As filed with the Securities and Exchange Commission on April 22, 1996.
Registration No. 2-98409
811-4325
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 19 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
Amendment No. 19 [X]
FIRST INVESTORS LIFE SERIES FUND
(Exact name of Registrant as specified in charter)
Ms. Concetta Durso
Secretary and Vice President
First Investors Life Series Fund
95 Wall Street
New York, New York 10005
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable
after the effective date of this Registration Statement
It is proposed that this filing will become effective on April 29, 1996 pursuant
to paragraph (b) of Rule 485.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
previously elected to register an indefinite number of shares of beneficial
interest, no par value, under the Securities Act of 1933. Registrant filed a
Rule 24f-2 Notice for its fiscal year ending December 31, 1995 on February 27,
1996.
<PAGE>
FIRST INVESTORS LIFE SERIES FUND
CROSS-REFERENCE SHEET
N-1A Item No. Location
- ------------- --------
PART A: PROSPECTUS
1. Cover Page.................................... Cover Page
2. Synopsis...................................... Not Applicable
3. Condensed Financial Information............... Financial Highlights
4. General Description of Registrant............. Investment Objectives and
Policies; General
Information
5. Management of the Fund........................ Management
5A. Management's Discussion of
Fund Performance.............................
6. Capital Stock and Other Securities............ Dividends and Other
Distributions; Taxes;
Determination of Net
Asset Value
7. Purchase of Securities Being Offered.......... How to Buy Shares
8. Redemption or Repurchase...................... How to Redeem Shares
9. Pending Legal Proceedings..................... Not Applicable
PART B: STATEMENT OF ADDITIONAL INFORMATION
10. Cover Page.................................... Cover Page
11. Table of Contents............................. Table of Contents
12. General Information and History............... General Information
13. Investment Objectives and Policies............ Investment Policies;
Investment Restrictions
14. Management of the Fund........................ Trustees and Officers
15. Control Persons and Principal
Holders of Securities......................... Not Applicable
16. Investment Advisory and Other Services........ Management
17. Brokerage Allocation.......................... Allocation of Portfolio
Brokerage
18. Capital Stock and Other Securities............ Determination of Net
Asset Value
19. Purchase, Redemption and Pricing
of Securities Being Offered................... Determination of Net
Asset Value
20. Tax Status.................................... Taxes
21. Underwriters.................................. Not Applicable
22. Performance Data.............................. Performance Information
23. Financial Statements.......................... Financial Statements;
Report of Independent
Accountants
PART C: OTHER INFORMATION
Information required to be included in Part C is set forth under the appropriate
item so numbered, in Part C hereof.
<PAGE>
First Investors Life Series Fund
95 Wall Street, New York, New York 10005/(212) 858-8200
This is a Prospectus for First Investors Life Series Fund ("Life Series
Fund"), an open-end, diversified management investment company. The Fund offers
eleven separate investment series, each of which has different investment
objectives and policies: First Investors Life Blue Chip Fund ("Blue Chip Fund"),
First Investors Life Cash Management Fund ("Cash Management Fund"), First
Investors Life Discovery Fund ("Discovery Fund"), First Investors Life
Government Fund ("Government Fund"), First Investors Life Growth Fund ("Growth
Fund"), First Investors Life High Yield Fund ("High Yield Fund"), First
Investors Life International Securities Fund ("International Securities Fund"),
First Investors Life Investment Grade Fund ("Investment Grade Fund"), First
Investors Life Target Maturity 2007 Fund ("Target Maturity 2007 Fund"), First
Investors Life Target Maturity 2010 Fund ("Target Maturity 2010 Fund") and First
Investors Life Utilities Income Fund ("Untilities Income Fund") (each, a Fund,
and collectively, "Funds"). Each Fund's investment objectives are listed on the
inside cover.
Investments in a Fund are only available through purchases of the Level
Premium Variable Life Insurance Policies ("Policies") or the Individual Variable
Annuity Contracts ("Contracts") offered by First Investors Life Insurance
Company ("First Investors Life"). Policy premiums, net of certain expenses, are
paid into a unit investment trust, First Investors Life Insurance Company
Separate Account B ("Separate Account B"). Purchase payments for the Contracts,
net of certain expenses, are also paid into a unit investment trust, First
Investors Life Variable Annuity Fund C ("Separate Account C"). Separate Account
B and Separate Account C ("Separate Accounts") pool these proceeds to purchase
shares of a Fund designated by purchasers of the Policies or Contracts.
Investments in a Fund are used to fund benefits under the Policies and
Contracts. Target Maturity 2007 Fund and Target Maturity 2010 Fund are only
offered to Contractowners of Separate Account C.
An investment in Life Series Fund, including Cash Management Fund, is
neither insured nor guaranteed by the U.S. Government. There can be no assurance
that the Cash Management Fund will be able to maintain a stable net asset value
of $1.00 per share. Investments by the High Yield Fund in high-yield, high risk
securities, commonly referred to as "junk bonds," may entail risks that are
different or more pronounced than those that would result from investment in
higher-rated securities. See "High Yield Securities--Risk Factors."
This Prospectus sets forth concisely the information about the Funds that a
prospective investor should know before investing and should be retained for
future reference. First Investors Management Company, Inc. ("FIMCO" or
"Adviser") serves as investment adviser to the Funds. A Statement of Additional
Information ("SAI"), dated April 29, 1996 (which is incorporated by reference
herein), has been filed with the Securities and Exchange Commission. The SAI is
available at no charge upon request to the Funds at the address or telephone
number indicated above.
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.
An investment in these securities is not a deposit or obligation of, or
guaranteed or endorsed by, any bank and is not federally insured or protected by
the Federal Deposit Insurance Corporation, the Federal Reserve Board or any
other governmental agency.
The date of this Prospectus is April 29, 1996
<PAGE>
The investment objectives of each Fund of Life Series Fund offered by this
Prospectus are as follows:
Blue Chip Fund. The investment objective of the Fund is to seek high total
investment return consistent with the preservation of capital. This goal will be
sought by investing, under normal market conditions, primarily in equity
securities of larger, well-capitalized companies with high potential earnings
growth that have shown a history of dividend payments, commonly known as "Blue
Chip" companies.
Cash Management Fund. The objective of the Fund is to seek to earn a high
rate of current income consistent with the preservation of capital and
maintenance of liquidity. The Fund will invest in money market obligations,
including high quality securities issued or guaranteed by the U.S. Government or
its agencies and instrumentalities, bank obligations and high grade corporate
instruments.
Discovery Fund. The investment objective of the Fund is to seek long-term
capital appreciation, without regard to dividend or interest income, through
investment in the common stock of companies with small to medium market
capitalization that the Adviser considers to be undervalued or less well known
in the current marketplace and to have the potential for capital growth.
Government Fund. The investment objective of the Fund is to seek to achieve
a significant level of current income which is consistent with security and
liquidity of principal by investing, under normal market conditions, primarily
in obligations issued or guaranteed as to principal and interest by the U.S.
Government, its agencies or instrumentalities, including mortgage-backed
securities.
Growth Fund. The investment objective of the Fund is to seek long-term
capital appreciation. This goal will be sought by investing, under normal market
conditions, primarily in common stocks of companies and industries selected for
their growth potential.
High Yield Fund. The primary objective of the Fund is to seek to earn a
high level of current income. The Fund actively seeks to achieve its secondary
objective of capital appreciation to the extent consistent with its primary
objective. The Fund seeks to attain its objectives primarily through investments
in lower-grade, high-yielding, high risk debt securities, commonly referred to
as "junk bonds" ("High Yield Securities").
International Securities Fund. The primary objective of the Fund is to seek
long-term capital growth. As a secondary objective, the Fund seeks to earn a
reasonable level of current income. These objectives are sought, under normal
market conditions, through investment in common stocks, rights and warrants,
preferred stocks, bonds and other debt obligations issued by companies or
governments of any nation, subject to certain restrictions with respect to
concentration and diversification.
Investment Grade Fund. The investment objective of the Fund is to seek a
maximum level of income consistent with investment in investment grade debt
securities.
Target Maturity 2007 Fund. The investment objective of the Fund is to seek
a predictable compounded investment return for investors who hold their Fund
shares until the Fund's maturity, consistent with preservation of capital. The
Fund intends to terminate in the year 2007.
2
<PAGE>
Target Maturity 2010 Fund. The investment objective of the Fund is to seek
a predictable compounded investment return for investors who hold their Fund
shares until the Fund's maturity, consistent with preservation of capital. The
Fund intends to terminate in the year 2010.
Target Maturity 2007 Fund and Target Maturity 2010 Fund each will seek its
objective by investing, under normal market conditions, at least 65% of its
total assets in zero coupon securities which are issued by the U.S. Government,
its agencies or instrumentalities or created by third parties using securities
issued by the U.S. Government, its agencies or instrumentalities.
As a result of the volatile nature of the market for zero coupon
securities, the value of shares of Target Maturity 2007 Fund and Target Maturity
2010 Fund prior to each Fund's maturity may fluctuate significantly. Thus, to
achieve a predictable return, investors should hold their investments in either
of these two Funds until the Fund liquidates since the Fund's value changes
daily with market conditions. Accordingly, any investor who redeems his or her
shares prior to a Fund's maturity is likely to achieve a different investment
result than the return that was predicted on the date the investment was made,
and may even suffer a significant loss.
Utilities Income Fund. The primary investment objective of the Fund is to
seek high current income. Long-term capital appreciation is a secondary
objective. These objectives are sought, under normal market conditions, through
investment in equity and debt securities issued by companies primarily engaged
in the public utilities industry.
There can be no assurance that any Fund will achieve its investment
objectives. See "Investment Objectives and Policies" for a detailed description
of each Fund's investment objectives and policies.
3
<PAGE>
FINANCIAL HIGHLIGHTS
The following table sets forth the per share operating performance data for
a share outstanding, total return, ratios to average net assets and other
supplemental data for each period indicated. Financial highlights are not
presented for Target Maturity 2010 Fund since the Fund did not commence
operations until April 1996. The table below has been derived from financial
statements which have been examined by Tait, Weller & Baker, independent
certified public accountants, whose report thereon appears in the Statement of
Additional Information ("SAI"). This information should be read in conjunction
with the Financial Statements and Notes thereto, which also appear in the SAI,
available at no charge upon request to the Funds.
<TABLE>
<CAPTION>
PER SHARE DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations Less Distributions from
------------------------------------- -----------------------
Net Asset Value Net Realized
--------------- Net and Unrealized Total from Net Net Net Asset Value
Beginning of Investment Gain (Loss) Investment Investment Realized Total ---------------
Period Income on Investments Operations Income Gains Distributions End of Period
- ------------------------------------------------------------------------------------------------------------------------------------
Blue Chip
- ---------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
3/8/90* to 12/31/90 ...... $10.00 $.07 $(.02) $ .$5 -- $ -- $ -- $10.05
1991 ..................... 10.05 .12 2.50 2.62 .05 -- .05 12.62
1992 ..................... 12.62 .16 .67 .83 .21 -- .21 13.24
1993 ..................... 13.24 .15 .97 1.12 .15 -- .15 14.21
1994 ..................... 14.21 .18 (.39) (.21) .08 .17 .25 13.75
1995 ..................... 13.75 .26 4.11 4.37 .19 .95 1.14 16.98
Cash Management**
- ---------------
1988 ..................... 1.00 .048 -- .048 .048 -- .048 1.00
1989 ..................... 1.00 .075 -- .075 .075 -- .075 1.00
1990 ..................... 1.00 .072 -- .072 .072 -- .072 1.00
1991 ..................... 1.00 .054 -- .054 .054 -- .054 1.00
1992 ..................... 1.00 .029 -- .029 .029 -- .029 1.00
1993 ..................... 1.00 .027 -- .027 .027 -- .027 1.00
1994 ..................... 1.00 .037 -- .037 .037 -- .037 1.00
1995 ..................... 1.00 .054 -- .054 .054 -- .054 1.00
Discovery
- ---------
1988 ..................... 10.02 .26 .10 .36 -- -- -- 10.38
1989 ..................... 10.38 .19 2.19 2.38 .27 .09 .36 12.40
1990 ..................... 12.40 .14 (.78) (.64) .15 .90 1.05 10.71
1991 ..................... 10.71 .07 5.42 5.49 .18 -- .18 16.02
1992 ..................... 16.02 -- 2.51 2.51 .03 .15 .18 18.35
1993 ..................... 18.35 -- 3.92 3.92 -- .91 .91 21.36
1994 ..................... 21.36 .06 (.62) (.56) -- .94 .94 19.86
1995 ..................... 19.86 .11 4.62 4.73 .06 1.26 1.32 23.27
Government
- ----------
1/7/92* to 12/31/92 ...... 10.00 .47 .51 .98 .33 -- .33 10.65
1993 ..................... 10.65 .64 .02 .66 .70 .19 .89 10.42
1994 ..................... 10.42 .79 (1.21) (.42) .25 .05 .30 9.70
1995 ..................... 9.70 .66 .78 1.44 .62 -- .62 10.52
</TABLE>
- ----------------
* Commencement of operations
** Adjusted to reflect ten-for-one stock split on May 1, 1991.
+ Some or all expenses have been waived or assumed by the investment adviser
from commencement of operations through December 31, 1995.
++ The effect of fees and charges incurred at the separate account level are
not reflected in these performance figures.
(a) Annualized
4
<PAGE>
<TABLE>
<CAPTION>
RATIOS / SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio to Average Net Assets
Ratio to Average Net Assets+ Before Expenses Waived or Assumed
Net Assets ----------------------------- --------------------------------- Portfolio
Total End of Period Net Investment Net Investment Turnover
Return++(%) (in thousands) Expenses+(%) Income(%) Expenses(%) Income(%) Rate(%)
- ------------------------------------------------------------------------------------------------------------------------------------
Blue Chip
- ---------
<C> <C> <C> <C> <C> <C> <C> <C>
3/8/90* to 12/31/90 ...... .61(a) $3,656 -- 2.95(a) 1.92(a) 1.03(a) 15
1991 ..................... 26.17 13,142 1.00 1.88 1.55 1.34 21
1992 ..................... 6.67 23,765 .79 1.66 .86 1.60 40
1993 ..................... 8.51 34,030 .88 1.27 N/A N/A 37
1994 ..................... (1.45) 41,424 .88 1.49 N/A N/A 82
1995 ..................... 34.00 66,900 .86 1.89 N/A N/A 26
Cash Management**
- ---------------
1988 ..................... 4.94 33 -- 4.99 7.68 (2.69) N/A
1989 ..................... 7.79 2,210 -- 7.84 1.35 6.49 N/A
1990 ..................... 7.49 8,203 .39 6.90 1.15 6.15 N/A
1991 ..................... 5.71 9,719 .57 5.39 .93 5.03 N/A
1992 ..................... 3.02 8,341 .79 2.99 .98 2.81 N/A
1993 ..................... 2.70 4,243 .60 2.67 1.05 2.22 N/A
1994 ..................... 3.77 3,929 .60 3.69 1.04 3.25 N/A
1995 ..................... 5.51 4,162 .61 5.36 1.10 4.87 N/A
Discovery
- ---------
1988 ..................... 3.59 125 -- 3.80 3.10 .70 158
1989 ..................... 23.62 283 -- 2.43 4.78 (2.35) 231
1990 ..................... (5.47) 960 -- 2.97 2.68 .28 104
1991 ..................... 51.73 4,661 .70 .48 1.49 (.31) 93
1992 ..................... 15.74 10,527 .91 .02 1.05 (.12) 91
1993 ..................... 22.20 21,221 .87 (.03) N/A N/A 69
1994 ..................... (2.53) 30,244 .88 .36 N/A N/A 53
1995 ..................... 25.23 50,900 .87 .60 N/A N/A 78
Government
- ----------
1/7/92* to 12/31/92 ...... 9.95(a) 5,064 .03(a) 6.64(a) .89(a) 5.79(a) 301
1993 ..................... 6.35 8,234 .35 6.60 .84 6.11 525
1994 ..................... (4.10) 7,878 .35 6.74 .90 6.19 457
1995 ..................... 15.63 9,500 .40 6.73 .93 6.21 198
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
PER SHARE DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations Less Distributions from
------------------------------------- -----------------------
Net Asset Value Net Realized
--------------- Net and Unrealized Total from Net Net Net Asset Value
Beginning of Investment Gain (Loss) Investment Investment Realized Total ---------------
Period Income on Investments Operations Income Gains Distributions End of Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Growth
- ------
1988........................ $10.02 $ .26 $ .51 $ .77 $ -- $ -- $ -- $10.79
1989........................ 10.79 .02 2.51 2.53 .18 .12 .30 13.02
1990........................ 13.02 .16 (.55) (.39) .06 -- .06 12.57
1991........................ 12.57 .17 4.15 4.32 .18 -- .18 16.71
1992........................ 16.71 .08 1.41 1.49 .18 1.38 1.56 16.64
1993........................ 16.64 .07 .93 1.00 .09 .10 .19 17.45
1994........................ 17.45 .09 (.60) (.51) -- .21 .21 16.73
1995........................ 16.73 .18 3.94 4.12 .09 .29 .38 20.47
High Yield
- ----------
1988........................ 10.00 .74 .82 1.56 -- -- -- 11.56
1989........................ 11.56 .74 (.92) (.18) .56 .11 .67 10.71
1990........................ 10.71 1.08 (1.79) (.71) .83 -- .83 9.17
1991........................ 9.17 1.16 1.66 2.82 1.18 -- 1.18 10.81
1992........................ 10.81 1.11 .21 1.32 1.69 -- 1.69 10.44
1993........................ 10.44 .96 .88 1.84 1.12 -- 1.12 11.16
1994........................ 11.16 .87 (1.14) (.27) .31 -- .31 10.58
1995........................ 10.58 1.00 .95 1.95 .96 -- .96 11.57
International Securities
- ------------------------
4/16/90* to 12/31/90........ 10.00 .03 .34 .37 -- -- -- 10.37
1991........................ 10.37 .09 1.49 1.58 .03 .05 .08 11.87
1992........................ 11.87 .15 (.28) (.13) .15 .22 .37 11.37
1993........................ 11.37 .10 2.41 2.51 .14 -- .14 13.74
1994........................ 13.74 .14 (.32) (.18) .05 -- .05 13.51
1995........................ 13.51 .19 2.25 2.44 .12 .25 .37 15.58
Investment Grade
- ----------------
1/7/92* to 12/31/92......... 10.00 .43 .44 .87 .34 -- .34 10.53
1993........................ 10.53 .65 .49 1.14 .71 .01 .72 10.95
1994........................ 10.95 .67 (1.06) (.39) .16 .09 .25 10.31
1995........................ 10.31 .67 1.28 1.95 .53 -- .53 11.73
Target Maturity 2007
- --------------------
4/26/95* to 12/31/95 10.00 .26 2.00 2.26 -- -- -- 12.26
Utilities Income
- ----------------
11/15/93* to 12/31/93....... 10.00 .01 (.07) (.06) -- -- -- 9.94
1994........................ 9.94 .24 (.96) (.72) .03 -- .03 9.19
1995........................ 9.19 .28 2.46 2.74 .19 -- .19 11.74
</TABLE>
- ----------
* Commencement of operations
+ Some or all expenses have been waived or assumed by the investment adviser
from commencement of operations through Dec. 31, 1995.
++ The effect of fees and charges incurred at the separate account level are
not reflected in these performance figures.
(a) Annualized
6
<PAGE>
<TABLE>
<CAPTION>
RATIOS / SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio to Average Net Assets
Ratio to Average Net Assets+ Before Expenses Waived or Assumed
Net Assets ----------------------------- --------------------------------- Portfolio
Total End of Period Net Investment Net Investment Turnover
Return++(%) (in thousands) Expenses+(%) Income(%) Expenses(%) Income(%) Rate(%)
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
Growth
- ------
1988........................ 7.68 $ 38 -- 3.20 8.70 (5.50) 31
1989........................ 24.00 570 -- 2.91 5.21 (2.30) 24
1990........................ (2.99) 2,366 -- 3.03 1.64 1.40 28
1991........................ 34.68 7,743 .69 1.21 1.34 .55 148
1992........................ 9.78 16,385 .76 .75 1.20 .30 45
1993........................ 6.00 25,658 .91 .43 N/A N/A 51
1994........................ (2.87) 32,797 .90 .60 N/A N/A 40
1995........................ 25.12 51,171 .88 1.10 N/A N/A 64
High Yield
- ----------
1988........................ 15.60 4,565 -- 13.22 1.32 11.90 46
1989........................ (1.76) 14,354 -- 12.05 .88 11.17 22
1990........................ (5.77) 18,331 -- 13.21 .91 12.30 35
1991........................ 33.96 23,634 .53 11.95 .89 11.60 40
1992........................ 13.15 24,540 .91 10.48 .96 10.43 84
1993........................ 18.16 30,593 .91 9.49 N/A N/A 96
1994........................ (1.56) 32,285 .88 9.43 N/A N/A 50
1995........................ 19.82 41,894 .87 9.83 N/A N/A 57
International Securities
- ------------------------
4/16/90* to 12/31/90........ 5.21(a) 3,946 -- .99(a) 3.43(a) (2.43)(a) 29
1991........................ 15.24 8,653 1.70 .75 2.27 .18 70
1992........................ (1.13) 12,246 1.03 1.55 1.38 1.20 36
1993........................ 22.17 21,009 1.14 .97 N/A N/A 37
1994........................ (1.29) 31,308 1.03 1.22 N/A N/A 36
1995........................ 18.70 41,012 1.02 1.42 N/A N/A 45
Investment Grade
- ----------------
1/7/92* to 12/31/92......... 8.91(a) 4,707 .23(a) 6.16(a) .93(a) 5.46(a) 72
1993........................ 10.93 10,210 .35 6.32 .85 5.82 64
1994........................ (3.53) 11,602 .37 6.61 .92 6.06 15
1995........................ 19.69 16,262 .51 6.77 .91 6.37 26
Target Maturity 2007
- --------------------
4/26/95* to 12/31/95 22.60 9,860 .04(a) 6.21(a) .87(a) 5.38(a) 28
Utilities Income
- ----------------
11/15/93* to 12/31/93....... (4.66)(a) 494 -- 1.46(a) 3.99(a) (2.52)(a) 0
1994........................ (7.24) 4,720 .17 4.13 .95 3.35 31
1995........................ 30.26 14,698 .41 4.16 .91 3.67 17
</TABLE>
7
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
Blue Chip Fund
Blue Chip Fund seeks to provide investors with high total investment return
consistent with the preservation of capital. The Fund seeks to achieve its
objective by investing, under normal market conditions, at least 65% of its
total assets in equity securities of "Blue Chip" companies, including common and
preferred stocks and securities convertible into common stock, that the Adviser
believes have potential earnings growth that is greater than the average company
included in the Standard & Poor's 500 Composite Stock Price Index ("S&P 500").
The Fund also may invest up to 35% of its total assets in the equity securities
of non-Blue Chip companies that the Adviser believes have significant potential
for growth of capital or future income consistent with the preservation of
capital. When market conditions warrant, or when the Adviser believes it is
necessary to achieve the Fund's objective, the Fund may invest up to 25% of its
total assets in fixed income securities.
The Fund defines Blue Chip companies as those companies that have a market
capitalization of at least $300 million, are dividend paying and are included in
the S&P 500. Market capitalization is the total market value of a company's
outstanding common stock. Blue Chip companies are considered to be of relatively
high quality and generally exhibit superior fundamental characteristics, which
may include: potential for consistent earnings growth, a history of
profitability and payment of dividends, leadership position in their industries
and markets, proprietary products or services, experienced management, high
return on equity and a strong balance sheet. Blue Chip companies usually exhibit
less investment risk and share price volatility than smaller, less established
companies. Examples of Blue Chip companies are American Telephone & Telegraph,
General Electric, Pepsico Inc. and Bristol-Myers Squibb.
The fixed income securities in which the Fund may invest include money
market instruments (including prime commercial paper, certificates of deposit of
domestic branches of U.S. banks and bankers' acceptances), obligations issued or
guaranteed as to principal and interest by the U.S. Government, its agencies or
instrumentalities ("U.S. Government Obligations"), including mortgage-backed
securities, and corporate debt securities. However, no more than 5% of the
Fund's net assets may be invested in corporate debt securities rated below Baa
by Moody's Investors Service, Inc. ("Moody's") or BBB by Standard & Poor's
Ratings Group ("S&P"). The Fund may borrow money for temporary or emergency
purposes in amounts not exceeding 5% of its total assets. The Fund may also
invest up to 5% of its net assets in American Depository Receipts ("ADRs"),
enter into repurchase agreements and make loans of portfolio securities. See
"Description of Certain Securities, Other Investment Policies and Risk Factors,"
below, and the SAI for additional information concerning these securities.
Cash Management Fund
Cash Management Fund seeks to earn a high rate of current income consistent
with the preservation of capital and maintenance of liquidity. The Fund
generally can invest only in securities that mature within 397 days from the
date of purchase. In addition, the Fund maintains a dollar-weighted average
portfolio maturity of 90 days or less.
8
<PAGE>
Cash Management Fund invests primarily in (1) high quality marketable
securities issued or guaranteed as to principal and interest by the U.S.
Government, its agencies or instrumentalities, (2) bank certificates of deposit,
bankers' acceptances, time deposits and other short-term obligations issued by
banks and (3) prime commercial paper and high quality, U.S. dollar denominated
short-term corporate bonds and notes. The U.S. Government securities in which
the Fund may invest include a variety of U.S. Treasury securities that differ in
their interest rates, maturities and dates of issue. Securities issued or
guaranteed by agencies or instrumentalities of the U.S. Government may be
supported by the full faith and credit of the United States or by the right of
the issuer to borrow from the U.S. Treasury. See the SAI for additional
information on U.S. Government securities. The Fund may invest in domestic bank
certificates of deposit (insured up to $100,000) and bankers' acceptances (not
insured) issued by domestic banks and savings institutions which are insured by
the Federal Deposit Insurance Corporation ("FDIC") and that have total assets
exceeding $500 million. The Fund also may invest in certificates of deposit
issued by London branches of domestic or foreign banks ("Eurodollar CDs"). The
Fund may invest in time deposits and other short-term obligations, including
uninsured, direct obligations bearing fixed, floating or variable interest
rates, issued by domestic banks, foreign branches of domestic banks, foreign
subsidiaries of domestic banks and domestic and foreign branches of foreign
banks. See Appendix A to the SAI for a description of commercial paper ratings
and Appendix B to the SAI for a description of municipal note ratings. The Fund
also may invest in repurchase agreements with banks that are members of the
Federal Reserve System or securities dealers that are members of a national
securities exchange or are market makers in U.S. Government securities, and, in
either case, only where the debt instrument subject to the repurchase agreement
is a U.S. Treasury or agency obligation.
Cash Management Fund also may purchase high quality, U.S. dollar
denominated short-term bonds and notes, including variable rate and master
demand notes issued by domestic and foreign corporations (including banks).
Floating and variable rate demand notes and bonds permit the Fund, as the
holder, to demand payment of principal at any time, or at specified intervals
not exceeding 397 days, in each case upon not more than 30 days' notice. The
Fund may borrow money for temporary or emergency purposes in amounts not
exceeding 5% of its total assets and make loans of portfolio securities. See
"Description of Certain Securities, Other Investment Policies and Risk Factors"
for additional information concerning these securities.
Cash Management Fund may purchase only obligations that (1) the Adviser
determines present minimal credit risks based on procedures adopted by Life
Series Fund's Board of Trustees, and (2) are either (a) rated in one of the top
two rating categories by at least two nationally recognized statistical ratings
organizations ("NRSROs") (or one, if only one rated the security) or (b) unrated
securities that the Adviser determines are of comparable quality. Securities
qualify as being in the top rating category ("First Tier Securities") if at
least two NRSROs (or one, if only one rated the security) have given it the
highest rating. If only one NRSRO has rated a security, or it is unrated, the
acquisition of that security must be approved or ratified by Life Series Fund's
Board of Trustees. The Fund's purchases of commercial paper are limited to First
Tier Securities. The Fund may not invest more than 5% of its total assets in
securities rated in the second highest rating category ("Second Tier
Securities"). Investments in Second Tier Securities of any one issuer are
limited to the greater of 1% of the Fund's total assets or $1 million. The Fund
generally may invest no more than 5% of its total assets in the securities of a
single issuer (other than securities issued by the U.S. Government, its agencies
or instrumentalities).
9
<PAGE>
Discovery Fund
Discovery Fund seeks long-term capital appreciation, without regard to
dividend or interest income. The Fund seeks to achieve its objective by
investing in the common stock of companies with small to medium market
capitalization that the Adviser considers to be undervalued or less well known
in the current marketplace and to have potential for capital growth.
The Fund seeks to invest in the common stock of companies that are
undervalued in the current market in relation to fundamental economic values
such as earnings, sales, cash flow and tangible book value; that are early in
their corporate development (i.e., before they become widely recognized and well
known and while their reputations and track records are still emerging); or that
offer the possibility of greater earnings because of revitalized management, new
products or structural changes in the economy. Such companies primarily are
those with small to medium market capitalization, which the Adviser currently
considers to be market capitalization of up to $1.5 billion, but which could be
higher under certain market conditions. The Adviser believes that, over time,
these securities are more likely to appreciate in price than securities whose
market prices have already reached their perceived economic value. In addition,
the Fund intends to diversify its holdings among as many companies and
industries as the Adviser deems appropriate.
Companies that are early in their corporate development may be dependent on
relatively few products or services, may lack adequate capital reserves, may be
dependent on one or two management individuals and may have less of a track
record or historical pattern of performance. In addition, there may be less
information available as to the issuers and their securities may not be well
known to the general public and may not yet have wide institutional ownership.
Thus, the investment risk is higher than that normally associated with larger,
older or better-known companies.
Investments in securities of companies with small to medium market
capitalization are generally considered to offer greater opportunity for
appreciation and to involve greater risk of depreciation than securities of
companies with larger market capitalization. Because the securities of most
companies with small to medium market capitalization are not as broadly traded
as those of companies with larger market capitalization, these securities are
often subject to wider and more abrupt fluctuations in market price. In the
past, there have been prolonged periods when these securities have substantially
underperformed or outperformed the securities of larger capitalization
companies. In addition, smaller capitalization companies generally have fewer
assets available to cushion an unforeseen adverse occurrence and thus such an
occurrence may have a disproportionately negative impact on these companies.
The Fund may invest up to 10% of its total assets in common stocks issued
by foreign companies which are traded on a recognized domestic or foreign
securities exchange. In addition to the fundamental analysis of companies and
their industries which it performs for U.S. issuers, the Adviser evaluates the
economic and political climate of the country in which the company is located
and the principal securities markets in which such securities are traded.
Although the foreign stocks in which the Fund invests are primarily denominated
in foreign currencies, the Fund also may invest in ADRs. The Adviser does not
attempt to time actively either short-term market trends or short-term currency
trends in any market. See "Foreign Securities--Risk Factors" and "American
Depository Receipts and Global Depository Receipts."
10
<PAGE>
The Fund may borrow money for temporary or emergency purposes in amounts
not exceeding 5% of its total assets. The Fund also may enter into repurchase
agreements and may make loans of portfolio securities. For temporary defensive
purposes, the Fund may invest all of its assets in U.S. Government Obligations,
prime commercial paper, certificates of deposit and bankers' acceptances. See
the SAI for more information regarding these securities.
Government Fund
Government Fund seeks to achieve a significant level of current income
which is consistent with security and liquidity of principal by investing, under
normal market conditions, at least 65% of its assets in U.S. Government
Obligations, including mortgage-backed securities. Securities issued or
guaranteed as to principal and interest by the U.S. Government include a variety
of Treasury securities, which differ only in their interest rates, maturities
and times of issuance. Although the payment of interest and principal on a
portfolio security may be guaranteed by the U.S. Government or one of its
agencies or instrumentalities, shares of the Fund are not insured or guaranteed
by the U.S. Government or any agency or instrumentality. The net asset value of
shares of the Fund generally will fluctuate in response to interest rate levels.
When interest rates rise, prices of fixed income securities generally decline;
when interest rates decline, prices of fixed income securities generally rise.
See "U.S. Government Obligations" and "Debt Securities-Risk Factors," below.
The Fund may invest in mortgage-backed securities, including those
involving Government National Mortgage Association ("GNMA") certificates,
Federal National Mortgage Association ("FNMA") certificates and Federal Home
Loan Mortgage Corporation ("FHLMC") certificates. The Fund also may invest in
securities issued or guaranteed by other U.S. Government agencies or
instrumentalities, including: the Federal Farm Credit System and the Federal
Home Loan Bank (each of which may not borrow from the U.S. Treasury and the
securities of which are not guaranteed by the U.S. Government); the Tennessee
Valley Authority, and the U.S. Postal Service (each of which may borrow from the
U.S. Treasury to meet its obligations); the Farmers Home Administration and the
Export-Import Bank (the securities of which are backed by the full faith and
credit of the United States). The Fund normally reinvests principal payments
(whether regular or pre-paid) in additional mortgage-backed securities. See
"Mortgage-Backed Securities," below.
The Fund may invest up to 35% of its assets in securities other than U.S.
Government Obligations and mortgage-backed securities. These may include: prime
commercial paper, certificates of deposit of domestic branches of U.S. banks,
bankers' acceptances, repurchase agreements (applicable to U.S. Government
Obligations), insured certificates of deposit and certificates representing
accrual on U.S. Treasury securities. The Fund also may make loans of portfolio
securities and invest in zero coupon securities. The Fund may borrow money for
temporary or emergency purposes in amounts not exceeding 5% of its total assets.
See the SAI for a further discussion of these securities.
For temporary defensive purposes, the Fund may invest all of its assets in
cash, cash equivalents and money market instruments, including bank certificates
of deposit, bankers' acceptances and commercial paper issued by domestic
corporations, short-term fixed income securities or U.S. Government Obligations.
See the SAI for a description of these securities.
11
<PAGE>
Growth Fund
The investment objective of Growth Fund is long-term capital appreciation.
Current income through the receipt of interest or dividends from investments
will merely be incidental to the Fund's efforts in pursuing its goal. It is the
policy of the Fund to invest, under normal market conditions, primarily in
common stocks and it is anticipated that the Fund will usually be so invested.
It also may invest to a limited degree in convertible securities and preferred
stocks. At least 75% of the value of the Fund's total assets (excluding
securities held for defensive purposes) shall be invested in securities of
companies in industries in which the Adviser, or the Fund's investment
subadviser, Wellington Management Company ("Subadviser" or "WMC"), believes
opportunities for capital growth exist. The Fund does not intend to concentrate
its investments in a particular industry, but it may invest up to 25% of the
value of its assets in a particular industry. The Fund may also invest in ADRs
and Global Depository Receipts ("GDRs"), purchase securities on a when-issued or
delayed delivery basis and make loans of portfolio securities. The Fund may
borrow money for temporary or emergency purposes in amounts not exceeding 5% of
its total assets. For temporary defensive purposes, the Fund may invest all of
its assets in U.S. Government Obligations, investment grade bonds, prime
commercial paper, certificates of deposit, bankers' acceptances, repurchase
agreements and participation interests. See the SAI for a description of these
securities.
High Yield Fund
High Yield Fund primarily seeks high current income and secondarily seeks
growth of capital. The Fund actively seeks to achieve its secondary objective to
the extent consistent with its primary objective. The Fund seeks to achieve its
objectives by investing, under normal market conditions, at least 65% of its
total assets in high risk, high yield securities, commonly referred to as "junk
bonds" ("High Yield Securities"). High Yield Securities include the following
instruments: fixed, variable or floating rate debt obligations (including bonds,
debentures and notes) which are rated below Baa by Moody's or below BBB by S&P,
or, if unrated, are deemed to be of comparable quality by the Adviser; preferred
stocks and dividend-paying common stocks that have yields comparable to those of
high yielding debt securities; any of the foregoing securities of companies that
are financially troubled, in default or undergoing bankruptcy or reorganization
("Deep Discount Securities"); and any securities convertible into any of the
foregoing. See "High Yield Securities-- Risk Factors" and "Deep Discount
Securities."
The Fund may invest up to 5% of its total assets in debt securities issued
by foreign governments and companies located outside the United States and
denominated in U.S. or foreign currency. The Fund may borrow money for temporary
or emergency purposes in amounts not exceeding 5% of its total assets, make
loans of portfolio securities, enter into repurchase agreements and invest in
zero coupon and pay-in-kind securities. The Fund may also invest in securities
on a "when issued" or delayed delivery basis. See "Description of Certain
Securities, Other Investment Policies and Risk Factors," below, and the SAI for
more information concerning these securities.
The Fund may invest up to 35% of its total assets in securities other than
High Yield Securities, including: dividend-paying common stocks; securities
convertible into, or exchangeable for, common stock; debt obligations of all
types (including bonds, debentures and notes) rated A or better by Moody's or
S&P; U.S. Government Obligations; warrants; and money market instruments
consisting of prime commercial paper, certificates of deposit of domestic
branches of U.S. banks, bankers' acceptances and repurchase agreements.
12
<PAGE>
In any period of market weakness or of uncertain market or economic
conditions, the Fund may establish a temporary defensive position to preserve
capital by having all or part of its assets invested in investment grade debt
securities or retained in cash or cash equivalents, including bank certificates
of deposit, bankers' acceptances, U.S. Government Obligations and commercial
paper issued by domestic corporations. See "Description of Certain Securities,
Other Investment Policies and Risk Factors," below.
The medium- to lower-rated, and certain of the unrated securities in which
the Fund invests tend to offer higher yields than higher-rated securities with
the same maturities because the historical financial condition of the issuers of
such securities may not be as strong as that of other issuers. Debt obligations
rated lower than Baa or BBB by Moody's or S&P, respectively, are speculative and
generally involve more risk of loss of principal and income than higher-rated
securities. Also, their yields and market value tend to fluctuate more than
higher quality securities. The greater risks and fluctuations in yield and value
occur because investors generally perceive issuers of lower-rated and unrated
securities to be less creditworthy. These risks cannot be eliminated, but may be
reduced by diversifying holdings to minimize the portfolio impact of any single
investment. In addition, fluctuations in market value does not affect the cash
income from the securities, but are reflected in the Fund's net asset value.
When interest rates rise, the net asset value of the Fund tends to decrease.
When interest rates decline, the net asset value of the Fund tends to increase.
Variable or floating rate debt obligations in which the Fund may invest
periodically adjust their interest rates to reflect changing economic
conditions. Thus, changing economic conditions specified by the terms of the
security would serve to change the interest rate and the return offered to the
investor. This reduces the effect of changing market conditions on the
security's underlying market value.
A High Yield Security may itself be convertible into or exchangeable for
equity securities, or may carry with it the right to acquire equity securities
evidenced by warrants attached to the security or acquired as part of a unit
with the security. Although the Fund invests primarily in High Yield Securities,
securities received upon conversion or exercise of warrants and securities
remaining upon the break-up of units or detachment of warrants may be retained
to permit orderly disposition, to establish a long-term holding basis for
Federal income tax purposes or to seek capital appreciation.
Because of the greater number of investment considerations involved in
investing in High Yield Securities, the achievement of the Fund's investment
objectives depends more on the Adviser's research abilities than would be the
case if the Fund were investing primarily in securities in the higher rated
categories. Because medium- to lower-rated securities generally involve greater
risks of loss of income and principal than higher-rated securities, investors
should consider carefully the relative risks associated with investments in
securities that carry medium to lower ratings or, if unrated, deemed to be of
comparable quality by the Adviser. See "High Yield Securities--Risk Factors" and
Appendix A for a description of corporate bond ratings.
The dollar weighted average of credit ratings of all bonds held by the Fund
during the 1995 fiscal year, computed on a monthly basis, is set forth below.
This information reflects the average composition of the Fund's assets during
the 1995 fiscal year and is not necessarily representative of the Fund as of the
end of its 1995 fiscal year, the current fiscal year or at any other time in the
future.
13
<PAGE>
Comparable Quality of
Unrated Securities to
Rated by Moody's Bonds Rated by Moody's
---------------- ----------------------
Ba 12.16% 0.73%
B 71.29 0.20
Caa 1.92 0.22
Ca 0.73 0
---- ------
Total 86.10% 1.15%
International Securities Fund
International Securities Fund primarily seeks long-term capital growth and
secondarily seeks to earn a reasonable level of current income. The Fund may
invest in all types of securities issued by companies and government
instrumentalities of any nation approved by the Trustees, subject only to
industry concentration and issuer diversification restrictions described below
and in the SAI. This investment flexibility permits the Fund to react to rapidly
changing economic conditions among countries which cause the relative
attractiveness of investments within national markets to be subject to frequent
reappraisal. It is a fundamental policy of the Fund that no more than 35% of its
total assets will be invested in securities issued by U.S. companies and U.S.
Government Obligations or cash and cash equivalents denominated in U.S.
currency. In addition, the Fund presently does not intend to invest more than
35% of its total assets in any one particular country. Further, except for
temporary defensive purposes, the Fund's assets will be invested in securities
of at least three different countries outside the United States. See "Foreign
Securities--Risk Factors". For defensive purposes, the Fund may temporarily
invest in securities issued by U.S. companies and the U.S. Government and its
agencies and instrumentalities, or cash equivalents denominated in U.S.
currency, without limitation as to amount.
The Fund may purchase securities traded on any foreign stock exchange. The
Fund may also purchase ADRs and GDRs. See "American Depository Receipts and
Global Depository Receipts," below. The Fund also may invest up to 25% of its
total assets in unlisted securities of foreign issuers; provided, however, that
no more than 15% of the value of its net assets may be invested in unlisted
securities with a limited trading market and other illiquid investments. The
investment standards for the selection of unlisted securities are the same as
those used in the purchase of securities traded on a stock exchange.
The Fund may invest in warrants, which may or may not be listed on a
recognized United States or foreign exchange. The Fund also may enter into
repurchase agreements, purchase securities on a when-issued or delayed delivery
basis and make loans of portfolio securities. The Fund also may borrow money for
temporary or emergency purposes in amounts not exceeding 5% of its total assets.
See the SAI for further information concerning these securities.
Investment Grade Fund
Investment Grade Fund seeks to generate a maximum level of income
consistent with investment in investment grade debt securities. The Fund seeks
to achieve its objective by investing, under normal market conditions, at least
65% of its total assets in debt securities of U.S. issuers that are rated in the
four highest rated categories by Moody's or S&P, or in unrated securities that
are deemed to be of comparable quality by the Adviser ("investment grade
securities"). The Fund may
14
<PAGE>
invest up to 35% of its total assets in U.S. Government Obligations, including
mortgage-related securities, dividend-paying common and preferred stocks,
obligations convertible into common stocks, repurchase agreements, debt
securities rated below investment grade and money market instruments. The Fund
may invest up to 5% of its net assets in corporate or government debt securities
of foreign issuers which are U.S. dollar denominated and traded in U.S. markets.
The Fund may also borrow money for temporary or emergency purposes in amounts
not exceeding 5% of its total assets. The Fund may purchase securities on a
when-issued basis, make loans of portfolio securities and invest in zero coupon
or pay-in-kind securities. See "Description of Certain Securities, Other
Investment Policies and Risk Factors," below, and the SAI for additional
information concerning these securities.
The published reports of rating services are considered by the Adviser in
selecting rated securities for the Fund's portfolio. The Adviser also relies,
among other things, on its own credit analysis, which includes a study of the
existing debt's capital structure, the issuer's ability to service debt (or to
pay dividends, if investing in common or preferred stock) and the current trend
of earnings for the issuer. Although up to 100% of the Fund's total assets can
be invested in debt securities rated at least Baa by Moody's or at least BBB by
S&P, or unrated debt securities deemed to be of comparable quality by the
Adviser, no more than 5% of the Fund's net assets may be invested in debt
securities rated lower than Baa by Moody's or BBB by S&P (including securities
that have been downgraded), or, if unrated, deemed to be of comparable quality
by the Adviser, or in any equity securities of any issuer if a majority of the
debt securities of such issuer are rated lower than Baa by Moody's or BBB by
S&P. Securities rated BBB or Baa by S&P or Moody's, respectively, are considered
to be speculative with respect to the issuer's ability to make principal and
interest payments. The Adviser continually monitors the investments in the
Fund's portfolio and carefully evaluates on a case-by-case basis whether to
dispose of or retain a debt security which has been downgraded to a rating lower
than investment grade. See "Debt Securities--Risk Factors" and Appendix A for a
description of corporate bond ratings.
For temporary defensive purposes, the Fund may invest all of its assets in
money market instruments, short-term fixed income securities or U.S. Government
Obligations. See "Description of Certain Securities, Other Investment Policies
and Risk Factors," below, and the SAI.
Target Maturity 2007 Fund
Target Maturity 2010 Fund
Target Maturity 2007 Fund seeks to provide a predictable compounded
investment return for investors who hold their Fund shares until the Fund's
maturity, consistent with preservation of capital.
Target Maturity 2010 Fund seeks to provide a predictable compounded
investment return for investors who hold their Fund shares until the Fund's
maturity consistent with the preservation of capital.
Each Fund will seek its objective by investing, under normal market
conditions, at least 65% of its total assets in zero coupon securities which are
issued by the U.S. Government and its agencies and instrumentalities or created
by third parties using securities issued by the U.S. Government and its agencies
and instrumentalities. With respect to Target Maturity 2007 Fund, these
investments will mature no later than December 31, 2007 and, with respect to
Target Maturity 2010 Fund,
15
<PAGE>
these investments will mature no later than December 31, 2010. December 31, 2007
and December 31, 2010 are herein collectively referred to as the "Maturity
Date." On the Maturity Date, each Fund will be converted to cash and distributed
or reinvested in another Fund of Life Series Fund at the investor's choice.
Each Fund seeks to provide investors with a positive total return at the
Maturity Date which, together with the reinvestment of all dividends and
distributions, exceeds their original investment in a Fund by a relatively
predictable amount. While the risk of fluctuation in the values of zero coupon
securities is greater when the period to maturity is longer, that risk tends to
diminish as the Maturity Date approaches. Although an investor can redeem shares
at the current net asset value at any time, any investor who redeems his or her
shares prior to the Maturity Date is likely to achieve a different investment
result than the return that was predicted on the date the investment was made,
and may even suffer a significant loss.
Zero coupon securities are debt obligations that do not entitle the holder
to any periodic payment of interest prior to maturity or a specified date when
the securities begin paying current interest. They are issued and traded at a
discount from their face amount or par value. This discount varies depending on
the time remaining until maturity, prevailing interest rates, liquidity of the
security and the perceived credit quality of the issuer. When held to maturity,
the entire return of a zero coupon security, which consists of the accretion of
the discount, comes from the difference between its issue price and its maturity
value. This difference is known at the time of purchase, so investors holding
zero coupon securities until maturity know the amount of their investment return
at the time of their investment. The market values are subject to greater market
fluctuations from changing interest rates prior to maturity than the values of
debt obligations of comparable maturities that bear interest currently. See
"Zero Coupon Securities-Risk Factors."
A portion of the total realized return from conventional interest-paying
bonds comes from the reinvestment of periodic interest. Since the rate to be
earned on these reinvestments may be higher or lower than the rate quoted on the
interest-paying bonds at the time of the original purchase, the total return of
interest-paying bonds is uncertain even for investors holding the security to
its maturity. This uncertainty is commonly referred to as reinvestment risk and
can have a significant impact on total realized investment return. With zero
coupon securities, however, there are no cash distributions to reinvest, so
investors bear no reinvestment risk if they hold the zero coupon securities to
maturity.
Each Fund primarily will purchase three types of zero coupon securities:
(1) U.S. Treasury STRIPS (Separately Traded Registered Interest and Principal
Securities), which are created when the coupon payments and the principal
payment are stripped from an outstanding Treasury security by the Federal
Reserve Bank. Bonds issued by the Resolution Funding Corporation (REFCORP) can
also be stripped in this fashion. (2) STRIPS which are created when a dealer
deposits a Treasury security or a Federal agency security with a custodian for
safekeeping and then sells the coupon payments and principal payment that will
be generated by this security. Bonds issued by the Financing Corporation (FICO)
can be stripped in this fashion. (3) Zero coupon securities of federal agencies
and instrumentalities either issued directly by an agency in the form of a zero
coupon bond or created by stripping an outstanding bond.
Each Fund may invest up to 35% of its total assets in the following
instruments: interest-bearing obligations issued by the U.S. Government and its
agencies and instrumentalities (see "U.S.
16
<PAGE>
Government Obligations"), including, for Target Maturity 2007 Fund, zero coupon
securities maturing beyond 2007, and, for Target Maturity 2010 Fund, zero coupon
securities maturing beyond 2010; corporate debt securities, including corporate
zero coupon securities; repurchase agreements; and money market instruments
consisting of prime commercial paper, certificates of deposit of domestic
branches of U.S. banks and bankers' acceptances. Each Fund may only invest in
debt securities rated A or better by Moody's or S&P or in unrated securities
that are deemed to be of comparable quality by the Adviser. Debt obligations
rated A or better by Moody's or S&P comprise what are known as high-grade bonds
and are regarded as having a strong capacity to repay principal and make
interest payments. See Appendix A for a description of corporate bond ratings.
Each Fund may also invest in restricted and illiquid securities, make loans of
portfolio securities and purchase securities on a when-issued basis. See the SAI
for more information regarding these types of investments.
Utilities Income Fund
The primary investment objective of Utilities Income Fund is to seek high
current income. Long-term capital appreciation is a secondary objective. The
Fund seeks its objectives by investing, under normal market conditions, at least
65% of its total assets in equity and debt securities issued by companies
primarily engaged in the public utilities industry. Equity securities in which
the Fund may invest include common stocks, preferred stocks, securities
convertible into common stocks or preferred stocks, and warrants to purchase
common or preferred stocks. Debt securities in which the Fund may invest will be
rated at the time of investment at least A by Moody's or S&P or, if unrated,
will be deemed to be of comparable quality as determined by the Adviser. Debt
securities rated A or higher by Moody's or S&P or, if unrated, deemed to be of
comparable quality by the Adviser, are regarded as having a strong capacity to
pay principal and interest. The Fund's policy is to attempt to sell, within a
reasonable time period, a debt security in its portfolio which has been
downgraded below A, provided that such disposition is in the best interests of
the Fund and its shareholders. See Appendix A for a description of corporate
bond ratings. The portion of the Fund's assets invested in equity securities and
in debt securities will vary from time to time due to changes in interest rates
and economic and other factors.
The utility companies in which the Fund will invest include companies
primarily engaged in the ownership or operation of facilities used to provide
electricity, gas, water or telecommunications (including telephone, telegraph
and satellite, but not companies engaged in public broadcasting or cable
television). For these purposes, "primarily engaged" means that (1) more than
50% of the company's assets are devoted to the ownership or operation of one or
more facilities as described above, or (2) more than 50% of the company's
operating revenues are derived from the business or combination of any of the
businesses described above. It should be noted that based on this definition,
the Fund may invest in companies which are also involved to a significant degree
in non-public utilities activities.
Utility stocks generally offer dividend yields that exceed those of
industrial companies and their prices tend to be less volatile than stocks of
industrial companies. However, utility stocks can still be affected by the risks
of the stock of industrial companies. Because the Fund concentrates its
investments in public utilities companies, the value of its shares will be
especially affected by factors peculiar to the utilities industry, and may
fluctuate more widely than the value of shares of a fund that invests in a
broader range of industries. See "Utilities Industries--Risk Factors."
17
<PAGE>
The Fund may invest up to 35% of its total assets in the following
instruments: debt securities (rated at least A by Moody's or S&P) and common and
preferred stocks of non-utility companies; U.S. Government Obligations;
mortgage-backed securities; cash; and money market instruments consisting of
prime commercial paper, bankers' acceptances, certificates of deposit and
repurchase agreements. The Fund may invest in securities on a "when-issued" or
delayed delivery basis and make loans of portfolio securities. The Fund may
invest up to 5% of its net assets in ADRs. The Fund may borrow money for
temporary or emergency purposes in amounts not exceeding 5% of its net assets.
The Fund also may invest in zero coupon and pay-in-kind securities. In addition,
in any period of market weakness or of uncertain market or economic conditions,
the Fund may establish a temporary defensive position to preserve capital by
having all of its assets invested in short-term fixed income securities or
retained in cash or cash equivalents. See the SAI for a description of these
securities.
General. Each Fund's net asset value fluctuates based mainly upon changes
in the value of its portfolio securities. Each Fund's investment objectives and
certain investment limitations set forth in the SAI are fundamental policies
that may not be changed without shareholder approval. There can be no assurance
that any Fund will achieve its investment objectives.
Description of Certain Securities, Other Investment Policies and Risk Factors
American Depository Receipts and Global Depository Receipts. Blue Chip
Fund, International Securities Fund, Growth Fund, Utilities Income Fund and
Discovery Fund may invest in sponsored and unsponsored ADRs. ADRs are receipts
typically issued by a U.S. bank or trust company evidencing ownership of the
underlying securities of foreign issuers, and other forms of depository receipts
for securities of foreign issuers. Generally, ADRs, in registered form, are
denominated in U.S. dollars and are designed for use in the U.S. securities
markets. Thus, these securities are not denominated in the same currency as the
securities into which they may be converted. In addition, the issuers of the
securities underlying unsponsored ADRs are not obligated to disclose material
information in the United States and, therefore, there may be less information
available regarding such issuers and there may not be a correlation between such
information and the market value to the ADRs. International Securities Fund and
Growth Fund may also invest in sponsored and unsponsored GDRs. GDRs are issued
globally and evidence a similar ownership arrangement. Generally, GDRs are
designed for trading in non-U.S. securities markets. ADRs and GDRs are
considered to be foreign securities by each of the above Funds, as appropriate.
See "Foreign Securities--Risk Factors."
Bankers' Acceptances. Each Fund may invest in bankers' acceptances.
Bankers' acceptances are short-term credit instruments used to finance
commercial transactions. Generally, an acceptance is a time draft drawn on a
bank by an exporter or importer to obtain a stated amount of funds to pay for
specific merchandise. The draft is then "accepted" by a bank that, in effect,
unconditionally guarantees to pay the face value of the instrument on its
maturity date. The acceptance may then be held by the accepting bank as an asset
or it may be sold in the secondary market at the going rate of interest for a
specific maturity. Although maturities for acceptances can be as long as 270
days, most acceptances have maturities of six months or less.
Certificates of Deposit. Each Fund may invest in bank certificates of
deposit ("CDs"). The FDIC is an agency of the U.S. Government which insures the
deposits of certain banks and savings and loan associations up to $100,000 per
deposit. The interest on such deposits may not be insured
18
<PAGE>
if this limit is exceeded. Current Federal regulations also permit such
institutions to issue insured negotiable CDs in amounts of $100,000 or more,
without regard to the interest rate ceilings on other deposits. To remain fully
insured, these investments currently must be limited to $100,000 per insured
bank or savings and loan association.
Commercial Paper. Commercial paper is a promissory note issued by a
corporation to finance short-term credit needs which may either be unsecured or
backed by a letter of credit. Commercial paper includes notes, drafts or similar
instruments payable on demand or having a maturity at the time of issuance not
exceeding nine months, exclusive of days of grace or any renewal thereof. See
Appendix A to the SAI for a description of commercial paper ratings.
Convertible Securities. A convertible security is a bond, debenture, note,
preferred stock or other security that may be converted into or exchanged for a
prescribed amount of common stock of the same or a different issuer within a
particular period of time at a specified price or formula. A convertible
security entitles the holder to receive interest paid or accrued on debt or
dividends paid on preferred stock until the convertible security matures or is
redeemed, converted or exchanged. Convertible securities have unique investment
characteristics in that they generally (1) have higher yields than common
stocks, but lower yields than comparable non-convertible securities, (2) are
less subject to fluctuation in value than the underlying stock because they have
fixed income characteristics, and (3) provide the potential for capital
appreciation if the market price of the underlying common stock increases. See
the SAI for more information on convertible securities.
Debt Securities--Risk Factors. The market value of debt securities is
influenced primarily by changes in the level of interest rates. Generally, as
interest rates rise, the market value of debt securities decreases. Conversely,
as interest rates fall, the market value of debt securities increases. Factors
which could result in a rise in interest rates, and a decrease in the market
value of debt securities, include an increase in inflation or inflation
expectations, an increase in the rate of U.S. economic growth, an expansion in
the Federal budget deficit or an increase in the price of commodities such as
oil. In addition, the market value of debt securities is influenced by
perceptions of the credit risks associated with such securities. Sale of debt
securities prior to maturity may result in a loss and the inability to replace
the sold securities with debt securities with a similar yield. Debt obligations
rated lower than Baa by Moody's or BBB by S&P, commonly referred to as "junk
bonds," are speculative and generally involve a higher risk of loss of principal
and income than higher-rated securities. See "High Yield Securities--Risk
Factors" and Appendix A for a description of corporate bond ratings.
Deep Discount Securities. High Yield Fund may invest up to 15% of its total
assets in securities of companies that are financially troubled, in default or
undergoing bankruptcy or reorganization. Such securities are usually available
at a deep discount from the face value of the instrument. The Fund will invest
in Deep Discount Securities when the Adviser believes that there exist factors
that are likely to restore the company to a healthy financial condition. Such
factors include a restructuring of debt, management changes, existence of
adequate assets or other unusual circumstances. Debt instruments purchased at
deep discounts may pay very high effective yields. In addition, if the financial
condition of the issuer improves, the underlying value of the security may
increase, resulting in a capital gain. If the company defaults on its
obligations or remains in default, or if the plan of reorganization is
insufficient for debtholders, the Deep Discount Securities may stop paying
interest and lose value or become worthless. The Adviser will balance the
benefits of Deep Discount Securities with their risks. While a diversified
portfolio may reduce the overall impact of
19
<PAGE>
a Deep Discount Security that is in default or loses its value, the risk cannot
be eliminated. See "High Yield Securities--Risk Factors."
Eurodollar Certificates of Deposit. Cash Management Fund may invest in
Eurodollar CDs, which are issued by London branches of domestic or foreign
banks. Such securities involve risks that differ from certificates of deposit
issued by domestic branches of U.S. banks. These risks include future political
and economic developments, the possible imposition of United Kingdom withholding
taxes on interest income payable on the securities, the possible establishment
of exchange controls, the possible seizure or nationalization of foreign
deposits or the adoption of other foreign governmental restrictions that might
adversely affect the payment of principal and interest on such securities.
Foreign Securities--Risk Factors. International Securities Fund, High Yield
Fund and Discovery Fund may sell a security denominated in a foreign currency
and retain the proceeds in that foreign currency to use at a future date (to
purchase other securities denominated in that currency) or a Fund may buy
foreign currency outright to purchase securities denominated in that foreign
currency at a future date. Because none of these Funds intend to hedge their
foreign investments, the Fund will be affected by changes in exchange control
regulations and fluctuations in the relative rates of exchange between the
currencies of different nations, as well as by economic and political
developments. Other risks involved in foreign securities include the following:
there may be less publicly available information about foreign companies
comparable to the reports and ratings that are published about companies in the
United States; foreign companies are not generally subject to uniform
accounting, auditing and financial reporting standards and requirements
comparable to those applicable to U.S. companies; some foreign stock markets
have substantially less volume than U.S. markets, and securities of some foreign
companies are less liquid and more volatile than securities of comparable U.S.
companies; there may be less government supervision and regulation of foreign
stock exchanges, brokers and listed companies than exist in the United States;
and there may be the possibility of expropriation or confiscatory taxation,
political or social instability or diplomatic developments which could affect
assets of a Fund held in foreign countries.
International Securities Fund's and Discovery Fund's investments in
emerging markets include investments in countries whose economies or securities
markets are not yet highly developed. Special considerations associated with
these emerging market investments (in addition to the considerations regarding
foreign investments generally) may include, among others, greater political
uncertainties, an economy's dependence on revenues from particular commodities
or on international aid or development assistance, currency transfer
restrictions, a limited number of potential buyers for such securities and
delays and disruptions in securities settlement procedures.
High Yield Securities--Risk Factors. High Yield Securities are subject to
certain risks that may not be present with investments in higher grade
securities.
Effect of Interest Rate and Economic Changes. High Yield Securities rated
lower than Baa by Moody's or BBB by S&P, commonly referred to as "junk bonds,"
are speculative and generally involve a higher risk or loss of principal and
income than higher-rated securities. The prices of High Yield Securities tend to
be less sensitive to interest rate changes than higher-rated investments, but
may be more sensitive to adverse economic changes or individual corporate
developments. Periods of economic uncertainty and changes generally result in
increased volatility in the market prices and yields of High Yield Securities
and thus in a Fund's net asset value. A strong economic downturn
20
<PAGE>
or a substantial period of rising interest rates could severely affect the
market for High Yield Securities. In these circumstances, highly leveraged
companies might have greater difficulty in making principal and interest
payments, meeting projected business goals, and obtaining additional financing.
Thus, there could be a higher incidence of default. This would affect the value
of such securities and thus a Fund's net asset value. Further, if the issuer of
a security owned by a Fund defaults, that Fund might incur additional expenses
to seek recovery.
Generally, when interest rates rise, the value of fixed rate debt
obligations, including High Yield Securities, tends to decrease; when interest
rates fall, the value of fixed rate debt obligations tends to increase. If an
issuer of a High Yield Security containing a redemption or call provision
exercises either provision in a declining interest rate market, a Fund would
have to replace the security, which could result in a decreased return for
shareholders. Conversely, if a Fund experiences unexpected net redemptions in a
rising interest rate market, it might be forced to sell certain securities,
regardless of investment merit. This could result in decreasing the assets to
which Fund expenses could be allocated and in a reduced rate of return for that
Fund. While it is impossible to protect entirely against this risk,
diversification of a Fund's portfolio and the Adviser's careful analysis of
prospective portfolio securities should minimize the impact of a decrease in
value of a particular security or group of securities in a Fund's portfolio.
The High Yield Securities Market. The market for below investment
grade bonds expanded rapidly in recent years and its growth paralleled a long
economic expansion. In the past, the prices of many lower-rated debt securities
declined substantially, reflecting an expectation that many issuers of such
securities might experience financial difficulties. As a result, the yields on
lower-rated debt securities rose dramatically. However, such higher yields did
not reflect the value of the income streams that holders of such securities
expected, but rather the risk that holders of such securities could lose a
substantial portion of their value as a result of the issuers' financial
restructuring or default. There can be no assurance that such declines in the
below investment grade market will not reoccur. The market for below investment
grade bonds generally is thinner and less active than that for higher quality
bonds, which may limit a Fund's ability to sell such securities at fair value in
response to changes in the economy or the financial markets. Adverse publicity
and investor perceptions, whether or not based on fundamental analysis, may also
decrease the values and liquidity of lower rated securities, especially in a
thinly traded market.
Credit Ratings. The credit ratings issued by credit rating services
may not fully reflect the true risks of an investment. For example, credit
ratings typically evaluate the safety of principal and interest payments, not
market value risk, of High Yield Securities. Also, credit rating agencies may
fail to change on a timely basis a credit rating to reflect changes in economic
or company conditions that affect a security's market value. Although the
Adviser considers ratings of recognized rating services such as Moody's and S&P,
the Adviser primarily relies on its own credit analysis, which includes a study
of existing debt, capital structure, ability to service debt and to pay
dividends, the issuer's sensitivity to economic conditions, its operating
history and the current trend of earnings. High Yield Fund may invest in
securities rated as low as D by S&P or C by Moody's or, if unrated, deemed to be
of comparable quality by the Adviser. Debt obligations with these ratings either
have defaulted or are in great danger of defaulting and are considered to be
highly speculative. See "Deep Discount Securities." The Adviser continually
monitors the investments in a Fund's portfolio and carefully evaluates whether
to dispose of or retain High Yield Securities whose credit ratings have changed.
See Appendix A for a description of corporate bond ratings.
21
<PAGE>
Liquidity and Valuation. Lower-rated bonds are typically traded
among a smaller number of broker-dealers than in a broad secondary market.
Purchasers of High Yield Securities tend to be institutions, rather than
individuals, which is a factor that further limits the secondary market. To the
extent that no established retail secondary market exists, many High Yield
Securities may not be as liquid as higher-grade bonds. A less active and thinner
market for High Yield Securities than that available for higher quality
securities may result in more volatile valuations of a Fund's holdings and more
difficulty in executing trades at favorable prices during unsettled market
conditions.
The ability of a Fund to value or sell High Yield Securities will be
adversely affected to the extent that such securities are thinly traded or
illiquid. During such periods, there may be less reliable objective information
available and thus the responsibility of Life Series Fund's Board of Trustees to
value High Yield Securities becomes more difficult, with judgment playing a
greater role. Further, adverse publicity about the economy or a particular
issuer may adversely affect the public's perception of the value, and thus
liquidity, of a High Yield Security, whether or not such perceptions are based
on a fundamental analysis.
Legislation. Provisions of the Revenue Reconciliation Act of 1989
limit a corporate issuer's deduction for a portion of the original issue
discount on "high yield discount" obligations (including certain pay-in-kind
securities). This limitation could have a materially adverse impact on the
market for certain High Yield Securities. From time to time, legislators and
regulators have proposed other legislation that would limit the use of high
yield debt securities in leveraged buyouts, mergers and acquisitions. It is not
certain whether such proposals, which also could adversely affect High Yield
Securities, will be enacted into law.
Market Risk. Blue Chip Fund, Discovery Fund, Growth Fund and Utilities
Income Fund are subject to market risk because they invest primarily in common
stocks. Market risk is the possibility that common stock prices will decline
over short or even extended periods. The U.S. stock market tends to be cyclical,
with periods when stock prices generally rise and periods when stock prices
generally decline.
Mortgage-Backed Securities
Mortgage loans made by banks, savings and loan institutions and
other lenders are often assembled into pools, the interests in which are issued
and guaranteed by an agency or instrumentality of the U.S. Government, though
not necessarily by the U.S. Government itself. Interests in such pools are
referred to herein as "mortgage-backed securities." The market value of these
securities will fluctuate as interest rates and market conditions change. In
addition, prepayment of principal by the mortgagees, which often occurs with
mortgage-backed securities when interest rates decline, can significantly change
the realized yield of these securities.
GNMA certificates are backed as to the timely payment of principal
and interest by the full faith and credit of the U.S. Government. Payments of
principal and interest on FNMA certificates are guaranteed only by FNMA itself,
not by the full faith and credit of the U.S. Government. FHLMC certificates
represent mortgages for which FHLMC has guaranteed the timely payment of
principal and interest but, like a FNMA certificate, they are not guaranteed by
the full faith and credit of the U.S. Government.
22
<PAGE>
Collateralized Mortgage Obligations and Multiclass Pass-Through
Securities. Collateralized mortgage obligations ("CMOs") are debt obligations
collateralized by mortgage loans or mortgage pass-through securities. Typically,
CMOs are collateralized by GNMA certificates or other government mortgage-backed
securities (such collateral collectively hereinafter referred to as "Mortgage
Assets"). Multiclass pass-through securities are interests in trusts that are
comprised of Mortgage Assets. Unless the context indicates otherwise, references
herein to CMOs include multiclass pass-through securities. Payments of principal
of, and interest on, the Mortgage Assets, and any reinvestment income thereon,
provide the funds to pay debt service on the CMOs or to make scheduled
distributions on the multiclass pass-through securities. CMOs in which
Government Fund may invest are issued or guaranteed by U.S. Government agencies
or instrumentalities, such as FNMA and FHLMC. See the SAI for more information
on CMOs.
Stripped Mortgage-Backed Securities. Government Fund, Target
Maturity 2007 Fund and Target Maturity 2010 Fund may invest in stripped
mortgage-backed securities ("SMBS"), which are derivative multiclass mortgage
securities. SMBS are usually structured with two classes that receive different
proportions of the interest and principal distributions from a pool of mortgage
assets. A common type of SMBS will have one class receiving most of the interest
and the remainder of the principal. In the most extreme case, one class will
receive all of the interest while the other class will receive all of the
principal. If the underlying Mortgage Assets experience greater than anticipated
prepayments of principal, the Fund may fail to fully recoup its initial
investment in these securities. The market value of the class consisting
primarily or entirely of principal payments generally is unusually volatile in
response to changes in interest rates.
Risks of Mortgage-Backed Securities. Investments in mortgage-backed
securities entail both market and prepayment risk. Fixed-rate mortgage-backed
securities are priced to reflect, among other things, current and perceived
interest rate conditions. As conditions change, market values will fluctuate. In
addition, the mortgages underlying mortgage-backed securities generally may be
prepaid in whole or in part at the option of the individual buyer. Prepayments
of the underlying mortgages can affect the yield to maturity on mortgage-backed
securities and, if interest rates decline, the prepayment may only be invested
at the then prevailing lower interest rate. Changes in market conditions,
particularly during periods of rapid or unanticipated changes in market interest
rates, may result in volatility and reduced liquidity of the market value of
certain mortgage-backed securities. CMOs and SMBS involve similar risks,
although they may be more volatile and even less liquid.
Preferred Stock. A preferred stock is a blend of the characteristics of a
bond and common stock. It can offer the higher yield of a bond and has priority
over common stock in equity ownership, but does not have the seniority of a bond
and, unlike common stock, its participation in the issuer's growth may be
limited. Preferred stock has preference over common stock in the receipt of
dividends and in any residual assets after payment to creditors should the
issuer be dissolved. Although the dividend is set at a fixed annual rate, in
some circumstances it can be changed or omitted by the issuer.
Repurchase Agreements. Repurchase agreements are transactions in which a
Fund purchases securities from a bank or recognized securities dealer and
simultaneously commits to resell the securities to the bank or dealer at an
agreed-upon date and price reflecting a market rate of interest unrelated to the
coupon rate or maturity of the purchased securities. Each Fund's risk is
23
<PAGE>
limited primarily to the ability of the seller to repurchase the securities at
the agreed-upon price upon the delivery date. See the SAI for more information
regarding repurchase agreements.
Restricted and Illiquid Securities. Each Fund, other than Cash Management
Fund, may invest up to 15% of its net assets in illiquid securities. Cash
Management Fund may invest up to 10% of its net assets in illiquid securities.
These securities include (1) securities that are illiquid due to the absence of
a readily available market or due to legal or contractual restrictions on resale
and (2) repurchase agreements maturing in more than seven days. However,
illiquid securities for purposes of this limitation do not include securities
eligible for resale to qualified institutional buyers pursuant to Rule 144A
under the Securities Act of 1933, as amended, which Life Series Fund's Board of
Trustees or the Adviser or the Subadviser, as applicable, has determined are
liquid under Board- approved guidelines. See the SAI for more information
regarding restricted and illiquid securities.
Under current guidelines of the staff of the SEC, interest-only and
principal-only classes of fixed-rate mortgage-backed securities in which
Government Fund may invest are considered illiquid. However, such securities
issued by the U.S. Government or one of its agencies or instrumentalities will
not be considered illiquid if the Adviser has determined that they are liquid
pursuant to guidelines established by Life Series Fund's Board of Trustees.
Government Fund, Target Maturity 2007 Fund and Target Maturity 2010 Fund may not
be able to sell illiquid securities when the Adviser considers it desirable to
do so or may have to sell such securities at a price lower than could be
obtained if they were more liquid. Also the sale of illiquid securities may
require more time and may result in higher dealer discounts and other selling
expenses than does the sale of securities that are not illiquid. Illiquid
securities may be more difficult to value due to the unavailability of reliable
market quotations for such securities, and investment in illiquid securities may
have an adverse impact on these Fund's net asset value.
Time Deposits. Cash Management Fund may invest in time deposits. Time
deposits are non-negotiable deposits maintained in a banking institution for a
specified period of time at a stated interest rate. For the most part, time
deposits which may be held by the Fund would not benefit from insurance from the
Bank Insurance Fund or the Savings Association Insurance Fund administered by
the FDIC.
U.S. Government Obligations. Securities issued or guaranteed as to
principal and interest by the U.S. Government include (1) U.S. Treasury
obligations which differ only in their interest rates, maturities and times of
issuance as follows: U.S. Treasury bills (maturities of one year or less), U.S.
Treasury notes (maturities of one to ten years), and U.S. Treasury bonds
(generally maturities of greater than ten years); and (2) obligations issued or
guaranteed by U.S. Government agencies and instrumentalities that are backed by
the full faith and credit of the United States, such as securities issued by the
Federal Housing Administration, GNMA, the Department of Housing and Urban
Development, the Export-Import Bank, the General Services Administration and the
Maritime Administration and certain securities issued by the Farmers Home
Administration and the Small Business Administration. The range of maturities of
U.S. Government Obligations is usually three months to thirty years.
Utilities Industry-Risk Factors. Stocks of utilities companies generally
offer dividend yields that exceed those of industrial companies and their prices
tend to be less volatile than stocks of industrial companies. However, utility
stocks can still be affected by the risks of the stock market in general, as
well as factors specific to public utilities companies.
24
<PAGE>
Many utility companies, especially electric and gas and other
energy-related utility companies, have historically been subject to the risk of
increases in fuel and other operating costs, changes in interest rates on
borrowing for capital improvement programs, changes in applicable laws and
regulations, and costs and operating constraints associated with compliance with
environmental regulations. In particular, regulatory changes with respect to
nuclear and conventionally-fueled power generating facilities could increase
costs or impair the ability of utility companies to operate such facilities or
obtain adequate return on invested capital.
Certain utilities, especially gas and telephone utilities, have in recent
years been affected by increased competition, which could adversely affect the
profitability of such utility companies. In addition, expansion by companies
engaged in telephone communication services of their non-regulated activities
into other businesses (such as cellular telephone services, data processing,
equipment retailing, computer services and financial services) has provided the
opportunity for increases in earnings and dividends at faster rates than have
been allowed in traditional regulated businesses. However, technological
innovations and other structural changes also could adversely affect the
profitability of such companies in competition with utilities companies.
Because securities issued by utility companies are particularly sensitive
to movements in interest rates, the equity securities of such companies are more
affected by movements in interest rates than are the equity securities of other
companies.
Each of these risks could adversely affect the ability and inclination of
public utilities companies to declare or pay dividends and the ability of
holders of common stock, such as the Utilities Income Fund, to realize any value
from the assets of the company upon liquidation or bankruptcy.
Variable Rate and Floating Rate Notes. Cash Management Fund may invest in
derivative variable rate and floating rate notes. Issuers of such notes include
corporations, banks, broker-dealers and finance companies. Variable rate notes
include master demand notes which are obligations permitting the holder to
invest fluctuating amounts, which may change daily without penalty, pursuant to
direct arrangements between the Fund, as lender, and the borrower. The interest
rates on these notes fluctuate from time to time. The issuer of such obligations
normally has a corresponding right, after a given period, to prepay in its
discretion the outstanding principal amount of the obligations plus accrued
interest upon a specified number of days' notice to the holders of such
obligations. See the SAI for more information on these securities.
Zero Coupon and Pay-In-Kind Securities. Zero coupon securities are debt
obligations that do not entitle the holder to any periodic payment of interest
prior to maturity or a specified date when the securities begin paying current
interest. They are issued and traded at a discount from their face amount or par
value, which discount varies depending on the time remaining until cash payments
begin, prevailing interest rates, liquidity of the security and the perceived
credit quality of the issuer. Pay-in-kind securities are those that pay interest
through the issuance of additional securities. The market prices of zero coupon
and pay-in-kind securities generally are more volatile than the prices of
securities that pay interest periodically and in cash and are likely to respond
to changes in interest rates to a greater degree than do other types of debt
securities having similar maturities and credit quality. Original issue discount
earned on zero coupon securities and the "interest" on pay-in-kind securities
must be included in a Fund's income. Thus, to continue to qualify for tax
treatment as a regulated investment company and to avoid a certain excise tax on
undistributed income, a Fund may be required to distribute as a dividend an
amount that is greater
25
<PAGE>
than the total amount of cash it actually receives. See "Taxes" in the SAI.
These distributions must be made from a Fund's cash assets or, if necessary,
from the proceeds of sales of portfolio securities. A Fund will not be able to
purchase additional income-producing securities with cash used to make such
distributions, and its current income ultimately could be reduced as a result.
Zero Coupon Securities-Risk Factors. Zero coupon securities are debt
securities and thus are subject to the same risk factors as all debt securities.
See "Debt Securities-Risk Factors." The market prices of zero coupon securities,
however, generally are more volatile than the prices of securities that pay
interest periodically and in cash and are likely to respond to changes in
interest rates to a greater degree than do other types of debt securities having
similar maturities and credit quality. As a result, the net asset value of
shares of the Target Maturity 2007 Fund and Target Maturity 2010 Fund may
fluctuate over a greater range than shares of the other Funds or mutual funds
that invest in debt obligations having similar maturities but that make current
distributions of interest.
Zero coupon securities can be sold prior to their due date in the secondary
market at their then prevailing market value, which depends primarily on the
time remaining to maturity, prevailing levels of interest rates and the
perceived credit quality of the issuer. The prevailing market value may be more
or less than the securities' value at the time of purchase. While the objective
of both the Target Maturity 2007 Fund and Target Maturity 2010 Fund is to seek a
predictable compounded investment return for investors who hold their Fund
shares until that Fund's maturity, a Fund cannot assure that it will be able to
achieve a certain level of return due to the possible necessity of having to
sell certain zero coupon securities to pay expenses, dividends or to meet
redemptions at times and at prices that might be disadvantageous or,
alternatively, the need to invest assets received from new purchases at
prevailing interest rates, which would expose a Fund to reinvestment risk. In
addition, no assurance can be given as to the liquidity of the market for
certain of these securities. Determination as to the liquidity of such
securities will be made in accordance with guidelines established by Life Series
Fund's Board of Trustees. In accordance with such guidelines, the Adviser will
monitor each Fund's investments in such securities with particular regard to
trading activity, availability of reliable price information and other relevant
information.
Portfolio Turnover. The sustained and substantial decrease in interest
rates during 1995 caused the Government Fund's portfolio to be restructered
several times. In particular, declining rates increased prepayments on
mortgage-backed securities, causing their durations to decrease. In order to
offset the decrease in duration, the Government Fund had to actively manage its
mortgage-backed holdings. This resulted in a portfolio turnover rate for the
fiscal year ended December 31, 1995 of 198% and 457% for the prior fiscal year.
A high rate of portfolio turnover generally leads to increased transaction costs
and may result in a greater number of taxable transactions. See "Allocation of
Portfolio Brokerage" in the SAI. The Target Maturity 2010 Fund currently does
not expect its annual rate of portfolio turnover to exceed 100%. See the SAI for
the other Funds' portfolio turnover rate and for more information on portfolio
turnover.
HOW TO BUY SHARES
Investments in a Fund are only available through purchases of the Policies
or the Contracts offered by First Investors Life. Policy premiums, net of
certain expenses, are paid into a unit investment trust, Separate Account B.
Purchase payments for the Contracts, net of certain expenses, are also paid into
a unit investment trust, Separate Account C. The Separate Accounts pool these
26
<PAGE>
proceeds to purchase shares of a Fund designated by purchasers of the Policies
or Contracts. Orders for the purchase of Fund shares received prior to the close
of regular trading on the New York Stock Exchange ("NYSE"), generally 4:00 P.M.
(New York City time), on any business day the NYSE is open for trading, will be
processed and shares will be purchased at the net asset value determined at the
close of regular trading on the NYSE on that day. Orders received after the
close of regular trading on the NYSE will be processed at the net asset value
determined at the close of regular trading on the NYSE on the next trading day.
See "Determination of Net Asset Value."
Due to emergency conditions, such as snow storms, the Woodbridge offices of
First Investors Corporation ("FIC"), the underwriter of Separate Accounts B and
C, and Administrative Data Management Corp. (the "Transfer Agent") may not be
open for business on a day when the NYSE is open for regular trading and,
therefore, would be unable to accept purchase orders. Should this occur,
purchase orders will be executed at the net asset value determined at the close
of regular trading on the NYSE on the next business day that these offices are
open for business.
HOW TO REDEEM SHARES
Shares of a Fund may be redeemed at the direction of Policyowners or
Contractowners, in accordance with the terms of the Policies or Contracts.
Redemptions will be made at the next determined net asset value of the
respective Fund upon receipt of a proper request for redemption or repurchase.
Payment will be made by check as soon as possible but within seven days after
presentation. However, Life Series Fund's Board of Trustees may suspend the
right of redemption or postpone the date of payment during any period when (a)
trading on the NYSE is restricted as determined by the Securities and Exchange
Commission ("SEC") or the NYSE is closed for other than weekends and holidays,
(b) the SEC has by order permitted such suspension, or (c) an emergency, as
defined by rules of the SEC, exists during which time the sale or valuation of
portfolio securities held by a Fund is not reasonably practicable.
Due to emergency conditions, such as snow storms, the Woodbridge offices of
FIC and the Transfer Agent may not be open for business on a day when the NYSE
is open for regular trading and, therefore, would be unable to accept redemption
orders. Should this occur, redemption orders will be executed at the net asset
value determined at the close of regular trading on the NYSE on the next
business day that these offices are open for business.
MANAGEMENT
Board of Trustees. Life Series Fund's Board of Trustees, as part of its
overall management responsibility, oversees various organizations responsible
for each Fund's day-to-day management.
Adviser. First Investors Management Company, Inc. supervises and manages
each Fund's investments, supervises all aspects of each Fund's operations and,
except for International Securities Fund and Growth Fund, determines each Fund's
portfolio transactions. The Adviser is a New York corporation located at 95 Wall
Street, New York, NY 10005. First Investors Consolidated Corporation ("FICC")
owns all of the voting common stock of the Adviser and all of the outstanding
stock of First Investors Corporation and the Transfer Agent. Mr. Glenn O. Head
controls FICC and, therefore, controls the Adviser.
27
<PAGE>
As compensation for its services, the Adviser receives an annual fee from
each Fund, which is payable monthly. For the fiscal year ended December 31,
1995, the advisory fees were 0.75% of average daily net assets for each of Blue
Chip Fund, Discovery Fund, Growth Fund, High Yield Fund and International
Securities Fund, 0.35% of average daily net assets, net of waiver, for each of
Cash Management Fund, Government Fund, Investment Grade Fund and Utilities
Income Fund. The Adviser waived Target Maturity 2007 Fund's advisory fee in its
entirety. As compensation for its services, the Adviser will receive a fee from
Target Maturity 2010 Fund at the rate of 0.75% of the average daily net assets
of that Fund. The SEC staff takes the position that fees of 0.75% or greater are
higher than those paid by most investment companies.
Subadviser. Wellington Management Company has been retained by the Adviser
and Life Series Fund, on behalf of International Securities Fund and Growth
Fund, as each of those Fund's investment subadviser. The Adviser has delegated
discretionary trading authority to WMC with respect to all the assets of
International Securities Fund and Growth Fund, subject to the continuing
oversight and supervision of the Adviser and the Board of Trustees. As
compensation for its services, WMC is paid by the Adviser, and not by either
Fund, a fee which is computed daily and paid monthly.
WMC, located at 75 State Street, Boston, MA 02109, is a Massachusetts
general partnership of which Robert W. Doran, Duncan M. McFarland and John R.
Ryan are Managing Partners. WMC is a professional investment counseling firm
which provides investment services to investment companies, employee benefit
plans, endowment funds, foundations and other institutions and individuals. As
of December 31, 1995, WMC held investment management authority with respect to
approximately $109.2 billion of assets. Of that amount, WMC acted as investment
adviser or subadviser to approximately 110 registered investment companies or
series of such companies, with net assets of approximately $76.1 billion as of
December 31, 1995. WMC is not affiliated with the Adviser or any of its
affiliates.
For the fiscal year ended December 31, 1995, the Subadviser's fees amounted
to 0.34% of Growth Fund's average daily net assets and 0.40% of International
Securities Fund's average daily net assets, all of which was paid by the Adviser
and not by the Funds.
Portfolio Managers. Patricia D. Poitra, Director of Equities, has been
primarily responsible for the day-to-day management of the Blue Chip Fund since
October 1994 and Discovery Fund since 1988. Ms. Poitra is assisted by a team of
portfolio analysts. Ms. Poitra has been responsible for the management of the
Special Situations Fund, the Blue Chip Fund and the equity portion of Total
Return Fund, all series of First Investors Series Fund. Ms. Poitra also is
responsible for the management of the Blue Chip Fund of Executive Investors
Trust and the U.S.A. Mid-Cap Opportunity Fund of First Investors Series Fund II,
Inc. Ms. Poitra joined FIMCO in 1985 as a Senior Equity Analyst.
George V. Ganter has been Portfolio Manager for High Yield Fund since 1989.
Mr. Ganter joined FIMCO in 1985 as a Senior Analyst. In 1986, he became
Portfolio Manager for First Investors Special Bond Fund, Inc. In 1989, he became
Portfolio Manager for First Investors High Yield Fund, Inc. and Executive
Investors High Yield Fund.
Margaret R. Haggerty is Portfolio Manager for Utilities Income Fund. Ms.
Haggerty joined FIMCO in 1990 as an analyst for several First Investors equity
funds. In addition, she monitored
28
<PAGE>
the management of several First Investors funds for which WMC was the
subadviser. In early 1993, she became Portfolio Manager for First Investors
Utilities Income Fund of First Investors Series Fund II, Inc.
Nancy Jones has been Portfolio Manager for Investment Grade Fund since its
inception in 1992. Ms. Jones joined FIMCO in 1983 as Director of Research in the
High Yield Department. In 1989, she became Portfolio Manager for First Investors
Fund For Income, Inc. Ms. Jones has been Portfolio Manager for Investment Grade
Fund of First Investors Series Fund since its inception in 1991 and has managed
the fixed income corporate securities portion of Total Return Fund of First
Investors Series Fund since 1992.
Since August 1995, WMC's Growth Investment Team, a group of equity
portfolio managers and senior investment professionals, has assumed
responsibility for managing the Growth Fund.
Since October 1995, Clark D. Wagner has been primarily responsible for the
day-to-day management of the Government Fund and the Target Maturity 2007 Fund.
Mr. Wagner will have the primary responsibility for the day-to-day management of
Target Maturity 2010 Fund. Since he joined FIMCO in 1991, Mr. Wagner has been
Portfolio Manager for all of First Investors municipal bond funds. Mr. Wagner
also is responsible for the day-to-day management of First Investors Government
Fund, Inc. In 1992, he became Chief Investment Officer of FIMCO.
Since April 1, 1994, International Securities Fund is managed by WMC's
Global Equity Strategy Group, a group of global portfolio managers and senior
investment professionals headed by Trond Skramstad. Prior to joining WMC as a
portfolio manager in 1993, Mr. Skramstad was a global portfolio manager at
Scudder, Stevens & Clark since 1990.
DETERMINATION OF NET ASSET VALUE
The net asset value of shares of each Fund is determined as of the close of
regular trading on the NYSE (generally 4:00 P.M., New York City time) on each
day the NYSE is open for trading, and at such other times as Life Series Fund's
Board of Trustees deems necessary by dividing the value of the securities held
by a Fund, plus any cash and other assets, less all liabilities, by the number
of shares outstanding. If there is no available market value, securities will be
valued at their fair value as determined in good faith pursuant to procedures
adopted by the Board of Trustees. The NYSE currently observes the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The investments in Cash Management Fund, when purchased at a discount, are
valued at amortized cost and when purchased at face value, are valued at cost
plus accrued interest.
DIVIDENDS AND OTHER DISTRIBUTIONS
For the purposes of determining dividends, the net investment income of
each Fund, other than Cash Management Fund, consists of interest and dividends,
earned discount and other income earned on portfolio securities less expenses.
Net investment income of Cash Management Fund consists of (i) accrued interest,
plus or minus (ii) all realized and unrealized gains and losses on the Fund's
securities, less (iii) accrued expenses. Dividends from net investment income
are generally
29
<PAGE>
declared and paid annually by each Fund, other than Cash Management Fund.
Dividends from net investment income are generally declared daily and paid
monthly by Cash Management Fund. Distributions of a Fund's net capital gain (the
excess of net long-term capital gain over net short-term capital loss), if any,
after deducting any available capital loss carryovers, are declared and paid
annually by each Fund, other than Cash Management Fund, which does not
anticipate realizing any such gain. International Securities Fund and High Yield
Fund also distribute any net realized gains from foreign currency transactions
with their annual distribution. All dividends and other distributions are paid
in shares of the distributing Fund at net asset value (without sales charge),
generally determined as of the close of business on the business day immediately
following the record date of such distribution.
TAXES
Each Fund has qualified, or intends to qualify, for treatment as a
regulated investment company ("RIC") under Subchapter M of the Internal Revenue
Code of 1986, as amended ("Code"), so that it will be relieved of Federal income
tax on that part of its investment company taxable income (consisting generally
of net investment income, net short-term capital gain and, for International
Securities Fund and High Yield Fund, net gains from certain foreign currency
transactions) and net capital gain that is distributed to its shareholders.
Shares of the Funds are offered only to the Separate Accounts, which are
insurance company separate accounts that fund variable annuity and variable life
insurance contracts. Under the Code, no tax is imposed on an insurance company
with respect to income of a qualifying separate account that is properly
allocable to the value of eligible variable annuity (or variable life insurance)
contracts. Please refer to "Federal Income Tax Status" in the Prospectuses of
Separate Accounts B and C for information as to the tax status of those accounts
and the holders of the Contracts or Policies.
Each Fund intends to comply with the diversification requirements imposed
by section 817(h) of the Code and the regulations thereunder. These
requirements, which are in addition to the diversification requirements imposed
on the Fund by the Investment Company Act of 1940, as amended, and Subchapter M
of the Code, place certain limitations on the assets of Separate Accounts B and
C -- and of a Fund, because section 817(h) and those regulations treat the
assets of a Fund as assets of Separate Accounts B and C -- that may be invested
in securities of a single issuer. Specifically, the regulations provide that,
except as permitted by the "safe harbor" described below, as of the end of each
calendar quarter (or within 30 days thereafter) no more than 55% of a Fund's
total assets may be represented by any one investment, no more than 70% by any
two investments, no more than 80% by any three investments and no more than 90%
by any four investments. For this purpose, all securities of the same issuer are
considered a single investment, and while each U.S. Government agency and
instrumentality is considered a separate issuer, a particular foreign government
and its agencies, instrumentalities and political subdivisions are considered
the same issuer. Section 817(h) provides, as a safe harbor, that a separate
account will be treated as being adequately diversified if the diversification
requirements under Subchapter M are satisfied and no more than 55% of the value
of the account's total assets are cash and cash items, government securities and
securities of other RICs. Failure of a Fund to satisfy the section 817(h)
requirements would result in taxation of First Investors Life and treatment of
the Contract holders and Policyowners other than as described in the
Prospectuses of Separate Accounts B and C.
30
<PAGE>
The foregoing is only a summary of some of the important Federal income tax
considerations generally affecting each Fund and its shareholders; see the SAI
for a more detailed discussion. Shareholders are urged to consult their tax
advisers.
GENERAL INFORMATION
Organization. Life Series Fund is a Massachusetts business trust organized
on June 12, 1985. The Board of Trustees of Life Series Fund has authority to
issue an unlimited number of shares of beneficial interest of separate series,
no par value, of Life Series Fund. The shares of beneficial interest of Life
Series Fund are presently divided into eleven separate and distinct series. Life
Series Fund does not hold annual shareholder meetings. If requested to do so by
the holders of at least 10% of Life Series Fund's outstanding shares, the Board
of Trustees will call a special meeting of shareholders for any purpose,
including the removal of Trustees.
Custodian. The Bank of New York, 48 Wall Street, New York, NY 10286, is
custodian of the securities and cash of each Fund, except the International
Securities Fund. Brown Brothers Harriman & Co., 40 Water Street, Boston, MA
02109, is custodian of the securities and cash of the International Securities
Fund and employs foreign sub-custodians to provide custody of the Fund's foreign
assets.
Transfer Agent. Administrative Data Management Corp., 581 Main Street,
Woodbridge, NJ 07095-1198, an affiliate of FIMCO and FIC, acts as transfer agent
for each Fund and as redemption agent for regular redemptions.
Performance. Performance information is contained in Life Series Fund's
Annual Report which may be obtained without charge by contacting First Investors
Life at 212-858-8200.
Shareholder Inquiries. Shareholder inquiries can be made by calling First
Investors Life at 212-858-8200.
Annual and Semi-Annual Reports to Shareholders. It is Life Series Fund's
practice to mail only one copy of its annual and semi-annual reports to any
address at which more than one shareholder with the same last name has indicated
that mail is to be delivered. Additional copies of the reports will be mailed if
requested in writing or by telephone by any shareholder. Life Series Fund will
ensure that an additional copy of such reports are sent to any shareholder who
subsequently changes his or her mailing address.
APPENDIX A
DESCRIPTION OF CORPORATE BOND RATINGS
STANDARD & POOR'S RATINGS GROUP
The ratings are based on current information furnished by the issuer or
obtained by S&P from other sources it considers reliable. S&P does not perform
any audit in connection with any rating and may, on occasion, rely on unaudited
financial information. The ratings may be changed, suspended, or withdrawn as a
result of changes in, or unavailability of, such information, or based on other
circumstances.
31
<PAGE>
The ratings are based, in varying degrees, on the following considerations:
1. Likelihood of default-capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in
accordance with the terms of the obligation;
2. Nature of and provisions of the obligation;
3. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization, or other arrangement under
the laws of bankruptcy and other laws affecting creditors' rights.
AAA Debt rated "AAA" has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A Debt rated "A" has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC, C Debt rated "BB," "B," "CCC," "CC" and "C" is regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal. "BB" indicates the least degree of speculation and "C" the
highest. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
BB Debt rated "BB" has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The "BB"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BBB-" rating.
B Debt rated "B" has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
"BB" or "BB-" rating.
CCC Debt rated "CCC" has a currently identifiable vulnerability to default
and is dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not
32
<PAGE>
likely to have the capacity to pay interest and repay principal. The "CCC"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "B" or "B-" rating.
CC The rating "CC" typically is applied to debt subordinated to senior debt
that is assigned an actual or implied "CCC" rating.
C The rating "C" typically is applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC-" debt rating. The "C" rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
CI The rating "CI" is reserved for income bonds on which no interest is
being paid.
D Debt rated "D" is in payment default. The "D" rating category is used
when interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The "D" rating also will be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
categories.
MOODY'S INVESTORS SERVICE, INC.
Aaa Bonds which are rated "Aaa" are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa Bonds which are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat greater than the Aaa securities.
A Bonds which are rated "A" possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the future.
Baa Bonds which are rated "Baa" are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
33
<PAGE>
Ba Bonds which are rated "Ba" are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B Bonds which are rated "B" generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa Bonds which are rated "Caa" are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca Bonds which are rated "Ca" represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C Bonds which are rated "C" are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
34
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Financial Highlights...................................................... 4
Investment Objectives and Policies........................................ 8
How to Buy Shares......................................................... 26
How to Redeem Shares...................................................... 27
Management................................................................ 27
Determination of Net Asset Value.......................................... 29
Dividends and Other Distributions......................................... 29
Taxes..................................................................... 30
General Information....................................................... 31
Appendix A................................................................ 31
Investment Adviser Custodians
First Investors Management The Bank of New York
Company, Inc. 48 Wall Street
95 Wall Street New York, NY 10286
New York, NY 10005
Brown Brothers
Subadviser Harriman & Co.
Wellington Management 40 Water Street
Company Boston, MA 02109
75 State Street
Boston, MA 02109 Auditors
Tait, Weller & Baker
Transfer Agent Two Penn Center Plaza
Administrative Data Philadelphia, PA 19102-1707
Management Corp.
581 Main Street Legal Counsel
Woodbridge, NJ 07095-1198 Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036
This Prospectus is intended to constitute an offer by Life Series Fund only of
the securities of which it is the issuer and is not intended to constitute an
offer by any Fund of the securities of any other Fund whose securities are also
offered by this Prospectus. No Fund intends to make any representation as to the
accuracy or completeness of the disclosure in this Prospectus relating to any
other Fund. No dealer, salesman or any other person has been authorized to give
any information or to make any representations other than those contained in
this Prospectus or the Statement of Additional Information, and if given or
made, such information and representation must not be relied upon as having been
authorized by Life Series Fund, First Investors Corporation, or any affiliate
thereof. This Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy any of the shares offered hereby in any state to any person
to whom it is unlawful to make such offer in such state.
<PAGE>
First Investors
Life Series Fund
- -----------------------------
Blue Chip Fund
Cash Management Fund
Discovery Fund
Government Fund
Growth Fund
High Yield Fund
International Securities Fund
Investment Grade Fund
Target Maturity 2007 Fund
Target Maturity 2010 Fund
Utilities Income Fund
Prospectus
- -----------------------------
April 29, 1996
First Investors Logo
Logo is described as follows: the arabic numeral one separated into seven
vertical segments followed by the words "First Investors."
Verticle line from top to bottom in center of page about 1/2 inch in thickness
The following language appears to the left of the above language in the printed
piece:
FIRST INVESTORS LIFE SERIES FUND
95 WALL STREET
NEW YORK, NY 10005
First Investors Logo (as described above)
A MEMBER OF THE
FIRST INVESTORS
FINANCIAL NETWORK
LIFE325
<PAGE>
FIRST INVESTORS LIFE SERIES FUND
95 Wall Street (212) 858-8200
New York, New York 10005
Statement of Additional Information
dated April 29, 1996
This is a Statement of Additional Information for First Investors Life
Series Fund ("Life Series Fund") an open-end, diversified management investment
company consisting of eleven separate investment portfolios (each, a "Fund," and
collectively, the "Funds"). The objectives of each of the Funds is set forth in
the Prospectus. There can be no assurance that any Fund will achieve its
investment objective. Investments in the Funds are made through purchases of the
Level Premium Variable Life Insurance Policies ("Policies") or the Individual
Variable Annuity Contracts ("Contracts") offered by First Investors Life
Insurance Company ("First Investors Life"). Policy premiums net of certain
expenses are paid into a unit investment trust, First Investors Life Insurance
Company Separate Account B ("Separate Account B"). Purchase payments for the
Contracts net of certain expenses also are paid into a unit investment trust,
First Investors Life Variable Annuity Fund C ("Separate Account C"). Separate
Account B and Separate Account C pool these proceeds to purchase shares of the
Fund designated by purchasers of the Policies or Contracts. Target Maturity 2007
Fund and Target Maturity 2010 Fund are only offered to Contractowners of
Separate Account C.
This Statement of Additional Information is not a prospectus. It should be
read in connection with Life Series Fund's Prospectus dated April 29, 1996,
which may be obtained free of cost from the Funds at the address or telephone
number noted above.
TABLE OF CONTENTS
-----------------
Page
----
Investment Policies........................................................ 2
Hedging and Option Income Strategies....................................... 7
Investment Restrictions.................................................... 16
Trustees and Officers...................................................... 18
Management................................................................. 19
Determination of Net Asset Value........................................... 21
Allocation of Portfolio Brokerage.......................................... 22
Taxes...................................................................... 23
General Information........................................................ 26
Appendix A................................................................. 26
Appendix B................................................................. 27
Financial Statements....................................................... 32
1
<PAGE>
INVESTMENT POLICIES
Certificates of Accrual on U.S. Treasury Securities. Government Fund may
purchase certificates, not issued by the U.S. Treasury, which evidence ownership
of future interest, principal or interest and principal payments on obligations
issued by the U.S. Treasury. The actual U.S. Treasury securities will be held by
a custodian on behalf of the certificate holder. These certificates are
purchased with original issue discount and are subject to greater fluctuations
in market value, based upon changes in market interest rates, than
income-producing securities.
Commercial Paper. Commercial paper is a promissory note issued by a
corporation to finance short-term credit needs which may either be unsecured or
backed by a letter of credit. Commercial paper includes notes, drafts or similar
instruments payable on demand or having a maturity at the time of issuance not
exceeding nine months, exclusive of days of grace or any renewal thereof. See
Appendix B for a description of commercial paper ratings.
Convertible Securities. Each Fund, other than Cash Management Fund, Target
Maturity 2007 Fund and Target Maturity 2010 Fund, may invest in convertible
securities. While no securities investment is without some risk, investments in
convertible securities generally entail less risk than the issuer's common
stock, although the extent to which such risk is reduced depends in large
measure upon the degree to which the convertible security sells above its value
as a fixed income security. The Funds investment adviser, First Investors
Management Company, Inc. ("Adviser" or "FIMCO"), or, for Growth Fund and
International Securities Fund, their subadviser, Wellington Management Company
("Subadviser" or "WMC") will decide to invest based upon a fundamental analysis
of the long-term attractiveness of the issuer and the underlying common stock,
the evaluation of the relative attractiveness of the current price of the
underlying common stock and the judgment of the value of the convertible
security relative to the common stock at current prices.
Loans of Portfolio Securities. Each Fund may loan securities to qualified
broker-dealers or other institutional investors provided: the borrower pledges
to a Fund and agrees to maintain at all times with that Fund collateral equal to
not less than 100% of the value of the securities loaned (plus accrued interest
or dividend, if any); the loan is terminable at will by a Fund; a Fund pays only
reasonable custodian fees in connection with the loan; and the Adviser or the
Subadviser monitors the creditworthiness of the borrower throughout the life of
the loan. Such loans may be terminated by a Fund at any time and a Fund may vote
the proxies if a material event affecting the investment is to occur. The market
risk applicable to any security loaned remains a risk of a Fund. The borrower
must add to the collateral whenever the market value of the securities rises
above the level of such collateral. A Fund could incur a loss if the borrower
should fail financially at a time when the value of the loaned securities is
greater than the collateral. Each Fund may make loans, together with illiquid
securities, not in excess of 10% of its total assets.
Mortgage-Backed Securities. Government Fund may invest in mortgage-backed
securities, including those representing an undivided ownership interest in a
pool of mortgage loans. Each of the certificates described below is
characterized by monthly payments to the security holder, reflecting the monthly
payments made by the mortgagees of the underlying mortgage loans. The payments
to the security holders (such as the Fund), like the payments on the underlying
loans, represent both principal and interest. Although the underlying mortgage
loans are for specified periods of time, such as twenty to thirty years, the
borrowers can, and typically do, repay them sooner. Thus, the security holders
frequently receive prepayments of principal, in addition to the principal which
is part of the regular monthly payments. A borrower is more likely to prepay a
mortgage which bears a relatively high rate of interest. Thus, in times of
declining interest rates, some higher yielding mortgages might be repaid
2
<PAGE>
resulting in larger cash payments to the Fund, and the Fund will be forced to
accept lower interest rates when that cash is used to purchase additional
securities.
Interest rate fluctuations may significantly alter the average maturity of
mortgage-backed securities, due to the level of refinancing by homeowners. When
interest rates rise, prepayments often drop, which should increase the average
maturity of the mortgage-backed security. Conversely, when interest rates fall,
prepayments often rise, which should decrease the average maturity of the
mortgage-backed security.
GNMA Certificates. Government National Mortgage Association ("GNMA")
certificates ("GNMA Certificates") are mortgage-backed securities, which
evidence an undivided interest in a pool of mortgage loans. GNMA Certificates
differ from bonds in that principal is paid back monthly by the borrower over
the term of the loan rather than returned in a lump sum at maturity. GNMA
Certificates that the Fund purchases are the "modified pass-through" type.
"Modified pass-through" GNMA Certificates entitle the holder to receive a share
of all interest and principal payments paid and owed on the mortgage pool net of
fees paid to the "issuer" and GNMA, regardless of whether or not the mortgagor
actually makes the payment.
GNMA Guarantee. The National Housing Act authorizes GNMA to guarantee
the timely payment of principal and interest on securities backed by a pool of
mortgages insured by the Federal Housing Administration ("FHA") or the Farmers'
Home Administration ("FMHA"), or guaranteed by the Department of Veteran Affairs
("VA"). The GNMA guarantee is backed by the full faith and credit of the U.S.
Government. GNMA also is empowered to borrow without limitation from the U.S.
Treasury if necessary to make any payments required under its guarantee.
Life of GNMA Certificates. The average life of a GNMA Certificate is
likely to be substantially less than the original maturity of the mortgage pools
underlying the securities. Prepayments of principal by mortgagors and mortgage
foreclosures will usually result in the return of the greater part of principal
investment long before maturity of the mortgages in the pool. The Fund normally
will not distribute principal payments (whether regular or prepaid) to its
shareholders. Rather, it will invest such payments in additional mortgage-backed
securities of the types described above. Interest received by the Fund will,
however, be distributed to shareholders. Foreclosures impose no risk to
principal investment because of the GNMA guarantee. As prepayment rates of the
individual mortgage pools vary widely, it is not possible to predict accurately
the average life of a particular issue of GNMA Certificates.
Yield Characteristics of GNMA Certificates. The coupon rate of
interest on GNMA Certificates is lower than the interest rate paid on the
VA-guaranteed or FHA-insured mortgages underlying the Certificates by the amount
of the fees paid to GNMA and the issuer. The coupon rate by itself, however,
does not indicate the yield which will be earned on GNMA Certificates. First,
Certificates may trade in the secondary market at a premium or discount. Second,
interest is earned monthly, rather than semi-annually as with traditional bonds;
monthly compounding raises the effective yield earned. Finally, the actual yield
of a GNMA Certificate is influenced by the prepayment experience of the mortgage
pool underlying it. For example, if the higher-yielding mortgages from the pool
are prepaid, the yield on the remaining pool will be reduced.
FHLMC Securities. The Federal Home Loan Mortgage Corporation ("FHLMC")
issues two types of mortgage pass-through securities, mortgage participation
certificates ("PCs") and guaranteed mortgage certificates ("GMCs"). PCs resemble
GNMA Certificates in that each PC represents a pro rata share of all interest
and principal payments made and owed on the underlying pool.
3
<PAGE>
FNMA Securities. The Federal National Mortgage Association ("FNMA")
issues guaranteed mortgage pass-through certificates ("FNMA Certificates"). FNMA
Certificates resemble GNMA Certificates in that each FNMA Certificate represents
a pro rata share of all interest and principal payments made and owed on the
underlying pool. FNMA guarantees timely payment of interest on FNMA Certificates
and the full return of principal.
Risk of foreclosure of the underlying mortgages is greater with FHLMC and
FNMA securities because, unlike GNMA Certificates, FHLMC and FNMA securities are
not guaranteed by the full faith and credit of the U.S. Government.
Participation Interests. Participation interests which may be held by
Government Fund are pro rata interests in securities held either by banks which
are members of the Federal Reserve System or securities dealers who are members
of a national securities exchange or are market makers in government securities,
which are represented by an agreement in writing between the Fund and the entity
in whose name the security is issued, rather than possession by the Fund. The
Fund will purchase participation interests only in securities otherwise
permitted to be purchased by the Fund, and only when they are evidenced by
deposit, safekeeping receipts, or book-entry transfer, indicating the creation
of a security interest in favor of the Fund in the underlying security. However,
the issuer of the participation interests to the Fund will agree in writing,
among other things: to promptly remit all payments of principal, interest and
premium, if any, to the Fund once received by the issuer; to repurchase the
participation interest upon seven days' notice; and to otherwise service the
investment physically held by the issuer, a portion of which has been sold to
the Fund.
Repurchase Agreements. A repurchase agreement essentially is a short-term
collateralized loan. The lender (a Fund) agrees to purchase a security from a
borrower (typically a broker-dealer) at a specified price. The borrower
simultaneously agrees to repurchase that same security at a higher price on a
future date (which typically is the next business day). The difference between
the purchase price and the repurchase price effectively constitutes the payment
of interest. In a standard repurchase agreement, the securities which serve as
collateral are transferred to a Fund's custodian bank. In a "tri-party"
repurchase agreement, these securities would be held by a different bank for the
benefit of the Fund as buyer and the broker-dealer as seller. In a "quad-party"
repurchase agreement, the Fund's custodian bank also is made a party to the
agreement. Each Fund may enter into repurchase agreements with banks which are
members of the Federal Reserve System or securities dealers who are members of a
national securities exchange or are market makers in government securities.
Government Fund may enter into repurchase agreements only where the debt
instrument subject to the agreement is a U.S. Government Obligation (as defined
in the Prospectus). The period of these repurchase agreements will usually be
short, from overnight to one week, and at no time will a Fund invest in
repurchase agreements with more than one year in time to maturity. The
securities which are subject to repurchase agreements, however, may have
maturity dates in excess of one year from the effective date of the repurchase
agreement. Each Fund will always receive, as collateral, securities whose market
value, including accrued interest, which will at all times be at least equal to
100% of the dollar amount invested by the Fund in each agreement, and the Fund
will make payment for such securities only upon physical delivery or evidence of
book entry transfer to the account of the custodian. If the seller defaults, a
Fund might incur a loss if the value of the collateral securing the repurchase
agreement declines, and might incur disposition costs in connection with
liquidating the collateral. In addition, if bankruptcy or similar proceedings
are commenced with respect to the seller of the security, realization upon the
collateral by a Fund may be delayed or limited.
Restricted and Illiquid Securities. No Fund, other than Cash Management
Fund, will purchase or otherwise acquire any security if, as a result, more than
15% of its net assets (taken at current value) would be invested in securities
that are illiquid by virtue of the absence of a readily available market or
4
<PAGE>
legal or contractual restrictions on resale. Cash Management Fund may invest up
to 10% of its net assets in illiquid securities. This policy includes foreign
issuers' unlisted securities with a limited trading market and repurchase
agreements maturing in more than seven days. This policy does not include
restricted securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933, as amended ("1933 Act"), which Life Series Fund's Board
of Trustees or the Adviser or Subadviser has determined under Board-approved
guidelines are liquid.
Restricted securities which are illiquid may be sold only in privately
negotiated transactions or in public offerings with respect to which a
registration statement is in effect under the 1933 Act. Such securities include
those that are subject to restrictions contained in the securities laws of other
countries. Securities that are freely marketable in the country where they are
principally traded, but would not be freely marketable in the United States,
will not be subject to each Fund's limitation on illiquid securities. Where
registration is required a Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time a Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, a Fund might obtain a less favorable price
than prevailed when it decided to sell.
In recent years, a large institutional market has developed for certain
securities that are not registered under the 1933 Act, including private
placements, repurchase agreements, commercial paper, foreign securities and
corporate bonds and notes. These instruments are often restricted securities
because the securities are either themselves exempt from registration or sold in
transactions not requiring registration. Institutional investors generally will
not seek to sell these instruments to the general public, but instead will often
depend on an efficient institutional market in which such unregistered
securities can be readily resold or on an issuer's ability to honor a demand for
repayment. Therefore, the fact that there are contractual or legal restrictions
on resale to the general public or certain institutions is not dispositive of
the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. Institutional markets for restricted securities
that might develop as a result of Rule 144A could provide both readily
ascertainable values for restricted securities and the ability to liquidate an
investment in order to satisfy share redemption orders. An insufficient number
of qualified institutional buyers interested in purchasing Rule 144A-eligible
securities held by a Fund, however, could affect adversely the marketability of
such portfolio securities and the Fund might be unable to dispose of such
securities promptly or at reasonable prices.
Stripped U.S. Treasury Securities. Government Fund, Target Maturity 2007
Fund and Target Maturity 2010 Fund may invest in separated or divided U.S.
Treasury securities. These instruments represent a single interest, or
principal, payment on a U.S. Treasury bond which has been separated from all the
other interest payments as well as the bond itself. When a Fund purchases such
an instrument, it purchases the right to receive a single payment of a set sum
at a known date in the future. The interest rate on such an instrument is
determined by the price a Fund pays for the instrument when it purchases the
instrument at a discount under what the instrument entitles a Fund to receive
when the instrument matures. The amount of the discount a Fund will receive will
depend upon the length of time to maturity of the separated U.S. Treasury
security and prevailing market interest rates when the separated U.S. Treasury
security is purchased. Separated U.S. Treasury securities can be considered a
zero coupon investment because no payment is made to a Fund until maturity. The
market values of these securities are much more susceptible to change in market
interest rates than income-producing securities.
5
<PAGE>
These securities are purchased with original issue discount and such discount is
includable as gross income to a Fund shareholder over the life of the security.
Warrants. International Securities Fund may purchase warrants, which are
instruments that permit the Fund to acquire, by subscription, the capital stock
of a corporation at a set price, regardless of the market price for such stock.
Warrants may be either perpetual or of limited duration. There is a greater risk
that warrants might drop in value at a faster rate than the underlying stock.
The Fund may invest up to 15% of its total assets in warrants.
When-Issued Securities. Growth Fund, High Yield Fund, International
Securities Fund, Investment Grade Fund, Target Maturity 2007 Fund, Target
Maturity 2010 Fund and Utilities Income Fund may each invest up to 5% of their
net assets in securities issued on a when-issued or delayed delivery basis. A
Fund generally would not pay for such securities or start earning interest on
them until they are issued or received. However, when a Fund purchases debt
obligations on a when- issued basis, it assumes the risks of ownership,
including the risk of price fluctuation, at the time of purchase, not at the
time of receipt. Failure of the issuer to deliver a security purchased by a Fund
on a when-issued basis may result in such Fund incurring a loss or missing an
opportunity to make an alternative investment. When a Fund enters into a
commitment to purchase securities on a when-issued basis, it establishes a
separate account with its custodian consisting of cash or liquid high-grade debt
securities equal to the amount of the Fund's commitment, which are valued at
their fair market value. If on any day the market value of this segregated
account falls below the value of a Fund's commitment, the Fund will be required
to deposit additional cash or qualified securities into the account until equal
to the value of the Fund's commitment. When the securities to be purchased are
issued, a Fund will pay for the securities from available cash, the sale of
securities in the segregated account, sales of other securities and, if
necessary, from sale of the when-issued securities themselves although this is
not ordinarily expected. Securities purchased on a when-issued basis are subject
to the risk that yields available in the market, when delivery takes place, may
be higher than the rate to be received on the securities a Fund is committed to
purchase. Sale of securities in the segregated account or other securities owned
by a Fund and when-issued securities may cause the realization of a capital gain
or loss.
Portfolio Turnover. Although each Fund generally will not invest for
short-term trading purposes, portfolio securities may be sold from time to time
without regard to the length of time they have been held when, in the opinion of
the Adviser or the Subadviser investment considerations warrant such action.
Portfolio turnover rate is calculated by dividing (1) the lesser of purchases or
sales of portfolio securities for the fiscal year by (2) the monthly average of
the value of portfolio securities owned during the fiscal year. A 100% turnover
rate would occur if all the securities in a Fund's portfolio, with the exception
of securities whose maturities at the time of acquisition were one year or less,
were sold and either repurchased or replaced within one year. A high rate of
portfolio turnover generally leads to transaction costs and may result in a
greater number of taxable transactions. See "Portfolio Transactions." The rate
of portfolio turnover for the fiscal year ended December 31, 1994 for the Blue
Chip Fund, Discovery Fund, Growth Fund, High Yield Fund, International
Securities Fund, Investment Grade Fund and Utilities Income Fund was 82%, 53%,
40%, 50%, 36%, 15% and 31%, respectively. The rate of portfolio turnover for the
fiscal year ended December 31, 1995 for the Blue Chip Fund, Discovery Fund,
Growth Fund, High Yield Fund, International Securities Fund, Investment Grade
Fund, Target Maturity 2007 Fund and Utilities Income Fund was 26%, 78%, 64%,
57%, 45%, 26%, 28% and 17%, respectively. See the Prospectus for the portfolio
turnover rate for the Government Fund and the expected portfolio turnover rate
for Target Maturity 2010 Fund.
6
<PAGE>
HEDGING AND OPTION INCOME STRATEGIES
The Subadviser may engage in certain options and futures strategies to
hedge International Securities Fund's portfolio and in other circumstances
permitted by the Commodities Futures Trading Commission ("CFTC") and may engage
in certain options strategies to enhance income. The instruments described below
are sometimes referred to collectively as "Hedging Instruments." Certain special
characteristics of and risks associated with using Hedging Instruments are
discussed below. In addition to the non-fundamental investment guidelines
(described below) adopted by Life Series Fund's Board of Trustees to govern the
Fund's investments in Hedging Instruments, use of these instruments is subject
to the applicable regulations of the Securities and Exchange Commission ("SEC"),
the several options and futures exchanges upon which options and futures
contracts are traded, the CFTC and various state regulatory authorities. In
addition, the Fund's ability to use Hedging Instruments will be limited by tax
considerations. See "Taxes."
International Securities Fund may buy and sell put and call options on
stock indices, domestic or foreign securities and foreign currencies that are
traded on national securities exchanges or in the over-the-counter ("OTC")
market to enhance income or to hedge the Fund's portfolio. International
Securities Fund also may write put and covered call options to generate
additional income through the receipt of premiums, purchase put options in an
effort to protect the value of a security that it owns against a decline in
market value and purchase call options in an effort to protect against an
increase in the price of securities (or currencies) it intends to purchase.
International Securities Fund also may purchase put and call options to offset
previously written put and call options of the same series. International
Securities Fund also may write put and call options to offset previously
purchased put and call options of the same series. Other than to offset closing
transactions, International Securities Fund will write only covered call
options, including options on futures contracts.
International Securities Fund may buy and sell financial futures contracts
and options thereon that are traded on a commodities exchange or board of trade
for hedging purposes. These futures contracts and related options may be on
stock indices, financial indices, debt securities or foreign currencies.
International Securities Fund also may enter into forward currency contracts.
Participation in the options or futures markets involves investment risks
and transaction costs to which International Securities Fund would not be
subject absent the use of these strategies. If the Subadviser's prediction of
movements in the direction of the securities and interest rate markets are
inaccurate, the adverse consequences to the Fund may leave the Fund in a worse
position than if such strategies were not used. The Fund might not employ any of
the strategies described below, and there can be no assurance that any strategy
will succeed. The use of these strategies involve certain special risks,
including (1) dependence on the Subadviser's ability to predict correctly
movements in the direction of interest rates and securities prices, (2)
imperfect correlation between the price of options, futures contracts and
options thereon and movements in the prices of the securities being hedged, (3)
the fact that skills needed to use these strategies are different from those
needed to select portfolio securities, (4) the possible absence of a liquid
secondary market for any particular instrument at any time, and (5) the possible
need to defer closing out certain hedged positions to avoid adverse tax
consequences.
Cover for Hedging and Option Income Strategies. The Fund will not use
leverage in its hedging and option income strategies. In the case of each
transaction entered into as a hedge, the Fund will hold securities, currencies
or other options or futures positions whose values are expected to offset
("cover") its obligations hereunder. The Fund will not enter into a hedging or
option income strategy that exposes the Fund to an obligation to another party
unless it owns either (1) an offsetting ("covered") position in securities,
currencies or other options or futures contracts or (2) cash, receivables and
short-
7
<PAGE>
term debt securities with a value sufficient at all times to cover its
potential obligations. The Fund will comply with guidelines established by the
SEC with respect to coverage of hedging and option income strategies by mutual
funds and, if required, will set aside cash and/or liquid, high-grade debt
securities in a segregated account with its custodian in the prescribed amount.
Securities, currencies or other options or futures positions used for cover and
securities held in a segregated account cannot be sold or closed out while the
hedging or option income strategy is outstanding unless they are replaced with
similar assets. As a result, there is a possibility that the use of cover or
segregation involving a large percentage of the Fund's assets could impede
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
Options Strategies. International Securities Fund may purchase call options
on securities that the Subadviser intends to include in the Fund's portfolio in
order to fix the cost of a future purchase. Call options also may be used as a
means of participating in an anticipated price increase of a security. In the
event of a decline in the price of the underlying security, use of this strategy
would serve to limit the Fund's potential loss on the option strategy to the
option premium paid; conversely, if the market price of the underlying security
increases above the exercise price and the Fund either sells or exercises the
option, any profit eventually realized will be reduced by the premium. The Fund
may purchase put options in order to hedge against a decline in the market value
of securities held in its portfolio. The put option enables the Fund to sell the
underlying security at the predetermined exercise price; thus the potential for
loss to the Fund below the exercise price is limited to the option premium paid.
If the market price of the underlying security is higher than the exercise price
of the put option, any profit the Fund realizes on the sale of the security will
be reduced by the premium paid for the put option less any amount for which the
put option may be sold.
International Securities Fund may write covered call options on securities
to increase income in the form of premiums received from the purchasers of the
options. Because it can be expected that a call option will be exercised if the
market value of the underlying security increases to a level greater than the
exercise price, the Fund will write covered call options on securities generally
when the Subadviser believes that the premium received by the Fund, plus
anticipated appreciation in the market price of the underlying security up to
the exercise price of the option, will be greater than the total appreciation in
the price of the security. The strategy may be used to provide limited
protection against a decrease in the market price of the security in an amount
equal to the premium received for writing the call option less any transaction
costs. Thus, if the market price of the underlying security held by the Fund
declines, the amount of such decline will be offset wholly or in part by the
amount of the premium received by the Fund. If, however, there is an increase in
the market price of the underlying security and the option is exercised, the
Fund will be obligated to sell the security at less than its market value. The
Fund gives up the ability to sell the portfolio securities used to cover the
call option while the call option is outstanding. Such securities may also be
considered illiquid in the case of OTC options written by the Fund, and
therefore subject to the Fund's limitation on investments in illiquid
securities. See "Restricted and Illiquid Securities." In addition, the Fund
could lose the ability to participate in an increase in the value of such
securities above the exercise price of the call option because such an increase
would likely be offset by an increase in the cost of closing out the call option
(or could be negated if the buyer chose to exercise the call option at an
exercise price below the securities' current market value).
International Securities Fund may purchase put and call options and write
covered call options on stock indices in much the same manner as the more
traditional equity and debt options discussed above, except that stock index
options may serve as a hedge against overall fluctuations in the securities
markets (or a market sector) rather than anticipated increases or decreases in
the value of a particular security. A stock index assigns relative values to the
stock included in the index and fluctuates with changes in such values. Stock
index options operate in the same way as the more traditional equity options,
except that
8
<PAGE>
settlements of stock index options are effected with cash payments and do not
involve delivery of securities. Thus, upon settlement of a stock index option,
the purchaser will realize, and the writer will pay, an amount based on the
difference between the exercise price and the closing price of the stock index.
The effectiveness of hedging techniques using stock index options will depend on
the extent to which price movements in the stock index selected correlate with
price movements of the securities in which the Fund invests.
International Securities Fund may write put options. A put option gives the
purchaser of the option the right to sell, and the writer (seller) the
obligation to buy, the underlying security at the exercise price during the
option period. So long as the obligation of the writer continues, the writer may
be assigned an exercise notice by the broker-dealer through which such option
was sold, requiring it to make payment of the exercise price against delivery of
the underlying security. The operation of put options in other respects,
including their related risks and rewards, is substantially identical to that of
call options. The Fund may write covered put options in circumstances when the
Subadviser believes that the market price of the securities will not decline
below the exercise price less the premiums received. If the put option is not
exercised, the Fund will realize income in the amount of the premium received.
This technique could be used to enhance current return during periods of market
uncertainty. The risk in such a transaction would be that the market price of
the underlying security would decline below the exercise price less the premiums
received, in which case the Fund would expect to suffer a loss.
Currently, many options on equity securities and options on currencies are
exchange-traded, whereas options on debt securities are primarily traded on the
OTC market. Although many options on currencies are exchange-traded, the
majority of such options are traded on the OTC market. Exchange- traded options
in the U.S. are issued by a clearing organization affiliated with the exchange
on which the option is listed which, in effect, guarantees completion of every
exchange-traded option transaction. In contrast, OTC options are contracts
between the Fund and the opposite party with no clearing organization guarantee.
Thus, when the Fund purchases an OTC option, it relies on the dealer from which
it has purchased the OTC option to make or take delivery of the securities
underlying the option. Failure by the dealer to do so would result in the loss
of the premium paid by the Fund as well as the loss of the expected benefit of
the transaction.
Foreign Currency Options and Related Risks. International Securities Fund
may take positions in options on foreign currencies in order to hedge against
the risk of foreign exchange rate fluctuations on foreign securities the Fund
holds in its portfolio or intends to purchase. For example, if the Fund enters
into a contract to purchase securities denominated in a foreign currency, it
could effectively fix the maximum U.S. dollar cost of the securities by
purchasing call options on that foreign currency. Similarly, if the Fund held
securities denominated in a foreign currency, and anticipated a decline in the
value of that currency against the U.S. dollar, the Fund could hedge against
such a decline by purchasing a put option on the currency involved. The Fund's
ability to establish and close out positions in such options is subject to the
maintenance of a liquid secondary market. Although the Fund will not purchase or
write such options unless and until, in the Subadviser's opinion, the market for
them has developed sufficiently to ensure that the risks in connection with such
options are not greater than the risks in connection with the underlying
currency, there can be no assurance that a liquid secondary market will exist
for a particular option at any specific time. In addition, options on foreign
currencies are affected by all of those factors that influence foreign exchange
rates and investments generally.
The value of a foreign currency option depends upon the value of the
underlying currency relative to the U.S. dollar. As a result, the price of the
option position may vary with changes in the value of either or both currencies
and may have no relationship to the investment merits of a foreign security.
Because foreign currency transactions occurring in the interbank market involve
substantially larger
9
<PAGE>
amounts than those that may be involved in the use of foreign currency options,
investors may be disadvantaged by having to deal in an odd lot market for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis. Quotation
information available is generally representative of very large transactions in
the interbank market and thus may not reflect relatively smaller transactions
where rates may be less favorable. The interbank market in foreign currencies is
a global, around-the-clock market. To the extent that the U.S. options markets
are closed while the markets for the underlying currencies remain open,
significant price and rate movements may take place in the underlying markets
that cannot be reflected in the options markets until they reopen.
Options Guidelines. In view of the risks involved in using options, Life
Series Fund's Board of Trustees has adopted non-fundamental investment
guidelines to govern the Fund's use of options that may be modified by the Board
without shareholder vote: (1) options will be purchased or written only when the
Subadviser believes that there exists a liquid secondary market in such options;
and (2) the Fund may not purchase a put or call option if the value of the
option's premium, when aggregated with the premiums on all other options held by
the Fund, exceeds 5% of the Fund's total assets. This policy does not limit risk
to 5% of the Fund's assets.
Special Characteristics and Risks of Options Trading. International
Securities Fund may effectively terminate its right or obligation under an
option by entering into a closing transaction. If the Fund wishes to terminate
its obligation to sell securities or currencies under a call option it has
written, the Fund may purchase a call option of the same series (that is, a call
option identical in its terms to the call option previously written); this is
known as a closing purchase transaction. Conversely, in order to terminate its
right to purchase or sell specified securities or currencies under a call or put
option it has purchased, the Fund may write an option of the same series, as the
option held; this is known as a closing sale transaction. Closing transactions
essentially permit the Fund to realize profits or limit losses on its options
positions prior to the exercise or expiration of the option. Whether a profit or
loss is realized from a closing transaction depends on the price movement of the
underlying index, security or currency and the market value of the option.
The value of an option position will reflect, among other things, the
current market price of the underlying security, stock index or currency, the
time remaining until expiration, the relationship of the exercise price to the
market price, the historical price volatility of the underlying security, stock
index or currency and general market conditions. For this reason, the successful
use of options depends upon the Subadviser's ability to forecast the direction
of price fluctuations in the underlying securities or currency markets or, in
the case of stock index options, fluctuations in the market sector represented
by the index selected.
Options normally have expiration dates of up to nine months. Unless an
option purchased by the Fund is exercised or unless a closing transaction is
effected with respect to that position, a loss will be realized in the amount of
the premium paid and any transaction costs.
A position in an exchange-listed option may be closed out only on an
exchange that provides a secondary market for identical options. The ability to
establish and close out positions on the exchanges is subject to the maintenance
of a liquid secondary market. Although the Fund intends to purchase or write
only those exchange-traded options for which there appears to be a liquid
secondary market, there is no assurance that a liquid secondary market will
exist for any particular option at any particular time.
10
<PAGE>
Closing transactions may be effected with respect to options traded in the OTC
markets (currently the primary markets for options on debt securities) only by
negotiating directly with the other party to the option contract or in a
secondary market for the option if such market exists. Although the Fund will
enter into OTC options only with dealers that agree to enter into, and that are
expected to be capable of entering into, closing transactions with the Fund,
there is no assurance that the Fund will be able to liquidate an OTC option at a
favorable price at any time prior to expiration. In the event of insolvency of
the opposite party, the Fund may be unable to liquidate an OTC option.
Accordingly, it may not be possible to effect closing transactions with respect
to certain options, with the result that the Fund would have to exercise those
options that it has purchased in order to realize any profit. With respect to
options written by the Fund, the inability to enter into a closing transaction
may result in material losses to the Fund. For example, because the Fund must
maintain a covered position with respect to any call option it writes, the Fund
may not sell the underlying assets used to cover an option during the period it
is obligated under the option. This requirement may impair the Fund's ability to
sell a portfolio security or make an investment at a time when such a sale or
investment might be advantageous.
Stock index options are settled exclusively in cash. If the Fund purchases
an option on a stock index, the option is settled based on the closing value of
the index on the exercise date. Thus, a holder of a stock index option who
exercises it before the closing index value for that day is available runs the
risk that the level of the underlying index may subsequently change. For
example, in the case of a call option, if such a change causes the closing index
value to fall below the exercise price of the option on the index, the
exercising holder will be required to pay the difference between the closing
index value and the exercise price of the option.
The Fund's activities in the options markets may result in a higher
portfolio turnover rate and additional brokerage costs; however, the Fund also
may save on commissions by using options as a hedge rather than buying or
selling individual securities in anticipation or as a result of market
movements.
Futures Strategies. International Securities Fund may engage in futures
strategies to attempt to reduce the overall investment risk that would normally
be expected to be associated with ownership of the securities in which it
invests. The Fund may sell foreign currency futures contracts to hedge against
possible variations in the exchange rate of the foreign currency in relation to
the U.S. dollar. In addition, the Fund may sell foreign currency futures
contracts when the Subadviser anticipates a general weakening of foreign
currency exchange rates that could adversely affect the market value of the
Fund's foreign securities holdings. In this case, the sale of futures contracts
on the underlying currency may reduce the risk to the Fund of a reduction in
market value caused by foreign currency variations and, by so doing, provide an
alternative to the liquidation of securities positions and resulting transaction
costs. When the Subadviser anticipates a significant foreign exchange rate
increase while intending to invest in a security denominated in that currency,
the Fund may purchase a foreign currency futures contract to hedge against that
increase pending completion of the anticipated transaction. Such a purchase
would serve as a temporary measure to protect the Fund against any rise in the
foreign exchange rate that may add additional costs to acquiring the foreign
security position. The Fund also may purchase call or put options on foreign
currency futures contracts to obtain a fixed foreign exchange rate at limited
risk. The Fund may purchase a call option on a foreign currency futures contract
to hedge against a rise in the foreign exchange rate while intending to invest
in a security denominated in that currency. The Fund may purchase put options or
write call options on foreign currency futures contracts as a partial hedge
against a decline in the foreign exchange rates or the value of its foreign
portfolio securities.
International Securities Fund may sell stock index futures contracts in
anticipation of a general market or market sector decline that could adversely
affect the market value of the Fund's portfolio. To the extent that a portion of
the Fund's portfolio correlates with a given stock index, the sale of futures
11
<PAGE>
contracts on that index could reduce the risks associated with a market decline
and thus provide an alternative to the liquidation of securities positions. The
Fund may purchase a stock index futures contract if a significant market or
market sector advance is anticipated. Such a purchase would serve as a temporary
substitute for the purchase of individual stocks, which stocks may then be
purchased in an orderly fashion. This strategy may minimize the effect of all or
part of an increase in the market price of securities that the Fund intends to
purchase. A rise in the price of the securities should be partially or wholly
offset by gains in the futures position.
International Securities Fund may purchase a call option on a stock index
future to hedge against a market advance in equity securities that the Fund
plans to purchase at a future date. The Fund may write covered call options on
stock index futures as a partial hedge against a decline in the prices of stocks
held in the Fund's portfolio. The Fund also may purchase put options on stock
index futures contracts.
International Securities Fund may use interest rate futures contracts and
options thereon to hedge the debt portion of its portfolio against changes in
the general level of interest rates. The Fund may purchase an interest rate
futures contract when it intends to purchase debt securities but has not yet
done so. This strategy may minimize the effect of all or part of an increase in
the market price of those securities because a rise in the price of the
securities prior to their purchase may either be offset by an increase in the
value of the futures contract purchased by the Fund or avoided by taking
delivery of the debt securities under the futures contract. Conversely, a fall
in the market price of the underlying debt securities may result in a
corresponding decrease in the value of the futures position. The Fund may sell
an interest rate futures contract in order to continue to receive the income
from a debt security, while endeavoring to avoid part or all of the decline in
the market value of that security that would accompany an increase in interest
rates.
International Securities Fund may purchase a call option on an interest
rate futures contract to hedge against a market advance in debt securities that
the Fund plans to acquire at a future date. The Fund also may write covered call
options on interest rate futures contracts as a partial hedge against a decline
in the price of debt securities held in the Fund's portfolio or purchase put
options on interest rate futures contracts in order to hedge against a decline
in the value of debt securities held in the Fund's portfolio.
Special Risks Related to Foreign Currency Futures Contracts and Related
Options. Buyers and sellers of foreign currency futures contracts are subject to
the same risks that apply to the use of futures generally. In addition, there
are risks associated with foreign currency futures contracts and their use as a
hedging device similar to those associated with options on foreign currencies
described above. Further, settlement of a foreign currency futures contract must
occur within the country issuing the underlying currency. Thus, International
Securities Fund must accept or make delivery of the underlying foreign currency
in accordance with any U.S. or foreign restrictions or regulations regarding the
maintenance of foreign banking arrangements by U.S. residents and may be
required to pay any fees, taxes or charges associated with such delivery that
are assessed in the issuing country.
Options on foreign currency futures contracts may involve certain
additional risks. Trading of such options is relatively new. The ability to
establish and close out positions on such options is subject to the maintenance
of a liquid secondary market. To reduce this risk, International Securities Fund
will not purchase or write options on foreign currency futures contracts unless
and until, in the Subadviser's opinion, the market for such options has
developed sufficiently that the risks in connection with such options are not
greater than the risks in connection with transactions in the underlying futures
contracts. Compared to the purchase or sale of foreign currency futures
contracts, the purchase of call or put options
12
<PAGE>
thereon involves less potential risk to International Securities Fund because
the maximum amount at risk is the premium paid for the options (plus transaction
costs). However, there may be circumstances when the purchase of a call or put
option on a foreign currency futures contract would result in a loss, such as
when there is no movement in the price of the underlying currency or futures
contract.
Futures Guidelines. In view of the risks involved in using futures
strategies described below, Life Series Fund's Board of Trustees has adopted
non-fundamental investment guidelines to govern the Fund's use of such
investments that may be modified by the Board without shareholder vote. Foreign
currency options traded on a commodities exchange are included and governed by
these guidelines. The Fund will not purchase or sell futures contracts or
related options if, immediately thereafter, the sum of the amount of initial
margin deposits on the Fund's existing futures positions and margin and premiums
paid for related options would exceed 5% of the market value of the Fund's total
assets. The value of all futures sold will not exceed the total market value of
the Fund's portfolio. This policy does not limit risk to 5% of the Fund's
assets.
Special Characteristics and Risks of Futures Trading. No price is paid upon
entering into futures contracts. Instead, upon entering into a futures contract,
International Securities Fund is required to deposit with its custodian in a
segregated account in the name of the futures broker through which the
transaction is effected an amount of cash, U.S. Government securities or other
liquid, high-grade debt instruments generally equal to 3%-5% or less of the
contract value. This amount is known as "initial margin." When writing a call or
put option on a futures contract, margin also must be deposited in accordance
with applicable exchange rules. Initial margin on futures contracts is in the
nature of a performance bond or good-faith deposit that is returned to the Fund
upon termination of the transaction, assuming all obligations have been
satisfied. Under certain circumstances, such as periods of high volatility, the
Fund may be required by an exchange to increase the level of its initial margin
payment. Additionally, initial margin requirements may be increased generally in
the future by regulatory action. Subsequent payments, called "variation margin,"
to and from the broker, are made on a daily basis as the value of the futures
position varies, a process known as "marking to market." Variation margin does
not involve borrowing to finance the futures transactions, but rather represents
a daily settlement of the Fund's obligation to or from a clearing organization.
Holders and writers of futures positions and options thereon can enter into
offsetting closing transactions, similar to closing transactions on options on
securities, by selling or purchasing, respectively, a futures position or
options position with the same terms as the position or option held or written.
Positions in futures contracts and options thereon may be closed only on an
exchange or board of trade providing a secondary market for such futures or
options.
Under certain circumstances, futures exchanges may establish daily limits
on the amount that the price of a futures contract or related option may vary
either up or down from the previous day's settlement price. Once the daily limit
has been reached in a particular contract, no trades may be made that day at a
price beyond that limit. The daily limit governs only price movements during a
particular trading day and therefore does not limit potential losses because
prices could move to the daily limit for several consecutive trading days with
little or no trading and thereby prevent prompt liquidation of unfavorable
positions. In such event, it may not be possible for the Fund to close a
position and, in the event of adverse price movements the Fund would have to
make daily cash payments of variation margin (except in the case of purchased
options). However, in the event futures contracts have been used to hedge
portfolio securities, such securities will not be sold until the contracts can
be terminated. In such circumstances, an increase in the price of the
securities, if any, may partially or completely offset losses on the futures
contract. However, there is no guarantee that the price of the securities will,
in fact, correlate with the price movements in the contracts and thus provide an
offset to losses on the contracts.
13
<PAGE>
Successful use by International Securities Fund of futures contracts and
related options will depend upon the Subadviser's ability to predict movements
in the direction of the overall securities, currency and interest rate markets,
which requires different skills and techniques than predicting changes in the
prices of individual securities. Moreover, futures contracts relate not to the
current price level of the underlying instrument but to the anticipated levels
at some point in the future. There is, in addition, the risk that the movements
in the price of the futures contract or related option will not correlate with
the movements in prices of the securities or currencies being hedged. In
addition, if the Fund has insufficient cash, it may have to sell assets from its
portfolio to meet daily variation margin requirements. Any such sale of assets
may or may not be made at prices that reflect the rising market. Consequently,
the Fund may need to sell assets at a time when such sales are disadvantageous
to the Fund. If the price of the futures contract or related option moves more
than the price of the underlying securities or currencies, the Fund will
experience either a loss or a gain on the futures contract or related option
that may or may not be completely offset by movements in the price of the
securities or currencies that are the subject of the hedge.
In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between price movements in the futures or related
option position and the securities or currencies being hedged, movements in the
prices of futures contracts and related options may not correlate perfectly with
movements in the prices of the hedged securities or currencies because of price
distortions in the futures market. As a result, a correct forecast of general
market trends may not result in successful hedging through the use of futures
contracts and related options over the short term.
Positions in futures contracts and related options may be closed out only
on an exchange or board of trade that provides a secondary market for such
futures contracts or related options. Although the Fund intends to purchase or
sell futures contracts and related options only on exchanges or boards of trade
where there appears to be a liquid secondary market, there is no assurance that
such a market will exist for any particular contract or option at any particular
time. In such event, it may not be possible to close a futures or option
position and, in the event of adverse price movements, the Fund would continue
to be required to make variation margin payments.
Like options on securities and currencies, options on futures contracts
have a limited life. The ability to establish and close out options on futures
will be subject to the development and maintenance of liquid secondary markets
on the relevant exchanges or boards of trade. There can be no certainty that
liquid secondary markets for all options on futures contracts will develop.
Purchasers of options on futures contracts pay a premium in cash at the
time of purchase. This amount and the transaction costs are all that is at risk.
Sellers of options on a futures contract, however, must post initial margin and
are subject to additional margin calls that could be substantial in the event of
adverse price movements. In addition, although the maximum amount at risk when
the Fund purchases an option is the premium paid for the option and the
transaction costs, there may be circumstances when the purchase of an option on
a futures contract would result in a loss to the Fund when the use of a futures
contract would not, such as when there is no movement in the level of the
underlying stock index or the value of the securities or currencies being
hedged.
The Fund's activities in the futures and related options markets may result
in a higher portfolio turnover rate and additional transaction costs in the form
of added brokerage commissions; however, the Fund also may save on commissions
by using futures and related options as a hedge rather than buying or selling
individual securities or currencies in anticipation or as a result of market
movements.
14
<PAGE>
Forward Currency Contracts. International Securities Fund may use forward
currency contracts to protect against uncertainty in the level of future
exchange rates. The Fund will not speculate with forward currency contracts or
foreign currency exchange rates.
International Securities Fund may enter into forward currency contracts
with respect to specific transactions. For example, when the Fund enters into a
contract for the purchase or sale of a security denominated in a foreign
currency, or when the Fund anticipates the receipt in a foreign currency of
dividend or interest payments on a security that it holds, the Fund may desire
to "lock-in" the U.S. dollar price of the security or the U.S. dollar equivalent
of such payment, as the case may be, by entering into a forward contract for the
purchase or sale, for a fixed amount of U.S. dollars or foreign currency, of the
amount of foreign currency involved in the underlying transaction. The Fund will
thereby be able to protect itself against a possible loss resulting from an
adverse change in the relationship between the currency exchange rates during
the period between the date on which the security is purchased or sold, or on
which the payment is declared, and the date of which such payments are made or
received.
International Securities Fund also may use forward currency contracts in
connection with portfolio positions to lock in the U.S. dollar value of those
positions, to increase the Fund's exposure to foreign currencies that its
Subadviser believes may rise in value relative to the U.S. dollar or to shift
the Fund's exposure to foreign currency fluctuations from one country to
another. This investment practice generally is referred to as "cross-hedging"
when another foreign currency is used.
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward contract
is entered into and the date it matures. Accordingly, it may be necessary for
the Fund to purchase additional foreign currency on the spot (i.e., cash) market
and bear the expense of such purchase if the market value of the security is
less than the amount of foreign currency the Fund is obligated to deliver and if
a decision is made to sell the security and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some of the
foreign currency received upon the sale of the portfolio security if its market
value exceeds the amount of foreign currency the Fund is obligated to deliver.
The projection of short-term currency market movements is extremely difficult,
and the successful execution of a short-term hedging strategy is highly
uncertain. Forward contracts involve the risk that anticipated currency
movements will not be accurately predicted, causing the Fund to sustain losses
on these contracts and transactions costs. The Fund may enter into formal
contracts or maintain a net exposure to such contracts only if the Fund
maintains cash, U.S. Government securities or liquid, high-grade debt securities
in a segregated account in an amount not less than the value of the Fund's total
assets committed to the consummation of the contract, as marked to market daily.
At or before the maturity date of a forward contract requiring
International Securities Fund to sell a currency, the Fund may either sell a
portfolio security and use the sale proceeds to make delivery of the currency or
retain the security and offset its contractual obligation to deliver the
currency by purchasing a second contract pursuant to which the Fund will obtain,
on the same maturity date, the same amount of the currency that it is obligated
to deliver. Similarly, the Fund may close out a forward contract requiring it to
purchase a specified currency by entering into a second contract entitling it to
sell the same amount of the same currency on the maturity date of the first
contract. The Fund would realize a gain or loss as a result of entering into an
offsetting forward currency contract under either circumstance to the extent the
exchange rate or rates between the currencies involved moved between the
execution dates of the first contract and the offsetting contract. There can be
no assurance that new forward contracts or offsets always will be available for
the Fund. Forward currency contracts also involve a risk that the other party to
the contract may fail to deliver currency when due, which could result in
substantial
15
<PAGE>
losses to the Fund. The cost to the Fund of engaging in forward currency
contracts varies with factors such as the currencies involved, the length of the
contract period and the market conditions then prevailing. Because forward
currency contracts are usually entered into on a principal basis, no fees or
commissions are involved.
INVESTMENT RESTRICTIONS
The investment restrictions set forth below have been adopted by the Life
Series Fund and, unless identified as non-fundamental policies, may not be
changed without the affirmative vote of a majority of the outstanding voting
securities of Life Series Fund. As provided in the Investment Company Act of
1940, as amended ("1940 Act"), a "vote of a majority of the outstanding voting
securities of the Fund" means the affirmative vote of the lesser of (1) more
than 50% of the outstanding shares of the Fund or (2) 67% or more of the shares
of the Fund present at a meeting, if more than 50% of the outstanding shares are
represented at the meeting in person or by proxy. Except with respect to
borrowing, changes in values of a particular Fund's assets will not cause a
violation of the following investment restrictions so long as percentage
restrictions are observed by that Fund at the time it purchases any security.
(1) Borrow money, except as a temporary or emergency measure in an
amount not to exceed 5% of the value of its total assets.
(2) Pledge assets, except that a Fund may pledge its assets to secure
borrowings made in accordance with paragraph (1) above, provided the Fund
maintains asset coverage of at least 300% for pledged assets; provided, however,
this limitation will not prohibit escrow, collateral or margin arrangements in
connection with the International Securities Fund's use of options, futures
contracts or options on futures contracts.
(3) Make loans, except by purchase of debt obligations and through
repurchase agreements. However, Life Series Fund's Board of Trustees may, on the
request of broker-dealers or other unaffiliated institutional investors which
they deem qualified, authorize a Fund to loan securities to cover the borrower's
short position; provided, however, the borrower pledges to the Fund and agrees
to maintain at all times with the Fund cash collateral equal to not less than
100% of the value of the securities loaned, the loan is terminable at will by
the Fund, the Fund receives interest on the loan as well as any distributions
upon the securities loaned, the Fund retains voting rights associated with the
securities, the Fund pays only reasonable custodian fees in connection with the
loan, and the Adviser or Subadviser monitors the creditworthiness of the
borrower throughout the life of the loan; provided further, that such loans will
not be made if the value of all loans, repurchase agreements with more than
seven days to maturity, and other illiquid assets is greater than an amount
equal to 10% of the Fund's total assets; provided, however, securities that have
legal or contractual restrictions as to resale but have a readily available
market are not deemed illiquid for purposes of this limitation.
(4) Purchase, with respect to only 75% of a Fund's assets, the
securities of any issuer (other than the U.S. Government) if, as a result
thereof, (a) more than 5% of the Fund's total assets (taken at current value)
would be invested in the securities of such issuer; or (b) the Fund would hold
more than 10% of any class of securities (including any class of voting
securities) of such issuer (for this purpose, all debt obligations of an issuer
maturing in less than one year are treated as a single class of securities).
(5) Purchase securities on margin (but a Fund may obtain such credits
as may be necessary for the clearance of purchases and sales of securities);
provided, however, that International
16
<PAGE>
Securities Fund may make margin deposits in connection with the use of options,
futures contracts and options on futures contracts.
(6) Make short sales of securities.
(7) Buy or sell puts, calls, straddles or spreads, except, as to
International Securities Fund, with respect to options on securities, securities
indices and foreign currencies or on futures contracts.
(8) Purchase the securities of other investment companies or
investment trusts, except as they may be acquired as part of a merger,
consolidation or acquisition of assets.
(9) Underwrite securities issued by other persons except to the extent
that, in connection with the disposition of its portfolio investments, it may be
deemed to be an underwriter under Federal securities laws.
(10) Buy or sell real estate, commodities, or commodity contracts
(unless acquired as a result of ownership of securities) or interests in oil,
gas or mineral explorations; provided, however, a Fund may invest in securities
secured by real estate or interests in real estate, and International Securities
Fund may purchase or sell options on securities, securities indices and foreign
currencies, stock index futures, interest rate futures and foreign currency
futures, as well as options on such futures contracts.
(11) Purchase the securities of an issuer if such purchase, at the
time thereof, would cause more than 5% of the value of a Fund's total assets to
be invested in securities of issuers which, including predecessors, have a
record of less than three years' continuous operation.
The following investment restrictions are not fundamental and can be
changed without prior shareholder approval:
1. A Fund will not invest in any securities of any issuer if, to the
knowledge of the Fund, any officer, director or trustee of Life Series Fund or
of the Adviser owns more than 1/2 of 1% of the outstanding securities of such
issuer, and such officers, directors or trustees who own more than 1/2 of 1% own
in the aggregate more than 5% of the outstanding securities of such issuer.
2. A Fund will not purchase any security if, as a result, more than 15%
(10% for Cash Management Fund) of its net assets would be invested in illiquid
securities, including repurchase agreements not entitling the holder to payment
of principal and interest within seven days and any securities that are illiquid
by virtue of legal or contractual restrictions on resale or the absence of a
readily available market. The Trustees, or the Funds' investment adviser acting
pursuant to authority delegated by the Trustees, may determine that a readily
available market exists for securities eligible for resale pursuant to Rule 144A
under the Securities Act of 1933, as amended, or any other applicable rule, and
therefore that such securities are not subject to the foregoing limitation.
3. Fundamental investment restriction (4)(a) above shall apply to 100% of
Cash Management Fund's assets.
17
<PAGE>
TRUSTEES AND OFFICERS
The following table lists the Trustees and executive officers of Life
Series Fund, their age, business address and principal occupations during the
past five years. Unless otherwise noted, an individual's business address is 95
Wall Street, New York, New York 10005.
Glenn O. Head*+ (70), President and Trustee. Chairman of the Board and Director,
Administrative Data Management Corp. ("ADM"), FIMCO, Executive Investors
Management Company, Inc. ("EIMCO"), First Investors Corporation ("FIC"),
Executive Investors Corporation ("EIC") and First Investors Consolidated
Corporation ("FICC").
James J. Coy (82), Trustee, 90 Buell Lane, East Hampton, NY 11937. Retired;
formerly Senior Vice President, James Talcott, Inc. (financial institution).
Roger L. Grayson* (39), Trustee. Director, FIC and FICC; President and Director,
First Investors Resources, Inc.; Commodities Portfolio Manager.
Kathryn S. Head*+ (40), Trustee, 581 Main Street, Woodbridge, NJ 07095.
President, FICC, EIMCO, FIMCO and ADM; Vice President, Chief Financial Officer
and Director, FIC and EIC; President and Director, First Financial Savings Bank,
S.L.A.
Rex R. Reed (74), Trustee, 1381 Fairway Oaks, Kiawah Island, SC 29455. Retired;
formerly Senior Vice President, American Telephone & Telegraph Company.
Herbert Rubinstein (74), Trustee, 145 Elm Drive, Roslyn, NY 11576. Retired;
formerly President, Belvac International Industries, Ltd. and President, Central
Dental Supply.
James M. Srygley (63), Trustee, 33 Hampton Road, Chatham, NJ 07982. Principal,
Hampton Properties, Inc. (property investment company).
John T. Sullivan* (64), Trustee and Chairman of the Board; Director, FIMCO, FIC,
FICC and ADM; Of Counsel, Hawkins, Delafield & Wood, Attorneys.
Robert F. Wentworth (66), Trustee, RR1, Box 2554, Upland Downs Road, Manchester
Center, VT 05255. Retired; formerly financial and planning executive with
American Telephone & Telegraph Company.
Joseph I. Benedek (38), Treasurer, 581 Main Street, Woodbridge, NJ 07095.
Treasurer, FIC FIMCO, EIMCO and EIC; Comptroller and Treasurer, FICC.
Concetta Durso (61), Vice President and Secretary. Vice President, FIMCO, EIMCO
and ADM; Assistant Vice President and Assistant Secretary, FIC and EIC.
- ----------
* These Trustees may be deemed to be "interested persons," as defined in the
1940 Act.
+ Mr. Glenn O. Head and Ms. Kathryn S. Head are father and daughter.
All of the officers and Trustees hold identical or similar positions with
13 other registered investment companies in the First Investors Family of Funds.
Mr. Head is also an officer and/or Director of First Investors Asset Management
Company, Inc., First Investors Credit Funding Corporation, First
18
<PAGE>
Investors Leverage Corporation, First Investors Realty Company, Inc., First
Investors Resources, Inc., N.A.K. Realty Corporation, Real Property Development
Corporation, Route 33 Realty Corporation, First Investors Life Insurance
Company, First Financial Savings Bank, S.L.A., First Investors Credit
Corporation and School Financial Management Services, Inc. Ms. Head is also an
officer and/or Director of First Investors Life Insurance Company, First
Investors Credit Corporation, School Financial Management Services, Inc., First
Investors Credit Funding Corporation, N.A.K. Realty Corporation, Real Property
Development Corporation, First Investors Leverage Corporation and Route 33
Realty Corporation.
The following table lists compensation paid to the Trustees by Life Series
Fund for the fiscal year ended December 31, 1995.
<TABLE>
<CAPTION>
Pension or Estimated Total Compensation
Aggregate Retirement Benefits Annual Benefits From First Investors
Compensation Accrued as Part of Upon Family of Funds
Trustee From Fund* Fund Expenses Retirement Paid to Trustees*
- ------- ------------ -------------------- ----------------- -----------------
<S> <C> <C> <C> <C>
James J. Coy $2,400 $-0- $-0- $37,200
Roger L. Grayson -0- -0- -0- -0-
Glenn O. Head -0- -0- -0- -0-
Kathryn S. Head -0- -0- -0- -0-
F. William Ortman, Jr.** 1,000 -0- -0- 15,500
Rex R. Reed 2,400 -0- -0- 37,200
Herbert Rubinstein 2,400 -0- -0- 37,200
James M. Srygley*** 2,400 -0- -0- 37,200
John T. Sullivan -0- -0- -0- -0-
Robert F. Wentworth 2,400 -0- -0- 37,200
</TABLE>
* Compensation to officers and interested Trustees of the Life Series Fund is
paid by the Adviser. In addition, compensation to non-interested Trustees
of the Life Series Fund is currently voluntarily paid by the Adviser.
** For the period January 1, 1995 through September 21, 1995.
*** For the period January 19, 1995 through December 31, 1995.
MANAGEMENT
Adviser. Investment advisory services to the Funds are provided by First
Investors Management Company, Inc. pursuant to an Investment Advisory Agreement
("Advisory Agreement") dated June 13, 1994. The Advisory Agreement was approved
by the Board of Trustees of Life Series Fund, including a majority of the
Trustees who are not parties to the Advisory Agreement or "interested persons"
(as defined in the 1940 Act) of any such party ("Independent Trustees"), in
person at a meeting called for such purpose and by a majority of the
shareholders of each Fund.
Pursuant to the Advisory Agreement, FIMCO shall supervise and manage each
Fund's investments, determine each Fund's portfolio transactions and supervise
all aspects of each Fund's operations, subject to review by the Trustees. The
Advisory Agreement also provides that FIMCO shall provide Life Series Fund and
each Fund with certain executive, administrative and clerical personnel, office
facilities and supplies, conduct the business and details of the operation of
Life Series Fund and each Fund and assume certain expenses thereof, other than
obligations or liabilities of the Funds. The Advisory Agreement may be
terminated at any time without penalty by the Trustees or by a majority of the
outstanding voting securities of the applicable Fund, or by FIMCO, in each
instance on not less than 60 days' written notice, and shall automatically
terminate in the event of its assignment (as defined in the 1940 Act). The
19
<PAGE>
Advisory Agreement also provides that it will continue in effect, with respect
to a Fund, for a period of over two years only if such continuance is approved
annually either by the Trustees or by a majority of the outstanding voting
securities of that Fund, and, in either case, by a vote of a majority of the
Independent Trustees voting in person at a meeting called for the purpose of
voting on such approval.
Under the Advisory Agreement, each Fund pays the Adviser an annual fee,
paid monthly, according to the following schedules:
Annual
Average Daily Net Assets Rate
- ------------------------ ----
Up to $250 million................................................... 0.75%
In excess of $250 million up to $500 million......................... 0.72
In excess of $500 million up to $750 million......................... 0.69
Over $750 million.................................................... 0.66
The Adviser has an Investment Committee composed of George V. Ganter,
Margaret Haggerty, Glenn O. Head, Nancy W. Jones, Patricia D. Poitra, Michael
O'Keefe, Richard Guinnessey and Clark D. Wagner. The Committee usually meets
weekly to discuss the composition of the portfolio of each Fund and to review
additions to and deletions from the portfolios.
Each Fund bears all expenses of its operations other than those incurred by
the Adviser under the terms of its advisory agreement. Fund expenses include,
but are not limited to: the advisory fee; shareholder servicing fees and
expenses; custodian fees and expenses; legal and auditing fees; expenses of
communicating to existing shareholders, including preparing, printing and
mailing prospectuses and shareholder reports to such shareholders; and proxy and
shareholder meeting expenses.
For the fiscal year ended December 31, 1993, Blue Chip Fund's advisory fees
were $214,369, Cash Management Fund's advisory fees were $19,805, net of a
waiver of $29,519, Discovery Fund's advisory fees were $114,996, Government
Fund's advisory fees were $24,232, net of a waiver of $27,694, Growth Fund's
advisory fees were $154,256, High Yield Fund's advisory fees were $205,249,
International Securities Fund's advisory fees were $112,984 and Investment Grade
Fund's advisory fees were $25,954, net of a waiver of $29,662. For the period
November 15, 1993 (commencement of operations) through December 31, 1993,
Utilities Income Fund's advisory fees in the amount of $205 were waived in their
entirety.
For the fiscal year ended December 31, 1994, Blue Chip Fund's advisory fees
were $286,413, Cash Management Fund's advisory fees were $12,024, net of a
waiver of $17,258, Discovery Fund's advisory fees were $194,546, Government
Fund's advisory fees were $27,509, net of a waiver of $31,440, Growth Fund's
advisory fees were $218, 813, High Yield Fund's advisory fees were $236,209,
International Securities Fund's advisory fees were $202,739, Investment Grade
Fund's advisory fees were $38,655, net of a waiver of $44,177 and Utilities
Income Fund's advisory fees were $4,772, net of a waiver of $16,163.
For the fiscal year ended December 31, 1995, Blue Chip Fund's advisory fees
were $399,774, Cash Management Fund's advisory fees were $14,398, net of a
waiver of $16,454, Discovery Fund's advisory fees were $301,852, Government
Fund's advisory fees were $31,084, net of a waiver of $35,526, Growth Fund's
advisory fees were $311,003, High Yield Fund's advisory fees were $279,016,
International Securities Fund's advisory fees were $262,203, Investment Grade
Fund's advisory fees
20
<PAGE>
were $48,182, net of a waiver of $55,066, Target Maturity 2007 Fund's advisory
fees were $25,339, all of which were waived, and Utilities Income Fund's
advisory fees were $31,583, net of a waiver of $36,095.
Subadviser. Wellington Management Company has been retained by the Adviser
and Life Series Fund as the investment subadviser to International Securities
Fund and Growth Fund under a subadvisory agreement dated June 13, 1994
("Subadvisory Agreement"). The Subadvisory Agreement was approved by the Board
of Trustees of Life Series Fund, including a majority of Independent Trustees in
person at a meeting called for such purpose and by a majority of the
shareholders of International Securities Fund and Growth Fund.
The Subadvisory Agreement provides that it will continue, with respect to a
Fund, for a period of more than two years from the date of execution only so
long as such continuance is approved annually by either the Board of Trustees or
a majority of the outstanding voting securities of that Fund and, in either
case, by a vote of a majority of the Independent Trustees voting in person at a
meeting called for the purpose of voting on such approval. The Subadvisory
Agreement provides that it will terminate automatically, with respect to a Fund,
if assigned or upon the termination of the Advisory Agreement, and that it may
be terminated without penalty by the Board of Trustees or a vote of a majority
of the outstanding voting securities of that Fund, upon not more than 60 days'
written notice, or by the Adviser or Subadviser on not more than 30 days'
written notice. The Subadvisory Agreement provides that WMC will not be liable
for any error of judgment or for any loss suffered by a Fund or the Adviser in
connection with the matters to which the Subadvisory Agreement relates, except a
loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation or from willful misfeasance, bad faith, gross negligence or
reckless disregard of duty.
Under the Subadvisory Agreement, the Adviser will pay to the Subadviser a
fee at an annual rate of 0.400% of the average daily net assets of each Fund up
to and including $50 million; 0.275% of the average daily net assets in excess
of $50 million up to and including $150 million, 0.225% of the average daily net
assets in excess of $150 million up to and including $500 million; and 0.200% of
the average daily net assets in excess of $500 million. This fee is calculated
separately for each of the Fund.
For the fiscal year ended December 31, 1993, the Subadviser received
$60,245 for its services with respect to the International Securities Fund and
$82,270 for its services with respect to the Growth Fund. For the fiscal year
ended December 31, 1994, the Subadviser received $108,127 for its services with
respect to the International Securities Fund and $116,700 for its services with
respect to the Growth Fund. For the fiscal year ended December 31, 1995, the
Subadviser received $139,842 for its service with respect to International
Securities Fund and $141,153 for its services with respect to Growth Fund.
DETERMINATION OF NET ASSET VALUE
Except as provided herein, a security listed or traded on an exchange or
the Nasdaq national market system is valued at its last sale price on the
exchange or market system where the security is primarily traded, and lacking
any sales on a particular day, the security is valued at the mean between the
closing bid and asked prices on that day. Each security traded in the OTC market
(including securities listed on exchanges whose primary market is believed to be
OTC) is valued at the mean between the closing bid and asked prices based upon
quotes furnished by a market maker for such securities. The U.S. Government
securities in which the Funds invest are traded primarily in the OTC markets. In
the absence of market quotations, a Fund will determine the value of bonds based
upon quotes furnished by market
21
<PAGE>
makers, if available, or in accordance with the procedures described herein. In
that connection, the Board of Trustees has determined that a Fund may use an
outside pricing service. The pricing service uses quotations obtained from
investment dealers or brokers for the particular securities being evaluated,
information with respect to market transactions in comparable securities and
other available information in determining value. Short-term debt securities
that mature in 60 days or less are valued at amortized cost if their original
term to maturity from the date of purchase was 60 days or less, or by amortizing
their value on the 61st day prior to maturity if their term to maturity from the
date of purchase exceeded 60 days, unless the Board of Trustees determines that
such valuation does not represent fair value. Securities for which market
quotations are not readily available are valued at fair value as determined in
good faith by the Board of Trustees.
"When-issued securities" are reflected in the assets of a Fund as of the
date the securities are purchased. Such investments are valued thereafter at the
mean between the most recent bid and asked prices obtained from recognized
dealers in such securities. For valuation purposes, quotations of foreign
securities in foreign currencies are converted into U.S. dollar equivalents
using the foreign exchange equivalents in effect. The investments in Cash
Management Fund when purchased at a discount, are valued at amortized cost and
when purchased at face value, are valued at cost plus accrued interest.
ALLOCATION OF PORTFOLIO BROKERAGE
Purchases and sales of portfolio securities by Target Maturity 2007 Fund,
Target Maturity 2010 Fund, Investment Grade Fund, Government Fund and High Yield
Fund generally are principal transactions. In principal transactions, portfolio
securities are normally purchased directly from the issuer or from an
underwriter or market maker for the securities. There will usually be no
brokerage commissions paid by a Fund for such purchases. Purchases from
underwriters will include the underwriter's commission or concession and
purchases from dealers serving as market makers will include the spread between
the bid and asked price. Certain money market instruments may be purchased
directly from an issuer, in which no commissions or discounts are paid. Fixed
income securities are generally purchased on a "net" basis with dealers acting
as principal for their own accounts without a stated commission, although the
price of the security usually includes a profit to the dealer.
A Fund may deal in securities which are not listed on a national securities
exchange or the NASDAQ national market system but are traded in the OTC market.
A Fund also may purchase listed securities through the "third market." When
transactions are executed in the OTC market, a Fund seeks to deal with the
primary market makers, but when advantageous it utilizes the services of
brokers.
In effecting portfolio transactions, the Adviser or the Subadviser seeks
best execution of trades either (1) at the most favorable and competitive rate
of commission charged by any broker or member of an exchange, or (2) with
respect to agency transactions, at a higher rate of commission if reasonable in
relation to brokerage and research services provided to a Fund or the Adviser or
the Subadviser by such member or broker. Such services may include, but are not
limited to, any one or more of the following: information as to the availability
of securities for purchase or sale, statistical or factual information or
opinions pertaining to investments. The Adviser or the Subadviser may use
research and services provided to it by brokers in servicing all the funds in
the First Investors Group of Funds; however, not all such services may be used
by the Adviser or the Subadviser in connection with a Fund. No portfolio orders
are placed with an affiliated broker, nor does any affiliated broker participate
in these commissions.
The Adviser or the Subadviser may combine transaction orders placed on
behalf of any of the Funds, any other fund in the First Investors Group of
Funds, and any Fund of Executive Investors Trust and First Investors Life, for
the purpose of negotiating brokerage commissions or obtaining a more
22
<PAGE>
favorable transaction price; and where appropriate, securities purchased or sold
may be allocated, in terms of price and amount, to a Fund according to the
proportion that the size of the transaction order actually placed by a Fund
bears to the aggregate size of the transaction orders simultaneously made by
other participants in the transaction.
Brokerage commissions for the fiscal year ended December 31, 1993 are as
follows: Blue Chip Fund paid $43,811 in brokerage commissions. Of that amount,
$1,040 was paid in brokerage commissions to brokers who furnished research
services on portfolio transactions in the amount of $659,709. International
Securities Fund paid $40,600 in brokerage commissions. Of that amount, $354 was
paid in brokerage commissions to brokers who furnished research services on
portfolio transactions in the amount of $158,358. Discovery Fund paid $21,875 in
brokerage commissions. Of that amount, $8,062 was paid in brokerage commissions
to brokers who furnished research services on portfolio transactions in the
amount of $2,203,374. Growth Fund paid $27,301 in brokerage commissions. Of that
amount, $11,318 was paid in brokerage commissions to brokers who furnished
research services on portfolio transactions in the amount of $7,444,277. High
Yield Fund paid brokerage commissions of $268. Of that amount, $176 was paid in
brokerage commissions to brokers who furnished research services on portfolio
transactions in the amount of $42,600. For the same period, all other Fund of
the Fund did not pay brokerage commissions. For the period November 15 through
December 31, 1993, Utilities Income Fund paid $1,284.
Brokerage commissions for the fiscal year ended December 31, 1994 are as
follows: Blue Chip Fund, International Securities Fund, Discovery Fund and
Utilities Income Fund paid $96,570, $69,494, $34,423 and $14,811, respectively,
in brokerage commissions. Growth Fund paid $37,740 in brokerage commissions. Of
that amount $7,571 was paid in brokerage commissions to brokers who furnished
research services on portfolio transactions in the amount of $4,437,997. High
Yield Fund paid $586 in brokerage commissions, all of which was paid to brokers
who furnished research services on portfolio transactions in the amount of
$16,600. For the same period, all other Fund of Life Series Fund did not pay
brokerage commissions.
Brokerage commissions for the fiscal year ended December 31, 1995 are as
follows: Blue Chip Fund paid $57,716 in brokerage commissions. Of that amount,
$32,661 was paid in brokerage commissions to brokers who furnished research
services on portfolio transactions in the amount of $18,258,789. International
Securities Fund paid $103,347 in brokerage commissions, none of which was paid
to brokers who furnished research services. Discovery Fund paid $58,774 in
brokerage commissions. Of that amount, $30,757 was in brokerage commissions to
brokers who furnished research services on portfolio transactions in the amount
of $12,229,787. Growth Fund paid $70,984 in brokerage commissions. Of that
amount, $51,652 was paid in brokerage commissions to brokers who furnished
research services on portfolio transactions in the amount of $31,898,514.
Utilities Income Fund paid $23,084 in brokerage commissions. Of that amount,
$11,949 was paid in brokerage commissions to brokers who furnished research
services on portfolio transactions in the amount of $4,773,646. For the same
period, all other Funds of Life Series Fund did not pay brokerage commissions.
TAXES
Each Fund is treated as a separate corporation for Federal income tax
purposes. In order to continue to qualify for treatment as a regulated
investment company ("RIC") under the Code, a Fund must distribute to its
shareholders for each taxable year at least 90% of its investment company
taxable income (consisting generally of net investment income, net short-term
capital gain and, for International Securities Fund and High Yield Fund, net
gains from certain foreign currency transactions) ("Distribution
23
<PAGE>
Requirement") and must meet several additional requirements. For each Fund these
requirements include the following: (1) the Fund must derive at least 90% of its
gross income each taxable year from dividends, interest, payments with respect
to securities loans and gains from the sale or other disposition of securities
or, for International Securities Fund and High Yield Fund, foreign currencies,
or other income (including for International Securities Fund, gains from
options, futures or forward contracts) derived with respect to its business of
investing in securities or, for International Securities Fund and High Yield
Fund, those currencies ("Income Requirement"); (2) the Fund must derive less
than 30% of its gross income each taxable year from the sale or other
disposition of securities or any of the following, that were held for less than
three months--options, futures or forward contracts (other than those on foreign
currencies), or, for International Securities Fund and High Yield Fund, foreign
currencies (or options, futures or forward contracts thereon) that are not
directly related to its principal business of investing in securities (or, for
International Securities Fund, options and futures with respect thereto)
("Short-Short Limitation"); (3) at the close of each quarter of the Fund's
taxable year, at least 50% of the value of its total assets must be represented
by cash and cash items, U.S. Government securities, securities of other RICs and
other securities, with those other securities limited, in respect of any one
issuer, to an amount that does not exceed 5% of the value of the Fund's total
assets and that does not represent more than 10% of the issuer's outstanding
voting securities; and (4) at the close of each quarter of the Fund's taxable
year, not more than 25% of the value of its total assets may be invested in
securities (other than U.S. Government securities or the securities of other
RICs) of any one issuer.
Dividends and interest received by International Securities Fund may be
subject to income, withholding or other taxes imposed by foreign countries that
would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors. If more than 50% of the value of
International Securities Fund's total assets at the close of its taxable year
consists of securities of foreign corporations, it will be eligible to, and may,
file an election with the IRS that will enable its shareholders, in effect, to
receive the benefit of the foreign tax credit with respect to any foreign income
taxes paid by it. Pursuant to the election, International Securities Fund will
treat those taxes as dividends paid to its shareholders and each shareholder
will be required to (1) include in gross income, and treat as paid by him, his
proportionate share of those taxes, (2) treat his share of those taxes and of
any dividend paid by the Fund that represents income from foreign sources as his
own income from those sources and (3) either deduct the taxes deemed paid by him
in computing his taxable income or, alternatively, use the foregoing information
in calculating the foreign tax credit against his Federal income tax.
International Securities Fund will report to its shareholders shortly after each
taxable year their respective shares of the income from sources within, and
taxes paid to, foreign countries if it makes this election.
International Securities Fund and Discovery Fund may invest in the stock of
"passive foreign investment companies" ("PFICs"). A PFIC is a foreign
corporation that, in general, meets either of the following tests: (1) at least
75% of its gross income is passive or (2) an average of at least 50% of its
assets produce, or are held for the production of, passive income. Under certain
circumstances, if a Fund holds stock of a PFIC, it will be subject to Federal
income tax on a portion of any "excess distribution" received on the stock or of
any gain on disposition of the stock (collectively "PFIC income"), plus interest
thereon, even if a Fund distributes the PFIC income as a taxable dividend to its
shareholders. The balance of the PFIC income will be included in a Fund's
investment company taxable income and, accordingly, will not be taxable to it to
the extent that income is distributed to its shareholders.
If International Securities Fund or Discovery Fund invests in a PFIC and
elects to treat the PFIC as a "qualified electing fund," then in lieu of the
foregoing tax and interest obligation, a Fund would be required to include in
income each year its pro rata share of the qualified electing fund's annual
24
<PAGE>
ordinary earnings and net capital gain (the excess of net long-term capital gain
over net short-term capital loss) -- which probably would have to be distributed
to satisfy the Distribution Requirement and avoid imposition of the Excise Tax
- -- even if those earnings and gain were not received by a Fund. In most
instances it will be very difficult, if not impossible, to make this election
because of certain requirements thereof.
Pursuant to proposed regulations, open-end RICs, such as Life Series Fund,
would be entitled to elect to "mark-to-market" their stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each taxable
year the excess, as of the end of that year, of the fair market value of such a
PFIC's stock over the adjusted basis in that stock (including mark-to-market
gain for each prior year for which an election was in effect).
For International Securities Fund, gains from the disposition of foreign
currencies (except certain gains that may be excluded by future regulations)
will qualify as permissible income under the Income Requirement. However, income
from such a Fund's disposition of foreign currencies that are not directly
related to its principal business of investing in securities will be subject to
the Short-Short Limitation if they are held for less than three months.
High Yield Fund, Government Fund, Investment Grade Fund, Target Maturity
2007 Fund, Target Maturity 2010 Fund and Utilities Income Fund may acquire zero
coupon securities issued with original issue discount. As a holder of those
securities, each Fund must include in its income the original issue discount
that accrues on the securities during the taxable year, even if it receives no
corresponding payment on them during the year. Similarly, each Fund must include
in its gross income securities it receives as "interest" on pay-in-kind
securities. Because each Fund annually must distribute substantially all of its
investment company taxable income, including any original issue discount and
other non-cash income, to satisfy the Distribution Requirement and avoid
imposition of the Excise Tax, each Fund may be required in a particular year to
distribute as a dividend an amount that is greater than the total amount of cash
it actually receives. Those distributions will be made from each Fund's cash
assets or from the proceeds of sales of portfolio securities, if necessary. Each
Fund may realize capital gains or losses from those sales, which would increase
or decrease its investment company taxable income and/or net capital gain. In
addition, any such gains may be realized on the disposition of securities held
for less than three months. Because of the Short-Short Limitation, any such
gains would reduce the Fund's ability to sell other securities, or options,
futures or certain forward contracts held for less than three months that it
might wish to sell in the ordinary course of its portfolio management.
The use of hedging strategies, such as selling and purchasing options and
futures contracts and entering into forward contracts, involves complex rules
that will determine for income tax purposes the character and timing of
recognition of the gains and losses International Securities Fund realizes in
connection therewith. For International Securities Fund and High Yield Fund,
income from foreign currencies (except certain gains therefrom that may be
excluded by future regulations), and income from transactions in options,
futures and forward contracts derived by such Fund with respect to its business
of investing in securities or foreign currencies, will qualify as permissible
income under the Income Requirement. However, income from the Fund's disposition
of options and futures contracts (other than those on foreign currencies) will
be subject to the Short-Short Limitation if they are held for less than three
months. Income from the Fund's disposition of foreign currencies and options,
futures and forward contracts that are not directly related to its principal
business of investing in securities (or options and futures with respect to
securities) also will be subject to the Short-Short Limitation if they are held
for less than three months.
25
<PAGE>
If International Securities Fund satisfies certain requirements, then any
increase in value of a position that is part of a "designated hedge" will be
offset by any decrease in value (whether realized or not) of the offsetting
hedging position during the period of the hedge for purposes of determining
whether the Fund satisfies the Short-Short Limitation. Thus, only the net gain
(if any) from the designated hedge will be included in gross income for purposes
of that limitation. The Fund intends that, when it engages in hedging
strategies, they will qualify for this treatment, but at the present time it is
not clear whether this treatment will be available for all of the Fund's hedging
transactions. To the extent this treatment is not available, the Fund may be
forced to defer the closing out of certain options, futures or forward contracts
beyond the time when it otherwise would be advantageous to do so, in order for
the Fund to continue to qualify as a RIC.
GENERAL INFORMATION
Audits and Reports. The accounts of the Fund are audited twice a year by
Tait, Weller & Baker, independent certified public accountants. Shareholders
receive semi-annual and annual reports of the Fund, including audited financial
statements, and a list of securities owned.
Shareholder Liability. Life Series Fund is organized as an entity known as
a "Massachusetts business trust." Under Massachusetts law, shareholders of such
a trust may, under certain circumstances, be held personally liable for the
obligations of Life Series Fund. The Declaration of Trust however, contains, an
express disclaimer of shareholder liability for acts or obligations of Life
Series Fund and requires that notice of such disclaimer be given in each
agreement, obligation or instrument entered into or executed by Life Series Fund
or the Trustees. The Declaration of Trust provides for indemnification out of
the property of Life Series Fund of any shareholder held personally liable for
the obligations of Life Series Fund. The Declaration of Trust also provides that
Life Series Fund shall, upon request, assume the defense of any claim made
against any shareholder for any act or obligation of Life Series Fund and
satisfy any judgment thereon. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to circumstances
in which Life Series Fund itself would be unable to meet its obligations. The
Adviser believes that, in view of the above, the risk of personal liability to
shareholders is immaterial and extremely remote. The Declaration of Trust
further provides that the Trustees will not be liable for errors of judgment or
mistakes of fact or law, but nothing in the Declaration of Trust protects a
Trustee against any liability to which he would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office. Life Series Fund may have an
obligation to indemnify Trustees and officers with respect to litigation.
APPENDIX A
DESCRIPTION OF COMMERCIAL PAPER RATINGS
STANDARD & POOR'S RATINGS GROUP
Standard & Poor's Rating Group ("S&P") commercial paper rating is a current
assessment of the likelihood of timely payment of debt considered short-term in
the relevant market. Ratings are graded into several categories, ranging from
"A-1" for the highest quality obligations to "D" for the lowest.
A-1 This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus (+) designation.
26
<PAGE>
MOODY'S INVESTORS SERVICE, INC.
Moody's Investors Service, Inc. ("Moody's") short-term debt ratings are
opinions of the ability of issuers to repay punctually senior debt obligations
which have an original maturity not exceeding one year. Obligations relying upon
support mechanisms such as letters-of-credit and bonds of indemnity are excluded
unless explicitly rated.
Prime-1 Issuers (or supporting institutions) rated Prime-1 (P-1) have a
superior ability for repayment of senior short-term debt obligations. P-1
repayment ability will often be evidenced by many of the following
characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
- Well-established access to a range of financial markets and assured
sources of alternate liquidity.
APPENDIX B
DESCRIPTION OF MUNICIPAL NOTE RATINGS
STANDARD & POOR'S
S&P's note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in 3 years or less will likely receive a note rating.
Notes maturing beyond 3 years will most likely receive a long-term debt rating.
The following criteria will be used in making that assessment.
- Amortization schedule (the larger the final maturity relative to other
maturities the more likely it will be treated as a note).
- Source of Payment (the more dependent the issue is on the market for its
refinancing, the more likely it will be treated as a note).
Note rating symbols are as follows:
SP-1 Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be given a
plus (+) designation.
MOODY'S INVESTORS SERVICE, INC.
Moody's ratings for state and municipal notes and other short-term loans
are designated Moody's Investment Grade (MIG). This distinction is in
recognition of the difference between short-term credit risk and long-term risk.
27
<PAGE>
MIG-1. Loans bearing this designation are of the best quality, enjoying
strong protection from established cash flows of funds for their servicing or
from established and broad-based access to the market for refinancing, or both.
28
<PAGE>
Target Maturity 2010 Fund
A series of First Investors Life Series Fund
Statement of Net Assets
as of February 5, 1996
29
<PAGE>
ZERO COUPON 2010 FUND
(A Series of First Investors
Life Series Fund)
STATEMENT OF NET ASSETS
February 5, 1996
Cash on deposit with Custodian ..................................... $100
Liabilities ........................................................ None
----
Net Assets ......................................................... $100
====
Net Asset Value, Offering Price and Redemption Price
Per Share ($100 divided by 10 shares of beneficial
interest outstanding) ............................................ $10.00
======
NOTES TO STATEMENT OF NET ASSETS
Note 1 -- Zero Coupon 2010 Fund (the "Fund"), a separate designated series of
First Investors Life Series Fund ("Life Series Fund"), raised its
initial capital through a private offering in which First Investors
Life Insurance Company purchased 10 shares, at $10.00 per share.
Note 2 -- Life Series Fund was organized under the laws of the Commonwealth of
Massachusetts on June 12, 1985 and presently contains ten other
operating series. Except for the outstanding shares of beneficial
interest reflected in the Statement of Net Assets, Zero Coupon 2010
Fund has not commenced operations.
Note 3 -- Organizational expenses of the Fund will be borne by First Investors
Management Company, Inc.
30
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Trustees of First Investors
Life Series Fund and the
Shareholder of
Zero Coupon 2010 Fund
We have audited the accompanying Statement of Net Assets of Zero Coupon
2010 Fund (a series of First Investors Life Series Fund) as of February 5, 1996.
This financial statement is the responsibility of the Fund's management. Our
responsibility is to express an opinion on this financial statement based on our
audit. We conducted our audit 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 statement is free of material
misstatements. An audit includes examining evidence supporting the amounts and
disclosures in the financial statements. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the accompanying Statement of Net Assets presents fairly
the financial position of Zero Coupon 2010 Fund at February 5, 1996 in
conformity with generally accepted accounting principles.
/s/Tait, Weller & Baker
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 7, 1996
31
<PAGE>
Financial Statements as of December 31, 1995
32
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
First Investors Life Series Fund-Blue Chip Fund
December 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS--93.4%
Basic Industry--3.9%
6,100 * Alumax, Inc. $ 186,812 $ 29
5,450 Dow Chemical Company 383,543 57
7,700 Du Pont (E.I.) DE Nemours & Company 538,037 80
8,800 Freeport McMoRan Copper & Gold, Inc. Class "B" 247,500 37
6,800 IMC Global, Inc. 277,950 42
4,000 James River Corporation of Virginia 96,500 14
3,900 Mead Corporation 203,775 30
6,100 Minnesota Mining & Manufacturing Company 404,125 60
4,400 Sigma-Aldrich Corporation 217,800 33
1,400 Temple-Inland, Inc. 61,775 9
- ------------------------------------------------------------------------------------------------------------------------------
2,617,817 391
- ------------------------------------------------------------------------------------------------------------------------------
Capital Goods--7.5%
5,200 Boeing Company 407,550 61
3,000 Browning-Ferris Industries, Inc. 88,500 13
6,300 Deere & Company 222,075 33
2,100 Eaton Corporation 112,612 17
3,100 Emerson Electric Company 253,425 38
2,500 Foster Wheeler Corporation 106,250 16
23,800 General Electric Company 1,713,600 256
5,500 Grainger (W.W.), Inc. 364,375 54
6,800 Ingersoll-Rand Company 238,850 36
3,200 Lockheed Martin Corporation 252,800 38
3,900 Loral Corporation 137,962 21
7,200 Raytheon Company 340,200 51
3,600 United Technologies Corporation 341,550 51
6,000 * Varity Corporation 222,750 33
8,000 WMX Technologies, Inc. 239,000 36
- ------------------------------------------------------------------------------------------------------------------------------
5,041,499 754
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Durables--1.7%
6,800 Corning, Inc. 217,600 32
1,400 Fleetwood Enterprises, Inc. 36,050 5
14,250 Ford Motor Company 413,250 62
5,100 Goodyear Tire & Rubber Company 231,412 35
7,450 Masco Corporation 233,744 35
- ------------------ ----------------------------------------------------------------------------------------------------------
1,132,056 169
- ------------------ ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Consumer Non-Durables--22.1%
12,200 Abbott Laboratories 509,350 75
4,100 American Home Products Corporation 397,700 58
6,900 Anheuser-Busch Companies, Inc. 461,438 69
6,800 * Astra AB (ADR) Class "A" 272,000 41
7,400 Bristol-Myers Squibb Company 635,475 95
18,250 Coca-Cola Company 1,355,062 203
6,200 Columbia/HCA Healthcare Corporation 314,650 47
5,300 CPC International, Inc. 363,712 54
5,350 Eastman Kodak Company 358,450 54
8,400 Eli Lilly & Company 472,500 71
3,800 General Mills, Inc. 219,450 33
6,400 Gillette Company 333,600 50
9,750 Heinz (H.J.) Company 322,969 48
5,000 Hershey Foods Corporation 325,000 49
9,400 Johnson & Johnson 804,875 120
3,100 Kellogg Company 239,475 36
5,200 Kimberly-Clark Corporation 430,300 64
17,900 Merck & Company, Inc. 1,176,925 176
12,500 Newell Company 323,438 48
4,100 Nike, Inc. 285,463 43
13,300 PepsiCo, Inc. 743,138 111
9,100 Pfizer, Inc. 573,300 86
13,800 Philip Morris Companies, Inc. 1,248,900 187
10,000 Procter & Gamble Company 830,000 124
5,200 * Ralcorp Holdings, Inc. 126,100 19
5,200 Schering-Plough Corporation 284,700 43
8,100 Teva Pharmaceutical Industries Ltd. (ADR) 375,638 56
3,800 Unilever N.V. 534,850 80
4,000 United Healthcare Corporation 262,000 39
2,000 Warner-Lambert Company 194,250 29
- ------------------------------------------------------------------------------------------------------------------------------
14,774,708 2,208
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Services--11.0%
6,500 Brunswick Corporation 156,000 24
2,200 Capital Cities/ABC, Inc. 271,425 41
2,700 * CUC International, Inc. 92,137 14
3,800 Darden Restaurants, Inc. 45,125 7
6,600 Gap, Inc. 277,200 41
4,500 * HFS, Inc. 367,875 55
6,500 Home Depot, Inc. 311,187 47
3,900 ITT Corporation 206,700 31
3,900 ITT Hartford Group, Inc. 188,662 28
3,900 ITT Industries, Inc. 93,600 14
6,000 * Kroger Company 225,000 34
4,250 Marriott International, Inc. 162,562 24
7,325 Mattel, Inc. 225,244 34
4,700 May Department Stores Company 198,576 30
10,150 McDonald's Corporation 458,019 68
2,900 McGraw-Hill Companies, Inc. 252,662 38
5,500 Nordstrom, Inc. 222,750 33
12,400 * Price/Costco, Inc. 189,100 28
5,200 Sears, Roebuck and Company 202,800 30
5,900 Talbots, Inc. 169,625 25
10,625 * Tele-Communications, Inc., Liberty Media Group Class "A" 285,547 43
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
16,100 * Tele-Communications, Inc., TCI Group Class "A" 319,988 48
5,200 Time Warner, Inc. 196,950 29
6,400 US West Media Group 121,600 18
5,000 * Viacom, Inc. Class "B" 236,875 35
6,400 * Vons Companies, Inc. 180,800 27
39,400 Wal-Mart Stores, Inc. 881,575 132
5,000 Walgreen Company 149,375 22
7,600 Walt Disney Company 448,400 67
13,800 * Woolworth Corporation 179,400 27
- ------------------------------------------------------------------------------------------------------------------------------
7,316,759 1,094
- ------------------------------------------------------------------------------------------------------------------------------
Energy--12.0%
3,800 Aluminum Company of America 200,925 30
7,100 Amoco Corporation 510,313 76
3,400 Atlantic Richfield Company 376,550 56
6,200 Avery Dennison Corporation 310,775 46
10,700 Baker Hughes, Inc. 260,813 39
10,300 Barrick Gold Corporation 271,663 41
2,700 Burlington Resources, Inc. 105,975 16
9,400 Chevron Corporation 493,500 74
10,100 Enron Corporation 385,062 58
18,000 Exxon Corporation 1,442,250 216
2,300 Kerr-McGee Corporation 146,050 22
5,700 Mobil Corporation 638,400 95
7,700 Morton International, Inc. 276,237 41
4,900 Pacific Enterprises 138,425 21
3,450 Phillips Petroleum Company 117,731 18
7,900 Royal Dutch Petroleum Company 1,114,888 167
4,100 Schlumberger Ltd. 283,925 42
11,900 Sonat, Inc. 423,938 63
3,500 Texaco, Inc. 274,750 41
9,000 Unocal Corporation 262,125 39
- ------------------------------------------------------------------------------------------------------------------------------
8,034,295 1,201
- ------------------------------------------------------------------------------------------------------------------------------
Financial--11.4%
6,650 American Express Company 275,144 42
6,900 American International Group, Inc. 638,250 95
6,900 American Re Corporation 282,038 42
14,700 Banc One Corporation 554,925 83
4,500 Bank of New York Company, Inc. 219,375 33
6,600 BankAmerica Corporation 427,350 64
11,700 Charles Schwab Corporation 235,463 35
4,200 Chase Manhattan Corporation 254,625 38
5,100 Chemical Banking Corporation 299,625 45
2,900 Chubb Corporation 280,575 42
9,000 Citicorp 605,250 90
5,400 Dean Witter Discover and Company 253,800 38
6,300 Federal National Mortgage Association 781,987 117
4,600 First Union Corporation 255,875 38
1,900 General Re Corporation 294,500 44
30,800 Hibernia Corporation Class "A" 331,100 49
950 Marsh & McLennan Companies, Inc. 84,312 13
5,400 Mellon Bank Corporation 290,250 43
6,900 NationsBank Corporation 480,413 72
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
13,800 Norwest Corporation 455,400 68
8,800 Salomon, Inc. 312,400 47
- ------------------ ----------------------------------------------------------------------------------------------------------
7,612,657 1,138
- ------------------ ----------------------------------------------------------------------------------------------------------
Technology--13.8%
9,100 * Airtouch Communications, Inc. 257,075 39
7,200 * Applied Materials, Inc. 283,500 42
4,100 * Ascend Communications, Inc. 332,613 50
23,000 A T & T Corp. 1,489,250 223
1,700 Autodesk, Inc. 58,225 9
3,100 Automatic Data Processing, Inc. 230,175 34
9,500 * Cisco Systems, Inc. 708,937 106
2,100 Computer Associates International, Inc. 119,438 18
16,500 * EMC Corporation 253,687 38
8,300 First Data Corporation 555,062 83
7,600 Hewlett-Packard Company 636,500 95
11,600 Intel Corporation 658,300 98
8,800 International Business Machines Corporation 807,400 121
7,500 * LSI Logic Corporation 245,625 37
9,900 MCI Communications Corporation 258,637 38
8,400 * Microsoft Corporation 737,100 109
9,400 Motorola, Inc. 535,800 80
7,100 * National Semiconductor Corporation 157,975 24
11,650 * Oracle Corporation 493,669 74
8,100 * Premenos Technology Corporation 213,638 32
5,100 Sprint Corporation 203,362 30
- ------------------ ----------------------------------------------------------------------------------------------------------
9,235,968 1,380
- ------------------ ----------------------------------------------------------------------------------------------------------
Telecommunications--.3%
6,400 US West Communications Group 228,800 34
- ------------------ ----------------------------------------------------------------------------------------------------------
Transportation--1.3%
4,000 * AMR Corporation 297,000 44
2,400 Burlington Northern, Inc. 187,200 28
5,700 Union Pacific Corporation 376,200 56
- ------------------ ----------------------------------------------------------------------------------------------------------
860,400 128
- ------------------ ----------------------------------------------------------------------------------------------------------
Utilities--8.4%
7,400 Ameritech Corporation 436,600 64
6,300 Bell Atlantic Corporation 421,313 63
16,100 BellSouth Corporation 700,350 105
8,700 Carolina Power & Light Company 300,150 45
15,100 CINergy Corporation 462,438 69
8,700 Duke Power Company 412,162 62
10,500 FPL Group, Inc. 486,937 73
13,300 GTE Corporation 585,200 88
5,800 NYNEX Corporation 313,200 48
6,100 Pacific Telesis Group 205,112 31
9,800 PacifiCorp 208,250 31
6,000 Peco Energy Company 180,750 27
8,300 SBC Communications, Inc. 477,250 71
10,500 Texas Utilities Company 431,813 65
- ------------------ ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
5,621,525 842
- ------------------------------------------------------------------------------------------------------------------------------
Total Value of Common Stocks ($49,784,003) 62,476,484 9,339
- ------------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE BONDS--.5%
$ 500M Bell Sports Corporation, 4 1U4%, 11/15/00 (cost $429,695) 350,000 52
- ------------------ ----------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--5.5%
600M Hewlett Packard Company, 5.72%, 1/11/96 599,047 90
1,050M Hitachi America Ltd., 5.90%, 1/10/96 1,048,451 156
400M Idaho Power Company, 5.75%, 1/12/96 399,297 59
800M Lubrizol Corporation, 5.74%, 1/5/96 799,490 120
800M Nestle Capital Corporation, 5.67%, 1/3/96 799,748 120
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Short-Term Corporate Notes (cost $3,646,033) 3,646,033 545
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $53,859,731) 99.4% 66,472,517 9,936
Other Assets, Less Liabilities .6 427,227 64
- ------------------ ----------------------------------------------------------------------------------------------------------
Net Assets 100.0% $66,899,744 $10,000
================== ==========================================================================================================
* Non-income producing
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Portfolio of Investments
First Investors Life Series Fund-Cash Management Fund
December 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal Interest $10,000 of
Amount Security Rate* Value Net Assets
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHORT-TERM CORPORATE NOTES--91.5%
$ 63M Baltimore Gas & Electric Company, 4/15/96 6.00% $ 63,530 $ 152
200M BellSouth Telecommunications, Inc., 2/9/96 5.63 198,780 477
200M Brown-Forman Corporation, 2/12/96 5.70 198,670 477
200M Chevron Oil Finance Company, 1/12/96 5.75 199,648 480
155M Consolidated Natural Gas Company, 1/5/96 5.72 154,902 372
189M Dresser Industries, Inc., 1/31/96 5.73 188,099 452
107M Gannett Company, 1/17/96 5.80 106,724 256
100M GTE South, Inc., 2/7/96 5.73 99,411 239
200M Hewlett Packard Company, 1/25/96 5.68 199,243 479
200M Hitachi America Ltd., 1/12/1996 5.55 199,660 480
200M Laclede Gas Company, 1/31/96 5.65 199,058 478
100M Lubrizol Corporation, 1/5/96 5.74 99,936 240
200M McGraw-Hill Inc., 2/21/96 5.67 198,394 477
150M Merck & Company, Inc., 8/14/96 5.59 153,787 370
150M National Rural Utilities Cooperative
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal Interest $10,000 of
Amount Security Rate* Value Net Assets
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial Corporation, 2/9/96 5.62 149,087 358
100M Pacific Bell, 1/22/96 5.65 99,670 240
200M PepsiCo, Inc., 1/30/96 5.86 206,287 496
150M Pitney Bowes Credit, Inc., 2/13/96 5.65 148,988 358
200M Southern California Edison Company, 1/19/96 5.68 199,432 479
200M TDK U.S.A. Corporation, 1/22/96 5.65 199,341 479
200M The Stanley Works, 3/6/96 5.60 197,978 476
200M U.S. Borax & Chemical Corporation, 3/21/96 5.53 197,542 475
150M Waste Management, Inc., 4/14/96 5.84 150,926 363
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Short-Term Corporate Notes (cost $3,809,093) 3,809,093 9,153
- ------------------ ----------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES--7.3%
200M Federal Home Loan Bank, 12/27/96 5.55 200,152 481
100M Tennessee Valley Authority, 9/9/96 5.51 100,712 242
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of U.S. Government Agencies (cost $300,864) 300,864 723
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $4,109,957) 98.8% 4,109,957 9,876
Other Assets, Less Liabilities 1.2 51,607 124
- ------------------ ----------------------------------------------------------------------------------------------------------
Net Assets 100.0% $4,161,564 $10,000
================== ==========================================================================================================
* The interest rate shown is the effective rate at the time of purchase.
See notes to finanical statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
First Investors Life Series Fund-Discovery Fund
December 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS--84.9%
Basic Industry--2.0%
3,800 Chesapeake Corporation $ 112,575 $ 23
26,200 Interpool, Inc. 468,325 92
29,300 * Repap Enterprises, Inc. 130,018 26
8,700 Schulman (A.), Inc. 195,750 38
9,800 * Universal Stainless & Alloy Products, Inc. 104,125 20
- ------------------ ----------------------------------------------------------------------------------------------------------
1,010,793 199
- ------------------ ----------------------------------------------------------------------------------------------------------
Capital Goods--3.0%
10,850 Agco Corporation 553,350 109
16,400 Case Corporation 750,300 147
24,800 Owosso Corporation 220,100 43
- ------------------ ----------------------------------------------------------------------------------------------------------
1,523,750 299
- ------------------ ----------------------------------------------------------------------------------------------------------
Consumer Durables--1.2%
10,100 Falcon Products, Inc. 132,562 26
24,900 * National R.V. Holdings, Inc. 289,463 57
3,800 * Wolverine Tube, Inc. 142,500 28
- ------------------ ----------------------------------------------------------------------------------------------------------
564,525 111
- ------------------ ----------------------------------------------------------------------------------------------------------
Consumer Non-Durables--1.5%
10,200 Dreyer's Grand Ice Cream, Inc. 339,150 67
17,600 * Ralcorp Holdings, Inc. 426,800 84
- ------------------ ----------------------------------------------------------------------------------------------------------
765,950 151
- ------------------ ----------------------------------------------------------------------------------------------------------
Consumer Services--20.1%
11,300 Advo, Inc. 293,800 58
14,700 * Barnes & Noble, Inc. 426,300 84
31,200 * Bell Sport Corporation 249,600 49
46,700 * Cannondale Corporation 741,362 146
26,400 * Cinar Films, Inc. Class "B" 399,300 78
18,150 * CUC International, Inc. 619,369 122
19,600 * Discount Auto Parts, Inc. 610,050 120
20,400 Equifax, Inc. 436,050 86
7,000 * Federated Department Stores, Inc. 192,500 38
21,400 * Franklin Electronic Publishers, Inc. 631,300 124
14,000 Gaylord Entertainment Class "A" 388,500 76
24,600 * Home Shopping Network, Inc. 221,400 43
22,200 LA Quinta Inns, Inc. 607,725 119
16,900 * Meyer (Fred), Inc. 380,250 75
19,400 * Monarch Casino & Resort, Inc. 67,900 13
13,900 * NHP, Inc. 257,150 51
12,100 * REX Stores Corporation 214,775 42
20,000 Rite Aid Corporation 685,000 135
5,600 * Studio Plus Hotels, Inc. 144,200 28
9,000 Talbots, Inc. 258,750 51
24,100 * Tele-Communications, Inc., TCI Group Class "A" 478,988 94
43,200 * US Office Products Company 982,800 193
35,000 * USCI, Inc. 345,625 68
12,900 * Viacom, Inc. Class "B" 611,138 120
- ------------------ ----------------------------------------------------------------------------------------------------------
10,243,832 2,013
- ------------------ ----------------------------------------------------------------------------------------------------------
Energy--.8%
8,400 Snyder Oil Company 101,850 20
2,800 Sonat, Inc. 99,750 20
4,200 * Tejas Gas Corporation 222,075 43
- ------------------ ----------------------------------------------------------------------------------------------------------
423,675 83
- ------------------ ----------------------------------------------------------------------------------------------------------
Financial--8.1%
14,600 * American Travellers Corporation 410,625 81
25,600 Amvestors Financial Corporation 300,800 59
6,100 Boatmens Bancshares, Inc. 249,337 48
1,700 Commercial Federal Corporation 64,175 13
10,200 First USA, Inc. 452,625 89
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
20,400 Independent Bancorporation 150,450 30
14,700 Integon Corporation 303,187 60
6,500 * Mark Twain Bancshares, Inc. 251,875 49
5,700 Mercanitle Bancorporation 262,200 52
27,300 * Penn Treaty American Corporation 450,450 88
17,050 Reliance Group Holdings, Inc. 147,056 29
7,182 Southern National Corporation 188,528 37
21,000 Titan Holdings, Inc. 301,875 59
14,100 * WFS Financial, Inc. 274,950 54
25,000 Willis Corroon Group PLC (ADR) 290,625 57
- ------------------ ----------------------------------------------------------------------------------------------------------
4,098,758 805
- ------------------ ----------------------------------------------------------------------------------------------------------
Health Care/Miscellaneous--13.3%
8,400 * AHI Healthcare Systems, Inc. 48,300 9
13,900 * American Medical Response, Inc. 451,750 89
5,600 * American Oncology Resources, Inc. 272,300 54
29,500 * Applied Bioscience International, Inc. 199,125 39
11,700 * Arbor Health Care Company 204,750 40
10,100 * Boston Scientific Corporation 494,900 98
11,000 Dentsply International, Inc. 440,000 86
33,800 * Ethical Holdings PLC (ADR) 304,200 60
15,000 Fisher Scientific International 500,625 98
10,100 * Health Care and Retirement Corporation 353,500 69
13,200 * Humana, Inc. 361,350 71
7,000 * InStent, Inc. 105,000 21
12,200 * Living Centers of America, Inc. 427,000 84
22,400 * Mid Atlantic Medical Services, Inc. 543,200 107
4,200 * Norland Medical Systems, Inc. 97,650 19
14,300 * Noven Pharmaceuticals, Inc. 160,875 32
8,400 * Orthologic Corporation 121,800 24
11,900 * Pacific Physicians Services, Inc. 214,200 42
12,300 * Pyxis Corporation 179,888 35
7,000 * Rural/Metro Corporation 158,375 31
7,000 * Tecnol Medical Products, Inc. 126,000 25
15,500 Teva Pharmaceutical Industries Ltd. (ADR) 718,813 141
29,200 * Vidamed, Inc. 277,400 54
- ------------------ ----------------------------------------------------------------------------------------------------------
6,761,001 1,328
- ------------------ ----------------------------------------------------------------------------------------------------------
Technology--27.3%
11,800 * Adaptec, Inc. 483,800 95
7,500 * Altera Corporation 373,125 73
11,300 * Applied Materials, Inc. 444,937 87
14,300 * Atmel Corporation 319,962 63
13,400 * Bisys Group, Inc. 412,050 81
12,900 * Broadway & Seymour, Inc. 209,625 41
14,000 * Catalyst International, Inc. 161,000 32
5,600 * Cerner Corporation 114,800 23
5,500 * Cisco Systems, Inc. 410,437 81
6,850 Computer Associates International, Inc. 389,594 77
14,000 * Cornerstone Imaging, Inc. 203,000 40
15,400 * Data Works Corporation 194,425 38
14,000 * Davidson & Associates, Inc. 308,000 61
9,700 * Discreet Logic, Inc. 242,500 48
24,800 * EMC Corporation 381,300 75
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
7,500 * FileNet Corporation 352,500 69
20,500 * Fulcrum Technologies, Inc. 666,250 131
5,600 * HCIA, Inc. 261,800 51
14,000 * IDX Systems Corporation 486,500 96
13,200 * IMNET Systems, Inc. 316,800 62
6,700 * Informix Corporation 201,000 39
14,900 * Integrated Micro Products PLC (ADR) 275,650 54
23,700 * Intersolv 305,137 60
5,300 * Lam Research Corporation 242,475 48
17,900 * LSI Logic Corporation 586,225 115
11,200 * Mercury Interactive Corporation 204,400 40
12,900 * Metatec Corporation 141,900 28
19,500 * MySoftware Company 248,625 49
33,200 * National Semiconductor Corporation 738,700 145
14,550 * Oracle Corporation 616,556 121
54,900 * Plasma-Therm, Inc. 137,250 27
21,800 * Premenos Technology Corporation 574,975 113
12,500 Reynolds & Reynolds Company 485,938 95
18,200 * Saville Systems Ireland (ADR) 259,350 51
11,300 * Softkey International, Inc. 261,313 51
28,700 * Symantec Corporation 667,275 131
22,500 * System Soft Corporation 253,125 50
15,100 * Tower Semiconductor Ltd. 334,088 66
5,700 * Veritas Software Corporation 216,600 43
13,800 * VLSI Technology, Inc. 250,126 48
5,100 * Xilinx, Inc. 155,550 31
- ------------------ ----------------------------------------------------------------------------------------------------------
13,888,663 2,729
- ------------------ ----------------------------------------------------------------------------------------------------------
Telecommunications--6.8%
6,300 * Ascend Communications, Inc. 511,087 100
10,900 * Boston Technology, Inc. 138,975 27
19,000 ECI Telecommunications Limited Designs 433,437 85
16,400 Ericsson (L.M.) Telephone Co. (ADR) Class "B" 319,800 63
6,000 Motorola, Inc. 342,000 67
5,300 * Netcom On-Line Communication Services, Inc. 190,800 37
9,100 Nokia Corporation (ADR) Class "A" 353,763 70
14,000 * Octel Communications Corporation 451,500 89
5,100 * TCSI Corporation 94,350 19
24,100 * Tele-Communications, Inc., Liberty Media Group Class "A" 647,687 127
- ------------------ ----------------------------------------------------------------------------------------------------------
3,483,399 684
- ------------------------------------------------------------------------------------------------------------------------------
Transportation--.8%
2,800 * Celadon Group, Inc. 25,200 5
49,300 * Transportacion Maritima Mexicana SA (ADR) 412,888 81
- ------------------ ----------------------------------------------------------------------------------------------------------
438,088 86
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $36,077,157) 43,202,434 8,488
- ------------------ ----------------------------------------------------------------------------------------------------------
CONVERTIBLE BONDS--.3%
Health Care/Miscellaneous
150M Pacific Physicians Services, Inc., 5 1U2%, 2003 (cost $150,000) 145,125 29
- ------------------ ----------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--14.9%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
650M Appalachian Power, 6%, 1/2/1996 649,892 128
1,000M Dresser Industries, 5.75%, 1/16/1996 997,604 196
250M Ford Motor, 5.70%, 1/11/1996 249,604 49
700M Idaho Power, 5.65%, 1/11/1996 698,902 138
1,000M Lubrizol Corporation, 5.74%, 1/5/1996 999,362 196
2,000M Pacific Bell, 5.65%, 1/22/96 1,993,408 392
1,600M Pearson Incorporated, 5.80%, 1/23/1996 1,594,329 313
400M Stanley Works, 5.72%, 1/12/1996 399,301 78
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Short-Term Corporate Notes (cost $7,582,402) 7,582,402 1,490
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $43,809,559) 100.1% 50,929,961 10,007
Excess of Liabilities Over Other Assets (.1) (30,000) (7)
- ------------------ ----------------------------------------------------------------------------------------------------------
Net Assets 100.0% $50,899,953 10,000
================== ==========================================================================================================
* Non-income producing
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Portfolio of Investments
First Investors Life Series Fund-Government Fund
December 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MORTGAGE-BACKED CERTIFICATES--44.9%
$ 36M Federal Home Loan Mortgage Corp., 6 1/2%, 4/1/2024 $ 36,408 $ 38
133M Federal Home Loan Mortgage Corp., 6 1/2%, 6/1/2024 132,030 139
1,066M Federal Home Loan Mortgage Corp., 6 1/2%, 9/1/2024 1,054,647 1,110
862M Federal National Mortgage Association, 9%, 10/1/2020 911,301 959
508M Government National Mortgage Association, 7 1/2%, 8/15/2025 523,017 551
999M Government National Mortgage Association, 7 1/2%, 11/15/2025 1,027,937 1,082
198M Government National Mortgage Association, 11 1/2%, 10/15/2012 222,517 234
317M Government National Mortgage Association, 11 1/2%, 5/15/2015 356,103 375
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Mortgage-Backed Certificates (cost $4,211,839) 4,263,960 4,488
- ------------------ ----------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS--39.3%
1,100M Federal Farm Credit, 8.65%, 10/01/2099 1,216,724 1,281
1,400M Federal Home Loan Bank, 5.92%, 6/29/2000 1,421,875 1,496
1,000M Federal National Mortgage Association, 8 1/2%, 2/1/2005 1,095,000 1,153
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of U.S. Government Agency Obligations (cost $3,733,054) 3,733,599 3,930
- ------------------ ----------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--12.9%
1,150M U.S. Treasury Note, 6 1/2%, 8/15/2005 (cost $1,177,695) 1,226,547 1,291
- ------------------ ----------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--1.4%
130M Appalachian Power 6%, 1/2/96 (cost $129,957) 129,957 137
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $9,252,545) 98.5% 9,354,063 9,846
Other Assets, Less Liabilities 1.5 146,124 154
- ------------------ ----------------------------------------------------------------------------------------------------------
Net Assets 100.0% $9,500,187 $10,000
================== ==========================================================================================================
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
First Investors Life Series Fund-Blue Chip Fund
December 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS--97.7%
Apparel/Textiles--.4%
6,000 * Nine West Group, Inc. $ 225,000 $ 44
- ------------------ ----------------------------------------------------------------------------------------------------------
Banks--6.6%
5,000 Associated Banc-Corp 204,687 40
8,000 Bancorp Hawaii, Inc. 287,000 56
21,900 First Bank System, Inc. 1,086,787 212
5,350 First Commercial Corporation 176,550 35
10,000 J.P. Morgan & Company, Inc. 802,500 157
4,000 Old Kent Financial Corporation 164,500 32
15,000 State Street Boston Corporation 675,000 132
- ------------------ ----------------------------------------------------------------------------------------------------------
3,397,024 664
- ------------------ ----------------------------------------------------------------------------------------------------------
Business Services--2.9%
12,000 Dames & Moore, Inc. 145,500 28
7,500 * DST Systems, Inc. 213,750 42
10,000 G & K Services, Inc. Class "A" 255,000 50
4,000 * Ionics, Inc. 174,000 34
19,000 Sysco Corporation 617,500 121
5,000 * Tetra Tech, Inc. 113,750 22
- ------------------ ----------------------------------------------------------------------------------------------------------
1,519,500 297
- ------------------ ----------------------------------------------------------------------------------------------------------
Chemicals--4.6%
7,600 Air Products and Chemicals, Inc. 400,900 78
21,600 Engelhard Corporation 469,800 92
20,800 Morton International, Inc. 746,200 146
13,500 Nalco Chemical Company 406,688 79
15,000 Schulman (A.), Inc. 337,500 66
- ------------------ ----------------------------------------------------------------------------------------------------------
2,361,088 461
- ------------------------------------------------------------------------------------------------------------------------------
Communication Equipment--5.1%
32,000 Ericsson (L.M.) Telephone Co. (ADR) Class "B" 624,000 122
20,000 * General Instrument Corporation 467,500 92
10,800 Motorola, Inc. 615,600 120
7,200 Nokia Corporation (ADR) Class "A" 279,900 55
13,000 * 3COM Corporation 606,125 118
- ------------------ ----------------------------------------------------------------------------------------------------------
2,593,125 507
- ------------------ ----------------------------------------------------------------------------------------------------------
Computers & Office Equipment--3.0%
9,000 * Compaq Computer Corporation 432,000 85
10,800 Hewlett-Packard Company 904,500 177
12,800 Sensormatic Electronics Corporation 222,400 43
- ------------------ ----------------------------------------------------------------------------------------------------------
1,558,900 305
- ------------------ ----------------------------------------------------------------------------------------------------------
Drugs--5.3%
10,000 * Alza Corporation 247,500 48
12,500 Pfizer, Inc. 787,500 154
15,000 Rhone-Poulenc Rorer Group, Inc. 798,750 156
15,000 Zeneca Group PLC (ADR) 875,625 171
- ------------------ ----------------------------------------------------------------------------------------------------------
2,709,375 529
- ------------------ ----------------------------------------------------------------------------------------------------------
Electrical Equipment--2.4%
11,000 Hubbell, Inc. Class "B" 723,250 141
10,000 Juno Lighting, Inc. 160,000 31
9,000 * Littlefuse, Inc. 330,750 65
- ------------------ ----------------------------------------------------------------------------------------------------------
1,214,000 237
- ------------------ ----------------------------------------------------------------------------------------------------------
Electronics--1.9%
15,700 AMP, Inc. 602,487 118
10,000 Dallas Semiconductor Corporation 207,500 41
6,000 * Silicon Valley Group, Inc. 151,500 30
- ------------------ ----------------------------------------------------------------------------------------------------------
961,487 189
- ------------------------------------------------------------------------------------------------------------------------------
Energy Services--1.4%
4,000 * Input/Output, Inc. 231,000 45
6,600 Schlumberger Ltd. 457,050 89
- ------------------ ----------------------------------------------------------------------------------------------------------
688,050 134
- ------------------ ----------------------------------------------------------------------------------------------------------
Energy Sources--5.5%
13,300 Amoco Corporation 955,937 187
9,500 * Barrett Resources Corporation 279,062 55
15,500 Burlington Resources, Inc. 608,375 119
33,000 Unocal Corporation 961,125 188
- ------------------ ----------------------------------------------------------------------------------------------------------
2,804,499 549
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------ ----------------------------------------------------------------------------------------------------------
Entertaiment Products--1.3%
6,000 * Coleman Company, Inc. (New) 210,750 41
7,000 Harley-Davidson, Inc. 201,250 39
8,500 * Speedway Motorsports, Inc. 255,000 50
- ------------------ ----------------------------------------------------------------------------------------------------------
667,000 130
- ------------------ ----------------------------------------------------------------------------------------------------------
Financial Services--2.9%
11,500 American Express Company 475,813 93
8,320 Federal National Mortgage Association 1,032,720 202
- ------------------ ----------------------------------------------------------------------------------------------------------
1,508,533 295
- ------------------ ----------------------------------------------------------------------------------------------------------
Food/Beverage/Tobacco--4.0%
6,000 * Canadaigua Wine Company, Inc. Class "A" 195,750 38
18,000 Pepsico, Inc. 1,005,750 197
3,400 * Robert Mondavi Corporation Class "A" 93,925 18
22,600 Sara Lee Corporation 720,375 141
- ------------------ ----------------------------------------------------------------------------------------------------------
2,015,800 394
- ------------------ ----------------------------------------------------------------------------------------------------------
Health Services--1.0%
6,000 * American Medical Response, Inc. 195,000 38
30,000 * Beverly Enterprises 318,750 62
- ------------------ ----------------------------------------------------------------------------------------------------------
513,750 100
- ------------------------------------------------------------------------------------------------------------------------------
Household Products--4.4%
10,000 Armor All Products Corporation 181,250 35
9,000 * Bush Boake Allen, Inc. 246,375 48
14,300 Kimberly-Clark Corporation 1,183,325 231
7,500 Procter & Gamble Company 622,500 122
- ------------------ ----------------------------------------------------------------------------------------------------------
2,233,450 436
- ------------------ ----------------------------------------------------------------------------------------------------------
Insurance--4.0%
8,175 American International Group, Inc. 756,187 148
6,000 American Re Corporation 245,250 48
8,000 Frontier Insurance Group, Inc. 256,000 50
5,000 General Re Corporation 775,000 151
- ------------------ ----------------------------------------------------------------------------------------------------------
2,032,437 397
- ------------------ ----------------------------------------------------------------------------------------------------------
Machinery & Manufacturing--1.8%
10,500 Donaldson Company 263,812 52
9,100 Minnesota Mining & Manufacturing Company 602,875 118
2,300 * MSC Industrial Direct Company, Inc. Class "A" 63,250 12
- ------------------ ----------------------------------------------------------------------------------------------------------
929,937 182
- ------------------ ----------------------------------------------------------------------------------------------------------
Media--8.6%
7,000 ADVO, Inc. 182,000 35
54,000 Comcast Corporation Class "A" 982,127 192
12,000 Dun & Bradstreet Corporation 777,000 152
9,000 Gannett Company 552,375 108
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
6,500 Houghton Mifflin Company 279,500 55
21,400 * Viacom, Inc. Class "B" 1,013,825 198
18,000 Vodafone Group PLC (ADR) 634,500 124
- ------------------ ----------------------------------------------------------------------------------------------------------
4,421,327 864
- ------------------------------------------------------------------------------------------------------------------------------
Medical Products--3.0%
22,000 Abbott Laboratories 918,500 179
14,500 * Biomet, Inc. 259,188 51
9,000 * Datascope Corporation 216,000 42
5,000 Life Technologies, Inc. 136,250 27
- ------------------ ----------------------------------------------------------------------------------------------------------
1,529,938 299
- ------------------ ----------------------------------------------------------------------------------------------------------
Paper/Forest Products--1.3%
8,000 Bemis Company, Inc. 205,000 40
12,000 International Paper Company 454,500 89
- ------------------ ----------------------------------------------------------------------------------------------------------
659,500 129
- ------------------ ----------------------------------------------------------------------------------------------------------
Real Estate Companies--.5%
10,000 * Doubletree Corporation 262,500 51
- ------------------ ----------------------------------------------------------------------------------------------------------
Retail--9.0%
12,000 Arbor Drugs, Inc. 252,000 49
25,000 * AutoZone, Inc. 721,875 141
10,000 * Barnes & Noble, Inc. 290,000 57
10,000 * Gymboree Corporation 206,250 40
11,000 Home Depot, Inc. 526,625 103
18,000 May Department Stores Company 760,500 149
19,000 Rite Aid Corporation 650,750 127
10,000 * Sports Authority, Inc. 203,750 40
9,300 Talbots, Inc. 267,375 52
32,600 Wal-Mart Stores, Inc. 729,425 143
- ------------------ ----------------------------------------------------------------------------------------------------------
4,608,550 901
- ------------------ ----------------------------------------------------------------------------------------------------------
Software & Services--8.9%
9,000 * American Management Systems, Inc. 270,000 53
9,000 Automatic Data Processing, Inc. 668,250 131
9,000 * Bisys Group, Inc. 276,750 54
12,000 * BMC Software, Inc. 513,000 100
7,000 * Cognos, Inc. 312,375 61
10,800 * Computer Sciences Corporation 758,700 148
5,600 First Data Corporation 374,500 73
6,300 * Microsoft Corporation 552,825 108
13,000 * Policy Management Systems Corporation 619,125 121
10,700 * Systems & Computer Technology Corporation 212,663 42
- ------------------ ----------------------------------------------------------------------------------------------------------
4,558,188 891
- ------------------ ----------------------------------------------------------------------------------------------------------
Telephone--5.1%
19,700 A T & T Corp. 1,275,575 249
7,000 Century Telephone Enterprises 222,250 43
13,900 MCI Communications Corporation 363,137 71
14,300 * MFS Communications Company, Inc. 761,475 149
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------ ----------------------------------------------------------------------------------------------------------
2,622,437 512
- ------------------ ----------------------------------------------------------------------------------------------------------
Transportation--.9%
9,500 Air Express International Corporation 218,500 42
4,000 Airborne Freight 106,500 21
7,000 Werner Enterprises, Inc. 141,750 28
- ------------------ ----------------------------------------------------------------------------------------------------------
466,750 91
- ------------------ ----------------------------------------------------------------------------------------------------------
Travel & Leisure--1.9%
10,000 * Landry's Seafood Restaurants, Inc. 170,625 33
8,000 McDonald's Corporation 361,000 71
18,000 Southwest Airlines Company 418,500 82
- ------------------ ----------------------------------------------------------------------------------------------------------
950,125 186
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $41,695,820) 50,012,270 9,774
- ------------------ ----------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--2.0%
1,004M Morgan Stanley Securities, Inc. 5 1/2%, 1/2/96, (collateralized by
$730M U.S. Treasury Note, 9 1/4%, 2/15/16) (cost $1,004,000) 1,004,000 196
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $42,699,820) 99.7% 51,016,270 9,970
Other Assets, Less Liabilities .3 154,953 30
- ------------------ ----------------------------------------------------------------------------------------------------------
Net Assets 100.0% $51,171,223 $10,000
================== ==========================================================================================================
* Non-income producing
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
First Investors Life Series Fund-High Yield Fund
December 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS--87.8%
Aerospace/Defense--2.5%
$ 500M Fairchild Industries, Inc., 12 1/4%, 1999 $ 535,000 $ 127
500M Howmet Corp., 10%, 2003 (Note 4) 520,000 124
- ------------------ ----------------------------------------------------------------------------------------------------------
1,055,000 251
- ------------------ ----------------------------------------------------------------------------------------------------------
Apparel/Textiles--1.4%
600M Westpoint Stevens, Inc., 9 3/8%, 2005 594,000 142
- ------------------ ----------------------------------------------------------------------------------------------------------
Automotive--3.7%
800M SPX Corp., 11 3/4%, 2002 852,000 204
700M Walbro Corp., 9 7/8%, 2005 (Note 4) 703,500 168
- ------------------ ----------------------------------------------------------------------------------------------------------
1,555,500 372
- ------------------ ----------------------------------------------------------------------------------------------------------
Chemicals--4.6%
1,000M Harris Chemical North America, Inc., 0%-10 1/4%, 2001 973,750 232
600M Rexene Corp., 11 3/4%, 2004 637,500 152
300M Synthetic Industries, Inc., 12 3/4%, 2002 295,500 71
- ------------------ ----------------------------------------------------------------------------------------------------------
1,906,750 455
- ------------------ ----------------------------------------------------------------------------------------------------------
Computers/Software/Business Equipment--1.2%
500M Bell & Howell Co., 10 3/4%, 2002 533,750 127
- ------------------ ----------------------------------------------------------------------------------------------------------
Consumer Products--1.8%
700M Herff Jones, Inc., 11%, 2005 752,500 180
- ------------------ ----------------------------------------------------------------------------------------------------------
Electrical Equipment--3.3%
700M Essex Group, Inc., 10%, 2003 693,000 165
700M IMO Industries, Inc., 12%, 2001 714,000 171
- ------------------ ----------------------------------------------------------------------------------------------------------
1,407,000 336
- ------------------ ----------------------------------------------------------------------------------------------------------
Energy--9.0%
1,000M Clark R & M Holdings, Inc., 0%, 2000 667,500 159
700M Falcon Drilling Co., Inc., 12 1/2%, 2005 770,000 184
800M Giant Industries, Inc., 9 3/4%, 2003 812,000 194
800M United Meridian Corp., 10 3/8%, 2005 850,000 203
650M Vintage Petroleum, Inc., 9%, 2005 658,936 157
- ------------------ ----------------------------------------------------------------------------------------------------------
3,758,436 897
- ------------------ ----------------------------------------------------------------------------------------------------------
Financial Services--2.1%
700M American Life Holding Co., 11 1/4%, 2004 735,000 176
260M Lomas Mortgage, USA, 10 1/4%, 2002 (Defaulted) (Note 7) 131,300 31
- ------------------ ----------------------------------------------------------------------------------------------------------
866,300 207
- ------------------ ----------------------------------------------------------------------------------------------------------
Food/Beverage/Tobacco--1.5%
600M Van de Kamps, Inc., 12%, 2005 (Note 4) 624,000 149
- ------------------ ----------------------------------------------------------------------------------------------------------
Gaming/Lodging--3.0%
650M GB Property Funding, Inc., 10 7/8%, 2004 570,375 136
700M Showboat, Inc., 9 1/4%, 2008 707,000 169
- ------------------ ----------------------------------------------------------------------------------------------------------
1,277,375 305
- ------------------ ----------------------------------------------------------------------------------------------------------
Healthcare--9.5%
750M Abbey Healthcare Group, Inc., 9 1/2%, 2002 798,750 191
700M Genesis Healthcare, Inc., 9 3/4%, 2005 742,000 177
600M Integrated Health Services, Inc., 9 5/8%, 2002 613,500 146
400M Integrated Health Services, Inc., 10 3/4%, 2004 430,000 103
500M Mediq/PRN Life Support Services, Inc., 11 1/8%, 1999 500,000 119
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
800M Tenet Healthcare Corp., 10 1/8%, 2005 889,000 212
- ------------------ ----------------------------------------------------------------------------------------------------------
3,973,250 948
- ------------------ ----------------------------------------------------------------------------------------------------------
Media/Cable Television--16.3%
1,000M Act III Broadcasting, Inc., 10 1/4%, 2005 1,022,500 244
600M Adelphia Communications, Inc., 9 7/8%, 2005 546,000 130
1,000M Affiliated Newspaper Investments, 0%-13 1/4%, 2006 595,000 142
1,000M Bell Cablemedia PLC, 0%-11.95%, 2004 707,500 169
500M Diamond Cable Communications PLC, 0%-11 3/4%, 2005 295,625 71
1,400M Echostar Communications Corp., 0%-12 7/8%, 2004 945,000 226
500M Garden State Newspapers, Inc., 12%, 2004 507,500 121
750M Outdoor Systems, Inc., 10 3/4%, 2003 727,500 174
400M PanAmSat Capital Corp., 0%-11 3/8%, 2003 326,000 78
500M Rogers Cablesystems, Inc., 10%, 2005 539,375 129
600M World Color Press, Inc., 9 1/8%, 2003 621,000 148
- ------------------ ----------------------------------------------------------------------------------------------------------
6,833,000 1,632
- ------------------ ----------------------------------------------------------------------------------------------------------
Mining/Metals--6.4%
634M Carbide/Graphite Group, Inc., 11 1/2%, 2003 687,099 164
800M Gulf States Steel, Inc., 13 1/2%, 2003 (Note 4) 724,000 173
900M WCI Steel, Inc., 10 1/2%, 2002 875,250 209
400M Wheeling-Pittsburgh Steel Corp., 9 3/8%, 2003 378,000 90
- ------------------ ----------------------------------------------------------------------------------------------------------
2,664,349 636
- ------------------ ----------------------------------------------------------------------------------------------------------
Miscellaneous--1.8%
700M Monarch Marking Systems, Inc., 12 1/2%, 2003 735,000 175
- ------------------ ----------------------------------------------------------------------------------------------------------
Paper/Forest Products--9.0%
500M Container Corp., 11 1/4%, 2004 517,500 124
500M Gaylord Container Corp., 11 1/2%, 2001 516,250 123
800M Rainy River Forest Products Co., Inc., 10 3/4%, 2001 883,000 211
800M S.D. Warren Co., Inc., 12%, 2004 884,000 211
1,000M Stone Container Corp., 9 7/8%, 2001 976,250 233
- ------------------ ----------------------------------------------------------------------------------------------------------
3,777,000 902
- ------------------ ----------------------------------------------------------------------------------------------------------
Retail-Food/Drug--1.9%
800M P&C Food Markets, Inc., 11 1/2%, 2001 784,000 187
- ------------------ ----------------------------------------------------------------------------------------------------------
Retail-General Merchandise--1.7%
1M Barry's Jewelers, Inc., 12 5/8%, 1996 505 --
750M General Host Co., Inc., 11 1/2%, 2002 708,750 169
- ------------------ ----------------------------------------------------------------------------------------------------------
709,255 169
- ------------------------------------------------------------------------------------------------------------------------------
Telecommunications--5.9%
1,500M American Communication Services, Inc., 0%-13%, 2005 (Note 4) 825,000 197
750M CAI Wireless Systems, Inc., 12 1/4%, 2002 804,375 192
800M Metrocall, Inc., 10 3/8%, 2007 852,000 203
- ------------------ ----------------------------------------------------------------------------------------------------------
2,481,375 592
- ------------------ ----------------------------------------------------------------------------------------------------------
Transportation--1.2%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
500M Trism, Inc., 10 3/4%, 2000 487,500 116
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Corporate Bonds (cost $36,067,586) 36,775,340 8,778
- ------------------ ----------------------------------------------------------------------------------------------------------
COMMON STOCKS--.7%
Financial Services--.2%
4,000 * Olympic Financial Ltd. 65,000 16
- ------------------ ----------------------------------------------------------------------------------------------------------
Gaming/Lodging--.0%
1,620 * Divi Hotels, Inc. 122 --
2,000 * Goldriver Hotel & Casino Corp., Series "B" 374 --
- ------------------ ----------------------------------------------------------------------------------------------------------
496 --
- ------------------ ----------------------------------------------------------------------------------------------------------
Media/Cable Television--.5%
1,000 * Affiliated Newspaper Investments 25,000 6
8,400 * Echostar Communications Class "A" 203,700 48
- ------------------ ----------------------------------------------------------------------------------------------------------
228,700 54
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $85,096) 294,196 70
- ------------------ ----------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--6.1%
Financial Services--4.4%
7,000 California Federal Bank, 10 5/8%, Series "B" 759,500 181
10,000 First Nationwide Bank, 11 1/2% 1,110,000 265
- ------------------ ----------------------------------------------------------------------------------------------------------
1,869,500 446
- ------------------------------------------------------------------------------------------------------------------------------
Media/Cable Television--.9%
318 PanAmSat Capital Corp., 12 3/4% 358,594 86
- ------------------ ----------------------------------------------------------------------------------------------------------
Paper/Forest Products--.8%
10,800 * S.D. Warren Co., Inc., 14% 345,600 82
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Preferred Stocks (cost $2,319,845) 2,573,694 614
- ------------------ ----------------------------------------------------------------------------------------------------------
WARRANTS--.2%
Financial Services--.0%
18 * Reliance Group Holdings, Inc. (expiring 1/28/97) 31 --
- ------------------ ----------------------------------------------------------------------------------------------------------
Gaming/Lodging--.1%
200 * Goldriver Finance Corp., Liquidating Trust 3,000 1
4,200 * President Riverboat Casinos, Inc. (expiring 9/23/96) (Note 4) 12,600 3
- ------------------ ----------------------------------------------------------------------------------------------------------
15,600 4
- ------------------ ----------------------------------------------------------------------------------------------------------
Mining/Metals--.0%
800 * Gulf State Steel Acquisition Corp. (expiring 4/1/03) (Note 4) 400 --
- ------------------ ----------------------------------------------------------------------------------------------------------
Paper/Forest Products--.1%
10,800 * S.D. Warren Co., Inc. (expiring 12/15/06) (Note 4) 54,000 13
- ------------------ ----------------------------------------------------------------------------------------------------------
Retail-General Merchandise--.0%
100 * Payless Cashways, Inc. (expiring 11/1/96) 25 --
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Warrants (cost $5,375) 70,056 17
- ------------------ ----------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--3.6%
$1,250M Appalachian Power Company, 6%, 1/2/96 1,249,792 298
250M Massachusetts Electric Company, 5.85%, 1/9/96 249,674 60
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Short-Term Corporate Notes (cost $1,499,466) 1,499,466 358
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $39,977,368) 98.4% 41,212,752 9,837
Other Assets, Less Liabilities 1.6 681,209 163
- ------------------ ----------------------------------------------------------------------------------------------------------
Net Assets 100.0% $41,893,961 $10,000
================== ==========================================================================================================
* Non-income producing
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
First Investors Life Series Fund-International Securities Fund
December 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS--95.0%
United States--23.6%
5,625 American International Group, Inc. $ 520,313 $ 127
6,500 American Re Corporation 265,688 65
4,000 * AMR Corporation 297,000 72
8,500 A T & T Corp. 550,375 134
2,000 Capital Cities/ABC, Inc. 246,750 60
7,500 Dow Chemical Company 527,813 129
7,000 Exxon Corporation 560,875 137
2,500 Federal National Mortgage Association 310,313 76
6,000 General Electric Company 432,000 105
5,000 Gillette Company 260,625 64
4,000 Hewlett-Packard Company 335,000 82
16,000 International Paper Company 606,000 148
9,500 J.C. Penney Company 452,438 110
6,000 Johnson & Johnson 513,750 125
7,000 Kimberly Clark Corporation 579,250 141
15,000 MCI Communications 391,875 96
4,000 Minnesota Mining & Manufacturing Company 265,000 65
5,000 Pepsico, Inc. 279,375 68
10,000 Pharmacia & Upjohn, Inc. 387,500 94
700 * Schweitzer-Mauduit International, Inc. 16,188 4
21,000 Unocal Corporation 611,625 149
696 * Viacom Inc., Class "A" 31,929 8
8,273 * Viacom Inc., Class "B" 391,933 96
22,000 Wal-Mart Stores 492,250 120
8,300 York International Corporation 390,100 95
- ------------------ ----------------------------------------------------------------------------------------------------------
9,715,965 2,370
- ------------------ ----------------------------------------------------------------------------------------------------------
Japan--15.5%
8,400 Canon Sales Company Ltd. 223,941 56
50,000 Chichibu Onoda Cement Company 267,080 65
19,000 Chugai Pharmaceutical 182,168 45
17,000 Dai Nippon Printing Company Ltd. 288,410 70
5,000 Ito Yokado Company Ltd. 308,284 76
35,000 Kawasaki Heavy Industries 161,168 39
51,000 Kawasaki Steel 177,990 43
20,000 Keio Teito Railway 116,526 28
1,000 Kyocera Corporation 74,357 19
1,000 Kyoritsu Air Technology, Inc. 10,858 3
2,000 Mabuchi Motor Company Ltd. 124,477 30
10,000 Matsushita Electric Industrial Company Ltd. 162,866 40
22,000 Minebea Company Ltd. 184,699 45
6,000 Mitsubishi Bank Ltd. 141,345 34
28,000 Mitsui Petrochemical Industries 229,370 56
2,000 Murata Manufacturing Company Ltd. 73,678 18
2,000 Nihon Jumbo Company Ltd. 69,994 17
16,000 Nippon Express 154,179 38
25 Nippon Telegraph & Telephone Corp. 202,372 49
92,000 * NKK Corporation 247,940 60
14,000 Nomura Securities Company Ltd. 305,375 74
6,000 Orix Corporation 247,208 60
2,000 Riso Kagaku Corporation 168,877 41
15,000 Sakura Bank Ltd. 190,496 46
1,000 Sankyo Company Ltd. 22,491 5
4,000 Sanwa Bank Ltd. 81,433 20
1,500 Sanyo Shinpan Finance Company Ltd. 123,604 30
5,000 Secom Company Ltd. 348,031 85
3,000 Sekisui Chemical Company 44,207 11
7,400 Shimamura Corporation 286,239 70
21,000 Showa Corporation 161,034 39
4,000 Sony Corporation 240,035 59
20,000 Sumitimo Marine & Fire 164,418 40
40,000 Sumitomo Realty & Development 283,076 69
16,000 Sumitomo Trust and Banking 226,462 55
5,000 Toda Construction Company Ltd. 43,383 11
1,000 Tsutsumi Jewelry Company Ltd. 50,120 12
- ------------------ ----------------------------------------------------------------------------------------------------------
6,388,191 1,558
- ------------------ ----------------------------------------------------------------------------------------------------------
France--5.7%
6,000 Banque Nationale De Paris 271,022 66
800 Canal Plus SA 150,172 37
2,430 Compagnie De Saint Gobain 269,316 66
1,301 Euro Rscg Worldwide SA 106,413 26
1,019 Groupe Danone 168,361 41
900 Peugeot Citroen SA 118,886 29
5,600 Renault SA 161,459 39
14,500 Rhone-Poulenc SA Series "A" 311,028 76
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2,334 Societe Generale Paris 288,744 70
2,200 Technip SA 151,604 37
- ------------------ ----------------------------------------------------------------------------------------------------------
2,343,158 571
- ------------------ ----------------------------------------------------------------------------------------------------------
United Kingdom--5.4%
18,000 Associated British Foods PLC 103,122 25
26,500 Bass PLC 295,822 72
262,000 BET PLC 516,612 126
30,000 Body Shop International PLC 70,797 17
60,000 British Steel PLC 151,608 37
15,000 British Telecommunictions PLC 82,443 20
36,000 Northern Foods PLC 95,576 23
20,244 Powergen PLC 167,367 41
30,000 Royal Insurance Holdings PLC 177,927 43
60,000 Tomkins PLC 262,698 65
80,000 Vodafone Group PLC 286,920 70
- ------------------ ----------------------------------------------------------------------------------------------------------
2,210,892 539
- ------------------ ----------------------------------------------------------------------------------------------------------
Netherlands--4.8%
20,000 Elsevier NV CVA 267,000 66
9,301 International Nederlanden Groep NV CVA 622,004 152
3,500 Unilever NV CVA 492,361 120
14,000 Vendex International NV (BDR) 416,597 102
1,250 Verenigd Bezit VNU 171,789 42
- ------------------ ----------------------------------------------------------------------------------------------------------
1,969,751 482
- ------------------ ----------------------------------------------------------------------------------------------------------
Germany--4.0%
1,400 Bayer AG 370,229 90
200 Beiersdorf AG 137,639 34
350 Daimler-Benz AG 177,045 43
500 Degussa AG 168,730 41
3,000 Deutsche Bank AG 142,740 35
300 Karstadt AG 123,246 30
850 Mannesmann AG 271,223 66
5,500 Veba AG 235,943 58
- ------------------ ----------------------------------------------------------------------------------------------------------
1,626,795 397
- ------------------ ----------------------------------------------------------------------------------------------------------
Spain--3.9%
2,300 Acerinox SA Regd 232,624 57
14,000 Banco Bilbao Vizcaya 504,301 123
4,000 Empresa Nacional De Electricidad SA 226,516 55
3,200 Empresa Nacional De Electricidad SA (ADR) 183,200 45
11,000 Repsol SA (ADR) 361,625 88
7,500 Telefonica De Espana 103,861 25
- ------------------ ----------------------------------------------------------------------------------------------------------
1,612,127 393
- ------------------ ----------------------------------------------------------------------------------------------------------
Australia--3.9%
11,205 Advance Bank of Australia 89,851 22
50,892 Amcor Ltd. 359,638 88
55,159 Australia & New Zealand Banking Group 258,905 63
44,660 Broken Hill Proprietary Ltd. 631,197 154
16,246 National Australia Bank Ltd. 146,225 35
6,200 Qantas Airways (ADR) (Note 4) 103,308 25
- ------------------ ----------------------------------------------------------------------------------------------------------
1,589,124 387
- ------------------ ----------------------------------------------------------------------------------------------------------
Norway--3.7%
45,200 Christiania Bank OG 105,881 26
8,378 Hafslund Nyco Series "A" Free 219,467 54
8,500 Kvaerner AS Series "A" 301,368 72
9,000 Orkla AS Class "A" 448,728 109
33,000 Saga Petroleum "A" Free 441,365 108
- ------------------ ----------------------------------------------------------------------------------------------------------
1,516,809 369
- ------------------ ----------------------------------------------------------------------------------------------------------
Hong Kong--3.3%
94,099 Hong Kong Telecom 167,948 41
58,000 Hutchison Whampoa Ltd. 353,313 86
42,000 Sun Hung Kai Properties 343,572 84
63,000 Swire Pacific Class "A" 488,880 119
- ------------------ ----------------------------------------------------------------------------------------------------------
1,353,713 330
- ------------------ ----------------------------------------------------------------------------------------------------------
Switzerland--3.0%
535 Ciba Geigy AG Regd 471,929 114
580 Nestle AG Regd 643,184 157
250 Sulzer AG PC 133,620 33
- ------------------ ----------------------------------------------------------------------------------------------------------
1,248,733 304
- ------------------ ----------------------------------------------------------------------------------------------------------
Singapore--2.8%
34,000 Development Bank of Singapore 423,055 104
55,000 Keppel Corporation 489,935 119
18,000 Overseas Chinese Banking Corporation Ltd. 225,243 55
- ------------------ ----------------------------------------------------------------------------------------------------------
1,138,233 278
- ------------------ ----------------------------------------------------------------------------------------------------------
Sweden--1.7%
8,100 Astra AB Series "A" Free 323,891 78
14,000 Avesta Sheffield AB Free 123,581 30
11,000 * BT Industries AB 121,167 30
11,000 Stora Kopparbergs Bergslags Series "A" 129,466 32
- ------------------ ----------------------------------------------------------------------------------------------------------
698,105 170
- ------------------ ----------------------------------------------------------------------------------------------------------
Italy--1.6%
160,000 Banca Commercial Italiana 341,904 83
199,000 Telecom Italia SPA 309,823 76
- ------------------ ----------------------------------------------------------------------------------------------------------
651,727 159
- ------------------ ----------------------------------------------------------------------------------------------------------
Denmark--1.6%
21,700 Tele Danmark A/S Class "B" (ADR) 599,463 146
1,000 Unidanmark A/S Class "A" Regd 49,623 12
- ------------------ ----------------------------------------------------------------------------------------------------------
649,086 158
- ------------------ ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Canada--1.6%
35,000 Canadian Pacific Ltd. 634,375 155
- ------------------ ----------------------------------------------------------------------------------------------------------
New Zealand--1.3%
423,000 Brierley Investments Ltd. 334,593 82
84,000 Carter Holt Harvey Ltd. 181,213 44
- ------------------ ----------------------------------------------------------------------------------------------------------
515,806 126
- ------------------ ----------------------------------------------------------------------------------------------------------
Finland--1.2%
70,000 * Merita Bank Ltd. 177,331 43
3,000 Metsa Serla OY Class "B" 92,584 23
5,500 * Nokia Corporation Class "A" (ADR) 213,813 52
- ------------------ ----------------------------------------------------------------------------------------------------------
483,728 118
- ------------------ ----------------------------------------------------------------------------------------------------------
Philippines--1.1%
22,000 * Philippine National Bank 243,239 59
204,600 * Pilipino Telephone 206,707 50
- ------------------ ----------------------------------------------------------------------------------------------------------
449,946 109
- ------------------ ----------------------------------------------------------------------------------------------------------
Mexico--.9%
19,000 Cementos De Mexico SA Class "A" 62,883 15
24,000 Fomento Economico Mexicano SA Class "B" 54,013 13
13,000 * Grupo Carso SA Class "A" 70,190
6,000 Kimberly Clark De Mexico SA Class "A" 90,645 22
10,700 * Transportacion Maritima Mexicana SA Class "A" (ADR) 80,250 20
- ------------------ ----------------------------------------------------------------------------------------------------------
357,981 87
- ------------------ ----------------------------------------------------------------------------------------------------------
Thailand--.7%
5,000 Bangkok Bank Public Company Ltd. Foreign Regd 60,740 15
49,200 Bangkok Metropolitan Bank Public Company Ltd. 45,898 11
192,800 Bangkok Metropolitan Bank Public Company Ltd. Foreign Regd 183,681 45
- ------------------ ----------------------------------------------------------------------------------------------------------
290,319 71
- ------------------ ----------------------------------------------------------------------------------------------------------
Malaysia--.6%
98,000 Sime Darby Berhad 260,543 64
- ------------------ ----------------------------------------------------------------------------------------------------------
Austria--.6%
1,800 EVN 247,560 60
- ------------------ ----------------------------------------------------------------------------------------------------------
Belgium--.5%
5,000 Delhaize Le Lion 207,277 50
- ------------------ ----------------------------------------------------------------------------------------------------------
Portugal--.5%
10,700 * Portugal Telecom (ADR) 203,300 50
- ------------------ ----------------------------------------------------------------------------------------------------------
Brazil--.4%
7,000 Electrobras ON (ADR) 94,709 23
10,000 Usiminas Siderurg Minas (ADR) 81,281 20
- ------------------ ----------------------------------------------------------------------------------------------------------
175,990 43
- ------------------ ----------------------------------------------------------------------------------------------------------
Indonesia--.4%
49,000 Jaya Real Property Foreign Regd 131,795 32
7,500 Semen Gresik (Note 4) 20,993 5
- ------------------ ----------------------------------------------------------------------------------------------------------
152,788 37
- ------------------ ----------------------------------------------------------------------------------------------------------
Chile-- .3%
1,500 Compania De Telecomunicaciones De Chile SA (ADR) 124,313 30
- ------------------ ----------------------------------------------------------------------------------------------------------
Argentina--.3%
2,000 Telefonica De Argentina SA Class "B" (ADR) 54,500 13
3,000 YPF SA Class "D" (ADR) 64,875 16
- ------------------ ----------------------------------------------------------------------------------------------------------
119,375 29
- ------------------ ----------------------------------------------------------------------------------------------------------
India--.1%
2,000 ITC Ltd. (GDR) (Note 4) 14,276 3
1,000 Reliance Industries Ltd. (GDS) (Note 4) 14,000 4
- ------------------ ----------------------------------------------------------------------------------------------------------
28,276 7
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $32,506,045) 38,963,986 9,501
- ------------------ ----------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--1.7%
300M United States Treasury Bill, 5.33%, 1/25/96 298,934 73
300M United States Treasury Bill, 5.34%, 1/25/96 298,933 73
100M United States Treasury Bill, 5.35%, 1/25/96 99,643 24
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of U.S. Government Obligations (cost $697,510) 697,510 170
- ------------------ ----------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--2.7%
1,116M Aubrey G. Lanston & Co., Inc., 5.90%, 1/2/96 (collateralized by $1,115M
U.S. Treasury Notes, 61/4%, 12/31/1996) (cost $1,116,000 1,116,000 272
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $34,319,555) 99.4% 40,777,496 9,943
Other Assets, Less Liabilities .6 234,066 57
- ------------------ ----------------------------------------------------------------------------------------------------------
Net Assets 100.0% $41,011,562 $10,000
================== ==========================================================================================================
* Non-income producing
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
First Investors Life Series Fund-International Securities Fund
At December 31, 1995, sector diversification of the Portfolio was as follows
- ------------------------------------------------------------------------------------------------------------------------------------
Percentage
Sector Diversification of Net Assets
Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Banks 11.8% $4,820,123
Food/Beverage/Tobacco 7.2 2,943,894
Drugs 6.8 2,802,453
Telephone 6.8 2,794,608
Retail 6.0 2,452,977
Business Services 5.9 2,391,958
Energy Sources 5.8 2,386,518
Metals & Minerals 5.5 2,266,493
Media 4.5 1,855,278
Real Estate Companies 3.9 1,600,636
Paper Forest Products 3.7 1,529,540
Transportation 3.3 1,358,739
Electric Utilities 2.8 1,155,295
Insurance 2.8 1,128,346
Electrical Equipment 2.7 1,107,745
Financial Services 2.6 1,073,885
Household Products 2.6 1,048,311
Machinery & Manufacturing 2.0 826,120
Chemicals 1.9 771,183
Automotive 1.5 618,424
Computers & Office Equipment 1.2 503,877
Entertainment Products 1.0 402,901
Travel & Leisure 1.0 400,308
Electronics .8 332,734
Communications Equipment .5 213,813
Medical Products .3 133,620
Housing .1 44,207
U.S. Government Obligations 1.7 697,510
Repurchase Agreements 2.7 1,116,000
Total Investments 99.4 40,777,496
Other Assets, Less Liabilities .6 234,066
----- -----------
Net Assets 100.0% $41,011,562
===== ===========
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Portfolio of Investments
First Investors Life Series Fund-Investment Fund
December 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS--80.1%
Aerospace/Defense--5.2%
$ 300M Boeing Co., 6.35%, 2003 $ 308,038 $ 189
250M Lockheed Corp., 6 3/4%, 2003 261,500 161
250M Rockwell International Corp., 8 3/8%, 2001 279,481 172
- ------------------ ----------------------------------------------------------------------------------------------------------
849,019 522
- ------------------ ----------------------------------------------------------------------------------------------------------
Automotive--1.5%
250M Hertz Corporation, 6 3/8%, 2005 251,252 155
- ------------------ ----------------------------------------------------------------------------------------------------------
Building Materials--.7%
100M Masco Corp., 9%, 2001 114,198 70
- ------------------ ----------------------------------------------------------------------------------------------------------
Chemicals--2.0%
300M Lubrizol Corp., 7 1/4%, 2025 330,011 203
- ------------------ ----------------------------------------------------------------------------------------------------------
Conglomerates--3.7%
300M Hanson Overseas, B.V., 7 3/8%, 2003 322,127 198
250M Tenneco, Inc., 7 7/8%, 2002 272,987 168
- ------------------ ----------------------------------------------------------------------------------------------------------
595,114 366
- ------------------ ----------------------------------------------------------------------------------------------------------
Consumer Non-Durables--2.1%
300M American Home Products Corp., 7.90%, 2005 338,058 208
- ------------------ ----------------------------------------------------------------------------------------------------------
Consumer Products--1.6%
250M Mattel, Inc., 6 3/4%, 2000 256,530 158
- ------------------ ----------------------------------------------------------------------------------------------------------
Electric & Gas Utilities--11.7%
250M Baltimore Gas & Electric Co., 6 1/2%, 2003 256,517 158
200M Carolina Power & Light Co., 7 3/4%, 2003 205,174 126
200M Commonwealth Edison, 8 1/4%, 2006 228,141 140
250M Duke Power Co., 5 7/8%, 2003 244,550 150
200M Kansas Gas & Electric Co., 7.60%, 2003 215,688 133
75M Old Dominion Electric Cooperative, 7.97%, 2002 81,425 50
300M Pennsylvania Power & Light Co., 6 7/8%, 2003 311,728 192
250M Philadelphia Electric Co., 8%, 2002 272,850 168
75M Southwestern Electric Power Co., 7%, 2007 80,152 49
- ------------------ ----------------------------------------------------------------------------------------------------------
1,896,225 1,166
- ------------------ ----------------------------------------------------------------------------------------------------------
Energy--2.2%
315M Baroid Corp., 8%, 2003 349,495 215
- ------------------ ----------------------------------------------------------------------------------------------------------
Financial Services--10.9%
75M Banc One Corp., 7 1/4%, 2002 79,896 49
40M BankAmerica Corp., 9 1/2%, 2001 46,315 28
200M Barnett Banks, Inc., 8 1/2%, 1999 215,391 132
300M Chemical Bank, Inc., 7%, 2005 316,138 194
200M Citicorp, 8%, 2003 221,008 136
150M First Union Corp., 8 1/8%, 2002 165,956 102
250M Mellon Bank N.A., 6 1/2%, 2005 254,963 157
50M Meridian Bancorp, 7 7/8%, 2002 54,849 34
75M Morgan Guaranty Trust Co., 7 3/8%, 2002 80,537 50
300M Nationsbank Corporation., 8 1/8%, 2002 331,500 204
- ------------------ ----------------------------------------------------------------------------------------------------------
1,766,553 1,086
- ------------------ ----------------------------------------------------------------------------------------------------------
Food/Beverage/Tobacco--5.0%
250M Anheuser Busch Companies, Inc., 7%, 2005 262,918 162
25M Coca-Cola Enterprises, Inc., 7 7/8%, 2002 27,492 17
300M Hershey Foods Corp., 6.70%, 2005 316,265 194
200M Philip Morris Cos., Inc., 7 1/8%, 2002 209,819 129
- ------------------ ----------------------------------------------------------------------------------------------------------
816,494 502
- ------------------ ----------------------------------------------------------------------------------------------------------
Food Services--1.6%
250M McDonalds Corporation, 6 5/8%, 2005 258,432 159
- ------------------ ----------------------------------------------------------------------------------------------------------
Healthcare--2.0%
300M Columbia /HCA Healthcare, 7.69%, 2025 332,035 204
- ------------------ ----------------------------------------------------------------------------------------------------------
Investment/Finance Companies--6.0%
300M Associates Corp. of North America, 7 7/8%, 2001 327,871 202
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
300M General Electric Capital Corp., 7 7/8%, 2006 343,325 211
300M General Motors Acceptance Corp., 7 1/8%, 1999 312,301 192
- ------------------ ----------------------------------------------------------------------------------------------------------
983,497 605
- ------------------ ----------------------------------------------------------------------------------------------------------
Media/Cable Television--5.0%
300M New York Times Co., Inc., 7 5/8%, 2005 333,111 205
250M PanAmSat Capital Corp., 9 3/4%, 2000 263,750 162
200M Tele-Communications, Inc., 8 1/4%, 2003 217,718 134
- ------------------ ----------------------------------------------------------------------------------------------------------
814,579 501
- ------------------ ----------------------------------------------------------------------------------------------------------
Natural Gas--1.9%
300M Columbia Gas System, Inc., 6.80%, 2005 309,953 191
- ------------------ ----------------------------------------------------------------------------------------------------------
Oil/Natural Gas--1.7%
250M BP America, Inc., 7 7/8%, 2002 276,599 170
- ------------------ ----------------------------------------------------------------------------------------------------------
Paper/Forest Prod/cts--3.4%
100M S. D. Warren Company, 12%, 2004 110,500 67
150M Stone Container Corp., 10 3/4%, 2002 155,813 96
250M Temple Inland, Inc., 9%, 2001 285,606 176
- ------------------ ----------------------------------------------------------------------------------------------------------
551,919 339
- ------------------ ----------------------------------------------------------------------------------------------------------
Retail-General Merchandise--1.5%
250M Penney J.C. & Co., 6 1/8%, 2003 250,904 154
- ------------------ ----------------------------------------------------------------------------------------------------------
Technology--3.4%
250M International Business Machines Corp., 6 3/8%, 2000 256,290 158
275M Xerox Corp., 7.15%, 2004 293,085 180
- ------------------ ----------------------------------------------------------------------------------------------------------
549,375 338
- ------------------ ----------------------------------------------------------------------------------------------------------
Telephone--7.0%
30M GTE Corp., 8.85%, 1998 31,832 20
350M MCI Communication Corp., 7 1/2%, 2004 384,448 236
250M New Jersey Bell Telephone Co., 7 3/8%, 2012 258,419 159
200M Pacific Bell Telephone Co., 7%, 2004 210,376 129
250M Southern Bell Telephone & Telegraph Co., Inc., 8 1/8%, 2017 259,348 159
- ------------------ ----------------------------------------------------------------------------------------------------------
1,144,423 703
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Corporate Bonds (cost $12,405,719) 8,015
- ------------------ ----------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS--1.9%
300M Federal Home Loan Mortgage Corp., 7.88%, 2004 (cost $300,000) 306,852 189
- ------------------ ----------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--8.0%
1,200M U.S. Treasury Note, 7 3/4%., 2000 (cost $1,280,312) 1,303,875 802
- ------------------ ----------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--8.0%
850M Gannett Company, 5.85%, 1/8/96 849,034 522
450M Home Depot, 5.70%, 1/5/96 449,714 277
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Short-Term Corporate Notes (cost $1,298,748) 1,298,748 799
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $15,284,779) 98.0% 15,944,140 9,805
Other Assets, Less Liabilities 2.0 317,731 195
- ------------------ ----------------------------------------------------------------------------------------------------------
Net Assets 100.0% $16,261,871 $10,000
================== ==========================================================================================================
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
First Investors Life Series Fund-Target 2007 Fund
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principle $10,000 of
Amount Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY ZERO COUPON OBLIGATIONS--84.1%
$ 570M Agency For International Development-Israel ("AID"), 2/15/2007 $ 294,744 $ 299
119M Agency For International Development-Israel ("AID"), 3/15/2007 61,219 62
1,513M Agency For International Development-Israel ("AID"), 8/15/2007 757,797 769
181M Agency For International Development-Israel ("AID"), 10/1/2007 89,771 91
980M Agency For International Development-Israel ("AID"), 2/15/2008 474,768 482
493M Federal Judiciary Office Building ("JOBS"), 2/15/2007 250,530 254
1,030M Federal National Mortgage Association, 8/1/2008 476,340 483
303M Financing Corporations ("FICOS"), 6/6/2007 150,964 153
1,404M Financing Corporations ("FICOS"), 12/6/2007 675,394 685
220M Financing Corporations ("FICOS"), 12/27/2007 105,418 107
4,070M Government Trust Certificate, 11/15/2007 1,992,981 2,021
586M International Bank For Reconstruction & Development, 8/15/2007 287,728 292
3,450M Resolution Funding Corporation, 10/15/2007 1,724,245 1,749
1,950M Tennessee Valley Authority, 11/1/2007 946,395 960
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of U.S. Government Agency Zero Coupon
Obligations (cost $7,658,222) 8,288,294 8,407
- ------------------ ----------------------------------------------------------------------------------------------------------
UNITED STATES TREASURY ZERO COUPON OBLIGATIONS--15.0%
200M Treasury Investors Growth Receipts ("TIGERS"), 11/15/2007 98,715 100
2,750M U.S. Treasury Strips, 11/15/2007 1,384,075 1,404
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of U.S. Government Agency Zero Coupon Obligations
(cost $1,388,165) 1,482,790 1,504
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $9,046,387) 99.1% 9,771,084 9,911
Other Assets, Less Liabilities .9 88,663 89
- ------------------ ----------------------------------------------------------------------------------------------------------
Net Assets 100.0% $9,859,747 $10,000
================== ==========================================================================================================
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
First Investors Life Series Fund-Utilities Income Fund
December 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS--93.2%
Electric Power--44.8%
6,000 American Electric Power Company $ 243,000 $ 165
7,600 Baltimore Gas & Electric Company 216,600 147
5,000 Bangor Hydro-Electric Company 57,500 39
5,000 Carolina Power & Light Company 172,500 117
8,000 CINergy Corporation 245,000 167
2,000 CMS Energy Corporation 59,750 41
9,900 DPL, Inc. 245,025 168
7,750 DQE, Inc. 238,312 162
5,500 DTE Energy Company 189,750 129
6,100 Duke Power Company 288,987 197
1,000 Empresa Nacional De Electricidad SA 57,250 39
7,600 FPL Group, Inc. 352,450 240
8,500 General Public Utilities Corporation 289,000 197
12,000 Houston Industries, Inc. 291,000 198
6,000 Illinova Corporation 180,000 122
3,500 Kansas City Power & Light Company 91,437 63
4,200 New England Electric System 166,425 113
4,500 NIPSCO Industries, Inc. 172,125 117
5,800 Northeast Utilities 141,375 96
3,000 Northern States Power Company 147,375 100
5,000 Ohio Edison Company 117,500 80
10,700 PacifiCorp 227,375 155
4,000 Peco Energy Company 120,500 82
6,500 Pinnacle West Capital Corporation 186,875 127
5,500 Portland General Corporation 160,187 109
6,300 PP&L Resources, Inc. 157,500 107
7,100 Public Service Company of Colorado 251,163 171
8,000 * Public Service Company of New Mexico 141,000 96
7,000 Public Service Enterprise Group, Inc. 214,375 146
3,000 Scana Corporation 85,875 57
8,800 Southern Company 216,700 147
7,800 Teco Energy, Inc. 199,875 136
6,900 Texas Utilities Company 283,763 193
3,000 TNP Enterprises, Inc. 56,250 38
5,000 Unicom Corporation 163,750 111
5,500 Wisconsin Energy Corporation 168,438 115
- ------------------ ----------------------------------------------------------------------------------------------------------
6,595,987 4,487
- ------------------ ----------------------------------------------------------------------------------------------------------
Natural Gas--22.4%
8,800 Atlanta Gas Light Company 173,800 118
3,000 Atmos Energy Corporation 69,000 47
4,400 Brooklyn Union Gas Company 128,700 88
5,000 * Columbia Gas System, Inc. 219,375 149
2,500 Consolidated Natural Gas Company 113,437 77
4,500 El Paso Natural Gas Company 127,687 87
5,000 Enron Corporation 190,625 130
8,000 MCN Corporation 186,000 127
4,400 National Fuel Gas Company 147,950 101
5,000 New Jersey Resources Corporation 150,625 102
4,200 NICOR, Inc. 115,500 79
7,800 Pacific Enterprises 220,350 150
4,400 Panhandle Eastern Corporation 122,650 83
5,000 Piedmont Natural Gas Company, Inc. 116,250 79
5,000 Questar Corporation 167,500 114
4,400 Sonat, Inc. 156,750 107
5,000 Southwest Gas Corporation 88,125 60
1,500 * Tejas Gas Corporation 79,313 54
3,000 Tenneco, Inc. 148,875 101
6,500 UGI Corporation 134,875 92
4,500 Washington Energy Company 83,813 57
4,300 Washington Gas & Light Company 88,150 60
3,000 Wicor, Inc. 96,750 65
3,700 Williams Companies, Inc. 162,338 110
- ------------------ ----------------------------------------------------------------------------------------------------------
3,288,438 2,237
- ------------------ ----------------------------------------------------------------------------------------------------------
Technology--3.4%
5,000 * Airtouch Communications, Inc. 141,250 96
3,000 A T & T Corp. 194,250 132
4,000 Sprint Corporation 159,500 109
- ------------------ ----------------------------------------------------------------------------------------------------------
495,000 337
- ------------------ ----------------------------------------------------------------------------------------------------------
Telecommunications--5.8%
4,000 Comcast Corporation Class "A" 70,500 48
5,000 Ericsson (L.M.) Telephone Co. (ADR) Class "B" 97,500 66
3,000 * LCI International, Inc. 61,500 42
3,000 * MFS Communications Company, Inc. 159,750 109
5,000 * Mobile Telecommunication Technologies Corporation 106,875 73
500 Motorola, Inc. 28,500 19
875 * Tele-Communications, Inc., Liberty Media Group Class "A" 23,515 16
5,000 US West Communications Group 178,750 121
5,000 US West Media Group 95,000 65
1,000 Vodafone Group PLC (ADR) 35,250 24
- ------------------ ----------------------------------------------------------------------------------------------------------
857,140 583
- ------------------ ----------------------------------------------------------------------------------------------------------
Telephone/Utilities--16.8%
5,900 Ameritech Corporation 348,100 237
5,800 Bell Atlantic Corporation 387,875 264
10,600 BellSouth Corporation 461,100 314
3,500 Century Telephone Enterprises 111,125 76
4,400 Frontier Corporation 132,000 90
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
9,600 GTE Corporation 422,400 287
3,500 NYNEX Corporation 189,000 128
6,100 SBC Communications, Inc. 350,750 239
1,500 Telefonica De Espana (ADR) 62,813 43
- ------------------ ----------------------------------------------------------------------------------------------------------
2,465,163 1,678
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $11,635,880) 13,701,728 9,322
- ------------------ ----------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--5.5%
200M Chevron Oil Corporation, 5.70%, 1/3/96 199,937 136
400M General Telephone Northwest, 5.82%, 1/3/96 399,871 272
200M Hitachi America, 5.90%, 1/10/96 199,705 136
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Short-Term Corporate Notes (cost $799,513) 799,513 544
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $12,435,393) 98.7% 14,501,241 9,866
Other Assets, Less Liabilities 1.3 197,094 134
- ------------------ ----------------------------------------------------------------------------------------------------------
Net Assets 100.0% $14,698,335 $10,000
================== ==========================================================================================================
* Non-income producing
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
FIRST INVESTORS LIFE SERIES FUND
December 31, 1995
- --------------------------------------------- --------------- ------------- --------------- --------------- ---------------
CASH
BLUE CHIP MANAGEMENT DISCOVERY GOVERNMENT GROWTH
- --------------------------------------------- --------------- ------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Assets
Investments in securities:
At identified cost $53,859,731 $4,109,957 $43,809,559 $9,252,545 $42,699,820
=============== ============= =============== =============== ===============
At value (Note 1A) $66,472,517 $4,109,957 $50,929,961 $9,354,063 $51,016,270
Cash (overdraft) 244,737 65,239 241,141 16,956 1,300
Receivables:
Trust shares sold 149,102 4,164 129,155 2,075 115,621
Investment securities sold -- -- 35,000 -- 56,112
Interest and dividends 101,691 -- 10,036 134,681 66,870
Other assets 141 644 578 -- 603
--------------- ------------- --------------- --------------- ---------------
Total Assets 66,968,188 4,180,004 51,345,871 9,507,775 51,256,776
--------------- ------------- --------------- --------------- ---------------
Liabilities
Payables:
Investment securities purchased -- -- 240,178 -- --
Trust shares redeemed 10,453 15,159 161,737 4,819 41,582
Accrued advisory fee 41,528 1,224 31,614 2,760 31,580
Accrued expenses 16,463 2,057 12,389 9 12,391
--------------- ------------- --------------- --------------- ---------------
Total Liabilities 68,444 18,440 445,918 7,588 85,553
--------------- ------------- --------------- --------------- ---------------
Net Assets $66,899,744 $4,161,564 $50,899,953 $9,500,187 $51,171,223
=============== ============= =============== =============== ===============
Net Assets Consist of:
Capital paid in $51,315,635 $4,161,564 $41,523,140 $9,262,818 $40,897,473
Undistributed net investment income 1,018,903 -- 253,600 601,947 459,781
Accumulated net realized
gain (loss) on investments and
foreign currency transactions 1,952,420 -- 2,002,811 (466,096) 1,497,519
Net unrealized appreciation
of investments and translation of
assets in foreign currencies 12,612,786 -- 7,120,402 101,518 8,316,450
--------------- ------------- --------------- --------------- ---------------
Total $66,899,744 $4,161,564 $50,899,953 $9,500,187 $51,171,223
=============== ============= =============== =============== ===============
Shares of Beneficial
Interest Outstanding (Note 2) 3,940,249 4,161,564 2,187,245 903,314 2,499,680
=============== ============= =============== =============== ===============
Net Asset Value, Offering and
Redemption Price Per Share
(Net assets divided
by shares outstanding) $16.98 $1.00 $23.27 $10.52 $20.47
======== ======== ======== ======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
FIRST INVESTORS LIFE SERIES FUND
December 31, 1995
- --------------------------------------------- --------------- --------------- --------------- ---------------
INTERNATIONAL INVESTMENT TARGET
UTILITIES
HIGH YIELD SECURITIES GRADE MATURITY 2007
INCOME
- --------------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Assets
Investments in securities:
At identified cost $39,977,368 $34,319,555 $15,284,779 $9,046,387 $12,435,393
=============== =============== =============== =============== ===============
At value (Note 1A) $41,212,752 $40,777,496 $15,944,140 $9,771,084 $14,501,241
Cash (overdraft) (84,149) 19,547 66,404 29,874 87,522
Receivables:
Trust shares sold 37,608 159,030 15,283 84,297 69,014
Investment securities sold -- 60,322 -- 47,152 --
Interest and dividends 798,851 88,993 266,508 -- 44,681
Other assets 792 132 -- -- 35
--------------- --------------- --------------- --------------- ---------------
Total Assets 41,965,854 41,105,520 16,292,335 9,932,407 14,702,493
--------------- --------------- --------------- --------------- ---------------
Liabilities
Payables:
Investment securities purchased -- 22,243 -- 72,660 --
Trust shares redeemed 30,499 20,192 19,238 -- 48
Accrued advisory fee 25,970 25,131 4,580 -- 4,110
Accrued expenses 15,424 26,392 6,646 -- --
--------------- --------------- --------------- --------------- ---------------
Total Liabilities 71,893 93,958 30,464 72,660 4,158
--------------- --------------- --------------- --------------- ---------------
Net Assets $41,893,961 $41,011,562 $16,261,871 $9,859,747 $14,698,335
=============== =============== =============== =============== ===============
Net Assets Consist of:
Capital paid in $38,230,979 $32,724,961 $14,749,614 $8,883,571 $12,373,687
Undistributed net investment income 3,663,919 493,877 936,245 209,332 380,800
Accumulated net realized
gain (loss) on investments and
foreign currency transactions (1,236,321) 1,334,545 (83,349) 42,147 (122,000)
Net unrealized appreciation
of investments and translation of
assets in foreign currencies 1,235,384 6,458,179 659,361 724,697 2,065,848
--------------- --------------- --------------- --------------- ---------------
Total $41,893,961 $41,011,562 $16,261,871 $9,859,747 $14,698,335
=============== =============== =============== =============== ===============
Shares of Beneficial
Interest Outstanding (Note 2) 3,620,808 2,632,200 1,385,759 804,138 1,252,365
=============== =============== =============== =============== ===============
Net Asset Value, Offering and
Redemption Price Per Share
(Net assets divided
by shares outstanding) $11.57 $15.58 $11.73 $12.26 $11.74
======== ======== ======== ======== ========
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Operations FIRST INVESTORS LIFE SERIES FUND Year Ended December 31, 1995
CASH
BLUE CHIP MANAGEMENT DISCOVERY GOVERNMENT GROWTH
--------- ---------- --------- ---------- ------
<S> <C> <C> <C> <C> <C>
Investment Income
Income:
Interest $303,155 $245,440 $472,205 $633,757 $113,559
Dividends 1,165,452 -- 119,610 -- 707,980
Consent fees -- -- -- -- --
Total income 1,468,607 245,440 591,815 633,757 821,539
Expenses (Notes 1 and 5):
Advisory fee 399,774 30,852 301,852 66,610 311,003
Professional fees 16,075 6,027 10,186 4,869 10,665
Reports to shareholders 16,614 1,528 13,537 3,181 14,601
Custodian fees 12,884 5,345 13,581 4,764 15,283
Other expenses 14,878 1,370 11,987 2,899 13,003
Total expenses 460,225 45,122 351,143 82,323 364,555
Less: Expenses waived or assumed -- (19,978) -- (51,238) --
Custodian fees paid indirectly (12,154) (471) (13,418) -- (2,612)
Expenses--net 448,071 24,673 337,725 31,085 361,943
Net investment income 1,020,536 220,767 254,090 602,672 459,596
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions (Note 3):
Net realized gain (loss) on investments and foreign
currency transactions 1,953,467 178 2,003,359 322,099 1,548,981
Net unrealized appreciation of investments and translation
of assets in foreign currencies 12,258,988 -- 6,147,258 344,995 6,983,358
Net gain on investments and foreign currency 14,212,455 178 8,150,617 667,094 8,532,339
Net Increase in Net Assets Resulting from Operations $15,232,991 $220,945 $8,404,707 $1,269,766 $8,991,935
+ Net of $4,803 foreign taxes withheld
(a) Includes net realized gain of $2,862 on foreign currency transactions
(b) Includes $1,062 of net unrealized appreciation on translation of assets in
foreign currencies *From April 25, 1995 (commencement of operations) to
December 31, 1995
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Operations FIRST INVESTORS LIFE SERIES FUND Year Ended December 31, 1995
INTERNATIONAL INVESTMENT TARGET
UTILITIES
HIGH YIELD SECURITIES GRADE MATURITY 2007*
INCOME
- -------------------------------------------------------------------------------------------------------------------------------
- ----
<S> <C> <C> <C> <C> <C>
Investment Income
Income:
Interest $3,700,593 $139,067 $979,652 $209,332 $39,389
Dividends 209,611 712,375+ -- -- 373,451
Consent fees 70,691 -- 22,113 --
Total income 3,980,895 851,442 1,001,765 209,332 412,840
Expenses (Notes 1 and 5):
Advisory fee 279,016 262,203 103,248 25,339 67,678
Professional fees 12,296 13,532 7,323 1,319 3,397
Reports to shareholders 13,122 12,521 5,280 249 2,363
Custodian fees 7,828 56,986 4,124 1,219 5,462
Other expenses 10,077 10,347 4,678 850 3,120
Total expenses 322,339 355,589 124,653 28,976 82,020
Less: Expenses waived or assumed -- -- (55,066) (28,976) (50,437)
Custodian fees paid indirectly (7,828) -- (4,092) --
Expenses--net 314,511 355,589 65,495 -- 31,583
Net investment income 3,666,384 495,853 936,270 209,332 381,257
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions (Note 3):
Net realized gain (loss) on investments and foreign
currency transactions (147,796) 1,334,830(a) (35,809) 42,147 (21,926)
Net unrealized appreciation of investments and translation
of assets in foreign currencies 3,097,609 4,263,821(b) 1,528,072 724,697 2,200,558
Net gain on investments and foreign currency 2,949,813 5,598,651 1,492,263 766,844 2,178,632
Net Increase in Net Assets Resulting from Operations $6,616,197 $6,094,504 $2,428,533 $976,176 $2,559,889
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
FIRST INVESTORS LIFE SERIES FUND
BLUE CHIP CASH MANAGEMENT
--------------------------------- ---------------------------------
Year Ended December 31 1995 1994 1995 1994
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income $1,020,536 $568,219 $220,767 $144,250
Net realized gain (loss) on investments and
foreign currency transactions 1,953,467 2,931,871 178 61
Net unrealized appreciation (depreciation)
of investments and translation of assets
in foreign currencies 12,258,988 (4,069,423) -- --
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets
resulting from operations. 15,232,991 (569,333) 220,945 144,311
--------------- --------------- --------------- ---------------
Distributions to Shareholders from:
Net investment income (569,704) (204,030) (220,945) (144,311)
Net realized gain on investments (2,922,430) (416,537) -- --
--------------- --------------- --------------- ---------------
Total distributions (3,492,134) (620,567) (220,945) (144,311)
--------------- --------------- --------------- ---------------
Trust Share Transactions (a)
Proceeds from shares sold 12,100,755 9,253,157 1,802,472 828,637
Value of distributions reinvested 3,492,134 620,566 220,945 144,311
Cost of shares redeemed (1,858,303) (1,289,081) (1,790,408) (1,286,977)
--------------- --------------- --------------- ---------------
Net increase (decrease) from trust
share transactions 13,734,586 8,584,642 233,009 (314,029)
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets 25,475,443 7,394,742 233,009 (314,029)
Net Assets
Beginning of year 41,424,301 34,029,559 3,928,555 4,242,584
--------------- --------------- --------------- ---------------
End of year+ $66,899,744 $41,424,301 $4,161,564 $3,928,555
=============== =============== =============== ===============
+Includes undistributed net investment income of $1,018,903 $568,071 $ -- $ --
=============== =============== =============== ===============
(a) Trust Shares Issued and Redeemed
Sold 791,231 664,327 1,802,472 828,637
Issued for distributions reinvested 261,975 45,969 220,945 144,311
Redeemed (125,241) (92,113) (1,790,408) (1,286,977)
---------------- -------------- -------------- ----------------
Net increase (decrease) in shares outstanding 927,965 618,183 233,009 (314,029)
=============== =============== =============== ===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
FIRST INVESTORS LIFE SERIES FUND
DISCOVERY GOVERNMENT
----------------------------------- ---------------------------------
Year Ended December 31 1995 1994 1995 1994
------------------ --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income $254,090 $93,202 $602,672 $530,105
Net realized gain (loss) on investments and
foreign currency transactions 2,003,359 1,992,419 322,099 (786,678)
Net unrealized appreciation (depreciation)
of investments and translation of assets
in foreign currencies 6,147,258 (2,687,366) 344,995 (75,120)
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets
resulting from operations. 8,404,707 (601,745) 1,269,766 (331,693)
--------------- --------------- --------------- ---------------
Distributions to Shareholders from:
Net investment income (93,692) -- (507,584) (84,143)
Net realized gain on investments (1,992,932) (1,014,247) -- (138,692)
--------------- --------------- --------------- ---------------
Total distributions (2,086,624) (1,014,247) (507,584) (222,835)
--------------- --------------- --------------- ---------------
Trust Share Transactions (a)
Proceeds from shares sold 13,530,189 10,106,014 1,678,903 1,488,126
Value of distributions reinvested 2,086,624 1,014,247 507,584 222,836
Cost of shares redeemed (1,278,557) (481,564) (1,326,445) (1,512,005)
--------------- --------------- --------------- ---------------
Net increase (decrease) from trust
share transactions 14,338,256 10,638,697 860,042 198,957
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets 20,656,339 9,022,705 1,622,224 (355,571)
Net Assets
Beginning of year 30,243,614 21,220,909 7,877,963 8,233,534
--------------- --------------- --------------- ---------------
End of year+ $50,899,953 $30,243,614 $9,500,187 $7,877,963
=============== =============== =============== ===============
+ Includes undistributed net investment income of $253,600 $93,202 $601,947 $506,859
=============== =============== =============== ===============
(a) Trust Shares Issued and Redeemed
Sold 617,324 501,020 170,551 151,268
Issued for distributions reinvested 109,304 51,897 53,998 22,959
Redeemed (61,853) (24,001) (133,164) (152,565)
----------------- ---------------- ---------------- ---------------
Net increase (decrease) in shares outstanding 664,775 528,916 91,385 21,662
=============== =============== =============== ===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
FIRST INVESTORS LIFE SERIES FUND
GROWTH HIGH YIELD
--------------------------------- ---------------------------------
Year Ended December 31 1995 1994 1995 1994
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income $459,596 $176,061 $3,666,384 $2,971,391
Net realized gain (loss) on investments and
foreign currency transactions 1,548,981 555,580 (147,796) (106,914)
Net unrealized appreciation (depreciation)
of investments and translation of assets
in foreign currencies 6,983,358 (1,490,527) 3,097,609 (3,352,582)
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets
resulting from operations. 8,991,935 (758,886) 6,616,197 (488,105)
--------------- --------------- --------------- ---------------
Distributions to Shareholders from:
Net investment income (175,754) -- (2,973,759) (1,135,309)
Net realized gain on investments (591,906) (336,304) -- --
--------------- --------------- --------------- ---------------
Total distributions (767,660) (336,304) (2,973,759) (1,135,309)
--------------- --------------- --------------- ---------------
Trust Share Transactions (a)
Proceeds from shares sold 10,824,201 8,593,462 5,830,065 4,464,152
Value of distributions reinvested 767,659 336,304 2,973,759 1,135,309
Cost of shares redeemed (1,442,104) (695,724) (2,837,047) (2,284,666)
--------------- --------------- --------------- ---------------
Net increase (decrease) from trust 10,149,756 8,234,042 5,966,777 3,314,795
share transactions --------------- --------------- --------------- ---------------
18,374,031 7,138,852 9,609,215 1,691,381
Net increase (decrease) in net assets
Net Assets 32,797,192 25,658,340 32,284,746 30,593,365
Beginning of year --------------- --------------- --------------- ---------------
$51,171,223 $32,797,192 $41,893,961 $32,284,746
End of year+ =============== =============== =============== ===============
$459,781 $176,061 $3,663,919 $2,971,294
+Includes undistributed net investment income of =============== =============== =============== ===============
(a) Trust Shares Issued and Redeemed 572,178 510,485 537,054 416,564
Sold 45,613 20,645 296,191 107,326
Issued for distributions reinvested (78,592) (41,089) (263,126) (214,630)
Redeemed --------------- --------------- --------------- ---------------
539,199 490,041 570,119 309,260
Net increase (decrease) in shares outstanding =============== =============== =============== ===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
FIRST INVESTORS LIFE SERIES FUND
INTERNATIONAL INVESTMENT
SECURITIES GRADE
--------------------------------- ---------------------------------
1995 1994 1995 1994
Year Ended December 31 --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from Operations $495,853 $331,106 $936,270 $729,582
Net investment income
Net realized gain (loss) on investments and 1,334,830 913,209 (35,809) (47,540)
foreign currency transactions
Net unrealized appreciation (depreciation)
of investments and translation of assets 4,263,821 (1,619,867) 1,528,072 (1,054,894)
in foreign currencies --------------- --------------- --------------- ---------------
Net increase (decrease) in net assets 6,094,504 (375,552) 2,428,533 (372,852)
resulting from operations. --------------- --------------- --------------- ---------------
Distributions to Shareholders from: (284,370) (87,059) (605,201) (154,441)
Net investment income (601,917) -- -- (90,556)
Net realized gain on investments --------------- --------------- --------------- ---------------
(886,287) (87,059) (605,201) (244,997)
Total distributions --------------- --------------- --------------- ---------------
Trust Share Transactions (a) 6,301,362 11,075,210 3,462,505 2,762,399
Proceeds from shares sold 886,288 87,058 605,201 244,996
Value of distributions reinvested (2,692,802) (399,664) (1,231,643) (997,487)
Cost of shares redeemed --------------- --------------- --------------- ---------------
4,494,848 10,762,604 2,836,063 2,009,908
Net increase from trust share transactions --------------- --------------- --------------- ---------------
9,703,065 10,299,993 4,659,395 1,392,059
Net increase in net assets
Net Assets 31,308,497 21,008,504 11,602,476 10,210,417
Beginning of year --------------- --------------- --------------- ---------------
$41,011,562 $31,308,497 $16,261,871 $11,602,476
End of year+ =============== =============== =============== ===============
$493,877 $279,003 $936,245 $605,176
+Includes undistributed net investment income of =============== =============== =============== ===============
(a)Trust Shares Issued and Redeemed 439,419 811,007 315,041 264,613
Sold 69,350 6,642 59,159 24,055
Issued for distributions reinvested (194,386) (29,290) (113,482) (96,249)
Redeemed --------------- --------------- --------------- ---------------
314,383 788,359 260,718 192,419
Net increase in shares outstanding =============== =============== =============== ===============
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
FIRST INVESTORS LIFE SERIES FUND
TARGET
MATURITY UTILITIES
2007 INCOME
--------------- --------------- ---------------
1995* 1995 1994
Year Ended December 31 --------------- --------------- ---------------
<S> <C> <C> <C>
Increase (Decrease) in Net Assets from Operations $209,332 $381,257 $115,157
Net investment income
Net realized gain (loss) on investments and 42,147 (21,926) (100,075)
foreign currency transactions
Net unrealized appreciation (depreciation)
of investments and translation of assets 724,697 2,200,558 (132,614)
in foreign currencies --------------- --------------- ---------------
Net increase (decrease) in net assets 976,176 2,559,889 (117,532)
resulting from operations. --------------- --------------- ---------------
Distributions to Shareholders from: -- (110,536) (5,535)
Net investment income -- -- --
Net realized gain on investments --------------- --------------- ---------------
-- (110,536) (5,535)
Total distributions --------------- --------------- ---------------
Trust Share Transactions (a) 8,383,571 7,708,137 4,449,169
Proceeds from shares sold -- 110,535 5,534
Value of distributions reinvested -- (289,717) (105,265)
Cost of shares redeemed --------------- --------------- ---------------
8,383,571 7,528,955 4,349,438
Net increase from trust share transactions --------------- --------------- ---------------
9,359,747 9,978,308 4,226,371
Net increase in net assets
Net Assets 500,000 ** 4,720,027 493,656
Beginning of year --------------- --------------- ---------------
$9,859,747 $14,698,335 $4,720,027
End of year+ =============== =============== ===============
$209,332 $380,800 $110,079
+Includes undistributed net investment income of =============== =============== ===============
(a)Trust Shares Issued and Redeemed 754,138 755,204 474,683
Sold -- 11,709 600
Issued for distributions reinvested -- (28,182) (11,306)
Redeemed --------------- --------------- ---------------
754,138 738,731 463,977
Net increase in shares outstanding =============== =============== ===============
* From April 25, 1995 (commencement of operations) to December 31, 1995 ** See
Note 6
See notes to financial statements
</TABLE>
<PAGE>
Notes to Financial Statements
FIRST INVESTORS LIFE SERIES FUND
1. Significant Accounting Policies--The Fund, a Massachusetts business trust, is
registered under the Investment Company Act of 1940, as a diversified, open-end
management investment company. The Fund operates as a series fund, issuing
shares of beneficial interest in the Blue Chip, Cash Management, Discovery,
Government, Growth, High Yield, International Securities, Investment Grade,
Target Maturity 2007 and Utilities Income Funds and accounts separately for the
assets, liabilities and operations of each Fund. The objective of each Fund is
as follows:
Blue Chip Fund seeks high total investment return consistent with the
preservation of capital. Cash Management Fund seeks to earn a high rate of
current income consistent with the preservation of capital and maintenance of
liquidity.
Discovery Fund seeks long-term capital appreciation.
Government Fund seeks to achieve a significant level of current income which is
consistent with security and liquidity of principal.
Growth Fund seeks long-term capital appreciation.
High Yield Fund seeks to earn a high level of current income. Consistent with
that objective, the Fund will also seek growth of capital as a secondary
objective.
International Securities Fund seeks long-term capital growth. As a secondary
objective, the Fund seeks to earn a reasonable level of current income.
Investment Grade Fund seeks a maximum level of income consistent with investment
in investment grade debt securities.
Target Maturity 2007 Fund seeks a predictable compounded investment return for
investors who hold their Funds' shares until the Funds' maturity, consistent
with the preservation of capital.
Utilities Income Fund seeks high current income. Long-term capital appreciation
is a secondary objective.
A. Security Valuation--A security listed or traded on an exchange or the NASDAQ
National Market System is valued at its last sale price on the exchange or
system where the security is principally traded, and lacking any sales, the
security is valued at the mean between the closing bid and asked prices.
Securities traded in the over-the-counter markets are valued at the mean between
the last bid and asked prices. For the Government, High Yield and Investment
Grade Funds, each security traded in the over-the-counter market (including
securities listed on exchanges or systems whose primary market is believed to be
over-the-counter) is valued at the mean between the last bid and asked prices
based upon quotes furnished by a market maker for such securities. The High
Yield, International Securities, Investment Grade and Target Maturity 2007 Funds
may use prices provided by a pricing service. The pricing service uses
quotations obtained from investment dealers or brokers, information with respect
to market transactions in comparable securities and other available information
in determining value. Securities for which market quotations are not readily
available and any other assets are valued on a consistent basis at fair value as
determined in good faith by or under the supervision of the Fund's officers in
the manner specifically authorized by the trustees of the Fund.
The investments in the Cash Management Fund, when purchased at a discount, are
valued at amortized cost and when purchased at face value, are valued at cost
plus accrued interest.
B. Federal Income Taxes--No provision has been made for federal income taxes on
net income or capital gains since it is the policy of each Fund to continue to
comply with the special provisions of the Internal Revenue Code applicable to
investment companies, and to make sufficient
<PAGE>
distributions of income and capital gains (in excess of any available capital
loss carryovers) to relieve each fund from all, or substantially all, federal
income taxes. At December 31, 1995, Funds having capital loss carryovers were as
follows:
<TABLE>
<CAPTION>
Year Capital Loss Carryovers Expire
-----------------------------------------
Fund Total 1998 1999 2002 2003
- ----- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
GOVERNMENT $ 466,096 $ --- $ --- $466,096 $ ---
HIGH YIELD 1,236,321 625,684 355,926 106,914 147,797
INVESTMENT GRADE 83,349 --- --- 47,540 35,809
UTILITIES INCOME 122,000 --- --- 100,075 21,925
</TABLE>
C. Foreign Currency Translations--For valuation purposes, quotations of
foreign securities in foreign currency are translated to U.S. dollar
equivalents using the daily rate of exchange. Purchases and sales of
investment securities, dividend income and certain expenses are
translated to U.S. dollars at the rates of exchange prevailing on the
respective dates of such transactions.
The International Securities Fund does not isolate that portion of gains and
losses on investments which is due to changes in foreign exchange rates from
that which is due to changes in market prices of the investments. Such
fluctuations are included with the net realized and unrealized gains and losses
from investments. Net realized and unrealized gain from foreign currency related
transactions includes gains and losses arising from the sales of foreign
currency, and gains and losses between the ex and payment dates on dividends and
foreign withholding taxes.
D. Distributions to Shareholders--Distributions to shareholders from net
investment income and net realized gains are declared and paid annually on all
funds except for the Cash Management Fund which declares daily and pays monthly.
Income dividends and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
foreign currency transactions, capital loss carryforwards and deferral of wash
sales. E. Expense Allocation--Expenses directly charged or attributable to a
Fund are paid from the assets of that Fund. General expenses of the Funds are
allocated among and charged to the assets of each Fund on a fair and equitable
basis, which may be based on the relative assets of each Fund or the nature of
the services performed and relative applicability to each Fund.
F. Repurchase Agreements--Securities pledged as collateral for repurchase
agreements are held by the Fund's custodian until maturity of the repurchase
agreement. Provisions of the agreement provide that the market value of the
collateral is sufficient in the event of default; however, in the event of
default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral may be subject
<PAGE>
to legal proceedings.
G. Other--Security transactions are accounted for on the date the securities are
purchased or sold. Cost is determined and gains and losses are based, on the
identified cost basis for securities and the amortized cost basis for short-term
securities, for both financial statement and federal income tax purposes.
Dividend income is recorded on the ex-dividend date, except that certain
dividends from foreign securities are recorded on the ex-dividend date or as
soon thereafter as the Fund is informed of the dividend. Interest income and
estimated expenses are accrued daily. The Bank of New York as Custodian for all
Funds, except the International Securities Fund, has provided credits in the
amount of $52,020 against custodian charges based on the uninvested cash
balances of the Funds.
2. Trust Shares--The Declaration of Trust permits the issuance of an unlimited
number of shares of beneficial interest, of one or more Funds. Shares in the
Funds are acquired through the purchase of variable annuity or variable life
insurance contracts sold by First Investors Life Insurance Company.
3. Purchases and Sales of Securities--For the year ended December 31, 1995,
purchases and sales of securities and long-term U.S. Government obligations,
excluding foreign currencies, short-term corporate notes and repurchase
agreements were as follows:
<TABLE>
<CAPTION>
Long-Term
Securities U.S. Government Obligations
-------------------------- ---------------------------
Cost of Proceeds Cost of Proceeds
Fund Purchases of Sales Purchases of Sales
- ---- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C>
BLUE CHIP $24,767,189 $12,743,972 $ -- $ --
DISCOVERY 33,299,263 25,314,118 -- --
GOVERNMENT -- -- 18,814,356 15,620,984
GROWTH 35,962,901 25,421,753 -- --
HIGH YIELD 26,108,254 19,876,773 -- --
INTERNATIONAL SECURITIES 19,825,010 15,013,276 -- --
INVESTMENT GRADE 4,521,590 1,503,758 1,808,046 1,707,808
TARGET MATURITY 2007 327,670 338,977 9,895,126 879,579
UTILITIES INCOME 9,231,512 1,417,154 -- --
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
At December 31, 1995, aggregate cost and net unrealized appreciation of
securities for federal income tax purposes were as follows:
Gross Gross
Aggregate Unrealized Unrealized Net Unrealized
Fund Cost Appreciation Depreciation Appreciation
- ------ ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C>
BLUE CHIP $ 53,860,356 $ 13,352,093 $ 739,932 $ 12,612,161
CASH MANAGEMENT 4,109,957 -- -- --
DISCOVERY 43,816,620 9,062,423 1,949,102 7,113,321
GOVERNMENT 9,252,545 146,867 45,349 101,518
GROWTH 42,706,633 9,278,167 968,530 8,309,637
HIGH YIELD 39,977,368 1,819,585 584,201 1,235,384
INTERNATIONAL SECURITIES 34,319,555 7,169,525 711,583 6,457,942
INVESTMENT GRADE 15,284,779 683,787 24,426 659,361
TARGET MATURITY 2007 9,047,030 724,054 -- 724,054
UTILITIES INCOME 12,435,393 2,110,940 45,092 2,065,848
</TABLE>
4. Rule 144A Securities--Under Rule 144A, certain restricted securities are
exempt from the registration requirements of the Securities Act of 1933 and may
only be sold to qualified institutional investors. At December 31, 1995, the
High Yield and International Securities Funds held 144A securities, with
aggregate values of $3,463,500 and $152,577, respectively. These securities
represent 8.3% and .4%, respectively, of the Funds' net assets and are valued as
set forth in Note 1A.
5. Advisory Fee and Other Transactions With Affiliates--Certain officers and
trustees of the Fund are officers and directors of its investment adviser, First
Investors Management Company, Inc. ("FIMCO") and/or its transfer agent,
Administrative Data Management Corp. Officers and trustees of the Fund received
no remuneration from the Fund for serving in such capacities. Their remuneration
(together with certain other expenses of the Fund) is paid by FIMCO or First
Investors Corporation. The Investment Advisory Agreement provides as
compensation to FIMCO an annual fee, payable monthly, at the rate of .75% on the
first $250 million of each Fund's average daily net assets, declining by .03% on
each $250 million thereafter, down to .66% on average daily net assets over $750
million. For the year ended December 31, 1995, total advisory fees were
$1,847,575 of which $168,480 was waived by the investment adviser. In addition,
$25,770 of expenses were assumed by FIMCO. Pursuant to certain state
regulations, FIMCO has agreed to reimburse a Fund if and to the extent that any
Funds' aggregate operating expenses, including the advisory fee but generally
excluding interest, taxes, brokerage commissions and extraordinary expenses,
exceed any limitation on expenses applicable to the Fund in those states (unless
waivers of such limitations have been obtained). The amount of any such
reimbursement is limited to the yearly advisory fee. For the year ended December
31, 1995, no reimbursement was required pursuant to these provisions.
Wellington Management Company serves as investment subadviser to the Growth Fund
and the International Securities Fund. The subadviser is paid by FIMCO and not
by the Fund.
6. Commencement of Operations--The Target Maturity 2007 Fund commenced
operations in April 1995 following the sale of 50,000 shares of beneficial
interest to First Investors Life Insurance Company for $500,000.
<PAGE>
7. Concentration of Credit Risk--The High Yield Fund's investment in high yield
securities, whether rated or unrated, may be considered speculative and subject
to greater market fluctuations and risk of loss of income and principal than
lower yielding, higher rated, fixed income securities. The risk of loss due to
default by the issuer may be significantly greater for the holders of high
yielding securities, because such securities are generally unsecured and are
often subordinated to other creditors of the issuer. At December 31, 1995, the
High Yield Fund held one defaulted security with a value of $131,300
representing less than 1/2 of 1% of the Fund's net assets. The Utilities Income
Fund invests in securities issued by companies primarily engaged in the public
utilities industries. As a result, there are certain credit risks which may
subject the Fund more significantly to economic changes occurring in the public
utilities industry.
<PAGE>
Independent Auditor's Report
To the Shareholders and Trustees of
First Investors Life Series Fund
We have audited the accompanying statement of assets and liabilities, including
the portfolios of investments, of the ten funds comprising First Investors Life
Series Fund as of December 31, 1995, the related statement of operations for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and financial highlights for the periods
indicated thereon. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights 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 and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian and brokers. 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 and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the ten funds comprising First Investors Life Series Fund as of December 31,
1995, and the results of their operations, changes in their net assets and
financial highlights for each of the respective periods presented, in conformity
with generally accepted accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
January 31, 1996
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Financial Statements are set forth in Part B, Statement of Additional
Information.
(b) Exhibits:
(1)(6) Declaration of Trust
(2)(6) By-laws
(3) Not Applicable
(4)(1) Specimen Certificate
(5)a.(4) Investment Advisory Agreement between Registrant and
First Investors Management Company, Inc., including form
of Schedule A for Zero Coupon 2007 Series
b.(4) Subadvisory Agreement relating to International
Securities Series and Growth Series
(6) Not Applicable
(7) Not Applicable
(8)a.(7) Custodian Agreement between Registrant and Irving Trust
Company
b.(7) Custodian Agreement between Registrant and Brown
Brothers Harriman & Co. relating to International
Securities Fund
c.(7) Custodian Agreement between Registrant and Brown
Brothers Harriman & Co. relating to Total Return Fund
d.(7) Supplement to Custodian Agreement between Registrant and
The Bank of New York
(9)(7) Administration Agreement between Registrant, First
Investors Management Company, Inc., First Investors
Corporation and Administrative Data Management Corp.
(10) Opinion of Counsel
(11)a. Consent of independent accountants
b.(6) Powers of Attorney
<PAGE>
(12) Not Applicable
(13)(2,3) Undertakings
(14) Not Applicable
(15) Not Applicable
(16) Not Applicable
(17) Financial Data Schedules (Filed as Exhibit 27
fo electronic filing purposes.)
(18) Not Applicable
- -----------------------
(1) Incorporated by reference from Pre-Effective Amendment No. 2 to
Registrant's Registration Statement (File No. 2-98409).
(2) Incorporated by reference from Post-Effective Amendment No. 10 to
Registrant's Registration Statement (File No. 2-98409) filed with
the Commission on October 31, 1991.
(3) Incorporated by reference from Post-Effective Amendment No. 13 to
Registrant's Registration Statement (File No. 2-98409) filed with
the Commission on September 16, 1993.
(4) Incorporated by reference from Post-Effective Amendment No. 15 to
Registrant's Registration Statement (File No. 2-98409) filed with
the Commission on February 15, 1995.
(5) Incorporated by reference from Registrant's Rule 24f-2 Notice for
its fiscal year ending December 31, 1995 filed with the Commission
on February 27, 1996.
(6) Incorporated by reference from Post-Effective Amendment No. 17 to
Registrant's Registration Statement (File No. 2-98409) filed with
the Commission on October 2, 1995.
(7) Incorporated by reference from Post-Effective Amendment No. 18 to
Registrant's Registration Statement (File No. 2-98409) filed with
the Commission on February 14, 1996.
Item 25. Persons Controlled by or under common control with Registrant
There are no persons controlled by or under common control with the
Registrant.
<PAGE>
Item 26. Number of Holders of Securities
Number of
Record Holders as of
Title of Class February 13, 1996
-------------- -----------------
Shares of
Beneficial Interest,
no par value
Investment Grade Fund 2
Government Fund 2
Cash Management Fund 2
Discovery Fund 2
Growth Fund 2
High Yield Fund 2
Blue Chip Fund 2
International Securities Fund 2
Utilities Income Fund 2
Zero Coupon 2007 Fund 1
Zero Coupon 2010 Fund 1
Item 27. Indemnification
Article XI, Section 2 of Registrant's Declaration of Trust provides as
follows:
"Section 2.
(a) Subject to the exceptions and limitations contained in Section (b)
below:
(i) every person who is, or has been, a Trustee or officer of the Trust (a
"Covered Person") shall be indemnified by the Trust to the fullest extent
permitted by law against liability and against expenses reasonably incurred or
paid by him in connection with any claim, action, suit or proceeding which he
becomes involved as a party or otherwise by virtue of his being or having been a
Trustee or officer and against amounts paid or incurred by him in the settlement
thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall apply to
all claims, actions, suits or proceedings (civil, criminal or other, including
appeals), actual or threatened, and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) Who shall have been adjudicated by a court or body before which the
proceeding was brought (A) to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of
<PAGE>
his office or (B) not to have acted in good faith in the reasonable belief that
his action was in the best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a determination
that such Trustee or officer did not engage in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office,
(A) by the court or other body approving the settlement; or
(B) by at least a majority or those Trustees who are
neither interested persons of the Trust nor are parties
to the matter based upon a review of readily available
facts (as opposed to a full trial-type inquiry); or
(C) by written opinion of independent legal counsel based
upon a review of readily available facts (as opposed to
a full trial-type inquiry); provided, however, that any
Shareholder may, by appropriate legal proceedings,
challenge any such determination by the Trustees, or by
independent counsel.
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not be exclusive of
or affect any other rights to which any Covered Person may now or hereafter be
entitled, shall continue as to a person who has ceased to be such Trustee or
officer and shall inure to the benefit of the heirs, executors and
administrators of such a person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel, other than Trustees and
officers, and other persons may be entitled by contract or otherwise under the
law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
paragraph (a) of this Section 2 may be paid by the Trust from time to time prior
to final disposition thereof upon receipt of an undertaking by or on behalf of
such Covered Person that such amount will be paid over by him to the Trust if it
is ultimately determined that he is not entitled to indemnification under this
Section 2; provided, however, that either (a) such Covered Person shall have
provided appropriate security for such undertaking, (b) the Trust is insured
against losses arising out of any such advance payments or (c) either a majority
of the Trustees who are neither interested persons of the Trust nor are parties
to the matter, or independent legal counsel in a written opinion, shall have
determined, based upon a review of readily available facts (as opposed to a full
trial-type inquiry), that there is a reason to believe that such Covered Person
will be found entitled to indemnification under this Section 2."
The general effect of this Indemnification will be to indemnify the
officers and Trustees of the Registrant from costs and expenses arising from any
action, suit or proceeding to which they may be made a party by reason of their
being or having been a Trustee or officer of the Registrant, except where such
action is determined to have arisen out of
<PAGE>
the willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of the Trustee's or officer's office.
The Registrant's Investment Advisory Agreement provides as follows:
The Manager shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Company or any Series in connection with the
matters to which this Agreement relate except a loss resulting from the willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement. Any person, even though also an officer, partner, employee, or agent
of the Manager, who may be or become an officer, Board member, employee or agent
of the Company shall be deemed, when rendering services to the Company or acting
in any business of the Company, to be rendering such services to or acting
solely for the Company and not as an officer, partner, employee, or agent or one
under the control or direction of the Manager even though paid by it.
Item 28. Business and Other Connections of Investment Adviser
First Investors Management Company, Inc., the Registrant's Investment
Adviser, also serves as Investment Adviser to:
First Investors Cash Management Fund, Inc.
First Investors Series Fund
First Investors Fund For Income, Inc.
First Investors Government Fund, Inc.
First Investors High Yield Fund, Inc.
First Investors Insured Tax Exempt Fund, Inc.
First Investors Global Fund, Inc.
First Investors Multi-State Insured Tax Free Fund
First Investors New York Insured Tax Free Fund, Inc.
First Investors Special Bond Fund, Inc.
First Investors Tax-Exempt Money Market Fund, Inc.
First Investors U.S. Government Plus Fund
First Investors Series Fund II, Inc.
Affiliations of the officers and directors of the Investment Adviser are
set forth in Part B, Statement of Additional Information, under "Trustees and
Officers."
Item 29. Principal Underwriters
Not applicable
Item 30. Location of Accounts and Records
Physical possession of the books, accounts and records of the Registrant
are held by First Investors Management Company, Inc. and its affiliated
companies, First Investors Corporation and Administrative Data Management Corp.,
at their corporate headquarters, 95 Wall Street, New York, NY 10005 and
administrative offices, 581 Main Street, Woodbridge, NJ 07095, except for those
<PAGE>
maintained by the Registrant's Custodians, The Bank of New York, 48 Wall Street,
New York, NY 10286, and Brown Brothers Harriman & Co., 40 Water Street, Boston,
MA 02109.
Item 31. Management Services
Inapplicable
Item 32. Undertakings
The Registrant undertakes to carry out all indemnification provisions of
its Declaration of Trust, Advisory Agreement, Subadvisory Agreement and
Underwriting Agreement in accordance with Investment Company Act Release No.
11330 (September 4, 1980) and successor releases.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of the
Registrant pursuant to the provisions under Item 27 herein, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The Registrant hereby undertakes to furnish a copy of its latest annual
report to shareholders, upon request and without charge, to each person to whom
a prospectus is delivered.
The Registrant hereby undertakes to file a Post-Effective Amendment
containing financial statements for First Investors Target Maturity 2010 Fund
that need not be certified, within four to six months from the effective date of
the Post-Effective Amendment to Registrant's Registration Statement filed
herewith, or from the date of its commencement of operations.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant represents that this Amendment
meet all the requirements for effectiveness pursuant to Rule 485(b) under the
Securities Act of 1933, and has duly caused this Post- Effective Amendment to
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on the
17th day of April, 1996.
FIRST INVESTORS LIFE
SERIES FUND
(Registrant)
By:/s/Glenn O. Head
----------------
Glenn O. Head
President and Trustee
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Amendment to this Registration Statement
has been signed below by the following persons in the capacities and on the
dates indicated.
/s/Glenn O. Head Principal Executive April 17, 1996
- -------------------- Officer and Trustee
Glenn O. Head
/s/Joseph I. Benedek Principal Financial April 17, 1996
- -------------------- and Accounting Officer
Joseph I. Benedek
* Trustee April 17, 1996
- --------------------
Kathryn S. Head
* Trustee April 17, 1996
- --------------------
James J. Coy
* Trustee April 17, 1996
- --------------------
Roger L. Grayson
<PAGE>
* Trustee April 17, 1996
- --------------------
Herbert Rubinstein
* Trustee April 17, 1996
- --------------------
James M. Srygley
* Trustee April 17, 1996
- --------------------
John T. Sullivan
* Trustee April 17, 1996
- --------------------
Rex R. Reed
* Trustee April 17, 1996
- --------------------
Robert F. Wentworth
*By: /s/Larry R. Lavoie
------------------
Larry R. Lavoie
Attorney-in-fact
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------ -----------
99.B11 Consent of independent accountants
27.01 FDS - High Yield Fund
27.02 FDS - Discovery Fund
27.03 FDS - Blue Chip Fund
27.04 FDS - Growth Fund
27.05 FDS - Cash Management Fund
27.06 FDS - International Securities Fund
27.07 FDS - Government Fund
27.08 FDS - Investment Grade Fund
27.09 FDS - Utilities Income Fund
27.10 FDS - Target Maturity 2007 Fund
Consent of Independent Certified Public Accountants
First Investors Life Series Fund
95 Wall Street
New York, New York 10005
We consent to the use in Post-Effective Amendment No. 19 to the
Registration Statement on Form N-1A (File No. 2-98409) of our report dated
January 31, 1996 relating to the December 31, 1995 financial statements of First
Investors Life Series Fund and of our opinion dated February 7, 1996 and
accompanying Statement of Net Assets of First Investors Zero Coupon 2010 Fund,
which are included in said Registration Statement.
/s/Tait, Weller & Baker
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
April 16, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 01
<NAME> LIFE SERIES HIGH YIELD
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 39977
<INVESTMENTS-AT-VALUE> 41213
<RECEIVABLES> 837
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 42051
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 156
<TOTAL-LIABILITIES> 156
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38231
<SHARES-COMMON-STOCK> 3621
<SHARES-COMMON-PRIOR> 3051
<ACCUMULATED-NII-CURRENT> 3664
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1236)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1235
<NET-ASSETS> 41895
<DIVIDEND-INCOME> 210
<INTEREST-INCOME> 3701
<OTHER-INCOME> 71
<EXPENSES-NET> (315)
<NET-INVESTMENT-INCOME> 3667
<REALIZED-GAINS-CURRENT> (148)
<APPREC-INCREASE-CURRENT> 3098
<NET-CHANGE-FROM-OPS> 6617
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3667)
<DISTRIBUTIONS-OF-GAINS> (148)
<DISTRIBUTIONS-OTHER> (3098)
<NUMBER-OF-SHARES-SOLD> 537
<NUMBER-OF-SHARES-REDEEMED> 263
<SHARES-REINVESTED> 296
<NET-CHANGE-IN-ASSETS> 9609
<ACCUMULATED-NII-PRIOR> 2471
<ACCUMULATED-GAINS-PRIOR> (1089)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (279)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (322)
<AVERAGE-NET-ASSETS> 37202
<PER-SHARE-NAV-BEGIN> 10.58
<PER-SHARE-NII> 1
<PER-SHARE-GAIN-APPREC> .95
<PER-SHARE-DIVIDEND> .96
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.57
<EXPENSE-RATIO> .87
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 02
<NAME> LIFE SERIES DISCOVERY
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 43810
<INVESTMENTS-AT-VALUE> 50930
<RECEIVABLES> 174
<ASSETS-OTHER> 242
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 51346
<PAYABLE-FOR-SECURITIES> 240
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 206
<TOTAL-LIABILITIES> 446
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 41523
<SHARES-COMMON-STOCK> 2187
<SHARES-COMMON-PRIOR> 1522
<ACCUMULATED-NII-CURRENT> 254
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2003
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7120
<NET-ASSETS> 50900
<DIVIDEND-INCOME> 120
<INTEREST-INCOME> 472
<OTHER-INCOME> 0
<EXPENSES-NET> (338)
<NET-INVESTMENT-INCOME> 254
<REALIZED-GAINS-CURRENT> 2003
<APPREC-INCREASE-CURRENT> 6147
<NET-CHANGE-FROM-OPS> 8404
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (254)
<DISTRIBUTIONS-OF-GAINS> (2003)
<DISTRIBUTIONS-OTHER> (6147)
<NUMBER-OF-SHARES-SOLD> 617
<NUMBER-OF-SHARES-REDEEMED> 62
<SHARES-REINVESTED> 109
<NET-CHANGE-IN-ASSETS> 20656
<ACCUMULATED-NII-PRIOR> 93
<ACCUMULATED-GAINS-PRIOR> 1992
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 302
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 352
<AVERAGE-NET-ASSETS> 40247
<PER-SHARE-NAV-BEGIN> 19.86
<PER-SHARE-NII> .11
<PER-SHARE-GAIN-APPREC> 4.62
<PER-SHARE-DIVIDEND> .06
<PER-SHARE-DISTRIBUTIONS> 1.26
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.27
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 03
<NAME> LIFE SERIES BLUE CHIP
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 53860
<INVESTMENTS-AT-VALUE> 66473
<RECEIVABLES> 251
<ASSETS-OTHER> 245
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 66968
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 68
<TOTAL-LIABILITIES> 68
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 51316
<SHARES-COMMON-STOCK> 3940
<SHARES-COMMON-PRIOR> 3012
<ACCUMULATED-NII-CURRENT> 1019
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1952
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12613
<NET-ASSETS> 66900
<DIVIDEND-INCOME> 1165
<INTEREST-INCOME> 303
<OTHER-INCOME> 0
<EXPENSES-NET> (448)
<NET-INVESTMENT-INCOME> 1020
<REALIZED-GAINS-CURRENT> 1953
<APPREC-INCREASE-CURRENT> 12259
<NET-CHANGE-FROM-OPS> 15232
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1021)
<DISTRIBUTIONS-OF-GAINS> (1953)
<DISTRIBUTIONS-OTHER> (12259)
<NUMBER-OF-SHARES-SOLD> 791
<NUMBER-OF-SHARES-REDEEMED> 125
<SHARES-REINVESTED> 262
<NET-CHANGE-IN-ASSETS> 25475
<ACCUMULATED-NII-PRIOR> 568
<ACCUMULATED-GAINS-PRIOR> 2921
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 400
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 460
<AVERAGE-NET-ASSETS> 53303
<PER-SHARE-NAV-BEGIN> 13.75
<PER-SHARE-NII> .26
<PER-SHARE-GAIN-APPREC> 4.11
<PER-SHARE-DIVIDEND> .19
<PER-SHARE-DISTRIBUTIONS> .95
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.98
<EXPENSE-RATIO> .86
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 04
<NAME> LIFE SERIES GROWTH
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 42700
<INVESTMENTS-AT-VALUE> 51016
<RECEIVABLES> 239
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 51257
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 86
<TOTAL-LIABILITIES> 86
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 40897
<SHARES-COMMON-STOCK> 2450
<SHARES-COMMON-PRIOR> 1960
<ACCUMULATED-NII-CURRENT> 460
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1498
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8316
<NET-ASSETS> 51171
<DIVIDEND-INCOME> 708
<INTEREST-INCOME> 114
<OTHER-INCOME> 0
<EXPENSES-NET> (362)
<NET-INVESTMENT-INCOME> 460
<REALIZED-GAINS-CURRENT> 1549
<APPREC-INCREASE-CURRENT> 6983
<NET-CHANGE-FROM-OPS> 8992
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (460)
<DISTRIBUTIONS-OF-GAINS> (1549)
<DISTRIBUTIONS-OTHER> (6983)
<NUMBER-OF-SHARES-SOLD> 572
<NUMBER-OF-SHARES-REDEEMED> 79
<SHARES-REINVESTED> 46
<NET-CHANGE-IN-ASSETS> 18374
<ACCUMULATED-NII-PRIOR> 176
<ACCUMULATED-GAINS-PRIOR> 540
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 311
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 365
<AVERAGE-NET-ASSETS> 41467
<PER-SHARE-NAV-BEGIN> 16.73
<PER-SHARE-NII> .18
<PER-SHARE-GAIN-APPREC> 3.94
<PER-SHARE-DIVIDEND> .09
<PER-SHARE-DISTRIBUTIONS> .29
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.47
<EXPENSE-RATIO> .88
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 05
<NAME> LIFE SERIES CASH MANAGEMENT
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 4110
<INVESTMENTS-AT-VALUE> 4110
<RECEIVABLES> 4
<ASSETS-OTHER> 66
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4180
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 18
<TOTAL-LIABILITIES> 18
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4162
<SHARES-COMMON-STOCK> 4162
<SHARES-COMMON-PRIOR> 3929
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 4162
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 245
<OTHER-INCOME> 0
<EXPENSES-NET> (25)
<NET-INVESTMENT-INCOME> 220
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 220
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (221)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1802
<NUMBER-OF-SHARES-REDEEMED> 1790
<SHARES-REINVESTED> 221
<NET-CHANGE-IN-ASSETS> 233
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 31
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 45
<AVERAGE-NET-ASSETS> 4114
<PER-SHARE-NAV-BEGIN> 1
<PER-SHARE-NII> .054
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .054
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1
<EXPENSE-RATIO> .61
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 06
<NAME> LIFE SERIES INTERNATIONAL
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> DEC-1-1995
<INVESTMENTS-AT-COST> 34320
<INVESTMENTS-AT-VALUE> 40777
<RECEIVABLES> 308
<ASSETS-OTHER> 20
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 41105
<PAYABLE-FOR-SECURITIES> 22
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 71
<TOTAL-LIABILITIES> 93
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 32725
<SHARES-COMMON-STOCK> 2632
<SHARES-COMMON-PRIOR> 2318
<ACCUMULATED-NII-CURRENT> 494
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1335
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6458
<NET-ASSETS> 41012
<DIVIDEND-INCOME> 712
<INTEREST-INCOME> 139
<OTHER-INCOME> 0
<EXPENSES-NET> (356)
<NET-INVESTMENT-INCOME> 495
<REALIZED-GAINS-CURRENT> 1335
<APPREC-INCREASE-CURRENT> 4264
<NET-CHANGE-FROM-OPS> 5599
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (496)
<DISTRIBUTIONS-OF-GAINS> (1335)
<DISTRIBUTIONS-OTHER> (4264)
<NUMBER-OF-SHARES-SOLD> 439
<NUMBER-OF-SHARES-REDEEMED> 194
<SHARES-REINVESTED> 69
<NET-CHANGE-IN-ASSETS> 9701
<ACCUMULATED-NII-PRIOR> 279
<ACCUMULATED-GAINS-PRIOR> 605
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 262
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 356
<AVERAGE-NET-ASSETS> 34960
<PER-SHARE-NAV-BEGIN> 13.51
<PER-SHARE-NII> .19
<PER-SHARE-GAIN-APPREC> 2.25
<PER-SHARE-DIVIDEND> .12
<PER-SHARE-DISTRIBUTIONS> .25
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.58
<EXPENSE-RATIO> 1.02
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 07
<NAME> LIFE SERIES GOVERNMENT
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 9253
<INVESTMENTS-AT-VALUE> 9354
<RECEIVABLES> 137
<ASSETS-OTHER> 17
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 9508
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8
<TOTAL-LIABILITIES> 8
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 9263
<SHARES-COMMON-STOCK> 903
<SHARES-COMMON-PRIOR> 812
<ACCUMULATED-NII-CURRENT> 602
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (466)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 101
<NET-ASSETS> 9500
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 634
<OTHER-INCOME> 0
<EXPENSES-NET> (31)
<NET-INVESTMENT-INCOME> 603
<REALIZED-GAINS-CURRENT> 322
<APPREC-INCREASE-CURRENT> 345
<NET-CHANGE-FROM-OPS> 667
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (603)
<DISTRIBUTIONS-OF-GAINS> (322)
<DISTRIBUTIONS-OTHER> (345)
<NUMBER-OF-SHARES-SOLD> 171
<NUMBER-OF-SHARES-REDEEMED> 133
<SHARES-REINVESTED> 54
<NET-CHANGE-IN-ASSETS> 1622
<ACCUMULATED-NII-PRIOR> 506
<ACCUMULATED-GAINS-PRIOR> (788)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 67
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 82
<AVERAGE-NET-ASSETS> 8881
<PER-SHARE-NAV-BEGIN> 9.70
<PER-SHARE-NII> .66
<PER-SHARE-GAIN-APPREC> .78
<PER-SHARE-DIVIDEND> .62
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.52
<EXPENSE-RATIO> .40
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 08
<NAME> LIFE SERIES INVESTMENT GRADE
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 15285
<INVESTMENTS-AT-VALUE> 15944
<RECEIVABLES> 282
<ASSETS-OTHER> 66
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 16292
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 30
<TOTAL-LIABILITIES> 30
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14750
<SHARES-COMMON-STOCK> 1386
<SHARES-COMMON-PRIOR> 1125
<ACCUMULATED-NII-CURRENT> 936
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (83)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 659
<NET-ASSETS> 16262
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 980
<OTHER-INCOME> 22
<EXPENSES-NET> (65)
<NET-INVESTMENT-INCOME> 937
<REALIZED-GAINS-CURRENT> (36)
<APPREC-INCREASE-CURRENT> 1528
<NET-CHANGE-FROM-OPS> 1492
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (936)
<DISTRIBUTIONS-OF-GAINS> 36
<DISTRIBUTIONS-OTHER> (1528)
<NUMBER-OF-SHARES-SOLD> 315
<NUMBER-OF-SHARES-REDEEMED> 113
<SHARES-REINVESTED> 59
<NET-CHANGE-IN-ASSETS> 4659
<ACCUMULATED-NII-PRIOR> 605
<ACCUMULATED-GAINS-PRIOR> (48)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 103
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 125
<AVERAGE-NET-ASSETS> 13766
<PER-SHARE-NAV-BEGIN> 10.31
<PER-SHARE-NII> .67
<PER-SHARE-GAIN-APPREC> 1.28
<PER-SHARE-DIVIDEND> .53
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.73
<EXPENSE-RATIO> .51
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 09
<NAME> LIFE SERIES UTILITIES
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 12435
<INVESTMENTS-AT-VALUE> 14501
<RECEIVABLES> 114
<ASSETS-OTHER> 88
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 14703
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4
<TOTAL-LIABILITIES> 4
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12374
<SHARES-COMMON-STOCK> 1252
<SHARES-COMMON-PRIOR> 513
<ACCUMULATED-NII-CURRENT> 381
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (122)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2066
<NET-ASSETS> 14699
<DIVIDEND-INCOME> 373
<INTEREST-INCOME> 39
<OTHER-INCOME> 0
<EXPENSES-NET> (32)
<NET-INVESTMENT-INCOME> 380
<REALIZED-GAINS-CURRENT> (22)
<APPREC-INCREASE-CURRENT> 2201
<NET-CHANGE-FROM-OPS> 2179
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (381)
<DISTRIBUTIONS-OF-GAINS> 22
<DISTRIBUTIONS-OTHER> (2201)
<NUMBER-OF-SHARES-SOLD> 775
<NUMBER-OF-SHARES-REDEEMED> 28
<SHARES-REINVESTED> 12
<NET-CHANGE-IN-ASSETS> 9978
<ACCUMULATED-NII-PRIOR> 110
<ACCUMULATED-GAINS-PRIOR> (100)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 68
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 82
<AVERAGE-NET-ASSETS> 9024
<PER-SHARE-NAV-BEGIN> 9.19
<PER-SHARE-NII> .28
<PER-SHARE-GAIN-APPREC> 2.46
<PER-SHARE-DIVIDEND> .19
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.74
<EXPENSE-RATIO> .41
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> LIFE SERIES TARGET MATURITY 2007
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 9046
<INVESTMENTS-AT-VALUE> 9771
<RECEIVABLES> 132
<ASSETS-OTHER> 30
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 9933
<PAYABLE-FOR-SECURITIES> 73
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 73
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8884
<SHARES-COMMON-STOCK> 804
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 209
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 42
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 725
<NET-ASSETS> 9860
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 209
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 209
<REALIZED-GAINS-CURRENT> 42
<APPREC-INCREASE-CURRENT> 725
<NET-CHANGE-FROM-OPS> 767
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (209)
<DISTRIBUTIONS-OF-GAINS> (42)
<DISTRIBUTIONS-OTHER> (725)
<NUMBER-OF-SHARES-SOLD> 754
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 8860
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 25
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 29
<AVERAGE-NET-ASSETS> 4871
<PER-SHARE-NAV-BEGIN> 10
<PER-SHARE-NII> .26
<PER-SHARE-GAIN-APPREC> 2
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.26
<EXPENSE-RATIO> .04
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
