FIRST INVESTORS LIFE SERIES FUND, 497, 1998-05-05

FIRST INVESTORS LIFE SERIES FUND
497, 1998-05-05

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<PAGE>

As part of this Prospectus we attach the Prospectus of First Investors Life
Level Premium Variable Life Insurance (Separate Account B) (File No. 2-98410)
which was filed with the SEC on May 1, 1998 as part of a 497 filing (Accession
No. 0001047469-98-017622)

<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 ("UTILITIES 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"). Purchase payments for the
Contracts are also paid into a unit investment trust, First Investors Life
Variable Annuity Fund D ("Separate Account D"). Separate Account B, Separate
Account C and Separate Account D ("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 and Separate Account D.

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 "DESCRIPTION OF CERTAIN SECURITIES, OTHER
INVESTMENT POLICIES AND RISK FACTORS-HIGH YIELD SECURITIES."

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 30, 1998, as amended July 21, 1997 (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.

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.

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.

The date of this Prospectus is April 30, 1998

<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 "Blue Chip" companies 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. It is the Fund's policy to
remain relatively fully invested in equity securities under all market
conditions rather than to attempt to time the market by maintaining large cash
or fixed-income securities positions when market declines are anticipated. The
Fund is appropriate for investors who are comfortable with a fully invested
stock portfolio.

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"). Investments in High
Yield Securities may entail risks that are different or more pronounced than
those involved in higher-rated securities. See "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. The Fund seeks to

2
<PAGE>

achieve its objective primarily by investing, under normal market conditions,
in debt securities of U.S. issuers that are rated in one of the four highest
rating categories by Moody's Investors Service, Inc. or Standard & Poor's
Ratings Group or, if unrated, are deemed to be of comparable quality by the
Adviser.

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.

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.

Life Series Fund offers shares of each Fund to insurance company separate
accounts that fund Policies and Contracts. Due to differences in tax treatment
or other considerations, the interests of various Contract owners and Policy
owners might at some point be in conflict. Life Series Fund currently does not
foresee any such conflict. If such a conflict were to occur, one or more
Policies or Contracts offered by First Investors Life might be required to
withdraw its investments in one or more Funds. This might force a Fund to sell
securities at disadvantageous prices.

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. Additional 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. The table below has
been derived from financial statements which have been audited by Tait, Weller &
Baker, independent certified public accountants, whose report thereon appears in
the 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.

4
<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 TOTAL
BEGINNING OF INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT REALIZED DISTRI-
PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS BUTIONS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BLUE CHIP
3/8/90* to 12/31/90 . . . . $10.00 $ .07 $(.02) $ .05 $ -- $ -- $ --
1991 . . . . . . . . . . . . 10.05 .12 2.50 2.62 .05 -- .05
1992 . . . . . . . . . . . . 12.62 .16 .67 .83 .21 -- .21
1993 . . . . . . . . . . . . 13.24 .15 .97 1.12 .15 -- .15
1994 . . . . . . . . . . . . 14.21 .18 (.39) (.21) .08 .17 .25
1995 . . . . . . . . . . . 13.75 .26 4.11 4.37 .19 .95 1.14
1996 . . . . . . . . . . . . 16.98 .22 3.31 3.53 .25 .49 .74
1997 . . . . . . . . . . . . 19.77 .19 4.88 5.07 .22 .91 1.13

CASH MANAGEMENT **

1989 . . . . . . . . . . . . $ 1.00 $.075 $ -- $ .075 $.075 $ -- $.075
1990 . . . . . . . . . . . . 1.00 .072 -- .072 .072 -- .072
1991 . . . . . . . . . . . . 1.00 .054 -- .054 .054 -- .054
1992 . . . . . . . . . . . . 1.00 .029 -- .029 .029 -- .029
1993 . . . . . . . . . . . . 1.00 .027 -- .027 .027 -- .027
1994 . . . . . . . . . . . . 1.00 .037 -- .037 .037 -- .037
1995 . . . . . . . . . . . . 1.00 .054 -- .054 .054 -- .054
1996 . . . . . . . . . . . . 1.00 .049 -- .049 .049 -- .049
1997 . . . . . . . . . . . . 1.00 .050 -- .050 .050 -- .050

DISCOVERY
1989 . . . . . . . . . . . . $10.38 $ .19 $2.19 $2.38 $ .27 $ .09 $ .36
1990 . . . . . . . . . . . . 12.40 .14 (.78) (.64) .15 .90 1.05
1991 . . . . . . . . . . . . 10.71 .07 5.42 5.49 .18 -- .18
1992 . . . . . . . . . . . . 16.02 -- 2.51 2.51 .03 .15 .18
1993 . . . . . . . . . . . . 18.35 -- 3.92 3.92 -- .91 .91
1994 . . . . . . . . . . . . 21.36 .06 (.62) (.56) -- .94 .94
1995 . . . . . . . . . . . . 19.86 .11 4.62 4.73 .06 1.26 1.32
1996 . . . . . . . . . . . . 23.27 .13 2.66 2.79 .11 .89 1.00
1997 . . . . . . . . . . . . 25.06 .08 3.93 4.01 .14 1.16 1.30
</TABLE>

(a) Annualized
* 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, 1997.
+++ The effect of fees and charges incurred at the separate
account level are not reflected in these performance figures.
Average commission rate (per share of security) as required
by amended disclosure requirements effective in 1996.

5
<PAGE>

- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS / SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------

RATIO TO AVERAGE NET
ASSETS BEFORE
RATIO TO AVERAGE EXPENSES WAIVED OR
NET ASSETS + ASSUMED
---------------- --------------------
NET ASSET NET ASSETS NET NET
VALUE END OF INVEST- INVEST-
--------- TOTAL PERIOD MENT MENT PORTFOLIO AVERAGE
END OF RETURN ++ (IN EXPENSES INCOME EXPENSES INCOME TURNOVER COMMISSION
PERIOD (%) THOUSANDS) (%) (%) (%) (%) RATE (%) RATE +++
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$10.05 .61(a) $ 3,656 -- 2.95(a) 1.92(a) 1.03(a) 15 $ --
12.62 26.17 13,142 1.00 1.88 1.55 1.34 21 --
13.24 6.67 23,765 .79 1.66 .86 1.60 40 --
14.21 8.51 34,030 .88 1.27 N/A N/A 37 --
13.75 (1.45) 41,424 .88 1.49 N/A N/A 82 --
16.98 34.00 66,900 .86 1.91 N/A N/A 26 --
19.77 21.52 100,078 .84 1.39 N/A N/A 45 .0692
23.71 26.72 154,126 .81 .99 N/A N/A 63 .0649

1.00 7.79 $ 2,210 -- 7.84 1.35 6.49 N/A $ --
1.00 7.49 8,203 .39 6.90 1.15 6.15 N/A --
1.00 5.71 9,719 .57 5.39 .93 5.03 N/A --
1.00 3.02 8,341 .79 2.99 .98 2.81 N/A --
1.00 2.70 4,243 .60 2.67 1.05 2.22 N/A --
1.00 3.77 3,929 .60 3.69 1.04 3.25 N/A --
1.00 5.51 4,162 .60 5.36 1.10 4.87 N/A --
1.00 5.00 4,297 .60 4.89 1.11 4.38 N/A --
1.00 5.08 4,760 .70 4.97 1.06 4.61 N/A --

12.40 23.62 $ 283 -- 2.43 4.78 (2.35) 231 $ --
10.71 (5.47) 960 -- 2.97 2.68 .28 104 --
16.02 51.73 4,661 .70 .48 1.49 (.31) 93 --
18.35 15.74 10,527 .91 .02 1.05 (.12) 91 --
21.36 22.20 21,221 .87 (.03) N/A N/A 69 --
19.86 (2.53) 30,244 .88 .36 N/A N/A 53 --
23.27 25.23 50,900 .87 .63 N/A N/A 78 --
25.06 12.48 70,899 .85 .63 N/A N/A 98 .0689
27.77 16.84 99,530 .82 .34 N/A N/A 85 .0648

</TABLE>

<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 TOTAL
BEGINNING OF INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT REALIZED DISTRI-
PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS BUTIONS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GOVERNMENT
1/7/92* to 12/31/92 . . . . $10.00 $ .47 $ .51 $ .98 $ .33 $ -- $ .33
1993 . . . . . . . . . . . . 10.65 .64 .02 .66 .70 .19 .89
1994 . . . . . . . . . . . . 10.42 .79 (1.21) (.42) .25 .05 .30
1995 . . . . . . . . . . . 9.70 .66 .78 1.44 .62 -- .62
1996 . . . . . . . . . . . . 10.52 .68 (.33) .35 .68 -- .68
1997 . . . . . . . . . . . . 10.19 .72 .11 .83 .69 -- .69

GROWTH
1989 . . . . . . . . . . . . $10.79 $ .02 $ 2.51 $ 2.53 $ .18 $ .12 $ .30
1990 . . . . . . . . . . . . 13.02 .16 (.55) (.39) .06 -- .06
1991 . . . . . . . . . . . . 12.57 .17 4.15 4.32 .18 -- .18
1992 . . . . . . . . . . . . 16.71 .08 1.41 1.49 .18 1.38 1.56
1993 . . . . . . . . . . . . 16.64 .07 .93 1.00 .09 .10 .19
1994 . . . . . . . . . . . . 17.45 .09 (.60) (.51) -- .21 .21
1995 . . . . . . . . . . . . 16.73 .18 3.94 4.12 .09 .29 .38
1996 . . . . . . . . . . . . 20.47 .18 4.68 4.86 .18 .59 .77
1997 . . . . . . . . . . . . 24.56 .15 6.57 6.72 .18 1.86 2.04

HIGH YIELD
1989 . . . . . . . . . . . . $11.56 $ .74 $ (.92) $ (.18) $ .56 $ .11 $ .67
1990 . . . . . . . . . . . . 10.71 1.08 (1.79) (.71) .83 -- .83
1991 . . . . . . . . . . . . 9.17 1.16 1.66 2.82 1.18 -- 1.18
1992 . . . . . . . . . . . . 10.81 1.11 .21 1.32 1.69 -- 1.69
1993 . . . . . . . . . . . . 10.44 .96 .88 1.84 1.12 -- 1.12
1994 . . . . . . . . . . . . 11.16 .87 (1.14) (.27) .31 -- .31
1995 . . . . . . . . . . . . 10.58 1.00 .95 1.95 .96 -- .96
1996 . . . . . . . . . . . . 10.57 1.02 .35 1.37 1.01 -- 1.01
1997 . . . . . . . . . . . . 11.93 .98 .41 1.39 1.02 -- 1.02

</TABLE>

(a) Annualized
* Commencement of operations
+ Some or all expenses have been waived or assumed by the
investment adviser from commencement of operations through
December 31, 1997.
++ The effect of fees and charges incurred at the separate
account level are not reflected in the performance figures.
+++ Average commission rate (per share of security) as required
by amended disclosure requirements effective in 1996.

<PAGE>

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS / SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------

RATIO TO AVERAGE NET
ASSETS BEFORE
RATIO TO AVERAGE EXPENSES WAIVED OR
NET ASSETS + ASSUMED
---------------- --------------------
NET ASSET NET ASSETS NET NET
VALUE END OF INVEST- INVEST-
--------- TOTAL PERIOD MENT MENT PORTFOLIO AVERAGE
END OF RETURN ++ (IN EXPENSES INCOME EXPENSES INCOME TURNOVER COMMISSION
PERIOD (%) THOUSANDS) (%) (%) (%) (%) RATE (%) RATE +++
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$10.65 9.95(a) $ 5,064 .03(a) 6.64(a) .89(a) 5.79(a) 301 $ --
10.42 6.35 8,234 .35 6.60 .84 6.11 525 --
9.70 (4.10) 7,878 .35 6.74 .90 6.19 457 --
10.52 15.63 9,500 .40 6.79 .93 6.26 198 --
10.19 3.59 9,024 .60 6.75 .94 6.41 199 --
10.33 8.61 9,120 .60 6.95 .92 6.63 134 --

13.02 24.00 $ 570 -- 2.91 5.21 (2.30) 24 $ --
12.57 (2.99) 2,366 -- 3.03 1.64 1.40 28 --
16.71 34.68 7,743 .69 1.21 1.34 .55 148 --
16.64 9.78 16,385 .76 .75 1.20 .30 45 --
17.45 6.00 25,658 .91 .43 N/A N/A 51 --
16.73 (2.87) 32,797 .90 .60 N/A N/A 40 --
20.47 25.12 51,171 .88 1.11 N/A N/A 64 --
24.56 24.45 78,806 .85 .92 N/A N/A 49 .0485
29.24 29.28 127,585 .82 .64 N/A N/A 27 .0506

10.71 (1.76) $ 14,354 -- 12.05 .88 11.17 22 $ --
9.71 (5.77) 18,331 -- 13.21 .91 12.30 35 --
10.81 33.96 23,634 .53 11.95 .89 11.60 40 --
10.44 13.15 24,540 .91 10.48 .96 10.43 84 --
11.16 18.16 30,593 .91 9.49 N/A N/A 96 --
10.58 (1.56) 32,285 .88 9.43 N/A N/A 50 --
11.57 19.82 41,894 .87 9.86 N/A N/A 57 --
11.93 12.56 49,474 .85 9.43 N/A N/A 34 --
12.30 12.47 59,619 .83 8.88 N/A N/A 40 --

</TABLE>

<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 TOTAL
BEGINNING OF INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT REALIZED DISTRI-
PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS BUTIONS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL SECURITIES
------------------------
4/16/90* to 12/31/90 . . . $10.00 $ .03 $ .34 $ .37 $ -- $ -- $ --
1991 . . . . . . . . . . . . 10.37 .09 1.49 1.58 .03 .05 .08
1992 . . . . . . . . . . . . 11.87 .15 (.28) (.13) .15 .22 .37
1993 . . . . . . . . . . . . 11.37 .10 2.41 2.51 .14 -- .14
1994 . . . . . . . . . . . . 13.74 .14 (.32) (.18) .05 -- .05
1995 . . . . . . . . . . . 13.51 .19 2.25 2.44 .12 .25 .37
1996 . . . . . . . . . . . . 15.58 .18 2.12 2.30 .19 .50 .69
1997 . . . . . . . . . . . . 17.19 .18 1.26 1.44 .20 1.52 1.72

INVESTMENT GRADE
----------------
1/7/92* to 12/31/92 . . . $10.00 $ .43 $ .44 $ .87 $ .34 $ -- $ .34
1993 . . . . . . . . . . . . 10.53 .65 .49 1.14 .71 .01 .72
1994 . . . . . . . . . . . . 10.95 .67 (1.06) (.39) .16 .09 .25
1995 . . . . . . . . . . . . 10.31 .67 1.28 1.95 .53 -- .53
1996 . . . . . . . . . . . . 11.73 .72 (.42) .30 .67 -- .67
1997 . . . . . . . . . . . . 11.36 .74 .31 1.05 .74 -- .74

TARGET MATURITY 2007
--------------------
4/26/95* to 12/31/95 . . . $10.00 $ .26 $ 2.00 $2.26 $ -- $ -- $ --
1996 . . . . . . . . . . . . 12.26 .56 (.83) (.27) .23 .05 .28
1997 . . . . . . . . . . . . 11.71 .59 .90 1.49 .57 -- .57

TARGET MATURITY 2010
--------------------
4/30/96* to 12/31/96 . . . . $10.00 $ .26 $ .90 $1.16 $ -- $ -- --
1997 . . . . . . . . . . . . 11.16 .45 1.29 1.74 .20 -- .20

UTILITIES INCOME
----------------
11/15/93* to 12/31/93 . . . $10.00 $ .01 $ (.07) $(.06) $ -- $ -- --
1994 . . . . . . . . . . . . 9.94 .24 (.96) (.72) .03 -- .03
1995 . . . . . . . . . . . . 9.19 .28 2.46 2.74 .19 -- .19
1996 . . . . . . . . . . . . 11.74 .32 .78 1.10 .27 -- .27
1997 . . . . . . . . . . . . 12.57 .37 2.64 3.01 .36 .27 .63

</TABLE>

(a) Annualized
* Commencement of operations
+ Some or all expenses have been waived or assumed by the
investment adviser from commencement of operations through
++ December 31, 1997.
+++ The effect of fees and charges incurred at the separate
account level are not reflected in the performance figures.
Average commission rate (per share of security) as required
by amended disclosure requirements effective in 1996.

<PAGE>

RATIO TO AVERAGE NET
ASSETS BEFORE
RATIO TO AVERAGE EXPENSES WAIVED OR
NET ASSETS + ASSUMED
---------------- --------------------
NET ASSET NET ASSETS NET NET
VALUE END OF INVEST- INVEST-
--------- TOTAL PERIOD MENT MENT PORTFOLIO AVERAGE
END OF RETURN ++ (IN EXPENSES INCOME EXPENSES INCOME TURNOVER COMMISSION
PERIOD (%) THOUSANDS) (%) (%) (%) (%) RATE (%) RATE +++
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$10.37 5.21(a) $ 3,946 -- .99(a) 3.43(a) (2.43)(a) 29 $ --
11.87 15.24 8,653 1.70 .75 2.27 .18 70 --
11.37 (1.13) 12,246 1.03 1.55 1.38 1.20 36 --
13.74 22.17 21,009 1.14 .97 N/A N/A 37 --
13.51 (1.29) 31,308 1.03 1.22 N/A N/A 36 --
15.58 18.70 41,012 1.02 1.42 N/A N/A 45 --
17.19 15.23 57,955 1.12 1.25 N/A N/A 67 .0093
16.91 9.09 74,463 1.13 1.15 N/A N/A 71 .0042

10.53 8.91(a) $ 4,707 .23(a) 6.16(a) .93(a) 5.46(a) 72 $ --
10.95 10.93 10,210 .35 6.32 .85 5.82 64 --
10.31 (3.53) 11,602 .37 6.61 .92 6.06 15 --
11.73 19.69 16,262 .51 6.80 .91 6.40 26 --
11.36 2.84 16,390 .60 6.47 .88 6.19 19 --
11.67 9.81 17,220 .60 6.54 .87 6.27 41 --

12.26 22.60 $ 9,860 .04(a) 6.25(a) .87(a) 5.42(a) 28 $ --
11.71 (2.16) 14,647 .60 6.05 .82 5.83 13 --
12.63 13.38 20,300 .60 5.91 .82 5.69 1 --

11.16 11.60 $ 2,195 .60(a) 6.05(a) .98(a) 5.67(a) 0 $ --
12.70 15.86 5,209 .60 5.88 .87 5.61 13 --

9.94 (4.66)(a) $ 494 -- 1.46(a) 3.99(a) (2.52)(a) 0 $ --
9.19 (7.24) 4,720 .17 4.13 .95 3.35 31 --
11.74 30.26 14,698 .41 4.23 .91 3.73 17 --
12.57 9.57 24,108 .60 3.48 .86 3.22 45 .0707
14.95 25.07 33,977 .67 3.12 .85 2.94 64 .0681

</TABLE>

<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. It is the Fund's policy to remain relatively fully
invested in equity securities under all market conditions rather than to
attempt to time the market by maintaining large cash or fixed-income
securities positions when market declines are anticipated. The Fund is
appropriate for investors who are comfortable with a fully invested stock
portfolio.

The Fund defines Blue Chip companies as those companies that are
included in the S&P 500. 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 Microsoft Corp., General Electric Co., Pepsico Inc. and
Bristol-Myers Squibb Co.

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 10% of its total 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" 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 or are deemed to
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.
In

<PAGE>

managing the Fund's investment portfolio, the Adviser may employ various
professional money management techniques in order to respond to changing
economic and money market conditions and to shifts in fiscal and monetary
policy. These techniques include varying the composition and the
average-weighted maturity of the Fund's portfolio based upon the Adviser's
assessment of the relative values of various money market instruments and
future interest rate patterns. The Adviser also may seek to improve the
Fund's yield by purchasing or selling securities to take advantage of yield
disparities among money market instruments that regularly occur in the money
market.

The 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. 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. Repurchase agreements maturing in over 7
days are deemed illiquid securities, and can constitute no more than 10% of
the Fund's net assets. See "Description of Certain Securities, Other
Investment Policies and Risk Factors" for additional information on
repurchase agreements.

The 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). The Fund may
invest in floating and variable rate demand notes and bonds that 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. When market
conditions warrant, the Fund may purchase short-term, high quality fixed and
variable rate instruments issued by state and municipal governments and by
public authorities. See "Description of Certain Securities, Other Investment
Policies and Risk Factors" for additional information concerning these
securities.

The Fund may purchase only obligations that (1) the Adviser determines
present minimal credit risks based on procedures adopted by the Life Series
Board of Trustees, and (2) are either (a) rated in one of the top two rating
categories by any two nationally recognized statistical rating

<PAGE>

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, or unrated securities that the Adviser
determines are of comparable quality. 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).

In periods of declining interest rates, the Fund's yield will tend to be
somewhat higher than prevailing market rates, and in periods of rising
interest rates the opposite will be true. Also, when interest rates are
falling, net cash inflows from the continuous sale of the Fund's shares
likely will be invested in portfolio instruments producing lower yields than
the balance of the Fund's portfolio, thereby reducing the Fund's yield. In
periods of rising interest rates, the opposite may be true.

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, under normal market conditions, 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 the
Adviser believes 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 Fund considers to be market
capitalization of up to $1.5 billion. 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. Securities of these companies may have more potential for growth
but also greater risk 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

<PAGE>

depreciation than securities of companies with larger market capitalization.
These include the equity securities of companies which represent new or
changing industries and those which, in the opinion of the Adviser, represent
special situations, the potential future value of which has not been fully
recognized. Growth securities of companies with small to medium market
capitalization which represent a special situation bear the risk that the
special situation will not develop as favorably as expected, or the situation
may deteriorate. For example, a merger with favorable implications may be
blocked, an industrial development may not enjoy anticipated market
acceptance or a bankruptcy may not be as profitably resolved as had been
expected. 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 majority of the Fund's investments are expected to be securities
listed on the New York Stock Exchange ("NYSE") or other national securities
exchanges, or securities that have an established over-the-counter ("OTC")
market, although the depth and liquidity of the OTC market may vary from time
to time and from security to security.

The Fund may invest up to 15% 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"
and "American Depository Receipts."

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 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 "Description of Certain Securities, Other Investment
Policies and Risk Factors" and 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). The Fund has no fixed
policy with respect to the duration of U.S. Government Obligations it
purchases. Securities issued or guaranteed as to principal and interest (but
not market value) 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

<PAGE>

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," 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 (which may not
borrow from the U.S. Treasury and the securities of which are not guaranteed
by the U.S. Government); the Federal Home Loan Bank (which may borrow from
the U.S. Treasury to meet its obligations but 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
it obligations); and 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 may invest in collateralized mortgage obligations
("CMOs") and stripped mortgage-backed securities issued or guaranteed by the
U.S. Government, its agencies, authorities or instrumentalities. 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 and may invest up to 35% of its net assets
in securities issued on when-issued or delayed delivery basis. See
"Description of Certain Securities, Other Investment Policies and Risk
Factors," below, and 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.

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,
LLP ("Subadviser" or "WMC"), believes opportunities for capital growth exist.
The Fund does not intend to concentrate its

<PAGE>

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 invest up to 5% of
its total assets in common stocks issued by foreign companies that are
denominated in U.S. currency; provided, however, that the Fund may invest
without limit in U.S. dollar denominated foreign securities listed on the
NYSE. 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 and may
invest up to 5% of its net assets in securities issued on a when-issued or
delayed delivery basis. 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" and "Deep Discount Securities," below.

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 up to 5% of its net assets in securities issued 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. The Adviser continually monitors the investments in
the Fund's portfolio and carefully calculates on a case-by-case basis whether
to dispose of or retain a debt obligation that has been downgraded.

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

<PAGE>

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 period 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" 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 1997 fiscal year, computed on a monthly basis, is set forth
below. This information reflects the average composition of the Fund's assets
during the 1997 fiscal year and is not necessarily representative of the Fund
as of the end of its 1997 fiscal year, the current fiscal year or at any
other time in the future.

<PAGE>

COMPARABLE QUALITY OF
UNRATED SECURITIES TO
RATED BY MOODY'S BONDS RATED BY MOODY'S
---------------- ----------------------
<S> <C> <C>
Baa 0.0% 0.50%
Ba 8.18 0.0
B 81.18 3.45
Caa 0.46 3.47
----- ----
Total 89.36% 7.42%

</TABLE>

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 Board, 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". 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, invest up to 5% of its net assets in securities issued
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. In addition, the
Fund can engage in hedging and options strategies. 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

<PAGE>

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 invest up to
35% of its total assets in U.S. Government Obligations (including
mortgage-backed 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 invest
up to 5% of its net assets in securities issued on a when-issued or delayed
delivery 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" 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.

<PAGE>

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, 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
other 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.

<PAGE>

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. 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 invest up to 5% of its net
assets in securities issued 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 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 utilities companies in which the Fund invests 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

<PAGE>

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.

Utilities 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, utilities 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."

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-utilities companies; U.S. Government Obligations
(including mortgage-backed securities); cash; and money market instruments
consisting of prime commercial paper, bankers' acceptances, certificates of
deposit and repurchase agreements. The Fund may make loans of portfolio
securities and invest up to 5% of its net assets in securities issued on a
when-issued or delayed delivery basis. The Fund may invest up to 10% of its
total 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. GDRs are considered to be foreign securities by
INTERNATIONAL SECURITIES FUND and GROWTH FUND. See the SAI for more
information on ADRs.

<PAGE>

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. 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 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. 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. Credit risk
is the risk that adverse changes in economic conditions can affect an
issuer's ability to pay principal and interest. 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

<PAGE>

involve a higher risk of loss of principal and income than higher-rated debt
securities. See "High Yield Securities " 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 attempt to balance the benefits of
investing in Deep Discount Securities with their risks. While a diversified
portfolio may reduce the overall impact of a Deep Discount Security that is
in default or loses its value, the risk cannot be eliminated. See "High Yield
Securities," below. High Yield Securities are subject to certain risks that
may not be present with investments in higher grade debt securities.

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. 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. Investing in foreign securities involves more
risk than investing in securities of U.S. companies. Because none of these
Funds currently 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. GROWTH FUND may invest in
securities issued by foreign companies that are denominated in U.S. currency.
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

<PAGE>

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. 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 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

<PAGE>

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.

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.

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

<PAGE>

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.

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 market, prepayment and extension 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. Prepayment generally increases when interest rates
decline. 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.
As a result, mortgage-backed securities may have less potential for capital
appreciation during periods of declining interest rates as compared with
other U.S. Government securities with comparable stated maturities.
Conversely, rising interest rates may cause prepayment rates to occur at a
slower than expected rate. This may effectively lengthen the life of a
security, which is known as

<PAGE>

extension risk. Longer term securities generally fluctuate more widely in
response to changes in interest rates than shorter term securities. 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.

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
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 SECURITIES AND ILLIQUID INVESTMENTS. 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 investments for purposes of this
limitation do not include restricted securities eligible for resale pursuant
to Rule 144A under the Securities Act of 1933, as amended ("Rule 144A
Securities"), which Life Series Fund's Board of Trustees or the Adviser or
the Subadviser, as applicable, has determined are liquid under Board-approved
guidelines. In addition, there is a risk of increasing illiquidity during
times when qualified institutional buyers are uninterested in purchasing Rule
144A Securities. 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

<PAGE>

stated interest rate. For the most part, time deposits that 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 or 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 INDUSTRIES. Many utilities companies, especially electric and
gas and other energy-related utilities companies, have historically been
subject to the risk of increases in fund 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 recent years, regulatory changes in the United States have increasingly
allowed utilities companies to provide services and products outside their
traditional geographical areas and line of business, creating new areas of
competition with the utilities industries. This trend towards deregulation
and the emergence of new entrants have caused non-regulated providers of
utilities services to become a significant part of the utilities industries.
The Adviser believes that the emergence of competition and deregulation will
result in certain utilities companies being able to earn more than their
traditional regulated rates of return, while others may be forced to defend
their core business from increased competition and may be less profitable.

Certain utilities, especially gas and telephone utilities, have in recent
years been affected by increased competition, which could adversely affect
the profitability of such utilities 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. Although the Adviser seeks to
take advantage of favorable investment opportunities that may arise from
these structural changes there can be no assurance that the Fund will benefit
from any such changes.

Foreign utilities companies may be more heavily regulated than U.S.
utilities companies which may result in increased costs or otherwise
adversely affect the operations of such companies. The securities of foreign
utilities companies also have lower dividend yields than U.S. utilities
companies. The Fund's investments in foreign issuers may include recently
privatized enterprises, in which the Fund's participation may be limited or
otherwise affected by local law.

<PAGE>

There can be no assurance that governments with privatization programs will
continue such programs or that privatization will succeed in such countries.

Because securities issued by utilities companies are particularly
sensitive to movement 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 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, that 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.

The interest rate on a floating rate obligation is based on a known
lending rate, such as a bank's prime rate, and is adjusted automatically each
time such rate is adjusted. The interest rate on a variable rate obligation
is adjusted automatically at specified intervals. Frequently, such
obligations are secured by letters of credit or other credit support
arrangements provided by banks. Because these obligations are direct lending
arrangements between the lender and borrower, it is not contemplated that
such instruments generally will be traded, and there is generally no
established secondary market for these obligations, although they are
redeemable at face value. Accordingly, where these obligations are not
secured by letters of credit or other credit support arrangements, the right
of the Fund to redeem is dependent on the ability of the borrower to pay
principal and interest on demand. Such obligations frequently are not rated
by credit rating agencies. The Fund will invest in obligations that are
unrated only if the Adviser determines that, at the time of investment, the
obligations are of comparable quality to the other obligations in which the
Fund may invest. The Adviser, on behalf of the Fund, will consider on an
ongoing basis the creditworthiness of the issuers of the floating and
variable rate obligations in the Fund's portfolio.

VARIABLE RATE DEMAND INSTRUMENTS. CASH MANAGEMENT FUND may invest in
variable rate demand instruments ("VRDIs"). VRDIs generally are revenue
bonds, issued primarily by or on behalf of public authorities, and are not
backed by the taxing power of the issuing authority. The interest on VRDIs
is adjusted periodically, and the holder of a VRDI can demand payment of all
unpaid principal plus accrued interest from the issuer on not more than seven
calendar days' notice. An unrated VRDI purchased by the Fund must be backed
by a standby letter of credit of a creditworthy financial institution or a
similar obligation of at least equal quality. The Fund periodically
reevaluates the credit risks of such unrated instruments. There is a
recognized after-market for VRDIs. VRDIs may include instruments where
adjustments to interest rates are

<PAGE>

limited either by state law or the instruments themselves. As a result,
these instruments may experience greater changes in value than would
otherwise be the case. The maturity of VRDIs is deemed to be the longer of
the (a) demand period or (b) time remaining until the next adjustment to the
interest rate thereon, regardless of the stated maturity on the instrument.
Benefits of investing in VRDIs may include reduced risk of capital
depreciation and increased yield when market interest rates rise. However,
owners of such instruments forego the opportunity for capital appreciation
when market interest rates fall. See the SAI for more information concerning
VRDIs.

WARRANTS. HIGH YIELD FUND, INTERNATIONAL SECURITIES FUND and UTILITIES
INCOME 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. HIGH YIELD
FUND may invest up to 35% of its total assets in warrants. International
Securities Fund may invest up to 15% of its total assets in warrants.
UTILITIES INCOME FUND may invest up to 65% 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 each may invest up to 5%, and
Government Fund may invest up to 25%, of its net assets in securities issued
on a when-issued or delayed delivery basis at the time the purchase is made.
Under such an arrangement, delivery of, and payment for, a security occurs up
to 60 days after the agreement to purchase the security is made by a Fund.
The purchase price to be paid by a Fund and the interest rate on the
instruments to be purchased are both selected when a Fund agrees to purchase
the securities "when-issued." When a Fund purchases securities 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 a Fund incurring a loss or missing an
opportunity to make an alternative investment. Each Fund is permitted to sell
when-issued securities prior to issuance of such securities, but will not
purchase such securities with that purpose intended. 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. For a further discussion
of when-issued securities, see "When-Issued Securities" in the SAI.

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. Original issue discount earned each year on zero coupon
securities and the "interest" on pay-in-kind securities must be accounted for
by the Fund that holds the securities for purposes of determining the amount
it must distribute that year to continue to qualify for tax treatment as a
regulated investment company. Thus, a Fund may be required to distribute as a
dividend an amount that is greater 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

<PAGE>

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.

OTHER INVESTMENT POLICIES -- PORTFOLIO TURNOVER

The GOVERNMENT FUND was substantially restructured during 1997 to improve
its total return. In particular, the Fund purchased seasoned, high coupon
mortgage-backed bonds with very low prepayments; and the Fund purchased U.S.
Treasury and Agency securities to extend its duration. In addition, the Fund
occasionally bought or sold Treasury and Agency securities to make
incremental changes in the Fund's duration. This resulted in a portfolio
turnover rate for the fiscal year ended December 31, 1997 of 134%. A high
rate of portfolio turnover (100% or more) generally leads to increased
transaction costs and may result in a greater number of taxable transactions.
See "Allocation of Portfolio Brokerage" in the SAI. 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

<PAGE>

expenses, are also paid into a unit investment trust, Separate Account C.
Purchase payments for the Contracts are also paid into a unit investment
trust, Separate Account D. The Separate Accounts pool these 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."
For a discussion of pricing when FIC's Woodbridge offices are unable to open
for business due to an emergency, see the SAI.

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, less any
applicable contingent deferred sales charge, 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.

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
Administrative Data Management Corp. Mr. Glenn O. Head controls FICC and,
therefore, controls the Adviser.

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,
1997, 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, 0.60% of average daily net assets, net of
waiver, for each of CASH MANAGEMENT FUND, GOVERNMENT FUND, INVESTMENT GRADE
FUND, TARGET MATURITY 2007 FUND, TARGET MATURITY 2010 FUND and UTILITIES
INCOME FUND.

<PAGE>

SUBADVISER. Wellington Management Company, LLP 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
limited liability 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 January 31, 1998, WMC held investment management
authority with respect to approximately $178 billion of assets. Of that
amount, WMC acted as investment adviser or subadviser to approximately 93
registered investment companies or series of such companies, with net assets
of approximately $117 billion as of December 31, 1997. WMC is not affiliated
with the Adviser or any of its affiliates.

For the fiscal year ended December 31, 1997, the Subadviser's fees
amounted to 0.30% of GROWTH FUND'S average daily net assets and 0.37% 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 DISCOVERY FUND
since 1988. Ms. Poitra also is responsible for the management of certain
other First Investors funds. Ms. Poitra joined FIMCO in 1985 as a Senior
Equity Analyst

Since January 1, 1998, THE BLUE CHIP FUND has been co-managed by Dennis T.
Fitzpatrick and Kimberly Speegle. Mr. Fitzpatrick and Ms. Speegle also
co-manage certain other First Investors funds. Mr. Fitzpatrick joined FIMCO
in October 1995 as a Large Cap Analyst. From July 1995 to October 1995, Mr.
Fitzpatrick was a Regional Surety Manager at United States Fidelity &
Guaranty Co. and from 1988 to 1995 he was Northeast Surety Manager at
American International Group. Ms. Speegle joined FIMCO in August 1997 as an
Assistant Portfolio Manager. From March 1997 to August 1997, Ms. Speegle was
an Investment Analyst at Sale Asset Management and from 1992 to 1995, she was
a Portfolio Manager for the Clark Family.

George V. Ganter has been Portfolio Manager of the HIGH YIELD FUND since
1989. Mr. Ganter is also Portfolio Manager of certain other First Investors
funds. Mr. Ganter joined FIMCO in 1985 as a Senior Investment Analyst.

Since early January 1998, Jack B. Wolfman has been Portfolio Manager of
the UTILITIES INCOME FUND. Mr. Wolfman also is Portfolio Manager of the
Utilities Income Fund of First Investors Series Fund II, Inc. Prior to
joining FIMCO on January 7, 1998, Mr. Wolfman was an Analyst with the New
York City Housing Authority, Office of Administrative Methods and Analysis
from 1996 to 1998, a Senior Economist, North American Director with Wharton
Econometric Forecasting Associates, Inc. from 1992 to 1993, a Senior
Economist with Economic

<PAGE>

Consulting & Planning, Inc. from 1987 to 1992 and an Economist with Merrill
Lynch Economics, Inc. from 1980 to 1987.

Since late May 1997, the INVESTMENT GRADE FUND has been co-managed by Ms.
Nancy Jones and Mr. Clark D. Wagner. From its inception to May 1997, Ms.
Jones had primarily responsibility for the day-to-day management of the
INVESTMENT GRADE FUND. Ms. Jones also is Portfolio Manager of certain other
First Investors funds. Ms. Jones joined FIMCO in 1983 as Director of
Research in the High Yield Department.

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 has also been primarily responsible for the day-to-day
management of TARGET MATURITY 2010 FUND since its inception in 1996. Mr.
Wagner has also been co-manager of the INVESTMENT GRADE FUND since May 1997.
Mr. Wagner is also Portfolio Manager of certain other First Investors funds.
Mr. Wagner has been Chief Investment Officer of FIMCO 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 April 1994, INTERNATIONAL SECURITIES FUND has been managed by WMC's
Global Equity Strategy Group, a group of global portfolio managers and senior
investment professionals headed by Trond Skramstad. Trond Skramstad, Senior
Vice President and Director of International Equity Investments, and Andrew
S. Offit, Vice President and Associate Portfolio Manger, have primary
responsibility for the day to day management of the INTERNATIONAL SECURITIES
FUND. Mr. Skramstad is chairman of WMC's Global Equity Strategy Group which
is a group of regional equity portfolio managers and senior investment
professionals responsible for providing investment research and
recommendations.

Prior to joining WMC in 1993, Mr. Skramstad was an international equity
portfolio manager and principal at Scudder, Steven & Clark since 1990. Prior
to joining WMC in 1997, Mr. Offit was a portfolio manager at Chestnut Hill
Management during 1997, and at Fidelity Investments since 1987.

BROKERAGE. Each Fund may allocate brokerage commissions, if any, to
broker-dealers in consideration of Fund share distribution, but only when
execution and price are comparable to that offered by other broker-dealers.
Brokerage may be directed to brokers who provide research. See the SAI for
more information on allocation of portfolio brokerage.

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, Martin Luther

<PAGE>

King, Jr. 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

Dividends from net investment income are generally declared and paid
annually by each Fund, other than CASH MANAGEMENT FUND, which generally
declares dividends from net investment income daily and pays them monthly.
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 for those purposes
consists of (i) accrued interest, plus or minus (ii) all realized short-term
gains and losses on the Fund's securities, less (iii) accrued expenses.
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. Each dividend and other distribution is 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 intends to continue 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 it distributes to its shareholders.

Shares of the Funds are offered only to the Separate Accounts, which are
insurance company separate accounts that fund the Policies and 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 contract.
Please refer to "Federal Income Tax Status" in the Prospectuses of the
Separate Accounts for information as to the tax status of those accounts and
the holders of the Contracts or Policies.

Each Fund intends to continue 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 Funds by the Investment Company Act of 1940, as
amended, and Subchapter M of the Code, place certain limitations on the
assets of each Separate Account -- and of each Fund, because section 817(h)
and those regulations treat the assets of a Fund as assets of the related
Separate Account -- 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

<PAGE>

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 the Separate Accounts.

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.

SHAREHOLDER INQUIRIES. Shareholder inquiries can be made by calling First
Investors Life at 212-858-8200.

ANNUAL AND SEMI-ANNUAL REPORTS AND PROSPECTUSES TO SHAREHOLDERS. It is
each 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. In addition, if the SEC adopts a currently pending
proposed rule, it is the Life Series Fund's intention to mail only one copy
of its Prospectus to any address at which more than one shareholder with the
same last name has indicated that mail is to be delivered.

<PAGE>

Additional copies of the Prospectus will be mailed if requested in writing or
by telephone by any shareholder.

YEAR 2000. Like other mutual funds, the Funds could be adversely affected
if the computer and other information processing systems used by the Adviser,
Subadviser, Transfer Agent and other service providers are not properly
programmed to process date-related information on and after January 1, 2000.
Such systems typically have been programmed to use a two-digit number to
represent the year for any date. As a result, computer systems could
incorrectly misidentify "00" as 1900, rather than 2000, and make mistakes
when performing operations. The Adviser and Transfer Agent are taking steps
that they believe are reasonably designed to address the Year 2000 problem
for computer and other systems used by them and are obtaining assurances that
comparable steps are being taken by the Funds' other service providers.
However, there can be no assurance that these steps will be sufficient to
avoid any adverse impact on the Funds. Nor can the Funds estimate the extent
of any impact.

<PAGE>

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.

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

<PAGE>

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
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.

<PAGE>

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.

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.

<PAGE>

TABLE OF CONTENTS

Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Investment Objectives and Policies . . . . . . . . . . . . . . . . . . . 11
How to Buy Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
How to Redeem Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . 35
Dividends and Other Distributions. . . . . . . . . . . . . . . . . . . . 36
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

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, LLP Boston, MA 02109
75 State Street
Boston, MA 02109 AUDITORS
Tait, Weller & Baker
TRANSFER AGENT 8 Penn Center Plaza
Administrative Data Philadelphia, PA 19103
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
Level Premium Variable
Life Insurance
(Separate Account B)
- -----------------------
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

Prospectuses
- ----------------------------
April 30, 1998

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:

The words "BULK RATE U.S. POSTAGE PAID PERMIT NO. 7379" in a box to the right of
a circle containing the words "MAILED FROM ZIP CODE 11201" appears on the
righthand side.

The following language appears on the lefthand side.

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

LIFE316

<PAGE>

As part of this Prospectus we attach the Prospectus of First Investors Life
Variable Annuity Fund C (File No. 33-33419) which was filed with the SEC on May
1, 1998 as part of a 497 filing (Accession No. 0001047469-98-017621)

<PAGE>

FIRST INVESTORS LIFE SERIES FUND

95 Wall Street, New York, New York 10005/(212) 858-8200

The date of this Prospectus is April 30, 1998

<PAGE>

The investment objectives of each Fund of Life Series Fund offered by this
Prospectus are as follows:

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. The Fund seeks to

2
<PAGE>

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

4
<PAGE>

CASH MANAGEMENT **

5
<PAGE>

</TABLE>

<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 TOTAL
BEGINNING OF INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT REALIZED DISTRI-
PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS BUTIONS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GOVERNMENT
1/7/92* to 12/31/92 . . . . $10.00 $ .47 $ .51 $ .98 $ .33 $ -- $ .33
1993 . . . . . . . . . . . . 10.65 .64 .02 .66 .70 .19 .89
1994 . . . . . . . . . . . . 10.42 .79 (1.21) (.42) .25 .05 .30
1995 . . . . . . . . . . . 9.70 .66 .78 1.44 .62 -- .62
1996 . . . . . . . . . . . . 10.52 .68 (.33) .35 .68 -- .68
1997 . . . . . . . . . . . . 10.19 .72 .11 .83 .69 -- .69

</TABLE>

<PAGE>

RATIO TO AVERAGE NET
ASSETS BEFORE
RATIO TO AVERAGE EXPENSES WAIVED OR
NET ASSETS + ASSUMED
---------------- --------------------
NET ASSET NET ASSETS NET NET
VALUE END OF INVEST- INVEST-
--------- TOTAL PERIOD MENT MENT PORTFOLIO AVERAGE
END OF RETURN ++ (IN EXPENSES INCOME EXPENSES INCOME TURNOVER COMMISSION
PERIOD (%) THOUSANDS) (%) (%) (%) (%) RATE (%) RATE +++
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$10.65 9.95(a) $ 5,064 .03(a) 6.64(a) .89(a) 5.79(a) 301 $ --
10.42 6.35 8,234 .35 6.60 .84 6.11 525 --
9.70 (4.10) 7,878 .35 6.74 .90 6.19 457 --
10.52 15.63 9,500 .40 6.79 .93 6.26 198 --
10.19 3.59 9,024 .60 6.75 .94 6.41 199 --
10.33 8.61 9,120 .60 6.95 .92 6.63 134 --

</TABLE>

<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 TOTAL
BEGINNING OF INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT REALIZED DISTRI-
PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS BUTIONS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL SECURITIES
------------------------
4/16/90* to 12/31/90 . . . $10.00 $ .03 $ .34 $ .37 $ -- $ -- $ --
1991 . . . . . . . . . . . . 10.37 .09 1.49 1.58 .03 .05 .08
1992 . . . . . . . . . . . . 11.87 .15 (.28) (.13) .15 .22 .37
1993 . . . . . . . . . . . . 11.37 .10 2.41 2.51 .14 -- .14
1994 . . . . . . . . . . . . 13.74 .14 (.32) (.18) .05 -- .05
1995 . . . . . . . . . . . 13.51 .19 2.25 2.44 .12 .25 .37
1996 . . . . . . . . . . . . 15.58 .18 2.12 2.30 .19 .50 .69
1997 . . . . . . . . . . . . 17.19 .18 1.26 1.44 .20 1.52 1.72

TARGET MATURITY 2010
--------------------
4/30/96* to 12/31/96 . . . . $10.00 $ .26 $ .90 $1.16 $ -- $ -- --
1997 . . . . . . . . . . . . 11.16 .45 1.29 1.74 .20 -- .20

</TABLE>

<PAGE>

RATIO TO AVERAGE NET
ASSETS BEFORE
RATIO TO AVERAGE EXPENSES WAIVED OR
NET ASSETS + ASSUMED
---------------- --------------------
NET ASSET NET ASSETS NET NET
VALUE END OF INVEST- INVEST-
--------- TOTAL PERIOD MENT MENT PORTFOLIO AVERAGE
END OF RETURN ++ (IN EXPENSES INCOME EXPENSES INCOME TURNOVER COMMISSION
PERIOD (%) THOUSANDS) (%) (%) (%) (%) RATE (%) RATE +++
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$10.37 5.21(a) $ 3,946 -- .99(a) 3.43(a) (2.43)(a) 29 $ --
11.87 15.24 8,653 1.70 .75 2.27 .18 70 --
11.37 (1.13) 12,246 1.03 1.55 1.38 1.20 36 --
13.74 22.17 21,009 1.14 .97 N/A N/A 37 --
13.51 (1.29) 31,308 1.03 1.22 N/A N/A 36 --
15.58 18.70 41,012 1.02 1.42 N/A N/A 45 --
17.19 15.23 57,955 1.12 1.25 N/A N/A 67 .0093
16.91 9.09 74,463 1.13 1.15 N/A N/A 71 .0042

12.26 22.60 $ 9,860 .04(a) 6.25(a) .87(a) 5.42(a) 28 $ --
11.71 (2.16) 14,647 .60 6.05 .82 5.83 13 --
12.63 13.38 20,300 .60 5.91 .82 5.69 1 --

11.16 11.60 $ 2,195 .60(a) 6.05(a) .98(a) 5.67(a) 0 $ --
12.70 15.86 5,209 .60 5.88 .87 5.61 13 --

</TABLE>

<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

BLUE CHIP FUND

CASH MANAGEMENT FUND

<PAGE>

DISCOVERY FUND

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

<PAGE>

GOVERNMENT FUND

<PAGE>

GROWTH FUND

<PAGE>

HIGH YIELD FUND

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

<PAGE>

</TABLE>

INTERNATIONAL SECURITIES FUND

INVESTMENT GRADE FUND

<PAGE>

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.

<PAGE>

UTILITIES INCOME FUND

<PAGE>

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.

DESCRIPTION OF CERTAIN SECURITIES, OTHER INVESTMENT POLICIES AND RISK FACTORS

<PAGE>

involve a higher risk of loss of principal and income than higher-rated debt
securities. See "High Yield Securities " and Appendix A for a description of
corporate bond ratings.

<PAGE>

or confiscatory taxation, political or social instability or diplomatic
developments which could affect assets of a Fund held in foreign countries.

HIGH YIELD SECURITIES. High Yield Securities are subject to certain risks
that may not be present with investments in higher grade securities.

<PAGE>

MORTGAGE-BACKED SECURITIES

<PAGE>

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

<PAGE>

There can be no assurance that governments with privatization programs will
continue such programs or that privatization will succeed in such countries.

<PAGE>

OTHER INVESTMENT POLICIES -- PORTFOLIO TURNOVER

HOW TO BUY SHARES

<PAGE>

HOW TO REDEEM SHARES

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.

<PAGE>

Consulting & Planning, Inc. from 1987 to 1992 and an Economist with Merrill
Lynch Economics, Inc. from 1980 to 1987.

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.

DETERMINATION OF NET ASSET VALUE

<PAGE>

King, Jr. 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

TAXES

<PAGE>

GENERAL INFORMATION

SHAREHOLDER INQUIRIES. Shareholder inquiries can be made by calling First
Investors Life at 212-858-8200.

<PAGE>

Additional copies of the Prospectus will be mailed if requested in writing or
by telephone by any shareholder.

<PAGE>

APPENDIX A
DESCRIPTION OF CORPORATE BOND RATINGS

STANDARD & POOR'S RATINGS GROUP

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;

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.

<PAGE>

principal payments. The "BB" rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied "BBB-"
rating.

CC The rating "CC" typically is applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC" rating.

CI The rating "CI" is reserved for income bonds on which no interest is
being paid.

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.

<PAGE>

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.

<PAGE>

TABLE OF CONTENTS

<PAGE>

First Investors Life
Variable Annuity
Fund C
- -----------------------
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

Prospectuses
- ----------------------------
April 30, 1998

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:

The words "BULK RATE U.S. POSTAGE PAID PERMIT NO. 7379" in a box to the right of
a circle containing the words "MAILED FROM ZIP CODE 11201" appears on the
righthand side.

The following language appears on the lefthand side.

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>

As part of this Prospectus we attach the Prospectus of First Investors Life
Variable Annuity Fund D (File No. 333-26341) which was filed with the SEC on May
1, 1998 as part of a 497 filing (Accession No. 0001047469-98-017650)

<PAGE>

FIRST INVESTORS LIFE SERIES FUND

95 Wall Street, New York, New York 10005/(212) 858-8200

The date of this Prospectus is April 30, 1998

<PAGE>

The investment objectives of each Fund of Life Series Fund offered by this
Prospectus are as follows:

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. The Fund seeks to

2
<PAGE>

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

4
<PAGE>

CASH MANAGEMENT **

5
<PAGE>

</TABLE>

<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 TOTAL
BEGINNING OF INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT REALIZED DISTRI-
PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS BUTIONS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GOVERNMENT
1/7/92* to 12/31/92 . . . . $10.00 $ .47 $ .51 $ .98 $ .33 $ -- $ .33
1993 . . . . . . . . . . . . 10.65 .64 .02 .66 .70 .19 .89
1994 . . . . . . . . . . . . 10.42 .79 (1.21) (.42) .25 .05 .30
1995 . . . . . . . . . . . 9.70 .66 .78 1.44 .62 -- .62
1996 . . . . . . . . . . . . 10.52 .68 (.33) .35 .68 -- .68
1997 . . . . . . . . . . . . 10.19 .72 .11 .83 .69 -- .69

</TABLE>

<PAGE>

RATIO TO AVERAGE NET
ASSETS BEFORE
RATIO TO AVERAGE EXPENSES WAIVED OR
NET ASSETS + ASSUMED
---------------- --------------------
NET ASSET NET ASSETS NET NET
VALUE END OF INVEST- INVEST-
--------- TOTAL PERIOD MENT MENT PORTFOLIO AVERAGE
END OF RETURN ++ (IN EXPENSES INCOME EXPENSES INCOME TURNOVER COMMISSION
PERIOD (%) THOUSANDS) (%) (%) (%) (%) RATE (%) RATE +++
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$10.65 9.95(a) $ 5,064 .03(a) 6.64(a) .89(a) 5.79(a) 301 $ --
10.42 6.35 8,234 .35 6.60 .84 6.11 525 --
9.70 (4.10) 7,878 .35 6.74 .90 6.19 457 --
10.52 15.63 9,500 .40 6.79 .93 6.26 198 --
10.19 3.59 9,024 .60 6.75 .94 6.41 199 --
10.33 8.61 9,120 .60 6.95 .92 6.63 134 --

</TABLE>

<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 TOTAL
BEGINNING OF INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT REALIZED DISTRI-
PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS BUTIONS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL SECURITIES
------------------------
4/16/90* to 12/31/90 . . . $10.00 $ .03 $ .34 $ .37 $ -- $ -- $ --
1991 . . . . . . . . . . . . 10.37 .09 1.49 1.58 .03 .05 .08
1992 . . . . . . . . . . . . 11.87 .15 (.28) (.13) .15 .22 .37
1993 . . . . . . . . . . . . 11.37 .10 2.41 2.51 .14 -- .14
1994 . . . . . . . . . . . . 13.74 .14 (.32) (.18) .05 -- .05
1995 . . . . . . . . . . . 13.51 .19 2.25 2.44 .12 .25 .37
1996 . . . . . . . . . . . . 15.58 .18 2.12 2.30 .19 .50 .69
1997 . . . . . . . . . . . . 17.19 .18 1.26 1.44 .20 1.52 1.72

TARGET MATURITY 2010
--------------------
4/30/96* to 12/31/96 . . . . $10.00 $ .26 $ .90 $1.16 $ -- $ -- --
1997 . . . . . . . . . . . . 11.16 .45 1.29 1.74 .20 -- .20

</TABLE>

<PAGE>

RATIO TO AVERAGE NET
ASSETS BEFORE
RATIO TO AVERAGE EXPENSES WAIVED OR
NET ASSETS + ASSUMED
---------------- --------------------
NET ASSET NET ASSETS NET NET
VALUE END OF INVEST- INVEST-
--------- TOTAL PERIOD MENT MENT PORTFOLIO AVERAGE
END OF RETURN ++ (IN EXPENSES INCOME EXPENSES INCOME TURNOVER COMMISSION
PERIOD (%) THOUSANDS) (%) (%) (%) (%) RATE (%) RATE +++
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$10.37 5.21(a) $ 3,946 -- .99(a) 3.43(a) (2.43)(a) 29 $ --
11.87 15.24 8,653 1.70 .75 2.27 .18 70 --
11.37 (1.13) 12,246 1.03 1.55 1.38 1.20 36 --
13.74 22.17 21,009 1.14 .97 N/A N/A 37 --
13.51 (1.29) 31,308 1.03 1.22 N/A N/A 36 --
15.58 18.70 41,012 1.02 1.42 N/A N/A 45 --
17.19 15.23 57,955 1.12 1.25 N/A N/A 67 .0093
16.91 9.09 74,463 1.13 1.15 N/A N/A 71 .0042

12.26 22.60 $ 9,860 .04(a) 6.25(a) .87(a) 5.42(a) 28 $ --
11.71 (2.16) 14,647 .60 6.05 .82 5.83 13 --
12.63 13.38 20,300 .60 5.91 .82 5.69 1 --

11.16 11.60 $ 2,195 .60(a) 6.05(a) .98(a) 5.67(a) 0 $ --
12.70 15.86 5,209 .60 5.88 .87 5.61 13 --

</TABLE>

<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

BLUE CHIP FUND

CASH MANAGEMENT FUND

<PAGE>

DISCOVERY FUND

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

<PAGE>

GOVERNMENT FUND

<PAGE>

GROWTH FUND

<PAGE>

HIGH YIELD FUND

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

<PAGE>

</TABLE>

INTERNATIONAL SECURITIES FUND

INVESTMENT GRADE FUND

<PAGE>

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.

<PAGE>

UTILITIES INCOME FUND

<PAGE>

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.

DESCRIPTION OF CERTAIN SECURITIES, OTHER INVESTMENT POLICIES AND RISK FACTORS

<PAGE>

involve a higher risk of loss of principal and income than higher-rated debt
securities. See "High Yield Securities " and Appendix A for a description of
corporate bond ratings.

<PAGE>

or confiscatory taxation, political or social instability or diplomatic
developments which could affect assets of a Fund held in foreign countries.

HIGH YIELD SECURITIES. High Yield Securities are subject to certain risks
that may not be present with investments in higher grade securities.

<PAGE>

MORTGAGE-BACKED SECURITIES

<PAGE>

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

<PAGE>

There can be no assurance that governments with privatization programs will
continue such programs or that privatization will succeed in such countries.

<PAGE>

OTHER INVESTMENT POLICIES -- PORTFOLIO TURNOVER

HOW TO BUY SHARES

<PAGE>

HOW TO REDEEM SHARES

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.

<PAGE>

Consulting & Planning, Inc. from 1987 to 1992 and an Economist with Merrill
Lynch Economics, Inc. from 1980 to 1987.

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.

DETERMINATION OF NET ASSET VALUE

<PAGE>

King, Jr. 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

TAXES

<PAGE>

GENERAL INFORMATION

SHAREHOLDER INQUIRIES. Shareholder inquiries can be made by calling First
Investors Life at 212-858-8200.

<PAGE>

Additional copies of the Prospectus will be mailed if requested in writing or
by telephone by any shareholder.

<PAGE>

APPENDIX A
DESCRIPTION OF CORPORATE BOND RATINGS

STANDARD & POOR'S RATINGS GROUP

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;

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.

<PAGE>

principal payments. The "BB" rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied "BBB-"
rating.

CC The rating "CC" typically is applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC" rating.

CI The rating "CI" is reserved for income bonds on which no interest is
being paid.

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.

<PAGE>

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.

<PAGE>

TABLE OF CONTENTS

<PAGE>

First Investors Life
Variable Annuity
Fund D
- -----------------------
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

Prospectuses
- ----------------------------
April 30, 1998

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:

The words "BULK RATE U.S. POSTAGE PAID PERMIT NO. 7379" in a box to the right of
a circle containing the words "MAILED FROM ZIP CODE 11201" appears on the
righthand side.

The following language appears on the lefthand side.

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

LIFE078

<PAGE>

FIRST INVESTORS LIFE SERIES FUND

95 WALL STREET (212) 858-8200
NEW YORK, NEW YORK 10005

STATEMENT OF ADDITIONAL INFORMATION
DATED APRIL 30, 1998

This is a Statement of Additional Information ("SAI") 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"). Purchase
payments for the Contracts are also paid into a unit investment trust, First
Investors Life Variable Annuity Fund D ("Separate Account D"). Separate
Account B, Separate Account C and Separate Account D (the "Separate
Accounts") 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 and Separate Account D.

This SAI is not a prospectus. It should be read in connection with Life
Series Fund's Prospectus dated April 30, 1998, which may be obtained free of
cost from the Funds at the address or telephone number noted above.

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Investment Policies. . . . . . . . . . . . . . . . . . . . . . . . 2
Hedging and Option Income Strategies . . . . . . . . . . . . . . . 7
Investment Restrictions. . . . . . . . . . . . . . . . . . . . . . 15
Trustees and Officers. . . . . . . . . . . . . . . . . . . . . . . 17
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Determination of Net Asset Value . . . . . . . . . . . . . . . . . 21
Allocation of Portfolio Brokerage. . . . . . . . . . . . . . . . . 22
Emergency Pricing Procedures . . . . . . . . . . . . . . . . . . . 24
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
General Information. . . . . . . . . . . . . . . . . . . . . . . . 26
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>

<PAGE>
INVESTMENT POLICIES

AMERICAN DEPOSITORY RECEIPTS. American Depository Receipts ("ADRs") may
be purchased through "sponsored" or "unsponsored" facilities. A sponsored
facility is established jointly by the issuer of the underlying security and
a depository, whereas a depository may establish an unsponsored facility
without participation by the issuer of the depository security. Holders of
unsponsored depository receipts generally bear all the costs of such
facilities and the depository of an unsponsored facility frequently is under
no obligation to distribute shareholder communications received from the
issuer of the deposited security or to pass through voting rights to the
holders of such receipts of the deposited securities. ADRs are not
necessarily denominated in the same currency as the underlying securities to
which they may be connected. Generally, ADRs in registered form are designed
for use in the U.S. securities market and ADRs in bearer form are designed
for use outside the United States.

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.

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, LLP ("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.

FOREIGN GOVERNMENT OBLIGATIONS. HIGH YIELD FUND may invest in foreign
government obligations, which generally consist of obligations supported by
national, state or provincial governments or similar political subdivisions.
Investments in foreign government debt obligations involve special risks.
The issuer of the debt may be unable or unwilling to pay interest or repay
principal when due in accordance with the terms of such debt, and the Fund
may have limited legal resources in the event of default. Political
conditions, especially a sovereign entity's willingness to meet the terms of
its debt obligations, are of considerable significance.

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.

2
<PAGE>

MORTGAGE-BACKED SECURITIES. BLUE CHIP FUND, GOVERNMENT FUND, HIGH YIELD
FUND, INVESTMENT GRADE FUND and UTILITIES INCOME 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 resulting in larger
cash payments to a Fund, and a 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

3
<PAGE>

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.

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.

4
<PAGE>

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 SECURITIES AND ILLIQUID INVESTMENTS. 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 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 this 15% limit. 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 the 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 a Fund
might be unable to dispose of such securities promptly or at reasonable
prices.

Over-the-counter ("OTC") options and their underlying collateral are
also considered illiquid investments. INSURED TAX EXEMPT FUND may not invest
in options. While BLUE CHIP FUND and HIGH YIELD FUND have no intention of
investing in options in the coming year, if any such Fund did, the assets
used as cover for OTC options written by the Fund would not be considered
illiquid unless the OTC options are sold to qualified dealers who agree that
the Fund may repurchase any OTC option it writes at a maximum price to be
calculated by a formula set forth in the option agreement. The cover for an
OTC option written subject to this procedure would be considered illiquid
only to the extent that the maximum repurchase price under the formula
exceeds the intrinsic value of the option

5
<PAGE>

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. 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.

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%, and
GOVERNMENT FUND may invest up to 25%, of its 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 on its books and records or 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 sale of the
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 (100% or more) generally leads to transaction costs and may
result in a greater number of taxable transactions. See "Allocation of
Portfolio Brokerage." The rate of portfolio turnover for the fiscal year ended
December 31, 1996 for the BLUE CHIP FUND, DISCOVERY FUND, GOVERNMENT FUND,
GROWTH FUND, HIGH YIELD FUND, INTERNATIONAL SECURITIES FUND, INVESTMENT GRADE
FUND, TARGET MATURITY 2007 FUND And UTILITIES INCOME FUND was 45%, 98%, 199%,
49%. 34%. 67%, 19%, 13% and 45%, respectively. The rate of portfolio turnover
for the fiscal year ended December 31, 1997 for the BLUE CHIP FUND, DISCOVERY
FUND, GROWTH FUND, HIGH YIELD FUND, INTERNATIONAL SECURITIES FUND, INVESTMENT
GRADE FUND, TARGET MATURITY 2007 FUND, TARGET MATURITY 2010

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FUND And UTILITIES INCOME FUND was 63%, 85%, 27%. 40%. 71%, 41%, 1%, 13%
and 64%, respectively. See the Prospectus for the portfolio turnover rate for
the GOVERNMENT FUND for the fiscal year ended December 31, 1997.

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 and the CFTC.

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,
and (4) the possible absence of a liquid secondary market for any particular
instrument at any time.

COVER FOR HEDGING AND OPTION INCOME STRATEGIES. The Fund will not use
leverage in its hedging and option income strategies. 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 and/or liquid assets 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

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<PAGE>

strategies by mutual funds and, if required, will set aside cash and/or
liquid assets 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 Securities and Illiquid Investments." 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 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

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<PAGE>

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 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

9
<PAGE>

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 put or call
option it has written, the Fund may purchase a put or call option of the same
series (that is, an option identical in its terms to the put or 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.
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

10
<PAGE>

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 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 call options on stock index
futures 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

11
<PAGE>

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
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 above, the 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. In the event that the
Fund enters into futures contracts or options thereon other than for bona
fide hedging purposes (as defined by the CFTC), the aggregate initial margin
and premiums required to establish these positions (excluding the
in-the-money amount for options that are in-the-money at the time of
purchase) will not exceed 5% of the Fund's net assets. This does not limit
the Fund's assets at risk to 5%. The value of all futures sold will not
exceed the total market value of the Fund's portfolio.

12
<PAGE>

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. The Fund is also obligated to make initial and variation
margin payments when it writes options on futures contracts.

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.

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.

13
<PAGE>

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.

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

14
<PAGE>

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 currency 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 currency 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. Unless the Fund's
obligations under a forward contract are covered, the Fund will enter into a
forward contract only if the Fund maintains cash assets 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 or pay for currency when due, which could result in
substantial 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.

<PAGE>

(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 is greater than an amount equal to 10% of the Fund's total assets.

(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 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:

<PAGE>

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.

TRUSTEES AND OFFICERS

The following table lists the Trustees and executive officers of 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*+ (72), 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 (84), Emeritus Trustee, 90 Buell Lane, East Hampton, NY 11937.
Retired; formerly Senior Vice President, James Talcott, Inc. (financial
institution).

ROGER L. GRAYSON* (41), Trustee, FIC and FICC; President and Director, First
Investors Resources, Inc.; Commodities Portfolio Manager.

KATHRYN S. HEAD*+ (42), Trustee, 581 Main Street, Woodbridge, NJ 07095.
President and Director, FICC, ADM and FIMCO; Vice President and Director, FIC
and EIC; President EIMCO; Chairman, President and Director, First Financial
Savings Bank, S.L.A.

REX R. REED (76), Trustee, 259 Governors Drive, Kiawah Island, SC 29455.
Retired; formerly Senior Vice President, American Telephone & Telegraph
Company.

HERBERT RUBINSTEIN (76), Trustee, 695 Charolais Circle, Edwards, CO
81632-1136. Retired; formerly President, Belvac International Industries,
Ltd. and President, Central Dental Supply.

NANCY SCHAENEN (66), Trustee, 56 Midwood Terrace, Madison, NJ 07940.
Trustee, Drew University and DePauw University.

JAMES M. SRYGLEY (65), Trustee, 33 Hampton Road, Chatham, NJ 07982.
Principal, Hampton Properties, Inc. (property investment company).

JOHN T. SULLIVAN* (66), Trustee and Chairman of the Board; Director, FIMCO,
FIC, FICC and ADM; Of Counsel, Hawkins, Delafield & Wood, Attorneys.

<PAGE>

ROBERT F. WENTWORTH (68), 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 (40), Treasurer and Chief Financial Officer, 581 Main
Street, Woodbridge, NJ 07095. Treasurer, FIC, FIMCO, EIMCO and EIC;
Comptroller and Treasurer, FICC.

CONCETTA DURSO (63), 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 14 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 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 of Life
Series Fund for the fiscal year ended December 31, 1997.

PENSION OR TOTAL
RETIREMENT COMPENSATION
BENEFITS ESTIMATED FROM FIRST
AGGREGATE ACCRUED AS ANNUAL INVESTORS FAMILY
COMPENSATION PART OF FUND BENEFITS UPON OF FUNDS PAID TO
TRUSTEE FROM FUND* EXPENSES RETIREMENT TRUSTEE
- ------- ------------ ------------ ------------- ----------------
<S> <C> <C> <C> <C>
James J. Coy** $1,125.00 $-0- $-0- $15,500.00
Roger L. Grayson -0- -0- -0- -0-
Glenn O. Head -0- -0- -0- -0-
Kathryn S. Head -0- -0- -0- -0-
Rex R. Reed 2,700.00 -0- -0- 37,200.00
Herbert Rubinstein 2,700.00 -0- -0- 37,200.00
James M. Srygley 2,700.00 -0- -0- 37,200.00
John T. Sullivan -0- -0- -0- -0-
Robert F. Wentworth 2,700.00 -0- -0- 37,200.00
Nancy Schaenen 2,025.00 -0- -0- 27,900.00

</TABLE>

________________

* Compensation to officers and interested Trustees of Life Series Fund is
paid by the Adviser. In addition, prior to December 31, 1997, compensation
to non-interested Trustees of Life Series Fund was voluntarily paid by the
Adviser. Commencing January 1, 1998, compensation to non-interested Trustees
of Life Series Fund is being paid by Life Series Fund.

** On March 27, 1997, Mr. Coy resigned as a Trustee of Life Series Fund. Mr.
Coy did not resign due to a disagreement on any matters relating to Life Series
Fund's operations, policies or practices. Mr. Coy currently serves as an
emeritus Trustee.

<PAGE>

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 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:

<TABLE>
<CAPTION>
Annual
Average Daily Net Assets Rate
- ------------------------ ----
<S> <C>
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

</TABLE>

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.

<PAGE>

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 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.

For the fiscal year ended December 31, 1996, BLUE CHIP FUND's advisory
fees were $611,681, CASH MANAGEMENT FUND's advisory fees were $23,439, net of
a waiver of $5,860, DISCOVERY FUND's advisory fees were $450,910, GOVERNMENT
FUND's advisory fees were $54,997, net of a waiver of $13,749, GROWTH FUND's
advisory fees were $475,966, HIGH YIELD FUND's advisory fees were $338,303,
INTERNATIONAL SECURITIES FUND's advisory fees were $364,115, INVESTMENT GRADE
FUND's advisory fees were $96,305, net of a waiver of $24,076, TARGET
MATURITY 2007 FUND's advisory fees were $73,502, net of a waiver of $18,376;
TARGET MATURITY 2010 FUND's advisory fees were $5,014, net of a waiver of
$1,254 and UTILITIES INCOME FUND's advisory fees were $119,506, net of a
waiver of $29,876.

For the fiscal year ended December 31, 1997, BLUE CHIP FUND's advisory
fees were $965,995, CASH MANAGEMENT FUND's advisory fees were $27,384, net of
a waiver of $6,846, DISCOVERY FUND's advisory fees were $640,895, GOVERNMENT
FUND's advisory fees were $54,162, net of a waiver of $13,541, GROWTH FUND's
advisory fees were $777,312, HIGH YIELD FUND's advisory fees were $407,953,
INTERNATIONAL SECURITIES FUND's advisory fees were $512,589, INVESTMENT GRADE
FUND's advisory fees were $98,694, net of a waiver of $24,674, TARGET
MATURITY 2007 FUND's advisory fees were $101,588, net of a waiver of $25,397;
TARGET MATURITY 2010 FUND's advisory fees were $21,425, net of a waiver of
$5,356 and UTILITIES INCOME FUND's advisory fees were $162,992, net of a
waiver of $40,748. For the fiscal year ended December 31, 1997, the Adviser
voluntarily reimbursed expenses for CASH MANAGEMENT FUND, GOVERNMENT FUND,
INVESTMENT GRADE FUND, TARGET MATURITY 2007 FUND, TARGET MATURITY 2010 FUND
and UTILITIES INCOME FUND in the amounts of $10,586, $12,100, $15,884,
$10,255, $3,617 and $7,919, respectively.

SUBADVISER. Wellington Management Company, LLP 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.

<PAGE>

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 Fund. The Subadviser
voluntarily has agreed to waive its fees on the first $50 million of the
daily net assets of GROWTH FUND to an annual rate of 0.325%. The Adviser
will retain the portion of those fees waived by the Subadviser.

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. For the fiscal year
ended December 31, 1996, the Subadviser received $192,042 for its services
with respect to INTERNATIONAL SECURITIES FUND and $199,147 for its services
with respect to GROWTH FUND. For the fiscal year ended December 31, 1997,
the Subadviser received $250,449 for its services with respect to the
INTERNATIONAL SECURITIES FUND and $310,010 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 Stock Market is valued at its last sale price on the exchange or
market where the security is principally traded, and lacking any sales on a
particular day, the security is valued at the mean between the closing bid
and asked prices. Securities traded in the OTC market (including securities
listed on exchanges whose primary market is believed to be OTC) are valued at
the mean between the last bid and asked prices prior to the time when assets
are valued based upon quotes furnished by market makers for such securities.
However, a Fund may determine the value of debt securities based upon prices
furnished by an outside pricing service. The pricing services use quotations
obtained from investment dealers or brokers for the particular securities
being evaluated, information with respect to market transactions in
comparable securities and consider security type, rating, market condition,
yield data and other available information in determining value. Interactive
Data Corporation provides pricing services for corporate debt securities and
foreign equity securities. Short-term debt securities that mature in 60 days
or less are valued at amortized cost. Securities for which market quotations
are not readily available are valued on at fair value as determined in good
faith by or under the supervision of Life Series Fund's officers in a manner
specifically authorized 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 or by the pricing service. 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 CASH MANAGEMENT FUND values its portfolio securities in accordance
with the amortized cost method of valuation under Rule 2a-7 under the 1940
Act. To use amortized cost to value its portfolio securities, a Fund must
adhere to certain conditions under that Rule relating to the Fund's
investments, some of which are discussed in the Prospectus. Amortized cost
is an approximation of market value of an instrument, whereby the difference
between its acquisition cost and value at maturity is amortized on a
straight-line basis over the remaining life of the instrument. The effect of
changes in the market value of a security as a result of fluctuating interest
rates is not taken into account and thus the amortized cost method of
valuation may result in the value of a security being higher or lower than
its actual market value. In the event that a large number of redemptions
take place at a time when interest rates have increased, a Fund might have to
sell portfolio securities prior to maturity and at a price that might not be
desirable.

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The Board of Trustees of Life Series Fund has established procedures for
the purpose of maintaining a constant net asset value of $1.00 per share,
which include a review of the extent of any deviation of net asset value per
share, based on available market quotations, from the $1.00 amortized cost
per share. Should that deviation exceed 1/2 of 1%, the Board of Trustees will
promptly consider whether any action should be initiated to eliminate or
reduce material dilution or other unfair results to shareholders. Such
action may include selling portfolio securities prior to maturity, reducing
or withholding dividends and utilizing a net asset value per share as
determined by using available market quotations. The Fund maintains a dollar
weighted average portfolio maturity of 90 days or less and does not purchase
any instrument with a remaining maturity greater than 13 months, limits
portfolio investments, including repurchase agreements, to those U.S.
dollar-denominated instruments that are of high quality and that the Trustees
determine present minimal credit risks as advised by the Adviser, and
complies with certain reporting and recordkeeping procedures. There is no
assurance that a constant net asset value per share will be maintained. In
the event amortized cost ceases to represent fair value per share, the Board
will take appropriate action.

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 Stock Market 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. In addition, upon
the instruction of the Board of Trustees of Life Series Fund, the Adviser or
the Subadviser may use dealer concessions available in fixed-price
underwritings to pay for research services. 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.

22
<PAGE>

The Adviser 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 favorable transaction
price; and where appropriate, securities purchased or sold may be allocated
in accordance with written procedures approved by the Board of Trustees. In
addition, some securities considered for investment by a Fund may also be
appropriate for other Funds and/or clients served by the Subadviser. If the
purchase or sale of securities consistent with the investment policies of a
Fund and one or more of these other funds or clients serviced by the
Subadviser are considered at or about the same time, transactions in such
securities will be allocated among the several funds and clients in a manner
deemed equitable by the Subadviser.

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.

Brokerage commissions for the fiscal year ended December 31, 1996 are as
follows: BLUE CHIP FUND paid $107,473 in brokerage commissions. Of that
amount, $46,425 was paid in brokerage commissions to brokers who furnished
research services on portfolio transactions in the amount of $26,460,832.
INTERNATIONAL SECURITIES FUND paid $192,286 in brokerage commissions. Of
that amount, $4,302 was paid in brokerage commissions to brokers who
furnished research services on portfolio transactions in the amount of
$2,972,468. DISCOVERY FUND paid $98,732 in brokerage commissions. Of that
amount, $50,064 was paid in brokerage commissions to brokers who furnished
research services on portfolio transactions in the amount of $19,630,693.
GROWTH FUND paid $70,083 in brokerage commissions. Of that amount, $10,277
was paid in brokerage commissions to brokers who furnished research services
on portfolio transactions in the amount of $8,999,871. HIGH YIELD FUND paid
$418 in brokerage commissions, all of which was in brokerage commissions to
brokers who furnished research services on portfolio transactions in the
amount of $125,354. UTILITIES INCOME FUND paid $55,051 in brokerage
commissions. Of that amount, $13,900 was paid in brokerage commissions to
brokers who furnished research services on portfolio transactions in the
amount of $5,966,660. For the same period, all other Funds of Life Series
Fund did not pay brokerage commissions.

Brokerage commissions for the fiscal year ended December 31, 1997 are as
follows: BLUE CHIP FUND paid $194,635 in brokerage commissions. Of that
amount, $108,092 was paid in brokerage commissions to brokers who furnished
research services on portfolio transactions in the amount of $87,860,801.
INTERNATIONAL SECURITIES FUND paid $231,957 in brokerage commissions. Of
that amount, $10,203 was paid in brokerage commissions to brokers who
furnished research services on portfolio transactions in the amount of
$10,445,470. DISCOVERY FUND paid $136,562 in brokerage commissions. Of
that amount, $60,163 was paid in brokerage commissions to brokers who
furnished research services on portfolio transactions in the amount of
$23,951,040. GROWTH FUND paid $68,509 in brokerage commissions. Of that
amount, $11,029 was paid in brokerage commissions to brokers who furnished
research services on portfolio transactions in the amount of $9,446,682.
HIGH YIELD FUND paid $158 in brokerage commissions. Of that amount, $44 was
paid in brokerage commissions to brokers who furnished research services on
portfolio transactions in the amount of $10,929.

<PAGE>

UTILITIES INCOME FUND paid $68,591 in brokerage commissions. Of that amount,
$8,562 was paid in brokerage commissions to brokers who furnished research
services on portfolio transactions in the amount of $3,767,423. For the same
period, all other Funds of Life Series Fund did not pay brokerage commissions.

EMERGENCY PRICING PROCEDURES

In the event that the Funds must halt operations during any day that
they would normally be required to price under Rule 22c-1 under the 1940 Act
due to an emergency ("Emergency Closed Day"), the Funds will apply the
following procedures:

1. The Funds will make every reasonable effort to segregate orders
received on the Emergency Closed Day and give them the price that they would
have received but for the closing. The Emergency Closed Day price will be
calculated as soon as practicable after operations have resumed and will be
applied equally to sales, redemptions and repurchases that were in fact
received in the mail or otherwise on the Emergency Closed Day.

2. For purposes of paragraph 1, an order will be deemed to have been
received by the Funds on an Emergency Closed Day, even if neither the Funds
nor the Transfer Agent is able to perform the mechanical processing of
pricing on that day, under the following circumstances:

(a) In the case of a mail order the order will be considered
received by a Fund when the postal service has delivered it to FIC's offices
in Woodbridge, New Jersey prior to the close of regular trading on the NYSE,
or at such other time as may be prescribed in its prospectus; and

(b) In the case of a wire order, including a Fund/SERV order, the
order will be considered received when it is received in good form by a FIC
branch office or an authorized dealer prior to the close of regular trading
on the NYSE, or such other time as may be prescribed in its prospectus.

3. If the Funds are unable to segregate orders received on the
Emergency Closed Day from those received on the next day the Funds are open
for business, the Funds may give all orders the next price calculated after
operations resume.

4. Notwithstanding the foregoing, on business days in which the NYSE
is not open for regular trading, the Funds may determine not to price their
portfolio securities if such prices would lead to a distortion of the net
asset value for the Funds and their shareholders.

TAXES

Shares of the Funds are offered only to the Separate Accounts that fund
the Policies and Contracts. See the applicable Separate Account Prospectus
for a discussion of the special taxation of First Investors Life with respect
to those accounts and of the Policyowners and Contractholders.

In order to continue to qualify for treatment as a regulated investment
company ("RIC") under the Internal Revenue Code of 1986, as amended (the
"Code"), a Fund-each Fund being treated as a separate corporation for these
purposes-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, DISCOVERY FUND and HIGH YIELD FUND ("Foreign Funds"), net
gains from certain foreign currency transactions) ("Distribution
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

<PAGE>

disposition of securities or, for a Foreign Fund, foreign currencies, or
other income (including, for gains from options, futures or currency forward
contracts) derived with respect to its business of investing in securities
or, for a Foreign Fund, those currencies ("Income Requirement"); (2) 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 (3) 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 a Foreign Fund, and gains realized by
a Foreign Fund, may be subject to income, withholding or other taxes imposed
by foreign countries that would reduce the yield and/or total return 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.

Each of INTERNATIONAL SECURITIES FUND and DISCOVERY FUND may invest in
the stock of "passive foreign investment companies" ("PFICs"). A PFIC is a
foreign corporation-other than a "controlled foreign corporation" (i.e., a
foreign corporation in which, on any day during its taxable year, more than
50% of the total voting power of all voting stock therein or the total value
of all stock therein is owned, directly, indirectly, or constructively, by
"U.S. shareholders," defined as U.S. persons that individually own, directly,
indirectly, or constructively, at least 10% of that voting power) as to which
such a Fund is a U.S. shareholder--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 either 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 the
Fund distributes the PFIC income as a taxable dividend to its shareholders.
The balance of the PFIC income will be included in the 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" ("QEF"), then in lieu
of the foregoing tax and interest obligation, the Fund would be required to
include in income each year its pro rata share of the QEF's annual 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 by
the Fund to satisfy the Distribution Requirement--even if those earnings and
gain were not distributed to the Fund by the QEF. In most instances it will
be very difficult, if not impossible, to make this election because of
certain requirements thereof.

Each of the International Securities Fund and Discovery Fund may elect
to "mark-to-market" its stock in any PFICs. "Marking-to-market," in this
context, means including in ordinary income each taxable year the excess, if
any, of the fair market value of the PFIC's stock over a Fund's adjusted
basis in that stock as of the end of that year. Pursuant to the election, a
Fund also would be allowed to deduct (as an ordinary, not capital, loss) the
excess, if any, of its adjusted basis in PFIC stock over the fair market
value thereof as of the taxable year-end, but only to the extent of any net
mark-to-market gains with respect to that stock included by the Fund for
prior taxable years. A Fund's adjusted basis in each PFIC's stock with
respect to which it makes this election would be adjusted to reflect the
amounts of income included and deductions taken under the election.
Regulations proposed in 1992 would provide a similar election with respect to
the stock of certain PFICs.

<PAGE>

HIGH YIELD FUND, GOVERNMENT FUND, INVESTMENT GRADE FUND, TARGET MATURITY
2007 FUND, TARGET MATURITY 2010 FUND and UTILITIES INCOME FUND may acquire
zero coupon or other securities issued with original issue discount. As a
holder of those securities, each such Fund must include in its income the
portion of the original issue discount that accrues on the securities during
the taxable year, even if the Fund receives no corresponding payment on them
during the year. Similarly, each such 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, a 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 a Fund's cash assets or from the proceeds of sales of portfolio
securities, if necessary. A 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.

INTERNATIONAL SECURITIES FUND'S use of hedging strategies, such as
writing (selling) and purchasing options and futures contracts and entering
into forward currency contracts, involves complex rules that will determine
for income tax purposes the amount, character and timing of recognition of
the gains and losses the Fund will realize in connection therewith. Gains
from the Foreign Funds' disposition of foreign currencies (except gains that
may be excluded by future regulations), and in the case of the INTERNATIONAL
SECURITIES FUND gains from options, futures and forward currency contracts
derived by INTERNATIONAL SECURITIES FUND with respect to its business of
investing in securities or foreign currencies will qualify as permissible
income under the Income Requirement.

If a Fund has an "appreciated financial position"-generally, an interest
(including an interest through an option, futures or forward currency
contract or short sale) with respect to any stock, debt instrument (other
than "straight debt"), or partnership interest the fair market value of which
exceeds its adjusted basis-and enters into a "constructive sale" of the same
or substantially similar property, the Fund will be treated as having made an
actual sale thereof, with the result that gain will be recognized at that
time. A constructive sale generally consists of a short sale, an offsetting
notional principal contract or futures or forward contract entered into by
the Fund or a related person with respect to the same or substantially
similar property. In addition, if the appreciated financial position is
itself a short sale or such a contract, acquisition of the underlying
property or substantially similar property will be deemed a constructive sale.

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

<PAGE>

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.

TRADING BY PORTFOLIO MANAGERS AND OTHER ACCESS PERSONS. Pursuant to
Section 17(j) of the 1940 Act and Rule 17j-1 thereunder, the Life Series Fund
and the Adviser have adopted Codes of Ethics restricting personal securities
trading by portfolio managers and other access persons of the Funds. Among
other things, such persons, except the Trustees: (a) must have all non-exempt
trades pre-cleared; (b) are restricted from short-term trading; (c) must
provide duplicate statements and transactions confirmations to a compliance
officer; and (d) are prohibited from purchasing securities of initial public
offerings.

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.

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.

<PAGE>

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.

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.

<PAGE>

Financial Statements
as of December 31, 1997

<PAGE>

Financial Statements
as of December 31, 1997

Registrant incorporates by reference the financial statements and report
of independent auditors contained in the Annual Report to shareholders for
the fiscal year ended December 31, 1997 electronically filed with the
Commission on March 3, 1998 (Accession Number: 0001047469-98-008384).