<PAGE>
[LOGO]First Investors
LIFE SERIES FUND
BLUE CHIP
CASH MANAGEMENT
DISCOVERY
FOCUSED EQUITY
GOVERNMENT
GROWTH
HIGH YIELD
INTERNATIONAL SECURITIES
INVESTMENT GRADE
TARGET MATURITY 2007
TARGET MATURITY 2010
TARGET MATURITY 2015
UTILITIES INCOME
ANNUAL REPORT
DECEMBER 31, 1999
<PAGE>
MARKET OVERVIEW
FIRST INVESTORS LIFE SERIES FUND
Dear Investor:
We are pleased to present this Market Overview for the annual report for the
First Investors Life Series Funds for the fiscal year ended December 31, 1999.
The Funds are only available through the purchase of variable life insurance
policies and variable annuity contracts issued by an affiliated life insurance
company. The annual reports do not reflect the additional expenses and charges
that are applicable to variable life insurance policies and variable annuity
contracts. In addition, charges will differ among variable life insurance
policyowners because of age, gender and risk classification at time of policy
issue.
THE ECONOMY
The U.S. economy, in its ninth year of expansion, continued to show remarkable
strength during 1999. The domestic economy grew at a rate of 4.2 % during the
reporting period. The unemployment rate fell to 4.1%--a 29-year low--and 2.6
million new jobs were created. Despite rapid growth and near full employment,
inflation remained benign. As measured by the Consumer Price Index, inflation
increased slightly, from 1.6% to a still low 2.7%, primarily due to higher oil
prices. Rising personal income, high consumer confidence, wealth from stock
market gains and home price appreciation, and improvement in the economies of
U.S. trading partners were all factors that contributed to economic growth.
THE EQUITY MARKET
Despite a great deal of volatility, particularly during the summer months, the
performance of the U.S. stock market was once again solid. Supported by the
healthy economy, strong corporate profits and mild inflation, the broad stock
market indices reached record highs. The big story of the year was the explosive
growth of technology stocks, as high-flying Internet stocks led the equity
rally. Propelled by the ongoing Internet phenomenon, many prominent technology
companies, including hardware, software and telecommunication service providers,
posted strong gains. The Nasdaq Composite Index, which is meant to be a broad
Nasdaq stock market indicator but is increasingly being driven by technology
stocks, was up an unprecedented 85.6% for the year. Standard & Poor's 500 Index
("S&P 500 Index") was up 19.5%--the fifth consecutive year of double-digit
growth. The powerful momentum of technology stocks is exemplified by the fact
that when technology stocks are removed from the S&P 500 Index, it is up only
mid-single digits for the year.
Large capitalization stocks continued their winning streak, as indicted by the
S&P 500 Index. However, it is important to note that while the S&P 500 Index
soared, the majority of individual stocks included in the index actually
declined (256 stocks fell in price, 3 remained unchanged and 241 rose.) In a
stunning reversal of fortune, small capitalization stocks, which had lagged for
several years, rebounded as the Russell 2000 Index (the small-cap benchmark)
rose 19.6%.
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MARKET OVERVIEW (continued)
FIRST INVESTORS LIFE SERIES FUND
In the international marketplace, stock markets around the world roared back to
life in 1999. Buoyed by stabilizing economies, many emerging markets staged a
dramatic comeback, while more established countries also posted respectable
results.
THE BOND MARKET
Interest rates moved steadily and substantially higher during the year, causing
bond prices to decline. The yield on the benchmark 30-year U.S. Treasury bond
rose from 5.10% to 6.48%, its highest yield in over two years. Early in the
year, the market was hurt by a reversal of the "flight to safety," which had
benefited bonds during the financial market crisis in the fall of 1998. As the
year progressed, the market became increasingly concerned about the strength of
the U.S. economy and likely Federal Reserve action. In fact, the Fed, concerned
with the rapid expansion of the economy, raised the federal funds rate by 25
basis points (1/4 of 1%) three times during the year, thus undoing its three
easing moves that were initiated in response to 1998's financial market crisis.
Among the various bond sectors, U.S. corporate high yield bonds had the best
performance due to their high coupon income. Mortgage-backed bonds were the
second-best sector, due to reduced prepayment risk and a decrease in supply.
Corporate investment grade bonds underperformed in part because of heavy
issuance, particularly in the first half of the year. The worst-performing bond
sector was Treasury securities, which are the most sensitive to changes in
interest rates.
LOOKING AHEAD
Going forward, our long-term outlook for the equity market remains optimistic,
though we are concerned about excessive valuations and record-high share prices
of some stocks. As demonstrated in the past, the stock market is inherently
volatile, and significant short-term corrections are part of its nature.
However, in general, we are encouraged by the healthy fundamentals of the
domestic economy, sustained corporate earnings and subdued inflation.
We anticipate that the bond market will continue to face a challenging
environment in the months ahead. Given the economy's considerable momentum, the
Federal Reserve is likely to continue to raise short-term interest rates. In
addition, long-term rates are likely to continue to rise during the first few
months of 2000. If the economy starts to slow due to higher interest rates,
improvement in the bond market is possible by mid-year.
Because it is impossible to predict the future direction of the markets, even
over the short term, there are certain basic investment principles that we
encourage our clients to follow to reduce exposure to risk.* First, we encourage
our clients to take a long-term view, and to avoid trying to time the market.
Attempting to time the market is extremely difficult, even for professional
investors. Second, we encourage our clients to diversify their portfolios among
stock, bond and money market portfolios. Third, we
2
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encourage our clients to follow a regular investment plan. This may help you to
avoid getting caught up in the excitement of a rising market and will reduce the
risk of buying at high points.
Of course, no financial plan or program, no matter how well-designed, is
guaranteed to be successful. In addition, nothing eliminates the risk associated
with overall market trends. However, utilizing these various strategies may help
to minimize the risk by reducing the extent to which an investor may be affected
by a decline in any one security or segment of the market. If you use dollar
cost averaging, you should consider your ability to continue purchases through
periods of declining prices.
Thank you for placing your trust in First Investors. As always, we appreciate
the opportunity to serve your investment needs.
Sincerely,
/s/ Patricia D. Poitra
Patricia D. Poitra
Director of Equities
First Investors Management Company, Inc.
/s/ Clark D. Wagner
Clark D. Wagner
Chief Investment Officer
First Investors Management Company, Inc.
January 31, 2000
*THERE ARE A VARIETY OF RISKS ASSOCIATED WITH INVESTING IN ALL VARIABLE LIFE AND
ANNUITY SUBACCOUNTS. FOR THE STOCK SUBACCOUNTS, THE RISKS INCLUDE MARKET RISK
(THE RISK THAT THE ENTIRE STOCK MARKET WILL DECLINE BECAUSE OF AN EVENT SUCH AS
A DETERIORATION IN THE ECONOMY OR A RISE IN INTEREST RATES). THERE ARE SPECIAL
RISKS ASSOCIATED WITH INVESTING IN CERTAIN TYPES OF STOCK SUBACCOUNTS, SUCH AS
SMALL-CAP AND GLOBAL SUBACCOUNTS. FOR THE BOND SUBACCOUNTS, THE RISKS INCLUDE
INTEREST RATE RISK AND CREDIT RISK. INTEREST RATE RISK IS THE RISK THAT BONDS
WILL DECREASE IN VALUE AS INTEREST RATES RISE. AS A GENERAL MATTER, LONGER-
TERM BONDS FLUCTUATE MORE THAN SHORTER-TERM BONDS IN REACTION TO CHANGES IN
INTEREST RATES. CREDIT RISK IS THE RISK THAT BONDS WILL DECLINE IN VALUE AS THE
RESULT OF A DECLINE IN THE CREDIT RATING OF THE BONDS OR THE ECONOMY AS A
WHOLE. YOU SHOULD CONSULT YOUR PROSPECTUS FOR A PRECISE EXPLANATION OF THE
RISKS ASSOCIATED WITH YOUR SUBACCOUNTS.
3
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MARKET OVERVIEW (continued)
FIRST INVESTORS LIFE SERIES FUND
OUR PORTFOLIO MANAGERS' LETTERS DISCUSS HOW FUNDS PERFORMED RELATIVE TO THEIR
LIPPER INC. ("LIPPER") PEER GROUPS. DURING 1999, LIPPER INSTITUTED A NEW
CLASSIFICATION SYSTEM FOR EQUITY MUTUAL FUNDS. LIPPER IS CURRENTLY CONTINUING TO
PUBLISH INFORMATION BASED ON BOTH THE OLD AND NEW CLASSIFICATIONS. BECAUSE THE
NEW CLASSIFICATIONS WERE NOT IN PLACE WHEN THE FISCAL YEAR BEGAN AND THEY
CONTINUED TO BE REFINED DURING THE YEAR, WE HAVE DECIDED TO CONTINUE TO RELY ON
THE OLD CLASSIFICATIONS. THUS, WHEN WE REFER TO LIPPER PEER GROUPS IN EQUITY
ANNUAL REPORTS, WE ARE USING THE PREVIOUS CLASSIFICATION STRUCTURE.
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PORTFOLIO MANAGERS' LETTER
FIRST INVESTORS LIFE BLUE CHIP FUND
Dear Investor:
We are pleased to present the annual report for the First Investors Life Blue
Chip Fund for the fiscal year ended December 31, 1999. During the period, the
Fund's return on a net asset value basis was 25.3%, compared to a return of
13.8% for its Lipper peer group. During the period, the Fund declared dividends
from net investment income of 17.8 cents per share. The Fund also declared a
capital gains distribution of 42.5 cents per share.
The primary factors driving the Fund's performance were the performance of large
capitalization stocks, as well as the Fund's sector allocations. The Fund
benefited from the equity markets' continued upward trend, which was supported
by persistent gains in productivity. This in turn led to an improving corporate
earnings environment. Concerns about inflation and rising interest rates
returned mid-year and effectively cooled the markets. Fears soon subsided, and
the market resumed its march upward through the year end. In general, the
performance of the major indices was driven by large-cap technology issues. The
economy and financial markets are still debating the possible emergence of a
"new paradigm" created by massive leaps forward in computer technologies. These
technologies have made possible a heightened level of productivity, which some
believe may render the historically perceived trade-off between inflation and
unemployment invalid. However, the debate on this topic continues.
Technology was the reigning theme for the year, and the Fund benefited from the
strong performance of a number of holdings in this sector. In the handset and
wireless communications markets, Ericsson and Lucent Technologies were two solid
stocks. As the semiconductor market improved, the stocks of Intel and LSI Logic
generated out-performing returns, as did Applied Materials, a semiconductor
capital equipment company.
In the consumer staples area, several cable providers added to the Fund's
performance. AT&T/Liberty Media's focus on cable helped it become one of the
year's solid performers. Time Warner, another major cable company, was also a
good performer thanks to its improving programming content.
A number of holdings in the capital goods sector helped the Fund's performance
during the reporting period. One company in particular that contributed to the
performance of the Fund was General Electric, a well-managed, industrial company
that benefited from continuing strength in the domestic economy, as well as the
recent re-invigoration of the world economies.
The Fund's holdings in the consumer cyclicals sector also helped performance.
Solid advertising and classified revenue helped propel Tribune's newspaper
business. Their television station ratings also fared well, due to solid
demographic perspectives. The big box retailers, Home Depot, Wal-Mart and
Costco, continued to generate solid returns for the Fund by providing the
consumer with a solid shopping value and a good in-store experience.
5
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PORTFOLIO MANAGERS' LETTER (continued)
FIRST INVESTORS LIFE BLUE CHIP FUND
The Fund's holdings in some sectors did not benefit performance. For example, in
the health care sector, the Federal Reserve's decision to raise interest rates
had a significant impact on some of the major pharmaceutical companies with
higher price-to-earnings multiples. The stocks of companies such as Eli Lilly,
Schering-Plough, and Pfizer all underperformed.
In the consumer cyclicals area, select sellers of hard goods were hurt by the
rising interest rate environment, though their fundamentals remained solid. An
example of this situation was the underperformance of the stock of Ford Motor
Company, a leading automobile manufacturer.
In the financial services sector, concerns about merger integration, potential
Year 2000 computer glitches, rising interest rates, exposure to Latin America
and declining revenues in the capital markets wreaked havoc. In this
environment, some of the Fund's holdings underperformed. In the insurance
industry, pricing pressures continued to depress the stocks of companies like
Hartford Insurance Group.
Thank you for placing your trust in First Investors. As always, we appreciate
the opportunity to serve your investment needs.
Sincerely,
/s/ Dennis T. Fitzpatrick
Dennis T. Fitzpatrick
Co-Portfolio Manager
/s/ Andrew Wedeck
Andrew Wedeck
Co-Portfolio Manager*
January 31, 2000
* Effective November 15, 1999, Mr. Wedeck serves as Co-Portfolio Manager of the
Fund.
6
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CUMULATIVE PERFORMANCE INFORMATION
FIRST INVESTORS LIFE BLUE CHIP FUND
Comparison of change in value of $10,000 investment in the First Investors Life
Blue Chip Fund and the Standard & Poor's 500 Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999 LIFE BLUE CHIP FUND S&P 500 INDEX
<S> <C> <C>
Mar-90 $10,000 $10,000
Dec-90 10,050 9,996
Dec-91 11,680 13,041
Dec-92 13,526 14,034
Dec-93 14,676 15,446
Dec-94 14,463 15,650
Dec-95 19,381 21,532
Dec-96 23,551 26,475
Dec-97 29,842 35,808
Dec-98 35,409 45,315
Dec-99 44,377 54,849
Average Annual Total Return*
One Year 25.32%
Five Years 25.13%
Since Inception (3/8/90) 16.38%
</TABLE>
* THE GRAPH COMPARES A $10,000 INVESTMENT IN THE FIRST INVESTORS LIFE BLUE CHIP
FUND BEGINNING 3/8/90 (INCEPTION DATE) WITH A THEORETICAL INVESTMENT IN THE
STANDARD & POOR'S 500 INDEX. THE STANDARD & POOR'S 500 INDEX IS AN UNMANAGED
CAPITALIZATION-WEIGHTED INDEX OF 500 STOCKS DESIGNED TO MEASURE PERFORMANCE
OF THE BROAD DOMESTIC ECONOMY THROUGH CHANGES IN THE AGGREGATE MARKET VALUE
OF SUCH STOCKS, WHICH REPRESENT ALL MAJOR INDUSTRIES. IT IS NOT POSSIBLE TO
INVEST DIRECTLY IN THIS INDEX. IN ADDITION, THE INDEX DOES NOT TAKE INTO
ACCOUNT FEES AND EXPENSES THAT AN INVESTOR WOULD INCUR IN PURCHASING
SECURITIES IN THE INDEX. FOR PURPOSES OF THE GRAPH AND THE ACCOMPANYING TABLE
IT IS ASSUMED THAT ALL DIVIDENDS AND DISTRIBUTIONS WERE REINVESTED.
THE AVERAGE ANNUAL TOTAL RETURN FIGURES ARE FOR THE PERIOD ENDED 12/31/99.
DURING THE PERIODS SHOWN, SOME OR ALL OF THE EXPENSES OF THE FUND WERE WAIVED OR
ASSUMED. IF SUCH EXPENSES HAD BEEN PAID BY THE FUND, THE AVERAGE ANNUAL TOTAL
RETURN SINCE INCEPTION WOULD HAVE BEEN 16.25%.
THE RETURNS SHOWN DO NOT REFLECT ANY SALES CHARGES, SINCE THE FUND SELLS ITS
SHARES SOLELY TO VARIABLE ANNUITY AND/OR VARIABLE LIFE INSURANCE SUBACCOUNTS AT
NET ASSET VALUE. THE RETURNS DO NOT REFLECT THE FEES AND CHARGES THAT AN
INDIVIDUAL WOULD PAY IN CONNECTION WITH AN INVESTMENT IN A VARIABLE ANNUITY OR
LIFE CONTRACT OR POLICY. RESULTS REPRESENT PAST PERFORMANCE AND DO NOT INDICATE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. STANDARD & POOR'S 500 INDEX FIGURES FROM STANDARD &
POOR'S AND ALL OTHER FIGURES FROM FIRST INVESTORS MANAGEMENT COMPANY, INC.
7
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PORTFOLIO OF INVESTMENTS
FIRST INVESTORS LIFE BLUE CHIP FUND
December 31, 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
COMMON STOCKS--97.1%
BASIC MATERIALS--3.1%
42,400 Alcoa, Inc. $ 3,519,200 $ 128
104,300 * Bethlehem Steel Corporation 873,512 32
27,800 Ecolab, Inc. 1,087,675 40
67,400 Mead Corporation 2,927,687 106
- ---------------------------------------------------------------------------------------
8,408,074 306
- ---------------------------------------------------------------------------------------
CAPITAL GOODS--7.2%
56,700 Deere & Company 2,459,362 89
68,000 General Electric Company 10,523,000 383
62,800 Ingersoll-Rand Company 3,457,925 126
36,000 Tyco International, Ltd. 1,399,500 51
29,500 United Technologies Corporation 1,917,500 70
- ---------------------------------------------------------------------------------------
19,757,287 719
- ---------------------------------------------------------------------------------------
COMMUNICATION SERVICES--5.5%
15,500 ALLTEL Corporation 1,281,656 47
77,900 Bell Atlantic Corporation 4,795,719 174
22,200 * Covad Communications Group, Inc. 1,241,812 45
31,400 GTE Corporation 2,215,663 81
61,350 * MCI WorldCom, Inc. 3,255,384 118
43,100 * NorthPoint Communications Group, Inc. 1,034,400 38
29,300 * Qwest Communications International, Inc. 1,259,900 46
- ---------------------------------------------------------------------------------------
15,084,534 549
- ---------------------------------------------------------------------------------------
CONSUMER CYCLICALS--9.8%
31,400 * Best Buy Company, Inc. 1,575,887 57
31,400 Circuit City Stores-Circuit City Group 1,414,962 51
59,000 * Costco Wholesale Corporation 5,383,750 196
51,600 Home Depot, Inc. 3,537,825 129
57,900 Masco Corporation 1,469,212 53
50,700 McGraw-Hill Companies, Inc. 3,124,387 114
69,100 Tribune Company 3,804,819 138
97,900 Wal-Mart Stores, Inc. 6,767,337 246
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27,078,179 984
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</TABLE>
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<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
CONSUMER STAPLES--10.9%
148,900 * AT&T Corporation-Liberty Media Group -
Class "A" $ 8,450,075 $ 307
29,000 Bestfoods 1,524,312 55
29,300 * Clear Channel Communications, Inc. 2,615,025 95
74,400 General Mills, Inc. 2,659,800 97
30,600 * Getty Images, Inc. 1,495,575 54
107,800 PepsiCo, Inc. 3,799,950 138
27,100 Procter & Gamble Company 2,969,144 108
55,600 Time Warner, Inc. 4,027,525 146
21,300 Unilever NV - NY Shares (ADR) 1,159,519 42
21,900 * Viacom, Inc. - Class "B" 1,323,581 48
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30,024,506 1,090
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ENERGY--4.8%
14,100 Chevron Corporation 1,221,412 44
66,133 Exxon Mobil Corporation 5,327,840 194
50,000 Halliburton Company 2,012,500 73
58,800 Royal Dutch Petroleum Company - NY Shares (ADR) 3,553,725 129
44,000 USX-Marathon Group 1,086,250 39
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13,201,727 479
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FINANCIAL--12.2%
43,000 American International Group, Inc. 4,649,375 169
55,400 Capital One Financial Corporation 2,669,587 97
28,200 Charles Schwab Corporation 1,082,175 39
30,000 Chase Manhattan Corporation 2,330,625 85
22,900 CIGNA Corporation 1,844,881 67
67,300 Citigroup, Inc. 3,739,356 136
102,200 Conseco, Inc. 1,826,825 66
21,000 Fannie Mae 1,311,188 48
47,100 Finova Group, Inc. 1,672,050 61
36,800 Freddie Mac 1,731,900 63
18,150 Jefferson-Pilot Corporation 1,238,738 45
72,900 MBNA Corporation 1,986,525 72
20,600 Morgan Stanley Dean Witter & Company 2,940,650 107
38,800 SLM Holding Corporation 1,639,300 60
43,400 SunTrust Banks, Inc. 2,986,463 109
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33,649,638 1,224
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</TABLE>
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PORTFOLIO OF INVESTMENTS (continued)
FIRST INVESTORS LIFE BLUE CHIP FUND
December 31, 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
HEALTHCARE--7.7%
26,900 Abbott Laboratories $ 976,806 $ 36
38,200 Allergan, Inc. 1,900,450 69
40,300 Bristol-Myers Squibb Company 2,586,756 94
79,400 Columbia HCA Healthcare Corporation 2,327,413 85
33,500 Eli Lilly and Company 2,227,750 81
30,700 Johnson & Johnson 2,858,938 104
71,800 Medtronic, Inc. 2,616,213 95
51,100 Merck & Company, Inc. 3,426,894 125
27,000 Warner-Lambert Company 2,212,313 80
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21,133,533 769
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TECHNOLOGY--34.2%
44,500 * Altera Corporation 2,205,531 80
32,300 * Applied Materials, Inc. 4,092,006 149
53,400 * Atmel Corporation 1,578,638 57
35,700 Autodesk, Inc. 1,204,875 44
186,800 * Cadence Design Systems, Inc. 4,483,200 163
67,400 * CIENA Corporation 3,875,500 141
66,700 * Cisco Systems, Inc. 7,145,238 260
76,400 Compaq Computer Corporation 2,067,575 75
41,800 * Compuware Corporation 1,557,050 57
74,200 * Cypress Semiconductor Corporation 2,402,225 87
29,800 * EMC Corporation 3,255,650 118
22,100 * Entrust Technologies, Inc. 1,324,619 48
31,000 * Fairchild Semiconductor International, Inc. -
Class "A" 922,250 34
46,100 * Harbinger Corporation 1,466,556 53
7,100 Hewlett-Packard Company 808,956 29
52,800 Intel Corporation 4,346,100 158
22,800 International Business Machines Corporation 2,462,400 90
49,100 * Jabil Circuit, Inc. 3,584,300 130
67,800 * LSI Logic Corporation 4,576,500 166
55,600 Lucent Technologies, Inc. 4,159,575 151
32,000 * Micron Electronics, Inc. 356,000 13
24,700 * Micron Technology, Inc. 1,920,425 70
43,000 * Microsoft Corporation 5,020,250 183
16,400 Motorola, Inc. 2,414,900 88
3,500 Nokia Corporation (ADR) - Class "A" 665,000 24
57,400 * Oracle Corporation 6,432,388 234
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</TABLE>
10
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<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
TECHNOLOGY (continued)
22,000 * Ramp Networks, Inc. $ 335,500 $ 12
59,000 * Sun Microsystems, Inc. 4,568,813 166
122,200 * Symantec Corporation 7,163,975 260
8,000 Telefonaktiebolaget L.M. Ericsson (ADR) -
Class "B" 525,500 19
29,000 * Tellabs, Inc. 1,861,438 68
61,700 * Teradyne, Inc. 4,072,200 148
11,100 W.W. Grainger, Inc. 530,719 19
27,700 Xerox Corporation 628,444 23
- ---------------------------------------------------------------------------------------
94,014,296 3,417
- ---------------------------------------------------------------------------------------
UTILITIES--1.7%
107,200 Enron Corporation 4,757,000 173
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF COMMON STOCKS (cost $163,277,352) 267,108,774 9,710
- ---------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--2.9%
$ 1,500M Heinz, H.J. Co., 6.15%, 1/13/00 1,496,916 55
1,000M Metlife Funding, Inc., 5.88%, 1/18/00 997,209 36
4,000M Prudential Funding Corp., 5.89%, 1/11/00 3,993,428 145
1,500M Southern California Edison Co., 6.25%, 1/24/00 1,493,994 54
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF SHORT-TERM CORPORATE NOTES (cost $7,981,547) 7,981,547 290
- ---------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL VALUE OF INVESTMENTS (cost $171,258,899) 100.0% 275,090,321 10,000
OTHER ASSETS, LESS LIABILITIES .0 9,325 --
- --------------------------------------------------------------------------------------
NET ASSETS 100.0% $275,099,646 $ 10,000
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
* Non-income producing
See notes to financial statements
11
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PORTFOLIO MANAGER'S LETTER
FIRST INVESTORS LIFE CASH MANAGEMENT FUND
Dear Investor:
We are pleased to present the annual report for the First Investors Life Cash
Management Fund for the fiscal year ended December 31, 1999. During the period,
the Fund's return on a net asset value basis was 4.7%. The Fund maintained a
$1.00 net asset value throughout the year.
The primary factor that drove the Fund's performance during the year was rising
interest rates. At mid-year, short-term interest rates started to move higher,
as the Federal Reserve began raising interest rates in an effort to take some
steam out of an economy that continued to exhibit extraordinary strength as it
concluded its ninth year of expansion. In three separate actions, the Fed raised
short-term interest rates by 75 basis points (.75%) during 1999, reversing the
liquidity that was provided during the last quarter of 1998 when financial
markets were in turmoil.
Management of the Life Cash Management Fund remained conservative, investing
only in short-term instruments considered to present minimal credit risk at the
time of purchase. With interest rates rising, the Fund established a floating
rate position that helped performance during the second half of the year.
Floating rate securities generally perform well in rising interest rate
environments. The Fund also effectively used short-term corporate bonds to
bolster returns, as these securities often provide higher returns than those
available on other money market products.
As the new millennium approached, many individuals were concerned about
liquidity and the ability of the financial system to provide it. The Fund
established a strategy that allowed it to have sufficient liquidity, while also
taking advantage of certain inefficiencies in the market. This provided
additional return to shareholders in the fourth quarter and should provide
incremental return in 2000. Given the outlook for higher short-term interest
rates, it is likely that the Fund will maintain weighted average maturities
similar to those of its peers.
Although the Fund's annual return for 1999 lags in comparison to returns in the
equity market, money market funds in general were among the best performing
sectors of the fixed income market. While investors realize that longer-term
returns offered by money market funds are generally lower than returns offered
by other types of mutual funds, they continue to be attracted to the liquidity
and relatively stable net asset value per share of money market funds.
Even though the Fund is conservative, there can be no assurance that the Fund
will be able to maintain a stable net asset value of $1.00 per share. Money
market
12
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mutual funds are not insured by the Federal Deposit Insurance Corporation and
are not guaranteed by a bank or other entity.
Thank you for placing your trust in First Investors. As always, we appreciate
the opportunity to serve your investment needs.
Sincerely,
/s/ Michael J. O'Keefe
Michael J. O'Keefe
Portfolio Manager
January 31, 2000
13
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PORTFOLIO OF INVESTMENTS
FIRST INVESTORS LIFE CASH MANAGEMENT FUND
December 31, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL INTEREST $10,000 OF
AMOUNT SECURITY RATE* VALUE NET ASSETS
- --------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CORPORATE NOTES--88.3%
$ 375M Associates Corp., 4/1/00 5.98% $ 377,705 $ 377
300M BellSouth Telecommunications, Inc., 2/24/00 6.05 297,270 297
500M Coca-Cola Co., 1/19/00 5.85 498,530 498
400M Donnelley (R.R.) & Sons, 1/31/00 5.82 398,047 397
464M Eastman Kodak Co., 1/26/00 6.30 461,965 461
400M Florida Power Corp., 1/10/00 5.87 399,408 399
200M Ford Motor Credit Corp., 4/13/00 5.62 200,977 201
250M Gannett Co., Inc., 5/1/00 5.80 250,002 250
300M General Electric Capital Corp., 2/3/00 5.93 298,346 298
100M General Electric Capital Corp, 2/3/00 5.97 99,450 99
400M Hartford Steam Boiler Inspection & Insurance Co.,
2/2/00 6.02 397,839 397
385M Heinz, H.J. Co., 1/13/00 6.20 384,202 383
100M Illinois Tool Works, Inc., 3/1/00 5.92 99,979 100
100M International Business Machines Corp., 6/15/00 5.97 100,192 100
105M International Business Machines Corp., 6/15/00 6.21 105,005 105
250M International Business Machines Corp., 8/7/00 6.25 249,598 249
400M Metlife Funding, Inc., 2/29/00 6.05 396,023 395
300M Motorola Credit Co., 1/20/00 5.93 299,057 298
200M National Rural Utilities Cooperative Finance
Corp., 2/7/00 5.80 198,799 198
175M National Rural Utilities Cooperative Finance
Corp., 3/9/00 5.88 173,048 173
202M PepsiCo, Inc., 5/15/00 6.11 202,444 202
250M Pharmacia & Upjohn, 4/15/00 6.15 249,641 249
400M PPG Industries, Inc., 1/21/00 5.87 398,689 398
365M Procter & Gamble Co., 2/4/00 5.90 362,941 362
400M Prudential Funding Corp., 2/4/00 5.98 397,733 397
400M Snap-on, Inc., 1/21/00 6.50 398,553 398
150M Texaco, Inc., 1/7/00 5.90 149,852 150
260M Texaco, Inc., 1/13/00 5.84 259,491 259
151M Wal Mart Stores, Inc., 7/15/00 6.23 153,153 153
200M Walt Disney Co., 4/17/00 5.68 199,971 200
150M Walt Disney Co., 4/17/00 6.15 149,673 149
240M Xerox Corp., 3/15/00 5.45 242,026 242
- --------------------------------------------------------------------------------------------------
TOTAL VALUE OF CORPORATE NOTES (cost $8,849,609) 8,849,609 8,834
- --------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL INTEREST $10,000 OF
AMOUNT SECURITY RATE* VALUE NET ASSETS
- --------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS--7.2%
$ 300M Fannie Mae, 3/17/00 5.67% $ 299,892 $ 299
150M Federal Farm Credit Bank, 2/1/00 5.97 149,890 150
275M Freddie Mac, 2/29/00 5.60 272,475 272
- --------------------------------------------------------------------------------------------------
TOTAL VALUE OF U.S. GOVERNMENT AGENCY OBLIGATIONS
(cost $722,257) 722,257 721
- --------------------------------------------------------------------------------------------------
FLOATING RATE NOTES--4.0%
400M First Union National Bank, 10/27/00
(cost $400,000) 4.85 400,000 399
- --------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
TOTAL VALUE OF INVESTMENTS (cost $9,971,866) 99.5% 9,971,866 9,954
OTHER ASSETS, LESS LIABILITIES 0.5 45,933 46
- --------------------------------------------------------------------------------------------------
NET ASSETS 100.0% $ 10,017,799 $ 10,000
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>
*The interest rates shown for the corporate notes and the U.S. Government agency
obligations are the effective rates at the time of purchase by the Fund. The
interest rates shown on the floating rate notes are adjusted periodically; the
interest rates shown are the rates that were in effect at December 31, 1999.
See notes to financial statements
15
<PAGE>
PORTFOLIO MANAGERS' LETTER
FIRST INVESTORS LIFE DISCOVERY FUND
Dear Investor:
We are pleased to present the annual report for the First Investors Life
Discovery Fund for the fiscal year ended December 31, 1999. During the period,
the Fund's return on a net asset value basis was 28.0%, compared to a return of
33.4% for its Lipper peer group. During the period, the Fund declared dividends
from net investment income of 8.8 cents per share. The Fund also declared a
capital gains distribution of 10.2 cents per share.
The primary factor that drove the Fund's performance during the period was the
re-invigoration of small-cap stocks. Although small-cap stocks struggled at the
beginning of the year, they rebounded to outperform large-caps for the last
three quarters of the year. Their resurgence was driven by improving earnings
and expectations that the improvement will continue.
The Fund's return was also bolstered by sector allocations and stock selection.
In particular, holdings in the technology sector enhanced the Fund's
performance. Two high-tech firms that demonstrated the small-cap turnaround were
RF Micro Devices and Alpha Industries. These communication semiconductor
companies benefited from continued strong growth in wireless communications,
particularly cellular phones.
Another key sector for the Fund was the telecommunication sector. Competitive
local exchange carriers and telecommunication equipment providers benefited from
increasing Internet usage, which is driving the demand for greater bandwidth for
both commercial and residential users. A number of the Fund's holdings benefited
from this, including Allegiance Telecom and US LEC, two competitive local
exchange carriers.
Among the Fund's underperformers were IMRglobal and Condor Technology Solutions,
two information technology consulting firms that were negatively affected by
Year 2000 information technology spending.
In the health care sector, Pediatrics Medical Group, a neonatology physician
practice management company, suffered from the negative impact of an
investigation into the company's billing practices. US Oncology, an oncology
physician practice management company, felt the negative effects of rising drug
costs.
16
<PAGE>
Thank you for placing your trust in First Investors. As always, we appreciate
the opportunity to serve your investment needs.
Sincerely,
/s/ David A. Hanover
David A. Hanover
Co-Portfolio Manager
/s/ Patricia D. Poitra
Patricia D. Poitra
Co-Portfolio Manager
January 31, 2000
17
<PAGE>
CUMULATIVE PERFORMANCE INFORMATION
FIRST INVESTORS LIFE DISCOVERY FUND
Comparison of change in value of $10,000 investment in the First Investors Life
Discovery Fund and the Russell 2000 Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999 LIFE DISCOVERY FUND RUSSELL 2000 INDEX
<S> <C> <C>
Jan-90 $10,000 $10,000
Dec-90 9,453 7,855
Dec-91 14,361 11,285
Dec-92 16,601 13,131
Dec-93 20,269 15,364
Dec-94 19,756 14,875
Dec-95 24,742 18,773
Dec-96 27,830 21,880
Dec-97 32,517 26,746
Dec-98 33,508 26,148
Dec-99 42,881 31,731
Average Annual Total Return*
One Year 27.97%
Five Years 16.76%
Ten Years 15.67%
</TABLE>
* THE GRAPH COMPARES A $10,000 INVESTMENT IN THE FIRST INVESTORS LIFE DISCOVERY
FUND BEGINNING 1/1/90 WITH A THEORETICAL INVESTMENT IN THE RUSSELL 2000 INDEX.
THE RUSSELL 2000 INDEX CONSISTS OF THE SMALLEST 2,000 COMPANIES IN THE RUSSELL
3000 INDEX (WHICH REPRESENTS APPROXIMATELY 98% OF THE INVESTABLE U.S. EQUITY
MARKET). THE RUSSELL 2000 INDEX IS AN UNMANAGED INDEX GENERALLY CONSIDERED AS
THE PREMIER OF SMALL-CAPITALIZATION STOCKS. IT IS NOT POSSIBLE TO INVEST
DIRECTLY IN THIS INDEX. IN ADDITION, THE INDEX DOES NOT TAKE INTO ACCOUNT FEES
AND EXPENSES THAT AN INVESTOR WOULD INCUR IN PURCHASING SECURITIES IN THE
INDEX. FOR PURPOSES OF THE GRAPH AND THE ACCOMPANYING TABLE IT IS ASSUMED THAT
ALL DIVIDENDS AND DISTRIBUTIONS WERE REINVESTED.
THE AVERAGE ANNUAL TOTAL RETURN FIGURES ARE FOR THE PERIOD ENDED 12/31/99.
DURING THE PERIODS SHOWN, SOME OR ALL OF THE EXPENSES OF THE FUND WERE WAIVED OR
ASSUMED. IF SUCH EXPENSES HAD BEEN PAID BY THE FUND, THE AVERAGE ANNUAL TOTAL
RETURN FOR TEN YEARS WOULD HAVE BEEN 15.55%.
THE RETURNS SHOWN DO NOT REFLECT ANY SALES CHARGES, SINCE THE FUND SELLS ITS
SHARES SOLELY TO VARIABLE ANNUITY AND/OR VARIABLE LIFE INSURANCE SUBACCOUNTS AT
NET ASSET VALUE. THE RETURNS DO NOT REFLECT THE FEES AND CHARGES THAT AN
INDIVIDUAL WOULD PAY IN CONNECTION WITH AN INVESTMENT IN A VARIABLE ANNUITY OR
LIFE CONTRACT OR POLICY. RESULTS REPRESENT PAST PERFORMANCE AND DO NOT INDICATE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. RUSSELL 2000 INDEX FIGURES FROM FRANK RUSSELL AND
COMPANY AND ALL OTHER FIGURES FROM FIRST INVESTORS MANAGEMENT COMPANY, INC.
18
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS LIFE DISCOVERY FUND
December 31, 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
COMMON STOCKS--89.6%
BASIC MATERIALS--3.3%
52,400 Cabot Corporation $ 1,067,650 $ 72
144,700 * ChirRex, Inc. 2,116,237 143
26,400 Minerals Technologies, Inc. 1,057,650 72
17,100 Valspar Corporation 716,062 49
- ---------------------------------------------------------------------------------------
4,957,599 336
- ---------------------------------------------------------------------------------------
CAPITAL GOODS--2.6%
49,800 * CommScope, Inc. 2,007,562 136
38,600 * Flextronics International, Ltd. 1,775,600 120
- ---------------------------------------------------------------------------------------
3,783,162 256
- ---------------------------------------------------------------------------------------
COMMUNICATION SERVICES--8.3%
25,400 * Allegiance Telecom, Inc. 2,343,150 159
60,300 Applied Power, Inc. - Class "A" 2,216,025 150
26,000 * Commonwealth Telephone Enterprises, Inc. 1,374,750 93
127,600 * ICG Communications, Inc. 2,392,500 162
68,800 * US LEC Corporation - Class "A" 2,218,800 150
23,700 * WinStar Communications, Inc. 1,774,537 120
- ---------------------------------------------------------------------------------------
12,319,762 834
- ---------------------------------------------------------------------------------------
CONSUMER CYCLICALS--6.4%
34,900 * Electronics Boutique Holdings Corporation 628,200 43
39,550 * Fossil, Inc. 914,594 62
91,200 Fred's, Inc. - Class "A" 1,453,500 98
94,600 * Hibbett Sporting Goods, Inc. 1,608,200 109
41,300 * NCO Group, Inc. 1,244,162 84
82,700 * Sunglass Hut International, Inc. 930,375 63
62,800 * Tuesday Morning Corporation 1,157,875 78
136,700 Wolverine World Wide, Inc. 1,495,156 101
- ---------------------------------------------------------------------------------------
9,432,062 638
- ---------------------------------------------------------------------------------------
CONSUMER STAPLES--17.8%
81,700 * Ames Department Stores, Inc. 2,353,981 159
40,200 * AT&T Corporation-Liberty Media Group -
Class "A" 2,281,350 155
39,600 * Beringer Wine Estates Holdings, Inc. -
Class "B" 1,579,050 107
115,400 * Cinar Corporation - Class "B" 2,827,300 191
- ---------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
FIRST INVESTORS LIFE DISCOVERY FUND
December 31, 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
CONSUMER STAPLES (continued)
48,800 * Citadel Communications Corporation $ 3,165,900 $ 214
106,400 Earthgrains Company 1,715,700 116
188,794 * Four Media Company 2,808,311 190
37,200 * Hain Food Group, Inc. 832,350 56
18,500 * Jones Intercable, Inc. - Class "A" 1,282,281 87
69,300 * Suiza Foods Corporation 2,746,012 186
67,700 * THQ, Inc. 1,569,794 106
67,300 * Whole Foods Market, Inc. 3,121,037 211
- ---------------------------------------------------------------------------------------
26,283,066 1,778
- ---------------------------------------------------------------------------------------
ENERGY--2.8%
70,800 * Newfield Exploration Company 1,893,900 128
86,400 Santa Fe International Corporation 2,235,600 151
- ---------------------------------------------------------------------------------------
4,129,500 279
- ---------------------------------------------------------------------------------------
FINANCIAL--5.7%
58,600 Chittenden Corporation 1,736,025 118
27,800 Comerica, Inc. 1,297,913 88
48,200 First Tennessee National Corporation 1,373,700 93
164,900 HCC Insurance Holdings, Inc. 2,174,619 147
67,300 Westamerica Bancorporation 1,880,194 127
- ---------------------------------------------------------------------------------------
8,462,451 573
- ---------------------------------------------------------------------------------------
HEALTHCARE--22.6%
21,400 * Celgene Corporation 1,498,000 101
29,700 * CONMED Corporation 768,488 52
77,900 Hooper Holmes, Inc. 2,005,925 136
93,900 * Impath, Inc. 2,388,581 162
78,750 Jones Pharma, Inc. 3,420,703 232
175,880 * Kensey Nash Corporation 2,088,575 141
68,200 * Medicis Pharmaceutical Corporation 2,902,763 197
59,400 * Molecular Devices Corporation 3,088,800 209
135,200 * Province Healthcare Company 2,568,800 174
65,000 * Renal Care Group, Inc. 1,519,375 103
117,200 * Sangstat Medical Corporation 3,486,700 236
30,300 Teva Pharmaceutical Industries, Ltd. (ADR) 2,172,131 147
113,800 * Total Renal Care Holdings, Inc. 761,038 52
51,600 * Trigon Healthcare, Inc. - Class "A" 1,522,200 103
- ---------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
HEALTHCARE (continued)
41,100 * Universal Health Services, Inc. $ 1,479,600 $ 100
354,300 * US Oncology, Inc. 1,749,356 118
- ---------------------------------------------------------------------------------------
33,421,035 2,263
- ---------------------------------------------------------------------------------------
TECHNOLOGY--19.1%
32,900 * Alpha Industries, Inc. 1,885,581 128
35,300 * ASM International NV 811,900 55
25,800 * Asyst Technologies, Inc. 1,691,513 115
37,600 * Etec Systems, Inc. 1,687,300 114
36,400 * Insight Communications Company, Inc. 1,078,350 73
14,200 * InterVu, Inc. 1,491,000 101
78,100 * N I C E Systems, Ltd. (ADR) 3,841,544 260
100,200 * Orckit Communications, Ltd. 3,438,113 233
58,100 * Performance Technologies, Inc. 1,009,488 68
24,700 * PRI Automation, Inc. 1,657,988 112
149,600 * Saga Systems, Inc. 2,982,650 202
44,300 * Symantec Corporation 2,597,088 176
24,900 * Synopsys, Inc. 1,662,075 113
29,700 W.W. Grainger, Inc. 1,420,031 96
16,000 * Zebra Technologies Corporation 936,000 63
- ---------------------------------------------------------------------------------------
28,190,621 1,909
- ---------------------------------------------------------------------------------------
UTILITIES--1.0%
63,100 Potomac Electric Power Company 1,447,356 98
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF COMMON STOCKS (cost $98,587,577) 132,426,614 8,964
- ---------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
FIRST INVESTORS LIFE DISCOVERY FUND
December 31, 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
SHORT-TERM CORPORATE NOTES--10.0%
$ 3,600M Bell Atlantic Corp., 5.95%, 1/19/00 $ 3,589,249 $ 243
2,000M Central Louisiana Electric Corp., 6.25%, 1/11/00 1,996,525 135
2,200M Ford Motor Credit Co., 6.38%, 1/14/00 2,198,828 149
2,200M Merrill Lynch & Co., Inc., 6.20%, 1/20/00 2,192,778 148
1,000M Prudential Funding Corp., 5.89%, 1/11/00 998,357 68
2,900M Toyota Motor Credit Co., 6%, 1/11/00 2,895,147 196
900M Union Electric Co., 5.40%, 1/18/00 897,704 61
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF SHORT-TERM CORPORATE NOTES (cost $14,768,588) 14,768,588 1,000
- ---------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL VALUE OF INVESTMENTS (cost $113,356,165) 99.6% 147,195,202 9,964
OTHER ASSETS, LESS LIABILITIES .4 534,750 36
- --------------------------------------------------------------------------------------
NET ASSETS 100.0% $147,729,952 $ 10,000
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
* Non-income producing
See notes to financial statements
22
<PAGE>
PORTFOLIO MANAGER'S LETTER
FIRST INVESTORS LIFE FOCUSED EQUITY FUND
Dear Investor:
We are pleased to present the annual report for the First Investors Life Focused
Equity Fund. The Fund was launched on November 8, 1999 and ended its fiscal year
on December 31, 1999. During the period, the Fund's return on a net asset value
basis was 2.5%.
The Fund's performance was driven mainly by stock selection and its large
exposure to leading media, content and distribution companies such as Liberty
Media, CBS (which is merging with Viacom Inc.), Clear Channel Communications and
Infinity Broadcasting. Also, as broadband is rolled out, the cable companies
will benefit. The value of broadband as well as content is clearly increasing as
the Internet develops as another form of distribution and the need for content
grows. Also, one of the few Internet models that is proving to be profitable is
advertising-based content, commerce and communication platforms. This is very
much like other media companies and we believe that the need to merge will grow
and the valuations will converge.
Liberty Media provided the largest positive performance to the portfolio.
Liberty Media owns a variety of publicly-traded companies. Its two largest
investments have been subject to takeovers: Time Warner announced a definitive
merger agreement to be purchased by America Online and Sprint PCS Group
announced an agreement to be purchased by MCI Worldcom. We believe that the
combination of America Online and Time Warner provides the platform for the
combined company to be a leader in bringing all forms of digital services to the
consumer. The cable networks that are majority owned by Liberty are performing
very strongly and we expect increases of over twenty percent in cash flow growth
from increased advertising and commerce revenue.
Other strong performers held by the Fund were Yahoo, Microsoft and Nextel
Communications. These companies benefited from a huge re-evaluation of
technology companies. Multiples have expanded dramatically as investors are
discounting a long growth cycle in the development of the Internet as a
necessity for all businesses to compete. The growth opportunities in this sector
are astounding but some of the valuations are particularly alarming.
Investments that negatively affected the portfolio include Tyco International
and M&T Bank. We trimmed our investment in Tyco because of the government's
investigation into its earnings, but still think that the stock is inexpensive
given the free cash flow it is generating. We hope that if there is an earnings
adjustment, it is not material. M&T Bank continues to deliver excellent earnings
but the market has little interest in domestic financials. We have, however,
benefited from our
23
<PAGE>
PORTFOLIO MANAGER'S LETTER (continued)
FIRST INVESTORS LIFE FOCUSED EQUITY FUND
investments in multinational financials such as American Express and Citigroup.
These companies are expected to benefit from strengthening worldwide economies.
In general, the market is placing a premium on rapid growth and discounting more
modestly growing companies.
The stock market had a very strong performance in the fourth quarter. Technology
stocks and more particularly, shares of companies that are leaders in the
Internet and broadband development advanced dramatically. Traditional methods of
valuation are being tested as the Internet revolution is spurring growth with
expectations of very high returns. With worldwide economies improving, U.S.
multinationals are well-positioned to improve earnings. However, with interest
rates increasing, the market is discounting those sectors that are more exposed
to the traditional late cycle parts of the economy. We believe that the economy
continues to grow strongly with limited inflation, but given present valuations
the margin for error has declined. We continue to focus on companies with good
franchises that trade at reasonable valuations.
Thank you for placing your trust in First Investors. As always, we appreciate
the opportunity to serve your investment needs.
Sincerely,
/s/ Colin G. Morris
Colin G. Morris
Portfolio Manager
January 31, 2000
24
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS LIFE FOCUSED EQUITY FUND
December 31, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
COMMON STOCKS--71.3%
CAPITAL GOODS--2.6%
550 General Dynamics Corporation $ 29,012 $ 145
600 Tyco International, Ltd. 23,325 117
- -------------------------------------------------------------------------------------
52,337 262
- -------------------------------------------------------------------------------------
COMMUNICATION SERVICES--9.6%
300 Bell Atlantic Corporation 18,469 93
1,300 * L-3 Communications Holdings, Inc. 54,112 271
1,500 * MCI WorldCom, Inc. 79,594 399
100 * Nextel Communications, Inc. - Class "A" 10,312 52
400 US West, Inc. 28,800 144
- -------------------------------------------------------------------------------------
191,287 959
- -------------------------------------------------------------------------------------
CONSUMER STAPLES--31.7%
3,500 * AT&T Corporation-Liberty Media Group -
Class "A" 198,625 995
900 * CBS Corporation 57,544 288
700 * Clear Channel Communications, Inc. 62,475 313
3,500 Coca Cola Enterprises, Inc. 70,437 353
500 Coca-Cola Company 29,125 146
1,000 Comcast Corporation - Spec. Class "A" 50,250 252
950 * Infinity Broadcasting Corporation - Class "A" 34,378 172
1,000 * MediaOne Group, Inc. 76,812 385
550 Pepsi Bottling Group, Inc. 9,109 46
600 Time Warner, Inc. 43,463 218
- -------------------------------------------------------------------------------------
632,218 3,168
- -------------------------------------------------------------------------------------
FINANCIAL--8.5%
275 American Express Company 45,719 229
300 American International Group, Inc. 32,438 162
900 Citigroup, Inc. 50,006 250
100 M&T Bank Corporation 41,425 207
- -------------------------------------------------------------------------------------
169,588 848
- -------------------------------------------------------------------------------------
HEALTHCARE--5.8%
800 Baxter International, Inc. 50,250 252
500 Eli Lilly and Company 33,250 167
1,000 Pfizer, Inc. 32,438 162
- -------------------------------------------------------------------------------------
115,938 581
- -------------------------------------------------------------------------------------
</TABLE>
25
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
FIRST INVESTORS LIFE FOCUSED EQUITY FUND
December 31, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
TECHNOLOGY--13.1%
200 * America Online, Inc. $ 15,088 $ 76
300 * Apple Computer, Inc. 30,844 154
300 Computer Associates International, Inc. 20,981 105
100 Intel Corporation 8,231 41
300 International Business Machines Corporation 32,400 162
200 Lucent Technologies, Inc. 14,963 75
700 * Microsoft Corporation 81,725 409
250 Motorola, Inc. 36,813 184
50 * Yahoo!, Inc. 21,634 108
- -------------------------------------------------------------------------------------
262,679 1,314
- -------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL VALUE OF COMMON STOCKS (cost $1,332,629) 71.3% 1,424,047 7,132
OTHER ASSETS, LESS LIABILITIES 28.7 572,584 2,868
- ------------------------------------------------------------------------------------
NET ASSETS 100.0% $1,996,631 $ 10,000
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
</TABLE>
* Non-income producing
See notes to financial statements
26
<PAGE>
PORTFOLIO MANAGER'S LETTER
FIRST INVESTORS LIFE GOVERNMENT FUND
Dear Investor:
We are pleased to present the annual report for the First Investors Life
Government Fund for the fiscal year ended December 31, 1999. During the period,
the Fund's return on a net asset value basis was 1.1%, compared to a return of
.1% for its Lipper peer group. During the period, the Fund declared dividends
from net investment income of 59.4 cents per share.
Since the Fund invests primarily in mortgage-backed bonds, the primary factors
affecting the Fund's performance were the substantial rise in interest rates and
the decreased rate of home refinancings. The reporting period began with the
yield spread between mortgage-backed bonds and Treasury securities at a wide
level that reflected the record volume of mortgage refinancings in the previous
year. As the year progressed, the spread tightened considerably as interest
rates rose, refinancing activities slowed, and the supply of new mortgage-backed
bonds fell. In this environment, investors bought mortgage-backed bonds to
capture their large-yield advantage relative to Treasuries. Mortgage-backed
bonds significantly outperformed Treasuries during the reporting period due to
narrowing of spreads and the former's relatively high yield.
The Fund posted excellent performance relative to its peer group funds. The Fund
began the reporting period with 74% of its assets in mortgage-backed bonds, 25%
in U.S. Agency and Treasury notes, and 1% in cash. The mortgage-backed bonds in
the Fund were primarily high-coupon bonds with a history of low prepayment
levels. During the year, we added to our holdings of high-coupon mortgage-
backed bonds, again focusing on bonds with histories of low prepayment levels.
These high-coupon bonds provided a cushion against rising interest rates, and
outperformed lower-coupon mortgage-backed bonds and Treasury notes.
Thank you for placing your trust in First Investors. As always, we appreciate
the opportunity to serve your investment needs.
Sincerely,
/s/ Clark D. Wagner
Clark D. Wagner
Portfolio Manager
January 31, 2000
27
<PAGE>
CUMULATIVE PERFORMANCE INFORMATION
FIRST INVESTORS LIFE GOVERNMENT FUND
Comparison of change in value of $10,000 investment in the First Investors Life
Government Fund, the Salomon Brothers Mortgage Index and the Salomon Brothers
Government Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999 LIFE GOVERNMENT SALOMON BROTHERS SALOMON BROTHERS
FUND MORTGAGE INDEX GOVERNMENT
INDEX
<S> <C> <C> <C>
Jan-92 $10,000 $10,000 $10,000
Dec-92 10,979 10,848 10,893
Dec-93 11,680 11,612 12,056
Dec-94 11,201 11,446 11,650
Dec-95 12,952 13,365 13,794
Dec-96 13,416 14,081 14,199
Dec-97 14,572 15,387 15,569
Dec-98 15,671 16,461 17,101
Dec-99 15,835 16,762 16,720
Average Annual Total Return*
One Year 1.05%
Five Years 7.17%
Since Inception (1/7/92) 5.92%
</TABLE>
* THE GRAPH COMPARES A $10,000 INVESTMENT IN THE FIRST INVESTORS LIFE GOVERNMENT
FUND BEGINNING 1/7/92 (INCEPTION DATE) WITH THEORETICAL INVESTMENTS IN THE
SALOMON BROTHERS MORTGAGE INDEX AND THE SALOMON BROTHERS GOVERNMENT INDEX. THE
SALOMON BROTHERS MORTGAGE INDEX IS A MARKET CAPITALIZATION-WEIGHTED INDEX THAT
CONSISTS OF ALL AGENCY PASS-THROUGHS AND FHA AND GNMA PROJECT NOTES. THE
SALOMON BROTHERS GOVERNMENT INDEX IS A MARKET CAPITALIZATION-WEIGHTED INDEX
THAT CONSISTS OF DEBT ISSUED BY THE U.S. TREASURY AND U.S. GOVERNMENT
SPONSORED AGENCIES. EVERY ISSUE INCLUDED IN THE INDICES IS TRADER-PRICED, AND
THE INDICES FOLLOW CONSISTENT AND REALISTIC AVAILABILITY LIMITS, INCLUDING
ONLY THOSE SECURITIES WITH SUFFICIENT AMOUNTS OUTSTANDING. IT IS NOT POSSIBLE
TO INVEST DIRECTLY IN THESE INDICES. IN ADDITION, THE INDICES DO NOT TAKE INTO
ACCOUNT FEES AND EXPENSES THAT AN INVESTOR WOULD INCUR IN PURCHASING
SECURITIES IN THE INDICES. FOR PURPOSES OF THE GRAPH AND THE ACCOMPANYING
TABLE IT IS ASSUMED THAT ALL DIVIDENDS AND DISTRIBUTIONS WERE REINVESTED.
THE AVERAGE ANNUAL TOTAL RETURN FIGURES ARE FOR THE PERIOD ENDED 12/31/99.
DURING THE PERIODS SHOWN, SOME OR ALL OF THE EXPENSES OF THE FUND WERE WAIVED OR
ASSUMED. IF SUCH EXPENSES HAD BEEN PAID BY THE FUND, THE AVERAGE ANNUAL TOTAL
RETURN FOR ONE YEAR, FIVE YEARS AND SINCE INCEPTION WOULD HAVE BEEN .90%, 6.92%
AND 5.58%, RESPECTIVELY.
THE RETURNS SHOWN DO NOT REFLECT ANY SALES CHARGES, SINCE THE FUND SELLS ITS
SHARES SOLELY TO VARIABLE ANNUITY AND/OR VARIABLE LIFE INSURANCE SUBACCOUNTS AT
NET ASSET VALUE. THE RETURNS DO NOT REFLECT THE FEES AND CHARGES THAT AN
INDIVIDUAL WOULD PAY IN CONNECTION WITH AN INVESTMENT IN A VARIABLE ANNUITY OR
LIFE CONTRACT OR POLICY. RESULTS REPRESENT PAST PERFORMANCE AND DO NOT INDICATE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. SALOMON BROTHERS MORTGAGE INDEX AND SALOMON BROTHERS
GOVERNMENT INDEX FIGURES FROM SALOMON BROTHERS AND ALL OTHER FIGURES FROM FIRST
INVESTORS MANAGEMENT COMPANY, INC.
28
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS LIFE GOVERNMENT FUND
December 31, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
MORTGAGE-BACKED CERTIFICATES--58.9%
FEDERAL HOME LOAN MORTGAGE CORPORATION--7.8%
$ 819M 8.50%, 7/1/2022-9/1/2024 $ 845,866 $ 777
FEDERAL NATIONAL MORTGAGE ASSOCIATION--24.0%
1,571M 9%, 6/1/2015-11/1/2026 1,636,619 1,505
888M 11%, 10/1/2015 974,277 895
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION I
PROGRAM--27.1%
1,262M 8%, 7/15/2018 1,285,764 1,182
1,356M 10%, 5/15/2019-8/15/2019 1,459,135 1,341
181M 11.50%, 10/15/2012-5/15/2015 200,856 185
- --------------------------------------------------------------------------------------
TOTAL VALUE OF MORTGAGE-BACKED CERTIFICATES
(cost $6,527,948) 6,402,517 5,885
- --------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS--12.7%
1,000M Federal Home Loan Banks, 5.80%, 9/2/2008 919,119 845
500M Federal Home Loan Mortgage Corporation, 5.75%,
4/15/2008 459,277 422
- --------------------------------------------------------------------------------------
TOTAL VALUE OF U.S. GOVERNMENT AGENCY OBLIGATIONS
(cost $1,451,069) 1,378,396 1,267
- --------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--26.1%
2,250M United States Treasury Notes 5.625%, 5/15/2008 2,117,111 1,946
750M United States Treasury Notes 6%, 8/15/2009 726,797 668
- --------------------------------------------------------------------------------------
TOTAL VALUE OF U.S. GOVERNMENT OBLIGATIONS (cost $2,988,029) 2,843,908 2,614
- --------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL VALUE OF INVESTMENTS (cost $10,967,046) 97.7% 10,624,821 9,766
OTHER ASSETS, LESS LIABILITIES 2.3 254,953 234
- -------------------------------------------------------------------------------------
NET ASSETS 100.0% $10,879,774 $ 10,000
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
29
<PAGE>
PORTFOLIO MANAGER'S LETTER
FIRST INVESTORS LIFE GROWTH FUND
Dear Investor:
We are pleased to present the annual report for the First Investors Life Growth
Fund for the fiscal year ended December 31, 1999. During the period, the Fund's
return on a net asset value basis was 26.5%, compared to a return of 29.3% for
its Lipper peer group. During the period, the Fund declared dividends from net
investment income of 9.9 cents per share. The Fund also declared a capital gains
distribution of $1.637 per share.
The year 1999 proved to be another extraordinary year for investors. Technology
stocks were the clear leaders for the year driving markets and valuations to new
highs. Indeed, Internet-related stocks offered eye-popping triple-digit returns
dwarfing even traditional technology leaders. The Standard & Poor's 500 Index
("S&P 500") was up 19.5%; however, the narrow momentum character of the market
is exemplified by the fact that when technology stocks are removed from the S&P
500, the Index was only up mid-single digits for the year with electric
utilities, most transportation stocks and many consumer brand companies actually
down for the year. In fact, more stocks provided negative returns in 1999 than
positive returns.
In this environment, the Fund benefited from its stock selections. In
particular, communications equipment companies such as Cisco Systems, Nokia and
Motorola contributed strongly to the Fund's return in 1999. Electronics was
another important area, with Applied Materials, Texas Instruments, Analog
Devices and Intel all adding to the Fund's return. Other technology companies,
such as Microsoft (software and services) and EMC (the storage company), also
saw their stock prices rise strongly during the year.
An accelerating world economy continues to be central to our investment outlook
for 2000 which generally has the Fund tilted toward more economically-sensitive
areas and underweight in stable sectors. We anticipate about 3.5% world real
Gross Domestic Product based on a moderating but still robust environment in the
U.S. and accelerating economic growth across Europe. Our current strategy
emphasizes sectors that can benefit from a more synchronized global recovery.
These include sectors such as materials, industrial and select technology sector
stocks in networking, communication, semiconductors and storage. Commodity
markets should benefit from higher prices in sectors such as paper and aluminum,
while industrial stocks should benefit from better capacity utilization. These
are trends that we believe will benefit the Fund going forward.
30
<PAGE>
Thank you for placing your trust in First Investors. As always, we appreciate
the opportunity to serve your investment needs.
Sincerely,
/s/ Matthew E. Megargel
Matthew E. Megargel
Portfolio Manager
January 31, 2000
31
<PAGE>
CUMULATIVE PERFORMANCE INFORMATION
FIRST INVESTORS LIFE GROWTH FUND
Comparison of change in value of $10,000 investment in the First Investors Life
Growth Fund and the Standard & Poor's 500 Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999 LIFE S&P
GROWTH FUND 500 INDEX
<S> <C> <C>
Jan-90 $10,000 $10,000
Dec-90 9,701 9,691
Dec-91 13,066 12,643
Dec-92 14,343 13,606
Dec-93 15,204 14,975
Dec-94 14,767 15,173
Dec-95 18,476 20,875
Dec-96 22,994 25,667
Dec-97 29,726 34,231
Dec-98 37,857 43,932
Dec-99 47,877 53,176
Average Annual Total Return*
One Year 26.47%
Five Years 26.52%
Ten Years 16.95%
</TABLE>
* THE GRAPH COMPARES A $10,000 INVESTMENT IN THE FIRST INVESTORS LIFE GROWTH
FUND BEGINNING 1/1/90 WITH A THEORETICAL INVESTMENT IN THE STANDARD & POOR'S
500 INDEX. THE STANDARD & POOR'S 500 INDEX IS AN UNMANAGED CAPITALIZATION-
WEIGHTED INDEX OF 500 STOCKS DESIGNED TO MEASURE PERFORMANCE OF THE BROAD
DOMESTIC ECONOMY THROUGH CHANGES IN THE AGGREGATE MARKET VALUE OF SUCH
STOCKS, WHICH REPRESENT ALL MAJOR INDUSTRIES. IT IS NOT POSSIBLE TO INVEST
DIRECTLY IN THIS INDEX. IN ADDITION, THE INDEX DOES NOT TAKE INTO ACCOUNT
FEES AND EXPENSES THAT AN INVESTOR WOULD INCUR IN PURCHASING SECURITIES IN
THE INDEX. FOR PURPOSES OF THE GRAPH AND THE ACCOMPANYING TABLE IT IS
ASSUMED THAT ALL DIVIDENDS AND DISTRIBUTIONS WERE REINVESTED.
THE AVERAGE ANNUAL TOTAL RETURN FIGURES ARE FOR THE PERIOD ENDED 12/31/99.
DURING THE PERIODS SHOWN, SOME OR ALL OF THE EXPENSES OF THE FUND WERE WAIVED OR
ASSUMED. IF SUCH EXPENSES HAD BEEN PAID BY THE FUND, THE AVERAGE ANNUAL TOTAL
RETURN FOR TEN YEARS WOULD HAVE BEEN 16.73%.
THE RETURNS SHOWN DO NOT REFLECT ANY SALES CHARGES, SINCE THE FUND SELLS ITS
SHARES SOLELY TO VARIABLE ANNUITY AND/OR VARIABLE LIFE INSURANCE SUBACCOUNTS AT
NET ASSET VALUE. THE RETURNS DO NOT REFLECT THE FEES AND CHARGES THAT AN
INDIVIDUAL WOULD PAY IN CONNECTION WITH AN INVESTMENT IN A VARIABLE ANNUITY OR
LIFE CONTRACT OR POLICY. RESULTS REPRESENT PAST PERFORMANCE AND DO NOT INDICATE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. STANDARD & POOR'S 500 INDEX FIGURES FROM STANDARD &
POOR'S AND ALL OTHER FIGURES FROM FIRST INVESTORS MANAGEMENT COMPANY, INC.
32
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS LIFE GROWTH FUND
December 31, 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
COMMON STOCKS--98.0%
AEROSPACE/DEFENSE--1.1%
14,000 * General Motors Corporation - Class "H" $ 1,344,000 $ 51
23,400 United Technologies Corporation 1,521,000 58
- ---------------------------------------------------------------------------------------
2,865,000 109
- ---------------------------------------------------------------------------------------
BANKS--3.8%
81,998 Citigroup, Inc. 4,556,014 174
17,100 Mercantile Bankshares Corporation 546,131 21
16,000 National Commerce Bancorporation 363,000 14
26,600 State Street Corporation 1,943,462 74
66,000 U.S. Bancorp 1,571,625 60
14,200 Westamerica Bancorporation 396,712 15
15,000 Wilmington Trust Corporation 723,750 28
- ---------------------------------------------------------------------------------------
10,100,694 386
- ---------------------------------------------------------------------------------------
BUSINESS SERVICES--3.5%
13,000 * DeVry, Inc. 242,125 9
24,600 G & K Services, Inc. 796,425 30
30,400 Herman Miller, Inc. 699,200 27
28,700 Hertz Corporation - Class "A" 1,438,587 55
23,800 * Ionics, Inc. 669,375 26
49,400 * Iron Mountain, Inc. 1,942,037 74
56,100 Manpower, Inc. 2,110,762 80
13,000 * NCO Group, Inc. 391,625 15
22,750 * Tetra Tech, Inc. 349,781 13
38,756 * United Rentals, Inc. 663,696 25
- ---------------------------------------------------------------------------------------
9,303,613 354
- ---------------------------------------------------------------------------------------
CHEMICALS--1.3%
31,300 Du Pont (E.I.) de Nemours & Company 2,061,887 79
11,000 MacDermid, Inc. 451,687 17
25,500 Minerals Technologies, Inc. 1,021,594 39
- ---------------------------------------------------------------------------------------
3,535,168 135
- ---------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--8.0%
6,500 * Black Box Corporation 435,500 17
89,900 * Broadwing, Inc. 3,315,062 126
57,300 * Cisco Systems, Inc. 6,138,262 234
- ---------------------------------------------------------------------------------------
</TABLE>
33
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
FIRST INVESTORS LIFE GROWTH FUND
December 31, 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
COMMUNICATIONS EQUIPMENT (continued)
49,536 Lucent Technologies, Inc. $ 3,705,912 $ 141
21,100 Motorola, Inc. 3,106,975 118
22,800 Nokia Corporation (ADR) - Class "A" 4,332,000 165
- ---------------------------------------------------------------------------------------
21,033,711 801
- ---------------------------------------------------------------------------------------
COMPUTERS & OFFICE EQUIPMENT--4.2%
2,800 * Affiliated Computer Services, Inc. - Class A 128,800 5
14,900 * EMC Corporation 1,627,825 62
18,600 Hewlett-Packard Company 2,119,237 81
32,800 International Business Machines Corporation 3,542,400 135
7,900 Symbol Technologies, Inc. 502,144 19
55,900 * Unisys Corporation 1,785,306 68
52,600 Xerox Corporation 1,193,362 45
- ---------------------------------------------------------------------------------------
10,899,074 415
- ---------------------------------------------------------------------------------------
DRUGS--6.2%
11,000 * ALZA Corporation 380,875 15
61,300 American Home Products Corporation 2,417,519 92
16,500 * Genzyme Corporation 742,500 28
26,300 * Immunex Corporation 2,874,919 110
25,500 Johnson & Johnson 2,374,687 91
38,600 Merck & Company, Inc. 2,588,612 99
26,800 Monsanto Company 954,750 36
40,000 Pharmacia & Upjohn, Inc. 1,800,000 69
24,900 Warner-Lambert Company 2,040,244 78
- ---------------------------------------------------------------------------------------
16,174,106 618
- ---------------------------------------------------------------------------------------
ELECTRIC UTILITIES--.2%
15,800 Montana Power Company 569,787 22
- ---------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--2.9%
44,500 General Electric Company 6,886,375 262
26,200 * Littelfuse, Inc. 635,759 24
- ---------------------------------------------------------------------------------------
7,522,134 286
- ---------------------------------------------------------------------------------------
ELECTRONICS--6.1%
46,300 * Analog Devices, Inc. 4,305,900 164
21,400 * Applied Materials, Inc. 2,711,112 103
6,200 * Broadcom Corporation - Class "A" 1,688,725 64
- ---------------------------------------------------------------------------------------
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
ELECTRONICS (continued)
6,800 * C-Cube Microsystems, Inc. $ 423,300 $ 16
15,800 Dallas Semiconductor Corporation 1,018,112 39
44,800 Intel Corporation 3,687,600 141
19,800 * Micron Technology, Inc. 1,539,450 59
5,000 Texas Instruments, Inc. 484,375 18
2,800 * Xilinx, Inc. 127,313 5
- ---------------------------------------------------------------------------------------
15,985,887 609
- ---------------------------------------------------------------------------------------
ENERGY SERVICES--1.4%
7,100 * Hanover Compressor Company 268,025 10
34,400 Schlumberger, Ltd. 1,935,000 74
46,559 Transocean Sedco Forex, Inc. 1,568,456 60
- ---------------------------------------------------------------------------------------
3,771,481 144
- ---------------------------------------------------------------------------------------
ENERGY SOURCES--2.6%
6,400 * Barrett Resources Corporation 188,400 7
19,400 Chevron Corporation 1,680,525 64
31,600 Exxon Mobil Corporation 2,545,775 97
39,300 Royal Dutch Petroleum Company - NY Shares (ADR) 2,375,194 91
- ---------------------------------------------------------------------------------------
6,789,894 259
- ---------------------------------------------------------------------------------------
ENTERTAINMENT--.3%
29,500 * Speedway Motorsports, Inc. 820,469 31
- ---------------------------------------------------------------------------------------
FINANCIAL SERVICES--3.4%
78,500 Associates First Capital Corporation 2,153,844 82
27,680 Fannie Mae 1,728,270 66
80,900 Franklin Resources, Inc. 2,593,856 99
10,000 Investment Technology Group 287,500 11
27,500 Merrill Lynch & Company, Inc. 2,296,250 88
- ---------------------------------------------------------------------------------------
9,059,720 346
- ---------------------------------------------------------------------------------------
FOOD/BEVERAGE/TOBACCO--.9%
24,400 * Beringer Wine Estates Holdings, Inc.- Class "B" 972,950 37
39,100 PepsiCo, Inc. 1,378,275 53
- ---------------------------------------------------------------------------------------
2,351,225 90
- ---------------------------------------------------------------------------------------
</TABLE>
35
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
FIRST INVESTORS LIFE GROWTH FUND
December 31, 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
HEALTH SERVICES--1.8%
35,000 Cardinal Health, Inc. $ 1,675,625 $ 64
49,450 Columbia HCA Healthcare Corporation 1,449,503 55
53,900 * Covance, Inc. 582,794 22
21,900 Shared Medical Systems Corporation 1,115,531 43
- ---------------------------------------------------------------------------------------
4,823,453 184
- ---------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS--1.5%
10,100 * Bush Boake Allen, Inc. 248,081 9
23,000 Gillette Company 947,313 36
24,000 Procter & Gamble Company 2,629,500 100
- ---------------------------------------------------------------------------------------
3,824,894 145
- ---------------------------------------------------------------------------------------
HOUSING--.2%
16,900 Ethan Allen Interiors, Inc. 541,856 21
- ---------------------------------------------------------------------------------------
INSURANCE--3.6%
92,800 ACE, Ltd. 1,548,600 59
31,116 American International Group, Inc. 3,364,418 128
40,000 Marsh & McLennan Companies, Inc. 3,827,500 146
30,000 Reinsurance Group of America, Inc. 832,500 32
- ---------------------------------------------------------------------------------------
9,573,018 365
- ---------------------------------------------------------------------------------------
MACHINERY & MANUFACTURING--2.8%
14,000 Caterpillar, Inc. 658,875 25
21,700 Corning, Inc. 2,797,944 107
10,600 Donaldson Company, Inc. 255,063 10
24,800 Illinois Tool Works, Inc. 1,675,550 64
8,000 Nordson Corporation 386,000 15
43,500 Tyco International, Ltd. 1,691,063 64
- ---------------------------------------------------------------------------------------
7,464,495 285
- ---------------------------------------------------------------------------------------
MEDIA--9.4%
13,000 * ACNielsen Corporation 320,125 12
28,200 * Acxiom Corporation 676,800 26
35,200 * America Online, Inc. 2,655,400 101
139,400 * American Tower Corporation - Class "A" 4,260,413 162
74,200 * AT&T Corporation-Liberty Media Group -
Class "A" 4,210,850 161
11,500 * Catalina Marketing Corporation 1,331,125 51
- ---------------------------------------------------------------------------------------
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
MEDIA (continued)
32,100 * CBS Corporation $ 2,052,394 $ 78
41,200 * Cox Communications, Inc. - Class "A" 2,121,800 81
29,000 Gannett Company, Inc. 2,365,313 90
10,700 * Sprint Corporation 1,096,750 42
24,600 Time Warner, Inc. 1,781,963 68
2,000 * Univision Communications, Inc. 204,375 8
52,700 Walt Disney Company 1,541,475 59
- ---------------------------------------------------------------------------------------
24,618,783 939
- ---------------------------------------------------------------------------------------
MEDICAL PRODUCTS--2.6%
42,800 Abbott Laboratories 1,554,175 59
29,200 Baxter International, Inc. 1,834,125 70
63,200 * Waters Corporation 3,349,600 128
- ---------------------------------------------------------------------------------------
6,737,900 257
- ---------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--.8%
16,200 Bemis Company, Inc. 564,975 22
22,400 Weyerhaeuser Company 1,608,600 61
- ---------------------------------------------------------------------------------------
2,173,575 83
- ---------------------------------------------------------------------------------------
RETAIL--7.9%
20,000 * Bed Bath & Beyond, Inc. 695,000 26
46,800 CVS Corporation 1,869,075 71
36,000 Dayton Hudson Corporation 2,643,750 101
151,075 Dollar General Corporation 3,436,956 131
31,000 Family Dollar Stores, Inc. 505,688 19
57,900 Home Depot, Inc. 3,969,769 151
39,100 Intimate Brands, Inc. 1,686,188 64
72,300 Wal-Mart Stores, Inc. 4,997,738 191
17,500 * Whole Foods Market, Inc. 811,563 31
- ---------------------------------------------------------------------------------------
20,615,727 785
- ---------------------------------------------------------------------------------------
SOFTWARE/SERVICES--13.0%
19,200 * American Management Systems, Inc. 602,400 23
52,000 Automatic Data Processing, Inc. 2,801,500 107
14,600 * BISYS Group, Inc. 952,650 36
100,900 * Cambridge Technology Partners, Inc. 2,648,625 101
27,200 * CheckFree Holdings Corporation 2,842,400 108
33,000 * Computer Sciences Corporation 3,122,625 119
- ---------------------------------------------------------------------------------------
</TABLE>
37
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
FIRST INVESTORS LIFE GROWTH FUND
December 31, 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
SOFTWARE/SERVICES (continued)
15,300 * DST Systems, Inc. $ 1,167,581 $ 44
40,000 First Data Corporation 1,972,500 75
11,000 * Fiserv, Inc. 421,438 16
3,700 * Macromedia, Inc. 270,563 10
69,100 * Microsoft Corporation 8,067,425 308
14,000 * NOVA Corporation 441,875 17
20,000 * Oracle Corporation 2,241,250 85
86,600 * Parametric Technology Corporation 2,343,613 89
12,400 * Policy Management Systems Corporation 316,975 12
14,900 * Sterling Commerce, Inc. 507,531 19
47,600 * Sterling Software, Inc. 1,499,400 57
14,000 * Sungard Data System 332,500 13
14,100 * Synopsys, Inc. 941,175 36
31,000 * Systems & Computer Technology Corporation 503,750 19
- ---------------------------------------------------------------------------------------
33,997,776 1,294
- ---------------------------------------------------------------------------------------
TELEPHONE--6.3%
60,000 AT&T Corporation 3,045,000 116
45,900 Bell Atlantic Corporation 2,825,719 108
61,050 * MCI WorldCom, Inc. 3,239,466 123
44,100 * McLeodUSA, Inc. - Class "A" 2,596,388 99
54,100 SBC Communications, Inc. 2,637,375 101
54,300 * Telecorp PCS, Inc. 2,063,400 79
- ---------------------------------------------------------------------------------------
16,407,348 626
- ---------------------------------------------------------------------------------------
TRANSPORTATION--.4%
15,850 * Air Express International Corporation 512,152 20
11,300 C. H. Robinson Worldwide, Inc. 449,175 17
- ---------------------------------------------------------------------------------------
961,327 37
- ---------------------------------------------------------------------------------------
TRAVEL & LEISURE--1.8%
31,900 * AMR Corporation 2,137,300 81
54,500 McDonald's Corporation 2,197,031 84
25,000 * Mesaba Holdings, Inc. 285,938 11
- ---------------------------------------------------------------------------------------
4,620,269 176
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF COMMON STOCKS (cost $159,101,592) 257,142,384 9,802
- ---------------------------------------------------------------------------------------
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
REPURCHASE AGREEMENT--2.0%
<C> <S> <C> <C>
$ 5,150M Paine Webber, Inc., 3.00%, 1/3/00 (collateralized
by U.S. Treasury Bonds, due 2/15/01, valued at
$5,210,094)(cost $5,150,000) $ 5,150,000 $ 196
- ---------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL VALUE OF INVESTMENTS (cost $164,251,592) 100.0% 262,292,384 9,998
OTHER ASSETS, LESS LIABILITIES .0 41,599 2
- --------------------------------------------------------------------------------------
NET ASSETS 100.0% $262,333,983 $ 10,000
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
* Non-income producing
See notes to financial statements
39
<PAGE>
PORTFOLIO MANAGER'S LETTER
FIRST INVESTORS LIFE HIGH YIELD FUND
Dear Investor:
We are pleased to present the annual report for the First Investors Life High
Yield Fund for the fiscal year ended December 31, 1999. During the period, the
Fund's return on a net asset value basis was 5.0%, compared to a return of 4.5%
for its Lipper peer group. During the period, the Fund declared dividends from
net investment income of $1.023 per share. The Fund also declared a capital
gains distribution of 1.6 cents per share.
The primary factors that drove the Fund's performance during the fiscal year
were the rising interest-rate environment and credit developments--both positive
and negative--within the portfolio.
Early in 1999, investor comfort with sustainable growth turned into a fear of
rising interest rates. This enabled higher-risk investments such as high yield
bonds to outperform Treasury securities. Widespread concerns about emerging
markets began to be relieved as Brazil devalued its currency and took some steps
toward fiscal reform. The improved performance of emerging markets removed a
large concern overhanging all markets. This spurred the high yield market, and
caused both the aggressiveness and volume of domestic high yield bond issues to
grow.
As the year progressed, the prospect of accelerating domestic growth and tight
employment conditions fueled inflation worries. Markets thus began to expect
Federal Reserve tightening and the resulting demand for higher yields caused new
issue activity to slow appreciably. After the Fed raised interest rates in June,
investors showed an increasing preference for larger, higher-rated, more liquid
bond issues. Issues not meeting these criteria underperformed and became
difficult to trade. This contrasted pretty sharply with the outperformance of
more aggressive transactions earlier in the year.
As the year progressed, concerns continued to mount regarding additional
interest rate hikes. Ultimately, the rapid pace of growth led the Fed to raise
interest rates again in August and a third time in October. Market liquidity
became problematic as pent-up demand for capital collided with investor
defensiveness and demands for higher yields. On top of year 2000 uncertainty,
investors also became less tolerant of incipient credit problems as more have
occurred.
During 1999, the default rate of high yield bonds more than doubled from the
1998 level, to about 4%. However, late in the year, premiums in the high yield
market--the DLJ High Yield Index began October at an unusually high 6.11% more
than Treasuries--partially overcame Y2K fears. Thus, selective new deals
40
<PAGE>
from large, liquid, widely followed issuers were completed, performed well and
aroused hopes for 2000.
Throughout the reporting period, a number of other factors stand out as having
had an impact on the Fund's performance. The Fund's performance was aided by its
emerging markets holdings, as well as several of its telecommunications
companies, which as a group have proven to be dynamic drivers of economic
growth. The Fund also benefited from premiums paid on some repurchases and calls
of successful credits. Although the U.S. enjoyed strong economic growth, company
and management-specific problems still affected some holdings. The Fund's
performance was negatively impacted by the fact that it had few holdings in the
growing European high yield community of issuers, which began to outperform as
Euro currency-based investors began to commit. Holdings in the U.S. health care
sector, usually viewed as defensive, also hurt the Fund. A number of long-term
care companies suffered because of difficulties in adjusting to new Medicare
reimbursement rules enacted under the Balanced Budget Act of 1997. The energy
sector began the year weakly, but most companies rebounded thanks to improved
pricing of oil and natural gas.
The Fund will continue to focus on uncovering the high yield bonds of companies
whose strong managements, market positions, strategies and results are likely to
provide us with value improvement in the high yield market.
Thank you for placing your trust in First Investors. As always, we appreciate
the opportunity to serve your investment needs.
Sincerely,
/s/ Nancy W. Jones
Nancy W. Jones
Portfolio Manager*
January 31, 2000
* Effective January 1, 2000, Ms. Jones serves as Portfolio Manager of the Fund.
41
<PAGE>
CUMULATIVE PERFORMANCE INFORMATION
FIRST INVESTORS LIFE HIGH YIELD FUND
Comparison of change in value of $10,000 investment in the First Investors Life
High Yield Fund and the CS First Boston High Yield Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999 LIFE HIGH YIELD FUND CS FIRST
BOSTON HIGH YIELD INDEX
<S> <C> <C>
Jan-90 $10,000 $10,000
Dec-90 9,304 9,362
Dec-91 12,453 13,458
Dec-92 14,103 15,700
Dec-93 16,664 18,669
Dec-94 16,403 18,488
Dec-95 19,654 21,701
Dec-96 22,122 24,396
Dec-97 24,881 27,477
Dec-98 25,664 27,637
Dec-99 26,936 28,261
Average Annual Total Return*
One Year 4.95%
Five Years 10.43%
Ten Years 10.42%
</TABLE>
* THE GRAPH COMPARES A $10,000 INVESTMENT IN THE FIRST INVESTORS LIFE HIGH YIELD
FUND BEGINNING 1/1/90 WITH A THEORETICAL INVESTMENT IN THE CS FIRST BOSTON
HIGH YIELD INDEX. THE CS FIRST BOSTON HIGH YIELD INDEX IS DESIGNED TO MEASURE
THE PERFORMANCE OF THE HIGH YIELD BOND MARKET. THE INDEX CONSISTS OF 1,493
DIFFERENT ISSUES, 1,290 OF WHICH ARE CASH PAY, 160 ARE ZERO-COUPON, 9 ARE STEP
BONDS, 12 ARE PAYMENT-IN-KIND BONDS AND THE REMAINING 22 ARE IN DEFAULT. THE
BONDS INCLUDED IN THE INDEX HAVE AN AVERAGE LIFE OF 7.7 YEARS, AN AVERAGE
MATURITY OF 7.8 YEARS, AN AVERAGE DURATION OF 4.8 YEARS AND AN AVERAGE COUPON
OF 10.1%. IT IS NOT POSSIBLE TO INVEST DIRECTLY IN THIS INDEX. IN ADDITION,
THE INDEX DOES NOT TAKE INTO ACCOUNT FEES AND EXPENSES THAT AN INVESTOR WOULD
INCUR IN PURCHASING SECURITIES IN THE INDEX. FOR PURPOSES OF THE GRAPH AND THE
ACCOMPANYING TABLE IT IS ASSUMED THAT ALL DIVIDENDS AND DISTRIBUTIONS WERE
REINVESTED.
THE AVERAGE ANNUAL TOTAL RETURN FIGURES ARE FOR THE PERIOD ENDED 12/31/99.
DURING THE PERIODS SHOWN, SOME OR ALL OF THE EXPENSES OF THE FUND WERE WAIVED OR
ASSUMED. IF SUCH EXPENSES HAD BEEN PAID BY THE FUND, THE AVERAGE ANNUAL TOTAL
RETURN FOR TEN YEARS WOULD HAVE BEEN 10.28%.
THE RETURNS SHOWN DO NOT REFLECT ANY SALES CHARGES, SINCE THE FUND SELLS ITS
SHARES SOLELY TO VARIABLE ANNUITY AND/OR VARIABLE LIFE INSURANCE SUBACCOUNTS AT
NET ASSET VALUE. THE RETURNS DO NOT REFLECT THE FEES AND CHARGES THAT AN
INDIVIDUAL WOULD PAY IN CONNECTION WITH AN INVESTMENT IN A VARIABLE ANNUITY OR
LIFE CONTRACT OR POLICY. RESULTS REPRESENT PAST PERFORMANCE AND DO NOT INDICATE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. THE ISSUERS OF THE HIGH YIELD BONDS, IN WHICH THE FUND
PRIMARILY INVESTS, PAY HIGHER INTEREST RATES BECAUSE THEY HAVE A GREATER
LIKELIHOOD OF FINANCIAL DIFFICULTY, WHICH COULD RESULT IN THEIR INABILITY TO
REPAY THE BONDS FULLY WHEN DUE. PRICES OF HIGH YIELD BONDS ARE ALSO SUBJECT TO
GREATER FLUCTUATIONS. CS FIRST BOSTON HIGH YIELD INDEX FIGURES FROM CS FIRST
BOSTON CORPORATION AND ALL OTHER FIGURES FROM FIRST INVESTORS MANAGEMENT
COMPANY, INC.
42
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS LIFE HIGH YIELD FUND
December 31, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
CORPORATE BONDS--90.3%
APPAREL/TEXTILES--1.6%
$ 1,100M Polymer Group, Inc., 9%, 2007 $ 1,072,500 $ 159
- --------------------------------------------------------------------------------------
AUTOMOTIVE--4.0%
1,000M Collins & Aikman Products Co., 11.50%, 2006 990,000 147
950M Exide Corp., 10%, 2005 909,626 135
1,000M Special Devices, Inc., 11.375%, 2008 785,000 116
- --------------------------------------------------------------------------------------
2,684,626 398
- --------------------------------------------------------------------------------------
BUILDING MATERIALS--.8%
500M Falcon Building Products, Inc., 9.50%, 2007 506,250 75
- --------------------------------------------------------------------------------------
CHEMICALS--1.8%
600M Huntsman Polymers Corp., 11.75%, 2004 630,000 93
700M Hydrochem Industrial Services, Inc., 10.375%,
2007 603,750 89
- --------------------------------------------------------------------------------------
1,233,750 182
- --------------------------------------------------------------------------------------
CONSUMER PRODUCTS--2.3%
970M Corning Consumer Products, Co., 9.625%, 2008 771,150 114
700M Herff Jones, Inc., 11%, 2005 746,375 111
- --------------------------------------------------------------------------------------
1,517,525 225
- --------------------------------------------------------------------------------------
CONTAINERS/PACKAGING--2.9%
1,000M Radnor Holdings, Inc., 10%, 2003 1,005,000 149
900M Tekni-Plex, Inc., 9.25%, 2008 918,000 136
- --------------------------------------------------------------------------------------
1,923,000 285
- --------------------------------------------------------------------------------------
DURABLE GOODS MANUFACTURING--2.8%
750M Clark Material Handling, Inc., 10.75%, 2006 266,250 39
1,040M Columbus McKinnon Corp., 8.50%, 2008 899,600 133
1,000M Numatics, Inc., 9.625%, 2008 755,000 112
- --------------------------------------------------------------------------------------
1,920,850 284
- --------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--1.9%
1,250M Amphenol Corp., 9.875%, 2007 1,306,250 193
- --------------------------------------------------------------------------------------
ENERGY--5.0%
800M Chesapeake Energy Corp., 9.625%, 2005 760,000 113
950M Giant Industries, Inc., 9.75%, 2003 928,625 137
- --------------------------------------------------------------------------------------
</TABLE>
43
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
FIRST INVESTORS LIFE HIGH YIELD FUND
December 31, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
ENERGY (continued)
$ 1,000M Veritas DGC, Inc., 9.75%, 2003 $ 1,020,000 $ 151
650M Vintage Petroleum, Inc., 9%, 2005 645,125 96
- --------------------------------------------------------------------------------------
3,353,750 497
- --------------------------------------------------------------------------------------
ENTERTAINMENT/LEISURE--4.0%
1,000M Carmike Cinemas, Inc., 9.375%, 2009 870,000 129
1,100M Loews Cineplex Entertainment Corp., 8.875%, 2008 973,500 144
1,200M Outboard Marine Corp., 10.75%, 2008 870,000 129
- --------------------------------------------------------------------------------------
2,713,500 402
- --------------------------------------------------------------------------------------
FOOD/BEVERAGE/TOBACCO--3.4%
1,300M Canandaigua Brands, Inc., 8.50%, 2009 1,241,500 184
1,000M International Home Foods, Inc., 10.375%, 2006 1,042,500 154
- --------------------------------------------------------------------------------------
2,284,000 338
- --------------------------------------------------------------------------------------
GAMING/LODGING--2.8%
1,000M Hollywood Park, Inc., 9.25%, 2007 996,250 148
1,000M Isle of Capri Casinos, Inc., 8.75%, 2009 925,000 137
- --------------------------------------------------------------------------------------
1,921,250 285
- --------------------------------------------------------------------------------------
HEALTHCARE--5.1%
500M Fisher Scientific International, Inc., 7.125%,
2005 454,635 67
950M Fisher Scientific International, Inc., 9%, 2008 914,375 135
600M Genesis Health Ventures, Inc., 9.75%, 2005 ++ 249,000 37
350M Integrated Health Services, Inc., 9.50%, 2007 ++ 22,313 3
1,000M Packard Bioscience, Inc., 9.375%, 2007 855,000 127
1,000M Tenet Healthcare Corp., 8.625%, 2007 975,000 144
- --------------------------------------------------------------------------------------
3,470,323 513
- --------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY/OFFICE EQUIPMENT--.9%
600M ChipPac International, Ltd., 12.75%, 2009 + 632,250 94
- --------------------------------------------------------------------------------------
MEDIA (CABLE TV/BROADCASTING)--7.9%
1,100M Diva Systems Corp., 0%-12.625%, 2008 434,500 64
1,100M Echostar DBS Corp., 9.375%, 2009 1,108,250 164
1,000M Grupo Televisa, SA, 11.875%, 2006 1,077,500 160
1,000M Rogers Communications, Inc., 8.875%, 2007 1,005,000 149
- --------------------------------------------------------------------------------------
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
MEDIA (CABLE TV/BROADCASTING) (continued)
$ 1,000M Salem Communications Corp., 9.50%, 2007 $ 1,006,250 $ 149
700M Star Choice Communications, Inc., 13%, 2005 701,750 104
- --------------------------------------------------------------------------------------
5,333,250 790
- --------------------------------------------------------------------------------------
MEDIA (OTHER)--2.8%
1,000M Garden State Newspapers, Inc., 8.625%, 2011 920,000 136
1,000M Mail-Well I Corp., 8.75%, 2008 955,000 141
- --------------------------------------------------------------------------------------
1,875,000 277
- --------------------------------------------------------------------------------------
MINING/METALS--6.1%
900M Commonwealth Aluminum Corp., 10.75%, 2006 913,500 135
1,000M CSN Iron, SA, 9.125%, 2007 + 838,125 124
750M WCI Steel, Inc., 10%, 2004 766,875 114
700M Wells Aluminum Corp., 10.125%, 2005 677,250 100
1,000M Wheeling-Pittsburgh Corp., 9.25%, 2007 950,000 141
- --------------------------------------------------------------------------------------
4,145,750 614
- --------------------------------------------------------------------------------------
MISCELLANEOUS--6.1%
1,150M Allied Waste NA, Inc., 10%, 2009 + 1,029,250 152
1,000M Iron Mountain, Inc., 8.25%, 2011 915,000 135
1,250M Kindercare Learning Centers, Inc., 9.50%, 2009 1,225,000 181
950M Loomis Fargo & Co., 10%, 2004 942,875 140
- --------------------------------------------------------------------------------------
4,112,125 608
- --------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--7.5%
500M Container Corp., 11.25%, 2004 517,500 77
1,050M Packaging Corporation of America, 9.625%, 2009 1,076,250 159
1,000M Riverwood International Corp., 10.25%, 2006 1,023,750 152
800M S.D. Warren Co., Inc., 12%, 2004 837,000 124
501M S.D. Warren Co., Inc., 14%, 2006 565,655 84
1,000M Stone Container Corp., 10.75%, 2002 1,030,000 153
- --------------------------------------------------------------------------------------
5,050,155 749
- --------------------------------------------------------------------------------------
</TABLE>
45
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
FIRST INVESTORS LIFE HIGH YIELD FUND
December 31, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
PRINCIPAL INVESTED
AMOUNT FOR EACH
OR $10,000 OF
SHARES SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
REAL ESTATE/CONSTRUCTION--.6%
$ 800M Cathay International, Ltd., 13%, 2008 + $ 416,000 $ 62
- --------------------------------------------------------------------------------------
TELECOMMUNICATIONS--18.6%
650M 21st Century Telecom Group, Inc., 0%-12.25%, 2008 437,125 65
1,500M E. Spire Communications, Inc., 0%-13%, 2005 780,000 115
1,000M Global Crossing Holdings, Ltd., 9.125%, 2006 + 991,250 147
1,000M Level 3 Communications, Inc., 9.125%, 2008 945,000 140
1,000M McCaw International, Ltd., 0%-13%, 2007 690,000 102
1,250M Netia Holdings BV, 0%-11.25%, 2007 815,625 121
1,000M Nextlink Communications, Inc., 9%, 2008 943,750 140
1,150M Pac-West Telecommunications, Inc., 13.50%, 2009 1,196,000 177
1,100M Powertel, Inc., 0%-12%, 2006 962,500 143
1,000M Qwest Communications International, Inc.,
0%-9.47%, 2007 807,500 120
1,200M RCN Corp., 0%-11%, 2008 792,000 117
1,500M Viatel, Inc., 0%-12.50%, 2008 948,750 140
750M VoiceStream Wirelesss Corp., 0%-11.875%, 2009 + 455,625 67
500M Williams Communications Group, Inc., 10.875%,
2009 525,000 78
1,400M World Access, Inc., 13.25%, 2008 1,267,000 188
- --------------------------------------------------------------------------------------
12,557,125 1,860
- --------------------------------------------------------------------------------------
TRANSPORTATION--1.4%
1,000M American Commercial Lines, LLC, 10.25%, 2008 960,000 142
- --------------------------------------------------------------------------------------
TOTAL VALUE OF CORPORATE BONDS (cost $65,817,753) 60,989,229 9,032
- --------------------------------------------------------------------------------------
COMMON STOCKS--1.5%
MEDIA (CABLE TV/BROADCASTING)--1.2%
8,400 * Echostar Communications Corp. - Class "A" 819,000 121
- --------------------------------------------------------------------------------------
MEDIA (OTHER)--.2%
1,000 * Affiliated Newspapers Investments, Inc. 125,000 18
- --------------------------------------------------------------------------------------
TELECOMMUNICATIONS--.1%
4,399 * World Access, Inc. 84,681 13
- --------------------------------------------------------------------------------------
TOTAL VALUE OF COMMON STOCKS (cost $91,126) 1,028,681 152
- --------------------------------------------------------------------------------------
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
SHARES, AMOUNT
WARRANTS INVESTED
OR FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
PREFERRED STOCKS--.4%
MISCELLANEOUS
368 Day International Group, Inc., 12.25%
(cost $350,557) $ 286,362 $ 43
- --------------------------------------------------------------------------------------
WARRANTS--.3%
MEDIA (CABLE TV/BROADCASTING)--.1%
3,300 * Diva Systems Corp. (expiring 3/1/08) + 26,400 4
16,212 * Star Choice Communications, Inc. (expiring
12/15/05) + 42,556 6
- --------------------------------------------------------------------------------------
68,956 10
- --------------------------------------------------------------------------------------
MINING/METALS--.0%
800 * Gulf States Steel Acquisition Corp. (expiring
4/15/03) + 8 --
- --------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--.1%
10,800 * S.D. Warren Holdings Corp. (expiring
12/15/06) + 54,000 8
- --------------------------------------------------------------------------------------
TELECOMMUNICATIONS--.1%
1,500 * E. Spire Communications, Inc. (expiring
11/1/05) 61,500 9
1,000 * McCaw International, Ltd. (expiring 4/15/07) + 2,500 1
- --------------------------------------------------------------------------------------
64,000 10
- --------------------------------------------------------------------------------------
TOTAL VALUE OF WARRANTS (cost $2,500) 186,964 28
- --------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--1.5%
$ 1,000M U.S. Treasury Notes, 6.125%, 2007
(cost $1,092,969) 975,000 144
- --------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--3.8%
2,600M Idaho Power Co., 6.50%, 1/14/00 (cost $2,593,893) 2,593,893 384
- --------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL VALUE OF INVESTMENTS (cost $69,948,798) 97.8% 66,060,129 9,783
OTHER ASSETS, LESS LIABILITIES 2.2 1,463,664 217
- -------------------------------------------------------------------------------------
NET ASSETS 100.0% $67,523,793 $ 10,000
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
</TABLE>
* Non-income producing
+ See Note 5
++ In default as to principal and/or interest.
See notes to financial statements
47
<PAGE>
PORTFOLIO MANAGER'S LETTER
FIRST INVESTORS LIFE INTERNATIONAL SECURITIES FUND
Dear Investor:
We are pleased to present the annual report for the First Investors Life
International Securities Fund for the fiscal year ended December 31, 1999.
During the period, the Fund provided investors with a 31.5% return, on a net
asset value basis, compared to a 26.8% return for the MSCI All Country World
Free Index and a 36.0% for the Lipper Global mutual fund category. The median
global fund returned 30.1% according to Lipper. During the period, the Fund
declared dividends from net investment income of 12.0 cents per share. The Fund
also declared a capital gains distribution of 3.1 cents per share.
For the first time in several years, foreign markets generally outpaced the U.S.
stock market in 1999. Risk and momentum were rewarded, as investments in the
riskiest countries and the high-growth sectors paid off handsomely. The biggest
story of the year was Japan, as the Japanese market and economy seemed to break
out of their decade-long malaise. The Japanese banking crisis was finally seen
as being resolved and the ensuing merger frenzy among the largest city banks
sent the sector upwards, benefiting a number of the Fund's holdings earlier in
the year. A number of Japanese companies also took concrete measures to
restructure and rationalize their operations. In addition, a new generation of
entrepreneurial Japanese companies emerged, led by the likes of Internet venture
firm Softbank.
Country allocation and stock selection helped the Fund's performance. In Europe,
the Fund's holdings in the Netherlands were up 35% for example, while Japanese
Fund holdings returned 109%. Individual securities that aided returns included
Nokia, the Finnish cellular phone giant and Sony, the Japanese electronics
manufacturer.
Our focus going forward continues to be on regions and sectors that have
demonstrated growth or growth acceleration. Our largest regional exposure
remains Europe, within which we continue to emphasize the core continental
European countries, including Germany and France. We believe that these areas
will show the strongest growth relative to expectations of the major regions in
the short to medium term. We expect that global economic activity will surprise
investors on the upside as the economic cycles in Europe, Japan, Pacific Basin
ex-Japan and the emerging-markets broadly continue to build up steam in
relatively synchronous fashion. While we continue to like the longer-term
outlook for continental Europe, we believe that the emerging markets will
benefit the most in the coming year for both shorter-term economic reasons and
because of long-term trends. Therefore, we have modestly increased our exposure
to selected nations among the emerging markets. In addition, we also favor some
of the faster
48
<PAGE>
growing sectors globally, including "new economy" sectors such as information
technology, telecommunications and the Internet, which are experiencing strong
secular growth trends around the globe. Shares in these sectors have increased
in price lately so we are cautious, although still very positive on the
long-term underlying dynamics of these sectors. With regard to Japan, we have
adopted a somewhat cautious stance (after being slightly overweight much of the
year) as we await further evidence of additional steps toward economic and
corporate recovery.
Thank you for placing your trust in First Investors. As always, we appreciate
the opportunity to serve your investment needs.
Sincerely,
/s/ Trond Skramstad
Trond Skramstad
Portfolio Manager
January 31, 2000
49
<PAGE>
CUMULATIVE PERFORMANCE INFORMATION
FIRST INVESTORS LIFE INTERNATIONAL SECURITIES FUND
Comparison of change in value of $10,000 investment in the First Investors Life
International Securities Fund and the Morgan Stanley Capital International
("MSCI") All Country World Free Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999 LIFE INTERNATIONAL MSCI ALL COUNTRY
SECURITIES FUND WORLD FREE INDEX
<S> <C> <C>
Apr-90 $10,000 $10,000
Dec-90 $10,370 $9,862
Dec-91 11,970 11,826
Dec-92 11,815 11,325
Dec-93 14,434 14,143
Dec-94 14,248 14,854
Dec-95 16,912 17,745
Dec-96 19,466 20,080
Dec-97 21,260 23,091
Dec-98 25,125 28,162
Dec-99 33,029 35,714
Average Annual Total Return*
One Year 31.46%
Five Years 18.31%
Since Inception (4/16/90) 13.09%
</TABLE>
* THE GRAPH COMPARES A $10,000 INVESTMENT IN THE FIRST INVESTORS LIFE
INTERNATIONAL SECURITIES FUND BEGINNING 4/16/90 (INCEPTION DATE) WITH A
THEORETICAL INVESTMENT IN THE MSCI ALL COUNTRY WORLD FREE INDEX. THE MSCI ALL
COUNTRY WORLD FREE INDEX REPRESENTS BOTH THE DEVELOPED AND THE EMERGING
MARKETS. THE INDEX INCLUDES 47 MARKETS OF WHICH EMERGING MARKETS REPRESENT
APPROXIMATELY 4.75%. IT IS NOT POSSIBLE TO INVEST DIRECTLY IN THIS INDEX. IN
ADDITION, THE INDEX DOES NOT TAKE INTO ACCOUNT FEES AND EXPENSES THAT AN
INVESTOR WOULD INCUR IN PURCHASING SECURITIES IN THE INDEX. FOR PURPOSES OF
THE GRAPH AND THE ACCOMPANYING TABLE IT IS ASSUMED THAT ALL DIVIDENDS AND
DISTRIBUTIONS WERE REINVESTED.
THE AVERAGE ANNUAL TOTAL RETURN FIGURES ARE FOR THE PERIOD ENDED 12/31/99.
DURING THE PERIODS SHOWN, SOME OR ALL OF THE EXPENSES OF THE FUND WERE WAIVED
OR ASSUMED. IF SUCH EXPENSES HAD BEEN PAID BY THE FUND, THE AVERAGE ANNUAL
TOTAL RETURN SINCE INCEPTION WOULD HAVE BEEN 12.84%.
THE RETURNS SHOWN DO NOT REFLECT ANY SALES CHARGES, SINCE THE FUND SELLS ITS
SHARES SOLELY TO VARIABLE ANNUITY AND/OR VARIABLE LIFE INSURANCE SUBACCOUNTS
AT NET ASSET VALUE. THE RETURNS DO NOT REFLECT THE FEES AND CHARGES THAT AN
INDIVIDUAL WOULD PAY IN CONNECTION WITH AN INVESTMENT IN A VARIABLE ANNUITY OR
LIFE CONTRACT OR POLICY. RESULTS REPRESENT PAST PERFORMANCE AND DO NOT
INDICATE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THE ORIGINAL COST. MSCI ALL COUNTRY WORLD FREE INDEX
FROM MORGAN STANLEY & CO., INC. AND ALL OTHER FIGURES FROM FIRST INVESTORS
MANAGEMENT COMPANY, INC.
50
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS LIFE INTERNATIONAL SECURITIES FUND
December 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ------------------------------------------------------------------------------------------
<C> <S> <C> <C>
COMMON STOCKS--90.0%
UNITED STATES--29.8%
21,850 Abbott Laboratories $ 793,428 $ 63
7,400 Alcoa, Inc. 614,200 48
5,200 * America Online, Inc. 392,275 31
4,150 American General Corporation 314,881 25
12,247 American International Group, Inc. 1,324,207 104
10,225 AT&T Corporation 518,919 41
9,700 * AT&T Corporation-Liberty Media Group -
Class "A" 550,475 43
7,500 Baxter International, Inc. 471,094 37
1,400 * Broadcom Corporation - Class "A" 381,325 30
7,100 Caterpillar, Inc. 334,144 26
8,800 Chevron Corporation 762,300 60
16,650 * Cisco Systems, Inc. 1,783,631 141
23,437 Citigroup, Inc. 1,302,218 103
4,700 Corning, Inc. 606,006 48
9,000 CSX Corporation 282,375 22
13,900 CVS Corporation 555,131 44
11,807 Du Pont (E.I.) de Nemours & Company 777,786 61
12,200 Exxon Mobil Corporation 982,862 77
7,925 First Data Corporation 390,802 31
8,200 Franklin Resources, Inc. 262,912 21
10,600 Gannett Company, Inc. 864,562 68
7,800 General Electric Company 1,207,050 95
4,300 * Guidant Corporation 202,100 16
5,575 Hartford Financial Services Group, Inc. 264,116 21
10,370 Hewlett-Packard Company 1,181,532 93
24,450 Home Depot, Inc. 1,676,353 132
10,300 Honeywell International, Inc. 594,181 47
12,620 Intel Corporation 1,038,784 82
8,800 International Business Machines Corporation 950,400 75
11,550 Johnson & Johnson 1,075,594 85
6,750 Kimberly Clark Corporation 440,437 35
7,800 Marsh & McLennan Companies, Inc. 746,362 59
20,700 McDonald's Corporation 834,469 66
19,375 * MCI WorldCom, Inc. 1,028,086 81
5,200 Merrill Lynch & Company, Inc. 434,200 34
17,100 * Microsoft Corporation 1,996,425 157
3,600 Motorola, Inc. 530,100 42
14,130 Pharmacia & Upjohn, Inc. 635,850 50
- ------------------------------------------------------------------------------------------
</TABLE>
51
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
FIRST INVESTORS LIFE INTERNATIONAL SECURITIES FUND
December 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ------------------------------------------------------------------------------------------
<C> <S> <C> <C>
UNITED STATES (continued)
5,900 Praxair, Inc. $ 296,844 $ 23
8,485 Procter & Gamble Company 929,638 73
17,180 SBC Communications, Inc. 837,525 66
8,030 Schlumberger, Ltd. 451,687 36
40,125 Southwest Airlines Company 649,523 51
4,400 * Sprint Corporation 451,000 36
16,275 State Street Corporation 1,189,092 94
8,400 Texas Instruments, Inc. 813,750 64
1,554 Transocean Sedco Forex, Inc. 52,350 4
24,500 Wal-Mart Stores, Inc. 1,693,563 134
11,150 Warner-Lambert Company 913,603 72
5,700 Weyerhaeuser Company 409,331 32
- ------------------------------------------------------------------------------------------
37,789,478 2,979
- ------------------------------------------------------------------------------------------
JAPAN--12.3%
58,000 Bank of Yokohama, Ltd. 266,895 21
79,000 Dai Nippon Printing Company, Ltd. 1,258,072 99
106,000 Daiwa Bank, Ltd. 310,683 24
18,000 Eisai Company, Ltd. 345,562 27
25,000 Fujisawa Pharmaceutical Company, Ltd. 605,735 48
13,000 Fujitsu, Ltd. 591,862 47
68,000 Hitachi, Ltd. 1,089,541 86
14,000 Hoya Corporation 1,101,070 87
5,600 * Internet Initiative Japan, Inc. (ADR) 544,250 43
400 Itochu Techno-Science Corporation 248,938 20
3,000 Ito-Yokado Company, Ltd. 325,338 26
150,000 Marubeni Corporation 628,694 50
6,500 Matsumotokiyoshi Company, Ltd. 502,320 40
1,000 Matsushita Communication Industrial
Company, Ltd. 27,649 2
37,000 Minebea Company, Ltd 633,687 50
50,000 Nikko Securities Company, Ltd. 631,625 50
41 Nippon Telegraph & Telephone Corporation 700,992 55
26 NTT Mobile Communications Network, Inc. 998,290 79
34,000 Omron Corporation 782,277 62
200 Softbank Corporation 191,100 15
7,000 Sony Corporation 2,072,200 163
7,000 Takeda Chemical Industries, Ltd. 345,367 27
3,800 Takefuji Corporation 474,838 37
- ------------------------------------------------------------------------------------------
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ------------------------------------------------------------------------------------------
<C> <S> <C> <C>
JAPAN (continued)
1,000 Trans Cosmos, Inc. $ 425,968 $ 34
8,100 Uni-Charm Corporation 466,113 37
- ------------------------------------------------------------------------------------------
15,569,066 1,229
- ------------------------------------------------------------------------------------------
FRANCE--9.2%
4,900 Air Liquide SA 816,335 64
19,512 Aventis SA 1,124,633 89
6,520 AXA-Uap 904,534 71
7,622 Banque Nationale de Paris 699,851 55
2,900 Carrefour Supermarche 532,264 42
2,700 Compagnie de Saint Gobain 505,300 40
8,900 France Telecom SA 1,171,375 92
1,600 L'Oreal SA 1,277,459 101
12,200 Michelin (CGDE) - Class "B" 476,942 38
2,500 Pinault-Printemps-Redoute SA 656,572 52
6,097 Societe Generale 1,411,787 111
2,520 Suez Lyonnaise des Eaux 401,894 32
12,941 Total Fina SA - Class "B" 1,718,798 135
- ------------------------------------------------------------------------------------------
11,697,744 922
- ------------------------------------------------------------------------------------------
UNITED KINGDOM--6.7%
21,300 Abbey National PLC 339,859 27
5,700 Anglo American PLC 378,032 30
17,400 Barclays PLC 500,152 39
101,226 BP Amoco PLC 1,015,584 80
131,000 British Airways PLC 852,976 67
25,661 British Telecommunications PLC 625,744 49
172,600 Invensys PLC 937,465 74
19,300 National Westminster Bank PLC 413,707 33
26,000 Peninsular & Oriental Steam Navigation Company 432,870 34
31,600 Prudential Corporation PLC 621,343 49
56,200 Scottish Power PLC 424,809 33
198,200 Smith & Nephew PLC 664,433 52
80,645 Smithkline Beecham PLC 1,026,807 81
16,602 Standard Chartered PLC 257,139 20
- ------------------------------------------------------------------------------------------
8,490,920 668
- ------------------------------------------------------------------------------------------
</TABLE>
53
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
FIRST INVESTORS LIFE INTERNATIONAL SECURITIES FUND
December 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ------------------------------------------------------------------------------------------
<C> <S> <C> <C>
GERMANY--5.5%
10,200 BASF AG $ 521,448 $ 41
8,000 Deutsche Bank AG 672,410 53
2,900 Dresdner Bank AG 156,976 12
2,100 HypoVereinsbank 142,722 11
9,192 Linde AG 500,323 39
8,961 Mannesmann AG 2,151,310 170
3,100 Muenchener Rueckver AG 782,453 62
15,910 Siemens AG 2,014,256 159
- ------------------------------------------------------------------------------------------
6,941,898 547
- ------------------------------------------------------------------------------------------
NETHERLANDS--5.1%
13,500 Fortis (NL) NV 483,783 38
10,871 ING Groep NV 653,172 51
16,039 Koninklijke KPN NV 1,557,909 123
10,324 Koninklijke Philips Electronics NV 1,397,085 110
11,800 * KPNQwest NV 752,250 59
8,300 Royal Dutch Petroleum Company 506,267 40
4,300 United Pan-Europe Communications NV 547,411 43
4,700 United Pan-Europe Communications NV - Class "A"
(ADR) 599,250 47
- ------------------------------------------------------------------------------------------
6,497,127 511
- ------------------------------------------------------------------------------------------
ITALY--3.5%
82,900 ENI SpA 453,720 36
66,600 Mediaset SpA 1,030,772 81
45,000 San Paolo-IMI SpA 608,507 48
123,100 Telecom Italia Mobile SpA 1,368,455 108
66,133 Telecom Italia SpA 928,084 73
- ------------------------------------------------------------------------------------------
4,389,538 346
- ------------------------------------------------------------------------------------------
SWITZERLAND--2.8%
3,340 Credit Suisse Group - Reg. Shs. 660,405 52
640 Holderbank Financiere Glarus AG 871,619 69
482 Nestle AG 878,362 69
100 Roche Holdings AG - Genusscheine 1,180,733 93
- ------------------------------------------------------------------------------------------
3,591,119 283
- ------------------------------------------------------------------------------------------
</TABLE>
54
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ------------------------------------------------------------------------------------------
<C> <S> <C> <C>
SPAIN--2.8%
8,400 Banco Popular Espanol SA $ 545,205 $ 43
21,200 Endesa SA 418,855 33
17,000 Endesa SA (ADR) 343,187 27
33,800 Telefonica SA 840,252 66
16,967 Telefonica SA (ADR) 1,337,212 105
- ------------------------------------------------------------------------------------------
3,484,711 274
- ------------------------------------------------------------------------------------------
HONG KONG--2.6%
110,000 Cheung Kong Holdings, Ltd. 1,397,376 110
152,500 * China Telecom (Hong Kong), Ltd. 953,432 75
12,200 * China.com Corporation 959,225 76
- ------------------------------------------------------------------------------------------
3,310,033 261
- ------------------------------------------------------------------------------------------
FINLAND--2.1%
13,160 Nokia OYJ - Class "A" 2,374,485 187
6,800 Upm- Kymmene Corporation 272,653 22
- ------------------------------------------------------------------------------------------
2,647,138 209
- ------------------------------------------------------------------------------------------
SWEDEN--1.3%
25,820 Telefonaktiebolaget L.M. Ericsson - Class "B" 1,653,230 130
- ------------------------------------------------------------------------------------------
AUSTRALIA--1.2%
47,161 Broken Hill Proprietary Company, Ltd. 617,274 49
314,831 M.I.M. Holdings, Ltd. 323,460 26
525,568 Pasminco, Ltd. 574,366 45
- ------------------------------------------------------------------------------------------
1,515,100 120
- ------------------------------------------------------------------------------------------
CANADA--1.0%
31,600 Alcan Aluminum, Ltd. 1,293,351 102
- ------------------------------------------------------------------------------------------
SOUTH KOREA--.8%
3,482 LG Investment & Securities Company, Ltd. 9,158 1
4,400 Samsung Electronics 1,033,192 81
- ------------------------------------------------------------------------------------------
1,042,350 82
- ------------------------------------------------------------------------------------------
</TABLE>
55
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
FIRST INVESTORS LIFE INTERNATIONAL SECURITIES FUND
December 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ------------------------------------------------------------------------------------------
<C> <S> <C> <C>
SINGAPORE--.7%
46,200 Overseas Chinese Banking Corporation, Ltd. $ 424,286 $ 33
79,940 Overseas Union Bank, Ltd. 467,836 37
- ------------------------------------------------------------------------------------------
892,122 70
- ------------------------------------------------------------------------------------------
INDIA--.7%
6,300 Hindalco Industries, Ltd. (GDR) 148,522 12
7,500 Larsen & Toubro, Ltd. (GDR) 178,125 14
23,400 State Bank of India (GDR) 241,703 19
13,100 Videsh Sanchar Nigam, Ltd. (GDR) 312,435 25
- ------------------------------------------------------------------------------------------
880,785 70
- ------------------------------------------------------------------------------------------
MEXICO--.6%
5,500 * Grupo Televisa SA (GDR) 375,375 30
3,500 Telefonica de Mexico SA 393,750 31
- ------------------------------------------------------------------------------------------
769,125 61
- ------------------------------------------------------------------------------------------
IRELAND--.5%
53,802 Allied Irish Banks PLC 609,422 48
- ------------------------------------------------------------------------------------------
BRAZIL--.4%
20,100 Embratel Participacoes SA (ADR) 547,725 43
- ------------------------------------------------------------------------------------------
BERMUDA--.4%
14,000 Tyco International, Ltd. 544,250 43
- ------------------------------------------------------------------------------------------
TOTAL VALUE OF COMMON STOCKS (cost $75,675,282) 114,156,232 8,998
- ------------------------------------------------------------------------------------------
PREFERRED STOCKS--1.4%
BRAZIL
1,620,600 Petroleo Brasileiro SA - Petrobras 415,654 33
10,900 Telecomunicacoes Brasileiras SA (ADR) 1,400,650 110
5,000 * Vale Do Rio Doce - Class "B" -- --
- ------------------------------------------------------------------------------------------
TOTAL VALUE OF PREFERRED STOCKS (cost $1,124,799) 1,816,304 143
- ------------------------------------------------------------------------------------------
</TABLE>
56
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
AMOUNT
WARRANTS INVESTED
OR FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- ------------------------------------------------------------------------------------------
<C> <S> <C> <C>
WARRANTS--.0%
THAILAND
1,500 * Siam Commercial Bank (expiring 12/31/02)
(cost $0) $ 619 $ --
- ------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--.2%
$ 100M United States Treasury Bill, 4.67%, 1/6/00+ 99,934 8
100M United States Treasury Bill, 5.09%, 3/2/00+ 99,134 8
- ------------------------------------------------------------------------------------------
TOTAL VALUE OF U.S. GOVERNMENT OBLIGATIONS (cost $199,068) 199,068 16
- ------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT AND AGENCY
SECURITIES--4.2%
GERMANY
Euro 5,335M Bundesschatzanweisugen, 4%, 3/17/00
(cost $5,584,836) 5,358,500 422
- ------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT--3.9%
$ 4,993M Paine Webber, Inc., 3.00%, 1/3/00,
(collateralized by U.S. Treasury Note, due
8/15/01, valued at $5,099,832)(cost $4,993,000) 4,993,000 394
- ------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL VALUE OF INVESTMENTS (cost $87,576,985) 99.7% 126,523,723 9,973
OTHER ASSETS, LESS LIABILITIES .3 342,470 27
- -----------------------------------------------------------------------------------------
NET ASSETS 100.0% $126,866,193 $ 10,000
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
</TABLE>
* Non-income producing
+ See Note 6
See notes to financial statements
57
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS LIFE INTERNATIONAL SECURITIES FUND
December 31, 1999
Sector diversification of the portfolio was as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
PERCENTAGE
SECTOR OF NET ASSETS VALUE
- ---------------------------------------------------------------------
<S> <C> <C>
Telephone.............................. 10.2% $ 12,952,908
Media.................................. 9.9 12,499,904
Banks.................................. 8.8 11,221,474
Drugs.................................. 5.7 7,253,884
Communication Equipment................ 5.5 7,016,352
Electronics............................ 5.5 6,979,226
Insurance.............................. 4.8 6,094,851
Retail................................. 4.7 5,941,541
Energy Sources......................... 4.6 5,855,185
Metals & Minerals...................... 4.2 5,326,124
Electrical Equipment................... 3.9 4,941,048
Medical Products....................... 2.5 3,232,125
Software Services...................... 2.5 3,122,577
Household Products..................... 2.5 3,113,647
Chemicals.............................. 1.9 2,412,413
Travel & Leisure....................... 1.8 2,336,968
Business Services...................... 1.7 2,204,195
Computers & Office Equipment........... 1.7 2,131,932
Entertainment Products................. 1.7 2,099,849
Machinery & Manufacturing.............. 1.6 1,984,723
Financial Services..................... 1.4 1,812,733
Electric Utilities..................... .9 1,186,851
Food/Beverage/Tobacco.................. .7 878,362
Transportation......................... .6 715,245
Paper/Forest Products.................. .5 681,984
Aerospace/Defense...................... .5 594,181
Energy Services........................ .4 504,037
Automotive............................. .4 476,942
Pipeline............................... .3 401,894
Foreign Government and Agency
Securities........................... 4.2 5,358,500
U.S. Government Obligations............ .2 199,068
Repurchase Agreement................... 3.9 4,993,000
- ---------------------------------------------------------------------
TOTAL VALUE OF INVESTMENTS 99.7 126,523,723
OTHER ASSETS, LESS LIABILITIES .3 342,470
- ---------------------------------------------------------------------
NET ASSETS 100.0% $126,866,193
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
</TABLE>
See notes to financial statements
58
<PAGE>
PORTFOLIO MANAGERS' LETTER
FIRST INVESTORS LIFE INVESTMENT GRADE FUND
Dear Investor:
We are pleased to present the annual report for the First Investors Life
Investment Grade Fund for the fiscal year ended December 31, 1999. During the
period, the Fund's return on a net asset value basis was -2.5%, compared to a
return of -1.7% for its Lipper peer group. During the period, the Fund declared
dividends from net investment income of 69.7 cents per share. The Fund also
declared a capital gains distribution of 0.5 cents per share.
The primary factor that drove the Fund's performance during the fiscal year was
the rising interest rate environment. Sector selection and a focus on credit
quality also affected the Fund's performance. As the year began, the problems
that precipitated the worldwide financial crisis of the summer of 1998 continued
to hang heavily over the bond market. The economic downturn in emerging markets,
the Long-Term Capital Management hedge fund bailout and other difficulties
sparked a "flight to quality," as investors shifted assets to the relative
security of U.S. Treasuries. In this environment, larger, highly liquid bond
issues tended to outperform smaller, more risky bonds early in 1999.
As the year progressed and the upheaval of mid-1998 subsided, investors showed
renewed confidence. Risk was beginning to be rewarded as smaller, lower-rated
investment grade bond issues outperformed larger, higher-rated issues. The yield
spread between benchmark U.S. Treasuries and investment grade bonds tightened,
as new issuance activity picked up. The Fund's investments in Yankee bonds (U.S.
dollar-denominated bonds issued by foreign entities) also performed well in this
environment.
By summer, rapid growth of the economy sparked inflation fears. In response, the
Federal Reserve raised interest rates three times, undoing the three easing
moves from the prior autumn. In this rising interest rate environment, the
investment grade bond market underperformed. The spread between Treasuries and
investment grade bonds widened in late summer in anticipation of heavy new
issuance in fall. However, the full new issue calendar failed to materialize in
late 1999, spreads tightened and the investment grade market experienced a
slight rebound--relative to the rest of the year.
During the reporting period, the performance of the Fund was aided by a number
of other factors. Our holdings with shorter maturities boosted returns, as they
tended to outperform those with longer maturities. The Fund held positions in a
number of issues that benefited from credit ratings upgrades, including Niagara
Mohawk. Mergers and acquisitions activity was a mixed blessing--it boosted
several holdings, but harmed others.
59
<PAGE>
PORTFOLIO MANAGERS' LETTER (continued)
FIRST INVESTORS LIFE INVESTMENT GRADE FUND
A number of the Fund's holdings were not helpful to performance. In general,
lower rated bonds tended to outperform higher rated bonds. The Fund did have
some exposure to lower rated investment grade bonds. However, our allocation was
not as large as our peer group. In addition, bonds with longer maturities
underperformed bonds with shorter maturities. Holdings in the industrial and
aerospace sectors fell short of expectations, especially those of companies with
disappointing earnings. Additionally, the Fund was underweighted in Yankee bonds
throughout the year, a sector which performed well.
Looking ahead, we continue to face a challenging interest rate environment. The
investment grade bond market may stabilize later in the year, if concerns about
rapid economic growth and inflation subside. As always, the Fund will
concentrate on investing in stable and improving credits and seek relative value
in the investment grade corporate bond market.
Thank you for placing your trust in First Investors. As always, we appreciate
the opportunity to serve your investment needs.
Sincerely,
/s/ George V. Ganter
George V. Ganter
Co-Portfolio Manager*
/s/ Clark D. Wagner
Clark D. Wagner
Co-Portfolio Manager
January 31, 2000
* Effective January 1, 2000, Mr. Ganter serves as Co-Portfolio Manager of the
Fund.
60
<PAGE>
CUMULATIVE PERFORMANCE INFORMATION
FIRST INVESTORS LIFE INVESTMENT GRADE FUND
Comparison of change in value of $10,000 investment in the First Investors Life
Investment Grade Fund and the Lehman Brothers Corporate Bond Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999 LIFE LEHMAN BROTHERS CORPORATE
INVESTMENT GRADE FUND BOND INDEX
<S> <C> <C>
Jan-92 $10,000 $10,000
Dec-92 10,878 10,869
Dec-93 12,056 12,190
Dec-94 11,630 11,711
Dec-95 13,920 14,316
Dec-96 14,316 14,786
Dec-97 15,720 16,298
Dec-98 17,159 17,695
Dec-99 16,724 17,348
Average Annual Total Return*
One Year (2.35%)
Five Years 7.54%
Since Inception (1/7/92) 6.65%
</TABLE>
* THE GRAPH COMPARES A $10,000 INVESTMENT IN THE FIRST INVESTORS LIFE INVESTMENT
GRADE FUND BEGINNING 1/7/92 (INCEPTION DATE) WITH A THEORETICAL INVESTMENT IN
THE LEHMAN BROTHERS CORPORATE BOND INDEX. THE LEHMAN BROTHERS CORPORATE BOND
INDEX INCLUDES ALL PUBLICLY ISSUED, FIXED RATE, NONCONVERTIBLE INVESTMENT
GRADE DOLLAR-DENOMINATED, S.E.C.-REGISTERED CORPORATE DEBT. ALL ISSUES HAVE AT
LEAST ONE YEAR TO MATURITY AND AN OUTSTANDING PAR VALUE OF AT LEAST $100
MILLION. IT IS NOT POSSIBLE TO INVEST DIRECTLY IN THIS INDEX. IN ADDITION, THE
INDEX DOES NOT TAKE INTO ACCOUNT FEES AND EXPENSES THAT AN INVESTOR WOULD
INCUR IN PURCHASING SECURITIES IN THE INDEX. FOR PURPOSES OF THE GRAPH AND THE
ACCOMPANYING TABLE IT IS ASSUMED THAT ALL DIVIDENDS AND DISTRIBUTIONS WERE
REINVESTED.
THE AVERAGE ANNUAL TOTAL RETURN FIGURES ARE FOR THE PERIOD ENDED 12/31/99.
DURING THE PERIODS SHOWN, SOME OR ALL OF THE EXPENSES OF THE FUND WERE WAIVED OR
ASSUMED. IF SUCH EXPENSES HAD BEEN PAID BY THE FUND, THE "S.E.C. STANDARDIZED"
AVERAGE ANNUAL TOTAL RETURN FOR ONE YEAR, FIVE YEARS AND SINCE INCEPTION WOULD
HAVE BEEN (2.68%), 7.34% AND 6.20%, RESPECTIVELY.
THE RETURNS SHOWN DO NOT REFLECT ANY SALES CHARGES, SINCE THE FUND SELLS ITS
SHARES SOLELY TO VARIABLE ANNUITY AND/OR VARIABLE LIFE INSURANCE SUBACCOUNTS AT
NET ASSET VALUE. THE RETURNS DO NOT REFLECT THE FEES AND CHARGES THAT AN
INDIVIDUAL WOULD PAY IN CONNECTION WITH AN INVESTMENT IN A VARIABLE ANNUITY OR
LIFE CONTRACT OR POLICY. RESULTS REPRESENT PAST PERFORMANCE AND DO NOT INDICATE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. LEHMAN BROTHERS CORPORATE BOND INDEX FIGURES FROM LEHMAN
BROTHERS, INC. AND ALL OTHER FIGURES FROM FIRST INVESTORS MANAGEMENT
COMPANY, INC.
61
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS LIFE INVESTMENT GRADE FUND
December 31, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
CORPORATE BONDS--84.6%
AEROSPACE/DEFENSE--2.4%
$ 250M Lockheed Martin Corp., 7.25%, 2006 $ 238,969 $ 114
300M Thiokol Corp., 6.625%, 2008 269,906 129
- --------------------------------------------------------------------------------------
508,875 243
- --------------------------------------------------------------------------------------
AUTOMOTIVE--2.5%
275M DaimlerChrysler NA Holding Corp., 7.20%, 2009 270,459 129
270M Navistar International Corp., 8%, 2008 257,850 123
- --------------------------------------------------------------------------------------
528,309 252
- --------------------------------------------------------------------------------------
CHEMICALS--2.6%
250M Du Pont (E. I.) de Nemours & Co., 8.125%, 2004 259,086 124
300M Lubrizol Corp., 7.25%, 2025 284,578 136
- --------------------------------------------------------------------------------------
543,664 260
- --------------------------------------------------------------------------------------
CONGLOMERATES--1.4%
300M Hanson Overseas BV, 7.375%, 2003 300,350 144
- --------------------------------------------------------------------------------------
CONSUMER DURABLES--1.2%
265M Mattel, Inc., 6%, 2003 250,185 120
- --------------------------------------------------------------------------------------
ELECTRIC & GAS UTILITIES--7.7%
250M Baltimore Gas & Electric Co., 6.50%, 2003 245,622 118
265M Consumers Energy Co., 6.375%, 2008 241,252 115
350M Duke Energy Co., 5.875%, 2003 341,533 163
200M Kansas Gas & Electric Co., 7.60%, 2003 200,952 96
209M Niagra Mohawk Power Co., 7.625%, 2005 210,005 100
42M Old Dominion Electric Cooperative, 7.97%, 2002 42,518 20
250M Philadelphia Electric Co., 8%, 2002 253,336 121
75M Southwestern Electric Power Co., 7%, 2007 72,538 35
- --------------------------------------------------------------------------------------
1,607,756 768
- --------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--1.2%
250M Rockwell International Corp., 8.375%, 2001 254,170 122
- --------------------------------------------------------------------------------------
ELECTRONICS/INSTRUMENTS--1.3%
300M Raytheon Co., 6.15%, 2008 266,912 128
- --------------------------------------------------------------------------------------
</TABLE>
62
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
ENERGY--3.9%
$ 315M Baroid Corp., 8%, 2003 $ 324,339 $ 155
275M Occidental Petroleum Corp., 6.40%, 2013 265,062 127
250M Phillips Petroleum Co., 7.20%, 2023 223,870 107
- --------------------------------------------------------------------------------------
813,271 389
- --------------------------------------------------------------------------------------
ENTERTAINMENT/LEISURE--2.1%
150M Time Warner, Inc., 6.875%, 2018 135,317 65
300M Walt Disney Co., 6.75%, 2006 293,595 140
- --------------------------------------------------------------------------------------
428,912 205
- --------------------------------------------------------------------------------------
FINANCIAL SERVICES--10.8%
300M Chemical Bank NY, 7%, 2005 295,373 141
200M Citicorp, 8%, 2003 204,335 98
250M First Colony Corp., 6.625%, 2003 246,922 118
300M First Union Corp., 8.125%, 2002 306,556 147
250M Fleet Capital Trust II, 7.92%, 2026 233,190 112
300M KeyCorp, 7.50%, 2006 298,239 143
250M Mellon Bank NA, 6.50%, 2005 240,235 115
50M Meridian Bancorp, 7.875%, 2002 50,603 24
75M Morgan Guaranty Trust Co. NY, 7.375%, 2002 75,545 36
300M NationsBank Corp., 8.125%, 2002 307,106 147
- --------------------------------------------------------------------------------------
2,258,104 1,081
- --------------------------------------------------------------------------------------
FOOD SERVICE--1.2%
250M McDonalds Corp., 6.625%, 2005 246,204 118
- --------------------------------------------------------------------------------------
FOOD/BEVERAGE/TOBACCO--5.8%
250M Anheuser-Busch Companies, Inc., 7%, 2005 247,496 118
225M Coca-Cola Enterprises, Inc., 7.875%, 2002 229,235 110
300M Hershey Foods Corp., 6.70%, 2005 290,822 139
275M Pepsi Bottling Group, Inc., 7%, 2029 248,954 119
200M Philip Morris Companies, Inc., 7.125%, 2002 196,877 94
- --------------------------------------------------------------------------------------
1,213,384 580
- --------------------------------------------------------------------------------------
</TABLE>
63
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
FIRST INVESTORS LIFE INVESTMENT GRADE FUND
December 31, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
HEALTHCARE--3.7%
$ 275M Johnson & Johnson, 6.625%, 2009 $ 265,004 $ 127
275M Merck & Co., Inc., 5.95%, 2028 228,170 109
300M Warner-Lambert Co., 6%, 2008 280,412 134
- --------------------------------------------------------------------------------------
773,586 370
- --------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS--1.1%
250M Dial Corp., 6.50%, 2008 230,097 110
- --------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY/OFFICE EQUIPMENT--2.3%
250M International Business Machines Corp., 5.375%,
2009 220,030 105
275M Xerox Corp., 7.20%, 2016 258,471 124
- --------------------------------------------------------------------------------------
478,501 229
- --------------------------------------------------------------------------------------
INVESTMENT/FINANCE COMPANIES--4.3%
300M Associates Corp. of North America, 7.875%, 2001 304,440 146
300M General Electric Capital Corp., 7.875%, 2006 308,234 148
300M General Motors Acceptance Corp., 6.625%, 2005 288,991 138
- --------------------------------------------------------------------------------------
901,665 432
- --------------------------------------------------------------------------------------
MEDIA (CABLE TV/BROADCASTING)--3.9%
300M New York Times Co., Inc., 7.625%, 2005 306,660 147
250M News America Holdings, Inc., 8.50%, 2005 259,681 124
300M PanAmSat Corp., 6.375%, 2008 254,672 122
- --------------------------------------------------------------------------------------
821,013 393
- --------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--1.2%
250M Temple Inland, Inc., 9%, 2001 254,988 122
- --------------------------------------------------------------------------------------
RETAIL - FOOD/DRUG--1.3%
300M Kroger Co., 7%, 2018 267,895 128
- --------------------------------------------------------------------------------------
RETAIL - GENERAL MERCHANDISE--2.9%
300M Federated Department Stores, Inc., 7.45%, 2017 286,978 137
300M Wal-Mart Stores, Inc., 8%, 2006 312,402 149
- --------------------------------------------------------------------------------------
599,380 286
- --------------------------------------------------------------------------------------
TELECOMMUNICATIONS--15.6%
275M AT&T Corp., 6%, 2009 250,918 120
250M Bell Atlantic New Jersey, Inc., 7.375%, 2012 243,959 117
- --------------------------------------------------------------------------------------
</TABLE>
64
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
TELECOMMUNICATIONS (continued)
$ 300M Cable & Wireless Communications PLC, 6.75%, 2008 $ 297,877 $ 143
275M Global Crossing Holdings, Ltd., 9.125%, 2006 + 272,594 130
350M MCI Communications Corp., 7.50%, 2004 354,223 170
275M Metromedia Fiber Network, Inc., 10%, 2009 283,250 136
275M MetroNet Communications Corp., 0%-9.95%, 2008 218,625 105
300M New York Telephone Co., 7.25%, 2024 267,884 128
200M Pacific Bell Telephone Co., 7%, 2004 198,336 95
275M Sprint Capital Corp., 6.125%, 2008 249,729 120
300M TCI Communications, Inc., 6.375%, 2003 293,941 141
305M WorldCom, Inc., 8.875%, 2006 319,056 153
- --------------------------------------------------------------------------------------
3,250,392 1,558
- --------------------------------------------------------------------------------------
TRANSPORTATION--1.4%
300M Norfolk Southern Corp., 7.35%, 2007 293,711 141
- --------------------------------------------------------------------------------------
UTILITIES--2.8%
300M Columbia Energy Group, 6.80%, 2005 289,983 139
300M Enron Corp., 7.125%, 2007 290,139 139
- --------------------------------------------------------------------------------------
580,122 278
- --------------------------------------------------------------------------------------
TOTAL VALUE OF CORPORATE BONDS (cost $18,426,584) 17,671,446 8,457
- --------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--11.2%
2,500M United States Treasury Notes, 5.625%, 2008
(cost $2,536,514) 2,352,345 1,126
- --------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--2.3%
475M Idaho Power Co., 6.50%, 1/14/00 (cost $473,884) 473,884 227
- --------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL VALUE OF INVESTMENTS (cost $21,436,982) 98.1% 20,497,675 9,810
OTHER ASSETS, LESS LIABILITIES 1.9 397,736 190
- -------------------------------------------------------------------------------------
NET ASSETS 100.0% $20,895,411 $ 10,000
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
</TABLE>
+ See Note 5.
See notes to financial statements
65
<PAGE>
PORTFOLIO MANAGER'S LETTER
FIRST INVESTORS LIFE TARGET MATURITY 2007 FUND
FIRST INVESTORS LIFE TARGET MATURITY 2010 FUND
FIRST INVESTORS LIFE TARGET MATURITY 2015 FUND
Dear Investor:
We are pleased to present the annual report for the First Investors Life Target
Maturity 2007, 2010 and 2015 Funds for the fiscal year ended December 31, 1999.
During the period, the Funds' return on a net asset value basis was -9.4% for
Target Maturity 2007, -11.7% for Target Maturity 2010 and -4.9% for Target
Maturity 2015. During the period, Target Maturity 2007 and Target Maturity 2010
declared dividends from net investment income of 61.6 and 51.1 cents per share,
respectively.
The Funds' investment objective is to seek a predictable compounded return for
investors who hold the Funds until maturity. In order to meet this objective,
the Funds are fully invested in high-quality zero coupon bonds. These bonds are
very sensitive to changes in interest rates. Consequently, with long-term
interest rates rising in 1999, zero coupon bonds provided lower returns than did
the bond market in general. The Target Maturity 2007 Fund had a higher return
than that of Target Maturity 2010 and 2015 because of its shorter average
maturity.
Thank you for placing your trust in First Investors. As always, we appreciate
the opportunity to serve your investment needs.
Sincerely,
/s/ Clark D. Wagner
Clark D. Wagner
Portfolio Manager
January 31, 2000
66
<PAGE>
CUMULATIVE PERFORMANCE INFORMATION
FIRST INVESTORS LIFE TARGET MATURITY 2007 FUND
Comparison of change in value of $10,000 investment in the First Investors Life
Target Maturity 2007 Fund and the Salomon Brothers Government Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999 LIFE TARGET MATURITY SALOMON BROTHERS
2007 FUND GOVERNMENT
INDEX
<S> <C> <C>
Apr-95 $10,000 $10,000
Dec-95 12,260 11,162
Dec-96 11,996 11,490
Dec-97 13,601 12,599
Dec-98 15,637 13,839
Dec-99 14,169 13,530
Average Annual Total Return*
One Year (9.39%)
Since Inception (4/26/95) 7.72%
</TABLE>
* THE GRAPH COMPARES A $10,000 INVESTMENT IN THE FIRST INVESTORS LIFE TARGET
MATURITY 2007 FUND BEGINNING 4/26/95 (INCEPTION DATE) WITH A THEORETICAL
INVESTMENT IN THE SALOMON BROTHERS GOVERNMENT INDEX. THE SALOMON BROTHERS
GOVERNMENT INDEX IS A MARKET CAPITALIZATION-WEIGHTED INDEX THAT CONSISTS OF
DEBT ISSUED BY THE U.S. TREASURY AND U.S. GOVERNMENT SPONSORED AGENCIES.
EVERY ISSUE INCLUDED IN THE INDEX IS TRADER-PRICED, AND THE INDEX FOLLOWS
CONSISTENT AND REALISTIC AVAILABILITY LIMITS, INCLUDING ONLY THOSE
SECURITIES WITH SUFFICIENT AMOUNTS OUTSTANDING. IT IS NOT POSSIBLE TO INVEST
DIRECTLY IN THIS INDEX. IN ADDITION, THE INDEX DOES NOT TAKE INTO ACCOUNT
FEES AND EXPENSES THAT AN INVESTOR WOULD INCUR IN PURCHASING SECURITIES IN
THE INDEX. FOR PURPOSES OF THE GRAPH AND THE ACCOMPANYING TABLE IT IS
ASSUMED THAT ALL DIVIDENDS AND DISTRIBUTIONS WERE REINVESTED.
THE AVERAGE ANNUAL TOTAL RETURN FIGURES ARE FOR THE PERIOD ENDED 12/31/99.
DURING THE PERIODS SHOWN, SOME OR ALL OF THE EXPENSES OF THE FUND WERE WAIVED OR
ASSUMED. IF SUCH EXPENSES HAD BEEN PAID BY THE FUND, THE AVERAGE ANNUAL TOTAL
RETURN FOR ONE YEAR AND SINCE INCEPTION WOULD HAVE BEEN (9.54%) AND 7.57%,
RESPECTIVELY.
THE RETURNS SHOWN DO NOT REFLECT ANY SALES CHARGES, SINCE THE FUND SELLS ITS
SHARES SOLELY TO VARIABLE ANNUITY AND/OR VARIABLE LIFE INSURANCE SUBACCOUNTS AT
NET ASSET VALUE. THE RETURNS DO NOT REFLECT THE FEES AND CHARGES THAT AN
INDIVIDUAL WOULD PAY IN CONNECTION WITH AN INVESTMENT IN A VARIABLE ANNUITY OR
LIFE CONTRACT OR POLICY. RESULTS REPRESENT PAST PERFORMANCE AND DO NOT INDICATE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. SALOMON BROTHERS GOVERNMENT INDEX FIGURES FROM SALOMON
BROTHERS AND ALL OTHER FIGURES FROM FIRST INVESTORS MANAGEMENT COMPANY, INC.
67
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS LIFE TARGET MATURITY 2007 FUND
December 31, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL EFFECTIVE $10,000 OF
AMOUNT SECURITY YIELD+ VALUE NET ASSETS
- -------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AGENCY ZERO COUPON
OBLIGATIONS--57.9%
Agency For International Development - Israel:
$ 570M 2/15/2007 6.90% $ 351,486 $ 139
119M 3/15/2007 6.90 72,962 29
1,513M 8/15/2007 6.92 900,488 357
750M 11/15/2007 6.88 440,217 175
250M 11/15/2007 6.88 146,739 58
980M 2/15/2008 6.97 561,529 223
493M Federal Judiciary Office Building, 2/15/2007 7.04 301,040 119
Federal National Mortgage Association:
525M 10/8/2007 7.01 307,434 122
719M 11/29/2007 7.00 416,993 165
558M 2/1/2008 7.06 318,386 126
1,134M 8/1/2008 7.10 623,047 247
Government Trust Certificate - Israel Trust:
307M 10/1/2007 6.81 182,634 73
3,450M 11/15/2007 7.05 1,998,999 793
3,304M 11/15/2007 7.05 1,914,404 759
Government Trust Certificate - Turkey Trust:
584M 11/15/2007 7.05 338,381 134
182M 11/15/2007 7.05 105,454 42
586M International Bank for Reconstruction &
Development, 8/15/2007 7.05 345,543 137
5,390M Resolution Funding Corporation, 10/15/2007 6.79 3,203,045 1,270
Tennessee Valley Authority:
2,600M 11/1/2007 7.11 1,504,144 596
1,000M 4/15/2008 7.20 556,244 221
- -------------------------------------------------------------------------------------------------
TOTAL VALUE OF U.S. GOVERNMENT AGENCY ZERO
COUPON OBLIGATIONS (cost $15,071,967) 14,589,169 5,785
- -------------------------------------------------------------------------------------------------
</TABLE>
68
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL EFFECTIVE $10,000 OF
AMOUNT SECURITY YIELD+ VALUE NET ASSETS
- -------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
U.S. TREASURY ZERO COUPON
OBLIGATIONS--41.7%
$ 200M Treasury Investors Growth Receipts, 11/15/2007 6.73% $ 118,738 $ 47
17,400M U.S. Treasury Strips, 11/15/2007 6.63 10,409,289 4,127
- ------------------------------------------------------------------------------------------------
TOTAL VALUE OF U.S. TREASURY ZERO COUPON OBLIGATIONS
(cost $10,608,873) 10,528,027 4,174
- ------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
TOTAL VALUE OF INVESTMENTS (cost $25,680,840) 99.6% 25,117,196 9,959
OTHER ASSETS, LESS LIABILITIES .4 103,694 41
- ------------------------------------------------------------------------------------------------
NET ASSETS 100.0% $25,220,890 $ 10,000
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
</TABLE>
+ The effective yields shown for the zero coupon obligations are the effective
yields at December 31, 1999.
See notes to financial statements
69
<PAGE>
CUMULATIVE PERFORMANCE INFORMATION
FIRST INVESTORS LIFE TARGET MATURITY 2010 FUND
Comparison of change in value of $10,000 investment in the First Investors Life
Target Maturity 2010 Fund and the Salomon Brothers Government Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999 LIFE TARGET MATURITY SALOMON BROTHERS
2010 FUND GOVERNMENT
INDEX
<S> <C> <C>
Apr-96 $10,000 $10,000
Dec-96 11,160 10,596
Dec-97 12,930 11,619
Dec-98 14,787 12,762
Dec-99 13,053 12,477
Average Annual Total Return*
One Year (11.73%)
Since Inception (4/30/96) 7.53%
</TABLE>
* THE GRAPH COMPARES A $10,000 INVESTMENT IN THE FIRST INVESTORS LIFE TARGET
MATURITY 2010 FUND BEGINNING 4/30/96 (INCEPTION DATE) WITH A THEORETICAL
INVESTMENT IN THE SALOMON BROTHERS GOVERNMENT INDEX. THE SALOMON BROTHERS
GOVERNMENT INDEX IS A MARKET CAPITALIZATION-WEIGHTED INDEX THAT CONSISTS OF
DEBT ISSUED BY THE U.S. TREASURY AND U.S. GOVERNMENT SPONSORED AGENCIES.
EVERY ISSUE INCLUDED IN THE INDEX IS TRADER-PRICED, AND THE INDEX FOLLOWS
CONSISTENT AND REALISTIC AVAILABILITY LIMITS, INCLUDING ONLY THOSE
SECURITIES WITH SUFFICIENT AMOUNTS OUTSTANDING. IT IS NOT POSSIBLE TO INVEST
DIRECTLY IN THIS INDEX. IN ADDITION, THE INDEX DOES NOT TAKE INTO ACCOUNT
FEES AND EXPENSES THAT AN INVESTOR WOULD INCUR IN PURCHASING SECURITIES IN
THE INDEX. FOR PURPOSES OF THE GRAPH AND THE ACCOMPANYING TABLE IT IS
ASSUMED THAT ALL DIVIDENDS AND DISTRIBUTIONS WERE REINVESTED.
THE AVERAGE ANNUAL TOTAL RETURN FIGURES ARE FOR THE PERIOD ENDED 12/31/99.
DURING THE PERIODS SHOWN, SOME OR ALL OF THE EXPENSES OF THE FUND WERE WAIVED OR
ASSUMED. IF SUCH EXPENSES HAD BEEN PAID BY THE FUND, THE AVERAGE ANNUAL TOTAL
RETURN FOR ONE YEAR AND SINCE INCEPTION WOULD HAVE BEEN (11.88%) AND 7.40%,
RESPECTIVELY.
THE RETURNS SHOWN DO NOT REFLECT ANY SALES CHARGES, SINCE THE FUND SELLS ITS
SHARES SOLELY TO VARIABLE ANNUITY AND/OR VARIABLE LIFE INSURANCE SUBACCOUNTS AT
NET ASSET VALUE. THE RETURNS DO NOT REFLECT THE FEES AND CHARGES THAT AN
INDIVIDUAL WOULD PAY IN CONNECTION WITH AN INVESTMENT IN A VARIABLE ANNUITY OR
LIFE CONTRACT OR POLICY. RESULTS REPRESENT PAST PERFORMANCE AND DO NOT INDICATE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL COST. SALOMON BROTHERS GOVERNMENT INDEX FIGURES FROM SALOMON
BROTHERS AND ALL OTHER FIGURES FROM FIRST INVESTORS MANAGEMENT COMPANY, INC.
70
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS LIFE TARGET MATURITY 2010 FUND
December 31, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL EFFECTIVE $10,000 OF
AMOUNT SECURITY YIELD+ VALUE NET ASSETS
- -------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AGENCY ZERO COUPON
OBLIGATIONS--59.8%
Agency For International Development - Israel:
$ 603M 8/15/2010 7.07% $ 288,083 $ 335
495M 9/15/2010 7.07 235,155 273
Federal National Mortgage Association:
925M 8/7/2010 7.19 437,629 509
700M 10/8/2010 7.19 326,952 380
600M 11/29/2010 7.19 277,455 323
921M 2/1/2011 7.19 421,061 490
200M Government Trust Certificate - Israel
Trust, 11/15/2010 7.24 92,251 107
1,700M Government Trust Certificate - Turkey
Trust, 11/15/2010 7.24 784,130 912
Resolution Funding Corporation:
650M 10/15/2010 7.00 309,312 360
2,998M 1/15/2011 7.00 1,401,859 1,630
1,250M Tennessee Valley Authority, 11/1/2010 7.31 574,036 667
- -------------------------------------------------------------------------------------------------
TOTAL VALUE OF U.S. GOVERNMENT AGENCY ZERO COUPON OBLIGATIONS
(cost $5,456,805) 5,147,923 5,986
- -------------------------------------------------------------------------------------------------
U.S. TREASURY ZERO COUPON OBLIGATIONS--39.7%
7,080M U.S. Treasury Strips, 11/15/2010
(cost $3,503,907) 6.82 3,412,886 3,968
- -------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
TOTAL VALUE OF INVESTMENTS (cost $8,960,712) 99.5% 8,560,809 9,954
OTHER ASSETS, LESS LIABILITIES .5 39,821 46
- -------------------------------------------------------------------------------------------------
NET ASSETS 100.0% $8,600,630 $ 10,000
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
+ The effective yields shown for the zero coupon obligations are the effective
yields at December 31, 1999.
See notes to financial statements
71
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS LIFE TARGET MATURITY 2015 FUND
December 31, 1999
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL EFFECTIVE $10,000 OF
AMOUNT SECURITY YIELD+ VALUE NET ASSETS
- -----------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AGENCY ZERO COUPON
OBLIGATIONS--41.5%
$ 300M Agency For International Development - Israel,
3/15/2016 7.18% $ 95,696 $ 1,098
Federal National Mortgage Association:
150M 2/12/2015 7.31 50,699 582
156M 8/12/2015 7.31 50,867 584
210M Government Trust Certificate - Turkey Trust,
5/15/2015 7.35 69,232 795
300M Resolution Funding Corporation, 7/15/2016 7.10 94,612 1,086
- -----------------------------------------------------------------------------------------------
TOTAL VALUE OF U.S. GOVERNMENT AGENCY ZERO COUPON OBLIGATIONS
(cost $386,118) 361,106 4,145
- -----------------------------------------------------------------------------------------------
U.S. TREASURY ZERO COUPON OBLIGATIONS--29.6%
760M U.S Treasury Strips, 11/15/2015 (cost $265,250) 6.93 257,875 2,960
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
TOTAL VALUE OF INVESTMENTS (cost $651,368) 71.1% 618,981 7,105
OTHER ASSETS, LESS LIABILITIES 28.9 252,185 2,895
- -----------------------------------------------------------------------------------------------
NET ASSETS 100.0% $871,166 $ 10,000
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
</TABLE>
+ The effective yields shown for the zero coupon obligations are the effective
yields at December 31, 1999.
See notes to financial statements
72
<PAGE>
PORTFOLIO MANAGER'S LETTER
FIRST INVESTORS LIFE UTILITIES INCOME FUND
Dear Investor:
We are pleased to present the annual report for the First Investors Life
Utilities Income Fund for the fiscal year ended December 31, 1999. During the
period, the Fund's return on a net asset value basis was 17.4%, compared to a
return of 15.8% for its Lipper peer group. During the period, the Fund declared
dividends from net investment income of 33.4 cents per share. The Fund also
declared a capital gains distribution of 51.2 cents per share.
Over the past year, the key driver of the Fund's performance was the
telecommunication sector, the best performing sector for the Fund. We began
steadily increasing the portfolio's weighting in telecommunication stocks late
in 1998, and telecommunications has since overtaken electric utilities as the
largest sector of the Fund. When compared with the electric and natural gas
industries, the telecommunication industry displayed superior growth and total
return characteristics in 1999. Analysts expect this trend to continue as
telecommunications becomes further deregulated and new business opportunities
arise. Perhaps the most important of these new developments is the boom in
telecommunication traffic generated by the Internet explosion. Another key
development is the entry of the local telephone companies into the long distance
market in 2000.
Although electric utilities stocks struggled in 1999, they continue to be an
important part of the Fund's portfolio. The industry had been largely ignored by
investors who have been drawn to the fortunes being made in the high-flying
Internet and other high-tech industries. Ironically, this has occurred at a time
when many of the regulatory clouds that had been hanging over electric utilities
have dissipated. An unprecedented amount of consolidation occurred as companies
sought to grow geographically. Electric companies have also been active in
buying natural gas utilities. It remains to be seen how well these former
monopolies will cope in a competitive market place.
Lastly, shares of gas utilities have fluctuated largely in line with commodities
prices. Depressed early in the year, natural gas prices recovered over the
summer and early fall only to pull back as we approached year end. Despite the
warmer-than-usual weather at the end of the year that drove down natural gas
prices, the underlying fundamentals in the gas industry remain solid. Several
gas companies benefited from industry consolidation, and we expect more mergers
and acquisitions in the electric and gas industries as more states pass
deregulation legislation.
73
<PAGE>
PORTFOLIO MANAGER'S LETTER (continued)
FIRST INVESTORS LIFE UTILITIES INCOME FUND
Thank you for placing your trust in First Investors. As always, we appreciate
the opportunity to serve your investment needs.
Sincerely,
/s/ Matthew S. Wright
Matthew S. Wright
Portfolio Manager
January 31, 2000
74
<PAGE>
CUMULATIVE PERFORMANCE INFORMATION
FIRST INVESTORS LIFE UTILITIES INCOME FUND
Comparison of change in value of $10,000 investment in the First Investors Life
Utilities Income Fund, the Standard & Poor's 500 Index and the Standard & Poor's
Utilities Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999 LIFE UTILITIES S&P S&P
INCOME FUND 500 INDEX UTILITIES INDEX
<S> <C> <C> <C>
Nov-93 $10,000 $10,000 $10,000
Dec-93 9,940 10,091 10,025
Dec-94 9,220 10,224 9,205
Dec-95 12,010 14,066 13,087
Dec-96 13,160 17,295 13,490
Dec-97 16,460 23,066 16,831
Dec-98 18,530 29,603 19,319
Dec-99 21,756 35,831 17,602
Average Annual Total Return*
One Year 17.41%
Five Years 18.73%
Since Inception (11/15/93) 13.52%
</TABLE>
* THE GRAPH COMPARES A $10,000 INVESTMENT IN THE FIRST INVESTORS LIFE UTILITIES
INCOME FUND BEGINNING 11/15/93 (INCEPTION DATE) WITH THEORETICAL INVESTMENTS
IN THE STANDARD & POOR'S 500 INDEX AND THE STANDARD & POOR'S UTILITIES INDEX.
THE STANDARD & POOR'S 500 INDEX IS AN UNMANAGED CAPITALIZATION-WEIGHTED INDEX
OF 500 STOCKS DESIGNED TO MEASURE PERFORMANCE OF THE BROAD DOMESTIC ECONOMY
THROUGH CHANGES IN THE AGGREGATE MARKET VALUE OF SUCH STOCKS, WHICH REPRESENT
ALL MAJOR INDUSTRIES. THE STANDARD & POOR'S UTILITIES INDEX IS A
CAPITALIZATION-WEIGHTED INDEX OF 37 STOCKS DESIGNED TO MEASURE THE PERFORMANCE
OF THE UTILITY SECTOR OF THE STANDARD & POOR'S 500 INDEX. IT IS NOT POSSIBLE
TO INVEST DIRECTLY IN THESE INDICES. IN ADDITION, THE INDICES DO NOT TAKE INTO
ACCOUNT FEES AND EXPENSES THAT AN INVESTOR WOULD INCUR IN PURCHASING
SECURITIES IN THE INDICES. FOR PURPOSES OF THE GRAPH AND THE ACCOMPANYING
TABLE IT IS ASSUMED THAT ALL DIVIDENDS AND DISTRIBUTIONS WERE REINVESTED.
THE AVERAGE ANNUAL TOTAL RETURN FIGURES ARE FOR THE PERIOD ENDED 12/31/99.
DURING THE PERIODS SHOWN, SOME OR ALL OF THE EXPENSES OF THE FUND WERE WAIVED
OR ASSUMED. IF SUCH EXPENSES HAD BEEN PAID BY THE FUND, THE AVERAGE ANNUAL
TOTAL RETURN FOR ONE YEAR, FIVE YEARS AND SINCE INCEPTION WOULD HAVE BEEN
17.26%, 18.52% AND 13.34%, RESPECTIVELY.
THE RETURNS SHOWN DO NOT REFLECT ANY SALES CHARGES, SINCE THE FUND SELLS ITS
SHARES SOLELY TO VARIABLE ANNUITY AND/OR VARIABLE LIFE INSURANCE SUBACCOUNTS
AT NET ASSET VALUE. THE RETURNS DO NOT REFLECT THE FEES AND CHARGES THAT AN
INDIVIDUAL WOULD PAY IN CONNECTION WITH AN INVESTMENT IN A VARIABLE ANNUITY OR
LIFE CONTRACT OR POLICY. RESULTS REPRESENT PAST PERFORMANCE AND DO NOT
INDICATE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THE ORIGINAL COST. STANDARD & POOR'S 500 INDEX AND
STANDARD & POOR'S UTILITIES INDEX FIGURES FROM STANDARD & POOR'S AND ALL OTHER
FIGURES FROM FIRST INVESTORS MANAGEMENT COMPANY, INC.
75
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS LIFE UTILITIES INCOME FUND
December 31, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
COMMON STOCKS--93.9%
COMMUNICATION SERVICES--46.9%
12,700 ALLTEL Corporation $ 1,050,131 $ 149
35,500 * AT&T Canada, Inc. - Class "B" 1,428,875 203
16,600 AT&T Corporation 842,450 119
14,500 BCE, Inc. 1,307,719 185
30,800 Bell Atlantic Corporation 1,896,125 269
29,200 BellSouth Corporation 1,366,925 194
53,091 * Broadwing, Inc. 1,957,731 278
7,375 CenturyTel, Inc. 349,391 50
43,355 * Global Crossing, Ltd. 2,167,750 307
6,400 GTE Corporation 451,600 64
52,300 * ICG Communications, Inc. 980,625 139
37,700 * Intermedia Communications, Inc. 1,463,231 208
39,530 * MCI WorldCom, Inc. 2,097,534 298
26,300 * McLeodUSA, Inc. - Class "A" 1,548,412 220
23,642 * Metromedia Fiber Network, Inc. 1,133,338 161
29,900 * Primus Telecommunications Group, Inc. 1,143,675 162
39,822 * Qwest Communications International, Inc. 1,712,346 243
16,332 Royal PTT Nederland NV 1,569,913 223
40,100 SBC Communications, Inc. 1,954,875 277
22,400 Sprint Corporation 1,507,800 214
13,600 Telephone and Data Systems, Inc. 1,713,600 243
20,800 US West, Inc. 1,497,600 212
20,624 * Viatel, Inc. 1,105,962 157
11,200 * WinStar Communications, Inc. 838,600 119
- --------------------------------------------------------------------------------------
33,086,208 4,694
- --------------------------------------------------------------------------------------
FINANCIAL--.9%
20,100 Health Care REIT, Inc. 304,012 43
24,800 Nationwide Health Properties, Inc. 341,000 48
- --------------------------------------------------------------------------------------
645,012 91
- --------------------------------------------------------------------------------------
UTILITIES--46.1%
23,200 AGL Resources, Inc. 394,400 56
47,300 Avista Corporation 730,194 104
35,500 Carolina Power & Light Company 1,080,531 153
25,300 Cascade Natural Gas Corporation 407,962 58
27,600 Coastal Corporation 978,075 139
8,700 Columbia Energy Group 550,275 78
- --------------------------------------------------------------------------------------
</TABLE>
76
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
UTILITIES (continued)
49,200 Conectiv, Inc. $ 827,175 $ 117
8,800 Consolidated Edison, Inc. 303,600 43
31,050 DQE, Inc. 1,075,106 152
21,500 Duke Energy Corporation 1,077,687 153
41,100 Dynegy, Inc. 999,244 142
2,300 Eastern Enterprises 132,106 19
16,800 El Paso Energy Corporation 652,050 92
43,100 Enron Corporation 1,912,562 271
42,300 Illinova Corporation 1,469,925 209
37,800 Kansas City Power & Light Company 833,963 118
21,800 MDU Resources Group, Inc. 436,000 62
19,600 Midcoast Energy Resources, Inc. 328,300 47
37,800 Montana Power Company 1,363,163 193
10,400 National Fuel Gas Company 483,600 69
28,800 New Century Energies, Inc. 874,800 124
10,500 New Jersey Resources Corporation 410,156 58
74,200 * Niagara Mohawk Holdings, Inc. 1,034,163 147
12,000 NICOR, Inc. 390,000 55
21,200 Northeast Utilities 435,925 62
17,359 NSTAR 703,040 100
51,300 OGE Energy Corporation 974,700 138
15,000 Peoples Energy Corporation 502,500 71
27,500 Pinnacle West Capital Corporation 840,469 119
49,000 Potomac Electric Power Company 1,123,938 159
7,800 Providence Energy Corporation 289,575 41
45,300 Public Service Company of New Mexico 736,125 104
14,400 RGS Energy Group, Inc. 296,100 42
46,600 SCANA Corporation 1,252,375 178
18,618 ScottishPower PLC (ADR) 521,304 74
29,500 Sempra Energy 512,563 73
59,024 Sierra Pacific Resources 1,021,853 145
25,900 Texas Utilities Company 921,069 131
44,400 UtiliCorp United, Inc. 863,025 122
16,900 Washington Gas Light Company 464,750 66
29,800 Western Resources, Inc. 506,600 72
57,100 Williams Companies, Inc. 1,745,119 248
- --------------------------------------------------------------------------------------
32,456,067 4,604
- --------------------------------------------------------------------------------------
TOTAL VALUE OF COMMON STOCKS (cost $51,076,893) 66,187,287 9,389
- --------------------------------------------------------------------------------------
</TABLE>
77
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
FIRST INVESTORS LIFE UTILITIES INCOME FUND
December 31, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
SHARES INVESTED
OR FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
CONVERTIBLE PREFERRED STOCKS--1.3%
UTILITIES
61,400 Avista Corporation, $1.24, 11/1/2001 (cost
$1,166,952) $ 936,350 $ 133
- --------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--4.2%
$ 750M Eastman Kodak Co., 4.90%, 1/18/00 748,264 106
2,200M General Mills, Inc., 6.65%, 1/4/00 2,198,780 312
- --------------------------------------------------------------------------------------
TOTAL VALUE OF SHORT-TERM CORPORATE NOTES (cost $2,947,044) 2,947,044 418
- --------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL VALUE OF INVESTMENTS (cost $55,190,889) 99.4% 70,070,681 9,940
OTHER ASSETS, LESS LIABILITIES .6 419,445 60
- -------------------------------------------------------------------------------------
NET ASSETS 100.0% $70,490,126 $ 10,000
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
</TABLE>
* Non-income producing
See notes to financial statements
78
<PAGE>
This page intentionally left blank.
79
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
FIRST INVESTORS LIFE SERIES FUND
December 31, 1999
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
CASH
BLUE CHIP MANAGEMENT DISCOVERY
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities:
At identified cost.................... $171,258,899 $ 9,971,866 $113,356,165
============ ============ ============
At value (Note 1A).................... $275,090,321 $ 9,971,866 $147,195,202
Cash.................................... 121,753 1,014 592,941
Receivables:
Interest and dividends................ 140,033 59,160 23,933
Trust shares sold..................... 52,823 49 62,564
------------ ------------ ------------
Total Assets............................ 275,404,930 10,032,089 147,874,640
------------ ------------ ------------
LIABILITIES
Payable for trust shares redeemed....... 103,653 1,036 45,704
Accrued advisory fees................... 167,472 5,151 88,904
Accrued expenses........................ 34,159 8,103 10,080
------------ ------------ ------------
Total Liabilities....................... 305,284 14,290 144,688
------------ ------------ ------------
NET ASSETS.............................. $275,099,646 $ 10,017,799 $147,729,952
============ ============ ============
NET ASSETS CONSIST OF:
Capital paid in......................... $153,527,089 $ 10,017,799 $ 96,602,552
Accumulated net investment income....... 1,045,167 -- --
Accumulated net realized gain (loss) on
investments........................... 16,695,968 -- 17,288,363
Net unrealized appreciation
(depreciation) of investments......... 103,831,422 -- 33,839,037
------------ ------------ ------------
Total................................... $275,099,646 $ 10,017,799 $147,729,952
============ ============ ============
SHARES OF BENEFICIAL INTEREST
OUTSTANDING (Note 2).................. 8,559,724 10,017,799 4,350,287
============ ============ ============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE (Net assets divided by
shares outstanding)................... $ 32.14 $ 1.00 $ 33.96
============ ============ ============
</TABLE>
See notes to financial statements
80
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
FOCUSED
EQUITY GOVERNMENT GROWTH HIGH YIELD
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities:
At identified cost................... $ 1,332,629 $ 10,967,046 $164,251,592 $ 69,948,798
============ ============ ============ ============
At value (Note 1A)................... $ 1,424,047 $ 10,624,821 $262,292,384 $ 66,060,129
Cash................................... 517,756 216,715 65,564 221,276
Receivables:
Interest and dividends............... 170 110,754 133,875 1,343,457
Trust shares sold.................... 56,592 151 109,853 4,734
------------ ------------ ------------ ------------
Total Assets........................... 1,998,565 10,952,441 262,601,676 67,629,596
------------ ------------ ------------ ------------
LIABILITIES
Payable for trust shares redeemed...... -- 64,227 91,672 46,231
Accrued advisory fees.................. 871 5,644 159,166 42,822
Accrued expenses....................... 1,063 2,796 16,855 16,750
------------ ------------ ------------ ------------
Total Liabilities...................... 1,934 72,667 267,693 105,803
------------ ------------ ------------ ------------
NET ASSETS............................. $ 1,996,631 $ 10,879,774 $262,333,983 $ 67,523,793
============ ============ ============ ============
NET ASSETS CONSIST OF:
Capital paid in........................ $ 1,934,636 $ 11,146,276 $144,483,499 $ 65,454,983
Accumulated net investment income...... -- 720,893 304,389 6,523,848
Accumulated net realized gain (loss) on
investments.......................... (29,423) (645,170) 19,505,303 (566,369)
Net unrealized appreciation
(depreciation) of investments........ 91,418 (342,225) 98,040,792 (3,888,669)
------------ ------------ ------------ ------------
Total.................................. $ 1,996,631 $ 10,879,774 $262,333,983 $ 67,523,793
============ ============ ============ ============
SHARES OF BENEFICIAL INTEREST
OUTSTANDING (Note 2)................. 194,736 1,096,733 6,091,935 6,035,413
============ ============ ============ ============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE (Net
assets divided by shares
outstanding)......................... $ 10.25 $ 9.92 $ 43.06 $ 11.19
============ ============ ============ ============
</TABLE>
See notes to financial statements
81
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (continued)
FIRST INVESTORS LIFE SERIES FUND
December 31, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
INTERNATIONAL INVESTMENT
SECURITIES GRADE
- --------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments in securities:
At identified cost................... $ 87,576,985 $ 21,436,982
============ ============
At value (Note 1A)................... $126,523,723 $ 20,497,675
Cash................................... 10,207 111,922
Receivables:
Investment securities sold........... 82,725 --
Interest and dividends............... 324,014 353,981
Trust shares sold.................... 52,434 567
Forward currency contracts
(Note 6)........................... 166 --
------------ ------------
Total Assets........................... 126,993,269 20,964,145
------------ ------------
LIABILITIES
Payables:
Trust shares redeemed................ 14,143 55,211
Variation margin (Note 6)............ 2,759 --
Accrued advisory fees.................. 77,060 10,820
Accrued expenses....................... 33,114 2,703
------------ ------------
Total Liabilities...................... 127,076 68,734
------------ ------------
NET ASSETS............................. $126,866,193 $ 20,895,411
============ ============
NET ASSETS CONSIST OF:
Capital paid in........................ $ 75,902,354 $ 20,589,200
Accumulated net investment income...... 721,874 1,316,544
Accumulated net realized gain (loss) on
investments, futures contracts and
foreign currency..................... 11,107,441 (71,026)
Net unrealized appreciation
(depreciation) of investments,
futures contracts and foreign
currency transactions................ 39,134,524 (939,307)
------------ ------------
Total.................................. $126,866,193 $ 20,895,411
============ ============
SHARES OF BENEFICIAL INTEREST
OUTSTANDING (Note 2)................. 5,152,632 1,904,479
============ ============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE (Net
assets divided by shares
outstanding)......................... $ 24.62 $ 10.97
============ ============
</TABLE>
See notes to financial statements
82
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
TARGET TARGET TARGET UTILITIES
MATURITY 2007 MATURITY 2010 MATURITY 2015 INCOME
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities:
At identified cost................... $ 25,680,840 $ 8,960,712 $ 651,368 $ 55,190,889
============ ============ ============ ============
At value (Note 1A)................... $ 25,117,196 $ 8,560,809 $ 618,981 $ 70,070,681
Cash................................... 124,698 39,953 203,212 305,940
Receivables:
Investment securities sold........... -- -- -- --
Interest and dividends............... -- -- -- 128,515
Trust shares sold.................... 4,508 6,088 50,000 83,160
Forward currency contracts
(Note 6)........................... -- -- -- --
------------ ------------ ------------ ------------
Total Assets........................... 25,246,402 8,606,850 872,193 70,588,296
------------ ------------ ------------ ------------
LIABILITIES
Payables:
Trust shares redeemed................ 5,569 295 -- 53,138
Variation margin (Note 6)............ -- -- -- --
Accrued advisory fees.................. 12,968 4,478 346 34,864
Accrued expenses....................... 6,975 1,447 681 10,168
------------ ------------ ------------ ------------
Total Liabilities...................... 25,512 6,220 1,027 98,170
------------ ------------ ------------ ------------
NET ASSETS............................. $ 25,220,890 $ 8,600,630 $ 871,166 $ 70,490,126
============ ============ ============ ============
NET ASSETS CONSIST OF:
Capital paid in........................ $ 24,520,199 $ 8,595,201 $ 899,823 $ 50,882,263
Accumulated net investment income...... 1,411,911 494,066 3,730 1,241,843
Accumulated net realized gain (loss) on
investments, futures contracts and
foreign currency..................... (147,576) (88,734) -- 3,486,228
Net unrealized appreciation
(depreciation) of investments,
futures contracts and foreign
currency transactions................ (563,644) (399,903) (32,387) 14,879,792
------------ ------------ ------------ ------------
Total.................................. $ 25,220,890 $ 8,600,630 $ 871,166 $ 70,490,126
============ ============ ============ ============
SHARES OF BENEFICIAL INTEREST
OUTSTANDING (Note 2)................. 2,112,405 725,785 91,600 4,015,775
============ ============ ============ ============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE (Net
assets divided by shares
outstanding)......................... $ 11.94 $ 11.85 $ 9.51 $ 17.55
============ ============ ============ ============
</TABLE>
See notes to financial statements
83
<PAGE>
STATEMENT OF OPERATIONS
FIRST INVESTORS LIFE SERIES FUND
Year Ended December 31, 1999
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
CASH
BLUE CHIP MANAGEMENT DISCOVERY
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest.............................. $ 622,250 $ 429,738 $ 437,704
Dividends............................. 2,268,057 -- 254,740
------------ ------------ ------------
Total Income............................ 2,890,307 429,738 692,444
------------ ------------ ------------
Expenses (Notes 1 and 4):
Advisory fees......................... 1,730,039 60,458 885,388
Professional fees..................... 30,207 4,999 23,752
Custodian fees and expenses........... 32,863 6,221 26,612
Reports and notices to shareholders... 24,001 605 6,668
Other expenses........................ 36,655 2,206 31,344
------------ ------------ ------------
Total expenses.......................... 1,853,765 74,489 973,764
Less: Expenses waived or assumed........ -- (16,895) --
Custodian fees paid indirectly..... (15,790) (941) (17,432)
------------ ------------ ------------
Net expenses............................ 1,837,975 56,653 956,332
------------ ------------ ------------
Net investment income (loss)............ 1,052,332 373,085 (263,888)
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 3):
Net realized gain (loss) on
investments........................... 16,725,036 -- 17,778,995
Net unrealized appreciation
(depreciation) of investments......... 36,956,916 -- 14,572,652
------------ ------------ ------------
Net gain (loss) on investments.......... 53,681,952 -- 32,351,647
------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $ 54,734,284 $ 373,085 $ 32,087,759
============ ============ ============
</TABLE>
* From November 8, 1999 (commencement of operations) to December 31, 1999.
(a) See Note 1H.
See notes to financial statements
84
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
FOCUSED
EQUITY* GOVERNMENT GROWTH HIGH YIELD
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest............................. $ -- $ 752,918 $ 319,704 $ 6,817,425
Dividends............................ 257 -- 1,727,436 247,873(a)
------------ ------------ ------------ ------------
Total Income........................... 257 752,918 2,047,140 7,065,298
------------ ------------ ------------ ------------
Expenses (Notes 1 and 4):
Advisory fees........................ 999 82,579 1,619,176 498,777
Professional fees.................... 250 7,196 27,913 13,714
Custodian fees and expenses.......... 687 4,699 35,497 11,433
Reports and notices to
shareholders....................... -- 1,321 16,623 5,910
Other expenses....................... 814 4,128 37,440 15,957
------------ ------------ ------------ ------------
Total expenses......................... 2,750 99,923 1,736,649 545,791
Less: Expenses waived or assumed....... -- (16,498) -- --
Custodian fees paid indirectly.... (638) (3,406) (4,036) (6,971)
------------ ------------ ------------ ------------
Net expenses........................... 2,112 80,019 1,732,613 538,820
------------ ------------ ------------ ------------
Net investment income (loss)........... (1,855) 672,899 314,527 6,526,478
------------ ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 3):
Net realized gain (loss) on
investments.......................... (29,423) (104,877) 19,501,310 (566,369)
Net unrealized appreciation
(depreciation) of investments........ 91,418 (447,008) 33,554,328 (2,750,171)
------------ ------------ ------------ ------------
Net gain (loss) on investments......... 61,995 (551,885) 53,055,638 (3,316,540)
------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............ $ 60,140 $ 121,014 $ 53,370,165 $ 3,209,938
============ ============ ============ ============
</TABLE>
* From November 8, 1999 (commencement of operations) to December 31, 1999.
(a) See Note 1H.
See notes to financial statements
85
<PAGE>
STATEMENT OF OPERATIONS (continued)
FIRST INVESTORS LIFE SERIES FUND
Year Ended December 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
INTERNATIONAL INVESTMENT
SECURITIES GRADE
- ------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Income:
Interest............................. $ 363,140 $ 1,461,648
Dividends............................ 1,433,424(a) --
------------ ------------
Total Income........................... 1,796,564 1,461,648
------------ ------------
Expenses (Notes 1 and 4):
Advisory fees........................ 775,668 161,188
Professional fees.................... 21,207 6,367
Custodian fees and expenses.......... 178,709 4,907
Reports and notices to
shareholders....................... 9,220 1,515
Other expenses....................... 23,602 5,210
------------ ------------
Total expenses......................... 1,008,406 179,187
Less: Expenses waived or assumed....... -- (32,231)
Custodian fees paid indirectly.... -- (3,715)
------------ ------------
Net expenses........................... 1,008,406 143,241
------------ ------------
Net investment income.................. 788,158 1,318,407
------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, FUTURES CONTRACTS AND
FOREIGN CURRENCY TRANSACTIONS (Notes
3 and 6):
Net realized gain (loss) on
investments, futures contracts and
foreign currency transactions........ 11,046,404 (71,026)
Net unrealized appreciation
(depreciation) of investments,
futures contracts and foreign
currency transactions................ 17,977,373 (1,782,681)
------------ ------------
Net gain (loss) on investments, futures
contracts and foreign currency
transactions......................... 29,023,777 (1,853,707)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............ $ 29,811,935 $ (535,300)
============ ============
</TABLE>
* From November 8, 1999 (commencement of operations) to December 31, 1999.
(a) Net of $101,819 foreign taxes withheld.
See notes to financial statements
86
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
TARGET TARGET TARGET UTILITIES
MATURITY 2007 MATURITY 2010 MATURITY 2015* INCOME
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest............................. $ 1,586,576 $ 557,180 $ 4,944 $ 111,979
Dividends............................ -- -- -- 1,520,445
------------ ------------ ------------ ------------
Total Income........................... 1,586,576 557,180 4,944 1,632,424
------------ ------------ ------------ ------------
Expenses (Notes 1 and 4):
Advisory fees........................ 193,782 67,652 660 442,935
Professional fees.................... 11,933 5,445 322 12,075
Custodian fees and expenses.......... 3,931 1,684 102 12,702
Reports and notices to
shareholders....................... 2,507 588 -- 3,414
Other expenses....................... 4,095 2,314 363 1,315
------------ ------------ ------------ ------------
Total expenses......................... 216,248 77,683 1,447 472,441
Less: Expenses waived or assumed....... (38,707) (13,508) (131) (88,601)
Custodian fees paid indirectly.... (3,036) (1,684) (102) (12,702)
------------ ------------ ------------ ------------
Net expenses........................... 174,505 62,491 1,214 371,138
------------ ------------ ------------ ------------
Net investment income.................. 1,412,071 494,689 3,730 1,261,286
------------ ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, FUTURES CONTRACTS AND
FOREIGN CURRENCY TRANSACTIONS (Notes
3 and 6):
Net realized gain (loss) on
investments, futures contracts and
foreign currency transactions........ (37,844) (88,734) -- 3,549,763
Net unrealized appreciation
(depreciation) of investments,
futures contracts and foreign
currency transactions................ (3,928,595) (1,517,508) (32,387) 5,102,784
------------ ------------ ------------ ------------
Net gain (loss) on investments, futures
contracts and foreign currency
transactions......................... (3,966,439) (1,606,242) (32,387) 8,652,547
------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............ $ (2,554,368) $ (1,111,553) $ (28,657) $ 9,913,833
============ ============ ============ ============
</TABLE>
* From November 8, 1999 (commencement of operations) to December 31, 1999.
(a) Net of $101,819 foreign taxes withheld.
See notes to financial statements
87
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FIRST INVESTORS LIFE SERIES FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
BLUE CHIP CASH MANAGEMENT
-------------------------- --------------------------
YEAR ENDED DECEMBER 31 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income (loss).......... $ 1,052,332 $ 1,399,170 $ 373,085 $ 252,286
Net realized gain (loss) on
investments......................... 16,725,036 3,330,401 -- --
Net unrealized appreciation of
investments......................... 36,956,916 25,976,750 -- --
------------ ------------ ------------ ------------
Net increase in net assets resulting
from operations................... 54,734,284 30,706,321 373,085 252,286
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income................. (1,406,535) (1,263,751) (373,085) (252,286)
Net realized gains.................... (3,358,300) (9,930,417) -- --
------------ ------------ ------------ ------------
Total distributions................. (4,764,835) (11,194,168) (373,085) (252,286)
------------ ------------ ------------ ------------
TRUST SHARE TRANSACTIONS*
Proceeds from shares sold............. 23,483,446 25,456,684 6,920,626 4,428,716
Reinvestment of distributions......... 4,764,835 11,194,168 373,085 252,286
Cost of shares redeemed............... (8,370,104) (5,036,856) (4,192,303) (2,524,501)
------------ ------------ ------------ ------------
Net increase from trust share
transactions........................ 19,878,177 31,613,996 3,101,408 2,156,501
------------ ------------ ------------ ------------
Net increase in net assets.......... 69,847,626 51,126,149 3,101,408 2,156,501
NET ASSETS
Beginning of period................... 205,252,020 154,125,871 6,916,391 4,759,890
------------ ------------ ------------ ------------
End of period+........................ $275,099,646 $205,252,020 $ 10,017,799 $ 6,916,391
============ ============ ============ ============
+Includes undistributed net investment
income of............................. $ 1,045,167 $ 1,399,370 -- --
============ ============ ============ ============
*TRUST SHARES ISSUED AND REDEEMED
Sold.................................. 851,225 1,058,051 6,920,626 4,428,716
Issued for distributions reinvested... 186,272 477,160 373,085 252,286
Redeemed.............................. (297,283) (216,433) (4,192,303) (2,524,501)
------------ ------------ ------------ ------------
Net increase in trust shares
outstanding......................... 740,214 1,318,778 3,101,408 2,156,501
============ ============ ============ ============
</TABLE>
** From November 8, 1999 (commencement of operations) to December 31, 1999.
See notes to financial statements
88
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
FOCUSED
DISCOVERY EQUITY
-------------------------- ------------
1999 1998 1999**
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income (loss)......... $ (263,888) $ 374,325 $ (1,855)
Net realized gain (loss) on
investments........................ 17,778,995 220,000 (29,423)
Net unrealized appreciation of
investments........................ 14,572,652 2,686,924 91,418
------------ ------------ ------------
Net increase in net assets
resulting from operations........ 32,087,759 3,281,249 60,140
------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income................ (377,623) (282,385) --
Net realized gains................... (437,699) (6,711,235) --
------------ ------------ ------------
Total distributions................ (815,322) (6,993,620) --
------------ ------------ ------------
TRUST SHARE TRANSACTIONS*
Proceeds from shares sold............ 9,277,546 14,683,013 1,936,584
Reinvestment of distributions........ 815,322 6,993,620 --
Cost of shares redeemed.............. (7,463,280) (3,666,264) (93)
------------ ------------ ------------
Net increase from trust share
transactions....................... 2,629,588 18,010,369 1,936,491
------------ ------------ ------------
Net increase in net assets......... 33,902,025 14,297,998 1,996,631
NET ASSETS
Beginning of period.................. 113,827,927 99,529,929 --
------------ ------------ ------------
End of period+....................... $147,729,952 $113,827,927 $ 1,996,631
============ ============ ============
+Includes undistributed net investment
income of............................ -- $ 371,841 --
============ ============ ============
*TRUST SHARES ISSUED AND REDEEMED
Sold................................. 337,310 565,739 194,745
Issued for distributions
reinvested......................... 32,810 257,308 --
Redeemed............................. (276,716) (149,789) (9)
------------ ------------ ------------
Net increase in trust shares
outstanding........................ 93,404 673,258 194,736
============ ============ ============
</TABLE>
** From November 8, 1999 (commencement of operations) to December 31, 1999.
See notes to financial statements
89
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (continued)
FIRST INVESTORS LIFE SERIES FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
GOVERNMENT
------------------------
YEAR ENDED DECEMBER 31 1999 1998
- ------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income................. $ 672,899 $ 659,776
Net realized gain (loss) on
investments, futures contracts and
foreign currency transactions....... (104,877) 100,859
Net unrealized appreciation
(depreciation) of investments,
futures contracts and currency
transactions........................ (447,008) (39,867)
----------- -----------
Net increase in net assets resulting
from operations................... 121,014 720,768
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income................. (630,932) (591,713)
Net realized gains.................... -- --
----------- -----------
Total distributions................. (630,932) (591,713)
----------- -----------
TRUST SHARE TRANSACTIONS*
Proceeds from shares sold............. 1,353,106 2,561,318
Reinvestment of distributions......... 630,932 591,713
Cost of shares redeemed............... (1,585,411) (1,410,754)
----------- -----------
Net increase from trust share
transactions........................ 398,627 1,742,277
----------- -----------
Net increase (decrease) in net
assets............................ (111,291) 1,871,332
NET ASSETS
Beginning of year..................... 10,991,065 9,119,733
----------- -----------
End of year+.......................... $10,879,774 $10,991,065
=========== ===========
+Includes undistributed net investment
income of............................. $ 720,893 $ 630,758
=========== ===========
*TRUST SHARES ISSUED AND REDEEMED
Sold.................................. 135,499 251,092
Issued for distributions reinvested... 64,184 60,564
Redeemed.............................. (158,848) (138,579)
----------- -----------
Net increase in trust shares
outstanding......................... 40,835 173,077
=========== ===========
</TABLE>
See notes to financial statements
90
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL
GROWTH HIGH YIELD SECURITIES
-------------------------- ------------------------ -------------------------
1999 1998 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income................ $ 314,527 $ 518,164 $ 6,526,478 $ 5,672,755 $ 788,158 $ 627,757
Net realized gain (loss) on
investments, futures contracts and
foreign currency transactions...... 19,501,310 8,688,575 (566,369) 611,559 11,046,404 111,518
Net unrealized appreciation
(depreciation) of investments,
futures contracts and currency
transactions....................... 33,554,328 28,691,762 (2,750,171) (4,441,350) 17,977,373 12,766,600
------------ ------------ ----------- ----------- ------------ -----------
Net increase in net assets
resulting from operations......... 53,370,165 37,898,501 3,209,938 1,842,964 29,811,935 13,505,875
------------ ------------ ----------- ----------- ------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income................ (525,165) (654,070) (5,672,750) (4,824,396) (586,561) (705,531)
Net realized gains................... (8,683,787) (4,932,402) (87,371) -- (151,528) (3,773,054)
------------ ------------ ----------- ----------- ------------ -----------
Total distributions................ (9,208,952) (5,586,472) (5,760,121) (4,824,396) (738,089) (4,478,585)
------------ ------------ ----------- ----------- ------------ -----------
TRUST SHARE TRANSACTIONS*
Proceeds from shares sold............ 27,557,752 24,961,026 4,901,483 7,629,469 9,519,344 9,229,799
Reinvestment of distributions........ 9,208,952 5,586,472 5,760,121 4,824,396 738,089 4,478,585
Cost of shares redeemed.............. (5,497,675) (3,540,336) (5,933,449) (3,745,407) (4,644,977) (5,018,471)
------------ ------------ ----------- ----------- ------------ -----------
Net increase from trust share
transactions....................... 31,269,029 27,007,162 4,728,155 8,708,458 5,612,456 8,689,913
------------ ------------ ----------- ----------- ------------ -----------
Net increase (decrease) in net
assets............................ 75,430,242 59,319,191 2,177,972 5,727,026 34,686,302 17,717,203
NET ASSETS
Beginning of year.................... 186,903,741 127,584,550 65,345,821 59,618,795 92,179,891 74,462,688
------------ ------------ ----------- ----------- ------------ -----------
End of year+......................... $262,333,983 $186,903,741 $67,523,793 $65,345,821 $126,866,193 $92,179,891
============ ============ =========== =========== ============ ===========
+Includes undistributed net investment
income of........................... $ 304,389 $ 515,027 $ 6,523,848 $ 5,670,120 $ 721,874 $ 587,940
============ ============ =========== =========== ============ ===========
*TRUST SHARES ISSUED AND REDEEMED
Sold................................. 743,411 794,414 444,510 645,767 458,672 512,858
Issued for distributions
reinvested......................... 269,899 182,445 539,843 414,467 39,576 256,212
Redeemed............................. (145,387) (116,212) (533,816) (320,790) (227,256) (289,842)
------------ ------------ ----------- ----------- ------------ -----------
Net increase in trust shares
outstanding........................ 867,923 860,647 450,537 739,444 270,992 479,228
============ ============ =========== =========== ============ ===========
</TABLE>
See notes to financial statements
91
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (continued)
FIRST INVESTORS LIFE SERIES FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
TARGET
INVESTMENT GRADE MATURITY 2007
------------------------ -------------------------
YEAR ENDED DECEMBER 31 1999 1998 1999 1998
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income................ $ 1,318,407 $ 1,146,513 $ 1,412,071 $ 1,196,662
Net realized gain (loss) on
investments........................ (71,026) 126,011 (37,844) 6,102
Net unrealized appreciation
(depreciation) of investments...... (1,782,681) 390,278 (3,928,595) 2,018,771
----------- ----------- ----------- ------------
Net increase (decrease) in net
assets resulting from
operations....................... (535,300) 1,662,802 (2,554,368) 3,221,535
----------- ----------- ----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income................ (1,148,146) (1,073,498) (1,196,679) (996,667)
Net realized gains................... (122,095) -- -- --
----------- ----------- ----------- ------------
Total distributions................ (1,270,241) (1,073,498) (1,196,679) (996,667)
----------- ----------- ----------- ------------
TRUST SHARE TRANSACTIONS*
Proceeds from shares sold............ 2,451,424 4,619,860 3,410,248 5,123,567
Reinvestment of distributions........ 1,270,241 1,073,498 1,196,679 996,667
Cost of shares redeemed.............. (2,529,317) (1,993,575) (2,107,583) (2,172,225)
----------- ----------- ----------- ------------
Net increase from trust share
transactions....................... 1,192,348 3,699,783 2,499,344 3,948,009
----------- ----------- ----------- ------------
Net increase (decrease) in net
assets........................... (613,193) 4,289,087 (1,251,703) 6,172,877
NET ASSETS
Beginning of period.................. 21,508,604 17,219,517 26,472,593 20,299,716
----------- ----------- ----------- ------------
End of period+....................... $20,895,411 $21,508,604 $25,220,890 $ 26,472,593
=========== =========== =========== ============
+Includes undistributed net investment
income of........................... $ 1,316,544 $ 1,146,283 $ 1,411,911 $ 1,196,519
=========== =========== =========== ============
*TRUST SHARES ISSUED AND REDEEMED
Sold................................. 218,876 396,824 272,882 392,375
Issued for distributions
reinvested......................... 114,954 96,974 96,273 82,165
Redeemed............................. (226,736) (172,079) (170,841) (167,391)
----------- ----------- ----------- ------------
Net increase in trust shares
outstanding........................ 107,094 321,719 198,314 307,149
=========== =========== =========== ============
</TABLE>
** From November 8, 1999 (commencement of operations) to December 31, 1999.
See notes to financial statements
92
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
TARGET
TARGET MATURITY UTILITIES
MATURITY 2010 2015 INCOME
----------------------- ------------ ------------------------
1999 1998 1999** 1999 1998
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income................ $ 494,689 $ 350,859 $ 3,730 $ 1,261,286 $ 1,070,493
Net realized gain (loss) on
investments........................ (88,734) -- -- 3,549,763 1,605,884
Net unrealized appreciation
(depreciation) of investments...... (1,517,508) 611,313 (32,387) 5,102,784 2,566,807
---------- ----------- ------------ ----------- -----------
Net increase (decrease) in net
assets resulting from
operations....................... (1,111,553) 962,172 (28,657) 9,913,833 5,243,184
---------- ----------- ------------ ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income................ (351,025) (209,527) -- (1,089,081) (847,985)
Net realized gains................... -- (3,786) -- (1,669,489) (1,305,515)
---------- ----------- ------------ ----------- -----------
Total distributions................ (351,025) (213,313) -- (2,758,570) (2,153,500)
---------- ----------- ------------ ----------- -----------
TRUST SHARE TRANSACTIONS*
Proceeds from shares sold............ 2,281,849 3,140,304 899,858 12,526,086 12,377,174
Reinvestment of distributions........ 351,025 213,313 -- 2,758,570 2,153,500
Cost of shares redeemed.............. (1,600,065) (280,737) (35) (2,381,542) (1,165,173)
---------- ----------- ------------ ----------- -----------
Net increase from trust share
transactions....................... 1,032,809 3,072,880 899,823 12,903,114 13,365,501
---------- ----------- ------------ ----------- -----------
Net increase (decrease) in net
assets........................... (429,769) 3,821,739 871,166 20,058,377 16,455,185
NET ASSETS
Beginning of period.................. 9,030,399 5,208,660 -- 50,431,749 33,976,564
---------- ----------- ------------ ----------- -----------
End of period+....................... $8,600,630 $ 9,030,399 $ 871,166 $70,490,126 $50,431,749
========== =========== ============ =========== ===========
+Includes undistributed net investment
income of........................... $ 494,066 $ 350,402 $ 3,730 $ 1,241,843 $ 1,069,638
========== =========== ============ =========== ===========
*TRUST SHARES ISSUED AND REDEEMED
Sold................................. 181,022 239,826 91,603 785,742 841,969
Issued for distributions
reinvested......................... 27,925 17,385 -- 192,503 151,335
Redeemed............................. (129,451) (21,133) (3) (147,855) (79,873)
---------- ----------- ------------ ----------- -----------
Net increase in trust shares
outstanding........................ 79,496 236,078 91,600 830,390 913,431
========== =========== ============ =========== ===========
</TABLE>
** From November 8, 1999 (commencement of operations) to December 31, 1999.
See notes to financial statements
93
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FIRST INVESTORS LIFE SERIES FUND
1. SIGNIFICANT ACCOUNTING POLICIES--First Investors Life Series Fund (the "Life
Series Fund"), a Massachusetts business trust, is registered under the
Investment Company Act of 1940, as an open-ended management investment company.
The Life Series Fund operates as a series fund, issuing shares of beneficial
interest in the Blue Chip, Cash Management, Discovery, Focused Equity,
Government, Growth, High Yield, International Securities, Investment Grade,
Target Maturity 2007, Target Maturity 2010, Target Maturity 2015, and Utilities
Income Funds (each a "Fund") and accounts separately for its assets, liabilities
and operations. The objective of each Fund is as follows:
BLUE CHIP FUND seeks high total investment return consistent with the
preservation of capital.
CASH MANAGEMENT FUND seeks to earn a high rate of current income consistent with
the preservation of capital and maintenance of liquidity.
DISCOVERY FUND seeks long-term growth of capital without regard to dividend or
interest income.
FOCUSED EQUITY FUND seeks capital appreciation.
GOVERNMENT FUND seeks to achieve a significant level of current income which is
consistent with security and liquidity of principal.
GROWTH FUND seeks long-term capital appreciation.
HIGH YIELD FUND primarily seeks high current income and secondarily seeks
capital appreciation.
INTERNATIONAL SECURITIES FUND primarily seeks long-term capital growth and
secondarily a reasonable level of current income.
INVESTMENT GRADE FUND seeks to generate a maximum level of income consistent
with investment in investment grade debt securities.
TARGET MATURITY 2007 FUND, TARGET MATURITY 2010 FUND AND TARGET MATURITY 2015
FUND seek a predictable compounded investment return for investors who hold
their Fund shares until the Fund's maturity, consistent with preservation of
capital.
UTILITIES INCOME FUND primarily seeks high current income and secondarily long-
term capital appreciation.
A. Security Valuation--Except as provided below, a security listed or traded on
an exchange or the Nasdaq Stock Market is valued at its last sale price on the
94
<PAGE>
exchange or market where the security is principally traded, and lacking any
sales, the security is valued at the mean between the closing bid and asked
prices. Securities traded in the over-the-counter ("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. Securities may also be priced by a pricing service. The pricing
service uses quotations obtained from investment dealers or brokers, information
with respect to market transactions in comparable securities and other available
information in determining value. 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 and other assets are valued on a consistent
basis at fair value as determined in good faith by or under the supervision of
the Life Series Fund's officers in the manner specifically authorized by the
Board of Trustees of the Life Series Fund. For valuation purposes, where
applicable, quotations of foreign securities in foreign currencies are
translated to U.S. dollar equivalents using the foreign exchange quotation 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. 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.
B. Federal Income Taxes--No provision has been made for federal income taxes on
net income or capital gains since it is the policy of each Fund to continue to
comply with the special provisions of the Internal Revenue Code applicable to
regulated investment companies, and to make sufficient distributions of income
and capital gains (in excess of any available capital loss carryovers), to
relieve each
95
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
FIRST INVESTORS LIFE SERIES FUND
Fund from all, or substantially all, federal income taxes. At December 31, 1999,
capital loss carryovers were as follows:
<TABLE>
<CAPTION>
Year Capital Loss Carryovers Expire
------------------------------------
Fund Total 2002 2003 2004 2007
- ---- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Focused Equity......................... $ 29,423 $ -- $ -- $ -- $29,423
Government............................. 633,029 264,105 228,020 -- 140,904
High Yield............................. 566,369 -- -- -- 566,369
Investment Grade....................... 71,026 -- -- -- 71,026
Target Maturity 2007................... 112,118 -- -- 82,126 29,992
Target Maturity 2010................... 88,734 -- -- -- 88,734
</TABLE>
C. Foreign Currency Translations--The accounting records of International
Securities Fund are maintained in U.S. dollars. Portfolio securities and other
assets and liabilities denominated in foreign currencies are translated into
U.S. dollars at the date of valuation. Purchases and sales of investment
securities, dividend income and certain expenses are translated to U.S. dollars
at the rates of exchange prevailing on the respective dates of such
transactions.
The International Securities Fund does not isolate that portion of gains and
losses on investment which is due to changes in foreign exchange rates from that
which is due to changes in market prices of the investments. Such fluctuations
are included with the net realized and unrealized gains and losses from
investments.
Net realized and unrealized gains and losses on foreign currency transactions
includes gains and losses from the sales of foreign currency and gains and
losses on accrued foreign dividends and related withholding taxes.
D. Distributions to Shareholders--Distributions to Shareholders from net
investment income and net realized capital gains are declared and paid annually
on all Funds, except for the Cash Management Fund which declares dividends from
the total of net investment income (plus or minus all realized short-term gains
and losses on investments) daily and pays monthly. Dividends from net investment
income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign currency
transactions, capital loss carryforwards and deferral of wash sales.
96
<PAGE>
E. Expense Allocation--Expenses directly charged or attributable to a Fund are
paid from the assets of that Fund. General expenses of the Life Series Fund are
allocated among and charged to the assets of each Fund on a fair and equitable
basis, which may be based on the relative assets of each Fund or the nature of
the services performed and relative applicability to each Fund.
F. Repurchase Agreements--Securities pledged as collateral for repurchase
agreements are held by the Fund's custodian until maturity of the repurchase
agreement. The agreements provide that the Fund will receive, as collateral,
securities with a market value which will at all times be at least equal to 100%
of the amount invested by the Fund.
G. Use of Estimates--The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expense during the reporting period. Actual results could differ
from those estimates.
H. Other--Security transactions are accounted for on the date the securities are
purchased or sold. Cost is determined and gains and losses are based, on the
identified cost basis for securities, for both financial statement and federal
income tax purposes. Dividend income is recorded on the ex-dividend date. Shares
of stock received in lieu of cash dividends on certain preferred stock holdings
of the High Yield Fund are recognized as dividend income and recorded at the
market value of the shares received. For the year ended December 31, 1999, the
High Yield Fund recognized $46,994 from these taxable "pay-in-kind"
distributions. Interest income and estimated expenses are accrued daily. For the
year ended December 31, 1999, the Bank of New York, custodian for all the Funds,
except the International Securities Fund, has provided credits in the amount of
$70,453 against custodian charges based on the uninvested cash balances of the
Funds.
2. TRUST SHARES--The Declaration of Trust permits the issuance of an unlimited
number of shares of beneficial interest, of one or more Funds. Shares in the
Funds are acquired through the purchase of variable annuity or variable life
insurance contracts sold by First Investors Life Insurance Company.
97
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
FIRST INVESTORS LIFE SERIES FUND
3. SECURITY TRANSACTIONS--For the year or period ended December 31, 1999,
purchases and sales of securities and long-term U.S. Government obligations,
excluding foreign currencies and short-term securities, were as follows:
<TABLE>
<CAPTION>
Long-Term U.S.
Securities Government Obligations
-------------------------- ----------------------
Cost of Proceeds Cost of Proceeds
Fund Purchases from Sales Purchases from Sales
- ---- ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C>
Blue Chip.............................. $216,326,300 $197,106,100 $ -- $ --
Discovery.............................. 119,656,283 125,947,560 -- --
Focused Equity......................... 1,471,555 109,503 -- --
Government............................. -- -- 7,913,087 7,151,918
Growth................................. 101,374,196 80,209,421 -- --
High Yield............................. 25,626,929 20,507,006 -- --
International Securities............... 118,618,404 116,688,422 -- --
Investment Grade....................... 4,227,791 3,455,115 2,536,133 2,086,017
Target Maturity 2007................... -- -- 1,602,025 488,947
Target Maturity 2010................... -- -- 1,364,994 766,752
Target Maturity 2015................... -- -- 646,425 --
Utilities Income....................... 40,366,568 29,688,021 -- --
</TABLE>
At December 31, 1999, aggregate cost and net unrealized appreciation
(depreciation) of securities for federal income tax purposes were as follows:
<TABLE>
<CAPTION>
Gross Gross Net Unrealized
Aggregate Unrealized Unrealized Appreciation
Fund Cost Appreciation Depreciation (Depreciation)
- ---- ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C>
Blue Chip.............................. $171,280,252 $105,390,152 $ 1,580,083 $ 103,810,069
Cash Management........................ 9,971,866 -- -- --
Discovery.............................. 113,681,441 38,973,916 5,460,155 33,513,761
Focused Equity......................... 1,332,862 104,987 13,802 91,185
Government............................. 10,979,187 -- 354,366 (354,366)
Growth................................. 164,720,475 104,730,325 7,158,416 97,571,909
High Yield............................. 69,948,798 1,771,437 5,660,106 (3,888,669)
International Securities............... 87,609,865 40,553,260 1,639,402 38,913,858
Investment Grade....................... 21,436,982 48,899 988,206 (939,307)
Target Maturity 2007................... 25,645,382 41,976 570,162 (528,186)
Target Maturity 2010................... 8,960,712 18,315 418,218 (399,903)
Target Maturity 2015................... 651,368 -- 32,387 (32,387)
Utilities Income....................... 55,232,580 18,442,483 3,604,382 14,838,101
</TABLE>
98
<PAGE>
4. ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES--Certain officers and
trustees of the Life Series Fund are officers and directors of its investment
adviser, First Investors Management Company, Inc. ("FIMCO") and/or its transfer
agent, Administrative Data Management Corp. Trustees of the Life Series Fund who
are not "interested persons" of the Life Series Fund as defined in the 1940 Act
are remunerated by the Funds. For the year ended December 31, 1999, total
trustees fees accrued by the Funds amounted to $50,675.
The investment Advisory Agreement provides as compensation to FIMCO an annual
fee, payable monthly, at the rate of .75% on the first $250 million of each
Fund's average daily net assets, declining by .03% on each $250 million
thereafter, down to .66% on average daily net assets over $750 million. For the
year ended December 31, 1999, total advisory fees accrued to FIMCO were
$6,519,301 of which $201,764 was waived by the investment adviser. In addition,
$4,807 of expenses were assumed by FIMCO.
Arnhold and S. Bleichroeder, Inc. serves as investment subadviser to the Focused
Equity Fund. Wellington Management Company, LLP serves as investment subadviser
to the Growth Fund and the International Securities Fund. The subadvisers are
paid by FIMCO and not by the Funds.
5. RULE 144A SECURITIES--Under Rule 144A, certain restricted securities are
exempt from the registration requirements of the Securities Act of 1933 and may
only be resold to qualified institutional investors. At December 31, 1999, the
High Yield Fund held eleven 144A securities with an aggregate value of
$4,487,964 representing 6.6% of the Fund's net assets and the Investment Grade
Fund held one 144A security with an value of $272,594 representing 1.3% of the
Fund's net assets. These securities are valued as set forth in Note 1A.
6. FORWARD CURRENCY CONTRACTS AND FUTURES CONTRACTS--A forward currency contract
is an obligation to purchase or sell a specific currency for an agreed-upon
price at a future date. When the International Securities Fund purchases or
sells foreign securities it customarily enters into a forward currency contract
to minimize foreign exchange risk between the trade date and the settlement date
of such transactions. The International Securities Fund could be exposed to risk
if counter-parties to the contracts are unable to meet the terms of their
contracts or if the value of the foreign currency changes unfavorably. The
International Securities Fund had the following forward currency contracts
outstanding at December 31, 1999:
99
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
FIRST INVESTORS LIFE SERIES FUND
<TABLE>
<CAPTION>
Net Unrealized
Gain on Forward
Contracts to Sell Currency
Foreign Currency In Exchange for Settlement Date Contracts
- ----------------------- --------------- --------------- ----------------
<C> <S> <C> <C> <C>
8,467,318 Japanese Yen US $82,891 1/4/00 US $166
=========== ========
</TABLE>
Initial margin deposits required upon entering into futures contracts are
satisfied by the segregation of specific securities or cash, and/or by securing
a standby letter of credit from a major commercial bank, as collateral, for the
account of the broker (the Fund's agent in acquiring the futures position).
During the period the futures contract is open, changes in the value of the
contract are recognized as unrealized gains or losses by "marking to market" on
a daily basis to reflect the market value of the contract at the end of each
day's trading. Variation margin payments are made or received depending upon
whether unrealized gains or losses are incurred. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
proceeds from (or cost of) the closing transaction and the Fund's basis in the
contract. The Fund may purchase or sell stock index future contracts as a hedge
against changes in market conditions. Risk includes the possibility of an
illiquid market and that a change in the value of the contract may not correlate
with changes in the securities being hedged. At December 31, 1999, the market
value of $199,068 of the U.S. Treasury Bills were pledged to cover margin
requirements for futures contracts. Open futures contracts at December 31, 1999
were:
<TABLE>
<CAPTION>
Unrealized
Contracts/Delivery Month/Commitment Appreciation
- ----------------------------------- ------------
<S> <C>
15 CAC 40 Index/March 2000/Buy......... $ 51,765
3 DAX 30 Index/March 2000/Buy.......... 57,788
3 IBEX 35 PLUS/January 2000/Buy........ 9,460
2 MIB 30 Index/March 2000/Buy.......... 31,991
10 TSE 60 Index/March 2000/Buy......... 26,099
2 Topix Index Future/March 2000/Buy.... 24,718
------------
Total Unrealized Appreciation on
Futures Contracts.................... $ 201,821
============
</TABLE>
7. CONCENTRATION OF CREDIT RISK--The High Yield Fund's investment in high-yield
securities, whether rated or unrated, may be considered speculative and subject
to greater market fluctuations and risks of loss of income and principal than
lower-yielding, higher-rated, fixed-income securities. The risk of loss due to
default by the issuer may be significantly greater for the holders of high
yielding securities, because such securities are generally unsecured and are
often subordinated to other creditors of the issuer.
100
<PAGE>
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101
<PAGE>
FINANCIAL HIGHLIGHTS
FIRST INVESTORS LIFE SERIES FUND
The following table sets forth the per share operating performance data for a
trust share outstanding, total return, ratios to average net assets and other
supplemental data for each period indicated.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
P E R S H A R E D A T A
-------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
NET ASSET -------------------------------------- FROM
VALUE NET REALIZED TOTAL --------------------
--------- NET AND UNREALIZED FROM NET NET
BEGINNING INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT REALIZED TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BLUE CHIP
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
1998.......................... 23.71 .17 4.05 4.22 .19 1.49 1.68
1999.......................... 26.25 .12 6.38 6.50 .18 .43 .61
- ---------------------------------------------------------------------------------------------------------------------
CASH MANAGEMENT
1995.......................... $ 1.00 $ .054 $ -- $ .054 $ .054 $ -- $ .054
1996.......................... 1.00 .049 -- .049 .049 -- .049
1997.......................... 1.00 .050 -- .050 .050 -- .050
1998.......................... 1.00 .049 -- .049 .049 -- .049
1999.......................... 1.00 .046 -- .046 .046 -- .046
- ---------------------------------------------------------------------------------------------------------------------
DISCOVERY
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
1998.......................... 27.77 .09 .79 .88 .08 1.83 1.91
1999.......................... 26.74 (.06) 7.47 7.41 .09 .10 .19
- ---------------------------------------------------------------------------------------------------------------------
FOCUSED EQUITY
11/8/99* to 12/31/99.......... $ 10.00 $ (.01) $ .26 $ .25 $ -- $ -- $ --
- ---------------------------------------------------------------------------------------------------------------------
GOVERNMENT
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
1998.......................... 10.33 .66** .08 .74 .66 -- .66
1999.......................... 10.41 .61 (.51) .10 .59 -- .59
- ---------------------------------------------------------------------------------------------------------------------
GROWTH
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
1998.......................... 29.24 .10 7.69 7.79 .15 1.10 1.25
1999.......................... 35.78 .05 8.97 9.02 .10 1.64 1.74
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
102
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
R A T I O S / S U P P L E M E N T A L D A T A
---------------------------------------------------------------------------------------
RATIO TO AVERAGE NET
ASSETS BEFORE
--------- RATIO TO AVERAGE EXPENSES
NET ASSETS+ WAIVED OR ASSUMED
NET ASSET --------------------------- --------------------
VALUE TOTAL NET NET PORTFOLIO
--------- RETURN NET ASSETS INVESTMENT INVESTMENT TURNOVER
END ++ END OF PERIOD EXPENSES INCOME EXPENSES INCOME RATE
OF PERIOD (%) (IN MILLIONS) (%) (%) (%) (%) (%)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BLUE CHIP
1995.......................... $ 16.98 34.00 $ 67 .86 1.91 N/A N/A 26
1996.......................... 19.77 21.52 100 .84 1.39 N/A N/A 45
1997.......................... 23.71 26.72 154 .81 .99 N/A N/A 63
1998.......................... 26.25 18.66 205 .82 .79 N/A N/A 91
1999.......................... 32.14 25.32 275 .81 .45 N/A N/A 91
- ----------------------------------------------------------------------------------------------------------------------------------
CASH MANAGEMENT
1995.......................... $ 1.00 5.51 $ 4 .60 5.36 1.10 4.86 N/A
1996.......................... 1.00 5.00 4 .60 4.89 1.11 4.38 N/A
1997.......................... 1.00 5.08 5 .70 4.97 1.06 4.61 N/A
1998.......................... 1.00 5.02 7 .70 4.89 .99 4.60 N/A
1999.......................... 1.00 4.67 10 .70 4.61 .91 4.40 N/A
- ----------------------------------------------------------------------------------------------------------------------------------
DISCOVERY
1995.......................... $ 23.27 25.23 $ 51 .87 .63 N/A N/A 78
1996.......................... 25.06 12.48 71 .85 .63 N/A N/A 98
1997.......................... 27.77 16.84 100 .82 .34 N/A N/A 85
1998.......................... 26.74 3.05 114 .83 .36 N/A N/A 121
1999.......................... 33.96 27.97 148 .83 (.24) N/A N/A 109
- ----------------------------------------------------------------------------------------------------------------------------------
FOCUSED EQUITY
11/8/99* to 12/31/99.......... $ 10.25 2.50 $ 2 1.59(a) (1.39)(a) N/A N/A 12
- ----------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT
1995.......................... $ 10.52 15.63 $ 10 .40 6.79 .93 6.26 198
1996.......................... 10.19 3.59 9 .60 6.75 .94 6.41 199
1997.......................... 10.33 8.61 9 .60 6.95 .92 6.63 134
1998.......................... 10.41 7.54 11 .70 6.59 .87 6.42 107
1999.......................... 9.92 1.05 11 .76 6.07 .91 5.92 69
- ----------------------------------------------------------------------------------------------------------------------------------
GROWTH
1995.......................... $ 20.47 25.12 $ 51 .88 1.11 N/A N/A 64
1996.......................... 24.56 24.45 79 .85 .92 N/A N/A 49
1997.......................... 29.24 29.28 128 .82 .64 N/A N/A 27
1998.......................... 35.78 27.35 187 .82 .34 N/A N/A 26
1999.......................... 43.06 26.47 262 .81 .14 N/A N/A 38
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
103
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
FIRST INVESTORS LIFE SERIES FUND
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
P E R S H A R E D A T A
-------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
NET ASSET -------------------------------------- FROM
VALUE NET REALIZED TOTAL --------------------
--------- NET AND UNREALIZED FROM NET NET
BEGINNING INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT REALIZED TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
HIGH YIELD
1995..................... $ 10.58 $ 1.00 $ .95 $ 1.95 $ .96 $ -- $ .96
1996..................... 11.57 1.02 .35 1.37 1.01 -- 1.01
1997..................... 11.93 .98 .41 1.39 1.02 -- 1.02
1998..................... 12.30 1.00 (.62) .38 .98 -- .98
1999..................... 11.70 1.09 (.56) .53 1.02 .02 1.04
- ----------------------------------------------------------------------------------------------------------------
INTERNATIONAL SECURITIES
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
1998..................... 16.91 .12 2.87 2.99 .16 .86 1.02
1999..................... 18.88 .15 5.74 5.89 .12 .03 .15
- ----------------------------------------------------------------------------------------------------------------
INVESTMENT GRADE
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
1998..................... 11.67 .68** .33 1.01 .71 -- .71
1999..................... 11.97 .69 (.98) (.29) .70 .01 .71
- ----------------------------------------------------------------------------------------------------------------
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
1998..................... 12.63 .61 1.20 1.81 .61 -- .61
1999..................... 13.83 .66 (1.93) (1.27) .62 -- .62
- ----------------------------------------------------------------------------------------------------------------
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
1998..................... 12.70 .51 1.25 1.76 .48 .01 .49
1999..................... 13.97 .65 (2.26) (1.61) .51 -- .51
- ----------------------------------------------------------------------------------------------------------------
TARGET MATURITY 2015
11/8/99* to 12/31/99..... $ 10.00 $ .04 $ (.53) $ (.49) $ -- $ -- $ --
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
104
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
R A T I O S / S U P P L E M E N T A L D A T A
------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET
--------- RATIO TO AVERAGE ASSETS BEFORE EXPENSES
NET ASSETS+ WAIVED OR ASSUMED
NET ASSET ---------------------- ----------------------
VALUE TOTAL NET NET PORTFOLIO
--------- RETURN NET ASSETS INVESTMENT INVESTMENT TURNOVER
END ++ END OF PERIOD EXPENSES INCOME EXPENSES INCOME RATE
OF PERIOD (%) (IN MILLIONS) (%) (%) (%) (%) (%)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HIGH YIELD
1995..................... $ 11.57 19.82 $ 42 .87 9.86 N/A N/A 57
1996..................... 11.93 12.56 49 .85 9.43 N/A N/A 34
1997..................... 12.30 12.47 60 .83 8.88 N/A N/A 40
1998..................... 11.70 3.15 65 .83 8.93 N/A N/A 42
1999..................... 11.19 4.95 68 .82 9.83 N/A N/A 33
- --------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL SECURITIES
1995..................... $ 15.58 18.70 $ 41 1.02 1.42 N/A N/A 45
1996..................... 17.19 15.23 58 1.12 1.25 N/A N/A 67
1997..................... 16.91 9.09 74 1.13 1.15 N/A N/A 71
1998..................... 18.88 18.18 92 1.15 .75 N/A N/A 109
1999..................... 24.62 31.46 127 .98 .76 N/A N/A 118
- --------------------------------------------------------------------------------------------------------------------------------
INVESTMENT GRADE
1995..................... $ 11.73 19.69 $ 16 .51 6.80 .91 6.40 26
1996..................... 11.36 2.84 16 .60 6.47 .88 6.19 19
1997..................... 11.67 9.81 17 .60 6.54 .87 6.27 41
1998..................... 11.97 9.15 22 .68 5.97 .84 5.81 60
1999..................... 10.97 (2.53) 21 .68 6.12 .83 5.97 27
- --------------------------------------------------------------------------------------------------------------------------------
TARGET MATURITY 2007
4/26/95* to 12/31/95..... $ 12.26 22.60 $ 10 .04(a) 6.25(a) .87(a) 5.42(a) 28
1996..................... 11.71 (2.16) 15 .60 6.05 .82 5.83 13
1997..................... 12.63 13.38 20 .60 5.91 .82 5.69 1
1998..................... 13.83 14.97 26 .67 5.18 .83 5.02 1
1999..................... 11.94 (9.39) 25 .69 5.47 .84 5.32 2
- --------------------------------------------------------------------------------------------------------------------------------
TARGET MATURITY 2010
4/30/96* to 12/31/96..... $ 11.16 11.60 $ 2 .60(a) 6.05(a) .98(a) 5.67(a) 0
1997..................... 12.70 15.86 5 .60 5.88 .87 5.61 13
1998..................... 13.97 14.36 9 .67 4.90 .82 4.75 0
1999..................... 11.85 (11.73) 9 .71 5.48 .86 5.33 9
- --------------------------------------------------------------------------------------------------------------------------------
TARGET MATURITY 2015
11/8/99* to 12/31/99..... $ 9.51 (4.90) $ 1 1.38(a) 4.24(a) 1.64(a) 3.98(a) 0
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
105
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
FIRST INVESTORS LIFE SERIES FUND
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
P E R S H A R E D A T A
-----------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
---------------------------------------
NET REALIZED LESS DISTRIBUTIONS
NET ASSET AND FROM
VALUE UNREALIZED ----------------------
--------- NET GAIN (LOSS) TOTAL FROM NET NET
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT REALIZED TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
UTILITIES INCOME
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
1998........... 14.95 .32 1.46 1.78 .35 .55 .90
1999........... 15.83 .31 2.25 2.56 .33 .51 .84
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(a) Annualized
* Commencement of operations
** Based on average shares outstanding during the year
+Some or all expenses have been waived or assumed by the investment adviser from
commencement of operations through December 31, 1999 (Note 4)
++The effect of fees and charges incurred at the separate account level are not
reflected in
these performance figures
See notes to financial statements
106
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
R A T I O S / S U P P L E M E N T A L D A T A
---------------------------------------------------------------------------------
RATIO TO AVERAGE NET
ASSETS BEFORE
--------- RATIO TO AVERAGE EXPENSES
NET NET ASSETS+ WAIVED OR ASSUMED
NET ASSET ASSETS --------------------- ---------------------
VALUE TOTAL END OF NET NET PORTFOLIO
--------- RETURN PERIOD INVESTMENT INVESTMENT TURNOVER
END ++ (IN EXPENSES INCOME EXPENSES INCOME RATE
OF PERIOD (%) MILLIONS) (%) (%) (%) (%) (%)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
UTILITIES INCOME
1995........... $ 11.74 30.26 $ 15 .41 4.23 .91 3.73 17
1996........... 12.57 9.57 24 .60 3.48 .86 3.22 45
1997........... 14.95 25.07 34 .67 3.12 .85 2.94 64
1998........... 15.83 12.58 50 .73 2.61 .85 2.49 105
1999........... 17.55 17.41 70 .65 2.12 .80 1.97 53
- -------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
107
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Trustees of
First Investors Life Series Fund
We have audited the accompanying statement of assets and liabilities, including
the portfolios of investments, of the thirteen Funds comprising First Investors
Life Series Fund at December 31, 1999, the related statement of operations for
the year or period then ended, and the statement of changes in net assets and
financial highlights for each of the periods indicated thereon. These financial
statements and financial highlights are the responsibility of the Life Series
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1999 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the thirteen Funds comprising First Investors Life Series Fund at
December 31, 1999, and the results of their operations, changes in their net
assets and financial highlights for the periods presented, in conformity with
generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 31, 2000
108
<PAGE>
This page intentionally left blank.
109
<PAGE>
FIRST INVESTORS LIFE SERIES FUND
TRUSTEES
- -------------------------------
JAMES J. COY (Emeritus)
GLENN O. HEAD
KATHRYN S. HEAD
LARRY R. LAVOIE
REX R. REED
HERBERT RUBINSTEIN
NANCY S. SCHAENEN
JAMES M. SRYGLEY
JOHN T. SULLIVAN
ROBERT F. WENTWORTH
OFFICERS
- -------------------------------
GLENN O. HEAD
President
CONCETTA DURSO
Vice President and Secretary
JOSEPH I. BENEDEK
Treasurer
MARK S. SPENCER
Assistant Treasurer
CAROL LERNER BROWN
Assistant Secretary
THE CASH MANAGEMENT FUND IS A MONEY MARKET FUND AND SEEKS TO MAINTAIN A STABLE
NET ASSET VALUE OF $1.00 PER SHARE. HOWEVER, THERE CAN BE NO ASSURANCE THAT THE
FUND WILL BE ABLE TO DO SO OR ACHIEVE ITS INVESTMENT OBJECTIVE. AN INVESTMENT IN
THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT.
110
<PAGE>
FIRST INVESTORS LIFE SERIES FUND
SHAREHOLDER INFORMATION
- ---------------------------------------
INVESTMENT ADVISER
FIRST INVESTORS MANAGEMENT COMPANY, INC.
95 Wall Street
New York, NY 10005
SUBADVISER (Focused Equity Fund Only)
ARNHOLD AND S. BLEICHROEDER, INC.
1345 Avenue of the Americas
New York, NY 10105
SUBADVISER (Growth Fund and International Securities Fund Only)
WELLINGTON MANAGEMENT COMPANY, LLP
75 State Street
Boston, MA 02109
CUSTODIAN
THE BANK OF NEW YORK
48 Wall Street
New York, NY 10286
CUSTODIAN (International Securities Fund Only)
BROWN BROTHERS HARRIMAN & CO.
40 Water Street
Boston, MA 02109
TRANSFER AGENT
ADMINISTRATIVE DATA MANAGEMENT CORP.
581 Main Street
Woodbridge, NJ 07095-1198
LEGAL COUNSEL
KIRKPATRICK & LOCKHART LLP
1800 Massachusetts Avenue, N.W.
Washington, DC 20036
AUDITORS
TAIT, WELLER & BAKER
Eight Penn Center Plaza
Philadelphia, PA 19103
It is the 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 by any shareholder in writing or by calling
800-423-4026. The Fund will ensure that separate reports are sent to any
shareholder who subsequently changes his or her mailing address.
This report is authorized for distribution only to existing shareholders, and,
if given to prospective shareholders, must be accompanied or preceded by the
Fund's prospectus.
111
<PAGE>
NOTES
112
<PAGE>
[LOGO]First Investors
95 WALL STREET
NEW YORK, NEW YORK 10005
LIFE310
