FIRST INVESTORS LIFE VARIABLE ANNUITY FUND C, 497, 1996-04-30

FIRST INVESTORS LIFE VARIABLE ANNUITY FUND C
497, 1996-04-30

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First Investors Life Variable Annuity Fund C
Individual Variable Annuity Contracts
Offered By
First Investors Life Insurance Company
95 Wall Street, New York, New York 10005/(212) 858-8200

This Prospectus describes the Variable Annuity Contracts (the "Contracts")
offered by First Investors Life Insurance Company ("First Investors Life") for
(a) nonqualified retirement programs and deferred compensation plans and (b) the
following retirement plans qualified for special tax treatment under the
Internal Revenue Code of 1986, as amended: (1) individual retirement annuities
and (2) qualified corporate employee pension and profit-sharing plans. The
Contracts offered are deferred annuity contracts under which annuity payments
will begin on a selected future date. A penalty may be assessed on early
withdrawals (see "Federal Income Tax Status"). The Contracts contain a 10-day
revocation right (see "Variable Annuity Contracts--Ten-Day Revocation Right").
The Contracts provide for the accumulation of values on a variable basis.
Payment of annuity benefits will be on a variable basis, unless a fixed basis or
a combination of variable and fixed bases is selected by the Contractowner.
Unless otherwise stated, this Prospectus describes only the variable aspects of
the Contracts. The Contracts contain information on the fixed aspects.

Contractowners' purchase payments less certain deductions ("net purchase
payments") are paid into a unit investment trust, First Investors Life Variable
Annuity Fund C ("Separate Account C"). A Contractowner elects to have his or her
net purchase payments paid into any one or more of the eleven subaccounts of
Separate Account C (the "Subaccounts"). The assets of each Subaccount are
invested at net asset value in shares of the related series of First Investors
Life Series Fund (the "Life Series Fund"), an open-end, diversified management
investment company.

This Prospectus sets forth the information about Separate Account C that a
prospective investor should know before investing and should be kept for future
reference. A Statement of Additional Information, dated April 29, 1996, has been
filed with the Securities and Exchange Commission and is incorporated herein by
reference in its entirety. (See page 22 of this Prospectus for the Table of
Contents of the Statement of Additional Information.) The Statement of
Additional Information is available at no charge upon request to First Investors
Life at the address or telephone number indicated above.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

THIS PROSPECTUS IS VALID ONLY WHEN ATTACHED TO THE CURRENT
PROSPECTUS OF FIRST INVESTORS LIFE SERIES FUND.

The date of this Prospectus is April 29, 1996
<PAGE>

GLOSSARY OF SPECIAL TERMS

Accumulated Value - The value of all the Accumulation Units credited to the
Contract.

Accumulation Period - The period between the date of issue of a Contract
and the Annuity Commencement Date.

Accumulation Unit - A unit used to measure the value of a Contractowner's
interest in a Subaccount of Separate Account C prior to the Annuity Commencement
Date.

Additional Payment - A purchase payment made to First Investors Life after
issuance of a deferred annuity.

Annuitant - The person designated to receive or the person who is actually
receiving annuity payments under a Contract.

Annuity Commencement Date - The date on which annuity payments are to
commence.

Annuity Unit - A unit used to determine the amount of each annuity payment
after the first.

Beneficiary - The person designated to receive any benefits under a
Contract upon the death of the Annuitant in accordance with the terms of the
Contract.

Contract - An individual variable annuity contract offered by this
Prospectus.

Contractowner - The person or entity with legal rights of ownership of the
Contract.

Fixed Annuity - An annuity with annuity payments which remain fixed as to
dollar amount throughout the payment period.

General Account - All assets of First Investors Life other than those
allocated to Separate Account C (or other segregated investment accounts of
First Investors Life).

Joint Annuitant - The designated second person under joint and survivor
life annuity.

Separate Account C - The segregated investment account entitled "First
Investors Life Variable Annuity Fund C," established by First Investors Life
pursuant to applicable law and registered as a unit investment trust under the
Investment Company Act of 1940, as amended.

Single Payment - A one-time purchase payment made to First Investors Life
to purchase a deferred annuity.

Subaccount - A segregated investment subaccount under Separate Account C
which corresponds to a series of the Life Series Fund. The assets of the
Subaccount are invested in shares of the corresponding series of the Life Series
Fund.

Valuation Date - Any date on which the New York Stock Exchange is open for
trading, and at such other times as the Directors of First Investors Life deem
necessary provided there is a sufficient degree of trading in the Subaccounts'
investments which may affect the Subaccounts' net asset value.

Valuation Period - The period beginning on the date after any Valuation
Date and ending on the next Valuation Date.

Variable Annuity - An annuity with annuity payments varying in amount in
accordance with the net investment experience of the Subaccounts.

<PAGE>

FEE TABLE

The following table has been prepared to assist the investor in
understanding the various costs and expenses a Contractowner will directly or
indirectly bear. The table reflects expenses of Separate Account C as well as
the series (each a "Fund" and collectively "Funds") of the Life Series Fund. The
Fee Table has been amended to reflect Fund expenses expected to be incurred in
1996.

CONTRACTOWNER TRANSACTION EXPENSES
Sales Load Imposed on Purchases (as a percentage of purchase payments) .. 7.00%

SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Fees.......................................... 1.00%

Total Separate Account Annual Expenses................................... 1.00%

FUND ANNUAL EXPENSES
(as a percentage of Fund average net assets)

<TABLE>
<CAPTION>
Total Fund
Management Other Operating
Fees(1) Expenses(2) Expenses(3)
------- ----------- -----------
<S> <C> <C> <C>
Blue Chip Fund................................... 0.75% 0.11% 0.86%
Cash Management Fund............................. 0.60+ -0-+ 0.60+
Discovery Fund................................... 0.75 0.12 0.87
Government Fund.................................. 0.60+ -0-+ 0.60+
Growth Fund...................................... 0.75 0.13 0.88
High Yield Fund.................................. 0.75 0.12 0.87
International Securities Fund.................... 0.75 0.27 1.02
Investment Grade Fund............................ 0.60+ -0-+ 0.60+
Target Maturity 2007 Fund........................ 0.60+ -0-+ 0.60+
Target Maturity 2010 Fund........................ 0.60+ -0-+ 0.60+
Utilities Income Fund............................ 0.60+ -0-+ 0.60+
</TABLE>

+ Net of waiver and/or reimbursement

(1) Management Fees have been restated for Cash Management Fund, Government
Fund, Investment Grade Fund and Utilities Income Fund to reflect current
fees. The Adviser will waive Management Fees in excess of 0.60% for Cash
Management Fund, Government Fund, Investment Grade Fund, Target Maturity
2007 Fund, Target Maturity 2010 Fund and Utilities Income Fund for a
minimum period ending December 31, 1996. Otherwise, Management Fees would
have been 0.75% for each Fund.

(2) Other Expenses have been restated for Cash Management Fund, Government
Fund, Investment Grade Fund and Utilities Income Fund to reflect current
expenses. The Adviser will reimburse Cash Management Fund, Government Fund,
Investment Grade Fund, Target Maturity 2007 Fund, Target Maturity 2010 Fund
and Utilities Income Fund for all Other Expenses for a minimum period
ending December 31, 1996. Otherwise, Other Expenses would have been 0.35%
for Cash Management Fund, 0.18% for Government Fund, 0.16% for each of
Investment Grade Fund and Utilities Income Fund, and are estimated to be
0.25% for each of Target Maturity 2007 Fund and Target Maturity 2010 Fund.
3

<PAGE>

(3) If certain Management Fees and Other Expenses were not waived or
reimbursed, Total Fund Operating Expenses would have been 1.10% for Cash
Management Fund, 0.93% for Government Fund, 0.91% for each of Investment
Grade Fund and Utilities Income Fund and are estimated to be 1.00% for each
of Target Maturity 2007 Fund and Target Maturity 2010 Fund.

For more complete descriptions of the various costs and expenses shown,
please refer to "Purchases, Deductions, Charges and Expenses." An administrative
charge may be deducted if the Accumulated Value of a Deferred Annuity Contract
is less than $1,500 (see "Administrative Charge"). In addition, premium taxes
may be applicable (see "Other Charges").

EXAMPLE

If you surrender your Contract at the end of the applicable time period:

You would pay the following expenses on a $1,000 investment, assuming 5%
annual return on assets:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Blue Chip Fund............................... $88 $124 $164 $273
Cash Management Fund......................... 85 117 151 247
Discovery Fund............................... 88 125 164 274
Government Fund.............................. 85 117 151 247
Growth Fund.................................. 88 125 164 275
High Yield Fund.............................. 88 125 164 274
International Securities Fund................ 89 129 171 288
Investment Grade Fund........................ 85 117 151 247
Target Maturity 2007 Fund.................... 85 117 N/A N/A
Target Maturity 2010 Fund.................... 85 117 N/A N/A
Utilities Income Fund........................ 85 117 151 247
</TABLE>

The expenses in the Example should not be considered a representation of
past or future expenses. Actual expenses in future years may be greater or less
than those shown.
CONDENSED FINANCIAL INFORMATION

Accumulation Unit Values

The following shows the accumulation unit values and the number of
accumulation units outstanding for each Subaccount of Separate Account C, with
the exception of the Target Maturity 2010 Subaccount which first became
available the date of this prospectus, as of the dates indicated from the dates
when the accumulation unit value for each Subaccount was initially set at
$10.00*:

<TABLE>
<CAPTION>
Number of
Accumulation Accumulation
Subaccount As of Unit Value($) Units
---------- ----- ------------- -----

<S> <C> <C> <C>
Blue Chip Subaccount...................... December 31, 1990 10.74931759 144,049.8
December 31, 1991 13.42731580 561,758.4
December 31, 1992 14.18287684 1,085,254.0
December 31, 1993 15.23373431 1,529,348.1
December 31, 1994 14.86290782 1,959,841.2
December 31, 1995 19.71773603 2,413,509.3
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Accumulation Accumulation
Subaccount As of Unit Value($) Units
---------- ----- ------------- -----
<S> <C> <C> <C>
Cash Management Subaccount................ December 31, 1990 10.07542807 571,856.9
December 31, 1991 10.52748985 571,891.0
December 31, 1992 10.73770189 437,185.0
December 31, 1993 10.91847727 253,743.1
December 31, 1994 11.21833852 235,919.5
December 31, 1995 11.71983145 252,407.7

Discovery Subaccount...................... December 31, 1990 10.91349031 8,362.1
December 31, 1991 16.53848277 130,585.7
December 31, 1992 18.93150000 307,107.8
December 31, 1993 22.89932001 563,070.0
December 31, 1994 22.07727850 867,303.8
December 31, 1995 27.37355380 1,203,507.8

Government Subaccount..................... December 31, 1992 10.87670909 437,095.3
December 31, 1993 11.44920392 674,512.1
December 31, 1994 10.85941183 672,797.1
December 31, 1995 12.43183229 705,348.4

Growth Subaccount......................... December 31, 1990 10.75804081 24,176.8
December 31, 1991 14.34498476 204,821.5
December 31, 1992 15.59155937 567,241.7
December 31, 1993 16.35977780 958,529.1
December 31, 1994 15.73131059 1,347,003.7
December 31, 1995 19.48689883 1,729,637.1

High Yield Subaccount..................... December 31, 1990 10.00101048 69,585.9
December 31, 1991 13.25243640 220,366.3
December 31, 1992 14.86894995 279,777.4
December 31, 1993 17.38280181 391,036.8
December 31, 1994 16.93482626 513,297.7
December 31, 1995 20.09026188 671,849.9

International Securities Subaccount...... December 31, 1990 10.26630533 118,091.2
December 31, 1991 11.73276972 269,273.6
December 31, 1992 11.46589494 463,523.6
December 31, 1993 13.86795475 792,294.1
December 31, 1994 13.55233761 1,383,676.5
December 31, 1995 15.92618862 1,502,998.2

Investment Grade Subaccount............... December 31, 1992 10.77845214 395,839.5
December 31, 1993 11.82065978 784,651.0
December 31, 1994 11.28602521 923,445.3
December 31, 1995 13.37384783 1,076,644.3

Target Maturity 2007 Subaccount........... December 31, 1995 11.90553994 775,738.1

</TABLE>
5

<PAGE>

<TABLE>
<CAPTION>
Accumulation Accumulation
Subaccount As of Unit Value($) Units
---------- ----- ------------- -----
<S> <C> <C> <C>
Utilities Income Subaccount............... December 31, 1993 9.92774964 45,091.7
December 31, 1994 9.11659215 473,447.1
December 31, 1995 11.75759954 1,129,455.9
</TABLE>

* The accumulation unit value for each Subaccount, other than the Government
Subaccount, Investment Grade Subaccount and Utilities Income Subaccount,
was set on October 16, 1990. The accumulation unit value for the Government
Subaccount and Investment Grade Subaccount was set on January 7, 1992. The
accumulation unit value for Utilities Income Subaccount was set on November
16, 1993. The accumulation unit value for Target Maturity 2007 Subaccount
was set on April 24, 1995.

GENERAL DESCRIPTION

First Investors Life Insurance Company. First Investors Life Insurance
Company, 95 Wall Street, New York, New York 10005 ("First Investors Life"), a
stock life insurance company incorporated under the laws of the State of New
York in 1962, writes life insurance, annuities and accident and health
insurance. First Investors Consolidated Corporation ("FICC") owns all of the
voting common stock of First Investors Management Company, Inc. ("FIMCO" or
"Adviser") and all of the outstanding stock of First Investors Life, First
Investors Corporation ("FIC" or "Underwriter") and Administrative Data
Management Corp., the Transfer Agent for the Life Series Fund. Mr. Glenn O. Head
controls FICC and, therefore, controls the Adviser.

Separate Account C. First Investors Life Variable Annuity Fund C, also
known by its proprietary name, the "Tax Tamer" ("Separate Account C"), was
established on December 21, 1989 under the provisions of the New York Insurance
Law. The assets of Separate Account C are held separately from the assets of
First Investors Life and for that portion of such assets having a value equal
to, or approximately equal to, such reserves and contract liabilities are not
chargeable with liabilities arising out of any other business of First Investors
Life. Separate Account C is registered as a unit investment trust under the
Investment Company Act of 1940, as amended ("1940 Act"), but such registration
does not involve any supervision of the management or investment practices or
policies of Separate Account C.

The assets of each Subaccount of Separate Account C are invested at net
asset value in shares of the corresponding Fund of Life Series Fund. For
example, the Blue Chip Subaccount invests in the Blue Chip Fund, the Government
Subaccount invests in the Government Fund, and so on. The Life Series Fund's
Prospectus describes the risks attendant to an investment in each Fund of the
Life Series Fund.

Income, gains and losses, whether or not realized, from assets allocated to
the Subaccounts of Separate Account C are, in accordance with the applicable
Contracts, credited to or charged against the Subaccounts of Separate Account C
without regard to other income, gains or losses of First Investors Life. The
obligations under the Contracts are obligations of First Investors Life.

Any and all distributions received from a Fund will be paid in shares of
the distributing Fund or if in cash, will be reinvested in shares of that Fund
at net asset value for the corresponding Subaccount. Accordingly, no cash
distributions will be made to Contractowners. Deductions and

<PAGE>

redemptions from any Subaccount of Separate Account C may be effected by
redeeming the number of applicable Fund shares, at net asset value, necessary to
satisfy the amount to be deducted or redeemed. Shares of the Fund in the
Subaccounts will be valued at their net asset values.

Separate Account C is divided into the following Subaccounts, each of which
corresponds to the following Funds of the Life Series Fund:

Separate Account C Subaccount Fund
- ----------------------------- ----
Blue Chip Subaccount Blue Chip Fund
Cash Management Subaccount Cash Management Fund
Discovery Subaccount Discovery Fund
Government Subaccount Government Fund
Growth Subaccount Growth Fund
High Yield Subaccount High Yield Fund
International Securities Subaccount International Securities Fund
Investment Grade Subaccount Investment Grade Fund
Target Maturity 2007 Subaccount Target Maturity 2007 Fund
Target Maturity 2010 Subaccount Target Maturity 2010 Fund
Utilities Income Subaccount Utilities Income Fund

Each Contractowner designates the Subaccount in which his or her purchase
payment (less deductions) will be invested. That Subaccount in turn invests in
the corresponding Fund of the Life Series Fund as set forth above.

Subject to applicable law, First Investors Life reserves the right to make
certain changes if, in its judgment, they would best serve the interests of the
Contractowners and Annuitants or would be appropriate in carrying out the
purposes of the Contract. First Investors Life will obtain, when required, the
necessary Contractowner approval or regulatory approval. Examples of the changes
First Investors Life may make include, but are not limited to:

o To operate separate Account C in any form permitted under 1940
Act or in any other form permitted by law.

o To add, delete, combine, or modify Subaccounts in Separate
Account C.

o To add, delete, or substitute, for the Fund shares held in any
Subaccount, the shares of another Fund of the Life Series Fund or
the shares of another investment company or series thereof, or
any other investment permitted by law.

o To make any amendments to the Contracts necessary for the
Contracts to comply with the provisions of the Internal Revenue
Code or any other applicable federal or state law.

Your Choice of Investment Objective. When you purchase a Contract you
decide to place your purchase payment (less deductions) and any additional
purchase payments (less deductions) into at least one but not more than five of
the Subaccounts of Separate Account C, provided the allocation to any one
Subaccount is not less than 10% of the purchase payment (less deductions). Each
Subaccount corresponds to a Fund of the Life Series Fund. The investment
objectives of each Fund of the Life Series Fund is set forth below. There is no
assurance that the investment objective of any

<PAGE>

Fund of the Life Series Fund will be realized. Because each Fund of the Life
Series Fund is intended to serve a different investment objective, each is
subject to varying degrees of financial and market risks. In addition, total
operating expenses vary by Fund. Twice during any Contract year, you may
transfer part or all of your cash value from the Subaccounts you are in to other
Subaccounts provided the cash value is not allocated to more than five of the
Subaccounts, and provided the allocation to any one Subaccount is not less than
10% of the cash value of the Contract. The cash value of the Contract may
increase or decrease depending on the investment performance of the Subaccounts
selected. First Investors Life reserves the right to adjust allocations to
eliminate fractional percentages.

The Fund. First Investors Life Series Fund is a diversified open-end
management investment company registered under the 1940 Act. Registration of
Life Series Fund with the Securities and Exchange Commission ("Commission") does
not involve supervision by the Commission of the management or investment
practices or policies of the Life Series Fund. The Life Series Fund consists of
eleven separate Funds. The shares of the Funds are not sold directly to the
general public but are available only through the purchase of an annuity
contract or a variable life insurance policy issued by First Investors Life.
Life Series Fund reserves the right to offer shares of its Funds to other
separate acounts of First Investors Life or directly to First Investors Life.
The eleven Funds of Life Series Fund may be referred to as: First Investors Life
Blue Chip Fund, First Investors Life Cash Management Fund, First Investors Life
Discovery Fund, First Investors Life Government Fund, First Investors Life
Growth Fund, First Investors Life High Yield Fund, First Investors Life
International Securities Fund, First Investors Life Investment Grade Fund, First
Investors Life Target Maturity 2007 Fund, First Investors Life Target Maturity
2010 Fund and First Investors Life Utilities Income Fund.

The investment objectives of each Fund of the Life Series Fund are as
follows:

Blue Chip Fund. The investment objective of Blue Chip Fund is to seek high
total investment return consistent with the preservation of capital. This goal
will be sought by investing, under normal market conditions, primarily in equity
securities of larger, well-capitalized companies with high potential earnings
growth that have shown a history of dividend payments, commonly known as "Blue
Chip" companies.

Cash Management Fund. The objective of Cash Management Fund is to seek to
earn a high rate of current income consistent with the preservation of capital
and maintenance of liquidity. The Cash Management Fund will invest in money
market obligations, including high quality securities issued or guaranteed by
the U.S. Government or its agencies and instrumentalities, bank obligations and
high grade corporate instruments. An investment in the Fund is neither insured
nor guaranteed by the U.S. Government. There can be no assurance that the Fund
will be able to maintain a stable net asset value of $1.00 per share.

Discovery Fund. The investment objective of Discovery Fund is to seek
long-term capital appreciation, without regard to dividend or interest income,
through investment in the common stock of companies with small to medium market
capitalization that the Adviser considers to be undervalued or less well known
in the current marketplace and to have the potential for capital growth.

<PAGE>

Government Fund. The investment objective of Government Fund is to seek to
achieve a significant level of current income which is consistent with security
and liquidity of principal by investing, under normal market conditions,
primarily in obligations issued or guaranteed as to principal and interest by
the U.S. Government, its agencies or instrumentalities, including
mortgage-related securities.

Growth Fund. The investment objective of Growth Fund is to seek long-term
capital appreciation. This goal will be sought by investing, under normal market
conditions, primarily in common stocks of companies and industries selected for
their growth potential.

High Yield Fund. The primary objective of the High Yield Fund is to seek to
earn a high level of current income. Consistent with that objective, the Fund
will also seek growth of capital as a secondary objective. The High Yield Fund
seeks to attain its objectives primarily through investments in lower-grade,
high-yielding, high risk debt securities. Investments in high yield, high risk
securities, commonly referred to as "junk bonds," may entail risks that are
different or more pronounced than those involved in higher-rated securities. See
"High Yield Securities--Risk Factors" in the Fund's Prospectus.

International Securities Fund. The primary objective of International
Securities Fund is to seek long-term capital growth. As a secondary objective,
the Fund seeks to earn a reasonable level of current income. These objectives
are sought, under normal market conditions, through investment in common stocks,
rights and warrants, preferred stocks, bonds and other debt obligations issued
by companies or governments of any nation, subject to certain restrictions with
respect to concentration and diversification.

Investment Grade Fund. The investment objective of the Investment Grade
Fund is to seek a maximum level of income consistent with investment in
investment grade debt securities.

Target Maturity 2007 Fund. The investment objective of the Target Maturity
2007 Fund is to seek a predictable compounded investment return for investors
who hold their Funds' shares until the Fund's maturity, consistent with the
preservation of capital. The Fund will seek its objective by investing, under
normal market conditions, in zero coupon securities which are issued by the U.S.
Government, its agencies or instrumentalities or created by third parties using
securities issued by the U.S. Government, its agencies or instrumentalities.

Target Maturity 2010 Fund. The investment objective of the Target Maturity
2010 Fund is to seek a predictable compounded investment return for investors
who hold their Fund shares until the Fund's maturity, consistent with the
preservation of capital. The Fund will seek its objective by investing, under
normal market conditions, in zero coupon securities which are issued by the U.S.
Government, its agencies or instrumentalities or created by third parties using
securities issued by the U.S. Government, its agencies or instrumentalities.

Utilities Income Fund. The primary objective of the Utilities Income Fund
is to seek high current income. Long-term capital appreciation is a secondary
objective. These objectives are sought, under normal market conditions, through
investment in equity and debt securities issued by companies primarily engaged
in the public utilities industry.

<PAGE>

No offer will be made of a Contract funded by the underlying Fund unless a
current Life Series Fund Prospectus has been delivered. Each Fund of the Life
Series Fund may be referred to as "Fund" or "Series" in the underlying
Contracts.

For more complete information about each of the Funds underlying Separate
Account C, including management fees and other expenses, see Life Series Fund's
Prospectus. The Prospectus details each Fund's investment goals, management
strategies, investment restrictions, portfolio turnover, and the inherent market
and financial risks of an investment in the Fund's shares. It is important to
read the Prospectus carefully before your decide to invest. Additional copies of
Life Series Fund's Prospectus, which is attached hereto, may be obtained by
writing to First Investors Life Insurance Company, 95 Wall Street, New York, New
York 10005 or by calling (212) 858-8200. There can be no assurance that any of
the objectives of the Funds will be achieved.

Adviser. First Investors Management Company, Inc., an affiliate of First
Investors Life, supervises and manages each Funds' investments, supervises all
aspects of each Fund operations and, except for International Securities Fund
and Growth Fund, determines each Funds' portfolio transactions. The Adviser is a
New York corporation located at 95 Wall Street, New York, NY 10005.

Subadviser. Wellington Management Company ("WMC" or "Subadviser") has been
retained by the Adviser and the Fund, on behalf of International Securities Fund
and Growth Fund, as each of those Funds' investment subadviser. The Adviser has
delegated discretionary trading authority to WMC with respect to all the assets
of International Securities Fund and Growth Fund, subject to the continuing
oversight and supervision of the Adviser and the Board of Trustees. As
compensation for its services, WMC is paid by the Adviser, and not by either
Fund, a fee which is computed daily and paid monthly.

WMC, located at 75 State Street, Boston, MA 02109, is a Massachusetts
general partnership of which Robert W. Doran, Duncan M. McFarland and John B.
Neff are Managing Partners. WMC is a professional investment counseling firm
which provides investment services to investment companies, employee benefit
plans, endowment funds, foundations and other institutions and individuals. As
of December 31, 1995, WMC held discretionary investment authority with respect
to approximately $109.2 billion of assets. Of that amount, WMC acted as
investment adviser or subadviser to approximately 110 registered investment
companies or Fund of such companies, with net assets of approximately $76.1
billion as of December 31, 1995. WMC is not affiliated with the Adviser or any
of its affiliates.

Underwriter. First Investors Life and Separate Account C have entered into
an Underwriting Agreement with their affiliate, FIC, 95 Wall Street, New York,
New York 10005. First Investors Life has reserved the right in the Underwriting
Agreement to sell the Contracts directly. The Contracts are sold by insurance
agents licensed to sell variable annuities, who are registered representatives
of the Underwriter or broker-dealers who have sales agreements with the
Underwriter.

Voting Rights. In accordance with its view of present applicable law, First
Investors Life will vote the Fund shares held in the Subaccounts at any Special
Meeting of Shareholders of the Fund in accordance with instructions received
from persons having the voting interest in the Subaccount. However, if the 1940
Act or any regulation thereunder should be amended or if the present

<PAGE>

interpretation thereof should change, and as a result First Investors Life
determines that it is permitted to vote the Fund shares in its own right, it may
elect to do so. The person having the voting interest shall be the
Contractowner. First Investors Life will vote, in its own right, Fund shares
that are not attributable to Contracts.

Prior to the Annuity Commencement Date, the number of shares of each Fund
held in the corresponding Subaccount which is attributable to each Contractowner
is determined by dividing the Subaccount Accumulated Value by the net asset
value of one share of the corresponding Fund. After the Annuity Commencement
Date, the number of Fund shares held in the corresponding Subaccount which is
attributable to each Contract is determined by dividing the reserve held in such
Subaccount for the variable annuity payment under such Contract by the net asset
value of one share of the corresponding Fund. As this reserve fluctuates, the
number of votes fluctuates. The number of votes which a person has the right to
cast will be determined as of the record date established by the Fund. Voting
instructions will be solicited by written communication prior to the date of the
meeting at which votes are to be cast. Shares of the Fund held in the
Subaccounts as to which no timely instructions are received or are not otherwise
attributable to Contractowners will be voted by First Investors Life in
proportion to the voting instructions which are received with respect to all
Contracts participating in such Subaccount. Each person having a voting interest
in Separate Account C will be sent reports and other materials relating to the
Fund.

PURCHASES, DEDUCTIONS, CHARGES AND EXPENSES

Purchase Payments. Investors in Separate Account C will be purchasing
Accumulation Units of a particular Subaccount only and not shares of the Fund in
which the Subaccount invests.

The minimum purchase payment is $2,000 for a Deferred Variable Annuity
Contract. Additional Payments under a Deferred Variable Annuity Contract in the
minimum amount of $200 may be made at any time after the issuance of the
Contract.

Purchase payments will be credited to a Contractowner's Account on the date
of receipt by First Investors Life of a completed application. Additional
payments will be credited to a Contractowner's Account on the date of receipt by
First Investors Life. In the event First Investors Life receives an incomplete
application, all required information shall be provided not later than five
business days following the receipt of such application or the purchase payment
will be returned to the applicant at the end of such five-day period. Purchase
payments, after deductions for sales expenses and any applicable premium taxes
(see "Deductions from Purchase Payments"), will be allocated to the appropriate
Subaccount or Subaccounts.

Deductions from Purchase Payments. First Investors Life or FIC, as the
Underwriter, makes deductions, in accordance with the Deduction Table below,
from the purchase payment for expenses in connection with sales functions
relative to the Contracts. Reductions in sales charges are applicable to the
total amount of the purchase payment. In addition, any Additional Payment made
after the issuance of a Deferred Annuity Contract is subject to the sales charge
applicable to the total amount of all purchase payments previously made plus the
amount of the Additional Payment being made. The sales charge is intended to
cover all expenses relating to the sale of the Contracts, including commissions
paid to persons distributing the Contracts.

<PAGE>

DEDUCTION TABLE
<TABLE>
<CAPTION>
Sales Charge as % of
---------------------------- Concession to
Offering Net Amount Dealers as % of
Amount of Investment Price* Invested Offering Price
- -------------------- --------- -------------- ---------------
<S> <C> <C> <C>
Less than $25,000....................................... 7.00% 7.53% 5.75%
$25,000 but under $50,000............................... 6.25 6.67 5.17
$50,000 but under $100,000.............................. 4.75 4.99 3.93
$100,000 but under $250,000............................. 3.50 3.63 2.90
$250,000 but under $500,000............................. 2.50 2.56 2.19
$500,000 but under $1,000,000........................... 2.00 2.04 1.67
$1,000,000 or over...................................... 1.50 1.52 1.24
</TABLE>

- ----------
* Assumes that no premium taxes have been deducted.

Contracts may be purchased without sales charge by officers and full-time
employees of First Investors Life or its affiliates, who have been employed for
at least one year, and its agents who have been under contract for at least one
year.

Exchange Privilege. Contractowners of First Investors Life Variable Annuity
Fund A ("Separate Account A") may exchange their Separate Account A Contracts
for Separate Account C Contracts. The Accumulated Value of the Separate Account
A Contract will be invested at net asset value in one or more Subaccounts of
Separate Account C. Although there is no charge for this exchange,
Contractowners will be required to execute a change of contract form which, in
part, states that First Investors Life deducts a daily charge equal to an annual
rate of 1.00% of the daily net asset value of the Subaccounts as a charge for
mortality and expense risk. This exchange privilege may be modified or
terminated at any time by First Investors Life.

Mortality and Expense Risk Charges. Although the amount of each variable
annuity payment made to an Annuitant will vary in accordance with the investment
performance of the Subaccounts, the amount will not be affected by the mortality
experience (death rate) of persons receiving such payments or of the general
population. First Investors Life assumes this "mortality risk" by virtue of
annuity rates incorporated in the Contracts which cannot be changed.

The mortality risk assumed by First Investors Life arises from its
obligation to continue to make fixed or variable annuity payments, determined in
accordance with the annuity tables and other provisions of the Contracts, to
each Annuitant regardless of how long that person lives and regardless of how
long all payees as a group live. This assures an Annuitant that neither the
Annuitant's own longevity nor an improvement in life expectancy generally will
have any adverse effect on the variable annuity payments the Annuitant will
receive under the Contract, and relieves the Annuitant of the risk that the
Annuitant will outlive the funds that the Annuitant has accumulated for
retirement.

In addition, First Investors Life assumes the risk that the charges for
administrative expenses may not be adequate to cover such expenses and assures
that it will not increase the amount charged for administrative expenses. In
consideration for its assumption of these mortality and expense risks, First
Investors Life deducts an amount equal on an annual basis to 1.00% of the daily
net asset value of the Subaccounts. Of such charge, approximately 0.6% is for
assuming the mortality risk and 0.4% is for assuming the expense risk.

<PAGE>

If the charge is insufficient to cover the actual cost of the mortality and
expense risks, the loss will fall on First Investors Life; conversely, if the
deduction proves more than sufficient, the excess will be a profit to First
Investors Life. Any profits resulting to First Investors Life for over-estimates
of the actual costs of the mortality and expense risks can be used by First
Investors Life for any business purpose, including the payment of expenses of
distributing the Contracts, and will not remain in Separate Account C.

Administrative Charge. An administrative charge of $7.50 may be deducted
annually by First Investors Life from the Accumulated Value of Deferred Annuity
Contracts which have an Accumulated Value of less than $1,500 due to partial
surrenders. These charges against Annuitant accounts are for the purpose of
compensating First Investors Life for expenses involved in administering small
dormant accounts. If the actual expenses exceed charges, First Investors Life
will bear the loss.

Other Charges. Some states assess premium taxes which presently range from
0% to 2.35% at the time Purchase Payments are made; others assess premium taxes
at the time of surrender or when annuity payments begin. First Investors Life
currently advances any premium taxes due at the time Purchase Payments are made
and then deducts premium taxes from the Accumulated Value of the Contract at the
time of surrender, upon death of the annuitant or when annuity payments begin.
First Investors Life, however, reserves the right to deduct premium taxes when
incurred. See Appendix I for premium tax table.

Expenses. The total expenses of Separate Account C for the fiscal year
ended December 31, 1995 amounted to $1,594,189 or 0.99% of its average net
assets. There are deductions from and expenses paid out of the assets of the
Funds that are described in the Prospectus for the Funds.

VARIABLE ANNUITY CONTRACTS

This Prospectus offers Individual Deferred Variable Annuity Contracts under
which annuity payments will begin on a selected future date. First Investors
Life is offering the Contracts in states where it has the authority to issue the
Contracts. The Individual Variable Annuity Contracts offered by this Prospectus
are designed to provide lifetime annuity payments to Annuitants in accordance
with the plan adopted by the Contractowner. The amount of annuity payments will
vary with the investment performance of the Subaccounts. The Contracts obligate
First Investors Life to make payments for the lifetime of the Annuitant in
accordance with the annuity rates contained in the Contract, regardless of
actual mortality experience (see "Annuity Period"). Upon the death of the
Annuitant under a Contract before the Annuity Commencement Date, First Investors
Life will pay a death benefit to the beneficiary designated by the Annuitant.
For a discussion of the amount and manner of payment of this benefit, see "Death
Benefit During the Accumulation Period."

All or a portion of the Accumulated Value may be withdrawn during the
Accumulation Period. For a discussion on withdrawals during the Accumulation
Period, see "Surrender and Termination (Redemption) During the Accumulation
Period." For Federal income tax consequences of a withdrawal, see "Federal
Income Tax Status." The exercise of contract rights herein described, including
the right to make a withdrawal during the Accumulation Period, will be subject
to the terms and conditions of any qualified trust or plan under which the
Contracts are purchased. This Prospectus contains no information concerning such
trust or plans.

<PAGE>

First Investors Life reserves the right to amend the Contracts to meet the
requirements of the 1940 Act or other applicable Federal or state laws or
regulations.

Contractowners with any inquiries concerning their account should write to
First Investors Life Insurance Company at its Executive office, 95 Wall Street,
New York, New York 10005.

Deferred Variable Annuities--Accumulation Period

Crediting Accumulation Units. During the Accumulation Period, net purchase
payments on Deferred Annuity Contracts, after deductions for sales expenses and
any premium taxes, where applicable (see "Deductions from Purchase Payments"),
are credited to the Contractowner's Account in the form of Accumulation Units.
The number of Accumulation Units credited to a Contractowner for the Subaccounts
is determined by dividing the net purchase payment by the value of an
Accumulation Unit for the Subaccount for the Valuation Period during which the
purchase payment is received at the Executive Office of First Investors Life or
other designated office. The value of the Contractowner's Individual Account
varies with the value of the assets of the Subaccounts. The investment
performance of the Fund Subaccounts, expenses and deduction of certain charges
affect the value of an Accumulation Unit. There is no assurance that the value
of a Contractowner's Individual Account will equal or exceed purchase payments.
The value of a Contractowner's Individual Account for a Valuation Period can be
determined by multiplying the total number of Accumulation Units credited to the
account for the Subaccount by the value of an Accumulation Unit for the
Subaccount for the Valuation Period.

Annuity Period

Commencement Date. Annuity payments will begin on the Annuity Commencement
Date selected by the Contractowner. Not later than 30 days prior to the Annuity
Commencement Date, the Contractowner may elect in writing to advance or defer
the Annuity Commencement Date. The Annuity Commencement Date may not be deferred
beyond the first day of the calendar month following the Annuitant's 85th
birthday. If no other date is elected, annuity payments will commence on the
first day of the calendar month following the Annuitant's 85th birthday.

If the Net Accumulated Value on the Annuity Commencement Date is less than
$2,000, First Investors Life may pay such value in one sum in lieu of annuity
payments. If the Net Accumulated Value is not less than $2,000 but the variable
annuity payments provided for would be or become less than $20, First Investors
Life may change the frequency of annuity payments to such intervals as will
result in payments of at least $20.

Assumed Investment Rate. A 3.5% assumed investment rate is built into the
Annuity Tables in the Contract. This is based on First Investors Life's opinion
that it is the average result to be expected from a diversified portfolio of
common stocks during a relatively stable economy. A higher assumption would mean
a higher initial payment but more slowly rising and more rapidly falling
subsequent variable annuity payments. A lower assumption would have the opposite
effect. If the actual net investment rate of the respective Subaccount is at the
annual rate of 3.5%, the variable annuity payments will be level. A fixed
annuity is an annuity with annuity payments which remain fixed as to dollar
amount, throughout the payment period and is based on an assumed interest rate
of 3.5% per year built into the Annuity Tables in the Contract.

<PAGE>

Annuity Options. The Contractowner may, at any time at least 30 days prior
to the Annuity Commencement Date upon written notice to First Investors Life at
its Executive Office or other designated office, elect to have payments made
under any one of the Annuity Options provided in the Contract. If no election is
in effect on the Annuity Commencement Date, annuity payments will be made on a
variable basis only under Annuity Option 3 below, Life Annuity with 120 Monthly
Payments Guaranteed, which is the Basic Annuity.

The material factors that determine the level of annuity benefits are (i)
the value of a Contractowner's Individual Account determined in the manner
described in this Prospectus before the Annuity Commencement Date, (ii) the
Annuity Option selected by the Contractowner, (iii) the sex and adjusted age of
the Annuitant and any Joint Annuitant at the Annuity Commencement Date and, (iv)
in the case of variable annuity, the investment performance of the Fund
Subaccounts selected.

On the Annuity Commencement Date, First Investors Life shall apply the
Accumulated Value, reduced by any applicable premium taxes not previously
deducted, to provide the Basic Annuity or, if an Annuity Option has been
elected, to provide one of the Annuity Options described below.

The Contracts provide for the six Annuity Options described below:

Option 1 - Life Annuity - An annuity payable monthly during the lifetime of
the Annuitant, ceasing with the last payment due prior to the death of the
Annuitant. If this Option is elected, annuity payments terminate automatically
and immediately on the death of the Annuitant without regard to the number or
total amount of payments received.

Option 2a - Joint and Survivor Life Annuity - An annuity payable monthly
during the joint lifetime of the Annuitant and the Joint Annuitant and
continuing thereafter during the lifetime of the survivor, ceasing with the last
payment due prior to the death of the survivor.

Option 2b - Joint and Two-Thirds to Survivor Life Annuity - An annuity
payable monthly during the lifetime of the Annuitant and the Joint Annuitant and
continuing thereafter during the lifetime of the survivor at an amount equal to
two-thirds of the joint annuity payment, ceasing with the first payment due
prior to the death of the survivor.

Option 2c - Joint and One-Half to Survivor Life Annuity - An annuity
payable monthly during the joint lifetime of the Annuitant and the Joint
Annuitant and continuing thereafter during the lifetime of the survivor at an
amount equal to one-half of the joint annuity payment, ceasing with the last
payment due prior to the death of the survivor.

Under Annuity Options 2a, 2b and 2c, annuity payments terminate
automatically and immediately on the deaths of both the Annuitant and the Joint
Annuitant without regard to the number or total amount of payments received.

Option 3 - Life Annuity with 60, 120 or 240 Monthly Payments Guaranteed -
An annuity payable monthly during the lifetime of the Annuitant with the
guarantee that if, upon the death of the Annuitant, payments have been made for
less than 60, 120 or 240 monthly periods, as elected, payments will be made as
follows:

<PAGE>

1. Any guaranteed annuity payments will be continued during the
remainder of the selected period to the Beneficiary. The Beneficiary may,
at any time, elect to have the present value of the guaranteed number of
annuity payments computed in the manner specified in (2) below, paid in a
lump sum.

2. If a Beneficiary receiving annuity payments under this Option dies
after the death of the Annuitant, the present value, computed as of the
Valuation Period in which notice of death of the Beneficiary is received by
First Investors Life at its Executive Office or other designated office, of
the guaranteed number of annuity payments remaining after receipt of such
notice and to which such deceased Beneficiary would have been entitled had
the Beneficiary not died, computed at the effective annual interest rate,
assumed in determining the Annuity Tables, shall be paid in a lump sum in
accordance with the Contract.

Option 4 - Unit Refund Life Annuity - An annuity payable monthly during the
lifetime of the Annuitant, terminating with the last payment due prior to the
death of the Annuitant. An additional annuity payment will be made to the
Beneficiary equal to the Annuity Unit Value of the Subaccount or Subaccounts as
of the date that notice of death in writing is received by First Investors Life
at its Executive Office or other designated office, multiplied by the excess, if
any, of (a) over (b) where (a) is the Net Accumulated Value allocated to each
Subaccount and applied under the option at the Annuity Commencement Date,
divided by the corresponding Annuity Unit Value as of the Annuity Commencement
Date, and (b) is the product of the number of Annuity Units applicable under the
Subaccount represented by each annuity payment and the number of annuity
payments made. (For an illustration of this calculation, see Appendix II,
Example A, in the Statement of Additional Information.)

Allocation of Annuity. The Contractowner may elect to have the Net
Accumulated Value applied at the Annuity Commencement Date to provide a Fixed
Annuity, a Variable Annuity, or any combination thereof. After the Annuity
Commencement Date, no transfers or redemptions are allowed. Such elections must
be made in writing to First Investors Life at its Executive Office or other
designated office, at least 30 days prior to the Annuity Commencement Date. In
the absence of an election, annuity payments will be made on a variable basis
only under Annuity Option 3 above, Life Annuity with 120 Monthly Payments
Guaranteed, which is the Basic Annuity.

Death Benefit During the Accumulation Period

If the Annuitant dies prior to the Annuity Commencement Date, First
Investors Life will pay a Death Benefit to the Beneficiary designated by the
Contractowner upon receipt of a death certificate or similar proof of the death
of the Annuitant. The value of the Death Benefit will be determined as of the
Valuation Date on or next following the date on which written notice of death is
received by First Investors Life at its Executive Office or other designated
office.

If payment of the Death Benefit under one of the Annuity Options was not
elected by the Contractowner prior to the Annuitant's death, the Beneficiary may
elect to have the Death Benefit paid in a single sum or applied to provide an
annuity under one of the Annuity Options or as otherwise permitted by First
Investors Life. If a single sum settlement is requested, the proceeds will be
paid within seven days of receipt of such election and due proof of death. If an
Annuity Option is desired, election may be made by the Beneficiary during a
ninety-day period commencing with the date of receipt of notification of death.
If such an election is not made, a single sum

<PAGE>

settlement will be made to the Beneficiary at the end of such ninety-day period.
If any Annuity Option is elected, the Annuity Commencement Date shall be the
date specified in the election but no later than ninety days after receipt by
First Investors Life of notification of death.

The amount of the Death Benefit will be the greater of (1) the gross
purchase payments (prior to any deductions or charges) made under an Individual
Contract less any amount of purchase payments surrendered, or (2) the
Accumulated Value.

Surrender and Termination (Redemption) During the Accumulation Period

A Contractowner may elect, at any time before the earlier of the Annuity
Commencement Date or the death of the Annuitant, to surrender the Contract for
all or any part of the Contractowner's Individual Account. In the event of a
termination of the Contract, First Investors Life will, upon due surrender of
the Contract at the Executive Office of First Investors Life or other designated
office, pay to the Contractowner the Accumulated Value of the Contract. If only
a portion of the amount of the Contractowner's Individual Account is requested,
the amount so requested shall be deducted from the Subaccount resulting in a
corresponding reduction in the number of Accumulation Units credited to the
Contractowner in the Subaccount. All Accumulated Values described in this
section will be determined as of the end of the Valuation Period during which
the written request is received by First Investors Life at its Executive Office
or other designated office. First Investors Life may defer any such payment for
a period of not more than 7 days. However, First Investors Life may postpone
such payment during any period when (a) trading on the New York Stock Exchange
is restricted as determined by the Securities and Exchange Commission or such
Exchange is closed for other than weekends and holidays, (b) the Securities and
Exchange Commission has by order permitted such suspension or (c) an emergency,
as defined by the rules of the Securities and Exchange Commission, exists during
which time the sale of portfolio securities or calculation of securities is not
reasonably practicable. For information as to Federal tax consequences resulting
from surrenders, see "Federal Income Tax Status." For information as to State
premium tax consequences, see "Other Charges" and "Appendix I."

Maturity Date Exchange Privilege. If this Contract is liquidated during the
one-year period preceding its maturity date, the proceeds can be used to
purchase Class A shares of First Investors mutual funds without incurring a
sales charge.

Death of Contractowner

If the Contractowner dies before the entire interest in the Contract has
been distributed, the value of the Contract must be distributed to the
Beneficiary as provided below so that the Contract qualifies as an annuity under
Section 72(s) of the Internal Revenue Code of 1986, as amended (the "Code").

If the death of the Contractowner occurs on or after the Annuity
Commencement Date, the entire interest in the Contract will be distributed at
least as rapidly as under the Annuity Option in effect on the date of death.

If the death of the Contractowner occurs prior to the Annuity Commencement
Date, the entire interest in the Contract will be (1) distributed to the
Beneficiary within five years, or (2) distributed under an Annuity Option
beginning within one year which provides that annuity payments will be

<PAGE>

made over a period not longer than the life or life expectancy of the
Beneficiary. If the Contract is payable to (or for the benefit of) the
Contractowner's surviving spouse, no distributions will be required and the
Contract may be continued with the surviving spouse as the new Contractowner. If
the Contractowner is also the Annuitant, such spouse shall have the right to
become the Annuitant under the Contract. Likewise, if the Annuitant dies and the
Contractowner is not a natural person, the Annuitant's surviving spouse shall
have the right to become the Contractowner and the Annuitant.

Ten-Day Revocation Right

A Contractowner may, within ten days from the date the Contract is
delivered to the Contractowner, elect to cancel the Contract. First Investors
Life will, upon surrender of the Contract, together with a written request for
cancellation, at the Executive Office of First Investors Life or other
designated office, pay to the Contractowner an amount equal to the Accumulated
Value of the Contract on the date of surrender plus the amount of any sales
charges deducted from the initial purchase payment. The amount refunded to
Contractowners may be more or less than their initial purchase payment depending
on the investment results of the designated Subaccount(s). In those states where
a full refund of premiums is required if the Contractowner elects to exercise to
cancel the Contract under the ten-day revocation right, such Contractowner shall
be entitled to a full refund of premiums paid upon such cancellation.

FEDERAL INCOME TAX STATUS

The Contracts are designed for use (a) by individuals in retirement plans
which will not be qualified plans under the provisions of the Code; and (b) in
the following retirement plans qualified for special tax treatment under the
Code (1) individual retirement annuities and (2) qualified corporate employee
pension and profit-sharing plans. In general, a Contract acquired by a person
who is not an individual will be treated as one which is not an annuity to the
extent of contributions made after February 28, 1986, and any income credited to
a Contractowner's Individual Account will accordingly, be includable in the
Contractowner's gross income on a current basis in accordance with that person's
method of accounting. The preceding sentence will not apply to any annuity
contract that is (i) acquired by a decedent's estate by reason of the decedent's
death, (ii) held under a qualified pension, profit-sharing or stock bonus plan
described under Section 401(a) of the Code or an employee annuity program
described under Section 403(a) of the Code (or that is purchased by an employer
upon the termination of such plan or program and that is held by the employer
until all amounts under a Contract are distributed to the employee for whom the
Contract was purchased or the employee's beneficiary), (iii) held under an
individual retirement plan or an employee annuity program described under
Section 403(b) of the Code, or (iv) an immediate annuity (as defined in Section
72(u)(4) of the Code).

The ultimate effect of Federal income taxes on Accumulated Values, on
annuity payments and on the economic benefit to the Contractowner, Annuitant or
Beneficiary depends on the tax status of both First Investors Life and the
individual concerned. The discussion contained herein is general in nature and
is not intended as tax advice. No attempt is made to consider any applicable
state or other tax laws. Moreover, the discussion herein is based upon First
Investors Life's understanding of Federal income tax laws as they are currently
interpreted. No representation is made regarding the likelihood of continuation
of current Federal income tax laws or the current interpretations of

<PAGE>

the Internal Revenue Service. Prospective Contractowners should consult their
tax advisors as to the tax consequences of purchasing Contracts.

First Investors Life is taxed as a life insurance company under the Code.
Since Separate Account C is not a separate entity from First Investors Life and
its operation forms part of First Investors Life, it will not be taxed
separately as a "regulated investment company" under Subchapter M of the Code.
Under existing Federal income tax law, investment income of the Subaccounts of
Separate Account C, to the extent that it is applied (after taking into account
the mortality risk and expense risk charges) to increase reserves under the
Contract, is not taxed and may be compounded through reinvestment without
additional tax to First Investors Life to the extent income is so applied. Thus,
the Funds may realize net investment income and pay dividends and the
Subaccounts of Separate Account C may receive and reinvest them on behalf of
Contractowners, all without Federal income tax consequences for Separate Account
C or the Contractowner.

Under current interpretations of the Code, the Contractowner is not subject
to income tax on increases in the value of the Contractowner's Individual
Account until payments are received by the Contractowner under the Contract.
Annuity payments received after the Annuity Commencement Date will be taxed to
the Contractowner as ordinary income in accordance with Section 72 of the Code.
However, that portion of each payment which represents the Contractowner's
investment in the Contract, as defined in Section 72, will be excluded from
gross income. The investment in the Contract, which is ordinarily the amount of
purchase payments made under the Contract with certain adjustments, is divided
by the Contractowner's life expectancy or other period for which annuity
payments are expected to be made to determine the annual exclusion. Annuity
payments received each year in excess of this annual exclusion are taxable as
ordinary income as provided in Section 72 of the Code.

In order that the Contracts be treated as annuities for Federal income tax
purposes, other than Contracts issued in connection with retirement plans that
are qualified under the Code, Separate Account C must satisfy certain
diversification requirements that are generally applicable to variable annuity
contract segregated asset accounts under Subchapter L of the Code. Ownership by
the Subaccounts of shares of the Fund will not fail the diversification
requirements provided that the Fund is taxed as a regulated investment company
under Subchapter M of the Code, and that the Fund meets such diversification
requirements, and all shares of the Fund are owned only by the Subaccounts (and
similar accounts of First Investors Life or other insurance companies), and
access to the Fund is available exclusively through the purchase of Contracts
(and additional variable annuity or life insurance products of First Investors
Life or other insurance companies). Fund shares also may be held by the Adviser
provided such shares are being held in connection with the creation or
management of the Fund. The Adviser does not intend to sell any Fund shares it
owns to the general public. It is expected that the Adviser will cause the
assets of the Fund to be invested in a manner that complies with the asset
diversification requirements.

The tax law does not currently provide guidance as to circumstances in
which a Contractowner may be said to have "control" over Separate Account C
assets and thus be subject to current taxation on income credited to the
Contractowner's Contract. The Treasury Department has said that it may provide
such guidance by a ruling or regulation. First Investors Life reserves the right
to amend the Contracts in any appropriate way necessary to avoid such current
taxation.

<PAGE>

With respect to withdrawals before the start of annuity payments, the Code
currently provides that: (i) withdrawals from an annuity contract are taxable as
ordinary income in the year of receipt to the extent that income from investment
has been earned, (ii) a loan under, or an assignment or pledge of an annuity
contract is treated as a distribution, and (iii) a 10 percent penalty will be
assessed, subject to certain exceptions, on the taxable portion of withdrawals
made prior to the taxpayer's attainment of age 59 1/2.

In determining the amount of any distribution that is includable in gross
income, all annuity contracts issued by the same company to the same
Contractowner during any 12-month period will be treated as one annuity
contract. Contractowners should consult their tax advisors before purchasing
more than one Contract during any 12-month period.

Under the Code, income tax must generally be withheld from all "designated
distributions." A designated distribution includes the taxable portion of any
distribution or payment from an annuity. A partial surrender of an annuity
contract is considered a distribution subject to withholding.

The amount of withholding depends on the type of payment: "periodic" or
"non-periodic." For a periodic payment (e.g., an annuity payment), unless the
recipient files an appropriate withholding certificate, the tax withheld from
the taxable portion of the payment is based on a payroll withholding schedule
which assumes a married recipient claiming three withholding exemptions. For a
non-periodic payment distribution (e.g., a partial surrender of an annuity
contract), the tax withheld will generally be 10 percent of the taxable portion
of the payment.

A recipient may elect not to have the withholding rules apply. For periodic
payments, an election is effective for the calendar year for which it is made
and for each necessary year until amended or modified. For non-periodic
distributions, an election is effective only for the distribution for which it
is made. Payors must notify recipients of their right to elect to have taxes
withheld.

Insurers are required to report all designated distribution payments to the
Internal Revenue Service.

With respect to the Contracts issued in connection with retirement or
deferred compensation plans which do not meet the requirements applicable to tax
qualified plans, the tax status of the Annuitant is determined by the provisions
of the plan. In general, the Annuitant is not taxed until the Annuitant receives
annuity payments. The rules for taxation of payments under non-qualified plans
are, in general, similar to those for taxation of payments under a qualified
plan; however, the special income averaging treatment available for certain lump
sum payments under qualified plans is not available for similar payments under
non-qualified plans.

The Contracts may be purchased in connection with the following types of
tax-favored retirement plans: (1) individual retirement annuities and (2)
pension and profit-sharing plans of corporations qualified under Section 401(a)
or employee annuity programs described in Section 403(a) of the Code. The tax
rules applicable to these plans, including restrictions on contributions and
benefits, taxation of distribution and any tax penalties, vary according to the
type of plan and its terms and conditions. Participants under such plans, as
well as Contractowners, Annuitants and Beneficiaries, should be aware that the
rights of any person to any benefits under such plans may be subject to the
terms and conditions of the plans themselves, regardless of the terms and
conditions of the Contracts. Purchasers of Contracts for use with any qualified
plan, as well as plan participants and

<PAGE>

Beneficiaries, should consult counsel and other competent advisors as to the
suitability of the Contracts to their special needs, and as to applicable Code
limitations and tax consequences.

It should be noted that the laws and regulations with respect to the
foregoing tax matters are subject to change at any time by Congress and the
Treasury Department, respectively, and that the interpretations of such laws and
regulations now in effect are subject to change by judicial decision or by the
Treasury Department.

PERFORMANCE INFORMATION

From time to time, Separate Account C may advertise several types of
performance information for the Subaccounts. All Subaccounts may advertise
"average annual total return" and "total return," except "average annual total
return" is not shown for the Cash Management Subaccount. The High Yield
Subaccount, Investment Grade Subaccount and Government Subaccount may also
advertise "yield." The Cash Management Subaccount may advertise "yield" and
"effective yield." Each of these figures is based upon historical earnings and
is not necessarily representative of the future performance of a Subaccount. The
yield and effective yield figures include the payment of the Mortality and
Expense Risk fee of 1.00% but do not include the maximum sales charge of 7.00%.

Average annual total return and total return calculations measure the net
income of a Subaccount plus the effect of any realized or unrealized
appreciation or depreciation of the underlying investments in a Subaccount for
the period in question. Average annual total return will be quoted for one, five
and ten year periods, or for shorter time periods depending upon the length of
time during which the Subaccount has operated. Average annual total return
figures are annualized and, therefore, represent the average annual percentage
change in the value of an investment in a Subaccount over the period in
question. Total return figures are not annualized and represent the actual
percentage change over the period in question. Average annual total return and
total return figures will include the deduction of all expenses and fees,
including the payment of the maximum sales charge of 7.00% and the payment of
the Mortality and Expense Risk fee of 1.00%.

Yield is a measure of the net dividend and interest income earned over a
specific one month or 30- day period (seven-day period for the Cash Management
Subaccount) expressed as a percentage of the value of the Subaccount's
Accumulation Units. Yield is an annualized figure, which means that it is
assumed that the Subaccount generates the same level of net income over a
one-year period which is compounded on a semi-annual basis. The effective yield
for the Cash Management Subaccount is calculated similarly but includes the
effect of assumed compounding calculated under rules prescribed by the
Securities and Exchange Commission. The Cash Management Subaccount's effective
yield will be slightly higher than its yield due to this compounding effect.

For further information on performance calculations, see "Performance
Information" in the Statement of Additional Information.

<PAGE>

TABLE OF CONTENTS
OF THE STATEMENT OF ADDITIONAL
INFORMATION

Item Page
---- ----
General Description ....................................... 2
Services................................................... 2
Purchase of Securities..................................... 4
Deduction Table............................................ 5
Annuity Payments........................................... 5
Other Information.......................................... 7
Performance Information.................................... 7
Relevance of Financial Statements.......................... 12
Appendices................................................. 13
Financial Statements....................................... 18

APPENDIX I

STATE AND LOCAL TAXES*

Alabama.................................... 1.00%
Alaska..................................... --
Arizona.................................... --
Arkansas................................... --
California................................. 2.35
Colorado................................... --
Connecticut................................ --
Delaware................................... --
District of Columbia....................... 2.25
Florida.................................... --
Georgia.................................... --
Illinois................................... --
Indiana.................................... --
Iowa....................................... --
Kentucky................................... 2.00
Louisiana.................................. --
Maryland................................... --
Massachusetts.............................. --
Michigan................................... --
Minnesota.................................. --

Mississippi................................ 2.00%
Missouri................................... --
Nebraska................................... --
New Jersey................................. --
New Mexico................................. --
New York................................... --
North Carolina............................. --
Ohio....................................... --
Oklahoma................................... --
Oregon..................................... --
Pennsylvania............................... 2.00
Rhode Island............................... --
South Carolina............................. --
Tennessee.................................. --
Texas...................................... --
Utah....................................... --
Virginia................................... --
Washington................................. --
West Virginia.............................. 1.00
Wyoming.................................... 1.00

- ----------

Note: The foregoing rates are subject to amendment by legislation and the
applicability of the stated rates may be subject to administrative
interpretation.

* Includes local annuity premium taxation.

<PAGE>

First Investors Life
Variable Annuity
Fund C

- ---------------------------
Individual Variable
Annuity Contracts

- ---------------------------

Prospectus

- ----------------------------

April 29, 1996

First Investors Logo

Logo is described as follows: the arabic numeral one separated into seven
vertical segments followed by the words "First Investors."

Vertical line from top to bottom in center of page about 1/2 inch in thickness

To the left of the vertical line is the following language:

TABLE OF CONTENTS
- -------------------------------------

Glossary of Special Terms.......................... 2
Fee Table.......................................... 3
Condensed Financial Information.................... 4
General Description................................ 6
Purchases, Deductions, Charges and Expenses........ 11
Variable Annuity Contracts......................... 13
Federal Income Tax Status.......................... 18
Performance Information............................ 21
Table of Contents of the
Statement of Additional Information............... 22
Appendix I - State and Local Taxes................. 22

<PAGE>

First Investors Life Series Fund

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

This is a Prospectus for First Investors Life Series Fund ("Life Series
Fund"), an open-end, diversified management investment company. The Fund offers
eleven separate investment series, each of which has different investment
objectives and policies: First Investors Life Blue Chip Fund ("Blue Chip Fund"),
First Investors Life Cash Management Fund ("Cash Management Fund"), First
Investors Life Discovery Fund ("Discovery Fund"), First Investors Life
Government Fund ("Government Fund"), First Investors Life Growth Fund ("Growth
Fund"), First Investors Life High Yield Fund ("High Yield Fund"), First
Investors Life International Securities Fund ("International Securities Fund"),
First Investors Life Investment Grade Fund ("Investment Grade Fund"), First
Investors Life Target Maturity 2007 Fund ("Target Maturity 2007 Fund"), First
Investors Life Target Maturity 2010 Fund ("Target Maturity 2010 Fund") and First
Investors Life Utilities Income Fund ("Untilities Income Fund") (each, a Fund,
and collectively, "Funds"). Each Fund's investment objectives are listed on the
inside cover.

Investments in a Fund are only available through purchases of the Level
Premium Variable Life Insurance Policies ("Policies") or the Individual Variable
Annuity Contracts ("Contracts") offered by First Investors Life Insurance
Company ("First Investors Life"). Policy premiums, net of certain expenses, are
paid into a unit investment trust, First Investors Life Insurance Company
Separate Account B ("Separate Account B"). Purchase payments for the Contracts,
net of certain expenses, are also paid into a unit investment trust, First
Investors Life Variable Annuity Fund C ("Separate Account C"). Separate Account
B and Separate Account C ("Separate Accounts") pool these proceeds to purchase
shares of a Fund designated by purchasers of the Policies or Contracts.
Investments in a Fund are used to fund benefits under the Policies and
Contracts. Target Maturity 2007 Fund and Target Maturity 2010 Fund are only
offered to Contractowners of Separate Account C.

An investment in Life Series Fund, including Cash Management Fund, is
neither insured nor guaranteed by the U.S. Government. There can be no assurance
that the Cash Management Fund will be able to maintain a stable net asset value
of $1.00 per share. Investments by the High Yield Fund in high-yield, high risk
securities, commonly referred to as "junk bonds," may entail risks that are
different or more pronounced than those that would result from investment in
higher-rated securities. See "High Yield Securities--Risk Factors."

This Prospectus sets forth concisely the information about the Funds that a
prospective investor should know before investing and should be retained for
future reference. First Investors Management Company, Inc. ("FIMCO" or
"Adviser") serves as investment adviser to the Funds. A Statement of Additional
Information ("SAI"), dated April 29, 1996 (which is incorporated by reference
herein), has been filed with the Securities and Exchange Commission. The SAI is
available at no charge upon request to the Funds at the address or telephone
number indicated above.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

An investment in these securities is not a deposit or obligation of, or
guaranteed or endorsed by, any bank and is not federally insured or protected by
the Federal Deposit Insurance Corporation, the Federal Reserve Board or any
other governmental agency.

The date of this Prospectus is April 29, 1996

<PAGE>

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

Blue Chip Fund. The investment objective of the Fund is to seek high total
investment return consistent with the preservation of capital. This goal will be
sought by investing, under normal market conditions, primarily in equity
securities of larger, well-capitalized companies with high potential earnings
growth that have shown a history of dividend payments, commonly known as "Blue
Chip" companies.

Cash Management Fund. The objective of the Fund is to seek to earn a high
rate of current income consistent with the preservation of capital and
maintenance of liquidity. The Fund will invest in money market obligations,
including high quality securities issued or guaranteed by the U.S. Government or
its agencies and instrumentalities, bank obligations and high grade corporate
instruments.

Discovery Fund. The investment objective of the Fund is to seek long-term
capital appreciation, without regard to dividend or interest income, through
investment in the common stock of companies with small to medium market
capitalization that the Adviser considers to be undervalued or less well known
in the current marketplace and to have the potential for capital growth.

Government Fund. The investment objective of the Fund is to seek to achieve
a significant level of current income which is consistent with security and
liquidity of principal by investing, under normal market conditions, primarily
in obligations issued or guaranteed as to principal and interest by the U.S.
Government, its agencies or instrumentalities, including mortgage-backed
securities.

Growth Fund. The investment objective of the Fund is to seek long-term
capital appreciation. This goal will be sought by investing, under normal market
conditions, primarily in common stocks of companies and industries selected for
their growth potential.

High Yield Fund. The primary objective of the Fund is to seek to earn a
high level of current income. The Fund actively seeks to achieve its secondary
objective of capital appreciation to the extent consistent with its primary
objective. The Fund seeks to attain its objectives primarily through investments
in lower-grade, high-yielding, high risk debt securities, commonly referred to
as "junk bonds" ("High Yield Securities").

International Securities Fund. The primary objective of the Fund is to seek
long-term capital growth. As a secondary objective, the Fund seeks to earn a
reasonable level of current income. These objectives are sought, under normal
market conditions, through investment in common stocks, rights and warrants,
preferred stocks, bonds and other debt obligations issued by companies or
governments of any nation, subject to certain restrictions with respect to
concentration and diversification.

Investment Grade Fund. The investment objective of the Fund is to seek a
maximum level of income consistent with investment in investment grade debt
securities.

Target Maturity 2007 Fund. The investment objective of the Fund is to seek
a predictable compounded investment return for investors who hold their Fund
shares until the Fund's maturity, consistent with preservation of capital. The
Fund intends to terminate in the year 2007.

<PAGE>

Target Maturity 2010 Fund. The investment objective of the Fund is to seek
a predictable compounded investment return for investors who hold their Fund
shares until the Fund's maturity, consistent with preservation of capital. The
Fund intends to terminate in the year 2010.

Target Maturity 2007 Fund and Target Maturity 2010 Fund each will seek its
objective by investing, under normal market conditions, at least 65% of its
total assets in zero coupon securities which are issued by the U.S. Government,
its agencies or instrumentalities or created by third parties using securities
issued by the U.S. Government, its agencies or instrumentalities.

As a result of the volatile nature of the market for zero coupon
securities, the value of shares of Target Maturity 2007 Fund and Target Maturity
2010 Fund prior to each Fund's maturity may fluctuate significantly. Thus, to
achieve a predictable return, investors should hold their investments in either
of these two Funds until the Fund liquidates since the Fund's value changes
daily with market conditions. Accordingly, any investor who redeems his or her
shares prior to a Fund's maturity is likely to achieve a different investment
result than the return that was predicted on the date the investment was made,
and may even suffer a significant loss.

Utilities Income Fund. The primary investment objective of the Fund is to
seek high current income. Long-term capital appreciation is a secondary
objective. These objectives are sought, under normal market conditions, through
investment in equity and debt securities issued by companies primarily engaged
in the public utilities industry.

There can be no assurance that any Fund will achieve its investment
objectives. See "Investment Objectives and Policies" for a detailed description
of each Fund's investment objectives and policies.

<PAGE>

FINANCIAL HIGHLIGHTS

The following table sets forth the per share operating performance data for
a share outstanding, total return, ratios to average net assets and other
supplemental data for each period indicated. Financial highlights are not
presented for Target Maturity 2010 Fund since the Fund did not commence
operations until April 1996. The table below has been derived from financial
statements which have been examined by Tait, Weller & Baker, independent
certified public accountants, whose report thereon appears in the Statement of
Additional Information ("SAI"). This information should be read in conjunction
with the Financial Statements and Notes thereto, which also appear in the SAI,
available at no charge upon request to the Funds.

<TABLE>
<CAPTION>
PER SHARE DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations Less Distributions from
------------------------------------- -----------------------
Net Asset Value Net Realized
--------------- Net and Unrealized Total from Net Net Net Asset Value
Beginning of Investment Gain (Loss) Investment Investment Realized Total ---------------
Period Income on Investments Operations Income Gains Distributions End of Period
- ------------------------------------------------------------------------------------------------------------------------------------
Blue Chip
- ---------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
3/8/90* to 12/31/90 ...... $10.00 $.07 $(.02) $ .$5 -- $ -- $ -- $10.05
1991 ..................... 10.05 .12 2.50 2.62 .05 -- .05 12.62
1992 ..................... 12.62 .16 .67 .83 .21 -- .21 13.24
1993 ..................... 13.24 .15 .97 1.12 .15 -- .15 14.21
1994 ..................... 14.21 .18 (.39) (.21) .08 .17 .25 13.75
1995 ..................... 13.75 .26 4.11 4.37 .19 .95 1.14 16.98
Cash Management**
- ---------------
1988 ..................... 1.00 .048 -- .048 .048 -- .048 1.00
1989 ..................... 1.00 .075 -- .075 .075 -- .075 1.00
1990 ..................... 1.00 .072 -- .072 .072 -- .072 1.00
1991 ..................... 1.00 .054 -- .054 .054 -- .054 1.00
1992 ..................... 1.00 .029 -- .029 .029 -- .029 1.00
1993 ..................... 1.00 .027 -- .027 .027 -- .027 1.00
1994 ..................... 1.00 .037 -- .037 .037 -- .037 1.00
1995 ..................... 1.00 .054 -- .054 .054 -- .054 1.00
Discovery
- ---------
1988 ..................... 10.02 .26 .10 .36 -- -- -- 10.38
1989 ..................... 10.38 .19 2.19 2.38 .27 .09 .36 12.40
1990 ..................... 12.40 .14 (.78) (.64) .15 .90 1.05 10.71
1991 ..................... 10.71 .07 5.42 5.49 .18 -- .18 16.02
1992 ..................... 16.02 -- 2.51 2.51 .03 .15 .18 18.35
1993 ..................... 18.35 -- 3.92 3.92 -- .91 .91 21.36
1994 ..................... 21.36 .06 (.62) (.56) -- .94 .94 19.86
1995 ..................... 19.86 .11 4.62 4.73 .06 1.26 1.32 23.27
Government
- ----------
1/7/92* to 12/31/92 ...... 10.00 .47 .51 .98 .33 -- .33 10.65
1993 ..................... 10.65 .64 .02 .66 .70 .19 .89 10.42
1994 ..................... 10.42 .79 (1.21) (.42) .25 .05 .30 9.70
1995 ..................... 9.70 .66 .78 1.44 .62 -- .62 10.52
</TABLE>

- ----------------

* Commencement of operations
** Adjusted to reflect ten-for-one stock split on May 1, 1991.
+ Some or all expenses have been waived or assumed by the investment adviser
from commencement of operations through December 31, 1995.
++ The effect of fees and charges incurred at the separate account level are
not reflected in these performance figures.
(a) Annualized

<PAGE>

<TABLE>
<CAPTION>
RATIOS / SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio to Average Net Assets
Ratio to Average Net Assets+ Before Expenses Waived or Assumed
Net Assets ----------------------------- --------------------------------- Portfolio
Total End of Period Net Investment Net Investment Turnover
Return++(%) (in thousands) Expenses+(%) Income(%) Expenses(%) Income(%) Rate(%)
- ------------------------------------------------------------------------------------------------------------------------------------
Blue Chip
- ---------
<C> <C> <C> <C> <C> <C> <C> <C>
3/8/90* to 12/31/90 ...... .61(a) $3,656 -- 2.95(a) 1.92(a) 1.03(a) 15
1991 ..................... 26.17 13,142 1.00 1.88 1.55 1.34 21
1992 ..................... 6.67 23,765 .79 1.66 .86 1.60 40
1993 ..................... 8.51 34,030 .88 1.27 N/A N/A 37
1994 ..................... (1.45) 41,424 .88 1.49 N/A N/A 82
1995 ..................... 34.00 66,900 .86 1.89 N/A N/A 26
Cash Management**
- ---------------
1988 ..................... 4.94 33 -- 4.99 7.68 (2.69) N/A
1989 ..................... 7.79 2,210 -- 7.84 1.35 6.49 N/A
1990 ..................... 7.49 8,203 .39 6.90 1.15 6.15 N/A
1991 ..................... 5.71 9,719 .57 5.39 .93 5.03 N/A
1992 ..................... 3.02 8,341 .79 2.99 .98 2.81 N/A
1993 ..................... 2.70 4,243 .60 2.67 1.05 2.22 N/A
1994 ..................... 3.77 3,929 .60 3.69 1.04 3.25 N/A
1995 ..................... 5.51 4,162 .61 5.36 1.10 4.87 N/A
Discovery
- ---------
1988 ..................... 3.59 125 -- 3.80 3.10 .70 158
1989 ..................... 23.62 283 -- 2.43 4.78 (2.35) 231
1990 ..................... (5.47) 960 -- 2.97 2.68 .28 104
1991 ..................... 51.73 4,661 .70 .48 1.49 (.31) 93
1992 ..................... 15.74 10,527 .91 .02 1.05 (.12) 91
1993 ..................... 22.20 21,221 .87 (.03) N/A N/A 69
1994 ..................... (2.53) 30,244 .88 .36 N/A N/A 53
1995 ..................... 25.23 50,900 .87 .60 N/A N/A 78
Government
- ----------
1/7/92* to 12/31/92 ...... 9.95(a) 5,064 .03(a) 6.64(a) .89(a) 5.79(a) 301
1993 ..................... 6.35 8,234 .35 6.60 .84 6.11 525
1994 ..................... (4.10) 7,878 .35 6.74 .90 6.19 457
1995 ..................... 15.63 9,500 .40 6.73 .93 6.21 198
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
PER SHARE DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations Less Distributions from
------------------------------------- -----------------------
Net Asset Value Net Realized
--------------- Net and Unrealized Total from Net Net Net Asset Value
Beginning of Investment Gain (Loss) Investment Investment Realized Total ---------------
Period Income on Investments Operations Income Gains Distributions End of Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Growth
- ------
1988........................ $10.02 $ .26 $ .51 $ .77 $ -- $ -- $ -- $10.79
1989........................ 10.79 .02 2.51 2.53 .18 .12 .30 13.02
1990........................ 13.02 .16 (.55) (.39) .06 -- .06 12.57
1991........................ 12.57 .17 4.15 4.32 .18 -- .18 16.71
1992........................ 16.71 .08 1.41 1.49 .18 1.38 1.56 16.64
1993........................ 16.64 .07 .93 1.00 .09 .10 .19 17.45
1994........................ 17.45 .09 (.60) (.51) -- .21 .21 16.73
1995........................ 16.73 .18 3.94 4.12 .09 .29 .38 20.47
High Yield
- ----------
1988........................ 10.00 .74 .82 1.56 -- -- -- 11.56
1989........................ 11.56 .74 (.92) (.18) .56 .11 .67 10.71
1990........................ 10.71 1.08 (1.79) (.71) .83 -- .83 9.17
1991........................ 9.17 1.16 1.66 2.82 1.18 -- 1.18 10.81
1992........................ 10.81 1.11 .21 1.32 1.69 -- 1.69 10.44
1993........................ 10.44 .96 .88 1.84 1.12 -- 1.12 11.16
1994........................ 11.16 .87 (1.14) (.27) .31 -- .31 10.58
1995........................ 10.58 1.00 .95 1.95 .96 -- .96 11.57
International Securities
- ------------------------
4/16/90* to 12/31/90........ 10.00 .03 .34 .37 -- -- -- 10.37
1991........................ 10.37 .09 1.49 1.58 .03 .05 .08 11.87
1992........................ 11.87 .15 (.28) (.13) .15 .22 .37 11.37
1993........................ 11.37 .10 2.41 2.51 .14 -- .14 13.74
1994........................ 13.74 .14 (.32) (.18) .05 -- .05 13.51
1995........................ 13.51 .19 2.25 2.44 .12 .25 .37 15.58
Investment Grade
- ----------------
1/7/92* to 12/31/92......... 10.00 .43 .44 .87 .34 -- .34 10.53
1993........................ 10.53 .65 .49 1.14 .71 .01 .72 10.95
1994........................ 10.95 .67 (1.06) (.39) .16 .09 .25 10.31
1995........................ 10.31 .67 1.28 1.95 .53 -- .53 11.73
Target Maturity 2007
- --------------------
4/26/95* to 12/31/95 10.00 .26 2.00 2.26 -- -- -- 12.26
Utilities Income
- ----------------
11/15/93* to 12/31/93....... 10.00 .01 (.07) (.06) -- -- -- 9.94
1994........................ 9.94 .24 (.96) (.72) .03 -- .03 9.19
1995........................ 9.19 .28 2.46 2.74 .19 -- .19 11.74
</TABLE>
- ----------
* Commencement of operations
+ Some or all expenses have been waived or assumed by the investment adviser
from commencement of operations through Dec. 31, 1995.
++ The effect of fees and charges incurred at the separate account level are
not reflected in these performance figures.
(a) Annualized

<PAGE>

<TABLE>
<CAPTION>
RATIOS / SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio to Average Net Assets
Ratio to Average Net Assets+ Before Expenses Waived or Assumed
Net Assets ----------------------------- --------------------------------- Portfolio
Total End of Period Net Investment Net Investment Turnover
Return++(%) (in thousands) Expenses+(%) Income(%) Expenses(%) Income(%) Rate(%)
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
Growth
- ------
1988........................ 7.68 $ 38 -- 3.20 8.70 (5.50) 31
1989........................ 24.00 570 -- 2.91 5.21 (2.30) 24
1990........................ (2.99) 2,366 -- 3.03 1.64 1.40 28
1991........................ 34.68 7,743 .69 1.21 1.34 .55 148
1992........................ 9.78 16,385 .76 .75 1.20 .30 45
1993........................ 6.00 25,658 .91 .43 N/A N/A 51
1994........................ (2.87) 32,797 .90 .60 N/A N/A 40
1995........................ 25.12 51,171 .88 1.10 N/A N/A 64
High Yield
- ----------
1988........................ 15.60 4,565 -- 13.22 1.32 11.90 46
1989........................ (1.76) 14,354 -- 12.05 .88 11.17 22
1990........................ (5.77) 18,331 -- 13.21 .91 12.30 35
1991........................ 33.96 23,634 .53 11.95 .89 11.60 40
1992........................ 13.15 24,540 .91 10.48 .96 10.43 84
1993........................ 18.16 30,593 .91 9.49 N/A N/A 96
1994........................ (1.56) 32,285 .88 9.43 N/A N/A 50
1995........................ 19.82 41,894 .87 9.83 N/A N/A 57
International Securities
- ------------------------
4/16/90* to 12/31/90........ 5.21(a) 3,946 -- .99(a) 3.43(a) (2.43)(a) 29
1991........................ 15.24 8,653 1.70 .75 2.27 .18 70
1992........................ (1.13) 12,246 1.03 1.55 1.38 1.20 36
1993........................ 22.17 21,009 1.14 .97 N/A N/A 37
1994........................ (1.29) 31,308 1.03 1.22 N/A N/A 36
1995........................ 18.70 41,012 1.02 1.42 N/A N/A 45
Investment Grade
- ----------------
1/7/92* to 12/31/92......... 8.91(a) 4,707 .23(a) 6.16(a) .93(a) 5.46(a) 72
1993........................ 10.93 10,210 .35 6.32 .85 5.82 64
1994........................ (3.53) 11,602 .37 6.61 .92 6.06 15
1995........................ 19.69 16,262 .51 6.77 .91 6.37 26
Target Maturity 2007
- --------------------
4/26/95* to 12/31/95 22.60 9,860 .04(a) 6.21(a) .87(a) 5.38(a) 28
Utilities Income
- ----------------
11/15/93* to 12/31/93....... (4.66)(a) 494 -- 1.46(a) 3.99(a) (2.52)(a) 0
1994........................ (7.24) 4,720 .17 4.13 .95 3.35 31
1995........................ 30.26 14,698 .41 4.16 .91 3.67 17
</TABLE>

<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

Blue Chip Fund

Blue Chip Fund seeks to provide investors with high total investment return
consistent with the preservation of capital. The Fund seeks to achieve its
objective by investing, under normal market conditions, at least 65% of its
total assets in equity securities of "Blue Chip" companies, including common and
preferred stocks and securities convertible into common stock, that the Adviser
believes have potential earnings growth that is greater than the average company
included in the Standard & Poor's 500 Composite Stock Price Index ("S&P 500").
The Fund also may invest up to 35% of its total assets in the equity securities
of non-Blue Chip companies that the Adviser believes have significant potential
for growth of capital or future income consistent with the preservation of
capital. When market conditions warrant, or when the Adviser believes it is
necessary to achieve the Fund's objective, the Fund may invest up to 25% of its
total assets in fixed income securities.

The Fund defines Blue Chip companies as those companies that have a market
capitalization of at least $300 million, are dividend paying and are included in
the S&P 500. Market capitalization is the total market value of a company's
outstanding common stock. Blue Chip companies are considered to be of relatively
high quality and generally exhibit superior fundamental characteristics, which
may include: potential for consistent earnings growth, a history of
profitability and payment of dividends, leadership position in their industries
and markets, proprietary products or services, experienced management, high
return on equity and a strong balance sheet. Blue Chip companies usually exhibit
less investment risk and share price volatility than smaller, less established
companies. Examples of Blue Chip companies are American Telephone & Telegraph,
General Electric, Pepsico Inc. and Bristol-Myers Squibb.

The fixed income securities in which the Fund may invest include money
market instruments (including prime commercial paper, certificates of deposit of
domestic branches of U.S. banks and bankers' acceptances), obligations issued or
guaranteed as to principal and interest by the U.S. Government, its agencies or
instrumentalities ("U.S. Government Obligations"), including mortgage-backed
securities, and corporate debt securities. However, no more than 5% of the
Fund's net assets may be invested in corporate debt securities rated below Baa
by Moody's Investors Service, Inc. ("Moody's") or BBB by Standard & Poor's
Ratings Group ("S&P"). The Fund may borrow money for temporary or emergency
purposes in amounts not exceeding 5% of its total assets. The Fund may also
invest up to 5% of its net assets in American Depository Receipts ("ADRs"),
enter into repurchase agreements and make loans of portfolio securities. See
"Description of Certain Securities, Other Investment Policies and Risk Factors,"
below, and the SAI for additional information concerning these securities.

Cash Management Fund

Cash Management Fund seeks to earn a high rate of current income consistent
with the preservation of capital and maintenance of liquidity. The Fund
generally can invest only in securities that mature within 397 days from the
date of purchase. In addition, the Fund maintains a dollar-weighted average
portfolio maturity of 90 days or less.

<PAGE>

Cash Management Fund invests primarily in (1) high quality marketable
securities issued or guaranteed as to principal and interest by the U.S.
Government, its agencies or instrumentalities, (2) bank certificates of deposit,
bankers' acceptances, time deposits and other short-term obligations issued by
banks and (3) prime commercial paper and high quality, U.S. dollar denominated
short-term corporate bonds and notes. The U.S. Government securities in which
the Fund may invest include a variety of U.S. Treasury securities that differ in
their interest rates, maturities and dates of issue. Securities issued or
guaranteed by agencies or instrumentalities of the U.S. Government may be
supported by the full faith and credit of the United States or by the right of
the issuer to borrow from the U.S. Treasury. See the SAI for additional
information on U.S. Government securities. The Fund may invest in domestic bank
certificates of deposit (insured up to $100,000) and bankers' acceptances (not
insured) issued by domestic banks and savings institutions which are insured by
the Federal Deposit Insurance Corporation ("FDIC") and that have total assets
exceeding $500 million. The Fund also may invest in certificates of deposit
issued by London branches of domestic or foreign banks ("Eurodollar CDs"). The
Fund may invest in time deposits and other short-term obligations, including
uninsured, direct obligations bearing fixed, floating or variable interest
rates, issued by domestic banks, foreign branches of domestic banks, foreign
subsidiaries of domestic banks and domestic and foreign branches of foreign
banks. See Appendix A to the SAI for a description of commercial paper ratings
and Appendix B to the SAI for a description of municipal note ratings. The Fund
also may invest in repurchase agreements with banks that are members of the
Federal Reserve System or securities dealers that are members of a national
securities exchange or are market makers in U.S. Government securities, and, in
either case, only where the debt instrument subject to the repurchase agreement
is a U.S. Treasury or agency obligation.

Cash Management Fund also may purchase high quality, U.S. dollar
denominated short-term bonds and notes, including variable rate and master
demand notes issued by domestic and foreign corporations (including banks).
Floating and variable rate demand notes and bonds permit the Fund, as the
holder, to demand payment of principal at any time, or at specified intervals
not exceeding 397 days, in each case upon not more than 30 days' notice. The
Fund may borrow money for temporary or emergency purposes in amounts not
exceeding 5% of its total assets and make loans of portfolio securities. See
"Description of Certain Securities, Other Investment Policies and Risk Factors"
for additional information concerning these securities.

Cash Management Fund may purchase only obligations that (1) the Adviser
determines present minimal credit risks based on procedures adopted by Life
Series Fund's Board of Trustees, and (2) are either (a) rated in one of the top
two rating categories by at least two nationally recognized statistical ratings
organizations ("NRSROs") (or one, if only one rated the security) or (b) unrated
securities that the Adviser determines are of comparable quality. Securities
qualify as being in the top rating category ("First Tier Securities") if at
least two NRSROs (or one, if only one rated the security) have given it the
highest rating. If only one NRSRO has rated a security, or it is unrated, the
acquisition of that security must be approved or ratified by Life Series Fund's
Board of Trustees. The Fund's purchases of commercial paper are limited to First
Tier Securities. The Fund may not invest more than 5% of its total assets in
securities rated in the second highest rating category ("Second Tier
Securities"). Investments in Second Tier Securities of any one issuer are
limited to the greater of 1% of the Fund's total assets or $1 million. The Fund
generally may invest no more than 5% of its total assets in the securities of a
single issuer (other than securities issued by the U.S. Government, its agencies
or instrumentalities).

<PAGE>

Discovery Fund

Discovery Fund seeks long-term capital appreciation, without regard to
dividend or interest income. The Fund seeks to achieve its objective by
investing in the common stock of companies with small to medium market
capitalization that the Adviser considers to be undervalued or less well known
in the current marketplace and to have potential for capital growth.

The Fund seeks to invest in the common stock of companies that are
undervalued in the current market in relation to fundamental economic values
such as earnings, sales, cash flow and tangible book value; that are early in
their corporate development (i.e., before they become widely recognized and well
known and while their reputations and track records are still emerging); or that
offer the possibility of greater earnings because of revitalized management, new
products or structural changes in the economy. Such companies primarily are
those with small to medium market capitalization, which the Adviser currently
considers to be market capitalization of up to $1.5 billion, but which could be
higher under certain market conditions. The Adviser believes that, over time,
these securities are more likely to appreciate in price than securities whose
market prices have already reached their perceived economic value. In addition,
the Fund intends to diversify its holdings among as many companies and
industries as the Adviser deems appropriate.

Companies that are early in their corporate development may be dependent on
relatively few products or services, may lack adequate capital reserves, may be
dependent on one or two management individuals and may have less of a track
record or historical pattern of performance. In addition, there may be less
information available as to the issuers and their securities may not be well
known to the general public and may not yet have wide institutional ownership.
Thus, the investment risk is higher than that normally associated with larger,
older or better-known companies.

Investments in securities of companies with small to medium market
capitalization are generally considered to offer greater opportunity for
appreciation and to involve greater risk of depreciation than securities of
companies with larger market capitalization. Because the securities of most
companies with small to medium market capitalization are not as broadly traded
as those of companies with larger market capitalization, these securities are
often subject to wider and more abrupt fluctuations in market price. In the
past, there have been prolonged periods when these securities have substantially
underperformed or outperformed the securities of larger capitalization
companies. In addition, smaller capitalization companies generally have fewer
assets available to cushion an unforeseen adverse occurrence and thus such an
occurrence may have a disproportionately negative impact on these companies.

The Fund may invest up to 10% of its total assets in common stocks issued
by foreign companies which are traded on a recognized domestic or foreign
securities exchange. In addition to the fundamental analysis of companies and
their industries which it performs for U.S. issuers, the Adviser evaluates the
economic and political climate of the country in which the company is located
and the principal securities markets in which such securities are traded.
Although the foreign stocks in which the Fund invests are primarily denominated
in foreign currencies, the Fund also may invest in ADRs. The Adviser does not
attempt to time actively either short-term market trends or short-term currency
trends in any market. See "Foreign Securities--Risk Factors" and "American
Depository Receipts and Global Depository Receipts."

<PAGE>

The Fund may borrow money for temporary or emergency purposes in amounts
not exceeding 5% of its total assets. The Fund also may enter into repurchase
agreements and may make loans of portfolio securities. For temporary defensive
purposes, the Fund may invest all of its assets in U.S. Government Obligations,
prime commercial paper, certificates of deposit and bankers' acceptances. See
the SAI for more information regarding these securities.

Government Fund

Government Fund seeks to achieve a significant level of current income
which is consistent with security and liquidity of principal by investing, under
normal market conditions, at least 65% of its assets in U.S. Government
Obligations, including mortgage-backed securities. Securities issued or
guaranteed as to principal and interest by the U.S. Government include a variety
of Treasury securities, which differ only in their interest rates, maturities
and times of issuance. Although the payment of interest and principal on a
portfolio security may be guaranteed by the U.S. Government or one of its
agencies or instrumentalities, shares of the Fund are not insured or guaranteed
by the U.S. Government or any agency or instrumentality. The net asset value of
shares of the Fund generally will fluctuate in response to interest rate levels.
When interest rates rise, prices of fixed income securities generally decline;
when interest rates decline, prices of fixed income securities generally rise.
See "U.S. Government Obligations" and "Debt Securities-Risk Factors," below.

The Fund may invest in mortgage-backed securities, including those
involving Government National Mortgage Association ("GNMA") certificates,
Federal National Mortgage Association ("FNMA") certificates and Federal Home
Loan Mortgage Corporation ("FHLMC") certificates. The Fund also may invest in
securities issued or guaranteed by other U.S. Government agencies or
instrumentalities, including: the Federal Farm Credit System and the Federal
Home Loan Bank (each of which may not borrow from the U.S. Treasury and the
securities of which are not guaranteed by the U.S. Government); the Tennessee
Valley Authority, and the U.S. Postal Service (each of which may borrow from the
U.S. Treasury to meet its obligations); the Farmers Home Administration and the
Export-Import Bank (the securities of which are backed by the full faith and
credit of the United States). The Fund normally reinvests principal payments
(whether regular or pre-paid) in additional mortgage-backed securities. See
"Mortgage-Backed Securities," below.

The Fund may invest up to 35% of its assets in securities other than U.S.
Government Obligations and mortgage-backed securities. These may include: prime
commercial paper, certificates of deposit of domestic branches of U.S. banks,
bankers' acceptances, repurchase agreements (applicable to U.S. Government
Obligations), insured certificates of deposit and certificates representing
accrual on U.S. Treasury securities. The Fund also may make loans of portfolio
securities and invest in zero coupon securities. The Fund may borrow money for
temporary or emergency purposes in amounts not exceeding 5% of its total assets.
See the SAI for a further discussion of these securities.

For temporary defensive purposes, the Fund may invest all of its assets in
cash, cash equivalents and money market instruments, including bank certificates
of deposit, bankers' acceptances and commercial paper issued by domestic
corporations, short-term fixed income securities or U.S. Government Obligations.
See the SAI for a description of these securities.

<PAGE>

Growth Fund

The investment objective of Growth Fund is long-term capital appreciation.
Current income through the receipt of interest or dividends from investments
will merely be incidental to the Fund's efforts in pursuing its goal. It is the
policy of the Fund to invest, under normal market conditions, primarily in
common stocks and it is anticipated that the Fund will usually be so invested.
It also may invest to a limited degree in convertible securities and preferred
stocks. At least 75% of the value of the Fund's total assets (excluding
securities held for defensive purposes) shall be invested in securities of
companies in industries in which the Adviser, or the Fund's investment
subadviser, Wellington Management Company ("Subadviser" or "WMC"), believes
opportunities for capital growth exist. The Fund does not intend to concentrate
its investments in a particular industry, but it may invest up to 25% of the
value of its assets in a particular industry. The Fund may also invest in ADRs
and Global Depository Receipts ("GDRs"), purchase securities on a when-issued or
delayed delivery basis and make loans of portfolio securities. The Fund may
borrow money for temporary or emergency purposes in amounts not exceeding 5% of
its total assets. For temporary defensive purposes, the Fund may invest all of
its assets in U.S. Government Obligations, investment grade bonds, prime
commercial paper, certificates of deposit, bankers' acceptances, repurchase
agreements and participation interests. See the SAI for a description of these
securities.

High Yield Fund

High Yield Fund primarily seeks high current income and secondarily seeks
growth of capital. The Fund actively seeks to achieve its secondary objective to
the extent consistent with its primary objective. The Fund seeks to achieve its
objectives by investing, under normal market conditions, at least 65% of its
total assets in high risk, high yield securities, commonly referred to as "junk
bonds" ("High Yield Securities"). High Yield Securities include the following
instruments: fixed, variable or floating rate debt obligations (including bonds,
debentures and notes) which are rated below Baa by Moody's or below BBB by S&P,
or, if unrated, are deemed to be of comparable quality by the Adviser; preferred
stocks and dividend-paying common stocks that have yields comparable to those of
high yielding debt securities; any of the foregoing securities of companies that
are financially troubled, in default or undergoing bankruptcy or reorganization
("Deep Discount Securities"); and any securities convertible into any of the
foregoing. See "High Yield Securities-- Risk Factors" and "Deep Discount
Securities."

The Fund may invest up to 5% of its total assets in debt securities issued
by foreign governments and companies located outside the United States and
denominated in U.S. or foreign currency. The Fund may borrow money for temporary
or emergency purposes in amounts not exceeding 5% of its total assets, make
loans of portfolio securities, enter into repurchase agreements and invest in
zero coupon and pay-in-kind securities. The Fund may also invest in securities
on a "when issued" or delayed delivery basis. See "Description of Certain
Securities, Other Investment Policies and Risk Factors," below, and the SAI for
more information concerning these securities.

The Fund may invest up to 35% of its total assets in securities other than
High Yield Securities, including: dividend-paying common stocks; securities
convertible into, or exchangeable for, common stock; debt obligations of all
types (including bonds, debentures and notes) rated A or better by Moody's or
S&P; U.S. Government Obligations; warrants; and money market instruments
consisting of prime commercial paper, certificates of deposit of domestic
branches of U.S. banks, bankers' acceptances and repurchase agreements.

<PAGE>

In any period of market weakness or of uncertain market or economic
conditions, the Fund may establish a temporary defensive position to preserve
capital by having all or part of its assets invested in investment grade debt
securities or retained in cash or cash equivalents, including bank certificates
of deposit, bankers' acceptances, U.S. Government Obligations and commercial
paper issued by domestic corporations. See "Description of Certain Securities,
Other Investment Policies and Risk Factors," below.

The medium- to lower-rated, and certain of the unrated securities in which
the Fund invests tend to offer higher yields than higher-rated securities with
the same maturities because the historical financial condition of the issuers of
such securities may not be as strong as that of other issuers. Debt obligations
rated lower than Baa or BBB by Moody's or S&P, respectively, are speculative and
generally involve more risk of loss of principal and income than higher-rated
securities. Also, their yields and market value tend to fluctuate more than
higher quality securities. The greater risks and fluctuations in yield and value
occur because investors generally perceive issuers of lower-rated and unrated
securities to be less creditworthy. These risks cannot be eliminated, but may be
reduced by diversifying holdings to minimize the portfolio impact of any single
investment. In addition, fluctuations in market value does not affect the cash
income from the securities, but are reflected in the Fund's net asset value.
When interest rates rise, the net asset value of the Fund tends to decrease.
When interest rates decline, the net asset value of the Fund tends to increase.

Variable or floating rate debt obligations in which the Fund may invest
periodically adjust their interest rates to reflect changing economic
conditions. Thus, changing economic conditions specified by the terms of the
security would serve to change the interest rate and the return offered to the
investor. This reduces the effect of changing market conditions on the
security's underlying market value.

A High Yield Security may itself be convertible into or exchangeable for
equity securities, or may carry with it the right to acquire equity securities
evidenced by warrants attached to the security or acquired as part of a unit
with the security. Although the Fund invests primarily in High Yield Securities,
securities received upon conversion or exercise of warrants and securities
remaining upon the break-up of units or detachment of warrants may be retained
to permit orderly disposition, to establish a long-term holding basis for
Federal income tax purposes or to seek capital appreciation.

Because of the greater number of investment considerations involved in
investing in High Yield Securities, the achievement of the Fund's investment
objectives depends more on the Adviser's research abilities than would be the
case if the Fund were investing primarily in securities in the higher rated
categories. Because medium- to lower-rated securities generally involve greater
risks of loss of income and principal than higher-rated securities, investors
should consider carefully the relative risks associated with investments in
securities that carry medium to lower ratings or, if unrated, deemed to be of
comparable quality by the Adviser. See "High Yield Securities--Risk Factors" and
Appendix A for a description of corporate bond ratings.

The dollar weighted average of credit ratings of all bonds held by the Fund
during the 1995 fiscal year, computed on a monthly basis, is set forth below.
This information reflects the average composition of the Fund's assets during
the 1995 fiscal year and is not necessarily representative of the Fund as of the
end of its 1995 fiscal year, the current fiscal year or at any other time in the
future.

<PAGE>

Comparable Quality of
Unrated Securities to
Rated by Moody's Bonds Rated by Moody's
---------------- ----------------------
Ba 12.16% 0.73%
B 71.29 0.20
Caa 1.92 0.22
Ca 0.73 0
---- ------
Total 86.10% 1.15%

International Securities Fund

International Securities Fund primarily seeks long-term capital growth and
secondarily seeks to earn a reasonable level of current income. The Fund may
invest in all types of securities issued by companies and government
instrumentalities of any nation approved by the Trustees, subject only to
industry concentration and issuer diversification restrictions described below
and in the SAI. This investment flexibility permits the Fund to react to rapidly
changing economic conditions among countries which cause the relative
attractiveness of investments within national markets to be subject to frequent
reappraisal. It is a fundamental policy of the Fund that no more than 35% of its
total assets will be invested in securities issued by U.S. companies and U.S.
Government Obligations or cash and cash equivalents denominated in U.S.
currency. In addition, the Fund presently does not intend to invest more than
35% of its total assets in any one particular country. Further, except for
temporary defensive purposes, the Fund's assets will be invested in securities
of at least three different countries outside the United States. See "Foreign
Securities--Risk Factors". For defensive purposes, the Fund may temporarily
invest in securities issued by U.S. companies and the U.S. Government and its
agencies and instrumentalities, or cash equivalents denominated in U.S.
currency, without limitation as to amount.

The Fund may purchase securities traded on any foreign stock exchange. The
Fund may also purchase ADRs and GDRs. See "American Depository Receipts and
Global Depository Receipts," below. The Fund also may invest up to 25% of its
total assets in unlisted securities of foreign issuers; provided, however, that
no more than 15% of the value of its net assets may be invested in unlisted
securities with a limited trading market and other illiquid investments. The
investment standards for the selection of unlisted securities are the same as
those used in the purchase of securities traded on a stock exchange.

The Fund may invest in warrants, which may or may not be listed on a
recognized United States or foreign exchange. The Fund also may enter into
repurchase agreements, purchase securities on a when-issued or delayed delivery
basis and make loans of portfolio securities. The Fund also may borrow money for
temporary or emergency purposes in amounts not exceeding 5% of its total assets.
See the SAI for further information concerning these securities.

Investment Grade Fund

Investment Grade Fund seeks to generate a maximum level of income
consistent with investment in investment grade debt securities. The Fund seeks
to achieve its objective by investing, under normal market conditions, at least
65% of its total assets in debt securities of U.S. issuers that are rated in the
four highest rated categories by Moody's or S&P, or in unrated securities that
are deemed to be of comparable quality by the Adviser ("investment grade
securities"). The Fund may

<PAGE>

invest up to 35% of its total assets in U.S. Government Obligations, including
mortgage-related securities, dividend-paying common and preferred stocks,
obligations convertible into common stocks, repurchase agreements, debt
securities rated below investment grade and money market instruments. The Fund
may invest up to 5% of its net assets in corporate or government debt securities
of foreign issuers which are U.S. dollar denominated and traded in U.S. markets.
The Fund may also borrow money for temporary or emergency purposes in amounts
not exceeding 5% of its total assets. The Fund may purchase securities on a
when-issued basis, make loans of portfolio securities and invest in zero coupon
or pay-in-kind securities. See "Description of Certain Securities, Other
Investment Policies and Risk Factors," below, and the SAI for additional
information concerning these securities.

The published reports of rating services are considered by the Adviser in
selecting rated securities for the Fund's portfolio. The Adviser also relies,
among other things, on its own credit analysis, which includes a study of the
existing debt's capital structure, the issuer's ability to service debt (or to
pay dividends, if investing in common or preferred stock) and the current trend
of earnings for the issuer. Although up to 100% of the Fund's total assets can
be invested in debt securities rated at least Baa by Moody's or at least BBB by
S&P, or unrated debt securities deemed to be of comparable quality by the
Adviser, no more than 5% of the Fund's net assets may be invested in debt
securities rated lower than Baa by Moody's or BBB by S&P (including securities
that have been downgraded), or, if unrated, deemed to be of comparable quality
by the Adviser, or in any equity securities of any issuer if a majority of the
debt securities of such issuer are rated lower than Baa by Moody's or BBB by
S&P. Securities rated BBB or Baa by S&P or Moody's, respectively, are considered
to be speculative with respect to the issuer's ability to make principal and
interest payments. The Adviser continually monitors the investments in the
Fund's portfolio and carefully evaluates on a case-by-case basis whether to
dispose of or retain a debt security which has been downgraded to a rating lower
than investment grade. See "Debt Securities--Risk Factors" and Appendix A for a
description of corporate bond ratings.

For temporary defensive purposes, the Fund may invest all of its assets in
money market instruments, short-term fixed income securities or U.S. Government
Obligations. See "Description of Certain Securities, Other Investment Policies
and Risk Factors," below, and the SAI.

Target Maturity 2007 Fund
Target Maturity 2010 Fund

Target Maturity 2007 Fund seeks to provide a predictable compounded
investment return for investors who hold their Fund shares until the Fund's
maturity, consistent with preservation of capital.

Target Maturity 2010 Fund seeks to provide a predictable compounded
investment return for investors who hold their Fund shares until the Fund's
maturity consistent with the preservation of capital.

Each Fund will seek its objective by investing, under normal market
conditions, at least 65% of its total assets in zero coupon securities which are
issued by the U.S. Government and its agencies and instrumentalities or created
by third parties using securities issued by the U.S. Government and its agencies
and instrumentalities. With respect to Target Maturity 2007 Fund, these
investments will mature no later than December 31, 2007 and, with respect to
Target Maturity 2010 Fund,

<PAGE>

these investments will mature no later than December 31, 2010. December 31, 2007
and December 31, 2010 are herein collectively referred to as the "Maturity
Date." On the Maturity Date, each Fund will be converted to cash and distributed
or reinvested in another Fund of Life Series Fund at the investor's choice.

Each Fund seeks to provide investors with a positive total return at the
Maturity Date which, together with the reinvestment of all dividends and
distributions, exceeds their original investment in a Fund by a relatively
predictable amount. While the risk of fluctuation in the values of zero coupon
securities is greater when the period to maturity is longer, that risk tends to
diminish as the Maturity Date approaches. Although an investor can redeem shares
at the current net asset value at any time, any investor who redeems his or her
shares prior to the Maturity Date is likely to achieve a different investment
result than the return that was predicted on the date the investment was made,
and may even suffer a significant loss.

Zero coupon securities are debt obligations that do not entitle the holder
to any periodic payment of interest prior to maturity or a specified date when
the securities begin paying current interest. They are issued and traded at a
discount from their face amount or par value. This discount varies depending on
the time remaining until maturity, prevailing interest rates, liquidity of the
security and the perceived credit quality of the issuer. When held to maturity,
the entire return of a zero coupon security, which consists of the accretion of
the discount, comes from the difference between its issue price and its maturity
value. This difference is known at the time of purchase, so investors holding
zero coupon securities until maturity know the amount of their investment return
at the time of their investment. The market values are subject to greater market
fluctuations from changing interest rates prior to maturity than the values of
debt obligations of comparable maturities that bear interest currently. See
"Zero Coupon Securities-Risk Factors."

A portion of the total realized return from conventional interest-paying
bonds comes from the reinvestment of periodic interest. Since the rate to be
earned on these reinvestments may be higher or lower than the rate quoted on the
interest-paying bonds at the time of the original purchase, the total return of
interest-paying bonds is uncertain even for investors holding the security to
its maturity. This uncertainty is commonly referred to as reinvestment risk and
can have a significant impact on total realized investment return. With zero
coupon securities, however, there are no cash distributions to reinvest, so
investors bear no reinvestment risk if they hold the zero coupon securities to
maturity.

Each Fund primarily will purchase three types of zero coupon securities:
(1) U.S. Treasury STRIPS (Separately Traded Registered Interest and Principal
Securities), which are created when the coupon payments and the principal
payment are stripped from an outstanding Treasury security by the Federal
Reserve Bank. Bonds issued by the Resolution Funding Corporation (REFCORP) can
also be stripped in this fashion. (2) STRIPS which are created when a dealer
deposits a Treasury security or a Federal agency security with a custodian for
safekeeping and then sells the coupon payments and principal payment that will
be generated by this security. Bonds issued by the Financing Corporation (FICO)
can be stripped in this fashion. (3) Zero coupon securities of federal agencies
and instrumentalities either issued directly by an agency in the form of a zero
coupon bond or created by stripping an outstanding bond.

Each Fund may invest up to 35% of its total assets in the following
instruments: interest-bearing obligations issued by the U.S. Government and its
agencies and instrumentalities (see "U.S.

<PAGE>

Government Obligations"), including, for Target Maturity 2007 Fund, zero coupon
securities maturing beyond 2007, and, for Target Maturity 2010 Fund, zero coupon
securities maturing beyond 2010; corporate debt securities, including corporate
zero coupon securities; repurchase agreements; and money market instruments
consisting of prime commercial paper, certificates of deposit of domestic
branches of U.S. banks and bankers' acceptances. Each Fund may only invest in
debt securities rated A or better by Moody's or S&P or in unrated securities
that are deemed to be of comparable quality by the Adviser. Debt obligations
rated A or better by Moody's or S&P comprise what are known as high-grade bonds
and are regarded as having a strong capacity to repay principal and make
interest payments. See Appendix A for a description of corporate bond ratings.
Each Fund may also invest in restricted and illiquid securities, make loans of
portfolio securities and purchase securities on a when-issued basis. See the SAI
for more information regarding these types of investments.

Utilities Income Fund

The primary investment objective of Utilities Income Fund is to seek high
current income. Long-term capital appreciation is a secondary objective. The
Fund seeks its objectives by investing, under normal market conditions, at least
65% of its total assets in equity and debt securities issued by companies
primarily engaged in the public utilities industry. Equity securities in which
the Fund may invest include common stocks, preferred stocks, securities
convertible into common stocks or preferred stocks, and warrants to purchase
common or preferred stocks. Debt securities in which the Fund may invest will be
rated at the time of investment at least A by Moody's or S&P or, if unrated,
will be deemed to be of comparable quality as determined by the Adviser. Debt
securities rated A or higher by Moody's or S&P or, if unrated, deemed to be of
comparable quality by the Adviser, are regarded as having a strong capacity to
pay principal and interest. The Fund's policy is to attempt to sell, within a
reasonable time period, a debt security in its portfolio which has been
downgraded below A, provided that such disposition is in the best interests of
the Fund and its shareholders. See Appendix A for a description of corporate
bond ratings. The portion of the Fund's assets invested in equity securities and
in debt securities will vary from time to time due to changes in interest rates
and economic and other factors.

The utility companies in which the Fund will invest include companies
primarily engaged in the ownership or operation of facilities used to provide
electricity, gas, water or telecommunications (including telephone, telegraph
and satellite, but not companies engaged in public broadcasting or cable
television). For these purposes, "primarily engaged" means that (1) more than
50% of the company's assets are devoted to the ownership or operation of one or
more facilities as described above, or (2) more than 50% of the company's
operating revenues are derived from the business or combination of any of the
businesses described above. It should be noted that based on this definition,
the Fund may invest in companies which are also involved to a significant degree
in non-public utilities activities.

Utility stocks generally offer dividend yields that exceed those of
industrial companies and their prices tend to be less volatile than stocks of
industrial companies. However, utility stocks can still be affected by the risks
of the stock of industrial companies. Because the Fund concentrates its
investments in public utilities companies, the value of its shares will be
especially affected by factors peculiar to the utilities industry, and may
fluctuate more widely than the value of shares of a fund that invests in a
broader range of industries. See "Utilities Industries--Risk Factors."

<PAGE>

The Fund may invest up to 35% of its total assets in the following
instruments: debt securities (rated at least A by Moody's or S&P) and common and
preferred stocks of non-utility companies; U.S. Government Obligations;
mortgage-backed securities; cash; and money market instruments consisting of
prime commercial paper, bankers' acceptances, certificates of deposit and
repurchase agreements. The Fund may invest in securities on a "when-issued" or
delayed delivery basis and make loans of portfolio securities. The Fund may
invest up to 5% of its net assets in ADRs. The Fund may borrow money for
temporary or emergency purposes in amounts not exceeding 5% of its net assets.
The Fund also may invest in zero coupon and pay-in-kind securities. In addition,
in any period of market weakness or of uncertain market or economic conditions,
the Fund may establish a temporary defensive position to preserve capital by
having all of its assets invested in short-term fixed income securities or
retained in cash or cash equivalents. See the SAI for a description of these
securities.

General. Each Fund's net asset value fluctuates based mainly upon changes
in the value of its portfolio securities. Each Fund's investment objectives and
certain investment limitations set forth in the SAI are fundamental policies
that may not be changed without shareholder approval. There can be no assurance
that any Fund will achieve its investment objectives.

Description of Certain Securities, Other Investment Policies and Risk Factors

American Depository Receipts and Global Depository Receipts. Blue Chip
Fund, International Securities Fund, Growth Fund, Utilities Income Fund and
Discovery Fund may invest in sponsored and unsponsored ADRs. ADRs are receipts
typically issued by a U.S. bank or trust company evidencing ownership of the
underlying securities of foreign issuers, and other forms of depository receipts
for securities of foreign issuers. Generally, ADRs, in registered form, are
denominated in U.S. dollars and are designed for use in the U.S. securities
markets. Thus, these securities are not denominated in the same currency as the
securities into which they may be converted. In addition, the issuers of the
securities underlying unsponsored ADRs are not obligated to disclose material
information in the United States and, therefore, there may be less information
available regarding such issuers and there may not be a correlation between such
information and the market value to the ADRs. International Securities Fund and
Growth Fund may also invest in sponsored and unsponsored GDRs. GDRs are issued
globally and evidence a similar ownership arrangement. Generally, GDRs are
designed for trading in non-U.S. securities markets. ADRs and GDRs are
considered to be foreign securities by each of the above Funds, as appropriate.
See "Foreign Securities--Risk Factors."

Bankers' Acceptances. Each Fund may invest in bankers' acceptances.
Bankers' acceptances are short-term credit instruments used to finance
commercial transactions. Generally, an acceptance is a time draft drawn on a
bank by an exporter or importer to obtain a stated amount of funds to pay for
specific merchandise. The draft is then "accepted" by a bank that, in effect,
unconditionally guarantees to pay the face value of the instrument on its
maturity date. The acceptance may then be held by the accepting bank as an asset
or it may be sold in the secondary market at the going rate of interest for a
specific maturity. Although maturities for acceptances can be as long as 270
days, most acceptances have maturities of six months or less.

Certificates of Deposit. Each Fund may invest in bank certificates of
deposit ("CDs"). The FDIC is an agency of the U.S. Government which insures the
deposits of certain banks and savings and loan associations up to $100,000 per
deposit. The interest on such deposits may not be insured

<PAGE>

if this limit is exceeded. Current Federal regulations also permit such
institutions to issue insured negotiable CDs in amounts of $100,000 or more,
without regard to the interest rate ceilings on other deposits. To remain fully
insured, these investments currently must be limited to $100,000 per insured
bank or savings and loan association.

Commercial Paper. Commercial paper is a promissory note issued by a
corporation to finance short-term credit needs which may either be unsecured or
backed by a letter of credit. Commercial paper includes notes, drafts or similar
instruments payable on demand or having a maturity at the time of issuance not
exceeding nine months, exclusive of days of grace or any renewal thereof. See
Appendix A to the SAI for a description of commercial paper ratings.

Convertible Securities. A convertible security is a bond, debenture, note,
preferred stock or other security that may be converted into or exchanged for a
prescribed amount of common stock of the same or a different issuer within a
particular period of time at a specified price or formula. A convertible
security entitles the holder to receive interest paid or accrued on debt or
dividends paid on preferred stock until the convertible security matures or is
redeemed, converted or exchanged. Convertible securities have unique investment
characteristics in that they generally (1) have higher yields than common
stocks, but lower yields than comparable non-convertible securities, (2) are
less subject to fluctuation in value than the underlying stock because they have
fixed income characteristics, and (3) provide the potential for capital
appreciation if the market price of the underlying common stock increases. See
the SAI for more information on convertible securities.

Debt Securities--Risk Factors. The market value of debt securities is
influenced primarily by changes in the level of interest rates. Generally, as
interest rates rise, the market value of debt securities decreases. Conversely,
as interest rates fall, the market value of debt securities increases. Factors
which could result in a rise in interest rates, and a decrease in the market
value of debt securities, include an increase in inflation or inflation
expectations, an increase in the rate of U.S. economic growth, an expansion in
the Federal budget deficit or an increase in the price of commodities such as
oil. In addition, the market value of debt securities is influenced by
perceptions of the credit risks associated with such securities. Sale of debt
securities prior to maturity may result in a loss and the inability to replace
the sold securities with debt securities with a similar yield. Debt obligations
rated lower than Baa by Moody's or BBB by S&P, commonly referred to as "junk
bonds," are speculative and generally involve a higher risk of loss of principal
and income than higher-rated securities. See "High Yield Securities--Risk
Factors" and Appendix A for a description of corporate bond ratings.

Deep Discount Securities. High Yield Fund may invest up to 15% of its total
assets in securities of companies that are financially troubled, in default or
undergoing bankruptcy or reorganization. Such securities are usually available
at a deep discount from the face value of the instrument. The Fund will invest
in Deep Discount Securities when the Adviser believes that there exist factors
that are likely to restore the company to a healthy financial condition. Such
factors include a restructuring of debt, management changes, existence of
adequate assets or other unusual circumstances. Debt instruments purchased at
deep discounts may pay very high effective yields. In addition, if the financial
condition of the issuer improves, the underlying value of the security may
increase, resulting in a capital gain. If the company defaults on its
obligations or remains in default, or if the plan of reorganization is
insufficient for debtholders, the Deep Discount Securities may stop paying
interest and lose value or become worthless. The Adviser will balance the
benefits of Deep Discount Securities with their risks. While a diversified
portfolio may reduce the overall impact of

<PAGE>

a Deep Discount Security that is in default or loses its value, the risk cannot
be eliminated. See "High Yield Securities--Risk Factors."

Eurodollar Certificates of Deposit. Cash Management Fund may invest in
Eurodollar CDs, which are issued by London branches of domestic or foreign
banks. Such securities involve risks that differ from certificates of deposit
issued by domestic branches of U.S. banks. These risks include future political
and economic developments, the possible imposition of United Kingdom withholding
taxes on interest income payable on the securities, the possible establishment
of exchange controls, the possible seizure or nationalization of foreign
deposits or the adoption of other foreign governmental restrictions that might
adversely affect the payment of principal and interest on such securities.

Foreign Securities--Risk Factors. International Securities Fund, High Yield
Fund and Discovery Fund may sell a security denominated in a foreign currency
and retain the proceeds in that foreign currency to use at a future date (to
purchase other securities denominated in that currency) or a Fund may buy
foreign currency outright to purchase securities denominated in that foreign
currency at a future date. Because none of these Funds intend to hedge their
foreign investments, the Fund will be affected by changes in exchange control
regulations and fluctuations in the relative rates of exchange between the
currencies of different nations, as well as by economic and political
developments. Other risks involved in foreign securities include the following:
there may be less publicly available information about foreign companies
comparable to the reports and ratings that are published about companies in the
United States; foreign companies are not generally subject to uniform
accounting, auditing and financial reporting standards and requirements
comparable to those applicable to U.S. companies; some foreign stock markets
have substantially less volume than U.S. markets, and securities of some foreign
companies are less liquid and more volatile than securities of comparable U.S.
companies; there may be less government supervision and regulation of foreign
stock exchanges, brokers and listed companies than exist in the United States;
and there may be the possibility of expropriation or confiscatory taxation,
political or social instability or diplomatic developments which could affect
assets of a Fund held in foreign countries.

International Securities Fund's and Discovery Fund's investments in
emerging markets include investments in countries whose economies or securities
markets are not yet highly developed. Special considerations associated with
these emerging market investments (in addition to the considerations regarding
foreign investments generally) may include, among others, greater political
uncertainties, an economy's dependence on revenues from particular commodities
or on international aid or development assistance, currency transfer
restrictions, a limited number of potential buyers for such securities and
delays and disruptions in securities settlement procedures.

High Yield Securities--Risk Factors. High Yield Securities are subject to
certain risks that may not be present with investments in higher grade
securities.

Effect of Interest Rate and Economic Changes. High Yield Securities rated
lower than Baa by Moody's or BBB by S&P, commonly referred to as "junk bonds,"
are speculative and generally involve a higher risk or loss of principal and
income than higher-rated securities. The prices of High Yield Securities tend to
be less sensitive to interest rate changes than higher-rated investments, but
may be more sensitive to adverse economic changes or individual corporate
developments. Periods of economic uncertainty and changes generally result in
increased volatility in the market prices and yields of High Yield Securities
and thus in a Fund's net asset value. A strong economic downturn

<PAGE>

or a substantial period of rising interest rates could severely affect the
market for High Yield Securities. In these circumstances, highly leveraged
companies might have greater difficulty in making principal and interest
payments, meeting projected business goals, and obtaining additional financing.
Thus, there could be a higher incidence of default. This would affect the value
of such securities and thus a Fund's net asset value. Further, if the issuer of
a security owned by a Fund defaults, that Fund might incur additional expenses
to seek recovery.

Generally, when interest rates rise, the value of fixed rate debt
obligations, including High Yield Securities, tends to decrease; when interest
rates fall, the value of fixed rate debt obligations tends to increase. If an
issuer of a High Yield Security containing a redemption or call provision
exercises either provision in a declining interest rate market, a Fund would
have to replace the security, which could result in a decreased return for
shareholders. Conversely, if a Fund experiences unexpected net redemptions in a
rising interest rate market, it might be forced to sell certain securities,
regardless of investment merit. This could result in decreasing the assets to
which Fund expenses could be allocated and in a reduced rate of return for that
Fund. While it is impossible to protect entirely against this risk,
diversification of a Fund's portfolio and the Adviser's careful analysis of
prospective portfolio securities should minimize the impact of a decrease in
value of a particular security or group of securities in a Fund's portfolio.

The High Yield Securities Market. The market for below investment
grade bonds expanded rapidly in recent years and its growth paralleled a long
economic expansion. In the past, the prices of many lower-rated debt securities
declined substantially, reflecting an expectation that many issuers of such
securities might experience financial difficulties. As a result, the yields on
lower-rated debt securities rose dramatically. However, such higher yields did
not reflect the value of the income streams that holders of such securities
expected, but rather the risk that holders of such securities could lose a
substantial portion of their value as a result of the issuers' financial
restructuring or default. There can be no assurance that such declines in the
below investment grade market will not reoccur. The market for below investment
grade bonds generally is thinner and less active than that for higher quality
bonds, which may limit a Fund's ability to sell such securities at fair value in
response to changes in the economy or the financial markets. Adverse publicity
and investor perceptions, whether or not based on fundamental analysis, may also
decrease the values and liquidity of lower rated securities, especially in a
thinly traded market.

Credit Ratings. The credit ratings issued by credit rating services
may not fully reflect the true risks of an investment. For example, credit
ratings typically evaluate the safety of principal and interest payments, not
market value risk, of High Yield Securities. Also, credit rating agencies may
fail to change on a timely basis a credit rating to reflect changes in economic
or company conditions that affect a security's market value. Although the
Adviser considers ratings of recognized rating services such as Moody's and S&P,
the Adviser primarily relies on its own credit analysis, which includes a study
of existing debt, capital structure, ability to service debt and to pay
dividends, the issuer's sensitivity to economic conditions, its operating
history and the current trend of earnings. High Yield Fund may invest in
securities rated as low as D by S&P or C by Moody's or, if unrated, deemed to be
of comparable quality by the Adviser. Debt obligations with these ratings either
have defaulted or are in great danger of defaulting and are considered to be
highly speculative. See "Deep Discount Securities." The Adviser continually
monitors the investments in a Fund's portfolio and carefully evaluates whether
to dispose of or retain High Yield Securities whose credit ratings have changed.
See Appendix A for a description of corporate bond ratings.

<PAGE>

Liquidity and Valuation. Lower-rated bonds are typically traded
among a smaller number of broker-dealers than in a broad secondary market.
Purchasers of High Yield Securities tend to be institutions, rather than
individuals, which is a factor that further limits the secondary market. To the
extent that no established retail secondary market exists, many High Yield
Securities may not be as liquid as higher-grade bonds. A less active and thinner
market for High Yield Securities than that available for higher quality
securities may result in more volatile valuations of a Fund's holdings and more
difficulty in executing trades at favorable prices during unsettled market
conditions.

The ability of a Fund to value or sell High Yield Securities will be
adversely affected to the extent that such securities are thinly traded or
illiquid. During such periods, there may be less reliable objective information
available and thus the responsibility of Life Series Fund's Board of Trustees to
value High Yield Securities becomes more difficult, with judgment playing a
greater role. Further, adverse publicity about the economy or a particular
issuer may adversely affect the public's perception of the value, and thus
liquidity, of a High Yield Security, whether or not such perceptions are based
on a fundamental analysis.

Legislation. Provisions of the Revenue Reconciliation Act of 1989
limit a corporate issuer's deduction for a portion of the original issue
discount on "high yield discount" obligations (including certain pay-in-kind
securities). This limitation could have a materially adverse impact on the
market for certain High Yield Securities. From time to time, legislators and
regulators have proposed other legislation that would limit the use of high
yield debt securities in leveraged buyouts, mergers and acquisitions. It is not
certain whether such proposals, which also could adversely affect High Yield
Securities, will be enacted into law.

Market Risk. Blue Chip Fund, Discovery Fund, Growth Fund and Utilities
Income Fund are subject to market risk because they invest primarily in common
stocks. Market risk is the possibility that common stock prices will decline
over short or even extended periods. The U.S. stock market tends to be cyclical,
with periods when stock prices generally rise and periods when stock prices
generally decline.

Mortgage-Backed Securities

Mortgage loans made by banks, savings and loan institutions and
other lenders are often assembled into pools, the interests in which are issued
and guaranteed by an agency or instrumentality of the U.S. Government, though
not necessarily by the U.S. Government itself. Interests in such pools are
referred to herein as "mortgage-backed securities." The market value of these
securities will fluctuate as interest rates and market conditions change. In
addition, prepayment of principal by the mortgagees, which often occurs with
mortgage-backed securities when interest rates decline, can significantly change
the realized yield of these securities.

GNMA certificates are backed as to the timely payment of principal
and interest by the full faith and credit of the U.S. Government. Payments of
principal and interest on FNMA certificates are guaranteed only by FNMA itself,
not by the full faith and credit of the U.S. Government. FHLMC certificates
represent mortgages for which FHLMC has guaranteed the timely payment of
principal and interest but, like a FNMA certificate, they are not guaranteed by
the full faith and credit of the U.S. Government.

<PAGE>

Collateralized Mortgage Obligations and Multiclass Pass-Through
Securities. Collateralized mortgage obligations ("CMOs") are debt obligations
collateralized by mortgage loans or mortgage pass-through securities. Typically,
CMOs are collateralized by GNMA certificates or other government mortgage-backed
securities (such collateral collectively hereinafter referred to as "Mortgage
Assets"). Multiclass pass-through securities are interests in trusts that are
comprised of Mortgage Assets. Unless the context indicates otherwise, references
herein to CMOs include multiclass pass-through securities. Payments of principal
of, and interest on, the Mortgage Assets, and any reinvestment income thereon,
provide the funds to pay debt service on the CMOs or to make scheduled
distributions on the multiclass pass-through securities. CMOs in which
Government Fund may invest are issued or guaranteed by U.S. Government agencies
or instrumentalities, such as FNMA and FHLMC. See the SAI for more information
on CMOs.

Stripped Mortgage-Backed Securities. Government Fund, Target
Maturity 2007 Fund and Target Maturity 2010 Fund may invest in stripped
mortgage-backed securities ("SMBS"), which are derivative multiclass mortgage
securities. SMBS are usually structured with two classes that receive different
proportions of the interest and principal distributions from a pool of mortgage
assets. A common type of SMBS will have one class receiving most of the interest
and the remainder of the principal. In the most extreme case, one class will
receive all of the interest while the other class will receive all of the
principal. If the underlying Mortgage Assets experience greater than anticipated
prepayments of principal, the Fund may fail to fully recoup its initial
investment in these securities. The market value of the class consisting
primarily or entirely of principal payments generally is unusually volatile in
response to changes in interest rates.

Risks of Mortgage-Backed Securities. Investments in mortgage-backed
securities entail both market and prepayment risk. Fixed-rate mortgage-backed
securities are priced to reflect, among other things, current and perceived
interest rate conditions. As conditions change, market values will fluctuate. In
addition, the mortgages underlying mortgage-backed securities generally may be
prepaid in whole or in part at the option of the individual buyer. Prepayments
of the underlying mortgages can affect the yield to maturity on mortgage-backed
securities and, if interest rates decline, the prepayment may only be invested
at the then prevailing lower interest rate. Changes in market conditions,
particularly during periods of rapid or unanticipated changes in market interest
rates, may result in volatility and reduced liquidity of the market value of
certain mortgage-backed securities. CMOs and SMBS involve similar risks,
although they may be more volatile and even less liquid.

Preferred Stock. A preferred stock is a blend of the characteristics of a
bond and common stock. It can offer the higher yield of a bond and has priority
over common stock in equity ownership, but does not have the seniority of a bond
and, unlike common stock, its participation in the issuer's growth may be
limited. Preferred stock has preference over common stock in the receipt of
dividends and in any residual assets after payment to creditors should the
issuer be dissolved. Although the dividend is set at a fixed annual rate, in
some circumstances it can be changed or omitted by the issuer.

Repurchase Agreements. Repurchase agreements are transactions in which a
Fund purchases securities from a bank or recognized securities dealer and
simultaneously commits to resell the securities to the bank or dealer at an
agreed-upon date and price reflecting a market rate of interest unrelated to the
coupon rate or maturity of the purchased securities. Each Fund's risk is

<PAGE>

limited primarily to the ability of the seller to repurchase the securities at
the agreed-upon price upon the delivery date. See the SAI for more information
regarding repurchase agreements.

Restricted and Illiquid Securities. Each Fund, other than Cash Management
Fund, may invest up to 15% of its net assets in illiquid securities. Cash
Management Fund may invest up to 10% of its net assets in illiquid securities.
These securities include (1) securities that are illiquid due to the absence of
a readily available market or due to legal or contractual restrictions on resale
and (2) repurchase agreements maturing in more than seven days. However,
illiquid securities for purposes of this limitation do not include securities
eligible for resale to qualified institutional buyers pursuant to Rule 144A
under the Securities Act of 1933, as amended, which Life Series Fund's Board of
Trustees or the Adviser or the Subadviser, as applicable, has determined are
liquid under Board- approved guidelines. See the SAI for more information
regarding restricted and illiquid securities.

Under current guidelines of the staff of the SEC, interest-only and
principal-only classes of fixed-rate mortgage-backed securities in which
Government Fund may invest are considered illiquid. However, such securities
issued by the U.S. Government or one of its agencies or instrumentalities will
not be considered illiquid if the Adviser has determined that they are liquid
pursuant to guidelines established by Life Series Fund's Board of Trustees.
Government Fund, Target Maturity 2007 Fund and Target Maturity 2010 Fund may not
be able to sell illiquid securities when the Adviser considers it desirable to
do so or may have to sell such securities at a price lower than could be
obtained if they were more liquid. Also the sale of illiquid securities may
require more time and may result in higher dealer discounts and other selling
expenses than does the sale of securities that are not illiquid. Illiquid
securities may be more difficult to value due to the unavailability of reliable
market quotations for such securities, and investment in illiquid securities may
have an adverse impact on these Fund's net asset value.

Time Deposits. Cash Management Fund may invest in time deposits. Time
deposits are non-negotiable deposits maintained in a banking institution for a
specified period of time at a stated interest rate. For the most part, time
deposits which may be held by the Fund would not benefit from insurance from the
Bank Insurance Fund or the Savings Association Insurance Fund administered by
the FDIC.

U.S. Government Obligations. Securities issued or guaranteed as to
principal and interest by the U.S. Government include (1) U.S. Treasury
obligations which differ only in their interest rates, maturities and times of
issuance as follows: U.S. Treasury bills (maturities of one year or less), U.S.
Treasury notes (maturities of one to ten years), and U.S. Treasury bonds
(generally maturities of greater than ten years); and (2) obligations issued or
guaranteed by U.S. Government agencies and instrumentalities that are backed by
the full faith and credit of the United States, such as securities issued by the
Federal Housing Administration, GNMA, the Department of Housing and Urban
Development, the Export-Import Bank, the General Services Administration and the
Maritime Administration and certain securities issued by the Farmers Home
Administration and the Small Business Administration. The range of maturities of
U.S. Government Obligations is usually three months to thirty years.

Utilities Industry-Risk Factors. Stocks of utilities companies generally
offer dividend yields that exceed those of industrial companies and their prices
tend to be less volatile than stocks of industrial companies. However, utility
stocks can still be affected by the risks of the stock market in general, as
well as factors specific to public utilities companies.

<PAGE>

Many utility companies, especially electric and gas and other
energy-related utility companies, have historically been subject to the risk of
increases in fuel and other operating costs, changes in interest rates on
borrowing for capital improvement programs, changes in applicable laws and
regulations, and costs and operating constraints associated with compliance with
environmental regulations. In particular, regulatory changes with respect to
nuclear and conventionally-fueled power generating facilities could increase
costs or impair the ability of utility companies to operate such facilities or
obtain adequate return on invested capital.

Certain utilities, especially gas and telephone utilities, have in recent
years been affected by increased competition, which could adversely affect the
profitability of such utility companies. In addition, expansion by companies
engaged in telephone communication services of their non-regulated activities
into other businesses (such as cellular telephone services, data processing,
equipment retailing, computer services and financial services) has provided the
opportunity for increases in earnings and dividends at faster rates than have
been allowed in traditional regulated businesses. However, technological
innovations and other structural changes also could adversely affect the
profitability of such companies in competition with utilities companies.

Because securities issued by utility companies are particularly sensitive
to movements in interest rates, the equity securities of such companies are more
affected by movements in interest rates than are the equity securities of other
companies.

Each of these risks could adversely affect the ability and inclination of
public utilities companies to declare or pay dividends and the ability of
holders of common stock, such as the Utilities Income Fund, to realize any value
from the assets of the company upon liquidation or bankruptcy.

Variable Rate and Floating Rate Notes. Cash Management Fund may invest in
derivative variable rate and floating rate notes. Issuers of such notes include
corporations, banks, broker-dealers and finance companies. Variable rate notes
include master demand notes which are obligations permitting the holder to
invest fluctuating amounts, which may change daily without penalty, pursuant to
direct arrangements between the Fund, as lender, and the borrower. The interest
rates on these notes fluctuate from time to time. The issuer of such obligations
normally has a corresponding right, after a given period, to prepay in its
discretion the outstanding principal amount of the obligations plus accrued
interest upon a specified number of days' notice to the holders of such
obligations. See the SAI for more information on these securities.

Zero Coupon and Pay-In-Kind Securities. Zero coupon securities are debt
obligations that do not entitle the holder to any periodic payment of interest
prior to maturity or a specified date when the securities begin paying current
interest. They are issued and traded at a discount from their face amount or par
value, which discount varies depending on the time remaining until cash payments
begin, prevailing interest rates, liquidity of the security and the perceived
credit quality of the issuer. Pay-in-kind securities are those that pay interest
through the issuance of additional securities. The market prices of zero coupon
and pay-in-kind securities generally are more volatile than the prices of
securities that pay interest periodically and in cash and are likely to respond
to changes in interest rates to a greater degree than do other types of debt
securities having similar maturities and credit quality. Original issue discount
earned on zero coupon securities and the "interest" on pay-in-kind securities
must be included in a Fund's income. Thus, to continue to qualify for tax
treatment as a regulated investment company and to avoid a certain excise tax on
undistributed income, a Fund may be required to distribute as a dividend an
amount that is greater

<PAGE>

than the total amount of cash it actually receives. See "Taxes" in the SAI.
These distributions must be made from a Fund's cash assets or, if necessary,
from the proceeds of sales of portfolio securities. A Fund will not be able to
purchase additional income-producing securities with cash used to make such
distributions, and its current income ultimately could be reduced as a result.

Zero Coupon Securities-Risk Factors. Zero coupon securities are debt
securities and thus are subject to the same risk factors as all debt securities.
See "Debt Securities-Risk Factors." The market prices of zero coupon securities,
however, generally are more volatile than the prices of securities that pay
interest periodically and in cash and are likely to respond to changes in
interest rates to a greater degree than do other types of debt securities having
similar maturities and credit quality. As a result, the net asset value of
shares of the Target Maturity 2007 Fund and Target Maturity 2010 Fund may
fluctuate over a greater range than shares of the other Funds or mutual funds
that invest in debt obligations having similar maturities but that make current
distributions of interest.

Zero coupon securities can be sold prior to their due date in the secondary
market at their then prevailing market value, which depends primarily on the
time remaining to maturity, prevailing levels of interest rates and the
perceived credit quality of the issuer. The prevailing market value may be more
or less than the securities' value at the time of purchase. While the objective
of both the Target Maturity 2007 Fund and Target Maturity 2010 Fund is to seek a
predictable compounded investment return for investors who hold their Fund
shares until that Fund's maturity, a Fund cannot assure that it will be able to
achieve a certain level of return due to the possible necessity of having to
sell certain zero coupon securities to pay expenses, dividends or to meet
redemptions at times and at prices that might be disadvantageous or,
alternatively, the need to invest assets received from new purchases at
prevailing interest rates, which would expose a Fund to reinvestment risk. In
addition, no assurance can be given as to the liquidity of the market for
certain of these securities. Determination as to the liquidity of such
securities will be made in accordance with guidelines established by Life Series
Fund's Board of Trustees. In accordance with such guidelines, the Adviser will
monitor each Fund's investments in such securities with particular regard to
trading activity, availability of reliable price information and other relevant
information.

Portfolio Turnover. The sustained and substantial decrease in interest
rates during 1995 caused the Government Fund's portfolio to be restructered
several times. In particular, declining rates increased prepayments on
mortgage-backed securities, causing their durations to decrease. In order to
offset the decrease in duration, the Government Fund had to actively manage its
mortgage-backed holdings. This resulted in a portfolio turnover rate for the
fiscal year ended December 31, 1995 of 198% and 457% for the prior fiscal year.
A high rate of portfolio turnover generally leads to increased transaction costs
and may result in a greater number of taxable transactions. See "Allocation of
Portfolio Brokerage" in the SAI. The Target Maturity 2010 Fund currently does
not expect its annual rate of portfolio turnover to exceed 100%. See the SAI for
the other Funds' portfolio turnover rate and for more information on portfolio
turnover.

HOW TO BUY SHARES

Investments in a Fund are only available through purchases of the Policies
or the Contracts offered by First Investors Life. Policy premiums, net of
certain expenses, are paid into a unit investment trust, Separate Account B.
Purchase payments for the Contracts, net of certain expenses, are also paid into
a unit investment trust, Separate Account C. The Separate Accounts pool these

<PAGE>

proceeds to purchase shares of a Fund designated by purchasers of the Policies
or Contracts. Orders for the purchase of Fund shares received prior to the close
of regular trading on the New York Stock Exchange ("NYSE"), generally 4:00 P.M.
(New York City time), on any business day the NYSE is open for trading, will be
processed and shares will be purchased at the net asset value determined at the
close of regular trading on the NYSE on that day. Orders received after the
close of regular trading on the NYSE will be processed at the net asset value
determined at the close of regular trading on the NYSE on the next trading day.
See "Determination of Net Asset Value."

Due to emergency conditions, such as snow storms, the Woodbridge offices of
First Investors Corporation ("FIC"), the underwriter of Separate Accounts B and
C, and Administrative Data Management Corp. (the "Transfer Agent") may not be
open for business on a day when the NYSE is open for regular trading and,
therefore, would be unable to accept purchase orders. Should this occur,
purchase orders will be executed at the net asset value determined at the close
of regular trading on the NYSE on the next business day that these offices are
open for business.

HOW TO REDEEM SHARES

Shares of a Fund may be redeemed at the direction of Policyowners or
Contractowners, in accordance with the terms of the Policies or Contracts.
Redemptions will be made at the next determined net asset value of the
respective Fund upon receipt of a proper request for redemption or repurchase.
Payment will be made by check as soon as possible but within seven days after
presentation. However, Life Series Fund's Board of Trustees may suspend the
right of redemption or postpone the date of payment during any period when (a)
trading on the NYSE is restricted as determined by the Securities and Exchange
Commission ("SEC") or the NYSE is closed for other than weekends and holidays,
(b) the SEC has by order permitted such suspension, or (c) an emergency, as
defined by rules of the SEC, exists during which time the sale or valuation of
portfolio securities held by a Fund is not reasonably practicable.

Due to emergency conditions, such as snow storms, the Woodbridge offices of
FIC and the Transfer Agent may not be open for business on a day when the NYSE
is open for regular trading and, therefore, would be unable to accept redemption
orders. Should this occur, redemption orders will be executed at the net asset
value determined at the close of regular trading on the NYSE on the next
business day that these offices are open for business.

MANAGEMENT

Board of Trustees. Life Series Fund's Board of Trustees, as part of its
overall management responsibility, oversees various organizations responsible
for each Fund's day-to-day management.

Adviser. First Investors Management Company, Inc. supervises and manages
each Fund's investments, supervises all aspects of each Fund's operations and,
except for International Securities Fund and Growth Fund, determines each Fund's
portfolio transactions. The Adviser is a New York corporation located at 95 Wall
Street, New York, NY 10005. First Investors Consolidated Corporation ("FICC")
owns all of the voting common stock of the Adviser and all of the outstanding
stock of First Investors Corporation and the Transfer Agent. Mr. Glenn O. Head
controls FICC and, therefore, controls the Adviser.

<PAGE>

As compensation for its services, the Adviser receives an annual fee from
each Fund, which is payable monthly. For the fiscal year ended December 31,
1995, the advisory fees were 0.75% of average daily net assets for each of Blue
Chip Fund, Discovery Fund, Growth Fund, High Yield Fund and International
Securities Fund, 0.35% of average daily net assets, net of waiver, for each of
Cash Management Fund, Government Fund, Investment Grade Fund and Utilities
Income Fund. The Adviser waived Target Maturity 2007 Fund's advisory fee in its
entirety. As compensation for its services, the Adviser will receive a fee from
Target Maturity 2010 Fund at the rate of 0.75% of the average daily net assets
of that Fund. The SEC staff takes the position that fees of 0.75% or greater are
higher than those paid by most investment companies.

Subadviser. Wellington Management Company has been retained by the Adviser
and Life Series Fund, on behalf of International Securities Fund and Growth
Fund, as each of those Fund's investment subadviser. The Adviser has delegated
discretionary trading authority to WMC with respect to all the assets of
International Securities Fund and Growth Fund, subject to the continuing
oversight and supervision of the Adviser and the Board of Trustees. As
compensation for its services, WMC is paid by the Adviser, and not by either
Fund, a fee which is computed daily and paid monthly.

WMC, located at 75 State Street, Boston, MA 02109, is a Massachusetts
general partnership of which Robert W. Doran, Duncan M. McFarland and John R.
Ryan are Managing Partners. WMC is a professional investment counseling firm
which provides investment services to investment companies, employee benefit
plans, endowment funds, foundations and other institutions and individuals. As
of December 31, 1995, WMC held investment management authority with respect to
approximately $109.2 billion of assets. Of that amount, WMC acted as investment
adviser or subadviser to approximately 110 registered investment companies or
series of such companies, with net assets of approximately $76.1 billion as of
December 31, 1995. WMC is not affiliated with the Adviser or any of its
affiliates.

For the fiscal year ended December 31, 1995, the Subadviser's fees amounted
to 0.34% of Growth Fund's average daily net assets and 0.40% of International
Securities Fund's average daily net assets, all of which was paid by the Adviser
and not by the Funds.

Portfolio Managers. Patricia D. Poitra, Director of Equities, has been
primarily responsible for the day-to-day management of the Blue Chip Fund since
October 1994 and Discovery Fund since 1988. Ms. Poitra is assisted by a team of
portfolio analysts. Ms. Poitra has been responsible for the management of the
Special Situations Fund, the Blue Chip Fund and the equity portion of Total
Return Fund, all series of First Investors Series Fund. Ms. Poitra also is
responsible for the management of the Blue Chip Fund of Executive Investors
Trust and the U.S.A. Mid-Cap Opportunity Fund of First Investors Series Fund II,
Inc. Ms. Poitra joined FIMCO in 1985 as a Senior Equity Analyst.

George V. Ganter has been Portfolio Manager for High Yield Fund since 1989.
Mr. Ganter joined FIMCO in 1985 as a Senior Analyst. In 1986, he became
Portfolio Manager for First Investors Special Bond Fund, Inc. In 1989, he became
Portfolio Manager for First Investors High Yield Fund, Inc. and Executive
Investors High Yield Fund.

Margaret R. Haggerty is Portfolio Manager for Utilities Income Fund. Ms.
Haggerty joined FIMCO in 1990 as an analyst for several First Investors equity
funds. In addition, she monitored

<PAGE>

the management of several First Investors funds for which WMC was the
subadviser. In early 1993, she became Portfolio Manager for First Investors
Utilities Income Fund of First Investors Series Fund II, Inc.

Nancy Jones has been Portfolio Manager for Investment Grade Fund since its
inception in 1992. Ms. Jones joined FIMCO in 1983 as Director of Research in the
High Yield Department. In 1989, she became Portfolio Manager for First Investors
Fund For Income, Inc. Ms. Jones has been Portfolio Manager for Investment Grade
Fund of First Investors Series Fund since its inception in 1991 and has managed
the fixed income corporate securities portion of Total Return Fund of First
Investors Series Fund since 1992.

Since August 1995, WMC's Growth Investment Team, a group of equity
portfolio managers and senior investment professionals, has assumed
responsibility for managing the Growth Fund.

Since October 1995, Clark D. Wagner has been primarily responsible for the
day-to-day management of the Government Fund and the Target Maturity 2007 Fund.
Mr. Wagner will have the primary responsibility for the day-to-day management of
Target Maturity 2010 Fund. Since he joined FIMCO in 1991, Mr. Wagner has been
Portfolio Manager for all of First Investors municipal bond funds. Mr. Wagner
also is responsible for the day-to-day management of First Investors Government
Fund, Inc. In 1992, he became Chief Investment Officer of FIMCO.

Since April 1, 1994, International Securities Fund is managed by WMC's
Global Equity Strategy Group, a group of global portfolio managers and senior
investment professionals headed by Trond Skramstad. Prior to joining WMC as a
portfolio manager in 1993, Mr. Skramstad was a global portfolio manager at
Scudder, Stevens & Clark since 1990.

DETERMINATION OF NET ASSET VALUE

The net asset value of shares of each Fund is determined as of the close of
regular trading on the NYSE (generally 4:00 P.M., New York City time) on each
day the NYSE is open for trading, and at such other times as Life Series Fund's
Board of Trustees deems necessary by dividing the value of the securities held
by a Fund, plus any cash and other assets, less all liabilities, by the number
of shares outstanding. If there is no available market value, securities will be
valued at their fair value as determined in good faith pursuant to procedures
adopted by the Board of Trustees. The NYSE currently observes the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

The investments in Cash Management Fund, when purchased at a discount, are
valued at amortized cost and when purchased at face value, are valued at cost
plus accrued interest.

DIVIDENDS AND OTHER DISTRIBUTIONS

For the purposes of determining dividends, the net investment income of
each Fund, other than Cash Management Fund, consists of interest and dividends,
earned discount and other income earned on portfolio securities less expenses.
Net investment income of Cash Management Fund consists of (i) accrued interest,
plus or minus (ii) all realized and unrealized gains and losses on the Fund's
securities, less (iii) accrued expenses. Dividends from net investment income
are generally

<PAGE>

declared and paid annually by each Fund, other than Cash Management Fund.
Dividends from net investment income are generally declared daily and paid
monthly by Cash Management Fund. Distributions of a Fund's net capital gain (the
excess of net long-term capital gain over net short-term capital loss), if any,
after deducting any available capital loss carryovers, are declared and paid
annually by each Fund, other than Cash Management Fund, which does not
anticipate realizing any such gain. International Securities Fund and High Yield
Fund also distribute any net realized gains from foreign currency transactions
with their annual distribution. All dividends and other distributions are paid
in shares of the distributing Fund at net asset value (without sales charge),
generally determined as of the close of business on the business day immediately
following the record date of such distribution.

TAXES

Each Fund has qualified, or intends to qualify, for treatment as a
regulated investment company ("RIC") under Subchapter M of the Internal Revenue
Code of 1986, as amended ("Code"), so that it will be relieved of Federal income
tax on that part of its investment company taxable income (consisting generally
of net investment income, net short-term capital gain and, for International
Securities Fund and High Yield Fund, net gains from certain foreign currency
transactions) and net capital gain that is distributed to its shareholders.

Shares of the Funds are offered only to the Separate Accounts, which are
insurance company separate accounts that fund variable annuity and variable life
insurance contracts. Under the Code, no tax is imposed on an insurance company
with respect to income of a qualifying separate account that is properly
allocable to the value of eligible variable annuity (or variable life insurance)
contracts. Please refer to "Federal Income Tax Status" in the Prospectuses of
Separate Accounts B and C for information as to the tax status of those accounts
and the holders of the Contracts or Policies.

Each Fund intends to comply with the diversification requirements imposed
by section 817(h) of the Code and the regulations thereunder. These
requirements, which are in addition to the diversification requirements imposed
on the Fund by the Investment Company Act of 1940, as amended, and Subchapter M
of the Code, place certain limitations on the assets of Separate Accounts B and
C -- and of a Fund, because section 817(h) and those regulations treat the
assets of a Fund as assets of Separate Accounts B and C -- that may be invested
in securities of a single issuer. Specifically, the regulations provide that,
except as permitted by the "safe harbor" described below, as of the end of each
calendar quarter (or within 30 days thereafter) no more than 55% of a Fund's
total assets may be represented by any one investment, no more than 70% by any
two investments, no more than 80% by any three investments and no more than 90%
by any four investments. For this purpose, all securities of the same issuer are
considered a single investment, and while each U.S. Government agency and
instrumentality is considered a separate issuer, a particular foreign government
and its agencies, instrumentalities and political subdivisions are considered
the same issuer. Section 817(h) provides, as a safe harbor, that a separate
account will be treated as being adequately diversified if the diversification
requirements under Subchapter M are satisfied and no more than 55% of the value
of the account's total assets are cash and cash items, government securities and
securities of other RICs. Failure of a Fund to satisfy the section 817(h)
requirements would result in taxation of First Investors Life and treatment of
the Contract holders and Policyowners other than as described in the
Prospectuses of Separate Accounts B and C.

<PAGE>

The foregoing is only a summary of some of the important Federal income tax
considerations generally affecting each Fund and its shareholders; see the SAI
for a more detailed discussion. Shareholders are urged to consult their tax
advisers.

GENERAL INFORMATION

Organization. Life Series Fund is a Massachusetts business trust organized
on June 12, 1985. The Board of Trustees of Life Series Fund has authority to
issue an unlimited number of shares of beneficial interest of separate series,
no par value, of Life Series Fund. The shares of beneficial interest of Life
Series Fund are presently divided into eleven separate and distinct series. Life
Series Fund does not hold annual shareholder meetings. If requested to do so by
the holders of at least 10% of Life Series Fund's outstanding shares, the Board
of Trustees will call a special meeting of shareholders for any purpose,
including the removal of Trustees.

Custodian. The Bank of New York, 48 Wall Street, New York, NY 10286, is
custodian of the securities and cash of each Fund, except the International
Securities Fund. Brown Brothers Harriman & Co., 40 Water Street, Boston, MA
02109, is custodian of the securities and cash of the International Securities
Fund and employs foreign sub-custodians to provide custody of the Fund's foreign
assets.

Transfer Agent. Administrative Data Management Corp., 581 Main Street,
Woodbridge, NJ 07095-1198, an affiliate of FIMCO and FIC, acts as transfer agent
for each Fund and as redemption agent for regular redemptions.

Performance. Performance information is contained in Life Series Fund's
Annual Report which may be obtained without charge by contacting First Investors
Life at 212-858-8200.

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

Annual and Semi-Annual Reports to Shareholders. It is Life Series Fund's
practice to mail only one copy of its annual and semi-annual reports to any
address at which more than one shareholder with the same last name has indicated
that mail is to be delivered. Additional copies of the reports will be mailed if
requested in writing or by telephone by any shareholder. Life Series Fund will
ensure that an additional copy of such reports are sent to any shareholder who
subsequently changes his or her mailing address.

APPENDIX A
DESCRIPTION OF CORPORATE BOND RATINGS

STANDARD & POOR'S RATINGS GROUP

The ratings are based on current information furnished by the issuer or
obtained by S&P from other sources it considers reliable. S&P does not perform
any audit in connection with any rating and may, on occasion, rely on unaudited
financial information. The ratings may be changed, suspended, or withdrawn as a
result of changes in, or unavailability of, such information, or based on other
circumstances.

<PAGE>

The ratings are based, in varying degrees, on the following considerations:

1. Likelihood of default-capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in
accordance with the terms of the obligation;

2. Nature of and provisions of the obligation;

3. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization, or other arrangement under
the laws of bankruptcy and other laws affecting creditors' rights.

AAA Debt rated "AAA" has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.

AA Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.

A Debt rated "A" has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

BB, B, CCC, CC, C Debt rated "BB," "B," "CCC," "CC" and "C" is regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal. "BB" indicates the least degree of speculation and "C" the
highest. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.

BB Debt rated "BB" has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The "BB"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BBB-" rating.

B Debt rated "B" has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
"BB" or "BB-" rating.

CCC Debt rated "CCC" has a currently identifiable vulnerability to default
and is dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not

<PAGE>

likely to have the capacity to pay interest and repay principal. The "CCC"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "B" or "B-" rating.

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

C The rating "C" typically is applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC-" debt rating. The "C" rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.

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

D Debt rated "D" is in payment default. The "D" rating category is used
when interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The "D" rating also will be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
categories.

MOODY'S INVESTORS SERVICE, INC.

Aaa Bonds which are rated "Aaa" are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa Bonds which are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat greater than the Aaa securities.

A Bonds which are rated "A" possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the future.

Baa Bonds which are rated "Baa" are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

<PAGE>

Ba Bonds which are rated "Ba" are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

B Bonds which are rated "B" generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa Bonds which are rated "Caa" are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca Bonds which are rated "Ca" represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.

C Bonds which are rated "C" are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.

<PAGE>

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

Financial Highlights...................................................... 4
Investment Objectives and Policies........................................ 8
How to Buy Shares......................................................... 26
How to Redeem Shares...................................................... 27
Management................................................................ 27
Determination of Net Asset Value.......................................... 29
Dividends and Other Distributions......................................... 29
Taxes..................................................................... 30
General Information....................................................... 31
Appendix A................................................................ 31

Investment Adviser Custodians
First Investors Management The Bank of New York
Company, Inc. 48 Wall Street
95 Wall Street New York, NY 10286
New York, NY 10005
Brown Brothers
Subadviser Harriman & Co.
Wellington Management 40 Water Street
Company Boston, MA 02109
75 State Street
Boston, MA 02109 Auditors
Tait, Weller & Baker
Transfer Agent Two Penn Center Plaza
Administrative Data Philadelphia, PA 19102-1707
Management Corp.
581 Main Street Legal Counsel
Woodbridge, NJ 07095-1198 Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036

This Prospectus is intended to constitute an offer by Life Series Fund only of
the securities of which it is the issuer and is not intended to constitute an
offer by any Fund of the securities of any other Fund whose securities are also
offered by this Prospectus. No Fund intends to make any representation as to the
accuracy or completeness of the disclosure in this Prospectus relating to any
other Fund. No dealer, salesman or any other person has been authorized to give
any information or to make any representations other than those contained in
this Prospectus or the Statement of Additional Information, and if given or
made, such information and representation must not be relied upon as having been
authorized by Life Series Fund, First Investors Corporation, or any affiliate
thereof. This Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy any of the shares offered hereby in any state to any person
to whom it is unlawful to make such offer in such state.

<PAGE>

First Investors
Life Series Fund
- -----------------------------
Blue Chip Fund
Cash Management Fund
Discovery Fund
Government Fund
Growth Fund
High Yield Fund
International Securities Fund
Investment Grade Fund
Target Maturity 2007 Fund
Target Maturity 2010 Fund
Utilities Income Fund

Prospectus

- -----------------------------

April 29, 1996

First Investors Logo

Logo is described as follows: the arabic numeral one separated into seven
vertical segments followed by the words "First Investors."

Verticle line from top to bottom in center of page about 1/2 inch in thickness

The following language appears to the left of the above language in the printed
piece:

FIRST INVESTORS LIFE SERIES FUND
95 WALL STREET
NEW YORK, NY 10005

First Investors Logo (as described above)
A MEMBER OF THE
FIRST INVESTORS
FINANCIAL NETWORK

LIFE325

<PAGE>

FIRST INVESTORS LIFE VARIABLE ANNUITY FUND C
INDIVIDUAL VARIABLE ANNUITY CONTRACTS
OFFERED BY
FIRST INVESTORS LIFE INSURANCE COMPANY

Statement of Additional Information dated April 29, 1996

This Statement of Additional Information is not a Prospectus and should be
read in conjunction with the Prospectus for First Investors Life Variable
Annuity Fund C, dated April 29, 1996, which may be obtained at no cost by
writing to First Investors Life Insurance Company, 95 Wall Street, New York, New
York 10005, or by telephoning (212) 858-8200.

TABLE OF CONTENTS

Page
----
General Description................................ 2
Services........................................... 2
Purchase of Securities............................. 4
Deduction Table.................................... 5
Annuity Payments................................... 5
Other Information.................................. 7
Performance Information............................ 7
Relevance of Financial Statements.................. 12
Appendices......................................... 13
Financial Statements............................... 18

<PAGE>

GENERAL DESCRIPTION

First Investors Life Insurance Company. First Investors Life Insurance
Company, 95 Wall Street, New York, New York 10005 ("First Investors Life"), a
stock life insurance company incorporated under the laws of the State of New
York in 1962, writes life insurance, annuities and accident and health
insurance. First Investors Consolidated Corporation ("FICC") owns all of the
voting common stock of First Investors Management Company, Inc. ("FIMCO" or
"Adviser") and all of the outstanding stock of First Investors Life, First
Investors Corporation ("FIC" or "Underwriter") and Administrative Data
Management Corp., the Transfer Agent for First Investors Life Series Fund ("Life
Series Fund"). Mr. Glenn O. Head controls FICC and, therefore, controls the
Adviser.

Separate Account C. First Investors Life Variable Annuity Fund C ("Separate
Account C") was established on December 21, 1989 under the provisions of the New
York Insurance Law. The assets of Separate Account C are held separately from
the assets of First Investors Life and for that portion of such assets having a
value equal to, or approximately equal to, such reserves and contract
liabilities are not chargeable with liabilities arising out of any other
business of First Investors Life. Separate Account C is registered as a unit
investment trust under the Investment Company Act of 1940, as amended (the "1940
Act"), but such registration does not involve any supervision of the management
or investment practices or policies of Separate Account C.

The assets of each Subaccount of Separate Account C are invested at net
asset value in shares of the corresponding series (each a "Fund" and
collectively "Funds") of Life Series Fund. For example, the Blue Chip Subaccount
invests in the Blue Chip Fund, the Government Subaccount invests in the
Government Fund, and so on. The Life Series Fund's Prospectus describes the
risks attendant to an investment in each Fund of Life Series Fund. The eleven
Funds of Life Series Fund may be referred to as: First Investors Life Blue Chip
Fund, First Investors Life Cash Management Fund, First Investors Life Discovery
Fund, First Investors Life Government Fund, First Investors Life Growth Fund,
First Investors Life High Yield Fund, First Investors Life International
Securities Fund, First Investors Life Investment Grade Fund, First Investors
Life Target Maturity 2007 Fund, First Investors Life Target Maturity 2010 Fund
and First Investors Life Utilities Income Fund.

SERVICES

Custodian. First Investors Life, subject to applicable laws and
regulations, is the custodian of the securities of the Subaccounts of Separate
Account C. The assets of the Subaccounts of Separate Account C are held by
United States Trust Company of New York, 114 W. 47th Street, New York, New York
10036 under a safekeeping arrangement. Under the terms of a Safekeeping
Agreement dated December 13, 1979 between First Investors Life and United States
Trust Company of New York, securities and similar investments of the Subaccounts
of Separate Account C shall be deposited in the safekeeping of United States
Trust Company of New York. First Investors Life is responsible for the payment
of all expenses of, and compensation to, United States Trust Company of New York
in such amounts as may be agreed upon from time to time.

Independent Public Accountants. Tait, Weller & Baker, Two Penn Center
Plaza, Philadelphia, PA 19102, independent certified public accountants, has
been selected as the independent accountants for Separate Account C.

<PAGE>

Adviser. Investment advisory services to each Fund are provided by First
Investors Management Company, Inc., 95 Wall Street, New York, NY 10005 pursuant
to an Investment Advisory Agreement dated June 13, 1994 (the "Advisory
Agreement"). The Advisory Agreement was approved, with respect to each Fund, by
Life Series Fund's Board of Trustees, including a majority of the Trustees who
are not parties to the Advisory Agreement or "interested persons" (as defined in
the 1940 Act) of any such party, in person at a meeting called for such purpose
and by the shareholders of each Fund.

Pursuant to the Advisory Agreement, FIMCO shall supervise and manage each
Fund's investments, determine each Fund's portfolio transactions and supervise
all aspects of each Fund's operations, subject to review by Life Series Fund's
Trustees. The Advisory Agreement also provides that FIMCO shall provide Life
Series Fund and each Fund with certain executive, administrative and clerical
personnel, office facilities and supplies, conduct the business and details of
the operation of each Fund and assume certain expenses thereof, other than
obligations or liabilities of a Fund, such as shareholder servicing fees and
expenses; custodian fees and expenses; legal and auditing fees; expenses of
communicating to existing shareholders, including preparing, printing and
mailing prospectuses and shareholder reports to such shareholders; and proxy and
shareholder meeting expenses.

Under the Advisory Agreement, each Fund pays the Adviser an annual fee,
paid monthly, according to the following schedule:

Annual
Average Daily Net Assets Rate
- ------------------------ ----
Up to $250 million...................................................... 0.75%
In excess of $250 million up to $500 million............................ 0.72
In excess of $500 million up to $750 million............................ 0.69
Over $750 million....................................................... 0.66

This fee is calculated separately for each Fund.

For the fiscal years ended December 31, 1993, 1994 and 1995, the Life
Series Fund paid the Adviser $871,844, $1,221,680 and $1,679,095, respectively,
in advisory fees.

Subadviser. Investment subadvisory services are provided to Growth Fund and
International Securities Fund by Wellington Management Company ("WMC" or
"Subadviser") pursuant to a Subadvisory Agreement dated June 13, 1994 (the
"Subadvisory Agreement"). The Subadvisory Agreement was approved, with respect
to each Fund, by Life Series Fund's Board of Trustees, including a majority of
the Trustees who are not parties to the Subadvisory Agreement or "interested
persons" (as defined in the 1940 Act) of any such party, in person at a meeting
called for such purpose and by the shareholders of Growth Fund and International
Securities Fund. The Subadvisory Agreement provides that WMC shall manage the
investment operations of each Fund subject to the oversight and supervision of
the Adviser and the Board of Trustees.

Under the Subadvisory Agreement, the Adviser will pay to the Subadviser a
fee at an annual rate of 0.400% of the average daily net assets of each Fund
allocated to WMC up to and including $50 million; 0.275% of such average daily
net assets in excess of $50 million up to and including $150 million, 0.225% of
such average daily net assets in excess of $150 million up to and including $500

<PAGE>

million; and 0.200% of such average daily net assets in excess of $500 million.
This fee is calculated separately for each Fund.

WMC, located at 75 State Street, Boston, MA 02109, is a Massachusetts
general partnership of which Robert W. Doran, Duncan M. McFarland and John B.
Neff are Managing Partners. WMC is a professional investment counseling firm
which provides investment services to investment companies, employee benefit
plans, endowment funds, foundations and other institutions and individuals. As
of December 31, 1995, WMC held discretionary investment authority with respect
to approximately $109.2 billion of assets. Of that amount, WMC acted as
investment adviser or subadviser to approximately 110 registered investment
companies or series of such companies, with net assets of approximately $76.1
billion as of December 31, 1995. WMC is not affiliated with the Adviser or any
of its affiliates.

Underwriter. First Investors Life and Separate Account C have entered into
an Underwriting Agreement with First Investors Corporation. FIC, an affiliate of
First Investors Life, and of the Adviser, has its principal business address at
95 Wall Street, New York, New York 10005. For the fiscal years ended December
31, 1993, 1994 and 1995, FIC received fees of $2,044,846, $2,609,538 and
$3,768,771, respectively, in connection with the distribution of the Contracts
in a continuous offering.

The Contracts are sold by insurance agents licensed to sell variable
annuities, who are registered representatives of the Underwriter or
broker-dealers who have sales agreements with the Underwriter.

PURCHASE OF SECURITIES

Purchase Payments. Investors in Separate Account C will be purchasing
Accumulation Units of a particular Subaccount only and not shares of the Fund in
which the Subaccount invests.

Purchase payments will be credited to a Contractowner's Account on the date
of receipt by First Investors Life of a completed application. In the event
First Investors Life receives an incomplete application, all required
information shall be provided not later than five business days following the
receipt of such application or the purchase payment will be returned to the
applicant at the end of such five-day period. Purchase payments, after
deductions for sales expenses and any applicable premium taxes (see "Deductions
from Purchase Payments"), will be allocated to the appropriate Subaccount or
Subaccounts.

Deductions from Purchase Payments. First Investors Life or FIC, as the
Underwriter, makes deductions, in accordance with the Deduction Table below,
from the purchase payment for expenses in connection with sales functions
relative to the Contracts. Reductions in sales charges are applicable to the
total amount of the purchase payment. In addition, any Additional Payment made
after the issuance of a Deferred Annuity Contract is subject to the sales charge
applicable to the total amount of all purchase payments previously made plus the
amount of the Additional Payment being made. The sales charge is intended to
cover expenses relating to the sale of the Contracts, including commissions paid
to persons distributing the Contracts and costs of preparation of sales
literature.

<PAGE>

- ----------
* Assumes that no premium taxes have been deducted.

ANNUITY PAYMENTS

Value of an Accumulation Unit. For each Subaccount of Separate Account C,
the value of an Accumulation Unit was arbitrarily initially set at $10.00. The
value of an Accumulation Unit for any subsequent Valuation Period is determined
by multiplying the value of an Accumulation Unit for the immediately preceding
Valuation Period by the Net Investment Factor for the Valuation Period for which
the Accumulation Unit Value is being calculated (see Appendix I, Example B). The
investment performance of each Fund, expenses and deductions of certain charges
affect the Accumulation Unit Value. The value of an Accumulation Unit for the
Subaccounts may increase or decrease from Valuation Period to Valuation Period.

Net Investment Factor. The Net Investment Factor for each Subaccount for
any Valuation Period is determined by dividing (a) by (b) and subtracting (c)
from the result, where:

(a) is the net result of:

(1) the net asset value per share of the applicable Fund determined at the
end of the current Valuation Period, plus

(2) the per share amount of any dividend or capital gains distributions
made by the applicable Fund if the "ex-dividend" date occurs during
the current Valuation Period.

(b) is the net asset value per share of the applicable Fund determined as of
the end of the immediately preceding Valuation Period.

(c) is a factor representing the charges deducted for mortality and expense
risks. Such factor is equal on an annual basis to 1.00% of the daily net
asset value of the Subaccount. This percentage represents approximately
0.6% charge for the mortality risk assumed and 0.4% charge for the expense
risk assumed.

<PAGE>

The Net Investment Factor may be greater or less than one, and therefore,
the value of an Accumulation Unit for any Subaccount may increase or decrease.
(For an illustration of this calculation, see Appendix I, Example A.)

Value of an Annuity Unit. For each Subaccount of Separate Account C, the
value of an Annuity Unit was arbitrarily initially set at $10.00. The value of
an Annuity Unit for any subsequent Valuation Period is determined by multiplying
the Annuity Unit Value for the immediately preceding Valuation Period by the Net
Investment Factor for the Valuation Period for which the Annuity Unit Value is
being calculated, and multiplying the result by an interest factor to offset the
effect of an investment earnings rate of 3.5% per annum, which is assumed in the
Annuity Tables contained in the Contract. (For an illustration of this
calculation, see Appendix III, Example A.)

Amount of Annuity Payments. When annuity payments are to commence, the
Accumulated Value to be applied to a variable annuity option will be determined
by multiplying the value of an Accumulation Unit for the Valuation Date on or
immediately preceding the seventh day before the Annuity Commencement Date by
the number of Accumulation Units owned. This seven day period is used to permit
calculation of amounts of annuity payments and mailing of checks in advance of
the due date. At that time, any applicable premium taxes not previously deducted
will be deducted from the Accumulated Value to determine the Net Accumulated
Value. The resultant value is then applied to the Annuity Tables set forth in
the Contract to determine the amount of the first monthly annuity payment. The
Contract contains Annuity Tables setting forth the amount of the first monthly
installment for each $1,000 of Accumulated Value applied. These Annuity Tables
vary according to the Annuity Option selected by the Contractowner and according
to the sex and adjusted age of the Annuitant and any Joint Annuitant at the
Annuity Commencement Date. The Contract contains a formula for determining the
adjusted age, and the Annuity Tables are determined from the Progressive Annuity
Table with interest at 3.5% per year and assumes births prior to 1900, adjusted
by a setback of four years of age for persons born 1900 and later and an
additional setback of one year of age for each completed 5 years by which the
year of birth is later than 1900. Annuity Tables used by other insurers may
provide greater or less benefits to the Annuitant.

The dollar amount of the first monthly Variable Payment, based on the
Subaccount determined as above, is divided by the value of an Annuity Unit for
the Subaccount for the Valuation Date on or immediately preceding the seventh
day before the Annuity Commencement Date to establish the number of Annuity
Units representing each monthly payment under the Subaccount. This seven day
period is used to permit calculation of amounts of annuity payments and mailing
of checks in advance of the due date. This number of Annuity Units remains fixed
for all variable annuity payments. The dollar amount of the second and
subsequent variable annuity payments is determined by multiplying the fixed
number of Annuity Units for the Subaccount by the applicable value of an Annuity
Value for the Valuation Date on or immediately preceding the seventh day before
the due date of the payment. The value of an Annuity Unit will vary with the
investment performance of the Fund, and, therefore, the dollar amount of the
second and subsequent variable annuity payments may change from month to month.
(For an illustration of the calculation of the first and subsequent Variable
Payments, see Appendix III, Examples B, C and D.)

A fixed annuity is an annuity with annuity payments which remain fixed as
to dollar amount throughout the payment period and is based on an assumed
interest rate of 3.5% per year built into the Annuity Tables in the Contract.

<PAGE>

OTHER INFORMATION

Time of Payments. All payments due under the Contracts will ordinarily be
made within seven days of the payment due date or within seven days after the
date of receipt of a request for partial surrender or termination. However,
First Investors Life reserves the right to suspend or postpone the date of any
payment due under the Contracts (1) for any period during which the New York
Stock Exchange ("NYSE") is closed (other than customary weekend and holiday
closings) or during which trading on the NYSE, as determined by the Securities
and Exchange Commission, is restricted; (2) for any period during which an
emergency, as determined by the Commission, exists as a result of which disposal
of securities held by the Funds is not reasonably practical or it is not
reasonably practical to determine the value of the Funds' net assets; or (3) for
such other periods as the Commission may by order permit for the protection of
security holders or as may be permitted under the 1940 Act.

Reports to Contractowners. First Investors Life will mail to each
Contractowner, at the last known address of record at the Home Office of First
Investors Life, at least annually, a report containing such information as may
be required by any applicable law or regulation and a statement of the
Accumulation Units credited to the Contract for each Subaccount and the
Accumulation Unit Values. In addition, latest available reports of Life Series
Fund will be mailed to each Contractowner.

Assignment. Any amounts payable under the Contracts may not be commuted,
alienated, assigned or otherwise encumbered before they are due. To the extent
permitted by law, no such payments shall be subject in any way to any legal
process to subject them to payment of any claims against any Annuitant, Joint
Annuitant or Beneficiary. The Contracts may be assigned.

PERFORMANCE INFORMATION

Separate Account C may advertise the performance of the Subaccounts in
various ways.

The yield for a Subaccount (other than Cash Management Subaccount) is
presented for a specified thirty-day period (the "base period"). Yield is based
on the amount determined by (i) calculating the aggregate amount of net
investment income earned by the Fund during the base period less expenses
accrued for that period (net of reimbursement), and (ii) dividing that amount by
the product of (A) the average daily number of Accumulation Units of the
Subaccount outstanding during the base period and (B) the maximum public
offering price per Accumulation Unit on the last day of the base period. The
result is annualized by compounding on a semi-annual basis to determine the
Subaccount's yield. For this calculation, interest earned on debt obligations
held by the underlying Fund is generally calculated using the yield to maturity
(or first expected call date) of such obligations based on their market values
(or, in the case of receivables-backed securities such as GNMA's, based on
cost). Dividends on equity securities are accrued daily at their estimated
stated dividend rates.

A Subaccount's "average annual total return" ("T") is an average annual
compounded rate of return. The calculation produces an average annual total
return for the number of years measured. It is the rate of return based on
factors which include a hypothetical initial investment of $1,000 ("P" in the
formula below) over a number of years ("n") with an Ending Redeemable Value
("ERV") of that investment, according to the following formula:

<PAGE>

T=[(ERV/P^)1/n]-1

The "total return" uses the same factors, but does not average the rate of
return on an annual basis. Total return is determined as follows:

[ERV-P]/P = TOTAL RETURN

In providing such performance data, each Subaccount will assume the payment
of the maximum sales charge of 7.00% (as a percentage of the purchase payment)
on the initial investment and the payment of the Mortality and Expense Risk Fee
of 1.00% ("P"). Each Subaccount will assume that during the period covered all
dividends and capital gain distributions are paid at net asset value per
Accumulation Unit, and that the investment is redeemed at the end of the period.

Average annual return and total return computed at the offering price for
the periods ended December 31, 1995 for each Subaccount are set forth in the
tables below:

AVERAGE ANNUAL TOTAL RETURN1

Life of
One Year Five Years Subaccount2
-------- ---------- -----------
Blue Chip Subaccount 23.41% 11.24% 12.32%
Discovery Subaccount 15.34 18.25 19.61
Government Subaccount 6.41 N/A 3.72
Growth Subaccount 15.22 10.97 12.05
High Yield Subaccount 10.25 8.14 12.72
International Securities Subaccount 9.23 7.58 7.80
Investment Grade Subaccount 10.13 N/A 5.61
Target Maturity 2007 Subaccount N/A N/A 13.27
Utilities Income Subaccount 19.93 N/A 4.29

- --------

1 The return figures assume the current maximum sales charge of 7.00%.
Prior to December 30, 1991, the maximum sales charge for Separate Account C was
7.25%. Some of the expenses for the underlying Funds were waived or reimbursed
from commencement of operations through December 31, 1995. Accordingly, return
figures for the Subaccounts are higher than they would have been had such
expenses not been waived or reimbursed.

2 The inception dates for the Subaccounts are as follows: Blue Chip
Subaccount - March 8, 1990; Discovery Subaccount, Growth Subaccount and High
Yield Subaccount - November 9, 1987; International Securities Subaccount - April
16, 1990; Government Subaccount and Investment Grade Subaccount - January 7,
1992; Utilities Income Subaccount - November 15, 1993; Target Maturity 2007
Subaccount - April 26, 1995.

<PAGE>

TOTAL RETURN1

Life of
One Year Five Years Subaccount2
-------- ---------- -----------
Blue Chip Subaccount 23.41% 70.31% 83.21%
Discovery Subaccount 15.34 131.19 154.29
Government Subaccount 6.41 N/A 15.67
Growth Subaccount 15.22 68.25 80.93
High Yield Subaccount 10.25 47.91 86.66
International Securities Subaccount 9.23 44.08 47.90
Investment Grade Subaccount 10.13 N/A 24.30
Target Maturity 2007 Subaccount N/A N/A 13.27
Utilities Income Subaccount 19.93 N/A 9.35

Average annual total return and total return may also be based on
investment at reduced sales charge levels or at net asset value. Any quotation
of return not reflecting the maximum sales charge will be greater than if the
maximum sales charge were used. Average annual return and total return computed
at net asset value for the periods ended December 31, 1995 for each Subaccount
are set forth in the tables below:

AVERAGE ANNUAL TOTAL RETURN1

Life of
One Year Five Years Subaccount2
-------- ---------- -----------

Blue Chip Subaccount 32.65% 12.87% 13.89%
Discovery Subaccount 24.00 19.99 21.29
Government Subaccount 14.42 N/A 5.62
Growth Subaccount 23.90 12.59 13.63
High Yield Subaccount 18.58 9.72 14.31
International Securities Subaccount 17.48 9.15 9.31
Investment Grade Subaccount 18.47 N/A 7.55
Target Maturity 2007 Subaccount N/A N/A 21.80
Utilities Income Subaccount 28.93 N/A 7.90

- --------

<PAGE>

TOTAL RETURN1

Life of
One Year Five Years Subaccount2
-------- --------- -----------
Blue Chip Subaccount 32.65% 83.19% 96.96%
Discovery Subaccount 24.00 148.68 173.39
Government Subaccount 14.42 N/A 24.35
Growth Subaccount 23.90 80.96 94.58
High Yield Subaccount 18.58 59.04 100.73
International Securities Subaccount 17.48 54.92 59.05
Investment Grade Subaccount 18.47 N/A 33.63
Target Maturity 2007 Subaccount N/A N/A 21.80
Utilities Income Subaccount 28.93 N/A 17.55

Return information may be useful to investors in reviewing a Subaccount's
performance. However, the total return and average annual total return will
fluctuate over time and the return figures for any given past period is not an
indication or representation by Separate Account C of future rates of return of
any Subaccount.

At times, a Fund's Adviser may reduce its compensation or assume expenses
of the Fund in order to reduce the Fund's expenses. Any such waiver or
reimbursement would increase the corresponding Subaccount's total return,
average annual total return and yield during the period of the waiver or
reimbursement.

Each Subaccount may include in advertisements and sales literature,
examples, information and statistics that illustrate the effect of taxable vs.
tax-deferred compounding income at a fixed rate of return to demonstrate the
growth of an investment over a stated period of time resulting from the payment
of dividends and capital gains distributions in additional Accumulation Units.
The examples may include hypothetical returns comparing taxable versus
tax-deferred growth which would pertain to an IRA, Section 403(b)(7) Custodial
Account or other qualified retirement program. The examples used will be for
illustrative purposes only and are not representations by any Subaccount of past
or future yield or return of any of the Subaccounts.

From time to time, in reports and promotional literature, Separate Account
C may compare the performance of its Subaccounts to, or cite the historical
performance of, other variable annuities. The

- --------

<PAGE>

performance rankings and ratings of variable annuities reported in L-VIPPAS, a
monthly publication for insurance companies and money managers published by
Lipper Analytical Services, Inc. and in Morningstar Variable Annuity Performance
Report, also a monthly publication published by Morningstar, Inc., may be used.
Additionally, performance rankings and ratings reported periodically in national
financial publications such as MONEY, FORBES, BUSINESS WEEK, BARRON'S, FINANCIAL
TIMES, CHANGING TIMES, FORTUNE, NATIONAL UNDERWRITER, etc., may also be used.
Quotations from articles appearing in daily newspaper publications such as THE
NEW YORK TIMES, THE WALL STREET JOURNAL and THE NEW YORK DAILY NEWS may be
cited.

Determination of Current and Effective Yield. Separate Account C provides
current yield quotations for the Cash Management Subaccount based on the
underlying Fund's daily dividends. The underlying Fund declares dividends from
net investment income daily and pays them monthly.

For purposes of current yield quotations, dividends per Accumulation Unit
for a seven-day period are annualized (using a 365-day year basis) and divided
by the average value of an Accumulation Unit for the seven-day period.

The current yield quoted will be for a recent seven day period. Current
yields will fluctuate from time to time and are not necessarily representative
of future results. The investor should remember that yield is a function of the
type and quality of the instruments in the portfolio, portfolio maturity and
operating expenses. Current yield information is useful in reviewing the Cash
Management Subaccount's performance but, because current yield will fluctuate,
such information may not provide a basis for comparison with bank deposits or
other investments which may pay a fixed yield for a stated period of time, or
other investment companies, which may use a different method of calculating
yield.

In addition to providing current yield quotations, Separate Account C
provides effective yield quotations for the Cash Management Subaccount for a
base period return of seven days. An effective yield quotation is determined by
a formula which requires the compounding of the unannualized base period return.
Compounding is computed by adding 1 to the unannualized base period return,
raising the sum to a power equal to 365 divided by 7 and subtracting 1 from the
result.

<PAGE>

The following is an example, for purposes of illustration only, of the
current and effective yield calculation for the seven day period ended December
31, 1995.

Dividends per accumulation unit from net investment income
(seven calendar days ended December 31, 1995)
(Base Period)................................................ $.001006760
Annualized (365 day basis)*.................................. $.052495340
Average value per accumulation unit for the
seven calendar days ended December 31, 1995.................. $1.00
Annualized historical yield per accumulation unit for the
seven calendar days ended December 31, 1995.................. 5.25%
Effective Yield**............................................ 5.38%
Weighted average life to maturity of the
portfolio on December 31, 1995 was 67 days

- --------------------

* This represents the average of annualized net investment income per
accumulation unit for the seven calendar days ended December 31, 1995

** Effective Yield = [(Base Period Return+1)365/7] - 1

The figures in the above example do not include the maximum sales charge of
7.00%. Accordingly, all yield quotations are higher than they would have been
had such expense been included.

Separate Account C's Prospectus and Statement of Additional Information may
be in use for a full year and, accordingly, it can be expected that yields will
fluctuate substantially from the example shown above.

RELEVANCE OF FINANCIAL STATEMENTS

The values of the interests of Contractowners under the variable portion of
the Contracts will be affected solely by the investment results of the
Subaccounts. The financial statements of First Investors Life as contained
herein should be considered only as bearing upon First Investors Life's ability
to meet its obligations to Contractowners under the Contracts, and they should
not be considered as bearing on the investment performance of the Subaccounts.

<PAGE>

APPENDICES

<PAGE>

APPENDIX I

EXAMPLE A
Formula and Illustration for Determining
the Net Investment Factor of a
Separate Account

Net Investment Factor = A + B
----- - D
C

Where:

<S> <C>
A = The Net Asset Value of a Fund share as of the end of the current
Valuation Period.
Assume............................................................................ = $8.51000000
B = The per share amount of any dividend or capital gains distribution
since the end of the immediately preceding Valuation Period.
Assume............................................................................ = 0
C = The Net Asset Value of a Fund share at the end of the immediately
preceding Valuation Period.
Assume............................................................................ = $8.39000000
D = The daily deduction for mortality and expense risks, which totals 1.0%
on an annual basis.
On a daily basis................................................................... = .00002740
Then, the Net Investment Factor = 8.51000000 + 0
-------------- - .00002740 ........................... = 1.01427534
8.39000000

EXAMPLE B

Formula and Illustration for Determining
Accumulation Unit Value of a
Separate Account

Accumulation Unit Value = A x B Where:
<S> <C>
A = The Accumulation Unit Value for the immediately preceding Valuation
Period.
Assume............................................................................. = $1.46328760
B = The Net Investment Factor for the current Valuation Period.
Assume............................................................................. = 1.01427534
Then, the Accumulation Unit Value = $1.46328760 x 1.01427534............................... = 1.48417653
</TABLE>

<PAGE>

APPENDIX II

EXAMPLE A
Formula and Illustration for Determining
Death Benefit Payable Under
Annuity Option 4-Unit Refund Life Annuity

Upon the death of the Annuitant the designated Beneficiary under this option
will receive under a Separate Account a lump sum death benefit of the then
dollar value of a number of Annuity Units computed using the following formula:

Annuity Units Payable = A A
-- - (CxD), if -- is greater than CxD
B B

Where:
<TABLE>
<CAPTION>

<S> <C>
A = The net benefit applied on the Annuity Commencement Date to purchase
the Variable Annuity.
Assume............................................................................ = $20,000.00
B = The Annuity Unit Value at the Annuity Commencement Date.
Assume............................................................................ = $1.08353012
C = The number of Annuity Units represented by each payment made.
Assume............................................................................ = 116.61488844
D = The total number of monthly Variable Annuity Payments made prior to
the Annuitant's death.
Assume............................................................................ = 30
</TABLE>

Then the number of Annuity Units Payable:

$20,000.00
--------------- - (116.61488844 x 30)
$1.08353012

= 18,458.18554633 - 3,498.46665300

= 15,076.35378177

If the value of an Annuity Unit on the date of receipt of notification of death
was $1.12173107 then the amount of the death benefit under the Separate Account
would be:

15,076.35378177 x $1.12173107 = $16,911.61

<PAGE>

APPENDIX III

EXAMPLE A
Formula and Illustration for Determining
Annuity Unit Value of a
Separate Account

Annuity Unit Value = A x B x C

Where:

<S> <C>
A = Annuity Unit Value of the immediately preceding Valuation Period.
Assume............................................................................ = $1.10071211
B = Net Investment Factor for the Valuation Period for which the Annuity
Unit is being calculated.
Assume............................................................................ = 1.0083530
C = A factor to neutralize the assumed interest rate of 3 1/2% built into
the Annuity tables used.
Daily factor equals............................................................... = 0.99990575

Then, the Annuity Value is:

$1.10071211 x 1.0053530 x 0.99990575 = $1.10152771

EXAMPLE B

Formula and Illustration for Determining
Amount of First Monthly Variable Annuity Payment from
One Separate Account

First Monthly Variable Annuity Payment = A
------- x B
$1,000

Where:

<S> <C>
A = The Accumulated Value allocated to a Separate Account for the
Valuation Date on or immediately preceding the seventh day before the
Annuity Commencement Date.
Assume............................................................................ = $20,000.00
B = The Annuity purchase rate per $1,000 based upon the option selected,
the sex and adjusted age of the Annuitant according to the tables
contained in the Contract.
Assume............................................................................ = $6.40
</TABLE>

Then, the first Monthly Variable Payment = $20,000
-------- x $6.40 = $128.00
$1,000

<PAGE>

EXAMPLE C

Formula and Illustration for Determining
the Number of Annuity Units for One Separate Account
Represented by Each Monthly Variable Annuity Payment

Number of Annuity Units = A
--
B

Where:

<S> <C>
A = The dollar amount of the first monthly Variable Annuity Payment.
Assume............................................................................ = $128.00
B = The Annuity Unit Value for the Valuation Date on or immediately
preceding the seventh day before the Annuity Commencement Date.
Assume............................................................................ = $1.09763000

Then, the number of Annuity Units = $123.00
----------- = 116.61488844
$1.09763000

EXAMPLE D

Formula and Illustration for Determining
the Amount of Second and Subsequent Monthly Variable
Annuity Payments From One Separate Account

Second Monthly Variable Annuity Payment = A x B

Where:

<S> <C>
A = The Number of Annuity Units represented by each monthly Variable
Annuity Payment.
Assume............................................................................ = 116.61488844
B = The Annuity Unit Value for the Valuation Date on or immediately
preceding the seventh day before the date on which the second (or
subsequent) Variable Annuity Payment is due.
Assume............................................................................ = $1.11834234
</TABLE>

Then, the second monthly Variable Annuity Payment =
116.61488844 x $1.11834234 = $130.42

The above example was based upon the assumption of an increase in the Annuity
Unit Value since the initial Variable Annuity Payment due to favorable
investment results of the Separate Account and the Fund. If the investment
results were less favorable, a decrease in the Annuity Unit Value and in the
second monthly Variable Annuity Payment could result. Assume B above was
$1.08103230.

Then, the second monthly Variable Annuity Payment = 116.61488844 x $1.08103230 =
$126.06

<PAGE>

FINANCIAL STATEMENTS

<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors
First Investors Life Insurance Company
New York, New York

We have audited the statement of assets and liabilities of First Investors
Life Variable Annuity Fund C (a separate account of First Investors Life
Insurance Company, registered as a unit investment trust under the Investment
Company Act of 1940), as of December 31, 1995, and the related statements of
operations for the year then ended and changes in net assets for each of the two
years in the period then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of First Investors Life
Variable Annuity Fund C as of December 31, 1995, and the results of its
operations for the year then ended and the changes in its net assets for each of
the two years in the period then ended, in conformity with generally accepted
accounting principles.

TAIT, WELLER & BAKER

Philadelphia, Pennsylvania
February 19, 1996

<PAGE>

FIRST INVESTORS LIFE
VARIABLE ANNUITY FUND C

STATEMENT OF ASSETS AND LIABILITIES

December 31, 1995

ASSETS
Investments at net asset value (Note 3):
First Investors Life Series Fund ........................... $201,474,274
Cash ......................................................... 173,334
------------
Total Assets ........................................... $201,647,608
------------

LIABILITIES
Payable to First Investors Life Insurance Company ............ 1,083,287
Other Liabilities ............................................ 173,334
------------
Total Liabilities ...................................... 1,256,621
------------

NET ASSETS ..................................................... $200,390,987
============

Net assets represented by Contracts in accumulation period ..... $200,390,987
============

See notes to financial statements.

<PAGE>

FIRST INVESTORS LIFE
VARIABLE ANNUITY FUND C

STATEMENT OF OPERATIONS

Year ended December 31, 1995

INVESTMENT INCOME
Income:
Dividends ................................................. $ 6,908,902
-----------

Total income .......................................... 6,908,902
-----------

Expenses:
Mortality and expense risks (Note 4) ...................... 1,594,189
-----------

Total expenses ........................................ 1,594,189
-----------

NET INVESTMENT INCOME ......................................... 5,314,713
-----------

UNREALIZED APPRECIATION ON INVESTMENTS
Beginning of year ........................................... 5,266,578
End of year ................................................. 32,339,209
-----------

Change in unrealized appreciation on investments .............. 27,072,631
-----------

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .......... $32,387,344
===========

See notes to financial statements.

<PAGE>

FIRST INVESTORS LIFE
VARIABLE ANNUITY FUND C

STATEMENTS OF CHANGES IN NET ASSETS

Years ended December 31,

<TABLE>
<CAPTION>
1995 1994
------------- -------------
<S> <C> <C>
Increase (Decrease) in Net Assets
From Operations
Net investment income .......................................... $ 5,314,713 $ 1,034,247
Change in unrealized appreciation on investments ............... 27,072,631 (4,360,632)
------------- -------------

Net increase (decrease) in net assets resulting from operations 32,387,344 (3,326,385)
------------- -------------

From Unit Transactions
Net insurance premiums ......................................... 66,836,279 43,974,468
Contract payments .............................................. (20,435,656) (8,918,667)
------------- -------------

Increase in net assets derived from unit transactions .......... 46,400,623 35,055,801
------------- -------------

Net increase in net assets .................................. 78,787,967 31,729,416

Net Assets

Beginning of year ................................................. 121,603,020 89,873,604
------------- -------------
End of year ....................................................... $ 200,390,987 $ 121,603,020
============= =============
</TABLE>

See notes to financial statements.

<PAGE>

FIRST INVESTORS LIFE
VARIABLE ANNUITY FUND C

NOTES TO FINANCIAL STATEMENTS
December 31, 1995

Note 1 -- Organization

First Investors Life Variable Annuity Fund C (Separate Account C), a unit
investment trust registered under the Investment Company Act of 1940 (the 1940
Act), is a segregated investment account established by First Investors Life
Insurance Company (FIL). Assets of Separate Account C have been used to purchase
shares of First Investors Life Series Fund (the Fund), an open-end diversified
management investment company registered under the 1940 Act. Note 2 --
Significant Accounting Practices

INVESTMENTS

Shares of the Fund held by Separate Account C are valued at net asset
value per share. All distributions received from the Fund are reinvested to
purchase additional shares of the Fund at net asset value.

FEDERAL INCOME TAXES

Separate Account C is not taxed separately because its operations are
part of the total operations of FIL, which is taxed as a life insurance
company under the Internal Revenue Code. Separate Account C will not be
taxed as a regulated investment company under Subchapter M of the Code.
Under existing Federal income tax law, no taxes are payable on the
investment income or on the capital gains of Separate Account C.

Note 3 -- Investments

Investments consist of the following:

<TABLE>
<CAPTION>
Net Asset Market
Shares Value Value Cost
------ ----- ----- ----
<S> <C> <C> <C> <C>
First Investors Life Series Fund
Cash Management.................................. 2,965,482 $ 1.00 $ 2,965,482 $ 2,965,482
High Yield....................................... 1,169,693 11.57 13,533,280 12,266,556
Growth........................................... 1,651,078 20.47 33,796,226 27,637,303
Discovery........................................ 1,420,244 23.27 33,053,274 27,602,810
Blue Chip........................................ 2,811,214 16.98 47,730,253 37,137,254
International Securities......................... 1,539,896 15.58 23,993,534 19,637,086
Government....................................... 834,038 10.52 8,771,618 8,557,935
Investment Grade................................. 1,233,111 11.73 14,467,617 13,125,964
Utilities Income................................. 1,133,534 11.74 13,303,742 11,210,052
Target Maturity 2007............................. 804,138 12.26 9,859,248 8,883,075
------------- -------------
$201,474,274 $169,023,517
============= =============
</TABLE>

The High Yield Series' investments 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.

As of December 31, 1995 FIL held shares in the Cash Management and Target
Maturity 2007 Series in the amount of $611,548.

Note 4 -- Mortality and Expense Risks and Deductions

In consideration for its assumption of the mortality and expense risks
connected with the Variable Annuity Contracts, FIL deducts an amount equal on an
annual basis to 1.00% of the daily net asset value of Separate Account C. The
deduction for the year ended December 31, 1995 was $1,594,189. An additional
administrative charge of $7.50 may be deducted annually by FIL from the
Accumulated Value of Deferred Annuity Contracts which have an Accumulated Value
of less than $1,500 due to partial surrenders. There was no deduction under this
provision during 1995.

<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors
First Investors Life Insurance Company
New York, New York

We have audited the accompanying balance sheets of First Investors Life
Insurance Company as of December 31, 1995 and 1994, and the related statements
of income, stockholder's equity and cash flows for each of the three years in
the period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of First Investors Life
Insurance Company as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.

As discussed in note 7 to the financial statements, the Company changed its
method of accounting for income taxes.

TAIT, WELLER & BAKER

Philadelphia, Pennsylvania
February 19, 1996

<PAGE>

FIRST INVESTORS LIFE INSURANCE COMPANY
BALANCE SHEETS

ASSETS
<TABLE>
<CAPTION>

December 31, 1995 December 31,1994
----------------- ----------------
<S> <C> <C>
Investments (note 2):
Available-for-sale securities ................................................... $ 113,815,086 $ 103,898,007
Held-to-maturity securities ..................................................... 5,942,604 5,990,367
Short term investments .......................................................... 5,160,201 6,964,868
Policy loans .................................................................... 17,016,692 14,686,101
------------- -------------

Total investments ............................................................ 141,934,583 131,539,343

Cash .............................................................................. 1,189,030 977,113
Premiums and other receivables, net of allowances of
$30,000 in 1995 and 1994 ........................................................ 4,334,595 3,901,489
Accrued investment income ......................................................... 2,833,561 2,593,771
Deferred policy acquisition costs (note 6) ........................................ 17,318,214 19,321,891
Deferred Federal income taxes (note 7) ............................................ 12,000 1,884,000
Furniture, fixtures and equipment, at cost, less accumulated
depreciation of $800,593 in 1995 and $697,010 in 1994 ........................... 236,736 243,634
Other assets ...................................................................... 123,509 193,780
Separate account assets ........................................................... 344,568,486 232,913,278
------------- -------------

Total assets ................................................................. $ 512,550,714 $ 393,568,299
============= =============

LIABILITIES AND STOCKHOLDER'S EQUITY

LIABILITIES:
Policyholder account balances (note 6) ............................................ $ 113,374,173 $ 115,256,764
Claims and other contract liabilities ............................................. 11,289,108 10,737,716
Accounts payable and accrued liabilities .......................................... 4,150,250 3,463,635
Separate account liabilities ...................................................... 343,956,938 232,913,278
------------- -------------

Total liabilities ............................................................ 472,770,469 362,371,393
------------- -------------

STOCKHOLDER'S EQUITY:

Common Stock, par value $4.75; authorized,

issued and outstanding 534,350 shares ........................................... 2,538,163 2,538,163
Additional paid in capital ........................................................ 6,496,180 6,496,180
Unrealized holding gains (losses) on available-for-sale

securities (note 2) ............................................................. 1,878,000 (2,486,000)
Retained earnings ................................................................. 28,867,902 24,648,563
------------- -------------

Total stockholder's equity ................................................... 39,780,245 31,196,906
------------- -------------

Total liabilities and stockholder's equity ................................... $ 512,550,714 $ 393,568,299
============= =============
</TABLE>

See accompanying notes to financial statements.

<PAGE>

FIRST INVESTORS LIFE INSURANCE COMPANY
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, 1995 December 31,1994 December 31,1993
----------------- ---------------- ----------------
REVENUES
<S> <C> <C> <C>
Policyholder fees ................................................. $ 19,958,420 $ 16,433,269 $ 14,825,696
Premiums .......................................................... 7,293,719 7,630,182 8,141,342
Investment income (note 2) ........................................ 9,363,212 8,835,356 8,470,643
Realized gain (loss) on fixed securities .......................... 373,582 (259,987) 318,372
Other income ...................................................... 835,703 701,355 654,608
------------ ------------ ------------

Total income ................................................... 37,824,636 33,340,175 32,410,661
------------ ------------ ------------

BENEFITS AND EXPENSES

Benefits and increases in contract liabilities .................... 13,027,516 14,297,499 13,118,328
Dividends to policyholders ........................................ 954,384 910,754 985,756
Amortization of deferred acquisition costs (note 6) ............... 1,672,429 1,573,216 1,528,876
Commissions and general expenses .................................. 15,773,968 13,513,644 13,212,536
------------ ------------ ------------

Total benefits and expenses .................................... 31,428,297 30,295,113 28,845,496
------------ ------------ ------------

Income before Federal income tax and cumulative

effect of a change in accounting principle ......................... 6,396,339 3,045,062 3,565,165

Federal income tax (note 7):

Current ........................................................... 2,553,000 838,000 1,425,000
Deferred .......................................................... (376,000) (352,000) (721,000)
------------ ------------ ------------

2,177,000 486,000 704,000
------------ ------------ ------------

Income before cumulative effect

of a change in accounting principle ............................... 4,219,339 2,559,062 2,861,165

Cumulative effect on prior years

of a change in accounting principle (note 7) ...................... -- -- 540,000
------------ ------------ ------------

Net Income .......................................................... $ 4,219,339 $ 2,559,062 $ 3,401,165
============ ============ ============

Income per share, based on 534,350 shares outstanding
Income before cumulative effect

of a change in accounting principle ............................... $ 7.90 $ 4.79 $ 5.35
Cumulative effect of a change in accounting principle ............... -- -- 1.01
------------ ------------ ------------
$ 7.90 $ 4.79 $ 6.36
============ ============ ============
</TABLE>

See accompanying notes to financial statements.

<PAGE>

FIRST INVESTORS LIFE INSURANCE COMPANY
STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31,1995 December 31,1994 December 31, 1993
---------------- ---------------- -----------------
<S> <C> <C> <C>
Balance at beginning of year ....................................... $ 31,196,906 $ 34,173,844 $ 27,722,679
Net income ......................................................... 4,219,339 2,559,062 3,401,165
Increase (decrease) in unrealized holding gains on
available-for-sale securities .................................... 4,364,000 (5,536,000) 3,050,000
------------ ------------ ------------
Balance at end of year ............................................. $ 39,780,245 $ 31,196,906 $ 34,173,844
============ ============ ============

STATEMENTS OF CASH FLOWS
<CAPTION>
Year Ended Year Ended Year Ended
December 31, 1995 December 31, 1994 December 31,1993
----------------- ----------------- ----------------
<S> <C> <C> <C>
Increase (decrease) in cash:
Cash flows from operating activities:
Policyholder fees received ........................................ $ 19,374,522 $ 16,433,269 $ 14,825,696
Premiums received ................................................. 6,895,096 7,366,276 7,996,528
Amounts received on policyholder accounts ......................... 87,156,662 63,526,544 52,654,219
Investment income received ........................................ 9,360,894 8,886,847 8,583,113
Other receipts .................................................... 69,621 46,581 44,193
Benefits and contract liabilities paid ............................ (101,642,156) (75,131,594) (61,360,490)
Commissions and general expenses paid ............................. (18,176,870) (15,252,935) (15,866,354)
------------- ------------- -------------

Net cash provided by (used for) operating activities .............. 3,037,769 5,874,988 6,876,905
------------- ------------- -------------

Cash flows from investing activities:
Proceeds from sale of investment securities ....................... 58,755,827 36,751,082 36,063,998
Purchase of investment securities ................................. (58,622,646) (42,164,770) (39,148,690)
Purchase of furniture, equipment and other assets ................. (128,442) (67,121) (40,227)
Net increase in policy loans ...................................... (2,330,591) (1,801,780) (1,941,256)
Investment in Separate Account .................................... (500,000) -- --
-------------

Net cash provided by (used for) investing activities .............. (2,825,852) (7,282,589) (5,066,175)
------------- ------------- -------------

Net increase (decrease) in cash ................................... 211,917 (1,407,601) 1,810,730

Cash

Beginning of year .................................................... 977,113 2,384,714 573,984
------------- ------------- -------------
End of year........................................................... $ 1,189,030 $ 977,113 $ 2,384,714
============= ============= =============
</TABLE>

The Company received a refund of Federal income tax of $102,000 in 1995 and paid
Federal income tax of $2,125,000 in 1995, $1,368,000 in 1994 and $1,265,000 in
1993.

See accompanying notes to financial statements.

<PAGE>

FIRST INVESTORS LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended Year Ended Year Ended
December 31, 1995 December 31, 1994 December 31, 1993
----------------- ----------------- -----------------
<S> <C> <C> <C>
Reconciliation of net income to net cash
provided by (used for) operating activities:

Net income .............................................................. $ 4,219,339 $ 2,559,062 $ 3,401,165

Adjustments to reconcile net income to net cash provided by (used for)
operating activities:
Depreciation and amortization ......................................... 141,121 122,199 118,365
Amortization of deferred policy acquisition costs ..................... 1,672,429 1,573,216 1,528,876
Realized investment (gains) losses .................................... (373,582) 259,987 (318,372)
Amortization of premiums and discounts on fixed
maturities ......................................................... 237,472 287,340 299,666
Deferred Federal income taxes ......................................... (376,000) (352,000) (721,000)
Cumulative effect of a change in
accounting principle ............................................... -- -- (540,000)
Other items not requiring cash - net .................................. (112,268) (149) (1,908)

(Increase) decrease in:
Premiums and other receivables, net ................................... (433,106) (1,055,910) 1,683,261
Accrued investment income ............................................. (239,790) (235,849) (187,196)
Deferred policy acquisition costs, exclusive
of amortization .................................................... (1,117,752) (1,138,988) (1,254,547)
Other assets .......................................................... 64,490 (30,882) (13,108)

Increase (decrease) in:
Policyholder account balances ......................................... (1,882,591) 2,719,458 1,268,788
Claims and other contract liabilities ................................. 551,392 503,025 1,903,908
Accounts payable and accrued liabilities .............................. 686,615 664,479 (290,993)
----------- ----------- -----------

$ 3,037,769 $ 5,874,988 $ 6,876,905
=========== =========== ===========
</TABLE>

See accompanying notes to financial statements.

<PAGE>

FIRST INVESTORS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS

Note 1 -- Basis of Financial Statements

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles (GAAP). Such basis of presentation
differs from statutory accounting practices permitted or prescribed by insurance
regulatory authorities primarily in that:

(a) policy reserves are computed according to the Company's estimates
of mortality, investment yields, withdrawals and other benefits and
expenses, rather than on the statutory valuation basis;

(b) certain expenditures, principally for furniture and equipment and
agents' debit balances, are recognized as assets rather than being
non-admitted and therefore charged to retained earnings;

(c) commissions and other costs of acquiring new business are
recognized as deferred acquisition costs and are amortized over the premium
paying period of policies and contracts, rather than charged to current
operations when incurred;

(d) income tax effects of temporary differences, relating primarily to
policy reserves and acquisition costs, are provided;

(e) the statutory asset valuation and interest maintenance reserves
are reported as retained earnings rather than as liabilities;

Note 2 -- Other Significant Accounting Practices

(a) Accounting Estimates. The preparation of 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, and disclosures of contingent assets and liabilities, at the date
of the financial statements and revenues and expenses during the reported
period. Actual results could differ from those estimates.

(b) Depreciation. Depreciation is computed on the useful service life of
the depreciable asset using the straight line method of depreciation.

(c) Investments. Investments in equity securities that have readily
determinable fair values and all investments in debt securities are classified
in three separate categories and accounted for as follows:

Held-to-Maturity Securities

Debt securities the Company has the positive intent and ability to
hold to maturity are recorded at amortized cost.

Trading Securities

Debt and equity securities that are held principally for the purpose
of selling such securities in the near term are recorded at fair value
with unrealized gains and losses included in earnings.

Available-For-Sale Securities

Debt and equity securities not classified in the other two categories
are recorded at fair value with unrealized gains and losses excluded
from earnings and reported as "unrealized holding gains or losses on
available-for-sale securities" in stockholder's equity.

Short term investments are reported at market value which approximates cost.

<PAGE>

FIRST INVESTORS LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (Continued)

Gains and losses on sales of investments are determined using the specific
identification method. Investment income for the years indicated consists of the
following:

<TABLE>
<CAPTION>
Year ended Year Ended Year Ended
December 31,1995 December 31, 1994 December 31,1993
---------------- ----------------- ----------------
<S> <C> <C> <C>
Interest on fixed maturities .................................. $8,243,748 $8,091,627 $7,844,723
Interest on short term investments ............................ 451,475 225,682 232,244
Interest on policy loans ...................................... 973,242 886,465 771,082
Dividends on equity securities ................................ 58,305 10,220 --
---------- ---------- ----------

Total investment income .................................. 9,726,770 9,213,994 8,848,049
Investment expense ....................................... 363,558 378,638 377,406
---------- ---------- ----------

Net investment income ......................................... $9,363,212 $8,835,356 $8,470,643
========== ========== ==========

The amortized cost and estimated market values of investments at December
31, 1995 and 1994 are as follows:

Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Available-For-Sale Securities
December 31, 1995
U.S. Treasury Securities and obligations
of U.S. Government Corporations
and Agencies .......................................... $ 40,056,913 $ 1,459,984 $ -- $ 41,516,897
Debt Securities issued by
States of the U.S. .................................... 9,067,445 215,464 10,295 9,272,614
Corporate Debt Securities .............................. 53,636,330 1,872,502 121,193 55,387,639
Equity Securities ...................................... 500,000 55,000 -- 555,000
Other Debt Securities .................................. 7,010,398 78,876 6,338 7,082,936
------------ ------------ ------------ ------------
$110,271,086 $ 3,681,826 $ 137,826 $113,815,086
============ ============ ============ ============

December 31,1994
U.S. Treasury Securities and obligations
of U.S. Government Corporations
and Agencies .......................................... $ 49,362,608 $ 5,901 $ 1,541,620 $ 47,826,889
Debt Securities issued by
States of the U.S. .................................... 3,910,143 -- 379,945 3,530,198
Corporate Debt Securities .............................. 53,768,481 86,359 2,578,037 51,276,803
Equity Securities ...................................... 500,000 -- 15,000 485,000
Other Debt Securities .................................. 873,777 1,801 96,461 779,117
------------ ------------ ------------ ------------
$108,415,009 $ 94,061 $ 4,611,063 $103,898,007
============ ============ ============ ============
</TABLE>

<PAGE>

FIRST INVESTORS LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (Continued)

At December 31, 1995 and 1994, the Company recognized "Unrealized Holding
Gains (Losses) on Available-For- Sale Securities" of $1,878,000 and
($2,486,000), net of applicable deferred income taxes and amortization of
deferred acquisition costs. The change in the Unrealized Holding Gains (Losses)
of $4,364,000 , ($5,536,000) and $3,050,000 for 1995, 1994 and 1993,
respectively is reported as a separate component of stockholders' equity.

<S> <C> <C> <C> <C>
Held-To-Maturity Securities
December 31,1995
U.S. Treasury Securities and obligations
of U.S. Government Corporations
and Agencies ........................................ $ 3,332,604 $ 120,983 $ -- $ 3,453,587
Corporate Debt Securities ............................ 2,000,000 -- 40,412 1,959,588
Other Debt Securities ................................ 610,000 -- -- 610,000
------------ ------------ ------------ ------------
$ 5,942,604 $ 120,983 $ 40,412 $ 6,023,175
============ ============ ============ ============

December 31,1994
U.S. Treasury Securities and obligations
of U.S. Government Corporations
and Agencies ........................................ $ 3,380,367 $ 4,873 $ 56,807 $ 3,328,433
Corporate Debt Securities ............................ 2,000,000 -- 324,020 1,675,980
Other Debt Securities ................................ 610,000 -- -- 610,000
------------ ------------ ------------ ------------
$ 5,990,367 $ 4,873 $ 380,827 $ 5,614,413
============ ============ ============ ============
</TABLE>

The amortized cost and estimated market value of debt securities at
December 31, 1995, by contractual maturity, are shown below. Expected maturities
will differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.

Held to Maturity Available For Sale
------------------------------- -------------------------------
Amortized Estimated Amortized Estimated
Cost Market Value Cost Market Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Due in one year or less ................................ $ 2,239,580 $ 2,251,899 $ 6,162,578 $ 6,227,117
Due after one year through five years .................. 361,632 362,031 32,404,977 34,434,038
Due after five years through ten years ................. 1,341,392 1,449,657 52,785,501 53,846,181
Due after ten years .................................... 2,000,000 1,959,588 18,418,030 18,752,750
------------ ------------ ------------ ------------
$ 5,942,604 $ 6,023,175 $109,771,086 $113,260,086
============ ============ ============ ============
</TABLE>

Proceeds from sales of investments in fixed maturities were $56,949,635,
$36,701,082 and $35,352,716 in 1995, 1994 and 1993, respectively. Gross gains of
$578,810 and gross losses of $205,228 were realized on those sales in 1995.
Gross gains of $85,827 and gross losses of $345,814 were realized on those sales
in 1994. Gross gains of $397,829 and gross losses of $79,457 were realized on
those sales in 1993.

(d) Recognition of Revenue, Policyholder Account Balances and Policy
Benefits

Traditional Ordinary Life and Health

Revenues from the traditional life insurance policies represent
premiums which are recognized as earned when due. Health
insurance premiums are recognized as revenue over the time period
to which the premiums relate. Benefits and expenses are
associated with earned premiums so as to result in recognition of
profits over the lives of the contracts. This association is
accomplished by means of the provision for liabilities for future
policy benefits and the deferral and amortization of policy
acquisition costs.

<PAGE>

FIRST INVESTORS LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (Continued)

Universal Life and Variable Life

Revenues from universal life and variable life policies
represent amounts assessed against policyholders. Included in
such assessments are mortality charges, surrender charges and
policy service fees.

Policyholder account balances on universal life consist of
the premiums received plus credited interest, less accumulated
policyholder assessments. Amounts included in expense represent
benefits in excess of policyholder account balances. The value of
policyholder accounts on variable life are included in separate
account liabilities as discussed below.

Annuities

Revenues from annuity contracts represent amounts assessed
against contractholders. Such assessments are principally sales
charges, administrative fees, and in the case of variable
annuities, mortality and expense risk charges. The carrying value
and fair value of fixed annuities are equal to the policyholder
account balances, which represent the net premiums received plus
accumulated interest.

(e) Separate Accounts. Separate account assets and the related liabilities,
both of which are valued at market, represent segregated variable annuity and
variable life contracts maintained in accounts with individual investment
objectives. All investment income (gains and losses of these accounts) accrues
directly to the contractholders and therefore does not affect net income of the
Company.

(f) Reclassifications. Certain reclassifications have been made to the 1993
and 1994 Financial Statements in order to conform to the 1995 presentation.

<PAGE>

FIRST INVESTORS LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (Continued)

Note 3 -- Fair Value of Financial Instruments

The carrying amounts for cash, short-term investments and policy loans as
reported in the accompanying balance sheet approximate their fair values. The
fair values for fixed maturities and equity-securities are based upon quoted
market prices, where available or are estimated using values from independent
pricing services.

The carrying amounts for the Company's liabilities under investment - type
contracts approximate their fair values because interest rates credited to
account balances approximate current rates paid on similar investments and are
generally not guaranteed beyond one year. Fair values for the Company's
insurance contracts other than investment - type contracts are not required to
be disclosed. However, the fair values of liabilities for all insurance
contracts are taken into consideration in the overall management of interest
rate risk, which minimizes exposure to changing interest rates.

Note 4 -- Retirement Plans

The Company has a non-contributory profit sharing plan for the benefit of
its employees which provides for retirement benefits based upon earnings.
Vesting of benefits is based upon years of service. The Company did not make
profit sharing contributions in 1995, 1994 and 1993.

The Company also has a non-contributory retirement plan for the benefit of
its sales agents. The plan provides for retirement benefits based upon
commission on first-year premiums and length of service. The plan is unfunded.
Vesting of benefits is based upon graduated percentages dependent upon the
number of allocations made in accordance with the plan by the Company for each
participant. The Company charged to operations pension expenses of approximately
$375,000 in 1995, $312,000 in 1994 and $292,000 in 1993. The accrued liability
of approximately $2,621,000 in 1995 and $2,415,000 in 1994 was sufficient to
cover the value of benefits provided by the plan.

Note 5 -- Commitments and Contingent Liabilities

The Company has agreements with affiliates and non-affiliates as follows:

(a) The Company's maximum retention on any one life is $100,000. The
Company reinsures a portion of its risk with other insurance companies and
reserves are reduced by the amount of reserves for such reinsured risks. The
Company is liable for any obligations which any reinsurance company may be
unable to meet. The Company had reinsured approximately 10% of its net life
insurance in force at December 31, 1995, 1994 and 1993. The Company also had
assumed reinsurance amounting to approximately 20%, 21% and 22% of its net life
insurance in force at the respective year ends. None of these transactions had
any material effect on the Company's operating results.

(b) The Company and certain affiliates share office space, data processing
facilities and management personnel. Charges for these services are based upon
space occupied, usage of data processing facilities and time allocated to
management. During the years ended December 31, 1995, 1994 and 1993, the Company
paid approximately $1,282,000, $1,099,000 and $1,187,000, respectively, for
these services. In addition, the Company reimbursed an affiliate approximately
$196,000 in 1993 for its share of the cost of the branch offices and
approximately $8,739,000 in 1995, $6,651,000 in 1994,and $5,510,000 in 1993 for
commissions relating to the sale of its products.

(c) The Company is subject to certain claims and lawsuits arising in the
ordinary course of business. In the opinion of management, all such claims
currently pending will not have a material adverse effect on the financial
position of the Company or its results of operations.

<PAGE>

FIRST INVESTORS LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (Continued)

Note 6 -- Adjustments Made to Statutory Accounting Practices

Note 1 describes some of the common differences between statutory practices
and generally accepted accounting principles. The effects of these differences
for the years ended December 31, 1995, 1994 and 1993 are shown in the following
table in which net income and capital shares and surplus reported therein on a
statutory basis are adjusted to a GAAP basis.

<TABLE>
<CAPTION>
Net Income Capital Shares and Surplus
Year Ended December 31 at December 31
----------------------- ------------------------
1995 1994 1993 1995 1994 1993
------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C>
Reported on a statutory basis ............... $3,593,786 $2,205,814 $1,682,537 $21,600,537 $18,020,531 $15,933,807

Adjustments:
Deferred policy acquisition costs (b) .... (554,677) (434,228) (274,329) 17,318,214 19,321,891 19,006,119
Future policy benefits (a) ............... 422,387 727,849 669,990 (2,912,483) (3,334,870)
Deferred income taxes .................... 376,000 352,000 1,261,435 12,000 1,884,000 (1,322,799)
Premiums due and deferred (e) ............ 80,133 70,968 11,558 (1,444,568) (1,524,702) (1,595,669)
Cost of colletion and other statutory
liabilities ............................ (16,318) (32,454) 8,598 49,267 65,585 98,039
Non-admitted assets ...................... -- -- -- 395,758 385,500 423,038
Asset valuation reserve .................. -- -- -- 1,016,830 901,041 744,264
Interest maintenance reserve ............. (40,804) (71,048) (222,809) 200,690 (5,070) 325,965
Gross unrealized holding gains (losses) on
available-for-sale securities .......... -- -- -- 3,544,000 (4,517,000) 4,623,799
Net realized capital gains (losses) ...... 373,582 (259,987) 262,712 -- -- --
Other .................................... (14,750) 148 1,473 -- -- --
625,553 353,248 1,718,628 18,179,708 13,176,375 18,240,037
In accordance with generally accepted
accounting principles .................... $4,219,339 $2,559,062 $3,401,165 $39,780,245 $31,196,906 $34,173,844

Per share, based on 534,350 shares
outstanding .............................. $7.90 $4.79 $6.36 $74.45 $58.38 $63.95

</TABLE>

<PAGE>

FIRST INVESTORS LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (Continued)

The following is a description of the significant policies used to adjust
the net income and capital shares and surplus from a statutory to a GAAP basis.

(a) Liabilities for future policy benefits have been computed primarily by
the net level premium method with assumptions as to anticipated mortality,
withdrawals and investment yields. The composition of the policy liabilities and
the more significant assumptions pertinent thereto are presented below:

<TABLE>
<CAPTION>
Distribution of Liabilities* Basis of Assumptions
- --------------------------------------------------------------------------------------------
Years
1995 1994 of Issue Interest Mortality Table Withdrawal
---- ---- -------- -------- --------------- ----------

Non-par:
<S> <C> <C> <C> <C> <C>
$ 1,722,604 $ 1,721,636 1962-1967 4 1/2% 1955-60 Basic Select plus Ultimate Linton B
5,668,858 5,764,026 1968-1988 5 1/2% 1955-60 Basic Select plus Ultimate Linton B
2,574,079 2,583,886 1984-1988 7 1/2% 85% of 1965-70 Basic Select Modified
plus Ultimate Linton B
74,055 62,830 1989-Present 7 1/2% 1975-80 Basic Select plus Ultimate Linton B
109,919 99,022 1989-Present 7 1/2% 1975-80 Basic Select plus Ultimate Actual
39,885 41,021 1989-Present 8% 1975-80 Basic Select plus Ultimate Actual
31,896,847 31,043,074 1985-Present 6% Accumulation of Funds --
Par:
224,307 232,295 1966-1967 4 1/2% 1955-60 Basic Select plus Ultimate Linton A
13,557,033 13,696,383 1968-1988 5 1/2% 1955-60 Basic Select plus Ultimate Linton A
988,555 1,037,503 1981-1984 7 1/4% 90% of 1965-70 Basic Select
plus Ultimate Linton B
4,713,069 4,634,783 1983-1988 9 1/2% 80% of 1965-70 Basic Select
plus Ultimate Linton B
12,459,045 9,922,152 1990-Present 8% 66% of 1975-80 Basic Select
plus Ultimate Linton B
Annuities:
25,202,605 32,707,541 1976-Present 5 1/2% Accumulation of Funds --
Miscellaneous:
15,161,153 12,776,574 1962-Present 2 1/2%-3 1/2% 1958-CSO None
</TABLE>
- ----------
* The above amounts are before deduction of deferred premiums of $1,017,841
in 1995 and $1,065,962 in 1994.

(b) The costs of acquiring new business, principally commissions and
related agency expenses, and certain costs of issuing policies, such as medical
examinations and inspection reports, all of which vary with and are primarily
related to the production of new business, have been deferred. Costs deferred on
universal life and variable life are amortized as a level percentage of the
present value of anticipated gross profits resulting from investment yields,
mortality and surrender charges. Costs deferred on traditional ordinary life and
health are amortized over the premium-paying period of the related policies in
proportion to the ratio of the annual premium revenue to the total anticipated
premium revenue. Anticipated premium revenue was estimated using the same
assumptions which were used for computing liabilities for future policy
benefits. Amortization of $1,672,429 in 1995, $1,573,216 in 1994 and $1,528,876
in 1993 was charged to operations.

(c) Participating business represented 11.1% and 11.9% of individual life
insurance in force at December 31, 1995 and 1994, respectively.

The Board of Directors annually approves a dividend formula for calculation
of dividends to be distributed to participating policyholders.

The portion of earnings of participating policies that can inure to the
benefit of shareholders is limited to the larger of 10% of such earnings or $.50
per thousand dollars of participating insurance in force. Earnings in excess of
that limit must be excluded from shareholders' equity by a charge against
operations. No such charge has been made, since participating business has
operated at a loss to date on a statutory basis. It is anticipated, however,
that the participating lines will be profitable over the lives of the policies.

(d) New York State insurance law prohibits the payment of dividends to
stockholders from any source other than the statutory unassigned surplus. The
amount of said surplus was $11,815,645, $8,235,339 and $6,148,130 at December
31, 1995, 1994 and 1993, respectively.

(e) Statutory due and deferred premiums are adjusted to conform to the
expected premium revenue used in computing future benefits and deferred policy
acquisition costs. In this regard, the GAAP due premium is recorded as an asset
and the GAAP deferred premium is applied against future policy benefits.

<PAGE>

FIRST INVESTORS LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS (Continued)

Note 7 -- Federal Income Taxes

The Company joins with its parent company and other affiliated companies in
filing a consolidated Federal income tax return. The provision for Federal
income taxes is determined on a separate company basis.

Retained earnings at December 31, 1995 included approximately $146,000
which is defined as "policyholders' surplus" and may be subject to Federal
income tax at ordinary corporate rates under certain future conditions,
including distributions to stockholders.

The Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting For Income Taxes" ("SFAS 109"), effective January 1, 1993. SFAS 109
is an asset and liability approach that requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been recognized in the Company's financial statements or tax returns.
Financial statements for the prior years were not restated and the cumulative
effect of the accounting change as of January 1, 1993 was to increase earnings
by $540,000. This amount is reflected in the 1993 accompanying Statement of
Income as the cumulative effect of a change in accounting principle. It
primarily represents the impact of adjusting deferred taxes to reflect the
current tax rate of 34% as opposed to the tax rates that were in effect when the
deferred taxes were originally recorded.

Deferred tax liabilities (assets) are comprised of the following:

<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Policyholder dividend provision ................................... $(323,612) $(309,818)
Non-qualified agents' pension plan reserve ........................ (1,044,728) (967,466)
Deferred policy acquisition costs ................................. 2,968,214 3,521,550
Future policy benefits ............................................ (2,639,345) (2,862,789)
Bond discount ..................................................... 27,842 20,182
Unrealized holding gains (losses) on Available-For-Sale Securities 967,000 (1,281,000)
Other ............................................................. 32,629 (4,659)
----------- -----------
$(12,000) $(1,884,000)
=========== ===========
</TABLE>

The currently payable Federal Income tax provision of $838,000 for 1994 is
net of a $102,000 Federal tax benefit resulting from a capital loss carry back
of $259,987.

A reconciliation of the Federal statutory income tax rate to the Company's
effective tax rate is as follows:

1995 1994 1993
---- ---- ----
Application of statutory tax rate ....................... 34% 34% 34%
Special tax deduction for life insurance companies ...... -- (18) (16)
Other ................................................... -- -- 2
--- --- ---
34% 16% 20%
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