UNITED STATES |
SECURITIES AND EXCHANGE COMMISSION |
WASHINGTON, D.C. 20549 |
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FORM N-CSR |
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CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT |
INVESTMENT COMPANIES |
INVESTMENT COMPANY ACT FILE NUMBER 811-4325 |
FIRST INVESTORS LIFE SERIES FUNDS
(Exact name of registrant as specified in charter)
40 Wall Street
New York, NY 10005
(Address of principal executive offices) (Zip code)
Joseph I. Benedek
Foresters Investment Management Company, Inc.
Raritan Plaza I
Edison, NJ 08837-3620
(Name and address of agent for service)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
1-212-858-8000
DATE OF FISCAL YEAR END: DECEMBER 31
DATE OF REPORTING PERIOD: JUNE 30, 2017
Item 1. Reports to Stockholders
The semi-annual report to stockholders follows |
FOREWORD |
This report is for the information of the shareholders of the Funds. It is the policy of each Fund described in this report to mail only one copy of a Fund’s prospectus, annual report, semi-annual report and proxy statements to all shareholders who share the same mailing address and share the same last name and have invested in a Fund covered by the same document. You are deemed to consent to this policy unless you specifically revoke this policy and request that separate copies of such documents be mailed to you. In such case, you will begin to receive your own copies within 30 days after our receipt of the revocation. You may request that separate copies of these disclosure documents be mailed to you by writing to us at: Foresters Investor Services, Inc., Raritan Plaza I, Edison, NJ 08837-3620 or calling us at 1-800-423-4026.
You may obtain a free prospectus for any of the Funds by contacting your representative, calling 1-800-423-4026, writing to us at the following address: Foresters Financial Services, Inc., 40 Wall Street, New York, NY 10005, or by visiting our website at www.foresters.com. You should consider the investment objectives, risks, charges and expenses of a Fund carefully before investing. The prospectus contains this and other information about the Fund, and should be read carefully before investing.
An investment in a Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although the Government Cash Management Fund seeks to preserve a net asset value at $1.00 per share, it is possible to lose money by investing in it, just as it is possible to lose money by investing in any of the other Funds. Past performance is no guarantee of future results. There is no guarantee that a Fund’s investment objective will be achieved.
A Statement of Additional Information (“SAI”) for any of the Funds may also be obtained, without charge, upon request by calling 1-800-423-4026, writing to us at our address or by visiting our website listed above. The SAI contains more detailed information about the Funds, including information about their Trustees.
Foresters Financial™ and Foresters™ are the trade names and trademarks of The Independent Order of Foresters (Foresters), a fraternal benefit society, 789 Don Mills Road, Toronto, Canada M3C 1T9 and its subsidiaries.
Equity & Bond Markets Overview
FIRST INVESTORS LIFE SERIES FUNDS
Dear Investor:
We are pleased to provide you with our report for the six-month period ended June 30, 2017 (“the review period”).
Economic Overview
First quarter GDP slowed to 1.4% compared to fourth quarter growth of 2.1%. The labor market continued to tighten and is approaching full employment. The unemployment rate reached its 16-year low of 4.3% in May. Despite a tighter employment market, annual wage growth of 2.5% was still disappointing. After showing signs of strength early in the year more recent inflation readings were weak, with June’s reading falling to 1.6%. Consumer sentiment was also strong earlier this year, but fell unexpectedly in June due to a fall in future expectations. Business activity remained strong with the June Purchasing Manager Survey rising to 57.8, the strongest rate of expansion in almost 3 years. The housing market, both in new construction and existing home sales, remained strong.
First quarter U.S. corporate earnings were up 14% from last year, their most robust growth since 2011. With about 40% of the S&P 500 revenues coming from countries abroad, the weaker dollar boosted foreign sales.
Many international markets also showed improved economic data. This included dramatically improved employment, revised upward GDPs, stronger Purchasing Managers Indexes, the highest consumer sentiment readings since 2008’s financial crisis, as well as improving corporate earnings.
The first half of 2017 was filled with key political developments, including the start of Donald Trump’s Administration, the presidential election in France and the UK’s general election. Investors also closely watched central banks’ actions and messaging.
The Federal Reserve (the “Fed”) raised the federal funds rate twice this year, in March and in June. Investors however, began to question the future path of Fed rate hikes due to softer than expected inflation data. The Fed is also expected to start gradually shrinking its $4.5 trillion balance sheet later this year.
Several major central banks, including the European Central Bank (ECB) and the Bank of England, signaled a sooner-than-expected tightening in monetary policy. According to bank officials’ speeches in June, the ECB could soon begin reducing its bond purchases while the Bank of England might raise interest rates later this year. This resulted in the worst three day sell-off this year in European equities during the final days of June. This put government bonds across the developed world under pressure, causing yields to spike at the end of the reporting period.
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Equity & Bond Markets Overview (continued)
FIRST INVESTORS LIFE SERIES FUNDS
The U.S. dollar weakened during the first half of the year, reflecting political uncertainty caused by challenges in implementing the Trump Administration’s pro-growth agenda. The Bloomberg U.S. Dollar Index lost 6.44 percent during the first half of 2017, erasing all of its post-election gains. A significant portion of this decline came from the strengthening euro.
The Equity Market
U.S. equities had a very strong first half of 2017, posting several new records. The Dow Jones Industrial Average (DJIA) hit two major psychological milestones of 20,000 (on January 25th) and 21,000 (on March 1st). The S&P 500 Index and the DJIA gained 9.34% and 9.35% for the period, respectively. Market volatility remained at historically low levels for most of the period despite elevated political uncertainty.
Performance was led by growth stocks for the first five months of 2017 as investors focused on an improving economic outlook while the “Trump Trade,” which was dominant in the fourth quarter of 2016, faded. Growth companies generally post stronger earnings than value companies during times of a prospering economy. Despite a weak June, growth outperformed year-to-date, with the S&P 500 Growth Index gaining 13.33%, while the S&P 500 Value Index returned 4.85%.
Small-caps, which benefited most in the immediate post-election rally, have been the weakest performers in 2017. Small-caps (measured by the Russell 2000 Index) and mid-caps (measured by the S&P 400 MidCap Index) returned 4.99% and 5.99% for the first six months of the year, respectively.
Higher yielding stocks outperformed the general market with the Dow Jones US Select Dividend Index returned 6.09% year-to-date. Real estate as a whole was under pressure earlier this year as investors focused on rising interest rates. In addition, well publicized retail bankruptcies and store closures resulted in a sell-off of retail REITs. Year-to-date the Dow Jones US Select REIT Index returned 1.36%.
Nine out of 11 S&P 500 sectors ended the first half of 2017 in positive territory, with Information Technology and Healthcare being the best performing sectors with returns of 17.23% and 16.07%, respectively. Energy, which was the strongest sector in 2016, is the weakest sector in 2017 at –12.61% due to a sharp decline in oil prices and expectations of an energy glut. Crude oil prices declined over the past 6 months by –14.30% to $46.04 per barrel.
International equities had an even stronger first half of 2017 than U.S. stocks with most of the regions and countries posting double-digit returns, their best first half year since 2009. International developed markets (measured by the MSCI EAFE Index)
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and emerging markets (measured by the MSCI EM Index) returned 14.23% and 18.60% year-to-date. International equities generally benefited from the weaker dollar.
The Bond Market
The U.S. fixed income markets were positive across the board for the first half of 2017. The broad U.S. bond market (measured by the BofA ML U.S. Broad Market Index) gained 2.35% during the review period.
The 2-year U.S. Treasury yield, which is very sensitive to changes in Fed policy, rose by 19 basis points to 1.38%. The 10-year Treasury yield, which is controlled by other factors such as GDP, inflation and investor sentiment, fell 14 basis points to 2.31%. Flattening of the yield curve resulted in an outperformance of the longer-dated Treasuries, with 15+ years performing the best at 5.47%, and shorter-dated Treasuries at only 0.31%.
Credit sensitive fixed income benefited from a narrowing in credit spreads. With record issuance and record demand, investment grade corporate bonds (measured by the BofA ML Corporate Master Index) posted a strong return of 3.88% for the review period. The demand was boosted by overseas buyers in their search of yields that were higher than those available locally. BBB-rated bonds continued to be the strongest performing sector in terms of credit quality among investment grade corporate bonds.
The high yield bond market (measured by the BofA ML U.S. Cash Pay HY Constrained Index) was the strongest domestic fixed income market for the period, returning 4.92%. Leveraged loans slightly underperformed the broad bond market, returning 1.96% year-to-date.
Municipal bonds (measured by the BofA ML Municipal Master Index) recovered significantly in the first half of 2017 with a return of 3.40% after a post-election sell-off in November. New muni issuance is still below expectations for the year, while demand has remained steady.
Sovereign bond markets had mixed performances in their local currencies, depending on the market. Most of the Eurozone markets and Japan had negative performance as yields in those countries rose. The rest of markets were mostly positive. Non-U.S. sovereign bonds (measured by the Citi World Government ex U.S. Bond Index) were up 5.91% year-to-date in U.S. dollar terms, benefiting from U.S. dollar depreciation.
3 |
Equity & Bond Markets Overview (continued)
FIRST INVESTORS LIFE SERIES FUNDS
Emerging market debt (measured by the BofA ML Global Emerging Markets Sovereign Index) was the strongest fixed income market during the review period at 7.45%. Emerging market bonds experienced strong inflows for the period, benefiting from the weakening of the U.S dollar and improving growth within emerging markets.
Thank you for placing your trust in Foresters Financial. As always, we appreciate the opportunity to serve your investment needs.
The Funds are only available through the purchase of variable life insurance policies and variable annuity contracts issued by Foresters Life Insurance and Annuity Company. The reports do not reflect the additional expenses and charges that are applicable to variable life insurance policies and variable annuity contracts.
This Equity & Bond Markets Overview is not part of the Funds’ financial report and is submitted for the general information of the shareholders of the Funds. It is not authorized for distribution to prospective investors in the Funds, unless preceded or accompanied by an effective prospectus. The views expressed in this Overview reflect those views of the Director of Equities and Director of Fixed Income of Foresters Investment Management Company, Inc. through the end of the period covered. Any such views are subject to change at any time based upon market or other conditions and we disclaim any responsibility to update such views. This Overview may not be relied upon as investment advice or an indication of current or future trading intent on behalf of any Fund.
There are a variety of risks associated with investing in variable life and annuity subaccounts. For all subaccounts, there is the risk that securities selected by the portfolio manager may perform differently than the overall market or may not meet the portfolio manager’s expectations. For stock subaccounts, the risks include market risk (the risk that the entire stock market will decline because of an event such as a deterioration in the economy or a rise in interest rates), as well as special risks associated with investing in certain types of stock subaccounts such as small-cap, global or international funds. For bond subaccounts, the risks include interest rate risk and credit risk. Interest rate risk is the risk that bonds will decrease in value as interest rates rise. As a general matter, bonds with longer maturities fluctuate more than bonds
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with shorter maturities in reaction to changes in interest rates. Credit risk is the risk that bonds will decline in value as the result of a decline in the credit rating of the bonds or the economy as a whole, or that the issuer will be unable to pay interest and/or principal when due. There are also special risks associated with investing in certain types of bond subaccounts, including liquidity risk and prepayment and extension risk. To the extent a subaccount uses derivatives, it will have risks associated with such use. You should consult the Funds’ prospectus for a precise explanation of the risks associated with your subaccounts.
5 |
Understanding Your Fund’s Expenses (unaudited)
FIRST INVESTORS LIFE SERIES FUNDS
As a mutual fund shareholder, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including advisory fees and other expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 in each Fund at the beginning of the period, January 1, 2017, and held for the entire six-month period ended June 30, 2017. The calculations assume that no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
Actual Expense Example:
These amounts help you to estimate the actual expenses that you paid over the period. The “Ending Account Value” shown is derived from the Fund’s actual return, and the “Expenses Paid During Period” shows the dollar amount that would have been paid by an investor who started with $1,000 in the Fund. You may use the information here, together with the amount you invested, to estimate the expenses that you paid during the period.
To estimate the expenses you paid on your account during this period simply divide your ending account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.60), then multiply the result by the number given for your Fund under the heading “Expenses Paid During Period”.
Hypothetical Expense Example:
These amounts provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight and help you compare your ongoing costs only and do not reflect any transactional costs. Therefore, the hypothetical expense example is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
6 |
Fund Expenses (unaudited)
BALANCED INCOME FUND
The examples below show the ongoing costs (in dollars) of investing in your Fund and will help you in comparing these costs with costs of other mutual funds. Please refer to page 6 for a detailed explanation of the information presented in these examples.
Beginning | Ending | ||
Account | Account | Expenses Paid | |
Value | Value | During Period | |
(1/1/17) | (6/30/17) | (1/1/17–6/30/17)* | |
Expense Examples | |||
Actual | $1,000.00 | $1,037.23 | $4.95 |
Hypothetical | |||
(5% annual return before expenses) | $1,000.00 | $1,019.93 | $4.91 |
* | Expenses are equal to the annualized expense ratio of .98%, multiplied by the average account |
value over the period, multiplied by 181/365 (to reflect the one-half year period). Expenses paid | |
during the period are net of expenses waived. |
Portfolio Composition
TOP TEN SECTORS
Portfolio holdings and allocations are subject to change. Percentages are as of June 30, 2017, and are |
based on the total value of investments. |
7 |
Portfolio of Investments
BALANCED INCOME FUND
June 30, 2017
Principal | ||||
Amount | Security | Value | ||
CORPORATE BONDS—48.6% | ||||
Automotive—1.6% | ||||
$100M | O’Reilly Automotive, Inc., 3.55%, 3/15/2026 | $ 100,868 | ||
Chemicals—3.3% | ||||
100M | Agrium, Inc., 3.5%, 6/1/2023 | 102,793 | ||
100M | Dow Chemical Co., 3.5%, 10/1/2024 | 102,861 | ||
205,654 | ||||
Consumer Non-Durables—1.7% | ||||
100M | Newell Brands, Inc., 4.2%, 4/1/2026 | 106,293 | ||
Energy—2.6% | ||||
50M | BP Capital Markets, PLC, 3.216%, 11/28/2023 | 50,821 | ||
100M | Magellan Midstream Partners, LP, 5%, 3/1/2026 | 110,472 | ||
161,293 | ||||
Financial Services—4.2% | ||||
100M | American International Group, Inc., 3.75%, 7/10/2025 | 102,029 | ||
50M | General Electric Capital Corp., 3.1%, 1/9/2023 | 51,891 | ||
100M | State Street Corp., 3.55%, 8/18/2025 | 104,241 | ||
258,161 | ||||
Financials—13.9% | ||||
100M | Bank of America Corp., 2.1532%, 4/24/2023 † | 100,435 | ||
100M | Citigroup, Inc., 3.7%, 1/12/2026 | 101,323 | ||
50M | Deutsche Bank AG, 3.7%, 5/30/2024 | 50,066 | ||
100M | General Motors Financial Co., 5.25%, 3/1/2026 | 108,196 | ||
50M | Goldman Sachs Group, Inc., 3.625%, 1/22/2023 | 51,671 | ||
100M | JPMorgan Chase & Co., 6.4%, 5/15/2038 | 134,241 | ||
100M | Morgan Stanley, 2.3732%, 5/8/2024 † | 100,598 | ||
50M | U.S. Bancorp, 3.6%, 9/11/2024 | 51,985 | ||
50M | Visa, Inc., 3.15%, 12/14/2025 | 50,818 | ||
Wells Fargo & Co.: | ||||
50M | 5.606%, 1/15/2044 | 59,591 | ||
50M | 3.9%, 5/1/2045 | 50,146 | ||
859,070 |
8 |
Principal | ||||
Amount | ||||
or Shares | Security | Value | ||
Food/Beverage/Tobacco—1.5% | ||||
$100M | PepsiCo, Inc., 3.45%, 10/6/2046 | $ 94,209 | ||
Information Technology—2.4% | ||||
100M | Microsoft Corp., 3.7%, 8/8/2046 | 99,216 | ||
50M | Oracle Corp., 2.65%, 7/15/2026 | 48,035 | ||
147,251 | ||||
Real Estate—9.8% | ||||
100M | Alexandria Real Estate Equities, Inc., 3.95%, 1/15/2028 | 101,902 | ||
50M | AvalonBay Communities, Inc., 3.5%, 11/15/2024 | 51,306 | ||
100M | Boston Properties, LP, 2.75%, 10/1/2026 | 94,607 | ||
50M | Prologis, LP, 3.75%, 11/1/2025 | 52,144 | ||
150M | Realty Income Corp., 3.25%, 10/15/2022 | 152,436 | ||
50M | Simon Property Group, LP, 3.375%, 10/1/2024 | 50,952 | ||
100M | Welltower, Inc., 4%, 6/1/2025 | 103,566 | ||
606,913 | ||||
Retail-General Merchandise—.9% | ||||
50M | Amazon.com, Inc., 4.8%, 12/5/2034 | 57,732 | ||
Telecommunications—1.6% | ||||
100M | Verizon Communications, Inc., 4.272%, 1/15/2036 | 96,820 | ||
Transportation—3.4% | ||||
100M | Cummins, Inc., 4.875%, 10/1/2043 | 113,211 | ||
100M | Southwest Airlines Co., 3%, 11/15/2026 | 97,184 | ||
210,395 | ||||
Utilities—1.7% | ||||
50M | Dominion Resources, Inc., 3.9%, 10/1/2025 | 51,848 | ||
50M | Oklahoma Gas & Electric Co., 4%, 12/15/2044 | 50,314 | ||
102,162 | ||||
Total Value of Corporate Bonds (cost $2,997,496) | 3,006,821 | |||
COMMON STOCKS—39.6% | ||||
Consumer Discretionary—4.4% | ||||
400 | Acushnet Holdings Corporation | 7,936 | ||
84 | Adient, PLC | 5,492 | ||
600 | American Eagle Outfitters, Inc. | 7,230 | ||
400 | Coach, Inc. | 18,936 | ||
950 | DSW, Inc. – Class “A” | 16,815 |
9 |
Portfolio of Investments (continued)
BALANCED INCOME FUND
June 30, 2017
Shares | Security | Value | ||
Consumer Discretionary (continued) | ||||
1,150 | Ford Motor Company | $ 12,867 | ||
500 | HSN, Inc. | 15,950 | ||
600 | L Brands, Inc. | 32,334 | ||
300 | Newell Brands, Inc. | 16,086 | ||
500 | Nordstrom, Inc. | 23,915 | ||
600 | Regal Entertainment Group – Class “A” | 12,276 | ||
550 | Tupperware Brands Corporation | 38,627 | ||
100 | Whirlpool Corporation | 19,162 | ||
300 | Williams-Sonoma, Inc. | 14,550 | ||
300 | Wyndham Worldwide Corporation | 30,123 | ||
272,299 | ||||
Consumer Staples—5.9% | ||||
950 | Altria Group, Inc. | 70,746 | ||
800 | B&G Foods, Inc. | 28,480 | ||
600 | Coca-Cola Company | 26,910 | ||
1,076 | Koninklijke Ahold Delhaize NV (ADR) | 20,595 | ||
300 | Nu Skin Enterprises, Inc. – Class “A” | 18,852 | ||
400 | PepsiCo, Inc. | 46,196 | ||
650 | Philip Morris International, Inc. | 76,343 | ||
250 | Procter & Gamble Company | 21,788 | ||
500 | Sysco Corporation | 25,165 | ||
400 | Wal-Mart Stores, Inc. | 30,272 | ||
365,347 | ||||
Energy—1.9% | ||||
100 | Chevron Corporation | 10,433 | ||
200 | ExxonMobil Corporation | 16,146 | ||
500 | Marathon Petroleum Corporation | 26,165 | ||
100 | Occidental Petroleum Corporation | 5,987 | ||
500 | PBF Energy, Inc. – Class “A” | 11,130 | ||
100 | Phillips 66 | 8,269 | ||
300 | Royal Dutch Shell, PLC – Class “A” (ADR) | 15,957 | ||
100 | Schlumberger, Ltd. | 6,584 | ||
600 | Suncor Energy, Inc. | 17,520 | ||
118,191 |
10 |
Shares | Security | Value | ||
Financials—4.8% | ||||
300 | Ameriprise Financial, Inc. | $ 38,187 | ||
400 | Berkshire Hills Bancorp, Inc. | 14,060 | ||
200 | Chubb, Ltd. | 29,076 | ||
500 | Discover Financial Services | 31,095 | ||
300 | Hamilton Lane, Inc. – Class “A” | 6,597 | ||
500 | JPMorgan Chase & Company | 45,700 | ||
500 | MetLife, Inc. | 27,470 | ||
250 | PNC Financial Services Group, Inc. | 31,218 | ||
600 | U.S. Bancorp | 31,152 | ||
1,200 | Waddell & Reed Financial, Inc. – Class “A” | 22,656 | ||
350 | Wells Fargo & Company | 19,394 | ||
296,605 | ||||
Health Care—4.3% | ||||
750 | Abbott Laboratories | 36,457 | ||
700 | AbbVie, Inc. | 50,757 | ||
900 | GlaxoSmithKline, PLC (ADR) | 38,808 | ||
400 | Johnson & Johnson | 52,916 | ||
550 | Merck & Company, Inc. | 35,249 | ||
1,600 | Pfizer, Inc. | 53,744 | ||
267,931 | ||||
Industrials—6.0% | ||||
300 | 3M Company | 62,457 | ||
1,200 | General Electric Company | 32,412 | ||
300 | Honeywell International, Inc. | 39,987 | ||
700 | Johnson Controls International, PLC | 30,352 | ||
800 | Koninklijke Philips NV (ADR) | 28,656 | ||
200 | Lockheed Martin Corporation | 55,522 | ||
600 | Mobile Mini, Inc. | 17,910 | ||
2,500 | Triton International, Ltd. | 83,600 | ||
150 | United Technologies Corporation | 18,317 | ||
369,213 | ||||
Information Technology—5.6% | ||||
500 | Apple, Inc. | 72,010 | ||
1,250 | Cisco Systems, Inc. | 39,125 | ||
600 | Intel Corporation | 20,244 | ||
150 | International Business Machines Corporation | 23,074 | ||
800 | Maxim Integrated Products, Inc. | 35,920 | ||
950 | Microsoft Corporation | 65,483 |
11 |
Portfolio of Investments (continued)
BALANCED INCOME FUND
June 30, 2017
Shares | Security | Value | ||
Information Technology (continued) | ||||
600 | QUALCOMM, Inc. | $ 33,132 | ||
300 | Symantec Corporation | 8,475 | ||
1,150 | Travelport Worldwide, Ltd. | 15,824 | ||
400 | Western Digital Corporation | 35,440 | ||
348,727 | ||||
Materials—1.1% | ||||
500 | International Paper Company | 28,305 | ||
150 | Praxair, Inc. | 19,883 | ||
300 | RPM International, Inc. | 16,365 | ||
64,553 | ||||
Real Estate—2.1% | ||||
2,100 | Brixmor Property Group, Inc. (REIT) | 37,548 | ||
650 | Chesapeake Lodging Trust (REIT) | 15,905 | ||
2,050 | FelCor Lodging Trust, Inc. (REIT) | 14,780 | ||
1,000 | Tanger Factory Outlet Centers, Inc. (REIT) | 25,980 | ||
600 | Urstadt Biddle Properties, Inc. – Class “A” (REIT) | 11,880 | ||
1,700 | Whitestone REIT (REIT) | 20,825 | ||
126,918 | ||||
Telecommunication Services—1.3% | ||||
1,150 | AT&T, Inc. | 43,389 | ||
800 | Verizon Communications, Inc. | 35,728 | ||
79,117 | ||||
Utilities—2.2% | ||||
300 | Black Hills Corporation | 20,241 | ||
500 | Duke Energy Corporation | 41,795 | ||
600 | Exelon Corporation | 21,642 | ||
800 | NiSource, Inc. | 20,288 | ||
200 | SCANA Corporation | 13,402 | ||
300 | WEC Energy Group, Inc. | 18,414 | ||
135,782 | ||||
Total Value of Common Stocks (cost $2,219,534) | 2,444,683 |
12 |
Principal | |||||||
Amount | |||||||
or Shares | Security | Value | |||||
RESIDENTIAL MORTGAGE-BACKED | |||||||
SECURITIES—5.9% | |||||||
Fannie Mae | |||||||
$ 209M | 3.5%, 6/1/2046 | $ 214,910 | |||||
99M | 4%, 3/1/2047 | 104,292 | |||||
44M | 4.5%, 1/1/2047 | 47,622 | |||||
Total Value of Residential Mortgage-Backed Securities (cost $373,444) | 366,824 | ||||||
EXCHANGE TRADED FUNDS—2.6% | |||||||
1,820 | ishares iBoxx USD High Yield Corporate Bond ETF (ETF) | ||||||
(cost $154,357) | 160,870 | ||||||
Total Value of Investments (cost $5,744,831) | 96.7 | % | 5,979,198 | ||||
Other Assets, Less Liabilities | 3.3 | 202,785 | |||||
Net Assets | 100.0 | % | $6,181,983 |
† | Interest rates are determined and reset periodically. The interest rates above are the rates in effect | |
at June 30, 2017. | ||
Summary of Abbreviations: | ||
ADR | American Depositary Receipts | |
ETF | Exchange Traded Fund | |
REIT | Real Estate Investment Trust | |
USD | United States Dollar |
Futures contracts outstanding at June 30, 2017:
Unrealized | |||||||||
Number of | Value at | Value at | Appreciation | ||||||
Contracts | Type | Expiration | Trade Date | June 30, 2017 | (Depreciation) | ||||
1 | 5 Year U.S. | Sep. 2017 | $117,923 | $117,998 | $ 75 | ||||
Treasury Note | |||||||||
5 | 10 Year U.S. | Sep. 2017 | 627,780 | 627,840 | 60 | ||||
Treasury Note | |||||||||
1 | U.S. Treasury | Sep. 2017 | 152,023 | 150,346 | (1,677) | ||||
Long Bond | |||||||||
(Premium received $89) | $(1,542) |
13 |
Portfolio of Investments (continued)
BALANCED INCOME FUND
June 30, 2017
The Fund’s assets and liabilities are classified into the following three levels based on the inputs used to value the assets and liabilities:
Level 1 — Unadjusted quoted prices in active markets for identical securities that the Fund has the ability to access. |
Level 2 — Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumption about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The inputs methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, U.S. Government securities are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market.
The following is a summary, by category of Level, of inputs used to value the Fund’s investments as of June 30, 2017:
Level 1 | Level 2 | Level 3 | Total | |||||||||
Assets | ||||||||||||
Corporate Bonds | $ | — | $ | 3,006,821 | $ | — | $ | 3,006,821 | ||||
Common Stocks | 2,444,683 | — | — | 2,444,683 | ||||||||
Residential Mortgage-Backed | ||||||||||||
Securities | — | 366,824 | — | 366,824 | ||||||||
Exchange Traded Funds | 160,870 | — | — | 160,870 | ||||||||
Total Investments in Securities* | $ | 2,605,553 | $ | 3,373,645 | $ | — | $ | 5,979,198 | ||||
Liabilities | ||||||||||||
Futures Contracts | $ | (1,453) | $ | — | $ | — | $ | (1,453) |
* | The Portfolio of Investments provides information on the industry categorization for corporate |
bonds and common stocks. | |
There were no transfers into or from Level 1 and Level 2 by the Fund for the period ended | |
June 30, 2017. Transfers, if any, between Levels are recognized at the end of the reporting period. |
14 | See notes to financial statements |
Fund Expenses (unaudited)
COVERED CALL STRATEGY FUND
The examples below show the ongoing costs (in dollars) of investing in your Fund and will help you in comparing these costs with costs of other mutual funds. Please refer to page 6 for a detailed explanation of the information presented in these examples.
Beginning | Ending | ||
Account | Account | Expenses Paid | |
Value | Value | During Period | |
(1/1/17) | (6/30/17) | (1/1/17–6/30/17)* | |
Expense Examples | |||
Actual | $1,000.00 | $1,041.08 | $5.42 |
Hypothetical | |||
(5% annual return before expenses) | $1,000.00 | $1,019.48 | $5.36 |
* | Expenses are equal to the annualized expense ratio of 1.07%, multiplied by the average account |
value over the period, multiplied by 181/365 (to reflect the one-half year period). Expenses paid | |
during the period are net of expenses waived. |
Portfolio Composition
BY SECTOR
Portfolio holdings and allocations are subject to change. Percentages are as of June 30, 2017, and are |
based on the total value of investments. |
15 |
Portfolio of Investments
COVERED CALL STRATEGY FUND
June 30, 2017
Shares | Security | Value | ||
COMMON STOCKS—98.9% | ||||
Consumer Discretionary—8.3% | ||||
200 | * | AutoZone, Inc. | $ 114,092 | |
2,700 | CBS Corporation – Class “B” | 172,206 | ||
1,500 | Walt Disney Company | 159,375 | ||
1,200 | Whirlpool Corporation | 229,944 | ||
675,617 | ||||
Consumer Staples—4.0% | ||||
2,800 | General Mills, Inc. | 155,120 | ||
3,900 | Mondelez International, Inc. | 168,441 | ||
323,561 | ||||
Energy—10.7% | ||||
2,200 | Chevron Corporation | 229,526 | ||
2,000 | ExxonMobil Corporation | 161,460 | ||
5,100 | Halliburton Company | 217,821 | ||
4,000 | Valero Energy Corporation | 269,840 | ||
878,647 | ||||
Financials—21.9% | ||||
3,400 | American Express Company | 286,416 | ||
15,100 | Bank of America Corporation | 366,326 | ||
600 | BlackRock, Inc. | 253,446 | ||
1,400 | Goldman Sachs Group, Inc. | 310,660 | ||
4,400 | JPMorgan Chase & Company | 402,160 | ||
3,400 | U.S. Bancorp | 176,528 | ||
1,795,536 | ||||
Health Care—16.5% | ||||
1,500 | Allergan, PLC | 364,635 | ||
900 | Amgen, Inc. | 155,007 | ||
3,000 | Bristol-Myers Squibb Company | 167,160 | ||
4,300 | Medtronic, PLC | 381,625 | ||
8,400 | Pfizer, Inc. | 282,156 | ||
1,350,583 |
16 |
Shares | Security | Value | |||||
Industrials—15.0% | |||||||
8,300 | General Electric Company | $ 224,183 | |||||
2,700 | Honeywell International, Inc. | 359,883 | |||||
600 | Lockheed Martin Corporation | 166,566 | |||||
2,000 | Raytheon Company | 322,960 | |||||
1,400 | United Parcel Service, Inc. – Class “B” | 154,826 | |||||
1,228,418 | |||||||
Information Technology—16.1% | |||||||
2,300 | Apple, Inc. | 331,246 | |||||
9,000 | Cisco Systems, Inc. | 281,700 | |||||
7,000 | Intel Corporation | 236,180 | |||||
6,200 | Oracle Corporation | 310,868 | |||||
2,900 | QUALCOMM, Inc. | 160,138 | |||||
1,320,132 | |||||||
Materials—4.9% | |||||||
6,400 | Dow Chemical Company | 403,648 | |||||
Telecommunication Services—1.5% | |||||||
2,800 | Verizon Communications, Inc. | 125,048 | |||||
Total Value of Common Stocks (cost $7,319,237) | 98.9 | % | 8,101,190 | ||||
Other Assets, Less Liabilities | 1.1 | 87,716 | |||||
Net Assets | 100.0 | % | $8,188,906 |
* | Non-income producing |
17 |
Portfolio of Investments (continued)
COVERED CALL STRATEGY FUND
June 30, 2017
Expiration | Exercise | |||
CALL OPTIONS WRITTEN—2.0% | Date | Price | Contracts | Value |
Allergan, PLC | 7/21/17 | $240.00 | 15 | $ 9,150 |
American Express Company | 7/21/17 | 80.00 | 34 | 16,252 |
Amgen, Inc. | 7/21/17 | 155.00 | 8 | 14,328 |
Amgen, Inc. | 7/21/17 | 165.00 | 1 | 833 |
Apple, Inc. | 7/21/17 | 150.00 | 23 | 1,495 |
AutoZone, Inc. | 7/21/17 | 620.00 | 2 | 260 |
Bank of America Corporation | 7/21/17 | 25.00 | 118 | 3,304 |
Bank of America Corporation | 8/11/17 | 25.50 | 33 | 1,221 |
BlackRock, Inc. | 10/20/17 | 390.00 | 5 | 19,925 |
BlackRock, Inc. | 10/20/17 | 420.00 | 1 | 1,885 |
Bristol-Myers Squibb Company | 9/15/17 | 60.00 | 30 | 2,970 |
CBS Corporation | 12/15/17 | 67.50 | 27 | 6,682 |
Cisco Systems, Inc. | 7/14/17 | 32.00 | 90 | 990 |
Dow Chemical Company | 7/28/17 | 64.50 | 64 | 4,608 |
ExxonMobil Corporation | 1/19/18 | 85.00 | 3 | 495 |
ExxonMobil Corporation | 1/19/18 | 87.50 | 17 | 1,649 |
General Electric Company | 7/14/17 | 29.50 | 83 | 83 |
General Mills, Inc. | 7/21/17 | 57.50 | 28 | 560 |
Halliburton Company | 10/20/17 | 45.00 | 51 | 8,007 |
Honeywell International, Inc. | 7/21/17 | 135.00 | 27 | 3,807 |
Intel Corporation | 9/15/17 | 34.00 | 70 | 7,700 |
JPMorgan Chase & Company | 8/18/17 | 95.00 | 4 | 324 |
JPMorgan Chase & Company | 12/15/17 | 95.00 | 40 | 11,840 |
Lockheed Martin Corporation | 7/21/17 | 280.00 | 6 | 1,800 |
Medtronic, PLC | 7/21/17 | 87.50 | 42 | 7,098 |
Medtronic, PLC | 8/18/17 | 90.00 | 1 | 117 |
Mondelez International, Inc. | 7/21/17 | 45.50 | 39 | 761 |
Oracle Corporation | 8/4/17 | 52.50 | 62 | 1,054 |
Pfizer, Inc. | 7/28/17 | 34.50 | 84 | 1,176 |
QUALCOMM, Inc. | 7/21/17 | 55.50 | 29 | 4,495 |
Raytheon Company | 8/18/17 | 165.00 | 20 | 5,320 |
U.S. Bancorp | 7/21/17 | 52.00 | 11 | 1,045 |
U.S. Bancorp | 7/21/17 | 52.50 | 23 | 1,633 |
United Parcel Service, Inc. | 7/21/17 | 111.00 | 14 | 2,030 |
Valero Energy Corporation | 8/18/17 | 67.50 | 40 | 8,160 |
Verizon Communications, Inc. | 7/21/17 | 47.00 | 28 | 112 |
Walt Disney Company | 7/14/17 | 107.00 | 15 | 900 |
Whirlpool Corporation | 9/15/17 | 190.00 | 12 | 10,830 |
Total Call Options Written (premium received $156,854) | $164,899 |
18 |
The Fund’s assets and liabilities are classified into the following three levels based on the inputs used to value the assets and liabilities:
Level 1 — Unadjusted quoted prices in active markets for identical securities that the Fund has the ability to access. |
Level 2 — Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumption about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The inputs methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, U.S. Government securities are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market.
The following is a summary, by category of Level, of inputs used to value the Fund’s investments as of June 30, 2017:
Level 1 | Level 2 | Level 3 | Total | |||||||||
Assets | ||||||||||||
Common Stocks* | $ | 8,101,190 | $ | — | $ | — | $ | 8,101,190 | ||||
Liabilities | ||||||||||||
Call Options Written | $ | (164,899) | $ | — | $ | — | $ | (164,899) |
* | The Portfolio of Investments provides information on the industry categorization for common stocks. |
There were no transfers into or from Level 1 and Level 2 by the Fund for the period ended | |
June 30, 2017. Transfers, if any, between Levels are recognized at the end of the reporting period. |
See notes to financial statements | 19 |
Fund Expenses (unaudited)
EQUITY INCOME FUND
The examples below show the ongoing costs (in dollars) of investing in your Fund and will help you in comparing these costs with costs of other mutual funds. Please refer to page 6 for a detailed explanation of the information presented in these examples.
Beginning | Ending | ||
Account | Account | Expenses Paid | |
Value | Value | During Period | |
(1/1/17) | (6/30/17) | (1/1/17–6/30/17)* | |
Expense Examples | |||
Actual | $1,000.00 | $1,056.95 | $4.08 |
Hypothetical | |||
(5% annual return before expenses) | $1,000.00 | $1,020.82 | $4.01 |
* | Expenses are equal to the annualized expense ratio of .80%, multiplied by the average account |
value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Portfolio Composition
TOP TEN SECTORS
Portfolio holdings and allocations are subject to change. Percentages are as of June 30, 2017, and are |
based on the total value of investments. |
20 |
Portfolio of Investments
EQUITY INCOME FUND
June 30, 2017
Shares | Security | Value | ||
COMMON STOCKS—93.7% | ||||
Consumer Discretionary—8.8% | ||||
17,000 | Acushnet Holdings Corporation | $ 337,280 | ||
13,200 | American Eagle Outfitters, Inc. | 159,060 | ||
8,687 | CBS Corporation – Class “B” | 554,057 | ||
36,200 | Comcast Corporation – Special Shares “A” | 1,408,904 | ||
3,900 | Delphi Automotive, PLC | 341,835 | ||
51,850 | Ford Motor Company | 580,202 | ||
7,950 | Home Depot, Inc. | 1,219,530 | ||
13,500 | HSN, Inc. | 430,650 | ||
4,800 | L Brands, Inc. | 258,672 | ||
6,900 | McDonald’s Corporation | 1,056,804 | ||
12,437 | Newell Brands, Inc. | 666,872 | ||
6,700 | Oxford Industries, Inc. | 418,683 | ||
28,400 | Regal Entertainment Group – Class “A” | 581,064 | ||
11,016 | Time Warner, Inc. | 1,106,117 | ||
3,600 | Tupperware Brands Corporation | 252,828 | ||
4,300 | Walt Disney Company | 456,875 | ||
1,400 | Whirlpool Corporation | 268,268 | ||
5,600 | Wyndham Worldwide Corporation | 562,296 | ||
10,659,997 | ||||
Consumer Staples—9.7% | ||||
23,100 | Altria Group, Inc. | 1,720,257 | ||
14,400 | B&G Foods, Inc. | 512,640 | ||
17,800 | Coca-Cola Company | 798,330 | ||
12,000 | CVS Health Corporation | 965,520 | ||
4,350 | Dr. Pepper Snapple Group, Inc. | 396,328 | ||
6,400 | Kimberly-Clark Corporation | 826,304 | ||
21,282 | Koninklijke Ahold Delhaize NV (ADR) | 407,337 | ||
3,666 | Kraft Heinz Company | 313,956 | ||
3,400 | Molson Coors Brewing Company | 293,556 | ||
12,300 | PepsiCo, Inc. | 1,420,527 | ||
16,200 | Philip Morris International, Inc. | 1,902,690 | ||
14,200 | Procter & Gamble Company | 1,237,530 | ||
12,700 | Wal-Mart Stores, Inc. | 961,136 | ||
11,756,111 | ||||
Energy—7.0% | ||||
17,200 | Chevron Corporation | 1,794,476 | ||
16,150 | ConocoPhillips | 709,954 | ||
14,600 | Devon Energy Corporation | 466,762 |
21 |
Portfolio of Investments (continued)
EQUITY INCOME FUND
June 30, 2017
Shares | Security | Value | ||
Energy (continued) | ||||
15,600 | ExxonMobil Corporation | $ 1,259,388 | ||
8,600 | Halliburton Company | 367,306 | ||
13,800 | Marathon Petroleum Corporation | 722,154 | ||
17,800 | Occidental Petroleum Corporation | 1,065,686 | ||
15,800 | PBF Energy, Inc. – Class “A” | 351,708 | ||
14,400 | Royal Dutch Shell, PLC – Class “A” (ADR) | 765,936 | ||
7,100 | Schlumberger, Ltd. | 467,464 | ||
20,400 | Suncor Energy, Inc. | 595,680 | ||
8,566,514 | ||||
Financials—17.4% | ||||
29,700 | AllianceBernstein Holding, LP (MLP) | 702,405 | ||
10,350 | American Express Company | 871,884 | ||
7,700 | American International Group, Inc. | 481,404 | ||
4,050 | Ameriprise Financial, Inc. | 515,524 | ||
20,200 | Bank of New York Mellon Corporation | 1,030,604 | ||
19,850 | Berkshire Hills Bancorp, Inc. | 697,727 | ||
13,567 | Chubb, Ltd. | 1,972,370 | ||
15,600 | Citizens Financial Group, Inc. | 556,608 | ||
14,550 | Discover Financial Services | 904,864 | ||
29,070 | Financial Select Sector SPDR Fund (ETF) | 717,157 | ||
300 | Hamilton Lane, Inc. – Class “A” | 6,597 | ||
7,900 | IBERIABANK Corporation | 643,850 | ||
13,900 | Invesco, Ltd. | 489,141 | ||
21,000 | iShares S&P U.S. Preferred Stock Index Fund (ETF) | 822,570 | ||
25,900 | JPMorgan Chase & Company | 2,367,260 | ||
21,100 | MetLife, Inc. | 1,159,234 | ||
9,400 | PNC Financial Services Group, Inc. | 1,173,778 | ||
6,200 | Prosperity Bancshares, Inc. | 398,288 | ||
9,700 | SPDR S&P Regional Banking (ETF) | 533,015 | ||
26,100 | Sterling Bancorp | 606,825 | ||
5,400 | Travelers Companies, Inc. | 683,262 | ||
20,900 | U.S. Bancorp | 1,085,128 | ||
17,400 | Waddell & Reed Financial, Inc. – Class “A” | 328,512 | ||
42,450 | Wells Fargo & Company | 2,352,155 | ||
21,100,162 | ||||
Health Care—11.7% | ||||
18,400 | Abbott Laboratories | 894,424 | ||
16,300 | AbbVie, Inc. | 1,181,913 | ||
8,492 | Baxter International, Inc. | 514,106 | ||
9,000 | Gilead Sciences, Inc. | 637,020 |
22 |
Shares | Security | Value | ||
Health Care (continued) | ||||
10,050 | GlaxoSmithKline, PLC (ADR) | $ 433,356 | ||
19,550 | Johnson & Johnson | 2,586,270 | ||
10,912 | Medtronic, PLC | 968,440 | ||
33,520 | Merck & Company, Inc. | 2,148,297 | ||
74,585 | Pfizer, Inc. | 2,505,310 | ||
14,400 | Phibro Animal Health Corporation – Class “A” | 533,520 | ||
3,850 | Thermo Fisher Scientific, Inc. | 671,710 | ||
3,100 | UnitedHealth Group, Inc. | 574,802 | ||
8,490 | Zoetis, Inc. | 529,606 | ||
14,178,774 | ||||
Industrials—11.6% | ||||
5,500 | 3M Company | 1,145,045 | ||
5,600 | A.O. Smith Corporation | 315,448 | ||
12,400 | Eaton Corporation, PLC | 965,092 | ||
3,400 | General Dynamics Corporation | 673,540 | ||
61,630 | General Electric Company | 1,664,626 | ||
11,800 | Honeywell International, Inc. | 1,572,822 | ||
13,300 | Industrial Select Sector SPDR Fund (ETF) | 905,863 | ||
9,700 | Ingersoll-Rand, PLC | 886,483 | ||
5,850 | ITT, Inc. | 235,053 | ||
24,834 | Johnson Controls International, PLC | 1,076,802 | ||
19,100 | Koninklijke Philips NV (ADR) | 684,162 | ||
3,680 | Lockheed Martin Corporation | 1,021,605 | ||
10,500 | Schneider National, Inc. | 234,885 | ||
1,450 | Snap-On, Inc. | 229,100 | ||
17,400 | Triton International, Ltd. | 581,856 | ||
8,500 | United Parcel Service, Inc. – Class “B” | 940,015 | ||
8,200 | United Technologies Corporation | 1,001,302 | ||
14,133,699 | ||||
Information Technology—13.0% | ||||
8,690 | Apple, Inc. | 1,251,534 | ||
16,300 | Applied Materials, Inc. | 673,353 | ||
5,450 | Automatic Data Processing, Inc. | 558,407 | ||
3,000 | Broadcom, Ltd. | 699,150 | ||
66,700 | Cisco Systems, Inc. | 2,087,710 | ||
14,200 | HP Enterprise Company | 235,578 | ||
26,800 | HP, Inc. | 468,464 | ||
34,100 | Intel Corporation | 1,150,534 | ||
11,600 | Juniper Networks, Inc. | 323,408 |
23 |
Portfolio of Investments (continued)
EQUITY INCOME FUND
June 30, 2017
Shares | Security | Value | ||
Information Technology (continued) | ||||
3,650 | Lam Research Corporation | $ 516,220 | ||
11,400 | Microchip Technology, Inc. | 879,852 | ||
39,250 | Microsoft Corporation | 2,705,503 | ||
5,100 | * | NXP Semiconductors NV | 558,195 | |
11,700 | QUALCOMM, Inc. | 646,074 | ||
10,800 | Silicon Motion Technology Corporation (ADR) | 520,884 | ||
22,700 | Symantec Corporation | 641,275 | ||
7,500 | TE Connectivity, Ltd. | 590,100 | ||
10,900 | Technology Select Sector SPDR Fund (ETF) | 596,448 | ||
8,400 | Western Digital Corporation | 744,240 | ||
15,846,929 | ||||
Materials—4.7% | ||||
17,050 | Dow Chemical Company | 1,075,343 | ||
9,190 | E.I. DuPont de Nemours & Company | 741,725 | ||
4,700 | Eastman Chemical Company | 394,753 | ||
9,700 | International Paper Company | 549,117 | ||
22,800 | * | Louisiana-Pacific Corporation | 549,708 | |
7,700 | LyondellBasell Industries NV – Class “A” | 649,803 | ||
5,400 | Praxair, Inc. | 715,770 | ||
10,400 | Sealed Air Corporation | 465,504 | ||
4,600 | Steel Dynamics, Inc. | 164,726 | ||
7,990 | WestRock Company | 452,713 | ||
5,759,162 | ||||
Real Estate—2.7% | ||||
31,100 | Brixmor Property Group, Inc. (REIT) | 556,068 | ||
16,900 | Chesapeake Lodging Trust (REIT) | 413,543 | ||
2,800 | Federal Realty Investment Trust (REIT) | 353,892 | ||
8,850 | iShares U.S. Real Estate ETF (ETF) | 705,965 | ||
12,000 | Sunstone Hotel Investors, Inc. (REIT) | 193,440 | ||
17,300 | Tanger Factory Outlet Centers, Inc. (REIT) | 449,454 | ||
31,600 | Urstadt Biddle Properties, Inc. – Class “A” (REIT) | 625,680 | ||
3,298,042 | ||||
Telecommunication Services—3.2% | ||||
50,760 | AT&T, Inc. | 1,915,175 | ||
43,100 | Verizon Communications, Inc. | 1,924,846 | ||
3,840,021 |
24 |
Shares | Security | Value | ||
Utilities—3.9% | ||||
7,350 | American Electric Power Company, Inc. | $ 510,604 | ||
19,200 | CenterPoint Energy, Inc. | 525,696 | ||
6,750 | Dominion Resources, Inc. | 517,252 | ||
6,900 | Duke Energy Corporation | 576,771 | ||
24,500 | Exelon Corporation | 883,715 | ||
3,400 | NextEra Energy, Inc. | 476,442 | ||
20,200 | PPL Corporation | 780,932 | ||
8,300 | Vectren Corporation | 485,052 | ||
4,756,464 | ||||
Total Value of Common Stocks (cost $78,188,539) | 113,895,875 | |||
PREFERRED STOCKS—1.7% | ||||
Financials—.6% | ||||
200 | Citizens Financial Group, Inc., Series A, 5.5%, 2049 | 209,500 | ||
21,200 | JPMorgan Chase & Co., Series Y, 6.125%, 2020 | 571,340 | ||
780,840 | ||||
Health Care—.4% | ||||
500 | Allergan, PLC, Series A, 5.5%, 2018 | 434,040 | ||
Real Estate—.7% | ||||
11,400 | Digital Realty Trust, Inc., Series G (REIT), 5.875%, 2049 | 291,498 | ||
9,000 | Urstadt Biddle Properties, Inc., Series F (REIT), 7.125%, 2049 | 231,570 | ||
11,000 | Urstadt Biddle Properties, Inc., Series G (REIT), 6.75%, 2049 | 290,400 | ||
813,468 | ||||
Total Value of Preferred Stocks (cost $2,019,492) | 2,028,348 |
25 |
Portfolio of Investments (continued)
EQUITY INCOME FUND
June 30, 2017
Principal | |||||||
Amount | Security | Value | |||||
SHORT-TERM U.S. GOVERNMENT AGENCY | |||||||
OBLIGATIONS—3.5% | |||||||
Federal Home Loan Bank: | |||||||
$ 500M | 0.92%, 7/13/2017 | $ 499,862 | |||||
750M | 0.9%, 7/19/2017 | 749,670 | |||||
1,000M | 1%, 7/19/2017 | 999,560 | |||||
500M | 0.9%, 7/24/2017 | 499,711 | |||||
1,000M | 0.99%, 8/2/2017 | 999,158 | |||||
500M | 0.98%, 8/11/2017 | 499,453 | |||||
Total Value of Short-Term U.S. Government Agency Obligations (cost $4,247,282) | 4,247,414 | ||||||
Total Value of Investments (cost $84,455,313) | 98.9 | % | 120,171,637 | ||||
Other Assets, Less Liabilities | 1.1 | 1,375,445 | |||||
Net Assets | 100.0 | % | $121,547,082 |
* | Non-income producing | |
Summary of Abbreviations: | ||
ADR | American Depositary Receipts | |
ETF | Exchange Traded Fund | |
MLP | Master Limited Partnership | |
REIT | Real Estate Investment Trust |
26 |
The Fund’s assets and liabilities are classified into the following three levels based on the inputs used to value the assets and liabilities:
Level 1 — Unadjusted quoted prices in active markets for identical securities that the Fund has the ability to access. |
Level 2 — Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumption about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The inputs methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, U.S. Government securities are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market.
The following is a summary, by category of Level, of inputs used to value the Fund’s investments as of June 30, 2017:
Level 1 | Level 2 | Level 3 | Total | |||||||||
Common Stocks | $ | 113,895,875 | $ | — | $ | — | $ | 113,895,875 | ||||
Preferred Stocks | 2,028,348 | — | — | 2,028,348 | ||||||||
Short-Term U.S. Government | ||||||||||||
Agency Obligations | — | 4,247,414 | — | 4,247,414 | ||||||||
Total Investments in Securities* | $ | 115,924,223 | $ | 4,247,414 | $ | — | $ | 120,171,637 |
* | The Portfolio of Investments provides information on the industry categorization for common stocks |
and preferred stocks. | |
There were no transfers into or from Level 1 and Level 2 by the Fund for the period ended | |
June 30, 2017. Transfers, if any, between Levels are recognized at the end of the reporting period. |
See notes to financial statements | 27 |
Fund Expenses (unaudited)
FUND FOR INCOME
The examples below show the ongoing costs (in dollars) of investing in your Fund and will help you in comparing these costs with costs of other mutual funds. Please refer to page 6 for a detailed explanation of the information presented in these examples.
Beginning | Ending | ||
Account | Account | Expenses Paid | |
Value | Value | During Period | |
(1/1/17) | (6/30/17) | (1/1/17–6/30/17)* | |
Expense Examples | |||
Actual | $1,000.00 | $1,040.09 | $4.45 |
Hypothetical | |||
(5% annual return before expenses) | $1,000.00 | $1,020.43 | $4.41 |
* | Expenses are equal to the annualized expense ratio of .88%, multiplied by the average account |
value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Portfolio Composition
TOP TEN SECTORS
Portfolio holdings and allocations are subject to change. Percentages are as of June 30, 2017, and are |
based on the total value of investments. |
28 |
Portfolio of Investments
FUND FOR INCOME
June 30, 2017
Principal | ||||
Amount | Security | Value | ||
CORPORATE BONDS—92.4% | ||||
Aerospace/Defense—1.3% | ||||
Bombardier, Inc.: | ||||
$375M | 8.75%, 12/1/2021 (a) | $ 417,187 | ||
225M | 7.5%, 3/15/2025 (a) | 234,000 | ||
Meccanica Holdings USA, Inc.: | ||||
275M | 7.375%, 7/15/2039 (a) | 331,375 | ||
100M | 6.25%, 1/15/2040 (a) | 112,500 | ||
275M | Transdigm, Inc., 6.375%, 6/15/2026 | 279,813 | ||
1,374,875 | ||||
Automotive—4.9% | ||||
200M | Allison Transmission, Inc., 5%, 10/1/2024 (a) | 205,500 | ||
American Axle & Manufacturing, Inc.: | ||||
25M | 6.625%, 10/15/2022 | 25,750 | ||
225M | 6.25%, 4/1/2025 (a) | 219,937 | ||
175M | 6.5%, 4/1/2027 (a) | 170,625 | ||
250M | Asbury Automotive Group, Inc., 6%, 12/15/2024 | 255,625 | ||
225M | Avis Budget Car Rental, 6.375%, 4/1/2024 (a) | 225,562 | ||
175M | Cooper-Standard Automotive, Inc., 5.625%, 11/15/2026 (a) | 176,094 | ||
Dana Holding Corp.: | ||||
200M | 6%, 9/15/2023 | 209,500 | ||
250M | 5.5%, 12/15/2024 | 260,625 | ||
450M | Fiat Chrysler Automobiles NV, 5.25%, 4/15/2023 | 459,562 | ||
Group 1 Automotive, Inc.: | ||||
325M | 5%, 6/1/2022 | 331,500 | ||
200M | 5.25%, 12/15/2023 (a) | 203,000 | ||
Hertz Corp.: | ||||
250M | 7.625%, 6/1/2022 (a) | 250,025 | ||
150M | 5.5%, 10/15/2024 (a) | 123,750 | ||
200M | IHO Verwaltungs GmbH, 4.125%, 9/15/2021 (a) | 204,250 | ||
500M | LKQ Corp., 4.75%, 5/15/2023 | 512,500 | ||
450M | Meritor, Inc., 6.25%, 2/15/2024 | 471,375 | ||
425M | Omega U.S. Sub, LLC, 8.75%, 7/15/2023 (a) | 451,563 | ||
325M | ZF North America Capital, Inc., 4.75%, 4/29/2025 (a) | 344,094 | ||
5,100,837 | ||||
Building Materials—1.0% | ||||
500M | Building Materials Corp., 5.375%, 11/15/2024 (a) | 529,375 | ||
550M | Griffon Corp., 5.25%, 3/1/2022 | 562,375 | ||
1,091,750 |
29 |
Portfolio of Investments (continued)
FUND FOR INCOME
June 30, 2017
Principal | ||||
Amount | Security | Value | ||
Chemicals—4.7% | ||||
$275M | A. Schulman, Inc., 6.875%, 6/1/2023 | $ 292,188 | ||
400M | Blue Cube Spinco, Inc., 10%, 10/15/2025 | 495,000 | ||
225M | Consolidated Energy Finance SA, 6.875%, 6/15/2025 (a) | 232,312 | ||
125M | Evolution Escrow Issuer, 7.5%, 3/15/2022 (a) | 129,375 | ||
275M | Koppers, Inc., 6%, 2/15/2025 (a) | 292,875 | ||
450M | Platform Specialty Products Corp., 10.375%, 5/1/2021 (a) | 498,938 | ||
400M | PolyOne Corp., 5.25%, 3/15/2023 | 422,000 | ||
Rain CII Carbon, LLC: | ||||
232M | 8.25%, 1/15/2021 (a) | 242,150 | ||
850M | 7.25%, 4/1/2025 (a) | 879,750 | ||
275M | Rayonier AM Products, Inc., 5.5%, 6/1/2024 (a) | 268,986 | ||
175M | TPC Group, Inc., 8.75%, 12/15/2020 (a) | 158,375 | ||
250M | Trinseo SA, 6.75%, 5/1/2022 (a) | 265,625 | ||
300M | Tronox Finance, LLC, 6.375%, 8/15/2020 | 301,500 | ||
375M | Univar USA, Inc., 6.75%, 7/15/2023 (a) | 392,813 | ||
75M | W.R. Grace & Co., 5.625%, 10/1/2024 (a) | 80,437 | ||
4,952,324 | ||||
Consumer Non-Durables—1.6% | ||||
150M | American Greetings Corp., 7.875%, 2/15/2025 (a) | 162,937 | ||
175M | First Quality Finance Co., 5%, 7/1/2025 (a) | 178,937 | ||
400M | Kronos Acquisition Holdings, 9%, 8/15/2023 (a) | 400,000 | ||
Reynolds Group Issuer, Inc.: | ||||
275M | 5.75%, 10/15/2020 | 281,762 | ||
125M | 5.125%, 7/15/2023 (a) | 130,000 | ||
250M | Standard Industries, Inc., 5.5%, 2/15/2023 (a) | 264,375 | ||
250M | Wolverine World Wide, Inc., 5%, 9/1/2026 (a) | 247,188 | ||
1,665,199 | ||||
Energy—10.0% | ||||
Antero Resources Corp.: | ||||
125M | 5.375%, 11/1/2021 | 126,719 | ||
50M | 5.125%, 12/1/2022 | 50,359 | ||
50M | 5%, 3/1/2025 (a) | 48,750 | ||
250M | Baytex Energy Corp., 5.125%, 6/1/2021 (a) | 223,125 | ||
200M | Blue Racer Midstream, LLC, 6.125%, 11/15/2022 (a) | 202,500 | ||
75M | Callon Petroleum Co., 6.125%, 10/1/2024 | 76,687 | ||
Carrizo Oil & Gas, Inc.: | ||||
125M | 6.25%, 4/15/2023 | 120,937 | ||
75M | 8.25%, 7/15/2025 (b) | 76,875 | ||
125M | Cheniere Corpus Christi Holdings, 5.125%, 6/30/2027 (a) | 128,281 |
30 |
Principal | ||||
Amount | Security | Value | ||
Energy (continued) | ||||
$150M | CONSOL Energy, Inc., 5.875%, 4/15/2022 | $ 148,125 | ||
Continental Resources, Inc.: | ||||
200M | 4.5%, 4/15/2023 | 191,500 | ||
275M | 3.8%, 6/1/2024 | 253,170 | ||
50M | 4.9%, 6/1/2044 | 42,000 | ||
125M | Covey Park Energy, LLC, 7.5%, 5/15/2025 (a) | 125,312 | ||
Crestwood Midstream Partners, LP: | ||||
250M | 6.25%, 4/1/2023 | 255,000 | ||
200M | 5.75%, 4/1/2025 (a) | 200,000 | ||
275M | Delek Logistics Partners, LP, 6.75%, 5/15/2025 (a) | 279,125 | ||
75M | Diamondback Energy, Inc., 4.75%, 11/1/2024 (a) | 75,000 | ||
400M | Exterran Partners, LP, 6%, 10/1/2022 | 390,000 | ||
275M | Forum Energy Technologies, Inc., 6.25%, 10/1/2021 | 269,500 | ||
Genesis Energy, LP: | ||||
200M | 6.75%, 8/1/2022 | 201,500 | ||
25M | 6%, 5/15/2023 | 24,625 | ||
100M | 5.625%, 6/15/2024 | 95,250 | ||
175M | Gulfport Energy Corp., 6.375%, 5/15/2025 (a) | 173,031 | ||
175M | Hilcorp Energy I, 5.75%, 10/1/2025 (a) | 165,812 | ||
375M | Laredo Petroleum, Inc., 5.625%, 1/15/2022 | 365,625 | ||
200M | Matador Resources Co., 6.875%, 4/15/2023 | 208,500 | ||
250M | MEG Energy Corp., 6.5%, 1/15/2025 (a) | 228,438 | ||
Murphy Oil Corp.: | ||||
200M | 4.7%, 12/1/2022 | 193,600 | ||
125M | 6.875%, 8/15/2024 | 130,938 | ||
350M | Newfield Exploration Co., 5.375%, 1/1/2026 | 364,000 | ||
50M | NuStar Logistics, LP, 4.8%, 9/1/2020 | 52,250 | ||
250M | Oasis Petroleum, Inc., 6.875%, 1/15/2023 | 243,125 | ||
Parsley Energy, LLC: | ||||
50M | 6.25%, 6/1/2024 (a) | 52,750 | ||
175M | 5.25%, 8/15/2025 (a) | 175,438 | ||
175M | PDC Energy, Inc., 6.125%, 9/15/2024 (a) | 178,500 | ||
225M | Precision Drilling Corp., 6.5%, 12/15/2021 | 221,344 | ||
300M | QEP Resources, Inc., 6.875%, 3/1/2021 | 312,750 | ||
296M | Range Resources Corp., 5%, 8/15/2022 (a) | 292,300 | ||
225M | Rice Energy, Inc., 6.25%, 5/1/2022 | 235,406 | ||
175M | Rowan Cos., Inc., 4.875%, 6/1/2022 | 163,188 | ||
100M | RSP Permian, Inc., 5.25%, 1/15/2025 (a) | 100,625 | ||
125M | Sabine Pass Liquefaction, LLC, 5.625%, 4/15/2023 | 139,117 | ||
150M | SM Energy Co., 5%, 1/15/2024 | 133,500 |
31 |
Portfolio of Investments (continued)
FUND FOR INCOME
June 30, 2017
Principal | ||||
Amount | Security | Value | ||
Energy (continued) | ||||
Southwestern Energy Co.: | ||||
$100M | 5.8%, 1/23/2020 | $ 102,375 | ||
150M | 4.95%, 1/23/2025 | 147,375 | ||
100M | Suburban Propane Partners, LP, 5.875%, 3/1/2027 | 100,000 | ||
Sunoco, LP: | ||||
225M | 6.25%, 4/15/2021 | 235,688 | ||
175M | 6.375%, 4/1/2023 | 184,765 | ||
Targa Resources Partners, LP: | ||||
100M | 5.25%, 5/1/2023 | 103,000 | ||
425M | 4.25%, 11/15/2023 | 417,031 | ||
175M | 5.125%, 2/1/2025 (a) | 180,906 | ||
Tesoro Logistics, LP: | ||||
375M | 6.25%, 10/15/2022 | 400,313 | ||
100M | 6.375%, 5/1/2024 | 108,750 | ||
Ultra Petroleum Corp.: | ||||
100M | 6.875%, 4/15/2022 (a) | 99,375 | ||
75M | 7.125%, 4/15/2025 (a) | 74,063 | ||
250M | Unit Corp., 6.625%, 5/15/2021 | 240,625 | ||
Weatherford Bermuda, PLC: | ||||
100M | 4.5%, 4/15/2022 | 88,750 | ||
100M | 6.5%, 8/1/2036 | 85,500 | ||
250M | WPX Energy, Inc., 6%, 1/15/2022 | 248,750 | ||
10,551,843 | ||||
Financials—3.9% | ||||
Ally Financial, Inc.: | ||||
225M | 6.25%, 12/1/2017 | 229,174 | ||
150M | 8%, 3/15/2020 | 171,000 | ||
625M | 8%, 11/1/2031 | 768,750 | ||
275M | Argos Merger Sub, Inc., 7.125%, 3/15/2023 (a) | 245,437 | ||
175M | BCD Acquisition, Inc., 9.625%, 9/15/2023 (a) | 189,875 | ||
250M | CDW, LLC, 5%, 9/1/2025 | 260,625 | ||
225M | CVR Partners, LP, 9.25%, 6/15/2023 (a) | 236,250 | ||
150M | Dana Financing Luxembourg Sarl, 6.5%, 6/1/2026 (a) | 160,031 | ||
Icahn Enterprises, LP: | ||||
300M | 6.25%, 2/1/2022 | 313,500 | ||
400M | 6.75%, 2/1/2024 | 418,040 | ||
250M | Intesa Sanpaolo SpA, 5.017%, 6/26/2024 (a) | 253,910 | ||
200M | Ladder Capital Finance Holdings, 5.25%, 3/15/2022 (a) | 206,000 |
32 |
Principal | ||||
Amount | Security | Value | ||
Financials (continued) | ||||
Park Aerospace Holdings, Ltd.: | ||||
$100M | 5.25%, 8/15/2022 (a) | $ 104,907 | ||
100M | 5.5%, 2/15/2024 (a) | 104,700 | ||
175M | Springleaf Finance Corp., 7.75%, 10/1/2021 | 196,438 | ||
200M | UniCredit SpA, 5.861%, 6/19/2032 (a) | 205,812 | ||
4,064,449 | ||||
Food/Beverage/Tobacco—1.0% | ||||
325M | Barry Callebaut Services SA, 5.5%, 6/15/2023 (a) | 353,665 | ||
Lamb Weston Holdings, Inc.: | ||||
125M | 4.625%, 11/1/2024 (a) | 129,375 | ||
100M | 4.875%, 11/1/2026 (a) | 104,125 | ||
250M | Post Holdings, Inc., 5.5%, 3/1/2025 (a) | 258,438 | ||
225M | Vector Group, Ltd., 6.125%, 2/1/2025 (a) | 234,281 | ||
1,079,884 | ||||
Food/Drug—.2% | ||||
200M | Albertson Cos., LLC, 5.75%, 3/15/2025 (a) | 186,500 | ||
Forest Products/Containers—2.6% | ||||
225M | Ardagh Packaging Finance, PLC, 6%, 6/30/2021 (a) | 233,719 | ||
275M | Berry Plastics Group, 5.125%, 7/15/2023 | 287,375 | ||
50M | Flex Acquisition Co., Inc., 6.875%, 1/15/2025 (a) | 52,094 | ||
200M | Greif, Inc., 7.75%, 8/1/2019 | 220,000 | ||
125M | Louisiana-Pacific Corp., 4.875%, 9/15/2024 | 127,969 | ||
Mercer International, Inc.: | ||||
200M | 7.75%, 12/1/2022 | 215,250 | ||
175M | 6.5%, 2/1/2024 (a) | 183,171 | ||
Owens-Brockway Glass Container, Inc.: | ||||
75M | 5%, 1/15/2022 (a) | 79,594 | ||
75M | 5.875%, 8/15/2023 (a) | 82,828 | ||
250M | 5.375%, 1/15/2025 (a) | 267,500 | ||
50M | 6.375%, 8/15/2025 (a) | 56,219 | ||
Sealed Air Corp.: | ||||
175M | 4.875%, 12/1/2022 (a) | 187,031 | ||
300M | 5.25%, 4/1/2023 (a) | 323,250 | ||
325M | 6.875%, 7/15/2033 (a) | 375,375 | ||
2,691,375 |
33 |
Portfolio of Investments (continued)
FUND FOR INCOME
June 30, 2017
Principal | ||||
Amount | Security | Value | ||
Gaming/Leisure—1.8% | ||||
International Game Technology, PLC: | ||||
$200M | 6.25%, 2/15/2022 (a) | $ 219,500 | ||
200M | 6.5%, 2/15/2025 (a) | 220,500 | ||
75M | Lions Gate Entertainment Corp., 5.875%, 11/1/2024 (a) | 79,313 | ||
250M | NCL Corp., Ltd., 4.625%, 11/15/2020 (a) | 257,892 | ||
250M | Regal Entertainment Group, 5.75%, 3/15/2022 | 261,875 | ||
275M | Scientific Games International, Inc., 7%, 1/1/2022 (a) | 293,563 | ||
175M | Silversea Cruise Finance, Ltd., 7.25%, 2/1/2025 (a) | 187,469 | ||
400M | Viking Cruises, Ltd., 6.25%, 5/15/2025 (a) | 405,000 | ||
1,925,112 | ||||
Health Care—8.9% | ||||
Centene Corp.: | ||||
250M | 5.625%, 2/15/2021 | 261,250 | ||
375M | 6.125%, 2/15/2024 | 406,380 | ||
CHS/Community Health Systems, Inc.: | ||||
175M | 7.125%, 7/15/2020 | 171,062 | ||
100M | 5.125%, 8/1/2021 | 101,625 | ||
375M | 6.25%, 3/31/2023 | 388,537 | ||
DaVita HealthCare Partners, Inc.: | ||||
150M | 5.75%, 8/15/2022 | 154,312 | ||
250M | 5.125%, 7/15/2024 | 254,219 | ||
Endo Finance, LLC: | ||||
275M | 7.25%, 1/15/2022 (a) | 264,687 | ||
225M | 6%, 7/15/2023 (a) | 190,237 | ||
Fresenius Medical Care U.S. Finance II, Inc.: | ||||
150M | 5.625%, 7/31/2019 (a) | 159,187 | ||
100M | 4.75%, 10/15/2024 (a) | 105,500 | ||
HCA, Inc.: | ||||
475M | 6.5%, 2/15/2020 | 519,531 | ||
250M | 6.25%, 2/15/2021 | 273,750 | ||
25M | 7.5%, 2/15/2022 | 28,844 | ||
550M | 5.875%, 5/1/2023 | 600,187 | ||
50M | 5.375%, 2/1/2025 | 52,865 | ||
350M | 5.875%, 2/15/2026 | 378,875 | ||
HealthSouth Corp.: | ||||
175M | 5.125%, 3/15/2023 | 181,125 | ||
200M | 5.75%, 11/1/2024 | 206,250 | ||
200M | Kindred Healthcare, Inc., 8.75%, 1/15/2023 | 211,000 | ||
LifePoint Health, Inc.: | ||||
400M | 5.875%, 12/1/2023 | 423,000 | ||
275M | 5.375%, 5/1/2024 | 285,313 |
34 |
Principal | ||||
Amount | Security | Value | ||
Health Care (continued) | ||||
Mallinckrodt Finance SB: | ||||
$ 75M | 5.75%, 8/1/2022 (a) | $ 70,875 | ||
225M | 5.5%, 4/15/2025 (a) | 198,000 | ||
Molina Healthcare, Inc.: | ||||
400M | 5.375%, 11/15/2022 | 425,500 | ||
250M | 4.875%, 6/15/2025 (a) | 252,500 | ||
125M | MPH Acquisition Holdings, 7.125%, 6/1/2024 (a) | 133,594 | ||
100M | RegionalCare Hospital Partners, 8.25%, 5/1/2023 (a) | 107,750 | ||
600M | Tenet Healthcare Corp., 6%, 10/1/2020 | 644,250 | ||
100M | Universal Health Services, Inc., 5%, 6/1/2026 (a) | 104,250 | ||
64M | Universal Hospital Services, Inc., 7.625%, 8/15/2020 | 65,360 | ||
Valeant Pharmaceuticals International, Inc.: | ||||
775M | 6.375%, 10/15/2020 (a) | 754,656 | ||
150M | 5.625%, 12/1/2021 (a) | 136,125 | ||
50M | 6.5%, 3/15/2022 (a) | 52,563 | ||
150M | 7%, 3/15/2024 (a) | 158,063 | ||
650M | 6.125%, 4/15/2025 (a) | 552,500 | ||
9,273,722 | ||||
Information Technology—4.9% | ||||
300M | Alliance Data Systems Corp., 5.375%, 8/1/2022 (a) | 304,500 | ||
150M | Anixter, Inc., 5.125%, 10/1/2021 | 160,500 | ||
375M | Belden, Inc., 5.5%, 9/1/2022 (a) | 388,125 | ||
275M | CommScope Technologies Finance, LLC, 6%, 6/15/2025 (a) | 294,937 | ||
225M | Diamond 1 Finance Corp., 6.02%, 6/15/2026 (a) | 248,263 | ||
350M | Equinix, Inc., 5.875%, 1/15/2026 | 382,483 | ||
205M | IAC/InterActiveCorp, 4.875%, 11/30/2018 | 206,947 | ||
100M | J2 Cloud Services, LLC, 6%, 7/15/2025 (a) | 103,500 | ||
Match Group, Inc.: | ||||
275M | 6.75%, 12/15/2022 | 287,031 | ||
125M | 6.375%, 6/1/2024 | 136,406 | ||
275M | Micron Technology, Inc., 7.5%, 9/15/2023 | 308,138 | ||
79M | Microsemi Corp., 9.125%, 4/15/2023 (a) | 90,653 | ||
150M | MSCI, Inc., 5.75%, 8/15/2025 (a) | 163,218 | ||
NXP BV: | ||||
200M | 4.125%, 6/1/2021 (a) | 211,100 | ||
500M | 3.875%, 9/1/2022 (a) | 521,875 | ||
175M | Open Text Corp., 5.625%, 1/15/2023 (a) | 183,313 | ||
225M | Rackspace Hosting, Inc, 8.625%, 11/15/2024 (a) | 240,188 | ||
250M | Radiate Holdco, LLC, 6.625%, 2/15/2025 (a) | 250,625 |
35 |
Portfolio of Investments (continued)
FUND FOR INCOME
June 30, 2017
Principal | ||||
Amount | Security | Value | ||
Information Technology (continued) | ||||
$125M | Sensata Technologies BV, 5%, 10/1/2025 (a) | $ 131,350 | ||
100M | Verisign, Inc., 4.75%, 7/15/2027 (a) | 101,625 | ||
325M | Western Digital Corp., 10.5%, 4/1/2024 | 384,209 | ||
5,098,986 | ||||
Manufacturing—3.5% | ||||
325M | Amkor Technology, Inc., 6.375%, 10/1/2022 | 339,625 | ||
375M | ATS Automation Tooling Systems, Inc., 6.5%, 6/15/2023 (a) | 391,875 | ||
100M | Boise Cascade Co., 5.625%, 9/1/2024 (a) | 103,500 | ||
200M | Brand Energy & Infrastructure, 8.5%, 7/15/2025 (a) | 207,500 | ||
325M | Cloud Crane, LLC, 10.125%, 8/1/2024 (a) | 357,500 | ||
375M | Gates Global, LLC, 6%, 7/15/2022 (a) | 377,813 | ||
400M | Grinding Media, Inc., 7.375%, 12/15/2023 (a) | 436,000 | ||
425M | H&E Equipment Services, Inc., 7%, 9/1/2022 | 444,125 | ||
200M | Park-Ohio Industries, Inc., 6.625%, 4/15/2027 (a) | 210,375 | ||
United Rentals, Inc.: | ||||
250M | 5.875%, 9/15/2026 | 267,188 | ||
200M | 5.5%, 5/15/2027 | 206,500 | ||
300M | Zekelman Industries, Inc., 9.875%, 6/15/2023 (a) | 337,875 | ||
3,679,876 | ||||
Media-Broadcasting—2.4% | ||||
Belo Corp.: | ||||
100M | 7.75%, 6/1/2027 | 111,500 | ||
25M | 7.25%, 9/15/2027 | 27,250 | ||
325M | LIN Television Corp., 5.875%, 11/15/2022 | 342,063 | ||
425M | Nexstar Broadcasting, Inc., 6.125%, 2/15/2022 (a) | 446,781 | ||
200M | Nexstar Escrow Corp., 5.625%, 8/1/2024 (a) | 203,000 | ||
Sinclair Television Group, Inc.: | ||||
375M | 5.375%, 4/1/2021 | 386,250 | ||
225M | 5.125%, 2/15/2027 (a) | 218,813 | ||
Sirius XM Radio, Inc.: | ||||
275M | 5.75%, 8/1/2021 (a) | 284,625 | ||
175M | 3.875%, 8/1/2022 (a)(b) | 177,244 | ||
325M | 6%, 7/15/2024 (a) | 346,125 | ||
2,543,651 |
36 |
Principal | ||||
Amount | Security | Value | ||
Media-Cable TV—8.6% | ||||
Altice Financing SA: | ||||
$325M | 6.625%, 2/15/2023 (a) | $ 345,618 | ||
275M | 5.375%, 7/15/2023 (a) | 286,859 | ||
200M | 7.625%, 2/15/2025 (a) | 214,250 | ||
200M | 5.5%, 5/15/2026 (a) | 210,500 | ||
200M | 7.5%, 5/15/2026 (a) | 222,500 | ||
175M | Block Communications, Inc., 6.875%, 2/15/2025 (a) | 188,125 | ||
225M | Cable One, Inc., 5.75%, 6/15/2022 (a) | 237,094 | ||
CCO Holdings, LLC: | ||||
375M | 5.125%, 2/15/2023 | 387,891 | ||
500M | 5.875%, 4/1/2024 (a) | 535,000 | ||
200M | 5.125%, 5/1/2027 (a) | 205,000 | ||
425M | 5.875%, 5/1/2027 (a) | 455,281 | ||
Cequel Communications Holdings I, LLC: | ||||
404M | 6.375%, 9/15/2020 (a) | 413,090 | ||
225M | 7.75%, 7/15/2025 (a) | 249,750 | ||
Clear Channel Worldwide Holdings, Inc. (Class “A”): | ||||
25M | 7.625%, 3/15/2020 | 24,750 | ||
100M | 6.5%, 11/15/2022 | 102,500 | ||
Clear Channel Worldwide Holdings, Inc. (Class “B”): | ||||
250M | 7.625%, 3/15/2020 | 249,687 | ||
325M | 6.5%, 11/15/2022 | 335,627 | ||
CSC Holdings, LLC: | ||||
400M | 6.75%, 11/15/2021 | 444,000 | ||
650M | 10.125%, 1/15/2023 (a) | 755,625 | ||
200M | 6.625%, 10/15/2025 (a) | 220,520 | ||
DISH DBS Corp.: | ||||
675M | 7.875%, 9/1/2019 | 745,875 | ||
125M | 5%, 3/15/2023 | 128,437 | ||
250M | 5.875%, 11/15/2024 | 267,680 | ||
100M | 7.75%, 7/1/2026 | 118,750 | ||
250M | Gray Television, Inc., 5.875%, 7/15/2026 (a) | 255,625 | ||
Midcontinent Communications & Finance Corp.: | ||||
100M | 6.25%, 8/1/2021 (a) | 103,800 | ||
425M | 6.875%, 8/15/2023 (a) | 460,063 | ||
Numericable Group SA: | ||||
225M | 6%, 5/15/2022 (a) | 235,688 | ||
600M | 6.25%, 5/15/2024 (a) | 636,000 | ||
9,035,585 |
37 |
Portfolio of Investments (continued)
FUND FOR INCOME
June 30, 2017
Principal | ||||
Amount | Security | Value | ||
Media-Diversified—1.9% | ||||
$225M | CBS Outdoor Americas Capital, 5.875%, 3/15/2025 | $ 236,531 | ||
225M | Clearwater Paper Corp., 4.5%, 2/1/2023 | 222,750 | ||
100M | EW Scripps Co., 5.125%, 5/15/2025 (a) | 103,250 | ||
225M | Gannett Co., Inc., 5.125%, 7/15/2020 | 230,906 | ||
300M | Lamar Media Corp., 5.375%, 1/15/2024 | 315,000 | ||
75M | LSC Communication, Inc., 8.75%, 10/15/2023 (a) | 78,563 | ||
375M | Tribune Co., 5.875%, 7/15/2022 | 394,688 | ||
425M | Virgin Media Communications, Ltd., 6.375%, 4/15/2023 (a) | 448,375 | ||
2,030,063 | ||||
Metals/Mining—6.5% | ||||
350M | AK Steel Corp., 7%, 3/15/2027 | 363,125 | ||
Aleris International, Inc.: | ||||
260M | 7.875%, 11/1/2020 | 246,350 | ||
175M | 9.5%, 4/1/2021 (a) | 180,826 | ||
175M | Alliance Resourse Operating Partners, LP, 7.5%, 5/1/2025 (a) | 184,625 | ||
ArcelorMittal: | ||||
275M | 6.125%, 6/1/2025 | 309,375 | ||
150M | 7.75%, 10/15/2039 | 168,937 | ||
50M | 7.5%, 3/1/2041 | 55,375 | ||
100M | Arconic, Inc., 5.95%, 2/1/2037 | 101,250 | ||
475M | Cliffs Natural Resources, Inc., 5.75%, 3/1/2025 (a) | 450,062 | ||
Commercial Metals Co.: | ||||
250M | 4.875%, 5/15/2023 | 254,062 | ||
175M | 5.375%, 7/15/2027 (b) | 178,719 | ||
250M | Constellium NV, 8%, 1/15/2023 (a) | 258,750 | ||
600M | First Quantum Minerals, Ltd., 7.25%, 5/15/2022 (a) | 616,500 | ||
Freeport-McMoRan, Inc.: | ||||
250M | 3.1%, 3/15/2020 | 245,625 | ||
200M | 5.45%, 3/15/2043 | 173,460 | ||
HudBay Minerals, Inc.: | ||||
100M | 7.25%, 1/15/2023 (a) | 103,625 | ||
75M | 7.625%, 1/15/2025 (a) | 78,937 | ||
175M | Joseph T. Ryerson & Son, Inc., 11%, 5/15/2022 (a) | 198,406 | ||
225M | Natural Resource Partners, LP, 10.5%, 3/15/2022 | 241,594 | ||
Novelis, Inc.: | ||||
575M | 6.25%, 8/15/2024 (a) | 605,188 | ||
600M | 5.875%, 9/30/2026 (a) | 619,500 | ||
Peabody Energy Corp.: | ||||
50M | 6%, 3/31/2022 (a) | 49,813 | ||
125M | 6.375%, 3/31/2025 (a) | 123,594 | ||
525M | SunCoke Energy Partners, LP, 7.5%, 6/15/2025 (a) | 521,063 |
38 |
Principal | ||||
Amount | Security | Value | ||
Metals/Mining (continued) | ||||
Teck Resources, Ltd.: | ||||
$125M | 8.5%, 6/1/2024 (a) | $ 144,688 | ||
300M | 6%, 8/15/2040 | 303,000 | ||
6,776,449 | ||||
Real Estate—2.6% | ||||
225M | Care Capital Properties, LP, 5.125%, 8/15/2026 | 229,022 | ||
275M | Dupont Fabros Technology, LP, 5.625%, 6/15/2023 | 294,250 | ||
Geo Group, Inc.: | ||||
100M | 5.125%, 4/1/2023 | 101,000 | ||
225M | 6%, 4/15/2026 | 234,562 | ||
Iron Mountain, Inc.: | ||||
375M | 6%, 8/15/2023 | 400,313 | ||
425M | 5.75%, 8/15/2024 | 435,625 | ||
Lennar Corp.: | ||||
225M | 4.75%, 4/1/2021 | 239,344 | ||
175M | 4.875%, 12/15/2023 | 186,703 | ||
MPT Operating Partnership, LP: | ||||
50M | 6.375%, 3/1/2024 | 54,632 | ||
125M | 5.25%, 8/1/2026 | 130,574 | ||
150M | Realogy Group/Co-Issuer, 5.25%, 12/1/2021 (a) | 157,950 | ||
200M | Starwood Property Trust, Inc., 5%, 12/15/2021 (a) | 208,500 | ||
2,672,475 | ||||
Retail-General Merchandise—3.0% | ||||
AmeriGas Partners, LP: | ||||
125M | 5.625%, 5/20/2024 | 129,375 | ||
350M | 5.5%, 5/20/2025 | 349,454 | ||
275M | 5.875%, 8/20/2026 | 283,250 | ||
125M | 5.75%, 5/20/2027 | 127,187 | ||
KFC Holding Co.: | ||||
150M | 5%, 6/1/2024 (a) | 156,750 | ||
275M | 5.25%, 6/1/2026 (a) | 290,125 | ||
75M | 4.75%, 6/1/2027 (a) | 76,781 | ||
L Brands, Inc.: | ||||
250M | 6.875%, 11/1/2035 | 242,500 | ||
450M | 6.75%, 7/1/2036 | 434,250 | ||
450M | Landry’s, Inc., 6.75%, 10/15/2024 (a) | 461,813 | ||
250M | Netflix, Inc., 5.5%, 2/15/2022 | 272,733 | ||
300M | ServiceMaster Global Holdings, Inc., 5.125%, 11/15/2024 (a) | 311,250 | ||
3,135,468 |
39 |
Portfolio of Investments (continued)
FUND FOR INCOME
June 30, 2017
Principal | ||||
Amount | Security | Value | ||
Services—2.8% | ||||
ADT Corp.: | ||||
$275M | 3.5%, 7/15/2022 | $ 267,355 | ||
250M | 4.125%, 6/15/2023 | 248,437 | ||
AECOM: | ||||
250M | 5.75%, 10/15/2022 | 262,812 | ||
275M | 5.875%, 10/15/2024 | 300,437 | ||
225M | 5.125%, 3/15/2027 (a) | 226,406 | ||
200M | Aramark Services, Inc., 5.125%, 1/15/2024 | 210,750 | ||
250M | Cimpress NV, 7%, 4/1/2022 (a) | 260,000 | ||
325M | GW Honos Security Corp., 8.75%, 5/15/2025 (a) | 340,844 | ||
100M | KAR Auction Services, Inc., 5.125%, 6/1/2025 (a) | 102,125 | ||
175M | Monitronics International, Inc., 9.125%, 4/1/2020 | 167,563 | ||
250M | Prime Security Services Borrower, LLC, 9.25%, 5/15/2023 (a) | 272,290 | ||
250M | Reliance Intermediate Holdings, LP, 6.5%, 4/1/2023 (a) | 268,750 | ||
2,927,769 | ||||
Telecommunications—3.7% | ||||
125M | CenturyLink, Inc., 5.8%, 3/15/2022 | 130,469 | ||
200M | Citizens Communications Co., 9%, 8/15/2031 | 161,500 | ||
450M | Frontier Communications Corp., 11%, 9/15/2025 | 419,625 | ||
GCI, Inc.: | ||||
350M | 6.75%, 6/1/2021 | 359,187 | ||
450M | 6.875%, 4/15/2025 | 488,812 | ||
225M | Qwest Corp., 7.25%, 9/15/2025 | 250,248 | ||
325M | Telesat Canada, LLC, 8.875%, 11/15/2024 (a) | 365,625 | ||
Wind Acquisition Finance SA: | ||||
275M | 4.75%, 7/15/2020 (a) | 278,575 | ||
675M | 7.375%, 4/23/2021 (a) | 702,422 | ||
Windstream Services, LLC: | ||||
100M | 7.5%, 6/1/2022 | 89,750 | ||
100M | 6.375%, 8/1/2023 | 83,063 | ||
Zayo Group, LLC: | ||||
50M | 6.375%, 5/15/2025 | 54,156 | ||
475M | 5.75%, 1/15/2027 (a) | 498,156 | ||
3,881,588 |
40 |
Principal | ||||
Amount | Security | Value | ||
Transportation—1.2% | ||||
Aircastle, Ltd.: | ||||
$ 75M | 4.625%, 12/15/2018 | $ 77,602 | ||
450M | 6.25%, 12/1/2019 | 491,062 | ||
275M | Fly Leasing, Ltd., 6.375%, 10/15/2021 | 289,781 | ||
225M | Mobile Mini, Inc., 5.875%, 7/1/2024 | 234,000 | ||
200M | XPO Logistics, Inc., 6.125%, 9/1/2023 (a) | 209,000 | ||
1,301,445 | ||||
Utilities—3.5% | ||||
AES Corp.: | ||||
275M | 7.375%, 7/1/2021 | 316,250 | ||
175M | 5.5%, 3/15/2024 | 183,094 | ||
150M | 6%, 5/15/2026 | 161,250 | ||
Calpine Corp.: | ||||
250M | 5.375%, 1/15/2023 | 244,687 | ||
275M | 5.75%, 1/15/2025 | 259,187 | ||
325M | 5.25%, 6/1/2026 (a) | 320,125 | ||
Dynegy, Inc.: | ||||
100M | 6.75%, 11/1/2019 | 103,625 | ||
275M | 7.375%, 11/1/2022 | 272,250 | ||
275M | 8%, 1/15/2025 (a) | 268,125 | ||
212M | FirstLight Hydro Generating Co., 8.812%, 10/15/2026 | 225,543 | ||
52M | Indiantown Cogeneration Utilities, LP, 9.77%, 12/15/2020 | 56,849 | ||
NRG Energy, Inc.: | ||||
75M | 6.25%, 7/15/2022 | 77,344 | ||
200M | 7.25%, 5/15/2026 | 208,000 | ||
400M | 6.625%, 1/15/2027 | 402,500 | ||
200M | NRG Yield Operating, LLC, 5%, 9/15/2026 | 204,500 | ||
336M | NSG Holdings, LLC, 7.75%, 12/15/2025 (a) | 362,642 | ||
3,665,971 | ||||
Waste Management—.2% | ||||
175M | GFL Environmental, Inc., 5.625%, 5/1/2022 (a) | 179,812 |
41 |
Portfolio of Investments (continued)
FUND FOR INCOME
June 30, 2017
Principal | ||||
Amount | Security | Value | ||
Wireless Communications—5.7% | ||||
Hughes Satellite Systems Corp.: | ||||
$225M | 6.5%, 6/15/2019 | $ 243,844 | ||
100M | 5.25%, 8/1/2026 | 104,875 | ||
125M | 6.625%, 8/1/2026 | 134,687 | ||
Inmarsat Finance, PLC: | ||||
150M | 4.875%, 5/15/2022 (a) | 153,000 | ||
200M | 6.5%, 10/1/2024 (a) | 214,000 | ||
Intelsat Jackson Holdings SA: | ||||
150M | 5.5%, 8/1/2023 | 124,875 | ||
375M | 8%, 2/15/2024 (a) | 405,000 | ||
200M | 9.75%, 7/15/2025 (a)(b) | 200,250 | ||
Level 3 Financing, Inc.: | ||||
200M | 6.125%, 1/15/2021 | 206,500 | ||
100M | 5.125%, 5/1/2023 | 104,062 | ||
75M | 5.25%, 3/15/2026 | 78,008 | ||
325M | SBA Communications Corp., 4.875%, 9/1/2024 (a)(b) | 331,500 | ||
Sprint Communications, Inc.: | ||||
150M | 7%, 3/1/2020 (a) | 165,048 | ||
850M | 7%, 8/15/2020 | 937,125 | ||
650M | 6%, 11/15/2022 | 690,625 | ||
350M | Sprint Corp., 7.875%, 9/15/2023 | 403,375 | ||
T-Mobile USA, Inc.: | ||||
375M | 6%, 3/1/2023 | 397,849 | ||
450M | 6.625%, 4/1/2023 | 477,315 | ||
50M | 6.5%, 1/15/2024 | 53,875 | ||
150M | 6%, 4/15/2024 | 160,875 | ||
400M | Telecom Italia SpA, 5.303%, 5/30/2024 | 430,500 | ||
6,017,188 | ||||
Total Value of Corporate Bonds (cost $93,738,756) | 96,904,196 | |||
LOAN PARTICIPATIONS†—4.8% | ||||
Automotive—.9% | ||||
500M | Superior Industries International, Inc., 5.7872%, 3/22/2024 (b) | 498,750 | ||
450M | Truck Hero, Inc., 5.1557%, 4/22/2024 | 447,048 | ||
945,798 | ||||
Building Materials—.3% | ||||
310M | Builders FirstSource, Inc., 4.2964%, 2/29/2024 | 310,588 | ||
Energy—.3% | ||||
300M | Jonah Energy, LLC, 7.7261%, 5/12/2021 | 290,250 |
42 |
Principal | ||||
Amount | Security | Value | ||
Financial—.8% | ||||
Lightstone Generation, LLC: | ||||
$ 20M | 5.7261%, 1/30/2024 | $ 19,471 | ||
342M | 5.7261%, 1/30/2024 | 333,433 | ||
500M | Project Leopard Holdings, Inc., 6.5%, 6/21/2023 (b) | 501,875 | ||
854,779 | ||||
Gaming/Leisure—.7% | ||||
500M | Dorna Sports SL, 3.5%, 4/12/2024 (b) | 504,375 | ||
216M | Seminole Hard Rock Entertainment, Inc., 4.0464%, 5/14/2020 | 216,811 | ||
721,186 | ||||
Health Care—.4% | ||||
CHS/Community Health Systems, Inc.: | ||||
70M | 3.9518%, 12/31/2019 | 70,002 | ||
129M | 4.2018%, 1/27/2021 | 128,968 | ||
208M | ExamWorks Group, Inc., 4.4761%, 7/27/2023 | 210,035 | ||
409,005 | ||||
Manufacturing—.1% | ||||
71M | Columbus McKinnon Corp., 4.2964%, 1/31/2024 | 71,731 | ||
Metals/Mining—.1% | ||||
100M | Peabody Energy Corp., 5.7261%, 3/31/2022 | 100,124 | ||
Retail-General Merchandise—.9% | ||||
500M | Bass Pro Group, LLC, 6.2964%, 12/15/2023 | 486,687 | ||
496M | Harbor Freight Tools USA, Inc., 4.4761%, 8/18/2023 | 496,406 | ||
983,093 | ||||
Services—.1% | ||||
81M | Brickman Group, Ltd., LLC, 4.2174%, 12/18/2020 | 80,832 | ||
Wireless Communications—.2% | ||||
250M | Intelsat Jackson Holdings, Ltd, 4.0003%, 6/30/2019 | 248,102 | ||
Total Value of Loan Participations (cost $4,993,322) | 5,015,488 |
43 |
Portfolio of Investments (continued)
FUND FOR INCOME
June 30, 2017
Principal | |||||||
Amount | Security | Value | |||||
PASS-THROUGH CERTIFICATES—.8% | |||||||
Transportation | |||||||
$782M | American Airlines 13-2 B PTT, 5.60%, 1/15/2022 | ||||||
(cost $798,172) (a) | $ 818,386 | ||||||
Total Value of Investments (cost $99,530,250) | 98.0 | % | 102,738,070 | ||||
Other Assets, Less Liabilities | 2.0 | 2,092,893 | |||||
Net Assets | 100.0 | % | $104,830,963 |
(a) | Security exempt from registration under Rule 144A of the Securities Act of 1933 (see Note 5). | |
(b) | A portion or all of the security purchased on a when-issued or delayed delivery basis (see Note 1G). | |
† | Interest rates are determined and reset periodically. The interest rates above are the rates in effect | |
at June 30, 2017. | ||
Summary of Abbreviations: | ||
PTT | Pass Through Trust |
44 |
The Fund’s assets and liabilities are classified into the following three levels based on the inputs used to value the assets and liabilities:
Level 1 — Unadjusted quoted prices in active markets for identical securities that the Fund has the ability to access. |
Level 2 — Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumption about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The inputs methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, U.S. Government securities are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market.
The following is a summary, by category of Level, of inputs used to value the Fund’s investments as of June 30, 2017:
Level 1 | Level 2 | Level 3 | Total | |||||||||
Corporate Bonds | $ | — | $ | 96,904,196 | $ | — | $ | 96,904,196 | ||||
Loan Participations | — | 5,015,488 | — | 5,015,488 | ||||||||
Pass-Through Certificates | — | 818,386 | — | 818,386 | ||||||||
Total Investments in Securities* | $ | — | $ | 102,738,070 | $ | — | $ | 102,738,070 |
* | The Portfolio of Investments provides information on the industry categorization of corporate bonds, |
loan participations and pass-through certificates. | |
There were no transfers into or from Level 1 and Level 2 by the Fund for the period ended | |
June 30, 2017. Transfers, if any, between Levels are recognized at the end of the reporting period. |
See notes to financial statements | 45 |
Fund Expenses (unaudited)
GOVERNMENT FUND
The examples below show the ongoing costs (in dollars) of investing in your Fund and will help you in comparing these costs with costs of other mutual funds. Please refer to page 6 for a detailed explanation of the information presented in these examples.
Beginning | Ending | ||
Account | Account | Expenses Paid | |
Value | Value | During Period | |
(1/1/17) | (6/30/17) | (1/1/17–6/30/17)* | |
Expense Examples | |||
Actual | $1,000.00 | $1,011.07 | $3.74 |
Hypothetical | |||
(5% annual return before expenses) | $1,000.00 | $1,021.07 | $3.76 |
* | Expenses are equal to the annualized expense ratio of .75%, multiplied by the average account |
value over the period, multiplied by 181/365 (to reflect the one-half year period). Expenses paid | |
during the period are net of expenses waived. |
Portfolio Composition
BY SECTOR
Portfolio holdings and allocations are subject to change. Percentages are as of June 30, 2017, and are |
based on the total value of investments. |
46 |
Portfolio of Investments
GOVERNMENT FUND
June 30, 2017
Principal | |||
Amount | Security | Value | |
RESIDENTIAL MORTGAGE-BACKED | |||
SECURITIES—38.3% | |||
Fannie Mae—27.8% | |||
$2,920M | 3%, 7/1/2021 – 6/1/2046 | $ 2,957,371 | |
2,826M | 3.5%, 11/1/2028 – 6/1/2046 | 2,920,549 | |
1,325M | 4%, 10/1/2035 – 7/1/2046 | 1,401,474 | |
241M | 4.5%, 11/1/2040 – 8/1/2041 | 261,124 | |
286M | 5.5%, 7/1/2034 – 10/1/2039 | 321,375 | |
139M | 9%, 11/1/2026 | 155,904 | |
8,017,797 | |||
Freddie Mac—3.9% | |||
140M | 3.5%, 2/1/2046 | 144,549 | |
812M | 4%, 12/1/2040 – 6/1/2047 (a) | 855,488 | |
123M | 4.5%, 5/1/2044 | 132,276 | |
1,132,313 | |||
Government National Mortgage Association I | |||
Program—6.6% | |||
167M | 4%, 8/15/2041 | 176,831 | |
425M | 4.5%, 12/15/2039 – 6/15/2040 | 461,978 | |
811M | 5%, 6/15/2033 – 4/15/2040 | 900,007 | |
176M | 5.5%, 2/15/2033 – 1/15/2036 | 195,711 | |
134M | 6%, 11/15/2032 – 4/15/2036 | 152,880 | |
1,887,407 | |||
Total Value of Residential Mortgage-Backed Securities (cost $11,034,266) | 11,037,517 | ||
U.S. GOVERNMENT AGENCY | |||
OBLIGATIONS—25.7% | |||
Fannie Mae: | |||
770M | 1.125%, 7/20/2018 | 768,522 | |
125M | 1.375%, 2/26/2021 | 123,531 | |
300M | 1.5%, 11/30/2020 | 298,305 | |
850M | 1.625%, 11/27/2018 | 853,023 | |
400M | 1.875%, 9/24/2026 | 379,735 |
47 |
Portfolio of Investments (continued)
GOVERNMENT FUND
June 30, 2017
Principal | ||||
Amount | Security | Value | ||
U.S. GOVERNMENT AGENCY OBLIGATIONS (continued) | ||||
Federal Farm Credit Bank: | ||||
$ 550M | 1.7%, 2/6/2019 | $ 552,429 | ||
300M | 2.125%, 3/6/2019 | 303,351 | ||
Federal Home Loan Bank: | ||||
750M | 1.03%, 9/28/2018 | 746,812 | ||
600M | 1.375%, 5/28/2019 | 599,470 | ||
1,000M | 1.625%, 10/7/2021 | 983,373 | ||
Freddie Mac: | ||||
800M | 0.875%, 3/7/2018 | 797,982 | ||
1,000M | 1.25%, 8/1/2019 | 996,313 | ||
Total Value of U.S. Government Agency Obligations (cost $7,453,211) | 7,402,846 | |||
U.S. GOVERNMENT OBLIGATIONS—14.8% | ||||
U.S. Treasury Bonds: | ||||
300M | 2.5%, 2/15/2046 | 279,305 | ||
400M | 3%, 2/15/2047 | 412,711 | ||
U.S. Treasury Notes: | ||||
200M | 1.125%, 8/31/2021 | 194,785 | ||
1,095M | 1.375%, 10/31/2020 | 1,086,168 | ||
300M | 1.5%, 3/31/2023 | 291,820 | ||
1,260M | 1.875%, 8/31/2022 | 1,257,736 | ||
630M | 2%, 2/15/2025 | 621,485 | ||
120M | 2.5%, 5/15/2046 | 111,647 | ||
Total Value of U.S. Government Obligations (cost $4,280,405) | 4,255,657 | |||
COMMERCIAL MORTGAGE-BACKED | ||||
SECURITIES—10.9% | ||||
Fannie Mae—8.0% | ||||
500M | 2.369%, 7/25/2026 | 481,738 | ||
200M | 2.4994%, 9/25/2026 | 194,092 | ||
472M | 2.995%, 11/1/2022 | 488,276 | ||
600M | 3.34%, 2/1/2027 | 629,676 | ||
500M | 3.84%, 5/1/2018 | 504,814 | ||
2,298,596 |
48 |
Principal | |||||||
Amount | Security | Value | |||||
Federal Home Loan Mortgage Corporation—2.9% | |||||||
Multi-Family Structured Pass-Through: | |||||||
$ 170M | 2.454%, 8/25/2023 | $ 171,077 | |||||
379M | 2.849%, 3/25/2026 | 379,335 | |||||
300M | 3.08%, 1/25/2031 | 298,734 | |||||
849,146 | |||||||
Total Value of Commercial Mortgage-Backed Securities (cost $3,250,516) | 3,147,742 | ||||||
TAXABLE MUNICIPAL BONDS—3.5% | |||||||
200M | Ford Foundation, 3.859%, 6/1/2047 | 208,008 | |||||
300M | New York City Trans. Fin. Auth., 3.21%, 5/1/2029 | 295,806 | |||||
500M | New York State Urban Dev. Corp., 3.27%, 3/15/2027 | 505,585 | |||||
Total Value of Taxable Municipal Bonds (cost $1,002,325) | 1,009,399 | ||||||
COLLATERALIZED MORTGAGE | |||||||
OBLIGATIONS—2.2% | |||||||
Fannie Mae: | |||||||
135M | 3%, 10/25/2042 | 138,197 | |||||
456M | 4%, 2/25/2025 | 482,697 | |||||
Total Value of Collateralized Mortgage Obligations (cost $631,040) | 620,894 | ||||||
COVERED BONDS—2.1% | |||||||
600M | Toronto-Dominion Bank, 2.5%, 1/18/2022 (cost $598,758) (b) | 604,549 | |||||
SOVEREIGN BONDS—1.0% | |||||||
300M | Ukraine Government Aid Bonds, 1.471%, 9/29/2021 (cost $300,000) | 294,448 | |||||
Total Value of Investments (cost $28,550,521) | 98.5 | % | 28,373,052 | ||||
Other Assets, Less Liabilities | 1.5 | 432,267 | |||||
Net Assets | 100.0 | % | $28,805,319 |
(a) | A portion or all of the security purchased on a when-issued or delayed delivery basis (see |
Note 1G). | |
(b) | Security exempt from registration under Rule 144A of Securities Act of 1933 (see Note 5). |
49 |
Portfolio of Investments (continued)
GOVERNMENT FUND
June 30, 2017
The Fund’s assets and liabilities are classified into the following three levels based on the inputs used to value the assets and liabilities:
Level 1 — Unadjusted quoted prices in active markets for identical securities that the Fund has the ability to access. |
Level 2 — Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumption about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The inputs methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, U.S. Government securities are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market.
The following is a summary, by category of Level, of inputs used to value the Fund’s investments as of June 30, 2017:
Level 1 | Level 2 | Level 3 | Total | |||||||||
Residential Mortgage-Backed | ||||||||||||
Securities | $ | — | $ | 11,037,517 | $ | — | $ | 11,037,517 | ||||
U.S. Government Agency | ||||||||||||
Obligations | — | 7,402,846 | — | 7,402,846 | ||||||||
U.S. Government Obligations | — | 4,255,657 | — | 4,255,657 | ||||||||
Commercial Mortgage-Backed | ||||||||||||
Securities | — | 3,147,742 | — | 3,147,742 | ||||||||
Taxable Municipal Bonds | — | 1,009,399 | — | 1,009,399 | ||||||||
Collateralized Mortgage | ||||||||||||
Obligations | — | 620,894 | — | 620,894 | ||||||||
Covered Bonds | — | 604,549 | — | 604,549 | ||||||||
Sovereign Bonds | — | 294,448 | — | 294,448 | ||||||||
Total Investments in Securities | $ | — | $ | 28,373,052 | $ | — | $ | 28,373,052 |
There were no transfers into or from Level 1 and Level 2 by the Fund for the period ended |
June 30, 2017. Transfers, if any, between Levels are recognized at the end of the reporting period. |
50 | See notes to financial statements |
Fund Expenses (unaudited)
GOVERNMENT CASH MANAGEMENT FUND
The examples below show the ongoing costs (in dollars) of investing in your Fund and will help you in comparing these costs with costs of other mutual funds. Please refer to page 6 for a detailed explanation of the information presented in these examples.
Beginning | Ending | ||
Account | Account | Expenses Paid | |
Value | Value | During Period | |
(1/1/17) | (6/30/17) | (1/1/17–6/30/17)* | |
Expense Examples | |||
Actual | $1,000.00 | $1,000.37 | $2.98 |
Hypothetical | |||
(5% annual return before expenses) | $1,000.00 | $1,021.81 | $3.01 |
* | Expenses are equal to the annualized expense ratio of .60%, multiplied by the average account |
value over the period, multiplied by 181/365 (to reflect the one-half year period). Expenses paid | |
during the period are net of expenses waived and/or assumed. |
Portfolio Composition
BY SECTOR
Portfolio holdings and allocations are subject to change. Percentages are as of June 30, 2017, and are |
based on the total value of investments. |
51 |
Portfolio of Investments
GOVERNMENT CASH MANAGEMENT FUND
June 30, 2017
Principal | Interest | ||||||
Amount | Security | Rate | * | Value | |||
U.S. GOVERNMENT AGENCY | |||||||
OBLIGATIONS—54.1% | |||||||
Federal Home Loan Bank: | |||||||
$200M | 7/6/2017 | 0.92 | % | $ 199,974 | |||
400M | 7/7/2017 | 0.81 | 399,946 | ||||
400M | 7/10/2017 | 0.90 | 399,910 | ||||
600M | 7/17/2017 | 0.83 | 599,778 | ||||
500M | 7/17/2017 | 0.94 | 499,791 | ||||
700M | 7/19/2017 | 1.01 | 699,646 | ||||
750M | 7/28/2017 | 1.02 | 749,426 | ||||
700M | 8/4/2017 | 1.03 | 699,319 | ||||
600M | 8/16/2017 | 0.95 | 599,271 | ||||
400M | 9/22/2017 | 0.92 | 399,150 | ||||
Total Value of U.S. Government Agency Obligations (cost $5,246,211) | 5,246,211 | ||||||
VARIABLE AND FLOATING RATE NOTES—8.8% | |||||||
Federal Home Loan Bank: | |||||||
250M | 9/5/2017 | 1.07 | 250,030 | ||||
400M | 10/20/2017 | 0.78 | 400,000 | ||||
200M | 1/26/2018 | 0.88 | 200,008 | ||||
Total Value of Variable and Floating Rate Notes (cost $850,038) | 850,038 | ||||||
SHORT-TERM U.S. GOVERNMENT | |||||||
OBLIGATIONS—34.4% | |||||||
U.S. Treasury Bills: | |||||||
500M | 7/20/2017 | 0.78 | 499,795 | ||||
400M | 9/14/2017 | 0.74 | 399,384 | ||||
500M | 9/14/2017 | 0.91 | 499,053 | ||||
600M | 9/21/2017 | 0.89 | 598,781 | ||||
450M | 9/28/2017 | 0.86 | 449,044 | ||||
300M | 10/5/2017 | 1.03 | 299,175 | ||||
600M | 10/12/2017 | 1.03 | 598,229 | ||||
Total Value of Short-Term U.S. Government Obligations (cost $3,343,461) | 3,343,461 | ||||||
Total Value of Investments (cost $9,439,710)** | 97.3 | % | 9,439,710 | ||||
Other Assets, Less Liabilities | 2.7 | 263,115 | |||||
Net Assets | 100.0 | % | $9,702,825 |
* | The interest rates shown are the effective rates at the time of purchase by the Fund. The interest |
rates shown on variable and floating rate notes are adjusted periodically; the rates shown are the | |
rates in effect at June 30, 2017. | |
** | Aggregate cost for federal income tax purposes is the same. |
52 |
The Fund’s assets and liabilities are classified into the following three levels based on the inputs used to value the assets and liabilities:
Level 1 — Unadjusted quoted prices in active markets for identical securities that the Fund has the ability to access. |
Level 2 — Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumption about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The inputs methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, U.S. Government securities are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market.
The following is a summary, by category of Level, of inputs used to value the Fund’s investments as of June 30, 2017:
Level 1 | Level 2 | Level 3 | Total | |||||||||
U.S. Government Agency | ||||||||||||
Obligations | $ | — | $ | 5,246,211 | $ | — | $ | 5,246,211 | ||||
Variable and Floating Rate Notes: | ||||||||||||
U.S. Government Agency | ||||||||||||
Obligations | — | 850,038 | — | 850,038 | ||||||||
Short-Term U.S. Government | ||||||||||||
Obligations | — | 3,343,461 | — | 3,343,461 | ||||||||
Total Investments in Securities | $ | — | $ | 9,439,710 | $ | — | $ | 9,439,710 |
There were no transfers into or from Level 1 and Level 2 by the Fund for the period ended |
June 30, 2017. Transfers, if any, between Levels are recognized at the end of the reporting period. |
See notes to financial statements | 53 |
Fund Expenses (unaudited)
GROWTH & INCOME FUND
The examples below show the ongoing costs (in dollars) of investing in your Fund and will help you in comparing these costs with costs of other mutual funds. Please refer to page 6 for a detailed explanation of the information presented in these examples.
Beginning | Ending | ||
Account | Account | Expenses Paid | |
Value | Value | During Period | |
(1/1/17) | (6/30/17) | (1/1/17–6/30/17)* | |
Expense Examples | |||
Actual | $1,000.00 | $1,072.05 | $4.01 |
Hypothetical | |||
(5% annual return before expenses) | $1,000.00 | $1,020.92 | $3.91 |
* | Expenses are equal to the annualized expense ratio of .78%, multiplied by the average account |
value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Portfolio Composition
TOP TEN SECTORS
Portfolio holdings and allocations are subject to change. Percentages are as of June 30, 2017, and are |
based on the total value of investments. |
54 |
Portfolio of Investments
GROWTH & INCOME FUND
June 30, 2017
Shares | Security | Value | ||
COMMON STOCKS—97.7% | ||||
Consumer Discretionary—15.9% | ||||
105,700 | Acushnet Holdings Corporation | $ 2,097,088 | ||
10,757 | Adient, PLC | 703,293 | ||
76,900 | American Eagle Outfitters, Inc. | 926,645 | ||
53,700 | ARAMARK Holdings Corporation | 2,200,626 | ||
80,800 | Big Lots, Inc. | 3,902,640 | ||
75,200 | BorgWarner, Inc. | 3,185,472 | ||
107,600 | CBS Corporation – Class “B” | 6,862,728 | ||
40,800 | Coach, Inc. | 1,931,472 | ||
26,600 | Delphi Automotive, PLC | 2,331,490 | ||
127,200 | DSW, Inc. – Class “A” | 2,251,440 | ||
19,000 | Foot Locker, Inc. | 936,320 | ||
181,500 | Ford Motor Company | 2,030,985 | ||
48,000 | Home Depot, Inc. | 7,363,200 | ||
36,100 | HSN, Inc. | 1,151,590 | ||
68,600 | L Brands, Inc. | 3,696,854 | ||
16,200 | Lear Corporation | 2,301,696 | ||
61,400 | Magna International, Inc. | 2,844,662 | ||
80,600 | * | Michaels Companies, Inc. | 1,492,712 | |
174,515 | Newell Brands, Inc. | 9,357,494 | ||
43,600 | Oxford Industries, Inc. | 2,724,564 | ||
32,400 | Penske Automotive Group, Inc. | 1,422,684 | ||
42,000 | * | Select Comfort Corporation | 1,490,580 | |
77,800 | Tupperware Brands Corporation | 5,463,894 | ||
42,700 | Walt Disney Company | 4,536,875 | ||
17,400 | Whirlpool Corporation | 3,334,188 | ||
26,400 | Wyndham Worldwide Corporation | 2,650,824 | ||
79,192,016 | ||||
Consumer Staples—9.9% | ||||
129,100 | Altria Group, Inc. | 9,614,077 | ||
95,300 | B&G Foods, Inc. | 3,392,680 | ||
96,178 | Coca-Cola Company | 4,313,583 | ||
77,400 | CVS Health Corporation | 6,227,604 | ||
169,979 | Koninklijke Ahold Delhaize NV (ADR) | 3,253,398 | ||
40,300 | Nu Skin Enterprises, Inc. – Class “A” | 2,532,452 | ||
44,100 | PepsiCo, Inc. | 5,093,109 | ||
78,700 | Philip Morris International, Inc. | 9,243,315 | ||
28,000 | Procter & Gamble Company | 2,440,200 | ||
42,650 | Wal-Mart Stores, Inc. | 3,227,752 | ||
49,338,170 |
55 |
Portfolio of Investments (continued)
GROWTH & INCOME FUND
June 30, 2017
Shares | Security | Value | ||
Energy—5.5% | ||||
36,900 | Anadarko Petroleum Corporation | $ 1,673,046 | ||
9,300 | Chevron Corporation | 970,269 | ||
61,400 | ConocoPhillips | 2,699,144 | ||
46,900 | Devon Energy Corporation | 1,499,393 | ||
53,400 | ExxonMobil Corporation | 4,310,982 | ||
26,700 | Hess Corporation | 1,171,329 | ||
80,222 | Marathon Oil Corporation | 950,631 | ||
103,722 | Marathon Petroleum Corporation | 5,427,772 | ||
26,700 | Occidental Petroleum Corporation | 1,598,529 | ||
26,600 | PBF Energy, Inc. – Class “A” | 592,116 | ||
30,650 | Phillips 66 | 2,534,449 | ||
12,900 | Schlumberger, Ltd. | 849,336 | ||
101,907 | Suncor Energy, Inc. | 2,975,684 | ||
27,252,680 | ||||
Financials—15.2% | ||||
73,606 | American Express Company | 6,200,569 | ||
44,600 | American International Group, Inc. | 2,788,392 | ||
42,200 | Ameriprise Financial, Inc. | 5,371,638 | ||
34,400 | Chubb, Ltd. | 5,001,072 | ||
138,300 | Citizens Financial Group, Inc. | 4,934,544 | ||
87,443 | Discover Financial Services | 5,438,080 | ||
147,700 | Financial Select Sector SPDR Fund (ETF) | 3,643,759 | ||
36,700 | Hamilton Lane, Inc. – Class “A” | 807,033 | ||
45,200 | IBERIABANK Corporation | 3,683,800 | ||
14,800 | iShares Russell 2000 ETF (ETF) | 2,085,616 | ||
115,388 | JPMorgan Chase & Company | 10,546,463 | ||
64,500 | MetLife, Inc. | 3,543,630 | ||
15,000 | Morgan Stanley | 668,400 | ||
40,100 | PNC Financial Services Group, Inc. | 5,007,287 | ||
67,200 | SPDR S&P Regional Banking (ETF) | 3,692,640 | ||
128,100 | Sterling Bancorp | 2,978,325 | ||
94,800 | U.S. Bancorp | 4,922,016 | ||
76,567 | Wells Fargo & Company | 4,242,578 | ||
75,555,842 | ||||
Health Care—15.4% | ||||
114,300 | Abbott Laboratories | 5,556,123 | ||
89,400 | AbbVie, Inc. | 6,482,394 | ||
5,300 | Allergan, PLC | 1,288,377 | ||
64,400 | * | AMN Healthcare Services, Inc. | 2,514,820 | |
45,039 | Baxter International, Inc. | 2,726,661 |
56 |
Shares | Security | Value | ||
Health Care (continued) | ||||
25,100 | * | Centene Corporation | $ 2,004,988 | |
85,300 | Gilead Sciences, Inc. | 6,037,534 | ||
24,000 | Hill-Rom Holdings, Inc. | 1,910,640 | ||
72,275 | Johnson & Johnson | 9,561,260 | ||
2,512 | * | Mallinckrodt, PLC | 112,563 | |
33,512 | Medtronic, PLC | 2,974,190 | ||
87,443 | Merck & Company, Inc. | 5,604,222 | ||
32,100 | * | Mylan NV (ADR) | 1,246,122 | |
233,493 | Pfizer, Inc. | 7,843,030 | ||
80,200 | Phibro Animal Health Corporation – Class “A” | 2,971,410 | ||
17,159 | Shire, PLC (ADR) | 2,835,868 | ||
53,443 | Thermo Fisher Scientific, Inc. | 9,324,200 | ||
31,500 | * | VWR Corporation | 1,039,815 | |
69,572 | Zoetis, Inc. | 4,339,901 | ||
76,374,118 | ||||
Industrials—10.5% | ||||
37,294 | 3M Company | 7,764,238 | ||
20,700 | * | Gardner Denver Holdings, Inc. | 447,327 | |
140,896 | General Electric Company | 3,805,601 | ||
56,000 | Honeywell International, Inc. | 7,464,240 | ||
14,700 | Ingersoll-Rand, PLC | 1,343,433 | ||
136,076 | Johnson Controls International, PLC | 5,900,255 | ||
53,300 | Koninklijke Philips NV (ADR) | 1,909,206 | ||
5,400 | Lockheed Martin Corporation | 1,499,094 | ||
26,300 | ManpowerGroup, Inc. | 2,936,395 | ||
76,200 | Masco Corporation | 2,911,602 | ||
14,600 | Owens Corning | 977,032 | ||
60,100 | Schneider National, Inc. – Class “B” | 1,344,437 | ||
18,700 | Snap-On, Inc. | 2,954,600 | ||
12,100 | Stanley Black & Decker, Inc. | 1,702,833 | ||
130,900 | Triton International, Ltd. | 4,377,296 | ||
40,200 | United Technologies Corporation | 4,908,822 | ||
52,246,411 | ||||
Information Technology—17.5% | ||||
82,800 | Apple, Inc. | 11,924,856 | ||
85,100 | Applied Materials, Inc. | 3,515,481 | ||
106,200 | * | ARRIS International, PLC | 2,975,724 | |
16,300 | Broadcom, Ltd. | 3,798,715 | ||
241,900 | Cisco Systems, Inc. | 7,571,470 |
57 |
Portfolio of Investments (continued)
GROWTH & INCOME FUND
June 30, 2017
Shares | Security | Value | ||
Information Technology (continued) | ||||
28,243 | * | Dell Technologies, Inc. – Class “V” | $ 1,725,930 | |
9,784 | DXC Technology Company | 750,629 | ||
67,200 | * | eBay, Inc. | 2,346,624 | |
12,300 | * | FleetCor Technologies, Inc. | 1,773,783 | |
113,900 | HP Enterprise Company | 1,889,601 | ||
157,000 | Intel Corporation | 5,297,180 | ||
13,400 | International Business Machines Corporation | 2,061,322 | ||
20,200 | Methode Electronics, Inc. | 832,240 | ||
168,100 | Microsoft Corporation | 11,587,133 | ||
33,600 | * | NXP Semiconductors NV | 3,677,520 | |
94,100 | Oracle Corporation | 4,718,174 | ||
86,088 | QUALCOMM, Inc. | 4,753,779 | ||
74,100 | Sabre Corporation | 1,613,157 | ||
165,960 | Symantec Corporation | 4,688,370 | ||
22,900 | TE Connectivity, Ltd. | 1,801,772 | ||
22,600 | * | Tech Data Corporation | 2,282,600 | |
74,500 | Travelport Worldwide, Ltd. | 1,025,120 | ||
49,165 | Western Digital Corporation | 4,356,019 | ||
86,967,199 | ||||
Materials—2.9% | ||||
800 | Eastman Chemical Company | 67,192 | ||
65,900 | International Paper Company | 3,730,599 | ||
84,100 | * | Louisiana-Pacific Corporation | 2,027,651 | |
16,100 | Praxair, Inc. | 2,134,055 | ||
36,050 | RPM International, Inc. | 1,966,528 | ||
62,500 | Sealed Air Corporation | 2,797,500 | ||
21,600 | Trinseo SA | 1,483,920 | ||
14,207,445 | ||||
Real Estate—1.8% | ||||
194,900 | Brixmor Property Group, Inc. (REIT) | 3,484,812 | ||
20,301 | Real Estate Select Sector SPDR Fund (ETF) | 653,692 | ||
103,500 | Tanger Factory Outlet Centers, Inc. (REIT) | 2,688,930 | ||
99,800 | Urstadt Biddle Properties, Inc. – Class “A” (REIT) | 1,976,040 | ||
8,803,474 | ||||
Telecommunication Services—2.1% | ||||
142,600 | AT&T, Inc. | 5,380,298 | ||
114,300 | Verizon Communications, Inc. | 5,104,638 | ||
10,484,936 |
58 |
Shares or | |||||||
Principal | |||||||
Amount | Security | Value | |||||
Utilities—1.0% | |||||||
119,600 | Exelon Corporation | $ 4,313,972 | |||||
21,900 | NiSource, Inc. | 555,384 | |||||
4,869,356 | |||||||
Total Value of Common Stocks (cost $289,065,753) | 485,291,647 | ||||||
SHORT-TERM U.S. GOVERNMENT AGENCY | |||||||
OBLIGATIONS—1.7% | |||||||
Federal Home Loan Bank: | |||||||
$ 1,750M | 0.9%, 7/19/2017 | 1,749,230 | |||||
2,000M | 0.94%, 7/21/2017 | 1,999,010 | |||||
2,000M | 0.9%, 7/24/2017 | 1,998,844 | |||||
2,000M | 1.01%, 8/4/2017 | 1,998,204 | |||||
750M | 0.98%, 8/11/2017 | 749,180 | |||||
Total Value of Short-Term U.S. Government Agency Obligations (cost $8,494,271) | 8,494,468 | ||||||
Total Value of Investments (cost $297,560,024) | 99.4 | % | 493,786,115 | ||||
Other Assets, Less Liabilities | .6 | 2,771,982 | |||||
Net Assets | 100.0 | % | $496,558,097 |
* | Non-income producing | |
Summary of Abbreviations: | ||
ADR | American Depositary Receipts | |
ETF | Exchange Traded Fund | |
REIT | Real Estate Investment Trust |
59 |
Portfolio of Investments (continued)
GROWTH & INCOME FUND
June 30, 2017
The Fund’s assets and liabilities are classified into the following three levels based on the inputs used to value the assets and liabilities:
Level 1 — Unadjusted quoted prices in active markets for identical securities that the Fund has the ability to access. |
Level 2 — Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumption about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The inputs methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, U.S. Government securities are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market.
The following is a summary, by category of Level, of inputs used to value the Fund’s investments as of June 30, 2017:
Level 1 | Level 2 | Level 3 | Total | |||||||||
Common Stocks | $ | 485,291,647 | $ | — | $ | — | $ | 485,291,647 | ||||
Short-Term U.S. Government | ||||||||||||
Agency Obligations | — | 8,494,468 | — | 8,494,468 | ||||||||
Total Investments in Securities* | $ | 485,291,647 | $ | 8,494,468 | $ | — | $ | 493,786,115 |
* | The Portfolio of Investments provides information on the industry categorization for common stocks. |
There were no transfers into or from Level 1 and Level 2 by the Fund for the period ended | |
June 30, 2017. Transfers, if any, between Levels are recognized at the end of the reporting period. |
60 | See notes to financial statements |
Fund Expenses (unaudited)
INTERNATIONAL FUND
The examples below show the ongoing costs (in dollars) of investing in your Fund and will help you in comparing these costs with costs of other mutual funds. Please refer to page 6 for a detailed explanation of the information presented in these examples.
Beginning | Ending | ||
Account | Account | Expenses Paid | |
Value | Value | During Period | |
(1/1/17) | (6/30/17) | (1/1/17–6/30/17)* | |
Expense Examples | |||
Actual | $1,000.00 | $1,221.53 | $4.52 |
Hypothetical | |||
(5% annual return before expenses) | $1,000.00 | $1,020.72 | $4.11 |
* | Expenses are equal to the annualized expense ratio of .82%, multiplied by the average account |
value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Portfolio Composition
BY SECTOR
Portfolio holdings and allocations are subject to change. Percentages are as of June 30, 2017, and are |
based on the total value of investments. |
61 |
Portfolio of Investments
INTERNATIONAL FUND
June 30, 2017
Shares | Security | Value | ||
COMMON STOCKS—99.0% | ||||
United Kingdom—16.2% | ||||
104,840 | British American Tobacco, PLC | $ 7,147,003 | ||
25,519 | DCC, PLC | 2,323,293 | ||
81,819 | Diageo, PLC | 2,417,443 | ||
614,681 | Domino’s Pizza Group, PLC | 2,352,949 | ||
956,779 | Lloyds Banking Group, PLC | 824,337 | ||
58,929 | Reckitt Benckiser Group, PLC | 5,974,411 | ||
146,503 | RELX Group | 3,011,917 | ||
24,051,353 | ||||
United States—13.7% | ||||
19,838 | Accenture, PLC – Class “A” | 2,453,564 | ||
49,123 | MasterCard, Inc. – Class “A” | 5,965,988 | ||
44,757 | Philip Morris International, Inc. | 5,256,710 | ||
2,004 | * | Priceline Group, Inc. | 3,748,522 | |
30,726 | Visa, Inc. – Class “A” | 2,881,484 | ||
20,306,268 | ||||
India—8.5% | ||||
291,789 | HDFC Bank, Ltd. | 7,457,745 | ||
205,174 | Housing Development Finance Corporation, Ltd. | 5,126,215 | ||
12,583,960 | ||||
Switzerland—7.2% | ||||
53,042 | Nestle SA – Registered | 4,616,076 | ||
17,660 | Roche Holding AG – Genusscheine | 4,497,416 | ||
97,328 | * | UBS Group AG | 1,648,354 | |
10,761,846 | ||||
France—7.1% | ||||
77,390 | Bureau Veritas SA | 1,712,579 | ||
14,443 | Essilor International SA | 1,837,666 | ||
738 | Hermes International | 364,684 | ||
7,401 | L’Oreal SA | 1,541,840 | ||
7,315 | LVMH Moet Hennessy Louis Vuitton SE | 1,823,862 | ||
12,188 | Sodexo SA | 1,575,806 | ||
12,759 | * | Teleperformance | 1,634,331 | |
10,490,768 |
62 |
Shares | Security | Value | ||
Canada—5.9% | ||||
96,876 | Alimentation Couche-Tard, Inc. – Class “B��� | $ 4,643,594 | ||
50,138 | Canadian National Railway Company | 4,068,106 | ||
8,711,700 | ||||
Japan—5.2% | ||||
13,122 | Daito Trust Construction Company, Ltd. | 2,041,070 | ||
3,400 | Keyence Corporation | 1,491,496 | ||
17,200 | Shimano, Inc. | 2,718,969 | ||
57,689 | Unicharm Corporation | 1,447,418 | ||
7,698,953 | ||||
Spain—4.7% | ||||
24,262 | Aena SA | 4,734,407 | ||
79,899 | Grifols SA – Class “A” | 2,225,298 | ||
6,959,705 | ||||
Netherlands—4.5% | ||||
121,477 | Unilever NV-CVA | 6,704,170 | ||
Ireland—3.6% | ||||
284,815 | Allied Irish Banks, PLC | 1,610,245 | ||
35,000 | Paddy Power Betfair, PLC | 3,736,494 | ||
5,346,739 | ||||
Hong Kong—3.5% | ||||
190,487 | Link REIT (REIT) | 1,449,248 | ||
106,172 | Tencent Holdings, Ltd. | 3,796,787 | ||
5,246,035 | ||||
Germany—3.3% | ||||
47,649 | SAP SE | 4,976,930 | ||
China—3.2% | ||||
33,675 | * | Alibaba Group Holding, Ltd. (ADR) | 4,744,807 | |
Belgium—2.8% | ||||
37,092 | Anheuser-Busch InBev SA/NV | 4,097,091 |
63 |
Portfolio of Investments (continued)
INTERNATIONAL FUND
June 30, 2017
Shares or | |||||||
Principal | |||||||
Amount | Security | Value | |||||
Australia—2.4% | |||||||
14,181 | CSL, Ltd. | $ 1,504,457 | |||||
36,404 | Ramsay Health Care, Ltd. | 2,059,331 | |||||
3,563,788 | |||||||
South Africa—2.1% | |||||||
16,164 | Naspers, Ltd. – Class “N” | 3,144,459 | |||||
Taiwan—1.9% | |||||||
82,243 | Taiwan Semiconductor Manufacturing Company, Ltd. (ADR) | 2,875,215 | |||||
Mexico—1.4% | |||||||
21,318 | Fomento Economico Mexicano SAB de CV – Class “B” (ADR) | 2,096,412 | |||||
Brazil—1.3% | |||||||
347,277 | Ambev SA (ADR) | 1,906,551 | |||||
Denmark—.5% | |||||||
8,321 | Coloplast A/S – Class “B” | 695,297 | |||||
Total Value of Common Stocks (cost $100,253,396) | 146,962,047 | ||||||
SHORT-TERM U.S. GOVERNMENT AGENCY | |||||||
OBLIGATIONS—.3% | |||||||
United States | |||||||
$500M | Federal Home Loan Bank, 0.98%, 8/11/2017 (cost $499,442) | 499,454 | |||||
Total Value of Investments (cost $100,752,838) | 99.3 | % | 147,461,501 | ||||
Other Assets, Less Liabilities | .7 | 965,627 | |||||
Net Assets | 100.0 | % | $148,427,128 |
* | Non-income producing | |
Summary of Abbreviations: | ||
ADR | American Depositary Receipts | |
REIT | Real Estate Investment Trust |
The Fund’s assets and liabilities are classified into the following three levels based on the inputs used to value the assets and liabilities:
Level 1 — Unadjusted quoted prices in active markets for identical securities that the Fund has the ability to access. |
Level 2 — Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
64 |
Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumption about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The inputs methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, U.S. Government securities are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market.
The following is a summary, by category of Level, of inputs used to value the Fund’s investments as of June 30, 2017:
Level 1 | Level 2 | Level 3 | Total | |||||||||
Common Stocks | ||||||||||||
United Kingdom | $ | 24,051,353 | $ | — | $ | — | 24,051,353 | |||||
United States | 20,306,268 | — | — | 20,306,268 | ||||||||
India | 12,583,960 | — | — | 12,583,960 | ||||||||
Switzerland | 10,761,846 | — | — | 10,761,846 | ||||||||
France | 10,490,768 | — | — | 10,490,768 | ||||||||
Canada | 8,711,700 | — | — | 8,711,700 | ||||||||
Japan | 7,698,953 | — | — | 7,698,953 | ||||||||
Spain | 6,959,705 | — | — | 6,959,705 | ||||||||
Netherlands | 6,704,170 | — | — | 6,704,170 | ||||||||
Ireland | 5,346,739 | — | — | 5,346,739 | ||||||||
Hong Kong | 5,246,035 | — | — | 5,246,035 | ||||||||
Germany | 4,976,930 | — | — | 4,976,930 | ||||||||
China | 4,744,807 | — | — | 4,744,807 | ||||||||
Belgium | 4,097,091 | — | — | 4,097,091 | ||||||||
Australia | 3,563,788 | — | — | 3,563,788 | ||||||||
South Africa | 3,144,459 | — | — | 3,144,459 | ||||||||
Taiwan | 2,875,215 | — | — | 2,875,215 | ||||||||
Mexico | 2,096,412 | — | — | 2,096,412 | ||||||||
Brazil | 1,906,551 | — | — | 1,906,551 | ||||||||
Denmark | 695,297 | — | — | 695,297 | ||||||||
Short-Term U.S. Government | ||||||||||||
Agency Obligations | — | 499,454 | — | 499,454 | ||||||||
Total Investments in Securities | $ | 146,962,047 | $ | 499,454 | $ | — | $ | 147,461,501 |
During the period ended June 30, 2017, there were no transfers between Level 1 investments and Level 2 investments that had a material impact to the Fund. This does not include transfers between Level 1 investments and Level 2 investments due to the Fund utilizing international fair value pricing during the year.
See notes to financial statements | 65 |
Fund Expenses (unaudited)
INVESTMENT GRADE FUND
The examples below show the ongoing costs (in dollars) of investing in your Fund and will help you in comparing these costs with costs of other mutual funds. Please refer to page 6 for a detailed explanation of the information presented in these examples.
Beginning | Ending | ||
Account | Account | Expenses Paid | |
Value | Value | During Period | |
(1/1/17) | (6/30/17) | (1/1/17–6/30/17)* | |
Expense Examples | |||
Actual | $1,000.00 | $1,026.88 | $3.42 |
Hypothetical | |||
(5% annual return before expenses) | $1,000.00 | $1,021.42 | $3.41 |
* | Expenses are equal to the annualized expense ratio of .68%, multiplied by the average account |
value over the period, multiplied by 181/365 (to reflect the one-half year period). Expenses paid | |
during the period are net of expenses waived. |
Portfolio Composition
TOP TEN SECTORS
Portfolio holdings and allocations are subject to change. Percentages are as of June 30, 2017, and are |
based on the total value of investments. |
66 |
Portfolio of Investments
INVESTMENT GRADE FUND
June 30, 2017
Principal | ||||
Amount | Security | Value | ||
CORPORATE BONDS—97.9% | ||||
Aerospace/Defense—1.4% | ||||
$ 500M | Rockwell Collins, Inc., 3.2%, 3/15/2024 | $ 507,569 | ||
400M | Rolls-Royce, PLC, 3.625%, 10/14/2025 (a) | 412,712 | ||
920,281 | ||||
Automotive—.6% | ||||
400M | O’Reilly Automotive, Inc., 3.55%, 3/15/2026 | 403,473 | ||
Chemicals—2.9% | ||||
Agrium, Inc.: | ||||
200M | 3.5%, 6/1/2023 | 205,587 | ||
300M | 3.375%, 3/15/2025 | 300,536 | ||
500M | Dow Chemical Co., 3.5%, 10/1/2024 | 514,307 | ||
300M | LYB International Finance Co. BV, 3.5%, 3/2/2027 | 296,323 | ||
500M | LyondellBasell Industries NV, 6%, 11/15/2021 | 565,369 | ||
1,882,122 | ||||
Consumer Non-Durables—.3% | ||||
200M | Newell Brands, Inc., 4.2%, 4/1/2026 | 212,585 | ||
Energy—10.2% | ||||
900M | BP Capital Markets, PLC, 3.216%, 11/28/2023 | 914,781 | ||
575M | Canadian Oil Sands, Ltd., 7.75%, 5/15/2019 (a) | 624,844 | ||
500M | Continental Resources, Inc., 5%, 9/15/2022 | 492,500 | ||
400M | DCP Midstream Operating, LP, 2.5%, 12/1/2017 | 400,500 | ||
400M | Enable Midstream Partners, LP, 4.4%, 3/15/2027 | 402,210 | ||
500M | Enbridge Energy Partners, LP, 4.2%, 9/15/2021 | 522,141 | ||
Kinder Morgan Energy Partners, LP: | ||||
300M | 3.5%, 3/1/2021 | 307,444 | ||
500M | 3.45%, 2/15/2023 | 503,668 | ||
500M | Magellan Midstream Partners, LP, 5%, 3/1/2026 | 552,359 | ||
Marathon Oil Corp.: | ||||
300M | 6%, 10/1/2017 | 302,867 | ||
200M | 3.85%, 6/1/2025 | 195,552 | ||
400M | ONEOK Partners, LP, 3.375%, 10/1/2022 | 404,122 | ||
400M | Spectra Energy, LLC, 6.2%, 4/15/2018 | 412,974 | ||
Valero Energy Corp.: | ||||
466M | 9.375%, 3/15/2019 | 521,694 | ||
100M | 3.4%, 9/15/2026 | 98,015 | ||
6,655,671 |
67 |
Portfolio of Investments (continued)
INVESTMENT GRADE FUND
June 30, 2017
Principal | ||||
Amount | Security | Value | ||
Financial Services—13.4% | ||||
$ 200M | American Express Co., 7%, 3/19/2018 | $ 207,470 | ||
American International Group, Inc.: | ||||
400M | 3.75%, 7/10/2025 | 408,115 | ||
200M | 4.7%, 7/10/2035 | 213,225 | ||
500M | Ameriprise Financial, Inc., 5.3%, 3/15/2020 | 540,865 | ||
500M | Assured Guaranty U.S. Holding, Inc., 5%, 7/1/2024 | 536,857 | ||
400M | Berkshire Hathaway, Inc., 3.4%, 1/31/2022 | 421,602 | ||
300M | Brookfield Finance, LLC, 4%, 4/1/2024 | 308,175 | ||
300M | Compass Bank, 6.4%, 10/1/2017 | 303,091 | ||
500M | ERAC USA Finance, LLC, 4.5%, 8/16/2021 (a) | 535,934 | ||
600M | Ford Motor Credit Co., LLC, 8.125%, 1/15/2020 | 681,655 | ||
500M | GE Capital International Funding Services, Ltd., 4.418%, 11/15/2035 | 545,239 | ||
700M | General Electric Capital Corp., 4.65%, 10/17/2021 | 771,545 | ||
500M | International Lease Finance Corp., 8.25%, 12/15/2020 | 589,955 | ||
500M | Key Bank NA, 3.4%, 5/20/2026 | 497,439 | ||
400M | Liberty Mutual Group, Inc., 4.95%, 5/1/2022 (a) | 439,179 | ||
300M | National City Corp., 6.875%, 5/15/2019 | 326,575 | ||
600M | Protective Life Corp., 7.375%, 10/15/2019 | 668,410 | ||
300M | Prudential Financial, Inc., 7.375%, 6/15/2019 | 330,831 | ||
400M | State Street Corp., 3.55%, 8/18/2025 | 416,962 | ||
8,743,124 | ||||
Financials—26.9% | ||||
Bank of America Corp.: | ||||
625M | 5%, 5/13/2021 | 682,556 | ||
200M | 2.1532%, 4/24/2023 † | 200,871 | ||
350M | 4.1%, 7/24/2023 | 371,014 | ||
475M | 5.875%, 2/7/2042 | 597,377 | ||
Barclays Bank, PLC: | ||||
400M | 5.125%, 1/8/2020 | 427,522 | ||
600M | 3.75%, 5/15/2024 | 619,125 | ||
300M | Capital One Financial Corp., 3.75%, 4/24/2024 | 307,003 | ||
Citigroup, Inc.: | ||||
200M | 8.5%, 5/22/2019 | 223,464 | ||
450M | 4.5%, 1/14/2022 | 484,385 | ||
400M | 2.2794%, 5/17/2024 † | 399,968 | ||
500M | 3.7%, 1/12/2026 | 506,613 | ||
Deutsche Bank AG: | ||||
300M | 3.375%, 5/12/2021 | 304,120 | ||
400M | 3.7%, 5/30/2024 | 400,526 | ||
400M | General Motors Financial Co., 5.25%, 3/1/2026 | 432,783 |
68 |
Principal | ||||
Amount | Security | Value | ||
Financials (continued) | ||||
Goldman Sachs Group, Inc.: | ||||
$ 200M | 2.35%, 11/15/2021 | $ 197,512 | ||
600M | 5.75%, 1/24/2022 | 675,934 | ||
300M | 3.625%, 1/22/2023 | 310,023 | ||
500M | 3.5%, 11/16/2026 | 497,939 | ||
700M | 6.125%, 2/15/2033 | 877,479 | ||
JPMorgan Chase & Co.: | ||||
300M | 6%, 1/15/2018 | 306,764 | ||
500M | 4.5%, 1/24/2022 | 541,760 | ||
700M | 3.625%, 12/1/2027 † | 694,323 | ||
400M | 3.54%, 5/1/2028 | 401,707 | ||
300M | 6.4%, 5/15/2038 | 402,721 | ||
Morgan Stanley: | ||||
1,450M | 5.5%, 7/28/2021 | 1,609,316 | ||
300M | 2.3732%, 5/8/2024 † | 301,794 | ||
400M | 3.625%, 1/20/2027 | 403,360 | ||
600M | SunTrust Banks, Inc., 6%, 9/11/2017 | 604,711 | ||
U.S. Bancorp: | ||||
500M | 3.6%, 9/11/2024 | 519,846 | ||
300M | 3.1%, 4/27/2026 | 296,856 | ||
400M | UBS AG, 4.875%, 8/4/2020 | 431,449 | ||
300M | UBS Group Funding (Switzerland) AG, 4.253%, 3/23/2028 (a) | 314,043 | ||
500M | Visa, Inc., 3.15%, 12/14/2025 | 508,181 | ||
Wells Fargo & Co.: | ||||
900M | 3.45%, 2/13/2023 | 922,168 | ||
500M | 4.75%, 12/7/2046 | 535,138 | ||
250M | Wells Fargo Bank NA, 5.85%, 2/1/2037 | 312,756 | ||
17,623,107 | ||||
Food/Beverage/Tobacco—4.9% | ||||
Anheuser-Busch InBev Finance, Inc.: | ||||
400M | 3.75%, 1/15/2022 | 422,284 | ||
400M | 3.65%, 2/1/2026 | 412,846 | ||
400M | 4.9%, 2/1/2046 | 453,262 | ||
550M | Bunge Ltd. Finance Corp., 8.5%, 6/15/2019 | 615,413 | ||
440M | Ingredion, Inc., 4.625%, 11/1/2020 | 471,977 | ||
400M | Mondelez International Holdings, Inc., 2%, 10/28/2021 (a) | 390,127 | ||
500M | PepsiCo, Inc., 3.45%, 10/6/2046 | 471,043 | ||
3,236,952 |
69 |
Portfolio of Investments (continued)
INVESTMENT GRADE FUND
June 30, 2017
Principal | ||||
Amount | Security | Value | ||
Food/Drug—.6% | ||||
$ 400M | CVS Health Corp., 3.875%, 7/20/2025 | $ 416,597 | ||
Forest Products/Containers—.4% | ||||
250M | Rock-Tenn Co., 4.9%, 3/1/2022 | 272,741 | ||
Health Care—1.9% | ||||
300M | Biogen, Inc., 6.875%, 3/1/2018 | 310,191 | ||
450M | Express Scripts Holding Co., 4.75%, 11/15/2021 | 486,770 | ||
400M | Laboratory Corp. of America, 3.75%, 8/23/2022 | 416,139 | ||
1,213,100 | ||||
Information Technology—2.5% | ||||
200M | Apple, Inc., 2.5%, 2/9/2025 | 195,808 | ||
900M | Diamond 1 Finance Corp., 4.42%, 6/15/2021 (a) | 949,638 | ||
500M | Oracle Corp., 2.4%, 9/15/2023 | 493,935 | ||
1,639,381 | ||||
Manufacturing—2.4% | ||||
CRH America Finance, Inc.: | ||||
750M | 8.125%, 7/15/2018 | 796,855 | ||
250M | 3.4%, 5/9/2027 (a) | 250,534 | ||
500M | Johnson Controls International, PLC, 5%, 3/30/2020 | 534,398 | ||
1,581,787 | ||||
Media-Broadcasting—2.2% | ||||
200M | ABC, Inc., 8.75%, 8/15/2021 | 243,866 | ||
400M | British Sky Broadcasting, PLC, 9.5%, 11/15/2018 (a) | 439,769 | ||
700M | Comcast Corp., 4.25%, 1/15/2033 | 747,322 | ||
1,430,957 | ||||
Media-Diversified—.6% | ||||
400M | Time Warner, Inc., 3.6%, 7/15/2025 | 399,781 | ||
Metals/Mining—3.9% | ||||
500M | Alcoa, Inc., 6.15%, 8/15/2020 | 540,000 | ||
400M | Glencore Finance Canada, Ltd., 4.95%, 11/15/2021 (a) | 428,220 | ||
500M | Glencore Funding, LLC, 4.625%, 4/29/2024 (a) | 523,425 | ||
500M | Newmont Mining Corp., 5.125%, 10/1/2019 | 531,457 | ||
500M | Vale Overseas, Ltd., 5.625%, 9/15/2019 | 528,750 | ||
2,551,852 |
70 |
Principal | ||||
Amount | Security | Value | ||
Real Estate—9.0% | ||||
$ 400M | Alexandria Real Estate Equities, Inc., 3.95%, 1/15/2028 | $ 407,608 | ||
AvalonBay Communities, Inc.: | ||||
300M | 3.5%, 11/15/2024 | 307,839 | ||
200M | 3.35%, 5/15/2027 | 200,853 | ||
400M | Boston Properties, LP, 5.875%, 10/15/2019 | 429,092 | ||
Digital Realty Trust, LP: | ||||
300M | 5.25%, 3/15/2021 | 325,171 | ||
300M | 4.75%, 10/1/2025 | 323,211 | ||
400M | ERP Operating, LP, 3.375%, 6/1/2025 | 403,155 | ||
200M | HCP, Inc., 4.25%, 11/15/2023 | 209,986 | ||
Prologis, LP: | ||||
200M | 3.35%, 2/1/2021 | 206,714 | ||
125M | 3.75%, 11/1/2025 | 130,359 | ||
Realty Income Corp.: | ||||
500M | 3.25%, 10/15/2022 | 508,119 | ||
200M | 4.125%, 10/15/2026 | 207,125 | ||
500M | Simon Property Group, LP, 3.375%, 10/1/2024 | 509,521 | ||
500M | Tanger Properties, LP, 3.125%, 9/1/2026 | 469,482 | ||
400M | Ventas Realty, LP, 4.75%, 6/1/2021 | 428,255 | ||
800M | Welltower, Inc., 4%, 6/1/2025 | 828,530 | ||
5,895,020 | ||||
Retail-General Merchandise—1.7% | ||||
400M | Amazon.com, Inc., 4.8%, 12/5/2034 | 461,858 | ||
500M | Home Depot, Inc., 5.875%, 12/16/2036 | 652,561 | ||
1,114,419 | ||||
Telecommunications—2.1% | ||||
500M | AT&T, Inc., 4.25%, 3/1/2027 | 517,977 | ||
900M | Verizon Communications, Inc., 4.272%, 1/15/2036 | 871,378 | ||
1,389,355 | ||||
Transportation—2.1% | ||||
400M | Burlington North Santa Fe, LLC, 5.15%, 9/1/2043 | 479,917 | ||
300M | Penske Truck Leasing Co., LP, 4.875%, 7/11/2022 (a) | 328,093 | ||
600M | Southwest Airlines Co., 3%, 11/15/2026 | 583,105 | ||
1,391,115 |
71 |
Portfolio of Investments (continued)
INVESTMENT GRADE FUND
June 30, 2017
Principal | |||||||
Amount | Security | Value | |||||
Utilities—7.9% | |||||||
$ 500M | Duke Energy Progress, Inc., 4.15%, 12/1/2044 | $ 524,697 | |||||
300M | E.ON International Finance BV, 5.8%, 4/30/2018 (a) | 309,217 | |||||
300M | Electricite de France SA, 3.625%, 10/13/2025 (a) | 307,191 | |||||
300M | Entergy Arkansas, Inc., 4.95%, 12/15/2044 | 309,089 | |||||
400M | Exelon Generation Co., LLC, 5.2%, 10/1/2019 | 425,088 | |||||
Great River Energy Co.: | |||||||
22M | 5.829%, 7/1/2017 (a) | 21,617 | |||||
439M | 4.478%, 7/1/2030 (a) | 469,892 | |||||
300M | MidAmerican Energy Co., 3.95%, 8/1/2047 | 309,317 | |||||
500M | Ohio Power Co., 5.375%, 10/1/2021 | 556,987 | |||||
450M | Oklahoma Gas & Electric Co., 4%, 12/15/2044 | 452,829 | |||||
214M | San Diego Gas & Electric Co., 1.914%, 2/1/2022 | 212,017 | |||||
604M | Sempra Energy, 9.8%, 2/15/2019 | 677,687 | |||||
500M | South Carolina Electric & Gas Co., 5.45%, 2/1/2041 | 576,764 | |||||
5,152,392 | |||||||
Total Value of Corporate Bonds (cost $62,468,190) | 64,125,812 | ||||||
TAXABLE MUNICIPAL BONDS—.5% | |||||||
300M | Ford Foundation, 3.859%, 6/1/2047 (cost $300,064) | 312,012 | |||||
Total Value of Investments (cost $62,768,254) | 98.4 | % | 64,437,824 | ||||
Other Assets, Less Liabilities | 1.6 | 1,063,664 | |||||
Net Assets | 100.0 | % | $65,501,488 |
(a) | Security exempt from registration under Rule 144A of the Securities Act of 1933 (see Note 5). |
† | Interest rates are determined and reset periodically. The interest rates above are the rates in effect |
at June 30, 2017. |
72 |
The Fund’s assets and liabilities are classified into the following three levels based on the inputs used to value the assets and liabilities:
Level 1 — Unadjusted quoted prices in active markets for identical securities that the Fund has the ability to access. |
Level 2 — Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumption about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The inputs methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, U.S. Government securities are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market.
The following is a summary, by category of Level, of inputs used to value the Fund’s investments as of June 30, 2017:
Level 1 | Level 2 | Level 3 | Total | |||||||||
Corporate Bonds | $ | — | $ | 64,125,812 | $ | — | $ | 64,125,812 | ||||
Taxable Municipal Bonds | — | 312,012 | — | 312,012 | ||||||||
Total Investments in Securities* | $ | — | $ | 64,437,824 | $ | — | $ | 64,437,824 |
* | The Portfolio of Investments provides information on the industry categorization for corporate bonds. |
There were no transfers into or from Level 1 and Level 2 by the Fund for the period ended | |
June 30, 2017. Transfers, if any, between Levels are recognized at the end of the reporting period. |
See notes to financial statements | 73 |
Fund Expenses (unaudited)
LIMITED DURATION HIGH QUALITY BOND FUND
The examples below show the ongoing costs (in dollars) of investing in your Fund and will help you in comparing these costs with costs of other mutual funds. Please refer to page 6 for a detailed explanation of the information presented in these examples.
Beginning | Ending | ||
Account | Account | Expenses Paid | |
Value | Value | During Period | |
(1/1/17) | (6/30/17) | (1/1/17–6/30/17)* | |
Expense Examples | |||
Actual | $1,000.00 | $1,010.45 | $5.03 |
Hypothetical | |||
(5% annual return before expenses) | $1,000.00 | $1,019.78 | $5.06 |
* | Expenses are equal to the annualized expense ratio of 1.01%, multiplied by the average account |
value over the period, multiplied by 181/365 (to reflect the one-half year period). Expenses paid | |
during the period are net of expenses waived. |
Portfolio Composition
TOP TEN SECTORS
Portfolio holdings and allocations are subject to change. Percentages are as of June 30, 2017, and are |
based on the total value of investments. |
74 |
Portfolio of Investments (continued)
LIMITED DURATION HIGH QUALITY BOND FUND
June 30, 2017
Principal | ||||
Amount | Security | Value | ||
CORPORATE BONDS—76.0% | ||||
Automotive—1.4% | ||||
$100M | BMW U.S. Capital, LLC, 1.85%, 9/15/2021 (a) | $ 98,255 | ||
Chemicals—1.5% | ||||
100M | Dow Chemical Co., 4.25%, 11/15/2020 | 106,260 | ||
Energy—1.4% | ||||
100M | BP Capital Markets, PLC, 3.216%, 11/28/2023 | 101,642 | ||
Financial Services—8.9% | ||||
100M | Ameriprise Financial, Inc., 5.3%, 3/15/2020 | 108,173 | ||
100M | BlackRock, Inc., 5%, 12/10/2019 | 107,409 | ||
100M | Protective Life Corp., 7.375%, 10/15/2019 | 111,402 | ||
100M | Prudential Financial, Inc., 7.375%, 6/15/2019 | 110,277 | ||
100M | State Street Bank & Trust, 5.25%, 10/15/2018 | 104,179 | ||
100M | UnitedHealth Group, Inc., 2.7%, 7/15/2020 | 102,149 | ||
643,589 | ||||
Financials—33.1% | ||||
100M | Bank of America Corp., 5.65%, 5/1/2018 | 103,161 | ||
100M | Bank of Montreal, 1.9%, 8/27/2021 | 98,192 | ||
100M | Bank of New York Mellon Corp., 2.05%, 5/3/2021 | 99,139 | ||
100M | Barclays Bank, PLC, 6.75%, 5/22/2019 | 108,476 | ||
100M | Capital One Financial Corp., 3.05%, 3/9/2022 | 100,893 | ||
Citigroup, Inc.: | ||||
100M | 6.125%, 11/21/2017 | 101,718 | ||
100M | 2.75%, 4/25/2022 | 99,953 | ||
250M | Citizens Bank, 2.25%, 3/2/2020 | 249,926 | ||
200M | Danske Bank A/S, 2.7%, 3/2/2022 (a) | 201,415 | ||
100M | Goldman Sachs Group, Inc., 6.15%, 4/1/2018 | 103,228 | ||
JPMorgan Chase & Co.: | ||||
100M | 6%, 1/15/2018 | 102,255 | ||
100M | 4.5%, 1/24/2022 | 108,352 | ||
200M | Lloyds Banking Group, PLC, 3%, 1/11/2022 | 202,187 | ||
200M | Morgan Stanley, 2.3362%, 1/20/2022 † | 202,104 | ||
100M | U.S. Bank NA, 2.125%, 10/28/2019 | 100,777 | ||
200M | UBS Group Funding (Switzerland) AG, 3.491%, 3/23/2023 (a) | 204,849 | ||
100M | Wachovia Corp., 5.75%, 2/1/2018 | 102,351 | ||
100M | Wells Fargo & Co., 4.6%, 4/1/2021 | 107,851 | ||
2,396,827 |
75 |
Portfolio of Investments (continued)
LIMITED DURATION HIGH QUALITY BOND FUND
June 30, 2017
Principal | ||||
Amount | Security | Value | ||
Food/Beverage/Tobacco—8.5% | ||||
$100M | Anheuser-Busch InBev Finance, Inc., 1.9%, 2/1/2019 | $ 100,262 | ||
200M | Ingredion, Inc., 4.625%, 11/1/2020 | 214,535 | ||
100M | Mead Johnson Nutrition Co., 3%, 11/15/2020 | 102,626 | ||
200M | Mondelez International Holdings, Inc., 2%, 10/28/2021 (a) | 195,063 | ||
612,486 | ||||
Forest Products/Containers—1.4% | ||||
100M | Georgia Pacific, LLC, 3.163%, 11/15/2021 (a) | 102,181 | ||
Health Care—2.8% | ||||
100M | AstraZeneca, PLC, 2.375%, 6/12/2022 | 99,834 | ||
100M | Gilead Sciences, Inc., 2.55%, 9/1/2020 | 101,487 | ||
201,321 | ||||
Information Technology—5.6% | ||||
100M | Apple, Inc., 2.5%, 2/9/2022 | 100,950 | ||
Diamond 1 Finance Corp.: | ||||
100M | 3.48%, 6/1/2019 (a) | 102,385 | ||
100M | 4.42%, 6/15/2021 (a) | 105,515 | ||
100M | QUALCOMM, Inc., 2.6%, 1/30/2023 | 99,712 | ||
408,562 | ||||
Real Estate—4.4% | ||||
100M | Boston Properties, LP, 5.875%, 10/15/2019 | 107,273 | ||
100M | Realty Income Corp., 3.25%, 10/15/2022 | 101,624 | ||
100M | Welltower, Inc., 6.125%, 4/15/2020 | 109,814 | ||
318,711 | ||||
Telecommunications—2.7% | ||||
100M | AT&T, Inc., 2.45%, 6/30/2020 | 100,584 | ||
100M | Verizon Communications, Inc., 1.75%, 8/15/2021 | 96,820 | ||
197,404 | ||||
Utilities—4.3% | ||||
100M | Arizona Public Service Co., 8.75%, 3/1/2019 | 110,977 | ||
100M | Ohio Power Co., 6.05%, 5/1/2018 | 103,519 | ||
100M | Wisconsin Public Service Corp., 1.65%, 12/4/2018 | 99,817 | ||
314,313 | ||||
Total Value of Corporate Bonds (cost $5,502,007) | 5,501,551 |
76 |
Principal | |||||||
Amount | Security | Value | |||||
RESIDENTIAL MORTGAGE-BACKED | |||||||
SECURITIES—10.6% | |||||||
Fannie Mae—9.2% | |||||||
$ 38M | 2.5%, 8/1/2030 | $ 38,447 | |||||
433M | 3%, 8/1/2026 – 4/1/2031 | 444,782 | |||||
173M | 3.5%, 12/1/2025 – 12/1/2029 | 180,258 | |||||
663,487 | |||||||
Freddie Mac—1.4% | |||||||
98M | 3%, 8/1/2027 – 8/1/2030 | 100,165 | |||||
Total Value of Residential Mortgage-Backed Securities (cost $768,850) | 763,652 | ||||||
COVERED BONDS—6.5% | |||||||
Financial Services—3.4% | |||||||
250M | Stadshypotek AB, 1.85%, 10/2/2019 (a) | 249,723 | |||||
Financials—3.1% | |||||||
223M | Royal Bank of Canada, 2.2%, 9/23/2019 | 223,932 | |||||
Total Value of Covered Bonds (cost $476,494) | 473,655 | ||||||
U.S. GOVERNMENT OBLIGATIONS—4.6% | |||||||
U.S. Treasury Notes: | |||||||
100M | 1%, 3/15/2019 | 99,395 | |||||
120M | 1.125%, 7/31/2021 | 116,979 | |||||
118M | 1.375%, 4/30/2020 | 117,488 | |||||
Total Value of U.S. Government Obligations (cost $334,227) | 333,862 | ||||||
U.S. GOVERNMENT AGENCY OBLIGATIONS—.7% | |||||||
50M | Freddie Mac, 1.375%, 5/1/2020 (cost $49,788) | 49,688 | |||||
Total Value of Investments (cost $7,131,366) | 98.4 | % | 7,122,408 | ||||
Other Assets, Less Liabilities | 1.6 | 112,457 | |||||
Net Assets | 100.0 | % | $7,234,865 |
(a) | Security exempt from registration under Rule 144A of the Securities Act of 1933 (see Note 5). |
† | Interest rates are determined and reset periodically. The interest rates above are the rates in effect |
at June 30, 2017. |
77 |
Portfolio of Investments (continued)
LIMITED DURATION HIGH QUALITY BOND FUND
June 30, 2017
The Fund’s assets and liabilities are classified into the following three levels based on the inputs used to value the assets and liabilities:
Level 1 — Unadjusted quoted prices in active markets for identical securities that the Fund has the ability to access. |
Level 2 — Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumption about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The inputs methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, U.S. Government securities are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market.
The following is a summary, by category of Level, of inputs used to value the Fund’s investments as of June 30, 2017:
Level 1 | Level 2 | Level 3 | Total | |||||||||
Corporate Bonds | $ | — | $ | 5,501,551 | $ | — | $ | 5,501,551 | ||||
Residential Mortgage Backed | ||||||||||||
Securities | — | 763,652 | — | 763,652 | ||||||||
Covered Bonds | — | 473,655 | — | 473,655 | ||||||||
U.S. Government Obligations | — | 333,862 | — | 333,862 | ||||||||
U.S. Government Agency | ||||||||||||
Obligations | — | 49,688 | — | 49,688 | ||||||||
Total Investments in Securities* | $ | — | $ | 7,122,408 | $ | — | $ | 7,122,408 |
* | The Portfolio of Investments provides information on the industry categorization for corporate bonds |
and covered bonds. | |
There were no transfers into or from Level 1 and Level 2 by the Fund for the period ended | |
June 30, 2017. Transfers, if any, between Levels are recognized at the end of the reporting period. |
78 | See notes to financial statements |
Fund Expenses (unaudited)
OPPORTUNITY FUND
The examples below show the ongoing costs (in dollars) of investing in your Fund and will help you in comparing these costs with costs of other mutual funds. Please refer to page 6 for a detailed explanation of the information presented in these examples.
Beginning | Ending | ||
Account | Account | Expenses Paid | |
Value | Value | During Period | |
(1/1/17) | (6/30/17) | (1/1/17–6/30/17)* | |
Expense Examples | |||
Actual | $1,000.00 | $1,085.34 | $4.29 |
Hypothetical | |||
(5% annual return before expenses) | $1,000.00 | $1,020.67 | $4.16 |
* | Expenses are equal to the annualized expense ratio of .83%, multiplied by the average account |
value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Portfolio Composition
BY SECTOR
Portfolio holdings and allocations are subject to change. Percentages are as of June 30, 2017, and are |
based on the total value of investments. |
79 |
Portfolio of Investments
OPPORTUNITY FUND
June 30, 2017
Shares | Security | Value | ||
COMMON STOCKS—95.4% | ||||
Consumer Discretionary—21.9% | ||||
19,300 | Acushnet Holdings Corporation | $ 382,912 | ||
12,800 | American Eagle Outfitters, Inc. | 154,240 | ||
9,900 | ARAMARK Holdings Corporation | 405,702 | ||
10,200 | * | Belmond, Ltd. – Class “A” | 135,660 | |
11,800 | Big Lots, Inc. | 569,940 | ||
10,600 | BorgWarner, Inc. | 449,016 | ||
8,200 | Coach, Inc. | 388,188 | ||
4,100 | Delphi Automotive, PLC | 359,365 | ||
23,600 | DSW, Inc. – Class “A” | 417,720 | ||
3,500 | Foot Locker, Inc. | 172,480 | ||
13,400 | * | Fox Factory Holding Corporation | 477,040 | |
7,000 | * | Helen of Troy, Ltd. | 658,700 | |
7,900 | HSN, Inc. | 252,010 | ||
8,400 | L Brands, Inc. | 452,676 | ||
2,900 | Lear Corporation | 412,032 | ||
9,300 | * | LKQ Corporation | 306,435 | |
9,600 | Magna International, Inc. | 444,768 | ||
21,000 | * | Michaels Companies, Inc. | 388,920 | |
24,800 | Newell Brands, Inc. | 1,329,776 | ||
5,500 | Nordstrom, Inc. | 263,065 | ||
7,100 | Oxford Industries, Inc. | 443,679 | ||
7,500 | Penske Automotive Group, Inc. | 329,325 | ||
1,400 | Ralph Lauren Corporation | 103,320 | ||
12,400 | Ruth’s Hospitality Group, Inc. | 269,700 | ||
9,600 | * | Select Comfort Corporation | 340,704 | |
18,000 | * | ServiceMaster Global Holdings, Inc. | 705,420 | |
5,400 | * | Taylor Morrison Home Corporation – Class “A” | 129,654 | |
24,500 | * | TRI Pointe Group, Inc. | 323,155 | |
12,200 | Tupperware Brands Corporation | 856,806 | ||
2,600 | Whirlpool Corporation | 498,212 | ||
27,800 | * | William Lyon Homes – Class “A” | 671,092 | |
4,600 | Wolverine World Wide, Inc. | 128,846 | ||
4,100 | Wyndham Worldwide Corporation | 411,681 | ||
13,632,239 | ||||
Consumer Staples—6.0% | ||||
15,800 | B&G Foods, Inc. | 562,480 | ||
4,400 | * | Herbalife, Ltd. | 313,852 | |
30,000 | Koninklijke Ahold Delhaize NV (ADR) | 574,200 | ||
1,200 | McCormick & Company, Inc. | 117,012 | ||
6,400 | Nu Skin Enterprises, Inc. – Class “A” | 402,176 |
80 |
Shares | Security | Value | ||
Consumer Staples (continued) | ||||
16,900 | * | Performance Food Group Company | $ 463,060 | |
9,900 | Pinnacle Foods, Inc. | 588,060 | ||
5,900 | Tootsie Roll Industries, Inc. | 205,615 | ||
18,300 | * | U.S. Foods Holding Corporation | 498,126 | |
3,724,581 | ||||
Energy—2.3% | ||||
1,700 | * | Dril-Quip, Inc. | 82,960 | |
4,600 | EOG Resources, Inc. | 416,392 | ||
5,200 | EQT Corporation | 304,668 | ||
4,900 | Hess Corporation | 214,963 | ||
4,600 | National Oilwell Varco, Inc. | 151,524 | ||
10,500 | PBF Energy, Inc. – Class “A” | 233,730 | ||
1,404,237 | ||||
Financials—14.5% | ||||
4,400 | Ameriprise Financial, Inc. | 560,076 | ||
12,800 | Berkshire Hills Bancorp, Inc. | 449,920 | ||
29,200 | Citizens Financial Group, Inc. | 1,041,856 | ||
13,400 | Discover Financial Services | 833,346 | ||
23,400 | Financial Select Sector SPDR Fund (ETF) | 577,278 | ||
8,800 | First Republic Bank | 880,880 | ||
5,300 | Great Western Bancorp, Inc. | 216,293 | ||
7,500 | IBERIABANK Corporation | 611,250 | ||
5,200 | iShares Core S&P Mid-Cap ETF (ETF) | 904,540 | ||
6,400 | iShares Russell 2000 ETF (ETF) | 901,888 | ||
7,000 | Nasdaq, Inc. | 500,430 | ||
13,100 | SPDR S&P Regional Banking (ETF) | 719,845 | ||
25,700 | Sterling Bancorp | 597,525 | ||
13,100 | Waddell & Reed Financial, Inc. – Class “A” | 247,328 | ||
9,042,455 | ||||
Health Care—12.4% | ||||
2,050 | Allergan, PLC | 498,335 | ||
7,900 | * | AMN Healthcare Services, Inc. | 308,495 | |
13,100 | * | Centene Corporation | 1,046,428 | |
5,800 | * | Charles River Laboratories International, Inc. | 586,670 | |
4,300 | Dentsply Sirona, Inc. | 278,812 | ||
8,200 | Gilead Sciences, Inc. | 580,396 | ||
8,800 | Hill-Rom Holdings, Inc. | 700,568 |
81 |
Portfolio of Investments (continued)
OPPORTUNITY FUND
June 30, 2017
Shares | Security | Value | ||
Health Care (continued) | ||||
20,500 | Phibro Animal Health Corporation – Class “A” | $ 759,525 | ||
13,400 | * | Prestige Brands, Inc. | 707,654 | |
4,300 | Quest Diagnostics, Inc. | 477,988 | ||
6,100 | Thermo Fisher Scientific, Inc. | 1,064,267 | ||
2,900 | * | VCA, Inc. | 267,699 | |
14,000 | * | VWR Corporation | 462,140 | |
7,738,977 | ||||
Industrials—11.9% | ||||
15,200 | A.O. Smith Corporation | 856,216 | ||
6,000 | Apogee Enterprises, Inc. | 341,040 | ||
14,000 | * | Atkore International Group, Inc. | 315,700 | |
2,800 | * | Dycom Industries, Inc. | 250,656 | |
9,300 | ESCO Technologies, Inc. | 554,745 | ||
4,700 | * | Gardner Denver Holdings, Inc. | 101,567 | |
3,800 | Ingersoll-Rand, PLC | 347,282 | ||
4,800 | J.B. Hunt Transport Services, Inc. | 438,624 | ||
14,400 | Korn/Ferry International | 497,232 | ||
5,500 | ManpowerGroup, Inc. | 614,075 | ||
19,300 | Masco Corporation | 737,453 | ||
2,400 | Owens Corning | 160,608 | ||
1,700 | Roper Technologies, Inc. | 393,601 | ||
16,600 | Schneider National, Inc. | 371,342 | ||
2,500 | Snap-On, Inc. | 395,000 | ||
2,900 | Stanley Black & Decker, Inc. | 408,117 | ||
19,000 | Triton International, Ltd. | 635,360 | ||
7,418,618 | ||||
Information Technology—13.3% | ||||
12,800 | * | ARRIS International, PLC | 358,656 | |
2,900 | Broadcom, Ltd. | 675,845 | ||
5,200 | * | Fiserv, Inc. | 636,168 | |
2,600 | * | FleetCor Technologies, Inc. | 374,946 | |
2,900 | Juniper Networks, Inc. | 80,852 | ||
4,100 | Lam Research Corporation | 579,863 | ||
900 | Methode Electronics, Inc. | 37,080 | ||
6,300 | * | Microsemi Corporation | 294,840 | |
6,100 | * | NETGEAR, Inc. | 262,910 | |
15,800 | Sabre Corporation | 343,966 | ||
8,700 | Silicon Motion Technology Corporation (ADR) | 419,601 | ||
26,000 | Symantec Corporation | 734,500 | ||
2,100 | TE Connectivity, Ltd. | 165,228 |
82 |
Shares | Security | Value | ||
Information Technology (continued) | ||||
4,100 | * | Tech Data Corporation | $ 414,100 | |
16,100 | Technology Select Sector SPDR Fund (ETF) | 880,992 | ||
36,800 | Travelport Worldwide, Ltd. | 506,368 | ||
10,800 | Western Digital Corporation | 956,880 | ||
5,800 | * | Zebra Technologies Corporation – Class “A” | 583,016 | |
8,305,811 | ||||
Materials—7.0% | ||||
11,700 | * | Berry Plastics Group, Inc. | 667,017 | |
2,200 | Eastman Chemical Company | 184,778 | ||
10,800 | * | Ferro Corporation | 197,532 | |
8,700 | FMC Corporation | 635,535 | ||
18,300 | * | Louisiana-Pacific Corporation | 441,213 | |
2,300 | Praxair, Inc. | 304,865 | ||
11,300 | Sealed Air Corporation | 505,788 | ||
27,600 | * | Summit Materials, Inc. – Class “A” | 796,812 | |
8,700 | Trinseo SA | 597,690 | ||
4,331,230 | ||||
Real Estate—3.7% | ||||
31,600 | Brixmor Property Group, Inc. (REIT) | 565,008 | ||
8,700 | Douglas Emmett, Inc. (REIT) | 332,427 | ||
3,200 | Federal Realty Investment Trust (REIT) | 404,448 | ||
49,800 | FelCor Lodging Trust, Inc. (REIT) | 359,058 | ||
3,200 | Real Estate Select Sector SPDR Fund (ETF) | 103,040 | ||
2,800 | Sunstone Hotel Investors, Inc. (REIT) | 45,136 | ||
19,300 | Tanger Factory Outlet Centers, Inc. (REIT) | 501,414 | ||
2,310,531 | ||||
Utilities—2.4% | ||||
200 | Black Hills Corporation | 13,494 | ||
4,000 | NiSource, Inc. | 101,440 | ||
8,400 | Portland General Electric Company | 383,796 | ||
3,700 | SCANA Corporation | 247,937 | ||
11,700 | WEC Energy Group, Inc. | 718,146 | ||
1,464,813 | ||||
Total Value of Common Stocks (cost $49,193,217) | 59,373,492 |
83 |
Portfolio of Investments (continued)
OPPORTUNITY FUND
June 30, 2017
Principal | |||||||
Amount | Security | Value | |||||
SHORT-TERM U.S. GOVERNMENT AGENCY | |||||||
OBLIGATIONS—2.8% | |||||||
Federal Home Loan Bank: | |||||||
$750M | 0.9%, 7/19/2017 | $ 749,670 | |||||
500M | 0.99%, 8/2/2017 | 499,579 | |||||
500M | 1.01%, 8/4/2017 | 499,551 | |||||
Total Value of Short-Term U.S. Government Agency Obligations (cost $1,748,745) | 1,748,800 | ||||||
Total Value of Investments (cost $50,941,962) | 98.2 | % | 61,122,292 | ||||
Other Assets, Less Liabilities | 1.8 | 1,118,109 | |||||
Net Assets | 100.0 | % | $62,240,401 |
* | Non-income producing | |
Summary of Abbreviations: | ||
ADR | American Depositary Receipts | |
ETF | Exchange Traded Fund | |
REIT | Real Estate Investment Trust |
84 |
The Fund’s assets and liabilities are classified into the following three levels based on the inputs used to value the assets and liabilities:
Level 1 — Unadjusted quoted prices in active markets for identical securities that the Fund has the ability to access. |
Level 2 — Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumption about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The inputs methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, U.S. Government securities are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market.
The following is a summary, by category of Level, of inputs used to value the Fund’s investments as of June 30, 2017:
Level 1 | Level 2 | Level 3 | Total | |||||||||
Common Stocks | $ | 59,373,492 | $ | — | $ | — | $ | 59,373,492 | ||||
Short-Term U.S. Government | ||||||||||||
Agency Obligations | — | 1,748,800 | — | 1,748,800 | ||||||||
Total Investments in Securities* | $ | 59,373,492 | $ | 1,748,800 | $ | — | $ | 61,122,292 |
* | The Portfolio of Investments provides information on the industry categorization for common stocks. |
There were no transfers into or from Level 1 and Level 2 by the Fund for the period ended | |
June 30, 2017. Transfers, if any, between Levels are recognized at the end of the reporting period. |
See notes to financial statements | 85 |
Fund Expenses (unaudited)
REAL ESTATE FUND
The examples below show the ongoing costs (in dollars) of investing in your Fund and will help you in comparing these costs with costs of other mutual funds. Please refer to page 6 for a detailed explanation of the information presented in these examples.
Beginning | Ending | ||
Account | Account | Expenses Paid | |
Value | Value | During Period | |
(1/1/17) | (6/30/17) | (1/1/17–6/30/17)* | |
Expense Examples | |||
Actual | $1,000.00 | $990.34 | $5.58 |
Hypothetical | |||
(5% annual return before expenses) | $1,000.00 | $1,019.19 | $5.66 |
* | Expenses are equal to the annualized expense ratio of 1.13%, multiplied by the average account |
value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Portfolio Composition
TOP TEN SECTORS
Portfolio holdings and allocations are subject to change. Percentages are as of June 30, 2017, and are |
based on the total value of investments. |
86 |
Portfolio of Investments
REAL ESTATE FUND
June 30, 2017
Shares | Security | Value | ||
COMMON STOCKS—97.0% | ||||
Apartments REITs—11.4% | ||||
1,112 | Apartment Investment & Management Company – Class “A” | $ 47,783 | ||
1,016 | AvalonBay Communities, Inc. | 195,245 | ||
539 | Camden Property Trust | 46,090 | ||
3,464 | Equity Residential | 228,035 | ||
311 | Essex Property Trust, Inc. | 80,011 | ||
1,078 | Mid-America Apartment Communities | 113,600 | ||
512 | UDR, Inc. | 19,953 | ||
730,717 | ||||
Diversified REITs—7.2% | ||||
266 | CoreCivic, Inc. | 7,336 | ||
136 | CorEnergy Infrastructure Trust, Inc. | 4,568 | ||
88 | Digital Realty Trust, Inc. | 9,940 | ||
1,816 | Duke Realty Corporation | 50,757 | ||
141 | DuPont Fabros Technology, Inc. | 8,624 | ||
2,148 | Forest City Realty Trust, Inc. | 51,917 | ||
205 | Liberty Property Trust | 8,346 | ||
5,005 | Uniti Group, Inc. | 125,826 | ||
1,903 | Vornado Realty Trust | 178,692 | ||
1,099 | Whitestone REIT | 13,463 | ||
459,469 | ||||
Health Care REITs—11.6% | ||||
3,484 | Care Capital Properties, Inc. | 93,023 | ||
4,263 | HCP, Inc. | 136,245 | ||
110 | Healthcare Realty Trust, Inc. | 3,756 | ||
183 | Healthcare Trust of America, Inc. | 5,693 | ||
207 | LTC Properties, Inc. | 10,638 | ||
608 | Omega Heathcare Investors, Inc. | 20,076 | ||
1,141 | * | Quality Care Properties | 20,892 | |
2,637 | Senior Housing Properties Trust | 53,900 | ||
2,833 | Ventas, Inc. | 196,837 | ||
2,701 | Welltower, Inc. | 202,170 | ||
743,230 |
87 |
Portfolio of Investments (continued)
REAL ESTATE FUND
June 30, 2017
Shares | Security | Value | ||
Hotels REITs—2.4% | ||||
998 | Hospitality Properties Trust | $ 29,092 | ||
4,769 | Host Hotels & Resorts, Inc. | 87,130 | ||
1,033 | LaSalle Hotel Properties | 30,783 | ||
515 | Sunstone Hotel Investors, Inc. | 8,302 | ||
155,307 | ||||
Manufactured Homes REITs—2.5% | ||||
1,225 | Equity LifeStyle Properties, Inc. | 105,766 | ||
621 | Sun Communities, Inc. | 54,455 | ||
160,221 | ||||
Mortgage REITs—.1% | ||||
372 | AGNC Investment Corporation | 7,920 | ||
Office Property REITs—9.0% | ||||
543 | Alexandria Real Estate Equities, Inc. | 65,415 | ||
1,552 | Boston Properties, Inc. | 190,927 | ||
293 | Brandywine Realty Trust | 5,136 | ||
953 | City Office REIT, Inc. | 12,103 | ||
1,070 | Corporate Office Properties Trust | 37,482 | ||
304 | Douglas Emmett, Inc. | 11,616 | ||
436 | Empire State Realty Trust, Inc. – Class “A” | 9,056 | ||
1,272 | * | Equity Commonwealth | 40,195 | |
44 | Franklin Street Properties Corporation | 488 | ||
640 | Mack-Cali Realty Corporation | 17,370 | ||
2,624 | New York REIT, Inc. | 22,671 | ||
3,632 | Paramount Group, Inc. | 58,112 | ||
767 | Piedmont Office Realty Trust, Inc. – Class “A” | 16,168 | ||
353 | SL Green Realty Corporation | 37,347 | ||
2,716 | Tier REIT, Inc. | 50,192 | ||
574,278 | ||||
Real Estate Services—3.1% | ||||
7,419 | * | Marcus & Millichap, Inc. | 195,565 | |
Regional Malls REITs—26.4% | ||||
9,461 | CBL & Associates Properties, Inc. | 79,756 | ||
13,901 | GGP, Inc. | 327,508 | ||
3,565 | Macerich Company | 206,984 | ||
2,268 | Pennsylvania Real Estate Investment Trust | 25,674 | ||
3,773 | Simon Property Group, Inc. | 610,320 |
88 |
Shares | Security | Value | ||
Regional Malls REITs continued | ||||
8,603 | Tanger Factory Outlet Centers, Inc. | $ 223,506 | ||
3,086 | Taubman Centers, Inc. | 183,771 | ||
3,449 | Washington Prime Group, Inc. | 28,868 | ||
1,686,387 | ||||
Shopping Centers REITs—4.0% | ||||
103 | Acadia Realty Trust | 2,863 | ||
1,539 | Brixmor Property Group, Inc. | 27,517 | ||
308 | Cedar Realty Trust, Inc. | 1,494 | ||
4,035 | DDR Corporation | 36,597 | ||
602 | Federal Realty Investment Trust | 76,087 | ||
992 | Kimco Realty Corporation | 18,203 | ||
396 | Kite Realty Group Trust | 7,496 | ||
169 | Ramco-Gershenson Properties Trust | 2,180 | ||
315 | Regency Centers Corporation | 19,732 | ||
3,522 | Retail Properties of America, Inc. – Class “A” | 43,004 | ||
652 | Weingarten Realty Investors | 19,625 | ||
254,798 | ||||
Single Tenant REITs—3.0% | ||||
5,571 | Select Income REIT | 133,871 | ||
5,034 | Spirit Realty Capital, Inc. | 37,302 | ||
843 | STORE Capital Corporation | 18,925 | ||
513 | VEREIT, Inc. | 4,176 | ||
194,274 | ||||
Storage REITs—14.9% | ||||
2,607 | CubeSmart | 62,672 | ||
2,961 | Extra Space Storage, Inc. | 230,958 | ||
90 | Iron Mountain, Inc. | 3,092 | ||
3,048 | Life Storage, Inc. | 225,857 | ||
2,067 | Public Storage | 431,031 | ||
953,610 | ||||
Student Housing REITs—.3% | ||||
452 | American Campus Communities, Inc. | 21,380 |
89 |
Portfolio of Investments (continued)
REAL ESTATE FUND
June 30, 2017
Shares | Security | Value | |||||
Warehouse/Industrial REITs—1.1% | |||||||
81 | DCT Industrial Trust, Inc. | $ 4,329 | |||||
39 | EastGroup Properties, Inc. | 3,268 | |||||
194 | First Industrial Realty Trust, Inc. | 5,552 | |||||
992 | Prologis, Inc. | 58,171 | |||||
71,320 | |||||||
Total Value of Common Stocks (cost $6,048,161) | 97.0 | % | 6,208,476 | ||||
Other Assets, Less Liabilities | 3.0 | 190,441 | |||||
Net Assets | 100.0 | % | $6,398,917 |
* | Non-income producing | |
Summary of Abbreviations: | ||
REITs | Real Estate Investment Trusts |
90 |
The Fund’s assets and liabilities are classified into the following three levels based on the inputs used to value the assets and liabilities:
Level 1 — Unadjusted quoted prices in active markets for identical securities that the Fund has the ability to access. |
Level 2 — Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumption about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The inputs methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, U.S. Government securities are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market.
The following is a summary, by category of Level, of inputs used to value the Fund’s investments as of June 30, 2017:
Level 1 | Level 2 | Level 3 | Total | |||||||||
Common Stocks* | $ | 6,208,476 | $ | — | $ | — | $ | 6,208,476 |
* | The Portfolio of Investments provides information on the industry categorization for common stocks. |
There were no transfers into or from Level 1 and Level 2 by the Fund for the period ended | |
June 30, 2017. Transfers, if any, between Levels are recognized at the end of the reporting period. |
See notes to financial statements | 91 |
Fund Expenses (unaudited)
SELECT GROWTH FUND
The examples below show the ongoing costs (in dollars) of investing in your Fund and will help you in comparing these costs with costs of other mutual funds. Please refer to page 6 for a detailed explanation of the information presented in these examples.
Beginning | Ending | ||
Account | Account | Expenses Paid | |
Value | Value | During Period | |
(1/1/17) | (6/30/17) | (1/1/17–6/30/17)* | |
Expense Examples | |||
Actual | $1,000.00 | $1,134.67 | $4.34 |
Hypothetical | |||
(5% annual return before expenses) | $1,000.00 | $1,020.72 | $4.11 |
* | Expenses are equal to the annualized expense ratio of .82%, multiplied by the average account |
value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Portfolio Composition
BY SECTOR
Portfolio holdings and allocations are subject to change. Percentages are as of June 30, 2017, and are |
based on the total value of investments. |
92 |
Portfolio of Investments
SELECT GROWTH FUND
June 30, 2017
Shares | Security | Value | ||
COMMON STOCKS—98.0% | ||||
Consumer Discretionary—15.9% | ||||
15,625 | Home Depot, Inc. | $ 2,396,875 | ||
9,300 | Lear Corporation | 1,321,344 | ||
10,900 | McDonald’s Corporation | 1,669,444 | ||
25,400 | Nordstrom, Inc. | 1,214,882 | ||
12,700 | PVH Corporation | 1,454,150 | ||
14,700 | Wyndham Worldwide Corporation | 1,476,027 | ||
9,532,722 | ||||
Consumer Staples—4.9% | ||||
31,600 | Sysco Corporation | 1,590,428 | ||
17,700 | Wal-Mart Stores, Inc. | 1,339,536 | ||
2,929,964 | ||||
Energy—1.7% | ||||
5,260 | Chevron Corporation | 548,776 | ||
5,680 | ExxonMobil Corporation | 458,546 | ||
1,007,322 | ||||
Financials—12.4% | ||||
29,200 | Bank of New York Mellon Corporation | 1,489,784 | ||
15,390 | Discover Financial Services | 957,104 | ||
16,500 | JPMorgan Chase & Company | 1,508,100 | ||
22,500 | SunTrust Banks, Inc. | 1,276,200 | ||
6,600 | Travelers Companies, Inc. | 835,098 | ||
25,900 | U.S. Bancorp | 1,344,728 | ||
7,411,014 | ||||
Health Care—19.0% | ||||
27,500 | Baxter International, Inc. | 1,664,850 | ||
13,700 | * | Celgene Corporation | 1,779,219 | |
22,300 | * | Centene Corporation | 1,781,324 | |
39,600 | * | Hologic, Inc. | 1,797,048 | |
20,800 | Merck & Company, Inc. | 1,333,072 | ||
14,000 | * | Varian Medical Systems, Inc. | 1,444,660 | |
8,400 | * | Waters Corporation | 1,544,256 | |
11,344,429 |
93 |
Portfolio of Investments (continued)
SELECT GROWTH FUND
June 30, 2017
Shares | Security | Value | |||||
Industrials—12.8% | |||||||
18,100 | Eaton Corporation, PLC | $ 1,408,723 | |||||
23,000 | Emerson Electric Company | 1,371,260 | |||||
9,400 | General Dynamics Corporation | 1,862,140 | |||||
6,600 | Huntington Ingalls Industries, Inc. | 1,228,656 | |||||
11,200 | Parker Hannifin Corporation | 1,789,984 | |||||
7,660,763 | |||||||
Information Technology—28.8% | |||||||
18,300 | * | Adobe Systems, Inc. | 2,588,352 | ||||
1,600 | * | Alphabet, Inc. – Class “A” | 1,487,488 | ||||
15,000 | * | Arista Networks, Inc. | 2,246,850 | ||||
68,100 | * | Cadence Design Systems, Inc. | 2,280,669 | ||||
18,300 | * | Citrix Systems, Inc. | 1,456,314 | ||||
14,400 | * | Facebook, Inc. – Class “A” | 2,174,112 | ||||
7,800 | * | FleetCor Technologies, Inc. | 1,124,838 | ||||
37,500 | NetApp, Inc. | 1,501,875 | |||||
32,500 | * | Take-Two Interactive Software | 2,384,850 | ||||
17,245,348 | |||||||
Materials—2.5% | |||||||
15,700 | Celanese Corporation – Series “A” | 1,490,558 | |||||
Total Value of Common Stocks (cost $47,819,281) | 58,622,120 | ||||||
SHORT-TERM U.S. GOVERNMENT AGENCY | |||||||
OBLIGATIONS—.8% | |||||||
$500M | Federal Home Loan Bank, 0.98%, 8/11/2017 (cost $499,442) | 499,453 | |||||
Total Value of Investments (cost $48,318,723) | 98.8 | % | 59,121,573 | ||||
Other Assets, Less Liabilities | 1.2 | 707,839 | |||||
Net Assets | 100.0 | % | $59,829,412 |
* | Non-income producing |
94 |
The Fund’s assets and liabilities are classified into the following three levels based on the inputs used to value the assets and liabilities:
Level 1 — Unadjusted quoted prices in active markets for identical securities that the Fund has the ability to access. |
Level 2 — Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumption about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The inputs methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, U.S. Government securities are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market.
The following is a summary, by category of Level, of inputs used to value the Fund’s investments as of June 30, 2017:
Level 1 | Level 2 | Level 3 | Total | |||||||||
Common Stocks | $ | 58,622,120 | $ | — | $ | — | $ | 58,622,120 | ||||
Short-Term U.S. Government | ||||||||||||
Agency Obligations | — | 499,453 | — | 499,453 | ||||||||
Total Investments in Securities* | $ | 58,622,120 | $ | 499,453 | $ | — | $ | 59,121,573 |
* | The Portfolio of Investments provides information on the industry categorization for common stocks. |
There were no transfers into or from Level 1 and Level 2 by the Fund for the period ended | |
June 30, 2017. Transfers, if any, between Levels are recognized at the end of the reporting period. |
See notes to financial statements | 95 |
Fund Expenses (unaudited)
SPECIAL SITUATIONS FUND
The examples below show the ongoing costs (in dollars) of investing in your Fund and will help you in comparing these costs with costs of other mutual funds. Please refer to page 6 for a detailed explanation of the information presented in these examples.
Beginning | Ending | ||
Account | Account | Expenses Paid | |
Value | Value | During Period | |
(1/1/17) | (6/30/17) | (1/1/17–6/30/17)* | |
Expense Examples | |||
Actual | $1,000.00 | $1,068.74 | $4.10 |
Hypothetical | |||
(5% annual return before expenses) | $1,000.00 | $1,020.82 | $4.01 |
* | Expenses are equal to the annualized expense ratio of .80%, multiplied by the average account |
value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Portfolio Composition
BY SECTOR
Portfolio holdings and allocations are subject to change. Percentages are as of June 30, 2017, and are |
based on the total value of investments. |
96 |
Portfolio of Investments
SPECIAL SITUATIONS FUND
June 30, 2017
Shares | Security | Value | |
COMMON STOCKS—96.9% | |||
Consumer Discretionary—17.0% | |||
107,000 | * | 1-800-FLOWERS.COM, Inc. | $ 1,043,250 |
57,000 | Acushnet Holdings Corporation | 1,130,880 | |
58,500 | American Eagle Outfitters, Inc. | 704,925 | |
76,500 | * | Belmond, Ltd. | 1,017,450 |
114,000 | * | Century Communities, Inc. | 2,827,200 |
60,500 | DSW, Inc. – Class “A” | 1,070,850 | |
108,000 | Entravision Communications Corporation – Class “A” | 712,800 | |
138,500 | * | Fox Factory Holding Corporation | 4,930,600 |
12,500 | * | Helen of Troy, Ltd. | 1,176,250 |
72,000 | * | Live Nation Entertainment, Inc. | 2,509,200 |
32,500 | * | LKQ Corporation | 1,070,875 |
31,800 | * | Malibu Boats, Inc. | 822,666 |
40,500 | * | Michaels Companies, Inc. | 750,060 |
38,500 | * | Motorcar Parts of America, Inc. | 1,087,240 |
54,500 | Newell Brands, Inc. | 2,922,290 | |
28,500 | Oxford Industries, Inc. | 1,780,965 | |
29,500 | Penske Automotive Group, Inc. | 1,295,345 | |
82,500 | Regal Entertainment Group – Class “A” | 1,687,950 | |
48,500 | Ruth’s Hospitality Group, Inc. | 1,054,875 | |
71,500 | * | ServiceMaster Holdings, Inc. | 2,802,085 |
18,000 | * | Taylor Morrison Home Corporation – Class “A” | 432,180 |
132,000 | * | TRI Pointe Group, Inc. | 1,741,080 |
24,500 | Tupperware Brands Corporation | 1,720,635 | |
19,000 | * | Visteon Corporation | 1,939,140 |
74,000 | * | William Lyon Homes – Class “A” | 1,786,360 |
40,017,151 | |||
Consumer Staples—3.7% | |||
58,000 | B&G Foods, Inc. | 2,064,800 | |
52,500 | * | Performance Food Group Company | 1,438,500 |
39,000 | Pinnacle Foods, Inc. | 2,316,600 | |
36,500 | Tootsie Roll Industries, Inc. | 1,272,025 | |
63,500 | * | U.S. Foods Holding Corporation | 1,728,470 |
8,820,395 |
97 |
Portfolio of Investments (continued)
SPECIAL SITUATIONS FUND
June 30, 2017
Shares | Security | Value | |
Energy—2.0% | |||
16,500 | Delek U.S. Holdings, Inc. | $ 436,260 | |
19,500 | * | Dril-Quip, Inc. | 951,600 |
90,000 | * | Jagged Peak Energy, Inc. | 1,201,500 |
36,000 | PBF Energy, Inc. – Class “A” | 801,360 | |
14,000 | * | Tesoro Corporation | 1,310,400 |
4,701,120 | |||
Financials—20.1% | |||
56,500 | AllianceBernstein Holding, LP (MLP) | 1,336,225 | |
54,500 | American Financial Group, Inc. | 5,415,665 | |
38,500 | Aspen Insurance Holdings, Ltd. | 1,919,225 | |
68,500 | * | Atlas Financial Holdings, Inc. | 1,020,650 |
81,500 | Berkshire Hills Bancorp, Inc. | 2,864,725 | |
56,000 | Brown & Brown, Inc. | 2,411,920 | |
28,000 | * | Capstar Financial Holdings, Inc. | 496,720 |
59,500 | Citizens Financial Group, Inc. | 2,122,960 | |
38,500 | * | FCB Financial Holdings, Inc. – Class “A” | 1,838,375 |
111,500 | Financial Select Sector SPDR Fund (ETF) | 2,750,705 | |
44,000 | Great Western Bancorp, Inc. | 1,795,640 | |
69,500 | * | Green Bancorp, Inc. | 1,348,300 |
46,000 | Guaranty Bancorp | 1,251,200 | |
20,300 | IBERIABANK Corporation | 1,654,450 | |
8,000 | iShares Russell 2000 ETF (ETF) | 1,127,360 | |
75,500 | OceanFirst Financial Corporation | 2,047,560 | |
35,500 | Prosperity Bancshares, Inc. | 2,280,520 | |
22,000 | QCR Holdings, Inc. | 1,042,800 | |
61,500 | * | Seacoast Banking Corporation | 1,482,150 |
32,500 | Simmons First National Corporation – Class “A” | 1,719,250 | |
51,500 | SPDR S&P Regional Banking (ETF) | 2,829,925 | |
179,500 | Sterling Bancorp | 4,173,375 | |
136,000 | TCF Financial Corporation | 2,167,840 | |
19,500 | Waddell & Reed Financial, Inc. – Class “A” | 368,160 | |
47,465,700 | |||
Health Care—11.4% | |||
24,500 | * | ANI Pharmaceuticals, Inc. | 1,146,600 |
24,000 | * | Cambrex Corporation | 1,434,000 |
59,000 | * | Centene Corporation | 4,712,920 |
15,500 | * | Charles River Laboratories | 1,567,825 |
58,500 | * | DepoMed, Inc. | 628,290 |
41,000 | Hill-Rom Holdings, Inc. | 3,264,010 |
98 |
Shares | Security | Value | |
Health Care (continued) | |||
13,000 | * | ICON, PLC | $ 1,271,270 |
64,000 | * | Integra LifeSciences Holdings Corporation | 3,488,640 |
46,500 | PerkinElmer, Inc. | 3,168,510 | |
69,500 | Phibro Animal Health Corporation – Class “A” | 2,574,975 | |
16,500 | * | VCA, Inc. | 1,523,115 |
60,000 | * | VWR Corporation | 1,980,600 |
26,760,755 | |||
Industrials—13.6% | |||
70,000 | A.O. Smith Corporation | 3,943,100 | |
23,000 | Apogee Enterprises, Inc. | 1,307,320 | |
58,500 | * | Atkore International Group, Inc. | 1,319,175 |
26,400 | Comfort Systems USA, Inc. | 979,440 | |
52,000 | Esco Technologies, Inc. | 3,101,800 | |
33,000 | * | Gardner Denver Holdings, Inc. | 713,130 |
29,000 | ITT, Inc. | 1,165,220 | |
31,000 | Masco Corporation | 1,184,510 | |
138,000 | * | NCI Building Systems, Inc. | 2,304,600 |
44,500 | Orbital ATK, Inc. | 4,377,020 | |
10,000 | Owens Corning | 669,200 | |
22,500 | * | Patrick Industries, Inc. | 1,639,125 |
15,000 | Regal Beloit Corporation | 1,223,250 | |
60,000 | Schneider National, Inc. – Class “B” | 1,342,200 | |
12,000 | Snap-On, Inc. | 1,896,000 | |
48,500 | * | SPX Corporation | 1,220,260 |
17,000 | Standex International Corporation | 1,541,900 | |
65,500 | Triton International, Ltd. | 2,190,320 | |
32,117,570 | |||
Information Technology—12.0% | |||
52,300 | * | ARRIS International, PLC | 1,465,446 |
76,500 | * | Autobytel, Inc. | 964,665 |
43,500 | * | Axcelis Technologies, Inc. | 911,325 |
65,500 | * | CommScope Holding Company, Inc. | 2,490,965 |
112,500 | * | Extreme Networks, Inc. | 1,037,250 |
14,500 | Hackett Group, Inc. | 224,750 | |
24,000 | * | IAC/InterActiveCorp | 2,477,760 |
16,000 | Lam Research Corporation | 2,262,880 | |
54,000 | * | Microsemi Corporation | 2,527,200 |
33,500 | MKS Instruments, Inc. | 2,254,550 | |
63,000 | * | Orbotech, Ltd. | 2,055,060 |
60,000 | * | Perficient, Inc. | 1,118,400 |
99 |
Portfolio of Investments (continued)
SPECIAL SITUATIONS FUND
June 30, 2017
Shares | Security | Value | |
Information Technology (continued) | |||
45,600 | Silicon Motion Technology Corporation (ADR) | $ 2,199,288 | |
110,500 | Travelport Worldwide, Ltd. | 1,520,480 | |
28,500 | Western Digital Corporation | 2,525,100 | |
22,500 | * | Zebra Technologies Corporation – Class “A” | 2,261,700 |
28,296,819 | |||
Materials—9.2% | |||
43,000 | AptarGroup, Inc. | 3,734,980 | |
36,000 | * | Berry Global Group, Inc. | 2,052,360 |
153,000 | * | Ferro Corporation | 2,798,370 |
68,000 | * | Louisiana-Pacific Corporation | 1,639,480 |
24,500 | Sealed Air Corporation | 1,096,620 | |
22,000 | Sensient Technologies Corporation | 1,771,660 | |
96,000 | * | Summit Materials, Inc. – Class “A” | 2,771,520 |
61,500 | Trinseo SA | 4,225,050 | |
29,500 | WestRock Company | 1,671,470 | |
21,761,510 | |||
Real Estate—5.1% | |||
89,500 | Brixmor Property Group, Inc. (REIT) | 1,600,260 | |
74,000 | Douglas Emmett, Inc. (REIT) | 2,827,540 | |
19,000 | Federal Realty Investment Trust (REIT) | 2,401,410 | |
177,500 | FelCor Lodging Trust, Inc. (REIT) | 1,279,775 | |
71,500 | Sunstone Hotel Investors, Inc. (REIT) | 1,152,580 | |
69,500 | Tanger Factory Outlet Centers, Inc. (REIT) | 1,805,610 | |
52,000 | Urstadt Biddle Properties, Inc. – Class “A” (REIT) | 1,029,600 | |
12,096,775 | |||
Utilities—2.8% | |||
17,500 | Pinnacle West Capital Corporation | 1,490,300 | |
42,500 | Portland General Electric Company | 1,941,825 | |
18,000 | SCANA Corporation | 1,206,180 | |
30,500 | WEC Energy Group, Inc. | 1,872,090 | |
6,510,395 | |||
Total Value of Common Stocks (cost $167,831,382) | 228,548,190 |
100 |
Principal | |||||||
Amount | Security | Value | |||||
SHORT-TERM U.S. GOVERNMENT AGENCY | |||||||
OBLIGATIONS—2.1% | |||||||
Federal Home Loan Bank: | |||||||
$ 500M | 0.92%, 7/13/2017 | $ 499,863 | |||||
1,000M | 0.935%, 7/17/2017 | 999,615 | |||||
500M | 0.98%, 8/11/2017 | 499,453 | |||||
1,000M | 0.99%, 8/2/2017 | 999,158 | |||||
1,500M | 1%, 7/19/2017 | 1,499,340 | |||||
500M | 1.01%, 8/4/2017 | 499,551 | |||||
Total Value of Short-Term U.S. Government Agency Obligations (cost $4,996,765) | 4,996,980 | ||||||
Total Value of Investments (cost $172,828,147) | 99.0 | % | 233,545,170 | ||||
Other Assets, Less Liabilities | 1.0 | 2,355,413 | |||||
Net Assets | 100.0 | % | $235,900,583 |
* | Non-income producing | |
Summary of Abbreviations: | ||
ADR | American Depositary Receipts | |
ETF | Exchange Traded Fund | |
MLP | Master Limited Partnership | |
REIT | Real Estate Investment Trust |
101 |
Portfolio of Investments (continued)
SPECIAL SITUATIONS FUND
June 30, 2017
The Fund’s assets and liabilities are classified into the following three levels based on the inputs used to value the assets and liabilities:
Level 1 — Unadjusted quoted prices in active markets for identical securities that the Fund has the ability to access. |
Level 2 — Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumption about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The inputs methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, U.S. Government securities are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market.
The following is a summary, by category of Level, of inputs used to value the Fund’s investments as of June 30, 2017:
Level 1 | Level 2 | Level 3 | Total | |||||||||
Common Stocks | $ | 228,548,190 | $ | — | $ | — | $ | 228,548,190 | ||||
Short-Term U.S. Government | ||||||||||||
Agency Obligations | — | 4,996,980 | — | 4,996,980 | ||||||||
Total Investments in Securities* | $ | 228,548,190 | $ | 4,996,980 | $ | — | $ | 233,545,170 |
* | The Portfolio of Investments provides information on the industry categorization for common stocks. |
There were no transfers into or from Level 1 and Level 2 by the Fund for the period ended | |
June 30, 2017. Transfers, if any, between Levels are recognized at the end of the reporting period. |
102 | See notes to financial statements |
Fund Expenses (unaudited)
TOTAL RETURN FUND
The examples below show the ongoing costs (in dollars) of investing in your Fund and will help you in comparing these costs with costs of other mutual funds. Please refer to page 6 for a detailed explanation of the information presented in these examples.
Beginning | Ending | ||
Account | Account | Expenses Paid | |
Value | Value | During Period | |
(1/1/17) | (6/30/17) | (1/1/17–6/30/17)* | |
Expense Examples | |||
Actual | $1,000.00 | $1,048.81 | $4.37 |
Hypothetical | |||
(5% annual return before expenses) | $1,000.00 | $1,020.53 | $4.31 |
* | Expenses are equal to the annualized expense ratio of .86%, multiplied by the average account |
value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Portfolio Composition
TOP TEN SECTORS
Portfolio holdings and allocations are subject to change. Percentages are as of June 30, 2017, and are |
based on the total value of investments. |
103 |
Portfolio of Investments
TOTAL RETURN FUND
June 30, 2017
Shares | Security | Value | |
COMMON STOCKS—57.4% | |||
Consumer Discretionary—9.4% | |||
5,600 | Acushnet Holdings Corporation | $ 111,104 | |
551 | Adient, PLC | 36,024 | |
4,000 | American Eagle Outfitters, Inc. | 48,200 | |
2,800 | ARAMARK Holdings Corporation | 114,744 | |
4,100 | Big Lots, Inc. | 198,030 | |
3,900 | BorgWarner, Inc. | 165,204 | |
5,550 | CBS Corporation – Class “B” | 353,979 | |
2,000 | Coach, Inc. | 94,680 | |
1,400 | Delphi Automotive, PLC | 122,710 | |
6,600 | DSW, Inc. – Class “A” | 116,820 | |
1,100 | Foot Locker, Inc. | 54,208 | |
9,300 | Ford Motor Company | 104,067 | |
2,500 | Home Depot, Inc. | 383,500 | |
1,800 | HSN, Inc. | 57,420 | |
3,400 | L Brands, Inc. | 183,226 | |
1,050 | Lear Corporation | 149,184 | |
3,150 | Magna International, Inc. | 145,940 | |
4,000 | * | Michaels Companies, Inc. | 74,080 |
9,058 | Newell Brands, Inc. | 485,690 | |
2,400 | Oxford Industries, Inc. | 149,976 | |
1,800 | Penske Automotive Group, Inc. | 79,038 | |
2,500 | * | Select Comfort Corporation | 88,725 |
4,000 | Tupperware Brands Corporation | 280,920 | |
2,200 | Walt Disney Company | 233,750 | |
900 | Whirlpool Corporation | 172,458 | |
1,350 | Wyndham Worldwide Corporation | 135,554 | |
4,139,231 | |||
Consumer Staples—5.8% | |||
6,750 | Altria Group, Inc. | 502,672 | |
4,800 | B&G Foods, Inc. | 170,880 | |
5,000 | Coca-Cola Company | 224,250 | |
4,000 | CVS Health Corporation | 321,840 | |
8,913 | Koninklijke Ahold Delhaize NV (ADR) | 170,595 | |
2,100 | Nu Skin Enterprises, Inc. – Class “A” | 131,964 | |
2,300 | PepsiCo, Inc. | 265,627 | |
4,100 | Philip Morris International, Inc. | 481,545 | |
1,450 | Procter & Gamble Company | 126,368 | |
2,250 | Wal-Mart Stores, Inc. | 170,280 | |
2,566,021 |
104 |
Shares | Security | Value | |
Energy—3.2% | |||
1,800 | Anadarko Petroleum Corporation | $ 81,612 | |
500 | Chevron Corporation | 52,165 | |
3,100 | ConocoPhillips | 136,276 | |
2,400 | Devon Energy Corporation | 76,728 | |
2,750 | ExxonMobil Corporation | 222,007 | |
1,400 | Hess Corporation | 61,418 | |
4,000 | Marathon Oil Corporation | 47,400 | |
5,400 | Marathon Petroleum Corporation | 282,582 | |
1,300 | Occidental Petroleum Corporation | 77,831 | |
1,400 | PBF Energy, Inc. – Class “A” | 31,164 | |
1,550 | Phillips 66 | 128,170 | |
600 | Schlumberger, Ltd. | 39,504 | |
5,200 | Suncor Energy, Inc. | 151,840 | |
1,388,697 | |||
Financials—8.9% | |||
3,800 | American Express Company | 320,112 | |
2,300 | American International Group, Inc. | 143,796 | |
2,200 | Ameriprise Financial, Inc. | 280,038 | |
1,700 | Chubb, Ltd. | 247,146 | |
7,500 | Citizens Financial Group, Inc. | 267,600 | |
4,450 | Discover Financial Services | 276,745 | |
7,100 | Financial Select Sector SPDR Fund (ETF) | 175,157 | |
1,800 | Hamilton Lane, Inc. – Class “A” | 39,582 | |
2,300 | IBERIABANK Corporation | 187,450 | |
1,100 | iShares Russell 2000 ETF (ETF) | 155,012 | |
6,000 | JPMorgan Chase & Company | 548,400 | |
3,200 | MetLife, Inc. | 175,808 | |
700 | Morgan Stanley | 31,192 | |
2,050 | PNC Financial Services Group, Inc. | 255,983 | |
3,200 | SPDR S&P Regional Banking (ETF) | 175,840 | |
6,700 | Sterling Bancorp | 155,775 | |
5,000 | U.S. Bancorp | 259,600 | |
4,000 | Wells Fargo & Company | 221,640 | |
3,916,876 | |||
Health Care—9.0% | |||
5,950 | Abbott Laboratories | 289,229 | |
4,700 | AbbVie, Inc. | 340,797 | |
200 | Allergan, PLC | 48,618 | |
3,300 | * | AMN Healthcare Services, Inc. | 128,865 |
105 |
Portfolio of Investments (continued)
TOTAL RETURN FUND
June 30, 2017
Shares | Security | Value | |
Health Care (continued) | |||
2,317 | Baxter International, Inc. | $ 140,271 | |
1,400 | * | Centene Corporation | 111,832 |
4,300 | Gilead Sciences, Inc. | 304,354 | |
1,250 | Hill-Rom Holdings, Inc. | 99,512 | |
3,750 | Johnson & Johnson | 496,087 | |
118 | * | Mallinckrodt, PLC | 5,288 |
1,850 | Medtronic, PLC | 164,188 | |
4,600 | Merck & Company, Inc. | 294,814 | |
1,600 | * | Mylan NV (ADR) | 62,112 |
12,200 | Pfizer, Inc. | 409,798 | |
4,100 | Phibro Animal Health Corporation – Class “A” | 151,905 | |
840 | Shire, PLC (ADR) | 138,827 | |
2,700 | Thermo Fisher Scientific, Inc. | 471,069 | |
1,850 | * | VWR Corporation | 61,069 |
3,700 | Zoetis, Inc. | 230,806 | |
3,949,441 | |||
Industrials—6.2% | |||
1,850 | 3M Company | 385,152 | |
1,100 | * | Gardner Denver Holdings, Inc. | 23,771 |
7,350 | General Electric Company | 198,523 | |
2,900 | Honeywell International, Inc. | 386,541 | |
800 | Ingersoll-Rand, PLC | 73,112 | |
7,015 | Johnson Controls International, PLC | 304,170 | |
2,800 | Koninklijke Philips NV (ADR) | 100,296 | |
250 | Lockheed Martin Corporation | 69,403 | |
1,400 | ManpowerGroup, Inc. | 156,310 | |
3,900 | Masco Corporation | 149,019 | |
700 | Owens Corning | 46,844 | |
3,400 | Schneider National, Inc. – Class “B” | 76,058 | |
1,200 | Snap-On, Inc. | 189,600 | |
650 | Stanley Black & Decker, Inc. | 91,475 | |
6,800 | Triton International, Ltd. | 227,392 | |
2,000 | United Technologies Corporation | 244,220 | |
2,721,886 | |||
Information Technology—10.3% | |||
4,300 | Apple, Inc. | 619,286 | |
4,400 | Applied Materials, Inc. | 181,764 | |
5,500 | * | ARRIS International, PLC | 154,110 |
900 | Broadcom, Ltd. | 209,745 | |
12,600 | Cisco Systems, Inc. | 394,380 |
106 |
Shares | Security | Value | |
Information Technology (continued) | |||
1,460 | * | Dell Technologies, Inc. – Class “V” | $ 89,221 |
545 | DXC Technology Company | 41,812 | |
3,450 | * | eBay, Inc. | 120,474 |
700 | * | FleetCor Technologies, Inc. | 100,947 |
5,950 | HP Enterprise Company | 98,710 | |
8,200 | Intel Corporation | 276,668 | |
700 | International Business Machines Corporation | 107,681 | |
1,200 | Methode Electronics, Inc. | 49,440 | |
8,800 | Microsoft Corporation | 606,584 | |
1,700 | * | NXP Semiconductors NV | 186,065 |
4,800 | Oracle Corporation | 240,672 | |
4,300 | QUALCOMM, Inc. | 237,446 | |
3,700 | Sabre Corporation | 80,549 | |
8,400 | Symantec Corporation | 237,300 | |
1,100 | TE Connectivity, Ltd. | 86,548 | |
1,200 | * | Tech Data Corporation | 121,200 |
3,800 | Travelport Worldwide, Ltd. | 52,288 | |
2,400 | Western Digital Corporation | 212,640 | |
4,505,530 | |||
Materials—1.7% | |||
3,500 | International Paper Company | 198,135 | |
4,400 | * | Louisiana-Pacific Corporation | 106,084 |
850 | Praxair, Inc. | 112,668 | |
1,800 | RPM International, Inc. | 98,190 | |
3,100 | Sealed Air Corporation | 138,756 | |
1,100 | Trinseo SA | 75,570 | |
729,403 | |||
Real Estate—1.1% | |||
10,300 | Brixmor Property Group, Inc. (REIT) | 184,164 | |
987 | Real Estate Select Sector SPDR Fund (ETF) | 31,781 | |
5,600 | Tanger Factory Outlet Centers, Inc. (REIT) | 145,488 | |
5,200 | Urstadt Biddle Properties, Inc. – Class “A” (REIT) | 102,960 | |
464,393 | |||
Telecommunication Services—1.2% | |||
7,450 | AT&T, Inc. | 281,088 | |
5,900 | Verizon Communications, Inc. | 263,494 | |
544,582 |
107 |
Portfolio of Investments (continued)
TOTAL RETURN FUND
June 30, 2017
Shares or | |||
Principal | |||
Amount | Security | Value | |
Utilities—.6% | |||
6,200 | Exelon Corporation | $ 223,634 | |
1,100 | NiSource, Inc. | 27,896 | |
251,530 | |||
Total Value of Common Stocks (cost $21,007,060) | 25,177,590 | ||
CORPORATE BONDS—20.7% | |||
Aerospace/Defense—.2% | |||
$ 100M | Rockwell Collins, Inc., 3.2%, 3/15/2024 | 101,514 | |
Automotive—.2% | |||
100M | O’Reilly Automotive, Inc., 3.55%, 3/15/2026 | 100,868 | |
Chemicals—.5% | |||
100M | Agrium, Inc., 3.375%, 3/15/2025 | 100,179 | |
100M | Dow Chemical Co., 3.5%, 10/1/2024 | 102,861 | |
203,040 | |||
Consumer Non-Durables—.5% | |||
200M | Newell Brands, Inc., 4.2%, 4/1/2026 | 212,585 | |
Energy—1.4% | |||
200M | BP Capital Markets, PLC, 3.216%, 11/28/2023 | 203,285 | |
100M | Canadian Oil Sands, Ltd., 7.75%, 5/15/2019 (a) | 108,669 | |
100M | DCP Midstream Operating, LP, 2.5%, 12/1/2017 | 100,125 | |
100M | Enbridge Energy Partners, LP, 4.2%, 9/15/2021 | 104,428 | |
100M | Valero Energy Corp., 9.375%, 3/15/2019 | 111,951 | |
628,458 | |||
Financial Services—2.9% | |||
100M | American Express Co., 7%, 3/19/2018 | 103,735 | |
100M | American International Group, Inc., 3.75%, 7/10/2025 | 102,029 | |
100M | Ameriprise Financial, Inc., 5.3%, 3/15/2020 | 108,173 | |
100M | Assured Guaranty U.S. Holding, Inc., 5%, 7/1/2024 | 107,371 | |
100M | BlackRock, Inc., 5%, 12/10/2019 | 107,409 | |
ERAC USA Finance, LLC: | |||
100M | 4.5%, 8/16/2021 (a) | 107,187 | |
100M | 3.3%, 10/15/2022 (a) | 102,432 | |
100M | Ford Motor Credit Co., LLC, 8.125%, 1/15/2020 | 113,609 | |
100M | General Electric Capital Corp., 5.625%, 9/15/2017 | 100,821 |
108 |
Principal | |||
Amount | Security | Value | |
Financial Services (continued) | |||
$ 100M | Liberty Mutual Group, Inc., 4.95%, 5/1/2022 (a) | $ 109,795 | |
100M | Prudential Financial, Inc., 7.375%, 6/15/2019 | 110,277 | |
100M | State Street Corp., 3.55%, 8/18/2025 | 104,241 | |
1,277,079 | |||
Financials—4.8% | |||
Bank of America Corp.: | |||
100M | 5%, 5/13/2021 | 109,209 | |
100M | 2.1532%, 4/24/2023 † | 100,435 | |
100M | 4.1%, 7/24/2023 | 106,004 | |
100M | Barclays Bank, PLC, 5.125%, 1/8/2020 | 106,881 | |
100M | Capital One Financial Corp., 3.75%, 4/24/2024 | 102,334 | |
Citigroup, Inc.: | |||
100M | 6.125%, 11/21/2017 | 101,719 | |
100M | 4.5%, 1/14/2022 | 107,641 | |
100M | Deutsche Bank AG, 3.7%, 5/30/2024 | 100,132 | |
100M | Goldman Sachs Group, Inc., 3.625%, 1/22/2023 | 103,341 | |
200M | HSBC Holdings, PLC, 2.8487%, 5/25/2021 † | 207,009 | |
JPMorgan Chase & Co.: | |||
100M | 6%, 1/15/2018 | 102,255 | |
100M | 4.5%, 1/24/2022 | 108,352 | |
100M | 3.625%, 12/1/2027 † | 99,189 | |
Morgan Stanley: | |||
200M | 5.5%, 7/28/2021 | 221,975 | |
100M | 2.3732%, 5/8/2024 † | 100,598 | |
100M | SunTrust Banks, Inc., 6%, 9/11/2017 | 100,785 | |
100M | U.S. Bancorp, 3.6%, 9/11/2024 | 103,969 | |
100M | Visa, Inc., 3.15%, 12/14/2025 | 101,636 | |
2,083,464 | |||
Food/Beverage/Tobacco—.9% | |||
Anheuser-Busch InBev Finance, Inc.: | |||
100M | 3.65%, 2/1/2026 | 103,211 | |
100M | 4.9%, 2/1/2046 | 113,316 | |
200M | Mondelez International Holdings, Inc., 2%, 10/28/2021 (a) | 195,063 | |
411,590 | |||
Food/Drug—.5% | |||
200M | CVS Health Corp., 3.875%, 7/20/2025 | 208,298 | |
Forest Products/Containers—.3% | |||
100M | Rock-Tenn Co., 4.9%, 3/1/2022 | 109,096 |
109 |
Portfolio of Investments (continued)
TOTAL RETURN FUND
June 30, 2017
Principal | |||
Amount | Security | Value | |
Health Care—.7% | |||
$ 100M | Biogen, Inc., 6.875%, 3/1/2018 | $ 103,397 | |
100M | Express Scripts Holding Co., 4.75%, 11/15/2021 | 108,171 | |
100M | Laboratory Corp. of America, 3.75%, 8/23/2022 | 104,035 | |
315,603 | |||
Higher Education—.2% | |||
100M | Yale University, 2.086%, 4/15/2019 | 100,744 | |
Information Technology—1.0% | |||
100M | Apple, Inc., 2.5%, 2/9/2025 | 97,904 | |
200M | Diamond 1 Finance Corp., 4.42%, 6/15/2021 (a) | 211,031 | |
150M | Oracle Corp., 2.4%, 9/15/2023 | 148,181 | |
457,116 | |||
Manufacturing—.3% | |||
100M | Johnson Controls International, PLC, 5%, 3/30/2020 | 106,880 | |
Media-Broadcasting—.3% | |||
100M | Comcast Corp., 5.15%, 3/1/2020 | 108,395 | |
Media-Diversified—.2% | |||
100M | Time Warner, Inc., 3.6%, 7/15/2025 | 99,945 | |
Metals/Mining—.2% | |||
100M | Newmont Mining Corp., 5.125%, 10/1/2019 | 106,291 | |
Real Estate—2.1% | |||
200M | Alexandria Real Estate Equities, Inc., 3.95%, 1/15/2028 | 203,804 | |
200M | AvalonBay Communities, Inc., 3.5%, 11/15/2024 | 205,226 | |
100M | ERP Operating, LP, 3.375%, 6/1/2025 | 100,789 | |
100M | HCP, Inc., 4.25%, 11/15/2023 | 104,993 | |
100M | Prologis, LP, 3.35%, 2/1/2021 | 103,357 | |
100M | Ventas Realty, LP, 4.75%, 6/1/2021 | 107,064 | |
100M | Welltower, Inc., 4%, 6/1/2025 | 103,566 | |
928,799 | |||
Retail-General Merchandise—.6% | |||
100M | Amazon.com, Inc., 4.8%, 12/5/2034 | 115,464 | |
100M | Home Depot, Inc., 5.875%, 12/16/2036 | 130,512 | |
245,976 |
110 |
Principal | |||
Amount | Security | Value | |
Telecommunications—.2% | |||
$ 100M | AT&T, Inc., 3.8%, 3/15/2022 | $ 103,614 | |
Transportation—1.0% | |||
100M | Burlington North Santa Fe, LLC, 5.15%, 9/1/2043 | 119,979 | |
100M | Penske Truck Leasing Co., LP, 4.875%, 7/11/2022 (a) | 109,364 | |
Southwest Airlines Co.: | |||
100M | 2.65%, 11/5/2020 | 101,269 | |
100M | 3%, 11/15/2026 | 97,184 | |
427,796 | |||
Utilities—1.7% | |||
100M | Duke Energy Progress, Inc., 4.15%, 12/1/2044 | 104,939 | |
100M | Electricite de France SA, 3.625%, 10/13/2025 (a) | 102,397 | |
100M | Entergy Arkansas, Inc., 4.95%, 12/15/2044 | 103,030 | |
100M | Ohio Power Co., 5.375%, 10/1/2021 | 111,397 | |
100M | Oklahoma Gas & Electric Co., 4%, 12/15/2044 | 100,629 | |
100M | Sempra Energy, 9.8%, 2/15/2019 | 112,200 | |
100M | South Carolina Electric & Gas Co., 5.45%, 2/1/2041 | 115,353 | |
749,945 | |||
Total Value of Corporate Bonds (cost $8,984,551) | 9,087,096 | ||
RESIDENTIAL MORTGAGE-BACKED | |||
SECURITIES—5.8% | |||
Fannie Mae—5.1% | |||
46M | 2.5%, 7/1/2031 | 46,185 | |
192M | 3%, 6/1/2030 – 11/1/2030 | 197,747 | |
610M | 3.5%, 11/1/2028 – 11/1/2046 | 630,759 | |
1,001M | 4%, 7/1/2041 – 3/1/2047 | 1,055,595 | |
189M | 4.5%, 8/1/2041 – 1/1/2047 | 204,340 | |
91M | 5%, 3/1/2042 | 99,960 | |
2,234,586 | |||
Freddie Mac—.7% | |||
73M | 3.5%, 7/1/2044 | 75,337 | |
81M | 4%, 7/1/2044 – 4/1/2045 | 84,999 | |
152M | 4.5%, 12/1/2043 | 163,737 | |
324,073 | |||
Total Value of Residential Mortgage-Backed Securities (cost $2,570,329) | 2,558,659 |
111 |
Portfolio of Investments (continued)
TOTAL RETURN FUND
June 30, 2017
Principal | |||
Amount | Security | Value | |
U.S. GOVERNMENT OBLIGATIONS—2.9% | |||
$ 100M | U.S. Treasury Bonds, 3.125%, 8/15/2044 | $ 105,678 | |
U.S. Treasury Notes: | |||
600M | 0.375%, 1/15/2027 (TIPS) | 596,914 | |
300M | 1.0725%, 4/30/2019 † | 299,992 | |
250M | 1.1425%, 1/31/2019 † | 250,377 | |
Total Value of U.S. Government Obligations (cost $1,260,573) | 1,252,961 | ||
VARIABLE AND FLOATING RATE NOTES—2.4% | |||
Municipal Bonds | |||
500M | Mississippi Business Fin. Corp., 1%, 12/1/2030 † | 500,000 | |
535M | Valdez, AK Marine Term. Rev., 0.89%, 12/1/2033 † | 535,000 | |
Total Value of Variable and Floating Rate Notes (cost $1,034,726) | 1,035,000 | ||
TAXABLE MUNICIPAL BONDS—.8% | |||
50M | Chicago, IL O’Hare Airport, 5%, 1/1/2042 | 56,148 | |
75M | Katy, TX ISD, 5%, 2/15/2042 | 88,211 | |
90M | New York City Trans. Fin. Auth., 3.05%, 5/1/2027 | 89,393 | |
50M | New York State Dorm Auth., 4%, 2/15/2037 (b) | 53,195 | |
50M | Oregon State GO, 5%, 8/1/2037 | 59,752 | |
Total Value of Taxable Municipal Bonds (cost $346,634) | 346,699 | ||
SHORT-TERM U.S. GOVERNMENT AGENCY | |||
OBLIGATIONS—4.5% | |||
Federal Home Loan Bank: | |||
1,000M | 0.9%, 7/19/2017 | 999,560 | |
500M | 0.94%, 7/21/2017 | 499,753 | |
500M | 1.01%, 8/4/2017 | 499,551 | |
Total Value of Short-Term U.S. Government Agency Obligations (cost $1,998,811) | 1,998,864 | ||
SHORT-TERM CORPORATE NOTES—4.3% | |||
Food/Beverage/Tobacco—2.1% | |||
Coca-Cola Co.: | |||
500M | 1%, 7/25/2017 (c) | 499,624 | |
400M | 0.95%, 7/14/2017 (c) | 399,833 | |
899,457 | |||
Information Technology—1.1% | |||
500M | Apple, Inc., 1.02%, 9/18/2017 (c) | 498,750 |
112 |
Principal | |||||||
Amount | Security | Value | |||||
Media-Diversified—1.1% | |||||||
$ 500M | Walt Disney Co., 0.91%, 7/17/2017 (c) | $ 499,739 | |||||
Total Value of Short-Term Corporate Notes (cost $1,898,205) | 1,897,946 | ||||||
Total Value of Investments (cost $39,100,889) | 98.8 | % | 43,354,815 | ||||
Other Assets, Less Liabilities | 1.2 | 533,192 | |||||
Net Assets | 100.0 | % | $43,888,007 |
* | Non-income producing | |
(a) | Security exempt from registration under Rule 144A of the Securities Act of 1933 (see Note 5). | |
(b) | A portion or all of the security purchased on a when-issued or delayed delivery basis (see | |
Note 1G). | ||
(c) | Security exempt from registration under Section 4(2) of the Securities Act of 1933 (see Note 5). | |
† | Interest rates are determined and reset periodically. The interest rates above are the rates in effect | |
at June 30, 2017. | ||
Summary of Abbreviations: | ||
ADR | American Depositary Receipts | |
ETF | Exchange Traded Fund | |
GO | General Obligations | |
ISD | Independent School District | |
REIT | Real Estate Investment Trust | |
TIPS | Treasury Inflation-Protected Securities |
113 |
Portfolio of Investments (continued)
TOTAL RETURN FUND
June 30, 2017
The Fund’s assets and liabilities are classified into the following three levels based on the inputs used to value the assets and liabilities:
Level 1 — Unadjusted quoted prices in active markets for identical securities that the Fund has the ability to access. |
Level 2 — Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumption about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The inputs methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, U.S. Government securities are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market.
The following is a summary, by category of Level, of inputs used to value the Fund’s investments as of June 30, 2017:
Level 1 | Level 2 | Level 3 | Total | |||||||||
Common Stocks | $ | 25,177,590 | $ | — | $ | — | $ | 25,177,590 | ||||
Corporate Bonds | — | 9,087,096 | — | 9,087,096 | ||||||||
Residential Mortgage-Backed | ||||||||||||
Securities | — | 2,558,659 | — | 2,558,659 | ||||||||
U.S. Government Obligations | — | 1,252,961 | — | 1,252,961 | ||||||||
Variable and Floating Rate Notes | ||||||||||||
Municipal Bonds | — | 1,035,000 | — | 1,035,000 | ||||||||
Taxable Municipal Bonds | — | 346,699 | — | 346,699 | ||||||||
Short-Term U.S. Government | ||||||||||||
Agency Obligations | — | 1,998,864 | — | 1,998,864 | ||||||||
Short-Term Corporate Notes | — | 1,897,946 | — | 1,897,946 | ||||||||
Total Investments in Securities* | $ | 25,177,590 | $ | 18,177,225 | $ | — | $ | 43,354,815 |
* | The Portfolio of Investments provides information on the industry categorization for common stocks, |
corporate bonds and short-term corporate notes. | |
There were no transfers into or from Level 1 and Level 2 by the Fund for the period ended | |
June 30, 2017. Transfers, if any, between Levels are recognized at the end of the reporting period. |
114 | See notes to financial statements |
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115 |
Statements of Assets and Liabilities
FIRST INVESTORS LIFE SERIES FUNDS
June 30, 2017
COVERED | GOVERNMENT | ||||||||||||||||||||||||||||
BALANCED | CALL | EQUITY | FUND FOR | CASH | GROWTH & | ||||||||||||||||||||||||
INCOME | STRATEGY | INCOME | INCOME | GOVERNMENT | MANAGEMENT | INCOME | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Investments in securities and futures contracts: | |||||||||||||||||||||||||||||
At identified cost | $ | 5,744,920 | $ | 7,319,237 | $ | 84,455,313 | $ | 99,530,250 | $ | 28,550,521 | $ | 9,439,710 | $ | 297,560,024 | |||||||||||||||
At value (Note 1A) | $ | 5,977,745 | $ | 8,101,190 | $ | 120,171,637 | $ | 102,738,070 | $ | 28,373,052 | $ | 9,439,710 | $ | 493,786,115 | |||||||||||||||
Cash | 72,282 | 188,827 | 956,974 | 1,701,720 | 362,353 | 406,547 | 983,931 | ||||||||||||||||||||||
Receivables: | |||||||||||||||||||||||||||||
Investment securities sold | — | 122,975 | 297,139 | 1,272,562 | 414,511 | — | 2,604,700 | ||||||||||||||||||||||
Options contracts sold | — | 6,543 | — | — | — | — | — | ||||||||||||||||||||||
Deposits at broker for futures contracts | 85,012 | — | — | — | — | — | — | ||||||||||||||||||||||
Interest and dividends | 34,997 | 8,980 | 195,712 | 1,572,604 | 110,949 | 1,184 | 623,166 | ||||||||||||||||||||||
Trust shares sold | 66,348 | 68,838 | 46,556 | 11,328 | 6,686 | 136,432 | 48,177 | ||||||||||||||||||||||
Other assets | 312 | 457 | 6,771 | 6,176 | 1,964 | 631 | 28,286 | ||||||||||||||||||||||
Total Assets | 6,236,696 | 8,497,810 | 121,674,789 | 107,302,460 | 29,269,515 | 9,984,504 | 498,074,375 | ||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Options written, at value (Note 5) | $ | — | $ | 164,899 | (a) | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Payables: | |||||||||||||||||||||||||||||
Investment securities purchased | 9,190 | 116,156 | — | 2,309,156 | 422,971 | — | 958,576 | ||||||||||||||||||||||
Due to broker-variation margin futures | 20,359 | — | — | — | — | — | — | ||||||||||||||||||||||
Trust shares redeemed | 8,630 | 8,912 | 33,170 | 41,103 | 7,164 | 265,852 | 206,662 | ||||||||||||||||||||||
Accrued advisory fees | 3,014 | 6,249 | 75,168 | 64,669 | 14,277 | — | 299,820 | ||||||||||||||||||||||
Accrued expenses | 13,520 | 12,688 | 19,369 | 56,569 | 19,784 | 15,827 | 51,220 | ||||||||||||||||||||||
Total Liabilities | 54,713 | 308,904 | 127,707 | 2,471,497 | 464,196 | 281,679 | 1,516,278 | ||||||||||||||||||||||
Net Assets | $ | 6,181,983 | $ | 8,188,906 | $ | 121,547,082 | $ | 104,830,963 | $ | 28,805,319 | $ | 9,702,825 | $ | 496,558,097 | |||||||||||||||
Net Assets Consist of: | |||||||||||||||||||||||||||||
Capital paid in | $ | 5,716,945 | $ | 7,394,668 | $ | 82,975,440 | $ | 120,846,224 | $ | 29,918,355 | $ | 9,702,825 | $ | 284,134,936 | |||||||||||||||
Undistributed net investment income | 69,517 | 74,029 | 1,235,945 | 1,819,781 | 228,325 | — | 3,777,103 | ||||||||||||||||||||||
Accumulated net realized gain (loss) on investments, | |||||||||||||||||||||||||||||
futures and options contracts | 162,696 | (53,699 | ) | 1,619,373 | (21,042,862 | ) | (1,163,892 | ) | — | 12,419,967 | |||||||||||||||||||
Net unrealized appreciation (depreciation) in value of | |||||||||||||||||||||||||||||
investments, futures and options contracts | 232,825 | 773,908 | 35,716,324 | 3,207,820 | (177,469 | ) | — | 196,226,091 | |||||||||||||||||||||
Total | $ | 6,181,983 | $ | 8,188,906 | $ | 121,547,082 | $ | 104,830,963 | $ | 28,805,319 | $ | 9,702,825 | $ | 496,558,097 | |||||||||||||||
Shares of beneficial interest outstanding (Note 2) | 580,998 | 749,627 | 5,619,291 | 16,683,311 | 3,035,118 | 9,702,825 | 11,078,683 | ||||||||||||||||||||||
Net asset value, offering and redemption price per share — | |||||||||||||||||||||||||||||
(Net assets divided by shares outstanding) | $10.64 | $10.92 | $21.63 | $6.28 | $9.49 | $ 1.00 | $44.82 |
(a) Premiums received from written options $ 156,854
116 | See notes to financial statements | 117 |
Statements of Assets and Liabilities
FIRST INVESTORS LIFE SERIES FUNDS
June 30, 2017
LIMITED | |||||||||||||||||||||||||||||
DURATION | |||||||||||||||||||||||||||||
INVESTMENT | HIGH QUALITY | REAL | SELECT | SPECIAL | |||||||||||||||||||||||||
INTERNATIONAL | GRADE | BOND | OPPORTUNITY | ESTATE | GROWTH | SITUATIONS | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Investments in securities: | |||||||||||||||||||||||||||||
At identified cost | $ | 100,752,838 | $ | 62,768,254 | $ | 7,131,366 | $ | 50,941,962 | $ | 6,048,161 | $ | 48,318,723 | $ | 172,828,147 | |||||||||||||||
At value (Note 1A) | $ | 147,461,501 | $ | 64,437,824 | $ | 7,122,408 | $ | 61,122,292 | $ | 6,208,476 | $ 59,121,573 | $ | 233,545,170 | ||||||||||||||||
Cash | 377,559 | 198,555 | 187,331 | 703,920 | 227,327 | 1,082,248 | 594,204 | ||||||||||||||||||||||
Receivables: | |||||||||||||||||||||||||||||
Investment securities sold | 76,578 | 433,122 | 98,266 | 432,389 | — | 2,417,956 | 1,983,946 | ||||||||||||||||||||||
Interest and dividends | 719,087 | 771,768 | 50,754 | 49,282 | 18,773 | 21,428 | 198,722 | ||||||||||||||||||||||
Trust shares sold | 6,780 | 115,144 | 2,371 | 81,829 | 4,547 | 115,734 | 101,119 | ||||||||||||||||||||||
Other assets | 8,161 | 3,921 | 449 | 2,901 | 412 | 3,071 | 12,579 | ||||||||||||||||||||||
Total Assets | 148,649,666 | 65,960,334 | 7,461,579 | 62,392,613 | 6,459,535 | 62,762,010 | 236,435,740 | ||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Payables: | |||||||||||||||||||||||||||||
Investment securities purchased | — | 400,510 | 205,795 | 86,625 | 19,970 | 2,878,153 | 311,571 | ||||||||||||||||||||||
Trust shares redeemed | 65,758 | 9,481 | 759 | 3,514 | 19,985 | 7,057 | 43,258 | ||||||||||||||||||||||
Accrued advisory fees | 92,658 | 32,295 | 3,562 | 37,978 | 3,900 | 36,863 | 145,188 | ||||||||||||||||||||||
Accrued expenses | 64,122 | 16,560 | 16,598 | 24,095 | 16,763 | 13,525 | 35,140 | ||||||||||||||||||||||
Total Liabilities | 222,538 | 458,846 | 226,714 | 152,212 | 60,618 | 2,935,598 | 535,157 | ||||||||||||||||||||||
Net Assets | $ | 148,427,128 | $ | 65,501,488 | $ | 7,234,865 | $ | 62,240,401 | $ | 6,398,917 | $ | 59,826,412 | $ | 235,900,583 | |||||||||||||||
Net Assets Consist of: | |||||||||||||||||||||||||||||
Capital paid in | $ | 102,551,673 | $ | 65,760,470 | $ 7,358,047 | $ | 51,797,933 | $ | 6,311,441 | $ | 46,338,321 | $ | 167,342,981 | ||||||||||||||||
Undistributed net investment income (deficit) | 1,067,206 | (718,515 | ) | (86,679 | ) | 203,672 | 219,230 | 117,556 | 868,133 | ||||||||||||||||||||
Accumulated net realized gain (loss) on investments and | |||||||||||||||||||||||||||||
foreign currency transactions | (1,902,193 | ) | (1,210,037 | ) | (27,545 | ) | 58,466 | (292,069 | ) | 2,567,685 | 6,972,446 | ||||||||||||||||||
Net unrealized appreciation (depreciation) in value | |||||||||||||||||||||||||||||
of investments and foreign currency transactions | 46,710,442 | 1,669,570 | (8,958 | ) | 10,180,330 | 160,315 | 10,802,850 | 60,717,023 | |||||||||||||||||||||
Total | $ | 148,427,128 | $ | 65,501,488 | $ | 7,234,865 | $ | 62,240,401 | $ | 6,398,917 | $ | 59,826,412 | $ | 235,900,583 | |||||||||||||||
Shares of beneficial interest outstanding (Note 2) | 6,079,500 | 6,184,953 | 754,313 | 3,637,103 | 626,842 | 4,412,243 | 6,512,506 | ||||||||||||||||||||||
Net asset value, offering and redemption price per share — | |||||||||||||||||||||||||||||
(Net assets divided by shares outstanding) | $ 24.41 | $ 10.59 | $ 9.59 | $ 17.11 | $ 10.21 | $ 13.56 | $ 36.22 |
118 | See notes to financial statements | 119 |
Statements of Assets and Liabilities
FIRST INVESTORS LIFE SERIES FUNDS
June 30, 2017
TOTAL | |||||||||||||||||||||||
RETURN | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||
Investments in securities: | |||||||||||||||||||||||
At identified cost | $ | 39,100,889 | |||||||||||||||||||||
At value (Note 1A) | $ | 43,354,815 | |||||||||||||||||||||
Cash | 501,586 | ||||||||||||||||||||||
Receivables: | |||||||||||||||||||||||
Investment securities sold | 199,046 | ||||||||||||||||||||||
Interest and dividends | 143,261 | ||||||||||||||||||||||
Trust shares sold | 13,149 | ||||||||||||||||||||||
Other assets | 2,494 | ||||||||||||||||||||||
Total Assets | 44,214,351 | ||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||
Payables: | |||||||||||||||||||||||
Investment securities purchased | 247,423 | ||||||||||||||||||||||
Trust shares redeemed | 28,579 | ||||||||||||||||||||||
Accrued advisory fees | 26,940 | ||||||||||||||||||||||
Accrued expenses | 23,402 | ||||||||||||||||||||||
Total Liabilities | 326,344 | ||||||||||||||||||||||
Net Assets | $ | 43,888,007 | This page left intentionally blank. | ||||||||||||||||||||
Net Assets Consist of: | |||||||||||||||||||||||
Capital paid in | $ | 39,414,194 | |||||||||||||||||||||
Undistributed net investment income | 9,757 | ||||||||||||||||||||||
Accumulated net realized gain on investments | 210,130 | ||||||||||||||||||||||
Net unrealized appreciation in value | |||||||||||||||||||||||
of investments | 4,253,926 | ||||||||||||||||||||||
Total | $ | 43,888,007 | |||||||||||||||||||||
Shares of beneficial interest outstanding (Note 2) | 3,381,133 | ||||||||||||||||||||||
Net asset value, offering and redemption price per share — | |||||||||||||||||||||||
(Net assets divided by shares outstanding) | $ 12.98 |
120 | See notes to financial statements | 121 |
Statements of Operations
FIRST INVESTORS LIFE SERIES FUNDS
Six Months Ended June 30, 2017
COVERED | GOVERNMENT | |||||||||||||||||||||
BALANCED | CALL | EQUITY | FUND FOR | CASH | GROWTH & | |||||||||||||||||
INCOME | STRATEGY | INCOME | INCOME | GOVERNMENT | MANAGEMENT | INCOME | ||||||||||||||||
Investment Income | ||||||||||||||||||||||
Income: | ||||||||||||||||||||||
Interest | $ | 70,513 | $ | — | $ | 12,006 | $ | 2,833,748 | $ | 337,007 | $ | 31,127 | $ | 24,347 | ||||||||
Dividends | 50,511 | (a) | 134,943 | 1,698,973 | (b) | — | — | — | 5,635,488 | (c) | ||||||||||||
Total income | 121,024 | 134,943 | 1,710,979 | 2,833,748 | 337,007 | 31,127 | 5,659,835 | |||||||||||||||
Expenses (Notes 1 and 4): | ||||||||||||||||||||||
Advisory fees | 30,080 | 42,886 | 444,687 | 384,301 | 108,433 | 34,646 | 1,780,089 | |||||||||||||||
Professional fees | 8,287 | 16,077 | 13,401 | 13,850 | 7,975 | 17,350 | 42,866 | |||||||||||||||
Custodian fees and expenses | 2,887 | 675 | 2,033 | 6,905 | 3,490 | 2,278 | 5,153 | |||||||||||||||
Reports and notices to shareholders | 200 | 800 | 8,250 | 7,500 | 3,100 | 1,900 | 25,972 | |||||||||||||||
Registration fees | 25 | 27 | 640 | 641 | 641 | 641 | 640 | |||||||||||||||
Trustees’ fees | 401 | 339 | 3,703 | 3,196 | 907 | 292 | 15,124 | |||||||||||||||
Other expenses | 3,260 | 127 | 4,196 | 36,093 | 6,237 | 3,656 | 15,763 | |||||||||||||||
Total expenses | 45,140 | 60,931 | 476,910 | 452,486 | 130,783 | 60,763 | 1,885,607 | |||||||||||||||
Less: Expenses waived and/or assumed (Note 4) | (6,016 | ) | — | — | — | (21,687 | ) | (32,906 | ) | — | ||||||||||||
Expenses paid indirectly (Note 1G) | (342 | ) | (22 | ) | (1,887 | ) | (2,482 | ) | (412 | ) | (149 | ) | (2,841 | ) | ||||||||
Net expenses | 38,782 | 60,909 | 475,023 | 450,004 | 108,684 | 27,708 | 1,882,766 | |||||||||||||||
Net investment income | 82,242 | 74,034 | 1,235,956 | 2,383,744 | 228,323 | 3,419 | 3,777,069 | |||||||||||||||
Realized and Unrealized Gain (Loss) on Investments, | ||||||||||||||||||||||
Futures and Options Contracts (Note 3): | ||||||||||||||||||||||
Net realized gain (loss) on: | ||||||||||||||||||||||
Investments | 181,658 | 221,076 | 1,661,131 | 1,157,083 | (156,842 | ) | — | 13,826,799 | ||||||||||||||
Futures contracts | (18,965 | ) | — | — | — | — | — | — | ||||||||||||||
Options contracts | — | 7,342 | 21,016 | — | — | — | — | |||||||||||||||
Net realized gain (loss) on investments, | ||||||||||||||||||||||
futures and options contracts | 162,693 | 228,418 | 1,682,147 | 1,157,083 | (156,842 | ) | — | 13,826,799 | ||||||||||||||
Net unrealized appreciation (depreciation) on: | ||||||||||||||||||||||
Investments | 54,442 | 202,363 | 3,670,614 | 549,540 | 262,806 | — | 16,218,957 | |||||||||||||||
Futures contracts | (4,573 | ) | — | — | — | — | — | — | ||||||||||||||
Options contracts | — | (35,050 | ) | — | — | — | — | — | ||||||||||||||
Net unrealized appreciation on investments | ||||||||||||||||||||||
futures and options contracts | 49,869 | 167,313 | 3,670,614 | 549,540 | 262,806 | — | 16,218,957 | |||||||||||||||
Net gain on investments, futures | ||||||||||||||||||||||
and options contracts purchased | 212,562 | 395,731 | 5,352,761 | 1,706,623 | 105,964 | — | 30,045,756 | |||||||||||||||
Net Increase in Net Assets Resulting | ||||||||||||||||||||||
from Operations | $ | 294,804 | $ | 469,765 | $ | 6,588,717 | $ | 4,090,367 | $ | 334,287 | $ | 3,419 | $ | 33,822,825 |
(a) Net of $432 foreign taxes withheld
(b) Net of $7,139 foreign taxes withheld
(c) Net of $31,796 foreign taxes withheld
122 | See notes to financial statements | 123 |
Statements of Operations
FIRST INVESTORS LIFE SERIES FUNDS
Six Months Ended June 30, 2017
LIMITED | ||||||||||||||||||||||
DURATION | ||||||||||||||||||||||
INVESTMENT | HIGH QUALITY | REAL | SELECT | SPECIAL | ||||||||||||||||||
INTERNATIONAL | GRADE | BOND | OPPORTUNITY | ESTATE | GROWTH | SITUATIONS | ||||||||||||||||
Investment Income | ||||||||||||||||||||||
Income: | ||||||||||||||||||||||
Interest | $ | 4,768 | $ | 1,172,201 | $ | 72,238 | $ | 3,460 | $ | — | $ | 390 | $ | 11,637 | ||||||||
Dividends | 1,628,877 | (d) | — | — | 436,565 | (e) | 261,608 | 348,259 | 1,763,527 | |||||||||||||
Total income | 1,633,645 | 1,172,201 | 72,238 | 440,025 | 261,608 | 348,649 | 1,775,164 | |||||||||||||||
Expenses (Notes 1 and 4): | ||||||||||||||||||||||
Advisory fees | 515,530 | 240,358 | 29,261 | 213,582 | 28,151 | 211,483 | 853,073 | |||||||||||||||
Professional fees | 19,350 | 10,300 | 7,092 | 8,674 | 7,250 | 7,450 | 20,474 | |||||||||||||||
Custodian fees and expenses | 7,055 | 2,198 | 2,963 | 6,633 | 2,636 | 2,750 | 4,849 | |||||||||||||||
Reports and notices to shareholders | 8,350 | 4,400 | 1,799 | 3,750 | 2,100 | 5,950 | 13,900 | |||||||||||||||
Registration fees | 641 | 641 | 640 | 642 | 640 | 640 | 642 | |||||||||||||||
Trustees’ fees | 4,207 | 2,000 | 242 | 1,672 | 231 | 1,743 | 7,114 | |||||||||||||||
Other expenses | 12,291 | 6,012 | 3,413 | 2,505 | 1,453 | 1,724 | 9,341 | |||||||||||||||
Total expenses | 567,424 | 265,909 | 45,410 | 237,458 | 42,461 | 231,740 | 909,393 | |||||||||||||||
Less: Expenses waived (Note 4) | — | (48,063 | ) | (5,852 | ) | — | — | — | — | |||||||||||||
Expenses paid indirectly (Note 1G) | (1,014 | ) | (1,003 | ) | (245 | ) | (1,105 | ) | (84 | ) | (637 | ) | (2,354 | ) | ||||||||
Net expenses | 566,410 | 216,843 | 39,313 | 236,353 | 42,377 | 231,103 | 907,039 | |||||||||||||||
Net investment income | 1,067,235 | 955,358 | 32,925 | 203,672 | 219,231 | 117,546 | 868,125 | |||||||||||||||
Realized and Unrealized Gain (Loss) on Investments | ||||||||||||||||||||||
and Foreign Currency Transactions (Note 3): | ||||||||||||||||||||||
Net realized gain (loss) on: | ||||||||||||||||||||||
Investments | 4,733,702 | 133,692 | (6,951 | ) | 659,060 | (259,361 | ) | 2,567,675 | 7,134,838 | |||||||||||||
Foreign currency transactions (Note 1C) | (40,524 | ) | — | — | — | — | — | — | ||||||||||||||
Net realized gain (loss) on investments and foreign | ||||||||||||||||||||||
currency transactions | 4,693,178 | 133,692 | (6,951 | ) | 659,060 | (259,361 | ) | 2,567,675 | 7,134,838 | |||||||||||||
Net unrealized appreciation (depreciation) on investments | ||||||||||||||||||||||
and foreign currency transactions | 21,635,736 | 630,567 | 58,053 | 3,824,425 | (74,023 | ) | 4,388,058 | 7,269,457 | ||||||||||||||
Net gain (loss) on investments and foreign | ||||||||||||||||||||||
currency transactions | 26,328,914 | 764,259 | 51,102 | 4,483,485 | (333,384 | ) | 6,955,733 | 14,404,295 | ||||||||||||||
Net Increase (Decrease) in Net Assets Resulting | ||||||||||||||||||||||
from Operations | $ | 27,396,149 | $ | 1,719,617 | $ | 84,027 | $ | 4,687,157 | $ | (114,153 | ) | $ | 7,073,279 | $ | 15,272,420 |
(d) Net of $180,551 foreign taxes withheld
(e) Net of $3,245 foreign taxes withheld
124 | See notes to financial statements | 125 |
Statements of Operations
FIRST INVESTORS LIFE SERIES FUNDS
Six Months Ended June 30, 2017
TOTAL | ||||||||||||||||||||||
RETURN | ||||||||||||||||||||||
Investment Income | ||||||||||||||||||||||
Income: | ||||||||||||||||||||||
Interest | $ | 168,127 | ||||||||||||||||||||
Dividends | 285,892 | (f) | ||||||||||||||||||||
Total income | 454,019 | |||||||||||||||||||||
Expenses (Notes 1 and 4): | ||||||||||||||||||||||
Advisory fees | 157,292 | |||||||||||||||||||||
Professional fees | 8,212 | |||||||||||||||||||||
Custodian fees and expenses | 4,884 | |||||||||||||||||||||
Reports and notices to shareholders | 3,754 | |||||||||||||||||||||
Registration fees | 640 | |||||||||||||||||||||
Trustees’ fees | 1,302 | |||||||||||||||||||||
Other expenses | 4,437 | |||||||||||||||||||||
Total expenses | 180,521 | |||||||||||||||||||||
Less: Expenses waived (Note 4) | — | |||||||||||||||||||||
Expenses paid indirectly (Note 1G) | (931 | ) | ||||||||||||||||||||
Net expenses | 179,590 | |||||||||||||||||||||
Net investment income | 274,429 | |||||||||||||||||||||
Realized and Unrealized Gain (Loss) on Investments | This page left intentionally blank. | |||||||||||||||||||||
(Note 3): | ||||||||||||||||||||||
Net realized gain on investments | 280,843 | |||||||||||||||||||||
Net unrealized appreciation on investments | 1,431,294 | |||||||||||||||||||||
Net gain on investments | 1,712,137 | |||||||||||||||||||||
Net Increase in Net Assets Resulting | ||||||||||||||||||||||
from Operations | $ | 1,986,566 |
(f) Net of $1,793 foreign taxes withheld
126 | See notes to financial statements | 127 |
Statements of Changes in Net Assets
FIRST INVESTORS LIFE SERIES FUNDS
COVERED CALL | |||||||||||||||||||||||||
BALANCED INCOME | STRATEGY | EQUITY INCOME | FUND FOR INCOME | ||||||||||||||||||||||
1/1/17 to | 1/1/16 to | 1/1/17 to | 5/2/16 to | 1/1/17 to | 1/1/16 to | 1/1/17 to | 1/1/16 to | ||||||||||||||||||
6/30/17 | 12/31/16 | 6/30/17 | 12/31/16 | * | 6/30/17 | 12/31/16 | 6/30/17 | 12/31/16 | |||||||||||||||||
Increase (Decrease) in Net Assets From Operations | |||||||||||||||||||||||||
Net investment income | $ | 82,242 | $ | 88,913 | $ | 74,034 | $ | 44,665 | $ | 1,235,956 | $ | 2,293,943 | $ | 2,383,744 | $ | 4,769,721 | |||||||||
Net realized gain (loss) on investments, futures | |||||||||||||||||||||||||
and options contracts | 162,693 | 100,648 | 228,418 | (282,117 | ) | 1,682,147 | 2,737,951 | 1,157,083 | (1,100,897 | ) | |||||||||||||||
Net unrealized appreciation of investments, futures | |||||||||||||||||||||||||
and options contracts | 49,869 | 236,326 | 167,313 | 606,595 | 3,670,614 | 8,846,824 | 549,540 | 6,756,011 | |||||||||||||||||
Net increase in net assets resulting | |||||||||||||||||||||||||
from operations | 294,804 | 425,887 | 469,765 | 369,143 | 6,588,717 | 13,878,718 | 4,090,367 | 10,424,835 | |||||||||||||||||
Distributions to Shareholders | |||||||||||||||||||||||||
Net investment income | (102,597 | ) | — | (44,670 | ) | — | (2,293,954 | ) | (2,153,046 | ) | (5,236,876 | ) | (5,391,490 | ) | |||||||||||
Net realized gains | (97,642 | ) | — | — | — | (2,744,455 | ) | (3,734,490 | ) | — | — | ||||||||||||||
Total distributions | (200,239 | ) | — | (44,670 | ) | — | (5,038,409 | ) | (5,887,536 | ) | (5,236,876 | ) | (5,391,490 | ) | |||||||||||
Trust Share Transactions | |||||||||||||||||||||||||
Proceeds from shares sold | 785,117 | 3,355,425 | 3,192,486 | 9,997,901 | 1,878,348 | 3,766,513 | 2,142,022 | 2,997,139 | |||||||||||||||||
Reinvestment of distributions | 200,239 | — | 44,670 | — | 5,038,409 | 5,887,536 | 5,236,876 | 5,391,490 | |||||||||||||||||
Cost of shares redeemed | (3,546,728 | ) | (178,581 | ) | (5,681,351 | ) | (159,038 | ) | (3,605,285 | ) | (7,976,411 | ) | (2,828,744 | ) | (7,028,139 | ) | |||||||||
Net increase (decrease) from trust share transactions | (2,561,372 | ) | 3,176,844 | (2,444,195 | ) | 9,838,863 | 3,311,472 | 1,677,638 | 4,550,154 | 1,360,490 | |||||||||||||||
Net increase (decrease) in net assets | (2,466,807 | ) | 3,602,731 | (2,019,100 | ) | 10,208,006 | 4,861,780 | 9,668,820 | 3,403,645 | 6,393,835 | |||||||||||||||
Net Assets | |||||||||||||||||||||||||
Beginning of period | 8,648,790 | 5,046,059 | 10,208,006 | — | 116,685,302 | 107,016,482 | 101,427,318 | 95,033,483 | |||||||||||||||||
End of period † | $ | 6,181,983 | $ | 8,648,790 | $ | 8,188,906 | $ | 10,208,006 | $ | 121,547,082 | $ | 116,685,302 | $ | 104,830,963 | $ | 101,427,318 | |||||||||
†Includes undistributed net investment income of | $ | 69,517 | $ | 89,444 | $ | 74,029 | $ | 44,665 | $ | 1,235,945 | $ | 2,293,943 | $ | 1,819,781 | $ | 4,668,188 | |||||||||
Trust Shares Issued and Redeemed | |||||||||||||||||||||||||
Sold | 74,464 | 328,826 | 294,460 | 985,167 | 87,300 | 189,937 | 341,005 | 487,203 | |||||||||||||||||
Issued for distributions reinvested | 19,107 | — | 4,087 | — | 237,437 | 326,179 | 848,764 | 940,923 | |||||||||||||||||
Redeemed | (336,942 | ) | (17,589 | ) | (518,646 | ) | (15,441 | ) | (168,062 | ) | (400,943 | ) | (450,764 | ) | (1,152,181 | ) | |||||||||
Net increase (decrease) in trust shares outstanding | (243,371 | ) | 311,237 | (220,099 | ) | 969,726 | 156,675 | 115,173 | 739,005 | 275,945 |
* From May 2, 2016 (commencement of operations) to December 31, 2016.
128 | See notes to financial statements | 129 |
Statements of Changes in Net Assets
FIRST INVESTORS LIFE SERIES FUNDS
GOVERNMENT | |||||||||||||||||||||||||
GOVERNMENT | CASH MANAGEMENT | GROWTH & INCOME | INTERNATIONAL | ||||||||||||||||||||||
1/1/17 to | 1/1/16 to | 1/1/17 to | 1/1/16 to | 1/1/17 to | 1/1/16 to | 1/1/17 to | 1/1/16 to | ||||||||||||||||||
6/30/17 | 12/31/16 | 6/30/17 | 12/31/16 | 6/30/17 | 12/31/16 | 6/30/17 | 12/31/16 | ||||||||||||||||||
Increase (Decrease) in Net Assets From Operations | |||||||||||||||||||||||||
Net investment income | $ | 228,323 | $ | 415,325 | $ | 3,419 | $ | — | $ | 3,777,069 | $ | 7,591,426 | $ | 1,067,235 | $ | 1,670,829 | |||||||||
Net realized gain (loss) on investments and | |||||||||||||||||||||||||
foreign currency transactions | (156,842 | ) | 167,007 | — | — | 13,826,799 | 18,841,035 | 4,693,178 | 5,080,148 | ||||||||||||||||
Net unrealized appreciation (depreciation) of investments | |||||||||||||||||||||||||
and foreign currency transactions | 262,806 | (439,798 | ) | — | — | 16,218,957 | 16,838,008 | 21,635,736 | (12,205,192 | ) | |||||||||||||||
Net increase (decrease) in net assets resulting | |||||||||||||||||||||||||
from operations | 334,287 | 142,534 | 3,419 | — | 33,822,825 | 43,270,469 | 27,396,149 | (5,454,215 | ) | ||||||||||||||||
Distributions to Shareholders | |||||||||||||||||||||||||
Net investment income | (565,317 | ) | (637,207 | ) | (3,419 | ) | — | (7,591,392 | ) | (6,459,887 | ) | (1,560,148 | ) | (1,623,198 | ) | ||||||||||
Net realized gains | — | — | — | — | (18,784,208 | ) | (21,983,908 | ) | — | — | |||||||||||||||
Total distributions | (565,317 | ) | (637,207 | ) | (3,419 | ) | — | (26,375,600 | ) | (28,443,795 | ) | (1,560,148 | ) | (1,623,198 | ) | ||||||||||
Trust Share Transactions | |||||||||||||||||||||||||
Proceeds from shares sold | 521,286 | 2,067,791 | 11,232,662 | 21,696,027 | 2,132,219 | 5,231,017 | 1,288,871 | 3,684,475 | |||||||||||||||||
Reinvestment of distributions | 565,317 | 637,207 | 3,419 | — | 26,375,600 | 28,443,795 | 1,560,148 | 1,623,198 | |||||||||||||||||
Cost of shares redeemed | (1,461,403 | ) | (2,575,897 | ) | (11,449,487 | ) | (25,738,180 | ) | (14,416,392 | ) | (30,568,649 | ) | (4,697,223 | ) | (7,482,137 | ) | |||||||||
Net increase (decrease) from trust share transactions | (374,800 | ) | 129,101 | (213,406 | ) | (4,042,153 | ) | 14,091,427 | 3,106,163 | (1,848,204 | ) | (2,174,464 | ) | ||||||||||||
Net increase (decrease) in net assets | (605,830 | ) | (365,572 | ) | (213,406 | ) | (4,042,153 | ) | 21,538,652 | 17,932,837 | 23,987,797 | (9,251,877 | ) | ||||||||||||
Net Assets | |||||||||||||||||||||||||
Beginning of period | 29,411,149 | 29,776,721 | 9,916,231 | 13,958,384 | 475,019,445 | 457,086,608 | 124,439,331 | 133,691,208 | |||||||||||||||||
End of period † | $ | 28,805,319 | $ | 29,411,149 | $ | 9,702,825 | $ | 9,916,231 | $ | 496,558,097 | $ | 475,019,445 | $ | 148,427,128 | $ | 124,439,331 | |||||||||
†Includes undistributed net investment income of | $ | 228,325 | $ | 565,319 | $ | — | $ | — | $ | 3,777,103 | $ | 7,591,426 | $ | 1,067,206 | $ | 1,560,119 | |||||||||
Trust Shares Issued and Redeemed | |||||||||||||||||||||||||
Sold | 54,777 | 212,127 | 11,232,662 | 21,696,027 | 47,854 | 127,571 | 58,582 | 176,382 | |||||||||||||||||
Issued for distributions reinvested | 60,013 | 65,759 | 3,419 | — | 603,699 | 759,717 | 72,666 | 80,436 | |||||||||||||||||
Redeemed | (154,256 | ) | (263,764 | ) | (11,449,487 | ) | (25,738,180 | ) | (324,776 | ) | (737,137 | ) | (206,431 | ) | (355,017 | ) | |||||||||
Net increase (decrease) in trust shares outstanding | (39,466 | ) | 14,122 | (213,406 | ) | (4,042,153 | ) | 326,777 | 150,151 | (75,183 | ) | (98,199 | ) |
130 | See notes to financial statements | 131 |
Statements of Changes in Net Assets
FIRST INVESTORS LIFE SERIES FUNDS
LIMITED DURATION | |||||||||||||||||||||||||
INVESTMENT GRADE | HIGH QUALITY BOND | OPPORTUNITY | REAL ESTATE | ||||||||||||||||||||||
1/1/17 to | 1/1/16 to | 1/1/17 to | 1/1/16 to | 1/1/17 to | 1/1/16 to | 1/1/17 to | 1/1/16 to | ||||||||||||||||||
6/30/17 | 12/31/16 | 6/30/17 | 12/31/16 | 6/30/17 | 12/31/16 | 6/30/17 | 12/31/16 | ||||||||||||||||||
Increase (Decrease) in Net Assets From Operations | |||||||||||||||||||||||||
Net investment income (loss) | $ | 955,358 | $ | 1,930,804 | $ | 32,925 | $ | (23,268 | ) | $ | 203,672 | $ | 372,100 | $ | 219,231 | $ | 113,231 | ||||||||
Net realized gain (loss) on investments | 133,692 | 108,860 | (6,951 | ) | 87,700 | 659,060 | 159,810 | (259,361 | ) | 143,778 | |||||||||||||||
Net unrealized appreciation (depreciation) of investments | 630,567 | 832,063 | 58,053 | (39,631 | ) | 3,824,425 | 3,582,873 | (74,023 | ) | 163,821 | |||||||||||||||
Net increase (decrease) in net assets resulting | |||||||||||||||||||||||||
from operations | 1,719,617 | 2,871,727 | 84,027 | 24,801 | 4,687,157 | 4,114,783 | (114,153 | ) | 420,830 | ||||||||||||||||
Distributions to Shareholders | |||||||||||||||||||||||||
Net investment income | (2,510,135 | ) | (2,594,609 | ) | (144,072 | ) | (58,111 | ) | (372,100 | ) | (185,108 | ) | (113,232 | ) | (37,714 | ) | |||||||||
Net realized gains | — | — | — | — | — | — | (173,121 | ) | (33,942 | ) | |||||||||||||||
Total distributions | (2,510,135 | ) | (2,594,609 | ) | (144,072 | ) | (58,111 | ) | (372,100 | ) | (185,108 | ) | (286,353 | ) | (71,656 | ) | |||||||||
Trust Share Transactions | |||||||||||||||||||||||||
Proceeds from shares sold | 2,044,825 | 4,240,378 | 926,817 | 2,545,068 | 5,889,185 | 11,416,769 | 1,315,760 | 3,064,328 | |||||||||||||||||
Reinvestment of distributions | 2,510,135 | 2,594,609 | 144,072 | 58,111 | 372,100 | 185,108 | 286,353 | 71,657 | |||||||||||||||||
Cost of shares redeemed | (2,357,628 | ) | (5,037,845 | ) | (1,613,010 | ) | (569,288 | ) | (1,072,729 | ) | (2,908,776 | ) | (2,535,889 | ) | (1,233,869 | ) | |||||||||
Net increase (decrease) from trust share transactions | 2,197,332 | 1,797,142 | (542,121 | ) | 2,033,891 | 5,188,556 | 8,693,101 | (933,776 | ) | 1,902,116 | |||||||||||||||
Net increase (decrease) in net assets | 1,406,814 | 2,074,260 | (602,166 | ) | 2,000,581 | 9,503,613 | 12,622,776 | (1,334,282 | ) | 2,251,290 | |||||||||||||||
Net Assets | |||||||||||||||||||||||||
Beginning of period | 64,094,674 | 62,020,414 | 7,837,031 | 5,836,450 | 52,736,788 | 40,114,012 | 7,733,199 | 5,481,909 | |||||||||||||||||
End of period † | $ | 65,501,488 | $ | 64,094,674 | $ | 7,234,865 | $ | 7,837,031 | $ | 62,240,401 | $ | 52,736,788 | $ | 6,398,917 | $ | 7,733,199 | |||||||||
†Includes undistributed net investment income (deficit) of | $ | (718,515 | ) | $ | 836,262 | $ | (86,679 | ) | $ | 24,468 | $ | 203,672 | $ | 372,100 | $ | 219,230 | $ | 113,231 | |||||||
Trust Shares Issued and Redeemed | |||||||||||||||||||||||||
Sold | 193,483 | 393,060 | 96,464 | 261,586 | 356,426 | 782,642 | 126,939 | 289,558 | |||||||||||||||||
Issued for distributions reinvested | 240,665 | 249,722 | 15,118 | 6,016 | 22,703 | 13,601 | 26,812 | 7,372 | |||||||||||||||||
Redeemed | (222,694 | ) | (467,925 | ) | (168,626 | ) | (58,513 | ) | (65,103 | ) | (195,533 | ) | (251,038 | ) | (112,653 | ) | |||||||||
Net increase (decrease) in trust shares outstanding | 211,454 | 174,857 | (57,044 | ) | 209,089 | 314,026 | 600,710 | (97,287 | ) | 184,277 |
132 | See notes to financial statements | 133 |
Statements of Changes in Net Assets
FIRST INVESTORS LIFE SERIES FUNDS
SELECT GROWTH | SPECIAL SITUATIONS | TOTAL RETURN | |||||||||||||||||||||||
1/1/17 to | 1/1/16 to | 1/1/17 to | 1/1/16 to | 1/1/17 to | 1/1/16 to | ||||||||||||||||||||
6/30/17 | 12/31/16 | 6/30/17 | 12/31/16 | 6/30/17 | 12/31/16 | ||||||||||||||||||||
Increase (Decrease) in Net Assets From Operations | |||||||||||||||||||||||||
Net investment income | $ | 117,546 | $ | 301,574 | $ | 868,125 | $ | 2,139,310 | $ | 274,429 | $ | 556,840 | |||||||||||||
Net realized gain on investments | 2,567,675 | 5,700,391 | 7,134,838 | 2,795,013 | 280,843 | 276,149 | |||||||||||||||||||
Net unrealized appreciation (depreciation) | |||||||||||||||||||||||||
of investments | 4,388,058 | (3,849,242 | ) | 7,269,457 | 26,538,583 | 1,431,294 | 1,711,186 | ||||||||||||||||||
Net increase in net assets resulting | |||||||||||||||||||||||||
from operations | 7,073,279 | 2,152,723 | 15,272,420 | 31,472,906 | 1,986,566 | 2,544,175 | |||||||||||||||||||
Distributions to Shareholders | |||||||||||||||||||||||||
Net investment income | (301,564 | ) | (302,470 | ) | (2,139,302 | ) | (1,100,614 | ) | (682,830 | ) | (540,341 | ) | |||||||||||||
Net realized gains | (5,700,381 | ) | (3,354,825 | ) | (2,798,466 | ) | (13,593,030 | ) | — | — | |||||||||||||||
Total distributions | (6,001,945 | ) | (3,657,295 | ) | (4,937,768 | ) | (14,693,644 | ) | (682,830 | ) | (540,341 | ) | |||||||||||||
Trust Share Transactions | |||||||||||||||||||||||||
Proceeds from shares sold | 1,888,082 | 4,743,137 | 2,246,470 | 3,401,363 | 2,993,687 | 5,072,292 | |||||||||||||||||||
Reinvestment of distributions | 6,001,945 | 3,657,295 | 4,937,768 | 14,693,644 | 682,830 | 540,341 | |||||||||||||||||||
Cost of shares redeemed | (1,567,730 | ) | (2,460,331 | ) | (5,838,628 | ) | (12,774,843 | ) | (1,492,222 | ) | (3,725,512 | ) | |||||||||||||
Net increase from trust share transactions | 6,322,297 | 5,940,101 | 1,345,610 | 5,320,164 | 2,184,295 | 1,887,121 | |||||||||||||||||||
Net increase in net assets | 7,393,631 | 4,435,529 | 11,680,262 | 22,099,426 | 3,488,031 | 3,890,955 | |||||||||||||||||||
Net Assets | |||||||||||||||||||||||||
Beginning of period | 52,432,781 | 47,997,252 | 224,220,321 | 202,120,895 | 40,399,976 | 36,509,021 | |||||||||||||||||||
End of period † | $ | 59,826,412 | $ | 52,432,781 | $ | 235,900,583 | $ | 224,220,321 | $ | 43,888,007 | $ | 40,399,976 | |||||||||||||
†Includes undistributed net investment income of | $ | 117,556 | $ | 301,574 | $ | 868,133 | $ | 2,139,310 | $ | 9,757 | $ | 418,158 | |||||||||||||
Trust Shares Issued and Redeemed | |||||||||||||||||||||||||
Sold | 140,705 | 371,591 | 63,779 | 112,686 | 233,827 | 421,740 | |||||||||||||||||||
Issued for distributions reinvested | 467,077 | 305,794 | 141,931 | 534,314 | 53,556 | 47,440 | |||||||||||||||||||
Redeemed | (117,140 | ) | (189,192 | ) | (165,598 | ) | (411,970 | ) | (116,641 | ) | (305,968 | ) | |||||||||||||
Net increase in trust shares outstanding | 490,642 | 488,193 | 40,112 | 235,030 | 170,742 | 163,212 |
134 | See notes to financial statements | 135 |
Notes to Financial Statements
FIRST INVESTORS LIFE SERIES FUNDS
June 30, 2017
1. Significant Accounting Policies—First Investors Life Series Funds, a Delaware statutory trust (“the Trust”), is registered under the Investment Company Act of 1940 (the “1940 Act”) as an open-end management investment company. The Trust operates as a series fund, issuing shares of beneficial interest in the Balanced Income Fund, Covered Call Strategy Fund, Equity Income Fund, Fund For Income, Government Fund, Government Cash Management Fund (formerly Cash Management Fund), Growth & Income Fund, International Fund, Investment Grade Fund, Limited Duration High Quality Bond Fund, Opportunity Fund, Real Estate Fund, Select Growth Fund, Special Situations Fund and Total Return Fund (each a “Fund”, collectively, “the Funds”), and accounts separately for the assets, liabilities and operations of each Fund. Each Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 “Financial Services—Investment Companies” including FASB Accounting Standard Update ASU 2013-08. Each Fund is diversified except for Real Estate Fund which is non-diversified. The objective of each Fund as of June 30, 2017 is as follows:
Balanced Income Fund seeks income as its primary objective and has a secondary objective of capital appreciation.
Covered Call Strategy Fund seeks long-term capital appreciation.
Equity Income Fund seeks total return.
Fund For Income seeks high current income.
Government Fund seeks to achieve a significant level of current income which is consistent with security and liquidity of principal.
Government Cash Management Fund seeks to earn a high rate of current income consistent with the preservation of capital and maintenance of liquidity.
Growth & Income Fund seeks long-term growth of capital and current income.
International Fund primarily seeks long-term capital growth.
Investment Grade Fund seeks to generate a maximum level of income consistent with investment in investment grade debt securities.
Limited Duration High Quality Bond Fund seeks current income consistent with low volatility of principal.
Opportunity Fund seeks long-term capital growth.
Real Estate Fund seeks total return.
136 |
Select Growth Fund seeks long-term growth of capital.
Special Situations Fund seeks long-term growth of capital.
Total Return Fund seeks high, long-term total investment return consistent with moderate investment risk.
A. Security Valuation—Except as provided below, a security listed or traded on an exchange or the Nasdaq Stock Market is valued at its last sale price on the exchange or market where the security is principally traded, and lacking any sales, the security is valued at the mean between the closing bid and asked prices. Securities traded in the over-the-counter (“OTC”) market (including securities listed on exchanges whose primary market is believed to be OTC) are valued at the mean between the last bid and asked prices based on quotes furnished by a market maker for such securities or an authorized pricing service. Fixed income securities, other than short-term debt securities held by the Government Cash Management Fund, are priced based upon evaluated prices that are provided by a pricing service. Other securities may also be priced based upon valuations that are provided by pricing services approved by the Trust’s Board of Trustees (“the Board”). The pricing services consider security type, rating, market condition and yield data as well as market quotations, prices provided by market makers and other available information in determining value.
The Funds monitor for significant events occurring prior to the close of trading on the New York Stock Exchange that could have a material impact on the value of any securities that are held by the Funds. Examples of such events include trading halts, natural disasters, political events and issuer-specific developments. If the Valuation Committee of Foresters Investment Management Company, Inc. (“FIMCO”) decides that such events warrant using fair value estimates, it will take such events into consideration in determining the fair values of such securities. If market quotations or prices are not readily available or are deemed to be unreliable, or do not appear to reflect significant events that have occurred prior to the time as of which the net asset value is calculated, the securities may be valued at fair value as determined in good faith pursuant to procedures adopted by the Board. The Funds also use evaluated prices from a pricing service to fair value foreign equity securities in the event that fluctuations in U.S. securities markets exceed a predetermined level or if a foreign market is closed. For valuation purposes, where applicable, quotations of foreign securities in foreign currencies are translated to U.S. dollar equivalents using the foreign exchange quotation in effect.
The Government Cash Management Fund values its portfolio securities in accordance with the amortized cost method of valuation under Rule 2a-7 under the 1940 Act. Amortized cost is an approximation of market value of an instrument, whereby the
137 |
Notes to Financial Statements (continued)
FIRST INVESTORS LIFE SERIES FUNDS
June 30, 2017
difference between its acquisition cost and market value at maturity is amortized on a straight-line basis over the remaining life of the instrument. The effect of changes in the market value of a security as a result of fluctuating interest rates is not taken into account and thus the amortized cost method of valuation may result in the value of a security being higher or lower than its actual market value.
In accordance with Accounting Standards Codification 820 “Fair Value Measurements and Disclosures” (“ASC 820”), investments held by the Funds are carried at “fair value”. As defined by ASC 820, fair value is the price that a fund would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market for the investment under current market conditions. Various inputs are used in determining the value of the Funds’ investments.
In addition to defining fair value, ASC 820 established a three-tier hierarchy of inputs to establish a classification of fair value measurements for disclosure purposes. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below:
Level 1 – Unadjusted quoted prices in active markets for identical securities that the Fund has the ability to access.
Level 2 – Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
Level 3 – Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumption about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.
Equity securities and options and futures contracts traded on an exchange or the Nasdaq Stock Market are categorized in Level 1 of the fair value hierarchy to the extent that they are actively traded and valuation adjustments are not applied. Foreign securities that are fair valued in the event that fluctuations in U.S. securities markets exceed a predetermined level or if a foreign market is closed are categorized in Level 2. Corporate, covered and municipal bonds, asset backed, U.S. Government and U.S. Government Agency securities, pass-through certificates and loan participations are categorized in Level 2 to the extent that the inputs are observable and timely, otherwise they would be categorized in Level 3. Short-term notes that are valued at amortized cost by the Government Cash Management Fund are categorized in Level 2. Restricted securities and securities that are fair valued by the Valuation
138 |
Committee may be categorized in either Level 2 or Level 3 of the fair value hierarchy depending on the relative significance of the unobservable valuation inputs.
The aggregate value by input level, as of June 30, 2017, for each Fund’s investments is included following each Fund’s portfolio of investments.
B. Federal Income Tax—No provision has been made for federal income taxes on net income or capital gains since it is the policy of each Fund to continue to comply with the special provisions of the Internal Revenue Code applicable to investment companies, and to make sufficient distributions of income and capital gains (in excess of any available capital loss carryovers), to relieve each Fund from all, or substantially all, federal income taxes. At December 31, 2016, capital loss carryovers were as follows:
Not Subject | ||||||||||
to Expiration | ||||||||||
Fund | Total | 2017 | 2018 | Long Term | Short Term | |||||
Covered Call Strategy | $ 278,242 | $ — | $ — | $ — | $ 278,242 | |||||
Fund For Income | 22,195,447 | 15,502,053 | — | 5,435,503 | 1,257,891 | |||||
Government | 1,006,919 | — | — | 140,669 | 866,250 | |||||
International | 6,224,564 | 5,191,811 | 1,032,753 | — | — | |||||
Investment Grade | 1,343,040 | 1,145,101 | — | 197,939 | — | |||||
Limited Duration | ||||||||||
High Quality Bond | 20,594 | — | — | — | 20,594 | |||||
Opportunity | 508,062 | — | — | — | 508,062 | |||||
Total Return | 66,830 | — | — | — | 66,830 |
During the year ended December 31, 2016, the following Funds had utilized/expired capital loss carryovers of:
Fund | Utilized | Expired | ||||||||
Balanced Income | $ 1,322 | $ — | ||||||||
Fund For Income | — | 3,694,844 | ||||||||
Government | 16,977 | — | ||||||||
International | 5,246,581 | — | ||||||||
Investment Grade | — | 684,231 | ||||||||
Opportunity | 190,490 | — | ||||||||
Total Return | 208,062 | — |
As a result of the passage of the Regulated Investment Company Modernization Act of 2010 (“the Modernization Act of 2010”), losses incurred in this year and beyond retain their character as short-term or long-term, have no expiration date and are utilized prior to capital loss carryovers occurring prior to the enactment of the Modernization Act of 2010.
139 |
Notes to Financial Statements (continued)
FIRST INVESTORS LIFE SERIES FUNDS
June 30, 2017
The Funds recognize the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has analyzed the Funds’ tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for open tax years 2014–2016, or are expected to be taken in the Funds’ 2017 tax returns. The Funds identify their major tax jurisdictions as U.S. Federal, New York State, New York City and foreign jurisdictions where the Funds make significant investments; however, the Funds are not aware of any tax position for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.
C. Foreign Currency Translations and Transactions—The accounting records of the International Fund (the “Fund”) are maintained in U.S. dollars. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the date of valuation. Purchases and sales of investment securities, dividend income and certain expenses are translated to U.S. dollars at the prevailing rates of exchange on the respective dates of such transactions.
The Fund does not isolate that portion of gains and losses on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. These changes are included with the net realized and unrealized gains and losses from investments.
Net realized and unrealized gains and losses on foreign currency transactions include gains and losses from the sales of spot currency transactions and gains and losses on accrued foreign dividends and related withholding taxes.
D. Distributions to Shareholders—The Separate Accounts, which own the shares of the Funds, will receive all dividends and other distributions by them. All dividends and distributions are reinvested by the Separate Accounts in additional shares of the distributing Funds. Distributions to shareholders from net investment income and net realized capital gains are generally declared and paid annually on all Funds, except for the Government Cash Management Fund which declares dividends, if any, from the total of net investment income (plus or minus all realized short-term gains and losses on investments) daily and pays monthly. Dividends from net investment income and capital gain distributions are determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences are primarily due to differing treatments for capital loss carryforwards, deferral of wash sale losses, late loss deferrals, post-October capital losses, net operating losses and foreign currency transactions.
140 |
E. Expense Allocation—Expenses directly charged or attributable to a Fund are paid from the assets of that Fund. General expenses of the Trust are allocated among and charged to the assets of each Fund on a fair and equitable basis, which may be based on the relative assets of each Fund or the nature of the services performed and relative applicability to each Fund.
F. Use of Estimates—The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates.
G. Other—Security transactions are generally accounted for on the first business day following the date the securities are purchased or sold, except for financial reporting purposes which is trade date. Investments in securities issued on a when-issued or delayed delivery basis are generally reflected in the assets of the Funds on the first business day following the date the securities are purchased and the Funds segregate assets for these transactions. Cost of securities is determined and gains and losses are based on the identified cost basis for securities for both financial statement and federal income tax purposes. Dividend income is recorded on the ex-dividend date or for certain foreign dividends, as soon as the Fund becomes aware of the dividends. Interest income and estimated expenses are accrued daily. Bond discounts and premiums are accreted or amortized using the interest method. Interest income on zero coupon bonds and step bonds is accrued daily at the effective interest rate. Withholding taxes on foreign dividends have been provided in accordance with the Funds’ understanding of the applicable country’s tax rules and rates. The Bank of New York Mellon serves as custodian for the Funds and may provide credits against custodian charges based on uninvested cash balances of the Funds. For the period ended June 30, 2017, the Funds received credits in the amount of $12,328. Certain of the Funds reduced expenses through brokerage service arrangements. For the period ended June 30, 2017, the Balanced Income, Equity Income, Growth & Income, Opportunity, Special Situations and Total Return Funds’ expenses were reduced by a total of $3,180 under these arrangements.
2. Trust Shares—The Trust is authorized to issue an unlimited number of shares of beneficial interest without par value. The Trust consists of the Funds listed on the cover page, each of which is a separate and distinct series of the Trust. Shares in the Funds are acquired through the purchase of variable annuity or variable life insurance contracts for which a Fund is an investment option.
141 |
Notes to Financial Statements (continued)
FIRST INVESTORS LIFE SERIES FUNDS
June 30, 2017
3. Security Transactions—For the period ended June 30, 2017, purchases and sales of securities and long-term U.S. Government obligations (excluding U.S. Treasury bills, short-term securities and foreign currencies) were as follows:
Long-Term U.S. | ||||||||
Securities | Government Obligations | |||||||
Cost of | Proceeds | Cost of | Proceeds | |||||
Fund | Purchases | of Sales | Purchases | of Sales | ||||
Balanced Income | $ 3,410,468 | $ 4,833,264 | $425,317 | $851,576 | ||||
Covered Call Strategy | 6,821,233 | 9,324,933 | — | — | ||||
Equity Income | 9,449,637 | 9,617,190 | — | — | ||||
Fund For Income | 34,398,135 | 32,227,497 | — | — | ||||
Government | 4,468,344 | 3,950,114 | 822,551 | 1,741,106 | ||||
Growth & Income | 39,397,886 | 53,279,329 | — | — | ||||
International | 21,852,718 | 23,380,338 | — | — | ||||
Investment Grade | 18,942,248 | 17,030,829 | — | 694,012 | ||||
Limited Duration | ||||||||
High Quality Bond | 3,581,212 | 4,238,062 | 253,688 | — | ||||
Opportunity | 13,835,433 | 10,109,231 | — | — | ||||
Real Estate | 1,733,592 | 2,818,553 | — | — | ||||
Select Growth | 18,834,539 | 18,355,211 | — | — | ||||
Special Situations | 34,455,504 | 41,202,552 | — | — | ||||
Total Return | 7,651,107 | 8,558,359 | 1,599,111 | 1,338,926 |
142 |
At June 30, 2017, aggregate cost and net unrealized appreciation (depreciation) of securities for federal income tax purposes were as follows:
Net | |||||||||||||
Gross | Gross | Unrealized | |||||||||||
Aggregate | Unrealized | Unrealized | Appreciation | ||||||||||
Fund | Cost | Appreciation | Depreciation | (Depreciation | ) | ||||||||
Balanced Income | $ | 5,750,019 | $ | 360,199 | $ | 131,020 | $ | 229,179 | |||||
Covered Call Strategy | 7,321,045 | 926,430 | 146,285 | 780,145 | |||||||||
Equity Income | 84,518,094 | 37,884,196 | 2,230,653 | 35,653,543 | |||||||||
Fund For Income | 99,982,065 | 3,427,137 | 671,132 | 2,756,005 | |||||||||
Government | 28,550,521 | 187,824 | 365,293 | (177,469 | ) | ||||||||
Growth & Income | 298,938,447 | 207,415,530 | 12,567,862 | 194,847,668 | |||||||||
International | 101,079,116 | 47,386,804 | 1,004,419 | 46,382,385 | |||||||||
Investment Grade | 64,254,495 | 1,278,492 | 1,095,163 | 183,329 | |||||||||
Limited Duration | |||||||||||||
High Quality Bond | 7,242,309 | 17,867 | 137,768 | (119,901 | ) | ||||||||
Opportunity | 50,996,036 | 12,050,029 | 1,923,773 | 10,126,256 | |||||||||
Real Estate | 6,059,246 | 441,829 | 292,599 | 149,230 | |||||||||
Select Growth | 48,318,723 | 11,369,316 | 566,466 | 10,802,850 | |||||||||
Special Situations | 172,990,148 | 66,457,362 | 5,902,340 | 60,555,022 | |||||||||
Total Return | 39,366,843 | 5,124,666 | 1,136,694 | 3,987,972 |
4. Advisory Fee and Other Transactions With Affiliates—Certain officers of the Trust are officers of the Trust’s investment adviser, FIMCO and its transfer agent, Foresters Investor Services, Inc. (“FIS”). Trustees of the Trust who are not officers or directors of FIMCO or its affiliates are remunerated by the Funds. For the period ended June 30, 2017, total trustee fees accrued by the Funds amounted to $42,473.
The Investment Advisory Agreement provides as compensation to FIMCO for each Fund, an annual fee, payable monthly, at the rate of .75% on the first $250 million of each Fund’s average daily net assets, .72% on the next $250 million, .69% on the next $250 million, .66% on the next $500 million, declining by .02% on each $500 million thereafter, down to .60% on average daily net assets over $2.25 billion. For the period ended June 30, 2017, FIMCO has voluntarily waived advisory fees in the amount of $6,016 on Balanced Income Fund, $21,687 on Government Fund, $48,063 on Investment Grade Fund and $5,852 on Limited Duration High Quality Bond Fund in order to limit the advisory fees on these Funds to .60% of their average daily net assets. During the period ended June 30, 2017, FIMCO has voluntarily waived advisory fees in the amount of $32,906 on Government Cash Management
143 |
Notes to Financial Statements (continued)
FIRST INVESTORS LIFE SERIES FUNDS
June 30, 2017
Fund to prevent a negative yield on the Fund’s shares. For the period ended June 30, 2017, total advisory fees accrued to FIMCO were $5,073,852 of which $114,524 was voluntarily waived by FIMCO as noted above.
Ziegler Capital Management, LLC serves as investment subadviser to Covered Call Strategy Fund, Muzinich & Co., Inc. serves as investment subadviser to Fund For Income, Vontobel Asset Management, Inc. serves as investment subadviser to International Fund and Smith Asset Management Group, L.P. serves as investment subadviser to Select Growth Fund. The subadvisers are paid by FIMCO and not by the Funds.
5. Restricted Securities—Certain restricted securities are exempt from the registration requirements under Rule 144A of the Securities Act of 1933 and may only be sold to qualified institutional investors. Unless otherwise noted, 144A securities are deemed to be liquid. At June 30, 2017, the Fund For Income held one hundred ninety-two 144A securities with an aggregate value of $48,678,753 representing 46.4% of the Fund’s net assets, the Government Fund held one 144A security with a value of $604,549 representing 2.1% of the Fund’s net assets, the Investment Grade Fund held sixteen 144A securities with an aggregate value of $6,744,435 representing 10.3% of the Fund’s net assets, the Limited Duration High Quality Bond Fund held eight 144A securities with an aggregate value of $1,259,386 representing 17.4% of the Fund’s net assets and the Total Return Fund held eight 144A securities with an aggregate value of $1,045,938 representing 2.4% of the Fund’s net assets. Certain restricted securities are exempt from the registration requirements under Section 4(2) of the Securities Act of 1933 and may only be sold to qualified investors. Unless otherwise noted, these Section 4(2) securities are deemed to be liquid. At June 30, 2017, the Total Return Fund held four Section 4(2) securities with an aggregate value of $1,897,946 representing 4.3% of the Fund’s net assets. These securities are valued as set forth in Note 1A.
6. Derivatives—Some of the Funds may invest in various derivatives. A derivative is a financial instrument which has a value that is based on—or “derived from”—the values of other assets, reference rates, or indices. The Funds may invest in derivatives for hedging purposes.
Derivatives may relate to a wide variety of underlying references, such as commodities, stocks, bonds, interest rates, currency exchange rates, and related indices. Derivatives include futures contracts and options on futures contracts, forward-commitment transactions, options on securities, caps, floors, collars, swap contracts, and other financial instruments. Some derivatives, such as futures contracts and certain options, are traded on U.S. commodity and securities exchanges, while other
144 |
derivatives, such as swap contracts, are privately negotiated and entered into in the over-the-counter market (“OTC”). The risks associated with the use of derivatives are different from, and possibly greater than, the risks associated with investing directly in securities and other traditional investments.
The use of a derivative involves the risk that a loss may be sustained as a result of the insolvency or bankruptcy of the other party to the contract (usually referred to as a “counterparty”) or the failure of the counterparty to make required payments or otherwise comply with the terms of the contract. Additionally, the use of credit derivatives can result in losses if FIMCO, or a Fund’s subadviser, as applicable, does not correctly evaluate the creditworthiness of the issuer on which the credit derivative is based.
Derivatives may be subject to liquidity risk, which exists when a particular derivative is difficult to purchase or sell. If a derivative transaction is particularly large or if the relevant market is relatively illiquid (as is the case with many OTC derivatives), it may not be possible to initiate a transaction or liquidate a position at an advantageous time or price.
Derivatives may be subject to pricing or “basis” risk, which exists when a particular derivative becomes extraordinarily expensive relative to historical prices or the prices of corresponding cash market instruments. Under certain market conditions, it may not be economically feasible to initiate a transaction or liquidate a position in time to avoid a loss or take advantage of an opportunity.
Because many derivatives have leverage or borrowing components, adverse changes in the value or level of the underlying asset, reference rate, or index can result in a loss substantially greater than the amount invested in the derivative itself. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment.
Like most other investments, derivative instruments are subject to the risk that the market value of the instrument will change in a way detrimental to the Funds’ interest. The Funds bear the risk that FIMCO will incorrectly forecast future market trends or the values of assets, reference rates, indices, or other financial or economic factors in establishing derivative positions for the Funds. If FIMCO attempts to use a derivative as a hedge against, or as a substitute for, a portfolio investment, the Funds will be exposed to the risk that the derivative will have or will develop an imperfect or no correlation with the portfolio investment. This could cause substantial losses for the Funds. While hedging strategies involving derivative instruments can reduce the risk of loss, they can also reduce the opportunity for gain or even result in losses by offsetting favorable price movements in other investments. Many derivatives, in
145 |
Notes to Financial Statements (continued)
FIRST INVESTORS LIFE SERIES FUNDS
June 30, 2017
particular OTC derivatives, are complex and often valued subjectively. Improper valuations can result in increased cash payment requirements to counterparties or a loss of value to a Fund.
The following provides more information on specific types of derivatives and activity in the Funds. The use of derivative instruments by certain of the Funds for the period ended June 30, 2017 was related to the use of written options, as discussed further below.
Options Contracts—Some of the Funds may write covered call options on securities, derivative instruments, or currencies the Fund owns or in which it may invest. Writing call options tends to decrease a Fund’s exposure to the underlying instrument. When a Fund writes a call, an amount equal to the premium received is recorded as a liability and subsequently marked to market to reflect the current value of the option written. These liabilities are reflected as written options outstanding in the Statement of Assets and Liabilities. Payments received or made, if any, from writing options with premiums to be determined on a future date are reflected as such on the Statement of Assets and Liabilities. Premiums received from writing options which expire are treated as realized gains. Premiums received from writing options which are exercised or closed are added to the proceeds or offset against amounts paid on the underlying future, swap, security or currency transaction to determine the realized gain or loss. A Fund, as a writer of an option, has no control over whether the underlying future, swap, security or currency may be sold (call) or purchased (put) and, as a result, bears the market risk of an unfavorable change in the price of the future, swap, security or currency underlying the written option. The risk exists that a Fund may not be able to enter into a closing transaction because of an illiquid market.
A Fund pays a premium which is included in its Statement of Assets and Liabilities as an investment and subsequently marked to market to reflect the current value of the option. Premiums paid for purchasing options which expire are treated as realized losses. The risk associated with purchasing put and call options is limited to the premium paid. Premiums paid for purchasing options which are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying future, swap, security or currency transaction to determine the realized gain or loss.
146 |
The premium amount and the number of option contracts written by the Funds during the period ended June 30, 2017, were as follows:
Covered Call Strategy | Equity Income | ||||||||
Call Options | Call Options | ||||||||
Number of | Premium | Number of | Premium | ||||||
Contracts | Amount | Contracts | Amount | ||||||
Options outstanding at | |||||||||
beginning of period | (1,399 | ) | $ (209,302 | ) | — | $ — | |||
Call options written | (9,462 | ) | (1,014,122 | ) | (670 | ) | (53,613 | ) | |
Call options exercised | 96 | 16,198 | 360 | 32,597 | |||||
Call options purchased | |||||||||
to cover | 8,002 | 911,379 | — | — | |||||
Call options expirations | 1,563 | 138,993 | 310 | 21,016 | |||||
Balance at | |||||||||
June 30, 2017 | (1,200 | ) | $ (156,854 | ) | — | $ — |
Derivative Investment Holdings Categorized by Risk Exposure—The following table sets forth the fair value and the location in the Statement of Assets and Liabilities of the Funds’ derivative contracts by primary risk exposure as of June 30, 2017:
Asset derivatives | Liability derivatives | |||
Statement of Assets and | Statement of Assets and | |||
Risk exposure category | Liabilities location | Value | Liabilities location | Value |
Equity Contracts: | ||||
Covered Call Strategy | N/A | N/A | Written options, at value | $164,899 |
The following table sets forth the Funds’ realized gain (loss), as reflected in the Statement of Operations, by primary risk exposure and by type of derivative contract for the period ended June 30, 2017:
Risk exposure category | Written options | |||||
Equity contracts: | ||||||
Covered Call Strategy | $7,342 |
147 |
Notes to Financial Statements (continued)
FIRST INVESTORS LIFE SERIES FUNDS
June 30, 2017
The following table sets forth the Funds’ change in unrealized appreciation/(depreciation) by primary risk exposure and by type of derivative contract for the period ended June 30, 2017:
Risk exposure category | Covered Call Strategy | |||||
Option contracts | $(35,050) |
Interest Rate Futures Contracts—The Funds may enter into interest rate futures contracts on U.S. Treasury obligations and options thereon that are traded on a U.S. exchange. An interest rate futures contract provides for the future sale by one party and the purchase by another party of a specified amount of a particular financial instrument (debt security) at a specified price, date, time and place. Such investments may be used for, among other purposes, the purpose of hedging against changes in the value of a Fund’s portfolio securities due to anticipated changes in interest rates and market conditions. A public market exists for interest rate futures contracts covering a number of debt securities, including long-term U.S. Treasury Bonds, 10-year U.S. Treasury Notes and three-month U.S. Treasury Bills. No price is paid upon entering into futures contracts. Instead, upon entering into a futures contract, a Fund is required to deposit with its custodian in a segregated account in the name of the futures broker through which the transaction is effected an amount of cash or U.S. Government securities generally equal to 3%-5% or less of the contract value. This amount is known as “initial margin.”
An option on an interest rate futures contract generally gives the purchaser the right, in return for the premium paid, to assume a position in a futures contract at a specified exercise price at any time prior to the expiration date of the option. The Funds may purchase put and call options on interest rate futures contracts on U.S. Treasury obligations which are traded on a U.S. exchange as a hedge against changes in interest rates, and may enter into closing transactions with respect to such options to terminate existing positions. There is no guarantee such closing transactions can be effected. When writing a call or put option on a futures contract, margin also must be deposited in accordance with applicable exchange rules. Initial margin on futures contracts is in the nature of a performance bond or good-faith deposit that is returned to a Fund upon termination of the transaction, assuming all obligations have been satisfied. Under certain circumstances, such as periods of high volatility, a Fund may be required by an exchange to increase the level of its initial margin payment. Subsequent payments, called “variation margin,” to and from the broker, are made on a daily basis as the value of the futures position varies, a process known as “marking to market.” Variation margin does not involve borrowing to finance the futures transactions, but rather represents a daily settlement of a Fund’s obligation to or from
148 |
a clearing organization. A Fund is also obligated to make initial and variation margin payments when it writes options on futures contracts.
To the extent that a Fund participates in the futures or options markets, it will incur investment risks and transaction costs to which it would not be subject absent the use of these strategies. The use of these strategies involves certain special risks, including: (1) dependence on the ability of the Funds’ investment adviser, FIMCO, or a Fund’s subadviser, as applicable, to predict correctly movements in the direction of interest rates and securities prices; (2) imperfect correlation between the price of futures contracts and options thereon and movements in the prices of the securities or currencies being hedged; (3) the fact that skills needed to use these strategies are different from those needed to select portfolio securities; (4) the leverage (if any) that is created by investing in the option or futures contract; and (5) the possible absence of a liquid secondary market for any particular instrument at any time. If FIMCO’s, or a Fund’s subadviser’s, if applicable, prediction of movements in the direction of the securities and interest rate markets is inaccurate, the adverse consequences to that Fund may leave it in a worse position than if such strategies were not used. Derivatives may be difficult to sell, unwind or value.
The amount of realized gains and losses on interest rate futures contracts recognized by the Funds in the accompanying Statement of Operations for the period ended June 30, 2017 are summarized in the following table:
Statement of Operations Location | ||||||
Realized Loss | Interest Rate Futures Contracts | |||||
Balanced Income | $(18,965) |
The following table summarizes the value of the Funds’ interest rate futures contracts held as of June 30, 2017, and the related location in the accompanying Statement of Operations.
Statement of Operations Location | ||||||
Unrealized depreciation | ||||||
Interest Rate Futures | in value of investments | |||||
Balanced Income | $(4,573) |
7. High Yield Credit Risk—The investments of Fund For Income and Investment Grade Fund in high yield securities, whether rated or unrated, may be considered speculative and subject to greater market fluctuations and risks of loss of income and principal than lower-yielding, higher-rated, fixed-income securities. The risk of
149 |
Notes to Financial Statements (continued)
FIRST INVESTORS LIFE SERIES FUNDS
June 30, 2017
loss due to default by the issuer may be significantly greater for the holders of high-yielding securities, because such securities are generally unsecured and are often subordinated to other creditors of the issuer.
8. Litigation—The Blue Chip and Equity Income Funds have been named, and have received notice that they may be putative members of the proposed defendant class of shareholders, in a lawsuit filed in the United States Bankruptcy Court for the District of Delaware on November 1, 2010, by the Official Committee of Unsecured Creditors of Tribune Company (the “Committee”). The Committee is seeking to recover all payments made to beneficial owners of common stock in connection with a leveraged buyout of the Tribune Company (“LBO”), including payments made in connection with a 2007 tender offer into which the Blue Chip and Equity Income Funds tendered their shares of common stock of the Tribune Company. On December 9, 2011, the Blue Chip Fund was reorganized into the Growth & Income Fund pursuant to a Plan of Reorganization and Termination, whereby all of the assets of the Blue Chip Fund were transferred to the Growth & Income Fund, the Growth & Income Fund assumed all of the liabilities of the Blue Chip Fund, including any contingent liabilities with respect to pending or threatened litigation or actions, and shareholders of Blue Chip Fund became shareholders of Growth & Income Fund. The adversary proceeding brought by the Committee has been transferred to the Southern District of New York and administratively consolidated with other similar suits as discussed below. In addition, on June 2, 2011, the Blue Chip and Equity Income Funds were named as defendants in a lawsuit brought in connection with the Tribune Company’s LBO by Deutsche Bank Trust Company Americas, in its capacity as successor indenture trustee for a certain series of Senior Notes, Law Debenture Trust Company of New York, in its capacity as successor indenture trustee for a certain series of Senior Notes, and Wilmington Trust Company, in its capacity as successor indenture trustee for the PHONES Notes (together, the “Bondholder Plaintiffs”) in the Supreme Court of the State of New York. The Blue Chip and Equity Income Funds have also been named in a similar suit filed on behalf of participants in Tribune defined-compensation plans (the “Retiree Plaintiffs”). As with the Bondholder Plaintiffs and the Committee, the Retiree Plaintiffs seek to recover payments of the proceeds of the LBO. (All of these suits have been removed to the United States District Court for the Southern District of New York and administratively consolidated with other substantially similar suits against other former Tribune shareholders (the “MDL Proceeding”)). On September 23, 2013, the Judge in the MDL Proceeding dismissed various state law constructive fraudulent transfer suits, resulting in the Funds being dismissed from the Bondholder and Retiree Plaintiffs’ actions. On March 24, 2016, the Second Circuit Court of Appeals affirmed the MDL Judge’s dismissal of the various state law constructive fraudulent transfer suits. In September 2016, the Bondholder and
150 |
Plaintiffs petitioned the U.S. Supreme Court to review the Second Circuit’s decision. The Supreme Court has not yet ruled on that request. On January 9, 2017, the Tribune MDL judge granted the defendants’ motion to dismiss the Committee lawsuit alleging a single claim for intentional fraudulent transfer. An appeal of that decision to the Second Circuit is expected, but has not yet been made. The extent of the Funds’ potential liability in any such actions has not been determined. The Funds have been advised by counsel that the Funds could be held liable to return all or part of the proceeds received in any of these actions, as well as interest and court costs, even though the Funds had no knowledge of, or participation in, any misconduct. The Equity Income Fund received proceeds of $376,754 in connection with the LBO, representing .31% of its net assets as of June 30, 2017. The Blue Chip Fund received proceeds of $288,456 in connection with the LBO, representing .06% of the net assets of Growth & Income Fund as of June 30, 2017. The Equity Income and Growth & Income Funds cannot predict the outcomes of these proceedings, and thus have not accrued any of the amounts sought in the various actions in the accompanying financial statements.
9. Conversion of Cash Management Fund to Government Cash Management Fund—Effective October 3, 2016, the name of the First Investors Life Series Cash Management Fund changed to the First Investors Life Series Government Cash Management Fund and the Fund converted to a “government money market fund” as defined in Rule 2a-7 under the Investment Company Act of 1940. As a government money market fund, the Fund has a policy to invest at least 99.5% of its total assets in U.S. Government Securities, cash and/or repurchase agreements that are collateralized fully by cash and/or U.S. Government Securities. In addition, the Fund has a policy to invest, under normal circumstances, at least 80% of its net assets, including any borrowings for investment purposes, in U.S. Government Securities and repurchase agreements collateralized fully by cash or U.S. Government Securities.
10. Subsequent Events—Subsequent events occurring after June 30, 2017 have been evaluated for potential impact to this report through the date the financial statements were issued. There were no subsequent events to report that would have a material impact on the Funds’ financial statements.
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Financial Highlights
FIRST INVESTORS LIFE SERIES FUNDS
The following table sets forth the per share operating performance data for a trust share outstanding,
total return, ratios to average net assets and other supplemental data for each year ended December 31
except as otherwise indicated.
P E R S H A R E D A T A | R A T I O S / S U P P L E M E N T A L D A T A | ||||||||||||||||||||||||||
Less Distributions | Ratio to Average Net | ||||||||||||||||||||||||||
Investment Operations | from | Ratio to Average | Assets Before Expenses | ||||||||||||||||||||||||
Net Asset | Net Realized | Net Asset | Net Assets** | Waived or Assumed | |||||||||||||||||||||||
Value, | Net | and Unrealized | Total from | Net | Net | Value, | Net Assets | Expenses | Net | Net | Portfolio | ||||||||||||||||
Beginning | Investment | Gain (Loss) on | Investment | Investment | Realized | Total | End | Total | End of Period | Before Fee | Investment | Investment | Turnover | ||||||||||||||
of Period | Income | Investments | Operations | Income | Gains | Distributions | of Period | Return* | (in millions) | Credits | *** | Income (Loss) | Expenses*** | Income (Loss) | Rate | ||||||||||||
BALANCED INCOME FUND | |||||||||||||||||||||||||||
2015(f) | $10.00 | $ — | (a) | $ (.17 | ) | $ (.17 | ) | $ — | $ — | $ — | $ 9.83 | (1.70 | )%†† | $ 5 | 3.10 | %† | (.70 | )%† | 3.25 | %† | (.85 | )%† | 26 | %†† | |||
2016 | 9.83 | .13 | (a) | .53 | .66 | — | — | — | 10.49 | 6.71 | 9 | 1.51 | 1.31 | 1.66 | 1.16 | 101 | |||||||||||
2017(m) | 10.49 | .11 | (a) | .28 | .39 | .12 | .12 | .24 | 10.64 | 3.72 | †† | 6 | .98 | † | 2.05 | † | 1.13 | † | 1.90 | † | 51 | †† | |||||
COVERED CALL STRATEGY FUND | |||||||||||||||||||||||||||
2016(d) | $10.00 | $ .07 | (a) | $ .46 | $ .53 | $ — | — | $ — | $10.53 | 5.30 | %†† | $ 10 | 1.73 | %† | .97 | %† | N/A | N/A | 96 | %†† | |||||||
2017(m) | 10.53 | .07 | (a) | .36 | .43 | .04 | — | .04 | 10.92 | 4.11 | †† | 8 | 1.07 | † | 1.29 | † | N/A | N/A | 61 | †† | |||||||
EQUITY INCOME FUND(l) | |||||||||||||||||||||||||||
2012 | $14.99 | $ .38 | $1.29 | $1.67 | $.30 | $ — | $ .30 | $16.36 | 11.20 | % | $ 74 | .87 | % | 2.37 | % | N/A | N/A | 39 | % | ||||||||
2013 | 16.36 | .36 | 4.55 | 4.91 | .38 | — | .38 | 20.89 | 30.53 | 99 | .82 | 1.97 | N/A | N/A | 31 | ||||||||||||
2014 | 20.89 | .35 | 1.28 | 1.63 | .36 | .87 | 1.23 | 21.29 | 8.26 | 110 | .81 | 1.76 | N/A | N/A | 25 | ||||||||||||
2015 | 21.29 | .40 | (a) | (.58 | ) | (.18 | ) | .35 | .75 | 1.10 | 20.01 | (1.03 | ) | 107 | .81 | 1.97 | N/A | N/A | 24 | ||||||||
2016 | 20.01 | .42 | (a) | 2.03 | 2.45 | .40 | .70 | 1.10 | 21.36 | 13.28 | 117 | .81 | 2.09 | N/A | N/A | 20 | |||||||||||
2017(m) | 21.36 | .22 | (a) | .98 | 1.20 | .42 | .51 | .93 | 21.63 | 5.70 | †† | 122 | .80 | † | 2.08 | † | N/A | N/A | 8 | †† | |||||||
FUND FOR INCOME(k) | |||||||||||||||||||||||||||
2012 | $ 6.42 | $ .41 | $ .42 | $ .83 | $.44 | — | $.44 | $ 6.81 | 13.51 | % | $ 84 | .88 | % | 6.11 | % | N/A | N/A | 61 | % | ||||||||
2013 | 6.81 | .36 | .09 | .45 | .42 | — | .42 | 6.84 | 6.88 | 95 | .88 | 5.37 | N/A | N/A | 56 | ||||||||||||
2014 | 6.84 | .34 | (.28 | ) | .06 | .37 | — | .37 | 6.53 | .79 | 99 | .85 | 4.88 | N/A | N/A | 41 | |||||||||||
2015 | 6.53 | .30 | (a) | (.40 | ) | (.10 | ) | .36 | — | .36 | 6.07 | (1.85 | ) | 95 | .86 | 4.86 | N/A | N/A | 45 | ||||||||
2016 | 6.07 | .30 | (a) | .34 | .64 | .35 | — | .35 | 6.36 | 11.12 | 101 | .89 | 4.85 | N/A | N/A | 56 | |||||||||||
2017(m) | 6.36 | .14 | (a) | .11 | .25 | .33 | — | .33 | 6.28 | 4.01 | †† | 105 | .88 | † | 4.65 | † | N/A | N/A | 32 | †† | |||||||
GOVERNMENT FUND | |||||||||||||||||||||||||||
2012 | $10.53 | $ .20 | $ — | $ .20 | $.31 | — | $.31 | $10.42 | 1.95 | % | $ 32 | .75 | % | 2.10 | % | .90 | % | 1.95 | % | 46 | % | ||||||
2013 | 10.42 | .18 | (.43 | ) | (.25 | ) | .27 | — | .27 | 9.90 | (2.47 | ) | 30 | .76 | 1.76 | .91 | 1.61 | 118 | |||||||||
2014 | 9.90 | .18 | .13 | .31 | .26 | — | .26 | 9.95 | 3.14 | 31 | .74 | 1.82 | .89 | 1.67 | 103 | ||||||||||||
2015 | 9.95 | .16 | (a) | (.15 | ) | .01 | .23 | — | .23 | 9.73 | .04 | 30 | .75 | 1.62 | .90 | 1.47 | 87 | ||||||||||
2016 | 9.73 | .14 | (a) | (.09 | ) | .05 | .21 | — | .21 | 9.57 | .48 | 29 | .75 | 1.38 | .90 | 1.23 | 95 | ||||||||||
2017(m) | 9.57 | .07 | (a) | .03 | .10 | .18 | — | .18 | 9.49 | 1.11 | †† | 29 | .75 | † | 1.58 | † | .90 | † | 1.43 | † | 19 | †† |
152 | 153 |
Financial Highlights (continued)
FIRST INVESTORS LIFE SERIES FUNDS
P E R S H A R E D A T A | R A T I O S / S U P P L E M E N T A L D A T A | |||||||||||||||||||||||||||
Less Distributions | Ratio to Average Net | |||||||||||||||||||||||||||
Investment Operations | from | Ratio to Average | Assets Before Expenses | |||||||||||||||||||||||||
Net Assets** | Waived or Assumed | |||||||||||||||||||||||||||
Net Asset | Net | Net Realized | Net Asset | Net | ||||||||||||||||||||||||
Value, | Investment | and Unrealized | Total from | Net | Net | Value, | Net Assets | Expenses | Net | Investment | Portfolio | |||||||||||||||||
Beginning | Income | Gain (Loss) on | Investment | Investment | Realized | Total | End | Total | End of Period | Before Fee | Investment | Income | Turnover | |||||||||||||||
of Period | (Loss) | Investments | Operations | Income | Gains | Distributions | of Period | Return* | (in millions) | Credits*** | Income (Loss) | Expenses*** | (Loss) | Rate | ||||||||||||||
GOVERNMENT CASH MANAGEMENT FUND(e) | ||||||||||||||||||||||||||||
2012 | $ 1.00 | — | — | — | $ — | — | $ — | $ 1.00 | .00 | % | $ 12 | .12 | %(b) | .00 | % | .99 | % | (.87 | )% | N/A | ||||||||
2013 | 1.00 | — | — | — | — | — | — | 1.00 | .00 | 11 | .10 | (b) | .00 | .99 | (.89 | ) | N/A | |||||||||||
2014 | 1.00 | — | — | — | — | — | — | 1.00 | .00 | 10 | .08 | (b) | .00 | .99 | (.91 | ) | N/A | |||||||||||
2015 | 1.00 | — | (a) | — | — | — | — | — | 1.00 | .00 | 14 | .13 | (b) | .00 | 1.09 | (.96 | ) | N/A | ||||||||||
2016 | 1.00 | — | (a) | — | — | — | — | — | 1.00 | .00 | 10 | .38 | (b) | .00 | 1.15 | (.78 | ) | N/A | ||||||||||
2017(m) | 1.00 | — | (a) | — | — | .00 | (c) | — | .00 | 1.00 | .04 | †† | 10 | .60 | (b)† | .07 | † | 1.32 | † | (.65 | )† | N/A | ||||||
GROWTH & INCOME FUND | ||||||||||||||||||||||||||||
2012 | $28.56 | $ .61 | $ 4.35 | $ 4.96 | $.44 | $ — | $.44 | $33.08 | 17.45 | % | $357 | .80 | % | 1.87 | % | N/A | N/A | 21 | % | |||||||||
2013 | 33.08 | .53 | 11.89 | 12.42 | .61 | — | .61 | 44.89 | 38.06 | 474 | .79 | 1.34 | N/A | N/A | 23 | |||||||||||||
2014 | 44.89 | .54 | 2.82 | 3.36 | .53 | .29 | .82 | 47.43 | 7.65 | 493 | .78 | 1.18 | N/A | N/A | 21 | |||||||||||||
2015 | 47.43 | .60 | (a) | (1.87 | ) | (1.27 | ) | .55 | 2.50 | 3.05 | 43.11 | (3.12 | ) | 457 | .78 | 1.33 | N/A | N/A | 23 | |||||||||
2016 | 43.11 | .69 | (a) | 3.08 | 3.77 | .61 | 2.09 | 2.70 | 44.18 | 9.88 | 475 | .79 | 1.67 | N/A | N/A | 21 | ||||||||||||
2017(m) | 44.18 | .34 | (a) | 2.78 | 3.12 | .71 | 1.77 | 2.48 | 44.82 | 7.21 | †† | 497 | .78 | † | 1.56 | † | N/A | N/A | 8 | †† | ||||||||
INTERNATIONAL FUND | ||||||||||||||||||||||||||||
2012 | $16.44 | $ .28 | $ 3.12 | $ 3.40 | $.27 | — | $.27 | $19.57 | 20.85 | % | $122 | .94 | % | 1.53 | % | N/A | N/A | 41 | % | |||||||||
2013 | 19.57 | .24 | 1.08 | 1.32 | .27 | — | .27 | 20.62 | 6.77 | 128 | .92 | 1.21 | N/A | N/A | 35 | |||||||||||||
2014 | 20.62 | .23 | .26 | .49 | .23 | — | .23 | 20.88 | 2.39 | 131 | .92 | 1.10 | N/A | N/A | 28 | |||||||||||||
2015 | 20.88 | .26 | (a) | .47 | .73 | .23 | — | .23 | 21.38 | 3.49 | 134 | .87 | 1.22 | N/A | N/A | 27 | ||||||||||||
2016 | 21.38 | .27 | (a) | (1.17 | ) | (.90 | ) | .26 | — | .26 | 20.22 | (4.20 | ) | 124 | .87 | 1.28 | N/A | N/A | 37 | |||||||||
2017(m) | 20.22 | .17 | (a) | 4.27 | 4.44 | .25 | — | .25 | 24.41 | 22.15 | †† | 148 | .82 | † | 1.55 | † | N/A | N/A | 16 | †† | ||||||||
INVESTMENT GRADE FUND | ||||||||||||||||||||||||||||
2012 | $10.86 | $ .43 | $ .76 | $ 1.19 | $.48 | — | $.48 | $11.57 | 11.23 | % | $ 57 | .70 | % | 3.73 | % | .85 | % | 3.58 | % | 28 | % | |||||||
2013 | 11.57 | .42 | (.51 | ) | (.09 | ) | .45 | — | .45 | 11.03 | (.80 | ) | 59 | .70 | 3.49 | .85 | 3.34 | 39 | ||||||||||
2014 | 11.03 | .42 | .21 | .63 | .46 | — | .46 | 11.20 | 5.86 | 63 | .69 | 2.78 | .84 | 2.63 | 45 | |||||||||||||
2015 | 11.20 | .34 | (a) | (.37 | ) | (.03 | ) | .47 | — | .47 | 10.70 | (.35 | ) | 62 | .68 | 3.12 | .83 | 2.97 | 37 | |||||||||
2016 | 10.70 | .33 | (a) | .15 | .48 | .45 | — | .45 | 10.73 | 4.65 | 64 | .68 | 3.02 | .83 | 2.87 | 40 | ||||||||||||
2017(m) | 10.73 | .15 | (a) | .13 | .28 | .42 | — | .42 | 10.59 | 2.69 | †† | 66 | .68 | † | 2.98 | † | .83 | † | 2.83 | † | 28 | †† | ||||||
LIMITED DURATION HIGH QUALITY BOND FUND | ||||||||||||||||||||||||||||
2014(h) | $10.00 | $(.13 | ) | $ (.13 | ) | $ (.26 | ) | $ — | — | $ — | $ 9.74 | (2.60 | )%†† | $ 3 | 5.82 | %† | (4.25 | )%† | 5.97 | %† | (4.40 | )%† | 11 | %†† | ||||
2015 | 9.74 | .01 | (a) | (.06 | ) | (.05 | ) | — | — | — | 9.69 | (.51 | ) | 6 | 1.44 | .11 | 1.59 | (.04 | ) | 94 | ||||||||
2016 | 9.69 | (.03 | )(a) | .09 | .06 | .09 | — | .09 | 9.66 | .64 | 8 | 1.06 | (.34 | ) | 1.21 | (.49 | ) | 78 | ||||||||||
2017(m) | 9.66 | .04 | (a) | .06 | .10 | .17 | — | .17 | 9.59 | 1.05 | †† | 7 | 1.01 | † | .84 | † | 1.16 | † | .69 | † | 49 | †† |
154 | 155 |
Financial Highlights (continued)
FIRST INVESTORS LIFE SERIES FUNDS
P E R S H A R E D A T A | R A T I O S S U P P L E M E N T A L D A T A | |||||||||||||||||||||||||||
Less Distributions | Ratio to Average Net | |||||||||||||||||||||||||||
Investment Operations | from | Ratio to Average | Assets Before Expenses | |||||||||||||||||||||||||
Net Asset ** | Waived or Assumed | |||||||||||||||||||||||||||
Net Asset | Net | Net Realized | Net Asset | |||||||||||||||||||||||||
Value, | Investment | and Unrealized | Total from | Net | Net | Value, | Net Assets | Expenses | Net | Net | Portfolio | |||||||||||||||||
Beginning | Income | Gain (Loss) on | Investment | Investment | Realized | Total | End | Total | End of Period | Before Fee | Investment | Investment | Turnover | |||||||||||||||
of Period | (Loss) | Investments | Operations | Income | Gains | Distributions | of Period | Return* | (in millions) | Credits*** | Income (Loss) | Expenses*** | Income | Rate | ||||||||||||||
OPPORTUNITY FUND | ||||||||||||||||||||||||||||
2012(i) | $10.00 | $(.05 | ) | $ .11 | $ .06 | $ — | $ — | $ — | $10.06 | .60 | %†† | $ 1 | 16.84 | %† | (13.27 | )%† | N/A | N/A | 0 | %†† | ||||||||
2013 | 10.06 | (.04 | ) | 4.06 | 4.02 | — | — | — | 14.08 | 39.96 | 14 | 2.28 | (.79 | ) | N/A | N/A | 32 | |||||||||||
2014 | 14.08 | .03 | .78 | .81 | — | .01 | .01 | 14.88 | 5.73 | 27 | 1.01 | .31 | N/A | N/A | 31 | |||||||||||||
2015 | 14.88 | .08 | (a) | (.20 | ) | (.12 | ) | .03 | — | .03 | 14.73 | (.81 | ) | 40 | .89 | .53 | N/A | N/A | 45 | |||||||||
2016 | 14.73 | .12 | (a) | 1.09 | 1.21 | .07 | — | .07 | 15.87 | 8.26 | 53 | .87 | .83 | N/A | N/A | 31 | ||||||||||||
2017(m) | 15.87 | .06 | (a) | 1.29 | 1.35 | .11 | — | .11 | 17.11 | 8.53 | †† | 62 | .83 | † | .71 | † | N/A | N/A | 18 | †† | ||||||||
REAL ESTATE FUND | ||||||||||||||||||||||||||||
2015(g) | $10.00 | $ .09 | (a) | $ .06 | $ .15 | $ — | $ — | $ — | $10.15 | 1.50 | %†† | $ 5 | 2.27 | %† | 1.40 | %† | N/A | N/A | 17 | %†† | ||||||||
2016 | 10.15 | .18 | (a) | .48 | .66 | .07 | .06 | .13 | 10.68 | 6.57 | 8 | 1.34 | 1.72 | N/A | N/A | 39 | ||||||||||||
2017(m) | 10.68 | .30 | (a) | (.39 | ) | (.09 | ) | .15 | .23 | .38 | 10.21 | (.97 | )†† | 6 | 1.13 | † | 5.84 | † | N/A | N/A | 24 | †† | ||||||
SELECT GROWTH FUND | ||||||||||||||||||||||||||||
2012 | $ 8.46 | $ .05 | $1.08 | $1.13 | $.01 | $ — | $ .01 | $ 9.58 | 13.30 | % | $ 24 | .87 | % | .61 | % | N/A | N/A | 52 | % | |||||||||
2013 | 9.58 | .04 | 3.12 | 3.16 | .05 | — | .05 | 12.69 | 33.15 | 35 | .85 | .43 | N/A | N/A | 64 | |||||||||||||
2014 | 12.69 | .05 | 1.66 | 1.71 | .05 | .01 | .06 | 14.34 | 13.53 | 44 | .83 | .43 | N/A | N/A | 37 | |||||||||||||
2015 | 14.34 | .09 | (a) | .38 | .47 | .05 | .78 | .83 | 13.98 | 3.21 | 48 | .83 | .65 | N/A | N/A | 43 | ||||||||||||
2016 | 13.98 | .08 | (a) | .36 | .44 | .09 | .96 | 1.05 | 13.37 | 4.04 | 52 | .83 | .61 | N/A | N/A | 64 | ||||||||||||
2017(m) | 13.37 | .03 | (a) | 1.69 | 1.72 | .08 | 1.45 | 1.53 | 13.56 | 13.47 | †† | 60 | .82 | † | .42 | † | N/A | N/A | 33 | †† | ||||||||
SPECIAL SITUATIONS FUND(j) | ||||||||||||||||||||||||||||
2012 | $31.94 | $ .34 | $2.88 | $3.22 | $.20 | $3.39 | $3.59 | $31.57 | 10.01 | % | $160 | .81 | % | 1.07 | % | N/A | N/A | 61 | % | |||||||||
2013 | 31.57 | .19 | 9.11 | 9.30 | .34 | 1.56 | 1.90 | 38.97 | 30.88 | 201 | .82 | .53 | N/A | N/A | 108 | |||||||||||||
2014 | 38.97 | .22 | 1.82 | 2.04 | .18 | 6.61 | 6.79 | 34.22 | 6.30 | 209 | .80 | .66 | N/A | N/A | 41 | |||||||||||||
2015 | 34.22 | .18 | (a) | (.27 | ) | (.09 | ) | .22 | 1.51 | 1.73 | 32.40 | (.52 | ) | 202 | .80 | .52 | N/A | N/A | 46 | |||||||||
2016 | 32.40 | .33 | (a) | 4.28 | 4.61 | .18 | 2.19 | 2.37 | 34.64 | 16.10 | 224 | .81 | 1.06 | N/A | N/A | 31 | ||||||||||||
2017(m) | 34.64 | .13 | (a) | 2.22 | 2.35 | .33 | .44 | .77 | 36.22 | 6.87 | †† | 236 | .80 | † | .76 | † | N/A | N/A | 15 | †† |
156 | 157 |
Financial Highlights (continued)
FIRST INVESTORS LIFE SERIES FUNDS
P E R S H A R E D A T A | R A T I O S / S U P P L E M E N T A L D A T A | ||||||||||||||||||||||||||
Less Distributions | Ratio to Average Net | ||||||||||||||||||||||||||
Investment Operations | from | Ratio to Average | Assets Before Expenses | ||||||||||||||||||||||||
Net Asset ** | Waived or Assumed | ||||||||||||||||||||||||||
Net Asset | Net | Net Realized | Net Asset | ||||||||||||||||||||||||
Value, | Investment | and Unrealized | Total from | Net | Net | Value, | Net Assets | Expenses | Net | Net | Portfolio | ||||||||||||||||
Beginning | Income | Gain (Loss) on | Investment | Investment | Realized | Total | End | Total | End of Period | Before Fee | Investment | Investment | Turnover | ||||||||||||||
of Period | (Loss) | Investments | Operations | Income | Gains | Distributions | of Period | Return* | (in millions) | Credits*** | Income (Loss) | Expenses*** | Income | Rate | |||||||||||||
TOTAL RETURN FUND | |||||||||||||||||||||||||||
2012(i) | $10.00 | $(.05 | ) | $ (.02 | ) | $ (.07 | ) | $ — | — | $ — | $ 9.93 | (.70 | )%†† | $ 1 | 16.99 | %† | (14.84 | )%† | N/A | N/A | 64 | %†† | |||||
2013 | 9.93 | — | 1.69 | 1.69 | — | — | — | 11.62 | 17.02 | 13 | 1.93 | .16 | N/A | N/A | 14 | ||||||||||||
2014 | 11.62 | .09 | .60 | .69 | .01 | — | .01 | 12.30 | 5.97 | 29 | .96 | .96 | N/A | N/A | 53 | ||||||||||||
2015 | 12.30 | .15 | (a) | (.34 | ) | (.19 | ) | .13 | — | .13 | 11.98 | (1.61 | ) | 37 | .89 | 1.20 | N/A | N/A | 39 | ||||||||
2016 | 11.98 | .18 | (a) | .59 | .77 | .17 | — | .17 | 12.58 | 6.62 | 40 | .89 | 1.45 | N/A | N/A | 67 | |||||||||||
2017(m) | 12.58 | .09 | (a) | .52 | .61 | .21 | — | .21 | 12.98 | 4.88 | †† | 44 | .86 | † | 1.31 | † | N/A | N/A | 24 | †† |
* | The effect of fees and charges incurred at the separate account level are not reflected in these | |
performance figures. | ||
** | Net of expenses waived or assumed by the investment adviser (Note 4). | |
*** | The ratios do not include a reduction of expenses from cash balances maintained with the Bank of | |
New York Mellon or from brokerage service arrangements (Note 1G). | ||
† | Annualized | |
†† | Not annualized | |
(a) | Based on average shares during the period. | |
(b) | For each of the periods shown, FIMCO voluntarily waived advisory fees to limit the Fund’s overall | |
expense ratio to .60% and waived additional advisory fees and assumed other expenses to prevent a | ||
negative yield on the Funds’ shares (Note 4). | ||
(c) | Due to rounding, amount is less than .005 per share. | |
(d) | For the period May 2, 2016 (commencement of operations) to December 31, 2016. | |
(e) | Prior to October 3, 2016, known as Cash Management Fund. | |
(f) | For the period November 2, 2015 (commencement of operations) to December 31, 2015. | |
(g) | For the period May 1, 2015 (commencement of operations) to December 31, 2015. | |
(h) | For the period July 1, 2014 (commencement of operations) to December 31, 2014. | |
(i) | For the period December 17, 2012 (commencement of operations) to December 31, 2012. | |
(j) | Prior to December 17, 2012, known as Discovery Fund. | |
(k) | Prior to December 17, 2012, known as High Yield Fund. | |
(l) | Prior to September 4, 2012, known as Value Fund. | |
(m) | For the period January 1, 2017 to June 30, 2017. |
See notes to financial statements | ||
158 | 159 |
Report of Independent Registered Public
Accounting Firm
To the Shareholders and Board of Trustees of
First Investors Life Series Funds
We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of Balanced Income Fund, Covered Call Strategy Fund, Equity Income Fund, Fund For Income, Government Fund, Government Cash Management Fund, Growth & Income Fund, International Fund, Investment Grade Fund, Limited Duration High Quality Bond Fund, Opportunity Fund, Real Estate Fund, Select Growth Fund, Special Situations Fund and Total Return Fund (each a series of First Investors Life Series Funds), as of June 30, 2017, the related statements of operations, the statements of changes in net assets, and the financial highlights for each of the periods indicated thereon. These financial statements and financial highlights are the responsibility of the Life Series Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of June 30, 2017, by correspondence with the custodian and brokers. Where brokers and agent banks have not replied to our confirmation requests, we have carried out other appropriate auditing procedures. 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.
160 |
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Balanced Income Fund, Covered Call Strategy Fund, Equity Income Fund, Fund For Income, Government Fund, Government Cash Management Fund, Growth & Income Fund, International Fund, Investment Grade Fund, Limited Duration High Quality Bond Fund, Opportunity Fund, Real Estate Fund, Select Growth Fund, Special Situations Fund and Total Return Fund, as of June 30, 2017, and the results of their operations, changes in their net assets, and their financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America.
Tait, Weller & Baker LLP |
Philadelphia, Pennsylvania
August 28, 2017
161 |
Board Considerations of Advisory Contracts and Fees
FIRST INVESTORS LIFE SERIES FUNDS
Annual Consideration of the Investment Advisory Agreements and the Sub-Advisory Agreements with Muzinich & Co., Inc., Smith Group Asset Management, LP, Vontobel Asset Management, Inc. and Ziegler Capital Management, LLC
The First Investors Life Series Funds’ (the “Trust”) investment advisory agreements with the Trust’s investment adviser and, as applicable, sub-advisers, on behalf of each of the Trust’s funds, can remain in effect after an initial term of no greater than two years only if they are renewed at least annually thereafter (i) by the vote of the Trustees or by a vote of the shareholders of each fund and (ii) by the vote of a majority of the Trustees who are not parties to the advisory agreement (and sub-advisory agreements, as applicable) or “interested persons” of any party thereto (the “Independent Trustees”), cast in person at a meeting called specifically for the purpose of voting on such approval.
The Board of Trustees (the “Board”) has four regularly scheduled and two informal meetings each year and takes into account throughout the year matters bearing on the approval of the advisory agreement (and sub-advisory agreements, as applicable). In particular, the Board and its standing committees also consider at each meeting at least certain of the factors that are relevant to the annual renewal of each fund’s advisory agreement (and sub-advisory agreements, as applicable), including investment performance, sub-adviser updates and reviews, reports with respect to brokerage and portfolio transactions, use of soft dollars for research products and services, portfolio turnover rates, compliance monitoring, and the services and support provided to each fund and its shareholders. In addition, the Board meets with representatives of each sub-adviser in person at least once per year.
On April 18, 2017 (the “April Meeting”), the Independent Trustees met in person with senior management personnel of Foresters Investment Management Company, Inc. (“FIMCO”), the Trust’s investment adviser, Trust counsel, independent legal counsel to the Independent Trustees (“Independent Legal Counsel”) and others to give preliminary consideration to information bearing on the continuation of the advisory agreement (and sub-advisory agreement, as applicable) with respect to each fund. The primary purpose of the April Meeting was to ensure that the Independent Trustees had ample opportunity to consider matters they deemed relevant in determining whether to continue the advisory agreement (or sub-advisory agreements, as applicable), and to request any additional information they considered reasonably necessary to their deliberations. The Independent Trustees also met in executive session with Independent Legal Counsel on April 18, 2017, immediately prior to the April Meeting, to consider the continuation of the advisory agreement (or sub-advisory agreements, as applicable) outside the presence of management. As part
162 |
of the April Meeting, the Independent Trustees asked FIMCO to respond to certain additional questions prior to the contract approval meeting of the Board to be held on May 18, 2017 (the “May Meeting”). In addition, Independent Legal Counsel, in conjunction with the Board, and personnel from FIMCO reviewed each sub-adviser’s response in connection with the request for information with respect to the applicable sub-advisory agreements and requested follow-up information or clarifications from each sub-adviser, as applicable, which was provided prior to the May Meeting.
At the May Meeting, the Board, including a majority of the Independent Trustees, approved the renewal of the investment advisory agreement (the “Advisory Agreement”) between FIMCO and each of the following funds (each a “Fund” and collectively the “Funds”): Balanced Income Fund, Covered Call Strategy Fund, Equity Income Fund, Fund For Income, Government Fund, Government Cash Management Fund, Growth & Income Fund, International Fund, Investment Grade Fund, Limited Duration High Quality Bond Fund, Opportunity Fund, Real Estate Fund, Select Growth Fund, Special Situations Fund and Total Return Fund. In addition, at the May Meeting, the Board, including a majority of the Independent Trustees, approved the renewal of the sub-advisory agreements (each a “Sub-Advisory Agreement” and collectively the “Sub-Advisory Agreements”) with: (1) Muzinich & Co., Inc. (“Muzinich”) with respect to the Fund For Income; (2) Smith Group Asset Management, LP (“Smith Group”) with respect to the Select Growth Fund; (3) Vontobel Asset Management, Inc. (“Vontobel”) with respect to the International Fund; and (4) Ziegler Capital Management, LLC (“Ziegler”) with respect to the Covered Call Strategy Fund. The Fund For Income, Select Growth Fund, International Fund and Covered Call Strategy Fund are collectively referred to as the “Sub-Advised Funds.”
In reaching its decisions to approve the continuation of the Advisory Agreement for each Fund and the Sub-Advisory Agreements for the Sub-Advised Funds, the Board considered information furnished and discussed throughout the year at regularly scheduled Board and Committee meetings as well as a wide range of information provided specifically in relation to the renewal of the Advisory Agreement and Sub-Advisory Agreements for the April Meeting and May Meeting. Information furnished at Board and/or Committee meetings throughout the year included FIMCO’s analysis of each Fund’s investment performance and the performance of the sub-advisers to the respective Sub-Advised Funds, presentations given by representatives of FIMCO, Muzinich, Smith Group, Vontobel and Ziegler and various reports on compliance and other services provided by FIMCO.
In preparation for the April Meeting and/or May Meeting, the Independent Trustees requested and received information compiled by Broadridge Financial Solutions, Inc. (formerly, Lipper, Inc.) (hereinafter, “Broadridge”), an independent provider
163 |
Board Considerations of Advisory Contracts and Fees (continued)
FIRST INVESTORS LIFE SERIES FUNDS
of investment company data, that included, among other things, the investment performance over various time periods and the fees and expenses of each Fund as compared to a comparable group of funds as determined by Broadridge (“Peer Group”). The Board also considered that FIMCO charges different fee rates to various mutual funds that have similar investment mandates and FIMCO’s explanation for these differences.
Additionally, in response to specific requests from the Independent Trustees in connection with the April Meeting and/or May Meeting, FIMCO furnished, and the Board considered, information concerning various aspects of its operations, including: (1) the nature, extent and quality of services provided by FIMCO to the Funds, including investment advisory and administrative services to the Funds and, as applicable, services in connection with selecting, overseeing and evaluating the sub-advisers; (2) the actual management fees paid by each Fund to FIMCO; (3) the costs of providing services to each Fund and the profitability of FIMCO from the relationship with each Fund; and (4) any “fall out” or ancillary benefits accruing to FIMCO as a result of the relationship with each Fund. FIMCO also provided, and the Board considered, an analysis of the overall profitability of the First Investors mutual fund business that included various entities affiliated with FIMCO as well as comparative profitability information based on analysis performed by FIMCO of the financial statements of certain publicly-traded mutual fund asset managers. The Board also considered FIMCO’s and each sub-adviser’s personnel and methods, including the education, experience of key personnel, and the number of their advisory and analytical personnel; general information regarding the compensation of FIMCO’s and each sub-adviser’s advisory personnel; FIMCO’s and each sub-adviser’s investment management process; FIMCO’s and each sub-adviser’s compliance program; the time and attention of FIMCO’s and each sub-adviser’s personnel devoted to the management of the Funds; FIMCO and each sub-adviser’s cybersecurity practices and related controls and business continuity plans; and material pending, threatened or settled litigation involving FIMCO and each sub-adviser, and any ongoing or completed audits, investigations or examinations by the Securities and Exchange Commission. The Board also considered information provided by FIMCO on management’s initiatives for increasing Fund assets and new product development, which included enhanced sales and marketing efforts (including increasing the size of the sales force); continuing efforts as deemed practicable to reduce expenses and improve performance of the Funds; and improving the efficiency of back-office operations and services (including a major initiative to process new business electronically). In addition to evaluating, among other considerations, the written information provided by FIMCO, the Board also evaluated the answers to questions posed by the Board to representatives of FIMCO.
164 |
In addition, in response to specific requests from the Independent Trustees in connection with the April Meeting and/or May Meeting, Muzinich, Smith Group, Vontobel and Ziegler furnished, and the Board reviewed, information concerning various aspects of their respective operations, including: (1) the nature, extent and quality of services provided by Muzinich, Smith Group, Vontobel and Ziegler to the applicable Sub-Advised Funds; (2) the sub-advisory fee rates charged by Muzinich, Smith Group, Vontobel and Ziegler and a comparison of those fee rates to the fee rates of Muzinich, Smith Group, Vontobel and Ziegler for providing advisory services to other investment companies or accounts or compared to their standard fee schedule, as applicable, with an investment mandate similar to the applicable Sub-Advised Funds; (3) profitability and/or financial information provided by Muzinich, Smith Group, Vontobel and Ziegler; and (4) any “fall out” or ancillary benefits accruing to Muzinich, Smith Group, Vontobel and Ziegler as a result of the relationship with each applicable Sub-Advised Fund. The Board also considered FIMCO’s representations that it found the sub-adviser responses to the information request in connection with the renewal of the Sub-Advisory Agreements to be satisfactory and raising no issues of general concern.
In considering the information and materials described above, the Independent Trustees took into account management style, investment strategies and prevailing market conditions. Moreover, the Independent Trustees received assistance from and met separately with Independent Legal Counsel during both the April Meeting and May Meeting and were provided with a written description of their statutory responsibilities and the legal standards that are applicable to approvals of advisory agreements (and sub-advisory agreements, as applicable). Although the Advisory Agreement for all of the Funds and the Sub-Advisory Agreements for the Sub-Advised Funds were considered at the same Board meeting, the Independent Trustees addressed each Fund separately during the April Meeting and May Meeting.
Based on all of the information presented, the Board, including a majority of its Independent Trustees, determined on a Fund-by-Fund basis that the fees charged under the Advisory Agreement and each Sub-Advisory Agreement are reasonable in relation to the services that are provided under each Agreement. The Board did not identify any single factor as being of paramount importance in reaching its conclusions and determinations with respect to the continuance of the Advisory Agreement for each Fund and Sub-Advisory Agreements and different Trustees may have given different weight to different factors. Although not meant to be all-inclusive, the following describes some of the factors that were considered by the Board in deciding to approve the continuance of the Advisory Agreement for each Fund and Sub-Advisory Agreements with Muzinich, Smith Group, Vontobel and Ziegler.
165 |
Board Considerations of Advisory Contracts and Fees (continued)
FIRST INVESTORS LIFE SERIES FUNDS
Nature, Extent and Quality of Services
In examining the nature, extent and quality of the services provided by FIMCO, the Board recognized that FIMCO is dedicated to providing investment management services exclusively to the Funds and the other funds in the First Investors fund complex and that, unlike many other mutual fund managers, FIMCO is not in the business of providing management services to hedge funds, pension funds or private accounts. In this connection, the Board was advised that certain key FIMCO personnel provide separately managed account services to a FIMCO-affiliated investment adviser, but that these personnel spend most of their time serving their FIMCO clients. As a result, the Board considered that FIMCO’s personnel devote substantially all of their time to serving the funds in the First Investors fund complex.
The Board noted that FIMCO has undertaken extensive responsibilities as manager of the Funds, including: (1) the provision of investment advice to the Funds; (2) implementing policies and procedures designed to ensure compliance with each Fund’s investment objectives and policies; (3) the review of brokerage arrangements; (4) oversight of general portfolio compliance with applicable laws; (5) the provision of certain administrative services to the Funds, including fund accounting; (6) the implementation of Board directives as they relate to the Funds; and (7) evaluating and monitoring any sub-advisers on an ongoing basis, including, but not limited to, monitoring each sub-adviser’s investment performance, evaluating each sub-adviser’s compliance program on an annual basis and monitoring investments for compliance purposes, including monitoring each sub-adviser’s soft dollar practices (as applicable), portfolio allocation and best execution. The Board also noted that FIMCO provided the same sorts of administrative and other services, except for direct management of the portfolio, for the Sub-Advised Funds as it does for the other funds that do not employ a sub-adviser. The Board noted that FIMCO provides not only advisory services, but historically also has provided certain administrative personnel and services that many other advisers do not provide without imposition of separate fees. The Board also noted the steps that FIMCO has taken to encourage strong performance, including the manner in which portfolio managers and analysts are compensated based on Fund performance. In addition, the Board considered information regarding the overall financial strength of FIMCO and its affiliates and the resources and staffing in place with respect to the services provided to the Funds.
The Board considered the nature, extent and quality of the investment management services provided by Muzinich, Smith Group, Vontobel and Ziegler to the applicable Sub-Advised Funds. The Board considered Muzinich’s, Smith Group’s, Vontobel’s and Ziegler’s investment management process in managing the applicable Sub-Advised Funds and the experience and capability of their respective personnel
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responsible for the portfolio management of the applicable Sub-Advised Funds. The Board also considered information regarding the resources and staffing in place with respect to the services provided by each sub-adviser. Additionally, with respect to the Sub-Advised Funds, the Board considered the differences in fees paid by each Sub-Advised Fund to FIMCO and the fees paid by FIMCO to each sub-adviser, as well as representations by FIMCO that these fee differentials are warranted by its ongoing services and assumption of risks.
Based on the information considered, the Board concluded that the nature, extent and quality of the services provided to each Fund by FIMCO and the applicable Sub-Advised Funds by Muzinich, Smith Group, Vontobel and Ziegler were appropriate and consistent with the terms of the Advisory Agreement and Sub-Advisory Agreements, as applicable, and supported approval of the Advisory Agreement and each Sub-Advisory Agreement.
Investment Performance
The Board placed significant emphasis on the investment performance of each of the Funds. While consideration was given to performance reports and discussions held at prior Board or Committee meetings, as applicable, particular attention was given to the performance information compiled by Broadridge. In particular, the Board reviewed the performance of each Fund over the most recent calendar year (“1-year period”) and the annualized performance over the most recent three calendar year period (“3-year period”) and five calendar year period (“5-year period”). In addition, the Board considered the performance information provided by FIMCO for each Fund through April 30, 2017. The Board also reviewed the annual yield of the Balanced Income Fund, Fund For Income, Government Fund, Government Cash Management Fund, Investment Grade Fund and Limited Duration High Quality Bond Fund over the past five years (or shorter period as applicable). With regard to the performance and yield information, the Board considered the performance and yield of each Fund on a percentile and quintile basis as compared to its Peer Group. For purposes of the performance data provided, the first quintile is defined as 20% of the funds in the applicable Peer Group with the highest performance or yield and the fifth quintile is defined as 20% of the funds in the applicable Peer Group with the lowest performance or yield. The Board also considered FIMCO’s representations that it monitors to ensure portfolio managers invest in a manner consistent with the mandate for the Fund or Funds they manage.
On a Fund-by-Fund basis, the performance reports indicated, and the Board noted, that each Fund, except for the Covered Call Strategy Fund (which did not have a full year of performance yet), Fund For Income, Government Fund, Government Cash Management Fund, Limited Duration High Quality Bond Fund and Opportunity
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Board Considerations of Advisory Contracts and Fees (continued)
FIRST INVESTORS LIFE SERIES FUNDS
Fund fell within one of the top three quintiles for at least one of the performance periods provided by Broadridge. In particular, the Board noted that: (i) the Balanced Income Fund fell within the first quintile for the 1-year period (the only period for which information was provided due to the short operating history of the Fund); (ii) the Equity Income Fund fell within fourth quintile, third quintile and fourth quintile for the 1-year period, 3-year period and 5-year period, respectively; (iii) the Growth & Income Fund fell within fourth quintile, fourth quintile and third quintile for the 1-year period, 3-year period and 5-year period, respectively; (iv) the International Fund fell within fifth quintile, first quintile and fourth quintile for the 1-year period, 3-year period and 5-year period, respectively; (v) the Investment Grade Fund fell within third quintile for the 1-year and 3-year periods and the second quintile for the 5-year period; (vi) the Real Estate Fund fell within the third quintile for the 1-year period (the only period for which information was provided due to the short operating history of the Fund); (vii) the Select Growth Fund fell within second quintile, first quintile and third quintile for the 1-year period, 3-year period and 5-year period, respectively; (viii) the Special Situations Fund fell within third quintile for the 3-year period and the fifth quintile for the 1-year and 5-year periods; and (ix) the Total Return Fund fell within the second quintile and third quintile for the 1-year period and 3-year period, respectively (the only periods for which information was provided due to the relatively short operating history of the Fund). With respect to the Government Fund, the Board noted that the Fund’s performance fell within the fifth quintile, fourth quintile and fifth quintile for the 1-year period, 3-year period and 5-year period, respectively. However, the Board considered that FIMCO changed the portfolio manager on the Fund at the end of 2012 and considered management’s explanation for the various periods of underperformance. With respect to the Fund For Income and Government Cash Management Fund, the Board noted that each Fund’s performance fell within the fourth quintile for the 1-year, 3-year and 5-year periods. With respect to the Opportunity Fund, the Board noted that the Fund’s performance fell within the fifth quintile for the 1-year period and 3-year period, respectively (the only periods for which information was provided due to the relatively short operating history of the Fund). The Board also considered management’s special performance report and explanation for the various periods of underperformance of the Opportunity Fund. The Board noted that the Limited Duration High Quality Bond Fund’s performance was in the fifth quintile for the 1-year period, which was the only period reported due to the short operating history of the Fund. The Board also noted that the Covered Call Strategy Fund had not yet completed a full year of operating history and therefore no performance information was provided by Broadridge.
The Board also reviewed the yields of the Balanced Income Fund, Fund For Income, Government Fund, Government Cash Management Fund, Investment Grade Fund
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and Limited Duration High Quality Bond Fund and noted that the yield for the Fund For Income, Government Fund and Investment Grade Fund fell within the top three quintiles for each of the past five calendar years and that the yield for the Government Cash Management Fund fell within the top three quintiles for four out of the past five calendar years. The Board noted that the yield for the Balanced Income Fund was outside of the top three quintiles for the past calendar year, which is the only period for which information was provided due to the short operating history of the Fund. The Board also noted that the yield for the Limited Duration High Quality Bond Fund was in the top three quintiles for one of the past two calendar years, which are the only periods for which information was provided due to the short operating history of the Fund. The Trustees also considered that, in the current market and interest-rate environment, comparative information regarding performance and fees of money market funds such as the Government Cash Management Fund is of relatively limited utility. Additionally, the Board considered FIMCO’s representation that it believes that the Funds use a more conservative investment style than many of their peers.
Based on the information considered, the Board concluded that the investment performance of each Fund was either (a) acceptable or better, or (b) subject to reasonable steps to monitor or address certain periods of underperformance.
Fund Expenses, Costs of Services, Economies of Scale and Related Benefits
Management Fees and Expenses. The Board also gave substantial consideration to the fees payable under each Fund’s Advisory Agreement as well as under the Sub-Advisory Agreements for the Sub-Advised Funds.
The Board reviewed the information compiled by Broadridge comparing each Fund’s contractual management fee rate (at common asset levels) and actual management fee rate (which included the effect of any fee waivers) as a percentage of average net assets to other funds in its Peer Group. In this regard, the Board considered the contractual and actual management fees of each Fund on a quintile basis as compared to its Peer Group and noted the relative position of each Fund within the Peer Group. The Board also considered that FIMCO provides not only advisory services but also certain administrative personnel to the Funds under each Fund’s Advisory Agreement and that many other advisers do not provide such administrative personnel under their advisory agreements and that FIMCO also provides certain administrative services without the imposition of a separate fee. The Board also considered that FIMCO informed the Board that it intends to: (i) extend, on a voluntary basis, the existing total expense cap limitation for the Government Cash Management Fund until May 31, 2018; and (ii) extend, on a voluntary basis, the existing management fee caps for the Balanced Income Fund, Government Fund, Investment Grade Fund
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Board Considerations of Advisory Contracts and Fees (continued)
FIRST INVESTORS LIFE SERIES FUNDS
and Limited Duration High Quality Bond Fund, respectively, until May 31, 2018. The Board also considered that, with respect to the Government Cash Management Fund, FIMCO was waiving all of its management fees and reimbursing a portion of other expenses to avoid a negative return for shareholders due to the historically low interest rate environment.
In particular, the Board noted that: (i) the Balanced Income Fund’s contractual and actual management fees were in the third and fourth quintiles, respectively, of its Peer Group; (ii) the Covered Call Strategy Fund’s contractual and actual management fees were in the first and third quintiles, respectively, of its Peer Group; (iii) the Equity Income Fund’s contractual and actual management fees were in the third and fourth quintiles, respectively, of its Peer Group; (iv) the Fund For Income’s contractual and actual management fees were in the fifth quintile of its Peer Group; (v) the Government Fund’s contractual and actual management fees were in the fifth quintile of its Peer Group; (vi) the Government Cash Management Fund’s contractual and actual management fees were in the fifth and first quintiles, respectively, of its Peer Group; (vii) the Growth & Income Fund’s contractual and actual management fees were in the third quintile of its Peer Group; (viii) the International Fund’s contractual and actual management fees were in the second quintile of its Peer Group; (ix) the Investment Grade Fund’s contractual and actual management fees were in the fifth quintile of its Peer Group; (x) the Limited Duration High Quality Bond Fund’s contractual and actual management fees were in the fifth quintile of its Peer Group; (xi) the Opportunity Fund’s contractual and actual management fees were in the second and third quintiles, respectively, of its Peer Group; (xii) the Real Estate Fund’s contractual and actual management fees were in the third quintile of its Peer Group; (xiii) the Select Growth Fund’s contractual and actual management fees were in the third and fourth quintiles, respectively, of its Peer Group; (xiv) the Special Situations Fund’s contractual and actual management fees were in the second quintile of its Peer Group; and (xv) the Total Return Fund’s contractual and actual management fees were in the fourth and fifth quintiles, respectively, of its Peer Group.
The Board also reviewed the information compiled by Broadridge comparing each Fund’s total expense ratio, taking into account FIMCO’s expense waivers (as applicable), and the ratio of the sum of actual management and other non-management fees (i.e., fees other than management fees) to other funds in its Peer Group, including on a quintile basis. In particular, the Board noted that: (i) the total expense ratio for each Fund except the Government Cash Management Fund, Growth & Income Fund, International Fund, Opportunity Fund and Special Situations Fund was not in the top three quintiles of their respective Peer Groups; and (ii) the ratio of the sum of actual management and other non-management fees for each Fund except the Government Cash Management Fund, Growth & Income Fund, International Fund, Opportunity
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Fund and Special Situations Fund was not in the top three quintiles of their respective Peer Groups. In considering the level of the total expense ratio and the ratio of the sum of actual management and other non-management fees, the Board took into account management’s explanation that Broadridge expense comparisons do not take into account the size of a fund complex, and as a result, in certain cases the First Investors funds are compared to funds in complexes that are much larger than First Investors. The Board also noted that Broadridge’s customized expense groups tend to be fairly small in number and the funds included in the Peer Group generally change from year to year, thereby introducing an element of randomness that affects comparative results each year. While recognizing the limitations inherent in Broadridge’s methodology, the Board believed that the data provided by Broadridge was a generally appropriate measure of comparative expenses.
In considering the sub-advisory fee rates charged by and costs and profitability of Muzinich, Smith Group, Vontobel and Ziegler with regard to the respective Sub-Advised Funds, the Board noted that FIMCO pays Muzinich, Smith Group, Vontobel or Ziegler, as the case may be, a sub-advisory fee from its own advisory fee rather than each Fund paying Muzinich, Smith Group, Vontobel or Ziegler a fee directly. The Board also considered arrangements pursuant to which Muzinich, Smith Group and Vontobel (but not the Sub-Advised Funds) each pays a portion of its sub-advisory fee to a solicitor that introduced each such subadviser to FIMCO. Muzinich, Smith Group, Vontobel and Ziegler provided, and the Board reviewed, information comparing the fees charged by Muzinich, Smith Group, Vontobel and Ziegler for services to the respective Sub-Advised Funds versus the fee rates of Muzinich, Smith Group, Vontobel and Ziegler for providing advisory services to other comparable investment companies or accounts or compared to their standard fee schedule, as applicable. Based on a review of this information, the Board noted that the fees charged by Muzinich, Smith Group, Vontobel and Ziegler for services to each applicable Sub-Advised Fund appeared competitive to the fees Muzinich, Smith Group, Vontobel and Ziegler charge to their other comparable investment companies or accounts or compared to their standard fee schedule, as applicable.
The foregoing comparisons assisted the Trustees by providing them with a basis for evaluating each Fund’s management fee and expense ratio on a relative basis and the Board concluded that each Fund’s management fees appeared reasonable in relation to the services and benefits provided to each Fund.
Profitability. The Board reviewed the materials it received from FIMCO regarding its revenues and costs in providing investment management and certain administrative services to the Funds. In particular, the Board considered the analysis of FIMCO’s profitability with respect to each Fund, calculated for the year ended December 31,
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Board Considerations of Advisory Contracts and Fees (continued)
FIRST INVESTORS LIFE SERIES FUNDS
2016, as well as overall profitability information relating to the past five calendar years. The Board also considered the information provided by FIMCO comparing the profitability of certain publicly-traded mutual fund asset managers as analyzed by FIMCO based on publicly available financial statements and noted FIMCO’s analysis that its profit margin is significantly lower than the average of, and lower overall than any of, such publicly-traded managers. In reviewing the profitability information, the Board also considered the “fall-out” or ancillary benefits that may accrue to FIMCO as a result of its relationship with the Funds, which are discussed below. Based on the information provided, the Board also noted that FIMCO operates the Government Cash Management Fund at a loss. The Board acknowledged that, as a business matter, FIMCO was entitled to earn reasonable profits for its services to the Funds and concluded that the level of profitability to FIMCO of its contractual arrangements with each Fund did not appear so high as to call into question the appropriateness of the fees paid to FIMCO by any Fund or otherwise to preclude the proposed continuation of the Advisory Agreement for any of the Funds. The Board also considered the profitability and/or financial information provided by Muzinich, Smith Group, Vontobel and Ziegler.
Economies of Scale. With respect to whether economies of scale are realized by FIMCO and the extent to which any economies of scale are reflected in the level of management fee rates charged, the Board considered that the Advisory Agreement fee schedule for each Fund includes breakpoints to account for management economies of scale as each Fund’s assets increase.
“Fall Out” or Ancillary Benefits. The Board considered the “fall-out” or ancillary benefits that may accrue to FIMCO, Muzinich, Smith Group, Vontobel and Ziegler as a result of their relationship with the Funds. In that regard, the Board considered the fact that FIMCO and each sub-adviser (except Muzinich and Ziegler) may receive research from broker-dealers that execute brokerage transactions for the funds in the First Investors fund complex. However, the Board noted that FIMCO and the sub-advisers must select brokers based on each Fund’s requirements for seeking best execution.
* * * |
In summary, based on all relevant information and factors, none of which was individually determinative of the outcome, the Board, including a majority of the Independent Trustees, approved the renewal of the Advisory Agreement and each Sub-Advisory Agreement.
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FIRST INVESTORS LIFE SERIES FUNDS
Trustees and Officers
Trustees | |
Susan E. Artmann | |
Mary J. Barneby | |
Charles R. Barton, III | |
Arthur M. Scutro, Jr. | |
Mark R. Ward | |
Officers | |
Clark D. Wagner | |
President | |
Marc S. Milgram | |
Chief Compliance Officer | |
Joseph I. Benedek | |
Treasurer | |
Mark S. Spencer | |
Assistant Treasurer | |
Mary C. Carty | |
Secretary | |
Carol Lerner Brown | |
Assistant Secretary |
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FIRST INVESTORS LIFE SERIES FUNDS
Shareholder Information | ||
Investment Adviser | Custodian | |
Foresters Investment Management | The Bank of New York Mellon | |
Company, Inc. | 225 Liberty Street | |
40 Wall Street | New York, NY 10286 | |
New York, NY 10005 | ||
Subadviser | Transfer Agent | |
(Covered Call Strategy Fund) | Foresters Investor Services, Inc. | |
Ziegler Capital Management, LLC | Raritan Plaza I – 8th Floor | |
70 W. Madison Street | Edison, NJ 08837-3620 | |
Chicago, IL 60602 | ||
Subadviser | Independent Registered | |
(Fund For Income) | Public Accounting Firm | |
Muzinich & Co., Inc. | Tait, Weller & Baker LLP | |
450 Park Avenue | 1818 Market Street | |
New York, NY 10022 | Philadelphia, PA 19103 | |
Subadviser | Legal Counsel | |
(International Fund) | K&L Gates LLP | |
Vontobel Asset Management, Inc. | 1601 K Street, N.W. | |
1540 Broadway | Washington, D.C. 20006 | |
New York, NY 10036 | ||
Subadviser | ||
(Select Growth Fund) | ||
Smith Asset Management Group, L.P. | ||
100 Crescent Court | ||
Dallas, TX 75201 |
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A description of the policies and procedures that the Funds use to vote proxies relating to a portfolio’s securities is available, without charge, upon request by calling toll free 1-800-423-4026 or can be viewed online or downloaded from the EDGAR database on the U.S. Securities and Exchange Commission’s (“SEC”) internet website at http://www. sec. gov. In addition, information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, is available, without charge, upon request in writing or by calling 1-800-423-4026 and on the SEC’s internet website at http://www. sec. gov.
The Funds file their complete schedule of portfolio holdings with the SEC on Form N-Q for the first and third quarters of each fiscal year. The Funds’ Form N-Q is available on the SEC’s website at http://www. sec. gov; and may also be reviewed and copied at the SEC’s Public Reference Room in Washington D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The schedule of portfolio holdings is available, without charge, upon request in writing or by calling 1-800-423-4026.
175 |
NOTES
176 |
NOTES
177 |
Item 2. Code of Ethics
Not applicable for semi-annual report
Item 3. Audit Committee Financial Expert
Not applicable for semi-annual report
Item 4. Principal Accountant Fees and Services
Not applicable for semi-annual report
Item 5. Audit Committee of Listed Registrants
Not applicable
Item 6. Schedule of Investments
(a) Schedule is included as part of the report to shareholders filed under Item 1 of this Form.
(b) Not applicable
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable to open-end investment companies
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable to open-end investment companies
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers
Not applicable to open-end investment companies
Item 10. Submission of Matters to a Vote of Security Holders
There were no material changes to the procedure by which shareholders may recommend nominees to the Registrant's Board of Trustees.
Item 11. Controls and Procedures
(a) The Registrant's Principal Executive Officer and Principal Financial Officer have concluded that the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective, based on their evaluation of these disclosure controls and procedures as of a date within 90 days of the filing date of this report.
(b) There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940 as amended) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.
Item 12. Exhibits
(a)(1) Code of Ethics - Not applicable for semi-annual report
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Filed herewith
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Filed herewith
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
First Investors Life Series Funds
By | /s/ | Clark D. Wagner |
Clark D. Wagner | ||
President and Principal Executive Officer | ||
Date: | August 28, 2017 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By | /s/ | Clark D. Wagner |
Clark D. Wagner | ||
President and Principal Executive Officer | ||
By | /s/ | Joseph I. Benedek |
Joseph I. Benedek | ||
Treasurer and Principal Financial Officer | ||
Date: | August 28, 2017 |