UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------
FORM N-CSR
--------
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)
110 Wall Street
New York, NY 10005
(Address of principal executive offices) (Zip code)
Joseph I. Benedek
First Investors Management Company, Inc.
Raritan Plaza I
Edison, NJ 08837-3620
1-732-855-2712
(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, 2007
DATE OF REPORTING PERIOD: JUNE 30, 2007
Item 1. Reports to Stockholders
The Semi-Annual Report to Stockholders follows
[Logo: "FIRST INVESTORS"]
The words "LIFE SERIES FUND" in a rectangular blue box
across the top of the page.
BLUE CHIP
CASH MANAGEMENT
DISCOVERY
GOVERNMENT
GROWTH & INCOME
HIGH YIELD
INTERNATIONAL
INVESTMENT GRADE
SELECT GROWTH
TARGET MATURITY 2007
TARGET MATURITY 2010
TARGET MATURITY 2015
VALUE
SPECIAL BOND
SEMI-ANNUAL REPORT
June 30, 2007
Equity and Bond Markets Overview
FIRST INVESTORS LIFE SERIES FUNDS
Dear Investor:
The Economy
The first half of 2007 was characterized by two very different quarters. In
the first quarter, the U.S. economy grew at only .6%, the slowest pace since
2002, due in part to the recession in housing. In the second quarter, in
contrast, economic growth exceeded 3%. Throughout the reporting period,
corporate profits were robust, consumer spending was solid, the rate of
unemployment remained low and foreign growth was very strong, contributing
to a high level of exports. The rate of inflation, however, was an issue.
Despite an improvement in "core" inflation (i.e., inflation excluding food
and energy), the Federal Reserve (the "Fed") noted at its June meeting that
"moderation in inflation pressures has yet to be convincingly demonstrated."
In addition, concerns about the subprime mortgage market and the problems
facing two Bear Stearns hedge funds put a damper on investor sentiment late
in the period.
The Equity Market
The stock market posted solid results for the first half of 2007. Among
market-cap sectors, mid-cap stocks produced the best results by a wide
margin, followed by large caps and small caps. Stocks struggled in the first
quarter, dragged down by worries over the sustainability of economic growth,
the persistent rate of inflation, emerging difficulties in the subprime
lending market and a sudden plunge in Chinese stocks. The market rebounded
sharply in the second quarter, thanks to positive economic signals, optimism
about corporate earnings and surging merger and acquisition activity. The
hot streak pushed the S&P 500 Index to a record close, topping the previous
high that was hit in March 2000.
The Bond Market
Interest rates moved higher during the reporting period. Investors became
convinced that the Fed was less likely to lower interest rates this year.
This view reflected the Fed's continued stated concern about inflation, as
well as the fact that the economy rebounded in the second quarter. In
addition, foreign interest rates moved higher due to strong foreign economic
growth and central bank tightening of monetary policy, which put pressure on
U.S. rates. Given the U.S.'s dependence on foreign capital to fund its trade
deficit, higher foreign rates compete directly with U.S. rates for
investment dollars and therefore contributed to higher U.S. rates. Ten-year
U.S. Treasury yields rose to a five-year high in mid-June.
Returns among fixed income classes were remarkably similar, with the
exception of high yield bonds. Investment grade corporate, government and
municipal bonds all had slightly positive returns, according to Merrill
Lynch's fixed income indexes. High yield corporate bonds were the best
performing sector of the fixed income market, returning over 3% according to
Merrill Lynch, despite a difficult second quarter.
Equity and Bond Markets Overview (continued)
FIRST INVESTORS LIFE SERIES FUNDS
Thank you for placing your trust in First Investors. As always, we
appreciate the opportunity to serve your investment needs.
/s/ EDWIN D. MISKA /s/ CLARK D. WAGNER
Edwin D. Miska Clark D. Wagner
Director of Equities Director of Fixed Income
First Investors Management First Investors Management
Company, Inc. Company, Inc.
August 1, 2007
The Funds are only available through the purchase of variable life insurance
policies and variable annuity contracts issued by First Investors Life
Insurance Company. The reports do not reflect the additional expenses and
charges that are applicable to variable life insurance policies and variable
annuity contracts.
This Market 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 Market
Overview reflects conditions through the end of the period as stated on the
cover. Market conditions are subject to change. This Market 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 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 and 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, longer-term bonds fluctuate more than
shorter-term bonds in reaction to changes in interest rates. Credit risk is
the risk that bonds will decline in value as the result of a decline in the
credit rating of the bonds or the economy as a whole, or that the issuer
will be unable to pay interest and/or principal when due. You should consult
your prospectus for a precise explanation of the risks associated with your
subaccounts.
On July 26, 2007, Smith Asset Management Group, L.P. ("Smith") replaced
Wellington Management Company, LLP, the former subadviser to First Investors
Life Series Focused Equity Fund (the "Fund"), and assumed responsibility for
the day-to-day management of the investments of the Fund. Due to Smith's
appointment, the Fund's name changed to First Investors Life Series Select
Growth Fund and the Fund changed its objective and investment strategies to
correspond with the investment style used by Smith. These changes were
previously approved by the Board of Trustees. Although these changes
occurred subsequent to the end of the reporting period, for purposes of
simplicity and clarity we have decided to refer to the Fund as Select Growth
Fund to the extent possible throughout this report.
Understanding Your Fund's Expenses
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, 2007, and held for the entire six-month
period ended June 30, 2007. 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.
Fund Expenses
BLUE CHIP 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 3 for a detailed explanation of the information
presented in these examples.
- ----------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
Expense Examples (1/1/07) (6/30/07) (1/1/07-6/30/07)*
- ----------------------------------------------------------------------------------------------
Actual $1,000.00 $1,063.47 $4.14
Hypothetical
(5% annual return before expenses) $1,000.00 $1,020.77 $4.06
- ----------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio of .81%, 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
(BAR CHART DATA:)
Financials 19.6%
Information Technology 16.7%
Health Care 12.1%
Consumer Staples 11.8%
Industrials 11.8%
Energy 10.9%
Consumer Discretionary 10.0%
Telecommunication Services 3.0%
Materials 2.6%
Utilities 0.9%
Portfolio holdings and allocations are subject to change. Percentages are as
of June 30, 2007, and are based on the total value of investments.
Portfolio of Investments
BLUE CHIP FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--99.2%
Consumer Discretionary--10.0%
13,300 Best Buy Company, Inc. $620,711 $34
14,900 Carnival Corporation 726,673 39
29,700 CBS Corporation - Class "B" 989,604 54
3,709 Citadel Broadcasting Corporation 23,923 1
20,200 Clear Channel Communications, Inc. 763,964 41
16,971 * Comcast Corporation - Class "A" 477,225 26
27,150 * Comcast Corporation - Special Class "A" 759,114 41
20,800 H&R Block, Inc. 486,096 26
9,700 Hilton Hotels Corporation 324,659 18
49,900 Home Depot, Inc. 1,963,565 107
5,300 * Kohl's Corporation 376,459 20
32,600 Lowe's Companies, Inc. 1,000,494 54
27,500 McDonald's Corporation 1,395,900 76
53,600 News Corporation - Class "A" 1,136,856 62
12,000 NIKE, Inc. - Class "B" 699,480 38
26,200 Target Corporation 1,666,320 90
89,700 Time Warner, Inc. 1,887,288 102
6,216 Tribune Company 182,750 10
22,400 * Viacom, Inc. - Class "B" 932,512 51
48,300 Walt Disney Company 1,648,962 89
11,280 * Wyndham Worldwide Corporation 409,013 22
- --------------------------------------------------------------------------------------------------------------------
18,471,568 1,001
- --------------------------------------------------------------------------------------------------------------------
Consumer Staples--11.8%
27,400 Altria Group, Inc. 1,921,836 104
25,200 Anheuser-Busch Companies, Inc. 1,314,432 71
28,400 Avon Products, Inc. 1,043,700 57
50,900 Coca-Cola Company 2,662,579 144
10,000 Colgate-Palmolive Company 648,500 35
13,200 Costco Wholesale Corporation 772,464 42
32,300 CVS Corporation 1,177,335 64
12,100 General Mills, Inc. 706,882 38
9,200 Hershey Foods Corporation 465,704 25
19,900 Kimberly-Clark Corporation 1,331,111 72
38,761 Kraft Foods, Inc. - Class "A" 1,366,325 74
35,000 PepsiCo, Inc. 2,269,750 123
46,335 Procter & Gamble Company 2,835,239 154
- --------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
BLUE CHIP FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Consumer Staples (continued)
17,200 Walgreen Company $748,888 $41
52,900 Wal-Mart Stores, Inc. 2,545,019 138
- --------------------------------------------------------------------------------------------------------------------
21,809,764 1,182
- --------------------------------------------------------------------------------------------------------------------
Energy--10.9%
6,200 BP PLC (ADR) 447,268 24
50,000 Chevron Corporation 4,212,000 228
25,771 ConocoPhillips 2,023,024 110
77,500 ExxonMobil Corporation 6,500,700 352
27,400 Halliburton Company 945,300 51
5,500 Hess Corporation 324,280 18
29,800 Schlumberger, Ltd. 2,531,212 137
29,150 Spectra Energy Corporation 756,734 41
14,900 * Transocean, Inc. 1,579,102 86
10,800 Valero Energy Corporation 797,688 43
- --------------------------------------------------------------------------------------------------------------------
20,117,308 1,090
- --------------------------------------------------------------------------------------------------------------------
Financials--19.5%
16,000 ACE, Ltd. 1,000,320 54
10,100 Allstate Corporation 621,251 34
32,500 American Express Company 1,988,350 108
51,400 American International Group, Inc. 3,599,542 195
6,500 Ameriprise Financial, Inc. 413,205 22
66,514 Bank of America Corporation 3,251,869 176
42,300 Bank of New York Company, Inc. 1,752,912 95
250 * Berkshire Hathaway, Inc. - Class "B" 901,250 49
15,900 Capital One Financial Corporation 1,247,196 67
12,200 Chubb Corporation 660,508 36
89,500 Citigroup, Inc. 4,590,455 249
10,400 Fannie Mae 679,432 37
14,500 Freddie Mac 880,150 48
60,132 JPMorgan Chase & Company 2,913,395 158
7,000 Lehman Brothers Holdings, Inc. 521,640 28
14,500 Marsh & McLennan Companies, Inc. 447,760 24
13,400 Mellon Financial Corporation 589,600 32
17,400 Merrill Lynch & Company, Inc. 1,454,292 79
23,600 Morgan Stanley 1,979,568 107
19,800 Progressive Corporation 473,814 26
7,500 SunTrust Banks, Inc. 643,050 35
15,000 Travelers Companies, Inc. 802,500 43
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Financials (continued)
20,500 U.S. Bancorp $675,475 $37
27,400 Wachovia Corporation 1,404,250 76
22,400 Washington Mutual, Inc. 955,136 52
45,800 Wells Fargo & Company 1,610,786 87
- --------------------------------------------------------------------------------------------------------------------
36,057,706 1,954
- --------------------------------------------------------------------------------------------------------------------
Health Care--12.0%
33,500 Abbott Laboratories 1,793,925 97
11,800 Aetna, Inc. 582,920 32
27,700 * Amgen, Inc. 1,531,533 83
12,400 Baxter International, Inc. 698,616 38
34,300 * Boston Scientific Corporation 526,162 28
46,200 Bristol-Myers Squibb Company 1,458,072 79
60,800 Johnson & Johnson 3,746,496 203
29,300 Medtronic, Inc. 1,519,498 82
22,800 Merck & Company, Inc. 1,135,440 62
28,700 Novartis AG (ADR) 1,609,209 87
129,640 Pfizer, Inc. 3,314,895 180
11,300 * St. Jude Medical, Inc. 468,837 25
13,200 Teva Pharmaceutical Industries, Ltd. (ADR) 544,500 30
9,600 * Triad Hospitals, Inc. 516,096 28
29,200 UnitedHealth Group, Inc. 1,493,288 81
21,900 Wyeth 1,255,746 68
- --------------------------------------------------------------------------------------------------------------------
22,195,233 1,203
- --------------------------------------------------------------------------------------------------------------------
Industrials--11.8%
18,500 3M Company 1,605,615 87
10,600 Boeing Company 1,019,296 55
16,300 Caterpillar, Inc. 1,276,290 69
12,000 Dover Corporation 613,800 33
27,200 Emerson Electric Company 1,272,960 69
145,500 General Electric Company 5,569,740 302
14,400 Honeywell International, Inc. 810,432 44
10,600 Illinois Tool Works, Inc. 574,414 31
9,200 ITT Corporation 628,176 34
11,900 Lockheed Martin Corporation 1,120,147 61
24,300 Masco Corporation 691,821 37
12,500 Northrop Grumman Corporation 973,375 53
60,100 Tyco International, Ltd. 2,030,779 110
- --------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
BLUE CHIP FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Industrials (continued)
15,300 United Parcel Service, Inc. - Class "B" $1,116,900 $61
33,700 United Technologies Corporation 2,390,341 130
- --------------------------------------------------------------------------------------------------------------------
21,694,086 1,176
- --------------------------------------------------------------------------------------------------------------------
Information Technology--16.7%
11,600 Accenture, Ltd. - Class "A" 497,524 27
12,500 Analog Devices, Inc. 470,500 25
5,600 * Apple, Inc. 683,424 37
27,900 Applied Materials, Inc. 554,373 30
10,000 Automatic Data Processing, Inc. 484,700 26
2,500 Broadridge Financial Solutions, Inc. 47,800 3
84,800 * Cisco Systems, Inc. 2,361,680 128
37,300 * Corning, Inc. 953,015 52
60,800 * Dell, Inc. 1,735,840 94
13,500 * eBay, Inc. 434,430 23
74,300 * EMC Corporation 1,344,830 73
33,800 First Data Corporation 1,104,246 60
31,400 Hewlett-Packard Company 1,401,068 76
114,800 Intel Corporation 2,727,648 148
22,900 International Business Machines Corporation 2,410,225 131
13,400 Maxim Integrated Products, Inc. 447,694 24
180,600 Microsoft Corporation 5,322,282 288
51,900 Motorola, Inc. 918,630 50
63,700 Nokia Corporation - Class "A" (ADR) 1,790,607 97
65,700 * Oracle Corporation 1,294,947 70
16,400 QUALCOMM, Inc. 711,596 39
39,300 Texas Instruments, Inc. 1,478,859 80
33,800 Western Union Company 704,054 38
19,700 * Xerox Corporation 364,056 20
19,700 * Yahoo!, Inc. 534,461 29
- --------------------------------------------------------------------------------------------------------------------
30,778,489 1,668
- --------------------------------------------------------------------------------------------------------------------
Materials--2.6%
19,400 Alcoa, Inc. 786,282 43
14,010 * Cemex SA de CV (ADR) 516,969 28
32,100 Dow Chemical Company 1,419,462 77
18,100 DuPont (E.I.) de Nemours & Company 920,204 50
23,800 International Paper Company 929,390 50
6,700 Newmont Mining Corporation 261,702 14
- --------------------------------------------------------------------------------------------------------------------
4,834,009 262
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
Shares or For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Telecommunication Services--3.0%
53,200 AT&T, Inc. $2,207,800 $120
74,222 Sprint Nextel Corporation 1,537,138 83
42,300 Verizon Communications, Inc. 1,741,491 94
- --------------------------------------------------------------------------------------------------------------------
5,486,429 297
- --------------------------------------------------------------------------------------------------------------------
Utilities--.9%
58,300 Duke Energy Corporation 1,066,890 58
10,300 FPL Group, Inc. 584,422 32
- --------------------------------------------------------------------------------------------------------------------
1,651,312 90
- --------------------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $117,749,073) 183,095,904 9,923
- --------------------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--.6%
$1,100M American General Finance Corp., 5.29%, 7/11/07
(cost $1,098,221) 1,098,221 59
- --------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $118,847,294) 99.8% 184,194,125 9,982
Other Assets, Less Liabilities .2 325,722 18
- --------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $184,519,847 $10,000
====================================================================================================================
* Non-income producing
Summary of Abbreviations:
ADR American Depositary Receipts
See notes to financial statements
Fund Expenses
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 3 for a detailed explanation of the information
presented in these examples.
- ----------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
Expense Examples (1/1/07) (6/30/07) (1/1/07-6/30/07)*
- ----------------------------------------------------------------------------------------------
Actual $1,000.00 $1,023.26 $3.51
Hypothetical
(5% annual return before expenses) $1,000.00 $1,021.32 $3.51
- ----------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio of .70%, 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
(BAR CHART DATA:)
Corporate Notes 45.2%
U.S. Government Agency Obligations 31.7%
Floating Rate Notes 14.3%
Certificates of Deposit 4.8%
Bankers' Acceptances 4.0%
Portfolio holdings and allocations are subject to change. Percentages are as
of June 30, 2007, and are based on the total value of investments.
Portfolio of Investments
CASH MANAGEMENT FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal Effective $10,000 of
Amount Security Yield+ Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
CORPORATE NOTES--43.9%
$300M Abbott Laboratories, 7/11/07 + 5.24% $299,519 $463
250M Anheuser-Busch Cos., Inc., 8/16/07 + 5.20 248,299 384
250M Brown-Forman Corp., 7/13/07 + 5.28 249,522 386
250M Chevron Funding Corp., 8/6/07 5.23 248,655 385
300M Coca Cola Co., 7/11/07 + 5.19 299,521 463
300M General Electric Capital Corp., 7/26/07 5.22 298,858 462
300M Merrill Lynch & Co., Inc., 8/30/07 5.22 297,336 460
200M Paccar Financial Corp., 7/17/07 5.18 199,507 308
250M Procter & Gamble Co., 9/7/07 + 5.21 247,495 383
150M Prudential Funding Corp., 7/5/07 5.20 149,891 232
300M Toyota Motor Credit Corp., 7/13/07 5.22 299,431 463
- --------------------------------------------------------------------------------------------------------------------
Total Value of Corporate Notes (cost $2,838,034) 2,838,034 4,389
- --------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS--30.7%
Fannie Mae:
289M 7/15/07 5.23 288,851 447
275M 8/10/07 5.15 273,383 423
125M Federal Farm Credit Bank, 12/3/07 5.36 123,658 191
Federal Home Loan Bank:
250M 8/13/07 5.25 249,447 386
125M 8/24/07 5.34 124,931 193
100M 10/10/07 5.35 100,223 155
250M 12/17/07 5.00 249,530 386
180M 1/23/08 5.31 179,950 278
200M 1/28/08 5.25 198,570 307
200M Freddie Mac, 9/10/07 5.15 197,941 306
- --------------------------------------------------------------------------------------------------------------------
Total Value of U.S. Government Agency Obligations
(cost $1,986,484) 1,986,484 3,072
- --------------------------------------------------------------------------------------------------------------------
FLOATING RATE NOTES--13.8%
100M Advanced Packaging Corp., 10/1/36
(LOC; Fifth Third Bank) 5.35 100,000 155
250M Bank of New York, 11/19/07 5.31 249,989 386
110M Freddie Mac, 7/6/07 5.22 109,999 170
135M Genesys Medsports, LLC, 1/1/27
(LOC; Fifth Third Bank) 5.35 135,000 209
300M Wachovia Bank, NA, 11/30/07 5.31 300,050 464
- --------------------------------------------------------------------------------------------------------------------
Total Value of Floating Rate Notes (cost $895,038) 895,038 1,384
- --------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
CASH MANAGEMENT FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal Effective $10,000 of
Amount Security Yield+ Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT--4.6%
$300M Citibank, NA, 8/16/07
(cost $300,000) 5.30% $300,000 $464
- --------------------------------------------------------------------------------------------------------------------
BANKERS' ACCEPTANCES--3.9%
250M Bank of America, NA, 7/19/07
(cost $249,311) 5.18 249,311 385
- --------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $6,268,867)++ 96.9% 6,268,867 9,694
Other Assets, Less Liabilities 3.1 198,037 306
- --------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $6,466,904 $10,000
====================================================================================================================
* The interest rates shown are the effective rates at the time of purchase
by the Fund. The interest rates shown on the floating rate notes are
adjusted periodically; the rates shown are the rates in effect on June 30,
2007.
+ Security exempt from registration under Section 4(2) of the Securities Act
of 1933 (see Note 5).
++ Aggregate cost for federal income tax purposes is the same.
See notes to financial statements
Fund Expenses
DISCOVERY 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 3 for a detailed explanation of the information
presented in these examples.
- ----------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
Expense Examples (1/1/07) (6/30/07) (1/1/07-6/30/07)*
- ----------------------------------------------------------------------------------------------
Actual $1,000.00 $1,102.55 $4.27
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
TOP TEN SECTORS
(BAR CHART DATA:)
Industrials 24.3%
Information Technology 15.9%
Consumer Discretionary 11.8%
Financials 10.6%
Health Care 8.0%
Consumer Staples 7.0%
Utilities 6.1%
Materials 5.3%
Telecommunication Services 5.1%
Energy 4.6%
Portfolio holdings and allocations are subject to change. Percentages are as
of June 30, 2007, and are based on the total value of investments.
Portfolio of Investments
DISCOVERY FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--98.5%
Consumer Discretionary--11.8%
73,900 Brunswick Corporation $2,411,357 $141
51,200 Catalina Marketing Corporation 1,612,800 94
91,700 Interactive Data Corporation 2,455,726 143
110,300 Jackson Hewitt Tax Service, Inc. 3,100,533 181
126,200 Journal Communications, Inc. 1,641,862 96
98,200 * Rent-A-Center, Inc. 2,575,786 150
118,000 Tempur-Pedic International, Inc. 3,056,200 179
417,800 * Visteon Corporation 3,384,180 198
- --------------------------------------------------------------------------------------------------------------------
20,238,444 1,182
- --------------------------------------------------------------------------------------------------------------------
Consumer Staples--7.0%
57,175 Church & Dwight Company, Inc. 2,770,701 162
94,800 Flowers Foods, Inc. 3,162,528 185
69,200 Hormel Foods Corporation 2,584,620 151
29,600 Lancaster Colony Corporation 1,239,944 72
82,285 Tootsie Roll Industries, Inc. 2,280,117 133
- --------------------------------------------------------------------------------------------------------------------
12,037,910 703
- --------------------------------------------------------------------------------------------------------------------
Energy--4.6%
88,300 * Denbury Resources, Inc. 3,311,250 193
186,000 * Parker Drilling Company 1,960,440 115
63,000 * Whiting Petroleum Corporation 2,552,760 149
- --------------------------------------------------------------------------------------------------------------------
7,824,450 457
- --------------------------------------------------------------------------------------------------------------------
Financials--10.6%
8,262 * Alleghany Corporation 3,358,503 196
90,700 Arthur J. Gallagher & Company 2,528,716 148
128,600 FirstMerit Corporation 2,691,598 157
80,200 Harleysville Group, Inc. 2,675,472 156
33,800 Midland Company 1,586,572 93
179,800 Phoenix Companies, Inc. 2,698,798 157
61,500 Wilmington Trust Corporation 2,552,865 149
- --------------------------------------------------------------------------------------------------------------------
18,092,524 1,056
- --------------------------------------------------------------------------------------------------------------------
Health Care--7.9%
44,500 Hillenbrand Industries, Inc. 2,892,500 169
37,200 * Invitrogen Corporation 2,743,500 160
72,900 * Lincare Holdings, Inc. 2,905,065 170
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Health Care (continued)
54,800 * Magellan Health Services, Inc. $2,546,556 $149
52,800 West Pharmaceutical Services, Inc. 2,489,520 145
- --------------------------------------------------------------------------------------------------------------------
13,577,141 793
- --------------------------------------------------------------------------------------------------------------------
Industrials--24.3%
49,100 Alexander & Baldwin, Inc. 2,607,701 152
71,300 Carlisle Companies, Inc. 3,316,163 194
93,700 CLARCOR, Inc. 3,507,191 205
71,900 Curtiss-Wright Corporation 3,351,259 196
56,300 Deluxe Corporation 2,286,343 133
58,100 HNI Corporation 2,382,100 139
72,200 * Kansas City Southern, Inc. 2,710,388 158
148,200 * Labor Ready, Inc. 3,424,902 200
172,900 Mueller Water Products, Inc. - Class "B" 2,593,500 151
54,000 * NCI Building Systems, Inc. 2,663,820 156
92,100 Pentair, Inc. 3,552,297 207
60,900 Robbins & Myers, Inc. 3,235,617 189
46,600 United Industrial Corporation 2,795,068 163
58,600 Woodward Governor Company 3,145,062 184
- --------------------------------------------------------------------------------------------------------------------
41,571,411 2,427
- --------------------------------------------------------------------------------------------------------------------
Information Technology--15.8%
68,400 * Avnet, Inc. 2,711,376 158
166,900 AVX Corporation 2,793,906 163
78,500 * Cabot Microelectronics Corporation 2,785,965 163
39,400 * CDW Corporation 3,347,818 195
114,200 * Checkpoint Systems, Inc. 2,883,550 168
118,100 * Convergys Corporation 2,862,744 167
96,400 MoneyGram International, Inc. 2,694,380 157
49,900 * Rogers Corporation 1,846,300 108
173,400 * Tyler Technologies, Inc. 2,151,894 126
76,875 * Varian Semiconductor Equipment Associates, Inc. 3,079,613 180
- --------------------------------------------------------------------------------------------------------------------
27,157,546 1,585
- --------------------------------------------------------------------------------------------------------------------
Materials--5.3%
85,800 AptarGroup, Inc. 3,051,048 178
80,500 Commercial Metals Company 2,718,485 159
- --------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
DISCOVERY FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
Shares or For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Materials (continued)
63,400 Eagle Materials, Inc. $3,109,770 $182
3,500 Neenah Paper, Inc. 144,410 8
- --------------------------------------------------------------------------------------------------------------------
9,023,713 527
- --------------------------------------------------------------------------------------------------------------------
Telecommunication Services--5.1%
150,200 * Premiere Global Services, Inc. 1,955,604 114
57,875 Telephone & Data Systems, Inc. - Special Shares 3,330,706 195
126,900 USA Mobility, Inc. 3,395,844 198
- --------------------------------------------------------------------------------------------------------------------
8,682,154 507
Utilities--6.1%
140,500 CMS Energy Corporation 2,416,600 141
329,700 * Dynegy, Inc. - Class "A" 3,112,368 182
94,000 Energy East Corporation 2,452,460 143
91,300 Portland General Electric Company 2,505,272 146
- --------------------------------------------------------------------------------------------------------------------
10,486,700 612
- --------------------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $134,605,695) 168,691,993 9,849
- --------------------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--1.3%
$2,300M Citigroup Funding, Inc., 5.13%, 7/2/07
(cost $2,299,344) 2,299,344 134
- --------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $136,905,039) 99.8% 170,991,337 9,983
Other Assets, Less Liabilities .2 287,731 17
- --------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $171,279,068 $10,000
====================================================================================================================
* Non-income producing
See notes to financial statements
Fund Expenses
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 3 for a detailed explanation of the information
presented in these examples.
- ----------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
Expense Examples (1/1/07) (6/30/07) (1/1/07-6/30/07)*
- ----------------------------------------------------------------------------------------------
Actual $1,000.00 $1,010.50 $3.99
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). Expenses paid during the period are net
of expenses waived.
Portfolio Composition
By Sector
(BAR CHART DATA:)
Government National Mortgage Association 53.0%
Fannie Mae 16.5%
U.S. Government Agency Obligations 10.1%
Freddie Mac 9.1%
U.S. Government Obligations 4.6%
Portfolio holdings and allocations are subject to change. Percentages are as
of June 30, 2007, and are based on the total value of investments.
Portfolio of Investments
GOVERNMENT FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED CERTIFICATES--78.1%
Fannie Mae--16.4%
$625M 5%, 1/1/2035-7/1/2035 $587,796 $300
1,073M 5.5%, 10/1/2032-7/1/2034 1,039,689 530
504M 6%, 2/1/2036 499,453 255
119M 7%, 5/1/2031 124,693 64
530M 9%, 6/1/2015-11/1/2026 571,729 291
351M 11%, 10/1/2015 393,369 200
- --------------------------------------------------------------------------------------------------------------------
3,216,729 1,640
- --------------------------------------------------------------------------------------------------------------------
Freddie Mac--9.0%
1,465M 6%, 8/1/2032-10/1/2035 1,456,649 743
307M 6.5%, 7/1/2032-12/1/2032 313,155 159
- --------------------------------------------------------------------------------------------------------------------
1,769,804 902
- --------------------------------------------------------------------------------------------------------------------
Government National Mortgage
Association I Program--52.7%
1,905M 5%, 3/15/2033-1/15/2037 1,806,015 921
3,720M 5.5%, 2/15/2033-5/15/2037 3,615,959 1,844
2,485M 6%, 11/15/2032-5/15/2036 2,478,347 1,264
982M 6.5%, 7/15/2032-8/15/2036 1,005,266 513
1,193M 7%, 1/15/2030-10/15/2032 1,253,802 639
154M 10%, 5/15/2019-8/15/2019 174,465 89
- --------------------------------------------------------------------------------------------------------------------
10,333,854 5,270
- --------------------------------------------------------------------------------------------------------------------
Total Value of Mortgage-Backed Certificates (cost $15,720,867) 15,320,387 7,812
- --------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS--10.0%
1,000M Federal Farm Credit Bank, 5.5%, 2015 980,075 500
1,000M Federal Home Loan Bank, 5%, 2012 981,971 500
- --------------------------------------------------------------------------------------------------------------------
Total Value of U.S. Government Agency Obligations (cost $1,982,574) 1,962,046 1,000
- --------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--4.6%
848M FDA Queens LP, 6.99%, 2017 (cost $963,890)+ 900,308 459
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
SHORT-TERM U.S. GOVERNMENT OBLIGATIONS--6.6%
U.S. Treasury Bills:
$900M 4.18%, 7/19/07 $898,013 $458
400M 4.3%, 7/19/07 399,091 203
- --------------------------------------------------------------------------------------------------------------------
Total Value of Short-Term U.S. Government Obligations
(cost $1,297,104) 1,297,104 661
- --------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $19,964,435) 99.3% 19,479,845 9,932
Other Assets, Less Liabilities .7 132,561 68
- --------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $19,612,406 $10,000
====================================================================================================================
+ Security exempt from registration under Rule 144A of the
Securities Act of 1933 (See Note 5).
See notes to financial statements
Fund Expenses
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 3 for a detailed explanation of the information
presented in these examples.
- ----------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
Expense Examples (1/1/07) (6/30/07) (1/1/07-6/30/07)*
- ----------------------------------------------------------------------------------------------
Actual $1,000.00 $1,091.61 $4.20
Hypothetical
(5% annual return before expenses) $1,000.00 $1,020.77 $4.06
- ----------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio of .81%, 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
(BAR CHART DATA:)
Industrials 19.6%
Consumer Discretionary 17.5%
Information Technology 15.6%
Financials 15.4%
Health Care 10.2%
Energy 8.5%
Consumer Staples 6.7%
Materials 5.4%
Telecommunication Services 0.8%
Utilities 0.3%
Portfolio holdings and allocations are subject to change. Percentages are as
of June 30, 2007, and are based on the total value of investments.
Portfolio of Investments
GROWTH & INCOME FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--99.7%
Consumer Discretionary--17.4%
90,000 bebe stores, inc. $1,440,900 $51
16,300 Brown Shoe Company, Inc. 396,416 14
55,800 * Carter's, Inc. 1,447,452 51
65,000 CBS Corporation - Class "B" 2,165,800 76
39,000 * CEC Entertainment, Inc. 1,372,800 48
12,300 * Cinemark Holdings, Inc. 220,047 8
64,600 Clear Channel Communications, Inc. 2,443,172 86
66,200 * Cost Plus, Inc. 561,376 20
95,000 Dollar General Corporation 2,082,400 73
10,900 Dow Jones & Company, Inc. 626,205 22
82,800 * Eddie Bauer Holdings, Inc. 1,063,980 37
66,900 Foot Locker, Inc. 1,458,420 51
82,000 H&R Block, Inc. 1,916,340 67
72,000 Home Depot, Inc. 2,833,200 100
18,100 J.C. Penney Company, Inc. 1,310,078 46
16,700 Jones Apparel Group, Inc. 471,775 17
48,900 Journal Register Company 219,072 8
38,600 Kenneth Cole Productions, Inc. - Class "A" 953,420 34
52,000 Leggett & Platt, Inc. 1,146,600 40
65,800 * Lincoln Educational Services Corporation 977,788 34
69,400 McDonald's Corporation 3,522,744 124
95,800 * Morgans Hotel Group Company 2,335,604 82
74,800 Movado Group, Inc. 2,523,752 89
74,500 Newell Rubbermaid, Inc. 2,192,535 77
56,200 Orient-Express Hotels, Ltd. 3,001,080 106
93,000 * Quiksilver, Inc. 1,314,090 46
22,400 Sherwin-Williams Company 1,488,928 52
57,400 Staples, Inc. 1,362,102 48
32,800 * Steiner Leisure Ltd. 1,611,136 57
36,950 * Viacom, Inc. - Class "B" 1,538,229 54
165,000 Westwood One, Inc. 1,186,350 42
63,200 * Wyndham Worldwide Corporation 2,291,632 81
- --------------------------------------------------------------------------------------------------------------------
49,475,423 1,741
- --------------------------------------------------------------------------------------------------------------------
Consumer Staples--6.7%
53,100 Altria Group, Inc. 3,724,434 131
44,200 Avon Products, Inc. 1,624,350 57
23,300 * Chattem, Inc. 1,476,754 52
- --------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
GROWTH & INCOME FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Consumer Staples (continued)
20,100 Coca-Cola Company $1,051,431 $37
73,100 CVS Corporation 2,664,495 94
36,746 Kraft Foods, Inc. - Class "A" 1,295,297 45
138,900 Nu Skin Enterprises, Inc. - Class "A" 2,291,850 81
16,500 PepsiCo, Inc. 1,070,025 38
25,400 Procter & Gamble Company 1,554,226 55
3,475 Tootsie Roll Industries, Inc. 96,292 3
30,000 Wal-Mart Stores, Inc. 1,443,300 51
20,400 WD-40 Company 670,548 24
- --------------------------------------------------------------------------------------------------------------------
18,963,002 668
- --------------------------------------------------------------------------------------------------------------------
Energy--8.5%
63,400 * Cal Dive International, Inc. 1,054,342 37
17,400 Chesapeake Energy Corporation 602,040 21
29,000 ConocoPhillips 2,276,500 80
39,700 ExxonMobil Corporation 3,330,036 117
10,000 * National-Oilwell Varco, Inc. 1,042,400 37
27,000 Noble Corporation 2,633,040 93
25,000 * North American Energy Partners, Inc. 506,500 18
42,800 Sasol, Ltd. (ADR) 1,606,712 57
20,000 Schlumberger, Ltd. 1,698,800 60
50,000 Suncor Energy, Inc. 4,496,000 158
23,500 * Swift Energy Company 1,004,860 35
19,900 World Fuel Services Corporation 836,994 29
50,000 XTO Energy, Inc. 3,005,000 106
- --------------------------------------------------------------------------------------------------------------------
24,093,224 848
- --------------------------------------------------------------------------------------------------------------------
Financials--15.4%
17,500 American Express Company 1,070,650 38
35,774 American International Group, Inc. 2,505,253 88
43,100 Astoria Financial Corporation 1,079,224 38
49,000 Bank of America Corporation 2,395,610 84
50,500 Brookline Bancorp, Inc. 581,255 21
18,700 Capital One Financial Corporation 1,466,828 52
44,000 Citigroup, Inc. 2,256,760 79
67,400 Colonial BancGroup, Inc. 1,682,978 59
81,200 * First Mercury Financial Corporation 1,702,764 60
13,000 * Flagstone Reinsurance Holdings, Ltd. 173,160 6
16,400 Hartford Financial Services Group, Inc. 1,615,564 57
60,000 JPMorgan Chase & Company 2,907,000 102
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Financials (continued)
21,500 Lehman Brothers Holdings, Inc. $1,602,180 $56
22,300 Merrill Lynch & Company, Inc. 1,863,834 66
24,800 Morgan Stanley 2,080,224 73
63,300 * NASDAQ Stock Market, Inc. 1,880,643 66
89,800 NewAlliance Bancshares, Inc. 1,321,856 47
43,300 South Financial Group, Inc. 980,312 35
71,800 Sovereign Bancorp, Inc. 1,517,852 53
49,500 Sunstone Hotel Investors, Inc. 1,405,305 50
24,600 SunTrust Banks, Inc. 2,109,204 74
65,000 U.S. Bancorp 2,141,750 75
65,400 U.S.B. Holding Company, Inc. 1,246,524 44
34,000 Wachovia Corporation 1,742,500 61
42,500 Washington Mutual, Inc. 1,812,200 64
19,900 Webster Financial Corporation 849,133 30
46,400 Wells Fargo & Company 1,631,888 57
- --------------------------------------------------------------------------------------------------------------------
43,622,451 1,535
- --------------------------------------------------------------------------------------------------------------------
Health Care--10.2%
53,900 Abbott Laboratories 2,886,345 102
39,300 * Amgen, Inc. 2,172,897 77
7,600 Baxter International, Inc. 428,184 15
36,200 Biomet, Inc. 1,655,064 58
33,700 * Boston Scientific Corporation 516,958 18
1,000 * Insulet Corporation 14,200 1
51,300 Johnson & Johnson 3,161,106 111
16,800 * Laboratory Corporation of America Holdings 1,314,768 46
24,300 Medtronic, Inc. 1,260,198 44
27,000 Merck & Company, Inc. 1,344,600 47
141,500 Pfizer, Inc. 3,618,155 127
47,000 Sanofi-Aventis (ADR) 1,892,690 67
42,400 * St. Jude Medical, Inc. 1,759,176 62
26,900 * Triad Hospitals, Inc. 1,446,144 51
29,500 * TriZetto Group, Inc. 571,120 20
18,500 UnitedHealth Group, Inc. 946,090 33
11,700 * Waters Corporation 694,512 25
57,500 Wyeth 3,297,050 116
- --------------------------------------------------------------------------------------------------------------------
28,979,257 1,020
- --------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
GROWTH & INCOME FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Industrials--19.5%
52,700 3M Company $4,573,833 $161
28,500 Alexander & Baldwin, Inc. 1,513,635 53
117,400 * Altra Holdings, Inc. 2,028,672 71
40,100 * Armstrong World Industries, Inc. 2,011,015 71
70,400 Barnes Group, Inc. 2,230,272 79
32,100 * BE Aerospace, Inc. 1,325,730 47
27,000 Burlington Northern Santa Fe Corporation 2,298,780 81
33,100 Caterpillar, Inc. 2,591,730 91
46,000 * Gardner Denver, Inc. 1,957,300 69
130,000 General Electric Company 4,976,400 175
13,700 * Genlyte Group, Inc. 1,075,998 38
49,100 Harsco Corporation 2,553,200 90
40,000 Honeywell International, Inc. 2,251,200 79
13,700 Hubbell, Inc. - Class "B" 742,814 26
40,500 Illinois Tool Works, Inc. 2,194,695 77
91,500 Knoll, Inc. 2,049,600 72
20,700 Lockheed Martin Corporation 1,948,491 69
16,500 * Mobile Mini, Inc. 481,800 17
47,700 * Navigant Consulting, Inc. 885,312 31
30,300 Northrop Grumman Corporation 2,359,461 83
50,900 * PGT, Inc. 556,337 20
34,500 Precision Castparts Corporation 4,186,920 147
16,900 Steelcase, Inc. - Class "A" 312,650 11
71,400 TAL International Group, Inc. 2,121,294 75
65,700 Tyco International, Ltd. 2,220,003 78
57,400 United Technologies Corporation 4,071,382 143
- --------------------------------------------------------------------------------------------------------------------
55,518,524 1,954
- --------------------------------------------------------------------------------------------------------------------
Information Technology--15.5%
60,700 * Arris Group, Inc. 1,067,713 38
10,000 * CACI International, Inc. - Class "A" 488,500 17
133,800 * Cisco Systems, Inc. 3,726,330 131
30,000 * Corning, Inc. 766,500 27
48,386 * Electronics for Imaging, Inc. 1,365,453 48
121,100 * EMC Corporation 2,191,910 77
85,000 * Entrust, Inc. 345,100 12
40,000 First Data Corporation 1,306,800 46
50,500 Harris Corporation 2,754,775 97
55,600 Hewlett-Packard Company 2,480,872 87
61,900 Intel Corporation 1,470,744 52
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Information Technology (continued)
39,000 International Business Machines Corporation $4,104,750 $144
10,600 * International Rectifier Corporation 394,956 14
128,100 Microsoft Corporation 3,775,107 133
92,700 Motorola, Inc. 1,640,790 58
65,800 * NCI, Inc. - Class "A" 1,103,466 39
25,000 Nokia Corporation - Class "A" (ADR) 702,750 25
61,500 Openwave Systems, Inc. 384,990 14
93,986 * Parametric Technology Corporation 2,031,037 72
45,500 QUALCOMM, Inc. 1,974,245 70
172,400 * Silicon Image, Inc. 1,479,192 52
122,600 * Smart Modular Technologies (WWH), Inc. 1,686,976 59
1,000 * Starent Networks Corporation 14,700 1
67,900 * Symantec Corporation 1,371,580 48
130,000 * TIBCO Software, Inc. 1,176,500 41
48,300 * Varian Semiconductor Equipment Associates, Inc. 1,934,898 68
40,200 Western Union Company 837,366 29
56,500 Xilinx, Inc. 1,512,505 53
- --------------------------------------------------------------------------------------------------------------------
44,090,505 1,552
- --------------------------------------------------------------------------------------------------------------------
Materials--5.4%
64,700 Celanese Corporation - Series "A" 2,509,066 88
21,200 Dow Chemical Company 937,464 33
26,500 Freeport-McMoRan Copper & Gold, Inc. - Class "B" 2,194,730 77
42,200 Lubrizol Corporation 2,724,010 96
14,800 PPG Industries, Inc. 1,126,428 40
21,600 Praxair, Inc. 1,554,984 55
65,000 RPM International, Inc. 1,502,150 53
16,700 Scotts Miracle-Gro Company - Class "A" 717,098 25
35,000 Temple-Inland, Inc. 2,153,550 76
- --------------------------------------------------------------------------------------------------------------------
15,419,480 543
- --------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
GROWTH & INCOME FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Telecommunication Services--.8%
56,400 AT&T, Inc. $2,340,600 $82
- --------------------------------------------------------------------------------------------------------------------
Utilities--.3%
25,000 Atmos Energy Corporation 751,500 27
- --------------------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $231,910,051) 99.7% 283,253,966 9,970
Other Assets, Less Liabilities .3 847,847 30
- --------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $284,101,813 $10,000
====================================================================================================================
* Non-income producing
Summary of Abbreviations:
ADR American Depositary Receipts
See notes to financial statements
Fund Expenses
HIGH YIELD 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 3 for a detailed explanation of the information
presented in these examples.
- ----------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
Expense Examples (1/1/07) (6/30/07) (1/1/07-6/30/07)*
- ----------------------------------------------------------------------------------------------
Actual $1,000.00 $1,037.14 $4.24
Hypothetical
(5% annual return before expenses) $1,000.00 $1,020.62 $4.21
- ----------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio of .84%, 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
(BAR CHART DATA:)
Consumer Staples 29.5%
Consumer Discretionary 20.9%
Energy 13.4%
Materials 8.1%
Health Care 7.8%
Industrials 6.0%
Information Technology 4.1%
Financials 3.9%
Telecommunication Services 2.0%
Portfolio holdings and allocations are subject to change. Percentages are as
of June 30, 2007, and are based on the total value of investments.
Portfolio of Investments
HIGH YIELD FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS--90.7%
Aerospace/Defense--3.1%
$550M Alliant Techsystems, Inc., 6.75%, 2016 + $536,250 $78
600M DRS Technologies, Inc., 6.875%, 2013 585,000 85
374M DynCorp International, LLC, 9.5%, 2013 399,712 58
190M GenCorp, Inc., 9.5%, 2013 204,250 29
400M L-3 Communications Corp., 7.625%, 2012 411,500 60
- --------------------------------------------------------------------------------------------------------------------
2,136,712 310
- --------------------------------------------------------------------------------------------------------------------
Automotive--7.0%
200M Accuride Corp., 8.5%, 2015 198,500 29
Asbury Automotive Group, Inc.:
600M 8%, 2014 609,000 88
175M 7.625%, 2017 + 173,250 25
500M Avis Budget Car Rental, LLC, 7.75%, 2016 512,500 74
750M Cooper Standard Automotive, Inc., 8.375%, 2014 703,125 102
575M Dana Corp., 9%, 2011 ++ 598,000 87
13M Goodyear Tire & Rubber Co., 9%, 2015 14,426 2
750M Tenneco Automotive, Inc., 8.625%, 2014 776,250 113
800M United Auto Group, Inc., 7.75%, 2016 800,000 116
400M United Components, Inc., 9.375%, 2013 415,000 60
- --------------------------------------------------------------------------------------------------------------------
4,800,051 696
- --------------------------------------------------------------------------------------------------------------------
Chemicals--5.2%
Equistar Chemicals LP:
12M 10.125%, 2008 12,881 2
350M 10.625%, 2011 370,125 54
50M Huntsman International, LLC, 7.375%, 2015 52,750 8
Huntsman, LLC:
183M 11.625%, 2010 197,182 29
319M 11.5%, 2012 355,685 52
700M Innophos, Inc., 8.875%, 2014 728,000 105
400M Nell AF S.a.r.l., 8.375%, 2015 + 385,000 56
550M Newmarket Corp., 7.125%, 2016 534,875 77
500M Terra Capital, Inc., 7%, 2017 485,000 70
450M Tronox Worldwide, LLC, 9.5%, 2012 471,375 68
- --------------------------------------------------------------------------------------------------------------------
3,592,873 521
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Consumer Non-Durables--1.8%
$200M Broder Brothers Co., 11.25%, 2010 $198,250 $29
500M GFSI, Inc., 11.5%, 2011 +*** 517,500 75
400M Levi Strauss & Co., 9.75%, 2015 430,000 62
100M Remington Arms Co., 10.5%, 2011 101,875 15
- --------------------------------------------------------------------------------------------------------------------
1,247,625 181
- --------------------------------------------------------------------------------------------------------------------
Energy--13.1%
600M Basic Energy Services, Inc., 7.125%, 2016 576,000 84
700M Bluewater Finance, Ltd., 10.25%, 2012 733,250 106
100M Calfrac Holdings, 7.75%, 2015 + 96,250 14
Chesapeake Energy Corp.:
200M 7.5%, 2014 203,500 30
1,000M 6.625%, 2016 967,500 140
500M Compagnie Generale de Geophysique, 7.5%, 2015 502,500 73
500M Complete Production Services, Inc., 8%, 2016 + 507,500 74
1,000M Delta Petroleum Corp., 7%, 2015 872,500 127
Giant Industries, Inc.:
650M 11%, 2012 685,750 99
450M 8%, 2014 487,035 71
150M Hilcorp Energy I, LP, 9%, 2016 + 156,000 23
400M Pacific Energy Partners LP, 7.125%, 2014 414,276 60
Petroplus Finance, Ltd.:
100M 6.75%, 2014 + 96,750 14
100M 7%, 2017 + 96,750 14
POGO Producing Co.:
50M 7.875%, 2013 51,250 7
750M 6.875%, 2017 748,125 108
400M Stallion Oilfield Services, Ltd., 9.75%, 2015 + 410,000 59
300M Stewart & Stevenson, LLC, 10%, 2014 + 315,000 46
Stone Energy Corp.:
600M 8.106%, 2010 +*** 603,000 87
100M 6.75%, 2014 92,500 13
400M Tesoro Corp., 6.25%, 2012 399,000 58
- --------------------------------------------------------------------------------------------------------------------
9,014,436 1,307
- --------------------------------------------------------------------------------------------------------------------
Financials--.7%
500M General Motors Acceptance Corp., 6.75%, 2014 479,510 70
- --------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
HIGH YIELD FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Financial Services--2.4%
$1,682M Targeted Return Index Securities Trust,
7.548%, 2016 + $1,655,860 $240
- --------------------------------------------------------------------------------------------------------------------
Food/Beverage/Tobacco--2.5%
1,000M Constellation Brands, Inc. , 7.25%, 2016 980,000 142
Land O'Lakes, Inc.:
200M 9%, 2010 211,000 31
33M 8.75%, 2011 34,238 5
200M Pierre Foods, Inc., 9.875%, 2012 204,000 30
250M Southern States Cooperative, Inc., 10.5%, 2010 + 265,000 38
- --------------------------------------------------------------------------------------------------------------------
1,694,238 246
- --------------------------------------------------------------------------------------------------------------------
Food/Drug--1.1%
750M Ingles Markets, Inc., 8.875%, 2011 780,938 113
- --------------------------------------------------------------------------------------------------------------------
Forest Products/Containers--1.8%
250M Jefferson Smurfit Corp., 8.25%, 2012 249,375 36
250M Packaging Dynamics Finance Corp., 10%, 2016 + 252,500 37
370M Tekni-Plex, Inc., 8.75%, 2013 368,150 53
375M Verso Paper Holdings, LLC, 9.106%, 2014 +*** 384,375 56
- --------------------------------------------------------------------------------------------------------------------
1,254,400 182
- --------------------------------------------------------------------------------------------------------------------
Gaming/Leisure--7.1%
500M Circus & Eldorado/Silver Legacy, 10.125%, 2012 525,625 76
250M Herbst Gaming, Inc., 8.125%, 2012 253,750 37
500M Isle of Capri Casinos, Inc., 7%, 2014 475,625 69
600M Mandalay Resort Group, 6.375%, 2011 604,500 88
800M MGM Mirage, Inc., 6.625%, 2015 731,000 106
500M Park Place Entertainment Corp., 7%, 2013 524,372 76
200M Pinnacle Entertainment, Inc., 7.5%, 2015 + 194,000 28
1,000M Speedway Motorsports, Inc., 6.75%, 2013 980,000 142
500M Station Casinos, Inc., 6.875%, 2016 443,750 64
200M Wimar Opco, LLC, (Tropicana Entertainment),
9.625%, 2014 + 193,500 28
- --------------------------------------------------------------------------------------------------------------------
4,926,122 714
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Health Care--7.6%
$260M Alliance Imaging, Inc., 7.25%, 2012 $253,500 $37
500M Cooper Companies, Inc., 7.125%, 2015 + 497,500 72
500M DaVita, Inc., 7.25%, 2015 496,250 72
400M Fisher Scientific International, Inc., 6.125%, 2015 393,375 57
600M Genesis Health Ventures, Inc., 9.75%, 2008 ++** 375 --
HCA, Inc.:
500M 6.95%, 2012 482,500 70
200M 6.75%, 2013 182,500 26
140M MedQuest, Inc., 11.875%, 2012 113,400 16
1,000M Omnicare, Inc., 6.875%, 2015 955,000 139
343M Res-Care, Inc., 7.75%, 2013 353,290 51
Tenet Healthcare Corp.:
600M 6.375%, 2011 551,250 80
250M 9.25%, 2015 238,750 35
620M Triad Hospitals, Inc., 7%, 2013 652,767 95
100M Universal Hospital Services, Inc., 8.759%, 2015 +*** 100,500 14
- --------------------------------------------------------------------------------------------------------------------
5,270,957 764
- --------------------------------------------------------------------------------------------------------------------
Housing--4.0%
500M Beazer Homes USA, Inc., 6.875%, 2015 432,500 63
700M Builders FirstSource, Inc., 9.61%, 2012*** 712,250 103
100M NTK Holdings, Inc., 0% - 10.75%, 2014# 73,000 11
500M Ply Gem Industries, Inc., 9%, 2012 451,875 66
400M Realogy Corp., 12.375%, 2015 + 366,000 53
William Lyon Homes, Inc.:
500M 7.625%, 2012 430,000 62
300M 10.75%, 2013 283,500 41
- --------------------------------------------------------------------------------------------------------------------
2,749,125 399
- --------------------------------------------------------------------------------------------------------------------
Information Technology--4.0%
850M Belden CDT, Inc., 7%, 2017 + 841,500 122
350M Exodus Communications, Inc., 10.75%, 2009 ++** 219 --
Freescale Semiconductor, Inc.:
600M 9.125%, 2014 + 567,000 82
100M 10.125%, 2016 + 94,500 14
1,000M Iron Mountain, Inc., 8.25%, 2011 1,000,000 145
Sanmina - SCI Corp.:
100M 8.11%, 2014 +*** 100,500 15
150M 8.125%, 2016 140,250 20
- --------------------------------------------------------------------------------------------------------------------
2,743,969 398
- --------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
HIGH YIELD FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Investment/Finance Companies--.8%
$500M LaBranche & Co., Inc., 11%, 2012 $532,500 $77
- --------------------------------------------------------------------------------------------------------------------
Manufacturing--.3%
200M Case New Holland, Inc., 7.125%, 2014 203,500 30
- --------------------------------------------------------------------------------------------------------------------
Media-Broadcasting--3.3%
1,250M Block Communications, Inc., 8.25%, 2015 + 1,268,750 184
50M Nexstar Finance, Inc., 7%, 2014 49,750 7
159M Sinclair Broadcasting Group, Inc., 8%, 2012 163,335 24
Young Broadcasting, Inc.:
340M 10%, 2011 340,000 49
500M 8.75%, 2014 475,000 69
- --------------------------------------------------------------------------------------------------------------------
2,296,835 333
- --------------------------------------------------------------------------------------------------------------------
Media-Cable TV--7.9%
900M Adelphia Communications Escrow Bond, 2011 ++ 294,750 43
715M Atlantic Broadband Finance, LLC, 9.375%, 2014 725,725 105
400M Cablevision Systems Corp., 8%, 2012 397,000 58
Charter Communications Holdings, LLC:
1,500M 10%, 2009 1,539,375 223
250M 0% - 11.75%, 2011# 256,250 37
250M CSC Holdings, Inc., 8.125%, 2009 255,625 37
1,000M Echostar DBS Corp., 6.375%, 2011 982,500 143
1,000M Mediacom LLC/Mediacom Capital Corp.,
7.875%, 2011 1,000,000 145
- --------------------------------------------------------------------------------------------------------------------
5,451,225 791
- --------------------------------------------------------------------------------------------------------------------
Media-Diversified--3.9%
500M Cenveo, Inc., 7.875%, 2013 492,500 71
100M Deluxe Corp., 7.375%, 2015 + 100,000 15
600M Idearc, Inc., 8%, 2016 609,000 88
MediaNews Group, Inc.:
300M 6.875%, 2013 259,500 38
350M 6.375%, 2014 293,125 43
Six Flags, Inc.:
350M 8.875%, 2010 347,375 50
150M 9.625%, 2014 139,875 20
400M Universal City Development Partners, Ltd.,
11.75%, 2010 425,000 62
- --------------------------------------------------------------------------------------------------------------------
2,666,375 387
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Metals/Mining--.9%
$200M Metals USA, Inc., 11.125%, 2015 $219,000 $32
450M Russell Metals, Inc., 6.375%, 2014 434,250 63
- --------------------------------------------------------------------------------------------------------------------
653,250 95
- --------------------------------------------------------------------------------------------------------------------
Retail-General Merchandise--4.7%
500M Claire's Stores, Inc., 9.625%, 2015, PIK 465,000 67
1,000M Gregg Appliances, Inc., 9%, 2013 1,070,000 155
GSC Holdings Corp.:
200M 9.224%, 2011*** 205,860 30
200M 8%, 2012 210,000 31
700M Neiman Marcus Group, Inc., 10.375%, 2015 773,500 112
500M Yankee Acquisition Corp., 9.75%, 2017 486,250 71
- --------------------------------------------------------------------------------------------------------------------
3,210,610 466
- --------------------------------------------------------------------------------------------------------------------
Services--5.5%
Allied Waste NA, Inc.:
200M 7.875%, 2013 203,250 29
700M 7.375%, 2014 694,750 101
600M 6.875%, 2017 583,500 85
250M Ashtead Capital, Inc., 9%, 2016 + 263,125 38
220M Hydrochem Industrial Services, Inc., 9.25%, 2013 + 227,700 33
United Rentals, Inc.:
300M 6.5%, 2012 296,250 43
500M 7%, 2014 490,000 71
1,000M Waste Services, Inc., 9.5%, 2014 1,056,250 153
- --------------------------------------------------------------------------------------------------------------------
3,814,825 553
- --------------------------------------------------------------------------------------------------------------------
Telecommunications--.0%
950M E. Spire Communications, Inc., 13%, 2010 ++** 95 --
- --------------------------------------------------------------------------------------------------------------------
Wireless Communications--2.0%
800M Nextel Communications, Inc., 5.95%, 2014 762,993 111
600M Rogers Wireless, Inc., 6.375%, 2014 607,221 88
- --------------------------------------------------------------------------------------------------------------------
1,370,214 199
- --------------------------------------------------------------------------------------------------------------------
Total Value of Corporate Bonds (cost $64,264,874) 62,546,245 9,072
- --------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
HIGH YIELD FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--3.1%
Consumer Staples--.7%
32,500 Sinclair Broadcasting Group, Inc. $462,150 $67
- --------------------------------------------------------------------------------------------------------------------
Food/Drug--.3%
6,400 Ingles Markets, Inc. 220,480 32
- --------------------------------------------------------------------------------------------------------------------
Media-Broadcasting--.7%
12,000 Clear Channel Communications, Inc. 453,840 66
- --------------------------------------------------------------------------------------------------------------------
Media-Cable TV--1.1%
898,613 * Adelphia Recovery Trust 92,108 13
16,740 * Time Warner Cable, Inc. - Class "A" 655,706 95
- --------------------------------------------------------------------------------------------------------------------
747,814 108
- --------------------------------------------------------------------------------------------------------------------
Media-Diversified--.3%
1,000 * MediaNews Group, Inc. - Class "A"** 225,000 33
- --------------------------------------------------------------------------------------------------------------------
Telecommunications--.0%
690 * Viatel Holding (Bermuda), Ltd.** 8 --
4,399 * World Access, Inc. 4 --
- --------------------------------------------------------------------------------------------------------------------
12 --
- --------------------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $1,638,580) 2,109,296 306
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--1.5%
$1,000M U.S. Treasury Notes, 6.125%, 2007 (cost $1,092,969) $1,001,641 $145
- --------------------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--2.7%
350M Chevron Funding Corp., 5.23%, 7/16/07 349,185 51
250M General Electric Capital Corp., 5.25%, 7/16/07 249,416 36
1,300M Toyota Motor Credit Corp., 5.24%, 7/6/07 1,298,863 188
- --------------------------------------------------------------------------------------------------------------------
Total Value of Short-Term Corporate Notes (cost $1,897,464) 1,897,464 275
- --------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $68,893,887) 98.0% 67,554,646 9,798
Other Assets, Less Liabilities 2.0 1,392,806 202
- --------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $68,947,452 $10,000
====================================================================================================================
+ Security exempt from registration under Rule 144A of the Securities Act
of 1933 (see Note 5).
++ In default as to principal and/or interest payment
* Non-income producing
** Security valued at fair value (see Note 1A)
*** Interest rates on adjustable rate bonds are determined and reset
quarterly by the indentures.
The interest rates shown are the rates in effect on June 30, 2007.
# Denotes a step bond (a zero coupon bond that converts to a fixed
interest rate at a designated date).
See notes to financial statements
Fund Expenses
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 3 for a detailed explanation of the information
presented in these examples.
- ----------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
Expense Examples (1/1/07) (6/30/07) (1/1/07-6/30/07)*
- ----------------------------------------------------------------------------------------------
Actual $1,000.00 $1,102.63 $4.59
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 COUNTRIES
(BAR CHART DATA:)
United Kingdom 22.4%
Switzerland 13.6%
India 9.8%
Spain 9.0%
Japan 6.7%
Australia 5.8%
Mexico 5.3%
Ireland 4.8%
Belguim 4.1%
France 3.7%
Portfolio holdings and allocations are subject to change. Percentages are as
of June 30, 2007, and are based on the total value of investments.
Portfolio of Investments
INTERNATIONAL FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--91.3%
United Kingdom--22.0%
240,973 British American Tobacco PLC $8,209,385 $577
192,597 Diageo PLC 4,007,124 282
85,910 Imperial Tobacco Group PLC 3,976,453 280
55,671 Reckitt Benckiser PLC 3,054,857 215
158,200 Rolls-Royce Group PLC 1,709,215 120
258,125 Royal Bank of Scotland Group PLC 3,278,222 230
88,700 SABMiller PLC 2,253,003 158
575,882 Tesco PLC 4,835,412 340
- --------------------------------------------------------------------------------------------------------------------
31,323,671 2,202
- --------------------------------------------------------------------------------------------------------------------
Switzerland--13.0%
5,362 EFG International - Registered 246,750 17
41,279 Kuehne & Nagel International AG - Registered 3,799,177 267
397 Lindt & Spruengli AG 1,078,340 76
9,375 Nestle SA - Registered 3,564,581 251
3,500 Novartis AG - Registered 197,046 14
71,500 Novartis AG (ADR) 4,009,005 282
31,560 Roche Holding AG - Genusscheine 5,598,192 393
- --------------------------------------------------------------------------------------------------------------------
18,493,091 1,300
- --------------------------------------------------------------------------------------------------------------------
Spain--8.9%
233,829 Banco Bilbao Vizcaya Argentaria SA 5,747,512 404
57,000 Banco Santander Central Hispano SA 1,053,873 74
30,400 Bolsas y Mercados Espanoles 1,783,912 125
98,792 Enagas 2,445,650 172
34,461 Red Electrica de Espana 1,618,705 114
- --------------------------------------------------------------------------------------------------------------------
12,649,652 889
- --------------------------------------------------------------------------------------------------------------------
Japan--6.6%
107,900 Millea Holdings, Inc. 4,421,021 311
142,700 Park24 Company, Ltd. 1,432,835 101
54,700 Toyota Motor Corporation 3,454,877 243
- --------------------------------------------------------------------------------------------------------------------
9,308,733 655
- --------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
INTERNATIONAL FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Australia--5.7%
193,397 Aristocrat Leisure, Ltd. $2,357,800 $166
131,597 Australia & New Zealand Banking Group, Ltd. 3,236,642 227
111,558 Woolworths, Ltd. 2,555,435 180
- --------------------------------------------------------------------------------------------------------------------
8,149,877 573
- --------------------------------------------------------------------------------------------------------------------
Mexico--5.2%
70,000 America Movil SAB de CV (ADR) - Series "L" 4,335,100 305
559,600 Grupo Modelo SA de CV - Series "C" 3,051,576 214
- --------------------------------------------------------------------------------------------------------------------
7,386,676 519
- --------------------------------------------------------------------------------------------------------------------
Ireland--4.7%
324,328 Anglo Irish Bank Corporation PLC 6,657,914 468
- --------------------------------------------------------------------------------------------------------------------
Belgium--4.0%
8,092 Colruyt NV 1,693,829 119
50,380 InBev NV 4,002,830 282
- --------------------------------------------------------------------------------------------------------------------
5,696,659 401
- --------------------------------------------------------------------------------------------------------------------
India--3.9%
65,000 HDFC Bank, Ltd. (ADR) 5,476,900 385
- --------------------------------------------------------------------------------------------------------------------
France--3.7%
11,790 Air Liquide SA 1,551,534 109
33,782 M6 Metropole Television 1,100,913 77
31,449 Total SA 2,559,447 180
- --------------------------------------------------------------------------------------------------------------------
5,211,894 366
- --------------------------------------------------------------------------------------------------------------------
Brazil--3.3%
47,900 Banco Itau Holding Financeira SA (ADR) 2,128,676 149
33,800 Companhia Vale do Rio Doce (ADR) 1,505,790 106
45,200 Souza Cruz SA 1,091,512 77
- --------------------------------------------------------------------------------------------------------------------
4,725,978 332
- --------------------------------------------------------------------------------------------------------------------
Norway--3.2%
241,500 Orkla ASA 4,579,478 322
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Amount
Shares, Invested
Warrants, For Each
Options $10,000 of
or Rights Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
South Africa--2.1%
70,200 Massmart Holdings, Ltd. $859,084 $60
80,721 Remgro, Ltd. 2,162,251 152
- --------------------------------------------------------------------------------------------------------------------
3,021,335 212
- --------------------------------------------------------------------------------------------------------------------
Netherlands--2.1%
65,343 TNT NV 2,950,160 207
- --------------------------------------------------------------------------------------------------------------------
Singapore--1.5%
87,800 Jardine Matheson Holdings, Ltd. 2,089,640 147
- --------------------------------------------------------------------------------------------------------------------
Taiwan--1.2%
158,991 Taiwan Semiconductor Manufacturing
Company, Ltd. (ADR) 1,769,570 124
- --------------------------------------------------------------------------------------------------------------------
Sweden--.2%
20,300 Atlas Copco AB 319,722 23
- --------------------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $100,679,510) 129,810,950 9,125
- --------------------------------------------------------------------------------------------------------------------
WARRANTS--5.8%
India
248,100 * Bharti Tele-Ventures, Ltd. (expiring 5/31/10) + 5,092,253 358
4,665 HDFC Bank, Ltd. (expiring 6/28/10) + 131,352 9
60,900 * Housing Development Finance Corp.
(expiring 5/25/09) + 3,035,743 214
- --------------------------------------------------------------------------------------------------------------------
Total Value of Warrants (cost $5,508,643) 8,259,348 581
- --------------------------------------------------------------------------------------------------------------------
OPTIONS--.3%
Switzerland
107 * Novartis AG - Registered (exercise price 50 CHF,
expiring 12/18/09) 182,815 13
52 * Roche Holding AG - Genusscheine (exercise price
160 CHF, expiring 12/18/09) 282,614 20
- --------------------------------------------------------------------------------------------------------------------
Total Value of Options (cost $476,453) 465,429 33
- --------------------------------------------------------------------------------------------------------------------
RIGHTS--.0%
Australia
275 * Westfield Group (expiring 7/6/07) (cost $0) + 107 --
- --------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
INTERNATIONAL FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--.8%
United States
$1,200M General Electric Capital Corp., 5.25%, 7/10/07
(cost $1,198,250) $1,198,250 $84
- --------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $107,862,856) 98.2% 139,734,084 9,823
Other Assets, Less Liabilities 1.8 2,524,840 177
- --------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $142,258,924 $10,000
====================================================================================================================
* Non-income producing
+ Securities valued at Fair Value (see Note 1A)
Summary of Abbreviations:
ADR American Depositary Receipts
See notes to financial statements
Sector diversification of the portfolio was as follows:
- ---------------------------------------------------------------------------------------------------------------
Percentage
Sector of Net Assets Value
- ---------------------------------------------------------------------------------------------------------------
Food, Beverage & Tobacco 22.0% $31,234,804
Banks 19.5 27,711,091
Pharmaceuticals, Biotechnology & Life Sciences 7.2 10,269,672
Food & Staples Retailing 7.0 9,943,760
Diversified Financials 6.5 9,318,296
Transportation 4.7 6,749,337
Capital Goods 4.6 6,608,415
Media 4.4 6,193,166
Insurance . 3.1 4,421,021
Telecommunication Services 3.0 4,335,100
Utilities 2.9 4,064,355
Automobiles & Components 2.4 3,454,877
Materials 2.2 3,057,324
Household & Personal Products 2.2 3,054,857
Energy 1.8 2,559,447
Consumer Services 1.7 2,357,800
Semiconductors & Semiconductor Equipment 1.2 1,769,570
Commercial Services & Supply 1.0 1,432,835
Real Estate 0.0 107
Short-term Corporate Notes 0.8 1,198,250
- ---------------------------------------------------------------------------------------------------------------
Total Value of Investments 98.2 139,734,084
Other Assets, Less Liabilities 1.8 2,524,840
- ---------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $142,258,924
===============================================================================================================
See notes to financial statements
Fund Expenses
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 3 for a detailed explanation of the information
presented in these examples.
- ----------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
Expense Examples (1/1/07) (6/30/07) (1/1/07-6/30/07)*
- ----------------------------------------------------------------------------------------------
Actual $1,000.00 $1,009.78 $3.59
Hypothetical
(5% annual return before expenses) $1,000.00 $1,021.22 $3.61
- ----------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio of .72%, 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
(BAR CHART DATA:)
Financials 24.0%
Industrials 11.1%
Consumer Discretionary 10.4%
Consumer Staples 7.1%
Mortgage-Backed Securities 6.4%
Materials 6.2%
U.S. Government Agency Obligations 5.5%
Utilities 5.0%
Telecommunication Services 4.4%
Energy 3.7%
Portfolio holdings and allocations are subject to change. Percentages are as
of June 30, 2007, and are based on the total value of investments.
Portfolio of Investments
INVESTMENT GRADE FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS--76.2%
Aerospace/Defense--2.1%
$300M Boeing Co., 7.25%, 2025 $346,086 $94
Honeywell International, Inc.:
100M 7.5%, 2010 105,160 28
125M 6.125%, 2011 128,030 35
100M Precision Castparts Corp., 5.6%, 2013 98,760 27
100M TRW, Inc., 7.125%, 2009 101,811 27
- --------------------------------------------------------------------------------------------------------------------
779,847 211
- --------------------------------------------------------------------------------------------------------------------
Automotive--.8%
300M Daimler Chrysler NA Holdings Corp., 5.75%, 2009 300,914 81
- --------------------------------------------------------------------------------------------------------------------
Chemicals--3.6%
300M Air Products & Chemicals, Inc., 4.125%, 2010 287,715 78
300M Cabot Corp., 5.25%, 2013 + 289,146 78
500M DuPont (E.I.) de Nemours & Co., 5.6%, 2036 454,915 123
300M Praxair, Inc., 5.375%, 2016 292,048 79
- --------------------------------------------------------------------------------------------------------------------
1,323,824 358
- --------------------------------------------------------------------------------------------------------------------
Consumer Durables--.9%
350M Black & Decker Corp., 5.75%, 2016 339,996 92
- --------------------------------------------------------------------------------------------------------------------
Consumer Non-Durables--1.8%
200M Colgate-Palmolive Co., 5.98%, 2012 204,582 55
300M Newell Rubbermaid, Inc., 6.75%, 2012 312,094 84
150M Procter & Gamble Co., 4.85%, 2015 142,802 39
- --------------------------------------------------------------------------------------------------------------------
659,478 178
- --------------------------------------------------------------------------------------------------------------------
Energy--3.7%
300M Anadarko Petroleum Corp., 5.95%, 2016 293,438 79
150M Kinder Morgan Finance Co., 5.35%, 2011 146,847 40
300M Nexen, Inc., 5.05%, 2013 285,980 77
300M Northern Border Pipeline Co., 7.1%, 2011 313,730 85
325M Phillips Petroleum Co., 7.125%, 2028 330,149 89
- --------------------------------------------------------------------------------------------------------------------
1,370,144 370
- --------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
INVESTMENT GRADE FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Financials--6.9%
$125M American General Finance Corp., 8.125%, 2009 $131,679 $36
100M Caterpillar Financial Services Corp., 4.6%, 2014 94,153 25
ERAC USA Finance Enterprise Co.:
100M 7.35%, 2008 + 101,391 27
355M 8%, 2011 + 379,151 103
252M Ford Motor Credit Co., 9.75%, 2010 263,314 71
General Electric Capital Corp.:
144M 8.5%, 2008 148,069 40
400M 5.45%, 2013 396,295 107
375M General Motors Acceptance Corp., 7.75%, 2010 379,841 103
175M Health Care Property Investors, Inc., 6%, 2017 171,644 46
200M Household Finance Corp., 6.5%, 2008 202,874 55
300M International Lease Finance Corp., 5.625%, 2013 299,718 81
- --------------------------------------------------------------------------------------------------------------------
2,568,129 694
- --------------------------------------------------------------------------------------------------------------------
Financial Services--13.8%
300M Bank of America Corp., 7.4%, 2011 317,857 86
300M Citigroup, Inc., 6%, 2033 289,781 78
300M Endurance Specialty Holdings, Ltd., 7%, 2034 293,746 79
250M First Union National Bank, 7.8%, 2010 265,554 72
300M Fleet Capital Trust II, 7.92%, 2026 311,724 84
90M GATX Financial Corp., 5.5%, 2012 87,735 24
300M Goldman Sachs Group, Inc., 6.45%, 2036 295,526 80
300M Hibernia Corp., 5.35%, 2014 284,668 77
360M Independence Community Bank Corp., 4.9%, 2010 352,490 95
300M JPMorgan Chase & Co., 5.25%, 2015 289,495 78
300M Lehman Brothers Holdings, Inc., 5.75%, 2011 300,284 81
375M MetLife, Inc., 6.4%, 2036 348,480 94
100M National City Bank of Pennsylvania, 7.25%, 2011 106,234 29
350M Nationsbank Corp., 7.8%, 2016 396,302 107
384M Republic NY Corp., 7.75%, 2009 398,993 108
400M Royal Bank of Scotland Group PLC, 5%, 2014 383,188 104
400M Washington Mutual Bank, 5.95%, 2013 399,827 108
- --------------------------------------------------------------------------------------------------------------------
5,121,884 1,384
- --------------------------------------------------------------------------------------------------------------------
Food/Beverage/Tobacco--4.6%
440M Altria Group, Inc., 7%, 2013 467,282 126
190M Bottling Group, LLC , 5%, 2013 183,583 50
350M Bunge Limited Finance Corp., 5.875%, 2013 344,431 93
150M Coca-Cola Enterprises, Inc., 7.125%, 2017 164,094 44
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Food/Beverage/Tobacco (continued)
$150M ConAgra Foods, Inc., 6.75%, 2011 $155,928 $42
200M Pepsi Bottling Group, Inc., 7%, 2029 220,302 60
175M UST, Inc., 7.25%, 2009 180,139 49
- --------------------------------------------------------------------------------------------------------------------
1,715,759 464
- --------------------------------------------------------------------------------------------------------------------
Food/Drug--1.4%
300M Kroger Co., 6.75%, 2012 310,133 84
200M Safeway, Inc., 6.5%, 2011 205,261 55
- --------------------------------------------------------------------------------------------------------------------
515,394 139
- --------------------------------------------------------------------------------------------------------------------
Forest Products/Containers--.7%
275M Sappi Papier Holding AG, 6.75%, 2012 + 272,040 74
- --------------------------------------------------------------------------------------------------------------------
Gaming/Leisure--1.6%
175M Hilton Hotels Corp., 7.2%, 2009 180,687 49
300M International Speedway Corp., 4.2%, 2009 292,682 79
125M MGM Mirage, Inc., 8.5%, 2010 131,406 35
- --------------------------------------------------------------------------------------------------------------------
604,775 163
- --------------------------------------------------------------------------------------------------------------------
Health Care--3.7%
300M Abbott Laboratories, 5.875%, 2016 300,590 81
100M Baxter International, Inc., 5.9%, 2016 100,166 27
200M Becton, Dickinson & Co., 7.15%, 2009 207,179 56
350M Fisher Scientific International, Inc., 6.75%, 2014 351,591 95
200M Tenet Healthcare Corp., 6.375%, 2011 183,750 50
200M Wyeth, 6.95%, 2011 209,475 57
- --------------------------------------------------------------------------------------------------------------------
1,352,751 366
- --------------------------------------------------------------------------------------------------------------------
Housing--.7%
250M D.R. Horton, Inc., 8%, 2009 257,117 70
- --------------------------------------------------------------------------------------------------------------------
Information Technology--2.7%
405M International Business Machines Corp., 7%, 2025 448,878 121
300M Oracle Corp., 5.25%, 2016 288,140 78
250M Xerox Corp., 6.875%, 2011 259,620 70
- --------------------------------------------------------------------------------------------------------------------
996,638 269
- --------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
INVESTMENT GRADE FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Manufacturing--4.2%
$250M Briggs & Stratton Corp., 8.875%, 2011 $267,218 $72
300M Caterpillar, Inc., 6.05%, 2036 296,135 80
300M Crane Co., 6.55%, 2036 290,301 78
123M Hanson Australia Funding, Ltd., 5.25%, 2013 120,388 32
100M Hanson PLC, 7.875%, 2010 106,818 29
125M Ingersoll-Rand Co., 9%, 2021 154,160 42
United Technologies Corp.:
100M 6.5%, 2009 101,997 28
200M 7.125%, 2010 210,615 57
- --------------------------------------------------------------------------------------------------------------------
1,547,632 418
- --------------------------------------------------------------------------------------------------------------------
Media-Broadcasting--2.3%
250M Comcast Cable Communications, Inc., 7.125%, 2013 265,285 72
300M Cox Communications, Inc., 4.625%, 2013 281,335 76
300M PanAmSat Corp., 6.375%, 2008 300,750 81
- --------------------------------------------------------------------------------------------------------------------
847,370 229
- --------------------------------------------------------------------------------------------------------------------
Media-Diversified--2.8%
225M AOL Time Warner, Inc., 6.875%, 2012 234,976 64
200M News America, Inc., 5.3%, 2014 193,494 52
Viacom, Inc.:
200M 5.75%, 2011 199,880 54
75M 8.875%, 2014 84,027 23
300M Walt Disney Co., 5.7%, 2011 302,943 82
- --------------------------------------------------------------------------------------------------------------------
1,015,320 275
- --------------------------------------------------------------------------------------------------------------------
Metals/Mining--1.2%
200M Alcoa, Inc., 6%, 2012 200,662 54
250M Vale Overseas, Ltd., 6.25%, 2017 249,205 68
- --------------------------------------------------------------------------------------------------------------------
449,867 122
- --------------------------------------------------------------------------------------------------------------------
Real Estate Investment Trusts--2.9%
142M Archstone-Smith Trust, 7.9%, 2016 157,103 42
270M AvalonBay Communities, Inc., 7.5%, 2010 286,607 78
185M Duke Weeks Realty Corp., 7.75%, 2009 194,155 53
400M Mack-Cali Realty LP, 7.75%, 2011 425,909 115
- --------------------------------------------------------------------------------------------------------------------
1,063,774 288
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Retail-General Merchandise--.3%
$100M Lowe's Cos., Inc., 8.25%, 2010 $107,409 $29
- --------------------------------------------------------------------------------------------------------------------
Telecommunications--4.4%
300M Deutsche Telekom AG, 8%, 2010 319,967 87
250M GTE Corp., 6.84%, 2018 263,214 71
300M SBC Communications, Inc., 6.25%, 2011 306,747 83
250M Sprint Capital Corp., 6.375%, 2009 253,180 68
200M Verizon New York, Inc., 6.875%, 2012 208,731 56
250M Vodafone AirTouch PLC, 7.75%, 2010 262,756 71
- --------------------------------------------------------------------------------------------------------------------
1,614,595 436
- --------------------------------------------------------------------------------------------------------------------
Transportation--3.0%
300M Burlington Northern Santa Fe Corp., 4.3%, 2013 277,568 75
300M Canadian National Railway Co., 6.25%, 2034 298,508 81
100M FedEx Corp., 5.5%, 2009 100,136 27
100M Norfolk Southern Corp., 7.7%, 2017 110,330 30
300M Union Pacific Corp., 7.375%, 2009 313,213 84
- --------------------------------------------------------------------------------------------------------------------
1,099,755 297
- --------------------------------------------------------------------------------------------------------------------
Utilities--5.0%
150M Carolina Power & Light, Inc., 5.15%, 2015 144,066 39
250M Dominion Resources, Inc., 5%, 2013 240,630 65
400M Entergy Gulf States, Inc., 5.25%, 2015 373,164 101
250M Florida Power & Light Co., 5.85%, 2033 242,952 65
250M Great River Energy Co., 5.829%, 2017 + 250,992 68
75M Jersey Central Power & Light Co., 5.625%, 2016 73,038 20
100M OGE Energy Corp., 5%, 2014 93,209 25
305M Public Service Electric & Gas Co., 6.75%, 2016 325,047 88
100M South Carolina Electric & Gas Co., 6.7%, 2011 103,921 28
- --------------------------------------------------------------------------------------------------------------------
1,847,019 499
- --------------------------------------------------------------------------------------------------------------------
Waste Management--1.1%
100M Allied Waste NA, Inc., 5.75%, 2011 95,625 26
300M Waste Management, Inc., 6.875%, 2009 306,950 83
- --------------------------------------------------------------------------------------------------------------------
402,575 109
- --------------------------------------------------------------------------------------------------------------------
Total Value of Corporate Bonds (cost $28,512,714) 28,174,006 7,615
- --------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
INVESTMENT GRADE FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED CERTIFICATES--6.3%
Fannie Mae:
$905M 5%, 12/1/2036 $848,408 $229
591M 5%, 1/1/2037 554,155 150
964M 5.5%, 1/1/2037 929,962 251
- --------------------------------------------------------------------------------------------------------------------
Total Value of Mortgage-Backed Certificates (cost $2,400,500) 2,332,525 630
- --------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--5.4%
271M FDA Queens LP, 6.99%, 2017 + 288,099 78
U.S. Treasury Notes:
800M 4.875%, 2009 799,188 216
275M 4.625%, 2011 271,670 73
340M 4.875%, 2016 335,936 91
300M 5.125%, 2016 301,781 82
- --------------------------------------------------------------------------------------------------------------------
Total Value of U.S. Government Obligations (cost $2,015,106) 1,996,674 540
- --------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS--3.1%
Fannie Mae:
375M 5.25%, 2010 374,249 101
400M 6%, 2016 396,850 108
375M Federal Home Loan Bank, 5.815%, 2013 374,176 101
- --------------------------------------------------------------------------------------------------------------------
Total Value of U.S. Government Agency Obligations (cost $1,149,832) 1,145,275 310
- --------------------------------------------------------------------------------------------------------------------
PASS THROUGH CERTIFICATES--1.2%
58M American Airlines, Inc., 7.377%, 2019 55,672 15
161M Continental Airlines, Inc., 8.388%, 2020 166,721 45
202M FedEx Corp., 7.5%, 2018 219,922 60
- --------------------------------------------------------------------------------------------------------------------
Total Value of Pass Through Certificates (cost $439,879) 442,315 120
- --------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS--.7%
250M Tobacco Settlement Fin. Auth., West Virginia -
Series "A", 7.467%, 2047 (Cost $250,000) 254,110 69
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--5.9%
$600M American General Finance Corp., 5.29%, 7/11/07 $599,030 $162
850M Paccar Financial Corp., 5.23%, 7/31/07 846,171 229
750M Toyota Motor Credit Corp., 5.24%, 7/6/07 749,344 202
- --------------------------------------------------------------------------------------------------------------------
Total Value of Short-Term Corporate Notes (cost $2,194,545) 2,194,545 593
- --------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $36,962,576) 98.8% 36,539,450 9,877
Other Assets, Less Liabilities 1.2 456,347 123
- --------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $36,995,797 $10,000
====================================================================================================================
+ Security exempt from registration under Rule 144A of the Securities
Act of 1933 (see Note 5).
See notes to financial statements
Fund Expenses
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 3 for a detailed explanation of the information
presented in these examples.
- ----------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
Expense Examples (1/1/07) (6/30/07) (1/1/07-6/30/07)*
- ----------------------------------------------------------------------------------------------
Actual $1,000.00 $1,073.72 $4.68
Hypothetical
(5% annual return before expenses) $1,000.00 $1,020.28 $4.56
- ----------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio of .91%, multiplied by
the average account value over the period, multiplied by 181/365 (to reflect
the one-half year period).
Portfolio Composition
TOP SECTORS
(BAR CHART DATA:)
Information Technology 22.6%
Financials 17.3%
Health Care 15.0%
Industrials 12.7%
Energy 12.7%
Consumer Staples 6.5%
Consumer Discretionary 6.4%
Utilities 2.2%
Materials 1.8%
Telecommunication Services 1.7%
Portfolio holdings and allocations are subject to change. Percentages are as
of June 30, 2007, and are based on the total value of investments.
Portfolio of Investments
SELECT GROWTH FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--98.9%
Consumer Discretionary--6.4%
4,585 CBS Corporation - Class "B" $152,772 $126
3,565 Macy's, Inc. 141,816 117
8,990 Staples, Inc. 213,333 176
6,390 * Viacom, Inc. - Class "B" 266,016 220
- --------------------------------------------------------------------------------------------------------------------
773,937 639
- --------------------------------------------------------------------------------------------------------------------
Consumer Staples--6.5%
2,555 Altria Group, Inc. 179,208 148
4,250 PepsiCo, Inc. 275,613 228
2,600 Procter & Gamble Company 159,094 131
3,585 Wal-Mart Stores, Inc. 172,474 142
- --------------------------------------------------------------------------------------------------------------------
786,389 649
- --------------------------------------------------------------------------------------------------------------------
Energy--12.7%
3,200 Apache Corporation 261,088 215
5,290 ConocoPhillips 415,265 343
4,725 GlobalSantaFe Corporation 341,381 282
7,290 Halliburton Company 251,505 208
8,500 Williams Companies, Inc. 268,770 222
- --------------------------------------------------------------------------------------------------------------------
1,538,009 1,270
- --------------------------------------------------------------------------------------------------------------------
Financials--17.3%
5,210 ACE, Ltd. 325,729 269
7,200 Bank of America Corporation 352,008 291
7,055 Citigroup, Inc. 361,851 299
3,340 Merrill Lynch & Company, Inc. 279,157 230
3,230 PNC Financial Services Group, Inc. 231,203 191
4,280 State Street Corporation 292,752 242
4,170 UBS AG - Registered 250,242 206
- --------------------------------------------------------------------------------------------------------------------
2,092,942 1,728
- --------------------------------------------------------------------------------------------------------------------
Health Care--15.0%
3,230 Abbott Laboratories 172,966 143
1,600 * Amgen, Inc. 88,464 73
4,010 Eli Lilly & Company 224,079 185
2,770 * Genentech, Inc. 209,578 173
5,280 Medtronic, Inc. 273,821 226
8,445 Schering-Plough Corporation 257,066 212
- --------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
SELECT GROWTH FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Health Care (continued)
6,400 Teva Pharmaceutical Industries, Ltd. (ADR) $264,000 $218
4,180 * WellPoint, Inc. 333,689 276
- --------------------------------------------------------------------------------------------------------------------
1,823,663 1,506
- --------------------------------------------------------------------------------------------------------------------
Industrials--12.7%
2,555 Boeing Company 245,689 203
3,020 Caterpillar, Inc. 236,466 195
2,900 Dover Corporation 148,335 123
3,455 General Dynamics Corporation 270,250 223
10,200 General Electric Company 390,456 322
3,440 United Technologies Corporation 243,999 201
- --------------------------------------------------------------------------------------------------------------------
1,535,195 1,267
- --------------------------------------------------------------------------------------------------------------------
Information Technology--22.6%
6,100 Accenture, Ltd. - Class "A" 261,629 216
5,580 * Adobe Systems, Inc. 224,037 185
8,600 * Cisco Systems, Inc. 239,510 198
9,340 * Corning, Inc. 238,637 197
13,220 * EMC Corporation 239,282 198
555 * Google, Inc. - Class "A" 290,476 240
3,065 Hewlett-Packard Company 136,760 113
3,800 * Lam Research Corporation 195,320 161
7,175 Maxim Integrated Products, Inc. 239,717 198
7,920 Microsoft Corporation 233,402 193
2,935 QUALCOMM, Inc. 127,350 105
1,570 * Research in Motion, Ltd. 313,984 259
- --------------------------------------------------------------------------------------------------------------------
2,740,104 2,263
- --------------------------------------------------------------------------------------------------------------------
Materials--1.8%
4,885 Companhia Vale do Rio Doce (ADR) 217,627 180
- --------------------------------------------------------------------------------------------------------------------
Telecommunication Services--1.7%
4,900 AT&T, Inc. 203,350 168
- --------------------------------------------------------------------------------------------------------------------
Utilities--2.2%
3,060 Dominion Resources, Inc. 264,109 218
- --------------------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $9,863,199) 11,975,325 9,888
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT--1.1%
$132M UBS Securities, 4.4%, dated 6/29/07,
to be repurchased at $132,048 on 7/2/07
(collateralized by U.S. Treasury Bonds,
8.125%, 8/15/21, valued at $137,239)
(cost $132,000) $132,000 $109
- --------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $9,995,199) 100.0% 12,107,325 9,997
Other Assets, Less Liabilities .0 3,510 3
- --------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $12,110,835 $10,000
====================================================================================================================
* Non-income producing
Summary of Abbreviations:
ADR American Depositary Receipts
See notes to financial statements
Fund Expenses
TARGET MATURITY 2007 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 3 for a detailed explanation of the information
presented in these examples.
- ----------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
Expense Examples (1/1/07) (6/30/07) (1/1/07-6/30/07)*
- ----------------------------------------------------------------------------------------------
Actual $1,000.00 $1,022.08 $3.86
Hypothetical
(5% annual return before expenses) $1,000.00 $1,020.97 $3.86
- ----------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio of .77%, 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
(BAR CHART DATA:)
U.S. Government Agency Zero-Coupon Obligations 68.4%
U.S. Government Zero-Coupon Obligations 31.6%
Portfolio holdings and allocations are subject to change. Percentages are as
of June 30, 2007, and are based on the total value of investments.
Portfolio of Investments
TARGET MATURITY 2007 FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal Effective $10,000 of
Amount Security Yield+ Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY ZERO COUPON
OBLIGATIONS--68.2%
Agency For International Development - Israel:
$913M 8/15/2007 4.40% $907,893 $558
750M 11/15/2007 4.75 736,771 452
3,104M Government Trust Certificate - Israel Trust,
11/15/07 4.78 3,048,994 1,873
586M International Bank for Reconstruction &
Development, 8/15/2007 4.71 582,493 358
4,116M Resolution Funding Corporation,
10/15/07 4.61 4,060,932 2,494
1,800M Tennessee Valley Authority, 11/1/2007 4.80 1,771,211 1,088
- --------------------------------------------------------------------------------------------------------------------
Total Value of U.S. Government Agency Zero Coupon
Obligations (cost $11,038,077) 11,108,294 6,823
- --------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT ZERO COUPON OBLIGATIONS--31.5%
5,210M U.S. Treasury Strips, 11/15/2007
(cost $5,078,871) 4.58 5,121,451 3,145
- --------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $16,116,948) 99.7% 16,229,745 9,968
Other Assets, Less Liabilities .3 51,923 32
- --------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $16,281,668 $10,000
====================================================================================================================
+ The effective yields shown for the zero coupon obligations are the
effective yields at June 30, 2007.
See notes to financial statements
Fund Expenses
TARGET MATURITY 2010 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 3 for a detailed explanation of the information
presented in these examples.
- ----------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
Expense Examples (1/1/07) (6/30/07) (1/1/07-6/30/07)*
- ----------------------------------------------------------------------------------------------
Actual $1,000.00 $1,013.53 $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
(BAR CHART DATA:)
U.S. Government Agency Zero-Coupon Obligations 61.8%
U.S. Government Zero-Coupon Obligations 38.2%
Portfolio holdings and allocations are subject to change. Percentages are as
of June 30, 2007, and are based on the total value of investments.
Portfolio of Investments
TARGET MATURITY 2010 FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal Effective $10,000 of
Amount Security Yield+ Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY ZERO COUPON
OBLIGATIONS--62.0%
Agency For International Development - Israel:
$1,303M 8/15/2010 5.00% $1,116,496 $849
495M 9/15/2010 5.00 422,443 321
Fannie Mae:
1,260M 8/7/2010 5.12 1,076,995 818
700M 10/8/2010 5.11 593,444 451
1,100M Freddie Mac, 9/15/2010 5.12 935,319 711
200M Government Trust Certificate -
Israel Trust, 11/15/2010 5.04 169,077 128
1,700M Government Trust Certificate -
Turkey Trust, 11/15/2010 5.04 1,437,151 1,092
1,600M Resolution Funding Corporation,
1/15/11 4.91 1,347,184 1,024
1,250M Tennessee Valley Authority, 11/1/2010 5.07 1,057,535 804
- --------------------------------------------------------------------------------------------------------------------
Total Value of U.S. Government Agency Zero Coupon
Obligations (cost $7,709,444) 8,155,644 6,198
- --------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT ZERO COUPON
OBLIGATIONS--38.4%
5,930M U.S. Treasury Strips, 11/15/2010
(cost $4,757,775) 4.81 5,050,783 3,839
- --------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $12,467,219) 100.4% 13,206,427 10,037
Excess of Liabilities Over Other Assets (.4) (48,504) (37)
- --------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $13,157,923 $10,000
====================================================================================================================
+ The effective yields shown for the zero coupon obligations are the
effective yields at June 30, 2007.
See notes to financial statements
Fund Expenses
TARGET MATURITY 2015 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 3 for a detailed explanation of the information
presented in these examples.
- ----------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
Expense Examples (1/1/07) (6/30/07) (1/1/07-6/30/07)*
- ----------------------------------------------------------------------------------------------
Actual $1,000.00 $992.73 $3.46
Hypothetical
(5% annual return before expenses) $1,000.00 $1,021.32 $3.51
- ----------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio of .70%, 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
(BAR CHART DATA:)
U.S. Government Agency Zero-Coupon Obligations 50.9%
U.S. Government Zero-Coupon Obligations 49.1%
Portfolio holdings and allocations are subject to change. Percentages are as
of June 30, 2007, and are based on the total value of investments.
Portfolio of Investments
TARGET MATURITY 2015 FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal Effective $10,000 of
Amount Security Yield+ Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY ZERO COUPON
OBLIGATIONS--50.7%
Agency For International Development - Israel:
$698M 9/15/2015 5.27% $455,446 $193
2,784M 11/15/2015 5.28 1,798,879 763
300M 3/15/2016 5.28 190,601 81
Fannie Mae:
243M 8/12/2015 5.37 158,100 67
600M 9/23/2015 5.43 386,081 164
4,643M 11/15/2015 5.39 2,974,928 1,261
650M Federal Judiciary Office Building,
2/15/2015 5.26 437,303 185
Freddie Mac:
550M 3/15/2015 5.36 365,671 155
1,760M 9/15/2015 5.37 1,138,906 483
625M 1/15/2016 5.38 397,143 168
210M Government Trust Certificate -
Turkey Trust, 5/15/2015 5.34 138,617 59
200M International Bank for Reconstruction &
Development, 2/15/2015 5.57 131,496 56
Resolution Funding Corporation:
2,927M 10/15/2015 5.22 1,908,375 809
320M 1/15/2016 5.23 205,874 87
2,000M Tennessee Valley Authority, 11/1/2015 5.37 1,285,302 545
- --------------------------------------------------------------------------------------------------------------------
Total Value of U.S. Government Agency Zero Coupon
Obligations (cost $11,790,909) 11,972,722 5,076
- --------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT ZERO COUPON
OBLIGATIONS--48.9%
17,575M U.S. Treasury Strips, 11/15/2015
(cost $11,388,897) 5.10 11,530,395 4,888
- --------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $23,179,806) 99.6% 23,503,117 9,964
Other Assets, Less Liabilities .4 84,362 36
- --------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $23,587,479 $10,000
====================================================================================================================
+ The effective yields shown for the zero coupon obligations are the
effective yields at June 30, 2007.
See notes to financial statements
Fund Expenses
VALUE 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 3 for a detailed explanation of the information
presented in these examples.
- ----------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
Expense Examples (1/1/07) (6/30/07) (1/1/07-6/30/07)*
- ----------------------------------------------------------------------------------------------
Actual $1,000.00 $1,070.15 $4.26
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
TOP TEN SECTORS
(BAR CHART DATA:)
Financials 26.3%
Consumer Discretionary 16.6%
Consumer Staples 10.5%
Industrials 8.8%
Materials 8.2%
Energy 8.1%
Information Technology 6.0%
Health Care 5.0%
Telecommunication Services 4.6%
Utilities 4.4%
Portfolio holdings and allocations are subject to change. Percentages are as
of June 30, 2007, and are based on the total value of investments.
Portfolio of Investments
VALUE FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--97.1%
Consumer Discretionary--16.6%
2,500 Autoliv, Inc. $142,175 $14
13,300 Bob Evans Farms, Inc. 490,105 49
11,100 Carnival Corporation 541,347 54
8,700 CBS Corporation - Class "B" 289,884 29
16,200 * Cinemark Holdings, Inc. 289,818 29
2,365 Citadel Broadcasting Corporation 15,254 2
23,500 Clear Channel Communications, Inc. 888,770 89
41,700 Dollar General Corporation 914,064 91
25,900 Family Dollar Stores, Inc. 888,888 89
7,300 Gannett Company, Inc. 401,135 40
10,900 Genuine Parts Company 540,640 54
14,000 H&R Block, Inc. 327,180 33
4,625 * Hanesbrands, Inc. 125,014 12
19,200 Haverty Furniture Companies, Inc. 224,064 22
19,400 Home Depot, Inc. 763,390 76
6,100 J.C. Penney Company, Inc. 441,518 44
13,100 Jones Apparel Group, Inc. 370,075 37
13,600 Kenneth Cole Productions, Inc. - Class "A" 335,920 34
23,600 Lee Enterprises, Inc. 492,296 49
26,700 Leggett & Platt, Inc. 588,735 59
7,200 Liz Claiborne, Inc. 268,560 27
3,800 Magna International, Inc. - Class "A" 345,762 34
16,900 Marine Products Corporation 139,087 14
23,400 McDonald's Corporation 1,187,784 118
25,700 Modine Manufacturing Company 580,820 58
22,300 New York Times Company - Class "A" 566,420 56
11,000 Newell Rubbermaid, Inc. 323,730 32
24,800 Pearson PLC (ADR) 417,632 42
26,900 Talbots, Inc. 673,307 67
13,500 Tiffany & Company 716,310 71
34,500 Time Warner, Inc. 725,880 72
8,119 Tribune Company 238,699 24
30,800 Walt Disney Company 1,051,512 105
7,880 * Wyndham Worldwide Corporation 285,729 29
- --------------------------------------------------------------------------------------------------------------------
16,591,504 1,655
- --------------------------------------------------------------------------------------------------------------------
Consumer Staples--10.5%
20,200 Anheuser-Busch Companies, Inc. 1,053,632 105
17,600 Avon Products, Inc. 646,800 64
- --------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
VALUE FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Consumer Staples (continued)
15,000 B&G Foods, Inc. - Class "A" $198,000 $20
20,100 Coca-Cola Company 1,051,431 105
13,400 ConAgra Foods, Inc. 359,924 36
8,295 Del Monte Foods Company 100,867 10
10,200 Diageo PLC (ADR) 849,762 85
7,900 Estee Lauder Companies, Inc. - Class "A" 359,529 36
9,600 Fomento Economico Mexicano SA de CV (ADR) 377,472 38
12,100 H.J. Heinz Company 574,387 57
10,600 Kimberly-Clark Corporation 709,034 71
30,300 Kraft Foods, Inc. - Class "A" 1,068,075 107
4,600 Pepsi Bottling Group, Inc. 154,928 15
13,600 Ruddick Corporation 409,632 41
37,000 Sara Lee Corporation 643,800 64
14,200 Tasty Baking Company 148,532 15
27,300 Topps Company, Inc. 286,923 29
9,000 UST, Inc. 483,390 48
21,000 Wal-Mart Stores, Inc. 1,010,310 101
- --------------------------------------------------------------------------------------------------------------------
10,486,428 1,047
- --------------------------------------------------------------------------------------------------------------------
Energy--8.1%
12,900 Anadarko Petroleum Corporation 670,671 67
10,700 BP PLC (ADR) 771,898 77
15,312 Chevron Corporation 1,289,883 129
12,800 ConocoPhillips 1,004,800 100
8,300 Diamond Offshore Drilling, Inc. 842,948 84
1,900 Hess Corporation 112,024 11
23,400 Marathon Oil Corporation 1,403,064 140
12,700 Royal Dutch Shell PLC - Class "A" (ADR) 1,031,240 103
13,900 Tidewater, Inc. 985,232 98
- --------------------------------------------------------------------------------------------------------------------
8,111,760 809
- --------------------------------------------------------------------------------------------------------------------
Financials--25.6%
10,300 A.G. Edwards, Inc. 870,865 87
4,400 ACE, Ltd. 275,088 27
4,100 Allstate Corporation 252,191 25
7,000 American International Group, Inc. 490,210 49
15,200 Aon Corporation 647,672 65
24,700 Aspen Insurance Holdings, Ltd. 693,329 69
8,800 Assured Guaranty, Ltd. 260,128 26
37,800 Bank Mutual Corporation 435,834 43
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Financials (continued)
21,655 Bank of America Corporation $1,058,713 $106
25,200 Bank of New York Company, Inc. 1,044,288 104
34,462 Brookfield Asset Management, Inc. - Class "A" 1,375,034 137
20,800 Brookline Bancorp, Inc. 239,408 24
6,094 Capital One Financial Corporation 478,013 48
9,622 Chubb Corporation 520,935 52
12,422 Cincinnati Financial Corporation 539,115 54
17,900 Citigroup, Inc. 918,091 92
9,900 Comerica, Inc. 588,753 59
34,100 Eagle Hospitality Properties Trust, Inc. (REIT) 448,756 45
6,300 EMC Insurance Group, Inc. 156,366 16
10,100 Erie Indemnity Company - Class "A" 545,804 54
5,200 FBL Financial Group, Inc. - Class "A" 204,464 20
12,900 First Potomac Realty Trust (REIT) 300,441 30
21,700 Hudson City Bancorp, Inc. 265,174 26
24,800 Invesco PLC (ADR) 641,080 64
6,000 IPC Holdings, Ltd. 193,740 19
22,900 JPMorgan Chase & Company 1,109,505 111
13,300 KeyCorp 456,589 46
10,632 Lincoln National Corporation 754,340 75
10,100 Merrill Lynch & Company, Inc. 844,158 84
12,900 Morgan Stanley 1,082,052 108
29,800 NewAlliance Bancshares, Inc. 438,656 44
7,700 One Liberty Properties, Inc. (REIT) 175,252 17
16,300 People's United Financial, Inc. 288,999 29
13,800 Plum Creek Timber Company, Inc. (REIT) 574,908 57
7,500 PMI Group, Inc. 335,025 33
8,700 PNC Financial Services Group, Inc. 622,746 62
17,600 Progressive Corporation 421,168 42
12,000 Protective Life Corporation 573,720 57
25,328 Regions Financial Corporation 838,357 84
4,700 St. Joe Company 217,798 22
9,582 State Street Corporation 655,409 65
8,600 SunTrust Banks, Inc. 737,364 74
24,200 U-Store-It Trust (REIT) 396,638 40
6,800 Wachovia Corporation 348,500 35
14,000 Waddell & Reed Financial, Inc. - Class "A" 364,140 36
2,000 Washington Mutual, Inc. 85,280 8
20,300 Wells Fargo & Company 713,951 71
17,800 Westfield Financial, Inc. 177,466 18
- --------------------------------------------------------------------------------------------------------------------
25,655,513 2,559
- --------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
VALUE FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Health Care--5.0%
17,700 Abbott Laboratories $947,835 $94
10,300 Biomet, Inc. 470,916 47
11,600 GlaxoSmithKline PLC (ADR) 607,492 61
16,800 Johnson & Johnson 1,035,216 103
7,500 Novartis AG (ADR) 420,525 42
38,300 Pfizer, Inc. 979,331 98
18,900 Schering-Plough Corporation 575,316 57
- --------------------------------------------------------------------------------------------------------------------
5,036,631 502
- --------------------------------------------------------------------------------------------------------------------
Industrials--8.7%
6,000 3M Company 520,740 52
900 Alexander & Baldwin, Inc. 47,799 5
7,200 Avery Dennison Corporation 478,656 48
2,940 * Avis Budget Group, Inc. 83,584 8
13,100 Dover Corporation 670,065 67
19,800 Federal Signal Corporation 314,028 31
9,500 General Dynamics Corporation 743,090 74
15,800 Honeywell International, Inc. 889,224 89
4,200 Hubbell, Inc. - Class "B" 227,724 23
5,000 Illinois Tool Works, Inc. 270,950 27
7,100 Lawson Products, Inc. 274,770 27
19,800 Masco Corporation 563,706 56
9,500 Norfolk Southern Corporation 499,415 50
13,800 Pitney Bowes, Inc. 646,116 64
3,200 SPX Corporation 280,992 28
24,500 Tyco International, Ltd. 827,855 83
10,600 United Parcel Service, Inc. - Class "B" 773,800 77
31,400 Werner Enterprises, Inc. 632,710 63
- --------------------------------------------------------------------------------------------------------------------
8,745,224 872
- --------------------------------------------------------------------------------------------------------------------
Information Technology--6.0%
25,600 * Agile Software Corporation 206,336 21
12,000 Automatic Data Processing, Inc. 581,640 58
11,200 AVX Corporation 187,488 19
7,600 Bel Fuse, Inc. - Class "B" 258,628 26
3,000 Broadridge Financial Solutions, Inc. 57,360 6
6,800 Fair Isaac Corporation 272,816 27
18,400 Hewlett-Packard Company 821,008 82
16,000 Intel Corporation 380,160 38
2,800 International Business Machines Corporation 294,700 29
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Information Technology (continued)
39,800 Methode Electronics, Inc. - Class "A" $622,870 $62
26,500 Microsoft Corporation 780,955 78
7,250 Molex, Inc. 217,573 22
16,700 Motorola, Inc. 295,590 29
19,300 Nokia Corporation - Class "A" (ADR) 542,523 54
20,700 * Planar Systems, Inc. 155,043 15
8,000 Texas Instruments, Inc. 301,040 30
- --------------------------------------------------------------------------------------------------------------------
5,975,730 596
- --------------------------------------------------------------------------------------------------------------------
Materials--8.1%
9,000 Air Products & Chemicals, Inc. 723,330 72
11,600 Albemarle Corporation 446,948 45
13,800 Alcoa, Inc. 559,314 56
28,167 Chemtura Corporation 312,935 31
13,500 Compass Minerals International, Inc. 467,910 47
22,700 Dow Chemical Company 1,003,794 100
18,200 DuPont (E.I.) de Nemours & Company 925,288 92
3,700 Glatfelter 50,283 5
21,100 Louisiana-Pacific Corporation 399,212 40
14,500 Lubrizol Corporation 935,975 93
14,500 MeadWestvaco Corporation 512,140 51
18,270 Myers Industries, Inc. 403,950 40
33,200 Sappi, Ltd. (ADR) 609,220 61
15,400 Sonoco Products Company 659,274 66
10,811 Tronox, Inc. - Class "B" 151,895 15
- --------------------------------------------------------------------------------------------------------------------
8,161,468 814
- --------------------------------------------------------------------------------------------------------------------
Telecommunication Services--4.3%
2,745 ALLTEL Corporation 185,425 19
33,010 AT&T, Inc. 1,369,915 137
1,800 CT Communications, Inc. 54,918 5
12,732 D&E Communications, Inc. 233,505 23
1,030 Embarq Corporation 65,271 7
8,400 Nippon Telegraph and Telephone
Corporation (ADR) 186,228 19
33,400 Sprint Nextel Corporation 691,714 69
6,600 Telephone & Data Systems, Inc. 412,962 41
6,600 Telephone & Data Systems, Inc. - Special Shares 379,830 38
- --------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
VALUE FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Telecommunication Services (continued)
17,118 Verizon Communications, Inc. $704,748 $70
2,838 Windstream Corporation 41,889 4
- --------------------------------------------------------------------------------------------------------------------
4,326,405 432
- --------------------------------------------------------------------------------------------------------------------
Utilities--4.2%
8,050 American States Water Company 286,339 29
9,600 FPL Group, Inc. 544,704 54
9,300 KeySpan Corporation 390,414 39
19,300 MDU Resources Group, Inc. 541,172 54
20,100 NiSource, Inc. 416,271 42
12,300 Northwest Natural Gas Company 568,137 57
9,200 ONEOK, Inc. 463,772 46
11,800 Southwest Gas Corporation 398,957 40
11,100 United Utilities PLC (ADR) 316,016 31
11,700 Vectren Corporation 315,080 31
- --------------------------------------------------------------------------------------------------------------------
4,240,862 423
- --------------------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $67,136,756) 97,331,525 9,709
- --------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--.7%
Financials--.2%
10,000 Citigroup Capital XVI, 6.45%, 2066 - Series "W" 243,900 24
- --------------------------------------------------------------------------------------------------------------------
Telecommunication Services--.3%
10,200 AT&T, Inc., 6.375%, 2056 251,226 25
- --------------------------------------------------------------------------------------------------------------------
Utilities--.2%
7,400 Entergy Louisiana, LLC, 7.6%, 2032 185,148 19
- --------------------------------------------------------------------------------------------------------------------
Total Value of Preferred Stocks (cost $693,082) 680,274 68
- --------------------------------------------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS--.4%
Financials
15,100 Lehman Brothers Holdings, Inc., 6.25%,
2007 - Series "GIS" (cost $383,537) 413,363 41
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--1.5%
$1,500M American General Finance Corp., 5.29%, 7/11/07
(cost $1,497,575) $1,497,575 $149
- --------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $69,710,950) 99.7% 99,922,737 9,967
Other Assets, Less Liabilities .3 328,570 33
- --------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $100,251,307 $10,000
====================================================================================================================
* Non-income producing
Summary of Abbreviations:
ADR American Depositary Receipts
REIT Real Estate Investment Trust
See notes to financial statements
Fund Expenses
SPECIAL 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 3 for a detailed explanation of the information
presented in these examples.
- ----------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
Expense Examples (1/1/07) (6/30/07) (1/1/07-6/30/07)*
- ----------------------------------------------------------------------------------------------
Actual $1,000.00 $1,044.23 $4.97
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).
Portfolio Composition
TOP SECTORS
(BAR CHART DATA:)
Consumer Staples 23.4%
Consumer Discretionary 19.1%
Energy 17.4%
Materials 11.8%
Industrials 8.4%
Health Care 7.8%
Financials 3.3%
Telecommunication Services 2.6%
Information Technology 1.6%
Portfolio holdings and allocations are subject to change. Percentages are as
of June 30, 2007, and are based on the total value of investments.
Portfolio of Investments
SPECIAL BOND FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS--87.6%
Aerospace/Defense--2.6%
$175M Alliant Techsystems, Inc., 6.75%, 2016 $170,625 $110
150M DRS Technologies, Inc., 6.875%, 2013 146,250 95
86M DynCorp International, LLC, 9.5%, 2013 91,913 59
- --------------------------------------------------------------------------------------------------------------------
408,788 264
- --------------------------------------------------------------------------------------------------------------------
Automotive--5.8%
100M Accuride Corp., 8.5%, 2015 99,250 64
75M Asbury Automotive Group, Inc., 7.625%, 2017 + 74,250 48
125M Avis Budget Car Rental, LLC, 7.75%, 2016 128,125 82
594M Cambridge Industries Liquidating Trust, 2007 ++ ** 371 --
250M Cooper Standard Automotive, Inc., 8.375%, 2014 234,375 151
225M Dana Corp., 9%, 2011 ++ 234,000 151
3M Goodyear Tire & Rubber Co., 9%, 2015 3,144 2
125M United Auto Group, Inc., 7.75%, 2016 125,000 81
- --------------------------------------------------------------------------------------------------------------------
898,515 579
- --------------------------------------------------------------------------------------------------------------------
Chemicals--6.6%
Equistar Chemicals LP:
3M 10.125%, 2008 2,807 2
150M 10.625%, 2011 158,625 102
100M Huntsman International, LLC, 7.375%, 2015 105,500 68
67M Huntsman, LLC, 11.625%, 2010 72,193 47
300M Innophos, Inc., 8.875%, 2014 312,000 201
100M Nell AF S.a.r.l., 8.375%, 2015 + 96,250 62
150M Newmarket Corp., 7.125%, 2016 145,875 94
125M Tronox Worldwide, LLC, 9.5%, 2012 130,938 84
- --------------------------------------------------------------------------------------------------------------------
1,024,188 660
- --------------------------------------------------------------------------------------------------------------------
Consumer Non-Durables--1.3%
100M Broder Brothers Co., 11.25%, 2010 99,125 64
100M Levi Strauss & Co., 9.75%, 2015 107,500 69
- --------------------------------------------------------------------------------------------------------------------
206,625 133
- --------------------------------------------------------------------------------------------------------------------
Energy--17.7%
125M Basic Energy Services, Inc., 7.125%, 2016 120,000 77
250M Belden & Blake Corp., 8.75%, 2012 257,500 166
300M Bluewater Finance, Ltd., 10.25%, 2012 314,250 202
- --------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
SPECIAL BOND FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Energy (continued)
Chesapeake Energy Corp.:
$500M 6.375%, 2015 $479,375 $309
150M 6.625%, 2016 145,125 93
150M Compagnie Generale de Geophysique, 7.5%, 2015 150,750 97
125M Complete Production Services, Inc., 8%, 2016 + 126,875 82
644M Giant Industries, Inc., 11%, 2012 679,420 438
100M Pacific Energy Partners LP, 7.125%, 2014 103,569 67
100M POGO Producing Co., 6.875%, 2017 99,750 64
100M Stewart & Stevenson, LLC, 10%, 2014 + 105,000 68
60M Stone Energy Corp., 8.106%, 2010 +*** 60,300 39
110M Tesoro Corp., 6.25%, 2012 109,725 71
- --------------------------------------------------------------------------------------------------------------------
2,751,639 1,773
- --------------------------------------------------------------------------------------------------------------------
Financials--.9%
150M General Motors Acceptance Corp., 6.75%, 2014 143,853 93
- --------------------------------------------------------------------------------------------------------------------
Financial Services--2.3%
367M Targeted Return Index Securities Trust,
7.548%, 2016 + 361,037 233
- --------------------------------------------------------------------------------------------------------------------
Food/Beverage/Tobacco--.1%
9M Land O'Lakes, Inc., 8.75%, 2011 9,338 6
- --------------------------------------------------------------------------------------------------------------------
Forest Products/Containers--3.8%
100M Jefferson Smurfit Corp., 8.25%, 2012 99,750 64
250M Packaging Dynamics Finance Corp.,
10%, 2016 + 252,500 163
130M Tekni-Plex, Inc., 8.75%, 2013 129,350 83
100M Verso Paper Holdings, LLC, 9.106%, 2014 +*** 102,500 66
- --------------------------------------------------------------------------------------------------------------------
584,100 376
- --------------------------------------------------------------------------------------------------------------------
Gaming/Leisure--6.2%
250M Circus & Eldorado/Silver Legacy, 10.125%, 2012 262,813 169
50M Herbst Gaming, Inc., 8.125%, 2012 50,750 33
180M Mandalay Resort Group, 6.375%, 2011 181,350 117
240M MGM Mirage, Inc., 6.625%, 2015 219,300 141
255M Speedway Motorsports, Inc., 6.75%, 2013 249,900 161
- --------------------------------------------------------------------------------------------------------------------
964,113 621
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Health Care--7.7%
$90M Alliance Imaging, Inc., 7.25%, 2012 $87,750 $57
400M DaVita, Inc., 7.25%, 2015 397,000 256
120M Fisher Scientific International, Inc.,
6.125%, 2015 118,013 76
HCA, Inc.:
100M 6.95%, 2012 96,500 62
70M 6.75%, 2013 63,875 41
60M MedQuest, Inc., 11.875%, 2012 48,600 31
200M Tenet Healthcare Corp., 6.375%, 2011 183,750 119
184M Triad Hospitals, Inc., 7%, 2013 194,144 125
- --------------------------------------------------------------------------------------------------------------------
1,189,632 767
- --------------------------------------------------------------------------------------------------------------------
Housing--2.7%
140M Beazer Homes USA, Inc., 6.875%, 2015 121,100 78
200M Builders FirstSource, Inc., 9.61%, 2012*** 203,500 131
100M Realogy Corp., 12.375%, 2015 + 91,500 59
- --------------------------------------------------------------------------------------------------------------------
416,100 268
- --------------------------------------------------------------------------------------------------------------------
Information Technology--1.5%
150M Exodus Communications, Inc., 10.75%, 2009 ++ ** 93 --
Freescale Semiconductor, Inc.:
150M 9.125%, 2014 + 141,750 92
25M 10.125%, 2016 + 23,625 15
Sanmina - SCI Corp.:
25M 8.11%, 2014 +*** 25,125 16
50M 8.125%, 2016 46,750 30
- --------------------------------------------------------------------------------------------------------------------
237,343 153
- --------------------------------------------------------------------------------------------------------------------
Manufacturing--.4%
60M Case New Holland, Inc., 7.125%, 2014 61,050 39
- --------------------------------------------------------------------------------------------------------------------
Media-Broadcasting--1.9%
67M Sinclair Broadcasting Group, Inc., 8%, 2012 68,876 44
Young Broadcasting, Inc.:
136M 10%, 2011 136,000 88
100M 8.75%, 2014 95,000 61
- --------------------------------------------------------------------------------------------------------------------
299,876 193
- --------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
SPECIAL BOND FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Media-Cable TV--9.0%
$355M Adelphia Communications Escrow Bond, 2011 ++ $116,263 $75
135M Atlantic Broadband Finance, LLC, 9.375%, 2014 137,025 88
200M Cablevision Systems Corp., 8%, 2012 198,500 128
500M Charter Communications Holdings, LLC, 10%, 2009 513,125 331
125M CSC Holdings, Inc., 8.125%, 2009 127,813 82
310M Echostar DBS Corp., 6.375%, 2011 304,575 196
- --------------------------------------------------------------------------------------------------------------------
1,397,301 900
- --------------------------------------------------------------------------------------------------------------------
Media-Diversified--6.2%
300M Cenveo, Inc., 7.875%, 2013 295,500 190
150M Idearc, Inc., 8%, 2016 152,250 98
MediaNews Group, Inc.:
75M 6.875%, 2013 64,875 42
50M 6.375%, 2014 41,875 27
Six Flags, Inc.:
150M 8.875%, 2010 148,875 96
50M 9.625%, 2014 46,625 30
200M Universal City Development Partners, Ltd.,
11.75%, 2010 212,500 137
- --------------------------------------------------------------------------------------------------------------------
962,500 620
- --------------------------------------------------------------------------------------------------------------------
Metals/Mining--1.2%
50M Metals USA, Inc., 11.125%, 2015 54,750 35
130M Russell Metals, Inc., 6.375%, 2014 125,450 81
- --------------------------------------------------------------------------------------------------------------------
180,200 116
- --------------------------------------------------------------------------------------------------------------------
Retail-General Merchandise--2.7%
100M Claire's Stores, Inc., 9.625%, 2015, PIK 93,000 60
100M GSC Holdings Corp., 8%, 2012 105,000 68
200M Neiman Marcus Group, Inc., 10.375%, 2015 221,000 142
- --------------------------------------------------------------------------------------------------------------------
419,000 270
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
Principal For Each
Amount $10,000 of
or Shares Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
Services--4.5%
Allied Waste NA, Inc.:
$300M 7.375%, 2014 $297,750 $192
150M 6.875%, 2017 145,875 94
100M Hydrochem Industrial Services, Inc., 9.25%, 2013 + 103,500 66
150M United Rentals, Inc., 7%, 2014 147,000 95
- --------------------------------------------------------------------------------------------------------------------
694,125 447
- --------------------------------------------------------------------------------------------------------------------
Telecommunications--.0%
600M ICG Services, Inc., 10%, 2008 ++** 375 --
- --------------------------------------------------------------------------------------------------------------------
Wireless Communications--2.5%
200M Nextel Communications, Inc., 5.95%, 2014 190,748 123
200M Rogers Wireless, Inc., 6.375%, 2014 202,407 131
- --------------------------------------------------------------------------------------------------------------------
393,155 254
- --------------------------------------------------------------------------------------------------------------------
Total Value of Corporate Bonds (cost $14,278,449) 13,602,853 8,765
- --------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--5.7%
Food/Drug--.6%
2,750 Ingles Markets, Inc. 94,737 61
- --------------------------------------------------------------------------------------------------------------------
Media-Broadcasting--1.0%
4,000 Clear Channel Communications, Inc. 151,280 97
- --------------------------------------------------------------------------------------------------------------------
Media-Cable TV--1.9%
354,453 * Adelphia Recovery Trust 36,331 23
6,602 * Time Warner Cable, Inc. - Class "A" 258,600 167
- --------------------------------------------------------------------------------------------------------------------
294,931 190
- --------------------------------------------------------------------------------------------------------------------
Media-Diversified--2.2%
1,500 * MediaNews Group, Inc. - Class "A"** 337,500 218
- --------------------------------------------------------------------------------------------------------------------
Telecommunications--.0%
230 * Viatel Holding (Bermuda), Ltd.** 2 --
1,571 * World Access, Inc. 2 --
- --------------------------------------------------------------------------------------------------------------------
4 --
- --------------------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $457,495) 878,452 566
- --------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
SPECIAL BOND FUND
June 30, 2007
- --------------------------------------------------------------------------------------------------------------------
Amount
Invested
Warrants or For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
WARRANTS--.0%
Telecommunication Services
250 * GT Group Telecom, Inc. (expiring 2/1/10)
(cost $22,587) +** $-- $--
- --------------------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--4.5%
$150M Chevron Funding Corp., 5.23%, 7/16/07 149,650 96
Toyota Motor Credit Corp.:
350M 5.24%, 7/6/07 349,694 225
200M 5.27%, 7/11/07 199,678 129
- --------------------------------------------------------------------------------------------------------------------
Total Value of Short-Term Corporate Notes (cost $699,022) 699,022 450
- --------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $15,457,553) 97.8% 15,180,327 9,781
Other Assets, Less Liabilities 2.2 339,271 219
- --------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $15,519,598 $10,000
====================================================================================================================
+ Security exempt from registration under Rule 144A of the Securities Act
of 1933 (see Note 5).
++ In default as to principal and/or interest payment
* Non-income producing
** Security valued at fair value (see Note 1A)
*** Interest rates on adjustable rate bonds are determined and reset
quarterly by the indentures. The interest rates shown are the rates in
effect on June 30, 2007.
# Denotes a step bond (a zero-coupon bond that coverts to a fixed interest
rate at a designated future date).
See notes to financial statements
This page intentionally left blank.
Statements of Assets and Liabilities
FIRST INVESTORS LIFE SERIES FUNDS
June 30, 2007
- ----------------------------------------------------------------------------------------------------------------------------
CASH
BLUE CHIP MANAGEMENT DISCOVERY GOVERNMENT
- ----------------------------------------------------------------------------------------------------------------------------
Assets
Investments in securities:
At identified cost $118,847,294 $6,268,867 $136,905,039 $19,964,435
============== ============== ============== ==============
At value (Note 1A) $184,194,125 $6,268,867 $170,991,337 $19,479,845
Cash 437,473 75,474 184,841 36,894
Receivables:
Investment securities sold -- -- 432,701 --
Interest and dividends 173,958 28,770 123,377 106,412
Trust shares sold 28,719 99,685 66,840 7,953
Foreign exchange contracts (Note 6) -- -- -- --
Other assets 15,163 1,253 13,592 1,737
-------------- -------------- -------------- --------------
Total Assets 184,849,438 6,474,049 171,812,688 19,632,841
-------------- -------------- -------------- --------------
Liabilities
Payables:
Investment securities purchased 91,996 -- 318,705 --
Trust shares redeemed 96,837 118 81,225 5,804
Accrued advisory fees 111,148 3,596 102,727 9,365
Accrued expenses 29,610 3,431 30,963 5,266
-------------- -------------- -------------- --------------
Total Liabilities 329,591 7,145 533,620 20,435
-------------- -------------- -------------- --------------
Net Assets $184,519,847 $6,466,904 $171,279,068 $19,612,406
============== ============== ============== ==============
Net Assets Consist of:
Capital paid in $149,391,915 $6,466,904 $130,266,905 $20,631,284
Undistributed net investment income (loss) 1,045,883 -- 270,744 470,734
Accumulated net realized gain (loss) on investments
and foreign currency transactions (31,264,782) -- 6,655,121 (1,005,022)
Net unrealized appreciation (depreciation) of investments
and foreign currency transactions 65,346,831 -- 34,086,298 (484,590)
-------------- -------------- -------------- --------------
Total $184,519,847 $6,466,904 $171,279,068 $19,612,406
============== ============== ============== ==============
Shares of beneficial interest outstanding (Note 2) 7,420,849 6,466,904 5,377,753 2,053,149
============== ============== ============== ==============
Net asset value, offering and redemption price per share
(Net assets divided by shares outstanding) $24.87 $1.00 $31.85 $9.55
============== ============== ============== ==============
Statements of Assets and Liabilities (continued)
FIRST INVESTORS LIFE SERIES FUNDS
June 30, 2007
- ----------------------------------------------------------------------------------------------------------
GROWTH &
INCOME HIGH YIELD INTERNATIONAL
- ----------------------------------------------------------------------------------------------------------
Assets
Investments in securities:
At identified cost $231,910,051 $68,893,887 $107,862,856
============== ============== ==============
At value (Note 1A) $283,253,966 $67,554,646 $139,734,084
Cash 391,107 243,008 610,656
Receivables:
Investment securities sold 418,075 -- 2,212,855
Interest and dividends 380,577 1,223,828 403,172
Trust shares sold 74,826 22,040 39,382
Foreign exchange contracts (Note 6) -- -- 89,468
Other assets 23,306 6,475 10,525
-------------- -------------- --------------
Total Assets 284,541,857 69,049,997 143,100,142
-------------- -------------- --------------
Liabilities
Payables:
Investment securities purchased 135,331 -- 659,168
Trust shares redeemed 101,389 43,192 66,137
Accrued advisory fees 170,063 41,549 84,890
Accrued expenses 33,261 17,804 31,023
-------------- -------------- --------------
Total Liabilities 440,044 102,545 841,218
-------------- -------------- --------------
Net Assets $284,101,813 $68,947,452 $142,258,924
============== ============== ==============
Net Assets Consist of:
Capital paid in $216,724,200 $86,402,554 $106,969,318
Undistributed net investment income (loss) 1,273,214 2,326,164 (68,944)
Accumulated net realized gain (loss) on investments
and foreign currency transactions 14,760,484 (18,442,025) 3,385,223
Net unrealized appreciation (depreciation) of investments
and foreign currency transactions 51,343,915 (1,339,241) 31,973,327
-------------- -------------- --------------
Total $284,101,813 $68,947,452 $142,258,924
============== ============== ==============
Shares of beneficial interest outstanding (Note 2) 7,950,237 8,833,209 6,319,171
============== ============== ==============
Net asset value, offering and redemption price per share
(Net assets divided by shares outstanding) $35.74 $7.81 $22.51
============== ============== ==============
See notes to financial statements
Statements of Assets and Liabilities
FIRST INVESTORS LIFE SERIES FUNDS
June 30, 2007
- ----------------------------------------------------------------------------------------------------------------------------
TARGET TARGET
INVESTMENT SELECT MATURITY MATURITY
GRADE GROWTH 2007 2010
- ----------------------------------------------------------------------------------------------------------------------------
Assets
Investments in securities:
At identified cost $36,962,576 $9,995,199 $16,116,948 $12,467,219
============== ============== ============== ==============
At value (Note 1A) $36,539,450 $12,107,325 $16,229,745 $13,206,427
Cash (overdraft) 177,918 2,253 94,575 (38,576)
Receivables:
Investment securities sold -- -- -- --
Interest and dividends 520,689 9,764 -- --
Trust shares sold 37,422 7,382 1,032 214
Other assets 3,180 995 1,554 1,258
-------------- -------------- -------------- --------------
Total Assets 37,278,659 12,127,719 16,326,906 13,169,323
-------------- -------------- -------------- --------------
Liabilities
Payables:
Investment securities purchased 250,000 -- -- --
Trust shares redeemed 6,643 3,918 33,287 764
Accrued advisory fees 17,559 7,247 7,774 6,308
Accrued expenses 8,660 5,719 4,177 4,328
-------------- -------------- -------------- --------------
Total Liabilities 282,862 16,884 45,238 11,400
-------------- -------------- -------------- --------------
Net Assets $36,995,797 $12,110,835 $16,281,668 $13,157,923
============== ============== ============== ==============
Net Assets Consist of:
Capital paid in $38,685,914 $11,086,167 $15,681,231 $12,052,482
Undistributed net investment income 508,220 45,362 496,411 368,611
Accumulated net realized loss on investments (1,775,211) (1,132,820) (8,771) (2,378)
Net unrealized appreciation (depreciation) of investments (423,126) 2,112,126 112,797 739,208
-------------- -------------- -------------- --------------
Total $36,995,797 $12,110,835 $16,281,668 $13,157,923
============== ============== ============== ==============
Shares of beneficial interest outstanding (Note 2) 3,539,496 1,200,081 1,466,504 998,075
============== ============== ============== ==============
Net asset value, offering and redemption price per share
(Net assets divided by shares outstanding) $10.45 $10.09 $11.10 $13.18
============== ============== ============== ==============
Statements of Assets and Liabilities (continued)
FIRST INVESTORS LIFE SERIES FUNDS
June 30, 2007
- ----------------------------------------------------------------------------------------------------------
TARGET
MATURITY SPECIAL
2015 VALUE BOND
- ----------------------------------------------------------------------------------------------------------
Assets
Investments in securities:
At identified cost $23,179,806 $69,710,950 $15,457,553
============== ============== ==============
At value (Note 1A) $23,503,117 $99,922,737 $15,180,327
Cash (overdraft) 142,223 400,427 105,196
Receivables:
Investment securities sold -- 53,009 --
Interest and dividends -- 165,255 254,242
Trust shares sold 360 48,940 --
Other assets 2,025 7,586 5,783
-------------- -------------- --------------
Total Assets 23,647,725 100,597,954 15,545,548
-------------- -------------- --------------
Liabilities
Payables:
Investment securities purchased -- 244,171 --
Trust shares redeemed 37,724 29,809 2,000
Accrued advisory fees 11,171 60,284 9,371
Accrued expenses 11,351 12,383 14,579
-------------- -------------- --------------
Total Liabilities 60,246 346,647 25,950
-------------- -------------- --------------
Net Assets $23,587,479 $100,251,307 $15,519,598
============== ============== ==============
Net Assets Consist of:
Capital paid in $22,826,232 $77,545,398 $23,057,279
Undistributed net investment income 526,614 795,301 488,623
Accumulated net realized loss on investments (88,678) (8,301,179) (7,749,078)
Net unrealized appreciation (depreciation) of investments 323,311 30,211,787 (277,226)
-------------- -------------- --------------
Total $23,587,479 $100,251,307 $15,519,598
============== ============== ==============
Shares of beneficial interest outstanding (Note 2) 1,745,164 5,574,051 1,664,909
============== ============== ==============
Net asset value, offering and redemption price per share
(Net assets divided by shares outstanding) $13.52 $17.99 $9.32
============== ============== ==============
See notes to financial statements
Statements of Operations
FIRST INVESTORS LIFE SERIES FUNDS
Six Months Ended June 30, 2007
- ----------------------------------------------------------------------------------------------------------------------------
CASH
BLUE CHIP MANAGEMENT DISCOVERY GOVERNMENT
- ----------------------------------------------------------------------------------------------------------------------------
Investment Income
Income:
Interest $8,170 $176,391 $115,300 $546,914
Dividends 1,767,623(a) -- 822,886 --
-------------- -------------- -------------- --------------
Total income 1,775,793 176,391 938,186 546,914
-------------- -------------- -------------- --------------
Expenses (Notes 1 and 4):
Advisory fees 681,995 24,630 616,132 73,994
Professional fees 14,988 4,736 14,627 6,135
Custodian fees and expenses 5,908 2,785 13,852 6,263
Reports and notices to shareholders 13,232 374 8,316 1,327
Registration fees 177 149 121 152
Trustees' fees 4,436 161 3,867 479
Other expenses 17,171 1,364 15,297 5,423
-------------- -------------- -------------- --------------
Total expenses 737,907 34,199 672,212 93,773
Less: Expenses waived -- (10,754) -- (14,799)
Expenses paid indirectly (8,046) (330) (4,812) (2,802)
-------------- -------------- -------------- --------------
Net expenses 729,861 23,115 667,400 76,172
-------------- -------------- -------------- --------------
Net investment income 1,045,932 153,276 270,786 470,742
-------------- -------------- -------------- --------------
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions (Note 3):
Net realized gain (loss) on:
Investments 2,750,150 -- 6,879,263 (13,514)
Foreign currency transactions -- -- -- --
-------------- -------------- -------------- --------------
Net realized gain (loss) on investments
and foreign currency transactions 2,750,150 -- 6,879,263 (13,514)
-------------- -------------- -------------- --------------
Net unrealized apprection (depreciation) of:
Investments 7,437,107 -- 8,934,637 (250,701)
Foreign currency transactions -- -- -- --
-------------- -------------- -------------- --------------
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions 7,437,107 -- 8,934,637 (250,701)
-------------- -------------- -------------- --------------
Net gain (loss) on investments
and foreign currency transactions 10,187,257 -- 15,813,900 (264,215)
-------------- -------------- -------------- --------------
Net Increase in Net Assets Resulting from Operations $11,233,189 $153,276 $16,084,686 $206,527
============== ============== ============== ==============
Statements of Operations (continued)
FIRST INVESTORS LIFE SERIES FUNDS
Six Months Ended June 30, 2007
- ----------------------------------------------------------------------------------------------------------
GROWTH &
INCOME HIGH YIELD INTERNATIONAL
- ----------------------------------------------------------------------------------------------------------
Investment Income
Income:
Interest $7,057 $2,719,738 $54,919
Dividends 2,367,538(b) 51,897 2,049,801(c)
-------------- -------------- --------------
Total income 2,374,595 2,771,635 2,104,720
-------------- -------------- --------------
Expenses (Notes 1 and 4):
Advisory fees 1,027,287 260,023 508,879
Professional fees 20,072 7,787 16,669
Custodian fees and expenses 9,034 5,259 43,037
Reports and notices to shareholders 19,368 5,350 10,291
Registration fees 156 153 154
Trustees' fees 6,331 950 3,094
Other expenses 25,503 11,376 16,915
-------------- -------------- --------------
Total expenses 1,107,751 290,898 599,039
Less: Expenses waived -- -- --
Expenses paid indirectly (6,420) (5,533) (622)
-------------- -------------- --------------
Net expenses 1,101,331 285,365 598,417
-------------- -------------- --------------
Net investment income 1,273,264 2,486,270 1,506,303
-------------- -------------- --------------
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions (Note 3):
Net realized gain (loss) on:
Investments 15,099,253 (294,584) 3,594,412
Foreign currency transactions -- -- (189,166)
-------------- -------------- --------------
Net realized gain (loss) on investments
and foreign currency transactions 15,099,253 (294,584) 3,405,246
-------------- -------------- --------------
Net unrealized apprection (depreciation) of:
Investments 7,743,491 278,549 8,089,288
Foreign currency transactions -- -- 294,393
-------------- -------------- --------------
Net unrealized appreciation (depreciation) on investments
and foreign currency transactions 7,743,491 278,549 8,383,681
-------------- -------------- --------------
Net gain (loss) on investments
and foreign currency transactions 22,842,744 (16,035) 11,788,927
-------------- -------------- --------------
Net Increase in Net Assets Resulting from Operations $24,116,008 $2,470,235 $13,295,230
============== ============== ==============
(a) Net of $11,674 foreign taxes withheld
(b) Net of $11,598 foreign taxes withheld
(c) Net of $274,789 foreign taxes withheld
See notes to financial statements
Statements of Operations
FIRST INVESTORS LIFE SERIES FUNDS
Six Months Ended June 30, 2007
- ----------------------------------------------------------------------------------------------------------------------------
TARGET TARGET
INVESTMENT SELECT MATURITY MATURITY
GRADE GROWTH 2007 2010
- ----------------------------------------------------------------------------------------------------------------------------
Investment Income
Income:
Interest $1,061,764 $6,454 $560,023 $418,545
Dividends -- 92,569(d) -- --
-------------- -------------- -------------- --------------
Total income 1,061,764 99,023 560,023 418,545
-------------- -------------- -------------- --------------
Expenses (Notes 1 and 4):
Advisory fees 138,841 44,239 62,963 51,101
Professional fees 8,568 5,116 7,756 5,576
Custodian fees and expenses 3,840 504 1,187 1,207
Reports and notices to shareholders 488 528 1,055 233
Registration fees 149 76 1,354 149
Trustees' fees 869 272 431 306
Other expenses 8,541 3,075 2,410 2,692
-------------- -------------- -------------- --------------
Total expenses 161,296 53,810 77,156 61,264
Less: Expenses waived (27,768) -- (12,593) (10,220)
Expenses paid indirectly (3,713) (151) (957) (1,111)
-------------- -------------- -------------- --------------
Net expenses 129,815 53,659 63,606 49,933
-------------- -------------- -------------- --------------
Net investment income 931,949 45,364 496,417 368,612
-------------- -------------- -------------- --------------
Realized and Unrealized Gain (Loss) on Investments (Note 3):
Net realized gain (loss) on investments 98,888 409,608 12,897 (290)
Net unrealized appreciation (depreciation) of investments (677,342) 388,609 (135,462) (180,109)
-------------- -------------- -------------- --------------
Net gain (loss) on investments (578,454) 798,217 (122,565) (180,399)
-------------- -------------- -------------- --------------
Net Increase (Decrease) in Net Assets
Resulting from Operations $353,495 $843,581 $373,852 $188,213
============== ============== ============== ==============
Statements of Operations (continued)
FIRST INVESTORS LIFE SERIES FUNDS
Six Months Ended June 30, 2007
- ----------------------------------------------------------------------------------------------------------
TARGET
MATURITY SPECIAL
2015 VALUE BOND
- ----------------------------------------------------------------------------------------------------------
Investment Income
Income:
Interest $609,358 $77,168 $595,970
Dividends -- 1,113,962(e) 29,607
-------------- -------------- --------------
Total income 609,358 1,191,130 625,577
-------------- -------------- --------------
Expenses (Notes 1 and 4):
Advisory fees 89,692 364,843 59,305
Professional fees 4,875 10,332 9,694
Custodian fees and expenses 711 6,659 1,351
Reports and notices to shareholders 1,875 7,553 1,159
Registration fees 154 151 177
Trustees' fees 476 2,194 376
Other expenses 3,691 11,187 5,764
-------------- -------------- --------------
Total expenses 101,474 402,919 77,826
Less: Expenses waived (17,939) -- --
Expenses paid indirectly (806) (7,110) (1,414)
-------------- -------------- --------------
Net expenses 82,729 395,809 76,412
-------------- -------------- --------------
Net investment income 526,629 795,321 549,165
-------------- -------------- --------------
Realized and Unrealized Gain (Loss) on Investments (Note 3):
Net realized gain (loss) on investments (13,869) 1,583,400 (9,748)
Net unrealized appreciation (depreciation) of investments (685,206) 4,205,481 152,172
-------------- -------------- --------------
Net gain (loss) on investments (699,075) 5,788,881 142,424
-------------- -------------- --------------
Net Increase (Decrease) in Net Assets
Resulting from Operations $(172,446) $6,584,202 $691,589
============== ============== ==============
(d) Net of $1,291 foreign taxes withheld
(e) Net of $7,464 foreign taxes withheld
See notes to financial statements
Statements of Changes in Net Assets
FIRST INVESTORS LIFE SERIES FUNDS
- ------------------------------------------------------------------------------------------------------------------------------------
BLUE CHIP CASH MANAGEMENT
------------------------------ ------------------------------
1/1/07 to 1/1/06 to 1/1/07 to 1/1/06 to
6/30/07 12/31/06 6/30/07 12/31/06
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations
Net investment income $1,045,932 $1,975,731 $153,276 $291,599
Net realized gain (loss) on investments 2,750,150 4,106,251 -- --
Net unrealized appreciation (depreciation) of investments 7,437,107 17,579,683 -- --
-------------- -------------- -------------- --------------
Net increase in net assets resulting
from operations 11,233,189 23,661,665 153,276 291,599
-------------- -------------- -------------- --------------
Distributions to Shareholders
Net investment income (1,975,764) (1,631,700) (153,276) (291,599)
Net realized gains -- -- -- --
-------------- -------------- -------------- --------------
Total distributions (1,975,764) (1,631,700) (153,276) (291,599)
-------------- -------------- -------------- --------------
Trust Share Transactions*
Proceeds from shares sold 1,264,921 3,125,426 2,834,824 7,337,066
Reinvestment of distributions 1,975,764 1,631,700 153,276 291,599
Cost of shares redeemed (9,100,408) (19,870,148) (3,454,751) (7,071,622)
-------------- -------------- -------------- --------------
Net increase (decrease) from trust share transactions (5,859,723) (15,113,022) (466,651) 557,043
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets 3,397,702 6,916,943 (466,651) 557,043
Net Assets
Beginning of period 181,122,145 174,205,202 6,933,555 6,376,512
-------------- -------------- -------------- --------------
End of period+ $184,519,847 $181,122,145 $6,466,904 $6,933,555
============== ============== ============== ==============
+Includes undistributed net investment income of $1,045,883 $1,975,715 $-- $--
============== ============== ============== ==============
*Trust Shares Issued and Redeemed
Sold 52,991 144,406 2,834,824 7,337,066
Issued for distributions reinvested 85,642 76,894 153,276 291,599
Redeemed (376,887) (915,936) (3,454,751) (7,071,622)
-------------- -------------- -------------- --------------
Net increase (decrease) in trust shares outstanding (238,254) (694,636) (466,651) 557,043
============== ============== ============== ==============
Statements of Changes in Net Assets (continued)
FIRST INVESTORS LIFE SERIES FUNDS
- ----------------------------------------------------------------------------------------------------------------------------------
DISCOVERY GOVERNMENT
------------------------------ ------------------------------
1/1/07 to 1/1/06 to 1/1/07 to 1/1/06 to
6/30/07 12/31/06 6/30/07 12/31/06
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations
Net investment income $270,786 $280,458 $470,742 $905,793
Net realized gain (loss) on investments 6,879,263 16,378,282 (13,514) (67,290)
Net unrealized appreciation (depreciation) of investments 8,934,637 13,222,001 (250,701) (103,391)
-------------- -------------- -------------- --------------
Net increase in net assets resulting
from operations 16,084,686 29,880,741 206,527 735,112
-------------- -------------- -------------- --------------
Distributions to Shareholders
Net investment income (280,470) (208,603) (1,016,156) (1,018,037)
Net realized gains (13,314,932) -- -- --
-------------- -------------- -------------- --------------
Total distributions (13,595,402) (208,603) (1,016,156) (1,018,037)
-------------- -------------- -------------- --------------
Trust Share Transactions*
Proceeds from shares sold 1,909,744 3,957,764 902,511 1,817,492
Reinvestment of distributions 13,595,402 208,603 1,016,156 1,018,037
Cost of shares redeemed (5,161,382) (12,065,753) (1,476,620) (3,029,846)
-------------- -------------- -------------- --------------
Net increase (decrease) from trust share transactions 10,343,764 (7,899,386) 442,047 (194,317)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets 12,833,048 21,772,752 (367,582) (477,242)
Net Assets
Beginning of period 158,446,020 136,673,268 19,979,988 20,457,230
-------------- -------------- -------------- --------------
End of period+ $171,279,068 $158,446,020 $19,612,406 $19,979,988
============== ============== ============== ==============
+Includes undistributed net investment income of $270,744 $280,428 $470,734 $1,016,148
============== ============== ============== ==============
*Trust Shares Issued and Redeemed
Sold 61,401 138,637 93,529 185,449
Issued for distributions reinvested 460,862 7,501 106,181 105,605
Redeemed (166,317) (422,971) (152,142) (310,747)
-------------- -------------- -------------- --------------
Net increase (decrease) in trust shares outstanding 355,946 (276,833) 47,568 (19,693)
============== ============== ============== ==============
See notes to financial statements
Statements of Changes in Net Assets
FIRST INVESTORS LIFE SERIES FUNDS
- ------------------------------------------------------------------------------------------------------------------------------------
GROWTH & INCOME HIGH YIELD
------------------------------ ------------------------------
1/1/07 to 1/1/06 to 1/1/07 to 1/1/06 to
6/30/07 12/31/06 6/30/07 12/31/06
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations
Net investment income $1,273,264 $1,392,436 $2,486,270 $5,149,740
Net realized gain (loss) on investments
and foreign currency transactions 15,099,253 38,358,887 (294,584) (1,809,651)
Net unrealized appreciation (depreciation) of investments
and foreign currency transactions 7,743,491 (5,433,213) 278,549 2,928,634
-------------- -------------- -------------- --------------
Net increase in net assets resulting from operations 24,116,008 34,318,110 2,470,235 6,268,723
-------------- -------------- -------------- --------------
Distributions to Shareholders
Net investment income (1,392,478) (1,106,509) (5,214,980) (5,591,784)
Net realized gains (37,602,922) (15,617,669) -- --
-------------- -------------- -------------- --------------
Total distributions (38,995,400) (16,724,178) (5,214,980) (5,591,784)
-------------- -------------- -------------- --------------
Trust Share Transactions
Proceeds from shares sold 2,805,909 7,263,655 1,280,494 2,071,984
Reinvestment of distributions 38,995,400 16,724,178 5,214,980 5,591,784
Cost of shares redeemed (10,503,151) (22,850,672) (3,181,178) (8,551,415)
-------------- -------------- -------------- --------------
Net increase (decrease) from trust share transactions 31,298,158 1,137,161 3,314,296 (887,647)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets 16,418,766 18,731,093 569,551 (210,708)
Net Assets
Beginning of period 267,683,047 248,951,954 68,377,901 68,588,609
-------------- -------------- -------------- --------------
End of period+ $284,101,813 $267,683,047 $68,947,452 $68,377,901
============== ============== ============== ==============
+Includes undistributed net investment income (loss) of $1,273,214 $1,392,428 $2,326,164 $5,054,874
============== ============== ============== ==============
*Trust Shares Issued and Redeemed
Sold 78,499 203,445 161,120 264,249
Issued for distributions reinvested 1,188,884 484,900 675,515 738,677
Redeemed (294,791) (642,540) (401,410) (1,098,910)
-------------- -------------- -------------- --------------
Net increase (decrease) in trust shares outstanding 972,592 45,805 435,225 (95,984)
============== ============== ============== ==============
Statements of Changes in Net Assets (continued)
FIRST INVESTORS LIFE SERIES FUNDS
- ----------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL INVESTMENT GRADE
------------------------------ ------------------------------
1/1/07 to 1/1/06 to 1/1/07 to 1/1/06 to
6/30/07 12/31/06 6/30/07 12/31/06
- ----------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations
Net investment income $1,506,303 $1,427,694 $931,949 $1,779,059
Net realized gain (loss) on investments
and foreign currency transactions 3,405,246 19,347,268 98,888 (205,692)
Net unrealized appreciation (depreciation) of investments
and foreign currency transactions 8,383,681 7,729,386 (677,342) (153,393)
-------------- -------------- -------------- --------------
Net increase in net assets resulting from operations 13,295,230 28,504,348 353,495 1,419,974
-------------- -------------- -------------- --------------
Distributions to Shareholders
Net investment income (4,361,060) (802,343) (2,023,888) (2,116,649)
Net realized gains (17,736,172) (3,322,771) -- --
-------------- -------------- -------------- --------------
Total distributions (22,097,232) (4,125,114) (2,023,888) (2,116,649)
-------------- -------------- -------------- --------------
Trust Share Transactions
Proceeds from shares sold 2,985,794 4,636,767 1,733,401 2,620,239
Reinvestment of distributions 22,097,232 4,125,114 2,023,888 2,116,649
Cost of shares redeemed (3,428,839) (8,568,552) (2,122,088) (5,239,553)
-------------- -------------- -------------- --------------
Net increase (decrease) from trust share transactions 21,654,187 193,329 1,635,201 (502,665)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets 12,852,185 24,572,563 (35,192) (1,199,340)
Net Assets
Beginning of period 129,406,739 104,834,176 37,030,989 38,230,329
-------------- -------------- -------------- --------------
End of period+ $142,258,924 $129,406,739 $36,995,797 $37,030,989
============== ============== ============== ==============
+Includes undistributed net investment income (loss) of $(68,944) $2,785,813 $508,220 $1,600,159
============== ============== ============== ==============
*Trust Shares Issued and Redeemed
Sold 131,290 214,213 162,969 243,980
Issued for distributions reinvested 1,078,440 205,127 192,020 200,820
Redeemed (153,009) (398,649) (199,054) (491,929)
-------------- -------------- -------------- --------------
Net increase (decrease) in trust shares outstanding 1,056,721 20,691 155,935 (47,129)
============== ============== ============== ==============
See notes to financial statements
Statements of Changes in Net Assets
FIRST INVESTORS LIFE SERIES FUNDS
- ------------------------------------------------------------------------------------------------------------------------------------
SELECT GROWTH TARGET MATURITY 2007
------------------------------ ------------------------------
1/1/07 to 1/1/06 to 1/1/07 to 1/1/06 to
6/30/07 12/31/06 6/30/07 12/31/06
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations
Net investment income $45,364 $87,655 $496,417 $1,086,649
Net realized gain (loss) on investments 409,608 520,942 12,897 69,244
Net unrealized appreciation (depreciation) of investments 388,609 432,625 (135,462) (571,249)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets
resulting from operations 843,581 1,041,222 373,852 584,644
-------------- -------------- -------------- --------------
Distributions to Shareholders
Net investment income (87,642) (63,598) (1,086,648) (1,203,940)
Net realized gains -- -- (69,228) (140,667)
-------------- -------------- -------------- --------------
Total distributions (87,642) (63,598) (1,155,876) (1,344,607)
-------------- -------------- -------------- --------------
Trust Share Transactions
Proceeds from shares sold 312,931 879,602 20,052 137,881
Reinvestment of distributions 87,642 63,598 1,155,876 1,344,607
Cost of shares redeemed (781,104) (1,540,060) (1,516,330) (3,903,422)
-------------- -------------- -------------- --------------
Net increase (decrease) from trust share transactions (380,531) (596,860) (340,402) (2,420,934)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets 375,408 380,764 (1,122,426) (3,180,897)
Net Assets
Beginning of period 11,735,427 11,354,663 17,404,094 20,584,991
-------------- -------------- -------------- --------------
End of period+ $12,110,835 $11,735,427 $16,281,668 $17,404,094
============== ============== ============== ==============
+Includes undistributed net investment income of $45,362 $87,640 $496,411 $1,086,642
============== ============== ============== ==============
*Trust Shares Issued and Redeemed
Sold 32,453 98,777 1,824 11,834
Issued for distributions reinvested 9,444 7,227 105,656 118,992
Redeemed (80,615) (172,568) (135,139) (337,221)
-------------- -------------- -------------- --------------
Net increase (decrease) in trust shares outstanding (38,718) (66,564) (27,659) (206,395)
============== ============== ============== ==============
Statements of Changes in Net Assets (continued)
FIRST INVESTORS LIFE SERIES FUNDS
- -----------------------------------------------------------------------------------------------------------------------------------
TARGET MATURITY 2010 TARGET MATURITY 2015
------------------------------ ------------------------------
1/1/07 to 1/1/06 to 1/1/07 to 1/1/06 to
6/30/07 12/31/06 6/30/07 12/31/06
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations
Net investment income $368,612 $761,235 $526,629 $978,165
Net realized gain (loss) on investments (290) (1,561) (13,869) (12,679)
Net unrealized appreciation (depreciation) of investments (180,109) (491,313) (685,206) (543,835)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets
resulting from operations 188,213 268,361 (172,446) 421,651
-------------- -------------- -------------- --------------
Distributions to Shareholders
Net investment income (761,230) (794,711) (978,165) (806,540)
Net realized gains -- (135,821) -- --
-------------- -------------- -------------- --------------
Total distributions (761,230) (930,532) (978,165) (806,540)
-------------- -------------- -------------- --------------
Trust Share Transactions
Proceeds from shares sold 115,504 584,897 1,380,879 3,847,573
Reinvestment of distributions 761,230 930,532 978,165 806,540
Cost of shares redeemed (1,291,314) (2,740,084) (1,464,951) (2,174,377)
-------------- -------------- -------------- --------------
Net increase (decrease) from trust share transactions (414,580) (1,224,655) 894,093 2,479,736
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets (987,597) (1,886,826) (256,518) 2,094,847
Net Assets
Beginning of period 14,145,520 16,032,346 23,843,997 21,749,150
-------------- -------------- -------------- --------------
End of period+ $13,157,923 $14,145,520 $23,587,479 $23,843,997
============== ============== ============== ==============
+Includes undistributed net investment income of $368,611 $761,229 $526,614 $978,150
============== ============== ============== ==============
*Trust Shares Issued and Redeemed
Sold 8,734 43,099 99,303 274,751
Issued for distributions reinvested 57,756 69,339 70,473 58,276
Redeemed (96,401) (202,284) (105,294) (156,076)
-------------- -------------- -------------- --------------
Net increase (decrease) in trust shares outstanding (29,911) (89,846) 64,482 176,951
============== ============== ============== ==============
See notes to financial statements
Statements of Changes in Net Assets
FIRST INVESTORS LIFE SERIES FUNDS
- --------------------------------------------------------------------------------------------------------------------------
VALUE SPECIAL BOND
------------------------------ ------------------------------
1/1/07 to 1/1/06 to 1/1/07 to 1/1/06 to
6/30/07 12/31/06 6/30/07 12/31/06
- --------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations
Net investment income $795,321 $1,493,900 $549,165 $1,248,908
Net realized gain (loss) on investments 1,583,400 3,911,723 (9,748) (472,326)
Net unrealized appreciation of investments 4,205,481 11,384,117 152,172 714,440
-------------- -------------- -------------- --------------
Net increase in net assets
resulting from operations 6,584,202 16,789,740 691,589 1,491,022
-------------- -------------- -------------- --------------
Dividends to Shareholders
Net investment income (1,493,871) (1,422,321) (995,185) (491,959)
-------------- -------------- -------------- --------------
Trust Share Transactions
Proceeds from shares sold 2,828,787 6,018,723 11,539 8,663
Reinvestment of dividends 1,493,871 1,422,321 995,185 491,959
Cost of shares redeemed (3,395,074) (7,586,935) (1,138,945) (4,747,100)
-------------- -------------- -------------- --------------
Net increase (decrease) from trust share transactions 927,584 (145,891) (132,221) (4,246,478)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets 6,017,915 15,221,528 (435,817) (3,247,415)
Net Assets
Beginning of period 94,233,392 79,011,864 15,955,415 19,202,830
-------------- -------------- -------------- --------------
End of period+ $100,251,307 $94,233,392 $15,519,598 $15,955,415
============== ============== ============== ==============
+Includes undistributed net investment income of $795,301 $1,493,851 $488,623 $934,643
============== ============== ============== ==============
*Trust Shares Issued and Redeemed
Sold 161,774 391,206 1,200 972
Issued for dividends 88,552 96,038 108,645 55,245
Redeemed (193,362) (492,908) (120,835) (525,916)
-------------- -------------- -------------- --------------
Net increase (decrease) in trust shares outstanding 56,964 (5,664) (10,990) (469,699)
============== ============== ============== ==============
See notes to financial statements
Notes to Financial Statements
FIRST INVESTORS LIFE SERIES FUNDS
June 30, 2007
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 a diversified, open-end management
investment company. The Trust operates as a series fund, issuing shares of
beneficial interest in the Blue Chip Fund, Cash Management Fund, Discovery
Fund, Government Fund, Growth & Income Fund, High Yield Fund, International
Fund, Investment Grade Fund, Select Growth Fund (formerly Focused Equity
Fund), Target Maturity 2007 Fund, Target Maturity 2010 Fund, Target
Maturity 2015 Fund and Special Bond Fund (each a "Fund", collectively, "the
Funds"), and accounts separately for the assets, liabilities and operations
of each Fund. The objective of each Fund is as follows:
Blue Chip Fund seeks high total investment return.
Cash Management Fund seeks to earn a high rate of current income consistent
with the preservation of capital and maintenance of liquidity.
Discovery Fund seeks long-term growth of capital.
Government Fund seeks to achieve a significant level of current income
which is consistent with security and liquidity of principal.
Growth & Income Fund seeks long-term growth of capital and current income.
High Yield Fund primarily seeks high current income and, secondarily, seeks
capital appreciation.
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.
Select Growth Fund seeks long-term growth of capital.
Target Maturity 2007, Target Maturity 2010 and Target Maturity 2015 Funds
seek a predictable compounded investment return for investors who hold
their Fund shares until the Fund's maturity, consistent with the
preservation of capital.
Value Fund seeks total return.
Special Bond Fund seeks high current income without undue risk to principal
and, secondarily, seeks growth of capital.
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. Securities may also be priced by a
pricing service approved by the Trust's Board of Trustees (the "Board").
The pricing service considers 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 also rely
on a pricing service in circumstances where the U.S. securities markets
exceed a predetermined threshold to value foreign securities held in the
Funds' portfolios. The pricing service, its methodology or the threshold
may change from time to time. Short-term debt securities that mature in 60
days or less are valued at amortized cost.
The Cash Management Fund values its portfolio securities in accordance with
the amortized cost method of valuation under Rule 2a-7 under the 1940 Act.
Amortized cost is an approximation of market value of an instrument,
whereby the difference between its acquisition cost and 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.
The Funds monitor for significant events occurring after the close of
foreign markets but prior to the close of trading on the New York Stock
Exchange that could have a material impact on the value of any foreign
securities that are held by the Funds. Examples of such events include
natural disasters, political events and issuer-specific developments. If
the Valuation Committee decides that such events warrant using fair value
estimates for foreign securities, 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 determined to be
unreliable, the securities will be valued at fair value as determined in
good faith pursuant to procedures adopted by the Board. The Board has also
approved the Fund's use of a pricing service to fair value foreign
securities in the event of a significant fluctuation in U.S. securities
markets. At June 30, 2007, the High Yield Fund held five securities that
were fair valued by the Valuation Committee with an aggregate value of
$225,697 representing 0.3% of the Fund's net assets, the International Fund
held four securities that were fair valued by the Valuation Committee with
an aggregate value of $8,259,455 representing 5.8% of the Fund's net assets
and the Special Bond Fund held six securities that were fair valued by the
Valuation Committee with an aggregate value of $338,341 representing 2.2%
of the Fund's net assets. For valuation purposes, where applicable, quotations
Notes to Financial Statements (continued)
FIRST INVESTORS LIFE SERIES FUNDS
June 30, 2007
of foreign securities in foreign currencies are translated to
U.S. dollar equivalents using the foreign exchange quotation in effect.
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, 2006, capital loss carryovers were as
follows:
Year Capital Loss Carryovers Expire
------------------------------------------------------------------------------------------------------
Fund Total 2007 2008 2009 2010 2011 2012 2013 2014
- ---- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Blue
Chip $30,745,282 $ -- $ -- $4,143,677 $22,469,579 $4,132,026 $ -- $ -- $ --
Govern-
ment 991,508 140,904 133,450 -- -- 272,546 51,149 193,688 199,771
High
Yield 18,146,221 566,369 1,503,018 3,751,289 4,221,351 4,736,272 790,779 632,307 1,944,836
Investment
Grade 1,873,161 -- 626,718 37,096 17,173 517,182 -- 108,453 566,539
Select
Growth 1,498,254 -- -- 64,524 1,083,303 350,427 -- -- --
Target
Maturity
2010 1,561 -- -- -- -- -- -- -- 1,561
Target
Maturity
2015 61,044 -- -- 2,287 4,285 14,833 26,960 -- 12,679
Value 9,877,356 -- -- -- 8,605,056 1,272,300 -- -- --
Special
Bond 7,739,331 636,995 365,853 1,284,606 2,764,915 1,656,953 212,617 153,691 663,701
C. Foreign Currency Translations--The accounting records of the
International Fund are maintained in U.S. dollars. Portfolio securities and
other assets and liabilities denominated in foreign currencies are
translated into U.S. dollars at the date of valuation. Purchases and sales
of investment securities, dividend income and certain expenses are
translated to U.S. dollars at the rates of exchange prevailing on the
respective dates of such transactions.
The International Fund does not isolate that portion of gains and losses on
investments which is due to changes in foreign exchange rates from that
which is due to changes in market prices of the investments. Such
fluctuations are included with the net realized and unrealized gains and
losses from investments.
Net realized and unrealized gains and losses on foreign currency
transactions include gains and losses from the sales of foreign currency
and gains and losses on accrued foreign dividends and related withholding
taxes.
D. Distributions to Shareholders--Distributions to shareholders from net
investment income and net realized capital gains are generally declared and
paid annually on all Funds, except for the Cash Management Fund which
declares dividends from the total of net investment income (plus or minus
all realized short-term gains and losses on investments) daily and pays
monthly. Dividends from net investment income and capital gain
distributions are determined in accordance with income tax regulations
which may differ from accounting principles generally accepted in the
United States of America. These differences are primarily due to differing
treatments for foreign currency transactions, capital loss carryforwards
and deferral of wash sales.
E. Expense Allocation--Expenses directly charged or attributable to a Fund
are paid from the assets of that Fund. General expenses of the 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. Repurchase Agreements--Securities pledged as collateral for repurchase
agreements entered into by the Select Growth Fund are held by the Fund's
custodian until maturity of the repurchase agreement. The agreements
provide that the Fund will receive, as collateral, securities with a market
value which will at all times be at least equal to 100% of the amount
invested by the Fund.
G. Use of Estimates--The preparation of the financial statements in
conformity with 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.
H. Other--Security transactions are generally accounted for on the first
business day following the date the securities are purchased or sold. Cost
is determined and gains and losses are based, on the identified cost basis
for securities, for both financial statement and federal income tax
purposes. Dividend income is recorded on the ex-dividend date. Shares of
stock received in lieu of cash dividends on certain preferred stock
holdings of the High Yield and Special Bond Funds are recognized as
dividend income and recorded at the market value of the shares received.
For the six months ended June 30, 2007, the High Yield and Special Bond
Fund recognized $23,161 and $15,581, respectively, from these taxable
"payment-in-kind" distributions. Interest
Notes to Financial Statements (continued)
FIRST INVESTORS LIFE SERIES FUNDS
June 30, 2007
income and estimated expenses are accrued daily. Bond premiums and
discounts are accreted or amortized using the interest method. Interest
income on zero-coupon bonds and stepbonds is accrued daily at the effective
interest rate. For the six months ended June 30, 2007, the Bank of New
York, custodian for all the Funds, except the International Fund, has
provided credits in the amount of $38,972 against custodian charges based
on the uninvested cash balances of the Funds. The Funds also reduced
expenses through brokerage service arrangements. For the six months ended
June 30, 2007, the Funds' expenses were reduced by $4,855 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 sold by First
Investors Life Insurance Company.
3. Security Transactions--For the six months ended June 30, 2007, purchases
and sales (including pay-downs on Government Fund) of securities and
long-term U.S. Government obligations (excluding short-term U.S. Government
obligations, repurchase agreements, foreign currencies and short-term
securities), were as follows:
Long-Term U.S.
Securities Government Obligations
---------------------------- ----------------------------
Cost of Proceeds Cost of Proceeds
Fund Purchases of Sales Purchases of Sales
- ---- ------------ ------------ ------------ ------------
Blue Chip $ 2,788,511 $ 9,085,147 $ -- $ --
Discovery 45,186,955 46,480,750 -- --
Government -- -- 1,229,392 2,090,760
Growth & Income 69,491,863 76,564,214 -- --
High Yield 11,182,218 8,361,734 -- --
International 34,680,201 32,909,345 -- --
Investment Grade 5,757,654 6,541,481 3,392,918 3,835,821
Select Growth 4,374,314 4,667,152 -- --
Target Maturity 2007 -- -- -- 1,601,222
Target Maturity 2010 -- -- -- 1,080,978
Target Maturity 2015 -- -- 201,246 489,165
Value 7,035,179 5,381,652 -- --
Special Bond 1,082,340 2,281,024 -- --
At June 30, 2007, 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)
- ---- ------------ ------------ ------------ ------------
Blue Chip $122,116,943 $64,494,022 $2,416,840 $62,077,182
Discovery 137,048,155 35,416,290 1,554,108 33,862,182
Government 19,964,435 15,940 500,530 (484,590)
Growth & Income 232,248,772 57,305,704 6,300,510 51,005,194
High Yield 69,063,377 1,890,115 3,398,846 (1,508,731)
International* 109,642,991 30,727,215 636,122 30,091,093
Investment Grade 37,424,307 113,377 998,234 (884,857)
Select Growth 10,039,373 2,157,624 89,672 2,067,952
Target Maturity 2007 16,138,613 91,132 -- 91,132
Target Maturity 2010 12,467,747 738,680 -- 738,680
Target Maturity 2015 23,193,572 498,023 188,478 309,545
Value 69,718,173 31,247,986 1,043,422 30,204,564
Special Bond 15,477,976 772,474 1,070,123 (297,649)
*Aggregate Tax Cost includes PFIC income of $1,767,489.
4. Advisory Fee and Other Transactions With Affiliates--Certain officers
and trustees of the Trust are officers and trustees of its investment
adviser, First Investors Management Company, Inc. ("FIMCO") and/or its
transfer agent, Administrative Data Management Corp. Trustees of the Trust
who are not "interested persons" of the Trust as defined in the 1940 Act
are remunerated by the Funds. For the six months ended June 30, 2007, total
trustee fees accrued by the Funds amounted to $24,242.
The Investment Advisory Agreement provides as compensation to FIMCO an
annual fee, payable monthly, at the rate of .75% on the first $250 million
of each Fund's average daily net assets, .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 six months ended June 30, 2007, FIMCO
has voluntarily waived 20% of the .75% annual fee on the first $250 million
of average daily net assets of the Government, Investment Grade, Target
Maturity 2007, Target Maturity 2010 and Target Maturity 2015 Funds. In
addition, FIMCO has voluntarily waived $10,754 in advisory fees on the Cash
Management Fund to limit the Fund's overall expense ratio to .70%. For the
six months ended June 30, 2007, total advisory fees accrued to FIMCO were
$4,003,924 of which $94,073 was waived as noted above.
Notes to Financial Statements (continued)
FIRST INVESTORS LIFE SERIES FUNDS
June 30, 2007
Paradigm Capital Management, Inc. serves as investment subadviser to the
Discovery Fund. Vontobel Asset Management, Inc. serves as investment
subadviser to the International Fund. Wellington Management Company, LLP
served as investment subadviser to the Focused Equity Fund through July 25,
2007. Effective July 26, 2007, 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. At June 30, 2007,
the Government Fund held one 144A security with a value of $900,308
representing 4.6% of the Fund's net assets, the High Yield Fund held
twenty-eight 144A securities with an aggregate value of $10,729,310
representing 15.6% of the Fund's net assets, the Investment Grade Fund held
six 144A securities with an aggregate value of $1,580,819 representing 4.3%
of the Fund's net assets and the Special Bond Fund held fourteen 144A
securities with an aggregate value of $1,564,212 representing 10.1% 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. At June 30, 2007, the Cash
Management Fund held five Section 4(2) securities with an aggregate value
of $1,344,356 representing 20.8% of the Fund's net assets. These securities
are valued as set forth in Note 1A.
6. Forward Currency Contracts, Foreign Exchange Contracts and Future
Contracts--Forward currency contracts and foreign exchange contracts are
obligations to purchase or sell a specific currency for an agreed-upon
price at a future date. When the International Fund purchases or sells
foreign securities, it may enter into a forward currency contract to
minimize the foreign exchange risk between the trade date and the
settlement date of such transactions. The International Fund could be
exposed to risk if counter parties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably. Forward currency contracts and foreign exchange contracts are
"marked-to-market" daily at the applicable translation rate and the
resulting unrealized gains or losses are reflected in the Fund's assets.
The International Fund had the following foreign exchange contracts open at
June 30, 2007:
Unrealized
Contracts to Buy Foreign Currency In Exchange for Settlement Date Gain (Loss)
- --------------------------------- --------------- --------------- ------------
12,126,000 Euro US $16,080,289 7/9/07 US $ 296,460
6,500,000 British Pound 12,565,150 7/9/07 476,060
14,575,000 Swiss Franc 12,094,379 7/9/07 (202,245)
21,823,000 South African Rand 2,959,587 3/5/08 134,997
--------------- ------------
$43,699,405 $ 705,272
=============== ------------
Unrealized
Contracts to Sell Foreign Currency In Exchange for Settlement Date Gain (Loss)
- ---------------------------------- --------------- --------------- ------------
12,126,000 Euro US $15,849,083 7/9/07 US $(527,666)
6,500,000 British Pound 12,539,930 7/9/07 (501,280)
14,575,000 Swiss Franc 11,929,299 7/9/07 37,164
9,700,000 Euro 13,120,705 8/27/07 20,386
9,140,000 British Pound 18,025,542 11/19/07 (312,406)
21,823,000 South African Rand 2,865,832 3/5/08 (228,751)
720,800,000 Japanese Yen 6,272,103 5/12/08 435,430
17,508,000 Swiss Franc 14,746,567 5/13/08 461,319
--------------- ------------
$95,349,061 (615,804)
=============== ------------
Net Unrealized Gain on Forward Exchange Contracts US $ 89,468
============
The International Fund may purchase or sell stock index futures contracts
as a hedge against changes in market conditions. Initial margin deposits
required upon entering into futures contracts are satisfied by the
segregation of specific securities or cash, and/or by securing a standby
letter of credit from a major commercial bank, as collateral, for the
account of the broker (the Fund's agent in acquiring the futures position).
During the period the futures contract is open, changes in the value of the
contract are recognized as unrealized gains or losses by
"marking-to-market" on a daily basis to reflect the market value of the
contract at the end of each day's trading. Variation margin payments are
made or received depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Fund records a realized gain or
loss equal to the difference between the proceeds from (or cost of) the
closing transaction and the Fund's basis in the contract. Risk includes the
possibility of an illiquid market and that a change in the value of the
contract may not correlate with changes in the securities being hedged. At
June 30, 2007, the International Fund had no open futures contracts.
7. High Yield Credit Risk--The High Yield Fund's investment in high yield
securities, whether rated or unrated, may be considered speculative and
subject to greater market fluctuations and risks of loss of income and
principal than lower yielding, higher-rated, fixed-income securities. The
risk of loss due to default by the issuer may be significantly greater for
the holders of high yielding securities, because such securities are
generally unsecured and are often subordinated to other creditors of the
issuer.
8. New Accounting Pronouncement--Effective June 29, 2007, the Funds adopted
Financial Accounting Standards Board ("FASB") Interpretation No. 48
"Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides
guidance for how uncertain tax positions should be recognized, measured,
presented and disclosed in the financial statements. FIN 48 requires the
evaluation of tax positions taken or expected to be taken in the course of
preparing the Funds' tax returns to determine whether tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority.
Tax positions not deemed to meet the more-likely-than-not threshold would
be recorded as a tax benefit or expense in the current year. The adoption
of FIN 48 had no impact on the financial statements of the Funds.
In September 2006, the FASB issued Statement on Financial Accounting
Standards ("SFAS") No. 157, "Fair Value Measurements." This standard
establishes a single authoritative definition of fair value, sets out a
framework for measuring fair value and requires additional disclosures
about fair value measurements. SFAS No. 157 applies to fair value
measurements already required or permitted by existing standards. SFAS No.
157 is effective for financial statements issued for fiscal years beginning
after November 15, 2007 and interim periods within those fiscal years. The
changes to current generally accepted accounting principles for the
application of this Statement relate to the definition of fair value, the
methods used to measure fair value, and the expanded disclosures about fair
value measurements. As of June 30, 2007, FIMCO does not believe the
adoption of SFAS No. 157 will impact the financial statement amounts of the
Funds, however, additional disclosures may be required about the inputs
used to develop the measurements and the effect of certain of the
measurements on changes in net assets for the period.
This page intentionally left blank.
Financial Highlights
FIRST INVESTORS LIFE SERIES FUND
The following table sets forth the per share operating performance data for
a trust share outstanding, total return, ratios to average net assets and
other supplemental data for each period indicated.
- -----------------------------------------------------------------------------------------------------
P E R S H A R E D A T A
----------------------------------------------------------------------------------------
Less Distributions
Investment Operations from
------------------------------------- ----------------------
Net Asset Net Net Realized
Value, Investment and Unrealized Total from Net Net
Beginning Income Gain (Loss) on Investment Investment Realized Total
of Period (Loss) Investments Operations Income Gain Distributions
- -----------------------------------------------------------------------------------------------------
BLUE CHIP FUND
- --------------
2002 $20.44 $ .11 $(5.36) $(5.25) $ .09 -- $ .09
2003 15.10 .12 3.80 3.92 .11 -- .11
2004 18.91 .19 1.20 1.39 .12 -- .12
2005 20.18 .20 .67 .87 .20 -- .20
2006 20.85 .26 2.74 3.00 .20 -- .20
2007(a) 23.65 .14 1.34 1.48 .26 -- .26
- ----------------------------------------------------------------------------------------------------
CASH MANAGEMENT FUND
- --------------------
2002 $ 1.00 $.012 -- $ .012 $.012 -- $.012
2003 1.00 .005 -- .005 .005 -- .005
2004 1.00 .007 -- .007 .007 -- .007
2005 1.00 .024 -- .024 .024 -- .024
2006 1.00 .043 -- .043 .043 -- .043
2007(a) 1.00 .023 -- .023 .023 -- .023
- ----------------------------------------------------------------------------------------------------
DISCOVERY FUND
- --------------
2002 $21.43 $(.08) $(5.73) $(5.81) $ -- $ -- $ --
2003 15.62 (.06) 6.19 6.13 -- -- --
2004 21.75 (.04) 2.82 2.78 -- -- --
2005 24.53 .08 1.18 1.26 -- -- --
2006 25.79 .06 5.74 5.80 .04 -- .04
2007(a) 31.55 .05 2.97 3.02 .06 2.66 2.72
- ----------------------------------------------------------------------------------------------------
GOVERNMENT FUND
- ---------------
2002 $10.45 $ .45 $ .33 $ .78 $ .52 -- $ .52
2003 10.71 .55 (.22) .33 .45 -- .45
2004 10.59 .54 (.17) .37 .58 -- .58
2005 10.38 .51 (.26) .25 .53 -- .53
2006 10.10 .51 (.14) .37 .51 -- .51
2007(a) 9.96 .25 (.14) .11 .52 -- .52
- ----------------------------------------------------------------------------------------------------
GROWTH & INCOME FUND++
- --------------------
2002 $30.71 $ .12 $(6.94) $(6.82) $ .06 $ -- $ .06
2003 23.83 .16 6.75 6.91 .12 -- .12
2004 30.62 .25 3.04 3.29 .16 -- .16
2005 33.75 .16 2.25 2.41 .25 -- .25
2006 35.91 .20 4.68 4.88 .16 2.27 2.43
2007(a) 38.36 .16 2.85 3.01 .20 5.43 5.63
- ----------------------------------------------------------------------------------------------------
HIGH YIELD FUND
- ---------------
2002 $ 8.13 $ .70 $ (.54) $ .16 $ .89 -- $ .89
2003 7.40 .63 1.16 1.79 .69 -- .69
2004 8.50 .62 .17 .79 .63 -- .63
2005 8.66 .65 (.61) .04 .63 -- .63
2006 8.07 .62 .12 .74 .67 -- .67
2007(a) 8.14 .29 .01 .30 .63 -- .63
- ----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
R A T I O S / S U P P L E M E N T A L D A T A
- ------------------------ --------------------------------------------------------------------------------
Ratio to Average Net
Ratio to Average Net Assets Before Expenses
Assets** Waived or Assumed
-------------------- ----------------------
Net Asset Net
Value, Net Assets Investment Net Portfolio
End of Total End of Period Income Investment Turnover
Period Return* (in millions) Expenses (Loss) Expenses Income Rate
- -----------------------------------------------------------------------------------------------------------
BLUE CHIP FUND
- --------------
2002 $15.10 (25.80)% $148 .81% .58% N/A N/A 138%
2003 18.91 26.19 179 .83 .71 N/A N/A 96
2004 20.18 7.37 181 .83 .99 N/A N/A 100
2005 20.85 4.34 174 .85 .93 N/A N/A 34
2006 23.65 14.49 181 .82 1.13 N/A N/A 4
2007(a) 24.87 6.35 185 .81+ 1.14+ N/A N/A 2
- -----------------------------------------------------------------------------------------------------------
CASH MANAGEMENT FUND
- --------------------
2002 $ 1.00 1.22% $ 14 .70% 1.20% .98% .92% N/A
2003 1.00 .54 10 .70 .55 .95 .30 N/A
2004 1.00 .71 7 .70 .69 1.04 .35 N/A
2005 1.00 2.44 6 .70 2.38 1.09 1.99 N/A
2006 1.00 4.35 7 .70 4.26 1.09 3.87 N/A
2007(a) 1.00 2.33 6 .70+ 4.66+ 1.04+ 4.32+ N/A
- -----------------------------------------------------------------------------------------------------------
DISCOVERY FUND
- --------------
2002 $15.62 (27.11)% $ 89 .83% (.43)% N/A N/A 130%
2003 21.75 39.24 122 .85 (.35) N/A N/A 111
2004 24.53 12.78 134 .83 (.18) N/A N/A 93
2005 25.79 5.14 137 .90 .15 N/A N/A 111
2006 31.55 22.51 158 .82 .19 N/A N/A 58
2007(a) 31.85 10.26 171 .82+ .32+ N/A N/A 28
- -----------------------------------------------------------------------------------------------------------
GOVERNMENT FUND
- ---------------
2002 $10.71 7.79% $ 25 .78% 5.39% .93% 5.24% 101%
2003 10.59 3.18 24 .75 4.98 .90 4.83 83
2004 10.38 3.62 21 .76 4.81 .91 4.66 62
2005 10.10 2.54 20 .81 4.85 .96 4.70 52
2006 9.96 3.80 20 .78 5.10 .93 4.95 28
2007(a) 9.55 1.05 20 .80+ 4.74+ .95+ 4.59+ 7
- -----------------------------------------------------------------------------------------------------------
GROWTH & INCOME FUND++
- --------------------
2002 $23.83 (22.24)% $176 .82% .43% N/A N/A 69%
2003 30.62 29.18 222 .83 .60 N/A N/A 74
2004 33.75 10.77 239 .83 .79 N/A N/A 76
2005 35.91 7.20 249 .85 .46 N/A N/A 93
2006 38.36 14.35 268 .82 .55 N/A N/A 127
2007(a) 35.74 9.16 284 .81+ .92+ N/A N/A 25
- -----------------------------------------------------------------------------------------------------------
HIGH YIELD FUND
- ---------------
2002 $ 7.40 2.25% $ 50 .86% 9.34% N/A N/A 13%
2003 8.50 26.14 64 .85 8.34 N/A N/A 30
2004 8.66 9.94 70 .85 7.55 N/A N/A 33
2005 8.07 .41 69 .87 8.01 N/A N/A 35
2006 8.14 9.77 68 .85 7.63 N/A N/A 31
2007(a) 7.81 3.71 69 .84+ 7.16+ N/A N/A 13
- -----------------------------------------------------------------------------------------------------------
Financial Highlights (continued)
FIRST INVESTORS LIFE SERIES FUND
- -----------------------------------------------------------------------------------------------------
P E R S H A R E D A T A
----------------------------------------------------------------------------------------
Less Distributions
Investment Operations from
------------------------------------- ----------------------
Net Asset Net Realized
Value, Net and Unrealized Total from Net Net
Beginning Investment Gain (Loss) on Investment Investment Realized Total
of Period Income Investments Operations Income Gain Distributions
- -----------------------------------------------------------------------------------------------------
INTERNATIONAL FUND+++
- ------------------
2002 $15.41 $ .08 $(2.91) $(2.83) $ .08 $ -- $ .08
2003 12.50 .10 3.91 4.01 .13 -- .13
2004 16.38 .09 2.28 2.37 .20 -- .20
2005 18.55 .28 1.41 1.69 .24 -- .24
2006 20.00 .29 5.09 5.38 .15 .64 .79
2007(a) 24.59 .29 1.82 2.11 .83 3.36 4.19
- ----------------------------------------------------------------------------------------------------
INVESTMENT GRADE FUND
- ---------------------
2002 $11.36 $ .63 $ .22 $ .85 $ .64 -- $ .64
2003 11.57 .61 .34 .95 .65 -- .65
2004 11.87 .59 (.12) .47 .67 -- .67
2005 11.67 .56 (.42) .14 .67 -- .67
2006 11.14 .53 (.11) .42 .62 -- .62
2007(a) 10.94 .27 (.16) .11 .60 -- .60
- ----------------------------------------------------------------------------------------------------
SELECT GROWTH FUND++++
- -------------------
2002 $ 8.66 $ .01 $(2.44) $(2.43) $ .02 -- $.02
2003 6.21 .04 1.68 1.72 .01 -- .01
2004 7.92 .10 .36 .46 .04 -- .04
2005 8.34 .05 .41 .46 .10 -- .10
2006 8.70 .07 .75 .82 .05 -- .05
2007(a) 9.47 .04 .65 .69 .07 -- .07
- ----------------------------------------------------------------------------------------------------
TARGET MATURITY 2007 FUND
- -------------------------
2002 $13.43 $ .74 $ 1.20 $1.94 $ .69 $ -- $ .69
2003 14.68 .77 (.50) .27 .74 .14 .88
2004 14.07 .77 (.61) .16 .80 .38 1.18
2005 13.05 .72 (.65) .07 .74 .28 1.02
2006 12.10 .76 (.38) .38 .74 .09 .83
2007(a) 11.65 .36 (.11) .25 .75 .05 .80
- ----------------------------------------------------------------------------------------------------
TARGET MATURITY 2010 FUND
- -------------------------
2002 $13.59 $ .65 $ 1.82 $ 2.47 $ .65 $ -- $ .65
2003 15.41 .72 (.28) .44 .67 -- .67
2004 15.18 .72 (.13) .59 .73 .06 .79
2005 14.98 .70 (.50) .20 .70 .14 .84
2006 14.34 .75 (.49) .26 .72 .12 .84
2007(a) 13.76 .40 (.21) .19 .77 -- .77
- ----------------------------------------------------------------------------------------------------
TARGET MATURITY 2015 FUND
- -------------------------
2002 $11.57 $ .38 $ 2.23 $ 2.61 $.47 -- $ .47
2003 13.71 .50 (.06) .44 .41 -- .41
2004 13.74 .53 .61 1.14 .51 -- .51
2005 14.37 .53 .08 .61 .52 -- .52
2006 14.46 .57 (.32) .25 .52 -- .52
2007(a) 14.19 .30 (.39) (.09) .58 -- .58
- ----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
R A T I O S / S U P P L E M E N T A L D A T A
- ------------------------ --------------------------------------------------------------------------------
Ratio to Average Net
Ratio to Average Net Assets Before Expenses
Assets** Waived or Assumed
Net Asset -------------------- ----------------------
Value, Net Assets Net Net Portfolio
End of Total End of Period Investment Investment Turnover
Period Return* (in millions) Expenses Income Expenses Income Rate
- -----------------------------------------------------------------------------------------------------------
INTERNATIONAL FUND+++
- ------------------
2002 $12.50 (18.43)% $ 72 1.09% .63% N/A N/A 129%
2003 16.38 32.52 90 1.08 .74 N/A N/A 119
2004 18.55 14.58 99 1.02 .94 N/A N/A 114
2005 20.00 9.22 105 .99 .80 N/A N/A 104
2006 24.59 27.79 129 .97 1.24 N/A N/A 157
2007(a) 22.51 10.26 142 .88+ 2.22+ N/A N/A 25
- -----------------------------------------------------------------------------------------------------------
INVESTMENT GRADE FUND
- ---------------------
2002 $11.57 7.86% $ 34 .74% 6.02% .89% 5.87% 14%
2003 11.87 8.60 37 .73 5.29 .88 5.14 14
2004 11.67 4.04 38 .72 5.03 .87 4.88 16
2005 11.14 1.31 38 .75 4.91 .90 4.76 24
2006 10.94 3.99 37 .74 4.82 .89 4.67 86
2007(a) 10.45 .98 37 .72+ 5.01+ .87+ 4.86+ 26
- -----------------------------------------------------------------------------------------------------------
SELECT GROWTH FUND++++
- -------------------
2002 $ 6.21 (28.09)% $ 7 1.04% .13% N/A N/A 127%
2003 7.92 27.73 10 .95 .67 N/A N/A 43
2004 8.34 5.87 11 .96 1.23 N/A N/A 50
2005 8.70 5.55 11 .99 .57 N/A N/A 66
2006 9.47 9.47 12 .92 .77 N/A N/A 80
2007(a) 10.09 7.37 12 .91+ .77+ N/A N/A 38
- -----------------------------------------------------------------------------------------------------------
TARGET MATURITY 2007 FUND
- -------------------------
2002 $14.68 15.09% $ 33 .73% 5.02% .88% 4.87% 1%
2003 14.07 1.90 28 .72 4.89 .87 4.74 0
2004 13.05 1.12 23 .73 5.14 .88 4.99 0
2005 12.10 .65 21 .75 5.46 .90 5.31 0
2006 11.65 3.29 17 .76 5.81 .91 5.66 0
2007(a) 11.10 2.21 16 .77+ 5.90+ .92+ 5.75+ 0
- -----------------------------------------------------------------------------------------------------------
TARGET MATURITY 2010 FUND
- -------------------------
2002 $15.41 18.88% $ 18 .78% 4.82% .93% 4.67% 3%
2003 15.18 2.84 17 .74 4.54 .89 4.39 1
2004 14.98 3.96 17 .75 4.70 .90 4.55 4
2005 14.34 1.46 16 .76 4.74 .91 4.59 3
2006 13.76 2.02 14 .76 5.13 .91 4.98 3
2007(a) 13.18 1.35 13 .75+ 5.39+ .90+ 5.24+ 0
- -----------------------------------------------------------------------------------------------------------
TARGET MATURITY 2015 FUND
- -------------------------
2002 $13.71 23.36% $ 9 .88% 4.70% 1.03% 4.55% 1%
2003 13.74 3.24 12 .80 4.27 .95 4.12 3
2004 14.37 8.47 17 .75 4.34 .90 4.19 2
2005 14.46 4.39 22 .73 4.14 .88 3.99 0
2006 14.19 1.85 24 .70 4.38 .85 4.23 2
2007(a) 13.52 (.73) 24 .70+ 4.40+ .85+ 4.25+ 1
- -----------------------------------------------------------------------------------------------------------
Financial Highlights (continued)
FIRST INVESTORS LIFE SERIES FUND
- -----------------------------------------------------------------------------------------------------
P E R S H A R E D A T A
----------------------------------------------------------------------------------------
Less Distributions
Investment Operations from
------------------------------------- ----------------------
Net Asset Net Realized
Value, Net and Unrealized Total from Net Net
Beginning Investment Gain (Loss) on Investment Investment Realized Total
of Period Income Investments Operations Income Gain Distributions
- -----------------------------------------------------------------------------------------------------
VALUE FUND+++++
- ----------
2002 $12.71 $ .32 $(3.02) $(2.70) $ .27 -- $ .27
2003 9.74 .22 2.35 2.57 .32 -- .32
2004 11.99 .23 1.71 1.94 .22 -- .22
2005 13.71 .25 .57 .82 .22 -- .22
2006 14.31 .27 2.76 3.03 .26 -- .26
2007(a) 17.08 .14 1.04 1.18 .27 -- .27
- -----------------------------------------------------------------------------------------------------
SPECIAL BOND FUND
- -----------------
2002 $ 8.53 $ .80 $ (.62) $ .18 $ .81 -- $ .81
2003 7.90 .76 1.41 2.17 .78 -- .78
2004 9.29 .73 .20 .93 .72 -- .72
2005 9.50 .73 (.58) .15 .70 -- .70
2006 8.95 .69 .11 .80 .23 -- .23
2007(a) 9.52 .35 .06 .41 .61 -- .61
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
R A T I O S / S U P P L E M E N T A L D A T A
- ------------------------ --------------------------------------------------------------------------------
Ratio to Average Net
Ratio to Average Net Assets Before Expenses
Assets** Waived or Assumed
Net Asset -------------------- ----------------------
Value, Net Assets Net Net Portfolio
End of Total End of Period Investment Investment Turnover
Period Return* (in millions) Expenses Income Expenses Income Rate
- -----------------------------------------------------------------------------------------------------------
VALUE FUND+++++
- ----------
2002 $ 9.74 (21.60)% $ 45 .97% 2.72% N/A N/A 71%
2003 11.99 27.59 58 .83 2.19 N/A N/A 33
2004 13.71 16.39 69 .84 1.87 N/A N/A 20
2005 14.31 6.09 79 .87 1.89 N/A N/A 21
2006 17.08 21.43 94 .83 1.73 N/A N/A 15
2007(a) 17.99 7.02 100 .83+ 1.62+ N/A N/A 6
- -----------------------------------------------------------------------------------------------------------
SPECIAL BOND FUND
- -----------------
2002 $ 7.90 2.20% $ 19 .93% 9.77% N/A N/A 18%
2003 9.29 28.31 22 .93 8.84 N/A N/A 23
2004 9.50 10.38 21 .93 7.79 N/A N/A 31
2005 8.95 1.69 19 .97 8.05 N/A N/A 28
2006 9.52 9.18 16 .98 7.16 N/A N/A 31
2007(a) 9.32 4.42 16 .98+ 6.93+ N/A N/A 7
- -----------------------------------------------------------------------------------------------------------
* 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).
+ Annualized
++ Prior to October 18, 2006, known as Growth Fund.
+++ Prior to June 27, 2006, known as International Securities Fund.
++++ Prior to July 26, 2007, known as Focused Equity Fund.
+++++ Prior to December 31, 2002, known as Utilities Income Fund.
(a) For the period January 1, 2007 to June 30, 2007.
See notes to financial statements.
Report of Independent Registered Public
Accounting Firm
To the Shareholders and Trustees of
First Investors Life Series Funds
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of the fourteen Funds comprising
First Investors Life Series Funds, as of June 30, 2007, 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, 2007, by correspondence with the custodian
and brokers. Where brokers 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.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of each of the fourteen Funds comprising First Investors Life Series Funds,
as of June 30, 2007, 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 15, 2007
Board Considerations of Advisory Contracts and Fees
(Unaudited)
FIRST INVESTORS LIFE SERIES FUNDS
I. Annual Consideration of the Investment Advisory Agreements and the
Sub-Advisory Agreements with Wellington Management Company, LLP, Paradigm
Capital Management, Inc. and Vontobel Asset Management, Inc.
At a meeting held on May 17, 2007 ("May Meeting"), the Board of Trustees
("Board"), including a majority of the non-interested or independent
Trustees (hereinafter, "Trustees"), approved the renewal of the investment
advisory agreement (the "Advisory Agreement") between First Investors
Management Company, Inc. ("FIMCO") and each of the following funds (each a
"Fund" and collectively the "Funds"): Blue Chip Fund, Value Fund, Discovery
Fund, Growth & Income Fund, Focused Equity Fund, International Fund,
Government Fund, Investment Grade Fund, High Yield Fund, Special Bond Fund,
Cash Management Fund, Target Maturity 2007 Fund, Target Maturity 2010 Fund
and Target Maturity 2015 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) Paradigm Capital
Management, Inc. ("Paradigm") with respect to the Discovery Fund; and (2)
Vontobel Asset Management, Inc. ("Vontobel") with respect to the
International Fund. The Discovery Fund and International Fund are
collectively referred to as the "Sub-Advised Funds."
At the May Meeting, the Board, including a majority of the independent
Trustees, also approved the employment of Smith Asset Management Group,
L.P. ("Smith Group") as the new sub-adviser for the Focused Equity Fund and
the continuance of the sub-advisory agreement with Wellington Management
Company, LLP ("WMC") with respect to the Focused Equity Fund on an interim
basis until the new sub-adviser assumed management of the Fund. At that
meeting, FIMCO also recommended, and the Board approved, a change in the
Focused Equity Fund's name to First Investors Life Series Select Growth
Fund and investment strategies to be effective upon Smith Group assuming
management of the Fund. Smith Group is expected to assume portfolio
management of the Focused Equity Fund in August 2007.
In reaching its decisions to approve the continuation of the Advisory
Agreement for each Fund and the Sub-Advisory Agreements with Paradigm and
Vontobel, the Board considered information furnished and discussed
throughout the year at regularly scheduled Board meetings and Investment
Committee meetings as well as information provided specifically in relation
to the renewal of the Advisory Agreement and Sub-Advisory Agreements for
the May Meeting. Information furnished at Board meetings and/or Investment
Committee meetings throughout the year included FIMCO's analysis of each
Fund's investment performance, presentations given by representatives of
FIMCO, Paradigm and Vontobel and various reports on compliance
Board Considerations of Advisory Contracts and Fees (continued)
(Unaudited)
FIRST INVESTORS LIFE SERIES FUNDS
and other services provided by FIMCO. In preparation for the May Meeting,
the independent Trustees requested and received information compiled by
Lipper, Inc. ("Lipper"), an independent provider of investment company
data, on 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 Lipper ("Peer Group"). Additionally, in response to specific
requests from the independent Trustees in connection with the May Meeting,
FIMCO furnished, and the Board considered, information concerning 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; (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. In addition to evaluating, among other things, the written
information provided by FIMCO, the Board also evaluated the answers to
questions posed by the Board to representatives of FIMCO at the May Meeting.
In addition, in response to specific requests from the independent Trustees
in connection with the May Meeting, Paradigm and Vontobel furnished, and
the Board reviewed, information concerning aspects of their respective
operations, including: (1) the nature, extent and quality of services
provided by Paradigm and Vontobel to the applicable Sub-Advised Funds; (2)
the sub-advisory fee rates charged by Paradigm and Vontobel and a
comparison of those fee rates to the fee rates charged by Paradigm and
Vontobel for providing sub-advisory services to other investment companies
or accounts, as applicable, with objectives similar to the applicable
Sub-Advised Funds; (3) profitability information provided by Paradigm and
Vontobel; and (4) any "fall out" or ancillary benefits accruing to Paradigm
and Vontobel as a result of the relationship with each applicable
Sub-Advised Fund.
In considering the information and materials described above, the
independent Trustees received assistance from and met separately with
independent legal counsel and were provided with a written description of
their statutory responsibilities and the legal standards that are
applicable to approvals of advisory agreements. 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 Trustees
addressed each Fund separately during the 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. In view of the broad scope and variety of factors and
information, the Trustees did not find it practicable to, and did not,
assign relative weights to the specific factors considered in reaching
their conclusions and determinations to approve the continuance of the
Advisory Agreement for each Fund and Sub-Advisory Agreements. Rather, the
approval determinations were made on the basis of each Trustee's business
judgment after consideration of all of the factors taken in their entirety.
Although not meant to be all-inclusive, the following discusses some of the
factors relevant to the Board's decisions to approve the continuance of the
Advisory Agreement for each Fund and Sub-Advisory Agreements with Paradigm
and Vontobel.
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 separately managed accounts. As a result, the
Trustees 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 sub-advisers. The Trustees noted that under the
Advisory Agreement with FIMCO, FIMCO provides not only advisory services
but certain administrative services, such as fund accounting services, that
many other advisers do not provide under their advisory agreements. The
Board also noted the steps that FIMCO has taken to encourage strong
performance, including making changes to portfolio managers and/or
sub-advisers of Funds that have had significant periods of
underperformance, adding to its in-house research and analytical
capabilities when necessary, providing significant compensation incentives
to portfolio managers and analysts for above-the-median Fund performance.
Board Considerations of Advisory Contracts and Fees (continued)
(Unaudited)
FIRST INVESTORS LIFE SERIES FUNDS
Furthermore, the Board considered the nature, extent and quality of the
investment management services provided by Paradigm and Vontobel to the
applicable Sub-Advised Funds. The Trustees considered Paradigm's and
Vontobel's investment management process in managing the applicable
Sub-Advised Funds and the experience and capability of their respective
personnel responsible for the portfolio management of the applicable
Sub-Advised Funds.
Based on the information considered, the Board concluded that the nature,
extent and quality of FIMCO's, Paradigm's and Vontobel's services, as
applicable, 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 meetings, particular attention was given to
the performance information compiled by Lipper. In particular, the Trustees
reviewed the performance of the Funds over the most recent calendar year
("1-year period") and, to the extent provided by Lipper, the annualized
performance over the most recent three calendar year period ("3-year
period") and five calendar year period ("5-year period"). In this regard,
the Board considered the performance of each Fund on a percentile and
quintile basis as compared to its Peer Group. For purposes of the
performance data provided by Lipper, the first quintile is defined as 20%
of the funds in the applicable Peer Group with the highest performance and
the fifth quintile is defined as 20% of the funds in the applicable Peer
Group with the lowest performance. On a Fund-by-Fund basis, the performance
reports indicated, and the Board noted, that each Fund, except for Focused
Equity Fund and Cash Management Fund, fell within the top three quintiles
for at least one of the performance periods provided by Lipper.
With regard to Focused Equity Fund, the Board considered and approved
FIMCO's recommendation that Smith Group be appointed as a sub-adviser to
the Fund and that the Fund's sub-advisory agreement with WMC be terminated
upon the assumption by Smith Group of the portfolio management of the Fund.
See separate discussion below regarding the approval of the sub-advisory
agreement with Smith Group.
With regard to Cash Management Fund, the Board considered information
provided by FIMCO concerning the impact of the Cash Management Fund's
investment parameters, which FIMCO described as generally more conservative
than those employed by advisers of many other money market funds, on
relative performance. For example, as described by FIMCO, unlike many other
money market funds, the Cash Management Fund holds a significant portion of
its assets in U.S. Government
securities in an effort to mitigate credit risk. This could impact relative
performance in certain market conditions.
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 Lipper 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 -- these fee rates include advisory and administrative service
fees -- to other funds in its Peer Group. The Board also reviewed the
information compiled by Lipper 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. In this
regard, the Board considered the management fees and expense ratios of each
Fund (other than the Target Maturity 2007 Fund, Target Maturity 2010 Fund
and Target Maturity 2015 Fund) on a quintile basis as compared to its Peer
Group. For purposes of the data provided by Lipper, the first quintile is
defined as 20% of the funds in the applicable Peer Group with the lowest
fee or ratio and the fifth quintile is defined as 20% of the funds in the
applicable Peer Group with the highest fee or ratio.
Based on the comparative data provided, on a Fund-by-Fund basis, the Board
noted that: (1) the contractual management fee rate and actual management
fee rate (after taking into account any applicable fee waivers) for each
Fund, except the Cash Management Fund (contractual fee only), Government
Fund, Investment Grade Fund, High Yield Fund and Special Bond Fund, was in
the first three quintiles of its respective Peer Group; and (2) the total
expense ratio and ratio of actual management and other non-management fees
for each Fund, except the Government Fund, Investment Grade Fund, Cash
Management Fund and Special Bond Fund (actual management and other
non-management fees only), was in the top three quintiles of its respective
Peer Group. The Board further considered that, effective July 1, 2007
through the 2008 fiscal year, FIMCO proposed the continuation of the total
expense cap agreement for the Cash Management Fund and the management fee
waiver agreements for the Government Fund and Investment Grade Fund. The
Board expressed its intention to continue to evaluate, through its
Investment Committee, the fees for these Funds.
Board Considerations of Advisory Contracts and Fees (continued)
(Unaudited)
FIRST INVESTORS LIFE SERIES FUNDS
With regard to the Target Maturity 2007 Fund, Target Maturity 2010 Fund and
Target Maturity 2015 Fund, the Board noted that Lipper did not provide data
comparing each Fund's management fee, total expense ratio or ratio of
management and other non-management fees to other funds in its Peer Group
on a quintile and percentile basis due to the limited number of funds in
the Target Maturity underlying variable insurance products classification.
However, the Board reviewed data provided by Lipper showing each Target
Maturity Fund's rank among the other funds in its Peer Group as it relates
to management fees and expense ratios. Based on this information, the Board
noted that although each Target Maturity Fund was ranked last in its Peer
Group for contractual management fees, it ranked first (i.e., lowest
management fee) for actual management fees due to fee waivers. In addition,
the Board noted that each Target Maturity Fund ranked in the middle of its
Peer Group as it relates to the total expense ratio and ratio of management
and other non-management fees. The Board further noted that, effective July
1, 2007 through the 2008 fiscal year, FIMCO proposed the continuation of
the management fee waiver agreement for each Target Maturity Fund.
In considering the sub-advisory fee rates charged by and costs and
profitability of Paradigm and Vontobel with regard to the respective
Sub-Advised Funds, the Board noted that FIMCO pays Paradigm or Vontobel, as
the case may be, a sub-advisory fee from its own advisory fee rather than
each Fund paying Paradigm or Vontobel a fee directly. Paradigm and Vontobel
provided, and the Board reviewed, information comparing the fees charged by
Paradigm and Vontobel for services to the respective Sub-Advised Funds
versus the fees charged by Paradigm and Vontobel to other comparable
investment companies or accounts, as applicable. Based on a review of this
information, the Board noted that the fees charged by Paradigm and Vontobel
for services to each applicable Sub-Advised Fund appeared competitive to
the fees Paradigm and Vontobel charge to such other comparable investment
companies or accounts.
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.
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, 2006, 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 other publicly-traded mutual fund asset managers
as analyzed by FIMCO based on publicly available financial statements.
In reviewing the profitability information, the Trustees 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. The Trustees
acknowledged that, as a business matter, FIMCO was entitled to earn
reasonable profits for its services to the Funds.
Economies of Scale. With respect to whether economies of scale are realized
by FIMCO as a Fund's assets increase 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. The
Board noted that the Growth & Income Fund has reached an asset size at
which the Fund and its shareholders are benefiting from reduced management
fee rates due to breakpoints in its fee schedule. With regard to all of the
other Funds, the Board recognized that, although the Funds have not reached
a size at which they can take advantage of the breakpoints contained in
their fee schedule, each schedule is structured so that when the assets of
the Funds grow, economies of scale may be shared for the benefit of
shareholders.
"Fall Out" or Ancillary Benefits. The Board considered the "fall-out" or
ancillary benefits that may accrue to FIMCO, Paradigm and Vontobel as a
result of their relationship with the Funds. In that regard, the Board
considered the fact that FIMCO and Vontobel 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
subadvisers must select brokers based on each Fund's requirements for
seeking best execution. The Board also considered that Paradigm executes
brokerage transactions for the Discovery Fund through the use of an
affiliated broker-dealer and that this also provides a source of fall-out
benefits to Paradigm.
* * *
In summary, after evaluation of the comparative performance, fee and
expense information and the profitability, ancillary benefits and other
considerations as described above, and in light of the nature, extent and
quality of services to be provided by FIMCO, Paradigm and Vontobel, the
Board concluded that the level of fees paid to FIMCO with respect to each
Fund, and Paradigm and Vontobel with respect to each applicable Sub-Advised
Fund, is reasonable. As a result, the Board, including a majority of the
independent Trustees, approved the Advisory Agreement and each Sub-Advisory
Agreement.
Board Considerations of Advisory Contracts and Fees (continued)
(Unaudited)
FIRST INVESTORS LIFE SERIES FUNDS
II. Initial Consideration of the Sub-Advisory Agreement with Smith Asset
Management Group, L.P. for the Focused Equity Fund
At the May Meeting, the Board, including a majority of the non-interested
or independent Trustees, also approved an initial sub-advisory agreement
(the "Proposed Agreement") with Smith Asset Management Group, L.P. ("Smith
Group") with respect to the Focused Equity Fund. In reaching its decision,
the Board considered several factors when evaluating Smith Group and in
approving the Proposed Agreement, including Smith Group's experience in
managing multi-cap growth stocks, the past performance of accounts managed
by Smith Group with a similar investment mandate, its overall capabilities
to perform the services under the Agreement and its willingness to perform
those services for the Focused Equity Fund. A discussion of the factors
relating to the Board's appointment of Smith Group as sub-adviser to the
Focused Equity Fund and approval of the Proposed Agreement and sub-advisory
fee to be paid by FIMCO to Smith Group follows.
Nature, extent, and quality of the services to be provided by Smith Group
The Board considered Smith Group's investment process, its experience in
managing portfolios using its growth strategy, and the experience and
capabilities of the personnel who will be responsible for the management of
the Focused Equity Fund. In addition, the Board considered the differences
between Smith Group's investment strategy compared to that of the previous
sub-adviser to the Focused Equity Fund. The Board also took into
consideration FIMCO's belief that Smith Group's approach to investing in
multi-cap growth stocks may increase the potential for positive returns for
Focused Equity Fund shareholders. In addition, the Board considered Smith
Group's investment resources, infrastructure and the adequacy of its
compliance program. Based on this information, the Board concluded that the
nature, extent and quality of the sub-advisory services to be provided by
Smith Group were appropriate for the Focused Equity Fund in light of its
investment objective, and, thus, supported a decision to approve the
Proposed Agreement.
Performance of Smith Group
The Board evaluated Smith Group's historical investment performance record
in managing assets utilizing a multi-cap growth mandate. In this regard,
the Board evaluated the performance of the Smith Group Large Cap
Core/Growth Composite with: (i) the performance of the S&P 500 Index for
the period January 1, 1996 to December 31, 2006 as well as the performance
for the period January 1, 2007 to March 31, 2007; (ii) the average
performance of the Lipper Multi-Cap Growth peer group for the period
January 1, 2001 to December 31, 2006; and (iii) the performance
of the Russell 3000 Growth Index over various time periods ending December 31,
2006. The Board noted that the performance of the Smith Group Large Cap
Core/Growth Composite was better than the performance of the S&P 500 Index and
the Lipper Multi-Cap Growth peer group average for most of the periods
presented and was better than the performance of the Russell 3000 Growth Index
for all of the periods presented. The Trustees concluded that the historical
investment performance record of Smith Group supported approval of the
Proposed Agreement.
Sub-advisory Fees
In evaluating the Proposed Agreement, the Board reviewed Smith Group's
proposed sub-advisory fee schedule. The Board considered that Smith Group
represented to FIMCO that the fee to be paid by FIMCO under the Proposed
Agreement is lower than the fee Smith Group charges to the other accounts
it manages with a similar investment mandate. The Board noted that the
proposed sub-advisory fee to be paid to Smith Group is lower than the fee
currently charged by WMC, which will result in an economic benefit to
FIMCO. The Trustees concluded that Smith Group's sub-advisory fees under
the Proposed Agreement appeared to be within a reasonable range for the
services to be provided to the Focused Equity Fund.
Costs of the services to be provided and profits to be realized by Smith
Group and its affiliates from the relationship with the Fund
Since the sub-advisory relationship with Smith Group as it relates to the
Focused Equity Fund is new, the Board did not consider the costs of the
services to be provided and profits to be realized by Smith Group and its
affiliates from the relationship with the Fund.
Extent to which economies of scale would be realized as the Fund grows and
whether fee levels reflect these economies of scale for the benefit of Fund
investors
The Board considered that the fees to be paid to Smith Group under the
Proposed Agreement are to be paid by FIMCO and not the Focused Equity Fund,
and noted that FIMCO negotiated "breakpoints" in Smith Group's fees based
on the levels of assets in the Focused Equity Fund as well as the assets in
the First Investors Select Growth Fund. The Board also considered that the
investment management agreement fee schedule with FIMCO for the Focused
Equity Fund includes breakpoints so that when assets of the Fund grow,
economies of scale may be shared for the benefit of shareholders.
Board Considerations of Advisory Contracts and Fees (continued)
(Unaudited)
FIRST INVESTORS LIFE SERIES FUNDS
Benefits to be derived by Smith Group from the relationship with the Fund
The Board considered the "fall-out" or ancillary benefits that may accrue
to Smith Group as a result of the sub-advisory relationship with the Fund,
including greater exposure in the marketplace with respect to the
sub-adviser's investment process, expanding the level of assets under
management by Smith Group and potentially increased opportunities for soft
dollar arrangements. With regard to these arrangements, the Board noted
that Smith Group may direct the Focused Equity Fund's brokerage
transactions to certain brokers to obtain research and other services,
which may be used in servicing other clients of Smith Group. However, the
Board noted that Smith Group must select brokers based on the Focused
Equity Fund's requirements for seeking best execution. After review of this
information, the Trustees concluded that the potential benefits accruing to
Smith Group by virtue of its relationship with the Focused Equity Fund are
fair and reasonable.
* * *
The Board did not identify any single factor as being of paramount
importance. In summary, based on the various considerations described
above, the Trustees, including a majority of the independent Trustees,
concluded that the proposed sub-advisory fee is reasonable and that the
approval of the Proposed Agreement is in the best interests of the Focused
Equity Fund and its shareholders, and as a result approved the Proposed
Agreement.
FIRST INVESTORS LIFE SERIES FUNDS
Trustees Officers
- ----------------------- -----------------------
Kathryn S. Head
Charles R. Barton, III President
Stefan L. Geiringer Larry R. Lavoie
Chief Compliance Officer
Robert M. Grohol
Joseph I. Benedek
Kathryn S. Head Treasurer
Arthur M. Scutro, Jr. Mark S. Spencer
Assistant Treasurer
James M. Srygley
Carol Lerner Brown
Robert F. Wentworth Assistant Secretary
Shareholder Information
- -----------------------
Investment Adviser Custodian
First Investors Management Company, Inc. The Bank of New York
110 Wall Street One Wall Street
New York, NY 10005 New York, NY 10286
Subadviser Custodian
(Discovery Fund) (International Fund)
Paradigm Capital Management, Inc. Brown Brothers Harriman & Co.
Nine Elk Street 40 Water Street
Albany, NY 12207 Boston, MA 02109
Subadviser Transfer Agent
(Select Growth Fund) Administrative Data Management Corp.
Smith Asset Management Group, L.P. Raritan Plaza I - 8th Floor
100 Crescent Court Edison, NJ 08837-3620
Dallas, TX 75201
Independent Registered
Subadviser Public Accounting Firm
(International Fund) Tait, Weller & Baker LLP
Vontobel Asset Management, Inc. 1818 Market Street
450 Park Avenue Philadelphia, PA 19103
New York, NY 10022
Legal Counsel
Kirkpatrick & Lockhart
Preston Gates Ellis LLP
1601 K Street, N.W.
Washington, DC 20006
FIRST INVESTORS LIFE SERIES FUNDS
Shareholder Information
- -----------------------
The Cash Management Fund is a money market fund and seeks to maintain a
stable net asset value of $1.00 per share. However, there can be no
assurance that the Fund will be able to do so or achieve its investment
objective. An investment in the Fund is neither insured nor guaranteed by
the Federal Deposit Insurance Corporation (FDIC) or any other government
agency.
It is the Trust's practice to mail only one copy of its annual and
semi-annual reports to all family members who reside in the same household.
Additional copies of the reports will be mailed if requested by any
shareholder in writing or by calling 800-423-4026. The Trust will ensure
that separate reports are sent to any shareholder who subsequently changes
his or her mailing address.
This report is authorized for distribution only to existing shareholders,
and, if given to prospective shareholders, must be accompanied or preceded
by the Trust's prospectus.
The Statement of Additional Information includes additional information
about the Trust's trustees and is available, without charge, upon request
in writing or by calling 800-423-4026.
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 800-423-4026 or can be viewed online or
downloaded from the EDGAR database on the Securities and Exchange
Commission's ("SEC") internet website at http://www.sec.gov. In addition,
information regarding how the Fund 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
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
Fund's Form N-Q will be 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 800-SEC-0330. The schedule
of portfolio holdings is available, without charge, upon request in writing
or by calling 800-423-4026.
Item 2. Code of Ethics
Not applicable
Item 3. Audit Committee Financial Expert
Not applicable
Item 4. Principal Accountant Fees and Services
Not applicable
Item 5. Audit Committee of Listed Registrants
Not applicable
Item 6. Schedule of Investments
Schedule is included as part of the report to
stockholders filed under Item 1 of this Form.
Item 7. Disclosure of Proxy Voting Policies & Procedures for
Closed-End Management Investment Companies
Not applicable
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable
Item 9. Purchases of Equity Securities by Closed-End Management
Investment Companies and Affiliated Purchasers
Not applicable
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 controls over
financial reporting that occurred during the second fiscal quarter of the
period covered by this report that has materially affected, or is reasonably
likely to materially affect, the Registrant's internal control over
financial reporting.
Item 12. Exhibits
(a)(1) Code of Ethics - Not applicable
(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
(Registrant)
By /S/ KATHRYN S. HEAD
Kathryn S. Head
President and Principal Executive Officer
Date: September 7, 2007
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.
First Investors Life Series Funds
(Registrant)
By /S/ JOSEPH I. BENEDEK
Joseph I. Benedek
Treasurer and Principal Financial Officer
Date: September 7, 2007