SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
FIRST INVESTORS SERIES FUND
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11(Set forth the amount on which
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration
Statement No.:
(3) Filing Party:
(4) Date Filed:
[FIMCO LETTERHEAD]
December _, 2004
First Investors
95 Wall Street
New York, New York 10005
Dear Shareholder/Contract or Policy Owner:
We are pleased to enclose the Proxy Statement for the joint meetings of
shareholders of the Special Situations Fund, a series of First Investors Series
Fund, and the Discovery Fund, a series of the First Investors Life Series Fund,
to be held on January 26, 2005. The Special Situations Fund and the Discovery
Fund are collectively referred to as the "Funds."
The purpose of the meetings is to obtain the approval of shareholders for (1)
proposals to enter into subadvisory agreements with Paradigm Capital Management,
Inc. ("PCM") under which it will become the subadviser of the Funds and (2)
proposals to permit First Investors Management Company, Inc. ("FIMCO"), the
Funds' investment adviser, and the Board of Trustees of the Funds ("the Board"),
to hire subadvisers and to modify subadvisory agreements in the future without
shareholder approval.
THE BOARD OF THE FUNDS HAS UNANIMOUSLY APPROVED THESE PROPOSALS AND RECOMMENDS
THAT SHAREHOLDERS APPROVE THEM AS WELL. THERE WILL BE NO MATERIAL CHANGES IN THE
FUNDS' INVESTMENT OBJECTIVES OR INVESTMENT POLICIES. AND, IMPORTANTLY, THERE
WILL BE NO INCREASE IN THE ADVISORY FEES PAID BY THE FUNDS. PCM'S SUBADVISORY
FEES WOULD BE PAID BY FIMCO, AND NOT BY THE FUNDS. THE PROPOSALS ARE INTENDED TO
IMPROVE THE PERFORMANCE OF THE FUNDS AND TO PROVIDE FIMCO AND THE BOARD WITH THE
ABILITY TO MAKE FUTURE SUBADVISORY CHANGES WITHOUT BURDENING THE FUNDS WITH THE
COSTS OF SHAREHOLDER MEETINGS.
PCM is a highly experienced and well regarded investment management firm. As of
November 30, 2004, PCM held investment management authority with respect to
approximately $1.4 billion in assets. Of that amount, PCM acted as investment
adviser or subadviser to a registered investment company with net assets of
approximately $123.5 million.
PLEASE READ THE ENCLOSED MATERIALS CAREFULLY AND VOTE YOUR SHARES TODAY BY
SIGNING AND RETURNING THE ENCLOSED PROXY CARD. BY DOING SO, YOU WILL HELP THE
FUNDS AVOID THE COSTS OF ADDITIONAL MAILINGS.
Very truly yours,
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Kathryn S. Head
President
First Investors Series Fund
First Investors Life Series Fund
FIRST INVESTORS SPECIAL SITUATIONS FUND
95 Wall Street
New York, New York 10005
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
JANUARY 26, 2005
To the Shareholders:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders ("Meeting") of the
Special Situations Fund ("Fund"), a series of First Investors Series Fund
("Trust"), will be held on January 26, 2005, at 95 Wall Street, New York, New
York 10005, at 10:00 a.m., Eastern time, for the following purposes:
1. To approve or disapprove a Subadvisory Agreement among First Investors
Series Fund, First Investors Management Company, Inc. ("FIMCO"), and
Paradigm Capital Management, Inc. ("PCM"); and,
2. To approve or disapprove a policy to permit FIMCO and the Trust's
Board of Trustees to appoint and replace subadvisers, enter into
subadvisory agreements, and approve amendments to subadvisory
agreements on behalf of the Fund without further shareholder approval.
Shareholders of record as of the close of business on December 20, 2004, are
entitled to notice of and to vote at, the Meeting or any adjournment thereof.
PLEASE EXECUTE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE THE ACCOMPANYING
PROXY CARD, WHICH IS BEING SOLICITED BY THE TRUST'S BOARD OF TRUSTEES. RETURNING
YOUR PROXY PROMPTLY IS IMPORTANT TO ENSURE A QUORUM AT THE MEETING AND TO AVOID
THE COSTS OF ADDITIONAL PROXY MAILINGS. YOU MAY REVOKE YOUR PROXY AT ANY TIME
BEFORE IT IS EXERCISED BY THE SUBSEQUENT EXECUTION AND SUBMISSION OF A REVISED
PROXY, BY GIVING WRITTEN NOTICE OF REVOCATION TO THE FUND AT ANY TIME BEFORE THE
PROXY IS EXERCISED, OR BY VOTING IN PERSON AT THE MEETING.
By Order of the Board of Trustees,
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/s/ Carol Lerner Brown
Assistant Secretary
December __, 2004
95 Wall Street
New York, New York 10005
FIRST INVESTORS SPECIAL SITUATIONS FUND
(A SERIES OF FIRST INVESTORS SERIES FUND)
AND
FIRST INVESTORS DISCOVERY FUND
(A SERIES OF FIRST INVESTORS LIFE SERIES FUND)
FIRST INVESTORS CORPORATION
95 WALL STREET
NEW YORK, NEW YORK 10005
______________________________
PROXY STATEMENT
______________________________
SPECIAL MEETING OF SHAREHOLDERS
JANUARY 26, 2005
This Proxy Statement and the accompanying proxy card are being furnished
to the shareholders of the Special Situations Fund, a series of First Investors
Series Fund ("Trust"), and the Discovery Fund, a series of First Investors Life
Series Fund ("Trust"), in connection with the solicitation of proxies made by,
and on behalf of, the Trusts' Boards of Trustees (collectively, the "Board") to
be used at the Special Meeting of Shareholders to be held on January 26, 2005,
at the principal executive office of the Trusts, 95 Wall Street, New York, New
York 10005 at 10:00 a.m. Eastern Time. The Special Situations Fund and the
Discovery Fund may be referred to individually as a "Fund" and are collectively
referred to as the "Funds" and the Special Meeting and any adjournments thereof
are referred to collectively as the "Meeting." This Proxy Statement and the
accompanying proxy card are being mailed to shareholders on or about December
[ ], 2004.
This Proxy Statement and the accompanying proxy card are also being
furnished to persons who have invested in the Discovery Fund through variable
annuity contracts and variable life policies issued by First Investors Life
Insurance Company ("FIL"). Although FIL is the sole shareholder of the Discovery
Fund, it will vote shares that are attributable to variable annuity contracts or
variable life policies in accordance with the votes received from the contract
owners and policy holders. FIL will vote shares attributable to contract owners
or policy holders who do not vote in the same proportion that it votes shares
attributable to those who do vote. Since contract owners and policy holders
essentially are entitled to vote through FIL, we will refer to them hereinafter
simply as "shareholders".
The presence, in person or by proxy, of Fund shareholders entitled to cast
a majority of all votes entitled to be cast at the Meeting will constitute a
quorum. In the absence of a quorum or in the event that a quorum is present at
the Meeting, but votes sufficient to approve the proposals are not received, the
persons named as proxies may propose one or more adjournments of the Meeting to
permit further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares represented at the Meeting in
person or by proxy. The persons named as proxies will vote those proxies that
they are entitled to vote "FOR" the proposals in favor of such an adjournment
and will vote those proxies required to be voted "AGAINST" the proposals against
such adjournment. A shareholder vote may be taken on one or more of the
proposals in this Proxy Statement prior to any such adjournment if sufficient
votes have been received and it is otherwise appropriate.
Broker non-votes are shares held in "street name" for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote and for which the broker does not have
discretionary voting authority. Abstentions and broker non-votes will be counted
as shares present at the Meeting for quorum purposes but will not be voted for
or against any adjournment or proposal.
All properly executed and unrevoked proxies received in time for the
Meeting will be voted as instructed by shareholders. Approval of each proposal
requires the affirmative vote of the lesser of (1) 67% or more of the shares of
the Fund present at the Meeting, if more than 50% of the outstanding shares are
represented at the Meeting in person or by proxy, or (2) more than 50% of the
outstanding shares entitled to vote at the Meeting. If you execute your proxy
but give no voting instructions, your shares that are represented by proxies
will be voted "FOR" the Proposed Agreements, "FOR" the Subadviser Approval
Policy and "FOR" or "AGAINST" any other business which may properly arise at the
Meeting, in the proxies' discretion. Any person giving a proxy has the power to
revoke it at any time prior to its exercise by executing a superseding proxy or
by submitting a written notice of revocation to the Secretary of the Trusts
("Secretary"). To be effective, such revocation must be received by the
Secretary prior to the Meeting and must indicate the shareholder's name and
account number. In addition, although mere attendance at the Meeting will not
revoke a proxy, a shareholder present at the Meeting may withdraw his or her
proxy by voting in person.
Shareholders of record as of the close of business on December 20, 2004
("Record Date"), are entitled to vote at the Meeting. On the Record Date, the
Special Situations Fund had [ ] shares issued and outstanding, consisting of [ ]
Class A shares and [ ] Class B shares. On the Record Date, the Discovery Fund
had [ ] shares issued and outstanding. Shareholders are entitled to one vote for
each full share held and a fractional vote for each fractional share held.
Except as set forth in Appendix A, as of the Record Date, the Funds do not know
of any person who owns beneficially or of record more than 5% of any class of
shares of the Funds. As of that same date, the Board, as a group, owned less
than 1% of any class of the Funds' outstanding shares.
The solicitation of proxies, the cost of which will be borne by the Funds,
will be made by mail. The Funds' officers, and those employees of First
Investors Management Company ("FIMCO") who assist in the proxy solicitation,
will not receive any additional or special compensation for any such efforts.
The Funds will request broker-dealer firms, custodians, nominees and fiduciaries
to forward proxy materials to the beneficial owners of the shares held of record
by such persons. The Funds may reimburse such broker-dealer firms, custodians,
nominees and fiduciaries for their reasonable expenses incurred in connection
with such proxy solicitation.
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COPIES OF THE FUNDS' MOST RECENT ANNUAL AND SEMI-ANNUAL REPORTS, INCLUDING
FINANCIAL STATEMENTS, HAVE PREVIOUSLY BEEN DELIVERED TO SHAREHOLDERS.
SHAREHOLDERS MAY REQUEST COPIES OF THE FUNDS' ANNUAL AND SEMI-ANNUAL REPORTS,
WITHOUT CHARGE, BY WRITING ADMINISTRATIVE DATA MANAGEMENT CORP., 581 MAIN
STREET, WOODBRIDGE, NJ 07095-1198, OR BY CALLING 1-800-423-4026.
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INTRODUCTION
On November 18, 2004, the Board approved, subject to shareholder approval,
Subadvisory Agreements ("Proposed Agreements") among each Fund, FIMCO, and
Paradigm Capital Management, Inc. ("PCM"). Under the Proposed Agreements, PCM
will manage the investments of each Fund. PCM is a registered investment adviser
under the Investment Advisers Act of 1940 that provides investment services to
a registered investment company, private investment partnerships, pension and
profit sharing plans, high net worth individuals, and other institutions. PCM
was formed in 1994, manages in excess of $1 billion and has extensive experience
in managing accounts investing in small cap assets. PCM employs a value
oriented-style. Consequently, each Fund's principal investment strategy will
change from a growth-oriented style to a value-oriented style.
Under the Proposed Agreements, FIMCO, and not the Funds, will pay PCM for
its services. FIMCO will also oversee and supervise PCM's activities as
subadviser and evaluate its performance.
The Board recommends that each Fund's shareholders approve its respective
Proposed Agreement with PCM. In addition, the Board is asking each Fund's
shareholders to approve a policy that permits FIMCO and the Board to appoint and
replace subadvisers, enter into new subadvisory agreements, and amend
subadvisory agreements without further shareholder approval.
PROPOSAL 1: TO APPROVE OR DISAPPROVE A SUBADVISORY AGREEMENT
AMONG EACH FUND, FIMCO AND PCM.
FIMCO proposed to the Board, and the Board approved at its meeting on
November 18, 2004, Proposed Agreements among each Fund, FIMCO and PCM.
PARADIGM CAPITAL MANAGEMENT, INC.
The principal office of PCM is located at Nine Elk Street, Albany, New
York 12207-1002. Further information regarding PCM is set forth in Appendix B.
PROPOSED SUBADVISORY AGREEMENTS
Under the Proposed Agreements, PCM would be responsible, subject to the
supervision of the Board and FIMCO, for the investment management of the assets
of each Fund, including the selection of each Fund's investments and the
broker-dealers that will execute transactions for each Fund. The Proposed
Agreements recognize that PCM, under certain circumstances, may direct brokerage
to broker-dealers who charge higher commissions if in its judgment the
commissions are reasonable in relation to the value of the research, analysis,
advice or similar services provided by such broker-dealer. The Proposed
Agreements also provide that PCM will maintain certain books and records
required to be maintained by it pursuant to the Investment Company Act of 1940,
as amended, ("1940 Act") and the rules and regulations promulgated thereunder
with respect to transactions that PCM effects on behalf of each Fund, and will
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furnish the Board and FIMCO with such periodic and special reports as the Board
or FIMCO may reasonably request.
The Proposed Agreements provide that PCM will not be liable for any error
of judgment or mistake of law or for any loss suffered by a Fund, their
shareholders, a Trust or FIMCO in connection with the matters to which a
Subadvisory Agreement relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of PCM in the performance of its
duties or from reckless disregard by it of its obligations and duties under the
Agreement. A form of Proposed Agreement is set forth in Appendix C.
Each Proposed Agreement provides that the Funds, by the vote of a majority
of the Board or a majority of its outstanding voting securities, may terminate
its agreement, without penalty, on not more than 60 days' nor less than 30 days'
written notice to PCM and PCM may terminate each Proposed Agreement, without
penalty, on not more than 60 days' nor less than 30 days' written notice to
FIMCO. In addition, each Proposed Agreement is automatically terminable upon
assignment.
Under the Proposed Agreements, for the services performed and the expenses
assumed, PCM would receive a subadvisory fee from FIMCO (and not from the
Funds), computed in the following manner. The daily net assets of the Funds
shall first be added together. An aggregate fee shall then be computed on the
sum as if the Funds were combined using the following schedule: 0.40% of the
first $50 million; 0.30% of the next $200 million; and 0.25% on the balance over
$250 million. The fee payable under each Proposed Agreement shall then be
computed by multiplying the aggregate fee by the ratio of the net assets of a
Fund to the sum of the net assets of both Funds.
If approved by the Funds' shareholders, the Proposed Agreements will
become effective on the date of approval, or shortly thereafter, and will remain
in effect for an initial two-year term. Thereafter, each Proposed Agreement will
continue in effect if it is approved at least annually by a vote of each Fund's
shareholders or by the Board, provided that, in either event, continuance is
approved by the vote of a majority of the Independent Trustees, which vote must
be cast in person at a meeting called for the purpose of voting on such
approval.
EVALUATION BY THE BOARD
After considering the relative performance of each Fund, the Board
determined that it is in each Fund's best interest to evaluate and then select
an investment subadviser. The Board considered several factors when evaluating
PCM and in approving the Proposed Agreements, including PCM's experience in
managing assets in the small cap value style, its reputation, the past
performance of an account managed by PCM in the small cap value style, its
overall capabilities to perform the services under each Proposed Agreement and
its willingness to perform those services for each Fund. A discussion of the
factors relating to the Boards' selection of PCM and approval of the Proposed
Agreements and subadvisory fee to be paid by FIMCO to PCM follows.
-5-
1) DISCUSSION OF THE NATURE, EXTENT, AND QUALITY OF THE SERVICES TO BE
PROVIDED BY PCM. The Board proposes that PCM manage the investment
operations and all or a designated portion of the assets of the Funds,
subject to supervision by FIMCO and the Board. In determining that
PCM's services would benefit each Fund, the Board considered that PCM's
investment process, including its value-oriented style and the
background and experience of the portfolio management team, could
enhance the performance of each Fund. In addition, the Board considered
PCM's investment resources and the adequacy of its compliance program.
2) DISCUSSION OF THE PERFORMANCE OF THE FUNDS AND PCM. The Board evaluated
the Funds' performance relative to PCM's performance record for a small
cap value managed account during the previous three calendar years
since inception and for the one, two, and three year periods ended
October 31, 2004. The Board noted that the performance of PCM's
similarly managed account was better than relevant indices for most of
the time periods presented, including since inception and year-to-date
performance periods.
3) DISCUSSION OF THE COSTS OF THE SERVICES TO BE PROVIDED AND PROFITS TO
BE REALIZED BY PCM AND ITS AFFILIATES FROM THE RELATIONSHIP WITH THE
FUNDS. The Board considered the representation from PCM that the fee
schedules in the Proposed Agreements are lower than the fee schedules
for PCM's other subadvisory relationships. Since the subadvisory
relationship with PCM is new, the Board did not consider the costs of
the services to be provided and profits to be realized by PCM and its
affiliates from the relationship with the Funds.
4) DISCUSSION OF THE EXTENT TO WHICH ECONOMIES OF SCALE WOULD BE REALIZED
AS THE FUNDS GROW AND WHETHER FEE LEVELS REFLECT THESE ECONOMIES OF
SCALE FOR THE BENEFIT OF FUND INVESTORS. The Board noted that the fees
paid to PCM are paid by FIMCO and not the Funds. However, the Board
considered that FIMCO negotiated "breakpoints" in PCM's fees based on
the levels of assets in the Funds and FIMCO's representation that it
would not benefit economically from the proposed fee arrangement with
PCM.
5) DISCUSSION OF THE COMPARISONS OF THE AMOUNTS TO BE PAID UNDER THE
PROPOSED AGREEMENTS WITH THOSE UNDER CONTRACTS BETWEEN PCM AND ITS
OTHER CLIENTS. The Board considered PCM's reprsentation that the fee
schedule for the Funds under the Proposed Agreements is lower than the
fee schedule for PCM's other subadvisory relationships, which include a
registered investment company and other institutional invetors.
6) DISCUSSION OF THE BENEFITS TO BE DERIVED BY PCM FROM THE RELATIONSHIP
WITH THE FUNDS. The Board considered the benefits accruing to PCM as a
result of the subadvisory relationship with the Funds, including
materially expanding the level of assets under management by PCM and
potentially increased opportunities for soft dollar arrangements. The
term soft dollars generally refers to arrangements where an investment
adviser purchases brokerage and research services provided by
broker-dealers with commissions from its clients' securities
transactions.
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After full consideration of these factors, the Board of Trustees,
including a majority of the Independent Trustees recommended that each Fund's
shareholders approve the Proposed Agreements.
REQUIRED VOTE
Approval of Proposal 1 requires the affirmative vote of the lesser of (1)
67% or more of the shares of each Fund present at the Meeting, if more than 50%
of the outstanding shares are represented at the Meeting in person or by proxy,
or (2) more than 50% of the outstanding shares entitled to vote at the Meeting.
THE BOARD RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 1.
____________________________
PROPOSAL 2: TO APPROVE A POLICY TO PERMIT FIMCO AND THE BOARD TO
APPOINT AND REPLACE SUBADVISERS, TO ENTER INTO SUBADVISORY
AGREEMENTS AND TO APPROVE AMENDMENTS TO SUBADVISORY AGREEMENTS ON
BEHALF OF THE FUNDS WITHOUT FURTHER SHAREHOLDER APPROVAL
("SUBADVISER APPROVAL POLICY" OR "POLICY").
PROPOSED SUBADVISER APPROVAL POLICY
The proposed Subadviser Approval Policy would permit FIMCO, subject to the
approval of the Board, including a majority of the Independent Trustees, to
appoint and replace subadvisers and to amend subadvisory agreements without
obtaining shareholder approval. The Subadviser Approval Policy thus would permit
FIMCO to change subadvisers or subadvisory arrangements in a variety of
situations, including, but not limited to: (1) the existing subadviser has a
record of substandard performance; (2) the individual employees responsible for
portfolio management of the Fund leave the investment advisory firm; (3) there
is a change of control of the subadviser; (4) FIMCO decides to diversify the
Funds' management by adding another subadviser; or (5) there is a change in
investment style of the Fund.
If shareholders approve the Subadviser Approval Policy, under current law,
the funds would still be required to obtain exemptive relief from the SEC to
appoint and replace subadvisers or to amend subadvisory agreements without
obtaining shareholder approval. There is no assurance that such relief would be
granted by the SEC. However, there is a pending rule proposal that would, under
certain conditions, permit the Board to appoint and replace subadvisers or to
amend subadvisory agreements without obtaining shareholder approval subject to
certain conditions. The rule would eliminate the need for the Funds to obtain
exemptive relief from the SEC.
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Approval of the Subadviser Approval Policy will not affect any of the
other requirements under the federal securities laws that govern the Funds,
FIMCO, any subadviser, or any subadvisory agreement, other than the requirement
to call and hold a meeting of the Funds' shareholders for the purpose of
approving a subadvisory agreement. The Board, including the Independent
Trustees, will continue to evaluate and approve all new subadvisory agreements
between FIMCO and any subadviser as well as all changes to existing subadvisory
agreements. In addition, the Funds and FIMCO will be subject to certain
conditions pursuant to the pending SEC rule or exemptive order to ensure that
the interests of the Funds' shareholders are adequately protected whenever FIMCO
acts under the Subadviser Approval Policy. Finally, within 90 days of the
appointment of a new subadviser, the Funds will provide its shareholders with an
information statement that contains substantially the same relevant information
about the subadviser, the subadvisory agreement and the subadvisory fee that the
Funds' shareholders would receive in a proxy statement. If the Funds'
shareholders are not satisfied with the subadvisory arrangements that FIMCO and
the Board implement under the Subadviser Approval Policy, they would, of course,
be able to exchange or sell their shares.
Shareholder approval of this Proposal 2 will not change the total amount
of management fees paid by the Funds to FIMCO or FIMCO's duties and
responsibilities toward the Funds under the current Investment Advisory
Agreement.
BENEFITS OF THE SUBADVISER APPROVAL POLICY
The Board believes that it is in the best interests of the Funds'
shareholders to give FIMCO the maximum flexibility to select, supervise and
evaluate subadvisers without incurring the expense and potential delay of
seeking specific shareholder approval. The current subadviser approval process
requires that the Funds call and hold meetings of the Funds' shareholders,
create and distribute proxy materials, and arrange for the solicitation of
voting instructions from shareholders. This process is time-intensive and
costly. These costs generally are borne entirely by the Funds. If FIMCO and the
Board can rely on the Subadviser Approval Policy, the Board would be able to act
more quickly and with less expense to appoint unaffiliated subadvisers when the
Board and FIMCO believe such appointments would benefit the Funds and their
shareholders.
Also, the Board believes that it is appropriate to vest the selection,
supervision and evaluation of the subadvisers in FIMCO, subject to review by the
Board, in light of FIMCO's significant experience and expertise in this area.
The Board believes that investors may choose to invest in the Funds because of
FIMCO's experience in this respect.
-8-
Finally, the Board will oversee the subadviser selection process to
ensure that shareholders' interests are protected whenever FIMCO selects a
subadviser or modifies a subadvisory agreement. The Board, including a
majority of the Independent Trustees, will continue to evaluate and approve
all new subadvisory agreements as well as any modification to existing
subadvisory agreements. In each review, the Board will analyze all factors
that it considers to be relevant to the determination, including the nature,
quality and scope of services provided by the subadvisers. The Board will
compare the investment performance of the assets managed by the subadviser
with other accounts with similar investment objectives managed by other
advisers and will review the subadviser's compliance with federal securities
laws and regulations. The Board believes that its review will ensure that
FIMCO continues to act in the best interests of the Funds and the
shareholders.
REQUIRED VOTE
Approval of Proposal 2 requires the affirmative vote of the lesser of
(1) 67% or more of the shares of each Fund present at the Meeting, if more
than 50% of the outstanding shares are represented at the Meeting in person
or by proxy, or (2) more than 50% of the outstanding shares entitled to vote
at the Meeting. If the Funds' shareholders do not approve the Subadviser
Approval Policy, the Funds will continue to be required to call a special
meeting and to bear the cost of special meetings to obtain shareholder
approval of any proposed changes in the Funds' subadvisory arrangements.
THE BOARD RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 2
____________________________
OTHER INFORMATION
SHAREHOLDER PROPOSALS. As a general matter, the Fund does not hold regular
annual or other regular meetings of shareholders. Any shareholder who wishes to
submit proposals to be considered at a special meeting of the Funds'
shareholders should send such proposals to the Funds at 95 Wall Street, New
York, New York 10005. Proposals must be received within a reasonable period of
time prior to any meeting to be included in the proxy materials or otherwise to
be considered at the meeting. Moreover, inclusion of such proposals is subject
to limitations under the federal securities laws. Persons named as proxies for
any subsequent shareholders' meeting will vote in their discretion with respect
to proposals submitted on an untimely basis.
OTHER BUSINESS. The Funds' management knows of no other business to be
presented to the Meeting other than the matters set forth in this Proxy
Statement, but should any other matter requiring a vote of the Funds'
shareholders arise, the proxies will vote thereon according to their best
judgment in the interests of the Funds.
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APPENDIX A
The following shareholders are shown on the Discovery Fund's records as
owning more than 5% of a class of its shares:
FIRST INVESTORS LIFE SERIES FUND - DISCOVERY FUND
- --------------------------------------------------------------------------------
NUMBER AND PERCENTAGE OF SHARES
NAME AND ADDRESS BENEFICIALLY OWNED AS OF NOVEMBER 30, 2004
- ---------------- ------------------------------------------
- --------------------------------------------------------------------------------
First Investors Life
Insurance Company 2,791,027 100%
95 Wall Street
New York, New York 10005
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A-1
APPENDIX B
The following is a list of the principal executive officers and directors of
PCM.
NAME ADDRESS PRINCIPAL OCCUPATION
- ---- ------- --------------------
Peter E. Bulger Nine Elk Street Director, Chief Compliance
Albany, New York 12207-1002 Officer
John B. Walthausen Nine Elk Street Portfolio Manager
Albany, New York 12207-1002
Candace King Weir Nine Elk Street Director, Chief Executive
Albany, New York 12207-1002 Officer, and Chief
Investment Officer
David J. DeLuca Nine Elk Street Director and Chief Financial
Albany, New York 12207-1002 Officer
B-1
APPENDIX C
FIRST INVESTORS [ ] FUND
SUBADVISORY AGREEMENT
Agreement made as of this ___ day of ________, 2004, by and among FIRST
INVESTORS MANAGEMENT COMPANY, INC., a New York corporation (the "Adviser"),
PARADIGM CAPITAL MANAGEMENT, INC. (the "Subadviser"), and FIRST INVESTORS [ ]
FUND (the "Fund"), a Massachusetts business trust and a diversified open-end
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"), on behalf of First Investors [ ] Fund.
W I T N E S S E T H:
-------------------
WHEREAS, the Adviser has entered into an Investment Advisory Agreement dated
June 13, 1994 (the "Advisory Agreement") with the Fund, pursuant to which the
Adviser acts as investment adviser of each series of the Fund; and
WHEREAS, the Adviser and the Fund each desire to retain the Subadviser to
provide investment advisory services to First Investors [ ] Fund, a series of
the Fund, and the Subadviser is willing to render such investment advisory
services.
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
1. SUBADVISER'S DUTIES.
(a) PORTFOLIO MANAGEMENT. Subject to supervision by the Adviser and the
Fund's Board of Trustees, the Subadviser shall manage the investment operations
and such portion of the assets of First Investors [ ] Fund (the "Series") that
is allocated to it by the Adviser, in accordance with that Series' investment
objectives, policies and restrictions, and subject to the following
understandings:
(i) INVESTMENT DECISIONS. The Subadviser shall determine from
time to time what investments and securities will be purchased, retained,
sold or loaned by the Series, and what portion of such assets will be
invested or held uninvested as cash.
(ii) INVESTMENT LIMITS. In the performance of its duties and
obligations under this Agreement, the Subadviser shall act in conformity with
applicable limits and requirements, as amended from time to time, as set forth
in the (A) Fund's Declaration of Trust, as amended and restated from time to
time, its By-Laws, and the Prospectus and Statement of Additional Information
applicable to the Series, (B) instructions and directions of the Adviser and of
the Board of Trustees of the Fund, and (C) requirements of the 1940 Act, the
Internal Revenue Code of 1986, as amended, as applicable to the Series, and all
other applicable federal and state laws and regulations.
(iii) PORTFOLIO TRANSACTIONS. With respect to the securities and
other investments to be purchased or sold for the Series, the Subadviser shall
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place orders with or through such persons, brokers, dealers or futures
commission merchants selected by the Subadviser, provided, however, that such
orders shall (A) be consistent with the brokerage policy set forth in the
Prospectus and Statement of Additional Information applicable to the Series, or
approved by the Fund's Board of Trustees, (B) conform with federal securities
laws, and (C) be consistent with securing the most favorable price and efficient
execution. Within the framework of this policy, the Subadviser may consider the
research, investment information and other services provided by, and the
financial responsibility of, brokers, dealers or futures commission merchants
who may effect, or be a party to, any such transaction or other transactions to
which the Subadviser's other clients may be a party.
On occasions when the Subadviser deems the purchase or sale of a security or
futures contract to be in the best interest of the Series as well as other
clients of the Subadviser, the Subadviser, to the extent permitted by applicable
laws and regulations, may, but shall be under no obligation to, aggregate the
securities or futures contracts to be sold or purchased in order to obtain the
most favorable price or lower brokerage commissions and efficient execution. In
such event, allocation of the securities or futures contracts so purchased or
sold, as well as the expenses incurred in the transaction, will be made by the
Subadviser in the manner the Subadviser considers to be the most equitable and
consistent with its fiduciary obligations to the Fund and to such other clients.
(iv) RECORDS AND REPORTS. The Subadviser shall maintain such books
and records required by Rule 31a-1 under the 1940 Act as shall be agreed upon
from time to time by the parties hereto, and shall render to the Fund's Board of
Trustees such periodic and special reports as the Board of Trustees of the Fund
may reasonably request.
(v) TRANSACTION REPORTS. The Subadviser shall provide the custodian
of the Series on each business day with information relating to all transactions
concerning the Series' assets and shall provide the Adviser with such
information upon the Adviser's request.
(vi) FUND POLICIES. The Subadviser will comply with all policies and
procedures of the Fund, including the portfolio holdings information policy.
(vii) SIGNIFICANT EVENTS. The Subadviser will monitor the securities
owned by the Fund for potential significant events that could affect their
values and notify the Fund when, in its opinion, a significant event has
occurred that may not be reflected in the market values of such securities.
(b) SUBADVISER'S PARTNERS, OFFICERS AND EMPLOYEES. Services to be
furnished by the Subadviser under this Agreement may be furnished through any of
its partners, officers or employees. The Subadviser shall notify the other
parties to this Agreement of any change in the Subadviser's management or
ownership within a reasonable time after such change.
(c) MAINTENANCE OF RECORDS. The Subadviser shall timely furnish to the
Adviser all information relating to the Subadviser's services hereunder which
are needed by the Adviser to maintain the books and records of the Series
required by Rule 31a-1 under the 1940 Act. The Subadviser agrees that all
records which it maintains for the Series are the property of the Fund and the
Subadviser will surrender promptly to the Fund any of such records upon the
Fund's request; provided, however, that the Subadviser may retain a copy of such
records. The Subadviser further agrees to preserve for the periods prescribed by
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Rule 31a-2 under the 1940 Act any such records as are required to be maintained
by it pursuant to paragraph 1(a) hereof.
(d) FIDELITY BOND, ERRORS & OMISSIONS POLICY, AND COMPLIANCE PROGRAM.
The Subadviser will provide the Fund with reasonable evidence that, with
respect to its activities on behalf of the Series, the Subadviser is (i)
maintaining adequate fidelity bond and errors & omissions insurance, (ii) has
adopted a compliance program that meets the requirements of the federal
securities laws, including all required codes of ethics, and (iii) has
designated a Chief Compliance Officer in accordance with the requirements of
the federal securities laws. The Subadviser shall also make such compliance
reports and certifications as are required by the Fund's compliance program.
2. ADVISER'S DUTIES. The Adviser shall continue to have responsibility for
all other services to be provided to the Fund and each Series pursuant to the
Advisory Agreement and shall oversee and review the Subadviser's performance of
its duties under this Agreement.
3. DOCUMENTS PROVIDED TO THE SUBADVISER. The Adviser has or will deliver to
the Subadviser current copies and supplements thereto of each of the following
documents, and will deliver to it all future amendments and supplements, if any:
(a) the Declaration of Trust of the Fund, as filed with the
Massachusetts Department of Assessment and Taxation;
(b) the By-Laws of the Fund;
(c) certified resolutions of the Board of Trustees of the Fund
authorizing the appointment of the Adviser and the Subadviser and approving the
form of this Agreement;
(d) the Fund's Registration Statement on Form N-1A under the 1940 Act
and the Securities Act of 1933, as amended ("1933 Act"), pertaining to the
Series, as filed with the Securities and Exchange Commission; and
(e) the Prospectus and Statement of Additional Information
pertaining to the Series.
4. COMPENSATION OF THE SUBADVISER. For the services provided and the
expenses assumed pursuant to this Agreement, the Adviser will pay to the
Subadviser, effective from the date of this Agreement, a fee which is computed
daily and paid monthly from the Series' assets at the annual rates set forth in
the attached Schedule A. If this Agreement becomes effective or terminates
before the end of any month, the fee for the period from the effective date to
the end of the month or from the beginning of such month to the date of
termination, as the case may be, shall be prorated according to the proportion
that such month bears to the full month in which such effectiveness or
termination occurs.
5. LIABILITY OF THE SUBADVISER. The Subadviser agrees to perform faithfully
the services required to be rendered to the Fund and the Series under this
Agreement, but nothing herein contained shall make the Subadviser or any of its
officers, partners or employees liable for any loss sustained by the Fund or its
officers, Trustees or shareholders or any other person on account of the
services which the Subadviser may render or fail to render under this Agreement;
provided, however, that nothing herein shall protect the Subadviser against
liability to the Fund, or to any of the Series' shareholders, to which the
Subadviser would otherwise be subject, by reason of its willful misfeasance, bad
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faith or gross negligence in the performance of its duties, or by reason of its
reckless disregard of its obligations and duties under this Agreement. Nothing
in this Agreement shall protect the Subadviser from any liabilities which it may
have under the 1933 Act or the 1940 Act.
6. DURATION AND TERMINATION. Unless sooner terminated as provided herein,
this Agreement shall continue in effect for a period of more than two years from
the date written above only so long as such continuance is specifically approved
at least annually in conformity with the requirements of the 1940 Act; provided,
however, that this Agreement may be terminated at any time, without the payment
of any penalty, by the Board of Trustees of the Fund or by vote of a majority of
the outstanding voting securities (as defined in the 1940 Act) of the Series, or
by the Subadviser at any time, without the payment of any penalty, on not more
than 60 days' nor less than 30 days' written notice to the other parties. This
Agreement shall terminate automatically in the event of its assignment (as
defined in the 1940 Act) or upon the termination of the Advisory Agreement.
7. SUBADVISER'S SERVICES ARE NOT EXCLUSIVE. Nothing in this Agreement shall
limit or restrict the right of any of the Subadviser's partners, officers or
employees to engage in any other business or to devote his or her time and
attention in part to the management or other aspects of any business, whether of
a similar or a dissimilar nature, or limit or restrict the Subadviser's right to
engage in any other business or to render services of any kind to any other
corporation, firm, individual or association.
8. REFERENCES TO THE SUBADVISER. During the term of this Agreement, the
Adviser agrees to furnish to the Subadviser at its principal office all
prospectuses, proxy statements, reports to shareholders, sales literature or
other material prepared for distribution to sales personnel, shareholders of the
Series or the public, which refer to the Subadviser or its clients in any way.
9. EXCLUSIVITY. The Subadviser agrees not to manage the assets of any
non-affiliated third party investment company that has investment objectives and
policies substantially similar to the investment objectives and policies
employed by the Series.
10. AMENDMENTS. This Agreement may be amended by mutual consent, subject to
approval by the Fund's Board of Trustees and the Series' shareholders to the
extent required by the 1940 Act.
11. GOVERNING LAW. This Agreement shall be governed by the laws of the State
of New York.
12. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding among the parties hereto, and supersedes all prior agreements and
understandings relating to the subject matter hereof.
13. SEVERABILITY. Should any part of this Agreement be held invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
14. THE 1940 ACT. Where the effect of a requirement of the 1940 Act
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reflected in any provision of this Agreement is altered by a rule, regulation or
order of the Securities and Exchange Commission, whether of special or general
application, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
15. HEADINGS. The headings in this Agreement are intended solely as a
convenience, and are not intended to modify any other provision herein.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
FIRST INVESTORS MANAGEMENT
Attest: COMPANY, INC.
By:_________________________________________
Carol R. Lerner, Secretary Kathryn S. Head, President
FIRST INVESTORS [ ] FUND, on behalf of
First Investors [ ] Fund
Attest:
By:_________________________________________
Kathryn S. Head, President
PARADIGM CAPITAL MANAGEMENT, INC.
Attest: ____________________________________________
By:
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FIRST INVESTORS [ ] FUND
SUBADVISORY AGREEMENT
SCHEDULE A
The fee paid to the Subadviser under this Agreement for managing that portion of
the assets of First Investors [ ] Fund allocated to it by the Adviser shall be
computed in the following manner.
1. The daily net assets of the of First Investors Special Situations Fund
and First Investors Discovery Fund shall first be added together;
2. An aggregate fee shall then be computed on the sum as if the two funds
were combined using the following schedule:
a. 0.40% of the first $50 million;
b. 0.30% of the next $200 million; and
c. 0.25% on the balance over $250 million.
3. The fee payable under this Agreement shall then be computed by
multiplying the aggregate fee by the ratio of the net assets of First
Investors [ ] Fund to the sum of the net assets of both funds.
The balance of the aggregate fee will be paid pursuant to a separate subadvisory
agreement among the Adviser, the Subadviser, and First Investors [ ] Fund. First
Investors [ ] Fund shall have no responsibility for any obligation arising under
that agreement.
Dated:
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FIRST INVESTORS SERIES FUND
SPECIAL SITUATIONS FUND
PROXY CARD FOR THE SPECIAL MEETING OF SHAREHOLDERS
JANUARY 26, 2005
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN. PLEASE SIGN, DATE,
AND RETURN THE PORTION BELOW IN THE ENCLOSED ENVELOPE TO:
Proxy Department
Administrative Data Management Corp.
581 Main Street
Woodbridge, New Jersey 07095-1198.
YOUR PROMPT RESPONSE WILL SAVE YOUR FUND THE EXPENSE OF FURTHER SOLICITATIONS.
Please sign exactly as name appears hereon. If shares are held in the name of
joint owners, each should sign. Attorneys-in-fact, executors, administrators,
etc. should so indicate. If the shareholder is a corporation or partnership, an
authorized person must sign in full the corporate or partnership name.
- --------------------------------------------------------------------------------
FIRST INVESTORS SERIES FUND
SPECIAL SITUATIONS FUND
PROXY CARD FOR THE SPECIAL MEETING OF SHAREHOLDERS
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD of Trustees of the
Special Situations Fund ("Fund"). The undersigned appoints as proxies Ruta M.
Carroll and Geeta Napoli, with power of substitution, to vote all the
undersigned's shares in the Fund at the Special Meeting of Shareholders to be
held on January 26, 2005, at 10:00 a.m. Eastern Time at 95 Wall Street, New
York, New York 10005, and any adjournment thereof ("Meeting"), with all the
power the undersigned would have if personally present. The shares represented
by this proxy will be voted as instructed. If you sign the proxy without marking
any box, your proxy shall be deemed to grant authority to vote "FOR" the
proposals specified below. This proxy also grants discretionary power to vote
upon such other business as may properly come before the Meeting.
1. To approve a subadvisory agreement among First Investors Series Fund, First
Investors Management Company, Inc. ("FIMCO"), and Paradigm Capital Management,
Inc.
FOR / / AGAINST / / ABSTAIN / /
2. To permit FIMCO, the Fund's manager, and the Fund's Board of Trustees to
appoint and replace subadvisers, to enter into and to amend subadvisory
agreements on behalf of the Fund without further shareholder approval.
FOR / / AGAINST / / ABSTAIN / /
------------------------------------ ---------
Signature (owner, trustee, custodian, etc.) Date
------------------------------------ ---------
Additional Signature if held jointly Date