UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-CSR
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CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
INVESTMENT COMPANY ACT FILE NUMBERS 811-6618
FIRST INVESTORS EQUITY FUNDS
(Exact name of registrant as specified in charter)
95 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: SEPTEMBER 30, 2006
DATE OF REPORTING PERIOD: SEPTEMBER 30, 2006
Item 1. Reports to Stockholders
The Annual Report to Stockholders follows
[First Investors Logo]
EQUITY FUNDS
TOTAL RETURN
VALUE
BLUE CHIP
GROWTH & INCOME
ALL-CAP GROWTH
MID-CAP OPPORTUNITY
SPECIAL SITUATIONS
FOCUSED EQUITY
GLOBAL
INTERNATIONAL
ANNUAL REPORT
September 30, 2006
Portfolio Managers' Letter
TOTAL RETURN FUND
Dear Investor:
This is the annual report for the First Investors Total Return Fund for
the fiscal year ended September 30, 2006. During the period, the Fund's
return on a net asset value basis was 6.2% for Class A shares and 5.5% for
Class B shares, including dividends of 22.5 cents per share on Class A
shares and 12.7 cents per share on Class B shares.
The Fund's strategy remains to allocate its portfolio among stocks, bonds
and cash equivalents, with at least 50% in stocks and at least 25% in
bonds. Given the solid rise in equity prices during the fiscal year, the
Fund benefited from its 64% average allocation to equity investments. The
Fund also held, on average, a 32% allocation to fixed income securities
and a 4% allocation to cash equivalents.
The performance of the equity portion of the portfolio was helped by stock
selection in the technology, consumer discretionary and health care
sectors, and overweight positions in the industrials and materials areas.
Notable performers included Hewlett Packard, which gained market share
versus competitors and rebounded under new leadership; Orient-Express
Hotels, which was helped by a resurgence in luxury travel and strong
pricing; and Thermo Electron, a designer and maker of instrumentation for
data collection and analysis, which benefited from a restructuring program
and strong end-market demand.
The Fund continued to be helped by strong merger and acquisitions activity
among its equity holdings. During the fiscal year, 13 of our holdings
received merger offers, which are either closed or still pending. The most
notable contributors were the takeover of Russell Corp. by Berkshire
Hathaway, the purchase of thrift institution Independence Community Bank
by Sovereign Financial, the takeover of specialty pharmaceutical
distributor and generic drug maker ANDRX by Watson Pharmaceuticals and the
pending takeover of crafts retailer Michaels Stores by a consortium of
private investors.
The Fund continued to employ a multi-cap strategy with respect to its
equity investments, and at the end of the reporting period, 54% of the
equity portion was invested in large-cap stocks, 21% in mid-cap stocks and
25% in small caps, according to Lipper's market capitalization ranges.
While the large- and mid-cap components delivered satisfactory results,
stock selection in the small-cap portion detracted from performance.
During the reporting period, the fixed income portion of the Fund was
invested on average, approximately 50% in high-grade corporate bonds, 25%
in mortgage-backed bonds, 20% in U.S. government agency debt, and 5% in
municipal bonds and U.S. Treasury notes. The two smallest allocations --
municipal bonds and Treasury notes --provided the best and worst
performance, respectively, among fixed income sectors.
Portfolio Managers' Letter (continued)
TOTAL RETURN FUND
While corporate bonds in general underperformed the broad bond market, the
Fund's corporate bond holdings had relatively short durations (i.e., less
interest rate risk), which limited the impact in the Fund of the sector's
relatively weak performance.
Thank you for placing your trust in First Investors. As always, we
appreciate the opportunity to serve your investment needs.
Sincerely,
\S\ EDWIN D. MISKA
Edwin D. Miska
Director of Equities
First Investors Management
Company, Inc.
\S\ CLARK D. WAGNER
Clark D. Wagner
Director of Fixed Income
First Investors Management
Company, Inc.
November 1, 2006
Understanding Your Fund's Expenses
FIRST INVESTORS EQUITY FUNDS
As a mutual fund shareholder, you incur two types of costs: (1)
transaction costs, including a sales charge (load) on purchase payments
(on Class A shares only), a contingent deferred sales charge on
redemptions (on Class B shares only); and (2) ongoing costs, including
advisory fees; distribution and service fees (12b-1); and other expenses.
This example is intended to help you understand your ongoing costs (in
dollars) of investing in the Funds 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, April 1, 2006, and held for the entire six-month
period ended September 30, 2006. 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 Expenses 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 over 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 Expenses Example:
These amounts provide information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio for Class A
and Class B shares, 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
transaction costs, such as front-end or contingent deferred sales charges
(loads). Therefore, the hypothetical expenses 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 transaction
costs were included, your costs would have been higher.
Board Considerations of Advisory Contracts and Fees
FIRST INVESTORS EQUITY FUNDS
At a meeting held on May 18, 2006 ("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 agreements (each an "Advisory Agreement") between First Investors
Management Company, Inc. ("FIMCO") and each of the following funds (each a
"Fund" and collectively the "Funds"): Growth & Income Fund, Total Return
Fund, Blue Chip Fund, Value Fund, Mid-Cap Opportunity Fund, Special
Situations Fund, All-Cap Growth Fund, Focused Equity Fund and Global Fund.
In addition, at the May Meeting, the Board, including a majority of
non-interested Trustees, approved the renewal of the sub-advisory
agreements (each a "Sub-Advisory Agreement" and collectively the
"Sub-Advisory Agreements") between: (1) FIMCO and Wellington Management
Company, LLP ("WMC") with respect to the All-Cap Growth Fund, Focused
Equity Fund and Global Fund; and (2) FIMCO and Paradigm Capital
Management, Inc. ("Paradigm") with respect to the Special Situations Fund.
The All-Cap Growth Fund, Focused Equity Fund, Global Fund and Special
Situations Fund are collectively referred to as the "Sub-Advised Funds."
In reaching its decisions, the Board considered information furnished and
discussed throughout the year at regularly scheduled Board meetings as
well as information provided specifically in relation to the renewal of
the Advisory Agreements and Sub-Advisory Agreements for the May Meeting.
Information furnished at Board meetings throughout the year included
FIMCO's analysis of each Fund's investment performance, presentations
given by FIMCO's Director of Equities and representatives of WMC and
Paradigm and various reports on compliance and other services provided by
FIMCO and its affiliates. 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 and its affiliates to the Funds, including
investment advisory and administrative services to the Funds; (2)
supplemental investment performance information relating to certain Funds;
(3) the actual management fees paid by each Fund to FIMCO; (4) the costs
of providing services to each Fund and the profitability of FIMCO and its
affiliate, Administrative Data Management Corporation ("ADM"), the Funds'
affiliated transfer agent, from the relationship with each Fund and, with
respect to the Sub-Advised Funds, the fact that FIMCO pays WMC or
Paradigm, as the case may be, a sub-advisory fee for their services to
those Funds out of the advisory fee received by FIMCO; and (5) any "fall
out" or ancillary benefits accruing to FIMCO or its affiliates 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. 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, WMC and Paradigm furnished,
and the Board reviewed, information concerning aspects of their respective
operations, including: (1) the nature, extent and quality of services
provided by WMC and Paradigm to the applicable Sub-Advised Funds; (2) the
sub-advisory fee rates charged by WMC and Paradigm and a comparison of
those fee rates to the fee rates charged by WMC and Paradigm 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 WMC and Paradigm; and (4) any
"fall out" or ancillary benefits accruing to WMC and Paradigm as a result
of the relationship with each applicable Sub-Advised Fund. In addition,
WMC provided, and the Board reviewed, a comparison of the fee rates
charged by other sub-advisers to investment companies in the same Peer
Group as the applicable Sub-Advised Funds managed by WMC.
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
Agreements 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. 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 Agreements 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 Agreements
and Sub-Advisory Agreements.
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
Board Considerations of Advisory Contracts and Fees (continued)
FIRST INVESTORS EQUITY FUNDS
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 also recognized that it is FIMCO's philosophy to provide a high
level of personal service to the shareholders of the Funds, that FIMCO
strives to service the needs of a customer base that includes many
investors who have modest incomes and net worths, that the fund complex is
small in size relative to many other fund complexes, that many of the
individual funds in the First Investors fund complex are small in asset
size relative to other funds in the industry, and that the average account
size of many of the First Investors funds is small by comparison to the
industry averages. The Board also considered management's representations
that there are significant costs involved in providing the level of
personal service that the First Investors fund complex attempts to deliver
to its customers.
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 Agreements with FIMCO, FIMCO provides not only advisory services
but also 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, adding to its in-house research and analytical capabilities, and
increasing the potential performance bonus for portfolio managers and
analysts.
The Board also considered the nature, extent and quality of the services
provided to the Funds by FIMCO's affiliates, including transfer agency and
distribution services. The Board took into account the fact that ADM is
dedicated to providing transfer agency services exclusively to the Funds
and the other funds in the First Investors fund complex. As a result, ADM
can tailor its processes and services to satisfy the needs of the Funds'
shareholder base. The Board noted that the Funds' shares are distributed
primarily through First Investors Corporation ("FIC"), which is an
affiliate of FIMCO.
Furthermore, the Board considered the nature, extent and quality of the
investment management services provided by WMC and Paradigm to the
applicable Sub-Advised Funds. The Trustees considered WMC's and Paradigm'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 totality of the information considered, the Trustees
concluded that the Funds were likely to benefit from the nature, extent
and quality of FIMCO's, WMC's and Paradigm's services, as applicable, as
well as the services of FIMCO's affiliates, and that FIMCO and its
affiliates as well as WMC and Paradigm have the ability to continue to
provide these services based on their respective experience, operations
and resources.
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 as well as the
supplemental performance information relating to certain Funds provided by
FIMCO for the May Meeting. In particular, the Trustees reviewed the
performance of the Funds over the most recent calendar year ("1-year
period") and 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. In reviewing this data,
the Board focused primarily on the 1- and 3-year periods with the greatest
weight being on whether a Fund's performance was in the top three
quintiles versus the Fund's Peer Group for the 3-year period. On a
Fund-by-Fund basis, the performance reports indicated, and the Board
noted, that:
* Growth & Income Fund, All-Cap Growth Fund and Global Fund were in the
third quintile of their respective Peer Group for both the 1-year period
and 3-year period.
* Total Return Fund and Value Fund were in the third quintile of their
respective Peer Group for the 1-year period and the second highest
quintile for the 3-year period.
* Mid-Cap Opportunity Fund was in the second highest quintile of its Peer
Group for both the 1-year period and 3-year period.
Board Considerations of Advisory Contracts and Fees (continued)
FIRST INVESTORS EQUITY FUNDS
With regard to the Special Situations Fund, the performance report showed
that the Fund was in the third quintile for the 1-year period and the
Board noted that Lipper did not provide performance information for the
3-year period and 5-year period because the Fund's investment objective
changed during those periods. The Board considered the fact that Paradigm
was retained as sub-adviser for the Special Situations Fund in 2005 at a
significant additional cost to FIMCO in an effort to improve the Fund's
performance to be a favorable development.
With regard to the Blue Chip Fund, the performance report showed that the
Fund was in the fourth quintile of its Peer Group for both the 1-year
period and 3-year period. The Board considered the fact that FIMCO
assigned a new portfolio manager to the Blue Chip Fund in May of 2005 in
an effort to improve the Fund's performance to be a positive development.
The Board also considered information provided by FIMCO noting that the
Blue Chip Fund was performing slightly ahead of its Peer Group average
from January through April 2006. The Board expressed its intention to
continue to closely monitor the Fund's performance in concert with FIMCO.
With regard to Focused Equity Fund, the performance report showed that the
Fund was in the third quintile of its Peer Group for the 1-year period and
the fourth quintile for the 3-year period. Although the Board was
encouraged by the Fund's performance over the most recent 1-year period,
the Board expressed its intention to continue to closely monitor the
Fund's performance in concert with FIMCO.
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. In this
regard, the Board considered the management fees of each Fund on a
quintile basis as compared to its Peer Group. For purposes of the
management fee data provided by Lipper, the first quintile is defined as
20% of the funds in the applicable Peer Group with the lowest management
fee and the fifth quintile is defined as 20% of the funds in the
applicable Peer Group with the highest management fee. In reviewing this
data, the Board generally focused on whether a Fund's management fee
(actual and contractual) was in the top three quintiles versus the Fund's
Peer Group.
Based on the data provided on management fee rates, on a Fund-by-Fund
basis, the Board noted that: (1) the contractual management fee rate for
each Fund, except the
Value Fund, was in the first three quintiles of its respective Peer Group;
and (2) the actual management fee rate (after taking into account any
applicable fee waivers) for each Fund, except the Blue Chip Fund, Value
Fund and Global Fund, was in the first three quintiles of its respective
Peer Group. The Board considered that the fee schedule for each Fund was
amended effective January 30, 2006 to incorporate additional "breakpoints"
(i.e., reductions in the management fee rate as assets increase), although
none of the Funds are currently at an asset level to benefit from such
additional breakpoints. Furthermore, with regard to the Blue Chip Fund,
Global Fund, Mid-Cap Opportunity Fund and Total Return Fund, the Board
considered that the fee schedule for these Funds was amended effective
January 30, 2006 to reduce the contractual management fee payable by these
Funds.
In considering the sub-advisory fee rates charged by and costs and
profitability of WMC and Paradigm with regard to the respective
Sub-Advised Funds, the Board noted that FIMCO pays WMC or Paradigm, as the
case may be, a sub-advisory fee from its own advisory fee rather than each
Fund paying WMC or Paradigm a fee directly. WMC and Paradigm provided, and
the Board reviewed, information comparing the fees charged by WMC and
Paradigm for services to the respective Sub-Advised Funds versus the fees
charged by WMC and Paradigm to other comparable investment companies or
accounts, as applicable. In addition, WMC provided, and the Board
reviewed, information comparing the fees charged by other sub-advisers to
investment companies in the same Peer Group as the Sub-Advised Funds
managed by WMC. Based on a review of this information, the Board noted
that the fees charged by WMC and Paradigm, as the case may be, for
services to each applicable Sub-Advised Fund appeared comparable to the
fees WMC and Paradigm charge to such other comparable investment companies
or accounts. Furthermore, the Board noted that the fees charged by WMC
appeared comparable to fees charged by other sub-advisers to investment
companies in the same Peer Group as the Sub-Advised Funds managed by WMC.
The Board also reviewed the information compiled by Lipper comparing each
Fund's total expense ratio to other funds in its Peer Group, including on
a quintile basis. For purposes of the expense ratio data provided by
Lipper, the first quintile is defined as 20% of the funds in the
applicable Peer Group with the lowest actual total expense ratio and the
fifth quintile is defined as 20% of the funds in the applicable Peer Group
with the highest actual total expense ratio. The Board noted that the
total expense ratio (Class A Shares) for the most recent calendar year,
taking into account FIMCO's expense waivers (as applicable), was in the
fourth quintile of the respective Peer Group for each Fund except the Blue
Chip Fund and Focused Equity Fund, which were in the fifth quintile of
their respective Peer Group. The Board took
Board Considerations of Advisory Contracts and Fees (continued)
FIRST INVESTORS EQUITY FUNDS
into account management's explanation that the Funds' total operating
expense ratios were impacted by their relatively small average account
size and the fact that a significant percentage of shareholders hold their
shares in retirement accounts. Furthermore, the Board recognized
management's ongoing efforts to reduce Fund expenses and encouraged
management to continue to seek additional ways to reduce Fund expenses.
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 detailed analysis of FIMCO's profitability with respect to
each Fund, calculated for the year ended December 31, 2005, as well as
profitability information relating to the past five calendar years. The
Board also considered FIMCO's expectation that there are a number of
significant regulatory changes on the horizon that may impose additional
responsibilities and costs on FIMCO and its affiliates in the upcoming
year. In reviewing the profitability information, the Trustees also
considered the "fall-out" or ancillary benefits that may accrue to FIMCO
and its affiliates as a result of their 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, Total Return Fund,
Blue Chip Fund, Value Fund, Mid-Cap Opportunity Fund and Special
Situations Fund have each reached an asset size at which the Fund and its
shareholders are benefiting from reduced management fee rates due to
breakpoints in their respective fee schedules. With regard to the All-Cap
Growth Fund, Focused Equity Fund and Global Fund, the Board recognized
that, although these 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 these 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, WMC and Paradigm as a result
of their relationship with the Funds. In that regard, the Board considered
the fact that FIMCO and WMC receive proprietary and third-party research
from broker-dealers that execute brokerage transactions for the funds in
the First Investors fund complex. However, the Board noted that FIMCO and
WMC must select brokers based on each Fund's requirements for seeking best
execution. The Board also considered that Paradigm will begin executing
brokerage transactions for the Special Situations Fund through the use of
an affiliated broker-dealer and that this will also provide a source of
fall-out benefits to Paradigm. The Board also considered ADM's fees and
profitability and the income received by FIC and FIMCO's affiliated bank
as a result of FIMCO's management of the First Investors funds. After
review of this information, the Board concluded that the benefits accruing
to FIMCO and its affiliates as well as WMC and Paradigm by virtue of their
relationship to the applicable Funds are fair and reasonable.
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, WMC and Paradigm, the Board
concluded that the level of fees paid to FIMCO with respect to each Fund,
and WMC and Paradigm with respect to each applicable Sub-Advised Fund, is
reasonable.
* * *
In summary, based on the various considerations discussed above, the Board
determined that approval of the Advisory Agreement with respect to each
Fund and the Sub-Advisory Agreement with respect to each Sub-Advised Fund
was in the best interests of the applicable Fund. As a result, the Board,
including a majority of the independent Trustees, approved each Advisory
Agreement and Sub-Advisory Agreement.
Board Considerations of Advisory Contracts and Fees (continued)
FIRST INVESTORS EQUITY FUNDS
Initial Consideration of the Investment Advisory Agreement with FIMCO and
the Sub-Advisory Agreement with Vontobel Asset Management, Inc. for the
New International Fund
At the May Meeting, the Board, including a majority of the non-interested
or independent Trustees, approved: (1) an initial investment advisory
agreement between FIMCO and the new International Fund (the "Proposed
Advisory Agreement"); and (2) an initial sub-advisory agreement between
FIMCO and Vontobel Asset Management, Inc. ("Vontobel") with respect to the
new International Fund (the "Proposed Sub-Advisory Agreement").
With respect to the Board's consideration of the Proposed Advisory
Agreement, the Trustees received information in advance of the May Meeting
from FIMCO, which included: (1) the nature, extent and quality of services
to be provided by FIMCO and its affiliates to the International Fund,
including investment advisory and administrative services; (2) the level
of the advisory fees to be charged to the International Fund and a
comparison of those fees to the fees charged by other funds in a peer
group comprised of front end load international multi-cap growth funds
with up to $500 million in assets (the "International Peer Group") as well
as the fees charged by FIMCO to the First Investors Global Fund; and (3)
the level of expense reimbursements proposed by FIMCO for the
International Fund. In addition to evaluating, among other things, the
information provided by FIMCO in advance of the May Meeting, the Board
also evaluated the answers to questions posed by the Board to
representatives of FIMCO at the May Meeting.
In addition, with respect to the Board's consideration of the Proposed
Sub-Advisory Agreement, the Trustees received information in advance of
the May Meeting from FIMCO or Vontobel, which included: (1) the nature,
extent and quality of services to be provided by Vontobel to the
International Fund; (2) Vontobel's experience, reputation, investment
management business, personnel and operations; (3) Vontobel's brokerage
and trading policies and practices; (4) the level of the sub-advisory fees
to be charged by Vontobel and a comparison of those fees to the fees
charged by Vontobel to other clients with an investment mandate similar to
that of the International Fund; (5) Vontobel's compliance program; (6)
Vontobel's historical investment performance record in managing assets
utilizing an international equity mandate; and (7) Vontobel's financial
condition. In addition, FIMCO discussed with the Board and the Board
considered the process by which FIMCO selected and recommended Vontobel as
sub-adviser to the International 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. 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 Proposed Advisory
Agreement and Proposed Sub-Advisory Agreement. 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 Proposed
Advisory Agreement and Proposed Sub-Advisory Agreement.
Nature, Extent and Quality of Services
In examining the nature, extent and quality of the services to be provided
by FIMCO, the Board recognized that FIMCO is dedicated to providing
investment management services exclusively to the 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 will undertake extensive responsibilities as
manager of the International Fund, including: (1) implementing policies
and procedures designed to ensure compliance with the International Fund's
investment objectives and policies; (2) the review of brokerage
arrangements; (3) oversight of general portfolio compliance with
applicable laws; (4) the provision of certain administrative services to
the International Fund, including fund accounting; (5) the implementation
of future Board directives as they relate to the International Fund; and
(6) evaluating and monitoring sub-adviser(s) to the International Fund.
The Board also considered the nature, extent and quality of the services
to be provided to the International Fund by FIMCO's affiliates, including
transfer agency and distribution services. The Board took into account the
fact that ADM is dedicated to providing transfer agency services
exclusively to the funds in the First Investors fund complex. As a result,
ADM can tailor its processes and services to satisfy the needs of the
International Fund's shareholder base. The Board noted that the
International Fund's shares will be distributed primarily through FIC,
which is an affiliate of FIMCO.
Furthermore, the Board considered the nature, extent and quality of the
investment management services to be provided by Vontobel to the
International Fund. The Board considered Vontobel's reputation and its
investment process as well as the background and experience of the
portfolio management team in implementing
Board Considerations of Advisory Contracts and Fees (continued)
FIRST INVESTORS EQUITY FUNDS
an international equity strategy. The Board noted that Vontobel
specializes in investing in international equities, including emerging
markets. In addition, the Board considered Vontobel's investment
resources, infrastructure and the adequacy of its compliance program.
Based on the totality of the information considered, the Trustees
concluded that the nature, extent and quality of the services to be
provided by FIMCO and its affiliates as well as Vontobel were appropriate
for the International Fund in light of its investment objective, and,
thus, supported a decision to approve the Proposed Advisory Agreement and
Proposed Sub-Advisory Agreement.
Investment Performance
At the time of the Board's consideration of the Proposed Advisory
Agreement and Proposed Sub-Advisory Agreement, the International Fund had
not commenced operations and, therefore, there was no information for the
Trustees to evaluate regarding FIMCO's and Vontobel's performance in
managing the International Fund. However, the Board evaluated Vontobel's
historical investment performance record in managing assets utilizing an
international equity mandate. In particular, the Board evaluated the
performance of the Vontobel International Equity Composite, the Phoenix
Foreign Opportunities Fund, the Penn Series International Equity Fund, and
the Vontobel Global Value Equity (ex US) Fund for the one-, three-, five-
and ten-year periods ended March 31, 2006 versus the Morgan Stanley
Capital International EAFE Index. The Board noted that the performance of
the Vontobel International Equity Composite, the Phoenix Foreign
Opportunities Fund and the Penn Series International Equity Fund was
better than the performance of the Morgan Stanley Capital International
EAFE Index (Net) for the one-, three-, five- and ten-year periods ended
March 31, 2006. The Board noted that the performance of the Vontobel
Global Value Equity (ex US) Fund was better than the performance of the
Morgan Stanley Capital International EAFE Index (Net) for most of the time
periods presented. The Trustees found Vontobel's historical investment
performance record in managing assets utilizing an international equity
mandate to be favorable.
Fund Expenses
The Board also gave consideration to the fees payable under the
International Fund's Proposed Advisory Agreement and Proposed Sub-Advisory
Agreement. In evaluating the Proposed Advisory Agreement, the Board
reviewed FIMCO's advisory fee schedule and breakpoints for the
International Fund. The Board also considered comparisons of the proposed
advisory fees to be charged by FIMCO under the Proposed Advisory Agreement
versus the fees charged by FIMCO to the First Investors Global
Fund, which invests in foreign securities, as well as fees charged by
other funds in the International Peer Group. The Board noted that FIMCO's
advisory fees for advising the International Fund under the Proposed
Advisory Agreement are identical to the fees that FIMCO charges for
advising the First Investors Global Fund and that the contractual
management fee to be charged by FIMCO was higher than the median of the
management fees charged to funds in the International Peer Group.
In evaluating the Proposed Sub-Advisory Agreement, the Board reviewed
Vontobel's sub-advisory fee schedule and breakpoints for the International
Fund. The Board also considered comparisons of the proposed sub-advisory
fees to be charged by Vontobel under the Proposed Sub-Advisory Agreement
versus the fees charged by Vontobel to other clients with a similar
investment mandate. The Board noted that Vontobel's fees for sub-advising
the International Fund under the Proposed Sub-Advisory Agreement, based on
current asset levels of the funds in the First Investors complex to be
managed by Vontobel, will be lower than the fees charged by Vontobel for
managing its two other U.S. registered investment companies and five
series of a Luxembourg investment fund, each of which has a similar
investment mandate to the International Fund.
The Board also reviewed information comparing the International Fund's
expected total expense ratio for its first fiscal year to other funds in
the International Peer Group. The Board noted that the expense ratio for
the International Fund is expected to be higher than the median of the
expense ratio of funds in the International Peer Group. This is due to the
fact that FIMCO expects the Fund to be very small in size for some time
and expects the Fund's average account size to be smaller than the average
account size of other First Investors equity funds, given the risk profile
of the International Fund. The Board noted management's explanation
regarding the impact that the Fund's size and its average account size
have on the Fund's total expense ratio. Furthermore, the Board noted that
FIMCO has contractually agreed to assume certain Fund expenses so that
total annual fund operating expenses through the end of the International
Fund's first fiscal year do not exceed a specified level for each class of
shares of the International Fund.
The foregoing comparisons assisted the Trustees by providing them with a
basis for evaluating the International Fund's management fee and expense
ratio on a relative basis.
Profitability
Since the advisory relationship between FIMCO and the International Fund,
and the sub-advisory relationship between FIMCO, Vontobel and the
International Fund, are
Board Considerations of Advisory Contracts and Fees (continued)
FIRST INVESTORS EQUITY FUNDS
new, the Board did not consider the costs of the services to be provided
and profitability of FIMCO, Vontobel and their respective affiliates from
the relationship with the International Fund. However, the Board noted
that FIMCO will pay Vontobel a sub-advisory fee from its own advisory fee
rather than the International Fund paying Vontobel a fee directly and that
Vontobel's fees for sub-advising the International Fund under the Proposed
Sub-Advisory Agreement, based on current asset levels of the funds in the
First Investors complex to be managed by Vontobel, will be lower than the
fees charged by Vontobel for managing its two other U.S. registered
investment companies and five series of a Luxembourg investment fund, each
of which has a similar investment mandate to the Fund.
Economies of Scale
With respect to whether economies of scale will be realized by FIMCO as
the International 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 Proposed Advisory Agreement fee
schedule for the International Fund includes breakpoints to account for
management economies of scale. In addition, the Board considered that the
fees paid to Vontobel are paid by FIMCO and not the International Fund.
However, the Board noted that FIMCO negotiated breakpoints in Vontobel's
fees based on the levels of assets in the International Fund as well as
any other funds in the First Investors fund complex managed by Vontobel.
"Fall Out" or Ancillary Benefits
The Board considered the "fall-out" or ancillary benefits that may accrue
to FIMCO as a result of its relationship with the International Fund. In
that regard, the Board considered the fact that FIMCO receives proprietary
and third-party research from broker-dealers that execute brokerage
transactions for many of the funds in the First Investors fund complex,
which may include the International Fund. The Board also considered that
ADM, FIC and other affiliates of FIMCO may receive fees or income as a
result of FIMCO's management of the International Fund. The Board also
considered the "fall-out" or ancillary benefits that may accrue to
Vontobel as a result of the sub-advisory relationship with the
International Fund, including greater exposure in the marketplace with
respect to the sub-adviser's investment process, expanding the level of
assets under management by Vontobel and potentially increased
opportunities for soft dollar arrangements. With regard to these
arrangements, the Board noted that Vontobel may direct the International
Fund's brokerage transactions to certain brokers to obtain research and
other services, which may be used in servicing other clients of Vontobel.
However, the Board noted that Vontobel must select brokers based on the
International Fund's requirements for seeking best execution.
After review of this information, the Trustees concluded that the
potential benefits accruing to FIMCO and its affiliates as well as
Vontobel by virtue of their relationship with the International Fund are
fair and reasonable.
* * *
In summary, based on the various considerations described above, the
Trustees, including a majority of the independent Trustees, concluded that
the proposed advisory fee and proposed sub-advisory fee are reasonable and
that the approval of the Proposed Advisory Agreement and Proposed
Sub-Advisory Agreement are in the best interests of the International
Fund, and as a result approved the Proposed Advisory Agreement and
Proposed Sub-Advisory Agreement.
Board Considerations of Advisory Contracts and Fees (continued)
FIRST INVESTORS EQUITY FUNDS
Consideration of the Amended Sub-Advisory Agreement with Wellington
Management Company, LLP ("WMC") for the All-Cap Growth Fund
At a meeting held on August 17, 2006 ("August Meeting"), the Board,
including a majority of the non-interested or independent Trustees,
approved an amended sub-advisory agreement with WMC with respect to the
All-Cap Growth Fund (the "Amended Sub-Advisory Agreement"). WMC requested
the Board approve an increase in its sub-advisory fee and the Amended
Sub-Advisory Agreement provides for an increase in the sub-advisory fee
payable to WMC.
With respect to the Board's consideration of the Amended Sub-Advisory
Agreement, the Trustees reviewed information provided by WMC in advance of
the August Meeting regarding its request for the proposed sub-advisory fee
increase with respect to the All-Cap Growth Fund. Such information
included a comparison of the proposed sub-advisory fee rate to the
sub-advisory fee rates charged by WMC for providing investment advisory
services to other accounts with objectives similar to the All-Cap Growth
Fund, as well as fee rates charged by other sub-advisers to certain
investment companies in the same Peer Group as the All-Cap Growth Fund. In
addition, the Trustees considered their deliberations in connection with
the May Meeting at which the Board approved the renewal of the current
sub-advisory agreement with WMC with respect to the All-Cap Growth Fund.
In considering the Amended Sub-Advisory Agreement with WMC for the All-Cap
Growth Fund, the independent Trustees received assistance from and met
separately with independent legal counsel. The Trustees did not find it
practicable to, and did not, assign relative weights to the specific
factors considered in reaching their conclusions and determination to
approve the Amended Sub-Advisory Agreement. Rather, the approval
determination was 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 decision to approve the Amended
Sub-Advisory Agreement.
Nature, Extent and Quality of Services
The Board considered the nature, extent and quality of the investment
management services provided by WMC to the All-Cap Growth Fund. In this
regard, in addition to considering their deliberations in connection with
the May Meeting (see discussion above related to the May Meeting), the
Trustees considered WMC's representations that: (i) there have been no
material changes to the investment process or strategies utilized for the
All-Cap Growth Fund by WMC; (ii) there have been no material changes to
personnel responsible for the day-to-day management of the All-Cap Growth
Fund; and (iii) there have been no changes to the nature and level of
services
provided by WMC to the All-Cap Growth Fund. In addition, the Trustees
considered that the quality and quantity of the services to be provided by
FIMCO and WMC with respect to the All-Cap Growth Fund are not expected to
change. The Board also considered that FIMCO supported approval of the
Amended Sub-Advisory Agreement. Based on the totality of the information
considered, the Trustees concluded that the Funds were likely to continue
to benefit from the nature, extent and quality of WMC's services and that
WMC has the ability to continue to provide these services.
Investment Performance
In addition to the performance information considered at the May Meeting
(described above), the Board noted that recent performance data provided
by WMC in connection with the August Meeting showed that the All-Cap
Growth Fund's annualized performance was in the second highest quintile of
its Peer Group for the five-year period ended July 31, 2006.
Sub-Advisory Fees
The Board gave substantial consideration to the proposed sub-advisory fees
payable under the All-Cap Growth Fund's Amended Sub-Advisory Agreement.
The Board reviewed the information provided by WMC comparing the All-Cap
Growth Fund's proposed sub-advisory fee rate (at the Fund's current asset
level) to other accounts managed by WMC with a similar investment mandate
as well as the fee rates charged by other sub-advisers to certain
investment companies in the same Peer Group as the All-Cap Growth Fund.
Based on a review of this information, the Board noted that the effective
fee rate at the current asset level of the All-Cap Growth Fund under the
proposed fee schedule with WMC would be lower than the average and median
effective fee rate of the composite of other accounts managed by WMC with
a similar investment mandate to the All-Cap Growth Fund. Furthermore, the
Board noted that the effective fee rate at the current asset level under
the proposed fee schedule with WMC appeared comparable to the median fee
charged by other sub-advisers to investment companies with assets between
$150 million and $1 billion in the same Peer Group as the All-Cap Growth
Fund, excluding index and quantitative funds.
Profitability and Economies of Scale
The Board considered that the sub-advisory fees that are paid to WMC are
paid by FIMCO rather than the All-Cap Growth Fund paying WMC a fee
directly, and that the management fee paid by the All-Cap Growth Fund will
remain the same. The Board also noted that FIMCO will be paying more in
sub-advisory fees under the Amended Sub-Advisory Agreement, which will
reduce FIMCO's profitability for managing the All-Cap Growth Fund. The
Board further noted that there are
Board Considerations of Advisory Contracts and Fees (continued)
FIRST INVESTORS EQUITY FUNDS
breakpoints in FIMCO's and WMC's fee schedules based on the level of
assets in the All-Cap Growth Fund.
"Fall Out" or Ancillary Benefits
The Board considered their previous deliberations in connection with the
May Meeting (described above) regarding the "fall-out" or ancillary
benefits that may accrue to WMC as a result of its relationship with the
All-Cap Growth Fund and noted that there would be no change in those
benefits under the Amended Sub-Advisory Agreement. After review of this
information, the Board concluded that the benefits accruing to WMC by
virtue of its relationship to the All-Cap Growth Fund are fair and
reasonable.
* * *
In summary, based on the various considerations described above, the
Trustees, including a majority of the independent Trustees, concluded that
it was in the best interests of the All-Cap Growth Fund to continue to
receive sub-advisory services from WMC. Moreover, the Trustees concluded
that the proposed sub-advisory fee is reasonable and that the approval of
the Amended Sub-Advisory Agreement is in the best interests of the All-Cap
Growth Fund, and as a result approved the Amended Sub-Advisory Agreement
with WMC for the All-Cap Growth Fund.
Fund Expenses
TOTAL RETURN FUND
The examples below show the ongoing costs (in dollars) of investing in your
Fund and will help you in comparing these costs with costs of other mutual
funds. Please refer to page 3 for a detailed explanation of the information
presented in these examples.
- --------------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
(4/1/06) (9/30/06) (4/1/06--9/30/06)*
- --------------------------------------------------------------------------------------------------
Expense Example -- Class A Shares
Actual $1,000.00 $1,005.93 $6.79
Hypothetical
(5% annual return before expenses) $1,000.00 $1,018.30 $6.83
- --------------------------------------------------------------------------------------------------
Expense Example -- Class B Shares
Actual $1,000.00 $1,003.19 $10.29
Hypothetical
(5% annual return before expenses) $1,000.00 $1,014.79 $10.35
- --------------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio of 1.35% for Class A shares and 2.05% for
Class B shares, multiplied by the average account value over the period, multiplied by 183/365
(to reflect the one-half year period).
Portfolio Composition
TOP TEN SECTORS
(BAR CHART DATA:)
Financials 13.6%
Consumer Discretionary 11.1%
Information Technology 10.3%
U.S. Agency Obligations 9.8%
Mortgage-Backed Certificates 9.0%
Health Care 7.9%
Industrials 7.9%
Consumer Staples 7.6%
Energy 4.8%
Materials 4.6%
Portfolio holdings and allocations are subject to change. Percentages
are as of September 30, 2006, and are based on the total market value of
investments.
Cumulative Performance Information
TOTAL RETURN FUND
Comparison of change in value of $10,000 investment in the First Investors
Total Return Fund (Class A shares), the Merrill Lynch U.S. Corporate &
Government Master Index and the Standard & Poor's 500 Index.
First Investors Total Return Fund
Graph Plot Points
for the periods Ended 9/30/06
Merrill Lynch
Total Return S&P 500 U.S. Corporate and Government
Fund Index Master Index
Dec-96 9,425 10,000 10,000
Dec-97 11,130 13,336 10,978
Sep-98 11,660 14,136 11,997
Sep-99 13,001 18,066 11,819
Sep-00 15,428 20,465 12,611
Sep-01 12,758 15,017 14,302
Sep-02 11,299 11,940 15,605
Sep-03 13,060 14,853 16,574
Sep-04 14,321 16,913 17,126
Sep-05 15,645 18,985 17,592
Sep-06 16,622 21,034 18,186
(INSET BOX IN CHART READS:)
Average Annual Total Returns*
Class A Shares N.A.V. Only S.E.C. Standardized
One Year 6.24% 0.13%
Five Years 5.43% 4.19%
Ten Years 6.36% 5.74%
Class B Shares
One Year 5.53% 1.53%
Five Years 4.69% 4.35%
Ten Years 5.69% 5.69%
The graph compares a $10,000 investment in the First Investors Total
Return Fund (Class A shares) beginning 12/31/96 with theoretical
investments in the Merrill Lynch Corporate & Government Master Index and
the Standard & Poor's 500 Index (the "Indices"). The Merrill Lynch U.S.
Corporate & Government Master Index tracks the performance of U.S.
dollar-denominated investment grade U.S. Government and corporate public
debt issued in the U.S. domestic bond market, excluding collateralized
products such as mortgage pass-through and assets backed securities.
Qualifying bonds have at least one year to maturity, a fixed coupon
schedule and minimum amount outstanding of $1 billion for U.S.
Treasuries and $150 million for all other securities. The Standard &
Poor's 500 Index is an unmanaged capitalization-weighted index of 500
stocks designed to measure performance of the broad domestic economy
through changes in the aggregate market value of such stocks, which
represent all major industries. It is not possible to invest directly in
these Indices. In addition, the Indices do not take into account fees
and expenses that an investor would incur in purchasing securities in
these Indices. For purposes of the graph and the accompanying table,
unless otherwise indicated, it has been assumed that the maximum sales
charge was deducted from the initial $10,000 investment in the Fund and
all dividends and distributions were reinvested. Class B shares
performance may be greater than or less than that shown in the line
graph above for Class A shares based on differences in sales loads and
fees paid by shareholders investing in the different classes.
* Average Annual Total Return figures (for the periods ended 9/30/06)
include the reinvestment of all dividends and distributions. "N.A.V.
Only" returns are calculated without sales charges. The Class A "S.E.C.
Standardized" returns shown are based on the maximum sales charge of
5.75% (prior to 6/17/02, the maximum sales charge was 6.25%) . The Class
B "S.E.C. Standardized" returns are adjusted for the applicable deferred
sales charge (maximum of 4% in the first year). During the periods
shown, some of the expenses of the Fund were waived or assumed. If such
expenses had been paid by the Fund, the Class A "S.E.C. Standardized"
Average Annual Total Return for One Year, Five Years and Ten Years would
have been 0.08%, 4.01% and 5.51%, respectively. The Class B "S.E.C.
Standardized" Average Annual Total Return for One Year, Five Years and
Ten Years would have been 1.48%, 4.16% and 5.46%, respectively. Results
represent past performance and do not indicate future results. The graph
and the returns shown do not reflect the deduction of taxes that a
shareholder would pay on distributions or the redemption of fund shares.
Investment return and principal value of an investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than
the original cost. Merrill Lynch U.S. Corporate & Government Master
Index figures are from Merrill Lynch & Co., Standard & Poor's 500 Index
figures are from Standard & Poor's and all other figures are from First
Investors Management Company, Inc.
Portfolio of Investments
TOTAL RETURN FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
COMMON STOCKS--60.7%
Consumer Discretionary--10.9%
60,000 * Blockbuster, Inc. - Class "A" $230,400 $7
27,700 Carnival Corporation 1,302,731 37
59,450 CBS Corporation - Class "B" 1,674,707 48
56,000 Clear Channel Communications, Inc. 1,615,600 46
53,800 * Cost Plus, Inc. 643,986 18
79,300 Dollar General Corporation 1,080,859 31
73,600 * Eddie Bauer Holdings, Inc. 791,200 23
56,200 Foot Locker, Inc. 1,419,050 41
14,500 Genuine Parts Company 625,385 18
108,100 H&R Block, Inc. 2,350,094 68
48,000 Home Depot, Inc. 1,740,960 50
15,600 J.C. Penney Company, Inc. (Holding Co.) 1,066,884 31
29,000 Jones Apparel Group, Inc. 940,760 27
36,500 Kenneth Cole Productions, Inc. - Class "A" 889,505 26
43,600 Leggett & Platt, Inc. 1,091,308 31
58,000 * Lincoln Educational Services Corporation 948,880 27
61,000 McDonald's Corporation 2,386,320 69
21,100 Michaels Stores, Inc. 918,694 26
57,200 * Morgans Hotel Group Company 715,000 21
48,300 Movado Group, Inc. 1,227,786 35
59,800 Newell Rubbermaid, Inc. 1,693,536 49
67,300 Orient-Express Hotels, Ltd. 2,515,674 72
20,200 Polo Ralph Lauren Corporation - Class "A" 1,306,738 38
76,400 * Quiksilver, Inc. 928,260 27
87,600 RadioShack Corporation 1,690,680 49
25,200 Sherwin-Williams Company 1,405,656 40
26,000 * Steiner Leisure, Ltd. 1,093,300 31
33,150 * Viacom, Inc. - Class "B" 1,232,517 35
155,200 Westwood One, Inc. 1,098,816 32
40,860 * Wyndham Worldwide Corporation 1,142,854 33
- -------------------------------------------------------------------------------------------------------
37,768,140 1,086
- -------------------------------------------------------------------------------------------------------
Consumer Staples--4.5%
42,800 Altria Group, Inc. 3,276,340 94
43,800 Avon Products, Inc. 1,342,908 38
250 * Bare Escentuals, Inc. 6,788 --
38,700 * Chattem, Inc. 1,359,144 39
14,800 Coca-Cola Company 661,264 19
- -------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
TOTAL RETURN FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Consumer Staples (continued)
34,600 CVS Corporation $1,111,352 $32
107,400 Nu Skin Enterprises, Inc. - Class "A" 1,881,648 54
14,300 PepsiCo, Inc. 933,218 27
96,200 * Prestige Brands Holdings, Inc. 1,071,668 31
22,300 Procter & Gamble Company 1,382,154 40
28,155 Tootsie Roll Industries, Inc. 825,223 24
26,000 Wal-Mart Stores, Inc. 1,282,320 37
15,900 WD-40 Company 567,153 16
- -------------------------------------------------------------------------------------------------------
15,701,180 451
- -------------------------------------------------------------------------------------------------------
Energy--4.6%
18,800 Anadarko Petroleum Corporation 824,004 24
230 * Aventine Renewable Energy Holdings, Inc. 4,920 --
28,000 Chesapeake Energy Corporation 811,440 23
25,200 ConocoPhillips 1,500,156 43
32,700 ExxonMobil Corporation 2,194,170 63
5,600 * Houston Exploration Company 308,840 9
2,197 Hugoton Royalty Trust 57,891 2
4,793 Marathon Oil Corporation 368,582 11
22,600 Noble Corporation 1,450,468 42
6,200 * PHI, Inc. - Non Voting Shares 188,914 5
28,800 Sasol, Ltd. (ADR) 947,232 27
41,500 Suncor Energy, Inc. 2,990,075 86
23,900 * Swift Energy Company 999,498 29
200 Technip SA (ADR) 11,394 --
27,500 * Transocean, Inc. 2,013,825 58
33,866 XTO Energy, Inc. 1,426,775 41
- -------------------------------------------------------------------------------------------------------
16,098,184 463
- -------------------------------------------------------------------------------------------------------
Financials--9.3%
15,000 American Express Company 841,200 24
28,000 American International Group, Inc. 1,855,280 53
3,080 Ameriprise Financial, Inc. 144,452 4
37,400 Astoria Financial Corporation 1,152,668 33
41,600 Bank of America Corporation 2,228,512 64
47,000 Brookline Bancorp, Inc. 646,250 19
38,100 Citigroup, Inc. 1,892,427 54
55,500 Colonial BancGroup, Inc. 1,359,750 39
49,600 JPMorgan Chase & Company 2,329,216 67
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Financials (continued)
17,700 Lehman Brothers Holdings, Inc. $1,307,322 $38
20,900 Merrill Lynch & Company, Inc. 1,634,798 47
25,700 Morgan Stanley 1,873,787 54
64,900 New York Community Bancorp, Inc. 1,063,062 30
70,900 NewAlliance Bancshares, Inc. 1,038,685 30
42,232 North Fork Bancorporation, Inc. 1,209,524 35
14,000 Plum Creek Timber Company, Inc. (REIT) 476,560 14
36,900 South Financial Group, Inc. 960,507 28
64,575 Sovereign Bancorp, Inc. 1,389,008 40
18,000 SunTrust Banks, Inc. 1,391,040 40
56,700 U.S. Bancorp 1,883,574 54
40,445 U.S.B. Holding Company, Inc. 892,217 26
28,000 Wachovia Corporation 1,562,400 45
38,000 Washington Mutual, Inc. 1,651,860 47
41,000 Wells Fargo & Company 1,483,380 43
- -------------------------------------------------------------------------------------------------------
32,267,479 928
- -------------------------------------------------------------------------------------------------------
Health Care--7.8%
46,800 Abbott Laboratories 2,272,608 65
27,800 Aetna, Inc. 1,099,490 32
13,400 * Amgen, Inc. 958,502 27
8,126 Baxter International, Inc. 369,408 11
15,500 Biomet, Inc. 498,945 14
28,400 * Boston Scientific Corporation 420,036 12
16,700 * Charles River Laboratories International, Inc. 724,947 21
6,200 * Genentech, Inc. 512,740 15
48,100 Johnson & Johnson 3,123,614 90
14,000 * Laboratory Corporation of America Holdings 917,980 26
22,400 Medtronic, Inc. 1,040,255 30
24,700 Merck & Company, Inc. 1,034,930 30
13,400 * Momenta Pharmaceuticals, Inc. 181,168 5
121,080 Pfizer, Inc. 3,433,829 99
31,800 Sanofi-Aventis (ADR) 1,414,146 41
53,700 * St. Jude Medical, Inc. 1,895,073 54
12,400 Stryker Corporation 614,916 18
31,400 * Thermo Electron Corporation 1,234,962 35
21,000 * Triad Hospitals, Inc. 924,630 27
29,700 * TriZetto Group, Inc. 449,658 13
- -------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
TOTAL RETURN FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Health Care (continued)
15,550 UnitedHealth Group, Inc. $765,060 $22
14,000 * Waters Corporation 633,920 18
48,900 Wyeth 2,486,076 71
- -------------------------------------------------------------------------------------------------------
27,006,893 776
- -------------------------------------------------------------------------------------------------------
Industrials--8.3%
43,900 3M Company 3,267,038 94
2,500 * Acco Brands Corporation 55,650 2
24,000 Alexander & Baldwin, Inc. 1,064,880 31
15,530 Avis Budget Group, Inc. 284,044 8
28,200 Barnes Group, Inc. 495,192 14
43,200 * BE Aerospace, Inc. 911,088 26
25,100 Burlington Northern Santa Fe Corporation 1,843,344 53
11,100 Eaton Corporation 764,235 22
63,600 * Gardner Denver, Inc. 2,103,888 61
12,900 Harsco Corporation 1,001,685 29
55,400 Honeywell International, Inc. 2,265,860 65
29,000 Illinois Tool Works, Inc. 1,302,100 37
79,900 Knoll, Inc. 1,613,980 46
15,900 Lockheed Martin Corporation 1,368,354 39
55,500 * Navigant Consulting, Inc. 1,113,330 32
26,100 Northrop Grumman Corporation 1,776,627 51
31,500 * PGT, Inc. 442,890 13
56,300 * Pinnacle Airlines Corporation 417,183 12
27,700 Precision Castparts Corporation 1,749,532 50
14,000 Steelcase, Inc. - Class "A" 219,660 6
39,300 TAL International Group, Inc. 833,553 24
49,300 Tyco International, Ltd. 1,379,907 40
41,500 United Technologies Corporation 2,629,025 76
- -------------------------------------------------------------------------------------------------------
28,903,045 831
- -------------------------------------------------------------------------------------------------------
Information Technology--10.6%
19,400 Amphenol Corporation - Class "A" 1,201,442 34
45,000 * Arris Group, Inc. 515,700 15
84,000 * Cisco Systems, Inc. 1,932,000 56
66,200 * Electronics for Imaging, Inc. 1,514,656 44
120,100 * EMC Corporation 1,438,798 41
85,700 * Entrust, Inc. 296,522 8
35,476 First Data Corporation 1,489,992 43
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Information Technology (continued)
46,400 Hewlett-Packard Company $1,702,415 $49
52,600 Intel Corporation 1,081,982 31
33,100 International Business Machines Corporation 2,712,214 78
23,800 * International Rectifier Corporation 829,192 24
16,800 * Komag, Inc. 536,928 15
13,600 * Lam Research Corporation 616,488 18
102,600 Microsoft Corporation 2,804,058 81
77,700 Motorola, Inc. 1,942,500 56
29,000 * NCI, Inc. - Class "A" 347,710 10
103,500 Nokia Corporation - Class "A" (ADR) 2,037,915 59
32,800 * OmniVision Technologies, Inc. 468,056 13
99,600 * Openwave Systems, Inc. 932,256 27
69,900 * Parametric Technology Corporation 1,220,454 35
31,600 * Paxar Corporation 631,368 18
103,700 * Powerwave Technologies, Inc. 788,120 23
39,500 QUALCOMM, Inc. 1,435,825 41
104,500 * Silicon Image, Inc. 1,329,240 38
97,800 * Smart Modular Technologies (WWH), Inc. 975,066 28
106,600 * Symantec Corporation 2,268,448 65
113,900 * TIBCO Software, Inc. 1,022,822 29
27,100 * Varian Semiconductor Equipment Associates, Inc. 994,570 29
37,900 * VeriSign, Inc. 765,580 22
52,000 Xilinx, Inc. 1,141,400 33
- -------------------------------------------------------------------------------------------------------
36,973,717 1,063
- -------------------------------------------------------------------------------------------------------
Materials--3.5%
31,300 Ashland, Inc. 1,996,314 58
82,500 Celanese Corporation 1,476,750 43
32,500 Commercial Metals Company 660,725 19
28,900 Dow Chemical Company 1,126,522 32
18,900 Freeport-McMoRan Copper &
Gold, Inc. - Class "B" 1,006,614 29
32,200 Lubrizol Corporation 1,472,506 42
13,800 PPG Industries, Inc. 925,704 27
18,900 Praxair, Inc. 1,118,124 32
55,500 RPM International, Inc. 1,053,945 30
33,300 Temple-Inland, Inc. 1,335,330 38
- -------------------------------------------------------------------------------------------------------
12,172,534 350
- -------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
TOTAL RETURN FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
Shares or For Each
Principal $10,000 of
Amount Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Telecommunication Services--.7%
46,600 AT&T, Inc. $1,517,296 $44
21,100 Verizon Communications, Inc. 783,443 22
- -------------------------------------------------------------------------------------------------------
2,300,739 66
- -------------------------------------------------------------------------------------------------------
Utilities--.5%
32,800 Atmos Energy Corporation 936,440 27
21,500 Consolidated Edison, Inc. 993,300 28
- -------------------------------------------------------------------------------------------------------
1,929,740 55
- -------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $171,193,752) 211,121,651 6,069
- -------------------------------------------------------------------------------------------------------
CORPORATE BONDS--12.0%
Aerospace/Defense--.1%
$500M Precision Castparts Corp., 5.6%, 2013 497,931 14
- -------------------------------------------------------------------------------------------------------
Automotive--.2%
500M Daimler Chrysler NA Holdings Corp.,
5.75%, 2009 502,362 15
- -------------------------------------------------------------------------------------------------------
Financial--1.1%
750M CIT Group, Inc., 7.75%, 2012 831,343 24
Ford Motor Credit Co.:
250M 6.625%, 2008 246,317 7
677M 9.75%, 2010 + 699,552 20
1,000M Goldman Sachs Group, Inc., 6.45%, 2036 1,023,890 29
1,000M HSBC Finance Corp., 5%, 2015 968,280 28
- -------------------------------------------------------------------------------------------------------
3,769,382 108
- -------------------------------------------------------------------------------------------------------
Financial Services--2.4%
950M Citigroup, Inc., 6%, 2033 964,652 28
500M Hibernia Corp., 5.35%, 2014 488,034 14
760M Independence Community Bank Corp.,
4.9%, 2010 744,609 21
500M JPMorgan Chase & Co., 5.6%, 2011 508,924 15
1,000M Lincoln National Corp., 6.5%, 2008 1,016,388 29
765M Marshall & Ilsley Bank, 5.2%, 2017 734,115 21
500M Merrill Lynch & Co., 4.79%, 2010 492,786 14
853M National City Bank of Kentucky, 6.3%, 2011 889,220 26
1,000M Nationsbank Corp., 7.8%, 2016 1,166,670 33
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Financial Services (continued)
$1,000M State Street Bank & Trust, 5.3%, 2016 $995,885 $29
335M Washington Mutual, Inc., 5.95%, 2013 342,429 10
- -------------------------------------------------------------------------------------------------------
8,343,712 240
- -------------------------------------------------------------------------------------------------------
Food/Beverage/Tobacco--.7%
1,000M Altria Group, Inc., 7%, 2013 1,091,858 31
200M Bottling Group, LLC, 5%, 2013 196,615 6
1,170M Bunge Limited Finance Co., 5.875%, 2013 1,165,800 34
- -------------------------------------------------------------------------------------------------------
2,454,273 71
- -------------------------------------------------------------------------------------------------------
Food/Drug--.8%
600M Delhaize America, Inc., 8.125%, 2011 646,973 19
1,000M Kroger Co., 7.8%, 2007 1,015,919 29
996M Safeway, Inc., 7%, 2007 1,011,539 29
- -------------------------------------------------------------------------------------------------------
2,674,431 77
- -------------------------------------------------------------------------------------------------------
Forest Products/Containers--.6%
International Paper Co.:
1,100M 6.75%, 2011 1,169,293 34
750M 5.85%, 2012 767,334 22
- -------------------------------------------------------------------------------------------------------
1,936,627 56
- -------------------------------------------------------------------------------------------------------
Gaming/Leisure--.2%
750M MGM Mirage, Inc., 8.5%, 2010 801,563 23
- -------------------------------------------------------------------------------------------------------
Health Care--.3%
336M Baxter International, Inc., 5.9%, 2016 345,725 10
800M Wyeth, 6.7%, 2011 851,496 24
- -------------------------------------------------------------------------------------------------------
1,197,221 34
- -------------------------------------------------------------------------------------------------------
Information Technology--.3%
900M International Business Machines Corp.,
7.5%, 2013 1,012,662 29
- -------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
TOTAL RETURN FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Manufacturing--.5%
$1,000M Ingersoll-Rand Co., 4.75%, 2015 $957,300 $28
700M Newell Rubbermaid, Inc., 6.75%, 2012 741,156 21
- -------------------------------------------------------------------------------------------------------
1,698,456 49
- -------------------------------------------------------------------------------------------------------
Media - Broadcasting--.5%
750M Comcast Cable Communications, Inc.,
7.125%, 2013 809,676 23
800M Cox Communications, Inc., 5.5%, 2015 772,238 22
- -------------------------------------------------------------------------------------------------------
1,581,914 45
- -------------------------------------------------------------------------------------------------------
Media - Diversified--.7%
750M AOL Time Warner, Inc., 6.75%, 2011 785,173 23
705M Viacom, Inc., 8.625%, 2012 795,042 23
1,000M Walt Disney Co., 5.7%, 2011 1,019,783 29
- -------------------------------------------------------------------------------------------------------
2,599,998 75
- -------------------------------------------------------------------------------------------------------
Metals/Mining--.4%
1,000M Alcoa, Inc., 6%, 2012 1,030,895 30
500M Thiokol Corp., 6.625%, 2008 507,937 14
- -------------------------------------------------------------------------------------------------------
1,538,832 44
- -------------------------------------------------------------------------------------------------------
Real Estate Investment Trusts--.4%
700M EOP Operating LP, 8.1%, 2010 760,742 22
700M Mack-Cali Realty LP, 7.75%, 2011 757,867 22
- -------------------------------------------------------------------------------------------------------
1,518,609 44
- -------------------------------------------------------------------------------------------------------
Telecommunications--.6%
800M GTE Corp., 6.84%, 2018 847,942 24
600M SBC Communications, Inc., 6.25%, 2011 620,045 18
600M Verizon New York, Inc., 6.875%, 2012 626,414 18
- -------------------------------------------------------------------------------------------------------
2,094,401 60
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Transportation--.5%
$500M Burlington Northern Santa Fe Corp., 4.3%, 2013 $470,910 $13
335M FedEx Corp., 5.5%, 2009 337,373 10
1,000M Union Pacific Corp., 7.375%, 2009 1,053,825 30
- -------------------------------------------------------------------------------------------------------
1,862,108 53
- -------------------------------------------------------------------------------------------------------
Utilities--1.4%
1,000M Carolina Power & Light, Inc., 5.15%, 2015 979,285 28
750M Consumers Energy Co., 6.375%, 2008 758,738 22
576M DPL, Inc., 6.875%, 2011 609,248 18
500M Kinder Morgan Finance Co., 5.35%, 2011 486,742 14
900M PP&L Capital Funding, Inc., 8.375%, 2007 917,715 26
900M Public Service Electric & Gas Co., 6.75%, 2016 984,104 28
- -------------------------------------------------------------------------------------------------------
4,735,832 136
- -------------------------------------------------------------------------------------------------------
Waste Management--.3%
1,000M Waste Management, Inc., 6.875%, 2009 1,039,569 30
- -------------------------------------------------------------------------------------------------------
Total Value of Corporate Bonds (cost $41,509,605) 41,859,883 1,203
- -------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY
OBLIGATIONS--9.9%
Fannie Mae:
5,000M 6.25%, 2011 5,001,390 144
5,000M 5.4%, 2013 4,960,205 143
2,000M 6%, 2014 2,003,478 58
5,000M 6%, 2015 4,972,210 143
Federal Farm Credit Bank:
4,650M 4.94%, 2012 4,569,034 131
3,000M 5.33%, 2013 2,972,661 85
Federal Home Loan Bank:
1,000M 5.125%, 2010 1,000,598 29
5,000M 6%, 2013 5,045,985 145
3,950M 6%, 2016 3,941,859 113
- -------------------------------------------------------------------------------------------------------
Total Value of U.S. Government Agency Obligations
(cost $34,569,922) 34,467,420 991
- -------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
TOTAL RETURN FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
Principal For Each
Amount $10,000 of
or Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED CERTIFICATES--9.1%
Fannie Mae--7.5%
$12,260M 5.5%, 4/1/2033 - 8/1/2035 $12,102,127 $348
5,930M 6%, 5/1/2036 5,958,895 172
5,775M 6.5%, 11/1/2033 - 6/1/2036 5,889,187 169
2,084M 7%, 3/1/2032 - 8/1/2032 2,164,663 62
- -------------------------------------------------------------------------------------------------------
26,114,872 751
- -------------------------------------------------------------------------------------------------------
Freddie Mac--.9%
2,935M 6%, 9/1/2032 - 10/1/2035 2,954,017 85
- -------------------------------------------------------------------------------------------------------
Government National Mortgage Association--.7%
1,483M 6%, 4/15/2036 1,503,578 43
999M 6.5%, 8/15/2036 1,026,757 30
- -------------------------------------------------------------------------------------------------------
2,530,335 73
- -------------------------------------------------------------------------------------------------------
Total Value of Mortgage-Backed Certificates (cost $31,635,562) 31,599,224 909
- -------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--3.4%
12,000M U.S. Treasury Notes, 4.5%, 2016
(cost $11,829,071) 11,883,288 342
- -------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS--1.1%
2,000M Jefferson Cnty., AL, Ltd. Oblig. Sch. Wts., 5%, 2024 2,085,000 60
1,500M Tobacco Settlement Fing. Corp., NJ, Rev. Bonds,
6.75%, 2039 1,681,875 48
- -------------------------------------------------------------------------------------------------------
Total Value of Municipal Bonds (cost $3,468,771) 3,766,875 108
- -------------------------------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS--.3%
Financials
14,900 Hartford Financial Services Group, Inc., 6%, 2006
(cost $683,024) 1,137,988 33
- -------------------------------------------------------------------------------------------------------
PASS THROUGH CERTIFICATES--.2%
Transportation
$635M Continental Airlines, Inc., 8.388%, 2020
(cost $663,358) 619,832 18
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--4.0%
$1,200M ChevronTexaco Funding Corp., 5.22%, 10/17/06 $1,197,041 $35
5,200M General Electric Capital Corp., 5.22%, 10/5/06 5,196,225 149
7,500M Toyota Motor Credit Co., 5.2%, 10/10/06 7,489,160 215
- -------------------------------------------------------------------------------------------------------
Total Value of Short-Term Corporate Notes (cost $13,882,426) 13,882,426 399
- -------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $309,435,491) 100.7% 350,338,587 10,072
Excess of Liabilities Over Other Assets (.7) (2,490,610) (72)
- -------------------------------------------------------------------------------------------------------
Net Assets 100.0% $347,847,977 $10,000
=======================================================================================================
* Non-income producing
+ Security exempt from registration under Rule 144A of the Securities Act of 1933 (see Note 5).
Summary of Abbreviations:
ADR American Depositary Receipts
REIT Real Estate Investment Trust
See notes to financial statements
Portfolio Manager's Letter
VALUE FUND
Dear Investor:
This is the annual report for the First Investors Value Fund for the
fiscal year ended September 30, 2006. During the period, the Fund's return
on a net asset value basis was 13.2% for Class A shares and 12.3% for
Class B shares, including dividends of 8.0 cents per share on Class A
shares and 3.2 cents per share on Class B shares.
The Fund generated strong returns across multiple sectors and market
capitalization classes. Information technology was the best performing
sector for the Fund, but strong returns were also generated in other areas
including telecommunications services, financials and consumer staples.
The top contributors to performance were Brookfield Asset Management,
JPMorgan Chase & Co., and Amvescap, PLC, all companies in the financial
sector.
The Fund's holdings in the information technology sector were, by far, the
biggest contributors to its outperformance relative to the S&P 500 Index.
Consumer staples, health care and energy were also significant factors for
the Fund's strong relative performance. Consumer discretionary was the
only major economic sector that dragged down the Fund's relative
performance.
The Fund uses a multi-cap approach. At the end of the reporting period,
the Fund had 49% of its assets invested in large-cap, 25% in mid-cap and
19% in small-cap with the remainder in cash equivalents, using Lipper's
market-cap definitions. The multi-cap strategy did not significantly
affect relative performance during the reporting period.
Thank you for placing your trust in First Investors. As always, we
appreciate the opportunity to serve your investment needs.
Sincerely,
\S\ MATTHEW S. WRIGHT
Matthew S. Wright
Portfolio Manager
November 1, 2006
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
(4/1/06) (9/30/06) (4/1/06--9/30/06)*
- --------------------------------------------------------------------------------------------------
Expense Example -- Class A Shares
Actual $1,000.00 $1,043.61 $6.97
Hypothetical
(5% annual return before expenses) $1,000.00 $1,018.25 $6.88
- --------------------------------------------------------------------------------------------------
Expense Example -- Class B Shares
Actual $1,000.00 $1,039.37 $10.53
Hypothetical
(5% annual return before expenses) $1,000.00 $1,014.74 $10.40
- --------------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio of 1.36% for Class A shares and 2.06% for
Class B shares, multiplied by the average account value over the period, multiplied by 183/365
(to reflect the one-half year period).
Value_Bar
Portfolio Composition
TOP TEN SECTORS
(BAR CHART DATA:)
Financials 24.5%
Consumer Discretionary 17.2%
Consumer Staples 10.0%
Industrials 8.3%
Materials 6.9%
Energy 6.8%
Health Care 5.0%
Information Technology 4.8%
Utilities 4.6%
Telecommunication Services 4.0%
Portfolio holdings and allocations are subject to change. Percentages
are as of September 30, 2006, and are based on the total market value of
investments.
Cumulative Performance Information
VALUE FUND
Comparison of change in value of $10,000 investment in the First Investors
Value Fund (Class A shares) and the Standard & Poor's 500 Index.
First Investors Value Fund
Graph Plot Points
for the periods Ended 9/30/06
Value S&P 500
Fund Index
Oct-96 9,425 10,000
Oct-97 10,553 13,211
Sep-98 12,247 14,905
Sep-99 13,715 19,048
Sep-00 16,126 21,578
Sep-01 12,097 15,834
Sep-02 8,911 12,589
Sep-03 10,608 15,661
Sep-04 12,790 17,833
Sep-05 14,365 20,018
Sep-06 16,264 22,178
(INSET BOX IN CHART READS:)
Average Annual Total Returns*
Class A Shares N.A.V. Only S.E.C. Standardized
One Year 13.22% 6.76%
Five Years 6.10% 4.86%
Ten Years 6.11% 5.48%
Class B Shares
One Year 12.34% 8.34%
Five Years 5.34% 5.01%
Ten Years 5.41% 5.41%
The graph compares a $10,000 investment in the First Investors Value Fund
(Class A shares) beginning 10/31/96 with a theoretical investment in the
Standard & Poor's 500 Index (the "Index"). The Index is an unmanaged
capitalization-weighted index of 500 stocks designed to measure
performance of the broad domestic economy through changes in the aggregate
market value of such stocks, which represent all major industries. It is
not possible to invest directly in this Index. In addition, the Index does
not take into account fees and expenses that an investor would incur in
purchasing securities in this Index. For purposes of the graph and the
accompanying table, unless otherwise indicated, it has been assumed that
the maximum sales charge was deducted from the initial $10,000 investment
in the Fund and all dividends and distributions were reinvested. Class B
shares performance may be greater than or less than that shown in the line
graph above for Class A shares based on differences in sales loads and
fees paid by shareholders investing in the different classes.
* Average Annual Total Return figures (for the periods ended 9/30/06)
include the reinvestment of all dividends and distributions. "N.A.V. Only"
returns are calculated without sales charges. The Class A "S.E.C.
Standardized" returns shown are based on the maximum sales charge of 5.75%
(prior to 6/17/02 the maximum sales charge was 6.25%) . The Class B "S.E.C.
Standardized" returns are adjusted for the applicable deferred sales charge
(maximum of 4% in the first year). During certain of the periods shown, some
of the expenses of the Fund were waived or assumed. If such expenses had
been paid by the Fund, the Class A "S.E.C. Standardized" Average Annual
Total Return for Ten Years would have been 5.47% . The Class B "S.E.C.
Standardized" Average Annual Total Return for Ten Years would have been
5.40% . Results represent past performance and do not indicate future
results. The graph and the returns shown do not reflect the deduction of
taxes that a shareholder would pay on distributions or the redemption of
fund shares. Investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than the original cost. Standard & Poor's 500 Index figures are from
Standard & Poor's and all other figures are from First Investors Management
Company, Inc.
Portfolio of Investments
VALUE FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
COMMON STOCKS--91.1%
Consumer Discretionary--17.2%
16,100 Autoliv, Inc. $887,271 $24
63,400 Bob Evans Farms, Inc. 1,919,752 53
44,900 Carnival Corporation 2,111,647 58
34,300 CBS Corporation - Class "B" 966,231 26
91,500 Clear Channel Communications, Inc. 2,639,775 72
168,300 Dollar General Corporation 2,293,929 63
107,100 Family Dollar Stores, Inc. 3,131,604 86
20,100 Gannett Company, Inc. 1,142,283 31
46,200 Genuine Parts Company 1,992,606 55
55,100 H&R Block, Inc. 1,197,874 33
18,525 * Hanesbrands, Inc. 416,998 11
72,600 Home Depot, Inc. 2,633,202 72
24,700 J.C. Penney Company, Inc. (Holding Co.) 1,689,233 46
50,600 Jones Apparel Group, Inc. 1,641,464 45
47,700 Kenneth Cole Productions, Inc. - Class "A" 1,162,449 32
20,274 Kimball International, Inc. - Class "B" 391,288 11
89,000 Lee Enterprises, Inc. 2,246,360 61
101,400 Leggett & Platt, Inc. 2,538,042 69
27,900 Liz Claiborne, Inc. 1,102,329 30
29,000 Magna International, Inc. - Class "A" 2,117,870 58
105,200 McDonald's Corporation 4,115,424 113
104,100 Modine Manufacturing Company 2,532,753 69
14,000 Natuzzi SpA (ADR) 101,360 3
89,700 New York Times Company - Class "A" 2,061,306 56
42,500 Newell Rubbermaid, Inc. 1,203,600 33
78,800 OSI Restaurant Partners, Inc. 2,498,748 68
102,600 Pearson PLC (ADR) 1,461,024 40
108,100 Talbots, Inc. 2,945,725 81
54,700 Tiffany & Company 1,816,040 50
139,800 Time Warner, Inc. 2,548,554 70
77,800 Tribune Company 2,545,616 70
123,700 Walt Disney Company 3,823,567 105
32,920 * Wyndham Worldwide Corporation 920,772 25
- -------------------------------------------------------------------------------------------------------
62,796,696 1,719
- -------------------------------------------------------------------------------------------------------
Consumer Staples--10.0%
79,800 Anheuser-Busch Companies, Inc. 3,791,298 104
76,400 Avon Products, Inc. 2,342,424 64
77,700 Coca-Cola Company 3,471,636 95
- -------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
VALUE FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Consumer Staples (continued)
59,400 ConAgra Foods, Inc. $1,454,112 $40
34,141 Del Monte Foods Company 356,773 10
45,200 Diageo PLC (ADR) 3,211,008 88
42,200 Estee Lauder Companies, Inc. - Class "A" 1,701,926 47
15,900 Fomento Economico Mexicano SA de CV (ADR) 1,541,346 42
53,800 H.J. Heinz Company 2,255,834 62
42,100 Kimberly-Clark Corporation 2,751,656 75
86,600 Kraft Foods, Inc. - Class "A" 3,088,156 85
52,500 Ruddick Corporation 1,366,575 37
148,200 Sara Lee Corporation 2,381,574 65
56,800 Tasty Baking Company 518,584 14
106,700 Topps Company, Inc. 956,032 26
37,100 UST, Inc. 2,034,193 56
69,000 Wal-Mart Stores, Inc. 3,403,080 93
- -------------------------------------------------------------------------------------------------------
36,626,207 1,003
- -------------------------------------------------------------------------------------------------------
Energy--6.8%
49,000 Anadarko Petroleum Corporation 2,147,670 59
42,400 BP PLC (ADR) 2,780,592 76
65,917 Chevron Corporation 4,275,377 117
51,400 ConocoPhillips 3,059,842 84
38,500 Diamond Offshore Drilling, Inc. 2,786,245 76
50,900 Marathon Oil Corporation 3,914,210 107
49,200 Royal Dutch Shell PLC - Class "A" (ADR) 3,252,120 89
57,600 Tidewater, Inc. 2,545,344 70
- -------------------------------------------------------------------------------------------------------
24,761,400 678
- -------------------------------------------------------------------------------------------------------
Financials--24.0%
44,300 A.G. Edwards, Inc. 2,360,304 65
14,600 ACE, Ltd. 799,058 22
15,700 Allstate Corporation 984,861 27
18,400 American International Group, Inc. 1,219,184 33
47,300 AmSouth Bancorporation 1,373,592 38
102,800 Amvescap PLC (ADR) 2,253,376 62
59,800 Aon Corporation 2,025,426 55
102,300 Aspen Insurance Holdings, Ltd. 2,642,409 72
35,100 Assured Guaranty, Ltd. 910,143 25
148,300 Bank Mutual Corporation 1,798,879 49
88,266 Bank of America Corporation 4,728,410 130
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Financials (continued)
101,800 Bank of New York Company, Inc. $3,589,468 $98
98,250 Brookfield Asset Management, Inc. - Class "A" 4,356,405 119
80,600 Brookline Bancorp, Inc. 1,108,250 30
35,456 Chubb Corporation 1,842,294 51
50,047 Cincinnati Financial Corporation 2,405,259 66
70,100 Citigroup, Inc. 3,481,867 95
40,900 Comerica, Inc. 2,328,028 64
56,900 Eagle Hospitality Properties Trust, Inc. 529,170 15
39,200 Erie Indemnity Company - Class "A" 2,052,904 56
21,000 FBL Financial Group, Inc. - Class "A" 702,870 19
78,400 Hudson City Bancorp, Inc. 1,038,800 28
25,000 IPC Holdings, Ltd. 760,500 21
92,100 JPMorgan Chase & Company 4,325,016 118
52,100 KeyCorp 1,950,624 53
44,074 Lincoln National Corporation 2,736,114 75
41,900 Merrill Lynch & Company, Inc. 3,277,418 90
54,100 Morgan Stanley 3,944,431 108
119,200 NewAlliance Bancshares, Inc. 1,746,280 48
51,200 North Fork Bancorporation, Inc. 1,466,368 40
29,900 One Liberty Properties, Inc. (REIT) 669,760 18
55,800 Plum Creek Timber Company, Inc. (REIT) 1,899,432 52
26,400 PMI Group, Inc. 1,156,584 32
30,000 PNC Financial Services Group, Inc. 2,173,200 60
51,300 Protective Life Corporation 2,346,975 64
79,400 Regions Financial Corporation 2,921,126 80
19,300 St. Joe Company 1,058,991 29
15,800 State National Bancshares, Inc. 600,242 16
37,893 State Street Corporation 2,364,523 65
32,800 SunTrust Banks, Inc. 2,534,784 69
29,779 TD Banknorth, Inc. 860,018 24
54,000 Waddell & Reed Financial, Inc. - Class "A" 1,336,500 37
82,400 Wells Fargo & Company 2,981,232 82
- -------------------------------------------------------------------------------------------------------
87,641,075 2,400
- -------------------------------------------------------------------------------------------------------
Health Care--5.0%
68,800 Abbott Laboratories 3,340,928 91
42,700 Biomet, Inc. 1,374,513 38
41,800 GlaxoSmithKline PLC (ADR) 2,225,014 61
57,900 Johnson & Johnson 3,760,026 103
32,500 Novartis AG (ADR) 1,899,300 52
- -------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
VALUE FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Health Care (continued)
137,200 Pfizer, Inc. $3,890,992 $106
82,100 Schering-Plough Corporation 1,813,589 50
- -------------------------------------------------------------------------------------------------------
18,304,362 501
- -------------------------------------------------------------------------------------------------------
Industrials--8.3%
24,100 3M Company 1,793,522 49
29,800 Adesa, Inc. 688,678 19
2,600 Alexander & Baldwin, Inc. 115,362 3
40,300 American Power Conversion Corporation 884,988 24
29,800 Avery Dennison Corporation 1,793,066 49
11,960 Avis Budget Group, Inc. 218,748 6
51,200 Dover Corporation 2,428,928 66
72,200 Federal Signal Corporation 1,101,050 30
41,600 General Dynamics Corporation 2,981,472 82
71,300 Honeywell International, Inc. 2,916,170 80
16,200 Illinois Tool Works, Inc. 727,380 20
77,700 Masco Corporation 2,130,534 58
44,700 Norfolk Southern Corporation 1,969,035 54
22,600 Pall Corporation 696,306 19
52,600 Pitney Bowes, Inc. 2,333,862 64
12,800 SPX Corporation 684,032 19
95,500 Tyco International, Ltd. 2,673,045 73
25,700 United Parcel Service, Inc. - Class "B" 1,848,858 51
126,100 Werner Enterprises, Inc. 2,359,331 65
- -------------------------------------------------------------------------------------------------------
30,344,367 831
- -------------------------------------------------------------------------------------------------------
Information Technology--4.8%
99,400 * Agile Software Corporation 649,082 18
46,000 Automatic Data Processing, Inc. 2,177,640 60
45,700 AVX Corporation 808,433 22
79,400 Hewlett-Packard Company 2,913,186 80
65,000 Intel Corporation 1,337,050 36
12,800 International Business Machines Corporation 1,048,832 29
182,000 Methode Electronics, Inc. - Class "A" 1,730,820 47
106,600 Microsoft Corporation 2,913,378 80
57,500 Motorola, Inc. 1,437,500 39
92,800 Nokia Corporation - Class "A" (ADR) 1,827,232 50
53,900 * Planar Systems, Inc. 611,765 17
- -------------------------------------------------------------------------------------------------------
17,454,918 478
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Materials--6.9%
36,400 Air Products & Chemicals, Inc. $2,415,868 $66
33,100 Albemarle Corporation 1,798,323 49
57,200 Alcoa, Inc. 1,603,888 44
106,830 Chemtura Corporation 926,216 25
56,600 Compass Minerals International, Inc. 1,602,346 44
92,300 Dow Chemical Company 3,597,854 99
79,200 Du Pont (E.I.) de Nemours & Company 3,392,928 93
63,400 Lubrizol Corporation 2,899,282 79
60,100 MeadWestvaco Corporation 1,593,251 44
73,830 Myers Industries, Inc. 1,255,110 34
146,000 Sappi, Ltd. (ADR) 1,858,580 51
66,600 Sonoco Products Company 2,240,424 62
4,723 Tronox, Inc. - Class "B" 60,313 2
- -------------------------------------------------------------------------------------------------------
25,244,383 692
- -------------------------------------------------------------------------------------------------------
Telecommunication Services--3.8%
9,651 ALLTEL Corporation 535,630 15
76,600 AT&T, Inc. 2,494,096 68
44,400 BellSouth Corporation 1,898,100 52
11,800 CT Communications, Inc. 256,296 7
47,200 D&E Communications, Inc. 595,192 16
4,120 Embarq Corporation 199,284 5
33,800 Nippon Telegraph and Telephone
Corporation (ADR) 829,114 23
130,600 Sprint Nextel Corporation 2,239,790 61
24,000 Telephone & Data Systems, Inc. 1,010,400 28
24,000 Telephone & Data Systems, Inc. - Special Shares 980,400 27
73,828 Verizon Communications, Inc. 2,741,234 75
9,978 Windstream Corporation 131,610 4
- -------------------------------------------------------------------------------------------------------
13,911,146 381
- -------------------------------------------------------------------------------------------------------
Utilities--4.3%
32,550 American States Water Company 1,245,037 34
44,100 FPL Group, Inc. 1,984,500 54
36,100 KeySpan Corporation 1,485,154 41
79,350 MDU Resources Group, Inc. 1,772,679 48
85,900 NiSource, Inc. 1,867,466 51
37,700 Northwest Natural Gas Company 1,480,856 41
40,300 ONEOK, Inc. 1,522,937 42
- -------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
VALUE FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
Shares or For Each
Principal $10,000 of
Amount Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Utilities (continued)
51,200 Southwest Gas Corporation $1,705,984 $47
48,700 United Utilities PLC (ADR) 1,289,576 35
50,300 Vectren Corporation 1,350,555 37
- -------------------------------------------------------------------------------------------------------
15,704,744 430
- -------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $257,661,776) 332,789,298 9,113
- -------------------------------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS--.4%
Financials
56,900 Lehman Brothers Holdings, Inc., 6.25%,
2007 - Series "GIS" (cost $1,446,983) 1,564,750 42
- -------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--.4%
Telecommunication Services--.2%
27,300 Verizon South, Inc., 7%, 2041 - Series "F" 691,782 19
- -------------------------------------------------------------------------------------------------------
Utilities--.2%
25,200 Entergy Louisiana, Inc., 7.6%, 2032 636,300 17
- -------------------------------------------------------------------------------------------------------
Total Value of Preferred Stocks (cost $1,328,110) 1,328,082 36
- -------------------------------------------------------------------------------------------------------
CORPORATE BONDS--.1%
Utilities
$500M Union Electric Co., 6.75%, 2008 (cost $499,667) 510,079 14
- -------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--7.8%
ChevronTexaco Funding Corp.:
15,200M 5.2%, 10/6/06 15,186,809 416
1,100M 5.22%, 10/17/06 1,097,288 30
12,000M Toyota Motor Credit Co., 5.2%, 10/10/06 11,982,657 329
- -------------------------------------------------------------------------------------------------------
Total Value of Short-Term Corporate Notes (cost $28,266,754) 28,266,754 775
- -------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $289,203,290) 99.8% 364,458,963 9,980
Other Assets, Less Liabilities .2 730,286 20
- -------------------------------------------------------------------------------------------------------
Net Assets 100.0% $365,189,249 $10,000
=======================================================================================================
* Non-income producing
Summary of Abbreviations:
ADR American Depositary Receipts
REIT Real Estate Investment Trust
See notes to financial statements
Portfolio Managers' Letter
BLUE CHIP FUND
Dear Investor:
This is the annual report for the First Investors Blue Chip Fund for the
fiscal year ended September 30, 2006. During the period, the Fund's return
on a net asset value basis was 9.3% for Class A shares and 8.5% for Class
B shares, including dividends of 6.5 cents per share on Class A shares.
The Fund's performance was largely driven by a stable economy and good
performance in the equity markets. While the financial sector was, by far,
the best performing sector for the Fund, positive returns were generated
across all major economic sectors. The biggest contributors to performance
included Bank of America, JPMorgan Chase & Co. and Schlumberger.
The Fund's security selections in the telecommunications services,
materials and health care sectors detracted from performance relative to
the S&P 500 Index. In the telecommunications sector, the Fund was hurt by
its position in Sprint Nextel, and by the fact that it did not own
BellSouth, which performed well after agreeing to be acquired by AT&T. In
the materials sector, our holdings in Dow Chemical and our underweight
position in metals stocks were a drag on our performance. Finally, in the
health care sector, the Fund's holdings in Boston Scientific, Medtronic,
Amgen and UnitedHealth Group were detrimental to performance.
The Fund's positive contributors relative to the S&P 500 Index were strong
relative performance in the energy, information technology and utilities
sectors. In the energy sector, our position in Schlumberger and our
underweight position in natural gas related stocks helped performance. In
technology, our holdings in Oracle and Nokia helped performance, in
addition to gains we registered from several stocks the Fund no longer
holds. We were also underweight some of the poorest performers in the
technology sector. Lastly, in the utilities sector, the Fund benefited
from an underweight position, as well as a strong performance from FPL
Group.
The Fund focuses primarily on the large-cap sector, and at the end of the
reporting period, the Fund held 94% in large-caps and 5% in mid-caps
(using Lipper's market-cap definitions), with the remainder in cash
equivalents. The Fund's market-cap strategy did not significantly affect
relative performance during the reporting period.
Portfolio Managers' Letter (continued)
BLUE CHIP FUND
Thank you for placing your trust in First Investors. As always, we
appreciate the opportunity to serve your investment needs.
Sincerely,
\S\ MATTHEW S. WRIGHT
Matthew S. Wright
Portfolio Manager
\S\ CONSTANCE UNGER
Constance Unger
Assistant Portfolio Manager*
November 1, 2006
* Ms. Unger became the Fund's Assistant Portfolio Manager on July 13, 2006.
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
(4/1/06) (9/30/06) (4/1/06--9/30/06)*
- --------------------------------------------------------------------------------------------------
Expense Example -- Class A Shares
Actual $1,000.00 $1,032.41 $7.29
Hypothetical
(5% annual return before expenses) $1,000.00 $1,017.90 $7.23
- --------------------------------------------------------------------------------------------------
Expense Example -- Class B Shares
Actual $1,000.00 $1,028.49 $10.83
Hypothetical
(5% annual return before expenses) $1,000.00 $1,014.39 $10.76
- --------------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio of 1.43% for Class A shares and 2.13% for
Class B shares, multiplied by the average account value over the period, multiplied by 183/365
(to reflect the one-half year period).
Portfolio Composition
TOP TEN SECTORS
(BAR CHART DATA:)
Financials 20.0%
Information Technology 15.8%
Health Care 13.0%
Consumer Staples 11.8%
Industrials 11.8%
Consumer Discretionary 11.1%
Energy 9.5%
Materials 2.7%
Telecommunication Services 2.7%
Utilities 1.3%
Portfolio holdings and allocations are subject to change. Percentages are
as of September 30, 2006, and are based on the total market value of
investments.
Cumulative Performance Information
BLUE CHIP FUND
Comparison of change in value of $10,000 investment in the First Investors
Blue Chip Fund (Class A shares) and the Standard & Poor's 500 Index.
First Investors Blue Chip Fund
Graph Plot Points
for the periods Ended 9/30/06
Blue Chip S&P 500
Fund Index
Dec-96 9,425 10,000
Dec-97 11,879 13,336
Sep-98 11,695 14,136
Sep-99 14,605 18,066
Sep-00 17,744 20,465
Sep-01 12,264 15,017
Sep-02 9,330 11,940
Sep-03 10,983 14,853
Sep-04 11,976 16,913
Sep-05 13,264 18,985
Sep-06 14,499 21,034
(INSET BOX IN CHART READS:)
Average Annual Total Returns*
Class A Shares N.A.V. Only S.E.C. Standardized
One Year 9.31% 3.01%
Five Years 3.40% 2.18%
Ten Years 5.14% 4.52%
Class B Shares
One Year 8.50% 4.50%
Five Years 2.67% 2.31%
Ten Years 4.40% 4.40%
The graph compares a $10,000 investment in the First Investors Blue Chip
Fund (Class A shares) beginning 12/31/96 with a theoretical investment in
the Standard & Poor's 500 Index (the "Index"). The Index is an unmanaged
capitalization-weighted index of 500 stocks designed to measure
performance of the broad domestic economy through changes in the aggregate
market value of such stocks, which represent all major industries. It is
not possible to invest directly in this Index. In addition, the Index does
not take into account fees and expenses that an investor would incur in
purchasing securities in the Index. For purposes of the graph and the
accompanying table, unless otherwise indicated, it has been assumed that
the maximum sales charge was deducted from the initial $10,000 investment
in the Fund and all dividends and distributions were reinvested. Class B
shares performance may be greater than or less than that shown in the line
graph above for Class A shares based on differences in sales loads and
fees paid by shareholders investing in the different classes.
* Average Annual Total Return figures (for the periods ended 9/30/06)
include the reinvestment of all dividends and distributions. "N.A.V. Only"
returns are calculated without sales charges. The Class A "S.E.C.
Standardized" returns shown are based on the maximum sales charge of 5.75%
(prior to 6/17/02, the maximum sales charge was 6.25%) . The Class B
"S.E.C. Standardized" returns are adjusted for the applicable deferred
sales charge (maximum of 4% in the first year). During the periods shown,
some of the expenses of the Fund were waived or assumed. If such expenses
had been paid by the Fund, the Class A "S.E.C. Standardized" Average
Annual Total Return for One Year, Five Years and Ten Years would have been
2.98%, 2.09% and 4.41%, respectively. The Class B "S.E.C. Standardized"
Average Annual Total Return for One Year, Five Years and Ten Years would
have been 4.47%, 2.21% and 4.29%, respectively. Results represent past
performance and do not indicate future results. The graph and the returns
shown do not reflect the deduction of taxes that a shareholder would pay
on distributions or the redemption of fund shares. Investment return and
principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than the original cost.
Standard & Poor's 500 Index figures are from Standard & Poor's and all
other figures are from First Investors Management Company, Inc.
Portfolio of Investments
BLUE CHIP FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
COMMON STOCKS--99.6%
Consumer Discretionary--11.1%
36,200 Best Buy Company, Inc. $1,938,872 $40
41,100 Carnival Corporation 1,932,933 40
81,300 CBS Corporation - Class "B" 2,290,221 48
51,400 Clear Channel Communications, Inc. 1,482,890 31
50,696 * Comcast Corporation - Class "A" 1,868,148 39
48,900 * Comcast Corporation - Special Class "A" 1,800,009 37
99,200 Gap, Inc. 1,879,840 39
57,200 H&R Block, Inc. 1,243,528 26
62,400 Hilton Hotels Corporation 1,737,840 36
138,500 Home Depot, Inc. 5,023,395 104
14,700 * Kohl's Corporation 954,324 20
97,400 Lowe's Companies, Inc. 2,733,044 57
101,100 McDonald's Corporation 3,955,032 82
148,400 News Corporation - Class "A" 2,916,060 60
33,100 NIKE, Inc. - Class "B" 2,900,222 60
73,800 Target Corporation 4,077,450 84
258,300 Time Warner, Inc. 4,708,809 98
52,800 TJX Companies, Inc. 1,479,984 31
40,300 Tribune Company 1,318,616 27
62,600 * Viacom, Inc. - Class "B" 2,327,468 48
134,000 Walt Disney Company 4,141,940 86
30,920 * Wyndham Worldwide Corporation 864,832 18
- -------------------------------------------------------------------------------------------------------
53,575,457 1,111
- -------------------------------------------------------------------------------------------------------
Consumer Staples--11.8%
74,600 Altria Group, Inc. 5,710,630 118
68,800 Anheuser-Busch Companies, Inc. 3,268,688 68
88,600 Avon Products, Inc. 2,716,476 56
142,900 Coca-Cola Company 6,384,772 132
44,100 Coca-Cola Enterprises, Inc. 918,603 19
27,000 Colgate-Palmolive Company 1,676,700 35
36,800 Costco Wholesale Corporation 1,828,224 38
89,700 CVS Corporation 2,881,164 60
25,600 Estee Lauder Companies, Inc. - Class "A" 1,032,448 21
32,900 General Mills, Inc. 1,862,140 39
25,800 Hershey Foods Corporation 1,379,010 29
55,800 Kimberly-Clark Corporation 3,647,088 76
- -------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
BLUE CHIP FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Consumer Staples (continued)
96,900 PepsiCo, Inc. $6,323,694 $131
130,040 Procter & Gamble Company 8,059,879 167
47,800 Walgreen Company 2,121,842 44
146,100 Wal-Mart Stores, Inc. 7,205,652 150
- -------------------------------------------------------------------------------------------------------
57,017,010 1,183
- -------------------------------------------------------------------------------------------------------
Energy--9.5%
33,800 BP PLC (ADR) 2,216,604 46
159,200 Chevron Corporation 10,325,712 214
81,870 ConocoPhillips 4,873,721 101
231,000 ExxonMobil Corporation 15,500,100 322
74,600 Halliburton Company 2,122,370 44
84,200 Schlumberger, Ltd. 5,222,926 108
55,100 * Transocean, Inc. 4,034,973 84
29,200 Valero Energy Corporation 1,502,924 31
- -------------------------------------------------------------------------------------------------------
45,799,330 950
- -------------------------------------------------------------------------------------------------------
Financials--20.0%
44,000 ACE, Ltd. 2,408,120 50
27,700 Allstate Corporation 1,737,621 36
89,500 American Express Company 5,019,160 104
121,600 American International Group, Inc. 8,057,216 167
17,900 Ameriprise Financial, Inc. 839,510 17
186,166 Bank of America Corporation 9,972,913 207
117,700 Bank of New York Company, Inc. 4,150,102 86
750 * Berkshire Hathaway, Inc. - Class "B" 2,380,500 49
43,100 Capital One Financial Corporation 3,390,246 70
33,800 Chubb Corporation 1,756,248 36
250,500 Citigroup, Inc. 12,442,335 258
28,600 Fannie Mae 1,599,026 33
40,500 Freddie Mac 2,686,365 56
8,800 Goldman Sachs Group, Inc. 1,488,696 31
170,968 JPMorgan Chase & Company 8,028,657 167
19,000 Lehman Brothers Holdings, Inc. 1,403,340 29
40,500 Marsh & McLennan Companies, Inc. 1,140,075 24
36,600 Mellon Financial Corporation 1,431,060 30
47,600 Merrill Lynch & Company, Inc. 3,723,272 77
80,300 Morgan Stanley 5,854,673 121
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Financials (continued)
41,000 St. Paul Travelers Companies, Inc. $1,922,490 $40
20,500 SunTrust Banks, Inc. 1,584,240 33
56,500 U.S. Bancorp 1,876,930 39
75,600 Wachovia Corporation 4,218,480 88
62,000 Washington Mutual, Inc. 2,695,140 56
126,200 Wells Fargo & Company 4,565,916 95
- -------------------------------------------------------------------------------------------------------
96,372,331 1,999
- -------------------------------------------------------------------------------------------------------
Health Care--13.0%
93,500 Abbott Laboratories 4,540,360 94
80,800 Aetna, Inc. 3,195,640 66
75,700 * Amgen, Inc. 5,414,821 112
39,500 Baxter International, Inc. 1,795,670 37
95,700 * Boston Scientific Corporation 1,415,403 29
127,800 Bristol-Myers Squibb Company 3,184,776 66
166,800 Johnson & Johnson 10,831,992 225
80,700 Medtronic, Inc. 3,747,708 78
63,200 Merck & Company, Inc. 2,648,080 55
84,500 Novartis AG (ADR) 4,938,180 103
359,560 Pfizer, Inc. 10,197,122 212
35,200 * St. Jude Medical, Inc. 1,242,208 26
36,800 Teva Pharmaceutical Industries, Ltd. (ADR) 1,254,512 26
26,400 * Triad Hospitals, Inc. 1,162,392 24
80,800 UnitedHealth Group, Inc. 3,975,360 83
60,100 Wyeth 3,055,484 63
- -------------------------------------------------------------------------------------------------------
62,599,708 1,299
- -------------------------------------------------------------------------------------------------------
Industrials--11.8%
51,100 3M Company 3,802,862 79
36,600 Boeing Company 2,885,910 60
44,700 Caterpillar, Inc. 2,941,260 61
33,000 Dover Corporation 1,565,520 32
38,100 Emerson Electric Company 3,195,066 66
409,000 General Electric Company 14,437,700 299
55,300 Honeywell International, Inc. 2,261,770 47
29,400 Illinois Tool Works, Inc. 1,320,060 27
24,800 ITT Industries, Inc. 1,271,496 26
42,300 Lockheed Martin Corporation 3,640,338 76
78,300 Masco Corporation 2,146,986 45
- -------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
BLUE CHIP FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Industrials (continued)
34,500 Northrop Grumman Corporation $2,348,415 $49
164,900 Tyco International, Ltd. 4,615,551 96
19,000 Union Pacific Corporation 1,672,000 35
37,400 United Parcel Service, Inc. - Class "B" 2,690,556 56
93,700 United Technologies Corporation 5,935,895 123
- -------------------------------------------------------------------------------------------------------
56,731,385 1,177
- -------------------------------------------------------------------------------------------------------
Information Technology--15.8%
37,400 Accenture, Ltd. - Class "A" 1,185,954 25
34,500 Analog Devices, Inc. 1,013,955 21
15,400 * Apple Computer, Inc. 1,186,262 25
77,100 Applied Materials, Inc. 1,366,983 28
27,000 Automatic Data Processing, Inc. 1,278,180 26
234,200 * Cisco Systems, Inc. 5,386,600 112
128,200 * Corning, Inc. 3,129,362 65
166,700 * Dell, Inc. 3,807,428 79
31,500 * eBay, Inc. 893,340 19
338,600 * EMC Corporation 4,056,428 84
93,200 First Data Corporation 3,914,400 81
92,600 Hewlett-Packard Company 3,397,494 70
320,200 Intel Corporation 6,586,514 137
71,700 International Business Machines Corporation 5,875,098 122
38,600 Maxim Integrated Products, Inc. 1,083,502 22
505,300 Microsoft Corporation 13,809,849 286
96,300 Motorola, Inc. 2,407,500 50
201,200 Nokia Corporation - Class "A" (ADR) 3,961,628 82
208,100 * Oracle Corporation 3,691,694 77
40,500 QUALCOMM, Inc. 1,472,175 31
96,191 * Symantec Corporation 2,046,944 42
109,900 Texas Instruments, Inc. 3,654,175 76
55,300 * Xerox Corporation 860,468 18
- -------------------------------------------------------------------------------------------------------
76,065,933 1,578
- -------------------------------------------------------------------------------------------------------
Materials--2.7%
53,600 Alcoa, Inc. 1,502,944 31
83,956 * Cemex SA de CV (ADR) 2,525,396 52
87,900 Dow Chemical Company 3,426,342 71
57,900 DuPont (E.I.) de Nemours & Company 2,480,436 52
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Amount
Invested
Shares or For Each
Principal $10,000 of
Amount Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Materials (continued)
66,200 International Paper Company $2,292,506 $48
18,300 Newmont Mining Corporation 782,325 16
- -------------------------------------------------------------------------------------------------------
13,009,949 270
- -------------------------------------------------------------------------------------------------------
Telecommunication Services--2.6%
145,800 AT&T, Inc. 4,747,248 98
206,366 Sprint Nextel Corporation 3,539,178 73
121,500 Verizon Communications, Inc. 4,511,295 94
- -------------------------------------------------------------------------------------------------------
12,797,721 265
- -------------------------------------------------------------------------------------------------------
Utilities--1.3%
160,700 Duke Energy Corporation 4,853,140 100
30,800 FPL Group, Inc. 1,386,000 29
- -------------------------------------------------------------------------------------------------------
6,239,140 129
- -------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $345,650,190) 480,207,964 9,961
- -------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--.4%
$1,000M ChevronTexaco Funding Corp., 5.2%, 10/6/06 999,132 21
1,000M Toyota Motor Credit Co., 5.2%, 10/10/06 998,555 21
- -------------------------------------------------------------------------------------------------------
Total Value of Short-Term Corporate Notes (cost $1,997,687) 1,997,687 42
- -------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $347,647,877) 100.0% 482,205,651 10,003
Excess of Liabilities Over Other Assets -- (139,557) (3)
- -------------------------------------------------------------------------------------------------------
Net Assets 100.0% $482,066,094 $10,000
=======================================================================================================
* Non-income producing
Summary of Abbreviations:
ADR American Depositary Receipts
See notes to financial statements
Portfolio Manager's Letter
GROWTH & INCOME FUND
Dear Investor:
This is the annual report for the First Investors Growth & Income Fund for
the fiscal year ended September 30, 2006. During the period, the Fund's
return on a net asset value basis was 8.1% for Class A shares and 7.3% for
Class B shares, including dividends of 5.0 cents per share on Class A
shares.
The Fund's performance was driven by better than expected corporate
earnings, increased mergers and acquisition activity and solid performance
of the equity markets.
The Fund's absolute performance was largely the result of the Fund's
investments in the financials, technology, industrials, consumer
discretionary and materials sectors. Overall stock selection benefited
investments most notably in the technology, consumer discretionary and
health care sectors. Overweight positions in the industrials and materials
areas also contributed positively.
Notable performers included Hewlett Packard, which gained market share
versus competitors and rebounded under new leadership; Orient-Express
Hotels, which benefited from a resurgence in luxury travel and strong
pricing; and Thermo Electron, a designer and maker of instrumentation for
data collection and analysis, which benefited from a restructuring program
and strong end-market demand.
The Fund continued to benefit from strong merger and acquisitions activity
among its holdings. During the fiscal year, 13 of our holdings received
merger offers, which are either closed or still pending. The most notable
contributors were the takeover of Russell Corp. by Berkshire Hathaway, the
purchase of thrift institution Independence Community Bank by Sovereign
Financial, the takeover of specialty pharmaceutical distributor and
generic drug maker ANDRX by Watson Pharmaceuticals and the pending
takeover of crafts retailer Michaels Stores by a consortium of private
investors.
The Fund's multi-cap strategy hurt the Fund's performance relative to the
S&P 500 Index during the fiscal year. The Fund maintained a diverse
allocation strategy, which at the end of the reporting period was 54%
large cap, 21% mid cap and 25% small cap, according to Lipper's market
capitalization ranges. While the large- and mid-cap components delivered
satisfactory results, stock selection in the small-cap area detracted from
performance.
Thank you for placing your trust in First Investors. As always, we
appreciate the opportunity to serve your investment needs.
Sincerely,
\S\ EDWIN D. MISKA
Edwin D. Miska
Director of Equities
First Investors Management Company, Inc.
and Portfolio Manager
November 1, 2006
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
(4/1/06) (9/30/06) (4/1/06--9/30/06)*
- --------------------------------------------------------------------------------------------------
Expense Example -- Class A Shares
Actual $1,000.00 $993.62 $6.75
Hypothetical
(5% annual return before expenses) $1,000.00 $1,018.30 $6.83
- --------------------------------------------------------------------------------------------------
Expense Example -- Class B Shares
Actual $1,000.00 $990.10 $10.23
Hypothetical
(5% annual return before expenses) $1,000.00 $1,014.79 $10.35
- --------------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio of 1.35% for Class A shares and 2.05% for
Class B shares, multiplied by the average account value over the period, multiplied by 183/365
(to reflect the one-half year period).
Portfolio Composition
TOP TEN SECTORS
(BAR CHART DATA:)
Consumer Discretionary 17.8%
Information Technology 17.4%
Financials 15.9%
Industrials 13.6%
Health Care 12.5%
Energy 7.7%
Consumer Staples 7.2%
Materials 5.8%
Telecommunication Services 1.1%
Utilities 0.9%
Portfolio holdings and allocations are subject to change. Percentages are
as of September 30, 2006, and are based on the total market value of
investments.
Cumulative Performance Information
GROWTH & INCOME FUND
Comparison of change in value of $10,000 investment in the First Investors
Growth & Income Fund (Class A shares) and the Standard & Poor's 500 Index.
First Investors Growth & Income Fund
Graph Plot Points
for the periods Ended 9/30/06
Growth & Income S&P 500
Fund Index
Oct-96 9,425 10,000
Oct-97 11,898 13,211
Sep-98 12,949 14,905
Sep-99 16,025 19,048
Sep-00 19,440 21,578
Sep-01 14,404 15,834
Sep-02 11,446 12,589
Sep-03 13,906 15,661
Sep-04 15,846 17,833
Sep-05 17,975 20,018
Sep-06 19,423 22,178
(INSET BOX IN CHART READS:)
Average Annual Total Returns*
Class A Shares N.A.V. Only S.E.C. Standardized
One Year 8.06% 1.87%
Five Years 6.16% 4.91%
Ten Years 7.60% 6.97%
Class B Shares
One Year 7.28% 3.28%
Five Years 5.41% 5.08%
Ten Years 6.87% 6.87%
The graph compares a $10,000 investment in the First Investors Growth &
Income Fund (Class A shares) beginning 10/31/96 with a theoretical
investment in the Standard & Poor's 500 Index (the "Index"). The Index
is an unmanaged capitalization-weighted index of 500 stocks designed to
measure performance of the broad domestic economy through changes in the
aggregate market value of such stocks, which represent all major
industries. It is not possible to invest directly in this Index. In
addition, the Index does not take into account fees and expenses that an
investor would incur in purchasing securities in the Index. For purposes
of the graph and the accompanying table, unless otherwise indicated, it
has been assumed that the maximum sales charge was deducted from the
initial $10,000 investment in the Fund and all dividends and
distributions were reinvested. Class B shares performance may be greater
than or less than that shown in the line graph above for Class A shares
based on differences in sales loads and fees paid by shareholders
investing in the different classes.
* Average Annual Total Return figures (for the periods ended 9/30/06)
include the reinvestment of all dividends and distributions. "N.A.V. Only"
returns are calculated without sales charges. The Class A "S.E.C.
Standardized" returns shown are based on the maximum sales charge of 5.75%
(prior to 6/17/02 the maximum sales charge was 6.25%) . The Class B "S.E.C.
Standardized" returns are adjusted for the applicable deferred sales charge
(maximum of 4% in the first year). During certain of the periods shown, some
of the expenses of the Fund were waived or assumed. If such expenses had
been paid by the Fund, the Class A "S.E.C. Standardized" Average Annual
Total Return for Ten years would have been 6.96% . The Class B "S.E.C.
Standardized" Average Annual Total Return for Ten Years would have been
6.86% . Results represent past performance and do not indicate future
results. The graph and the returns shown do not reflect the deduction of
taxes that a shareholder would pay on distributions or the redemption of
fund shares. Investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than the original cost. Standard & Poor's 500 Index figures are from
Standard & Poor's and all other figures are from First Investors Management
Company, Inc.
Portfolio of Investments
GROWTH & INCOME FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
COMMON STOCKS--99.2%
Consumer Discretionary--17.7%
212,500 * Blockbuster, Inc. - Class "A" $816,000 $11
100,000 Carnival Corporation 4,703,000 63
200,000 CBS Corporation - Class "B" 5,634,000 76
200,000 Clear Channel Communications, Inc. 5,770,000 77
195,602 * Cost Plus, Inc. 2,341,356 31
281,600 Dollar General Corporation 3,838,208 52
250,000 * Eddie Bauer Holdings, Inc. 2,687,500 36
200,000 Foot Locker, Inc. 5,050,000 68
50,000 Genuine Parts Company 2,156,500 29
375,000 H&R Block, Inc. 8,152,500 110
165,000 Home Depot, Inc. 5,984,550 80
55,000 J.C. Penney Company, Inc. (Holding Co.) 3,761,450 51
100,000 Jones Apparel Group, Inc. 3,244,000 44
114,700 Kenneth Cole Productions, Inc. - Class "A" 2,795,239 37
155,000 Leggett & Platt, Inc. 3,879,650 52
203,900 * Lincoln Educational Services Corporation 3,335,804 45
215,000 McDonald's Corporation 8,410,800 113
75,000 Michaels Stores, Inc. 3,265,500 44
197,500 * Morgans Hotel Group Company 2,468,750 33
175,000 Movado Group, Inc. 4,448,500 60
215,000 Newell Rubbermaid, Inc. 6,088,800 82
240,000 Orient-Express Hotels, Ltd. 8,971,200 121
70,000 Polo Ralph Lauren Corporation - Class "A" 4,528,300 61
275,000 * Quiksilver, Inc. 3,341,250 45
300,000 RadioShack Corporation 5,790,000 78
90,000 Sherwin-Williams Company 5,020,200 67
90,000 * Steiner Leisure, Ltd. 3,784,500 51
112,500 * Viacom, Inc. - Class "B" 4,182,750 56
500,000 Westwood One, Inc. 3,540,000 48
140,000 * Wyndham Worldwide Corporation 3,915,800 53
- -------------------------------------------------------------------------------------------------------
131,906,107 1,774
- -------------------------------------------------------------------------------------------------------
Consumer Staples--7.2%
147,500 Altria Group, Inc. 11,291,125 152
150,000 Avon Products, Inc. 4,599,000 62
750 * Bare Escentuals, Inc. 20,363 --
125,000 * Chattem, Inc. 4,390,000 59
52,500 Coca-Cola Company 2,345,700 32
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Consumer Staples (continued)
125,000 CVS Corporation $4,015,000 $54
350,000 Nu Skin Enterprises, Inc. - Class "A" 6,132,000 82
50,000 PepsiCo, Inc. 3,263,000 44
342,300 * Prestige Brands Holdings, Inc. 3,813,222 51
77,500 Procter & Gamble Company 4,803,450 65
91,763 Tootsie Roll Industries, Inc. 2,689,574 36
90,000 Wal-Mart Stores, Inc. 4,438,800 60
55,000 WD-40 Company 1,961,850 26
- -------------------------------------------------------------------------------------------------------
53,763,084 723
- -------------------------------------------------------------------------------------------------------
Energy--7.7%
60,000 Anadarko Petroleum Corporation 2,629,800 35
770 * Aventine Renewable Energy Holdings, Inc. 16,470 --
100,000 Chesapeake Energy Corporation 2,898,000 39
90,000 ConocoPhillips 5,357,700 72
115,000 ExxonMobil Corporation 7,716,500 104
20,000 * Houston Exploration Company 1,103,000 15
7,153 Hugoton Royalty Trust 188,482 3
16,548 Marathon Oil Corporation 1,272,541 17
80,000 Noble Corporation 5,134,400 69
20,400 * PHI, Inc. - Non Voting Shares 621,588 8
100,000 Sasol, Ltd. (ADR) 3,289,000 44
150,000 Suncor Energy, Inc. 10,807,500 145
84,500 * Swift Energy Company 3,533,790 48
800 Technip SA (ADR) 45,576 1
100,000 * Transocean, Inc. 7,323,000 99
120,000 XTO Energy, Inc. 5,055,600 68
- -------------------------------------------------------------------------------------------------------
56,992,947 767
- -------------------------------------------------------------------------------------------------------
Financials--15.3%
52,000 American Express Company 2,916,160 39
100,000 American International Group, Inc. 6,626,000 89
10,000 Ameriprise Financial, Inc. 469,000 6
130,000 Astoria Financial Corporation 4,006,600 54
150,000 Bank of America Corporation 8,035,500 108
150,000 Brookline Bancorp, Inc. 2,062,500 28
134,000 Citigroup, Inc. 6,655,780 90
200,000 Colonial BancGroup, Inc. 4,900,000 66
177,500 JPMorgan Chase & Company 8,335,400 112
- -------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
GROWTH & INCOME FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Financials (continued)
65,000 Lehman Brothers Holdings, Inc. $4,800,900 $65
75,000 Merrill Lynch & Company, Inc. 5,866,500 79
90,000 Morgan Stanley 6,561,900 88
230,000 New York Community Bancorp, Inc. 3,767,400 51
250,000 NewAlliance Bancshares, Inc. 3,662,500 49
150,000 North Fork Bancorporation, Inc. 4,296,000 58
50,000 Plum Creek Timber Company, Inc. (REIT) 1,702,000 23
120,000 South Financial Group, Inc. 3,123,600 42
231,000 Sovereign Bancorp, Inc. 4,968,810 67
65,000 SunTrust Banks, Inc. 5,023,200 68
200,000 U.S. Bancorp 6,644,000 89
140,970 U.S.B. Holding Company, Inc. 3,109,798 42
100,000 Wachovia Corporation 5,580,000 75
132,500 Washington Mutual, Inc. 5,759,775 77
140,000 Wells Fargo & Company 5,065,200 68
- -------------------------------------------------------------------------------------------------------
113,938,523 1,533
- -------------------------------------------------------------------------------------------------------
Health Care--12.5%
160,000 Abbott Laboratories 7,769,600 105
100,000 Aetna, Inc. 3,955,000 53
46,700 * Amgen, Inc. 3,340,451 45
22,417 Baxter International, Inc. 1,019,077 14
55,000 Biomet, Inc. 1,770,450 24
100,000 * Boston Scientific Corporation 1,479,000 20
60,000 * Charles River Laboratories International, Inc. 2,604,600 35
20,000 * Genentech, Inc. 1,654,000 22
155,000 Johnson & Johnson 10,065,700 135
50,000 * Laboratory Corporation of America Holdings 3,278,500 44
75,000 Medtronic, Inc. 3,483,000 47
80,000 Merck & Company, Inc. 3,352,000 45
50,000 * Momenta Pharmaceutical, Inc. 676,000 9
425,000 Pfizer, Inc. 12,053,000 162
110,000 Sanofi-Aventis (ADR) 4,891,700 66
175,000 * St. Jude Medical, Inc. 6,175,750 83
40,000 Stryker Corporation 1,983,600 27
115,000 * Thermo Electron Corporation 4,522,950 61
75,000 * Triad Hospitals, Inc. 3,302,250 44
106,000 * TriZetto Group, Inc. 1,604,840 22
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Health Care (continued)
55,000 UnitedHealth Group, Inc. $2,706,000 $36
50,000 * Waters Corporation 2,264,000 30
175,000 Wyeth 8,897,000 120
- -------------------------------------------------------------------------------------------------------
92,848,468 1,249
- -------------------------------------------------------------------------------------------------------
Industrials--13.6%
155,000 3M Company 11,535,100 155
7,500 * Acco Brands Corporation 166,950 2
84,600 Alexander & Baldwin, Inc. 3,753,702 51
52,500 Avis Budget Group, Inc. 960,225 13
100,000 Barnes Group, Inc. 1,756,000 24
142,300 * BE Aerospace, Inc. 3,001,107 40
90,000 Burlington Northern Santa Fe Corporation 6,609,600 89
36,000 Eaton Corporation 2,478,600 33
223,000 * Gardner Denver, Inc. 7,376,840 99
45,000 Harsco Corporation 3,494,250 47
197,500 Honeywell International, Inc. 8,077,750 109
100,000 Illinois Tool Works, Inc. 4,490,000 60
282,600 Knoll, Inc. 5,708,520 77
55,000 Lockheed Martin Corporation 4,733,300 64
200,000 * Navigant Consulting, Inc. 4,012,000 54
90,000 Northrop Grumman Corporation 6,126,300 82
107,500 * PGT, Inc. 1,511,450 20
200,000 * Pinnacle Airlines Corporation 1,482,000 20
97,500 Precision Castparts Corporation 6,158,100 83
50,000 Steelcase, Inc. - Class "A" 784,500 11
140,000 TAL International Group, Inc. 2,969,400 40
163,200 Tyco International, Ltd. 4,567,968 61
150,000 United Technologies Corporation 9,502,500 128
- -------------------------------------------------------------------------------------------------------
101,256,162 1,362
- -------------------------------------------------------------------------------------------------------
Information Technology--17.4%
70,000 Amphenol Corporation - Class "A" 4,335,100 58
150,000 * Arris Group, Inc. 1,719,000 23
300,000 * Cisco Systems, Inc. 6,900,000 93
240,000 * Electronics for Imaging, Inc. 5,491,200 74
412,500 * EMC Corporation 4,941,750 66
300,000 * Entrust, Inc. 1,038,000 14
120,000 First Data Corporation 5,040,000 68
- -------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
GROWTH & INCOME FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Information Technology (continued)
165,000 Hewlett-Packard Company $6,053,850 $81
185,000 Intel Corporation 3,805,450 51
115,000 International Business Machines Corporation 9,423,100 127
85,000 * International Rectifier Corporation 2,961,400 40
60,000 * Komag, Inc. 1,917,600 26
50,000 * Lam Research Corporation 2,266,500 31
350,000 Microsoft Corporation 9,565,500 129
275,000 Motorola, Inc. 6,875,000 92
100,400 * NCI, Inc. - Class "A" 1,203,795 16
375,000 Nokia Corporation - Class "A" (ADR) 7,383,750 99
120,000 * OmniVision Technologies, Inc. 1,712,400 23
360,000 * Openwave Systems, Inc. 3,369,600 45
249,400 * Parametric Technology Corporation 4,354,524 59
114,500 * Paxar Corporation 2,287,710 31
375,000 * Powerwave Technologies, Inc. 2,850,000 38
135,000 QUALCOMM, Inc. 4,907,250 66
325,000 * Silicon Image, Inc. 4,134,000 56
349,800 * Smart Modular Technologies (WWH), Inc. 3,487,506 47
359,840 * Symantec Corporation 7,657,395 103
400,000 * TIBCO Software, Inc. 3,592,000 48
93,200 * Varian Semiconductor Equipment Associates, Inc. 3,420,440 46
140,000 * VeriSign, Inc. 2,828,000 38
175,000 Xilinx, Inc. 3,841,250 52
- -------------------------------------------------------------------------------------------------------
129,363,070 1,740
- -------------------------------------------------------------------------------------------------------
Materials--5.8%
110,000 Ashland, Inc. 7,015,800 94
300,000 Celanese Corporation 5,370,000 72
115,000 Commercial Metals Company 2,337,950 31
105,000 Dow Chemical Company 4,092,900 55
60,000 Freeport-McMoRan Copper &
Gold, Inc. - Class "B" 3,195,600 43
115,000 Lubrizol Corporation 5,258,950 71
45,000 PPG Industries, Inc. 3,018,600 41
65,000 Praxair, Inc. 3,845,400 52
200,000 RPM International, Inc. 3,798,000 51
120,000 Temple-Inland, Inc. 4,812,000 65
- -------------------------------------------------------------------------------------------------------
42,745,200 575
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Amount
Invested
Shares or For Each
Principal $10,000 of
Amount Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Telecommunication Services--1.1%
165,000 AT&T, Inc. $5,372,400 $72
75,000 Verizon Communications, Inc. 2,784,750 38
- -------------------------------------------------------------------------------------------------------
8,157,150 110
- -------------------------------------------------------------------------------------------------------
Utilities--.9%
115,400 Atmos Energy Corporation 3,294,670 44
75,000 Consolidated Edison, Inc. 3,465,000 47
- -------------------------------------------------------------------------------------------------------
6,759,670 91
- -------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $595,667,392) 737,730,381 9,924
- -------------------------------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS--.5%
Financials
50,000 Hartford Financial Services Group, Inc.,
6%, 2006 (cost $2,277,018) 3,818,750 52
- -------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--.2%
$1,200M ChevronTexaco Funding Corp., 5.22%, 10/17/06
(cost $1,197,041) 1,197,041 16
- -------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $599,141,451) 99.9% 742,746,172 9,992
Other Assets, Less Liabilities .1 609,155 8
- -------------------------------------------------------------------------------------------------------
Net Assets 100.0% $743,355,327 $10,000
=======================================================================================================
* Non-income producing
Summary of Abbreviations:
ADR American Depositary Receipts
REIT Real Estate Investment Trust
See notes to financial statements
Portfolio Manager's Letter
ALL-CAP GROWTH FUND
Dear Investor:
This is the annual report for the First Investors All-Cap Growth Fund for
the fiscal year ended September 30, 2006. During the period, the Fund's
return on a net asset value basis was 5.0% for Class A shares and 4.3% for
Class B shares.
The Fund's positive performance during the reporting period was
attributable in part to the solid results of the equity markets. In
addition, the Fund's multi-cap strategy aided performance, as mid- and
small-cap equity holdings outperformed their larger-cap counterparts. At
the end of the reporting period, the Fund's market-cap allocation was
71.9% large-cap, 21.7% mid-cap and 6.4% small-cap, as defined in the
Fund's prospectus.
Favorable security selection in the financials, industrials, and health
care sectors benefited performance relative to the Russell 3000 Growth
Index. Top individual contributors included Network Appliance, a
technology hardware company, which is gaining market share in the health
storage industry due to their unified mid-range architecture and strong
growth rate. AstraZeneca benefited from strong performance from their top
five pharmaceutical offerings, including Crestor and Nexium. The Chicago
Mercantile Exchange benefited from strong growth in energy, electronic
options and foreign exchange trading growth during the period.
Security selection in the information technology and consumer
discretionary sectors hurt relative performance. Negative results within
these sectors were primarily driven by semiconductor holding Marvell
Technology, which has suffered from a lack of seasonal growth in its drive
and PC businesses; and Electronic Arts, a software company, which has
struggled to improve margins as development costs on new initiatives are
high. XM Satellite Radio declined after struggling with disappointing
subscriber numbers and product availability issues through the first half
of the year.
Thank you for placing your trust in First Investors. As always, we
appreciate the opportunity to serve your investment needs.
Sincerely,
\S\ ANDREW J. SHILLING
Andrew J. Shilling
Portfolio Manager
November 1, 2006
Fund Expenses
ALL-CAP 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
(4/1/06) (9/30/06) (4/1/06--9/30/06)*
- --------------------------------------------------------------------------------------------------
Expense Example -- Class A Shares
Actual $1,000.00 $962.58 $7.38
Hypothetical
(5% annual return before expenses) $1,000.00 $1,017.55 $7.59
- --------------------------------------------------------------------------------------------------
Expense Example -- Class B Shares
Actual $1,000.00 $960.04 $10.81
Hypothetical
(5% annual return before expenses) $1,000.00 $1,014.04 $11.11
- --------------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio of 1.50% for Class A shares and 2.20% for
Class B shares, multiplied by the average account value over the period, multiplied by 183/365
(to reflect the one-half year period).
Portfolio Composition
BY SECTOR
(BAR CHART DATA:)
Information Technology 27.9%
Industrials 17.7%
Health Care 17.1%
Financials 14.4%
Consumer Discretionary 7.4%
Energy 5.0%
Telecommunication Services 3.2%
Consumer Staples 2.1%
Utilities 1.6%
Materials 0.8%
Portfolio holdings and allocations are subject to change. Percentages are
as of September 30, 2006, and are based on the total market value of
investments.
Cumulative Performance Information
ALL-CAP GROWTH FUND
Comparison of change in value of $10,000 investment in the First Investors
All-Cap Growth Fund (Class A shares) and the Russell 3000 Growth Index.
First Investors All-Cap Growth Fund
Graph Plot Points
for the periods Ended 9/30/06
All-Cap Russell
Growth 3000 Growth
Fund Index
Oct-00 9,425 10,000
Sep-01 6,155 6,001
Sep-02 5,024 4,667
Sep-03 6,362 5,925
Sep-04 7,352 6,388
Sep-05 8,313 7,163
Sep-06 8,728 7,597
(INSET BOX IN CHART READS:)
Average Annual Total Returns*
Class A Shares N.A.V. Only S.E.C. Standardized
One Year 4.99% (1.07%)
Five Years 7.24% 5.97%
Since Inception (10/25/00) (1.29%) (2.27%)
Class B Shares
One Year 4.34% 0.34%
Five Years 6.50% 6.18%
Since Inception (10/25/00) (1.96%) (2.13%)
The graph compares a $10,000 investment in the First Investors All-Cap
Growth Fund (Class A shares) beginning 10/25/00 (inception date) with a
theoretical investment in the Russell 3000 Growth Index (the "Index"). The
Index is an unmanaged index that measures the performance of those Russell
3000 Index companies with higher price-to-book ratios and higher
forecasted growth values (the Russell 3000 Index is an unmanaged index
that measures the performance of the 3,000 largest U.S. companies based on
total market capitalization). It is not possible to invest directly in
this Index. In addition, the Index does not take into account fees and
expenses that an investor would incur in purchasing securities in the
Index. For purposes of the graph and the accompanying table, unless
otherwise indicated, it has been assumed that the maximum sales charge was
deducted from the initial $10,000 investment in the Fund. Class B shares
performance may be greater than or less than that shown in the line graph
above for Class A shares based on differences in the sales loads and fees
paid by shareholders investing in the different classes.
* Average Annual Total Return figures are for the periods ended 9/30/06.
"N.A.V. Only" returns are calculated without sales charges. The Class A
"S.E.C. Standardized" returns shown are based on the maximum sales charge of
5.75% (prior to 6/17/02, the maximum sales charge was 6.25%). The Class B
"S.E.C. Standardized" returns are adjusted for the applicable deferred sales
charge (maximum of 4% in the first year). During the periods shown, some of
the expenses of the Fund were waived or assumed. If such expenses had been
paid by the Fund, the Class A "S.E.C. Standardized" Total Return Since
Inception would have been (2.37%) . The Class B "S.E.C. Standardized" Total
Return Since Inception would have been (2.17%) . Results represent past
performance and do not indicate future results. The graph and the returns
shown do not reflect the deduction of taxes that a shareholder would pay on
distributions or the redemption of fund shares. Investment return and
principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than the original cost.
Russell 3000 Growth Index figures are from Frank Russell and Company and all
other figures are from First Investors Management Company, Inc.
Portfolio of Investments
ALL-CAP GROWTH FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
COMMON STOCKS--96.9%
Consumer Discretionary--7.3%
24,850 * California Pizza Kitchen, Inc. $743,761 $34
37,400 * CarMax, Inc. 1,559,954 71
19,150 * Focus Media Holding, Ltd. (ADR) 1,109,168 51
3,410 * GameStop Corporation - Class "B" 152,461 7
23,100 * Gildan Activewear, Inc. 1,119,426 51
59,000 PETsMART, Inc. 1,637,250 75
43,360 * Pinnacle Entertainment, Inc. 1,219,283 56
49,590 Starwood Hotels & Resorts Worldwide, Inc. 2,836,052 130
16,710 * Tween Brands, Inc. 628,296 29
37,600 * Univision Communications, Inc. - Class "A" 1,291,184 59
113,396 Walt Disney Company 3,505,070 160
6,500 Williams-Sonoma, Inc. 210,535 9
- -------------------------------------------------------------------------------------------------------
16,012,440 732
- -------------------------------------------------------------------------------------------------------
Consumer Staples--2.1%
5,500 * Bare Escentuals, Inc. 149,325 7
21,000 Clorox Company 1,323,000 60
6,800 * Herbalife, Ltd. 257,584 12
19,000 PepsiCo, Inc. 1,239,940 57
42,200 SUPERVALU, Inc. 1,251,230 57
7,900 Wal-Mart Stores, Inc. 389,628 18
- -------------------------------------------------------------------------------------------------------
4,610,707 211
- -------------------------------------------------------------------------------------------------------
Energy--4.9%
21,450 Arch Coal, Inc. 620,119 28
12,145 Cabot Oil & Gas Corporation - Class "A" 582,110 27
151,070 Cameco Corporation 5,524,630 253
26,880 * Complete Production Services, Inc. 530,611 24
5,000 Frontier Oil Corporation 132,900 6
33,800 GlobalSantaFe Corporation 1,689,662 77
61,560 Halliburton Company 1,751,382 80
- -------------------------------------------------------------------------------------------------------
10,831,414 495
- -------------------------------------------------------------------------------------------------------
Financials--14.3%
21,230 * Allied World Assurance Holdings, Ltd. 857,692 39
12,530 * Arch Capital Group, Ltd. 795,530 36
12,400 Chicago Mercantile Exchange
Holdings, Inc. - Class "A" 5,930,300 271
- -------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
ALL-CAP GROWTH FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Financials (continued)
64,900 * E*TRADE Financial Corporation $1,552,408 $71
57,590 Franklin Resources, Inc. 6,090,143 279
52,360 Moody's Corporation 3,423,297 157
121,170 * Move, Inc. 594,945 27
21,400 Nuveen Investments, Inc. - Class "A" 1,096,322 50
15,030 * ProAssurance Corporation 740,678 34
34,430 State Street Corporation 2,148,432 98
46,200 T. Rowe Price Group, Inc. 2,210,670 101
97,340 UBS AG 5,773,235 264
- -------------------------------------------------------------------------------------------------------
31,213,652 1,427
- -------------------------------------------------------------------------------------------------------
Health Care--17.0%
21,580 * Alkermes, Inc. 342,043 16
31,550 * Amgen, Inc. 2,256,771 103
10,540 * Amylin Pharmaceuticals, Inc. 464,498 21
105,840 AstraZeneca PLC (ADR) 6,615,000 302
10,300 * Cephalon, Inc. 636,025 29
19,300 * Digene Corporation 832,795 38
14,010 * Hologic, Inc. 609,715 28
25,830 * LifePoint Hospitals, Inc. 912,316 42
22,400 Manor Care, Inc. 1,171,072 53
152,410 Medtronic, Inc. 7,077,920 324
22,120 Pharmaceutical Product Development, Inc. 789,463 36
87,430 Sanofi-Aventis (ADR) 3,888,012 178
239,570 Schering-Plough Corporation 5,292,101 242
117,940 UnitedHealth Group, Inc. 5,802,648 265
11,930 * Vertex Pharmaceuticals, Inc. 401,445 18
- -------------------------------------------------------------------------------------------------------
37,091,824 1,695
- -------------------------------------------------------------------------------------------------------
Industrials--17.6%
18,150 * Alliant Techsystems, Inc. 1,471,239 67
16,290 * American Commercial Lines, Inc. 968,440 44
26,000 * American Reprographics Company 833,560 38
93,080 Boeing Company 7,339,358 335
12,300 C. H. Robinson Worldwide, Inc. 548,334 25
4,400 Copa Holdings SA - Class "A" 151,052 7
19,765 * Corrections Corporation of America 854,836 39
52,530 Danaher Corporation 3,607,235 165
58,900 Equifax, Inc. 2,162,219 99
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Industrials (continued)
6,900 Florida East Coast Industries, Inc. $393,852 $18
21,600 Fluor Corporation 1,660,824 76
70,010 General Dynamics Corporation 5,017,617 229
145,740 General Electric Company 5,144,622 235
19,400 * IHS, Inc - Class "A" 622,352 28
15,055 * Kenexa Corporation 379,687 17
5,200 Manpower, Inc. 318,604 15
34,800 * Monster Worldwide, Inc. 1,259,412 58
22,640 * Resources Connection, Inc. 606,526 28
20,700 Robert Half International, Inc. 703,179 32
20,300 Rockwell Collins, Inc. 1,113,252 51
12,540 * Suntech Power Holdings Company, Ltd. (ADR) 323,908 15
42,440 United Parcel Service, Inc. - Class "B" 3,053,134 140
- -------------------------------------------------------------------------------------------------------
38,533,242 1,761
- -------------------------------------------------------------------------------------------------------
Information Technology--27.7%
105,560 * Adobe Systems, Inc. 3,953,222 181
73,900 * Altera Corporation 1,358,282 62
25,950 * Apple Computer, Inc. 1,998,928 91
144,470 * Autodesk, Inc. 5,024,667 230
5,690 * Baidu.com, Inc. (ADR) 498,103 23
46,300 * Cadence Design Systems, Inc. 785,248 36
226,750 * Cisco Systems, Inc. 5,215,250 238
21,900 * Cognizant Technology Solutions
Corporation - Class "A" 1,621,914 74
12,200 * eBay, Inc. 345,992 16
14,970 * Equinix, Inc. 899,697 41
10,370 * Google, Inc. - Class "A" 4,167,703 191
57,730 * Hypercom Corporation 391,409 18
49,150 * Integrated Device Technology, Inc. 789,349 36
139,850 Linear Technology Corporation 4,352,132 199
149,840 * Marvell Technology Group, Ltd. 2,902,401 133
79,620 MoneyGram International, Inc. 2,313,757 106
150,400 Motorola, Inc. 3,760,000 172
255,030 * Network Appliance, Inc. 9,438,660 431
58,980 * Opsware, Inc. 531,410 24
222,510 * Oracle Corporation 3,947,327 180
33,320 QUALCOMM, Inc. 1,211,182 55
30,950 * Red Hat, Inc. 652,426 30
- -------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
ALL-CAP GROWTH FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
Shares or For Each
Principal $10,000 of
Amount Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Information Technology (continued)
39,660 * Redback Networks, Inc. $550,481 $25
35,900 * SanDisk Corporation 1,922,086 88
20,990 * Transaction Systems Architects, Inc. 720,377 33
44,620 * VeriFone Holdings, Inc. 1,273,901 58
- -------------------------------------------------------------------------------------------------------
60,625,904 2,771
- -------------------------------------------------------------------------------------------------------
Materials--.8%
26,600 Teck Cominco, Ltd. - Class "B" 1,662,234 76
- -------------------------------------------------------------------------------------------------------
Other--.5%
15,050 iShares Russell 2000 Growth Index Fund 1,088,567 50
- -------------------------------------------------------------------------------------------------------
Telecommunication Services--3.2%
176,460 * American Tower Corporation - Class "A" 6,440,790 294
19,340 * NeuStar, Inc. - Class "A" 536,685 25
- -------------------------------------------------------------------------------------------------------
6,977,475 319
- -------------------------------------------------------------------------------------------------------
Utilities--1.5%
54,190 TXU Corporation 3,387,959 155
- -------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $190,239,298) 212,035,418 9,692
- -------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT--2.4%
$5,268M UBS Securities, 5%, dated 9/29/06, to be
repurchased at $5,270,195 on 10/2/06
(collateralized by U.S. Treasury Bonds,
7.625%, 2/15/25, valued at $5,386,537)
(cost $5,268,000) 5,268,000 241
- -------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $195,507,298) 99.3% 217,303,418 9,933
Other Assets, Less Liabilities .7 1,475,393 67
- -------------------------------------------------------------------------------------------------------
Net Assets 100.0% $218,778,811 $10,000
=======================================================================================================
* Non-income producing
Summary of Abbreviations:
ADR American Depositary Receipts
See notes to financial statements
Portfolio Manager's Letter
MID-CAP OPPORTUNITY FUND
Dear Investor:
This is the annual report for the First Investors Mid-Cap Opportunity Fund
for the fiscal year ended September 30, 2006. During the period, the
Fund's return on a net asset value basis was 2.6 % for Class A shares and
1.9% for Class B shares, including capital gains distributions of 78 cents
per share for both A shares and B shares.
The Fund's performance was largely driven by rising oil and natural gas
prices, consolidation in the telecommunications and materials sectors,
solid performance of the mid-cap stock sector, and asset allocation
decisions. Performance on an absolute basis was attributable to
investments in two key sectors: financials and industrials. Shares of
asset managers were key contributors in the financials sector, aided by
consolidation and strong mutual fund sales. Shares of machinery and
electrical equipment companies were key contributors in the industrials
sector, driven by strong commercial demand in domestic and emerging
markets.
The Fund's underperformance relative to the S&P 400 Midcap Index was
primarily due to stock selection and underweight positions in the
technology, industrials and financial sectors. In the technology sector,
the Fund owned semiconductor and communications equipment names that
underperformed, such as Genesis Microchip. In industrials, some of our
positions in conglomerates, such as Walter Industries and Chicago Bridge &
Iron, underperformed. Finally, in the financials sector, the Fund's
underweight position in real estate investment trusts hurt performance, as
these trusts performed well due to consolidation.
Among positives to relative performance, the Fund's overweight positions
in the energy and materials sectors, as well as good stock selection in
those sectors, aided returns. Within the top overall contributing sector
- -- energy -- strength came from exploration companies and drilling rig
manufacturers. For example, Transocean, which provides offshore drilling
services to oil companies, benefited from very strong drilling activity.
In materials, strength came from paper, copper and chemical firms. For
example, Georgia-Pacific, a paper company, received an offer to be
acquired.
Thank you for placing your trust in First Investors. As always, we
appreciate the opportunity to serve your investment needs.
Sincerely,
\S\ STEVEN S. HILL
Steven S. Hill
Portfolio Manager
November 1, 2006
Fund Expenses
MID-CAP OPPORTUNITY FUND
The examples below show the ongoing costs (in dollars) of investing in your
Fund and will help you in comparing these costs with costs of other mutual
funds. Please refer to page 3 for a detailed explanation of the information
presented in these examples.
- --------------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
(4/1/06) (9/30/06) (4/1/06--9/30/06)*
- --------------------------------------------------------------------------------------------------
Expense Example -- Class A Shares
Expense Example -- Class A Shares
Actual $1,000.00 $949.39 $6.89
Hypothetical
(5% annual return before expenses) $1,000.00 $1,018.00 $7.13
- --------------------------------------------------------------------------------------------------
Expense Example -- Class B Shares
Actual $1,000.00 $945.93 $10.29
Hypothetical
(5% annual return before expenses) $1,000.00 $1,014.49 $10.66
- --------------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio of 1.41% for Class A shares and 2.11% for
Class B shares, multiplied by the average account value over the period, multiplied by 183/365
(to reflect the one-half year period).
Mid-Cap_Bar
Portfolio Composition
TOP TEN SECTORS
(BAR CHART DATA:)
Financials 15.3%
Industrials 14.1%
Information Technology 14.1%
Health Care 13.0%
Consumer Discretionary 12.0%
Energy 7.8%
Materials 6.1%
Consumer Staples 5.1%
Utilities 4.5%
Other 2.8%
Portfolio holdings and allocations are subject to change. Percentages are
as of September 30, 2006, and are based on the total market value of
investments.
Cumulative Performance Information
MID-CAP OPPORTUNITY FUND
Comparison of change in value of $10,000 investment in the First Investors
Mid-Cap Opportunity Fund (Class A shares) and the Standard & Poor's MidCap
400 Index.
First Investors Mid-Cap Opportunity Fund
Graph Plot Points
for the periods Ended 9/30/06
S&P 400
Mid-Cap MIDCAP
Fund Index
Oct-96 9,425 10,000
Oct-97 11,443 13,265
Sep-98 9,564 12,991
Sep-99 13,836 16,299
Sep-00 19,565 23,344
Sep-01 13,629 18,909
Sep-02 12,192 18,022
Sep-03 14,818 22,852
Sep-04 17,546 26,864
Sep-05 21,818 32,817
Sep-06 22,381 34,971
(INSET BOX IN CHART READS:)
Average Annual Total Returns*
Class A Shares N.A.V. Only S.E.C. Standardized
One Year 2.58% (3.31%)
Five Years 10.43% 9.12%
Ten Years 9.32% 8.68%
Class B Shares
One Year 1.85% (2.15%)
Five Years 9.66% 9.38%
Ten Years 8.57% 8.57%
The graph compares a $10,000 investment in the First Investors Mid-Cap
Opportunity Fund (Class A shares) beginning 10/31/96 with a theoretical
investment in the Standard & Poor's MidCap 400 Index (the "Index"). The
Index is an unmanaged capitalization-weighted index of 400 stocks
designed to measure performance of the mid-range sector of the U.S.
stock market. As of 9/30/06 the median market capitalization is
approximately $2.36 billion. It is not possible to invest directly in
this Index. In addition, the Index does not take into account fees and
expenses that an investor would incur in purchasing securities in the
Index. For purposes of the graph and the accompanying table, unless
otherwise indicated, it has been assumed that the maximum sales charge
was deducted from the initial $10,000 investment in the Fund and all
dividends and distributions were reinvested. Class B shares performance
may be greater than or less than that shown in the line graph above for
Class A shares based on differences in sales loads and fees paid by
shareholders investing in the different classes.
* Average Annual Total Return figures (for the periods ended 9/30/06)
include the reinvestment of all dividends and distributions. "N.A.V.
Only" returns are calculated without sales charges. The Class A "S.E.C.
Standardized" returns shown are based on the maximum sales charge of
5.75% (prior to 6/17/02, the maximum sales charge was 6.25%) . The Class
B "S.E.C. Standardized" returns are adjusted for the applicable deferred
sales charge (maximum of 4% in the first year). During the periods
shown, some of the expenses of the Fund were waived or assumed. If such
expenses had been paid by the Fund, the Class A "S.E.C. Standardized"
Average Annual Total Return for One Year, Five Years and Ten Years would
have been (3.34%), 8.98% and 8.41%, respectively. The Class B "S.E.C.
Standardized" Average Annual Total Return for One Year, Five Years and
Ten Years would have been (2.18%), 9.20% and 8.30%, respectively.
Results represent past performance and do not indicate future results.
The graph and the returns shown do not reflect the deduction of taxes
that a shareholder would pay on distributions or the redemption of fund
shares. Investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more
or less than the original cost. Standard & Poor's MidCap 400 Index
figures are from Standard & Poor's and all other figures are from First
Investors Management Company, Inc.
Portfolio of Investments
MID-CAP OPPORTUNITY FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
COMMON STOCKS--96.7%
Consumer Discretionary--12.0%
66,000 BorgWarner, Inc. $3,773,220 $78
95,000 * Burger King Holdings, Inc. 1,516,200 31
72,000 * Chico's FAS, Inc. 1,550,160 32
7,500 Claire's Stores, Inc. 218,700 4
101,000 * Coach, Inc. 3,474,400 72
80,000 Foot Locker, Inc. 2,020,000 41
39,000 Gannett Company, Inc. 2,216,370 46
25,500 * Hanesbrands, Inc. 574,005 12
34,000 Harman International Industries, Inc. 2,836,960 58
17,500 Jones Apparel Group, Inc. 567,700 12
122,500 Leggett & Platt, Inc. 3,066,175 63
49,500 Modine Manufacturing Company 1,204,335 25
225,000 * Morgans Hotel Group Company 2,812,500 58
118,700 Movado Group, Inc. 3,017,354 62
100,000 * Office Depot, Inc. 3,970,000 82
130,000 Orient-Express Hotels, Ltd. 4,859,400 100
15,000 * Pacific Sunwear of California, Inc. 226,200 5
75,000 Polo Ralph Lauren Corporation - Class "A" 4,851,750 100
135,000 * Quiksilver, Inc. 1,640,250 34
1,000 * Shutterfly, Inc. 15,550 --
95,000 Tiffany & Company 3,154,000 65
150,000 Tupperware Corporation 2,919,000 60
300,000 * Warnaco Group, Inc. - Class "A" 5,802,000 119
66,500 Wolverine World Wide, Inc. 1,882,615 39
- -------------------------------------------------------------------------------------------------------
58,168,844 1,198
- -------------------------------------------------------------------------------------------------------
Consumer Staples--5.1%
62,500 Alberto-Culver Company 3,161,875 65
65,000 Altria Group, Inc. 4,975,750 102
25,000 * Chattem, Inc. 878,000 18
160,000 * Constellation Brands, Inc. - Class "A" 4,604,800 95
120,000 * Dean Foods Company 5,042,400 104
20,000 * Elizabeth Arden, Inc. 323,200 7
175,000 Sara Lee Corporation 2,812,250 58
102,500 Tootsie Roll Industries, Inc. 3,004,275 62
- -------------------------------------------------------------------------------------------------------
24,802,550 511
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Energy--7.8%
62,500 Anadarko Petroleum Corporation $2,739,375 $56
11,000 * Aventine Renewable Energy Holdings, Inc. 235,290 5
100,000 Chesapeake Energy Corporation 2,898,000 60
50,000 EOG Resources, Inc. 3,252,500 67
55,000 GlobalSantaFe Corporation 2,749,450 57
72,500 * Grant Prideco, Inc. 2,757,175 57
80,000 Patterson-UTI Energy, Inc. 1,900,800 39
50,000 Suncor Energy, Inc. 3,602,500 74
75,000 * Swift Energy Company 3,136,500 64
210,000 Talisman Energy, Inc. 3,439,800 71
17,000 Technip SA (ADR) 968,490 20
40,000 * Transocean, Inc. 2,929,200 60
17,000 * VeraSun Energy Corporation 272,850 6
90,000 * Weatherford International, Ltd. 3,754,800 77
80,000 XTO Energy, Inc. 3,370,400 69
- -------------------------------------------------------------------------------------------------------
38,007,130 782
- -------------------------------------------------------------------------------------------------------
Financials--15.3%
76,000 A.G. Edwards, Inc. 4,049,280 83
40,000 Ambac Financial Group, Inc. 3,310,000 68
61,000 * AmeriCredit Corporation 1,524,390 31
170,000 Aspen Insurance Holdings, Ltd. 4,391,100 91
28,000 Bear Stearns Companies, Inc. 3,922,800 81
78,091 Brookline Bancorp, Inc. 1,073,751 22
70,000 Citigroup, Inc. 3,476,900 72
30,000 City National Corporation 2,011,800 42
145,000 Colonial BancGroup, Inc. 3,552,500 73
150,500 * Conseco, Inc. 3,158,995 65
135,000 Hub International, Ltd. 3,904,200 80
60,000 Lazard, Ltd. - Class "A" 2,398,800 49
2,000 Legg Mason, Inc. 201,720 4
215,000 NewAlliance Bancshares, Inc. 3,149,750 65
120,000 North Fork Bancorporation, Inc. 3,436,800 71
40,000 Pacific Capital Bancorp 1,078,800 22
70,000 PMI Group, Inc. 3,066,700 63
80,000 Protective Life Corporation 3,660,000 75
- -------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
MID-CAP OPPORTUNITY FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Financials (continued)
150,000 Provident Financial Services, Inc. $2,776,500 $57
50,000 Radian Group, Inc. 3,000,000 62
61,000 SAFECO Corporation 3,594,730 74
212,050 Sovereign Bancorp, Inc. 4,561,196 94
15,000 * United America Indemnity, Ltd. 337,050 7
170,000 Waddell & Reed Financial, Inc. - Class "A" 4,207,500 87
55,000 Zions Bancorporation 4,389,550 90
- -------------------------------------------------------------------------------------------------------
74,234,812 1,528
- -------------------------------------------------------------------------------------------------------
Health Care--12.9%
70,000 Aetna, Inc. 2,768,500 57
7,900 * Alkermes, Inc. 125,215 3
220,000 * Allscripts Healthcare Solutions, Inc. 4,939,000 102
51,750 Beckman Coulter, Inc. 2,978,730 61
71,500 * Caremark Rx, Inc. 4,051,905 83
150,000 * Community Health Systems, Inc. 5,602,500 115
165,000 DENTSPLY International, Inc. 4,968,150 102
302,500 * Exelixis, Inc. 2,634,775 54
60,000 * Fisher Scientific International, Inc. 4,694,400 97
65,000 * Gilead Sciences, Inc. 4,465,500 92
55,000 * Henry Schein, Inc. 2,757,700 57
75,000 * Invitrogen Corporation 4,755,750 98
70,000 * Laboratory Corporation of America Holdings 4,589,900 94
5,000 Medicis Pharmaceutical Corporation - Class "A" 161,750 3
130,000 * Thermo Electron Corporation 5,112,900 105
15,000 * TriZetto Group, Inc. 227,100 5
110,000 * Waters Corporation 4,980,800 103
40,000 * WellPoint, Inc. 3,082,000 63
- -------------------------------------------------------------------------------------------------------
62,896,575 1,294
- -------------------------------------------------------------------------------------------------------
Industrials--14.1%
100,000 American Standard Companies, Inc. 4,197,000 86
55,000 Avery Dennison Corporation 3,309,350 68
160,000 Chicago Bridge & Iron Company NV--NY Shares 3,849,600 79
65,500 * ChoicePoint, Inc. 2,344,900 48
35,000 FedEx Corporation 3,803,800 78
160,000 * Gardner Denver, Inc. 5,292,800 109
50,000 Harsco Corporation 3,882,500 80
65,000 IDEX Corporation 2,798,250 58
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Industrials (continued)
210,500 K&F Industries Holdings, Inc. $3,953,190 $81
186,500 Knoll, Inc. 3,767,300 78
50,000 L-3 Communications Holdings, Inc. 3,916,500 81
70,000 Manpower, Inc. 4,288,900 88
100,000 Masco Corporation 2,742,000 56
100,500 * Mobile Mini, Inc. 2,855,205 59
67,500 Northrop Grumman Corporation 4,594,725 95
100,000 Regal-Beloit Corporation 4,350,000 90
6,250 Rockwell Automation, Inc. 363,125 8
90,000 Rolls-Royce Group PLC (ADR) 3,807,792 78
50,000 Roper Industries, Inc. 2,237,000 46
100,504 * Williams Scotsman International, Inc. 2,146,765 44
- -------------------------------------------------------------------------------------------------------
68,500,702 1,410
- -------------------------------------------------------------------------------------------------------
Information Technology--14.0%
90,000 Amphenol Corporation - Class "A" 5,573,700 115
10,000 * Comverse Technology, Inc. 214,400 4
80,000 * DST Systems, Inc. 4,933,600 102
160,000 * Electronics for Imaging, Inc. 3,660,800 75
76,250 Fair Isaac Corporation 2,788,462 57
80,000 Harris Corporation 3,559,200 73
280,000 * Ingram Micro, Inc. - Class "A" 5,364,800 110
140,000 * International Rectifier Corporation 4,877,600 100
154,000 Intersil Corporation - Class "A" 3,780,700 78
115,000 * Intuit, Inc. 3,690,350 76
73,500 * Lam Research Corporation 3,331,755 69
18,000 * MasterCard, Inc. 1,266,300 26
5,000 Maxim Integrated Products, Inc. 140,350 3
77,250 * MEMC Electronic Materials, Inc. 2,829,668 58
100,000 Microchip Technology, Inc. 3,242,000 67
270,000 * Powerwave Technologies, Inc. 2,052,000 42
290,000 * Silicon Image, Inc. 3,688,800 76
393,500 * Smart Modular Technologies (WWH), Inc. 3,923,195 81
200,000 * Sybase, Inc. 4,848,000 100
74,500 * Tellabs, Inc. 816,520 17
98,750 * Varian Semiconductor Equipment
Associates, Inc. 3,624,125 75
- -------------------------------------------------------------------------------------------------------
68,206,325 1,404
- -------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
MID-CAP OPPORTUNITY FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Materials--6.2%
50,000 Agrium, Inc. $1,349,500 $28
18,500 Allegheny Technologies, Inc. 1,150,515 24
45,500 Ashland, Inc. 2,901,990 60
80,500 Celanese Corporation 1,440,950 30
48,000 Freeport-McMoRan Copper &
Gold, Inc. - Class "B" 2,556,480 53
110,000 Louisiana-Pacific Corporation 2,064,700 42
82,500 Lubrizol Corporation 3,772,725 77
65,000 Praxair, Inc. 3,845,400 79
250,000 Sappi, Ltd. (ADR) 3,182,500 65
75,000 Sigma-Aldrich Corporation 5,675,250 117
45,000 Temple-Inland, Inc. 1,804,500 37
- -------------------------------------------------------------------------------------------------------
29,744,510 612
- -------------------------------------------------------------------------------------------------------
Other--2.7%
40,000 iShares Russell Midcap Index Fund 3,730,000 77
70,000 MidCap SPDR Trust - Series "1" 9,645,300 198
- -------------------------------------------------------------------------------------------------------
13,375,300 275
- -------------------------------------------------------------------------------------------------------
Telecommunication Services--2.1%
230,000 Citizens Communications Company 3,229,200 67
105,000 Commonwealth Telephone Enterprises, Inc. 4,329,150 89
185,000 * NTELOS Holdings Corporation 2,362,450 49
11,000 * Time Warner Telecom, Inc. - Class "A" 209,110 4
- -------------------------------------------------------------------------------------------------------
10,129,910 209
- -------------------------------------------------------------------------------------------------------
Utilities--4.5%
120,000 AGL Resources, Inc. 4,380,000 90
85,000 Consolidated Edison, Inc. 3,927,000 81
125,000 Equitable Resources, Inc. 4,372,500 90
110,000 SCANA Corporation 4,429,700 91
110,000 Wisconsin Energy Corporation 4,745,400 98
- -------------------------------------------------------------------------------------------------------
21,854,600 450
- -------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $360,392,548) 469,921,258 9,673
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--3.0%
ChevronTexaco Funding Corp.:
$9,000M 5.2%, 10/6/06 $8,992,190 $186
1,900M 5.22%, 10/17/06 1,895,315 39
3,400M Toyota Motor Credit Co., 5.2%, 10/10/06 3,395,086 70
- -------------------------------------------------------------------------------------------------------
Total Value of Short-Term Corporate Notes (cost $14,282,591) 14,282,591 295
- -------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $374,675,139) 99.7% 484,203,849 9,968
Other Assets, Less Liabilities .3 1,589,186 32
- -------------------------------------------------------------------------------------------------------
Net Assets 100.0% $485,793,035 $10,000
=======================================================================================================
* Non-income producing
Summary of Abbreviations:
ADR American Depositary Receipts
See notes to financial statements
Portfolio Manager's Letter
SPECIAL SITUATIONS FUND
Dear Investor:
This is the annual report for the First Investors Special Situations Fund
for the fiscal year ended September 30, 2006. During the period, the
Fund's return on a net asset value basis was 10.7% for Class A shares and
9.9% for Class B shares.
The Fund's strategic shift from small-cap growth to small-cap value in
March of 2005 has borne fruit, as value continued to post superior
returns. The Fund's strategy is to seek out well-managed companies that
are being neglected by investors, rather than pursue companies with
promising, but unproven, products and technologies.
Stock selection was the primary factor in the Fund's outperformance
relative to the Russell 2000 Index. Our stock selection process uncovered
and allowed us to invest in an unusual number of companies that were in
the process of being acquired at premiums over current market valuations.
These companies included Stewart & Stevenson, Aviall, Reynolds & Reynolds
and Intergraph. In addition, we located a few companies that significantly
exceeded expectations as their strategic positioning paid off. These
holdings included Rogers Corporation and MEMC Electronic Materials. Both
prospered as their product development programs proved to be right on
target. In turn, their sales and earnings accelerated and their stock
values soared.
During the reporting period, energy, and its influence on the economy,
dominated the stock market. Early in the fiscal year we began to notice
rising inventories of natural gas and crude oil, which should precede
lower prices, and therefore reduced our position in energy. While this
proved premature in light of the supply disruption from the hurricanes, it
ultimately proved to be correct as 2006 unfolded.
As we look at the current portfolio we are pleased with the quality of our
holdings. However, we are cautious about the market given the substantial
appreciation in the prices of small-cap stocks over the past several
years.
Thank you for placing your trust in First Investors. As always, we
appreciate the opportunity to serve your investment needs.
Sincerely,
\S\ JOHN B. WALTHAUSEN
John B. Walthausen
Portfolio Manager
November 1, 2006
Fund Expenses
SPECIAL SITUATIONS FUND
The examples below show the ongoing costs (in dollars) of investing in your
Fund and will help you in comparing these costs with costs of other mutual
funds. Please refer to page 3 for a detailed explanation of the information
presented in these examples.
- --------------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
(4/1/06) (9/30/06) (4/1/06--9/30/06)*
- --------------------------------------------------------------------------------------------------
Expense Example -- Class A Shares
Actual $1,000.00 $993.85 $7.45
Hypothetical
(5% annual return before expenses) $1,000.00 $1,017.60 $7.54
- --------------------------------------------------------------------------------------------------
Expense Example -- Class B Shares
Actual $1,000.00 $990.36 $10.93
Hypothetical
(5% annual return before expenses) $1,000.00 $1,014.09 $11.06
- --------------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio of 1.49% for Class A shares and 2.19% for
Class B shares, multiplied by the average account value over the period, multiplied by 183/365
(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:)
Information Technology 22.2%
Industrials 20.4%
Consumer Discretionary 13.5%
Consumer Staples 8.7%
Health Care 7.6%
Utilities 6.4%
Financials 6.0%
Telecommunication Services 4.7%
Materials 4.3%
Energy 2.6%
Portfolio holdings and allocations are subject to change. Percentages are
as of September 30, 2006, and are based on the total market value of
investments.
Cumulative Performance Information
SPECIAL SITUATIONS FUND
Comparison of change in value of $10,000 investment in the First Investors
Special Situations Fund (Class A shares) and the Russell 2000 Index.
First Investors Special Situations Fund
Graph Plot Points
for the periods Ended 9/30/06
Special Russell
Situations 2000
Fund Index
Dec-96 9,425 10,000
Dec-97 10,949 12,236
Sep-98 8,802 10,253
Sep-99 11,551 12,208
Sep-00 16,526 15,063
Sep-01 9,442 11,868
Sep-02 7,885 10,764
Sep-03 9,735 14,693
Sep-04 10,489 17,451
Sep-05 12,731 20,584
Sep-06 14,089 22,626
(INSET BOX IN CHART READS:)
Average Annual Total Returns*
Class A Shares N.A.V. Only S.E.C. Standardized
One Year 10.67% 4.29%
Five Years 8.33% 7.06%
Ten Years 4.28% 3.67%
Class B Shares
One Year 9.88% 5.88%
Five Years 7.57% 7.27%
Ten Years 3.48% 3.48%
The graph compares a $10,000 investment in the First Investors Special
Situations Fund (Class A shares) beginning 12/31/96 with a theoretical
investment in the Russell 2000 Index (the "Index"). The Index consists
of the smallest 2,000 companies in the Russell 3000 Index (which
represents approximately 98% of the investable U.S. equity market). The
Index is an unmanaged index generally considered as the premier of small
capitalization stocks. It is not possible to invest directly in this
Index. In addition, the Index does not take into account fees and
expenses. For purposes of the graph and the accompanying table, unless
otherwise indicated, it has been assumed that the maximum sales charge
was deducted from the initial $10,000 investment in the Fund and all
dividends and distributions were reinvested. Class B shares performance
may be greater than or less than that shown in the line graph above for
Class A shares based on differences in the sales loads and fees paid by
shareholders investing in the different classes.
* Average Annual Total Return figures (for the periods ended 9/30/06)
include the reinvestment of all dividends and distributions. "N.A.V.
Only" returns are calculated without sales charges. The Class A "S.E.C.
Standardized" returns shown are based on the maximum sales charge of
5.75% (prior to 6/17/02, the maximum sales charge was 6.25%) . The Class
B "S.E.C. Standardized" returns are adjusted for the applicable deferred
sales charge (maximum of 4% in the first year). During the periods
shown, some of the expenses of the Fund were waived or assumed. If such
expenses had been paid by the Fund, the Class A "S.E.C. Standardized"
Average Annual Total Return for One Year, Five Years and Ten Years would
have been 4.08%, 6.85% and 3.43%, respectively. The Class B "S.E.C.
Standardized" Average Annual Total Return for One Year, Five Years and
Ten Years would have been 5.68%, 7.03% and 3.25%, respectively. Results
represent past performance and do not indicate future results. The graph
and the returns shown do not reflect the deduction of taxes that a
shareholder would pay on distributions or the redemption of fund shares.
Investment return and principal value of an investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than
the original cost. Russell 2000 Index figures are from Frank Russell and
Company and all other figures are from First Investors Management
Company, Inc.
Portfolio of Investments
SPECIAL SITUATIONS FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
COMMON STOCKS--96.6%
Consumer Discretionary--13.5%
162,500 Catalina Marketing Corporation $4,468,750 $167
140,300 Dillard's, Inc. - Class "A" 4,592,019 172
120,000 Jackson Hewitt Tax Service, Inc. 3,601,200 135
284,700 Journal Communications, Inc. 3,208,569 120
100,125 Media General, Inc.- Class "A" 3,776,715 141
152,000 * Payless ShoeSource, Inc. 3,784,800 142
127,600 * Rent-A-Center, Inc. 3,737,404 140
130,400 * Scholastic Corporation 4,061,960 152
285,600 * Tempur-Pedic International, Inc. 4,903,752 184
- -------------------------------------------------------------------------------------------------------
36,135,169 1,353
- -------------------------------------------------------------------------------------------------------
Consumer Staples--8.7%
230,100 Chiquita Brands International, Inc. 3,078,738 115
112,950 Church & Dwight Co., Inc. 4,417,475 165
138,000 Flower Foods, Inc. 3,709,440 139
117,600 Hormel Foods Corporation 4,231,248 158
89,300 Lancaster Colony Corporation 3,997,068 150
129,953 Tootsie Roll Industries, Inc. 3,808,922 143
- -------------------------------------------------------------------------------------------------------
23,242,891 870
- -------------------------------------------------------------------------------------------------------
Energy--2.6%
97,800 * Denbury Resources, Inc. 2,826,420 106
266,700 * Parker Drilling Company 1,888,236 70
54,900 * Swift Energy Company 2,295,918 86
- -------------------------------------------------------------------------------------------------------
7,010,574 262
- -------------------------------------------------------------------------------------------------------
Financials--6.0%
14,500 * Alleghany Corporation 4,190,645 157
143,200 Calamos Asset Management, Inc. - Class "A" 4,198,624 157
105,900 Harleysville Group, Inc. 3,705,441 139
118,250 HCC Insurance Holdings, Inc. 3,888,060 145
- -------------------------------------------------------------------------------------------------------
15,982,770 598
- -------------------------------------------------------------------------------------------------------
Health Care--7.7%
170,900 * AMN Healthcare Services, Inc. 4,058,875 152
164,200 * AmSurg Corporation 3,655,092 137
70,200 * Humana, Inc. 4,639,518 174
- -------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
SPECIAL SITUATIONS FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Health Care (continued)
102,200 * Magellan Health Services, Inc. $4,353,720 $163
95,300 West Pharmaceutical Services, Inc. 3,742,431 140
- -------------------------------------------------------------------------------------------------------
20,449,636 766
- -------------------------------------------------------------------------------------------------------
Industrials--20.4%
60,000 Carlisle Companies, Inc. 5,046,000 189
134,200 CLARCOR, Inc. 4,091,758 153
160,200 * Continental Airlines, Inc. - Class "B" 4,535,262 170
121,100 Curtiss-Wright Corporation 3,675,385 137
108,300 HNI Corporation 4,503,114 168
46,000 * Jacobs Engineering Group, Inc. 3,437,580 129
99,000 John H. Harland Company 3,608,550 135
134,600 * Kansas City Southern, Inc. 3,675,926 138
80,000 Kennametal, Inc. 4,532,000 170
88,200 * NCI Building Systems, Inc. 5,130,594 192
86,700 United Industrial Corporation 4,638,450 174
105,900 Wabtec Corporation 2,873,067 107
144,000 Woodward Governor Company 4,829,760 181
- -------------------------------------------------------------------------------------------------------
54,577,446 2,043
- -------------------------------------------------------------------------------------------------------
Information Technology--22.3%
161,650 * Avnet, Inc. 3,171,573 119
239,300 AVX Corporation 4,233,217 158
127,100 * Cabot Microelectronics Corporation 3,663,022 137
73,400 CDW Corporation 4,527,312 169
219,400 * Checkpoint Systems, Inc. 3,622,294 136
239,100 * Convergys Corporation 4,937,415 185
83,100 Imation Corporation 3,336,465 125
116,900 * Intergraph Corporation 5,012,672 188
124,900 * MEMC Electronic Materials, Inc. 4,575,087 171
151,600 MoneyGram International, Inc. 4,405,496 165
292,550 * Overland Storage, Inc. 1,886,948 71
76,300 Reynolds & Reynolds Company - Class "A" 3,014,613 113
80,700 * Rogers Corporation 4,983,225 187
337,700 * Tyler Technologies, Inc. 4,366,461 163
101,400 * Varian Semiconductor Equipment
Associates, Inc. 3,721,380 139
- -------------------------------------------------------------------------------------------------------
59,457,180 2,226
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Amount
Invested
Shares or For Each
Principal $10,000 of
Amount Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Materials--4.3%
73,300 AptarGroup, Inc. $3,729,504 $140
197,000 Commercial Metals Company 4,005,010 150
114,400 Eagle Materials, Inc. 3,852,992 144
- -------------------------------------------------------------------------------------------------------
11,587,506 434
- -------------------------------------------------------------------------------------------------------
Telecommunication Services--4.7%
105,300 CenturyTel, Inc. 4,177,251 156
449,800 * Premiere Global Services, Inc. 3,904,264 146
107,775 Telephone & Data Systems, Inc. - Special Shares 4,402,609 165
- -------------------------------------------------------------------------------------------------------
12,484,124 467
- -------------------------------------------------------------------------------------------------------
Utilities--6.4%
261,800 * CMS Energy Corporation 3,780,392 142
699,500 * Dynegy, Inc. - Class "A" 3,875,230 145
164,300 Energy East Corporation 3,897,195 146
83,700 NSTAR 2,792,232 105
112,100 Pepco Holdings, Inc. 2,709,457 101
- -------------------------------------------------------------------------------------------------------
17,054,506 639
- -------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $222,541,546) 257,981,802 9,658
- -------------------------------------------------------------------------------------------------------
SHORT-TERM U.S. GOVERNMENT
AGENCY OBLIGATIONS--3.5%
$9,400M Federal Home Loan Bank, 4.75%, 10/2/06
(cost $9,397,519) 9,397,519 352
- -------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $231,939,065) 100.1% 267,379,321 10,010
Excess of Liabilities Over Other Assets (.1) (265,071) (10)
- -------------------------------------------------------------------------------------------------------
Net Assets 100.0% $267,114,250 $10,000
=======================================================================================================
* Non-income producing
See notes to financial statements
Portfolio Manager's Letter
FOCUSED EQUITY FUND
Dear Investor:
This is the annual report for the First Investors Focused Equity Fund for
the fiscal year ended September 30, 2006. During the period, the Fund's
return on a net asset value basis was 4.7% for Class A shares and 4.0% for
Class B shares, including dividends of 1.1 cent per share on Class A
shares.
The Fund's absolute performance was driven by the performance of the
equity markets and the concentrated nature of the Fund.
The Fund's underperformance versus the S&P 500 Index was primarily
attributable to stock selection. Individual detractors during the period
included ConocoPhillips, Medtronic, Sprint Nextel and Marvell Technology.
Shares of ConocoPhillips declined as the company worked to integrate its
acquisition of Burlington Resources and ramped up its ownership percentage
of Lukoil. Concerns about slowing ICD (implantable cardiac defibrillator)
growth rates hurt shares of medical equipment manufacturer Medtronic.
Sprint Nextel has struggled with an inferior handset portfolio relative to
its peers. Marvell Technology has suffered from a lack of seasonal growth
in its drive and PC businesses. In addition, the Fund's relative
performance was hurt by its overweighting in the mega-capitalization
portion of the market, as this segment underperformed the overall S&P 500
Index during the period.
The Fund's relative performance was helped by security selection in the
industrials, materials and energy sectors. Top contributors in these
sectors included, Lockheed Martin, Waste Management, Newmont Mining, Rio
Tinto and Schlumberger.
Thank you for placing your trust in First Investors. As always, we
appreciate the opportunity to serve your investment needs.
Sincerely,
\S\ MATTHEW E. MEGARGEL
Matthew E. Megargel
Portfolio Manager
November 1, 2006
Fund Expenses
FOCUSED EQUITY 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
(4/1/06) (9/30/06) (4/1/06--9/30/06)*
- --------------------------------------------------------------------------------------------------
Expense Example -- Class A Shares
Actual $1,000.00 $1,004.41 $8.64
Hypothetical
(5% annual return before expenses) $1,000.00 $1,016.45 $8.69
- --------------------------------------------------------------------------------------------------
Expense Example -- Class B Shares
Actual $1,000.00 $1,001.16 $12.14
Hypothetical
(5% annual return before expenses) $1,000.00 $1,012.94 $12.21
- --------------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio of 1.72% for Class A shares and 2.42% for
Class B shares, multiplied by the average account value over the period, multiplied by 183/365
(to reflect the one-half year period).
Portfolio Composition
TOP TEN SECTORS
Portfolio Composition
TOP TEN SECTORS
(BAR CHART DATA:)
Health Care 18.9%
Information Technology 18.4%
Financials 18.2%
Industrials 12.9%
Consumer Staples 12.0%
Energy 9.1%
Consumer Discretionary 4.7%
Utilities 3.5%
Telecommunication Services 1.0%
Portfolio holdings and allocations are subject to change. Percentages are
as of September 30, 2006, and are based on the total market value of
investments.
Cumulative Performance Information
FOCUSED EQUITY FUND
Comparison of change in value of $10,000 investment in the First Investors
Focused Equity Fund (Class A shares) and the Standard & Poor's 500 Index.
First Investors Focused Equity Fund
Graph Plot Points
for the periods Ended 9/30/06
Focused
Equity S&P 500
Fund Index
Mar-99 9,425 10,000
Sep-99 10,254 9,957
Sep-00 9,783 11,279
Sep-01 7,276 8,277
Sep-02 5,401 6,581
Sep-03 6,814 8,187
Sep-04 7,380 9,322
Sep-05 8,218 10,464
Sep-06 8,606 11,593
(INSET BOX IN CHART READS:)
Average Annual Total Returns*
Class A Shares N.A.V. Only S.E.C. Standardized
One Year 10.67% 4.29%
Five Years 8.33% 7.06%
Ten Years 4.28% 3.67%
Class B Shares
One Year 9.88% 5.88%
Five Years 7.57% 7.27%
Ten Years 3.48% 3.48%
The graph compares a $10,000 investment in the First Investors Focused
Equity Fund (Class A shares) beginning 3/22/99 (inception date) with a
theoretical investment in the Standard & Poor's 500 Index (the "Index").
The Index is an unmanaged capitalization-weighted index of 500 stocks
designed to measure performance of the broad domestic economy through
changes in the aggregate market value of such stocks, which represent
all major industries. It is not possible to invest directly in this
Index. In addition, the Index does not take into account fees and
expenses that an investor would incur in purchasing securities in the
Index. For purposes of the graph and the accompanying table, unless
otherwise indicated, it has been assumed that the maximum sales charge
was deducted from the initial $10,000 investment in the Fund. Class B
shares performance may be greater than or less than that shown in the
line graph above for Class A shares based on differences in sales loads
and fees paid by shareholders investing in the different classes.
* Average Annual Total Return figures (for the periods ended 9/30/06)
include the reinvestment of all dividends and distributions. "N.A.V.
Only" returns are calculated without sales charges. The Class A "S.E.C.
Standardized" returns shown are based on the maximum sales charge of
5.75% (prior to 6/17/02 the maximum sales charge was 6.25%) . The Class
B "S.E.C. Standardized" returns are adjusted for the applicable deferred
sales charge (maximum of 4% in the first year). During certain of the
periods shown, some of the expenses of the Fund were waived or assumed.
If such expenses had been paid by the Fund, the Class A "S.E.C.
Standardized" Average Annual Total Returns Since Inception would have
been (1.98%) . The Class B "S.E.C. Standardized" Average Annual Total
Returns Since Inception would have been (1.90%) . Results represent past
performance and do not indicate future results. The graph and the
returns shown do not reflect the deduction of taxes that a shareholder
would pay on distributions or the redemption of fund shares. Investment
return and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the
original cost. Standard & Poor's 500 Index figures are from Standard &
Poor's and all other figures are from First Investors Management
Company, Inc.
Portfolio of Investments
FOCUSED EQUITY FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
COMMON STOCKS--98.7%
Consumer Discretionary--4.7%
35,100 CBS Corporation - Class "B" $988,767 $190
15,200 Federated Department Stores, Inc. 656,792 126
22,050 * Viacom, Inc. - Class "B" 819,819 157
- -------------------------------------------------------------------------------------------------------
2,465,378 473
- -------------------------------------------------------------------------------------------------------
Consumer Staples--12.0%
20,600 Altria Group, Inc. 1,576,930 303
11,600 Coca-Cola Company 518,288 99
16,600 General Mills, Inc. 939,560 180
24,000 PepsiCo, Inc. 1,566,240 300
26,600 Procter & Gamble Company 1,648,668 316
- -------------------------------------------------------------------------------------------------------
6,249,686 1,198
- -------------------------------------------------------------------------------------------------------
Energy--9.1%
28,600 Chesapeake Energy Corporation 828,828 159
27,900 ConocoPhillips 1,660,887 319
31,100 Halliburton Company 884,795 170
14,900 Noble Energy, Inc. 679,291 130
17,000 Petro-Canada 685,610 131
- -------------------------------------------------------------------------------------------------------
4,739,411 909
- -------------------------------------------------------------------------------------------------------
Financials--18.2%
21,000 ACE, Ltd. 1,149,330 220
39,400 Bank of America Corporation 2,110,658 405
35,500 Citigroup, Inc. 1,763,285 338
10,000 Merrill Lynch & Company, Inc. 782,200 150
14,700 MetLife, Inc. 833,196 160
11,200 PNC Financial Services Group, Inc. 811,328 156
14,800 State Street Corporation 923,520 177
18,600 UBS AG 1,103,166 211
- -------------------------------------------------------------------------------------------------------
9,476,683 1,817
- -------------------------------------------------------------------------------------------------------
Health Care--18.9%
18,500 Abbott Laboratories 898,360 172
2,700 Alcon, Inc. 309,150 59
15,400 * Amgen, Inc. 1,101,562 211
- -------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
FOCUSED EQUITY FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Health Care (continued)
18,800 Eli Lilly & Company $1,071,600 $206
26,000 * Forest Laboratories, Inc. 1,315,860 252
20,000 * Medco Health Solutions, Inc. 1,202,200 231
33,300 Medtronic, Inc. 1,546,452 297
70,500 Schering-Plough Corporation 1,557,345 299
10,900 * WellPoint, Inc. 839,845 161
- -------------------------------------------------------------------------------------------------------
9,842,374 1,888
- -------------------------------------------------------------------------------------------------------
Industrials--12.9%
14,100 Boeing Company 1,111,785 213
6,600 Fluor Corporation 507,475 98
41,300 General Electric Company 1,457,890 280
8,000 Lockheed Martin Corporation 688,480 132
9,500 United Parcel Service, Inc. - Class "B" 683,430 131
17,800 United Technologies Corporation 1,127,630 216
31,600 Waste Management, Inc. 1,159,088 222
- -------------------------------------------------------------------------------------------------------
6,735,778 1,292
- -------------------------------------------------------------------------------------------------------
Information Technology--18.4%
37,600 Accenture, Ltd. - Class "A" 1,192,296 229
29,200 * Adobe Systems, Inc. 1,093,540 210
47,600 * Cisco Systems, Inc. 1,094,800 210
35,600 * Corning, Inc. 868,996 167
80,300 * EMC Corporation 961,994 184
2,700 * Google, Inc. - Class "A" 1,085,130 208
14,000 Hewlett-Packard Company 513,660 98
52,700 Microsoft Corporation 1,440,291 276
28,700 * Oracle Corporation 509,138 98
22,500 QUALCOMM, Inc. 817,875 157
- -------------------------------------------------------------------------------------------------------
9,577,720 1,837
- -------------------------------------------------------------------------------------------------------
Telecommunication Services--1.0%
30,521 Sprint Nextel Corporation 523,435 100
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Amount
Invested
Shares or For Each
Principal $10,000 of
Amount Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Utilities--3.5%
12,900 Dominion Resources, Inc. $986,721 $189
14,000 Exelon Corporation 847,560 163
- -------------------------------------------------------------------------------------------------------
1,834,281 352
- -------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $45,316,191) 51,444,746 9,866
- -------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT--1.1%
$572M UBS Securities, 5%, dated 9/29/06, to be
repurchased at $572,238 on 10/2/06
(collateralized by U.S. Treasury Bonds,
6.125%, 8/15/29, valued at $585,206)
(cost $572,000) 572,000 110
- -------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $45,888,191) 99.8% 52,016,746 9,976
Other Assets, Less Liabilities .2 126,025 24
- -------------------------------------------------------------------------------------------------------
Net Assets 100.0% $52,142,771 $10,000
=======================================================================================================
* Non-income producing
See notes to financial statements
Portfolio Manager's Letter
GLOBAL FUND
Dear Investor:
This is the annual report for the First Investors Global Fund for the
fiscal year ended September 30, 2006. During the period, the Fund's return
on a net asset value basis was 10.2% for Class A shares and 9.5% for Class
B shares, including dividends of 1.5 cents per share on Class A shares.
The Fund generally invests in large and medium capitalization stocks that
are traded in the more established markets in the world, including the
U.S. At the end of the reporting period, the Fund held 47.3% of its assets
in U.S. securities, 49.6% in developed foreign markets and 3.1% in
emerging markets.
The Fund's absolute performance during the reporting period was driven by
the strong performance of the global equity markets. Foreign markets
outperformed U.S. domestic markets during the period. Based on their
respective MSCI Country Indexes, Europe led all markets, returning 23%,
followed closely by emerging markets, which returned 21%. The Pacific
Basin (excluding Japan) and Japan performed similarly, with each returning
13%. The U.S. returned 11% for the period.
The Fund's relative underperformance versus the MSCI All Country World
Index was primarily attributable to stock selection in the U.S. and Japan,
as well as within a number of sectors, particularly in the
telecommunication services and consumer discretionary sectors. Within
telecommunication services, Mobile Telesystems and Sprint Nextel
disappointed. Mobile Telesystems experienced seasonal weakness due to
lower roaming revenues and higher expenses. Sprint Nextel struggled with
an inferior handset portfolio relative to its peers. Within consumer
discretionary, Peugeot disappointed as some of their products have not
performed well and volumes have been low.
The Fund was helped by positive results from the Fund's U.K. and select
European holdings, which included the Swiss bank UBS AG. UBS has performed
well as the company has experienced strong growth in its investment
banking and private wealth businesses. Security selection within the
materials sector also helped performance, particularly our holdings in
Xstrata. Xstrata is well positioned, with a diversified resource base and
strong organic growth, and therefore should be able to withstand a decline
in commodities pricing.
Thank you for placing your trust in First Investors. As always, we
appreciate the opportunity to serve your investment needs.
Sincerely,
\S\ TROND SKRAMSTAD
Trond Skramstad
Portfolio Manager
November 1, 2006
Fund Expenses
GLOBAL 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
(4/1/06) (9/30/06) (4/1/06--9/30/06)*
- --------------------------------------------------------------------------------------------------
Expense Example -- Class A Shares
Actual $1,000.00 $1,022.41 $8.67
Hypothetical
(5% annual return before expenses) $1,000.00 $1,016.50 $8.64
- --------------------------------------------------------------------------------------------------
Expense Example -- Class B Shares
Actual $1,000.00 $1,020.00 $12.20
Hypothetical
(5% annual return before expenses) $1,000.00 $1,012.99 $12.16
- --------------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio of 1.71% for Class A shares and 2.41% for
Class B shares, multiplied by the average account value over the period, multiplied by 183/365
(to reflect the one-half year period).
Portfolio Composition
TOP SECTORS
Portfolio Composition
TOP TEN COUNTRIES
(BAR CHART DATA:)
United States 46.5%
France 9.3%
Japan 8.0%
United Kingdom 6.8%
Switzerland 5.9%
Germany 5.4%
Canada 3.2%
Italy 2.6%
Brazil 1.6%
Norway 1.5%
Portfolio holdings and allocations are subject to change. Percentages are
as of September 30, 2006, and are based on the total market value of
investments.
Cumulative Performance Information
GLOBAL FUND
Comparison of change in value of $10,000 investment in the First Investors
Global Fund (Class A shares) and the Morgan Stanley Capital International
("MSCI") All Country World Free Index.
First Investors Global Fund
Graph Plot Points
for the periods Ended 9/30/06
Global MSCI All Country
Fund Index
Dec-96 9,425 10,000
Dec-97 10,180 11,500
Sep-98 10,053 11,578
Sep-99 13,032 15,156
Sep-00 14,560 16,371
Sep-01 10,357 11,764
Sep-02 8,409 9,671
Sep-03 10,257 12,261
Sep-04 11,788 14,472
Sep-05 14,034 17,502
Sep-06 15,459 20,152
(INSET BOX IN CHART READS:)
Average Annual Total Returns*
Class A Shares N.A.V. Only S.E.C. Standardized
One Year 10.15% 3.83%
Five Years 8.34% 7.06%
Ten Years 5.72% 5.09%
Class B Shares
One Year 9.51% 5.51%
Five Years 7.60% 7.30%
Ten Years 4.98% 4.98%
The graph compares a $10,000 investment in the First Investors Global
Fund (Class A shares) beginning 12/31/96 with a theoretical investment
in the MSCI All Country World Free Index (the "Index"). The Index
represents both the developed and the emerging markets. The Index
includes 48 countries of which 25 are emerging markets. It is not
possible to invest directly in this Index. In addition, the Index does
not take into account fees and expenses that an investor would incur in
purchasing securities in the Index. For purposes of the graph and the
accompanying table, unless otherwise indicated, it has been assumed that
the maximum sales charge was deducted from the initial $10,000
investment in the Fund and all dividends and distributions were
reinvested. Class B shares performance may be greater than or less than
that shown in the line graph above for Class A shares based on
differences in sales loads and fees paid by shareholders investing in
the different classes.
* Average Annual Total Return figures (for the periods ended 9/30/06)
include the reinvestment of all dividends and distributions. "N.A.V.
Only" returns are calculated without sales charges. The Class A "S.E.C.
Standardized" returns shown are based on the maximum sales charge of
5.75% (prior to 6/17/02, the maximum sales charge was 6.25%) . The Class
B "S.E.C. Standardized" returns are adjusted for the applicable deferred
sales charge (maximum of 4% in the first year). Results represent past
performance and do not indicate future results. The graph and the
returns shown do not reflect the deduction of taxes that a shareholder
would pay on distributions or the redemption of fund shares. Investment
return and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the
original cost. MSCI All Country World Free Index figures are from Morgan
Stanley & Co., Inc. and all other figures are from First Investors
Management Company, Inc.
Portfolio of Investments
GLOBAL FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
COMMON STOCKS--98.3%
United States--46.5%
35,000 Abbott Laboratories $1,699,600 $62
70,800 Accenture, Ltd. - Class "A" 2,245,068 82
39,700 ACE, Ltd. 2,172,781 79
63,800 * Adobe Systems, Inc. 2,389,310 87
10,200 Aetna, Inc. 403,410 15
28,500 * Alkermes, Inc. 451,725 16
36,700 Altria Group, Inc. 2,809,385 103
35,200 * Amdocs, Ltd. 1,393,920 51
24,753 American International Group, Inc. 1,640,134 60
29,100 * Amgen, Inc. 2,081,523 76
24,100 AT&T, Inc. 784,696 29
77,900 Bank of America Corporation 4,173,103 152
6,900 * Bare Escentuals, Inc. 187,335 7
23,600 Boeing Company 1,860,860 68
102,400 CBS Corporation - Class "B" 2,884,608 105
10,800 * Cephalon, Inc. 666,900 24
31,900 Chesapeake Energy Corporation 924,462 34
94,500 * Cisco Systems, Inc. 2,173,500 79
71,949 Citigroup, Inc. 3,573,707 130
21,300 Coca-Cola Company 951,684 35
33,800 ConocoPhillips 2,012,114 73
96,200 * Corning, Inc. 2,348,242 86
27,800 Danaher Corporation 1,909,026 70
48,700 Dominion Resources, Inc. 3,725,063 136
36,800 * E*TRADE Financial Corporation 880,256 32
35,100 Eli Lilly & Company 2,000,700 73
217,900 * EMC Corporation 2,610,442 95
46,600 ExxonMobil Corporation 3,126,860 114
28,400 Federated Department Stores, Inc. 1,227,164 45
25,000 Fluor Corporation 1,922,250 70
54,700 * Forest Laboratories, Inc. 2,768,367 101
11,300 * Genentech, Inc. 934,510 34
106,000 General Electric Company 3,741,800 137
66,000 General Mills, Inc. 3,735,600 136
5,100 * Google, Inc. - Class "A" 2,049,690 75
20,700 Hewlett-Packard Company 759,483 28
13,800 Joy Global, Inc. 519,018 19
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
United States (continued)
23,600 * Lam Research Corporation $1,069,788 $39
14,300 Lockheed Martin Corporation 1,230,658 45
10,800 Loews Corporation - Carolina Group 598,212 22
12,800 Manpower, Inc. 784,256 29
29,900 Market 2000+ Holders Trust 1,733,901 63
46,500 * Medco Health Solutions, Inc. 2,795,115 102
60,800 Medtronic, Inc. 2,823,552 103
9,700 * MEMC Electronic Materials, Inc. 355,311 13
18,200 Merrill Lynch & Company, Inc. 1,423,604 52
24,900 Microchip Technology, Inc. 807,258 29
104,900 Microsoft Corporation 2,866,917 105
23,600 * NASDAQ Stock Market, Inc. 713,664 26
17,600 * National-Oilwell Varco, Inc. 1,030,480 38
22,700 Newmont Mining Corporation 970,425 35
51,000 Noble Energy, Inc. 2,325,090 85
14,900 Nuveen Investments - Class "A" 763,327 28
42,600 PepsiCo, Inc. 2,780,076 101
45,600 PNC Financial Services Group, Inc. 3,303,264 121
18,000 Precision Castparts Corporation 1,136,880 41
47,100 Procter & Gamble Company 2,919,258 107
31,800 QUALCOMM, Inc. 1,155,930 42
130,200 Schering-Plough Corporation 2,876,118 105
22,100 Schlumberger, Ltd. 1,370,863 50
15,800 Simon Property Group, Inc. (REIT) 1,431,796 52
55,279 Sprint Nextel Corporation 948,035 35
27,900 State Street Corporation 1,740,960 64
25,000 TJX Companies, Inc. 700,750 26
15,800 United Parcel Service, Inc. - Class "B" 1,136,652 41
37,800 United Technologies Corporation 2,394,630 87
46,900 * Univision Communications, Inc. - Class "A" 1,610,546 59
58,300 * Viacom, Inc. - Class "B" 2,167,594 79
10,100 Wal-Mart Stores, Inc. 498,132 18
103,000 Waste Management, Inc. 3,778,040 138
19,400 * WellPoint, Inc. 1,494,770 55
- -------------------------------------------------------------------------------------------------------
127,474,148 4,653
- -------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
GLOBAL FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
France--9.3%
20,523 Accor SA $1,397,369 $51
72,062 Axa 2,654,560 97
18,242 BNP Paribas SA 1,960,723 72
30,739 Carrefour SA 1,940,316 71
38,928 Electricite de France 2,159,872 79
23,821 Essilor International SA 2,436,657 89
27,069 Lafarge SA 3,490,695 127
15,418 LVMH Moet Hennessy Louis Vuitton SA 1,586,877 58
37,000 PSA Peugeot Citroen 2,084,302 76
39,253 Sanofi-Aventis 3,490,614 127
34,788 Total SA 2,280,508 83
- -------------------------------------------------------------------------------------------------------
25,482,493 930
- -------------------------------------------------------------------------------------------------------
Japan--8.0%
25,800 Astellas Pharma, Inc. 1,037,988 38
55,650 Canon, Inc. 2,903,519 106
81,300 Daiichi Sankyo Company, Ltd. 2,306,823 84
52,800 Eisai Company, Ltd. 2,553,576 93
104,400 Matsui Securities Company, Ltd. 870,995 32
514,000 Mitsubishi Heavy Industries, Ltd. 2,128,878 78
215 Mitsubishi UFJ Financial Group, Inc. 2,763,847 101
2,298 Rakuten, Inc. 901,176 33
49,400 Sega Sammy Holdings, Inc. 1,589,972 58
68,300 Seven & I Holdings Company, Ltd. 2,198,281 80
312,000 Shinsei Bank, Ltd. 1,902,681 69
16,600 Sony Corporation 672,070 25
- -------------------------------------------------------------------------------------------------------
21,829,806 797
- -------------------------------------------------------------------------------------------------------
United Kingdom--6.8%
92,816 Alliance Boots PLC 1,343,652 49
57,651 AstraZeneca PLC 3,594,640 131
265,000 * Debenhams PLC 899,668 33
345,254 EMI Group PLC 1,715,468 63
843,945 Old Mutual PLC 2,640,530 97
52,492 Reckitt Benckiser PLC 2,170,866 79
497,814 Tesco PLC 3,347,586 122
69,231 Xstrata PLC 2,854,073 104
- -------------------------------------------------------------------------------------------------------
18,566,483 678
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Switzerland--5.9%
34,386 Credit Suisse Group - Registered $1,983,992 $73
19,000 Nestle SA - Registered 6,606,324 241
92,500 UBS AG - Registered 5,517,764 201
8,227 Zurich Financial Services AG - Registered 2,015,827 74
- -------------------------------------------------------------------------------------------------------
16,123,907 589
- -------------------------------------------------------------------------------------------------------
Germany--5.4%
12,211 Deutsche Boerse AG 1,832,996 67
128,648 Deutsche Telekom AG - Registered 2,041,954 74
22,109 E.ON AG 2,624,502 96
23,692 Henkel KGaA 3,304,011 120
22,493 Muenchener Rueckversicherungs-
Gesellschaft AG - Registered 3,554,511 130
7,430 SAP AG 1,472,974 54
- -------------------------------------------------------------------------------------------------------
14,830,948 541
- -------------------------------------------------------------------------------------------------------
Canada--3.2%
17,100 Agnico-Eagle Mines, Ltd. 532,323 19
65,600 Alcan, Inc. 2,620,707 95
11,000 Cameco Corporation 402,270 15
30,400 EnCana Corporation 1,420,474 52
137,300 Talisman Energy, Inc. 2,248,439 82
25,200 Teck Cominco, Ltd. - Class "B" 1,581,593 58
- -------------------------------------------------------------------------------------------------------
8,805,806 321
- -------------------------------------------------------------------------------------------------------
Italy--2.6%
459,449 Banca Intesa SpA 3,020,623 110
510,761 UniCredito Italiano SpA 4,234,667 155
- -------------------------------------------------------------------------------------------------------
7,255,290 265
- -------------------------------------------------------------------------------------------------------
Brazil--1.6%
135,000 All America Latina Logistica 1,057,117 39
149,100 Companhia Vale Do Rio Doce (ADR) 3,214,596 117
- -------------------------------------------------------------------------------------------------------
4,271,713 156
- -------------------------------------------------------------------------------------------------------
Norway--1.5%
173,300 Statoil ASA 4,100,776 150
- -------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
GLOBAL FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Spain--1.5%
172,375 Banco Bilbao Vizcaya Argentaria SA $3,985,006 $145
- -------------------------------------------------------------------------------------------------------
Ireland--1.2%
54,500 * Elan Corporation PLC (ADR) 838,210 31
38,500 * Ryanair Holdings PLC (ADR) 2,436,665 89
- -------------------------------------------------------------------------------------------------------
3,274,875 120
- -------------------------------------------------------------------------------------------------------
Australia--1.1%
149,324 Westpac Banking Corporation 2,530,651 92
19,500 Woodside Petroleum, Ltd. (ADR) 571,163 21
- -------------------------------------------------------------------------------------------------------
3,101,814 113
- -------------------------------------------------------------------------------------------------------
Sweden--1.0%
91,200 Assa Abloy - Class "B" 1,695,561 62
283,000 Telefonaktiebolaget LM Ericsson - Class "B" 980,849 36
- -------------------------------------------------------------------------------------------------------
2,676,410 98
- -------------------------------------------------------------------------------------------------------
Netherlands--.9%
72,288 Koninklijke (Royal) Philips Electronics NV 2,533,770 92
- -------------------------------------------------------------------------------------------------------
Mexico--.7%
276,500 * Empresas ICA SA de CV 995,513 36
311,200 Wal-Mart de Mexico SA de CV 1,058,200 39
- -------------------------------------------------------------------------------------------------------
2,053,713 75
- -------------------------------------------------------------------------------------------------------
Taiwan--.7%
113,832 Chunghwa Telecom Company, Ltd. (ADR) 1,970,432 72
- -------------------------------------------------------------------------------------------------------
Belgium--.4%
16,195 UCB SA 1,028,830 38
- -------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $228,337,007) 269,366,220 9,833
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT--1.8%
$4,808M UBS Securities, 5%, dated 9/29/06, to be
repurchased at $4,810,003 on 10/2/06
(collaterized by U.S. Treasury Bonds,
6.375%, 8/15/27, valued at $4,916,048)
(cost $4,808,000) $4,808,000 $175
- -------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $233,145,007) 100.1% 274,174,220 10,008
Excess of Liabilities Over Other Assets (.1) (219,553) (8)
- -------------------------------------------------------------------------------------------------------
Net Assets 100.0% $273,954,667 $10,000
=======================================================================================================
* Non-income producing
Summary of Abbreviations:
ADR American Depositary Receipts
REIT Real Estate Investment Trust
See notes to financial statements
Portfolio of Investments (continued)
GLOBAL FUND
September 30, 2006
Sector diversification of the portfolio was as follows:
- --------------------------------------------------------------------------------------------------
Percentage
Sector of Net Assets Value
- --------------------------------------------------------------------------------------------------
Pharmaceuticals, Biotechnology & Life Sciences 10.3% $ 28,330,124
Banks 8.7 23,701,462
Diversified Financials 8.6 23,474,368
Energy 8.0 21,813,499
Capital Goods 7.1 19,535,074
Food, Beverage & Tobacco 6.4 17,481,281
Materials 5.6 15,264,412
Insurance 5.4 14,678,343
Technology Hardware & Equipment 4.7 12,931,965
Software & Services 4.5 12,417,879
Food & Staples Retailing 3.8 10,386,167
Health Care Equipment & Services 3.6 9,953,504
Household & Personal Products 3.1 8,581,470
Utilities 3.1 8,509,437
Media 3.1 8,378,216
Consumer Durables & Apparel 2.3 6,382,689
Telecommunication Services 2.1 5,745,117
Transportation 1.7 4,630,434
Commercial Services & Supplies 1.6 4,562,296
Retailing 1.4 3,728,758
Semiconductors & Semiconductor Equipment 0.8 2,232,357
Automobiles & Components 0.8 2,084,302
Other 0.6 1,733,901
Real Estate 0.5 1,431,796
Consumer Services 0.5 1,397,369
Repurchase Agreement 1.8 4,808,000
- --------------------------------------------------------------------------------------------------
Total Value of Investments 100.1 274,174,220
Excess of Liabilities Over Other Assets (.1) (219,553)
- --------------------------------------------------------------------------------------------------
Net Assets 100.0% $273,954,667
==================================================================================================
See notes to financial statements
Portfolio Manager's Letter
INTERNATIONAL FUND*
Dear Investor:
This is the annual report for the First Investors International Fund from
the Fund's inception (June 27, 2006) until September 30, 2006. During the
period, the Fund's return on a net asset value basis was 7.1% for Class A
shares and 7.0% for Class B shares.
Launched in late-June with the objective of long-term capital growth, the
Fund invests in a portfolio of 40 to 60 equity securities of companies
that are located outside of the U.S. We are pleased to report that the
Fund got off to a very good start. The Fund's absolute performance during
the reporting period benefited from the strong performance of the
international equity markets.
The Fund's relative outperformance versus the MSCI-EAFE Index was largely
driven by its overweight positions in emerging markets and the consumers
staples sector. The Fund looks for attractive investment opportunities in
all foreign markets, including developed and emerging markets. At the end
of the reporting period, the Fund held 19.4% of its assets in emerging
markets, a significant overweight position compared to the MSCI-EAFE
Index. This helped the Fund's relative performance, as emerging markets
outperformed developed markets. The Fund's overweight position in consumer
staples also helped its relative performance, as this sector performed
well as the global economy cooled.
The top three performing stocks in the Fund were Enagas SA, a Spanish gas
utilities company, Red Electrica, a Spanish electric utilities company,
and Tesco, a U.K. retailer. The Fund's worst performers were in the
financials and telecommunications services sectors.
While its greatest allocation is to large-cap stocks, the Fund invests in
companies of any size. At the end of the reporting period, the Fund held
58.9% of its assets in large caps, 34.0% in mid caps and 6.2% in small
caps, based on Lipper's market-cap ranges. The Fund's market
capitalization breakdown was not a significant contributor to relative
performance during the reporting period.
Portfolio Manager's Letter (continued)
INTERNATIONAL FUND*
Thank you for placing your trust in First Investors. As always, we
appreciate the opportunity to serve your investment needs.
Sincerely,
\S\ RAJIV JAIN
Rajiv Jain
Portfolio Manager
November 1, 2006
* The Fund commenced operations on June 27, 2006.
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
(6/27/06) (9/30/06) (6/27/06--9/30/06)
- --------------------------------------------------------------------------------------------------
Expense Example -- Class A Shares
Actual $1,000.00 $1,071.00 $6.40*
Hypothetical
(5% annual return before expenses) $1,000.00 $1,013.29 $11.86**
- --------------------------------------------------------------------------------------------------
Expense Example -- Class B Shares
Actual $1,000.00 $1,070.00 $8.30*
Hypothetical
(5% annual return before expenses) $1,000.00 $1,009.78 $15.37**
- --------------------------------------------------------------------------------------------------
* Actual expenses reflect only the inception period (June 27, 2006 to
September 30, 2006). Therefore expenses shown are lower than would be
expected for a six-month period. Actual expenses for the six- month
period will be reflected in future reports. Expenses are equal to the
annualized expense ratio of 2.35% for Class A shares and 3.05% for
Class B shares, multiplied by the average account value over the
period, multiplied by 96/365 (to reflect the inception period).
Expenses paid during the period are net of expenses waived.
** Expenses are equal to the annualized expense ratio of 2.35% for
Class A shares and 3.05% for Class B shares, multiplied by the average
account value over the period, multiplied by 183/365 (to reflect the
one-half year period). Expenses paid during the period are net of
expenses waived.
Portfolio Composition
TOP TEN COUNTRIES
Portfolio Composition
TOP TEN COUNTRIES
(BAR CHART DATA:)
United Kingdom 22.2%
Switzerland 13.2%
Spain 12.8%
Australia 7.8%
Japan 6.2%
India 5.8%
Ireland 5.5%
Mexico 4.6%
South Korea 4.1%
Netherlands 2.9%
Portfolio holdings and allocations are subject to change. Percentages are
as of September 30, 2006, and are based on the total market value of
investments.
Portfolio of Investments
INTERNATIONAL FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
COMMON STOCKS--89.3%
United Kingdom--20.3%
7,780 Barratt Developments PLC $154,917 $76
31,060 British American Tobacco PLC 837,782 413
27,800 Cadbury Schweppes PLC 295,214 146
30,620 Diageo PLC 539,646 266
18,090 Imperial Tobacco Group PLC 601,479 297
4,250 Northern Rock PLC 92,724 46
6,915 Reckitt Benckiser PLC 285,978 141
10,890 Royal Bank of Scotland Group PLC 374,086 185
140,140 Tesco PLC 942,382 465
- -------------------------------------------------------------------------------------------------------
4,124,208 2,035
- -------------------------------------------------------------------------------------------------------
Switzerland--12.1%
7,130 Kuehne & Nagel International AG - Registered 491,842 243
52 Lindt & Spruengli AG 116,818 58
1,360 Nestle SA - Registered 472,874 233
5,660 Novartis AG (ADR) 330,770 163
3,820 Roche Holding AG - Genusscheine 658,626 325
6,410 UBS AG - Registered 382,366 189
- -------------------------------------------------------------------------------------------------------
2,453,296 1,211
- -------------------------------------------------------------------------------------------------------
Spain--11.7%
32,430 Banco Bilbao Vizcaya Argentaria SA 749,724 370
37,230 Enagas 901,251 445
18,680 Red Electrica de Espana 724,323 357
- -------------------------------------------------------------------------------------------------------
2,375,298 1,172
- -------------------------------------------------------------------------------------------------------
Australia--7.2%
27,390 Aristocrat Leisure, Ltd. 288,202 142
11,215 Australia & New Zealand Banking Group, Ltd. 224,797 111
11,700 News Corporation - Class "B" 237,051 117
26,310 Westfield Group 369,510 182
21,850 Woolworths, Ltd. 330,352 163
- -------------------------------------------------------------------------------------------------------
1,449,912 715
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Japan--5.7%
5,600 Daito Trust Construction Company, Ltd. $304,036 $150
12,500 Millea Holdings, Inc. + 453,637 224
7,200 Toyota Motor Corporation 391,513 193
- -------------------------------------------------------------------------------------------------------
1,149,186 567
- -------------------------------------------------------------------------------------------------------
Ireland--5.1%
8,620 Allied Irish Banks PLC 229,308 113
48,760 Anglo Irish Bank Corporation PLC 799,881 395
- -------------------------------------------------------------------------------------------------------
1,029,189 508
- -------------------------------------------------------------------------------------------------------
Mexico--4.2%
7,010 America Movil SA de CV (ADR) - Series "L" 275,984 136
15,900 * America Telecom SA de CV - Series "A1" 107,699 53
107,000 Grupo Modelo SA de CV - Series "C" 466,865 231
- -------------------------------------------------------------------------------------------------------
850,548 420
- -------------------------------------------------------------------------------------------------------
South Korea--3.8%
10,900 Kangwon Land, Inc. 230,322 114
3,610 KT&G Corporation 219,308 108
85 Lotte Confectionary Company, Ltd. 103,634 51
5,610 S1 Corporation 218,414 108
- -------------------------------------------------------------------------------------------------------
771,678 381
- -------------------------------------------------------------------------------------------------------
India--2.8%
9,160 HDFC Bank, Ltd. (ADR) 559,218 276
- -------------------------------------------------------------------------------------------------------
Netherlands--2.7%
3,170 Aalberts Inustries NV 234,712 116
8,120 TNT NV 307,655 152
- -------------------------------------------------------------------------------------------------------
542,367 268
- -------------------------------------------------------------------------------------------------------
France--2.7%
6,920 M6 Metropole Television 212,136 105
4,960 Total SA 325,150 160
- -------------------------------------------------------------------------------------------------------
537,286 265
- -------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
INTERNATIONAL FUND
September 30, 2006
- -------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Shares or $10,000 of
Warrants Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
Belgium--2.6%
1,375 Colruyt NV $234,444 $116
5,440 InBev NV 299,213 147
- -------------------------------------------------------------------------------------------------------
533,657 263
- -------------------------------------------------------------------------------------------------------
Brazil--2.5%
8,880 Banco Itau Holding Financeira SA (ADR) 266,400 131
14,900 Souza Cruz SA 232,662 115
- -------------------------------------------------------------------------------------------------------
499,062 246
- -------------------------------------------------------------------------------------------------------
South Africa--1.7%
17,630 Remgro, Ltd. 349,507 173
- -------------------------------------------------------------------------------------------------------
Hong Kong--1.6%
18,200 HSBC Holdings PLC 331,896 164
- -------------------------------------------------------------------------------------------------------
Norway--1.3%
5,710 Orkla ASA 271,982 134
- -------------------------------------------------------------------------------------------------------
Taiwan--1.3%
27,500 Taiwan Semiconductor
Manufacturing Co., Ltd. (ADR) 264,000 130
- -------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $17,357,355) 18,092,290 8,928
- -------------------------------------------------------------------------------------------------------
WARRANTS--2.5%
India
4,525 * Bharat Heavy Electricals, Ltd. (expiring 7/20/10) + 236,354 116
26,300 * Bharti Tele-Ventures, Ltd. (expiring 5/31/10) + 268,733 132
700 * HDFC Bank, Ltd. (expiring 6/28/10) + 14,104 7
- -------------------------------------------------------------------------------------------------------
Total Value of Warrants (cost $528,378) 519,191 255
- -------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $17,885,733) 91.8% 18,611,481 9,183
Other Assets, Less Liabilities 8.2 1,655,024 817
- -------------------------------------------------------------------------------------------------------
Net Assets 100.0% $20,266,505 $10,000
=======================================================================================================
* Non-income producing
+ Security 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 20.7% $ 4,185,495
Banks 18.0 3,642,138
Utilities 9.2 1,861,928
Food & Staples Retailing 7.4 1,507,178
Pharmaceuticals, Biotechnology & Life Sciences 4.9 989,396
Transportation 3.9 799,497
Diversified Financials 3.6 731,873
Media 3.5 717,920
Consumer Services 2.6 518,524
Capital Goods 2.5 506,694
Consumer Durables & Apparel 2.3 458,953
Insurance 2.2 453,637
Automobiles & Components 1.9 391,513
Telecommunication Services 1.9 383,683
Real Estate 1.8 369,510
Energy 1.6 325,150
Household & Personal Products 1.4 285,978
Semiconductors & Semiconductor Equipment 1.3 264,000
Commercial Services & Supply 1.1 218,414
- --------------------------------------------------------------------------------------------------
Total Value of Investments 91.8 18,611,481
Other Assets, Less Liabilities 8.2 1,655,024
- --------------------------------------------------------------------------------------------------
Net Assets 100.0% $20,266,505
==================================================================================================
See notes to financial statements
Statements of Assets and Liabilities
FIRST INVESTORS EQUITY FUNDS
September 30, 2006
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL GROWTH & ALL-CAP
RETURN VALUE BLUE CHIP INCOME GROWTH
- -----------------------------------------------------------------------------------------------------------------------------
Assets
Investments in securities:
At identified cost $309,435,491 $289,203,290 $347,647,877 $599,141,451 $195,507,298
============ ============ ============ ============ ============
At value (Note 1A) $350,338,587 $364,458,963 $482,205,651 $742,746,172 $217,303,418
Cash 231,268 347,111 462,991 506,341 8,213
Receivables:
Investment securities sold 392,187 1,440 -- 1,400,669 4,003,547
Dividends and interest 1,451,604 599,493 441,955 580,366 94,716
Shares sold 442,223 869,285 449,828 1,063,425 430,763
Other assets 16,786 15,552 24,362 34,776 10,600
------------ ------------ ------------ ------------ ------------
Total Assets 352,872,655 366,291,844 483,584,787 746,331,749 221,851,257
------------ ------------ ------------ ------------ ------------
Liabilities
Payables:
Investment securities purchased 4,189,360 206,111 -- 1,000,495 2,350,336
Shares redeemed 514,029 578,835 1,091,907 1,362,879 509,282
Dividends payable 18,876 15,250 3,223 5,319 --
Accrued advisory fees 204,281 211,904 278,791 421,211 129,198
Accrued shareholder servicing costs 72,598 74,303 128,802 169,857 65,564
Accrued expenses 25,534 16,192 15,970 16,661 18,066
------------ ------------ ------------ ------------ ------------
Total Liabilities 5,024,678 1,102,595 1,518,693 2,976,422 3,072,446
------------ ------------ ------------ ------------ ------------
Net Assets $347,847,977 $365,189,249 $482,066,094 $743,355,327 $218,778,811
============ ============ ============ ============ ============
Net Assets Consist of:
Capital paid in $308,347,366 $324,409,354 $446,371,066 $601,392,296 $180,223,521
Undistributed net investment income 521,918 1,005,773 609,424 511,981 --
Accumulated net realized gain (loss)
on investments (1,924,403) (35,481,551) (99,472,170) (2,153,671) 16,759,170
Net unrealized appreciation in value
of investments 40,903,096 75,255,673 134,557,774 143,604,721 21,796,120
------------ ------------ ------------ ------------ ------------
Total $347,847,977 $365,189,249 $482,066,094 $743,355,327 $218,778,811
============ ============ ============ ============ ============
Net Assets:
Class A $311,973,781 $337,181,460 $437,596,643 $671,399,846 $195,412,728
Class B $35,874,196 $28,007,789 $44,469,451 $71,955,481 $23,366,083
Shares outstanding (Note 5):
Class A 21,414,405 45,567,442 19,494,791 45,622,147 21,092,284
Class B 2,498,925 3,845,142 2,123,175 5,136,720 2,628,171
Net asset value and redemption price
per share -- Class A $14.57 $7.40 $22.45 $14.72 $9.26
============ ============ ============ ============ ============
Maximum offering price per share -- Class A
(Net asset value/.9425)* $15.46 $7.85 $23.82 $15.62 $9.82
============ ============ ============ ============ ============
Net asset value and offering price per share --
Class B (Note 5) $14.36 $7.28 $20.94 $14.01 $8.89
============ ============ ============ ============ ============
* On purchases of $100,000 or more, the sales charge is reduced.
See notes to financial statements
Statements of Assets and Liabilities
FIRST INVESTORS EQUITY FUNDS
September 30, 2006
- -----------------------------------------------------------------------------------------------------------------------------
MID-CAP SPECIAL FOCUSED
OPPORTUNITY SITUATIONS EQUITY GLOBAL INTERNATIONAL
- -----------------------------------------------------------------------------------------------------------------------------
Assets
Investments in securities:
At identified cost $374,675,139 $231,939,065 $45,888,191 $233,145,007 $17,885,733
============ ============ ============ ============ ============
At value (Note 1A) $484,203,849 $267,379,321 $52,016,746 $274,174,220 $18,611,481
Cash 1,447,187 70,916 2,192 4,814,773 2,963,359
Receivables:
Investment securities sold 1,926,122 -- 246,995 1,141,899 130,419
Dividends and interest 323,306 37,916 54,050 418,358 30,635
Shares sold 772,909 454,209 17,766 222,466 656,094
Foreign exchange contracts (Note 4) -- -- -- -- 77,796
Other assets 24,022 12,904 3,479 35,520 --
------------ ------------ ------------ ------------ ------------
Total Assets 488,697,395 267,955,266 52,341,228 280,807,236 22,469,784
------------ ------------ ------------ ------------ ------------
Liabilities
Payables:
Investment securities purchased 1,216,915 88,372 -- 6,080,294 2,114,299
Shares redeemed 1,265,336 474,983 131,688 459,753 48,070
Forward currency contracts (Note 4) -- -- -- 1,686 --
Accrued advisory fees 283,464 160,057 30,987 211,844 --
Accrued shareholder servicing costs 121,040 75,830 22,065 62,506 18,096
Accrued expenses 17,605 41,774 13,717 36,486 22,814
------------ ------------ ------------ ------------ ------------
Total Liabilities 2,904,360 841,016 198,457 6,852,569 2,203,279
------------ ------------ ------------ ------------ ------------
Net Assets $485,793,035 $267,114,250 $52,142,771 $273,954,667 $20,266,505
============ ============ ============ ============ ============
Net Assets Consist of:
Capital paid in $358,877,300 $222,659,139 $67,495,971 $211,510,882 $19,560,187
Accumulated net investment loss -- -- -- -- (100,724)
Accumulated net realized gain (loss)
on investments and foreign currency
transactions 17,387,025 9,014,855 (21,481,755) 21,409,537 (4,647)
Net unrealized appreciation in value
of investments and foreign
currency transactions 109,528,710 35,440,256 6,128,555 41,034,248 811,689
------------ ------------ ------------ ------------ ------------
Total $485,793,035 $267,114,250 $52,142,771 $273,954,667 $20,266,505
============ ============ ============ ============ ============
Net Assets:
Class A $434,883,454 $248,927,293 $44,503,243 $260,355,733 $19,232,779
Class B $50,909,581 $18,186,957 $7,639,528 $13,598,934 $1,033,726
Shares outstanding (Note 5):
Class A 15,453,986 11,003,940 4,888,275 33,542,448 1,795,487
Class B 1,979,060 883,954 882,125 1,904,942 96,650
Net asset value and redemption price per share --
Class A $28.14 $22.62 $9.10 $7.76 $10.71
============ ============ ============ ============ ============
Maximum offering price per share -- Class A
(Net asset value/.9425)* $29.86 $24.00 $9.66 $8.23 $11.36
============ ============ ============ ============ ============
Net asset value and offering price per share --
Class B (Note 5) $25.72 $20.57 $8.66 $7.14 $10.70
============ ============ ============ ============ ============
* On purchases of $100,000 or more, the sales charge is reduced.
See notes to financial statements
Statements of Operations
FIRST INVESTORS EQUITY FUNDS
Year Ended September 30, 2006
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL GROWTH & ALL-CAP
RETURN VALUE BLUE CHIP INCOME GROWTH
- ------------------------------------------------------------------------------------------------------------------------------
Investment Income
Dividends $3,702,640(a) $7,679,445(b) $8,990,340(c) $12,248,510(d) $1,401,433(e)
Interest 6,306,353 1,067,736 158,908 55,508 473,783
------------ ------------ ------------ ------------ ------------
Total income 10,008,993 8,747,181 9,149,248 12,304,018 1,875,216
------------ ------------ ------------ ------------ ------------
Expenses (Notes 1 and 3):
Advisory fees 2,660,394 2,436,560 3,690,730 5,177,689 1,588,884
Distribution plan expenses -- Class A 891,350 895,611 1,280,816 1,913,052 563,287
Distribution plan expenses -- Class B 369,434 274,554 481,671 780,639 240,887
Shareholder servicing costs 827,822 829,896 1,547,415 1,955,057 779,917
Professional fees 54,486 61,545 87,905 104,489 43,381
Custodian fees 36,945 28,237 31,651 52,820 18,620
Registration fees 45,927 47,071 45,927 47,071 47,657
Reports to shareholders 81,489 87,780 138,499 176,455 74,736
Trustees' fees 15,152 14,552 21,904 32,476 9,545
Other expenses 74,422 69,668 97,925 137,810 49,616
------------ ------------ ------------ ------------ ------------
Total expenses 5,057,421 4,745,474 7,424,443 10,377,558 3,416,530
Less: Expenses waived (163,014) -- (163,014) -- --
Expenses paid indirectly (25,981) (19,089) (13,634) (24,901) (4,129)
------------ ------------ ------------ ------------ ------------
Net expenses 4,868,426 4,726,385 7,247,795 10,352,657 3,412,401
------------ ------------ ------------ ------------ ------------
Net investment income (loss) 5,140,567 4,020,796 1,901,453 1,951,361 (1,537,185)
------------ ------------ ------------ ------------ ------------
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency
Transactions (Note 2):
Net realized gain on investments 9,374,460 13,345,405 13,151,335 29,207,344 21,955,545
Net unrealized appreciation (depreciation)
of investment 5,379,510 23,282,192 26,847,027 23,026,678 (11,082,663)
------------ ------------ ------------ ------------ ------------
Net gain on investments 14,753,970 36,627,597 39,998,362 52,234,022 10,872,882
------------ ------------ ------------ ------------ ------------
Net Increase in Net Assets Resulting
from Operations $19,894,537 $40,648,393 $41,899,815 $54,185,383 $9,335,697
============ ============ ============ ============ ============
(a) Net of $5,794 foreign taxes withheld
(b) Net of $5,825 foreign taxes withheld
(c) Net of $1,771 foreign taxes withheld
(d) Net of $20,174 foreign taxes withheld
(e) Net of $8,986 foreign taxes withheld
See notes to financial statements
Statements of Operations
FIRST INVESTORS EQUITY FUNDS
Year Ended September 30, 2006
- ------------------------------------------------------------------------------------------------------------------------------
MID-CAP SPECIAL FOCUSED
OPPORTUNITY SITUATIONS EQUITY GLOBAL INTERNATIONAL*
- ------------------------------------------------------------------------------------------------------------------------------
Investment Income
Dividends $4,771,232(f) $2,226,438 $849,972(g) $4,722,077(h) $61,854(i)
Interest 640,766 410,261 38,412 319,627 16,147
------------ ------------ ------------ ------------ ------------
Total income 5,411,998 2,636,699 888,384 5,041,704 78,001
------------ ------------ ------------ ------------ ------------
Expenses (Notes 1 and 3):
Advisory fees 3,771,705 2,407,686 412,851 2,599,529 30,954
Distribution plan expenses -- Class A 1,293,712 705,244 139,611 748,616 4,513
Distribution plan expenses -- Class B 553,058 194,594 85,098 140,841 1,027
Shareholder servicing costs 1,524,820 933,575 282,435 812,512 64,654
Professional fees 63,417 52,854 26,580 66,677 29,409
Custodian fees 36,559 27,472 6,898 161,101 39,755
Registration fees 47,071 50,201 47,658 52,920 4,000
Reports to shareholders 138,517 96,676 34,831 114,244 1,383
Trustees' fees 22,031 11,572 2,548 11,697 108
Other expenses 100,122 49,894 11,932 66,664 3,604
------------ ------------ ------------ ------------ ------------
Total expenses 7,551,012 4,529,768 1,050,442 4,774,801 179,407
Less: Expenses waived (163,014) (498,630) -- -- (104,989)
Expenses paid indirectly (24,093) (6,059) (444) (1,392) --
------------ ------------ ------------ ------------ ------------
Net expenses 7,363,905 4,025,079 1,049,998 4,773,409 74,418
------------ ------------ ------------ ------------ ------------
Net investment income (loss) (1,951,907) (1,388,380) (161,614) 268,295 3,583
------------ ------------ ------------ ------------ ------------
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions (Note 2):
Net realized gain (loss) on:
Investments 17,445,399 16,672,396 2,552,254 26,629,300 (4,647)
Foreign currency transactions -- -- -- (32,450) (104,307)
------------ ------------ ------------ ------------ ------------
Net realized gain (loss) on investments
and foreign currency transactions 17,445,399 16,672,396 2,552,254 26,596,850 (108,954)
------------ ------------ ------------ ------------ ------------
Net unrealized appreciation (depreciation) of:
Investments (4,037,732) 10,315,175 90,291 (1,453,956) 725,748
Foreign currency transactions -- -- -- 5,451 85,941
------------ ------------ ------------ ------------ ------------
Net unrealized appreciation (depreciation)
of investments and foreign
currency transactions (4,037,732) 10,315,175 90,291 (1,448,505) 811,689
------------ ------------ ------------ ------------ ------------
Net gain on investments and foreign
currency transaction 13,407,667 26,987,571 2,642,545 25,148,345 702,735
------------ ------------ ------------ ------------ ------------
Net Increase in Net Assets Resulting
from Operations $11,455,760 $25,599,191 $2,480,931 $25,416,640 $706,318
============ ============ ============ ============ ============
* From June 27, 2006 (commencement of operations) to September 30, 2006.
(f) Net of $12,006 foreign taxes withheld
(g) Net of $224 foreign taxes withheld
(h) Net of $434,661 foreign taxes withheld
(i) Net of $5,227 foreign taxes withheld
See notes to financial statements
Statements of Changes in Net Assets
FIRST INVESTORS EQUITY FUNDS
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN VALUE
---------------------------- ----------------------------
Year Ended September 30 2006 2005 2006 2005
- ---------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations
Net investment income $5,140,567 $4,761,075 $4,020,796 $3,192,276
Net realized gain on investments 9,374,460 14,327,122 13,345,405 10,988,910
Net unrealized appreciation of investments 5,379,510 6,264,904 23,282,192 13,771,189
------------ ------------ ------------ ------------
Net increase in net assets resulting from operations 19,894,537 25,353,101 40,648,393 27,952,375
------------ ------------ ------------ ------------
Dividends to Shareholders
Net investment income -- Class A (4,717,963) (4,688,964) (3,480,451) (2,633,134)
Net investment income -- Class B (329,562) (428,201) (127,641) (122,898)
------------ ------------ ------------ ------------
Total dividends (5,047,525) (5,117,165) (3,608,092) (2,756,032)
------------ ------------ ------------ ------------
Share Transactions*
Class A:
Proceeds from shares sold 61,431,640 64,070,678 75,863,544 84,851,705
Reinvestment of dividends 4,647,596 4,613,539 3,419,946 2,574,863
Cost of shares redeemed (48,555,127) (36,254,876) (43,351,991) (27,688,829)
------------ ------------ ------------ ------------
17,524,109 32,429,341 35,931,499 59,737,739
------------ ------------ ------------ ------------
Class B:
Proceeds from shares sold 4,213,768 5,259,203 4,874,190 6,026,435
Reinvestment of dividends 327,500 425,505 126,427 121,750
Cost of shares redeemed (8,153,743) (6,076,543) (7,056,112) (5,162,063)
------------ ------------ ------------ ------------
(3,612,475) (391,835) (2,055,495) 986,122
------------ ------------ ------------ ------------
Net increase (decrease) from share transactions 13,911,634 32,037,506 33,876,004 60,723,861
------------ ------------ ------------ ------------
Net increase (decrease) in net assets 28,758,646 52,273,442 70,916,305 85,920,204
Net Assets
Beginning of year 319,089,331 266,815,889 294,272,944 208,352,740
------------ ------------ ------------ ------------
End of year+ $347,847,977 $319,089,331 $365,189,249 $294,272,944
============ ============ ============ ============
+Includes undistributed net investment income (deficit) $521,918 $(204,518) $1,005,773 $593,069
============ ============ ============ ============
*Shares Issued and Redeemed
Class A:
Sold 4,294,534 4,699,343 10,879,798 13,262,294
Issued for dividends reinvested 323,247 336,103 483,325 396,159
Redeemed (3,397,469) (2,656,447) (6,213,962) (4,319,198)
------------ ------------ ------------ ------------
Net increase (decrease) in Class A shares outstanding 1,220,312 2,378,999 5,149,161 9,339,255
============ ============ ============ ============
Class B:
Sold 299,997 393,326 712,632 960,339
Issued for dividends reinvested 23,118 31,456 18,191 19,022
Redeemed (579,661) (452,242) (1,026,380) (818,095)
------------ ------------ ------------ ------------
Net increase (decrease) in Class B shares outstanding (256,546) (27,460) (295,557) 161,266
============ ============ ============ ============
Statements of Changes in Net Assets (continued)
FIRST INVESTORS EQUITY FUNDS
- -----------------------------------------------------------------------------------------------------------------------
BLUE CHIP GROWTH & INCOME
---------------------------- ----------------------------
Year Ended September 30 2006 2005 2006 2005
- -----------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations
Net investment income $1,901,453 $2,231,932 $1,951,361 $3,980,086
Net realized gain on investments 13,151,335 27,341,802 29,207,344 52,239,623
Net unrealized appreciation of investments 26,847,027 19,535,734 23,026,678 22,329,279
------------ ------------ ------------ ------------
Net increase in net assets resulting from operations 41,899,815 49,109,468 54,185,383 78,548,988
------------ ------------ ------------ ------------
Dividends to Shareholders
Net investment income -- Class A (1,292,468) (2,052,222) (2,247,490) (4,113,800)
Net investment income -- Class B -- (179,271) -- (201,083)
------------ ------------ ------------ ------------
Total dividends (1,292,468) (2,231,493) (2,247,490) (4,314,883)
------------ ------------ ------------ ------------
Share Transactions*
Class A:
Proceeds from shares sold 55,709,500 44,068,883 126,552,654 105,630,410
Reinvestment of dividends 1,281,752 2,028,913 2,226,784 4,067,634
Cost of shares redeemed (77,002,217) (80,924,729) (100,395,457) (76,352,083)
------------ ------------ ------------ ------------
(20,010,965) (34,826,933) 28,383,981 33,345,961
------------ ------------ ------------ ------------
Class B:
Proceeds from shares sold 4,440,225 3,947,403 9,940,937 8,233,185
Reinvestment of dividends -- 178,831 -- 200,260
Cost of shares redeemed (16,026,612) (18,447,695) (25,190,976) (20,089,693)
------------ ------------ ------------ ------------
(11,586,387) (14,321,461) (15,250,039) (11,656,248)
------------ ------------ ------------ ------------
Net increase (decrease) from share transactions (31,597,352) (49,148,394) 13,133,942 21,689,713
------------ ------------ ------------ ------------
Net increase (decrease) in net assets 9,009,995 (2,270,419) 65,071,835 95,923,818
Net Assets
Beginning of year 473,056,099 475,326,518 678,283,492 582,359,674
------------ ------------ ------------ ------------
End of year+ $482,066,094 $473,056,099 $743,355,327 $678,283,492
============ ============ ============ ============
+Includes undistributed net investment income (deficit) $609,424 $439 $511,981 $808,110
============ ============ ============ ============
*Shares Issued and Redeemed
Class A:
Sold 2,606,479 2,197,308 8,823,823 8,066,584
Issued for dividends reinvested 59,127 98,491 153,919 306,678
Redeemed (3,601,132) (4,035,467) (7,005,475) (5,827,638)
------------ ------------ ------------ ------------
Net increase (decrease) in Class A shares outstanding (935,526) (1,739,668) 1,972,267 2,545,624
============ ============ ============ ============
Class B:
Sold 222,526 209,604 725,027 659,640
Issued for dividends reinvested -- 9,266 -- 15,843
Redeemed (800,563) (980,107) (1,837,472) (1,603,975)
------------ ------------ ------------ ------------
Net increase (decrease) in Class B shares outstanding (578,037) (761,237) (1,112,445) (928,492)
============ ============ ============ ============
See notes to financial statements
Statements of Changes in Net Assets
FIRST INVESTORS EQUITY FUNDS
- ---------------------------------------------------------------------------------------------------------------------------
ALL-CAP GROWTH MID-CAP OPPORTUNITY
---------------------------- ----------------------------
Year Ended September 30 2006 2005 2006 2005
- ---------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations
Net investment income (loss) $(1,537,185) $(1,303,216) $(1,951,907) $(1,887,963)
Net realized gain on investments 21,955,545 12,586,390 17,445,399 25,408,825
Net unrealized appreciation (depreciation) of investment (11,082,663) 9,837,022 (4,037,732) 61,015,861
------------ ------------ ------------ ------------
Net increase in net assets resulting from operations 9,335,697 21,120,196 11,455,760 84,536,723
------------ ------------ ------------ ------------
Distributions to Shareholders
Net investment income -- Class A -- -- -- --
Net investment income -- Class B -- -- -- --
Net realized gains -- Class A -- -- (11,436,474) --
Net realized gains -- Class B -- -- (1,696,534) --
------------ ------------ ------------ ------------
Total distributions -- -- (13,133,008) --
------------ ------------ ------------ ------------
Share Transactions*
Class A:
Proceeds from shares sold 48,443,378 41,188,051 87,073,595 99,735,632
Reinvestment of distributions -- -- 11,364,891 --
Cost of shares redeemed (30,853,902) (20,615,450) (72,718,404) (40,559,126)
------------ ------------ ------------ ------------
17,589,476 20,572,601 25,720,082 59,176,506
------------ ------------ ------------ ------------
Class B:
Proceeds from shares sold 4,128,019 3,422,603 8,879,710 8,855,927
Reinvestment of distributions -- -- 1,688,114 --
Cost of shares redeemed (5,146,160) (2,944,226) (16,113,816) (8,824,631)
------------ ------------ ------------ ------------
(1,018,141) 478,377 (5,545,992) 31,296
------------ ------------ ------------ ------------
Net increase (decrease) from share transactions 16,571,335 21,050,978 20,174,090 59,207,802
------------ ------------ ------------ ------------
Net increase (decrease) in net assets 25,907,032 42,171,174 18,496,842 143,744,525
Net Assets
Beginning of year 192,871,779 150,700,605 467,296,193 323,551,668
------------ ------------ ------------ ------------
End of year+ $218,778,811 $192,871,779 $485,793,035 $467,296,193
============ ============ ============ ============
+Includes undistributed net investment income of $-- $-- $-- $--
============ ============ ============ ============
*Shares Issued and Redeemed
Class A:
Sold 5,226,164 4,995,352 3,078,938 3,889,924
Issued for distributions reinvested -- -- 429,026 --
Redeemed (3,347,110) (2,484,476) (2,581,308) (1,578,469)
------------ ------------ ------------ ------------
Net increase (decrease) in Class A shares outstanding 1,879,054 2,510,876 926,656 2,311,455
============ ============ ============ ============
Class B:
Sold 461,478 428,824 341,525 373,923
Issued for distributions reinvested -- -- 69,270 --
Redeemed (578,815) (366,968) (621,241) (370,530)
------------ ------------ ------------ ------------
Net increase (decrease) in Class B shares outstanding (117,337) 61,856 (210,446) 3,393
============ ============ ============ ============
Statements of Changes in Net Assets (continued)
FIRST INVESTORS EQUITY FUNDS
- -----------------------------------------------------------------------------------------------------------------------
SPECIAL SITUATIONS FOCUSED EQUITY
---------------------------- ----------------------------
Year Ended September 30 2006 2005 2006 2005
- -----------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations
Net investment income (loss) $(1,388,380) $(1,629,311) $(161,614) $174,184
Net realized gain on investments 16,672,396 54,920,845 2,552,254 2,888,567
Net unrealized appreciation (depreciation) of investment 10,315,175 (9,477,244) 90,291 3,284,026
------------ ------------ ------------ ------------
Net increase in net assets resulting from operations 25,599,191 43,814,290 2,480,931 6,346,777
------------ ------------ ------------ ------------
Distributions to Shareholders
Net investment income -- Class A -- -- (56,977) (111,522)
Net investment income -- Class B -- -- -- (5,816)
Net realized gains -- Class A -- -- -- --
Net realized gains -- Class B -- -- -- --
------------ ------------ ------------ ------------
Total distributions -- -- (56,977) (117,338)
------------ ------------ ------------ ------------
Share Transactions*
Class A:
Proceeds from shares sold 37,576,661 28,756,884 4,647,327 4,675,073
Reinvestment of distributions -- -- 56,668 110,993
Cost of shares redeemed (35,967,977) (34,605,124) (10,351,825) (11,403,250)
------------ ------------ ------------ ------------
1,608,684 (5,848,240) (5,647,830) (6,617,184)
------------ ------------ ------------ ------------
Class B:
Proceeds from shares sold 2,561,815 1,950,974 739,696 638,285
Reinvestment of distributions -- -- -- 5,739
Cost of shares redeemed (7,038,485) (5,674,721) (2,783,896) (2,929,303)
------------ ------------ ------------ ------------
(4,476,670) (3,723,747) (2,044,200) (2,285,279)
------------ ------------ ------------ ------------
Net increase (decrease) from share transactions (2,867,986) (9,571,987) (7,692,030) (8,902,463)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets 22,731,205 34,242,303 (5,268,076) (2,673,024)
Net Assets
Beginning of year 244,383,045 210,140,742 57,410,847 60,083,871
------------ ------------ ------------ ------------
End of year+ $267,114,250 $244,383,045 $52,142,771 $57,410,847
============ ============ ============ ============
+Includes undistributed net investment income of $-- $-- $-- $56,846
============ ============ ============ ============
*Shares Issued and Redeemed
Class A:
Sold 1,736,840 1,508,510 523,377 559,778
Issued for distributions reinvested -- -- 6,447 13,198
Redeemed (1,672,171) (1,823,381) (1,164,907) (1,366,256)
------------ ------------ ------------ ------------
Net increase (decrease) in Class A shares outstanding 64,669 (314,871) (635,083) (793,280)
============ ============ ============ ============
Class B:
Sold 129,614 111,825 87,598 79,352
Issued for distributions reinvested -- -- -- 709
Redeemed (357,334) (324,252) (328,649) (364,892)
------------ ------------ ------------ ------------
Net increase (decrease) in Class B shares outstanding (227,720) (212,427) (241,051) (284,831)
============ ============ ============ ============
See notes to financial statements
Statements of Changes in Net Assets
FIRST INVESTORS EQUITY FUNDS
- -----------------------------------------------------------------------------------------------------------------------
GLOBAL INTERNATIONAL
---------------------------- -------------
Year Ended September 30 2006 2005 2006**
- -----------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations
Net investment income $268,295 $29,227 $3,583
Net realized gain (loss) on investments and
foreign currency transactions 26,596,850 26,274,478 (108,954)
Net unrealized appreciation (depreciation) of investments
and foreign currency transactions (1,448,505) 15,303,113 811,689
------------ ------------ ------------
Net increase in net assets resulting from operations 25,416,640 41,606,818 706,318
------------ ------------ ------------
Dividends to Shareholders
Net investment income -- Class A (511,516) -- --
Net investment income -- Class B -- -- --
------------ ------------ ------------
Total dividends (511,516) -- --
------------ ------------ ------------
Share Transactions*
Class A:
Proceeds from shares sold 32,079,774 21,167,913 18,783,707
Reinvestment of dividends 455,744 -- --
Cost of shares redeemed (34,415,861) (30,999,052) (233,440)
------------ ------------ ------------
(1,880,343) (9,831,139) 18,550,267
------------ ------------ ------------
Class B:
Proceeds from shares sold 2,181,431 1,619,784 1,041,875
Cost of shares redeemed (4,344,498) (4,823,294) (31,955)
------------ ------------ ------------
(2,163,067) (3,203,510) 1,009,920
------------ ------------ ------------
Net increase (decrease) from share transactions (4,043,410) (13,034,649) 19,560,187
------------ ------------ ------------
Net increase in net assets 20,861,714 28,572,169 20,266,505
Net Assets
Beginning of year 253,092,953 224,520,784 --
------------ ------------ ------------
End of year $273,954,667 $253,092,953 $20,266,505
============ ============ ============
*Shares Issued and Redeemed
Class A:
Sold 4,311,883 3,230,403 1,817,728
Reinvestment of dividends 63,740 -- --
Redeemed (4,642,293) (4,739,544) (22,242)
------------ ------------ ------------
Net increase (decrease) in Class A shares outstanding (266,670) (1,509,141) 1,795,486
============ ============ ============
Class B:
Sold 318,906 266,888 99,686
Redeemed (633,693) (800,150) (3,037)
------------ ------------ ------------
Net increase (decrease) in Class B shares outstanding (314,787) (533,262) 96,649
============ ============ ============
** From June 27, 2006 (commencement of operations) to September 30, 2006.
See notes to financial statements
Notes to Financial Statements
FIRST INVESTORS EQUITY FUNDS
September 30, 2006
1. Significant Accounting Policies--First Investors Equity 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 Total Return Fund, Value Fund, Blue Chip Fund,
Growth & Income Fund, All-Cap Growth Fund, Mid-Cap Opportunity Fund,
Special Situations Fund, Focused Equity Fund, Global Fund and International
Fund (each a "Fund", collectively, "the Funds"), and accounts separately
for the assets, liabilities and operations of each Fund. Focused Equity
Fund is registered as a non-diversified series of the Trust. The objective
of each Fund is as follows:
Total Return Fund seeks high, long-term total investment return consistent
with moderate investment risk.
Value Fund seeks total return.
Blue Chip Fund seeks high total investment return.
Growth & Income Fund seeks long-term growth of capital and current income.
All-Cap Growth Fund seeks long-term growth of capital.
Mid-Cap Opportunity Fund seeks long-term capital growth.
Special Situations Fund seeks long-term growth of capital.
Focused Equity Fund seeks capital appreciation.
Global Fund primarily seeks long-term capital growth and, secondarily, a
reasonable level of current income.
International Fund primarily seeks long-term capital growth.
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 upon quotes furnished by a market maker for such
securities. Debt securities may be priced based upon estimates of value
furnished by a pricing service approved by the Trust's Board of Trustees
("the Board"). In formulating such estimates of value, 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. Short-term debt
securities that mature in 60 days or less are valued at amortized cost.
Foreign securities are priced based upon their market values as of the
close of the foreign markets in which they principally trade. The Funds
also rely on a pricing service in circumstances where the U.S. securities
markets exceed a pre-determined threshold to value foreign securities held
in the Funds' portfolios. The pricing service, its methodology or the
threshold may change from time to time. The Funds also monitor for other
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 such as bankruptcies. If the Funds'
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. For valuation
purposes, where applicable, quotations of foreign securities in foreign
currency are translated to U.S. dollar equivalents using the foreign
exchange quotation in effect. At September 30, 2006, the International Fund
held four securities that were fair valued by its Valuation Committee with
an aggregate value of $972,828 representing 4.8% of the Fund's net assets.
B. Federal Income Taxes--No provision has been made for federal income
taxes on net income or capital gains since it is the policy of each Fund to
continue to comply with the special provisions of the Internal Revenue Code
applicable to investment companies and to make sufficient distributions of
income and capital gains (in excess of any available capital loss
carryovers) to relieve it from all, or substantially all, such taxes.
At September 30, 2006, capital loss carryovers were as follows:
Year Capital Loss Carryovers Expire
-------------------------------------------------------------------
Fund Total 2009 2010 2011 2012
- ---- ----- ---- ---- ---- ----
Total Return $ 191,963 $ -- $ -- $ 191,963 $ --
Value 35,462,447 -- -- 35,462,447 --
Blue Chip 91,192,794 -- 22,005,255 69,187,539 --
Focused Equity 21,406,905 8,392,235 1,712,582 9,856,986 1,445,102
C. Distributions to Shareholders--Dividends from net investment income, if
any, of Total Return Fund, Value Fund, Blue Chip Fund and Growth & Income
Fund are declared and paid quarterly. Dividends from net investment income,
if any, of All-Cap Growth Fund, Mid-Cap Opportunity Fund, Special Situations
Fund, Focused
Notes to Financial Statements (continued)
FIRST INVESTORS EQUITY FUNDS
September 30, 2006
Equity Fund, Global Fund and International Fund are declared and
paid annually. Distributions from net realized capital gains, if any, are
normally declared and paid annually. Income dividends and capital gain
distributions are determined in accordance with income tax regulations
which may differ from accounting principles generally accepted in the
United States of America. These differences are primarily due to differing
treatments for capital loss carryforwards, deferral of wash sales losses,
post-October capital losses, net operating losses and foreign currency
transactions.
D. 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.
E. Repurchase Agreements--Securities pledged as collateral for repurchase
agreements entered into by the All-Cap Growth Fund, Focused Equity Fund,
and Global Fund are held by each Fund's custodian until maturity of the
repurchase agreement. The agreements provide that the Funds 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 Funds.
F. Use of Estimates--The preparation of the financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expense
during the reporting period. Actual results could differ from those
estimates.
G. Foreign Currency Translations--The accounting records of Global Fund and
International Fund are maintained in U.S. dollars. Portfolio securities and
other assets and liabilities denominated in foreign currencies are
translated to 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.
Global Fund and International Fund do not isolate that portion of gains and
losses on investments which is due to changes in foreign exchange rates
from that which is due to changes in market prices of the investments.
These changes are included with the net realized and unrealized gains and
losses from investments.
Net realized and unrealized gains and losses on foreign currency
transactions include gains and losses from the sales of foreign currency
and gains and losses on accrued foreign dividends and related withholding
taxes.
H. Other--Security transactions are accounted for on the date the
securities are purchased or sold. Cost is determined, and gains and losses
are based, on the identified cost basis for both financial statement and
federal income tax purposes. Dividend income is recorded on the ex-dividend
date. Interest income and estimated expenses are accrued daily. Bond
discounts and premiums are accreted or amortized using the interest method.
For the year ended September 30, 2006, the Bank of New York, custodian of
each Fund (other than Global Fund and International Fund), has provided
credits in the amount of $103,041 against custodian charges based on the
uninvested cash balances of these Funds. The Funds also reduced expenses
through brokerage service arrangements. For the year ended September 30,
2006, the Funds expenses were reduced by $16,681 under these arrangements.
2. Security Transactions--For the year ended September 30, 2006, purchases
and sales of securities and long-term U.S. Government obligations
(excluding U.S. Treasury bills, repurchase agreements, short-term
securities and foreign currencies) were as follows:
Long-Term U.S.
Securities Government Obligations
--------------------------- ---------------------------
Cost of Proceeds Cost of Proceeds
Fund Purchases from Sales Purchases from Sales
- ---- ------------ ------------ ------------ ------------
Total Return $145,113,335 $170,078,173 $55,944,554 $13,429,577
Value 75,098,711 45,283,573 -- --
Blue Chip 27,035,548 56,585,065 -- --
Growth & Income 260,504,609 247,245,308 -- --
All-Cap Growth 235,374,084 217,342,199 -- --
Mid-Cap Opportunity 263,681,175 270,895,933 -- --
Special Situations 118,880,258 122,996,704 -- --
Focused Equity 41,205,861 49,774,186 -- --
Global 271,172,186 274,633,635 -- --
International 18,684,694 794,314 -- --
Notes to Financial Statements (continued)
FIRST INVESTORS EQUITY FUNDS
September 30, 2006
At September 30, 2006, aggregate cost and net unrealized appreciation of
securities for federal income tax purposes were as follows:
Gross Gross Net
Aggregate Unrealized Unrealized Unrealized
Fund Cost Appreciation Depreciation Appreciation
- ---- ------------ ------------ ------------ ------------
Total Return $311,788,761 $ 49,062,999 $10,513,173 $ 38,549,826
Value 289,222,394 80,393,696 5,157,127 75,236,569
Blue Chip 355,927,253 137,010,088 10,731,690 126,278,398
Growth & Income 603,848,645 173,120,937 34,223,410 138,897,527
All-Cap Growth 195,929,796 27,525,067 6,151,445 21,373,622
Mid-Cap Opportunity 374,792,410 113,640,961 4,229,522 109,411,439
Special Situations 232,216,241 44,823,509 9,660,429 35,163,080
Focused Equity 45,963,041 7,091,237 1,037,533 6,053,704
Global* 235,859,843 43,673,396 5,359,019 38,314,377
International* 17,961,604 704,897 55,020 649,877
* Aggregate cost includes PFIC income of $2,091,078 for Global Fund and
$75,871 for International Fund.
3. Advisory Fee and Other Transactions With Affiliates--Certain officers
and trustees of the Trust are officers and directors of the Trust's
investment adviser, First Investors Management Company, Inc. ("FIMCO"), its
underwriter, First Investors Corporation ("FIC"), its transfer agent,
Administrative Data Management Corp. ("ADM") and/or First Investors Federal
Savings Bank, ("FIFSB"), custodian of the Funds' retirement accounts.
Trustees of the Trust who are not "interested persons" of the Funds as
defined in the 1940 Act are remunerated by the Funds. For the year ended
September 30, 2006, total trustees fees accrued by the Funds amounted to
$141,585.
The Investment Advisory Agreements provide as compensation to FIMCO, an
annual fee, payable monthly, at the following rates:
Total Return, Blue Chip and Mid-Cap Opportunity Funds--Through January 27,
2006, the rate was 1% on the first $200 million of each Fund's average
daily net assets, .75% on the next $300 million, and declined by .03% on
each $250 million thereafter, down to .66% on average daily net assets over
$1 billion. Effective January 28, 2006, the rate was changed to .75% on the
first $300 million of each Fund's average daily net assets, .72% on the
next $200 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. During the period October 1,
2005 to January 27, 2006, FIMCO has waived 25% of the 1% annual fee on the
first $200 million of each Fund's average daily net assets.
Special Situations Fund--Through January 27, 2006, the rate was 1% on the
first $200 million of the Fund's average daily net assets, .75% on the next
$300 million, and declined by .03% on each $250 million thereafter, down to
..66% on average daily net assets over $1 billion. Effective January 28,
2006, the rate was changed to 1% on the first $200 million of the Fund's
average daily net assets, .75% on the next $300 million, .72% on the next
$250 million, .69% on the next $250 million, .66% on the next $500 million,
and .64% on average daily net assets over $1.5 billion. During the period
October 1, 2005 to September 30, 2006, FIMCO has waived 25% of the 1%
annual fee on the first $200 million of the Fund's average daily net
assets.
Value, Growth & Income, All-Cap Growth, and Focused Equity Funds--Through
January 27, 2006, the rate was .75% on the first $300 million of each
Fund's average daily net assets, .72% on the next $200 million, .69% on the
next $250 million and .66% on average daily net assets over $750 million.
Effective January 28, 2006, the rate was changed to .75% on the first $300
million of each Fund's average daily net assets, .72% on the next $200
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.
Global Fund--Through January 27, 2006, the rate was 1% on the first $250
million of the Fund's average daily net assets, and declined by .03% on
each $250 million thereafter, down to .91% on average daily net assets over
$750 million. Effective January 28, 2006, the rate was changed to .98% on
the first $300 million of the Fund's average daily net assets, .95% on the
next $300 million, .92% on the next $400 million, .90% on the next $500
million and .88% on average daily net assets over $1.5 billion.
International Fund--.98% on the first $300 million of the Fund's average
daily net assets, .95% on the next $300 million, .92% on the next $400
million, .90% on the next $500 million and .88% on average daily net assets
over $1.5 billion. During the period June 27, 2006 (commencement of
operations) to September 30, 2006, FIMCO has voluntarily waived $30,954 in
advisory fees and assumed $74,035 in other expenses to limit the Fund's
overall expense ratio to 2.35% on Class A shares and 3.05% on Class B
shares.
For the year ended September 30, 2006, total advisory fees accrued to FIMCO
by the Funds were $24,776,982 of which $1,018,626 was waived.
For the year ended September 30, 2006, FIC, as underwriter, received
$18,761,024 in commissions from the sale of shares of the Funds, after
allowing $71,759 to other dealers. Shareholder servicing costs included
$7,002,738 in transfer agent fees accrued to ADM and $1,871,519 in
retirement accounts custodian fees accrued to FIFSB.
Notes to Financial Statements (continued)
FIRST INVESTORS EQUITY FUNDS
September 30, 2006
Pursuant to Distribution Plans adopted under Rule 12b-1 of the 1940 Act,
each Fund is authorized to pay FIC a fee up to .30% of the average daily
net assets of the Class A shares and 1% of the average daily net assets of
the Class B shares on an annualized basis each fiscal year, payable
monthly. The fee consists of a distribution fee and a service fee. The
service fee is paid for the ongoing servicing of clients who are
shareholders of that Fund. For the year ended September 30, 2006, total
distribution plan fees accrued to FIC by the Funds amounted to $11,557,615.
Wellington Management Company, LLP serves as investment subadviser to
All-Cap Growth Fund, Focused Equity Fund and Global Fund. Paradigm Capital
Management, Inc. serves as investment subadviser to Special Situations
Fund. Effective June 27, 2006, Vontobel Asset Management, Inc. serves as
investment adviser to International Fund. The subadvisers are paid by FIMCO
and not by the Funds.
4. Forward Currency Contracts and Foreign Exchange Contracts--Forward
currency contracts and foreign exchange contracts are obligations to
purchase or sell a specific currency for an agreed-upon price at a future
date. When a Fund purchases or sells foreign securities it customarily
enters into a forward currency contract to minimize foreign exchange risk
between the trade date and the settlement date of such transactions. The
Fund could be exposed to risk if counter parties to the contracts are
unable to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably. Forward currency contracts and foreign
exchange contracts are "marked-to-market" daily at the applicable
translation rate and the resulting unrealized gains or losses are reflected
in the Fund's assets.
The Global Fund had the following forward currency contracts outstanding at
September 30, 2006:
Contracts to Buy Unrealized
Foreign Currency In Exchange for Settlement Date Gain (Loss)
- ---------------------------- --------------- --------------- ----------
87,481 British Pound US$ 165,224 10/2/06 US$(1,815)
=============== ----------
Contracts to Sell Unrealized
Foreign Currency In Exchange for Settlement Date Gain (Loss)
- ---------------------------- --------------- --------------- ----------
17,064 Canadian Dollar US$ 15,368 10/3/06 US$ 73
965,111 Hong Kong Dollar 123,912 10/3/06 56
--------------- ----------
$ 139,280 129
=============== ----------
Net Unrealized Loss on Forward Currency Contracts $(1,686)
==========
The International Fund had the following foreign exchange contracts
outstanding at September 30, 2006:
Contracts to Sell Unrealized
Foreign Currency In Exchange for Settlement Date Gain (Loss)
- ---------------------------- --------------- --------------- ----------
823,000 British Pound US $1,545,125 12/12/06 US$ 7,813
749,000 Australian Dollar 563,892 2/28/07 4,949
932,000 Euro 1,200,901 2/28/07 20,287
48,245,000 Japanese Yen 421,870 2/28/07 13,239
1,817,000 Swiss Franc 1,490,447 2/28/07 41,425
3,762,000 Mexican Peso 336,644 6/1/07 (5,394)
394,284,000 South Korean Won 415,145 6/11/07 (1,425)
1,108,000 South African Rand 139,536 3/5/08 (3,098)
--------------- ----------
$6,113,560
===============
Net Unrealized Gain on Foreign Exchange Contracts $77,796
==========
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 September 30,
2006, Total Return Fund held one 144A security with an aggregate value of
$699,552, representing .2% of the Fund's net assets.
6. Capital--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. Each Fund has designated two classes of shares, Class A shares
and Class B shares (each, a "Class"). Each share of each Class has an equal
beneficial interest in the assets, has identical voting, dividend,
liquidation and other rights and is subject to the same terms and conditions
except that expenses allocated to a Class may be borne solely by that Class
as determined by the Trustees and a Class may have exclusive voting rights
with respect to matters affecting only that Class. Class A and Class B
shares have a public offering price that reflects different sales charges
and expense levels. Class A shares are sold with an initial sales charge of
up to 5.75% of the amount invested and together with the Class B shares are
subject to distribution plan fees as described in Note 3. Class B shares are
sold without an initial sales charge, but are generally subject to a
contingent deferred sales charge which declines in steps from 4% to 0% over
a six-year period. Class B shares automatically convert into Class A shares
after eight years. Realized and unrealized gains or losses, investment
income and expenses (other than distribution plan fees) are allocated daily
to each class of shares based upon the relative proportion of net assets of
each class.
Notes to Financial Statements (continued)
FIRST INVESTORS EQUITY FUNDS
September 30, 2006
7. Tax Components of Capital and Distributions to Shareholders--The tax
character of distributions declared for the years ended September 30, 2006
and September 30, 2005 were as follows:
Year Ended September 30, 2006 Year Ended September 30, 2005
--------------------------------------- -----------------------------------------
Distributions Distributions
Declared from Declared from
------------------------- --------------------------
Long-Term Long-Term
Ordinary Capital Ordinary Capital
Fund Income Gain Total Income Gain Total
- ---- ----------- ------------ ------------ ------------ ------------ -------------
Total Return $5,047,525 $ -- $ 5,047,525 $5,117,165 $ -- $5,117,165
Value 3,608,092 -- 3,608,092 2,756,032 -- 2,756,032
Blue Chip 1,292,468 -- 1,292,468 2,231,493 -- 2,231,493
Growth & Income 2,247,490 -- 2,247,490 4,314,883 -- 4,314,883
Mid-Cap Opportunity -- 13,133,008 13,133,008 -- -- --
Focused Equity 56,977 -- 56,977 117,338 -- 117,338
Global 511,516 -- 511,516 -- -- --
As of September 30, 2006, the components of distributable earnings on a tax
basis were as follows:
Total
Undistributed Undistributed Capital Other Distributable
Ordinary Capital (Loss) Accumulated Unrealized Income
Fund Income Gains Carryovers Gains (Losses) Appreciation (Deficit)*
- ---- ------------- ------------- ------------- ------------- ------------- -------------
Total Return $1,142,749 $ -- $ (191,963) $ -- $ 38,549,825 $ 39,500,611
Value 1,005,773 -- (35,462,447) -- 75,236,569 40,779,895
Blue Chip 609,425 -- (91,192,794) -- 126,278,397 35,695,028
Growth & Income 511,981 2,553,522 -- -- 138,897,528 141,963,031
All-Cap Growth -- 17,181,669 -- -- 21,373,621 38,555,290
Mid-Cap Opportunity -- 17,504,296 -- -- 109,411,439 126,915,735
Special Situations 1,966,923 7,325,105 -- -- 35,163,083 44,455,111
Focused Equity -- -- (21,406,905) -- 6,053,705 (15,353,200)
Global 5,722,351 18,110,687 -- 296,370 38,314,377 62,443,785
International 79,454 -- -- (26,791) 645,230 697,893
* Differences between book distributable earnings and tax distributable
earnings consists of post-October losses, wash sales and amortization of
bond premiums and discounts.
For the year ended September 30, 2006, the following reclassifications were
made to reflect permanent differences between book and tax reporting:
Accumulated Undistributed
Capital Net Realized Net Investment
Fund Paid In Gain Income
- ---- -------------- -------------- ----------------
Total Return $ -- $ (633,394) $ 633,394
All-Cap Growth (1,537,185) -- 1,537,185
Mid-Cap Opportunity (1,951,907) -- 1,951,907
Special Situations -- (1,388,380) 1,388,380
Focused Equity (161,744) -- 161,744
Global (70,044) (173,177) 243,221
International -- 104,307 (104,307)
8. Fund Reorganizations--At the close of business on January 27, 2006,
First Investors Global Fund, Inc., First Investors Series Fund (Blue Chip,
Special Situations and Total Return Funds) and First Investors Series Fund
II, Inc. (All-Cap Growth, Focused Equity, Growth & Income, Mid-Cap
Opportunity and Value Funds) were reorganized into corresponding series of
the Trust pursuant to an Agreement and Plan of Conversion and Termination
(the "Reorganizations") that was approved by each Fund's shareholders. The
Reorganizations were accomplished through tax-free exchanges of shares,
which had no impact on net assets, operations, and number of shares
outstanding.
9. New Accounting Pronouncements--In July 2006, the Financial Accounting
Standards Board ("FASB") released 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 the 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. Adoption of
FIN 48 is required for fiscal years beginning after December 15, 2006 and
is to be applied to all open tax years as of the effective date. FIMCO
believes that the adoption of FIN 48 will have 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
Notes to Financial Statements (continued)
FIRST INVESTORS EQUITY FUNDS
September 30, 2006
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 from
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 September 30, 2006, 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 EQUITY FUNDS
The following table sets forth the per share operating performance data for a share outstanding,
total return, ratios to average net assets and other supplemental data for each fiscal year ended
September 30, except as otherwise indicated.
- -----------------------------------------------------------------------------------------------------
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 Year Income Investments Operations Income Gain Distributions
- -----------------------------------------------------------------------------------------------------
TOTAL RETURN FUND
- -----------------
Class A
- -------
2002 $12.28 $ .22 $(1.59) $(1.37) $ .32 -- $ .32
2003 10.59 .20 1.44 1.64 .21 -- .21
2004 12.02 .20 .96 1.16 .20 -- .20
2005 12.98 .23 .97 1.20 .25 -- .25
2006 13.93 .23 .64 .87 .23 -- .23
Class B
- -------
2002 12.11 .15 (1.59) (1.44) .21 -- .21
2003 10.46 .09 1.44 1.53 .13 -- .13
2004 11.86 .12 .94 1.06 .12 -- .12
2005 12.80 .13 .95 1.08 .15 -- .15
2006 13.73 .13 .63 .76 .13 -- .13
- -----------------------------------------------------------------------------------------------------
VALUE FUND++
- ------------
Class A
- -------
2002 $ 5.93 $ .11 $(1.65) $(1.54) $ .13 -- $ .13
2003 4.26 .08 .73 .81 .08 -- .08
2004 4.99 .07 .96 1.03 .07 -- .07
2005 5.95 .08 .65 .73 .07 -- .07
2006 6.61 .09 .78 .87 .08 -- .08
Class B
- -------
2002 5.84 .07 (1.63) (1.56) .08 -- .08
2003 4.20 .05 .71 .76 .04 -- .04
2004 4.92 .03 .95 .98 .03 -- .03
2005 5.87 .04 .63 .67 .03 -- .03
2006 6.51 .04 .76 .80 .03 -- .03
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
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 Year Investment Investment Turnover
Year Return* (in millions) Expenses Income Expenses Income Rate
- -----------------------------------------------------------------------------------------------------------
TOTAL RETURN FUND
- -----------------
Class A
- -------
2002 $10.59 (11.44)% $129 1.47% 1.91% 1.72% 1.66% 185%
2003 12.02 15.58 177 1.52 1.72 1.77 1.47 80
2004 12.98 9.65 231 1.44 1.60 1.65 1.39 41
2005 13.93 9.25 281 1.40 1.69 1.57 1.52 52
2006 14.57 6.24 312 1.38 1.63 1.44 1.57 57
Class B
- -------
2002 10.46 (12.09) 22 2.17 1.21 2.42 .96 185
2003 11.86 14.71 28 2.22 1.02 2.47 .77 80
2004 12.80 8.92 36 2.14 .90 2.35 .69 41
2005 13.73 8.49 38 2.10 .99 2.27 .82 52
2006 14.36 5.53 36 2.08 .93 2.14 .87 57
- -----------------------------------------------------------------------------------------------------------
VALUE FUND++
- ------------
Class A
- -------
2002 $ 4.26 (26.34)% $ 99 1.51% 1.93% N/A N/A 40%
2003 4.99 19.04 126 1.67 1.69 N/A N/A 198
2004 5.95 20.57 185 1.48 1.21 N/A N/A 11
2005 6.61 12.31 267 1.43 1.31 N/A N/A 17
2006 7.40 13.22 337 1.40 1.29 N/A N/A 15
Class B
- -------
2002 4.20 (26.94) 17 2.21 1.23 N/A N/A 40
2003 4.92 18.26 19 2.37 .99 N/A N/A 198
2004 5.87 19.91 23 2.18 .51 N/A N/A 11
2005 6.51 11.43 27 2.13 .61 N/A N/A 17
2006 7.28 12.34 28 2.10 .59 N/A N/A 15
- -----------------------------------------------------------------------------------------------------------
Financial Highlights (continued)
FIRST INVESTORS EQUITY FUNDS
- -----------------------------------------------------------------------------------------------------
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 Year (Loss) Investments Operations Income Gain Distributions
- -----------------------------------------------------------------------------------------------------
BLUE CHIP FUND
- --------------
Class A
- -------
2002 $19.14 $(.03) $(4.55) $(4.58) $ -- -- $ --
2003 14.56 -- 2.58 2.58 -- -- --
2004 17.14 .01 1.54 1.55 -- -- --
2005 18.69 .10 1.91 2.01 .10 -- .10
2006 20.60 .10 1.82 1.92 .07 -- .07
Class B
- -------
2002 18.42 (.16) (4.35) (4.51) -- -- --
2003 13.91 (.11) 2.46 2.35 -- -- --
2004 16.26 (.13) 1.48 1.35 -- -- --
2005 17.61 .09 1.67 1.76 .07 -- .07
2006 19.30 (.08) 1.72 1.64 -- -- --
- -----------------------------------------------------------------------------------------------------
GROWTH & INCOME FUND
- --------------------
Class A
- -------
2002 $11.16 $ .03 $(2.31) $(2.28) $.05 -- $ .05
2003 8.83 .04 1.85 1.89 .04 -- .04
2004 10.68 .06 1.43 1.49 .03 -- .03
2005 12.14 .09 1.54 1.63 .10 -- .10
2006 13.67 .05 1.05 1.10 .05 -- .05
Class B
- -------
2002 10.79 (.04) (2.24) (2.28) -- -- --
2003 8.51 (.03) 1.78 1.75 -- -- --
2004 10.26 (.03) 1.39 1.36 -- -- --
2005 11.62 (.04) 1.51 1.47 .03 -- .03
2006 13.06 (.12) 1.07 .95 -- -- --
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
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 Net
Value, Net Assets Investment Investment Portfolio
End of Total End of Year Income Income Turnover
Year Return* (in millions) Expenses (Loss) Expenses (Loss) Rate
- -----------------------------------------------------------------------------------------------------------
BLUE CHIP FUND
- --------------
Class A
- -------
2002 $14.56 (23.93)% $333 1.48% (.17)% 1.58% (.27)% 144%
2003 17.14 17.72 383 1.56 -- 1.68 (.12) 111
2004 18.69 9.04 414 1.47 .03 1.58 (.08) 94
2005 20.60 10.76 421 1.45 .54 1.56 .43 55
2006 22.45 9.31 438 1.46 .47 1.50 .43 6
Class B
- -------
2002 13.91 (24.48) 57 2.18 (.87) 2.28 (.97) 144
2003 16.26 16.90 62 2.26 (.70) 2.38 (.82) 111
2004 17.61 8.30 61 2.17 (.67) 2.28 (.78) 94
2005 19.30 9.98 52 2.15 (.16) 2.26 (.27) 55
2006 20.94 8.50 44 2.16 (.23) 2.20 (.27) 6
- -----------------------------------------------------------------------------------------------------------
GROWTH & INCOME FUND
- --------------------
Class A
- -------
2002 $ 8.83 (20.53)% $318 1.46% .33% N/A N/A 169%
2003 10.68 21.49 400 1.52 .44 N/A N/A 70
2004 12.14 13.95 499 1.42 .53 N/A N/A 32
2005 13.67 13.43 597 1.38 .72 N/A N/A 42
2006 14.72 8.06 671 1.37 .35 N/A N/A 34
Class B
- -------
2002 8.51 (21.13) 65 2.16 (.37) N/A N/A 169
2003 10.26 20.56 76 2.22 (.26) N/A N/A 70
2004 11.62 13.26 83 2.12 (.17) N/A N/A 32
2005 13.06 12.65 82 2.08 .02 N/A N/A 42
2006 14.01 7.28 72 2.07 (.35) N/A N/A 34
- -----------------------------------------------------------------------------------------------------------
Financial Highlights (continued)
FIRST INVESTORS EQUITY FUNDS
- -----------------------------------------------------------------------------------------------------
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 Year (Loss) Investments Operations Income Gain Distributions
- -----------------------------------------------------------------------------------------------------
ALL-CAP GROWTH FUND
- -------------------
Class A
- -------
2002 $ 6.53 $(.06) $(1.14) $(1.20) -- -- --
2003 5.33 (.06) 1.48 1.42 -- -- --
2004 6.75 (.07) 1.12 1.05 -- -- --
2005 7.80 (.05) 1.07 1.02 -- -- --
2006 8.82 (.06) .50 .44 -- -- --
Class B
- -------
2002 6.49 (.10) (1.13) (1.23) -- -- --
2003 5.26 (.09) 1.44 1.35 -- -- --
2004 6.61 (.12) 1.10 .98 -- -- --
2005 7.59 (.11) 1.04 .93 -- -- --
2006 8.52 (.12) .49 .37 -- -- --
- -----------------------------------------------------------------------------------------------------
MID-CAP OPPORTUNITY FUND
- ------------------------
Class A
- -------
2002 $17.64 $(.13) $(1.73) $(1.86) -- $ -- $ --
2003 15.78 (.12) 3.52 3.40 -- -- --
2004 19.18 (.09) 3.62 3.53 -- -- --
2005 22.71 (.09) 5.62 5.53 -- -- --
2006 28.24 (.09) .77 .68 -- .78 .78
Class B
- -------
2002 16.74 (.24) (1.63) (1.87) -- -- --
2003 14.87 (.23) 3.31 3.08 -- -- --
2004 17.95 (.23) 3.38 3.15 -- -- --
2005 21.10 (.26) 5.22 4.96 -- -- --
2006 26.06 (.29) .73 .44 -- .78 .78
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
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 Net
Value, Net Assets Investment Investment Portfolio
End of Total End of Year Income Income Turnover
Year Return* (in millions) Expenses (Loss) Expenses (Loss) Rate
- -----------------------------------------------------------------------------------------------------------
ALL-CAP GROWTH FUND
- -------------------
Class A
- -------
2002 $ 5.33 (18.38)% $ 44 1.75% (1.03)% 1.98% (1.26)% 138%
2003 6.75 26.64 77 1.94 (1.15) 1.96 (1.17) 126
2004 7.80 15.56 130 1.68 (1.12) N/A N/A 75
2005 8.82 13.08 169 1.58 (.66) N/A N/A 91
2006 9.26 4.99 195 1.53 (.65) N/A N/A 107
Class B
- -------
2002 5.26 (18.95) 9 2.45 (1.73) 2.68 (1.96) 138
2003 6.61 25.67 14 2.64 (1.85) 2.66 (1.87) 126
2004 7.59 14.83 20 2.38 (1.82) N/A N/A 75
2005 8.52 12.25 23 2.28 (1.36) N/A N/A 91
2006 8.89 4.34 23 2.23 (1.35) N/A N/A 107
- -----------------------------------------------------------------------------------------------------------
MID-CAP OPPORTUNITY FUND
- ------------------------
Class A
- -------
2002 $15.78 (10.55)% $131 1.70% (.82)% 1.95% (1.07)% 112%
2003 19.18 21.55 192 1.73 (.80) 1.97 (1.04) 37
2004 22.71 18.41 277 1.56 (.46) 1.73 (.63) 40
2005 28.24 24.35 410 1.48 (.39) 1.61 (.52) 43
2006 28.14 2.58 435 1.44 (.33) 1.47 (.36) 55
Class B
- -------
2002 14.87 (11.17) 25 2.40 (1.52) 2.65 (1.77) 112
2003 17.95 20.71 35 2.43 (1.50) 2.67 (1.74) 37
2004 21.10 17.55 46 2.26 (1.16) 2.43 (1.33) 40
2005 26.06 23.51 57 2.18 (1.09) 2.31 (1.22) 43
2006 25.72 1.85 51 2.14 (1.03) 2.17 (1.06) 55
- -----------------------------------------------------------------------------------------------------------
Financial Highlights (continued)
FIRST INVESTORS EQUITY FUNDS
- -----------------------------------------------------------------------------------------------------
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 Year (Loss) Investments Operations Income Gain Distributions
- -----------------------------------------------------------------------------------------------------
SPECIAL SITUATIONS FUND
- --------------------------
Class A
- -------
2002 $15.16 $(.19) $ (2.31) $ (2.50) -- -- --
2003 12.66 (.17) 3.14 2.97 -- -- --
2004 15.63 (.18) 1.39 1.21 -- -- --
2005 16.84 (.12) 3.72 3.60 -- -- --
2006 20.44 .11 2.07 2.18 -- -- --
Class B
- -------
2002 14.28 (.29) (2.15) (2.44) -- -- --
2003 11.84 (.25) 2.93 2.68 -- -- --
2004 14.52 (.30) 1.32 1.02 -- -- --
2005 15.54 (.26) 3.44 3.18 -- -- --
2006 18.72 (.26) 2.11 1.85 -- -- --
- -----------------------------------------------------------------------------------------------------
FOCUSED EQUITY FUND
- -------------------
Class A
- -------
2002 $ 7.72 $(.07) $(1.92) $(1.99) $ -- -- $ --
2003 5.73 (.02) 1.52 1.50 -- -- --
2004 7.23 (.02) .62 .60 -- -- --
2005 7.83 .03 .86 .89 .02 -- .02
2006 8.70 (.02) .43 .41 .01 -- .01
Class B
- -------
2002 7.58 (.13) (1.86) (1.99) -- -- --
2003 5.59 (.07) 1.48 1.41 -- -- --
2004 7.00 (.08) .61 .53 -- -- --
2005 7.53 (.02) .82 .80 -- -- --
2006 8.33 (.09) .42 .33 -- -- --
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
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 Net
Value, Net Assets Investment Investment Portfolio
End of Total End of Year Income Income Turnover
Year Return* (in millions) Expenses (Loss) Expenses (Loss) Rate
- -----------------------------------------------------------------------------------------------------------
SPECIAL SITUATIONS FUND
- --------------------------
Class A
- -------
2002 $12.66 (16.49)% $138 1.69% (1.24)% 1.93% (1.48)% 153%
2003 15.63 23.46 169 1.80 (1.26) 2.05 (1.51) 111
2004 16.84 7.74 190 1.63 (1.08) 1.86 (1.31) 119
2005 20.44 21.38 224 1.60 (.64) 1.82 (.86) 112
2006 22.62 10.67 249 1.53 (.49) 1.73 (.69) 48
Class B
- -------
2002 11.84 (17.09) 18 2.39 (1.94) 2.63 (2.18) 153
2003 14.52 22.63 20 2.50 (1.96) 2.75 (2.21) 111
2004 15.54 7.03 21 2.33 (1.78) 2.56 (2.01) 119
2005 18.72 20.46 21 2.30 (1.34) 2.52 (1.56) 112
2006 20.57 9.88 18 2.23 (1.19) 2.43 (1.39) 48
- -----------------------------------------------------------------------------------------------------------
FOCUSED EQUITY FUND
- -------------------
Class A
- -------
2002 $ 5.73 (25.78)% $ 38 1.83% (.90)% N/A N/A 150%
2003 7.23 26.18 48 1.99 (.35) N/A N/A 49
2004 7.83 8.30 49 1.85 (.30) N/A N/A 39
2005 8.70 11.35 48 1.79 .41 N/A N/A 60
2006 9.10 4.72 45 1.80 (.18) N/A N/A 76
Class B
- -------
2002 5.59 (26.25) 9 2.53 (1.60) N/A N/A 150
2003 7.00 25.22 11 2.69 (1.05) N/A N/A 49
2004 7.53 7.57 11 2.55 (1.00) N/A N/A 39
2005 8.33 10.68 9 2.49 (.29) N/A N/A 60
2006 8.66 3.96 8 2.50 (.88) N/A N/A 76
- -----------------------------------------------------------------------------------------------------------
Financial Highlights (continued)
FIRST INVESTORS EQUITY FUNDS
- -----------------------------------------------------------------------------------------------------
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 Year (Loss) Investments Operations Income Gain Distributions
- -----------------------------------------------------------------------------------------------------
GLOBAL FUND
- -----------
Class A
- -------
2002 $ 5.21 $(.01) $ (.96) $ (.97) $ -- -- $ --
2003 4.24 (.01) .93 .92 -- -- --
2004 5.16 (.01) .78 .77 -- -- --
2005 5.93 -- 1.13 1.13 -- -- --
2006 7.06 .01 .71 .72 .02 -- .02
Class B
- -------
2002 4.95 -- (.95) (.95) -- -- --
2003 4.00 (.04) .88 .84 -- -- --
2004 4.84 (.05) .73 .68 -- -- --
2005 5.52 (.04) 1.04 1.00 -- -- --
2006 6.52 (.05) .67 .62 -- -- --
- -----------------------------------------------------------------------------------------------------
INTERNATIONAL FUND
- ------------------
Class A
- -------
2006 (a) $10.00 $ -- $ .71 $ .71 -- -- --
Class B
- -------
2006 (a) 10.00 (.01) .71 .70 -- -- --
- -----------------------------------------------------------------------------------------------------
* Calculated without sales charges.
** Net of expenses waived or assumed by the investment adviser (Note 3).
+ Annualized
++ Prior to December 31, 2002, known as Utilities Income Fund.
(a) For the period June 27, 2006 (commencement of operations) to
September 30, 2006.
See notes to financial statements
- -----------------------------------------------------------------------------------------------------------
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 Net
Value, Net Assets Investment Investment Portfolio
End of Total End of Year Income Income Turnover
Year Return* (in millions) Expenses (Loss) Expenses (Loss) Rate
- -----------------------------------------------------------------------------------------------------------
GLOBAL FUND
- -----------
Class A
- -------
2002 $ 4.24 (18.62)% $173 1.87% (.35)% N/A N/A 125%
2003 5.16 21.70 192 1.98 (.19) N/A N/A 112
2004 5.93 14.92 209 1.86 (.13) N/A N/A 105
2005 7.06 19.06 239 1.78 .05 N/A N/A 104
2006 7.76 10.15 260 1.77 .14 N/A N/A 105
Class B
- -------
2002 4.00 (19.19) 14 2.57 (1.05) N/A N/A 125
2003 4.84 21.00 15 2.68 (.89) N/A N/A 112
2004 5.52 14.05 15 2.56 (.83) N/A N/A 105
2005 6.52 18.12 14 2.48 (.65) N/A N/A 104
2006 7.14 9.51 14 2.47 (.56) N/A N/A 105
- -----------------------------------------------------------------------------------------------------------
INTERNATIONAL FUND
- ------------------
Class A
- -------
2006 (a) $10.71 7.10% $ 19 2.35%+ .15%+ 5.65%+ (3.15)%+ 9
Class B
- -------
2006 (a) 10.70 7.00 1 3.05+ (.55)+ 6.35+ (3.85)+ 9
- -----------------------------------------------------------------------------------------------------------
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees of
First Investors Equity Funds
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments of the Total Return Fund, Value
Fund, Blue Chip Fund, Growth & Income Fund, All-Cap Growth Fund, Mid-Cap
Opportunity Fund, Special Situations Fund, Focused Equity Fund, Global Fund
and International Fund (each a series of First Investors Equity Funds), as
of September 30, 2006, the related statements of operations for the year
then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of
the five years in the period then ended for all funds except the
International Fund whose statement of operations, changes in net assets and
financial highlights were for the period June 27, 2006 (commencement of
operations) to September 30, 2006. These financial statements and financial
highlights are the responsibility of the 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 September 30, 2006, 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 the Total Return Fund, Value Fund, Blue Chip Fund, Growth & Income Fund,
All-Cap Growth Fund, Mid-Cap Opportunity Fund, Special Situations Fund,
Focused Equity Fund, Global Fund and International Fund as of September 30,
2006, and the results of their operations for the year then ended, changes
in their net assets, and their financial highlights for the periods
indicated above, in conformity with accounting principles generally
accepted in the United States of America.
Tait, Weller & Baker LLP
Philadelphia, Pennsylvania
November 3, 2006
FIRST INVESTORS EQUITY FUNDS
Trustees and Officers*
Position(s)
Held with Principal Number of Other
Funds and Occupation(s) Portfolios in Trusteeships
Name, Year of Birth Length of During Past Fund Complex Directorships
and Address Service 5 Years Overseen Held
- ----------- ------- ------- -------- ----
DISINTERESTED TRUSTEES
Charles R. Barton, III 1965 Trustee President of 50 None
c/o First Investors since 1/1/2006 Noe Pierson
Management Company, Inc. Corporation; Board
95 Wall Street Member of the
New York, NY 10005 Barton Group, LLC
Stefan L. Geiringer 1934 Trustee Founder/Partner 50 None
c/o First Investors since 1/1/2006 of Real Time
Management Company, Inc. Energy Solutions,
95 Wall Street Inc. since 2005;
New York, NY 10005 Founder/Owner of
SLG, Inc. since
2005; Senior Vice
President of Pepco
Energy Services
from 2003-2005;
Founder/Owner and
President of North
Atlantic Utilities,
Inc. from 1987-2003
Robert M. Grohol 1932 Trustee None/Retired 50 None
c/o First Investors since 8/18/05;
Management Company, Inc. Director/Trustee
95 Wall Street of predecessor
New York, NY 10005 funds since
6/30/00
Arthur M. Scutro, Jr. 1941 Trustee Retired; formerly 50 None
c/o First Investors since 1/1/2006 Senior Vice
Management Company, Inc. President of
95 Wall Street UBS PaineWebber
New York, NY 10005 from 1985-2001
James M. Srygley 1932 Trustee Retired; 50 None
c/o First Investors since 8/18/05; Owner
Management Company, Inc. Director/Trustee Hampton
95 Wall Street of predecessor Properties
New York, NY 10005 funds since
1/19/95
Robert F. Wentworth 1929 Trustee None/Retired 50 None
c/o First Investors since 8/18/05;
Management Company, Inc. Director/Trustee
95 Wall Street of predecessor
New York, NY 10005 funds since
10/15/92
Position(s)
Held with Principal Number of Other
Funds and Occupation(s) Portfolios in Trusteeships
Name, Year of Birth Length of During Past Fund Complex Directorships
and Address Service 5 Years Overseen Held
- ----------- ------- ------- -------- ----
INTERESTED TRUSTEES**
Kathryn S. Head 1955 Trustee Chairman, Officer 50 None
c/o First Investors and President and Director of
Management Company, Inc. since 8/18/05; First Investors
Raritan Plaza I Director/Trustee Corporation;
Edison, NJ 08837 of predecessor First Investors
funds since Consolidated
3/17/94; Corporation;
President of First Investors
predecessor Management
funds since Company, Inc.;
2001 Administrative Data
Management Corp.;
First Investors
Federal Savings
Bank; School
Financial
Management
Services, Inc.;
and other affiliated
companies***
John T. Sullivan 1932 Trustee Director of 50 None
c/o First Investors since 8/18/05; First Investors
Management Company, Inc. Director/Trustee Corporation,
95 Wall Street of predecessor First Investors
New York, NY 10005 funds since Consolidated
9/20/79 Corporation,
First Investors
Management
Company, Inc.,
Administrative Data
Management Corp.,
and other affiliated
companies***
Formerly
Of Counsel
Hawkins,
Delafield &
Wood.
FIRST INVESTORS EQUITY FUNDS
Trustees and Officers* (continued)
* Each Trustee serves for an indefinite term with the Funds, until
his/her successor is elected.
** Ms. Head is an interested trustee because (a) she indirectly owns
more than 5% of the voting stock of the adviser and principal
underwriter of the Funds, (b) she is an officer, director and employee
of the adviser and principal underwriter of the Funds, and (c) she is
an officer of the Funds. Mr. Sullivan is an interested trustee because
he is a director and he indirectly owns securities issued by the
adviser and principal underwriter of the Funds.
*** Other affiliated companies consist of: First Investors Realty
Company, Inc., First Investors Life Insurance Company, First Investors
Leverage Corporation, Route 33 Realty Corporation, First Investors
Credit Funding Corporation, N.A.K. Realty Corporation, Real Property
Development Corporation, First Investors Credit Corporation and First
Investors Resources, Inc.
Position(s)
Held with Principal Number of Other
Funds and Occupation(s) Portfolios in Trusteeships
Name, Year of Birth Length of During Past Fund Complex Directorships
and Address Service 5 Years Overseen Held
- ----------- ------- ------- -------- ----
OFFICER(S) WHO ARE NOT TRUSTEES
Joseph I. Benedek 1957 Treasurer Treasurer 50 None
c/o First Investors since 8/18/05; and Principal
Management Company, Inc. Treasurer of Accounting
Raritan Plaza I predecessor fund Officer
Edison, NJ 08837 since 1988
Larry R. Lavoie 1947 Chief Compliance General Counsel 50 None
c/o First Investors Officer since of First Investors
Management Company, Inc. 8/18/05; Corporation
95 Wall Street Chief Compliance and its affiliates;
New York, NY 10005 Officer of Director of
predecessor funds First Investors
since 2004 Corporation
and various
affiliates
FIRST INVESTORS EQUITY FUNDS
Shareholder Information
- -----------------------
Investment Adviser Custodian
First Investors Management Company, Inc. The Bank of New York
95 Wall Street One Wall Street
New York, NY 10005 New York, NY 10286
Subadviser (All-Cap Growth, Custodian
Focused Equity and Global Funds only) (Global and International Funds only)
Wellington Management Company, LLP Brown Brothers Harriman & Co.
75 State Street 40 Water Street
Boston, MA 02109 Boston, MA 02109
Subadviser (Special Situations Fund only) Transfer Agent
Paradigm Capital Management, Inc. Administrative Data Management Corp.
Nine Elk Street Raritan Plaza I - 8th Floor
Albany, NY 12207 Edison, NJ 08837-3620
Subadviser (International Fund only) Independent Registered
Vontobel Asset Management, Inc. Public Accounting Firm
450 Park Avenue Tait, Weller & Baker LLP
New York, NY 10022 1818 Market Street
Philadelphia, PA 19103
Underwriter
First Investors Corporation Legal Counsel
95 Wall Street Kirkpatrick & Lockhart
New York, NY 10005 Nicholson Graham LLP
1601 K Street, N.W.
Washington, DC 20006
It is the Funds' practice to mail only one copy of their 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 Funds 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 Funds voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30, is
available, without charge, upon request in writing or by calling
800-423-4026 and on the SEC's internet website at http://www.sec.gov.
The Funds file their complete schedule of portfolio holdings with the SEC
on Form N-Q for the first and third quarters of each fiscal year. The
Funds' Form N-Q is available on the SEC's website at http://www.sec.gov;
and may also be reviewed and copied at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the Public Reference Room
may be obtained by calling 800-SEC-0330. The schedule of portfolio holdings
is also available, without charge, upon request in writing or by calling
800-423-4026.
NOTES
NOTES
Item 2. Code of Ethics
As of September 30, 2006, the Registrant has adopted a code of ethics
that applies to the Registrant's President/Principal Executive Officer
and Treasurer/Principal Financial Officer. For the year ended
September 30, 2006, there were no amendments to any provision of its
code of ethics, nor were there any waivers granted from a provision
of the code of ethics. A copy of the Registrant's code of ethics is
filed under Item 12(a)(1).
Item 3. Audit Committee Financial Expert
The Registrant's Board has determined that it has at least one "audit
committee financial expert" serving on its audit committee. Robert F.
Wentworth is the "audit committee financial expert" and is considered
to be "independent" as defined in Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services
Fiscal Year Ended
September 30,
-----------------
2006 2005
---- ----
(a) Audit Fees
First Investors Equity Funds $228,700 $206,500
(b) Audit-Related Fees
First Investors Equity Funds $ 0 $ 0
(c) Tax Fees
First Investors Equity Funds $ 37,000 $ 32,400
Nature of fees: tax returns preparation and tax compliance
(d) All Other Fees
First Investors Equity Funds $ 0 $ 0
(e)(1) Audit committee's pre-approval policies
The Charter of the Audit Committee requires the Audit Committee:
(a) to pre-approve, and to recommend to the full Board, the
selection, retention or termination of the independent auditors to provide
audit, review or attest services to the Funds and, in connection therewith,
evaluate the independence of the auditors and to obtain the auditors'
specific representations as to their independence;
(b) to pre-approve all non-audit services to be provided to
the Funds by the independent auditor;
(c) to pre-approve all non-audit services to be provided by
the Funds' independent auditor to the Funds' investment adviser or to any
entity that controls, is controlled by or is under common control with the
Funds investment adviser ("adviser affiliate") and that provides ongoing
services to the Funds, if the engagement relates directly to the operations
and financial reporting of the Funds;
(d) to establish, if deemed necessary or appropriate as an
alternative to Audit Committee pre-approval of services to be provided by
the independent auditor as required by paragraphs (b) and (c) above,
policies and procedures to permit such services to be pre-approved by other
means, such as by action of a designated member and members of the Audit
Committee, subject to subsequent Committee review and oversight;
(e) to consider whether the non-audit services provided by the
Funds' independent auditors to the Funds' investment adviser or any adviser
affiliate that provides ongoing services to the Funds, which services were
not pre-approved by the Audit Committee, are compatible with maintaining the
auditors' independence;
(f) to review and approve the fees proposed to be charged to the
Funds by the auditors for each audit and non-audit service;
(e)(2) None, or 0%, of the services relating to the Audit-Related Fees,
Tax Fees and All Other Fees paid by the Registrant and Related Entities
disclosed above were approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X (which permits audit committee
approval after the start of the engagement with respect to services other
than audit review or attest services, if certain conditions are satisfied).
(f) Not Applicable
(g) Aggregate non-audit fees billed by the Registrant's accountant
for services rendered to the Registrant and the Registrant's investment
adviser or any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the
Registrant for the two fiscal years ended September 30, 2006 and 2005
were $71,000 and $68,000 respectively.
(h) 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
shareholders 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 Directors/Trustees.
Item 11. Controls and Procedures
(a) The Registrant's Principal Executive Officer and Principal
Financial Officer have concluded that the Registrant's disclosure controls
and procedures (as defined in Rule 30a-3(c) under the Investment Company
Act of 1940, as amended) are effective, based on their evaluation of these
disclosure controls and procedures as of a date within 90 days of the
filing date of this report.
(b) There were no changes in the Registrant's internal control over
financial reporting 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 - Filed herewith
(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 Equity Funds
(Registrant)
By /S/ KATHRYN S. HEAD
Kathryn S. Head
President and Principal Executive Officer
Date: December 6, 2006
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 Equity Funds
(Registrant)
By /S/ JOSEPH I. BENEDEK
Joseph I. Benedek
Treasurer and Principal Financial Officer
Date: December 6, 2006