-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PjIJey9n9m6iFMxZiJeh+9C0kjKT/jE7BmF3OzY+ytK8xmqglcIUwzjbIlXFtm5i 7yU4bhoAirhhKub2GUPA+A== 0000740967-06-000047.txt : 20061208 0000740967-06-000047.hdr.sgml : 20061208 20061208144702 ACCESSION NUMBER: 0000740967-06-000047 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20060930 FILED AS OF DATE: 20061208 DATE AS OF CHANGE: 20061208 EFFECTIVENESS DATE: 20061208 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST INVESTORS EQUITY FUNDS CENTRAL INDEX KEY: 0000886048 IRS NUMBER: 000000000 FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-06618 FILM NUMBER: 061265410 BUSINESS ADDRESS: STREET 1: 95 WALL ST CITY: NEW YORK STATE: NY ZIP: 10005 BUSINESS PHONE: 1-212-858-8000 MAIL ADDRESS: STREET 1: RARITAN PLAZA 1 STREET 2: 8TH FLOOR CITY: EDISON STATE: NJ ZIP: 08837-3620 FORMER COMPANY: FORMER CONFORMED NAME: FIRST INVESTORS SERIES FUND II INC DATE OF NAME CHANGE: 19920929 0000886048 S000010584 FIRST INVESTORS MID-CAP OPPORTUNITY FUND C000029237 CLASS A FIUSX C000029238 CLASS B FIMBX 0000886048 S000010585 FIRST INVESTORS ALL-CAP GROWTH FUND C000029239 CLASS A FICGX C000029240 CLASS B FIGBX 0000886048 S000010586 FIRST INVESTORS VALUE FUND C000029241 CLASS A FIUTX C000029242 CLASS B FIUBX 0000886048 S000010587 FIRST INVESTORS GROWTH & INCOME FUND C000029243 CLASS A FGINX C000029244 CLASS B FGIBX 0000886048 S000010588 FIRST INVESTORS FOCUSED EQUITY FUND C000029245 CLASS A FIFEX C000029246 CLASS B FIFBX 0000886048 S000010589 FIRST INVESTORS GLOBAL FUND C000029247 CLASS A FIISX C000029248 CLASS B FIBGX 0000886048 S000010590 FIRST INVESTORS BLUE CHIP FUND C000029249 CLASS A FIBCX C000029250 CLASS B FBCBX 0000886048 S000010591 FIRST INVESTORS TOTAL RETURN FUND C000029251 CLASS A FITRX C000029252 CLASS B FBTRX 0000886048 S000010592 FIRST INVESTORS SPECIAL SITUATIONS FUND C000029253 CLASS A FISSX C000029254 CLASS B FISBX 0000886048 S000012416 First Investors International Fund C000033679 Class A FIINX C000033680 Class B FIIOX N-CSR 1 equityncsr093006.txt FIRST INVESTORS EQUITY FUNDS UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------- FORM N-CSR -------- CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES INVESTMENT COMPANY ACT FILE 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 EX-99.302 CERT 2 equity302.txt CERTIFICATIONS SECTION 302 CERTIFICATIONS I, Kathryn S. Head, certify that: 1. I have reviewed this report on Form N-CSR of First Investors Equity Funds; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report; 4. The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change 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; and 5. The Registrant's other certifying officer(s) and I have disclosed to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. By: /S/ KATHRYN S. HEAD Kathryn S. Head President and Principal Executive Officer Date: December 6, 2006 CERTIFICATIONS I, Joseph I. Benedek, certify that: 1. I have reviewed this report on Form N-CSR of First Investors Equity Funds; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report; 4. The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change 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; and 5. The Registrant's other certifying officer(s) and I have disclosed to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. By: /S/ JOSEPH I. BENEDEK Joseph I. Benedek Treasurer and Principal Financial Officer Date: December 6, 2006 EX-99.906 CERT 3 equity906.txt CERTIFICATIONS SECTION 906 CERTIFICATION CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Kathryn S. Head, President and Principal Executive Officer of the First Investors Equity Funds (the "Registrant"), certify, pursuant to 18 U.S.C. Section 1350 as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: 1. The Registrant's periodic report on Form N-CSR of the First Investors Equity Funds for the year ended September 30, 2006, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in such Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Dated: December 6, 2006 /S/ KATHRYN S. HEAD Kathryn S. Head President and Principal Executive Officer, First Investors Equity Funds A signed original of this written statement required by Section 906 has been provided to First Investors Equity Funds and will be retained by First Investors Equity Funds and furnished to the Securities and Exchange Commission or its staff upon request. CERTIFICATION CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Joseph I. Benedek, Treasurer and Principal Financial Officer of the First Investors Equity Funds(the "Registrant"), certify, pursuant to 18 U.S.C. Section 1350 as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: 1. The Registrant's periodic report on Form N-CSR of the First Investors Equity Funds for the year ended September 30, 2006, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in such Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Dated: December 6, 2006 /S/ JOSEPH I. BENEDEK Joseph I. Benedek Treasurer and Principal Financial Officer, First Investors Equity Funds A signed original of this written statement required by Section 906 has been provided to First Investors Equity Funds and will be retained by First Investors Equity Funds and furnished to the Securities and Exchange Commission or its staff upon request. EX-99.CODE ETH 4 codeofethics.txt CODE OF ETHICS CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND FINANCIAL OFFICERS OF THE FIRST INVESTORS FUNDS Adopted August 21, 2003 I. Purpose of the Code In accordance with Section 406 of the Sarbanes-Oxley Act of 2002, and the instructions for Form N-CSR (1), the First Investors family of mutual funds (collectively, "Funds" and individually, "Fund") have adopted this code of ethics ("Code") to govern the conduct of their principal executive officers and financial officers ("Covered Officers") (2). This Code is intended to promote: Honest and ethical conduct by the Covered Officers of the Funds, including the honest and ethical handling of actual or apparent conflicts of interest between their personal and professional relationships; Full, fair, accurate, timely and understandable disclosure in reports and documents that the Funds file with, or submit to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Funds; Compliance with applicable laws and governmental rules and regulations; The prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and Accountability for adherence to the Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. (1) Form N-CSR implements Section 406 of the Sarbanes-Oxley Act of 2002 insofar as it applies to mutual funds. Item 2 of Form N-CSR requires a registered management investment company to disclose annually whether, as of the end of the period covered by the report, it has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these officers are employed by registrant or a third party. If the registrant has not adopted such a code of ethics, it must explain why it has not done so. The registrant must also (1) file with the SEC a copy of its code as an exhibit to its annual report on Form N-CSR; (2) post the text of its code on its Internet website and disclose, in its most recent report on Form N-CSR, its Internet address and the fact that it has posted the code on its Internet website; or (3) undertake in its most recent report on Form N-CSR to provide to any person without charge, upon request, a copy of its code and explain the manner in which such request may be made. The registrant must also disclose in its annual Form N-CSR any amendments to, or waivers (including implicit waivers) from, the provisions of the code. (2) The Covered Officers of the First Investors Funds are identified in Exhibit A to this Code. II. Conflicts of Interest A. Definition of Conflict of Interests for Purposes of this Code For purposes of this Code, a "conflict of interest" occurs when a Covered Officer's "personal interests" interfere with the interests of, or his or her service to, any of the Funds. For example, a conflict of interest would arise if a Covered Officer, directly or indirectly, were to receive improper personal benefits as a result of the Covered Officer's position with the Funds. This Code applies to all conflicts of interest between the personal interests of Covered Officers and the interests of the Funds, whether or not such conflicts of interest are prohibited by the Investment Company Act of 1940 ("1940 Act"), the Investment Advisers Act of 1940 ("Investment Advisers Act"), or the rules adopted by the SEC under these laws. For example, this Code prohibits individual transactions between Covered Officers and the Funds, notwithstanding the fact that such transactions may already be prohibited by law. This Code does not apply to conflicts of interest that arise solely because Covered Officers are employees or direct or indirect shareholders of the investment adviser of the Funds or the affiliates of the adviser. This Code recognizes that the Covered Officers will, in the normal course of their duties, be involved in establishing policies and implementing decisions that will have different effects on the adviser (and its affiliates) and the Funds. The participation of the Covered Officers in such activities is inherent in the contractual relationships between the Funds and the adviser (and its affiliates) and is consistent with the performance by the Covered Officers of their duties as officers of the Funds. These conflicts are not deemed to involve the "personal interests" of Covered Officers for purposes of this Code. B. Standards of Conduct With Respect to Conflicts of Interest The following standards govern the conduct of Covered Officers with respect to any actual or apparent conflicts of interest that arise between their personal interests and the interests of the Funds. The overarching principle of each standard is that the personal interests of a Covered Officer should not be placed improperly before the interests of the Funds. Each Covered Officer must: Not engage in any personal transaction that would violate the conflict of interest provisions of the 1940 Act, the Investment Advisers Act, or the SEC's rules thereunder; Not use his or her personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Funds whereby the Covered Officer would benefit personally to the detriment of the Funds; Not cause the Funds to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of the Funds; and, Not use material, non-public knowledge of portfolio transactions made or contemplated for the Funds to trade personally or cause others to trade personally in contemplation of the market effect of such transactions. C. Reporting of Potential Conflicts At least annually, the Covered Officers are required to complete a Directors and Officers Questionnaire ("Questionnaire"), which contains information about potential personal conflicts of interest. These Questionnaires are required to be submitted to the Investment Compliance Manager of the Funds, who is charged with the responsibility of reviewing them for actual or potential conflicts of interest. Covered Officers are also required to report, as soon as possible, to the Investment Compliance Manager, any transactions or arrangements, not previously disclosed in their annual Questionnaires, that they reasonably believe may present a potential conflict of interest between their personal interests and the interests of the Funds. Examples of the potential conflicts that should be reported include: Serving as a Board of Director or Trustee of any public or private company; The acceptance of any gift, other than a gift of nominal value (i.e., having a value of less than $100) from any company with which the Funds has a current or prospective business dealings (other than the Funds' adviser and its affiliates); The acceptance of entertainment, other than occasional meals, tickets to sporting events, or the like that are not so frequent or extensive as to raise questions of impropriety, from any company with which the Funds has current or prospective business dealings (other than the Funds' adviser and its affiliates); Any ownership interest in, or any consulting or employment relationship with, any of the Funds' service providers (other than the Funds' adviser and its affiliates); and A direct or indirect financial interest in commissions, transaction charges or spreads paid by the Funds for effecting portfolio transactions or for selling or redeeming shares other than an interest in arising from the Covered Officer's employment, such as compensation or equity ownership. The willful or knowing failure of a Covered Officer to report a potential conflict of interest in the manner set forth above shall be considered a violation of this Code. In the event that any potential conflicts of interest are reported to or otherwise are detected by the Investment Compliance Manager, he is required to inform the General Counsel. As discussed below, the General Counsel is responsible for conducting any investigation that may be necessary, interpreting the provisions of the Code, determining whether there is an actual or apparent conflict of interest and if so, making a recommendation to the Board for appropriate action. III. Compliance with Applicable Laws and Regulations It is the responsibility of each Covered Officer to promote compliance with the laws, rules and regulations that are applicable to the Funds. Each covered Officer should: Make reasonable efforts to familiarize himself or herself with the disclosure and other requirements applicable to the Funds; Not knowingly misrepresent, or cause others to misrepresent, facts about the Funds to others, whether within or outside the Funds, including to the Funds' directors, trustees and auditors, and to governmental regulators and self-regulatory organizations; and, To the extent appropriate within his or her area of responsibility, consult with other officers and employees of the Funds and the adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds. IV. Certifications and Reports of Violations Each Covered Officer must: Upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), certify in writing to the Investment Compliance Manager that he or she has received, read and understands the Code and any amendments thereto (Exhibit B); Annually thereafter affirm to the Investment Compliance Manager that he or she has complied with the requirements of the Code (Exhibit C); Notify the Investment Compliance Manager promptly if he or she knows of any violation of this Code; and Not retaliate against any other Covered Officer or any employee of the Funds or their affiliated persons for reporting potential violations of, or carrying out their responsibilities under, this Code. The Investment Compliance Manager shall promptly report to the General Counsel any evidence of a violation of this Code. V. Interpretations and Investigations The General Counsel is responsible for interpreting this Code as it applies to particular situations, investigating potential violations of the Code, reporting violations of the Code to the Board of Directors/Trustees of the Funds ("Board"), and making recommendations of any changes to the Code that he believes are necessary and appropriate. The following policies and procedures will apply in connection with investigations of any potential violations of this Code by a Covered Officer: The General Counsel will take such steps as he deems necessary and appropriate to investigate any potential violations that are reported to or that otherwise become known to him; If, after such investigation, the General Counsel believes that no violation has occurred, the General Counsel is not required to take any further action; If the General Counsel concludes that a violation of this Code has occurred, he will report it the Board no later than its next formal meeting; Under no circumstances shall the General Counsel waive compliance with the Code if he believes that it has been violated; If the Board concurs that a violation has occurred, it will determine what action should be taken, which may include requiring a Covered Officer to disgorge any gains obtained as a result of a conflict, imposing restrictions on the Covered Officer's future activities, or recommending a suspension or dismissal of the Covered Officer; and The Board shall also have authority to waive, by majority vote, any disciplinary action for a violation of this Code in appropriate circumstances, such as for a good faith but erroneous belief that a transaction did not involve a conflict of interest covered by this Code. On at least an annual basis, the General Counsel will provide a report to the Board concerning overall compliance with the Code, any significant interpretive issues that have arisen during the year, and his suggestions for changes, if any. VI. Other Codes of Conduct and Policies and Procedures This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act. The Covered Officers are required to continue to comply with other codes of ethics, policies and procedures that apply to their conduct. However, the other codes of ethics, policies and procedures are not part of this Code. For example, Covered Officers must continue to comply with the code of ethics that has been adopted by the Funds and their adviser, and principal underwriter pursuant to Rule 17j-1 ("Rule 17j-1 Code of Ethics") as long as they are deemed to be access persons under it. However, a violation of the Rule 17j-1 Code of Ethics would not be a violation of this Code unless the conduct at issue independently violated the terms of this Code. VII. Amendments Any amendments to this Code must be approved or ratified by a majority vote of the Board. In the event that an amendment to this Code is made between formal Board meetings, it will be presented to the Board for ratification by the next formal meeting. VIII. Confidentiality All reports and records prepared or maintained pursuant to this Code will be considered privileged and confidential and shall be maintained and protected accordingly. IX. Internal Use The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of any Fund or person, as to any fact, circumstance, or legal conclusion. Exhibit A COVERED OFFICERS OF THE FIRST INVESTORS FUNDS Kathryn S. Head - - President of the First Investors Funds Joseph I. Benedek - - Treasurer of the First Investors Funds Exhibit B INITIAL CERTIFICATION I hereby certify that I have received and read a copy of the Code of Ethics For Principal Executive and Financial Officers of the First Investors Funds and understand that as a "Covered Officer" I am subject to its provisions and any amendments thereto. I also understand that as a "Covered Officer" I will certify annually to the Investment Compliance Manager that I have complied with the requirements of this Code. DATED ________________ Signature _____________________________ Name (please print) ______________________ Title __________________________________ Please return to: Investment Compliance Manager FIMCO 95 Wall Street - 23rd Floor New York, New York 10005 Exhibit C ANNUAL CERTIFICATION I hereby certify that I have received and read a copy of the Code of Ethics For Principal Executive and Financial Officers of the First Investors Funds and understand that as a "Covered Officer" I am subject to its provisions and any amendments thereto. I have complied with all of the requirements of the Code including, but not limited to reporting any actual or apparent conflicts of interest or any violations of this Code to the Investment Compliance Manager. DATED ________________ Signature ______________________________ Name (please print) ______________________ Title __________________________________ Please return to: Investment Compliance Manager FIMCO 95 Wall Street - 23rd Floor New York, New York 10005 -----END PRIVACY-ENHANCED MESSAGE-----