<PAGE>
PORTFOLIO MANAGER'S LETTER
FIRST INVESTORS GROWTH & INCOME FUND
Dear Investor:
We are pleased to present the annual report for the First Investors Growth &
Income Fund for the fiscal year ended October 31, 1996. At October 31, 1996, the
Fund's net asset value per share was $9.39 for Class A shares and $9.33 for
Class B shares.
The U.S. stock market posted strong gains in the past fiscal year with the S&P
500 Index rising 24%. Investor confidence continued to be buoyed by moderate
economic growth, benign inflation and relatively stable interest rates. In
addition, corporate earnings have generally been better than expected, despite a
few visible shortfalls. For the year ended October 31, 1996, the First Investors
Growth & Income Fund returned on a net asset value basis 21.8% on Class A shares
and 20.9% on Class B shares, compared to a 21.2% return for the Lipper Growth
and Income Average.
Despite the stock market's powerful advance, returns among industries and
sectors were highly uneven during the past year. Contributing to the results of
the First Investors Growth & Income Fund were strong gains from the health care
and household products sectors as well as from selected industrial holdings. In
addition, our relatively low exposure to utilities benefited the Fund's returns.
The Fund's performance was restrained by our neutral weighting in the finance
sector, which was the market's top returning sector, as well as by the Fund's
slightly underweighted position in technology, which continued to experience
healthy returns in the past year.
While the decline in long-term interest rates in recent months has been an
important factor behind the stock market's rise to record highs, we expect that
the direction of earnings will be the primary driver of equity returns in the
quarters ahead. A slowing economy has resulted in a greater number of profit
shortfalls in the past few months, but they have been isolated primarily to the
basic industrial and capital spending related areas. Overall, the earnings
cycle, while mature, has proven to be quite durable, and we expect profits to
continue to rise at a 5-6% rate for this year and next. Our view of the current
stock market level is that, based on historical dividend yields and price to
book value ratios, the stock market has been extended for some time. However,
relative to earnings the market is priced at a price/earnings multiple of 16
times next year's estimates, which is within normal historical ranges.
In our last letter to shareholders, we indicated that our investment strategy
was to place a greater emphasis on sectors and companies with stable growth
characteristics, such as household products, health care, software, and
financial services. These areas have performed quite well in the past year, and
valuations are not as compelling as they were earlier in the year. Therefore, we
do not expect to increase our holdings in these areas at this time. We have been
less optimistic on the basic industrial groups as current earnings trends are
weak and may remain difficult over the next year. Many of the cyclicals have
been market laggards in 1996 as earnings expectations have been lowered. We are
looking for opportunities to increase the Fund's exposure to a selected list of
economically sensitive companies, particularly ones that will benefit from
improving fundamentals overseas. Better economies in Europe and Japan could be
the source of positive earnings surprises for many U.S. multinationals in 1997,
and this is an investment theme that we intend to emphasize in the Fund over the
next 12 to 18 months.
The recent bull market in stocks has lasted 74 months, the longest bull market
in the history of the U.S. stock market. While investors have enjoyed these
gains, it is important to remember that the stock market tends to be cyclical
with periods when stock prices generally rise and periods when stock prices
generally decline. In addition, certain sectors of the market, such as
technology stocks, can be more volatile than the general market, creating
greater opportunities but also greater risks. Investors should be aware of these
risks and recognize that successful investing generally requires a long-term
commitment to the market.
As always, we appreciate the opportunity to serve your investment needs.
Sincerely,
[SIGNATURE]
Laura J. Allen
Portfolio Manager
November 29, 1996
1
<PAGE>
CUMULATIVE PERFORMANCE INFORMATION
FIRST INVESTORS 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.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS OF OCTOBER 31, 1996
$ 100,000 $ 10,000 $ 1,000
GROWTH & INCOME FUND S & P 500 INDEX
<S> <C> <C>
Oct 93 9371 10148
Apr 94 9365 9917
Oct 94 9723 10530
Apr 95 10514 11589
Oct 95 11636 13192
Apr 96 13194 15007
Oct 96 14155 16369
Average Annual Total Return*
Class A Shares N.A.V. Only S.E.C. Standardized
One Year 21.82% 14.22%
Since Inception (10/4/93) 14.34% 11.96%
Class B Shares
One Year 20.92% 16.15%
Since Inception (1/12/95) 24.48% 21.67%
</TABLE>
THE GRAPH COMPARES A $10,000 INVESTMENT MADE IN THE FIRST INVESTORS GROWTH &
INCOME FUND (CLASS A SHARES) ON 10/4/93 (INCEPTION DATE) WITH A THEORETICAL
INVESTMENT IN THE S&P 500 INDEX. THE S&P 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 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 BASED ON DIFFERENCES IN SALES LOADS
AND FEES PAID BY SHAREHOLDERS INVESTING IN THE DIFFERENT CLASSES.
* AVERAGE ANNUAL TOTAL RETURN FIGURES (FOR THE PERIOD ENDED 10/31/96) INCLUDE
THE REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS. "N.A.V. ONLY" RETURNS ARE
CALCULATED WITHOUT SALES CHARGES. THE "S.E.C. STANDARDIZED" RETURNS SHOWN ARE
BASED ON THE MAXIMUM SALES CHARGE OF 6.25% FOR CLASS A SHARES. THE CLASS B
"S.E.C. STANDARDIZED" RETURNS ARE ADJUSTED FOR THE APPLICABLE DEFERRED SALES
CHARGE (MAXIMUM OF 4% IN THE FIRST YEAR). SOME OR ALL OF THE EXPENSES OF THE
FUND WERE WAIVED OR ASSUMED. IF SUCH EXPENSES HAD BEEN PAID BY THE FUND, THE
"S.E.C. STANDARDIZED" AVERAGE ANNUAL TOTAL RETURN FOR ONE YEAR AND SINCE
INCEPTION WOULD HAVE BEEN 13.8% AND 11.1%, RESPECTIVELY, FOR THE CLASS A
SHARES AND 15.7% AND 20.6%, RESPECTIVELY, FOR THE CLASS B SHARES. RESULTS
REPRESENT PAST PERFORMANCE AND DO NOT INDICATE FUTURE RESULTS. 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. S&P 500 INDEX FIGURES FROM STANDARD & POOR'S AND ALL OTHER FIGURES FROM
FIRST INVESTORS MANAGEMENT COMPANY, INC.
2
<PAGE>
PORTFOLIO MANAGER'S LETTER
FIRST INVESTORS U.S.A. MID-CAP OPPORTUNITY FUND
Dear Investor:
We are pleased to present the annual report of the First Investors U.S.A.
Mid-Cap Opportunity Fund for the fiscal year ended October 31, 1996. At October
31, 1996, the Fund's net asset value per share was $15.29 for Class A shares and
$15.10 for Class B shares.
The past fiscal year witnessed a continued benign interest rate environment, low
unemployment and a positive outlook on inflation which led to a soft landing for
the U.S. economy. Although the general overall economic outlook was positive,
concerns regarding pricing pressures on the profit outlook limited the returns
of the broader small and mid-cap indices, while the narrower, large-cap indices
continued to hit new highs. With a consensus of market strategists expecting
more of the same from the U.S. economy in the coming year, we expect investors
to become more comfortable with a slow growth economy and shift their investment
focus from large-cap companies to smaller well managed mid-cap companies.
The past fiscal year also marked the transition of the Fund's investment focus
to securities of U.S. based mid-cap companies from securities of companies with
a majority of their employees located in, or services or products produced in
the U.S. The name of the Fund was changed to First Investors U.S.A. Mid-Cap
Opportunity Fund to reflect the new concentration on mid-cap stocks. We believe
the emphasis on mid-cap stocks represents an opportunity to invest in companies
that are growing, yet have more experienced management and broader product
offerings than small-cap companies. The goal of the Fund remains long-term
capital growth.
For the year ended October 31, 1996, the Fund had a total return on a net asset
value basis of 11.6% and 10.8% on Class A and Class B shares, respectively,
compared to a total return of 16.1% for the average mid-cap company growth fund
as tracked by Lipper Analytical Services, Inc. We attribute this relative
underperformance to the fact that for a portion of its fiscal year the Fund was
operating under the investment policies in effect prior to the change in
emphasis to mid-capitalization stocks.
The Fund's performance was hurt by underweightings in the energy, retail and
financial sectors. With their outlooks still positive, we have added to these
sectors as well as to the capital goods, basic industry, utility and
transportation sectors. At the same time, our exposure has decreased in consumer
services, healthcare, consumer durables and non-durables, and technology
sectors. While benefiting overall from an underweighting in the technology
sector, some of the Fund's best performers were in that group. Software
companies such as SystemSoft, Microsoft and Oracle posted outstanding returns,
as did Atmel, a semiconductor company and AVX Corp., a maker of electronic
components. Conversely, the Fund's performance was hindered by technology stocks
such as MEMC Electronics and Filenet.
The recent bull market in stocks has lasted 74 months, the longest bull market
in the history of the U.S. stock market. While investors have enjoyed these
gains, it is important to remember that the stock market tends to be cyclical
with periods when stock prices generally rise and periods when stock prices
generally decline. In addition, certain sectors of the market, such as
technology stocks, can be more volatile than the general market, creating
greater opportunities but also greater risks. Investors should be aware of these
risks and recognize that successful investing generally requires a long-term
commitment to the market.
There is a wide range of estimates for expected U.S. GDP growth for the coming
year; however, none call for robust growth. Our general outlook is for a slow
growth, low inflation economy over the next twelve months. We feel the U.S.A.
Mid-Cap Opportunity Fund is positioned to benefit from a shift over the next
twelve months in investment sentiment from large, "blue chip" companies to well
managed, mid-cap growth companies.
As always, we appreciate the opportunity to serve your investment needs.
Sincerely,
[SIGNATURE]
Patricia D. Poitra
Director of Equities
and Portfolio Manager
November 29, 1996
3
<PAGE>
CUMULATIVE PERFORMANCE INFORMATION
FIRST INVESTORS U.S.A. MID-CAP OPPORTUNITY FUND
Comparison of change in value of $10,000 investment in the First Investors
U.S.A. Mid-Cap Opportunity Fund (Class A shares) the Standard & Poor's 400
Midcap Index and the Russell 1000 Growth Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS OF OCTOBER 31, 1996
$ 100,000 $ 10,000 $ 1,000
U.S.A. MID-CAP S & P 400 MIDCAP RUSSELL 1000
<S> <C> <C> <C>
Aug 92 9375 10000 10000
Oct 92 9441 10462 10257
Apr 93 9557 11440 10832
Oct 93 9840 12659 11562
Apr 94 9172 12552 11137
Oct 94 9639 11373 11592
Apr 95 10806 13762 12598
Oct 95 12009 15707 14538
Apr 96 13021 17684 16496
Oct 96 13407 18432 17838
Average Annual Total Return*
Class A Shares N.A.V. Only S.E.C. Standardized
One Year 11.64% 4.68%
Since Inception (8/24/92) 8.74% 7.11%
Class B Shares
One Year 10.80% 6.39%
Since Inception (1/12/95) 17.45% 14.83%
</TABLE>
THE GRAPH COMPARES A $10,000 INVESTMENT MADE IN THE FIRST INVESTORS U.S.A.
MID-CAP OPPORTUNITY FUND (CLASS A SHARES) ON 8/24/92 (INCEPTION DATE) WITH
THEORETICAL INVESTMENTS IN THE STANDARD & POOR'S 400 MIDCAP INDEX AND THE
RUSSELL 1000 GROWTH INDEX. THE S&P 400 MIDCAP 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 WHERE THE MEDIAN MARKET
CAPITALIZATION IS APPROXIMATELY $700 MILLION. THE RUSSELL 1000 GROWTH INDEX
CONTAINS THOSE RUSSELL 1000 INDEX SECURITIES WITH A GREATER-THAN-AVERAGE GROWTH
ORIENTATION. THE RUSSELL 1000 INDEX, DESIGNED TO BE A COMPREHENSIVE
REPRESENTATION OF THE INVESTABLE U.S. EQUITY MARKET, IS AN UNMANAGED INDEX
GENERALLY CONSIDERED TO BE REPRESENTATIVE OF THE 1,000 LARGEST SECURITIES ON THE
RUSSELL 3000 INDEX (WHICH REPRESENTS APPROXIMATELY 98% OF THE INVESTABLE U.S.
EQUITY MARKET). IT IS NOT POSSIBLE TO INVEST DIRECTLY IN THESE INDICES. IN
ADDITION, THE INDICES DO 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 BASED ON DIFFERENCES IN SALES LOADS AND FEES PAID BY
SHAREHOLDERS INVESTING IN THE DIFFERENT CLASSES.
* AVERAGE ANNUAL TOTAL RETURN FIGURES (FOR THE PERIOD ENDED 10/31/96) INCLUDE
THE REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS "N.A.V. ONLY" RETURNS ARE
CALCULATED WITHOUT SALES CHARGES. THE "S.E.C. STANDARDIZED" RETURNS SHOWN ARE
BASED ON THE MAXIMUM SALES CHARGE OF 6.25% FOR CLASS A SHARES. THE CLASS B
"S.E.C. STANDARDIZED" RETURNS ARE ADJUSTED FOR THE APPLICABLE DEFERRED SALES
CHARGE (MAXIMUM OF 4% IN THE FIRST YEAR). SOME OR ALL OF THE EXPENSES OF THE
FUND WERE WAIVED OR ASSUMED. IF SUCH EXPENSES HAD BEEN PAID BY THE FUND, THE
"S.E.C. STANDARDIZED" AVERAGE ANNUAL TOTAL RETURN FOR ONE YEAR AND SINCE
INCEPTION WOULD HAVE BEEN 4% AND 6.4%, RESPECTIVELY, FOR THE CLASS A SHARES
AND 5.9% AND 13.9%, RESPECTIVELY, FOR THE CLASS B SHARES. RESULTS REPRESENT
PAST PERFORMANCE AND DO NOT INDICATE FUTURE RESULTS. 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. S&P 400
MIDCAP INDEX FIGURES FROM STANDARD & POOR'S, RUSSELL 1000 GROWTH INDEX FIGURES
FROM FRANK RUSSELL AND COMPANY AND ALL OTHER FIGURES FROM FIRST INVESTORS
MANAGEMENT COMPANY, INC.
4
<PAGE>
PORTFOLIO MANAGER'S LETTER
FIRST INVESTORS UTILITIES INCOME FUND
Dear Investor:
We are pleased to present the annual report of the First Investors Utilities
Income Fund for the fiscal year ended October 31, 1996. At October 31, 1996, the
Fund's net asset value per share was $6.41 for Class A shares and $6.35 for
Class B shares. For the year then ended, dividends from net investment income
were 21.6 cents per share on Class A shares and 18.4 cents per share on Class B
shares.
During fiscal 1996, the Fund steadily increased its exposure to the natural gas
segment of the utility market. Fundamentals and earnings momentum for many
natural gas companies improved dramatically this year causing the group to
outperform the broader stock market. The Fund decreased its exposure in the
telephone segment of the market as concern over competition caused the telephone
sector to lag. For the year ended October 31, 1996, the Fund had a total return
on a net asset value basis of 12.5% for the Class A shares compared to 10.5% for
the average utility fund as tracked by Lipper Analytical Services, Inc. Class B
shares returned 11.6%.
The Fund remains well diversified among all sectors of the utility market.
Natural gas stocks performed very well this year. An improved pricing
environment for natural gas commodities, a return to a normal winter weather
pattern, and increased merger and acquisition speculation surrounding the group
were the main reasons for solid performance. During fiscal 1996, both telephone
and electric company stocks underperformed the broader stock market. With
respect to telephone companies, earnings growth remained in place, but concerns
over a more competitive telephone market hampered performance. Most of the
underperformance this year by electric utility stocks was caused by a weak bond
market. Recently, it appears that electric utility state regulators are
rationally addressing the needs for a more competitive electricity market.
Positive legislation from California this year suggests that the
transition to a more competitive market will be manageable for most electric
companies. In addition, electric utility stocks currently appear attractive on a
valuation basis as well as on a defensive basis if the stock market were to
experience a correction.
The recent bull market in stocks has lasted 74 months, the longest bull market
in the history of the U.S. stock market. While investors have enjoyed these
gains, it is important to remember that the stock market tends to be cyclical
with periods when stock prices generally rise and periods when stock prices
generally decline. In addition, certain sectors of the market, such as
technology stocks, can be more volatile than the general market, creating
greater opportunities but also greater risks. Investors should be aware of these
risks and recognize that successful investing generally requires a long-term
commitment to the market.
The Fund will continue to invest in utility companies with above average
earnings and dividend growth potential, and will continue to monitor its
positions in an increasingly competitive environment, especially in the electric
and telephone sectors.
As always, we appreciate the opportunity to serve your investment needs.
Sincerely,
[SIGNATURE]
Margaret R. Haggerty
Portfolio Manager
November 29, 1996
5
<PAGE>
CUMULATIVE PERFORMANCE INFORMATION
FIRST INVESTORS UTILITIES INCOME FUND
Comparison of change in value of $10,000 investment in the First Investors
Utilities Income Fund (Class A shares), the Standard & Poor's 500 Index and the
Standard & Poor's Utilities Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS OF OCTOBER 31, 1996
$ 100,000 $ 10,000 $ 1,000
UTILITIES INCOME S & P 500 S & P UTILITIES
<S> <C> <C> <C>
Feb 93 9375 10000 10000
Apr 93 9327 9964 9886
Oct 93 10112 10741 10748
Apr 94 9316 10493 9294
Oct 94 9085 11160 8927
Apr 95 9666 12323 9797
Oct 95 11025 14102 11492
Apr 96 11663 16042 12019
Oct 96 12397 17498 12658
Average Annual Total Return*
Class A Shares N.A.V. Only S.E.C. Standardized
One Year 12.45% 5.47%
Since Inception (2/22/93) 7.85% 6.00%
Class B Shares
One Year 11.61% 7.22%
Since Inception (1/12/95) 18.68% 15.98%
</TABLE>
THE GRAPH COMPARES A $10,000 INVESTMENT MADE IN THE FIRST INVESTORS UTILITIES
INCOME FUND (CLASS A SHARES) ON 2/22/93 (INCEPTION DATE) WITH THEORETICAL
INVESTMENTS IN THE S&P 500 INDEX AND THE S&P UTILITIES INDEX. THE S&P 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 REPRESENTS ALL MAJOR INDUSTRIES. THE S&P
UTILITIES INDEX IS AN UNMANAGED CAPITALIZATION-WEIGHTED INDEX OF 46 STOCKS
DESIGNED TO MEASURE THE PERFORMANCE OF THE UTILITY SECTOR OF THE STANDARD &
POOR'S 500 INDEX. IT IS NOT POSSIBLE TO INVEST DIRECTLY IN THESE INDICES. IN
ADDITION, THE INDICES DO 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 BASED ON DIFFERENCES IN SALES LOADS AND FEES PAID BY
SHAREHOLDERS INVESTING IN THE DIFFERENT CLASSES.
* AVERAGE ANNUAL TOTAL RETURN FIGURES (FOR THE PERIOD ENDED 10/31/96) INCLUDE
THE REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS. "N.A.V. ONLY" RETURNS ARE
CALCULATED WITHOUT SALES CHARGES. THE "S.E.C. STANDARDIZED" RETURNS SHOWN ARE
BASED ON THE MAXIMUM SALES CHARGE OF 6.25% FOR CLASS A SHARES. THE CLASS B
"S.E.C. STANDARDIZED" RETURNS ARE ADJUSTED FOR THE APPLICABLE DEFERRED SALES
CHARGE (MAXIMUM OF 4% IN THE FIRST YEAR). SOME OR ALL OF THE EXPENSES OF THE
FUND WERE WAIVED OR ASSUMED. IF SUCH EXPENSES HAD BEEN PAID BY THE FUND, THE
"S.E.C. STANDARDIZED" AVERAGE ANNUAL TOTAL RETURN FOR ONE YEAR AND SINCE
INCEPTION WOULD HAVE BEEN 5% AND 4.5%, RESPECTIVELY, FOR THE CLASS A SHARES
AND 6.6% AND 15.1%, RESPECTIVELY, FOR THE CLASS B SHARES. RESULTS REPRESENT
PAST PERFORMANCE AND DO NOT INDICATE FUTURE RESULTS. 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. S&P 500 INDEX
AND S&P UTILITIES INDEX FIGURES FROM STANDARD & POOR'S AND ALL OTHER FIGURES
FROM FIRST INVESTORS MANAGEMENT COMPANY, INC.
6
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS GROWTH & INCOME FUND
October 31, 1996
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
COMMON STOCKS--91.8%
AEROSPACE/DEFENSE--2.9%
22,000 Boeing Company $ 2,098,250 $ 169
12,000 United Technologies Corporation 1,545,000 125
- ---------------------------------------------------------------------------------------
3,643,250 294
- ---------------------------------------------------------------------------------------
AUTOMOTIVE--0.5%
19,592 Ford Motor Company 612,250 49
- ---------------------------------------------------------------------------------------
BANKS--6.9%
33,000 Bancorp Hawaii, Inc. 1,307,625 105
25,000 First Bank System, Inc. 1,650,000 133
30,000 First Union Corporation 2,182,500 176
11,500 J.P. Morgan & Company, Inc. 993,312 80
45,000 Wachovia Corporation 2,418,750 195
- ---------------------------------------------------------------------------------------
8,552,187 689
- ---------------------------------------------------------------------------------------
CHEMICALS--5.0%
30,000 Air Products and Chemicals, Inc. 1,800,000 145
25,000 Dow Chemical Company 1,943,750 157
17,000 Du Pont (E.I.) de Nemours & Company 1,576,750 127
45,000 Engelhard Corporation 821,250 66
- ---------------------------------------------------------------------------------------
6,141,750 495
- ---------------------------------------------------------------------------------------
COMMUNICATION EQUIPMENT--1.0%
28,000 Motorola, Inc. 1,288,000 104
- ---------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES--5.3%
38,000 Automatic Data Processing, Inc. 1,581,750 127
20,000 *BMC Software, Inc. 1,660,000 134
33,000 Electronic Data Systems Corporation 1,485,000 120
23,000 First Data Corporation 1,834,250 148
- ---------------------------------------------------------------------------------------
6,561,000 529
- ---------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS GROWTH & INCOME FUND
October 31, 1996
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
COMPUTERS & OFFICE EQUIPMENT--2.8%
30,000 Hewlett-Packard Company $ 1,323,750 $ 107
16,500 International Business Machines Corporation 2,128,500 172
- ---------------------------------------------------------------------------------------
3,452,250 279
- ---------------------------------------------------------------------------------------
DRUGS--10.3%
30,000 American Home Products Corporation 1,837,500 148
20,000 Bristol-Myers Squibb Company 2,115,000 170
24,000 Johnson & Johnson 1,182,000 95
25,000 Pfizer, Inc. 2,068,750 167
50,000 Pharmacia & Upjohn, Inc. 1,800,000 145
30,000 Warner-Lambert Company 1,908,750 154
23,238 Zeneca Group PLC (ADR) 1,893,897 153
- ---------------------------------------------------------------------------------------
12,805,897 1,032
- ---------------------------------------------------------------------------------------
ELECTRIC UTILITIES--2.3%
30,000 Baltimore Gas and Electric Company 817,500 66
40,000 Pacific Gas and Electric Company 940,000 76
26,000 Texas Utilities Company 1,053,000 85
- ---------------------------------------------------------------------------------------
2,810,500 227
- ---------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--3.6%
36,000 General Electric Company 3,483,000 281
20,000 York International Corporation 967,500 78
- ---------------------------------------------------------------------------------------
4,450,500 359
- ---------------------------------------------------------------------------------------
ELECTRONICS--1.0%
35,000 AMP, Inc. 1,185,625 96
- ---------------------------------------------------------------------------------------
ENERGY--2.1%
35,000 Dresser Industries, Inc. 1,150,625 93
15,000 Schlumberger, Ltd. 1,486,875 120
- ---------------------------------------------------------------------------------------
2,637,500 213
- ---------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
ENERGY SOURCES--6.2%
25,000 Amoco Corporation $ 1,893,750 $ 153
22,000 Exxon Corporation 1,949,750 157
27,285 Noble Affiliates, Inc. 1,186,898 96
48,633 Union Pacific Resources Group, Inc. 1,337,380 108
37,000 Unocal Corporation 1,355,125 109
- ---------------------------------------------------------------------------------------
7,722,903 623
- ---------------------------------------------------------------------------------------
ENTERTAINMENT PRODUCTS--1.3%
24,000 Duracell International, Inc. 1,602,000 129
- ---------------------------------------------------------------------------------------
FINANCIAL SERVICES--1.7%
45,000 American Express Company 2,115,000 170
- ---------------------------------------------------------------------------------------
FOOD/BEVERAGE/TOBACCO--1.4%
50,000 Sara Lee Corporation 1,775,000 143
- ---------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS--6.6%
15,000 Colgate-Palmolive Company 1,380,000 111
25,900 Estee Lauder Companies - Class "A" 1,113,700 90
22,000 Kimberly-Clark Corporation 2,051,500 165
20,000 Procter & Gamble Company 1,980,000 160
45,800 *Revlon, Inc. - Class "A" 1,671,700 135
- ---------------------------------------------------------------------------------------
8,196,900 661
- ---------------------------------------------------------------------------------------
INSURANCE--5.3%
40,000 Ace, Ltd. 2,190,000 177
45,000 Allstate Corporation 2,525,625 204
17,000 American International Group, Inc. 1,846,625 149
- ---------------------------------------------------------------------------------------
6,562,250 530
- ---------------------------------------------------------------------------------------
MACHINERY & MANUFACTURING--0.9%
15,000 Illinois Tool Works, Inc. 1,053,750 85
- ---------------------------------------------------------------------------------------
MEDIA--4.2%
26,000 Gannett Company 1,972,750 159
32,000 Knight-Ridder, Inc. 1,196,000 96
- ---------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS GROWTH & INCOME FUND
October 31, 1996
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
MEDIA (continued)
35,000 *Viacom, Inc. - Class "B" $ 1,141,875 $ 92
22,000 Vodafone Group PLC (ADR) 849,750 68
- ---------------------------------------------------------------------------------------
5,160,375 415
- ---------------------------------------------------------------------------------------
MEDICAL PRODUCTS--2.8%
41,000 Abbott Laboratories 2,075,625 167
50,000 Bard (C.R.), Inc. 1,412,500 114
- ---------------------------------------------------------------------------------------
3,488,125 281
- ---------------------------------------------------------------------------------------
METALS & MINERALS--1.4%
28,000 Phelps Dodge Corporation 1,760,500 142
- ---------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--1.5%
6,600 Georgia-Pacific Corporation 495,000 40
32,000 International Paper Company 1,368,000 110
- ---------------------------------------------------------------------------------------
1,863,000 150
- ---------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS--0.4%
13,300 Storage USA, Inc. 462,175 37
- ---------------------------------------------------------------------------------------
RETAIL--6.3%
45,000 May Department Stores Company 2,131,875 172
36,000 Mercantile Stores Company, Inc. 1,786,500 144
55,000 *Saks Holdings, Inc. 1,925,000 155
75,000 Wal-Mart Stores, Inc. 1,996,875 161
- ---------------------------------------------------------------------------------------
7,840,250 632
- ---------------------------------------------------------------------------------------
TELEPHONE--3.5%
31,000 A T & T Corporation 1,081,125 87
50,000 MCI Communications Corporation 1,256,250 101
27,000 SBC Communications, Inc. 1,312,875 106
24,500 US West Communications Group 744,188 60
- ---------------------------------------------------------------------------------------
4,394,438 354
- ---------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
SHARES INVESTED
OR FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
TRANSPORTATION--2.2%
50,000 Canadian Pacific, Ltd. $ 1,262,500 $ 102
27,000 Union Pacific Corporation 1,515,375 122
- ---------------------------------------------------------------------------------------
2,777,875 224
- ---------------------------------------------------------------------------------------
TRAVEL & LEISURE--2.4%
11,392 *AMR Corporation 956,928 77
45,000 McDonald's Corporation 1,996,875 161
- ---------------------------------------------------------------------------------------
2,953,803 238
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF COMMON STOCKS (cost $91,107,256) 113,869,053 9,180
- ---------------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS--1.5%
ENERGY SOURCES--0.2%
5,580 Unocal Corporation 6.25% 296,786 24
- ---------------------------------------------------------------------------------------
MEDIA--0.9%
55,000 Merrill Lynch Structured Yield Product
(exchangeable into Cox Communication, Inc.
Common Stock), 6%, 6/1/99 1,065,625 86
- ---------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS--0.4%
18,000 Security Capital Pacific Trust "A" 7% 483,750 39
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF CONVERTIBLE PREFERRED STOCKS (cost
$2,014,877) 1,846,161 149
- ---------------------------------------------------------------------------------------
CONVERTIBLE BONDS--1.5%
COMMUNICATION EQUIPMENT--0.2%
$ 280M General Instrument Corp., 5%, 2000 292,950 24
- ---------------------------------------------------------------------------------------
RETAIL--1.3%
1,600M Home Depot, Inc., 3.25%, 2001 1,604,000 129
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF CONVERTIBLE BONDS (cost
$1,934,592) 1,896,950 153
- ---------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS GROWTH & INCOME FUND
October 31, 1996
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
REPURCHASE AGREEMENTS--4.5%
$ 5,540M Paine Webber, Inc., 5.51%, 11/1/96
(collateralized by $5,600M U.S. Treasury Note,
5.625%, 8/31/97, valued at $5,656,000) (cost
$5,540,000) $ 5,540,000 $ 447
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF INVESTMENTS (cost $100,596,725) 99.3% 123,152,164 9,929
OTHER ASSETS, LESS LIABILITIES 0.7 884,568 71
- ---------------------------------------------------------------------------------------
NET ASSETS 100.0% $124,036,732 $10,000
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
</TABLE>
* Non-income producing
See notes to financial statements
12
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS U.S.A. MID-CAP OPPORTUNITY FUND
October 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
COMMON STOCKS--80.5%
BASIC MATERIALS--3.7%
3,500 Cabot Corporation $ 84,437 $ 54
5,000 *Landec Corporation 44,375 28
3,200 Nucor Corporation 151,600 97
6,000 Schulman (A.), Inc. 126,750 81
2,000 Wellman, Inc. 35,500 23
2,000 Willamette Industries, Inc. 135,000 86
- --------------------------------------------------------------------------------------
577,662 369
- --------------------------------------------------------------------------------------
CAPITAL GOODS--8.0%
7,000 AGCO Corporation 177,625 114
5,700 *American Buildings Company 119,522 76
3,300 Corning, Inc. 127,875 82
2,600 Cummins Engine Company, Inc. 108,225 69
9,700 Ogden Corporation 175,812 112
4,000 Thomas & Betts Corporation 169,500 108
6,400 *USA Waste Services, Inc. 204,800 131
3,500 York International Corporation 169,312 108
- --------------------------------------------------------------------------------------
1,252,671 800
- --------------------------------------------------------------------------------------
COMMUNICATION SERVICES--1.5%
3,000 Frontier Corporation 87,000 56
2,900 *Octel Communications Corporation 46,037 29
21,800 *USCI, Inc. 109,000 70
- --------------------------------------------------------------------------------------
242,037 155
- --------------------------------------------------------------------------------------
CONSUMER CYLICALS--7.8%
3,800 *AutoZone, Inc. 97,375 62
25,000 *Chaus (Bernard), Inc. 62,500 40
6,000 *CUC International, Inc. 147,000 94
5,000 Equifax, Inc. 148,750 95
3,800 *Franklin Electronic Publishers, Inc. 48,450 31
1,800 *Gymboree Corporation 56,250 36
2,600 Harley-Davidson, Inc. 117,325 75
- --------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS U.S.A. MID-CAP OPPORTUNITY FUND
October 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
CONSUMER CYLICALS (continued)
3,100 La Quinta Inns, Inc. $ 62,000 $ 40
4,300 Masco Corporation 134,912 86
3,100 *OfficeMax, Inc. 41,850 27
2,500 Pep Boys - Manny, Moe & Jack 87,500 56
1,900 *Saks Holdings, Inc. 66,500 42
5,000 *U.S. Office Products Company 145,000 93
- --------------------------------------------------------------------------------------
1,215,412 777
- --------------------------------------------------------------------------------------
CONSUMER STAPLES--12.0%
5,000 Dole Food Company 195,000 125
4,500 *Evergreen Media Corporation - Class "A" 121,500 78
6,300 First Brands Corporation 178,762 114
3,675 Gaylord Entertainment Company - Class "A" 72,581 46
3,450 *Infinity Broadcasting Corporation - Class "A" 100,050 64
3,700 *Kroger Company 165,112 106
6,000 McCormick & Company, Inc. 144,750 92
3,100 *Outback Steakhouse, Inc. 71,881 46
7,500 Richfood Holdings, Inc. 180,938 116
4,600 *Tele-Communications, Inc. Liberty Media Group -
Class "A" 118,450 76
3,200 Time Warner, Inc. 119,200 76
3,600 Universal Corporation 98,100 63
8,100 *US West Media Group 126,563 81
2,500 *Viacom, Inc. - Class "B" 81,563 52
4,200 Whitman Corporation 101,850 65
- --------------------------------------------------------------------------------------
1,876,300 1,200
- --------------------------------------------------------------------------------------
ENERGY--2.5%
4,400 Apache Corporation 156,200 100
7,000 Louisiana-Pacific Corporation 146,125 93
5,000 *Oryx Energy Company 96,250 61
- --------------------------------------------------------------------------------------
398,575 254
- --------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
FINANCIAL--14.0%
7,400 Ambassador Apartments, Inc. $ 149,850 $ 96
7,000 American Financial Group, Inc. 251,125 160
7,500 *American Travellers Corporation 257,813 165
2,900 *Cal Fed Bancorp Inc. 67,425 43
5,200 Federal National Mortgage Association 203,450 130
6,800 *Imperial Credit Industries, Inc. 123,250 79
19,000 Innkeepers USA Trust 223,250 143
1,200 Mark Twain Bancshares, Inc. 55,050 35
1,000 Mercantile Bancorporation 49,625 32
4,900 Ohio Casualty Corporation 159,250 102
4,000 Redwood Trust, Inc. 132,000 84
6,300 The Money Store, Inc. 162,225 104
3,100 Torchmark Corporation 149,963 96
11,200 USF&G Corporation 212,800 136
- --------------------------------------------------------------------------------------
2,197,076 1,405
- --------------------------------------------------------------------------------------
HEALTH CARE/MISCELLANEOUS--4.4%
4,200 Dentsply International, Inc. 176,925 113
4,200 *Living Centers of America, Inc. 98,175 63
3,500 *Norland Medical Systems, Inc. 51,625 33
4,300 *Noven Pharmaceuticals, Inc. 58,588 37
4,100 *Perrigo Company 38,950 25
6,200 *Tenet Healthcare Corporation 129,425 83
6,200 *VidaMed, Inc. 65,875 42
2,000 *Watson Pharmaceuticals, Inc. 66,750 43
- --------------------------------------------------------------------------------------
686,313 439
- --------------------------------------------------------------------------------------
TECHNOLOGY--22.9%
1,600 *3Com Corporation 108,200 69
3,800 *Adaptec, Inc. 231,325 148
3,000 Adobe Systems, Inc. 103,875 66
4,200 *Analog Devices, Inc. 109,200 70
13,000 AVX Corporation 240,500 154
1,300 *C-Cube Microsystems, Inc. 50,375 32
- --------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS U.S.A. MID-CAP OPPORTUNITY FUND
October 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
TECHNOLOGY (continued)
2,000 *Cascade Communications Corporation $ 145,250 $ 93
1,400 *Cisco Systems, Inc. 86,625 55
3,900 Computer Associates International, Inc. 230,588 147
3,500 *Compuware Corporation 184,625 118
3,000 *Control Data Systems, Inc. 70,500 45
7,300 *EMC Corporation 191,625 122
600 HBO & Company 36,075 23
2,900 *Informix Corporation 64,344 41
800 Intel Corporation 87,900 56
1,600 *Komag, Inc. 44,200 28
3,400 *LSI Logic Corporation 90,100 58
2,000 *Microsoft Corporation 274,500 175
2,000 Motorola, Inc. 92,000 59
6,200 *Network General Corporation 149,575 96
4,800 Reynolds & Reynolds Company 126,600 81
1,800 *Seagate Technology, Inc. 120,150 77
6,100 *Silicon Gaming, Inc. 86,925 56
8,192 *Sterling Commerce, Inc. 230,400 147
12,200 *SystemSoft Corporation 344,650 220
1,300 U.S. Robotics, Inc. 81,738 52
- --------------------------------------------------------------------------------------
3,581,845 2,288
- --------------------------------------------------------------------------------------
TRANSPORTATION--1.5%
10,000 *Swift Transportation Company, Inc. 227,500 145
- --------------------------------------------------------------------------------------
UTILITIES--2.2%
8,600 PacifiCorp 181,675 116
5,600 Sierra Pacific Resources 156,100 100
- --------------------------------------------------------------------------------------
337,775 216
- --------------------------------------------------------------------------------------
TOTAL VALUE OF COMMON STOCKS (cost $11,127,773) 12,593,166 8,048
- --------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
SHORT-TERM CORPORATE NOTES--16.3%
$ 450M B.A.T. Capital Corporation, 5.24%, 11/20/96 $ 448,755 $ 287
500M Ford Motor Credit Company, 5.24%, 11/26/96 498,181 319
595M General Electric Capital Corporation, 5.23%,
11/21/96 593,245 379
565M Prudential Funding Corporation, 5.19%, 11/15/96 563,860 360
450M Sandoz Corporation, 5.23%, 11/14/96 449,150 287
- --------------------------------------------------------------------------------------
TOTAL VALUE OF SHORT-TERM CORPORATE NOTES (cost
$2,553,191) 2,553,191 1,632
- --------------------------------------------------------------------------------------
TOTAL VALUE OF INVESTMENTS (cost $13,680,964) 96.8% 15,146,357 9,680
OTHER ASSETS, LESS LIABILITIES 3.2 499,988 320
- --------------------------------------------------------------------------------------
NET ASSETS 100.0% $15,646,345 $10,000
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
* Non-income producing
See notes to financial statements
17
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS UTILITIES INCOME FUND
October 31, 1996
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
COMMON STOCKS--92.0%
ELECTRIC POWER--45.4%
60,000 Allegheny Power Systems, Inc. $ 1,792,500 $ 160
57,000 American Electric Power Company 2,365,500 212
55,000 Carolina Power & Light Company 1,986,875 178
50,000 Central & South West Corporation 1,325,000 119
70,000 CINergy Corporation 2,318,750 208
40,000 CMS Energy Corporation 1,265,000 113
50,000 Dominion Resources, Inc. 1,887,500 169
65,000 DPL, Inc. 1,551,875 139
60,000 DQE, Inc. 1,725,000 154
55,000 Duke Power Company 2,688,125 241
60,000 Edison International 1,185,000 106
9,700 Empresa Nacional De Electricidad S.A. (ADR) 596,550 53
42,000 Florida Progress Corporation 1,401,750 125
66,000 FPL Group, Inc. 3,036,000 272
50,000 Houston Industries, Inc. 1,143,750 102
40,000 Illinova Corporation 1,090,000 98
25,000 Kansas City Power & Light Company 687,500 62
46,000 LG&E Energy Corporation 1,063,750 95
52,000 NIPSCO Industries, Inc. 1,969,500 176
37,000 Oklahoma Gas & Electric Company 1,447,625 130
33,000 Pacific Gas and Electric Company 775,500 69
70,000 PacifiCorp 1,478,750 132
50,000 Pinnacle West Capital Corporation 1,543,750 138
55,000 Public Service Company of Colorado 2,035,000 182
25,000 Public Service Company of New Mexico 468,750 42
57,000 Scana Corporation 1,524,750 136
64,000 Sierra Pacific Resources 1,784,000 160
30,000 Southern Company 663,750 59
65,000 TECO Energy, Inc. 1,600,625 143
70,000 Texas Utilities Company 2,835,000 254
25,000 TNP Enterprises, Inc. 646,875 58
- ---------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
ELECTRIC POWER (continued)
46,000 Western Resources, Inc. $ 1,380,000 $ 124
55,000 Wisconsin Energy Corporation 1,491,875 134
- ---------------------------------------------------------------------------------------
50,756,175 4,543
- ---------------------------------------------------------------------------------------
ENERGY--1.3%
6,000 Amoco Corporation 454,500 41
4,100 Mobil Corporation 478,675 43
4,800 Texaco, Inc. 487,800 44
- ---------------------------------------------------------------------------------------
1,420,975 128
- ---------------------------------------------------------------------------------------
NATURAL GAS--30.4%
40,000 AGL Resources, Inc. 840,000 75
25,000 Brooklyn Union Gas Company 725,000 65
25,000 CMS Energy Corporation - Class "G" 468,750 42
25,000 Coastal Corporation 1,075,000 96
25,000 Columbia Gas System, Inc. 1,518,750 136
40,000 Consolidated Natural Gas Company 2,125,000 190
41,500 El Paso Natural Gas Company 2,012,750 180
42,000 Enron Corporation 1,953,000 175
28,000 Enron Global Power & Pipelines, L.L.C. 787,500 70
30,000 Equitable Resources, Inc. 862,500 77
20,000 KN Energy, Inc. 747,500 67
50,000 MCN Corporation 1,375,000 123
40,000 National Fuel Gas Company 1,490,000 133
30,000 New Jersey Resources Corporation 828,750 74
40,000 NICOR, Inc. 1,395,000 125
25,000 NUI Corporation 496,875 44
29,000 Oneok, Inc. 779,375 70
45,000 Pacific Enterprises 1,383,750 124
55,000 PanEnergy Corporation 2,117,500 190
25,000 Piedmont Natural Gas Company, Inc. 612,500 55
45,000 Questar Corporation 1,620,000 145
13,500 Seagull Energy Corporation 291,937 26
41,000 Sonat, Inc. 2,019,250 181
- ---------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS UTILITIES INCOME FUND
October 31, 1996
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
NATURAL GAS (continued)
30,000 Southwest Gas Corporation $ 573,750 $ 51
45,000 UGI Corporation 1,063,125 95
48,000 Washington Energy Company 924,000 83
30,000 Washington Gas & Light Company 671,250 60
30,000 WICOR, Inc. 1,068,750 96
40,400 Williams Companies, Inc. 2,110,900 189
- ---------------------------------------------------------------------------------------
33,937,462 3,037
- ---------------------------------------------------------------------------------------
OIL SERVICE--0.4%
7,000 Anadarko Petroleum Corporation 445,375 40
- ---------------------------------------------------------------------------------------
TELECOMMUNICATIONS/LONG DISTANCE--1.5%
27,000 MCI Communications Corporation 678,375 61
15,000 Sprint Corporation 588,750 53
15,000 WorldCom, Inc. 365,625 33
- ---------------------------------------------------------------------------------------
1,632,750 147
- ---------------------------------------------------------------------------------------
TELEPHONE/UTILITIES--13.0%
30,000 Ameritech Corporation 1,642,500 147
30,000 Bell Atlantic Corporation 1,807,500 162
40,000 BellSouth Corporation 1,630,000 146
45,000 Frontier Corporation 1,305,000 117
45,000 GTE Corporation 1,895,625 170
12,000 *LCI International, Inc. 382,500 34
20,000 NYNEX Corporation 890,000 80
35,000 SBC Communications, Inc. 1,701,875 152
36,000 Southern New England Telecommunications
Corporation 1,341,000 120
15,000 Telefonica De Espana S.A. (ADR) 903,750 81
35,000 US West Communications Group 1,063,125 95
- ---------------------------------------------------------------------------------------
14,562,875 1,304
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF COMMON STOCKS (cost $89,558,951) 102,755,612 9,199
- ---------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
SHARES INVESTED
OR FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
PREFERRED STOCKS--0.8%
TELEPHONE/UTILITIES
10,000 Pacific Telesis 8.50% $ 257,500 $ 23
10,000 Pacific Telesis Finance 7.56% 236,250 21
5,000 US West Financing 7.96% 121,875 11
10,000 US West Financing 8.25% 248,750 23
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF PREFERRED STOCKS (cost $875,000) 864,375 78
- ---------------------------------------------------------------------------------------
CORPORATE BONDS--4.6%
ELECTRIC & GAS UTILITIES--2.8%
$ 500M Consolidated Edison Co. of New York, 6.625%, 2002 502,061 45
500M Duke Power Co., 5.875%, 2003 478,183 43
500M Idaho Power Co., 6.40%, 2003 494,100 44
700M Pennsylvania Power & Light Co., 6.875%, 2003 705,606 63
500M SCE Capital Corp., 7.375%, 2003 505,023 45
500M Union Electric Co., 6.75%, 2008 497,591 45
- ---------------------------------------------------------------------------------------
3,182,564 285
- ---------------------------------------------------------------------------------------
ELECTRIC POWER--0.5%
500M Baltimore Gas & Electric Co., 7.52%, 2000 514,870 46
- ---------------------------------------------------------------------------------------
TELEPHONE--1.3%
500M A T & T Corp., 7.50%, 2006 525,226 47
500M BellSouth Telecommunications, Inc., 6.375%, 2004 493,881 44
500M United Telephone of Florida, 6.25%, 2003 490,009 44
- ---------------------------------------------------------------------------------------
1,509,116 135
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF CORPORATE BONDS (cost $5,284,869) 5,206,550 466
- ---------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--0.7%
750M Dupont (E.I.) de Nemours & Co., 5.21%,
12/5/96 (cost $746,310) 746,310 67
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF INVESTMENTS (cost $96,465,130) 98.1% 109,572,847 9,810
OTHER ASSETS, LESS LIABILITIES 1.9 2,126,310 190
- ---------------------------------------------------------------------------------------
NET ASSETS 100.0% $111,699,157 $10,000
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
</TABLE>
* Non-income producing
See notes to financial statements
21
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
FIRST INVESTORS SERIES FUND II, INC.
October 31, 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
GROWTH & U.S.A. MID-CAP UTILITIES
INCOME OPPORTUNITY INCOME
FUND FUND FUND
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment in securities:
At identified cost................... $100,596,725 $ 13,680,964 $ 96,465,130
------------ -------------- ------------
------------ -------------- ------------
At value (Note 1A)................... $123,152,164 $ 15,146,357 $109,572,847
Cash................................... 69,686 331,380 1,802,120
Receivables:
Investment securities sold........... 793,536 198,238 --
Dividends and interest............... 180,393 11,349 527,447
Capital shares sold.................. 803,832 49,879 101,150
Deferred organization expenses (Note
1E).................................. 6,250 -- 4,250
------------ -------------- ------------
Total Assets........................... 125,005,861 15,737,203 112,007,814
------------ -------------- ------------
LIABILITIES
Payables:
Investment securities purchased...... 648,875 6,250 --
Capital shares redeemed.............. 173,115 58,369 190,708
Accrued advisory fees.................. 60,879 9,758 55,000
Accrued expenses....................... 86,260 16,481 62,949
------------ -------------- ------------
Total Liabilities...................... 969,129 90,858 308,657
------------ -------------- ------------
NET ASSETS............................. $124,036,732 $ 15,646,345 $111,699,157
------------ -------------- ------------
------------ -------------- ------------
NET ASSETS CONSIST OF:
Capital paid in........................ $ 99,242,642 $ 13,439,090 $ 99,712,528
Undistributed net investment income.... 11,885 37,394 332,943
Accumulated net realized gain (loss) on
investment transactions.............. 2,226,766 704,468 (1,454,031)
Net unrealized appreciation in value of
investments.......................... 22,555,439 1,465,393 13,107,717
------------ -------------- ------------
Total.................................. $124,036,732 $ 15,646,345 $111,699,157
------------ -------------- ------------
------------ -------------- ------------
CAPITAL SHARES OUTSTANDING (Note 4):
Class A.............................. 11,914,484 947,109 16,228,289
Class B.............................. 1,301,979 77,385 1,207,351
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE - CLASS A.................. $ 9.39 $ 15.29 $ 6.41
----- ------ -----
----- ------ -----
MAXIMUM OFFERING PRICE PER
SHARE - CLASS A
(Net asset value/.9375)*............. $ 10.02 $ 16.31 $ 6.84
------ ------ -----
------ ------ -----
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE - CLASS B.................. $ 9.33 $ 15.10 $ 6.35
----- ------ -----
----- ------ -----
</TABLE>
* On purchases of $25,000 or more, the sales charge is reduced.
See notes to financial statements
22
<PAGE>
STATEMENT OF OPERATIONS
FIRST INVESTORS SERIES FUND II, INC.
Year Ended October 31, 1996
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
GROWTH & U.S.A. MID-CAP UTILITIES
INCOME OPPORTUNITY INCOME
FUND FUND FUND
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividends............................ $ 1,929,941 $ 99,898 $ 4,205,748
Interest............................. 410,660 116,013 591,888
------------ -------------- -----------
Total income........................... 2,340,601 215,911 4,797,636
------------ -------------- -----------
Expenses (Notes 1E and 3):
Advisory fee......................... 686,090 115,907 770,177
Shareholder servicing costs.......... 306,416 55,375 328,110
Distribution plan expenses - Class
A.................................. 257,997 32,909 290,420
Distribution plan expenses - Class
B.................................. 75,084 6,207 58,929
Reports and notices to
shareholders....................... 50,680 11,130 50,333
Professional fees.................... 31,015 20,370 32,014
Custodian fees....................... 18,731 8,174 23,866
Amortization of organization
expenses........................... 3,000 -- 3,000
Other expenses....................... 15,448 4,184 22,083
------------ -------------- -----------
Total expenses......................... 1,444,461 254,256 1,578,932
Less: Expenses waived or assumed....... (165,632) (67,877) (306,275)
Custodian fees paid indirectly.... (2,639) (8,174) (14,185)
------------ -------------- -----------
Net expenses........................... 1,276,190 178,205 1,258,472
------------ -------------- -----------
Net investment income.................. 1,064,411 37,706 3,539,164
------------ -------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 2):
Net realized gain on investments....... 2,338,223 704,468 3,348,109
Net unrealized appreciation of
investments.......................... 14,282,176 492,864 4,512,594
------------ -------------- -----------
Net gain on investments................ 16,620,399 1,197,332 7,860,703
------------ -------------- -----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS...................... $ 17,684,810 $ 1,235,038 $11,399,867
------------ -------------- -----------
------------ -------------- -----------
</TABLE>
See notes to financial statements
23
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FIRST INVESTORS SERIES FUND II, INC.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
GROWTH &
INCOME FUND
-------------------------
YEAR ENDED OCTOBER 31 1996 1995
- ---------------------------------------- ------------ -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income................. $ 1,064,411 $ 1,150,915
Net realized gain (loss) on
investments......................... 2,338,223 59,975
Net unrealized appreciation of
investments......................... 14,282,176 7,741,415
------------ -----------
Net increase in net assets resulting
from operations................... 17,684,810 8,952,305
------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income - Class A....... (1,124,492) (1,115,624)
Net investment income - Class B....... (56,261) (25,337)
Net realized gains - Class A.......... -- --
Net realized gains - Class B.......... -- --
------------ -----------
Total distributions................. (1,180,753) (1,140,961)
------------ -----------
CAPITAL SHARE TRANSACTIONS (a)
Class A:
Proceeds from shares sold............. 44,537,868 27,027,606
Value of distributions reinvested..... 1,102,988 1,092,153
Cost of shares redeemed............... (12,479,680) (6,745,463)
------------ -----------
33,161,176 21,374,296
------------ -----------
Class B:
Proceeds from shares sold............. 7,730,826 3,403,974
Value of distributions reinvested..... 54,999 25,204
Cost of shares redeemed............... (509,452) (9,090)
------------ -----------
7,276,373 3,420,088
------------ -----------
Net increase (decrease) from capital
share transactions.................. 40,437,549 24,794,384
------------ -----------
Net increase in net assets.......... 56,941,606 32,605,728
NET ASSETS
Beginning of year..................... 67,095,126 34,489,398
------------ -----------
End of year+.......................... $124,036,732 $67,095,126
------------ -----------
------------ -----------
+Includes undistributed net investment
income of.............................. $ 11,885 $ 125,227
------------ -----------
------------ -----------
(a)CAPITAL SHARES ISSUED AND REDEEMED
Class A:
Sold.................................. 5,098,974 3,750,649
Issued for distributions reinvested... 125,569 151,589
Redeemed.............................. (1,437,840) (932,605)
------------ -----------
Net increase (decrease) in Class A
capital shares outstanding.......... 3,786,703 2,969,633
------------ -----------
------------ -----------
Class B:
Sold.................................. 891,261 461,042
Issued for distributions reinvested... 6,317 3,305
Redeemed.............................. (58,752) (1,194)
------------ -----------
Net increase in Class B capital shares
outstanding......................... 838,826 463,153
------------ -----------
------------ -----------
</TABLE>
See notes to financial statements
24
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
U.S.A. MID-CAP UTILITIES
OPPORTUNITY FUND INCOME FUND
----------------------- -------------------------
1996 1995 1996 1995
- ---------------------------------------- ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income................. $ 37,706 $ 43,381 $ 3,539,164 $ 3,178,531
Net realized gain (loss) on
investments......................... 704,468 1,220,064 3,348,109 (725,427)
Net unrealized appreciation of
investments......................... 492,864 460,706 4,512,594 12,245,737
----------- ---------- ------------ -----------
Net increase in net assets resulting
from operations................... 1,235,038 1,724,151 11,399,867 14,698,841
----------- ---------- ------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income - Class A....... (34,589) (47,512) (3,356,371) (3,123,462)
Net investment income - Class B....... (1,319) -- (175,052) (49,998)
Net realized gains - Class A.......... (500,576) -- -- --
Net realized gains - Class B.......... (20,889) -- -- --
----------- ---------- ------------ -----------
Total distributions................. (557,373) (47,512) (3,531,423) (3,173,460)
----------- ---------- ------------ -----------
CAPITAL SHARE TRANSACTIONS (a)
Class A:
Proceeds from shares sold............. 6,237,390 1,771,094 28,533,238 19,911,865
Value of distributions reinvested..... 526,859 47,031 3,227,282 2,975,959
Cost of shares redeemed............... (1,744,626) (2,312,636) (18,917,320) (13,152,876)
----------- ---------- ------------ -----------
5,019,623 (494,511) 12,843,200 9,734,948
----------- ---------- ------------ -----------
Class B:
Proceeds from shares sold............. 1,021,499 297,505 4,829,402 2,987,201
Value of distributions reinvested..... 22,208 -- 168,900 48,361
Cost of shares redeemed............... (210,746) (15,000) (910,784) (66,853)
----------- ---------- ------------ -----------
832,961 282,505 4,087,518 2,968,709
----------- ---------- ------------ -----------
Net increase (decrease) from capital
share transactions.................. 5,852,584 (212,006) 16,930,718 12,703,657
----------- ---------- ------------ -----------
Net increase in net assets.......... 6,530,249 1,464,633 24,799,162 24,229,038
NET ASSETS
Beginning of year..................... 9,116,096 7,651,463 86,899,995 62,670,957
----------- ---------- ------------ -----------
End of year+.......................... $15,646,345 $9,116,096 $111,699,157 $86,899,995
----------- ---------- ------------ -----------
----------- ---------- ------------ -----------
+Includes undistributed net investment
income of............................. $ 37,394 $ 35,596 $ 332,943 $ 322,202
----------- ---------- ------------ -----------
----------- ---------- ------------ -----------
(a)CAPITAL SHARES ISSUED AND REDEEMED
Class A:
Sold.................................. 424,011 130,597 4,588,232 3,733,022
Issued for distributions reinvested... 37,986 3,962 516,114 557,233
Redeemed.............................. (119,786) (179,150) (3,050,042) (2,460,412)
----------- ---------- ------------ -----------
Net increase (decrease) in Class A
capital shares outstanding.......... 342,211 (44,591) 2,054,304 1,829,843
----------- ---------- ------------ -----------
----------- ---------- ------------ -----------
Class B:
Sold.................................. 69,762 21,568 781,947 550,886
Issued for distributions reinvested... 1,612 -- 27,217 8,714
Redeemed.............................. (14,524) (1,033) (148,928) (12,485)
----------- ---------- ------------ -----------
Net increase in Class B capital shares
outstanding......................... 56,850 20,535 660,236 547,115
----------- ---------- ------------ -----------
----------- ---------- ------------ -----------
</TABLE>
See notes to financial statements
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FIRST INVESTORS SERIES FUND II, INC.
1. SIGNIFICANT ACCOUNTING POLICIES--First Investors Series Fund II, Inc.
("Series Fund II"), a Maryland corporation, is registered under the Investment
Company Act of 1940 (the "1940 Act") as a diversified, open-end management
investment company. The Fund operates as a series Fund, issuing shares of
beneficial interest in the Growth & Income Fund, U.S.A. Mid-Cap Opportunity Fund
and Utilities Income Fund (each a "Fund"), and accounts separately for the
assets, liabilities and operations of each Fund. The objective of each Fund is
as follows:
GROWTH & INCOME FUND seeks long-term growth of capital and current income by
investing, under normal market conditions, at least 65% of its total assets in
securities that provide the potential for growth and offer income, such as
dividend-paying stocks and securities convertible into common stocks.
U.S.A. MID-CAP OPPORTUNITY FUND seeks long-term capital growth by investing,
under normal market conditions, at least 75% of its total assets in common and
preferred stocks of companies that its investment adviser considers to have
potential for capital growth. In addition, under normal market conditions, at
least 65% of the Fund's total assets will be invested in securities of companies
that have a medium market capitalization and are incorporated and have their
principal place of business in the United States.
UTILITIES INCOME FUND primarily seeks high current income. Long-term capital
appreciation is a secondary objective. The Fund seeks to achieve its objectives
by investing, under normal market conditions, at least 65% of its total assets
in equity and debt securities issued by companies primarily engaged in the
public utilities industry.
A. Security Valuation--Except as provided below, a security listed or traded on
an exchange or the NASDAQ National Market System is valued at its last sale
price on the exchange or system where the security is principally traded, and
lacking any sales, the security is valued at the mean between the closing bid
and asked prices. Each security traded in the over-the-counter market (including
securities listed on exchanges whose primary market is believed to be
over-the-counter) is valued at the mean between the last bid and asked prices
based upon quotes furnished by a market maker for such securities. Securities
may also be priced by a pricing service. The pricing service uses quotations
obtained from investment dealers or brokers, information with respect to market
transactions in comparable securities and other available information in
determining value. Short-term corporate notes which are purchased at a discount
are valued at amortized cost. Securities for which market quotations are not
readily available and other assets are valued on a consistent basis at fair
value as determined in good faith by or under the supervision of the Fund's
officers in a manner specifically authorized by the Board of Directors.
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 October 31, 1996, the Utilities Income
Fund had capital loss carryovers of $1,454,031 of which $717,765 expires in 2002
and $736,266 expires in 2003.
26
<PAGE>
C. Distributions to Shareholders--Dividends from net investment income of the
Growth & Income Fund and Utilities Income Fund are declared and paid quarterly
and dividends from net investment income of the U.S.A. Mid-Cap Opportunity Fund
are declared and paid annually. Distributions from net realized capital gains
are normally declared and paid annually. Income dividends and capital gain
distributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. These differences are
primarily due to differing treatments for capital loss carryforwards, deferral
of wash sales and amortization of deferred organization expenses.
D. Expense Allocation--Expenses directly charged or attributable to a Fund are
paid from the assets of that Fund. General expenses of Series Fund II 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. Deferred Organization Expenses--Organization expenses are being amortized
over a five year period. Investors purchasing shares of a Fund bear such
expenses only as they are amortized. First Investors Management Company, Inc.
("FIMCO"), Series Fund II's investment adviser, has agreed that in the event any
of the initial Class A shares of a Fund purchased by FIMCO are redeemed during
the amortization period, the redemption proceeds will be reduced by a pro rata
portion of any unamortized organization expenses in the same proportion as the
number of initial Class A shares of the Fund being redeemed bears to the number
of initial Class A shares of the Fund outstanding at the time of redemption.
F. Use of Estimates--The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expense during the reporting period. Actual results could differ
from those estimates.
G. Other--Security transactions are 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. The Bank of New York, custodian for
the Funds, has provided credits in the amount of $24,998 against custodian
charges based on the uninvested cash balances of these Funds.
2. PURCHASES AND SALES OF SECURITIES--For the year ended October 31, 1996,
purchases and sales of securities, excluding repurchase agreements and
short-term corporate notes, were as follows:
<TABLE>
<CAPTION>
Cost of Proceeds
Purchases of Sales
----------- -----------
<S> <C> <C>
Growth & Income Fund................... $62,709,969 $21,910,091
U.S.A. Mid-Cap Opportunity Fund........ 15,909,402 11,101,818
Utilities Income Fund.................. 55,926,022 37,505,296
</TABLE>
27
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FIRST INVESTORS SERIES FUND II, INC.
At October 31, 1996, aggregate cost and net unrealized appreciation of
securities for federal income tax purposes were as follows:
<TABLE>
<CAPTION>
Gross Gross Net
Aggregate Unrealized Unrealized Unrealized
Cost Appreciation Depreciation Appreciation
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Growth & Income Fund................... $100,596,725 $ 24,164,654 $ 1,609,215 $ 22,555,439
U.S.A. Mid-Cap Opportunity Fund........ 13,702,489 2,006,631 562,763 1,443,868
Utilities Income Fund.................. 96,465,130 13,841,138 733,421 13,107,717
</TABLE>
3. ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES--Certain officers and
directors of Series Fund II are officers and directors of its investment
adviser, FIMCO, its underwriter, First Investors Corporation ("FIC"), its
transfer agent, Administrative Data Management Corp. ("ADM") and/or First
Financial Savings Bank, S.L.A. ("FFS"), custodian of Series Fund II's Individual
Retirement Accounts. Officers and directors of Series Fund II received no
remuneration from Series Fund II for serving in such capacities. Their
remuneration (together with certain other expenses of Series Fund II) is paid by
FIMCO or FIC.
The Investment Advisory Agreement provides as compensation to FIMCO for each
Fund other than the U.S.A. Mid-Cap Opportunity Fund, an annual fee, payable
monthly, at the rate of .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. The annual fee for the
U.S.A. Mid-Cap Opportunity Fund is payable monthly, at the rate of 1% on the
first $200 million of the Fund's average daily net assets, .75% on the next $300
million, declining by .03% on each $250 million thereafter, down to .66% on
average daily net assets over $1 billion. The investment adviser had agreed to
waive 1/4 of the 1% annual fee on the first $200 million of the U.S.A. Mid-Cap
Opportunity Fund's average daily net assets for a minimum period ending October
31, 1996. For the year ended October 31, 1996, total advisory fees accrued to
FIMCO were $1,572,174 of which $323,166 was waived. In addition, expenses of
$193,971 were assumed by FIMCO.
Pursuant to certain state regulations, FIMCO has agreed to reimburse each Fund
if and to the extent that the Fund's aggregate operating expenses, including
advisory fees but generally excluding interest, taxes, brokerage commissions and
extraordinary expenses, exceed any limitation on expenses applicable to the Fund
in those states (unless waivers of such limitations have been obtained). The
amount of any such reimbursement is limited to the Fund's yearly advisory fee.
For the year ended October 31, 1996, no reimbursement was required pursuant to
these provisions.
For the year ended October 31, 1996, FIC, as underwriter, received $3,261,905 in
commissions from the sale of shares of the Funds, after allowing $14,919 to
other dealers. Shareholder servicing costs
28
<PAGE>
included $516,772 in transfer agent fees and out of pocket expenses accrued to
ADM and $173,129 in IRA custodian fees paid to FFS.
Pursuant to a Distribution Plan adopted under Rule 12b-1 of the 1940 Act, each
Fund is authorized to pay FIC a fee equal to .30% of the average net assets of
the Class A shares and 1% of the average 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. Total 12b-1 fees accrued
to FIC amounted to $721,546 (of which $22,647 was waived).
Wellington Management Company serves as an investment subadviser to the Growth &
Income Fund. The subadviser is paid by FIMCO and not by the Fund.
4. CAPITAL--Each Fund sells two classes of shares, Class A and Class B, each
with 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 6.25% of
the amount invested and together with the Class B shares are subject to 12b-1
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% during 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 12b-1
fees and certain other class expenses) are allocated daily to each class of
shares based upon the relative proportion of net assets of each class. Of the
100,000,000 shares originally designated, Series Fund II has classified
50,000,000 shares as Class A and 50,000,000 shares as Class B.
29
<PAGE>
FINANCIAL HIGHLIGHTS
FIRST INVESTORS SERIES FUND II, INC.
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 period indicated.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
P E R S H A R E D A T A
--------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
NET ASSET -------------------------------------- LESS DISTRIBUTIONS FROM
VALUE NET REALIZED -----------------------------------
--------- NET AND UNREALIZED TOTAL FROM NET NET
BEGINNING INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT REALIZED TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAIN DISTRIBUTIONS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GROWTH & INCOME FUND
CLASS A
10/4/93* to 10/31/93............... $ 6.56 $ .005 $ -- $ .005 $ .005 $ -- $ .005
11/1/93 to 10/31/94................ 6.56 .128 .109 .237 .107 -- .107
11/1/94 to 10/31/95................ 6.69 .163 1.125 1.288 .168 -- .168
11/1/95 to 10/31/96................ 7.81 .102 1.593 1.695 .115 -- .115
CLASS B
1/12/95* to 10/31/95............... 6.43 .084 1.372 1.456 .106 -- .106
11/1/95 to 10/31/96................ 7.78 .066 1.555 1.621 .071 -- .071
- ---------------------------------------------------------------------------------------------------------------------------
U.S.A. MID-CAP OPPORTUNITY FUND***
CLASS A
8/24/92* to 10/31/92............... $ 11.64 $ .036 $ .050 $ .086 $ .026 $ -- $ .026
11/1/92 to 10/31/93................ 11.70 .122 .373 .495 .045 -- .045
11/1/93 to 10/31/94................ 12.15 .078 (.326) (.248) .122 -- .122
11/1/94 to 10/31/95................ 11.78 .083 2.796 2.879 .079 -- .079
11/1/95 to 10/31/96................ 14.58 .042 1.564 1.606 .058 .838 .896
CLASS B
1/12/95* to 10/31/95............... 12.03 (.011) 2.491 2.480 -- -- --
11/1/95 to 10/31/96................ 14.51 .013 1.468 1.481 .053 .838 .891
- ---------------------------------------------------------------------------------------------------------------------------
UTILITIES INCOME FUND
CLASS A
2/22/93* to 10/31/93............... $ 5.59 $ .118 $ .317 $ .435 $ .105 $ -- $ .105
11/1/93 to 10/31/94................ 5.92 .239 (.839) (.600) .227 .013 .240
11/1/94 to 10/31/95................ 5.08 .233 .822 1.055 .235 -- .235
11/1/95 to 10/31/96................ 5.90 .214 .512 .726 .216 -- .216
CLASS B
1/12/95* to 10/31/95............... 4.95 .144 .930 1.074 .164 -- .164
11/1/95 to 10/31/96................ 5.86 .185 .489 .674 .184 -- .184
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of operations of Class A or date Class B shares first offered
** Calculated without sales charges
*** Prior to February 15, 1996, known as Made In The U.S.A. Fund
+ Annualized
++ Some or all expenses have been waived or assumed from commencement of
operations through October 31, 1996 (Note 3).
+++ Average commission rate (per share of security) as required by amended
disclosure requirements effective September 1, 1995.
See notes to financial statements
30
<PAGE>
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 period indicated.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
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 ASSETS BEFORE
EXPENSES WAIVED OR
NET RATIO TO AVERAGE
ASSET NET ASSETS++ ASSUMED
VALUE NET ASSETS ------------------ -------------------
------- TOTAL END OF NET NET PORTFOLIO AVERAGE
END RETURN PERIOD INVESTMENT INVESTMENT TURNOVER COMMISSION
OF ** (IN EXPENSES INCOME EXPENSES INCOME RATE RATE
PERIOD (%) THOUSANDS) (%) (%) (%) (%) (%) +++
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GROWTH & INCOME FUND
CLASS A
10/4/93* to 10/31/93............... $ 6.56 .99+ $ 3,407 -- 1.02+ 1.37+ (.35)+ 0 $ N/A
11/1/93 to 10/31/94................ 6.69 3.67 34,489 .67 2.26 1.83 1.11 6 N/A
11/1/94 to 10/31/95................ 7.81 19.51 63,493 .98 2.34 1.59 1.74 19 N/A
11/1/95 to 10/31/96................ 9.39 21.82 111,896 1.31 1.20 1.49 1.02 25 .0530
CLASS B
1/12/95* to 10/31/95............... 7.78 22.73 3,602 1.90+ 2.23+ 2.61+ 1.52+ 19 N/A
11/1/95 to 10/31/96................ 9.33 20.92 12,141 2.03 .48 2.19 .31 25 .0530
- ----------------------------------------------------------------------------------------------------------------------------------
U.S.A. MID-CAP OPPORTUNITY FUND***
CLASS A
8/24/92* to 10/31/92............... $ 11.70 3.86+ $ 8,150 .06+ 1.87+ 2.64+ (.72)+ 0 $ N/A
11/1/92 to 10/31/93................ 12.15 4.23 15,586 .81 .96 2.03 (.26) 52 N/A
11/1/93 to 10/31/94................ 11.78 (2.05) 7,651 .90 .45 2.32 (.97) 29 N/A
11/1/94 to 10/31/95................ 14.58 24.59 8,818 1.34 .48 2.36 (.55) 106 N/A
11/1/95 to 10/31/96................ 15.29 11.64 14,478 1.57 .36 2.15 (.21) 118 .0704
CLASS B
1/12/95* to 10/31/95............... 14.51 20.62 298 2.29+ (.03)+ 3.79+ (1.53)+ 106 N/A
11/1/95 to 10/31/96................ 15.10 10.80 1,168 2.30 (.37) 3.03 (1.10) 118 .0704
- ----------------------------------------------------------------------------------------------------------------------------------
UTILITIES INCOME FUND
CLASS A
2/22/93* to 10/31/93............... $ 5.92 11.28+ $ 58,373 .35+ 3.84+ 1.80+ 2.39+ 17 $ N/A
11/1/93 to 10/31/94................ 5.08 (10.15) 62,671 .80 4.59 1.59 3.80 58 N/A
11/1/94 to 10/31/95................ 5.90 21.35 83,691 1.04 4.37 1.57 3.84 16 N/A
11/1/95 to 10/31/96................ 6.41 12.45 104,029 1.20 3.49 1.49 3.19 38 .0706
CLASS B
1/12/95* to 10/31/95............... 5.86 21.99 3,209 1.82+ 4.93+ 2.53+ 4.21+ 16 N/A
11/1/95 to 10/31/96................ 6.35 11.61 7,670 1.91 2.77 2.28 2.40 38 .0706
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of operations of Class A or date Class B shares first offered
** Calculated without sales charges
*** Prior to February 15, 1996, known as Made In The U.S.A. Fund
+ Annualized
++ Some or all expenses have been waived or assumed from commencement of
operations through October 31, 1996 (Note 3).
+++ Average commission rate (per share of security) as required by amended
disclosure requirements effective September 1, 1995.
See notes to financial statements
31
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and Board of Directors of
First Investors Series Fund II, Inc.
We have audited the accompanying statement of assets and liabilities, including
the portfolios of investments, of Growth & Income Fund, U.S.A. Mid-Cap
Opportunity Fund (formerly known as Made In The U.S.A. Fund) and Utilities
Income Fund (comprising First Investors Series Fund II, Inc.), as of October 31,
1996, the related statement of operations for the year then ended, the statement
of changes in net assets for each of the two years in the period then ended, and
financial highlights for each of the periods indicated thereon. These financial
statements and financial highlights are the responsibility of the Fund's
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 generally accepted auditing
standards. 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. 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 October 31, 1996,
by correspondence with the custodian and brokers. 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 Growth
& Income Fund, U.S.A. Mid-Cap Opportunity Fund and Utilities Income Fund of
First Investors Series Fund II, Inc. at October 31, 1996, and the results of
their operations, changes in their net assets and financial highlights for the
periods presented, in conformity with generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
November 29, 1996
32
<PAGE>
(This page has been left blank intentionally.)
33
<PAGE>
FIRST INVESTORS SERIES FUND II, INC.
DIRECTORS
- -------------------------------------------
JAMES J. COY
ROGER L. GRAYSON
GLENN O. HEAD
KATHRYN S. HEAD
REX R. REED
HERBERT RUBINSTEIN
JAMES M. SRYGLEY
JOHN T. SULLIVAN
ROBERT F. WENTWORTH
OFFICERS
- -------------------------------------------
GLENN O. HEAD
President
MARGARET R. HAGGERTY
Vice President
PATRICIA D. POITRA
Vice President
CONCETTA DURSO
Vice President and Secretary
JOSEPH I. BENEDEK
Treasurer
CAROL LERNER BROWN
Assistant Secretary
GREGORY R. KINGSTON
Assistant Treasurer
MARK S. SPENCER
Assistant Treasurer
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FIRST INVESTORS SERIES FUND II, INC.
SHAREHOLDER INFORMATION
- -------------------------------------------
INVESTMENT ADVISER
FIRST INVESTORS MANAGEMENT COMPANY, INC.
95 Wall Street
New York, NY 10005
SUBADVISER (Growth & Income Fund only)
WELLINGTON MANAGEMENT COMPANY
75 State Street
Boston, MA 02109
UNDERWRITER
FIRST INVESTORS CORPORATION
95 Wall Street
New York, N.Y. 10005
CUSTODIAN
THE BANK OF NEW YORK
48 Wall Street
New York, NY 10286
TRANSFER AGENT
ADMINISTRATIVE DATA MANAGEMENT CORP.
581 Main Street
Woodbridge, NJ 07095-1198
LEGAL COUNSEL
KIRKPATRICK & LOCKHART LLP
1800 Massachusetts Avenue, N.W.
Washington, DC 20036
AUDITORS
TAIT, WELLER & BAKER
Two Penn Center Plaza
Philadelphia, PA 19102-1707
It is the Fund's practice to mail only one copy of its annual and semi-annual
reports to any address at which more than one shareholder with the same last
name has indicated that mail is to be delivered. Additional copies of the
reports will be mailed if requested by any shareholder in writing or by calling
800-423-4026. Each Fund 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
Fund's prospectus.
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FIRST
INVESTORS
SERIES FUND II, INC.
Growth & Income Fund
U.S.A. Mid-Cap Opportunity Fund
Utilities Income Fund
ANNUAL
REPORT
OCTOBER 31, 1996
Vertically reading from bottom to top in the center of the page the words
"FIRST INVESTORS" appear.
The following language appears to the left of the above language:
The words "BULK RATE U.S. POSTAGE PAID PERMIT NO. 7379" in a box to the right
of a circle containing the words "MAILED FROM ZIP CODE 11201" appears on the
righthand side.
The following language appears on the lefthand side:
FIRST INVESTORS SERIES FUND II, INC.
95 WALL STREET
NEW YORK, NY 10005
The following appears on the bottom lefthand side:
First Investors logo
A MEMBER OF THE
FIRST INVESTORS
FINANCIAL NETWORK
FIUSA03
