[FIRST INVESTORS LOGO]
EQUITY FUNDS
TOTAL RETURN
GROWTH & INCOME
BLUE CHIP
UTILITIES INCOME
MID-CAP OPPORTUNITY
SPECIAL SITUATIONS
FOCUSED EQUITY
GLOBAL
The Securities and Exchange Commission has not approved or disapproved
these securities or passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
The date of this prospectus is January 28, 2000
<PAGE>
CONTENTS
INTRODUCTION
FUND DESCRIPTIONS
Total Return Fund
Growth & Income Fund
Blue Chip Fund
Utilities Income Fund
Mid-Cap Opportunity Fund
Special Situations Fund
Focused Equity Fund
Global Fund
FUND MANAGEMENT
BUYING AND SELLING SHARES
How and when do the Funds price their shares? How do I buy shares? Which
class of shares is best for me?
How do I sell shares?
Can I exchange my shares for the shares of other First Investors Funds?
ACCOUNT POLICIES
What about dividends and capital gain distributions?
What about taxes?
How do I obtain a complete explanation of all account privileges and
policies?
APPENDIX
FINANCIAL HIGHLIGHTS
Total Return Fund
Growth & Income Fund
Blue Chip Fund
Utilities Income Fund
Mid-Cap Opportunity Fund
Special Situations Fund
Focused Equity Fund
Global Fund
2
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INTRODUCTION
This prospectus describes the First Investors Funds that invest primarily in
common stocks and other equity securities. Each individual Fund description in
this prospectus has an "Overview" which provides a brief explanation of the
Fund's objectives, its primary strategies and primary risks, how it has
performed, and its fees and expenses. To help you decide which Funds may be
right for you, we have included in each Overview a section offering examples of
who should consider buying the Fund. Each Fund description also contains a "Fund
in Detail" section with more information on strategies and risks of the Fund.
None of the Funds in this prospectus, other than the Total Return Fund, pursues
a strategy of allocating its assets among stocks, bonds, and money market
instruments. For most investors, a complete investment program should include
each of these asset classes. While stocks have historically outperformed other
categories of investments over long periods of time, they generally carry higher
risks. There have also been extended periods during which bonds and money market
instruments have outperformed stocks. By allocating your assets among different
types of funds, you can reduce the overall risk of your portfolio. Of course,
even a diversified investment program can result in a loss.
3
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FUND DESCRIPTIONS
TOTAL RETURN FUND
OVERVIEW
OBJECTIVE: The Fund seeks high, long-term total investment return consistent
with moderate investment risk.
PRIMARY
INVESTMENT
STRATEGIES: The Fund allocates its assets among stocks, bonds and money
market instruments based upon its views on market conditions, the
relative values of these asset classes, and economic trends.
While the percentage of assets allocated to each asset class is
flexible rather than fixed, the Fund normally invests at least
50% of its assets in stocks and at least 25% in bonds, cash and
cash equivalents. On a regular basis, the Fund reviews and
determines whether to adjust the asset allocations. Once the
target allocation for stocks has been set, the Fund uses
fundamental research and analysis to determine which particular
stocks to purchase or sell. The Fund decides how to invest the
assets allocated to bonds by first considering the outlook for
the economy and interest rates and thereafter the financial
strength of particular issuers. The Fund may invest in investment
grade or below investment grade bonds ("high yield" or "junk
bonds") depending on its view of the economy.
PRIMARY
RISKS: While a diversified portfolio of stocks, bonds and money market
instruments is generally regarded as having less risk than a
portfolio invested exclusively in stocks, it is nevertheless
subject to market risk. Both stocks and bonds fluctuate not only
as a result of company-specific developments but also with market
conditions, economic cycles, and interest rates. High yield bonds
provide a higher yield but fluctuate more than investment grade
bonds because of their speculative nature and their potential
lack of liquidity. There are times when the value of bonds and
stocks may decline simultaneously, such as when interest rates
rise. The Fund may, at times, engage in short-term trading, which
could produce higher brokerage costs and taxable distributions
and may result in a lower total return for the Fund. Accordingly,
the value of your investment in the Fund will go up and down,
which means that you could lose money.
AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT AND IS NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
Who should consider buying the Total Return Fund?
The Total Return Fund may be used as a core holding of an
investment portfolio. While every investor should consider an
asset allocation strategy that meets his or her own needs, the
Fund can be used as a stand-alone investment by an investor who
does not want to make his or her own asset allocation decisions.
It may be appropriate for you if you:
o Are seeking total return,
o Are willing to accept a moderate degree of market volatility,
and
o Have a long-term investment horizon and are able to ride out
market cycles.
4
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How has the Total Return Fund performed?
The bar chart and table below show you how the Fund's performance has varied
from year to year and in comparison with a broad-based index. This information
gives you some indication of the risks of investing in the Fund.
The Fund has two classes of shares, Class A shares and Class B shares. The bar
chart shows changes in the performance of the Fund's Class A shares from year to
year over the life of the Fund. The performance of Class B shares differs from
the performance of Class A shares shown in the bar chart only to the extent that
they do not have the same expenses. The bar chart does not reflect sales charges
that you may pay upon purchase or redemption of Fund shares. If they were
included, the returns would be less than those shown.
[OBJECT OMITTED]
During the periods shown, the highest quarterly return was 13.00% (for the
quarter ended December 31, 1999) and the lowest quarterly return was -4.95% (for
the quarter ended March 31, 1994). THE FUND'S PAST PERFORMANCE DOES NOT
NECESSARILY INDICATE HOW THE FUND WILL PERFORM IN THE FUTURE.
The following table shows how the average annual total returns for Class A
shares and Class B shares compare to those of the Standard & Poor's 500
Composite Stock Price Index ("S&P 500 Index") and the Lehman Brothers
Government/Corporate Bond Index ("Government/Corporate Bond Index"). This table
assumes that the maximum sales charge or contingent deferred sales charge
("CDSC") was paid. The S&P 500 Index is an unmanaged index consisting of the
stocks of large-sized U.S. and foreign companies. The Government/Corporate Bond
Index is an index which includes Treasury obligations, obligations of U.S.
agencies, and investment grade corporate bonds. The indexes do not take into
account fees and expenses that an investor would incur in holding the securities
in the indexes. If they did so, the returns would be lower than those shown.
5
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Inception Inception
Class A Shares Class B Shares
1 Year* 5 Years* (4/24/90) (1/12/95)
Class A Shares 6.48% 15.43% 10.35% N/A
Class B Shares 8.82% N/A N/A 15.97%
S&P 500 Index 21.04% 28.51% 19.53% 28.56%
Government/Corporate
Bond Index -2.15% 7.60% 7.91%** 7.60%
</TABLE>
* The annual returns are based upon calendar years.
** The average annual total return shown is for the period 4/30/90 to 12/31/99.
*** The average annual total return shown is for the period 1/1/95 to 12/31/99.
What are the fees and expenses of the Total Return Fund?
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
Class A Class B
SHARES SHARES
------ ------
SHAREHOLDER FEES
(fees paid directly from your investment)
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price).......... 6.25% None
Maximum deferred sales charge (load)
(as a percentage of the lower of purchase
price or redemption price)................... None* 4%**
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
<S> <C> <C> <C> <C> <C> <C>
DISTRIBUTION TOTAL
AND SERVICE ANNUAL FUND
MANAGEMENT (12B-1) OTHER OPERATING FEE NET
FEES(1) FEES (2) EXPENSES EXPENSES(3) WAIVER(1) EXPENSES
----- -------- --------- --------- ------- --------
(3)
Class A Shares....... 1.00% 0.30% 0.35% 1.65% 0.25% 1.40%
Class B Shares....... 1.00% 1.00% 0.35% 2.35% 0.25% 2.10%
</TABLE>
*A contingent deferred sales charge of 1.00% will be assessed on certain
redemptions of Class A shares that are purchased without a sales charge.
**4% in the first year; declining to 0% after the sixth year. Class B shares
convert to Class A shares after 8 years.
(1) For the fiscal year ended September 30, 1999, First Investors
Management Company, Inc. ("the Adviser") waived Management Fees in excess of
0.75% for the Fund. The Adviser has contractually agreed with the Fund to
waive Management Fees in excess of 0.75% for the fiscal year ending September
30, 2000.
(2)Because the Fund pays Rule 12b-1 fees, long-term shareholders could pay more
than the economic equivalent of the maximum front-end sales charge permitted
by the National Association of Securities Dealers, Inc.
(3)The Fund has an expense offset arrangement that may reduce the Fund's
custodian fee based on the amount of cash maintained by the Fund with its
custodian. Any such fee reductions are not reflected under Total Annual Fund
Operating Expenses or Net Expenses.
6
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<TABLE>
<CAPTION>
EXAMPLE
This example helps you to compare the costs of investing in the Fund with the
cost of investing in other mutual funds. The example assumes that (1) you invest
$10,000 in the Fund for the time periods indicated; (2) your investment has a 5%
return each year; and (3) the Fund's operating expenses remain the same, except
for year one, which is net of fees waived. Although your actual costs may be
higher or lower, under these assumptions your costs would be:
<S> <C> <C> <C> <C>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
If you redeem your shares:
Class A shares $759 $1,090 $1,444 $2,438
Class B shares $613 $1,010 $1,433 $2,492*
If you do not redeem your shares:
Class A shares $759 $1,090 $1,444 $2,438
Class B shares $213 $710 $1,233 $2,492*
</TABLE>
*Assumes conversion to Class A shares eight years after purchase.
THE FUND IN DETAIL
What are the Total Return Fund's objective, principal investment strategies,
and risks?
OBJECTIVE: The Fund seeks high, long-term total investment return consistent
with moderate investment risk.
PRINCIPAL INVESTMENT STRATEGIES: The Fund allocates its assets among stocks,
bonds, and money market instruments. While the percentage of assets allocated to
each asset class is flexible rather than fixed, the Fund normally invests at
least 50% of its assets in stocks and at least 25% in bonds, cash and cash
equivalents. On a regular basis, the Fund reviews and determines whether to
adjust its asset allocations based upon its views on market conditions, the
relative values of the asset classes and economic trends. The Fund may allocate
up to 25% of its net assets to high yield bonds. These are bonds that are below
investment grade. Investment grade bonds are those that are rated among the four
highest ratings categories by Moody's Investors Service, Inc. or Standard &
Poor's Ratings Group.
Once the asset allocation for stocks has been set, the Fund uses fundamental
research and analysis to determine which particular stocks to purchase or sell.
In selecting stocks, the Fund looks for companies that have a mix of strong
management, solid financial condition, and above-average earnings growth
potential.
Once the target allocation for bonds has been set, the Fund determines how this
percentage should be allocated among different types of bonds based upon the
outlook for the economy and interest rates. If the outlook for the economy is
positive, the Fund would normally allocate more to high yield, below-investment
grade bonds to secure additional income and potential capital appreciation. If
the outlook for the economy is negative, the Fund would normally allocate more
to investment grade or Treasury bonds. The duration of the bond portion of the
portfolio would be determined by the interest rate outlook. Duration is a
measurement of a bond's sensitivity to changes in interest rates that takes into
consideration not only the maturity of the bond but also the time value of money
that will be received from the bond over its life. In selecting bonds, the Fund
considers a variety of factors, including the issuer's earnings and cash flow
generating capabilities, asset quality, debt levels, and management strength.
While the Fund invests primarily in domestic companies, it also invests in
securities of issuers domiciled in foreign countries. These securities will
generally be dollar-denominated and traded in the U.S.
7
<PAGE>
The Fund sells a security if its fundamentals have deteriorated or if it is
necessary to rebalance the portfolio. Information on the Fund's recent
strategies and holdings can be found in the most recent annual report (see back
cover).
PRINCIPAL RISKS: Any investment carries with it some level of risk. An
investment offering greater potential rewards generally carries greater risks.
Here are the principal risks of owning the Total Return Fund:
MARKET RISK: The Fund's portfolio is subject to market risk. Stock prices in
general may decline over short or even extended periods not only because of
company-specific developments but also due to an economic downturn, a change in
interest rates, or a change in investor sentiment, regardless of the success or
failure of an individual company's operations. Stock markets tend to run in
cycles with periods when prices generally go up, known as "bull" markets, and
periods when stock prices generally go down, referred to as "bear" markets.
Similarly, bond prices fluctuate in value with changes in interest rates, the
economy and in the case of corporate bonds, the financial conditions of
companies that issue them. In general, bonds decline in value when interest
rates rise. High yield bonds behave like bonds at times and like stocks at
times. Like other bonds, high yield bonds tend to decline in value when interest
rates rise. Like stocks, however, high yield bonds generally decline in value
when the economy deteriorates.
While stocks and bonds may react differently to economic events, and thereby
provide a more balanced return, there are times when stocks and bonds both may
decline in value simultaneously. Accordingly, the value of your investment in
the Fund will go up and down, which means that you could lose money.
ASSET ALLOCATION RISK: The Fund may allocate assets to investment classes which
underperform other classes. For example, the Fund may be overweighted in stocks
when the stock market is falling and the bond market is rising.
INTEREST RATE RISK: The market value of a bond is affected by changes in
interest rates. When interest rates rise, the market value of a bond declines,
and when interest rates decline, the market value of a bond increases. The price
volatility of a bond also depends on its maturity and duration. Generally, the
longer the maturity and duration of a bond, the greater its sensitivity to
interest rates. To compensate investors for this higher risk, bonds with longer
maturities and durations generally offer higher yields than bonds with shorter
maturities and durations.
CREDIT RISK: This is the risk that an issuer of bonds will be unable to pay
interest or principal when due. The prices of bonds are affected by the credit
quality of the issuer. High yield bonds are subject to greater credit risk than
higher quality bonds because the companies that issue them are not as
financially strong as companies with investment grade ratings. Changes in the
financial condition of an issuer, changes in general economic conditions, and
changes in specific economic conditions that affect a particular type of issuer
can impact the credit quality of an issuer. Such changes may weaken an issuer's
ability to make payments of principal or interest, or cause an issuer of bonds
to fail to make timely payments of interest or principal. Lower quality bonds
generally tend to be more sensitive to these changes than higher quality bonds,
but BBB-rated bonds may have speculative characteristics as well. While credit
ratings may be available to assist in evaluating an issuer's credit quality,
they may not accurately predict an issuer's ability to make timely payments of
principal and interest.
LIQUIDITY RISK: High yield bonds tend to be less liquid than higher quality
bonds, meaning that it may be difficult to sell high yield bonds at a reasonable
price, particularly if there is a deterioration in the economy or in the
financial prospects of their issuers. As a result, the prices of high yield
bonds may be subject to wide price fluctuations due to liquidity concerns.
FOREIGN ISSUERS RISK: Foreign investments involve additional risks, including
currency fluctuations, political instability, government regulation, unfavorable
political or legal developments, differences in financial reporting standards,
and less stringent regulation of foreign securities markets.
8
<PAGE>
FREQUENT TRADING RISK: The Fund may, at times, engage in short-term trading,
which could produce higher brokerage costs and taxable distributions and may
result in a lower total return for the Fund.
9
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GROWTH & INCOME FUND
OVERVIEW
OBJECTIVES: The Fund seeks long-term growth of capital and current
income.
PRIMARY
INVESTMENT
STRATEGIES: The Fund primarily invests in dividend-paying common stocks
and securities that are convertible into common stocks of
established domestic and foreign companies. The strategy of
focusing on securities which offer income as well as the
potential for capital appreciation is intended to reduce the
Fund's volatility relative to the general stock market while
affording potential for long-term total return. The Fund also
may invest in corporate bonds to increase the income component
of its total return.
PRIMARY
RISKS: While dividend-paying common stocks and convertible securities
are expected to hold up better in a declining market than
stocks which do not pay dividends, like all stocks they
fluctuate in price in response to movements in the overall
securities markets, general economic conditions, changes in
interest rates, company-specific developments and other
factors. Moreover, under certain conditions, the dividends
paid on stocks held by the Fund may not be sufficient to
provide a significant cushion against price declines.
Fluctuations in the prices of the stocks held by the Fund at
times can be substantial. Accordingly, the value of your
investment in the Fund will go up and down, which means that
you could lose money.
AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT AND IS NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
Who should consider buying the Growth & Income Fund?
The Growth & Income Fund may be used as a core holding for an
investment portfolio or as a base on which to build a portfolio.
It may be appropriate for you if you:
o Are primarily seeking growth of capital,
o Are willing to accept a moderate degree of market volatility,
and
o Have a long-term investment horizon and are able to ride out
market cycles.
Since the Fund's income level will likely be small and will
fluctuate, there can be no assurance that the Fund will be able
to pay regular dividends. The Fund is therefore not designed for
investors who need an assured level of current income.
How has the Growth & Income Fund performed?
The bar chart and table below show you how the Fund's performance has varied
from year to year and in comparison with a broad-based index. This information
gives you some indication of the risks of investing in the Fund.
The Fund has two classes of shares, Class A shares and Class B shares. The bar
chart shows changes in the performance of the Fund's Class A shares from year to
year over the life of the Fund. The performance of Class B shares differs from
the performance of Class A shares shown in the bar chart only to the extent that
they do not have the same expenses. The bar chart does not reflect sales charges
that you may pay upon purchase or redemption of Fund shares. If they were
included, the returns would be less than those shown.
10
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[OBJECT OMITTED]
During the periods shown, the highest quarterly return was 18.90% (for the
quarter ended December 31, 1999) and the lowest quarterly return was -10.80%
(for the quarter ended September 30, 1998 ). THE FUND'S PAST PERFORMANCE DOES
NOT NECESSARILY INDICATE HOW THE FUND WILL PERFORM IN THE FUTURE.
The following table shows how the Fund's average annual total returns for Class
A shares and Class B shares compare to those of the Standard & Poor's 500
Composite Stock Price Index ("S&P 500 Index"). This table assumes that the
maximum sales charge or CDSC was paid. The S&P 500 Index is an unmanaged index
consisting of the stocks of large-sized U.S. and foreign companies. The S&P 500
Index does not take into account fees and expenses that an investor would incur
in holding the securities in the index. If it did so, the returns would be lower
than those shown.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Inception Inception
Class A Shares Class B Shares
1 Year* 5 Years* (10/4/93) (1/12/95)
Class A Shares 15.49% 23.22% 18.33% N/A
Class B Shares 18.39% N/A N/A 24.01%
S&P 500 Index 21.04% 28.51% 22.85% 28.56%
*The annual returns are based upon calendar years.
</TABLE>
11
<PAGE>
What are the fees and expenses of the Growth & Income Fund?
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
Class A Class B
SHARES SHARES
------ ------
SHAREHOLDER FEES
(fees paid directly from your investment)
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price).......... 6.25% None
Maximum deferred sales charge (load)
(as a percentage of the lower of purchase
price or redemption price)................... None* 4%**
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
DISTRIBUTION TOTAL
AND SERVICE ANNUAL FUND
MANAGEMENT (12B-1) OTHER OPERATING
FEES FEES (1) EXPENSES EXPENSES(2)
----- -------- -------- -----------
Class A Shares....... 0.74% 0.30% 0.32% 1.36%
Class B Shares....... 0.74% 1.00% 0.32% 2.06%
*A contingent deferred sales charge of 1.00% will be assessed on certain
redemptions of Class A shares that are purchased without a sales charge. **4% in
the first year; declining to 0% after the sixth year. Class B shares convert to
Class A shares after 8 years.
(1) Because the Fund pays Rule 12b-1 fees, long-term shareholders could pay more
than the economic equivalent of the maximum front-end sales charge permitted by
the National Association of Securities Dealers, Inc.
(2) The Fund has an expense offset arrangement that may reduce the Fund's
custodian fee based on the amount of cash maintained by the Fund with its
custodian. Any such fee reductions are not reflected under Total Annual Fund
Operating Expenses.
EXAMPLE
This example helps you to compare the costs of investing in the Fund with the
cost of investing in other mutual funds. The example assumes that (1) you invest
$10,000 in the Fund for the time periods indicated; (2) your investment has a 5%
return each year; and (3) the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, under these assumptions your
costs would be:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
If you redeem your shares:
Class A shares $755 $1,029 $1,323 $2,158
Class B shares $609 $ 946 $1,308 $2,210*
If you do not redeem your shares:
Class A shares $755 $1,029 $1,323 $2,158
Class B shares $209 $ 646 $1,108 $2,210*
*Assumes conversion to Class A shares eight years after purchase.
12
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THE FUND IN DETAIL
What are the Growth & Income Fund's objectives, principal investment strategies,
and principal risks?
OBJECTIVES: The Fund seeks long-term growth of capital and current income.
PRINCIPAL INVESTMENT STRATEGIES: The Fund invests at least 65% of its total
assets in dividend-paying common stocks and convertible securities of
established domestic and foreign companies. The Fund also invests in corporate
bonds to increase the income component of its total return. The strategy of
focusing on securities which offer income as well as the potential for capital
appreciation is intended to reduce the Fund's volatility relative to the overall
stock market while affording potential for long-term total return.
The Fund uses a "bottom-up" approach to selecting investments. This means that
the Fund identifies potential investments through fundamental research and
analysis and thereafter focuses on broader issues, such as economic trends,
interest rates, and industry diversification. The Fund focuses on companies
which have solid balance sheets, strong management, relatively consistent
earnings growth or potential earnings growth greater than that of the average
company in the S&P 500 Index. The Fund typically sells a security when the
reason for holding it is no longer valid, it shows deteriorating fundamentals,
or falls short of the manager's expectations. Information on the Fund's recent
strategies and holdings can be found in the most recent annual report (see back
cover).
PRINCIPAL RISKS: Any investment carries with it some level of risk. An
investment offering greater potential rewards generally carries greater risks.
Here are the principal risks of owning the Growth & Income Fund:
MARKET RISK: Because the Fund primarily invests in common stocks and convertible
securities, it is subject to market risk. Stock prices in general may decline
over short or even extended periods not only because of company-specific
developments but also due to an economic downturn, a change in interest rates,
or a change in investor sentiment, regardless of the success or failure of an
individual company's operations. Stock markets tend to run in cycles with
periods when prices generally go up, known as "bull" markets, and periods when
stock prices generally go down, referred to as "bear" markets.
While dividend-paying common stocks and convertible securities are expected to
hold up better in a declining market than stocks which do not pay dividends,
like all stocks they fluctuate in price in response to movements in the overall
securities markets, general economic conditions, company-specific developments,
and other factors. Moreover, under certain conditions, the dividends paid on
these stocks may not be sufficient to provide a significant cushion against
price declines. Fluctuations in the prices of these stocks can therefore be
substantial. The dividend income received by the Fund will also fluctuate with
market conditions. Depending upon market conditions, the Fund may not have
sufficient income to pay its shareholders regular dividends. Accordingly, the
value of your investment in the Fund will go up and down, which means that you
could lose money.
The Fund's focus on growth stocks increases the potential volatility of its
share price. Growth stocks are stocks of companies which are expected to
increase their earnings faster than the overall market. If expectations are not
met, the prices of these stocks may decline drastically even if earnings do
increase. Investments in growth companies may lack the dividend yield that can
cushion stock prices in market downturns.
CREDIT RISK: This is the risk that an issuer of bonds will be unable to pay
interest or principal when due. The prices of bonds are affected by the credit
quality of the issuer. Changes in the financial condition of an issuer, changes
in general economic conditions, and changes in specific economic conditions that
affect a particular type of issuer can impact the credit quality of an issuer.
Such changes may weaken an issuer's ability to make payments of principal or
interest, or cause an issuer of bonds to fail to make timely payments of
13
<PAGE>
interest or principal. Lower quality bonds generally tend to be more sensitive
to these changes than higher quality bonds, but BBB-rated bonds may have
speculative characteristics as well. While credit ratings may be available to
assist in evaluating an issuer's credit quality, they may not accurately predict
an issuer's ability to make timely payment of principal and interest.
14
<PAGE>
BLUE CHIP FUND
OVERVIEW
OBJECTIVE: The Fund seeks high total investment return consistent with
the preservation of capital.
PRIMARY
INVESTMENT
STRATEGIES: The Fund primarily invests in the common stocks of large,
well-established companies that are in the Standard and Poor's
500 Composite Stock Price Index ("S&P 500 Index"). These are
defined by the Fund as "Blue Chip" stocks. The Fund selects
stocks that it believes will have earnings growth in excess of
the average company in the S&P 500 Index. While the Fund
attempts to diversify its investments so that its weightings
in different industries are similar to those of the S&P 500
Index, it is not an index fund and therefore will not
necessarily mirror the S&P 500 Index. The Fund generally
stays fully invested in stocks under all market conditions.
PRIMARY
RISKS: While Blue Chip stocks are regarded as among the most
conservative stocks, like all stocks they fluctuate in price
in response to movements in the overall securities markets,
general economic conditions, and changes in interest rates or
investor sentiment. Fluctuations in the prices of Blue Chip
stocks at times can be substantial. Accordingly, the value of
your investment in the Fund will go up and down, which means
that you could lose money.
AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT AND IS NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
Who should consider buying the Blue Chip Fund?
The Blue Chip Fund may be used as a core holding for an
investment portfolio or as a base on which to build a portfolio.
It may be appropriate for you if you:
o Are seeking growth of capital,
o Are willing to accept a moderate degree of market volatility,
and
o Have a long-term investment horizon and are able to ride
out market cycles.
How has the Blue Chip Fund performed?
The bar chart and table below show you how the Fund's performance has varied
from year to year and in comparison with a broad-based index. This information
gives you some indication of the risks of investing in the Fund.
The Fund has two classes of shares, Class A shares and Class B shares. The bar
chart shows changes in the performance of the Fund's Class A shares for each of
the last 10 calendar years. The performance of Class B shares differs from the
performance of Class A shares shown in the bar chart only to the extent that
they do not have the same expenses. The bar chart does not reflect sales charges
that you may pay upon purchase or redemption of Fund shares. If they were
included, the returns would be less than those shown.
15
<PAGE>
[OBJECT OMITTED]
During the periods shown, the highest quarterly return was 19.96% (for the
quarter ended December 31, 1998) and the lowest quarterly return was -14.96%
(for the quarter ended September 30, 1990). THE FUND'S PAST PERFORMANCE DOES NOT
NECESSARILY INDICATE HOW THE FUND WILL PERFORM IN THE FUTURE.
The following table shows how the average annual total returns for Class A
shares and Class B shares compare to those of the S&P 500 Index. This table
assumes that the maximum sales charge or CDSC was paid. The S&P 500 Index is an
unmanaged index consisting of the stocks of large-sized U.S. and foreign
companies. The S&P 500 Index does not take into account fees and expenses that
an investor would incur in holding the securities in the S&P 500 Index. If it
did so, the returns would be lower than those shown.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Inception
Class B Shares
1 Year* 5 Years* 10 Years* (1/12/95)
Class A Shares 16.92% 22.97% 14.44% N/A
Class B Shares 19.84% N/A N/A 23.65%
S&P 500 Index 21.04% 28.51% 18.19% 28.56%
* The annual returns are based upon calendar years.
</TABLE>
What are the fees and expenses of the Blue Chip Fund?
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
Class A Class B
SHARES SHARES
------ ------
SHAREHOLDER FEES
(fees paid directly from your investment)
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price).......... 6.25% None
Maximum deferred sales charge (load)
(as a percentage of the lower of purchase
price or redemption price)................... None* 4%**
16
<PAGE>
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
DISTRIBUTION TOTAL
AND SERVICE ANNUAL FUND
MANAGEMENT (12B-1) OTHER OPERATING FEE NET
FEES(1) FEES(2) EXPENSES EXPENSES(3) WAIVER(1) EXPENSES(3)
----------- ----------- -------- ------------ --------- -----------
Class A Shares 0.85% 0.30% 0.27% 1.42% 0.10% 1.32%
Class B Shares 0.85% 1.00% 0.27% 2.12% 0.10% 2.02%
</TABLE>
*A contingent deferred sales charge of 1.00% will be assessed on certain
redemptions of Class A shares that are purchased without a sales charge.
**4% in the first year; declining to 0% after the sixth year. Class B shares
convert to Class A shares after 8 years.
(1)For the fiscal year ended September 30, 1999, the Adviser waived
Management Fees in excess of 0.75% for the Blue Chip Fund. The Adviser has
contractually agreed with the Fund to waive Management Fees in excess of
0.75% for the fiscal year ending September 30, 2000.
(2)Because the Fund pays Rule 12b-1 fees, long-term shareholders could pay more
than the economic equivalent of the maximum front-end sales charge permitted
by the National Association of Securities Dealers, Inc.
(3)The Fund has an expense offset arrangement that may reduce the Fund's
custodian fee based on the amount of cash maintained by the Fund with its
custodian. Any such fee reductions are not reflected under Total Annual Fund
Operating Expenses or Net Expenses.
EXAMPLE
<TABLE>
<CAPTION>
This example helps you to compare the costs of investing in the Fund with the
cost of investing in other mutual funds. The example assumes that (1) you invest
$10,000 in the Fund for the time periods indicated; (2) your investment has a 5%
return each year; and (3) the Fund's operating expenses remain the same, except
for year one, which is net of fees waived. Although your actual costs may be
higher or lower, under these assumptions your costs would be:
<S> <C> <C> <C> <C>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
If you redeem your shares:
Class A shares $751 $1,037 $1,344 $2,213
Class B shares $605 $ 954 $1,330 $2,265*
If you do not redeem your shares:
Class A shares $751 $1,037 $1,344 $2,213
Class B shares $205 $ 654 $1,130 $2,265*
</TABLE>
*Assumes conversion to Class A shares eight years after purchase.
THE FUND IN DETAIL
What are the Blue Chip Fund's objective, principal investment strategies, and
risks?
OBJECTIVE: The Fund seeks high total investment return consistent with the
preservation of capital.
PRINCIPAL INVESTMENT STRATEGIES: The Fund invests at least 65% of its total
assets in common stocks of large, well-established companies that are in the
S&P 500 Index. These are defined by the Fund as "Blue Chip" stocks. The S&P
500 Index consists of both U.S. and foreign corporations.
17
<PAGE>
The Fund uses fundamental research to select stocks of companies with strong
balance sheets, relatively consistent records of achievement, and potential
earnings growth that is greater than that of the average company in the S&P 500
Index. The Fund attempts to stay broadly diversified and sector neutral relative
to the S&P 500 Index, but it may emphasize certain industry sectors based on
economic and market conditions. The Fund intends to remain relatively fully
invested in stocks under all market conditions rather than attempt to time the
market by maintaining large cash or fixed income securities positions when
market declines are anticipated. The Fund usually will sell a stock when the
reason for holding it is no longer valid, it shows deteriorating fundamentals,
or it falls short of the Fund's expectations. Information on the Fund's recent
strategies and holdings can be found in the most recent annual report (see back
cover).
PRINCIPAL RISKS: Any investment carries with it some level of risk. An
investment offering greater potential rewards generally carries greater risks.
Here are the principal risks of owning the Blue Chip Fund:
MARKET RISK: Because the Fund primarily invests in common stocks, it is subject
to market risk. Stock prices in general may decline over short or even extended
periods not only because of company-specific developments but also due to an
economic downturn, a change in interest rates or a change in investor sentiment,
regardless of the success or failure of an individual company's operations.
Stock markets tend to run in cycles with periods when prices generally go up,
known as "bull" markets, and periods when stock prices generally go down,
referred to as "bear" markets. While Blue Chip stocks have historically been the
least risky and most liquid of stocks, like all stocks they fluctuate in value.
Fluctuations of Blue Chip stocks can be sudden and substantial. Accordingly, the
value of your investment in the Fund will go up and down, which means that you
could lose money.
OTHER RISKS: While the Fund generally attempts to remain sector-neutral relative
to the S&P 500 Index, it is not an index fund. The Fund may hold securities
other than those in the S&P 500 Index, may hold fewer securities than the index,
and may have sector or industry allocations different from the index, each of
which could cause the Fund to underperform the index.
18
<PAGE>
UTILITIES INCOME FUND
OVERVIEW
OBJECTIVES: The Fund primarily seeks high current income and secondarily
long-term capital appreciation.
PRIMARY
INVESTMENT
STRATEGIES: The Fund concentrates its investments in stocks of public
utilities companies ("utilities stocks"). The Fund attempts to
diversify across all sectors of the utilities industry (i.e.,
electric, gas, telecommunications and water), but from time to
time it will emphasize one or more sectors based on the
outlook for the various sectors. While the Fund primarily
invests in U.S. companies, it may invest in stocks of foreign
utilities companies.
PRIMARY
RISKS: While utilities stocks tend to be regarded as less volatile
than other stocks, like all stocks they fluctuate in value in
response to movements in the overall securities markets,
general economic conditions, and changes in interest rates or
investor sentiment. Because the Fund concentrates its
investments in public utilities stocks, the value of its
shares will be particularly affected by events that impact on
the utilities industry, such as changes in public utilities
regulation, changes in weather, and changes in interest
rates. Stocks of foreign utilities companies carry additional
risks including currency fluctuations, political instability,
government regulation, unfavorable political or legal
developments, differences in financial reporting standards,
and less stringent regulation of foreign securities markets.
An investment in the Fund could decline in value even if the
market as a whole does well. Accordingly, the value of your
investment in the Fund will go up and down, which means that
you could lose money.
AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT AND IS NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
Who should consider buying the Utilities Income Fund?
The Utilities Income Fund is most appropriately used to add
diversification to an investment portfolio. It may be appropriate
for you if you:
o Are seeking income and growth of capital,
o Are willing to accept a moderate degree of market volatility,
and
o Have a long-term investment horizon and are able to ride out
market cycles.
How has the Utilities Income Fund performed?
The bar chart and table below show you how the Fund's performance has varied
from year to year and in comparison with a broad-based index. This information
gives you some indication of the risks of investing in the Fund.
The Fund has two classes of shares, Class A shares and Class B shares. The bar
chart shows changes in the performance of the Fund's Class A shares from year to
year over the life of the Fund. The performance of Class B shares differs from
the performance of Class A shares shown in the bar chart only to the extent that
they do not have the same expenses. The bar chart does not reflect sales charges
that you may pay upon purchase or redemption of Fund shares. If they were
included, the returns would be less than those shown.
19
<PAGE>
[OBJECT OMITTED]
During the periods shown, the highest quarterly return was 12.13% (for the
quarter ended December 31, 1997) and the lowest quarterly return was -7.56% (for
the quarter ended March 31, 1994). THE FUND'S PAST PERFORMANCE DOES NOT
NECESSARILY INDICATE HOW THE FUND WILL PERFORM IN THE FUTURE.
The following table shows how the average annual total returns for Class A
shares and Class B shares compare to those of the Standard & Poor's 500
Composite Stock Price Index ("S&P 500 Index") and the Standard and Poor's
Utilities Index ("S&P Utilities Index"). This table assumes that the maximum
sales charge or CDSC was paid. The S&P 500 Index is an unmanaged index
consisting of the stocks of large-sized U.S. and foreign companies. The S&P
Utilities Index is a capitalization-weighted index of 41 stocks designed to
measure the performance of the utilities sector of the S&P 500 Index. The
indexes do not take into account fees and expenses that an investor would incur
in holding the securities in the indexes. If they did so, the returns would be
lower than those shown.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Inception Inception
Class A Shares Class B Shares
1 Year* 5 Years* (2/22/93) (1/12/95)
Class A Shares 8.47% 16.35% 10.95% N/A
Class B Shares 10.99% N/A N/A 16.90%
S&P 500 Index 21.04% 28.51% 21.96% 28.56%
S&P Utilities Index -8.89% 13.84% 8.67% 13.93%
</TABLE>
* The annual returns are based upon calendar years.
20
<PAGE>
What are the fees and expenses of the Utilities Income Fund?
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
Class A Class B
SHARES SHARES
------ ------
SHAREHOLDER FEES
(fees paid directly from your investment)
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price).......... 6.25% None
Maximum deferred sales charge (load)
(as a percentage of the lower of purchase
price or redemption price)................... None* 4%**
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
DISTRIBUTION TOTAL
AND SERVICE ANNUAL FUND
MANAGEMENT (12B-1) OTHER OPERATING
FEES FEES (1) EXPENSES EXPENSES
(2)
Class A Shares 0.75% 0.30% 0.32% 1.37%
Class B Shares 0.75% 1.00% 0.32% 2.07%
*A contingent deferred sales charge of 1.00% will be assessed on certain
redemptions of Class A shares that are purchased without a sales charge. **4% in
the first year; declining to 0% after the sixth year. Class B shares convert to
Class A shares after 8 years.
(1)Because the Fund pays Rule 12b-1 fees, long-term shareholders could pay more
than the economic equivalent of the maximum front-end sales charge permitted
by the National Association of Securities Dealers, Inc.
(2)The Fund has an expense offset arrangement that may reduce the Fund's
custodian fee based on the amount of cash maintained by the Fund with its
custodian. Any such fee reductions are not reflected under Total Annual Fund
Operating Expenses.
EXAMPLE
This example helps you to compare the costs of investing in the Fund with the
cost of investing in other mutual funds. The example assumes that (1) you invest
$10,000 in the Fund for the time periods indicated; (2) your investment has a 5%
return each year; and (3) the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, under these assumptions your
costs would be:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
If you redeem your shares:
Class A shares $756 $1,032 $1,328 $2,168
Class B shares $610 $ 949 $1,314 $2,221*
If you do not redeem your shares:
Class A shares $756 $1,032 $1,328 $2,168
Class B shares $210 $ 649 $1,114 $2,221*
*Assumes conversion to Class A shares eight years after purchase.
21
<PAGE>
THE FUND IN DETAIL
What are the Utilities Income Fund's objectives, principal investment
strategies, and risks?
OBJECTIVES: The Fund primarily seeks high current income and secondarily
long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES: The Fund invests at least 65% of its total
assets in stocks (including not only common stocks, but also preferred stocks)
and securities convertible into stocks of companies in the utilities industry.
These are securities of companies which are primarily engaged in owning or
operating facilities used to provide electricity, gas, water or
telecommunications (including telephone, telegraph and satellite, but not public
broadcasting or cable television). While the Fund primarily invests in U.S.
companies, it may invest in stocks of foreign utilities companies. The Fund's
investments in foreign utilities companies are generally limited to stocks that
are dollar-denominated and traded in the U.S.
While the Fund attempts to diversify across all utilities sectors, it may
emphasize a particular sector based on that sector's yield, price to earnings
ratio, economic trends, and the regulatory environment. The Fund uses a
"top-down" approach to selecting investments. This means that it first decides
on how much of its assets to allocate to each sector of the utilities market and
then identifies potential investments for each sector through fundamental
research and analysis.
In selecting securities, the Fund will consider a stock's dividend potential,
its price to earnings ratio, the company's management, the company's ratio of
international to domestic earnings, the company's future strategies, and
external factors such as demographics and mergers and acquisitions prospects.
The Fund typically sells a security when its issuer shows deteriorating
fundamentals, it falls short of the manager's expectations or there is a change
in economic trends. Information on the Fund's recent strategies and holdings can
be found in the most recent annual report (see back cover).
PRINCIPAL RISKS: Any investment carries with it some level of risk. An
investment offering greater potential rewards generally carries greater risks.
Here are the principal risks of owning the Utilities Income Fund:
MARKET RISK: Because this Fund invests in stocks, it is subject to stock market
risk. Stock prices in general may decline over short or even extended periods
not only because of company-specific developments, but also due to an economic
downturn, a change in interest rates, or a change in investor sentiment,
regardless of the success or failure of an individual company's operations.
Stock markets tend to run in cycles with periods when prices generally go up,
known as "bull" markets, and periods when stock prices generally go down,
referred to as "bear" markets. While utilities stocks have long been thought of
as being less volatile than other stocks, like all stocks they fluctuate in
value. As the utilities industry has begun to deregulate and earnings have
become less predictable, utilities stocks have begun to have price fluctuations
which are more like other stocks.
INDUSTRY CONCENTRATION RISK: Because the Fund concentrates its investments in
public utilities companies, the value of its shares will be especially affected
by events that are peculiar to or have a greater impact on the utilities
industry. Utilities companies, especially electric and gas and other
energy-related utilities companies, have historically been subject to the risk
of increases in fuel and other operating costs, changes in national or regional
weather patterns, changes in interest rates, changes in applicable laws and
regulations, and costs and operating constraints associated with compliance with
environmental regulations. Utilities stocks therefore may decline in value even
if the overall market is doing well.
SECTOR CONCENTRATION RISK: Because the Fund may concentrate its portfolio in one
sector of the utilities industry, its share value could decline if one sector of
the utilities industry does poorly even if the industry does well as a whole.
22
<PAGE>
DEREGULATION/COMPETITION RISK: Regulatory changes in the United States have
increasingly allowed utilities companies to provide services and products
outside their traditional geographical areas and lines of business, creating
competitors and new areas of competition. As a result, certain utilities
companies earn more than their traditional, regulated rates of return, while
others are forced to defend their core business from competition and are less
profitable. Some utilities companies may not be able to recover the costs of
facilities built or acquired prior to the date of deregulation. This is known as
the "stranded assets" problem.
INTEREST RATE RISK: Utilities stocks tend to be more interest rate sensitive
than other stocks. As interest rates increase, utilities stocks tend to decline
in value.
FOREIGN ISSUERS RISK: Stock of foreign utilities companies carry additional
risks, including currency fluctuations, political instability, government
regulation, unfavorable political or legal developments, differences in
financial reporting standards, and less stringent regulation of foreign
securities markets.
23
<PAGE>
MID-CAP OPPORTUNITY FUND
OVERVIEW
OBJECTIVE: The Fund seeks long-term capital growth.
PRIMARY
INVESTMENT
STRATEGIES: The Fund primarily invests in common stocks of companies with
medium market capitalizations ("mid-cap stocks") which offer
the potential for substantial long-term growth. These
companies are generally more established than smaller
companies, yet are early enough in their development to be
still capable of increasing their revenues and earnings at a
strong rate. In selecting stocks, the Fund will look for
companies that have one or more of the following: a strong
balance sheet, experienced management; above-average earnings
growth potential; and stocks that are attractively priced.
Based upon the Fund's economic outlook for stocks, the Fund
may decide to invest a portion of its assets in stocks of
companies with small or large market capitalizations
("small-cap" and "large-cap"). While the Fund primarily
invests in U.S. companies, it may invest in stocks of foreign
companies.
PRIMARY
RISKS: While the potential long-term rewards of investing in mid-cap
stocks are substantial, there are also substantial risks.
Mid-cap companies carry more risk because they generally rely
on a smaller number of products or services, their earnings
tend to be less predictable, and their stocks tend to be less
liquid than those of large-cap companies. Mid-cap stocks tend
to experience sharper price fluctuations than stocks of
large-cap companies. These fluctuations can be substantial.
To the extent that the Fund decides to invest in small-cap
companies, the risk of price fluctuations is greater. Stocks
of foreign companies carry additional risks including currency
fluctuations, political instability, government regulation,
unfavorable political or legal developments, differences in
financial reporting standards, and less stringent regulation
of foreign securities markets. Accordingly, the value of your
investment in the Fund will go up and down, which means that
you could lose money.
AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT AND IS NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
Who should consider buying the Mid-Cap Opportunity Fund?
The Mid-Cap Opportunity Fund is most appropriately used to add
diversification to an investment portfolio. It may be appropriate
for you if you:
o Are seeking significant growth of capital,
o Are willing to accept higher than average market volatility,
and
o Have a long-term investment horizon and are able to ride
out market cycles.
How has the Mid-Cap Opportunity Fund performed?
The bar chart and table below show you how the Fund's performance has varied
from year to year and in comparison with a broad-based index. This information
gives you some indication of the risks of investing in the Fund.
The Fund has two classes of shares, Class A shares and Class B shares. The bar
chart shows changes in the performance of the Fund's Class A shares from year to
year over the life of the Fund. The performance of Class B shares differs from
24
<PAGE>
the performance of Class A shares shown in the bar chart only to the extent that
they do not have the same expenses. The bar chart does not reflect sales charges
that you may pay upon purchase or redemption of Fund shares. If they were
included, the returns would be less than those shown.
[OBJECT OMITTED]
During the periods shown, the highest quarterly return was 30.70% (for the
quarter ended December 31, 1998) and the lowest quarterly return was -20.16%
(for the quarter ended September 30, 1998). THE FUND'S PAST PERFORMANCE DOES NOT
NECESSARILY INDICATE HOW THE FUND WILL PERFORM IN THE FUTURE.
The following table shows how the average annual total returns for Class A
shares and Class B shares compare to those of the Standard & Poor's 400 Mid-Cap
Index ("S&P 400 Mid-Cap Index"). This table assumes that the maximum sales
charge or CDSC was paid. The S&P 400 Mid-Cap Index is an unmanaged index
generally representative of the U.S. market for medium cap stocks. The S&P 400
Mid-Cap Index does not take into account fees and expenses that an investor
would incur in holding the securities in the S&P 400 Mid-Cap Index. If it did
so, the returns would be lower than those shown.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Inception Inception
Class A Shares Class B Shares
1 Year* 5 Years* (8/24/92) (1/12/95)
Class A Shares 31.47% 20.15% 13.93% N/A
Class B Shares 35.36% N/A N/A 20.51%
S&P 400 Mid-Cap Index 14.70% 23.04% 18.68% 23.06%
*The annual returns are based upon calendar years.
</TABLE>
What are the fees and expenses of the Mid-Cap Opportunity Fund?
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
Class A Class B
SHARES SHARES
SHAREHOLDER FEES
(fees paid directly from your investment)
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price).......... 6.25% None
25
<PAGE>
Maximum deferred sales charge (load)
(as a percentage of the lower of purchase
price or redemption price)................... None* 4%**
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
DISTRIBUTION TOTAL FEE
AND SERVICE ANNUAL FUND WAIVER
MANAGEMENT (12B-1) OTHER OPERATING AND/OR NET
FEES FEES EXPENSES EXPENSES(4) EXPENSE EXPENSES(4)
(1) (2) (3) ASSUMPTION(1),
(3),(4)
Class A Shares 1.00% 0.30% 0.47% 1.77% 0.27% 1.50%
Class B Shares 1.00% 1.00% 0.47% 2.47% 0.27% 2.20%
</TABLE>
*A contingent deferred sales charge of 1.00% will be assessed on certain
redemptions of Class A shares that are purchased without a sales charge.
**4% in the first year; declining to 0% after the sixth year. Class B shares
convert to Class A shares after 8 years.
(1)For the fiscal year ended September 30, 1999, the adviser waived Management
Fees in excess of 0.75% for the Fund. The Adviser has contractually agreed
with the Fund to waive Management Fees in excess of 0.75% for the fiscal year
ending September 30, 2000.
(2)Because the Fund pays Rule 12b-1 fees, long-term shareholders could pay more
than the economic equivalent of the maximum front-end sales charge permitted
by the National Association of Securities Dealers, Inc.
(3)For the fiscal year ended September 30, 1999, the Adviser assumed for each
class of shares of the Fund certain Other Expenses that were in excess of
0.45%. The Adviser has contractually agreed with the Fund to assume Other
Expenses in excess of 0.45% for the fiscal year ending September 30, 2000.
(4)The Fund has an expense offset arrangement that may reduce the Fund's
custodian fee based on the amount of cash maintained by the Fund with its
custodian. The Fund's custodial credits equaled 0.02%. Any such fee
reductions are not reflected under Total Annual Fund Operating Expenses, but
are reflected under Fee Waiver and Net Expenses.
EXAMPLE
This example helps you to compare the costs of investing in the Fund with the
cost of investing in other mutual funds. The example assumes that (1) you invest
$10,000 in the Fund for the time periods indicated; (2) your investment has a 5%
return each year; and (3) the Fund's operating expenses remain the same, except
for year one, which is net of fees waived and/or expenses assumed. Although your
actual costs may be higher or lower, under these assumptions your costs would
be:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
If you redeem your shares:
Class A shares $768 $1,123 $1,501 $2,558
Class B shares $623 $1,044 $1,491 $2,613*
If you do not redeem your shares:
Class A shares $768 $1,123 $1,501 $2,558
Class B shares $223 $ 744 $1,291 $2,613*
*Assumes conversion to Class A shares eight years after purchase.
26
<PAGE>
THE FUND IN DETAIL
What are the Mid-Cap Opportunity Fund's objective, principal investment
strategies, and risks?
OBJECTIVE: The Fund seeks long-term capital growth.
PRINCIPAL INVESTMENT STRATEGIES: The Fund invests at least 65% of its total
assets in common stocks of mid-cap companies. The Fund defines mid-cap stocks as
those with market capitalizations which fall within the range of those of
companies in the S&P 400 Mid-Cap Index. (As of December 31, 1999, the market
capitalizations of companies in the S&P 400 Mid-Cap Index was between $165
million and $37.1 billion. The market capitalizations of companies in the S&P
400 Mid-Cap Index will change with market conditions.) Mid-cap companies are
generally more established than smaller capitalization companies, yet are early
enough in their development to be still capable of increasing their revenues and
earnings at a strong rate. The Fund also may invest a portion of its assets in
stocks of small-cap or large-cap companies. While the Fund primarily invests in
U.S. companies, it may invest in stocks of foreign companies. The Fund's
investments in foreign companies will generally be dollar-denominated and traded
in the U.S.
The Fund uses a "bottom-up" approach to selecting investments. The Fund uses
fundamental research to search for stocks of companies that have one of more of
the following: a strong balance sheet; experienced management; above-average
earnings growth potential; and stocks that are attractively priced. The Fund
attempts to stay broadly diversified, but it may emphasize certain industry
sectors based upon economic and market conditions. The Fund will usually sell a
stock when the reason for holding it is no longer valid, it shows deteriorating
fundamentals, or it falls short of the portfolio manager's expectations.
Information on the Fund's recent strategies and holdings can be found in the
most recent annual report (see back cover).
PRINCIPAL RISKS: Any investment carries with it some level of risk. An
investment offering greater potential rewards generally carries greater risks.
Here are the principal risks of owning the Mid-Cap Opportunity Fund:
MARKET RISK: Because the Fund invests in equity securities, it is subject to
stock market risk. Stock prices in general may decline over short or even
extended periods not only because of company-specific developments but also due
to an economic downturn, a change in interest rates, or a change in investor
sentiment, regardless of the success or failure of an individual company's
operations. Stock markets tend to run in cycles with periods when prices
generally go up, known as "bull" markets, and periods when stock prices
generally go down, referred to as "bear" markets.
The market risk associated with mid-cap and small-cap stocks is generally
greater than that associated with large-cap stocks because mid-cap and small-cap
stocks tend to experience sharper price fluctuations than large-cap stocks,
particularly during bear markets. Their earnings tend to be less predictable
than those of larger, more established companies. The prices of these stocks can
also be influenced by the anticipation of future products and services which, if
delayed, could cause the prices to drop.
LIQUIDITY RISK: The stocks in which the Fund primarily invests are less liquid
than those of larger, more well-established companies. Securities of companies
with small-to-medium market capitalization often are not as broadly traded as
those of companies with larger market capitalization and are often subject to
wider price fluctuations. As a result, at times it may be difficult for the Fund
to sell these securities at a reasonable price.
FOREIGN SECURITIES RISK: Foreign investments involve additional risks, including
currency fluctuations, political instability, government regulation, unfavorable
political or legal developments, differences in financial reporting standards,
and less stringent regulation of foreign securities markets.
27
<PAGE>
OTHER RISKS: While the Fund generally attempts to invest in mid-cap stocks with
market capitalizations which fall within the range of those of companies in the
S&P 400 Mid-Cap Index, it is not an index fund. The Fund may hold securities
other than those in the S&P 400 Mid-Cap Index, may hold fewer securities than
the index, and may have sector or industry allocations different from the index,
each of which could cause the Fund to underperform the index.
28
<PAGE>
SPECIAL SITUATIONS FUND
OVERVIEW
OBJECTIVE: The Fund seeks long-term growth of capital.
PRIMARY
INVESTMENT
STRATEGIES: The Fund primarily invests in common stocks of companies with
small market capitalizations ("small-cap stocks") which have the
potential for substantial long-term growth. The Fund looks for
companies that are in the early stages of their development, have
a new product or service, are in a position to benefit from some
change in the economy, have new management, or are experiencing
some other "special situation" which makes their stocks
undervalued. Because these companies tend to be smaller, their
growth potential is often greater. While the Fund primarily
invests in U.S. companies, it may invest in stocks of foreign
companies.
PRIMARY
RISKS: While the potential long-term rewards of investing in small-cap
stocks are substantial, there are also substantial risks.
Small-cap stocks carry more risk because they are often in the
early stages of development, dependent on a small number of
products or services, lack substantial financial resources, and
have less predictable earnings. Small-cap stocks also tend to be
less liquid, and experience sharper price fluctuations than
stocks of companies with large capitalizations. These
fluctuations can be substantial. Stocks of foreign companies
carry additional risks including currency fluctuations, political
instability, government regulation, unfavorable political or
legal developments, differences in financial reporting standards,
and less stringent regulation of foreign securities markets.
Accordingly, the value of your investment in the Fund will go up
and down, which means that you could lose money.
AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT AND IS NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
Who should consider buying the Special Situations Fund?
The Special Situations Fund is most appropriately used to add
diversification to an investment portfolio. It may be appropriate
for you if you:
o Are seeking significant growth of capital,
o Are willing to accept a high degree of market volatility, and
o Have a long-term investment horizon and are able to ride out
market cycles.
How has the Special Situations Fund performed?
The bar chart and table below show you how the Fund's performance has varied
from year to year and in comparison with a broad-based index. This information
gives you some indication of the risks of investing in the Fund.
The Fund has two classes of shares, Class A shares and Class B shares. The bar
chart shows changes in the performance of the Fund's Class A shares from year to
year over the life of the Fund. The performance of Class B shares differs from
the performance of Class A shares shown in the bar chart only to the extent that
they do not have the same expenses. The bar chart does not reflect sales charges
that you may pay upon purchase or redemption of Fund shares. If they were
included, the returns would be less than those shown.
29
<PAGE>
[OBJECT OMITTED]
During the periods shown, the highest quarterly return was 26.30% (for the
quarter ended December 31, 1998) and the lowest quarterly return was -23.05%
(for the quarter ended September 30, 1998). THE FUND'S PAST PERFORMANCE DOES NOT
NECESSARILY INDICATE HOW THE FUND WILL PERFORM IN THE FUTURE.
The following table shows how the average annual total returns for Class A
shares and Class B shares compare to those of the Russell 2000 Index. This table
assumes that the maximum sales charge or CDSC was paid. The Russell 2000 Index
is an unmanaged index generally representative of the U.S. market for small-cap
stocks. The Russell 2000 Index does not take into account fees and expenses that
an investor would incur in holding the securities in the Russell 2000 Index. If
it did so, the returns would be lower than those shown.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Inception Inception
Class A Shares Class B Shares
1 Year* 5 Years* (9/18/90) (1/12/95)
------ ------- --------- ---------
Class A Shares 19.49% 14.26% 16.54% N/A
Class B Shares 22.52% N/A N/A 14.89%
Russell 2000 Index 21.35% 16.36% 15.85% 16.66%
</TABLE>
*The annual returns are based upon calendar years.
30
<PAGE>
What are the fees and expenses of the Special Situations Fund?
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
Class A Class B
SHARES SHARES
SHAREHOLDER FEES
(fees paid directly from your investment)
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price).......... 6.25% None
Maximum deferred sales charge (load)
(as a percentage of the lower of purchase
price or redemption price)................... None* 4%**
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
DISTRIBUTION TOTAL
AND SERVICE ANNUAL FUND
MANAGEMENT (12B-1) OTHER OPERATING FEE NET
FEES(1) FEES (2) EXPENSES EXPENSES(3) WAIVER(1) EXPENSES(3)
---------- ------------ -------- ------------ --------- -----------
Class A Shares...... 0.99% 0.30% 0.48% 1.77% 0.24% 1.53%
Class B Shares...... 0.99% 1.00% 0.48% 2.47% 0.24% 2.23%
</TABLE>
*A contingent deferred sales charge of 1.00% will be assessed on certain
redemptions of Class A shares that are purchased without a sales charge. **4% in
the first year; declining to 0% after the sixth year. Class B shares convert to
Class A shares after 8 years.
(1)For the fiscal year ended September 30, 1999, the Adviser waived Management
Fees in excess of 0.75% for the Fund. The Adviser has contractually agreed
with the Fund to waive Management Fees in excess of 0.75% for the fiscal year
ending September 30, 2000.
(2)Because the Fund pays Rule 12b-1 fees, long-term shareholders could pay more
than the economic equivalent of the maximum front-end sales charge permitted
by the National Association of Securities Dealers, Inc.
(3)The Fund has an expense offset arrangement that may reduce the Fund's
custodian fee based on the amount of cash maintained by the Fund with its
custodian. Any such fee reductions are not reflected under Total Annual Fund
Operating Expenses or Net Expenses.
EXAMPLE
This example helps you to compare the costs of investing in the Fund with the
cost of investing in other mutual funds. The example assumes that (1) you invest
$10,000 in the Fund for the time periods indicated; (2) your investment has a 5%
return each year; and (3) the Fund's operating expenses remain the same, except
for year one, which is net of fees waived. Although your actual costs may be
higher or lower, under these assumptions your costs would be:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
If you redeem your shares:
Class A shares $771 $1,125 $1,503 $2,560
Class B shares $626 $1,047 $1,494 $2,615*
If you do not redeem your shares:
Class A shares $771 $1,125 $1,503 $2,560
Class B shares $226 $ 747 $1,294 $2,615*
31
<PAGE>
*Assumes conversion to Class A shares eight years after purchase.
THE FUND IN DETAIL
What are the Special Situations Fund's objective, principal investment
strategies, and risks?
OBJECTIVE: The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENT STRATEGIES: The Fund invests at least 65% of its total
assets in common stocks of small-cap companies. The Fund defines small-cap
stocks as those with market capitalizations which fall within the range of those
of companies in the Standard and Poor's 600 Small-Cap Index ("S&P 600 Small-Cap
Index"). (As of December 31, 1999, the market capitalizations of companies in
the S&P 600 Small-Cap Index was between $28 million and $4.1 billion. The market
capitalizations of companies in the S&P 600 Small-Cap Index will change with
market conditions.) The Fund looks for companies that are in the early stages of
their development, have a new product or service, are in a position to benefit
from some change in the economy, have new management, or are experiencing some
other "special situation" which makes their stocks undervalued. Because these
companies tend to be smaller, their growth potential is often greater. While the
Fund primarily invests in U.S. companies, it may invest in stocks of foreign
companies. The Fund's investments in foreign companies are generally limited to
stocks that are dollar-denominated and traded in the U.S.
In selecting stocks, the Fund relies on fundamental research. It considers,
among other things, earnings growth potential, revenue growth potential, cash
flow and tangible book value. The Fund attempts to stay broadly diversified but
it may emphasize certain industry sectors based on economic and market
conditions. The Fund usually will sell a stock when it shows deteriorating
fundamentals or falls short of the portfolio manager's expectations. Information
on the Fund's recent strategies and holdings can be found in the most recent
annual report (see back cover).
PRINCIPAL RISKS: Any investment carries with it some level of risk. An
investment offering greater potential rewards generally carries greater risks.
Here are the principal risks of owning the Special Situations Fund:
MARKET RISK: Because this Fund invests in stocks, an investment in the Fund is
subject to stock market risk. Stock prices in general may decline over short or
even extended periods not only because of company-specific developments but also
due to an economic downturn, a change in interest rates, or a change in investor
sentiment, regardless of the success or failure of an individual company's
operations. Stock markets tend to run in cycles with periods when prices
generally go up, known as "bull" markets and periods when stock prices generally
go down, referred to as "bear" markets. The market risk associated with
small-cap stocks is greater than that associated with larger-cap stocks because
small-cap stocks tend to experience sharper price fluctuations than larger-cap
stocks, particularly during bear markets.
Small-cap companies are generally dependent on a small number of products or
services, their earnings are less predictable, and their share prices more
volatile. These companies are also more likely to have limited markets or
financial resources, and may depend on a small, inexperienced management group.
LIQUIDITY RISK: Stocks of small-cap companies often are not as broadly traded as
those of larger-cap companies and are often subject to wider price fluctuations.
As a result, at times it may be difficult for the Fund to sell these securities
at a reasonable price.
FOREIGN ISSUERS RISK: Foreign investments involve additional risks, including
currency fluctuations, political instability, government regulation, unfavorable
political or legal developments, differences in financial reporting standards,
and less stringent regulation of foreign securities markets.
OTHER RISKS: While the Fund generally attempts to invest in small-cap stocks
with market capitalizations which fall within the range of those of companies in
32
<PAGE>
the S&P 600 Small-Cap Index, it is not an index fund. The Fund may hold
securities other than those in the S&P 600 Small-Cap Index, may hold fewer
securities than the index, and may have sector or industry allocations different
from the index, each of which could cause the Fund to underperform the index.
33
<PAGE>
FOCUSED EQUITY FUND
OVERVIEW
OBJECTIVE: The Fund seeks capital appreciation.
PRIMARY
INVESTMENT
STRATEGIES: The Fund seeks to achieve its objective by focusing its investments
in the common stocks of approximately 20 to 30 U.S. companies.
Generally, not more than 12% of the Fund's total assets will be
invested in the securities of a single issuer. The Fund uses an
event-driven approach in selecting investments. In making investment
decisions, the Fund looks for companies that appear to be
undervalued because they are undergoing corporate or other events
that appear likely to result in significant growth in the companies'
valuations. The Fund seeks to identify companies with proven
management, superior cash flow and outstanding franchise values. The
Fund usually will sell a stock when it shows deteriorating
fundamentals, reaches its target value, constitutes 12% or more of
the total portfolio, or when the Fund identifies better investment
opportunities.
PRIMARY While there are substantial potential long-term rewards of investing
RISKS: in a concentrated portfolio of securities that are considered
undervalued, there are also substantial risks. First, the value of
the portfolio will fluctuate with movements in the overall
securities markets, general economic conditions, and changes in
interest rates or investor sentiment. Second, because the Fund is
non-diversified and concentrates its investments in the stocks of a
small number of issuers, the Fund's performance may be substantially
impacted by the change in value of a single holding. Third, there is
a risk that the event that led the Fund to make an investment may
occur later than anticipated or not at all. This may disappoint the
market and cause a decline in the value of the investment.
Accordingly, the value of your investment in the Fund will go up and
down, which means that you could lose money.
AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT AND IS NOT INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENT AGENCY.
Who should consider buying the Focused Equity Fund?
The Focused Equity Fund is most appropriately used to add
diversification to an investment portfolio. It may be appropriate
for you if you:
o Are seeking significant growth of capital,
o Understand and are willing to accept significant stock market
volatility,
o Are willing to take high risk on the money you invest in the
Fund, and
o Have a long-term investment horizon and are able to ride out
market cycles.
What about performance?
Because the Fund commenced operations on March 22, 1999, as of the date of this
prospectus it did not have a full year of performance information available. For
the performance of the Fund from March 22, 1999 to December 31, 1999, see the
Appendix on page 49 of this prospectus.
34
<PAGE>
What are the fees and expenses of the Focused Equity Fund?
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
CLASS A CLASS B
SHARES SHARES
SHAREHOLDER FEES
(fees paid directly from your investment)
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price)....... 6.25% None
Maximum deferred sales charge (load)
(as a percentage of the lower of purchase
price or redemption price)................ None* 4%**
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund
assets)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
DISTRIBUTION
AND SERVICE TOTAL
(12B-1) ANNUAL
FEES(1) FUND EXPENSE
MANAGEMENT AND SERVICE OTHER OPERATING ASSUMPTION NET
FEES FEES(1) EXPENSES(2) EXPENSES (2) EXPENSES
---- ------- ----------- -------- --- --------
Class A
Shares...... 0.75% 0.30% 0.85% 1.90% 0.15% 1.75%
Class B
Shares...... 0.75% 1.00% 0.85% 2.60% 0.15% 2.45%
</TABLE>
* A contingent deferred sales charge of 1.00% will be assessed on certain
redemptions of Class A shares that are purchased without a sales charge.
** 4% in the first year; declining to 0% after the sixth year. Class B shares
convert To Class A shares after 8 years.
(1)Because the Fund pays Rule 12b-1 fees, long-term shareholders could pay
more than the economic equivalent of the maximum front-end sales charge
permitted by the National Association of Securities Dealers, Inc.
(2)The Adviser has contractually agreed with the Fund to assume Other Expenses
in excess of .70% during the Fund's first fiscal year (ending September 30,
1999), provided that the Adviser may recover such assumed expenses within the
following three years as long as the total expenses of the Fund do not exceed
1.75% of the average daily net assets on Class A shares and 2.45% of the
average daily net assets on Class B shares or any lower expense limitation to
which the Adviser agrees. Other Expenses include organizational expenses.
EXAMPLE
This example helps you to compare the costs of investing in the Fund with the
cost of investing in other mutual funds. The example assumes that (1) you invest
$10,000 in the Fund for the time periods indicated; (2) your investment has a 5%
return each year; and (3) the Fund's operating expenses remain the same, except
for year one, which is net of expenses assumed. Although your actual costs may
be higher or lower, under these assumptions your costs would be:
35
<PAGE>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
If you redeem your shares:
Class A shares $792 $1,171 $1,574 $2,697
Class B Shares $648 $1,094 $1,567 $2,753*
If you do not redeem your
shares:
Class A shares $792 $1,171 $1,574 $2,697
Class B Shares $248 $ 794 $1,367 $2,753*
* Assumes conversion to Class A shares eight years after purchase.
THE FUND IN DETAIL
What are the Focused Equity Fund's objective, principal investment
strategies, and principal risks?
OBJECTIVE: The Fund seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES: The Fund seeks to achieve its objective by
focusing its investments in the common stocks of approximately 20 to 30 U.S.
companies. The Fund is a non-diversified investment company. The Fund will
usually concentrate 80% of its portfolio in its top 15 holdings. It will
frequently have more than 10% of its assets in the securities of a single
issuer. Although the Fund is not required to limit the amount of any investment
in the securities of any one issuer, it generally will not invest more than 12%
of its total assets in the securities of a single issuer. The Fund's strategy is
to remain relatively fully invested, but at times the Fund may have cash
positions of 10% or more if the Fund cannot identify qualified investment
opportunities or it has a negative or "bearish" view of the stock market.
However, under normal market conditions, at least 65% of the Fund's total assets
will be invested in equity securities (including not only common stocks, but
preferred stocks and securities convertible into common and preferred stocks).
The Fund uses an event-driven approach in selecting investments. The Fund looks
for companies that appear to be undervalued because they are undergoing some
corporate or other event that the Fund believes can result in significant growth
in the companies' valuations. Examples of these events include: announced
mergers, acquisitions and divestitures; financial restructurings; management
reorganizations; stock buy-back programs; or industry transformations that can
affect competitiveness. The Fund then identifies companies with proven
management teams which maintain significant financial interest in the companies,
superior cash flows in excess of internal growth requirements and outstanding
franchise values. The Fund generally invests with a time horizon of two-to-five
years and seeks investments which offer the potential of appreciating at least
50% within the first two years of the investment.
The Fund actively monitors the companies in its portfolio through regular
meetings and teleconference calls with senior management and personal visits.
The Fund also actively monitors the industries and competitors of the companies
within its portfolio and checks whether the original investment thesis still
holds true. The Fund usually will sell a stock when it shows deteriorating
fundamentals, reaches its target value, constitutes 12% or more of the total
portfolio, or when the Fund identifies better investment opportunities.
The Fund may purchase and sell futures contracts and options on futures
contracts for hedging purposes. The Fund anticipates engaging in such
transactions relatively infrequently and over relatively short periods of time.
Any hedging strategy that the Fund may decide to employ will generally be
effected by buying puts on the overall market or an index, such as puts on the
Standard & Poor's 500 Composite Stock Price Index.
PRINCIPAL RISKS: Any investment carries with it some level of risk. An
investment offering greater potential rewards generally carries greater risks.
Here are the principal risks of owning the Focused Equity Fund:
36
<PAGE>
MARKET RISK: Because the Fund primarily invests in stocks, it is subject to
market risk. Stock prices in general may decline over short or even extended
periods not only due to company specific developments but also due to an
economic downturn, a change in interest rates, or a change in investor
sentiment, regardless of the success or failure of an individual company's
operations. Stock markets tend to run in cycles with periods when prices
generally go up, known as "bull" markets, and periods when stock prices
generally go down, referred to as "bear" markets. Fluctuations in the prices of
stocks can be sudden and substantial. Accordingly, the value of your investment
in the Fund will go up and down, which means that you could lose money.
NON-DIVERSIFICATION RISK: The Fund is a non-diversified investment company and,
as such, its assets may be invested in a limited number of issuers. This means
that the Fund's performance may be substantially impacted by the change in value
of even a single holding. The price of a share of the Fund can therefore be
expected to fluctuate more than a comparable diversified fund. Moreover, the
Fund's share price may decline even when the overall market is increasing.
Accordingly, an investment in the Fund therefore may entail greater risks than
an investment in a diversified investment company.
EVENT-DRIVEN STYLE RISK: The event-driven investment approach used by the Fund
carries the additional risk that the event anticipated may occur later than
expected or not at all or may not have the desired effect on the market price of
the security.
FUTURES AND OPTIONS RISK: The Fund could suffer a loss if it fails to hedge its
portfolio prior to a market decline. Moreover, if the Fund engages in hedging
transactions using futures or options, the Fund could nevertheless suffer a loss
if the hedging is based upon an inaccurate prediction of movements in the
direction of the securities and interest rate markets or the hedging instrument
does not accurately reflect the Fund's portfolio. The Fund may experience
adverse consequences that leave it in a worse position than if such strategies
were not used. As a result, the Fund may not achieve its investment objective.
37
<PAGE>
GLOBAL FUND
OVERVIEW
OBJECTIVES: The Fund primarily seeks long-term capital growth and
secondarily a reasonable level of current income.
PRIMARY
INVESTMENT
STRATEGIES: The Fund invests in a diversified portfolio of common stocks
of companies which are located throughout the world. While the
Fund attempts to maintain broad country diversification, under
normal market conditions it must allocate assets to at least
three countries, including the United States. The Fund primarily
invests in large or medium capitalization stocks which are traded
in larger or more established markets throughout the world. The
Fund also invests opportunistically in smaller capitalization
stocks and stocks of smaller, less-developed or emerging markets.
The Fund generally does not attempt to hedge its foreign
securities investments against currency rate fluctuations.
PRIMARY
RISKS: All stocks fluctuate in price in response to movements in
the overall securities markets, general economic conditions, and
changes in interest rates or investor sentiment. The risks of
investing in a stock fund that invests in foreign stocks are
accentuated because investments in foreign stocks, particularly
emerging markets, can decline in value because of declines in the
values of local currencies, irrespective of how well the
companies that issue such stocks are doing; there is generally
less supervision and regulation of foreign securities markets;
foreign securities markets are generally less liquid than U.S.
markets; there may be less financial information available on
certain foreign companies; and there may be political instability
in some countries in which the Fund may invest. Fluctuations in
the prices of foreign stocks can be especially sudden and
substantial. Stocks with smaller market capitalizations tend to
experience sharper price fluctuations. Accordingly, the value of
your investment in the Fund will go up and down, which means that
you could lose money.
AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT AND IS NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
Who should consider buying the Global Fund?
The Global Fund is most appropriately used to add diversification
to an investment portfolio. It may be appropriate for you if you:
o Are seeking significant growth of capital,
o Want exposure not only to U.S. but also foreign securities,
o Are willing to accept a high degree of market volatility
and the additional risks of foreign investments, and
o Have a long-term investment horizon and are able to ride out
market cycles.
How has the Global Fund performed?
The bar chart and table below show you how the Fund's performance has varied
from year to year and in comparison with a broad-based index. This information
gives you some indication of the risks of investing in the Fund.
38
<PAGE>
The Fund has two classes of shares, Class A shares and Class B shares. The bar
chart shows changes in the performance of the Fund's Class A shares for each of
the last 10 calendar years. The performance of Class B shares differs from the
performance of Class A shares shown in the bar chart only to the extent that
they do not have the same expenses. The bar chart does not reflect sales charges
that you may pay upon purchase or redemption of Fund shares. If they were
included, the returns would be less than those shown.
[OBJECT OMITTED]
During the periods shown, the highest quarterly return was 20.13% (for the
quarter ended December 31, 1999) and the lowest quarterly return was -21.79%
(for the quarter ended September 30, 1990). THE FUND'S PAST PERFORMANCE DOES NOT
NECESSARILY INDICATE HOW THE FUND WILL PERFORM IN THE FUTURE.
The following table shows how the average annual total returns for Class A
shares and Class B shares compare to those of the Morgan Stanley All Country
World Free Index ("All Country Index"). This table assumes that the maximum
sales charge or CDSC was paid. The All Country Index is designed to measure the
performance of stock markets in the United States, Europe, Canada, Australia,
New Zealand and the developed and emerging markets of Eastern Europe, Latin
America, Asia and the Far East. The index consists of approximately 60% of the
aggregate market value of the covered stock exchanges and is calculated to
exclude companies and share classes which cannot be freely purchased by
foreigners. The All Country Index does not take into account fees and expenses
that an investor would incur in holding the securities in the index. If it did
so, the returns would be lower than those shown.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Inception
Class B Shares
1 Year* 5 Years* 10 Years* (1/12/95)
Class A Shares 23.48% 15.98% 9.25% N/A
Class B Shares 26.92% N/A N/A 16.89%
All Country Index 26.82% 19.18% 11.70% 19.18%**
</TABLE>
*The annual returns are based upon calendar years.
**The average annual total return shown is for the period 1/1/95 to 12/31/99.
39
<PAGE>
What are the fees and expenses of the Global Fund?
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
Class A Class B
SHARES SHARES
SHAREHOLDER FEES
(fees paid directly from your investment)
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price).......... 6.25% None
Maximum deferred sales charge (load)
(as a percentage of the lower of purchase
price or redemption price)................... None* 4%**
(ANNUAL FUND OPERATING EXPENSES
expenses that are deducted from Fund assets)
DISTRIBUTION TOTAL
AND SERVICE ANNUAL FUND
MANAGEMENT (12B-1) OTHER OPERATING
FEES FEES (1) EXPENSES EXPENSES
Class A Shares....... 0.99% 0.30% 0.43% 1.72%
Class B Shares....... 0.99% 1.00% 0.43% 2.42%
*A contingent deferred sales charge of 1.00% will be assessed on certain
redemptions of Class A shares that are purchased without a sales charge.
**4% in the first year; declining to 0% after the sixth year. Class B shares
convert to Class A shares after 8 years.
(1) Because the Fund pays Rule 12b-1 fees, long-term shareholders could
pay more than the economic equivalent of the
maximum front-end sales charge permitted by the National Association of
Securities Dealers, Inc.
EXAMPLE
This example helps you to compare the costs of investing in the Fund with the
cost of investing in other mutual funds. The example assumes that (1) you invest
$10,000 in the Fund for the time periods indicated; (2) your investment has a 5%
return each year; and (3) the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, under these assumptions your
costs would be:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
If you redeem your shares:
Class A shares $789 $1,133 $1,500 $2,528
Class B shares $645 $1,055 $1,491 $2,583*
If you do not redeem your shares:
Class A shares $789 $1,133 $1,500 $2,528
Class B shares $245 $ 755 $1,291 $2,583*
*Assumes conversion to Class A shares eight years after purchase.
THE FUND IN DETAIL
What are the Global Fund's objectives, principal investment strategies, and
risks?
OBJECTIVES: The Global Fund primarily seeks long-term capital growth
and secondarily a reasonable level of current income.
40
<PAGE>
PRINCIPAL INVESTMENT STRATEGIES: The Fund invests in a diversified portfolio of
common stocks of companies which are located throughout the world. While the
Fund attempts to maintain broad country diversification, under normal market
conditions it must allocate assets to at least three countries, including the
United States.
The Fund primarily invests in stocks of companies which are considered large to
medium in size (measured by market capitalization). The Fund may also invest in
smaller companies when management views them as attractive alternatives to the
stocks of larger or more established companies.
The Fund primarily invests in stocks which trade in larger or more established
markets, but also may invest (to a lesser degree) in smaller, less-developed or
emerging markets where management believes there is significant opportunity for
growth of capital. The definition of "emerging markets" may change over time as
a result of developments in national or regional economies and capital markets.
The foreign stocks that the Fund purchases are typically denominated in foreign
currencies. The Fund generally does not hedge against fluctuations in the value
of foreign currencies.
The Fund uses fundamental research and analysis to identify prospective
investments. Security selection is based on any one or more of the following
characteristics: accelerating earnings growth or the possibility of positive
earnings surprises; strong possibility of price to earnings multiple expansion
(or increases in other similar valuation measures); hidden or unappreciated
value; or improving local market and/or industry outlook.
Once the purchase candidates for the Fund are identified, the portfolio
construction process begins. In this phase, many factors are considered in
creating a total portfolio of securities for the Fund, including: (1) regional
and country allocation, (2) currency exposure, (3) industry and sector
allocation, and (4) exposure to a number of other factors such as interest rates
or company size. The total risk of the Fund is monitored at this point in the
portfolio construction process.
Every company in the portfolio is monitored to ensure its fundamental
attractiveness. A stock may be sold if in the portfolio manager's opinion its
downside risk equals or exceeds its upside potential; it suffers from a
decreasing trend of earnings growth or suffers an earnings disappointment; it
experiences excessive valuations; or there is a deteriorating local market
and/or industry outlook.
Information on the Fund's recent strategies and holdings can be found in the
most recent annual report (see back cover).
PRINCIPAL RISKS: Any investment carries with it some level of risk. An
investment offering greater potential rewards generally carries greater risks.
Here are the principal risks of owning the Global Fund:
MARKET RISK: Because the Fund primarily invests in common stocks, it is subject
to market risk. Stock prices in general may decline over short or even extended
periods not only because of company-specific developments but also due to an
economic downturn, a change in interest rates, or a change in investor
sentiment, regardless of the success or failure of an individual company's
operations. Stock markets tend to run in cycles with periods when prices
generally go up, known as "bull" markets, and periods when stock prices
generally go down, referred to as "bear" markets.
While the Fund's strategy of being globally diversified may help to reduce the
volatility or variability of the Fund's returns relative to another fund which
invests in fewer stocks or whose investments are focused in fewer countries or
industry sectors, this strategy may not prevent a loss if stock markets
worldwide were to decline at the same time. Fluctuations of prices of stocks can
be sudden and substantial. Accordingly, the value of your investment in the Fund
will go up and down, which means that you could lose money.
41
<PAGE>
FOREIGN SECURITIES RISK: There are special risk factors associated with
investing in foreign securities. Some of these factors are also present when
investing in the United States but are heightened issues when investing in
non-U.S. markets, especially emerging markets. For example, such risks and
considerations may include political and economic instability, differing
accounting and financial reporting standards or inability to obtain reliable
financial information regarding a company's balance sheet and operations. Risks
such as these are common to all investments but are exacerbated when investing
in international markets. In addition, international investors may experience
higher commission rates on foreign portfolio transactions, potentially adverse
changes in tax and exchange control regulations, the potential for restrictions
on the flow of international capital and the transition to the euro for European
Monetary Union countries. Many foreign countries impose withholding taxes on
income from investments in such countries, which the Fund may not recover. Also,
fluctuations in the exchange rates between the U.S. dollar and foreign
currencies may have a negative impact on investments denominated in foreign
currencies, for example, by eroding or reversing gains or widening losses from
those investments.
LIQUIDITY RISK: The Fund is also susceptible to the risk that certain securities
may be difficult or impossible to sell at the time and the price that the Fund
would like. As a result, the Fund may have to lower the price on certain
securities that it is trying to sell, sell other securities instead, or forego
an investment opportunity, any of which could have a negative effect on fund
management or performance. This risk is common to most stock mutual funds, but
is particularly acute in the case of foreign investments.
SMALL-CAP AND MID-CAP RISK: The market risk associated with small-to mid-cap
stocks is greater than that associated with larger-cap stocks because small-to
mid-cap stocks tend to experience sharper price fluctuations than larger-cap
stocks, particularly during bear markets. Small-to mid-cap companies are
generally dependent on a smaller number of products or services, their earnings
are less predictable, and their share prices more volatile. These companies are
also more likely to have limited markets or financial resources, or to depend on
a small, inexperienced management group.
42
<PAGE>
FUND MANAGEMENT
First Investors Management Company, Inc. ("FIMCO") is the investment adviser to
the Fund. Its address is 95 Wall Street, New York, NY 10005. It currently serves
as investment adviser to 52 mutual funds or series of funds with total net
assets of over $5 billion. FIMCO supervises all aspects of each Fund's
operations and determines each Fund's portfolio transactions, except for the
Focused Equity Fund and the Global Fund. For the fiscal year ended September 30,
1999, FIMCO received advisory fees as follows: 0.75% of average daily net
assets, net of waiver, for Total Return Fund, Blue Chip Fund, Mid-Cap
Opportunity Fund, and Special Situations Fund; 0.75% of average daily net assets
for Utilities Income Fund and Focused Equity Fund; 0.74% of average daily net
assets for Growth & Income Fund; and 0.99% of average daily net assets for
Global Fund.
The Total Return Fund is managed by a team of portfolio managers.
Dennis T. Fitzpatrick serves as Co-Portfolio Manager of the Growth & Income Fund
and the Blue Chip Fund. Mr. Fitzpatrick has been a member of FIMCO's investment
management team since October 1995. During 1995, Mr. Fitzpatrick was a Regional
Surety Manager at United States Fidelity & Guaranty Co. From 1988 to 1995, he
was Northeast Surety Manager at American International Group.
Andrew Wedeck serves as Co-Portfolio Manager of the Growth & Income Fund and the
Blue Chip Fund. From April 1999 to November 1999, Mr. Wedeck was a Research
Analyst at Cramer Rosenthal McGlynn. From April 1998 to March 1999, Mr. Wedeck
was a personal money management consultant for family members. From 1995 to
March 1998, Mr. Wedeck was an Equity Analyst at Stechler & Company.
Matthew S. Wright serves as Portfolio Manager of the Utilities Income Fund. Mr.
Wright is also the Portfolio Manager for the Utilities Income Fund of First
Investors Life Series Fund. Mr. Wright joined FIMCO in February 1996 as an
Equity Analyst. From May 1995 to January 1996, Mr. Wright was an Analyst at Fuji
Bank. From June 1994 to April 1995, he was Market Editor of BLOOMBERG MAGAZINE
and from September 1991 to June 1994, he was Editor/Reporter for BLOOMBERG
BUSINESS NEWS.
Patricia D. Poitra serves as Portfolio Manager of the Mid-Cap Opportunity Fund
and Co-Portfolio Manager of the Special Situations Fund. Ms. Poitra has been
Director of Equities at FIMCO since October 1994.
David A. Hanover is Co-Portfolio Manager of the Special Situations Fund. From
1997 to August 1998, Mr. Hanover was a Portfolio Manager and Analyst at Heritage
Investors Management Corporation. From 1994 to 1996, Mr. Hanover was
Co-Portfolio Manager and Analyst at Psagot Mutual Funds and in 1993 he was an
International Equity Investments Summer Associate at Howard Hughes Medical
Institute.
FIMCO and the Global Fund have retained Wellington Management Company, LLP
("WMC") as the Global Fund's investment subadviser. WMC has discretionary
trading authority over all of the Global Fund's assets, subject to continuing
oversight and supervision by FIMCO and the Board of Directors. WMC is located at
75 State Street, Boston, MA 02109. WMC is a professional investment counseling
firm which provides investment services to investment companies, employee
benefit plans, endowment funds, foundations and other institutions and
individuals. As of December 31, 1999, WMC held investment management authority
with respect to $241 billion of assets. Of that amount, WMC acted as investment
adviser or subadviser to approximately 60 registered investment companies or
series of such companies, with net assets of approximately $170 billion. The
Global Fund is managed by Trond Skramstad, Senior Vice President of WMC and
Chairman of the firm's Global Equity Strategy Group. Mr. Skramstad joined WMC in
1993.
FIMCO and the Focused Equity Fund have retained Arnhold and S. Bleichroeder,
Inc. ("ASB") as the Fund's investment subadviser. ASB has discretionary trading
authority over all of the Focused Equity Fund's assets, subject to continuing
43
<PAGE>
oversight and supervision by FIMCO and the Board of Directors. ASB is located at
1345 Avenue of the Americas, New York, NY 10105. ASB and its affiliates
currently provide investment advisory services to investment companies,
institutions and private clients. As of December 31, 1999, ASB and its
affiliates held investment management authority with respect to approximately $7
billion of domestic and international assets. The Focused Equity Fund is managed
by Colin G. Morris, Senior Vice President of ASB, who has been responsible for
the management of various ASB clients since January 1993. Prior to joining ASB
in 1992, Mr. Morris was a partner at Mabon Securities, with responsibility over
arbitrage investments from 1988 to 1992.
BUYING AND SELLING SHARES
How and when do the Funds price their shares?
The share price (which is called "net asset value" or "NAV" per share) for each
Fund is calculated once each day as of 4 p.m., Eastern Time ("E.T."), on each
day the New York Stock Exchange ("NYSE") is open for regular trading. The NYSE
is closed on most national holidays and Good Friday. In the event that the NYSE
closes early, the share price will be determined as of the time of the closing.
To calculate the NAV, each Fund's assets are valued and totaled, liabilities are
subtracted, and the balance, called net assets, is divided by the number of
shares outstanding. The prices or NAVs of Class A shares and Class B shares will
generally differ because they have different expenses.
In valuing its assets, each Fund uses the market value of securities for which
market quotations or last sale prices are readily available. If there are no
readily available quotations or last sale prices for an investment or the
available quotations are considered to be unreliable, the securities will be
valued at their fair value as determined in good faith pursuant to procedures
adopted by the Board of Directors of the Funds.
How do I buy shares?
You may buy shares of each Fund through a First Investors registered
representative or through a registered representative of an authorized
broker-dealer ("Representative"). Your Representative will help you complete and
submit an application. Your initial investment must be at least $1,000. However,
we have lower initial investment requirements and offer automatic investment
plans that allow you to open a Fund account with as little as $50. Subsequent
investments may be made in any amount. You can also arrange to make systematic
investments electronically from your bank account or through payroll deduction.
All the various ways you can buy shares are explained in the Shareholder Manual.
For further information on the procedures for buying shares, please contact your
Representative or call Shareholder Services at 1-800-423-4026.
If we receive your application or order in our Woodbridge, N.J. offices in
correct form, as described in the Shareholder Manual, prior to the close of
regular trading on the NYSE, your transaction will be priced at that day's NAV.
If you place your order with your Representative prior to the close of regular
trading on the NYSE, your transaction will also be priced at that day's NAV
provided that your Representative transmits the order to our Woodbridge, N.J.
offices by 5 p.m., E.T. Orders placed after the close of regular trading on the
NYSE will be priced at the next business day's NAV. The procedures for
processing transactions are explained in more detail in our Shareholder Manual
which is available upon request.
Each Fund reserves the right to refuse any order to buy shares if the Fund
determines that doing so would be in the best interests of the Fund and its
shareholders.
Which class of shares is best for me?
Each Fund has two classes of shares, Class A and Class B. While each class
invests in the same portfolio of securities, the classes have separate sales
44
<PAGE>
charge and expense structures. Because of the different expense structures, each
class of shares generally will have different NAVs and dividends.
The principal advantages of Class A shares are the lower overall expenses, the
availability of quantity discounts on volume purchases and certain account
privileges that are available only on Class A shares. The principal advantage of
Class B shares is that all of your money is invested from the outset.
Class A shares of a Fund are sold at the public offering price which includes a
front-end sales load. The sales charge declines with the size of your purchase,
as illustrated below.
Class A Shares
Your investment SALES CHARGE AS A PERCENTAGE OF
offering price net amount invested
Less than $25,000 6.25% 6.67%
$25,000-$49,999 5.75 6.10
$50,000-$99,999 5.50 5.82
$100,000-$249,999 4.50 4.71
$250,000-$499,999 3.50 3.63
$500,000-$999,999 2.50 2.56
$1,000,000 or more 0* 0*
*If you invest $1,000,000 or more in Class A shares, you will not pay a
front-end sales charge. However, if you make such an investment and then sell
your shares within 24 months of purchase, you will pay a CDSC of 1.00%.
Class B shares are sold at net asset value, without any initial sales charge.
However, you may pay a CDSC when you sell your shares. The CDSC declines the
longer you hold your shares, as illustrated below. Class B shares convert to
Class A shares after eight years.
Class B Shares
<TABLE>
<CAPTION>
<S> <C> <C>
CDSC as a Percentage of Purchase Price
YEAR OF REDEMPTION OR NAV AT REDEMPTION
------------------ --------------------
Within the 1st or 2nd year...... 4%
Within the 3rd or 4th year...... 3
In the 5th year................. 2
In the 6th year................. 1
Within the 7th year and 8th year 0
</TABLE>
There is no CDSC on Class B shares which are acquired through reinvestment of
dividends or distributions. The CDSC is imposed on the lower of the original
purchase price or the net asset value of the shares being sold. For purposes of
determining the CDSC, all purchases made during a calendar month are counted as
having been made on the first day of that month at the average cost of all
purchases made during that month.
To keep your CDSC as low as possible, each time you place a request to sell
shares, we will first sell any shares in your account that carry no CDSC. If
there is an insufficient number of these shares to meet your request in full, we
will then sell those shares that have the lowest CDSC.
Sales charges and CDSCs may be reduced or waived under certain circumstances and
for certain groups. Consult your Representative or call us directly at
1-800-423-4026 for details.
Each Fund has adopted a plan pursuant to Rule 12b-1 that allows the Fund to pay
distribution fees for the sale and distribution of its shares. Each class of
45
<PAGE>
shares pays Rule 12b-1 fees for the marketing of fund shares and for services
provided to shareholders. The plans provide for payments at annual rates (based
on average daily net assets) of up to 0.30% on Class A shares and 1.00% on Class
B shares. No more than 0.25% of these payments may be for service fees. These
fees are paid monthly in arrears. Because these fees are paid out of a Fund's
assets on an ongoing basis, the higher fees for Class B shares will increase the
cost of your investment and over time may cost you more than paying the initial
sales charge for Class A shares.
FOR ACTUAL PAST EXPENSES OF CLASS A AND CLASS B SHARES OF A FUND, SEE THE
APPROPRIATE SECTION IN THIS PROSPECTUS ENTITLED "WHAT ARE THE FEES AND EXPENSES
OF THE FUND?"
Because of the lower overall expenses on Class A shares, we recommend Class A
shares for purchases in excess of $250,000. If you are investing in excess of
$1,000,000, we will only sell Class A shares to you. For purchases below
$250,000, the class that is best for you generally depends upon the amount you
invest, your time horizon, and your preference for paying the sales charge
initially or over time. If you fail to tell us what Class of shares you want, we
will purchase Class A shares for you.
How do I sell shares?
You may redeem your Fund shares on any day the Fund is open for business by:
o Contacting your Representative who will place a redemption order for you;
o Sending a written redemption request to Administrative Data Management
Corp., ("ADM") at 581 Main Street, Woodbridge, N.J. 07095-1198;
o Telephoning the Special Services Department of ADM at 1-800-342-6221
(telephone redemptions are not available on retirement and certain other
types of accounts); or
o Instructing us to make an electronic transfer to a predesignated bank (if
you have completed an application authorizing such transfers).
Your redemption request will be processed at the price next computed after we
receive the request, in good order, as described in the Shareholder Manual. For
all requests, have your account number available.
Payment of redemption proceeds generally will be made within 7 days. If you are
redeeming shares which you recently purchased by check, payment may be delayed
to verify that your check has cleared. This may take up to 15 days from the date
of your purchase. You may not redeem shares by telephone or Electronic Fund
Transfer unless you have owned the shares for at least 15 days.
If your account fails to meet the minimum account balance as a result of a
redemption, or for any reason other than market fluctuation, each Fund reserves
the right to redeem your account without your consent or to impose a low balance
account fee of $15 annually on 60 days prior notice. Each Fund may also redeem
your account or impose a low balance account fee if you have established your
account under a systematic investment program and discontinue the program before
you meet the minimum account balance. You may avoid redemption or imposition of
a fee by purchasing additional Fund shares during this 60-day period to bring
your account balance to the required minimum. If you own Class B shares, you
will not be charged a CDSC on a low balance redemption.
Each Fund reserves the right to make in-kind redemptions. This means that it
could respond to a redemption request by distributing shares of the Fund's
underlying investments rather than distributing cash.
Can I exchange my shares for the shares of other First Investors Funds?
You may exchange shares of a Fund for shares of the same class of any other
46
<PAGE>
First Investors Fund without paying any additional sales charge. Consult your
Representative or call ADM at 1-800-423-4026 for details.
Each Fund reserves the right to reject any exchange request that appears to be
part of a market timing strategy based upon the holding period of the initial
investment, the amount of the investment being exchanged, the funds involved,
and the background of the shareholder or dealer involved. Each Fund is designed
for long-term investment purposes. It is not intended to provide a vehicle for
short-term market timing.
ACCOUNT POLICIES
What about dividends and capital gain distributions?
To the extent that it has net investment income, Total Return Fund, Growth &
Income Fund, Blue Chip Fund and Utilities Income Fund will declare and pay a
dividend from net investment income on a quarterly basis. To the extent that it
has net investment income, Mid-Cap Opportunity Fund, Special Situations Fund,
Focused Equity Fund and Global Fund will declare and pay a dividend from net
investment income on an annual basis. Any net realized capital gains will be
declared and distributed on an annual basis, usually after the end of each
Fund's fiscal year. Each Fund may make an additional distribution in any year if
necessary to avoid a Federal excise tax on certain undistributed income and
capital gain.
Dividends and other distributions paid on both classes of a Fund's shares are
calculated at the same time and in the same manner. Dividends on Class B shares
of a Fund are expected to be lower than those for its Class A shares because of
the higher distribution fees borne by the Class B shares. Dividends on each
class also might be affected differently by the allocation of other
class-specific expenses. In order to be eligible to receive a dividend or other
distribution, you must own Fund shares as of the close of business on the record
date of the distribution.
You may choose to reinvest all dividends and other distributions at NAV in
additional shares of the same class of a Fund or certain other First Investors
Funds, or receive all dividends and other distributions in cash. If you do not
select an option when you open your account, all dividends and other
distributions will be reinvested in additional shares of a Fund. If you do not
cash a distribution check and do not notify ADM to issue a new check within 12
months, the distribution may be reinvested in a Fund. If any correspondence sent
by a Fund is returned as "undeliverable," dividends and other distributions
automatically will be reinvested in a Fund. No interest will be paid to you
while a distribution remains uninvested.
A dividend or other distribution paid on a class of shares will be paid in
additional shares of the distributing class if the total amount of the
distribution is under $5 or a Fund has received notice of your death (until
written alternate payment instructions and other necessary documents are
provided by your legal representative).
What about taxes?
Any dividends or capital gain distributions paid by a Fund are taxable to you
unless you hold your shares in an individual retirement account ("IRA"), 403(b)
account, 401(k) account, or other tax-deferred account. Dividends (including
distributions of net short-term capital gains) are taxable to you as ordinary
income. Capital gain distributions (essentially, distributions of net long-term
capital gains) by a Fund are taxed to you as long-term capital gains, regardless
of how long you owned your Fund shares. You are taxed in the same manner whether
you receive your dividends and capital gain distributions in cash or reinvest
47
<PAGE>
them in additional Fund shares. Your sale or exchange of Fund shares will be
considered a taxable event for you. Depending on the purchase price and the sale
price of the shares you sell or exchange, you may have a gain or a loss on the
transaction. You are responsible for any tax liabilities generated by your
transactions.
How do I obtain a complete explanation of all account privileges and
policies?
The Funds offer a full range of special privileges, including special investment
programs for group retirement plans, systematic investment programs, automatic
payroll investment programs, telephone privileges, check writing privileges, and
expedited redemptions by wire order or Automated Clearing House transfer. The
full range of privileges, and related policies, are described in a special
Shareholder Manual, which you may obtain on request. For more information on the
full range of services available, please contact us directly at 1-800-423-4026.
48
<PAGE>
APPENDIX
--------
For the period March 22, 1999 to December 31, 1999, the Focused Equity Fund's
Class A and Class B shares returned 19.00% and 18.30%, respectively. The
performance of Class B shares differs from the performance of Class A shares
only to the extent that they do not have the same expenses. These figures do not
reflect sales charges that you may pay upon purchase or redemption of Fund
shares. If they were included, the returns would be less than those stated.
49
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand the
financial performance of each Fund for the past five years. Certain information
reflects financial results for a single Fund share. The total returns in the
tables represent the rates that an investor would have earned (or lost) on an
investment in each Fund (assuming reinvestment of all dividends and
distributions). The information has been audited by Tait, Weller & Baker, whose
report, along with the Funds' financial statements, are included in the SAI,
which is available upon request.
<TABLE>
<CAPTION>
TOTAL RETURN FUND
--------------------------------------------------------------------------------
PER SHARE DATA
--------------------------------------------------------------------------------
LESS DISTRIBUTIONS
INCOME FROM INVESTMENT OPERATIONS FROM
--------------------------------- ------------------
NET
REALIZED
NET AND
NET ASSET INVEST- UNREALIZED TOTAL FROM NET
VALUE MENT GAIN(LOSS) INVEST- INVEST- NET TOTAL
---------
BEGINNING INCOME ON MENT MENT REALIZED DISTRI-
OF PERIOD (LOSS) INVESTMENTS OPERATIONS INCOME GAINS BUTIONS
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
CLASS A
1994(h).............. $11.88 $.21 $(.62) $(.41) $.19 $.39 $.58
1995(h).............. 10.89 .39 2.50 2.89 .37 .44 .81
1996(h).............. 12.97 .39 .97 1.36 .41 1.12 1.53
1997(h).............. 12.80 .26 2.04 2.30 .28 1.08 1.36
1998(a).............. 13.74 .23 .43 .66 .13 -- .13
1999(f).............. 14.27 .29 1.26 1.55 .30 1.18 1.48
CLASS B
1995(b).............. $10.90 $ .25 $2.54 $2.79 $ .33 $ .44 $ .77
1996(h).............. 12.92 .32 .94 1.26 .34 1.12 1.46
1997(h).............. 12.72 .21 1.97 2.18 .19 1.08 1.27
1998(a).............. 13.63 .17 .41 .58 .08 -- .08
1999(f).............. 14.13 .21 1.22 1.43 .21 1.18 1.39
</TABLE>
+ Annualized
++ Net of expenses waived or assumed by the investment advisor.
* Calculated without sales charges.
** Prior to February 15, 1996, known as Made In The U.S.A. Fund, and prior to
December 31, 1997, known as U.S.A.Mid-Cap Opportunity Fund.
(a) For the period January 1, 1998 to September 30, 1998.
(b) For the period January 12, 1995 (date Class B shares first offered) to
December 31, 1995.
(c) For the period November 1, 1997 to September 30, 1998.
(d) For the fiscal year ended October 31.
(e) For the period January 12, 1995 (class B shares first offered) to October
31, 1995.
(f) For the period October 1, 1998 to September 30, 1999.
(g) For the period March 22, 1999 (commencement of operations) to September 30,
1999.
(h) For the calendar year ended December 31.
50
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
RATIOS / SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET
ASSETS BEFORE
RATIO TO AVERAGE EXPENSES WAIVED OR
NET ASSETS ++ ASSUMED
------------------- --------------------
NET ASSETS NET NET
NET ASSET END OF INVEST- INVEST-
VALUE TOTAL PERIOD MENT MENT PORTFOLIO
- ---------
END OF RETURN* (IN EXPENSES INCOME EXPENSES INCOME TURNOVER
PERIOD (%) MILLIONS) (%) (%) (%) (%) RATE (%)
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
$10.89 (3.45) $51 1.63 1.91 1.88 1.66 124
12.97 26.71 55 1.58 3.08 1.83 2.83 135
12.80 10.62 57 1.53 2.93 1.78 2.68 146
13.74 18.08 67 1.49 1.94 1.74 1.69 149
14.27 4.76 73 1.42+ 2.15+ 1.65+ 1.92+ 111
14.34 11.50 92 1.40 2.08 1.63 1.85 127
$12.92 25.74 $ .3 2.41+ 2.24+ 2.67+ 1.98+ 135
12.72 9.86 1 2.32 2.14 2.49 1.97 146
13.63 17.24 3 2.19 1.24 2.44 .99 149
14.13 4.25 4 2.12+ 1.45+ 2.35+ 1.22+ 111
14.17 10.72 9 2.10 1.38 2.33 1.15 127
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND
----------------------------------------------------------------------------------------------------
PER SHARE DATA
----------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
----------------------------------- --------------------
FROM
----
NET
REALIZED
AND TOTAL FROM NET NET TOTAL
NET ASSET NET UNREALIZED INVESTMENT INVESTMENT REALIZED DISTRIBU-
VALUE INVESTMENT GAIN (LOSS) OPERATIONS INCOME GAINS TIONS
BEGINNING INCOME ON
OF PERIOD (LOSS) INVESTMENTS
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
CLASS A
1994(d)....... $6.56 $.13 $.11 $.24 $.11 $-- $.11
1995(d)....... 6.69 .16 1.13 1.29 .17 -- .17
1996(d)....... 7.81 .10 1.60 1.70 .12 -- .12
1997(d)....... 9.39 .06 2.36 2.42 .06 .16 .22
1998(c)....... 11.59 .05 .97 1.02 .03 .27 .30
1999(f)....... 12.31 .04 2.88 2.92 .05 -- .05
CLASS B
1995(e)....... $6.43 $.08 $1.38 $1.46 $ .11 $-- $.11
1996(d)....... 7.78 .07 1.55 1.62 .07 -- .07
1997(d)....... 9.33 2.32 2.32 .01 .16 .17
1998(c)....... 11.48 (.01) .94 .93 -- .27 .27
1999(f)....... 12.14 (.04) 2.80 2.76 -- -- --
</TABLE>
+Annualized
++Net of expenses waived or assumed by the investment advisor.
*Calculated without sales charges.
**Prior to February 15, 1996, known as Made In The U.S.A. Fund, and prior to
December 31, 1997, known as U.S.A.Mid-Cap Opportunity Fund.
(a) For the period January 1, 1998 to September 30, 1998.
(b) For the period January 12, 1995 (date Class B shares first offered) to
December 31, 1995.
(c) For the period November 1, 1997 to September 30, 1998.
(d) For the fiscal year ended October 31.
(e) For the period January 12, 1995 (class B shares first offered) to October
31, 1995.
(f) For the period October 1, 1998 to September 30, 1999.
(g) For the period March 22, 1999 (commencement of operations) to September 30,
1999.
(h) For the calendar year ended December 31.
52
<PAGE>
<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
RATIO TO AVERAGE NET ASSET BEFORE EXPENSES
NET ASSETS++ WAIVED OR ASSUMED
-------------------- --------------------
NET ASSET
VALUE NET ASSETS
-------- END OF PERIOD NET NET PORTFOLIO
END TOTAL (IN INVESTMENT INVESTMENT TURNOVER
OF PERIOD RETURN* MILLIONS) EXPENSES INCOME EXPENSES INCOME RATE
(%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
$ 6.69 3.67 $ 34 .67 2.26 1.83 1.11 6
7.81 19.51 63 .98 2.34 1.59 1.74 19
9.39 21.82 112 1.31 1.20 1.49 1.02 25
11.59 26.20 194 1.39 .55 1.43 .51 28
12.31 8.84 258 1.39+ .47+ N/A N/A 36
15.18 23.75 378 1.36 .29 N/A N/A 112
$ 7.78 22.73 $ 4 1.90+ 2.23+ 2.61+ 1.52+ 19
9.33 20.92 12 2.03 .48 2.19 .31 25
11.48 25.23 27 2.09 (.15) 2.13 (.19) 28
12.14 8.19 43 2.09+ (.23)+ N/A N/A 36
14.90 22.77 77 2.06 (.41) N/A N/A 112
</TABLE>
53
<PAGE>
<TABLE>
<CAPTION>
BLUE CHIP FUND
----------------------------------------------------------------------------------------------------
PER SHARE DATA
----------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
--------------------------------- ------------------
NET REALIZED
NET AND
NET ASSET INVEST- UNREALIZED NET
VALUE MENT GAIN (LOSS) TOTAL FROM INVEST- NET TOTAL
BEGINNING INCOME ON INVESTMENT MENT REALIZED DISTRI-
OF PERIOD (LOSS) INVESTMENT OPERATIONS INCOME GAINS BUTIONS
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
CLASS A
1994(h)............... $15.58 $.11 $(.58) $(.47) $.09 $1.56 $1.65
1995(h)............... 13.46 .19 4.37 4.56 .20 .60 .80
1996(h)............... 17.22 .14 3.39 3.53 .17 1.11 1.28
1997(h)............... 19.47 .09 4.98 5.07 .08 1.62 1.70
1998(a)............... 22.84 .04 (.39) (.35) .03 -- .03
1999(f)............... 22.46 -- 5.46 5.46 .02 .75 .77
CLASS B
1995(b)............... $13.51 $ .10 $4.31 $4.41 $.16 $ .60 $ .76
1996(h)............... 17.16 .06 3.32 3.38 .06 1.11 1.17
1997(h)............... 19.37 (.03) 4.91 4.88 - 1.62 1.62
1998(a)............... 22.63 (.06) (.42) (.48) - -- --
1999(f)............... 22.15 (.14) 5.35 5.21 - .75 .75
</TABLE>
+Annualized
++Net of expenses waived or assumed by the investment advisor.
*Calculated without sales charges.
**Prior to February 15, 1996, known as Made In The U.S.A. Fund, and prior to
December 31, 1997, known as U.S.A.Mid-Cap Opportunity Fund.
(a) For the period January 1, 1998 to September 30, 1998.
(b) For the periodJanuary 12, 1995 (date Class B shares first offered) to
December 31, 1995.
(c) For the period November 1, 1997 to September 30, 1998.
(d) For the fiscal year ended October 31.
(e) For the period January 12, 1995 (class B shares first offered) to October
31, 1995.
(f) For the period October 1, 1998 to September 30, 1999.
(g) For the period March 22, 1999 (commencement of operations) to September 30,
1999.
(h) For the calendar year ended December 31.
54
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
RATIOS / SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------
RATIO TO AVERAGE
NET ASSETS
RATIO TO AVERAGE BEFORE EXPENSES
NET ASSETS++ WAIVED OR ASSUMED
---------------- ---------------------
NET
ASSETS NET NET
NET ASSET END OF INVEST- INVEST-
VALUE TOTAL PERIOD INCOME MENT PORTFOLIO
END OF RETURN* (IN EXPENSES MENT EXPENSES INCOME TURNOVER
PERIOD (%) MILLIONS) (%) (%) (%) (%) RATE (%
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
$13.46 (3.02) $124 1.54 .80 1.79 .55 82
17.22 34.01 170 1.49 1.23 1.74 .98 25
19.47 20.55 240 1.44 .78 1.67 .55 45
22.84 26.05 351 1.39 .40 1.64 .15 63
22.46 (1.55) 368 1.37+ .23+ 1.47+ .13+ 71
27.15 24.88 471 1.32 .01 1.41 (.08) 97
$17.16 32.76 $ 5 2.20+ .52+ 2.46+ .26+ 25
19.37 19.71 17 2.22 -- 2.37 (.16) 45
22.63 25.19 37 2.09 (.30) 2.34 (.55) 63
22.15 (2.12) 47 2.07+ (.47)+ 2.17+ (.57)+ 71
26.61 24.07 70 2.02 (.69) 2.11 (.78) 97
</TABLE>
55
<PAGE>
<TABLE>
<CAPTION>
UTILITIES INCOME FUND
------------------------------------------------------------------------
PER SHARE DATA
------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS FROM
--------------------------------- -----------------------
NET
NET ASSET REALIZED AND
VALUE NET UNREALIZED TOTAL
--------- INVESTMENT GAIN (LOSS) FROM NET NET
BEGINNING INCOME ON INVESTMENT INVESTMENT REALIZED TOTAL
OF PERIOD (LOSS) INVESTMENTS OPERATIONS INCOME GAIN. DISTRIBUTIONS
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
- -------
1994(d).............. $5.92 $.24 $(.84) $(.60) $.23 $.01 $.24
1995(d).............. 5.08 .23 .83 1.06 .24 -- .24
1996(d).............. 5.90 .21 .52 .73 .22 -- .22
1997(d).............. 6.41 .20 .61 .81 .19 -- .19
1998(c).............. 7.03 .14 .96 1.10 .14 .37 .51
1999(f).............. 7.62 .13 .74 .87 .13 .37 .50
CLASS B
- -------
1995(e).............. $4.95 $.14 $.93 $1.07 $.16 $-- .16
1996(d).............. 5.86 .18 .49 .67 .18 -- .18
1997(d).............. 6.35 .15 .61 .76 .15 -- .15
1998(c).............. 6.96 .10 .94 1.04 .10 .37 .47
1999(f).............. 7.53 .08 .72 .80 .08 .37 .45
+ Annualized
++ Net of expenses waived or assumed by the investment advisor.
* Calculated without sales charges.
** Prior to February 15, 1996, known as Made In The U.S.A. Fund, and prior to
December 31, 1997, known as U.S.A.Mid-Cap Opportunity Fund.
(a) For the period January 1, 1998 to September 30, 1998.
(b) For the period January 12, 1995 (date Class B shares first offered) to
December 31, 1995.
(c) For the period November 1, 1997 to September 30, 1998. (d) For the fiscal
year ended October 31.
(e) For the period January 12, 1995 (class B shares first offered) to October
31, 1995.
(f) For the period October 1, 1998 to September 30, 1999.
(g) For the period March 22, 1999 (commencement of operations) to September 30,
1999.
(h) For the calendar year ended December 31.
</TABLE>
56
<PAGE>
<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
RATIO TO AVERAGE NET ASSET BEFORE EXPENSES
ASSETS++ WAIVED OR ASSUMED
-------------------- ---------------------
NET ASSET
VALUE NET NET PORTFOLIO
- -------- TOTAL NET ASSETS INVESTMENT INVESTMENT TURNOVER
END RETURN* END OF PERIOD EXPENSES INCOME EXPENSES INCOME RATE
OF PERIOD (%) (IN MILLIONS) (%) (%) (%) (%) (%)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$5.08 (10.15) $ 63 .80 4.59 1.59 3.80 58
5.90 21.35 84 1.04 4.37 1.57 3.84 16
6.41 12.45 104 1.20 3.49 1.49 3.19 38
7.03 12.86 102 1.40 2.98 1.48 2.90 60
7.62 16.05 123 1.43+ 2.10+ N/A N/A 83
7.99 11.99 145 1.37 1.69 N/A N/A 65
$5.86 21.99 $ 3 1.82+ 4.93+ 2.53+ 4.21+ 16
6.35 11.61 8 1.91 2.77 2.28 2.40 38
6.96 12.08 9 2.10 2.28 2.18 2.20 60
7.53 15.38 14 2.13+ 1.40+ N/A N/A 83
7.88 11.13 21 2.07 .99 N/A N/A 65
</TABLE>
57
<PAGE>
<TABLE>
<CAPTION>
MID-CAP OPPORTUNITY FUND**
-----------------------------------------------------------------------------------------------------
PER SHARE DATA
-----------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS FROM
--------------------------------- -----------------------
NET
NET ASSET REALIZED AND
VALUE NET UNREALIZED TOTAL
--------- INVESTMENT GAIN (LOSS) FROM NET NET
BEGINNING INCOME ON INVESTMENT INVESTMENT REALIZED TOTAL
OF PERIOD (LOSS) INVESTMENTS OPERATIONS INCOME GAIN. DISTRIBUTIONS
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
- -------
1994(d)................ $12.15 $.08 $(.33) $(.25) $.12 $-- $.12
1995(d)................ 11.78 .08 2.80 2.88 .08 -- .08
1996(d)................ 14.58 .04 1.57 1.61 .06 .84 .90
1997(d)................ 15.29 (.03) 4.02 3.99 .04 .68 .72
1998(c)................ 18.56 (.03) (2.82) (2.85) -- 1.18 1.18
1999(f)................ 14.53 (.13) 6.62 6.49 -- -- --
CLASS B
- -------
1995(e)................ $12.03 $(.01) $2.49 $2.48 $-- $-- $
1996(d)................ 14.51 .01 1.47 1.48 .05 .84 .89
1997(d)................ 15.10 (.08) 3.89 3.81 -- .68 .68
1998(c)................ 18.23 (.12) (2.76) (2.88) -- 1.18 1.18
1999(f)................. 14.17 (.23) 6.41 6.18 -- --
</TABLE>
+ Annualized
++ Net of expenses waived or assumed by the investment advisor.
* Calculated without sales charges.
** Prior to February 15, 1996, known as Made In The U.S.A. Fund, and prior to
December 31, 1997, known as U.S.A.Mid-Cap Opportunity Fund.
(a) For the period January 1, 1998 to September 30, 1998.
(b) For the period January 12, 1995 (date Class B shares first offered) to
December 31, 1995.
(c) For the period November 1, 1997 to September 30, 1998. (d) For the fiscal
year ended October 31.
(e) For the period January 12, 1995 (class B shares first offered) to October
31, 1995.
(f) For the period October 1, 1998 to September 30, 1999.
(g) For the period March 22, 1999 (commencement of operations) to September 30,
1999.
(h) For the calendar year ended December 31.
58
<PAGE>
<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
RATIO TO AVERAGE NET ASSET BEFORE EXPENSES
ASSETS++ WAIVED OR ASSUMED
-------------------- ---------------------
NET ASSET
VALUE NET NET PORTFOLIO
- -------- TOTAL NET ASSETS INVESTMENT INVESTMENT TURNOVER
END RETURN* END OF PERIOD EXPENSES INCOME EXPENSES INCOME RATE
OF PERIOD (%) (IN MILLIONS) (%) (%) (%) (%) (%)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$11.78 (2.05) $ 8 .90 .45 2.32 (.97) 29
14.58 24.59 9 1.34 .48 2.36 (.55) 106
15.29 11.64 14 1.57 .36 2.15 (.21) 118
18.56 27.09 26 1.50 (.21) 1.94 (.65) 90
14.53 (16.42) 30 1.50+ (.25)+ 1.89+ (.64)+ 102
21.02 44.67 50 1.50 (.69) 1.77 (.96) 171
$14.51 20.62 $ .3 2.29+ (.03)+ 3.79+ (1.53)+ 106
15.10 10.80 1 2.30 (.37) 3.03 (1.10) 118
18.23 26.17 3 2.20 (.91) 2.64 (1.35) 90
14.17 (16.91) 4 2.20+ (.95)+ 2.59+ (1.34)+ 102
20.35 43.61 7 2.20 (1.39) 2.47 (1.66) 171
</TABLE>
59
<PAGE>
<TABLE>
<CAPTION>
SPECIAL SITUATIONS FUND
- -------------------------------------------------------------------------------------------------------------------
PER SHARE DATA
--------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
INCOME FROM INVESTMENT OPERATIONS FROM
--------------------------------- -------------------
NET
REALIZED
NET ASSET NET AND
VALUE INVEST- UNREALIZED TOTAL FROM NET
--------- MENT GAIN (LOSS) INVEST- INVEST- NET TOTAL
BEGINNING INCOME ON MENT MENT REALIZED DISTRI-
OF PERIOD (LOSS) INVESTMENTS OPERATIONS INCOME GAINS BUTIONS
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
- -------
1994(h)................... $18.00 $(.04) $(.62) $(.66) $ -- $.91 $.91
1995(h)................... 16.43 (.01) 3.94 3.93 -- .73 .73
1996(h)................... 19.63 (.01) 2.28 2.27 -- 1.17 1.17
1997(h)................... 20.73 (.09) 3.44 3.35 -- 1.90 1.90
1998(a)................... 22.18 (.05) (4.30) (4.35) -- -- --
1999(f)................... 17.83 (.22) 5.79 5.57 -- -- --
CLASS B
- -------
1995(b)................... $16.40 $(.01) $3.85 $3.84 $-- $ .73 $ .73
1996(h)................... 19.51 (.14) 2.25 2.11 -- 1.17 1.17
1997(h)................... 20.45 (.15) 3.29 3.14 -- 1.90 1.90
1998(a)................... 21.69 (.13) (4.22) (4.35) -- -- --
1999(f)................... 17.34 (.36) 5.64 5.28 -- -- --
</TABLE>
+ Annualized
++ Net of expenses waived or assumed by the investment advisor.
* Calculated without sales charges.
** Prior to February 15, 1996, known as Made In The U.S.A. Fund, and prior to
December 31, 1997, known as U.S.A.Mid-Cap Opportunity Fund.
(a) For the period January 1, 1998 to September 30, 1998.
(b) For the period January 12, 1995 (date Class B shares first offered) to
December 31, 1995.
(c) For the period November 1, 1997 to September 30, 1998.
(d) For the fiscal year ended October 31.
(e) For the period January 12, 1995 (class B shares first offered) to October
31, 1995.
(f) For the period October 1, 1998 to September 30, 1999.
(g) For the period March 22, 1999 (commencement of operations) to September 30,
1999.
(h) For the calendar year ended December 31.
60
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
RATIOS / SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------
RATIO TO AVERAGE NET
ASSET BEFORE
RATIO TO AVERAGE EXPENSES WAIVED OR
NET ASSETS++ ASSUMED
-------------------- ---------------------
NET ASSET NET NET
VALUE NET ASSETS INVEST- INVEST-
- -------- TOTAL END OF MENT MENT PORTFOLIO
END RETURN* PERIOD (IN EXPENSES INCOME EXPENSES INCOME TURNOVER
OF PERIOD (%) MILLIONS) (%) (%) (%) (%) RATE (%)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$16.43 (3.66) $ 90 1.65 (.26) 1.90 (.51) 53
19.63 23.92 125 1.60 (.08) 1.85 (.33) 80
20.73 11.56 158 1.59 (.13) 1.84 (.38) 99
22.18 16.15 194 1.53 (.45) 1.78 (.70) 84
17.83 (19.61) 160 1.53+ (.32)+ 1.75+ (.54)+ 70
23.40 31.24 186 1.53 (.97) 1.76 (1.20) 132
$19.51 23.42 $ 5 2.33+ (.81)+ 2.59+ (1.07)+ 80
20.45 10.81 10 2.38 (.92) 2.55 (1.09) 99
21.69 15.34 17 2.23 (1.15) 2.48 (1.40) 84
17.34 (20.06) 15 2.23+ (1.02)+ 2.45+ (1.24) 70
22.62 30.45 20 2.23 (1.67) 2.46 (1.90) 132
</TABLE>
61
<PAGE>
<TABLE>
<CAPTION>
FOCUSED EQUITY FUND
---------------------------------------------------------------------------------
PER SHARE DATA
---------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
--------------------------------- FROM
----
NET
REALIZED
NET ASSET AND
VALUE UNREALIZED
--------- NET GAIN (LOSS) TOTAL FROM NET NET TOTAL
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT REALIZED DISTRIBU
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS TIONS
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
- -------
1999(g) $10.00 $(.04) $.92 $.88 $-- $-- $--
CLASS B
- -------
1999(g) $10.00 $(.06) $.90 $.84 $-- $-- $--
</TABLE>
+ Annualized
++ Net of expenses waived or assumed by the investment advisor.
* Calculated without sales charges.
** Prior to February 15, 1996, known as Made In The U.S.A. Fund, and prior to
December 31, 1997, known as U.S.A.Mid-Cap Opportunity Fund.
(a) For the period January 1, 1998 to September 30, 1998.
(b) For the period January 12, 1995 (date Class B shares first offered) to
December 31, 1995.
(c) For the period November 1, 1997 to September 30, 1998. (d) For the fiscal
year ended October 31.
(e) For the period January 12, 1995 (class B shares first offered) to October
31, 1995.
(f) For the period October 1, 1998 to September 30, 1999.
(g) For the period March 22, 1999 (commencement of operations) to September 30,
1999.
(h) For the calendar year ended December 31.
62
<PAGE>
<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
RATIO TO AVERAGE NET ASSET BEFORE EXPENSES
ASSETS++ WAIVED OR ASSUMED
--------------------- ---------------------
NET ASSET NET NET
VALUE NET ASSETS INVEST- INVEST-
- -------- TOTAL END OF MENT MENT PORTFOLIO
END RETURN* PERIOD (IN EXPENSES INCOME EXPENSES INCOME TURNOVER
OF PERIOD (%) MILLIONS) (%) (%) (%) (%) RATE (%)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 10.88 8.80 $ 59 1.75+ (.93)+ 1.90+ (1.08)+ 57
$ 10.84 8.40 $ 14 2.45+ (1.63)+ 2.60+ (1.78)+ 57
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GLOBAL FUND
-----------------------------------------------------------------------------------
PER SHARE DATA
-----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
--------------------------------- FROM
----
NET
VALUE REALIZED
--------- NET AND TOTAL FROM NET NET
BEGINNING INVESTMENT UNREALIZED INVESTMENT INVESTMENT REALIZED TOTAL
OF PERIOD INCOME GAIN (LOSS) OPERATIONS INCOME GAINS DISTRIBU
(LOSS) ON TIONS
INVESTMENTS
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
- -------
1994(h)...... $6.27 $ .03 $ (.27) $ (.24) $ .03 $.16 $.19
1995(h)...... 5.84 .03 1.01 1.04 .04 .27 .31
1996(h)...... 6.57 .04 .91 .95 .04 .89 .93
1997(h)...... 6.59 .03 .50 .53 .03 .68 .71
1998(a)...... 6.41 .01 (.09) (.08) -- -- --
1999(f)...... 6.33 1.86 1.86 .08 .08 .08
CLASS B
- -------
1995(b)...... $5.76 $ .03 $ 1.05 $1.08 $ .03 $.27 $.30
1996(h)...... 6.54 (.01) .88 .87 .02 .88 .90
1997(h....... 6.51 (.01) .49 .48 -- .68 .68
1998(a)...... 6.31 (.03) (.09) (.12) -- -- --
1999(f)...... 6.19 (.04) 1.81 1.77 -- .08 .08
</TABLE>
+ Annualized
++ Net of expenses waived or assumed by the investment advisor.
* Calculated without sales charges.
** Prior to February 15, 1996, known as Made In The U.S.A. Fund, and prior to
December 31, 1997, known as U.S.A.Mid-Cap Opportunity Fund.
(a) For the period January 1, 1998 to September 30, 1998.
(b) For the period January 12, 1995 (date Class B shares first offered) to
December 31, 1995.
(c) For the period November 1, 1997 to September 30, 1998.
(d) For the fiscal year ended October 31.
(e) For the period January 12, 1995 (class B shares first offered) to October
31, 1995.
(f) For the period October 1, 1998 to September 30, 1999.
(g) For the period March 22, 1999 (commencement of operations) to September 30,
1999.
(h) For the calendar year ended December 31.
64
<PAGE>
<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
RATIO TO AVERAGE NET ASSET BEFORE EXPENSES
ASSETS++ WAIVED OR ASSUMED
--------------------- ---------------------
NET ASSET NET NET
VALUE NET ASSETS INVEST- INVEST-
- -------- TOTAL END OF MENT MENT PORTFOLIO
END RETURN* PERIOD (IN EXPENSES INCOME EXPENSES INCOME TURNOVER
OF PERIOD (%) MILLIONS) (%) (%) (%) (%) RATE (%)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$5.84 (3.78) 214 1.84 .45 N/A N/A 56
6.57 17.83 228 1.83 .55 N/A N/A 47
6.59 14.43 263 1.83 .50 N/A N/A 73
6.41 7.98 277 1.82 .41 N/A N/A 70
6.33 (1.25) 261 1.82+ .12+ N/A N/A 82
8.11 29.63 316 1.72 (.03) N/A N/A 92
6.54 18.80 1 2.56+ (.19)+ N/A N/A 47
6.51 13.33 5 2.54 (.21) N/A N/A 73
6.31 7.36 10 2.52 (.29) N/A N/A 70
6.19 (1.90) 12 2.52+ (.58) N/A N/A 82
7.88 28.78 18 2.42 (.73) N/A N/A 92
</TABLE>
<PAGE>
[FIRST INVESTORS LOGO]
TOTAL RETURN
GROWTH & INCOME
BLUE CHIP
UTILITIES INCOME
MID-CAP OPPORTUNITY
SPECIAL SITUATIONS
FOCUSED EQUITY
GLOBAL
For investors who want more information about the Funds, the following documents
are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS: Additional information about each Fund's investments
is available in the Funds' annual and semi-annual reports to shareholders. In
the Funds' annual report, you will find a discussion of the market conditions
and investment strategies that significantly affected each Fund's performance
during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Funds and is incorporated by reference into this
prospectus.
SHAREHOLDER MANUAL: The Shareholder Manual provides more detailed information
about the purchase, redemption and sale of the Funds' shares.
You can get free copies of reports, the SAI and the Shareholder Manual, request
other information and discuss your questions about the Funds by contacting the
Funds at:
Administrative Data Management Corp.
581 Main Street
Woodbridge, NJ 07095-1198
Telephone: 1-800-423-4026
You can review and copy Fund documents (including reports, Shareholder Manuals
and SAIs) at the Public Reference Room of the SEC in Washington, D.C. You can
also obtain copies of Fund documents after paying a duplicating fee (i) by
writing to the Public Reference Section of the SEC, Washington, D.C. 20549-0102
or (ii) by electronic Request at [email protected]. You can obtain information
on the operation of the Public Reference Room, including information about
duplicating fee charges, by calling (202) 942-8090. Text-only versions of Fund
documents can be viewed online or downloaded from the EDGAR database on the
SEC's Internet website at http://www.sec.gov.
(Investment Company Act File No:
First Investors Total Return Fund
811-5690, First Investors Growth &
Income Fund 811-6618, First
Investors Blue Chip Fund 811-5690,
First Investors Utilities Income
Fund 811-6618, First Investors
Mid-Cap Opportunity Fund 811-6618,
First Investors Special Situations
Fund 811-5690, First Investors
Focused Equity Fund 811-6618, First
Investors Global Fund 811-3169)