N-Q 1 dnq.htm FIRST FUNDS First Funds

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-10569

First Funds

(Exact name of registrant as specified in charter)

3435 Stelzer Road Columbus, Ohio 43219

(Address of principal executive offices) (Zip code)

Citi Fund Services Ohio, Inc. 3435 Stelzer Road Columbus, Ohio 43219

(Name and address of agent for service)

Registrant’s telephone number, including area code: (888) 494-8510

Date of fiscal year end: 4/30/10

Date of reporting period: 7/31/09

Form N-Q is to be used by management investment companies, other than small business investment companies registered on Form N-5 (§§ 239.24 and 274.5 of this chapter), to file reports with the Commission, not later than 60 days after the close of the first and third fiscal quarters, pursuant to rule 30b1-5 under the Investment Company Act of 1940 (17 CFR 270.30b1-5). The Commission may use the information provided on Form N-Q in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-Q, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-Q unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

 

 

 

Item 1. Schedule of Investments.

FIRST FUNDS

FIRST CALIBER EQUITY

SCHEDULE OF PORTFOLIO INVESTMENTS

JULY 31, 2009 (UNAUDITED)

 

SHARES

        

DESCRIPTION

    VALUE

Common Stocks (59.5%):

   

Aerospace/Defense (1.1%):

   
   13,921    Rockwell Collins, Inc.    $ 587,466
            

Consumer Discretionary (3.3%):

   
        21,072    McDonald’s Corp.      1,160,224
   9,493    NIKE, Inc. Class B      537,684
            
           1,697,908
            

Consumer Staples (8.6%):

   
   15,609    BJ’s Wholesale Club, Inc. (a)      520,560
   17,316    General Mills, Inc.      1,020,085
   18,757    PepsiCo, Inc.      1,064,460
   18,123    Procter & Gamble Co.      1,006,008
   17,458    Wal-Mart Stores, Inc.      870,805
            
           4,481,918
            

Diversified Manufacturing Operation (1.6%):

   
   11,597    3M Co.      817,820
            

E-Commerce/Services (0.8%):

   
   9,150    Netflix, Inc. (a)      402,051
            

Energy (7.5%):

   
   17,115    Chevron Corp.      1,188,979
   17,211    Exxon Mobil Corp.      1,211,482
   16,442    National Oilwell Varco, Inc. (a)      590,926
   22,586    Petroleo Brasileiro S.A. ADR      931,447
            
           3,922,834
            

Financial (2.3%):

   
   13,908    JPMorgan Chase & Co.      537,544
   11,382    Northern Trust Corp.      680,758
            
           1,218,302
            

Health Care (10.8%):

   
   17,394    Abbott Laboratories      782,556
   14,905    Baxter International, Inc.      840,195
   42,895    Bristol-Myers Squibb Co.      932,537
   11,972    Express Scripts, Inc. (a)      838,519
   27,724    Gilead Sciences, Inc. (a)      1,356,536
   15,902    Wellpoint Health Networks, Inc. (a)      837,081
            
           5,587,424
            

Industrials (2.2%):

   
   7,384    Flowserve Corp.      596,406
   14,557    Joy Global, Inc.      541,229
            
           1,137,635
            

Information Technology (13.8%):

   
   28,685    Accenture Ltd.      1,005,983
   11,492    Apple, Inc. (a)      1,877,678
   15,436    International Business Machines Corp.      1,820,368
   53,719    Oracle Corp.      1,188,801

See notes to schedules of portfolio investments.

FIRST FUNDS

FIRST CALIBER EQUITY

SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED

JULY 31, 2009 (UNAUDITED)

 

SHARES OR
CONTRACTS

        

DESCRIPTION

    VALUE

Common Stocks, Continued:

   

Information Technology, Continued:

   
   27,440    QUALCOMM, Inc.    $ 1,268,002
            
           7,160,832
            

Materials (2.3%):

   
   10,238    Freeport-McMoRan Copper & Gold, Inc.      617,351
   6,569    Monsanto Co.      551,796
            
           1,169,147
            

Mining (0.9%):

   
   11,895    Newmont Mining Corp.      491,858
            

Pipelines (1.2%):

   
   10,211    Sunoco Logistics Partners L.P.      604,798
            

Telecom Services (2.2%):

   
   44,191    AT&T, Inc.      1,159,130
            

Telecommunications (0.9%):

   
   15,625    CenturyTel, Inc.      490,469
            

Total Common Stocks

      30,929,592
            

Options Purchased (0.0%):

   
   800    S&P 500 SPDR Put @ 89.00 expiring August 2009      17,600
            

Total Options Purchased

      17,600
            

Exchange Traded Funds (26.8%):

   
   56,199    Consumer Discretionary Select Sector SPDR Fund      1,420,149
   55,522    Consumer Staples Select Sector SPDR Fund      1,361,399
   29,870    Energy Select Sector SPDR Fund      1,508,734
   246,395    Financial Select Sector SPDR Fund      3,205,599
   25,812    Health Care Select Sector SPDR Fund      719,380
   37,995    Industrial Select Sector SPDR Fund      907,321
   31,988    iShares Dow Jones U.S. Financial Sector Index Fund      1,478,805
   45,978    Powershares QQQ Trust      1,812,912
   5,215    Ultrashort S&P 500 ProShares      246,722
   45,018    Utilities Select Sector SPDR Fund      1,302,821
            

Total Exchange Traded Funds

      13,963,842
            

Investment Companies (15.4%):

   
   7,987,183    First Elite Money Market Fund (b)      7,987,183
            

Total Investment Companies

      7,987,183
            

Total Investments (Cost $46,650,885) (c) – (101.7%)

    $ 52,898,217

Percentages indicated are based on net assets of $51,993,150.

 

(a) Represents non-income producing securities.
(b) Affiliate.
(c) Represents cost for financial reporting purposes and differs from cost basis for federal income tax purposes.
ADR American Depositary Receipt
QQQ Nasdaq 100 Index
SPDR Standard & Poor’s Depositary Receipt

See notes to schedules of portfolio investments.

FIRST FUNDS

FIRST CALIBER EQUITY

SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED

JULY 31, 2009 (UNAUDITED)

 

Options outstanding on July 31, 2009:

Written Options:

 

Call

    Exercise Price    Premium     Expiration Date    Number of
Contracts		     Market Value     Unrealized
Appreciation /
(Depreciation)		  

S&P 500 SPDR

    $ 89.00    $ (283,193 )    8/22/2009    (800 )    $ (796,000 )    $ (512,807 ) 
                    

Total Written Options

                $ (512,807 ) 
                    

See notes to schedules of portfolio investments.

FIRST FUNDS

FIRST STERLING INCOME

SCHEDULE OF PORTFOLIO INVESTMENTS

JULY 31, 2009 (UNAUDITED)

 

PRINCIPAL

AMOUNT

   

DESCRIPTION

    VALUE

Corporate Bonds (51.7%):

   

Agricultural Operations (0.3%):

   
    $    200,000    Bunge Limited., Finance Corp., 5.10%, 7/15/15    $ 187,798
           

Banking, Finance & Insurance (20.5%):

   
    500,000    Citigroup, Inc., 4.75%, 12/15/10      280,887
    500,000    Citigroup, Inc., 5.13%, 2/14/11      504,013
      1,000,000    General Electric Capital Corp., 5.88%, 2/15/12      1,059,606
    250,000    General Electric Capital Corp., 5.00%, 4/10/12      257,748
      1,000,000    General Electric Capital Corp., 5.38%, 10/20/16      1,004,884
      2,000,000    Goldman Sachs Group, Inc., 5.70%, 9/1/12      2,140,690
      1,000,000    JPMorgan Chase & Co., 6.00%, 1/15/18      1,058,983
      2,000,000    Merrill Lynch & Co., 6.05%, 8/15/12      2,060,176
      1,150,000    Morgan Stanley Dean Witter, 6.60%, 4/1/12      1,223,812
      1,000,000    Principal Financial Group (AU), 8.20%, 8/15/09      1,001,082
    500,000    SLM Corp., 4.50%, 7/26/10      455,215
      1,000,000    Textron Financial Corp., 5.13%, 2/3/11      924,659
           
          11,971,755
           

Banks (0.3%):

   
    200,000    PNC Funding Corp., 5.25%, 11/15/15      196,916
           

Computers (2.4%):

   
      1,285,000    IBM Corp., 6.50%, 1/15/28      1,418,464
           

Consumer Discretionary (0.3%):

   
    200,000    Fortune Brands, Inc., 4.88%, 12/1/13      195,159
           

Financial (1.2%):

   
    200,000    Caterpillar Financial Services, 7.15%, 2/15/19      225,123
    500,000    Countrywide Home Loans, 4.13%, 9/15/09      501,280
           
          726,403
           

Health Care (1.9%):

   
      1,000,000    Humana, Inc., 6.45%, 6/1/16      892,770
    200,000    UnitedHealth Group, Inc., 5.38%, 3/15/16      197,048
           
          1,089,818
           

Industrial Goods & Services (2.7%):

   
      1,000,000    Honeywell International, Inc., 5.30%, 3/1/18      1,067,339
    500,000    Weyerhaeuser Co., 6.75%, 3/15/12      511,294
           
          1,578,633
           

Integrated Oil & Gas (3.9%):

   
      1,000,000    Marathon Oil Corp., 6.00%, 10/1/17      1,042,968
      1,000,000    Weatherford International Ltd., 9.63%, 3/1/19      1,240,304
           
          2,283,272
           

Medical Instruments (0.9%):

   
    500,000    Medtronic, Inc., 4.38%, 9/15/10      515,987
           

Metals (0.8%):

   
    500,000    Alcoa, Inc., 6.00%, 7/15/13      496,533
           

Paper & Related Products (0.8%):

   
    500,000    Avery Dennison Corp., 6.63%, 10/1/17      451,008
           

Pharmaceuticals (5.5%):

   
      2,000,000    American Home Products, 6.95%, 3/15/11      2,161,784

See notes to schedules of portfolio investments.

FIRST FUNDS

FIRST STERLING INCOME

SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED

JULY 31, 2009 (UNAUDITED)

 

SHARES OR

PRINCIPAL

AMOUNT

   

DESCRIPTION

    VALUE

Corporate Bonds, Continued:

   

Pharmaceuticals, Continued:

   
    $ 1,000,000    Pfizer, Inc., 4.45%, 3/15/12    $ 1,058,694
           
          3,220,478
           

Restaurants (0.9%):

   
    500,000    Darden Restaurants, Inc., 6.20%, 10/15/17      497,727
           

Retail (3.5%):

   
    1,000,000    Home Depot, Inc., 3.75%, 9/15/09      1,001,676
    1,000,000    Home Depot, Inc., 5.40%, 3/1/16      1,030,957
           
          2,032,633
           

Special Purpose Entity (0.3%):

   
    200,000    Harley-Davidson Funding Corp., 5.00%, 12/15/10      197,336
           

Telecommunications (5.5%):

   
    1,000,000    AT&T, Inc., 6.70%, 11/15/13      1,129,902
    500,000    CBS Corp., 7.70%, 7/30/10      513,778
    1,000,000    GTE California, Inc., 6.70%, 9/1/09      1,003,773
    500,000    New Cingular Wireless Service, 7.88%, 3/1/11      541,741
           
          3,189,194
           

Total Corporate Bonds

      30,249,114
           

Yankee Dollars (2.2%):

   

Beverages-Wine/Spirits (1.0%):

   
    500,000    Diageo PLC, 7.38%, 1/15/14      574,368
           

Diversified Manufacturing Operation (1.2%):

   
    500,000    Ingersoll-Rand Global Holding Co., 6.00%, 8/15/13      510,539
    200,000    Tyco International Finance, 6.00%, 11/15/13      214,360
           
          724,899
           

Total Yankee Dollars

      1,299,267
           

Preferred Stocks (1.6%):

   

Banking, Finance & Insurance (1.6%):

   
    10,000    BAC Capital Trust III      211,000
    10,000    JPMorgan Chase Capital XIX      239,900
    10,350    PNC Capital Trust      256,369
    10,000    USB Capital XI      231,000
           

Total Preferred Stocks

      938,269
           

U.S. Government Agency Collateralized Mortgage Obligations (0.6%):

   

Freddie Mac (0.6%):

   
    $335,150    5.00%, 9/15/24      337,271
           

Total U.S. Government Agency Collateralized Mortgage Obligations

      337,271
           

U.S. Government Agency Securities (35.7%):

   

Fannie Mae (19.2%):

   
    2,000,000    5.25%, 8/1/12      2,116,890
    1,000,000    4.00%, 5/20/13      1,023,032
    1,000,000    3.00%, 1/13/14      991,810
    4,000,000    5.08%, 11/5/15      4,135,452
    2,317,500    5.00%, 10/25/16      2,415,321

See notes to schedules of portfolio investments.

FIRST FUNDS

FIRST STERLING INCOME

SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED

JULY 31, 2009 (UNAUDITED)

 

SHARES OR

PRINCIPAL

AMOUNT

   

DESCRIPTION

    VALUE

U.S. Government Agency Securities, Continued:

   
  $    500,000    5.00%, 4/26/17    $ 505,429
           
          11,187,934
           

Federal Farm Credit Bank (3.5%):

   
    1,000,000    5.05%, 11/6/17      1,042,457
    1,000,000    4.25%, 4/16/18      1,005,881
           
          2,048,338
           

Federal Home Loan Bank (6.9%):

   
    1,000,000    2.00%, 7/30/14      991,004
    1,000,000    4.00%, 9/28/15      1,008,341
    2,000,000    5.50%, 10/19/17      2,065,386
           
          4,064,731
           

Freddie Mac (4.3%):

   
  500,000    2.75%, 4/29/14      493,285
    1,000,000    4.00%, 9/19/14      1,013,402
    1,000,000    5.30%, 5/12/20      1,001,355
           
          2,508,042
           

Tennessee Valley Authority (1.8%):

   
    1,000,000    4.88%, 12/15/16      1,073,201
           

Total U.S. Government Agency Securities

      20,882,246
           

U.S. Treasury Obligations (3.4%):

   

U.S. Treasury Bond (1.7%):

   
    1,000,000    3.25%, 6/30/16      1,007,500
           

U.S. Treasury Note (1.7%):

   
    1,000,000    3.13%, 5/15/19      969,060
           

Total U.S. Treasury Obligations

      1,976,560
           

Investment Companies (4.1%):

   
    2,430,858    First Elite Money Market Fund (a)      2,430,858
           

Total Investment Companies

      2,430,858
           

Total Investments (Cost $56,243,026) (b) – (99.3%)

    $ 58,113,585
           

Percentages indicated are based on net assets of $58,508,639.

 

(a)   Affiliate.
(b)   Represents cost for financial reporting purposes and differs from cost basis for federal income tax purposes.
AU   Australia

See notes to schedules of portfolio investments.

FIRST FUNDS

FIRST ELITE MONEY MARKET

SCHEDULE OF PORTFOLIO INVESTMENTS

JULY 31, 2009 (UNAUDITED)

 

PRINCIPAL
AMOUNT

        

DESCRIPTION

    VALUE

U.S. Government Agency Securities (80.1%):

   

Fannie Mae (4.3%):

   
     $    1,500,000   

0.19%, 9/1/09(a)

    $ 1,499,755
     1,000,000   

0.22%, 9/25/09(a)

      999,664
     1,500,000   

0.18%, 9/30/09(a)

      1,499,550
     550,000   

0.23%, 10/6/09(a)

      549,768
     1,250,000   

0.25%, 11/13/09(a)

      1,249,097
            
           5,797,834
            

Federal Farm Credit Bank (0.8%):

   
     1,000,000   

0.39%, 8/28/09(a)

      999,715
            

Federal Home Loan Bank (69.3%):

   
     3,000,000   

0.15%, 8/3/09(a)

      2,999,954
     1,500,000   

0.20%, 8/5/09(a)

      1,499,967
     2,726,000   

0.16%, 8/6/09(a)

      2,725,931
     2,000,000   

0.21%, 8/7/09(a)

      1,999,930
     2,500,000   

0.18%, 8/11/09(a)

      2,499,862
     2,100,000   

0.21%, 8/12/09(a)

      2,099,865
     6,000,000   

0.22%, 8/13/09(b)

      5,999,517
     1,500,000   

0.21%, 8/14/09(a)

      1,499,886
     2,500,000   

0.20%, 8/18/09(a)

      2,499,771
     2,500,000   

0.18%, 8/19/09(a)

      2,499,767
     1,000,000   

0.15%, 8/25/09(a)

      999,900
     1,500,000   

0.19%, 8/26/09(a)

      1,499,807
     1,000,000   

0.17%, 9/1/09(a)

      999,854
     2,000,000   

0.21%, 9/2/09(a)

      1,999,627
     1,500,000   

0.20%, 9/4/09(a)

      1,499,717
     2,200,000   

0.21%, 9/8/09(a)

      2,199,525
     1,000,000   

0.19%, 9/9/09(a)

      999,805
     2,500,000   

0.20%, 9/11/09(a)

      2,498,975
     2,000,000   

0.23%, 9/14/09(b)

      2,000,063
     2,200,000   

0.45%, 9/14/09(a)

      2,198,670
     1,000,000   

0.20%, 9/15/09(a)

      999,750
     2,500,000   

0.44%, 9/16/09(a)

      2,498,626
     1,500,000   

0.22%, 9/18/09(a)

      1,499,560
     2,000,000   

0.22%, 9/21/09(a)

      1,999,122
     1,000,000   

0.22%, 9/28/09(a)

      999,646
     2,988,000   

0.26%, 10/2/09(a)

      2,986,576
     1,500,000   

0.47%, 10/5/09(a)

      1,498,754
     1,000,000   

0.49%, 10/6/09(a)

      999,120
     2,000,000   

0.20%, 10/7/09(a)

      1,999,256
     1,796,000   

0.20%, 10/8/09(a)

      1,795,288
     3,000,000   

0.22%, 10/9/09(a)

      2,998,792
     1,000,000   

0.21%, 10/13/09(a)

      999,574
     3,000,000   

0.44%, 10/13/09(b)

      3,000,817
     1,500,000   

0.37%, 10/14/09(a)

      1,498,890
     2,500,000   

0.20%, 10/16/09(a)

      2,498,913
     1,500,000   

0.22%, 10/19/09(a)

      1,499,276
     1,000,000   

0.36%, 10/20/09(a)

      999,222
     2,000,000   

0.20%, 10/21/09(a)

      1,998,807
     2,000,000   

0.18%, 10/22/09(a)

      1,999,180

See notes to schedules of portfolio investments.

FIRST FUNDS

FIRST ELITE MONEY MARKET

SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED

JULY 31, 2009 (UNAUDITED)

 

SHARES OR

PRINCIPAL

AMOUNT

        

DESCRIPTION

    VALUE

U.S. Government Agency Securities, Continued:

   
     $    2,000,000   

0.31%, 10/28/09(a)

    $ 1,998,484
     750,000   

0.24%, 11/2/09(a)

      749,535
     2,000,000   

0.30%, 11/12/09(a)

      1,998,283
     1,500,000   

0.28%, 11/13/09(a)

      1,498,787
     1,500,000   

0.26%, 11/16/09(a)

      1,498,841
     2,000,000   

0.22%, 11/25/09(a)

      1,998,582
     1,000,000   

0.30%, 12/1/09(a)

      998,983
     1,500,000   

0.26%, 12/9/09(a)

      1,498,592
     2,000,000   

0.82%, 1/4/10(a)

      1,993,067
     1,000,000   

0.29%, 1/6/10(a)

      998,727
            
           93,221,443
            

Freddie Mac (5.7%):

   
     1,504,000   

0.19%, 8/17/09(a)

      1,503,873
     1,000,000   

0.52%, 9/1/09(a)

      999,561
     1,074,000   

0.22%, 10/19/09(a)

      1,073,481
     1,025,000   

0.21%, 10/20/09(a)

      1,024,522
     1,000,000   

0.21%, 10/23/09(a)

      999,516
     1,000,000   

0.29%, 12/21/09(a)

      998,856
     1,000,000   

0.30%, 1/4/10(a)

      998,700
            
           7,598,509
            

Total U.S. Government Agency Securities

      107,617,501
            

Master Demand Notes (16.0%):

   

Federal Home Loan Bank (16.0%):

   
     21,500,000   

0.12%, 12/12/09(b)

      21,500,000
            

Total Master Demand Notes

      21,500,000
            

Investment Companies (3.9%):

   
     5,267,005   

Goldman Sachs Financial Square Federal Fund

      5,267,005
            

Total Investment Companies

      5,267,005
            

Total Investments (Cost $134,384,506)(c) – (100.0%)

    $ 134,384,506
            

Percentages indicated are based on net assets of $134,436,854.

 

(a) Discount note securities. The rate reflected on the Schedule of Portfolio Investments is the effective yield of the security.
(b) Variable rate securities. The interest rate on these securities are adjusted periodically to reflect current interest rates. The rate represents the rate that was in effect on July 31, 2009.
(c) Aggregate cost for federal income tax and financial reporting purposes is the same.

See notes to schedules of portfolio investments.

FIRST FUNDS

NOTES TO SCHEDULES OF PORTFOLIO INVESTMENTS

JULY 31, 2009 (UNAUDITED)

 

1. ORGANIZATION:

First Funds (the “Trust”) was organized as a Massachusetts business trust on November 1, 2001, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Trust presently offers shares of First Caliber Equity, First Sterling Income, and First Elite Money Market, (individually referred to as a “Fund” and collectively as the “Funds”).

The Trust has an unlimited number of shares of beneficial interest, with a par value of $0.001 which may, without shareholder approval, be divided into an unlimited number of series of such shares, and any series may be classified or reclassified into one or more classes. The Trust is registered to offer two classes of shares: Trust Class and Class A. Shareholders of each class are entitled to one vote for each full share held and vote in the aggregate and not by class or series, except as otherwise expressly required by law or when the Board of Trustees has determined that the matter to be voted on affects only the interest of shareholders of a particular class or series.

Each Class A and Trust Class share of the Funds represents identical interests in each Fund’s investment portfolio and have the same rights, except that (i) Class A shares bear the expense of a distribution fee, which will cause Class A shares to have a higher expense ratio and to pay lower dividends than those related to Trust Class shares; (ii) certain other class specific expenses will be borne solely by the class to which such expenses are attributable; and (iii) each class has exclusive voting rights with respect to matters relating to its own distribution arrangements.

Under the Funds’ organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Funds. In addition, in the normal course of business, the Funds may enter into contracts with vendors and others that provide for general indemnifications. Each Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims made against the Funds. However, based on experience, the Funds expect that risk of loss to be remote.

 

2. SIGNIFICANT ACCOUNTING POLICIES:

The following is a summary of significant accounting policies followed by the Funds in the preparation of their schedules of portfolio investments. The policies are in conformity with accounting principles generally accepted in the United States (“GAAP”). The preparation of the schedules of portfolio investments in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts at the date of the schedules of portfolio investments. The actual results could differ from those estimates.

SECURITIES VALUATION:

Investments of First Elite Money Market are valued in accordance with Rule 2a-7 of the 1940 Act at amortized cost, which approximates market value. Under the amortized cost method, discount or premium is amortized on a constant basis to the maturity of the security.

Equity securities are generally valued on the basis of market quotations or official closing prices on the principal exchange on which the securities are traded or by an independent pricing service approved by the Board of Trustees. Equity securities quoted by NASDAQ National Market System are valued at the NASDAQ Official Closing Price. Debt securities are generally valued on the basis of market quotations or official closing prices or by an independent pricing service approved by the Board of Trustees. Certain securities, such as U.S. Government securities, are valued at their market values determined on the latest bid prices in the principal market (closing sales prices if the principal market is an exchange) in

FIRST FUNDS

NOTES TO SCHEDULES OF PORTFOLIO INVESTMENTS

JULY 31, 2009 (UNAUDITED)

 

which such securities are normally traded. If market quotations or official closing prices or valuations from a pricing service are not readily available, or are determined not to accurately reflect fair value (such as when the value of a security is materially affected by events occurring before their valuation time but after the close of the primary market on which the security is principally traded) the Fund may value those investments at fair value as determined in accordance with procedures approved by the Board of Trustees. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the prices used by other mutual funds to calculate their net asset values. Debt instruments with maturities of 60 days or less are valued at amortized cost, unless the Board of Trustees determines that this does not result in a fair value. Such valuations received from a pricing service may be established through the use of electronic and matrix techniques. Investments in open-end investment companies are valued at their respective net asset values as reported by such companies. The differences between the cost and market values of investments are reflected as either unrealized appreciation or depreciation.

Effective May 1, 2008, the Funds adopted Statement of Financial Accounting Standards No. 157 (“SFAS No. 157”), “Fair Value Measurements”. This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair value measurements.

One key component of SFAS No. 157 is the development of a three-tier fair value hierarchy. The basis of the tiers is dependent upon the various “inputs” used to determine the value of the Funds’ investments. These inputs are summarized in the three broad levels listed below:

 

  •  

Level 1 – quoted prices in active markets for identical assets

 

  •  

Level 2 – other significant inputs (including quoted prices of similar securities, interest rates, prepayment speeds, credit risk, etc.)

 

  •  

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments.)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, money market securities are valued using amortized cost, in accordance with rules under the 1940 Act. Generally, amortized cost approximates the current fair value of a security, but since this valuation is not obtained from a quoted price in an active market, such securities are reflected as Level 2.

Effective June 15, 2009, the Funds adopted Financial Accounting Standards Board Staff Position No. FAS 157-4 (“FSP SFAS No. 157-4”), “Determining Fair Value When the Volume and Level of Activity For the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”. FSP SFAS No. 157-4 provides additional guidance for estimating fair value in accordance with FSP SFAS No. 157 when the volume and level of activity for the asset or liability has significantly decreased. FSP SFAS No. 157-4 is applied prospectively to all fair value measurements where appropriate and is effective for interim and annual periods ending June 15, 2009. The adoption of FSP SFAS No. 157-4 did not have a material impact on the Funds’ schedules of portfolio investments.

The following is a summary of the inputs used to value the Fund’s investments as of July 31, 2009:

 

Fund

    LEVEL 1 —
Quoted Prices		     LEVEL 2 —
Other
Significant
Observable
Inputs		    LEVEL 3 —
Significant
Unobservable
Inputs		    Total  

First Caliber Equity

           

Common Stocks

    $ 30,929,592      $ —      $ —      $ 30,929,592   

Options Purchased

      17,600        —        —        17,600   

Exchange Traded Funds

      13,963,842        —        —        13,963,842   

Investment Companies

      7,987,183        —        —        7,987,183   
                              

Total

      52,898,217        —        —        52,898,217   
                              

Other Financial Instruments (1)

      (512,807 )      —        —        (512,807 ) 

First Sterling Income

           

Corporate Bonds

      —          30,249,114      —        30,249,114   

Yankee Dollars

      —          1,299,267      —        1,299,267   

Preferred Stocks

      938,269        —        —        938,269   

U.S. Government Collateralized Mortgage Obligations

      —          337,271      —        337,271   

U.S. Government Agency Securities

      —          20,882,246      —        20,882,246   

U.S. Treasury Obligations

      —          1,976,560      —        1,976,560   

Investment Companies

      2,430,858        —        —        2,430,858   
                              

Total

      3,369,127        54,744,458      —        58,113,585   
                              

First Elite Money Market

           

U.S. Government Agency Securities

      —          107,617,501      —        107,617,501   

Master Demand Notes

      —          21,500,000      —        21,500,000   

Investment Companies

     
 5,267,005
   
     —        —        5,267,005   
                              

Total

      5,267,005        129,117,501      —        134,384,506   
                              

 

           
  (1) Other Financial Instruments are derivative instruments not reflected in the schedule of portfolio investments such as written option contracts, which are valued at the unrealized appreciation/(depreciation) on the instrument.

NEW ACCOUNTING STANDARDS:

In March 2008, the Financial Accounting Standards Board (“FASB”) issued the Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS No. 161”). SFAS No. 161 is effective for fiscal years and interim periods beginning after November 15, 2008. SFAS No. 161 requires enhanced disclosures about the Funds’ derivative and hedging activities, including how such activities are accounted for and their effect on the Funds’ financial position, performance and cash flows. The Funds were not impacted by the adoption of these standards. The notional amounts in the Schedules of Portfolio Investments are representative of typical volumes.

FIRST FUNDS

NOTES TO SCHEDULES OF PORTFOLIO INVESTMENTS

JULY 31, 2009 (UNAUDITED)

 

SECURITY TRANSACTIONS:

During the period, security transactions were accounted for no later than one business day following the trade date. For financial reporting purposes, however, security transactions are accounted for on trade date on the last business day of the reporting period.

PURCHASED OPTIONS CONTRACTS:

The First Caliber Equity Fund and First Sterling Income Fund may purchase put and call options on securities to hedge against security price risk in the normal course of pursuing their investment objectives. The Funds pay a premium which is included in total investments on the schedule of portfolio investments and marked to market to reflect the current value of the option.

WRITTEN OPTIONS CONTRACTS:

The First Caliber Equity Fund and First Sterling Income Fund may write options contracts in order to reduce risks associated with the types of securities in which each Fund is authorized to invest. Premiums received from these option contracts are recorded as liabilities and are subsequently adjusted to the current value of the options written. Premiums received from writing options which expire are treated as realized gains. Premiums received from writing options which are either exercised or closed are offset against the proceeds received or the amount paid on the transaction to determine realized gains or losses. When writing an option, the Fund bears the market risk of unfavorable changes in the price of the security underlying the written option.

First Sterling Income Fund had no written option activity for the period ended July 31, 2009.

The following is a summary of First Caliber Equity’s written option activity for the period ended July 31, 2009:

 

Contracts

    Number of
Contracts		     Premium  

Options outstanding at 04/30/2009

    (607 )    $ (66,691 ) 

Options purchased

    —          —     

Options written

    (806 )      (286,961 ) 

Options expired

    496        41,230   

Options bought back

    117        29,229   

Options exercised

    —          —     
              

Options outstanding at 07/31/2009

    (800 )    $ (283,193 ) 
              

VARIABLE AND FLOATING RATE DEMAND AND MASTER DEMAND NOTES:

The Funds may, from time to time, purchase variable or floating rate demand notes issued by corporations, bank holding companies, financial institutions and similar taxable and tax-exempt instruments issued by government agencies and instrumentalities. These securities will typically have a maturity over one year but carry with them the right of the holder to put the securities to a remarketing agent or other entity at designated time intervals and on specified notice. The obligation of the issuer of the put to repurchase the securities may be backed up by a letter of credit or other obligation issued by a financial institution.

 

3. FEDERAL INCOME TAX INFORMATION:

As of July 31, 2009, the tax cost and unrealized appreciation/(depreciation) of securities was as follows:

 

     Tax Cost of
Securities		    Tax Unrealized
Appreciation		    Tax Unrealized
Depreciation		     Net Tax
Unrealized
Appreciation /
(Depreciation)

First Caliber Equity

    $ 47,714,664    $ 7,117,687    $ (1,934,134 )    $ 5,183,553

First Sterling Income

      56,708,456      2,391,411      (986,282 )      1,405,129

First Elite Money Market

      134,384,506      —        —          —  

 

4. SUBSEQUENT EVENTS:

The Funds have adopted Statement of Financial Accounting Standards No. 165 (SFAS 165) effective the current reporting period. Management has evaluated subsequent events through September 29, 2009, the date of this filing.

Item 2. Controls and Procedures.

(a) The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the registrant’s disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure that information required to be disclosed by the registrant on Form N-Q is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

(b) There were no changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

Item 3. Exhibits.

Certifications pursuant to Rule 30a-2(a) are attached hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

(Registrant)  

First Funds

By (Signature and Title)  

/s/ Arthur A. Jensen

  Arthur A. Jensen, Treasurer
Date  

September 29, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By (Signature and Title)  

/s/ J. Franklin Hall

  J. Franklin Hall, President
Date  

September 29, 2009

By (Signature and Title)  

/s/ Arthur A. Jensen

  Arthur A. Jensen, Treasurer
Date  

September 29, 2009