UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------
FORM N-CSR
--------
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
INVESTMENT COMPANY ACT FILE NUMBERS 811-2860; 811-3967;
811-5690; 811-2107
FIRST INVESTORS CASH MANAGEMENT FUND, INC.
FIRST INVESTORS GOVERNMENT FUND, INC.
FIRST INVESTORS SERIES FUND
FIRST INVESTORS FUND FOR INCOME, INC.
(Exact name of registrant as specified in charter)
- --------
95 Wall Street
New York, NY 10005
(Address of principal executive offices) (Zip code)
Joseph I. Benedek
First Investors Management Company, Inc.
581 Main Street
Woodbridge, NJ 07095
(Name and address of agent for service)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
1-212-858-8000
DATE OF FISCAL YEAR END: SEPTEMBER 30, 2003
DATE OF REPORTING PERIOD: SEPTEMBER 30, 2003
Item 1. Reports to Stockholders - Filed herewith
Portfolio Manager's Letter
FIRST INVESTORS CASH MANAGEMENT FUND, INC.
Dear Investor:
This is the annual report for the First Investors Cash Management Fund for
the fiscal year ended September 30, 2003. During the period, the Fund's
return on a net asset value basis was .6% for Class A shares and .1% for
Class B shares. The Fund maintained a $1.00 net asset value for each class
of shares throughout the year.
The primary factor that drove the Fund's performance during the fiscal year
was the low short-term interest rate environment.
Short-term interest rates moved generally lower through the first three
quarters of the reporting period. The Federal Reserve Board ("the Fed")
lowered short-term rates by 50 basis points (1/2 of 1%) in November 2002,
and again by 25 basis points in June 2003.
The Fund responded to the declining short-term interest rates by
maintaining a relatively long weighted average maturity. The yield curve
remained positively sloped during most of the period and offered
opportunities for incremental return by investing in securities with longer
maturities. The Fund also used corporate bonds and notes for incremental
return, in addition to floating rate securities and various types of
callable securities.
Although money market funds are relatively conservative vehicles, there can
be no assurance that they will be able to maintain a stable net asset value
of $1.00 per share. Money market mutual funds are not insured by the
Federal Deposit Insurance Corporation (FDIC) or any other government
agency.
Thank you for placing your trust in First Investors. As always, we
appreciate the opportunity to serve your investment needs.
Sincerely,
/S/ MICHAEL J. O'KEEFE
Michael J. O'Keefe
Vice President
and Portfolio Manager
October 31, 2003
Portfolio of Investments
FIRST INVESTORS CASH MANAGEMENT FUND, INC.
September 30, 2003
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal Interest $10,000 of
Amount Security Rate* Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
CORPORATE NOTES--46.3%
$5,400M 3M Co., 11/3/03 1.00% $5,395,050 $291
Abbott Laboratories:
3,000M 10/16/03 + 1.00 2,998,749 162
750M 7/1/04 1.42 770,670 42
ChevronTexaco Funding Corp.:
1,200M 10/3/03 1.01 1,199,933 65
4,000M 11/3/03 1.03 3,996,220 216
5,000M Clorox Co., 11/7/03 1.00 4,994,860 270
750M Colgate-Palmolive Co., 12/1/03 1.13 755,106 41
5,000M Donnelley (R.R.) & Sons Co., 10/9/03 + 1.02 4,998,866 270
Dow Jones & Co., Inc.:
1,025M 10/22/03 + 1.03 1,024,384 55
3,000M 10/15/03 + 1.04 2,998,178 162
5,000M DuPont (E.I.) de Nemours & Co., 10/27/03 1.00 4,996,380 270
5,000M Gannett Company, Inc., 10/3/03 + 1.03 4,999,714 270
1,025M International Business Machines Corp.,
11/10/03 1.10 1,029,367 55
Johnson & Johnson:
3,100M 10/15/03 + 1.00 3,098,791 167
1,200M 11/5/03 + 1.06 1,198,762 65
5,000M Lubrizol Corp., 10/10/03 + 1.00 4,998,747 270
4,000M New York Times Co., 10/15/03 1.02 3,998,413 216
5,000M Northern Illinois Gas Corp., 11/25/03 1.04 4,992,054 268
3,200M Paccar Financial Corp., 12/23/03 1.02 3,192,474 172
2,000M PepsiCo, Inc., 9/15/04 1.28 2,060,649 111
5,000M Pfizer, Inc., 11/13/03 + 1.02 4,993,907 269
5,000M Proctor & Gamble Co., 10/6/03 + 1.02 4,999,292 270
3,000M Prudential Funding Corp., 10/31/03 1.03 2,997,424 162
2,000M Schering-Plough Corp., 10/7/03 1.05 1,999,650 108
3,000M Verizon Network Funding, 10/20/03 1.01 2,998,400 162
4,000M Wal-Mart Stores, Inc., 10/21/03 + .99 3,997,799 216
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Corporate Notes (cost $85,683,839) 85,683,839 4,625
- ----------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS--41.0%
1,700M Federal Farm Credit Bank, 10/2/03 1.85 1,700,144 92
Federal Home Loan Bank:
9,000M 10/1/03 1.02 9,000,000 486
3,700M 10/15/03 1.00 3,698,561 200
1,000M 5/21/04 1.08 1,000,233 54
800M 5/26/04 1.25 829,686 45
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal Interest $10,000 of
Amount Security Rate* Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Fannie Mae:
$6,200M 10/10/03 1.04% $6,198,385 $335
3,000M 10/15/03 1.05 2,998,773 162
2,514M 10/16/03 1.05 2,512,900 135
7,000M 10/24/03 1.00 6,995,527 378
3,000M 11/14/03 1.09 3,013,011 163
627M 12/15/03 1.47 625,089 34
6,459M 3/15/04 1.19 6,564,982 353
500M 8/15/04 1.40 521,907 28
1,000M 8/27/04 1.38 999,292 54
2,000M 9/3/04 1.45 2,000,000 108
3,000M 9/14/04 1.45 3,000,000 162
2,000M 9/21/04 1.40 2,000,000 108
2,000M 9/24/04 1.50 2,000,000 108
2,000M 10/1/04 1.50 2,000,000 108
Freddie Mac:
4,700M 10/16/03 1.01 4,698,018 254
1,100M 1/15/04 1.04 1,106,905 60
5,155M 1/15/04 1.07 5,212,764 281
1,000M 2/15/04 1.04 1,015,482 55
1,000M 4/19/04 1.10 1,012,996 55
1,275M 5/20/04 1.19 1,289,485 69
3,000M 9/10/04 1.40 3,000,000 162
960M Tennessee Valley Authority, 11/1/03 1.75 958,563 52
- ----------------------------------------------------------------------------------------------------------------------
Total Value of U.S. Government Agency Obligations
(cost $75,952,703) 75,952,703 4,101
- ----------------------------------------------------------------------------------------------------------------------
FLOATING RATE NOTES--5.2%
2,700M Fannie Mae, 9/10/04 1.08 2,700,000 146
Federal Farm Credit Bank:
2,200M 11/12/03 1.00 2,200,000 119
4,750M 2/26/04 1.07 4,749,421 256
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Floating Rate Notes (cost $9,649,421) 9,649,421 521
- ----------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
FIRST INVESTORS CASH MANAGEMENT FUND, INC.
September 30, 2003
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal Interest $10,000 of
Amount Security Rate* Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
BANKERS' ACCEPTANCES--3.1%
Bank of America, NA:
$1,769M 10/9/03 1.05% $1,768,822 $96
1,482M 10/10/03 1.05 1,481,176 80
1,099M 10/14/03 1.05 1,099,025 59
1,356M 10/15/03 1.05 1,355,050 73
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Bankers' Acceptances (cost $5,704,073) 5,704,073 308
- ----------------------------------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT--2.7%
5,000M Chase Manhattan Bank, NA, 10/7/03
(cost $5,000,000) 1.04 5,000,000 270
- ----------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--.9%
1,750M U.S. Treasury Bills, 12/4/03
(cost $1,746,926) .99 1,746,926 94
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $183,736,962) ++ 99.2% 183,736,962 9,919
Other Assets, Less Liabilities .8 1,508,752 81
- ----------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $185,245,714 $10,000
======================================================================================================================
* The interest rates shown are the effective rates at the time of
purchase by the Fund. The interest rates shown on floating rate notes
are adjusted periodically and are the rates in effect at September 30,
2003.
+ See Note 4
++ Aggregate cost for federal income tax purposes is the same.
See notes to financial statements
Portfolio Manager's Letter
FIRST INVESTORS GOVERNMENT FUND, INC.
Dear Investor:
This is the annual report for the First Investors Government Fund for the
fiscal year ended September 30, 2003. During the period, the Fund's return
on a net asset value basis was 3.1% for Class A shares and 2.3% for Class B
shares, including dividends of 54 cents per share on Class A shares and 45
cents per share on Class B shares.
The Fund invests primarily in Government National Mortgage Association
(GNMA) mortgage-backed bonds. The primary factors that drove the Fund's
performance during the reporting period were the substantial increase in
prepayments on mortgage-backed securities and the volatility in the bond
market during the latter part of the reporting period.
The generally low level of interest rates during the reporting period and
their decline to historic lows in June adversely affected the performance
of the mortgage-backed bond market. Specifically, 30-year mortgage rates
fell to all-time lows (slightly above 5%), and refinancings of outstanding
mortgages by homeowners rose to all-time highs (in part due to rising home
values which stimulated cash-out refinancings to tap home equity).
Consequently, prepayments on mortgage-backed bonds soared, reducing returns
to investors.
The Fund initiated positions in both GNMA 5-1/2% coupon and, later, GNMA 5%
coupon mortgage-backed bonds as interest rates fell. The Fund also
purchased higher coupon mortgage-backed bonds with favorable prepayment
characteristics to replace holdings with comparable coupons that were
called due to prepayments. The Fund generally benefited from these
strategies with the exception of the GNMA 5% coupon position that
underperformed when rates rose during the third quarter.
Thank you for placing your trust in First Investors. As always, we
appreciate the opportunity to serve your investment needs.
Sincerely,
/S/ CLARK D. WAGNER
Clark D. Wagner
Director of Fixed Income
and Portfolio Manager
October 31, 2003
Cumulative Performance Information
FIRST INVESTORS GOVERNMENT FUND, INC.
Comparison of change in value of $10,000 investment in the First Investors
Government Fund, Inc. (Class A shares), the Citigroup Mortgage Index and
the Citigroup Treasury/Government Sponsored Index.
GOVERNMENT
GRAPH PLOTS
as of September 30, 2003
FIRST INVESTORS CITIGROUP CITIGROUP
GOVERNMENT MORTGAGE TREASURY/GOVERNMENT
DEC 93 $ 9,425 $10,000 $10,000
DEC 94 9,125 9,857 9,663
DEC 95 10,492 11,510 11,441
DEC 96 10,860 12,127 11,777
DEC 97 11,772 13,251 12,914
SEP 98 12,504 14,057 14,196
SEP 99 12,499 14,396 13,953
SEP 00 13,333 15,467 14,951
SEP 01 14,758 17,371 16,929
SEP 02 15,597 18,672 18,637
SEP 03 16,077 19,323 19,316
(INSET BOX IN CHART READS:)
Average Annual Total Returns*
Class A Shares N.A.V. Only S.E.C. Standardized
One Year 3.08% (2.84%)
Five Years 5.27% 4.03%
Ten Years 5.43% 4.81%
S.E.C. 30-Day Yield 3.07%
Class B Shares
One Year 2.33% (1.67%)
Five Years 4.49% 4.15%
Since Inception
(1/12/95) 6.05% 6.05%
S.E.C. 30-Day Yield 2.50%
The graph compares a $10,000 investment in the First Investors Government
Fund, Inc. (Class A shares) beginning 12/31/93 with theoretical investments
in the Citigroup Mortgage Index and the Citigroup Treasury/Government
Sponsored Index (the "Indices"). The Citigroup Mortgage Index is a market
capitalization-weighted index that consists of all agency pass-throughs and
FHA and GNMA project notes. The Citigroup Treasury/Government Sponsored
Index is a market capitalization-weighted index that consists of debt
issued by the U.S. Treasury and U.S. Government sponsored agencies. Every
issue included in the Indices is trader-priced, and the Indices follow
consistent and realistic availability limits, including only those
securities with sufficient amounts outstanding. It is not possible to
invest directly in these Indices. In addition, the Indices do not take into
account fees and expenses that an investor would incur in purchasing
securities in these Indices. For purposes of the graph and the accompanying
table, unless otherwise indicated, it has been assumed that the maximum
sales charge was deducted from the initial $10,000 investment in the Fund
and all dividends and distributions were reinvested. Class B shares
performance may be greater than or less than that shown in the line graph
above for Class A shares based on differences in sales loads and fees paid
by shareholders investing in the different classes.
* Average Annual Total Return figures (for the periods ended 9/30/03)
include the reinvestment of all dividends and distributions. "N.A.V. Only"
returns are calculated without sales charges. The Class A "S.E.C.
Standardized" returns shown are based on the maximum sales charge of 5.75%
(prior to 6/17/02, the maximum sales charge was 6.25%). The Class B "S.E.C.
Standardized" returns are adjusted for the applicable deferred sales charge
(maximum of 4% in the first year). During the periods shown, some of the
expenses of the Fund were waived or assumed. If such expenses had been paid
by the Fund, the Class A "S.E.C. Standardized" Average Annual Total Return
for One Year, Five Years and Ten Years would have been (3.32%), 3.56% and
4.45%, respectively, and the S.E.C. 30-Day Yield for September 2003 would
have been 2.65%. The Class B "S.E.C. Standardized" Average Annual Total
Return for One Year, Five Years and Since Inception would have been
(2.15%), 3.71% and 5.63%, respectively, and the S.E.C. 30-Day Yield for
September 2003 would have been 2.04%. Results represent past performance
and do not indicate future results. Investment return and principal value
of an investment will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than the original cost. Citigroup
Mortgage Index and Citigroup Treasury/Government Sponsored Index figures
are from Citigroup, Inc. and all other figures are from First Investors
Management Company, Inc.
Portfolio of Investments
FIRST INVESTORS GOVERNMENT FUND, INC.
September 30, 2003
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED CERTIFICATES--96.0%
Fannie Mae--10.0%
$3,746M 5.5%, 8/1/2033 $3,824,837 $186
13,486M 6%, 12/1/2029-9/1/2032 13,930,090 679
2,455M 8%, 9/1/2027 2,709,221 132
- ----------------------------------------------------------------------------------------------------------------------
20,464,148 997
- ----------------------------------------------------------------------------------------------------------------------
Government National Mortgage Association I Program--80.0%
9,782M 5%, 6/15/2033-8/15/2033 9,812,157 478
36,496M 5.5%, 2/15/2033-8/15/2033 37,468,537 1,825
35,864M 6%, 3/15/2031-9/15/2033 37,330,183 1,818
46,231M 6.5%, 3/15/2028-9/15/2033 48,780,024 2,376
18,732M 7%, 7/15/2027-8/15/2033 19,979,915 973
5,437M 7.5%, 7/15/2023-1/15/2030 5,843,947 285
3,955M 8%, 4/15/2030-6/15/2030 4,335,190 211
618M 8.5%, 11/15/2030-10/15/2031 670,158 33
- ----------------------------------------------------------------------------------------------------------------------
164,220,111 7,999
- ----------------------------------------------------------------------------------------------------------------------
Government National Mortgage Association II Program--6.0%
1,911M 6.5%, 10/20/2028-1/20/2029 2,002,343 98
7,043M 7%, 6/20/2023-10/20/2029 7,487,062 365
2,578M 7.5%, 12/20/2022-10/20/2023 2,757,407 134
- ----------------------------------------------------------------------------------------------------------------------
12,246,812 597
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Mortgage-Backed Certificates (cost $193,358,098) 196,931,071 9,593
- ----------------------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--4.3%
4,500M ChevronTexaco Corp., 1.01%, 10/7/03 4,499,243 219
4,500M Prudential Funding Corp., 1.02%, 10/2/03 4,499,872 219
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Short-Term Corporate Notes (cost $8,999,115) 8,999,115 438
- ----------------------------------------------------------------------------------------------------------------------
SHORT-TERM U.S. GOVERNMENT AGENCY OBLIGATIONS--.5%
1,000M Federal Home Loan Bank., 1.00%,
10/8/03 (cost $999,805) 999,805 49
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $203,357,018) 100.8% 206,929,991 10,080
Excess of Liabilities Over Other Assets (.8) (1,651,216) (80)
- ----------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $205,278,775 $10,000
======================================================================================================================
See notes to financial statements
Portfolio Manager's Letter
FIRST INVESTORS INVESTMENT GRADE FUND
Dear Investor:
This is the annual report for the First Investors Investment Grade Fund for
the fiscal year ended September 30, 2003. During the period, the Fund's
return on a net asset value basis was 8.9% for Class A shares and 8.2% for
Class B shares, including dividends of 54 cents per share on Class A shares
and 47 cents per share on Class B shares.
The most important factors that drove the Fund's performance during the
reporting period were the positive performance of the investment grade
corporate bond sector, industry sector choices and security selection.
Corporate bonds outperformed government securities during the reporting
period, reflecting increased demand for corporates. Economically sensitive
industries and the lower investment grade rating categories generally
showed the best performance during this period.
The Fund's decision to hold onto the bonds of strong companies in
struggling sectors worked well as once-troubled sectors, such as
telecommunications and utilities, rebounded during the reporting period.
The Fund's holdings in the cable and automotive industries also helped
performance. By contrast, the Fund's holdings in the airline industry had a
substantial negative impact on returns.
Thank you for placing your trust in First Investors. As always, we
appreciate the opportunity to serve your investment needs.
Sincerely,
/S/ GEORGE V. GANTER
George V. Ganter
Vice President
and Portfolio Manager
October 31, 2003
Cumulative Performance Information
FIRST INVESTORS INVESTMENT GRADE FUND
Comparison of change in value of $10,000 investment in the First Investors
Investment Grade Fund (Class A shares) and the Lehman Brothers U.S. Credit
Index.
INVESTMENT GRADE GRAPH PLOTS
As of September 30, 2003
FIRST INVESTORS LEHMAN U.S.
INVESTMENT GRADE CREDIT INDEX
DEC 93 $ 9,425 $10,000
DEC 94 8,990 9,607
DEC 95 10,734 11,745
DEC 96 10,991 12,130
DEC 97 11,995 13,371
SEP 98 13,064 14,430
SEP 99 12,636 14,228
SEP 00 13,328 15,058
SEP 01 14,815 16,980
SEP 02 15,759 18,371
SEP 03 17,169 20,294
(INSET BOX IN CHART READS:)
Average Annual Total Returns*
Class A Shares N.A.V. Only S.E.C. Standardized
One Year 8.94% 2.66%
Five Years 5.74% 4.50%
Ten Years 6.16% 5.54%
S.E.C. 30-Day Yield 3.52%
Class B Shares
One Year 8.17% 4.17%
Five Years 4.97% 4.64%
Since Inception
(1/12/95) 7.07% 7.07%
S.E.C. 30-Day Yield 3.01%
The graph compares a $10,000 investment in the First Investors Investment
Grade Fund (Class A shares) beginning 12/31/93 with a theoretical
investment in the Lehman Brothers U.S. Credit Index (the "Index"). The
Index includes all publicly issued, fixed-rate, nonconvertible investment
grade dollar-denominated, S.E.C.-registered corporate debt. All issues have
at least one year to maturity and an outstanding par value of at least $150
million. It is not possible to invest directly in this Index. In addition,
the Index does not take into account fees and expenses that an investor
would incur in purchasing securities in the Index. For purposes of the
graph and the accompanying table, unless otherwise indicated, it has been
assumed that the maximum sales charge was deducted from the initial $10,000
investment in the Fund and all dividends and distributions were reinvested.
Class B shares performance may be greater than or less than that shown in
the line graph above for Class A shares based on differences in sales loads
and fees paid by shareholders investing in the different classes.
* Average Annual Total Return figures (for the periods ended 9/30/03)
include the reinvestment of all dividends and distributions. "N.A.V. Only"
returns are calculated without sales charges. The Class A "S.E.C.
Standardized" returns shown are based on the maximum sales charge of 5.75%
(prior to 6/17/02, the maximum sales charge was 6.25%). The Class B "S.E.C.
Standardized" returns are adjusted for the applicable deferred sales charge
(maximum of 4% in the first year). During the periods shown, some of the
expenses of the Fund were waived or assumed. If such expenses had been paid
by the Fund, the Class A "S.E.C. Standardized" Average Annual Total Return
for One Year, Five Years and Ten Years would have been 2.41%, 4.16% and
5.11%, respectively, and the S.E.C. 30-Day Yield for September 2003 would
have been 3.35%. The Class B "S.E.C. Standardized" Average Annual Total
Return for One Year, Five Years and Since Inception would have been 3.92%,
4.27% and 6.55%, respectively, and the S.E.C. 30-Day Yield for September
2003 would have been 2.83%. Results represent past performance and do not
indicate future results. Investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than the original cost. Lehman Brothers U.S. Credit
Index figures are from Lehman Brothers, Inc. and all other figures are from
First Investors Management Company, Inc.
Portfolio of Investments
FIRST INVESTORS INVESTMENT GRADE FUND
September 30, 2003
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS--85.3%
Aerospace/Defense--2.2%
$100M Boeing Capital Corp., 4.75%, 2008 $104,065 $6
Honeywell International, Inc.:
1,500M 7.5%, 2010 1,806,285 104
975M 6.125%, 2011 1,092,130 62
700M Precision Castparts Corp., 8.75%, 2005 749,220 43
- ----------------------------------------------------------------------------------------------------------------------
3,751,700 215
- ----------------------------------------------------------------------------------------------------------------------
Automotive--3.7%
2,000M DaimlerChrysler NA Holdings Corp., 8%, 2010 2,333,705 134
886M Ford Motor Co., 8.9%, 2032 926,965 53
800M Lear Corp., 8.11%, 2009 924,000 53
730M Navistar International Corp., 8%, 2008 750,075 43
717M TRW, Inc., 7.125%, 2009 828,448 47
700M Visteon Corp., 8.25%, 2010 747,167 43
- ----------------------------------------------------------------------------------------------------------------------
6,510,360 373
- ----------------------------------------------------------------------------------------------------------------------
Chemicals--.9%
750M Du Pont (E.I.) de Nemours & Co., 8.125%, 2004 773,126 44
700M Lubrizol Corp., 7.25%, 2025 799,275 46
- ----------------------------------------------------------------------------------------------------------------------
1,572,401 90
- ----------------------------------------------------------------------------------------------------------------------
Energy--3.5%
875M Ashland Oil, Inc., 8.8%, 2012 1,064,652 61
795M El Paso Energy Corp., 7.375%, 2012 653,888 38
500M Mobil Corp., 8.625%, 2021 685,785 39
750M Phillips Petroleum Co., 7.2%, 2023 779,802 45
833M Repsol International Finance BV, 7.45%, 2005 908,352 52
975M Sunoco, Inc., 9.375%, 2016 1,098,503 63
800M Texaco Capital, Inc., 8.25%, 2006 943,629 54
- ----------------------------------------------------------------------------------------------------------------------
6,134,611 352
- ----------------------------------------------------------------------------------------------------------------------
Financial--5.7%
875M American General Finance Corp., 8.125%, 2009 1,064,314 61
CIT Group, Inc.:
300M 6.875%, 2009 341,768 19
1,900M 7.75%, 2012 2,258,669 130
400M Ford Motor Credit Co., 9.03%, 2009 416,996 24
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Financial (continued)
General Electric Capital Corp.:
$700M 7.875%, 2006 $814,152 $47
700M 8.5%, 2008 855,380 49
1,550M General Motors Acceptance Corp., 7.75%, 2010 1,707,925 98
Household Finance Corp.:
1,825M 6.5%, 2008 2,074,040 119
452M 7.75%, 2022 481,450 27
- ----------------------------------------------------------------------------------------------------------------------
10,014,694 574
- ----------------------------------------------------------------------------------------------------------------------
Financial Services--11.0%
Bank of America Corp.:
1,067M 7.8%, 2010 1,283,380 74
1,225M 7.4%, 2011 1,457,259 84
Bank One Corp.:
1,165M 7.6%, 2007 1,340,334 77
700M 7.875%, 2010 853,142 49
700M Chase Manhattan Corp., 7.875%, 2010 845,027 48
1,200M First Union National Bank, 7.8%, 2010 1,469,137 84
1,000M Fleet Capital Trust II, 7.92%, 2026 1,097,640 63
1,500M Florida Windstorm Underwriting Assoc.,
7.125%, 2019 + 1,773,570 101
1,200M Greenpoint Bank, 9.25%, 2010 1,504,548 86
775M Huntington National Bank, 8%, 2010 947,242 54
795M Manufacturers & Traders Trust Co., 8%, 2010 972,801 56
288M NBD Bancorp, Inc., 7.125%, 2007 327,566 19
1,125M Old National Bank, 6.75%, 2011 1,257,239 72
800M PNC Funding Corp., 6.125%, 2009 903,981 52
750M Republic NY Corp., 7.75%, 2009 902,440 52
1,825M Washington Mutual, Inc., 8.25%, 2010 2,225,004 128
- ----------------------------------------------------------------------------------------------------------------------
19,160,310 1,099
- ----------------------------------------------------------------------------------------------------------------------
Food/Beverage/Tobacco--3.9%
Coca-Cola Enterprises, Inc.:
1,050M 7.125%, 2009 1,243,822 71
800M 7.125%, 2017 980,372 56
2,375M ConAgra Foods, Inc., 6.75%, 2011 2,735,345 156
700M Hershey Foods Corp., 6.7%, 2005 767,534 44
1,000M Pepsi Bottling Group, Inc., 7%, 2029 1,171,068 67
- ----------------------------------------------------------------------------------------------------------------------
6,898,141 394
- ----------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
FIRST INVESTORS INVESTMENT GRADE FUND
September 30, 2003
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Food/Drug--3.6%
$1,550M Delhaize America, Inc., 8.125%, 2011 $1,712,750 $98
Kroger Co.:
700M 6.8%, 2018 805,140 46
1,600M 7%, 2018 1,844,525 106
Safeway, Inc.:
510M 7%, 2007 576,977 33
450M 9.3%, 2007 535,292 31
700M 6.5%, 2011 783,380 45
- ----------------------------------------------------------------------------------------------------------------------
6,258,064 359
- ----------------------------------------------------------------------------------------------------------------------
Forest Products/Containers--3.4%
International Paper Co.:
700M 8.125%, 2005 774,160 45
1,190M 6.75%, 2011 1,344,552 77
1,725M Sappi Papier Holding AG, 6.75%, 2012 + 1,915,133 110
Weyerhaeuser Co.:
1,100M 7.25%, 2013 1,257,880 72
545M 7.5%, 2013 631,450 36
- ----------------------------------------------------------------------------------------------------------------------
5,923,175 340
- ----------------------------------------------------------------------------------------------------------------------
Gaming/Leisure--1.0%
750M MGM Mirage, Inc., 8.5%, 2010 847,500 48
750M Park Place Entertainment Corp., 9.375%, 2007 830,625 48
- ----------------------------------------------------------------------------------------------------------------------
1,678,125 96
- ----------------------------------------------------------------------------------------------------------------------
Health Care--2.9%
1,080M Becton, Dickinson & Co., 7.15%, 2009 1,274,470 73
900M Columbia/HCA Healthcare, Inc., 7.5%, 2023 915,375 53
1,130M Tenet Healthcare Corp., 6.375%, 2011 1,087,625 62
1,500M Wyeth, 6.7%, 2011 1,716,632 98
- ----------------------------------------------------------------------------------------------------------------------
4,994,102 286
- ----------------------------------------------------------------------------------------------------------------------
Manufacturing--2.2%
875M Ingersoll-Rand Co., 9%, 2021 1,135,610 65
1,600M Newell Rubbermaid, Inc., 6.75%, 2012 1,816,474 104
800M United Technologies Corp., 7.125%, 2010 953,566 55
- ----------------------------------------------------------------------------------------------------------------------
3,905,650 224
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Media-Broadcasting--2.8%
Comcast Cable Communications, Inc.:
$1,300M 8.375%, 2007 $1,523,172 $87
850M 7.125%, 2013 980,335 56
1,480M Cox Enterprises, Inc., 8%, 2007 + 1,707,035 98
700M PanAmSat Corp., 6.375%, 2008 726,250 42
- ----------------------------------------------------------------------------------------------------------------------
4,936,792 283
- ----------------------------------------------------------------------------------------------------------------------
Media-Diversified--4.6%
750M AOL Time Warner, Inc., 6.875%, 2012 843,184 48
500M Houghton Mifflin Co., 7.2%, 2011 533,750 31
700M New York Times Co., 7.625%, 2005 761,020 44
1,600M News America, Inc., 7.3%, 2028 1,806,165 104
1,000M Time Warner, Inc., 6.875%, 2018 1,112,616 64
Viacom, Inc.:
775M 7.75%, 2005 851,113 49
500M 8.625%, 2012 635,634 36
360M 8.875%, 2014 470,589 27
900M Walt Disney Co., 7.3%, 2005 966,080 55
- ----------------------------------------------------------------------------------------------------------------------
7,980,151 458
- ----------------------------------------------------------------------------------------------------------------------
Metals/Mining--1.6%
1,446M Hanson PLC, 7.875%, 2010 1,725,153 99
950M Thiokol Corp., 6.625%, 2008 1,056,991 61
- ----------------------------------------------------------------------------------------------------------------------
2,782,144 160
- ----------------------------------------------------------------------------------------------------------------------
Real Estate--8.6%
1,600M Archstone-Smith Trust, 7.9%, 2016 (REIT) 1,955,662 112
AvalonBay Communities, Inc. (REIT):
1,900M 7.5%, 2010 2,229,711 128
200M 6.625%, 2011 224,428 13
1,800M Boston Properties, Inc., 5%, 2015 (REIT) 1,738,363 100
1,350M Duke-Weeks Realty Corp., 7.75%, 2009 (REIT) 1,591,896 91
EOP Operating LP (REIT):
1,705M 8.1%, 2010 2,049,690 118
150M 7.25%, 2018 173,056 10
1,900M Mack-Cali Realty LP, 7.75%, 2011 (REIT) 2,247,349 129
- ----------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
FIRST INVESTORS INVESTMENT GRADE FUND
September 30, 2003
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Real Estate (continued)
Simon Property Group, Inc. (REIT):
$1,875M 7.875%, 2016 + $2,268,823 $130
425M 7.375%, 2018 501,770 29
- ----------------------------------------------------------------------------------------------------------------------
14,980,748 860
- ----------------------------------------------------------------------------------------------------------------------
Retail-General Merchandise--4.4%
1,750M Federated Department Stores, Inc., 7.45%, 2017 2,111,617 121
900M Lowe's Companies, Inc., 8.25%, 2010 1,119,722 64
800M RadioShack Corp., 7.375%, 2011 944,070 54
Target Corp.:
235M 5.375%, 2009 256,683 15
1,620M 7.5%, 2010 1,961,745 113
Wal-Mart Stores, Inc.:
700M 8%, 2006 816,197 47
400M 8.5%, 2024 438,870 25
- ----------------------------------------------------------------------------------------------------------------------
7,648,904 439
- ----------------------------------------------------------------------------------------------------------------------
Services--2.2%
750M Allied Waste NA, Inc., 8.875%, 2008 815,625 47
ERAC USA Finance Enterprise Co.:
750M 9.125%, 2004 810,815 47
1,375M 7.35%, 2008 + 1,593,063 91
520M 8%, 2011 + 625,852 36
- ----------------------------------------------------------------------------------------------------------------------
3,845,355 221
- ----------------------------------------------------------------------------------------------------------------------
Telecommunications--4.0%
500M Chesapeake & Potomac Telephone Co.
of Maryland, 8.3%, 2031 634,196 36
1,200M Deutsche Telekom AG, 8.5%, 2010 1,470,196 85
GTE Corp.:
909M 6.84%, 2018 1,033,707 59
1,400M 7.9%, 2027 1,579,018 91
480M Qwest Services Corp., 13.5%, 2010 + 561,600 32
725M Sprint Capital Corp., 6.375%, 2009 789,318 45
750M Vodafone AirTouch PLC, 7.75%, 2010 906,465 52
- ----------------------------------------------------------------------------------------------------------------------
6,974,500 400
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Transportation--6.4%
$1,341M Attransco, Inc., 6.12%, 2008 + $1,463,484 $84
Burlington Northern Santa Fe Corp.:
725M 7.875%, 2007 853,788 49
700M 7.125%, 2010 833,982 48
700M 6.75%, 2011 811,122 47
Canadian National Railway Co.:
810M 6.45%, 2006 893,262 51
850M 7.375%, 2031 1,032,011 59
1,600M Norfolk Southern Corp., 7.7%, 2017 1,987,618 114
750M Southwest Airlines Co., 6.126%, 2006 830,555 48
1,700M Union Pacific Corp., 7.375%, 2009 2,006,694 115
300M Union Pacific Railroad, 7.28%, 2011 358,319 21
- ----------------------------------------------------------------------------------------------------------------------
11,070,835 636
- ----------------------------------------------------------------------------------------------------------------------
Utilities--6.7%
700M Columbia Energy Group, 6.8%, 2005 764,355 44
Consumers Energy Co.:
735M 6.375%, 2008 806,904 46
1,500M 6.875%, 2018 1,758,360 101
1,000M DPL, Inc., 6.875%, 2011 1,032,850 59
1,650M Duke Capital Corp., 8%, 2019 1,852,516 107
500M Entergy Gulf States, Inc., 6.2%, 2033 + 466,803 27
547M Niagara Mohawk Holdings, Inc., 7.625%, 2005 603,168 35
600M NiSource Finance Corp., 7.875%, 2010 716,318 41
1,350M PP&L Capital Funding, Inc., 8.375%, 2007 1,576,712 90
775M PSI Energy, Inc., 8.85%, 2022 1,043,330 60
900M Wisconsin Power & Light Co., 7%, 2007 1,017,283 58
- ----------------------------------------------------------------------------------------------------------------------
11,638,599 668
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Corporate Bonds (cost $136,936,840) 148,659,361 8,527
- ----------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--5.0%
U.S. Treasury Notes:
1,000M 7.875%, 2004 1,075,508 62
2,000M 6.625%, 2007 2,303,986 132
1,300M 6%, 2009 1,502,466 86
3,300M 6.5%, 2010 3,917,077 225
- ----------------------------------------------------------------------------------------------------------------------
Total Value of U.S. Government Obligations (cost $8,546,965) 8,799,037 505
- ----------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
FIRST INVESTORS INVESTMENT GRADE FUND
September 30, 2003
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
Principal For Each
Amount $10,000 of
or Shares Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
PASS THROUGH CERTIFICATES--4.2%
Real Estate--.9%
$1,387M FDA Queens LP, 6.99%, 2017 $1,598,150 $92
- ----------------------------------------------------------------------------------------------------------------------
Transportation--3.3%
779M American Airlines, Inc., 7.377%, 2019 476,477 27
446M Canadian National Railway Co., 7.195%, 2016 521,689 30
Continental Airlines, Inc.:
535M 6.748%, 2017 392,492 23
1,525M 8.388%, 2020 1,133,229 65
1,268M FedEx Corp., 7.5%, 2018 1,486,740 85
738M NorthWest Airlines, Inc., 8.072%, 2019 822,821 47
1,028M NWA Trust, 10.23%, 2012 817,321 47
- ----------------------------------------------------------------------------------------------------------------------
5,650,769 324
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Pass Through Certificates (cost $8,135,426) 7,248,919 416
- ----------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS--1.0%
1,600M Fannie Mae, 6.125%, 2012 (cost $1,738,750) 1,820,496 104
- ----------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS--.9%
Virginia State Housing Development Authority:
800M 6.51%, 2019, Series "A" 832,704 48
710M 7%, 2022, Series "M" 789,698 45
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Municipal Bonds (cost $1,474,294) 1,622,402 93
- ----------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--.1%
Information Technology
Allstream, Inc.:
83 * Class "A" 3,219 --
4,476 * Class "B" 174,788 10
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $123,500) 178,007 10
- ----------------------------------------------------------------------------------------------------------------------
SHORT-TERM U.S. GOVERNMENT AGENCY
OBLIGATIONS--1.0%
$1,700M Fannie Mae, 1%, 10/6/03 (cost $1,699,764) 1,699,764 97
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--.3%
$500M ChevronTexaco Corp., 1.02%,
10/6/03 (cost $499,929) $499,929 $29
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $159,155,468) 97.8% 170,527,915 9,781
Other Assets, Less Liabilities 2.2 3,811,773 219
- ----------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $174,339,688 $10,000
======================================================================================================================
* Non-income producing
+ See Note 4
See notes to financial statements
Portfolio Managers' Letter
FIRST INVESTORS FUND FOR INCOME, INC.
Dear Investor:
This is the annual report for the First Investors Fund For Income for the
fiscal year ended September 30, 2003. During the period, the Fund's return
on a net asset value basis was 25.8% for Class A shares and 25.2% for Class
B shares, including dividends of 24 cents per share on Class A shares and
22 cents per share on Class B shares.
The rebound in the overall high yield market, after several poor years,
had the greatest influence on the Fund's performance. The high yield rally
started shortly after the beginning of the reporting period and ran more or
less uninterrupted with only a brief dip in July. A low, albeit volatile
interest rate environment, declining default rates and improving business
fundamentals associated with a strengthening economy caused a return of
confidence in the high yield market. Risk taking was generally rewarded, as
the lowest-rated names generally outperformed middle-rated and higher-rated
high yield bonds.
The top contributors to the Fund's performance during the period were those
securities and sectors that rebounded from low prices as a result of better
liquidity, renewed investor confidence or improved results. In particular,
the cable television sector, which had been under heavy pressure from
investors, recovered significantly during the reporting period. The Fund's
holdings in Cablevisions Systems, Charter Communications and Adelphia
Communications all aided performance.
The Fund's performance was hurt by some investments whose issuing company
failed or remained distressed. These included Texas Petrochemicals, AES
Drax, and DeCrane Aircraft. Texas Petrochemicals and AES Drax defaulted
during the year. DeCrane, which makes aircraft interiors, declined with the
downturn in aircraft manufacturing, particularly among business jets. The
Fund's performance was also hurt by an underweight of utilities industry
holdings, as the sector recovered from distressed levels during the year.
In addition, investments that merely "earned their coupon" during the year
served as a drag on the Fund's performance. These included investments that
were not considered troubled, high-coupon, short-dated bonds and some
low-coupon bonds purchased later in the year.
Thank you for placing your trust in First Investors. As always, we
appreciate the opportunity to serve your investment needs.
Sincerely,
/S/ RICHARD T. BOURKE
Richard T. Bourke
Co-Portfolio Manager
/S/ GREG MILLER
Greg Miller
Co-Portfolio Manager
October 31, 2003
Cumulative Performance Information
FIRST INVESTORS FUND FOR INCOME, INC.
Comparison of change in value of $10,000 investment in the First Investors
Fund For Income, Inc. (Class A shares) and the CS First Boston High Yield
Index.
FUND FOR INCOME
GRAPH PLOTS
As of September 30, 2003
FIRST INVESTORS CS FIRST BOSTON
FUND FOR INCOME HIGH YIELD INDEX
DEC 93 $ 9,425 $10,000
DEC 94 9,489 9,903
DEC 95 11,248 11,624
DEC 96 12,756 13,068
DEC 97 14,366 14,718
SEP 98 14,367 14,409
SEP 99 14,850 14,978
SEP 00 15,255 15,266
SEP 01 13,699 14,513
SEP 02 13,491 14,927
SEP 03 16,969 19,114
(INSET BOX IN CHART READS:)
Average Annual Total Returns*
Class A Shares N.A.V. Only S.E.C. Standardized
One Year 25.78% 18.60%
Five Years 3.29% 2.09%
Ten Years 6.50% 5.87%
S.E.C. 30-Day Yield 7.49%
Class B Shares
One Year 25.24% 21.24%
Five Years 2.63% 2.27%
Since Inception
(1/12/95) 6.14% 6.14%
S.E.C. 30-Day Yield 7.23%
The graph compares a $10,000 investment in the First Investors Fund For
Income, Inc. (Class A shares) beginning 12/31/93 with a theoretical
investment in the CS First Boston High Yield Index (the "Index"). The Index
is designed to measure the performance of the high yield bond market. As of
9/30/03, the Index consisted of 1,633 different issues, most of which were
cash pay, but also included in the Index were zero-coupon bonds, step
bonds, payment-in-kind bonds and bonds which were in default. As of
9/30/03, approximately 6.8% of the market value of the Index was in
default. The bonds included in the Index had an average life of 7.0 years,
an average maturity of 7.3 years, an average duration of 4.0 years and an
average coupon of 9.2%. It is not possible to invest directly in this
Index. In addition, the Index does not take into account fees and expenses
that an investor would incur in purchasing securities in the Index. For
purposes of the graph and the accompanying table, unless otherwise
indicated, it has been assumed that the maximum sales charge was deducted
from the initial $10,000 investment in the Fund and all dividends and
distributions were reinvested. Class B shares performance may be greater
than or less than that shown in the line graph above for Class A shares
based on differences in sales loads and fees paid by shareholders investing
in the different classes.
* Average Annual Total Return figures (for the periods ended 9/30/03)
include the reinvestment of all dividends and distributions. "N.A.V. Only"
returns are calculated without sales charges. The Class A "S.E.C.
Standardized" returns shown are based on the maximum sales charge of 5.75%
(prior to 6/17/02, the maximum sales charge was 6.25%). The Class B "S.E.C.
Standardized" returns are adjusted for the applicable deferred sales charge
(maximum of 4% in the first year). Results represent past performance and
do not indicate future results. Investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than the original cost. The issuers of the high yield
bonds, in which the Fund primarily invests, pay higher interest rates
because they have a greater likelihood of financial difficulty, which could
result in their inability to repay the bonds fully when due. Prices of high
yield bonds are also subject to greater fluctuations. CS First Boston High
Yield Index figures are from CS First Boston Corporation and all other
figures are from First Investors Management Company, Inc.
Portfolio of Investments
FIRST INVESTORS FUND FOR INCOME, INC.
September 30, 2003
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS--85.6%
Aerospace/Defense--2.4%
$3,450M Alliant Techsystems, Inc., 8.5%, 2011 $3,777,750 $69
3,000M DeCrane Aircraft Holdings, Inc., 12%, 2008 1,425,000 26
2,700M GenCorp, Inc., 9.5%, 2013 + 2,781,000 51
L-3 Communications Corp.:
3,000M 8%, 2008 3,131,250 57
1,600M 7.625%, 2012 1,740,000 32
- ----------------------------------------------------------------------------------------------------------------------
12,855,000 235
- ----------------------------------------------------------------------------------------------------------------------
Automotive--7.1%
6,725M Accuride Corp., 9.25%, 2008 6,741,812 122
3,400M Asbury Automotive Group, Inc., 9%, 2012 3,417,000 63
4,208M Cambridge Industries Liquidating Trust ++ ** 42,084 1
6,800M Collins & Aikman Products Co., 11.5%, 2006 5,338,000 98
5,450M Dana Corp., 9%, 2011 5,995,000 110
5,500M Delco Remy International, Inc., 11%, 2009 5,032,500 92
2,500M Special Devices, Inc., 11.375%, 2008 2,265,625 41
5,250M TRW Automotive, Inc., 9.375%, 2013 + 5,932,500 109
3,600M United Components, Inc., 9.375%, 2013 + 3,762,000 69
- ----------------------------------------------------------------------------------------------------------------------
38,526,521 705
- ----------------------------------------------------------------------------------------------------------------------
Chemicals--8.0%
3,150M Equistar Chemicals LP, 10.625%, 2011 + 3,134,250 57
450M Ethyl Corp., 8.875%, 2010 463,500 8
3,500M FMC Corp., 10.25%, 2009 4,007,500 73
2,600M Huntsman, LLC, 11.625%, 2010 + 2,548,000 47
7,000M IMC Global, Inc., 10.875%, 2013 + 7,280,000 133
8,000M Lyondell Chemical Co., 10.875%, 2009 7,160,000 131
4,375M Millennium America, Inc., 9.25%, 2008 4,560,938 84
3,250M Noveon, Inc., 11%, 2011 3,688,750 68
900M Omnova Solutions, Inc., 11.25%, 2010 + 958,500 18
8,500M Terra Capital, Inc., 11.5%, 2010 7,862,500 145
4,500M Texas Petrochemicals Corp., 11.125%, 2006 ++ 1,282,500 23
900M Westlake Chemical Corp., 8.75%, 2011 + 938,250 17
- ----------------------------------------------------------------------------------------------------------------------
43,884,688 804
- ----------------------------------------------------------------------------------------------------------------------
Consumer Non-Durables--3.2%
3,420M AKI, Inc., 10.5%, 2008 3,608,100 66
1,707M Chattem, Inc., 8.875%, 2008 1,715,535 31
- ----------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
FIRST INVESTORS FUND FOR INCOME, INC.
September 30, 2003
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Consumer Non-Durables (continued)
$2,500M GFSI, Inc., 9.625%, 2007 $2,162,500 $40
3,350M Hines Horticulture, Inc., 12.75%, 2005 3,567,750 65
4,000M Playtex Products, Inc., 9.375%, 2011 3,860,000 71
2,500M Remington Arms Co., 10.5%, 2011 2,575,000 47
- ----------------------------------------------------------------------------------------------------------------------
17,488,885 320
- ----------------------------------------------------------------------------------------------------------------------
Energy--9.6%
7,000M Bluewater Finance, Ltd., 10.25%, 2012 7,140,000 131
4,500M Chesapeake Energy Corp., 9%, 2012 5,085,000 93
5,050M Compagnie Generale de Geophysique,
10.625%, 2007 5,353,000 98
4,075M Dresser, Inc., 9.375%, 2011 4,299,125 79
13,750M El Paso Production Holding Co., 7.75%, 2013 + 13,131,250 240
1,800M Energy Partners, Ltd., 8.75%, 2010 + 1,854,000 34
Giant Industries, Inc.:
1,730M 9%, 2007 1,686,750 31
8,500M 11%, 2012 8,415,000 154
Tesoro Petroleum Corp.:
3,900M 9%, 2008 3,822,000 70
1,750M 9.625%, 2008 1,750,000 32
- ----------------------------------------------------------------------------------------------------------------------
52,536,125 962
- ----------------------------------------------------------------------------------------------------------------------
Food/Beverage/Tobacco--2.2%
5,000M Canandaigua Brands, Inc., 8.5%, 2009 5,300,000 97
250M Domino's, Inc., 8.25%, 2011 + 265,313 5
5,500M Land O'Lakes, Inc., 8.75%, 2011 4,647,500 85
1,550M Pilgrim's Pride Corp., 9.625%, 2011 1,681,750 31
250M Reddy Ice Group, Inc., 8.875%, 2011 + 262,813 5
- ----------------------------------------------------------------------------------------------------------------------
12,157,376 223
- ----------------------------------------------------------------------------------------------------------------------
Food/Drug--2.6%
6,500M Di Giorgio Corp., 10%, 2007 6,483,750 119
4,000M Ingles Markets, Inc., 8.875%, 2011 4,060,000 74
3,500M Roundy's, Inc., 8.875%, 2012 3,675,000 67
- ----------------------------------------------------------------------------------------------------------------------
14,218,750 260
- ----------------------------------------------------------------------------------------------------------------------
Forest Products/Containers--4.5%
9,300M AEP Industries, Inc., 9.875%, 2007 9,160,500 168
4,000M Potlatch Corp., 10%, 2011 4,460,000 82
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Forest Products/Containers (continued)
$4,300M Stone Container Corp., 9.75%, 2011 $4,708,500 $86
3,625M Tekni-Plex, Inc., 12.75%, 2010 3,570,625 65
2,600M Tembec Industries, Inc., 8.5%, 2011 2,548,000 47
- ----------------------------------------------------------------------------------------------------------------------
24,447,625 448
- ----------------------------------------------------------------------------------------------------------------------
Gaming/Leisure--2.8%
2,250M Circus & Eldorado/Silver Legacy, 10.125%, 2012 2,250,000 41
4,550M Isle of Capri Casinos, Inc., 8.75%, 2009 4,845,750 88
3,000M John Q. Hammons Hotels, LP, 8.875%, 2012 3,262,500 60
2,445M Outboard Marine Corp., 10.75%, 2008 ++ ** 3,055 --
Park Place Entertainment Corp.:
3,500M 9.375%, 2007 3,876,250 71
500M 7%, 2013 519,375 10
500M Royal Caribbean Cruises, Ltd., 8%, 2010 530,000 10
- ----------------------------------------------------------------------------------------------------------------------
15,286,930 280
- ----------------------------------------------------------------------------------------------------------------------
Health Care--7.4%
4,176M Advanced Medical Optics, Inc., 9.25%, 2010 4,593,600 84
955M ALARIS Medical Systems, Inc., 7.25%, 2011 964,550 18
900M Fisher Scientific International, Inc., 8.125%, 2012 960,750 18
4,400M Genesis Health Ventures, Inc., 9.75%, 2005 ++ ** 89,760 2
4,000M Insight Health Services Corp., 9.875%, 2011 4,250,000 78
500M Medex, Inc., 8.875%, 2013 + 531,250 10
4,500M MedQuest, Inc., 11.875%, 2012 4,770,000 86
2,800M Owens & Minor, Inc., 8.5%, 2011 3,087,000 57
3,600M PerkinElmer, Inc., 8.875%, 2013 3,942,000 72
1,725M Quintiles Transnational Corp., 10%, 2013 + 1,789,688 33
3,500M Rotech Healthcare, Inc., 9.5%, 2012 3,710,000 68
12,400M Tenet Healthcare Corp., 6.375%, 2011 11,935,000 218
- ----------------------------------------------------------------------------------------------------------------------
40,623,598 744
- ----------------------------------------------------------------------------------------------------------------------
Housing--2.2%
3,150M Integrated Electrical Services, Inc., 9.375%, 2009 3,260,250 60
Nortek, Inc.:
4,000M 9.125%, 2007 4,140,000 76
1,500M 9.875%, 2011 1,593,750 29
2,700M William Lyon Homes, Inc., 10.75%, 2013 2,943,000 54
- ----------------------------------------------------------------------------------------------------------------------
11,937,000 219
- ----------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
FIRST INVESTORS FUND FOR INCOME, INC.
September 30, 2003
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Information Technology--1.0%
$3,100M ChipPac International, Ltd., 12.75%, 2009 $3,472,000 $64
3,000M Exodus Communications, Inc., 10.75%, 2009 ++ ** 3,750 --
Iron Mountain, Inc.:
1,000M 8.625%, 2013 1,070,000 20
1,000M 6.625%, 2016 952,500 17
- ----------------------------------------------------------------------------------------------------------------------
5,498,250 101
- ----------------------------------------------------------------------------------------------------------------------
Investment/Finance Companies--.9%
2,600M Finova Group, Inc., 7.5%, 2009 1,300,000 24
3,400M General Motors Acceptance Corp., 4.5%, 2006 3,474,633 63
- ----------------------------------------------------------------------------------------------------------------------
4,774,633 87
- ----------------------------------------------------------------------------------------------------------------------
Manufacturing--2.6%
Columbus McKinnon Corp.:
3,500M 8.5%, 2008 3,097,500 56
500M 10%, 2010 + 528,750 10
2,500M Day International Group, Inc., 11.125%, 2005 2,543,400 47
1,800M Eagle-Picher Industries, Inc., 9.75%, 2013 + 1,899,000 35
6,000M Wolverine Tube, Inc., 10.5%, 2009 6,060,000 111
- ----------------------------------------------------------------------------------------------------------------------
14,128,650 259
- ----------------------------------------------------------------------------------------------------------------------
Media-Broadcasting--1.7%
3,000M Sinclair Broadcasting Group, Inc., 8.75%, 2011 3,277,500 60
Young Broadcasting Corp.:
2,700M 8.75%, 2007 2,754,000 50
2,920M 10%, 2011 3,109,800 57
- ----------------------------------------------------------------------------------------------------------------------
9,141,300 167
- ----------------------------------------------------------------------------------------------------------------------
Media-Cable TV--8.9%
2,275M Adelphia Communications Corp., 10.25%, 2011 ++ 1,638,000 30
2,000M Century Communications Corp., 9.5%, 2005 ++ 1,410,000 26
Charter Communications Holdings, LLC:
6,500M 10%, 2009 5,167,500 95
1,000M 10.75%, 2009 822,500 15
2,000M 10.25%, 2010 1,570,000 29
5,800M 0%-9.92%, 2011 4,132,500 76
7,650M Diva Systems Corp., 12.625%, 2008 ++ 650,250 12
12,200M Echostar DBS Corp., 9.375%, 2009 13,069,250 238
5,476M Loral Cyberstar, Inc., 10%, 2006 ++ 3,367,740 62
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Media-Cable TV (continued)
Mediacom LLC/Mediacom Capital Corp.:
$6,500M 8.5%, 2008 $6,142,500 $112
4,000M 7.875%, 2011 3,650,000 67
2,000M 9.5%, 2013 1,905,000 35
4,300M Quebecor Media, Inc., 11.125%, 2011 4,923,500 90
- ----------------------------------------------------------------------------------------------------------------------
48,448,740 887
- ----------------------------------------------------------------------------------------------------------------------
Media -Diversified--4.1%
3,890M Carmike Cinemas, Inc., 10.375%, 2009 4,103,950 75
400M CBD Media, LLC, 8.625%, 2011 + 427,000 8
250M Dex Media Finance/West, 8.5%, 2010 + 273,125 5
4,000M Garden State Newspapers, Inc., 8.625%, 2011 4,220,000 77
6,645M Mail-Well I Corp., 8.75%, 2008 6,545,325 120
1,500M R.H. Donnelley Financial Corp., 10.875%, 2012 + 1,777,500 33
3,400M Universal City Development Partners, Ltd.,
11.75%, 2010 + 3,842,000 70
1,000M Vivendi Universal SA, 9.25%, 2010 + 1,153,750 21
- ----------------------------------------------------------------------------------------------------------------------
22,342,650 409
- ----------------------------------------------------------------------------------------------------------------------
Metals/Mining--1.0%
3,728M Commonwealth Aluminum Corp., 10.75%, 2006 3,760,620 69
1,840M Euramax International, Inc., 8.5%, 2011 + 1,913,600 35
3,000M Murrin Murrin Holdings Property, Ltd.,
9.375%, 2007 ++ ** 3,750 --
- ----------------------------------------------------------------------------------------------------------------------
5,677,970 104
- ----------------------------------------------------------------------------------------------------------------------
Retail-General Merchandise--1.5%
3,204M Big 5 Corp., 10.875%, 2007 3,384,225 62
4,000M Michaels Stores, Inc., 9.25%, 2009 4,400,000 81
250M Phillips Van-Heusen Corp., 8.125%, 2013 + 263,125 5
- ----------------------------------------------------------------------------------------------------------------------
8,047,350 148
- ----------------------------------------------------------------------------------------------------------------------
Services--5.6%
Allied Waste NA, Inc.:
10,000M 10%, 2009 10,887,500 199
2,700M 9.25%, 2012 2,997,000 55
1,800M 7.875%, 2013 1,894,500 35
5,350M Hydrochem Industrial Services, Inc.,
10.375%, 2007 3,771,750 69
- ----------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
FIRST INVESTORS FUND FOR INCOME, INC.
September 30, 2003
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Services (continued)
$1,000M IESI Corp., 10.25%, 2012 $1,090,000 $20
5,825M Kindercare Learning Centers, Inc., 9.5%, 2009 5,883,250 108
United Rentals, Inc.:
2,000M 9%, 2009 2,080,000 38
2,000M 9.25%, 2009 2,080,000 38
- ----------------------------------------------------------------------------------------------------------------------
30,684,000 562
- ----------------------------------------------------------------------------------------------------------------------
Telecommunications--1.9%
4,000M Adelphia Business Solutions, Inc., 13%, 2003 ++ 420,000 8
6,050M E. Spire Communications, Inc., 13%, 2005 ++ 605 --
2,400M ICG Services, Inc., 10%, 2008 ++ ** 3,000 --
6,350M Pac-West Telecommunications, Inc., 13.5%, 2009 5,556,250 102
RCN Corp.:
9,000M 11.125%, 2007 4,320,000 79
300M 11%, 2008 141,000 2
5,500M Viatel, Inc., 12.5%, 2008 ++ ** 3,602 --
4,000M Worldwide Fiber, Inc., 12%, 2009 ++ 400 --
XO Communications, Inc.:
2,750M 9.45%, 2008 ++ ** 3,438 --
7,000M 12.5%, 2006 ++ ** 8,750 --
- ----------------------------------------------------------------------------------------------------------------------
10,457,045 191
- ----------------------------------------------------------------------------------------------------------------------
Transportation--.9%
2,700M General Maritime Corp., 10%, 2013 3,030,750 55
1,750M Overseas Shipholding Group, Inc., 8.25%, 2013 1,837,500 34
- ----------------------------------------------------------------------------------------------------------------------
4,868,250 89
- ----------------------------------------------------------------------------------------------------------------------
Utilities--.0%
5,500M AES Drax Energy, Ltd., 11.5%, 2010 ++ 68,750 1
- ----------------------------------------------------------------------------------------------------------------------
Wireless Communications--3.5%
5,000M Crown Castle International Corp., 9.375%, 2011 5,362,500 98
5,500M Nextel Communications, Inc., 9.95%, 2008 5,809,375 106
Triton Communications, LLC:
3,500M 8.75%, 2011 3,508,750 64
4,350M 8.5%, 2013 4,687,125 86
- ----------------------------------------------------------------------------------------------------------------------
19,367,750 354
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Corporate Bonds (cost $511,249,394) 467,467,836 8,559
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
Shares or For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--3.7%
Consumer Non-Durables--.0%
7,714 * Worldtex, Inc., 12%** $146,566 $3
- ----------------------------------------------------------------------------------------------------------------------
Financial--.2%
40,800 Astoria Financial Corp., 12%, 2013, Series "B" 1,111,800 20
- ----------------------------------------------------------------------------------------------------------------------
Health Care--.0%
115 * Leiner Health Products, Inc., 9.625%, 2007 ** 1 --
- ----------------------------------------------------------------------------------------------------------------------
Media - Cable TV--3.5%
180,793 CSC Holdings, Inc., 11.125%, 2008, Series "M" 18,938,083 347
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Preferred Stocks (cost $20,048,457) 20,196,450 370
- ----------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--2.1%
U.S. Treasury Notes:
$5,500M 7.25%, 2004 5,795,845 106
5,000M 7%, 2006 5,697,660 105
- ----------------------------------------------------------------------------------------------------------------------
Total Value of U.S. Government Obligations (cost $10,685,424) 11,493,505 211
- ----------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--.6%
Automotive--.0%
37,387 * Safelite Glass Corp. - Class "B" + ** 224,322 4
2,523 * Safelite Realty Corp. ** 25 --
- ----------------------------------------------------------------------------------------------------------------------
224,347 4
- ----------------------------------------------------------------------------------------------------------------------
Consumer Non-Durables--.0%
25,200 * Worldtex, Inc. ** 252 --
- ----------------------------------------------------------------------------------------------------------------------
Media - Cable TV--.3%
41,221 * Echostar Communications Corp.-- Class "A" 1,577,528 29
- ----------------------------------------------------------------------------------------------------------------------
Telecommunications--.3%
5,805 * ICG Communications, Inc. 40,635 1
32,386 * NTL, Inc. 1,526,028 28
18,224 * World Access, Inc. 26 --
- ----------------------------------------------------------------------------------------------------------------------
1,566,689 29
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $10,208,553) 3,368,816 62
- ----------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
FIRST INVESTORS FUND FOR INCOME, INC.
September 30, 2003
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Units or $10,000 of
Warrants Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
UNITS--.5%
Metals/Mining
2,500 Russel Metals, Inc. (cost $2,500,000) *** $2,675,000 $49
- ----------------------------------------------------------------------------------------------------------------------
WARRANTS--.0%
Aerospace/Defense--.0%
3,000 * DeCrane Aircraft Holdings, Inc. (expiring 9/30/08) + 30 --
- ----------------------------------------------------------------------------------------------------------------------
Automotive--.0%
91,625 * Safelite Glass Corp. - Class "A" (expiring 9/29/06) + ** 916 --
61,084 * Safelite Glass Corp. - Class "B" (expiring 9/29/07) + ** 611 --
- ----------------------------------------------------------------------------------------------------------------------
1,527 --
- ----------------------------------------------------------------------------------------------------------------------
Media - Cable TV--.0%
22,950 * Diva Systems Corp. (expiring 3/1/08) + 230 --
54,020 * Loral Cyberstar, Inc. (expiring 12/26/06) 540 --
- ----------------------------------------------------------------------------------------------------------------------
770 --
- ----------------------------------------------------------------------------------------------------------------------
Telecommunications--.0%
11,500 * E. Spire Communications, Inc. (expiring 11/1/05) + ** -- --
3,500 * GT Group Telecom, Inc. (expiring 2/1/10) + 2,625 --
5,600 * Powertel, Inc. (expiring 2/1/06) ** 117,111 2
- ----------------------------------------------------------------------------------------------------------------------
119,736 2
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Warrants (cost $5,065,967) 122,063 2
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
SHORT-TERM U.S. GOVERNMENT
AGENCY OBLIGATIONS--2.6%
$14,100M Fannie Mae, 1%, 10/6/03 (cost $14,098,041) $14,098,041 $258
- ----------------------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--2.1%
11,595M Coca-Cola Co., 1%, 10/3/03 (cost $11,594,356) 11,594,356 212
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $585,450,192) 97.2% 531,016,067 9,723
Other Assets, Less Liabilities 2.8 15,152,358 277
- ----------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $546,168,425 $10,000
======================================================================================================================
+ See Note 4
++ In default as to principal and/or interest payment
* Non-income producing
** Security valued at fair value (see Note 1A)
*** Each unit consists of one Russel Metals, Inc. $600 principal amount
guaranteed senior note 10%, due 2009 and one Russel Metals, Inc. USA LLC
$400 principal amount guaranteed senior note 10%, due 2009.
See notes to financial statements
FIRST INVESTORS FUND FOR INCOME, INC.
The dollar weighted average of credit ratings of all bonds held by the Fund
during the fiscal year ended September 30, 2003 and the dollar weighted
average of the total of the Fund's investments in step bonds and
pay-in-kind bonds during the 2003 fiscal year, computed on a monthly basis,
are set forth below. This information reflects the average composition of
the Fund's assets during the 2003 fiscal year and is not necessarily
representative of the Fund as of the end of its 2003 fiscal year, the
current fiscal year or at any other time in the future.
- --------------------------------------------------------------------
Comparable Quality of
Rated by Unrated Securities to
Moody's Bonds Rated by Moody's
- --------------------------------------------------------------------
Aaa 3.01% 0.00%
Baa1 0.00 0.00
Baa2 0.58 0.00
Baa3 0.00 0.00
Ba1 3.45 0.00
Ba2 3.28 0.00
Ba3 10.86 0.00
B1 9.50 0.00
B2 30.30 0.00
B3 25.00 0.00
Caa1 6.42 0.00
Caa2 0.55 0.00
Caa3 1.14 0.00
Ca 3.35 1.14
C 0.03 1.39
- --------------------------------------------------------------------
Step Bonds 4.33%
Pay-in-kind Bonds .02%
See notes to financial statements
This page intentionally left blank.
Statement of Assets and Liabilities
FIRST INVESTORS
September 30, 2003
CASH INVESTMENT
MANAGEMENT GOVERNMENT GRADE INCOME
------------ ------------ ------------ ------------
Assets
Investments in securities:
At identified cost $183,736,962 $203,357,018 $159,155,468 $585,450,192
============ ============ ============ ============
At value (Note 1A) $183,736,962 $206,929,991 $170,527,915 $531,016,067
Cash 1,566,772 429,951 2,251,496 614,061
Receivables:
Interest and dividends 323,700 972,773 2,857,756 13,207,796
Shares sold -- 286,801 697,162 552,088
Investment securities sold -- 1,143,897 -- 2,701,201
Other assets 24,200 27,482 64 232,843
------------ ------------ ------------ ------------
Total Assets 185,651,634 209,790,895 176,334,393 548,324,056
------------ ------------ ------------ ------------
Liabilities
Payables:
Investment securities purchased -- 3,779,002 1,473,755 500,000
Dividends payable 9,987 82,891 89,149 805,528
Shares redeemed 208,444 468,236 294,309 357,475
Accrued advisory fees 81,675 107,977 89,109 346,910
Accrued expenses 105,814 74,014 48,383 145,718
------------ ------------ ------------ ------------
Total Liabilities 405,920 4,512,120 1,994,705 2,155,631
------------ ------------ ------------ ------------
Net Assets $185,245,714 $205,278,775 $174,339,688 $546,168,425
============ ============ ============ ============
Net Assets Consist of:
Capital paid in $185,245,714 $206,679,875 $167,689,920 $723,056,319
Undistributed net investment income (deficit) -- 47,132 (1,073,397) (1,481,783)
Accumulated net realized loss on investments -- (5,021,205) (3,649,282) (120,971,986)
Net unrealized appreciation (depreciation) in value
of investments -- 3,572,973 11,372,447 (54,434,125)
------------ ------------ ------------ ------------
Total $185,245,714 $205,278,775 $174,339,688 $546,168,425
============ ============ ============ ============
Net Assets:
Class A $179,440,987 $184,368,381 $143,617,659 $509,213,688
Class B $ 5,804,727 $ 20,910,394 $ 30,722,029 $ 36,954,737
Shares outstanding (Note 6):
Class A 179,440,987 16,300,098 13,963,854 166,752,255
Class B 5,804,727 1,849,860 2,988,003 12,132,730
Net asset value and redemption price per share - Class A $ 1.00* $11.31 $10.28 $ 3.05
====== ====== ====== ======
Maximum offering price per share - Class A
(Net asset value/.9425)** N/A $12.00 $10.91 $ 3.24
====== ====== ====== ======
Net asset value and offering price per share - Class B (Note 6) $ 1.00 $11.30 $10.28 $ 3.05
====== ====== ====== ======
* Also maximum offering price per share.
** On purchases of $100,000 or more, the sales charge is reduced.
See notes to financial statements
Statement of Operations
FIRST INVESTORS
Year Ended September 30, 2003
CASH INVESTMENT
MANAGEMENT GOVERNMENT GRADE INCOME
------------ ------------ ------------ ------------
Investment Income
Income:
Interest $ 2,739,594 $ 10,086,835 $ 8,902,562 $ 44,685,778
Dividends (Note 1F) -- -- -- 2,133,724
------------ ------------ ------------ ------------
Total Income 2,739,594 10,086,835 8,902,562 46,819,502
------------ ------------ ------------ ------------
Expenses (Notes 1 and 3):
Advisory fees 981,023 2,016,328 1,122,758 3,545,679
Distribution plan expenses - Class A -- 456,596 307,246 1,356,040
Distribution plan expenses - Class B 35,076 202,356 268,028 304,822
Shareholder servicing costs 685,072 470,952 379,488 1,113,941
Professional fees 49,292 44,449 29,900 79,918
Custodian fees 34,450 34,681 20,682 49,404
Reports to shareholders 64,954 37,778 24,301 98,795
Other expenses 81,111 86,018 68,498 106,735
------------ ------------ ------------ ------------
Total expenses 1,930,978 3,349,158 2,220,901 6,655,334
Less: Expenses waived or assumed (372,240) (963,316) (370,846) --
Custodian fees paid indirectly (1,477) (2,955) (2,948) (8,251)
------------ ------------ ------------ ------------
Net expenses 1,557,261 2,382,887 1,847,107 6,647,083
------------ ------------ ------------ ------------
Net investment income 1,182,333 7,703,948 7,055,455 40,172,419
------------ ------------ ------------ ------------
Realized and Unrealized Gain (Loss) on Investments (Note 2):
Net realized gain (loss) on investments -- 8,408 (1,287,197) (40,988,935)
Net unrealized appreciation (depreciation) of investments -- (1,789,098) 7,336,387 110,648,829
------------ ------------ ------------ ------------
Net gain (loss) on investments -- (1,780,690) 6,049,190 69,659,894
------------ ------------ ------------ ------------
Net Increase in Net Assets Resulting from Operations $ 1,182,333 $ 5,923,258 $ 13,104,645 $109,832,313
============ ============ ============ ============
See notes to financial statements
Statement of Changes in Net Assets
FIRST INVESTORS
CASH MANAGEMENT GOVERNMENT
----------------------------- -----------------------------
Year Ended September 30 2003 2002 2003 2002
------------ ------------ ------------ ------------
Increase (Decrease) in Net Assets From Operations
Net investment income $ 1,182,333 $ 2,832,709 $ 7,703,948 $ 8,088,326
Net realized gain on investments -- -- 8,408 873,160
Net unrealized appreciation (depreciation) of investments -- -- (1,789,098) 636,234
------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations 1,182,333 2,832,709 5,923,258 9,597,720
------------ ------------ ------------ ------------
Dividends to Shareholders
Net investment income - Class A (1,179,371) (2,805,379) (8,582,301) (7,695,114)
Net investment income - Class B (2,962) (27,330) (801,350) (426,932)
------------ ------------ ------------ ------------
Total dividends (1,182,333) (2,832,709) (9,383,651) (8,122,046)
------------ ------------ ------------ ------------
Share Transactions*
Class A:
Proceeds from shares sold 234,463,530 276,335,247 46,898,620 43,757,168
Reinvestment of dividends 1,159,375 3,215,622 7,221,886 6,825,231
Cost of shares redeemed (248,896,616) (290,857,507) (35,011,833) (20,665,820)
------------ ------------ ------------ ------------
(13,273,711) (11,306,638) 19,108,673 29,916,579
------------ ------------ ------------ ------------
Class B:
Proceeds from shares sold 5,714,577 5,418,523 10,300,873 11,122,298
Reinvestment of dividends 2,815 32,067 740,287 414,467
Cost of shares redeemed (5,696,499) (3,940,787) (6,071,287) (1,549,612)
------------ ------------ ------------ ------------
20,893 1,509,803 4,969,873 9,987,153
------------ ------------ ------------ ------------
Net increase (decrease) from share transactions (13,252,818) (9,796,835) 24,078,546 39,903,732
------------ ------------ ------------ ------------
Net increase (decrease) in net assets (13,252,818) (9,796,835) 20,618,153 41,379,406
Net Assets
Beginning of year 198,498,532 208,295,367 184,660,622 143,281,216
------------ ------------ ------------ ------------
End of year+ $185,245,714 $198,498,532 $205,278,775 $184,660,622
============ ============ ============ ============
+Includes undistributed net investment income of $ -- $ -- $ 47,132 $ 63,291
============ ============ ============ ============
*Shares Issued and Redeemed
Class A:
Sold 234,463,530 276,335,247 4,098,534 3,850,343
Issued for dividends reinvested 1,159,375 3,215,622 633,021 600,767
Redeemed (248,896,616) (290,857,507) (3,071,484) (1,823,040)
------------ ------------ ------------ ------------
Net increase (decrease) in Class A shares outstanding (13,273,711) (11,306,638) 1,660,071 2,628,070
============ ============ ============ ============
Class B:
Sold 5,714,577 5,418,523 899,737 977,294
Issued for dividends reinvested 2,815 32,067 64,938 36,479
Redeemed (5,696,499) (3,940,787) (533,219) (135,957)
------------ ------------ ------------ ------------
Net increase in Class B shares outstanding 20,893 1,509,803 431,456 877,816
============ ============ ============ ============
See notes to financial statements
Statement of Changes in Net Assets
FIRST INVESTORS
INVESTMENT GRADE INCOME
----------------------------- -----------------------------
Year Ended September 30 2003 2002 2003 2002
------------ ------------ ------------ ------------
Increase (Decrease) in Net Assets From Operations
Net investment income $ 7,055,455 $ 5,425,493 $ 40,172,419 $ 39,664,668
Net realized loss on investments (1,287,197) (386,408) (40,988,935) (37,103,041)
Net unrealized appreciation (depreciation) of investments 7,336,387 1,798,504 110,648,829 (8,428,785)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations 13,104,645 6,837,589 109,832,313 (5,867,158)
------------ ------------ ------------ ------------
Dividends to Shareholders
Net investment income - Class A (6,630,609) (4,810,730) (38,529,726) (37,692,940)
Net investment income - Class B (1,254,542) (904,899) (2,335,735) (1,962,017)
------------ ------------ ------------ ------------
Total dividends (7,885,151) (5,715,629) (40,865,461) (39,654,957)
------------ ------------ ------------ ------------
Share Transactions*
Class A:
Proceeds from shares sold 54,335,625 47,473,392 74,169,454 43,116,454
Reinvestment of dividends 5,527,350 4,139,571 27,917,451 29,138,211
Cost of shares redeemed (22,919,488) (14,827,750) (54,438,349) (50,752,779)
------------ ------------ ------------ ------------
36,943,487 36,785,213 47,648,556 21,501,886
------------ ------------ ------------ ------------
Class B:
Proceeds from shares sold 10,815,522 10,125,998 12,429,320 6,535,725
Reinvestment of dividends 1,092,655 812,606 1,486,015 1,175,341
Cost of shares redeemed (4,647,711) (2,085,303) (5,406,924) (3,483,162)
------------ ------------ ------------ ------------
7,260,466 8,853,301 8,508,411 4,227,904
------------ ------------ ------------ ------------
Net increase from share transactions 44,203,953 45,638,514 56,156,967 25,729,790
------------ ------------ ------------ ------------
Net increase (decrease) in net assets 49,423,447 46,760,474 125,123,819 (19,792,325)
Net Assets
Beginning of year 124,916,241 78,155,767 421,044,606 440,836,931
------------ ------------ ------------ ------------
End of year+ $174,339,688 $124,916,241 $546,168,425 $421,044,606
============ ============ ============ ============
+Includes undistributed net investment deficit of $ (1,073,397) $ (540,137) $ (1,481,783) $ (1,141,323)
============ ============ ============ ============
*Shares Issued and Redeemed
Class A:
Sold 5,422,036 4,854,850 25,912,750 14,895,545
Issued for dividends reinvested 549,544 422,822 9,743,823 10,076,127
Redeemed (2,282,798) (1,519,576) (19,071,100) (17,411,428)
------------ ------------ ------------ ------------
Net increase in Class A shares outstanding 3,688,782 3,758,096 16,585,473 7,560,244
============ ============ ============ ============
Class B:
Sold 1,080,259 1,034,955 4,363,332 2,269,331
Issued for dividends reinvested 108,648 82,994 517,968 409,120
Redeemed (463,573) (214,018) (1,892,570) (1,214,018)
------------ ------------ ------------ ------------
Net increase in Class B shares outstanding 725,334 903,931 2,988,730 1,464,433
============ ============ ============ ============
See notes to financial statements
Notes to Financial Statements
September 30, 2003
1. Significant Accounting Policies--First Investors Cash Management Fund,
Inc. ("Cash Management Fund"), First Investors Government Fund, Inc.
("Government Fund"), First Investors Investment Grade Fund ("Investment
Grade Fund"), a series of First Investors Series Fund ("Series Fund"),
and First Investors Fund For Income, Inc. ("Income Fund") are registered
under the Investment Company Act of 1940 (the "1940 Act") as
diversified, open-end management investment companies. Each Fund
accounts separately for its assets, liabilities and operations of the
Fund. Series Fund offers four additional series which are not included
in this report. The objective of each Fund is as follows:
Cash Management Fund seeks to earn a high rate of current income
consistent with the preservation of capital and maintenance of
liquidity.
Government Fund seeks to achieve a significant level of current income
which is consistent with security and liquidity of principal.
Investment Grade Fund seeks to generate a maximum level of income
consistent with investment in investment grade debt securities.
Income Fund primarily seeks high current income and secondarily seeks
capital appreciation.
A. Security Valuation--The Cash Management Fund values its portfolio
securities in accordance with the amortized cost method of valuation
under Rule 2a-7 under the 1940 Act. Amortized cost is an approximation
of market value of an instrument, whereby the difference between its
acquisition cost and market value at maturity is amortized on a
straight-line basis over the remaining life of the instrument. The
effect of changes in the market value of a security as a result of
fluctuating interest rates is not taken into account and thus the
amortized cost method of valuation may result in the value of a security
being higher or lower than its actual market value. With respect to each
of the other Funds, except as provided below, a security listed or
traded on an exchange or the Nasdaq Stock Market is valued at its last
sale price on the exchange or market where the security is principally
traded, and lacking any sales, the security is valued at the mean
between the closing bid and asked prices. Securities traded in the
over-the-counter ("OTC") market (including securities listed on
exchanges whose primary market is believed to be OTC) are valued at the
mean between the last bid and asked prices based upon quotes furnished
by a market maker for such securities. Securities may also be priced by
a pricing service approved by the applicable Fund's Board of
Directors/Trustees. The pricing service considers security type, rating,
market condition and yield data as well as market quotations, prices
provided by market makers and other available information in determining
value. Short-term debt securities that mature in 60 days or less are
valued at amortized cost. If market quotations or prices are not readily
available or determined to be unreliable, the securities will be valued
at fair value as determined in good faith pursuant to procedures adopted
the Fund's Board of Directors/Trustees. At September 30, 2003, the
Income Fund held eighteen securities that were fair valued by its
Valuation Committee with an aggregate value of $650,993 representing
0.1% of the Fund's net assets.
B. Federal Income Taxes--No provision has been made for federal income
taxes on net income or capital gains since it is the policy of each Fund
to continue to comply with the special provisions of the Internal
Revenue Code applicable to investment companies, and to make sufficient
distributions of income and capital gains (in excess of any available
capital loss carryovers) to relieve it from all, or substantially all,
federal income taxes.
At September 30, 2003, capital loss carryovers were as follows:
Year Capital Loss Carryovers Expire
--------------------------------------------------------------------------------------------------
Fund Total 2004 2005 2007 2008 2009 2010 2011
- ---- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Government $3,420,990 $ 204,508 $ -- $ -- $1,017,364 $2,144,197 $ -- $ 54,921
Investment
Grade 2,150,642 -- -- -- -- 1,715,940 27,419 407,283
Income 94,718,360 4,514,945 3,055,280 842,581 1,832,458 13,810,649 18,563,112 52,099,335
C. Distributions to Shareholders--The Cash Management Fund declares
distributions daily and pays distributions monthly. Distributions are
declared from the total of net investment income plus or minus all
realized short-term gains and losses on investments. Dividends from net
investment income of each of the other Funds are generally declared
daily and paid monthly and distributions from net realized capital
gains, if any, are generally declared and paid annually. Income
dividends and capital gain distributions are determined in accordance
with income tax regulations which may differ from accounting principles
generally accepted in the United States of America. These differences
are primarily due to differing treatments for mortgage-backed
securities, capital loss carryforwards and post-October capital losses.
D. Use of Estimates--The preparation of the financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of revenue and
expense during the reporting period. Actual results could differ from
those estimates.
E. Expense Allocation--Expenses directly charged or attributable to a
Fund are paid from the assets of that Fund. General expenses of Series
Fund are allocated among and charged to the assets of each Fund in
Notes to Financial Statements (continued)
September 30, 2003
Series Fund on a fair and equitable basis, which may be based on the
relative assets of each Fund or the nature of the services performed and
relative applicability to each Fund.
F. Other--Security transactions are accounted for on the date the
securities are purchased or sold. Cost is determined, and gains and
losses are based, on the identified cost basis for both financial
statement and federal income tax purposes. Dividend income is recorded
on the ex-dividend date. Interest income and estimated expenses are
accrued daily. Bond discounts and premiums are accreted or amortized
using the interest method. For the year ended September 30, 2003, the
Bank of New York, custodian for the Funds, has provided total credits in
the amount of $15,631 against custodian charges based on the uninvested
cash balances of the Funds.
2. Security Transactions--For the year ended September 30, 2003,
purchases and sales (including pay-downs on Government Fund) of
securities and long-term U.S. Government obligations (excluding
short-term U.S. Government obligations and short-term securities) were
as follows:
Long-Term U.S.
Securities Government Obligations
--------------------------- ---------------------------
Cost of Proceeds Cost of Proceeds
Fund Purchases from Sales Purchases from Sales
- ---- ------------ ------------ ------------ ------------
Government $ -- $ -- $150,537,306 $126,665,895
Investment Grade 46,504,811 9,118,385 8,759,948 --
Income 187,709,659 136,904,229 -- --
At September 30, 2003, aggregate cost and net unrealized appreciation
(depreciation) of securities for federal income tax purposes were as
follows:
Net
Gross Gross Unrealized
Aggregate Unrealized Unrealized Appreciation
Fund Cost Appreciation Depreciation (Depreciation)
- ---- ------------ ------------ ------------ ------------
Government $203,357,018 $ 3,973,141 $ 400,168 $ 3,572,973
Investment Grade 160,441,315 11,858,777 1,771,907 10,086,870
Income 587,786,686 28,683,952 85,454,571 (56,770,619)
3. Advisory Fee and Other Transactions With Affiliates--Certain officers
and directors/trustees of the Funds are officers and directors of the
Funds' investment adviser, First Investors Management Company, Inc.
("FIMCO"), its underwriter, First Investors Corporation ("FIC"), its
transfer agent, Administrative Data Management Corp. ("ADM") and/or
First Investors Federal Savings Bank ("FIFSB"), custodian of the Funds'
Individual Retirement Accounts. Directors/trustees of the Funds who are
not "interested persons" of the Funds as defined in the 1940 Act are
remunerated by the Funds. For the year ended September 30, 2003, total
directors/trustees fees accrued by the Funds amounted to $43,250.
The Investment Advisory Agreements provide as compensation to FIMCO an
annual fee, payable monthly, at the following rates:
Cash Management Fund--.50% of the Fund's average daily net assets.
Government Fund--1% on the first $200 million of the Fund's average daily
net assets, .75% on the next $300 million, declining by .03% on each
$250 million thereafter, down to .66% on average daily net assets over
$1 billion. FIMCO has voluntarily waived 40% of the 1% annual fee on the
first $200 million of the Fund's average daily net assets for the year
ended September 30, 2003.
Investment Grade Fund--.75% on the first $300 million of the Fund's
average daily net assets, .72% on the next $200 million, .69% on the
next $250 million, and .66% on average daily net assets over $750
million. FIMCO has voluntarily waived 20% of the .75% annual fee on the
first $300 million of the Fund's average daily net assets for the year
ended September 30, 2003.
Income Fund--.75% on the first $250 million of the Fund's average daily
net assets, declining by .03% on each $250 million thereafter, down to
..66% on average daily net assets over $750 million.
For the year ended September 30, 2003, total advisory fees accrued to
FIMCO by the Funds were $7,665,788 of which $1,016,186 was waived by
FIMCO on the Government and Investment Grade Funds. In addition, FIMCO
assumed $690,216 of the Cash Management, Government and Investment Grade
Funds' expenses.
For the year ended September 30, 2003, FIC, as underwriter, received
$5,293,301 in commissions from the sale of shares of the Funds after
allowing $126,580 to other dealers. Shareholder servicing costs included
$1,878,081 in transfer agent fees accrued to ADM and $376,762 in IRA
custodian fees accrued to FIFSB.
Pursuant to Distribution Plans adopted under Rule 12b-1 of the 1940 Act,
each Fund, other than the Cash Management Fund, is authorized to pay FIC
a fee up to .30% of the average daily net assets of the Class A shares
on an annual basis, payable monthly. Each fund, including the Cash
Management Fund, is authorized to pay FIC a fee up to 1% of the average
daily net assets of the Class B shares on an annual basis, payable
monthly. The fee consists of a distribution fee and a service fee. The
Notes to Financial Statements (continued)
September 30, 2003
service fee is paid for the ongoing servicing of clients who are
shareholders of that Fund. For the year ended September 30, 2003, total
distribution fees accrued to FIC by the Funds amounted to $2,930,164.
4. Restricted Securities--Certain restricted securities are exempt from
the registration requirements of the Securities Act of 1933 and may only
be sold to qualified institutional investors. At September 30, 2003,
Cash Management Fund held eleven restricted securities with an aggregate
value of $40,307,189 representing 21.8% of the Fund's net assets,
Investment Grade Fund held nine restricted securities with an aggregate
value of $12,375,363 representing 7.1% of the Fund's net assets and
Income Fund held thirty restricted securities with an aggregate value of
$57,475,398 representing 10.5% of the Fund's net assets. These
securities are valued as set forth in Note 1A.
5. High Yield Credit Risk--The investments of Income Fund in high yield
securities whether rated or unrated may be considered speculative and
subject to greater market fluctuations and risks of loss of income and
principal than lower-yielding, higher-rated, fixed-income securities.
The risk of loss due to default by the issuer may be significantly
greater for holders of high-yielding securities, because such securities
are generally unsecured and are often subordinated to other creditors of
the issuer.
6. Capital--Cash Management Fund sells two classes of shares, Class A and
Class B, each without an initial sales charge. Class B shares may only
be acquired through an exchange of Class B shares from another First
Investors eligible fund or through the reinvestment of dividends on
Class B shares and are generally subject to a contingent deferred sales
charge at the rate of 4% in the first year and declining to 0% over a
six-year period, which is payable to FIC as underwriter of the Funds.
Each of the other Funds also sells two classes of shares, Class A and
Class B, each with a public offering price that reflects different sales
charges and expense levels. Class A shares are sold with an initial
sales charge of up to 5.75% of the amount invested and together with the
Class B shares are subject to distribution plan fees as described in
Note 3. Class B shares are sold without an initial sales charge, but are
generally subject to a contingent deferred sales charge which declines
in steps from 4% to 0% over a six-year period. Class B shares
automatically convert into Class A shares after eight years. Realized
and unrealized gains or losses, investment income and expenses (other
than distribution plan fees) are allocated daily to each class of shares
based upon the relative proportion of net assets to each class. Of the
5,000,000,000 shares originally authorized by the Cash Management Fund,
the Fund has designated 2,500,000,000 shares as Class A and
2,500,000,000 shares as Class B. Of the 1,000,000,000 shares originally
authorized by both Government Fund and Income Fund, each Fund has
designated 500,000,000 shares as Class A and 500,000,000 shares as
Class B. Series Fund, of which Investment Grade Fund is a series, has
established an unlimited number of shares of beneficial interest for
both Class A and Class B shares.
7. Tax Components of Capital and Distributions to Shareholders--The tax
character of distributions declared for the years ended September 30,
2003 and September 30, 2002 consisted entirely of ordinary income as
follows:
Distributions Distributions
Declared Declared
in 2003 from: in 2002 from:
-------------- --------------
Ordinary Ordinary
Fund Income Income
- ---- -------------- --------------
Cash Management $ 1,182,333 $ 2,832,709
Government 9,383,651 8,122,046
Investment Grade 7,885,151 5,715,629
Income 40,865,461 39,654,957
As of September 30, 2003, the components of distributable earnings on a
tax basis were:
Total
Undistributed Capital Unrealized Distributable
Ordinary Loss Appreciation Earnings
Fund Income Carryover (Depreciation) (Deficit)
- ---- ------------ ------------ ------------ ------------
Government $ 47,132 $ (3,420,990) $ 1,972,758 $ (1,401,100)
Investment Grade 212,180 (2,150,642) 8,588,230 6,649,768
Income 634,711 (94,718,360) (82,804,245) (176,887,894)
Financial Highlights
FIRST INVESTORS
The following table sets forth the per share operating performance data for
a share outstanding, total return, ratios to average net assets and other
supplemental data for each fiscal year ended September 30, except as
otherwise indicated.
- ---------------------------------------------------------------------------------------------------------------------------------
P E R S H A R E D A T A
------------------------------------------------------------------------------------------------------------------
Less Distributions
Investment Operations from
---------------------------------------- -------------------------
Net Asset Net Realized Net Asset
Value, Net and Unrealized Total from Net Net Value,
Beginning Investment Gain (Loss) on Investment Investment Realized Total End of
of Period Income Investments Operations Income Gain Distributions Period
- ---------------------------------------------------------------------------------------------------------------------------------
CASH MANAGEMENT FUND
- --------------------
Class A
- -------
1998(a) $ 1.00 $.048 $ -- $.048 $.048 $ -- $.048 $ 1.00
1999(b) 1.00 .032 -- .032 .032 -- .032 1.00
2000 1.00 .054 -- .054 .054 -- .054 1.00
2001 1.00 .050 -- .050 .050 -- .050 1.00
2002 1.00 .014 -- .014 .014 -- .014 1.00
2003 1.00 .006 -- .006 .006 -- .006 1.00
Class B
- -------
1998(a) 1.00 .041 -- .041 .041 -- .041 1.00
1999(b) 1.00 .027 -- .027 .027 -- .027 1.00
2000 1.00 .046 -- .046 .046 -- .046 1.00
2001 1.00 .040 -- .040 .040 -- .040 1.00
2002 1.00 .006 -- .006 .006 -- .006 1.00
2003 1.00 .001 -- .001 .001 -- .001 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT FUND
- ---------------
Class A
- -------
1999 $11.49 $ .63 $(.58) $ .05 $ .61 $ -- $ .61 $10.93
2000 10.93 .65 .02 .67 .66 -- .66 10.94
2001 10.94 .64 .48 1.12 .65 -- .65 11.41
2002 11.41 .59 .09 .68 .59 -- .59 11.50
2003 11.50 .54 (.19) .35 .54 -- .54 11.31
Class B
- -------
1999 11.48 .54 (.57) (.03) .53 -- .53 10.92
2000 10.92 .57 .02 .59 .58 -- .58 10.93
2001 10.93 .55 .49 1.04 .56 -- .56 11.41
2002 11.41 .50 .09 .59 .51 -- .51 11.49
2003 11.49 .45 (.19) .26 .45 -- .45 11.30
- ---------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
R A T I O S / S U P P L E M E N T A L D A T A
------------------------------------------------------------------------------------------------
Ratio to Average Net
Ratio to Average Net Assets Before Expenses
Assets** Waived or Assumed
----------------------- -----------------------
Net Net Portfolio
Total Net Assets Investment Investment Turnover
Return* End of Period Expenses Income Expenses Income Rate
(%) (in millions) (%) (%) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------
CASH MANAGEMENT FUND
- --------------------
Class A
- -------
1998(a) 4.92 $160 .80 5.00 1.14 4.66 --
1999(b) 3.29 158 .80+ 4.33+ 1.14+ 3.99+ --
2000 5.50 182 .80 5.36 1.08 5.08 --
2001 4.63 204 .80 4.52 .99 4.33 --
2002 1.38 193 .80 1.38 .90 1.28 --
2003 0.62 179 .78 .62 .97 .43 --
Class B
- -------
1998(a) 4.14 1 1.55 4.25 1.89 3.91 --
1999(b) 2.72 2 1.55+ 3.58+ 1.89+ 3.24+ --
2000 4.72 2 1.55 4.61 1.83 4.33 --
2001 3.85 4 1.55 3.77 1.74 3.58 --
2002 .63 6 1.55 .63 1.65 .53 --
2003 0.05 6 1.34 .06 1.53 (.13) --
- ------------------------------------------------------------------------------------------------------------------
GOVERNMENT FUND
- ---------------
Class A
- -------
1999 .50 $140 1.19 5.58 1.57 5.20 99
2000 6.38 124 1.12 6.05 1.55 5.62 26
2001 10.49 137 1.10 5.70 1.53 5.27 59
2002 6.16 168 1.10 5.21 1.56 4.75 75
2003 3.08 184 1.10 4.69 1.58 4.21 65
Class B
- -------
1999 (.25) 3 1.93 4.84 2.31 4.46 99
2000 5.56 3 1.87 5.30 2.30 4.87 26
2001 9.77 6 1.85 4.95 2.28 4.52 59
2002 5.29 16 1.85 4.46 2.31 4.00 75
2003 2.33 21 1.85 3.94 2.33 3.46 65
- ------------------------------------------------------------------------------------------------------------------
Financial Highlights (continued)
FIRST INVESTORS
- ---------------------------------------------------------------------------------------------------------------------------------
P E R S H A R E D A T A
------------------------------------------------------------------------------------------------------------------
Less Distributions
Investment Operations from
---------------------------------------- -------------------------
Net Asset Net Realized Net Asset
Value, Net and Unrealized Total from Net Net Value,
Beginning Investment Gain (Loss) on Investment Investment Realized Total End of
of Period Income Investments Operations Income Gain Distributions Period
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT GRADE FUND
- ---------------------
Class A
- -------
1999 $10.53 $ .57 $(.79) $(.22) $ .58 $.07 $ .65 $ 9.66
2000 9.66 .60 (.14) .46 .58 .01 .59 9.53
2001 9.53 .61 .41 1.02 .63 -- .63 9.92
2002++ 9.92 .55 .07 .62 .58 -- .58 9.96
2003 9.96 .51 .35 .86 .54 -- .54 10.28
Class B
- -------
1999 10.54 .50 (.79) (.29) .51 .07 .58 9.67
2000 9.67 .54 (.14) .40 .52 .01 .53 9.54
2001 9.54 .54 .41 .95 .56 -- .56 9.93
2002++ 9.93 .48 .06 .54 .51 -- .51 9.96
2003 9.96 .43 .36 .79 .47 -- .47 10.28
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME FUND
- -----------
Class A
- -------
1999 $ 4.17 $ .40 $ (.27) $ .13 $ .38 $ -- $ .38 $ 3.92
2000 3.92 .35 (.26) .09 .38 -- .38 3.63
2001 3.63 .33 (.68) (.35) .35 -- .35 2.93
2002++ 2.93 .26 (.29) (.03) .26 -- .26 2.64
2003 2.64 .24 .41 .65 .24 -- .24 3.05
Class B
- -------
1999 4.16 .37 (.27) .10 .36 -- .36 3.90
2000 3.90 .33 (.26) .07 .36 -- .36 3.61
2001 3.61 .31 (.67) (.36) .33 -- .33 2.92
2002++ 2.92 .24 (.30) (.06) .23 -- .23 2.63
2003 2.63 .23 .41 .64 .22 -- .22 3.05
- ---------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
R A T I O S / S U P P L E M E N T A L D A T A
------------------------------------------------------------------------------------------------
Ratio to Average Net
Ratio to Average Net Assets Before Expenses
Assets** Waived or Assumed
----------------------- -----------------------
Net Net Portfolio
Total Net Assets Investment Investment Turnover
Return* End of Period Expenses Income Expenses Income Rate
(%) (in millions) (%) (%) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------
INVESTMENT GRADE FUND
- ---------------------
Class A
- -------
1999 (2.21) $ 49 1.10 5.70 1.38 5.42 18
2000 5.03 47 1.10 6.36 1.35 6.11 62
2001 10.93 65 1.10 6.22 1.28 6.04 21
2002++ 6.48 102 1.10 5.63 1.33 5.40 13
2003 8.94 144 1.10 4.85 1.35 4.60 6
Class B
- -------
1999 (2.90) 7 1.80 5.00 2.08 4.72 18
2000 4.31 8 1.80 5.66 2.05 5.41 62
2001 10.15 13 1.84 5.48 2.02 5.30 21
2002++ 5.61 23 1.85 4.88 2.08 4.65 13
2003 8.17 31 1.85 4.10 2.10 3.85 6
- ------------------------------------------------------------------------------------------------------------------
INCOME FUND
- -----------
Class A
- -------
1999 3.13 $389 1.29 9.71 N/A N/A 28
2000 2.46 501 1.29 9.55 N/A N/A 14
2001 (10.20) 418 1.30 9.81 N/A N/A 18
2002++ (1.52) 397 1.35 8.90 N/A N/A 20
2003 25.78 509 1.34 8.38 N/A N/A 31
Class B
- -------
1999 2.29 14 1.99 9.01 N/A N/A 28
2000 1.81 23 1.99 8.85 N/A N/A 14
2001 (10.62) 22 2.00 9.11 N/A N/A 18
2002++ (2.33) 24 2.05 8.20 N/A N/A 20
2003 25.24 37 2.04 7.68 N/A N/A 31
- ------------------------------------------------------------------------------------------------------------------
* Calculated without sales charges.
** Net of expenses waived or assumed (Note 3).
+ Annualized
++ Prior to October 1, 2001, the Income Fund and the Investment Grade
Fund did not amortize premiums on debt securities. The per share data
and ratios prior to October 1, 2001 have not been restated. The
cumulative effect of this accounting change had no impact on total net
assets of the Funds.
(a) For the calendar year ended December 31, 1998.
(b) For the period January 1, 1999 to September 30, 1999.
See notes to financial statements
Independent Auditors' Report
To the Shareholders and Boards of Directors/Trustees of
First Investors Cash Management Fund, Inc.
First Investors Government Fund, Inc.
First Investors Investment Grade Fund
First Investors Fund For Income, Inc.
We have audited the accompanying statement of assets and liabilities,
including the portfolios of investments, of the First Investors Cash
Management Fund, Government Fund, Investment Grade Fund (a series of
First Investors Series Fund) and Fund For Income as of September 30,
2003, the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the
period then ended and the financial highlights for each of the periods
indicated thereon. These financial statements and financial highlights
are the responsibility of the Funds' management. Our responsibility is
to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about
whether the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as
of September 30, 2003, by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of First Investors Cash Management Fund, Government
Fund, Investment Grade Fund and Fund For Income as of September 30,
2003, and the results of their operations for the year then ended,
changes in their net assets for each of the two years in the period then
ended, and their financial highlights for the periods presented, in
conformity with accounting principles generally accepted in the United
States of America.
Tait, Weller & Baker
Philadelphia, Pennsylvania
November 3, 2003
This page intentionally left blank.
FIRST INVESTORS TAXABLE BOND AND MONEY MARKET FUNDS
Directors/Trustees and Officers*
Position(s)
Held with Principal Number of Other
Funds and Occupation(s) Portfolios in Trusteeships
Name, Date of Birth Length of During Past Fund Complex Directorships
and Address Service 5 Years Overseen Held
- ------------------- ------------------ ------------------ ------------ ------------
DISINTERESTED DIRECTORS/TRUSTEES
Robert M. Grohol 1/16/1932 Director/Trustee None/Retired 50 None
c/o First Investors since 6/30/00
Management Company, Inc.
95 Wall Street
New York, NY 10005
Rex R. Reed 3/19/1922 Director/Trustee None/Retired 50 None
c/o First Investors since 3/31/84
Management Company, Inc.
95 Wall Street
New York, NY 10005
Herbert Rubinstein 6/14/1921 Director/Trustee None/Retired 50 None
c/o First Investors since 9/20/79
Management Company, Inc.
95 Wall Street
New York, NY 10005
James M. Srygley 10/17/1932 Director/Trustee Owner 50 None
c/o First Investors since 1/19/95 Hampton
Management Company, Inc. Properties
95 Wall Street
New York, NY 10005
Robert F. Wentworth 7/5/1929 Director/Trustee None/Retired 50 None
217 Upland Downs Road since 10/15/92
Management Company, Inc.
95 Wall Street
New York, NY 10005
Position(s)
Held with Principal Number of Other
Funds and Occupation(s) Portfolios in Trusteeships
Name, Date of Birth Length of During Past Fund Complex Directorships
and Address Service 5 Years Overseen Held
- ------------------- ------------------ ------------------ ------------ ------------
INTERESTED DIRECTORS/TRUSTEES**
Glenn O. Head 8/16/1925 Director/Trustee Chairman of 50 None
c/o First Investors since 1968 First Investors
Management Company, Inc. Corporation,
95 Wall Street Chairman of
New York, NY 10005 First Investors
Consolidated
Corporation,
Chairman of
First Investors
Management
Company, Inc.,
Chairman of
Administrative Data
Management Corp.,
and officer of
other affiliated
companies***
Kathryn S. Head 12/31/1955 Director/Trustee Vice President 50 None
c/o First Investors since 3/17/94 of First Investors
Management Company, Inc. Corporation,
581 Main Street President President of
Woodbridge, NJ 07095 since 11/15/01 First Investors
Consolidated
Corporation,
President of
First Investors
Management
Company, Inc.,
President of
Administrative Data
Management Corp.,
Chairman of
First Investors
Federal Savings
Bank and
officer of
other affiliated
companies***
FIRST INVESTORS TAXABLE BOND AND MONEY MARKET FUNDS
Directors/Trustees and Officers* (continued)
Position(s)
Held with Principal Number of Other
Funds and Occupation(s) Portfolios in Trusteeships
Name, Date of Birth Length of During Past Fund Complex Directorships
and Address Service 5 Years Overseen Held
- ------------------- ------------------ ------------------ ------------ ------------
INTERESTED DIRECTORS/TRUSTEES (continued)
Larry R. Lavoie 9/12/1947 Director/Trustee General Counsel 50 None
c/o First Investors since 9/17/98 First Investors
Management Company, Inc. Corporation
95 Wall Street and other
New York, NY 10005 affiliated
companies***
John T. Sullivan 1/18/1932 Director/Trustee Of Counsel 50 None
c/o First Investors since 9/20/79 Hawkins,
Management Company, Inc. Delafield &
95 Wall Street Wood; Director
New York, NY 10005 and Chairman
of Executive
Committee of
First Investors
Corporation
* Each Director/Trustee serves for an indefinite term with the Funds,
until his/her successor is elected.
** Mr. Head and Ms. Head are interested directors/trustees because (a)
they are indirect owners of more than 5% of the voting stock of the
adviser and principal underwriter of the Funds, (b) they are
officers, directors and employees of the adviser and principal
underwriter of the Funds, and (c) they are officers of the Funds.
Ms. Head is the daughter of Mr. Head. Mr. Lavoie is an interested
director/trustee of the Funds because he indirectly owns securities
issued by and is an officer of the adviser and principal underwriter
of the Funds. Mr. Sullivan is an interested director/trustee because
he is a director and Chairman of the Executive Committee of First
Investors Corporation and he indirectly owns securities issued by
the adviser and principal underwriter of the Funds.
*** Other affiliated companies consist of: First Investors Realty
Company, Inc., First Investors Life Insurance Company, First
Investors Leverage Corporation, Route 33 Realty Corporation, First
Investors Credit Funding Corporation, N.A.K. Realty Corporation,
Real Property Development Corporation, School Financial Management
Services, Inc., First Investors Federal Savings Bank, First
Investors Credit Corporation and First Investors Resources, Inc.
Position(s)
Held with Principal Number of Other
Funds and Occupation(s) Portfolios in Trusteeships
Name, Date of Birth Length of During Past Fund Complex Directorships
and Address Service 5 Years Overseen Held
- ------------------- ------------------ ------------------ ------------ ------------
OFFICERS WHO ARE NOT DIRECTORS/TRUSTEES
Joseph I. Benedek 8/2/1957 Treasurer Treasurer 50 None
c/o First Investors since 1988 and Principal
Management Company, Inc. Accounting Officer
581 Main Street
Woodbridge, NJ 07095
George V. Ganter 5/29/1952 Vice President Portfolio Manager 2 None
c/o First Investors since 2000 of First Investors
Management Company, Inc. Management
95 Wall Street Company, Inc.
New York, NY 10005
Michael J. O'Keefe 11/24/1965 Vice President Portfolio Manager 3 None
c/o First Investors since 1996 of First Investors
Management Company, Inc. Management
95 Wall Street Company, Inc.
New York, NY 10005
Clark D. Wagner 2/25/1959 Vice President Director of 27 None
c/o First Investors since 1991 Fixed Income
Management Company, Inc. (previously Chief
95 Wall Street Investment Officer)
New York, NY 10005 of First Investors
Management
Company, Inc.
FIRST INVESTORS TAXABLE BOND AND MONEY MARKET FUNDS
Shareholder Information
- --------------------------------------------------
Investment Adviser
First Investors Management Company, Inc.
95 Wall Street
New York, NY 10005
Underwriter
First Investors Corporation
95 Wall Street
New York, NY 10005
Custodian
The Bank of New York
One Wall Street
New York, NY 10286
Transfer Agent
Administrative Data Management Corp.
581 Main Street
Woodbridge, NJ 07095-1198
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, DC 20036
Auditors
Tait, Weller & Baker
1818 Market Street
Philadelphia, PA 19103
The Cash Management Fund is a money market fund and seeks to maintain a
stable net asset value of $1.00 per share. However, there can be no
assurance that the Fund will be able to do so or achieve its investment
objective. An investment in the Fund is neither insured nor guaranteed
by the U.S. Government.
It is the Funds' practice to mail only one copy of their annual and
semi-annual reports to any address at which more than one shareholder
with the same last name has indicated that mail is to be delivered.
Additional copies of the reports will be mailed if requested by any
shareholder in writing or by calling 800-423-4026. The Funds will ensure
that separate reports are sent to any shareholder who subsequently
changes his or her mailing address.
This report is authorized for distribution only to existing
shareholders, and, if given to prospective shareholders, must be
accompanied or preceded by the Funds' prospectus.
NOTES
NOTES
Item 2. Code of Ethics - Filed herewith
The Board of Directors/Trustees of First Investors Funds ("Board") has
adopted a Code of Ethics that applies to the First Investors Funds'
("Funds") principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the Funds or a third party. The Code of Ethics is attached to this
report as Exhibit A.
During the period of the report, there have been no amendments to the
Code of Ethics or waivers, implicit or otherwise, from its provisions.
Item 3. Audit Committee Financial Expert - Filed herewith
The Independent Director currently serving as the Audit Committee Financial
Expert is Robert F. Wentworth.
The Board of Directors/Trustees of First Investors Funds ("Board") has
unanimously determined that Mr. Wentworth satisfied the definition of an
audit committee financial expert as set forth in the instructions to
Form N-CSR under the Investment Company Act of 1940. Specifically, the
Board determined that Mr. Wentworth has all of the following: (i) an
understanding of generally accepted accounting principles and financial
statements; (ii) the ability to assess the general application of such
principles in connection with the accounting for estimates, accruals, and
reserves; (iii) experience preparing, auditing, analyzing or evaluating
financial statements that present the breadth and level of complexity of
accounting issues that are generally comparable to the breadth and
complexity of issues that can reasonably be expected to be raised by the
Funds' financial statements, or experience actively supervising one or more
persons engaged in such activities; (iv) an understanding of internal
controls and procedures for financial reports; and (v) an understanding of
audit committee functions. Furthermore, he had acquired these attributes
through education and many years of relevant experience in various financial
positions with American Telephone and Telegraph Company, including the
positions of Director - Accounting, Director - Finance, Director - Financial
Reporting and Analysis, Controller, and Director of Business Planning. Mr.
Wentworth also has many years experience serving on the Audit Committees
of First Investors Funds and other organizations. Finally, Mr. Wentworth is
independent as defined in the instructions to the Form.
Item 4. Principal Accountant Fees and Services - Not applicable to this
filing. Applicable to Annual Reports for fiscal years ending on
or after December 15, 2003.
Item 5. Audit Committee of Listed Registrants - Not applicable
Item 6. [Reserved]
Item 7. Disclosure of Proxy Voting Policies & Procedures for Closed-End
Management Investment Companies - Not applicable for this filing
Item 8. [Reserved]
Item 9. Controls and Procedures
(a) The Registrant's Principal Executive Officer and Principal
Financial Officer have concluded that the Registrant's disclosure controls
and procedures (as defined in Rule 30a-3(c) under the Investment Company
Act of 1940, as amended) are effective, based on their evaluation of these
disclosure controls and procedures as of a date within 90 days of the
filing date of this report.
(b) There were no significant changes in the Registrant's internal
controls or in other factors that could significantly affect these controls
subsequent to the date of their evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.
Item 10. Exhibits
(a) Code of Ethics - Filed herewith
(b) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 - Filed herewith
(c) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 - Filed herewith
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, the Registrant have duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
First Investors Cash Management Fund, Inc.
First Investors Government Fund, Inc.
First Investors Series Fund
First Investors Fund For Income, Inc.
(Registrant)
By /S/ KATHRYN S. HEAD
Kathryn S. Head
President and Principal Executive Officer
Date: December 1, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and
on the dates indicated.
First Investors Cash Management Fund, Inc.
First Investors Government Fund, Inc.
First Investors Series Fund
First Investors Fund For Income, Inc.
(Registrant)
By /S/ JOSEPH I. BENEDEK
Joseph I. Benedek
Treasurer and Principal Financial Officer
Date: December 1, 2003