UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------
FORM N-CSR
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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
1-732-855-2712
(Name and address of agent for service)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
1-212-858-8000
DATE OF FISCAL YEAR END: SEPTEMBER 30, 2004
DATE OF REPORTING PERIOD: SEPTEMBER 30, 2004
Item 1. Reports to Stockholders
The Annual Report to Stockholders follows
[First Investors Logo]
TAXABLE BOND & MONEY MARKET FUNDS
CASH MANAGEMENT
GOVERNMENT
INVESTMENT GRADE
FUND FOR INCOME
ANNUAL REPORT
September 30, 2004
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, 2004. During the period, the
Fund's return on a net asset value basis was 0.5% for Class A shares and
0.0% 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
reporting period was the short-term interest-rate environment.
During the first half of this period, short-term interest rates remained
relatively stable, with a positively sloped yield curve. Rates then rose
steadily through the second half, as the economy gained strength and
inflation picked up slightly. The Federal Reserve Board ("the Fed")
raised short-term rates by 25 basis points (1/4 of 1%) in June 2004,
exactly one year after it ended its last easing cycle. Around the same
time, the Fed indicated that it would continue to raise the target
federal funds rate at a measured pace. The rate has since risen an
additional 50 basis points.
The Fund took advantage of a relatively steep yield curve in the
beginning of the reporting period, realizing additional returns by
selectively investing in longer-term securities. But in the second
quarter of 2004, the Fund responded to the increased likelihood of a
less accommodative Federal Reserve by focusing its assets on
shorter-maturity vehicles. The Fund also effectively used corporate
bonds and notes for incremental return, in addition to floating rate
securities and various types of callable securities.
The Fund continued to mitigate credit risk by generally limiting the
maturity length and overall proportion of corporate-security investments
in its portfolio. In addition, the Fund invested a large portion of its
assets in U.S. government and agency securities and maintained on
average 8% of its assets in domestic bank obligations.
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 neither
insured nor guaranteed 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 29, 2004
Understanding Your Fund's Expenses
FIRST INVESTORS TAXABLE BOND AND MONEY MARKET FUNDS
As a mutual fund shareholder, you incur two types of costs: (1)
transaction costs, including a sales charge (load) on purchase payments
(on Class A shares only), a contingent deferred sales charge on
redemptions (on Class B shares only); and (2) ongoing costs, including
advisory fees; distribution and service fees (12b-1); and other
expenses. This Example is intended to help you understand your ongoing
costs (in dollars) of investing in the funds and to compare these costs
with the ongoing costs of investing in other mutual funds.
The Examples are based on an investment of $1,000 in each Fund at the
beginning of the period, April 1, 2004, and held for the entire
six-month period ended September 30, 2004. The calculations assume that
no shares were bought or sold during the period. Your actual costs may
have been higher or lower, depending on the amount of your investment
and the timing of any purchases or redemptions.
Actual Expenses Example:
These lines help you to estimate the actual expenses that you paid over
the period. The "Ending Account Value" shown is derived from the Fund's
actual return, and the "Expenses Paid During Period" shows the dollar
amount that would have been paid by an investor who started with $1,000
in each Fund. You may use the information here, together with the amount
you invested, to estimate the expenses that you paid over the period.
To estimate the expense you paid on your account during this period,
simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.60), then multiply the result by the
number given for your Fund under the heading "Expenses Paid During
Period".
Hypothetical Expenses Example:
These lines of the table provide information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense
ratio for Class A and Class B shares, and an assumed rate of return of
5% per year before expenses, which is not the Fund's actual return. The
hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expense you paid for the period. You
may use this information to compare the ongoing costs of investing in
the Fund and other funds. To do so, compare this 5% hypothetical example
with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight
and help you compare your ongoing costs only and do not reflect any
transaction costs, such as front-end or contingent deferred sales
charges (loads). Therefore, the hypothetical expense example is useful
in comparing ongoing costs only and will not help you determine the
relative total costs of owning different funds. In addition, if these
transaction costs were included, your costs would have been higher.
Fund Expenses
FIRST INVESTORS CASH MANAGEMENT FUND, INC.
The examples below show the ongoing costs (in dollars) of investing in
your Fund and will help you in comparing those costs with those of other
mutual funds. Please refer to page 2 for a detailed explanation of the
information presented in these examples.
- ----------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
Expense Example - Class A Shares (4/1/04) (9/30/04) (4/1/04-9/30/04)*
- ----------------------------------------------------------------------------------------------
Actual $1,000.00 $1,002.98 $3.51
Hypothetical (5% return before expenses) $1,000.00 $1,021.50 $3.54
- ----------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
Expense Example - Class B Shares (4/1/04) (9/30/04) (4/1/04-9/30/04)*
- ----------------------------------------------------------------------------------------------
Actual $1,000.00 $1,000.00 $5.95
Hypothetical (5% return before expenses) $1,000.00 $1,017.75 $6.01
- ----------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio of 0.70% for Class
A shares and 1.19% for Class B shares, multiplied by the average account
value over the period, multiplied by 183/366 (to reflect the one-half
year period). Expenses paid during the period are net of expenses
waived.
Portfolio Composition
ASSET ALLOCATION
(BAR CHART DATA:)
Corporate Notes 51.6%
U.S. Government Agency Obligations 34.1%
Floating Rate Notes 7.9%
Bankers' Acceptances 6.4%
Portfolio's holdings and allocations are subject to change. Percentages
are as of September 30, 2004, and are based on the total value of
investments.
Portfolio of Investments
FIRST INVESTORS CASH MANAGEMENT FUND, INC.
September 30, 2004
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal Interest $10,000 of
Amount Security Rate* Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
CORPORATE NOTES--51.2%
$5,000M Abbott Laboratories, 11/18/04 + 1.75% $4,988,329 $283
5,000M American General Finance Corp., 11/4/04 1.76 4,991,685 283
3,000M Anheuser-Busch Companies, Inc.,
10/1/04 + 1.50 3,000,000 170
3,000M Archer-Daniels-Midland Co., 10/12/04 + 1.53 2,998,595 170
960M Associates Corp., NA, 10/15/04 1.23 962,553 55
5,000M Bristol-Myers Squibb Co., 10/19/04 1.76 4,995,598 284
5,000M ChevronTexaco Corp., 10/13/04 1.72 4,997,133 284
5,000M DuPont (E.I.) de Nemours & Co.,
10/25/04 1.70 4,994,330 284
2,000M Exxon Capital Corp., 7/1/05 2.08 2,057,676 117
5,000M Gannett Company, Inc., 10/5/04 + 1.74 4,999,033 284
4,500M General Electric Capital Corp., 10/1/04 1.70 4,500,000 255
5,000M Hewlett-Packard Co., 10/29/04 + 1.76 4,993,155 283
3,000M International Business Machines Corp.,
10/8/04 1.72 2,998,997 170
2,700M Minnesota, Mining & Manufacturing Co.,
10/18/04 1.71 2,697,819 153
National Rural Utilities Cooperative
Finance Corp.:
3,000M 10/20/04 1.73 2,997,259 170
2,000M 10/25/04 1.77 1,997,639 113
3,500M New Jersey Natural Gas Co., 11/17/04 1.65 3,492,446 198
4,500M Paccar Financial Corp., 12/16/04 1.82 4,482,700 254
5,000M PepsiCo, Inc., 10/14/04 + 1.71 4,996,911 284
5,000M Pfizer, Inc., 10/8/04 + 1.52 4,998,519 284
3,000M Procter & Gamble Co., 11/16/04 + 1.60 2,993,855 170
5,000M Prudential Funding Corp., 11/8/04 1.76 4,990,707 283
5,000M Toyota Motor Credit Corp., 10/6/04 1.59 4,998,894 284
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Corporate Notes (cost $90,123,833) 90,123,833 5,115
- ----------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY
OBLIGATIONS--33.8%
Fannie Mae:
2,500M 10/20/04 1.61 2,497,873 142
4,500M 10/27/04 1.59 4,494,833 255
435M 10/27/04 1.65 434,479 25
1,783M 2/4/05 1.87 1,771,295 101
2,700M 2/14/05 1.38 2,700,000 153
2,300M 5/3/05 1.36 2,300,000 131
2,000M 5/9/05 1.65 1,998,205 113
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal Interest $10,000 of
Amount Security Rate* Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Fannie Mae (continued):
$3,660M 5/16/05 1.36% $3,658,091 $208
4,000M 5/23/05 1.75 4,000,000 227
500M 7/14/05 2.28 496,986 28
555M 7/22/05 2.30 544,536 31
Federal Farm Credit Bank:
3,000M 10/18/2004 1.70 2,997,591 170
750M 12/15/2004 1.24 754,000 43
1,850M 6/21/2005 2.46 1,849,145 105
Federal Home Loan Bank:
1,000M 10/15/2004 1.72 1,000,729 57
670M 2/15/2005 1.17 676,965 39
2,700M 2/23/2005 1.41 2,700,000 153
2,000M 3/22/2005 1.31 2,000,000 113
2,000M 3/23/2005 1.35 2,000,000 113
3,000M 3/25/2005 1.37 3,000,000 170
2,000M 3/28/2005 1.38 2,000,000 113
955M 3/30/2005 1.32 955,000 54
2,500M 4/27/2005 1.30 2,499,460 142
2,000M 5/13/2005 1.56 2,000,000 113
2,000M 5/27/2005 1.78 2,000,000 113
1,200M 6/16/2005 2.10 1,194,636 68
500M 6/17/2005 2.05 498,545 29
6,500M Freddie Mac, 10/8/04 1.72 6,497,825 369
- ----------------------------------------------------------------------------------------------------------------------
Total Value of U.S. Government Agency Obligations
(cost $59,520,194) 59,520,194 3,378
- ----------------------------------------------------------------------------------------------------------------------
FLOATING RATE NOTES--7.8%
2,000M Bank One, NA, 10/8/04 1.66 2,000,047 113
3,000M Merrill Lynch & Co., 1/31/05 1.79 3,000,000 170
3,800M Pitney Bowes Nova Scotia ULC,
12/21/04 ++ 2.23 3,803,017 216
5,000M Sallie Mae, 11/18/04 1.74 5,000,000 284
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Floating Rate Notes (cost $13,803,064) 13,803,064 783
- ----------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
FIRST INVESTORS CASH MANAGEMENT FUND, INC.
September 30, 2004
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal Interest $10,000 of
Amount Security Rate* Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
BANKERS' ACCEPTANCES--6.3%
Bank of America, NA:
$2,416M 11/8/04 1.78% $2,411,060 $137
2,400M 11/9/04 1.78 2,395,370 136
JPMorgan Chase & Co.:
3,500M 10/25/04 1.75 3,495,916 198
1,505M 11/15/04 1.77 1,501,669 85
1,368M 11/22/04 1.77 1,364,501 77
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Bankers' Acceptances (cost $11,168,516) 11,168,516 633
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $174,615,607)** 99.1% 174,615,607 9,909
Other Assets, Less Liabilities .9 1,606,668 91
- ----------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $176,222,275 $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; the rates shown are the rates in effect at
September 30, 2004.
** Aggregate cost for federal income tax purposes is the same.
+ Security exempt from registration under Section 4(2) of the
Securities Act of 1933 (see Note 4).
++ Security exempt from registration under Rule 144A of the Securities
Act of 1933 (see Note 4).
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, 2004. During the period, the Fund's return
on a net asset value basis was 3.0% for Class A shares and 2.3% for Class B
shares, including dividends of 51.2 cents per share on Class A shares and
42.8 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 were prepayments on mortgage-backed securities and tighter
yield spreads on mortgage-backed bonds versus Treasury securities.
The generally low level of interest rates during the reporting period
reduced returns in the mortgage-backed market. Specifically, the average
30-year mortgage rate was the second lowest in over 20 years. This kept
refinancings of outstanding mortgages at relatively high levels and caused
prepayments on mortgage-backed bonds to remain elevated, thereby reducing
returns to investors.
Interest rates rose slightly during the reporting period, resulting in
negative returns for Treasuries on a price basis. In contrast, interest
rates on GNMAs were unchanged, meaning that the yield spreads between
Treasury securities and GNMAs narrowed. This was a favorable development in
GNMAs because it meant that they did not have negative returns on a price
basis. In combination with higher coupon payments, this allowed GNMAs to
outperform the bond market in general.
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 29, 2004
Fund Expenses
FIRST INVESTORS GOVERNMENT FUND, INC.
The examples below show the ongoing costs (in dollars) of investing in your
Fund and will help you in comparing those costs with those of other mutual
funds. Please refer to page 2 for a detailed explanation of the information
presented in these examples.
- ----------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
Expense Example - Class A Shares (4/1/04) (9/30/04) (4/1/04-9/30/04)*
- ----------------------------------------------------------------------------------------------
Actual $1,000.00 $1,009.89 $5.53
Hypothetical (5% return before expenses) $1,000.00 $1,019.50 $5.55
- ----------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
Expense Example - Class B Shares (4/1/04) (9/30/04) (4/1/04-9/30/04)*
- ----------------------------------------------------------------------------------------------
Actual $1,000.00 $1,006.08 $9.28
Hypothetical (5% return before expenses) $1,000.00 $1,015.75 $9.32
- ----------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio of 1.10% for Class A
shares and 1.85% for Class B shares, multiplied by the average account
value over the period, multiplied by 183/366 (to reflect the one-half year
period). Expenses paid during the period are net of expenses waived.
Portfolio Composition
ASSET ALLOCATION
(BAR CHART DATA:)
Fannie Mae 20.0%
Government National Mortgage Association I Program 74.4%
Government National Mortgage Association II Program 2.8%
Cash Equivalents 2.8%
Portfolio's holdings and allocations are subject to change. Percentages are
as of September 30, 2004, and are based on the total value of investments.
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, the
Citigroup Treasury/Government Sponsored Index and the Merrill Lynch GNMA
Master Index.+
First Investors Government Fund
Graph Plot Points
for the periods Ended 9/30/04
Merrill
Citigroup Citigroup Lynch
Government Mortgage Treasury/ GNMA
Fund Index Index Index
Dec-94 $ 9,425 $10,000 $10,000 $10,000
Dec-95 10,837 11,677 11,840 11,712
Dec-96 11,218 12,303 12,188 12,364
Dec-97 12,160 13,443 13,364 13,544
Sep-98 12,894 14,261 14,691 14,381
Sep-99 12,958 14,604 14,440 14,740
Sep-00 13,785 15,691 15,473 15,881
Sep-01 15,231 17,623 17,520 17,799
Sep-02 16,110 18,942 19,287 19,155
Sep-03 16,606 19,604 19,989 19,883
Sep-04 17,107 20,470 20,507 20,683
(INSET BOX IN CHART READS:)
Average Annual Total Returns*
Class A Shares N.A.V. Only S.E.C. Standardized
One Year 3.01% (2.91%)
Five Years 5.79% 4.54%
Ten Years 6.19% 5.56%
S.E.C. 30-Day Yield 3.52%
Class B Shares
One Year 2.25% (1.75%)
Five Years 5.00% 4.67%
Since Inception
(1/12/95) 5.73% 5.73%
S.E.C. 30-Day Yield 2.99%
The graph compares a $10,000 investment in the First Investors Government
Fund, Inc. (Class A shares) beginning 12/31/94 with theoretical investments
in the Citigroup Mortgage Index, the Citigroup Treasury/Government
Sponsored Index and the Merrill Lynch GNMA Master 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. The Merrill Lynch GNMA
Master Index is a market capitalization-weighted index, including
generic-coupon GNMA mortgages, with at least $150 million principal amounts
outstanding. 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 9/30/04)
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 Returns
for One Year, Five Years and Ten Years would have been (3.36%), 4.11% and
5.16%, respectively, and the S.E.C. 30-Day Yield for September 2004 would
have been 3.08%. The Class B "S.E.C. Standardized" Average Annual Total
Returns for One Year, Five Years and Since Inception would have been
(2.22%), 4.19% and 5.32%, respectively, and the S.E.C. 30-Day Yield for
Cumulative Performance Informations (continued)
FIRST INVESTORS GOVERNMENT FUND, INC.
September 2004 would have been 2.53%. Results represent past performance
and do not indicate future results.The graph and the returns shown do not
reflect the deduction of taxes that a shareholder would pay on
distributions or the redemption of fund shares. Investment return and
principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than the original cost.
Citigroup Mortgage Index and Citigroup Treasury/Government Sponsored Index
figures are from Citigroup, Inc. Merrill Lynch GNMA Master Index figures
are from Merrill Lynch & Co. and all other figures are from First Investors
Management Company, Inc.
+ We have added a comparison to the Merrill Lynch GNMA Master Index this
year because that Index is more representative of the Fund's current
investment universe. After this year, we will not show a comparison to the
Citigroup Mortgage Index and the Citigroup Treasury/Government Sponsored
Index.
Portfolio of Investments
FIRST INVESTORS GOVERNMENT FUND, INC.
September 30, 2004
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED CERTIFICATES--94.8%
Fannie Mae--19.5%
$28,397M 5.5%, 4/1/2033-7/1/2034 $28,851,832 $1,475
7,518M 6%, 9/1/2032 7,792,362 398
1,303M 8%, 9/1/2027 1,446,728 74
- ----------------------------------------------------------------------------------------------------------------------
38,090,922 1,947
- ----------------------------------------------------------------------------------------------------------------------
Government National Mortgage Association
I Program--72.5%
39,360M 5.5%, 3/15/2033-9/15/2034 40,200,412 2,054
34,281M 6%, 3/15/2031-8/15/2034 35,688,507 1,824
37,029M 6.5%, 3/15/2028-7/15/2034 39,294,682 2,008
13,615M 7%, 7/15/2027-4/15/2034 14,561,535 744
7,826M 7.5%, 7/15/2023-6/15/2034 8,440,242 431
3,435M 8%, 4/15/2030-6/15/2034 3,780,057 193
- ----------------------------------------------------------------------------------------------------------------------
141,965,435 7,254
- ----------------------------------------------------------------------------------------------------------------------
Government National Mortgage Association
II Program--2.8%
3,700M 7%, 6/20/2023-10/20/2029 3,948,060 202
1,334M 7.5%, 12/20/2022-10/20/2023 1,438,704 73
- ----------------------------------------------------------------------------------------------------------------------
5,386,764 275
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Mortgage-Backed Certificates (cost $183,172,172) 185,443,121 9,476
- ----------------------------------------------------------------------------------------------------------------------
SHORT-TERM U.S. GOVERNMENT
OBLIGATIONS--2.7%
U.S. Treasury Bills:
4,800M 1.5%, 10/7/04 4,798,800 245
500M 1.44%, 10/14/04 499,740 26
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Short-Term U.S. Government Obligations
(cost $5,298,540) 5,298,540 271
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $188,470,712) 97.5% 190,741,661 9,747
Other Assets, Less Liabilities 2.5 4,955,729 253
- ----------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $195,697,390 $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, 2004. During the period, the Fund's
return on a net asset value basis was 3.6% for Class A shares and 2.7% for
Class B shares, including dividends of 52.5 cents per share on Class A
shares and 45.3 cents per share on Class B shares.
Corporate bonds beat government bond benchmarks during the reporting
period. This was in part due to a strengthening economy, as well as a
series of capital structure policies adopted by the corporate sector to
improve creditworthiness following a series of difficult credit problems in
2002. Companies in general strove for greater financial liquidity, net debt
reduction and moderate amounts of equity buybacks.
The most important drivers of the Fund's performance during the reporting
period were the interest rate environment and the Fund's sector
concentrations. The Fund intentionally shortened the average duration of
its holdings from 5.65 years to 4.94 years during the period to guard
against the risk of an increase in interest rates. However, this adjustment
did not benefit the Fund as anticipated because interest rates declined
during the latter part of the reporting period.
The Fund's airlines holdings performed well during the year, as did
utilities and forest products. Concentrations in the financial services and
real estate sectors, both of which are rate-sensitive, lagged slightly due
to continuing interest rate concerns. The Fund's underweight positions in
automotive holdings, the energy sector and other basic industries also hurt
performance.
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 29, 2004
Fund Expenses
FIRST INVESTORS INVESTMENT GRADE FUND
The examples below show the ongoing costs (in dollars) of investing in your
Fund and will help you in comparing those costs with those of other mutual
funds. Please refer to page 2 for a detailed explanation of the information
presented in these examples.
- ----------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
Expense Example - Class A Shares (4/1/04) (9/30/04) (4/1/04-9/30/04)*
- ----------------------------------------------------------------------------------------------
Actual $1,000.00 $999.97 $5.50
Hypothetical (5% return before expenses) $1,000.00 $1,019.50 $5.55
- ----------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
Expense Example - Class B Shares (4/1/04) (9/30/04) (4/1/04-9/30/04)*
- ----------------------------------------------------------------------------------------------
Actual $1,000.00 $995.43 $9.23
Hypothetical (5% return before expenses) $1,000.00 $1,015.75 $9.32
- ----------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio of 1.10% for Class A
shares and 1.85% for Class B shares, multiplied by the average account
value over the period, multiplied by 183/366 (to reflect the one-half year
period). Expenses paid during the period are net of expenses waived.
Portfolio Composition
TOP TEN SECTORS
(BAR CHART DATA:)
Financials 19.5%
Consumer Staples 15.3%
U.S. Government Obligations 9.2%
Consumer Discretionary 9.0%
Real Estate Investment Trusts 8.4%
Transportation 8.2%
Utilities 7.8%
Industrials 5.8%
Materials 5.2%
Telecommunication Services 3.2%
Portfolio's holdings and allocations are subject to change. Percentages are
as of September 30, 2004, and are based on the total value of investments.
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.
First Investors Investment Grade Fund
Graph Plot Points
for the periods Ended 9/30/04
Investment Lehman
Grade U.S. Credit
Fund Index
Dec-94 $ 9,425 $10,000
Dec-95 11,258 12,225
Dec-96 11,528 12,626
Dec-97 12,581 13,918
Sep-98 13,624 15,020
Sep-99 13,322 14,810
Sep-00 13,993 15,673
Sep-01 15,522 17,726
Sep-02 16,529 19,178
Sep-03 18,007 21,186
Sep-04 18,650 22,127
(INSET BOX IN CHART READS:)
Average Annual Total Returns*
Class A Shares N.A.V. Only S.E.C. Standardized
One Year 3.57% (2.41%)
Five Years 6.96% 5.70%
Ten Years 7.08% 6.45%
S.E.C. 30-Day Yield 3.25%
Class B Shares
One Year 2.74% (1.26%)
Five Years 6.16% 5.85%
Since Inception
(1/12/95) 6.70% 6.70%
S.E.C. 30-Day Yield 2.71%
The graph compares a $10,000 investment in the First Investors Investment
Grade Fund (Class A shares) beginning 12/31/94 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 9/30/04)
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 Returns
for One Year, Five Years and Ten Years would have been (2.63%), 5.49% and
6.16%, respectively, and the S.E.C. 30-Day Yield for September 2004 would
have been 3.07%. The Class B "S.E.C. Standardized" Average Annual Total
Returns for One Year, Five Years and Since Inception would have been
(1.48%), 5.61% and 6.41%, respectively, and the S.E.C. 30-Day Yield for
September 2004 would have been 2.52%. Results represent past performance
and do not indicate future results.The graph and the returns shown do not
reflect the deduction of taxes that a shareholder would pay on
distributions or the redemption of fund shares. Investment return and
principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than the original cost.
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, 2004
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS--81.5%
Aerospace/Defense--2.0%
$100M Boeing Capital Corp., 4.75%, 2008 $104,355 $5
Honeywell International, Inc.:
1,500M 7.5%, 2010 1,750,307 88
975M 6.125%, 2011 1,075,249 54
Precision Castparts Corp.:
700M 8.75%, 2005 718,284 36
400M 5.6%, 2013 410,220 21
- ----------------------------------------------------------------------------------------------------------------------
4,058,415 204
- ----------------------------------------------------------------------------------------------------------------------
Automotive--2.7%
2,000M DaimlerChrysler NA Holdings Corp., 8%, 2010 2,328,012 117
886M Ford Motor Co., 8.9%, 2032 996,909 50
500M Lear Corp., 8.11%, 2009 577,862 29
717M TRW, Inc., 7.125%, 2009 799,188 40
700M Visteon Corp., 8.25%, 2010 740,250 37
- ----------------------------------------------------------------------------------------------------------------------
5,442,221 273
- ----------------------------------------------------------------------------------------------------------------------
Chemicals--.4%
700M Lubrizol Corp., 7.25%, 2025 725,504 36
- ----------------------------------------------------------------------------------------------------------------------
Consumer Non-Durables--1.8%
1,800M Colgate-Palmolive Co., 7.84%, 2007 2,013,687 101
1,415M Unilever Capital Corp., 6.875%, 2005 1,479,489 74
- ----------------------------------------------------------------------------------------------------------------------
3,493,176 175
- ----------------------------------------------------------------------------------------------------------------------
Energy--1.8%
500M Mobil Corp., 8.625%, 2021 685,659 35
833M Repsol International Finance, BV, 7.45%, 2005 864,828 43
975M Sunoco, Inc., 9.375%, 2016 1,066,228 54
800M Texaco Capital, Inc., 8.25%, 2006 884,170 44
- ----------------------------------------------------------------------------------------------------------------------
3,500,885 176
- ----------------------------------------------------------------------------------------------------------------------
Financial--6.5%
875M American General Finance Corp., 8.125%, 2009 1,023,475 51
CIT Group Holdings, Inc.:
300M 6.875%, 2009 337,476 17
1,900M 7.75%, 2012 2,251,850 113
- ----------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
FIRST INVESTORS INVESTMENT GRADE FUND
September 30, 2004
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Financial (continued)
ERAC USA Finance Enterprise Co.:
$750M 9.125%, 2004 $759,635 $38
1,775M 7.35%, 2008 + 1,987,959 100
520M 8%, 2011 + 617,064 31
400M Ford Motor Credit Co., 9.03%, 2009 404,443 20
General Electric Capital Corp.:
850M 7.875%, 2006 934,407 47
700M 8.5%, 2008 819,123 41
1,550M General Motors Acceptance Corp., 7.75%, 2010 1,705,090 86
1,825M Household Finance Corp., 6.5%, 2008 2,009,975 101
- ----------------------------------------------------------------------------------------------------------------------
12,850,497 645
- ----------------------------------------------------------------------------------------------------------------------
Financial Services--12.6%
Bank of America Corp.:
1,067M 7.8%, 2010 1,254,860 63
1,225M 7.4%, 2011 1,429,500 72
Bank One Corp.:
1,165M 7.6%, 2007 1,289,795 65
700M 7.875%, 2010 827,215 42
700M Chase Manhattan Corp., 7.875%, 2010 824,499 41
1,750M Comerica, Inc., 7.125%, 2013 1,935,724 97
1,595M Fifth Third Bank, 3.375%, 2008 1,582,020 79
1,200M First Union National Bank, 7.8%, 2010 1,415,173 71
1,000M Fleet Capital Trust II, 7.92%, 2026 1,115,334 56
1,500M Florida Windstorm Underwriting Assoc.,
7.125%, 2019 + 1,771,518 89
1,200M Greenpoint Bank, 9.25%, 2010 1,497,359 75
775M Huntington National Bank, 8%, 2010 910,559 46
795M Manufacturers & Traders Trust Co., 8%, 2010 953,236 48
1,200M National City Bank of Pennsylvania,
7.25%, 2011 1,398,445 70
288M NBD Bancorp, Inc., 7.125%, 2007 315,797 16
1,125M Old National Bank, 6.75%, 2011 1,269,192 64
1,298M Republic NY Corp., 7.75%, 2009 1,499,045 75
1,600M Royal Bank of Scotland, 5%, 2014 1,623,230 81
1,825M Washington Mutual, Inc., 8.25%, 2010 2,162,357 108
- ----------------------------------------------------------------------------------------------------------------------
25,074,858 1,258
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Food/Beverage/Tobacco--3.6%
Coca-Cola Enterprises, Inc.:
$1,050M 7.125%, 2009 $1,202,347 $60
800M 7.125%, 2017 948,945 48
1,995M Conagra Foods, Inc., 6.75%, 2011 2,247,792 113
700M Hershey Foods Corp., 6.7%, 2005 727,106 36
1,000M Pepsi Bottling Group, Inc., 7%, 2029 1,185,731 60
900M Philip Morris Companies, Inc., 6.95%, 2006 944,637 47
- ----------------------------------------------------------------------------------------------------------------------
7,256,558 364
- ----------------------------------------------------------------------------------------------------------------------
Food/Drug--2.7%
1,550M Delhaize America, Inc., 8.125%, 2011 1,777,887 89
1,600M Kroger Co., 7%, 2018 1,823,194 92
Safeway, Inc.:
510M 7%, 2007 555,408 28
450M 9.3%, 2007 503,787 25
700M 6.5%, 2011 766,081 38
- ----------------------------------------------------------------------------------------------------------------------
5,426,357 272
- ----------------------------------------------------------------------------------------------------------------------
Forest Products/Containers--2.9%
1,690M International Paper Co., 6.75%, 2011 1,885,830 95
1,725M Sappi Papier Holding AG, 6.75%, 2012 + 1,895,592 95
Weyerhaeuser Co.:
1,100M 7.25%, 2013 1,265,601 63
545M 7.5%, 2013 633,104 32
- ----------------------------------------------------------------------------------------------------------------------
5,680,127 285
- ----------------------------------------------------------------------------------------------------------------------
Gaming/Leisure--.8%
750M MGM Mirage, Inc., 8.5%, 2010 855,938 43
750M Park Place Entertainment Corp., 9.375%, 2007 838,125 42
- ----------------------------------------------------------------------------------------------------------------------
1,694,063 85
- ----------------------------------------------------------------------------------------------------------------------
Health Care--2.9%
1,880M Becton, Dickinson & Co., 7.15%, 2009 2,145,841 108
900M Columbia/HCA Healthcare, Inc., 7.5%, 2023 925,342 46
1,130M Tenet Healthcare Corp., 6.375%, 2011 1,019,825 51
1,500M Wyeth, 6.95%, 2011 1,670,172 84
- ----------------------------------------------------------------------------------------------------------------------
5,761,180 289
- ----------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
FIRST INVESTORS INVESTMENT GRADE FUND
September 30, 2004
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Information Technology--.5%
$950M International Business Machines Corp.,
4.875%, 2006 $986,650 $49
- ----------------------------------------------------------------------------------------------------------------------
Manufacturing--2.9%
875M Ingersoll-Rand Co., 9%, 2021 1,184,510 60
1,600M Newell Rubbermaid, Inc., 6.75%, 2012 1,821,589 91
United Technologies Corp.:
900M 6.5%, 2009 1,002,942 50
1,600M 7.125%, 2010 1,852,075 93
- ----------------------------------------------------------------------------------------------------------------------
5,861,116 294
- ----------------------------------------------------------------------------------------------------------------------
Media-Broadcasting--1.8%
Comcast Cable Communications, Inc.:
1,300M 8.375%, 2007 1,453,048 73
850M 7.125%, 2013 962,941 48
500M Cox Communications, Inc., 5.5%, 2015 477,189 24
700M PanAmSat Corp., 6.375%, 2008 714,000 36
- ----------------------------------------------------------------------------------------------------------------------
3,607,178 181
- ----------------------------------------------------------------------------------------------------------------------
Media-Diversified--5.0%
750M AOL Time Warner, Inc., 6.875%, 2012 838,009 42
1,480M Cox Enterprises, Inc., 8%, 2007 + 1,589,257 80
500M Houghton Mifflin Co., 7.2%, 2011 523,125 26
New York Times Co.:
700M 7.625%, 2005 717,177 36
500M 6.95%, 2009 568,707 29
1,600M News America, Inc., 7.3%, 2028 1,812,299 91
1,000M Time Warner, Inc., 6.875%, 2018 1,095,150 55
Viacom, Inc.:
775M 7.75%, 2005 802,775 40
500M 8.625%, 2012 618,443 31
360M 8.875%, 2014 463,054 23
900M Walt Disney Co., 7.3%, 2005 915,512 46
- ----------------------------------------------------------------------------------------------------------------------
9,943,508 499
- ----------------------------------------------------------------------------------------------------------------------
Metals/Mining--1.8%
1,846M Hanson PLC, 7.875%, 2010 2,165,129 109
1,350M Thiokol Corp., 6.625%, 2008 1,485,489 74
- ----------------------------------------------------------------------------------------------------------------------
3,650,618 183
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Real Estate Investment Trusts--7.4%
$1,654M Archstone-Smith Trust, 7.9%, 2016 $1,962,064 $98
AvalonBay Communities, Inc.:
1,900M 7.5%, 2010 2,186,644 109
200M 6.625%, 2011 220,487 11
1,800M Boston Properties, Inc., 5%, 2015 1,749,443 88
1,350M Duke-Weeks Realty Corp., 7.75%, 2009 1,570,402 79
EOP Operating LP:
1,705M 8.1%, 2010 1,988,574 100
150M 7.25%, 2018 170,915 9
1,900M Mack-Cali Realty LP, 7.75%, 2011 2,205,036 110
Simon Property Group, Inc.:
1,875M 7.875%, 2016 + 2,235,188 112
425M 7.375%, 2018 491,591 25
- ----------------------------------------------------------------------------------------------------------------------
14,780,344 741
- ----------------------------------------------------------------------------------------------------------------------
Retail-General Merchandise--4.3%
1,750M Federated Department Stores, Inc., 7.45%, 2017 2,059,167 103
900M Lowe's Companies, Inc., 8.25%, 2010 1,086,664 54
1,675M RadioShack Corp., 7.375%, 2011 1,930,404 97
Target Corp.:
235M 5.375%, 2009 250,624 12
1,620M 7.5%, 2010 1,907,440 96
Wal-Mart Stores, Inc.:
850M 8%, 2006 929,916 47
400M 8.5%, 2024 416,541 21
- ----------------------------------------------------------------------------------------------------------------------
8,580,756 430
- ----------------------------------------------------------------------------------------------------------------------
Telecommunications--3.1%
1,200M Deutsche Telekom AG, 8.5%, 2010 1,439,972 72
GTE Corp.:
909M 6.84%, 2018 1,006,325 50
500M 7.9%, 2027 549,037 28
800M New York Telephone Co., 6.125%, 2010 853,325 43
1,325M Sprint Capital Corp., 6.375%, 2009 1,450,912 73
750M Vodafone AirTouch PLC, 7.75%, 2010 880,775 44
- ----------------------------------------------------------------------------------------------------------------------
6,180,346 310
- ----------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
FIRST INVESTORS INVESTMENT GRADE FUND
September 30, 2004
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Transportation--4.8%
Burlington Northern Santa Fe Corp.:
$725M 7.875%, 2007 $804,994 $40
1,125M 7.125%, 2010 1,283,513 64
700M 6.75%, 2011 787,299 38
600M Caliber System, Inc., 7.8%, 2006 648,450 33
Canadian National Railway Co.:
1,015M 6.45%, 2006 1,072,228 54
850M 7.375%, 2031 1,032,109 52
650M FedEx Corp., 3.5%, 2009 639,517 32
800M Norfolk Southern Corp., 7.7%, 2017 968,706 49
1,700M Union Pacific Corp., 7.375%, 2009 1,944,690 98
300M Union Pacific Railroad, 7.28%, 2011 352,731 18
- ----------------------------------------------------------------------------------------------------------------------
9,534,237 478
- ----------------------------------------------------------------------------------------------------------------------
Utilities--7.6%
500M Cogentrix Energy, Inc., 8.75%, 2008 + 585,661 29
700M Columbia Energy Group, 6.8%, 2005 729,369 37
Consumers Energy Co.:
735M 6.375%, 2008 796,006 40
1,500M 6.875%, 2018 1,757,139 88
1,000M DPL, Inc., 6.875%, 2011 1,065,000 53
1,650M Duke Capital Corp., 8%, 2019 1,977,779 99
1,371M Eastern Energy, Ltd., 6.75%, 2006 + 1,474,016 74
795M El Paso Energy Corp., 7.375%, 2012 771,150 39
500M Entergy Gulf States, Inc., 6.2%, 2033 494,922 25
547M Niagara Mohawk Holdings, Inc., 7.625%, 2005 569,478 29
1,200M Nisource Finance Corp., 7.875%, 2010 1,419,846 71
1,350M PP&L Capital Funding, Inc., 8.375%, 2007 1,501,107 75
775M PSI Energy, Inc., 8.85%, 2022 1,039,325 52
900M Wisconsin Power & Light Co., 7%, 2007 978,473 49
- ----------------------------------------------------------------------------------------------------------------------
15,159,271 760
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Waste Management--1.6%
Allied Waste NA, Inc.:
$750M 8.875%, 2008 $817,500 $41
500M 5.75%, 2011 477,500 24
Waste Management, Inc.:
1,400M 6.875%, 2009 1,565,068 79
300M 7.375%, 2010 346,706 17
- ----------------------------------------------------------------------------------------------------------------------
3,206,774 161
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Corporate Bonds (cost $152,869,492) 162,454,639 8,148
- ----------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--4.9%
U.S. Treasury Notes:
2,250M 7.875%, 2004 2,267,579 114
2,000M 6.625%, 2007 2,193,672 110
1,300M 6%, 2009 1,453,665 73
3,300M 6.5%, 2010 3,787,526 190
- ----------------------------------------------------------------------------------------------------------------------
Total Value of U.S. Government Obligations (cost $9,558,852) 9,702,442 487
- ----------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY
OBLIGATIONS--4.1%
Fannie Mae:
1,600M 6.125%, 2012 1,785,261 89
1,287M 5%, 2016 1,253,550 63
475M Federal Home Loan Bank, 4.3%, 2008 475,117 24
Freddie Mac:
1,400M 4.6%, 2018 1,313,659 66
900M 5%, 2018 867,770 43
2,300M Tennessee Valley Authority, 5.375%, 2008 2,463,958 124
- ----------------------------------------------------------------------------------------------------------------------
Total Value of U.S. Government Agency Obligations
(cost $8,150,593) 8,159,315 409
- ----------------------------------------------------------------------------------------------------------------------
PASS THROUGH CERTIFICATES--4.0%
Real Estate--.8%
1,318M FDA Queens LP, 6.99%, 2017+ 1,489,348 75
- ----------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
FIRST INVESTORS INVESTMENT GRADE FUND
September 30, 2004
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Transportation--3.2%
$718M American Airlines, Inc., 7.377%, 2019 $432,120 $21
446M Canadian National Railway Co., 7.195%, 2016 519,349 26
Continental Airlines, Inc.:
523M 6.748%, 2017 402,433 20
1,512M 8.388%, 2020 1,149,919 58
1,239M FedEx Corp., 7.5%, 2018 1,456,244 73
714M Northwest Airlines, Inc., 8.072%, 2019 785,044 39
973M NWA Trust, 10.23%, 2012 851,442 43
825M Southwest Airlines Co., 6.126%, 2006 871,371 44
- ----------------------------------------------------------------------------------------------------------------------
6,467,922 324
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Pass Through Certificates (cost $8,673,738) 7,957,270 399
- ----------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS--.8%
Housing
Virginia State Housing Development Authority:
800M Series "A", 6.51%, 2019 851,408 43
710M Series "M", 7%, 2022 773,254 39
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Municipal Bonds (cost $1,468,829) 1,624,662 82
- ----------------------------------------------------------------------------------------------------------------------
SHORT-TERM U.S. GOVERNMENT AGENCY
OBLIGATIONS--1.8%
3,700M Federal Home Loan Bank, 1.74%, 10/13/04
(cost $3,697,860) 3,697,860 185
- ----------------------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--.4%
800M General Electric Co., 1.75%, 10/26/04
(cost $799,028) 799,028 40
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $185,218,392) 97.5% 194,395,216 9,750
Other Assets, Less Liabilities 2.5 4,989,986 250
- ----------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $199,385,202 $10,000
======================================================================================================================
+ Security exempt from registration under Rule 144A of the Securities Act
of 1933 (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, 2004. During the period, the Fund's return
on a net asset value basis was 12.1% for Class A shares and 11.2% for Class
B shares, including dividends of 22.8 cents per share on Class A shares and
20.4 cents per share on Class B shares.
The continued strength of the high yield market had the most significant
influence on the Fund's performance. Historically low interest rates,
relatively few defaults, and a sideways-trading equity market made high
yield bonds attractive. These factors, along with favorable economic and
business fundamentals, enabled the Fund to generate a return that exceeded
its dividend yield for the second year in a row. Within the high yield
asset class, risk taking was once again rewarded -- the lowest-rated
portion of the market had the highest returns.
The top contributor to the Fund's performance was its overweighting of
cyclical industries, specifically chemicals, energy, and automotive, in
anticipation of an improving economy. Chemical holdings included IMC
Global, a producer of phosphate and potash crop nutrient products; Terra
Industries, a nitrogen fertilizer manufacturer; Lyondell Chemical, a
diversified chemical company; and Hydrochem Industrial Services, an
industrial service provider to the chemical and refining industries. Energy
holdings included Giant Industries, a refining and marketing company.
Automotive holdings included Collins & Aikman, a supplier of automotive
interiors and trim products. The above-mentioned investments all benefited
from the improving economy.
On the negative side, the Fund was hurt by disappointing results of
individual companies, as well as sector allocation choices. For instance,
the Fund was hurt by its holdings in Triton Communications. The wireless
provider suffered from operating difficulties and performed poorly as the
market digested the ramifications from the termination of Triton's
affiliation agreement with AT&T Wireless following AT&T's merger with
Cingular. Another company in the Fund's portfolio, Six Flags,
underperformed due to poor attendance at its theme parks. The Fund also
owned bonds of Tekni-Plex, a plastics packaging and tubing manufacturer.
Tekni-Plex suffered from an inability to pass raw material price increases
on to its customers. Underweight positions in the both the metals and
mining and utilities sectors also led to a drag on the Fund's performance.
Portfolio Managers' Letter (continued)
FIRST INVESTORS FUND FOR INCOME, INC.
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 29, 2004
Fund Expenses
FIRST INVESTORS FUND FOR INCOME, INC.
The examples below show the ongoing costs (in dollars) of investing in your
Fund and will help you in comparing those costs with those of other mutual
funds. Please refer to page 2 for a detailed explanation of the information
presented in these examples.
- ----------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
Expense Example - Class A Shares (4/1/04) (9/30/04) (4/1/04-9/30/04)*
- ----------------------------------------------------------------------------------------------
Actual $1,000.00 $1,039.97 $6.58
Hypothetical (5% return before expenses) $1,000.00 $1,018.55 $6.51
- ----------------------------------------------------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
Expense Example - Class B Shares (4/1/04) (9/30/04) (4/1/04-9/30/04)*
- ----------------------------------------------------------------------------------------------
Actual $1,000.00 $1,039.69 $10.15
Hypothetical (5% return before expenses) $1,000.00 $1,015.05 $10.02
- ----------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio of 1.29% for Class A
shares and 1.99% for Class B shares, multiplied by the average account
value over the period, multiplied by 183/366 (to reflect the one-half year
period).
Portfolio Composition
TOP TEN SECTORS
(BAR CHART DATA:)
Consumer Discretionary 24.2%
Consumer Staples 21.3%
Materials 16.4%
Energy 8.9%
Health Care 7.2%
Industrials 5.5%
Financials 4.2%
Telecommunication Services 3.5%
Transportation 0.9%
U.S. Government Obligations 0.9%
Portfolio's holdings and allocations are subject to change. Percentages are
as of September 30, 2004, and are based on the total value of investments.
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.
First Investors Fund For Income
Graph Plot Points
for the periods Ended 9/30/04
Income CSFB
Fund Index
Dec-94 $ 9,425 $10,000
Dec-95 11,179 11,968
Dec-96 12,678 13,527
Dec-97 14,278 15,179
Sep-98 14,347 14,816
Sep-99 14,796 15,480
Sep-00 15,160 15,708
Sep-01 13,614 14,930
Sep-02 13,407 15,356
Sep-03 16,864 19,663
Sep-04 18,896 21,054
(INSET BOX IN CHART READS:)
Average Annual Total Returns*
Class A Shares N.A.V. Only S.E.C. Standardized
One Year 12.06% 5.48%
Five Years 5.01% 3.77%
Ten Years 7.25% 6.61%
S.E.C. 30-Day Yield 5.66%
Class B Shares
One Year 11.22% 7.22%
Five Years 4.36% 4.02%
Since Inception
(1/12/95) 6.73% 6.73%
S.E.C. 30-Day Yield 5.29%
The graph compares a $10,000 investment in the First Investors Fund For
Income, Inc. (Class A shares) beginning 12/31/94 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
9/30/04, the Index consisted of 1,593 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
9/30/04, approximately 4.36% of the market value of the Index was in
default. The bonds included in the Index had an average maturity of 7.38
years, an average duration of 3.94 years and an average coupon of 8.9%. 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 9/30/04)
include the reinvestment of all dividends and distributions. "N.A.V. Only"
returns are calculated without sales charges. The Class A "S.E.C.
Standardized" returns shown are based on the maximum sales charge of 5.75%
(prior to 6/17/02, the maximum sales charge was 6.25%). The Class B "S.E.C.
Standardized" returns are adjusted for the applicable deferred sales charge
(maximum of 4% in the first year). Results represent past performance and
do not indicate future results.The graph and the returns shown do not
reflect the deduction of taxes that a shareholder would pay on
distributions or the redemption of fund shares. Investment return and
principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than the original cost.
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, 2004
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS--91.6%
Aerospace/Defense--2.7%
$3,450M Alliant Techsystems, Inc., 8.5%, 2011 $3,777,750 $63
900M DRS Technologies, Inc., 6.875%, 2013 940,500 16
2,700M GenCorp, Inc., 9.5%, 2013 2,902,500 48
L-3 Communications Corp.:
3,000M 8%, 2008 3,105,000 52
1,600M 7.625%, 2012 1,768,000 29
3,600M 6.125%, 2014 3,618,000 60
- ----------------------------------------------------------------------------------------------------------------------
16,111,750 268
- ----------------------------------------------------------------------------------------------------------------------
Automotive--8.8%
6,725M Accuride Corp., 9.25%, 2008 6,909,938 115
Asbury Automotive Group, Inc.:
3,400M 9%, 2012 3,604,000 60
5,400M 8%, 2014 5,346,000 89
4,208M Cambridge Industries Liquidating Trust ++ ** 8,417 --
Collins & Aikman Products Co.:
3,750M 10.75%, 2011 3,768,750 63
6,250M 12.875%, 2012 + 5,796,875 96
5,450M Dana Corp., 9%, 2011 6,608,125 110
Delco Remy International, Inc.:
5,500M 11%, 2009 5,802,500 97
3,250M 9.375%, 2012 3,201,250 53
2,500M Special Devices, Inc., 11.375%, 2008 2,400,000 40
4,693M TRW Automotive, Inc., 9.375%, 2013 5,385,218 90
3,600M United Components, Inc., 9.375%, 2013 3,897,000 65
- ----------------------------------------------------------------------------------------------------------------------
52,728,073 878
- ----------------------------------------------------------------------------------------------------------------------
Chemicals--10.7%
3,175M BCP Caylux Holding Lux SCA, 9.625%, 2014 + 3,444,875 57
3,500M Equistar Chemicals LP, 10.625%, 2011 4,007,500 67
450M Ethyl Corp., 8.875%, 2010 488,250 8
3,500M FMC Corp., 10.25%, 2009 4,103,750 68
Huntsman, LLC:
2,600M 11.625%, 2010 3,022,500 50
4,250M 11.5%, 2012 + 4,712,188 78
7,000M IMC Global, Inc., 10.875%, 2013 8,872,500 148
Lyondell Chemical Co.:
1,000M 9.625%, 2007 1,093,750 18
8,000M 10.875%, 2009 8,520,000 142
- ----------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
FIRST INVESTORS FUND FOR INCOME, INC.
September 30, 2004
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Chemicals (continued)
Millennium America, Inc.:
$900M 7%, 2006 $938,250 $16
1,975M 9.25%, 2008 2,187,313 36
2,400M 9.25%, 2008 + 2,658,000 44
250M Nalco Co., 8.875%, 2013 270,000 5
900M Omnova Solutions, Inc., 11.25%, 2010 1,012,500 17
8,150M Resolution Performance Products, LLC,
13.5%, 2010 7,946,250 132
8,500M Terra Capital, Inc., 11.5%, 2010 9,647,500 161
622M Texas Petrochemicals Corp., 7.25%, 2009 730,850 12
592M Westlake Chemical Corp., 8.75%, 2011 667,480 11
- ----------------------------------------------------------------------------------------------------------------------
64,323,456 1,070
- ----------------------------------------------------------------------------------------------------------------------
Consumer Non-Durables--2.9%
3,420M AKI, Inc., 10.5%, 2008 3,535,425 59
4,000M GFSI, Inc., 9.625%, 2007 3,890,000 65
7,200M Playtex Products, Inc., 9.375%, 2011 7,416,000 123
2,500M Remington Arms Co., 10.5%, 2011 2,387,500 40
- ----------------------------------------------------------------------------------------------------------------------
17,228,925 287
- ----------------------------------------------------------------------------------------------------------------------
Energy--8.8%
7,000M Bluewater Finance, Ltd., 10.25%, 2012 7,630,000 127
Chesapeake Energy Corp.:
4,500M 9%, 2012 5,163,750 86
1,800M 7.5%, 2014 1,975,500 33
5,050M Compagnie Generale de Geophysique,
10.625%, 2007 5,373,200 89
4,075M Dresser, Inc., 9.375%, 2011 4,502,875 75
13,750M El Paso Production Holding Co., 7.75%, 2013 13,853,125 231
1,800M Energy Partners, Ltd., 8.75%, 2010 1,962,000 33
Giant Industries, Inc.:
6,289M 11%, 2012 7,232,350 120
2,600M 8%, 2014 2,665,000 44
1,000M Hanover Compressor Co., Zero Coupon
(effective yield 11.37%), 2007 ## 850,000 14
1,750M Tesoro Petroleum Corp., 9.625%, 2008 1,933,750 32
- ----------------------------------------------------------------------------------------------------------------------
53,141,550 884
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Financial Services--2.4%
$14,500M Dow Jones CDX, High Yield, Trust 1,
Series 3-1, 7.75%, 2009 + $14,699,375 $244
- ----------------------------------------------------------------------------------------------------------------------
Food/Beverage/Tobacco--2.5%
Land O'Lakes, Inc.:
1,800M 9%, 2010 + 1,883,250 31
7,300M 8.75%, 2011 6,862,000 114
4,500M Merisant Co., 9.5%, 2013 + 4,297,500 72
Pilgrim's Pride Corp.:
1,550M 9.625%, 2011 1,743,750 29
150M 9.25%, 2013 165,750 3
- ----------------------------------------------------------------------------------------------------------------------
14,952,250 249
- ----------------------------------------------------------------------------------------------------------------------
Food/Drug--2.0%
3,660M Di Giorgio Corp., 10%, 2007 3,678,300 61
4,000M Ingles Markets, Inc., 8.875%, 2011 4,330,000 72
3,500M Roundy's, Inc., 8.875%, 2012 3,788,750 63
- ----------------------------------------------------------------------------------------------------------------------
11,797,050 196
- ----------------------------------------------------------------------------------------------------------------------
Forest Products/Containers--4.2%
9,300M AEP Industries, Inc., 9.875%, 2007 9,520,875 158
500M Graham Packaging Co., 8.5%, 2012 + 512,500 8
1,250M Pliant Corp., 0%-11.125%, 2009 # 1,075,000 18
4,000M Potlatch Corp., 10%, 2011 4,540,000 76
4,300M Stone Container Corp., 9.75%, 2011 4,783,750 80
Tekni-Plex, Inc.:
3,625M 12.75%, 2010 3,045,000 51
2,000M 8.75%, 2013 + 1,910,000 32
- ----------------------------------------------------------------------------------------------------------------------
25,387,125 423
- ----------------------------------------------------------------------------------------------------------------------
Gaming/Leisure--3.3%
4,250M Circus & Eldorado/Silver Legacy, 10.125%, 2012 4,547,500 76
500M Herbst Gaming, Inc., 8.125%, 2012 + 515,000 9
1,800M Isle of Capri Casinos, Inc., 7%, 2014 1,818,000 30
3,000M John Q. Hammons Hotels, LP, 8.875%, 2012 3,360,000 56
Park Place Entertainment Corp.:
3,500M 9.375%, 2007 3,911,250 65
5,000M 7%, 2013 5,587,500 93
- ----------------------------------------------------------------------------------------------------------------------
19,739,250 329
- ----------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
FIRST INVESTORS FUND FOR INCOME, INC.
September 30, 2004
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Health Care--7.2%
$4,000M Encore Medical IHC, Inc., 9.75%, 2012 + $3,970,000 $66
755M Fisher Scientific International, Inc., 8.125%, 2012 845,600 14
4,400M Genesis Health Ventures, Inc., 9.75%, 2005 ++ ** 2,750 --
4,350M HCA, Inc., 5.25%, 2008 4,458,123 74
4,000M Insight Health Services Corp., 9.875%, 2011 4,020,000 67
500M Medex, Inc., 8.875%, 2013 547,500 9
4,500M MedQuest, Inc., 11.875%, 2012 5,152,500 86
2,800M Owens & Minor, Inc., 8.5%, 2011 3,108,000 52
3,600M PerkinElmer, Inc., 8.875%, 2013 4,086,000 68
1,725M Quintiles Transnational Corp., 10%, 2013 1,837,125 30
3,500M Rotech Healthcare, Inc., 9.5%, 2012 3,762,500 63
12,400M Tenet Healthcare Corp., 6.375%, 2011 11,191,000 186
- ----------------------------------------------------------------------------------------------------------------------
42,981,098 715
- ----------------------------------------------------------------------------------------------------------------------
Housing--2.5%
4,050M Integrated Electrical Services, Inc.,
9.375%, 2009 3,989,250 66
2,700M Nortek, Inc., 8.5%, 2014 + 2,841,750 47
5,000M Ply Gem Industries, Inc., 9%, 2012 + 5,012,500 84
2,700M William Lyon Homes, Inc., 10.75%, 2013 3,132,000 52
- ----------------------------------------------------------------------------------------------------------------------
14,975,500 249
- ----------------------------------------------------------------------------------------------------------------------
Information Technology--.9%
3,100M ChipPac International, Ltd., 12.75%, 2009 3,297,625 55
3,000M Exodus Communications, Inc., 10.75%, 2009 ++ ** 1,875 --
Iron Mountain, Inc.:
1,000M 8.625%, 2013 1,090,000 18
1,000M 6.625%, 2016 980,000 16
- ----------------------------------------------------------------------------------------------------------------------
5,369,500 89
- ----------------------------------------------------------------------------------------------------------------------
Investment/Finance Companies--1.7%
2,106M Finova Group, Inc., 7.5%, 2009 1,060,898 18
3,400M General Motors Acceptance Corp., 4.5%, 2006 3,454,715 57
5,500M LaBranche & Co., Inc., 11%, 2012 + 5,678,750 95
- ----------------------------------------------------------------------------------------------------------------------
10,194,363 170
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Manufacturing--2.8%
Columbus McKinnon Corp.:
$7,900M 8.5%, 2008 $7,742,000 $129
500M 10%, 2010 552,500 9
1,800M Eagle-Picher Industries, Inc., 9.75%, 2013 1,845,000 31
6,000M Wolverine Tube, Inc., 10.5%, 2009 6,630,000 110
- ----------------------------------------------------------------------------------------------------------------------
16,769,500 279
- ----------------------------------------------------------------------------------------------------------------------
Media-Broadcasting--2.7%
650M Block Communications, Inc., 9.25%, 2009 690,625 12
5,000M Nexstar Finance Holding, LLC, 0%-11.375%,
2013 # 3,856,250 64
450M Nexstar Finance, Inc., 7%, 2014 445,500 7
3,000M Sinclair Broadcasting Group, Inc., 8.75%, 2011 3,270,000 54
Young Broadcasting Corp.:
2,920M 10%, 2011 3,022,200 50
4,900M 8.75%, 2014 4,728,500 79
- ----------------------------------------------------------------------------------------------------------------------
16,013,075 266
- ----------------------------------------------------------------------------------------------------------------------
Media-Cable TV--11.2%
2,275M Adelphia Communications Corp. , 10.25%, 2011 ++ 2,155,563 36
6,250M Atlantic Broadband Finance, LLC, 9.375%, 2014 + 5,953,125 99
18,000M Cablevision Systems Corp., 8%, 2012 + 18,900,000 314
2,000M Century Communications Corp., 9.5%, 2005 ++ 2,150,000 36
Charter Communications Holdings, LLC:
8,500M 10%, 2009 6,927,500 115
1,000M 10.75%, 2009 825,000 14
2,000M 10.25%, 2010 1,615,000 27
5,800M 9.92%, 2011 4,495,000 75
2,000M 8%, 2012 + 2,005,000 33
750M Coleman Cable, Inc., 9.875%, 2012 + 765,938 13
5,476M Loral Cyberstar, Inc., 10%, 2006 ++ 4,353,420 72
Mediacom LLC/Mediacom Capital Corp.:
6,500M 8.5%, 2008 6,678,750 111
4,000M 7.875%, 2011 3,840,000 64
2,000M 9.5%, 2013 1,935,000 32
4,300M Quebecor Media, Inc., 11.125%, 2011 4,988,000 83
- ----------------------------------------------------------------------------------------------------------------------
67,587,296 1,124
- ----------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
FIRST INVESTORS FUND FOR INCOME, INC.
September 30, 2004
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Media-Diversified--2.5%
$5,200M Cenveo, Inc., 7.875%, 2013 $5,096,000 $85
1,500M R.H. Donnelley Financial Corp., 10.875%, 2012 + 1,826,250 31
Six Flags, Inc.:
2,500M 8.875%, 2010 2,356,250 39
1,800M 9.625%, 2014 1,692,000 28
3,400M Universal City Development Partners, Ltd.,
11.75%, 2010 3,978,000 66
- ----------------------------------------------------------------------------------------------------------------------
14,948,500 249
- ----------------------------------------------------------------------------------------------------------------------
Metals/Mining--.9%
3,728M Commonwealth Aluminum Corp., 10.75%, 2006 3,755,960 62
1,840M Euramax International, Inc., 8.5%, 2011 1,968,800 33
3,000M Murrin Murrin Holdings Property, Ltd.,
9.375%, 2007 ++ ** -- --
- ----------------------------------------------------------------------------------------------------------------------
5,724,760 95
- ----------------------------------------------------------------------------------------------------------------------
Retail-General Merchandise--1.0%
1,296M Big 5 Corp., 10.875%, 2007 1,336,500 22
4,000M Michaels Stores, Inc., 9.25%, 2009 4,360,000 73
250M Phillips Van-Heusen Corp., 8.125%, 2013 268,750 4
- ----------------------------------------------------------------------------------------------------------------------
5,965,250 99
- ----------------------------------------------------------------------------------------------------------------------
Services--5.5%
Allied Waste NA, Inc.:
3,450M 5.75%, 2011 3,294,750 55
2,700M 9.25%, 2012 3,017,250 50
1,800M 7.875%, 2013 1,908,000 32
6,000M 7.375%, 2014 5,805,000 97
5,350M Hydrochem Industrial Services, Inc.,
10.375%, 2007 5,416,875 90
1,000M IESI Corp., 10.25%, 2012 1,085,000 18
4,535M Kindercare Learning Centers, Inc., 9.5%, 2009 4,620,030 77
United Rentals, Inc.:
5,000M 6.5%, 2012 4,837,500 80
3,600M 7%, 2014 3,213,000 53
- ----------------------------------------------------------------------------------------------------------------------
33,197,405 552
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Telecommunications--.8%
$4,000M Adelphia Business Solutions, Inc.,
13%, 2005 ++ ** $2,500 $--
6,050M E. Spire Communications, Inc., 13%, 2005 ++ 605 --
2,400M ICG Services, Inc., 10%, 2008 ++ ** 1,500 --
RCN Corp.:
9,000M 11.125%, 2007 ++ 4,725,000 79
300M 11%, 2008 ++ 153,000 3
XO Communications, Inc.:
7,000M 12.5%, 2006 ++ ** 4,375 --
2,750M 9.45%, 2008 ++ ** 1,719 --
- ----------------------------------------------------------------------------------------------------------------------
4,888,699 82
- ----------------------------------------------------------------------------------------------------------------------
Transportation--.9%
2,700M General Maritime Corp., 10%, 2013 3,081,375 51
500M Great Lakes Dredge & Dock Corp., 7.75%, 2013 435,000 7
1,750M Overseas Shipholding Group, Inc., 8.25%, 2013 1,942,500 33
- ----------------------------------------------------------------------------------------------------------------------
5,458,875 91
- ----------------------------------------------------------------------------------------------------------------------
Utilities--.2%
5,500M AES Drax Energy, Ltd., 11.5%, 2010 ++ 55,000 1
1,000M Pacific Energy Partners, LP, 7.125%, 2014 + 1,087,500 18
- ----------------------------------------------------------------------------------------------------------------------
1,142,500 19
- ----------------------------------------------------------------------------------------------------------------------
Wireless Communications--2.5%
5,000M Crown Castle International Corp., 9.375%, 2011 5,775,000 96
5,000M Nextel Communications, Inc., 5.95%, 2014 4,925,000 82
Triton Communications, LLC:
3,500M 8.75%, 2011 2,397,500 40
2,600M 9.375%, 2011 1,878,500 32
- ----------------------------------------------------------------------------------------------------------------------
14,976,000 250
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Corporate Bonds (cost $563,656,035) 550,301,125 9,157
- ----------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--.9%
5,000M U.S. Treasury Notes, 7%, 2006 (cost $5,082,547) 5,390,630 90
- ----------------------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
FIRST INVESTORS FUND FOR INCOME, INC.
September 30, 2004
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Shares or $10,000 of
Warrants Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--.7%
Automotive--.1%
37,387 * Safelite Glass Corp.-- Class "B" + ** $299,096 $5
2,523 Safelite Realty Corp. ** 25 --
- ----------------------------------------------------------------------------------------------------------------------
299,121 5
- ----------------------------------------------------------------------------------------------------------------------
Chemicals--.3%
181,689 * Texas Petrochemicals Corp. 1,771,468 30
14,634 * Texas Petrochemicals Corp. ** 107,011 2
- ----------------------------------------------------------------------------------------------------------------------
1,878,479 32
- ----------------------------------------------------------------------------------------------------------------------
Consumer Non-Durables--.0%
25,200 * Worldtex, Inc. ** 252 --
- ----------------------------------------------------------------------------------------------------------------------
Media-Cable TV--.2%
41,221 * Echostar Communications Corp. - Class "A" 1,282,798 21
- ----------------------------------------------------------------------------------------------------------------------
Telecommunications--.1%
5,805 * ICG Communications, Inc. 4,064 --
35,876 * TelCove, Inc. + ** 905,000 14
2,533 * Viatel Holding (Bermuda), Ltd. 1,963 --
18,224 * World Access, Inc. 22 --
- ----------------------------------------------------------------------------------------------------------------------
911,049 14
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $9,405,125) 4,371,699 72
- ----------------------------------------------------------------------------------------------------------------------
WARRANTS--.1%
Aerospace/Defense--.0%
3,000 * DeCrane Aircraft Holdings, Inc. (expiring 9/30/08) + 30 --
- ----------------------------------------------------------------------------------------------------------------------
Automotive--.0%
Safelite Glass Corp.:
91,625 * Class "A" (expiring 9/29/06) + ** 916 --
61,084 * Class "B" (expiring 9/29/07) + ** 611 --
- ----------------------------------------------------------------------------------------------------------------------
1,527 --
- ----------------------------------------------------------------------------------------------------------------------
Media-Cable TV--.0%
54,020 * Loral Cyberstar, Inc. (expiring 12/26/06) 540 --
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Amount
Warrants, Invested
Shares or For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
Telecommunications--.1%
3,500 * GT Group Telecom, Inc. (expiring 2/1/10) + ** $-- $--
5,600 * Powertel, Inc. (expiring 2/1/06) ** 199,349 3
- ----------------------------------------------------------------------------------------------------------------------
199,349 3
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Warrants (cost $5,065,950) 201,446 3
- ----------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--.0%
Consumer Non-Durables
7,714 * Worldtex, Inc., 12%, 2004 (cost $527,885) ** 76 --
- ----------------------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--3.1%
$7,500M Coca-Cola Co., 1.74%, 10/19/04 7,493,474 125
11,300M Toyota Motor Credit Co., 1.59%, 10/6/04 11,297,501 188
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Short-Term Corporate Notes (cost $18,790,975) 18,790,975 313
- ----------------------------------------------------------------------------------------------------------------------
SHORT-TERM U.S. GOVERNMENT
AGENCY OBLIGATIONS--2.1%
12,600M Fannie Mae, 1.72%, 10/7/04 (cost $12,596,387) 12,596,387 210
- ----------------------------------------------------------------------------------------------------------------------
SHORT-TERM U.S. GOVERNMENT
OBLIGATIONS--.6%
3,800M U.S. Treasury Bills, 1.53%, 10/7/04
(cost $3,799,030) 3,799,030 63
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $618,923,934) 99.1% 595,451,368 9,908
Other Assets, Less Liabilities .9 5,498,839 92
- ----------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $600,950,207 $10,000
======================================================================================================================
+ Security exempt from registration under Rule 144A of the Securities Act of 1933 (see Note 4).
++ In default as to principal and/or interest payment
* Non-income producing
** Security valued at fair value (see Note 1A)
# Denotes a stepbond (a zero coupon bond that converts to a fixed interest rate at a designated future date).
## Zero coupon bond reflecting effective yield on the date of purchase.
See notes to financial statements
Portfolio Composition (Unaudited)
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, 2004 and the dollar weighted
average of the total of the Fund's investments in step bonds and zero
coupon bonds during the 2004 fiscal year, computed on a monthly basis, are
set forth below. This information reflects the average composition of the
Fund's assets during the 2004 fiscal year and is not necessarily
representative of the Fund as of the end of its 2004 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 1.75% 0.00%
A 0.60 0.00
Ba1 3.31 0.00
Ba2 1.50 0.00
Ba3 10.51 0.00
B1 8.00 0.27
B2 21.44 0.00
B3 29.15 0.14
Caa1 8.26 0.39
Caa2 1.16 0.00
Caa3 0.19 0.00
Ca 3.21 0.46
C 0.01 1.00
- ----------------------------------------------------------------------
Step Bonds 0.73%
Zero Coupon Bonds 0.83%
See notes to financial statements
This page intentionally left blank.
Statements of Assets and Liabilities
FIRST INVESTORS
September 30, 2004
- -----------------------------------------------------------------------------------------------------------------------------
CASH INVESTMENT
MANAGEMENT GOVERNMENT GRADE INCOME
- -----------------------------------------------------------------------------------------------------------------------------
Assets
Investments in securities:
At identified cost $174,615,607 $188,470,712 $185,218,392 $618,923,934
============ ============ ============ ============
At value (Note 1A) $174,615,607 $190,741,661 $194,395,216 $595,451,368
Cash 1,820,008 792,743 1,498,778 966,799
Receivables:
Interest and dividends 303,454 907,467 3,379,639 13,919,369
Shares sold -- 292,682 604,277 1,002,204
Investment securities sold -- 5,062,296 -- 1,270,625
Other assets 34,168 38,458 9,314 261,733
------------ ------------ ------------ ------------
Total Assets 176,773,237 197,835,307 199,887,224 612,872,098
------------ ------------ ------------ ------------
Liabilities
Payables:
Investment securities purchased -- 1,559,324 -- 9,959,856
Dividends payable 11,717 101,674 101,111 918,212
Shares redeemed 394,819 320,306 260,008 556,140
Accrued advisory fees 33,065 85,369 88,759 356,363
Accrued shareholder servicing costs 57,981 36,030 37,038 91,347
Accrued expenses 53,380 35,214 15,106 39,973
------------ ------------ ------------ ------------
Total Liabilities 550,962 2,137,917 502,022 11,921,891
------------ ------------ ------------ ------------
Net Assets $176,222,275 $195,697,390 $199,385,202 $600,950,207
============ ============ ============ ============
Net Assets Consist of:
Capital paid in $176,222,275 $200,161,684 $195,940,139 $750,137,121
Undistributed net investment income (deficit) -- 47,109 (2,224,743) (404,386)
Accumulated net realized loss on investments -- (6,782,352) (3,507,018) (125,309,962)
Net unrealized appreciation (depreciation) in value of investments -- 2,270,949 9,176,824 (23,472,566)
------------ ------------ ------------ ------------
Total $176,222,275 $195,697,390 $199,385,202 $600,950,207
============ ============ ============ ============
Net Assets:
Class A $171,000,364 $178,860,254 $169,691,892 $560,637,012
Class B $5,221,911 $16,837,136 $29,693,310 $40,313,195
Shares outstanding (Note 6):
Class A 171,000,364 16,071,435 16,790,840 176,190,452
Class B 5,221,911 1,513,860 2,940,327 12,694,476
Net asset value and redemption price per share--Class A $1.00* $11.13 $10.11 $3.18
============ ============ ============ ============
Maximum offering price per share--Class A
(Net asset value/.9425)** N/A $11.81 $10.73 $3.37
============ ============ ============ ============
Net asset value and offering price per share--Class B (Note 6) $1.00 $11.12 $10.10 $3.18
============ ============ ============ ============
* Also maximum offering price per share.
** On purchases of $100,000 or more, the sales charge is reduced.
See notes to financial statements
Statements of Operations
FIRST INVESTORS
Year Ended September 30, 2004
- -----------------------------------------------------------------------------------------------------------------------------
CASH INVESTMENT
MANAGEMENT GOVERNMENT GRADE INCOME
- -----------------------------------------------------------------------------------------------------------------------------
Investment Income
Income (Note 1F):
Interest $2,159,264 $9,643,551 $10,382,711 $48,625,616
Dividends -- -- 10,539 1,255,876
------------ ------------ ------------ ------------
Total Income 2,159,264 9,643,551 10,393,250 49,881,492
------------ ------------ ------------ ------------
Expenses (Notes 1 and 3):
Advisory fees 893,599 1,978,077 1,395,145 4,217,016
Distribution plan expenses - Class A -- 449,522 390,416 1,616,285
Distribution plan expenses - Class B 24,667 181,187 298,529 397,915
Shareholder servicing costs 775,850 437,583 436,784 1,160,723
Professional fees 38,612 45,243 28,333 76,697
Registration fees 38,443 37,213 32,042 37,791
Custodian fees 40,346 36,690 23,239 52,734
Reports to shareholders 49,440 17,402 22,608 57,720
Directors/trustees' fees 7,089 7,613 7,347 19,608
Other expenses 35,572 45,624 51,734 114,828
------------ ------------ ------------ ------------
Total expenses 1,903,618 3,236,154 2,686,177 7,751,317
Less: Expenses waived (619,825) (920,409) (410,712) --
Expenses paid indirectly (4,337) (2,941) (6,251) (9,439)
------------ ------------ ------------ ------------
Net expenses 1,279,456 2,312,804 2,269,214 7,741,878
------------ ------------ ------------ ------------
Net investment income 879,808 7,330,747 8,124,036 42,139,614
------------ ------------ ------------ ------------
Realized and Unrealized Gain (Loss) on Investments (Note 2):
Net realized gain (loss) on investments -- (341,641) 302,465 (8,251,858)
Net unrealized appreciation (depreciation) of investments -- (1,302,024) (2,195,623) 30,961,559
------------ ------------ ------------ ------------
Net gain (loss) on investments -- (1,643,665) (1,893,158) 22,709,701
------------ ------------ ------------ ------------
Net Increase in Net Assets Resulting from Operations $879,808 $5,687,082 $6,230,878 $64,849,315
============ ============ ============ ============
See notes to financial statements
Statements of Changes in Net Assets
FIRST INVESTORS
- -----------------------------------------------------------------------------------------------------------------------------
CASH MANAGEMENT GOVERNMENT
---------------------------- ----------------------------
Year Ended September 30 2004 2003 2004 2003
- -----------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations
Net investment income $879,808 $1,182,333 $7,330,747 $7,703,948
Net realized gain (loss) on investments -- -- (341,641) 8,408
Net unrealized appreciation (depreciation) of investments -- -- (1,302,024) (1,789,098)
------------ ------------ ------------ ------------
Net increase in net assets resulting from operations 879,808 1,182,333 5,687,082 5,923,258
------------ ------------ ------------ ------------
Dividends to Shareholders
Net investment income - Class A (879,808) (1,179,371) (8,259,090) (8,582,301)
Net investment income - Class B -- (2,962) (695,693) (801,350)
------------ ------------ ------------ ------------
Total dividends (879,808) (1,182,333) (8,954,783) (9,383,651)
------------ ------------ ------------ ------------
Share Transactions *
Class A:
Proceeds from shares sold 230,381,626 234,463,530 24,724,756 46,898,620
Reinvestment of dividends 866,316 1,159,375 7,024,588 7,221,886
Cost of shares redeemed (239,688,565) (248,896,616) (34,302,401) (35,011,833)
------------ ------------ ------------ ------------
(8,440,623) (13,273,711) (2,553,057) 19,108,673
------------ ------------ ------------ ------------
Class B:
Proceeds from shares sold 4,173,253 5,714,577 2,096,784 10,300,873
Reinvestment of dividends -- 2,815 646,291 740,287
Cost of shares redeemed (4,756,069) (5,696,499) (6,503,702) (6,071,287)
------------ ------------ ------------ ------------
(582,816) 20,893 (3,760,627) 4,969,873
------------ ------------ ------------ ------------
Net increase (decrease) from share transactions (9,023,439) (13,252,818) (6,313,684) 24,078,546
------------ ------------ ------------ ------------
Net increase (decrease) in net assets (9,023,439) (13,252,818) (9,581,385) 20,618,153
Net Assets
Beginning of year 185,245,714 198,498,532 205,278,775 184,660,622
------------ ------------ ------------ ------------
End of year+ $176,222,275 $185,245,714 $195,697,390 $205,278,775
============ ============ ============ ============
+Includes undistributed net investment income (deficit) of $-- $-- $47,109 $47,132
============ ============ ============ ============
*Shares Issued and Redeemed
Class A:
Sold 230,381,626 234,463,530 2,210,207 4,098,534
Issued for dividends reinvested 866,316 1,159,375 628,957 633,021
Redeemed (239,688,565) (248,896,616) (3,067,827) (3,071,484)
------------ ------------ ------------ ------------
Net increase (decrease) in Class A shares outstanding (8,440,623) (13,273,711) (228,663) 1,660,071
============ ============ ============ ============
Class B:
Sold 4,173,253 5,714,577 187,448 899,737
Issued for dividends reinvested -- 2,815 57,886 64,938
Redeemed (4,756,069) (5,696,499) (581,334) (533,219)
------------ ------------ ------------ ------------
Net increase (decrease) in Class B shares outstanding (582,816) 20,893 (336,000) 431,456
============ ============ ============ ============
Statements of Changes in Net Assets (continued)
FIRST INVESTORS
- -----------------------------------------------------------------------------------------------------------------------------
INVESTMENT GRADE INCOME
---------------------------- ----------------------------
Year Ended September 30 2004 2003 2004 2003
- -----------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations
Net investment income $8,124,036 $7,055,455 $42,139,614 $40,172,419
Net realized gain (loss) on investments 302,465 (1,287,197) (8,251,858) (40,988,935)
Net unrealized appreciation (depreciation) of investments (2,195,623) 7,336,387 30,961,559 110,648,829
------------ ------------ ------------ ------------
Net increase in net assets resulting from operations 6,230,878 13,104,645 64,849,315 109,832,313
------------ ------------ ------------ ------------
Dividends to Shareholders
Net investment income - Class A (8,099,196) (6,630,609) (39,075,051) (38,529,726)
Net investment income - Class B (1,336,388) (1,254,542) (2,588,132) (2,335,735)
------------ ------------ ------------ ------------
Total dividends (9,435,584) (7,885,151) (41,663,183) (40,865,461)
------------ ------------ ------------ ------------
Share Transactions *
Class A:
Proceeds from shares sold 50,364,030 54,335,625 63,662,598 74,169,454
Reinvestment of dividends 6,793,101 5,527,350 28,659,730 27,917,451
Cost of shares redeemed (28,437,258) (22,919,488) (62,497,536) (54,438,349)
------------ ------------ ------------ ------------
28,719,873 36,943,487 29,824,792 47,648,556
------------ ------------ ------------ ------------
Class B:
Proceeds from shares sold 5,712,034 10,815,522 7,671,407 12,429,320
Reinvestment of dividends 1,164,424 1,092,655 1,824,251 1,486,015
Cost of shares redeemed (7,346,111) (4,647,711) (7,724,800) (5,406,924)
------------ ------------ ------------ ------------
(469,653) 7,260,466 1,770,858 8,508,411
------------ ------------ ------------ ------------
Net increase (decrease) from share transactions 28,250,220 44,203,953 31,595,650 56,156,967
------------ ------------ ------------ ------------
Net increase (decrease) in net assets 25,045,514 49,423,447 54,781,782 125,123,819
Net Assets
Beginning of year 174,339,688 124,916,241 546,168,425 421,044,606
------------ ------------ ------------ ------------
End of year+ $199,385,202 $174,339,688 $600,950,207 $546,168,425
============ ============ ============ ============
+Includes undistributed net investment income (deficit) of $(2,224,743) $(1,073,397) $(404,386) $(1,481,783)
============ ============ ============ ============
*Shares Issued and Redeemed
Class A:
Sold 4,971,218 5,422,036 20,179,230 25,912,750
Issued for dividends reinvested 671,503 549,544 9,084,550 9,743,823
Redeemed (2,815,735) (2,282,798) (19,825,583) (19,071,100)
------------ ------------ ------------ ------------
Net increase (decrease) in Class A shares outstanding 2,826,986 3,688,782 9,438,197 16,585,473
============ ============ ============ ============
Class B:
Sold 562,738 1,080,259 2,440,270 4,363,332
Issued for dividends reinvested 115,116 108,648 579,255 517,968
Redeemed (725,530) (463,573) (2,457,779) (1,892,570)
------------ ------------ ------------ ------------
Net increase (decrease) in Class B shares outstanding (47,676) 725,334 561,746 2,988,730
============ ============ ============ ============
See notes to financial statements
Notes to Financial Statements
September 30, 2004
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, 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. First Investors 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 of 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 by the Fund's Board of
Directors/Trustees. At September 30, 2004, the Income Fund held eighteen
securities that were fair valued by its Valuation Committee with an
aggregate value of $1,535,472 representing .3% 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, 2004, capital loss carryovers were as follows:
Year Capital Loss Carryovers Expire
--------------------------------------------------------------------------------------------------------
Fund Total 2005 2007 2008 2009 2010 2011 2012
- ---- ----- ---- ---- ---- ---- ---- ---- ----
Government $ 5,337,388 $ -- $ -- $1,017,364 $ 2,144,197 $ -- $ 54,921 $ 2,120,906
Investment
Grade 3,507,018 -- -- -- 1,715,940 27,419 407,283 1,356,376
Income 115,943,713 3,055,280 842,581 1,832,458 13,810,649 18,563,112 52,099,335 25,740,298
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.
Notes to Financial Statements (continued)
September 30, 2004
E. Expense Allocation--Expenses directly charged or attributable to a Fund
are paid from the assets of that Fund. General expenses of First Investors
Series Fund are allocated among and charged to the assets of each Fund in
First Investors 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, 2004, the Bank of New York, custodian for
the Funds, has provided total credits in the amount of $18,504 against
custodian charges based on the uninvested cash balances of the Funds. The
Funds also reduced expenses through brokerage service arrangements. For the
year ended September 30, 2004, the Funds expenses were reduced by $4,464
under these arrangements.
2. Security Transactions--For the year ended September 30, 2004, 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 $ -- $ -- $116,077,886 $124,319,095
Investment Grade 34,651,770 15,689,522 5,948,678 69,380
Income 231,996,544 196,511,958 -- 5,500,000
At September 30, 2004, 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 $188,470,712 $ 2,691,125 $ 420,176 $ 2,270,949
Investment Grade 187,757,276 8,852,625 2,214,685 6,637,940
Income 620,732,092 36,922,268 62,310,003 (25,387,735)
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' 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, 2004, total directors/trustees fees accrued by the
Funds amounted to $41,657.
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. FIMCO
has voluntarily waived $619,825 in advisory fees to limit the Fund's
overall expense ratio to .70% on Class A shares and 1.45% on Class B shares.
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 $920,409 in advisory fees to limit
the Fund's overall expense ratio to 1.10% on Class A shares and 1.85% on
Class B shares.
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 $410,712 in advisory fees to limit the Fund's
overall expense ratio to 1.10% on Class A shares and 1.85% on Class B shares.
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, 2004, total advisory fees accrued to FIMCO
by the Funds were $8,483,837 of which $1,950,946 was waived as noted above.
For the year ended September 30, 2004, FIC, as underwriter, received
$4,642,815 in commissions from the sale of shares of the Funds after
allowing $64,196 to other dealers. Shareholder servicing costs included
$1,904,622 in transfer agent fees accrued to ADM and $406,895 in retirement
accounts custodian fees accrued to FIFSB.
Notes to Financial Statements (continued)
September 30, 2004
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 service fee is paid
for the ongoing servicing of clients who are shareholders of that Fund. For
the year ended September 30, 2004, the fees paid under the distribution
plans by Government Fund and Investment Grade Fund were limited to .25% on
Class A shares and 1% on Class B shares. The distribution fees paid by Cash
Management Fund were limited to .75% on Class B shares.
4. Restricted Securities -- Certain restricted securities are exempt from
the registration requirements under Rule 144A of the Securities Act of 1933
and may only be sold to qualified institutional investors. At September 30,
2004, Cash Management Fund held one 144A security with a value of
$3,803,017 representing 2.2% of the Fund's net assets, Investment Grade
Fund held nine 144A securities with an aggregate value of $13,645,603
representing 6.8% of the Fund's net assets and Income Fund held twenty-six
144A securities with an aggregate value of $89,676,029 representing 14.9%
of the Fund's net assets. Cash Management Fund also held eight Section 4(2)
securities with an aggregate value of $33,968,397 representing 19.3% 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 sell 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 of each class. Of the 5,000,000,000 $.01
par value 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 $.01 par value shares originally
authorized by the Government Fund and of the 1,000,000,000 $1.00 par value
shares originally authorized by the Income Fund, each Fund has designated
500,000,000 shares as Class A and 500,000,000 shares as Class B. First
Investors Series Fund, of which Investment Grade Fund is a series, has
established an unlimited number of no par value 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, 2004
and September 30, 2003 consisted entirely of ordinary income as follows:
Distributions Declared
from Ordinary Income
---------------------------------
Fund in 2004 in 2003
- ---- -------------- --------------
Cash Management $ 879,808 $ 1,182,333
Government 8,954,783 9,383,651
Investment Grade 9,435,584 7,885,151
Income 41,663,183 40,865,461
As of September 30, 2004, 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 $ 47,109 $ (5,337,388) $ 825,985 $ (4,464,294)
Investment Grade 314,141 (3,507,018) 6,637,940 3,445,063
Income 1,403,772 (115,943,713) (34,646,973) (149,186,914)
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.
- ---------------------------------------------------------------------------------------------------------------------------------
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 Year Income Investments Operations Income Gain Distributions Year
- ---------------------------------------------------------------------------------------------------------------------------------
CASH MANAGEMENT FUND
- --------------------
Class A
- -------
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
2004 1.00 .005 -- .005 .005 -- .005 1.00
Class B
- -------
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
2004 1.00 -- -- -- -- -- -- 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT FUND
- ---------------
Class A
- -------
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
2004 11.31 .51 (.18) .33 .51 -- .51 11.13
Class B
- -------
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
2004 11.30 .43 (.18) .25 .43 -- .43 11.12
- ---------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
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 Assets Net Net Portfolio
Total End of Year Investment Investment Turnover
Return* (in millions) Expenses Income Expenses Income (Loss) Rate
- ------------------------------------------------------------------------------------------------------------------
CASH MANAGEMENT FUND
- --------------------
Class A
- -------
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 .62 179 .78 .62 .97 .43 --
2004 .50 171 .70 .50 1.05 .15 --
Class B
- -------
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 .05 6 1.34 .06 1.53 (.13) --
2004 -- 5 1.20 -- 1.55 (.35) --
- ------------------------------------------------------------------------------------------------------------------
GOVERNMENT FUND
- ---------------
Class A
- -------
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
2004 3.01 179 1.10 4.59 1.56 4.13 60
Class B
- -------
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
2004 2.25 17 1.85 3.84 2.31 3.38 60
- ------------------------------------------------------------------------------------------------------------------
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 Year Income Investments Operations Income Gain Distributions Year
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT GRADE FUND
- ---------------------
Class A
- -------
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
2004 10.28 .47 (.11) .36 .53 -- .53 10.11
Class B
- -------
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
2004 10.28 .38 (.11) .27 .45 -- .45 10.10
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME FUND
- -----------
Class A
- -------
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
2004 3.05 .23 .13 .36 .23 -- .23 3.18
Class B
- -------
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
2004 3.05 .21 .12 .33 .20 -- .20 3.18
- ---------------------------------------------------------------------------------------------------------------------------------
* Calculated without sales charges.
** Net of expenses waived or assumed (Note 3).
+ 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 the total
net assets of the Funds.
See notes to financial statements
- ------------------------------------------------------------------------------------------------------------------
R A T I O S / S U P P L E M E N T A L D A T A
------------------------------------------------------------------------------------------------
Ratio to Average Net
Ratio to Average Net Assets Before Expenses
Assets** Waived or Assumed
----------------------- -----------------------
Net Assets Net Net Portfolio
Total End of Year Investment Investment Turnover
Return* (in millions) Expenses Income Expenses Income Rate
- ------------------------------------------------------------------------------------------------------------------
INVESTMENT GRADE FUND
- ---------------------
Class A
- -------
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
2004 3.57 170 1.10 4.49 1.32 4.27 9
Class B
- -------
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
2004 2.74 30 1.85 3.74 2.07 3.52 9
- ------------------------------------------------------------------------------------------------------------------
INCOME FUND
- -----------
Class A
- -------
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
2004 12.06 561 1.29 7.35 N/A N/A 37
Class B
- -------
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
2004 11.22 40 1.99 6.65 N/A N/A 37
- ------------------------------------------------------------------------------------------------------------------
Report of Independent Registered Public Accounting Firm
To the Shareholders and Boards of Directors/Trustees of
First Investors Cash Management Fund, Inc.
First Investors Government Fund, Inc.
First Investors Series Fund
First Investors Fund For Income, Inc.
We have audited the accompanying statements 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, 2004, the
related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended
and the financial highlights for each of the five years in the period then
ended. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements and financial highlights are free of
material misstatement. 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, 2004, by correspondence with the custodian and brokers. Where
brokers have not replied to our confirmation request, we have carried out
other appropriate auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of First Investors Cash Management Fund, Government Fund, Investment Grade
Fund and Fund For Income as of September 30, 2004, and the results of their
operations for the year then ended and changes in their net assets for each
of the two years in the period then ended and their financial highlights
for the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
Tait, Weller & Baker
Philadelphia, Pennsylvania
November 1, 2004
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, Year of Birth Length of During Past Fund Complex Directorships
and Address Service 5 Years Overseen Held
- ------------------- ------------------ ------------------ ------------ ------------
DISINTERESTED DIRECTORS/TRUSTEES
Robert M. Grohol 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 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 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 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 1929 Director/Trustee None/Retired 50 None
c/o First Investors 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, Year of Birth Length of During Past Fund Complex Directorships
and Address Service 5 Years Overseen Held
- ------------------- ------------------ ------------------ ------------ ------------
INTERESTED DIRECTORS/TRUSTEES**
Glenn O. Head 1925 Director/Trustee Chairman of 50 None
c/o First Investors since 1968 First Investors
Management Company, Inc. Corporation,
95 Wall Street First Investors
New York, NY 10005 Consolidated
Corporation,
First Investors
Management
Company, Inc., and
Administrative Data
Management Corp.,
and officer of
other affiliated
companies***
Kathryn S. Head 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, Year of Birth Length of During Past Fund Complex Directorships
and Address Service 5 Years Overseen Held
- ------------------- ------------------ ------------------ ------------ ------------
INTERESTED DIRECTORS/TRUSTEES (continued)
John T. Sullivan 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. 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, Year 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 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 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 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 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
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, DC 20036
Auditors
Tait, Weller & Baker
1818 Market Street
Philadelphia, PA 19103
Transfer Agent
Administrative Data Management Corp.
581 Main Street
Woodbridge, NJ 07095-1198
FIRST INVESTORS TAXABLE BOND AND MONEY MARKET FUNDS
Shareholder Information
- -----------------------
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 Federal Deposit Insurance Corporation (FDIC) or any other government
agency.
It is the Funds' practice to mail only one copy of their annual and
semi-annual reports to all family members who reside in the same household.
Additional copies of the reports will be mailed if requested by any
shareholder in writing or by calling 800-423-4026. The Funds will ensure
that separate reports are sent to any shareholder who subsequently changes
his or her mailing address.
This report is authorized for distribution only to existing shareholders,
and, if given to prospective shareholders, must be accompanied or preceded
by the Funds' prospectus.
The Statement of Additional Information includes additional information
about the Funds' directors/trustees and is available, without charge, upon
request in writing or by calling 800-423-4026.
A description of the policies and procedures that the Funds use to vote
proxies relating to a portfolio's securities is available, without charge,
upon request by calling toll free 800-423-4026 or can be viewed online or
downloaded from the EDGAR database on the Securities and Exchange
Commission's ("SEC") internet website at http://www.sec.gov. In addition,
commencing on August 31, 2004, information regarding how the Funds voted
proxies relating to portfolio securities during the most recent 12-month
period ended June 30, will be available, without charge, upon request in
writing or by calling 800-423-4026 and on the SEC's internet website at
http://www.sec.gov.
The Funds will file their complete schedule of portfolio holdings with the
SEC for the first and third quarters of each fiscal year (beginning the 1st
quarter ending December 31, 2004) on Form N-Q. The Funds' Form N-Q will be
available on the SEC's website at http://www.sec.gov; and may also be
reviewed and copied at the SEC's Public Reference Room in Washington, D.C.
Information on the operation of the Public Reference Room may be obtained
by calling 800-SEC-0330. The schedule of portfolio holdings will also be
available, without charge, upon request in writing or by calling
800-423-4026.
NOTES
NOTES
NOTES
Item 2. Code of Ethics
As of the end of the period, September 30, 2004, the Registrant 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. A copy of 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
The independent director currently serving as the audit committee
financial expert is Robert F. Wentworth.
The Registrant's 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
Fiscal Year Ended
September 30,
-----------------
2004 2003
---- ----
(a) Audit Fees
First Investors
Cash Management Fund, Inc. $ 17,400 $ 17,400
Government Fund, Inc. 20,400 20,400
Investment Grade Fund (a series of
First Investors Series Fund) 11,900 11,900
Fund For Income, Inc. 34,900 34,900
(b) Audit-Related Fees
First Investors
Cash Management Fund, Inc. $ 0 $ 0
Government Fund, Inc. 0 0
Investment Grade Fund (a series of
First Investors Series Fund) 0 0
Fund For Income, Inc. 0 0
(c) Tax Fees
First Investors
Cash Management Fund, Inc. $ 2,500 $ 2,500
Government Fund, Inc. 3,500 3,500
Investment Grade Fund (a series of
First Investors Series Fund) 3,500 3,500
Fund For Income, Inc. 3,500 3,500
Nature of fees: tax returns preparation and tax compliance
(d) All Other Fees
First Investors
Cash Management Fund, Inc. $ 0 $ 0
Government Fund, Inc. 0 0
Investment Grade Fund (a series of
First Investors Series Fund) 0 0
Fund For Income, Inc. 0 0
(e)(1) Audit committee's pre-approval policies
The Audit Committee has adopted a charter under which it has the duties,
among other things,
(a) to pre-approve, and to recommend to the full Board, the
selection, retention or termination of the independent auditors to provide
audit, review or attest services to the Funds and, in connection therewith,
evaluate the independence of the auditors and to obtain the auditors'
specific representations as to their independence;
(b) to pre-approve all non-audit services to be provided to
the Funds by the independent auditor;
(c) to pre-approve all non-audit services to be provided by
the Funds' independent auditor to the Funds' investment adviser or to any
entity that controls, is controlled by or is under common control with the
Funds investment adviser ("adviser affiliate") and that provides ongoing
services to the Funds, if the engagement relates directly to the operations
and financial reporting of the Funds;
(d) to establish, if deemed necessary or appropriate as an
alternative to Audit Committee pre-approved of services to be provided by
the independent auditor as required by paragraphs (b) and (c) above,
policies and procedures to permit such services to be pre-approved by other
means, such as by action of a designated member and members of the Audit
Committee, subject to subsequent Committee review and oversight;
(e) to consider whether the non-audit services provided by the
Funds' independent auditors to the Funds' investment adviser or any adviser
affiliate that provides ongoing services to the Funds, which services were
not pre-approved by the Audit Committee, are compatible with maintaining the
auditors' independence;
(f) to meet with the Funds' independent auditors, including
meetings without management representatives, as necessary (i) to review the
arrangements for, and scope of, the annual audit, any special audits and any
other services to be provided to the Fund's by the auditors; (ii) to discuss
any matters of concern relating to the Fund's financial statements,
including any adjustments to such statements recommended by the auditors, or
other results of said audit(s); and (iii) to review the form of opinion the
auditors propose to render to the Board and shareholders;
(g) to receive and consider (i) information and comments from
the auditors with respect to the Funds' accounting and financial reporting
policies, procedures and internal control over financial reporting
(including the Funds' critical accounting policies and practices) and to
consider management's responses to any such comments; (ii) reports from the
auditors regarding any material written communications between the auditors
and management; and (iii) reports from the auditors regarding all non-audit
services provided to any entity in the Funds' investment company complex
that were not pre-approved by the Audit Committee or pursuant to
pre-approved policies and procedures established by the Audit Committee and
associated fees;
(h) to consider the effect upon the Funds of any changes in
accounting principles or practices proposed by management or the auditors;
(i) to review and approve the fees proposed to be charged to the
Funds by the auditors for each audit and non-audit service;
(j) to receive reports from Fund management in connection with
the required certifications on Form N-CSR under the 1940 Act of any
significant deficiencies in the design or operation of the Funds' internal
control over financial reporting or material weakness therein and any
reported evidence of fraud, whether or not material, involving management or
other employees of the Funds who have a significant role in the Funds'
internal control over financial reporting;
(k) to investigate improprieties or suspected improprieties in
the Funds' accounting or financial reporting brought to the attention of the
Audit Committee;
(l) to receive and consider reports from attorneys, in
accordance with the "Up-the-Ladder" Reporting Policies for attorneys who
appear or practice before the Securities and Exchange Commission in the
representation of the Funds and in accordance with applicable federal law,
and auditors relating to possible material violations of federal or state
law or fiduciary duty;
(m) to report its activities to the full Board on a regular
basis and to make such recommendations with respect to the above and other
matters as the Audit Committee may deem necessary or appropriate;
(n) to meet with the Treasurer of the Funds and, as necessary,
with internal auditors, if any, for the management company; and
(o) to perform such other functions and to have such powers as
may be necessary or appropriate in the efficient and lawful discharge of the
powers provided in this Charter.
(e)(2) None, or 0%, of the services relating to the Audit-Related Fees,
Tax Fees and All Other Fees paid by the Registrant and Related Entities
disclosed above were approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X (which permits audit committee
approval after the start of the engagement with respect to services other
than audit review or attest services, if certain conditions are satisfied).
(f) Not Applicable
(g) Aggregate non-audit fees billed by the Registrant's accountant
for services rendered to the Registrant and the Registrant's investment
adviser or any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the
Registrant for the two fiscal years ended September 30, 2004 and 2003
were $0 and $0, respectively.
(h) Not Applicable
Item 5. Audit Committee of Listed Registrants
Audit Committee Members -
Robert M. Grohol
Rex R. Reed
Herbert Rubinstein
James M. Srygley
Robert F. Wentworth
Item 6. Schedule of Investments
Schedule is included as part of the report to
shareholders filed under Item 1 of this Form.
Item 7. Disclosure of Proxy Voting Policies & Procedures for
Closed-End Management Investment Companies
Not applicable to the Registrant
Item 8. Purchases of Equity Securities by Closed-End Management
Investment Companies and Affiliated Purchasers
Not applicable to the Registrant
Item 9. Submission of Matters to a Vote of Security Holders
The Nominating and Compensation Committee (the "Committee") of the Board of
Directors/Trustees of the First Investors Family of Funds (the "Board") was
established in November 2004. The Committee is comprised of all the
Independent Directors/Trustees. The Committee is responsible for, among
other things, selecting and nominating persons to serve as Independent
Directors/Trustees on the Board, evaluating candidates' qualifications,
reviewing the composition of the Board to determine whether it may be
appropriate to add other Independent Directors/Trustees, and reviewing
director/trustee compensation. When the Board has, or expects to have,
vacancies, the Committee shall consider shareholder recommendations for
nominations to fill such vacancies if such recommendations are submitted in
writing and addressed to the Committee at the Funds' offices at: First
Investors Funds, 95 Wall Street, New York, NY 10005.
Item 10. 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 11. 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 7, 2004
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 7, 2004