<PAGE>
[LOGO] First Investors
CASH MANAGEMENT
GOVERNMENT
INVESTMENT GRADE
FUND FOR INCOME
HIGH YIELD
TAXABLE BOND FUNDS
- -----------------------------------
A N N U A L R E P O R T
- -----------------------------------
SEPTEMBER 30, 1999
<PAGE>
BOND MARKET OVERVIEW
FIRST INVESTORS CASH MANAGEMENT FUND, INC.
FIRST INVESTORS GOVERNMENT FUND, INC.
FIRST INVESTORS INVESTMENT GRADE FUND
FIRST INVESTORS FUND FOR INCOME, INC.
FIRST INVESTORS HIGH YIELD FUND, INC.
Dear Investor:
We are pleased to present the annual reports for the First Investors taxable
bond funds for the fiscal year ending September 30, 1999. Included are annual
reports for the First Investors Cash Management Fund, Inc., First Investors
Government Fund, Inc., First Investors Investment Grade Fund, First Investors
Fund For Income, Inc. and First Investors High Yield Fund, Inc.
This is the first time we have grouped the Cash Management Fund with our bond
funds for the purposes of annual or semi-annual reports. While there are
important differences between the Cash Management Fund and the other bond funds
covered in this report, they all invest in taxable fixed-income securities.
Accordingly, they may be properly grouped for reporting purposes. This is also a
new fiscal year-end for the Cash Management Fund. Last year, its fiscal year
ended December 31, 1998. Therefore, this report for the Cash Management Fund
will cover a nine-month period: January 1, 1999 through September 30, 1999.
The primary factors that influenced the performances of all of the bond funds
were changes in interest rates and concerns about inflation. Interest rates
moved full circle during the reporting period, with interest rates beginning the
period at historically low levels and ending the period near their highest
levels in two years. During the 12-month period ended September 30, 1999,
interest rates rose steadily and substantially, as bond prices declined. For
example, the two-year U.S. Treasury note yield increased from 4.27% to 5.6%, and
the 30-year U.S. Treasury bond yield increased from 4.98% to 6.05%.
There were a number of factors that caused the rising interest rate environment.
The reporting period began at the height of the worldwide financial markets
crisis that had started in Asia during the summer of 1998, and spread throughout
most of the world. The crisis culminated with a 10% decline in the S&P 500,
Russia's default on its sovereign debt and the bail-out of Long-Term Capital
Management, a prominent U.S. hedge fund. Investors throughout the world reacted
by shifting assets into the relative safety of the U.S. bond market. In response
to financial market distress, the Federal Reserve lowered the benchmark federal
funds interest rate three times in an eight-week period last autumn. The Federal
Reserve's action--which was mirrored by central banks worldwide--stabilized
financial markets by year-end.
Ultimately, the financial markets crisis did not hurt the U.S. economy, as lower
interest rates spurred growth. The domestic economy grew at a rate of
approximately 4% over
1
<PAGE>
BOND MARKET OVERVIEW (continued)
FIRST INVESTORS CASH MANAGEMENT FUND, INC.
FIRST INVESTORS GOVERNMENT FUND, INC.
FIRST INVESTORS INVESTMENT GRADE FUND
FIRST INVESTORS FUND FOR INCOME, INC.
FIRST INVESTORS HIGH YIELD FUND, INC.
the past 12 months, as measured by the increase in Gross Domestic Product. The
unemployment rate fell from 4.5% to 4.2% (a 29-year low), and 2.5 million new
jobs were created. The rate of inflation, as measured by the Consumer Price
Index, increased from 1.5% to a still low 2.6%, primarily due to higher oil
prices. The stock market, as measured by the S&P 500, continued to move upward,
rising over 26% in the past year. The "wealth effect" from investors' stock
market gains also helped power the economy.
The economy grew so swiftly through the early part of 1999 that the Federal
Reserve became concerned about potential inflation, particularly with respect to
the tight labor market. The Fed responded by raising the federal funds rate in
June and August, partially undoing the three easing moves from last autumn. This
change in the Fed's stance rattled the bond market and pushed long-term yields
to year-to-date highs in August.
With respect to the specific bond markets during the past year, high yield
corporate bonds provided the highest total returns, followed by mortgage-backed
bonds and investment grade corporate bonds. Investors reacted to stabilized
financial markets by selling Treasuries and buying riskier bonds. Consequently,
U.S. Treasuries were the worst-performing U.S. bond category during the
reporting period.
The short-term outlook for the bond market is at best stable. The Federal
Reserve continues to be concerned by the pace of economic growth and may well
raise short-term interest rates again. There are also concerns about an increase
in the default rate on high yield bonds. And of course, despite assurances from
banking and securities regulators that our markets are well-prepared for Year
2000, there are lingering concerns about the effect of Year 2000. The market may
improve early next year if the Fed's actions slow the economy, inflation remains
subdued, and as expected in the U.S. at least, Year 2000 comes and goes without
any significant disruptions.
Because it is impossible to predict the future direction of the markets, even
over the short term, there are certain basic investment principles that we
encourage our shareholders to follow to reduce exposure to risk.* First, we
encourage shareholders to take a long-term view, and to avoid trying to time the
market. Attempting to time the market is extremely difficult, even for
professional investors. Second, we encourage our shareholders to diversify their
portfolios among stock funds, bond funds and money market funds. Third, we
encourage our shareholders to follow a regular investment plan, investing a
specific amount of money at defined intervals. This strategy is known
2
<PAGE>
as "dollar cost averaging." It may help you to avoid getting caught up in the
excitement of a rising market and will reduce the risk of buying at high points.
Of course, no financial plan or program, no matter how well-designed, is
guaranteed to be successful. In addition, nothing eliminates the risk associated
with overall market trends. However, utilizing these various strategies may help
to minimize the risk by reducing the extent to which an investor may be affected
by a decline in any one security or segment of the market. If you use dollar
cost averaging, you should consider your ability to continue purchases through
periods of declining prices.
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
Chief Investment Officer
First Investors Management Company, Inc.
October 29, 1999
*THERE ARE A VARIETY OF RISKS ASSOCIATED WITH INVESTING IN BOND MUTUAL FUNDS,
INCLUDING INTEREST RATE RISK AND CREDIT RISK. INTEREST RATE RISK IS THE RISK
THAT BONDS WILL DECREASE IN VALUE AS INTEREST RATES RISE. AS A GENERAL MATTER,
LONGER-TERM BONDS FLUCTUATE MORE THAN SHORTER-TERM BONDS IN REACTION TO CHANGES
IN INTEREST RATES. CREDIT RISK IS THE RISK THAT THAT BONDS WILL DECLINE IN
VALUE AS THE RESULT OF A DECLINE IN THE CREDIT RATING OF THE BONDS OR THE
ECONOMY AS A WHOLE. YOU SHOULD CONSULT YOUR PROSPECTUS FOR A PRECISE
EXPLANATION OF THE RISKS ASSOCIATED WITH YOUR FUND.
3
<PAGE>
PORTFOLIO MANAGER'S LETTER
FIRST INVESTORS CASH MANAGEMENT FUND, INC.
Dear Investor:
We are pleased to present the annual report for the First Investors Cash
Management Fund for the fiscal year ending September 30, 1999. As noted in the
Bond Market Overview, this is a new fiscal year-end for the Fund. Therefore,
this report will cover a nine-month period: January 1, 1999 through September
30, 1999. During the period, the Fund's return on a net asset value basis was
3.3% on Class A shares and 2.7% on Class B shares. The Fund maintained a $1.00
net asset value for each class of shares throughout the period.
The primary factor that drove the Fund's performance during the fiscal year was
rising interest rates, particularly as a result of the Federal Reserve's
actions, as described in the Bond Market Overview. Short-term interest rates
increased over the last few months of the reporting period as the Federal
Reserve raised the benchmark federal funds interest rate by 25 basis points in
late June and again in August in an effort to slow the economy and reduce the
risk of an increase in the rate of inflation. Although the economy continued to
grow steadily throughout the year, investors remained focused on quality and
liquidity in their portfolios. Consequently, many lower-quality issuers were
forced to pay a notably higher rate of interest to borrow money. Investors and
issuers are taking note of the nearing Y2K concerns and the potential technical
(though short-term) impact on the markets.
Another factor that influenced the Fund's performance was the weighted-average
maturity of its portfolio. Although money market mutual funds must maintain
portfolios with very short weighted-average maturities, there are differences in
performance. During the period, the Fund maintained weighted-average maturities
that were generally consistent with those of other money market mutual funds.
Given the outlook for short-term interest rates, it is likely that the Fund will
continue to maintain weighted-average maturities similar to those of its peers.
Going forward, the Fund will continue to be managed in a conservative manner,
focusing on credit quality and liquidity. The Fund will continue to purchase
only those securities considered at the time of purchase to present minimal
market and credit risk.
Money market funds continue to be among the most conservative investment
vehicles available, offering relative stability of principal, easy access to
account information, generally free check writing privileges and a return that
is, in most instances, higher than that available on bank savings and checking
accounts. There can be no assurance, however, that the Fund will be able to
maintain a stable net
4
<PAGE>
asset value of $1.00 per share. Money market mutual funds are not insured by the
Federal Deposit Insurance Corporation (FDIC) or any other government agency.
Thank you for placing your trust in First Investors. As always, we appreciate
the opportunity to serve your investment needs.
Sincerely,
/s/ Michael J. O'Keefe
Michael J. O'Keefe
Vice President
and Portfolio Manager
October 29, 1999
5
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS CASH MANAGEMENT FUND, INC.
September 30, 1999
<TABLE>
- ------------------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000
PRINCIPAL OF
INTEREST NET
AMOUNT SECURITY RATE* VALUE ASSETS
- ------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CORPORATE NOTES--87.8%
$ 4,750M Anheuser-Busch Cos., Inc., 12/1/99 5.00% $ 4,778,892 $ 281
300M Anheuser-Busch Cos., Inc., 12/1/99 5.10 301,730 18
539M Anheuser-Busch Cos., Inc., 12/1/99 5.25 542,063 32
330M Anheuser-Busch Cos., Inc., 12/1/99 5.27 331,808 19
2,425M Archer-Daniels-Midland Co., 12/14/99 5.30 2,398,511 141
1,300M Associates Corp. of North America, 4/6/00 5.56 1,308,059 77
1,000M Associates Corp. of North America, 4/6/00 5.70 1,005,397 59
1,015M Associates Corp. of North America, 6/15/00 6.08 1,014,071 60
5,000M BellSouth Telecommunications, Inc., 10/4/99 5.27 4,997,795 294
1,500M Brown-Forman Corp., 10/1/99 5.63 1,500,000 88
5,630M Campbell Soup Co., 10/8/99 5.22 5,624,249 331
1,015M Carolina Power & Light Co., 2/1/00 5.87 1,015,772 60
5,000M Chevron USA, Inc., 10/6/99 5.29 4,996,310 294
6,000M Coca-Cola Co., 10/7/99 5.18 5,994,783 353
4,700M Colgate-Palmolive Co., 12/1/99 5.52 4,709,111 277
450M Colgate-Palmolive Co., 4/17/00 5.13 450,939 26
1,000M Donnelley RR & Sons Co., 6/21/00 5.95 1,002,353 59
1,000M Dresser Industries, Inc., 6/1/00 5.90 1,001,733 59
1,335M Dresser Industries, Inc., 6/1/00 5.91 1,337,209 79
2,075M Du Pont (E.I.) de Nemours & Co., 4/15/00 5.19 2,117,326 125
750M Duke Energy Corp., 11/1/99 5.01 751,836 44
2,000M Duke Energy Corp., 11/1/99 5.10 2,004,613 118
7,000M Eastman Kodak Co., 10/25/99 5.30 6,975,205 410
1,000M Florida Power & Light Co., 4/1/00 5.85 997,029 59
1,200M Florida Power Corp., 12/1/99 5.34 1,201,917 71
2,620M Ford Holdings Inc., 3/1/00 5.52 2,659,106 156
500M Ford Holdings Inc., 3/1/00 6.02 506,401 30
2,000M Ford Motor Credit Co., 4/15/00 5.65 2,039,075 120
750M General Electric Capital Corp., 4/24/00 5.65 750,228 44
500M General Mills, Inc., 12/15/99 5.25 503,687 30
500M General Motors Acceptance Corp., 2/23/00 5.73 504,447 30
5,500M Halliburton Co., 10/26/99 5.27 5,479,806 322
420M Heinz, H.J. Co., 10/15/99 5.16 420,230 25
1,050M Heinz, H.J. Co., 10/15/99 5.39 1,050,466 62
4,600M Hewlett Packard Co., 10/12/99 5.28 4,592,554 270
500M IBM Credit Corp., 10/20/99 5.50 500,114 29
3,000M Idaho Power Co., 10/4/99 5.32 2,998,669 176
- ------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000
PRINCIPAL OF
INTEREST NET
AMOUNT SECURITY RATE* VALUE ASSETS
- ------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CORPORATE NOTES (continued)
$ 200M International Business Machines Corp., 6/15/00 5.67% $ 200,897 $ 12
1,000M International Business Machines Corp., 6/15/00 5.68 1,004,418 59
500M International Business Machines Corp., 6/15/00 5.70 502,142 29
1,350M International Business Machines Corp., 6/15/00 5.72 1,355,666 80
570M International Business Machines Corp., 6/15/00 5.80 572,091 34
1,000M International Business Machines Corp., 6/15/00 5.90 1,002,772 59
1,500M International Business Machines Corp., 6/15/00 5.94 1,504,030 88
5,000M Kellogg Co., 10/7/99 5.28 4,995,585 294
7,600M Motorola Credit Co., 10/22/99 5.28 7,576,544 446
5,000M National Rural Utilities Coop., 11/16/99 5.32 4,966,001 292
2,000M NIKE, Inc., 6/16/00 5.62 2,011,576 118
5,000M Paccar Financial Corp., 11/15/99 5.46 5,003,086 294
7,500M Pfizer Corp., 10/14/99 5.27 7,485,668 440
6,035M Sara Lee Corp., 11/9/99 5.27 6,051,254 356
5,000M Sherwin Williams Co., 10/6/99 5.30 4,996,315 294
500M Texaco Capital, Inc., 12/15/99 5.10 502,675 30
1,000M Texaco Capital, Inc., 12/15/99 5.47 1,006,790 59
2,000M Texaco, Inc., 2/7/00 5.74 1,958,758 115
5,000M United Technologies Corp., 12/15/99 5.45 5,026,705 296
1,515M Wal Mart Stores, Inc., 10/1/99 5.14 1,515,000 89
500M Walt Disney Co., 4/17/00 5.81 499,237 29
5,000M Walt Disney Co., 4/17/00 5.88 4,990,374 293
4,200M Washington Gas Light Co., 10/7/99 5.30 4,196,275 247
- ------------------------------------------------------------------------------------------------
TOTAL VALUE OF CORPORATE NOTES (cost $149,287,353) 149,287,353 8,781
- ------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
FIRST INVESTORS CASH MANAGEMENT FUND, INC.
September 30, 1999
<TABLE>
- ------------------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000
PRINCIPAL OF
INTEREST NET
AMOUNT SECURITY RATE* VALUE ASSETS
- ------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS--8.9%
$ 3,000M Fannie Mae, 3/17/00 5.67% $ 2,997,633 $ 176
2,100M Federal Home Loan Bank, 10/28/99 5.07 2,100,000 124
3,000M Federal Home Loan Bank, 10/29/99 5.01 3,000,000 176
2,000M Federal Home Loan Bank, 4/20/00 5.07 1,998,649 118
5,000M Federal Home Loan Mortgage Corp., 11/2/99 5.24 4,976,602 293
- ------------------------------------------------------------------------------------------------
TOTAL VALUE OF U.S. GOVERNMENT AGENCY OBLIGATIONS 15,072,884 887
(cost $15,072,884)
- ------------------------------------------------------------------------------------------------
FLOATING RATE NOTES--1.7%
3,000M Merrill Lynch & Co., Inc., 10/21/99
(cost $3,000,000) 5.36 3,000,000 176
- ------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
TOTAL VALUE OF INVESTMENTS (cost $167,360,237)+ 98.4% 167,360,237 9,844
OTHER ASSETS, LESS LIABILITIES 1.6 2,654,008 156
- ------------------------------------------------------------------------------------------------
NET ASSETS 100.0% $170,014,245 $ 10,000
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
</TABLE>
*The interest rates shown for the corporate notes and U.S. Government agency
obligations are the effective rates at the time of purchase by the Fund. The
interest rate shown on the floating rate note is adjusted monthly; the interest
rate shown is the rate that was in effect at September 30, 1999.
+Aggregate cost for federal income tax purposes is the same.
See notes to financial statements
8
<PAGE>
PORTFOLIO MANAGER'S LETTER
FIRST INVESTORS GOVERNMENT FUND, INC.
Dear Investor:
We are pleased to present the annual report for the First Investors Government
Fund for the fiscal year ending September 30, 1999. During the period, the
Fund's return on a net asset value basis was .50% on Class A shares and -.25% on
Class B shares, compared to a return of .64% for the Lipper Government National
Mortgage Association (GNMA) fund group. During the period, the Fund declared
dividends from net investment income of 61.3 cents per share on Class A shares
and 52.9 cents per share on Class B shares.
The Government Fund invests primarily in Government National Mortgage
Association (GNMA) mortgage-backed bonds. The primary factors that drove the
Fund's performance during the fiscal year were the record level of home
refinancings in 1998 and the substantial rise in interest rates in 1999. The
reporting period began with mortgage rates at their lowest level since the
1960s, presenting a lifetime best opportunity for homeowners to refinance. Many
took advantage of this opportunity and the volume of mortgage refinancings
reached an all-time high in October 1998, causing mortgage-backed bond yields to
increase relative to Treasury yields. The interest rate spread between
mortgage-backed and Treasury securities remained wide through year-end as the
financial markets stabilized after the summer/fall financial crisis.
In 1999, the interest rate spread between mortgage-backed and Treasury
securities tightened steadily during the first nine months. The stability in
financial markets encouraged investors to shift from Treasuries to relatively
riskier bonds. The historically large yield advantage of mortgage-backed bonds
versus Treasuries made them particularly attractive to investors. Higher
interest rates caused a decrease in refinancing activity and further enhanced
the attractiveness of mortgage-backed bonds. Consequently, mortgage-backed bonds
outperformed Treasury securities, as spreads ended the reporting period at
substantially narrower levels.
The Fund's strategy focused on managing interest rate risk and prepayment risk.
Interest rate risk was managed by changing the amount and average maturity of
the Fund's Treasury securities (generally 5%-10% of the Fund's assets).
Prepayment risk was managed by adjusting the average coupon rate of
mortgage-backed holdings.
Concern over the high level of prepayments led the Fund to twice shift 10%-15%
of its assets from higher to lower coupon mortgage-backed securities (lower
coupons have less prepayment risk). Both of these trades adversely affected the
Fund's performance, as higher rates caused the lower coupon bonds to
9
<PAGE>
PORTFOLIO MANAGER'S LETTER (continued)
FIRST INVESTORS GOVERNMENT FUND, INC.
underperform. The Fund took advantage of exceptionally high yields on high
coupon mortgage-backed bonds during the fourth quarter of 1998 by investing over
10% of its assets in Federal National Mortgage Association (FNMA) 8% and GNMA
9 1/2% coupons. As the trend toward higher interest rates became apparent, the
Fund reduced its Treasury holdings to 5% of assets. This helped performance,
particularly during the latter part of the reporting period.
The Fund ended the reporting period with 90% of its assets in mortgage-backed
securities, 5% in Treasuries and 5% in cash equivalents. In the current market
environment, mortgage-backed bonds appear attractive given their high yields
versus Treasury securities and their lack of prepayment risk at current interest
rates.
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
Chief Investment Officer
and Portfolio Manager
October 29, 1999
10
<PAGE>
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 Salomon Brothers Mortgage Index and
the Salomon Brothers Government Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999 GOVERNMENT SALOMON SOLOMON
FUND MORTGAGE GOVERNMENT
<S> <C> <C> <C>
Jan-90 $9,375 $10,000 $10,000
Dec-90 10,248 11,089 10,862
Dec-91 11,822 12,824 12,523
Dec-92 12,561 13,770 13,424
Dec-93 13,062 14,739 14,858
Dec-94 12,641 14,528 14,357
Dec-95 14,535 16,965 16,999
Dec-96 15,045 17,874 17,499
Dec-97 16,309 19,531 19,188
Sep-98 17,293 20,718 21,093
Sep-99 17,379 21,218 20,732
Average Annual Total Returns*
S.E.C.
Class A Shares N.A.V. Only Standardized
One Year .50% (5.81%)
Five Years 6.58% 5.22%
Ten Years 6.78% 6.09%
S.E.C. 30-Day Yield 5.78%
Class B Shares
One Year (.25%) (4.24%)
Sinc Inception (1/12/95) 6.17% 5.82%
S.E.C. 30-Day Yield 5.41%
</TABLE>
THE GRAPH COMPARES A $10,000 INVESTMENT IN THE FIRST INVESTORS GOVERNMENT
FUND, INC. (CLASS A SHARES) BEGINNING 1/1/90 WITH THEORETICAL INVESTMENTS IN
THE SALOMON BROTHERS MORTGAGE INDEX AND THE SALOMON BROTHERS GOVERNMENT
INDEX. THE SALOMON BROTHERS MORTGAGE INDEX IS A MARKET
CAPITALIZATION-WEIGHTED INDEX THAT CONSISTS OF ALL AGENCY PASS-THROUGHS AND
FHA AND GNMA PROJECT NOTES. THE SALOMON BROTHERS GOVERNMENT INDEX IS A MARKET
CAPITALIZATION-WEIGHTED INDEX THAT CONSISTS OF DEBT ISSUED BY THE U.S.
TREASURY AND U.S. GOVERNMENT SPONSORED AGENCIES. EVERY ISSUE INCLUDED IN THE
INDICES IS TRADER-PRICED, AND THE INDICES FOLLOW CONSISTENT AND REALISTIC
AVAILABILITY LIMITS, INCLUDING ONLY THOSE SECURITIES WITH SUFFICIENT AMOUNTS
OUTSTANDING. IT IS NOT POSSIBLE TO INVEST DIRECTLY IN THESE INDICES. IN
ADDITION, THE INDICES DO NOT TAKE INTO ACCOUNT FEES AND EXPENSES. 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 YEAR ENDED 9/30/99) 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 6.25% (PRIOR TO 7/1/93, THE
MAXIMUM SALES CHARGE WAS 6.9%). THE CLASS B "S.E.C. STANDARDIZED" RETURNS ARE
ADJUSTED FOR THE APPLICABLE DEFERRED SALES CHARGE (MAXIMUM OF 4% IN THE FIRST
YEAR). SOME OR ALL OF THE EXPENSES OF THE FUND WERE WAIVED OR ASSUMED. IF SUCH
EXPENSES HAD BEEN PAID BY THE FUND, THE CLASS A "S.E.C. STANDARDIZED" AVERAGE
ANNUAL TOTAL RETURN FOR ONE YEAR, FIVE YEARS AND TEN YEARS WOULD HAVE BEEN
(6.19%), 4.92% AND 5.83%, RESPECTIVELY, AND THE S.E.C. 30-DAY YIELD FOR
SEPTEMBER 1999 WOULD HAVE BEEN 5.35%. THE CLASS B "S.E.C. STANDARDIZED"
AVERAGE ANNUAL TOTAL RETURN FOR ONE YEAR AND SINCE INCEPTION WOULD HAVE BEEN
(4.64%) AND 5.30%, RESPECTIVELY, AND THE S.E.C. 30-DAY YIELD FOR SEPTEMBER
1999 WOULD HAVE BEEN 5.00%. RESULTS REPRESENT PAST PERFORMANCE AND DO NOT
INDICATE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THE ORIGINAL COST. SALOMON BROTHERS MORTGAGE INDEX AND
SALOMON BROTHERS GOVERNMENT INDEX FIGURES FROM SALOMON BROTHERS AND ALL OTHER
FIGURES FROM FIRST INVESTORS MANAGEMENT COMPANY, INC.
11
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS GOVERNMENT FUND, INC.
September 30, 1999
<TABLE>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000
OF
PRINCIPAL NET
AMOUNT SECURITY VALUE ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
MORTGAGE-BACKED CERTIFICATES--90.1%
FEDERAL NATIONAL MORTGAGE ASSOCIATION--5.5%
$ 7,787M 8%, 9/1/2027 $ 7,957,288 $ 555
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION I
PROGRAM--41.9%
17,840M 6.50%, 9/15/2028-5/15/2029 17,069,117 1,191
40,078M 7%, 7/15/2027-4/15/2029 39,387,740 2,748
3,363M 9.50%, 8/15/2009-1/15/2010 3,612,237 252
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION II
PROGRAM--42.7%
36,158M 7%, 6/20/2023-11/20/2027 35,489,053 2,476
14,053M 7.50%, 12/20/2022-10/20/2023 14,127,252 985
11,034M 9%, 10/20/2015-7/20/2021 11,562,963 806
- -------------------------------------------------------------------------------------
TOTAL VALUE OF MORTGAGE-BACKED CERTIFICATES
(cost $131,807,928) 129,205,650 9,013
- -------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--4.8%
7,000M United States Treasury Notes, 5.625%, 5/15/08
(cost $7,208,674) 6,798,750 474
- -------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--4.4%
6,300M Texaco, Inc., 5.33%, 10/5/1999 (cost $6,296,268) 6,296,268 439
- -------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL VALUE OF INVESTMENTS (cost $145,312,870) 99.3% 142,300,668 9,926
OTHER ASSETS, LESS LIABILITIES .7 1,057,447 74
- ----------------------------------------------------------------------------------------
NET ASSETS 100.0% $143,358,115 $ 10,000
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
12
<PAGE>
PORTFOLIO MANAGERS' LETTER
FIRST INVESTORS INVESTMENT GRADE FUND
Dear Investor:
We are pleased to present the annual report for the First Investors Investment
Grade Fund for the fiscal year ending September 30, 1999. During the period, the
Fund's return on a net asset value basis was -2.2% on Class A shares and -2.9%
on Class B shares, compared to a return of -1.0% for the Lipper BBB investment
grade bond fund group. During the period, the Fund declared dividends from net
investment income of 57.6 cents per share on Class A shares and 50.5 cents per
share on Class B shares. The Fund also declared a capital gains distribution of
6.6 cents per share on Class A and Class B shares.
The primary factor that drove the Fund's performance during the fiscal year was
the rising interest rate environment. Sector selection and a focus on credit
quality also affected the Fund's performance. As the reporting period began, the
problems that precipitated the worldwide financial crisis of the Summer of 1998
continued to hang heavily over the bond market. The economic downturn in
emerging markets, the Long-Term Capital Management hedge fund bailout and other
difficulties sparked a "flight to quality," as investors shifted assets to the
relative security of U.S. Treasuries. The Federal Reserve responded with three
successive federal funds interest rate cuts in the fall, which helped to
stabilize financial markets. In this environment, larger, highly liquid bond
issues tended to outperform smaller, more risky bonds.
Throughout the first half of the reporting period, investors showed renewed
confidence. Risk was beginning to be rewarded as smaller, lower-rated investment
grade bond issues outperformed larger, higher-rated issues. The yield spread
tightened between benchmark U.S. Treasuries and investment grade bonds, as new
issuance activity picked up. The performance of Yankee bonds (U.S. dollar-
denominated bonds issued by foreign entities) also did well in this environment.
In the Summer of 1999, the rapid growth of the economy sparked inflation fears.
In response, the Federal Reserve raised interest rates in June and August,
partially undoing the three easing moves from the prior autumn. In this rising
interest rate environment, the investment grade bond market underperformed. The
spread between Treasuries and investment grade bonds widened in August in
anticipation of heavy new issuance in September. However, the full new issue
calendar failed to materialize.
During the reporting period, the performance of the Fund was aided by a number
of factors. Our holdings with shorter maturities boosted returns, as they tended
to outperform those with longer maturities. The Fund held positions in a number
of
13
<PAGE>
PORTFOLIO MANAGERS' LETTER (continued)
FIRST INVESTORS INVESTMENT GRADE FUND
issues that benefited from credit ratings upgrades, including Niagara Mohawk.
Merger and acquisition activity also helped several holdings, including Sprint.
A number of the Fund's holdings were not helpful to performance. In general,
bonds with longer maturities underperformed bonds with shorter maturities.
Holdings in the industrial sector fell short of expectations, especially those
of companies with disappointing earnings. Additionally, the Fund was
underweighted in Yankee bonds throughout the year, a sector which performed
well.
Looking ahead, a number of concerns may impact the investment grade bond
marketplace. The potential for future interest rate increases as well as
possible Year 2000 computer glitches may have a negative effect on financial
markets. The market may stabilize early in 2000, as these concerns are put to
rest. As always, the Fund will concentrate on investing in stable and improving
credits and seek relative value in the investment grade corporate bond market.
Thank you for placing your trust in First Investors. As always, we appreciate
the opportunity to serve your investment needs.
Sincerely,
/s/ Nancy W. Jones
Nancy W. Jones
Vice President
and Co-Portfolio Manager
/s/ Clark D. Wagner
Clark D. Wagner
Chief Investment Officer
and Co-Portfolio Manager
October 29, 1999
14
<PAGE>
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 Corporate Bond
Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999 INVESTMENT GRADE FUND LEHMAN CORPORATE BOND
<S> <C> <C> <C>
Feb-91 $9,375 $10,000
Dec-91 10,621 11,702
Dec-92 11,498 12,719
Dec-93 12,857 14,266
Dec-94 12,263 13,705
Dec-95 14,642 16,754
Dec-96 14,993 17,304
Dec-97 16,363 19,074
Sep-98 17,719 20,585
Sep-99 17,327 20,297
Average Annual Total Return*
S.E.C.
Class A Shares N.A.V. Only Standardized
One Year (2.21%) (8.31%)
Five Years 7.20% 5.81%
Since Inception (2/19/91) 7.38% 6.58%
S.E.C. 30-Day Yield 5.70%
Class B Shares
One Year (2.90%) (6.78%)
Since Inception (1/12/95) 6.76% 6.42%
S.E.C. 30-Day Yield 5.37%
</TABLE>
THE GRAPH COMPARES A $10,000 INVESTMENT IN THE FIRST INVESTORS INVESTMENT
GRADE FUND (CLASS A SHARES) BEGINNING 2/19/91 (INCEPTION DATE) WITH A
THEORETICAL INVESTMENT IN THE LEHMAN BROTHERS CORPORATE BOND INDEX. THE LEHMAN
BROTHERS CORPORATE BOND 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 $100 MILLION. IT IS NOT POSSIBLE TO INVEST
DIRECTLY IN THIS INDEX. IN ADDITION, THE INDEX DOES NOT TAKE INTO ACCOUNT FEES
AND EXPENSES. FOR PURPOSES OF THE GRAPH AND THE ACCOMPANYING TABLE, UNLESS
OTHERWISE INDICATED, IT HAS BEEN ASSUMED THAT THE MAXIMUM SALES CHARGE WAS
DEDUCTED FROM THE INITIAL $10,000 INVESTMENT IN THE FUND AND ALL DIVIDENDS AND
DISTRIBUTIONS WERE REINVESTED. CLASS B SHARES PERFORMANCE MAY BE GREATER THAN
OR LESS THAN THAT SHOWN IN THE LINE GRAPH ABOVE 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 YEAR ENDED 9/30/99) 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 6.25% (PRIOR TO 7/1/93, THE
MAXIMUM SALES CHARGE WAS 6.9%). THE CLASS B "S.E.C. STANDARDIZED" RETURNS ARE
ADJUSTED FOR THE APPLICABLE DEFERRED SALES CHARGE (MAXIMUM OF 4% IN THE FIRST
YEAR). SOME OR ALL OF THE EXPENSES OF THE FUND WERE WAIVED OR ASSUMED. IF SUCH
EXPENSES HAD BEEN PAID BY THE FUND, THE CLASS A "S.E.C STANDARDIZED" AVERAGE
ANNUAL TOTAL RETURN FOR ONE YEAR, FIVE YEARS AND SINCE INCEPTION WOULD HAVE
BEEN (8.62%), 5.42% AND 5.94%, RESPECTIVELY, AND THE S.E.C. 30-DAY YIELD FOR
SEPTEMBER 1999 WOULD HAVE BEEN 5.38%. THE CLASS B "S.E.C. STANDARDIZED"
AVERAGE ANNUAL TOTAL RETURN FOR ONE YEAR AND SINCE INCEPTION WOULD HAVE BEEN
(7.25%) AND 5.83%, RESPECTIVELY, AND THE S.E.C. 30-DAY YIELD FOR SEPTEMBER
1999 WOULD HAVE BEEN 5.03%. RESULTS REPRESENT PAST PERFORMANCE AND DO NOT
INDICATE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THE ORIGINAL COST. LEHMAN BROTHERS CORPORATE BOND
INDEX FIGURES FROM LEHMAN BROTHERS, INC. AND ALL OTHER FIGURES FROM FIRST
INVESTORS MANAGEMENT COMPANY, INC.
15
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS INVESTMENT GRADE FUND
September 30, 1999
<TABLE>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000
OF
PRINCIPAL NET
AMOUNT SECURITY VALUE ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
CORPORATE BONDS--85.6%
AEROSPACE/DEFENSE--5.5%
$ 750M Lockheed Martin Corp., 7.25%, 2006 $ 737,321 $ 131
700M Raytheon Co., 6.15%, 2008 644,817 115
300M Raytheon Co., 6.55%, 2010 280,597 50
750M Rockwell International Corp., 8.375%, 2001 769,852 137
700M Thiokol Corp., 6.625%, 2008 653,957 116
- -------------------------------------------------------------------------------------
3,086,544 549
- -------------------------------------------------------------------------------------
APPAREL/TEXTILES--1.6%
250M VF Corp., 9.50%, 2001 261,453 46
740M Westpoint Stevens, Inc., 7.875%, 2008 666,000 118
- -------------------------------------------------------------------------------------
927,453 164
- -------------------------------------------------------------------------------------
AUTOMOTIVE--1.3%
730M Navistar International Corp., 8%, 2008 709,925 126
- -------------------------------------------------------------------------------------
CHEMICALS--2.6%
750M Du Pont (E.I.) de Nemours & Co., 8.125%, 2004 793,697 141
700M Lubrizol Corp., 7.25%, 2025 686,784 122
- -------------------------------------------------------------------------------------
1,480,481 263
- -------------------------------------------------------------------------------------
CONGLOMERATES--2.5%
700M Hanson Overseas BV, 7.375%, 2003 709,030 126
750M Tenneco, Inc., 7.875%, 2027 711,568 126
- -------------------------------------------------------------------------------------
1,420,598 252
- -------------------------------------------------------------------------------------
CONSUMER PRODUCTS--2.5%
750M Dial Corp., 6.50%, 2008 710,684 126
735M Mattel, Inc., 6%, 2003 711,079 126
- -------------------------------------------------------------------------------------
1,421,763 252
- -------------------------------------------------------------------------------------
ELECTRIC & GAS UTILITIES--9.8%
750M Baltimore Gas & Electric Co., 6.50%, 2003 747,686 133
735M Consumers Energy Co., 6.375%, 2008 681,175 121
900M Duke Energy Corp., 5.875%, 2003 885,854 157
800M Kansas Gas & Electric Co., 7.60%, 2003 818,381 145
263M Niagara Mohawk Power Co., 7.625%, 2005 264,834 47
421M Old Dominion Electric Cooperative, 7.97%, 2002 430,079 76
- -------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000
OF
PRINCIPAL NET
AMOUNT SECURITY VALUE ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
ELECTRIC & GAS UTILITIES (continued)
$ 750M Philadelphia Electric Co., 8%, 2002 $ 773,151 $ 137
925M Southwestern Electric Power Co., 7%, 2007 921,678 164
- -------------------------------------------------------------------------------------
5,522,838 980
- -------------------------------------------------------------------------------------
ENERGY--4.8%
700M Baroid Corp., 8%, 2003 732,277 130
500M Mobil Corp., 8.625%, 2021 582,900 104
725M Occidental Petroleum Corp., 6.40%, 2003 709,047 126
750M Phillips Petroleum Co., 7.20%, 2023 689,497 123
- -------------------------------------------------------------------------------------
2,713,721 483
- -------------------------------------------------------------------------------------
ENTERTAINMENT/LEISURE--1.8%
350M Time Warner, Inc., 6.875%, 2018 323,267 57
700M Walt Disney Co., 6.75%, 2006 696,851 124
- -------------------------------------------------------------------------------------
1,020,118 181
- -------------------------------------------------------------------------------------
FINANCIAL SERVICES--12.0%
700M Chemical Bank NY, 7%, 2005 696,571 124
800M Citicorp, 8%, 2003 828,298 147
800M First Union Corp., 8.125%, 2002 831,774 148
750M Fleet Capital Trust II, 7.92%, 2026 711,425 126
700M KeyCorp, 7.50%, 2006 704,921 125
750M Mellon Bank NA, 6.50%, 2005 725,212 129
550M Meridian Bancorp, 7.875%, 2002 569,400 101
925M Morgan Guaranty Trust Co. NY, 7.375%, 2002 943,319 168
700M NationsBank Corp., 8.125%, 2002 729,922 130
- -------------------------------------------------------------------------------------
6,740,842 1,198
- -------------------------------------------------------------------------------------
FOOD/BEVERAGE/TOBACCO--7.6%
750M Anheuser-Busch Companies, Inc., 7%, 2005 750,716 133
550M Coca-Cola Enterprises, Inc., 7.875%, 2002 567,816 101
700M Hershey Foods Corp., 6.70%, 2005 690,819 123
725M Pepsi Bottling Group, Inc., 7%, 2029 669,951 119
900M Philip Morris Companies, Inc., 7.125%, 2002 905,121 161
650M Universal Corp., 9.25%, 2001 670,495 119
- -------------------------------------------------------------------------------------
4,254,918 756
- -------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
FIRST INVESTORS INVESTMENT GRADE FUND
September 30, 1999
<TABLE>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000
OF
PRINCIPAL NET
AMOUNT SECURITY VALUE ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
GAS TRANSMISSION--2.4%
$ 700M Columbia Energy Group, 6.80%, 2005 $ 688,969 $ 122
700M Enron Corp., 7.125%, 2007 683,563 121
- -------------------------------------------------------------------------------------
1,372,532 243
- -------------------------------------------------------------------------------------
HEALTHCARE--3.6%
725M Johnson & Johnson, 6.625%, 2009 721,693 128
725M Merck & Co., Inc., 5.95%, 2028 623,303 111
700M Warner-Lambert Co., 6%, 2008 670,931 119
- -------------------------------------------------------------------------------------
2,015,927 358
- -------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY/OFFICE EQUIPMENT--2.5%
750M International Business Machines Corp., 5.375%,
2009 676,433 120
725M Xerox Corp., 7.20%, 2016 719,190 128
- -------------------------------------------------------------------------------------
1,395,623 248
- -------------------------------------------------------------------------------------
INVESTMENT/FINANCE COMPANIES--4.3%
700M Associates Corp. of North America, 7.875%, 2001 718,318 128
700M General Electric Capital Corp., 7.875%, 2006 735,448 131
700M General Motors Acceptance Corp., 6.625%, 2005 688,676 122
250M International Lease Finance Corp., 8.875%, 2001 259,403 46
- -------------------------------------------------------------------------------------
2,401,845 427
- -------------------------------------------------------------------------------------
MEDIA (CABLE TV/BROADCASTING)--3.9%
700M New York Times Co., Inc., 7.625%, 2005 729,707 130
750M News America Holdings, Inc., 8.50%, 2005 788,413 140
700M PanAmSat Corp., 6.375%, 2008 654,950 116
- -------------------------------------------------------------------------------------
2,173,070 386
- -------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--1.4%
750M Temple Inland, Inc., 9%, 2001 774,992 138
- -------------------------------------------------------------------------------------
RETAIL - FOOD/DRUG--1.1%
700M Kroger Co., 7%, 2018 637,258 113
- -------------------------------------------------------------------------------------
RETAIL - GENERAL MERCHANDISE--2.5%
700M Federated Department Stores, Inc., 7.45%, 2017 677,489 120
700M Wal-Mart Stores, Inc., 8%, 2006 743,128 132
- -------------------------------------------------------------------------------------
1,420,617 252
- -------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000
OF
PRINCIPAL NET
AMOUNT SECURITY VALUE ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
TELECOMMUNICATIONS--10.7%
$ 725M AT&T Corp., 6%, 2009 $ 674,811 $ 120
850M MCI Communications Corp., 7.50%, 2004 873,372 155
725M MetroNet Communications Corp., 0%-9.95%, 2008 565,500 101
700M New York Telephone Co., 7.25%, 2024 665,210 118
1,000M Pacific Bell Telephone Co., 7%, 2004 1,013,942 180
725M Sprint Capital Corp., 6.125%, 2008 673,743 120
700M TCI Communications, Inc., 6.375%, 2003 692,749 123
800M WorldCom, Inc., 8.875%, 2006 846,733 150
- -------------------------------------------------------------------------------------
6,006,060 1,067
- -------------------------------------------------------------------------------------
TRANSPORTATION--1.2%
700M Norfolk Southern Corp., 7.35%, 2007 702,219 125
- -------------------------------------------------------------------------------------
TOTAL VALUE OF CORPORATE BONDS (cost $49,242,602) 48,199,344 8,561
- -------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS--1.3%
775M Federal National Mortgage Association, 5.75%,
2008 (cost $783,462) 731,508 130
- -------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--8.6%
5,000M United States Treasury Notes, 5.625%, 2008
(cost $5,077,959) 4,856,250 862
- -------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--2.8%
800M General Electric Capital Corp., 5.37%, 10/7/99 799,284 142
750M Texaco, Inc., 5.33%, 10/5/99 749,556 133
- -------------------------------------------------------------------------------------
TOTAL VALUE OF SHORT-TERM CORPORATE NOTES (cost $1,548,840) 1,548,840 275
- -------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL VALUE OF INVESTMENTS (cost $56,652,863) 98.3% 55,335,942 9,828
OTHER ASSETS, LESS LIABILITIES 1.7 966,852 172
- -------------------------------------------------------------------------------------
NET ASSETS 100.0% $56,302,794 $ 10,000
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
19
<PAGE>
PORTFOLIO MANAGER'S LETTER
FIRST INVESTORS FUND FOR INCOME, INC.
Dear Investor:
We are pleased to present the annual report for the First Investors Fund For
Income for the fiscal year ending September 30, 1999. During the period, the
Fund's return on a net asset value basis was 3.1% on Class A shares and 2.3% on
Class B shares, compared to a return of 4.8% for the Lipper high yield bond fund
group. During the period, the Fund declared dividends from net investment income
of 38.4 cents per share on Class A shares and 36 cents per share on Class B
shares.
The primary factors that drove the Fund's performance during the fiscal year
were the rising interest rate environment and the credit quality of the bonds in
the portfolio. The reporting period began with the resolution of several
system-wide financial difficulties. Financial markets struggled to put the
difficulties of the summer -- the Asian economic crisis, Russian devaluation,
and the near-collapse of the giant hedge fund Long-Term Capital Management --
behind them. Investors around the world shunned risk and sought safety.
Corporate bonds in general became "cheap," and lower-rated, high yield bonds
suffered the most. The Federal Reserve, looking to prevent a credit crunch,
provided liquidity to the monetary system by lowering interest rates three times
in an eight-week period. Investors became more comfortable -- though still
selective -- with risk, and the high yield market rebounded sharply in November,
posting one of its best months ever.
In the early part of 1999, investors continued to shun riskier bonds. Investor
confidence returned in March, and the high yield market surged. Risk was
rewarded, not only for lower-quality issues, but also for bonds with longer
durations and those issued in emerging markets. For the quarter, lower-rated
issues tended to outperform higher-rated issues and overall, the high-yield
market outperformed other domestic fixed income markets.
By the middle of 1999, the domestic economy continued to be strong and the
market began to brace for possible tightening by the Fed to stave off inflation.
Yields rose in May as interest rate concerns were priced into the market. New
issuance -- which had been building slowly through the year -- declined somewhat
in June. On June 25, 1999, the Fed, as expected, raised interest rates 25 basis
points. Demand for high yield bonds abated, as evidenced by heavy mutual fund
outflows in May, and smaller outflows in June.
The latter part of the reporting period was difficult for the high-yield market,
and it was the weakest performing sector in the bond market. The Fed raised
rates a second time in August, and economic uncertainty prompted concerns
regarding the need for further rate increases. Demand within the high-yield
market fell, liquidity decreased and new issuance slowed. In this guarded
environment, higher-rated issues tended to outperform lower-rated issues.
A number of factors aided the Fund's performance during the reporting period. In
general, the Fund's holdings of higher-rated bonds helped to enhance returns.
20
<PAGE>
Also, a number of positions in the telecommunications sector performed well, in
large part because of merger and acquisition activity. The Fund's performance
was negatively impacted by poor performance in several sectors, including health
care, which was hurt due to the enactment of various reimbursement-related
legislation. Two of the Fund's holdings, Genesis Health Ventures, Inc. and
Integrated Health Services, were particularly hard hit. In addition, holdings in
the textile/apparel industry negatively impacted performance.
Going forward, we will likely see a continuation of current market conditions.
We look forward to stabilization in the high yield market early in 2000, as Y2K
concerns pass and the economic picture becomes clearer. The Fund will continue
to focus on credit quality and seek value in the high yield market.
Thank you for placing your trust in First Investors. As always, we appreciate
the opportunity to serve your investment needs.
Sincerely,
/s/ Nancy W. Jones
Nancy W. Jones
Vice President
and Portfolio Manager
October 29, 1999
21
<PAGE>
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.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999 FUND FOR INCOME CS FIRST BOSTON HIGH YIELD
<S> <C> <C> <C>
Jan-90 $9,375 $10,000
Dec-90 7,758 9,362
Dec-91 11,081 13,458
Dec-92 12,933 15,700
Dec-93 15,268 18,669
Dec-94 15,357 18,488
Dec-95 18,204 21,701
Dec-96 20,644 24,396
Dec-97 23,249 27,477
Sep-98 23,362 26,900
Sep-99 24,093 27,963
Average Annual Total Return*
Class A Shares N.A.V. Only S.E.C. Standardized
One Year 3.13% (3.36%)
Five Years 9.54% 8.13%
Ten Years 9.00% 8.29%
S.E.C. 30-Day Yield 8.99%
Class B Shares
One Year 2.29% (1.71%)
Since Inception (1/12/95) 9.18% 8.87%
S.E.C. 30-Day Yield 8.89%
</TABLE>
THE GRAPH COMPARES A $10,000 INVESTMENT IN THE FIRST INVESTORS FUND FOR
INCOME, INC. (CLASS A SHARES) BEGINNING 1/1/90 WITH A THEORETICAL INVESTMENT
IN THE CS FIRST BOSTON HIGH YIELD INDEX. THE CS FIRST BOSTON HIGH YIELD INDEX
IS DESIGNED TO MEASURE THE PERFORMANCE OF THE HIGH YIELD BOND MARKET. THE
INDEX CONSISTS OF 1,631 DIFFERENT ISSUES, 1,403 OF WHICH ARE CASH PAY, 176 ARE
ZERO-COUPON, 11 ARE STEP BONDS, 18 ARE PAY-IN-KIND BONDS AND THE REMAINING 23
ARE IN DEFAULT. THE BONDS INCLUDED IN THE INDEX HAVE AN AVERAGE LIFE OF 7.9
YEARS, AN AVERAGE MATURITY OF 7.9 YEARS, AN AVERAGE DURATION OF 4.8 YEARS AND
AN AVERAGE COUPON OF 10.1%. IT IS NOT POSSIBLE TO INVEST DIRECTLY IN THIS
INDEX. IN ADDITION, THE INDEX DOES NOT TAKE INTO ACCOUNT FEES AND EXPENSES.
FOR PURPOSES OF THE GRAPH AND THE ACCOMPANYING TABLE, UNLESS OTHERWISE
INDICATED, IT HAS BEEN ASSUMED THAT THE MAXIMUM SALES CHARGE WAS DEDUCTED FROM
THE INITIAL $10,000 INVESTMENT IN THE FUND AND ALL DIVIDENDS AND DISTRIBUTIONS
WERE REINVESTED. CLASS B SHARES PERFORMANCE MAY BE GREATER THAN OR LESS THAN
THAT SHOWN IN THE LINE GRAPH ABOVE 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 YEAR ENDED 9/30/99) 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 6.25% (PRIOR TO 7/1/93, THE
MAXIMUM SALES CHARGE WAS 6.9%). THE CLASS B "S.E.C. STANDARDIZED" RETURNS ARE
ADJUSTED FOR THE APPLICABLE DEFERRED SALES CHARGE (MAXIMUM OF 4% IN THE FIRST
YEAR). RESULTS REPRESENT PAST PERFORMANCE AND DO NOT INDICATE FUTURE RESULTS.
INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT
AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THE
ORIGINAL COST. THE UNUSUALLY HIGH CURRENT YIELDS OFFERED REFLECT THE
SUBSTANTIAL RISKS ASSOCIATED WITH INVESTMENTS IN HIGH YIELD BONDS. THE ISSUERS
OF THE BONDS 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 FROM CS FIRST BOSTON
CORPORATION AND ALL OTHER FIGURES FROM FIRST INVESTORS MANAGEMENT
COMPANY, INC.
22
<PAGE>
PORTFOLIO COMPOSITION
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, 1999 and the dollar weighted average
of the total of the Fund's investments in zero coupon bonds, step bonds and
pay-in-kind bonds during the 1999 fiscal year, computed on a monthly basis, are
set forth below. This information reflects the average composition of the Fund's
assets during the 1999 fiscal year and is not necessarily representative of the
Fund as of the end of its 1999 fiscal year, the current fiscal year or at any
other time in the future.
<TABLE>
<CAPTION>
Comparable Quality of
Rated by Unrated Securities to
Moody's Bonds Rated by Moody's
- ---------------------------------------------------------------------------
<S> <C> <C>
Aaa 1.97% 0.00%
A1p1 4.90 0.00
Baa3 0.14 0.00
Ba1 0.79 0.00
Ba2 0.56 0.00
Ba3 5.04 0.00
B1 14.58 0.42
B2 31.96 0.11
B3 29.08 0.00
Caa1 2.98 0.00
Caa2 0.22 0.00
Caa 0.05 2.58
- ---------------------------------------------------------------------------
Zero Coupon Bonds 11.64%
Step Bonds 0.08%
Pay-in-kind Bonds 3.30%
</TABLE>
23
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS FUND FOR INCOME, INC.
September 30, 1999
<TABLE>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000
OF
PRINCIPAL NET
AMOUNT SECURITY VALUE ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
CORPORATE BONDS--87.6%
AEROSPACE/DEFENSE--2.0%
$ 2,000M Burke Industries, Inc., 10%, 2007 $ 1,410,000 $ 35
3,000M DeCrane Aircraft Holdings, Inc., 12%, 2008 3,015,000 75
1,600M L-3 Communications Corp., 10.375%, 2007 1,664,000 41
2,000M L-3 Communications Corp., 8%, 2008 1,855,000 46
- --------------------------------------------------------------------------------------
7,944,000 197
- --------------------------------------------------------------------------------------
AGRICULTURAL PRODUCTS--.7%
5,500M Terra Industries, Inc., 10.50%, 2005 2,860,000 71
- --------------------------------------------------------------------------------------
APPAREL/TEXTILES--3.2%
3,500M Dan River, Inc., 10.125%, 2003 3,552,500 88
4,480M GFSI, Inc., 9.625%, 2007 3,158,400 79
2,450M Pillowtex Corp., 10%, 2006 1,678,250 42
4,600M Polymer Group, Inc., 9%, 2007 4,381,500 109
- --------------------------------------------------------------------------------------
12,770,650 318
- --------------------------------------------------------------------------------------
AUTOMOTIVE--3.6%
4,000M Accuride Corp., 9.25%, 2008 3,910,000 97
1,650M Cambridge Industries, Inc., 10.25%, 2007 1,080,750 27
2,800M Collins & Aikman Products Co., 11.50%, 2006 2,674,000 66
4,000M Exide Corp., 10%, 2005 3,960,000 98
3,610M Safelite Glass Corp., 9.875%, 2006 2,924,100 73
- --------------------------------------------------------------------------------------
14,548,850 361
- --------------------------------------------------------------------------------------
BUILDING MATERIALS--1.0%
3,500M American Architectural Products Corp., 11.75%,
2007 1,207,500 30
3,000M Nortek, Inc, 9.125%, 2007 2,910,000 72
- --------------------------------------------------------------------------------------
4,117,500 102
- --------------------------------------------------------------------------------------
CHEMICALS--6.9%
6,300M AEP Industries, Inc., 9.875%, 2007 5,922,000 147
3,000M Huntsman ICI Chemicals, LLC, 10.125%, 2009 + 2,955,000 73
6,600M Huntsman Polymers Corp., 11.75%, 2004 6,897,000 171
3,450M Hydrochem Industrial Services, Inc., 10.375%,
2007 3,018,750 75
3,750M Lyondell Chemical Co., 10.875%, 2009 3,782,812 94
- --------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000
OF
PRINCIPAL NET
AMOUNT SECURITY VALUE ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
CHEMICALS (continued)
$ 1,500M Precise Technology, Inc., 11.125%, 2007 $ 1,455,000 $ 36
4,500M Texas Petrochemicals Corp., 11.125%, 2006 3,712,500 92
- --------------------------------------------------------------------------------------
27,743,062 688
- --------------------------------------------------------------------------------------
CONSUMER DURABLES--.5%
2,000M Republic Group, Inc., 9.50%, 2008 1,860,000 46
- --------------------------------------------------------------------------------------
CONSUMER PRODUCTS--2.4%
1,300M AKI, Inc., 10.50%, 2008 1,163,500 29
4,500M Chattem, Inc., 8.875%, 2008 4,185,000 104
4,070M Herff Jones, Inc., 11%, 2005 4,339,637 108
- --------------------------------------------------------------------------------------
9,688,137 241
- --------------------------------------------------------------------------------------
CONTAINERS/PACKAGING--.8%
3,300M Tekni-Plex, Inc., 9.25%, 2008 3,147,375 78
- --------------------------------------------------------------------------------------
DURABLE GOODS MANUFACTURING--1.2%
1,000M Amtrol, Inc., 10.625%, 2006 965,000 24
1,200M Columbus McKinnon Corp., 8.50%, 2008 1,086,000 27
2,500M Day International Group, Inc., 11.125%, 2005 2,587,500 64
- --------------------------------------------------------------------------------------
4,638,500 115
- --------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--.2%
1,000M Applied Power, Inc., 8.75%, 2009 945,000 24
- --------------------------------------------------------------------------------------
ELECTRONICS/INSTRUMENTS/COMPONENTS--.9%
4,000M Advanced Micro Devices, Inc., 11%, 2003 3,620,000 90
- --------------------------------------------------------------------------------------
ENERGY--1.5%
1,200M Chesapeake Energy Corp., 9.625%, 2005 1,152,000 29
2,000M RBF Finance Co., 11.375%, 2009 2,120,000 53
3,000M Tesoro Petroleum Corp., 9%, 2008 2,940,000 73
- --------------------------------------------------------------------------------------
6,212,000 155
- --------------------------------------------------------------------------------------
ENTERTAINMENT/LEISURE--2.9%
1,540M Carmike Cinemas, Inc., 9.375%, 2009 1,424,500 35
4,000M KSL Recreation Group, Inc., 10.25%, 2007 3,940,000 98
- --------------------------------------------------------------------------------------
</TABLE>
25
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
FIRST INVESTORS FUND FOR INCOME, INC.
September 30, 1999
<TABLE>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000
OF
PRINCIPAL NET
AMOUNT SECURITY VALUE ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
ENTERTAINMENT/LEISURE (continued)
$ 3,800M Loews Cineplex Entertainment Corp., 8.875%, 2008 $ 3,420,000 $ 85
4,000M Outboard Marine Corp., 10.75%, 2008 2,960,000 74
- --------------------------------------------------------------------------------------
11,744,500 292
- --------------------------------------------------------------------------------------
FINANCIAL--1.0%
4,500M Bay View Capital Corp., 9.125%, 2007 4,140,000 103
- --------------------------------------------------------------------------------------
FOOD SERVICE--1.2%
5,000M Domino's, Inc., 10.375%, 2009 4,787,500 119
- --------------------------------------------------------------------------------------
FOOD/BEVERAGE/TOBACCO--2.2%
5,000M Canandaigua Brands, Inc., 8.50%, 2009 4,712,500 117
1,000M Delta Beverage Group, Inc., 9.75%, 2003 1,000,000 25
3,500M Di Giorgio Corp., 10%, 2007 3,290,000 82
- --------------------------------------------------------------------------------------
9,002,500 224
- --------------------------------------------------------------------------------------
GAMING/LODGING--.8%
1,000M Mohegan Tribal Gaming Authority, 8.75%, 2009 983,750 24
2,250M Prime Hospitality Corp., 9.25%, 2006 2,235,937 56
- --------------------------------------------------------------------------------------
3,219,687 80
- --------------------------------------------------------------------------------------
HEALTHCARE--3.3%
2,250M ALARIS Medical Systems, Inc., 9.75%, 2006 2,036,250 51
2,750M Conmed Corp., 9%, 2008 2,540,312 63
4,100M Fisher Scientific International, Inc., 9%, 2008 3,854,000 96
4,000M Genesis Health Ventures, Inc., 9.75%, 2005 1,940,000 48
3,750M Integrated Health Services, Inc., 10.25%, 2006 576,563 14
2,200M Owens & Minor, Inc., 10.875%, 2006 2,233,000 56
- --------------------------------------------------------------------------------------
13,180,125 328
- --------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY/OFFICE EQUIPMENT--.8%
3,125M ChipPac International, Ltd., 12.75%, 2009 + 3,136,719 78
- --------------------------------------------------------------------------------------
MEDIA (CABLE TV/BROADCASTING)--12.4%
2,000M Bresnan Communications Group, LLC, 0%-9.25%, 2009 1,307,500 33
5,000M Charter Communications Holdings, LLC, 8.625%,
2009 + 4,737,500 118
- --------------------------------------------------------------------------------------
</TABLE>
26
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000
OF
PRINCIPAL NET
AMOUNT SECURITY VALUE ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
MEDIA (CABLE TV/BROADCASTING) (continued)
$ 5,000M Comcast United Kingdom Cable Partners, Ltd.,
0%-11.20%, 2007 $ 4,537,500 $ 113
4,750M Diamond Cable Communications PLC, 0%-11.75%, 2005 4,286,875 107
4,150M Diva Systems Corp., 0%-12.625%, 2008 1,307,250 33
13,500M Echostar DBS, 9.375%, 2009 13,365,000 332
5,000M Mediacom LLC/Mediacom Capital Corp., 8.50%, 2008 4,625,000 115
4,000M Mediacom LLC/Mediacom Capital Corp., 7.875%,
2011 + 3,510,000 87
2,000M NTL, Inc., 11.50%, 2008 2,160,000 54
3,000M Sinclair Broadcasting Group, Inc., 10%, 2005 3,007,500 75
3,850M Star Choice Communications, Inc., 13%, 2005 3,830,750 95
3,000M Young Broadcasting Corp., 10.125%, 2005 3,127,500 78
- --------------------------------------------------------------------------------------
49,802,375 1,240
- --------------------------------------------------------------------------------------
MEDIA (OTHER)--2.9%
3,000M Mail-Well Corp., 8.75%, 2008 2,865,000 71
6,000M MDC Communications Corp., 10.50%, 2006 5,940,000 148
3,000M Von Hoffman Press, Inc., 10.875%, 2007 + 2,970,000 74
- --------------------------------------------------------------------------------------
11,775,000 293
- --------------------------------------------------------------------------------------
MINING/METALS--3.7%
5,400M Euramax International PLC, 11.25%, 2006 5,427,000 135
3,000M Murrin Murrin Holdings Property, Ltd., 9.375%,
2007 2,625,000 65
4,000M Renco Metals, Inc., 11.50%, 2003 3,480,000 87
3,500M Wheeling-Pittsburgh Corp., 9.25%, 2007 3,263,750 81
- --------------------------------------------------------------------------------------
14,795,750 368
- --------------------------------------------------------------------------------------
MISCELLANEOUS--.2%
1,025M Kindercare Learning Centers, Inc., 9.50%, 2009 973,750 24
- --------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--7.2%
4,000M Container Corp., 11.25%, 2004 4,120,000 102
5,650M Packaging Corp. of America, 9.625%, 2009 + 5,692,375 142
5,500M Riverwood International Corp., 10.25%, 2006 5,424,375 135
5,600M S.D. Warren Co., Inc., 12%, 2004 5,922,000 147
- --------------------------------------------------------------------------------------
</TABLE>
27
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
FIRST INVESTORS FUND FOR INCOME, INC.
September 30, 1999
<TABLE>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000
OF
PRINCIPAL NET
AMOUNT SECURITY VALUE ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
PAPER/FOREST PRODUCTS (continued)
$ 4,635M S.D. Warren Co., Inc., 14%, 2006 $ 5,237,549 $ 130
2,400M Stone Container Corp., 10.75%, 2002 2,475,000 62
- --------------------------------------------------------------------------------------
28,871,299 718
- --------------------------------------------------------------------------------------
REAL ESTATE/CONSTRUCTION--.5%
4,000M Cathay International, Ltd., 13%, 2008 + 1,900,000 47
- --------------------------------------------------------------------------------------
RETAIL - GENERAL MERCHANDISE--.5%
2,000M Big 5 Corp., 10.875%, 2007 1,970,000 49
- --------------------------------------------------------------------------------------
TELECOMMUNICATIONS--20.8%
1,350M 21st Century Telecom Group, Inc., 0%-12.25%, 2008 543,375 14
5,300M E.Spire Communications, Inc., 0%-13%, 2005 3,153,500 78
3,500M Energis PLC, 9.75%, 2009 + 3,578,750 89
3,000M Facilicom International, Inc., 10.50%, 2008 2,505,000 62
4,600M GST USA, Inc., 0%-13.875%, 2005 3,714,500 92
4,000M Hyperion Telecommunications, Inc., 0%-13%, 2003 3,375,000 84
5,000M Intermedia Communications, Inc., 8.50%, 2008 4,325,000 108
4,300M Level 3 Communications, Inc., 9.125%, 2008 3,891,500 97
5,000M Nextel Communications, Inc., 0%-9.95%, 2008 3,500,000 87
7,000M Nextlink Communications, Inc., 12.50%, 2006 7,455,000 185
750M Nextlink Communications, Inc., 0%, 2008 452,813 11
1,700M Nextlink Communications, Inc., 9%, 2008 1,587,375 39
6,000M Omnipoint Corp., 11.625%, 2006 6,210,000 154
6,000M Orion Network Systems, Inc., 11.25%, 2007 4,530,000 113
4,000M Pac-West Telecommunications, Inc., 13.50%, 2009 4,060,000 101
5,000M Paging Network, Inc., 10%, 2008 1,400,000 35
4,000M Powertel, Inc., 11.125%, 2007 4,180,000 104
1,000M PSINet, Inc., 11%, 2009 + 985,000 25
4,175M Qwest Communications International, Inc.,
0%-9.47%, 2007 3,266,938 81
6,000M RCN Corp., 0%-11.125%, 2007 3,900,000 97
4,500M Tritel PCS, Inc., 0%-12.75%, 2009 + 2,553,750 63
- --------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000
AMOUNT, OF
SHARES OR NET
WARRANTS SECURITY VALUE ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
TELECOMMUNICATIONS (continued)
$ 8,000M Triton Communications, LLC., 0%-11%, 2008 $ 5,410,000 $ 134
3,000M Viatel, Inc., 0%-12.50%, 2008 1,807,500 45
3,500M Williams Communications Group, Inc., 10.875%,
2009 3,517,500 87
4,000M Worldwide Fiber, Inc., 12%, 2009 + 3,940,000 98
- --------------------------------------------------------------------------------------
83,842,501 2,083
- --------------------------------------------------------------------------------------
TRANSPORTATION--2.3%
4,000M Coach USA, Inc., 9.375%, 2007 4,140,000 103
5,700M Eletson Holdings, Inc., 9.25%, 2003 5,158,500 128
- --------------------------------------------------------------------------------------
9,298,500 231
- --------------------------------------------------------------------------------------
TOTAL VALUE OF CORPORATE BONDS (cost $388,530,735) 352,535,280 8,763
- --------------------------------------------------------------------------------------
COMMON STOCKS--.7%
MEDIA (CABLE TV/BROADCASTING)--.7%
31,506 *Echostar Communications Corp. - Class "A" 2,861,138 71
- --------------------------------------------------------------------------------------
TELECOMMUNICATIONS--.0%
4,090 *Viatel, Inc. 120,911 3
- --------------------------------------------------------------------------------------
TOTAL VALUE OF COMMON STOCKS (cost $35,744) 2,982,049 74
- --------------------------------------------------------------------------------------
PREFERRED STOCKS--2.8%
MEDIA (CABLE TV/BROADCASTING)--2.8%
104,234 CSC Holdings, Inc., 11.125%, PIK, Series "M"
(cost $10,333,559) 11,205,114 278
- --------------------------------------------------------------------------------------
WARRANTS--.2%
AEROSPACE/DEFENSE--.0%
3,000 *DeCrane Aircraft Holdings, Inc. (expiring
9/30/08) + -- --
- --------------------------------------------------------------------------------------
MEDIA (CABLE TV/BROADCASTING)--.1%
12,450 *Diva Systems Corp. (expiring 3/1/08) + 99,600 3
89,166 *Star Choice Communications, Inc. (expiring
12/15/05) + 234,061 6
- --------------------------------------------------------------------------------------
333,661 9
- --------------------------------------------------------------------------------------
</TABLE>
29
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
FIRST INVESTORS FUND FOR INCOME, INC.
September 30, 1999
<TABLE>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
WARRANTS, $10,000
UNITS OR OF
PRINCIPAL NET
AMOUNT SECURITY VALUE ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
PAPER/FOREST PRODUCTS--.1%
100,000 *S.D. Warren Co., Inc. (expiring 12/15/06) + $ 500,000 $ 12
- --------------------------------------------------------------------------------------
TELECOMMUNICATIONS--.0%
7,300 *E.Spire Communications, Inc. (expiring 11/1/05) 73,000 2
- --------------------------------------------------------------------------------------
TOTAL VALUE OF WARRANTS (cost $3,015) 906,661 23
- --------------------------------------------------------------------------------------
UNITS--.6%
MINING/METALS
2,500 Russel Metals, Inc. (cost $2,500,000)++ 2,375,000 59
- --------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--2.0%
$ 7,500M U.S. Treasury Note, 7.25%, 2004 (cost $8,163,281) 7,924,223 197
- --------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--4.2%
3,760M General Electric Co., 5.34%, 10/7/99 3,756,652 94
13,100M General Electric Co., 5.37%, 10/7/99 13,088,272 325
- --------------------------------------------------------------------------------------
TOTAL VALUE OF SHORT-TERM CORPORATE NOTES (cost $16,844,924) 16,844,924 419
- --------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL VALUE OF INVESTMENTS (cost $426,411,258) 98.1% 394,773,251 9,813
OTHER ASSETS, LESS LIABILITIES 1.9 7,529,393 187
- --------------------------------------------------------------------------------------
NET ASSETS 100.0% $402,302,644 $ 10,000
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
* Non-income producing
+ See Note 4
++Each unit consists of one Russel Metals, Inc. 10% $600 guaranteed Senior Note
due 2009 and one Russel Metals, Inc. USA LLC 10% $400 guaranteed Senior Note
due 2009
See notes to financial statements
30
<PAGE>
PORTFOLIO MANAGER'S LETTER
FIRST INVESTORS HIGH YIELD FUND, INC.
Dear Investor:
We are pleased to present the annual report for the First Investors High Yield
Fund for the fiscal year ending September 30, 1999. During the period, the
Fund's return on a net asset value basis was 2.5% on Class A shares and 1.9% on
Class B shares, compared to a return of 4.8% for the Lipper high yield bond fund
group. During the period, the Fund declared dividends from net investment income
of 45.68 cents per share on Class A shares and 42.4 cents per share on Class B
shares.
The primary factors that drove the Fund's performance during the fiscal year
were the rising interest rate environment and credit developments--both positive
and negative--within the portfolio. The Fund's fiscal year began in
October 1998 as global financial difficulties that plagued markets during the
previous summer months touched off an investor "flight to quality." The Federal
Reserve succeeded in stabilizing the financial system through strong
leadership--which included easing interest rates three times in an eight-week
period. As a result, the high-yield market bounced back strongly in
November with one of its strongest months on record.
Early in 1999, investor comfort with sustainable growth turned into fear of
rising interest rates. This enabled higher-risk investments such as high-yield
bonds to outperform Treasury securities. Widespread concerns about emerging
markets began to be relieved as Brazil devalued its currency and took some steps
toward fiscal reform. Improved performance of emerging markets also encouraged
participation in the high-yield market and both the aggressiveness and the
volume of new domestic high-yield bond issues began to grow.
As the reporting period progressed, the prospect of accelerating domestic growth
and tight employment conditions fueled inflation worries. Markets thus began to
expect Fed tightening and new issue activity slowed appreciably. After the Fed
raised interest rates in June, investors showed an increasing preference for
larger, higher-rated, more-liquid bond issues. This contrasted pretty sharply
with the outperformance of more aggressive transactions earlier in the year.
In the latter part of the reporting period, concerns continued to mount
regarding additional interest rate hikes. As anticipated, the Fed raised
interest rates a second time in August, but concerns remained about the rapid
pace of growth, implying a possible need for a further rate increase. Investors
have also become less tolerant of incipient credit problems as more have
occurred. Since 1998, the default rate of high-yield bonds has almost doubled,
to about 3.4%. Market
31
<PAGE>
PORTFOLIO MANAGER'S LETTER (continued)
FIRST INVESTORS HIGH YIELD FUND, INC.
liquidity remains problematic as pent-up demand for capital has collided with
investor defensiveness and demands for higher yields.
Throughout the reporting period, a number of factors stand out as having had an
impact on the Fund's performance. The Fund's performance was aided by its
increased emphasis in emerging markets and gradual increase in equity
investments. The Fund's performance was negatively impacted by the fact that it
had few holdings in the growing European high-yield community of issuers. As a
group, these bonds outperformed. The health care sector, usually viewed as
defensive, also hurt the Fund. A number of hospital and long-term care companies
suffered because of difficulties in adjusting to new Medicare reimbursement
rules enacted under the Balanced Budget Act of 1997. The energy sector began the
year weakly, but many companies rebounded thanks to improved pricing of oil and
natural gas.
Looking ahead, interest rate concerns and Year 2000 issues cloud the picture for
the high-yield bond market. As this is written, we do not expect much additional
bond issuance for this year because issuers have tried to avoid raising money
under these hostile conditions. However, late in the fourth quarter or early in
2000, performance has the potential to turn positive as investors notice the
good relative value that is being obscured by Y2K worries and try to re-enter
the market. The Fund will continue to focus on what we think are the important
things--the companies whose strong managements, market positions, strategies and
results are likely to provide us with value improvement in the high-yield
market.
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, 1999
32
<PAGE>
CUMULATIVE PERFORMANCE INFORMATION
FIRST INVESTORS HIGH YIELD FUND, INC.
Comparison of change in value of $10,000 investment in the First Investors High
Yield Fund, Inc. and the CS First Boston High Yield Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999 HIGH YIELD FUND CS FIRST BOSTON HIGH YIELD
<S> <C> <C> <C>
Jan-90 $9,375 $10,000
Dec-90 7,779 9,362
Dec-91 10,542 13,458
Dec-92 12,539 15,700
Dec-93 14,665 18,669
Dec-94 14,722 18,488
Dec-95 17,436 21,701
Dec-96 19,764 24,396
Dec-97 22,103 27,477
Sep-98 22,121 26,900
Sep-99 22,683 27,963
Average Annual Total Return*
S.E.C.
Class A Shares N.A.V. Only Standardized
One Year 2.54% (3.93%)
Five Years 8.99% 7.60%
Ten Years 8.46% 7.77%
S.E.C. 30-Day Yield 9.16%
Class B Shares
One Year 1.90% (2.10%)
Since Inception (1/12/95) 8.75% 8.44%
S.E.C. 30-Day Yield 9.07%
</TABLE>
THE GRAPH COMPARES A $10,000 INVESTMENT IN THE FIRST INVESTORS HIGH YIELD
FUND, INC. (CLASS A SHARES) BEGINNING 1/1/90 WITH A THEORETICAL INVESTMENT IN
THE CS FIRST BOSTON HIGH YIELD INDEX. THE CS FIRST BOSTON HIGH YIELD INDEX IS
DESIGNED TO MEASURE THE PERFORMANCE OF THE HIGH YIELD BOND MARKET. THE INDEX
CONSISTS OF 1,631 DIFFERENT ISSUES, 1,403 OF WHICH ARE CASH PAY, 176 ARE ZERO-
COUPON, 11 ARE STEP BONDS, 18 ARE PAY-IN-KIND BONDS AND THE REMAINING 23 ARE IN
DEFAULT. THE BONDS INCLUDED IN THE INDEX HAVE AN AVERAGE LIFE OF 7.9 YEARS, AN
AVERAGE MATURITY OF 7.9 YEARS, AN AVERAGE DURATION OF 4.8 YEARS AND AN AVERAGE
COUPON OF 10.1%. IT IS NOT POSSIBLE TO INVEST DIRECTLY IN THIS INDEX. IN
ADDITION, THE INDEX DOES NOT TAKE INTO ACCOUNT FEES AND EXPENSES. FOR PURPOSES
OF THE GRAPH AND THE ACCOMPANYING TABLE, UNLESS OTHERWISE INDICATED, IT HAS BEEN
ASSUMED THAT THE MAXIMUM SALES CHARGE WAS DEDUCTED FROM THE INITIAL $10,000
INVESTMENT IN THE FUND AND ALL DIVIDENDS AND DISTRIBUTIONS WERE REINVESTED.
CLASS B SHARES PERFORMANCE MAY BE GREATER THAN OR LESS THAN THAT SHOWN IN THE
LINE GRAPH ABOVE 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 YEAR ENDED 9/30/99) 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 6.25% (PRIOR TO 7/1/93, THE
MAXIMUM SALES CHARGE WAS 6.9%). THE CLASS B "S.E.C. STANDARDIZED" RETURNS ARE
ADJUSTED FOR THE APPLICABLE DEFERRED SALES CHARGE (MAXIMUM OF 4% IN THE FIRST
YEAR). SOME OR ALL OF THE EXPENSES OF THE FUND WERE WAIVED OR ASSUMED. IF SUCH
EXPENSES HAD BEEN PAID BY THE FUND, THE CLASS A "S.E.C. STANDARDIZED" AVERAGE
ANNUAL TOTAL RETURN FOR ONE YEAR, FIVE YEARS AND TEN YEARS WOULD HAVE BEEN
(4.11%), 7.42% AND 7.62%, RESPECTIVELY, AND THE S.E.C. YIELD FOR
SEPTEMBER 1999 WOULD HAVE BEEN 9.02%. THE CLASS B "S.E.C. STANDARDIZED"
AVERAGE ANNUAL TOTAL RETURN FOR ONE YEAR AND SINCE INCEPTION WOULD HAVE BEEN
(2.30%) AND 8.07%, RESPECTIVELY, AND THE S.E.C. YIELD FOR SEPTEMBER 1999 WOULD
HAVE BEEN 8.93%. RESULTS REPRESENT PAST PERFORMANCE AND DO NOT INDICATE FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE
SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN
THE ORIGINAL COST. THE UNUSUALLY HIGH CURRENT YIELDS OFFERED REFLECT THE
SUBSTANTIAL RISKS ASSOCIATED WITH INVESTMENTS IN HIGH YIELD BONDS.
33
<PAGE>
CUMULATIVE PERFORMANCE INFORMATION
FIRST INVESTORS HIGH YIELD FUND, INC.
THE ISSUERS OF THE BONDS 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 FROM CS FIRST
BOSTON CORPORATION AND ALL OTHER FIGURES FROM FIRST INVESTORS MANAGEMENT
COMPANY, INC.
34
<PAGE>
PORTFOLIO COMPOSITION
FIRST INVESTORS HIGH YIELD FUND, INC.
The dollar weighted average of credit ratings of all bonds held by the Fund
during the fiscal year ended September 30, 1999 and the dollar weighted average
of the total of the Fund's investments in zero coupon bonds, step bonds and
pay-in-kind bonds during the 1999 fiscal year, computed on a monthly basis, is
set forth below. This information reflects the average composition of the Fund's
assets during the 1999 fiscal year and is not necessarily representative of the
Fund as of the end of its 1999 fiscal year, the current fiscal year or at any
other time in the future.
<TABLE>
<CAPTION>
Comparable Quality of
Rated by Unrated Securities to
Moody's Bonds Rated by Moody's
<S> <C> <C>
- ---------------------------------------------------------------------------
Aaa 2.53% 0.00%
A1p1 3.80 0.00
A2 0.61 0.00
Ba1 0.80 0.00
Ba2 3.64 0.00
Ba3 6.45 0.00
B1 13.15 0.27
B2 30.83 0.05
B3 25.90 0.48
Caa 0.00 2.61
Caa1 3.25 0.00
Caa2 0.42 0.00
Ca 0.59 0.00
- ---------------------------------------------------------------------------
Zero Coupon Bonds 9.75%
Step Bonds 0.58%
Pay-in kind Bonds 2.54%
</TABLE>
35
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS HIGH YIELD FUND, INC.
September 30, 1999
<TABLE>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000
OF
PRINCIPAL NET
AMOUNT SECURITY VALUE ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
CORPORATE BONDS--86.2%
AEROSPACE/DEFENSE--.7%
$ 1,300M Moog, Inc., 10%, 2006 $ 1,313,000 $ 71
- -------------------------------------------------------------------------------------
AGRICULTURAL PRODUCTS--.4%
1,400M Terra Industries, Inc., 10.50%, 2005 728,000 39
- -------------------------------------------------------------------------------------
APPAREL/TEXTILES--2.8%
1,000M Pillowtex Corp., 10%, 2006 685,000 37
2,800M Polymer Group, Inc., 9%, 2007 2,667,000 145
2,250M Worldtex, Inc., 9.625%, 2007 1,884,375 102
- -------------------------------------------------------------------------------------
5,236,375 284
- -------------------------------------------------------------------------------------
AUTOMOTIVE--3.5%
2,000M Cambridge Industries, Inc., 10.25%, 2007 1,310,000 71
1,750M Cooperative Computing, Inc., 9%, 2008 1,338,750 73
2,185M Safelite Glass Corp., 9.875%, 2006 1,769,850 96
2,400M Special Devices, Inc., 11.375%, 2008 2,052,000 111
- -------------------------------------------------------------------------------------
6,470,600 351
- -------------------------------------------------------------------------------------
BUILDING MATERIALS--.3%
1,650M American Architectural Products Corp., 11.75%,
2007 569,250 31
- -------------------------------------------------------------------------------------
CHEMICALS--5.1%
2,250M AEP Industries, Inc., 9.875%, 2007 2,115,000 115
1,500M Huntsman ICI Chemicals, LLC, 10.125%, 2009 + 1,477,500 80
2,800M Huntsman Polymers Corp., 11.75%, 2004 2,926,000 159
1,900M Hydrochem Industrial Services, Inc., 10.375%,
2007 1,662,500 90
1,250M Lyondell Chemical Co., 10.875%, 2009 1,260,937 68
- -------------------------------------------------------------------------------------
9,441,937 512
- -------------------------------------------------------------------------------------
CONSUMER PRODUCTS--4.4%
2,000M AKI Holding Corp., 0%-13.50%, 2009 830,000 45
1,720M AKI, Inc., 10.50%, 2008 1,539,400 83
1,700M Corning Consumer Products, Co., 9.625%, 2008 1,377,000 75
2,800M Herff Jones, Inc., 11%, 2005 2,985,500 162
1,235M Hines Horticulture, Inc., 11.75%, 2005 1,302,925 71
- -------------------------------------------------------------------------------------
8,034,825 436
- -------------------------------------------------------------------------------------
</TABLE>
35
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
FIRST INVESTORS HIGH YIELD FUND, INC.
September 30, 1999
<TABLE>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000
OF
PRINCIPAL NET
AMOUNT SECURITY VALUE ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
CONTAINERS/PACKAGING--3.3%
$ 2,850M Radnor Holdings, Corp., 10%, 2003 $ 2,892,750 $ 157
1,250M Tekni-Plex, Inc., 9.25%, 2008 1,192,187 65
2,000M U.S. Can Corp., 10.125%, 2006 2,040,000 111
- -------------------------------------------------------------------------------------
6,124,937 333
- -------------------------------------------------------------------------------------
DURABLE GOODS MANUFACTURING--.4%
750M Amtrol, Inc., 10.625%, 2006 723,750 39
- -------------------------------------------------------------------------------------
ENERGY--3.1%
1,500M Giant Industries, Inc., 9.75%, 2003 1,462,500 79
3,000M Gulf Canada Resources, Ltd., 9.625%, 2005 3,071,250 167
1,250M Stone Energy Corp., 8.75%, 2007 1,229,687 67
- -------------------------------------------------------------------------------------
5,763,437 313
- -------------------------------------------------------------------------------------
ENTERTAINMENT/LEISURE--3.6%
1,000M Bell Sports, Inc., 11%, 2008 1,015,000 55
3,600M Loews Cineplex Entertainment Corp., 8.875%, 2008 3,240,000 176
3,300M Outboard Marine Corp., 10.75%, 2008 2,442,000 132
- -------------------------------------------------------------------------------------
6,697,000 363
- -------------------------------------------------------------------------------------
FOOD/BEVERAGE/TOBACCO--1.1%
2,000M International Home Foods, Inc., 10.375%, 2006 2,050,000 111
- -------------------------------------------------------------------------------------
GAMING/LODGING--1.7%
1,550M Isle of Capri Casinos, Inc., 8.75%, 2009 1,429,875 78
1,750M Prime Hospitality Corp., 9.25%, 2006 1,739,062 94
- -------------------------------------------------------------------------------------
3,168,937 172
- -------------------------------------------------------------------------------------
HEALTHCARE--4.3%
1,400M Genesis Health Ventures, Inc., 9.75%, 2005 679,000 37
2,000M Integrated Health Services, Inc., 10.25%, 2006 307,500 17
1,400M Leiner Health Products, Inc., 9.625%, 2007 1,102,500 60
2,489M Owens & Minor, Inc., 10.875%, 2006 2,526,335 137
1,500M Packard Bioscience, Inc., 9.375%, 2007 1,365,000 74
2,100M Tenet Healthcare Corp., 8.625%, 2007 2,010,750 109
- -------------------------------------------------------------------------------------
7,991,085 434
- -------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY/OFFICE EQUIPMENT--.6%
1,000M ChipPac International, Ltd., 12.75%, 2009 + 1,003,750 54
- -------------------------------------------------------------------------------------
</TABLE>
36
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000
OF
PRINCIPAL NET
AMOUNT SECURITY VALUE ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
MEDIA (CABLE TV/BROADCASTING)--12.4%
$ 3,000M American Telecasting, Inc., 14.50%, 2004 $ 3,232,500 $ 175
2,000M Century Communications Corp., 9.50%, 2005 2,010,000 109
3,000M Diva Systems Corp., 0%-12.625%, 2008 945,000 51
5,000M Echostar DBS, 9.375%, 2009 4,950,000 269
2,250M Grupo Televisa, SA, 11.875%, 2006 2,354,063 128
1,500M Mediacom LLC/Mediacom Capital Corp., 8.50%, 2008 1,387,500 75
1,035M Rogers Communications, Inc., 9.125%, 2006 1,073,813 58
2,700M Rogers Communications, Inc., 8.875%, 2007 2,821,500 153
2,000M Salem Communications Corp., 9.50%, 2007 2,010,000 109
2,000M Star Choice Communications, Inc., 13%, 2005 1,990,000 108
- -------------------------------------------------------------------------------------
22,774,376 1,235
- -------------------------------------------------------------------------------------
MEDIA (OTHER)--1.8%
1,800M Garden State Newspapers, Inc., 8.75%, 2009 1,683,000 91
1,800M Garden State Newspapers, Inc., 8.625%, 2011 1,647,000 89
- -------------------------------------------------------------------------------------
3,330,000 180
- -------------------------------------------------------------------------------------
MINING/METALS--4.7%
2,500M Commonwealth Aluminum Corp., 10.75%, 2006 2,503,125 136
3,300M CSN Iron, SA, 9.125%, 2007 + 2,491,500 135
2,000M Renco Metals, Inc., 11.50%, 2003 1,740,000 94
2,100M Wheeling-Pittsburgh Corp., 9.25%, 2007 1,958,250 106
- -------------------------------------------------------------------------------------
8,692,875 471
- -------------------------------------------------------------------------------------
MISCELLANEOUS--5.8%
3,200M Allied Waste, Inc. NA., 10%, 2009 + 2,944,000 160
1,500M Iron Mountain, Inc., 10.125%, 2006 1,522,500 83
4,400M Kindercare Learning Centers, Inc., 9.50%, 2009 4,180,000 227
2,000M Loomis Fargo & Co., 10%, 2004 1,965,000 107
- -------------------------------------------------------------------------------------
10,611,500 577
- -------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--3.7%
1,650M Fonda Group, Inc., 9.50%, 2007 1,443,750 78
1,000M Riverwood International Corp., 10.25%, 2006 986,250 53
2,600M S.D. Warren Co., Inc., 12%, 2004 2,749,500 149
1,400M S.D. Warren Co., Inc., 14%, 2006 1,581,740 86
- -------------------------------------------------------------------------------------
6,761,240 366
- -------------------------------------------------------------------------------------
</TABLE>
37
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
FIRST INVESTORS HIGH YIELD FUND, INC.
September 30, 1999
<TABLE>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000
OF
PRINCIPAL NET
AMOUNT SECURITY VALUE ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
REAL ESTATE/CONSTRUCTION--.6%
$ 2,200M Cathay International, Ltd., 13%, 2008 + $ 1,045,000 $ 57
- -------------------------------------------------------------------------------------
RETAIL - FOOD/DRUG--.6%
1,000M Randall's Food Markets, Inc., 9.375%, 2007 1,107,500 60
- -------------------------------------------------------------------------------------
RETAIL - GENERAL MERCHANDISE--.9%
1,700M Big 5 Corp., 10.875%, 2007 1,674,500 91
- -------------------------------------------------------------------------------------
TELECOMMUNICATIONS--17.3%
2,000M 21st Century Telecom Group, Inc., 0%-12.25%, 2008 805,000 44
1,650M CAI Wireless Systems, 0%, 2004 871,035 47
3,750M E.Spire Communications, Inc., 0%-13%, 2005 2,231,250 121
2,500M Facilicom International, Inc., 10.50%, 2008 2,087,500 113
2,400M ICG Services, Inc., 0%-10%, 2008 1,350,000 73
3,400M Level 3 Communications, Inc., 9.125%, 2008 3,077,000 167
3,200M McCaw International, Ltd., 0%-13%, 2007 1,856,000 101
1,400M McLeodUSA, Inc., 8.125%, 2009 1,309,000 71
2,000M Netia Holdings BV, 0%-11.25%, 2007 1,260,000 68
2,750M Nextlink Communications, Inc., 0%-9.45%, 2008 1,660,313 90
3,000M Omnipoint Corp., 11.625%, 2006 3,105,000 168
1,300M Orion Network Systems, Inc., 11.25%, 2007 981,500 53
2,100M Pac-West Telecommunications, Inc., 13.50%, 2009 2,131,500 116
2,000M Paging Network, Inc., 10%, 2008 560,000 30
3,100M Powertel, Inc., 0%-12%, 2006 2,635,000 143
2,000M Qwest Communications International, Inc.,
0%-9.47%, 2007 1,565,000 85
3,000M RCN Corp., 0%-11.125%, 2007 1,950,000 106
2,500M Viatel, Inc., 0%-12.50%, 2008 1,506,250 82
1,000M Williams Communications Group, Inc., 10.875%,
2009 1,005,000 55
- -------------------------------------------------------------------------------------
31,946,348 1,733
- -------------------------------------------------------------------------------------
TRANSPORTATION--3.1%
2,500M American Commercial Lines, LLC, 10.25%, 2008 2,443,750 133
3,550M Eletson Holdings, Inc., 9.25%, 2003 3,212,750 174
- -------------------------------------------------------------------------------------
5,656,500 307
- -------------------------------------------------------------------------------------
TOTAL VALUE OF CORPORATE BONDS (cost $178,473,865) 158,916,722 8,620
- -------------------------------------------------------------------------------------
</TABLE>
38
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000
AMOUNT OF
OR NET
SHARES SECURITY VALUE ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
CONVERTIBLE BONDS--1.9%
CHEMICALS--.8%
$ 2,000M Hexcel Corp., 7%, 2003 $ 1,547,500 $ 84
- -------------------------------------------------------------------------------------
MEDIA (OTHER)--1.1%
2,000M Mail-Well, Inc., 5%, 2002 1,940,000 105
- -------------------------------------------------------------------------------------
TOTAL VALUE OF CONVERTIBLE BONDS (cost $3,705,178) 3,487,500 189
- -------------------------------------------------------------------------------------
COMMON STOCKS--1.4%
CHEMICALS--.2%
20,000 *Polymer Group, Inc. 295,000 16
- -------------------------------------------------------------------------------------
FOOD/BEVERAGE/TOBACCO--.1%
7,000 Philip Morris Companies, Inc. 239,313 13
- -------------------------------------------------------------------------------------
HEALTHCARE--.2%
16,000 *Tenet Healthcare Corp. 281,000 15
- -------------------------------------------------------------------------------------
MEDIA (CABLE TV/BROADCASTING)--.9%
17,692 *Echostar Communications Corp. - Class "A" 1,606,655 87
- -------------------------------------------------------------------------------------
MISCELLANEOUS--.0%
3,800 Waste Management, Inc. 73,150 4
- -------------------------------------------------------------------------------------
TOTAL VALUE OF COMMON STOCKS (cost $1,019,620) 2,495,118 135
- -------------------------------------------------------------------------------------
PREFERRED STOCKS--3.2%
FINANCIAL--.6%
40,800 Astoria Financial Corp., 12%, Series "B" 1,193,400 65
- -------------------------------------------------------------------------------------
MEDIA (CABLE TV/BROADCASTING)--2.6%
44,668 CSC Holdings, Inc., 11.125%, PIK, Series "M" 4,801,853 260
- -------------------------------------------------------------------------------------
TOTAL VALUE OF PREFERRED STOCKS (cost $5,576,415) 5,995,253 325
- -------------------------------------------------------------------------------------
</TABLE>
39
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
FIRST INVESTORS HIGH YIELD FUND, INC.
September 30, 1999
<TABLE>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
WARRANTS $10,000
OR OF
PRINCIPAL NET
AMOUNT SECURITY VALUE ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
WARRANTS--.2%
MEDIA (CABLE TV/BROADCASTING)--.1%
9,000 *Diva Systems Corp. (expiring 3/1/08) + $ 72,000 $ 4
46,320 *Star Choice Communications, Inc. (expiring
12/15/05) + 121,590 7
- -------------------------------------------------------------------------------------
193,590 11
- -------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--.1%
30,200 *S.D. Warren Co., Inc. (expiring 12/15/06) + 151,000 8
- -------------------------------------------------------------------------------------
TELECOMMUNICATIONS--.0%
3,750 *E.Spire Communications, Inc. (expiring 11/1/05) 37,500 2
3,000 *McCaw International, Ltd. (expiring 4/15/07) + 7,500 1
5,600 *Powertel, Inc. (expiring 2/1/06) 22,400 1
- -------------------------------------------------------------------------------------
67,400 4
- -------------------------------------------------------------------------------------
TOTAL VALUE OF WARRANTS (cost $7,500) 411,990 23
- -------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--2.6%
$ 4,500M United States Treasury Note, 7%, 2006
(cost $4,795,281) 4,726,408 257
- -------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--3.2%
2,500M General Electric Co., 5.37%, 10/7/99 2,497,762 135
3,500M Texaco, Inc., 5.33%, 10/5/99 3,497,927 190
- -------------------------------------------------------------------------------------
TOTAL VALUE OF SHORT-TERM CORPORATE NOTES (cost $5,995,689) 5,995,689 325
- -------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL VALUE OF INVESTMENTS (cost $199,573,548) 98.7% 182,028,680 9,874
OTHER ASSETS, LESS LIABILITIES 1.3 2,323,659 126
- -------------------------------------------------------------------------------------
NET ASSETS 100.0% $184,352,339 $ 10,000
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
</TABLE>
* Non-income producing
+ See Note 4
See notes to financial statements
40
<PAGE>
This page intentionally left blank.
41
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
FIRST INVESTORS
September 30, 1999
<TABLE>
- ------------------------------------------------------------------------
CASH
MANAGEMENT GOVERNMENT
- ------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments in securities:
At identified cost................... $ 167,360,237 $ 145,312,870
============== ===============
At value (Note 1A)................... $ 167,360,237 $ 142,300,668
Cash................................... 2,068,200 973,733
Receivables:
Interest............................. 1,727,656 939,189
Shares sold.......................... -- 42,887
Investment securities sold........... -- --
Other assets........................... 24,200 27,482
-------------- ---------------
Total Assets........................... 171,180,293 144,283,959
-------------- ---------------
LIABILITIES
Payables:
Investment securities purchased...... -- --
Distributions payable................ 653,916 660,230
Shares redeemed...................... 324,060 135,040
Accrued advisory fees.................. 70,056 70,903
Accrued expenses....................... 118,016 59,671
-------------- ---------------
Total Liabilities...................... 1,166,048 925,844
-------------- ---------------
NET ASSETS............................. $ 170,014,245 $ 143,358,115
============== ===============
NET ASSETS CONSIST OF:
Capital paid in........................ $ 170,014,245 $ 166,007,405
Undistributed net investment income.... -- 140,709
Accumulated net realized gain (loss) on
investments.......................... -- (19,777,797)
Net unrealized depreciation in value of
investments.......................... -- (3,012,202)
-------------- ---------------
Total.................................. $ 170,014,245 $ 143,358,115
============== ===============
NET ASSETS:
Class A.............................. $ 167,362,582 $ 140,143,403
Class B.............................. $ 2,651,663 $ 3,214,712
SHARES OUTSTANDING (Note 6):
Class A.............................. 167,362,582 12,825,317
Class B.............................. 2,651,663 294,444
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE - CLASS A.................. $1.00+ $10.93
============== ===============
MAXIMUM OFFERING PRICE PER
SHARE - CLASS A
(Net asset value/.9375)*............. N/A $11.66
============== ===============
NET ASSET VALUE AND OFFERING PRICE PER
SHARE - CLASS B (Note 6)............. $ 1.00 $10.92
============== ===============
</TABLE>
*On purchases of $25,000 or more, the sales charge is reduced.
+Also maximum offering price per share
See notes to financial statements
42
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------
INVESTMENT HIGH
GRADE INCOME YIELD
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities:
At identified cost................... $56,652,863 $426,411,258 $199,573,548
=========== ============ ============
At value (Note 1A)................... $55,335,942 $394,773,251 $182,028,680
Cash................................... 329,667 713,409 669,533
Receivables:
Interest............................. 950,472 10,192,642 4,593,127
Shares sold.......................... 101,034 404,889 98,548
Investment securities sold........... -- 3,498,750 1,323,472
Other assets........................... 64 168,816 59,061
----------- ------------ ------------
Total Assets........................... 56,717,179 409,751,757 188,772,421
----------- ------------ ------------
LIABILITIES
Payables:
Investment securities purchased...... -- 3,473,743 2,486,455
Distributions payable................ 266,953 3,186,098 1,411,020
Shares redeemed...................... 95,534 427,408 334,579
Accrued advisory fees.................. 27,854 247,598 115,353
Accrued expenses....................... 24,044 114,266 72,675
----------- ------------ ------------
Total Liabilities...................... 414,385 7,449,113 4,420,082
----------- ------------ ------------
NET ASSETS............................. $56,302,794 $402,302,644 $184,352,339
=========== ============ ============
NET ASSETS CONSIST OF:
Capital paid in........................ $57,538,229 $428,450,233 $209,949,960
Undistributed net investment income.... 61,400 6,665,116 1,812,407
Accumulated net realized gain (loss) on
investments.......................... 20,086 (1,174,698) (9,865,160)
Net unrealized depreciation in value of
investments.......................... (1,316,921) (31,638,007) (17,544,868)
----------- ------------ ------------
Total.................................. $56,302,794 $402,302,644 $184,352,339
=========== ============ ============
NET ASSETS:
Class A.............................. $48,980,645 $388,542,169 $175,508,661
Class B.............................. $ 7,322,149 $ 13,760,475 $ 8,843,678
SHARES OUTSTANDING (Note 6):
Class A.............................. 5,070,288 99,181,982 35,929,149
Class B.............................. 757,372 3,524,789 1,814,132
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE - CLASS A.................. $9.66 $3.92 $4.88
=========== ============ ============
MAXIMUM OFFERING PRICE PER
SHARE - CLASS A
(Net asset value/.9375)*............. $10.30 $4.18 $5.21
=========== ============ ============
NET ASSET VALUE AND OFFERING PRICE PER
SHARE - CLASS B (Note 6)............. $9.67 $3.90 $4.87
=========== ============ ============
</TABLE>
See notes to financial statements
43
<PAGE>
STATEMENT OF OPERATIONS
FIRST INVESTORS
<TABLE>
- -----------------------------------------------------------------
CASH MANAGEMENT
------------------------
1/1/99 TO 1/1/98 TO
9/30/99 12/31/98
- -----------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Income:
Interest income...................... $ 6,267,166 $ 8,387,063
Dividends (Note 1F).................. -- --
----------- -----------
Total income........................... 6,267,166 8,387,063
----------- -----------
Expenses (Notes 1 and 3):
Advisory fees........................ 613,472 748,196
Distribution plan
expenses-Class A................... -- --
Distribution plan
expenses-Class B................... 12,664 8,093
Shareholder servicing costs.......... 629,929 764,537
Professional fees.................... 35,688 41,853
Custodian fees....................... 49,270 77,439
Reports to shareholders.............. 21,943 40,880
Other expenses....................... 36,654 36,376
----------- -----------
Total expenses......................... 1,399,620 1,717,374
Less: Expenses waived or assumed....... (414,285) (513,318)
Custodian fees paid indirectly.... -- --
----------- -----------
Net expenses........................... 985,335 1,204,056
----------- -----------
Net investment income.................. 5,281,831 7,183,007
----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 2):
Net realized gain (loss) on
investments.......................... -- 962
Net unrealized depreciation of
investments.......................... -- --
----------- -----------
Net gain (loss) on investments......... -- 962
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............ $ 5,281,831 $ 7,183,969
=========== ===========
</TABLE>
See notes to financial statements
44
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------
GOVERNMENT INVESTMENT GRADE INCOME HIGH YIELD
----------- ---------------- ----------- -----------
10/1/98 TO 10/1/98 TO 10/1/98 TO 10/1/98 TO
9/30/99 9/30/99 9/30/99 9/30/99
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest income...................... $10,461,680 $ 3,826,935 $42,852,042 $20,046,554
Dividends (Note 1F).................. -- -- 3,579,328 1,256,891
----------- ---------------- ----------- -----------
Total income........................... 10,461,680 3,826,935 46,431,370 21,303,445
----------- ---------------- ----------- -----------
Expenses (Notes 1 and 3):
Advisory fees........................ 1,552,113 423,414 3,121,524 1,994,143
Distribution plan
expenses-Class A................... 400,309 149,689 1,234,576 571,559
Distribution plan
expenses-Class B................... 30,974 65,580 116,392 94,087
Shareholder servicing costs.......... 339,310 135,311 819,655 495,183
Professional fees.................... 51,618 15,888 69,015 48,897
Custodian fees....................... 26,801 10,275 48,066 35,347
Reports to shareholders.............. 20,302 7,759 75,794 40,852
Other expenses....................... 52,703 18,646 29,844 21,979
----------- ---------------- ----------- -----------
Total expenses......................... 2,474,130 826,562 5,514,866 3,302,047
Less: Expenses waived or assumed....... (600,530) (156,903) -- (495,021)
Custodian fees paid indirectly.... (22,146) (4,562) (6,835) (9,542)
----------- ---------------- ----------- -----------
Net expenses........................... 1,851,454 665,097 5,508,031 2,797,484
----------- ---------------- ----------- -----------
Net investment income.................. 8,610,226 3,161,838 40,923,339 18,505,961
----------- ---------------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 2):
Net realized gain (loss) on
investments.......................... (212,801) 43,933 (807,500) (85,213)
Net unrealized depreciation of
investments.......................... (7,728,801) (4,531,517) (26,750,866) (12,659,742)
----------- ---------------- ----------- -----------
Net gain (loss) on investments......... (7,941,602) (4,487,584) (27,558,366) (12,744,955)
----------- ---------------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............ $ 668,624 $ (1,325,746) $13,364,973 $ 5,761,006
=========== ================ =========== ===========
</TABLE>
45
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FIRST INVESTORS
<TABLE>
- ---------------------------------------------------------------------------------
CASH MANAGEMENT
----------------------------------------
1/1/99 TO 1/1/98 TO 1/1/97 TO
9/30/99 12/31/98 12/31/97
- --------------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income................ $ 5,281,831 $ 7,183,007 $ 6,518,603
Net realized gain (loss) on
investments........................ -- 962 (395)
Net unrealized appreciation
(depreciation) of investments...... -- -- --
------------ ------------ ------------
Net increase (decrease) in net
assets resulting from
operations....................... 5,281,831 7,183,969 6,518,208
------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income-Class A........ (5,236,156) (7,150,694) (6,508,537)
Net investment income-Class B........ (45,675) (32,313) (9,671)
Net realized gains-Class A........... -- (952) --
Net realized gains-Class B........... -- (10) --
------------ ------------ ------------
Total distributions................ (5,281,831) (7,183,969) (6,518,208)
------------ ------------ ------------
SHARE TRANSACTIONS*
Class A:
Proceeds from shares sold............ 207,642,217 275,726,040 233,709,809
Reinvestment of distributions........ 4,502,460 7,004,723 6,358,311
Cost of shares redeemed.............. (205,252,197) (261,823,090) (234,306,443)
------------ ------------ ------------
6,892,480 20,907,673 5,761,677
------------ ------------ ------------
Class B:
Proceeds from shares sold............ 2,740,803 2,414,995 743,487
Reinvestment of distributions........ 36,167 30,219 8,777
Cost of shares redeemed.............. (1,619,923) (1,217,975) (591,831)
------------ ------------ ------------
1,157,047 1,227,239 160,433
------------ ------------ ------------
Net increase (decrease) from share
transactions..................... 8,049,527 22,134,912 5,922,110
------------ ------------ ------------
Net increase (decrease) in net
assets........................... 8,049,527 22,134,912 5,922,110
NET ASSETS
Beginning of period.................. 161,964,718 139,829,806 133,907,696
------------ ------------ ------------
End of period +...................... $170,014,245 $161,964,718 $139,829,806
============ ============ ============
+Includes undistributed net
investment income of............... $ -- $ -- $ --
============ ============ ============
*SHARES ISSUED AND REDEEMED
Class A:
Sold................................. 207,642,217 275,726,040 233,709,809
Issued for distributions
reinvested......................... 4,502,460 7,004,723 6,358,311
Redeemed............................. (205,252,197) (261,823,090) (234,306,443)
------------ ------------ ------------
Net increase (decrease) in Class A
shares outstanding................. 6,892,480 20,907,673 5,761,677
============ ============ ============
Class B:
Sold................................. 2,740,803 2,414,995 743,487
Issued for distributions
reinvested......................... 36,167 30,219 8,777
Redeemed............................. (1,619,923) (1,217,975) (591,831)
------------ ------------ ------------
Net increase in Class B shares
outstanding........................ 1,157,047 1,227,239 160,433
============ ============ ============
</TABLE>
See notes to financial statements
46
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------
GOVERNMENT INVESTMENT GRADE
---------------------------------------- -------------------------------------
10/1/98 TO 1/1/98 TO 1/1/97 TO 10/1/98 TO 1/1/98 TO 1/1/97 TO
9/30/99 9/30/98 12/31/97 9/30/99 9/30/98 12/31/97
- --------------------------------------- ------------ ------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income.................. $ 8,610,226 $ 7,106,026 $ 10,923,827 $ 3,161,838 $ 2,251,025 $ 2,902,275
Net realized gain (loss) on
investments.......................... (212,801) 1,183,567 639,617 43,933 332,824 145,546
Net unrealized appreciation
(depreciation) of investments........ (7,728,801) 1,409,717 2,599,700 (4,531,517) 1,502,946 1,059,248
------------ ------------ ------------ ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations.......... 668,624 9,699,310 14,163,144 (1,325,746) 4,086,795 4,107,069
------------ ------------ ------------ ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income-Class A.......... (8,322,989) (6,724,124) (10,429,404) (2,852,022) (2,031,526) (2,740,532)
Net investment income-Class B.......... (146,529) (81,974) (87,929) (329,267) (157,556) (148,190)
Net realized gains-Class A............. -- -- -- (315,829) -- (145,340)
Net realized gains-Class B............. -- -- -- (34,277) -- (10,710)
------------ ------------ ------------ ----------- ----------- -----------
Total distributions.................. (8,469,518) (6,806,098) (10,517,333) (3,531,395) (2,189,082) (3,044,772)
------------ ------------ ------------ ----------- ----------- -----------
SHARE TRANSACTIONS*
Class A:
Proceeds from shares sold............ 15,464,882 9,525,532 5,908,414 11,094,669 7,654,519 6,253,282
Reinvestment of distributions........ 6,905,530 4,926,021 8,585,051 2,502,015 1,382,541 2,236,906
Cost of shares redeemed.............. (35,078,160) (26,851,304) (34,742,760) (10,073,591) (6,018,074) (10,870,685)
------------ ------------ ------------ ----------- ----------- -----------
(12,707,748) (12,399,751) (20,249,295) 3,523,093 3,018,986 (2,380,497)
------------ ------------ ------------ ----------- ----------- -----------
Class B:
Proceeds from shares sold............ 1,200,503 1,211,035 771,873 3,650,939 2,122,648 1,206,438
Reinvestment of distributions........ 122,997 61,087 77,395 270,893 97,513 110,137
Cost of shares redeemed.............. (1,012,485) (255,377) (293,938) (1,308,933) (438,399) (402,070)
------------ ------------ ------------ ----------- ----------- -----------
311,015 1,016,745 555,330 2,612,899 1,781,762 914,505
------------ ------------ ------------ ----------- ----------- -----------
Net increase (decrease) from share
transactions...................... (12,396,733) (11,383,006) (19,693,965) 6,135,992 4,800,748 (1,465,992)
------------ ------------ ------------ ----------- ----------- -----------
Net increase (decrease) in net
assets............................ (20,197,627) (8,489,794) (16,048,154) 1,278,851 6,698,461 (403,695)
NET ASSETS
Beginning of period.................. 163,555,742 172,045,536 188,093,690 55,023,943 48,325,482 48,729,177
------------ ------------ ------------ ----------- ----------- -----------
End of period +...................... $143,358,115 $163,555,742 $172,045,536 $56,302,794 $55,023,943 $48,325,482
============ ============ ============ =========== =========== ===========
+Includes undistributed net
investment income of............... $ 140,709 $ 317,681 $ 17,753 $ 61,400 $ 80,851 $ 18,908
============ ============ ============ =========== =========== ===========
*SHARES ISSUED AND REDEEMED
Class A:
Sold................................. 1,370,344 840,674 532,781 1,100,406 746,328 628,030
Issued for distributions
reinvested......................... 617,466 435,243 772,790 247,887 135,264 224,425
Redeemed............................. (3,133,789) (2,371,443) (3,132,875) (1,001,822) (587,942) (1,095,164)
------------ ------------ ------------ ----------- ----------- -----------
Net increase (decrease) in Class A
shares outstanding................. (1,145,979) (1,095,526) (1,827,304) 346,471 293,650 (242,709)
============ ============ ============ =========== =========== ===========
Class B:
Sold................................. 107,492 106,792 69,580 361,388 206,853 120,858
Issued for distributions
reinvested......................... 11,013 5,403 6,967 26,886 9,529 11,021
Redeemed............................. (90,301) (22,630) (26,527) (130,878) (42,765) (40,307)
------------ ------------ ------------ ----------- ----------- -----------
Net increase in Class B shares
outstanding........................ 28,204 89,565 50,020 257,396 173,617 91,572
============ ============ ============ =========== =========== ===========
</TABLE>
See notes to financial statements
47
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (continued)
FIRST INVESTORS
<TABLE>
- ---------------------------------------------------------------------------------
INCOME
----------------------------------------
10/1/98 TO 1/1/98 TO 1/1/97 TO
9/30/99 9/30/98 12/31/97
- --------------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income.................. $ 40,923,339 $ 28,808,714 $ 37,617,154
Net realized gain (loss) on
investments.......................... (807,500) 6,072,547 7,801,754
Net unrealized appreciation
(depreciation) of investments........ (26,750,866) (32,899,878) 7,327,698
------------ ------------ ------------
Net increase in net assets resulting
from operations.................... 13,364,973 1,981,383 52,746,606
------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income-Class A.......... (38,097,881) (28,271,152) (37,571,202)
Net investment income-Class B.......... (1,015,407) (427,881) (367,759)
------------ ------------ ------------
Total distributions.................. (39,113,288) (28,699,033) (37,938,961)
------------ ------------ ------------
SHARE TRANSACTIONS*
Class A:
Proceeds from shares sold............ 28,824,653 19,191,549 16,851,806
Reinvestment of distributions........ 27,082,488 17,811,002 26,312,729
Cost of shares redeemed.............. (52,103,604) (39,843,145) (50,837,153)
------------ ------------ ------------
3,803,537 (2,840,594) (7,672,618)
------------ ------------ ------------
Class B:
Proceeds from shares sold............ 7,314,849 4,069,154 2,600,932
Reinvestment of distributions........ 574,750 222,517 234,762
Cost of shares redeemed.............. (2,187,378) (634,541) (543,250)
------------ ------------ ------------
5,702,221 3,657,130 2,292,444
------------ ------------ ------------
Net increase (decrease) from share
transactions..................... 9,505,758 816,536 (5,380,174)
------------ ------------ ------------
Net increase (decrease) in net
assets........................... (16,242,557) (25,901,114) 9,427,471
NET ASSETS
Beginning of period.................. 418,545,201 444,446,315 435,018,844
------------ ------------ ------------
End of period +...................... $402,302,644 $418,545,201 $444,446,315
============ ============ ============
+Includes undistributed net
investment income of............... $ 6,665,116 $ 4,855,065 $ 4,745,384
============ ============ ============
*SHARES ISSUED AND REDEEMED
Class A:
Sold................................. 6,963,528 4,340,514 3,881,531
Issued for distributions
reinvested......................... 6,527,820 4,026,825 6,059,302
Redeemed............................. (12,582,818) (9,003,279) (11,715,604)
------------ ------------ ------------
Net increase (decrease) in Class A
shares outstanding................. 908,530 (635,940) (1,774,771)
============ ============ ============
Class B:
Sold................................. 1,776,869 928,514 599,023
Issued for distributions
reinvested......................... 139,057 50,572 54,064
Redeemed............................. (534,681) (144,214) (124,769)
------------ ------------ ------------
Net increase in Class B shares
outstanding........................ 1,381,245 834,872 528,318
============ ============ ============
</TABLE>
See notes to financial statements
48
<PAGE>
<TABLE>
- ---------------------------------------------------------------------------------
HIGH YIELD
----------------------------------------
10/1/98 TO 1/1/98 TO 1/1/97 TO
9/30/99 9/30/98 12/31/97
- --------------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income.................. $ 18,505,961 $ 13,476,215 $ 17,677,606
Net realized gain (loss) on
investments.......................... (85,213) 2,887,542 713,528
Net unrealized appreciation
(depreciation) of investments........ (12,659,742) (16,132,114) 5,114,885
------------ ------------ ------------
Net increase in net assets resulting
from operations.................... 5,761,006 231,643 23,506,019
------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income-Class A.......... (16,841,063) (12,837,075) (18,059,105)
Net investment income-Class B.......... (773,936) (469,260) (449,764)
------------ ------------ ------------
Total distributions.................. (17,614,999) (13,306,335) (18,508,869)
------------ ------------ ------------
SHARE TRANSACTIONS*
Class A:
Proceeds from shares sold............ 10,387,736 13,015,941 18,043,474
Reinvestment of distributions........ 12,316,084 8,343,126 12,110,096
Cost of shares redeemed.............. (29,557,806) (23,733,242) (28,096,512)
------------ ------------ ------------
(6,853,986) (2,374,175) 2,057,058
------------ ------------ ------------
Class B:
Proceeds from shares sold............ 2,623,986 3,149,731 3,582,510
Reinvestment of distributions........ 478,671 232,619 255,493
Cost of shares redeemed.............. (2,282,797) (1,125,496) (1,007,361)
------------ ------------ ------------
819,860 2,256,854 2,830,642
------------ ------------ ------------
Net increase (decrease) from share
transactions...................... (6,034,126) (117,321) 4,887,700
------------ ------------ ------------
Net increase (decrease) in net
assets............................ (17,888,119) (13,192,013) 9,884,850
NET ASSETS
Beginning of period.................. 202,240,458 215,432,471 205,547,621
------------ ------------ ------------
End of period +...................... $184,352,339 $202,240,458 $215,432,471
============ ============ ============
+Includes undistributed net
investment income of............... $ 1,812,407 $ 921,445 $ 751,565
============ ============ ============
*SHARES ISSUED AND REDEEMED
Class A:
Sold................................. 2,010,671 2,358,746 3,324,677
Issued for distributions
reinvested......................... 2,384,943 1,516,355 2,233,259
Redeemed............................. (5,739,513) (4,319,040) (5,175,518)
------------ ------------ ------------
Net increase (decrease) in Class A
shares outstanding................. (1,343,899) (443,939) 382,418
============ ============ ============
Class B:
Sold................................. 508,216 571,087 661,609
Issued for distributions
reinvested......................... 92,865 42,398 46,771
Redeemed............................. (441,537) (206,051) (185,884)
------------ ------------ ------------
Net increase in Class B shares
outstanding........................ 159,544 407,434 522,496
============ ============ ============
</TABLE>
See notes to financial statements
49
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES--First Investors Cash Management Fund, Inc.
(Cash Management Fund), First Investors Government Fund, Inc. ("Government
Fund"), First Investors Investment Grade Fund ("Investment Grade Fund"), a
series of First Investors Series Fund ("Series Fund"), First Investors Fund For
Income, Inc. ("Income Fund") and First Investors High Yield Fund, Inc. ("High
Yield 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 the assets, liabilities and operations of the Fund.
Series Fund offers four additional series which are not included in this report.
The objective of each Fund is as follows:
CASH MANAGEMENT FUND seeks to earn a high rate of current income consistent with
the preservation of capital and maintenance of liquidity.
GOVERNMENT FUND seeks to achieve a significant level of current income which is
consistent with security and liquidity of principal.
INVESTMENT GRADE FUND seeks to generate a maximum level of income consistent
with investment in investment grade debt securities.
INCOME FUND primarily seeks high current income and secondarily seeks capital
appreciation.
HIGH YIELD FUND primarily seeks high current income and secondarily seeks
capital appreciation.
On March 19, 1998, the Boards of Directors/Trustees of the Government Fund,
Series Fund, Income Fund and High Yield Fund approved a change in the fiscal
year-end of each of the above listed Funds to September 30. On September 29,
1999, the Board of Directors of the Cash Management Fund approved a change in
the Fund's fiscal year to September 30. Previously, the fiscal year-end was
December 31 for each of the Funds.
A. Security Valuation--The Cash Management Fund values its portfolio securities
in accordance with the amortized cost method of valuation under Rule 2a-7 under
the 1940 Act. Amortized cost is an approximation of market value of an
instrument, whereby the difference between its acquisition cost and market value
at maturity is amortized on a straight-line basis over the remaining life of the
instrument. The effect of changes in the market value of a security as a result
of fluctuating interest rates is not taken into account and thus the amortized
cost method of valuation may result in the value of a security being higher or
lower than its actual market value. With respect to each of the other Funds,
except as provided below, a security listed or traded on an exchange or the
Nasdaq Stock
50
<PAGE>
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. The pricing
service uses quotations obtained from investment dealers or brokers, information
with respect to market transactions in comparable securities, and other
available information in determining values. Short-term debt securities that
mature in 60 days or less are valued at amortized cost. Securities for which
market quotations are not readily available, and any other assets are valued on
a consistent basis at fair value as determined in good faith by or under the
supervision of the Fund's officers in a manner specifically authorized by the
Board of Directors/Trustees.
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, 1999, capital
loss carryovers were as follows:
<TABLE>
Year Capital Loss Carryovers Expire
--------------------------------------------------------------------------------
Fund Total 2001 2002 2003 2004 2005 2007
- --------------------------------------- ----------- ---------- ----------- -------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Government............................. $19,777,797 $ -- $19,360,488 $ -- $ 204,508 $ -- $212,801
Income................................. 1,174,698 -- 254,689 -- -- 112,509 807,500
High Yield............................. 9,865,160 1,762,042 135,416 593,956 4,405,482 2,883,051 85,213
</TABLE>
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 generally accepted
accounting principles. These differences are primarily due to differing
treatments for mortgage-backed securities, capital loss carryforwards and
post-October capital losses.
51
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
D. Use of Estimates--The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expense during the accounting period. Actual results could differ
from those estimates.
E. Expense Allocation--Expenses directly charged or attributable to a Fund are
paid from the assets of that Fund. General expenses of Series Fund are allocated
among and charged to the assets of each Fund in 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 of 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. Shares of stock
received in lieu of cash dividends on certain preferred stock holdings of Income
Fund and High Yield Fund are recognized as dividend income and recorded at the
market value of the shares received. During the year ended September 30, 1999,
Income Fund and High Yield Fund recognized $1,422,769 and $567,173,
respectively, from these taxable "pay-in-kind" distributions. Interest income
and estimated expenses are accrued daily. For the year ended September 30, 1999,
the Bank of New York, custodian for the Funds, has provided total credits in the
amount of $43,085 against custodian charges based on the uninvested cash
balances of the Funds.
2. SECURITIES TRANSACTIONS--For the year ended September 30, 1999, purchases and
sales (including pay-downs on Government Fund) of securities and long-term U.S.
Government obligations (excluding U.S. Treasury bills, short-term U.S.
Government obligations and short-term securities) were as follows:
<TABLE>
<CAPTION>
Long-Term
U.S. Government
Securities Obligations
-------------------------- --------------------------
<S> <C> <C> <C> <C>
Cost of Proceeds Cost of Proceeds
Fund Purchases from Sales Purchases from Sales
- --------------------------------------- ------------ ------------ ------------ ------------
Government............................. $ -- $ -- $148,291,302 $164,485,090
Investment Grade....................... 9,397,195 5,630,516 6,128,359 3,922,985
Income................................. 121,600,192 111,671,313 -- --
High Yield............................. 55,464,994 61,160,555 -- --
</TABLE>
52
<PAGE>
At September 30, 1999, aggregate cost and net unrealized appreciation
(depreciation) of securities for federal income tax purposes were as follows:
<TABLE>
<CAPTION>
Gross Gross Net
Aggregate Unrealized Unrealized Unrealized
Fund Cost Appreciation Depreciation Depreciation
- ---- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Government............................. $145,312,870 $ 204,972 $ 3,217,174 $ (3,012,202)
Investment Grade....................... 56,652,863 298,837 1,615,758 (1,316,921)
Income................................. 426,411,258 8,067,940 39,705,947 (31,638,007)
High Yield............................. 199,573,548 3,690,145 21,235,013 (17,544,868)
</TABLE>
3. ADVISORY FEES 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 Financial Savings
Bank, S.L.A. ("FFS"), custodian of the Funds' Individual Retirement Accounts.
Directors/ trustees of the Funds who are not "interested persons" of the Funds
as defined in the 1940 Act are remunerated by the Funds. For the year ended
September 30, 1999, total directors/trustees fees accrued by the Funds amounted
to $43,000.
The Investment Advisory Agreements provide as compensation to FIMCO an annual
fee, payable monthly, at the following rates:
CASH MANAGEMENT FUND--.50% of the Funds average daily net assets.
GOVERNMENT AND HIGH YIELD FUNDS--1% on the first $200 million of each 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 35% and 40%, respectively, of the 1%
annual fee on the first $200 million of Government Fund's average daily net
assets for the periods October 1, 1998 through December 31, 1998 and January 1,
1999 through September 30, 1999. For the year ended September 30, 1999, FIMCO
also has voluntarily waived 25% of the 1% annual fee on the first $200 million
of High Yield Fund's average daily net assets.
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 assets over $750 million. FIMCO waived 20% of the .75%
annual fee on the first $300 million of the Fund's average daily net assets for
the year ended September 30, 1999.
53
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
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, 1999, total advisory fees accrued to FIMCO by
the Funds were $7,704,666 of which $1,180,234 was waived. In addition, FIMCO
assumed $483,339 of the Cash Management and Investment Grade Funds expenses.
For the year ended September 30, 1999, FIC, as underwriter, received $1,578,668
in commissions from the sale of shares of the Funds after allowing $210,998 to
other dealers. Shareholder servicing costs included $1,645,388 in transfer agent
fees accrued to ADM and $367,777 in IRA custodian fees accrued to FFS. For the
nine months ended September 30, 1999, FIC received contingent deferred sales
charges from the redemption of Class B shares of the Cash Management Fund in the
amount of $19,357. In addition, Class B shares are subject to distribution plan
fees which are payable monthly to FIC at the annual rate of up to 1% of the
Class B shares average daily net assets.
For the nine months ended September 30, 1999, FIC received $9,498 in
distribution plan fees from the Cash Management Fund, after waiving $3,166 (or
25% of the fee). Pursuant to Distribution Plans adopted under Rule 12b-1 of the
1940 Act, each of the other Funds is authorized to pay FIC a fee up to .30% of
the average daily net assets of the Class A shares and 1% of the average daily
net assets of the Class B shares on an annual basis each year, payable monthly.
The fee consists of a distribution fee and a service fee. The service fee is
paid for the ongoing servicing of clients who are shareholders of the Funds.
4. RULE 144A SECURITIES--Under Rule 144A, certain restricted securities are
exempt from the registration requirements of the Securities Act of 1933 and may
only be sold to qualified institutional investors. At September 30, 1999, Income
Fund held fifteen 144A securities with an aggregate value of $36,792,755
representing 9.1% of the Fund's net assets and High Yield Fund held nine 144A
securities with an aggregate value of $9,313,840 representing 5.1% of the Fund's
net assets. These securities are valued as set forth in Note 1A.
5. CONCENTRATION OF CREDIT RISK--The investments of Income Fund and High Yield
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
the holders of
54
<PAGE>
high yielding securities, because such securities are generally unsecured and
are often subordinated to other creditors of the issuer.
6. CAPITAL--At September 30, 1999, paid-in capital of the Cash Management Fund
amounted to $170,014,245. The Fund sells two classes of shares, Class A and
Class B, each without an initial sales charge. Class B shares may only be
acquired through an exchange of Class B shares from another First Investors
eligible fund or through the reinvestment of dividends on Class B shares and are
generally subject to a contingent deferred sales charge at the rate of 4% in the
first year and declining to 0% over a six-year period, which is payable to FIC
as underwriter of the Funds. Each of the other Funds also sells two classes of
shares, Class A and Class B, each with a public offering price that reflects
different sales charges and expense levels. Class A shares are sold with an
initial sales charge of up to 6.25% of the amount invested and together with the
Class B shares are subject to distribution plan fees as described in Note 3.
Class B shares are sold without an initial sales charge, but are generally
subject to a contingent deferred sales charge which declines in steps from 4% to
0% over a six-year period. Class B shares automatically convert into Class A
shares after eight years. Realized and unrealized gains or losses, investment
income and expenses (other than distribution plan fees) are allocated daily to
each class of shares based upon the relative proportion of net assets to each
class. Of the 5,000,000,000 shares originally authorized by the Cash Management
Fund, the Fund has designated 2,500,000,000 shares as Class A and 2,500,000,000
shares as Class B. Of the 1,000,000,000 shares originally authorized by both
Government Fund and Income Fund, each Fund has designated 500,000,000 shares as
Class A and 500,000,000 as Class B. Series Fund, of which Investment Grade Fund
is a series, has established an unlimited number of shares of beneficial
interest for both Class A and Class B shares. Of the 500,000,000 shares
originally authorized by High Yield Fund, the Fund has designated 250,000,000
shares as Class A and 250,000,000 shares as Class B.
7. SUBSEQUENT EVENT--The Investment Grade Fund declared a distribution of net
realized capital gains in the amount of $0.01 per share to shareholders of
record as of October 29, 1999 payable November 10, 1999.
55
<PAGE>
FINANCIAL HIGHLIGHTS
FIRST INVESTORS
The following table sets forth the per share operating performance data for a
share, total return, ratios to average net assets and other supplemental data
for each period indicated.
<TABLE>
- ----------------------------------------------------------------------------------------------------------
P E R S H A R E D A T A
-----------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
---------------------------------------
NET REALIZED LESS DISTRIBUTIONS
NET ASSET AND FROM
VALUE UNREALIZED ----------------------
--------- NET GAIN (LOSS) TOTAL FROM NET NET
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT REALIZED TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAIN DISTRIBUTIONS
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CASH MANAGEMENT
CLASS A
1994(d)........ $ 1.00 $ .036 $ -- $ .036 $ .036 $ -- $ .036
1995(d)........ 1.00 .053 -- .053 .053 -- .053
1996(d)........ 1.00 .048 -- .048 .048 -- .048
1997(d)........ 1.00 .049 -- .049 .049 -- .049
1998(d)........ 1.00 .048 -- .048 .048 -- .048
1999(c)........ 1.00 .032 -- .032 .032 -- .032
CLASS B
1995(b)........ $ 1.00 $ .044 $ -- $ .044 $ .044 $ -- $ .044
1996(d)........ 1.00 .040 -- .040 .040 -- .040
1997(d)........ 1.00 .041 -- .041 .041 -- .041
1998(d)........ 1.00 .041 -- .041 .041 -- .041
1999(c)........ 1.00 .027 -- .027 .027 -- .027
- ----------------------------------------------------------------------------------------------------------
GOVERNMENT
CLASS A
1994(d)........ $ 11.55 $ .69 $ (1.06) $ (.37) $ .68 $ -- $ .68
1995(d)........ 10.50 .71 .82 1.53 .72 -- .72
1996(d)........ 11.31 .68 (.30) .38 .64 -- .64
1997(d)........ 11.05 .69 .21 .90 .66 -- .66
1998(a)........ 11.29 .49 .18 .67 .47 -- .47
1999(e)........ 11.49 .63 (.58) .05 .61 -- .61
CLASS B
1995(b)........ $ 10.52 $ .63 $ .80 $ 1.43 $ .64 $ -- $ .64
1996(d)........ 11.31 .60 (.31) .29 .56 -- .56
1997(d)........ 11.04 .61 .21 .82 .59 -- .59
1998(a)........ 11.27 .42 .19 .61 .40 -- .40
1999(e)........ 11.48 .54 (.57) (.03) .53 -- .53
- ----------------------------------------------------------------------------------------------------------
</TABLE>
56
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------
R A T I O S / S U P P L E M E N T A L D A T A
---------------------------------------------------------------------------------
---------
RATIO TO AVERAGE NET
ASSETS BEFORE
RATIO TO AVERAGE EXPENSES
NET NET ASSETS++ WAIVED OR ASSUMED
NET ASSET ASSETS --------------------- ---------------------
VALUE TOTAL END OF NET NET PORTFOLIO
--------- RETURN PERIOD INVESTMENT INVESTMENT TURNOVER
END * (IN EXPENSES INCOME EXPENSES INCOME RATE
OF PERIOD (%) MILLIONS) (%) (%) (%) (%) (%)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CASH MANAGEMENT
CLASS A
1994(d)........ $ 1.00 3.69 $ 128 .70 3.72 1.15 3.27 --
1995(d)........ 1.00 5.42 129 .70 5.29 1.18 4.81 --
1996(d)........ 1.00 4.89 134 .70 4.78 1.19 4.29 --
1997(d)........ 1.00 4.98 140 .77 4.87 1.19 4.45 --
1998(d)........ 1.00 4.92 160 .80 5.00 1.14 4.66 --
1999(c)........ 1.00 3.29 158 .80+ 4.33+ 1.14+ 3.99+ --
CLASS B
1995(b)........ $ 1.00 4.46 $ .1 1.45+ 4.54+ 1.93+ 4.06+ --
1996(d)........ 1.00 4.11 .1 1.45 4.03 1.94 3.54 --
1997(d)........ 1.00 4.20 .3 1.52 4.12 1.94 3.70 --
1998(d)........ 1.00 4.14 1 1.55 4.25 1.89 3.91 --
1999(c)........ 1.00 2.72 2 1.55+ 3.58+ 1.89+ 3.24+ --
- -------------------------------------------------------------------------------------------------------------
GOVERNMENT
CLASS A
1994(d)........ $ 10.50 (3.22) $ 219 1.40 6.31 1.60 6.11 260
1995(d)........ 11.31 14.98 217 1.38 6.50 1.61 6.27 163
1996(d)........ 11.05 3.51 187 1.39 6.15 1.63 5.90 121
1997(d)........ 11.29 8.40 170 1.34 6.16 1.64 5.86 134
1998(a)........ 11.49 6.03 161 1.28+ 5.71+ 1.62+ 5.37+ 62
1999(e)........ 10.93 .50 140 1.19 5.58 1.57 5.20 99
CLASS B
1995(b)........ $ 11.31 13.94 $ 1 2.13+ 5.75+ 2.37+ 5.51+ 163
1996(d)........ 11.04 2.73 1 2.09 5.45 2.34 5.20 121
1997(d)........ 11.27 7.60 2 2.04 5.46 2.34 5.16 134
1998(a)........ 11.48 5.54 3 1.98+ 5.01+ 2.32+ 4.67+ 62
1999(e)........ 10.92 (.25) 3 1.93 4.84 2.31 4.46 99
- -------------------------------------------------------------------------------------------------------------
</TABLE>
57
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
FIRST INVESTORS
<TABLE>
- ----------------------------------------------------------------------------------------------------------
P E R S H A R E D A T A
-----------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
---------------------------------------
NET REALIZED LESS DISTRIBUTIONS
NET ASSET AND FROM
VALUE UNREALIZED ----------------------
--------- NET GAIN (LOSS) TOTAL FROM NET NET
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT REALIZED TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAIN DISTRIBUTIONS
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT GRADE
CLASS A
1994(d)........ $ 10.33 $ .62 $ (1.09) $ (.47) $ .62 $ -- $ .62
1995(d)........ 9.24 .64 1.10 1.74 .64 -- .64
1996(d)........ 10.34 .62 (.39) .23 .62 .02 .64
1997(d)........ 9.93 .62 .25 .87 .61 .03 .64
1998(a)........ 10.16 .46 .36 .82 .45 -- .45
1999(e)........ 10.53 .57 (.79) (.22) .58 .07 .65
CLASS B
1995(b)........ $ 9.26 $ .54 $ 1.10 $ 1.64 $ .55 $ -- $ .55
1996(d)........ 10.35 .55 (.39) .16 .55 .02 .57
1997(d)........ 9.94 .55 .26 .81 .55 .03 .58
1998(a)........ 10.17 .41 .36 .77 .40 -- .40
1999(e)........ 10.54 .50 (.79) (.29) .51 .07 .58
- ----------------------------------------------------------------------------------------------------------
INCOME
CLASS A
1994(d)........ $ 4.17 $ .37 $ (.35) $ .02 $ .38 $ -- $ .38
1995(d)........ 3.81 .38 .30 .68 .36 -- .36
1996(d)........ 4.13 .39 .14 .53 .37 -- .37
1997(d)........ 4.29 .38 .14 .52 .38 -- .38
1998(a)........ 4.43 .29 (.26) .03 .29 -- .29
1999(e)........ 4.17 .40 (.27) .13 .38 -- .38
CLASS B
1995(b)........ $ 3.81 $ .31 $ .33 $ .64 $ .32 $ -- $ .32
1996(d)........ 4.13 .38 .12 .50 .35 -- .35
1997(d)........ 4.28 .34 .15 .49 .35 -- .35
1998(a)........ 4.42 .26 (.26) -- .26 -- .26
1999(e)........ 4.16 .37 (.27) .10 .36 -- .36
- ----------------------------------------------------------------------------------------------------------
</TABLE>
58
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------
R A T I O S / S U P P L E M E N T A L D A T A
---------------------------------------------------------------------------------
---------
RATIO TO AVERAGE NET
ASSETS BEFORE
RATIO TO AVERAGE EXPENSES
NET NET ASSETS++ WAIVED OR ASSUMED
NET ASSET ASSETS --------------------- ---------------------
VALUE TOTAL END OF NET NET PORTFOLIO
--------- RETURN PERIOD INVESTMENT INVESTMENT TURNOVER
END * (IN EXPENSES INCOME EXPENSES INCOME RATE
OF PERIOD (%) MILLIONS) (%) (%) (%) (%) (%)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT GRADE
CLASS A
1994(d)........ $ 9.24 (4.62) $ 46 .95 6.46 1.47 5.94 17
1995(d)........ 10.34 19.40 50 1.10 6.43 1.43 6.10 27
1996(d)........ 9.93 2.39 46 1.11 5.96 1.42 5.65 22
1997(d)........ 10.16 9.14 45 1.11 6.18 1.43 5.86 34
1998(a)........ 10.53 8.29 50 1.10+ 6.02+ 1.40+ 5.72+ 49
1999(e)........ 9.66 (2.21) 49 1.10 5.70 1.38 5.42 18
CLASS B
1995(b)........ $ 10.35 18.08 $ 1 1.80+ 5.73+ 2.13+ 5.40+ 27
1996(d)........ 9.94 1.64 2 1.81 5.26 2.12 4.95 22
1997(d)........ 10.17 8.40 3 1.81 5.48 2.13 5.16 34
1998(a)........ 10.54 7.73 5 1.80+ 5.32+ 2.10+ 5.02+ 49
1999(e)........ 9.67 (2.90) 7 1.80 5.00 2.08 4.72 18
- -------------------------------------------------------------------------------------------------------------
INCOME
CLASS A
1994(d)........ $ 3.81 .58 $ 401 1.22 9.34 N/A N/A 39
1995(d)........ 4.13 18.54 425 1.18 9.53 N/A N/A 33
1996(d)........ 4.29 13.40 432 1.16 9.27 N/A N/A 30
1997(d)........ 4.43 12.62 439 1.15 8.63 N/A N/A 45
1998(a)........ 4.17 .49 410 1.27+ 8.68+ N/A N/A 28
1999(e)........ 3.92 3.13 389 1.29 9.71 N/A N/A 28
CLASS B
1995(b)........ $ 4.13 17.46 $ 2 1.92+ 8.78+ N/A N/A 33
1996(d)........ 4.28 12.51 3 1.86 8.57 N/A N/A 30
1997(d)........ 4.42 11.95 6 1.85 7.93 N/A N/A 45
1998(a)........ 4.16 (.06) 9 1.97+ 7.98+ N/A N/A 28
1999(e)........ 3.90 2.29 14 1.99 9.01 N/A N/A 28
- -------------------------------------------------------------------------------------------------------------
</TABLE>
59
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
FIRST INVESTORS
<TABLE>
- ----------------------------------------------------------------------------------------------------------
P E R S H A R E D A T A
-----------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
---------------------------------------
NET REALIZED LESS DISTRIBUTIONS
NET ASSET AND FROM
VALUE UNREALIZED ----------------------
--------- NET GAIN (LOSS) TOTAL FROM NET NET
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT REALIZED TOTAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAIN DISTRIBUTIONS
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
HIGH YIELD
CLASS A
1994(d)........ $ 5.30 $ .48 $ (.46) $ .02 $ .48 $ -- $ .48
1995(d)........ 4.84 .47 .39 .86 .48 -- .48
1996(d)........ 5.22 .47 .20 .67 .49 -- .49
1997(d)........ 5.40 .46 .15 .61 .48 -- .48
1998(a)........ 5.53 .35 (.34) .01 .34 -- .34
1999(e)........ 5.20 .48 (.34) .14 .46 -- .46
CLASS B
1995(b)........ $ 4.84 $ .42 $ .40 $ .82 $ .43 $ -- $ .43
1996(d)........ 5.23 .44 .18 .62 .45 -- .45
1997(d)........ 5.40 .43 .14 .57 .44 -- .44
1998(a)........ 5.53 .32 (.34) (.02) .32 -- .32
1999(e)........ 5.19 .44 (.34) .10 .42 -- .42
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* Calculated without sales charges
+ Annualized
++ Net of expenses waived or assumed (Note 3)
(a) For the period January 1, 1998 to September 30, 1998
(b) For the period January 12, 1995 (date class B shares first offered) to
December 31, 1995
(c) For the period January 1, 1999 to September 30, 1999
(d) For the calendar year ended December 31
(e) For the fiscal year ended September 30
See notes to financial statements
60
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------
R A T I O S / S U P P L E M E N T A L D A T A
---------------------------------------------------------------------------------
---------
RATIO TO AVERAGE NET
ASSETS BEFORE
RATIO TO AVERAGE EXPENSES
NET NET ASSETS++ WAIVED OR ASSUMED
NET ASSET ASSETS --------------------- ---------------------
VALUE TOTAL END OF NET NET PORTFOLIO
--------- RETURN PERIOD INVESTMENT INVESTMENT TURNOVER
END * (IN EXPENSES INCOME EXPENSES INCOME RATE
OF PERIOD (%) MILLIONS) (%) (%) (%) (%) (%)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HIGH YIELD
CLASS A
1994(d)........ $ 4.84 .39 $ 170 1.56 9.48 1.59 9.44 32
1995(d)........ 5.22 18.43 187 1.45 9.22 1.55 9.12 42
1996(d)........ 5.40 13.35 202 1.37 8.99 1.52 8.84 29
1997(d)........ 5.53 11.84 209 1.29 8.17 1.48 7.98 46
1998(a)........ 5.20 .08 194 1.36+ 8.36+ 1.59+ 8.13+ 20
1999(e)........ 4.88 2.54 176 1.37 9.31 1.62 9.06 30
CLASS B
1995(b)........ $ 5.23 17.40 $ 1 2.22+ 8.45+ 2.32+ 8.35+ 42
1996(d)........ 5.40 12.41 4 2.07 8.28 2.22 8.13 29
1997(d)........ 5.53 11.11 7 1.99 7.47 2.18 7.28 46
1998(a)........ 5.19 (.59) 9 2.06+ 7.66+ 2.29+ 7.43+ 20
1999(e)........ 4.87 1.90 9 2.07 8.61 2.32 8.36 30
- -------------------------------------------------------------------------------------------------------------
</TABLE>
* Calculated without sales charges
+ Annualized
++ Net of expenses waived or assumed (Note 3)
(a) For the period January 1, 1998 to September 30, 1998
(b) For the period January 12, 1995 (date class B shares first offered) to
December 31, 1995
(c) For the period January 1, 1999 to September 30, 1999
(d) For the calendar year ended December 31
(e) For the fiscal year ended September 30
See notes to financial statements
61
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors/Trustees of
First Investors Cash Management Fund, Inc.
First Investors Government Fund, Inc.
First Investors Investment Grade Fund
First Investors Fund For Income, Inc.
First Investors High Yield Fund, Inc.
We have audited the accompanying statement of assets and liabilities, including
the portfolios of investments, of the First Investors Cash Management Fund,
Government Fund, Investment Grade Fund (a series of shares of First Investors
Series Fund), Fund For Income and High Yield Fund as of September 30, 1999, the
related statement of operations and the statement of changes in net assets and
financial highlights for each of the periods indicated thereon. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1999, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
First Investors Cash Management Fund, Government Fund, Investment Grade Fund,
Fund For Income and High Yield Fund at September 30, 1999, and the results of
their operations, changes in their net assets and financial highlights for the
periods presented, in conformity with generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
October 29, 1999
62
<PAGE>
FIRST INVESTORS TAXABLE BOND FUNDS
DIRECTORS
- --------------------------------
JAMES J. COY (Emeritus)
GLENN O. HEAD
KATHRYN S. HEAD
LARRY R. LAVOIE
REX R. REED
HERBERT RUBINSTEIN
NANCY S. SCHAENEN
JAMES M. SRYGLEY
JOHN T. SULLIVAN
ROBERT F. WENTWORTH
OFFICERS
- --------------------------------
GLENN O. HEAD
President
GEORGE V. GANTER
Vice President
NANCY W. JONES
Vice President
MICHAEL J. O'KEEFE
Vice President
CLARK D. WAGNER
Vice President
CONCETTA DURSO
Vice President and Secretary
JOSEPH I. BENEDEK
Treasurer
CAROL LERNER BROWN
Assistant Secretary
MARK S. SPENCER
Assistant Treasurer
63
<PAGE>
FIRST INVESTORS TAXABLE BOND 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
48 Wall Street
New York, NY 10286
TRANSFER AGENT
ADMINISTRATIVE DATA MANAGEMENT CORP.
581 Main Street
Woodbridge, NJ 07095-1198
LEGAL COUNSEL
KIRKPATRICK & LOCKHART LLP
1800 Massachusetts Avenue, N.W.
Washington, DC 20036
AUDITORS
TAIT, WELLER & BAKER
Eight Penn Center Plaza
Philadelphia, PA 19103
THE CASH MANAGEMENT FUND IS A MONEY MARKET FUND AND SEEKS TO MAINTAIN A STABLE
NET ASSET VALUE OF $1.00 PER SHARE. HOWEVER, THERE CAN BE NO ASSURANCE THAT THE
FUND WILL BE ABLE TO DO SO OR ACHIEVE ITS INVESTMENT OBJECTIVE. AN INVESTMENT IN
THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT.
It is the Funds' practice to mail only one copy of the annual and semi-annual
reports to any address at which more than one shareholder with the same last
name has indicated that mail is to be delivered. Additional copies of the
reports will be mailed if requested by any shareholder in writing or by calling
800-423-4026. The Funds will ensure that separate reports are sent to any
shareholder who subsequently changes his or her mailing address.
This report is authorized for distribution only to existing shareholders, and,
if given to prospective shareholders, must be accompanied or preceded by the
Funds' prospectus.
64
<PAGE>
[LOGO] First Investors
95 WALL STREET
NEW YORK, NEW YORK 10005
BAR999
