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TAXABLE BOND & MONEY MARKET FUNDS
CASH MANAGEMENT
GOVERNMENT
INVESTMENT GRADE
FUND FOR INCOME
ANNUAL REPORT
September 30, 2000
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.
Dear Investor:
We are pleased to present this Bond Market Overview of the annual
reports for the First Investors taxable bond and money market funds
for the fiscal year ended September 30, 2000.
The primary factors that influenced the bond market and performance
of all of the bond funds were the strong economy, low inflation,
tightening of monetary policy and the federal budget surplus. Short-
term yields moved higher during the past twelve months, as the two-
year Treasury rate began the period at 5.60% and ended the period at
5.98%. However, long-term yields declined, as the ten-year Treasury
note began the period at 5.88% and ended the period at 5.80%.
In its tenth year of the current expansion, the U.S. economy
remained remarkably robust. Often referred to as the "New Economy,"
it has been notable for strong growth with low inflation. As
measured by the gross domestic product, economic growth was a strong
5.3% during the past twelve months. In fact, the fourth quarter
1999's annualized growth rate of 8.3% was the highest rate since
1984. With the economy running at full tilt, the unemployment rate
fell to a 30-year low of 3.9% in September -- a level that many
economists would term "full employment." Despite the extremely tight
labor market, wage gains remained relatively moderate.
Even with the rapid growth and low unemployment, inflation remained
mild. The consumer price index (CPI), a key gauge of inflation, rose
3.5% during the past twelve months. The primary factor driving the
rate upward was the increase in oil prices, which hit their highest
level in ten years in September. When the volatile food and energy
components are excluded, the CPI rose only 2.6%, just .59% faster
than one year ago. The keys to this ongoing benign inflation
environment have been the increase in global competition and the
enhanced productivity of U.S. companies, due in large part to
technology investment. As the reporting period came to a close, the
economy began to show signs of slowing to a more moderate growth
rate.
In response to the prevailing economic conditions, the Federal
Reserve Board ("Fed") continued to raise interest rates. Concerned
that the pace of economic growth and the tight labor market would
create inflation, the Fed raised the benchmark federal funds rate
four times over the past year, for a total of 125 basis points
(1.25%). At their meeting on October 3rd, the Fed indicated
satisfaction with the moderating economy, but remained concerned
about the tight labor market and watchful of the inflationary impact
of higher oil prices.
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.
In addition to the economy and the Fed's policy, the federal budget
surplus was another key factor in bond market performance. High tax
receipts from both the strong economy (income taxes) and the stock
market (capital gains taxes) have produced substantial reserves for
the U.S. Treasury. This year, the federal government had a $236
billion surplus, which is projected to grow to a cumulative surplus
of $2.9 trillion over the next ten years. The decreased need for
debt has shrunk the supply of Treasury securities, as the Treasury
Department has reduced issuance and bought back long-term bonds in
the open market this year. This has created a perception of scarcity
of Treasury securities and has helped lower long-term interest
rates.
An interesting and rare phenomenon occurred in the bond market at
the beginning of the year -- an inverted yield curve. Normally,
interest rates on bonds with longer maturities are higher than
interest rates on bonds with shorter maturities due to the former's
greater interest rate risk. However, the interest rates on longer
maturity bonds have fallen below those of shorter maturities, as
investors have flocked to "long bonds" due to the perceived scarcity
of high-quality bonds. The inversion can be traced to the Fed's
raising of short-term rates as well as the fact that the budget
surplus has reduced the supply of long-term Treasury bonds.
Generally, most sectors of the bond market posted strong returns
during the past twelve months, with the Lehman Aggregate Bond Market
Index up 6.99%. Long-term Treasury bonds provided the highest total
returns, rising more than 10% due to their perceived shortage.
Mortgage-backed bonds also posted solid performance, as the Lehman
Mortgage-Backed Bond Index rose 7.42%. The sector was helped by the
high level of housing activity, low prepayments on existing
mortgages and declining supply. Returns in the investment grade
corporate bond sector were moderate, as the Lehman Corporate Bond
Index posted a gain of 5.84%. Returns were limited by the inverted
yield curve, substantial new issue supply and deteriorating credit
quality. High yield corporate bonds lagged behind other sectors, as
the Lehman Corporate Bond High Yield Index was up .97%. The sector
faced a number of difficulties, including rising default rates and
lack of investor interest.
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 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 31, 2000
* 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.
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 ended September 30, 2000.
During the period, the Fund's return on a net asset value basis was
5.5% for Class A shares and 4.7% for Class B shares. The Fund
maintained a $1.00 net asset value for each class of shares
throughout the year.
The primary factors that drove the Fund's performance during the
fiscal year were rising interest rates and security selection.
Short-term interest rates rose sharply over the last year, as the
Federal Reserve's target federal funds rate increased by a
cumulative total of 125 basis points (1.25%) through a series of
rate hikes from the fourth quarter of 1999 through the second
quarter of 2000. More recently, however, the economy appears to be
exhibiting signs of slowing and short-term interest rates have
leveled off. Most market participants currently believe that the Fed
will not need to raise interest rates again in the near future.
The Cash Management Fund continued to invest conservatively,
investing only in short-term instruments considered to present
minimal credit risk at the time of purchase. The Fund maintained a
weighted average maturity similar to that of its peers through most
of the last year. Late in the second quarter of 2000, however, the
Fund took advantage of the steepness of the yield curve and extended
its weighted average maturity. This aided the Fund's performance as
the money market yield curve has since flattened.
The Fund also was able to realize additional returns by investing a
small portion of its assets in floating rate securities, which
generally perform well during rising interest rate environments. The
Fund also effectively used short-term corporate bonds and notes as
well as callable government agency securities to bolster returns, as
these securities often provide higher returns than those available
on other money market products.
While the returns offered by money market funds are generally lower
than those offered by other types of mutual funds, the liquidity and
relatively stable asset value nature of a money market fund remain
key attractions for investors. Assets in taxable money market funds
have risen by about 16% over this reporting period. This growth
reflects investors' desire for safety and diversification among
different asset classes in this current financial environment.
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 asset value of $1.00 per share. Money market mutual funds
are not insured by the Federal Deposit Insurance Corporation (FDIC)
or any other government agency.
Thank you for placing your trust in First Investors. As always, we
appreciate the opportunity to serve your investment needs.
Sincerely,
/S/ MICHAEL J. O'KEEFE
Michael J. O'Keefe
Vice President
and Portfolio Manager
October 31, 2000
<TABLE>
<CAPTION>
Portfolio of Investments
FIRST INVESTORS CASH MANAGEMENT FUND, INC.
September 30, 2000
----------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal Interest $10,000 of
Amount Security Rate* Value Net Assets
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CORPORATE NOTES--77.2%
$7,600M Anheuser-Busch Cos., Inc., 11/13/00 6.45% $ 7,539,881 $ 410
500M Anheuser-Busch Cos., Inc., 3/1/01 7.01 500,801 27
3,200M Campbell Soup Co., 12/4/00 6.48 3,162,506 172
4,900M Campbell Soup Co., 12/6/00 6.48 4,840,821 263
1,700M Chevron Corp., 10/2/00 6.55 1,699,381 93
1,800M Clorox Co., 7/15/01 6.99 1,824,647 99
5,000M Coca-Cola Co., 10/27/00 6.47 4,975,733 271
7,000M Dow Chemical Co., 10/4/00 6.55 6,994,903 381
1,000M Dow Jones & Co., Inc., 12/1/00 6.54 998,558 54
1,000M Dow Jones & Co., Inc., 12/1/00 6.95 997,835 54
3,500M Du Pont (E.I.) de Nemours & Co., 10/11/00 6.53 3,499,554 190
1,000M Eastman Kodak Co., 10/2/00 6.72 999,627 54
7,000M Eastman Kodak Co., 10/18/00 6.47 6,977,141 380
2,000M Ford Capital BV, 5/15/01 7.40 2,024,030 110
530M Ford Motor Credit Co., 10/6/00 6.61 529,971 29
2,500M Ford Motor Credit Co., 11/8/00 6.60 2,498,778 136
1,385M Ford Motor Credit Co., 1/25/01 6.73 1,380,129 75
1,048M Ford Motor Credit Co., 1/25/01 7.19 1,043,027 57
2,500M General Electric Capital Corp., 10/5/00 6.50 2,497,742 136
2,000M General Electric Capital Corp., 4/3/01 6.78 1,991,728 108
875M General Electric Capital Corp., 4/3/01 7.18 869,611 47
6,000M H.J. Heinz Co., 10/16/00 6.48 5,982,598 326
8,000M Hewlett-Packard Co., 10/26/00 6.50 7,962,431 433
4,100M Kellogg Co., 10/16/00 6.47 4,088,161 223
5,000M McGraw-Hill Cos., Inc., 11/21/00 6.47 4,953,061 270
4,000M National Rural Utilities Corp., 11/16/00 6.47 3,966,066 216
900M Nationsbank Corp., 3/15/01 6.78 895,925 49
2,000M New York Times Co., Inc., 10/2/00 6.51 1,999,275 109
5,000M New York Times Co., Inc., 10/2/00 6.55 4,998,179 272
1,582M New York Times Co., Inc., 12/13/00 6.48 1,560,909 85
8,400M Peoples Gas Light and Coke Co., 10/23/00 6.49 8,365,139 455
4,300M PepsiCo, Inc., 10/18/00 6.50 4,286,015 233
7,000M PPG Industries, Inc., 10/30/00 6.48 6,962,125 379
9,000M Prudential Funding Corp., 10/20/00 6.49 8,967,497 488
3,000M Texaco, Inc., 10/25/00 6.48 2,986,454 163
1,540M Wal-Mart Stores, Inc., 4/1/01 6.85 1,552,727 85
2,000M Wal-Mart Stores, Inc., 4/1/01 7.33 2,012,101 110
1,500M Walt Disney Co., 3/30/01 6.76 1,497,381 82
1,000M Walt Disney Co., 3/30/01 6.79 998,132 54
2,515M Walt Disney Co., 3/30/01 7.28 2,504,061 136
7,400M Washington Gas Light Co., 10/26/00 6.52 7,365,141 401
----------------------------------------------------------------------------------------------------------------
Total Value of Corporate Notes (cost $141,749,782) 147,749,782 7,715
----------------------------------------------------------------------------------------------------------------
<CAPTION>
----------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal Interest $10,000 of
Amount Security Rate* Value Net Assets
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS--15.8%
$1,000M Fannie Mae, 10/2/00 6.58% $ 999,899 $ 54
1,500M Fannie Mae, 10/16/00 6.60 1,498,474 82
1,000M Fannie Mae, 11/20/00 6.50 997,457 54
3,750M Fannie Mae, 12/18/00 6.72 3,760,897 205
3,000M Fannie Mae, 7/17/01 6.65 2,985,030 163
2,000M Federal Home Loan Bank, 10/16/00 6.60 1,999,177 109
500M Federal Home Loan Bank, 12/29/00 6.75 498,498 27
2,150M Federal Home Loan Bank, 8/7/01 6.95 2,150,000 117
3,000M Federal Home Loan Bank, 10/5/01 6.72 3,000,000 163
5,450M Freddie Mac, 1/26/01 7.11 5,416,170 295
3,000M Freddie Mac, 7/13/01 7.02 3,000,000 163
2,700M Freddie Mac, 8/28/01 6.83 2,698,994 147
----------------------------------------------------------------------------------------------------------------
Total Value of U.S. Government Agency Obligations
(cost $29,004,596) 29,004,596 1,579
----------------------------------------------------------------------------------------------------------------
FLOATING RATE NOTES--6.0%
5,600M AT&T Corp., 3/8/01 6.56 5,599,760 305
3,000M First Union Corp., 10/27/00 7.10 3,000,000 163
1,000M Merrill Lynch & Co., Inc., 5/8/01 6.82 1,000,603 54
1,500M Merrill Lynch & Co., Inc., 8/10/01 6.76 1,500,929 82
----------------------------------------------------------------------------------------------------------------
Total Value of Floating Rate Notes (cost $11,101,292) 11,101,292 604
----------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $181,855,670) + 99.0% 181,855,670 9,898
Other Assets, Less Liabilities 1.0 1,875,205 102
----------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $183,730,875 $10,000
================================================================================================================
* 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 rates shown on the floating rate notes are
adjusted periodically and are the rates in effect at September 30, 2000.
+ Aggregate cost for federal income tax purposes is the same.
See notes to financial statements
</TABLE>
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 ended September 30, 2000. During
the period, the Fund's return on a net asset value basis was 6.4%
for Class A shares and 5.6% for Class B shares, compared to a return
of 6.5% for the Lipper Government National Mortgage Association
(GNMA) fund group. During the period, the Fund declared dividends
from net investment income of 65.9 cents per share on Class A shares
and 57.5 cents per share on Class B shares.
The Government Fund continued to invest primarily in Government
National Mortgage Association (GNMA) mortgage-backed bonds ("Ginnie
Maes"). The primary factors that drove the Fund's performance during
the reporting period were declining long-term Treasury yields, the
inversion of the Treasury yield curve and a favorable prepayment
environment. The favorable prepayment environment reflected both the
high level of housing turnover and reduced level of refinancing
activity by homeowners.
In aggregate, prices on Ginnie Maes changed little over the course
of the past twelve months. Lower coupon Ginnie Maes provided higher
total returns than higher coupon bonds, reflecting both rising
short-term rates and falling long-term rates. The interest rate
spread between current coupon Ginnie Maes and Treasury securities
widened approximately 20 basis points (.2%) during the past twelve
months. This widening occurred primarily during the first several
months of 2000, as ten-year Treasury note yields declined from 6.79%
in mid-January to 5.78% in early April. Issuance of mortgage-backed
bonds fell substantially, down 50% from the prior twelve month
period.
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.
In response to the inversion of the yield curve (described in the
Bond Market Overview) which caused high coupon mortgage-backed bonds
to underperform, the Fund sold its highest coupon holding in March
(GNMA 9%, which represented 11% of the Fund's assets). The Fund
purchased Federal National Mortgage Association (FNMA) mortgage-
backed bonds ("Fannie Maes") with the proceeds from the sale, rather
than other Ginnie Maes, as Fannie Maes had become increasingly
attractive relative to Ginnie Maes due to Congressional scrutiny of
FNMA's status as a government-sponsored enterprise. Fannie Mae
holdings reached 18% of the Fund's assets in April. The Fund
subsequently benefited from the higher yield of the Fannie Maes and
price appreciation relative to Ginnie Maes, as concern over FNMA's
status receded.
The Fund also benefited from the sale of one-third of its position
in GNMA 6-1/2% coupons (5% of total assets) and the purchase of 30-
year Treasury bonds in May, as the Treasury market rallied through
August due to perceived scarcity of Treasury securities. The Fund's
performance had been limited earlier in the year due to its lack of
exposure to the Treasury market. The Fund ended the reporting period
with 95% of its assets in mortgage-backed bonds (82% Ginnie Maes,
13% Fannie Maes) and 5% in 30-year Treasury bonds.
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 31, 2000
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.
As of September 30, 2000
FIRST INVESTORS SALOMON SALOMON
GOVERNMENT MORTGAGE GOVERNMENT
FUND INDEX INDEX
JAN 91 $ 9,375 $10,000 $10,000
DEC 91 10,814 11,565 11,529
DEC 92 11,490 12,417 12,359
DEC 93 11,948 13,292 13,679
DEC 94 11,564 13,101 13,218
DEC 95 13,296 15,299 15,650
DEC 96 13,763 16,119 16,110
DEC 97 14,918 17,613 17,665
SEP 98 15,818 18,684 19,419
SEP 99 15,897 19,134 19,087
SEP 00 16,911 20,557 20,452
(INSET BOX IN CHART READS:)
Average Annual Total Returns*
Class A Shares N.A.V. Only S.E.C. Standardized
One Year 6.38% (.28%)
Five Years 5.66% 4.31%
Ten Years 6.54% 5.85%
S.E.C. 30-Day Yield 5.61%
Class B Shares
One Year 5.56% 1.56%
Five Years 4.90% 4.56%
Since Inception
(1/12/95) 6.05% 5.92%
S.E.C. 30-Day Yield 5.26%
The graph compares a $10,000 investment in the First
Investors Government Fund, Inc. (Class A shares) beginning 1/1/91
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
9/30/00) 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 (.72%), 3.96% and
5.57%, respectively, and the S.E.C. 30-Day Yield for September 2000
would have been 5.20%. The Class B "S.E.C. Standardized" Average
Annual Total Return for One Year, Five Years and Since Inception
would have been 1.12%, 4.21% and 5.55%, respectively, and the S.E.C.
30-Day Yield for September 2000 would have been 4.87%. 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.
<TABLE>
<CAPTION>
Portfolio of Investments
FIRST INVESTORS GOVERNMENT FUND, INC.
September 30, 2000
----------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MORTGAGE-BACKED CERTIFICATES--94.8%
Federal National Mortgage Association--13.0%
$16,245M 8%, 9/1/2027-4/1/2030 $ 16,484,564 $ 1,303
Government National Mortgage Association I
Program--41.2%
9,195M 6.50%, 5/15/2029 8,866,370 701
28,342M 7%, 7/15/2027-11/15/2028 27,952,476 2,208
6,725M 7.50%, 1/15/2030 6,749,738 533
8,469M 8%, 4/15/2030-6/15/2030 8,629,630 682
Government National Mortgage Association II
Program--40.6%
40,165M 7%, 6/20/2023-10/20/2029 39,433,879 3,115
11,881M 7.50%, 12/20/2022-10/20/2023 11,903,121 940
----------------------------------------------------------------------------------------------------
Total Value of Mortgage-Backed Certificates (cost $120,911,789) 120,019,778 9,482
----------------------------------------------------------------------------------------------------
U.S GOVERNMENT OBLIGATIONS--4.2%
6,000M U.S. Treasury Bond, 5.25%, 11/15/2028
(cost $5,147,174) 5,375,628 425
----------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--.7%
850M Nestle Capital Corp., 6.51%, 10/3/00 (cost $849,539) 849,539 67
----------------------------------------------------------------------------------------------------
Total Value of Investments (cost $126,908,502) 99.7% 126,244,945 9,974
Other Assets, Less Liabilities 0.3 332,392 26
----------------------------------------------------------------------------------------------------
Net Assets 100.0% $126,577,337 $10,000
====================================================================================================
See notes to financial statements
</TABLE>
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 ended September 30, 2000.
During the period, the Fund's return on a net asset value basis was
5.0% for Class A shares and 4.3% for Class B shares, compared to a
return of 5.0% for the Lipper BBB investment grade bond fund group.
During the period, the Fund declared dividends from net investment
income of 58.4 cents per share on Class A shares and 51.9 cents per
share on Class B shares. The Fund also declared a capital gains
distribution of 1.0 cents per share on Class A and Class B shares.
During the reporting period, the Fund increased its earning power,
raising monthly dividends three times -- from 4.8 cents per share as
the year began to 5.1 cents per share at its close.
The primary factor that drove the Fund's performance during the
reporting period was the revaluation of corporate bonds relative to
Treasuries. While yields on long maturity Treasury securities fell
substantially, corporate yields did not fall in tandem. Corporate
bonds as a group were revalued, as markets required more yield as
compensation for the rising uncertainty about inflation, future
growth rates and economy-wide credit risks. Thus, corporate
bondholders received yields that stayed even or increased slightly,
even as Treasury yields declined.
Corporates are always priced at higher yields than Treasury
securities, which pose no credit risk. Retirement of long-term
Treasuries, coupled with heavy corporate bond issuance, widened the
yield spread between the two. While corporate yields have not
increased markedly, credit spreads grew wider and more attractive
versus Treasuries, as Treasury yields fell. In this environment, new
bond issues required relatively high yields to get the deals done.
Several sectors became "cheap," as issuers rushed to raise capital.
One theme this year, "event risk," is a byproduct of softness in
some parts of the equity markets, as some issuers took credit
damaging actions, such as leveraged buy-outs (LBOs), leveraged
recapitalizations or stock buybacks. As some stock prices
languished, related bonds sometimes became suspect, as bond
investors become wary of management attempts to use aggressive
financial tools to "unlock shareholder value." Huge amounts of
capital are available to fund LBOs, which often work to the
detriment of bondholders.
Business risk is always present, even in the excellent environment
we have now, but earnings shortfalls and negative surprises have
been treated very harshly this year. To many investors, 2000 is also
seen as a transition -- or slowing down -- year for domestic and
international economies. Transition also describes domestic
politics, as Congressional and Presidential elections are upon us.
The Fund participated selectively in new issues sold under
conditions favorable to investors -- those with high yields. We
increased the Fund's duration only slightly. Most holdings remained
of intermediate maturity, which was the best performing part of the
corporate yield curve. The Fund acquired more highly liquid issues,
which were much sought after by the market. The Fund benefited from
its weighting -- and specific holding choices -- in the finance
sector, especially banks.
In general, during a period of frequent downgrades, the Fund avoided
the worst instances of credit deterioration. The Fund held a
position in Xerox, whose business is suffering, but sold it before
the worst deterioration. The Fund stayed selective in the
telecommunications sector, an area where heavy issuance is required
to pay for very aggressive investment spending worldwide.
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 Co-Portfolio Manager
/S/ CLARK D. WAGNER
Clark D. Wagner
Chief Investment Officer
and Co-Portfolio Manager
October 31, 2000
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.
As of September 30, 2000
INVESTMENT GRADE LEHMAN
FUND CORPORATE BOND INDEX
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 20,296
SEP 00 18,199 21,482
(INSET BOX IN CHART READS:)
Average Annual Total Return*
Class A Shares N.A.V. Only S.E.C. Standardized
One Year 5.03% (1.50%)
Five Years 5.35% 4.00%
Since Inception
(2/19/91) 7.13% 6.42%
S.E.C. 30-Day Yield 6.19%
Class B Shares
One Year 4.31% .31%
Five Years 4.63% 4.29%
Since Inception
(1/12/95) 6.32% 6.19%
S.E.C. 30-Day Yield 5.91%
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
9/30/00) 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 (1.75%), 3.67%
and 5.81%, respectively, and the S.E.C. 30-Day Yield for September
2000 would have been 5.88%. The Class B "S.E.C. Standardized"
Average Annual Total Return for One Year, Five Years and Since
Inception would have been .05%, 3.96% and 5.80%, respectively, and
the S.E.C. 30-Day Yield for September 2000 would have been 5.57%.
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.
<TABLE>
<CAPTION>
Portfolio of Investments
FIRST INVESTORS INVESTMENT GRADE FUND
September 30, 2000
----------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS--91.3%
Aerospace/Defense--5.0%
$700M Honeywell International, Inc., 6.875%, 2005 $ 699,282 $ 128
700M Precision Castparts Corp., 8.75%, 2005 715,500 131
700M Raytheon Co., 6.15%, 2008 641,136 117
700M Thiokol Corp., 6.625%, 2008 670,832 122
----------------------------------------------------------------------------------------------------
2,726,750 498
----------------------------------------------------------------------------------------------------
Apparel/Textiles--.5%
250M VF Corp., 9.50%, 2001 253,451 46
----------------------------------------------------------------------------------------------------
Automotive --6.6%
750M DaimlerChrysler NA Holdings Corp., 8%, 2010 774,242 142
800M Goodyear Tire & Rubber Co., 8.50%, 2007 823,874 150
650M Lear Corp., 7.96%, 2005 619,718 113
730M Navistar International Corp., 8%, 2008 678,900 124
700M Visteon Corp., 8.25%, 2010 702,939 128
----------------------------------------------------------------------------------------------------
3,599,673 657
----------------------------------------------------------------------------------------------------
Chemicals--2.6%
750M Du Pont (E.I.) de Nemours & Co., 8.125%, 2004 779,651 143
700M Lubrizol Corp., 7.25%, 2025 663,794 121
----------------------------------------------------------------------------------------------------
1,443,445 264
----------------------------------------------------------------------------------------------------
Conglomerates--1.3%
700M Hanson PLC, 7.875%, 2010 694,798 127
----------------------------------------------------------------------------------------------------
Consumer Products--1.8%
300M Dial Corp., 6.50%, 2008 271,101 49
735M Mattel, Inc., 6%, 2003 692,908 126
----------------------------------------------------------------------------------------------------
964,009 175
----------------------------------------------------------------------------------------------------
Electrical Equipment--1.0%
550M Emerson Electric Co., 7.875%, 2005 574,871 105
----------------------------------------------------------------------------------------------------
Energy--4.8%
700M Baroid Corp., 8%, 2003 724,828 132
500M Mobil Corp., 8.625%, 2021 567,551 104
750M Phillips Petroleum Co., 7.20%, 2023 652,227 119
700M Repsol International Finance, 7.45%, 2005 708,294 129
----------------------------------------------------------------------------------------------------
2,652,900 484
----------------------------------------------------------------------------------------------------
<CAPTION>
Portfolio of Investments (continued)
FIRST INVESTORS INVESTMENT GRADE FUND
September 30, 2000
----------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Entertainment/Leisure--1.9%
$ 350M Time Warner, Inc., 6.875%, 2018 $ 313,466 $ 57
700M Walt Disney Co., 7.30%, 2005 711,313 130
----------------------------------------------------------------------------------------------------
1,024,779 187
----------------------------------------------------------------------------------------------------
Financial Services--13.7%
700M Associates Corp. of North America, 7.875%, 2001 707,403 129
700M Bank of America Corp., 7.80%, 2010 721,645 132
700M Bank One Corp., 7.875%, 2010 719,632 131
700M Chase Manhattan Corp., 7.875%, 2010 729,920 133
800M Citicorp, 8%, 2003 817,330 149
800M First Union Corp., 7.70%, 2005 813,767 149
750M Fleet Capital Trust II, 7.92%, 2026 683,493 125
775M Huntington National Bank, 8%, 2010 785,852 143
750M Republic NY Corp., 7.75%, 2009 754,691 138
775M Washington Mutual, Inc., 8.25%, 2010 795,046 145
----------------------------------------------------------------------------------------------------
7,528,779 1,374
----------------------------------------------------------------------------------------------------
Food/Beverage/Tobacco--7.0%
750M Anheuser-Busch Companies, Inc., 7%, 2005 749,771 137
550M Coca-Cola Enterprises, Inc., 7.875%, 2002 556,047 102
700M Hershey Foods Corp., 6.70%, 2005 697,353 127
725M Pepsi Bottling Group, Inc., 7%, 2029 666,436 122
500M Philip Morris Companies, Inc., 7.125%, 2002 495,402 90
650M Universal Corp., 9.25%, 2001 654,051 119
----------------------------------------------------------------------------------------------------
3,819,060 697
----------------------------------------------------------------------------------------------------
Gas Transmission--2.5%
700M Columbia Energy Group, 6.80%, 2005 674,538 123
700M Enron Corp., 7.125%, 2007 697,295 127
----------------------------------------------------------------------------------------------------
1,371,833 250
----------------------------------------------------------------------------------------------------
Healthcare--3.9%
725M Johnson & Johnson, 6.625%, 2009 712,880 130
750M Tenet Healthcare Corp., 8.625%, 2007 746,250 136
700M Warner-Lambert Co., 6%, 2008 660,367 121
----------------------------------------------------------------------------------------------------
2,119,497 387
----------------------------------------------------------------------------------------------------
<CAPTION>
----------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment/Finance Companies--4.0%
$ 750M Ford Motor Credit Co., 7.50%, 2005 $ 754,733 $ 138
700M General Electric Capital Corp., 7.875%, 2006 737,876 135
700M General Motors Acceptance Corp., 6.625%, 2005 682,226 125
----------------------------------------------------------------------------------------------------
2,174,835 398
----------------------------------------------------------------------------------------------------
Media--5.3%
750M Cox Enterprises, Inc., 8%, 2007 + 765,692 140
700M New York Times Co., Inc., 7.625%, 2005 726,553 133
750M News America Holdings, Inc., 8.50%, 2005 783,502 143
700M PanAmSat Corp., 6.375%, 2008 630,467 115
----------------------------------------------------------------------------------------------------
2,906,214 531
----------------------------------------------------------------------------------------------------
Miscellaneous--1.0%
600M Allied Waste, Inc. N.A., 7.625%, 2006 537,000 98
----------------------------------------------------------------------------------------------------
Paper/Forest Products--1.3%
700M International Paper Co., 8.125%, 2005 + 722,706 132
----------------------------------------------------------------------------------------------------
Retail - Food/Drug--2.3%
700M Kroger Co., 7%, 2018 608,782 111
650M Safeway, Inc., 7.25%, 2004 649,837 119
----------------------------------------------------------------------------------------------------
1,258,619 230
----------------------------------------------------------------------------------------------------
Retail - General Merchandise--3.8%
700M Federated Department Stores, Inc., 7.45%, 2017 614,580 112
750M Target Corp., 7.50%, 2010 751,475 137
700M Wal-Mart Stores, Inc., 8%, 2006 739,329 135
----------------------------------------------------------------------------------------------------
2,105,384 384
----------------------------------------------------------------------------------------------------
Telecommunications--11.3%
700M Deutsche Telekom AG, 8%, 2010 719,649 132
725M Global Crossing Holding, Ltd., 9.125%, 2006 719,563 132
725M Metromedia Fiber Network, Inc., 10%, 2009 681,500 124
725M MetroNet Communications Corp., 0%-9.95%, 2008 592,688 108
700M New York Telephone Co., 7.25%, 2024 629,119 115
600M Pacific Bell Telephone Co., 7%, 2004 601,567 110
725M Sprint Capital Corp., 6.375%, 2009 664,460 121
750M Vodafone AirTouch PLC, 7.75%, 2010 + 765,672 140
800M WorldCom, Inc., 8.875%, 2006 826,033 151
----------------------------------------------------------------------------------------------------
6,200,251 1,133
----------------------------------------------------------------------------------------------------
<CAPTION>
Portfolio of Investments (continued)
FIRST INVESTORS INVESTMENT GRADE FUND
September 30, 2000
----------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Transportation--4.2%
$ 480M Canadian National Railway Co., 6.45%, 2006 $ 454,254 $ 83
750M Continental Airlines, Inc., 8.388%, 2020 762,836 139
400M Eletson Holdings, Inc., 9.25%, 2003 384,000 70
700M Norfolk Southern Corp., 7.35%, 2007 691,083 126
----------------------------------------------------------------------------------------------------
2,292,173 418
----------------------------------------------------------------------------------------------------
Utilities--5.5%
735M Consumers Energy Co., 6.375%, 2008 677,100 123
547M Niagara Mohawk Holdings, Inc., 7.625%, 2005 551,292 101
725M Northwestern Public Service Co., 7.10%, 2005 727,714 133
311M Old Dominion Electric Cooperative, 7.97%, 2002 312,429 57
750M PP&L Capital Funding, Inc., 8.375%, 2007 756,239 138
----------------------------------------------------------------------------------------------------
3,024,774 552
----------------------------------------------------------------------------------------------------
Total Value of Corporate Bonds (cost $50,563,138) 49,995,801 9,127
----------------------------------------------------------------------------------------------------
MUNICIPAL BONDS--1.3%
Housing
800M Virginia State Housing Dev. Auth., 6.51%, 2019
(cost $689,972) 712,000 130
----------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--5.7%
1,000M U.S. Treasury Notes, 7.875%, 2004 1,070,313 195
2,000M U.S. Treasury Notes, 6.625%, 2007 2,073,750 379
----------------------------------------------------------------------------------------------------
Total Value of U.S. Government Obligations (cost $3,091,953) 3,144,063 574
----------------------------------------------------------------------------------------------------
Total Value of Investments (cost $54,345,063) 98.3% 53,851,864 9,831
Other Assets, Less Liabilities 1.7 925,217 169
----------------------------------------------------------------------------------------------------
Net Assets 100.0% $54,777,081 $10,000
====================================================================================================
+ See Note 4
See notes to financial statements
</TABLE>
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 ended September 30, 2000. During
the period, the Fund's return on a net asset value basis was 2.5%
for Class A shares and 1.8% for Class B shares, compared to a return
of -.02% 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 36.0 cents per share on
Class B shares.
The primary factors that drove the Fund's performance during the
fiscal year were an increase in the number of defaults among high
yield issuers and a decline in investor demand for high yield bonds.
The past twelve months have been a difficult time for the high yield
bond market, and it underperformed all other domestic fixed income
classes. The Federal Reserve increased short-term interest rates,
equity volatility roiled markets in the spring, and concerns began
to mount at mid-year regarding an economic slowdown and inflationary
pressures. These macro-factors combined to cause a deterioration in
the dynamics of the high yield market.
The yield spread between Treasury securities and high yield bonds
widened considerably, and liquidity in the marketplace declined as
dealers became increasingly unwilling to hold inventories of -- or
make bids for -- the bonds they had underwritten. In part because of
the difficulty raising additional debt or equity capital, there was
a marked increase in the number of issuers forced to default on
their bonds. Also, high yield mutual funds saw steady outflows as
result of the pessimistic environment. Investors shunned risk and
gravitated toward investments of higher credit quality. These
outflows compounded problems by forcing mutual funds to sell their
bonds into a tough market.
In this challenging environment, the Fund For Income performed well
on a relative basis, outpacing a majority of the funds in its peer
group. A number of factors aided the Fund's performance during the
reporting period. Because of the prevailing investor sentiment, the
Fund's upper tier issues (bonds at the higher end of the speculative
bond ratings scale) performed better than lower tier issues by a
wide margin. Rising oil prices led to good performance of holdings
in the energy sector. In addition, some traditionally defensive
sectors, such as cable providers, also performed well. The Fund was
aided by positive event risk, as a number of mergers and
acquisitions produced credit upgrades and enhanced prices. For
example, Intermedia Communications and VoiceStream Wireless, who are
to be acquired by Worldcom and Deutsche Telekom, respectively, both
turned in outstanding performances.
Portfolio Manager's Letter (continued)
FIRST INVESTORS FUND FOR INCOME, INC.
The Fund had several holdings with disappointing performance,
including bonds in the steel and theater exhibitor sectors.
Telecommunication holdings were also hard hit, particularly
"wireline" companies or CLECs (Competitive Local Exchange Carriers).
Healthcare holdings underperformed, and some issuers experienced
defaults.
Going forward, we will likely see a continuation of current market
conditions. However, exceptional values exist in high yield bonds,
and for long-term investors, this may be an opportune time to enter
the market. We look forward to an event (for example, a mild winter)
which may spark a turnaround and help stabilize the high yield
market. As always, the Fund will remain vigilant in its research,
focusing on stable and improving credits, seeking to avoid defaults,
while continuing to pursue value in the high yield marketplace.
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 31, 2000
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.
As of September 30, 2000
CS FIRST BOSTON
FUND FOR INCOME HIGH YIELD INDEX
JAN 91 $ 9,375 $10,000
DEC 91 13,386 14,375
DEC 92 15,622 16,770
DEC 93 18,444 19,941
DEC 94 18,551 19,748
DEC 95 21,990 23,180
DEC 96 24,938 26,059
DEC 97 28,085 29,350
SEP 98 28,221 28,734
SEP 99 29,104 29,869
SEP 00 29,820 30.442
(INSET BOX IN CHART READS:)
Average Annual Total Return*
Class A Shares N.A.V. Only S.E.C. Standardized
One Year 2.46% (3.91%)
Five Years 7.06% 5.69%
Ten Years 11.31% 10.59%
S.E.C. 30-Day Yield 9.75%
Class B Shares
One Year 1.81% (2.19%)
Five Years 6.52% 6.21%
Since Inception
(1/12/95) 7.85% 7.72%
S.E.C. 30-Day Yield 9.70%
The graph compares a $10,000 investment in the First
Investors Fund For Income, Inc. (Class A shares) beginning 1/1/91
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. As of 9/30/00, the
Index consisted of 1,623 different issues, 1,353 of which were cash
pay, 168 were zero-coupon, 5 were step bonds, 12 were pay-in-kind
bonds and the remaining 85 were in default. As of 9/30/00, the bonds
included in the Index had an average life of 7.4 years, an average
maturity of 7.4 years, an average duration of 4.4 years and an
average coupon of 10.2%. 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
9/30/00) 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 charges 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.
<TABLE>
<CAPTION>
Portfolio of Investments
FIRST INVESTORS FUND FOR INCOME, INC.
September 30, 2000
----------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS--83.7%
Aerospace/Defense--1.5%
$ 2,000M Burke Industries, Inc., 10%, 2007 $ 680,000 $ 13
3,000M DeCrane Aircraft Holdings, Inc., 12%, 2008 2,775,000 53
1,600M L-3 Communications Corp., 10.375%, 2007 1,640,000 31
3,000M L-3 Communications Corp., 8%, 2008 2,715,000 52
----------------------------------------------------------------------------------------------------
7,810,000 149
----------------------------------------------------------------------------------------------------
Agricultural Products--.8%
6,900M Terra Industries, Inc., 10.50%, 2005 4,347,000 83
----------------------------------------------------------------------------------------------------
Apparel/Textiles--1.9%
4,480M GFSI, Inc., 9.625%, 2007 3,382,400 64
7,750M Polymer Group, Inc., 9%, 2007 5,928,750 113
2,250M Worldtex, Inc., 9.625%, 2007 ++ 573,750 11
----------------------------------------------------------------------------------------------------
9,884,900 188
----------------------------------------------------------------------------------------------------
Automotive--2.6%
4,000M Accuride Corp., 9.25%, 2008 3,380,000 64
4,075M Cambridge Industries, Inc., 10.25%, 2007 ++ 1,059,500 21
4,800M Collins & Aikman Products Co., 11.50%, 2006 4,620,000 87
2,000M Cooperative Computing, Inc., 9%, 2008 790,000 15
4,200M Exide Corp., 10%, 2005 3,213,000 61
5,795M Safelite Glass Corp., 9.875%, 2006 ++ 72,438 1
2,500M Special Devices, Inc., 11.375%, 2008 750,000 14
----------------------------------------------------------------------------------------------------
13,884,938 263
----------------------------------------------------------------------------------------------------
Building Materials--.8%
2,500M American Architectural Products Corp., 11.75%,
2007 ++ 537,500 10
4,000M Nortek, Inc., 9.125%, 2007 3,790,000 72
----------------------------------------------------------------------------------------------------
4,327,500 82
----------------------------------------------------------------------------------------------------
Chemicals--6.6%
8,550M AEP Industries, Inc., 9.875%, 2007 7,353,000 140
9,800M Huntsman Polymers Corp., 11.75%, 2004 9,947,000 190
5,350M Hydrochem Industrial Services, Inc., 10.375%, 2007 4,092,750 78
9,500M Lyondell Chemical Co., 10.875%, 2009 9,203,125 175
4,500M Texas Petrochemicals Corp., 11.125%, 2006 3,757,500 72
----------------------------------------------------------------------------------------------------
34,353,375 655
----------------------------------------------------------------------------------------------------
<CAPTION>
----------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Consumer Products--1.5%
$ 3,420M AKI, Inc., 10.50%, 2008 $ 2,736,000 $ 51
3,000M Chattem, Inc., 8.875%, 2008 2,385,000 46
2,050M Corning Consumer Products Co., 9.625%, 2008 840,500 16
2,135M Hines Horticulture, Inc., 11.75%, 2005 2,102,975 40
----------------------------------------------------------------------------------------------------
8,064,475 153
----------------------------------------------------------------------------------------------------
Containers/Packaging--1.9%
3,250M Radnor Holdings Corp., 10%, 2003 2,892,500 55
4,500M Tekni-Plex, Inc., 12.75%, 2010 + 4,455,000 85
2,200M U.S. Can Corp., 10.125%, 2006 2,376,000 45
----------------------------------------------------------------------------------------------------
9,723,500 185
----------------------------------------------------------------------------------------------------
Durable Goods Manufacturing--1.0%
1,750M Amtrol, Inc., 10.625%, 2006 1,513,750 29
1,500M Columbus McKinnon Corp., 8.50%, 2008 1,327,500 25
2,500M Day International Group, Inc., 11.125%, 2005 2,462,500 47
----------------------------------------------------------------------------------------------------
5,303,750 101
----------------------------------------------------------------------------------------------------
Energy--2.4%
3,750M Giant Industries, Inc., 9.75%, 2003 3,717,187 71
3,750M Gulf Canada Resources, Ltd., 9.625%, 2005 3,876,563 74
2,000M RBF Finance Co., 11.375%, 2009 2,312,500 44
3,000M Tesoro Petroleum Corp., 9%, 2008 2,936,250 56
----------------------------------------------------------------------------------------------------
12,842,500 245
----------------------------------------------------------------------------------------------------
Entertainment/Leisure--1.4%
3,890M Carmike Cinemas, Inc., 9.375%, 2009 ++ 1,128,100 22
4,000M KSL Recreation Group, Inc., 10.25%, 2007 3,940,000 75
4,000M Loews Cineplex Entertainment Corp., 8.875%, 2008 1,540,000 29
2,445M Outboard Marine Corp., 10.75%, 2008 965,775 18
----------------------------------------------------------------------------------------------------
7,573,875 144
----------------------------------------------------------------------------------------------------
Financial --.7%
4,500M Bay View Capital Corp., 9.125%, 2007 3,442,500 66
----------------------------------------------------------------------------------------------------
Food Service--.9%
5,000M Domino's, Inc., 10.375%, 2009 4,775,000 91
----------------------------------------------------------------------------------------------------
Food/Beverage/Tobacco--1.9%
5,000M Canandaigua Brands, Inc., 8.50%, 2009 4,850,000 92
----------------------------------------------------------------------------------------------------
<CAPTION>
Portfolio of Investments (continued)
FIRST INVESTORS FUND FOR INCOME, INC.
September 30, 2000
----------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Food/Beverage/Tobacco (continued)
$ 3,500M Di Giorgio Corp., 10%, 2007 $ 3,097,500 $ 59
2,000M International Home Foods, Inc., 10.375%, 2006 2,150,000 41
----------------------------------------------------------------------------------------------------
10,097,500 192
----------------------------------------------------------------------------------------------------
Gaming/Lodging--1.8%
250M Hollywood Park, Inc., 9.25%, 2007 256,250 5
1,550M Isle of Capri Casinos, Inc., 8.75%, 2009 1,449,250 28
3,500M Park Place Entertainment Corp., 9.375%, 2007 3,570,000 68
4,000M Prime Hospitality Corp., 9.25%, 2006 3,935,000 75
----------------------------------------------------------------------------------------------------
9,210,500 176
----------------------------------------------------------------------------------------------------
Healthcare--4.1%
2,250M ALARIS Medical Systems, Inc., 9.75%, 2006 1,721,250 33
3,750M CONMED Corp., 9%, 2008 3,164,062 60
5,200M Fisher Scientific International, Inc., 9%, 2008 4,836,000 92
4,400M Genesis Health Ventures, Inc., 9.75%, 2005 ++ 396,000 8
5,750M Integrated Health Services, Inc., 10.25%, 2006 ++ 129,375 2
1,400M Leiner Health Products, Inc., 9.625%, 2007 609,000 12
6,689M Owens & Minor, Inc., 10.875%, 2006 6,931,476 133
1,500M Packard Bioscience, Inc., 9.375%, 2007 1,398,750 27
2,300M Tenet Healthcare Corp., 8.625%, 2007 2,288,500 43
----------------------------------------------------------------------------------------------------
21,474,413 410
----------------------------------------------------------------------------------------------------
Information Technology/Office Equipment--3.3%
4,400M ChipPac International, Ltd., 12.75%, 2009 4,680,500 89
5,500M Exodus Communications, Inc., 10.75%, 2009 + 5,293,750 101
1,720M Exodus Communications, Inc., 11.625%, 2010 1,732,900 33
4,200M Rhythms NetConnections, Inc., 12.75%, 2009 2,751,000 52
4,000M Rhythms NetConnections, Inc., 14%, 2010 2,660,000 51
----------------------------------------------------------------------------------------------------
17,118,150 326
----------------------------------------------------------------------------------------------------
Media (Cable TV/Broadcasting)--12.4%
2,000M Century Communications Corp., 9.50%, 2005 1,920,000 37
5,000M Charter Communications Holdings, LLC, 8.625%, 2009 4,500,000 86
1,000M Charter Communications Holdings, LLC, 10%, 2009 980,000 19
2,000M Charter Communications Holdings, LLC, 10.25%, 2010 1,960,000 37
5,000M Comcast United Kingdom Cable Partners, Ltd.,
0%-11.20%, 2007 4,762,500 91
4,750M Diamond Cable Communications PLC, 0%-11.75%, 2005 4,524,375 86
----------------------------------------------------------------------------------------------------
<CAPTION>
----------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Media (Cable TV/Broadcasting) (continued)
$ 7,650M Diva Systems Corp., 0%-12.625%, 2008 $ 3,480,750 $ 66
15,200M Echostar DBS, 9.375%, 2009 14,972,000 286
6,500M Mediacom LLC/Mediacom Capital Corp., 8.50%, 2008 6,110,000 116
4,000M Mediacom LLC/Mediacom Capital Corp., 7.875%, 2011 3,560,000 68
2,000M NTL, Inc., 11.50%, 2008 1,927,500 37
1,385M Rogers Communications, Inc., 9.125%, 2006 1,391,925 27
2,700M Rogers Communications, Inc., 8.875%, 2007 2,716,875 52
3,000M Sinclair Broadcasting Group, Inc., 10%, 2005 2,947,500 56
5,850M Star Choice Communications, Inc., 13%, 2005 6,347,250 120
3,000M Young Broadcasting Corp., 10.125%, 2005 3,030,000 58
----------------------------------------------------------------------------------------------------
65,130,675 1,242
----------------------------------------------------------------------------------------------------
Media (Other)--3.2%
4,000M Garden State Newspapers, Inc., 8.625%, 2011 3,740,000 71
3,250M Mail-Well I Corp., 8.75%, 2008 2,795,000 53
8,000M MDC Communications Corp., 10.50%, 2006 7,320,000 140
3,000M Von Hoffman Press, Inc., 10.875%, 2007 + 2,790,000 53
----------------------------------------------------------------------------------------------------
16,645,000 317
----------------------------------------------------------------------------------------------------
Mining/Metals--2.3%
2,500M Commonwealth Aluminum Corp., 10.75%, 2006 2,400,000 46
5,800M Euramax International PLC, 11.25%, 2006 5,104,000 98
3,000M Murrin Murrin Holdings Property, Ltd., 9.375%, 2007 2,715,000 51
2,000M Renco Metals, Inc., 11.50%, 2003 770,000 15
4,000M Wheeling-Pittsburgh Corp., 9.25%, 2007 ++ 820,000 16
----------------------------------------------------------------------------------------------------
11,809,000 226
----------------------------------------------------------------------------------------------------
Miscellaneous--2.9%
5,500M Allied Waste, Inc. N.A., 10%, 2009 4,785,000 91
1,500M Iron Mountain, Inc., 10.125%, 2006 1,522,500 29
5,825M Kindercare Learning Centers, Inc., 9.50%, 2009 5,417,250 103
2,000M Loomis Fargo & Co., 10%, 2004 1,922,500 37
1,286M Pierce Leahy Corp., 11.125%, 2006 1,350,300 26
----------------------------------------------------------------------------------------------------
14,997,550 286
----------------------------------------------------------------------------------------------------
Paper/Forest Products--5.2%
4,000M Container Corp., 11.25%, 2004 4,040,000 77
5,950M Packaging Corporation of America, 9.625%, 2009 6,039,250 115
7,500M Riverwood International Corp., 10.25%, 2006 7,650,000 146
----------------------------------------------------------------------------------------------------
<CAPTION>
Portfolio of Investments (continued)
FIRST INVESTORS FUND FOR INCOME, INC.
September 30, 2000
----------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Paper/Forest Products (continued)
$6,452M S.D. Warren Co., Inc., 14%, 2006 $ 7,145,500 $ 136
2,400M Stone Container Corp., 10.75%, 2002 2,433,000 46
----------------------------------------------------------------------------------------------------
27,307,750 520
----------------------------------------------------------------------------------------------------
Real Estate/Construction--.6%
6,600M Cathay International, Ltd., 13%, 2008 + 3,349,500 64
----------------------------------------------------------------------------------------------------
Retail - General Merchandise--.7%
4,000M Big 5 Corp., 10.875%, 2007 3,680,000 70
----------------------------------------------------------------------------------------------------
Telecommunications--19.2%
7,800M E. Spire Communications, Inc., 0%-13%, 2005 3,822,000 73
5,000M Global Crossing Holding, Ltd., 9.50%, 2009 4,987,500 95
3,500M GT Group Telecom, Inc., 0%-13.25%, 2010 1,505,000 29
4,000M Hyperion Telecommunications, Inc., 0%-13%, 2003 3,415,000 65
2,400M ICG Services, Inc., 0%-10%, 2008 ++ 348,000 7
5,000M Intermedia Communications, Inc., 8.50%, 2008 4,775,000 91
8,000M Level 3 Communications, Inc., 9.125%, 2008 6,890,000 132
3,000M Level 3 Communications, Inc., 0%-12.875%, 2010 1,571,250 30
2,500M McCaw International, Ltd., 0%-13%, 2007 1,900,000 36
2,250M Netia Holdings BV, 0%-11.25%, 2007 1,485,000 28
5,500M Nextel Communications, Inc., 0%-9.95%, 2008 4,193,750 80
7,000M Nextlink Communications, Inc., 12.50%, 2006 6,895,000 132
2,750M Nextlink Communications, Inc., 0%-9.45%, 2008 1,687,812 32
7,300M Orion Network Systems, Inc., 11.25%, 2007 4,252,250 81
6,350M Pac-West Telecommunications, Inc., 13.50%, 2009 5,746,750 110
1,800M Powertel, Inc., 0%-12%, 2006 1,818,000 34
4,000M Powertel, Inc., 11.125%, 2007 4,340,000 83
2,200M Qwest Communications International, Inc.,
0%-9.47%, 2007 1,897,500 36
9,000M RCN Corp., 0%-11.125%, 2007 4,815,000 92
300M RCN Corp., 0%-11%, 2008 147,000 3
4,500M Tritel PCS, Inc., 0%-12.75%, 2009 3,037,500 58
8,000M Triton Communications, LLC, 0%-11%, 2008 6,020,000 115
5,500M Viatel, Inc., 0%-12.50%, 2008 1,443,750 28
7,522M VoiceStream Wireless Corp., 10.375%, 2009 8,152,108 154
4,500M Williams Communications Group, Inc.,
10.875%, 2009 4,140,000 79
4,000M Williams Communications Group, Inc.,
11.875%, 2010 + 3,825,000 73
5,800M World Access, Inc., 13.25%, 2008 4,350,000 83
----------------------------------------------------------------------------------------------------
<CAPTION>
----------------------------------------------------------------------------------------------------
Amount
Principal Invested
Amount, For Each
Shares or $10,000 of
Warrants Security Value Net Assets
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Telecommunications (continued)
$ 4,000M Worldwide Fiber, Inc., 12%, 2009 $ 3,500,000 $ 67
----------------------------------------------------------------------------------------------------
100,960,170 1,926
----------------------------------------------------------------------------------------------------
Transportation--2.1%
2,500M American Commercial Lines, LLC, 10.25%, 2008 2,125,000 40
9,250M Eletson Holdings, Inc., 9.25%, 2003 8,880,000 169
----------------------------------------------------------------------------------------------------
11,005,000 209
----------------------------------------------------------------------------------------------------
Total Value of Corporate Bonds (cost $527,257,454) 439,118,521 8,369
----------------------------------------------------------------------------------------------------
CONVERTIBLE BONDS--.7%
Chemicals--.4%
2,000M Hexcel Corp., 7%, 2003 1,977,500 38
----------------------------------------------------------------------------------------------------
Media (Other)--.3%
2,000M Mail-Well, Inc., 5%, 2002 1,580,000 30
----------------------------------------------------------------------------------------------------
Total Value of Convertible Bonds (cost $3,781,367) 3,557,500 68
----------------------------------------------------------------------------------------------------
COMMON STOCKS--.8%
Media (Cable TV/Broadcasting)--.8%
75,577 * Echostar Communications Corp. - Class "A" 3,986,687 76
----------------------------------------------------------------------------------------------------
Telecommunications--.0%
4,090 * Viatel, Inc. 41,922 1
18,224 * World Access, Inc. 98,526 2
----------------------------------------------------------------------------------------------------
140,448 3
----------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $348,884) 4,127,135 79
----------------------------------------------------------------------------------------------------
PREFERRED STOCKS--3.6%
Financial --.2%
40,800 Astoria Financial Corp., 12%, Series "B" 1,050,600 20
----------------------------------------------------------------------------------------------------
Media (Cable TV/Broadcasting)--3.4%
166,171 CSC Holdings, Inc., 11.125%, PIK, Series "M" 17,738,780 338
----------------------------------------------------------------------------------------------------
Total Value of Preferred Stocks (cost $17,713,965) 18,789,380 358
----------------------------------------------------------------------------------------------------
WARRANTS--.3%
Aerospace/Defense--.0%
3,000 * DeCrane Aircraft Holdings, Inc. (expiring 9/30/08) + 30 --
----------------------------------------------------------------------------------------------------
<CAPTION>
Portfolio of Investments (continued)
FIRST INVESTORS FUND FOR INCOME, INC.
September 30, 2000
----------------------------------------------------------------------------------------------------
Amount
Warrants, Invested
Units or For Each
Principal $10,000 of
Amount Security Value Net Assets
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Media (Cable TV/Broadcasting)--.1%
22,950 * Diva Systems Corp. (expiring 3/1/08) + $ 321,300 $ 6
135,486 * Star Choice Communications, Inc. (expiring 12/15/05) + 355,651 7
----------------------------------------------------------------------------------------------------
676,951 13
----------------------------------------------------------------------------------------------------
Mining/Metals--.0%
200 * Gulf State Steel Acquisition Corp. (expiring 4/15/03) + 2 --
----------------------------------------------------------------------------------------------------
Telecommunications--.2%
11,500 * E. Spire Communications, Inc. (expiring 11/1/05) 178,250 3
3,500 * GT Group Telecom, Inc. (expiring 2/1/10) 245,000 5
3,400 * McCaw International, Ltd. (expiring 4/15/07) + 8,500 --
5,600 * Powertel, Inc. (expiring 2/1/06) 350,000 7
----------------------------------------------------------------------------------------------------
781,750 15
----------------------------------------------------------------------------------------------------
Total Value of Warrants (cost $323,739) 1,458,733 28
----------------------------------------------------------------------------------------------------
UNITS--.4%
Mining/Metals
2,500 Russel Metals, Inc.** (cost $2,500,000) 2,400,000 45
----------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--2.5%
$ 7,500M U.S. Treasury Notes, 7.25%, 2004 7,844,535 150
5,000M U.S. Treasury Notes, 7%, 2006 5,259,375 100
----------------------------------------------------------------------------------------------------
Total Value of U.S. Government Obligations (cost $13,493,437) 13,103,910 250
----------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--5.7%
1,600M Dow Chemical Co., 6.55%, 10/4/2000 1,598,835 30
28,500M Nestle Capital Corp., 6.51%, 10/3/2000 28,484,525 543
----------------------------------------------------------------------------------------------------
Total Value of Short-Term Corporate Notes (cost $30,083,360) 30,083,360 573
----------------------------------------------------------------------------------------------------
Total Value of Investments (cost $595,502,206) 97.7% 512,638,539 9,770
Other Assets, Less Liabilities 2.3 12,052,947 230
----------------------------------------------------------------------------------------------------
Net Assets 100.0% $524,691,486 $10,000
====================================================================================================
* Non-income producing
** 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 Note 4
++ In default as to principal and/or interest payment
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
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, 2000 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 2000 fiscal year,
computed on a monthly basis, are set forth below. This information
reflects the average composition of the Fund's assets during the 2000
fiscal year and is not necessarily representative of the Fund as of the
end of its 2000 fiscal year, the current fiscal year or at any other
time in the future.
--------------------------------------------------------------------
Comparable Quality of
Rated by Unrated Securities to
Moody's Bonds Rated by Moody's
--------------------------------------------------------------------
<S> <C> <C>
A1 4.86% 0.00%
Aaa 2.28 0.00
Baa 0.14 0.00
Ba1 0.24 0.00
Ba2 2.72 0.00
Ba3 3.13 0.00
B1 12.43 1.34
B2 33.32 0.00
B3 27.34 0.32
Caa1 4.24 0.00
Caa2 0.75 0.00
Caa3 0.03 0.00
Caa 0.00 2.04
Ca 0.19 0.00
C 0.14 0.00
--------------------------------------------------------------------
Zero Coupon Bonds 10.86%
Pay-in-kind Bonds 3.11%
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
FIRST INVESTORS
September 30, 2000
-----------------------------------------------------------------------------------------------
CASH INVESTMENT
MANAGEMENT GOVERNMENT GRADE INCOME
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Investments in securities:
At identified cost $181,855,670 $126,908,502 $54,345,063 $595,502,206
============ ============ ============ ============
At value (Note 1A) $181,855,670 $126,244,945 $53,851,864 $512,638,539
Cash 4,962,404 297,901 291,307 1,115,564
Receivables:
Interest 1,282,424 857,595 993,441 15,539,243
Shares sold -- 36,176 55,563 524,917
Investment securities sold -- -- 778,253 --
Other assets 24,200 27,482 64 232,843
------------ ------------ ------------ ------------
Total Assets 188,124,698 127,464,099 55,970,492 530,051,106
------------ ------------ ------------ ------------
Liabilities
Payables:
Investment securities
purchased 3,000,000 -- 778,866 --
Dividends payable 861,600 606,644 265,210 4,323,675
Shares redeemed 344,540 159,645 95,380 584,473
Accrued advisory fees 72,194 60,302 26,110 310,215
Accrued expenses 115,489 60,171 27,845 141,257
------------ ------------ ------------ ------------
Total Liabilities 4,393,823 886,762 1,193,411 5,359,620
------------ ------------ ------------ ------------
Net Assets $183,730,875 $126,577,337 $54,777,081 $524,691,486
============ ============ ============ ============
Net Assets Consist of:
Capital paid in $183,730,875 $149,357,331 $56,768,305 $625,048,028
Undistributed net investment
income -- 199,472 136,382 3,944,051
Accumulated net realized loss
on investments -- (22,315,909) (1,634,407) (21,436,926)
Net unrealized depreciation
in value of investments -- (663,557) (493,199) (82,863,667)
------------ ------------ ------------ ------------
Total $183,730,875 $126,577,337 $54,777,081 $524,691,486
============ ============ ============ ============
Net Assets:
Class A $182,140,872 $123,685,097 $46,776,010 $501,348,749
Class B $ 1,590,003 $ 2,892,240 $ 8,001,071 $ 23,342,737
Shares outstanding (Note 6):
Class A 182,140,872 11,306,390 4,906,175 138,207,294
Class B 1,590,003 264,537 838,633 6,463,742
Net asset value and
redemption price
per share - Class A $1.00+ $10.94 $9.53 $3.63
============ ============ ============ ============
Maximum offering price
per share - Class A
(Net asset value/.9375)* N/A $11.67 $10.17 $3.87
============ ============ ============ ============
Net asset value and offering
price per share - Class B
(Note 6) $1.00 $10.93 $9.54 $3.61
============ ============ ============ ============
* On purchases of $25,000 or more, the sales charge is reduced.
+ Also maximum offering price per share.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
FIRST INVESTORS
Year Ended September 30, 2000
-----------------------------------------------------------------------------------------------
CASH INVESTMENT
MANAGEMENT GOVERNMENT GRADE INCOME
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income
Income:
Interest $10,474,154 $9,597,856 $4,082,767 $50,176,515
Dividends (Note 1F) -- -- -- 1,600,446
------------ ------------ ------------ ------------
Total Income 10,474,154 9,597,856 4,082,767 51,776,961
------------ ------------ ------------ ------------
Expenses (Notes 1 and 3):
Advisory fees 847,819 1,319,910 409,342 3,502,308
Distribution plan expenses -
Class A -- 322,669 141,582 1,373,101
Distribution plan expenses -
Class B 17,504 29,664 73,869 189,423
Shareholder servicing costs 783,650 299,714 125,686 957,448
Professional fees 35,500 32,625 10,004 91,021
Custodian fees 49,242 25,994 8,630 48,965
Reports to shareholders 86,320 25,920 9,200 84,890
Other expenses 49,238 43,851 20,890 64,678
------------ ------------ ------------ ------------
Total expenses 1,869,273 2,100,347 799,203 6,311,834
Less: Expenses waived or assumed (488,668) (573,477) (138,724) --
Custodian fees paid indirectly (7,247) (20,940) (8,548) (31,933)
------------ ------------ ------------ ------------
Net expenses 1,373,358 1,505,930 651,931 6,279,901
------------ ------------ ------------ ------------
Net investment income 9,100,796 8,091,926 3,430,836 45,497,060
------------ ------------ ------------ ------------
Realized and Unrealized Gain
(Loss) on Investments (Note 2):
Net realized loss on investments -- (2,538,112) (1,632,279) (9,220,347)
Net unrealized appreciation
(depreciation) of
investments -- 2,348,645 823,722 (28,176,371)
------------ ------------ ------------ ------------
Net loss on investments -- (189,467) (808,557) (37,396,718)
------------ ------------ ------------ ------------
Net Increase in Net Assets
Resulting from Operations $ 9,100,796 $7,902,459 $2,622,279 $ 8,100,342
============ ============ ============ ============
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
FIRST INVESTORS
----------------------------------------------------------------------------------------------------------------
CASH MANAGEMENT GOVERNMENT
-------------------------------------------- ----------------------------
10/1/99 to 1/1/99 to 1/1/98 to 10/1/99 to 10/1/98 to
9/30/00 9/30/99 12/31/98 9/30/00 9/30/99
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
From Operations
Net investment income $ 9,100,796 $ 5,281,831 $ 7,183,007 $ 8,091,926 $ 8,610,226
Net realized gain (loss) on
investments -- -- 962 (2,538,112) (212,801)
Net unrealized appreciation
(depreciation) of investments -- -- -- 2,348,645 (7,728,801)
------------ ------------ ------------ ------------ ------------
Net increase (decrease)
in net assets
resulting from operations 9,100,796 5,281,831 7,183,969 7,902,459 668,624
------------ ------------ ------------ ------------ ------------
Distributions to Shareholders
Net investment income-Class A (8,995,339) (5,236,156) (7,150,694) (7,875,175) (8,322,989)
Net investment income-Class B (105,457) (45,675) (32,313) (157,988) (146,529)
Net realized gains-Class A -- -- (952) -- --
Net realized gains-Class B -- -- (10) -- --
------------ ------------ ------------ ------------ ------------
Total distributions (9,100,796) (5,281,831) (7,183,969) (8,033,163) (8,469,518)
------------ ------------ ------------ ------------ ------------
Share Transactions *
Class A:
Proceeds from shares sold 313,784,842 207,642,217 275,726,040 6,084,542 15,464,882
Value of shares issued
for acquisitions** -- -- -- -- --
Reinvestment of distributions 8,620,002 4,502,460 7,004,723 6,493,800 6,905,530
Cost of shares redeemed (307,626,554) (205,252,197) (261,823,090) (28,907,305) (35,078,160)
------------ ------------ ------------ ------------ ------------
14,778,290 6,892,480 20,907,673 (16,328,963) (12,707,748)
------------ ------------ ------------ ------------ ------------
Class B:
Proceeds from shares sold 2,599,192 2,740,803 2,414,995 826,979 1,200,503
Value of shares issued
for acquisition** -- -- -- -- --
Reinvestment of distributions 101,099 36,167 30,219 130,988 122,997
Cost of shares redeemed (3,761,951) (1,619,923) (1,217,975) (1,279,078) (1,012,485)
------------ ------------ ------------ ------------ ------------
(1,061,660) 1,157,047 1,227,239 (321,111) 311,015
------------ ------------ ------------ ------------ ------------
Net increase (decrease) from
share transactions 13,716,630 8,049,527 22,134,912 (16,650,074) (12,396,733)
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in
net assets 13,716,630 8,049,527 22,134,912 (16,780,778) (20,197,627)
Net Assets
Beginning of period 170,014,245 161,964,718 139,829,806 143,358,115 163,555,742
------------ ------------ ------------ ------------ ------------
End of period+ $183,730,875 $170,014,245 $161,964,718 $126,577,337 $143,358,115
============ ============ ============ ============ ============
+Includes undistributed
net investment
income of $ -- $ -- $ -- $ 199,472 $ 140,709
============ ============ ============ ============ ============
*Shares Issued and Redeemed
Class A:
Sold 313,784,842 207,642,217 275,726,040 564,840 1,370,344
Issued for acquisitions** -- -- -- -- --
Issued for distributions
reinvested 8,620,002 4,502,460 7,004,723 602,038 617,466
Redeemed (307,626,554) (205,252,197) (261,823,090) (2,685,806) (3,133,789)
------------ ------------ ------------ ------------ ------------
Net increase (decrease)
in Class A
shares outstanding 14,778,290 6,892,480 20,907,673 (1,518,928) (1,145,979)
============ ============ ============ ============ ============
Class B:
Sold 2,599,192 2,740,803 2,414,995 76,637 107,492
Issued for acquisition** -- -- -- -- --
Issued for distributions
reinvested 101,099 36,167 30,219 12,153 11,013
Redeemed (3,761,951) (1,619,923) (1,217,975) (118,696) (90,301)
------------ ------------ ------------ ------------ ------------
Net increase (decrease)
in Class B
shares outstanding (1,061,660) 1,157,047 1,227,239 (29,906) 28,204
============ ============ ============ ============ ============
** See Note 7
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
INVESTMENT GRADE INCOME
---------------------------- ----------------------------
10/1/99 to 10/1/98 to 10/1/99 to 10/1/98 to
9/30/00 9/30/99 9/30/00 9/30/99
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
From Operations
Net investment income $ 3,430,836 $ 3,161,838 $ 45,497,060 $ 40,923,339
Net realized gain (loss) on
investments (1,632,279) 43,933 (9,220,347) (807,500)
Net unrealized appreciation
(depreciation) of investments 823,722 (4,531,517) (28,176,371) (26,750,866)
------------ ------------ ------------ ------------
Net increase (decrease)
in net assets
resulting from operations 2,622,279 (1,325,746) 8,100,342 13,364,973
------------ ------------ ------------ ------------
Distributions to Shareholders
Net investment income-Class A (2,945,542) (2,852,022) (46,405,355) (38,097,881)
Net investment income-Class B (410,312) (329,267) (1,812,770) (1,015,407)
Net realized gains-Class A (19,371) (315,829) -- --
Net realized gains-Class B (2,844) (34,277) -- --
------------ ------------ ------------ ------------
Total distributions (3,378,069) (3,531,395) (48,218,125) (39,113,288)
------------ ------------ ------------ ------------
Share Transactions *
Class A:
Proceeds from shares sold 7,165,013 11,094,669 30,975,758 28,824,653
Value of shares issued
for acquisitions** -- -- 174,400,627 --
Reinvestment of distributions 2,324,117 2,502,015 32,019,270 27,082,488
Cost of shares redeemed (11,020,632) (10,073,591) (86,139,336) (52,103,604)
------------ ------------ ------------ ------------
(1,531,502) 3,523,093 151,256,319 3,803,537
------------ ------------ ------------ ------------
Class B:
Proceeds from shares sold 2,455,564 3,650,939 7,386,450 7,314,849
Value of shares issued
for acquisition** -- -- 7,454,721 --
Reinvestment of distributions 304,845 270,893 936,426 574,750
Cost of shares redeemed (1,998,830) (1,308,933) (4,527,291) (2,187,378)
------------ ------------ ------------ ------------
761,579 2,612,899 11,250,306 5,702,221
------------ ------------ ------------ ------------
Net increase (decrease) from
share transactions (769,923) 6,135,992 162,506,625 9,505,758
------------ ------------ ------------ ------------
Net increase (decrease) in
net assets (1,525,713) 1,278,851 122,388,842 (16,242,557)
Net Assets
Beginning of period 56,302,794 55,023,943 402,302,644 418,545,201
------------ ------------ ------------ ------------
End of period+ $54,777,081 $56,302,794 $524,691,486 $402,302,644
============ ============ ============ ============
+Includes undistributed
net investment
income of $ 136,382 $ 61,400 $ 3,944,051 $ 6,665,116
============ ============ ============ ============
*Shares Issued and Redeemed
Class A:
Sold 757,808 1,100,406 8,165,881 6,963,528
Issued for acquisitions** -- -- 45,133,723 --
Issued for distributions
reinvested 245,595 247,887 8,452,131 6,527,820
Redeemed (1,167,515) (1,001,822) (22,726,423) (12,582,818)
------------ ------------ ------------ ------------
Net increase (decrease)
in Class A
shares outstanding (164,112) 346,471 39,025,312 908,530
============ ============ ============ ============
Class B:
Sold 260,288 361,388 1,950,006 1,776,869
Issued for acquisition** -- -- 1,936,922 --
Issued for distributions
reinvested 32,190 26,886 248,665 139,057
Redeemed (211,217) (130,878) (1,196,640) (534,681)
------------ ------------ ------------ ------------
Net increase (decrease)
in Class B
shares outstanding 81,261 257,396 2,938,953 1,381,245
============ ============ ============ ============
See notes to financial statements
</TABLE>
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"), and First Investors Fund For Income, Inc. ("Income
Fund") are registered under the Investment Company Act of 1940 (the
"1940 Act") as diversified, open-end management investment companies.
Each Fund accounts separately for its assets, liabilities and operations
of the Fund. Series Fund offers four additional series which are not
included in this report. The objective of each Fund is as follows:
Cash Management Fund seeks to earn a high rate of current income
consistent with the preservation of capital and maintenance of
liquidity.
Government Fund seeks to achieve a significant level of current income
which is consistent with security and liquidity of principal.
Investment Grade Fund seeks to generate a maximum level of income
consistent with investment in investment grade debt securities.
Income Fund primarily seeks high current income and secondarily seeks
capital appreciation.
A. Security Valuation--The Cash Management Fund values its portfolio
securities in accordance with the amortized cost method of valuation
under Rule 2a-7 under the 1940 Act. Amortized cost is an approximation
of market value of an instrument, whereby the difference between its
acquisition cost and market value at maturity is amortized on a
straight-line basis over the remaining life of the instrument. The
effect of changes in the market value of a security as a result of
fluctuating interest rates is not taken into account and thus the
amortized cost method of valuation may result in the value of a security
being higher or lower than its actual market value. With respect to each
of the other Funds, except as provided below, a security listed or
traded on an exchange or the Nasdaq Stock Market is valued at its last
sale price on the exchange or market where the security is principally
traded, and lacking any sales, the security is valued at the mean
between the closing bid and asked prices. Securities traded in the over-
the-counter ("OTC") market (including securities listed on exchanges
whose primary market is believed to be OTC) are valued at the mean
between the last bid and asked prices based upon quotes furnished by a
market maker for such securities. Securities may also be priced by a
pricing service. 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 Funds' 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, 2000, capital loss carryovers were as follows:
<TABLE>
<CAPTION>
Year Capital Loss Carryovers Expire
---------------------------------------------------------------------------------
Fund Total 2001 2002 2003 2004 2005 2007 2008
---- ----- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Government $19,795,655 $ -- $18,573,783 $ -- $ 204,508 $ -- $ -- $1,017,364
Income 11,300,823 1,762,042 135,416 646,669 4,514,945 2,942,771 379,237 919,743
</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.
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.
Notes to Financial Statements (continued)
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 to each Fund.
F. Other--Security transactions are accounted for on the date the
securities are purchased or sold. Cost is determined, and gains and
losses are based, on the identified cost basis for both financial
statement and federal income tax purposes. Dividend income is recorded
on the ex-dividend date. Shares of stock received in lieu of cash
dividends on certain preferred stock holdings of Income Fund are
recognized as dividend income and recorded at the market value of the
shares received. During the year ended September 30, 2000, Income Fund
recognized $1,539,246 from these taxable "pay-in-kind" distributions.
Interest income and estimated expenses are accrued daily. For the year
ending September 30, 2000, the Bank of New York, custodian for the
Funds, has provided total credits in the amount of $68,668 against
custodian charges based on the uninvested cash balances of the Funds.
2. Security Transactions--For the year ended September 30, 2000,
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.
Securities Government Obligations
---------------------------- ----------------------------
Cost of Proceeds Cost of Proceeds
Fund Purchases from Sales Purchases from Sales
---- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Government $ -- $ -- $55,197,277 $65,849,005
Investment Grade 29,591,740 26,424,816 3,841,953 6,225,737
Income 57,003,586 98,582,337 5,330,156 --
</TABLE>
At September 30, 2000, aggregate cost and net unrealized 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 $126,908,502 $ 228,454 $ 892,011 $ 663,557
Investment Grade 54,345,063 638,131 1,131,330 493,199
Income 595,502,206 9,986,066 92,849,733 82,863,667
</TABLE>
3. Advisory Fee and Other Transactions With Affiliates--Certain officers
and directors/trustees of the Funds are officers and directors of the
Funds' investment adviser, First Investors Management Company, Inc.
("FIMCO"), its underwriter, First Investors Corporation ("FIC") its
transfer agent, Administrative Data Management Corp. ("ADM") and/or
First Investors Federal Savings Bank ("FIFSB"), custodian of the Funds'
Individual Retirement Accounts. Directors/trustees of the Funds who are
not "interested persons" of the Funds as defined in the 1940 Act are
remunerated by the Funds. For the year ended September 30, 2000, total
directors/trustees fees accrued by the Funds amounted to $37,775.
The Investment Advisory Agreements provide as compensation to FIMCO an
annual fee, payable monthly, at the following rates:
Cash Management Fund--.50% of the Fund's average daily net assets.
Government Fund--1% on the first $200 million of the Fund's average
daily net assets, .75% on the next $300 million, declining by .03% on each
$250 million thereafter, down to .66% on average daily net assets over
$1 billion. FIMCO has voluntarily waived 40% of the 1% annual fee on the
first $200 million of Government Fund's average daily net assets for the
year ended September 30, 2000.
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, 2000.
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, 2000, total advisory fees accrued to
FIMCO by the Funds were $6,079,379 of which $609,829 was waived. In
addition, FIMCO assumed $591,040 of the Cash Management and Investment
Grade Funds expenses.
For the year ended September 30, 2000, FIC, as underwriter, received
$1,147,448 in commissions from the sale of shares of the Funds after
allowing $113,551 to other dealers. Shareholder servicing costs included
$1,462,970 in transfer agent fees accrued to ADM and $294,713 in IRA
custodian fees accrued to FIFSB. For the year ended September 30, 2000,
FIC received contingent deferred sales charges from the redemption of
Notes to Financial Statements (continued)
Class B shares of the Cash Management Fund in the amount of $35,829. 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 year ended September 30, 2000, FIC received $17,504 in
distribution plan fees from the Cash Management Fund. 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 that Fund.
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, 2000, Investment Grade Fund held three 144A securities
with an aggregate value of $2,254,070 representing 4.1% of the Fund's
net assets and Income Fund held ten 144A securities with an aggregate
value of $20,398,733 representing 3.9% of the Fund's net assets. These
securities are valued as set forth in Note 1A.
5. High Yield Credit Risk-- The investments of Income Fund in high yield
securities whether rated or unrated may be considered speculative and
subject to greater market fluctuations and risks of loss of income and
principal than lower yielding, higher rated, fixed income securities.
The risk of loss due to default by the issuer may be significantly
greater for holders of high yielding securities, because such securities
are generally unsecured and are often subordinated to other creditors of
the issuer.
6. Capital--At September 30, 2000, paid-in capital of the Cash Management
Fund amounted to $183,730,875. 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 shares as Class B. Series
Fund, of which Investment Grade Fund is a series, has established an
unlimited number of shares of beneficial interest for both Class A and
Class B shares.
7. Reorganization--On March 14, 2000, the First Investors Fund For
Income, Inc. ("Income Fund") acquired all of the net assets of the First
Investors High Yield Fund, Inc. ("High Yield Fund") and the Executive
Investors High Yield Fund ("Executive High Yield Fund") in connection
with tax-free reorganizations that were approved by the High Yield Fund
and Executive High Yield Fund shareholders. The Income Fund issued 41,380,062
Class A shares and 1,936,922 Class B shares to the High Yield Fund and
3,753,611 Class A shares to the Executive High Yield Fund in connection
with the reorganizations. In return, it received net assets of
$167,350,876 from the High Yield Fund (which included $21,301,059 of
unrealized depreciation and $10,784,903 in accumulated net realized
losses) and $14,504,472 in net assets from the Executive High Yield Fund
(which included $1,748,230 in unrealized depreciation and $256,977 in
accumulated net realized losses). The Income Fund's shares were issued
at their current net asset values as of the date of the reorganizations.
The aggregate net assets of the Income Fund, High Yield Fund and
Executive High Yield Fund immediately before the acquisition were
$575,064,172 consisting of Income Fund $393,208,824 ($377,900,590 Class
A and $15,308,234 Class B), High Yield Fund $167,350,876 ($159,896,155
Class A and $7,454,721 Class B) and Executive High Yield Fund
$14,504,472, respectively.
Financial Highlights
FIRST INVESTORS
The following table sets forth the per share operating performance data
for a share outstanding, total return, ratios to average net assets and
other supplemental data for each period indicated.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
P E R S H A R E D A T A
------------------------------------------------------------------------------------------------------------------
Less Distributions
Income from Investment Operations from
---------------------------------------- -------------------------
Net Asset Net Realized Net Asset
Value, Net and Unrealized Total from Net Net Value,
Beginning Investment Gain (Loss) on Investment Investment Realized Total End of
of Period Income Investments Operations Income Gain Distributions Period
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CASH MANAGEMENT FUND
--------------------
Class A
-------
1995(d) $ 1.00 $.053 $ -- $.053 $.053 $ -- $.053 $ 1.00
1996(d) 1.00 .048 -- .048 .048 -- .048 1.00
1997(d) 1.00 .049 -- .049 .049 -- .049 1.00
1998(d) 1.00 .048 -- .048 .048 -- .048 1.00
1999(c) 1.00 .032 -- .032 .032 -- .032 1.00
2000(e) 1.00 .054 -- .054 .054 -- .054 1.00
Class B
-------
1995(b) 1.00 .044 -- .044 .044 -- .044 1.00
1996(d) 1.00 .040 -- .040 .040 -- .040 1.00
1997(d) 1.00 .041 -- .041 .041 -- .041 1.00
1998(d) 1.00 .041 -- .041 .041 -- .041 1.00
1999(c) 1.00 .027 -- .027 .027 -- .027 1.00
2000(e) 1.00 .046 -- .046 .046 -- .046 1.00
---------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT FUND
---------------
Class A
-------
1995(d) $10.50 $ .71 $ .82 $1.53 $ .72 $ -- $ .72 $11.31
1996(d) 11.31 .68 (.30) .38 .64 -- .64 11.05
1997(d) 11.05 .69 .21 .90 .66 -- .66 11.29
1998(a) 11.29 .49 .18 .67 .47 -- .47 11.49
1999(e) 11.49 .63 (.58) .05 .61 -- .61 10.93
2000(e) 10.93 .65 .02 .67 .66 -- .66 10.94
Class B
-------
1995(b) 10.52 .63 .80 1.43 .64 -- .64 11.31
1996(d) 11.31 .60 (.31) .29 .56 -- .56 11.04
1997(d) 11.04 .61 .21 .82 .59 -- .59 11.27
1998(a) 11.27 .42 .19 .61 .40 -- .40 11.48
1999(e) 11.48 .54 (.57) (.03) .53 -- .53 10.92
2000(e) 10.92 .57 .02 .59 .58 -- .58 10.93
---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------------------------------
R A T I O S / S U P P L E M E N T A L D A T A
------------------------------------------------------------------------------------------------
Ratio to Average Net
Ratio to Average Net Assets Before Expenses
Assets++ Waived or Assumed
----------------------- -----------------------
Net Net Portfolio
Total Net Assets Investment Investment Turnover
Return* End of Period Expenses Income Expenses Income Rate
(%) (in millions) (%) (%) (%) (%) (%)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CASH MANAGEMENT FUND
--------------------
Class A
-------
1995(d) 5.42 $129 .70 5.29 1.18 4.81 --
1996(d) 4.89 134 .70 4.78 1.19 4.29 --
1997(d) 4.98 140 .77 4.87 1.19 4.45 --
1998(d) 4.92 160 .80 5.00 1.14 4.66 --
1999(c) 3.29 158 .80+ 4.33+ 1.14+ 3.99+ --
2000(e) 5.50 182 .80 5.36 1.08 5.08 --
Class B
-------
1995(b) 4.46 $ .1 1.45+ 4.54+ 1.93+ 4.06+ --
1996(d) 4.11 .1 1.45 4.03 1.94 3.54 --
1997(d) 4.20 .3 1.52 4.12 1.94 3.70 --
1998(d) 4.14 1 1.55 4.25 1.89 3.91 --
1999(c) 2.72 2 1.55+ 3.58+ 1.89+ 3.24+ --
2000(e) 4.72 2 1.55 4.61 1.83 4.33 --
------------------------------------------------------------------------------------------------------------------
GOVERNMENT FUND
---------------
Class A
-------
1995(d) 14.98 $217 1.38 6.50 1.61 6.27 163
1996(d) 3.51 187 1.39 6.15 1.64 5.90 121
1997(d) 8.40 170 1.34 6.16 1.64 5.86 134
1998(a) 6.03 161 1.28+ 5.71+ 1.62+ 5.37+ 62
1999(e) .50 140 1.19 5.58 1.57 5.20 99
2000(e) 6.38 124 1.12 6.05 1.55 5.62 26
Class B
-------
1995(b) 13.94 1 2.13+ 5.75+ 2.37+ 5.51+ 163
1996(d) 2.73 1 2.09 5.45 2.34 5.20 121
1997(d) 7.60 2 2.04 5.46 2.34 5.16 134
1998(a) 5.54 3 1.98+ 5.01+ 2.32+ 4.67+ 62
1999(e) (.25) 3 1.93 4.84 2.31 4.46 99
2000(e) 5.56 3 1.87 5.30 2.30 4.87 26
------------------------------------------------------------------------------------------------------------------
</TABLE>
Financial Highlights
FIRST INVESTORS
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
P E R S H A R E D A T A
------------------------------------------------------------------------------------------------------------------
Less Distributions
Income from Investment Operations from
---------------------------------------- -------------------------
Net Asset Net Realized Net Asset
Value, Net and Unrealized Total from Net Net Value,
Beginning Investment Gain (Loss) on Investment Investment Realized Total End of
of Period Income Investments Operations Income Gain Distributions Period
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT GRADE FUND
---------------------
Class A
-------
1995(d) $ 9.24 $ .64 $1.10 $1.74 $ .64 $ -- $ .64 $10.34
1996(d) 10.34 .62 (.39) .23 .62 .02 .64 9.93
1997(d) 9.93 .62 .25 .87 .61 .03 .64 10.16
1998(a) 10.16 .46 .36 .82 .45 -- .45 10.53
1999(e) 10.53 .57 (.79) (.22) .58 .07 .65 9.66
2000(e) 9.66 .60 (.14) .46 .58 .01 .59
Class B
-------
1995(b) 9.26 .54 1.10 1.64 .55 -- .55 10.35
1996(d) 10.35 .55 (.39) .16 .55 .02 .57 9.94
1997(d) 9.94 .55 .26 .81 .55 .03 .58 10.17
1998(a) 10.17 .41 .36 .77 .40 -- .40 10.54
1999(e) 10.54 .50 (.79) (.29) .51 .07 .58 9.67
2000(e) 9.67 .54 (.14) .40 .52 .01 .53 9.54
---------------------------------------------------------------------------------------------------------------------------------
INCOME FUND
-----------
Class A
-------
1995(d) $ 3.81 $ .38 $ .30 $ .68 $ .36 $ -- $ .36 $ 4.13
1996(d) 4.13 .39 .14 .53 .37 -- .37 4.29
1997(d) 4.29 .38 .14 .52 .38 -- .38 4.43
1998(a) 4.43 .29 (.26) .03 .29 -- .29 4.17
1999(e) 4.17 .40 (.27) .13 .38 -- .38 3.92
2000(e) 3.92 .35 (.26) .09 .38 -- .38 3.63
Class B
-------
1995(b) 3.81 .31 .33 .64 .32 -- .32 4.13
1996(d) 4.13 .38 .12 .50 .35 -- .35 4.28
1997(d) 4.28 .34 .15 .49 .35 -- .35 4.42
1998(a) 4.42 .26 (.26) -- .26 -- .26 4.16
1999(e) 4.16 .37 (.27) .10 .36 -- .36 3.90
2000(e) 3.90 .33 (.26) .07 .36 -- .36 3.61
---------------------------------------------------------------------------------------------------------------------------------
* 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.
<CAPTION>
------------------------------------------------------------------------------------------------------------------
R A T I O S / S U P P L E M E N T A L D A T A
------------------------------------------------------------------------------------------------
Ratio to Average Net
Ratio to Average Net Assets Before Expenses
Assets++ Waived or Assumed
----------------------- -----------------------
Net Net Portfolio
Total Net Assets Investment Investment Turnover
Return* End of Period Expenses Income Expenses Income Rate
(%) (in millions) (%) (%) (%) (%) (%)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT GRADE FUND
---------------------
Class A
-------
1995(d) 19.40 $ 50 1.10 6.43 1.43 6.10 27
1996(d) 2.39 46 1.11 5.96 1.42 5.65 22
1997(d) 9.14 45 1.11 6.18 1.43 5.86 34
1998(a) 8.29 50 1.10+ 6.02+ 1.40+ 5.72+ 49
1999(e) (2.21) 49 1.10 5.70 1.38 5.42 18
2000(e) 5.03 47 1.10 6.36 1.35 6.11 62
Class B
-------
1995(b) 18.08 1 1.80+ 5.73+ 2.13+ 5.40+ 27
1996(d) 1.64 2 1.81 5.26 2.12 4.95 22
1997(d) 8.40 3 1.81 5.48 2.13 5.16 34
1998(a) 7.73 5 1.80+ 5.32+ 2.10+ 5.02+ 49
1999(e) (2.90) 7 1.80 5.00 2.08 4.72 18
2000(e) 4.31 8 1.80 5.66 2.05 5.41 62
------------------------------------------------------------------------------------------------------------------
INCOME FUND
-----------
Class A
-------
1995(d) 18.54 $425 1.18 9.53 N/A N/A 33
1996(d) 13.40 432 1.16 9.27 N/A N/A 30
1997(d) 12.62 439 1.15 8.63 N/A N/A 45
1998(a) .49 410 1.27+ 8.68+ N/A N/A 28
1999(e) 3.13 389 1.29 9.71 N/A N/A 28
2000(e) 2.46 501 1.29 9.55 N/A N/A 14
Class B
-------
1995(b) 17.46 2 1.92+ 8.78+ N/A N/A 33
1996(d) 12.51 3 1.86 8.57 N/A N/A 30
1997(d) 11.95 6 1.85 7.93 N/A N/A 45
1998(a) (.06) 9 1.97+ 7.98+ N/A N/A 28
1999(e) 2.29 14 1.99 9.01 N/A N/A 28
2000(e) 1.81 23 1.99 8.85 N/A N/A 14
------------------------------------------------------------------------------------------------------------------
See notes to financial statements
</TABLE>
Independent Auditors' Report
To the Shareholders and Boards of Directors/Trustees of
First Investors Cash Management Fund, Inc.
First Investors Government Fund, Inc.
First Investors Investment Grade Fund
First Investors Fund For Income, Inc.
We have audited the accompanying statement of assets and liabilities,
including the portfolios of investments, of the First Investors Cash
Management Fund, Government Fund, Investment Grade Fund (a series of
First Investors Series Fund), and Fund For Income as of September 30,
2000, the related statement of operations for the year then ended 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, 2000, by
correspondence with the custodian and brokers. Where brokers have not
replied to our confirmation requests, we have carried out other
appropriate auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of the First Investors Cash Management Fund,
Government Fund, Investment Grade Fund, and Fund For Income at September
30, 2000, and the results of their operations for the year then ended,
and changes in their net assets and their financial highlights for the
periods presented, in conformity with generally accepted accounting
principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
October 31, 2000
FIRST INVESTORS TAXABLE BOND AND MONEY MARKET FUNDS
Directors/Trustees
------------------
James J. Coy (Emeritus)
Robert M. Grohol
Glenn O. Head
Kathryn S. Head
Larry R. Lavoie
Rex R. Reed
Herbert Rubinstein
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
Mark S. Spencer
Assistant Treasurer
Carol Lerner Brown
Assistant Secretary
FIRST INVESTORS TAXABLE BOND AND MONEY MARKET FUNDS
Shareholder Information
-----------------------
Investment Adviser
First Investors Management Company, Inc.
95 Wall Street
New York, NY 10005
Underwriter
First Investors Corporation
95 Wall Street
New York, NY 10005
Custodian
The Bank of New York
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 their annual and
semi-annual reports to any address at which more than one shareholder
with the same last name has indicated that mail is to be delivered.
Additional copies of the reports will be mailed if requested by any
shareholder in writing or by calling 800-423-4026. The Funds will ensure
that separate reports are sent to any shareholder who subsequently
changes his or her mailing address.
This report is authorized for distribution only to existing
shareholders, and, if given to prospective shareholders, must be
accompanied or preceded by the Funds' prospectus.
