Portfolio of Investments - First Investors

Portfolio Manager’s Letter (continued)FUND FOR INCOMEThe Fund benefited versus the benchmark from its concentration in lower-duration orless interest-rate sensitive holdings, a trend that could be accentuated should interestrates appear poised to increase.We believe that fiscal year 2014 for the Fund starts very much where 2013 left off.Largely in the absence of credit concerns, we believe that high-yield markets are notlikely to be impacted by credit defaults — which are poised to remain historicallylow — but instead by factors other than corporate fundamentals. Specifically, moves inthe prices and yields of Treasuries, as well as political wrangling about the economyin Washington, could create price movement in the high yield market as investorschange their views with regard to larger economic issues. Thus, short bouts of Treasuryvolatility could result in small episodes of high yield price volatility, even whennothing has fundamentally changed in the outlook for most high yield companies.Investors already appear satisfied by late October’s Congressional budget and debtceilingactions, but both issues will continue to make headlines in 2014. Interestingly,the Fed’s Ben Bernanke cited political uncertainty around the U.S. debt-ceiling debateas a risk to the U.S. economic outlook and one of the reasons why the Fed chosenot to begin its tapering activity in September.We anticipate increased volatility around Treasuries in the short-term based on anyapparent episodes of government impasse. If the budget and debt-ceiling issuesare resolved, then we could see Treasury rates move higher as flight-to-qualityfears subside.Corporate-credit fundamentals remain strong, but investors do not like gridlock andthe political posturing coming out of Washington. History has demonstrated thatsuch uncertainty can impact the price of high-yield bonds as well as other risk assets.As market participants gain clarity on the timing of Fed tapering and become moreconfident in economic conditions, the high yield market could benefit.Thank you for placing your trust in First Investors. As always, we appreciate theopportunity to serve your investment needs.Sincerely,Clinton ComeauxPortfolio ManagerOctober 31, 201344