UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM N-Q

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QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT

INVESTMENT COMPANY

INVESTMENT COMPANY ACT FILE NUMBER 811-3967

 

FIRST INVESTORS INCOME FUNDS

(Exact name of registrant as specified in charter)

40 Wall Street

New York, NY 10005

(Address of principal executive offices) (Zip code)

Joseph I. Benedek

First Investors Management Company, Inc.

Raritan Plaza I

Edison, NJ 08837-3620

(Name and address of agent for service)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:

1-212-858-8000

DATE OF FISCAL YEAR END: SEPTEMBER 30

DATE OF REPORTING PERIOD: DECEMBER 31, 2013

   

 

Item 1. Schedule of Investments

The Quarterly Schedule of Portfolio Holdings follows


Portfolio of Investments (unaudited)
CASH MANAGEMENT FUND
December 31, 2013

 
Principal           Interest    
Amount     Security         Rate * Value
  U.S. GOVERNMENT AGENCY OBLIGATIONS-44.1%          
  Fannie Mae:        
$3,460 M   2/3/14     0.08 % $3,459,746
4,650 M   3/19/14     0.06   4,649,413
  Federal Home Loan Bank:        
3,000 M   1/8/14     0.04   2,999,977
4,000 M   1/22/14     0.05   3,999,883
3,000 M   2/28/14     0.09   2,999,589
7,000 M   3/12/14     0.10   6,998,707
7,300 M   4/4/14     0.11   7,297,925
5,000 M   5/21/14     0.12   4,997,764
3,100 M   5/23/14     0.12   3,098,594
  Freddie Mac:        
5,820 M   1/14/14     0.07   5,819,853
6,750 M   1/27/14     0.06   6,749,732
1,700 M   2/3/14     0.07   1,699,891
1,648 M   3/3/14         0.07   1,647,804
Total Value of U.S. Government Agency Obligations (cost $56,418,878)           56,418,878
  CORPORATE NOTES-31.6%        
3,000 M   Abbott Laboratories, 3/10/2014   (a) 0.09   2,999,490
6,000 M   Coca-Cola Co., 2/27/2014   (a) 0.19   5,998,194
4,000 M   Google, Inc., 2/18/2014   (a) 0.09   3,999,520
5,000 M   Honeywell International, Inc., 1/30/2014     (a) 0.12   4,999,516
5,000 M   Merck & Co., Inc., 2/28/2014   (a) 0.07   4,999,436
5,000 M   New Jersey Natural Gas Co., 1/7/2014       0.10   4,999,917
2,500 M   PepsiCo, Inc., 1/6/2014   (a) 0.06   2,499,979
5,000 M   Philip Morris International, Inc., 2/13/2014     (a) 0.09   4,999,462
  Procter & Gamble Co.:        
4,000 M   3/10/14   (a) 0.08   3,999,396
1,000 M   3/28/14       (a) 0.09   999,785
Total Value of Corporate Notes (cost $40,494,695)              40,494,695
  VARIABLE AND FLOATING RATE NOTES-12.5%          
4,500 M   Federal Farm Credit Bank, 3/18/2014       0.13   4,499,906
5,700 M   Mississippi Business Finance Corp. (Chevron USA, Inc.), 12/1/2030       0.02   5,700,000
5,835 M   Valdez, Alaska Marine Terminal Rev. (Exxon Pipeline Co., Project B), 12/1/2033        0.02   5,835,000
Total Value of Variable and Floating Rate Notes (cost $16,034,906)            16,034,906
  SHORT-TERM U.S. GOVERNMENT OBLIGATIONS-10.2%          
  U.S. Treasury Bills:        
3,000 M   1/9/14     0.03   2,999,981
7,000 M   1/23/14     0.03   6,999,872
3,000 M   5/1/14          0.09   2,999,100
Total Value of Short-Term U.S. Government Obligations (cost $12,998,953)            12,998,953
Total Value of Investments (cost $125,947,432)** 98.4 %       125,947,432
Other Assets, Less Liabilities 1.6            2,052,507
Net Assets       100.0 %            $127,999,939

 


* The interest rates shown are the effective rates at the time of purchase by the Fund. The
  interest rates shown on variable and floating rate notes are adjusted periodically; the rates
  shown are the rates in effect at December 31, 2013.
 
 
** Aggregate cost for federal income tax purposes is the same.
 
(a) Security exempt from registration under Section 4(2) of the Securities Act of 1933. Certain
  restricted securities are exempt from the registration requirements under Section 4(2) of the
  Securities Act of 1933 and may only be sold to qualified institutional investors. At December
  31, 2013, the Fund held nine Section 4(2) securities with an aggregate value of $35,494,778
  representing 27.7% of the Fund's net assets.

 


Accounting Standards Codification 820 established a three-tier hierarchy of inputs to establish a classification of fair value measurements for disclosure purposes. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below:

Level 1 - Unadjusted quoted prices in active markets for identical securities that the Fund has the ability to access.

Level 2 - Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.

Level 3 - Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund's own assumption about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

The inputs methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, such securities are reflected as Level 2.

The following is a summary, by category of Level, of inputs used to value the Fund's investments as of December 31, 2013:

    Level 1     Level 2     Level 3     Total
U.S. Government Agency                
Obligations   $ -   $ 56,418,878   $ -   $ 56,418,878
Corporate Notes     -   40,494,695     -   40,494,695
Variable and Floating Rate Notes:                
Municipal Bonds     -   11,535,000     -   11,535,000
U.S. Government Agency                
Obligations     -   4,499,906     -   4,499,906
Short-Term U.S. Government                
Obligations     -   12,998,953     -   12,998,953
Total Investments in Securities   $ -   $ 125,947,432   $ -   $ 125,947,432

There were no transfers into or from Level 1 and Level 2 by the Fund for the period ended December 31, 2013.
Transfers, if any, between Levels are recognized at the end of the reporting period.


Portfolio of Investments (unaudited)
GOVERNMENT FUND
December 31, 2013

 
Principal            
Amount     Security              Value
  RESIDENTIAL MORTGAGE-BACKED SECURITIES-71.3%              
  Fannie Mae-27.8%              
$15,976 M   2.5%, 9/1/2023 - 12/1/2027             $16,068,107
10,951 M   3%, 8/1/2022 - 6/1/2023             11,363,411
16,736 M   3.5%, 10/1/2025 - 5/1/2033             17,323,455
27,231 M   4%, 8/1/2026 - 10/1/2041         (a)   28,551,926
11,913 M   4.5%, 11/1/2040 - 1/1/2042             12,745,541
7,956 M   5%, 8/1/2039 - 4/1/2040             8,677,423
3,992 M   5.5%, 7/1/2033 - 10/1/2039              4,414,603
                    99,144,466
  Freddie Mac-4.4%              
4,467 M   2.5%, 1/1/2028             4,440,149
2,250 M   3.5%, 9/1/2032             2,329,700
6,231 M   4%, 11/1/2040             6,498,280
2,294 M   5%, 8/1/2039              2,528,252
                     15,796,381
  Government National Mortgage Association I Program-39.1%              
7,171 M   4%, 11/15/2025 - 6/15/2042             7,687,847
26,203 M   4.5%, 9/15/2033 - 9/15/2040             28,282,011
42,977 M   5%, 6/15/2033 - 6/15/2040             47,199,456
24,245 M   5.5%, 3/15/2033 - 10/15/2039             27,253,793
21,708 M   6%, 3/15/2031 - 5/15/2040             24,428,350
1,800 M   6.5%, 6/15/2034 - 3/15/2038             2,010,307
2,543 M   7%, 6/15/2023 - 4/15/2034             2,829,437
                    139,691,201
Total Value of Residential Mortgage-Backed Securities (cost $249,811,606)             254,632,048
  U.S. GOVERNMENT AGENCY OBLIGATIONS-18.3%              
  Fannie Mae:              
18,200 M   0.875%, 12/20/2017             17,836,764
21,000 M   1.875%, 9/18/2018             21,161,994
10,000 M   1.625%, 11/27/2018             9,928,210
7,000 M   Federal Farm Credit Bank, 2.79%, 11/12/2020             6,930,168
4,400 M   Federal Home Loan Bank, 1%, 2/15/2028         (b)   4,128,124
5,000 M   Freddie Mac, 3.75%, 3/27/2019             5,456,365
Total Value of U.S. Government Agency Obligations (cost $66,004,410)             65,441,625
  COLLATERALIZED MORTGAGE OBLIGATIONS-3.5%              
  Fannie Mae-2.2%              
7,790 M   3%, 2/25/2024             7,821,880
  Freddie Mac-1.3%              
4,574 M   3%, 8/15/2039              4,782,900
Total Value of Collateralized Mortgage Obligations (cost $13,085,391)             12,604,780
  COMMERCIAL MORTGAGE-BACKED SECURITIES-3.5%              

 


  Fannie Mae-2.1%      
2,952 M   2.27%, 1/1/2023     2,748,217
1,300 M   2.96%, 11/1/2018     1,356,250
2,987 M   3.76%, 4/1/2018             3,224,633
                    7,329,100
  Federal Home Loan Mortgage Corp.-1.4%            
5,000 M   Multi Family Structured Pass Through, 2.13%, 1/25/2019           4,985,425
Total Value of Commercial Mortgage-Backed Securities (cost $12,772,662)           12,314,525
  CORPORATE BONDS-1.1%      
  Financials      
4,216 M   Excalibur One 77B, LLC, 1.492%, 1/1/2025 (cost $4,195,085)           3,980,679
Total Value of Investments (cost $345,869,154) 97.7 %         348,973,657
Other Assets, Less Liabilities 2.3           8,274,532
Net Assets       100.0 %         $357,248,189

 


(a) A portion or all of the security purchased on a when-issued or delayed delivery
basis.
 
(b) Denotes a step bond (a zero coupon bond that converts to a fixed interest rate
at a designated date)
 
At December 31, 2013, the cost of investments for federal income tax purposes
was $345,869,154. Accumulated net unrealized appreciation on investments
was $3,104,503, consisting of $7,833,040 gross unrealized appreciation and
$4,728,537 gross unrealized depreciation.

 


Accounting Standards Codification 820 established a three-tier hierarchy of inputs to establish a classification of fair value measurements for disclosure purposes. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below:

Level 1 - Unadjusted quoted prices in active markets for identical securities that the Fund has the ability to access.

Level 2 - Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.

Level 3 - Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund's own assumption about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

The inputs methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, such securities are reflected as Level 2.

The following is a summary, by category of Level, of inputs used to value the Fund's investments as of December 31, 2013:

    Level 1     Level 2     Level 3     Total
Residential                  
Mortgage-Backed Securities   $ -   $ 254,632,048   $   - $ 254,632,048
U.S. Government Agency Obligations     -   65,441,625       -   65,441,625
Collateralized Mortgage Obligations     -   12,604,780       -   12,604,780
Commercial                  
Mortgage-Backed Securities     -   12,314,525       -   12,314,525
Corporate Bonds     -   3,980,679       -   3,980,679
Total Investments in Securities   $ -   $ 348,973,657   $   - $ 348,973,657

There were no transfers into or from Level 1 and Level 2 by the Fund for the period ended December 31, 2013.
Transfers, if any, between Levels are recognized at the end of the reporting period.


Portfolio of Investments (unaudited)
INVESTMENT GRADE FUND
December 31, 2013

 
Principal            
Amount     Security               Value
  CORPORATE BONDS-98.4%              
  Aerospace/Defense-.3%              
$1,800 M   BAE Systems Holdings, Inc., 4.95%, 6/1/2014         (a)   $1,831,271
  Agriculture-.6%              
2,725 M   Cargill, Inc., 6%, 11/27/2017         (a)   3,114,174
  Automotive-1.9%              
2,000 M   Daimler Finance NA, LLC, 2.95%, 1/11/2017         (a)   2,066,690
4,000 M   General Motors Co., 3.5%, 10/2/2018         (a)   4,110,000
4,100 M   Johnson Controls, Inc., 5%, 3/30/2020              4,485,039
                    10,661,729
  Chemicals-2.9%              
5,000 M   CF Industries, Inc., 7.125%, 5/1/2020             5,868,345
4,000 M   Dow Chemical Co., 4.25%, 11/15/2020             4,273,292
5,000 M   LyondellBasell Industries NV, 6%, 11/15/2021               5,759,745
                     15,901,382
  Consumer Durables-.4%              
2,300 M   Newell Rubbermaid, Inc., 4.7%, 8/15/2020             2,415,787
  Energy-9.7%              
5,000 M   Canadian Oil Sands, Ltd., 7.75%, 5/15/2019         (a)   6,001,105
4,800 M   DCP Midstream, LLC, 9.75%, 3/15/2019         (a)   5,978,654
5,000 M   Enbridge Energy Partners, LP, 4.2%, 9/15/2021             5,038,800
5,000 M   Kinder Morgan Energy Partners, LP, 3.45%, 2/15/2023             4,653,125
1,646 M   Maritime & Northeast Pipeline, LLC, 7.5%, 5/31/2014         (a)   1,681,563
5,000 M   Nabors Industries, Inc., 6.15%, 2/15/2018             5,623,810
4,000 M   ONEOK Partners, LP, 3.375%, 10/1/2022             3,746,204
5,000 M   Petrobras International Finance Co., 5.375%, 1/27/2021             4,986,940
5,800 M   Spectra Energy Capital, LLC, 6.2%, 4/15/2018             6,550,184
4,000 M   Valero Energy Corp., 9.375%, 3/15/2019             5,160,680
4,000 M   Weatherford International, Inc., 6.35%, 6/15/2017              4,525,604
                       53,946,669
  Financial Services-17.0%              
2,250 M   Aflac, Inc., 8.5%, 5/15/2019             2,876,924
6,000 M   American Express Co., 7%, 3/19/2018             7,175,748
  American International Group, Inc.:              
3,200 M   8.25%, 8/15/2018             4,010,768
3,100 M   6.4%, 12/15/2020             3,669,027
4,000 M   Ameriprise Financial, Inc., 5.3%, 3/15/2020             4,517,024
4,300 M   Berkshire Hathaway, Inc., 3.4%, 1/31/2022             4,284,653
4,000 M   BlackRock, Inc., 5%, 12/10/2019             4,522,236
4,000 M   CoBank, ACB, 7.875%, 4/16/2018         (a)   4,812,284
1,800 M   Compass Bank, 6.4%, 10/1/2017             1,985,834
5,750 M   ERAC USA Finance Co., 4.5%, 8/16/2021         (a)   6,001,994
6,200 M   Ford Motor Credit Co., LLC, 8.125%, 1/15/2020             7,762,375
  General Electric Capital Corp.:            
9,400 M   5.3%, 2/11/2021           10,530,773
7,000 M   6.75%, 3/15/2032           8,692,593
4,000 M   Glencore Funding, LLC, 6%, 4/15/2014         (a)   4,057,812
3,800 M   Harley-Davidson Funding Corp., 5.75%, 12/15/2014         (a)   3,969,518
4,000 M   Liberty Mutual Group, Inc., 4.95%, 5/1/2022         (a)   4,143,088
5,400 M   Protective Life Corp., 7.375%, 10/15/2019           6,593,746
4,000 M   Prudential Financial, Inc., 7.375%, 6/15/2019             4,916,420
                    94,522,817
  Financials-20.6%            
  Bank of America Corp.:            
9,500 M   5.65%, 5/1/2018           10,824,081
4,300 M   5%, 5/13/2021           4,706,212
8,000 M   Barclays Bank, PLC, 5.125%, 1/8/2020           8,882,224
  Citigroup, Inc.:            
10,200 M   6.125%, 11/21/2017           11,767,954
2,000 M   4.5%, 1/14/2022           2,123,002
1,800 M   Cooperatieve Centrale Raiffeisen-Boerenleenbank BA, 4.625%, 12/1/2023           1,816,213
2,000 M   Fifth Third Bancorp, 3.5%, 3/15/2022           1,953,744
  Goldman Sachs Group, Inc.:            
6,000 M   5.375%, 3/15/2020           6,681,654
1,900 M   5.75%, 1/24/2022           2,142,305
3,000 M   3.625%, 1/22/2023           2,910,597
5,250 M   6.75%, 10/1/2037           5,858,974
  JPMorgan Chase & Co.:            
9,200 M   6%, 1/15/2018           10,603,221
4,000 M   4.5%, 1/24/2022           4,238,088
  Morgan Stanley:            
5,800 M   5.95%, 12/28/2017           6,632,573
5,500 M   6.625%, 4/1/2018           6,441,584
4,250 M   5.5%, 7/28/2021           4,756,634
6,000 M   SunTrust Banks, Inc., 6%, 9/11/2017           6,800,838
4,000 M   UBS AG, 4.875%, 8/4/2020           4,457,560
  Wells Fargo & Co.:            
5,800 M   4.6%, 4/1/2021           6,367,982
4,800 M   3.45%, 2/13/2023             4,546,824
                     114,512,264
  Food/Beverage/Tobacco-8.8%            
4,000 M   Altria Group, Inc., 9.7%, 11/10/2018           5,262,904
4,000 M   Anheuser-Busch InBev Worldwide, Inc., 5.375%, 1/15/2020           4,596,632
3,000 M   Bottling Group, LLC, 5.125%, 1/15/2019           3,391,302
5,225 M   Bunge Ltd. Finance Corp., 8.5%, 6/15/2019           6,426,050
4,000 M   Dr. Pepper Snapple Group, Inc., 6.82%, 5/1/2018           4,725,876
4,165 M   Ingredion, Inc., 4.625%, 11/1/2020           4,349,160
4,000 M   Lorillard Tobacco Co., 6.875%, 5/1/2020           4,622,320
3,000 M   Mead Johnson Nutrition Co., 4.9%, 11/1/2019           3,275,544
4,000 M   Philip Morris International, Inc., 5.65%, 5/16/2018           4,598,600
4,000 M   SABMiller Holdings, Inc.:            
4,000 M   3.75%, 1/15/2022         (a)   4,021,836
4,000 M   4.95%, 1/15/2042         (a)   3,987,964
                    49,258,188
  Food/Drug-.7%            
4,000 M   Safeway, Inc., 4.75%, 12/1/2021             4,023,236
  Forest Products/Container-.5%            
2,200 M   International Paper Co., 9.375%, 5/15/2019             2,888,877
  Gaming/Leisure-.7%            
4,000 M   Marriott International, Inc., 3.25%, 9/15/2022             3,736,188
  Health Care-3.6%            
4,000 M   Biogen IDEC, Inc., 6.875%, 3/1/2018           4,720,120
4,050 M   Express Scripts Holding Co., 4.75%, 11/15/2021           4,286,520
4,000 M   Laboratory Corp. of America Holdings, 3.75%, 8/23/2022           3,881,632
4,000 M   Mylan, Inc. , 3.125%, 1/15/2023         (a)   3,636,932
2,400 M   Novartis Securities Investments, Ltd., 5.125%, 2/10/2019           2,720,774
916 M   Roche Holdings, Inc., 6%, 3/1/2019         (a)   1,073,147
                    20,319,125
  Information Technology-3.3%            
4,000 M   Harris Corp., 4.4%, 12/15/2020           4,152,556
5,000 M   Motorola Solutions, Inc., 6%, 11/15/2017           5,692,250
4,000 M   Pitney Bowes, Inc., 5.75%, 9/15/2017           4,411,656
4,000 M   Symantec Corp., 3.95%, 6/15/2022             3,887,584
                     18,144,046
  Manufacturing-2.7%            
4,000 M   CRH America, Inc., 8.125%, 7/15/2018           4,904,468
4,000 M   Ingersoll-Rand Global Holdings Co., Ltd., 6.875%, 8/15/2018           4,712,324
2,500 M   Pentair Finance SA, 3.15%, 9/15/2022           2,262,370
2,725 M   Tyco Electronics Group SA, 6.55%, 10/1/2017              3,121,106
                    15,000,268
  Media-Broadcasting-3.1%            
3,950 M   British Sky Broadcasting Group, PLC, 9.5%, 11/15/2018         (a)   5,154,169
2,000 M   CBS Corp. , 8.875%, 5/15/2019           2,559,904
3,250 M   Comcast Corp., 4.25%, 1/15/2033           3,028,581
3,000 M   DirecTV Holdings, LLC, 3.8%, 3/15/2022           2,886,918
3,000 M   Time Warner Entertainment Co., LP, 8.375%, 3/15/2023             3,456,231
                    17,085,803
  Media-Diversified-.7%            
  McGraw-Hill Cos., Inc.:            
1,800 M   5.9%, 11/15/2017           1,956,870
2,300 M   6.55%, 11/15/2037              2,201,052
                    4,157,922
  Metals/Mining-5.0%            
5,000 M   Alcoa, Inc., 6.15%, 8/15/2020           5,395,880
4,000 M   ArcelorMittal, 6.125%, 6/1/2018           4,405,000
4,200 M   Newmont Mining Corp., 5.125%, 10/1/2019           4,361,192
5,000 M   Rio Tinto Finance USA, Ltd., 3.75%, 9/20/2021           5,056,395
4,000 M   Vale Overseas, Ltd., 5.625%, 9/15/2019           4,359,544
4,000 M   Xstrata Canada Financial Corp., 4.95%, 11/15/2021         (a)   4,058,288
                     27,636,299
  Real Estate Investment Trusts-5.3%            
5,000 M   Boston Properties, LP, 5.875%, 10/15/2019           5,748,860
5,000 M   Digital Realty Trust, LP, 5.25%, 3/15/2021           5,110,575
5,000 M   HCP, Inc., 5.375%, 2/1/2021           5,450,710
4,000 M   ProLogis, LP, 6.625%, 5/15/2018           4,676,392
4,000 M   Simon Property Group, LP, 5.75%, 12/1/2015           4,334,376
4,000 M   Ventas Realty, LP, 4.75%, 6/1/2021              4,202,852
                    29,523,765
  Retail-General Merchandise-1.6%            
6,000 M   GAP, Inc., 5.95%, 4/12/2021       6,639,726
2,000 M   Home Depot, Inc., 5.875%, 12/16/2036            2,315,476
                    8,955,202
  Telecommunications-1.5%        
1,800 M   AT&T, Inc., 2.375%, 11/27/2018       1,803,618
3,300 M   GTE Corp., 6.84%, 4/15/2018       3,847,328
3,000 M   Rogers Communications, Inc., 3%, 3/15/2023           2,772,891
                    8,423,837
  Transportation-2.2%        
3,000 M   Burlington North Santa Fe, LLC, 3%, 3/15/2023           2,799,312
3,000 M   Con-way, Inc., 7.25%, 1/15/2018       3,451,239
4,000 M   GATX Corp., 4.75%, 6/15/2022       4,074,976
2,000 M   Penske Truck Leasing Co., LP, 4.875%, 7/11/2022       (a)   2,055,324
                     12,380,851
  Utilities-5.3%        
3,000 M   E.ON International Finance BV, 5.8%, 4/30/2018       (a)   3,436,053
1,900 M   Electricite de France SA, 6.5%, 1/26/2019       (a)   2,248,844
3,240 M   Entergy Arkansas, Inc., 3.75%, 2/15/2021           3,315,019
4,000 M   Exelon Generation Co., LLC, 5.2%, 10/1/2019           4,316,064
  Great River Energy Co.:        
393 M   5.829%, 7/1/2017   (a)   417,134
3,538 M   4.478%, 7/1/2030   (a)   3,539,620
4,000 M   National Fuel Gas Co., 8.75%, 5/1/2019           4,987,828
3,000 M   Ohio Power Co., 5.375%, 10/1/2021       3,352,473
2,881 M   Sempra Energy, 9.8%, 2/15/2019             3,809,932
                    29,422,967
Total Value of Corporate Bonds (cost $531,643,433) 98.4 %         547,862,667
Other Assets, Less Liabilities 1.6            8,906,330
Net Assets       100.0 %         $556,768,997

 


(a) Security exempt from registration under Rule 144A of the Securities Act of
1933. Certain restricted securities are exempt from the registration
requirements under Rule 144A of the Securities Act of 1933 and may only be
sold to qualified institutional investors. At December 31, 2013, the Fund held
twenty-three 144A securities with an aggregate value of $81,397,464
representing 14.6% of the Fund's net assets.
 
At December 31, 2013, the cost of investments for federal income tax purposes
was $531,643,433. Accumulated net unrealized appreciation on investments
was $16,219,234, consisting of $23,108,375 gross unrealized appreciation and
$6,889,141 gross unrealized depreciation.

 


Accounting Standards Codification 820 established a three-tier hierarchy of inputs to establish a classification of fair value measurements for disclosure purposes. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below:

Level 1 - Unadjusted quoted prices in active markets for identical securities that the Fund has the ability to access.

Level 2 - Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.

Level 3 - Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund's own assumption about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

The inputs methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, such securities are reflected as Level 2.

The following is a summary, by category of Level, of inputs used to value the Fund's investments as of December 31, 2013:

    Level 1     Level 2     Level 3   Total
Corporate Bonds*   $ -   $ 547,862,667   $ -   $ 547,862,667

*The Portfolio of Investments provides information on the industry categorization.

There were no transfers into or from Level 1 and Level 2 by the Fund for the period ended December 31, 2013.
Transfers, if any, between Levels are recognized at the end of the reporting period.


Portfolio of Investments (unaudited)
STRATEGIC INCOME FUND
December 31, 2013

 
Shares     Security             Value
  MUTUAL FUNDS-99.6%      
  Fixed Income Funds-89.4%      
311,513     First Investors Floating Rate Fund - Institutional Shares           $3,118,246
9,410,196     First Investors Fund For Income - Institutional Shares           24,937,019
284,058     First Investors Government Fund - Institutional Shares           3,084,866
941,689     First Investors International Opportunities Bond Fund - Institutional Shares           9,190,885
1,577,833     First Investors Investment Grade Fund - Institutional Shares           15,462,766
                     55,793,782
  Equity Funds-10.2%      
659,723     First Investors Equity Income Fund - Institutional Shares           6,346,536
Total Value of Mutual Funds (cost $62,150,397) 99.6 %         62,140,318
Other Assets, Less Liabilities .4           283,185
Net Assets       100.0 %         $62,423,503

 


At December 31, 2013, the cost of investments for federal income tax purposes was
$62,152,340. Accumulated net unrealized depreciation on investments was $12,022,
consisting of $523,274 gross unrealized appreciation and $535,296 gross unrealized
depreciation.

 


Accounting Standards Codification 820 established a three-tier hierarchy of inputs to establish a classification of fair value measurements for disclosure purposes. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below:

Level 1 - Unadjusted quoted prices in active markets for identical securities that the Fund has the ability to access.

Level 2 - Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.

Level 3 - Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund's own assumption about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

The inputs methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, such securities are reflected as Level 2.

The following is a summary, by category of Level, of inputs used to value the Fund's investments as of December 31, 2013:

      Level 1     Level 2     Level 3     Total
Mutual Funds                        
Fixed Income Funds   $ 55,793,782   $   -   $   -   $ 55,793,782
Equtiy Funds     6,346,536       -       -     6,346,536
Total Investments in Securities   $ 62,140,318   $   -   $   -   $ 62,140,318

There were no transfers into or from Level 1 and Level 2 by the Fund for the period ended December 31, 2013.
Transfers, if any, between Levels are recognized at the end of the reporting period.


Portfolio of Investments (unaudited)
INTERNATIONAL OPPORTUNITIES BOND FUND
December 31, 2013

 
Principal                    
Amount      Security             Value
      SOVEREIGN BONDS-58.9%              
      Mexico-12.9%              
      United Mexican States:              
584 M MXN 8.5%, 5/31/2029             $ 5,075,873
420 M MXN 8.5%, 11/18/2038             3,561,511
595 M MXN 7.75%, 11/13/2042             4,648,479
                    13,285,863
      United Kingdom-10.2%              
      United Kingdom Gilt:              
4,205 M GBP 2.25%, 3/7/2014             6,988,106
1,900 M GBP 4.25%, 3/7/2036             3,460,066
                     10,448,172
      Italy-8.2%              
5,870 M EUR Italy Buoni Poliennali Del Tesoro, 5%, 8/1/2039             8,391,030
      South Korea-4.7%              
      Republic of Korea:              
3,594,500 M KRW 5.75%, 9/10/2018             3,774,373
1,170,500 M KRW 3.375%, 9/10/2023             1,092,262
                    4,866,635
      Poland-4.4%              
      Republic of Poland:              
6,800 M PLN 5.5%, 4/25/2015             2,333,851
3,025 M PLN 5.25%, 10/25/2020             1,076,720
3,340 M PLN 4%, 10/25/2023             1,078,831
                    4,489,402
      New Zealand-3.9%              
      New Zealand Government Bonds:              
2,390 M NZD 5%, 3/15/2019             2,038,921
2,230 M NZD 5.5%, 4/15/2023             1,944,047
                    3,982,968
      South Africa-3.7%              
      Republic of South Africa:              
12,855 M ZAR 6.75%, 3/31/2021             1,168,581
37,525 M ZAR 6.5%, 2/28/2041             2,645,515
                     3,814,096
      Brazil-3.6%              
      Nota Do Tesouro Nacional:              
1 M BRL 9.76%, 1/1/2021             194,836
9 M BRL 9.76%, 1/1/2023             3,481,092
                    3,675,928
      Hungary-2.8%              
      Hungary Government Bond:              
535,000 M HUF 5.5%, 2/12/2016             2,577,894
69,000 M HUF 7.5%, 11/12/2020             360,852
                    2,938,746
      Ireland-2.2%              
      Republic of Ireland:              
885 M EUR 4.5%, 4/18/2020             1,335,373
575 M EUR 5%, 10/18/2020             891,932
                      2,227,305
      Turkey-1.3%              
2,795 M TRY Republic of Turkey, 9%, 3/5/2014             1,305,747
      Malaysia-1.0%              
3,550 M MYR Federation of Malaysia, 3.48%, 3/15/2023             1,044,819

 


Total Value of Sovereign bonds (cost $62,376,862)             60,470,711
      GOVERNMENT REGIONAL AGENCY-9.8%            
      Australia-9.3%              
3,950 M AUD New South Wales Treasury Corp., 6%, 4/1/2016           3,765,985
      Queensland Treasury Corp.:              
3,260 M AUD 6.25%, 2/21/2020             3,246,231
735 M AUD 6%, 7/21/2022             719,160
1,910 M AUD Treasury Corp. of Victoria, 5.75%, 11/15/2016           1,831,923
                     9,563,299
      Netherlands-.5%              
466 M   USD Bank Nederlanse Gemeenten, 1%, 11/17/2014     (a)     468,770
Total Value of Government Regional Agency (cost $11,506,628)           10,032,069
      GOVERNMENT SOVEREIGN AGENCY-6.8%            
      Sweden-3.7%              
      Swedish Export Credit:              
3,200 M USD 0.625%, 9/4/2015             3,210,387
585 M USD 0.38685%, 4/29/2016         (b)      585,485
                        3,795,872
      Norway-2.2%              
2,250 M USD Kommunalbanken AS, 0.32285%, 3/18/2016     (a) (b)   2,252,882
      Denmark-.9%              
940 M USD KommuneKredit, 0.28735%, 11/20/2014     (b)       940,082
Total Value of Government Sovereign Agency (cost $6,976,702)               6,988,836
      U.S. GOVERNMENT OBLIGATIONS-5.8%            
      United States              
6,010 M USD U.S. Treasury Notes, 0.25%, 6/30/2014 (cost $6,014,886)              6,015,048
      GOVERNMENT GUARANTEED PROGRAM-4.2%            
      Germany-3.5%              
1,000 M USD Erste Abwicklungsanstalt, 0.4416%, 6/7/2016     (b)     1,001,170
      Kreditanstalt fuer Wiederaufbau:            
905 M USD 0.375%, 5/15/2015       (c)     905,671
1,735 M AUD 6.25%, 12/4/2019        (c)       1,704,181
                        3,611,022
      New Zealand-.7%              
720 M USD Wespac Securities New Zealand, Ltd., 3.45%, 7/28/2014     (a)     732,947
Total Value of Government Guaranteed Program (cost $4,699,915)           4,343,969
      SUPRANATIONAL-1.0%              
      Luxembourg              
1,015 M USD European Investment Bank, 1.125%, 9/15/2017 (cost $1,011,665)           1,010,024
      SHORT-TERM U.S. GOVERNMENT OBLIGATIONS-8.3%            
      United States              
      U.S. Treasury Bills:              
4,145 M USD 0.121%, 11/13/2014             4,140,597
4,450 M USD 0.1085%, 11/13/2014             4,445,762
Total Value of Short-Term U.S. Government Obligations (cost $8,586,359)              8,586,359
Total Value of Investments (cost $101,173,017) 94.8 %         97,447,016
Other Assets, Less Liabilities 5.2            5,336,914
Net Assets      100.0 %           $102,783,930

 


 
 
 
(a) Security exempt from registration under Rule 144A of the Securities Act of 1933.
Certain restricted securities are exempt from the registration requirements under Rule
144A of the Securities Act of 1933 and may only be sold to qualified institutional
investors. At December 31, 2013, the Fund held three 144A securities with an
aggregate value of $3,454,599 representing 3.4% of the Fund's net assets.
 
(b) Interest rates are determined and reset periodically. The interest rates above are the
rates in effect at December 31, 2013.
 
(c) The Federal Republic of Germany guarantees all existing and future obligations of
Kreditanstalt fuer Wiederaufbau ("KFW") in respect of money borrowed, bonds issued,
and derivative transactions entered into by KFW, as well as third party obligations that
are expressly guaranteed by KFW.
 
Abbreviations:
AUD Australian Dollar
BRL Brazillian Real
EUR Euro
GBP British Pound
HUF Hungarian Forint
KRW South Korean Won
MXN Mexican Peso
MYR Malaysian Ringgit
NZD New Zealand Dollar
PLN Polish Zloty
TRY Turkish Lira
USD United States Dollar
ZAR South African Rand
 
At December 31, 2013, the cost of investments for federal income tax purposes was
$101,173,017. Accumulated net unrealized depreciation on investments was
$3,726,001, consisting of $2,076,210 gross unrealized appreciation and $5,802,211
gross unrealized depreciation.

 


Accounting Standards Codification 820 established a three-tier hierarchy of inputs to establish a classification of fair value measurements for disclosure purposes. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below:

Level 1 - Unadjusted quoted prices in active markets for identical securities that the Fund has the ability to access.

Level 2 - Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.

Level 3 - Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund's own assumption about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

The inputs methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, such securities are reflected as Level 2.

The following is a summary, by category of Level, of inputs used to value the Fund's investments as of December 31, 2013:

      Level 1     Level 2   Level 3     Total
Sovereign Bonds            
Mexico   $ -   $ 13,285,863   $ -   $ 13,285,863
United Kingdom -   10,448,172   -     10,448,172
Italy   -   8,391,030   -     8,391,030
South Korea   -   4,866,635   -     4,866,635
Poland   -   4,489,402   -     4,489,402
New Zealand   -   3,982,968   -     3,982,968
South Africa   -   3,814,096   -     3,814,096
Brazil   -   3,675,928   -     3,675,928
Hungary   -   2,938,746   -     2,938,746
Ireland   -   2,227,305   -     2,227,305
Turkey   -   1,305,747   -     1,305,747
Malaysia   -   1,044,819   -     1,044,819
Government Regional Agency            
Australia   -   9,563,299   -     9,563,299
Netherlands   -   468,770   -     468,770
Government Sovereign Agency            
Sweden   -   3,795,872   -     3,795,872
Norway   -   2,252,882   -     2,252,882
Denmark   -   940,082   -     940,082
U.S. Government Obligations   -   6,015,048   -     6,015,048
Government Guaranteed Program            
Germany   -   3,611,022   -     3,611,022
New Zealand   -   732,947   -     732,947
Supranationals            
Luxembourg   -   1,010,024   -     1,010,024
Short-Term U.S. Government            
Obligations     -   8,586,359   -     8,586,359
Total Investments in Securities   $ -   $ 97,447,016   $ -    $ 97,447,016
Other Financial Instruments**   $ -   $ 297,248   $ -     $ 297,248

**Other financial instruments are foreign exchange contracts and are considered derivative instruments, which are valued at the net unrealized appreciation on the instrument.

There were no transfers into or from Level 1 and Level 2 by the Fund for the period ended December 31, 2013. Transfers, if any, between Levels are recognized at the end of the reporting period.


Portfolio of Investments (unaudited)
FLOATING RATE FUND
December 31, 2013

 
Principal            
Amount     Security             Value
  LOAN PARTICIPATIONS+-83.5%              
  Aerospace/Defense-1.1%              
$599 M   TransDigm, Inc., 3.75%, 2/28/2020         (a)   $600,652
  Automotive-2.7%              
499 M   ASP HHI Group Holdings, LLC, 5%, 10/5/2018             504,981
900 M   Chrysler Group, LLC, 4.25% 5/24/2017         (a)   907,778
                     1,412,759
  Building Materials-1.0%              
499 M   USIC Holdings, Inc., 4.75%, 7/10/2020             500,513
  Chemicals-3.8%              
328 M   AIlnex Luxembourgh & Cy SCA, 4.5%, 10/4/2019             331,860
170 M   AIlnex USA, Inc., 4.5%, 10/4/2019             172,186
500 M   Axalta Coating Systems, Inc., 4.75%, 2/1/2020         (a)   504,453
500 M   Cyanco Intermediate Corp., 5.5%, 5/1/2020         (a)   505,625
500 M   Univar, Inc., 5%, 6/30/2017         (a)   496,563
                     2,010,687
  Energy-10.2%              
598 M   Alpha Natural Resources, Inc., 3.5%, 5/22/2020             589,765
1,050 M   Chesapeake Energy Corp., 5.75%, 12/2/2017         (a)   1,071,574
  Fieldwood Energy, LLC:              
250 M   3.875%, 9/28/2018             251,058
550 M   8.205%, 9/30/2020         (a)   562,787
650 M   Murray Energy Corp., 5.25%, 11/21/2019         (a)   657,448
650 M   Offshore Group Investment, Ltd., 5.75% 3/28/2019         (a)   661,103
599 M   Pacific Drilling SA, 4.5%, 6/3/2018             605,603
  Samson Investment Co.:              
500 M   6%, 9/25/2018         (a)   502,708
500 M   5%, 9/25/2018              502,708
                     5,404,754
  Financial Services-3.0%              
600 M   HUB International, Ltd., 4.75% 10/2/2020             606,563
  Sheridan Investment Partners II, LP:              
161 M   4.25%, 12/11/2020         (a)   161,563
840 M   4.5%, 12/11/2020         (a)   845,937
                     1,614,063
  Food/Beverage/Tobacco-4.7%              
800 M   Darling International, Inc., 3.25% 1/1/2021         (a)   809,000
698 M   H.J. Heinz Co., 3.5% 6/5/2020             704,936
500 M   JBS USA, LLC, 3.75%, 5/25/2018             499,063
499 M   Pinnacle Foods Finance, LLC, 3.25%, 4/29/2020              498,884
                     2,511,883
  Food/Drug-3.2%            
650 M   NBTY, Inc., 3.5% 10/1/2017         (a)   655,223
500 M   Rite Aid Corp., 4.875%, 6/21/2021         (a)   508,875
530 M   Sprouts Farmers Market Holdings, LLC, 4% 4/23/2020               532,065
                    1,696,163
  Forest Products/Container-4.0%            
900 M   Ardagh Holdings USA, Inc., 4.25%, 12/12/2019         (a)   906,750
599 M   Berry Plastics Group, Inc., 3.5% 2/8/2020           597,059
  Exopack, LLC:            
500 M   5.25%, 4/11/2019           508,907
100 M   5.25%, 5/8/2019         (a)   101,781
                    2,114,497
  Gaming/Leisure-6.8%            
598 M   AMC Entertainment, Inc., 3.5% 4/30/2020           600,830
  Hilton Worldwide Finance, LLC:            
394 M   3.75%, 9/23/2020           397,767
420 M   3.75%, 10/26/2020         (a)   423,226
499 M   Live Nation Entertainment, Inc., 3.5%, 8/17/2020           499,789
598 M   Pinnacle Entertainment, Inc., 3.75% 8/17/2020           600,740
499 M   SeaWorld Parks & Entertainment, Inc., 3%, 5/14/2020           493,759
599 M   Seminole Hard Rock Entertainment, Inc., 3.5%, 5/14/2020         (a)   599,994
                     3,616,105
  Health Care-5.6%            
600 M   Biomet, Inc., 3.5% 7/25/2017         (a)   604,813
750 M   Endo Health Solutions, Inc., 3.75%, 12/12/2020         (a)   752,813
494 M   Onex Carestream Health, Inc., 5%, 6/7/2019           500,644
500 M   Salix Pharmaceuticals, Ltd., 4.25%, 12/17/2019         (a)   505,625
  Select Medical Corp.:            
598 M   4%, 6/1/2018           600,888
3 M   5.25%, 6/1/2018             2,861
                    2,967,644
  Information Technology-7.0%            
599 M   Activision Blizzard, Inc., 3.25%, 10/12/2020         (a)   602,991
423 M   ARRIS Group, Inc., 3.5%, 4/17/2020           422,253
800 M   BMC Software Finance, Inc., 5%, 9/10/2020         (a)   804,501
600 M   Dell International, Inc., 4.5%, 4/29/2020           597,542
750 M   Infor (US), Inc., 3.75%, 6/3/2020         (a)   750,000
508 M   Kronos, Inc., 4.5%, 10/30/2019         (a)   511,612
                     3,688,899
  Manufacturing-3.9%            
649 M   Apex Tool Group, LLC, 4.5%, 1/31/2020         (a)   653,288
900 M   Brand Energy & Infrastructure Services, Inc., 4.75%, 11/21/2020         (a)   907,032
499 M   Gardner Denver, Inc., 4.25%, 7/30/2020              499,175
                     2,059,495
  Media-Broadcasting-1.1%            
598 M   Sinclair Television Group, Inc., 3%, 4/9/2020             597,149
  Media-Diversified-2.4%            
650 M   Tribune Co., 4%, 11/20/2020         (a)   646,649
600 M   Virgin Media Investment Holdings, Ltd., 3.5%, 6/8/2020         (a)   601,580
                    1,248,229
  Metals/Mining-9.5%            
830 M   Arch Coal, Inc., 5.75%, 5/16/2018         (a)   819,106
599 M   FMG Resources (August 2006) Property, Ltd., 4.25%, 6/30/2019         (a)   607,497
699 M   McJunkin Red Man Corp., 5%, 11/11/2019         (a)   709,302
499 M   Novelis, Inc., 3.75%, 3/10/2017           501,418
      Oxbow Carbon & Minerals, LLC:            
250 M   4.25%, 7/19/2019         (a)   251,563
250 M   8%, 1/19/2020           255,156
899 M   Peabody Energy Corp., 4.25%, 9/24/2020         (a)   906,137
950 M   TMS International Corp., 4.5%, 10/16/2020         (a)   958,907
                    5,009,086
      Retail-General Merchandise-6.7%            
600 M   Academy, Ltd., 4.5%, 8/3/2018         (a)   604,800
600 M   General Nutrition Centers, Inc., 3.25%, 3/4/2019           599,625
601 M   Neiman Marcus, Inc., 5%, 10/25/2020           607,554
      Party City Holdings, Inc.:            
303 M   4.25%, 7/22/2019           304,687
157 M   5%, 7/22/2019           157,986
39 M   5.5%, 7/22/2019           39,009
138 M   4.25%, 7/27/2019           138,802
11 M   5.5%, 7/27/2019           11,436
600 M   Pilot Travel Centers, LLC, 3.75%, 3/30/2018         (a)   601,625
499 M   Wendy's International, Inc., 3.25%, 5/15/2019              499,949
                     3,565,473
      Services-3.1%            
490 M   Brickman Group, Ltd., LLC, 4%, 12/18/2020         (a)   493,063
625 M   Garda World Security Corp., 4%, 11/6/2020         (a)   627,149
500 M   Monitronics International, Inc., 4.25%, 3/23/2018         (a)   504,297
                         1,624,509
      Utilities-.9%            
499 M   Calpine Corp., 4%, 10/9/2019              502,824
      Wireless Communications-2.8%            
850 M   Crown Castle Operating Co., 3.25%, 1/31/2019         (a)   850,918
600 M   Intelsat Jackson Holdings SA, 3.75%, 6/30/2019         (a)   606,000
                      1,456,918
Total Value of Loan Participations (cost $44,098,838)             44,202,302
      CORPORATE BONDS-8.8%            
      Automotive-1.1%            
500 M   Goodyear Tire & Rubber Co., 8.25%, 8/15/2020              561,250
      Consumer Non-Durables-2.0%            
500 M   Hanesbrands, Inc., 6.375%, 12/15/2020           548,750
500 M   Reynolds Group Issuer, Inc., 7.125%, 4/15/2019              535,000
                    1,083,750
      Energy-.6%            
250 M   Expro Finance Luxembourg SCA, 8.5%, 12/15/2016         (b)   261,875
50 M   Kinder Morgan, Inc., 5%, 2/15/2021         (b)   49,499
                         311,374
      Gaming/Leisure-.3%            
150 M   National CineMedia, LLC, 7.875%, 7/15/2021             165,750
      Healthcare-.6%            
325 M   Community Health Systems, Inc., 5.125%, 8/15/2018             336,375
      Media-Cable TV-1.7%            
475 M   CCO Holdings, LLC, 8.125%, 4/30/2020           517,750
150 M   Unitymedia Hessen GmbH & Co., 7.5%, 3/15/2019       (b)   163,875
200 M   Virgin Media Finance, PLC, 8.375%, 10/15/2019            219,000
                    900,625
  Retail-General Merchandise-1.2%            
250 M   Michaels Stores, Inc., 7.75%, 11/1/2018           272,500
300 M   Sally Holdings, LLC, 6.875%, 11/15/2019            333,000
                    605,500
  Services-.2%        
100 M   FTI Consulting, Inc., 6.75%, 10/1/2020           108,500
  Telecommunications-.5%        
250 M   PAETEC Holding Corp., 9.875%, 12/1/2018           280,625
  Wireless Communications-.6%            
300 M   MetroPCS Wireless, Inc., 7.875%, 9/1/2018           322,875
Total Value of Corporate Bonds (cost $4,677,406)                4,676,624
Total Value of Investments (cost $48,776,244) 92.3 %         48,878,926
Other Assets, Less Liabilities 7.7            4,071,996
Net Assets       100.0 %         $52,950,922

 


+ Interest rates are determined and reset periodically. The interest
  rates above are the rates in effect at December 31, 2013.
 
(a) A portion or all of the security purchased on a when-issued or delayed delivery basis.
 
(b) Security exempt from registration under Rule 144A of the Securities Act of
  1933. Certain restricted securities are exempt from the registration
  requirements under Rule 144A of the Securities Act of 1933 and may only
  be sold to qualified institutional investors. At December 31, 2013, the Fund
  held three 144A securities with an aggregate value of $475,249 representing
  0.9% of the Fund's net assets.
 
 
  At December 31, 2013, the cost of investments for federal income tax
  purposes was $48,776,244. Accumulated net unrealized appreciation on
  investments was $102,682, consisting of $154,390 gross unrealized
  appreciation and $51,708 gross unrealized depreciation.

 


Accounting Standards Codification 820 established a three-tier hierarchy of inputs to establish a classification of fair value measurements for disclosure purposes. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below:

Level 1 - Unadjusted quoted prices in active markets for identical securities that the Fund has the ability to access.

Level 2 - Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.

Level 3 - Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund's own assumption about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

The inputs methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, such securities are reflected as Level 2.

The following is a summary, by category of Level, of inputs used to value the Fund's investments as of December 31, 2013:

    Level 1     Level 2     Level 3     Total
Loan Participations   $   - $ 44,202,302   $   - $ 44,202,302
Corporate Bonds       -   4,676,624       -     4,676,624
Total Investments in Securities*   $   - $ 48,878,926   $   - $ 48,878,926

* The Portfolio of Investments provides information on the industry categorization of loan participations and corporate bonds.

There were no transfers into or from Level 1 and Level 2 by the Fund for the period ended December 31, 2013.
Transfers, if any, between Levels are recognized at the end of the reporting period.


Portfolio of Investments (unaudited)
FUND FOR INCOME
December 31, 2013

 
Principal                    
Amount                    
or Shares     Security             Value
      CORPORATE BONDS-88.2%              
      Aerospace/Defense-.6%              
$ 3,725 M   Meccanica Holdings USA, Inc., 6.25%, 7/15/2019         (a)   $ 3,867,217
      Automotive-2.9%              
      American Axle & Manufacturing, Inc.:              
2,350 M   6.25%, 3/15/2021             2,508,625
1,950 M   6.625%, 10/15/2022             2,062,125
2,825 M   Cooper-Standard Automotive, Inc., 8.5%, 5/1/2018             3,005,094
      General Motors Financial Co., Inc.:              
575 M   3.25%, 5/15/2018         (a)   576,437
175 M   4.25%, 5/15/2023         (a)   166,906
3,300 M   Gestamp Funding Luxembourg SA, 5.625%, 5/31/2020         (a)   3,374,250
900 M   Goodyear Tire & Rubber Co., 8.25%, 8/15/2020             1,010,250
625 M   Jaguar Land Rover Automotive, PLC, 8.125%, 5/15/2021         (a)   714,063
2,400 M   Oshkosh Corp., 8.5%, 3/1/2020             2,664,000
      Schaeffler Finance BV:              
1,900 M   8.5%, 2/15/2019         (a)   2,147,000
2,050 M   4.75%, 5/15/2021         (a)   2,055,125
                      20,283,875
      Building Materials-1.7%              
      Building Materials Corp.:              
3,625 M   6.875%, 8/15/2018         (a)   3,869,687
1,700 M   7.5%, 3/15/2020         (a)   1,844,500
1,325 M   Cemex Finance, LLC, 9.375%, 10/12/2022         (a)   1,500,562
      Cemex SAB de CV:              
1,350 M   9.5%, 6/15/2018         (a)   1,539,000
525 M   5.875%, 3/25/2019         (a)   527,625
400 M   6.5%, 12/10/2019         (a)   414,200
2,150 M   Texas Industries, Inc., 9.25%, 8/15/2020             2,405,313
                    12,100,887
      Chemicals-1.9%              
2,950 M   Ferro Corp., 7.875%, 8/15/2018             3,127,000
1,625 M   Huntsman International, LLC, 8.625%, 3/15/2020             1,805,781
1,125 M   LSB Industries, Inc., 7.75%, 8/1/2019         (a)   1,186,875
2,575 M   Orion Engineered Carbon Bondco GmbH, 9.625%, 6/15/2018         (a)   2,858,250
4,175 M   TPC Group, Inc., 8.75%, 12/15/2020         (a)   4,456,813
                    13,434,719
      Consumer Non-Durables-2.6%              
2,200 M   Hanesbrands, Inc., 6.375%, 12/15/2020             2,414,500
      Levi Strauss & Co.:              
925 M   7.625%, 5/15/2020             1,019,813
2,625 M   6.875%, 5/1/2022             2,900,625
1,017 M   Libbey Glass, Inc., 6.875%, 5/15/2020             1,103,445
3,025 M   Phillips Van-Heusen Corp., 7.375%, 5/15/2020             3,346,406
      Reynolds Group Issuer, Inc.:              
1,250 M   7.125%, 4/15/2019             1,337,500
3,600 M   5.75%, 10/15/2020             3,690,000
      Spectrum Brands Escrow Corp.:              
925 M   6.375%, 11/15/2020         (a)   989,750
1,075 M   6.625%, 11/15/2022         (a)   1,146,219
                    17,948,258
      Energy-15.5%              
      AmeriGas Finance, LLC:              
500 M   6.75%, 5/20/2020             548,750
1,250 M   7%, 5/20/2022             1,362,500
      Antero Resources Finance Corp.:              
675 M   6%, 12/1/2020             712,125
950 M   5.375%, 11/1/2021         (a)   960,094
      Atlas Pipeline Partners, LP:              
2,225 M   4.75%, 11/15/2021         (a)   2,047,000
4,000 M   5.875%, 8/1/2023         (a)   3,830,000
      Basic Energy Services, Inc.:              
1,025 M   7.75%, 2/15/2019             1,076,250
2,100 M   7.75%, 10/15/2022             2,178,750
      Berry Petroleum Co.:              
675 M   6.75%, 11/1/2020             703,687
2,275 M   6.375%, 9/15/2022             2,326,187
      Calumet Specialty Products Partners, LP:              
2,650 M   9.625%, 8/1/2020             2,987,875
525 M   7.625%, 1/15/2022         (a)   531,562
      Chesapeake Energy Corp.:              
2,025 M   7.25%, 12/15/2018             2,349,000
800 M   6.625%, 8/15/2020             898,000
2,000 M   6.875%, 11/15/2020             2,270,000
1,325 M   5.75%, 3/15/2023             1,371,375
875 M   Concho Resources, Inc., 5.5%, 4/1/2023             905,625
      Consol Energy, Inc.:              
1,225 M   8%, 4/1/2017             1,295,437
4,250 M   8.25%, 4/1/2020             4,621,875
1,700 M   Crestwood Midstream Partners, LP, 6%, 12/15/2020             1,759,500
3,675 M   Eagle Rock Energy Partners, LP, 8.375%, 6/1/2019             4,024,125
2,750 M   El Paso Corp., 6.5%, 9/15/2020             2,962,635
2,075 M   Energy XXI Gulf Coast, Inc., 7.5%, 12/15/2021         (a)   2,173,562
3,126 M   Expro Finance Luxembourg SCA, 8.5%, 12/15/2016         (a)   3,274,485
1,375 M   Forum Energy Technologies, Inc., 6.25%, 10/1/2021         (a)   1,450,625
3,375 M   Genesis Energy, LP, 7.875%, 12/15/2018             3,653,437
1,125 M   Gibson Energy, Inc., 6.75%, 7/15/2021         (a)   1,195,313
      Kinder Morgan, Inc.:              
650 M   5%, 2/15/2021         (a)   643,491
1,650 M   5.625%, 11/15/2023         (a)   1,605,841
      Legacy Reserves, LP:              
3,175 M   8%, 12/1/2020         (a)   3,317,875
1,500 M   6.625%, 12/1/2021         (a)   1,458,750
      Linn Energy, LLC:              
625 M   6.5%, 5/15/2019             640,625
1,850 M   7%, 11/1/2019         (a)   1,877,750
1,225 M   8.625%, 4/15/2020             1,329,125
1,975 M   7.75%, 2/1/2021             2,098,438
3,025 M   Memorial Production Partners, LP, 7.625%, 5/1/2021         (a)   3,123,313
      Newfield Exploration Co.:              
450 M   7.125%, 5/15/2018             468,450
1,100 M   5.75%, 1/30/2022             1,138,500
1,375 M   NuStar Logistics, LP, 6.75%, 2/1/2021             1,425,760
      Offshore Group Investment, Ltd.:              
1,875 M   7.5%, 11/1/2019             2,048,438
1,075 M   7.125%, 4/1/2023             1,101,875
1,675 M   Pacific Drilling SA, 5.375%, 6/1/2020         (a)   1,691,750
      Penn Virginia Resource Partners, LP:              
2,200 M   8.25%, 4/15/2018             2,343,000
715 M   8.375%, 6/1/2020             791,863
2,125 M   PetroLogistics, LP, 6.25%, 4/1/2020         (a)   2,140,938
700 M   Plains Exploration & Production Co., 6.125%, 6/15/2019             766,024
4,000 M   Rain CII Carbon, LLC, 8.25%, 1/15/2021         (a)   4,100,000
1,865 M   RKI Exploration and Production, LLC, 8.5%, 8/1/2021         (a)   1,972,238
3,750 M   Sabine Pass Liquefaction, 6.25%, 3/15/2022         (a)   3,726,563
1,575 M   Samson Investment Co., 10.5%, 2/15/2020         (a)   1,724,625
2,450 M   SandRidge Energy, Inc., 7.5%, 2/15/2023             2,499,000
      SM Energy Co.:              
600 M   6.625%, 2/15/2019             640,500
1,175 M   6.5%, 11/15/2021             1,251,375
1,150 M   6.5%, 1/1/2023             1,211,813
      Suburban Propane Partners, LP:              
2,089 M   7.5%, 10/1/2018             2,250,898
433 M   7.375%, 8/1/2021             474,135
600 M   Ultra Petroleum Corp., 5.75%, 12/15/2018         (a)   618,000
2,875 M   Unit Corp., 6.625%, 5/15/2021              3,047,500
                     106,998,227
      Financials-3.9%              
      Algeco Scotsman Global Finance, PLC:              
1,650 M   8.5%, 10/15/2018         (a)   1,794,375
800 M   10.75%, 10/15/2019         (a)   848,000
      Ally Financial, Inc.:              
4,300 M   6.25%, 12/1/2017             4,810,625
1,350 M   4.75%, 9/10/2018             1,417,500
4,525 M   8%, 3/15/2020             5,446,969
      International Lease Finance Corp.:              
4,775 M   8.75%, 3/15/2017             5,646,438
825 M   6.25%, 5/15/2019             897,188
4,450 M   8.25%, 12/15/2020             5,217,625
900 M   Nielsen Co., (Luxembourg) Sarl, 5.5%, 10/1/2021         (a)   915,750
                     26,994,470
      Food/Beverage/Tobacco-1.5%              
2,100 M   B&G Foods, Inc., 4.625%, 6/1/2021             2,021,250
1,550 M   Barry Callebaut Services SA, 5.5%, 6/15/2023         (a)   1,588,750
1,650 M   Chiquita Brands International, Inc., 7.875%, 2/1/2021         (a)   1,790,250
1,875 M   Darling Escrow Corp., 5.375%, 1/15/2022         (a) (e) 1,891,406
1,000 M   JBS Investments GmbH, 7.75%, 10/28/2020         (a)   1,015,000
1,700 M   JBS USA, LLC, 7.25%, 6/1/2021         (a)   1,776,500
                     10,083,156
      Food/Drug-1.4%              
2,900 M   BI-LO, LLC, 8.625%, 9/15/2018         (a)   3,045,000
3,600 M   NBTY, Inc., 9%, 10/1/2018             3,964,500
2,275 M   Tops Holding Corp., 8.875%, 12/15/2017         (a)    2,511,031
                      9,520,531
      Forest Products/Containers-2.9%              
  2,675 M   Ardagh Packaging Finance, PLC, 7.375%, 10/15/2017           (a)   2,888,094
      Ball Corp.:              
1,500 M   7.375%, 9/1/2019             1,627,500
1,050 M   4%, 11/15/2023             945,000
3,525 M   Clearwater Paper Corp., 7.125%, 11/1/2018             3,780,562
1,925 M   CROWN Americas, LLC, 4.5%, 1/15/2023             1,809,500
2,200 M   Greif, Inc., 7.75%, 8/1/2019             2,508,000
      Sealed Air Corp.:              
1,500 M   8.125%, 9/15/2019         (a)   1,691,250
1,250 M   8.375%, 9/15/2021         (a)   1,425,000
3,170 M   Tekni-Plex, Inc., 9.75%, 6/1/2019         (a)   3,613,800
                      20,288,706
      Gaming/Leisure-1.3%              
      GLP Capital, LP:              
275 M   4.375%, 11/1/2018         (a)   281,875
575 M   4.875%, 11/1/2020         (a)   576,437
1,150 M   5.375%, 11/1/2023         (a)   1,135,625
1,350 M   Hilton Worldwide Finance, LLC, 5.625%, 10/15/2021         (a)   1,403,156
700 M   Nai Entertainment Holdings, LLC, 5%, 8/1/2018         (a)   726,250
3,325 M   National CineMedia, LLC, 7.875%, 7/15/2021             3,674,125
1,350 M   Six Flags Entertainment Corp., 5.25%, 1/15/2021         (a)    1,323,000
                      9,120,468
      Health Care-6.0%              
      Aviv Healthcare Properties, LP:              
850 M   7.75%, 2/15/2019             918,000
825 M   6%, 10/15/2021         (a)   843,562
3,249 M   Biomet, Inc., 6.5%, 8/1/2020             3,427,695
      Community Health Systems, Inc.:              
1,625 M   5.125%, 8/15/2018             1,681,875
1,275 M   8%, 11/15/2019             1,389,750
2,425 M   7.125%, 7/15/2020             2,518,969
1,950 M   DaVita, Inc., 6.375%, 11/1/2018             2,051,156
1,550 M   Endo Finance Co., 5.75%, 1/15/2022         (a)   1,561,625
1,150 M   Fresenius Medical Care US Finance II, Inc., 5.625%, 7/31/2019         (a)   1,247,750
4,400 M   Genesis Health Ventures, Inc., 9.75%, 6/15/2005         (b) (c) -
      HCA, Inc.:              
2,075 M   8%, 10/1/2018             2,456,281
1,100 M   8.5%, 4/15/2019             1,168,750
1,375 M   6.5%, 2/15/2020             1,514,219
475 M   7.25%, 9/15/2020             518,938
1,225 M   6.25%, 2/15/2021             1,284,719
1,950 M   7.75%, 5/15/2021             2,135,250
1,525 M   7.5%, 2/15/2022             1,677,500
      HealthSouth Corp.:              
977 M   8.125%, 2/15/2020             1,075,921
847 M   7.75%, 9/15/2022             931,700
650 M   LifePoint Hospitals, Inc., 5.5%, 12/1/2021         (a)   654,063
3,450 M   Tenet Healthcare Corp., 6.75%, 2/1/2020             3,549,188
2,500 M   Universal Hospital Services, Inc., 7.625%, 8/15/2020             2,650,000
      Valeant Pharmaceuticals International, Inc.:              
3,750 M   6.375%, 10/15/2020         (a)   3,970,313
1,300 M   5.625%, 12/1/2021         (a)   1,309,750
1,100 M   WellCare Health Plans, Inc., 5.75%, 11/15/2020               1,130,250
                      41,667,224
      Information Technology-3.2%              
      Activision Blizzard, Inc.:              
1,075 M   5.625%, 9/15/2021         (a)   1,115,312
500 M   6.125%, 9/15/2023         (a)   522,500
2,450 M   Advanced Micro Devices, Inc., 7.5%, 8/15/2022             2,388,750
      Audatex North America, Inc.:              
2,375 M   6%, 6/15/2021         (a)   2,499,687
875 M   6.125%, 11/1/2023         (a)   905,625
1,475 M   CyrusOne, LP, 6.375%, 11/15/2022             1,534,000
1,725 M   Denali Borrower, LLC, 5.625%, 10/15/2020         (a)   1,714,219
2,025 M   Equinix, Inc., 7%, 7/15/2021             2,219,906
3,175 M   Healthcare Technology Intermediate, Inc., 7.375%, 9/1/2018         (a)   3,317,875
1,400 M   IAC/InterActiveCorp, 4.875%, 11/30/2018         (a)   1,438,500
1,825 M   Lender Processing Services, Inc., 5.75%, 4/15/2023             1,898,000
2,100 M   MEMC Electronic Materials, Inc., 7.75%, 4/1/2019             2,257,500
                     21,811,874
      Manufacturing-4.2%              
1,550 M   Amsted Industries, 8.125%, 3/15/2018         (a)   1,637,187
      Bombardier, Inc.:              
2,425 M   7.5%, 3/15/2018         (a)   2,770,562
2,575 M   7.75%, 3/15/2020         (a)   2,935,500
2,150 M   6.125%, 1/15/2023         (a)   2,144,625
1,775 M   Brand Energy & Infrastructure Services, Inc., 8.5%, 12/1/2021         (a)   1,808,281
3,850 M   Case New Holland, Inc., 7.875%, 12/1/2017             4,562,250
2,450 M   Dematic SA, 7.75%, 12/15/2020         (a)   2,615,375
1,550 M   EDP Finance BV, 6%, 2/2/2018         (a)   1,667,800
2,150 M   H&E Equipment Services, Inc., 7%, 9/1/2022             2,354,250
      Rexel SA:              
5,150 M   6.125%, 12/15/2019         (a)   5,407,500
975 M   5.25%, 6/15/2020         (a)   984,750
                    28,888,080
      Media-Broadcasting-2.3%              
2,450 M   Allbritton Communication Co., 8%, 5/15/2018             2,603,125
      Belo Corp.:              
725 M   7.75%, 6/1/2027             784,812
150 M   7.25%, 9/15/2027             156,375
1,575 M   Block Communications, Inc., 7.25%, 2/1/2020         (a)   1,677,375
2,075 M   LIN Television Corp., 8.375%, 4/15/2018             2,199,500
3,175 M   Nexstar Broadcasting, Inc., 6.875%, 11/15/2020             3,413,125
      Sinclair Television Group, Inc.:              
2,300 M   5.375%, 4/1/2021             2,277,000
925 M   6.375%, 11/1/2021         (a)   962,000
      Sirius XM Radio, Inc.:              
850 M   5.75%, 8/1/2021         (a)   862,750
800 M    4.625%, 5/15/2023         (a)   726,000
                      15,662,062
      Media-Cable TV-6.4%              
      Cablevision Systems Corp.:              
2,000 M   8.625%, 9/15/2017             2,335,000
1,525 M   7.75%, 4/15/2018             1,708,000
      CCO Holdings, LLC:              
1,825 M   7%, 1/15/2019             1,927,656
1,125 M   8.125%, 4/30/2020             1,226,250
1,175 M   7.375%, 6/1/2020             1,277,812
650 M   5.25%, 3/15/2021         (a)   624,000
550 M   6.5%, 4/30/2021             567,875
875 M   5.125%, 2/15/2023             815,937
3,350 M   Cequel Communications Holdings I, LLC, 6.375%, 9/15/2020         (a)   3,450,500
      Clear Channel Worldwide Holdings, Inc.:              
200 M   7.625%, 3/15/2020 Series "A"             209,000
950 M   7.625%, 3/15/2020 Series "B"             1,003,437
1,025 M   6.5%, 11/15/2022 Series "A"             1,044,219
2,375 M   6.5%, 11/15/2022 Series "B"             2,437,344
      DISH DBS Corp.:              
5,475 M   7.875%, 9/1/2019             6,282,562
950 M   5%, 3/15/2023             890,625
1,175 M   Echostar DBS Corp., 7.125%, 2/1/2016             1,304,250
3,025 M   Gray Television, Inc., 7.5%, 10/1/2020             3,229,188
3,275 M   Harron Communications, LP, 9.125%, 4/1/2020         (a)   3,643,438
1,200 M   Lynx II Corp., 6.375%, 4/15/2023         (a)   1,227,000
1,725 M   Midcontinent Communications Corp., 6.25%, 8/1/2021         (a)   1,746,563
2,375 M   Nara Cable Funding, Ltd., 8.875%, 12/1/2018         (a)   2,565,000
450 M   Quebecor Media, Inc., 5.75%, 1/15/2023             437,625
3,850 M   UPC Holding BV, 9.875%, 4/15/2018         (a)   4,138,750
                     44,092,031
      Media-Diversified-1.0%              
      Gannett Co., Inc.:              
1,425 M   5.125%, 7/15/2020         (a)   1,449,937
1,600 M   6.375%, 10/15/2023         (a)   1,660,000
3,625 M   Lamar Media Corp., 7.875%, 4/15/2018              3,837,969
                         6,947,906
      Metals/Mining-8.1%              
4,200 M   Alcoa, Inc., 6.15%, 8/15/2020             4,532,539
2,250 M   Aleris International, Inc., 7.875%, 11/1/2020             2,401,875
      ArcelorMittal:              
1,925 M   6.125%, 6/1/2018             2,119,906
4,481 M   10.35%, 6/1/2019             5,690,870
1,450 M   6.75%, 2/25/2022             1,584,125
      Arch Coal, Inc.:              
325 M   7%, 6/15/2019             260,000
2,475 M   7.25%, 10/1/2020             1,942,875
2,400 M   7.25%, 6/15/2021             1,848,000
      FMG Resources (August 2006) Property, Ltd.:              
975 M   6%, 4/1/2017         (a)   1,040,812
3,675 M   6.875%, 2/1/2018         (a)   3,877,125
1,525 M   8.25%, 11/1/2019         (a)   1,717,531
450 M   6.875%, 4/1/2022         (a)   492,750
5,025 M   JMC Steel Group, 8.25%, 3/15/2018         (a)   5,087,813
1,000 M   Kaiser Aluminum Corp., 8.25%, 6/1/2020             1,135,000
      Novelis, Inc.:              
6,475 M   8.375%, 12/15/2017             6,924,203
1,850 M   8.75%, 12/15/2020             2,067,375
      Peabody Energy Corp.:              
2,050 M   6%, 11/15/2018             2,193,500
1,700 M   6.5%, 9/15/2020             1,797,750
2,525 M   6.25%, 11/15/2021             2,562,875
      Steel Dynamics, Inc.:              
1,200 M   6.125%, 8/15/2019             1,305,000
675 M   6.375%, 8/15/2022             732,375
      United States Steel Corp.:              
550 M   7%, 2/1/2018             600,875
1,275 M   7.375%, 4/1/2020             1,383,375
900 M   7.5%, 3/15/2022             963,000
1,925 M   Wise Metals Group, LLC, 8.75%, 12/15/2018         (a)   2,035,688
                     56,297,237
      Real Estate Investment Trusts-.4%              
2,162 M   Taylor Morrison Communities, Inc., 7.75%, 4/15/2020         (a)   2,389,010
      Retail-General Merchandise-2.7%              
800 M   Chinos Intermediate Holdings A, Inc., 7.75%, 5/1/2019         (a)   820,000
2,975 M   Landry's, Inc., 9.375%, 5/1/2020         (a)   3,257,625
2,850 M   Limited Brands, Inc., 8.5%, 6/15/2019             3,434,250
2,275 M   Michaels Stores, Inc., 7.75%, 11/1/2018             2,479,750
4,485 M   Needle Merger Sub Corp., 8.125%, 3/15/2019         (a)   4,714,856
2,250 M   Party City Holdings, Inc., 8.875%, 8/1/2020             2,531,250
1,525 M   Sally Holdings, LLC, 6.875%, 11/15/2019             1,692,750
                    18,930,481
      Services-4.7%              
      ADT Corp.:              
1,075 M   6.25%, 10/15/2021         (a)   1,130,094
3,275 M   3.5%, 7/15/2022             2,855,839
650 M   4.125%, 6/15/2023             577,979
1,300 M   APX Group, Inc., 6.375%, 12/1/2019             1,326,000
1,525 M   Ashtead Capital, Inc., 6.5%, 7/15/2022         (a)   1,633,656
1,350 M   CoreLogic, Inc., 7.25%, 6/1/2021             1,471,500
      Covanta Holding Corp.:              
900 M   7.25%, 12/1/2020             987,025
2,225 M   6.375%, 10/1/2022             2,295,573
825 M   Geo Group, Inc., 5.875%, 1/15/2022         (a)   821,906
      Iron Mountain, Inc.:              
1,525 M   7.75%, 10/1/2019             1,708,000
3,250 M   5.75%, 8/15/2024             3,030,625
3,000 M   Live Nation Entertainment, Inc., 7%, 9/1/2020         (a)   3,270,000
2,650 M   Monitronics International, Inc., 9.125%, 4/1/2020             2,822,250
      PHH Corp.:              
1,350 M   7.375%, 9/1/2019             1,447,875
1,500 M   6.375%, 8/15/2021             1,507,500
2,925 M   Reliance Intermediate Holdings, LP, 9.5%, 12/15/2019         (a)   3,217,500
525 M   Rent-A-Center, Inc., 4.75%, 5/1/2021             495,469
1,625 M   Safway Group Holding, LLC, 7%, 5/15/2018         (a)   1,722,500
                     32,321,291
      Telecommunications-6.2%              
      CenturyLink, Inc.:              
400 M   5.625%, 4/1/2020             409,000
1,500 M   5.8%, 3/15/2022             1,488,750
1,250 M   6.75%, 12/1/2023             1,271,875
      Citizens Communications Co.:              
5,200 M   7.125%, 3/15/2019             5,629,000
2,175 M   9%, 8/15/2031             2,147,812
325 M   Frontier Communications Corp., 8.5%, 4/15/2020             365,625
2,525 M   GCI, Inc., 8.625%, 11/15/2019             2,695,437
5,850 M   Inmarsat Finance, PLC, 7.375%, 12/1/2017         (a)   6,113,250
      Intelsat Jackson Holdings SA:              
2,675 M   7.25%, 4/1/2019             2,902,375
1,200 M   8.5%, 11/1/2019             1,314,000
2,075 M   7.25%, 10/15/2020             2,279,906
800 M   PAETEC Holding Corp., 9.875%, 12/1/2018             898,000
      Sprint Capital Corp.:              
2,600 M   6.9%, 5/1/2019             2,853,500
3,125 M   6.875%, 11/15/2028             2,960,938
1,700 M   Telesat Canada, 6%, 5/15/2017         (a)   1,774,375
      Wind Acquisition Finance SA:              
750 M   11.75%, 7/15/2017         (a)   798,750
2,175 M   7.25%, 2/15/2018         (a)   2,300,063
      Windstream Corp.:              
1,725 M   7.875%, 11/1/2017             1,979,438
2,050 M   7.75%, 10/15/2020             2,185,813
600 M   6.375%, 8/1/2023              564,000
                      42,931,907
      Transportation-1.2%              
      Aircastle, Ltd.:              
550 M   4.625%, 12/15/2018             555,500
5,112 M   6.25%, 12/1/2019             5,501,790
675 M   Fly Leasing, Ltd., 6.75%, 12/15/2020             686,812
1,200 M   Navios Maritime Holdings, 8.125%, 2/15/2019              1,239,000
                    7,983,102
      Utilities-2.6%              
      AES Corp.:              
875 M   9.75%, 4/15/2016             1,034,687
800 M   8%, 10/15/2017             944,000
1,275 M   7.375%, 7/1/2021             1,443,937
      Calpine Corp.:              
297 M   7.875%, 7/31/2020         (a)   326,700
2,024 M   7.5%, 2/15/2021         (a)   2,218,810
2,100 M   Dynegy, Inc., 5.875%, 6/1/2023         (a)   1,995,000
1,027 M   Indiantown Cogeneration Utilities, LP, 9.77%, 12/15/2020             1,121,126
3,075 M   InterGen NV, 7%, 6/30/2023         (a)   3,198,000
2,350 M   NRG Energy, Inc., 7.625%, 5/15/2019             2,496,875
3,010 M   NSG Holdings, LLC, 7.75%, 12/15/2025         (a)    3,220,700
                      17,999,835
      Waste Management-.3%              
2,050 M   ADS Waste Holdings, Inc., 8.25%, 10/1/2020              2,234,500
      Wireless Communications-2.7%              
1,125 M   Altice Financing SA, 6.5%, 1/15/2022         (a)   1,139,062
2,800 M   Intelsat Luxembourg SA, 8.125%, 6/1/2023         (a)   3,013,500
      MetroPCS Wireless, Inc.:              
1,200 M   6.625%, 11/15/2020             1,276,500
4,100 M   6.25%, 4/1/2021         (a)   4,269,125
2,725 M   6.625%, 4/1/2023         (a)   2,823,781
      Sprint Nextel Corp.:              
925 M   9.125%, 3/1/2017             1,091,500
1,250 M   8.375%, 8/15/2017             1,453,125
1,875 M   7%, 8/15/2020             2,039,063
1,750 M   6%, 11/15/2022              1,715,000
                    18,820,656
Total Value of Corporate Bonds (cost $594,103,822)             609,617,710
      LOAN PARTICIPATIONS-7.7%              
      Chemicals-.4%              
2,804 M   Axalta Coating Systems, Inc., 4.75%, 2/1/2020         (d)   2,828,784
      Consumer Non-Durables-.1%              
938 M   Sun Products Corp., 5.5%, 3/15/2020         (d)    893,031
      Energy-1.0%              
      Drillships Financing Holding, Inc.:              
1,800 M   6%, 2/2/2021         (d)   1,845,000
2,115 M   6%, 3/31/2021         (d)   2,168,067
1,000 M   Fieldwood Energy, LLC, 8.375%, 9/30/2020         (d)   1,023,250
1,925 M   Samson Investment Co., 5%, 9/25/2018         (d)    1,935,428
                      6,971,745
      Financial-.4%              
2,963 M   Ocwen Financial Corp., 5%, 1/31/2018         (d)    3,010,293
      Food/Drug-1.4%              
3,905 M   Albertson's, LLC, 4.75%, 2/20/2016         (d)   3,927,343
      Rite Aid Corp.:              
1,315 M   4.875%, 6/7/2021         (d)   1,338,341
1,900 M   4.875%, 6/21/2021         (d)   1,933,725
      Supervalu, Inc.:              
2,681 M   5%, 3/21/2019         (d)   2,709,293
178 M   5%, 3/31/2019         (d)     180,098
                          10,088,800
      Gaming/Leisure-.2%              
1,562 M         Seminole Hard Rock Entertainment, Inc., 3.5%, 4/28/2020          (d)   1,565,404
      Information Technology-1.0%              
1,838 M   ARRIS Group, Inc., 3.5%, 2/7/2020         (d)   1,836,019
4,800 M   BMC Software Finance, Inc., 5%, 8/9/2020         (d)    4,827,000
                      6,663,019
      Manufacturing-.9%              
2,218 M   Apex Tool Group, LLC, 4.5%, 1/8/2020         (d)   2,233,765
3,676 M    Gardner Denver, Inc., 4.25%, 7/30/2020         (d)   3,678,919
                       5,912,684
      Media-Diversified-.9%              
1,150 M   Kasima, LLC, 3.25%, 5/14/2021         (d)   1,150,480
5,000 M   Tribune Co., 4%, 11/20/2020         (d) (e) 4,974,220
                      6,124,700
      Metals/Mining-.6%              
2,832 M   Arch Coal, Inc., 6.25%, 5/16/2018       (d)   2,794,733
1,280 M   Oxbow Carbon & Minerals, LLC, 8.0%, 1/18/2020       (d)   1,306,400
                      4,101,133
      Retail-General Merchandise-.6%            
1,235 M   Burger King Corp., 3.75%, 9/27/2019       (d)   1,242,553
2,694 M   General Nutrition Centers, Inc., 3.25%, 3/4/2019       (d)    2,692,180
                     3,934,733
      Services-.2%              
      Brickman Group Ltd., LLC:            
610 M   4%, 12/18/2020         (d) (e) 613,812
470 M   7.5%, 12/17/2021          (d) (e) 481,633
                      1,095,445
Total Value of Loan Participations (cost $52,739,826)             53,189,771
      PASS THROUGH CERTIFICATES-.4%            
      Transportation              
2,375 M   American Airlines, Series "B" PTT, 5.6%, 7/15/2020 (cost $2,382,156)       (a)   2,398,750
      COMMON STOCKS-.0%              
      Telecommunications              
18,224   * World Access, Inc. (cost $310,138)       (b)   -
Total Value of Investments (cost $649,535,942) 96.3 %         665,206,231
Other Assets, Less Liabilities 3.7             25,891,461
Net Assets       100.0 %          $691,097,692

 


* Non-income producing
 
Summary of Abbreviations:
PTT Pass Through Trust
 
(a) Security exempt from registration under Rule 144A of the Securities Act of
1933. Certain restricted securities are exempt from the registration
requirements under Rule 144A of the Securities Act of 1933 and may only be
sold to qualified institutional investors. At December 31, 2013, the Fund held
one hundred twenty-four 144A securities with an aggregate value of
$249,563,209 representing 36.1% of the Fund's net assets.
 
 
(b) Securities fair valued as determined in good faith pursuant to procedures
adopted by the Fund's Board of Trustees. At December 31, 2013, the Fund
held two securities that were fair valued by the Valuation Committee with an
aggregate value of $0 representing 0% of the Fund's net assets.
 
 
(c) In default as to principal and /or interest payment.
 
(d) Interest rates are determined and reset periodically. The interest rates above
are the rates in effect at December 31, 2013.
 
 
(e) A portion or all of the security purchased on a when-issued or delayed delivery
basis.
 
 
At December 31, 2013, the cost of investments for federal income tax purposes
was $649,539,442. Accumulated net unrealized appreciation on investments
was $15,666,789, consisting of $23,963,935 gross unrealized appreciation and
$8,297,146 gross unrealized depreciation.

 


Accounting Standards Codification 820 established a three-tier hierarchy of inputs to establish a classification of fair value measurements for disclosure purposes. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below:

Level 1 - Unadjusted quoted prices in active markets for identical securities that the Fund has the ability to access.

Level 2 - Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.

Level 3 - Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund's own assumption about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

The inputs methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, such securities are reflected as Level 2.

The following is a summary, by category of Level, of inputs used to value the Fund's investments as of December 31, 2013:

    Level 1     Level 2    Level 3     Total
Corporate Bonds   $   - $ 609,617,710   $ -   $ 609,617,710
Loan Participations       -   53,189,771   -     53,189,771
Pass Through Certificates       -   2,398,750   -     2,398,750
Common Stocks       -   -   -     -
Total Investments in Securities*   $   - $ 665,206,231   $ -   $  665,206,231

* The Portfolio of Investments provides information on the industry categorization of corporate bonds, loan participations, pass through certificates and common stocks.

There were no transfers into or from Level 1 and Level 2 by the Fund for the period ended December 31, 2013.

The following is a reconciliation of Fund investments valued using Level 3 inputs for the period:

    Investments in   Investments in    
    Corporate Bonds   Common Stocks   Total    
Balance, September 30, 2013 $ -   $ 3,785   $ 3,785    
Purchases   -   -   -    
Sales   -   (75,632)   (75,632)    
Change in unrealized            
appreciation (depreciation)   -   -   -    
Realized gain (loss)   -   71,847   71,847    
Transfer into Level 3   -   -   -    
Transfer out of Level 3   -   -   -    
Balance, December 31, 2013 $ -   $ -   $ -    

 

The following is a summary of Level 3 inputs by industry:

Health Care $ -  
Telecommunications   -  
  $ -  

 


The following table presents additional information about valuation methodologies and inputs used for investments that are measured at fair value and categorized within Level 3 as of December 31, 2013:

            Impact to Valuation
  Fair Value   Valuation   Unobservable     from a Decrease
  December 31, 2013   Methodologies   Input(s)(1)   Range   in Input(2)
 
Corporate Bonds $ -   Market   Probability   100%   Increase
      Comparables   of      
        Bankruptcy      
 
Common Stocks $ -   Market   Probability   100%   Increase
      Comparables   of      
        Bankruptcy      

 

(1) In determining certain of these inputs, Management evaluates a variety of factors including economic
  conditions, industry and market developments, market valuations of comparable companies and
  company specific developments including exit strategies and realization opportunities. Management
  has determined that market participants would take these inputs into account when valuing the
  investments.
 
 
(2) This column represents the directional change in the fair value of the Level 3 investments that would
  result from a decrease to the corresponding unobservable input. An increase to the unobservable input
  would have the opposite effect.

 


Security Valuation -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 on quotes furnished by a market maker for such securities. Securities may also be priced by pricing services approved by the Trust's Board of Trustees (the "Board"). The pricing services consider security type, rating, market condition and yield data as well as market quotations, prices provided by market makers and other available information in determining value. Short-term debt securities that mature in 60 days or less are valued at amortized cost.

The Funds monitor for significant events occurring prior to the close of trading on the New York Stock Exchange that could have a material impact on the value of any securities that are held by the Funds. Examples of such events include trading halts, natural disasters, political events and issuer-specific developments. If the Valuation Committee decides that such events warrant using fair value estimates, it will take such events into consideration in determining the fair values of such securities. If market quotations or prices are not readily available or determined to be unreliable, the securities will be valued at fair value as determined in good faith pursuant to procedures adopted by the Board.

The Cash Management Fund values its portfolio securities in accordance with the amortized cost method of valuation under Rule 2a-7 of the 1940 Act. Amortized cost is an approximation of market value of an instrument, whereby the difference between its acquisition cost and market value at maturity is amortized on a straight-line basis over the remaining life of the instrument. The effect of changes in the market value of a security as a result of fluctuating interest rates is not taken into account and thus the amortized cost method of valuation may result in the value of a security being higher or lower than its actual market value.

In accordance with Accounting Standards Codification 820 "Fair Value Measurements and Disclosures" ("ASC 820"), investments held by the Funds are carried at "fair value". As defined by ASC 820, fair value is the price that a fund would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market for the investment under current market conditions. Various inputs are used in determining the value of the Funds' investments.

In addition to defining fair value, ASC 820 established a three-tier hierarchy of inputs to establish a classification of fair value measurements for disclosure purposes. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below:


Level 1 - Unadjusted quoted prices in active markets for identical securities that the Fund has the ability to access.

Level 2 - Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.

Level 3 - Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund's own assumption about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

Equity securities traded on an exchange or the Nasdaq Stock Market are categorized in Level 1 of the fair value hierarchy to the extent that they are actively traded and valuation adjustments are not applied. Corporate and municipal bonds, asset backed, U.S. Government and U.S. Agency securities and Loan Participations are categorized in Level 2 to the extent that the inputs are observable and timely, otherwise they would be categorized as Level 3. Short-term notes that are valued at amortized cost are categorized in Level 2. Foreign exchange contracts that are considered derivative instruments and are valued at the net unrealized appreciation or depreciation on the instruments are categorized in Level 2. Restricted securities and securities that are fair valued by the Valuation Committee may be categorized in either Level 2 or Level 3 of the fair value hierarchy depending on the relative significance of valuation inputs.

The aggregate value by input level, as of December 31, 2013, for each Fund's investments is included at the end of each Fund's schedule of investments.

Investments in securities issued on a when-issued or delayed delivery basis are generally reflected in the assets of the Funds on the first business day following the date the securities are purchased and the Funds segregated assets for these transactions.

 

 

Item 2. Controls and Procedures

(a) The Registrant's Principal Executive Officer and Principal

Financial Officer have concluded that the Registrant's disclosure controls

and procedures (as defined in Rule 30a-3(c) under the Investment Company

Act of 1940, as amended) are effective, based on their evaluation of these

disclosure controls and procedures as of a date within 90 days of the

filing date of this report.

(b) There were no changes in the Registrant's internal control over financial

reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940,

as amended)  that occurred during the Registrant's last fiscal quarter that have

materially affected, or are reasonably likely to materially affect, the Registrant's

internal control over financial reporting.

 

Item 3. Exhibits

(a) Certifications required by Rule 30a-2(a) under the Investment

Company Act of 1940 (17 CFR 270.30a-2(a)) - filed herewith

 

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934

and the Investment Company Act of 1940, the registrant has duly caused this

report to be signed on its behalf by the undersigned, thereunto duly

authorized.

First Investors Income Funds

By /S/ DEREK BURKE

Derek Burke

President and Principal Executive Officer

Date: February 28, 2014

 

Pursuant to the requirements of the Securities Exchange Act of 1934

and the Investment Company Act of 1940, this report has been signed below

by the following persons on behalf of the registrant and in the capacities

and on the dates indicated.

 

First Investors Income Funds

By /S/ DEREK BURKE

Derek Burke

President and Principal Executive Officer

 

By /S/ JOSEPH I. BENEDEK

Joseph I. Benedek

Treasurer and Principal Financial Officer

Date: February 28, 2014

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