Portfolio Manager's Letter
FIRST INVESTORS FUND FOR INCOME, INC.
Dear Shareholder:
The principal factors that affected the Fund's performance
in 1994 were strong economic growth and fears of inflation.
The U.S. economic recovery hit full stride with gross
domestic product growth of approximately 4%.
The unemployment rate fell from 6.4% to 5.4% as the economy
created 3.5 million new jobs. Feeling secure about job
prospects, consumers were willing to borrow and spend. U.S.
vehicle sales reached their highest level since 1988.
Despite strong growth, inflation remained below 3% as low
labor costs, improved productivity and international
competition kept prices from accelerating.
Nonetheless, concerned that strong economic growth would
eventually lead to inflation, the Federal Reserve in
February engineered the first of six short-term interest
rate increases which in total raised rates 250 basis points
(2.50%). As is typical at this point in the economic cycle,
long-term interest rates also rose with the benchmark 30
year U.S. Treasury bond yield increasing approximately 155
basis points (1.55%) during the year. With higher interest
rates creating concern that the economy might slow, broad
stock market indices were unable to advance and ended the
year unchanged to slightly lower despite strong earnings
reported by many companies.
The high yield market was not immune to the difficult
conditions in the fixed income and equity markets with the
First Boston High Yield Index posting a total return
of -.97%. The First Investors Fund For Income, however,
performed well on a relative basis, posting a total return
of .58% according to Lipper Analytical Services, Inc. This
compares favorably to a total return of -3.83% for the
average high yield fund, according to Lipper Analytical
Services, Inc.
The Fund's performance was aided by its large holdings of
high-coupon bonds of companies with stable to improving
credit profiles. Sector choices also helped.
Larger positions in cyclical industries such as chemicals
and forest products and in healthcare proved beneficial, as
did the Fund's minimal exposure to the poorly performing
casino and homebuilding sectors.
The Fund was not without its disappointments, however. For
example, equipment rental company Acme Holdings experienced
a rapid falloff in operating earnings over the course of
the year and defaulted on its bonds. We have maintained our
position hoping to realize the full benefits of a financial
restructuring currently being negotiated. In addition,
deferred-pay securities significantly underperformed the
overall high yield market. At year-end, these securities
represented approximately 8% of the Fund's portfolio.
At year-end, 88.5% of the portfolio was in bonds, 3.8% in
preferred and common stock, warrants and units, 2.4% in
U.S. Government Obligations, with the remainder in cash and
equivalents. The five major industry exposures were
chemicals, cable/telecommunications, healthcare, forest
products and steel. For each industry, we try to invest
only in those companies which exhibit stable or improving
credit measurements and which we believe are poised to
withstand the challenges of changing economic environments.
As always, we appreciate the opportunity to serve your
investment needs.
Sincerely,
/s/ Nancy W. Jones
Nancy W. Jones
Portfolio Manager
January 31, 1995
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 First Boston High Yield Index.
The following table is the source data for the line chart which
appears at this point in the printed document. This table is
not part of the original printed document and is shown for
reference only. The same is also true for this descriptive
paragraph.
<TABLE>
<CAPTION>
First Boston High
Fund For Income Yield Index
<S> <C> <C>
Jan-85 $ 9,375 $10,000
Dec-85 11,208 12,493
Dec-86 12,506 14,446
Dec-87 12,350 15,390
Dec-88 14,106 17,491
Dec-89 12,970 17,558
Dec-90 10,735 16,438
Dec-91 15,334 23,629
Dec-92 17,896 27,565
Dec-93 21,128 32,778
Dec-94 21,251 32,460
</TABLE>
<TABLE>
<CAPTION>
Class A shares Average Annual Total Return*
N.A.V. Only S.E.C. Standardized
<S> <C> <C>
One Year .58% (5.75%)
Five Years 10.38% 8.95%
Ten Years 8.53% 7.83%
S.E.C. 30-Day Yield 9.27%
</TABLE>
The graph compares a $10,000 investment made in the First
Investors Fund For Income, Inc. on 1/1/85 with a similar
investment in the First Boston High Yield Index. For
purposes of the graph and the accompanying table, unless
otherwise indicated, it has been assumed that the maximum
sales charge was deducted from the initial $10,000
investment in the Fund and all dividends and distributions
were reinvested. Investors investing in periodic payment
plans bear additional expenses.
The First Boston High Yield Index is designed to measure
the performance of the High Yield Bond Market. The Index
consists of 661 different issues, 576 of which are cash
pay, 70 are zero-coupon, 6 are step bonds, 4 are payment-in-
kind bonds and the remaining 5 are in default. The bonds
included in the Index have an average life of 8.1 years, an
average maturity of 8.2 years, an average duration of 4.7
years and an average coupon of 10.65%. The Index does not
take into account fees and expenses. It is not possible to
invest in the First Boston High Yield Index.
* Average Annual Total Return figures (for the period ended
12/31/94) include the reinvestment of all dividends and
distributions. "N.A.V. Only" returns are calculated
without sales charges. The "S.E.C. Standardized" returns
shown are based on the maximum sales charge of 6.25% (prior
to 7/1/93 and 12/29/89, the maximum sales charges were 6.9%
and 8.5%, respectively) and are higher than they would have
been had these sales charges not been reduced. 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. The Fund was closed
to new investments from 11/9/90 to 7/27/92. First Boston
High Yield Index figures from CS First Boston and all other
figures from First Investors Management Company Inc. Class
A shares were the only shares offered by the Fund during
the period.
Portfolio Composition
FIRST INVESTORS FUND FOR INCOME, INC.
The dollar weighted average of credit ratings of all bonds
held by the Fund during the 1994 fiscal year and the dollar
weighted average of the total of the Fund's investments in
zero coupon bonds and pay-in-kind bonds during the 1994
fiscal year, computed on a monthly basis, is set forth
below. This information reflects the average composition of
the Fund's assets during the 1994 fiscal year and is not
necessarily representative of the Fund as of the end of its
1994 fiscal year, the current fiscal year or at any other
time in the future.
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------
Comparable Quality
Rated by of Unrated Securities
Moody's to Bonds Rated by Moody's
- - ----------------------------------------------------------------------
<S> <C> <C>
Baa2 0.32% 0.00%
Baa3 0.24 0.00
Ba1 0.14 0.00
Ba2 3.07 0.00
Ba3 12.15 0.00
B1 23.62 1.02
B2 22.22 1.54
B3 19.46 0.11
Caa 5.48 0.13
Ca 0.78 0.13
- - ----------------------------------------------------------------------
</TABLE>
Zero Coupon Bonds 6.28%
Pay-in-kind Bonds 1.44%
<TABLE>
<CAPTION>
Portfolio of Investments
FIRST INVESTORS FUND FOR INCOME, INC.
December 31, 1994
- - -------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- - -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS--88.5%
Aerospace/Defense--2.8%
$ 4,800M Allison Engine Co., Inc., 10%, 2003 $ 4,920,000 $ 122
4,308M Dyncorp, PIK, 16%, 2003 4,049,623 101
3,000M Sequa Corp., 9 3/8%, 2003 2,505,000 62
- - -------------------------------------------------------------------------------------------------------------
11,474,623 285
- - -------------------------------------------------------------------------------------------------------------
Apparel/Textiles--2.5%
2,000M Consoltex Group, Inc., 11%, 2003 1,840,000 46
2,000M Dan River, Inc., 10 1/8%, 2003 1,800,000 45
7,000M +Linter Textiles Corp., Ltd., 13 3/4%, 2000 52,500 1
7,000M Westpoint Stevens, Inc., 9 3/8%, 2005 6,282,500 157
- - -------------------------------------------------------------------------------------------------------------
9,975,000 249
- - -------------------------------------------------------------------------------------------------------------
Automotive--4.4%
5,600M JPS Automotive Products Corp., 11 1/8%, 2001 5,446,000 136
4,000M Lear Seating, Inc., 11 1/4%, 2000 4,055,000 101
4,400M SPX Corp., 11 3/4%, 2002 4,378,000 109
3,500M Truck Components, Inc., 12 1/4%, 2001 3,640,000 91
- - -------------------------------------------------------------------------------------------------------------
17,519,000 437
- - -------------------------------------------------------------------------------------------------------------
Building Materials--2.6%
4,500M American Standard Corp., 11 3/8%, 2004 4,590,000 114
4,500M American Standard Corp., 0%-10 1/2%, 2005 2,868,750 72
1,750M Waxman Industries, Inc., 13 3/4%, 1999 1,645,000 41
3,248M Waxman Industries, Inc., 0%-12 3/4%, 2004 1,429,120 36
- - -------------------------------------------------------------------------------------------------------------
10,532,870 263
- - -------------------------------------------------------------------------------------------------------------
Chemicals--8.6%
6,200M Harris Chemical North America, Inc., 0%-10 1/4%, 2001 5,115,000 128
4,125M Harris Chemical North America, Inc., 10 3/4%, 2003 3,805,313 95
5,000M Huntsman Corp., 11%, 2004 5,187,500 129
1,700M Methanex Corp., 8 7/8%, 2001 1,657,500 41
1,500M NL Industries, Inc., 11 3/4%, 2003 1,500,000 37
2,500M OSI Specialties, Inc., 9 1/4%, 2003 2,275,000 57
5,100M Rexene Corp., 11 3/4%, 2004 5,214,750 130
6,000M Synthetic Industries, Inc., 12 3/4%, 2002 5,280,000 132
4,700M UCC Investors Holdings, Inc., 11%, 2003 4,629,500 115
- - -------------------------------------------------------------------------------------------------------------
34,664,563 864
- - -------------------------------------------------------------------------------------------------------------
Conglomerates--.7%
4,400M Eagle Industries, Inc., 0%-10 1/2%, 2003 2,816,000 70
- - -------------------------------------------------------------------------------------------------------------
Consumer Non-Durables--.4%
1,600M Calmar, Inc., 12%, 1997 1,600,000 40
- - -------------------------------------------------------------------------------------------------------------
Containers--5.9%
13,000M Owens Illinois, Inc., 11%, 2003 13,487,500 336
5,000M Riverwood International Corp., 11 1/4%, 2002 5,100,000 127
5,250M Sweetheart Cup Co., Inc., 10 1/2%, 2003 4,908,750 123
- - -------------------------------------------------------------------------------------------------------------
23,496,250 586
- - -------------------------------------------------------------------------------------------------------------
Durable Goods Manufacturing--1.0%
4,275M Fairfield Manufacturing, Inc., 11 3/8%, 2001 3,997,125 100
- - -------------------------------------------------------------------------------------------------------------
Electrical Equipment--1.8%
3,650M Essex Group, Inc., 10%, 2003 3,394,500 85
3,850M IMO Industries, Inc., 12%, 2001 3,850,000 96
- - -------------------------------------------------------------------------------------------------------------
7,244,500 181
- - -------------------------------------------------------------------------------------------------------------
Energy Exploration/Production--1.0%
3,900M Maxus Energy Corp., 11 1/2%, 2015 3,919,500 98
- - -------------------------------------------------------------------------------------------------------------
Energy Services--3.8%
3,500M Deeptech International, Inc., 12%, 2000 3,193,750 80
3,500M Falcon Drilling Co., Inc., 9 3/4%, 2001 3,333,750 83
2,851M Synergy Group, Inc., 9 1/2%, 2000 2,280,800 57
6,000M Transco Energy Co., 11 1/4%, 1999 6,375,000 159
- - -------------------------------------------------------------------------------------------------------------
15,183,300 379
- - -------------------------------------------------------------------------------------------------------------
Food/Beverage/Tobacco--1.1%
4,500M Fleming Co., Inc., 10 5/8%, 2001 4,500,000 112
- - -------------------------------------------------------------------------------------------------------------
Food Services--1.9%
4,000M Americold Corp., 11 1/2%, 2005 3,600,000 90
5,062M Flagstar Cos., Inc., 11 1/4%, 2004 4,201,460 105
- - -------------------------------------------------------------------------------------------------------------
7,801,460 195
- - -------------------------------------------------------------------------------------------------------------
Gaming/Lodging--2.2%
5,000M Casino America, Inc., 11 1/2%, 2001 4,200,000 105
5,500M Showboat, Inc., 9 1/4%, 2008 4,606,250 115
- - -------------------------------------------------------------------------------------------------------------
8,806,250 220
- - -------------------------------------------------------------------------------------------------------------
Healthcare--8.4%
3,650M American Medical International, Inc., 11%, 2000 3,796,000 94
4,950M Continental Medical Systems, Inc., 10 7/8%, 2002 4,083,750 102
4,400M Healthsouth Rehabilitation Corp., 9 1/2%, 2001 4,246,000 106
5,300M Healthtrust, Inc., 10 3/4%, 2002 5,604,750 140
4,500M Integrated Health Service Inc., 10 3/4%, 2004 4,522,500 113
3,000M Mediq/PRN Life Support Services, Inc., 11 1/8%, 1999 2,700,000 67
6,000M Ornda Healthcorp., 12 1/4%, 2002 6,300,000 157
2,550M Ornda Healthcorp., 11 3/8%, 2004 2,594,625 65
- - -------------------------------------------------------------------------------------------------------------
33,847,625 844
- - -------------------------------------------------------------------------------------------------------------
Information Technology/Office Equipment--1.3%
5,000M Unisys Corp., 10 5/8%, 1999 5,050,000 126
- - -------------------------------------------------------------------------------------------------------------
Media/Cable Television--8.6%
5,500M Jones Intercable, Inc., 11 1/2%, 2004 5,720,000 142
2,000M Lamar Advertising, Inc., 11%, 2003 1,905,000 48
5,000M Marcus Cable Operating Co., 0%-13 1/2%, 2004 2,612,500 65
3,625M Outdoor Systems, Inc., 10 3/4%, 2003 3,262,500 81
6,150M Rogers Communication Corp., 10 7/8%, 2004 6,211,500 155
5,000M SCI Television Corp., 11%, 2005 5,037,500 126
1,500M Sullivan Graphics, Inc., 15%, 2000 1,582,500 39
4,000M Videotron, Ltd., 10 1/4%, 2002 3,960,000 99
8,000M Videotron Holdings, Plc., 0%-11 1/8%, 2004 4,200,000 105
- - -------------------------------------------------------------------------------------------------------------
34,491,500 860
- - -------------------------------------------------------------------------------------------------------------
Mining/Metals--8.0%
5,500M Carbide/Graphite Group, Inc., 11 1/2%, 2003 5,527,500 138
2,750M Earle M. Jorgensen Co., 10 3/4%, 2000 2,667,500 66
4,000M Federal Industries, Ltd., 10 1/4%, 2000 3,730,000 93
5,000M Geneva Steel Co., Inc., 11 1/8%, 2001 4,700,000 117
5,500M Magma Copper Co., Inc., 12%, 2001 5,933,125 148
5,400M WCI Steel, Inc., 10 1/2%, 2002 5,170,500 129
5,000M Wheeling-Pittsburgh Steel Corp., 9 3/8%, 2003 4,250,000 106
- - -------------------------------------------------------------------------------------------------------------
31,978,625 797
- - -------------------------------------------------------------------------------------------------------------
Miscellaneous--.4%
4,000M +Acme Holdings, Inc., 11 3/4%, 2000 1,600,000 40
- - -------------------------------------------------------------------------------------------------------------
Paper/Forest Products--7.7%
1,000M Container Corp., 11 1/4%, 2004 1,020,000 26
3,000M Fort Howard Corp., 14 1/8%, 2004 3,026,250 75
4,000M Gaylord Container Corp., 11 1/2%, 2001 4,060,000 101
2,000M Rainy River Forest Products Co., Inc., 10 3/4%, 2001 1,985,000 50
1,815M Seminole Kraft Corp., 13 1/2%, 1996 1,815,000 45
5,500M Stone Container Corp., 11 7/8%, 1998 5,685,625 142
7,000M Stone Container Corp., 9 7/8%, 2001 6,615,000 165
2,600M Stone Container Corp., 10 3/4%, 2002 2,580,500 64
3,870M S. D. Warren Co., Inc. 12%, 2004 (Note 5) 3,947,400 98
- - -------------------------------------------------------------------------------------------------------------
30,734,775 766
- - -------------------------------------------------------------------------------------------------------------
Retail-General Merchandise--5.5%
4,500M Barnes & Noble, Inc., 11 7/8%, 2003 4,792,500 120
31M Barry's Jewelers, Inc., 12 5/8%, 1996 15,490 --
4,760M General Host Co., Inc., 11 1/2%, 2002 4,165,000 104
1,500M Hook-SupeRx, Inc., 10 1/8%, 2002 1,526,250 38
3,500M Levitz Furniture Corp., 12 3/8%, 1997 3,618,125 90
4,000M Payless Cashways, Inc., 9 1/8%, 2003 3,560,000 89
4,500M Waban, Inc., 11%, 2004 4,365,000 109
- - -------------------------------------------------------------------------------------------------------------
22,042,365 550
- - -------------------------------------------------------------------------------------------------------------
Telecommunications--3.6%
5,000M Horizon Cellular Telephone, Inc., 0%-11 3/8%, 2000 3,612,500 90
2,800M Paging Network, Inc., 11 3/4%, 2002 2,779,000 69
3,250M PanAmSat Capital Corp., 9 3/4%, 2000 3,087,500 77
8,000M PanAmSat Capital Corp., 0%-11 3/8%, 2003 4,960,000 124
- - -------------------------------------------------------------------------------------------------------------
14,439,000 360
- - -------------------------------------------------------------------------------------------------------------
Transportation--4.3%
5,700M Eletson Holdings, Inc., 9 1/4%, 2003 5,080,125 127
3,100M Moran Transportation Co., 11 3/4%, 2004 2,914,000 73
5,500M OMI Corp., 10 1/4%, 2003 4,757,500 118
4,600M Trism, Inc., 10 3/4%, 2000 4,324,000 108
- - -------------------------------------------------------------------------------------------------------------
17,075,625 426
- - -------------------------------------------------------------------------------------------------------------
Total Value of Corporate Bonds (cost $376,715,528) 354,789,956 8,848
- - -------------------------------------------------------------------------------------------------------------
COMMON STOCKS--1.3%
Chemicals--.5%
173,769 *UCC Investors Holding, Inc. (Note 4) 2,085,228 52
- - -------------------------------------------------------------------------------------------------------------
Gaming/Lodging--.0%
141,762 *Divi Hotels, Inc. (Note 4) 7,088 --
35,000 *Goldriver Hotel & Casino Corp., Series "B" 35,000 1
- - -------------------------------------------------------------------------------------------------------------
42,088 1
- - -------------------------------------------------------------------------------------------------------------
Paper/Forest Products--.0%
18,538 *Gaylord Container Corp., Class "A" 169,159 4
- - -------------------------------------------------------------------------------------------------------------
Retail-General Merchandise--.6%
116,129 *Barry's Jewelers, Inc. 812,903 20
10,800 *Finlay Enterprises, Inc. 162,000 4
77,310 *Peebles, Inc. (Note 4) 1,159,650 29
- - -------------------------------------------------------------------------------------------------------------
2,134,553 53
- - -------------------------------------------------------------------------------------------------------------
Transportation--.2%
32,605 *Chicago & North Western Holdings Corp. 635,798 16
- - -------------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $8,818,980) 5,066,826 126
- - -------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--.2%
Media/Cable Television
9,133 K-III Communications Corp., 11 5/8%, Series B (cost $912,471) 876,833 22
- - -------------------------------------------------------------------------------------------------------------
WARRANTS--.3%
Building Materials--.0%
103,250 *Waxman Industries, Inc. (expiring 6/1/04) (Note 5) 25,812 1
- - -------------------------------------------------------------------------------------------------------------
Financial Services--.0%
89,950 *Reliance Group Holdings, Inc. (expiring 1/28/97) 116,935 3
- - -------------------------------------------------------------------------------------------------------------
Gaming/Lodging--.1%
16,300 *Casino America, Inc. (expiring 11/15/96) 4,075 --
7,000 *Goldriver Finance Corp., Liquidating Trust 105,000 3
21,000 *Presidential Riverboat Casinos, Inc. (expiring 9/15/96) (Note 5) 84,000 2
- - -------------------------------------------------------------------------------------------------------------
193,075 5
- - -------------------------------------------------------------------------------------------------------------
Paper/Forest Products--.2%
98,471 *Gaylord Container Corp. (expiring 7/31/96) 726,224 18
- - -------------------------------------------------------------------------------------------------------------
Retail-Food/Drug--.0%
12,129 *Purity Supreme, Inc. (expiring 8/6/97) (Note 4) 242 --
- - -------------------------------------------------------------------------------------------------------------
Retail-General Merchandise--.0%
66,000 *New Cort Holdings Corp. (expiring 9/1/98) 66,000 1
4,000 *Payless Cashways, Inc. (expiring 11/1/96) 6,000 --
- - -------------------------------------------------------------------------------------------------------------
72,000 1
- - -------------------------------------------------------------------------------------------------------------
Total Value of Warrants (cost $745,601) 1,134,288 28
- - -------------------------------------------------------------------------------------------------------------
UNITS--2.0%
Paper/Forest Products--.6%
100,000 S. D. Warren Co., Inc., (a) (Note 5) 2,600,000 65
- - -------------------------------------------------------------------------------------------------------------
Telecommunications--1.4%
10,550 Echostar Communications Corp., 0%-12 7/8, 2004 (b) 5,459,625 136
- - -------------------------------------------------------------------------------------------------------------
Total Value of Units (cost $8,436,964) 8,059,625 201
- - -------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--2.4%
10,000M United States Treasury Notes, 7 1/2%, 2002 (cost $10,667,187) 9,814,063 245
- - -------------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--3.7%
7,500M Appalachian Power, 6.35%, 1/3/95 7,497,354 187
1,500M Coca Cola Co., 5.75%, 1/9/95 1,498,084 38
6,000M General Electric Capital Corp., 5.80%, 1/11/95 5,990,334 149
- - -------------------------------------------------------------------------------------------------------------
Total Value of Short-Term Corporate Notes (cost $14,985,772) 14,985,772 374
- - -------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $421,282,503) 98.4% 394,727,363 9,844
Other Assets, Less Liabilities 1.6 6,259,345 156
- - -------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $400,986,708 $10,000
=============================================================================================================
* Non-income producing
+ In default as to principal and/or interest (Note 8).
(a) Each unit consists of one share of senior preferred stock of the
S.D. Warren Company and one warrant to purchase 0.29948 shares
of common stock of SDW Holdings Corporation and its
successors.
(b) Each unit consists of a $1,000 principal amount 12 7/8% senior
secured discount note due 6/1/04 and warrants to purchase six
shares of Class "A" common stock.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
FIRST INVESTORS FUND FOR INCOME, INC.
December 31, 1994
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments in securities, at value (identified cost $421,282,503) (Note 1A) $394,727,363
Cash 90,555
Receivables:
Interest $7,958,218
Investment securities sold 5,043,750
Capital stock sold 514,259 13,516,227
----------
Other assets 168,816
------------
Total Assets 408,502,961
Liabilities
Payables:
Investment securities purchased 5,034,125
Dividend payable January 15, 1995 1,086,258
Capital stock redeemed 931,054
Accrued advisory fee 244,508
Accrued expenses 220,308
----------
Total Liabilities 7,516,253
------------
Net Assets $400,986,708
============
Net Assets Consist of:
Capital paid in $1,160,927,008
Undistributed net investment income 926,838
Accumulated net realized loss on investment transactions (734,311,998)
Net unrealized depreciation in value of investments (26,555,140)
--------------
Total $ 400,986,708
==============
Net Asset Value and Redemption Price Per Share--Class A (Note 9)
($400,986,708 divided by 105,260,290 shares outstanding),
500,000,000 shares authorized, $1.00 par value $3.81
=====
Maximum Offering Price Per Share--Class A ($3.81/.9375)* $4.06
=====
* On purchases of $25,000 or more, the sales charge is reduced.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
FIRST INVESTORS FUND FOR INCOME, INC.
Year Ended December 31, 1994
- - ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income
Income (Notes 1C and 6):
Interest $43,264,173
Consent fees 391,938
Dividends 117,550
-------------
Total income $43,773,661
Expenses:
Advisory fee (Note 3) 3,060,320
Shareholder servicing costs (Note 3) 880,226
Distribution plan expenses (Note 7) 676,231
Reports and notices to shareholders 245,356
Professional fees 84,724
Other expenses 96,002
-------------
Total expenses 5,042,859
------------
Net investment income 38,730,802
Realized and Unrealized Gain (Loss) on Investments (Note 2):
Net realized gain on investments 653,361
Net unrealized depreciation of investments (37,481,745)
-------------
Net loss on investments (36,828,384)
------------
Net Increase in Net Assets Resulting from Operations $ 1,902,418
============
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
FIRST INVESTORS FUND FOR INCOME, INC.
- - ---------------------------------------------------------------------------------------------------------
Year Ended December 31 1994 1993
- - ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income $ 38,730,802 $ 40,467,236
Net realized gain on investments 653,361 12,200,587
Net unrealized appreciation (depreciation) of investments (37,481,745) 18,206,744
------------ ------------
Net increase in net assets resulting from operations 1,902,418 70,874,567
------------ ------------
Dividends to Shareholders from:
Net investment income (39,768,324) (41,216,569)
------------ ------------
Capital Share Transactions--Class A(a)
Issued 20,228,141 10,712,359
Issued on reinvestments 26,318,610 26,744,743
Redeemed (38,780,019) (50,022,071)
------------ ------------
Net increase (decrease) in net assets resulting from
capital share transactions 7,766,732 (12,564,969)
------------- -------------
Total increase (decrease) in net assets (30,099,174) 17,093,029
Net Assets
Beginning of year 431,085,882 413,992,853
------------ -------------
End of year (including undistributed net investment income of
$926,838 and $1,964,360, respectively) $400,986,708 $431,085,882
============ ============
(a) Capital Shares Issued and Redeemed--Class A (Note 9)
Issued 5,062,541 2,608,233
Issued on reinvestments 6,666,913 6,546,010
Redeemed (9,787,987) (12,279,291)
------------ ------------
Net increase (decrease) in capital shares 1,941,467 (3,125,048)
============ ============
See notes to financial statements
</TABLE>
Notes to Financial Statements
FIRST INVESTORS FUND FOR INCOME, INC.
1. Significant Accounting Policies--The Fund is registered
under the Investment Company Act of 1940 (the "1940 Act")
as a diversified, open-end management investment company.
A. Security Valuation--Except as provided below, a security
listed or traded on an exchange or the NASDAQ National
Market System is valued at its last sale price on the
exchange or system where the security is principally
traded, and lacking any sales, the security is valued at
the last bid price. Each security traded in the over-the-
counter market (including securities listed on exchanges
whose primary market is believed to be over-the-counter) is
valued at the most recent bid price 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 value. Short-term corporate notes which are
purchased at a discount are valued at amortized cost.
Securities for which market quotations are not readily
available, "restricted securities," and any other assets
are valued on a consistent basis at fair value as
determined in good faith by or under the supervision of the
Fund's officers in a manner specifically authorized by the
Board of Directors.
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 the 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, such taxes. At December 31, 1994, the
Fund had capital loss carryovers of $734,311,998 of which
$24,933,230 expires in 1995, $40,084,935 in 1996,
$111,360,941 in 1997, $350,158,165 in 1998, $207,520,038 in
1999 and $254,689 in 2002.
C. 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 are
recognized as dividend income and recorded at the market
value of the shares received. During the year ended
December 31, 1994, the Fund recognized $97,485 of dividend
income from these taxable "pay in kind" distributions.
Interest income and estimated expenses are accrued daily.
Dividends to shareholders from net investment income are
accrued daily and paid monthly.
2. Security Transactions--For the year ended December 31,
1994, purchases and sales of investment securities, other
than United States Government obligations and short-term
corporate notes, aggregated $157,529,700 and $154,513,942,
respectively.
At December 31, 1994, the cost of investments for federal
income tax purposes was $421,282,503. Accumulated net
unrealized depreciation on investments was $26,555,140,
consisting of $7,517,479 gross unrealized appreciation and
$34,072,619 gross unrealized depreciation.
3. Advisory Fee and Other Transactions With Affiliates
(Also see Note 7)--Certain officers and directors of the
Fund are officers and directors of its investment adviser,
First Investors Management Company, Inc. ("FIMCO"), its
underwriter, First Investors Corporation ("FIC"), its
transfer agent, Administrative Data Management Corp.
("ADM") and/or First Financial Savings Bank, S.L.A.
("FFS"), custodian of the Fund's Individual Retirement
Accounts. Officers and directors of the Fund received no
remuneration from the Fund for serving in such capacities.
Their remuneration (together with certain other expenses of
the Fund) is paid by FIMCO or FIC.
The Investment Advisory Agreement provides as compensation
to FIMCO an annual fee, payable monthly, at the rate of
.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.
Pursuant to certain state regulations, FIMCO has agreed to
reimburse the Fund if and to the extent that the Fund's
aggregate operating expenses, including the advisory fee
but generally excluding interest, taxes, brokerage
commissions and extraordinary expenses, exceed any
limitation on expenses applicable to the Fund in those
states (unless waivers of such limitations have been
obtained). The amount of any such reimbursement is limited
to the yearly advisory fee. For the year ended December 31,
1994, no reimbursement was required pursuant to these
provisions.
For the year ended December 31, 1994, FIC, as underwriter,
received $413,039 in commissions after allowing $28,996 to
other dealers. Shareholder servicing costs included
$516,083 in transfer agent fees paid to ADM and $231,027 in
custodian fees paid to FFS.
4. Restricted Securities--The Fund held the following
restricted securities at December 31, 1994:
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------
Date
Issuer Acquired Quantity Type of Security Cost
- - ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UCC Investors Holding, Inc. 10/30/89 173,769shs Common Stock Class "A" $ 173,769
Peebles, Inc. 2/07/92 77,310shs Common Stock 2,120,750
Divi Hotels, Inc. 4/27/92 141,762shs Common Stock 3,387,500
Purity Supreme, Inc. 7/29/92 12,129wts Warrants, Expiring 8/6/97 --
- - ------------------------------------------------------------------------------------------------------------------
</TABLE>
These securities, which have been acquired through private
placements, may not be sold or transferred without prior
registration under the Securities Act of 1933 or pursuant
to an exemption therefrom. If and when the Fund sells such
portfolio securities, additional costs for registration may
be required. The restricted securities are valued pursuant
to procedures established by the Fund's Board of Directors
which include using data provided by certain dealers that
participate in any secondary market that may exist for
these securities, pricing services and other relevant
criteria. At December 31, 1994, the aggregate value of the
above restricted securities was $3,252,208 representing
less than 1% of the Fund's net assets.
5. 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
resold to qualified institutional investors. At December
31, 1994, the Fund held four 144A securities with an
aggregate value of $6,657,212 representing 1.7% of the
Fund's net assets. These securities are valued as set forth
in Note 1A.
6. Affiliated Companies--Investments in companies 5% or
more of whose outstanding voting securities are held by the
Fund are defined as "Affiliated Companies" in Section
2(a)(3) of the 1940 Act. For the year ended December 31,
1994, the Fund received interest income of $9,601 from such
affiliated companies.
7. Distribution Plan--Pursuant to a Distribution Plan
adopted under Rule 12b-1 of the 1940 Act, the Fund may pay
a fee to FIC in an amount up to .30% of the Fund's average
net assets on an annualized basis each fiscal year, payable
monthly. The fee consists of a distribution fee and a
service fee. The service fee is paid for the ongoing
servicing of clients who are shareholders of the Fund.
However, pursuant to settlements entered into with various
state regulators, the fee is limited to .15% until February
1, 1998. For the year ended December 31, 1994, this fee
reduction amounted to $567,652.
8. Concentration of Credit Risk--The Fund's investment in
high yield securities whether rated or unrated may be
considered speculative and subject to greater market
fluctuations and risks of loss of income and principal than
lower yielding, higher rated, fixed income securities. The
risk of loss due to default by the issuer may be
significantly greater for the holders of high yielding
securities, because such securities are generally unsecured
and are often subordinated to other creditors of the
issuer. At December 31, 1994, the Fund held two defaulted
securities with a value aggregating $1,652,500 representing
less than 1/2 of 1% of the Fund's net assets.
9. Capital Stock--By action of the Board of Directors, the
Fund amended its Articles of Incorporation on October 21,
1994 so that of the 1,000,000,000 shares originally
authorized, 500,000,000 shares were reclassified as Class A
capital stock and 500,000,000 shares as Class B capital
stock. As of December 31, 1994, only Class A shares have
been issued.
10. Pending Litigation--The Fund is a defendant in a number
of cases involving investors who invested in the Fund and
First Investors High Yield Fund, Inc. (collectively, the
"Funds"). First Investors High Yield Fund, Inc. and FIC are
defendants in these cases. The suits allege that FIC sales
representatives had made misrepresentations concerning the
risks of investing in the Funds. FIC has made tentative
settlements in connection with several of these cases. In
connection with these settlements, FIC's parent company,
First Investors Consolidated Corporation ("FICC"), has
agreed to assume the liability. Additionally, FICC has
agreed to assume the liability, if any, in the remaining
suits.
Financial Highlights
FIRST INVESTORS FUND FOR INCOME, INC.
The following table sets forth the per share operating
performance data for a Class A share of capital stock
outstanding, total return, ratios to average net assets and
other supplemental data for each year indicated.
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------------------------
Year Ended December 31
---------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C. <C> <C> <C> <C>
Per Share Data
- - --------------
Net Asset Value, Beginning of Year $4.17 $3.89 $3.69 $2.98 $4.16 $5.19 $5.15 $5.87 $5.96 $5.70
------ ----- ----- ----- ----- ----- ----- ----- ----- -----
Income from Investment Operations
Net investment income .37 .39 .41 .42 .53 .64 .69 .66 .77 .77
Net realized and unrealized gain (loss)
on investments (.35) .29 .19 .78 (1.19) (1.01) .01 (.71) (.11) .28
------ ----- ----- ----- ----- ----- ----- ----- ----- -----
Total from Investment Operations .02 .68 .60 1.20 (.66) (.37) .70 (.05) .66 1.05
------ ----- ----- ----- ----- ----- ----- ----- ----- -----
Less Distributions from:
Net investment income .38 .40 .40 .41 .52 .66 .66 .67 .75 .79
Capital surplus -- -- -- .08 -- -- -- -- -- --
------ ----- ----- ----- ----- ----- ----- ----- ----- -----
Total Distributions .38 .40 .40 .49 .52 .66 .66 .67 .75 .79
------ ----- ----- ----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of Year $3.81 $4.17 $3.89 $3.69 $2.98 $4.16 $5.19 $5.15 $5.87 $5.96
====== ===== ===== ===== ===== ===== ===== ===== ===== =====
Total Return(%)+ .58 18.06 16.70 42.84 (17.23) (8.05) 14.22 (1.25) 11.58 19.56
- - ---------------
Ratios/Supplemental Data
- - ------------------------
Net Assets, End of Year
(in millions) $401 $431 $414 $429 $527 $1,321 $1,739 $1,620 $1,693 $1,364
Ratio to Average Net Assets:(%)
Expenses 1.22 1.32 1.03 1.18 1.27 1.02 .99 1.08 .98 .90
Net Investment Income 9.34 9.54 10.63 12.49 14.39 13.19 13.03 11.56 12.81 13.10
Portfolio Turnover Rate(%) 39 76 51 50 21 44 74 74 168 96
+ Calculated without sales charge
See notes to financial statements
</TABLE>
Independent Auditor's Report
To the Shareholders and Board of Directors of
First Investors Fund For Income, Inc.
We have audited the accompanying statement of assets and
liabilities of First Investors Fund For Income, Inc.,
including the portfolio of investments, as of December 31,
1994, and the related statement of operations for the year
then ended, the statement of changes in net assets for each
of the two years in the period then ended and financial
highlights for each of the ten years in the period then
ended. These financial statements and financial highlights
are the responsibility of the Fund's 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 December 31, 1994, by correspondence
with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of First
Investors Fund For Income, Inc. at December 31, 1994, and
the results of its operations, changes in its net assets
and financial highlights for each of the respective periods
presented, in conformity with generally accepted accounting
principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
January 31, 1995
FIRST INVESTORS FUND FOR INCOME, INC.
Directors
- - ---------
James J. Coy
Roger L. Grayson
Glenn O. Head
Kathryn S. Head
F. William Ortman, Jr.
Rex R. Reed
Herbert Rubinstein
John T. Sullivan
Robert F. Wentworth
Officers
- - --------
Glenn O. Head
President
Nancy W. Jones
Vice President
Concetta Durso
Vice President and Secretary
Joseph I. Benedek
Treasurer
Carol Lerner Brown
Assistant Secretary
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.
10 Woodbridge Center Drive
Woodbridge, NJ 07095-1198
Legal Counsel
Kirkpatrick & Lockhart
1800 M Street, N.W.
Washington, DC 20036
Auditors
Tait, Weller & Baker
Two Penn Center Plaza
Philadelphia, PA 19102
For more complete information about First Investors Fund
For Income, Inc., including charges and expenses, you may
obtain a prospectus from your registered
representative or by calling 1-800-423-4026. Read it
carefully before you invest or send money.
FIRST INVESTORS FUND FOR INCOME, INC.
95 WALL STREET
NEW YORK, NY 10005
First Investors LOGO
LOGO is described as follows: The arabic numeral one separated into seven
vertical segments followed by the words "First Investors".
A MEMBER OF THE
FIRST INVESTORS
FINANCIAL NETWORK
FIFI065
The words "BULK RATE U.S. POSTAGE PAID PERMIT NO. 7379" in a box
to the right of a circle containing the words "MAILED FROM
ZIP CODE 11201" appears to the right of the above language in the
printed piece.
Vertically reading from bottom to top in center of the page the words
"FIRST INVESTORS" appear in the printed piece.
FIRST
INVESTORS
FUND FOR
INCOME, INC.
ANNUAL
REPORT
DECEMBER 31, 1994
