Portfolio Manager's Letter
FIRST INVESTORS FUND FOR INCOME, INC.
Dear Investor:
U.S. economic growth slowed during the first six months of 1995. In response
to the Federal Reserve's tightening of monetary policy, economic growth
downshifted from an unsustainable 5.1% fourth quarter pace to a more
moderate 2.7% rate in the first quarter of 1995. By Spring, the financial
markets began to anticipate an end to the Federal Reserve's interest rate
hikes. The economic crisis in Mexico, higher individual tax payments and
excessive business inventories further dampened the U.S. economy in the
second quarter. By June, in a notable reversal of opinion from six months
earlier, the markets began to expect the Federal Reserve to lower short-term
interest rates to insure against the possibility of a recession.
Slower growth was good news for U.S. financial markets. As inflation concerns
receded, long-term interest rates fell substantially with the benchmark 30
year U.S. Treasury bond yield declining from 7.88% to 6.62%. The prospect of
slower growth spurred broad stock market indices to numerous new highs as
fears of an overheating economy -- and the risk of further Federal Reserve
tightening -- subsided. Stocks also benefitted from falling interest rates
and continued strong earnings growth. The financial markets, in general,
reacted positively to legislation to eliminate the Federal budget deficit
over the next seven years.
The high yield market benefitted from the decline in interest rates and
the strong equity markets. The first six months also saw an increase in
cash flowing into the market. As the year progressed, and fears of a
recession set in, investors began to upgrade portfolios, seeking higher
quality credits within more recession resistant industries. This
selectivity continued in the second quarter despite the ample liquidity
in the market and spate of new issues. The First Investors Fund For
Income performed well on a relative basis. For the first six months of
1995, the Fund's total return on a net asset value basis, as measured by
Lipper Analytical Services, Inc. was 10.15% on Class A shares and 8.38%
on Class B shares (first offered for sale on January 12, 1995), compared
to 9.72% for the average high yield fund. During this period, dividends
paid from net investment income amounted to 18 cents per share on Class
A shares and 15.4 cents per share on Class B shares.
For the Fund For Income, sector choices were the key to performance. Generally,
those industries which are better able to ride out a recession outperform
those whose cash flows would contract in an economic downturn. Consequently,
the Fund's large position in both healthcare and media/telecommunications
proved beneficial to its performance. In each industry, credit quality
remains fairly stable throughout the economic cycle. In addition,
consolidations and acquisitions resulting in improved credit quality further
bolstered these sectors' return. On the other hand, exposure to cyclicals,
and, in particular, the metals/mining and chemical industries, dampened the
Fund's performance. These sectors, which outperformed in 1994, lagged the
market as investors sought to reduce their positions.
As we enter the last half of 1995, fears of a recession have subsided as
signs of moderate economic growth have appeared. Furthermore,
inflationary pressures are not in evidence. We believe that our strategy
of investing in stable to improving credits should continue to benefit
the Fund.
As always we appreciate the opportunity to serve your investment needs.
Sincerely,
/s/ Nancy W. Jones
Nancy W. Jones
Portfolio Manager
July 31, 1995
<TABLE>
<CAPTION>
Portfolio of Investments
First Investors Fund For Income, Inc.
June 30, 1995
-----------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS--92.2%
Aerospace/Defense--1.5%
$ 4,308M Dyncorp, PIK, 16%, 2003 $4,265,029 $102
2,000M Sequa Corp., 9 3/8%, 2003 1,840,000 44
-----------------------------------------------------------------------------------------------------------------
6,105,029 146
-----------------------------------------------------------------------------------------------------------------
Agricultural Products--1.1%
4,500M Terra Industries, Inc., 10 1/2%, 2005 (Note 5) 4,590,000 110
-----------------------------------------------------------------------------------------------------------------
Apparel/Textiles--2.5%
2,000M Consoltex Group, Inc., 11%, 2003 1,830,000 44
2,000M Dan River, Inc., 10 1/8%, 2003 1,980,000 47
7,000M +Linter Textiles Corp., Ltd., 13 3/4%, 2000 52,500 1
7,000M Westpoint Stevens, Inc., 9 3/8%, 2005 6,755,000 161
-----------------------------------------------------------------------------------------------------------------
10,617,500 253
-----------------------------------------------------------------------------------------------------------------
Automotive--3.8%
2,000M Exide Corp., 10%, 2005 (Note 5) 2,055,000 49
5,600M JPS Automotive Products Corp., 11 1/8%, 2001 5,488,000 131
4,400M SPX Corp., 11 3/4%, 2002 4,587,000 110
3,500M Truck Components, Inc., 12 1/4%, 2001 3,815,000 91
-----------------------------------------------------------------------------------------------------------------
15,945,000 381
-----------------------------------------------------------------------------------------------------------------
Building Materials--3.8%
4,500M American Standard Corp., 11 3/8%, 2004 4,950,000 118
4,500M American Standard Corp., 0%-10 1/2%, 2005 3,397,500 81
4,950M Triangle Pacific Corp., 10 1/2%, 2003 5,036,625 120
1,630M Waxman Industries, Inc., 13 3/4%, 1999 1,369,200 33
3,248M Waxman Industries, Inc., 0%-12 3/4%, 2004 1,299,200 31
-----------------------------------------------------------------------------------------------------------------
16,052,525 383
-----------------------------------------------------------------------------------------------------------------
Chemicals--7.3%
7,200M Harris Chemical North America, Inc., 0%-10 1/4%, 2001 6,516,000 156
3,125M Harris Chemical North America, Inc., 10 3/4%, 2003 2,906,250 69
5,000M Huntsman Corp., 11%, 2004 5,487,500 131
2,500M OSI Specialties, Inc., 9 1/4%, 2003 2,525,000 60
6,600M Rexene Corp., 11 3/4%, 2004 7,078,500 169
6,000M Synthetic Industries, Inc., 12 3/4%, 2002 6,000,000 143
-----------------------------------------------------------------------------------------------------------------
30,513,250 728
-----------------------------------------------------------------------------------------------------------------
Conglomerates--.8%
4,400M Eagle Industries, Inc., 0%-10 1/2%, 2003 3,124,000 75
-----------------------------------------------------------------------------------------------------------------
Consumer Non-Durables--.4%
1,600M Calmar, Inc., 12%, 1997 1,640,000 39
-----------------------------------------------------------------------------------------------------------------
Containers--4.6%
13,000M Owens Illinois, Inc., 11%, 2003 14,365,000 343
5,250M Sweetheart Cup Co., Inc., 10 1/2%, 2003 5,066,250 121
-----------------------------------------------------------------------------------------------------------------
19,431,250 464
-----------------------------------------------------------------------------------------------------------------
Durable Goods Manufacturing--1.6%
2,500M Day International Group, Inc., 11 1/8%, 2005 (Note 5) 2,512,500 60
4,275M Fairfield Manufacturing, Inc., 11 3/8%, 2001 4,061,250 97
-----------------------------------------------------------------------------------------------------------------
6,573,750 157
-----------------------------------------------------------------------------------------------------------------
Electrical Equipment--1.8%
3,650M Essex Group, Inc., 10%, 2003 3,504,000 84
3,850M IMO Industries, Inc., 12%, 2001 3,946,250 94
-----------------------------------------------------------------------------------------------------------------
7,450,250 178
-----------------------------------------------------------------------------------------------------------------
Energy Exploration/Production--.9%
3,900M Maxus Energy Corp., 11 1/2%, 2015 3,880,500 93
-----------------------------------------------------------------------------------------------------------------
Energy Services--2.0%
3,500M Deeptech International, Inc., 12%, 2000 2,380,000 57
3,500M Falcon Drilling Co., Inc., 9 3/4%, 2001 3,430,000 82
2,851M Synergy Group, Inc., 9 1/2%, 2000 (Note 4) 2,565,900 61
-----------------------------------------------------------------------------------------------------------------
8,375,900 200
-----------------------------------------------------------------------------------------------------------------
Food/Beverage/Tobacco--1.1%
4,500M Fleming Co., Inc., 10 5/8%, 2001 4,747,500 113
-----------------------------------------------------------------------------------------------------------------
Food Services--.9%
5,062M Flagstar Cos., Inc., 11 1/4%, 2004 3,935,705 94
-----------------------------------------------------------------------------------------------------------------
Gaming/Lodging--3.0%
5,000M Casino America, Inc., 11 1/2%, 2001 5,050,000 120
2,500M Players International, Inc., 10 7/8%, 2005 (Note 5) 2,450,000 59
5,500M Showboat, Inc., 9 1/4%, 2008 5,060,000 121
-----------------------------------------------------------------------------------------------------------------
12,560,000 300
-----------------------------------------------------------------------------------------------------------------
Healthcare--9.0%
4,950M Continental Medical Systems, Inc., 10 7/8%, 2002 5,160,375 124
3,000M Genesis Healthcare, Inc., 9 3/4%, 2005 3,022,500 72
4,400M Healthsouth Rehabilitation Corp., 9 1/2%, 2001 4,543,000 108
3,750M Integrated Health Services, Inc., 9 5/8%, 2002 (Note 5) 3,825,000 91
4,500M Integrated Health Services, Inc., 10 3/4%, 2004 4,792,500 114
3,000M Mediq/PRN Life Support Services, Inc., 11 1/8%, 1999 2,820,000 67
3,800M National Medical Enterprises, Inc., 10 1/8%, 2005 4,018,500 96
6,000M Ornda Healthcorp., 12 1/4%, 2002 6,630,000 159
2,550M Ornda Healthcorp., 11 3/8%, 2004 2,779,500 66
-----------------------------------------------------------------------------------------------------------------
37,591,375 897
-----------------------------------------------------------------------------------------------------------------
Insurance--.7%
2,800M Terra Nova Holdings, PLC, 10 3/4%, 2005 2,821,000 67
-----------------------------------------------------------------------------------------------------------------
Media/Cable Television--13.1%
6,000M Adelphia Communications, Inc., 9 7/8%, 2005 5,310,000 128
8,000M Bell Cablemedia, PLC., 0%-11.95%, 2004 5,340,000 129
3,000M CF Cable TV, Inc. 11 5/8%, 2005 3,180,000 76
5,500M Jones Intercable, Inc., 11 1/2%, 2004 6,050,000 144
2,000M Lamar Advertising, Inc., 11%, 2003 1,987,500 47
5,000M Marcus Cable Operating Co., 0%-13 1/2%, 2004 3,162,500 76
3,625M Outdoor Systems, Inc., 10 3/4%, 2003 3,480,000 83
6,150M Rogers Communication Inc., 10 7/8%, 2004 6,303,750 151
6,000M SCI Television Corp., 11%, 2005 6,210,000 148
1,500M Sullivan Graphics, Inc., 15%, 2000 1,586,250 38
4,000M Videotron, Ltd., 10 1/4%, 2002 4,130,000 99
8,000M Videotron Holdings, PLC, 0%-11 1/8%, 2004 5,240,000 125
3,000M Young Broadcasting, Inc., 10 1/8%, 2005 (Note 5) 3,022,500 72
-----------------------------------------------------------------------------------------------------------------
55,002,500 1,316
-----------------------------------------------------------------------------------------------------------------
Mining/Metals--8.1%
5,500M Carbide/Graphite Group, Inc., 11 1/2%, 2003 5,775,000 139
2,750M Earle M. Jorgensen Co., 10 3/4%, 2000 2,612,500 62
5,000M Geneva Steel Co., Inc., 11 1/8%, 2001 3,950,000 94
5,500M Magma Copper Co., Inc., 12%, 2001 6,063,750 145
4,000M Russel Metals, Inc., 10 1/4%, 2000 3,740,000 89
2,000M UCAR Global Enterprises, Inc., 12%, 2005 2,140,000 51
5,400M WCI Steel, Inc., 10 1/2%, 2002 5,278,500 126
5,000M Wheeling-Pittsburgh Steel Corp., 9 3/8%, 2003 4,537,500 108
-----------------------------------------------------------------------------------------------------------------
34,097,250 814
-----------------------------------------------------------------------------------------------------------------
Miscellaneous--1.4%
4,000M +Acme Holdings, Inc., 11 3/4%, 2000 2,000,000 48
4,000M Monarch Acquisition Corp., 12 1/2%, 2003 (Note 5) 4,010,000 96
-----------------------------------------------------------------------------------------------------------------
6,010,000 144
-----------------------------------------------------------------------------------------------------------------
Paper/Forest Products--7.5%
4,000M Gaylord Container Corp., 11 1/2%, 2001 4,250,000 101
5,000M Riverwood International Corp., 11 1/4%, 2002 5,412,500 129
5,600M S.D. Warren Co., Inc., 12%, 2004 6,048,000 144
5,500M Stone Container Corp., 11 7/8%, 1998 5,864,375 140
7,000M Stone Container Corp., 9 7/8%, 2001 6,947,500 166
2,600M Stone Container Corp., 10 3/4%, 2002 2,730,000 65
-----------------------------------------------------------------------------------------------------------------
31,252,375 745
-----------------------------------------------------------------------------------------------------------------
Retail-General Merchandise--4.6%
4,500M Barnes & Noble, Inc., 11 7/8%, 2003 4,978,125 119
20M Barry's Jewelers, Inc., 12 5/8%, 1996 10,330 --
4,000M General Host Co., Inc., 11 1/2%, 2002 4,000,000 96
2,500M Levitz Furniture Corp., 12 3/8%, 1997 2,525,000 60
4,000M Payless Cashways, Inc., 9 1/8%, 2003 3,100,000 74
4,500M Waban, Inc., 11%, 2004 4,477,500 107
-----------------------------------------------------------------------------------------------------------------
19,090,955 456
-----------------------------------------------------------------------------------------------------------------
Technology--1.0%
4,000M Lear Seating, Inc., 11 1/4%, 2000 4,160,000 99
-----------------------------------------------------------------------------------------------------------------
Telecommunications--6.7%
2,500M Centennial Cellular, 8 7/8%, 2001 2,350,000 56
10,550M Echostar Communications Corp., 0%-12 7/8%, 2004 5,090,375 122
5,000M Horizon Cellular Telephone, Inc., 0%-11 3/8%, 2000 3,925,000 94
2,800M Paging Network, Inc., 11 3/4%, 2002 3,013,500 72
3,250M PanAmSat Capital Corp., 9 3/4%, 2000 3,323,125 79
8,000M PanAmSat Capital Corp., 0%-11 3/8%, 2003 5,720,000 137
4,500M Pronet, Inc., 11 7/8%, 2005 (Note 5) 4,522,500 108
-----------------------------------------------------------------------------------------------------------------
27,944,500 668
-----------------------------------------------------------------------------------------------------------------
Transportation--3.0%
5,700M Eletson Holdings, Inc., 9 1/4%, 2003 5,457,750 130
3,100M Moran Transportation Co., 11 3/4%, 2004 2,790,000 67
4,600M Trism, Inc., 10 3/4%, 2000 4,462,000 107
-----------------------------------------------------------------------------------------------------------------
12,709,750 304
-----------------------------------------------------------------------------------------------------------------
Total Value of Corporate Bonds (cost $393,479,660) 386,221,864 9,224
-----------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Shares or $10,000 of
Warrants Security Value Net Assets
-----------------------------------------------------------------------------------------------------------------
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" 222,456 5
-----------------------------------------------------------------------------------------------------------------
Retail-General Merchandise--.1%
116,129 *Barry's Jewelers, Inc. 377,419 9
-----------------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $6,251,724) 641,963 15
-----------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--2.0%
Media/Cable Television--.2%
9,672 K-III Communications Corp., 11 5/8%, Series "B" 938,209 22
-----------------------------------------------------------------------------------------------------------------
Paper/Forest Products--.7%
100,000 S.D. Warren Co., Inc., 14% 2,800,000 67
-----------------------------------------------------------------------------------------------------------------
Telecommunications--1.1%
4,500 *PanAmSat Capital Corp., 12 3/4% 4,500,000 108
-----------------------------------------------------------------------------------------------------------------
Total Value of Preferred Stocks (cost $7,963,426) 8,238,209 197
-----------------------------------------------------------------------------------------------------------------
WARRANTS--.7%
Building Materials-- .0%
103,250 *Waxman Industries, Inc. (expiring 6/1/04) (Note 5) 25,813 1
-----------------------------------------------------------------------------------------------------------------
Financial Services--.0%
89,950 *Reliance Group Holdings, Inc. (expiring 1/28/97) 134,925 3
-----------------------------------------------------------------------------------------------------------------
Gaming/Lodging--.1%
16,300 *Casino America, Inc. (expiring 11/15/96) 16,300 --
7,000 *Goldriver Finance Corp., Liquidating Trust 105,000 3
21,000 *President Riverboat Casinos, Inc. (expiring 9/15/96) (Note 5) 84,000 2
-----------------------------------------------------------------------------------------------------------------
205,300 5
-----------------------------------------------------------------------------------------------------------------
Amount
Warrants Invested
or For Each
Principal $10,000 of
Amount Security Value Net Assets
-----------------------------------------------------------------------------------------------------------------
Paper/Forest Products--.4%
98,471 *Gaylord Container Corp. (expiring 7/31/96) 1,009,328 24
100,000 *S.D. Warren Co., Inc. (expiring 12/15/06) (Note 5) 600,000 14
-----------------------------------------------------------------------------------------------------------------
1,609,328 38
-----------------------------------------------------------------------------------------------------------------
Retail-Food/Drug--.0%
12,129 *Purity Supreme, Inc. (expiring 8/6/97) (Note 4) -- --
-----------------------------------------------------------------------------------------------------------------
Retail-General Merchandise--.0%
66,000 *New Cort Holdings Corp. (expiring 9/1/98) 72,600 2
4,000 *Payless Cashways, Inc. (expiring 11/1/96) 1,000 --
-----------------------------------------------------------------------------------------------------------------
73,600 2
-----------------------------------------------------------------------------------------------------------------
Telecommunications--.2%
63,300 *Echostar Communications Corp. (expiring 6/1/04) 712,125 17
-----------------------------------------------------------------------------------------------------------------
Total Value of Warrants (cost $745,601) 2,761,091 66
-----------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--2.6%
$ 10,000 M United States Treasury Notes, 7 1/2%, 2002 (cost $10,667,188) 10,767,188 257
-----------------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--1.2%
5,000M Texaco, Inc., 5.92%, 7/6/95 (cost $4,995,889) 4,995,889 119
------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $424,103,488) 98.8% 413,626,204 9,878
Other Assets, Less Liabilities 1.2 5,093,014 122
------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $418,719,218 $10,000
==================================================================================================================
*Non-income producing
+In default as to principal and/or interest (Note 6).
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
FIRST INVESTORS FUND FOR INCOME, INC.
June 30, 1995
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments in securities, at value (identified cost $424,103,488)(Note 1A): $ 413,626,204
Cash 952,555
Receivables:
Interest $ 7,804,511
Capital shares sold 101,623 7,906,134
------------
Other assets 168,816
--------------
Total Assets 422,653,709
Liabilities
Payables:
Dividend payable July 15, 1995 3,189,294
Capital shares redeemed 389,963
Accrued advisory fee 258,543
Accrued expenses 96,691
------------
Total Liabilities 3,934,491
--------------
Net Assets (Note 7):
Class A (104,106,421 shares outstanding) 417,657,903
Class B (267,009 shares outstanding) 1,061,315 $ 418,719,218
------------ ==============
Net Assets Consist of:
Capital paid in $1,157,435,659
Undistributed net investment income 2,165,527
Accumulated net realized loss on investment transactions (730,404,684)
Net unrealized depreciation in value of investments (10,477,284)
--------------
Total $ 418,719,218
==============
Net asset value and redemption price per share--Class A $4.01
=====
Maximum offering price per share--Class A ($4.01/.9375)* $4.28
=====
Net asset value and offering price per share--Class B $3.97
=====
*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.
Six Months Ended June 30, 1995
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income
Income (Note 1C):
Interest $22,350,453
Consent fees 123,000
Dividends 70,417
-----------
Total income $22,543,870
Expenses:
Advisory fee (Note 3) 1,519,418
Shareholder servicing costs (Note 3) 433,711
Distribution plan expenses--Class A (Note 3) 308,466
Distribution plan expenses--Class B (Note 3) 1,508
Reports and notices to shareholders 83,662
Professional fees 35,164
Other expenses 58,655
-----------
Total expenses 2,440,584
-----------
Net investment income 20,103,286
Realized and Unrealized Gain (Loss) on Investments (Note 2):
Net realized gain on investments 3,907,314
Net unrealized appreciation of investments 16,077,856
-----------
Net gain on investments 19,985,170
-----------
Net Increase in Net Assets Resulting from Operations $40,088,456
===========
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
FIRST INVESTORS FUND FOR INCOME, INC.
------------------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended
June 30, 1995 December 31, 1994
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income $ 20,103,286 $ 38,730,802
Net realized gain on investments 3,907,314 653,361
Net unrealized appreciation (depreciation) of investments 16,077,856 (37,481,745)
------------ ------------
Net increase in net assets resulting from operations 40,088,456 1,902,418
------------ ------------
Dividends to Shareholders from:
Net investment income--Class A (18,849,251) (39,768,324)
Net investment income--Class B (15,346) --
------------ ------------
Total dividends (18,864,597) (39,768,324)
------------ ------------
Capital Share Transactions(a)
Class A:
Proceeds from shares sold 7,572,951 20,228,141
Value of dividends reinvested 10,531,273 26,318,610
Cost of shares redeemed (22,646,545) (38,780,019)
------------ ------------
(4,542,321) 7,766,732
------------ ------------
Class B:
Proceeds from shares sold 1,044,695 --
Value of dividends reinvested 6,277 --
Cost of shares redeemed -- --
------------ ------------
1,050,972 --
------------ ------------
Net increase (decrease) from capital share transactions (3,491,349) 7,766,732
------------ ------------
Net increase (decrease) in net assets 17,732,510 (30,099,174)
Net Assets
Beginning of period 400,986,708 431,085,882
------------ ------------
End of period (including undistributed net investment income of
$2,165,527 and $926,838, respectively) $418,719,218 $400,986,708
============ ============
(a)Capital Shares Issued and Redeemed
Class A:
Sold 1,934,470 5,062,541
Issued for dividends reinvested 2,681,243 6,666,913
Redeemed (5,769,582) (9,787,987)
------------ ------------
Net increase (decrease) in Class A shares outstanding (1,153,869) 1,941,467
============ ============
Class B:
Sold 265,417 --
Issued for dividends reinvested 1,592 --
Redeemed -- --
------------ ------------
Net increase in Class B shares outstanding 267,009 --
============ ============
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 zrecent 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 June 30, 1995, 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 six months ended June 30, 1995, the Fund recognized $50,955 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 six months ended June 30, 1995,
purchases and sales of investment securities, other than United States
Government obligations and short-term corporate notes, aggregated
$75,664,066 and $66,760,513, respectively.
At June 30, 1995, the cost of investments for federal income tax
purposes was $424,103,488. Accumulated net unrealized depreciation on
investments was $10,477,284, consisting of $15,038,845 gross unrealized
appreciation and $25,516,129 gross unrealized depreciation.
3. Advisory Fee and Other Transactions With Affiliates--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 six months
ended June 30, 1995, no reimbursement was required pursuant to these
provisions.
For the six months ended June 30, 1995, FIC, as underwriter, received
$198,030 in commissions after allowing $15,846 to other dealers.
Shareholder servicing costs included $245,473 in transfer agent fees
paid to ADM and $107,931 in custodian fees paid to FFS.
Pursuant to a Distribution Plan adopted under Rule 12b-1 of the 1940
Act, the Fund is authorized to pay FIC a fee in an amount up to .30% of
the average net assets of the Class A shares and up to 1% of the average
net assets of the Class B shares on an annualized basis each year,
payable monthly. The fee consists of a distribution fee and a service
fee. The service fee is paid for the ongoing servicing of clients who
are shareholders of the Fund. However, pursuant to settlements entered
into with various state regulators, the fee is limited to .15% for Class
A and .85% for Class B until February 1, 1998. For the six months ended
June 30, 1995, this fee reduction amounted to $308,466 for Class A and
$266 for Class B.
4. Restricted Securities--The Fund held the following restricted
securities at June 30, 1995.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Date
Issuer Acquired Quantity Type of Security Cost
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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 --
Synergy Group, Inc. 3/15/95 $2,851M Sr. Sec. Incr. Rate Note,
Series A, 9 1/2%, 9/15/00 2,628,545
--------------------------------------------------------------------------------------
</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 June 30, 1995, the aggregate
value of the above restricted securities was $2,572,988, representing
.6% 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
June 30, 1995, the Fund held eleven 144A securities with an aggregate
value of $27,697,313 representing 6.6% of the Fund's net assets. These
securities are valued as set forth in Note 1A.
6. 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 June 30, 1995, the Fund held two defaulted
securities with a value aggregating $2,052,500 representing less than
1/2 of 1% of the Fund's net assets.
7. Capital--The Fund sells two classes of shares, Class A and Class B,
each with a public offering price that reflects different sales charges
and expense levels. Class A shares are sold with an initial sales charge
of up to 6.25% of the amount invested and together with the Class B
shares are subject to 12b-1 fees as described in Note 3. Class B shares
are sold without an initial sales charge, but are generally subject to a
contingent deferred sales charge which declines in steps from 4% to 0%
during a six-year period. Class B shares automatically convert into
Class A shares after eight years. Realized and unrealized gains or
losses, investment income and expenses (other than 12b-1 fees and
certain other class expenses) are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
Of the 1,000,000,000 shares originally designated, the Fund has
classified 500,000,000 shares as Class A and 500,000,000 shares as Class
B.
8. 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 some or all of these cases. The
suits primarily allege that FIC sales representatives had made
misrepresentations concerning the risks of investing in the Funds. FIC
has made 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.
<TABLE>
<CAPTION>
Financial Highlights
FIRST INVESTORS FUND FOR INCOME, INC.
The following table sets forth the per share operating performance data for a share of capital stock
outstanding, total return, ratios to average net assets and other supplemental data for each period indicated.
----------------------------------------------------------------------------------------------------------
Class A Class B
--------------------------------------------------- -------
1/1/95 Year Ended December 31 1/12/95++
to ---------------------------------------- to
6/30/95 1994 1993 1992 1991 1990 6/30/95
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Data
Net Asset Value, Beginning of Period $3.81 $4.17 $3.89 $3.69 $2.98 $4.16 $3.81
----- ----- ----- ----- ----- ----- -----
Income from Investment Operations
Net investment income .19 .37 .39 .41 .42 .53 .16
Net realized and unrealized
gain (loss) on investments .19 (.35) .29 .19 .78 (1.19) .15
----- ----- ----- ----- ----- ----- -----
Total from Investment Operations .38 .02 .68 .60 1.20 (.66) .31
----- ----- ----- ----- ----- ----- -----
Less Distributions from:
Net investment income .18 .38 .40 .40 .41 .52 .15
Capital surplus -- - -- -- .08 -- --
----- ----- ----- ----- ----- ----- -----
Total Distributions .18 .38 .40 .40 .49 .52 .15
----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of Period $4.01 $3.81 $4.17 $3.89 $3.69 $2.98 $3.97
===== ===== ===== ===== ===== ===== =====
Total Return(%)+ 10.15 .58 18.06 16.70 42.84 (17.23) 8.38
Ratios/Supplemental Data
Net Assets, End of Period (in millions $418 $401 $431 $414 $429 $527 $1
Ratio to Average Net Assets:(%)
Expenses 1.19(a) 1.22 1.32 1.03 1.18 1.27 1.82(a)
Net investment income 9.77(a) 9.34 9.54 10.63 12.49 14.39 9.91(a)
Portfolio Turnover Rate(%) 17 39 76 51 50 21 17
+ Calculated without sales charges
++ Date shares first offered
(a) Annualized
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 June 30, 1995, and the related statement of
operations for the six months then ended, the statement of changes in
net assets for the six months ended June 30, 1995 and the year ended
December 31, 1994, and financial highlights for each of the periods
presented. 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 June 30, 1995, by correspondence
with the custodian. 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 June 30,
1995, and the results of its operations, changes in its net assets and
financial highlights for the periods presented, in conformity with
generally accepted accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
July 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
James M. Srygley
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
FIRST INVESTORS FUND FOR INCOME, INC.
Shareholder Information
-------------------------------------
Investment Adviser
First Investors
Management Company, Inc.
95 Wall Street
New York, NY 10005
Underwriter
First Investors Corporation
95 Wall Street
New York, NY 10005
Custodian
The Bank of New York
48 Wall Street
New York, NY 10286
Transfer Agent
Administrative Data
Management Corp.
581 Main Street
Woodbridge, NJ 07095-1198
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 M Street, N.W.
Washington, DC 20036
Auditors
Tait, Weller & Baker
Two Penn Center Plaza
Philadelphia, PA 19102
It is the Fund's practice to mail only one copy of its annual and semi-
annual reports to any address at which more than one shareholder with
the same last name has indicated that mail is to be delivered.
Additional copies of the reports will be mailed if requested by any
shareholder in writing or by calling 800-423-4026. The Fund will ensure
that separate reports are sent to any shareholder who subsequently
changes his or her mailing address.
This report is authorized for distribution only to existing
shareholders, and, if given to prospective shareholders, must be
accompanied or preceded by the Fund's prospectus.
(This page left blank intentionally.)
FIRST INVESTORS FUND FOR INCOME, INC.
95 WALL STREET
NEW YORK, NY 10005
The following appears on the bottom lefthand side:
First Investors Logo, which is described as follows: the arabic numeral
one separated into seven vertical segments followed by the word "First
Investors."
A MEMBER OF THE
FIRST INVESTORS
FINANCIAL NETWORK
FIFI065
Vertically reading from bottom to top in the center of the page the
words "FIRST INVESTORS" appear.
FIRST
INVESTORS
FUND FOR
INCOME, INC.
SEMI-
ANNUAL
REPORT
JUNE 30, 1995
