FIRST INVESTORS FUND FOR INCOME INC/NY, 485BPOS, 1996-04-24

FIRST INVESTORS FUND FOR INCOME INC/NY
485BPOS, 1996-04-24

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<PAGE>

As filed with the Securities and Exchange Commission on April 24, 1996

Registration No. 2-38309
811-2107

- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Post-Effective Amendment No. 62 X
----- -

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940

Amendment No. 62 X
----- -

----------

FIRST INVESTORS FUND FOR INCOME, INC.
(Exact name of Registrant as specified in charter)

Ms. Concetta Durso
Secretary and Vice President
First Investors Fund For Income, Inc.
95 Wall Street
New York, New York 10005
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.

It is proposed that this filing will become effective on April 29, 1996 pursuant
to paragraph (b) of Rule 485.

Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
previously elected to register an indefinite number of shares of common stock,
par value $1.00 per share, under the Securities Act of 1933. Registrant filed a
Rule 24f-2 Notice for its fiscal year ending December 31, 1995 on February 27,
1996.

<PAGE>

FIRST INVESTORS FUND FOR INCOME, INC.
CROSS-REFERENCE SHEET

N-1A Item No. Location
- ------------- --------

PART A: PROSPECTUS

1. Cover Page. . . . . . . . . . . . . . . . . . Cover Page
2. Synopsis. . . . . . . . . . . . . . . . . . . Fee Table
3. Condensed Financial Information . . . . . . . Financial Highlights
4. General Description of Registrant . . . . . . Investment Objectives and
Policies; General
Information
5. Management of the Fund. . . . . . . . . . . . Management
5A. Management's Discussion of
Fund Performance. . . . . . . . . . . . . . Performance Information
6. Capital Stock and Other Securities. . . . . . Description of Shares;
Dividends and Other
Distributions; Taxes;
Determination of Net
Asset Value
7. Purchase of Securities Being Offered. . . . . Alternative Purchase
Plan; How to Buy Shares
8. Redemption or Repurchase. . . . . . . . . . . How to Exchange Shares;
How to Redeem Shares;
Telephone Transactions
9. Pending Legal Proceedings . . . . . . . . . . Not Applicable

PART B: STATEMENT OF ADDITIONAL INFORMATION

10. Cover Page. . . . . . . . . . . . . . . . . . Cover Page
11. Table of Contents . . . . . . . . . . . . . . Table of Contents
12. General Information and History . . . . . . . General Information
13. Investment Objectives and Policies. . . . . . Investment Policies;
Investment Restrictions
14. Management of the Fund. . . . . . . . . . . . Directors and Officers
15. Control Persons and Principal
Holders of Securities. . . . . . . . . . . .
16. Investment Advisory and Other Services. . . . Management
17. Brokerage Allocation. . . . . . . . . . . . . Allocation of Portfolio
Brokerage
18. Capital Stock and Other Securities. . . . . . Determination of Net
Asset Value
19. Purchase, Redemption and Pricing
of Securities Being Offered. . . . . . . . . Reduced Sales Charges,
Additional Exchange and
Redemption Information
and Other Services;
Determination of Net
Asset Value

<PAGE>

N-1A Item No. Location
- ------------- --------

20. Tax Status. . . . . . . . . . . . . . . . . . Taxes
21. Underwriters. . . . . . . . . . . . . . . . . Underwriter
22. Performance Data. . . . . . . . . . . . . . . Performance Information
23. Financial Statements. . . . . . . . . . . . . Financial Statements;
Report of Independent
Accountants
PART C: OTHER INFORMATION

Information required to be included in Part C is set forth under
the appropriate item so numbered, in Part C hereof.

<PAGE>

FIRST INVESTORS HIGH YIELD FUND, INC.
FIRST INVESTORS FUND FOR INCOME, INC.

95 Wall Street, New York, New York 10005/1-800-423-4026

This is a Prospectus for FIRST INVESTORS HIGH YIELD FUND, INC. ("HIGH YIELD
FUND") and FIRST INVESTORS FUND FOR INCOME, INC. ("INCOME FUND"), each of which
is an open-end diversified management investment company. HIGH YIELD FUND and
INCOME FUND are referred to herein collectively as "Funds." Each Fund sells two
classes of shares. Investors may select Class A or Class B shares, each with a
public offering price that reflects different sales charges and expense levels.
See "Alternative Purchase Plans."

HIGH YIELD FUND primarily seeks high current income and secondarily seeks
capital appreciation. The Fund seeks its objectives by investing, under normal
market conditions, at least 65% of its total assets in high risk, high yield
securities, commonly referred to as "junk bonds" ("High Yield Securities").

INCOME FUND primarily seeks to earn a high level of current income and, to
the extent possible, in view of that objective, secondarily seeks growth of
capital. The Fund seeks its objective by emphasizing investment in High Yield
Securities.

Because the price of lower-grade debt securities tends to fluctuate more
than the price of investment grade debt securities, the net asset value of each
Fund's shares has fluctuated significantly in recent years. Because of the
emphasis placed upon High Yield Securities by the Funds, investors in either
Fund should differentiate between it and investment companies emphasizing
high-grade debt securities and commit only that portion of their resources that
they wish to invest in a portfolio which is accompanied by higher risk. There
is no assurance that either Fund will achieve its investment objectives.
INVESTMENTS IN HIGH YIELD, HIGH RISK SECURITIES, COMMONLY REFERRED TO AS "JUNK
BONDS," ENTAIL RISKS THAT ARE DIFFERENT AND MORE PRONOUNCED THAN THOSE INVOLVED
IN HIGHER-RATED SECURITIES. SEE "HIGH YIELD SECURITIES-RISK FACTORS."

This Prospectus sets forth concisely the information about each Fund that a
prospective investor should know before investing and should be retained for
future reference. First Investors Management Company, Inc. ("FIMCO" or
"Adviser") serves as investment adviser to the Funds and First Investors
Corporation ("FIC" or "Underwriter") serves as distributor of the Funds' shares.
A Statement of Additional Information ("SAI"), dated April 29, 1996 (which is
incorporated by reference herein), has been filed with the Securities and
Exchange Commission. The SAI is available at no charge upon request to the
Funds at the address or telephone number indicated above.

AN INVESTMENT IN THESE SECURITIES IS NOT A DEPOSIT OR OBLIGATION OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK AND IS NOT FEDERALLY INSURED OR PROTECTED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER GOVERNMENT AGENCY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this Prospectus is April 29, 1996

<PAGE>

FEE TABLE

The following table is intended to assist investors in understanding the
expenses associated with investing in each class of shares of a Fund. Shares of
either Fund issued prior to January 12, 1995 have been designated as Class A
shares.

SHAREHOLDER TRANSACTION EXPENSES

Class A Class B
Shares Shares
--------- ---------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) . . . 6.25% None
Deferred Sales Load
(as a percentage of the lower of
original purchase price or redemption
proceeds) . . . . . . . . . . . . . . . . None* 4% in the first year;
declining to 0% after
the sixth year

</TABLE>

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)

High Yield Fund Income Fund
--------------- -----------
Class A Class B Class A Class B
Shares Shares Shares Shares
------ ------ ------ ------
<S> <C> <C> <C> <C>
Management Fees(1) 0.85%+ 0.85%+ 0.74% 0.74%
12b-1 Fees(2)+ 0.15 0.85 0.15 0.85
Other Expenses 0.40 0.40 0.29 0.29
Total Fund Operating Expenses(3)+ 1.40 2.10 1.18 1.88

</TABLE>

- ----------------
* A contingent deferred sales charge of 1.00% will be assessed on certain
redemptions of Class A shares that are purchased without a sales charge.
See "How to Buy Shares."
+ Net of waiver
(1) Management Fees have been restated for HIGH YIELD FUND to reflect current
fees. For the fiscal year ended December 31, 1995, the Adviser waived
Management Fees for HIGH YIELD FUND in excess of 0.85%. Absent the waiver,
such fees would have been 1.00%. The adviser will continue to waive such
fees for a minimum period ending December 31, 1996.
(2) The Underwriter has agreed through December 31, 1996 to cap its right to
claim Class A 12b-1 Fees at the annual rates listed above for the Funds.
The Funds' Class A Distribution Plans provide for a 12b-1 Fee in the total
amount of up to 0.30% on an annual basis.
(3) If certain fees had not been waived, Total Fund Operating Expenses for HIGH
YIELD FUND would have been 1.70% for Class A shares and 2.40% for Class B
shares.

For a more complete description of the various costs and expenses, see
"Alternative Purchase Plans," "How to Buy Shares," "How to Redeem Shares,"
"Management" and "Distribution Plans." Due to the imposition of 12b-1 fees, it
is possible that long-term shareholders of a Fund may pay more in total sales
charges than the economic equivalent of the maximum front-end sales charge
permitted by the rules of the National Association of Securities Dealers, Inc.
The Fee Table does not reflect the costs incurred by shareholders who purchase
shares of the Funds through First Investors Contractual Plans.

The Example below is based on Class A and Class B expense data for each
Fund's fiscal year ended December 31, 1995, except that certain Operating
Expenses have been restated, as noted above.

<PAGE>

EXAMPLE

You would pay the following expenses on a $1,000 investment, assuming (1)
5% annual return and (2) redemption at the end of each time period:

ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
HIGH YIELD FUND
Class A. . . . . . . . . $76 $104 $134 $220
Class B. . . . . . . . . 61 96 133 225*

INCOME FUND
Class A. . . . . . . . . 74 98 123 197
Class B. . . . . . . . . 59 89 122 202*

</TABLE>

You would pay the following expenses on a $1,000 investment, assuming (1)
5% annual return and (2) no redemption at the end of each time period:

ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
HIGH YIELD FUND
Class A. . . . . . . . . $76 $104 $134 $228
Class B. . . . . . . . . 21 66 113 225*

INCOME FUND
Class A. . . . . . . . . 74 98 123 197
Class B. . . . . . . . . 19 59 102 202*

</TABLE>

* Assumes conversion to Class A shares eight years after purchase.

THE EXPENSES IN THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION BY
THE FUNDS OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES IN FUTURE YEARS MAY BE
GREATER OR LESS THAN THOSE SHOWN.

<PAGE>

FINANCIAL HIGHLIGHTS

The following tables set forth the per share operating performance data for
a share outstanding, total return, ratios to average net assets and other
supplemental data for each year indicated. The tables have been derived from
financial statements which have been examined by Tait, Weller & Baker,
independent certified public accountants, whose reports thereon appear in the
SAI. This information should be read in conjunction with the Financial
Statements and Notes thereto, which also appear in the SAI, available at no
charge upon request to the Funds.

HIGH YIELD FUND

CLASS A CLASS B
------------------------------------------------------------------------------------------------------------------ --------
YEAR ENDED DECEMBER 31 8/12/86* 1/12/95*
----------------------------------------------------------------
TO TO
1995 1994 1993 1992 1991 1990 1989 1988 1987 12/31/86 12/31/95
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
- --------------
Net Asset Value, Beginning of Year . $4.84 $5.30 $4.97 $4.59 $3.83 $5.26 $6.52 $6.51 $7.40 $7.42 $4.84
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Income from Investment Operations
Net investment income. . . . . . . .47 .48 .47 .53 .53 .61 .78 .81 .81 .21 .42
Net realized and unrealized
gain (loss) on investments . . . .39 (.46) .34 .31 .75 (1.44) (1.26) -- (.87) (.03) .40
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total from Investment Operations . .86 .02 .81 .84 1.28 (.83) (.48) .81 (.06) .18 .82
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----

Less Distributions from:
Net investment income. . . . . . . .48 .48 .48 .46 .52 .60 .78 .80 .82 .20 .43
Capital surplus. . . . . . . . . . -- -- -- -- -- -- -- -- .01 -- --
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total Distributions. . . . . . .48 .48 .48 .46 .52 .60 .78 .80 .83 .20 .43
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of Year . . . . $5.22 $4.84 $5.30 $4.97 $4.59 $3.83 $5.26 $6.52 $6.51 $7.40 $5.23
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----

TOTAL RETURN(%)+ . . . . . . . . . . 18.43 .39 16.95 18.94 35.87 (17.25) (8.07) 12.86 (1.38) 6.29 (a) 17.40(a)
- ---------------

RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Year (in millions) $187 $170 $191 $192 $211 $297 $754 $637 $228 $92 $1

Ratio to Average Net Assets:(%)
Expenses . . . . . . . . . . . . . 1.45 1.56 1.69 1.39 1.58 1.48 1.23 1.30 1.28 1.39 (a) 2.22(a)
Net investment income. . . . . . . 9.21 9.48 8.96 10.65 12.36 13.18 12.85 12.08 11.42 10.82 (a) 8.36(a)

Ratio to Average Net Assets
Before Expenses Waived:(%)
Expenses . . . . . . . . . . . . 1.55 1.59 N/A N/A N/A N/A N/A N/A 1.30 1.57 (a) 2.32(a)
Net investment income. . . . . . 9.11 9.44 N/A N/A N/A N/A N/A N/A 11.40 10.65 (a) 8.26(a)

Portfolio Turnover Rate(%) . . . . . 42 32 87 43 45 26 45 82 80 11 42

</TABLE>

- ---------------------
+ Calculated without sales charge
* Commencement of operations of Class A shares or date Class B shares were
first offered
(a) Annualized

<PAGE>

INCOME FUND

CLASS B
CLASS A SHARES SHARES
- -------------------------------------------------------------------------------------------------------------------- ---------
1/12/95*
YEAR ENDED DECEMBER 31 TO
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 12/31/95
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value,
Beginning of Year. . . . . . $ 3.81 $ 4.17 $ 3.89 $ 3.69 $ 2.98 $ 4.16 $ 5.19 $ 5.15 $ 5.87 $ 5.96 $ 3.81
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------

Income from Investment
Operations
Net investment income. . . .38 .37 .39 .41 .42 .53 .64 .69 .66 .77 .31
Net realized and
unrealized gain (loss)
on investments . . . . . .30 (.35) .29 .19 .78 (1.19) (1.01) .01 (.71) (.11) .33
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment
Operations . . . . . . .68 .02 .68 .60 1.20 (.66) (.37) .70 (.05) .66 .64
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------

Less Distributions from:
Net investment income. . . .36 .38 .40 .40 .41 .52 .66 .66 .67 .75 .32
Capital surplus. . . . . . -- -- -- -- .08 -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions. . . .36 .38 .40 .40 .49 .52 .66 .66 .67 .75 .32
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------

Net Asset Value, End of Year $ 4.13 $ 3.81 $ 4.17 $ 3.89 $ 3.69 $ 2.98 $ 4.16 $ 5.19 $ 5.15 $ 5.87 $ 4.13
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------

TOTAL RETURN(%)+ . . . . . . 18.54 .58 18.06 16.70 42.84 (17.23) (8.05) 14.22 (1.25) 11.58 17.46

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year
(in millions). . . . . . . $425 $401 $431 $414 $429 $527 $1,321 $1,739 $1,620 $1,693 $2

Ratio to Average Net Assets:(%)
Expenses . . . . . . . . . 1.18 1.22 1.32 1.03 1.18 1.27 1.02 .99 1.08 .98 1.92(a)
Net investment income. . . 9.52 9.34 9.54 10.63 12.49 14.39 13.19 13.03 11.56 12.81 8.71(a)

Portfolio Turnover Rate(%) . 33 39 76 51 50 21 44 74 74 168 33

</TABLE>

- --------------------
+ Calculated without sales charge
* Date shares first offered
(a) Annualized

<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

HIGH YIELD FUND primarily seeks high current income and secondarily seeks
capital appreciation by investing, under normal market conditions, at least 65%
of its total assets in high risk, high yield securities, commonly referred to as
"junk bonds" ("High Yield Securities"). INCOME FUND primarily seeks to earn a
high level of current income and, to the extent possible, in view of that
objective, secondarily seeks growth of capital by emphasizing, under normal
market conditions, investments in High Yield Securities. High Yield Securities
include the following instruments: fixed, variable or floating rate debt
obligations (including bonds, debentures and notes) which are rated below Baa by
Moody's Investors Service, Inc. ("Moody's") or below BBB by Standard & Poor's
Ratings Group ("S&P"), or are unrated and deemed to be of comparable quality by
the Adviser; preferred stocks and dividend-paying common stocks that have yields
comparable to those of high yielding debt securities; any of the foregoing
securities of companies that are financially troubled, in default or undergoing
bankruptcy or reorganization ("Deep Discount Securities"); and any securities
convertible into any of the foregoing. See "High Yield Securities--Risk
Factors" and "Deep Discount Securities."

GENERAL POLICIES

Each Fund may invest up to 5% of its total assets in debt securities issued
by foreign governments and companies located outside the United States and
denominated in U.S. or foreign currency. Each Fund also may borrow money for
temporary or emergency purposes in amounts not exceeding 5% of its total assets,
invest in restricted securities (which may not be publicly marketable) and
invest in zero coupon and pay-in-kind securities. In addition, HIGH YIELD FUND
may make loans of portfolio securities. See the SAI for more information
concerning these securities.

HIGH YIELD FUND may invest up to 35% of its total assets, and INCOME FUND
may invest without limitation, in the following instruments: common and
preferred stocks, other than those considered to be High Yield Securities; debt
obligations of all types (including bonds, debentures and notes) rated A or
better by Moody's or S&P; securities issued by the U.S. Government or its
agencies or instrumentalities ("U.S. Government Obligations"); warrants and
money market instruments consisting of prime commercial paper, certificates of
deposit of domestic branches of U.S. banks, bankers' acceptances and repurchase
agreements.

In any period of market weakness or of uncertain market or economic
conditions, each Fund may establish a temporary defensive position to preserve
capital by having all or part of its assets invested in short-term fixed income
securities or retained in cash or cash equivalents, including bank certificates
of deposit, bankers' acceptances, U.S. Government Obligations and commercial
paper issued by domestic corporations. See the SAI for more information
concerning these securities.

The medium- to lower-rated, and certain of the unrated securities in which
each Fund invests tend to offer higher yields than higher-rated securities with
the same maturities because the historical financial condition of the issuers of
such securities may not be as strong as that of other issuers. Debt obligations
rated lower than A by Moody's or S&P tend to have speculative characteristics or
are speculative, and generally involve more risk of loss of principal and income
than higher-rated securities. Also, their yields and market value, tend to
fluctuate more than higher quality securities. The greater risks and
fluctuations in yield and value occur because investors generally perceive
issuers of lower-rated and unrated securities to be less creditworthy. These
risks cannot be eliminated, but may be reduced by diversifying holdings to
minimize the portfolio impact

<PAGE>

of any single investment. In addition, fluctuations in market value do not
affect the cash income from the securities, but are reflected in the computation
of a Fund's net asset value. When interest rates rise, the net asset value of
the Funds tends to decrease. When interest rates decline, the net asset value
of the Funds tends to increase.

Variable or floating rate debt obligations in which the Funds may invest
periodically adjust their interest rates to reflect changing economic
conditions. Thus, changing economic conditions specified by the terms of the
security would serve to change the interest rate and the return offered to the
investor. This reduces the effect of changing market conditions on the
security's underlying market value.

A High Yield Security may itself be convertible into or exchangeable for
equity securities, or may carry with it the right to acquire equity securities
evidenced by warrants attached to the security or acquired as part of a unit
with the security. Although each Fund invests primarily in High Yield
Securities, securities received upon conversion or exercise of warrants and
securities remaining upon the break-up of units or detachment of warrants may be
retained to permit orderly disposition, to establish a long-term holding basis
for Federal income tax purposes, or to seek capital appreciation.

Because of the greater number of investment considerations involved in
investing in High Yield Securities, the achievement of either Fund's investment
objectives depends more on the Adviser's research abilities than would be the
case if a Fund were investing primarily in securities in the higher rated
categories. Because medium- to lower-rated securities generally involve greater
risks of loss of income and principal than higher-rated securities, investors
should consider carefully the relative risks associated with investments in
securities that carry medium to lower ratings or are unrated. See "High Yield
Securities--Risk Factors" and Appendix A for a description of corporate bond
ratings.

Each Fund actively seeks to achieve its secondary objective to the extent
consistent with its primary objective. There can be no assurance that either
Fund will be able to achieve its investment objectives. Each Fund's net asset
value fluctuates based mainly upon changes in the value of its portfolio
securities. Each Fund's investment objectives and certain investment policies
set forth in the SAI that are designated fundamental policies may not be changed
without shareholder approval.

The dollar weighted average of credit ratings of all bonds held by each
Fund during the 1995 fiscal year, and the dollar weighted average of the total
of each Fund's investment in zero coupon and pay-in-kind bonds during the 1995
fiscal year, computed on a monthly basis, are set forth below. This information
reflects the average composition of each Fund's assets during the 1995 fiscal
year and is not necessarily representative of either Fund as of the end of its
1995 fiscal year, the current fiscal year or at any other time in the future.

<PAGE>

HIGH YIELD FUND

COMPARABLE QUALITY
OF UNRATED SECURITIES
RATED BY MOODY'S TO BONDS RATED BY MOODY'S
---------------- -------------------------
<S> <C> <C>
Baa . . . . . . . 0.61% 0.00%
Ba. . . . . . . . 19.04 0.81
B . . . . . . . . 52.49 1.92
Caa . . . . . . . 4.12 0.96
Ca. . . . . . . . 0.40 0.00

Total. . . . 76.66% 3.69%

Zero Coupon Bonds 12.75%
Pay-In-Kind Bonds 1.51%

</TABLE>

INCOME FUND
-----------

COMPARABLE QUALITY
OF UNRATED SECURITIES
RATED BY MOODY'S TO BONDS RATED BY MOODY'S
---------------- -------------------------
<S> <C> <C>
Baa . . . . . . . 0.56% 0.00%
Ba. . . . . . . . 17.27 0.45
B . . . . . . . . 65.59 0.97
Caa . . . . . . . 4.98 0.51
Ca. . . . . . . . 0.59 0.00

Total. . . . 88.99% 1.93%

Zero Coupon Bonds 10.69%
Pay-In-Kind Bonds 0.74%

</TABLE>

DESCRIPTION OF CERTAIN SECURITIES, OTHER INVESTMENT POLICIES AND RISK FACTORS

CONVERTIBLE SECURITIES. A convertible security is a bond, debenture, note,
preferred stock or other security that may be converted into or exchanged for a
prescribed amount of common stock of the same or a different issuer within a
particular period of time at a specified price or formula. A convertible
security entitles the holder to receive interest paid or accrued on debt or
dividends paid on preferred stock until the convertible security matures or is
redeemed, converted or exchanged. Convertible securities have unique investment
characteristics in that they generally (1) have higher yields than common
stocks, but lower yields than comparable non-convertible securities, (2) are
less subject to fluctuation in value than the underlying stock because they have
fixed income characteristics, and (3) provide the potential for capital
appreciation if the market price of the underlying common stock increases. See
the SAI for more information on convertible securities.

DEBT SECURITIES--RISK FACTORS. The market value of debt securities is
influenced primarily by changes in the level of interest rates. Generally, as
interest rates rise, the market value of debt securities decreases. Conversely,
as interest rates fall, the market value of debt securities increases. Factors
which could result in a rise in interest rates, and a decrease in the market
value of debt securities, include an increase in inflation or inflation
expectations, an increase in the rate of U.S. economic growth, an expansion in
the Federal budget deficit or an increase in the price of commodities such as
oil. In addition, the market value of debt securities is influenced by
perceptions

<PAGE>

of the credit risks associated with such securities. See Appendix A for a
description of corporate bond ratings.

DEEP DISCOUNT SECURITIES. Each Fund may invest up to 15% of its total
assets in securities of companies that are financially troubled, in default or
undergoing bankruptcy or reorganization. Such securities are usually available
at a deep discount from the face value of the instrument. A Fund will invest in
Deep Discount Securities when the Adviser believes that there exist factors that
are likely to restore the company to a healthy financial condition. Such
factors include a restructuring of debt, management changes, existence of
adequate assets or other unusual circumstances. Debt instruments purchased at
deep discounts may pay very high effective yields. In addition, if the
financial condition of the issuer improves, the underlying value of the security
may increase, resulting in a capital gain. If the company defaults on its
obligations or remains in default, or if the plan of reorganization is
insufficient for debtholders, the Deep Discount Securities may stop paying
interest and lose value or become worthless. The Adviser will balance the
benefits of investing in Deep Discount Securities with their risks. While a
diversified portfolio may reduce the overall impact of a Deep Discount Security
that is in default or loses its value, the risk cannot be eliminated. See "High
Yield Securities--Risk Factors."

HIGH YIELD SECURITIES--RISK FACTORS. High Yield Securities are subject to
certain risks that may not be present with investments in higher grade
securities.

EFFECT OF INTEREST RATE AND ECONOMIC CHANGES. Debt obligations rated
lower than Baa by Moody's or BBB by S&P, commonly referred to as "junk bonds"
are speculative and generally involve a higher risk or loss of principal and
income than higher-rated securities ("High Yield Securities"). The prices of
High Yield Securities tend to be less sensitive to interest rate changes than
higher-rated investments, but may be more sensitive to adverse economic changes
or individual corporate developments. Periods of economic uncertainty and
changes generally result in increased volatility in the market prices and yields
of High Yield Securities and thus in a Fund's net asset value. A strong
economic downturn or a substantial period of rising interest rates could
severely affect the market for High Yield Securities. In these circumstances,
highly leveraged companies might have greater difficulty in making principal and
interest payments, meeting projected business goals, and obtaining additional
financing. Thus, there could be a higher incidence of default. This would
affect the value of such securities and thus a Fund's net asset value. Further,
if the issuer of a security owned by a Fund defaults, that Fund might incur
additional expenses to seek recovery.

Generally, when interest rates rise, the value of fixed rate debt
obligations, including High Yield Securities, tends to decrease; when interest
rates fall, the value of fixed rate debt obligations tends to increase. If an
issuer of a High Yield Security containing a redemption or call provision
exercises either provision in a declining interest rate market, a Fund would
have to replace the security, which could result in a decreased return for
shareholders. Conversely, if a Fund experiences unexpected net redemptions in a
rising interest rate market, it might be forced to sell certain securities,
regardless of investment merit. This could result in decreasing the assets to
which Fund expenses could be allocated and in a reduced rate of return for that
Fund. While it is impossible to protect entirely against this risk,
diversification of a Fund's portfolio and the Adviser's careful analysis of
prospective portfolio securities should minimize the impact of a decrease in
value of a particular security or group of securities in a Fund's portfolio.

<PAGE>

THE HIGH YIELD SECURITIES MARKET. The market for below investment
grade bonds expanded rapidly in recent years and its growth paralleled a long
economic expansion. In the past, the prices of many lower-rated debt securities
declined substantially, reflecting an expectation that many issuers of such
securities might experience financial difficulties. As a result, the yields on
lower-rated debt securities rose dramatically. However, such higher yields did
not reflect the value of the income streams that holders of such securities
expected, but rather the risk that holders of such securities could lose a
substantial portion of their value as a result of the issuers' financial
restructuring or default. There can be no assurance that such declines in the
below investment grade market will not reoccur. The market for below investment
grade bonds generally is thinner and less active than that for higher quality
bonds, which may limit a Fund's ability to sell such securities at fair value in
response to changes in the economy or the financial markets. Adverse publicity
and investor perceptions, whether or not based on fundamental analysis, may also
decrease the values and liquidity of lower rated securities, especially in a
thinly traded market.

CREDIT RATINGS. The credit ratings issued by credit rating services
may not fully reflect the true risks of an investment. For example, credit
ratings typically evaluate the safety of principal and interest payments, not
market value risk, of High Yield Securities. Also, credit rating agencies may
fail to change on a timely basis a credit rating to reflect changes in economic
or company conditions that affect a security's market value. Although the
Adviser considers ratings of recognized rating services such as Moody's and S&P,
the Adviser primarily relies on its own credit analysis, which includes a study
of existing debt, capital structure, ability to service debt and to pay
dividends, the issuer's sensitivity to economic conditions, its operating
history and the current trend of earnings. Each Fund may invest in securities
rated as low as D by S&P or C by Moody's or, if unrated, deemed to be of
comparable quality by the Adviser. Debt obligations with these ratings either
have defaulted or in great danger of defaulting and are considered to be highly
speculative. See "Deep Discount Securities." The Adviser continually monitors
the investments in a Fund's portfolio and carefully evaluates whether to dispose
of or retain High Yield Securities whose credit ratings have changed. See
Appendix A for a description of corporate bond ratings.

LIQUIDITY AND VALUATION. Lower-rated bonds are typically traded among
a smaller number of broker-dealers than in a broad secondary market. Purchasers
of High Yield Securities tend to be institutions, rather than individuals, which
is a factor that further limits the secondary market. To the extent that no
established retail secondary market exists, many High Yield Securities may not
be as liquid as higher-grade bonds. A less active and thinner market for High
Yield Securities than that available for higher quality securities may result in
more volatile valuations of a Fund's holdings and more difficulty in executing
trades at favorable prices during unsettled market conditions.

The ability of a Fund to value or sell High Yield Securities will be
adversely affected to the extent that such securities are thinly traded or
illiquid. During such periods, there may be less reliable objective information
available and thus the responsibility of each Fund's Board of Directors to value
High Yield Securities becomes more difficult, with judgment playing a greater
role. Further, adverse publicity about the economy or a particular issuer may
adversely affect the public's perception of the value, and thus liquidity, of a
High Yield Security, whether or not such perceptions are based on a fundamental
analysis.

LEGISLATION. Provisions of the Revenue Reconciliation Act of 1989
limit a corporate issuer's deduction for a portion of the original issue
discount on "high yield discount" obligations (including

<PAGE>

certain pay-in-kind securities). This limitation could have a materially
adverse impact on the market for certain High Yield Securities. From time to
time, legislators and regulators have proposed other legislation that would
limit the use of high yield debt securities in leveraged buyouts, mergers and
acquisitions. It is not certain whether such proposals, which also could
adversely affect High Yield Securities, will be enacted into law.

MONEY MARKET INSTRUMENTS. Investments in commercial paper are limited to
obligations rated Prime-1 by Moody's or A-1 by S&P. Commercial paper includes
notes, drafts, or similar instruments payable on demand or having a maturity at
the time of issuance not exceeding nine months, exclusive of days of grace or
any renewal thereof. Investments in certificates of deposit will be made only
with domestic institutions with assets in excess of $500 million. See the SAI
for more information regarding money market instruments and Appendix A to the
SAI for a description of commercial paper ratings.

PREFERRED STOCK. A preferred stock is a blend of the characteristics of a
bond and common stock. It can offer the higher yield of a bond and has priority
over common stock in equity ownership, but does not have the seniority of a bond
and, unlike common stock, its participation in the issuer's growth may be
limited. Preferred stock has preference over common stock in the receipt of
dividends and in any residual assets after payment to creditors should the
issuer be dissolved. Although the dividend is set at a fixed annual rate, in
some circumstances it can be changed or omitted by the issuer.

REPURCHASE AGREEMENTS. Repurchase agreements are transactions in which a
Fund purchases securities from a bank or recognized securities dealer and
simultaneously commits to resell the securities to the bank or dealer at an
agreed-upon date and price reflecting a market rate of interest unrelated to the
coupon rate or maturity of the purchased securities. Each Fund's risk is
limited primarily to the ability of the seller to repurchase the securities at
the agreed-upon price upon the delivery date. See the SAI for more information
regarding repurchase agreements.

RESTRICTED AND ILLIQUID SECURITIES. Each Fund may invest up to 15% of its
net assets in illiquid securities, including (1) securities that are illiquid
due to the absence of a readily available market or due to legal or contractual
restrictions on resale and (2) repurchase agreements maturing in more than seven
days. However, illiquid securities for purposes of this limitation do not
include securities eligible for resale under Rule 144A under the Securities Act
of 1933, as amended, which the applicable Fund's Board of Directors or the
Adviser has determined are liquid under Board-approved guidelines. See the SAI
for more information regarding restricted and illiquid securities.

ZERO COUPON AND PAY-IN-KIND SECURITIES. Zero coupon securities are debt
obligations that do not entitle the holder to any periodic payment of interest
prior to maturity or a specified date when the securities begin paying current
interest. They are issued and traded at a discount from their face amount or
par value, which discount varies depending on the time remaining until cash
payments begin, prevailing interest rates, liquidity of the security and the
perceived credit quality of the issuer. Pay-in-kind securities are those that
pay interest through the issuance of additional securities. The market prices
of zero coupon and pay-in-kind securities generally are more volatile than the
prices of securities that pay interest periodically and in cash and are likely
to respond to changes in interest rates to a greater degree than do other types
of debt securities having similar maturities and credit quality. Original issue
discount earned on zero coupon securities and the "interest" on pay-in-kind
securities must be included in a Fund's income. Thus, to continue to qualify

<PAGE>

for tax treatment as a regulated investment company and to avoid a certain
excise tax on undistributed income, a Fund may be required to distribute as a
dividend an amount that is greater than the total amount of cash it actually
receives. See "Taxes" in the SAI. These distributions must be made from a
Fund's cash assets or, if necessary, from the proceeds of sales of portfolio
securities. Each Fund will not be able to purchase additional income-producing
securities with cash used to make such distributions, and its current income
ultimately could be reduced as a result.

ALTERNATIVE PURCHASE PLANS

Each Fund has two classes of shares, Class A and Class B, which represent
interests in the same portfolio of securities and have identical voting,
dividend, liquidation and other rights and the same terms and conditions, except
that each class (i) is subject to a different sales charge and bears its
separate distribution and certain other class expenses; (ii) has exclusive
voting rights with respect to matters affecting only that class; and (iii) has
different exchange privileges.

CLASS A SHARES. Class A shares are sold with an initial sales charge of up
to 6.25% of the amount invested with discounts available for volume purchases.
Class A shares are subject to a maximum 12b-1 fee at the annual rate of 0.15% of
each Fund's average daily net assets attributable to Class A shares. The
initial sales charge is waived for certain purchases and a contingent deferred
sales charge ("CDSC") may be imposed on such purchases. See "How to Buy
Shares."

CLASS B SHARES. Class B shares are sold without an initial sales charge,
but are generally subject to a CDSC which declines in steps from 4% to 0% during
a six-year period and bear a higher 12b-1 fee than Class A shares. Class B
shares pay a 12b-1 fee at the annual rate of 0.85% of each Fund's average daily
net assets attributable to Class B shares, of which no more than 0.25% may be
paid as a service fee and the balance thereof paid as an asset-based sales
charge. Class B shares automatically convert into Class A shares after eight
years. See "How to Buy Shares."

FACTORS TO CONSIDER IN CHOOSING A CLASS OF SHARES. In deciding which
alternative is most suitable, an investor should consider several factors, as
discussed below. Regardless of whether an investor purchases Class A or Class B
shares, your Representative, as defined under "How to Buy Shares," receives
compensation for selling shares of a Fund, which may differ for each class.

The principal advantages of purchasing Class A shares are the lower overall
expenses, the availability of quantity discounts on volume purchases and certain
account privileges which are not offered to Class B shareholders. If an
investor plans to make a substantial investment, the sales charge on Class A
shares may either be lower due to the reduced sales charges available on volume
purchases of Class A shares or waived for certain eligible purchasers. Because
of the reduced sales charge available on quantity purchases of Class A shares,
it is recommended that investments of $250,000 or more be made in Class A
shares. Investments in excess of $1,000,000 must be made in Class A shares.
Distributions paid by each Fund with respect to Class A shares will also
generally be greater than those paid with respect to Class B shares because
expenses attributable to Class A shares will generally be lower.

The principal advantage of purchasing Class B shares is that, since no
initial sales charge is paid, all of an investor's money is put to work from the
outset. Furthermore, although any investment in a Fund should only be viewed as
a long-term investment, if a redemption must be made soon after purchase, an
investor will pay a lower sales charge than if Class A shares had been

<PAGE>

purchased. Conversely, because Class B shares are subject to a higher
asset-based sales charge, long-term Class B shareholders may pay more in
asset-based sales charges than the economic equivalent of the maximum sales
charge on Class A shares. The automatic conversion of Class B shares into Class
A shares after eight years is designed to reduce the probability of this
occurring.

HOW TO BUY SHARES

You may buy shares of a Fund through a First Investors registered
representative ("FIC Representative") or through a registered representative
("Dealer Representative") of an unaffiliated broker-dealer ("Dealer") which is
authorized to sell shares of a Fund. Your FIC Representative or Dealer
Representative (each, a "Representative") may help you complete and submit an
application to open an account with a Fund. Certain accounts may require
additional documentation. Applications accompanied by checks drawn on U.S.
banks made payable to "FIC" and received in FIC's Woodbridge offices by the
close of regular trading on the NYSE, generally 4:00 P.M. (New York City time),
will be processed and shares will be purchased at the public offering price
determined at the close of regular trading on the NYSE on that day. Orders
received by Representatives before the close of regular trading on the NYSE and
received by FIC at their Woodbridge offices before the close of its business
day, generally 5:00 P.M. (New York City time), will be executed at the public
offering price determined at the close of regular trading on the NYSE on that
day. It is the responsibility of Representatives to promptly transmit orders
they receive to FIC. The "public offering price" is the net asset value plus
the applicable sales charge for Class A shares and net asset value for Class B
shares. Each Fund reserves the right to reject any application or order for its
shares for any reason and to suspend the offering of its shares.

Due to emergency conditions, such as snow storms, the Woodbridge offices of
FIC and Administrative Data Management Corp. (the "Transfer Agent") may not be
open for business on a day when the NYSE is open for regular trading and,
therefore, would be unable to accept purchase orders. Should this occur,
purchase orders will be executed at the public offering price determined at the
close of regular trading on the NYSE on the next business day that these offices
are open for business.

WHEN YOU OPEN A FUND ACCOUNT, YOU MUST SPECIFY WHICH CLASS OF SHARES YOU
WISH TO PURCHASE. If you do not specify which class of shares you wish to
purchase, your order will be processed according to procedures established by
FIC. For more information, see the SAI.

INITIAL INVESTMENT IN A FUND. You may open a Fund account with as little
as $1,000. This account minimum is waived if you open an account for a
particular class of shares through a full exchange of shares of the same class
of another "Eligible Fund," as defined below. Class A share accounts opened
through an exchange of shares from First Investors Cash Management Fund, Inc. or
First Investors Tax-Exempt Money Market Fund, Inc. (collectively, "Money Market
Funds") may be subject to an initial sales charge. You may open a Fund account
with $250 for individual retirement accounts ("IRAs") or, at the Fund's
discretion, a lesser amount for Simplified Employee Pension Plans ("SEPs"),
salary reduction SEPs ("SARSEPs") and qualified or other retirement plans.
Automatic investment plans allow you to open an account with as little as $50,
provided you invest at least $600 a year. See "Systematic Investing."

ADDITIONAL PURCHASES. After you make your first investment in a Fund, you
may purchase additional shares of a Fund by mailing a check made payable to FIC,
directly to First Investors

<PAGE>

Corporation, 581 Main Street, Woodbridge, NJ 07095-1198, Attn: Dept. CP.
Include your account number on the face of the check. There is no minimum on
additional purchases of Fund shares.

ELIGIBLE FUNDS. With respect to certain shareholder privileges noted in
this Prospectus and the SAI, each fund in the First Investors family of funds,
except as noted below, is an "Eligible Fund" (collectively, "Eligible Funds").
First Investors Special Bond Fund, Inc., First Investors Life Series Fund and
First Investors U.S. Government Plus Fund are not Eligible Funds. The Money
Market Funds, unless otherwise noted, are not Eligible Funds. The funds of
Executive Investors Trust ("Executive Investors") are Eligible Funds provided
the shares of any such fund either have been (a) acquired through an exchange
from an Eligible Fund which imposes a maximum sales charge of 6.25%, or (b) held
for at least one year from their date of purchase.

SYSTEMATIC INVESTING. You may arrange for automatic investments in a Fund
on a systematic basis through First Investors Money Line and through automatic
payroll investments. You may also elect to invest in Class A shares of a Fund
at net asset value all the cash distributions or Systematic Withdrawal Plan
payments from the same class of shares of an existing account in another
Eligible Fund. If you wish to participate in any of these systematic investment
plans, please call Shareholder Services at 1-800-423-4026 or see the SAI.

ELECTRONIC FUNDS TRANSFER. Shareholders who have an account with a U.S.
bank, or other financial institution that is an Automated Clearing House member,
may establish Electronic Funds Transfer. This permits shareholders to purchase
shares of a Fund through electronic funds transfer from a predesignated bank
account. The minimum amount which may be electronically transferred is $500 or
$50 for systematic investment programs and the maximum amount is $50,000. You
may purchase shares of a Fund through electronic funds transfer if the amount of
the purchase, together with all other purchases made by electronic funds
transfer into the account during the prior 30-day period, does not exceed
$100,000. Each Fund has the right, at its sole discretion, to limit or
terminate your ability to exercise the electronic funds transfer privilege at
any time. For additional information, see the SAI. Applications to establish
Electronic Funds Transfer are available from your FIC Representative or by
calling Shareholder Services at 1-800-423-4026.

CLASS A SHARES. Class A shares of each Fund are sold at the public
offering price, which will vary with the size of the purchase, as shown in the
following table:

SALES CHARGE AS % OF
---------------------- CONCESSION TO
OFFERING NET AMOUNT DEALERS AS % OF
AMOUNT OF INVESTMENT PRICE INVESTED OFFERING PRICE
- -------------------- -------- ---------- ---------------
<S> <C> <C> <C>
Less than $25,000. . . . . . . . . 6.25% 6.67% 5.13%
$25,000 but under $50,000. . . . . 5.75 6.10 4.72
$50,000 but under $100,000 . . . . 5.50 5.82 4.51
$100,000 but under $250,000. . . . 4.50 4.71 3.69
$250,000 but under $500,000. . . . 3.50 3.63 2.87
$500,000 but under $1,000,000. . . 2.50 2.56 2.05

</TABLE>

There is no sales charge on transactions of $1 million or more, including
transactions of this amount that are subject to the Cumulative Purchase
Privilege or a Letter of Intent. The Underwriter will pay from its own
resources a sales commission to FIC Representatives and a concession equal to
0.90% of the amount invested to Dealers on such purchases. If shares are

<PAGE>

redeemed within 24 months of purchase (or 18 months for shares purchased prior
to May 1, 1995), a CDSC of 1.00% will be deducted from the redemption proceeds.
The CDSC will be applied in the same manner as the CDSC on Class B shares. See
"Class B Shares."

CUMULATIVE PURCHASE PRIVILEGE AND LETTERS OF INTENT. You may purchase
Class A shares of a Fund at a reduced sales charge through the Cumulative
Purchase Privilege or by executing a Letter of Intent. For more information,
see the SAI, call your Representative or call Shareholder Services at
1-800-423-4026.

WAIVERS OF CLASS A SALES CHARGES. Sales charges on Class A shares do not
apply to: (1) any purchase by an officer, director or employee (who has
completed the introductory employment period) of the Funds, the Underwriter, the
Adviser, or their affiliates, by a Representative, or by the spouse, or by the
children and grandchildren under the age of 21 of any such person; (2) any
purchase by a former officer, director or employee of the Funds, the
Underwriter, the Adviser, or their affiliates, or by a former FIC
Representative; provided they had acted as such for at least five years and had
retired or otherwise terminated the relationship in good standing; (3) the
proceeds of any settlement reached with FIC, FIMCO and/or certain First
Investors funds; (4) any reinvestment of the loan repayments by a participant in
a loan program of any First Investors sponsored qualified retirement plan; (5) a
purchase with proceeds from the liquidation of a First Investors Life Variable
Annuity Fund A contract or a First Investors Life Variable Annuity Fund C
contract during the one-year period preceding the maturity date of the contract;
and (6) any purchase by a participant in a Group Qualified Plan account, as
defined under "Retirement Plans," if the purchase is made with the proceeds from
a redemption of shares of a fund in another fund group on which either an
initial sales charge or a CDSC has been paid; and (7) any purchase in an IRA
account if the purchase is made with the proceeds of a distribution from a Group
Qualified Plan, as defined under "Retirement Plans," with a First Investors
fund. With respects to items (6) and (7) above, if shares are redeemed within
24 months of purchase, a CDSC of 1.00% will be deducted from the redemption
proceeds.

Additionally, policyholders of participating life insurance policies issued
by First Investors Life Insurance Company ("FIL"), an affiliate of the Adviser
and Underwriter, may elect to invest dividends earned on such policies in Class
A shares of a Fund at net asset value, provided the annual dividend is at least
$50 and the policyholder has an existing account with the Fund.

Holders of certain unit trusts ("Unitholders") who have elected to invest
the entire amount of cash distributions from either principal, interest income
or capital gains or any combination thereof ("Unit Distributions") from the
following trusts may invest such Unit Distributions in Class A shares of a Fund
at a reduced sales charge. Unitholders of various series of New York Insured
Municipals-Income Trust sponsored by Van Kampen Merritt Inc. (the "New York
Trust"); Unitholders of various series of the Multistate Tax Exempt Trust
sponsored by Advest Inc.; and Unitholders of various series of the Municipal
Insured National Trust, J.C. Bradford & Co. as agent, may purchase Class A
shares of a Fund with Unit Distributions at an offering price which is the net
asset value per share plus a sales charge of 1.5%. Unitholders of various
series of tax-exempt trusts, other than the New York Trust, sponsored by Van
Kampen Merritt Inc. may purchase Class A shares of a Fund with Unit
Distributions at an offering price which is the net asset value per share plus a
sales charge of 1.0%. Each Fund's initial minimum investment requirement is
waived for purchases of Class A shares with Unit Distributions. Shares of a
Fund purchased by Unitholders may be exchanged for Class A shares of any
Eligible Fund subject to the terms and conditions set forth under "How to
Exchange Shares."

<PAGE>

RETIREMENT PLANS. You may invest in shares of a Fund through an IRA, SEP,
SARSEP or any other retirement plan. Participant-directed plans, such as 401(k)
plans, profit sharing and money purchase plans and 403(b) plans, that are
subject to Title I of ERISA (each, a "Group Qualified Plan") are entitled to a
reduced sales charge provided the number of employees eligible to participate is
99 or less. The sales charge as a percentage of the offering price and net
amount invested is 3.00% and 3.09%, respectively, and the concession to dealers
as a percentage of the offering price is 2.55%.

There is no sales charge on purchases through a Group Qualified Plan with
100 or more eligible employees. A CDSC of 1.00% will be deducted from the
redemption proceeds of such accounts for redemptions made within 24 months of
purchase. The CDSC will be applied in the same manner as the CDSC on Class B
shares. See "Class B Shares." The Underwriter will pay from its own resources
a sales commission to FIC Representatives and a concession equal to 0.90% of the
amount invested to Dealers on such purchases. These sales charges will be
available regardless of whether the account is registered with the Transfer
Agent in the name of the individual participant or the sponsoring employer or
plan trustee. A Group Qualified Plan account will be subject to the lower of
the sales charge for Group Qualified Plans or the sales charge for the purchase
of Fund shares.

CLASS B SHARES. The public offering price of Class B shares of each Fund
is the next determined net asset value, with no initial sales charge imposed. A
CDSC, however, is imposed upon most redemptions of Class B shares at the rates
set forth below:

CONTINGENT DEFERRED SALES CHARGE
YEAR SINCE PURCHASE AS A PERCENTAGE OF DOLLARS INVESTED
PAYMENT MADE OR REDEMPTION PROCEEDS
------------------- -----------------------------------

<S> <C>
First . . . . . . . . . . . 4%
Second. . . . . . . . . . . 4
Third . . . . . . . . . . . 3
Fourth. . . . . . . . . . . 3
Fifth . . . . . . . . . . . 2
Sixth . . . . . . . . . . . 1
Seventh and thereafter. . . 0

</TABLE>

The CDSC will not be imposed on (1) the redemption of Class B shares
acquired as dividends or other distributions, or (2) any increase in the net
asset value of redeemed shares above their initial purchase price (in other
words, the CDSC will be imposed on the lower of net asset value or purchase
price). In determining whether a CDSC is payable on any redemption, it will be
assumed that the redemption is made first of any Class B shares acquired as
dividends or distributions, second of Class B shares that have been held for a
sufficient period of time such that the CDSC no longer is applicable to such
shares and finally of Class B shares held longest during the period of time that
a CDSC is applicable to such shares. This will result in your paying the lowest
possible CDSC.

As an example, assume an investor purchased 100 shares of Class B shares at
$10 per share for a total cost of $1,000 and in the second year after purchase,
the net asset value per share is $12 and, during such time, the investor has
acquired 10 additional Class B shares as dividends. If at such time the
investor makes his or her first redemption of 50 shares (proceeds of $600), 10
shares will not be subject to a CDSC charge because redemptions are first made
of shares acquired through dividend reinvestment. With respect to the remaining
40 shares, the charge is applied only to the

<PAGE>

original cost of $10 per share and not to the increase in net asset value of $2
per share. Therefore, $400 of the $600 redemption proceeds will be charged at a
rate of 4.00% (the applicable rate in the second year after purchase).

For purposes of determining the CDSC on Class B shares, all purchases made
during a calendar month will be deemed to have been made on the first business
day of that month at the average cost of all purchases made during that month.
The holding period of Class B shares acquired through an exchange with another
Eligible Fund will be calculated from the first business day of the month that
the Class B shares were initially acquired in the other Eligible Fund. The
amount of any CDSC will be paid to FIC. The CDSC imposed on the purchase of
Class B shares will be waived under certain circumstances. See "Waivers of CDSC
on Class B Shares" in the SAI.

CONVERSION OF CLASS B SHARES. A shareholder's Class B shares will
automatically convert to Class A shares approximately eight years after the date
of purchase, together with a pro rata portion of all Class B shares representing
dividends and other distributions paid in additional Class B shares. The Class
B shares so converted will no longer be subject to the higher expenses borne by
Class B shares. The conversion will be effected at the relative net asset
values per share of the two classes on the first business day of the month
following the month in which the eighth anniversary of the purchase of the Class
B shares occurs. If a shareholder effects one or more exchanges between Class B
shares of the Eligible Funds during the eight-year period, the holding period
for the shares so exchanged will commence upon the date of the purchase of the
original shares. Because the per share net asset value of the Class A shares
may be higher than that of the Class B shares at the time of conversion, a
shareholder may receive fewer Class A shares than the number of Class B shares
converted. See "Determination of Net Asset Value."

GENERAL. The Underwriter may at times agree to reallow to Dealers up to an
additional 0.25% of the dollar amount of shares of the Funds and/or certain
other First Investors funds sold by such Dealers during a specific period of
time. From time to time, the Underwriter also will pay, through additional
reallowances or other sources, a bonus or other compensation to Dealers that
employ a Dealer Representative who sells a minimum dollar amount of the shares
of the Funds and/or certain other First Investors funds during a specific period
of time. Such bonus or other compensation may take the form of reimbursement of
certain seminar expenses, co-operative advertising, or payment for travel
expenses, including lodging incurred in connection with trips taken by
qualifying Dealer Representatives to the Underwriter's principal office in New
York City.

HOW TO EXCHANGE SHARES

Should your investment needs change, you may exchange, at net asset value,
shares of a Fund for shares of any Eligible Fund, including the Money Market
Funds. In addition, Class A shares of a Fund may be exchanged at net asset
value for units of any single payment plan ("plan") sponsored by the
Underwriter. SHARES OF A PARTICULAR CLASS MAY BE EXCHANGED ONLY FOR SHARES OF
THE SAME CLASS OF ANOTHER FUND. Exchanges can only be made into accounts
registered to identical owners. If your exchange is into a new account, it must
meet the minimum investment and other requirements of the fund or plan into
which the exchange is being made. Additionally, the fund or plan must be
available for sale in the state where you reside. Before exchanging Fund shares
for shares of another fund or plan, you should read the Prospectus of the fund
or plan into which the exchange is to be made. You may obtain Prospectuses and
information with respect to which funds or plans qualify for the exchange
privilege free of charge by calling Shareholder Services at 1-800-

<PAGE>

423-4026. Exchange requests received in "good order," as defined below, by the
Transfer Agent before the close of regular trading on the NYSE will be processed
at the net asset value determined as of the close of regular trading on the NYSE
on that day; exchange requests received after that time will be processed on the
following trading day.

EXCHANGES BY MAIL. To exchange shares by mail, you should mail requests to
Administrative Data Management Corp., 581 Main Street, Woodbridge, NJ
07095-1198. Shares will be exchanged after the request is received in "good
order" by the Transfer Agent. "Good order" means that an exchange request must
include: (1) the names of the funds, account numbers (if existing accounts), the
dollar amount, number of shares or percentage of the account you wish to
exchange; (2) share certificates, if issued; and (3) the signature of all
registered owners exactly as the account is registered. If the request is not
in good order or information is missing, the Transfer Agent will seek additional
information from you and process the exchange on the day it receives such
information. Certain account registrations may require additional legal
documentation in order to exchange. To review these requirements, please call
Shareholder Services at
1-800-423-4026.

EXCHANGES BY TELEPHONE. See "Telephone Transactions."

ADDITIONAL EXCHANGE INFORMATION. Exchanges should be made for investment
purposes only. A pattern of frequent exchanges may be contrary to the best
interests of a Fund's other shareholders. Accordingly, each Fund has the right,
at its sole discretion, to limit the amount of an exchange, reject any exchange,
or, upon 60 days' notice, materially modify or discontinue the exchange
privilege. Each Fund will consider all relevant factors in determining whether
a particular frequency of exchanges is contrary to the best interests of the
Fund and/or a class of the Fund and its other shareholders. Any such
restriction will be made by a Fund on a prospective basis only, upon notice to
the shareholder not later than ten days following such shareholder's most recent
exchange.

HOW TO REDEEM SHARES

You may redeem your Fund shares at the next determined net asset value,
less any applicable CDSC, on any day the NYSE is open, directly through the
Transfer Agent. Your Representative may help you with this transaction. Shares
may be redeemed by mail or telephone. Certain account registrations may require
additional legal documentation in order to redeem. Redemption requests received
in "good order" by the Transfer Agent before the close of regular trading on the
NYSE, will be processed at the net asset value, less any applicable CDSC,
determined as of the close of regular trading on the NYSE on that day. Payment
of redemption proceeds generally will be made within seven days. If the shares
being redeemed were recently purchased by check, payment may be delayed to
verify that the check has been honored, normally not more than fifteen days.

Due to emergency conditions, such as snow storms, the Woodbridge offices of
FIC and the Transfer Agent may not be open for business on a day when the NYSE
is open for regular trading and, therefore, would be unable to accept redemption
requests. Should this occur, redemption requests will be executed at the at the
net asset value, less any applicable CDSC, determined at the close of regular
trading on the NYSE on the next business day that these offices are open for
business.

REDEMPTIONS BY MAIL. Written redemption requests should be mailed to
Administrative Data Management Corp., 581 Main Street, Woodbridge, NJ
07095-1198. For your redemption request to be in good order, you must include:
(1) the name of the Fund; (2) your account number; (3) the dollar

<PAGE>

amount, number of shares or percentage of the account you want redeemed; (4)
share certificates, if issued; (5) the original signatures of all registered
owners exactly as the account is registered; and (6) signature guarantees, if
required, as described below. If your redemption request is not in good order
or information is missing, the Transfer Agent will seek additional information
and process the redemption on the day it receives such information. To review
these requirements, please call Shareholder Services at 1-800-423-4026.

SIGNATURE GUARANTEES. In order to protect you, the Funds and their agents,
each Fund reserves the right to require signature guarantees in order to process
certain exchange or redemption requests. A notary public is not an acceptable
guarantor. See the SAI or call Shareholder Services at 1-800-423-4026 for
instances when signature guarantees are required.

REDEMPTIONS BY TELEPHONE. See "Telephone Transactions."

ELECTRONIC FUNDS TRANSFER. Shareholders who have established Electronic
Funds Transfer may have redemption proceeds electronically transferred to a
predesignated bank account. The minimum amount which may be electronically
transferred is $500 and the maximum amount is $50,000. You may redeem shares of
a Fund through electronic funds transfer if the amount of the redemption,
together with all other redemptions made by electronic funds transfer from the
account during the prior 30-day period, does not exceed $100,000. Each Fund has
the right, at its sole discretion, to limit or terminate your ability to
exercise the electronic funds transfer privilege at any time. For additional
information, see the SAI. Applications to establish Electronic Funds Transfer
are available from your FIC Representative or by calling Shareholder Services at
1-800-423-4026.

SYSTEMATIC WITHDRAWAL PLAN. If you own noncertificated shares, you may set
up a plan for redemptions to be made automatically at regular intervals. You
may elect to have the payments automatically (a) sent directly to you or, if
signature guarantees are obtained, to persons you designate; or (b) invested in
shares of the same class of any other Eligible Fund, including the Money Market
Funds; or (c) paid to FIL for the purchase of a life insurance policy or a
variable annuity. See the SAI for more information on the Systematic Withdrawal
Plan. For information regarding the Systematic Withdrawal Plan, call
Shareholder Services at 1-800-423-4026.

REPURCHASE THROUGH UNDERWRITER. You may redeem Class A shares through a
Dealer. In this event, the Underwriter, acting as agent for each Fund, will
offer to repurchase or accept an offer to sell such shares at a price equal to
the net asset value next determined after the making of such offer. The Dealer
may charge you an added commission for handling any redemption transaction.

REDEMPTION OF LOW BALANCE ACCOUNTS. Because each Fund incurs certain fixed
costs in maintaining shareholder accounts, each Fund may redeem without your
consent, on at least 60 days' prior written notice (which may appear on your
account statement), any Fund account of Class A or Class B shares which has a
net asset value of less than $500. To avoid such redemption, you may,

<PAGE>

during such 60-day period, purchase additional Fund shares of the same class so
as to increase your account balance to the required minimum. There will be no
CDSC imposed on such redemptions of Class B shares. A Fund will not redeem
accounts that fall below $500 solely as a result of a reduction in net asset
value. Accounts established under a Systematic Investment Plan that have been
discontinued prior to meeting the $1,000 minimum are subject to this policy.

Additional information concerning how to redeem shares of a Fund is
available upon request to your Representative or Shareholder Services at
1-800-423-4026.

TELEPHONE TRANSACTIONS

Unless you specifically decline to have telephone privileges, you, or any
person who we reasonably believe is authorized to act on your behalf, may redeem
or exchange noncertificated shares of a Fund by calling the Special Services
Department at 1-800-342-6221 weekdays (except holidays) between 9:00 A.M. and
5:00 P.M. (New York City time). Exchange or redemption requests received before
the close of regular trading on the NYSE will be processed at the net asset
value, less any applicable CDSC, determined as of the close of business on that
day. For more information on telephone privileges, please call Shareholder
Services at 1-800-423-4026 or see the SAI.

TELEPHONE EXCHANGES. Exchange requests may be made by telephone (for
shares held on deposit only). Telephone exchanges to Money Market Funds are not
available if your address of record has changed within 60 days prior to the
exchange request.

TELEPHONE REDEMPTIONS. The telephone redemption privilege may be used
provided: (1) the redemption proceeds are being mailed to the address of record;
(2) your address of record has not changed within the past 60 days; (3) the
shares to be redeemed have not been issued in certificate form; (4) each
redemption does not exceed $50,000; and (5) the proceeds of the redemption,
together with all redemptions made from the account during the prior 30-day
period, do not exceed $100,000. TELEPHONE REDEMPTION INSTRUCTIONS WILL BE
ACCEPTED FROM ANY ONE OWNER OR AUTHORIZED INDIVIDUAL.

ADDITIONAL INFORMATION. The Funds, the Adviser, the Underwriter and their
officers, directors and employees will not be liable for any loss, damage, cost
or expense arising out of any instruction (or any interpretation of such
instruction) received by telephone or which they reasonably believe to be
authentic. This policy places the entire risk of loss for unauthorized or
fraudulent transactions on the shareholder, except that if the above-referenced
parties do not follow reasonable procedures, some or all of them may be liable
for any such losses. For more information on telephone transactions see the
SAI. The Funds have the right, at their sole discretion, upon 60 days' notice,
to materially modify or discontinue the telephone exchange and redemption
privilege. During times of drastic economic or market changes, telephone
exchanges or redemptions may be difficult to implement. If you experience
difficulty in making a telephone exchange or redemption, your exchange or
redemption request may be made by regular or express mail, and it will be
implemented at the next determined net asset value, less any applicable CDSC,
following receipt by the Transfer Agent.

MANAGEMENT

BOARD OF DIRECTORS. Each Fund's Board of Directors, as part of its overall
management responsibility, oversees various organizations responsible for that
Fund's day-to-day management.

<PAGE>

ADVISER. First Investors Management Company, Inc. supervises and manages
each Fund's investments, supervises all aspects of each Fund's operations and
determines the Fund's portfolio transactions. The Adviser is a New York
corporation located at 95 Wall Street, New York, NY 10005. The Adviser
presently acts as investment adviser to 14 mutual funds. First Investors
Consolidated Corporation ("FICC") owns all of the voting common stock of the
Adviser and all of the outstanding stock of FIC and the Transfer Agent. Mr.
Glenn O. Head controls FICC and, therefore, controls the Adviser.

As compensation for its services, the Adviser receives an annual fee from
each of the Funds, which is payable monthly. For the fiscal year ended December
31, 1995, HIGH YIELD FUND's advisory fees were 0.90%, net of waiver, of its
average daily net assets and INCOME FUND's advisory fees were 0.74% of its
average daily net assets. The SEC staff takes the position that advisory fees
of 0.75% or greater are higher than those paid by most investment companies.

PORTFOLIO MANAGERS. George V. Ganter has been Portfolio Manager for the
HIGH YIELD FUND since 1989. Mr. Ganter joined FIMCO in 1985 as an Analyst. In
1986, he was made Portfolio Manager for First Investors Special Bond Fund, Inc.
and in 1989, he was made Portfolio Manager for the High Yield Series of First
Investors Life Series Fund and Executive Investors High Yield Fund.

Nancy Jones has been Portfolio Manager for INCOME FUND since 1989. Ms.
Jones joined FIMCO in 1983 as Director of Research in the High Yield Department.
Ms. Jones is also Portfolio Manager for Investment Grade Series of First
Investors Series Fund, the Investment Grade Series of First Investors Life
Series Fund and manages the fixed income corporate securities portion of the
Total Return Series of First Investors Series Fund.

BROKERAGE. Each Fund may allocate brokerage commissions, if any, to
broker-dealers in consideration of Fund share distribution, but only when
execution and price are comparable to that offered by other broker-dealers.
Brokerage may be directed to brokers who provide research. See the SAI for more
information on allocation of portfolio brokerage.

UNDERWRITER. Each Fund has entered into an Underwriting Agreement with
First Investors Corporation, 95 Wall Street, New York, NY 10005, as Underwriter.
The Underwriter receives all sales charges in connection with the sale of each
Fund's Class A shares and all CDSCs in connection with each Fund's Class B
shares and may receive other payments under a plan of distribution. See "How to
Buy Shares" and "Distribution Plans."

DISTRIBUTION PLANS

Pursuant to separate distribution plans pertaining to each Fund's Class A
and Class B shares ("Class A Plan" or "Class B Plan," and collectively,
"Plans"), each Fund may reimburse or compensate, as applicable, the Underwriter
for certain expenses incurred in the distribution of that Fund's shares
("distribution fees") and the servicing or maintenance of existing Fund
shareholder accounts ("service fees"). Pursuant to the Plans, distribution fees
are paid for activities relating to the distribution of Fund shares, including
costs of printing and dissemination of sales material or literature,
prospectuses and reports used in connection with the sale of Fund shares.
Service fees are paid for the ongoing maintenance and servicing of existing
shareholder accounts, including

<PAGE>

payments to Representatives who provide shareholder liaison services to their
customers who are holders of that Fund, provided they meet certain criteria.

Pursuant to each Class A Plan, each Fund's Board of Directors, in its sole
discretion, may periodically allocate the portion of distribution fees and
services fees that Fund may spend, provided the aggregate of such fees paid by
the Fund may not exceed an annual rate of 0.30% of the Fund's average daily net
assets attributable to Class A shares in any one fiscal year. Of that amount,
no more than 0.25% of a Fund's average daily net assets attributable to Class A
shares may be paid as service fees. Payments made to the Underwriter under each
Class A Plan may only be made for reimbursement of specific expenses incurred in
connection with distribution and service activities.

Pursuant to each Class B Plan, each Fund is authorized to pay the
Underwriter a distribution fee at the annual rate of 0.75% of that Fund's
average daily net assets attributable to Class B shares and a service fee of
0.25% of the Fund's average daily net assets attributable to Class B shares.
Payments made to the Underwriter under each Class B Plan will represent
compensation for distribution and service activities, not reimbursement for
specific expenses incurred.

Although Class B shares are sold without an initial sales charge, the
Underwriter pays from its own resources a sales commission to FIC
Representatives and a concession equal to 3.5% of the amount invested to Dealers
who sell Class B shares. In addition, the Underwriter will make quarterly
payments of service fees to Representatives commencing after the thirteenth
month following the initial sale of Class B shares. The Underwriter will make
such payments at an annual rate of up to 0.25% of the average net asset value of
Class B shares which are attributable to shareholders for whom the
Representatives are designated as dealer of record.

Pursuant to settlements entered into with various state regulators, for a
period ending on or about February 1, 1998, each Fund is permitted to pay up to
a maximum of 0.15% of that Fund's average daily net assets attributable to its
Class A shares and up to a maximum of 0.85% of its average daily net assets
attributable to its Class B shares for service and distribution fees.

The Funds may suspend or modify payments under the Plans at any time, and
payments are subject to the continuation of each Plan, the terms of any dealer
agreements between Dealers and the Underwriter and any applicable limits imposed
by the National Association of Securities Dealers, Inc. Each Fund will not
carry over any fees under the Plans to the next fiscal year. See "Distribution
Plans" in the SAI for a full discussion of the various Plans.

DETERMINATION OF NET ASSET VALUE

The net asset value of each Fund's shares fluctuates and is determined
separately for each class of shares. The per share net asset value of the Class
B shares will generally be lower than that of the Class A shares because of the
higher expenses borne by the Class B shares. The net asset value of shares of a
given class of each Fund is determined as of the close of regular trading on the
NYSE (generally 4:00 P.M., New York City time) on each day the NYSE is open for
trading, and at such other times as such Fund's Board of Directors deems
necessary, by dividing the market value of the securities held by such Fund,
plus any cash and other assets, less all liabilities attributable to that class,
by the number of shares of the applicable class outstanding. If there is no
available market value, securities will be valued at their fair value as
determined in good faith pursuant to procedures adopted by each Fund's Board of
Directors. The NYSE currently observes the following holidays:

<PAGE>

New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.

DIVIDENDS AND OTHER DISTRIBUTIONS

Dividends from net investment income are generally declared daily and paid
monthly by each Fund. Unless you direct the Transfer Agent otherwise, dividends
declared on a class of shares of a Fund are paid in additional shares of the
same class of the distributing Fund at the net asset value generally determined
as of the close of business on the first business day of the following month.
If you redeem all of your shares of a Fund at any time during a month, you are
paid all dividends declared through the day prior to the date of the redemption,
together with the proceeds of your redemption, less any applicable CDSC. Net
investment income includes interest and dividends, earned discount and other
income earned on portfolio securities less expenses.

Each Fund also distributes with its regular dividend at the end of each
year substantially all of (a) its net capital gain (the excess of net long-term
capital gain over net short-term capital loss) and net short-term capital gain,
if any, after deducting any available capital loss carryovers, and (b) any net
realized gains from foreign currency transactions. Unless you direct the
Transfer Agent otherwise, these distributions are paid in additional shares of
the same class of the distributing Fund at the net asset value generally
determined as of the close of business on the business day immediately following
the record date of the distribution. A Fund may make an additional distribution
in any year if necessary to avoid a Federal excise tax on certain undistributed
income and capital gain.

Dividends and other distributions paid on both classes of a Fund's shares
are calculated at the same time and in the same manner. Dividends on Class B
shares of a Fund are expected to be lower than those for its Class A shares
because of the higher distribution fees borne by the Class B shares. Dividends
on each class also might be affected differently by the allocation of other
class-specific expenses.

In order to be eligible to receive a dividend or other distribution, you
must own Fund shares as of the close of business on the record date of the
distribution. You may elect to receive dividends and/or other distributions in
cash by notifying the Transfer Agent by telephone or in writing prior to the
record date of any such distribution. If you elect this form of payment, the
payment date generally is two weeks following the record date of any such
distribution. Your election remains in effect until you revoke it by notifying
the Transfer Agent.

You may elect to invest the entire amount of any cash distribution on Class
A shares of a Fund in Class A shares of any Eligible Fund, including the Money
Market Funds, by notifying the Transfer Agent. See "How to Buy Shares--
Cross-Investment of Cash Distributions." The investment will be made at the net
asset value per Class A share of the other fund, generally determined as of the
close of business, on the business day immediately following the record date of
any such distribution.

A dividend or other distribution paid on a class of shares of a Fund will
be paid in additional shares of that class and not in cash if any of the
following events occurs: (1) the total amount of the distribution is under $5,
(2) the Fund has received notice of your death on an individual account (until
written alternate payment instructions and other necessary documents are
provided by your

<PAGE>

legal representative), or (3) a distribution check is returned to the Transfer
Agent, marked as being undeliverable, by the U.S. Postal Service after two
consecutive mailings.

TAXES

Each Fund intends to continue to qualify for treatment as a regulated
investment company under the Code so that it will be relieved of Federal income
tax on that part of its investment company taxable income (consisting generally
of net investment income, net short-term capital gain and net gains from certain
foreign currency transactions) and net capital gain that is distributed to its
shareholders.

Dividends from a Fund's investment company taxable income are taxable to
you as ordinary income, to the extent of the Fund's earnings and profits,
whether paid in cash or in additional Fund shares. Distributions of a Fund's
net capital gain, when designated as such, are taxable to you as long-term
capital gain, whether paid in cash or in additional Fund shares, regardless of
the length of time you have owned your shares. If you purchase shares shortly
before the record date for a dividend or other distribution, you will pay full
price for the shares and receive some portion of the price back as a taxable
distribution. You will receive an annual statement following the end of each
calendar year describing the tax status of distributions paid by the Fund during
that year.

Each Fund is required to withhold 31% of all dividends, capital gain
distributions and redemption proceeds payable to you after any applicable CDSC
is deducted (if you are an individual or certain other non-corporate
shareholder) if the Fund is not furnished with your correct taxpayer
identification number, and the same percentage of dividends and such
distributions in certain other circumstances.

Your redemption of Fund shares will result in a taxable gain or loss to
you, depending on whether the redemption proceeds are more or less than your
adjusted basis for the redeemed shares (which normally includes any initial
sales charge paid on Class A shares). An exchange of Fund shares for shares of
any Eligible Fund generally will have similar tax consequences. However,
special tax rules apply if you (1) dispose of Class A shares through a
redemption or exchange within 90 days of your purchase and (2) subsequently
acquire Class A shares of the same Fund or an Eligible Fund without paying a
sales charge due to the reinvestment privilege or exchange privilege. In these
cases, any gain on your disposition of the original Class A shares will be
increased, or loss decreased, by the amount of the sales charge you paid when
the shares were acquired, and that amount will increase the basis of the
Eligible Fund's shares you subsequently acquired. In addition, if you purchase
Fund shares within 30 days before or after redeeming other shares of that Fund
(regardless of class) at a loss, all or a portion of the loss will not be
deductible and will increase the basis of the newly purchased shares.

No gain or loss will be recognized to a shareholder as a result of a
conversion of Class B shares into Class A shares.

The foregoing is only a summary of some of the important Federal tax
considerations generally affecting each Fund and its shareholders; see the SAI
for a further discussion. There may be other Federal, state or local tax
considerations applicable to a particular investor. You therefore are urged to
consult your own tax adviser.

<PAGE>

PERFORMANCE INFORMATION

For purposes of advertising, each Fund's performance may be calculated for
each class of its shares based on average annual total return and total return.
Each of these figures reflects past performance and does not necessarily
indicate future results. Average annual total return shows the average annual
percentage change in an assumed $1,000 investment. It reflects the hypothetical
annually compounded return that would have produced the same total return if a
Fund's performance had been constant over the entire period. Because average
annual total return tends to smooth out variations in a Fund's return, you
should recognize that it is not the same as actual year-by-year results.
Average annual total return includes the effect of paying the maximum sales
charge (in the case of Class A shares) or the deduction of any applicable CDSC
(in the case of Class B shares) and payment of dividends and other distributions
in additional shares. One, five and ten year periods will be shown unless the
class has been in existence for a shorter period. Total return is computed
using the same calculations as average annual total return. However, the rate
expressed is the percentage change from the initial $1,000 invested to the value
of the investment at the end of the stated period. Total return calculations
assume reinvestment of dividends and other distributions.

Each Fund also may advertise its yield for each class of shares. Yield
reflects investment income net of expenses over a 30-day (or one-month) period
on a Fund share, expressed as an annualized percentage of the maximum offering
price per share for Class A shares and the net asset value per share for Class B
shares at the end of the period. Yield computations differ from other
accounting methods and therefore may differ from dividends actually paid or
reported net income. Each Fund may also advertise its "actual distribution
rate" for each class of shares. This is computed in the same manner as yield
except that actual income dividends declared per share during the period in
questions are substituted for net investment income per share. In addition,
each Fund calculates its "actual distribution rate" based upon net asset value
for dissemination to existing shareholders.

Each of the above performance calculations may be based on investment at
reduced sales charge levels or at net asset value. Any quotation of performance
figures not reflecting the maximum sales charge or CDSC will be greater than if
the maximum sales charge or CDSC were used. Each class of shares of a Fund has
different expenses which will affect its performance. Additional performance
information is contained in the Funds' Annual Reports which may be obtained
without charge by contacting the Funds at 1-800-423-4026.

<PAGE>

Cumulative Performance Information
FIRST INVESTORS HIGH YIELD FUND, INC.

Comparison of change in value of $10,000 investment in the First Investors High
Yield Fund, Inc. (Class A shares) and the First Boston High Yield Index.

[The following was represented by a line graph in the printed document]

- --------------------------------------------------------------------------------
As of December 31, 1995

$100,000 HIGH YIELD GRAPH PLOTS
HIGH YIELD FIRST BOSTON
AUG 86 9,375 10,000
DEC 86 9,612 10,438
DEC 87 9,501 11,119
DEC 88 10,669 12,637
DEC 89 9,836 12,686
DEC 90 8,160 11,877
DEC 91 11,059 17,073
DEC 92 13,153 19,909
DEC 93 15,384 23,765
DEC 94 15,444 23,445
DEC 95 18,290 27,520

Average Annual Total Return*
N.A.V. Only SEC Standardized
Class A shares
One Year 18.4% 11.1%
Five Years 17.6% 16.1%
Since Inception 7.4% 6.6%
$10,000 S.E.C. 30-Day Yield 7.1%
Class B shares
Since Inception 17.4% 12.7%
S.E.C. 30-Day Yield 6.8%

$1,000
Aug-86 Dec-87 Dec-89 Dec-91 Dec-93 Dec-95
- --------------------------------------------------------------------------------
High Yield Fund First Boston High Yield Index
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

The graph compares a $10,000 investment made in the First Investors High Yield
Fund, Inc. (Class A shares) on 8/12/86 (inception date) with a theoretical
investment in the First Boston High Yield Index. It is not possible to invest
directly in this Index. In addition, the Index does not take into account fees
and expenses. For purposes of the graph and the accompanying table, unless
otherwise indicated, it has been assumed that the maximum sales charge was
deducted from the initial $10,000 investment in the Fund and all dividends and
distributions were reinvested. Class B shares performance may be greater than or
less than that shown above based on differences in sales loads and fees paid by
shareholders investing in the different classes.

The First Boston High Yield Index is designed to measure the performance of the
high yield bond market. The Index consists of 687 different issues, 574 of which
are cash pay, 84 are zero-coupon, 20 are step bonds, 5 are payment-in-kind bonds
and the remaining 4 are in default. The bonds included in the Index have an
average life of 7.8 years, an average maturity of 7.9 years, an average duration
of 4.4 years and an average coupon of 10.6%.

*Average Annual Total Return figures (for the period ended 12/31/95) include the
reinvestment of all dividends and distributions. "N.A.V. Only" returns are
calculated without sales charges. The Class A "S.E.C. Standardized" returns
shown are based on the maximum sales charge of 6.25% (prior to 7/1/93 and
12/29/89, the maximum sales charges were 6.9% and 7.25%, respectively). In
addition, the Fund began reinvesting dividends at N.A.V. on 11/30/90; previously
dividends were reinvested at offering price. Therefore, total returns and yield
are higher than they would have had these charges not been reduced or
eliminated. Some or all of the expenses of the Fund were waived or assumed. If
such expenses had been paid by the Fund, the Class A shares "S.E.C.
Standardized" Average Annual Total Return for One Year, Five Years and Since
Inception would have been 11.0%, 15.9% and 6.6%, respectively and the Class A
shares S.E.C. 30-Day Yield for December 1995 would have been 7.0%. The returns
for Class B shares (first offered for sale on 1/12/95) are for the period
1/12/95 through 12/31/95. The Class B "S.E.C. Standardized" return is adjusted
for the applicable deferred sales charge (maximum of 4% in the first year).
Results represent past performance and do not indicate future results.
Investment return and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. The unusually high current yields offered reflect the substantial risks
associated with investments in high yield bonds. The issuers of the bonds pay
higher interest rates because they have a greater likelihood of financial
difficulty which could result in their inability to repay the bonds fully when
due. Prices of high yield bonds are also subject to greater fluctuations. 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.

THE GRAPH COMPARES A $10,000 INVESTMENT MADE IN THE FIRST INVESTORS HIGH YIELD
FUND, INC. (CLASS A SHARES) ON 8/12/86 (INCEPTION DATE) WITH A THEORETICAL
INVESTMENT IN THE FIRST BOSTON HIGH YIELD INDEX. IT IS NOT POSSIBLE TO INVEST
DIRECTLY IN THIS INDEX. IN ADDITION, THE INDEX DOES NOT TAKE INTO ACCOUNT FEES
AND EXPENSES. FOR PURPOSES OF THE GRAPH AND THE ACCOMPANYING TABLE, UNLESS
OTHERWISE INDICATED, IT HAS BEEN ASSUMED THAT THE MAXIMUM SALES CHARGE WAS
DEDUCTED FROM THE INITIAL $10,000 INVESTMENT IN THE FUND AND ALL DIVIDENDS AND
DISTRIBUTIONS WERE REINVESTED. CLASS B SHARES PERFORMANCE MAY BE GREATER THAN
OR LESS THAN THAT SHOWN ABOVE BASED ON DIFFERENCES IN SALES LOADS AND FEES PAID
BY SHAREHOLDERS INVESTING IN THE DIFFERENT CLASSES.

THE FIRST BOSTON HIGH YIELD INDEX IS DESIGNED TO MEASURE THE PERFORMANCE OF THE
HIGH YIELD BOND MARKET. THE INDEX CONSISTS OF 687 DIFFERENT ISSUES, 574 OF
WHICH ARE CASH PAY, 84 ARE ZERO-COUPON, 20 ARE STEP BONDS, 5 ARE PAYMENT-IN-KIND
BONDS AND THE REMAINING 4 ARE IN DEFAULT. THE BONDS INCLUDED IN THE INDEX HAVE
AN AVERAGE LIFE OF 7.8 YEARS, AN AVERAGE MATURITY OF 7.9 YEARS, AN AVERAGE
DURATION OF 4.4 YEARS AND AN AVERAGE COUPON OF 10.6%.

<PAGE>

CUMULATIVE PERFORMANCE INFORMATION
FIRST INVESTORS FUND FOR INCOME, INC.

Comparison of change in value of $10,000 investment in the First Investors High
Yield Fund, Inc. (Class A shares) and the First Boston High Yield Index.

[The following was represented by a line graph in the printed document]

- --------------------------------------------------------------------------------
As of December 31, 1995

$100,000 FUND FOR INCOME GRAPH PLOTS
INCOME FIRST BOSTON
JAN 86 9,375 10,000
DEC 86 10,456 11,563
DEC 87 10,328 12,319
DEC 88 11,752 14,001
DEC 89 10,826 14,054
DEC 90 8,964 13,157
DEC 91 12,804 18,914
DEC 92 14,943 22,065
DEC 93 17,642 26,237
DEC 94 17,445 25,983
DEC 95 21,034 30,498

THE GRAPH COMPARES A $10,000 INVESTMENT MADE IN THE FIRST INVESTORS FUND FOR
INCOME, INC. (CLASS A SHARES) ON 1/1/86 WITH A THEORETICAL INVESTMENT IN THE
FIRST BOSTON HIGH YIELD INDEX. IT IS NOT POSSIBLE TO INVEST DIRECTLY IN THIS
INDEX. IN ADDITION, THE INDEX DOES NOT TAKE INTO ACCOUNT FEES AND EXPENSES.
FOR PURPOSES OF THE GRAPH AND THE ACCOMPANYING TABLE, UNLESS OTHERWISE
INDICATED, IT HAS BEEN ASSUMED THAT THE MAXIMUM SALES CHARGE WAS DEDUCTED FROM
THE INITIAL $10,000 INVESTMENT IN THE FUND AND ALL DIVIDENDS AND DISTRIBUTIONS
WERE REINVESTED. CLASS B SHARES PERFORMANCE MAY BE GREATER THAN OR LESS THAN
THAT SHOWN ABOVE BASED ON DIFFERENCES IN SALES LOADS AND FEES PAID BY
SHAREHOLDERS INVESTING IN THE DIFFERENT CLASSES.
THE FIRST BOSTON HIGH YIELD INDEX IS DESIGNED TO MEASURE THE PERFORMANCE OF THE
HIGH YIELD BOND MARKET. THE INDEX CONSISTS OF 687 DIFFERENT ISSUES, 574 OF
WHICH ARE CASH PAY, 84 ARE ZERO-COUPON, 20 ARE STEP BONDS, 5 ARE PAYMENT-IN-KIND
BONDS AND THE REMAINING 4 ARE IN DEFAULT. THE BONDS INCLUDED IN THE INDEX HAVE
AN AVERAGE LIFE OF 7.8 YEARS, AN AVERAGE MATURITY OF 7.9 YEARS, AN AVERAGE
DURATION OF 4.4 YEARS AND AN AVERAGE COUPON OF 10.6%.

<PAGE>

GENERAL INFORMATION

ORGANIZATION. HIGH YIELD FUND and INCOME FUND were incorporated in the
state of Maryland on November 14, 1984 and August 20, 1970, respectively. HIGH
YIELD FUND'S authorized capital stock consists of 500 million shares of common
stock, all of one series, with a par value per share of $0.01. INCOME FUND's
authorized capital stock consists of 1 billion shares of common stock, all of
one series, with a par value per share of $1.00. Each Fund is authorized to
issue shares of common stock in such separate and distinct series and classes of
series as the particular Fund's Board of Directors shall from time to time
establish. The shares of common stock of each Fund are presently divided into
two classes, designated Class A shares and Class B shares. Each class of a Fund
represents interests in the same assets of that Fund. The Funds do not hold
annual shareholder meetings. If requested to do so by the holders of at least
10% of a Fund's outstanding shares, such Fund's Board of Directors will call a
special meeting of shareholders for any purpose, including the removal of
Directors. Each share of each Fund has equal voting rights except as noted
above.

CUSTODIAN. The Bank of New York, 48 Wall Street, New York, NY 10286, is
custodian of the securities and cash of each Fund.

TRANSFER AGENT. Administrative Data Management Corp., 581 Main Street,
Woodbridge, NJ 07095-1198, an affiliate of FIMCO and FIC, acts as transfer and
dividend disbursing agent for each Fund and as redemption agent for regular
redemptions. The Transfer Agent's telephone number is 1-800-423-4026.

SHARE CERTIFICATES. The Funds do not issue certificates for Class B shares
or for Class A shares purchased under any retirement account. The Funds,
however, will issue share certificates for Class A shares at the shareholder's
request. Ownership of shares of each Fund is recorded on a stock register by
the Transfer Agent and shareholders have the same rights of ownership with
respect to such shares as if certificates had been issued.

CONFIRMATIONS AND STATEMENTS. You will receive confirmations of purchases
and redemptions of shares of a Fund. Statements of shares owned will be sent to
you following a transaction in the account, including payment of a dividend or
capital gain distribution in additional shares or cash.

SHAREHOLDER INQUIRIES. Shareholder inquiries can be made by calling
Shareholder Services at 1-800-423-4026.

ANNUAL AND SEMI-ANNUAL REPORTS TO SHAREHOLDERS. It is each 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 in writing or by telephone by any shareholder. Each Fund will ensure
that an additional copy of such reports are sent to any shareholder who
subsequently changes his or her mailing address.

<PAGE>

APPENDIX A
DESCRIPTION OF CORPORATE BOND RATINGS

STANDARD & POOR'S RATINGS GROUP

The ratings are based on current information furnished by the issuer or
obtained by S&P from other sources it considers reliable. S&P does not perform
any audit in connection with any rating and may, on occasion, rely on unaudited
financial information. The ratings may be changed, suspended, or withdrawn as a
result of changes in, or unavailability of, such information, or based on other
circumstances.

The ratings are based, in varying degrees, on the following considerations:

1. Likelihood of default-capacity and willingness of the obligor as
to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation;

2. Nature of and provisions of the obligation;

3. Protection afforded by, and relative position of, the obligation
in the event of bankruptcy, reorganization, or other arrangement
under the laws of bankruptcy and other laws affecting creditors'
rights.

AAA Debt rated "AAA" has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.

AA Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.

A Debt rated "A" has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

BB, B, CCC, CC, C Debt rated "BB," "B," "CCC," "CC" and "C" is regarded,
on balance, as predominantly speculative with respect to capacity to pay
interest and repay principal. "BB" indicates the least degree of speculation
and "C" the highest. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions.

BB Debt rated "BB" has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.

<PAGE>

The "BB" rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied "BBB-" rating.

B Debt rated "B" has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.

CCC Debt rated "CCC" has a currently identifiable vulnerability to default
and is dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The "CCC" rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
"B" or "B-" rating.

CC The rating "CC" typically is applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC" rating.

C The rating "C" typically is applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC-" debt rating. The "C" rating may
be used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued.

CI The rating "CI" is reserved for income bonds on which no interest is
being paid.

D Debt rated "D" is in payment default. The "D" rating category is used
when interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The "D" rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
categories.

MOODY'S INVESTORS SERVICE, INC.

Aaa Bonds which are rated "Aaa" are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edged." Interest payments are protected by a large or exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.

Aa Bonds which are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities, fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risk appear somewhat greater than the Aaa
securities.

<PAGE>

A Bonds which are rated "A" possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the future.

Baa Bonds which are rated "Baa" are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba Bonds which are rated "Ba" are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

B Bonds which are rated "B" generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.

Caa Bonds which are rated "Caa" are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.

Ca Bonds which are rated "Ca" represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.

C Bonds which are rated "C" are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.

<PAGE>

TABLE OF CONTENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

Fee Table. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Investment Objectives and Policies . . . . . . . . . . . . . . . . . . . . 6
Alternative Purchase Plans . . . . . . . . . . . . . . . . . . . . . . . . 12
How to Buy Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
How to Exchange Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 17
How to Redeem Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Telephone Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Distribution Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . . 22
Dividends and Other Distributions. . . . . . . . . . . . . . . . . . . . . 23
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Performance Information. . . . . . . . . . . . . . . . . . . . . . . . . . 25
General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

INVESTMENT ADVISER CUSTODIAN
First Investors Management The Bank of New York
Company, Inc. 48 Wall Street
95 Wall Street New York, NY 10286
New York, NY 10005
TRANSFER AGENT
UNDERWRITER Administrative Data
First Investors Corporation Management Corp.
95 Wall Street 581 Main Street
New York, NY 10005 Woodbridge, NJ 07095-1198

LEGAL COUNSEL AUDITORS
Kirkpatrick & Lockhart LLP Tait, Weller & Baker
1800 Massachusetts Avenue, N.W. Two Penn Center Plaza
Washington, D.C. 20036 Philadelphia, PA 19102-1707

THIS PROSPECTUS IS INTENDED TO CONSTITUTE AN OFFER BY EACH FUND ONLY OF THE
SECURITIES OF WHICH IT IS THE ISSUER AND IS NOT INTENDED TO CONSTITUTE AN OFFER
BY EITHER FUND OF THE SECURITIES OF THE OTHER FUND WHOSE SECURITIES ARE ALSO
OFFERED BY THIS PROSPECTUS. NEITHER FUND INTENDS TO MAKE ANY REPRESENTATION AS
TO THE ACCURACY OR COMPLETENESS OF THE DISCLOSURE IN THIS PROSPECTUS RELATING TO
THE OTHER FUND. NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS OR THE STATEMENT OF ADDITIONAL INFORMATION, AND IF GIVEN OR
MADE, SUCH INFORMATION AND REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY EITHER FUND, FIRST INVESTORS CORPORATION, OR ANY AFFILIATE
THEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SHARES OFFERED HEREBY IN ANY STATE TO ANY PERSON
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH STATE.

<PAGE>

First Investors
High Yield Fund, Inc.
- ---------------------------

First Investors Fund
For Income, Inc.

- ---------------------------

Prospectus

- ---------------------------

April 29, 1996

First Investors Logo

Logo is described as follows: the arabic numeral one separated into seven
vertical segments followed by the words "First Investors."

Verticle line from top to bottom in center of page about 1/2 inch in thickness

The following language appears to the left of the above language in the printed
piece:

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 on the
righthand side.

The following language appears on the lefthand side:

FIRST INVESTORS HIGH YIELD FUND, INC.
FIRST INVESTORS FUND FOR INCOME, INC.
95 WALL STREET
NEW YORK, NY 10005

First Investors Logo (as described above)
A MEMBER OF THE
FIRST INVESTORS
FINANCIAL NETWORK

<PAGE>

FIRST INVESTORS HIGH YIELD FUND, INC.
FIRST INVESTORS FUND FOR INCOME, INC.

95 Wall Street 1-800-423-4026
New York, New York 10005

STATEMENT OF ADDITIONAL INFORMATION
DATED APRIL 29, 1996

This is a Statement of Additional Information ("SAI") for FIRST INVESTORS
HIGH YIELD FUND,INC. ("HIGH YIELD FUND") and FIRST INVESTORS FUND FOR INCOME,
INC. ("INCOME FUND"), each of which is an open-end diversified management
investment company. HIGH YIELD FUND and INCOME FUND are referred to herein
collectively as "Funds."

HIGH YIELD FUND primarily seeks high current income and secondarily
seeks capital appreciation.

INCOME FUND primarily seeks to earn a high level of current income and,
to the extent possible, in view of that objective, secondarily seeks growth
of capital.

This SAI is not a prospectus. It should be read in conjunction with the
Funds' Prospectus dated April 29, 1996, which maybe obtained free of cost
from the Funds at the address or telephone number noted above.

TABLE OF CONTENTS

Page
----

Investment Policies . . . . . . . . . . . . . . . . . . 2
Hedging Strategies . . . . . . . . . . . . . . . . . . 5
Investment Restrictions . . . . . . . . . . . . . . . . 8
Directors and Officers . . . . . . . . . . . . . . . . 12
Management . . . . . . . . . . . . . . . . . . . . . . 14
Underwriter . . . . . . . . . . . . . . . . . . . . . . 16
Distribution Plans . . . . . . . . . . . . . . . . . . 16
Determination of Net Asset Value . . . . . . . . . . . 17
Allocation of Portfolio Brokerage . . . . . . . . . . . 18
Reduced Sales Charges, Additional Exchange and
Redemption Information and Other Services . . . . . . 19
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 26
Performance Information . . . . . . . . . . . . . . . . 28
General Information . . . . . . . . . . . . . . . . . . 33
Appendix A . . . . . . . . . . . . . . . . . . . . . . 35
Appendix B . . . . . . . . . . . . . . . . . . . . . . 36
Financial Statements . . . . . . . . . . . . . . . . . 42

<PAGE>

INVESTMENT POLICIES

BANKERS' ACCEPTANCES. Each Fund may invest in bankers' acceptances.
Bankers' acceptances are short-term credit instruments used to finance
commercial transactions. Generally, an acceptance is a time draft drawn on a
bank by an exporter or importer to obtain a stated amount of funds to pay for
specific merchandise. The draft is then "accepted" by a bank that, in effect,
unconditionally guarantees to pay the face value of the instrument on its
maturity date. The acceptance may then be held by the accepting bank as an
asset or it may be sold in the secondary market at the going rate of interest
for a specific maturity. Although maturities for acceptances can be as long as
270 days, most acceptances have maturities of six months or less.

CERTIFICATES OF DEPOSIT. Each Fund may invest in bank certificates of
deposit ("CDs") subject to the restrictions set forth in the Prospectus. The
Federal Deposit Insurance Corporation is an agency of the U.S. Government which
insures the deposits of certain banks and savings and loan associations up to
$100,000 per deposit. The interest on such deposits may not be insured if this
limit is exceeded. Current Federal regulations also permit such institutions to
issue insured negotiable Cds in amounts of $100,000 or more, without regard to
the interest rate ceilings on other deposits. To remain fully insured, these
investments currently must be limited to $100,000 per insured bank or savings
and loan association.

CONVERTIBLE SECURITIES. Each Fund may invest in convertible securities.
While no securities investment is without some risk, investments in convertible
securities generally entail less risk than the issuer's common stock, although
the extent to which such risk is reduced depends in large measure upon the
degree to which the convertible security sells above its value as a fixed income
security. The Funds' investment adviser, First Investors Management Company,
Inc. ("Adviser" or "FIMCO"), will decide to invest based upon a fundamental
analysis of the long-term attractiveness of the issuer and the underlying common
stock, the evaluation of the relative attractiveness of the current price of the
underlying common stock and the judgment of the value of the convertible
security relative to the common stock at current prices.

FOREIGN SECURITIES--RISK FACTORS. HIGH YIELD FUND may sell a security
denominated in a foreign currency and retain the proceeds in that foreign
currency to use at a future date (to purchase other securities denominated in
that currency) or the Fund may buy foreign currency outright to purchase
securities denominated in that foreign currency at a future date. Because HIGH
YIELD FUND does not intend to hedge its foreign investments against the risk of
foreign currency fluctuations, changes in the value of these currencies can
significantly affect the Fund's share price. In addition, the Fund will be
affected by changes in exchange control regulations and fluctuations in the
relative rates of exchange between the currencies of different nations, as well
as by economic and political developments. Other risks involved in foreign
securities include the following: there may be less publicly available
information about foreign companies comparable to the reports and ratings that
are published about companies in the United States; foreign companies are not
generally subject to uniform accounting, auditing and financial reporting
standards and requirements comparable to those applicable to U.S. companies;
some foreign stock markets have substantially less volume than U.S. markets, and
securities of some foreign companies are less liquid and more volatile than
securities of comparable U.S. companies; there may be less government
supervision and regulation of foreign stock exchanges, brokers and listed
companies than exist in the United States; and there may be the possibility of
expropriation or confiscatory taxation, political or social instability or
diplomatic developments which could affect assets of the HIGH YIELD FUND held in
foreign countries.

2
<PAGE>

LOANS OF PORTFOLIO SECURITIES. HIGH YIELD FUND may loan securities to
qualified broker-dealers or other institutional investors provided: the borrower
pledges to the Fund and agrees to maintain at all times with the Fund collateral
equal to not less than 100% of the value of the securities loaned (plus accrued
interest or dividend, if any); the loan is terminable at will by the Fund; the
Fund pays only reasonable custodian fees in connection with the loan; and the
Adviser monitors the creditworthiness of the borrower throughout the life of the
loan. Such loans may be terminated by the Fund at any time and the Fund may
vote the proxies if a material event affecting the investment is to occur. The
market risk applicable to any security loaned remains a risk of the Fund. The
borrower must add to the collateral whenever the market value of the securities
rises above the level of such collateral. The Fund could incur a loss if the
borrower should fail financially at a time when the value of the loaned
securities is greater than the collateral. HIGH YIELD FUND may make loans of
portfolio securities, together with illiquid securities, not in excess of 15% of
its net assets.

REPURCHASE AGREEMENTS. A repurchase agreement essentially is a short-term
collateralized loan. The lender (a Fund) agrees to purchase a security from a
borrower (typically a broker-dealer) at a specified price. The borrower
simultaneously agrees to repurchase that same security at a higher price on a
future date (which typically is the next business day). The difference between
the purchase price and the repurchase price effectively constitutes the payment
of interest. In a standard repurchase agreement, the securities which serve as
collateral are transferred to a Fund's custodian bank. In a "tri-party"
repurchase agreement, these securities would be held by a different bank for the
benefit of the Fund as buyer and the broker-dealer as seller. In a "quad-party"
repurchase agreement, the Fund's custodian bank also is made a party to the
agreement. Each Fund may enter into repurchase agreements with banks which are
members of the Federal Reserve System or securities dealers who are members of a
national securities exchange or are market makers in government securities. The
period of these repurchase agreements will usually be short, from overnight to
one week, and at no time will a Fund invest in repurchase agreements with more
than one year in time to maturity. The securities which are subject to
repurchase agreements, however, may have maturity dates in excess of one year
from the effective date of the repurchase agreement. Each Fund will always
receive, as collateral, securities whose market value, including accrued
interest, which will at all times be at least equal to 100% of the dollar amount
invested by the Fund in each agreement, and the Fund will make payment for such
securities only upon physical delivery or evidence of book entry transfer to the
account of the custodian. If the seller defaults, a Fund might incur a loss if
the value of the collateral securing the repurchase agreement declines, and
might incur disposition costs in connection with liquidating the collateral. In
addition, if bankruptcy or similar proceedings are commenced with respect to the
seller of the security, realization upon the collateral by a Fund may be delayed
or limited. Neither Fund will enter into a repurchase agreement with more than
seven days to maturity if, as a result, more than 15% of such Fund's net assets
would be invested in such repurchase agreements and other illiquid investments.

RESTRICTED AND ILLIQUID SECURITIES. No Fund will purchase or otherwise
acquire any security if, as a result, more than 15% of its net assets (taken at
current value) would be invested in securities that are illiquid by virtue of
the absence of a readily available market or legal or contractual restrictions
on resale. This policy includes foreign issuers' unlisted securities with a
limited trading market and repurchase agreements maturing in more than seven
days. This policy does not include restricted securities eligible for resale
pursuant to Rule 144A under the Securities Act of 1933, as amended ("1933 Act"),
which each Fund's Board of Directors or the Adviser has determined under Board-
approved guidelines are liquid.

Restricted securities which are illiquid may be sold only in privately
negotiated transactions or in public offerings with respect to which a
registration statement is in effect under the 1933 Act. Such

3
<PAGE>

securities include those that are subject to restrictions contained in the
securities laws of other countries. Securities that are freely marketable in
the country where they are principally traded, but would not be freely
marketable in the United States, will not be subject to this 15% limitation, as
noted above. Where registration is required, a Fund may be obligated to pay all
or part of the registration expenses and a considerable period may elapse
between the time of the decision to sell and the time the Fund may be permitted
to sell a security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, a Fund might obtain a less
favorable price than prevailed when it decided to sell.

In recent years, a large institutional market has developed for certain
securities that are not registered under the 1933 Act, including private
placements, repurchase agreements, commercial paper, foreign securities and
corporate bonds and notes. These instruments are often restricted securities
because the securities are either themselves exempt from registration or sold in
transactions not requiring registration. Institutional investors generally will
not seek to sell these instruments to the general public, but instead will often
depend on an efficient institutional market in which such unregistered
securities can be readily resold or on an issuer's ability to honor a demand for
repayment. Therefore, the fact that there are contractual or legal restrictions
on resale to the general public or certain institutions is not dispositive of
the liquidity of such investments.

Rule 144A under the 1933 Act establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. Institutional markets for restricted securities
that might develop as a result of Rule 144A could provide both readily
ascertainable values for restricted securities and the ability to liquidate an
investment in order to satisfy share redemption orders. An insufficient number
of qualified institutional buyers interested in purchasing Rule 144A-eligible
securities held by a Fund, however, could affect adversely the marketability of
such portfolio securities and a Fund might be unable to dispose of such
securities promptly or at reasonable prices.

SHORT SALES. Although HIGH YIELD FUND does not presently intend to do so,
it may borrow securities for cash sale to others for hedging purposes only. In
this type of transaction, known as a "short sale," the Fund borrows a security
from a lender and is obligated to replace the security (not its cash value) at a
date in the future. The Fund may make short sales "against the box." A short
sale against the box occurs when the Fund enters into a short sale with a
security identical to the one it already owns or has the immediate or
unconditional right, at no cost, to obtain the identical security.

U.S. GOVERNMENT OBLIGATIONS. Securities issued or guaranteed as to
principal and interest by the U.S. Government include (1) U.S. Treasury
obligations which differ only in their interest rates, maturities and times of
issuance as follows: U.S. Treasury bills (maturities of one year or less), U.S.
Treasury notes (maturities of one to ten years) and U.S. Treasury bonds
(generally maturities of greater than ten years), and (2) obligations issued or
guaranteed by U.S. Government agencies and instrumentalities that are backed by
the full faith and credit of the United States, such as securities issued by the
Federal Housing Administration, Government National Mortgage Association, the
Department of Housing and Urban Development, the Export-Import Bank, the General
Services Administration and the Maritime Administration and certain securities
issued by the Farmers Home Administration and the Small Business Administration.
The range of maturities of U.S. Government Obligations is usually three months
to thirty years.

WARRANTS. Each Fund may purchase warrants, which are instruments that
permit a Fund to acquire, by subscription, the capital stock of a corporation at
a set price, regardless of the market price

4
<PAGE>

for such stock. Warrants may be either perpetual or of limited duration. There
is greater risk that warrants might drop in value at a faster rate than the
underlying stock. HIGH YIELD FUND's investment in warrants is limited to 5% of
its net assets, with no more than 2% in warrants not listed on either the New
York or American Stock Exchange. INCOME FUND's investment in warrants is
limited to 2% of its net assets.

WHEN-ISSUED SECURITIES. Although they have no intention of doing so in the
coming year, each Fund many invest up to 10% of its net assets in securities
issued on a when-issued or delayed delivery basis at the time the purchase is
made. A Fund generally would not pay for such securities or start earning
interest on them until they are issued or received. However, when a Fund
purchases debt obligations on a when-issued basis, it assumes the risks of
ownership, including the risk of price fluctuation, at the time of purchase, not
at the time of receipt. Failure of the issuer to deliver a security purchased
by a Fund on a when-issued basis may result in such Fund incurring a loss or
missing an opportunity to make an alternative investment. When a Fund enters
into a commitment to purchase securities on a when-issued basis, it establishes
a separate account with its custodian consisting of cash or liquid high-grade
debt securities equal to the amount of the Fund's commitment, which are valued
at their fair market value. If on any day the market value of this segregated
account falls below the value of the Fund's commitment, the Fund will be
required to deposit additional cash or qualified securities into the account
until equal to the value of the Fund's commitment. When the securities to be
purchased are issued, the Fund will pay for the securities from available cash,
the sale of securities in the segregated account, sales of other securities and,
if necessary, from sale of the when-issued securities themselves although this
is not ordinarily expected. Securities purchased on a when-issued basis are
subject to the risk that yields available in the market, when delivery takes
place, may be higher than the rate to be received on the securities a Fund is
committed to purchase. Sale of securities in the segregated account or other
securities owned by a Fund and when-issued securities may cause the realization
of a capital gain or loss.

PORTFOLIO TURNOVER. Although each Fund generally will not invest for
short-term trading purposes, portfolio securities may be sold from time to time
without regard to the length of time they have been held when, in the opinion of
the Adviser, investment considerations warrant such action. Portfolio turnover
rate is calculated by dividing (1) the lesser of purchases or sales of portfolio
securities for the fiscal year by (2) the monthly average of the value of
portfolio securities owned during the fiscal year. A 100% turnover rate would
occur if all the securities in a Fund's portfolio, with the exception of
securities whose maturities at the time of acquisition were one year or less,
were sold and either repurchased or replaced within one year. A high rate of
portfolio turnover generally leads to transaction costs and may result in a
greater number of taxable transactions. See "Allocation of Portfolio
Brokerage." For the fiscal years ended December 31, 1994 and 1995, HIGH YIELD
FUND's portfolio turnover rate was 32% and 42%, respectively and INCOME FUND's
portfolio turnover rate was 39% and 33%, respectively.

HEDGING STRATEGIES

Although it presently does not intend to engage in these strategies in the
coming year, HIGH YIELD FUND may engage in certain futures strategies to hedge
its investment portfolio and in other circumstances permitted by the Commodities
Futures Trading Commission ("CFTC"). Certain special characteristics of and
risks associated with using Hedging Instruments are discussed below. In
addition to the investment guidelines (described below) adopted by the Fund's
Board of Directors to govern its investments in Hedging Instruments, use of
these instruments is subject to the applicable regulations of the Securities and
Exchange Commission ("SEC"), the several futures exchanges upon which futures
contracts are traded,

5
<PAGE>

the CFTC and various state regulatory authorities. In addition, the Fund's
ability to use Hedging Instruments will be limited by tax considerations. See
"Taxes."

Participation in the futures markets involves investment risks and
transaction costs to which the Fund would not be subject absent the use of these
strategies. If the Adviser's prediction of movements in the direction of the
securities and interest rate markets are inaccurate, the adverse consequences to
the Fund may leave the Fund in a worse position than if such strategies were not
used. The Fund might not employ any of the strategies described below, and
there can be no assurance that any strategy will succeed. The use of these
strategies involve certain special risks, including (1) dependence on the
Adviser's ability to predict correctly movements in the direction of interest
rates and securities prices; (2) imperfect correlation between the price of
futures contracts and movements in the prices of the securities being hedged;
(3) the fact that skills needed to use these strategies are different from those
needed to select portfolio securities; (4) the possible absence of a liquid
secondary market for any particular instrument at any time; and (5) the possible
need to defer closing out certain hedged positions to avoid adverse tax
consequences.

COVER FOR HEDGING STRATEGIES. The Fund will not use leverage in its
hedging strategies. In the case of each transaction entered into as a hedge,
the Fund will hold securities or futures positions whose values are expected to
offset ("cover") its obligations thereunder. The Fund will not enter into a
hedging strategy that exposes the Fund to an obligation to another party unless
it owns either (1) an offsetting ("covered") position in securities or futures
contracts, or (2) cash, receivables and short-term debt securities with a value
sufficient at all times to cover its potential obligations. The Fund will
comply with guidelines established by the SEC with respect to coverage of
hedging strategies by mutual funds and, if required, will set aside cash and/or
liquid, high-grade debt securities in a segregated account with its custodian in
the prescribed amount. Securities or futures positions used for cover and
securities held in a segregated account cannot be sold or closed out while the
hedging strategy is outstanding unless they are replaced with similar assets.
As a result, there is a possibility that the use of cover or segregation
involving a large percentage of the Fund's assets could impede portfolio
management or the Fund's ability to meet redemption requests or other current
obligations.

INTEREST RATE FUTURES CONTRACTS. Interest rate futures contracts are
bilateral agreements pursuant to which one party agrees to make, and the other
party agrees to accept, delivery of a specified type of debt security at a
specified future time and at a specified price. Although such futures contracts
by their terms call for actual delivery or acceptance of debt securities, in
most cases the contracts are closed out before the settlement date without the
making or taking of delivery. The Fund may buy and sell interest rate futures
contracts which are traded on a board of trade as a hedge against adverse
changes in interest rates.

FUTURES STRATEGIES. The Fund may engage in futures strategies to attempt
to reduce the overall investment risk that would normally be expected to be
associated with ownership of the securities in which it invests. The Fund may
use interest rate futures contracts to hedge its portfolio against changes in
the general level of interest rates. The Fund may purchase an interest rate
futures contract when it intends to purchase debt securities but has not yet
done so. This strategy may minimize the effect of all or part of an increase in
the market price of those securities because a rise in the price of the
securities prior to their purchase may either be offset by an increase in the
value of the futures contract purchased by the Fund or avoided by taking
delivery of the debt securities under the futures contract. Conversely, a fall
in the market price of the underlying debt securities may result in a
corresponding decrease in the value of the futures position. The Fund may sell
an interest rate futures contract in order to continue to receive

6
<PAGE>

the income from a debt security, while endeavoring to avoid part or all of the
decline in the market value of that security that would accompany an increase in
interest rates.

FUTURES GUIDELINES. In view of the risks involved in using futures
strategies described below, the Fund's Board of Directors has adopted non-
fundamental investment guidelines to govern the Fund's use of such investments
that may be modified by the Board without shareholder vote. The Fund will not
purchase or sell futures contracts if, immediately thereafter, the sum of the
amount of initial margin deposits on the Fund's existing futures positions would
exceed 5% of the market value of the Fund's total assets. This does not limit
the Fund's assets at risk to 5%. The Fund may not purchase futures contracts if
immediately thereafter more than 30% of the Fund's total assets would be so
invested.

SPECIAL CHARACTERISTICS AND RISKS OF FUTURES TRADING. No price is paid
upon entering into futures contracts. Instead, upon entering into a futures
contract, the Fund is required to deposit with its custodian in a segregated
account in the name of the futures broker through which the transaction is
effected an amount of cash, U.S. Government securities or other liquid, high-
grade debt instruments generally equal to 10% or less of the contract value.
This amount is known as "initial margin." Initial margin on futures contracts
is in the nature of a performance bond or good-faith deposit that is returned to
the Fund upon termination of the transaction, assuming all obligations have been
satisfied. Under certain circumstances, such as periods of high volatility, the
Fund may be required by an exchange to increase the level of its initial margin
payment. Additionally, initial margin requirements may be increased generally
in the future by regulatory action. Subsequent payments, called "variation
margin," to and from the broker, are made on a daily basis as the value of the
futures position varies, a process known as "marking to market." Variation
margin does not involve borrowing to finance the futures transactions, but
rather represents a daily settlement of the Fund's obligation to or from a
clearing organization.

Holders and writers of futures positions can enter into offsetting closing
transactions, similar to closing transactions on options on securities, by
selling or purchasing, respectively, a futures position with the same terms as
the position held or written. Positions in futures contracts thereon may be
closed only on an exchange or board of trade providing a secondary market for
such futures or options.

Under certain circumstances, futures exchanges may establish daily limits
on the amount that the price of a futures contract may vary either up or down
from the previous day's settlement price. Once the daily limit has been reached
in a particular contract, no trades may be made that day at a price beyond that
limit. The daily limit governs only price movements during a particular trading
day and therefore does not limit potential losses because prices could move to
the daily limit for several consecutive trading days with little or no trading
and thereby prevent prompt liquidation of unfavorable positions. In such event,
it may not be possible for the Fund to close a position and, in the event of
adverse price movements the Fund would have to make daily cash payments of
variation margin. However, in the event futures contracts have been used to
hedge portfolio securities, such securities will not be sold until the contracts
can be terminated. In such circumstances, an increase in the price of the
securities, if any, may partially or completely offset losses on the futures
contract. However, there is no guarantee that the price of the securities will,
in fact, correlate with the price movements in the contracts and thus provide an
offset to losses on the contracts.

Successful use by the Fund of futures contracts will depend upon the
Adviser's ability to predict movements in the direction of the overall interest
rate markets, which requires different skills and techniques than predicting
changes in the prices of individual securities. Moreover, futures contracts
relate not to the current price level of the underlying instrument but to the
anticipated levels at some point in

7
<PAGE>

the future. There is, in addition, the risk that the movements in the price of
the futures contract will not correlate with the movements in prices of the
securities being hedged. In addition, if the Fund has insufficient cash, it may
have to sell assets from its portfolio to meet daily variation margin
requirements. Any such sale of assets may or may not be made at prices that
reflect the rising market. Consequently, the Fund may need to sell assets at a
time when such sales are disadvantageous to the Fund. If the price of the
futures contract moves more than the price of the underlying securities, the
Fund will experience either a loss or a gain on the futures contract that may or
may not be completely offset by movements in the price of the securities that
are the subject of the hedge.

In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between price movements in the futures position and
the securities being hedged, movements in the prices of futures contracts may
not correlate perfectly with movements in the prices of the hedged securities
because of price distortions in the futures market. As a result, a correct
forecast of general market trends may not result in successful hedging through
the use of futures contracts over the short term.

Positions in futures contracts may be closed out only on an exchange or
board of trade that provides a secondary market for such futures contracts.
Although the Fund intends to purchase or sell futures only on exchanges or
boards of trade where there appears to be a liquid secondary market, there is no
assurance that such a market will exist for any particular contract at any
particular time. In such event, it may not be possible to close a futures
position and, in the event of adverse price movements, the Fund would continue
to be required to make variation margin payments.

The Fund's activities in the futures markets may result in a higher
portfolio turnover rate and additional transaction costs in the form of added
brokerage commissions; however, the Fund also may save on commissions by using
futures as a hedge rather than buying or selling individual securities in
anticipation or as a result of market movements.

INVESTMENT RESTRICTIONS

The investment restrictions set forth below have been adopted by the
respective Fund and, unless identified as non-fundamental policies, may not be
changed without the affirmative vote of a majority of the outstanding voting
securities of that Fund. As provided in the Investment Company Act of 1940, as
amended ("1940 Act"), a "vote of a majority of the outstanding voting securities
of the Fund" means the affirmative vote of the lesser of (1) more than 50% of
the outstanding shares of the Fund or (2) 67% or more of the shares present at a
meeting, if more than 50% of the outstanding shares are represented at the
meeting in person or by proxy. Except with respect to borrowing, changes in
values of a particular Fund's assets will not cause a violation of the following
investment restrictions so long as percentage restrictions are observed by such
Fund at the time it purchases any security.

HIGH YIELD FUND. HIGH YIELD FUND will not:

(1) Borrow money, except from banks and only for temporary or emergency
purposes and then in amounts not in excess of 5% of its total assets.

(2) Engage in "short sales" in excess of 10% of the Fund's total assets.
As a matter of non-fundamental policy, the Fund has undertaken to a certain
state securities commission that the Fund will not engage in short sales other
than (a) short sales against the box and (b) the sale of financial futures
contracts and options thereon.

8
<PAGE>

(3) Pledge, mortgage or hypothecate any of its assets, except that the
Fund may pledge its assets to secure borrowings made in accordance with
paragraphs (1) and (2) above and for margin to secure its obligations under
interest rate futures contracts, provided the Fund maintains asset coverage of
at least 300% for pledged assets.

(4) Make loans, except by purchase of debt obligations and through
repurchase agreements. However, the Board of Directors may, on the request of
broker-dealers or other institutional investors which they deem qualified,
authorize the Fund to loan securities to cover the borrower's short position;
provided, however, the borrower pledges to the Fund and agrees to maintain at
all times with the Fund cash collateral equal to not less than 100% of the value
of the securities loaned, the loan is terminable at will by the Fund, the Fund
receives interest on the loan as well as any distributions upon the securities
loaned, the Fund retains voting rights associated with the securities, the Fund
pays only reasonable custodian fees in connection with the loan, and the Adviser
monitors the creditworthiness of the borrower throughout the life of the loan;
provided further, that such loans will not be made if the value of all
repurchase agreements with more than seven days to maturity, and other illiquid
assets is greater than an amount equal to 15% of the Fund's net assets.

(5) With respect to 75% of the Fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities) if, as a result, (a) more than 5%
of the Fund's total assets would be invested in the securities of that issuer,
or (b) the Fund would hold more than 10% of the outstanding voting securities of
that issuer.

(6) Purchase the securities of an issuer if such purchase, at the time
thereof, would cause more than 5% value of the Fund's total assets to be
invested in securities of issuers which, including predecessors, have a record
of less than three years' continuous operation.

(7) Underwrite securities issued by other persons except to the extent
that, in connection with the disposition of its portfolio investments, it may be
deemed to be an underwriter under Federal securities laws.

(8) Purchase or sell real estate or commodities or commodity contracts.
However, the Fund may purchase interests in real estate investment trusts whose
securities are registered under the Act and are readily marketable and may
invest in interest rate futures contracts and options thereon (provided the
margin required does not violate the investment restrictions pertaining to
pledging assets).

(9) Invest in companies for the purpose of exercising control or
management.

(10) Invest in securities of other investment companies, except in
connection with a merger of another investment company.

(11) Purchase any securities on margin (however, the Fund's engaging in
"hedging transactions" and the margins required thereon shall not be considered
a violation of this provision).

(12) Purchase or retain securities of any issuer if any officer or Director
of the Fund or the Adviser owns beneficially more than 1/2 of 1% of the
securities of such issuer or if all such officers and Directors together own
more than 5% of the securities of such issuer.

(13) Invest 25% or more of the value of its total assets in a particular
industry at any one time.

9
<PAGE>

(14) Invest more than 5% of the value of its net assets in warrants, with
no more than 2% in warrants not listed on either the New York or American Stock
Exchange.

(15) Purchase or sell portfolio securities from or to the Adviser or any
Director or officer thereof or of the Fund, as principals.

(16) Invest more than 15% of the value of its total assets, at the time of
purchase, in deep discount securities of companies that are financially
troubled, in default or in bankruptcy or reorganization.

(17) Issue senior securities.

(18) Invest any of its assets in interests in oil, gas or other mineral
exploration or development programs, or in puts, calls, straddles or any
combination thereof.

(19) Invest more than 10% of its net assets in when-issued securities at
the time such purchase is made.

The Fund has also filed the following undertakings to comply with
requirements of certain states in which shares of the Fund are sold, which may
be changed without shareholder approval:

(1) In the event the original custodian or any successor custodian
resigns or for any reason cannot or will not continue to serve as custodian and
no successor custodian can be found, the Fund will submit to shareholders for
their approval or disapproval, the matter of possible liquidation of the Fund.

(2) Not withstanding investment restriction (8) above, the Fund will not
invest in real estate limited partnership interests or interests in real estate
investment trusts that are not readily marketable.

The Fund has adopted the following non-fundamental investment restriction
which may be changed without shareholder approval. This investment restriction
provides that the Fund will not:

Purchase any security if, as a result, more than 15% of its net assets
would be invested in illiquid securities, including repurchase agreements not
entitling the holder to payment of principal and interest within seven days and
any securities that are illiquid by virtue of legal or contractual restrictions
on resale or the absence of a readily available market. The Directors, or the
Fund's investment adviser acting pursuant to authority delegated by the
Directors, may determine that a readily available market exists for securities
eligible for resale pursuant to Rule 144A under the Securities Act of 1933, as
amended, or any other applicable rule, and therefore that such securities are
not subject to the foregoing limitation.

INCOME FUND. INCOME FUND will not:

(1) Borrow money except from banks and only for temporary or emergency
purposes and then in amounts not in excess of 5% of its total assets taken at
cost or value, whichever is the lesser.

(2) Make loans to other persons except that the Board of Directors may, on
the request of broker-dealers or other institutional investors that it deems
qualified, authorize the Fund to lend securities for the purpose of covering
short positions of the borrower, but only when the borrower pledges cash
collateral to the Fund and agrees to maintain such collateral so that it amounts
at all times to at least 100% of the value of the securities. Such security
loans will not be made if as a result the aggregate of such

10
<PAGE>

loans exceeds 10% of the value of the Fund's total assets. The Fund may
terminate such loans at any time and vote the proxies if a material event
affecting the investment is about to occur. The market risk applicable to any
security loaned remains a risk of the Fund. The borrower must add to collateral
whenever the market value of the securities rises above the level of such
collateral. The primary objective of such loaning function is to supplement the
Fund's income through investment of the cash collateral in short-term interest-
bearing obligations. The purchase of a portion of an issue of publicly
distributed debt securities is not considered the making of a loan.

(3) With respect to 75% of the Fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities) if, as a result, (a) more than 5%
of the Fund's total assets would be invested in the securities of that issuer,
or (b) the Fund would hold more than 10% of the outstanding voting securities of
that issuer.

(4) Invest more than 5% of the value of its total assets in securities of
issuers, including the operations of predecessors, that have been in business
for less than three years.

(5) Invest 25% or more of the value of its total assets in a particular
industry at one time.

(6) Underwrite securities of other issuers, except to the extent that, in
connection with the disposition of its portfolio investments, it may be deemed
to be an underwriter under Federal securities laws.

(7) Purchase or sell real estate or commodities or commodity contracts.
However, the Fund may purchase interests in real estate investment trusts whose
securities are registered under the 1933 Act and are readily marketable.

(8) Invest in companies for the purpose of exercising control or
management.

(9) Invest in securities of other investment companies, except in
connection with a merger of another investment company.

(10) Purchase any securities on margin or sell any securities short.

(11) Purchase or retain securities of any issuer if any officer or Director
of the Fund or the Adviser owns beneficially more than 1/2 of 1% of the
securities of such issuer and together own more than 5% of the securities of
such issuer.

(12) Purchase or sell portfolio securities from or to the Adviser or any
Director or officer thereof or of the Fund, as principals.

(13) Issue senior securities.

The following undertakings, which may be changed without shareholder
approval, have been filed to comply with requirements of certain states in which
shares of the Fund are sold:

(1) Notwithstanding fundamental investment restriction (7) above, the Fund
will not invest in real estate limited partnership interests or in interests in
real estate investment trusts that are not readily marketable.

11
<PAGE>

(2) The Fund will not write, purchase or sell puts, calls, straddles or
any combinations thereof.

(3) In reference to the investment power of the Fund to invest in warrants
and rights in connection with the purchase of securities, the investment in
warrants taken at the lower of cost or market will not exceed 2% of the Fund's
net assets. Warrants initially attached to securities and acquired by the Fund
upon the original issuance thereof shall be deemed for the above 2%
determination to be without value.

(4) In the event the original custodian or any successor custodian resigns
or for any reason cannot or will not continue to serve as custodian and no
successor can be found, the Fund will submit to shareholders for their approval
or disapproval the matter of possible liquidation of the Fund.

The Fund has adopted the following non-fundamental investment restrictions,
which may be changed without shareholder approval. These investment
restrictions provide that the Fund will not:

(1) Purchase any security if, as a result, more than 15% of its net assets
would be invested in illiquid securities, including repurchase agreements not
entitling the holder to payment of principal and interest within seven days and
any securities that are illiquid by virtue of legal or contractual restrictions
on resale or the absence of a readily available market. The Directors, or the
Fund's investment adviser acting pursuant to authority delegated by the
Directors, may determine that a readily available market exists for securities
eligible for resale pursuant to Rule 144A under the Securities Act of 1933, as
amended, or any other applicable rule, and therefore that such securities are
not subject to the foregoing limitation.

(2) Pledge, mortgage or hypothecate any of its assets, except that the
Fund may pledge its assets to secure borrowings made in accordance with
fundamental investment restriction (1) above, provided the Fund maintains asset
coverage of at least 300% for all such borrowings.

DIRECTORS AND OFFICERS

The following table lists the Directors and executive officers of the
Funds, their age, business address and principal occupations during the past
five years. Unless otherwise noted, an individual's business address is 95 Wall
Street, New York, New York 10005.

GLENN O. HEAD*+ (70), President and Director. Chairman of the Board and
Director, Administrative Data Management Corp. ("ADM"), FIMCO, Executive
Investors Management Company, Inc. ("EIMCO"), First Investors Corporation
("FIC"), Executive Investors Corporation ("EIC") and First Investors
Consolidated Corporation ("FICC").

JAMES J. COY (82), Director, 90 Buell Lane, East Hampton, NY 11937. Retired;
formerly Senior Vice President, James Talcott, Inc. (financial institution).

ROGER L. GRAYSON* (39), Director. Director, FIC and FICC; President and
Director, First Investors Resources, Inc.; Commodities Portfolio Manager.

KATHRYN S. HEAD*+ (40), Director, 581 Main Street, Woodbridge, NJ 07095.
President, FICC, EIMCO, FIMCO and ADM; Vice President, Chief Financial Officer
and Director, FIC and EIC; President and Director, First Financial Savings
Bank, S.L.A.

12
<PAGE>

REX R. REED (74), Director, 1381 Fairway Oaks, Kiawah Island, SC 29455.
Retired; formerly Senior Vice President, American Telephone & Telegraph Company.

HERBERT RUBINSTEIN (74), Director, 145 Elm Drive, Roslyn, NY 11576. Retired;
formerly President, Belvac International Industries, Ltd. and President,
Central Dental Supply.

JAMES M. SRYGLEY (63), Director, 33 Hampton Road, Chatham, NJ 07982. Principal,
Hampton Properties, Inc. (property investment company).

JOHN T. SULLIVAN* (64), Director and Chairman of the Board; Director, FIMCO,
FIC, FICC and ADM; Of Counsel, Hawkins, Delafield & Wood, Attorneys.

ROBERT F. WENTWORTH (66), Director, RR1, Box 2554, Upland Downs Road, Manchester
Center, VT 05255. Retired; formerly financial and planning executive with
American Telephone & Telegraph Company.

JOSEPH I. BENEDEK (38), Treasurer, 581 Main Street, Woodbridge, NJ 07095.
Treasurer, FIC FIMCO, EIMCO and EIC; Comptroller and Treasurer, FICC.

CONCETTA DURSO (61), Vice President and Secretary. Vice President, FIMCO, EIMCO
and ADM; Assistant Vice President and Assistant Secretary, FIC and EIC.

NANCY W. JONES (52), Vice President, INCOME FUND. Vice President, First
Investors Asset Management Company, Inc. and First Investors Series Fund;
Portfolio Manager, FIMCO.

GEORGE V. GANTER (43), Vice President, HIGH YIELD FUND. Vice President, First
Investors Asset Management Company, Inc., First Investors Special Bond Fund,
Inc., and Executive Investors Trust; Portfolio Manager, FIMCO.

- -------------------------------
* These Directors may be deemed to be "interested persons," as defined in the
1940 Act.
+ Mr. Glenn O. Head and Ms. Kathryn S. Head are father and daughter.

All of the officers and Directors, except for Ms. Jones and Mr. Ganter,
hold identical or similar positions with 13 other registered investment
companies in the First Investors Family of Funds. Mr. Head is also an officer
and/or Director of First Investors Asset Management Company, Inc., First
Investors Credit Funding Corporation, First Investors Leverage Corporation,
First Investors Realty Company, Inc., First Investors Resources, Inc., N.A.K.
Realty Corporation, Real Property Development Corporation, Route 33 Realty
Corporation, First Investors Life Insurance Company, First Financial Savings
Bank, S.L.A., First Investors Credit Corporation and School Financial Management
Services, Inc. Ms. Head is also an officer and/or Director of First Investors
Life Insurance Company, First Investors Credit Corporation, School Financial
Management Services, Inc., First Investors Credit Funding Corporation, N.A.K.
Realty Corporation, Real Property Development Corporation, First Investors
Leverage Corporation and Route 33 Realty Corporation.

The following table lists compensation paid to the Directors of HIGH YIELD
FUND for the fiscal year ended December 31, 1995.

<PAGE>

<TABLE>
<CAPTION>
TOTAL
COMPENSATION
PENSION OR ESTIMATED FROM FIRST
AGGREGATE RETIREMENT BENEFITS ANNUAL INVESTORS FAMILY
COMPENSATION ACCRUED AS PART OF BENEFITS UPON OF FUNDS
DIRECTOR FROM FUND* FUND EXPENSES RETIREMENT PAID TO DIRECTORS*
-------- ------------ -------------------- -------------- ------------------
<S> <C> <C> <C> <C>

James J. Coy $4,200 $-0- $-0- $37,200
Roger L. Grayson -0- -0- -0- -0-
Glenn O. Head -0- -0- -0- -0-
Kathryn S. Head -0- -0- -0- -0-
F. William Ortman, Jr.** 1,750 -0- -0- 15,500
Rex R. Reed 4,200 -0- -0- 37,200
Herbert Rubinstein 4,200 -0- -0- 37,200
James M. Srygley*** 4,200 -0- -0- 37,200
John T. Sullivan -0- -0- -0- -0-
Robert F. Wentworth 4,200 -0- -0- 37,200

</TABLE>

The following table lists compensation paid to the Directors of INCOME FUND
for the fiscal year ended December 31, 1995.

TOTAL
COMPENSATION
PENSION OR ESTIMATED FROM FIRST
AGGREGATE RETIREMENT BENEFITS ANNUAL INVESTORS FAMILY
COMPENSATION ACCRUED AS PART OF BENEFITS UPON OF FUNDS
DIRECTOR FROM FUND* FUND EXPENSES RETIREMENT PAID TO DIRECTORS*
-------- ------------ ------------------- ----------- ------------------
<S> <C> <C> <C> <C>

</TABLE>

* Compensation to officers and interested Directors of the Funds is paid by
the Adviser. In addition, compensation to non-interested Directors of the Funds
is currently voluntarily paid by the Adviser.
** For the period January 1, 1995 through September 21, 1995.
*** For the period January 19, 1995 through December 31, 1995.

MANAGEMENT

Investment advisory services to each Fund are provided by First Investors
Management Company, Inc. pursuant to separate Investment Advisory Agreements
(each, an "Advisory Agreement") dated June 13, 1994. Each Advisory Agreement
was approved by the Board of Directors of the applicable Fund, including a
majority of the Directors who are not parties to such Fund's Advisory Agreement
or "interested persons" (as defined in the 1940 Act) of any such party
("Independent Directors"), in person at a meeting called for such purpose and by
a majority of the public shareholders of the applicable Fund.

14
<PAGE>

Pursuant to each Advisory Agreement, FIMCO shall supervise and manage each
Fund's investments, determine each Fund's portfolio transactions and supervise
all aspects of each Fund's operations, subject to review by the applicable
Fund's Directors. Each Advisory Agreement also provides that FIMCO shall
provide the applicable Fund with certain executive, administrative and clerical
personnel, office facilities and supplies, conduct the business and details of
the operation of such Fund and assume certain expenses thereof, other than
obligations or liabilities of such Fund. Each Advisory Agreement may be
terminated at any time without penalty by the applicable Fund's Directors or by
a majority of the outstanding voting securities of such Fund, or by FIMCO, in
each instance on not less than 60 days' written notice, and shall automatically
terminate in the event of its assignment (as defined in the 1940 Act). Each
Advisory Agreement also provides that it will continue in effect, with respect
to the applicable Fund, for a period of over two years only if such continuance
is approved annually either by such Fund's Directors or by a majority of the
outstanding voting securities of such Fund, and, in either case, by a vote of a
majority of such Fund's Independent Directors voting in person at a meeting
called for the purpose of voting on such approval.

Under each Advisory Agreement, the applicable Fund pays the Adviser an
annual fee, paid monthly, according to the following schedules:

HIGH YIELD FUND
Annual
Average Daily Net Assets . . . . . . . . . . . . . . . Rate
- ------------------------ ------

Up to $200 million . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00%
In excess of $200 million up to $500 million . . . . . . . . . . . . . . 0.75
In excess of $500 million up to $750 million . . . . . . . . . . . . . . 0.72
In excess of $750 million up to $1.0 billion . . . . . . . . . . . . . . 0.69
Over $1.0 billion . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.66

INCOME FUND

Annual
Average Daily Net Assets Rate
- ------------------------ ------

Up to $250 million . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.75%
In excess of $250 million up to $500 million . . . . . . . . . . . . . . 0.72
In excess of $500 million up to $750 million . . . . . . . . . . . . . . 0.69
Over $750 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.66

For the fiscal years ended December 31, 1993, 1994 and 1995, HIGH YIELD
FUND paid the Adviser $1,911,571, $1,735,499 (net of waiver of $66,131) and
$1,634,213 (net of waiver of $181,579), respectively, in advisory fees. For the
fiscal years ended December 31, 1993, 1994 and 1995, INCOME FUND paid the
Adviser $3,130,066, $3,060,320 and $3,083,269, respectively, in advisory fees.

Pursuant to certain state regulations, the Adviser has agreed to reimburse
a Fund if and to the extent that Fund's aggregate operating and management
expenses, including advisory fees but generally excluding interest, taxes,
brokerage commissions and extraordinary expenses, exceed any limitation on
expenses applicable to that Fund for any full fiscal year (unless a waiver of
such expense limitation is obtained). The amount of any such reimbursement is
limited to the amount of the advisory fees paid or

15
<PAGE>

accrued to the Adviser for the fiscal year. For the fiscal year ended December
31, 1995, no reimbursement to either Fund was required pursuant to these
regulations.

Each Fund bears all expenses of its operations other than those incurred by
the Adviser or Underwriter under the terms of its advisory or underwriting
agreements. Fund expenses include, but are not limited to: the advisory fee;
shareholder servicing fees and expenses; custodian fees and expenses; legal and
auditing fees; expenses of communicating to existing shareholders, including
preparing, printing and mailing prospectuses and shareholder reports to such
shareholders; and proxy and shareholder meeting expenses.

The Adviser has an Investment Committee composed of George V. Ganter,
Margaret Haggerty, Glenn O. Head, Nancy W. Jones, Patricia D. Poitra, Michael
O'Keefe, Clark D. Wagner and Richard Guinnessey. The Committee usually meets
weekly to discuss the composition of the portfolio of each Fund and to review
additions to and deletions from the portfolios.

UNDERWRITER

Each Fund has entered into an Underwriting Agreement ("Underwriting
Agreement") with First Investors Corporation ("Underwriter" or "FIC") which
requires the Underwriter to use its best efforts to sell shares of the Funds.
Pursuant to each Underwriting Agreement, the Underwriter shall bear all fees and
expenses incident to the registration and qualification of the applicable Fund's
shares. In addition, the Underwriter shall bear all expenses of sales material
or literature, including prospectuses and proxy materials, to the extent such
materials are used in connection with the sale of the Fund's shares, unless the
Fund has agreed to bear such costs pursuant to a plan of distribution. See
"Distribution Plans." Each Underwriting Agreement was approved by the
applicable Fund's Board of Directors, including a majority of the Independent
Directors. Each Underwriting Agreement provides that it will continue in effect
from year to year only so long as such continuance is specifically approved at
least annually by the applicable Fund's Board of Directors or by a vote of a
majority of the outstanding voting securities of such Fund, and in either case
by the vote of a majority of such Fund's Independent Directors, voting in person
at a meeting called for the purpose of voting on such approval. Each
Underwriting Agreement will terminate automatically in the event of its
assignment.

For the fiscal years ended December 31, 1993, 1994 and 1995, FIC received
underwriting commissions with respect to HIGH YIELD FUND of $64,157, $171,682
and $310,680, respectively. For the same periods, FIC reallowed an additional
$1,382, $3,102 and $80,463, respectively, to unaffiliated dealers. For the
fiscal years ended December 31, 1993, 1994 and 1995, FIC received underwriting
commissions with respect to INCOME FUND of $236,878, $413,039 and $359,115,
respectively. For the same periods, FIC reallowed an additional $100,618,
$28,996 and $34,668, respectively, to unaffiliated dealers.

DISTRIBUTION PLANS

As stated in the Funds' Prospectus, pursuant to a separate plan of
distribution for each class of shares adopted by each Fund pursuant to Rule
12b-1 under the 1940 Act ("Class A Plan" and "Class B Plan" and,
collectively, "Plans"), each Fund may reimburse or compensate, as applicable,
the Underwriter for certain expenses incurred in the distribution of that
Fund's shares and the servicing or maintenance of existing Fund shareholder
accounts.

16
<PAGE>

Each Plan was approved by the applicable Fund's Board of Directors,
including a majority of the Independent Directors, and by a majority of the
outstanding voting securities of the relevant class of such Fund. Each Plan
will continue in effect from year to year as long as its continuance is approved
annually be either the applicable Fund's Board of Directors or by a vote of a
majority of the outstanding voting securities of the relevant class of shares of
such Fund. In either case, to continue, each Plan must be approved by the vote
of a majority of the Independent Directors of the applicable Fund. Each Fund's
Board reviews quarterly and annually a written report provided by the Treasurer
of the amounts expended under the applicable Plan and the purposes for which
such expenditures were made. While each Plan is in effect, the selection and
nomination of the applicable Fund's Independent Directors will be committed to
the discretion of such Independent Directors then in office.

Each Plan can be terminated at any time by a vote of a majority of the
applicable Fund's Independent Directors or by a vote of a majority of the
outstanding voting securities of the relevant class of shares of such Fund. Any
change to the Class B Plan that would materially increase the costs to that
class of shares of a Fund or any material change to the Class A Plan may not be
instituted without the approval of the outstanding voting securities of the
relevant class of shares of such Fund. Such changes also require approval by a
majority of the applicable Fund's Independent Directors.

In reporting amounts expended under the Plans to the Directors, FIMCO will
allocate expenses attributable to the sale of each class of a Fund's shares to
such class based on the ratio of sales of such class to the sales of both
classes of shares. The fees paid by one class of a Fund's shares will not be
used to subsidize the sale of any other class of the Fund's shares.

For the fiscal year ended December 31, 1995, HIGH YIELD FUND and INCOME
FUND paid $271,716 and $625,437, respectively, pursuant to their respective
Class A Plan. For the same period, the Underwriter incurred the following Class
A Plan-related expenses with respect to each Fund:

HIGH YIELD INCOME
FUND FUND
------ ----------
Advertising $0 $0
Payments to Sales Personnel* $ 83,004 $182,654
Compensation to Underwriter** $188,712 $442,783

* Represents service fees
** Represents distribution fees

For the fiscal year ended December 31, 1995, HIGH YIELD FUND and INCOME
FUND paid $3,697 and $7,283, respectively, pursuant to their respective Class B
Plan. With respect to the Class B Plans, all amounts were paid to the
Underwriter as distribution fees.

DETERMINATION OF NET ASSET VALUE

Except as provided herein, 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 market system where the security is primarily traded, and lacking
any sales on a particular day, the security is valued at the mean between the
closing bid and asked prices on that day. Each security traded in the market
(including securities listed on exchanges whose primary market is believed to be
OTC) is valued at the mean between the last bid and asked prices based upon
quotes furnished by a market maker for such securities. The U.S.

17
<PAGE>

Government securities in which the Funds invest are traded primarily in the OTC
markets. In the absence of market quotations, a Fund will determine the value
of bonds based upon quotes furnished by market makers, if available, or in
accordance with the procedures described herein. In that connection, the Boards
of Directors have determined that a Fund may use an outside pricing service.
The pricing service uses quotations obtained from investment dealers or brokers
for the particular securities being evaluated, information with respect to
market transactions in comparable securities and other available information in
determining value. This service is furnished by Interactive Data Corporation.
Short-term debt securities that mature in 60 days or less are valued at
amortized cost if their original term to maturity from the date of purchase was
60 days or less, or by amortizing their value on the 61st day prior to maturity
if their term to maturity from the date of purchase exceeded 60 days, unless the
Board of Directors determines that such valuation does not represent fair value.
Securities for which market quotations are not readily available are valued at
fair value as determined in good faith by or under the direction of a Fund's
officers in a manner specifically authorized by the Board of Directors of that
Fund.

"When-issued securities" are reflected in the assets of the Fund as of the
date the securities are purchased. Such investments are valued thereafter at
the mean between the most recent bid and asked prices obtained from recognized
dealers in such securities. For valuation purposes, quotations of foreign
securities in foreign currencies are converted into U.S. dollar equivalents
using the foreign exchange equivalents in effect.

Each Fund's Board of Directors may suspend the determination of a Fund's
net asset value per share separately for each class of shares for the whole or
any part of any period (1) during which trading on the New York Stock Exchange
("NYSE") is restricted as determined by the SEC or the NYSE is closed for other
than weekend and holiday closings, (2) during which an emergency, as defined by
rules of the SEC in respect to the U.S. market, exists as a result of which
disposal by a Fund of securities owned by it is not reasonably practicable for
the Fund fairly to determine the value of its net assets, or (3) for such other
period as the SEC has by order permitted.

ALLOCATION OF PORTFOLIO BROKERAGE

Purchases and sales of portfolio securities by a Fund may be principal
transactions. In principal transactions, portfolio securities are normally
purchased directly from the issuer or from an underwriter or market maker for
the securities. There will usually be no brokerage commissions paid by a Fund
for such purchases. Purchases from underwriters will include the underwriter's
commission or concession and purchases from dealers serving as market makers
will include the spread between the bid and asked price.

Each Fund may deal in securities which are not listed on a national
securities exchange or the Nasdaq national market system but are traded in the
OTC market. Each Fund also may purchase listed securities through the "third
market." When transactions are executed in the OTC market, each Fund seeks to
deal with the primary market makers, but when advantageous it utilizes the
services of brokers.

In effecting portfolio transactions, the Adviser seeks best execution of
trades either (1) at the most favorable and competitive rate of commission
charged by any broker or member of an exchange, or (2) with respect to agency
transactions, at a higher rate of commission if reasonable in relation to
brokerage and research services provided to a Fund or the Adviser by such member
or broker. Such services may include, but are not limited to, any one or more
of the following: information as to the availability of securities for purchase
or sale and statistical or factual information or opinions pertaining to
investments. The Adviser may use research and services provided to it by
brokers in servicing all the

18
<PAGE>

funds in the First Investors Group of Funds; however, not all such services may
be used by the Adviser in connection with a Fund. No portfolio orders are
placed with an affiliated broker, nor does any affiliated broker-dealer
participate in these commissions.

The Adviser may combine transaction orders placed on behalf of a Fund and
any other Fund in the First Investors Group of Funds, any fund of Executive
Investors Trust and First Investors Life Insurance Company, affiliates of the
Funds, for the purpose of negotiating brokerage commissions or obtaining a more
favorable transaction price; and where appropriate, securities purchased or sold
may be allocated, in terms of price and amount, to a Fund according to the
proportion that the size of the transaction order actually placed by a Fund
bears to the aggregate size of the transaction orders simultaneously made by
other participants in the transaction.

For the fiscal year ended December 31, 1993, HIGH YIELD FUND paid $30,860
in brokerage commissions. Of that amount, $22,306 was paid in brokerage
commissions to brokers who furnished research services on portfolio transactions
in the amount of $5,651,721. For the fiscal year ended December 31, 1993,
INCOME FUND paid $29,024 in brokerage commissions. Of that amount $15,520 was
paid in brokerage commissions to brokers who furnished research services on
portfolio transactions in the amount of $1,957,960. For the fiscal year ended
December 31, 1994, HIGH YIELD FUND paid $2,312 in brokerage commissions. Of
that amount $2,187 was paid in brokerage commissions to brokers who furnished
research services on portfolio transactions in the amount of $264,375. For the
fiscal year ended December 31, 1994, INCOME FUND did not pay brokerage
commissions.

For the fiscal year ended December 31, 1995, HIGH YIELD FUND paid $1,117 in
brokerage commissions, all of which was paid to brokers who furnished research
services on portfolio transactions in the amount of $475,388. For the fiscal
year ended December 31, 1995, INCOME FUND paid $4,860 in brokerage commissions,
all of which was paid to brokers who furnished research services on portfolio
transactions in the amount of $798,496.

REDUCED SALES CHARGES, ADDITIONAL EXCHANGE AND
REDEMPTION INFORMATION AND OTHER SERVICES

REDUCED SALES CHARGES--CLASS A SHARES

Reduced sales charges are applicable to purchases made at one time of Class
A shares of any one or more of the Funds or of any one or more of the Eligible
Funds, as defined in the Prospectus, by "any person," which term shall include
an individual, or an individual's spouse and children under the age of 21, or a
trustee or other fiduciary of a single trust, estate or fiduciary account
(including a pension, profit-sharing or other employee benefit trust created
pursuant to a plan qualified under section 401 of the Internal Revenue Code of
1986, as amended (the "Code")), although more than one beneficiary is involved;
provided, however, that the term "any person" shall not include a group of
individuals whose funds are combined, directly or indirectly, for the purchase
of redeemable securities of a registered investment company, nor shall it
include a trustee, agent, custodian or other representative of such a group of
individuals.

Ownership of Class A and Class B shares of any Eligible Fund, except as
noted below, qualify for a reduced sales charge on the purchase of Class A
shares. Class A shares purchased at net asset value, Class A shares of the
Money Market Funds, or shares owned under a Contractual Plan are not eligible
for

19
<PAGE>

the purchase of Class A shares of a Fund at a reduced sales charge through a
Letter of Intent or the Cumulative Purchase Privilege.

LETTER OF INTENT. Any of the eligible persons described above may, within
90 days of their investment, sign a statement of intent ("Letter of Intent") in
the form provided by the Underwriter, covering purchases of Class A shares of
any one or more of the Funds and of the other Eligible Funds to be made within a
period of thirteen months, provided said shares are currently being offered to
the general public and only in those states where such shares may be legally
sold, and thereby become eligible for the reduced sales charge applicable to the
total amount purchased. A Letter of Intent filed after the date of investment
is considered retroactive to the date of investment for determination of the
thirteen-month period. The Letter of Intent is not a binding obligation on
either the investor or the Fund. During the term of a Letter of Intent,
Administrative Data Management Corp. ("Transfer Agent") will hold Class A shares
representing 5% of each purchase in escrow, which shares will be released upon
completion of the intended investment.

Purchases of Class A Shares made under a Letter of Intent are made at the
sales charge applicable to the purchase of the aggregate amount of shares
covered by the Letter of Intent as if they were purchased in a single
transaction. The applicable quantity discount will be based on the sum of the
then current public offering price (I.E., net asset value plus applicable sales
charge) of all Class A shares and the net asset value of all Class B shares of a
Fund and of the other Eligible Funds, including Class B shares of the Money
Market Funds, currently owned, together with the aggregate offering price of
purchases to be made under the Letter of Intent. If all such shares are not so
purchased, a price adjustment is made, depending upon the actual amount invested
within such period, by the redemption of sufficient Class A shares held in
escrow in the name of the investor (or by the investor paying the commission
differential). A Letter of Intent can be amended (1) during the thirteen-month
period if the purchaser files an amended Letter of Intent with the same
expiration date as the original Letter of Intent, or (2) automatically after the
end of the period, if total purchases credited to the Letter of Intent qualify
for an additional reduction in the sales charge. The Letter of Intent privilege
may be modified or terminated at any time by the Underwriter.

CUMULATIVE PURCHASE PRIVILEGE. Upon written notice to FIC, Class A shares
of a Fund are also available at a quantity discount on new purchases if the then
current public offering price (I.E., net asset value plus applicable sales
charge) of all Class A shares and the net asset value of all Class B shares of a
Fund and of the other Eligible Funds, including Class B shares of the Money
Market Funds, previously purchased and then owned, plus the value of Class A
shares being purchased at the current public offering price, amount to $25,000
or more. Such quantity discounts may be modified or terminated at any time by
the Underwriter.

PURCHASE OF SHARES. When you open a Fund account, you must specify which
class of shares you wish to purchase. If not, your order will be processed as
follows: (1) if you are opening an account with a new registration with First
Investors your order will not be processed until the Fund receives notification
of which class of shares to purchase; (2) if you have existing First Investors
accounts solely in either Class A shares or Class B shares with the identical
registration, your investment in the Fund will be made in the same class of
shares as your existing account(s); (3) if you are an existing First Investors
shareholder and own a combination of Class A and Class B shares with an
identical registration, your investment in the Fund will be made in Class B
shares; and (4) if you own in the aggregate at least $250,000 in any combination
of classes, your investment will be made in Class A shares.

20
<PAGE>

SYSTEMATIC INVESTING

FIRST INVESTORS MONEY LINE. This service allows you to invest in a Fund
through automatic deductions from your bank checking account. Scheduled
investments in the minimum amount of $50 may be made on a bi-weekly, semi-
monthly, monthly, quarterly, semi-annual or annual basis. Shares of the Fund
are purchased at the public offering price determined at the close of business
on the day your designated bank account is debited and a confirmation will be
sent to you after every transaction. You may change the amount or discontinue
this service at any time by calling Shareholder Services or writing to
Administrative Data Management Corp., 581 Main Street, Woodbridge, NJ 07095-
1198, Attn: Control Dept. Money Line application forms are available from your
Representative or by calling Shareholder Services at 1-800-423-4026.

AUTOMATIC PAYROLL INVESTMENT. You also may arrange for automatic
investments in the minimum amount of $50 into a Fund on a systematic basis
through salary deductions, provided your employer has direct deposit
capabilities. Shares of the Fund are purchased at the public offering price
determined as of the close of business on the day the electronic fund transfer
is received by the Fund, and a confirmation will be sent to you after every
transaction. You may change the amount or discontinue the service by contacting
your employer. An application is available from your Representative or by
calling Shareholder Services at 1-800-423-4026. Arrangements must also be made
with your employer's payroll department.

CROSS-INVESTMENT OF CASH DISTRIBUTIONS. You may elect to invest in Class A
shares of a Fund at net asset value all the cash distributions from the same
class of shares of another Eligible Fund. The investment will be made at the
net asset value per share of the Fund, generally determined as of the close of
business, on the business day immediately following the record date of any such
distribution. You may also elect to invest cash distributions of a Fund's Class
A shares into the same class of another Eligible Fund, including the Money
Market Funds. If your distributions are to be invested in a new account, you
must invest a minimum of $50 per month. See "Dividends and Other Distributions"
in the Prospectus. To arrange for cross-investing, call Shareholder Services at
1-800-423-4026.

INVESTMENT OF SYSTEMATIC WITHDRAWAL PLAN PAYMENTS. You may elect to invest
in Class A shares of a Fund at net asset value through payments from a
Systematic Withdrawal Plan you maintain with any other Eligible Fund. Scheduled
investments may be made on a monthly, quarterly, semi-annual or annual basis.
You may also elect to invest Systematic Withdrawal Plan payments of Class A
shares from a Fund into the same class of another Eligible Fund, including the
Money Market Funds. If your Systematic Withdrawal Payments are to be invested
in a new account, you must invest a minimum of $50 per month. See "Systematic
Withdrawal Plan," below. To arrange for Systematic Withdrawal Plan investments,
call Shareholder Services at 1-800-423-4026.

SYSTEMATIC WITHDRAWAL PLAN. Shareholders who own noncertificated shares
may establish a Systematic Withdrawal Plan ("Withdrawal Plan"). If you have a
Fund account with a value of at least $5,000, you may elect to receive monthly,
quarterly, semi-annual or annual checks for any designated amount (minimum $25).
You may have the payments sent directly to you or persons you designate.
Regardless of the amount of your Fund account, you may also elect to the have
the Systematic Plan payments automatically (i) invested at net asset value in
shares of the same class of any other Eligible Fund, including the Money Market
Funds, or (ii) paid to First Investors Life Insurance Company for the purchase
of a life insurance policy or a variable annuity. If your Systematic Plan
payments are to be invested in a new Eligible Fund account, you must invest a
minimum of $600 per year. If you own Class B shares in a non-retirement
account, your Plan payments will be subject to the applicable contingent
deferred sales charge ("CDSC"). Dividends and other distributions, if any, are
reinvested in additional

21
<PAGE>

shares of the same class of the Fund. Shareholders may add shares to the
Withdrawal Plan or terminate the Withdrawal Plan at any time. Withdrawal Plan
payments will be suspended when a distributing Fund has received notice of a
shareholder's death on an individual account. Payments may recommence upon
receipt of written alternate payment instructions and other necessary documents
from the deceased's legal representative. Withdrawal payments will also be
suspended when a payment check is returned to the Transfer Agent marked as
undeliverable by the U.S. Postal Service after two consecutive mailings.

Shareholders who own Class B shares in a retirement account may establish a
Plan and elect to receive up to 8% of the value of their account (calculated as
set forth below) each year without incurring any CDSC. Shares not subject to a
CDSC (such as shares representing reinvestment of distributions) will be
redeemed first and will count toward the 8% limitation. If the shares not
subject to a CDSC are insufficient for this purpose, then shares subject to the
lowest CDSC will be redeemed next until the 8% limit is reached. The 8% figure
is calculated on a pro rata basis at the time of the first payment made pursuant
to the Plan and recalculated thereafter on a pro rata basis at the time of each
Plan payment. Therefore, shareholders who have chosen the Plan based on a
percentage of the value of their account of up to 8% will be able to receive
Plan payments without incurring a CDSC. However, shareholders who have chosen a
specific dollar amount (for example, $100 per month) for their periodic Plan
payment should be aware that the amount of that payment not subject to a CDSC
may vary over time depending on the value of their account. For example, if the
value of the account is $15,000 at the time of payment, the shareholder will
receive $100 free of the CDSC (8% of $15,000 divided by 12 monthly payments).
However, if at the time of a payment the value of the account has fallen to
$14,000, the shareholder will receive $93.33 free of any CDSC (8% of $14,000
divided by 12 monthly payments) and $6.67 subject to the lowest applicable CDSC.
This privilege may be revised or terminated at any time.

The withdrawal payments derived from the redemption of sufficient shares in
the account to meet designated payments in excess of dividends and other
distributions may deplete or possibly extinguish the initial investment,
particularly in the event of a market decline, and may result in a capital gain
or loss depending on the shareholder's cost. Purchases of additional shares of
a Fund concurrent with withdrawals are ordinarily disadvantageous to
shareholders because of tax liabilities and sales charges. To establish a
Withdrawal Plan, call Shareholder Services at 1-800-423-4026.

ELECTRONIC FUNDS TRANSFER. Fund shares will be purchased on the day the
Fund receives the funds, which is normally two days after the electronic funds
transfer is initiated. The electronic transfer normally will be initiated on
the next bank business day after the redemption request is received and will
ordinarily be received by the predesignated bank account within two days after
transmission. However, once the funds are transmitted, the time of receipt and
the availability of the funds are not within the Funds' control. No dividends
are paid on the proceeds of redeemed shares awaiting electronic transmittal.

CONVERSION OF CLASS B SHARES. Class B Shares of a Fund will automatically
convert to Class A shares of that Fund, based on the relative net asset values
per share of the two classes, as of the close of business on the first business
day of the month in which the eighth anniversary of the initial purchase of such
Class B shares occurs. For these purposes, the date of initial purchase shall
mean (1) the first business day of the month in which such Class B shares were
issued, or (2) for Class B shares obtained through an exchange or a series of
exchanges, the first business day of the month in which the original Class B
shares were issued. For conversion purposes, Class B shares purchased through
the reinvestment of dividends and other distributions paid in respect of Class B
shares will be held in a separate sub-account. Each time any Class B shares in
the shareholder's regular account (other than those in the sub-account) convert
to Class A shares, a pro rata portion of the Class B shares in the sub-account
also will convert to Class A shares. The portion will be determined by the
ratio that the shareholder's Class B

22
<PAGE>

shares converting to Class A shares bears to the shareholder's total Class B
shares not acquired through dividends and other distributions.

The availability of the conversion feature is subject to the continuing
applicability of a ruling of the Internal Revenue Service ("IRS"), or an opinion
of counsel, that: (1) the dividends and other distributions paid on Class A and
Class B shares will not result in "preferential dividends" under the Code; and
(2) the conversion of shares does not constitute a taxable event. If the
conversion feature ceased to be available, the Class B shares of the Fund would
not be converted and would continue to be subject to the higher ongoing expenses
of the Class B shares beyond eight years from the date of purchase. FIMCO has
no reason to believe that these conditions for the availability of the
conversion feature will not continue to be met.

If either Fund implements any amendments to its Class A Plan that would
increase materially the costs that may be borne under such Plan by Class A
shareholders, a new target class into which Class B shares will convert will be
established, unless a majority of Class B shareholders, voting separately as a
class, approve the proposal.

WAIVERS OF CDSC ON CLASS B SHARES. The CDSC imposed on Class B shares does
not apply to: (a) any redemption pursuant to the tax-free return of an excess
contribution to an individual retirement account ("IRA") or other qualified
retirement plan if the Fund is notified at the time of such request; (b) any
redemption of a lump-sum or other distribution from qualified retirement plans
or accounts provided the shareholder has attained the minimum age of 70 1/2
years and has held the Class B shares for a minimum period of three years; (c)
any redemption by advisory accounts managed by the Adviser or any of its
affiliates or for shares held by the Adviser or any of its affiliates; (d) any
redemption by a tax-exempt employee benefit plan if continuance of the
investment would be improper under applicable laws or regulations; (e) any
redemption or transfer of ownership of Class B shares following the death or
disability, as defined in Section 72(m)(7) of the Code, of a shareholder if the
Fund is provided with proof of death or disability and with all documents
required by the Transfer Agent within one year after the death or disability;
and (f) any redemption of shares purchased during the period April 29, 1996
through June 30, 1996 with the proceeds from a redemption of shares of a fund in
another fund group for which no sales charge was paid, other than a money market
fund or shares held in a retirement plan account. For more information on what
specific documents are required, call Shareholder Services at 1-800-423-4026.

SIGNATURE GUARANTEES. The words "Signature Guaranteed" must appear in
direct association with the signature of the guarantor. Members of the STAMP
(Securities Transfer Agents Medallion Program), MSP (New York Stock Exchange
Medallion Signature Program), SEMP (Stock Exchanges Medallion Program) and FIC
are eligible signature guarantors. Although each Fund reserves the right to
require signature guarantees at any other time, signature guarantees are
required whenever: (1) the amount of the redemption is over $50,000, (2) an
exchange in the amount over $50,000 is made into the Money Market Funds, (3) a
redemption check is to be made payable to someone other than the registered
accountholder, other than major financial institutions, as determined solely by
the Fund and its agent, on behalf of the shareholder, (4) a redemption check is
to be mailed to an address other than the address of record, preauthorized bank
account, or to a major financial institution for the benefit of a shareholder,
(5) an account registration is being transferred to another owner, (6) a
transaction requires additional legal documentation; (7) the redemption request
is for certificated shares; (8) your address of record has changed within 60
days prior to a redemption request; (9) multiple owners have a dispute or give
inconsistent instructions; and (10) the authority of a representative of a
corporation, partnership, association or other entity has not been established
to the satisfaction of a Fund or its agents. ERISA Title I 403(b) Plans and

23
<PAGE>

401(k) Plans are exempt from the signature guarantee requirement except for
exchanges or redemption in amounts greater than $50,000.

REINVESTMENT AFTER REDEMPTION. If you redeem Class A or Class B shares in
your Fund account, you can reinvest within six months from the date of
redemption all or any part of the proceeds in shares of the same class of the
same Fund or any other Eligible Fund (including the Money Market Funds), at net
asset value, on the date the Transfer Agent receives your purchase request. If
you reinvest the entire proceeds of a redemption of Class B shares for which a
CDSC has been paid, you will be credited for the amount of the CDSC. If you
reinvest less than the entire proceeds, you will be credited with a pro rata
portion of the CDSC. All credits will be paid in Class B shares of the fund
into which the reinvestment is being made. The period you owned the original
Class B shares prior to redemption will be added to the period of time you own
Class B shares acquired through reinvestment for purposes of determining (a) the
applicable CDSC upon a subsequent redemption and (b) the date on which Class B
shares automatically convert to class A shares. If your reinvestment is into a
new account, other than the Money Market Funds, it must meet the minimum
investment and other requirements of the fund into which the reinvestment is
being made. If you reinvest into a new Money Market Fund within one year from
the date of redemption, the minimum investment is $500. To take advantage of
this option, send your reinvestment check along with a written request to the
Transfer Agent within six months from the date of your redemption. Include your
account number and a statement that you are taking advantage of the
"Reinvestment Privilege."

TELEPHONE TRANSACTIONS. Fund shares not held in certificate form may be
exchanged or redeemed by telephone provided you have not declined telephone
privileges. For corporations, partnerships, trusts and certain other accounts,
additional documents are required to activate telephone privileges. Telephone
exchanges are available between nonretirement accounts and between IRA and
403(b) accounts of the same class of shares registered in the same name.
Telephone exchanges are also available from an individually registered
nonretirement account to an IRA account of the same class of shares in the same
name (provided an IRA application is on file). Telephone exchanges are not
available for exchanges of Fund shares for plan units.

As stated in the Funds' Prospectus, the Funds, the Adviser, the Underwriter
and their officers, directors and employees will not be liable for any loss,
damage, cost or expense arising out of any instruction (or any interpretation of
such instruction) received by telephone which they reasonably believe to be
authentic. In acting upon telephone instructions, these parties use procedures
which are reasonably designed to ensure that such instructions are genuine, such
as (1) obtaining some or all of the following information: account number,
address, social security number and such other information as may be deemed
necessary; (2) recording all telephone instructions; and (3) sending written
confirmation of each transaction to the shareholder's address of record.

RETIREMENT PLANS

PROFIT-SHARING/MONEY PURCHASE PENSION/401(k) PLANS. FIC offers prototype
Profit-Sharing, Money Purchase Pension and Code section 401(k) Retirement Plans
("Retirement Plans") approved by the IRS for corporations, sole proprietorships
and partnerships. The Custodial Agreement for such a Money Purchase Pension and
Profit-Sharing Retirement Plan provides that First Financial Savings Bank,
S.L.A. ("First Financial Savings"), an affiliate of FIC, will furnish all
required custodial services.

FIC offers additional versions of prototype qualified retirement plans for
eligible employers, including 401(k), money purchase, profit-sharing and target
benefit plans.

24
<PAGE>

Currently, there are no annual service fees chargeable to participants in
connection with a Retirement Plan account. Participants are, however, charged
$5.00 for opening a Retirement Plan account, other than a 401(k) Retirement Plan
account. Each Fund currently pays the annual $10.00 custodian fee for each
Retirement Plan account, if applicable, maintained with such Fund. This policy
may be changed at any time by a Fund on 45 days' written notice. First
Financial Savings has reserved the right to waive its fees at any time or to
change the fees on 45 days' prior written notice.

The Retirement Plan documents contain further specific information about
the Retirement Plans and may be obtained from your Representative. Prior to
establishing a Retirement Plan, you are advised to consult with your legal and
tax advisers.

INDIVIDUAL RETIREMENT ACCOUNTS. A qualified individual may purchase shares
of a Fund through an IRA or, as an employee of a qualified employer, through a
simplified employee pension-IRA ("SEP-IRA") or a salary reduction simplified
employee pension-IRA ("SARSEP-IRA") furnished by FIC. Under the related
Custodial Agreements, First Financial Savings acts as custodian of each of these
retirement plans.

The Funds offer IRA accounts with specific provisions tailored to meet the
needs of certain groups of investors. The custodian fees are disclosed in the
IRA documents provided to investors in such accounts.

A taxpayer generally may make an annual IRA contribution no greater than
the lesser of (a) 100% of his or her compensation or (b) $2,000 (or $2,250 when
also contributing to a spousal IRA). However, contributions are deductible only
under certain conditions. The requirements as to SEP-IRAs and SARSEP-IRAs are
described in IRS Forms 5305-SEP and 5305A-SEP, respectively, which are provided
to employers. Employers are required to provide copies of these forms to their
eligible employees. A disclosure statement setting forth complete details of
the IRA should be given to each participant before the contribution is invested.

Currently, there are no annual service fees chargeable to a participant in
connection with an IRA, SEP-IRA or SARSEP-IRA. Each Fund currently pays the
annual $10.00 custodian fee for each IRA account maintained with such Fund.
This policy may be changed at any time by a Fund on 45 days' written notice to
the holder of any IRA, SEP-IRA or SARSEP-IRA. First Financial Savings has
reserved the right to waive its fees at any time or to change the fees on 45
days' prior written notice to the holder of any IRA.

An application and other documents necessary to establish an IRA, SEP-IRA
or SARSEP-IRA, are available from your Representative. Prior to establishing
an IRA, SEP-IRA or SARSEP-IRA, you are advised to consult with your legal and
tax advisers.

RETIREMENT BENEFIT PLANS FOR EMPLOYEES OF ELIGIBLE ORGANIZATIONS. FIC
makes available model custodial accounts under Section 403(b)(7) of the Code
("Custodial Accounts") to provide retirement benefits for employees of certain
eligible public educational institutions and other eligible non-profit
charitable, religious and humane organizations. The Custodial Accounts are
designed to permit contributions (up to a "maximum exclusion allowance") by
employees through salary reduction. First Financial Savings acts as custodian
of these accounts.

Contributions may be made to a Custodial Account under the Optional
Retirement Program for Employees of Texas Institutions of Higher Education
("ORP"), either by salary reduction agreement or

25
<PAGE>

otherwise, in accordance with the terms and conditions of the ORP, and under the
Texas Deferred Compensation Plan Program for eligible state employees by salary
reduction agreement.

Currently, there are no annual service fees chargeable to participants in
connection with a Custodial Account. Each Fund currently pays the annual $10.00
custodian fee for each Custodial Account maintained with such Fund. This policy
may be changed at any time by a Fund on 45 days' written notice to a Custodial
Account participant. First Financial Savings has reserved the right to waive
its fees at any time or to change the fees on 45 days' prior written notice to a
Custodial Account participant.

An application and other documents necessary to establish a Custodial
Account are available from your Representative. Persons desiring to create a
Custodial Account are advised to confer with their legal and tax advisers
concerning the specifics of this type of retirement benefit plan.

Mandatory income tax withholding, at the rate of 20%, may be required on
"eligible rollover" distributions made from any of the foregoing retirement
plans (other than IRAs, including SEP-IRAs and SARSEP-IRAs). If the recipient
elects to directly transfer an eligible rollover distribution to an "eligible
retirement plan" that permits acceptance of such distributions, no withholding
will apply. For distributions that are not "eligible rollover" distributions,
the recipient can elect, in writing, not to require any withholding. This
election must be submitted immediately before, or must accompany, the
distribution request. The amount, if any, of any such optional withholding
depends on the amount and type of the distribution. Appropriate election forms
are available from the Custodian or Shareholder Services. Other types of
withholding nonetheless may apply.

DISTRIBUTION FEES. A participant/shareholder's account under any of the
foregoing retirement plans (including IRAs) may be charged a distribution fee
(at the time of withdrawal) of $7.00 for a single distribution of the entire
account and $1.00 for each periodic distribution therefrom.

TAXES

Each Fund is treated as a separate corporation for Federal income tax
purposes. In order to continue to qualify for treatment as a regulated
investment company ("RIC") under the Code, a Fund must distribute to its
shareholders for each taxable year at least 90% of its investment company
taxable income (consisting generally of net investment income, net short-term
capital gain and net gains from certain foreign currency transactions)
("Distribution Requirement") and must meet several additional requirements. For
each Fund these requirements include the following: (1) the Fund must derive at
least 90% of its gross income each taxable year from dividends, interest,
payments with respect to securities loans and gains from the sale or other
disposition of securities or foreign currencies, or other income (including
gains from futures contracts) derived with respect to its business of investing
in securities or those currencies ("Income Requirement"); (2) the Fund must
derive less than 30% of its gross income each taxable year from the sale or
other disposition of securities, or any of the following, that were held for
less than three months -- futures contracts or foreign currencies that are not
directly related to the Fund's principal business of investing in securities (or
futures with respect thereto) ("Short-Short Limitation"); (3) at the close of
each quarter of the Fund's taxable year, at least 50% of the value of its total
assets must be represented by cash and cash items, U.S. Government securities,
securities of other RICs and other securities, with those other securities
limited, in respect of any one issuer, to an amount that does not exceed 5% of
the value of the Fund's total assets and that does not represent more than 10%
of the issuer's outstanding voting securities; and (4) at the close of each
quarter of the Fund's taxable year, not more than

26
<PAGE>

25% of the value of its total assets may be invested in securities (other than
U.S. Government securities or the securities of other RICs) of any one issuer.

Dividends and other distributions declared by a Fund in October, November
or December of any year and payable to shareholders of record on a date in any
of those months are deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.

Each Fund will be subject to a nondeductible 4% excise tax ("Excise Tax")
to the extent it fails to distribute by the end of any calendar year
substantially all of its ordinary income for that year and capital gain net
income for the one-year period ending on October 31 of that year, plus certain
other amounts.

A portion of the dividends from a Fund's investment company taxable income
may be eligible for the dividends-received deduction allowed to corporations.
The eligible portion may not exceed the aggregate dividends received by a Fund
from U.S. corporations. However, dividends received by a corporate shareholder
and deducted by it pursuant to the dividends-received deduction are subject
indirectly to the Federal alternative minimum tax. Although each Fund is
authorized to hold equity securities, it is expected that any dividend income
received by either Fund will be minimal; accordingly, very little, if any, of
the distributions made by the Funds will be eligible for the dividends-received
deduction.

If shares of a Fund are sold at a loss after being held for six months or
less, the loss will be treated as long-term, instead of short-term, capital loss
to the extent of any capital gain distributions received on those shares.

Dividends and interest received by a Fund may be subject to income,
withholding or other taxes imposed by foreign countries that would reduce the
yield on its securities. Tax conventions between certain countries and the
United States may reduce or eliminate these foreign taxes, however, and many
foreign countries do not impose taxes on capital gains in respect of investments
by foreign investors.

Each Fund may acquire zero coupon securities issued with original issue
discount. As a holder of those securities, each such Fund must include in its
income the original issue discount that accrues on the securities during the
taxable year, even if it receives no corresponding payment on them during the
year. Similarly, each such Fund must include in its gross income securities it
receives as "interest" on pay-in-kind securities. Because each Fund annually
must distribute substantially all of its investment company taxable income,
including any original issue discount and other non-cash income, to satisfy the
Distribution Requirement and avoid imposition of the Excise Tax, either Fund may
be required in a particular year to distribute as a dividend an amount that is
greater than the total amount of cash it actually receives. Those distributions
will be made from a Fund's cash assets or from the proceeds of sales of
portfolio securities, if necessary. A Fund may realize capital gains or losses
from those sales, which would increase or decrease its investment company
taxable income and/or net capital gain. In addition, any such gains may be
realized on the disposition of securities held for less than three months.
Because of the Short-Short Limitation, any such gains would reduce a Fund's
ability to sell other securities or futures contracts or foreign currency
positions, held for less than three months that it might wish to sell in the
ordinary course of its portfolio management.

27
<PAGE>

The use of hedging strategies, such as selling (writing) and purchasing
futures contracts, involves complex rules that will determine for income tax
purposes the character and timing of recognition of the gains and losses HIGH
YIELD FUND realizes in connection therewith. Gains from futures contracts
derived by the Fund with respect to its business of investing in securities or
foreign currencies will qualify as permissible income under the Income
Requirement. However, income from the Fund's disposition of futures contracts
will be subject to the Short-Short Limitation if they are held for less than
three months.

If a HIGH YIELD FUND satisfies certain requirements, then any increase in
value of a position that is part of a "designated hedge" will be offset by any
decrease in value (whether realized or not) of the offsetting hedging position
during the period of the hedge for purposes of determining whether the Fund
satisfies the Short-Short Limitation. Thus, only the net gain (if any) from the
designated hedge will be included in gross income for purposes of that
limitation. The Fund intends that, when it engages in hedging strategies, it
will qualify for this treatment, but at the present time it is not clear whether
this treatment will be available for all of the Fund's hedging transactions. To
the extent this treatment is not available, the Fund may be forced to defer the
closing out of certain futures contracts and foreign currency positions beyond
the time when it otherwise would be advantageous to do so, in order for the Fund
to continue to qualify as a RIC.

PERFORMANCE INFORMATION

A Fund may advertise its performance in various ways.

Each Fund's "average annual total return" ("T") is an average annual
compounded rate of return. The calculation produces an average annual total
return for the number of years measured. It is the rate of return based on
factors which include a hypothetical initial investment of $1,000 ("P") over a
number of years ("n") with an Ending Redeemable Value ("ERV") of that
investment, according to the following formula:

T=[(ERV/P)1/n]-1

The "total return" uses the same factors, but does not average the rate of
return on an annual basis. Total return is determined as follows:

[ERV-P]/P = TOTAL RETURN

Total return is calculated by finding the average annual change in the
value of an initial $1,000 investment over the period. In calculating the
ending redeemable value for Class A shares, each Fund will deduct the maximum
sales charge of 6.25% (as a percentage of the offering price) from the initial
$1,000 payment and, for Class B shares, the applicable CDSC imposed on a
redemption of Class B shares held for the period is deducted. All dividends and
other distributions are assumed to have been reinvested at net asset value on
the initial investment ("P").

Return information may be useful to investors in reviewing a Fund's
performance. However, certain factors should be taken into account before using
this information as a basis for comparison with alternative investments. No
adjustment is made for taxes payable on distributions. Return will fluctuate
over time and return for any given past period is not an indication or
representation by a Fund of future rates of return on its shares. At times, the
Adviser may reduce its compensation or assume expenses of

<PAGE>

a Fund in order to reduce the Fund's expenses. Any such waiver or reimbursement
would increase the Fund's return during the period of the waiver or
reimbursement.

Average annual return and total return computed at the public offering
price (maximum sales charge for Class A shares and applicable CDSC for Class B
shares) for the periods ended December 31, 1995 are set forth in the tables
below:

AVERAGE ANNUAL TOTAL RETURN(1)

<TABLE>
<CAPTION>
High Yield Fund(2) Income Fund(2)
--------------- -----------
Class A Shares Class B Shares Class A Shares Class B Shares
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>

One Year 11.09% N/A 11.24% N/A
Five Years 16.10 N/A 17.07 N/A
Ten Years N/A N/A 7.72 N/A
Life of Fund(3) 6.64 N/A N/A N/A
1/12/95(4) to 12/31/95 N/A 3.21% N/A 13.20%

TOTAL RETURN1

High Yield Fund(2) Income Fund(2)
--------------- -----------
Class A Shares Class B Shares Class A Shares Class B Shares
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>

One Year 11.09% N/A 11.24% N/A
Five Years 110.92 N/A 119.90 N/A
Ten Years N/A N/A 110.34 N/A
Life of Fund(3) 82.91 N/A N/A N/A
1/12/95(4) to 12/31/95 N/A 12.74% N/A 12.73%
</TABLE>

Average annual total return and total return may also be based on
investment at reduced sales charge levels or at net asset value. Any quotation
of return not reflecting the maximum sales charge will be greater than if the
maximum sales charge were used. Average annual total return and total return
computed at net asset value for the periods ended December 31, 1995 are set
forth in the tables below:

- --------------------

(1) All return figures assume the maximum sales charge of 6.25% and dividends
reinvested at net asset value. Prior to July 1, 1993, the maximum sales charge
was 6.90%. Prior to December 29, 1989, the maximum sales charge was 7.25%
for HIGH YIELD FUND and 8.50% for INCOME FUND. Prior to December 18, 1990,
HIGH YIELD FUND's dividends were paid in additional shares at the public
offering price.
(2) Certain expenses of HIGH YIELD FUND have been waived from commencement of
operations through December 31, 1995. Certain expenses of INCOME FUND have been
waived for the period February 1, 1994 through December 31, 1995.
Accordingly, return figures are higher than they would have been had such
expenses not been waived.
(3) HIGH YIELD FUND commenced operations on August 12, 1986.
(4) Commencement of offering of Class B shares.

<PAGE>

AVERAGE ANNUAL TOTAL RETURN(1)
<TABLE>
<CAPTION>
High Yield Fund(2) Income Fund(2)
--------------- -----------
Class A Shares Class B Shares Class A Shares Class B Shares
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>

One Year 18.43% N/A 18.54% N/A
Five Years 17.58 N/A 18.60 N/A
Ten Years N/A N/A 8.41 N/A
Life of Fund(3) 7.37 N/A N/A N/A
1/12/95(4) to 12/31/95 N/A 18.05% N/A 18.12%

TOTAL RETURN(1)
High Yield Fund(2) Income Fund(2)
--------------- -----------
Class A Shares Class B Shares Class A Shares Class B Shares
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>

One Year 18.43% N/A 18.54% N/A
Five Years 124.73 N/A 134.65 N/A
Ten Years N/A N/A 124.28 N/A
Life of Fund(3) 94.97 N/A N/A N/A
1/12/95(4) to 12/31/95 N/A 17.40% N/A 17.46%
</TABLE>

Yield is presented for a specified thirty-day period ("base period").
Yield is based on the amount determined by (i) calculating the aggregate amount
of dividends and interest earned by a Fund during the base period less expenses
accrued for that period (net of reimbursement), and (ii) dividing that amount by
the product of (A) the average daily number of shares of the Fund outstanding
during the base period and entitled to receive dividends and (B) the per share
maximum public offering price for Class A shares or the net asset value for
Class B shares of the Fund on the last day of the base period. The result is
annualized by compounding on a semi-annual basis to determine the Fund's yield.
For this calculation, interest earned on debt obligations held by the Fund is
generally calculated using the yield to maturity (or first expected call date)
of such obligations based on their market values (or, in the case of
receivables-backed securities such as GNMA Certificates, based on cost).
Dividends on equity securities are accrued daily at their estimated stated
dividend rates.

For the 30 days ended December 31, 1995, the yield for Class A shares and
Class B shares of HIGH YIELD FUND was 7.06% and 6.77%, respectively. For the 30
days ended December 31, 1995, the yield for Class A and Class B shares of INCOME
FUND was 7.78% and 7.60%, respectively. During this period certain expenses of
the Funds were waived. Accordingly, yield is higher than it would have been if
such expenses had not been waived.

- --------------------

(1) All return figures assume the maximum sales charge of 6.25% and dividends
reinvested at net asset value. Prior to July 1, 1993, the maximum sales charge
was 6.90%. Prior to December 29, 1989, the maximum sales charge was 7.25%
for HIGH YIELD FUND and 8.50% for INCOME FUND. Prior to December 18, 1990,
HIGH YIELD FUND's dividends were paid in additional shares at the public
offering price.
(2) Certain expenses of HIGH YIELD FUND have been waived from commencement of
operations through December 31, 1995. Certain expenses of INCOME FUND have been
waived for the period February 1, 1994 through December 31, 1995. Accordingly,
return figures are higher than they would have been had such expenses not been
waived.
(3) HIGH YIELD FUND commenced operations on August 12, 1986.
(4) Commencement of offering of Class B shares.

30
<PAGE>

The distribution rate for each Fund is presented for a twelve-month period.
It is calculated by adding the dividends for the last twelve months and dividing
the sum by a Fund's offering price per share at the end of that period. The
distribution rate is also calculated by using a Fund's net asset value.
Distribution rate calculations do not include capital gain distributions, if
any, paid. The distribution rate for the twelve-month period ended December 31,
1995 for Class A shares of HIGH YIELD FUND and INCOME FUND calculated using the
offering price was 8.63% and 8.18%, respectively. The distribution rate for the
same period for Class A shares of HIGH YIELD FUND and INCOME FUND calculated
using net asset value was 9.20% and 8.72%, respectively. The distribution rate
for the period January 12, 1995 through December 31, 1995 for Class B shares of
HIGH YIELD FUND and INCOME FUND calculated using net asset value was 8.15% and
7.95%, respectively. During this period certain expenses of the Funds were
waived. Accordingly, the distribution rates are higher than they would have
been had such expenses not been waived.

Each Fund may include in advertisements and sales literature, information,
examples and statistics to illustrate the effect of compounding income at a
fixed rate of return to demonstrate the growth of an investment over a stated
period of time resulting from the payment of dividends and capital gain
distributions in additional shares. These examples may also include
hypothetical returns comparing taxable versus tax-deferred growth which would
pertain to an IRA, section 403(b)(7) Custodial Account or other qualified
retirement program. The examples used will be for illustrative purposes only
and are not representations by the Fund of past or future yield or return.
Examples of typical graphs and charts depicting such historical performance,
compounding and hypothetical returns are included in Appendix B.

From time to time, in reports and promotional literature, each Fund may
compare its performance to, or cite the historical performance of, Overnight
Government repurchase agreements, U.S. Treasury bills, notes and bonds,
certificates of deposit, and six-month money market certificates or indices of
broad groups of unmanaged securities considered to be representative of, or
similar to, that Fund's portfolio holdings, such as:

Lipper Analytical Services, Inc. ("Lipper") is a widely-recognized
independent service that monitors and ranks the performance of regulated
investment companies. The Lipper performance analysis includes the
reinvestment of capital gain distributions and income dividends but does
not take sales charges into consideration. The method of calculating total
return data on indices utilizes actual dividends on ex-dividend dates
accumulated for the quarter and reinvested at quarter end.

Morningstar Mutual Funds ("Morningstar"), a semi-monthly publication of
Morningstar, Inc. Morningstar proprietary ratings reflect historical risk-
adjusted performance and are subject to change every month. Funds with at
least three years of performance history are assigned ratings from one star
(lowest) to five stars (highest). Morningstar ratings are calculated from
the funds' three-, five-, and ten-year average annual returns (when
available) and a risk factor that reflects fund performance relative to
three-month Treasury bill monthly returns. Fund's returns are adjusted for
fees and sales loads. Ten percent of the funds in an investment category
receive five stars, 22.5% receive four stars, 35% receive three stars,
22.5% receive two stars, and the bottom 10% receive one star.

Salomon Brothers Inc., "Market Performance," a monthly publication which
tracks principal return, total return and yield on the Salomon Brothers
Broad Investment-Grade Bond Index and the components of the Index.

31
<PAGE>

Telerate Systems, Inc., a computer system to which the Adviser subscribes
which daily tracks the rates on money market instruments, public corporate
debt obligations and public obligations of the U.S. Treasury and agencies
of the U.S. Government.

The Wall Street Journal, a daily newspaper publication which lists the
yields and current market values on money market instruments, public
corporate debt obligations, public obligations of the U.S. Treasury and
agencies of the U.S. Government as well as common stocks, preferred stocks,
convertible preferred stocks, options and commodities; in addition to
indices prepared by the research departments of such financial
organizations as Lehman Bros., Merrill Lynch, Pierce, Fenner and Smith,
Inc., First Boston, Salomon Brothers, Morgan Stanley, Goldman, Sachs & Co.,
Donaldson, Lufkin & Jenrette, Value Line, Datastream International, James
Capel, S.G. Warburg Securities, County Natwest and UBS UK Limited,
including information provided by the Federal Reserve Board, Moody's, and
the Federal Reserve Bank.

Merrill Lynch, Pierce, Fenner & Smith, Inc., "Taxable Bond Indices," a
monthly corporate government index publication which lists principal,
coupon and total return on over 100 different taxable bond indices which
Merrill Lynch tracks. They also list the par weighted characteristics of
each Index.
Lehman Brothers, Inc., "The Bond Market Report," a monthly publication
which tracks principal, coupon and total return on the Lehman Govt./Corp.
Index and Lehman Aggregate Bond Index, as well as all the components of
these Indices.

Standard & Poor's 500 Composite Stock Price Index and the Dow Jones
Industrial Average of 30 stocks are unmanaged lists of common stocks
frequently used as general measures of stock market performance. Their
performance figures reflect changes of market prices and quarterly
reinvestment of all distributions but are not adjusted for commissions or
other costs.

The Consumer Price Index, prepared by the U.S. Bureau of Labor Statistics,
is a commonly used measure of inflation. The Index shows changes in the
cost of selected consumer goods and does not represent a return on an
investment vehicle.

The NYSE composite of component indices--unmanaged indices of all
industrial, utilities, transportation, and finance stocks listed on the
NYSE.

The Russell 2500 Index, prepared by the Frank Russell Company, consists of
U.S. publicly traded stocks of domestic companies that rank from 500 to
3000 by market capitalization. The Russell 2500 tracks the return on these
stocks based on price appreciation or depreciation and does not include
dividends and income or changes in market values caused by other kinds of
corporate changes.

The Russell 2000 Index, prepared by the Frank Russell Company, consists of
U.S. publicly traded stocks of domestic companies that rank from 1000 to
3000 by market capitalization. The Russell 2000 tracks the return on these
stocks based on price appreciation or depreciation and does not include
dividends and income or changes in market values caused by other kinds of
corporate changes.

Reuters, a wire service that frequently reports on global business.

32
<PAGE>

Standard & Poor's Utilities Index is an unmanaged capitalization weighted
index comprising common stock in approximately 40 electric, natural gas
distributors and pipelines, and telephone companies. The Index assumes the
reinvestment of dividends.

Moody's Stock Index, an unmanaged index of utility stock performance.

From time to time, in reports and promotional literature, performance
rankings and ratings reported periodically in national financial publications
such as MONEY, FORBES, BUSINESS WEEK, BARRON'S, FINANCIAL TIMES and FORTUNE may
also be used. In addition, quotations from articles and performance ratings and
ratings appearing in daily newspaper publications such as THE WALL STREET
JOURNAL, THE NEW YORK TIMES and NEW YORK DAILY NEWS may be cited.

GENERAL INFORMATION

AUDITS AND REPORTS. The accounts of each Fund are audited twice a year by
Tait, Weller & Baker, independent certified public accountants, Two Penn Center
Plaza, Philadelphia, PA, 19102-1707. Shareholders of each Fund receive semi-
annual and annual reports, including audited financial statements, and a list of
securities owned.

TRANSFER AGENT. Administrative Data Management Corp., 581 Main Street,
Woodbridge, NJ 07095-1198, an affiliate of FIMCO and FIC, acts as transfer agent
for each Fund and as redemption agent for regular redemptions. The fees charged
to a Fund by the Transfer Agent are $5.00 to open an account; $3.00 for each
certificate issued; $.65 per account per month; $10.00 for each legal transfer
of shares; $.45 per account per dividend declared; $5.00 for each exchange of
shares into a Fund; $5.00 for each partial withdrawal or complete liquidation;
and $1.00 per account per report required by any governmental authority.
Additional fees charged to a Fund by the Transfer Agent are assumed by the
Underwriter. The Transfer Agent reserves the right to change the fees on prior
notice to a Fund. Upon request from shareholders, the Transfer Agent will
provide an account history. For account histories covering the most recent
three year period, there is no charge. The Transfer Agent charges a $5.00
administrative fee for each account history covering the period 1983 through
1990 and $10.00 per year for each account history covering the period 1974
through 1982. Account histories prior to 1974 will not be provided. If any
communication from the Transfer Agent to a shareholder is returned from the U.S.
Postal Service marked as "Undeliverable" two consecutive times, the Transfer
Agent will cease sending any further materials to the shareholder until the
Transfer Agent is provided with a correct address. Furthermore, if there is no
known address for a shareholder for at least one year, the Transfer Agent will
charge such shareholder's account $40 to cover the Transfer Agent's expenses in
trying to locate the shareholder's correct address. For the fiscal year ended
December 31, 1995, HIGH YIELD FUND and INCOME FUND paid $321,117 and $486,175,
respectively, in transfer agency fees. The Transfer Agent's telephone number is
1-800-423-4026.

5% SHAREHOLDERS. As of April 1, 1996, The Bank of New York, 48 Wall
Street, New York, NY 10286, Custodian of First Investors Periodic Payment Plans
for Investment in First Investors High Yield Fund, Inc., owned of record 9.1% of
the outstanding Class A shares of HIGH YIELD FUND for beneficial owners of such
Plans and as Custodian of First Investors Single Payment and Periodic Payment
Plans for Investment in First Investors Fund For Income, Inc., owned of record
27.1% of the outstanding Class A shares of INCOME FUND for beneficial owners of
such Plans.

<PAGE>

As of April 1, 1996, the following beneficially owned more than 5% of the
outstanding Class B shares of the Fund listed below:

Fund % of Shares Shareholder
- ---- ----------- -----------

High Yield Fund 5.9% Oscar B. Ladd
123 Summit Avenue
Neptune, NJ 07753-4306

6.4% Alma Dolores Jablonski
60 Hale Terr.
Bridgeport, CT 06610

7.4% William H. Ellison
P.O. Box 585705
Orlando, FL 32858-5705

8.2% Estate of Ralph Holt
Mary Holt Executrix
23 Meadow Hill Rd.
Newburgh, NY 12550

Fund For Income 5.5% Eugene E. Lutz
RD #1 Box 15A
Bloomville, NY 13739

5.6% Ann McHugh
402 Marine Avenue
Apt. 10C
Brooklyn, NY 11209

5.6% Evelyn Ferperman
2699 Caladium Drive
Atlanta, GA 30345

TRADING BY PORTFOLIO MANAGERS AND OTHER ACCESS PERSONS. Pursuant to
Section 17(j) of the 1940 Act and Rule 17j-1 thereunder, each Fund and the
Adviser have adopted Codes of Ethics restricting personal securities trading by
portfolio managers and other access persons of the Fund. Among other things,
such persons: (a) must have all non-exempt trades pre-cleared by the Adviser;
(b) are restricted from short-term trading; (c) must have duplicate statements
and transactions confirmations reviewed by a compliance officer; and (d) are
prohibited from purchasing securities of initial public offerings.

<PAGE>

APPENDIX A
DESCRIPTION OF COMMERCIAL PAPER RATINGS

STANDARD & POOR'S RATINGS GROUP

S&P's commercial paper rating is a current assessment of the likelihood of
timely payment of debt considered short-term in the relevant market. Ratings
are graded into several categories, ranging from "A-1" for the highest quality
obligations to "D" for the lowest.

A-1 This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus (+) designation.

MOODY'S INVESTORS SERVICE, INC.

Moody's short-term debt ratings are opinions of the ability of issuers to
repay punctually senior debt obligations which have an original maturity not
exceeding one year. Obligations relying upon support mechanisms such as
letters-of-credit and bonds of indemnity are excluded unless explicitly rated.

PRIME-1 Issuers (or supporting institutions) rated Prime-1 (P-1) have a
superior ability for repayment of senior short-term debt obligations. P-1
repayment ability will often be evidenced by many of the following
characteristics:

- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structure with moderate reliance
on debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial
charges and high internal cash generation.
- Well-established access to a range of financial markets and
assured sources of alternate liquidity.

35
<PAGE>

APPENDIX B

[The following tables are represented as graphs in the printed document.]

The following graphs and chart illustrate hypothetical returns:

INCREASE RETURNS

This graph shows over a period of time even a small increase in returns can make
a significant difference.

Years 10% 8% 6% 4%
----- ------- ------ ------ ------
5 16,453 14,898 13,489 12,210
10 27,070 22,196 18,194 14,908
15 44,539 33,069 24,541 18,203
20 73,281 49,268 33,102 22,226
25 120,569 73,402 44,650 27,138

INCREASE INVESTMENT

This graph shows the more you invest on a regular basis over time, the more you
can accumulate.

Years $100 $250 $500 $1,000
----- ------ ------- ------- -------
5 7,348 18,369 36,738 73,476
10 18,295 43,736 91,473 182,946
15 34,604 86,509 173,019 346,038
20 58,902 147,255 294,510 589,020
25 95,103 237,757 475,513 951,026

<PAGE>

[The following table is represented as graph in the printed document.]

This chart illustrates the time value of money based upon the following
assumptions:

If you invested $2,000 each year for 20 years, starting at 25, assuming a 9%
investment return, you would accumulate $573,443 by the time you reach age 65.
However, had you invested the same $2,000 each year for 20 years, at that rate,
but waited until age 35, you would accumulate only $242,228 - a diference of
$331,215.

25 years old .............. 533,443
35 years old .............. 202,228
45 years old .............. 62,320

For each of the above graphs and chart it should be noted that systematic
investment plans do not assume a profit or protect against loss in declining
markets. Investors should consider their financial ability to continue purchases
through periods of both high and low price levels. Figures are hypothetical and
for illustrative purposes only and do not represent any actual investment or
performance. The value of a shareholder's investment and return may vary.

<PAGE>

[The following table is represented as a chart in the printed document.]

The following chart illustrates the historical performance of the Dow Jones
Industrial Average from 1928 through 1995.

1928 .................. 300.00
1929 .................. 248.48
1930 .................. 164.58
1931 .................. 77.90
1932 .................. 59.93
1933 .................. 99.90
1934 .................. 104.04
1935 .................. 144.13
1936 .................. 179.90
1937 .................. 120.85
1938 .................. 154.76
1939 .................. 150.24
1940 .................. 131.13
1941 .................. 110.96
1942 .................. 119.40
1943 .................. 136.20
1944 .................. 152.32
1945 .................. 192.91
1946 .................. 177.20
1947 .................. 181.16
1948 .................. 177.30
1949 .................. 200.10
1950 .................. 235.40
1951 .................. 269.22
1952 .................. 291.89
1953 .................. 280.89
1954 .................. 404.38
1955 .................. 488.39
1956 .................. 499.46
1957 .................. 435.68
1958 .................. 583.64
1959 .................. 679.35
1960 .................. 615.88
1961 .................. 731.13
1962 .................. 652.10
1963 .................. 762.94
1964 .................. 874.12
1965 .................. 969.25
1966 .................. 785.68
1967 .................. 905.10
1968 .................. 943.75
1969 .................. 800.35
1970 .................. 838.91
1971 .................. 890.19
1972 .................. 1,020.01
1973 .................. 850.85
1974 .................. 616.24
1975 .................. 858.71
1976 .................. 1,004.65
1977 .................. 831.17
1978 .................. 805.01
1979 .................. 838.74
1980 .................. 963.98
1981 .................. 875.00
1982 .................. 1,046.55
1983 .................. 1,258.64
1984 .................. 1,211.56
1985 .................. 1,546.67
1986 .................. 1,895.95
1987 .................. 1,938.80
1988 .................. 2,168.60
1989 .................. 2,753.20
1990 .................. 2,633.66
1991 .................. 3,168.83
1992 .................. 3,301.11
1993 .................. 3,754.09
1994 .................. 3,834.44
1995 .................. 5,000.00

<PAGE>

[The following table is represented as a chart in the printed document.]

The following chart shows that inflation is constantly eroding the value of your
money.

THE EFFECTS OF INFLATION OVER TIME

1966 ....................... 96.61836
1967 ....................... 93.80423
1968 ....................... 89.59334
1969 ....................... 84.36285
1970 ....................... 79.88906
1971 ....................... 77.33694
1972 ....................... 74.79395
1973 ....................... 68.80768
1974 ....................... 61.27131
1975 ....................... 57.31647
1976 ....................... 54.63915
1977 ....................... 51.20820
1978 ....................... 46.98000
1979 ....................... 41.46514
1980 ....................... 36.85790
1981 ....................... 33.84564
1982 ....................... 32.60659
1983 ....................... 31.41290
1984 ....................... 30.23378
1985 ....................... 29.12696
1986 ....................... 28.81005
1987 ....................... 27.59583
1988 ....................... 26.43279
1989 ....................... 25.27035
1990 ....................... 23.81748
1991 ....................... 23.10134
1992 ....................... 22.45028
1993 ....................... 21.86006
1994 ....................... 21.28536
1995 ....................... 20.76620

1995........................ 1.00
1996........................ 1.03
1997........................ 1.06
1998 ....................... 1.09
1999 ....................... 1.13
2000 ....................... 1.16
2001 ....................... 1.19
2002 ....................... 1.23
2003 ....................... 1.27
2004 ....................... 1.30
2005 ....................... 1.34
2006 ....................... 1.38
2007 ....................... 1.43
2008 ....................... 1.47
2009 ....................... 1.51
2010 ....................... 1.56
2011 ....................... 1.60
2012 ....................... 1.65
2013 ....................... 1.70
2014 ....................... 1.75
2015 ....................... 1.81
2016 ....................... 1.86
2017 ....................... 1.92
2018 ....................... 1.97
2019 ....................... 2.03
2020 ....................... 2.09
2021 ....................... 2.16
2022 ....................... 2.22
2023 ....................... 2.29
2024 ....................... 2.36
2025 ....................... 2.43

Inflation erodes your buying power. $100 in 1966, could purchase the same amount
of goods and service as $21 in 1995.* Projecting inflation at 3%, goods and
services costing $100 today will cost $243 in the year 2025.

* Source: Consumer Price Index, U.S. Bureau of Labor Statistics.

<PAGE>

[The following tables are represented as graphs in the printed document.]

This chart illustrates that historically, the longer you hold onto stocks, the
greater chance that you will have a positive return.

1926 through 1995(1)

Total Number of Percentage of
Number of Positive Positive
Periods Periods Periods
------- ------- -------
1-Year Periods 70 50 71%
5-Year Periods 66 59 89%
10-Year Periods 61 59 97%
15-Year Periods 56 56 100%
20-Year Periods 51 51 100%

The following chart shows the compounded annual return of large company stocks
compared to U.S. Treasury Bills and inflation over the most recent 15 year
period. (2)

Compound Annual Return from 1981 -- 1995(1)

Inflation ..................... 3.93
U.S. Treasury Bills ........... 7.11
Large Company Stocks .......... 14.80

The following chart illustrates for the period shown that long-term corpoate
bonds have outpaced U.S. Treasury Bills and inflation.

Compound Annual Return from 1981 -- 1995(1)

Inflation ..................... 3.93
U.S. Treasury Bills ........... 7.11
Long-Term Corp. bonds ......... 13.46

(1) Sources: Stocks, Bonds, Bill and Inflation 1996 Yearbook, Ibbotson
Associates, Chicago.

(2) Please note that U.S. Treasury bills are guaranteed as to principal and
interest payments (although the funds that invest in them are not), while
stocks will fluctuate in share price. Although past performance cannot
guarantee future results, reeturns of U.S. Treasury bills historically have
not outpaced inflation by as great a margin as stocks.

The accompanying table illustrates that if you are in the 36% tax bracket, a
tax-free yield of 3% is actually equivalent to a taxable investment earning
4.69%.

Your Taxable Equivalent Yield

Your Federal TAx Bracket
---------------------------------------------
your tax-free yield 31.0% 36.0% 39.6%
------------------- ----- ----- -----
3.00% 4.35% 4.69% 4.97%
3.50% 5.07% 5.47% 5.79%
4.00% 5.80% 6.25% 6.62%
4.50% 6.52% 7.03% 7.45%
5.00% 7.25% 7.81% 8.25%
5.50% 7.97% 8.59% 9.11%

This information is general in nature and should not be construed as tax advice.
Please consult a tax or financial adviser as to how this information affects
your particular circumstances.

<PAGE>

Financial Statements

as of December 31, 1995

<PAGE>

Portfolio of Investments
FIRST INVESTORS HIGH YIELD FUND, INC.
December 31, 1995

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
CORPORATE BONDS -- 89.6%
Aerospace/Defense -- 1.0%
$ 1,750M Fairchild Industries, Inc., 121/4%, 1999 $ 1,863,750 $ 99
- --------------------------------------------------------------------------------------------------------------
Apparel/Textiles--1.6%
3,900M +Linter Textiles Corp., Ltd., 133/4%, 2000 29,250 2
3,000M Westpoint Stevens, Inc., 93/8%, 2005 2,955,000 157
- --------------------------------------------------------------------------------------------------------------
2,984,250 159
- --------------------------------------------------------------------------------------------------------------
Automotive--3.9%
1,500M Aftermarket Technology Corp., 12%, 2004 1,590,000 85
1,100M Lear Seating, Inc., 111/4%, 2000 1,159,125 62
2,450M SPX Corp., 113/4%, 2002 2,597,000 138
2,000M Walbro Corp., 97/8%, 2005 (Note 5) 2,000,000 107
- --------------------------------------------------------------------------------------------------------------
7,346,125 392
- --------------------------------------------------------------------------------------------------------------
Building Materials--2.5%
3,000M G-I Holdings, Inc., 0%, 1998 2,302,500 123
1,600M Waxman Industries, Inc., 133/4%, 1999 1,232,000 66
3,155M Waxman Industries, Inc., 0%-123/4%, 2004 1,230,450 66
- --------------------------------------------------------------------------------------------------------------
4,764,950 255
- --------------------------------------------------------------------------------------------------------------
Chemicals--5.6%
2,500M Harris Chemical North America, Inc., 0%-101/4%, 2001 2,425,000 129
2,175M Harris Chemical North America, Inc., 103/4%, 2003 1,995,563 106
1,000M Huntsman Corp., 11%, 2004 1,146,250 61
2,800M Rexene Corp., 113/4%, 2004 2,968,000 159
2,000M Synthetic Industries, Inc., 123/4%, 2002 1,960,000 104
- --------------------------------------------------------------------------------------------------------------
10,494,813 559
- --------------------------------------------------------------------------------------------------------------
Conglomerates--2.1%
1,255M Lexington Precision Co., Inc., 123/4%, 2000 978,900 52
5,500M Semi-Tech Corp., 0%-111/2%, 2003 2,970,000 158
- --------------------------------------------------------------------------------------------------------------
3,948,900 210
- --------------------------------------------------------------------------------------------------------------
Consumer Non-Durables--.7%
1,300M Hines Horticulture, Inc., 113/4%, 2005 (Note 5) 1,358,500 72
- --------------------------------------------------------------------------------------------------------------
Consumer Products--.8%
1,500M Herff Jones, Inc., 11%, 2005 1,605,000 85
- --------------------------------------------------------------------------------------------------------------
Containers--3.2%
5,400M Owens Illinois, Inc., 11%, 2003 6,108,750 325
- --------------------------------------------------------------------------------------------------------------
Durable Goods Manufacturing--2.4%
2,445M Fairfield Manufacturing, Inc., 113/8%, 2001 2,383,875 127
2,500M RACI Acquisition Corp., 10%, 2003 (Note 5) 2,125,000 113
- --------------------------------------------------------------------------------------------------------------
4,508,875 240
- --------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Electrical Equipment--1.2%
$ 2,200M IMO Industries, Inc., 12%, 2001 $ 2,233,000 $ 119
- --------------------------------------------------------------------------------------------------------------
Energy--1.9%
1,500M Giant Industries, Inc., 93/4%, 2003 1,518,750 81
2,000M Maxus Energy Corp., 111/2%, 2015 2,100,000 112
- --------------------------------------------------------------------------------------------------------------
3,618,750 193
- --------------------------------------------------------------------------------------------------------------
Energy Exploration/Production--1.7%
3,000M Gulf Canada Resources, Ltd., 95/8%, 2005 3,127,500 167
- --------------------------------------------------------------------------------------------------------------
Financial Services--1.9%
1,500M +Lomas Mortgage, USA, 101/4%, 2002 750,000 40
1,200M Olympic Financial, Ltd., 13%, 2000 1,308,000 70
1,300M Terra Nova Holdings, PLC, 103/4%, 2005 1,417,000 75
- --------------------------------------------------------------------------------------------------------------
3,475,000 185
- --------------------------------------------------------------------------------------------------------------
Food Services--1.1%
2,200M Flagstar Corp., 103/4%, 2001 2,029,500 108
- --------------------------------------------------------------------------------------------------------------
Food/Beverage/Tobacco--4.1%
3,000M Fleming Co., Inc., 105/8%, 2001 2,910,000 155
2,500M TLC Beatrice International Holdings, Inc., 111/2%, 2005 2,431,250 129
2,350M Van de Kamps, Inc., 12%, 2005 (Note 5) 2,444,000 130
- --------------------------------------------------------------------------------------------------------------
7,785,250 414
- --------------------------------------------------------------------------------------------------------------
Gaming/Lodging--2.8%
2,450M Casino America, Inc., 111/2%, 2001 2,303,000 123
1,000M GB Property Funding, Inc., 107/8%, 2004 872,500 46
750M Grand Casinos, Inc., 101/8%, 2003 781,875 42
800M Players International, Inc., 107/8%, 2005 750,000 40
1,925M +SHRP Capital Corp., 113/4%, 1999 442,750 24
- --------------------------------------------------------------------------------------------------------------
5,150,125 275
- --------------------------------------------------------------------------------------------------------------
Healthcare--4.4%
1,300M Genesis Healthcare, Inc., 93/4%, 2005 1,371,500 73
1,600M Integrated Health Services, Inc., 103/4%, 2004 1,712,000 91
2,700M Ornda Healthcorp., 121/4%, 2002 2,956,500 157
2,000M Tenet Healthcare Corp., 101/8%, 2005 2,212,500 118
- --------------------------------------------------------------------------------------------------------------
8,252,500 439
- --------------------------------------------------------------------------------------------------------------
Information Technology/Office Equipment--.6%
1,000M Bell & Howell Co., 103/4%, 2002 1,062,500 57
- --------------------------------------------------------------------------------------------------------------
Media/Cable Television--17.2%
1,400M Adelphia Communications, Inc., 97/8%, 2005 1,267,000 67
4,000M Bell Cablemedia, PLC, 0%-11.95%, 2004 2,820,000 150
2,000M Century Communications Corp., 91/2%, 2005 2,065,000 110
- --------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Portfolio of Investments
FIRST INVESTORS HIGH YIELD FUND, INC.
December 31, 1995

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Media/Cable Television (continued)
$ 3,725M Echostar Communications Corp., 0%-127/8%, 2004 $ 2,495,750 $ 133
3,200M Garden State Newspapers, Inc., 12%, 2004 3,224,000 172
3,000M Lamar Advertising, Inc., 11%, 2003 3,105,000 165
1,000M Le Groupe Videotron, Ltee., 105/8%, 2005 1,072,500 57
3,625M Outdoor Systems, Inc., 103/4%, 2003 3,498,125 187
1,800M PanAmSat Capital Corp., 93/4%, 2000 1,890,000 101
3,700M PanAmSat Capital Corp., 0%-113/8%, 2003 2,997,000 160
2,000M Rogers Cablesystems, Inc., 10%, 2005 2,147,500 114
2,000M Rogers Communication, Inc., 107/8%, 2004 2,087,500 111
5,100M Videotron Holdings, PLC, 0%-111/8%, 2004 3,570,000 190
- --------------------------------------------------------------------------------------------------------------
32,239,375 1,717
- --------------------------------------------------------------------------------------------------------------
Mining/Metals--7.9%
2,755M Carbide/Graphite Group, Inc., 111/2%, 2003 2,975,400 159
2,475M Geneva Steel Co., Inc., 111/8%, 2001 2,054,250 109
2,590M Magma Copper Co., Inc., 12%, 2001 2,871,663 153
4,050M WCI Steel, Inc., 101/2%, 2002 3,928,500 209
3,200M Wheeling-Pittsburgh Steel Corp., 93/8%, 2003 3,008,000 160
- --------------------------------------------------------------------------------------------------------------
14,837,813 790
- --------------------------------------------------------------------------------------------------------------
Miscellaneous--1.1%
2,025M Monarch Marking Systems, Inc., 121/2%, 2003 2,116,125 113
- --------------------------------------------------------------------------------------------------------------
Paper/Forest Products--9.3%
2,000M Doman Industries, Inc., 83/4%, 2004 1,920,000 102
3,600M Gaylord Container Corp., 111/2%, 2001 3,708,000 197
2,000M Riverwood International Corp., 111/4%, 2002 2,160,000 115
2,600M S.D. Warren Co., Inc., 12%, 2004 2,860,000 152
2,750M Stone Container Corp., 117/8%, 1998 2,880,625 153
4,000M Stone Container Corp., 97/8%, 2001 3,890,000 208
- --------------------------------------------------------------------------------------------------------------
17,418,625 927
- --------------------------------------------------------------------------------------------------------------
Retail-Food/Drug--1.2%
2,400M Penn Traffic Co., 101/4%, 2002 2,292,000 122
- --------------------------------------------------------------------------------------------------------------
Retail-General Merchandise--.9%
11M Barry's Jewelers, Inc., 125/8%, 1996 5,750 --
1,750M General Host Co., Inc., 111/2%, 2002 1,645,000 88
- --------------------------------------------------------------------------------------------------------------
1,650,750 88
- --------------------------------------------------------------------------------------------------------------
Telecommunications--5.0%
3,750M American Communication Services, Inc., 0%-13%, 2005 (Note 5) 2,053,125 109
2,000M Metrocall, Inc., 103/8%, 2007 2,120,000 113
6,525M MFS Communications, Inc., 0%-93/8%, 2004 5,203,687 277
- --------------------------------------------------------------------------------------------------------------
9,376,812 499
- --------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Amount
Principal Invested
Amount, For Each
Shares or $10,000 of
Warrants Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Transportation--3.5%
$ 3,550M Eletson Holdings, Inc., 91/4%, 2003 $ 3,479,000 $ 185
1,100M Moran Transportation Co., 113/4%, 2004 1,034,000 55
2,050M Trism, Inc., 103/4%, 2000 1,988,500 106
- --------------------------------------------------------------------------------------------------------------
6,501,500 346
- --------------------------------------------------------------------------------------------------------------
Total Value of Corporate Bonds (cost $173,454,644) 168,151,038 8,955
- --------------------------------------------------------------------------------------------------------------
COMMON STOCKS--.9%
Electrical Equipment--.1%
6,481 *Thermadyne Holdings Corp. 117,468 6
- --------------------------------------------------------------------------------------------------------------
Financial Services--.1%
9,600 *Olympic Financial, Ltd. 156,000 9
- --------------------------------------------------------------------------------------------------------------
Gaming/Lodging--.0%
120,498 *Divi Hotels, Inc. (Note 4) 6,025 --
- --------------------------------------------------------------------------------------------------------------
Media/Cable Television--.3%
22,350 *Echostar Communications Corp., Class "A" 541,988 29
- --------------------------------------------------------------------------------------------------------------
Paper/Forest Products--.2%
53,061 *Gaylord Container Corp., Class "A" 427,804 23
- --------------------------------------------------------------------------------------------------------------
Retail-General Merchandise--.2%
89,806 *Barry's Jewelers, Inc. 359,225 19
- --------------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $4,950,927) 1,608,510 86
- --------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--2.3%
Financial Services--1.8%
20,000 California Federal Bank, 105/8%, Series "B" 2,160,000 115
40,800 Greater New York Savings Bank, 12%, Series "B" 1,162,800 62
- --------------------------------------------------------------------------------------------------------------
3,322,800 177
- --------------------------------------------------------------------------------------------------------------
Paper/Forest Products--.5%
30,200 *S.D. Warren Co., Inc., 14% 951,300 51
- --------------------------------------------------------------------------------------------------------------
Total Value of Preferred Stocks (cost $3,998,050) 4,274,100 228
- --------------------------------------------------------------------------------------------------------------
WARRANTS--.3%
Building Materials--.0%
100,300 *Waxman Industries, Inc. (expiring 6/1/04) (Note 5) 25,075 1
- --------------------------------------------------------------------------------------------------------------
Electrical Equipment--.0%
67 *Digicon, Inc. (expiring 7/1/96) 2 --
- --------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Portfolio of Investments
FIRST INVESTORS HIGH YIELD FUND, INC.
December 31, 1995

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Amount
Warrants Invested
or For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Gaming/Lodging--.1%
7,987 *Casino America, Inc. (expiring 11/15/96) $ 1,997 $--
12,000 *President Riverboat Casinos, Inc. (expiring 9/23/96) (Note 5) 36,000 2
17,660 *President Riverboat Casinos, Inc. (expiring 9/30/99) (Note 4) 70,640 4
7,200 *SHRP Capital Corp. (expiring 7/15/99) (Note 5) -- --
- --------------------------------------------------------------------------------------------------------------
108,637 6
- --------------------------------------------------------------------------------------------------------------
Paper/Forest Products--.2%
47,697 *Gaylord Container Corp. (expiring 7/31/96) 357,727 19
30,200 *S.D. Warren Co., Inc. (expiring 12/15/06) (Note 5) 151,000 8
- --------------------------------------------------------------------------------------------------------------
508,727 27
- --------------------------------------------------------------------------------------------------------------
Retail-General Merchandise--.0%
3,800 *Payless Cashways, Inc. (expiring 11/1/96) 950 --
- --------------------------------------------------------------------------------------------------------------
Total Value of Warrants (cost $884,483) 643,391 34
- --------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--2.1%
$ 4,000M Federal Home Loan Bank Board, 6.02%, 1998 (cost $4,000,000) 4,006,716 213
- --------------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--3.2%
1,000M Appalachian Power, 6%, 1/2/96 999,833 53
5,000M Gannett Co., 5.85%, 1/8/96 4,994,313 266
- --------------------------------------------------------------------------------------------------------------
Total Value of Short-Term Corporate Notes (cost $5,994,146) 5,994,146 319
- --------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $193,282,250) 98.4% 184,677,901 9,835
Other Assets, Less Liabilities 1.6 3,102,608 165
- --------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $187,780,509 $10,000
==============================================================================================================
</TABLE>
* Non-income producing

+ In default as to principal and/or interest (Note 7)

<PAGE>

Statement of Assets and Liabilities
FIRST INVESTORS HIGH YIELD FUND, INC.
December 31, 1995

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

<S> <C> <C>
Assets
Investments in securities, at value
(identified cost $193,282,250) (Note 1A)................................ $ 184,677,901
Cash...................................................................... 201,922
Receivables:
Interest................................................................ $ 3,625,748
Capital shares sold..................................................... 193,176
Investment securities sold.............................................. 28,000 3,846,924
-----------
Other assets.............................................................. 59,061
-------------
Total Assets.............................................................. 188,785,808

Liabilities
Payables:
Capital shares redeemed................................................. 385,394
Dividend payable January 15, 1996....................................... 369,939
Accrued advisory fee...................................................... 140,504
Accrued expenses.......................................................... 109,462
-----------
Total Liabilities......................................................... 1,005,299
-------------
Net Assets (Note 8):

Class A (35,771,215 shares outstanding)................................. 186,892,517
Class B (169,897 shares outstanding).................................... 887,992 $ 187,780,509
----------- =============
Net Assets Consist of:

Capital paid in........................................................... $ 631,641,245
Undistributed net investment income....................................... 1,991,248
Accumulated net realized loss on investment transactions.................. (437,247,635)
Net unrealized depreciation in value of investments....................... (8,604,349)
-------------
Total..................................................................... $ 187,780,509
=============

Net asset value and redemption price per share-- Class A ................ $5.22
=====

Maximum offering price per share-- Class A ($5.22/.9375)*................. $5.57
=====

Net asset value and offering price per share-- Class B ................... $5.23
=====
*On purchases of $25,000 or more, the sales charge is reduced.
</TABLE>

See notes to financial statements

<PAGE>

Statement of Operations
FIRST INVESTORS HIGH YIELD FUND, INC.
Year Ended December 31, 1995

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

<S> <C> <C>
Investment Income
Income:
Interest ................................................................. $18,855,778
Dividends ................................................................ 311,109
Consent fees ............................................................. 187,465
-----------
Total income ............................................................... $19,354,352

Expenses (Note 3):
Advisory fee ............................................................. 1,815,792
Shareholder servicing costs .............................................. 540,510
Distribution plan expenses-- Class A ..................................... 271,715
Distribution plan expenses-- Class B ..................................... 3,697
Reports and notices to shareholders ...................................... 75,600
Professional Fees ........................................................ 43,512
Custodian Fees ........................................................... 24,771
Other expenses ........................................................... 44,997
-----------
Total expenses ............................................................. 2,820,594
Less: Portion of advisory fee waived........................................ (181,579)
Custodian fees paid indirectly ........................................ (21,288)
-----------
Net expenses ............................................................... 2,617,727
-----------
Net investment income ...................................................... 16,736,625

Realized and Unrealized Gain (Loss) on Investments (Notes 2 and 6):

Net realized gain (loss) on investments:
Unaffiliated companies ................................................... 1,690,981
Affiliated companies ..................................................... (2,411,012)
-----------
Net realized loss on investments ........................................... (720,031)
Net unrealized appreciation of investments ................................. 14,815,104
-----------
Net gain on investments .................................................... 14,095,073
-----------

Net Increase in Net Assets Resulting from Operations ...................... $30,831,698
===========
</TABLE>

See notes to financial statements

<PAGE>

FIRST INVESTORS HIGH YIELD FUND, INC.
Statement of Changes in Net Assets

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Year Ended December 31 1995 1994
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income .................................................... $ 16,736,625 $ 17,082,492
Net realized gain (loss) on investments .................................. (720,031) 846,883
Net unrealized appreciation (depreciation) on investments ................ 14,815,104 (17,368,735)
------------ ------------
Net increase in net assets resulting from operations ................... 30,831,698 560,640
------------ ------------
Dividends to Shareholders from:
Net investment income-- Class A .......................................... (17,039,142) (17,023,090)
Net investment income-- Class B .......................................... (37,544) --
------------ ------------
Total dividends ........................................................ (17,076,686) (17,023,090)
------------ ------------
Capital Share Transactions (a)
Class A:
Proceeds from shares sold .............................................. 12,606,146 7,240,104
Value of dividends reinvested .......................................... 12,721,081 12,643,358
Cost of shares redeemed ................................................ (22,568,327) (24,351,080)
------------ ------------
2,758,900 (4,467,618)
------------ ------------
Class B:
Proceeds from shares sold .............................................. 856,809 --
Value of dividends reinvested .......................................... 16,473 --
Cost of shares redeemed ................................................ (5,776) --
------------ ------------
867,506 --

------------ ------------
Net increase (decrease) from capital share transactions ................ 3,626,406 (4,467,618)
------------ ------------
Net increase (decrease) in net assets ................................ 17,381,418 (20,930,068)
Net Assets
Beginning of year ...................................................... 170,399,091 191,329,159
------------ ------------
End of year (including undistributed net investment income of
$1,991,248 and $2,331,309, respectively).............................. $187,780,509 $170,399,091
============ ============
(a)Capital shares issued and redeemed
Class A:
Sold ................................................................... 2,473,148 1,431,548
Issued for dividends reinvested ........................................ 2,489,075 2,504,396
Redeemed ............................................................... (4,415,539) (4,798,027)
------------ ------------
Net increase (decrease) in Class A shares outstanding ................ 546,684 (862,083)
============ ============
Class B:
Sold ................................................................... 167,832 --
Issued for dividends reinvested ........................................ 3,176 --
Redeemed ............................................................... (1,111) --
------------ ------------
Net increase in Class B shares outstanding ........................... 169,897 --
============ ============
</TABLE>

See notes to financial statements

<PAGE>

Notes to Financial Statements
FIRST INVESTORS HIGH YIELD FUND, 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. The primary investment
objective of the Fund is to seek high current income and secondarily to seek
capital appreciation.

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, 1995, the Fund had
capital loss carryovers of $437,011,075 of which $51,200,545 expires in 1996,
$107,418,334 in 1997, $166,492,834 in 1998, $109,407,948 in 1999, $1,762,042 in
2001, $135,416 in 2002 and $593,956 in 2003.

C. Distributions to Shareholders--Dividends to shareholders from net investment
income are declared daily and paid monthly. Income dividends and capital gain
distributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. These differences are
primarily due to differing treatments for capital loss carryforwards and post
October losses.

2. Security Transactions--For the year ended December 31, 1995, purchases and
sales of investment securities, other than United States Government obligations
and short-term corporate notes, aggregated $71,482,943 and $67,704,878,
respectively.

At December 31, 1995, the cost of investments for federal income tax purposes
was $193,282,250. Accumulated net unrealized depreciation on investments was
$8,604,349, consisting of $6,811,627 gross unrealized appreciation and
$15,415,976, gross unrealized depreciation.

<PAGE>

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 1% on the first $200 million of the Fund's
average daily net assets, .75% on the next $300 million, declining by .03% on
each $250 million thereafter, down to .66% on average daily net assets over $1
billion. For the year ended December 31, 1995, FIMCO has voluntarily waived 10%
of the fee.

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, 1995, no reimbursement was required pursuant to these
provisions.

For the year ended December 31, 1995, FIC, as underwriter, received $310,680 in
commissions after allowing $80,463 to other dealers. Shareholder servicing costs
included $321,117 in transfer agent fees paid to ADM and $126,079 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 Fund's
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
year ended December 31, 1995, this fee reduction amounted to $271,715. for Class
A and $652 for Class B.

4. Restricted Securities--The Fund held the following restricted securities at
December 31, 1995:

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Date Number
Issuer Acquired of Units Type of Security Cost
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Divi Hotels, Inc. 4/23/92 120,498shs Common Stock $2,540,750
President Riverboat
Casinos, Inc. 11/10/94 17,660wts Warrants, Expiring 9/30/99 84,316
- ----------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Notes to Financial Statements
FIRST INVESTORS HIGH YIELD FUND, INC.

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, 1995, the
aggregate value of the above restricted securities was $76,665 representing less
than 1/2 of 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, 1995, the
Fund held nine 144A securities with an aggregate value of $10,192,700
representing 51/2% of the Fund's net assets. These securities are valued as set
forth in Note 1A.

6. Affiliated Person--Investments in companies 5% or more of whose outstanding
voting securities are held by the Fund are defined as "affiliated person" in
Section 2(a)(3) of the 1940 Act.

7. 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, 1995, the Fund
held three defaulted securities with a value aggregating $1,222,000 representing
less than 1% of the Fund's net assets.

8. 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% over a six-year period. Class B shares
automatically convert into Class A shares after eight years. Realized and
unrealized gains or losses, investment income and expenses (other than 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
500,000,000 shares originally authorized, the Fund has designated 250,000,000
shares as Class A and 250,000,000 shares as Class B.

9. Pending Litigation--The Fund and FIC are defendants in two cases involving
investors who invested in the Fund. The suits primarily allege that FIC sales
representatives had made misrepresentations concerning the risks of investing in
the Fund. FIC's parent company, First Investors Consolidated Corporation has
agreed to assume the liability, if any.

<PAGE>

Independent Auditor's Report

To the Shareholders and Board of Directors of First
Investors High Yield Fund, Inc.

We have audited the accompanying statement of assets and liabilities of First
Investors High Yield Fund, Inc., including the portfolio of investments, as of
December 31, 1995, 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 years 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
December 31, 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 High Yield Fund, Inc. at December 31, 1995, and the results of its
operations, changes in its net assets and financial highlights for each of the
respective years presented, in conformity with generally accepted accounting
principles.

Tait, Weller & Baker

Philadelphia, Pennsylvania
January 31, 1996

<PAGE>

PORTFOLIO OF INVESTMENTS
FIRST INVESTORS FUND FOR INCOME, INC.
December 31, 1995

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000
OF
PRINCIPAL NET
AMOUNT SECURITY VALUE ASSETS
- -------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
CORPORATE BONDS--89.5%
AGRICULTURAL PRODUCTS--1.2%
$ 4,500M Terra Industries, Inc., 10 1/2%, 2005 $ 4,961,250 $ 116
- -------------------------------------------------------------------------------------------------
APPAREL/TEXTILES--2.0%
2,000M Dan River, Inc., 10 1/8%, 2003 1,820,000 43
7,000M Linter Textiles Corp., Ltd., 13 3/4%, 2000 (Defaulted) (Note 1
5) 52,500
7,000M Westpoint Stevens, Inc., 9 3/8%, 2005 6,895,000 161
- -------------------------------------------------------------------------------------------------
8,767,500 205
- -------------------------------------------------------------------------------------------------
AUTOMOTIVE--2.6%
2,000M Exide Corp., 10%, 2005 2,140,000 50
4,000M Lear Seating, Inc., 11 1/4%, 2000 4,215,000 99
4,400M SPX Corp., 11 3/4%, 2002 4,664,000 109
- -------------------------------------------------------------------------------------------------
11,019,000 258
- -------------------------------------------------------------------------------------------------
BUILDING MATERIALS--3.9%
4,500M American Standard Corp., 11 3/8%, 2004 4,983,750 116
4,500M American Standard Corp., 0%-10 1/2%, 2005 3,836,250 90
4,950M Triangle Pacific Corp., 10 1/2%, 2003 5,247,000 123
1,630M Waxman Industries, Inc., 13 3/4%, 1999 1,255,100 29
3,248M Waxman Industries, Inc., 0%-12 3/4%, 2004 1,266,720 30
- -------------------------------------------------------------------------------------------------
16,588,820 388
- -------------------------------------------------------------------------------------------------
CHEMICALS--6.7%
7,200M Harris Chemical North America, Inc., 0%-10 1/4%, 2001 6,984,000 163
3,125M Harris Chemical North America, Inc., 10 3/4%, 2003 2,867,187 67
5,000M Huntsman Corp., 11%, 2004 5,731,250 134
6,600M Rexene Corp., 11 3/4%, 2004 6,996,000 164
6,000M Synthetic Industries, Inc., 12 3/4%, 2002 5,880,000 138
- -------------------------------------------------------------------------------------------------
28,458,437 666
- -------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--.5%
2,000M Hines Horticulture, Inc., 11 3/4%, 2005 (Note 4) 2,090,000 49
- -------------------------------------------------------------------------------------------------
CONSUMER PRODUCTS--.4%
1,500M Herff Jones, Inc., 11%, 2005 1,605,000 38
- -------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000
OF
PRINCIPAL NET
AMOUNT SECURITY VALUE ASSETS
- -------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
CONTAINERS--5.0%
$ 13,000M Owens Illinois, Inc., 11%, 2003 $14,706,250 $ 344
1,250M Portola Packaging, Inc., 10 3/4%, 2005 1,293,750 30
5,250M Sweetheart Cup Co., Inc., 10 1/2%, 2003 5,355,000 125
- -------------------------------------------------------------------------------------------------
21,355,000 499
- -------------------------------------------------------------------------------------------------
DURABLE GOODS MANUFACTURING--1.6%
2,500M Day International Group, Inc., 11 1/8%, 2005 2,550,000 60
4,275M Fairfield Manufacturing, Inc., 11 3/8%, 2001 4,168,125 97
- -------------------------------------------------------------------------------------------------
6,718,125 157
- -------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--1.7%
3,650M Essex Group, Inc., 10%, 2003 3,595,250 84
3,850M IMO Industries, Inc., 12%, 2001 3,907,750 91
- -------------------------------------------------------------------------------------------------
7,503,000 175
- -------------------------------------------------------------------------------------------------
ENERGY--2.5%
3,500M Deeptech International, Inc., 12%, 2000 3,150,000 74
3,500M Falcon Drilling Co., Inc., 9 3/4%, 2001 3,570,000 83
3,900M Maxus Energy Corp., 11 1/2%, 2015 4,095,000 96
- -------------------------------------------------------------------------------------------------
10,815,000 253
- -------------------------------------------------------------------------------------------------
FINANCIAL SERVICES--.7%
2,800M Terra Nova Holdings, PLC, 10 3/4%, 2005 3,052,000 71
- -------------------------------------------------------------------------------------------------
FOOD SERVICES--.4%
2,500M Flagstar Cos., Inc., 11 1/4%, 2004 1,775,000 42
- -------------------------------------------------------------------------------------------------
FOOD/BEVERAGE/TOBACCO--2.2%
4,500M Fleming Co., Inc., 10 5/8%, 2001 4,365,000 102
5,000M TLC Beatrice International Holdings, Inc., 11 1/2%, 2005 4,862,500 114
- -------------------------------------------------------------------------------------------------
9,227,500 216
- -------------------------------------------------------------------------------------------------
GAMING/LODGING--3.2%
5,000M Casino America, Inc., 11 1/2%, 2001 4,700,000 110
1,000M Grand Casinos, Inc., 10 1/8%, 2003 1,042,500 24
2,500M Player's International, Inc., 10 7/8%, 2005 2,343,750 55
5,500M Showboat, Inc., 9 1/4%, 2008 5,527,500 129
- -------------------------------------------------------------------------------------------------
13,613,750 318
- -------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

PORTFOLIO OF INVESTMENTS
FIRST INVESTORS FUND FOR INCOME, INC.
December 31, 1995

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000
OF
PRINCIPAL NET
AMOUNT SECURITY VALUE ASSETS
- -------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
HEALTHCARE--7.5%
$ 3,000M Genesis Healthcare, Inc., 9 3/4%, 2005 $ 3,165,000 $ 74
4,400M Healthsouth Rehabilitation Corp., 9 1/2%, 2001 4,686,000 110
3,750M Integrated Health Services, Inc., 9 5/8%, 2002 3,815,625 89
4,500M Integrated Health Services, Inc., 10 3/4%, 2004 4,815,000 113
2,000M Mediq/PRN Life Support Services, Inc., 11 1/8%, 1999 1,980,000 46
6,000M Ornda Healthcorp., 12 1/4%, 2002 6,570,000 154
2,550M Ornda Healthcorp., 11 3/8%, 2004 2,868,750 67
3,800M Tenet Healthcare Corp., 10 1/8%, 2005 4,203,750 98
- -------------------------------------------------------------------------------------------------
32,104,125 751
- -------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY/OFFICE EQUIPMENT--.8%
3,500M Dictaphone Corp., 11 3/4%, 2005 3,395,000 79
- -------------------------------------------------------------------------------------------------
MEDIA/CABLE TELEVISION--18.6%
1,500M Act III Broadcasting, Inc., 10 1/4%, 2005 1,530,000 36
6,000M Adelphia Communications, Inc., 9 7/8%, 2005 5,430,000 127
8,000M Bell Cablemedia, PLC, 0%-11.95%, 2004 5,640,000 132
3,000M CF Cable TV, Inc., 11 5/8%, 2005 3,292,500 77
5,000M Comcast United Kingdom Cable Corp., 0%-11.2%, 2007 2,912,500 68
4,750M Diamond Cable Communications, PLC, 0%-11 3/4%, 2005 2,796,563 65
10,550M Echostar Communications Corp., 0%-12 7/8%, 2004 7,068,500 165
5,500M Jones Intercable, Inc., 11 1/2%, 2004 6,077,500 142
2,000M Lamar Advertising, Inc., 11%, 2003 2,070,000 48
5,000M Marcus Cable Operating Co., 0%-13 1/2%, 2004 3,750,000 88
3,625M Outdoor Systems, Inc., 10 3/4%, 2003 3,498,125 82
11,000M PanAmSat Capital Corp., 0%-11 3/8%, 2003 8,910,000 209
6,150M Rogers Communication Inc., 10 7/8%, 2004 6,419,062 150
6,000M SCI Television Corp., 11%, 2005 6,330,000 148
2,000M Sinclair Broadcasting Group, 10%, 2005 2,042,500 48
6,500M Videotron Holdings, PLC, 0%-11 1/8%, 2004 4,550,000 107
4,000M Videotron, Ltd., 10 1/4%, 2002 4,200,000 98
3,000M Young Broadcasting Corp., 10 1/8%, 2005 3,165,000 74
- -------------------------------------------------------------------------------------------------
79,682,250 1,864
- -------------------------------------------------------------------------------------------------
MINING/METALS--7.8%
5,001M Carbide/Graphite Group, Inc., 11 1/2%, 2003 5,401,080 126
2,750M Earle M. Jorgensen Co., 10 3/4%, 2000 2,530,000 59
- -------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000
OF
PRINCIPAL NET
AMOUNT SECURITY VALUE ASSETS
- -------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
MINING/METALS (continued)
$ 5,000M Geneva Steel Co., Inc., 11 1/8%, 2001 $ 4,150,000 $ 97
5,500M Magma Copper Co., Inc., 12%, 2001 6,098,125 143
4,000M Russel Metals, Inc., 10 1/4%, 2000 3,810,000 89
1,155M UCAR Global Enterprises, Inc., 12%, 2005 1,316,700 31
5,400M WCI Steel, Inc., 10 1/2%, 2002 5,238,000 122
5,000M Wheeling-Pittsburgh Steel Corp., 9 3/8%, 2003 4,700,000 110
- -------------------------------------------------------------------------------------------------
33,243,905 777
- -------------------------------------------------------------------------------------------------
MISCELLANEOUS--1.0%
4,000M Monarch Marking Systems, Inc., 12 1/2%, 2003 4,180,000 98
- -------------------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--7.2%
4,000M Gaylord Container Corp., 11 1/2%, 2001 4,120,000 96
5,000M Riverwood International Corp., 11 1/4%, 2002 5,400,000 126
5,600M S.D. Warren Co., Inc., 12%, 2004 6,160,000 144
5,500M Stone Container Corp., 11 7/8%, 1998 5,761,250 63
7,000M Stone Container Corp., 9 7/8%, 2001 6,807,500 135
2,600M Stone Container Corp., 10 3/4%, 2002 2,691,000 159
- -------------------------------------------------------------------------------------------------
30,939,750 723
- -------------------------------------------------------------------------------------------------
RETAIL-GENERAL MERCHANDISE--3.6%
4,500M Barnes & Noble, Inc., 11 7/8%, 2003 5,017,500 117
10M Barry's Jewelers, Inc., 12 5/8%, 1996 5,170 --
2,800M General Host Co., Inc., 11 1/2%, 2002 2,632,000 62
4,000M Payless Cashways, Inc., 9 1/8%, 2003 3,120,000 73
4,500M Waban, Inc., 11%, 2004 4,590,000 107
- -------------------------------------------------------------------------------------------------
15,364,670 359
- -------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS--5.4%
7,300M American Communication Services, Inc., 0%-13%, 2005 (Note 4) 3,996,750 93
4,000M CAI Wireless Systems, Inc., 12 1/4%, 2002 4,280,000 101
2,500M Centennial Cellular, 8 7/8%, 2001 2,456,250 57
5,000M Horizon Cellular Telephone, Inc., 0%-11 3/8%, 2000 4,300,000 101
2,800M Paging Network, Inc., 11 3/4%, 2002 3,097,500 72
4,500M Pronet, Inc., 11 7/8%, 2005 4,972,500 116
- -------------------------------------------------------------------------------------------------
23,103,000 540
- -------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

PORTFOLIO OF INVESTMENTS
FIRST INVESTORS FUND FOR INCOME, INC.
December 31, 1995

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000
AMOUNT OF
OR NET
SHARES SECURITY VALUE ASSETS
- -------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
TRANSPORTATION--3.0%
$ 5,700M Eletson Holdings, Inc., 9 1/4%, 2003 $ 5,586,000 $ 131
3,100M Moran Transportation Co., 11 3/4%, 2004 2,914,000 68
4,600M Trism, Inc., 10 3/4%, 2000 4,462,000 104
- -------------------------------------------------------------------------------------------------
12,962,000 303
- -------------------------------------------------------------------------------------------------
TOTAL VALUE OF CORPORATE BONDS (cost $380,104,648) 382,524,082 8,945
- -------------------------------------------------------------------------------------------------
COMMON STOCKS--.5%
GAMING/LODGING--.0%
141,762 *Divi Hotels, Inc. 7,088 --
35,000 *Goldriver Hotel & Casino Corp., Series "B" 4,375 --
- -------------------------------------------------------------------------------------------------
11,463 --
- -------------------------------------------------------------------------------------------------
MEDIA/CABLE TELEVISION--.3%
63,300 *Echostar Communications, Class "A" 1,535,025 36
- -------------------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--.1%
41,619 *Gaylord Container Corp., Class "A" 335,553 8
- -------------------------------------------------------------------------------------------------
RETAIL-GENERAL MERCHANDISE--.1%
96,129 *Barry's Jewelers, Inc. 384,516 9
- -------------------------------------------------------------------------------------------------
TOTAL VALUE OF COMMON STOCKS (cost $5,861,835) 2,266,557 53
- -------------------------------------------------------------------------------------------------
PREFERRED STOCKS--2.2%
MEDIA/CABLE TELEVISION--1.5%
10,242 K-III Communications Corp., 11 5/8%, Series "B" 1,019,142 24
4,781 PanAmSat Capital Corp., 12 3/4% 5,355,347 125
- -------------------------------------------------------------------------------------------------
6,374,489 149
- -------------------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--.7%
100,000 *S.D. Warren Co., Inc., 14% 3,150,000 74
- -------------------------------------------------------------------------------------------------
TOTAL VALUE OF PREFERRED STOCKS (cost $8,318,594) 9,524,489 223
- -------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
WARRANTS, $10,000
UNITS OR OF
PRINCIPAL NET
AMOUNT SECURITY VALUE ASSETS
- -------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
WARRANTS--.3%
BUILDING MATERIALS--.0%
103,250 *Waxman Industries, Inc. (expiring 6/1/04) (Note 4) $ 25,813 $ 1
- -------------------------------------------------------------------------------------------------
FINANCIAL SERVICES--.0%
89,950 *Reliance Group Holdings, Inc. (expiring 1/28/97) 143,920 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 *President Riverboat Casinos, Inc. (expiring 9/23/96) (Note 1
4) 63,000
- -------------------------------------------------------------------------------------------------
172,075 4
- -------------------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--.2%
55,390 *Gaylord Container Corp. (expiring 7/31/96) 415,425 10
100,000 *S.D. Warren Co., Inc. (expiring 12/15/06) (Note 4) 500,000 12
- -------------------------------------------------------------------------------------------------
915,425 22
- -------------------------------------------------------------------------------------------------
RETAIL-GENERAL MERCHANDISE--.0%
66,000 *New Cort Holdings Corp. (expiring 9/1/98) 148,500 3
4,000 *Payless Cashways, Inc. (expiring 11/1/96) 1,000 --
- -------------------------------------------------------------------------------------------------
149,500 3
- -------------------------------------------------------------------------------------------------
TOTAL VALUE OF WARRANTS (cost $605,918) 1,406,733 33
- -------------------------------------------------------------------------------------------------
UNITS--.4%
TELECOMMUNICATIONS
325 GST Telecommunications, Inc. (a) (cost $1,506,141) (Note 4) 1,527,500 36
- -------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--2.6%
$ 10,000M United States Treasury Notes, 7 1/4%, 2004 (cost 260
$10,884,375) 11,125,000
- -------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--3.0%
750M Appalachian Power, 6%, 1/2/96 749,875 18
12,000M Gannett Company, 5.85%, 1/8/96 11,986,350 280
- -------------------------------------------------------------------------------------------------
TOTAL VALUE OF SHORT-TERM CORPORATE NOTES (cost $12,736,225) 12,736,225 298
- -------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<S> <C> <C> <C>
TOTAL VALUE OF INVESTMENTS (cost $420,017,736) 98.5% 421,110,586 9,848
OTHER ASSETS, LESS LIABILITIES 1.5 6,487,385 152
- --------------------------------------------------------------------------------------------------
NET ASSETS 100.0% $427,597,971 $ 10,000
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>

*Non-income producing

(a)Each unit consists of eight 13 7/8% Senior Discount Notes due 2005 of GST USA
guaranteed by GST and one 13 7/8% Convertible Senior Subordinated Discount
Note due 2005 of GST guaranteed by GST USA. GST USA is a wholly-owned
subsidiary of GST.

See notes to financial statements

6
<PAGE>

STATEMENT OF ASSETS AND LIABILITIES
FIRST INVESTORS FUND FOR INCOME, INC.
December 31, 1995

- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
ASSETS
Investments in securities, at value
(identified cost $420,017,736)(Note 1A).... $ 421,110,586
Cash......................................... 410,596
Receivables:
Interest................................... $ 7,848,437
Capital shares sold........................ 77,990 7,926,427
----------------
Other assets................................. 168,816
----------------
Total Assets................................. 429,616,425
LIABILITIES
Payables:
Dividend payable January 15, 1996.......... 1,012,568
Capital shares redeemed.................... 552,718
Accrued advisory fee......................... 261,729
Accrued expenses............................. 191,439
----------------
Total Liabilities............................ 2,018,454
----------------

NET ASSETS (Note 6):
Class A (103,018,467 shares outstanding)... 425,837,971
Class B (425,781 shares outstanding)....... 1,760,000 $ 427,597,971
---------------- ----------------
----------------

NET ASSETS CONSIST OF:
Capital paid in.............................. $ 1,132,716,947
Undistributed net investment income.......... 3,166,942
Accumulated net realized loss on investment
transactions............................... (709,378,768)
Net unrealized appreciation in value of
investments................................ 1,092,850
----------------
Total........................................ $ 427,597,971
----------------
----------------

NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE--CLASS A............................. $4.13
----------------
----------------

MAXIMUM OFFERING PRICE PER SHARE--CLASS A
($4.13/.9375)*............................. $4.41
----------------
----------------

NET ASSET VALUE AND OFFERING PRICE PER
SHARE--CLASS B............................. $4.13
----------------
----------------
</TABLE>

*On purchases of $25,000 or more, the sales charge is reduced.

See notes to financial statements

<PAGE>

STATEMENT OF OPERATIONS
FIRST INVESTORS FUND FOR INCOME, INC.
Year Ended December 31, 1995

- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME

Income (Note 1D):
Interest.............................. $ 44,040,927
Dividends............................. 425,585
Consent fees.......................... 238,765
----------------
Total income............................ $ 44,705,277
Expenses (Notes 1 and 3):
Advisory fee.......................... 3,083,269
Shareholder servicing costs........... 865,633
Distribution plan expenses--Class A... 625,437
Distribution plan expenses--Class B... 7,283
Reports and notices to shareholders... 131,692
Professional fees..................... 63,353
Custodian fees........................ 43,484
Other expenses........................ 105,375
----------------
Total expenses.......................... 4,925,526
Less: Custodian fees paid indirectly.... 21,134
----------------
Net expenses............................ 4,904,392
----------------
Net investment income................... 39,800,885

REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 2):
Net realized gain on investments........ 4,041,341
Net unrealized appreciation of
investments........................... 27,647,990
----------------
Net gain on investments................. 31,689,331
----------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $ 71,490,216
----------------
----------------
</TABLE>

See notes to financial statements

<PAGE>

STATEMENT OF CHANGES IN NET ASSETS
FIRST INVESTORS FUND FOR INCOME, INC.

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Year Ended December 31 1995 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income.................................................. $39,800,885 $38,730,802
Net realized gain on investments....................................... 4,041,341 653,361
Net unrealized appreciation (depreciation) on investments.............. 27,647,990 (37,481,745)
----------- -----------
Net increase in net assets resulting from operations................. 71,490,216 1,902,418
----------- -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income--Class A......................................... (37,489,349) (39,768,324)
Net investment income--Class B......................................... (71,432) --
----------- -----------
Total dividends.................................................... (37,560,781) (39,768,324)
----------- -----------
CAPITAL SHARE TRANSACTIONS (a)
Class A:
Proceeds from shares sold............................................ 13,975,925 20,228,141
Value of dividends reinvested........................................ 25,433,839 26,318,610
Cost of shares redeemed.............................................. (48,423,529) (38,780,019)
----------- -----------
(9,013,765) 7,766,732
----------- -----------
Class B:
Proceeds from shares sold............................................ 1,762,436 --
Value of dividends reinvested........................................ 45,376 --
Cost of shares redeemed.............................................. (112,219) --
----------- -----------
1,695,593 --
----------- -----------
Net increase (decrease) from capital share transactions............ (7,318,172) 7,766,732
----------- -----------
Net increase (decrease) in net assets.............................. 26,611,263 (30,099,174)
NET ASSETS
Beginning of year...................................................... 400,986,708 431,085,882
----------- -----------
End of year (including undistributed net investment income of
$3,166,942 and $926,838, respectively)............................... $427,597,971 $400,986,708
----------- -----------
----------- -----------
(a)CAPITAL SHARES ISSUED AND REDEEMED
Class A:
Sold................................................................. 3,505,873 5,062,541
Issued for dividends reinvested...................................... 6,340,562 6,666,913
Redeemed............................................................. (12,088,258) (9,787,987)
----------- -----------
Net increase (decrease) in Class A shares outstanding.............. (2,241,823) 1,941,467
----------- -----------
----------- -----------
Class B:
Sold................................................................. 442,113 --
Issued for dividends reinvested...................................... 11,234 --
Redeemed............................................................. (27,566) --
----------- -----------
Net increase in Class B shares outstanding........................... 425,781 --
----------- -----------
----------- -----------
</TABLE>

See notes to financial statements

<PAGE>

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. The investment objective of the Fund is primarily to seek to
earn a high level of current income and, to the extent possible, in view of that
objective, secondarily to seek growth of capital.

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 distribu-
tions 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, 1995, the Fund had capital loss carryovers of $709,378,768 of which
$40,084,935 expires in 1996, $111,360,941 in 1997, $350,158,165 in 1998,
$207,520,038 in 1999 and $254,689 in 2002.

D. 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, 1995, the Fund recognized $406,124
of dividend income from these taxable "pay in kind" distributions. Interest
income and estimated expenses are accrued daily. The Fund's Custodian has
provided credits in the amount of $21,134 against custodian charges based on the
uninvested cash balances of the Fund.

2. SECURITY TRANSACTIONS--For the year ended December 31, 1995, purchases and
sales of investment securities, other than short-term United States Government
obligations and corporate notes, aggregated $119,518,404 and $122,552,339,
respec-

<PAGE>

NOTES TO FINANCIAL STATEMENTS
FIRST INVESTORS FUND FOR INCOME, INC.

tively. Purchases and sales of long-term U.S. Government obligations amounted to
$10,884,375 and $10,912,500, respectively.

At December 31, 1995, the cost of investments for federal income tax purposes
was $420,017,736. Accumulated net unrealized appreciation on investments was
$1,092,850, consisting of $21,071,646 gross unrealized appreciation and
$19,978,796 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.

For the year ended December 31, 1995, FIC, as underwriter, received $359,115 in
commissions after allowing $34,668 to other dealers. Shareholder servicing costs
included $486,175 in transfer agent fees paid to ADM and $210,773 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 year ended
December 31, 1995, this fee reduction amounted to $625,437 for Class A and
$1,286 for Class B.

4. RULE 144A SECURITIES--Under Rule 144A, certain restricted securities are
exempt from the registration requirements of the Securities Act of 1933 and may
only be resold to qualified institutional investors. At December 31, 1995, the
Fund held six 144A securities with an aggregate value of $8,203,063 representing
less than 2% of the Fund's net assets. These securities are valued as set forth
in Note 1A.

5. 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

<PAGE>

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, 1995, the Fund held one defaulted security with a value of $52,500.

6. 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.

7. PENDING LITIGATION--The Fund and FIC are defendants in a case involving
investors who invested in the Fund. The suit primarily alleges that FIC sales
representatives had made misrepresentations concerning the risks of investing in
the Fund. FIC's parent company, First Investors Consolidated Corporation has
agreed to assume the liability, if any.

<PAGE>

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, 1995, 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 years 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.

Our procedures included confirmation of securities owned as of December 31,
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 December 31, 1995, and the results of its
operations, changes in its net assets and financial highlights for each of the
respective years presented, in conformity with generally accepted accounting
principles.

TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 31, 1996

<PAGE>

PART C

OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements:

Financial Statements are set forth in Part B, Statement of Additional
Information.

(b) Exhibits:

(1)a. Articles of Restatement

b. Articles Supplementary

(2) Amended and Restated By-laws

(3) Not Applicable

(4)(1) Specimen Certificate

(5) Investment Advisory Agreement between Registrant and First
Investors Management Company, Inc.

(6) Underwriting Agreement between Registrant and First Investors
Corporation.

(7) Not Applicable

(8)a. Custodian Agreement between Registrant and Irving Trust
Company

b. Supplement to Custodian Agreement between Registrant and The
Bank of New York

(9) Administration Agreement between Registrant, First Investors
Management Company, Inc., First Investors Corporation and
Administrative Data Management Corp.

(10)(5) Opinion of Counsel

(11)a. Consent of independent accountants

b. Powers of Attorney

(12) Not Applicable

<PAGE>

(13)(1) Undertaking of the Co-Underwriters

(14)a.(3)First Investors Profit Sharing/Money Purchase
Pension Retirement Plan for Sole
Proprietorships, Partnerships and
Corporations

b.(4)First Investors Individual Retirement Account

c.(2)First Investors 403(b) Custodial Account

d.(4)First Investors SEP-IRA and SARSEP-IRA

(15)a. Amended and Restated Class A Distribution Plan

b. Class B Distribution Plan

(16) Performance Calculations

(17) Financial Data Schedule (filed as Exhibit 27 for electronic
filing purposes)

(18) 18f-3 Plan

- ----------------

(1) Previously filed with the Commission
(2) Incorporated by reference from Post-Effective Amendment No. 46 to
Registrant's Registration Statement (File No. 2-38309) filed on January
22, 1991.
(3) Incorporated by reference from Post-Effective Amendment No. 51 to
Registrant's Registration Statement (File No. 2-38309) filed on July 23,
1991.
(4) Incorporated by reference from Post-Effective Amendment No. 57 to
Registrant's Registration Statement (File No. 2-38309) filed on April
29, 1993.
(5) Incorporated by reference from Registrant's Rule 24f-2 Notice for its
fiscal year ending December 31, 1995 filed on February 27, 1996.

Item 25. Persons Controlled by or under common control with Registrant

There are no persons controlled by or under common control with the
Registrant.

Item 26. Number of Holders of Securities

<PAGE>

NUMBER OF RECORD
HOLDERS AS OF
TITLE OF CLASS FEBRUARY 9, 1996
-------------- ------------------
Class A Shares 31,173
Class B Shares 151

Item 27. Indemnification

Article X, Section 1 of the By-Laws of Registrant provides as follows:

Section 1. Every person who is or was an officer or director of the
Corporation (and his heirs, executors and administrators) shall be indemnified
by the Corporation against reasonable costs and expenses incurred by him in
connection with any action, suit or proceeding to which he may be made a party
by reason of his being or having been a director or officer of the Corporation,
except in relation to any action, suit or proceeding in which he has been
adjudged liable because of negligence or misconduct, which shall be deemed to
include willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office. In the absence of an
adjudication which expressly absolves the director or officer of liability to
the Corporation or its stockholders for negligence or misconduct, within the
meaning thereof as used herein, or in the event of a settlement, each director
or officer (and his heirs, executors and administrators) shall be indemnified by
the Corporation against payments made, including reasonable costs and expenses,
provided that such indemnity shall be conditioned upon the prior determination
by a resolution of two-thirds of the Board of Directors who are not involved in
the action, suit or proceeding that the director or officer has no liability by
reason of negligence or misconduct within the meaning thereof as used herein,
and provided further that if a majority of the members of the Board of Directors
of the Corporation are involved in the action, suit or proceeding, such
determination shall have been made by a written opinion of independent counsel.
Amounts paid in settlement shall not exceed costs, fees and expenses which would
have been reasonably incurred if the action, suit or proceeding had been
litigated to a conclusion. Such a determination by the Board of Directors or by
independent counsel, and the payment of amounts by the Corporation on the basis
thereof, shall not prevent a stockholder from challenging such indemnification
by appropriate legal proceedings on the grounds that the person indemnified was
liable to the Corporation or its security holders by reason of negligence or
misconduct within the meaning thereof as used herein. The foregoing rights and
indemnification shall not be exclusive of any other rights to which any officer
or director (or his heirs, executors and administrators) may be entitled to
according to law.

<PAGE>

The Registrant's Investment Advisory Agreement provides as follows:

The Manager shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Company or any Series in connection with the
matters to which this Agreement relate except a loss resulting from the willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement. Any person, even though also an officer, partner, employee, or agent
of the Manager, who may be or become an officer, Board member, employee or agent
of the Company shall be deemed, when rendering services to the Company or acting
in any business of the Company, to be rendering such services to or acting
solely for the Company and not as an officer, partner, employee, or agent or one
under the control or direction of the Manager even though paid by it.

The Registrant's Underwriting Agreement provides as follows:

The Underwriter agrees to use its best efforts in effecting the sale and
public distribution of the shares of the Fund through dealers and to perform its
duties in redeeming and repurchasing the shares of the Fund, but nothing
contained in this Agreement shall make the Underwriter or any of its officers
and directors or shareholders liable for any loss sustained by the Fund or any
of its officers, directors, or shareholders, or by any other person on account
of any act done or omitted to be done by the Underwriter under this Agreement
provided that nothing herein contained shall protect the Underwriter against any
liability to the Fund or to any of its shareholders to which the Underwriter
would otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of its duties as Underwriter or by reason of its
reckless disregard of its obligations or duties as Underwriter under this
Agreement. Nothing in this Agreement shall protect the Underwriter from any
liabilities which they may have under the Securities Act of 1933 or the
Investment Company Act of 1940.

Reference is hereby made to the Maryland Corporations and Associations
Annotated Code, Sections 2-417, 2-418 (1986).

The general effect of this Indemnification will be to indemnify the officers
and directors of the Registrant from costs and expenses arising from any action,
suit or proceeding to which they may be made a party by reason of their being or
having been a director or officer of the Registrant, except where such action is
determined to have arisen out of the willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
director's or officer's office.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has been
informed that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable. See Item 32 herein.

<PAGE>

Item 28. Business and Other Connections of Investment Adviser

First Investors Management Company, Inc., the Registrant's Investment
Adviser, also serves as Investment Adviser to:

First Investors Cash Management Fund, Inc.
First Investors Series Fund
First Investors Government Fund, Inc.
First Investors High Yield Fund, Inc.
First Investors Global Fund, Inc.
First Investors Life Series Fund
First Investors Multi-State Insured Tax Free Fund
First Investors New York Insured Tax Free Fund, Inc.
First Investors Special Bond Fund, Inc.
First Investors Insured Tax Exempt Fund, Inc.
First Investors Tax-Exempt Money Market Fund, Inc.
First Investors U.S. Government Plus Fund
First Investors Series Fund II, Inc.

Affiliations of the officers and directors of the Investment Adviser are set
forth in Part B, Statement of Additional Information, under "Directors and
Officers."

Item 29. Principal Underwriters

(a) First Investors Corporation, Underwriter of the Registrant, is also
underwriter for:

First Investors Cash Management Fund, Inc.
First Investors Series Fund
First Investors Government Fund, Inc.
First Investors High Yield Fund, Inc.
First Investors Global Fund, Inc.
First Investors Multi-State Insured Tax Free Fund
First Investors New York Insured Tax Free Fund, Inc.
First Investors Insured Tax Exempt Fund, Inc.
First Investors Tax-Exempt Money Market Fund, Inc.
First Investors U.S. Government Plus Fund
First Investors Series Fund II, Inc.

(b) The following persons are the officers and directors of the
Underwriter:

<PAGE>

POSITION AND POSITION AND
NAME AND PRINCIPAL OFFICE WITH FIRST OFFICE WITH
BUSINESS ADDRESS INVESTORS CORPORATION REGISTRANT
- ------------------ --------------------- -------------

Glenn O. Head Chairman President
95 Wall Street and Director and Director
New York, NY 10005

Marvin M. Hecker President None
95 Wall Street
New York, NY 10005

John T. Sullivan Director Chairman of the
95 Wall Street Board of Directors
New York, NY 10005

Roger L. Grayson Director Director
95 Wall Street
New York, NY 10005

Joseph I. Benedek Treasurer Treasurer
581 Main Street
Woodbridge, NJ 07095

Robert Murphy Comptroller None
581 Main Street
Woodbridge, NJ 07095

Lawrence A. Fauci Senior Vice President None
95 Wall Street and Director
New York, NY 10005

Kathryn S. Head Vice President, Director
581 Main Street Chief Financial
Woodbridge, NJ 07095 Officer and Director

Louis Rinaldi Senior Vice None
581 Main Street President
Woodbridge, NJ 07095

Frederick Miller Vice President None
581 Main Street
Woodbridge, NJ 07095

<PAGE>

POSITION AND POSITION AND
NAME AND PRINCIPAL OFFICE WITH FIRST OFFICE WITH
BUSINESS ADDRESS INVESTORS CORPORATION REGISTRANT
- ------------------ --------------------- -------------

Howard M. Factor Vice President None
95 Wall Street
New York, NY 10005

Larry R. Lavoie Secretary and None
95 Wall Street General Counsel
New York, NY 10005

Matthew Smith Vice President None
581 Main Street
Woodbridge, NJ 07095

Jeremiah J. Lyons Director None
56 Weston Avenue
Chatham, NJ 07928

Anne Condon Vice President None
581 Main Street
Woodbridge, NJ 07095

Jane W. Kruzan Director None
15 Norwood Avenue
Summit, NJ 07901

Item 30. Location of Accounts and Records

Physical possession of the books, accounts and records of the Registrant are
held by First Investors Management Company, Inc. and its affiliated companies,
First Investors Corporation and Administrative Data Management Corp., at their
corporate headquarters, 95 Wall Street, New York, NY 10005 and administrative
offices, 581 Main Street, Woodbridge, NJ 07095, except for those maintained by
the Registrant's Custodian, The Bank of New York, 48 Wall Street, New York, NY
10286.

Item 31. Management Services

Inapplicable

Item 32. Undertakings

<PAGE>

The Registrant undertakes to carry out all indemnification provisions of its
Articles of Incorporation, Advisory Agreement and Underwriting Agreement in
accordance with Investment Company Act Release No. 11330 (September 4, 1980) and
successor releases.

Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions under Item 27 herein, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

The Registrant hereby undertakes to furnish a copy of its latest annual
report to shareholders, upon request and without charge, to each person to whom
a prospectus is delivered.

<PAGE>

INDEX TO EXHIBITS

EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

99.B1.1 Articles of Restatement
99.B1.2 Articles Supplementary
99.B2 Amended and Restated By-laws
99.B5 Advisory Agreement
99.B6 Underwriting Agreement
99.B8.1 Custodian Agreement
99.B8.2 Supplement to Custodian Agreement
99.B9 Administration Agreement
99.B11.1 Consent of accountants
99.B11.2 Powers of Attorney
99.B15.1 Class A Distribution Plan
99.B15.2 Class B Distribution Plan
99.B16 Performance Calculations
99.B18 18f-3 Plan
27.001 FDS-Class A Shares
27.002 FDS-Class B Shares

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant represents that this Amendment
meets all the requirements for effectiveness pursuant to Rule 485(b) under the
Securities Act of 1933, and has duly caused this Post-Effective Amendment to
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on the
17th day of April, 1996.

FIRST INVESTORS FUND FOR
INCOME, INC.
(Registrant)

By:/s/Glenn O. Head
---------------------------
Glenn O. Head
President and Director

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Amendment to this Registration Statement
has been signed below by the following persons in the capacities and on the
dates indicated.

/s/Glenn O. Head
- --------------------- Principal Executive April 17, 1996
Glenn O. Head Officer and Director

/s/Joseph I. Benedek
- --------------------- Principal Financial April 17, 1996
Joseph I. Benedek and Accounting Officer

*
- -------------------- Director April 17, 1996
Kathryn S. Head

*
- -------------------- Director April 17, 1996
James J. Coy

*
- -------------------- Director April 17, 1996
Roger L. Grayson

*
- -------------------- Director April 17, 1996
Herbert Rubinstein

*
- -------------------- Director April 17, 1996
James M. Srygley

*
- -------------------- Director April 17, 1996
John T. Sullivan

*
- -------------------- Director April 17, 1996
Rex R. Reed

*
- -------------------- Director April 17, 1996
Robert F. Wentworth

*By: /s/Larry R. Lavoie
-------------------------
Larry R. Lavoie
Attorney-in-fact

<PAGE>

ARTICLES OF RESTATEMENT

FIRST INVESTORS FUND FOR INCOME, INC.

To the State Department
of Assessments and Taxation
State of Maryland

Pursuant to the provisions of Section 2-608 of the Maryland General
Corporation Law, First Investors Fund For Income, Inc. (the "corporation"), a
Maryland corporation having its principal office in Baltimore City, hereby
certifies that:

FIRST: The corporation desires to restate its charter as currently in
effect.

SECOND: The provisions hereinafter set forth in the Articles of
Restatement are all the provisions of the charter of the corporation as
currently in effect.

THIRD: The restatement of the charter of the corporation has been approved
by a majority of the entire Board of Directors of the corporation.

FOURTH: The charter of the corporation is not amended by these Articles of
Restatement.

FIFTH: The current address of the principal office of the corporation in
the State of Maryland is c/o The Prentice-Hall Corporation System, Maryland, 11
East Chase Street, Baltimore, Maryland 21202.

<PAGE>

SIXTH: The name and the address of the current resident agent of the
corporation in the State of Maryland are The Prentice-Hall Corporation System,
Maryland, 11 East Chase Street, Baltimore, Maryland 21202.

SEVENTH: The number of directors of the corporation is nine, and the names
of the directors of the corporation currently in office are Glenn O. Head, James
J. Coy, Roger L. Grayson, Kathryn S. Head, F. William Ortman, Jr., Rex R. Reed,
Herbert Rubinstein, John T. Sullivan and Robert F. Wentworth.

ARTICLES OF RESTATEMENT

FIRST INVESTORS FUND FOR INCOME, INC.

SECOND: The name of the corporation is
FIRST INVESTORS FUND FOR INCOME, INC.
(hereinafter called the "Corporation").

THIRD: The purposes for which the Corporation is formed and the
business to be carried on and promoted by it are as follows:

To engage generally in the business of an incorporated investment
company of the management type, investing and reinvesting its assets in all
forms of securities and other personal and real property, of every kind and
description, all as more specifically set forth herein, subject to the
provisions of these Articles of Incorporation and the By-Laws of the
Corporation; to consolidate or merge with, to acquire and take over the assets
of, and to assume the liabilities of, any other corporation or trust with
similar powers, to make contracts, and, generally, to do any or all acts and
things necessary or desirable in furtherance of any of the corporate purposes or
designed to protect, preserve, or enhance the value of the corporate assets, or
to the extent permitted to business corporations authorized under the laws of
the State of Maryland as now or may in the future be enforced; and to do any or
all of the things in furtherance of the above purposes as natural persons might
do.

To subscribe for, receive, purchase and otherwise acquire, own, hold,
sell, exchange, transfer, mortgage, pledge, hypothecate and otherwise dispose
of, and generally deal in and with all or any of the following (hereinafter
sometimes referred to collectively as "securities" or individually as
"security") namely: All kinds of shares, stocks, voting trust certificates,
trust certificates, bonds,

<PAGE>

debentures, mortgages, trust receipts, notes and other securities, obligations,
contracts, certificates of interest, choses in action and evidences of
indebtedness generally of any corporation, association, partnership, syndicate,
entity, person, or governmental, municipal or public authority, domestic or
foreign, and evidences of any interest therein or in respect thereto, subject to
such restrictions as may be set forth from time to time in the By-Laws of the
Corporation; to acquire or become interested in any such securities by original
subscription, underwriting, participation in syndicates or otherwise and while
the owner or holder of any such securities to exercise all the rights, powers
and privileges of ownership or interest in respect thereof.

To purchase, acquire, hold, exchange, sell, deal in and dispose of,
alone or in syndicates or otherwise in conjunction with others, commodities and
other personal property of every kind, character and description whatsoever and
wheresoever situated, and any interest therein.

To conduct researches, investigations, enterprises, and otherwise
transact all kinds of business relating to the gathering, publishing and
distribution of financial and investment information and statistics or such
business as may be carried on in connection therewith throughout the world.

To enter into, make and perform contracts of every lawful kind,
without limitation as to amount, except as expressly provided to the contrary in
the By-Laws, with any person, firm, association, partnership, corporation or
entity including but not by way of limitation, agreements for the disposition or
acquisition of the corporate stock of the Corporation, agreements for the
management, supervision and overseeing of its assets or activities, and the
rendering of services with reference thereto, agreements for the holding or
custody of its assets, the acquisition and disposition of its securities,
agreements for the conduct of administrative, accounting or other activities,
and agreements relating to borrowing or repayment of money.

The foregoing statements of objects and purposes except as otherwise
expressly provided shall not be held to limit or restrict in any manner the
powers of the Corporation, and are in furtherance of, and in addition to, and
not in limitation of the general powers conferred upon the Corporation by the
laws of the State of Maryland or otherwise.

FOURTH: The post office address of the principal office of the
Corporation in this State is c/o The Prentice-Hall Corporation System, Maryland,
11 East Chase Street, Baltimore, Maryland 21202. The name of the resident agent
of the Corporation in this State is The Prentice-Hall Corporation System,
Maryland, a corporation of the State of Maryland, and the post office address
of the resident agent is 11 East Chase Street, Baltimore, Maryland 21202.

FIFTH: Section 5.1. The total number of shares of all classes of
stock which the Corporation shall have authority to issue is

<PAGE>

one billion (1,000,000,000) shares of capital stock of the par value of one
dollar ($1.00) each, having an aggregate par value of $1,000,000,000. The
Shares may be issued by the Board of Directors in such separate and distinct
series ("Series") and classes of series ("Classes") as the Board of Directors
shall from time to time create and establish. The Board of Directors shall have
full power and authority, in its sole discretion, to create and establish Shares
of said Series and Classes having such preferences, rights, voting power,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption as shall be fixed and determined from time to time by
resolution or resolutions providing for the issuance of such Shares adopted by
the Board of Directors. In the event of establishment of Classes, each Class of
a Series shall represent interests in the assets of that Series and have
identical voting, dividend, liquidation and other rights and the same terms and
conditions as any other Class of that Series, except as provided in these
Articles of Incorporation, and except that expenses allocated to the Class of a
Series may be borne solely by such Class as shall be determined by the Board of
Directors and a Class of a Series may have exclusive voting rights with respect
to matters affecting only that Class. Expenses related to the distribution of,
and other identified expenses that should properly be allocated to, the Shares
of a particular Class or Series may be charged to and borne solely by such Class
or Series and the bearing of expenses solely by a Class or Series may be
appropriately reflected (in a manner determined by the Board of Directors) and
cause differences in the net asset value attributable to, and the dividend,
redemption and liquidation rights of, the Shares of each Class or Series. In
addition, the Board of Directors is hereby expressly granted authority to
increase or decrease the number of Shares of any Series or Class, but the number
of Shares of any Series or Class shall not be decreased by the Board of
Directors below the number of Shares thereof then outstanding.

The Board of Directors is authorized, from time to time, to classify or to
reclassify, as the case may be, any unissued Shares of the Corporation in
separate Series or Classes. The Shares of said Series and Classes of stock
shall have such preferences, rights, voting powers, restrictions, limitations as
to dividends, qualifications and terms and conditions of redemption as shall be
fixed and determined from time to time by the Board of Directors. The
Corporation may hold as treasury shares, reissue for such consideration and on
such terms as the Board of Directors may determine, or cancel, at its discretion
from time to time, any Shares reacquired by the Corporation. No holder of any
of the Shares shall be entitled as of right to subscribe for, purchase, or
otherwise acquire any Shares of the Corporation that the Corporation proposes to
issue or reissue.

The Corporation shall have authority to issue any additional shares
hereafter authorized and any Shares redeemed or repurchased by the Corporation.
All Shares of any Series or Class when properly issued in accordance with these
Articles of Incorporation shall be fully paid and nonassessable.

Section 5.2. The establishment of any Series or Class, in addition to
those established in Section 5.1 hereof, shall be effective

<PAGE>

upon the adoption of a resolution by a majority of the then Directors setting
forth such establishment and designation and the relative rights and preferences
of the Shares of such Series or Class. At any time that there are no Shares
outstanding of any particular Series or Class previously established and
designated, the Directors may by a majority vote abolish that Series or Class
and the establishment and designation thereof.

Section 5.3. Dividends and distributions on Shares with respect to each
Series or Class may be declared and paid with such frequency, in such form and
in such amount as the Board of Directors may from time to time determine.
Dividends may be declared daily or otherwise pursuant to a standing resolution
or resolutions adopted only once or with such frequency as the Board of
Directors may determine.

All dividends and distributions on Shares of each Series shall be
distributed pro rata to the holders of that Series in proportion to the number
of Shares of that Series held by such holders at the date and time of record
established for the payment of such dividends or distributions, except that such
dividends and distributions shall appropriately reflect expenses allocated to a
particular Class of such Series.

The Board of Directors shall have the power, in its sole discretion, to
distribute in any fiscal year as dividends (including dividends designated in
whole or in part as capital gain distributions) amounts sufficient, in the
opinion of the Board of Directors, to enable the Corporation, or where
applicable each Series of the Corporation, to qualify as a regulated investment
company under the Internal Revenue Code of 1986, as amended, or any successor or
comparable statute thereto, and regulations promulgated thereunder, and to avoid
liability of income tax in respect of that year. However, nothing in the
foregoing shall limit the authority of the Board of Directors to make
distributions greater than or less than the amount necessary to qualify as a
regulated investment company and to avoid liability of the Corporation, or any
Series of the Corporation, for such tax.

Dividends and distributions may be paid in cash, property or Shares, or a
combination thereof, as determined by the Board of Directors or pursuant to any
program that the Board of Directors may have in effect at the time. Any such
dividend or distribution paid in Shares will be paid at the current net asset
value thereof as defined in Section 5.7.

Section 5.4. All consideration received by the Corporation for the issue
or sale of Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall be
referred to as "assets belonging to" that Series. In addition, any assets,
income, earnings, profits, and proceeds thereof, funds, or payments or any
general liabilities, expenses, costs, charges or reserves which are not readily
identifiable

<PAGE>

as belonging to or chargeable to any particular Series, shall be allocated by
the Board of Directors between and among any one or more of the Series in such
manner as the Board of Directors, in its sole discretion, deems fair and
equitable. Each such allocation shall be conclusive and binding upon the
stockholders of all Series for all purposes, and shall be referred to as assets
belonging to that Series. The assets belonging to a particular Series shall be
so recorded upon the books of the Corporation.

Section 5.5. On each matter submitted to a vote of the stockholders, each
holder of a Share shall be entitled to one vote for each Share and fractional
votes for fractional Shares standing in his name on the books of the
Corporation; provided, however, that when required by the Investment Company Act
of 1940, as amended ("1940 Act"), or rules thereunder or when the Board of
Directors has determined that the matter affects only the interests of one
Series or Class, matters may be submitted to a vote of the stockholders of a
particular Series or Class, and each holder of Shares thereof shall be entitled
to votes equal to the number of full and fractional Shares of the Series or
Class standing in his name on the books of the Corporation. The presence in
person or by proxy of the holders of one-third of the Shares of capital stock of
the Corporation outstanding and entitled to vote thereat shall constitute a
quorum for the transaction of business at a stockholders' meeting, except that
where any provision of law or of these Articles of Incorporation permit or
require that holders of any Series or Class shall vote as a Series or Class,
then one-third of the aggregate number of Shares of capital stock of that Series
or Class outstanding and entitled to vote shall constitute a quorum for the
transaction of business by that Series or Class.

Section 5.6. Each holder of Shares shall have the right at such times as
may be permitted by the Corporation to require the Corporation to redeem all or
any part of his Shares at a redemption price per Share equal to the net asset
value per Share as of such time as the Board of Directors shall have prescribed
by resolution. In the absence of such resolution, the redemption price per
Share shall be the net asset value next determined (in accordance with Section
5.7) after receipt by the Corporation of a request for redemption in proper form
less such charges as are determined by the Board of Directors and described in
the Corporation's registration statement under the Securities Act of 1933, as
amended. The Board of Directors may specify conditions, prices, and places of
redemption, and may specify binding requirements for the proper form or forms of
requests for redemption. Payment of the redemption price may be wholly or
partly in securities or other assets at the value of such securities or assets
used in such determination of net asset value, or may be in cash.
Notwithstanding the foregoing, the Board of Directors may postpone payment of
the redemption price and may suspend the rights of the holders of Shares to
require the Corporation to redeem Shares during any period or at any time when
and to the extent permissible under the 1940 Act. The Corporation reserves the
right, upon 60 days' notice, to reduce the redemption price in certain
circumstances by an amount not in excess of 1% of net asset value of the shares
to be redeemed.

<PAGE>

Section 5.7. The net asset value of each Share of the Corporation, or
each Series or Class, shall be the quotient obtained by dividing the value of
the net assets of the Corporation, or if applicable of the Series (being the
value of the assets of the Corporation or of the particular Series less its
actual and accrued liabilities exclusive of capital stock and surplus), by the
total number of Shares of the Corporation, or of the Series. Such determination
may be made on a Series-by-Series basis or made or adjusted on a Class-by-Class
basis, as appropriate, and shall include any expenses allocated to a specific
Series or Class thereof. The Board of Directors shall have the power and duty
to determine the net asset value per Share at such times and by such methods as
it shall determine subject to any restrictions or requirements under the 1940
Act and the rules, regulations and interpretations thereof promulgated or issued
by the Securities and Exchange Commission applicable to the Corporation. The
Board of Directors may delegate such power and duty to any one or more of the
directors and officers of the Corporation, to the Corporation's investment
adviser, to the custodian or depository of the Corporation's assets, or to
another agent of the Corporation.

Section 5.8. The Board of Directors may cause the Corporation to redeem
at current net asset value all Shares owned or held by any one stockholder
having an aggregate current net asset value of such amount as set by the Board
of Directors in accordance with applicable state laws. No such redemption shall
be effected unless the Corporation has given the stockholder at least sixty (60)
days' notice of its intention to redeem the Shares and an opportunity to
purchase a sufficient number of additional Shares to bring the aggregate current
net asset value of his Shares to such amount as set by the Board of Directors.
Upon redemption of Shares pursuant to this Section, the Corporation shall
promptly cause payment of the full redemption price, in any permissible form, to
be made to the holder of Shares so redeemed. The Board of Directors may by a
majority vote establish from time to time amounts less than the current amount
at which the Corporation will redeem Shares pursuant to this Section.

SIXTH: The number of directors of the Corporation shall be nine
(9), which number may be increased or decreased as may be provided by the By-
Laws, but in no case shall the number be less than three (3) or more than
fifteen (15). The names of the directors who shall act until their successors
are duly chosen and qualified are:

Herbert Rubinstein
James J. Coy
Roger L. Grayson
Glenn O. Head
F. William Ortman, Jr.
John T. Sullivan
Robert F. Wentworth
Kathryn S. Head
Rex R. Reed

SEVENTH: In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized

<PAGE>

To make, alter or repeal the By-Laws of the Corporation except as
therein provided.

To set apart out of any of the funds of the Corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserves in the manner in which it was created. Such reserve or reserves may be
invested and reinvested by the Board of Directors in the same way and subject to
the same restrictions as are provided for the investment and reinvestment of the
capital of the Corporation. When and only when the Board of Directors shall
decide that it is advisable or necessary to pay dividends out of the reserve,
shall such funds be subject to the payment of dividends.

To specify by the By-Laws the number of directors constituting the
whole Board of Directors, which number shall not be less than three (3) and
which may be increased or decreased as provided in the By-Laws; and if there be
a vacancy on the Board of Directors by reason of death, resignation or otherwise
to fill such vacancy for the unexpired term by a majority vote of the remaining
directors; and to fill a vacancy created by an increase in the number of
directors by a majority vote of the entire Board of Directors. A director
elected by the Board of Directors to fill a vacancy shall be elected to hold
office until the next annual meeting of stockholders or until his successor is
elected and qualifies. Notwithstanding the foregoing, any such election by the
Board of Directors is subject to the restrictions relating thereto set forth in
the By-Laws.

To designate one or more committees, each committee to consist of two
or more of the directors of the Corporation, which to the extent provided in the
Resolution or Resolutions of the Board of Directors or in the By-Laws of the
Corporation, shall have and may exercise the powers of the Board of Directors in
the management of the business and affairs of the Corporation, except the power
to declare dividends, to issue stock or to recommend to stockholders any action
requiring stockholders' approval, and have the power to authorize the seal of
the Corporation to be affixed to all papers which may require it.

Subject to all applicable provisions of the By-Laws, and of the 1940
Act and the rules and regulations thereunder, to authorize the Corporation to
enter into a written agreement with any person, firm or corporation to act as
manager, investment adviser, underwriter, distributor, fiscal agent, depository
or custodian of the Corporation.

From time to time to offer for subscription or otherwise issue or
sell, for such consideration as the Board of Directors may determine and which
may be permitted by law at any time of such subscription, any or all of the
authorized stock of the Corporation not then issued or which may have been
issued and reacquired by the Corporation and any or all of any increased stock
that may hereafter be authorized.

When and as authorized by the affirmative vote of the holders of two-
thirds of the stock issued and outstanding given at a stockholders' meeting duly
called for that purpose or when authorized by the written consent of the holders
of two-thirds of the stock issued and

<PAGE>

outstanding, to sell, lease or exchange all of the property and assets of the
Corporation including its goodwill and its corporate franchise upon such terms
and conditions and for such consideration which may be in whole or in part
shares of stock in and/or other securities of any other corporation or
corporations, as the Board of Directors shall deem expedient and for the best
interest of the Corporation.

EIGHTH: The holders of the capital stock of this Corporation shall
have no preemptive or preferential rights to subscribe for, purchase or receive
any part of any new or additional issues of any stock or any bonds or other
obligations of the Corporation convertible into stock whether now or hereafter
authorized. The Board of Directors of the Corporation may in its discretion
from time to time grant rights to stockholders to subscribe to or purchase
additional shares or bonds of the Corporation. Stockholders shall have no right
to cumulative voting.

NINTH: The Corporation is to have perpetual existence.

TENTH: The Corporation reserves the right to amend, alter, change
or repeal any provisions contained in these Articles of Incorporation in the
manner now or hereafter prescribed by statute and all rights conferred upon
stockholders herein are granted subject to this reservation.

ELEVENTH: The Corporation reserves the right to take any lawful action
and to make up any amendment to these Articles of Incorporation, including the
right to make any amendment which changes the terms of any shares of the capital
stock of the Corporation of any class now or hereafter authorized by
classification, reclassification, or otherwise, and to make any amendment
authorizing any sale, lease, exchange or transfer of property and assets of the
Corporation as an entirety or substantially an entirety, with or without its
goodwill and franchise, if a majority of all the shares of the capital stock of
the Corporation at the time issued and outstanding and entitled to vote and a
majority of shares of each class of capital stock of the Corporation, now or
hereafter authorized, at the time issued and outstanding and

<PAGE>

entitled to vote affected by such amendment, vote in favor of any such action or
amendment, and reserves the right to make any amendment of these Articles of
Incorporation in any form, manner or substance now or hereafter authorized or
permitted by law.

IN WITNESS WHEREOF, First Investors Fund For Income, Inc., has caused these
presents to be signed in its name and on its behalf by its Vice President and
attested by its Assistant Secretary on September 14, 1994.

FIRST INVESTORS FUND FOR INCOME,
INC.

ATTEST:
/s/C. Durso
----------------------------------------
Concetta Durso, Vice President

/s/Carol R. Lerner
- -----------------------------------
Carol R. Lerner,
Assistant Secretary

STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )

I HEREBY CERTIFY that on the 14th day of September, 1994, before me
the subscriber, a Notary Public of the State of New York, personally appeared
CONCETTA DURSO, Vice President of First Investors Fund For Income, Inc., a
Maryland corporation, and in the name and on behalf of said corporation
acknowledged the foregoing Articles of Restatement to be the corporate act of
said corporation and further made oath in due form of law that the matters and
facts set forth in the said Articles of Restatement with respect to the approval
thereof are true to the best of his knowledge, information and belief.

<PAGE>

WITNESS, my hand and notarial seal, the day and year above written.

Dale Kaplan
----------------------------
Notary Public

[SEAL] Dale Kaplan
Notary Public, State of New York
No. 31-4504204
Qualified in New York County
Commission Expires August 31, 1995

<PAGE>

ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
FIRST INVESTORS FUND FOR INCOME, INC.

First Investors Fund For Income, Inc. ("Company"), a Maryland
corporation, having its principal office in Baltimore, Maryland, organized on
August 20, 1970 hereby certifies to the State Department of Assessments and
Taxation of Maryland that:

FIRST: The Company is authorized to issue one billion (1,000,000,000)
shares of capital stock in such separate and distinct classes or series of
shares as shall be determined from time to time by the Board of Directors of the
Company. The Company presently offers one series of shares.

SECOND: By action of the Board of Directors of the Company in
accordance with the Company's charter, five hundred million (500,000,000) shares
of capital stock of the Company, including all currently issued and outstanding
shares of capital stock of the Company, are hereby classified as Class A capital
stock of the Company.

THIRD: By action of the Board of Directors of the Company in
accordance with the Company's charter, five hundred million (500,000,000) shares
of capital stock that the Company is authorized to issue are hereby classified
as Class B capital stock of the Company.

FOURTH: The Class A capital stock and Class B capital stock of the
Company represents interests in the same investment portfolio of the Company.
All shares of each particular class of the Company shall represent an equal
proportionate interest in that class and each share of any particular class of
the Company shall be equal to each other share of that class. Class A shares
and Class B shares of the Company shall be subject to all provisions of Article
V in the Company's Articles of Incorporation relating to stock of the Company
generally and shall have the same preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption, except as follows:

(1) The Class B capital stock of the Company may convert into Class A
capital stock of the Company in the manner as determined by the Board of
Directors;

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(2) Each class of the Company shall have separate exchange privileges
as determined by the Board of Directors from time to time;

(3) The Class A capital stock of the Company shall be subject to a
front-end sales load and a Rule 12b-1 service and distribution fee as determined
by the Board of Directors from time to time;

(4) The Class B capital stock of the Company shall be subject to a
contingent deferred sales charge and a Rule 12b-1 service and distribution fee
as determined by the Board of Directors from time to time; and

(5) Unless otherwise expressly provided in the Articles of
Incorporation, including any Articles Supplementary creating any class or series
of capital stock, on each matter submitted to a vote of stockholders of the
Company, each holder of a share of capital stock of the Company shall be
entitled to one vote for each share standing in such holders's name on the books
of the Company, irrespective of the class or series thereof, and all shares of
all classes and series shall vote together as a single class; provided, however,
that

(a) as to any matter with respect to which a separate vote of any
class or series is required by the Investment Company Act of 1940, as amended
("1940 Act"), or any rules, regulations or orders issued thereunder, or by the
Maryland General Corporation Law, such requirement as to a separate vote by that
class or series shall apply in lieu of a general vote of all classes and series
as described above; and

(b) as to any matter which in the judgment of the Board of Directors
(which shall be conclusive) does not affect the interest of a particular class
or series, such class or series shall not be entitled to any vote and only the
holders of shares of the one or more affected classes and series shall be
entitled to vote.

FIFTH: The Company is registered with the Securities and Exchange
Commission as an open-end investment company under the 1940 Act.

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IN WITNESS WHEREOF, First Investors Fund For Income, Inc., has caused
these presents to be signed in its name and on its behalf by its Vice President
and attested by its Assistant Secretary on October 20, 1994.

FIRST INVESTORS FUND FOR INCOME, INC.

ATTEST:
/s/C. Durso
---------------------------------
Concetta Durso, Vice President

/s/Carol R. Lerner
- -------------------------
Carol R. Lerner,
Assistant Secretary

STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )

I HEREBY CERTIFY that on the 20th day of October, 1994, before me the
subscriber, a Notary Public of the State of New York, personally appeared
CONCETTA DURSO, Vice President of First Investors Fund For Income, Inc., a
Maryland corporation, and in the name and on behalf of said corporation
acknowledged the foregoing Articles Supplementary to be the corporate act of
said corporation and further made oath in due form of law that the matters and
facts set forth in the said Articles Supplementary with respect to the approval
thereof are true to the best of his knowledge, information and belief.

WITNESS, my hand and notarial seal, the day and year above written.

/s/Dale Kaplan
----------------------------
Notary Public

[SEAL]

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AMENDED AND RESTATED BY-LAWS

FIRST INVESTORS FUND FOR INCOME, INC.

*******

ARTICLE I

OFFICES

SECTION 1. The principal office of the Corporation shall be in the City
of Baltimore, State of Maryland. The Corporation may also have offices at such
other places both within and without the State of Maryland as the Board of
Directors may from time to time determine or the business of the Corporation may
require.

ARTICLE II

STOCKHOLDERS

SECTION 1. The annual meeting of stockholders shall be held on such day
during the month of April or on such other date and at such time and place
within or without the State of Maryland as may be fixed by the Board of
Directors for the purpose of electing directors and of transacting such other
business as may properly be brought before the meeting; PROVIDED, however, that
an annual meeting of stockholders shall not be required to be held in any year
in which none of the following is required, under the Investment Company Act of
1940, to be acted on by the stockholders: election of directors; approval of the
investment advisory agreement; ratification of independent public accountants or
approval of a distribution agreement.

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SECTION 2. Special meetings of the stockholders for any purpose or
purposes may be called by the Board of Directors or by the President, and must
be called at the written request of stockholders owning not less than
twenty-five percent of the stock then outstanding and entitled to vote. Special
meetings of the stockholders for the purpose of voting on the removal of one or
more directors must be called at the written request of stockholders owning not
less than ten percent of the stock then outstanding and entitled to vote. Any
such meeting shall be held at such time and such place within or without the
State of Maryland as may be stated in the call and notice.

SECTION 3. Written or printed notice of every annual or special meeting
of stockholders, stating the time and place thereof and the general nature of
the business proposed to be transacted at any such meeting, shall be delivered
personally or mailed at least ten days previous thereto to each stockholder of
record entitled to vote at the meeting at his address as the same appears on the
books of the Corporation. Such further notice shall be given as may be required
by law. Meetings may be held without notice if all of the stockholders entitled
to vote are present or represented at the meeting, or if notice is waived in
writing, either before or after the meeting, by those not present or represented
at the meeting. No notice of an adjourned meeting of stockholders other than an
announcement of the time and place thereof at the preceding meeting shall be
required.

SECTION 4. At every meeting of stockholders the holders of record of a
majority of the outstanding shares of the stock of the Corporation entitled to
vote at the meeting, whether present in person or represented by proxy, shall,

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except as otherwise provided by law, constitute a quorum. If at any meeting
there shall be no quorum, the holders of record, entitled to vote at the
meeting, of a majority of such shares so present or represented may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall have been obtained when any business may be
transacted which might have been transacted at the meeting as first convened had
there been a quorum.

SECTION 5. Each stockholder entitled to vote at any meeting shall
(except as otherwise provided in the Articles of Incorporation) have one vote in
person or by proxy for each share of stock held by him. No share shall be
entitled to vote if any installment payable thereon is overdue and unpaid. All
elections of directors shall be held and all questions, except as otherwise
provided by law or by the Articles of Incorporation or by these By-Laws shall be
decided by a majority of the votes cast by stockholders present or represented
and entitled to vote thereat in person or by proxy.

SECTION 6. Meetings of the stockholders shall be presided over by the
Chairman of the Board, if he is not present, by the President or a Vice
President or in their absence, by a Chairman to be chosen at the meeting. The
Secretary of the Corporation, or, if he is not present, an Assistant Secretary
of the Corporation or, if neither is present, a secretary to be chosen at the
meeting shall act as secretary of the meeting.

SECTION 7. The vote on the election of directors, and other questions
properly brought before any meeting, need not be by ballot except when so
demanded by a majority vote of the shares present in person or by proxy and
entitled to

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<PAGE>

vote thereon, or when so ordered by the Chairman of such meeting. The Chairman
of each meeting at which directors are to be elected by ballot or at which any
question is to be voted on shall, at the request of any stockholder present or
represented by proxy at the meeting and entitled to vote at such election or on
such question, appoint two inspectors of election. No director or candidate for
the office of director shall be appointed as such inspector. Inspectors shall
first take and subscribe an oath or affirmation faithfully to execute the duties
of inspector at such meeting with strict impartiality and according to the best
of their ability, and shall take charge of the polls and after the balloting
shall make a certificate of the result of the vote taken.

SECTION 8. The Board of Directors may close the stock transfer books of
the Corporation for a period not exceeding twenty days preceding the date of any
meeting of stockholders, or the date for the payment of any dividend or the date
for the allotment of rights, or the date when any change or conversion or
exchange of stock shall go into effect; or in lieu of closing the stock transfer
books, the Board of Directors may fix in advance a date, not exceeding ninety
days and not less than ten days preceding the date of any meeting of
stockholders, and not exceeding forty days preceding the date for the payment of
any dividend or the date for the allotment of rights, or the date when any
change or conversion or exchange of stock shall go into effect, or a date in
connection with the obtaining of any consent, as a record date, for the
determination of the stockholders entitled to notice of, and to vote at any such
meeting and at any adjournments thereof, or entitled to receive payment of any
such dividend, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion

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<PAGE>

or exchange of stock, or to give consent and in such case such stockholders, and
only such stockholders, as shall be stockholders of record on the date so fixed,
shall be entitled to such notice of, and to vote at, such meeting and any
adjournment thereof, or to receive payment of such dividend, or to receive such
allotment of rights, or to exercise such rights, or to give such consent as the
case may be, notwithstanding any transfer of any stock on the books of the
corporation after any such record date fixed as aforesaid.

ARTICLE III

BOARD OF DIRECTORS

SECTION 1. The Board of Directors of the Corporation shall consist of
not less than three nor more than fifteen persons. The number of directors
(within the above limits) shall be determined by the Board of Directors from
time to time as it sees fit, by vote of a majority of the whole Board. Each
director shall hold office until such time as less than a majority of the
directors then holding office have been elected by the stockholders or upon the
occurrence of any of the conditions described under Section 16 of the Investment
Company Act of 1940, as amended. At such time, a meeting of the stockholders
shall be called for the purpose of electing the Board of Directors and the terms
of office of the directors then in office shall terminate upon the election and
qualification of such Board of Directors. Directors need not be stockholders. A
majority of the whole Board, but in no event less than three, shall constitute a
quorum for the transaction of business, but if at any meeting of the Board there
shall be less than a quorum present, a majority of the directors present may
adjourn the meeting from time to time, until a quorum shall have been obtained

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<PAGE>

where any business may be transacted which might have been transacted at the
meeting as first convened had there been a quorum. No notice of an adjourned
meeting of the directors other than an announcement of the time and place
thereof at the preceding meeting shall be required. The acts of the majority of
the directors present at any meeting at which there is a quorum, shall, except
as otherwise provided by law, by the Articles of Incorporation or by the
By-Laws, be the acts of the Board.

SECTION 2. The Board of Directors, by a vote of a majority of the whole
Board, may elect directors to fill vacancies in the Board resulting from an
increase in the number of Directors or from any other cause. A director so
chosen shall hold office until the next meeting of stockholders or their
respective successors are elected and qualify, unless sooner displaced pursuant
to law or these By-Laws. The stockholders, at any meeting called for the
purpose, may, with or without cause, remove any director by the affirmative vote
of the holders of a majority of the votes entitled to be cast and at any meeting
called for that purpose, fill the vacancy in the Board thus caused.

SECTION 3. Meetings of the Board of Directors shall be held at such
place, within or without the State of Maryland, as may from time to time be
fixed by resolution of the Board as may be specified in the call of any meeting.
Regular meetings of the Board of Directors shall be held at such times as may
from time to time be fixed by resolution of the Board, and special meetings may
be held at any time upon the call of a majority of the persons constituting the
Board of Directors or by the President or the Secretary, by oral, telephonic,
telegraphic or written notice, duly served on or sent or mailed to each director
at least twenty-four hours

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<PAGE>

before the meeting. The notice of any special meeting shall specify the
purposes thereof. Notice need not be given of regular meetings of the Board
held at times fixed by resolution of the Board. Meetings may be held at any time
without notice if all of the directors are present or if notice is waived in
writing, either before or after the meeting of those not present.

SECTION 4. Meetings of the Board of Directors shall be presided over by
the Chairman of the Board or the President, or if neither of the above is
present, by a Chairman to be chosen at the meeting; and the Secretary or, if he
is not present, an Assistant Secretary, or if neither is present, a Secretary to
be chosen at the meeting shall act as Secretary of the Meeting.

SECTION 5. Except as otherwise provided by law or in the Articles of
Incorporation, a director of the Corporation shall, not in the absence of fraud,
be disqualified by his office from dealing or contracting with the Corporation
either as a vendor, purchaser or otherwise, nor in the absence of fraud shall
any transaction or contract of the Corporation be void or voidable or affected
by reason of the fact that any director, or any firm of which any director is a
member, or any corporation of which any director is an officer, director or
stockholder, is in any way interested in such transaction or contract; provided
that at the meeting of the Board of Directors, authorizing or confirming said
contract or transaction, the existence of an interest of such director, firm or
corporation is disclosed or made known and there shall be present a quorum of
the Board of Directors, and such contract or transaction shall be approved by a
majority of such quorum, which majority shall consist of directors not so
interested or connected. Nor shall any

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<PAGE>

director be liable to account to the Corporation for any profit realized by him
or through any such transaction or contract of the Corporation ratified or
approved as aforesaid, by reason of the fact that he or any firm of which he is
a member, or any corporation of which he is an officer, director or stockholder,
was interested in such transaction or contract. Directors so interested may be
counted when present at meetings of the Board of Directors for purposes of
determining the existence of a quorum. Any contract, transaction or act of the
Corporation or of the Board of Directors (whether or not approved or ratified as
hereinabove provided) which shall be ratified by a majority in interest of a
quorum of the stockholders having voting power at any annual meeting or any
special meeting called for such purpose or approved in writing by a majority in
interest of the stockholders having voting power without a meeting shall, except
as otherwise provided by law, be valid and as binding as though ratified by
every stockholder of the Corporation.

SECTION 6. The Board of Directors may, by resolution or resolutions,
passed by a majority of the whole Board, designate one or more of the directors
of the Corporation, which, to the extent permitted by law and provided in said
resolution or resolutions, shall have and may exercise the powers of the Board
over the business and affairs of the Corporation and may have power to authorize
the seal of the Corporation to be affixed to all papers which may require it.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the Board of Directors. A majority
of the members of such committee may determine its action and fix the time and
place of its meetings unless the Board of Directors shall otherwise provide.
The Board of Directors shall have the power at any

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time to change the membership of, or to fill vacancies in, or to dissolve any
such committees.

SECTION 7. The Board may, from time to time, elect one or more persons
to the position of Director Emeritus, which election need not be submitted for
stockholder approval. Such person(s) shall be non-voting honorary directors who
shall not be considered in determining whether a quorum exists, shall have no
right to vote and shall not be responsible for the actions of the Board.

ARTICLE IV

OFFICERS

SECTION 1. The Board of Directors shall appoint a President of the
Corporation and a Secretary and a Treasurer, and may appoint one or more Vice
Presidents, Assistant Secretaries and Assistant Treasurers and, from time to
time, any other officers and agents as it may deem proper. The President shall
be selected from among the Directors. Any two of the above-mentioned offices,
except those of President and a Vice President, may be held by the same person,
but no officer shall execute, acknowledge or verify any instrument in more than
one capacity if such instrument be required by law or by these By-Laws to be
executed, acknowledged or verified by any two or more officers.

SECTION 2. The term of office of all officers shall be one year until
their respective successors are chosen; but any officer or agent chosen or
appointed by the Board of Directors may be removed, with or without cause, at
any time, by the affirmative vote of a majority of the members of the Board then
in office.

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<PAGE>

SECTION 3. Subject to such limitations as the Board of Directors may
from time to time prescribe, the officers of the Corporation shall each have
such powers and duties as generally appertain to their respective offices, as
well as such powers and duties as from time to time may be conferred by the
Board of Directors. Any officer, agent, or employee of the Corporation may be
required by the Board of Directors to give bond for the faithful discharge of
his duties, in such sum and of such character as the Board may from time to time
prescribe.

ARTICLE V

CERTIFICATES OF STOCK

SECTION 1. The Board of Directors of the Corporation may authorize the
issuance of some or all of the shares of any or all of its classes or series
without certificates. In the event a certificate shall be issued, such
certificate shall present the number of shares of stock of such class or series
of the Corporation owned by the stockholder, which certificate or certificates
shall be in such form as the Board of Directors may from time to time prescribe
by a recording of each stockholder's interest on the records of the
Corporation's Transfer Agent. The certificates for shares of stock of the
Corporation shall bear the signature, either manual or facsimile, of the
President or a Vice President and the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary, and shall be sealed with the seal of the
Corporation or bear a facsimile of such seal. The validity of any stock
certificate shall not be affected if any officer whose signature appears thereon
ceases to be an officer of the Corporation before such certificate is issued.

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<PAGE>

SECTION 2. The shares of stock of the Corporation shall be transferable
on the books of the Corporation by the holder thereof in person or by a duly
authorized attorney, upon surrender for cancellation of a certificate or
certificates for a like number of shares, with a duly executed assignment and
power of transfer endorsed thereon or attached thereto, and with such proof of
the authenticity of the signatures as the Corporation or its agent may
reasonably require.

SECTION 3. No certificate for shares of stock of the Corporation shall
be issued in place of any certificate alleged to have been lost, stolen,
mutilated or destroyed, except upon production of such evidence of the loss,
theft, mutilation or destruction, and upon indemnification of the Corporation
and its agents to such extent and in such manner as the Board of Directors may
from time to time prescribe.

ARTICLE VI

CORPORATE BOOKS

SECTION 1. The books of the Corporation, except the original or a
duplicate stock ledger, may be kept outside the State of Maryland at such place
or places as the Board of Directors may from time to time determine.

ARTICLE VII

SIGNATURES

SECTION 1. Except as otherwise provided in these By-Laws or as the
Board of Directors may generally or in particular cases authorize the execution
thereof in some other manner, all deeds, leases, transfers, contracts, bonds,
notes, checks, drafts and other obligations made, accepted or endorsed by the
Corporation and all endorsements,

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assignments, transfers, stock powers or other instruments of transfer of
securities owned by or standing in the name of the Corporation shall be signed
or executed by two officers of the Corporation who shall be the President or a
Vice President and a Vice President, the Secretary or the Treasurer.

SECTION 2. The President of the Corporation or, in his absence or
disability or at his request, a Vice President of the Corporation may authorize
from time to time the signature and issuance of proxies to vote upon shares of
stock of other corporations owned by the Corporation unless otherwise provided
by the Board of Directors. All proxies for shares held in the name of the
Corporation shall be signed in the name of the Corporation by two officers of
the Corporation, who shall be the President or a Vice President and a Vice
President, the Secretary or the Treasurer.

ARTICLE VIII

FISCAL YEAR

SECTION 1. The fiscal year of the Corporation shall be the calendar
year or such other period as may be prescribed by the Board of Directors.

ARTICLE IX

CORPORATE SEAL

SECTION 1. The corporate seal of the Corporation shall consist of a
flat faced circular die with the word "Maryland" together with the name of the
Corporation, the year of its organization and such other appropriate legend as
the Board of Directors may from time to time determine, cut or engraved thereon.
In lieu of the corporate seal when so authorized by the Board of Directors or a
duly empowered

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committee thereof, a facsimile thereof may be impressed or affixed or
reproduced.

ARTICLE X

INDEMNIFICATION OF OFFICERS AND DIRECTORS

SECTION 1. Every person who is or was a director or officer of this
Corporation (and his heirs, executors and administrators) shall be indemnified
by the Corporation against reasonable costs and expenses incurred by him in
connection with any action, suit or proceeding to which he may be made a party
to by reason of his being or having been a director or officer of the
Corporation, except in relation to any action, suit or proceeding in which he
has been adjudged liable because of negligence or misconduct, which shall be
deemed to include willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office. In the absence
of any adjudication which expressly absolves the director or officer of
liability to the Corporation or its stockholders for negligence or misconduct,
within the meaning thereof as used herein, or in the event of a settlement, each
director and officer (his heirs, executors and administrators) shall be
indemnified by the Corporation against payments made, including reasonable costs
and expenses, provided that such indemnity shall be conditioned upon the prior
determination by a resolution of two-thirds of those members of the Board of
Directors of the Corporation who are not involved in the action, suit or
proceeding that the director or officer has no liability by reason of negligence
or misconduct, within the meaning thereof as used herein, and provided further
that if a majority of the members of the Board of Directors of the Corporation
are involved in the action, suit or proceeding, such determination shall have
been made by a written opinion

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of independent counsel. Amounts paid in settlement shall not exceed the costs,
fees and expenses which would have been incurred had such action, suit or
proceeding been litigated to a conclusion. Such a determination by the Board of
Directors or by independent counsel, and the payments of amounts by the
Corporation on the basis thereof shall not prevent a stockholder from
challenging such indemnification by appropriate legal proceedings on the grounds
that the person indemnified was liable to the Corporation or its security
holders by reason of negligence or misconduct, within the meaning thereof as
used herein. The foregoing right and indemnification shall not be exclusive of
any other rights to which any officer or director (or his heirs, executors and
administrators) may be entitled according to law.

ARTICLE XI

INVESTMENT RESTRICTIONS

SECTION 1. Notwithstanding any of the foregoing provisions, the power
of the Corporation to invest and reinvest its assets and to hold, sell,
exchange, pledge, mortgage, hypothecate or otherwise dispose of or turn to
account or realize upon and generally deal in securities and investments of
every kind or description or in and with its own credit, shall be expressly
limited as follows.

(a) The Corporation shall not borrow money except from banks and only for
temporary or emergency purposes and then in amounts not in excess of 5%
of its total assets taken at cost or value, whichever is the lesser.

(b) The Corporation shall not engage in making loans to other persons.

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(d) The Corporation shall not purchase or sell real estate or commodities or
commodity contracts.

(e) The Corporation shall not purchase any securities on margin.

(f) With respect to 75% of the Corporation's total assets, the Corporation
shall not purchase the securities of any issuer (other than obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities) if, as a result, (1) more than 5% of the
Corporation's total assets would be invested in the securities of that
issuer, or (2) the Corporation would hold more than 10% of the
outstanding voting securities of that issuer.

(g) The Corporation shall not invest in companies for the purpose of
exercising control or management.

(h) The Corporation shall not purchase or retain in its portfolio the
securities of any issuer if, to the knowledge of the Corporation, any
officer or director of the Corporation, any person or organization which
is an investment adviser of the Corporation (as defined in the
Investment Company Act of 1940), or any officer, director, partner or
trustee of, or person owning of record more than 10% of the stock of,
any such investment adviser, owns beneficially more than 1/2 of 1% of
the outstanding securities of any class of such issuer and the persons
or organizations so owning more than 1/2 of 1% of such securities
together own beneficially more than 5% of such securities.

(i) The Corporation shall not invest in the securities of issuers which have
been in operation for less than three years (including the operations of
predecessors) if such investment at the time thereof would cause more
than 5% of the total assets of the Corporation, taken at market value,
to be invested in securities of all such issuers.

(j) The Corporation shall not purchase the securities of other investment
companies except in connection with a merger of another investment
company.

(k) The Corporation shall not invest more than 25% of the value of its
assets in a particular industry at any one time.

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(l) The Corporation shall require its officers and directors and any firm or
organization through which the Corporation issues its own shares and
with which the Corporation has contractual relations, not to take a
short position in the stock of the Corporation or to hold back orders to
purchase stock of the Corporation or to buy stock of the Corporation in
anticipation of orders to purchase such stock.

(m) The securities and all other investments of the Corporation shall be
held by an independent custodian which shall be a bank or trust company
having not less than $2,000,000 aggregate capital and surplus.

(n) The Corporation shall not pledge, mortgage or hypothecate any of its
assets.

SECTION 2. The Corporation shall not purchase or sell any securities
(other then the capital stock of the Corporation) from or to any of the
following acting as principals, and shall not make any loan to (i) officers or
directors of the Corporation, (ii) any partnership of which any officer or
director of the Corporation is a member, (iii) any corporation or association of
which any officer or director of the Corporation is an officer, director or
trustee, except as permitted by applicable law or regulation; (iv) any person or
organization furnishing advisory or supervisory services to the Corporation, (v)
any officer, director, partner or trustee of, or person owning of record 10% or
more of the stock of, any person or organization furnishing such advisory or
supervisory services, (vi) any partnership of which any officer, director,
partner or trustee of, or person owning of record 10% or more of the stock of,
any person or organization furnishing such advisory or supervisory services, is
a member, or (vii) any corporation or association of which any officer,
director, partner or trustee of or person owning of record 10% or more of the
stock of, any person or organization furnishing such advisory or supervisory
services, is an officer or director

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or trustee; provided, however, that nothing contained in (iii) or (vii) shall
prevent the purchase of additional securities from any corporation or
association referred to in such clauses upon the exercise of rights issued to
the Corporation as a part of a general offering to the holders of securities of
such corporation or association.

SECTION 3. The Corporation may enter into advisory or supervisory
contracts and other contracts with, and may otherwise do business with, First
Investors Management Company, Inc. and First Investors Corporation,
notwithstanding that the Board of Directors of the Corporation may be composed
in part of directors, officers or employees of said corporations and officers of
the Corporation may have been or may be or become directors, officers or
employees of said corporations, and notwithstanding that First Investors
Management Company, Inc. may act as investment advisor to other investment
companies investing in securities similar or identical with those owned by the
Corporation and may at or about the same time recommend, purchase or sell the
same securities to the Corporation and such other investment companies, and in
the absence of fraud the Corporation and said corporations may deal freely with
each other, and neither such advisory or supervisory contract nor any other
contract or transaction between the Corporation and said corporations shall be
invalidated or in any manner affected thereby, nor shall any director or officer
of the Corporation be liable to the Corporation or any stockholder or creditor
thereof or to any other person for any loss incurred by it or him by reason of
any such contract or transaction; provided that nothing herein shall protect any
director or officer of the Corporation against any liability he would otherwise
be subject by reason of willful misfeasance, bad faith, gross

- 17 -

<PAGE>

negligence or reckless disregard of the duties involved in the conduct of his
office; and provided always that such contracts or transactions shall have been
on terms that were not unfair at the time at which it was entered into.

ARTICLE XII

ADDITIONAL PROVISIONS

SECTION 1. The books of account of the Corporation shall be examined by
an independent firm of public accountants, selected as required by law, at the
close of each fiscal year of the Corporation and at such other times, if any, as
may be directed by the Board of Directors of the Corporation. A report to the
shareholders based upon each such examination shall be mailed to each
shareholder of the Corporation, of record on such date with respect to each
report as may be determined by the Board of Directors, at his address as the
same appears on the books of the Corporation. Each such report shall show the
assets and liabilities of the Corporation as of the close of the period covered
by the report, its income and expenses, the net asset value of its outstanding
shares, the securities in which the funds of the Corporation were invested and
such other matters as the Board of Directors shall determine.

- 18 -

<PAGE>

ARTICLE XIII

AMENDMENTS

SECTION 1. The By-Laws of the Corporation may be amended, added to,
rescinded or repealed at any meeting of 7the shareholders, or by a majority vote
of the directors then in office at any meeting of the Board of Directors,
provided notice of the substance of the proposed change is contained in the
notice of the meeting or any waiver thereof; except that after the initial issue
of any shares of capital stock of the Corporation, the provisions of Section 1
of Article XI hereof and this Article XIII, may be altered, amended or repealed
only upon the affirmative vote of the lesser of (i) more than fifty percent
(50%) of the outstanding shares of the capital stock of the Corporation, or (ii)
sixty-seven percent (67%) or more of the shares of capital stock present at a
meeting if more than fifty percent (50%) of the outstanding shares of capital
stock of the Corporation are represented at the meeting in person or by proxy.

- 19 -

<PAGE>

FIRST INVESTORS FUND FOR INCOME, INC.
INVESTMENT ADVISORY AGREEMENT

This Agreement is made as of June 13, 1994, by and between FIRST INVESTORS
FUND FOR INCOME, INC., a Maryland corporation ("Company"), and FIRST INVESTORS
MANAGEMENT COMPANY INC., a New York corporation ("Manager").

WHEREAS, the Company is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as an open-end, diversified management investment
company consisting of one or more separate series of shares ("Series"), each
having its own assets and investment policies; and

WHEREAS, the Manager is an investment adviser under the Investment Advisers
Act of 1940, as amended; and

WHEREAS, the Company desires to retain the Manager as investment adviser to
furnish investment advisory and portfolio management services to each Series of
the Company as now exists and to each such other Series of the Company
hereinafter established as agreed to from time to time by the parties hereto
(hereinafter, "Series" shall refer to each Series of the Company which is
subject to this Agreement), and the Manager is willing to furnish such services.

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:

1. APPOINTMENT. The Company hereby appoints the Manager as investment
adviser of the Company and each Series listed on Schedule A of this Agreement
(as such Schedule may be amended from time to time) for the period and on the
terms set forth in this Agreement. The Manager accepts such appointment and
agrees to render the services herein set forth for compensation as set forth on
Schedule A. In the performance of its duties, the Manager will act in the best
interests of the Company and the Series and will comply with (a) applicable laws
and regulations, including, but not limited to, the 1940 Act, (b) the terms of
this Agreement, (c) the Company's Articles of Incorporation, By-Laws and
currently effective registration statement under the Securities Act of 1933, as
amended, and the 1940 Act, and any amendments thereto, (d) relevant undertakings
to state securities regulators which also have been provided to the Manager, (e)
the stated investment objective(s), policies and restrictions of each applicable
Series, and (f) such other guidelines as the Company's Board of Directors
("Board") reasonably may establish.

2. DUTIES OF THE MANAGER.

(a) INVESTMENT PROGRAM. Subject to supervision by the Board, the
Manager will provide a continuous investment program for each Series and shall
determine what securities and other investments will be purchased, retained or
sold by each Series.

<PAGE>

The Manager will exercise full discretion and act for each Series in the same
manner and with the same force and effect as such Series itself might or could
do with respect to purchases, sales, or other transactions, as well as with
respect to all other things necessary or incidental to the furtherance or
conduct of such purchases, sales or other transactions.

(b) OTHER MANAGEMENT SERVICES. The Manager agrees to conduct the
business and details of the operation of the Series as shall be agreed to from
time to time by the parties hereto; provided, however, that the Manager shall
not act as custodian for Series assets. The Manager also agrees, at its own
cost, to provide the Series with certain executive, administrative and clerical
personnel and to provide the Series with office facilities and supplies.

(c) EXECUTION OF TRANSACTIONS. The Manager will place orders pursuant
to its investment determinations for each Series either directly with the issuer
or through any brokers or dealers. In the selection of brokers or dealers and
the placement of orders for the purchase and sale of portfolio investments for
each Series, the Manager shall use its best efforts to obtain for each Series
the most favorable price and execution available, except to the extent that it
may be permitted to pay higher brokerage commissions for brokerage or research
services as described below. In using its best efforts to obtain the most
favorable price and execution available, the Manager, bearing in mind each
Series' best interests at all times, shall consider all factors it deems
relevant, including by way of illustration, price, the size of the transaction,
the nature of the market for the security, the amount of the commission, the
timing of the transaction taking into account market prices and trends, the
reputation, experience and financial stability of the broker or dealer involved
and the quality of service rendered by the broker or dealer in other
transactions. Subject to such policies as the Board may determine, the Manager
shall not be deemed to have acted unlawfully or to have breached any duty
created by this Agreement or otherwise solely by reason of its having caused a
Series to pay a broker that provides brokerage or research services to the
Manager an amount of commission for effecting a portfolio investment transaction
in excess of the amount of commission another broker would have charged for
effecting that transaction if the Manager determines in good faith that such
amount of commission is reasonable in relation to the value of the brokerage or
research services provided by such broker or dealer, viewed in terms of either
that particular transaction or the Manager's overall responsibilities with
respect to such Series and to other clients of the Manager as to which the
Manager exercises investment discretion.

(d) REPORTS TO THE BOARD. Upon request, the Manager will provide the
Board with economic and investment analyses and reports and make available to
the Board any economic, statistical and investment services normally available
to institutional or other customers of the Manager.

<PAGE>

(e) DELEGATION OF AUTHORITY. Any of the foregoing duties specified in
this paragraph 2 with respect to one or more Series may be delegated by the
Manager, at the Manager's expense, to an appropriate party, subject to such
approval by the Board and shareholders of the applicable Series as may be
required by the 1940 Act. The Manager shall oversee the performance of
delegated duties by any such other party and shall furnish the Board with
periodic reports concerning the performance of delegated responsibilities by
such party.

3. SERVICES NOT EXCLUSIVE. The services furnished by the Manager hereunder
are not to be deemed exclusive and the Manager shall be free to furnish similar
services to others so long as its services under this Agreement are not impaired
thereby. Nothing in this Agreement shall limit or restrict the right of any
director, officer or employee of the Manager, who may also be a Director,
officer or employee of the Company, to engage in any other business or to devote
his or her time and attention in part to the management or other aspects of any
other business, whether of a similar nature or a dissimilar nature.

4. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Manager hereby agrees that all records which it
maintains for the Company are the property of the Company and further agrees to
surrender promptly to the Company any of such records upon the Company's
request. The Manager further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act the records required to be maintained by
Rule 31a-1 under the 1940 Act.

5. EXPENSES.

(a) EXPENSES OF THE COMPANY. During the term of this Agreement, each
Series will bear all expenses not specifically assumed by the Manager incurred
in its operations and the offering of its shares. Expenses borne by each Series
will include, but not be limited to, the following (or each Series'
proportionate share of the following): brokerage commissions relating to
securities purchased or sold by the Series or any losses incurred in connection
therewith; fees payable to and expenses incurred on behalf of the Series by the
Manager; expenses of organizing the Series; filing fees and expenses relating to
the registration and qualification of the Series' shares under federal or state
securities laws and maintaining such registrations and qualifications;
distribution fees; fees and salaries payable to the members of the Board and
officers who are not officers or employees of the Manager; taxes (including any
income or franchise taxes) and governmental fees; costs of any liability,
uncollectible items of deposit and other insurance or fidelity bonds; any costs,
expenses or losses arising out of any liability of or claim for damage or other
relief asserted against the Company or Series for violation of any law; legal,
accounting and auditing expenses, including legal fees of special counsel for
the independent directors; charges of custodians, transfer agents and other
agents; costs of

<PAGE>

preparing share certificates; expenses of setting in type and printing
prospectuses and supplements thereto for existing shareholders, reports and
statements to shareholders and proxy materials; any extraordinary expenses
(including fees and disbursements of counsel) incurred by the Company or Series;
and fees and other expenses incurred in connection with membership in investment
company organizations.

(b) FEE WAIVERS AND REIMBURSEMENTS. If the expenses borne by a Series
in any fiscal year exceed the applicable expense limitations imposed by the
securities regulations of any state in which shares are registered or qualified
for sale to the public, the Manager will waive its fee or reimburse such Series
for any excess up to the amount of the fee payable to it during that fiscal year
pursuant to paragraph 6 hereof.

6. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement with respect to each Series, the Company will pay the
Manager, effective from the date of this Agreement, a fee which is computed
daily and paid monthly from each Series' assets at the annual rates as
percentages of that Series' average daily net assets as set forth in the
attached Schedule A, which Schedule can be modified from time to time to reflect
changes in annual rates or the addition or deletion of a Series from the terms
of this Agreement, subject to appropriate approvals required by the 1940 Act.
If this Agreement becomes effective or terminates with respect to any Series
before the end of any month, the fee for the period from the effective date to
the end of the month or from the beginning of such month to the date of
termination, as the case may be, shall be prorated according to the proportion
that such period bears to the full month in which such effectiveness or
termination occurs.

7. LIMITATION OF LIABILITY OF THE MANAGER. The Manager shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Company or any Series in connection with the matters to which this Agreement
relate except a loss resulting from the willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement. Any person,
even though also an officer, partner, employee, or agent of the Manager, who may
be or become an officer, Board member, employee or agent of the Company shall be
deemed, when rendering services to the Company or acting in any business of the
Company, to be rendering such services to or acting solely for the Company and
not as an officer, partner, employee, or agent or one under the control or
direction of the Manager even though paid by it.

8. DURATION AND TERMINATION.

(a) EFFECTIVENESS. This Agreement shall become effective upon the date
hereinabove written, provided that, with respect to a Series, this Agreement
shall not take effect unless it has first been approved (i) by a vote of a
majority of those members of the

<PAGE>

Board who are not parties to this Agreement or interested persons of any such
party ("Independent Board Members") cast in person at a meeting called for the
purpose of voting on such approval, and (ii) by an affirmative vote of a
majority of the outstanding voting securities of such Series.

(b) RENEWAL. Unless sooner terminated as provided herein, this
Agreement shall continue in effect for two years from the above written date.
Thereafter, if not terminated, this Agreement shall continue automatically for
successive periods of twelve months each, provided that such continuance is
specifically approved at least annually (i) by a vote of a majority of the
Independent Board Members cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by the Board or, with respect to any given
Series, by an affirmative vote of a majority of the outstanding voting
securities of such Series.

(c) TERMINATION. Notwithstanding the foregoing, with respect to any
Series, this Agreement may be terminated at any time by vote of the Board or by
vote of a majority of the outstanding voting securities of such Series on 60
days' written notice delivered or mailed by registered mail, postage prepaid, to
the Manager. The Manager may at any time terminate this Agreement on 60 days'
written notice delivered or mailed by registered mail, postage prepaid, to the
Company. This Agreement automatically and immediately will terminate in the
event of its assignment. Termination of this Agreement pursuant to this
paragraph 8 shall be without the payment of any penalty. Termination of this
Agreement with respect to a given Series shall not affect the continued validity
of this Agreement or the performance thereunder with respect to any other
Series.

9. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no material amendment of this Agreement
as to a given Series shall be effective until approved by vote of the holders of
a majority of the outstanding voting securities of such Series.

10. NAME OF COMPANY. The Company or any Series may use the name "First
Investors" only for so long as this Agreement or any extension, renewal or
amendment hereof remains in effect, including any similar agreement with any
organization which shall have succeeded to the business of the Manager. At such
time as such an agreement shall no longer be in effect, the Company and each
Series will (to the extent that it lawfully can) cease to use any name derived
from First Investors Management Company, Inc. or any successor organization.

11. GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the State of New York, without giving effect to the conflicts of laws
principles thereof, and in accordance with the 1940 Act. To the extent that the
applicable

<PAGE>

laws of the State of New York conflict with the applicable provisions of the
1940 Act, the latter shall control.

12. DEFINITIONS. As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested person," and "assignment" shall have
the same meanings as such terms have in the 1940 Act.

13. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors.

14. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.

FIRST INVESTORS FUND FOR INCOME,
Attest: INC.

By: /s/C. Durso By: /s/Glenn O. Head
------------------------------ ---------------------------------
C. Durso, Secretary Glenn O. Head, President

FIRST INVESTORS MANAGEMENT
Attest: COMPANY, INC.

By: /s/Carol R. Lerner By: /s/Kathryn S. Head
------------------------------ ---------------------------------
Carol R. Lerner, Kathryn S. Head, President
Secretary

<PAGE>

FIRST INVESTORS FUND FOR INCOME, INC.
INVESTMENT ADVISORY AGREEMENT

SCHEDULE A

Compensation pursuant to Paragraph 6 of this First Investors Fund For Income,
Inc. Investment Advisory Agreement shall be calculated in accordance with the
following schedule:

Advisory Fee as %
Average Daily of Average Daily
Net Assets Net Assets
------------------ -------------------
<S> <C>
Up to $250 million 0.75%
In excess of $250 million to $500 million 0.72%
In excess of $500 million to $750 million 0.69%
Over $750 million 0.66%

</TABLE>

Dated: June 13, 1994

<PAGE>

UNDERWRITING AGREEMENT

BETWEEN

FIRST INVESTORS FUND FOR INCOME, INC.

AND

FIRST INVESTORS CORPORATION

This AGREEMENT entered into the 17th day of March, 1994, by and between
FIRST INVESTORS FUND FOR INCOME, INC., a Maryland corporation, with an office
located at 95 Wall Street, New York, New York 10005 (the "Fund"), and FIRST
INVESTORS CORPORATION, a New York corporation with its principal office located
at 95 Wall Street, New York, New York 10005 (the "Underwriter").

In consideration of the mutual covenants and agreements of the parties
hereto, the parties mutually covenant and agree with each other as follows:

1. APPOINTMENT. The Fund hereby appoints the Underwriter as agent of the
Fund to effect the sale and public distribution of shares of each series and
each class of common stock of the Fund as now exists or is hereafter established
("Shares"). This appointment is made by the Fund and accepted by the
Underwriter upon the understanding that (a) upon the request of the Underwriter,
the Fund will prepare, execute and file such applications for registration and
qualification of the Shares as are required by federal and state law in such
amounts as the Underwriter reasonably may determine, (b) the distribution of the
Shares to the public be effected by the Underwriter or through various
securities dealers, and (c) the distribution of the Shares shall be done in such
manner that the Fund shall be under no responsibility or liability to any person
whatsoever on account of the acts and statements of any such person or their
agents or employees. The Underwriter shall have the sole right to select the
security dealers to whom the Shares will be offered by it and, subject to
express provisions of this Agreement, the Articles of Incorporation, By-Laws and
the Fund's then current Registration Statement, to determine the terms and
prices in any contract for the sale of Shares to any dealer made by it as such
agent for the Fund.

2. UNDERWRITER AS EXCLUSIVE AGENT. The Underwriter shall be the
exclusive agent for the Fund for the sale of the Shares and the Fund agrees that
it will not sell any Shares to any person except to fill orders for the Shares
received through the Underwriter, provided, however, that the foregoing
exclusive right shall not apply to: (a) Shares issued or sold in connection with
the merger or consolidation of any other investment company with the Fund or the
acquisition by purchase or otherwise of all or substantially all the outstanding
shares of any such company by the Fund, (b) Shares which may be offered by the
Fund to its shareholders for reinvestment of cash distributed from capital gains
or net

<PAGE>

investment income of the Fund, or such gains or income paid in the form of
Shares, or (c) Shares which may be issued to shareholders of other investment
companies who exercise the exchange and/or cross-investment privileges set forth
in the Fund's then current Registration Statement.

3. SALES TO DEALERS. The Underwriter shall have the right to sell the
Shares to dealers, as needed (making reasonable allowance for clerical errors
and errors of transmission), but not more than the Shares needed to fill
unconditional orders for Shares placed with the Underwriter by dealers. In
every case the Fund shall receive the net asset value for the Shares sold,
determined as provided in Paragraph 4 hereof. The Underwriter shall notify the
Fund at the close of each business day of the number of Shares sold during each
day.

4. DETERMINATION OF NET ASSET VALUE. The net asset value of each series
or class of Shares shall be determined by the Fund or the Fund's custodian, or
such officer or officers or other persons as the Board of Directors of the Fund
may designate. The determinations shall be made once a day on each day that the
New York Stock Exchange is open for a full business day and in accordance with
the method set forth in the Fund's then current Registration Statement.

5. PUBLIC OFFERING PRICE. The public offering price of each series or
class of Shares shall be the net asset value per Share (as determined by the
Fund) of the outstanding Shares of such series or class, plus any applicable
sales charge as described in the Fund's then current Registration Statement.
The Fund shall furnish (or arrange for another person to furnish) the
Underwriter with quotations of public offering prices on each business day.

6. REPURCHASE AND REDEMPTION OF SHARES.

(a) The Fund appoints and designates the Underwriter as agent of the Fund,
and the Underwriter accepts such appointment as such agent, to redeem or
repurchase for retirement the Shares in accordance with the provisions of the
Articles of Incorporation and By-Laws of the Fund.

(b) In connection with such redemptions or repurchases the Fund authorizes
and designates the Underwriter to take any action, to make any adjustments in
net asset value (including the deduction of a contingent deferred sales charge,
if applicable, as provided in Paragraph 8 hereof) and to make any arrangements
for the payment of the redemption or repurchase price authorized or permitted to
be taken or made as set forth in the By-Laws and the Fund's then current
Registration Statement.

(c) The authority of the Underwriter under this Paragraph 6 may, with the
consent of the Fund, be re-delegated in whole or in part to another person or
firm.

- 2 -

<PAGE>

(d) To the extent permitted by law and applicable regulations, the
authority granted in this Paragraph 6 may be suspended by the Fund at any time
or from time to time until further notice to the Underwriter.

7. ALLOCATION OF EXPENSES. The Underwriter (or one of its non-investment
company affiliates) shall bear all fees and expenses incident to the
registration and qualification of the Shares, the cost of preparing and
disseminating sales material or literature, as well as the costs of preparing
and disseminating prospectuses, proxy material and shareholder reports used in
connection with the sale of the Shares except, as discussed below, to the extent
that such materials are being sent to existing shareholders or the Fund has
agreed to bear the cost of such expenses under a Plan (as defined in Paragraph 8
hereof). The Fund shall bear all expenses related to communications with its
existing shareholders, including the costs of preparing, printing and mailing
prospectuses, statements of additional information, proxy materials and other
materials sent to such shareholders.

8. COMPENSATION. As compensation for providing services under this
Agreement, the Underwriter shall retain the sales charge, if any (including a
contingent deferred sales shares, if applicable), on purchases or, if
applicable, on redemptions of Shares as set forth in the Fund's then current
Registration Statement. With regard to purchases, the Underwriter is authorized
to collect the gross proceeds derived from the sale of the Shares, remit the net
asset value thereof to the Fund upon receipt of the proceeds and retain the
sales charge, if any. With regard to redemptions, the Underwriter is authorized
to retain the contingent deferred sales charge, if any, imposed on the
redemption of Shares as may be authorized by the Board of Directors and set
forth in the Fund's then current Registration Statement. The Underwriter may
reallow any or all of such sales charges to such dealers as it may from time to
time determine. Whether a sales charge shall be retained by the Underwriter
shall be determined in accordance with the Fund's then current Registration
Statement and applicable law. The Underwriter may also receive from the Fund a
distribution and/or service fee at the rate and under the terms and conditions
of any plan or plans of distribution (collectively and singularly, "Plan") as
have been or may be adopted by the Fund, subject to any further limitations on
such fee as the Board of Directors may impose.

9. EFFECTIVENESS OF AGREEMENT. This Agreement shall become effective
upon the date hereabove written, provided that, with respect to any series or
class of Shares created after the date of this Agreement, this Agreement shall
not take effect unless such action has first been approved by vote of a majority
of the Board of Directors and by vote of a majority of those directors of the
Fund who are not interested persons of the Fund and have no direct or indirect
financial interest in the operation of the Plan or in any agreements related
thereto (all such directors collectively being referred to herein as the
"Independent Directors"), cast in

- 3 -

<PAGE>

person at a meeting called for the purpose of voting on such action.

10. TERMINATION OF AGREEMENT. This Agreement shall continue in effect for
a period of more than one year from its effective date only as long as such
continuance is approved, at least annually, by the Board of Directors of the
Fund, including a majority of the Independent Directors, voting in person at a
meeting called for the purpose of voting on such approval. This Agreement may
be terminated by either party hereto upon thirty (30) days' written notice to
the other party. This Agreement shall automatically terminate in the event of
its assignment by the Underwriter, as the term "assignment" is defined by the
Investment Company Act of 1940, as amended ("1940 Act"), unless the Securities
Exchange Commission ("SEC") has issued an order exempting the Fund and the
Underwriter from the provisions of the 1940 Act which would otherwise have
effected the termination of this Agreement.

11. AMENDMENTS. No amendment to this Agreement shall be executed or
become effective unless its terms have been approved: (a) by a majority of the
Directors of the Fund, or (b) by the vote of a majority of the outstanding
voting securities of the Fund and, in either case, by a vote of a majority of
the Independent Directors.

12. LIMITATION OF LIABILITY. The Underwriter agrees to use its best
efforts in effecting the sale and public distribution of the Shares through
dealers and in performing its duties in redeeming and repurchasing the Shares,
but nothing contained in this Agreement shall make the Underwriter or any of its
officers, directors or shareholders liable for any loss sustained by the Fund or
any of its officers, directors or shareholders, or by any other person on
account of any act done or omitted to be done by the Underwriter under this
Agreement, provided that nothing contained herein shall protect the Underwriter
against any liability to the Fund or to any of its shareholders to which the
Underwriter would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence in the performance of its duties as Underwriter or by
reason of its reckless disregard of its obligations or duties as Underwriter
under this Agreement. Nothing in this Agreement shall protect the Underwriter
from any liabilities which it may have under the Securities Act of 1933, as
amended ("1933 Act"), or the 1940 Act.

13. DEFINITIONS. The terms "assignment," "interested person," and
"majority of the outstanding voting securities" shall have the meanings given to
them by Section 2(a) of the 1940 Act, subject to such exemptions as may be
granted by the SEC by any rule, regulation or order. Additionally, the term
"Registration Statement" shall mean the registration statement most recently
filed by the Fund with the SEC and effective under the 1940 Act and 1933 Act, as
such Registration Statement is amended from time to time, and the terms
"Prospectus" and "Statement of Additional Information" shall mean, respectively,
the form of prospectus(es)

- 4 -

<PAGE>

and statement(s) of additional information with respect to the Fund filed by it
as part of the Registration Statement.

14. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of New York, without giving effect to the conflicts of
laws principles thereof, and in accordance with the 1940 Act. To the extent
that the applicable laws of the State of New York conflict with the applicable
provisions of the 1940 Act, the latter shall control.

15. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors.

16. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.

IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.

FIRST INVESTORS FUND FOR INCOME, INC.

By: /s/Glenn O. Head
------------------------
Glenn O. Head
President
ATTEST:

/s/C. Durso
- -----------------------
Concetta Durso
Secretary

FIRST INVESTORS CORPORATION

By: /s/Michael S. Miller
-----------------------------
Michael S. Miller
Chief Executive Officer
ATTEST:

/s/Carol R. Lerner
- --------------------------
Carol R. Lerner
Assistant Secretary

- 5 -

<PAGE>

CUSTODIAN AGREEMENT
BETWEEN
IRVING TRUST COMPANY
AND
FIRST INVESTORS FUND FOR INCOME, INC.

CUSTODIAN AGREEMENT, made this 25th day of February, 1985, between FIRST
INVESTORS FUND FOR INCOME, INC., a corporation organized and existing under the
laws of the State of Maryland, having its office and place of business at 120
Wall Street, New York, New York 10005 (hereinafter called the "Fund") and Irving
Trust Company, a banking corporation organized and existing under the laws of
the State of New York, having its principal office and place of business at One
Wall Street, New York, New York 10015 (hereinafter called the "Custodian").

WITNESSETH:

That for and in consideration of the mutual promises hereinafter set forth
the Fund and the Custodian agree as follows:

APPOINTMENT OF CUSTODIAN

1. The Fund hereby constitutes and appoints the Custodian as custodian of
all the securities and monies at any time owned by the Fund during the period of
this Agreement.

2. The Custodian hereby accepts appointment as such custodian and agrees
to perform the duties thereof as hereinafter set forth.

CUSTODY OF CASH AND SECURITIES

1. The Fund will deliver or cause to be delivered to the Custodian all
securities and all monies owned by it, including cash received for the issuance
of its shares, at any time during the period of this Agreement. The Custodian
will not be responsible for such securities and such monies until actually
received by it.

2. The Custodian shall credit to a separate account in the name of the
Fund all monies received by it for the account of the Fund, and shall disburse
the same only:

(a) In payment for securities purchased, as provided in Article III
hereof;

(b) In payment of dividends or distributions as provided in Article V
hereof;

<PAGE>

(d) In payment for capital stock of the Fund redeemed by it, as
provided in Article VI hereof;

(e) Pursuant to an officers certificate, or with respect to money
market securities, as defined in Article IX, the oral instructions of an
authorized person, as defined in Article IX, setting forth the name and address
of the person to whom payment is to be made, the amount to be paid, and the
corporate purpose for which payment is to be made; and

(f) In payment of the fees and in reimbursement of the expenses and
liabilities of the Custodian, as provided in Article VII hereof.

3. The Custodian shall provide the Fund promptly after the close of
business on each day with a statement summarizing all transactions and entries
for the account of the Fund during said day, and it shall, at least monthly and
from time to time, at the reasonable request of the Fund, render a detailed
statement of the securities and monies held for the Fund under this Agreement.

4. All securities held for the Fund, which are issued or issuable only in
bearer form, shall be held by the Custodian in that form; all other securities
held for the Fund may be registered in the name of the Fund or in the name of
any duly appointed and registered nominee of the Custodian, as the Custodian may
from time to time determine. The Fund agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold or deliver in proper
form for transfer, or to register in the name of its registered nominee, any
securities which it may held for the account of the Fund and which may from time
to time be registered in the name of the Fund. The Custodian shall hold all
securities in a separate account in the name of the Fund physically segregated
at all times from those of any person or persons. Notwithstanding the
foregoing, to the extent authorized by the Board of Directors of the Fund, the
Custodian may deposit securities in a clearing agency or the book entry system
of the Federal Reserve Banks, as provided in Rule 17f-4 of the Investment
Company Act of 1940, as amended, and securities deposited in such agency may be
registered in the name of such agency or its nominee.

5. Unless otherwise instructed to the contrary by an officers certificate,
the Custodian shall, with respect to all securities held for the Fund:

(a) Collect all income due or payable;

(b) Present for payment and collect the amount payable upon all
securities which may mature or be called, redeemed, or retired, or otherwise
become payable;

<PAGE>

(d) Execute, as custodian, any necessary declarations or certificates
of ownership under the Federal Income Tax laws or the laws or regulations of any
other taxing authority now or hereafter in effect; and

(e) Hold for the account of the Fund all stock dividends, rights
and similar securities issued with respect to any securities held by it
hereunder.

6. Upon receipt of an officers certificate and not otherwise, the
Custodian shall:

(a) Execute and deliver to such persons as may be designated in such
officers certificate, proxies, consents, authorizations, and any other
instruments whereby the authority of the Fund as owner of any securities may be
exercised;

(b) Deliver any securities held for the Fund in exchange for other
securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation or the exercise of any conversion privilege;

(c) Deliver any securities held for the Fund to any protective
committee, reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or sale of
assets of any corporation, and receive and hold under the terms of this
Agreement, such certificates of deposit, interim receipts or other instruments
or documents as may be issued to it to evidence such delivery;

(d) Take such other action as may be authorized in such officers
certificate.

III

PURCHASE AND SALE OF INVESTMENTS OF THE FUND

1. Promptly after each purchase of securities by the Fund, the Fund shall
deliver to the Custodian (i) with respect to each purchase of securities which
are not money market securities an officers certificate and (ii) with respect to
each purchase of money market securities such an officers certificate or oral
instructions from an authorized person, specifying with respect to each such
purchase: (a) the name of the issuer and the title of the securities, (b) the
number of shares or the principal amount purchased, and accrued interest, if
any, (c) the date of purchase and settlement, (d) the purchase price per unit,
(e) the total amount payable upon such purchase, (f) the name of the person from
whom or the broker through whom the purchase was made and (g) such

<PAGE>

other information as shall be necessary for the issuance by the Custodian or a
depository of escrow receipts relating to options purchased by the Fund, if the
issuance of escrow receipts is requested by the officers certificate. The
Custodian shall receive all securities purchased by or for the Fund from the
persons through or from whom the same were purchased, and shall pay out the
monies held for the account of the Fund, the total amount payable upon such
purchase as set forth in such officers certificate or such oral instruments, as
the case may be, provided that the same conforms to the total amount payable as
set forth on such officers certificate or in such oral instructions. The
Custodian may make payment in such forms as shall be satisfactory to it and may
accept securities in accordance with the customs prevailing among dealers.

2. Promptly after each sale of securities by the Fund, the Fund shall
deliver to the Custodian, (i) with respect to each sale of securities which are
not money market securities an officers certificate and (ii) with respect to
each sale of money market securities such an officers certificate or oral
instructions from an authorized person specifying with respect to each such
sale: (a) the name of the issuer and the title of the securities, (b) the number
of shares or principal amount sold, and accrued interest, if any, (c) the date
of sale, (d) the sale price per unit, (e) the total amount payable to the Fund
upon such sale and (f) the name of the broker through whom or the person to whom
the sale was made. The Custodian shall deliver the securities thus designated to
the broker or other person named in such officers certificate upon receipt of
the total amount payable to the Fund as set forth in such officers certificate
or such oral instructions as the case may be, with respect to such sale. The
Custodian may accept payment in such form as shall be satisfactory to it, and
may deliver securities and arrange for payment in accordance with the customs
prevailing among dealers in securities.

LOAN OF PORTFOLIO SECURITIES OF THE FUND

1. Where the Fund is permitted to lend its portfolio securities and
wishes to lend its portfolio securities, the Fund shall deliver to the Custodian
an officers certificate specifying with respect to each such loan: (a) the name
of the issuer and the title of the securities, (b) the number of shares or the
principal amount loaned, (c) the date of the loan and delivery, (d) the total
amount to be delivered to the Custodian against the loan of the securities
including the amount of cash collateral and the premium, if any, separately
identified and (e) the name of the broker to whom the loan was made. The
Custodian shall deliver the securities thus designated to the broker to whom the
loan was made upon receipt of the total amount designated as to be delivered
against the loan of securities. The Custodian may accept payment only in the
form of immediately available funds or a certified or bank cashier's check
payable to the order of the Fund or the Custodian

<PAGE>

drawn on New York Clearing House funds and may deliver securities in accordance
with the customs prevailing among dealers in securities.

2. Promptly after each termination of the loan of securities by the Fund,
the Fund shall deliver to the Custodian an officers certificate specifying with
respect to each such loan termination and return of securities: (a) the name of
the issuer and the title of the securities to be returned, (b) the number of
shares or the principal amount to be returned, (c) the date of termination, (d)
the total amount to be delivered by the Custodian (including the cash collateral
for such securities minus any offsetting credits as described in said officers
certificate) and (e) the name of the broker from whom the securities will be
returned. The Custodian shall receive all securities returned from the broker
to whom such securities were loaned and upon receipt thereof shall pay, out of
the monies held for the account of the Fund, the total amount payable upon such
return of securities as set forth in the officers
certificate.

PAYMENT OF DIVIDENDS OR DISTRIBUTIONS

1. The Fund shall furnish to the Custodian a copy of any resolution of its
Board of Directors, authorizing the declaration of dividends on a monthly,
quarterly, semi-annual, annual or other basis, and authorizing the Custodian to
rely on the oral instructions from an authorized officer of the Fund, setting
forth the date of the declaration of such dividend or distribution, the date of
payment thereof, the record date as of which stockholders entitled to payment
shall be determined, and the amount payable per share to the stockholders of
record as of that date and the total amount payable to the Dividend Agent on the
payment date.

2. Upon the payment date specified in such officers certificate or oral
instructions, the Custodian shall pay out of the monies held for the account of
the Fund the total amount payable to the Dividend Agent for the Fund.

SALE AND REDEMPTION OF CAPITAL STOCK OF THE FUND

1. Whenever the Fund shall sell any shares of its capital stock, it shall
cause to be delivered to the Custodian an officers certificate duly specifying:

(a) The number of shares sold, trade date, and price; and

<PAGE>

(b) The amount of money to be received by the Custodian for the sale
of such shares.

2. Upon receipt of such money the Custodian shall credit such money into
the account of the Fund.

3. Upon the issuance of any of the capital stock of the Fund in accordance
with the foregoing provisions of this Article, the Custodian shall pay, out of
the money held for the account of the Fund, all original issue or other taxes
required to be paid by the Fund in connection with such issuance upon the
receipt of an officers certificate specifying the amount to be paid.

4. Except as provided hereinafter, whenever the Fund shall hereafter
redeem any shares of its capital stock, it shall furnish to the Custodian an
officers certificate specifying:

(a) The number of shares of capital stock redeemed; and

(b) The amount to be paid for the shares redeemed.

5. Upon receipt from the Transfer Agent of an advice setting forth the
number of shares received by the Transfer Agent for redemption and that such
shares are valid and in good form for redemption, the Custodian shall make
payment to the Transfer Agent out of the monies held for the account of the
Fund, of the total amount specified in the officers certificate issued pursuant
to the foregoing paragraph 4 of this Article.

VII

CONCERNING THE CUSTODIAN

1. Neither the Custodian nor its nominee shall be liable for any loss or
damage including counsel fees, resulting from its action or omission to act or
otherwise, except for any such loss or damage arising out of its own negligence
or willful misconduct. The Custodian may, with respect to questions of law,
apply for and obtain the advice and opinion of counsel to the Fund or of its own
counsel, at the expense of the Fund, and shall be fully protected with respect
to anything done or omitted by it in good faith in conformity with such advice
or opinion.

2. Without limiting the generality of the foregoing, the Custodian shall
be under no duty or obligation to inquire into, and shall not be liable for:

(a) The validity of the issue of any securities purchased by or for
the Fund, the legality of the purchase thereof, or the propriety of the amount
paid therefor;

<PAGE>

(b) The legality of the sale of any securities by or for the Fund or
the propriety of the amount for which the same are sold;

(c) The legality of the issue or sale of any shares of the capital
stock of the Fund, or the sufficiency of the amount to be received therefor;

(d) The legality of the redemption of any shares of the capital stock
of the Fund, or the propriety of the amount to be paid therefor;

(e) The legality of the declaration of any dividend by the Fund or
the legality of the issue of any shares of the Fund's capital stock in payment
of any stock dividend;

(f) The legality of any loan of portfolio securities pursuant to
Article IV of this Agreement, nor shall the Custodian be under any duty or
obligation to see to it that any cash collateral delivered to it by a brokerage
firm or held by it at any time as a result of such loan of the portfolio
securities of the Fund is adequate collateral for the Fund against any loss it
might sustain as a result of such loan. The Custodian specifically, but not by
way of limitation, shall not be under any duty or obligation to periodically
check or notify the Fund that the amount of such cash collateral held by it for
the Fund is sufficient collateral for the Fund, but such duty or obligation
shall be the sole responsibility of the Fund. In addition, the Custodian shall
be under no duty or obligation to see that any brokerage firm to whom portfolio
securities of the Fund are lent pursuant to Article IV of this Agreement makes
payment to it of any dividends or interest which are payable to or for the
account of the Fund during the period of such loan or at the termination of such
loan, provided however, that the Custodian shall promptly notify the Fund in the
event that such dividends or interest are not paid and received when due;

(g) The legality of a payment made pursuant to an officers
certificate or, in the case of money market securities, pursuant to oral
instructions of any authorized person.

3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money represented by any check, draft, or other instrument for
the payment of money received by it on behalf of the Fund, until the Custodian
actually receives such money.

4. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount due to the Fund from the Transfer Agent of
the Fund nor to take any action to effect payment or distribution by the
Transfer Agent of the Fund of any amount paid by the Custodian to the Transfer
Agent of the Fund in accordance with this Agreement.

<PAGE>

5. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount, if the securities upon which such amount is
payable are in default or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to take such action by
an officers certificate and (ii) it shall be assured to its satisfaction of
reimbursement of its costs and expenses in connection with any such action.

6. The Custodian may appoint one or more banking institutions,
including, but not limited to, banking institutions located in foreign
countries, as Depository or Depositories or as a Sub-Custodian of securities and
monies at any time owned by the Fund, upon terms and conditions approved in
written instructions from two officers of the Fund.

7. The Custodian shall not be under any duty or obligation to ascertain
whether any securities at any time delivered to or held by it for the account of
the Fund are such as may properly be held by the Fund under the provisions of
its Articles of Incorporation.

8. The Custodian shall be entitled to receive and the Fund agrees to pay
to the Custodian, such compensation as may be agreed upon from time to time
between the Custodian and the Fund. The Custodian may charge such compensation
and any expenses incurred by the Custodian in the performance of its duties
pursuant to such agreement against any money held by it for the account of the
Fund. The Custodian shall also be entitled to charge against any money held by
it for the account of the Fund the amount of any loss, damage, liability or
expense, including counsel fees, for which it shall be entitled to reimbursement
under the provisions of this Agreement. The expenses which the Custodian may
charge against the account of the Fund include, but are not limited to, the
expenses of Sub-Custodians and foreign branches of the Custodian incurred in
settling transactions involving the purchase and sale of securities of the Fund.

9. The Custodian shall be entitled to rely upon any officers certificate,
notice or other instrument in writing received by the Custodian and believed by
the Custodian to be genuine and to be signed by two officers of the Fund as
defined in Article IX. The Custodian shall be entitled to rely upon any oral
instructions received by the Custodian pursuant to Article III or V hereof and
believed by the Custodian to be genuine and to be given by an authorized person.
The Fund agrees to forward to the Custodian written instructions from an
authorized person confirming such oral instructions in such manner so that such
written instructions are received by the Custodian, whether by hand delivery,
telex or otherwise, by the close of business of the same day that such oral
instructions are given to the Custodian. The Custodian's understanding of any
oral instructions on which it has acted shall be binding on the Fund
notwithstanding receipt by the Custodian of written confirmation of such oral
instructions which is inconsistent with the Custodian's understanding thereof.
The Fund agrees that the fact that such confirming written instructions are

<PAGE>

not received by the Custodian shall in no way affect the validity of
transactions or enforceability of the transactions hereby authorized by the
Fund. The Fund agrees that the Custodian shall incur no liability to the Fund
in acting upon oral instructions given to the Custodian hereunder concerning
such transactions provided such instructions reasonably appear to have been
received from a duly authorized person.

VIII

TERMINATION

1. Either of the parties hereto may terminate this Agreement by giving to
the other party a notice in writing specifying the date of such termination,
which shall be no less than 60 days after the date of the giving of such notice.
In the event such notice is given by the Fund, it shall be accompanied by a copy
of a resolution of the Board of Directors of the Fund, certified by the
Secretary or any Assistant Secretary, electing to terminate this Agreement and
designating a successor custodian or custodians, each of which shall be a bank
or trust company having not less than $2,000,000 aggregate capital, surplus and
undivided profits. In the event such notice is given by the Custodian, the Fund
shall, on or before the termination date, deliver to the Custodian a copy of
resolution of its Board of Directors, certified by the Secretary or any
Assistant Secretary, designating a successor custodian or custodians. In the
absence of such designation by the Fund, the Custodian may apply to any court of
competent jurisdiction for the appointment of a successor custodian which shall
be a bank or a trust company having not less than $2,000,000 aggregate capital,
surplus and undivided profits. If the Fund fails to designate a successor
custodian, the Fund shall, upon the date specified in the notice of termination
of this Agreement and upon the delivery by the Custodian of all securities and
monies then owned by the Fund be deemed to be its own custodian and the
Custodian shall thereby be relieved of all duties and responsibilities pursuant
to this Agreement.

2. Upon the date set forth in such notice, this Agreement shall terminate
and the Custodian shall, upon receipt of a notice of acceptance by the successor
custodian, on that date deliver directly to the successor custodian all
securities and monies then owned by the Fund and held by it as Custodian, after
deducting all fees, expenses and other amounts for the payment or reimbursement
of which it shall be entitled.

MISCELLANEOUS

1. The term "officers certificate" shall mean any notice, instructions or
other instrument in writing, authorized or required by this Agreement to be
given to the Custodian signed by two officers on behalf of the Fund.

<PAGE>

2. The term "Officers" shall be deemed to include the President, Vice-
President, the Secretary, the Treasurer, any Assistant Secretary, any Assistant
Treasurer, or any other person or persons duly authorized by the Board of
Directors to execute any certificate, instruction, notice or other instrument on
behalf of the Fund. The term "securities" shall include, but shall not be
limited to, stocks, bonds, debentures, notices, bankers' acceptances,
certificates of deposit, options, securities covered by options, and money
market instruments.

3. Annexed hereto as Appendix A, is a certificate signed by two of the
present officers of the Fund under its corporate seal, setting forth the names
and the signatures of the present officers of the Fund. The Fund agrees to
notify the Custodian promptly if any such present officer ceases to be an
officer of the Fund, and to furnish the Custodian a new certificate in similar
form in the event other or additional officers as defined in Article IX are
elected or appointed. Until such new certificate shall be received, the
Custodian shall be fully protected in acting under the provisions of this
Agreement upon the signatures of the present officers as set forth in said
annexed certificate or upon the signatures of the present officers as set forth
in subsequently issued certificates.

4. The term "authorized person" shall be deemed to include the Treasurer,
the Secretary or any other persons, whether or not any such person is an officer
or employee of the Fund, duly authorized by the Board of Directors to execute
any certificate, instruction, notice or other instrument or to deliver oral
instructions on behalf of the Fund.

5. Annexed hereto as Appendix B is a certificate signed by two of the
present officers of the Fund under its corporate seal, setting forth the names
and signatures of the present authorized persons. The Fund agrees to notify the
Custodian promptly if any such present authorized person ceases to be an
authorized person and to furnish to the Custodian a new certificate in similar
form in the event that other or additional authorized persons are elected or
appointed. Until such new certificate shall be received, the Custodian shall be
fully protected in acting under the provisions of this Agreement upon oral
instructions or signatures of the present authorized persons as set forth in
said annexed certificate or upon oral instructions or the signatures of the
present authorized persons as set forth in a subsequently issued certificate.

6. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at One
Wall Street, New York, New York 10015, Attn: Institutional Custody
Administration Department or at such other place as the Custodian may from time
to time designate in writing.

<PAGE>

7. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given if addressed
to the Fund and mailed or delivered to it at its office, at 120 Wall Street, New
York, New York 10005, or at such other place as the Fund may from time to time
designate in writing.

8. This Agreement may not be amended or modified in any manner except by
a written agreement executed by both parties with the same formality as this
Agreement, and authorized and approved by a resolution of the Board of Directors
of the Fund.

9. The term "money market security" shall be deemed to include, but not
be limited to, debt obligations issued or guaranteed as to interest and
principal by the Government of the United States or agencies or
instrumentalities thereof, bank deposits, certificates of deposit, commercial
paper and bankers' acceptances, where the purchase or sale of such securities
normally requires settlement in federal funds on the same day as such purchase
or sale.

10. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Fund without the written consent
of the Custodian and shall not be assignable by the Custodian without the
written consent of the Fund, authorized or approved by a resolution of its Board
of Directors.

11. This Agreement shall be construed in accordance with the laws of the
State of New York.

12. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original but such counterparts shall,
together, constitute only one instrument.

13. The term "written instructions" shall mean written communications by
telex or any other such system whereby the receiver of such communications is
able to verify by codes or otherwise with a reasonable degree of certainty the
authenticity of the sender of such communications.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective corporate officers, thereunder duly authorized and
their respective corporate seals to be hereunto affixed as of the day and year
first above written.

FIRST INVESTORS FUND FOR INCOME, INC.

By: /s/Andrew J. Donohue
----------------------------
Andrew J. Donohue, President
ATTEST:

<PAGE>

/s/C. Durso
- -------------------------
Concetta Durso, Secretary

IRVING TRUST COMPANY

By: /s/Michael A. Mertz
---------------------------
Michael A. Mertz
Vice President
ATTEST:

/s/Signature Illegible
- -----------------------
Assistant Secretary

<PAGE>

SUPPLEMENT
TO
CUSTODIAN AGREEMENT

This Supplement is added to and forms a part of the Custodian Agreement
between First Investors Fund For Income, Inc. (the "Fund") and The Bank of New
York, as successor-in-interest to Irving Trust Company (the "Custodian") dated
March 27, 1986 (the "Agreement"). All defined terms used herein shall have the
meanings ascribed to them in the Agreement.

1. If the Custodian in its sole discretion advances Funds on behalf of
the Fund or any series thereof which results in an overdraft because the moneys
held by the Custodian in the separate account for the Fund or such series shall
be insufficient to pay the total amount payable upon a purchase of securities
specifically allocated to the Fund or such series, as set forth in an officer's
certificate, oral instructions or written instructions, or which results in an
overdraft in the separate account of the Fund or such series for some other
reason, or if the Fund or such series is indebted to The Bank of New York as the
issuer of any letter of credit on behalf of the Fund or such series, such
overdraft or indebtedness shall be deemed to be a loan made by the Custodian to
the Fund (allocated to the appropriate series, if any) payable on demand and
shall bear interest from the date incurred at a rate per annum (based on a 360-
day year for the actual number of days involved) equal to the Federal Funds Rate
in effect from time to time plus 1%, such rate to be adjusted on the effective
date of any change in the Federal Funds Rate, but in no event to be less than 6%
per annum. Promptly upon the occurrence of any overdraft, the Custodian will
notify the Fund of the amount of such overdraft and the series to which it
relates. In addition, the Fund hereby agrees that the Custodian shall have a
continuing lien and security interest in and to any property of the Fund or
specifically allocated the Fund's series (if applicable) at any time held by it
for the benefit of the Fund or such series or in which the Fund may have an
interest which is then in the Custodian's possession or control or in possession
or control of any third party acting in the Custodian's behalf. If, one business
day after the Custodian has demanded repayment of any overdraft or indebtedness,
the Fund fails to pay the same in full, the Custodian shall be entitled, in its
sole discretion, at any time to charge any outstanding overdraft or indebtedness
together with interest due thereon against any balance of account standing to
the Fund's or the appropriate series' credit on the Custodian's books.

2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the Custodian)
for which it borrows money for investment or for temporary or emergency purposes
using securities held by the Custodian hereunder as collateral for such
borrowings, a notice or undertaking in the form currently employed by any such
bank setting forth the amount which such bank will loan to the Fund against
delivery of a stated amount of collateral. The Fund shall promptly deliver to
the Custodian an officer's certificate specifying with respect to each such
borrowing:

- 1 -

<PAGE>

(a) the series to which such borrowing relates (if applicable); (b) the name of
the bank, (c) the amount and terms of the borrowing, which may be set forth by
incorporating by reference an attached promissory not, duly endorsed by the
Fund, or other loan agreement, (d) the time and date, if known, on which the
loan is to be entered into, (e) the date on which the loan becomes due and
payable, (f) the total amount payable to the Fund on the borrowing date, (g) the
market value of securities to be delivered as collateral for such loan,
including the name of the issuer, the title and the number of shares or the
principal amount of any particular securities, and (h) a statement specifying
whether such loan is for investment purposes or for temporary or emergency
purposes and that such loan is in conformance with the Investment Company Act of
1940 and the Fund's prospectus. The Custodian shall deliver on the borrowing
date specified in an officer's certificate the specified collateral and the
executed promissory note, if any, against delivery by the lending bank of the
total amount of the loan payable, provided that the same conforms to the total
amount payable as set forth in the officer's certificate. The Custodian may, at
the option of the lending bank, keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the lending bank by
virtue of any promissory note or loan agreement. The Custodian shall deliver
such securities as additional collateral as may be specified in an officer's
certificate to collateralize further any transaction described in this
paragraph. If the Custodian keeps the collateral in its possession, it shall
release such collateral as may be specified in a notice or undertaking in the
form currently used by the lending bank, provided that the same conforms to the
total amount set forth in an officer's certificate. The Fund shall cause all
securities released from collateral status to be returned directly to the
Custodian, and the Custodian shall receive from time to time such return of
collateral as may be tendered to it. In the event that the Fund fails to specify
in an officer's certificate the series (if applicable), the name of the issuer,
the title and number of shares or the principal amount of any particular
securities to be delivered as collateral by the Custodian, the Custodian shall
not be under any obligation to deliver any securities.

3. This Supplement shall be effective as of the date hereof upon
execution by the parties hereto, and any reference to the Agreement shall be a
reference to the Agreement as supplemented hereby.

4. In the event of any conflict between the provisions of the Agreement
and the provisions of this Supplement, the provisions of this Supplement shall
control.

5. With respect to any obligations of the Fund on behalf of a series
arising out of this agreement, including, without limitation, the obligations
arising under this Supplement, the Custodian shall look for payment or
satisfaction of any obligation solely to the assets and property of the series
to which such obligation relates as though the Fund had separately contracted
with the Custodian by separate written instrument with respect to each series.

6. Notwithstanding the provisions of any applicable law, including
without limitation the Uniform Commercial Code, the remedy set

- 2 -

<PAGE>

forth in this Section 1 shall be the only right or remedy to which the Custodian
is entitled with respect to the lien and security interest granted pursuant to
this Section 1. Without limiting the foregoing, the Custodian hereby waives and
relinquishes all contractual and common law rights of set off to which it may
now or hereafter be or become entitled with respect to any obligations of the
Fund to the Custodian arising under the Supplement.

IN WITNESS WHEREOF, the parties hereto have executed this SUPPLEMENT as of
the date first above written.

First Investors Fund For Income, Inc.

By: /s/ G. Head
------------------------------
Title: Vice President & Secretary

ATTEST:

/s/ C. Durso
- ------------
THE BANK OF NEW YORK

By: /s/ Jorge Ramos
------------------------------
Title: Vice President

ATTEST:

/s/ Michael Cecero
- ------------------

- 3 -

<PAGE>

ADMINISTRATION AGREEMENT

This Agreement, dated as of the 17th of September, 1981, made by and
between FIRST INVESTORS FUND FOR INCOME, INC. (the Fund), a corporation duly
organized and existing under the laws of the State of Maryland; FIRST INVESTORS
MANAGEMENT COMPANY, INC. (FIMCO), a corporation duly organized and existing
under the laws of the State of New York; FIRST INVESTORS CORPORATION (FIC), a
corporation duly organized and existing under the laws of the State of New York;
ADMINISTRATIVE DATA MANAGEMENT CORP. (ADM), a corporation duly organized and
existing under the laws of the State of New York.

WITNESSETH THAT:

WHEREAS, FIMCO and FIC are the national distributors of the shares of the
Fund; and

WHEREAS, ADM has agreed to act as transfer agent of the Fund, as its
dividend disbursing agent, and as administrator of the Dividend Reinvestment,
Share Accumulation and Systematic Withdrawal Accounts of the Fund, and ADM also
agreed to act for the Fund in other respects as hereinafter stated; and

WHEREAS, the parties hereto desire to set forth certain terms relating to
the activities of ADM under this Agreement.

NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto, intending to be legally bound, do hereby
agree as follows:

THE TRANSFER AGENCY

Section 1. The Fund hereby appoints ADM as its transfer agent, and ADM
accepts such appointment and agrees to act in such capacity upon the terms set
forth in this Agreement.

Section 2. ADM will maintain stock registry records in the usual form
in which it will note the issuance and redemption of Shares and the issuance and
transfer of Share Certificates, and is also authorized to maintain an account
entitled Unissued Share Certificate Account in which it will record the Shares
and fractions issued and outstanding from time to time for which issuance of
Share Certificates is deferred. ADM is also authorized to keep records, which
will be part of the stock transfer records, as well as its records of the Plans,
in which it will note the names and registered addresses of Planholders, and the
number of shares and fractions from time to time owned by them for which no
Share Certificates are outstanding. Each Shareholder or Planholder whether he
holds one or more Share Certificates or owns Shares held

-1-

<PAGE>

under one or more Plans, or whether he holds or owns Shares by both methods,
will be assigned a single account number.

Section 3. Whenever Shares are purchased for Planholders, the Fund
authorizes ADM to dispense with the issuance and countersignature of Share
Certificates. In such case ADM, as transfer agent, shall merely note on its
stock registry records the issuance of the Shares and fractions, (if any), shall
credit the Unissued Share Certificate Account with the Shares and fractions to
the respective Planholders. Likewise, whenever ADM has occasion to surrender
for redemption Shares and fractions owned by Planholders, it shall be
unnecessary to issue Share Certificates for redemption purposes. The Fund
authorizes ADM in such cases to process the transactions by appropriate entries
in its stock transfer records, and debiting of the Unissued Share Certificate
Account and the record of issued Shares outstanding. Whenever Planholders are
entitled to the issuance of Share Certificates for Shares held under Plans, the
Fund authorizes ADM as transfer agent, to countersign Share Certificates for
issuance and delivery, and to debit the Unissued Certificate Account.

Section 4. ADM in its capacity as transfer agent will, in addition to
the duties and functions above-mentioned, perform the usual duties and functions
of a stock transfer agent for a corporation. It will countersign for issuance
or reissuance of Share Certificates representing original issue or reissued
treasury Shares as directed by the Written Instructions of the Fund, and will
transfer Share Certificates registered in the name of Shareholders from one
Shareholder to another in the usual manner. ADM may rely conclusively and act
without further investigation upon any list, instruction, certification,
authorization, Share Certificate or other instrument or paper believed by it in
good faith to be genuine and unaltered, and to have been signed, countersigned,
or executed by a duly authorized person or persons, or upon the instructions of
any Officer of the Fund, or upon the advice of counsel for the Fund or for ADM.
ADM may record any transfer of Share Certificates which is believed by it in
good faith to have been duly authorized or may refuse to record any transfer of
Share Certificates if in good faith ADM in its capacity as transfer agent deems
such refusal necessary in order to avoid any liability either to the Fund or
ADM. The Fund agrees to indemnify and hold harmless ADM from and against any
and all losses, costs, claims and liability which it may suffer or incur by
reason of so relying or acting or refusing to act in good faith.

THE DIVIDEND DISBURSEMENT AGENCY

Section 5. Upon declaration of each dividend and each capital gains
distribution by the Board of Directors of the Fund, the Fund shall notify ADM of
the date of such declaration, the amount payable per share, the record date for
determining the

-2-

<PAGE>

Shareholders entitled to payment, the payment date, and the reinvestment date,
the price for which is to be used to purchase Shares for reinvestment.

Section 6. On or before each payment date, the Fund will transfer, or
cause the Custodian to transfer, to ADM in its capacity as dividend disbursing
agent, the total amount of the dividend or distribution currently payable and
ADM in such capacity will on the designated payment date mail distribution
checks to the Shareholders for the proper amounts payable to them except as
follows:

(a) Dividends and capital gains distributions directed to be reinvested
under Plans will be transferred to ADM in its capacity as administrator for
application as provided in Section 11.

ADMINISTRATION OF THE PLANS

Section 7. The Fund, FIMCO and FIC hereby appoint ADM as administrator
of the Plans, and ADM accepts such appointment and agrees to act in such
capacity upon the terms set forth in this Agreement. As provided Section 2, ADM
will maintain records, which will be part of the stock registry records as well
as its records of the administration of the Plans, in which it will note the
transactions effected for the respective Planholders and the number of Shares
and fractions from time to time owned by them for which no Share Certificates
are outstanding.

Section 8. FIMCO, FIC and the Fund will from time to time keep ADM
fully informed of the names of all Planholders who are entitled to purchase
Shares at reduced offering prices and of the respective prices which are
applicable to each of such Planholders. ADM may conclusively rely on such
information in placing orders for Shares on behalf of Planholders.

Section 9. It will be the practice of ADM to process payments by
planholders received by its mutual funds department in acceptable form until the
time of the closing of the New York Stock Exchange on each day on which said
exchange is open since the same time on the prior business day in which said
exchange was open, and to obtain from FIMCO, FIC or the Fund a quotation (on
which it may conclusively rely) as of the close of the said exchange. ADM will
proceed to calculate the amount available for investment in Shares at the public
offering price so quoted, (and, if applicable), the amounts to be invested as
between commissions of dealers, shares of FIMCO, or FIC and net asset value to
be deposited with the Custodian. ADM while the public offering price so quoted
is still in effect, will, as agent for sundry Planholders, place an order with
FIMCO or FIC for the proper number of Shares and fractions, will advise FIMCO or
FIC of the breakdown of the total purchase price as between discount of dealers,
shares of FIMCO or FIC and

-3-

<PAGE>

net asset value and will confirm said figures to FIMCO or FIC in writing.

Section 10. ADM will thereupon set aside the commissions of dealers, and
share of FIMCO and FIC and will pay over the balance available (net asset value)
to the custodian and will furnish said custodian with the Statements required by
the Custodian Agreement. Said Custodian will deposit the net asset value in the
Principal Account under the Custodian Agreement. ADM will credit the Bank's
account of FIMCO or FIC for its share. The proper number of Shares and
fractions will then be issued and credited to the Unissued Certificate Account,
and the Shares and fractions purchased for each Planholder will be credited to
his separate account. ADM will thereupon mail to each Planholder a confirmation
of the purchase, with copies to the Fund and the proper dealers, if the Fund so
requests. Such confirmation will show the prior and new share balance, the
Shares held under the Plans and Shares (if any) for which Stock Certificates are
outstanding, the amount invested, the price paid and other data.

ADM will remit commissions to the proper dealers weekly or at other
convenient intervals, as agreed upon between the Fund and ADM.

Section 11. As and when the Fund declares dividends or capital gains
distributions, it will promptly quote to ADM the net asset value per share at
the close of business in the reinvestment date, whereupon as soon as it can
calculate the total of such dividend or distributions it will receive for
reinvestment, ADM will advise the Fund of the amount which will be available for
reinvestment on the payment date and the number of Shares and fractions to be
issued. Upon receipt of the amount of the dividends or distributions to be
reinvested under Plans, ADM will pay over such amount to the Custodian for
deposit in the Principal Account under the Custodian Agreement, whereupon the
Shares and fractions purchased for the Plans will be issued pursuant to a
Statement of ADM and will be credited to the Unissued Certificate Account. ADM
will credit the Shares and fractions so purchased to the separate accounts
maintained for the respective Planholders, and will promptly mail to each
Planholder a confirmation of the purchase, with a copy to the Fund, showing the
prior and new share balance.

Section 12. Whenever a Shareholder shall deposit Shares represented by
Share Certificates in an investment plan or systematic withdrawal plan or other
plan permitting deposit of Shares thereunder, ADM as transfer agent is
authorized upon receipt of Share Certificates registered in the name of the
Shareholder, or if not so registered in due form for transfer, to cancel such
Share Certificates, to debit the individual stock accounts and to credit the
Shares to the Unissued Certificate Account. ADM as plan

-4-

<PAGE>

administrator will credit the Shares to be deposited to the proper plan
accounts. In the event that a Planholder shall desire to deposit under a
systematic withdrawal plan Shares held in an investment plan or other like plan,
ADM will accomplish such deposit by proper debiting and crediting of plan
accounts.

Section 13. ADM will administer the systematic withdrawal plans for the
Planholders. ADM will note in such accounts the share balances from time to
time, the additional Shares purchased with the reinvested dividends and
distributions, and the Shares redeemed to provide the withdrawal payments.
Confirmations will be mailed to the Planholders reflecting each transaction,
with copies to the Fund.

Section 14. Whenever ADM shall have received requests from Planholders
to redeem Shares and remit proceeds, or whenever ADM is required to redeem
Shares to make withdrawal payments under systematic withdrawal plans or the
like, ADM will advise the Fund that it has Shares for redemption, stating the
number of Shares and fractions to be redeemed. The Fund will then quote to ADM
the applicable net asset value of redemption price, whereupon ADM will furnish
the Fund with an appropriate confirmation of the redemption and will process the
redemption by filing with the Custodian an appropriate statement of ADM as may
be required by the Custodian Agreement. The Custodian shall be authorized to
pay over to ADM as administrator, the total redemption price stated in the
Statement of ADM for proper distribution and application. The stock registry
books recording outstanding Shares, the Unissued Certificate Account and the
individual accounts of the Shareholders shall be properly debited.

Section 15. The practices and procedures of ADM and the Fund above
outlined in Sections 7 to 14, inclusive, may be altered or modified from time to
time as may be mutually agreed by the parties to this Agreement, so long as the
intent and purposes of the Plans, as stated from time to time in the prospectus
of the Fund, are observed. For special cases, the parties hereto may adopt such
procedures as may be appropriate or practical under the circumstances and ADM
may conclusively assume that any special procedure which has been approved by
the Fund, does not conflict with or violate any requirements of its Articles of
Incorporation, By-Laws or prospectus, or any rule, regulation or requirement of
any regulatory body.

Section 16. ADM in acting for Planholders, or in any other capacity set
forth in this Agreement, shall incur no liability for any actions taken or
omitted in good faith, nor shall ADM be personally liable for any taxes,
assessments or governmental charges which may be levied or assessed on any basis
whatsoever in connection with the administration of the Plans, excepting only
for

-5-

<PAGE>

taxes assessed against it in its corporate capacity out of its compensation
hereunder.

MISCELLANEOUS

Section 17. In addition to the services as transfer agent, dividend
disbursing agent and administrator as above set forth, ADM will perform other
services for the Fund as agreed from time to time, including but not limited to
preparation of Federal 1099 forms, mailing of quarterly and semi-annual reports
of the Fund, preparation of one annual list of Shareholders, and preparing
notices of Shareholders meeting, proxies and proxy statements.

Section 18. The Fund, FIMCO and FIC agree to pay ADM compensation for
its services and to reimburse it for expenses, as set forth in Schedule A
attached hereto, or as shall be set forth in amendments to such schedule
approved by the Fund, FIMCO FIC and ADM. Said payments and reimbursements shall
be allocated between the Fund, FIMCO and FIC as they may agree.

Section 19. ADM may from time to time in its sole discretion delegate
some or all of its duties hereunto to any affiliate(s) which shall perform such
functions as the agent of ADM. To the extent of such delegation, the term "ADM"
in this Agreement shall be deemed to refer to both ADM and such affiliate(s) or
either of them, as the context may indicate.

Section 20. Nothing contained in this Agreement is intended to or shall
require ADM, in any capacity hereunder to perform any functions or duties on any
holiday or other day of special observance on which ADM is closed. Functions or
duties normally scheduled to be performed on such days shall be performed on,
and as of, the next business day on which both the New York Stock Exchange and
the Bank are open.

Section 21. All terms used herein, which are defined in the Custodian
Agreement, shall have the same meanings as set forth therein. In addition, the
following terms as used in this Agreement shall have the meaning set forth below
unless the context otherwise requires:

Plan: The term Plan shall include such Dividend Reinvestment
Accounts, Share Accumulation Accounts, Systematic Withdrawal Plans and other
types of plans or accounts in form acceptable to ADM, which the Fund may from
time to time adopt and make available to its Shareholders, including plans or
accounts adopted for pension and profit sharing plans established by self-
employed individuals, partnerships, individuals, corporations and not for profit
organizations.

-6-

<PAGE>

Planholder: The term Planholder shall mean a Shareholder who at the time
of reference is participating in a Plan.

Section 22. This Agreement may be terminated by any party to this
Agreement by giving at least sixty (60) days advance written notice stating when
thereafter such termination shall be effective. Such termination shall only be
effective with respect to the rights, obligations and duties as between the non-
terminating parties. In case such notice of termination is given by either ADM
or the Fund, the Board of Directors of the Fund shall, by resolution duly
adopted, promptly appoint a successor to ADM, to serve upon the terms set forth
in this Agreement as then amended and supplemented. Unless and until a
successor to ADM has been appointed as above, provided ADM shall continue to
perform according to the terms of this Agreement and shall be entitled to
receive all the payments and reimbursement to which it is entitled under this
Agreement.

Section 23. This Agreement may be executed in two or more counterparts,
each of which when so executed shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.

Section 24. This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns; provided however
that this Agreement shall not be assignable by the Fund without the written
consent of the Fund, authorized or approved by a resolution of its Board of
Directors.

Section 25. This Agreement shall be governed by the laws of the State of
New York.

-7-

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized officers and their corporate seals hereunto duly
affixed and attested, as of the day and the year first above written.

ATTEST: FIRST INVESTORS FUND FOR INCOME, INC.

/s/Andrew J. Donohue BY: /s/Joseph M. O'Brien
- ------------------------------ -------------------------------
Andrew J. Donohue, Secretary Joseph M. O'Brien, President
[Seal]

ATTEST: FIRST INVESTORS MANAGEMENT COMPANY, INC.

/s/Andrew J. Donohue BY: /s/Joseph M. O'Brien
- ------------------------------ ------------------------------
Andrew J. Donohue, Secretary Joseph M. O'Brien, President
[Seal]

ATTEST: FIRST INVESTORS CORPORATION

/s/Andrew J. Donohue BY: /s/Glenn O. Head
- ------------------------------ ------------------------------
Andrew J. Donohue, Secretary Glenn O. Head, Chairman
[Seal]

ATTEST: ADMINISTRATIVE DATA MANAGEMENT CORP.

/s/Andrew J. Donohue BY: /s/Glenn O. Head
- ------------------------------ -------------------------------
Andrew J. Donohue, Secretary Glenn O. Head, Chairman
[Seal]

-8-

<PAGE>

ADMINISTRATION AGREEMENT
SCHEDULE A

Compensation and charges of Administrative Data Management Corp. for
services as Transfer Agent, Dividend Disbursing Agent and Plan Administration,
and for other services under the Administration Agreement.

Opening New Account $5.00 for each account

Processing Payments $0.75 for each payment*

Processing Share Certificates $3.00 per certificate issued

General Account Maintenance $0.65 per account per month

Legal Transfers of Shares $10.00 per transfer

Dividend Processing $0.45 per account per dividend
declared

Partial Withdrawals and
Complete Liquidations 5.00 per transaction

Reports Required by
Governmental Authorities $1.00 for each account

Exchange Fee $5.00 for each exchange of shares
into a Fund

Systematic Withdrawal Plans $1.00 for each SWP check*

OUT-OF-POCKET EXPENSES: In addition to the above charges, the Fund, First
Investors Management Company, Inc. or First Investors Corporation shall
reimburse Administrative Data Management Corp. for all out-of-pocket costs
including but not limited to postage, insurance, forms relating to shareholders
of the Fund, envelopes and other similar items, and will also reimburse
Administrative Data Management Corp. for counsel fees, including fees for the
preparation of the Administration Agreement and review of prospectus and
application forms.

THE ABOVE FEES AND OUT-OF-POCKET EXPENSES APPLY TO THE FOLLOWING FUNDS:

FIRST INVESTORS FUND FOR INCOME, INC., FIRST INVESTORS GLOBAL FUND, INC., FIRST
INVESTORS GOVERNMENT FUND, INC., FIRST INVESTORS HIGH YIELD FUND, INC., FIRST
INVESTORS INSURED TAX EXEMPT FUND, INC., FIRST INVESTORS MULTI-STATE INSURED
TAX FREE FUND, FIRST INVESTORS NEW YORK INSURED TAX FREE FUND, INC., FIRST
INVESTORS SERIES FUND, FIRST INVESTORS SERIES FUND II, INC., FIRST INVESTORS
U.S. GOVERNMENT PLUS FUND - 1st, 2nd & 3rd SERIES, EXECUTIVE INVESTORS TRUST

* Administrative Data Management Corp. (ADM) bills the Fund. ADM is then
paid by the Fund, after which FIMCO reimburses the Fund.

-9-

<PAGE>

Consent of Independent Certified Public Accountants

First Investors Fund For Income, Inc.
95 Wall Street
New York, New York 10005

We consent to the use in Post-Effective Amendment No. 62 to the
Registration Statement on Form N-1A (File No. 2-38309) of our report dated
January 31, 1996 relating to the December 31, 1995 financial statements of First
Investors Fund For Income, Inc., which are included in said Registration
Statement.

/s/Tait, Weller & Baker

TAIT, WELLER & BAKER

Philadelphia, Pennsylvania
April 16, 1996

<PAGE>

First Investors Fund For Income, Inc.

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS that the undersigned officer and/or director
of First Investors Fund For Income, Inc. hereby appoints Larry R. Lavoie or
Glenn O. Head, and each of them, his true and lawful attorney to execute in his
name, place and stead and on his behalf a Registration Statement on Form N-1A
for the registration pursuant to the Securities Act of 1933 and the Investment
Company Act of 1940 of shares of common stock of said Maryland corporation and
any and all amendments to said Registration Statement (including post-effective
amendments), and all instruments necessary or incidental in connection therewith
and to file the same with the Securities and Exchange Commission. Said attorney
shall have full power and authority to do and perform in the name and on behalf
of the undersigned every act whatsoever requisite or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do, the undersigned hereby ratifying and approving all such acts of said
attorney.

IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st
day of September, 1995.

/s/Robert F. Wentworth
---------------------------
Robert F. Wentworth

<PAGE>

First Investors Fund For Income, Inc.

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st
day of September, 1995.

/s/John T. Sullivan
---------------------------
John T. Sullivan

<PAGE>

First Investors Fund For Income, Inc.

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st
day of September, 1995.

/s/Herbert Rubinstein
---------------------------
Herbert Rubinstein

<PAGE>

First Investors Fund For Income, Inc.

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st
day of September, 1995.

/s/James M. Srygley
---------------------------
James M. Srygley

<PAGE>

First Investors Fund For Income, Inc.

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st
day of September, 1995.

/s/Rex R. Reed
---------------------------
Rex R. Reed

<PAGE>

First Investors Fund For Income, Inc.

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st
day of September, 1995.

/s/Kathryn S. Head
---------------------------
Kathryn S. Head

<PAGE>

First Investors Fund For Income, Inc.

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st
day of September, 1995.

/s/Roger L. Grayson
---------------------------
Roger L. Grayson

<PAGE>

First Investors Fund For Income, Inc.

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st
day of September, 1995.

/s/Glenn O. Head
---------------------------
Glenn O. Head

<PAGE>

First Investors Fund For Income, Inc.

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st
day of September, 1995.

/s/James J. Coy
------------------------
James J. Coy

<PAGE>

AMENDED AND RESTATED
CLASS A DISTRIBUTION PLAN
OF
FIRST INVESTORS FUND FOR INCOME, INC.

WHEREAS, FIRST INVESTORS FUND FOR INCOME, INC. (the "Fund") is a
diversified open-end management investment company duly registered with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended (the "1940 Act");

WHEREAS, the Fund employs one or more broker-dealers as distributors
of its shares ("Underwriter") pursuant to a written agreement ("Underwriting
Agreement");

WHEREAS, Rule 12b-1 under the 1940 Act permits registered investment
companies to bear certain expenses associated with the distribution of their
shares;

WHEREAS, the Fund offers multiple classes of shares for purchase by
shareholders;

WHEREAS, the Board of Directors has determined that the payment of
certain expenses involved in distributing Class A shares of the Fund and the
servicing or maintenance of such Class A shareholder accounts would be
beneficial to the Fund and its shareholders; and

WHEREAS, the Fund wishes to adopt a plan under Rule 12b-1 to permit it
to pay some of the expenses involved in distributing its Class A shares and the
servicing or maintenance of its Class A shareholder accounts.

NOW THEREFORE, in consideration of the foregoing, the Fund hereby
adopts the following distribution plan in accordance with Rule 12b-1 (the "Class
A Plan"):

1. PAYMENT OR REIMBURSEMENT. Pursuant to one or more Underwriting
Agreements which the Fund can enter into from time to time and the Class A Plan,
the Fund periodically may pay directly or reimburse the Underwriter for expenses
incurred in the distribution of Class A Fund shares ("Distribution Expenses")
and the servicing or maintenance of Class A Fund shareholder accounts ("Service
Expenses"). The Fund may pay for or reimburse such expenses, as determined from
time to time by the Board of Directors of the Fund, in an amount up to 0.30 of
1% of its average daily net assets attributable to Class A shares (referred to
herein as the "Class A 12b-1 fee") on an annualized basis each fiscal year,

- 1 -

<PAGE>

payable monthly, or at such other intervals as shall be determined by the Board
of Directors in the manner provided for approval of the Class A Plan in
paragraph 5(a).

2. EXPENSES FOR DISTRIBUTION AND SHAREHOLDER SERVICING.
"Distribution Expenses" are expenses paid or incurred for the distribution of
the Fund's Class A shares, including continuing payments to registered
representatives and dealers for sales of the Fund's Class A shares, the costs of
printing and dissemination of sales material or literature, prospectuses used as
sales material and reports or proxy material prepared for the Fund's Class A
shareholders to the extent that such material is used in connection with the
sales of the Fund's Class A shares, and general overhead of an Underwriter.
"Service Expenses" are expenses paid or incurred for services related to the
maintenance and servicing of existing Class A shareholder accounts, including
shareholder liaison services, whether provided by individual representatives,
dealers, an Underwriter or others entitled to receive such fees.

3. EXPENSES IN EXCESS OF THE ANNUAL RATE. An Underwriter may pay
from its own resources for Distribution and Service Expenses whether or not such
expenses exceed the Class A 12b-1 fee.

4. REPORTS TO DIRECTORS. At least quarterly and annually in each
year that the Class A Plan remains in effect, the Underwriter shall prepare and
furnish to the Board of Directors of the Fund a written report of the amounts so
expended and the purposes for which such expenditures were made under the Class
A Plan.

5. APPROVAL OF THE PLAN. The Class A Plan shall become effective
immediately upon the approval by the majority vote of (a) the Fund's Board of
Directors and of the Directors who are not interested persons of the Fund,
within the meaning of the 1940 Act, and who have no direct or indirect financial
interest in the operation of the Class A Plan or in any agreements related to
the Class A Plan (the "Independent Directors") cast in person at a meeting
called for the purpose of voting on such Class A Plan and (b) the outstanding
Class A voting securities of the Fund, voting separately from any other class of
the Fund, which for this purpose is defined in Section 2(a)(42) of the 1940 Act
and means the affirmative vote of 67% or more of the voting shares present at
such meeting, if more than 50% of the outstanding shares of the Fund are
represented at the meeting in person or by proxy, or more than 50% of the
outstanding shares of the Fund, whichever is less.

6. TERM. The Class A Plan shall remain in effect for one year from
the date of its approval in accordance with Rule 12b-1(b) of the 1940 Act and
may continue thereafter only if the Class

- 2 -

<PAGE>

A Plan is approved at least annually by a majority of the Directors of the Fund
and a majority of the Independent Directors cast in person at a meeting called
for the purpose of voting on the Class A Plan.

7. TERMINATION. The Class A Plan can be terminated at any time
without the payment of any penalty by vote of a majority of the Independent
Directors or by vote of a majority of the outstanding Class A voting securities
of the Fund, voting separately from any other class of the Fund (as defined in
Section 2(a)(42) of the 1940 Act), on not more than 60 days' written notice to
any other party to the Class A Plan.

8. PAYMENT OF INTEREST; CARRYOVER OF EXPENSES. The Fund will not
pay, directly or indirectly, interest, carrying charges, or other financing
costs in connection with the Class A Plan. Expenses of the Class A Plan will
not be carried over from year to year. If the Class A Plan is terminated or not
continued, unreimbursed amounts expended by the Underwriter in excess of the
Class A 12b-1 fee may not be paid to the Underwriter in subsequent years.

9. AMENDMENTS. Any material amendment to the Class A Plan may not
be instituted without the approval of a majority of the Fund's Board of
Directors and the Independent Directors and a majority of the outstanding Class
A voting securities of the Fund, voting separately from any other class of the
Fund (as defined in the 1940 Act). If Class B shares of the Fund are
convertible into Class A shares, and if the Fund implements any amendment to the
Class A Plan that would increase materially the amount that may be borne by the
Class A shareholders under the Class A Plan, then Class B shares will stop
converting into Class A shares unless the holders of a majority of Class B
shares, voting separately as a class, (as defined in the 1940 Act), also approve
the amendment.

10. NOMINATION OF DIRECTORS. While the Class A Plan shall be in
effect, the selection and nomination of the Independent Directors of the Fund
shall be committed to the discretion of the Independent Directors then in
office.

11. PAYMENTS OUTSIDE OF THE PLAN. To the extent any payments made by
the Fund to its investment advisor, its transfer agent or any company affiliated
with an Underwriter, may be deemed to be indirect financing of any monies paid
by the Underwriter or investment advisor out of their own assets for
distribution expenses, such payments are permissible under the Class A Plan.
Permissible payments may include, but are not limited to, the payment by the
Fund of investment advisory and service fees.

- 3 -
<PAGE>

12. TREATMENT OF EXPENSES. The Directors, including all of the
Independent Directors, have determined that the amounts paid under the Class A
Plan will not be an operating expense of the Fund. However, while it is
expected that the Fund's payments under the Class A Plan will be excluded from
the Fund's total expenses for purposes of determining compliance with a state
expense limitation, whether any expenditure under the Class A Plan is subject to
a state expense limitation will depend upon the nature of the expenditure and
the terms of the state law, regulation or order imposing the limitation. In any
event, the amount paid under the Class A Plan will be an expense for accounting
purposes.

Dated: November 1990, as amended and restated as of
September 22, 1994

- 4 -

<PAGE>

CLASS B DISTRIBUTION PLAN
OF
FIRST INVESTORS FUND FOR INCOME, INC.

WHEREAS, the Fund employs one or more broker-dealers as distributors of its
shares ("Underwriter") pursuant to a written agreement ("Underwriting
Agreement");

WHEREAS, Rule 12b-1 under the 1940 Act permits registered investment
companies to bear certain expenses associated with the distribution of their
shares;

WHEREAS, the Fund offers multiple classes of shares for purchase by
shareholders;

WHEREAS, the Board of Directors believes that payment of certain expenses
associated with the distribution of Class B shares of the Fund and the servicing
or maintenance of such Class B shareholder accounts would be beneficial to the
Fund and its shareholders; and

WHEREAS, the Fund, on behalf of its separate designated series presently
existing or hereafter established (individually and collectively, "Series"),
wishes to adopt a plan under Rule 12b-1 to permit each Series to pay some of the
expenses involved in distributing its Class B shares and the servicing or
maintenance of its Class B shareholder accounts.

NOW, THEREFORE, in consideration of the foregoing, the Fund hereby adopts
the following distribution plan in accordance with Rule 12b-1 (the "Class B
Plan"):

1. PAYMENT OF THE FEE. Pursuant to one or more Underwriting Agreements
which the Fund can enter into from time to time and this Class B Plan, each
Series shall pay as compensation for the Underwriter's services an annualized
Rule 12b-1 fee of an aggregate of 1% of each Series' average daily net assets
attributable to Class B shares (referred to herein as the "Class B 12b-1 fee").
The Class B 12b-1 fee is payable by each Series monthly or at such intervals as
shall be determined by the Board of Directors in the manner provided for
approval of this Class B Plan in paragraph 5(a). The Class B 12b-1 fee shall
consist of a distribution fee and a service fee, in the following proportions:
(a) the distribution fee shall be at the rate of 0.75% of the average daily net
assets attributable to Class B shares, and (b) the service fee shall be at the
rate of 0.25% of the average daily net assets attributable to Class B shares.
The Class B 12b-1 fee shall be payable regardless of whether that amount exceeds
or is less than the actual expenses incurred by the Underwriter in distributing
Class B shares of such Series in a particular year.

- 1 -

<PAGE>

2. EXPENSES DIFFERENT FROM ANNUAL RATE. To the extent that the Class B
12b-1 fee paid by each Series in a particular year exceeds actual expenses
attributable to Class B Shares incurred by an Underwriter in that year, the
Underwriter may realize a profit in that year. If the expenses attributable to
Class B Shares incurred by an Underwriter in a particular year are greater than
the Class B 12b-1 fee, the Underwriter may incur a loss in that year and may not
recover from such Series such excess of expenses attributable to Class B Shares
over the Class B 12b-1 fee unless actual expenses attributable to Class B shares
incurred in a subsequent year in which the Class B Plan remained in effect were
less than the Class B 12b-1 fee paid under the Class B Plan in that year.

3. DISTRIBUTION AND SERVICE FEES. "Distribution" fees are fees paid for
the distribution of the Series' Class B shares, including continuing payments to
registered representatives and dealers for sales of such shares, the costs of
printing and dissemination of sales material or literature, prospectuses used as
sales material and reports or proxy material prepared for the Series' Class B
shareholders to the extent that such material is used in connection with the
sales of the Series' Class B shares, and general overhead of an Underwriter.
"Service" fees are fees paid for services related to the maintenance and
servicing of existing Class B shareholder accounts, including shareholder
liaison services, whether provided by individual representatives, dealers, an
Underwriter or others entitled to receive such fees.

4. REPORTS TO DIRECTORS. Quarterly and annually in each year that the
Class B Plan remains in effect, the Treasurer of the Fund shall prepare and
furnish to the Board of Directors of the Fund a written report of the amounts so
expended and the purposes for which such expenditures were made under the Class
B Plan. The Board of Directors will promptly review the Treasurer's report.

5. APPROVAL OF PLAN. The Class B Plan shall become effective with
respect to any Series of the Fund immediately upon the approval by the majority
vote of (a) the Fund's Board of Directors and of the Directors who are not
"interested persons" of the Fund, within the meaning of the 1940 Act, and have
no direct or indirect financial interest in the operation of the Class B Plan or
in any agreements related to the Class B Plan (the "Independent Directors") cast
in person at a meeting called for the purpose of voting on such Class B Plan and
(b) the outstanding Class B voting securities of such Series, voting separately
from any other class or Series of the Fund, which for this purpose is defined in
Section 2(a)(42) of the 1940 Act and means the lesser of (1) more than 50% of
the outstanding shares, or (2) 67% or more of the shares present or represented
at a shareholders meeting if more than 50% of the outstanding shares are
represented at the meeting in person or by proxy, whichever is less.

6. TERMINATION OF PLAN. The Class B Plan can be terminated by any Series
at any time without the payment of any penalty by vote of a majority of the
Independent Directors or by vote of a majority of the outstanding Class B voting
securities of such Series, voting separately from any other class or Series of
the Fund (as defined in Section 2(a)(42) of the 1940 Act), on not more than 60
days' written notice to any other party to the Class B Plan.

- 2 -

<PAGE>

7. AMENDMENTS. Any amendment to increase materially the cost to any
Series of the Fund under the Class B Plan may not be instituted without the
approval of the outstanding Class B voting securities of such Series, voting
separately from any other class or Series of the Fund (as defined in Section
2(a)(42) of the 1940 Act).

8. NOMINATION OF DIRECTORS. While the Class B Plan shall be in effect,
the selection and nomination of the Independent Directors shall be committed to
the discretion of the Independent Directors then in office.

9. TERM. The Class B Plan shall remain in effect with respect to any
Series for one year from the date of its approval by the Class B shareholders of
such Series and may continue thereafter only if the Class B Plan is approved at
least annually by either the Board of Directors or by a vote of a majority of
the outstanding Class B voting securities of such Series, voting separately from
any other class or Series of the Fund, and in either case by a majority vote of
the Independent Directors, cast in person at a meeting called for the purpose of
voting on the Class B Plan.

10. PAYMENTS OUTSIDE OF THE PLAN. To the extent any payments made by any
Series to its investment advisor, its transfer agent or any company affiliated
with an Underwriter, may be deemed to be indirect financing of any monies paid
by the Underwriter or investment advisor out of their own assets for
distribution expenses, such payments are permissible under the Class B Plan.
Permissible payments may include, but are not limited to, the payment by the
Series of investment advisory and service fees.

11. TREATMENT OF EXPENSES. The Directors, including all of the
Independent Directors, have determined that the Class B 12b-1 fee will not be an
operating expense of the Series. However, while it is expected that the
payments under the Class B Plan will be excluded from each Series' total
expenses for purposes of determining compliance with any state expense
limitation, whether any expenditure under the Class B Plan is subject to any
such state expense limitation will depend upon the nature of the expenditure and
the terms of the state regulation imposing the limitation. In any event, the
amounts paid under the Class B Plan will be an expense for accounting purposes.

Dated: September 22, 1994

- 3 -

<PAGE>

NAV Only Total Returns - Class A Shares

Average Annual Total Return and Total Return for First Investors Funds are
calculated using the following standardized formula:

Average Annual
Total Return =((ERV DIVIDED BY P) ) - 1

Total Return = ((ERV - P) DIVIDED BY P)

WHERE: ERV = Ending redeemable value of a hypothetical $1,000 investment
made at the beginning of 1, 5, or 10 year periods (or
fractional period there of.)

P = a hypothetical initial investment of $1,000

N = number of years

The following table lists the information used to calculate the average annual
total return and total return for First Investors Fund For Income, Inc. (Class A
shares) as of December 31, 1995.

AVE. ANNUAL TOTAL
ERV P N TOTAL RETURN RETURN
--- - -- ------------- -------
<S> <C> <C> <C> <C> <C>
1 year: $1,185.40 $1,000.00 1.00 18.54% 18.54%
5 years: $2,346.50 $1,000.00 5.00 18.60% 134.65%
10 years: $2,242.80 $1,000.00 10.00 8.41% 124.28%

</TABLE>

<PAGE>

SEC Standardized Total Returns - Class B Shares

Average Annual Total Return and Total Return for First Investors Funds are
calculated using the following standardized formula:

Average Annual
Total Return = ((ERV DIVIDED BY P) ) - 1

Total Return = ((ERV - P) DIVIDED BY P)

WHERE: ERV = Ending redeemable value of a hypothetical $1,000 investment made
at the beginning of 1, 5, or 10 year periods (or fractional
period there of)

P = a hypothetical initial investment of $1,000

N = number of years

The following table lists the information used to calculate the standardized
average annual return and total return for First Investors Fund For Income, Inc.
(Class B shares) as of December 31, 1995.

ERV P N TOTAL RETURN
--- - -- ------------
<S> <C> <C> <C> <C>

1/12/95 to 12/31/95 $1,127.30 $1,000 .97 12.73%

</TABLE>

<PAGE>

SEC Standardized Total Returns - Class A Shares

Average Annual Total Return and Total Return for First Investors Funds are
calculated using the following standardized formula:

Average Annual
Total Return = ((ERV DIVIDED BY P) ) - 1

Total Return = ((ERV - P) DIVIDED BY P)

WHERE: ERV = Ending redeemable value of a hypothetical $1,000 investment made
at the beginning of 1, 5, or 10 year periods (or fractional
period there of)

P = a hypothetical initial investment of $1,000

N = number of years

The following table lists the information used to calculate the standardized
average annual total return and total return for First Investors Fund For
Income, Inc. (Class A shares) as of December 31, 1995.

AVE. ANNUAL TOTAL
ERV P N TOTAL RETURN RETURN
--- - -- ------------- -------
<S> <C> <C> <C> <C> <C>
1 year: $1,112.40 $1,000.00 1.00 11.24% 11.24%
5 years: $2,199.00 $1,000.00 5.00 17.07% 119.90%
10 years: $2,103.40 $1,000.00 10.00 7.72% 110.34%

</TABLE>

<PAGE>

NAV Only Total Returns - Class B Shares

Average Annual Total Return and Total Return for First Investors Funds are
calculated using the following standardized formula:

Average Annual
Total Return =((ERV DIVIDED BY P) )- 1

Total Return = ((ERV - P) DIVIDED BY P)

WHERE: ERV = Ending redeemable value of a hypothetical $1,000 investment made
at the beginning of 1, 5, or 10 year periods (or fractional
period there of.)

P = a hypothetical initial investment of $1,000

N = number of years

The following table lists the information used to calculate the average annual
total return and total return for First Investors Fund For Income, Inc. (Class B
shares) as of December 31, 1995.

ERV P N TOTAL RETURN
--- - -- -------------
<S> <C> <C> <C> <C>

1/12/95 to 12/31/95 $1,174.60 1,000 .97 17.46%

</TABLE>

<PAGE>

Yields for First Investor's Funds are calculated using the following formula:

2(((((a-b) + ((cd)-e)+1)-)-1)

Where:

a = dividends and interest earned during the 30 day period.

b = expenses accrued for the period (net of reimbursements).

c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.

d = the maximum offering price per share on the last day of the
period.

e = undeclared earned income.

The following is a list of the information used to calculate the for First
Investors Fund For Income, Inc. (Class A shares) as of December 31, 1995.

a b c d e Yield
- - - - - -----
<S> <C> <C> <C> <C> <C>
$3,298,529 $406,118 102,876,063 $4.41 $.00 7.78%

</TABLE>

<PAGE>

Yields for First Investor's Funds are calculated using the following formula:

2(((((a-b) + ((cd)-e)+1)-)-1)

Where:

a = dividends and interest earned during the 30 day period.

b = expenses accrued for the period (net of reimbursements).

c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.

d = the maximum offering price per share on the last day of the
period.

e = undeclared earned income.

The following is a list of the information used to calculate the for First
Investors Fund For Income, Inc. (Class B shares) as of December 31, 1995.

a b c d e Yield
- - - - - -----
<S> <C> <C> <C> <C> <C>
$13,141 $2,572 $409,859 $4.13 $.00 7.60%

</TABLE>

<PAGE>

Distribution yields for First Investor's Funds are calculated using the
following formula:

Yield = (a/b)

Where:

a = dividends declared during the last 12 months.

b = Maximum offering price per share on the last day of the period.

The following is a list of the information used to calculate the distribution
yield for First Investors Fund For Income, Inc. (Class A shares) as of December
31, 1995.

Distribution
a b Yield
- - -----
<S> <C> <C>
$.360 $4.41 8.18%

</TABLE>
<PAGE>

Distribution yields for First Investor's Funds are calculated using the
following formula:

Yield = (a/b)

Where:

a = dividends declared during the last 12 months.

b = Net asset value per share on the last day of the period.

The following is a list of the information used to calculate the distribution
yield for First Investors Fund For Income, Inc. (Class A shares) as of December
31, 1995.

Distribution
a b Yield
- - -----
<S> <C> <C>
$.380 $4.13 8.72%

</TABLE>

<PAGE>

SEC Standardized Total Returns - Class B Shares

Average Annual Total Return and Total Return for First Investors
Funds are calculated using the following standardized formula:

Average Annual
Total Return = ((ERV DIVIDED BY P) ) - 1

Total Return = ((ERV - P) DIVIDED BY P)

WHERE: ERV = Ending redeemable value of a hypothetical
$1,000 investment made at the beginning of
1, 5, or 10 year periods (or fractional
period there of.)

P = a hypothetical initial investment of $1,000

N = number of years

The following table lists the information used to calculate the standardized
average annual total return and total return for First Investors Fund For
Income, Inc. (Class B shares) as of December 31, 1995.

AVE. ANNUAL TOTAL
ERV P N TOTAL RETURN RETURN
--- - -- ------------ ------

LIFE OF FUND: $1,127.30 $1,000.00 .97 13.20% 12.73%

<PAGE>

NAV Only Total Returns - Class B Shares

Average Annual Total Return and Total Return for First Investors
Funds are calculated using the following standardized formula:

Average Annual
Total Return = ((ERV DIVIDED BY P) ) - 1

Total Return = ((ERV - P) DIVIDED BY P)

WHERE: ERV = Ending redeemable value of a hypothetical
$1,000 investment made at the beginning of
1, 5, or 10 year periods (or fractional
period there of.)

P = a hypothetical initial investment of $1,000

N = number of years

The following table lists the information used to calculate the average annual
total return and total return for First Investors Fund For Income, Inc.
(Class B shares) as of December 31, 1995.

AVE. ANNUAL TOTAL
ERV P N TOTAL RETURN RETURN
--- - -- ------------ ------

LIFE OF FUND: $1,174.60 $1,000.00 .97 18.12% 17.46%

<PAGE>

Distribution yields for First Investor's Funds are calculated using the
following formula:

Yield - (a/b)

Where:

a = dividends declared during the last 12 months.

b = Net assest value per share on the last day of the period.

The following is a list of the onformation used to calculate the distribution
yield for First Investors Fund For Income, Inc. (Class B shares) as of
December 31, 1995.

Distribution
a b Yield
- - -----
$.328 $4.13 7.95%

<PAGE>

FIRST INVESTORS CASH MANAGEMENT FUND, INC.
FIRST INVESTORS FUND FOR INCOME, INC.
FIRST INVESTORS GLOBAL FUND, INC.
FIRST INVESTORS GOVERNMENT FUND, INC.
FIRST INVESTORS HIGH YIELD FUND, INC.
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
FIRST INVESTORS MULTI-STATE INSURED TAX FREE FUND
FIRST INVESTORS NEW YORK INSURED TAX FREE FUND, INC.
FIRST INVESTORS SERIES FUND
FIRST INVESTORS SERIES FUND II, INC.
FIRST INVESTORS TAX-EXEMPT MONEY MARKET FUND, INC.

Plan Pursuant to Rule 18f-3

Each of the above-referenced funds (each a "Fund" and, collectively, the
"Funds") hereby adopt this Plan pursuant to Rule 18f-3 under the Investment
Company Act of 1940, as amended (the "1940 Act"), to address the differing
requirements and preferences of potential investors.

A. CLASSES OFFERED. The Funds offer the following classes of shares:

1. CLASS A. Class A shares of each Fund, other than First Investors Cash
Management Fund, Inc. and First Investors Tax-Exempt Money Market Fund, Inc.
(the "Money Market Funds") are sold with an initial sales charge of up to 6.25%
of the amount invested, which is waived for certain purchases. Class A shares
of the Money Market Funds are sold at net asset value, with no sales charge. The
minimum initial investment is $1,000, which is likewise waived for certain
purchases. However, the initial minimum investment for IRA accounts is $250 and
the initial minimum investment for shareholders who invest under a systematic
investment plan is $50. Purchases of Class A shares which aggregate at least $1
million are sold at net asset value. However, if such shares are redeemed
within 24 months of purchase, they are subject to a contingent deferred sales
charge ("CDSC") of 1.00%. Pursuant to a plan of distribution adopted pursuant
to Rule 12b-1 under the 1940 Act ("12b-1 Plan"), Class A shares are subject to a
12b-1 fee in an amount up to an annual rate of 0.30% of each Fund's average
daily net assets attributable to Class A shares, of which no more than 0.25% may
be paid as a service fee and the balance thereof paid as an asset-based sales
charge. These 12b-1 fees are paid to First Investors Corporation ("FIC") as
compensation for distribution- related expenses or shareholder services.

2. CLASS B. Class B shares are sold without an initial sales charge, but
are generally subject to a CDSC which declines in steps from 4% to 0% during a
six-year period. At the time of redemption, the CDSC will be imposed on the
lower of net asset value or the purchase price. The CDSC is waived for certain
purchases. Class B shares automatically convert into Class A shares after eight

<PAGE>

years on the basis of their relative net asset values. The minimum initial
investment is the same as that for Class A shares. Pursuant to a 12b-1 Plan,
Class B shares pay a 12b-1 fee in an amount up to an annual rate of 1.00% of
each Fund's average daily net assets attributable to Class B shares, of which no
more than 0.25% may be paid as a service fee and the balance thereof up to 0.75%
paid as an asset-based sales charge. These 12b-1 fees are paid to FIC as
compensation for distribution-related expenses or shareholder services.

B. EXPENSES. The expenses of the Funds that cannot be attributed to any one
Fund generally are allocated to each Fund based on the relative net assets of
the Funds. Certain expenses that may be attributable to a particular Fund, but
not a particular Class, are allocated based on the relative daily net assets of
each Class. Finally, certain expenses may be attributable to a particular Class
of shares of a Fund ("Class Expenses"). Class Expenses are charged directly to
the net assets of the particular Class and, thus, are borne on a pro rata basis
by the outstanding shares of that Class.

Examples of Class Expenses may include, but are not limited to, (1) 12b-1
fees, (2) transfer agent fees identified as being attributable to a specific
Class, (3) stationery, printing, postage, and delivery expenses related to
preparing and distributing materials such as shareholder reports, prospectuses,
and proxy statements to current shareholders of a Class, (4) Blue Sky
registration fees incurred by a Class, (5) Securities and Exchange Commission
registration fees incurred by a Class, (6) expenses of administrative and
personnel services as required to support the shareholders of a Class; (7)
trustees' or directors' fees or expenses incurred as a result of issues relating
to one Class, (8) accounting expenses relating solely to one Class, (9)
auditors' fees, litigation expenses, and legal fees and expenses relating to a
Class, and (10) expenses incurred in connection with shareholders meetings as a
result of issues relating to one Class.

C. CLASS DIFFERENCES. Other than the differences as a result of the Class A
and Class B 12b-1 Plans and certain shareholder purchase privileges available to
Class A shareholders (as discussed in the prospectus for each Fund), there are
no material differences in the services offered to each Class. This Rule 18f-3
Plan is qualified and subject to the terms of the then current prospectus for
the applicable Fund; provided, however, that none of the terms set forth in any
such prospectus shall be inconsistent with the terms of the Classes set forth in
this Plan. The prospectus for each Fund contains additional information about
the Classes.

D. EXCHANGE FEATURE. Exchanges are not permitted between the Classes.
However, each Class offers exchange privileges within that Class. These
exchange privileges may be modified or terminated by a Fund.

Dated: September 25, 1995

<PAGE>
<ARTICLE> 6
<CIK> 0000312370
<NAME> FIRST INVESTORS FUND FOR INCOME
<SERIES>
<NUMBER> 001
<NAME> CLASS A
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 420,018
<INVESTMENTS-AT-VALUE> 421,111
<RECEIVABLES> 7,926
<ASSETS-OTHER> 579
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 429,616
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,018
<TOTAL-LIABILITIES> 2,018
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,131,022
<SHARES-COMMON-STOCK> 103,018
<SHARES-COMMON-PRIOR> 105,260
<ACCUMULATED-NII-CURRENT> 3,161
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (709,386)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,041
<NET-ASSETS> 425,838
<DIVIDEND-INCOME> 424
<INTEREST-INCOME> 43,949
<OTHER-INCOME> 238
<EXPENSES-NET> (4,782)
<NET-INVESTMENT-INCOME> 39,829
<REALIZED-GAINS-CURRENT> 4,034
<APPREC-INCREASE-CURRENT> 27,642
<NET-CHANGE-FROM-OPS> 71,505
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (39,795)
<DISTRIBUTIONS-OF-GAINS> (4,034)
<DISTRIBUTIONS-OTHER> (27,642)
<NUMBER-OF-SHARES-SOLD> (3,505)
<NUMBER-OF-SHARES-REDEEMED> 12,088
<SHARES-REINVESTED> (6,341)
<NET-CHANGE-IN-ASSETS> 2,236
<ACCUMULATED-NII-PRIOR> 927
<ACCUMULATED-GAINS-PRIOR> (734,312)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (3,077)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (4,894)
<AVERAGE-NET-ASSETS> 416,958
<PER-SHARE-NAV-BEGIN> 3.81
<PER-SHARE-NII> .38
<PER-SHARE-GAIN-APPREC> .30
<PER-SHARE-DIVIDEND> .36
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 4.13
<EXPENSE-RATIO> 9.52
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>
<ARTICLE> 6
<CIK> 0000312370
<NAME> FIRST INVESTORS FUND FOR INCOME
<SERIES>
<NUMBER> 002
<NAME> CLASS B
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 420,018
<INVESTMENTS-AT-VALUE> 421,111
<RECEIVABLES> 7,926
<ASSETS-OTHER> 579
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 429,616
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,018
<TOTAL-LIABILITIES> 2,018
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,696
<SHARES-COMMON-STOCK> 426
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 6
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 51
<NET-ASSETS> 1,760
<DIVIDEND-INCOME> 1
<INTEREST-INCOME> 92
<OTHER-INCOME> 0
<EXPENSES-NET> (16)
<NET-INVESTMENT-INCOME> 77
<REALIZED-GAINS-CURRENT> 7
<APPREC-INCREASE-CURRENT> 7
<NET-CHANGE-FROM-OPS> 91
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (6)
<DISTRIBUTIONS-OF-GAINS> (7)
<DISTRIBUTIONS-OTHER> (7)
<NUMBER-OF-SHARES-SOLD> (442)
<NUMBER-OF-SHARES-REDEEMED> 27
<SHARES-REINVESTED> (11)
<NET-CHANGE-IN-ASSETS> 6
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (6)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (10)
<AVERAGE-NET-ASSETS> 857
<PER-SHARE-NAV-BEGIN> 3.81
<PER-SHARE-NII> .31
<PER-SHARE-GAIN-APPREC> .33
<PER-SHARE-DIVIDEND> .32
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 4.13
<EXPENSE-RATIO> 8.71
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>