FIRST
INVESTORS
FUND FOR
INCOME, INC.
SEMI-
ANNUAL
REPORT
June 30, 1996
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FIRST INVESTORS FUND FOR INCOME, INC.
95 WALL STREET
NEW YORK, NY 10005
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First Investors logo
A MEMBER OF THE
FIRST INVESTORS
FINANCIAL NETWORK
FIFI065
Portfolio Manager's Letter
FIRST INVESTORS FUND FOR INCOME, INC.
Dear Investor:
As 1996 began, most investors expected the U.S. economy to continue
to slow or even enter a recession. Instead the economy accelerated
throughout the first half of the year. After growing at an
annualized rate of only .5% in the fourth quarter of 1995, the
economy expanded at a 2.2% pace during the first quarter of this
year and at an estimated 3.5%-4% during the second quarter. Concern
that faster growth would lead to higher inflation contributed to a
sharp rise in interest rates with the yield on long-term U. S.
Treasury bonds increasing from 5.95% to 6.87%. Despite higher
interest rates the stock market continued to rally, with the broad
stock market averages hitting record highs during the second
quarter.
Within this environment, the high yield market turned in a mixed
performance during the first half of 1996. While outpacing other
fixed income markets during the period, high yield funds lagged the
equity markets. There were a variety of factors driving returns
during the six months. The strong economic numbers that propelled
the equity markets to new highs generally increased the valuations
of companies in the high yield universe. With the economy strong,
default fears eased and high yield instruments as a group
"tightened" (became closer in yield) to investment grade and
government bonds. Riskier credits, which tend to have higher
coupons, shorter durations and the smallest equity cushions were the
best performers year-to-date. Additionally, a favorable
supply/demand dynamic worked in the market's favor, as extremely
high issuance was met by even larger net new money from mutual
funds, insurance companies and pension plans.
For the six months ended June 30, 1996, your Fund performed
generally in line with the broader market The Fund returned on a net
asset value basis 4.2% on Class A shares and 3.9% on Class B shares
compared to 4.8%, the average for high current yield funds as
tracked by Lipper Analytical Services, Inc. Dividends paid from net
investment income amounted to 18 cents per Class A share and 16.8
cents per Class B share. Helping returns were good security
selections across a broad range of industries, as the Fund avoided
defaults and severe negative surprises. Additionally, some
investments that we had held through bad times made impressive
comebacks. The main factors which hurt performance were the Fund's
good credit quality and its zero-coupon bond holdings. Higher
quality bonds tend to track the Treasury market more closely than
bonds which the market believes to be riskier, hurting performance
as interest rates rise. Zero-coupon bonds, which carry longer
durations than cash-paying instruments of a similar maturity, also
tend to decline more as rates rise. Our large exposure to the United
Kingdom cable/telephone industry, for example, returned 0% for the
first six months, because improving performance by the companies we
held was overcome by the long duration of these deferred-coupon
securities. Finally, the Fund had minimal exposure to the volatile
retail and gaming industries, where several companies which had been
trading at near-distressed levels experienced very strong returns.
Over the long run, credit selection will remain the key driver of
performance in the high yield market place. Rather than trying to
pick the next hot area or dabble in dicey credits, the Fund will
continue to seek to invest in companies with good and improving
fundamentals, strengthening balance sheets and solid equity bases.
Investors who buy bond funds -- whether for income or total return -
- - should be aware that the value of their investment fluctuates as
interest rates change. For example, a 100 basis point (or 1%)
increase in yield on a ten year bond results in roughly a 7%
decrease in that bond's price. In each of the last four years and
the first half of 1996, ten year Treasury bond yields have moved
more than 100 basis points. In addition, the value of a fund can
fluctuate based on changes in the credit quality of the bonds which
it holds. In particular, high yield funds invest in lower-rated debt
obligations which are more sensitive than higher-rated investments
to adverse economic changes or individual corporate developments,
and thus can be subject to a higher incidence of default. Investors
should be aware of these risks and recognize that successful
investing generally requires a long-term commitment to the
market.Looking forward, inflation shows few signs of accelerating,
despite the market's concern. In addition, the pace of economic
growth is likely to slow during the second half of the year. A
combination of stable inflation and moderate growth should provide a
comfortable environment for investors throughout the remainder of
1996.
As always, we appreciate the opportunity to serve your investment
needs.
Sincerely,
Nancy W. Jones
Vice President
and Portfolio Manager
July 8, 1996
<TABLE>
<CAPTION>
Portfolio of Investments
FIRST INVESTORS FUND FOR INCOME, INC.
June 30, 1996
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
Principal For Each
Amount or $10,000 of
Shares Security Value Net Assets
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CORPORATE BONDS--88.5%
Agricultural Products--1.1%
$4,500M Terra Industries, Inc., 10 1/2%, 2005 $ 4,657,500 $ 111
- ------------------------------------------------------------------------------------------------------------------------------
Apparel/Textiles--2.1%
2,000M Dan River, Inc., 10 1/8%, 2003 1,920,000 46
7,000M Linter Textiles Corp., Ltd., 13 3/4%, 2000 (Defaulted) (Note 5) 52,500 1
7,000M Westpoint Stevens, Inc., 9 3/8%, 2005 6,755,000 161
- ------------------------------------------------------------------------------------------------------------------------------
8,727,500 208
- ------------------------------------------------------------------------------------------------------------------------------
Automotive--3.2%
2,800M Collins & Aikman Products Co., 11 1/2%, 2006 2,849,000 68
2,000M Exide Corp., 10%, 2005 1,960,000 47
4,000M Lear Seating, Inc., 11 1/4%, 2000 4,140,000 99
4,400M SPX Corp., 11 3/4%, 2002 4,653,000 110
- ------------------------------------------------------------------------------------------------------------------------------
13,602,000 324
- ------------------------------------------------------------------------------------------------------------------------------
Building Materials--3.7%
4,500M American Standard Corp., 11 3/8%, 2004 4,871,250 116
4,500M American Standard Corp., 0%-10 1/2%, 2005 3,870,000 92
4,950M Triangle Pacific Corp., 10 1/2%, 2003 5,135,625 122
1,630M Waxman USA, Inc., 11 1/8%, 2001 (Note 4) 1,613,700 38
- ------------------------------------------------------------------------------------------------------------------------------
15,490,575 368
- ------------------------------------------------------------------------------------------------------------------------------
Chemicals--6.1%
4,200M Harris Chemical North America, Inc., 0%-10 1/4%, 2001 4,200,000 100
6,125M Harris Chemical North America, Inc., 10 3/4%, 2003 5,971,875 142
6,600M Rexene Corp., 11 3/4%, 2004 6,831,000 163
6,000M Synthetic Industries, Inc., 12 3/4%, 2002 6,345,000 151
2,000M Texas Petrochemical Corp., 11 1/8%, 2006 (Note 4) 2,032,500 49
- ------------------------------------------------------------------------------------------------------------------------------
25,380,375 605
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Durables--.5%
2,000M Hines Horticulture, Inc., 11 3/4%, 2005 2,070,000 49
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Products--.4%
1,500M Herff Jones, Inc., 11%, 2005 1,545,000 37
- ------------------------------------------------------------------------------------------------------------------------------
Containers--3.8%
10,000M Owens Illinois, Inc., 11%, 2003 10,750,000 256
5,250M Sweetheart Cup Co., Inc., 10 1/2%, 2003 5,197,500 124
- ------------------------------------------------------------------------------------------------------------------------------
15,947,500 380
- ------------------------------------------------------------------------------------------------------------------------------
Durable Goods Manufacturing--2.5%
2,500M Day International Group, Inc., 11 1/8%, 2005 2,556,250 61
4,275M Fairfield Manufacturing, Inc., 11 3/8%, 2001 4,317,750 103
4,000M RACI Acquisition Corp., 10%, 2003 (Note 4) 3,520,000 84
- ------------------------------------------------------------------------------------------------------------------------------
10,394,000 248
- ------------------------------------------------------------------------------------------------------------------------------
Electrical Equipment--.9%
3,650M Essex Group, Inc., 10%, 2003 3,668,250 88
- ------------------------------------------------------------------------------------------------------------------------------
Energy--3.9%
3,500M Deeptech International, Inc., 12%, 2000 3,465,000 83
3,500M Falcon Drilling Co., Inc., 9 3/4%, 2001 3,535,000 84
5,000M KCS Energy Inc., 11%, 2003 5,275,000 126
3,900M Maxus Energy Corp., 11 1/2%, 2015 4,056,000 97
- ------------------------------------------------------------------------------------------------------------------------------
16,331,000 390
- ------------------------------------------------------------------------------------------------------------------------------
Financial Services--.7%
2,800M Terra Nova Holdings, PLC, 10 3/4%, 2005 3,122,000 74
- ------------------------------------------------------------------------------------------------------------------------------
Food/Beverage/Tobacco--1.8%
2,700M Fleming Co., Inc., 10 5/8%, 2001 2,443,500 58
5,000M TLC Beatrice International Holdings, Inc., 11 1/2%, 2005 5,068,750 121
- ------------------------------------------------------------------------------------------------------------------------------
7,512,250 179
- ------------------------------------------------------------------------------------------------------------------------------
Gaming/Lodging--3.8%
5,000M Casino America, Inc., 11 1/2%, 2001 5,225,000 125
500M Majestic Star Casino, LLC, 12 3/4%, 2003 (Note 4) 541,250 13
2,500M Player's International, Inc., 10 7/8%, 2005 2,550,000 61
2,250M Prime Hospitality Corp., 9 1/4%, 2006 2,120,625 51
5,500M Showboat, Inc., 9 1/4%, 2008 5,568,750 133
- ------------------------------------------------------------------------------------------------------------------------------
16,005,625 383
- ------------------------------------------------------------------------------------------------------------------------------
Healthcare--8.0%
3,000M Genesis Healthcare, Inc., 9 3/4%, 2005 3,052,500 73
4,400M Healthsouth Rehabilitation Corp., 9 1/2%, 2001 4,543,000 108
3,750M Integrated Health Services, Inc., 9 5/8%, 2002 3,712,500 89
4,500M Integrated Health Services, Inc., 10 3/4%, 2004 4,646,250 111
2,000M Mediq/PRN Life Support Services, Inc., 11 1/8%, 1999 2,140,000 51
6,000M Ornda Healthcorp., 12 1/4%, 2002 6,480,000 155
2,550M Ornda Healthcorp., 11 3/8%, 2004 2,805,000 67
2,200M Owens & Minor, Inc., 10 7/8%, 2006 2,222,000 53
3,800M Tenet Healthcare Corp., 10 1/8%, 2005 4,018,500 96
- ------------------------------------------------------------------------------------------------------------------------------
33,619,750 803
- ------------------------------------------------------------------------------------------------------------------------------
Information Technology/Office Equipment--.8%
3,500M Dictaphone Corp., 11 3/4%, 2005 3,272,500 78
- ------------------------------------------------------------------------------------------------------------------------------
Media/Cable Television--16.5%
3,500M Allbritton Communications Corp., 9 3/4%, 2007 3,185,000 76
5,000M Bell Cablemedia, PLC, 0%-11.95%, 2004 3,537,500 84
3,000M CF Cable TV, Inc., 11 5/8%, 2005 3,285,000 78
5,000M Comcast United Kingdom Cable Corp., 0%-11.2%, 2007 2,868,750 68
4,750M Diamond Cable Communications, PLC, 0%-11 3/4%, 2005 2,802,500 67
10,550M Echostar Communications Corp., 0%-12 7/8%, 2004 7,727,875 184
5,500M Jones Intercable, Inc., 11 1/2%, 2004 5,995,000 143
2,000M Lamar Advertising, Inc., 11%, 2003 2,045,000 49
5,000M Marcus Cable Operating Co., 0%-13 1/2%, 2004 3,600,000 86
3,625M Outdoor Systems, Inc., 10 3/4%, 2003 3,751,875 89
5,000M PanAmSat Capital Corp., 0%-11 3/8%, 2003 4,337,500 103
6,150M Rogers Communication Inc., 10 7/8%, 2004 6,242,250 149
6,000M SCI Television Corp., 11%, 2005 6,240,000 149
2,000M Sinclair Broadcasting Group, 10%, 2005 1,900,000 45
4,000M Videotron, Ltd., 10 1/4%, 2002 4,120,000 98
6,500M Videotron Holdings, PLC, 0%-11 1/8%, 2004 4,810,000 115
3,000M Young Broadcasting Corp., 10 1/8%, 2005 2,872,500 69
- ------------------------------------------------------------------------------------------------------------------------------
69,320,750 1,652
- ------------------------------------------------------------------------------------------------------------------------------
Mining/Metals--8.3%
5,001M Carbide/Graphite Group, Inc., 11 1/2%, 2003 5,326,065 127
2,750M Earle M. Jorgensen Co., 10 3/4%, 2000 2,681,250 64
3,650M Geneva Steel Co., Inc., 11 1/8%, 2001 3,139,000 75
5,500M Magma Copper Co., Inc., 12%, 2001 5,958,453 142
2,500M Renco Metals, Inc., 11 1/2%, 2003 2,537,500 61
4,000M Russel Metals, Inc., 10 1/4 %, 2000 3,870,000 92
1,155M UCAR Global Enterprises, Inc., 12%, 2005 1,305,150 31
5,400M WCI Steel, Inc., 10 1/2%, 2002 5,481,000 131
5,000M Wheeling-Pittsburgh Steel Corp., 9 3/8%, 2003 4,625,000 110
- ------------------------------------------------------------------------------------------------------------------------------
34,923,418 833
- ------------------------------------------------------------------------------------------------------------------------------
Miscellaneous--1.0%
4,000M Monarch Marking Systems, Inc., 12 1/2%, 2003 4,220,000 101
- ------------------------------------------------------------------------------------------------------------------------------
Paper/Forest Products--6.7%
4,000M Container Corp., 11 1/4%, 2004 4,110,000 98
4,000M Gaylord Container Corp., 11 1/2%, 2001 4,100,000 98
2,500M Riverwood International Corp., 10 1/4%, 2006 2,481,250 59
5,600M S.D. Warren Co., Inc., 12%, 2004 5,936,000 142
5,500M Stone Container Corp., 11 7/8%, 1998 5,747,500 137
3,000M Stone Container Corp., 9 7/8%, 2001 2,910,000 69
2,600M Stone Container Corp., 10 3/4%, 2002 2,622,750 63
- ------------------------------------------------------------------------------------------------------------------------------
27,907,500 666
- ------------------------------------------------------------------------------------------------------------------------------
Retail-General Merchandise--2.6%
4,500M Barnes & Noble, Inc., 11 7/8%, 2003 4,837,500 115
1,800M General Host Co., Inc., 11 1/2%, 2002 1,656,000 39
4,500M Waban, Inc., 11%, 2004 4,635,000 111
- ------------------------------------------------------------------------------------------------------------------------------
11,128,500 265
- ------------------------------------------------------------------------------------------------------------------------------
Telecommunications--7.0%
7,300M American Communication Services, Inc., 0%-13%, 2005 (Note 4) 4,051,500 97
3,300M Brooks Fiber Properties, Inc., 0%-10 7/8%, 2006 (Note 4) 1,757,250 42
4,000M CAI Wireless Systems, Inc., 12 1/4%, 2002 4,180,000 100
2,500M Centennial Cellular, 8 7/8%, 2001 2,312,500 55
2,600M GST Telecommunications, Inc., 0%-13 7/8 %, 2005 1,456,000 35
3,800M Intercel, Inc., 0%-12%, 2006 2,061,500 49
6,000M NetLink Communication, Inc., 12 1/2%, 2006 (Note 4) 5,985,000 143
2,800M Paging Network, Inc., 11 3/4%, 2002 2,996,000 71
4,500M Pronet, Inc., 11 7/8%, 2006 4,365,000 104
- ------------------------------------------------------------------------------------------------------------------------------
29,164,750 696
- ------------------------------------------------------------------------------------------------------------------------------
Transportation--3.1%
5,700M Eletson Holdings, Inc., 9 1/4%, 2003 5,443,500 130
3,100M Moran Transportation Co., 11 3/4%, 2004 3,092,250 74
4,600M Trism, Inc., 10 3/4%, 2000 4,324,000 103
- ------------------------------------------------------------------------------------------------------------------------------
12,859,750 307
- ------------------------------------------------------------------------------------------------------------------------------
Total Value of Corporate Bonds (cost $372,272,522) 370,870,493 8,845
- ------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--.3%
Gaming/Lodging--.0%
35,000 *Goldriver Hotel & Casino Corp., Series "B" -- --
- ------------------------------------------------------------------------------------------------------------------------------
Media/Cable Television--.2%
35,753 *Echostar Communications, Class "A" 1,010,022 24
- ------------------------------------------------------------------------------------------------------------------------------
Retail-General Merchandise--.1%
96,129 *Barry's Jewelers, Inc. 336,452 8
- ------------------------------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $2,339,391) 1,346,474 32
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
Shares For Each
or $10,000 of
Warrants Security Value Net Assets
- ------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--5.0%
Consumer Services--.9%
4,000 *Time Warner Inc., 10 1/4%, Series "K" (Note 4) $ 3,920,000 $ 94
- ------------------------------------------------------------------------------------------------------------------------------
Media/Cable Television--3.3%
70,995 Cablevision Systems Corp., 11 1/8%, PIK (Note 4) 6,815,520 163
10,846 K-III Communications Corp., 11 5/8%, Series "B" 1,084,593 26
5,089 PanAmSat Capital Corp., 12 3/4% 5,801,870 138
- ------------------------------------------------------------------------------------------------------------------------------
13,701,983 327
- ------------------------------------------------------------------------------------------------------------------------------
Paper/Forest Products--.8%
100,000 *S.D. Warren Co., Inc., 14% 3,500,000 83
- ------------------------------------------------------------------------------------------------------------------------------
Total Value of Preferred Stocks (cost $19,830,974) 21,121,983 504
- ------------------------------------------------------------------------------------------------------------------------------
WARRANTS--.4%
Gaming/Lodging--.0%
16,300 *Casino America, Inc. (expiring 11/15/96) 2,037 --
7,000 *Goldriver Finance Corp., Liquidating Trust 49,000 1
21,000 *President Riverboat Casinos, Inc. (expiring 9/23/96) (Note 4) 21,000 1
- ------------------------------------------------------------------------------------------------------------------------------
72,037 2
- ------------------------------------------------------------------------------------------------------------------------------
Paper/Forest Products--.2%
55,390 *Gaylord Container Corp. (expiring 7/31/96) 432,734 10
100,000 *S.D. Warren Co., Inc. (expiring 12/15/06)(Note 4) 300,000 7
- ------------------------------------------------------------------------------------------------------------------------------
732,734 17
- ------------------------------------------------------------------------------------------------------------------------------
Retail-General Merchandise--.0%
65,000 *New Cort Holdings Corp. (expiring 9/1/98) 146,250 3
4,000 *Payless Cashways, Inc. (expiring 11/1/96) 400 --
- ------------------------------------------------------------------------------------------------------------------------------
146,650 3
- ------------------------------------------------------------------------------------------------------------------------------
Telecommunications--.2%
7,300 *American Communication Services, Inc. (expiring 11/1/05) 784,750 19
- ------------------------------------------------------------------------------------------------------------------------------
Total Value of Warrants (cost $517,033) 1,736,171 41
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--2.5%
$10,000M United States Treasury Notes, 7 1/4%, 2004 (cost $10,884,375) $ 10,350,000 $ 247
- ------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--3.2%
5,000M Anheuser Busch Company, 5.3%, 7/11/96 4,992,639 119
3,500M Florida Power, 5.45%, 7/3/96 3,498,940 83
5,000M Ford Motor Credit, 5.34%, 7/1/96 5,000,000 119
- ------------------------------------------------------------------------------------------------------------------------------
Total Value of Short-Term Corporate Notes (cost $13,491,579) 13,491,579 321
- ------------------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $419,335,874) 99.9% 418,916,700 9,990
Other Assets, Less Liabilities .1 402,003 10
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $419,318,703 $10,000
==============================================================================================================================
* Non-income producing
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
FIRST INVESTORS FUND FOR INCOME, INC.
June 30, 1996
- ------------------------------------------------------------------------------------------------------------------------------
Assets
<S> <C> <C>
Investments in securities, at value (identified cost $419,335,874) (Note 1A) $ 418,916,700
Cash 783,154
Receivables:
Interest $ 7,988,207
Capital shares sold 63,905 8,052,112
------------
Other assets 168,816
--------------
Total Assets 427,920,782
Liabilities
Payables:
Investment securities purchased 4,530,000
Dividend payable July 15, 1996 3,116,042
Capital shares redeemed 539,740
Accrued advisory fee 258,623
Accrued expenses 157,674
-------------
Total Liabilities 8,602,079
--------------
Net Assets (Note 6):
Class A (101,071,098 shares outstanding) 416,717,126
Class B (631,528 shares outstanding) 2,601,577 $ 419,318,703
------------- ==============
Net Assets Consist of:
Capital paid in $1,125,524,091
Undistributed net investment income 4,278,934
Accumulated net realized loss on investment transactions (710,065,148)
Net unrealized depreciation in value of investments (419,174)
--------------
Total $ 419,318,703
==============
Net asset value and redemption price per share--Class A $4.12
=====
Maximum offering price per share--Class A ($4.12/.9375)* $4.39
=====
Net asset value and offering price per share--Class B $4.12
=====
*On purchases of $25,000 or more, the sales charge is reduced.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
FIRST INVESTORS FUND FOR INCOME, INC.
Six Months Ended June 30, 1996
- ------------------------------------------------------------------------------------------------------------------------------
Investment Income
<S> <C> <C>
Income:
Interest $21,221,064
Dividends (Note 1D) 514,046
Consent fees 306,603
-----------
Total income $22,041,713
Expenses (Notes 1D and 3):
Advisory fee 1,575,678
Shareholder servicing costs 399,954
Distribution plan expenses--Class A 318,880
Distribution plan expenses--Class B 8,914
Reports and notices to shareholders 82,432
Professional fees 32,385
Custodian fees 22,918
Other expenses 25,365
-----------
Total expenses 2,466,526
Less: Custodian fees paid indirectly 10,244
-----------
Net expenses 2,456,282
----------
Net investment income 19,585,431
Realized and Unrealized Gain (Loss) on Investments (Note 2):
Net realized loss on investments (686,380)
Net unrealized depreciation of investments (1,512,024)
-----------
Net loss on investments (2,198,404)
-----------
Net Increase in Net Assets Resulting from Operations $17,387,027
===========
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
FIRST INVESTORS FUND FOR INCOME, INC.
- ------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended
June 30, 1996 December 31 ,1995
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income $ 19,585,431 $ 39,800,885
Net realized gain (loss) on investments (686,380) 4,041,341
Net unrealized appreciation (depreciation) on investments (1,512,024) 27,647,990
------------ ------------
Net increase in net assets resulting from operations 17,387,027 71,490,216
------------ ------------
Dividends to Shareholders from:
Net investment income--Class A (18,388,446) (37,489,349)
Net investment income--Class B (84,993) (71,432)
------------ ------------
Total dividends (18,473,439) (37,560,781)
------------ ------------
Capital Share Transactions (a)
Class A:
Proceeds from shares sold 7,137,118 13,975,925
Value of dividends reinvested 10,523,827 25,433,839
Cost of shares redeemed (25,708,699) (48,423,529)
------------ ------------
(8,047,754) (9,013,765)
------------ ------------
Class B:
Proceeds from shares sold 893,268 1,762,436
Value of dividends reinvested 40,301 45,376
Cost of shares redeemed (78,671) (112,219)
------------ ------------
854,898 1,695,593
------------ ------------
Net decrease from capital share transactions (7,192,856) (7,318,172)
------------ ------------
Net increase (decrease) in net assets (8,279,268) 26,611,263
Net Assets
Beginning of period 427,597,971 400,986,708
------------ ------------
End of period (including undistributed net investment income of
$4,278,934 and $3,166,942, respectively) $419,318,703 $427,597,971
============ ============
(a)Capital shares issued and redeemed
Class A:
Sold 1,711,765 3,505,873
Issued for dividends reinvested 2,522,762 6,340,562
Redeemed (6,181,896) (12,088,258)
------------ ------------
Net decrease in Class A shares outstanding (1,947,369) (2,241,823)
============ ============
Class B:
Sold 214,869 442,113
Issued for dividends reinvested 9,651 11,234
Redeemed (18,773) (27,566)
------------ ------------
Net increase in Class B shares outstanding 205,747 425,781
============ ============
See notes to financial statements
</TABLE>
Notes to Financial Statements
FIRST INVESTORS FUND FOR INCOME, INC.
1. Significant Accounting Policies-- The Fund is registered under
the Investment Company Act of 1940 (the "1940 Act") as a
diversified, open-end management investment company. 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.
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 and other available information in
determining bid values. Short-term corporate notes which are
purchased at a discount are valued at amortized cost. Securities for
which market quotations are not readily available and other assets
are valued on a consistent basis at fair value as determined in good
faith by or under the supervision of the Fund's officers in a manner
specifically authorized by the Board of Directors.
B. Federal Income Taxes--No provision has been made for federal
income taxes on net income or capital gains since it is the policy
of the Fund to continue to comply with the special provisions of the
Internal Revenue Code applicable to investment companies and to make
sufficient distributions of income and capital gains (in excess of
any available capital loss carryovers) to relieve it from all, or
substantially all, such taxes. At June 30, 1996, 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.
C. Distributions to Shareholders--Dividends to shareholders from net
investment income are accrued 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.
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 six months ended June 30, 1996, the Fund
recognized $514,046 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 $10,244 against custodian charges based on the uninvested
cash balances of the Fund.
2. Security Transactions-- For the six months ended June 30, 1996,
purchases and sales of investment securities, other than United
States Government obligations and short-term corporate notes,
aggregated $70,799,296 and $71,550,132, respectively.
At June 30, 1996, the cost of investments for federal income tax
purposes was $ 419,335,874. Accumulated net unrealized depreciation
on investments was $419,174, consisting of $14,738,440 gross
unrealized appreciation and $15,157,614 gross unrealized
depreciation.
3. Advisory Fee and Other Transactions With Affiliates-- Certain
officers and directors of the Fund are officers and directors of its
investment adviser, First Investors Management Company, Inc.
("FIMCO"), its underwriter, First Investors Corporation ("FIC"), its
transfer agent, Administrative Data Management Corp. ("ADM") and/or
First Financial Savings Bank, S.L.A. ("FFS"), custodian of the
Fund's Individual Retirement Accounts. Officers and directors of the
Fund received no remuneration from the Fund for serving in such
capacities. Their remuneration (together with certain other expenses
of the Fund) is paid by FIMCO or FIC.
The Investment Advisory Agreement provides as compensation to FIMCO
an annual fee, payable monthly, at the rate of .75% on the first
$250 million of the Fund's average daily net assets, declining by
.03% on each $250 million thereafter, down to .66% on average daily
net assets over $750 million.
Pursuant to certain state regulations, FIMCO has agreed to reimburse
the Fund if and to the extent that the Fund's aggregate operating
expenses, including the advisory fee but generally excluding
interest, taxes, brokerage commissions and extraordinary expenses,
exceed any limitation on expenses applicable to the Fund in those
states (unless waivers of such limitations have been obtained). The
amount of any such reimbursement is limited to the yearly advisory
fee. For the six months ended June 30, 1996, no reimbursement was
required pursuant to these provisions.
For the six months ended June 30, 1996, FIC, as underwriter,
received $167,124 in commissions after allowing $9,666 to other
dealers. Shareholder servicing costs included $233,290 in transfer
agent fees paid to ADM and $98,059 in custodian fees paid to FFS.
Pursuant to a Distribution Plan adopted under Rule 12b-1 of the 1940
Act, the Fund is authorized to pay FIC a fee in an amount up to .30%
of the average net assets of the Class A shares and up to 1% of the
average net assets of the Class B shares on an annualized basis each
year, payable monthly. The fee consists of a distribution fee and a
service fee. The service fee is paid for the ongoing servicing of
clients who are shareholders of the Fund. However, pursuant to
settlements entered into with various state regulators, the fee is
limited to .15% for Class A and .85% for Class B until February 1,
1998. For the six months ended June 30, 1996, this fee reduction
amounted to $318,880 for Class A and $1,573 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 June 30, 1996, the Fund held eleven 144A
securities with an aggregate value of $30,557,720 representing 7.3%
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
income and principal than lower yielding, higher rated, fixed income
securities. The risk of loss due to default by the issuer may be
significantly greater for the holders of high yielding securities,
because such securities are generally unsecured and are often
subordinated to other creditors of the issuer. At June 30, 1996, 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% 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 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.
Financial Highlights
FIRST INVESTORS FUND FOR INCOME, INC.
<TABLE>
<CAPTION>
The following table sets forth the per share operating performance for a share of capital stock outstanding, total return,
ratios to average net assets and other supplemental data for each period indicated.
- --------------------------------------------------------------------------------------------------------------------------
Class A Class B
------------------------------------------------------------ --------------------
1/1/96 Year Ended December 31 1/1/96 1/12/95 ++
to -------------------------------------------------- to to
6/30/96 1995 1994 1993 1992 1991 6/30/96 12/31/95
- --------------------------------------------------------------------------------------------------------------------------
Per Share Data
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $4.13 $3.81 $4.17 $3.89 $3.69 $2.98 $4.13 $3.81
----- ----- ----- ----- ----- ----- ----- -----
Income from Investment Operations
Net investment income .19 .38 .37 .39 .41 .42 .20 .31
Net realized and unrealized
gain (loss) on investments (.02) .30 (.35) .29 .19 .78 (.04) .33
----- ----- ----- ----- ----- ----- ----- -----
Total from Investment Operations .17 .68 .02 .68 .60 1.20 .16 .64
----- ----- ----- ----- ----- ----- ----- -----
Less Distributions from:
Net investment income .18 .36 .38 .40 .40 .41 .17 .32
Capital surplus -- -- -- -- -- .08 -- --
----- ----- ----- ----- ----- ----- ----- -----
Total Distributions .18 .36 .38 .40 .40 .49 .17 .32
----- ----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of Period $4.12 $4.13 $3.81 $4.17 $3.89 $3.69 $4.12 $4.13
===== ===== ===== ===== ===== ===== ===== =====
Total Return (%)+ 4.15 18.54 .58 18.06 16.70 42.84 3.85 17.46
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $417 $425 $401 $431 $414 $429 $3 $2
Ratio to Average Net Assets:(%)
Expenses 1.15(a) 1.18 1.22 1.32 1.03 1.18 1.85(a) 1.92(a)
Net investment income 9.17(a) 9.53 9.34 9.54 10.63 12.49 8.47(a) 8.78(a)
Portfolio Turnover Rate (%) 17 33 39 76 51 50 17 33
+ Calculated without sales charge
++ Date shares first offered
(a) Annualized
See notes to fiancial statements
Independent Auditor's Report
To the Shareholders and Board of Directors of
First Investors Fund For Income, Inc.
We have audited the accompanying statement of assets and liabilities
of First Investors Fund For Income, Inc., including the portfolio of
investments, as of June 30, 1996, and the related statement of
operations for the six months then ended, the statement of changes
in net assets for the six months ended June 30, 1996 and the year
ended December 31, 1995 and financial highlights for each of the
periods presented. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned as of June
30, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of First Investors Fund For Income, Inc. at June
30, 1996, and the results of its operations, changes in its net
assets and financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
July 31, 1996
FIRST INVESTORS FUND FOR INCOME, INC.
Directors
- ---------------------------------------
James J. Coy
Roger L. Grayson
Glenn O. Head
Kathryn S. Head
Rex R. Reed
Herbert Rubinstein
James M. Srygley
John T. Sullivan
Robert F. Wentworth
Officers
- ---------------------------------------
Glenn O. Head
President
Nancy W. Jones
Vice President
Concetta Durso
Vice President and Secretary
Joseph I. Benedek
Treasurer
Carol Lerner Brown
Assistant Secretary
Gregory R. Kingston
Assistant Treasurer
Mark S. Spencer
Assistant Treasurer
FIRST INVESTORS FUND FOR INCOME, INC.
Shareholder Information
- ---------------------------------------
Investment Adviser
First Investors
Management Company, Inc.
95 Wall Street
New York, NY 10005
Underwriter
First Investors Corporation
95 Wall Street
New York, NY 10005
Custodian
The Bank of New York
48 Wall Street
New York, NY 10286
Transfer Agent
Administrative Data
Management Corp.
581 Main Street
Woodbridge, NJ 07095-1198
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, DC 20036
Auditors
Tait, Weller & Baker
Two Penn Center Plaza
Philadelphia, PA 19102
It is the Fund's practice to mail only one copy of its annual and
semi-annual reports to any address at which more than one shareholder
with the same last name has indicated that mail is to be delivered.
Additional copies of the reports will be mailed if requested by any
shareholder in writing or by calling 800-423-4026. The Fund will
ensure that separate reports are sent to any shareholder who
subsequently changes his or her mailing address.
This report is authorized for distribution only to existing
shareholders, and, if given to prospective shareholders, must be
accompanied or preceded by the Fund's prospectus.
FIRST INVESTORS FUND FOR INCOME, INC.
95 WALL STREET
NEW YORK, NY 10005
A MEMBER OF THE
FIRST INVESTORS
FINANCIAL NETWORK
FIFI065
</TABLE>
