<PAGE>
PORTFOLIO MANAGER'S LETTER
FIRST INVESTORS FUND FOR INCOME, INC.
Dear Investor:
We are pleased to present the semi-annual report for First Investors Fund For
Income, Inc. for the six months ended June 30, 1997. During the period, the Fund
declared dividends from net investment income of 18.6 cents per share on Class A
shares and 17.4 cents per share on Class B shares. For the same period, the
Fund's return on a net asset value basis was 5.4% on Class A shares and 5.1% on
Class B shares compared to a return of 5.9% for the average of all high yield
funds as measured by Lipper Analytical Services, Inc.
The first half of 1997 ended with an ideal economy: sustained, moderate growth
with little inflation. Early in the year it appeared that the economy might be
growing too fast as gross domestic product expanded at a 4.9% annual rate during
the first quarter. Concerned by the economy's strength, the Federal Reserve
raised short-term interest rates in March for the first time in over two years
as an "insurance policy" in case faster growth led to higher inflation. The
Federal Reserve's action subsequently appeared to be unnecessary as the economy
slowed down significantly in the second quarter and consumer price inflation in
fact decelerated to an annual rate of less than 2.5%.
Although both the bond and stock markets suffered setbacks at times during the
first six months of the year, the combination of moderate growth and low
inflation ultimately provided a positive environment for investors. The markets
were also buoyed by an agreement between the President and Congress to eliminate
the Federal budget deficit over the next five years. Lastly, the markets
benefited from substantial demand for both stocks and bonds throughout the first
half of 1997.
As was the case during 1996, the high yield market outpaced other domestic fixed
income asset classes, while trailing the torrid pace of the equity markets.
Mutual fund investors, insurance companies, pension plans and others poured
money into high yield bonds, seeking haven from the scanty yields available in
other non-equity asset classes. This new money easily absorbed record new
issuance of more than $55 billion and drove the average spread between high
yield and Treasury securities to under 300 basis points. The market was made to
look even more attractive as the good economic environment kept default rates
unusually low and the strong stock market allowed many issuers to reduce debt by
issuing public equity.
Generally, the performance of the Fund was hindered by its higher-than-average
quality and shorter-than-average duration compared to other high yield funds,
which generated greater returns as a result of their holdings in bonds with
lower quality and longer duration. Additionally, the Fund was underweighted in
the retailing and casino sectors, which have performed well so far this year.
The Fund's lack of exposure to emerging markets also held back performance, as
this traditionally volatile sector turned in extraordinary performance. Finally,
there were fewer of the merger/corporate development announcements that aided
Fund performance last year. Helping performance was the lack of any new
defaulted or severely distressed issuers in the portfolio.
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 1% increase in yield on a ten-year Treasury bond results in
roughly a 7% decrease in that bond's price. In each of the last five years,
ten-year Treasury bond yields have moved more than 1%. 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.
The outlook for the financial markets continues to be positive. The economy is
growing moderately, inflation is subdued and the Federal Reserve is unlikely to
tolerate unsustainably fast economic growth. Demand for financial assets is
likely to remain strong both here and overseas. While the sizable recent returns
in some
1
<PAGE>
PORTFOLIO MANAGER'S LETTER (continued)
FIRST INVESTORS FUND FOR INCOME, INC.
markets are not likely to continue, the factors which might cause a sustained
downturn are not readily apparent. Despite this optimistic outlook, investors
should keep in mind that a diversified portfolio provides the best insurance
against unexpected changes in the financial markets.
As always, we appreciate the opportunity to serve your investment needs.
Sincerely,
[SIGNATURE]
Nancy W. Jones
Vice President
and Portfolio Manager
July 28, 1997
2
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS FUND FOR INCOME, INC.
June 30, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
CORPORATE BONDS--85.9%
AEROSPACE/DEFENSE--.3%
$ 1,250M K & F Industries, Inc., 10.375%, 2004 $ 1,325,000 $ 31
- ---------------------------------------------------------------------------------------
AGRICULTURAL PRODUCTS--1.1%
4,500M Terra Industries, Inc., 10.50%, 2005 4,927,500 114
- ---------------------------------------------------------------------------------------
APPAREL/TEXTILES--2.9%
2,000M Dan River, Inc., 10.125%, 2003 2,130,000 49
2,000M Gear for Sports, 9.625%, 2007 (Note 4) 2,020,000 47
1,200M Pillowtex, 10%, 2006 1,270,500 29
7,000M Westpoint Stevens, Inc., 9.375%, 2005 7,280,000 168
- ---------------------------------------------------------------------------------------
12,700,500 293
- ---------------------------------------------------------------------------------------
AUTOMOTIVE--2.7%
2,800M Collins & Aikman Products Co., 11.50%, 2006 3,164,000 73
2,000M Exide Corp., 10%, 2005 2,095,000 48
4,000M Lear Seating, Inc., 11.25%, 2000 4,030,000 93
2,260M Safelite Glass Corp., 9.875%, 2006 (Note 4) 2,463,400 57
- ---------------------------------------------------------------------------------------
11,752,400 271
- ---------------------------------------------------------------------------------------
BUILDING MATERIALS--2.6%
4,500M American Standard Corp., 0%-10.50%, 2005 4,387,500 101
4,950M Triangle Pacific Corp., 10.50%, 2003 5,302,687 122
1,630M Waxman USA, Inc., 11.125%, 2001 1,638,150 38
- ---------------------------------------------------------------------------------------
11,328,337 261
- ---------------------------------------------------------------------------------------
CHEMICALS--5.6%
4,200M Harris Chemical North America, Inc., 10.25%, 2001 4,315,500 100
6,125M Harris Chemical North America, Inc., 10.75%, 2003 6,201,562 143
1,500M Precise Technology, Inc., 11.125%, 2007 (Note 4) 1,503,750 35
6,600M Rexene Corp., 11.75%, 2004 7,491,000 173
4,500M Texas Petrochemicals Corp., 11.125%, 2006 4,876,875 112
- ---------------------------------------------------------------------------------------
24,388,687 563
- ---------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS FUND FOR INCOME, INC.
June 30, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
CONSUMER PRODUCTS--1.8%
$ 1,000M E & S Holdings, Inc., 10.375%, 2006 $ 1,043,750 $ 24
2,070M Herff Jones, Inc., 11%, 2005 2,235,600 52
2,000M Hines Horticulture, Inc., 11.75%, 2005 2,100,000 48
2,200M Syratech Corp., 11%, 2007 2,351,250 54
- ---------------------------------------------------------------------------------------
7,730,600 178
- ---------------------------------------------------------------------------------------
CONTAINERS/PACKAGING--1.4%
600M Plastic Containers, Inc., 10%, 2006 624,000 14
5,250M Sweetheart Cup Co., Inc., 10.50%, 2003 5,302,500 122
- ---------------------------------------------------------------------------------------
5,926,500 136
- ---------------------------------------------------------------------------------------
DURABLE GOODS MANUFACTURING--1.9%
1,000M Amtrol, Inc., 10.625%, 2006 1,050,000 24
2,500M Day International Group, Inc., 11.125%, 2005 2,637,500 61
4,275M Fairfield Manufacturing, Inc., 11.375%, 2001 4,574,250 106
- ---------------------------------------------------------------------------------------
8,261,750 191
- ---------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--1.1%
1,000M Amphenol Corp., 9.875%, 2007 1,030,000 24
3,650M Essex Group, Inc., 10%, 2003 3,832,500 88
- ---------------------------------------------------------------------------------------
4,862,500 112
- ---------------------------------------------------------------------------------------
ELECTRONICS/INSTRUMENTS/COMPONENTS--1.2%
3,000M Advanced Micro Devices, Inc., 11%, 2003 3,330,000 77
1,600M L-3 Communications Corp., 10.375%, 2007 (Note 4) 1,700,000 39
- ---------------------------------------------------------------------------------------
5,030,000 116
- ---------------------------------------------------------------------------------------
ENERGY--4.2%
3,500M Deeptech International, Inc., 12%, 2000 3,718,750 86
3,500M Falcon Drilling Co., Inc., 9.75%, 2001 3,587,500 83
5,000M KCS Energy Inc., 11%, 2003 5,475,000 126
1,500M Magnum Hunter Resources, Inc., 10%, 2007 (Note 4) 1,483,125 34
3,900M Maxus Energy Corp., 11.50%, 2015 4,090,125 94
- ---------------------------------------------------------------------------------------
18,354,500 423
- ---------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
ENTERTAINMENT/LEISURE--1.0%
$ 4,000M KSL Recreation Group, Inc., 10.25%, 2007 (Note 4) $ 4,160,000 $ 96
- ---------------------------------------------------------------------------------------
FINANCIAL SERVICES--.7%
2,800M Terra Nova Holdings, PLC, 10.75%, 2005 3,115,000 72
- ---------------------------------------------------------------------------------------
FOOD/BEVERAGE/TOBACCO--2.0%
1,000M Delta Beverage Group, Inc., 9.75%, 2003 1,037,500 24
2,000M Di Giorgio Corp., 10%, 2007 (Note 4) 1,970,000 45
5,000M TLC Beatrice International Holdings, Inc.,
11.50%, 2005 5,625,000 130
- ---------------------------------------------------------------------------------------
8,632,500 199
- ---------------------------------------------------------------------------------------
GAMING/LODGING--2.3%
4,000M Casino America, Inc., 12.50%, 2003 4,175,000 96
500M Majestic Star Casino, LLC, 12.75%, 2003 550,000 13
2,250M Prime Hospitality Corp., 9.25%, 2006 2,317,500 53
3,000M Showboat, Inc., 9.25%, 2008 3,067,500 71
- ---------------------------------------------------------------------------------------
10,110,000 233
- ---------------------------------------------------------------------------------------
HEALTHCARE--4.8%
3,000M Genesis Healthcare, Inc., 9.75%, 2005 3,120,000 72
4,400M Healthsouth Rehabilitation Corp., 9.50%, 2001 4,642,000 107
1,000M IMED Corp., 9.75%, 2006 (Note 4) 1,015,000 23
3,750M Integrated Health Services, Inc., 10.25%, 2006
(Note 4) 3,984,375 92
1,350M Integrated Health Services, Inc., 9.50%, 2007
(Note 4) 1,387,125 32
2,200M Owens & Minor, Inc., 10.875%, 2006 2,376,000 55
3,800M Tenet Healthcare Corp., 10.125%, 2005 4,142,000 96
- ---------------------------------------------------------------------------------------
20,666,500 477
- ---------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY/OFFICE EQUIPMENT--.7%
3,500M Dictaphone Corp., 11.75%, 2005 3,185,000 73
- ---------------------------------------------------------------------------------------
MEDIA/CABLE TELEVISION--17.7%
3,000M Bell Cablemedia, PLC, 0%-11.95%, 2004 2,726,250 63
3,000M CF Cable TV, Inc., 11.625%, 2005 3,405,000 79
5,000M Comcast United Kingdom Cable Corp., 0%-11.20%,
2007 3,750,000 86
- ---------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS FUND FOR INCOME, INC.
June 30, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
MEDIA/CABLE TELEVISION (continued)
$ 4,750M Diamond Cable Communications, PLC, 0%-11.75%,
2005 $ 3,188,438 $ 74
10,550M Echostar Communications Corp., 0%-12.875%, 2004 8,862,000 204
4,000M Jones Intercable, Inc., 11.50%, 2004 4,300,000 99
5,000M Marcus Cable Operating Co., 0%-13.50%, 2004 4,337,500 100
4,000M MDC Communications Corp., 10.50%, 2006 4,260,000 98
4,000M Outdoor Systems, Inc., 8.875%, 2007 (Note 4) 3,880,000 89
5,000M PanAmSat Capital Corp., 0%-11.375%, 2003 4,850,000 112
4,150M Rogers Communication, Inc., 10.875%, 2004 4,367,875 101
6,000M SCI Television Corp., 11%, 2005 6,330,000 146
2,000M Sinclair Broadcasting Group, 10%, 2005 2,057,500 47
4,150M TCI Satellite Entertainment, Inc., 10.875%, 2007
(Note 4) 4,160,375 96
6,500M Videotron Holdings, PLC, 0%-11.125%, 2004 5,874,375 136
4,000M Videotron, Ltd., 10.25%, 2002 4,260,000 98
3,000M Von Hoffman Press, Inc., 10.375%, 2007 (Note 4) 3,135,000 72
3,000M Young Broadcasting Corp., 10.125%, 2005 3,097,500 71
- ---------------------------------------------------------------------------------------
76,841,813 1,771
- ---------------------------------------------------------------------------------------
MINING/METALS--5.0%
5,001M Carbide/Graphite Group, Inc., 11.50%, 2003 5,476,095 126
1,400M Euramax International, PLC, 11.25%, 2006 1,505,000 35
4,000M Renco Metals, Inc., 11.50%, 2003 4,280,000 99
4,000M Russel Metals, Inc., 10.25%, 2000 4,160,000 96
1,155M UCAR Global Enterprises, Inc., 12%, 2005 1,305,872 30
5,000M Wheeling-Pittsburgh Steel Corp., 9.375%, 2003 4,850,000 112
- ---------------------------------------------------------------------------------------
21,576,967 498
- ---------------------------------------------------------------------------------------
MISCELLANEOUS--1.9%
1,800M Allied Waste, North America, 10.25%, 2006 (Note
4) 1,930,500 45
1,025M Kindercare Learning Centers, Inc., 9.50%, 2009 995,531 23
1,000M Mettler Toledo, 9.75%, 2006 1,055,000 24
700M Muzak, L.P./ Muzak Capital Corp., 10%, 2003 733,250 17
3,600M Polymer Group, Inc., 9%, 2007 (Note 4) 3,542,076 82
- ---------------------------------------------------------------------------------------
8,256,357 191
- ---------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
PAPER/FOREST PRODUCTS--7.2%
$ 4,000M Container Corp., 11.25%, 2004 $ 4,385,000 $ 101
1,450M Fonda Group, Inc., 9.50%, 2007 (Note 4) 1,395,625 32
4,000M Gaylord Container Corp., 11.50%, 2001 4,180,000 96
4,500M Riverwood International, 10.25%, 2006 4,438,125 102
5,600M S.D. Warren Co., Inc., 12%, 2004 6,244,000 144
5,500M Stone Container Corp., 11.875%, 1998 5,795,625 134
2,000M Stone Container Corp., 9.875%, 2001 1,997,500 46
2,400M Stone Container Corp., 10.75%, 2002 2,505,000 58
- ---------------------------------------------------------------------------------------
30,940,875 713
- ---------------------------------------------------------------------------------------
RETAIL--FOOD/DRUG--.7%
2,000M Randall's Food Markets, Inc., 9.375%, 2007 (Note
4) 1,990,000 46
1,000M Shoppers Food Warehouse Corp., 9.75%, 2004 (Note
4) 1,000,000 23
- ---------------------------------------------------------------------------------------
2,990,000 69
- ---------------------------------------------------------------------------------------
RETAIL--GENERAL MERCHANDISE--2.3%
4,500M Barnes & Noble, Inc., 11.875%, 2003 4,871,250 112
4,500M Waban, Inc., 11%, 2004 5,051,250 117
- ---------------------------------------------------------------------------------------
9,922,500 229
- ---------------------------------------------------------------------------------------
TELECOMMUNICATIONS--9.5%
5,300M American Communication Services, Inc., 0%-13%,
2005 3,166,750 73
3,300M Brooks Fiber Properties, Inc., 0%-10.875%, 2006 2,252,250 52
2,500M Brooks Fiber Properties, Inc., 0%-11.875%, 2006 1,631,250 38
3,750M Brooks Fiber Properties, Inc., 10%, 2007 (Note 4) 3,796,875 88
5,800M Comcast Cellular Corp., 9.50%, 2007 (Note 4) 5,836,250 135
4,600M GST USA Inc., 0%-13.875%, 2005 2,852,000 66
3,800M InterCel, Inc., 0%-12%, 2006 2,370,250 55
500M InterCel, Inc., 11.125%, 2007 (Note 4) 500,000 12
7,000M Nextlink Communications, Inc., 12.50%, 2006 7,507,500 173
6,000M Orion Network Systems, Inc., 11.25%, 2007 6,240,000 144
5,000M Paging Network, Inc., 10%, 2008 4,800,000 111
- ---------------------------------------------------------------------------------------
40,953,125 947
- ---------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS FUND FOR INCOME, INC.
June 30, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
PRINCIPAL INVESTED
AMOUNT FOR EACH
OR $10,000 OF
SHARES SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
TRANSPORTATION--3.3%
$ 2,000M Coach USA, Inc., 9.375%, 2007 (Note 4) $ 1,970,000 $ 45
5,700M Eletson Holdings, Inc., 9.25%, 2003 5,785,500 133
3,100M Moran Transportation Co., 11.75%, 2004 3,441,000 79
3,350M Trism, Inc., 10.75%, 2000 3,249,500 75
- ---------------------------------------------------------------------------------------
14,446,000 332
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF CORPORATE BONDS (cost
$356,201,839) 372,384,911 8,589
- ---------------------------------------------------------------------------------------
COMMON STOCKS--.1%
MEDIA/CABLE TELEVISION
15,753 *Echostar Communications Corp. - Class "A" (cost
$0) 246,141 6
- ---------------------------------------------------------------------------------------
PREFERRED STOCKS--6.1%
MEDIA/CABLE TELEVISION--5.1%
2,631 American Radio Systems Corp., 11.375%, PIK (Note
4) 280,859 6
81,430 Cablevision Systems Corp., 11.125%, PIK, Series
"M" 8,305,860 192
11,820 K-III Communications Corp., 11.625%, PIK, Series
"B" 1,276,538 29
5,770 PanAmSat Capital Corp., 12.75%, PIK 7,154,850 165
4,522 Time Warner, Inc., 10.25% PIK, Series "M" 5,019,420 116
- ---------------------------------------------------------------------------------------
22,037,527 508
- ---------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--1.0%
100,000 *S.D. Warren Co., Inc., 14%, Series "B" 4,300,000 99
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF PREFERRED STOCKS (cost
$22,421,857) 26,337,527 607
- ---------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
WARRANTS INVESTED
OR FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
WARRANTS--.3%
PAPER/FOREST PRODUCTS--.2%
55,390 *Gaylord Container Corp. (expiring 11/1/02) $ 439,658 $ 10
100,000 *S.D. Warren Co., Inc. (expiring 12/15/06) (Note
4) 500,000 12
- ---------------------------------------------------------------------------------------
939,658 22
- ---------------------------------------------------------------------------------------
RETAIL-GENERAL MERCHANDISE--.0%
65,000 *Cort Business Services Corp. (expiring 9/1/98) 219,375 5
- ---------------------------------------------------------------------------------------
TELECOMMUNICATIONS--.1%
7,300 *American Communication Services, Inc. (expiring
11/1/05) 346,750 8
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF WARRANTS (cost $214,857) 1,505,783 35
- ---------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--2.4%
$ 10,000M U.S. Treasury Note, 7.25%, 2004 (cost
$10,884,375) 10,428,120 241
- ---------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--4.9%
6,500M Archer-Daniels-Midland Co., 6.20%, 7/1/97 6,500,000 150
2,250M Hartford Steam Boiler Inspection & Insurance Co.,
5.58%, 7/16/97 2,244,769 51
12,750M NYNEX Corp., 5.55%, 7/7/97 12,738,206 294
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF SHORT-TERM CORPORATE NOTES (cost
$21,482,975) 21,482,975 495
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF INVESTMENTS (cost $411,205,903) 99.7% 432,385,457 9,973
OTHER ASSETS, LESS LIABILITIES .3 1,159,876 27
- ---------------------------------------------------------------------------------------
NET ASSETS 100.0% $433,545,333 $10,000
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
</TABLE>
* Non-income producing
See notes to financial statements
9
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
FIRST INVESTORS FUND FOR INCOME, INC.
June 30, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments in securities, at value
(identified cost $411,205,903) (Note
1A).................................. $ 432,385,457
Cash................................... 473,689
Receivables:
Interest............................. $ 7,679,790
Capital shares sold.................. 454,123 8,133,913
------------
Other assets........................... 168,816
--------------
Total Assets........................... 441,161,875
LIABILITIES
Payables:
Investment securities purchased...... 3,542,076
Dividend payable..................... 3,154,361
Capital shares redeemed.............. 560,976
Accrued advisory fee................... 267,540
Accrued expenses....................... 91,589
------------
Total Liabilities...................... 7,616,542
--------------
NET ASSETS (Note 6):
Class A (99,199,992 shares
outstanding)....................... 429,069,811
Class B (1,037,180 shares
outstanding)....................... 4,475,522 $ 433,545,333
------------ --------------
--------------
NET ASSETS CONSIST OF:
Capital paid in........................ $1,081,195,880
Undistributed net investment income.... 5,566,373
Accumulated net realized loss on
investment transactions.............. (674,396,474)
Net unrealized appreciation in value of
investments.......................... 21,179,554
--------------
Total.................................. $ 433,545,333
--------------
--------------
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE - CLASS A.................. $ 4.33
-----
-----
MAXIMUM OFFERING PRICE PER
SHARE - CLASS A ($4.33/.9375)*....... $ 4.62
-----
-----
NET ASSET VALUE AND OFFERING PRICE PER
SHARE - CLASS B (Note 6)............. $ 4.32
-----
-----
</TABLE>
* On purchases of $25,000 or more, the sales charge is reduced.
See notes to financial statements
10
<PAGE>
STATEMENT OF OPERATIONS
FIRST INVESTORS FUND FOR INCOME, INC.
Six Months Ended June 30, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Income:
Interest............................. $20,262,408
Dividends (Note 1E).................. 830,530
Consent fees......................... 530,515
-----------
Total income........................... $21,623,453
Expenses (Notes 1 and 3):
Advisory fee......................... 1,594,007
Shareholder servicing costs.......... 463,955
Distribution plan expenses - Class
A.................................. 321,355
Distribution plan expenses - Class
B.................................. 16,528
Professional fees.................... 35,784
Custodian fees....................... 27,462
Reports and notices to
shareholders....................... 20,612
Other expenses....................... 34,209
-----------
Total expenses......................... 2,513,912
Less: Custodian fees paid indirectly... (14,298)
-----------
Net expenses........................... 2,499,614
-----------
Net investment income.................. 19,123,839
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 2):
Net realized gain on investments....... 2,811,623
Net unrealized appreciation of
investments.......................... 494,515
-----------
Net gain on investments................ 3,306,138
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS...................... $22,429,977
-----------
-----------
</TABLE>
See notes to financial statements
11
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FIRST INVESTORS FUND FOR INCOME, INC.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
- -------------------------------------------------- ---------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income........................... $ 19,123,839 $ 39,637,266
Net realized gain (loss) on investments......... 2,811,623 (5,886,757)
Net unrealized appreciation of investments...... 494,515 19,592,189
---------------- -----------------
Net increase in net assets resulting from
operations.................................. 22,429,977 53,342,698
---------------- -----------------
DIVIDENDS TO SHAREHOLDERS
Net investment income - Class A................. (18,466,914) (37,526,146)
Net investment income - Class B................. (157,743) (210,871)
---------------- -----------------
Total dividends............................... (18,624,657) (37,737,017)
---------------- -----------------
CAPITAL SHARE TRANSACTIONS (a)
Class A:
Proceeds from shares sold....................... 9,269,152 14,956,436
Value of dividends reinvested................... 10,682,597 25,915,540
Cost of shares redeemed......................... (26,331,302) (50,539,459)
---------------- -----------------
(6,379,553) (9,667,483)
---------------- -----------------
Class B:
Proceeds from shares sold....................... 1,154,625 1,604,309
Value of dividends reinvested................... 81,035 127,411
Cost of shares redeemed......................... (134,938) (249,045)
---------------- -----------------
1,100,722 1,482,675
---------------- -----------------
Net decrease from capital share transactions.... (5,278,831) (8,184,808)
---------------- -----------------
Net increase (decrease) in net assets......... (1,473,511) 7,420,873
NET ASSETS
Beginning of period............................. 435,018,844 427,597,971
---------------- -----------------
End of period (including undistributed net
investment income of $5,566,373 and
$5,067,191, respectively)..................... $ 433,545,333 $ 435,018,844
---------------- -----------------
---------------- -----------------
(a)CAPITAL SHARES ISSUED AND REDEEMED
Class A:
Sold............................................ 2,160,100 3,564,924
Issued for dividends reinvested................. 2,499,829 6,171,776
Redeemed........................................ (6,144,100) (12,071,004)
---------------- -----------------
Net decrease in Class A capital shares
outstanding................................... (1,484,171) (2,334,304)
---------------- -----------------
---------------- -----------------
Class B:
Sold............................................ 269,610 383,768
Issued for dividends reinvested................. 18,996 30,324
Redeemed........................................ (31,780) (59,519)
---------------- -----------------
Net increase in Class B capital shares
outstanding................................... 256,826 354,573
---------------- -----------------
---------------- -----------------
</TABLE>
See notes to financial statements
12
<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 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 Stock Market is valued at its last sale price on the
exchange where the security is principally traded, and lacking any sales, the
security is valued at the mean between the closing bid and asked prices.
Effective January 2, 1997, the Board of Directors approved a change in the
pricing policy for securities traded in the over-the-counter market (including
securities listed on exchanges whose primary market is believed to be
over-the-counter). These securities, which had previously been valued at the
last bid price, are now valued at the mean between the last bid and asked prices
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 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 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 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, 1997, the Fund had capital loss
carryovers of $669,293,833 of which $111,360,941 expires 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 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.
D. Use of Estimates--The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expense during the reporting period. Actual results could differ
from those estimates.
E. 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, 1997, the Fund recognized
$830,530 of dividend income from these taxable "pay in kind"
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<PAGE>
NOTES TO FINANCIAL STATEMENTS
FIRST INVESTORS FUND FOR INCOME, INC.
distributions. Interest income and estimated expenses are accrued daily. The
Fund's custodian has provided credits in the amount of $14,298 against custodian
charges based on the uninvested cash balances of the Fund.
2. SECURITIES TRANSACTIONS--For the six months ended June 30, 1997, purchases
and sales of securities, other than United States Government obligations and
short-term corporate notes, aggregated $74,355,421 and $77,648,233,
respectively.
At June 30, 1997, the cost of investments for federal income tax purposes was
$411,205,903. Accumulated net unrealized appreciation on investments was
$21,179,554, consisting of $23,467,624 gross unrealized appreciation and
$2,288,070 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 six months ended June 30, 1997, FIC, as underwriter, received $253,062
in commissions after allowing $25,388 to other dealers. Shareholder servicing
costs included $305,992 in transfer agent fees paid to ADM, and $89,892 in IRA
custodian fees paid to FFS.
Pursuant to Distribution Plans 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 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, 1997, this fee reduction amounted to $321,355 for Class A and
$2,917 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, 1997, the Fund
held twenty-four 144A securities with an aggregate value of $55,604,335
representing 12.8% 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
14
<PAGE>
such securities are generally unsecured and are often subordinated to other
creditors of the issuer.
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
distribution plan 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
distribution plan fees) 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 authorized, the Fund has designated 500,000,000 shares as Class A and
500,000,000 shares as Class B.
15
<PAGE>
FINANCIAL HIGHLIGHTS
FIRST INVESTORS FUND FOR INCOME, INC.
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.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B
---------------------------------------------------- ------------------------------
1/1/97 Year Ended December 31 1/1/97
to --------------------------------------- to
6/30/97 1996 1995 1994 1993 1992 6/30/97 1996 1995*
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period... $ 4.29 $ 4.13 $ 3.81 $4.17 $ 3.89 $ 3.69 $ 4.28 $ 4.13 $ 3.81
-------- ------ ------ ----- ------ ------ -------- ------ ---------
Income from Investment Operations
Net investment income................ .19 .39 .38 .37 .39 .41 .17 .38 .31
Net realized and unrealized gain
(loss) on investments.............. .04 .14 .30 (.35) .29 .19 .04 .12 .33
-------- ------ ------ ----- ------ ------ -------- ------ ---------
Total from Investment Operations... .23 .53 .68 .02 .68 .60 .21 .50 .64
Less dividends from
net investment income................ .19 .37 .36 .38 .40 .40 .17 .35 .32
-------- ------ ------ ----- ------ ------ -------- ------ ---------
Net Asset Value, End of Period......... $ 4.33 $ 4.29 $ 4.13 $3.81 $ 4.17 $ 3.89 $ 4.32 $ 4.28 $ 4.13
-------- ------ ------ ----- ------ ------ -------- ------ ---------
-------- ------ ------ ----- ------ ------ -------- ------ ---------
TOTAL RETURN (%)+...................... 5.39 13.40 18.54 .58 18.06 16.70 5.11 12.51 17.46
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in
millions)............................ $429 $432 $425 $401 $431 $414 $4 $3 $2
Ratio to Average Net Assets: (%)
Expenses............................. 1.16(a) 1.16 1.18 1.22 1.32 1.03 1.86(a) 1.86 1.92(a)
Net investment income................ 8.85(a) 9.27 9.53 9.34 9.54 10.63 8.15(a) 8.57 8.78(a)
Portfolio Turnover Rate (%)............ 18 30 33 39 76 51 18 30 33
</TABLE>
+ Calculated without sales charge
* For the period 1/12/95 (date class B shares first offered) to 12/31/95
(a) Annualized
See notes to financial statements
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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, 1997, and the related statement of operations for the six months ended
June 30, 1997, the statement of changes in net assets for the six months ended
June 30, 1997 and the year ended December 31, 1996, and financial highlights for
each of the periods indicated thereon. 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, 1997, 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, 1997, and the results of its
operations, changes in its net assets and financial highlights for the
respective periods presented, in conformity with generally accepted accounting
principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
July 31, 1997
17
<PAGE>
FIRST INVESTORS FUND FOR INCOME, INC.
DIRECTORS
- -------------------------------------------
JAMES J. COY (Emeritus)
ROGER L. GRAYSON
GLENN O. HEAD
KATHRYN S. HEAD
REX R. REED
HERBERT RUBINSTEIN
NANCY S. SCHAENEN
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
18
<PAGE>
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.
19
<PAGE>
FIRST
INVESTORS
FUND FOR
INCOME, INC.
SEMI-
ANNUAL
REPORT
JUNE 30, 1997
Vertically reading from bottom to top in the center of the page the words "FIRST
INVESTORS" appear.
The following appears in a box to the left of the above language:
First Investors Logo (as described above)
NEED SERVICE?
If you have questions about your account...or would like information regarding
other products or services...please contact your representative or call our
Shareholder Services Department at...
(800) 423-4026
The following appears in a box within the above box:
Our business is...putting investors first
The following appears on the bottom lefthand side:
FIFI065
