<PAGE>
CHIEF INVESTMENT OFFICER'S MARKET OVERVIEW 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, 1998. Although both the bond and
stock markets suffered setbacks at times during the first six months of the
year, the combination of moderate growth, low inflation, and respectable
corporate earnings reports helped provide a positive environment for investors
in most types of funds.
The U.S. economy remained strong for the first half of 1998, with sustained,
moderate growth and low levels of inflation and unemployment. Inflation remained
low, as the Consumer Price Index rose just 1.7% for the twelve months ended June
30. The unemployment rate continued to be low, at 4.5% as of June 30, 1998.
Consumer confidence remained high, encouraged by the robust domestic economy and
rising income levels.
In general, our long-term outlook for the financial markets continues to be
positive. The economy appears to be growing moderately, inflation remains
subdued and the Federal Reserve appears unlikely to tolerate unsustainably fast
economic growth. In regard to the stock market, we are encouraged by the
underlying fundamentals of the U.S. economy. However, we are cautioned by a
number of situations, including the struggles in Asia. We are concerned about
the effect this region's difficulties may have on U.S. growth and corporate
earnings. We are also concerned about the relative lack of pricing power and the
prospects that the lofty level of gains posted year-to-date can continue into
the second half of 1998.
With regard to the bond market, interest rates continue to remain in a tight
range; we believe the Federal Reserve is likely to maintain current interest
rates. Continued weak Asian markets, low inflation in the U.S. and the Federal
budget surplus should support an environment of low interest rates and high bond
prices. However, the continued strength of the U.S. economy could result in
higher interest rates and inflation, notwithstanding Asia. In this event, bond
fund values would decline.
Thank you for your continued confidence in First Investors. As always, we
appreciate the opportunity to serve your investment needs.
Sincerely,
[SIGNATURE]
Clark D. Wagner
Chief Investment Officer
First Investors Management Company, Inc.
July 31, 1998
1
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS FUND FOR INCOME, INC.
June 30, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- -----------------------------------------------------------------------------------------
<C> <S> <C> <C>
CORPORATE BONDS--85.3%
AEROSPACE/DEFENSE--.5%
$ 2,000M Burke Industries, Inc., 10%, 2007 $ 2,020,000 $ 46
- -----------------------------------------------------------------------------------------
AGRICULTURAL PRODUCTS--1.6%
1,000M Purina Mills, Inc., 9%, 2010 + 1,030,000 23
5,500M Terra Industries, Inc., 10.50%, 2005 5,953,750 135
- -----------------------------------------------------------------------------------------
6,983,750 158
- -----------------------------------------------------------------------------------------
APPAREL/TEXTILES--2.9%
3,500M Dan River, Inc., 10.125%, 2003 3,727,500 84
2,000M GFSI, Inc., 9.625%, 2007 2,080,000 47
2,450M Pillowtex Corp., 10%, 2006 2,658,250 60
650M Pillowtex Corp., 9%, 2007 671,937 15
3,600M Polymer Group, Inc., 9%, 2007 3,645,000 83
- -----------------------------------------------------------------------------------------
12,782,687 289
- -----------------------------------------------------------------------------------------
AUTOMOTIVE--3.0%
4,000M Accuride Corp., 9.25%, 2008 + 4,000,000 91
1,650M Cambridge Industries, Inc., 10.25%, 2007 1,683,000 38
2,800M Collins & Aikman Products Co., 11.50%, 2006 3,108,000 70
2,000M Exide Corp., 10%, 2005 2,080,000 47
2,260M Safelite Glass Corp., 9.875%, 2006 + 2,373,000 54
- -----------------------------------------------------------------------------------------
13,244,000 300
- -----------------------------------------------------------------------------------------
BUILDING MATERIALS--3.0%
3,500M American Architectural Products Corp., 11.75%,
2007 3,605,000 82
3,000M Nortek, Inc., 9.125%, 2007 3,067,500 70
4,950M Triangle Pacific Corp., 10.50%, 2003 5,172,750 117
1,277M Waxman USA, Inc., 11.125%, 2001 1,275,404 29
- -----------------------------------------------------------------------------------------
13,120,654 298
- -----------------------------------------------------------------------------------------
CHEMICALS--7.3%
5,300M AEP Industries, Inc., 9.875%, 2007 5,445,750 123
4,200M Harris Chemical North America, Inc., 10.25%, 2001 4,375,875 99
- -----------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- -----------------------------------------------------------------------------------------
<C> <S> <C> <C>
CHEMICALS (continued)
$ 3,000M Harris Chemical North America, Inc., 10.75%, 2003 $ 3,155,625 $ 71
6,600M Huntsman Polymers Corp., 11.75%, 2004 7,227,000 164
3,450M Hydrochem Industrial Services, Inc., 10.375%,
2007 3,519,000 80
2,000M Pharmaceutical Fine Chemicals, SA, 9.75%, 2007 + 2,270,000 51
1,500M Precise Technology, Inc., 11.125%, 2007 1,537,500 35
4,500M Texas Petrochemicals Corp., 11.125%, 2006 4,905,000 111
- -----------------------------------------------------------------------------------------
32,435,750 734
- -----------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--.3%
1,500M R.H. Donnelley, Inc., 9.125%, 2008 + 1,530,000 35
- -----------------------------------------------------------------------------------------
CONSUMER PRODUCTS--2.8%
1,300M AKI, Inc., 10.50%, 2008 + 1,300,000 29
2,000M Chattem, Inc., 8.875%, 2008 + 2,000,000 45
4,070M Herff Jones, Inc., 11%, 2005 4,436,300 101
2,000M Hines Horticulture, Inc., 11.75%, 2005 2,190,000 50
2,700M Syratech Corp., 11%, 2007 2,403,000 54
- -----------------------------------------------------------------------------------------
12,329,300 279
- -----------------------------------------------------------------------------------------
CONTAINERS/PACKAGING--.9%
600M Plastic Containers, Inc., 10%, 2006 645,000 15
3,300M Tekni-Plex, Inc., 9.25%, 2008 3,300,000 75
- -----------------------------------------------------------------------------------------
3,945,000 90
- -----------------------------------------------------------------------------------------
DURABLE GOODS MANUFACTURING--2.1%
1,000M Amtrol, Inc., 10.625%, 2006 992,500 22
1,200M Columbus McKinnon Corp., 8.50%, 2008 + 1,191,000 27
2,500M Day International Group, Inc., 11.125%, 2005 2,712,500 61
4,275M Fairfield Manufacturing, Inc., 11.375%, 2001 4,456,687 101
- -----------------------------------------------------------------------------------------
9,352,687 211
- -----------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--.2%
1,000M Amphenol Corp., 9.875%, 2007 1,052,500 24
- -----------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS FUND FOR INCOME, INC.
June 30, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- -----------------------------------------------------------------------------------------
<C> <S> <C> <C>
ELECTRONICS/INSTRUMENTS/COMPONENTS--1.1%
$ 3,000M Advanced Micro Devices, Inc., 11%, 2003 $ 3,180,000 $ 72
1,600M L-3 Communications Corp., 10.375%, 2007 1,766,000 40
- -----------------------------------------------------------------------------------------
4,946,000 112
- -----------------------------------------------------------------------------------------
ENERGY--3.2%
1,200M Chesapeake Energy Corp., 9.625%, 2005 + 1,203,000 27
5,000M KCS Energy, Inc., 11%, 2003 5,393,750 122
4,500M Magnum Hunter Resources, Inc., 10%, 2007 4,590,000 104
3,000M Tesoro Petroleum Corp., 9%, 2008 + 3,003,750 68
- -----------------------------------------------------------------------------------------
14,190,500 321
- -----------------------------------------------------------------------------------------
ENTERTAINMENT/LEISURE--1.2%
4,000M KSL Recreation Group, Inc., 10.25%, 2007 4,330,000 98
1,000M Outboard Marine Corp., 10.75%, 2008 + 1,010,000 23
- -----------------------------------------------------------------------------------------
5,340,000 121
- -----------------------------------------------------------------------------------------
FINANCIAL--1.1%
4,500M Bay View Capital Corp., 9.125%, 2007 4,657,500 106
- -----------------------------------------------------------------------------------------
FOOD/BEVERAGE/TOBACCO--1.7%
1,000M Delta Beverage Group, Inc., 9.75%, 2003 1,040,000 24
3,500M Di Giorgio Corp., 10%, 2007 3,500,000 79
2,625M Fleming Companies, Inc., 10.625%, 2007 2,743,125 62
- -----------------------------------------------------------------------------------------
7,283,125 165
- -----------------------------------------------------------------------------------------
GAMING/LODGING--2.6%
4,000M Casino America, Inc., 12.50%, 2003 4,515,000 102
4,000M Grand Casinos, Inc., 9%, 2004 4,360,000 99
2,250M Prime Hospitality Corp., 9.25%, 2006 2,382,187 54
- -----------------------------------------------------------------------------------------
11,257,187 255
- -----------------------------------------------------------------------------------------
HEALTHCARE--4.5%
1,000M Alaris Medical Systems, Inc., 9.75%, 2006 1,020,000 23
2,000M Conmed Corp., 9%, 2008 1,992,500 45
- -----------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- -----------------------------------------------------------------------------------------
<C> <S> <C> <C>
HEALTHCARE (continued)
$ 4,100M Fisher Scientific International, Inc., 9%, 2008 $ 4,059,000 $ 92
4,000M Genesis Health Ventures, Inc., 9.75%, 2005 4,140,000 94
3,750M Integrated Health Services, Inc., 10.25%, 2006 4,017,188 91
2,200M Owens & Minor, Inc., 10.875%, 2006 2,354,000 53
2,500M Vencor, Inc., 9.875%, 2005 + 2,459,500 56
- -----------------------------------------------------------------------------------------
20,042,188 454
- -----------------------------------------------------------------------------------------
MEDIA (CABLE TV/BROADCASTING)--10.0%
5,000M Comcast United Kingdom Cable Corp., 0% - 11.20%,
2007 4,162,500 94
4,750M Diamond Cable Communications PLC, 0% - 11.75%,
2005 3,918,750 89
8,050M Echostar Communications Corp., 0% - 12.875%, 2004 7,848,750 178
5,000M Marcus Cable Operating Co., 0% - 13.50%, 2004 4,862,500 110
4,000M Mediacom LLC/Mediacom Capital Corp., 8.50%, 2008
+ 3,985,000 90
3,000M Rogers Cantel, Inc., 8.80%, 2007 2,970,000 67
3,000M Sinclair Broadcasting Group, Inc., 10%, 2005 3,217,500 73
3,850M Star Choice Communications, Inc., 13%, 2005 3,946,250 89
3,150M TCI Satellite Entertainment, Inc., 10.875%, 2007 3,142,125 71
3,000M Videotron Holdings PLC, 0% - 11.125%, 2004 2,961,930 67
3,000M Young Broadcasting Corp., 10.125%, 2005 3,228,750 73
- -----------------------------------------------------------------------------------------
44,244,055 1,001
- -----------------------------------------------------------------------------------------
MEDIA (OTHER)--2.6%
4,000M MDC Communications Corp., 10.50%, 2006 4,200,000 95
4,000M Outdoor Systems, Inc., 8.875%, 2007 4,150,000 94
3,000M Von Hoffman Press, Inc., 10.375%, 2007 + 3,157,500 72
- -----------------------------------------------------------------------------------------
11,507,500 261
- -----------------------------------------------------------------------------------------
MINING/METALS--3.7%
1,400M Euramax International PLC, 11.25%, 2006 1,512,000 34
3,000M Murrin Murrin Holdings Property, Ltd., 9.375%,
2007 2,955,000 67
4,000M Renco Metals, Inc., 11.50%, 2003 4,280,000 97
4,000M Russel Metals, Inc., 10.25%, 2000 4,120,000 93
3,500M Wheeling-Pittsburgh Corp., 9.25%, 2007 3,570,000 81
- -----------------------------------------------------------------------------------------
16,437,000 372
- -----------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS FUND FOR INCOME, INC.
June 30, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- -----------------------------------------------------------------------------------------
<C> <S> <C> <C>
MISCELLANEOUS--1.3%
$ 4,300M Allied Waste North America, Inc., 10.25%, 2006 $ 4,724,625 $ 107
1,025M Kindercare Learning Centers, Inc., 9.50%, 2009 1,049,344 24
- -----------------------------------------------------------------------------------------
5,773,969 131
- -----------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--4.6%
4,000M Container Corp., 11.25%, 2004 4,380,000 99
1,450M Fonda Group, Inc., 9.50%, 2007 1,406,500 32
2,500M Riverwood International Corp., 10.25%, 2006 2,565,625 58
5,600M S.D. Warren Co., Inc., 12%, 2004 6,202,000 141
3,000M Stone Container Corp., 11.875%, 1998 3,101,250 70
2,400M Stone Container Corp., 10.75%, 2002 2,553,000 58
- -----------------------------------------------------------------------------------------
20,208,375 458
- -----------------------------------------------------------------------------------------
REAL ESTATE/CONSTRUCTION--.8%
4,000M Cathay International, Ltd., 13%, 2008 + 3,480,000 79
- -----------------------------------------------------------------------------------------
RETAIL - FOOD/DRUG--.5%
2,000M Randall's Food Markets, Inc., 9.375%, 2007 2,115,000 48
- -----------------------------------------------------------------------------------------
RETAIL - GENERAL MERCHANDISE--.5%
2,000M Big 5 Corp., 10.875%, 2007 2,090,000 47
- -----------------------------------------------------------------------------------------
TELECOMMUNICATIONS--18.3%
1,350M 21st Century Telecommunications Group, Inc., 0% -
12.25%, 2008 + 766,125 17
5,800M Comcast Cellular Holdings, Inc., 9.50%, 2007 6,046,500 137
5,300M E Spire Communications, Inc., 0% - 13%, 2005 4,412,250 100
3,000M Facilicom International, Inc., 10.50%, 2008 + 2,940,000 67
4,600M GST USA, Inc., 0% - 13.875%, 2005 3,749,000 85
4,000M Hyperion Telecommunications, Inc., 0% - 13%, 2003 2,980,000 68
5,000M Intermedia Communications, Inc., 8.50%, 2008 5,025,000 114
4,300M Level 3 Communications, Inc., 9.125%, 2008 + 4,192,500 95
5,500M Metronet Communications Corp., 0% - 9.95%, 2008 + 3,430,625 78
5,000M Nextel Communications, Inc., 0% - 9.95%, 2008 + 3,156,500 72
7,000M Nextlink Communications, LLC, 12.50%, 2006 7,892,500 179
750M Nextlink Communications, Inc., 0% - 9.45%, 2008 + 460,313 10
- -----------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
AMOUNT
PRINCIPAL INVESTED
AMOUNT FOR EACH
OR $10,000 OF
SHARES SECURITY VALUE NET ASSETS
- -----------------------------------------------------------------------------------------
<C> <S> <C> <C>
TELECOMMUNICATIONS (continued)
$ 1,700M Nextlink Communications, Inc., 9%, 2008 + $ 1,702,125 $ 39
4,000M Omnipoint Corp., 11.625%, 2006 4,260,000 97
6,000M Orion Network Systems, Inc., 11.25%, 2007 6,780,000 154
5,000M Paging Network, Inc., 10%, 2008 5,187,500 118
3,800M Powertel, Inc., 0% - 12%, 2006 2,926,000 66
4,000M Powertel, Inc., 11.125%, 2007 4,230,000 96
4,175M Qwest Communications International, Inc., 0% -
9.47%, 2007 3,131,250 71
6,000M RCN Corp., 0% - 11.125%, 2007 3,870,000 88
6,000M Triton PCS, Inc., 0% - 11%, 2008 + 3,375,000 76
- -----------------------------------------------------------------------------------------
80,513,188 1,827
- -----------------------------------------------------------------------------------------
TRANSPORTATION--3.0%
4,000M Coach USA, Inc., 9.375%, 2007 4,160,000 94
5,700M Eletson Holdings, Inc., 9.25%, 2003 5,849,625 133
3,100M Moran Transportation Co., 11.75%, 2004 3,433,250 78
- -----------------------------------------------------------------------------------------
13,442,875 305
- -----------------------------------------------------------------------------------------
TOTAL VALUE OF CORPORATE BONDS (cost
$361,588,651) 376,324,790 8,527
- -----------------------------------------------------------------------------------------
COMMON STOCKS--.1%
MEDIA (CABLE TV/BROADCASTING)--.1%
15,753 *Echostar Communications Corp. - Class "A" 379,057 9
- -----------------------------------------------------------------------------------------
TECHNOLOGY--.0%
3,633 *Loral Space & Communications Corp. 102,632 2
- -----------------------------------------------------------------------------------------
TOTAL VALUE OF COMMON STOCKS (cost $0) 481,689 11
- -----------------------------------------------------------------------------------------
PREFERRED STOCKS--5.8%
MEDIA (CABLE TV/BROADCASTING)--4.7%
2,631 American Radio Systems Corp., 11.375%, Series "B" 305,196 7
88,415 CSC Holdings, Inc., 11.125%, PIK, Series "M" 10,189,871 231
4,350 Echostar Communications Corp., 12.125%, Series
"B" 4,904,512 111
4,755 Time Warner, Inc., 10.25%, PIK, Series "K" 5,307,769 120
- -----------------------------------------------------------------------------------------
20,707,348 469
- -----------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--1.1%
100,000 S.D. Warren Co., Inc., 14%, Series "B" 5,000,000 114
- -----------------------------------------------------------------------------------------
TOTAL VALUE OF PREFERRED STOCKS (cost
$20,918,652) 25,707,348 583
- -----------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS FUND FOR INCOME, INC.
June 30, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
AMOUNT
INVESTED
WARRANTS FOR EACH
OR $10,000 OF
UNITS SECURITY VALUE NET ASSETS
- -----------------------------------------------------------------------------------------
<C> <S> <C> <C>
WARRANTS--.4%
GAMING/LODGING--.0%
7,000 *Goldriver Finance Corp., Liquidating Trust $ 7,000 $ --
- -----------------------------------------------------------------------------------------
MEDIA (CABLE TV/BROADCASTING)--.0%
89,166 *Star Choice Communications, Inc. (expiring
12/15/05) 234,061 5
- -----------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--.1%
100,000 *S.D. Warren Co., Inc. (expiring 12/15/06) + 500,000 11
- -----------------------------------------------------------------------------------------
TELECOMMUNICATIONS--.3%
7,300 *E Spire Communications, Inc. (expiring 11/1/05)
+ 1,131,500 26
- -----------------------------------------------------------------------------------------
TOTAL VALUE OF WARRANTS (cost $0) 1,872,561 42
- -----------------------------------------------------------------------------------------
UNITS--.6%
MEDIA (CABLE TV/BROADCASTING)--.5%
4,150 Diva Systems Corp. (a)+ 1,929,750 44
- -----------------------------------------------------------------------------------------
TELECOMMUNICATIONS--.1%
1,000 Viatel, Inc. (b)+ 605,000 14
- -----------------------------------------------------------------------------------------
TOTAL VALUE OF UNITS (cost $2,904,254) 2,534,750 58
- -----------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- -----------------------------------------------------------------------------------------
<C> <S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--1.8%
$ 7,500M U.S. Treasury Note, 7.25%, 2004 (cost $8,163,280) $ 8,165,631 $ 185
- -----------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--5.5%
6,400M Ford Motor Credit Corp., 5.61%, 7/2/98 6,399,003 145
17,750M Merrill Lynch & Co., Inc., 5.82%, 7/7/98 17,732,783 402
- -----------------------------------------------------------------------------------------
TOTAL VALUE OF SHORT-TERM CORPORATE NOTES (cost
$24,131,786) 24,131,786 547
- -----------------------------------------------------------------------------------------
TOTAL VALUE OF INVESTMENTS (cost $417,706,623) 99.5% 439,218,555 9,953
OTHER ASSETS, LESS LIABILITIES .5 2,093,682 47
- -----------------------------------------------------------------------------------------
NET ASSETS 100.0% $441,312,237 $10,000
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
</TABLE>
+ See Note 4
* Non-income producing
(a) Each unit consists of one 0%-12.625% senior discount note due 2008 and three
warrants to buy three shares of common stock.
(b) Each unit consists of one 0%-12.5% senior discount note due 2008 and .49
share of Series "A" preferred stock.
See notes to financial statements
9
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
FIRST INVESTORS FUND FOR INCOME, INC.
June 30, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments in securities, at value
(identified cost $417,706,623) (Note
1A).................................. $ 439,218,555
Cash................................... 846,687
Receivables:
Interest............................. 7,985,086
Capital shares sold.................. 294,096
Other assets........................... 168,816
----------------
Total Assets........................... 448,513,240
LIABILITIES
Payables:
Dividend payable..................... $ 3,099,844
Investment securities purchased...... 2,982,870
Capital shares redeemed.............. 755,697
Accrued advisory fee................... 272,511
Accrued expenses....................... 90,081
----------------
Total Liabilities...................... 7,201,003
----------------
NET ASSETS (Note 6):
Class A (98,036,452 shares
outstanding)....................... 433,774,451
Class B (1,707,243 shares
outstanding)....................... 7,537,786 $ 441,312,237
----------------
----------------
----------------
NET ASSETS CONSIST OF:
Capital paid in........................ $ 967,621,311
Undistributed net investment income.... 4,840,622
Accumulated net realized loss on
investment transactions.............. (552,661,628)
Net unrealized appreciation in value of
investments.......................... 21,511,932
----------------
Total.................................. $ 441,312,237
----------------
----------------
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE - CLASS A.................. $ 4.42
-----
-----
MAXIMUM OFFERING PRICE PER
SHARE - CLASS A ($4.42/.9375)*....... $ 4.71
-----
-----
NET ASSET VALUE AND OFFERING PRICE PER
SHARE - CLASS B (Note 6)............. $ 4.42
-----
-----
</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, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Income:
Interest............................. $ 20,263,784
Dividends (Note 1E).................. 1,034,062
Consent fees......................... 703,631
----------------
Total income........................... $ 22,001,477
Expenses (Notes 1 and 3):
Advisory fee......................... 1,649,772
Distribution plan expenses - Class
A.................................. 606,690
Distribution plan expenses - Class
B.................................. 32,309
Shareholder servicing costs.......... 467,471
Custodian fees....................... 27,913
Professional fees.................... 27,886
Reports and notices to
shareholders....................... 11,642
Other expenses....................... 10,462
----------------
Total expenses......................... 2,834,145
Less: Custodian fees paid indirectly... (11,290)
----------------
Net expenses........................... 2,822,855
----------------
Net investment income.................. 19,178,622
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 2):
Net realized gain on investments....... 5,383,773
Net unrealized depreciation of
investments.......................... (6,500,805)
----------------
Net loss on investments................ (1,117,032)
----------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS...................... $ 18,061,590
----------------
----------------
</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, 1998 DECEMBER 31, 1997
- --------------------------------------- ---------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income................ $ 19,178,622 $ 37,617,154
Net realized gain on investments..... 5,383,773 7,801,754
Net unrealized appreciation
(depreciation) of investments...... (6,500,805) 7,327,698
---------------- -----------------
Net increase in net assets
resulting from operations........ 18,061,590 52,746,606
---------------- -----------------
DIVIDENDS TO SHAREHOLDERS
Net investment income - Class A...... (18,824,181) (37,571,202)
Net investment income - Class B...... (259,203) (367,759)
---------------- -----------------
Total dividends.................... (19,083,384) (37,938,961)
---------------- -----------------
CAPITAL SHARE TRANSACTIONS (a)
Class A:
Proceeds from shares sold............ 11,673,562 16,851,806
Reinvestment of dividends............ 11,111,884 26,312,729
Cost of shares redeemed.............. (26,678,422) (50,837,153)
---------------- -----------------
(3,892,976) (7,672,618)
---------------- -----------------
Class B:
Proceeds from shares sold............ 1,970,553 2,600,932
Reinvestment of dividends............ 125,516 234,762
Cost of shares redeemed.............. (315,377) (543,250)
---------------- -----------------
1,780,692 2,292,444
---------------- -----------------
Net decrease from capital share
transactions....................... (2,112,284) (5,380,174)
---------------- -----------------
Net increase (decrease) in net
assets........................... (3,134,078) 9,427,471
NET ASSETS
Beginning of period.................. 444,446,315 435,018,844
---------------- -----------------
End of period (including
undistributed net investment income
of $4,840,622 and $4,745,384,
respectively)...................... $ 441,312,237 $ 444,446,315
---------------- -----------------
---------------- -----------------
(a)CAPITAL SHARES ISSUED AND REDEEMED
Class A:
Sold................................. 2,608,678 3,881,531
Issued for dividends reinvested...... 2,480,386 6,059,302
Redeemed............................. (5,962,004) (11,715,604)
---------------- -----------------
Net decrease in Class A capital
shares outstanding................. (872,940) (1,774,771)
---------------- -----------------
---------------- -----------------
Class B:
Sold................................. 441,126 599,023
Issued for dividends reinvested...... 28,087 54,064
Redeemed............................. (70,642) (124,769)
---------------- -----------------
Net increase in Class B capital
shares outstanding................. 398,571 528,318
---------------- -----------------
---------------- -----------------
</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 or market where the security is principally traded, and lacking any
sales, the security is valued at the mean between the closing bid and asked
prices. Securities traded in the over-the-counter market (including securities
listed on exchanges whose primary market is believed to be over-the-counter) are
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 debt securities that mature in 60 days or less are valued on
the amortized cost method which approximates market value. 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, 1998 the Fund had capital loss
carryovers of $558,045,401 of which $350,158,165 expires in 1998, $207,520,038
in 1999, $254,689 in 2002 and $112,509 in 2005.
C. Distributions to Shareholders--Dividends to shareholders from net investment
income are declared daily and paid monthly. Distributions from net realized
capital gains, if any, are generally declared and paid annually. 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 capital 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, 1998, the Fund recognized
$818,488 of dividend income from these taxable "pay in kind" distributions.
Interest income and estimated expenses are accrued daily. For the six months
ended
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FIRST INVESTORS FUND FOR INCOME, INC.
June 30, 1998, the Fund's custodian has provided credits in the amount of
$11,290 against custodian charges based on the uninvested cash balances of the
Fund.
2. SECURITIES TRANSACTIONS--For the six months ended June 30, 1998, purchases
and sales of securities, other than United States Government obligations and
short-term corporate notes, aggregated $102,460,797 and $118,725,751,
respectively.
At June 30, 1998, the cost of investments for federal income tax purposes was
$417,706,623. Accumulated net unrealized appreciation on investments was
$21,511,932, consisting of $23,562,770 gross unrealized appreciation and
$2,050,838 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. Directors of the Fund
who are not "interested persons" of the Fund as defined in the 1940 Act are
remunerated by the Fund. For the six months ended June 30, 1998, total directors
fees accrued by the Fund amounted to $6,000.
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, 1998, FIC, as underwriter, received $297,818
in commissions after allowing $58,370 to other dealers. Shareholder servicing
costs included $265,992 in transfer agent fees paid to ADM, and $82,722 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 daily
net assets of the Class A shares and 1% of the average daily 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 was
limited to .15% for Class A and .85% for Class B until February 1, 1998. For the
six months ended June 30, 1998, this fee reduction amounted to $55,178 for Class
A and $733 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, 1998, the Fund
held twenty-seven 144A securities with an aggregate value of $58,182,188
representing 13.2% 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 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.
14
<PAGE>
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
-------------------------------------------------------------
1/1/98 Year Ended December 31
to --------------------------------------------------
6/30/98 1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period... $ 4.43 $ 4.29 $ 4.13 $ 3.81 $ 4.17 $ 3.89
------ ------ ------ ------ ------ ------
Income from Investment Operations
Net investment income................ .19 .38 .39 .38 .37 .39
Net realized and unrealized gain
(loss) on investments.............. (.01) .14 .14 .30 (.35) .29
------ ------ ------ ------ ------ ------
Total from Investment Operations..... .18 .52 .53 .68 .02 .68
------ ------ ------ ------ ------ ------
Less dividends from
Net investment income................ .19 .38 .37 .36 .38 .40
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period......... $ 4.42 $ 4.43 $ 4.29 $ 4.13 $ 3.81 $ 4.17
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
TOTAL RETURN (%)+...................... 4.14 12.62 13.40 18.54 .58 18.06
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in
millions)............................ $434 $439 $432 $425 $401 $431
Ratio to Average Net Assets: (%)
Expenses............................. 1.26(a) 1.15 1.16 1.18 1.22 1.32
Net investment income................ 8.58(a) 8.63 9.27 9.53 9.34 9.54
Portfolio Turnover Rate (%)............ 24 45 30 33 39 76
</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
16
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
Class B
-----------------------------------------
1/1/98 Year Ended December 31
to ------------------------------
6/30/98 1997 1996 1995*
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period... $ 4.42 $ 4.28 $ 4.13 $ 3.81
------ ------ ------ --------
Income from Investment Operations
Net investment income................ .18 .34 .38 .31
Net realized and unrealized gain
(loss) on investments.............. -- .15 .12 .33
------ ------ ------ --------
Total from Investment Operations..... .18 .49 .50 .64
------ ------ ------ --------
Less dividends from
Net investment income................ .18 .35 .35 .32
------ ------ ------ --------
Net Asset Value, End of Period......... $ 4.42 $ 4.42 $ 4.28 $ 4.13
------ ------ ------ --------
------ ------ ------ --------
TOTAL RETURN (%)+...................... 4.01 11.95 12.51 17.46
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in
millions)............................ $8 $6 $3 $2
Ratio to Average Net Assets: (%)
Expenses............................. 1.96(a) 1.85 1.86 1.92(a)
Net investment income................ 7.88(a) 7.93 8.57 8.78(a)
Portfolio Turnover Rate (%)............ 24 45 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
17
<PAGE>
INDEPENDENT AUDITORS' 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, including
the portfolio of investments of First Investors Fund For Income, Inc., as of
June 30, 1998, 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,
1998 and the year ended December 31, 1997 and financial highlights for 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, 1998, 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, 1998, 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, 1998
18
<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
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 10005
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
Eight Penn Center Plaza
Philadelphia, PA 19103
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.
95 WALL STREET
NEW YORK, NY 10005
First Investors Logo
Logo is described as follows: The arabic numeral one separated into seven
vertical segments followed by the words "First Investors."
A MEMBER OF THE
FIRST INVESTORS FINANCIAL NETWORK
FIFI-065
The words "BULK RATE U.S. POSTAGE PAID PERMIT NO. 7379" appear in a box to the
right of a circle containing the words "MAILED FROM ZIP CODE 11201" which
appears to the right of the above language in the printed piece.
Vertically reading from bottom to top in the center of the page the words "FIRST
INVESTORS" appear in the printed piece.
FIRST
INVESTORS
FUND FOR
INCOME, INC.
SEMI-
ANNUAL
REPORT
JUNE 30, 1998
