Portfolio Manager's Letter
FIRST INVESTORS SPECIAL BOND FUND, 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 thef
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.
During this period, the high yield market generally did not
track the upward move in interest rates and benefitted from
some of the factors that drove the equity markets. While
stirrings of economic strength drove interest rates higher,
this same strength also raised earnings prospects and
valuations of junk bond issuers, affording these companies
greater financial flexibility. These positive factors led the
high yield market to accept a narrower yield premium over
comparable Treasuries, which is another way of saying
that high yield bonds performed better than Treasury
bonds. In the first half of 1996, the average total return
for high current yield bond funds as tracked by Lipper
Analytical Services, Inc. was 4.8%, while ten year
Treasury notes returned -5%. Within the high yield
category, returns were inverse to credit quality. Issuers
in the lowest rating categories have the most to gain from
economic strength and improved financial flexibility and
thus performed the best. Conversely, the stronger
companies tended to be hurt by their greater interest rate
sensitivity. These attributes caused large cash inflows into
the market from new classes of investors. This made
possible a relatively smooth funding of $40.8 billion,
approximately twice the amount financed in the first half
of 1995.
For the six months ended June 30, 1996, the Fund's total
return on a net asset value basis was 3.4%. Our credit
objective of investing in companies with stable to
improving prospects paradoxically hurt rather than helped
the Fund in the market conditions of 1996. Helping
returns were generally good security selections in which
some companies outperformed and none defaulted. The
Fund did enjoy some rebounds in which bonds held
through credit difficulties emerged from those problems as
we had expected. Holdings of bonds with interest rate
sensitivity such as zero coupon structures hampered the
Fund but were at slightly less than market weighting. The
Fund had light involvement in two industries that did very
well in the marketplace; gaming and retailing, since these
are industries with extraordinary swings in investor
sentiment which the Fund seeks to avoid. Media/Cable
TV, a large industry sector held by the Fund, suffered
from heavy issuance and aggressive structuring and
pricing, but we believe continues to offer good value.
We continue to emphasize finding and holding fundamental
values, companies which have achieved stability and are
likely to benefit from credit improvement despite leveraged
balance sheets. Through market cycles, we are confident
that this strategy will produce strong returns.
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 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,
George V. Ganter
Vice President
and Portfolio Manager
July 8, 1996
<TABLE>
<CAPTION>
Portfolio of Investments
FIRST INVESTORS SPECIAL BOND FUND, INC.
June 30, 1996
- ------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS--91.5%
Aerospace/Defense--.9%
$ 300M Moog Inc., 10%, 2006 (Note 5) $ 303,000 $ 88
- ----------------------------------------------------------------------------------------------------------------------
Apparel/Textiles--.0%
500M Linter Textiles Corp., Ltd., 13 3/4%, 2000 (Defaulted) (Note 6) 6,250 2
- ----------------------------------------------------------------------------------------------------------------------
Automotive--6.7%
500M Aftermarket Technology Corp., 12%, 2004 537,500 155
500M Collins & Aikman Products Co., 11 1/2%, 2006 509,687 147
750M Exide Corp., 10%, 2005 737,813 214
500M SPX Corp., 11 3/4%, 2002 530,625 153
- ----------------------------------------------------------------------------------------------------------------------
2,315,625 669
- ----------------------------------------------------------------------------------------------------------------------
Building Materials--2.7%
1,000M Interface Flooring Systems, Inc., 9 1/2%, 2005 950,000 274
- ----------------------------------------------------------------------------------------------------------------------
Chemicals--3.9%
800M Rexene Corp., 11 3/4%, 2004 832,000 240
500M Synthetic Industries, Inc., 12 3/4%, 2002 531,250 154
- ----------------------------------------------------------------------------------------------------------------------
1,363,250 394
- ----------------------------------------------------------------------------------------------------------------------
Consumer Non-Durables--2.1%
700M Hines Horticulture, Inc., 11 3/4%, 2005 728,000 210
- ----------------------------------------------------------------------------------------------------------------------
Containers--2.2%
700M Owens Illinois, Inc., 11%, 2003 754,250 218
- ----------------------------------------------------------------------------------------------------------------------
Electrical Equipment--4.5%
725M Essex Group, Inc., 10%, 2003 732,250 212
221M Thermadyne Industries, Inc., 10 1/4%, 2002 221,000 64
618M Thermadyne Industries, Inc., 10 3/4%, 2003 610,275 176
- ----------------------------------------------------------------------------------------------------------------------
1,563,525 452
- ----------------------------------------------------------------------------------------------------------------------
Energy--6.5%
1,000M Clark R & M Holdings, Inc., 0%, 2000 690,000 199
600M Falcon Drilling Co., Inc., 9 3/4%, 2001 609,000 176
900M United Meridian Corp., 10 3/8%, 2005 933,750 270
- ----------------------------------------------------------------------------------------------------------------------
2,232,750 645
- ----------------------------------------------------------------------------------------------------------------------
Financial Services--1.9%
600M Olympic Financial Ltd., 13%, 2000 652,500 188
- ----------------------------------------------------------------------------------------------------------------------
Food/Beverage/Tobacco--6.1%
250M Doane Products Co., 10 5/8%, 2006 251,250 73
420M Fleming Co., Inc., 10 5/8%, 2001 381,150 110
750M Keebler Corp., 10 3/4%, 2006 (Note 5) 764,062 220
700M TLC Beatrice International Holdings, Inc., 11 1/2%, 2005 713,125 206
- ----------------------------------------------------------------------------------------------------------------------
2,109,587 609
- ----------------------------------------------------------------------------------------------------------------------
Gaming/Lodging--2.3%
800M Showboat, Inc., 9 1/4%, 2008 814,000 235
- ----------------------------------------------------------------------------------------------------------------------
Healthcare--10.7%
870M Abbey Healthcare Group, Inc., 9 1/2%, 2002 896,100 259
900M Integrated Health Services, Inc., 9 5/8%, 2002 895,500 259
900M Mediq/PRN Life Support Services, Inc., 11 1/8%, 1999 967,500 279
900M Tenet Healthcare Corp., 10 1/8%, 2005 956,250 276
- ----------------------------------------------------------------------------------------------------------------------
3,715,350 1,073
- ----------------------------------------------------------------------------------------------------------------------
Media/Cable Television--19.3%
1,500M Affiliated Newspaper Investments, 0%-13 1/4%, 2006 1,057,500 305
500M Allbritton Communications Corp., 9 3/4%, 2006 457,500 132
1,000M Bell Cablemedia PLC, 0%-11.95%, 2004 712,500 206
1,675M Echostar Communications Corp., 0%-12 7/8%, 2004 1,235,312 357
500M Hollinger International Publishing, Inc., 9 1/4%, 2006 460,625 133
400M PanAmSat Capital Corp., 0%-11 3/8%, 2003 349,000 101
- ----------------------------------------------------------------------------------------------------------------------
Media/Cable Television (continued)
500M Sinclair Broadcasting Group, 10%, 2005 477,500 138
1,400M Videotron Holdings, PLC, 0%-11 1/8%, 2004 1,043,000 301
900M World Color Press, Inc., 9 1/8%, 2003 877,500 253
- ----------------------------------------------------------------------------------------------------------------------
6,670,437 1,926
- ----------------------------------------------------------------------------------------------------------------------
Mining/Metals--2.1%
700M WCI Steel, Inc., 10 1/2%, 2002 714,000 206
- ----------------------------------------------------------------------------------------------------------------------
Paper/Forest Products--5.6%
500M Container Corp., 11 1/4%, 2004 516,250 149
700M Rainy River Forest Products Co., Inc., 10 3/4%, 2001 736,750 213
700M Stone Container Corp., 9 7/8%, 2001 682,500 197
- ----------------------------------------------------------------------------------------------------------------------
1,935,500 559
- ----------------------------------------------------------------------------------------------------------------------
Retail-Food/Drug--3.6%
800M P&C Food Markets, Inc., 11 1/2%, 2001 784,000 227
500M Penn Traffic Company, 10 1/4%, 2002 454,375 131
- ----------------------------------------------------------------------------------------------------------------------
1,238,375 358
- ----------------------------------------------------------------------------------------------------------------------
Retail-General Merchandise--.5%
200M General Host Co., Inc., 11 1/2%, 2002 184,500 53
- ----------------------------------------------------------------------------------------------------------------------
Telecommunications--7.4%
850M Cencall Communications Corp., 0%-10 1/8%, 2004 518,500 150
350M Centennial Cellular, 8 7/8%, 2001 325,500 94
1,000M MFS Communications, Inc., 0%-9 3/8%, 2004 757,500 219
900M Paging Network, Inc., 11 3/4%, 2002 967,500 279
- ----------------------------------------------------------------------------------------------------------------------
2,569,000 742
- ----------------------------------------------------------------------------------------------------------------------
Transportation--2.5%
900M Eletson Holdings, Inc., 9 1/4%, 2003 861,750 249
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Corporate Bonds (cost $31,858,504 31,681,649 9,150
- ----------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--1.0%
Electrical Equipment--.0%
684 *Thermadyne Holdings Corp. 14,706 4
- ----------------------------------------------------------------------------------------------------------------------
Gaming/Lodging--.0%
8,500 *Goldriver Hotel & Casino Corp., Series "B" - -
- ----------------------------------------------------------------------------------------------------------------------
Media/Cable Television--.6%
1,500 *Affiliated Newspaper Investments, Inc. 45,750 13
5,676 *Echostar Communications Class "A" 160,347 47
- ----------------------------------------------------------------------------------------------------------------------
206,097 60
- ----------------------------------------------------------------------------------------------------------------------
Paper/Forest Products--.4%
17,394 *Gaylord Container Corp., Class "A" 135,891 39
- ----------------------------------------------------------------------------------------------------------------------
Retail-General Merchandise--.0%
4,154 *Barry's Jewelers, Inc. 14,539 4
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $201,321) 371,233 107
- ----------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--4.0%
Consumer Services--.9%
300 Time Warner Inc. Series K (Note 5) 295,500 85
- ----------------------------------------------------------------------------------------------------------------------
Financial Services--3.1%
10,000 California Federal Bank, 10 5/8%, Series "B" 1,092,500 316
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Preferred Stocks (cost $1,300,000) 1,388,000 401
- ----------------------------------------------------------------------------------------------------------------------
WARRANTS--.3%
Gaming/Lodging--.1%
850 *Goldriver Finance Corp., Liquidating Trust 5,950 2
- ----------------------------------------------------------------------------------------------------------------------
Paper/Forest Products--.2%
8,332 *Gaylord Container Corp. (expiring 7/31/96) $ 65,094 $ 19
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Warrants (cost $12,495) 71,044 21
- ----------------------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--2.0%
$ 708M Ameritech Capital, 5.41%, 7/16/96 (cost $706,404) 706,404 204
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $34,078,724) 98.8% 34,218,330 9,883
Other Assets, Less Liabilities 1.2 406,541 117
- ----------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $ 34,624,871 $ 10,000
- ----------------------------------------------------------------------------------------------------------------------
*Non-income producing
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
FIRST INVESTORS SPECIAL BOND FUND, INC.
June 30, 1996
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments in securities, at value (identified cost
$34,078,724) (Note 1A)
Receivables:
Investment securities sold ............................$ 865,800 $ 34,218,330
Interest ................................................ 578,454 1,444,254
----------
Other assets .............................................................. 4,373
-----------
Total Assets ..............................................................35,666,957
Liabilities
Cash overdraft ............................................ 210,843
Dividend payable - July 1, 1996 ........................... 752,113
Payable for capital stock redeemed ........................ 44,553
Accrued advisory fee ...................................... 21,875
Accrued expenses .......................................... 12,702
----------
Total Liabilities ......................................................... 1,042,086
-----------
Net Asse..................................................................$ 34,624,871
===========
Net Assets Consist of:
Capital paid in .........................................................$ 53,126,799
Undistributed net investment income ....................................... 1,031,373
Accumulated net realized loss on investment transactions (19,672,907)
Net unrealized appreciation in value of investments ....................... 139,606
-----------
Total ...................................................................$ 34,624,871
===========
Net Asset Value, Offering Price and Redemption Price Per Share
($34,624,871 divided by 2,853,817 shares outstanding),
25,000,000 shares authorized, $1.00 par value (Note 2) .................... $12.13
===========
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
FIRST INVESTORS SPECIAL BOND FUND, INC.
Six Months Ended June 30, 1996
- ---------------------------------------------------------------------------------
<S> <C>
Investment Income
Income:
Interest .................................. $ 1,812,487
Dividends ...................................... 53,137
Consent fees ................................... 2,250
----------
Total income .................................................... $ 1,867,874
Expenses (Notes 1D and 4):
Advisory fee ................................... 138,125
Professional fees .............................. 13,232
Custodian fees ................................. 3,875
Reports and notices to shareholders ............ 1,029
Other expenses ................................. 1,748
----------
Total expenses ................................... 158,009
Less: Custodian fees paid indirectly ............. (877)
----------
Net expenses ......................................................... 157,132
----------
Net investment income ................................................1,710,742
Realized and Unrealized Gain (Loss) on Investments (Note 3):
Net realized gain on investments ................. 236,229
Net unrealized depreciation of investments ....... (698,398)
----------
Net loss on investments .............................................. (462,169)
----------
Net Increase in Net Assets Resulting from Operations.............. $ 1,248,573
===========
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
FIRST INVESTORS SPECIAL BOND FUND, 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 .......................................... $ 1,710,742 $ 3,766,024
Net realized gain (loss) on investments ........................ 236,229 (287,903)
Net unrealized appreciation (depreciation) of investments ...... (698,398) 3,605,865
------------- -----------
Net increase in net assets resulting from operations ........... 1,248,573 7,083,986
------------- -----------
Dividends to Shareholders from:
Net investment income .......................................... (1,525,931) (3,226,603)
------------ ------------
Capital Share Transactions (a)
Proceeds from shares sold ....................................... 230,595 736,623
Value of dividends reinvested ................................... 773,818 3,226,603
Cost of shares redeemed ......................................... (4,139,188) (6,508,688)
------------ ------------
Net decrease in net assets resulting from share transactions ... (3,134,775) (2,545,462)
------------ ------------
Net increase (decrease) in net assets .......................... (3,412,133) 1,311,921
Net Assets
Beginning of period ............................................ 38,037,004 36,725,083
------------ ------------
End of period (including undistributed net investment income of
$1,031,373 and $846,562, respectively) ....................... $ 34,624,871 $ 38,037,004
=========== ============
(a)Capital Shares Issued and Redeemed
Sold ........................................................... 18,794 64,445
Issued for dividends reinvested ................................ 63,169 273,019
Redeemed ....................................................... (337,044) (558,069)
------------ ------------
Net decrease in capital shares ................................. (255,081) (220,605)
============ ============
See notes to financial statements
</TABLE>
Notes to Financial Statements
FIRST INVESTORS SPECIAL BOND FUND, INC.
1. Significant Accounting Policies - The Fund is
registered under the Investment Company Act of
1940 (the "1940 Act") as a diversified, open-end
management investment company. The investment
objective of the Fund is to seek high current income
without undue risk to principal and 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 mean between the
closing bid and asked prices. 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
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 value.
Short-term corporate notes which are purchased at a
discount are valued at amortized cost. Securities for
which market quotations are not readily available
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 $19,909,136, of
which $16,599,362 expires in 1998, $3,021,871
expires in 1999, and $287,903 in 2003.
C. Distributions to Shareholders - Dividends to
shareholders from net investment income are
declared daily and paid monthly. Distributions
from net realized capital gains are normally
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 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. Interest income and estimated expenses are
accrued daily. The Fund's custodian has provided
credits in the amount of $877 against custodian
charges based on the uninvested cash balances of
the Fund.
2. Capital Stock - Shares of the Fund are sold only
through the purchase of annuity contracts issued by
First Investors Life Variable Annuity Fund A.
3. 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 $3,727,526 and $4,723,223,
respectively.
At June 30, 1996, the cost of investments for
federal income tax purposes was $34,078,724.
Accumulated net unrealized appreciation on
investments was $139,606, consisting of $1,357,836
gross unrealized appreciation and $1,218,230 gross
unrealized depreciation.
4. 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") and its transfer agent, Administrative
Data Management Corp. 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 First Investors Corporation.
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.
5. Rule 144A Securities - Under Rule 144A,
certain restricted securities are exempt from the
registration requirements of the Securities Act of
1933 and may only be resold to qualified
institutional investors. At June 30, 1996, the Fund
held three 144A securities with an aggregate value
of $1,362,562 representing 3.9% of the Fund's net
assets. These securities are valued as set forth in
Note 1A.
6. Concentration of Credit Risk - The Fund's
investment in high yield securities, whether rated or
unrated, may be considered speculative and subject
to greater market fluctuations and risk 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 $6,250 representing less
than 2/10 of 1% of the Fund's net assets.
Independent Auditor's Report
To the Shareholders and Board of Directors of
First Investors Special Bond Fund, Inc.
We have audited the accompanying statement of
assets and liabilities of First Investors Special Bond
Fund, 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. 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 Special Bond Fund, Inc. as of June
30, 1996, and the results of its operations, changes
in its net assets and financial highlights for each of
the respective periods presented, in conformity with
generally accepted accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
July 31, 1996
<TABLE>
<CAPTION>
Financial Highlights
FIRST INVESTORS SPECIAL BOND FUND, INC.
The following table sets forth the operating performance data for a share of capital stock outstanding, total return,
ratios to average net assets and other supplemental data for each period indicated.
------------------------------------------------
Year Ended December 31
1/1/96 ------------------------------------------------
to
6/30/96 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data
Net Asset Value, Beginning of Period ........... $12.23 $11.03 $12.18 $11.38 $11.05 $9.16
-------- -------- -------- -------- -------- --------
Income from Investment Operations
Net investment income ............................. .60 1.20 1.09 1.14 1.27 1.26
Net realized and unrealized
gain (loss) on investments ........................ (.19) 1.02 (1.22) .86 .29 1.86
-------- -------- -------- -------- -------- --------
Total from Investment Operations ............. .41 2.22 (.13) 2.00 1.56 3.12
-------- -------- -------- -------- -------- --------
Less Dividends from:
Net investment income ............................. .51 1.02 1.02 1.20 1.23 1.23
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period ................... $12.13 $12.23 $11.03 $12.18 $11.38 $11.05
-------- -------- -------- -------- -------- --------
Total Return(%)+ 3.37 20.76 (1.00) 18.15 14.56 35.76
- ----------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (in thousands) ........ $34,625 $38,037 $36,725 $43,056 $44,116 $50,914
Ratio to Average Net Assets:(%)
Expenses .......................................... .86(a) .88 .87 .85 .88 .89
Net investment income ............................. 9.29(a) 10.17 9.38 9.54 10.95 11.99
Portfolio Turnover Rate(%) ........................ 11 45 54 79 65 47
+ The effect of fees and charges incurred at the separate account level are not reflected in these performance
figures.
(a) Annualized
See notes to financial statements
</TABLE>
FIRST INVESTORS SPECIAL BOND FUND, 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
George V. Ganter
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
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.
