FIRST INVESTORS SPECIAL BOND FUND INC
485BPOS, 1998-04-28
Previous: PRICE T ROWE INTERNATIONAL FUNDS INC, 485BPOS, 1998-04-28
Next: PNC MORTGAGE SECURITIES CORP, 424B5, 1998-04-28



<PAGE>

   
       As filed with the Securities and Exchange Commission on April 28, 1998
    
                                                        Registration No. 2-66294
                                                                        811-2981
- --------------------------------------------------------------------------------

                          SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C.  20549

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

                                      FORM N-1A

               REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                           Post-Effective Amendment No. 17                     X
                                                                               -
                                        and/or

                 REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
                                     ACT OF 1940

                                   Amendment No. 17
                                                                               X
                                     ------------                              -

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

                             95 Wall Street
                           New York, New York                 10005
                (Address of Principal Executive Offices)   (Zip Code)

                                    212-858-8000
                (Registrant's Telephone Number, Including Area Code)

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

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

It is proposed that this filing will become effective on April 30, 1998 pursuant
to paragraph (b) of Rule 485.

<PAGE>

                      FIRST INVESTORS SPECIAL BOND FUND, INC.
                               CROSS-REFERENCE SHEET

<TABLE>
<CAPTION>
N-1A Item No.                                     Location
- -------------                                     --------
<S>  <C>                                          <C>
PART A:  PROSPECTUS

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

PART B:  STATEMENT OF ADDITIONAL INFORMATION

10.  Cover Page. . . . . . . . . . . . . . . .    Cover Page
11.  Table of Contents . . . . . . . . . . . .    Table of Contents
12.  General Information and History . . . . .    General Information
13.  Investment Objectives and Policies. . . .    Investment Objectives and
                                                  Policies; Investment
                                                  Restrictions
14.  Management of the Fund. . . . . . . . . .    Directors and Officers
15.  Control Persons and Principal Holders
        of Securities . . . . . . . . . . . .     Not Applicable
16.  Investment Advisory and Other Services. .    Investment Adviser
17.  Brokerage Allocation. . . . . . . . . . .    Allocation of Portfolio
                                                  Brokerage
18.  Capital Stock and Other Securities. . . .    Determination of Net Asset
                                                  Value
19.  Purchase, Redemption and Pricing of
        Securities Being Offered . . . . . . .    Determination of Net Asset
                                                  Value
20.  Tax Status. . . . . . . . . . . . . . . .    Not Applicable
21.  Underwriters. . . . . . . . . . . . . . .    Not Applicable
22.  Performance Data. . . . . . . . . . . . .    Not Applicable
23.  Financial Statements. . . . . . . . . . .    Financial Statements; Report
                                                  of Independent Accountants
</TABLE>

PART C:  OTHER INFORMATION

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

FIRST INVESTORS SPECIAL BOND FUND, INC.

95 Wall Street, New York, N.Y.  10005/(212) 858-8200

   This is a Prospectus for First Investors Special Bond Fund, Inc. ("Fund"), an
open-end diversified management investment company.  Investments in the Fund are
only available through the purchase of Individual Variable Annuity Contracts
("Contracts") issued by First Investors Life Insurance Company ("First Investors
Life").  Purchase payments for the Contracts, net of certain expenses, are paid
into a unit investment trust, First Investors Life Variable Annuity Fund A
("Separate Account A").  Separate Account A uses these proceeds to purchase
shares of the Fund.  Investments in the Fund are used to fund benefits under the
Contracts.

   The Fund primarily seeks high current income without undue risk to principal
and secondarily seeks growth of capital by investing, under normal market
conditions, at least 65% of its total assets in high yield, high risk
securities.  There can be no assurance the Fund will achieve its investment
objectives.  INVESTMENTS IN HIGH YIELD, HIGH RISK SECURITIES, COMMONLY REFERRED
TO AS "JUNK BONDS," MAY ENTAIL RISKS THAT ARE DIFFERENT OR MORE PRONOUNCED THAN
THOSE INVOLVED IN HIGHER-RATED SECURITIES.  SEE "DESCRIPTION OF CERTAIN
SECURITIES, OTHER INVESTMENT POLICIES AND THEIR RISKS--HIGH YIELD SECURITIES."

   
   This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing and should be retained for
further reference.  First Investors Management Company, Inc. ("FIMCO" or
"Adviser") serves as investment adviser to the Fund.  A Statement of Additional
Information ("SAI"), dated April 30, 1998 (which is incorporated by reference
herein), has been filed with the Securities and Exchange Commission.  The SAI is
available at no charge upon request to the Fund at the address or telephone
number indicated above.
    


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


   
                   The date of this Prospectus is April 30, 1998
    

<PAGE>

                                FINANCIAL HIGHLIGHTS

   The following table sets forth the per share operating performance data for a
share outstanding, total return, ratios to average net assets and other
supplemental data for each year indicated.  Additional performance information
is contained in the Fund's Annual Report which may be obtained without charge by
contacting First Investors Life at 212-858-8200.  The table has been derived
from financial statements which have been audited by Tait, Weller & Baker,
independent certified public accountants, whose report thereon appears in the
SAI.  This information should be read in conjunction with the Financial
Statements and Notes thereto, which also appear in the SAI, available at no
charge upon request to the Fund.


                                          2
<PAGE>

   
<TABLE>
<CAPTION>

                                                -----------------------------------------------
                                                              Year Ended December 31
                                                -----------------------------------------------

                                                   1997      1996      1995      1994      1993
                                                -------   -------   -------   -------   -------
<S>                                             <C>       <C>       <C>       <C>       <C>
Net Asset Value, Beginning of Year . . . . .     $12.75    $12.23    $11.03    $12.18    $11.38
                                                -------   -------   -------   -------   -------

Income from Investment Operations
Net investment income. . . . . . . . . . . .       1.11      1.17      1.20      1.09      1.14
Net realized and unrealized
 gain (loss) on investments. . . . . . . . .        .23       .37      1.02     (1.22)      .86
                                                -------   -------   -------   -------   -------

  Total from Investment Operations . . . . .       1.34      1.54      2.22      (.13)     2.00
                                                -------   -------   -------   -------   -------

Less Distributions from:
  Net investment income. . . . . . . . . . .       1.20      1.02      1.02      1.02      1.20
                                                -------   -------   -------   -------   -------

Net Asset Value, End of Year . . . . . . . .     $12.89    $12.75    $12.23    $11.03    $12.18
                                                -------   -------   -------   -------   -------
                                                -------   -------   -------   -------   -------

TOTAL RETURN(%)+ . . . . . . . . . . . . . .      10.94     13.10     20.76     (1.00)    18.15
- ----------------

RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Year (in thousands) . . .    $36,082   $36,948   $38,037   $36,725   $43,056


Ratios to Average Net Assets (%)
Expenses . . . . . . . . . . . . . . . . . .        .86       .86       .88       .87       .85
Net investment income. . . . . . . . . . . .       8.60      9.31     10.17      9.38      9.54


Portfolio Turnover Rate (%). . . . . . . . .         53        29        45        54        79

<CAPTION>
                                                -----------------------------------------------
                                                              Year Ended December 31
                                                -----------------------------------------------

                                                   1992      1991      1990      1989      1988
                                                -------   -------   -------   -------   -------
<S>                                             <C>       <C>       <C>       <C>       <C>
Net Asset Value, Beginning of Year . . . . .     $11.05     $9.16    $11.47    $13.19    $12.99
                                                -------   -------   -------   -------   -------

Income from Investment Operations
Net investment income. . . . . . . . . . . .       1.27      1.26      1.32      1.57      1.61
Net realized and unrealized
 gain (loss) on investments. . . . . . . . .        .29      1.86     (2.30)    (1.73)      .20
                                                -------   -------   -------   -------   -------

  Total from Investment Operations . . . . .       1.56      3.12      (.98)     (.16)     1.81
                                                -------   -------   -------   -------   -------

Less Distributions from:
  Net investment income. . . . . . . . . . .       1.23      1.23      1.33      1.56      1.61
                                                -------   -------   -------   -------   -------

Net Asset Value, End of Year . . . . . . . .     $11.38    $11.05     $9.16    $11.47    $13.19
                                                -------   -------   -------   -------   -------
                                                -------   -------   -------   -------   -------

TOTAL RETURN(%)+ . . . . . . . . . . . . . .      14.56     35.76     (9.18)    (1.60)    14.43
- ----------------

RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Year (in thousands) . . .    $44,116   $50,914   $53,328   $85,719   $69,641


Ratios to Average Net Assets (%)
Expenses . . . . . . . . . . . . . . . . . .        .88       .89       .86       .82       .84
Net investment income. . . . . . . . . . . .      10.95     11.99     12.57     12.38     11.96


Portfolio Turnover Rate (%). . . . . . . . .         65        47        37        34        51
</TABLE>
    


 +   The effect of fees and charges incurred at the separate account level are
not reflected in these performance figures.


                                          3
<PAGE>

                         INVESTMENT OBJECTIVES AND POLICIES

   The Fund primarily seeks high current income without undue risk to principal
and secondarily seeks growth of capital.  The Fund seeks to achieve its
objectives by investing, under normal market conditions, at least 65% of its
total assets in high yield, high risk securities, commonly referred to as "junk
bonds" ("High Yield Securities").  High Yield Securities include the following
instruments:  fixed, variable or floating rate debt obligations (including
bonds, debentures and notes) which are rated below Baa by Moody's Investors
Service, Inc. ("Moody's") or below BBB by Standard & Poor's Ratings Group
("S&P"), or are unrated and deemed to be of comparable quality by the Adviser;
preferred stocks and dividend-paying common stocks that have yields comparable
to those of high yielding debt securities; any of the foregoing securities of
companies that are financially troubled, in default or undergoing bankruptcy or
reorganization ("Deep Discount Securities"); and any securities convertible into
any of the foregoing.

   The Fund may invest up to 5% of its total assets in debt securities issued by
foreign governments and companies located outside the United States and
denominated in U.S. or foreign currency.  The Fund also may borrow money for
temporary or emergency purposes in amounts not exceeding 5% of its total assets,
make loans of portfolio securities and invest in zero coupon and pay-in-kind
securities.  The Fund may invest up to 10% of its net assets in securities
issued on a when-issued or delayed delivery basis.  See the SAI for more
information concerning these securities.

   The Fund may invest up to 35% of its total assets in the following
instruments:  common and preferred stocks, other than those considered to be
High Yield Securities; debt obligations of all types (including bonds,
debentures and notes) rated A or better by Moody's or S&P; securities issued by
the U.S. Government or its agencies or instrumentalities ("U.S. Government
Obligations"); warrants and money market instruments consisting of prime
commercial paper, certificates of deposit of domestic branches of U.S. banks,
bankers' acceptances and repurchase agreements.

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

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


                                          4
<PAGE>

of the Fund tends to decrease.  When interest rates decline, the net asset value
of the Fund tends to increase.

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

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

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

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

   
   The dollar weighted average of credit ratings of all bonds held by the Fund
during the 1997 fiscal year, computed on a monthly basis, are set forth below.
This information reflects the average composition of the Fund's assets during
the 1997 fiscal year and is not necessarily representative of the Fund as of the
end of its 1997 fiscal year, the current fiscal year or at any other time in the
future.
    

   
<TABLE>
<CAPTION>
                                                   COMPARABLE QUALITY
                                                 OF UNRATED SECURITIES
                             RATED BY MOODY'S  TO BONDS RATED BY MOODY'S
                             ----------------  -------------------------
     <S>                     <C>               <C>
     Baa                            3.75%                1.34%
     Ba                            10.86                 0
     B                             75.85                 3.17
     Caa                            0                    1.38
                                   -----                 ----
     Total                         91.46%                5.89%
</TABLE>
    


                                          5
<PAGE>

DESCRIPTION OF CERTAIN SECURITIES, OTHER INVESTMENT POLICIES AND RISK FACTORS

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

   DEBT SECURITIES.  The market value of debt securities is influenced primarily
by changes in the level of interest rates.  Generally, as interest rates rise,
the market value of debt securities decreases. Conversely, as interest rates
fall, the market value of debt securities increases.  Factors which could result
in a rise in interest rates, and a decrease in the market value of debt
securities, include an increase in inflation or inflationary expectations, an
increase in the rate of U.S. economic growth, an expansion in the Federal budget
deficit or an increase in the price of commodities such as oil.  In addition,
the market value of debt securities is influenced by perceptions of the credit
risks associated with such securities.  Credit risk is the risk that adverse
changes in economic conditions can affect an issuer's ability to pay principal
and interest.  See Appendix A for a description of corporate bond ratings.

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

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

   EFFECT OF INTEREST RATE AND ECONOMIC CHANGES.  Debt obligations rated lower
than Baa by Moody's or BBB by S&P, commonly referred to as "junk bonds," are
speculative and generally involve a higher risk or loss of principal and income
than higher-rated debt securities.  The prices of High Yield Securities tend to
be less sensitive to interest rate changes than higher-rated investments, but
may be


                                          6
<PAGE>

more sensitive to adverse economic changes or individual corporate developments.
Periods of economic uncertainty and changes generally result in increased
volatility in the market prices and yields of High Yield Securities and thus in
the Fund's net asset value.  A strong economic downturn or a substantial period
of rising interest rates could severely affect the market for High Yield
Securities.  In these circumstances, highly leveraged companies might have
greater difficulty in making principal and interest payments, meeting projected
business goals, and obtaining additional financing.  Thus, there could be a
higher incidence of default.  This would affect the value of such securities and
thus the Fund's net asset value.  Further, if the issuer of a security owned by
the Fund defaults, it might incur additional expenses to seek recovery.

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

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

   CREDIT RATINGS.  The credit ratings issued by credit rating services may not
fully reflect the true risks of an investment.  For example, credit ratings
typically evaluate the safety of principal and interest payments, not market
value risk, of High Yield Securities.  Also, credit rating agencies may fail to
change on a timely basis a credit rating to reflect changes in economic or
company conditions that affect a security's market value.  Although the Adviser
considers ratings of recognized rating services such as Moody's and S&P, the
Adviser primarily relies on its own credit analysis, which includes a study of
existing debt, capital structure, ability to service debt and to pay dividends,
the issuer's sensitivity to economic conditions, its operating history and the
current trend of earnings. The Fund may invest in securities rated as low as D
by S&P or C by Moody's or, if unrated, deemed to be of comparable quality by the
Adviser.  Debt obligations with these ratings either have defaulted or are in


                                          7
<PAGE>

great danger of defaulting and are considered to be highly speculative.  See
"Deep Discount Securities."  The Adviser continually monitors the investments in
the Fund's portfolio and carefully evaluates whether to dispose of or retain
High Yield Securities whose credit ratings have changed.  See Appendix A for a
description of corporate bond ratings.

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

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

   
   MARKET RISK.  The Fund is subject to market risk because it invests in common
stocks.  Market risk is the possibility that common stock prices will decline
over short or even extended periods.  The U.S. stock market tends to be
cyclical, with periods when stock prices generally rise and periods when stock
prices generally decline.
    

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

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

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


                                          8
<PAGE>

   RESTRICTED SECURITIES AND ILLIQUID INVESTMENTS.  The Fund may invest up to
15% of its net assets in illiquid investments, including (1) securities that are
illiquid due to the absence of a readily available market or due to legal or
contractual restrictions on resale and (2) repurchase agreements maturing in
more than seven days.  However, illiquid investments for purposes of this
limitation do not include restricted securities eligible for resale under Rule
144A under the Securities Act of 1933, as amended ("Rule 144A Securities"),
which the Board of Directors or the Adviser has determined are liquid under
Board-approved guidelines.  In addition, there is a risk of increasing
illiquidity during times when qualified institutional buyers are uninterested in
purchasing Rule 144A Securities.  See the SAI for more information regarding
restricted securities and illiquid investments, including the risks involved in
their use.

   
   ZERO COUPON AND PAY-IN-KIND SECURITIES.  Zero coupon securities are debt
obligations that do not entitle the holder to any periodic payment of interest
prior to maturity or a specified date when the securities begin paying current
interest.  They are issued and traded at a discount from their face amount or
par value, which discount varies depending on the time remaining until cash
payments begin, prevailing interest rates, liquidity of the security and the
perceived credit quality of the issuer.  Pay-in-kind securities are those that
pay interest through the issuance of additional securities.  The market prices
of zero coupon and pay-in-kind securities generally are more volatile than the
prices of securities that pay interest periodically and in cash and are likely
to respond to changes in interest rates to a greater degree than do other types
of debt securities having similar maturities and credit quality.  Original issue
discount earned each year on zero coupon securities and the "interest" on
pay-in-kind securities accounted for by the Fund for purposes of determining the
amount it must distribute that year to continue to qualify for tax treatment as
a regulated investment company.  Thus, the Fund may be required to distribute as
a dividend an amount that is greater than the total amount of cash it actually
receives.  See "Taxes" in the SAI.  These distributions must be made from the
Fund's cash assets or, if necessary, from the proceeds of sales of portfolio
securities.  The Fund will not be able to purchase additional income-producing
securities with cash used to make such distributions, and its current income
ultimately could be reduced as a result.
    

                                 HOW TO BUY SHARES

   Investments in the Fund are only available through purchases of the Contracts
offered by First Investors Life.  Purchase payments for the Contracts, net of
certain expenses, are paid into a unit investment trust, Separate Account A.
Separate Account A pools these proceeds to purchase shares of the Fund
designated by purchasers of the Contracts.  Orders for the purchase of Fund
shares received prior to the close of regular trading on the New York Stock
Exchange ("NYSE"), generally 4:00 P.M. (New York City time), on any business day
the NYSE is open for trading, will be processed and shares will be purchased at
the net asset value determined at the close of regular trading on the NYSE on
that day.  Orders received after the close of regular trading on the NYSE will
be processed at the net asset value determined at the close of regular trading
on the NYSE on the next trading day.  See "Determination of Net Asset Value."
For a discussion of pricing when FIC's Woodbridge offices are unable to open for
business due to an emergency, see the SAI.


                                          9
<PAGE>

                                HOW TO REDEEM SHARES

   Shares of the Fund may be redeemed at the direction of Contractowners, in
accordance with the terms of the Contracts.  Redemptions will be made at the
Fund's next determined net asset value upon receipt of a proper request for
redemption or repurchase.  Payment will be made by check as soon as possible but
within seven days after presentation.  However, the Fund's Board of Directors
may suspend the right of redemption or postpone the date of payment during any
period when (a) trading on the NYSE is restricted as determined by the
Securities and Exchange Commission ("SEC") or the NYSE is closed for other than
weekends and holidays, (b) the SEC has by order permitted such suspension, or
(c) an emergency, as defined by rules of the SEC, exists during which time the
sale or valuation of portfolio securities held by the Fund is not reasonably
practicable.

                                     MANAGEMENT

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

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

   
   As compensation for its services, the Adviser receives an annual fee from the
Fund, which is payable monthly.  For the fiscal year ended December 31, 1997,
the Fund's advisory fees were 0.75% of its average daily net assets.
    

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

   
   PORTFOLIO MANAGER.  George V. Ganter has been Portfolio Manager of the Fund
since 1986.  Mr. Ganter is also Portfolio Manager of certain other First
Investors funds.  Mr. Ganter joined FIMCO in 1985 as a Senior Investment
Analyst.
    

                          DETERMINATION OF NET ASSET VALUE

   
   The net asset value of a Fund share is determined as of the close of regular
trading on the NYSE (generally 4:00 P.M., New York City time) on each day the
NYSE is open for trading, and at such other times as the Fund's Board of
Directors deems necessary, by dividing the market value of the securities held
by the Fund, plus any cash and other assets, less all liabilities, by the number
of shares outstanding.  If there is no available market value, securities will
be valued at their fair value as
    

                                          10
<PAGE>

   
determined in good faith pursuant to procedures adopted by the Fund's Board of
Directors.  The NYSE currently observes the following holidays: New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
    

                         DIVIDENDS AND OTHER DISTRIBUTIONS

   Dividends from net investment income are generally declared daily and paid
quarterly in additional Fund shares at net asset value (without sales charge)
generally determined as of the close of business on the first business day of
the following quarter.  If you redeem all of your Fund shares at any time during
the quarter, you are paid all dividends declared through the day prior to the
date of the redemption, together with the proceeds of your redemption.  Net
investment income includes interest and dividends, earned discount and other
income earned on portfolio securities less expenses.  Distributions of
substantially all of the Fund's net capital gain (the excess of net long-term
capital gain over net short-term capital loss) and net short-term capital gain,
if any, after deducting any available capital loss carryovers, and any net
realized gains from foreign currency transactions, are declared annually and
paid in additional Fund shares at the net asset value (without sales charge)
generally determined as of the close of business on the business day immediately
following the record date of the distribution.

                                       TAXES

   The Fund intends to continue to qualify for treatment as a regulated
investment company ("RIC") under Subchapter M of the Internal Revenue Code of
1986, as amended ("Code"), so that it will be relieved of Federal income tax on
that part of its investment company taxable income (consisting generally of net
investment income, net short-term capital gain and net gains from certain
foreign currency transactions) and net capital gain that it distributes to its
shareholders.

   Shares of the Fund are offered only to Separate Account A, which is an
insurance company separate account that funds the Contracts.  Under the Code, no
tax is imposed on an insurance company with respect to income of a qualifying
separate account that is properly allocable to the value of eligible variable
annuity contracts.  Please refer to "Federal Income Tax Status" in the
Prospectus of Separate Account A for information as to the tax status of that
account and the holders of the Contracts.

   The Fund intends to comply with the diversification requirements imposed by
section 817(h) of the Code and the regulations thereunder.  These requirements,
which are in addition to the diversification requirements imposed on the Fund by
the Investment Company Act of 1940, as amended, and Subchapter M of the Code,
place certain limitations on the assets of Separate Account A--and of the Fund,
because section 817(h) and those regulations treat the assets of the Fund as
assets of Separate Account A--that may be invested in securities of a single
issuer. Specifically, the regulations provide that, except as permitted by the
"safe harbor" described below, as of the end of each calendar quarter (or within
30 days thereafter) no more than 55% of the Fund's total assets may be
represented by one investment, no more than 70% by any two investments, no more
than 80% by any three investments and no more than 90% by any four investments.
For this purpose, all securities of the same issuer are considered a single
investment, and while each U.S. Government agency and instrumentality is


                                          11
<PAGE>

considered a separate issuer, a particular foreign government and its agencies,
instrumentalities and political subdivisions all will be considered the same
issuer.  Section 817(h) provides, as a safe harbor, that a separate account will
be treated as being adequately diversified if the diversification requirements
under Subchapter M are satisfied and no more than 55% of the value of the
account's total assets are cash and cash items, government securities and
securities of other RICs.  Failure of the Fund to satisfy the section 817(h)
requirements would result in taxation of First Investors Life and treatment of
the Contractholders other than as described in the Prospectus of Separate
Account A.

   The foregoing is only a summary of some of the important Federal income tax
considerations generally affecting the Fund and its shareholders; see the
Statement of Additional Information for a more detailed discussion.
Shareholders are urged to consult their tax advisers.

                                GENERAL INFORMATION

   ORGANIZATION.  The Fund was incorporated in the State of Maryland on November
14, 1979.  The Fund is authorized to issue 25 million shares of common stock,
$1.00 par value per share.  Shares of the Fund have equal dividend, voting,
liquidation and redemption rights.  The Fund does not hold annual shareholder
meetings.  If requested to do so by the holders of at least 10% of the Fund's
outstanding shares, the Board of Directors will call a special meeting of
shareholders for any purpose, including the removal of Directors.

   CUSTODIAN.  The Fund has retained The Bank of New York, 48 Wall Street, New
York, New York  10286, to act as custodian of the securities and cash of the
Fund.

   TRANSFER AGENT.  Administrative Data Management Corp., 581 Main Street,
Woodbridge, NJ 07095-1198, an affiliate of the Adviser and First Investors Life,
acts as transfer agent for the Fund and as dividend disbursing agent.

   SHAREHOLDER INQUIRIES.  Shareholder inquiries can be made by calling First
Investors Life at 212-858-8200.

   
   ANNUAL AND SEMI-ANNUAL REPORTS AND PROSPECTUSES TO SHAREHOLDERS.  It is each
Fund's practice to mail only one copy of its annual and semi-annual reports to
any address at which more than one shareholder with the same last name has
indicated that mail is to be delivered.  Additional copies of the reports will
be mailed if requested in writing or by telephone by any shareholder.  In
addition, if the SEC adopts a currently pending proposed rule, it is the Funds'
intention to mail only one copy of its Prospectus 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 Prospectus will be mailed if requested in
writing or by telephone by any shareholder.
    

   
   YEAR 2000.  Like other mutual funds, the Fund could be adversely affected if
the computer and other information processing systems used by the Adviser,
Transfer Agent and other service providers are not properly programmed to
process date-related information on and after January 1, 2000.  Such systems
typically have been programmed to use a two-digit number to represent the year
for any date.  As a result, computer systems could incorrectly misidentify "00"
as 1900, rather than 2000, and make mistakes when performing operations.  The
Adviser and Transfer Agent are taking steps that they
    

                                          12
<PAGE>

   
believe are reasonably designed to address the Year 2000 problem for computer
and other systems used by them and are obtaining assurances that comparable
steps are being taken by the Fund's other service providers.  However, there can
be no assurance that these steps will be sufficient to avoid any adverse impact
on the Fund.  Nor can the Fund estimate the extent of any impact.
    


                                          13
<PAGE>

                                     APPENDIX A

                       DESCRIPTION OF CORPORATE BOND RATINGS

STANDARD & POOR'S RATINGS GROUP

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

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

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

   2.  Nature of and provisions of the obligation;

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

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

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

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

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

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

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


                                          14
<PAGE>

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

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

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

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

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

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

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

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

MOODY'S INVESTORS SERVICE, INC.

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

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


                                          15
<PAGE>

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

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

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

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

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

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

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

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


                                          16
<PAGE>

                                 TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Investment Objectives and Policies . . . . . . . . . . . . . . . . . . . . .4
How to Buy Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
How to Redeem Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . . 10
Dividends and Other Distributions. . . . . . . . . . . . . . . . . . . . . 11
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>

<PAGE>

                      FIRST INVESTORS SPECIAL BOND FUND, INC.
                                     PROSPECTUS


INVESTMENT ADVISER
First Investors Management Company, Inc.
95 Wall Street
New York, NY  10005


LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachussetts Avenue, N.W.
Washington, DC  20036


CUSTODIAN
The Bank of New York
48 Wall Street
New York, NY  10286


TRANSFER AGENT
Administrative Data Management Corp.
581 Main Street
Woodbridge, New Jersey  07095-1198


AUDITORS
Tait, Weller & Baker
8 Penn Center Plaza
Philadelphia, Pennsylvania  19103




                                     PROSPECTUS
                                   April 30, 1998

NO DEALER, SALESMAN OR ANY OTHER PERSONS HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS OR THE STATEMENT OF ADDITIONAL INFORMATION, AND IF GIVEN OR MADE,
SUCH INFORMATION AND REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUND, OR ANY AFFILIATE THEREOF.  THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SHARES OFFERED HEREBY IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER IS SUCH STATE.
<PAGE>


                       FIRST INVESTORS SPECIAL BOND FUND, INC.
   
               STATEMENT OF ADDITIONAL INFORMATION DATED APRIL 30, 1998
    

                95 WALL STREET NEW YORK, N.Y.  10005/(212) 858-8200

     This is a Statement of Additional Information ("SAI") for First Investors
Special Bond Fund, Inc. ("Fund"), an open-end diversified management investment
company.  Shares of the Fund may be purchased only through the acquisition of a
variable annuity contract issued by First Investors Life Insurance Company
("First Investors Life").

     The Fund primarily seeks high current income without undue risk of
principal and secondarily seeks growth of capital by investing at least 65% of
its total assets in high yield, high risk securities, commonly referred to as
"junk bonds."  There can be no assurance that the Fund will achieve its
investment objectives.

   
     This SAI is not a prospectus.  It should be read in conjunction with the
Fund's Prospectus dated April 30, 1998, which may be obtained free of cost from
the Fund at the address or telephone number noted above.
    

                                  TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                        Page
                                                                        ----
<S>                                                                     <C>
Investment Policies. . . . . . . . . . . . . . . . . . . . . . . . . .    2
Investment Restrictions. . . . . . . . . . . . . . . . . . . . . . . .    5
Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . .    7
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      9
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . .   10
Allocation of Portfolio Brokerage. . . . . . . . . . . . . . . . . . .   11
Emergency Pricing Procedures . . . . . . . . . . . . . . . . . . . . .   12
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   12
General Information. . . . . . . . . . . . . . . . . . . . . . . . . .   13
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   14
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . .   15
</TABLE>


<PAGE>

                                 INVESTMENT POLICIES

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

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

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

     FOREIGN GOVERNMENT OBLIGATIONS.  The Fund may invest in foreign government
obligations, which generally consist of obligations supported by national, state
or provincial governments or similar political subdivisions.  Investments in
foreign government debt obligations involve special risks.  The issuer of the
debt may be unable or unwilling to pay interest or repay principal when due in
accordance with the terms of such debt, and the Fund may have limited legal
resources in the event of default.  Political conditions, especially a sovereign
entity's willingness to meet the terms of its debt obligations, are of
considerable significance.

     FOREIGN SECURITIES-RISK FACTORS.  The Fund may sell a security denominated
in a foreign currency and retain the proceeds in that foreign currency to use at
a future date (to purchase other securities denominated in that currency) or the
Fund may buy foreign currency outright to purchase securities denominated in
that foreign currency at a future date.  Investing in foreign securities
involves more risk than investing in securities of U.S. companies.  Because the
Fund currently does not intend to hedge its foreign investments against the risk
of foreign currency fluctuations, changes in the value of these currencies can
significantly affect its share price.  In addition, the Fund will be affected by
changes in exchange control regulations and fluctuations in the relative rates
of exchange between the currencies of different nations, as well as by economic
and political developments.  Other risks involved in foreign securities include
the following: there may be less publicly available information


                                          2
<PAGE>

about foreign companies comparable to the reports and ratings that are published
about companies in the United States; foreign companies are not generally
subject to uniform accounting, auditing and financial reporting standards and
requirements comparable to those applicable to U.S. companies; some foreign
stock markets have substantially less volume than U.S. markets, and securities
of some foreign companies are less liquid and more volatile than securities of
comparable U.S. companies; there may be less government supervision and
regulation of foreign stock exchanges, brokers and listed companies than exist
in the United States; and there may be the possibility of expropriation or
confiscatory taxation, political or social instability or diplomatic
developments which could affect assets of the Fund held in foreign countries.

     LOANS OF PORTFOLIO SECURITIES.  The Fund may loan securities to qualified
broker-dealers or other institutional investors provided: the borrower pledges
to the Fund and agrees to maintain at all times with the Fund collateral equal
to not less than 100% of the value of the securities loaned (plus accrued
interest or dividend, if any); the loan is terminable at will by the Fund; the
Fund pays only reasonable custodian fees in connection with the loan; and the
Adviser monitors the creditworthiness of the borrower throughout the life of the
loan.  Such loans may be terminated by the Fund at any time and the Fund may
vote the proxies if a material event affecting the investment is to occur.  The
market risk applicable to any security loaned remains a risk of the Fund.  The
borrower must add to the collateral whenever the market value of the securities
rises above the level of such collateral.  The Fund could incur a loss if the
borrower should fail financially at a time when the value of the loaned
securities is greater than the collateral.  The Fund may not make loans of
portfolio securities in excess of 10% of its total assets.

     REPURCHASE AGREEMENTS.  The Fund may enter into repurchase agreements with
banks which are members of the Federal Reserve System or securities dealers who
are members of a national securities exchange or are market makers in government
securities.  The period of these repurchase agreements will usually be short,
from overnight to one week, and at no time will the Fund invest in repurchase
agreements with more than one year in time to maturity.  The securities which
are subject to repurchase agreements, however, may have maturity dates in excess
of one year from the effective date of the repurchase agreement.  The Fund will
always receive, as collateral, securities whose market value, including accrued
interest, which will at all times be at least equal to 100% of the dollar amount
invested by the Fund in each agreement, and the Fund will make payment for such
securities only upon physical delivery or evidence of book entry transfer to the
account of the custodian.  If the seller defaults, the Fund might incur a loss
if the value of the collateral securing the repurchase agreement declines, and
might incur disposition costs in connection with liquidating the collateral.  In
addition, if bankruptcy or similar proceedings are commenced with respect to the
seller of the security, realization upon the collateral by the Fund may be
delayed or limited.  The Fund may not enter into a repurchase agreement with
more than seven days to maturity if, as a result more than 15% of its net assets
would be invested in such repurchase agreements, together with any other
illiquid investments.

     RESTRICTED SECURITIES AND ILLIQUID INVESTMENTS.  The Fund may not purchase
or otherwise acquire any security if, as a result, more than 15% of its net
assets (taken at current value) would be invested in securities that are
illiquid by virtue of the absence of a readily available market or legal or
contractual restrictions on resale.  This policy includes foreign issuers'
unlisted securities with a limited trading market and repurchase agreements
maturing in more than seven days.  This policy does not include restricted
securities eligible for resale pursuant to Rule 144A under the


                                          3
<PAGE>

Securities Act of 1933, as amended ("1933 Act"), which the Board of Directors or
the Adviser has determined under Board-approved guidelines are liquid.


     Restricted securities which are illiquid may be sold only in privately
negotiated transactions or in public offerings with respect to which a
registration statement is in effect under the 1933 Act.  Such securities include
those that are subject to restrictions contained in the securities laws of other
countries.  Securities that are freely marketable in the country where they are
principally traded, but would not be freely marketable in the United States,
will not be subject to this 15% limit.  Where registration is required, the Fund
may be obligated to pay all or part of the registration expenses and a
considerable period may elapse between the time of the decision to sell and the
time the Fund may be permitted to sell a security under an effective
registration statement.  If, during such a period, adverse market conditions
were to develop, the Fund might obtain a less favorable price than prevailed
when it decided to sell.

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

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

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

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


                                          4
<PAGE>

price for such stock.  Warrants may be either perpetual or of limited duration.
There is greater risk that warrants might drop in value at a faster rate than
the underlying stock.

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

   
     PORTFOLIO TURNOVER.  Although the Fund generally will not invest for
short-term trading purposes, portfolio securities may be sold without regard to
the length of time they have been held when, in the opinion of the Adviser,
investment considerations warrant such action. Portfolio turnover rate is
calculated by dividing (1) the lesser of purchases or sales of portfolio
securities for the fiscal year by (2) the monthly average of the value of
portfolio securities owned during the fiscal year.  A 100% turnover rate would
occur if all the securities in Fund's portfolio, with the exception of
securities whose maturities at the time of acquisition were one year or less,
were sold and either repurchased or replaced within one year.  A high rate of
portfolio turnover (100% or more) generally leads to transaction costs and may
result in a greater number of taxable transactions.  See "Allocation of
Portfolio Brokerage."  For the fiscal years ended December 31, 1996 and 1997,
the Fund's portfolio turnover rate was 29% and 53%, respectively.
    

                            INVESTMENT RESTRICTIONS

     The Fund has adopted the investment restrictions set forth below, and,
unless identified as non-fundamental policies, may not be changed without the
approval of a vote of a majority of the outstanding shares of the Fund.  As
provided in the Investment Company Act of 1940, as amended ("1940 Act"), a "vote
of a majority of the outstanding shares of the Fund" means the affirmative vote
of the lesser of (1) more than 50% of the outstanding shares of the Fund or (2)
67% or more of the shares present at a meeting if more than 50% of the
outstanding shares are represented at the meeting in person or by proxy.

     The investment restrictions provide that, among other things, the Fund will
not:


                                          5
<PAGE>

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

     (2)  Make loans to other persons except that the Fund's Board of Directors
may, on the request of broker-dealers or other institutional investors, which it
deems qualified, authorize the Fund to lend securities for the purpose of
covering short positions of the borrower, but only when the borrower pledges
cash collateral to the Fund and agrees to maintain such collateral so that it
amounts at all times to at least 100% of the value of the securities.  Such
security loans will not be made if as a result the aggregate of such loans
exceeds 10% of the value of the Fund's total assets.  The Fund may terminate
such loans at any time and vote the proxies if a material event affecting the
investment is to occur.  The market risk applicable to any security loaned
remains a risk of the Fund.  The investment risk is that the borrower will fail
financially when the collateral is in its possession.  The borrower must add to
collateral whenever the market value of the securities rises above the level of
such collateral. The primary objectives of such loaning function is to
supplement the Fund's income through investment of the cash collateral in
short-term interest bearing obligations.  The purchase of a portion of an issue
of publicly distributed debt securities is not considered the making of a loan.

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

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

     (5)  Underwrite securities of other issuers.

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

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

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

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

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

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


                                          6
<PAGE>

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

     The Fund has adopted the following non-fundamental investment restrictions
which may be changed without shareholder approval:

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

     (2)  The Fund will not pledge, mortgage or hypothecate any of its assets,
except that the Fund may pledge its assets to secure borrowings made in
accordance with fundamental investment restriction (1) above, provided the Fund
maintains asset coverage of at least 300% for all such borrowings.

                                DIRECTORS AND OFFICERS

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

GLENN O. HEAD*+ (72), President and Director.  Chairman of the Board and
Director, Administrative Data Management Corp. ("ADM"), FIMCO, Executive
Investors Management Company, Inc. ("EIMCO"), First Investors Corporation
("FIC"), Executive Investors Corporation ("EIC") and First Investors
Consolidated Corporation ("FICC").

JAMES J. COY (84), Emeritus Director, 90 Buell Lane, East Hampton, NY  11937.
Retired; formerly Senior Vice President, James Talcott, Inc. (financial
institution).

ROGER L. GRAYSON* (41), Director, FIC and FICC; President and Director, First
Investors Resources, Inc.; Commodities Portfolio Manager.

KATHRYN S. HEAD*+ (42), Director, 581 Main Street, Woodbridge, NJ  07095.
President and Director, FICC, ADM and FIMCO; Vice President and Director, FIC
and EIC; President EIMCO; Chairman, President and Director, First Financial
Savings Bank, S.L.A.

REX R. REED (76), Director, 259 Governors Drive, Kiawah Island, SC  29455.
Retired; formerly Senior Vice President, American Telephone & Telegraph Company.

HERBERT RUBINSTEIN (76), Director, 695 Charolais Circle, Edwards, CO 81632-1136.
Retired; formerly President, Belvac International Industries, Ltd. and
President, Central Dental Supply.


                                          7
<PAGE>

NANCY SCHAENEN (66), Director, 56 Midwood Terrace, Madison, NJ 07940.  Trustee,
Drew University and DePauw University.

JAMES M. SRYGLEY (65), Director, 33 Hampton Road, Chatham, NJ 07982.  Principal,
Hampton Properties, Inc. (property investment company).

JOHN T. SULLIVAN* (66), Director and Chairman of the Board; Director, FIMCO,
FIC, FICC and ADM; Of Counsel, Hawkins, Delafield & Wood, Attorneys.

ROBERT F. WENTWORTH (68), Director, RR1, Box 2554, Upland Downs Road, Manchester
Center, VT  05255.  Retired; formerly financial and planning executive with
American Telephone & Telegraph Company.

JOSEPH I. BENEDEK (40), Treasurer and Chief Financial Officer, 581 Main Street,
Woodbridge, NJ  07095.  Treasurer, FIC, FIMCO, EIMCO and EIC; Comptroller and
Treasurer, FICC.

CONCETTA DURSO (63), Vice President and Secretary.  Vice President, FIMCO, EIMCO
and ADM; Assistant Vice President and Assistant Secretary, FIC and EIC.

GEORGE V. GANTER (45), Vice President.  Vice President, First Investors Asset
Management Company, Inc., First Investors High Yield, Inc. and Executive
Investors Trust; Portfolio Manager, FIMCO.

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

*  These Directors may be deemed to be "interested persons," as  defined in the
1940 Act.

+  Mr. Glenn O. Head and Ms. Kathryn S. Head are father and daughter.

     All of the officers and Directors, except for Mr. Ganter, hold identical or
similar positions with 14 other registered investment companies in the First
Investors Family of Funds.  Mr. Head is also an officer and/or Director of First
Investors Asset Management Company, Inc., First Investors Credit Funding
Corporation, First Investors Leverage Corporation, First Investors Realty
Company, Inc., First Investors Resources, Inc., N.A.K. Realty Corporation, Real
Property Development Corporation, Route 33 Realty Corporation, First Investors
Life Insurance Company, First Financial Savings Bank, S.L.A., First Investors
Credit Corporation and School Financial Management Services, Inc.  Ms. Head is
also an officer and/or Director of First Investors Life Insurance Company, First
Investors Credit Corporation, School Financial Management Services, Inc., First
Investors Credit Funding Corporation, N.A.K. Realty Corporation, Real Property
Development Corporation, First Investors Leverage Corporation and Route 33
Realty Corporation.

   
     The following table lists compensation paid to the Directors of the Fund
for the fiscal year ended December 31, 1997.
    

                                          8
<PAGE>

   
<TABLE>
<CAPTION>
                                         PENSION OR                             TOTAL
                                         RETIREMENT                             COMPENSATION
                                         BENEFITS           ESTIMATED           FROM FIRST
                         AGGREGATE       ACCRUED AS PART    ANNUAL              INVESTORS FAMILY
                         COMPENSATION    OF FUND            BENEFITS UPON       OF FUNDS PAID TO
DIRECTOR                 FROM FUND*      EXPENSES           RETIREMENT          DIRECTOR*
- --------                 ------------    ---------------    -------------       ----------------
<S>                      <C>             <C>                <C>                 <C>
James J. Coy**              $461.14              $-0-                $-0-            $15,500.00
Roger L. Grayson                -0-               -0-                 -0-                   -0-
Glenn O. Head                   -0-               -0-                 -0-                   -0-
Kathryn S. Head                 -0-               -0-                 -0-                   -0-
Rex R. Reed                1,106.74               -0-                 -0-             37,200.00
Herbert Rubinstein         1,106.74               -0-                 -0-             37,200.00
James M. Srygley           1,106.74               -0-                 -0-             37,200.00
John T. Sullivan                -0-               -0-                 -0-                 -0-
Robert F. Wentworth        1,106.74               -0-                 -0-             37,200.00
Nancy Schaenen               830.05               -0-                 -0-             27,900.00
</TABLE>



*  Compensation to officers and interested Directors of the Fund is paid by the
Adviser.  In addition, prior to December 31, 1997, compensation to
non-interested Directors of the Fund was voluntarily paid by the Adviser.
Commencing January 1, 1998, compensation to non-interested Directors of the Fund
is being be paid by the Fund.
** On March 27, 1997, Mr. Coy resigned as a Director of the Fund.  Mr. Coy did
not resign due to a disagreement on any matters relating to the Fund's
operations, policies or practices.  Mr. Coy currently serves as an emeritus
Director.
    

                                      MANAGEMENT

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

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


                                          9
<PAGE>

securities of the Fund, and, in either case, by a vote of a majority of the
Independent Directors voting in person at a meeting called for the purpose of
voting on such approval.

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

<TABLE>
<CAPTION>
                                                                          Annual
Average Daily Net Assets                                                   Rate
- ------------------------                                                  ------
<S>                                                                       <C>
Up to $250 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.75%
In excess of $250 million up to $500 million . . . . . . . . . . . . . . . 0.72
In excess of $500 million up to $750 million . . . . . . . . . . . . . . . 0.69
Over $750 million. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.66
</TABLE>

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

     For the fiscal years ended December 31, 1995, 1996 and 1997, the Fund paid
the Adviser $277,740, $271,569 and $269,748, respectively, in advisory fees.
    

                           DETERMINATION OF NET ASSET VALUE

     Except as provided herein, 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 on a
particular day, the security is valued at the mean between the closing bid and
asked prices.  Securities traded in the OTC market (including securities listed
on exchanges whose primary market is believed to be OTC) are valued at the mean
between the last bid and asked prices prior to the time when assets are valued
based upon quotes furnished by market makers for such securities.  However, the
Fund may determine the value of debt securities based upon prices furnished by
Interactive Data Corporation, an outside pricing service.  The pricing service
uses quotations obtained from investment dealers or brokers for the particular
securities being evaluated, information with respect to market transactions in
comparable securities and consider security type, rating, market condition,
yield data and other available information in determining value.  Short-term
debt securities that mature in 60 days or less are valued at amortized cost.
Securities for which market quotations are not readily available are valued on
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 Fund's Board of
Directors.

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

     The Fund's Board of Directors may suspend the determination of the Fund's
net asset value for the whole or any part of any period (1) during which trading
on the New York Stock Exchange


                                          10
<PAGE>

("NYSE") is restricted as determined by the SEC or the NYSE is closed for other
than weekend and holiday closings, (2) when an emergency exists, as defined by
the SEC, that makes it not reasonably practicable for the Fund to dispose of
securities owned by it or fairly to determine the value of its net assets, or
(3) for such other period as the SEC has by order permitted.

                          ALLOCATION OF PORTFOLIO BROKERAGE

     Purchases and sales of portfolio securities by the Fund may be principal
transactions.  In principal transactions, portfolio securities are normally
purchased directly from the issuer or from an underwriter or market maker for
the securities.  There will usually be no brokerage commission paid by the Fund
for such purchases.  Purchases from underwriters will include the underwriter's
commission or concession and purchases from dealers serving as market makers
will include the spread between the bid and asked price.  Certain money market
instruments may be purchased by the Fund directly from an issuer, in which no
commission or discounts are paid.  The Fund may purchase fixed income securities
on a "net" basis with dealers acting as principal for its own account without a
stated commission, although the price of the security usually includes a profit
to the dealer.

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

     In effecting portfolio transactions for the Fund, the Adviser seeks best
execution of trades either (1) at the most favorable and competitive rate of
commission charged by any broker or member of an exchange, or (2) with respect
to agency transactions, at a higher rate of commission if reasonable in relation
to brokerage and research services provided to the Fund or the Adviser, by such
member or broker.  In addition, upon the instruction of the Board of Directors,
the Adviser may use dealer concessions available in fixed-price underwritings to
pay for research services.  Such services may include, but are not limited to,
any one or more of the following:  information as to the availability of
securities for purchase or sale and statistical or factual information or
opinions pertaining to investments.  The Adviser may use research and services
provided to it by brokers in servicing all the funds in First Investors Group of
Funds; however, not all such services may be used by the Adviser in connection
with the Fund.  No portfolio orders are placed with an affiliated broker, nor
does any affiliated broker participate in these commissions.

     The Adviser may combine transaction orders placed on behalf of the Fund and
any other fund in the First Investors Group of Funds, any series of Executive
Investors Trust and First Investors Life for the purpose of negotiating
brokerage commissions or obtaining a more favorable transaction price; and where
appropriate, securities purchased or sold may be allocated in accordance with
written procedures approved by the Board of Directors.

   
     For the fiscal year ended December 31, 1995, the Fund did not pay brokerage
commissions.  For the fiscal year ended December 31, 1996, the Fund paid $1,408
in brokerage commissions.  Of that amount $1,149 was paid in brokerage
commissions to brokers who furnished research services on portfolio transactions
in the amount of $209,005.  For the fiscal year ended December 31, 1997, the
Fund paid $1,170 in brokerage commissions.  Of that amount $1,104 was paid in
brokerage
    

                                          11
<PAGE>

commissions to brokers who furnished research services on portfolio transactions
in the amount of $190,813.

                             EMERGENCY PRICING PROCEDURES

     In the event that the Fund must halt operations during any day that it
would normally be required to price under Rule 22c-1 under the Investment
Company of 1940 due to an emergency ("Emergency Closed Day"), the Fund will
apply the following procedures:

     1.  The Fund will make every reasonable effort to segregate orders received
on the Emergency Closed Day and give them the price that they would have
received but for the closing.  The Emergency Closed Day price will be calculated
as soon as practicable after operations have resumed and will be applied equally
to sales, redemptions and repurchases that were in fact received in the mail or
otherwise on the Emergency Closed Day.

     2.  For purposes of paragraph 1, an order will be deemed to have been
received by the Fund on an Emergency Closed Day, even if neither the Fund nor
the Transfer Agent is able to perform the mechanical processing of pricing on
that day, under the following circumstances:

          (a)  In the case of a mail order, the order will be considered
received by the Fund when the postal service has delivered it to FIC's
Woodbridge offices prior to the close of regular trading on the NYSE; or such
other time as may be prescribed in the Fund's Prospectus; and

          (b)  In the case of a wire order, including a Fund/SERV order, the
order will be considered received when it is received in good form by a FIC
branch office or an authorized dealer prior to the close of regular trading on
the NYSE, or such other time as may be prescribed in the Fund's Prospectus.

     3.  If the Fund is unable to segregate orders received on the Emergency
Closed Day from those received on the next day the Fund is open for business,
the Fund may give all orders the next price calculated after operations resume.

     4.  Notwithstanding the foregoing, on business days in which the NYSE is
not open for regular trading, the Fund may determine not to price its portfolio
securities if such prices would lead to a distortion of the net asset value for
the Fund and its shareholders.

                                        TAXES

     Fund shares are offered only to a separate account of First Investors Life
that funds individual variable annuity contracts.  See the separate account's
prospectus for a discussion of the special taxation of First Investors Life with
respect to the account and of the contractholders.

     In order to continue to qualify for treatment as a regulated investment
company ("RIC") under the Internal Revenue Code of 1986, as amended (the
"Code"), the Fund must distribute to its shareholders for each taxable year at
least 90% of its investment company taxable income (consisting generally of net
investment income, net short-term capital gain and net gains from certain
foreign currency transactions) ("Distribution Requirement") and must meet
several additional requirements.  These requirements include the following:
(1) the Fund must derive at least 90% of its gross income


                                          12
<PAGE>

each taxable year from dividends, interest, payments with respect to securities
loans and gains from the sale or other disposition of securities or foreign
currencies, or other income derived with respect to its business of investing in
securities or those currencies; (2) at the close of each quarter of the Fund's
taxable year, at least 50% of the value of its total assets must be represented
by cash and cash items, U.S. Government securities, securities of other RICs and
other securities, with those other securities limited, in respect of any one
issuer, to an amount that does not exceed 5% of the value of the Fund's total
assets and that does not represent more than 10% of the issuer's outstanding
voting securities; and (3) at the close of each quarter of the Fund's taxable
year, not more than 25% of the value of its total assets may be invested in
securities (other than U.S. Government securities or the securities of other
RICs) of any one issuer.

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

     The Fund may acquire zero coupon securities issued with original issue
discount.  As a holder of those securities, the Fund must include in its income
the portion of the original issue discount that accrues on the securities during
the taxable year, even if it receives no corresponding payment on them during
the year.  Similarly, the Fund must include in its gross income securities it
receives as "interest" on pay-in-kind securities.  Because the Fund annually
must distribute substantially all of its investment company taxable income,
including any original issue discount and other non-cash income, to satisfy the
Distribution Requirement, the Fund may be required in a particular year to
distribute as a dividend an amount that is greater than the total amount of cash
it actually receives.  Those distributions will be made from the Fund's cash
assets or from the proceeds of sales of portfolio securities, if necessary.  The
Fund may realize capital gains or losses from those sales, which would increase
or decrease its investment company taxable income and/or net capital gain (the
excess of net long-term capital gain over net short-term capital loss).

                                 GENERAL INFORMATION

     AUDITS AND REPORTS.  The accounts of the Fund are audited twice a year by
Tait, Weller & Baker, independent certified public accountants, 8 Penn Center
Plaza, Philadelphia, PA, 19103.  Shareholders of the Fund receive semi-annual
and annual reports, including audited financial statements, and a list of
securities owned.

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


                                          13
<PAGE>

                                      APPENDIX A

                       DESCRIPTION OF COMMERCIAL PAPER RATINGS

STANDARD & POOR'S RATINGS GROUP

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

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

MOODY'S INVESTORS SERVICE, INC.

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

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

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


                                          14
<PAGE>






                              Financial Statements as of
                                  December 31, 1997







                                          15
<PAGE>

                              Financial Statements as of
                                  December 31, 1997


Registrant incorporates by reference the financial statements and report of
independent auditors contained in the Annual Report to shareholders for the
fiscal year ended December 31, 1997 electronically filed with the Commission on
March 5, 1998 (Accession Number: 0000928816-98-000068).


                                          16

<PAGE>

                                        PART C

                                  OTHER INFORMATION

Item 24.  Financial Statements and Exhibits

     (a)  Financial Statements:

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

     (b)  Exhibits:

          (1)/1/    Articles of Restatement

          (2)/1/    Amended and Restated By-laws

          (3)       Not Applicable

          (4)       Shareholders' rights are contained in Article II of
                    Registrant's Amended and Restated By-laws, previously filed
                    as Exhibit 99.B2 to Registrant's Registration Statement.

          (5)/1/    Investment Advisory Agreement between Registrant and First
                    Investors Management Company, Inc.

          (6)       Not Applicable

          (7)       Not Applicable

          (8)a./2/  Custodian Agreement between Registrant and Irving Trust
                    Company

             b./2/  Supplement to Custodian Agreement between Registrant and The
                    Bank of New York

          (9)/2/    Administration Agreement between Registrant, First Investors
                    Management Company, Inc., First Investors Corporation and
                    Administrative Data Management Corp.

          (10)      Opinion of Counsel

          (11)a.    Consent of independent accountants

              b./2/ Powers of Attorney

          (12)      Not Applicable

          (13)      No undertaking in effect

          (14)      Not Applicable

          (15)      Not Applicable

          (16)      Not Applicable

<PAGE>

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

          (18)      Not Applicable

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

/1/  Incorporated by reference from Post-Effective Amendment No. 14 to 
     Registrant's Registration Statement (File No. 2-66294) filed on April 24, 
     1995.

/2/  Incorporated by reference from Post-Effective Amendment No. 15 to
     Registrant's Registration Statement (File No. 2-66294) filed on April 19,
     1996.

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

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


Item 26.  Number of Holders of Securities

                                        Number of Record
                                          Holders as of
           Title of Class               February   , 1998
           --------------               -----------------
            Common Stock                       1
         ($1.00 par value)


Item 27.  Indemnification

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

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

<PAGE>

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

          The Registrant's Investment Advisory Agreement provides as follows:

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

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

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

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

Item 28.  Business and Other Connections of Investment Adviser

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

          First Investors Cash Management Fund, Inc.

<PAGE>

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


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


Item 29.  Principal Underwriters

          Not Applicable


Item 30.  Location of Accounts and Records

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


Item 31.  Management Services

          Inapplicable


Item 32.  Undertakings

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

          Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions under Item 27 herein, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.  In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or 

<PAGE>

controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

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

<PAGE>

                                      SIGNATURES


     Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant represents that this Amendment
meets all the requirements for effectiveness pursuant to Rule 485(b) under the
Securities Act of 1933, and has duly caused this Post-Effective Amendment to
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on the
15th day of April, 1998.


                                   FIRST INVESTORS SPECIAL
                                   BOND FUND, INC. 
                                   (Registrant)



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

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



/s/Glenn O. Head            Principal Executive           April 15, 1998
- -----------------------     Officer and Director
Glenn O. Head          

/s/Joseph I. Benedek        Principal Financial           April 15, 1998
- -----------------------     and Accounting Officer
Joseph I. Benedek      

            *               Director                      April 15, 1998
- -----------------------
Kathryn S. Head

            *               Director                      April 15, 1998
- -----------------------
Roger L. Grayson

            *               Director                      April 15, 1998
- -----------------------
Herbert Rubinstein

            *               Director                      April 15, 1998
- -----------------------
Nancy Schaenen

<PAGE>

            *               Director                      April 15, 1998
- -----------------------
James M. Srygley

            *               Director                      April 15, 1998
- -----------------------
John T. Sullivan

            *               Director                      April 15, 1998
- -----------------------
Rex R. Reed

            *               Director                      April 15, 1998
- -----------------------
Robert F. Wentworth






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

<PAGE>

                                  INDEX TO EXHIBITS

Exhibit
Number              Description
- ------              -----------

99.B10              Opinion of counsel
99.B11              Consent of accountants
27                  Financial Data Schedule


<PAGE>

                             KIRKPATRICK & LOCKHART LLP
                          1800 Massachusetts Avenue, N.W.
                            Washington, D.C. 20036-1800
                               Telephone 202-778-9000


                                                  April 23, 1998



First Investors Special Bond Fund, Inc.
95 Wall Street
New York, NY 10005

Ladies and Gentlemen:

     You have requested our opinion, as counsel to First Investors Special Bond
Fund, Inc. ("Company"), as to certain matters regarding the issuance of Shares
of the Company.  As used in this letter, the term "Shares" means the shares of
common stock of the Company, during the time that Post-Effective Amendment No.
17 to the Company's Registration Statement on Form N-1A ("PEA") is effective and
has not been superseded by another post-effective amendment.  

     As such counsel, we have examined certified or other copies, believed by us
to be genuine, of the Company's Articles of Incorporation and By-laws and such
resolutions and minutes of the meetings of Company's Board of Directors as we
have deemed relevant to our opinion, as set forth herein. Our  opinion is
limited to the laws and facts in existence on the date hereof, and it is further
limited to the laws (other than the conflict of law rules) in the State of
Maryland that in our experience are normally applicable to the issuance of
shares by corporations and to the Securities Act of 1933 ("1933 Act"), the
Investment Company Act of 1940 ("1940 Act") and the regulations of the
Securities and Exchange Commission ("SEC") thereunder.

     Based on the foregoing, we are of the opinion that the issuance of the
Shares has been duly authorized by the Company and that, when sold in accordance
with the terms contemplated by the PEA, including receipt by the Company of full
payment for the Shares and compliance with the 1933 Act and the 1940 Act, the
Shares will have been validly issued, fully paid and non-assessable.

     We hereby consent to this opinion accompanying the PEA when it is filed
with the SEC and to the reference to our 

<PAGE>

firm in the prospectus that is being filed as part of the PEA. 


                                        Very truly yours,


                                        KIRKPATRICK & LOCKHART LLP


                                        By: /s/ Robert J. Zutz
                                            --------------------------
                                             Robert J. Zutz


<PAGE>

                 Consent of Independent Certified Public Accountants


First Investors Special Bond Fund, Inc.
95 Wall Street
New York, New York  10005

     We consent to the use in Post-Effective Amendment No. 17 to the
Registration Statement on Form N-1A (File No. 2-66294) of our report dated
January 30, 1998 relating to the December 31, 1997 financial statements of First
Investors Special Bond Fund, Inc., which are included in said Registration
Statement.




                                                  /s/Tait Weller & Baker

                                                  TAIT, WELLER & BAKER


Philadelphia, Pennsylvania
April 20, 1998



<TABLE> <S> <C>

<PAGE>
<ARTICLE> 6
<CIK> 0000314480
<NAME> FIRST INVESTORS SPECIAL BOND FUND, INC.
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          DEC-31-1997
<PERIOD-START>                             JAN-01-1997
<PERIOD-END>                               DEC-31-1997
<INVESTMENTS-AT-COST>                            32742
<INVESTMENTS-AT-VALUE>                           35386
<RECEIVABLES>                                      665
<ASSETS-OTHER>                                     131
<OTHER-ITEMS-ASSETS>                                 0
<TOTAL-ASSETS>                                   36182
<PAYABLE-FOR-SECURITIES>                             0
<SENIOR-LONG-TERM-DEBT>                              0
<OTHER-ITEMS-LIABILITIES>                          100
<TOTAL-LIABILITIES>                                100
<SENIOR-EQUITY>                                      0
<PAID-IN-CAPITAL-COMMON>                         52432
<SHARES-COMMON-STOCK>                             2800
<SHARES-COMMON-PRIOR>                             2897
<ACCUMULATED-NII-CURRENT>                          946
<OVERDISTRIBUTION-NII>                               0
<ACCUMULATED-NET-GAINS>                              0
<OVERDISTRIBUTION-GAINS>                       (19190)
<ACCUM-APPREC-OR-DEPREC>                          1894
<NET-ASSETS>                                     36082
<DIVIDEND-INCOME>                                  117
<INTEREST-INCOME>                                 3251
<OTHER-INCOME>                                      32
<EXPENSES-NET>                                   (305)
<NET-INVESTMENT-INCOME>                           3095
<REALIZED-GAINS-CURRENT>                           972
<APPREC-INCREASE-CURRENT>                        (313)
<NET-CHANGE-FROM-OPS>                             3754
<EQUALIZATION>                                       0
<DISTRIBUTIONS-OF-INCOME>                       (3378)
<DISTRIBUTIONS-OF-GAINS>                             0
<DISTRIBUTIONS-OTHER>                                0
<NUMBER-OF-SHARES-SOLD>                             13
<NUMBER-OF-SHARES-REDEEMED>                        374
<SHARES-REINVESTED>                                265
<NET-CHANGE-IN-ASSETS>                           (866)
<ACCUMULATED-NII-PRIOR>                           1229
<ACCUMULATED-GAINS-PRIOR>                            0
<OVERDISTRIB-NII-PRIOR>                              0
<OVERDIST-NET-GAINS-PRIOR>                     (20163)
<GROSS-ADVISORY-FEES>                            (270)
<INTEREST-EXPENSE>                                   0
<GROSS-EXPENSE>                                  (309)
<AVERAGE-NET-ASSETS>                             35966
<PER-SHARE-NAV-BEGIN>                            12.75
<PER-SHARE-NII>                                  1.110
<PER-SHARE-GAIN-APPREC>                           .230
<PER-SHARE-DIVIDEND>                           (1.200)
<PER-SHARE-DISTRIBUTIONS>                            0
<RETURNS-OF-CAPITAL>                                 0
<PER-SHARE-NAV-END>                              12.89
<EXPENSE-RATIO>                                    .86
<AVG-DEBT-OUTSTANDING>                               0
<AVG-DEBT-PER-SHARE>                                 0
        

</TABLE>


© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission