<PAGE>
As filed with the Securities and Exchange Commission on April 19, 1996
Registration No. 2-53252
811-2564
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
Post-Effective Amendment No. 21
To
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF A UNIT INVESTMENT TRUST
REGISTERED ON FORM N-8B-2
PURSUANT TO THE INVESTMENT
COMPANY ACT OF 1940
FIRST INVESTORS PERIODIC
PAYMENT PLANS FOR INVESTMENT IN
FIRST INVESTORS HIGH YIELD FUND, INC.
(Name of Trust)
FIRST INVESTORS CORPORATION
(Name of Depositor)
95 Wall Street
New York, New York 10005
(Complete address of depositor's principal
executive offices)
Mr. Larry R. Lavoie
Secretary and General Counsel
First Investors Corporation
95 Wall Street
New York, New York 10005
(Name and complete 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 29, 1996 pursuant
to paragraph (b) of Rule 485.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
previously elected to register an indefinite number of securities under the
Securities Act of 1933. Registrant filed a Rule 24f-2 Notice for its fiscal
year ending December 31, 1995 on February 26, 1996.
<PAGE>
TABLE OF CONTENTS
TO FORM S-6
Contents of Post-Effective Amendment No. 21 to Registration Statement of First
Investors Periodic Payment Plans for Investment in First Investors High Yield
Fund, Inc.
1. The Facing Page
2. The Prospectus consisting of 34 pages
3. The Signature Page
4. Consent of Accountants
5. Financial Data Schedule
<PAGE>
FIRST INVESTORS PERIODIC PAYMENT
PLANS FOR INVESTMENT IN FIRST INVESTORS
HIGH YIELD FUND, INC.
CROSS-REFERENCE SHEET
N-8B-2
Item No. Location
- ------- --------
1-8 Organizational and General Front Cover; Concerning the
Information Sponsor, First Investors
Corporation; Concerning the
Duties of the Custodian and
the Sponsor; Registration and
Legality of Offering;
Agreements
9 Material Litigation Not Applicable
10 General Information Rights and Privileges of
Concerning the Securities of Planholders; Method of
the Trust and the Rights of Investing Payments and
Holders Distributions; Method of
Selling Shares in the Event of
Partial Liquidation or
Complete Termination; Income
Dividends and Capital Gains
Distributions; Substitution of
Other Shares as the Underlying
Investment of the Plans;
Termination of the Plans
11-12 Information Concerning the Front Cover; Underlying
Securities Underlying the Investment; Concerning the
Trust's Securities Duties of the Custodian and
the Sponsor; Agreements
13 Information Concerning Statistical Data Applicable to
Loads, Fees, Charges and First Investors Plans;
Expenses Allocation of Monthly Payments
and Deductions; Deductions
Single Payment Plans; Combined
Plans for Discount; Letter of
Intent; Agreements; Other
Deductions From Assets or
Distributions; Rights and
Privileges of Planholders;
Termination of Plans
14-24 Information Concerning the Operation of a Periodic
Operations of the Trust Payment Plan; Single Payment
Plan; Method of Investing Pay-
<PAGE>
N-8B-2
Item No. Location
- ------- --------
ments and Distributions;
Termination of Plans; Other
Deductions From Assets or
Distributions; Rights and
Privileges of Planholders;
Concerning the Duties of
the Custodian and the Sponsor;
Concerning the Sponsor, First
Investors Corporation
25-27 Organization and Operations Concerning the Sponsor, First
of Depositor Investors Corporation
28 Officials and Affiliated Concerning the Sponsor, First
Persons of Depositor Investors Corporation; General
29 Companies Owning Securities General
of Depositor
30 Controlling Persons Not Applicable
31-34 Compensation of Officers and Concerning the Sponsor, First
Directors of Depositor Investors Corporation
35-38 Distribution of Securities Agreements; Statistical Data
Applicable to First Investors
Plans
41-43 Information Concerning Concerning the Sponsor, First
Principal Underwriter Investors Corporation; General
44-45 Offering Price or Pertinent Provisions of the
Acquisition Valuation of Prospectus of First Investors
Securities of the Trust High Yield Fund, Inc. (File
No. 33-4935) incorporated
herein by reference
46 Redemption Valuation of Pertinent Provisions of the
Securities of the Trust Prospectus of First Investors
High Yield Fund, Inc. (File
No. 33-4935) incorporated
herein by reference
47 Purchase and Sale of Rights and Privileges of
Interests in Underlying Shareholders; Method of
Securities from and to Investing Payments and
Security Holders Distributions; Method of
Selling Shares in the Event of
Partial Liquidation or
Complete Termination
<PAGE>
N-8B-2
Item No. Location
- ------- --------
48-50 Information Concerning the Concerning the Duties of the
Trustee or Custodian Custodian and the Sponsor;
Custodian, Bookkeeping and
Maintenance Fees; Other
Deductions From Assets or
Distributions
51 Information Concerning Not Applicable
Insurance of Holders of
Securities
52* Policy of Registrant Substitution of Other Shares
as the Underlying Investment
of the Plans; Rights and
Privileges of Planholders
53 Regulated Investment Company Tax Status
54-58 Financial and Statistical Illustration of a Plan Under
Information First Investors Corporation
Contractual Plans for
Investment in First Investors
High Yield Fund, Inc.;
59 Financial Statements Financial Statements and
Report of Independent
Certified Public Accountants
<PAGE>
FIRST INVESTORS PERIODIC PAYMENT PLANS FOR
INVESTMENT IN FIRST INVESTORS HIGH YIELD FUND, INC.
First Investors Corporation, as Sponsor, offers the following long term
investment programs providing for investment in First Investors High Yield Fund,
Inc. (the "Fund").
PERIODIC PAYMENT PLANS-provide for regular monthly payments for 10 or 15
years. The sales charge on 10-Year Plans ranges from 6.15% on $6,000 Plans ($50
per month) to 4.40% on $120,000 Plans ($1,000 per month) of total payments and
from 6.76% to 4.61% of the net amount invested, respectively. Total deductions
range from 10.07% to 4.88% of the net amount invested, respectively. Plans in
excess of $120,000 are subject to a sales charge of 4.40% (reducing to 3.40% on
Plans of $250,000 and over, 2.40% on Plans of $500,000 and over and 1.40% on
Plans of $1,000,000 and over). Plans are also subject to maintenance and
custodian fees.
The sales charge on 15-Year Plans ranges from 6.15% on $9,000 Plans ($50
per month) to 4.40% on $180,000 Plans ($1,000 per month) of total payments and
from 6.77% to 4.61% of the net amount invested, respectively. Total deductions
range from 10.08% to 4.88% of the net amount invested, respectively. Plans in
excess of $180,000 are subject to a sales charge of 4.40% (reducing to 3.40% on
Plans of $250,000 and over, 2.40% on Plans of $500,000 and over and 1.40% on
Plans of $1,000,000 and over). Plans are also subject to maintenance and
custodian fees.
A double initial payment is required on all Periodic Payment Plans. The
Planholder's net payments, after deducting all applicable fees, are invested in
Class A shares ("shares") of the Fund at net asset value. The value of Fund
shares is subject to fluctuation in accordance with the market value of the
securities it holds for investment. Furthermore, the provisions of the Periodic
Payment Plans are such that a substantial part of the costs of the Plan is
charged the first year: in fact, 50% of the first 13 monthly payments is
deducted as a sales charge. For example, even after application of the "refund
privileges" described herein under "Refund Privileges," total charges of a
minimum Periodic Payment Plan would amount to 18% of total payments if the Plan
were carried for any period of time between forty-five days and twenty-eight
months. Moreover, if such a minimum Plan were carried for nineteen months, total
charges would amount to 37.14% of total payments under the 10-year Plan and
37.75% under the 15-year Plan; they would amount to 29.16% and 30.07%,
respectively, under the 10- and 15-year Plans, if carried for two years.
Therefore, it is obvious that a loss would be incurred in the event of early
withdrawal or termination by a Planholder or if the Planholder redeemed his or
her underlying Fund shares at a time when their redemption value is less than
their cost to the Planholder. Consideration should be given to these factors by
a prospective Planholder who should be reasonably certain of his or her ability
to continue the Plan to completion before considering this long-term investment
program.
Shares of the Fund may also be purchased outright at a sales charge not in
excess of 6.25%, without penalty for early termination or payment of the
maintenance and custodian fees and service charges applicable to the Plans
offered hereby. (See the prospectus of the Fund and "Statistical Data Applicable
to First Investors Plans" in this Prospectus.) Direct purchases of Fund shares
enable the investor to put more of his or her money to work immediately and over
the life of a Fund account than would be possible under the life of the Periodic
Payment Plan offered hereby. Prepayment of all or any part of the first 13
payments under the Periodic Payment Plan produces a smaller net investment after
deduction of applicable charges than would result from direct investment of the
same amount in shares of the Fund. Such prepayment would increase possible loss
in the event of early termination. An investor has (a) a 45-day right of
withdrawal, and (b) a right to receive during the first 28 months of the Plan
the value of his or her account and a portion of the sales charges paid prior to
his or her withdrawal. For a full discussion of these withdrawal rights, see
"Refund Privileges" in this Prospectus.
<PAGE>
This Prospectus sets forth concisely the information about the Plans that a
prospective investor should know before investing and should be kept for future
reference.
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.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT FIRST INVESTORS
HIGH YIELD FUND, INC. PROSPECTUS
The date of this Prospectus is April 29, 1996
<PAGE>
ALLOCATION OF MONTHLY PAYMENTS AND DEDUCTIONS* 10-YEAR PLANS
<TABLE>
<CAPTION>
MAINTENANCE
SALES CHARGE AND PERCENTAGE
---------------------------------------- CUSTODIAN RELATIONSHIP
From From Each FEES* OF TOTAL CHARGES
Each of Subse- % of Sales ------------- ------------------
Aggregate the First quent Total Charge to Fee Per Net To To Net
Monthly Amount of 13 Monthly Monthly Sales Aggregate Pay- Total Total Investment Aggregate Invest-
Payments Payments Payments** Payment Charge Payments ment Fee Charges in Fund Payments ment
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 50.00 $ 6,000 $ 24.75 $ .44 $ 368.83 6.15% $1.50 $180.00 $ 548.83 $ 5,451.17 9.15% 10.07%
75.00 9,000 37.00 .68 553.76 6.15 2.00 240.00 793.76 8,206.24 8.82 9.67
100.00 12,000 49.50 .88 737.66 6.15 2.00 240.00 977.66 11,022.34 8.15 8.87
125.00 15,000 62.00 1.09 922.63 6.15 2.00 240.00 1,162.63 13,837.37 7.75 8.40
150.00 18,000 74.50 1.29 1,106.53 6.15 2.00 240.00 1,346.53 16,653.47 7.48 8.09
167.00 20,040 82.95 1.44 1,232.43 6.15 2.00 240.00 1,472.43 18,567.57 7.35 7.93
175.00 21,000 87.25 1.47 1,291.54 6.15 2.00 240.00 1,531.54 19,468.46 7.29 7.87
200.00 24,000 99.50 1.71 1,476.47 6.15 2.00 240.00 1,716.47 22,283.53 7.15 7.70
225.00 27,000 112.00 .65 1,525.55 5.65 2.50 300.00 1,825.55 25,174.45 6.76 7.25
250.00 30,000 124.50 .71 1,694.47 5.65 2.50 300.00 1,994.47 28,005.53 6.65 7.12
300.00 36,000 149.50 .85 2,034.45 5.65 2.50 300.00 2,334.45 33,665.55 6.48 6.93
350.00 42,000 174.50 .98 2,373.36 5.65 2.50 300.00 2,673.36 39,326.64 6.37 6.80
400.00 48,000 199.50 1.11 2,712.27 5.65 2.50 300.00 3,012.27 44,987.73 6.28 6.70
425.00 51,000 161.50 6.12 2,754.34 5.40 2.50 300.00 3,054.34 47,945.66 5.99 6.37
500.00 60,000 190.00 7.20 3,240.40 5.40 2.50 300.00 3,540.40 56,459.60 5.90 6.27
750.00 90,000 280.00 11.40 4,859.80 5.40 2.50 300.00 5,159.80 84,840.20 5.73 6.08
1,000.00 # 0,000 325.00 9.86 5,280.02 4.40 2.50 300.00 5,580.02 114,419.98 4.65 4.88
</TABLE>
* After a period of ten years from the date of a Plan or in the event no
payment has been made for a period of one year, the Plan is subject to
annual maintenance and custodian fees of 25/100 of 1% per year of the total
agreed payments (minimum $3.00 and maximum $30.00 per year) deducted from
dividend and capital gain distributions (whether paid in cash or additional
Fund shares) or from the proceeds of the redemption of Fund shares to the
extent that dividend and capital gain distributions are insufficient.
** A double initial payment is required on all Periodic Payment Plans and
deductions from this payment are double. The next regular scheduled
payment becomes due one month from the date of the initial payment.
# Periodic Payment Plans of larger denominations may be issued subject to
deductions for sales charges of 4.40% on Plans of $120,000 and over, 3.40%
on Plans of $250,000 and over, 2.40% on Plans of $500,000 and over and
1.40% on Plans of $1,000,000 and over. Deductions will be made on the same
proportionate basis as in the $1,000 per month Plan and maintenance and
custodian fees will be $300. Information regarding the sales charges and
fees for larger denomination Plans will be made available to prospective
investors upon request.
3
<PAGE>
ALLOCATION OF MONTHLY PAYMENTS AND DEDUCTIONS* 15-YEAR PLANS
<TABLE>
<CAPTION>
SALES CHARGE MAINTENANCE
---------------------------------------- AND PERCENTAGE
From From Each CUSTODIAN RELATIONSHIP
Each of Subse- % of Sales FEES* OF TOTAL CHARGES
------------- ------------------
Aggregate the First quent Total Charge to Fee Per Net To To Net
Monthly Amount of 13 Monthly Monthly Sales Aggregate Pay- Total Total Investment Aggregate Invest-
Payments Payments Payments** Payment Charge Payments ment Fee Charges in Fund Payments ment
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 50.00 $ 9,000 $ 24.75 $ 1.39 $ 553.88 6.15% $ 1.50 $270.00 $ 823.88 $ 8,176.12 9.15% 10.08%
75.00 13,500 37.00 2.09 830.03 6.15 2.00 360.00 1,190.03 12,309.97 8.82 9.67
100.00 18,000 49.50 2.78 1,107.76 6.15 2.00 360.00 1,467.76 16,532.24 8.15 8.88
125.00 22,500 62.00 3.46 1,383.82 6.15 2.00 360.00 1,743.82 20,756.18 7.75 8.40
150.00 27,000 74.50 3.34 1,526.28 5.65 2.00 360.00 1,886.28 25,113.72 6.99 7.51
167.00 30,060 82.95 3.71 1,697.92 5.65 2.00 360.00 2,057.92 28,002.08 6.85 7.35
175.00 31,500 87.25 3.87 1,780.54 5.65 2.00 360.00 2,140.54 29,359.46 6.80 7.29
200.00 36,000 99.50 4.43 2,033.31 5.65 2.00 360.00 2,393.31 33,606.69 6.65 7.12
225.00 40,500 112.00 4.98 2,287.66 5.65 2.50 450.00 2,737.66 37,762.34 6.76 7.25
250.00 45,000 124.50 5.53 2,542.01 5.65 2.50 450.00 2,992.01 42,007.99 6.65 7.12
300.00 54,000 149.50 5.82 2,915.44 5.40 2.50 450.00 3,365.44 50,634.56 6.23 6.65
350.00 63,000 174.50 6.79 3,402.43 5.40 2.50 450.00 3,852.43 59,147.57 6.11 6.51
400.00 72,000 199.50 7.75 3,887.75 5.40 2.50 450.00 4,337.75 67,662.25 6.02 6.41
500.00 90,000 190.00 14.31 4,859.77 5.40 2.50 450.00 5,309.77 84,690.23 5.90 6.27
600.00 108,000 200.00 12.89 4,752.63 4.40 2.50 450.00 5,202.63 102,797.37 4.82 5.06
750.00 135,000 205.00 19.61 5,939.87 4.40 2.50 450.00 6,389.87 128,610.13 4.73 4.97
1,000.00 # 180,000 250.00 27.96 7,919.32 4.40 2.50 450.00 8,369.32 171,630.68 4.65 4.88
</TABLE>
* After a period of fifteen years from the date of a Plan or in the event no
payment has been made for a period of one year, the Plan is subject to
annual maintenance and custodian fees of 25/100 of 1% per year of the total
agreed payments (minimum $3.00 and maximum $30.00 per year) deducted from
dividend and capital gain distributions (whether paid in cash or additional
Fund shares) or from the proceeds of the redemption of Fund shares to the
extent that dividend and capital gain distributions are insufficient.
** A double initial payment is required on all Periodic Payment Plans and
deductions from this payment are double. The next regular scheduled
payment becomes due one month from the date of the initial payment.
# Periodic Payment Plans of larger denominations may be issued subject to
deductions for sales charges of 4.40% on Plans of $180,000 and over, 3.40%
on Plans of $250,000 and over, 2.40% on Plans of $500,000 and over and
1.40% on Plans of $1,000,000 and over. Deductions will be made on the same
proportionate basis as in the $1,000 per month Plan and maintenance and
custodian fees will be $450. Information regarding the sales charges and
fees for larger denomination Plans will be made available to prospective
investors upon request.
4
<PAGE>
ALLOCATION OF PAYMENTS AT VARIOUS STAGES ($6,000 10-YEAR $50 MONTHLY PLAN)
<TABLE>
<CAPTION>
(At the End of 10 Years) (At the End of 2 Years) (At the End of 1 Year) (At the End of 6 Months)
------------------------ ----------------------- ---------------------- ------------------------
% of Amount % of Amount % of Amount % of Amount
Amount of Payments Amount of Payments Amount of Payments Amount of Payments
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Payments . . . . . . . . . . $6,000.00 100.00% $1,250.00** 100.00% $650.00** 100.00% $350.00** 100.00%
Amount of Sales Charge . . . . . . 368.83 6.15 327.03 26.16 321.75 49.50 173.25 49.50
Maintenance and Custodian Fees*. . 180.00 3.00 37.50 3.00 19.50 3.00 10.50 3.00
Total deductions . . . . . . . . . 548.83 9.15+ 364.53 29.16 341.25 52.50 183.75 52.50
Net Amount Invested. . . . . . . . 5,451.17 90.85 885.47 70.84 308.75 47.50 166.25 47.50
</TABLE>
+ 10.07% of net amount invested
ALLOCATION OF PAYMENTS AT VARIOUS STAGES ($9,000 15-YEAR $50 MONTHLY PLAN)
<TABLE>
<CAPTION>
(At the End of 10 Years) (At the End of 2 Years) (At the End of 1 Year) (At the End of 6 Months)
------------------------ ----------------------- ---------------------- ------------------------
% of Amount % of Amount % of Amount % of Amount
Amount of Payments Amount of Payments Amount of Payments Amount of Payments
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Payments . . . . . . . . . . $9,000.00 100.00% $1,250.00** 100.00% $650.00** 100.00% $350.00** 100.00%
Amount of Sales Charge . . . . . . 553.88 6.15 338.43 27.07 321.75 49.50 173.25 49.50
Maintenance and Custodian Fees*. . 270.00 3.00 37.50 3.00 19.50 3.00 10.50 3.00
Total deductions . . . . . . . . . 823.88 9.15+ 375.93 30.07 341.25 52.50 183.75 52.50
Net Amount Invested. . . . . . . . 8,176.12 90.85 874.07 69.93 308.75 47.50 166.25 47.50
</TABLE>
+ 10.06% of net amount invested
* Reference is made to tables on Pages 2 and 3 and "Other Deductions" for
maintenance and custodian fees on Periodic Payment Plans after completion
of payments and annual charges for special administrative duties.
** Reflects equivalent of one additional monthly payment because of the
required double initial payment.
FOR COMPARISON OF COST OF FIC CONTRACTUAL PLAN VERSUS AN OPEN ACCOUNT IN THE
SAME UNDERLYING FUND SEE "STATISTICAL DATA APPLICABLE TO FIRST INVESTORS PLANS."
THE PLANS
First Investors Periodic Payment Plans for Investment in First Investors
High Yield Fund, Inc. (each, a "Plan") is a long-term investment program. The
Sponsor of the Plan is First Investors Corporation (the "Sponsor"). The
custodian is The Bank of New York (the "Custodian"). Plan payments, after the
deduction of all applicable fees, are invested at net asset value in shares of
First Investors High Yield Fund, Inc., an open-end diversified management
investment company (the "Fund"). The Fund primarily seeks a high level of
current income and secondarily seeks growth of capital (see "Underlying
Investment").
PERIODIC PAYMENT PLANS
Periodic Payment Plans provide for regular and systematic monthly
investment over a period of either ten or fifteen years. From the investor's
viewpoint, the operation of the Plan is extremely simple. Once the investor
understands the Plan and decides to adopt it, the investor need only decide how
much to pay regularly--it can be as little as $50 per month, or as much as
$1,000 per month or more, limited to 120 or 180 payments. The investor can then
decide the most convenient time to make regular payments. The investor will
also probably choose to name a beneficiary by completing a Declaration of Trust.
These questions settled, with the assistance of a First Investors registered
5
<PAGE>
representative, the investor completes the appropriate Plan application, writes
out a check to the order of The Bank of New York, Custodian, to cover the first
payment (the initial payment requires a sum representing two monthly payments),
and the First Investors registered representative will submit the application
and check to Administrative Data Management Corp. for processing. After the
approval of the application by the Sponsor, a First Investors Periodic Payment
Plan Certificate will be forwarded to the investor. Following the double initial
payment, subsequent Plan payments will be made through First Investors Money
Line or Automatic Payroll Investment, as described below.
FIRST INVESTORS MONEY LINE. This service allows you to invest through
automatic deductions from your bank checking account. You must complete and sign
the First Investors Money Line portion of the Plan application in order to
participate in this service. Any loss or expense incurred by the Sponsor or any
delinquency in Plan payments resulting from insufficient funds in the
Planholder's checking account or otherwise will be the Planholder's liability.
You may decrease the amount or discontinue this service at any time by calling
Administrative Data Management Corp. at 1-800-423-4026 or writing to
Administrative Data Management Corp., 581 Main Street, Woodbridge, NJ
07095-1198, Attention: Control Dept. To increase the amount, send a written
request to Administrative Data Management Corp. at the address noted above.
Allow up to 5 days for processing your request. Please include the Plan name and
account number whenever writing to Administrative Data Management Corp.
AUTOMATIC PAYROLL INVESTMENT. You also may arrange for automatic Plan
payments on a systematic basis through salary deductions, provided your employer
has direct deposit capabilities. You must complete and sign the Automatic
Payroll Investment portion of the Plan application in order to participate in
this service. Arrangements must also be made with your employer's Payroll
Department. You may change the amount invested or discontinue the service by
contacting your employer.
When a Planholder's payment is received, the Sponsor will determine the
authorized deductions and the number of full and fractional shares of the Fund
to be acquired and will credit the requisite shares to the Planholder's account.
To the extent that there are shares to be sold for other Planholders on the same
day, new shares purchased will be offset by shares sold. The price paid for
shares is the net asset value of shares of the Fund next determined after
receipt of such payment. See the Fund's Prospectus for information as to the
procedure for computing net asset value. Unless privileges of termination are
exercised by the Planholder or the Sponsor, each Plan shall continue in force
for a period of at least twenty years for a ten-year Periodic Payment Plan and
twenty-five years for a fifteen-year Periodic Payment Plan.
UNDERLYING INVESTMENT
First Investors High Yield Fund, Inc., an open-end diversified management
investment company, primarily seeks to earn a high level of current income and
secondarily seeks capital appreciation. The Fund seeks to achieve these
objectives by investing in lower-grade, high yielding, high risk debt securities
(commonly referred to as "junk bonds"). Investors should refer to the Fund's
Prospectus for a detailed description of the Fund's investment objectives and
policies. There is no assurance that the Fund's objectives will be achieved.
OTHER DEDUCTIONS
The Plan provides that there may be deducted from the assets of the
Planholder, fees or expenses as follows:
6
<PAGE>
After the expiration of a period of ten years (or fifteen years for a
15-Year Plan) from the date of a Plan, or prior to the expiration of such
period, if there has been a lapse of one year from the date of the Planholder's
last payment that makes a Plan one year or more delinquent, a charge for
bookkeeping and administrative services will be made in monthly, quarterly or
semiannual installments, at the rate of 25/100 of 1% per annum of the total
agreed payments, subject to a minimum annual charge of $3 and a maximum of $30.
This fee shall be deductible from dividend and capital gain distributions
(whether paid in cash or additional Fund shares) or from the proceeds of the
redemption of Fund shares to the extent that dividend and capital gain
distributions are insufficient.
In the case of an assignment, release of an assignment, transfer of
ownership, partial withdrawal or liquidation or complete withdrawal and
termination from a non-retirement plan account (if made before completion of
Plan payments), certain transfers or replacement of lost Plan certificates, and
reinvestment of partial liquidations, a specified service fee of $2.25 is
charged. In the case of a partial withdrawal or liquidation or complete
withdrawal and termination from a retirement plan account, a specified service
fee of $7.00 is charged. For a retirement plan transfer, Plan certificate
transfer or replacement, reinvestment of a partial liquidation or complete
withdrawal and termination from a retirement plan account, such fee may be paid
directly by the Planholder or deducted from the proceeds of the redemption of
Fund shares, if desired. For an assignment or release of an assignment, such fee
must be paid directly by the Planholder.
After the thirteenth payment has been made on a Periodic Payment Plan, a
charge of up to $5.00 will be deducted on an annual basis from dividend or
capital gain distributions (whether paid in cash or additional Fund shares) or
from the proceeds of the redemption of Fund shares to the extent that dividend
and capital gain distributions are insufficient. This charge is to reimburse the
Sponsor for actual expenses incurred by the Sponsor in performing certain
administrative duties, as described under "Sponsor and Underwriter." (See the
Plan's Statement of Operations for Delegated Service Fees.) Some administrative
services are performed by the Fund at no expense to shareholders.
The foregoing fees mentioned for bookkeeping and administrative services
and for specific services are paid, as are the maintenance and custodian service
fees deducted from periodic payments, to the Sponsor as reasonable compensation
for the Sponsor's performing such services. The Sponsor reserves the right to
change the fees charged to Planholders.
Neither the Custodian nor the Sponsor shall be personally liable for any
taxes levied or assessed against them or either of them with respect to the Fund
shares in the custody of the Custodian, or arising from the income therefrom or
redemption or transfer thereof. Deductions may be made from time to time to pay
tax liabilities and claims therefor, and if necessary, Fund shares may be
redeemed to provide funds for the payment of such liabilities or the creation of
reserves therefor. The term "tax liability" includes not only taxes and possible
taxes but also auditing expenses and counsel fees incurred in connection
therewith.
RIGHTS AND PRIVILEGES OF PLANHOLDERS
Each Plan issued is registered in the name of the Planholder and is in the
form of an individual agreement between First Investors Corporation, as Sponsor
of the Plan, and the Planholder. The Bank of New York is appointed Custodian
under each agreement. The Custodian performs only bare custodianship functions,
while the Sponsor has assumed bookkeeping and administrative functions
7
<PAGE>
as set forth under the heading "Sponsor and Underwriter." No amendment adversely
affecting outstanding Plans may be made without the Planholder's express
consent.
Certain optional provisions are extended to Planholders, including rights
in the following respects:
(1) DIVIDENDS AND OTHER DISTRIBUTIONS
Dividend and other distributions received by Planholders are dependent upon
the distributions made by the Fund. Dividends from the Fund's net investment
income (consisting of interest and dividends, earned discount and other income
earned on portfolio securities less expenses) are generally declared daily and
paid monthly. Unless you direct Administrative Data Management Corp. otherwise,
dividends declared by the Fund are paid in additional Fund shares at the net
asset value (without sales charge) generally determined as of the close of
business on the first business day of the following month. The Fund also
distributes substantially all of its 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, with its
regular dividend at the end of the year. Unless you direct Administrative Data
Management Corp. otherwise, these distributions are paid in additional shares of
the Fund 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. Dividends and other distributions paid in Fund shares
are added to your Plan account.
In order to be eligible to receive a dividend or other distribution, you
must own Fund shares as of the close of business on the record date of the
distribution. You may elect to receive dividends and/or other distributions in
cash by notifying Administrative Data Management Corp. by telephone or in
writing prior to the record date. If you elect this form of payment, the
payment date generally is two weeks following the record date of any such
distribution. Your election remains in effect until you revoke it. Reference
is made to the Fund's Prospectus for additional information as to the payment of
dividends and capital gain distributions by the Fund.
(2) DECLARATION OF TRUST
A Planholder may, without transferring his or her Plan, execute and file
with the Sponsor from time to time revocable Declarations of Trust in a form
acceptable to the Sponsor, declaring that the Plan and the Fund shares held
thereunder are held in trust for the benefit of the person or persons named in
such Declaration of Trust upon the terms therein stated. Declarations of Trust
are not available to UGMA or UTMA accounts.
(3) PARTIAL LIQUIDATION WITHOUT TERMINATION
After making 20 payments or the equivalent thereof on a Periodic Payment
Plan, a Planholder may at any time withdraw a portion of the Fund shares in his
or her Plan account without terminating the Plan. In addition, if six months or
more have elapsed from the date of a substantial prepayment on a Periodic
Payment Plan (at least equal to initial payments 1-13), a Planholder may at any
time redeem a portion of the Fund shares in his or her account without
terminating the Plan. The liquidation must be for at least $50 and cannot be in
excess of 80% of the value of the Planholder's account. The proceeds of the
redemption of Fund shares or the Fund share certificate will be mailed to the
Planholder or designee of the Planholder. Requests for partial liquidations must
be in writing as more fully described under "Method of Selling Shares." Where a
partial liquidation has been effected through the redemption of Fund shares, the
Planholder may reinvest in an amount
8
<PAGE>
equal to the proceeds of such redemption by sending a check payable to The Bank
of New York, Custodian, c/o First Investors Corporation, 581 Main Street,
Woodbridge, New Jersey 07095, Attention: Non-Retirement Dept. Such funds will be
applied to the purchase of Fund shares at a net asset value based on the next
price computation and held under the Planholder's account. The number of Fund
shares may be more or less than the amount redeemed due to the purchase price in
effect at the time the reinvestment is made. Where a partial liquidation has
been effected through the withdrawal of Fund shares, rather than the redemption,
such shares may at any time be replaced by redepositing the share certificate
with the Custodian c/o First Investors Corporation, 581 Main Street, Woodbridge,
NJ 07095. (There is a fee, currently $2.25, for each partial liquidation or
reinvestment.) Reinvestment of such partial liquidation will be made only upon
written request of the Planholder accompanied by the appropriate payment. The
partial liquidation and reinvestment privilege is intended to facilitate the
temporary use for emergency purposes of funds invested in a Plan. If a
Planholder realizes a gain on liquidation, such gain is taxable for Federal
income tax purposes even though all of such proceeds are reinvested.
(4) TRANSFER OR ASSIGNMENT
A Planholder may (a) assign his or her Plan and the Fund shares held
thereunder to a bank or loan institution as security for a loan; or (b) transfer
and assign his or her Plan and Fund shares to another person, in the form and
manner acceptable to the Sponsor. If assignment is made without consent of the
Sponsor it will not be recorded on the records of the Plan. (There is a fee,
currently $2.25, for each assignment or transfer.)
(5) COMPLETE WITHDRAWAL AND TERMINATION
A Planholder may, at any time, terminate his or her Plan by surrendering
the Plan Certificate and other required documents, where applicable, to
Administrative Data Management Corp., 581 Main Street, Woodbridge, New Jersey
07095, Attention: Liquidation Dept. and may request delivery of the Fund shares
accumulated, registered in his or her name, or request their redemption and
remittance to the Planholder of the proceeds of such redemption. (There is a
fee, currently $2.25, for withdrawal or liquidation prior to completion of
Periodic Payment Plans.) Requests for termination and complete liquidation or
withdrawal must be in writing. Please refer to "Method of Selling Shares" for
instructions on making a complete withdrawal or termination. Any adjustment in
sales or other charges occasioned by virtue of termination by the Planholder
through the exercise of the refund privileges (see "Refund Privileges") will be
made at the same time. The redemption price is the net asset value of Fund
shares effective after receipt of the request in "good order," as defined below,
by Administrative Data Management Corp., 581 Main Street, Woodbridge, New Jersey
07095.
(6) REPORTS, RECEIPTS AND NOTICES
The Sponsor will mail to each Periodic Payment Planholder a receipt of each
payment, including a statement of the number of shares held for his or her
account, and notices of payments due in advance of their due date. The
Planholder will also be sent audited annual reports of the Fund, distribution
notices and tax statements relating to the Plan (TIN 13-3331632), and at least
annually a current Fund Prospectus if a Plan payment has been made during the
calendar year.
(7) VOTING RIGHTS
The Planholder will be sent notice of any meeting at which his or her Fund
shares may be voted and will be sent voting instruction forms. The Sponsor will
cause the Custodian to vote any Planholder's shares in accordance with the
Planholder's instructions, or if the Planholder so requests,
9
<PAGE>
to give him or her a proxy or otherwise arrange for his or her exercise of
voting rights at any meeting. If the Planholder does not exercise any of the
above privileges, the Sponsor will cause the Custodian to vote his or her Fund
shares for or against each matter on which the Planholder is entitled to vote,
in the same proportion as indicated in the voting instructions given the
Custodian on behalf of other Planholders.
(8) PREPAYMENT
Planholders of Periodic Payment Plans may accelerate completion of a Plan
by making full or partial payments in advance of their due dates. Such
prepayments do not in any way accelerate the due dates of unpaid payments.
Unpaid payments will be considered to be due on that date on which they would
have originally been required if all prior payments (whether or not in fact made
in advance) had been made when they were respectively due. In the event the
Planholder makes a payment aggregating twelve or more monthly payments, the
deductions therefrom for maintenance and custodian fees will be reduced by 50%
of the scheduled fees. A Planholder considering advance payments should keep in
mind that direct purchases of Fund shares enable the investor to put more of his
or her money to work immediately and over the life of a Fund account than would
be possible under the life of the Plan offered hereby.
(9) REFUND PRIVILEGES
Within 60 days after the issuance of the Plan Certificate, Planholders of
Periodic Payment Plans will receive a statement of charges to be deducted from
the projected Plan payments and a notice of his or her right to withdraw from
the Plan. Planholders electing to exercise this right of withdrawal will receive
a full refund of all charges deducted from payments made plus the net asset
value of Fund shares accumulated in his or her Plan account, provided the
Planholder surrenders his or her Plan Certificate to the Sponsor, First
Investors Corporation, 581 Main Street, Woodbridge, New Jersey 07095, so that it
is received within 45 days after the mailing to the Planholder of such
withdrawal notice. Please refer to "Method of Selling Shares" for instructions
on making requests for refunds of sales charges.
If a Planholder misses any three payments (which need not be consecutive)
among the first fifteen payments due under his or her Plan or any one payment
thereafter, but prior to the 18th payment, the Planholder will receive a
separate written notice informing the Planholder of (1) the right to surrender
his or her Plan Certificate, (2) the value of his or her Plan account at the
time of the mailing of the notice, and (3) the amount to which he or she is
entitled. Moreover, the Planholder has a right to request a refund of the
portion of the sales charges which exceeds 15% of the gross payments he or she
has made plus the then net asset value of the Fund shares accumulated in his or
her Plan account, provided the Planholder surrenders his or her Plan Certificate
so that it is received by the Sponsor at the address in the preceding paragraph
within 18 months of the date the Plan Certificate was issued. In addition, a
Planholder is entitled to this refund if he or she surrenders his or her Plan
Certificate so that it is received by the Sponsor at the address in the
preceding paragraph within 28 months of the date the Plan Certificate was
issued. Planholders will be sent notices setting forth these refund privileges
not less than 30 days and not more than 60 days prior to the expiration of the
18 month and 28 month right to receive a refund.
(10) COMPLETION OF PLAN
Upon completion of all Plan payments, the Planholder may elect to terminate
the Plan or have the Fund shares accumulated under the Plan held in his or her
Plan account.
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<PAGE>
A Planholder who elects to terminate the Plan account may either receive
the proceeds from the redemption of the Fund shares held in his or her account
or transfer those shares to a Fund account. Reference is made to "Method of
Selling Shares" for instructions on how to terminate a Plan. Planholders who
elect to receive the proceeds from the redemption of Fund shares will realize a
gain or loss for Federal income tax purposes.
As soon as possible after the close of each calendar year, the Planholder
will be advised of the amount and nature of the distributions declared on his or
her behalf during such year. Planholders who elect to have their investment
remain in their Plan account may make no more payments or contributions into the
account. Dividend and capital gain distributions will continue to be paid on the
Fund shares held in the Planholder's account and annual maintenance and
custodian fees will continue to be deducted from the Planholder's account.
METHOD OF SELLING SHARES
A Planholder may, by written request filed with the Sponsor, direct the
redemption of some but not all of the Fund shares credited to his or her Plan
account or, upon surrender of the Plan Certificate, terminate the Plan and
direct the redemption of all of his or her shares. The Sponsor will cause
payment to be made by check within seven days after the written request for
liquidation or termination "in good order" is received by Administrative Data
Management Corp. Requests for liquidation or termination should be addressed to
Administrative Data Management Corp., 581 Main Street, Woodbridge, New Jersey
07095-1198, Attention: Liquidation Department. "Good order" means that the
request for liquidation or termination must include:
(1) a letter of instruction specifying the account number and the number
of Fund shares or dollar amount to be redeemed. This request must be signed by
all registered Planholder(s) in the exact name(s) in which the account is
registered;
(2) required signature guarantees (see below);
(3) in the case of termination requests only, the Plan Certificate, if one
was issued; and
(4) other supporting legal documents, as required by Administrative Data
Management Corp. In the case of estates, trusts, guardianships, custodianships,
corporations, partnerships or other organizations, additional information may be
required. Please call Administrative Data Management Corp. at 1-800-423-4026 for
further information.
If information is missing, your request is ambiguous or the value of your
account is less than the amount indicated on your request, the redemption will
not be processed. Administrative Data Management Corp. will seek additional
information and process the redemption on the day it receives such information.
If the proceeds of the redemption are more than $50,000 or if the check is
made payable to someone other than the registered Planholder(s) or mailed to an
address other than the address of record, or if the address of record has
changed within the past 60 days, a signature guarantee will be required. In
order to avoid any possible delay in processing a transaction, Planholders are
advised to submit liquidation or termination requests with signature guarantees.
If the shares being redeemed were recently purchased, payment may be delayed to
verify that the check has been honored, normally not more than 15 days.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect you,
the Plan and the Sponsor. Members of STAMP (Securities Transfer Agents
Medallion Program), MSP (New York
11
<PAGE>
Stock Exchange Medallion Signature Program) and SEMP (Stock Exchanges Medallion
Program) are eligible signature guarantors. A notary public is not an
acceptable guarantor. The guarantee must be manually signed by an authorized
signatory of the guarantor and the words "Signature Guaranteed" must appear in
direct association with such signature. Although the Sponsor reserves the right
to require signature guarantees at any other time, signature guarantees are
required whenever: (1) the amount of the redemption is $50,000 or more, (2) a
redemption check is to be made payable to someone other than the registered
Planholder, (3) a redemption check is to be mailed to an address other than the
address of record, (4) an account registration is being transferred to another
owner, (5) a Plan account, other than an individual, joint, UGMA, UTMA, IRA or
403(b) Plan account, is being exchanged or redeemed, or (6) your address of
record has changed within 60 days prior to a redemption or exchange request.
The redemption price of Fund shares will be the net asset value per share
next determined after receipt by Administrative Data Management Corp. of the
request "in good order," as noted above. To the extent that there are offsetting
new purchases on the same day for the accounts of other Planholders, redemptions
will be netted against those purchases. If, on any business day, there are more
shares offered for redemption than required for new purchases, the excess will
be presented to the Fund for redemption or repurchase at the next determined net
asset value. The right to receive cash, however, may be suspended during any
period when the Fund shall have suspended the right to redeem its shares. The
Board of Directors of the Fund may suspend the right of redemption or postpone
the date of payment during any period when (a) trading on the New York Stock
Exchange ("NYSE") is restricted as determined by the Securities and Exchange
Commission or such Exchange is closed for other than weekends and holidays,
(b) the Securities and Exchange Commission has by order permitted such
suspensions, or (c) an emergency, as defined by rules of the Commission, exists
during which time the sale of portfolio securities or valuation of securities
held by the Fund are not reasonably practicable. For additional information
regarding redemption rights and suspension thereof, refer to the Prospectus of
the Fund.
TERMINATION OF PLAN BY THE SPONSOR
Either the Sponsor or the Custodian may, but is not required to, terminate
a Plan as hereinafter provided, after:
a) the expiration of 20 years from the date of inception of a Periodic
Payment Plan providing for 120 payments over 10 years; or
b) the expiration of 25 years from the date of inception of a Periodic
Payment Plan providing for 180 payments over 15 years.
If a Planholder fails to make a Plan payment on or before the due date, he
or she will be considered in default. Should any Planholder continue in default
for a period of two years or more, the Sponsor may terminate his or her Plan as
hereinafter provided. As a matter of policy the power to terminate because of
default will usually be exercised only when the default has continued over a
comparatively long period and the dividend and capital gain distributions on the
Fund shares are insufficient to cover maintenance and custodian charges.
If the Sponsor or the Custodian shall determine to exercise its right to
terminate any Plan for the reasons noted above, the Sponsor will mail to the
Planholder at his or her address noted on its records a notice of termination.
Within 60 days of the date of such notice of termination, the Planholder must
surrender the Plan Certificate to the Sponsor and elect to receive either: (a) a
share certificate for the amount of full Fund shares and the proceeds of any
fractional Fund share
12
<PAGE>
accumulated in his or her Plan account or; (b) the proceeds from the redemption
of all Fund shares in the account. If the Planholder fails to so elect, the
Sponsor may, without further notice, either: (a) cause the issuance of a share
certificate in the Planholder's name for the amount of full Fund shares
accumulated in his or her Plan account and the redemption of any fractional Fund
share; or (b) cause the redemption of all Fund shares in the Plan account. The
Sponsor will hold the share certificate or the net proceeds from the redemption
of Fund shares for delivery or payment to the Planholder upon surrender of the
Plan Certificate. If the Planholder does not surrender his or her Plan
Certificate after an additional 60 days, the Sponsor may, without receiving a
Plan Certificate, mail to the Planholder at his or her address noted on its
records either: (a) a share certificate for the amount of full Fund shares and a
check for the fractional Fund shares; or (b) a check representing the net
proceeds of the redemption of all Fund shares in the Plan account. Reference is
made to the Fund's Prospectus for the method of redeeming share certificates.
Planholders who elect to receive the proceeds from the redemption of Fund shares
will realize a gain or loss for Federal income tax purposes.
Furthermore, a Planholder who does not make the regularly scheduled second
payment within a period of 60 days after it becomes due shall be considered in
default. In such event, the Sponsor reserves the right to terminate the Plan by
giving the Planholder written notice and refunding the entire initial payment,
less deductions, upon surrender of the Plan Certificate.
Reference is made to "Other Deductions" relative to charges made after
completion of ten or fifteen years or in cases of default. Such deductions that
cannot be satisfied from distributions available will be made from the
redemption of Fund shares held in the Planholder's account.
No interest will be payable on funds held for Planholders pending surrender
of Plan Certificates. Any assets undelivered to the Planholder shall be held by
the Custodian in custody, subject to disposition under applicable state law.
Any notice required or permitted to be given to the Planholder shall be
conclusively deemed to have been given when such notice is enclosed in an
envelope, addressed to the Planholder at the Planholder's address, as noted on
the records, and deposited in the United States Mail, postage prepaid. The date
of the mailing of such notice shall be deemed to be the date of giving such
notice.
EXCHANGES INVOLVING OTHER PLANS
You may exchange at relative net asset value of the underlying Fund shares
into or from any other periodic payment plan of the same type and denomination
for which FIC is the Sponsor without paying an additional sales charge. If a
Planholder elects to exercise this exchange privilege, he or she pays the same
sales charge on additional payments, and has the same rights and privileges,
under the new plan as under the current plan. Exchanges can only be made into
accounts registered to identical owners. If your exchange is into a new
account, it must meet the minimum investment and other requirements of the plan
into which the exchange is being made. Additionally, the plan must be available
for sale in the state where you reside. A $10.00 exchange fee is charged for
each such exchange. A check for the fee may be submitted to Administrative Data
Managment Corp. If the exchange fee is not submitted with the request, it will
be deducted from your Plan account. In addition, the $2.25 redemption fee
applicable to Plan liquidations (see "Other Deductions") is charged for each
exchange.
Before exchanging your Plan, you should read the Prospectus for the new
plan and the Prospectus for its underlying Fund investment into which the
exchange is to be made. You may obtain these Prospectuses and information with
respect to which plans qualify for the exchange
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<PAGE>
privilege free of charge by calling Shareholder Services at 1-800-423-4026.
Exchange requests received in "good order" by Administrative Data Management
Corp., 581 Main Street, Woodbridge, New Jersey 07095 before the close of
regular trading on the NYSE, generally 4:00 P.M. (New York City time), will be
processed at the net asset value of the underlying Fund shares determined as of
the close of regular trading on the NYSE on that day; exchange requests received
after that time will be processed on the following trading day.
Exchanges should be made for investment purposes only. A pattern of
frequent exchanges may be contrary to the best interests of the Fund's other
shareholders. Accordingly, the Sponsor has the right, at its sole discretion,
to limit the amount of an exchange, impose a holding period, reject any
exchange, or, upon 60 days' notice, materially modify or discontinue the
exchange privilege. The Sponsor in consultation with the Fund's investment
adviser, will consider all relevant factors in determining whether a particular
frequency of exchanges is contrary to the best interests of the Fund and its
other shareholders. Any such restriction will be made by the Sponsor on a
prospective basis only, upon notice to the Planholder not later than ten days
following such Planholder's most recent exchange.
An exchange between plans will result in a taxable gain or loss to you,
depending on whether the redemption proceeds from the underlying Fund shares are
more or less than your adjusted basis for the Plan (which normally includes the
sales charges paid under the Plan). Please refer to "Taxes" and the Fund's
Prospectus.
SUBSTITUTION OF OTHER SHARES AS
THE UNDERLYING INVESTMENT OF THE PLAN
Subject to prior approval of the Securities and Exchange Commission, the
Sponsor may, whenever the Sponsor deems it to be in the best interest of the
Planholders, substitute other shares as the underlying investment of the Plans.
Such substitution may include shares previously purchased or may affect only
shares to be purchased. Shares to be substituted must be generally comparable to
the shares previously purchasable under the Plans and as a matter of policy will
be limited to shares registered with the Securities and Exchange Commission.
Before any substitution may be made by the Sponsor it shall:
(1) Apply for and receive prior approval from the Securities and Exchange
Commission permitting such substitution under the provisions of Section 26(b) of
the Investment Company Act of 1940, as amended;
(2) Notify the Custodian of the proposed substitution;
(3) Give written notice of the proposed substitution to the Planholders,
describing the new shares and notifying them that unless they surrender their
Plan Certificates to the Sponsor for termination within 30 days, they will be
conclusively deemed to have authorized the substitution; and
(4) In the case of substitution of new shares for shares previously
purchased, furnish new shares which have an aggregate net asset value at least
equal to the aggregate value of the shares previously purchased, based on their
published or quoted bid price.
Unless the Sponsor shall receive from the Planholder, within 30 days from
the date of the Sponsor's notice, written notice that he or she desires to make
a complete withdrawal, the Sponsor is authorized to cause the purchase of new
shares and, if the old shares are to be exchanged, to exchange the old shares
for the substituted shares.
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<PAGE>
In the event of substitution the Planholder is required to be advised in
writing within 5 days after such substitution is made. Any expenses and charges
involved in such substitution, other than proper transfer taxes and charges,
will be borne by the Sponsor.
In the event that shares used as the underlying investment of the Plan may
not be purchasable for a period of 90 days, and if the Sponsor does not
substitute other shares, it is agreed that the Plan will be terminated, and the
Sponsor is authorized to complete such termination.
SPONSOR AND UNDERWRITER
First Investors Corporation (TIN 13-2608328), 95 Wall Street, New York,
N.Y., 10005, was organized under the laws of the State of New York in
February 1968. It is a member of the National Association of Securities Dealers,
Inc. First Investors Corporation is the Sponsor and the Underwriter of the Plan.
The Plan is offered for sale by registered representatives of the Underwriter.
First Investors Corporation also acts as the Sponsor and Underwriter of
Periodic and/or Single Payment Plans for the accumulation of shares of First
Investors Government Fund, Inc., First Investors Global Fund, Inc., First
Investors Fund For Income, Inc., and First Investors Insured Tax Exempt Fund,
Inc. and as underwriter for the First Investors family of mutual funds.
First Investors Consolidated Corporation owns all of the outstanding stock
of First Investors Corporation and Administrative Data Management Corp. and all
of the outstanding voting common stock of First Investors Management Company,
Inc., the investment adviser to the Fund. Mr. Glenn O. Head controls First
Investors Consolidated Corporation and therefore controls First Investors
Management Company, Inc., the investment adviser to the Fund.
The Sponsor and its administrative agent, Administrative Data Management
Corp., a subsidiary of First Investors Consolidated Corporation, the Sponsor's
parent organization, are responsible for the performance of all regular
bookkeeping and administrative services with respect to the Plans, as more fully
set forth below. In addition, the Sponsor is responsible for the performance of
certain special administrative services, specifically: causing the mailing to
Planholders of prospectuses, when applicable, annual and semiannual reports of
the Fund, and required dividend and tax notices; and causing an independent
quarterly audit of the records of the Custodian and the preparation and filing
of required tax returns. The Sponsor receives all of the maintenance and
custodian fees deducted from payments or imposed on an annual basis as set forth
on pages 2 through 4 and all of the fees for specific services as set forth
under "Other Deductions." For the year ended December 31, 1995, these fees
amounted to $102,054, all of which were paid to Administrative Data Management
Corp.
In general, and without limitation, the bookkeeping and administrative
services assumed by the Sponsor and Administrative Data Management Corp. are
comprised of the maintenance of all records relating to the Planholders and
their accumulated Fund shares, the processing of payments from Planholders, the
processing of proceeds to withdrawing or terminating Planholders, the placement
of orders with the underwriter of the Fund's shares for the purchase and
redemption of Fund shares on behalf of the Planholders, the calculation of the
number of shares to be purchased or redeemed or credited as dividend or capital
gain distributions, the causing of the mailing of all required notices and other
information to Planholders and the handling of all contact and correspondence
with and inquiries from Planholders.
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<PAGE>
First Investors Corporation paid its three highest paid officers aggregate
compensation from salaries or commissions of $1,175,119 during 1995. The
aggregate remuneration paid to all other officers during 1995 was $1,252,116.
Compensation of sales officers, sales supervisory personnel and registered
representatives totaled $24,864,423 while administrative personnel excluding
officers received $5,406,073 during 1995. The aggregate directors fees paid in
1995 totalled $20,000.
A blanket fidelity bond in an amount of $5,000,000 is carried with Gulf
Insurance Company covering the acts of Directors, Officers, Employees and Sales
Personnel of the Sponsor. An excess blanket fidelity bond in an amount of
$20,000,000 is carried with the ICI Mutual Insurance Company, covering the acts
of Directors, Officers and Employees of the Sponsor. A $30,000,000 Directors
and Officers/Errors and Omissions Liability Insurance Policy is also carried
with ICI Mutual Insurance Company.
CUSTODIAN
The Bank of New York (TIN 13-4941102), 48 Wall Street, New York, N.Y.,
10286, acts as Custodian under the Custodian Agreement dated November 12, 1987.
The Custodian is subject to supervision by the New York State Banking
Commission. The duties of the Custodian under the provisions of the Custodian
Agreement are minimal. The Custodian holds all securities, cash, checks and
other property in which the funds of the Planholders are invested or are to be
invested, all funds held for such investment, all redemption proceeds, and other
special funds of the Planholders, and all income upon, accretions to, and
proceeds of such property and funds to the extent such assets are delivered to
it. All such assets are held subject to such disbursements as the Sponsor may
direct and subject to a charge for the fees of the Custodian. The Sponsor
directs the Custodian to make disbursements in accordance with the provisions of
the Plan.
The Custodian assumes no duties or obligations not specifically imposed
upon it by the Plan. Without limiting the generality of the foregoing, the
Custodian assumes no responsibility for the choice of the investment, the
investment policies of the investment adviser to the Fund, or for any acts or
omissions on the part of the Sponsor. The Custodian specifically does not assume
the duties of investment ordinarily imposed upon a trustee, and its only
obligations are, as set forth above, to function as bare Custodian under the
Plan. The Custodian may not resign its custodianship under the Plan unless the
Plan has been terminated or unless a successor Custodian has been designated and
has accepted the custodianship.
The Custodian shall have a lien upon the Fund shares held for Planholders
and the proceeds from any redemption thereof for its fees and reimbursable
expenses to the extent that payments by the Planholder and distributions
received on such Fund shares may be insufficient to pay the same. For the fiscal
year ended December 31, 1995 there were no fees paid to the Custodian for
services rendered on behalf of the Plans.
TAXES
Under the Internal Revenue Code of 1986, as amended ("Code"), you are
deemed, for Federal income tax purposes, to be the owner of the underlying Fund
shares accumulated in your Plan account. The Fund has qualified and intends to
continue to qualify for treatment as a regulated investment company under the
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 is distributed to its shareholders.
16
<PAGE>
Dividends from the Fund's investment company taxable income are taxable to
you as ordinary income, whether paid in cash or in additional Fund shares.
Distributions of the Fund's net capital gain, when designated as such, are
taxable to you as long-term capital gain, whether paid in cash or in additional
Fund shares, regardless of the length of time you have owned the shares. If you
purchase shares shortly before the record date for a dividend or other
distribution, you will pay full price for the shares and receive some portion of
the price back as a taxable distribution. You will receive an annual statement
following the end of each calendar year describing the tax status of
distributions paid by the Fund during that year.
The Sponsor is required to withhold 31% of all dividends, capital gain
distributions and redemption proceeds payable to you (if you are an individual
or certain other non-corporate shareholder) if the Sponsor is not furnished with
your correct taxpayer identification number, and that percentage of dividends
and such distributions in certain other circumstances.
If you itemize deductions for Federal income tax purposes, you may deduct
maintenance and custodian fees deducted from payments and/or dividend and
capital gain distributions only if the requirements applicable to the
deductibility of "miscellaneous itemized deductions" are satisfied. The sales
charges paid in acquiring your Plan should be included for tax purposes in the
cost of the Plan and reinvested dividends or distributions.
The foregoing is only a summary of some of the important Federal tax
considerations generally affecting the Fund and its shareholders; see the Fund's
Prospectus and Statement of Additional Information for a further discussion.
There may be other Federal, state or local tax considerations applicable to a
particular investor. You therefore are urged to consult your own tax advisor.
OFFICERS AND DIRECTORS OF FIRST INVESTORS CORPORATION
The following sets forth the officers and directors of First Investors
Corporation as well as information as to their other affiliations:
GLENN O. HEAD
CHAIRMAN OF THE BOARD AND DIRECTOR, 95 Wall Street, New York, NY 10005.
Chairman of the Board and Director of First Investors Management Company,
Inc., First Investors Consolidated Corporation and Administrative Data
Management Corp., and an officer and/or director of other affiliated
companies of First Investors Corporation as well as the 14 investment
companies of the First Investors Group.
MARVIN HECKER
PRESIDENT, 95 Wall Street, New York, NY 10005. Prior to March 1995 First
Vice President, Executive Sales.
LAWRENCE A. FAUCI
SENIOR VICE PRESIDENT AND DIRECTOR, 95 Wall Street, New York, NY 10005.
Senior Vice President of First Investors Consolidated Corporation.
LOUIS RINALDI
SENIOR VICE PRESIDENT, 581 Main Street, Woodbridge, NJ 07095. Senior Vice
President of Administrative Data Management Corp.
17
<PAGE>
KATHRYN S. HEAD
VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND DIRECTOR, 581 Main Street,
Woodbridge, NJ 07095. President of First Investors Consolidated
Corporation, First Investors Management Company, Inc. and Administrative
Data Management Corp., President and Director of First Financial Savings
Bank, S.L.A., and Administrative Data Management Corp. and an officer
and/or director of other affiliated companies of First Investors
Corporation as well as the investment companies of the First Investors
Group.
JOHN T. SULLIVAN
DIRECTOR, 95 Wall Street, New York, NY 10005. Director of First Investors
Management Company, Inc., First Investors Consolidated Corporation and
Administrative Data Management Corp. and an officer and/or director of
certain affiliated companies of First Investors Corporation as well as the
investment companies of the First Investors Group.
ROGER L. GRAYSON
DIRECTOR, 95 Wall Street, New York, NY 10005. President and Director,
First Investors Resources. A commodities portfolio manager and a director
of the investment companies of the First Investors Group.
JEREMY J. LYONS
DIRECTOR, 56 Weston Avenue, Chatham, NJ 07928. Publisher, Springer-Verlag
Inc. (publishing), New York, NY. Prior to September 1993, with W.H.
Freeman & Co. (publishing), New York, NY.
MARY JANE KRUZAN
DIRECTOR, 15 Norwood Avenue, Summit, NJ 07901. Corresponding Secretary of
charitable organization.
ANNE CONDON
VICE PRESIDENT, 581 Main Street, Woodbridge, NJ 07095. Senior Vice
President of Administrative Data Management Corp.
FREDERICK MILLER
VICE PRESIDENT, 581 Main Street, Woodbridge, NJ 07095. Senior Vice
President of Administrative Data Management Corp.
MATTHEW SMITH
VICE PRESIDENT, 581 Main Street, Woodbridge, NJ 07095.
LARRY R. LAVOIE
SECRETARY AND GENERAL COUNSEL, 95 Wall Street, New York, NY 10005. Officer
of certain affiliated companies of First Investors Corporation. Prior to
March 1993, a partner in the law firm of Kirkpatrick & Lockhart LLP.
JOSEPH I. BENEDEK
TREASURER, 581 Main Street, Woodbridge, NJ 07095. Officer of other
affiliated companies of First Investors Corporation as well as the
investment companies of the First Investors Group.
ROBERT J. MURPHY
COMPTROLLER, 581 Main Street, Woodbridge, NJ 07095. Officer of other
affiliated companies of First Investors Corporation.
18
<PAGE>
HOWARD M. FACTOR
VICE PRESIDENT, 95 Wall Street, New York, NY. Prior to June 1994, Vice
President, Oppenheimer Capital.
OTHER OFFICERS
Concetta Durso, Assistant Vice President and Assistant Secretary
Gary Abbott, Assistant Vice President
Philip Adriani, Jr., Assistant Vice President
Randy Pagan, Assistant Vice President
Mark Segal, Assistant Vice President
Iris Goldberg, Assistant Vice President
Elizabeth Reilly, Assistant Vice President
Carol Lerner Brown, Assistant Secretary
Frank Williams, Assistant Secretary
SALES OFFICERS
ALVIN BLUMENFELD, Senior Vice President. . . . . . .Scarsdale Division Executive
JOHN BUCSEK, Senior Vice President . . . . . . . . . . . . Grand Central Complex
CONRAD CHARAK, Senior Vice President . . . . . . . . . . . . .Penn Plaza Complex
BRUCE COBEY, Senior Vice President . . . . . . . . .Scarsdale Division Executive
MYRON FELTHEIMER, Senior Vice President. . . . . . . . . . . .Penn Plaza Complex
GEORGE KECHEJIAN, Senior Vice President. . . . . . .Scarsdale Division Executive
HOWARD FROMAN, Senior Vice President . . . . . . . .Scarsdale Division Executive
John Murphy, Senior Vice President . . . . . . . . . . . . . Springfield Complex
Stuart Rudnick, Senior Vice President. . . . . . . . . . . . . Scarsdale Complex
Jay Stainsby, Senior Vice President. . . . . . . . . . . . . . . Buffalo Complex
Bruce Katz, Regional Vice President. . . . . . . . . . . . . . . . Miami Complex
Andrew Levenson, Regional Vice President . . . . . . . . . . . . .Boston Complex
Jim Morton, Regional Vice President. . . . . . . . . . . . . . . Chicago Complex
Paul Prete, Regional Vice President. . . . . . . . . . . . . . New Haven Complex
Ronald Rovelli, Regional Vice President. . . . . . . . . . . . . Norfolk Complex
Sal Talamo, Regional Vice President. . . . . . . . . . . . .Indianapolis Complex
Thomas Barden, Regional Vice President . . . . . . . . . . . . .Executive Office
John Cupo, Vice President. . . . . . . . . . . . . .Scarsdale Division Executive
Richard Nadeau, Vice President . . . . . . . . . . . . . . . . .Executive Office
SALES OFFICE STATE
Sam Agust, Vice President. . . . . . . . . . . . . . . . . . . Lexington NY
Paul Caccomo, Vice President . . . . . . . . . . . . . . . . . . Detroit MI
Avra L. Cohn, Vice President . . . . . . . . . . . . . . . . . . .Skokie IL
Denis Collins, Vice President. . . . . . . . . . . . . . . . New Orleans LA
Richard Di Paolo, Vice President . . . . . . . . . . . . . . . .Columbus OH
Steve Domenitz, Vice President . . . . . . . . . . . . . . .Philadelphia PA
Ben N. Gardner, Vice President . . . . . . . . . . . . . . . Wall Street NY
John Golden, Vice President. . . . . . . . . . . . . . . . . Garden City NY
Gus Graff, Vice President. . . . . . . . . . . . . . . . . . .Huntington NY
James Hoysick, Vice President. . . . . . . . . . . . . . . . . . .Denver CO
Brian Kennedy, Vice President. . . . . . . . . . . . . . . . . Cleveland OH
Mary McConnell, Vice President . . . . . . . . . . . . . . . .Tudor City NY
Loren P. Morse, Vice President . . . . . . . . . . . . . . . .Binghamton NY
Fred Nero, Vice President. . . . . . . . . . . . . . . . . . . . .Albany NY
19
<PAGE>
James Reilly, Vice President . . . . . . . . . . . . . . . .Jersey Shore NJ
Richard C. Risley, Vice President. . . . . . . . . . . . . . . .Hartford CT
Richard Rustic, Vice President . . . . . . . . . . . . . . . . .Hartford CT
Malvin S. Scherr, Vice President . . . . . . . . . . . . . . Los Angeles CA
Stephen Sheron, Vice President . . . . . . . . . . . . . . . . Scarsdale NY
Richard Starace, Vice President. . . . . . . . . . . . . . . . . . Bronx NY
Norman Wigutow, Vice President . . . . . . . . . . . . . . . .Washington DC
Frank Williams, Vice President . . . . . . . . . . . . . . . Wall Street NY
Max Zwiebel, Vice President. . . . . . . . . . . . . . . . . .Penn Plaza NY
Frank Cimino, Senior Resident Vice President . . . . . . .Central Jersey NJ
Philip J. Franco, Senior Resident Vice President . . . . .Central Jersey NJ
Albert Gallo, Senior Resident Vice President . . . . . . . . .Penn Plaza NY
Peter Kulas, Senior Resident Vice President. . . . . . . .Central Jersey NJ
Richard Paul, Senior Resident Vice President . . . . . . .Central Jersey NJ
Edmund Reichard, Senior Resident Vice President. . . . . . . Wall Street NY
Buddy Schiff, Senior Resident Vice President . . . . . . . . Garden City NY
Jack Tuck, Senior Resident Vice President. . . . . . . . . . .Lauderhill FL
Garrett Cutler, Resident Vice President. . . . . . . . . . Grand Central NY
Sunny Ensley, Resident Vice President. . . . . . . . . . . . .Penn Plaza NY
Milton Fried, Resident Vice President. . . . . . . . . . . . . Lexington NY
Christine D. Froman, Resident Vice President . . . . . . . . . Scarsdale NY
Sal Gallo, Resident Vice President . . . . . . . . . . . . . .Penn Plaza NY
Peter Hesbacher, Resident Vice President . . . . . . . . . .Jersey Shore NJ
Lou Lombardi, Resident Vice President. . . . . . . . . . . Grand Central NY
Walter Markowitz, Resident Vice President. . . . . . . . . Grand Central NY
Hy Morgenstein, Resident Vice President. . . . . . . . . . . . Lexington NY
Alvin Person, Resident Vice President. . . . . . . . . . . . .Penn Plaza NY
Henia Reiser, Resident Vice President. . . . . . . . . . . . .Penn Plaza NY
Frank Sautner, Resident Vice President . . . . . . . . . .Central Jersey NJ
Bernard Shultz, Resident Vice President. . . . . . . . . . . .Penn Plaza NY
Harold Silvey, Resident Vice President . . . . . . . . . . Grand Central NY
Sanford Zipser, Resident Vice President. . . . . . . . . . . .Huntington NY
Dennis Burd, Associate Vice President. . . . . . . . . . . . .Pittsburgh PA
Jack Cline, Associate Vice President . . . . . . . . . . . . .Fort Worth TX
Ted Davis, Associate Vice President. . . . . . . . . . . . . . . .Albany NY
Michael Fioroni, Associate Vice President. . . . . . . . . . Springfield MA
Gregory Gelineau, Associate Vice President . . . . . . .Narragansett Bay RI
John Gentry, Associate Vice President. . . . . . . . . .Nebraska Central NE
Dino Giovannone, Associate Vice President. . . . . . . . . . . .Wheeling WV
Robert Graef, Associate Vice President . . . . . . . . . . . . New Haven CT
Ray Imbro, Associate Vice President . . . . . . . . . . . . . City Line PA
Alan Kasser, Associate Vice President. . . . . . . . . . . . . . Houston TX
Christopher Kinsky, Associate Vice President . . . . . . . . Denver Lodo CO
Joy Kourkounis, Associate Vice President . . . . . . . . . . . . Buffalo NY
Stephen E. Krise, Associate Vice President . . . . . . . . . . Charlotte NC
Christopher Long, Associate Vice President . . . . . . . . . . New Haven CT
John Timothy McCue, Associate Vice President . . . . . . . . Wall Street NY
Jim Messecar, Associate Vice President . . . . . . . . . . .Jacksonville FL
Luciano Miceli, Associate Vice President . . . . . . . . . . . . Buffalo NY
Tom Morin, Associate Vice President. . . . . . . . . . . . . . .Richmond VA
Don Skelly, Associate Vice President . . . . . . . . . . . .Jacksonville FL
Timothy Smith, Associate Vice President. . . . . . . . . . . . .Newburgh NY
William Stead, Associate Vice President. . . . . . . . . . . . . Phoenix AZ
Howard Washburn, Associate Vice President. . . . . . . . . . . . Seattle WA
Terry Wasserman, Associate Vice President. . . . . . . . . . Center City PA
20
<PAGE>
Rupi Arora, Assistant Vice President . . . . . . . . . . . . .Tudor City NY
Janice Barlow, Assistant Vice President. . . . . . . . . . . . . . Tampa FL
Sandro Barone, Assistant Vice President. . . . . . . . . . . Wall Street NY
Arnie Bergman, Assistant Vice President. . . . . . . . . . . . . Seattle WA
Nicholas Bollas, Assistant Vice President. . . . . . . . . . . . .Boston MA
Robert Bugdal, Assistant Vice President. . . . . . . . . .Central Jersey NJ
Kelle Cline, Assistant Vice President. . . . . . . . . . . . .Fort Worth TX
Steve Cooper, Assistant Vice President . . . . . . . . . . . . . .Tucson AZ
Paul Corapi, Assistant Vice President. . . . . . . . . . . .Jersey Shore NJ
Ted Davis, Assistant Vice President. . . . . . . . . . . . . . . .Albany NY
Jay Epstein, Assistant Vice President. . . . . . . . . . . . . . Buffalo NY
Robert Flood, Assistant Vice President . . . . . . . . . . . . . . Tampa FL
Judith Fryer, Assistant Vice President . . . . . . . . . . . . Lexington NY
Johnny Fu, Assistant Vice President. . . . . . . . . . . . . Wall Street NY
Jack Gardner, Assistant Vice President . . . . . . . . . . . Wall Street NY
Henry Golinski, Assistant Vice President . . . . . . . . . Grand Central NY
Herman Groen, Assistant Vice President . . . . . . . . . . . .Penn Plaza NY
William Henderson, Assistant Vice President. . . . . . . . . . . . Astro TX
Ronald W. Hoffer, Assistant Vice President . . . . . . . . .Indianapolis IN
Fred Johnson, Assistant Vice President . . . . . . . . . . . . . Norfolk VA
Kevin Keating, Assistant Vice President. . . . . . . . . . . . .Wheeling WV
Greg Knupp, Assistant Vice President . . . . . . . . . . . . . .Syracuse NY
Robert Kunin, Assistant Vice President . . . . . . . . . . .North Jersey NJ
Vincent Martucci, Assistant Vice President . . . . . . . . .North Jersey NJ
Robert McGeorge, Assistant Vice President. . . . . . . . . . . Keeneland KY
Joyce Messecar, Assistant Vice President . . . . . . . . . .Jacksonville FL
William Newman, Assistant Vice President . . . . . . . . . . . New Haven CT
Anthony Philbin, Assistant Vice President. . . . . . . . . . .Penn Plaza NY
George Rescigno, Assistant Vice President. . . . . . . . . . . . . Miami FL
David Roy, Assistant Vice President. . . . . . . . . . . . .Boston South MA
Harvey Sanders, Assistant Vice President . . . . . . . . . . Wall Street NY
Timothy Scrodin, Assistant Vice President. . . . . . . . . . . . .Albany NY
Peter Shalvoy, Assistant Vice President. . . . . . . . . . Grand Central NY
Robert Stutzman, Assistant Vice President. . . . . . . .Nebraska Central NE
Albert Troisi, Assistant Vice President. . . . . . . . . . . . . .Elmira NY
Anthony Trozzi, Assistant Vice President . . . . . . . . . . .Penn Plaza NY
Camille Vaccaro, Assistant Vice President. . . . . . . . . .Philadelphia PA
Anthony Valente, Assistant Vice President. . . . . . . . . . . Scarsdale NY
Landon Vath, Assistant Vice President. . . . . . . . . . . . . .St. Paul MN
Michael Weiss, Assistant Vice President. . . . . . . . . . . . New Haven CT
Dan White, Assistant Vice President. . . . . . . . . . . . . .Boundbrook NJ
Mary Wong, Assistant Vice President. . . . . . . . . . .Nebraska Central NE
21
<PAGE>
STATISTICAL DATA APPLICABLE TO
FIRST INVESTORS PLANS
CONTRACTUAL PLAN VS. OPEN ACCOUNT
COST COMPARISON ($50 PER MONTH--10 YEAR PLAN)
<TABLE>
<CAPTION>
THE UNDERLYING FUND
FIRST INVESTORS PLAN UNDER AN OPEN ACCOUNT
- ------------------------------------------------------------------------------------- -------------------------------
Maintenance % Net % Sales % Net
and % Total Investment Total Charges Investment
Total Sales Custodian Total Sales to Total Sales to Total to Total
Payments Charge Fees Charges Charge Payments Charges Payments Payments
-------- ------ ----------- ------- ------- ---------- ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6 Months . . . . . $ 350.00 $ 173.25 $ 10.50 $183.75 49.50% 47.50% $ 21.53 6.25% 93.75%
1 Year . . . . . . 650.00 321.75 19.50 341.25 49.50 47.50 39.98 6.25 93.75
2 Years. . . . . . 1,250.00 327.03 37.50 364.53 26.16 70.84 76.88 6.25 93.75
10 Years . . . . . 6,000.00 368.83 180.00 548.83 6.15 90.85 369.00 6.25 93.75
</TABLE>
22
<PAGE>
$6,000 TEN-YEAR PAYMENT PLAN
ILLUSTRATION OF A PLAN UNDER FIRST INVESTORS CORPORATION CONTRACTUAL
PLANS FOR INVESTMENT IN FIRST INVESTORS HIGH YIELD FUND, INC.
This illustration is in terms of an assumed investment of $50 per month for
the period August 1986 (commencement of operations) to December 31, 1995 with
dividend and capital gain distributions paid in additional Fund shares. The Plan
provides for ten years of investing and an additional ten years during which
dividends from investment income and distributions from capital gains on
accumulated Fund shares are paid in shares.
The period covered was one of fluctuating securities prices. The results
shown should not be considered as a representation of the dividend income or
capital gain (or loss) which may be realized from an investment made in the Fund
today. A program of the type illustrated does not assure a profit, or protect
against depreciation in declining markets.
The table below was computed at the maximum sales charge of 8.75%. As of
this date of this Prospectus, the maximum sales charge has been reduced to
6.25%. If the current maximum sales charge had been in place, Deductions would
have been lower and Total Value of Shares would have been higher.
<TABLE>
<CAPTION>
DEDUCTIONS*
----------------- BALANCE Annual
MONTHLY PAYMENTS Annual Maintenance INVESTED Capital No. of Net
-------------------- Dividend Total and AFTER DECUCTIONS Gain Distri- Shares Asset Total
Year Income Re- Cumulative Sales Custodian -------------------- bution Re- Accumu- Value Value of
Ended Annually Cumulative invested Cost (a) Charge Fees Annually Cumulative invested lated(b) Reinvest Shares
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1986 $300.00 $ 300.00 $ 3.15 $ 303.15 $148.50 $ 6.00 $148.65 $ 148.65 $ .00 9.982 $14.80 $ 147.73
1987 600.00 900.00 39.24 942.39 177.15 12.00 450.09 598.74 .26 41.929 12.99 544.66
1988 600.00 1,500.00 109.66 1,652.05 9.36 12.00 688.30 1,287.04 .00 93.559 13.02 1,218.14
1989 600.00 2,100.00 194.79 2,446.84 9.36 12.00 773.43 2,060.47 .00 314.251(c) 5.26(c) 1,652.96(c)
1990 600.00 2,700.00 235.62 3,282.46 9.36 12.00 814.26 2,874.73 .00 491.824(c) 3.82(c) 1,878.77(c)
1991 600.00 3,300.00 300.15 4,182.61 9.36 12.00 878.79 3,753.52 .00 700.491(c) 4.56(c) 3,194.24(c)
1992 600.00 3,900.00 313.10 5,095.71 9.36 12.00 891.74 4,645.26 .00 886.281(c) 4.88(c) 4,325.05(c)
1993 600.00 4,500.00 426.54 6,122.25 9.36 12.00 1,005.18 5,650.44 .00 1,086.608(c) 5.10(c) 5,541.70(c)
1994 600.00 5,100.00 517.58 7,239.83 9.36 12.00 1,096.22 6,746.66 .00 1,312.610(c) 4.64(c) 6,090.51(c)
1995 600.00 5,700.00 653.36 8,493.19 9.36 12.00 1,232.00 7,978.66 .00 1,564.745(c) 5.00(c) 7,823.73(c)
--------- -----
$2,793.19 $0.26
--------- -----
--------- -----
</TABLE>
* Under the terms of this Plan, out of the initial double payment of $100,
$49.50 is deducted as a sales charge, with $24.75 being deducted as a sales
charge from each of the next 11 payments. Additional deductions include $2.00
from the initial payment and $1.00 from each of the next 11 payments for
maintenance and custodian fees. Total deductions from the first 13 payments
equal $334.75, or 52% of the total of the first 13 monthly payments. If all of
the first 10 years' payments are made, total sales charges and other deductions
amount to 10.75% of the total agreed payments.
(a) Reflects the cumulative total of monthly payments plus the cumulative
amount of dividends paid in shares.
(b) Shares purchased include 996.823 from net payments invested, 567.886 from
net dividend income and .036 from capital gain distributions.
(c) Reflects a 2-for-1 stock split on May 31, 1989.
22
<PAGE>
TAIT, WELLER & BAKER
CERTIFIED PUBLIC ACCOUNTANTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
BOARD OF DIRECTORS
FIRST INVESTORS CORPORATION
AND THE PLANHOLDERS OF
FIRST INVESTORS PERIODIC PAYMENT PLANS
FOR INVESTMENT IN
FIRST INVESTORS HIGH YIELD FUND, INC.
NEW YORK, NEW YORK
We have audited the accompanying statement of assets and liabilities of First
Investors Periodic Payment Plans for Investment in First Investors High Yield
Fund, Inc. as of December 31, 1995, the related statement of operations for the
year then ended and the statement of changes in net assets for each of the two
years in the period then ended. These financial statements are the
responsibility of the plan sponsor, First Investors Corporation. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of investments owned and units outstanding as of December
31, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by the
plan sponsor, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of First Investors Periodic
Payment Plans for Investment in First Investors High Yield Fund, Inc. at
December 31, 1995, and the results of its operations for the year then ended and
the changes in its net assets for each of the two years in the period then
ended, in conformity with generally accepted accounting principles.
/S/ Tait, Weller & Baker
PHILADELPHIA, PENNSYLVANIA
FEBRUARY 22, 1996
<PAGE>
FIRST INVESTORS PERIODIC PAYMENT PLANS
FOR INVESTMENT IN
FIRST INVESTORS HIGH YIELD FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1995
- -----------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at value (NOTE 1)
First Investors High Yield Fund, Inc.
(Cost $18,776,683) (NOTE 3) $17,614,932
Dividends receivable 8,068
Cash 4,547
Other receivables 1,997
-----------
TOTAL ASSETS 17,629,544
LIABILITIES
Custodian fee payable $6,453
Dividends payable in cash 1,615
Payable for First Investors High Yield Fund, Inc.
shares purchased 2,788
Federal income tax withheld on liquidations 3,756
------
TOTAL LIABILITIES 14,612
-----------
NET ASSETS (Equivalent to $5.00 per unit based on
3,522,172 units outstanding) $17,614,932
-----------
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS
<PAGE>
FIRST INVESTORS PERIODIC PAYMENT PLANS
FOR INVESTMENT IN
FIRST INVESTORS HIGH YIELD FUND, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
- -----------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
DISTRIBUTIONS RECEIVED FROM INVESTMENTS
From: Net investment income $1,608,522
EXPENSES
Custodian fees $ 82,524
Delegated service fees 16,851
-----------
TOTAL EXPENSES 99,375
----------
INVESTMENT INCOME - NET 1,509,147
----------
REALIZED AND UNREALIZED GAIN (LOSS)
COMPLETE AND PARTIAL LIQUIDATIONS
Proceeds received,
net of custodian fees of $1,774 2,835,516
Cost of units sold 3,104,330
-----------
NET REALIZED LOSS (268,814)
UNREALIZED APPRECIATION (DEPRECIATION)
Beginning of year (2,716,001)
End of year (1,161,751)
-----------
NET APPRECIATION FOR THE YEAR 1,554,250
----------
NET REALIZED AND UNREALIZED GAIN 1,285,436
----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $2,794,583
----------
----------
</TABLE>
- --------------------------------------------------------------------------------
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS
<PAGE>
FIRST INVESTORS PERIODIC PAYMENT PLANS
FOR INVESTMENT IN
FIRST INVESTORS HIGH YIELD FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1995 AND 1994
- -----------------------------------------------------------------------------------------
<S> <C> <C>
1995 1994
INCREASE (DECREASE) IN NET ASSETS FROM
Investment income - net $ 1,509,147 $ 1,444,442
Realized loss on units sold (268,814) (332,161)
Unrealized appreciation (depreciation) 1,554,250 (1,300,381)
------------ ------------
2,794,583 (188,100)
Distributions from investment income - net (1,509,147) (1,444,442)
Capital transactions - net (NOTE 2) (310,855) (428,371)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS 974,581 (2,060,913)
NET ASSETS
Beginning of year 16,640,351 18,701,264
------------ ------------
END OF YEAR $17,614,932 $16,640,351
------------ ------------
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS
<PAGE>
FIRST INVESTORS PERIODIC PAYMENT PLANS
FOR INVESTMENT IN
FIRST INVESTORS HIGH YIELD FUND, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
The Plan is a unit investment trust registered under the Investment
Company Act of 1940. The following significant accounting policies, which
are in conformity with generally accepted accounting principles for unit
investment trusts, are consistently used in the preparation of its
financial statements.
SECURITY VALUATION
Underlying investments of the Plan are valued at the net asset value of
each investment on the last day of the period.
TRANSACTION DATES
Unit and portfolio transactions are recorded on the trade date.
Distributions of investment income and realized gains are recorded on the
ex-dividend date.
INCOME TAXES
It is the Plan's policy to comply with the requirements of the Internal
Revenue Code to distribute all of its taxable income. Therefore, no
provision for federal income tax is required.
UNDERLYING INVESTMENT
In November 1990, sales of shares of First Investors High Yield Fund, Inc.
were voluntarily suspended pending the resolution of certain legal
actions. In order to enable Planholders to continue to make Plan
payments, the Sponsor obtained a Securities and Exchange Commission order
approving a temporary substitution of shares of First Investors Government
Fund, Inc. as the underlying investment for continuing Plan payments.
Beginning in February 1991, the Plan, which had held only the original
First Investors High Yield Fund, Inc. shares, began purchasing shares of
First Investors Government Fund, Inc. and proportionally redeeming shares
in both Funds to satisfy redemptions.
On December 20, 1993, sales of shares of First Investors High Yield Fund,
Inc. were resumed as a result of settlements of legal actions. Since
December 20, 1993, all monthly payments are being invested in shares of
First Investors High Yield Fund, Inc. and all redemption proceeds were
obtained from redemptions of shares of First Investors Government Fund,
Inc. Eventually, as the Plan continues, all shares of First Investors
Government Fund, Inc. held in the Plan will be eliminated through
redemptions.
- --------------------------------------------------------------------------------
<PAGE>
FIRST INVESTORS PERIODIC PAYMENT PLANS
FOR INVESTMENT IN
FIRST INVESTORS HIGH YIELD FUND, INC.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
- --------------------------------------------------------------------------------
(2) CAPITAL TRANSACTIONS
At December 31, 1995 and 1994, the Plan held 3,522,172 and 3,584,437 units,
respectively. Unit transactions were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1995 1994
------------------------- -------------------------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
Planholders payments $1,111,591 $1,314,434
---------- ----------
Less
Sales charges 48,380 56,968
Custodian fees 17,756 17,743
Insurance premiums * (16) 19
---------- ----------
66,120 74,730
---------- ----------
Balance invested in units 1,045,471 214,661 1,239,704 254,057
Units acquired on
reinvestment of net
investment income 1,479,190 302,574 1,415,551 293,176
Redemptions and cancellations (2,835,516) (579,500) (3,083,626) (633,031)
---------- --------- ---------- ---------
NET DECREASE $(310,855) (62,265) $(428,371) (85,798)
---------- --------- ---------- ---------
---------- --------- ---------- ---------
</TABLE>
* INCLUDES EXCESS INSURANCE PREMIUMS RETURNED UPON PLAN COMPLETIONS
- --------------------------------------------------------------------------------
<PAGE>
FIRST INVESTORS PERIODIC PAYMENT PLANS
FOR INVESTMENT IN
FIRST INVESTORS HIGH YIELD FUND, INC.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
- --------------------------------------------------------------------------------
(3) UNITHOLDERS' COST OF UNITS
The investment in units is carried at identified cost, which represents the
amount available for investment (including reinvested distributions of net
investment income and realized gains) in such units after deduction of sales
charges, custodian fees, and insurance premiums, if applicable.
<TABLE>
<CAPTION>
The totals for the units outstanding at December 31, 1995, are as follows:
<S> <C>
TOTAL AGREED PAYMENTS $70,942,200
-----------
-----------
Total payments made by Unitholders $15,398,082
Reinvested distributions from
Net investment income 6,968,036
Realized gains 638,933
-----------
TOTAL 23,005,051
-----------
Deductions
Fees and service charges 2,860,743
Insurance premiums 5,021
-----------
TOTAL DEDUCTIONS 2,865,764
-----------
Net investment 20,139,287
Less cost of partial withdrawals 1,642,491
-----------
NET COST OF UNITS 18,496,796
RETURN OF CAPITAL DISTRIBUTIONS REINVESTED 279,887
UNREALIZED DEPRECIATION (1,161,751)
-----------
NET AMOUNT APPLICABLE TO UNITHOLDERS $17,614,932
-----------
-----------
</TABLE>
(4) TRANSACTIONS WITH AFFILIATES
First Investors Corporation, the Plan Sponsor, receives all sponsor fees
from Plan payments and an annual delegated service fee from Plan dividends.
Administrative Data Management Corp., the Plan Transfer Agent, receives the
custodian fees from Plan payments, dividends and liquidations.
First Investors Life Insurance Company, Inc. serves as insurer for Plans
issued with group reducing term insurance.
- --------------------------------------------------------------------------------
<PAGE>
FIRST INVESTORS PERIODIC PAYMENT PLANS
FOR INVESTMENT IN
FIRST INVESTORS HIGH YIELD FUND, INC.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
- --------------------------------------------------------------------------------
(5) PENDING LITIGATION
First Investors High Yield Fund, Inc. is a defendant in a number of cases
involving investors who invested in the First Investors High Yield Fund,
Inc. and First Investors Fund For Income, Inc. (collectively, the "FUNDS").
First Investors Fund For Income, Inc. and First Investors Corporation
("FIC") are also defendants in these cases. The suits primarily allege
that FIC sales representatives had made misrepresentations concerning the
risks of investing in the Funds. FIC has made settlements in connection
with several of these cases. In connection with these settlements, FIC's
parent company, First Investors Consolidated Corporation ("FICC"), assumed
the liability. Additionally, FICC has agreed to assume the liability, if
any, in the remaining suits.
- --------------------------------------------------------------------------------
<PAGE>
THE FINANCIAL STATEMENTS SHOWN BELOW ARE THE SPONSOR'S AND NOT THOSE OF FIRST
INVESTORS SINGLE PAYMENT PLANS AND PERIODIC PAYMENT PLANS. THEY ARE INCLUDED IN
THE PROSPECTUS FOR THE PURPOSE OF INFORMING INVESTORS AS TO THE FINANCIAL
RESPONSIBILITY OF THE SPONSOR AND ITS ABILITY TO CARRY OUT ITS CONTRACTUAL
OBLIGATIONS.
FIRST INVESTORS CORPORATION
BALANCE SHEET
DECEMBER 31, 1995
ASSETS
<TABLE>
<CAPTION>
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents. . . . . . . . . . . . . . . . . $11,491,318
Marketable securities. . . . . . . . . . . . . . . . . . . 279,117
Receivables from customers and others. . . . . . . . . . . 2,197,887
Salesmen advances--net, prepaid expenses and other
amounts receivable . . . . . . . . . . . . . . . . . . . 2,903,011
Receivable from affiliated companies . . . . . . . . . . . 64,994
-----------
Total current assets . . . . . . . . . . . . . . . . . . 16,936,327
FIXED ASSETS
Leasehold improvements and equipment (less accumulated
depreciation and amortization of $1,377,000) . . . . . . 397,948
OTHER ASSETS
Cash and cash equivalents segregated under
federal regulations (Note 2) . . . . . . . . . . . . . . $1,292,359
Deferred sales commissions . . . . . . . . . . . . . . . . 754,386
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . 75,743
----------
Total other assets . . . . . . . . . . . . . . . . . . . 2,122,488
-----------
Total assets . . . . . . . . . . . . . . . . . . . . . . $19,456,763
-----------
-----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Payable for securities purchased . . . . . . . . . . . . . $ 5,008,771
Payable to dealers and customers . . . . . . . . . . . . . 326,337
Accrued commissions and supplier accounts payable. . . . . 908,752
Other liabilities and accrued expenses . . . . . . . . . . 6,502,990
-----------
Total current liabilities. . . . . . . . . . . . . . . . 12,746,850
Deferred income taxes. . . . . . . . . . . . . . . . . . . 215,000
CONTINGENCIES (Note 6) . . . . . . . . . . . . . . . . . . . --
STOCKHOLDERS' EQUITY
Common stock, no par, stated value $5,
200 shares authorized, issued and outstanding. . . . . . 1,000
Surplus. . . . . . . . . . . . . . . . . . . . . . . . . . 6,493,913
----------
Total stockholder's equity . . . . . . . . . . . . . . . 6,494,913
-----------
Total liabilities and stockholder's equity . . . . . . . $19,456,763
-----------
-----------
</TABLE>
See notes to financial statements
24
<PAGE>
THE FINANCIAL STATEMENTS SHOWN BELOW ARE THE SPONSOR'S AND NOT THOSE OF FIRST
INVESTORS SINGLE PAYMENT PLANS AND PERIODIC PAYMENT PLANS. THEY ARE INCLUDED IN
THE PROSPECTUS FOR THE PURPOSE OF INFORMING INVESTORS AS TO THE FINANCIAL
RESPONSIBILITY OF THE SPONSOR AND ITS ABILITY TO CARRY OUT ITS CONTRACTUAL
OBLIGATIONS.
FIRST INVESTORS CORPORATION
STATEMENT OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
REVENUE
<S> <C> <C>
Commissions on sales of Funds and other securities . . . . $18,212,636
Sales of variable life insurance products. . . . . . . . . 8,738,666
Sponsor fees on periodic and single payment investment
plans. . . . . . . . . . . . . . . . . . . . . . . . . . 813,289
Service fees . . . . . . . . . . . . . . . . . . . . . . . 3,900,240
------------
31,664,831
Less commission expense. . . . . . . . . . . . . . . . . 20,301,115
------------
Total commissions and fees - net . . . . . . . . . . . . 11,363,716
Income from investments. . . . . . . . . . . . . . . . . . 600,514
Other revenue. . . . . . . . . . . . . . . . . . . . . . . 802,126
------------
------------
Total revenue. . . . . . . . . . . . . . . . . . . . . . 12,766,356
EXPENSES
Selling expenses . . . . . . . . . . . . . . . . . . . . . $ 9,057,508
Administrative expenses. . . . . . . . . . . . . . . . . . 6,636,934
-----------
Total expenses . . . . . . . . . . . . . . . . . . . . . 15,694,442
------------
------------
Loss before income tax benefit . . . . . . . . . . . . . . (2,928,086)
Income tax benefit (Note 8). . . . . . . . . . . . . . . . . (1,068,800)
------------
NET LOSS . . . . . . . . . . . . . . . . . . . . . . . . . (1,859,286)
Retained earnings (deficit)
Beginning of year. . . . . . . . . . . . . . . . . . . . . (6,112,627)
------------
End of year. . . . . . . . . . . . . . . . . . . . . . . . $(7,971,913)
------------
------------
</TABLE>
See notes to financial statements
25
<PAGE>
THE FINANCIAL STATEMENTS SHOWN BELOW ARE THE SPONSOR'S AND NOT THOSE OF FIRST
INVESTORS SINGLE PAYMENT PLANS AND PERIODIC PAYMENT PLANS. THEY ARE INCLUDED IN
THE PROSPECTUS FOR THE PURPOSE OF INFORMING INVESTORS AS TO THE FINANCIAL
RESPONSIBILITY OF THE SPONSOR AND ITS ABILITY TO CARRY OUT ITS CONTRACTUAL
OBLIGATIONS.
FIRST INVESTORS CORPORATION
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1995
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
<S> <C>
Cash flows from operating activities
Commissions and fees received - net. . . . . . . . . . . . $ 8,389,338
Other revenue. . . . . . . . . . . . . . . . . . . . . . . 802,126
Investment income received . . . . . . . . . . . . . . . . 449,290
Cash paid to suppliers and employees . . . . . . . . . . . (16,395,355)
Cash received from segregated trust account. . . . . . . . 1,138,619
Income taxes refunded. . . . . . . . . . . . . . . . . . . 1,855,800
------------
Net cash used for operating activities. . . . . . . . . . (3,760,182)
------------
Cash flows from investing activities
Proceeds received on sale of investment securities . . . . 617,084
Purchase of investment securities. . . . . . . . . . . . . (268,517)
Capital expenditures . . . . . . . . . . . . . . . . . . . (67,366)
------------
Net cash provided by investing activities . . . . . . . . 281,201
------------
Cash flows from financing activities
Capital contribution by parent . . . . . . . . . . . . . . 2,000,000
Advances from parent and affiliates. . . . . . . . . . . . 1,085,504
------------
Net cash provided by financing activities . . . . . . . . 3,085,504
------------
Net decrease in cash and cash equivalents . . . . . . . . (393,477)
Cash and cash equivalents
Beginning of year . . . . . . . . . . . . . . . . . . . . 11,884,795
------------
End of year . . . . . . . . . . . . . . . . . . . . . . . $ 11,491,318
------------
------------
</TABLE>
See notes to financial statements
26
<PAGE>
THE FINANCIAL STATEMENTS SHOWN BELOW ARE THE SPONSOR'S AND NOT THOSE OF FIRST
INVESTORS SINGLE PAYMENT PLANS AND PERIODIC PAYMENT PLANS. THEY ARE INCLUDED IN
THE PROSPECTUS FOR THE PURPOSE OF INFORMING INVESTORS AS TO THE FINANCIAL
RESPONSIBILITY OF THE SPONSOR AND ITS ABILITY TO CARRY OUT ITS CONTRACTUAL
OBLIGATIONS.
FIRST INVESTORS CORPORATION
STATEMENT OF CASH FLOWS--(CONTINUED)
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH PROVIDED BY
(USED FOR) OPERATING ACTIVITIES
<S> <C>
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1,859,286)
Adjustments to reconcile net loss to net cash provided by (used for)
operating activities
Depreciation and amortization - fixed assets. . . . . . . . . . . . . . . . 196,938
Amortization of deferred sales commissions. . . . . . . . . . . . . . . . . 139,328
Loss on sale of investment securities . . . . . . . . . . . . . . . . . . . (140,625)
Net unrealized loss on marketable securities. . . . . . . . . . . . . . . . (10,599)
Provision for deferred income taxes . . . . . . . . . . . . . . . . . . . . 787,000
(Increase) decrease in
Receivable from dealers. . . . . . . . . . . . . . . . . . . . . . . . . . (110,668)
Receivable from customers. . . . . . . . . . . . . . . . . . . . . . . . . (139,663)
Receivable from Funds - shares redeemed. . . . . . . . . . . . . . . . . . 235,937
Receivable from Funds - distribution fees. . . . . . . . . . . . . . . . . (56,966)
Salesmen's advances - net. . . . . . . . . . . . . . . . . . . . . . . . . (39,729)
Prepaid expenses and miscellaneous receivables . . . . . . . . . . . . . . 174,889
Cash and cash equivalents segregated under federal regulations . . . . . . 1,138,619
Receivable from affiliated companies . . . . . . . . . . . . . . . . . . . (43,757)
Deferred sales commissions . . . . . . . . . . . . . . . . . . . . . . . . (1,145,176)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14,087)
Increase (decrease) in
Payable for securities purchased . . . . . . . . . . . . . . . . . . . . . (2,199,145)
Customer credit balances . . . . . . . . . . . . . . . . . . . . . . . . . 1,007
Payable to dealers . . . . . . . . . . . . . . . . . . . . . . . . . . . . (883,360)
Accrued commissions payable. . . . . . . . . . . . . . . . . . . . . . . . 178,480
Accounts payable--suppliers. . . . . . . . . . . . . . . . . . . . . . . . (186,277)
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . 216,958
-------------
Net cash used for operating activities . . . . . . . . . . . . . . . . . . . $ (3,760,182)
-------------
-------------
</TABLE>
See notes to financial statements
27
<PAGE>
FIRST INVESTORS CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
First Investors Corporation (the "Company"), a wholly-owned subsidiary of
First Investors Consolidated Corporation ("FICC"), is engaged in business as a
broker-dealer primarily for the First Investors family of mutual funds
("Funds").
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the financial
statements, and revenues and expenses during the reported period. Actual
results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, accounts receivable,
accounts payable, and other liabilities approximate fair value because of the
short maturity of these items. Marketable securities are recorded at market
value in the balance sheet, therefore, these values represent fair value.
CASH EQUIVALENTS
The Company considers all investments in money market funds to be cash
equivalents.
FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
In the normal course of business, the Company's customer activities involve
the execution and settlement of customer transactions. These activities may
expose the Company to risk of loss in the event the customer is unable to
fulfill its contracted obligations, in which case the Company may have to
purchase or sell financial instruments at prevailing market prices. Any loss
from such transactions is not expected to have a material effect on the
Company's financial statements.
SECURITY TRANSACTIONS
Security transactions are recorded on a trade date basis with related
commission income and expenses recorded as of the trade date.
MARKETABLE SECURITIES
Marketable securities are valued at market and include securities acquired
for investment purposes and securities held for re-sale to customers. Marketable
securities consist principally of unit investment trusts at December 31, 1995.
Marketable securities subject to withdrawal restrictions are classified under
"Other Assets".
LEASEHOLD IMPROVEMENTS AND EQUIPMENT
Leasehold improvements and equipment are recorded at cost. Depreciation and
amortization are provided on a straight-line basis over the estimated useful
life of the asset, ranging from 5 to 15 years, or the remaining life of the
lease.
28
<PAGE>
FIRST INVESTORS CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
SALES COMMISSIONS
Sales commissions paid on sales of "A" shares of the Funds and other
investment companies are charged to operations when paid. Sales commissions
paid on sales of "B" shares of the Funds are charged to deferred sales
commissions and amortized over four years. Early withdrawal charges on "B"
shares of the Funds received by the Company from redeeming shareholders reduce
unamortized deferred sales commissions first, with any remaining amount recorded
in income.
DISTRIBUTION PLANS
Pursuant to separate underwriting agreements with the Funds, the Company is
entitled to commissions on the sale of shares of the Funds in an amount ranging
from one percent to six and one-quarter percent of the amount received on the
sales. In addition, under separate distribution plans adopted under Rule 12b-1
of the Investment Company Act of 1940 for each Fund, the Company receives
distribution and service fees in an amount up to three-tenths of one percent of
the Fund's average daily net assets. The distribution fees are intended to
cover the cost of distributing the Fund shares, including cost of sales
promotion and office expenses. The service fees provide for servicing or
maintenance of shareholder accounts, including payments to registered
representatives who provide ongoing servicing to such accounts. Distribution
fees are recorded in income or as a reduction of expenses when earned. For the
year ended December 31, 1995, approximately $4,928,500 of distribution fees were
received from the Funds and recorded as a reduction to selling expenses.
INCOME TAXES
The Company files consolidated federal and certain state income tax returns
with its parent and certain other wholly-owned subsidiaries of the parent. It is
the policy of the parent to allocate the applicable federal taxes (benefits) to
each subsidiary on a separate return basis.
The Company's method of accounting for income taxes conforms to Statement
of Financial Accounting Standards No. 109, "Accounting For Income Taxes". This
method requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between the financial
reporting basis and tax basis of assets and liabilities.
NOTE 2--CASH AND CASH EQUIVALENTS SEGREGATED UNDER FEDERAL REGULATIONS
At December 31, 1995, cash and cash equivalents of approximately $1,292,400
were segregated in a special reserve bank account for the benefit of customers
under Rule 15c3-3 of the Securities Exchange Act of 1934. The minimum amount
required was approximately $536,000.
NOTE 3--RELATED PARTIES
The Company and certain wholly-owned subsidiaries of its parent share
office space and data processing facilities. The Company is charged its
proportionate share of expenses based on space occupied and usage of the data
processing facilities. Additionally, the Company charges certain of its
affiliates for management, office space and other services based upon time
allocated to the management and operation of the affiliate and space occupied.
During the year 1995, the Company charged certain of its affiliates
approximately $3,673,000 for management and other services and approximately
$461,000 for office space.
29
<PAGE>
FIRST INVESTORS CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The Company purchased approximately $587,000 of data processing services, and
approximately $478,000 of office space.
The Company also receives commissions and fees on the sale of various life
insurance products from an affiliated life insurance company. For 1995, these
commissions and fees amounted to approximately $8,739,000.
In addition to the outstanding advances between the Company and its
affiliates, the Company also had approximately $3,631,000 deposited in an
account of an affiliated savings bank, and approximately $6,991,000 invested in
First Investors mutual funds, principally in the money market fund, at December
31, 1995.
NOTE 4--PROFIT-SHARING PLAN
The Company is a sponsoring employer in a profit-sharing plan covering all
of its eligible employees and those of other wholly-owned subsidiaries of its
parent. Contributions to the plan are determined annually by the Board of
Directors. In addition, in 1995, the Company is a sponsoring employer in a
401(k) savings plan covering all of its eligible employees and those of other
wholly-owned subsidiaries of its parent whereby employees may voluntarily
contribute a percentage of their compensation with the Company matching a
portion of the contributions of certain employees. The amount contributed by
the Company during the year was not material. For the year, the Company charged
operations approximately $179,000 for its portion of the contribution to the
profit-sharing plan.
NOTE 5--LEASES
The Company leases office space under terms of various lease agreements,
certain of which are cancelable at the end of specified time periods and others
which are non-cancelable, expiring at various times through 2005. Total rent
expense, including amounts charged from affiliates and net of amounts charged to
affiliates, was approximately $3,585,000 for 1995. The minimum annual rental
commitments relating to leases in effect as of December 31, 1995, exclusive of
taxes and other charges by lessors subject to escalation clauses, are as
follows:
1996 . . . . . . . . . . . . . . . . . . $ 2,842,000
1997 . . . . . . . . . . . . . . . . . . 2,560,000
1998 . . . . . . . . . . . . . . . . . . 2,244,000
1999 . . . . . . . . . . . . . . . . . . 2,035,000
2000 through 2005. . . . . . . . . . . . 9,805,000
-----------
$19,486,000
-----------
-----------
NOTE 6--LITIGATION
The Company is a defendant in a number of sales practice cases which allege
that certain of the Company's sales representatives had made misrepresentations
concerning the risks of investing in First Investors Fund For Income, Inc. and
First Investors High Yield Fund, Inc., investment companies which invest
primarily in high yield bonds. The Company believes that these cases will not
have a material adverse effect on its financial condition.
30
<PAGE>
FIRST INVESTORS CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The Company is a defendant in a number of other lawsuits involving claims
for damages of the type normally associated with the Company's business.
Management is of the opinion that such lawsuits will not result in any material
liability to the Company.
The Company received notice from the Internal Revenue Service ("IRS")
asserting deficiencies in payroll employment taxes for the years 1992-1994,
resulting from classification of certain sales representatives as independent
contractors. These deficiencies totalled approximately $5 million, excluding
any interest. The Company is currently protesting the entire amount of the IRS
asserted deficiencies in an administrative procedure. The Company believes that
it has meritorious legal defenses to the IRS adjustment and that the ultimate
resolution will result in no material impact on the Company's financial
statements. The Company's parent has agreed to assume this liability, if any.
The significance of this matter on the Company's 1995 and future operations
depends upon the ultimate resolution of the matter.
NOTE 7--NET CAPITAL REQUIREMENTS
As a registered broker-dealer the Company is subject to the Uniform Net
Capital Rule 15c3-1 under the Securities Exchange Act of 1934. Under the
alternative method permitted by this Rule, required net capital shall not be
less than 2% of aggregate debit items arising from customer security
transactions. At December 31, 1995, the Company had net capital of approximately
$1,867,000, or an excess of approximately $1,617,000, over net capital required
of $250,000.
For additional information, the Company's Annual Audited Report filed
pursuant to Rule 17a-5 under the Securities Exchange Act of 1934 is available
for inspection at the Company's main office or at the regional office of the
Securities and Exchange Commission.
31
<PAGE>
NOTE 8--INCOME TAXES
The provision (refund) for income taxes consists of the following:
CURRENT
Federal $ (1,615,600)
State and local (240,200)
-------------
(1,855,800)
-------------
DEFERRED
Federal 701,600
State and local 85,400
-------------
787,000
-------------
Total $ (1,068,800)
-------------
-------------
Deferred tax liabilities (assets) are comprised of the following:
Unrealized gains $ 5,900
Accrued expenses (84,900)
Depreciation (106,400)
Deferred sales commissions 382,000
Other 18,400
--------------
$ 215,000
--------------
--------------
A reconciliation of the Federal statutory income tax rate to the Company's
effective rate is as follows:
Statutory rate 34.0%
Increases (decreases) in effective tax rate resulting from
State and local income taxes, net of federal tax benefit 3.5
Other (1.0)
-------
Actual effective rate 36.5%
-----
-----
32
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholder
First Investors Corporation
New York, New York
We have audited the accompanying balance sheet of First Investors
Corporation as of December 31, 1995, and the related statements of operations
and retained earnings (deficit), and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of First Investors Corporation
at December 31, 1995 and the results of its operations and its cash flows for
the year then ended, in conformity with generally accepted accounting
principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 20, 1996
33
<PAGE>
SALES OFFICES
ARIZONA ILLINOIS NEBRASKA OREGON
PHOENIX ELGIN OMAHA BEAVERTON
TUCSON OAKBROOK
WESTCHESTER NEW JERSEY PENNSYLVANIA
CALIFORNIA FAIRFIELD BALA CYNWYD
LOS ANGELES INDIANA ISELIN FEASTERVILLE
SAN JOSE INDIANAPOLIS MANASQUAN PHILADELPHIA
MIDDLESEX PITTSBURGH
COLORADO KENTUCKY SHREWSBURY
DENVER LEXINGTON WOODBRIDGE RHODE ISLAND
WARWICK
CONNECTICUT LOUISIANA NEW YORK
HARTFORD METAIRE ALBANY TEXAS
NORTH HAVEN BINGHAMTON FT. WORTH
MAINE BRONX HOUSTON
FLORIDA PORTLAND ELMIRA
FORT LAUDERDALE FAYETTEVILLE VIRGINIA
JACKSONVILLE MARYLAND JERICHO ARLINGTON
LAUDERHILL COLUMBIA MANHATTAN GLEN ALLEN
MIAMI MINEOLA HAMPTON
NORTH MIAMI MASSACHUSETTS NEWBURGH
TAMPA HOLYOKE ROCHESTER WASHINGTON
WINTER PARK QUINCY SCARSDALE TUKWILA
SPRING VALLEY
GEORGIA MICHIGAN WILLIAMSVILLE WEST VIRGINIA
NORCROSS NORTHVILLE WHEELING
NORTH CAROLINA
MINNESOTA CHARLOTTE WISCONSIN
BLOOMINGTON BROOKFIELD
OHIO
MISSOURI COLUMBUS
KANSAS CITY INDEPENDENCE
ST. LOUIS
34
<PAGE>
EXHIBITS
1. (A - Form N-8B-2)
1.* Custodian Agreement
2. Not Applicable
3(a)* Specimen of Agreement between the Sponsor and a registered
representative with schedule of sales commissions attached
3(b) Not Applicable
3(c) Not Applicable
4. Not Applicable
5.* Specimen Plan Certificate for Periodic Payment Plans (10 and
15 years)
6.* Certificate of Incorporation, as amended, and By-Laws, as
amended, of First Investors Corporation
7. Not Applicable
8.* Agreement between the Sponsor and First Investors Management
Company, Inc. to provide shares of First Investors High
Yield Fund, Inc.
9. Not Applicable
10a.* Application Form - 10-year Periodic Payment Plan
b.* Application Form - 15-year Periodic Payment Plan
c.* Letter of Intention Form
2.** Opinion of Counsel
3. Not Applicable
4. Not Applicable
5. Financial Data Schedule (filed as Exhibit 27 for electronic filing purpose)
<PAGE>
ADDITIONAL EXHIBITS
1.* Revocable Declaration of Trust.
- -----------------------
* Incorporated by reference from Registrant's Registration Statement
(File No. 2-53252) previously filed with the Commission.
** Incorporated by reference from Registrant's Rule 24f-2 Notice for its
fiscal year ended December 31, 1995 filed with the Commission on
February 26, 1996.
<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 1st day of
April, 1996.
FIRST INVESTORS PERIODIC PAYMENT
PLANS FOR INVESTMENT IN FIRST
INVESTORS HIGH YIELD FUND, INC.
(Registrant)
BY: FIRST INVESTORS CORPORATION
(Depositor)
ATTEST:
/S/LARRY R. LAVOIE By /S/MARVIN M. HECKER
- ------------------- ---------------------
Larry R. Lavoie Marvin M. Hecker
Secretary and General Counsel President
As required by the Securities Act of 1933, this Amendment to this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
SIGNATURE TITLE DATE
- --------- ----- ----
/S/MARVIN M. HECKER President April 1, 1996
- --------------------
Marvin M. Hecker
* Chairman of the Board April 1, 1996
- --------------------
Glenn O. Head
* Vice President and April 1, 1996
- -------------------- Chief Financial Officer
Kathryn S. Head
<PAGE>
* Treasurer April 1, 1996
- ---------------------
Joseph I. Benedek
* Secretary April 1, 1996
- --------------------
Larry R. Lavoie
* Director April 1, 1996
- --------------------
Glenn O. Head
* Director April 1, 1996
- --------------------
John T. Sullivan
* Director April 1, 1996
- --------------------
Kathryn S. Head
* Director April 1, 1996
- ---------------------
Lawrence A. Fauci
* Director April 1, 1996
- --------------------
Roger L. Grayson
* Director April 1, 1996
- ---------------------
Jeremiah J. Lyons
* Director April 1, 1996
- --------------------
Jane W. Kruzan
* By: /S/LARRY R. LAVOIE
-------------------------
Larry R. Lavoie
Attorney-In-Fact
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
First Investors Corporation
95 Wall Street
New York, New York 10005
We hereby consent to the use in Post-Effective Amendment No. 21 to the
Registration Statement on Form S-6 (File No. 2-53252) of our report dated
February 22, 1996 relating to the December 31, 1995 financial statements of
First Investors Periodic Payment Plans for Investment in First Investors High
Yield Fund, Inc. and our report dated February 20, 1996 relating to the December
31, 1995 financial statements of First Investors Corporation, which are included
in said Registration Statement.
/s/TAIT, WELLER & BAKER
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
March 28, 1996
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<PAGE>
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