As filed with the Securities and Exchange Commission on April 7, 1997
Registration No. 2-53252
811-2564
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
Post-Effective Amendment No. 22
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 30, 1997 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, 1996 on February 21, 1997.
<PAGE>
TABLE OF CONTENTS
-----------------
TO FORM S-6
Contents of Post-Effective Amendment No. 22 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 45 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 Front Cover; Concerning the
General 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 Concerning Rights and Privileges of
the Securities of the Trust and Planholders; Method of Investing
the Rights of Holders Payments and 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 Trust's Investment; Concerning the
Securities Duties of the Custodian and the
Sponsor; Agreements
13 Information Concerning Loads, Statistical Data Applicable to
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
<PAGE>
N-8B-2
Item No. Location
- -------- --------
14-24 Information Concerning the Operation of a Periodic Payment
Operations of the Trust Plan; Single Payment Plan;
Method of Investing Payments 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 Principal Concerning the Sponsor, First
Underwriter Investors Corporation; General
44-45 Offering Price or Acquisition Pertinent Provisions of the
Valuation of Securities of the Prospectus of First Investors
Trust High Yield Fund, Inc. (File No.
33-4935) incorporated herein by
reference
46 Redemption Valuation of Securities Pertinent Provisions of the
of the Trust Prospectus of First Investors
High Yield Fund, Inc. (File No.
33-4935) incorporated herein by
reference
<PAGE>
N-8B-2
Item No. Location
- -------- --------
47 Purchase and Sale of Interests
in Underlying Securities from and
to Security Holders
48-50 Information Concerning the Concerning the Duties of the
Trustee or Custodian Rights and Custodian and the Sponsor;
Privileges of Shareholders; Custodian, Bookkeeping and
Method of Investing Payments and Maintenance Fees; Other
Distributions; Method of Selling Deductions From Assets or
Shares in the Event of Partial Distributions
Liquidation or Complete
Termination
51 Information Concerning Insurance Not Applicable
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>
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, 1996 filed with the Commission on February
21, 1997.
<PAGE>
First Investors
Periodic
Payment Plans
for Investment in
FIRST INVESTORS
HIGH YIELD FUND, INC.
==========================================
PROSPECTUS
==========================================
April 30, 1997
[LOGO] FIRST INVESTORS
<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).
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, a loss would likely be incurred in the event of early withdrawal or
termination by a 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 18 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.
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.
<PAGE>
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 30, 1997
<PAGE>
ALLOCATION OF MONTHLY PAYMENTS AND DEDUCTIONS* 10-YEAR PLANS
<TABLE>
<CAPTION>
SALES CHARGE MAINTENANCE
------------------------------------ AND PERCENTAGE
CUSTODIAN RELATIONSHIP
From From Each FEES* OF TOTAL CHARGES
Aggregate Each of Subse- % of Sales ----------- -----------------
Amount the First quent Total Charge to Fee Per Net To To Net
Monthly 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# 120,000 325.00 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>
MAINTENANCE
SALES CHARGE AND PERCENTAGE
------------------------------------ CUSTODIAN RELATIONSHIP
From From Each FEES* OF TOTAL CHARGES
Aggregate Each of Subse- % of Sales -------------- ----------------
Amount the First quent Total Charge to Fee Per Net To To Net
Monthly 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)
------------------------ -----------------------
% OF AMOUNT % OF AMOUNT
AMOUNT OF PAYMENTS AMOUNT OF PAYMENTS
----------------------------------------------
<S> <C> <C> <C> <C>
Total Payments.........................$6,000.00 100.00% $1,250.00** 100.00%
Amount of Sales Charge................. 368.83 6.15 327.03 26.16
Maintenance and Custodian Fees*........ 180.00 3.00 37.50 3.00
Total deductions....................... 548.83 9.15+ 364.53 29.16
Net Amount Invested.................... 5,451.17 90.85 885.47 70.84
<CAPTION>
(AT THE END OF 1 YEAR) (AT THE END OF 6 MONTHS)
---------------------- ------------------------
% OF AMOUNT % OF AMOUNT
AMOUNT OF PAYMENTS AMOUNT OF PAYMENTS
------------------------------------------------
<S> <C> <C> <C>
$650.00** 100.00% $350.00** 100.00%
321.75 49.50 173.25 49.50
19.50 3.00 10.50 3.00
341.25 52.50 183.75 52.50
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 15 YEARS) (AT THE END OF 2 YEARS)
------------------------ -----------------------
% OF AMOUNT % OF AMOUNT
AMOUNT OF PAYMENTS AMOUNT OF PAYMENTS
------------------------------------------------
<S> <C> <C> <C> <C>
Total Payments.........................$9,000.00 100.00% $1,250.00** 100.00%
Amount of Sales Charge................. 553.88 6.15 338.43 27.07
Maintenance and Custodian Fees*........ 270.00 3.00 37.50 3.00
Total deductions....................... 823.88 9.15+ 375.93 30.07
Net Amount Invested.................... 8,176.12 90.85 874.07 69.93
<CAPTION>
(AT THE END OF 1 YEAR) (AT THE END OF 6 MONTHS)
---------------------- ------------------------
% OF AMOUNT % OF AMOUNT
AMOUNT OF PAYMENTS AMOUNT OF PAYMENTS
------------------------------------------------
<S> <C> <C> <C>
$650.00** 100.00% $350.00** 100.00%
321.75 49.50 173.25 49.50
19.50 3.00 10.50 3.00
341.25 52.50 183.75 52.50
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
5
<PAGE>
completing a Declaration of Trust. These questions settled, with the assistance
of a First Investors registered 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
must 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, under normal circumstances, 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.
6
<PAGE>
OTHER DEDUCTIONS
The Plan provides that there may be deducted from the assets of the
Planholder, fees or expenses as follows:
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.
7
<PAGE>
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 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.
8
<PAGE>
(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 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: Non-Retirement 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,
9
<PAGE>
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 annual and semi-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.
(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, 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 45 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, Attention:
Non-Retirement Dept., 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
10
<PAGE>
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. 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 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.
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: Non-Retirement 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;
(3) in the case of termination requests only, the Plan Certificate, if one
was issued; and
11
<PAGE>
(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 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 its agents. The Plan reserves the right to require signature
guarantees in order to process certain transaction requests. A notary public is
not an acceptable guarantor. Call Shareholder Services at 1-800-423-4026 for
instances when signature guarantees are required.
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. For a discussion of emergency pricing practices when FIC's
Woodbridge offices are unable to open for business due to an emergency, see the
Fund's Prospectus. 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
12
<PAGE>
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 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
13
<PAGE>
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 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, Attention: Non-Retirement Dept., 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
14
<PAGE>
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.
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
15
<PAGE>
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 annual 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, 1996, these fees amounted to $86,167, all of which were paid to
Administrative Data Management Corp. The Sponsor assumes no duties or
obligations not specifically imposed upon it by the Plan.
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.
First Investors Corporation paid its three highest paid officers aggregate
compensation from salaries or commissions of $1,510,325 during 1996. The
aggregate remuneration paid to all other officers during 1996 was $1,417,388.
Compensation of sales officers, sales supervisory personnel and registered
representatives totaled $28,299,685 while administrative personnel excluding
officers received $5,275,023 during 1996. The aggregate directors fees paid in
1996 totalled $15,000.
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.
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<PAGE>
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, 1996 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.
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
17
<PAGE>
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.
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., Chairman, President and Director of First Financial Savings Bank, S.L.A.,
President and Director of 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.
18
<PAGE>
MARY JANE KRUZAN
Director, 232 Adair Street, Decatur, GA 30030. 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.
HOWARD M. FACTOR
Vice President, 95 Wall Street, New York, NY. Prior to June 1994, Vice
President, Oppenheimer Capital.
OTHER OFFICERS
Gary Abbott, Associate Vice President
Philip Adriani, Jr., Associate Vice President
Robert Flanagan, Associate Vice President
Concetta Durso, Assistant Vice President and Assistant Secretary
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
19
<PAGE>
SALES OFFICERS
ALVIN BLUMENFELD, Executive Vice President..........Scarsdale Division Executive
MYRON FELTHEIMER, Executive Vice President....................Penn Plaza Complex
HOWARD FROMAN, Executive 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
GEORGE KECHEJIAN, Senior Vice President.............Scarsdale Division Executive
Thomas Barden, Senior Vice President,...........................Executive Office
John Murphy, Senior Vice President...........................Springfield Complex
Richard Nadeau, SeniorVice President............................Executive Office
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
James Morton, Regional Vice President............................Chicago Complex
Paul Prete, Regional Vice President............................New Haven Complex
Ronald Rovelli, Regional Vice President..........................Norfolk Complex
Salvatore Talamo, Regional Vice President...................Indianapolis Complex
SALES OFFICE
STATE
Sam Agust, Vice President......................................Penn Plaza NY
Paul Caccomo, Vice President.................................Oakland Park FL
Avra Cohn, Vice President..........................................Skokie IL
Denis Collins, Vice President.................................New Orleans LA
John Cupo, Vice President.......................................Scarsdale NY
Richard Di Paolo, Vice President.................................Columbus OH
Steven Domenitz, Vice President..............................Philadelphia PA
Ben Gardner, Vice President...................................Wall Street NY
John Golden, Vice President...................................Garden City NY
Gus Graff, Vice President......................................Hicksville NY
James Hoysick, Vice President......................................Denver CO
Brian Kennedy, Vice President...................................Cleveland OH
Mary McConnell, Vice President.................................Penn Plaza NY
Thomas Morin, Vice President.....................................Richmond VA
Loren Morse, Vice President....................................Binghamton NY
Fred Nero, Vice President..........................................Albany NY
James Reilly, Vice President.................................Jersey Shore NJ
Richard Risley, Vice President...................................Hartford CT
Malvin Scherr, Vice President..................................Penn Plaza CA
Norman Wigutow, Vice President.................................Washington DC
20
<PAGE>
Frank Williams, Vice President................................Wall Street NY
Max Zwiebel, Vice President....................................Penn Plaza NY
Frank Cimino, Senior Resident Vice President...............Central Jersey NJ
Philip 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
Louis Lomardi, Senior Resident Vice President...............Grand Central NY
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
Janice Barlow, Resident Vice President..............................Tampa FL
Steve Cooper, Resident Vice President..............................Tucson AZ
Garrett Cutler, Resident Vice President.....................Grand Central NY
Rufus Ensley, Resident Vice President..........................Penn Plaza NY
Milton Fried, Resident Vice President..........................Penn Plaza NY
Christine Froman, Resident Vice President.......................Scarsdale NY
Sal Gallo, Resident Vice President.............................Penn Plaza NY
Peter Hesbacher, Resident Vice President.....................Jersey Shore NJ
Walter Markowitz, Resident Vice President...................Grand Central NY
Hyman Morgenstein, Resident Vice President.....................Penn Plaza NY
William Newman, Resident Vice President.........................New Haven CT
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
Gregory Steinmetz, Resident Vice President..........................Miami FL
Sanford Zipser, Resident Vice President........................Hicksville NY
Cynthia Bordeaux, Associate Vice President......................Beaverton OR
Dennis Burd, Associate Vice President..........................Pittsburgh PA
Jack Cline, Associate Vice President...........................Fort Worth TX
Michael Fioroni, Associate Vice President.....................Springfield MA
Robert Flood, Associate Vice President..............................Tampa FL
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
Alan Kasser, Associate Vice President.............................Houston TX
Christopher Kinsky, Associate Vice President.......................Denver CO
Joy Kourkounis, Associate Vice President..........................Buffalo NY
Stephen Krise, Associate Vice President.........................Charlotte NC
Christopher Long, Associate Vice President......................New Haven CT
Vincent Martucci, Associate Vice President...................North Jersey NJ
John Timothy McCue, Associate Vice President..................Wall Street NY
Luciano Miceli, Associate Vice President..........................Buffalo NY
Donald Skelly, Associate Vice President.............................Tampa FL
21
<PAGE>
Timothy Smith, Associate Vice President..........................Newburgh NY
William Stead, Associate Vice President...........................Phoenix AZ
Forrest Strickland, Associate Vice President....................Beaverton OR
Howard Washburn, Associate Vice President.........................Seattle WA
Terry Wasserman, Associate Vice President.....................Center City PA
Rupi Arora, Assistant Vice President...........................Penn Plaza NY
Kofi Awere, Assistant Vice President........................Grand Central NY
Vera Baker, Assistant Vice President..........................Garden City NY
Sandro Barone, Assistant Vice President.......................Wall Street NY
Arnie Bergman, Assistant Vice President...........................Seattle WA
Nicholas Bollas, Assistant Vice President..........................Boston MA
Catherine Bucsek, Assistant Vice President.......................Hamilton NJ
Robert Bugdal, Assistant Vice President....................Central Jersey NJ
Kelle Cline, Assistant Vice President..........................Fort Worth TX
Paul Corapi, Assistant Vice President........................Jersey Shore NJ
Lisa Danielson, Assistant Vice President......................Center City PA
Curtis Davis, Assistant Vice President...........................San Jose CA
Theodore Davis, Assistant Vice President...........................Albany NY
Jay Epstein, Assistant Vice President.............................Buffalo NY
Johnny Fu, Assistant Vice President...........................Wall Street NY
Jack Gardner, Assistant Vice President........................Wall Street NY
Anne Geddes, Assistant Vice President.............................Detroit MI
Henry Golinski, Assistant Vice President....................Grand Central NY
Herman Groen, Assistant Vice President.........................Penn Plaza NY
William Henderson, Assistant Vice President.........................Astro TX
Steven Hurter, Assistant Vice President...........................Seattle WA
Ronald Hoffer, Assistant Vice President......................Indianapolis IN
Fredrick Johnson, Assistant Vice President.....................Alexandria VA
Kevin Keating, Assistant Vice President..........................Wheeling WV
Rena Komarmy, Assistant Vice President............................Detroit MI
Gregory Knupp, Assistant Vice President..........................Syracuse NY
Robert Kunin, Assistant Vice President.......................North Jersey NJ
Robert McGeorge, Assistant Vice President.......................Keeneland KY
Joyce Messecar, Assistant Vice President............................Tampa FL
Kathleen Morton, Assistant Vice President.........................Chicago IL
Karol Noble, Assistant Vice President............................Hartford CT
Susan Perry, Assistant Vice President...........................Beaverton OR
Anthony Philbin, Assistant Vice President......................Penn Plaza NY
Mark Phillips, Assistant Vice President.............................Tampa FL
David Roy, Assistant Vice President................................Boston MA
Harvey Sanders, Assistant Vice President......................Wall Street NY
Tim Scrodin, Assistant Vice President..............................Albany NY
Stephen Scully, Assistant Vice President..........................Chicago IL
Peter Shalvoy, Assistant Vice President.....................Grand Central NY
Judith Shedden, Assistant Vice President.......................Penn Plaza NY
Robert Stutzman, Assistant Vice President................Nebraska Central NE
22
<PAGE>
Albert Troisi, Assistant Vice President............................Elmira NY
Leslie 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.........................Twin Cities MN
Dan White, Assistant Vice President............................Penn Plaza NY
Casey Winningham, Assistant Vice President.......................San Jose CA
Mary Wong, Assistant Vice President......................Nebraska Central NE
23
<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>
24
<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 January 1, 1987 to December 31, 1996 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 6.25%. Prior
to May 1, 1992, the maximum sales charge was 8.75%.
<TABLE>
<CAPTION>
DEDUCTIONS*
-----------
BALANCE
MONTHLY PAYMENTS Annual Maintenance INVESTED
- ----------------------- Dividend Total and AFTER DEDUCTIONS
Year Income Re- Cumulative Sales Custodian -----------------------
Ended Annually Cumulative invested Cost (a) Charge Fees Annually Cumulative
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1987 600.00 900.00 39.24 942.39 177.15 12.00 450.09 598.74
1988 600.00 1,500.00 109.66 1,652.05 9.36 12.00 688.30 1,287.04
1989 600.00 2,100.00 194.79 2,446.84 9.36 12.00 773.43 2,060.47
1990 600.00 2,700.00 235.62 3,282.46 9.36 12.00 814.26 2,874.73
1991 600.00 3,300.00 300.15 4,182.61 9.36 12.00 878.79 3,753.52
1992 600.00 3,900.00 313.10 5,095.71 9.36 12.00 891.74 4,645.26
1993 600.00 4,500.00 426.54 6,122.25 9.36 12.00 1,005.18 5,650.44
1994 600.00 5,100.00 517.58 7,239.83 9.36 12.00 1,096.22 6,746.66
1995 600.00 5,700.00 653.36 8,493.19 9.36 12.00 1,232.00 7,978.66
1996 550.00 6,000.00 738.22 9,263 8.58 11.00 1,268.64 8,737.89
$3,263.10
=========
<CAPTION>
Annual
Capital No. of Net
Gain Distri- Shares Asset Total
bution Re-Accumu- Value Value of
invested lated(b) Reinvest Shares
--------------------------------------------------------------
<S> <C> <C> <C>
.26 41.929 12.99 544.66
.00 93.559 13.02 1,218.14
.00 314.251(c) 5.26(c) 1,652.96(c)
.00 491.824(c) 3.82(c) 1,878.77(c)
.00 700.491(c) 4.56(c) 3,194.24(c)
.00 886.281(c) 4.88(c) 4,325.05(c)
.00 1,086.608(c) 5.10(c) 5,541.70(c)
.00 1,312.610(c) 4.64(c) 6,090.51(c)
.00 1,564.745(c) 5.00(c) 7,823.73(c)
.00 1,730.044(c) 5.17 8,944.33(c)
$0.09
=====
</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 1,068.221 from net payments invested, 661.89 from
net dividend income and .014 from capital gain distributions.
(c) Reflects a 2-for-1 stock split on May 31, 1989.
25
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
BOARD OF DIRECTORS
FIRST INVESTORS CORPORATION
AND THE PLANHOLDERS OF
FIRST INVESTORS PERIODIC PAYMENT PLANS
FOR INVESTMENT IN CLASS A SHARES OF
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 Class A Shares of First
Investors High Yield Fund, Inc. as of December 31, 1996, 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, 1996,
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 Class A Shares of First Investors High Yield
Fund, Inc. at December 31, 1996, 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.
PHILADELPHIA, PENNSYLVANIA
MARCH 31, 1997
26
<PAGE>
FIRST INVESTORS PERIODIC PAYMENT PLANS
FOR INVESTMENT IN CLASS A SHARES OF
FIRST INVESTORS HIGH YIELD FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
ASSETS
Investments, at value (NOTE 1)
First Investors High Yield Fund, Inc.
(3,255,405 Class A Shares)
(Cost $18,001,747) (NOTE 3) $17,579,187
Dividends receivable 8,050
Cash 4,202
Other receivables 1,997
-----------
TOTAL ASSETS 17,593,436
LIABILITIES
Dividends payable in cash $2,421
Custodian fee payable 5,629
Payable for First Investors High Yield Fund, Inc.
Class A Shares purchased 2,881
Federal income tax withheld on liquidations 3,318
------
TOTAL LIABILITIES 14,249
-----------
NET ASSETS (Equivalent to $5.17 per unit based on
3,397,914 units outstanding) $17,579,187
===========
- --------------------------------------------------------------------------------
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS
27
<PAGE>
FIRST INVESTORS PERIODIC PAYMENT PLANS
FOR INVESTMENT IN CLASS A SHARES OF
FIRST INVESTORS HIGH YIELD FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
INVESTMENT INCOME
DISTRIBUTIONS RECEIVED FROM INVESTMENTS
From: Net investment income $1,595,248
EXPENSES
Custodian fees $ 71,908
Delegated service fees 14,287
------------
TOTAL EXPENSES 86,195
----------
INVESTMENT INCOME - NET 1,509,053
----------
REALIZED AND UNREALIZED GAIN (LOSS)
COMPLETE AND PARTIAL LIQUIDATIONS
Proceeds received,
net of custodian fees of $1,448 2,994,092
Cost of units sold 3,142,364
-----------
NET REALIZED LOSS (148,272)
UNREALIZED APPRECIATION (DEPRECIATION)
Beginning of year (1,161,751)
End of year (422,560)
------------
NET APPRECIATION FOR THE YEAR 739,191
----------
NET REALIZED AND UNREALIZED GAIN 590,919
----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $2,099,972
===========
- --------------------------------------------------------------------------------
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS
28
<PAGE>
FIRST INVESTORS PERIODIC PAYMENT PLANS
FOR INVESTMENT IN CLASS A SHARES OF
FIRST INVESTORS HIGH YIELD FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 AND 1995
- --------------------------------------------------------------------------------
1996 1995
---- ----
INCREASE (DECREASE) IN NET ASSETS FROM
Investment income - net $ 1,509,053 $ 1,509,147
Realized loss on units sold (148,272) (268,814)
Unrealized appreciation 739,191 1,554,250
------------ ------------
2,099,972 2,794,583
Distributions from investment income - net (1,509,053) (1,509,147)
Capital transactions - net (NOTE 2) (626,664) (310,855)
------------ ------------
NET INCREASE (DECREASE)
IN NET ASSETS (35,745) 974,581
NET ASSETS
Beginning of year 17,614,932 16,640,351
------------ ------------
END OF YEAR $ 17,579,187 $ 17,614,932
============ ============
- --------------------------------------------------------------------------------
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS
29
<PAGE>
FIRST INVESTORS PERIODIC PAYMENT PLANS
FOR INVESTMENT IN CLASS A SHARES OF
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 Plan provides for periodic payment plans with
regular and systematic monthly investments over periods of either ten or
fifteen years. The objective of the investment in First Investors High
Yield Fund, Inc. ("HIGH YIELD") is primarily to seek high current income
and secondarily to seek capital appreciation.
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
The underlying investment of the Plan is valued at the net asset value
of the Fund 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 High Yield 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. ("GOVERNMENT FUND") as the underlying investment for continuing
Plan payments.
Beginning in February 1991, the Plan, which had held only the original
High Yield shares, began purchasing shares of Government Fund and
proportionally redeeming shares in both Funds to satisfy redemptions.
On December 20, 1993, sales of shares of High Yield were resumed as a
result of settlements of legal actions. Since December 20, 1993, all
monthly payments are invested in shares of High Yield and all redemption
proceeds were obtained from redemptions of shares of Government Fund. In
December 1995, all shares of Government Fund held in the Plan were
eliminated through redemptions.
- --------------------------------------------------------------------------------
30
<PAGE>
FIRST INVESTORS PERIODIC PAYMENT PLANS
FOR INVESTMENT IN CLASS A SHARES OF
FIRST INVESTORS HIGH YIELD FUND, INC.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(2) CAPITAL TRANSACTIONS
At December 31, 1996 and 1995, the Plan held 3,397,914 and
3,522,172 units, respectively. Unit transactions were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1996 1995
---- ----
AMOUNT UNITS AMOUNT UNITS
------ ----- ------ -----
<S> <C> <C> <C> <C>
Planholders payments $ 945,965 $ 1,111,591
------------ ------------
Less
Sales charges 42,031 48,380
Custodian fees 12,811 17,756
Insurance premiums * - (16)
------------ ------------
54,842 66,120
------------ ------------
Balance invested in units 891,123 176,413 1,045,471 214,661
Units acquired on
reinvestment of net
investment income 1,476,305 292,436 1,479,190 302,574
Redemptions and cancellations (2,994,092) (593,107) (2,835,516) (579,500)
------------ -------- ------------ --------
NET DECREASE $ (626,664) (124,258) $ (310,855) (62,265)
============ ======== ============ ========
</TABLE>
* INCLUDES EXCESS INSURANCE PREMIUMS RETURNED UPON PLAN COMPLETIONS
- --------------------------------------------------------------------------------
31
<PAGE>
FIRST INVESTORS PERIODIC PAYMENT PLANS
FOR INVESTMENT IN CLASS A SHARES OF
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.
The totals for the units outstanding at December 31, 1996, are as follows:
TOTAL AGREED PAYMENTS $61,187,400
===========
Total payments made by Unitholders $14,008,946
Reinvested distributions from
Net investment income 7,354,626
Realized gains 541,152
-----------
TOTAL 21,904,724
-----------
Deductions
Fees and service charges 2,510,397
Insurance premiums 3,698
-----------
TOTAL DEDUCTIONS 2,514,095
-----------
Net investment19,390,629
Less cost of partial withdrawals 1,626,752
-----------
NET COST OF UNITS 17,763,877
RETURN OF CAPITAL DISTRIBUTIONS REINVESTED 237,870
UNREALIZED DEPRECIATION (422,560)
-----------
NET AMOUNT APPLICABLE TO UNITHOLDERS $17,579,187
===========
(4) TRANSACTIONS WITH AFFILIATES
First Investors Corporation, ("FIC") 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.
- --------------------------------------------------------------------------------
32
<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, 1996
ASSETS
<TABLE>
<CAPTION>
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents................................ $11,649,549
Marketable securities.................................... 103,676
Receivables from customers and others.................... 2,023,253
Salesmen advances--net, prepaid expenses and other
amounts receivable.................................... 2,422,729
Receivable from affiliated companies..................... 25,570
Deferred sales commissions .............................. 482,809
-----------
Total current assets.................................. 16,707,586
FIXED ASSETS
Leasehold improvements and equipment (less accumulated
depreciation and amortization of $1,524,000).......... 280,560
OTHER ASSETS
Cash and cash equivalents segregated under
federal regulations (Note 2)..........................$1,013,338
Deferred sales commissions............................... 1,448,427
Other.................................................... 79,804
----------
Total other assets.................................... 2,541,569
-----------
Total assets.......................................... $19,529,715
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Payable for securities purchased......................... $ 4,948,452
Payable to dealers and customers......................... 234,694
Accrued commissions and supplier accounts payable........ 1,001,375
Other liabilities and accrued expenses................... 7,252,678
-----------
Total current liabilities............................. 13,437,199
Deferred income taxes.................................... 536,000
CONTINGENCIES (Note 6)........................................
STOCKHOLDERS' EQUITY
Common stock, no par, stated value $5,
200 shares authorized, issued and outstanding.........$ 1,000
Surplus.................................................. 5,555,516
----------
Total stockholder's equity............................ 5,556,516
-----------
Total liabilities and stockholder's equity............ $19,529,715
===========
</TABLE>
See notes to financial statements
- --------------------------------------------------------------------------------
33
<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, 1996
REVENUE
Commissions on sales of Funds and other securities..... $21,866,624
Sales of variable life insurance products.............. 9,708,831
Sponsor fees on periodic and single payment
investment plans..................................... 657,200
Service fees........................................... 4,130,413
-----------
36,363,068
Less commission expense............................. 24,107,335
----------
Total commissions and fees - net.................... 12,255,733
Income from investments................................ 330,356
Other revenue.......................................... 616,288
------------
Total revenue....................................... 13,202,377
EXPENSES
Selling expenses....................................... $ 8,233,748
Administrative expenses................................ 6,456,826
------------
Total expenses...................................... 14,690,574
------------
Loss before income tax benefit......................... (1,488,197)
Income tax benefit (Note 8)................................. (549,800)
------------
NET LOSS............................................... (938,397)
Retained earnings (deficit)
Beginning of year...................................... (7,971,913)
--------------
End of year............................................ $ (8,910,310)
=============
See notes to financial statements
34
<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, 1996
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES
Commissions and fees received - net..................... $ 12,161,131
Other revenue........................................... 616,288
Investment income received.............................. 329,407
Cash paid to suppliers and employees.................... (15,100,384)
Cash received from (paid to) segregated trust account... 279,021
Income taxes refunded................................... 870,800
-------------
NET CASH USED FOR OPERATING ACTIVITIES............... (843,737)
-------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds received on sale of investment securities...... 219,590
Purchase of investment securities....................... (43,200)
Capital expenditures.................................... (29,430)
-------------
NET CASH PROVIDED BY INVESTING ACTIVITIES............ 146,960
-------------
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from parent and affiliates..................... 855,008
-------------
NET CASH PROVIDED BY FINANCING ACTIVITIES............ 855,008
-------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 158,231
CASH AND CASH EQUIVALENTS
Beginning of year.................................... 11,491,318
-------------
END OF YEAR.......................................... $ 11,649,549
=============
See notes to financial statements
35
<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, 1996
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH PROVIDED BY
(USED FOR) OPERATING ACTIVITIES
NET LOSS................................................ $ (938,397)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES
Depreciation and amortization - fixed assets......... 146,818
Amortization of deferred sales commissions........... 601,212
Net unrealized (gain) loss on marketable securities.. (949)
Provision for deferred income taxes.................. 321,000
(Increase) decrease in
Receivable from dealers............................ (298,664)
Receivable from customers.......................... 89,098
Receivable from Funds - shares redeemed............ 384,200
Receivable from Funds - distribution fees.......... (110,613)
Salesmen's advances - net.......................... 328,791
Prepaid expenses and miscellaneous receivables..... 10,642
Cash and cash equivalents segregated under federal
regulations...................................... 279,021
Receivable from affiliated companies............... 39,424
Deferred sales commissions......................... (1,526,600)
Other.............................................. (4,061)
Increase (decrease) in
Payable for securities purchased................... (60,319)
Customer credit balances........................... 13,949
Payable to dealers................................. (105,592)
Accrued commissions payable........................ (6,661)
Accounts payable-suppliers......................... 99,284
Accrued expenses and other liabilities............. (105,320)
------------
NET CASH USED FOR OPERATING ACTIVITIES..................$ (843,737)
============
See notes to financial statements
36
<PAGE>
FIRST INVESTORS CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
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, 1996.
Marketable securities subject to withdrawal restrictions are classified under
"Other Assets".
37
<PAGE>
FIRST INVESTORS CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996
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.
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.
For the year ended December 31, 1996 amortization of deferred sales commissions
amounted to approximately $601,000.
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, 1996, approximately $5,687,000 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.
38
<PAGE>
FIRST INVESTORS CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996
NOTE 2--CASH AND CASH EQUIVALENTS SEGREGATED UNDER FEDERAL REGULATIONS
At December 31, 1996, cash and cash equivalents of approximately
$1,013,300 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 $350,000.
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 1996, the Company charged certain of its affiliates
approximately $2,615,000 for management and other services and approximately
$530,000 for office space.
The Company purchased approximately $617,000 of data processing services, and
approximately $460,000 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 1996, these
commissions and fees amounted to approximately $9,709,000.
In addition to the outstanding advances between the Company and its
affiliates, the Company also had approximately $4,287,000 deposited in an
account of an affiliated savings bank, and approximately $7,340,000 invested in
First Investors mutual funds, principally in the money market fund, at December
31, 1996.
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, 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 $430,000 for its portion of the contribution to the profit-sharing
plan.
39
<PAGE>
FIRST INVESTORS CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996
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 2010. Total rent
expense, including amounts charged from affiliates and net of amounts charged to
affiliates, was approximately $3,089,000 for 1996. The minimum annual rental
commitments relating to leases in effect as of December 31, 1996, exclusive of
taxes and other charges by lessors subject to escalation clauses, are as
follows:
1997..................................................... $ 1,826,000
1998..................................................... 2,164,000
1999..................................................... 1,845,000
2000..................................................... 1,557,000
2001 through 2010........................................ 11,501,000
------------
$ 18,893,000
============
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.
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.
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, 1996, the Company had net capital of approximately
$792,000, or an excess of approximately $542,000, 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.
40
<PAGE>
FIRST INVESTORS CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996
NOTE 8--INCOME TAXES
The provision (refund) for income taxes consists of the following:
CURRENT
Federal (802,400)
State and local (68,400)
-----------
(870,800)
-----------
DEFERRED
Federal 286,400
State and local 34,600
-----------
321,000
-----------
Total $ (549,800)
===========
Deferred tax liabilities (assets) are comprised of the following:
Unrealized gains 2,300
Accrued expenses (93,000)
Depreciation (127,300)
Deferred sales commissions 734,000
Other 20,000
-----------
$ 536,000
===========
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 1.4
Other 1.5
------
Actual effective rate 36.9%
41
<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, 1996, 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, 1996 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 14, 1997
42
<PAGE>
SALES OFFICES
ARIZONA ILLINOIS NEBRASKA OREGON
PHOENIX ELGIN OMAHA BEAVERTON
TUCSON OAKBROOK
WESTCHESTER NEW JERSEY PENNSYLVANIA
CALIFORNIA FAIRFIELD BALA CYNWYD
SAN JOSE INDIANA ISELIN FEASTERVILLE
INDIANAPOLIS MANASQUAN PHILADELPHIA
COLORADO WOODBRIDGE PITTSBURGH
DENVER KENTUCKY
LEXINGTON NEW YORK RHODE ISLAND
CONNECTICUT ALBANY WARWICK
EAST HARTFORD LOUISIANA BINGHAMTON
NORTH HAVEN METAIRIE ELMIRA TEXAS
FAYETTEVILLE FT. WORTH
FLORIDA MAINE JERICHO HOUSTON
FORT LAUDERDALE PORTLAND MANHATTAN
LAUDERHILL MINEOLA VIRGINIA
MIAMI MARYLAND NEWBURGH ARLINGTON
TAMPA COLUMBIA ROCHESTER GLEN ALLEN
WINTER PARK SCARSDALE HAMPTON
MASSACHUSETTS SPRING VALLEY
GEORGIA HOLYOKE WILLIAMSVILLE WASHINGTON
NORCROSS QUINCY TUKWILA
NORTH CAROLINA
MICHIGAN CHARLOTTE WEST VIRGINIA
NORTHVILLE WHEELING
OHIO
MINNESOTA COLUMBUS WISCONSIN
BLOOMINGTON INDEPENDENCE BROOKFIELD
43
<PAGE>
TABLE OF CONTENTS
===========================================================
Allocation of Monthly Payments and
Deductions - 10 Year Plans.......................... 3
Allocation of Monthly Payments and
Deductions - 15 Year Plans.......................... 4
Allocation of Payments at Various Stages.............. 5
The Plans............................................. 5
Underlying Investment................................. 6
Other Deductions...................................... 7
Rights and Privileges of Planholders.................. 8
Method of Selling Shares.............................. 11
Termination of Plan by the Sponsor.................... 12
Exchanges Involving Other Plans....................... 13
Substitution of Other Shares as the
Underlying Investment of the Plan................... 14
Sponsor and Underwriter............................... 15
Custodian ............................................ 16
Taxes................................................. 17
Officers and Directors of First Investors
Corporation......................................... 18
Statistical Data Applicable to First Investors
Plans............................................... 24
Illustration of a $6,000 Ten-Year Payment
Plan................................................ 25
Financial Statements.................................. 26
===========================================================
Executive Offices
95 Wall Street, New York, NY 10005
I hereby acknowledge receipt of FIRST INVESTORS CORPORATION'S PLAN PROSPECTUS
dated Aril 30, 1997, to which receipt was attached, as well as the current
prospectus of FIRST INVESTORS HIGH YIELD FUND, INC.
- -----------------------------------------------------------
(Signed)
- -----------------------------------------------------------
(Street)
- -----------------------------------------------------------
(City) (State)
- -----------------------------------------------------------
(Date)
- -----------------------------------------------------------
(Soliciting Agent)
Tel. (212) 858-8000
FIHY 095
<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 31st day of
March, 1997.
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 March 31, 1997
- --------------------
Marvin M. Hecker
*
- -------------------- Chairman of the Board March 31, 1997
Glenn O. Head
*
- -------------------- Vice President and March 31, 1997
Kathryn S. Head Chief Financial Officer
*
- --------------------- Treasurer March 31, 1997
Joseph I. Benedek
/s/Larry R. Lavoie
- -------------------- Secretary March 31, 1997
Larry R. Lavoie
*
- -------------------- Director March 31, 1997
Glenn O. Head
*
- -------------------- Director March 31, 1997
John T. Sullivan
*
- -------------------- Director March 31, 1997
Kathryn S. Head
*
- --------------------- Director March 31, 1997
Lawrence A. Fauci
*
- -------------------- Director March 31, 1997
Roger L. Grayson
* Director March 31, 1997
- ---------------------
Jeremiah J. Lyons
*
- -------------------- Director March 31, 1997
Jane W. Kruzan
* By: /s/Larry R. Lavoie
------------------
Larry R. Lavoie
Attorney-In-Fact
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. 22 to the
Registration Statement on Form S-6 (File No. 2-53252) of our report dated March
31, 1997 relating to the December 31, 1996 financial statements of First
Investors Periodic Payment Plans for Investment in First Investors High Yield
Fund, Inc. and our report dated February 14, 1997 relating to the December 31,
1996 financial statements of First Investors Corporation, which are included in
said Registration Statement.
/s/ Tait, Weller & Baker
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
April 3, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 195209
<INVESTMENTS-AT-VALUE> 201341
<RECEIVABLES> 3850
<ASSETS-OTHER> 2374
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 207565
<PAYABLE-FOR-SECURITIES> 1061
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 956
<TOTAL-LIABILITIES> 2017
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 639042
<SHARES-COMMON-STOCK> 37335
<SHARES-COMMON-PRIOR> 35771
<ACCUMULATED-NII-CURRENT> 1592
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (444916)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5915
<NET-ASSETS> 201634
<DIVIDEND-INCOME> 616
<INTEREST-INCOME> 18932
<OTHER-INCOME> 309
<EXPENSES-NET> (2614)
<NET-INVESTMENT-INCOME> 17243
<REALIZED-GAINS-CURRENT> (7669)
<APPREC-INCREASE-CURRENT> 14542
<NET-CHANGE-FROM-OPS> 24116
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (17643)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3872
<NUMBER-OF-SHARES-REDEEMED> 4780
<SHARES-REINVESTED> 2472
<NET-CHANGE-IN-ASSETS> 14741
<ACCUMULATED-NII-PRIOR> 1992
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