<PAGE>
First
Financial
Fund, Inc.
SEMI-
ANNUAL
REPORT
September 30, 1999
<PAGE>
Letter To Shareholders November 3, 1999
Dear Fellow Shareholder:
For the six months ended September 30, 1999, the Fund returned
+3.3% and managed to outperform the S&P 500 index and other
relevant indexes (see chart below). Market concerns over
higher interest rates and deteriorating credit, however,
quickly drove financial stocks lower during the second half
of this period. In spite of this, the actual financial results
of companies in the Fund generally met or exceeded our
expectations. Earnings grew smartly, credit quality continued
strong and interest margins came in a smidge higher than we
projected. Most of the Fund's companies confirmed their
attractive valuations with net insider
buying or corporate repurchases.
Investment Objective
The Fund seeks long-term capital
appreciation and, as a secondary
objective, current income by
investing in a portfolio of
securities issued by small to
mid-sized savings, banking and
mortgage institutions.
Notwithstanding solid operating performances by the Fund's
companies during the entire period, solid gains recorded by
the Fund during the first three months of this period were
partially offset during the second half. Investors continue
to drain money out of the financial services sector and
plough funds into large cap growth and technology Funds.
The "tyranny" of negative fund flows makes positive stock
performance in the financial services sector
difficult to come by, but superior execution will bring
back investors eventually.
<TABLE>
TOTAL RETURN
For The Period Ended September 30, 1999
<CAPTION>
6 Mos. 1 Year 3 Years 5 Years
<S> <C> <C> <C> <C>
First Financial Fund's NAV1 3.3% -8.9% 3.2% 14.1%
S&P 500 Index 0.4 27.8 25.1 25.0
NASDAQ Composite2 11.6 62.1 30.8 29.1
NASDAQ Banks2 -3.8 -2.8 13.6 16.9
SNL All Daily Thrift2 -13.9 -6.5 12.4 16.8
SNL MBS REITS2 -17.4 -36.6 -8.8 9.3
SNL Mortgage Banks2 -19.5 -25.1 -18.2 6.9
</TABLE>
1Source: Prudential Investments Fund Management. The Fund total
return represents the change in net asset value from the beginning
of the period noted through September 30, 1999 and assumes the
reinvestment of dividends and distributions. Past performance is
no guarantee of future results.
2Principal only.
Note: Returns for periods greater than one year are annualized.
We foresee several potential near-term catalysts to better stock
performance. Those catalysts would include a plateauing of
interest rates, a spurt of cross industry mergers or, more simply,
investor rotation out of large cap growth stocks. Such a revival
could gain momentum next year as it becomes clearer that the U.S.
financial system will not only survive Y2K, but also continue to
export its technological and operational prowess to the rest of
the world.
1
<PAGE>
More than ever, a disciplined credit culture, intelligent
investment in technology, and a firm wide culture of
accountability will differentiate winners and
losers in financial services. The gap between the
"haves" and "have nots" will grow wider and expand
faster than most predict. With the repeal of Glass-Steagall
now likely, boundaries between banks, insurers, brokers et.
al., will become less and less distinct. All of which is
positive for the well managed, attractively priced financial
service firms which the First Financial Fund represents.
Stay the course.
Sincerely,
Nicholas C. Adams
Portfolio Manager
Senior Vice President
Wellington Management Company, LLP
2
<PAGE>
Portfolio of Investments as
of September 30, 1999
(Unaudited) FIRST FINANCIAL FUND, INC.
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--114.6%
COMMON STOCKS--114.6%
- ------------------------------------------------------------
Banks & Thrifts--82.0%
11,700 Abington Bancorp, Inc. $ 141,131
34,600 Algiers Bancorp, Inc. 315,725
120,400 Bay State Bancorp, Inc. 2,347,800
125,000 Big Foot Financial Corp. 1,640,625
195,862 Bostonfed Bancorp, Inc. 2,937,930
89,640 Broadway Financial Corp., Delaware 616,275
100,000 Brookline Bancorp, Inc. 1,018,750
144,500 Cameron Financial Corp. 1,860,437
159,900 Capital Crossing Bank* 2,318,550
347,000 Capitol Federal Financial 3,459,156
234,000 Catskill Financial Corp. 3,524,625
91,000 CBES Bancorp, Inc. 1,387,750
142,538 CCF Holding Co. 2,512,232
51,450 Charter One Financial, Inc.* 1,189,781
118,000 Commercial Bank New York 1,386,500
60,000 Community Bank San Jose California 1,575,000
155,500 Community Financial Corp. 1,380,063
74,600 CSB Financial Group, Inc.* 764,650
196,000 Downey Financial Corp. 3,944,500
1,200,000 East West Bancorp, Inc. 14,250,000
50,000 Eldorado Bancshares, Inc. 428,125
202,900 Fidelity Federal Bancorp 557,975
109,200 First Commerce Bancshares, Inc. 2,270,175
24,000 First Financial Corp. 312,000
385,000 First Place Financial Corp.,
Delaware 4,379,375
258,700 FirstFed America Bancorp, Inc. 3,298,425
252,000 FirstFed Bancorp, Inc. 2,016,000
77,800 Hallmark Capital Corp.* 797,450
16,666 HFB Financial Corp. 229,158
85,200 Highland Bancorp, Inc.* 1,592,175
303,900 Hudson City Bancorp, Inc. 4,178,625
186,400 Hudson United Bancorp* 5,743,450
9,375 Independent Bankshares, Inc. 101,953
45,000 Innes Street Financial Corp. 551,250
327,400 ITLA Capital Corp.* 4,829,150
236,323 Jeffbanks, Inc. 6,823,827
56,100 Lincoln Bancorp Indiana 666,188
208,000 Metrocorp Bancshares, Inc. 1,872,000
147,200 Mystic Financial, Inc. 1,564,000
260,000 Niagara Bancorp, Inc. $ 2,713,750
301,000 Northeast Pennsylvania Financial
Corp. 3,122,875
182,000 Pacific Century Financial Corp.* 3,719,625
221,200 PBOC Holdings, Inc. 1,797,250
286,000 People's Bank 6,756,750
34,600 Peoples Financial Corp. 326,538
169,230 Perpetual Federal Savings Bank 3,257,677
85,000 PrivateBankcorp, Inc.* 1,508,750
324,602 Progress Financial Corp. 4,260,401
357,000 Provident Financial Holdings, Inc.* 6,202,875
64,650 Redwood Financial, Inc.* 646,500
45,000 River Valley Bancorp 585,000
47,800 Rowan Bancorp, Inc.* 1,027,700
86,500 Seacoast Financial Services Corp. 865,000
98,700 Security Pennsylvania Financial
Corp. 999,338
140,000 Southwest Bancorp, Inc., Oklahoma* 3,045,000
140,300 St Paul Bancorp, Inc. 3,209,362
32,500 ST Landry Financial Corp. 375,781
100,000 Team Financial, Inc. 1,012,500
110,600 Thistle Group Holdings Co.* 788,025
7,276 Tri-County Bancorp, Inc. 63,665
67,000 Triangle Bancorp, Inc.* 1,239,500
712,400 Troy Financial Corp.* 7,702,825
496,000 UCBH Holdings, Inc. 9,052,000
372,500 Unionbancal Corp. 13,503,125
700 Warwick Community Bancorp 7,525
140,000 Western Bancorp* 5,407,500
382,150 Woronoco Bancorp, Inc.* 3,869,269
344,000 WSFS Financial Corp. 4,859,000
160,800 Yardville National Bancorp 1,839,150
------------
184,547,037
------------
- ------------------------------------------------------------
Other Financial Intermediaries--32.2%
300,000 American Cap Strategies Ltd.* 5,550,000
511,800 Anthracite Capital, Inc. 3,518,625
248,200 Central Financial Acceptance Corp.* 1,613,300
375,700 Dynex Capital Inc.* 2,535,975
227,875 First Mortgage Corp.* 897,258
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3
<PAGE>
Portfolio of Investments as
of September 30, 1999
(Unaudited) FIRST FINANCIAL FUND, INC.
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Other Financial Intermediaries (cont'd.)
300,000 Fortress Investment Corp. $ 5,062,500
312,500 Healthcare Financial Partners, Inc., 6,250,000
398,400 Imperial Credit Industries, Inc.* 1,743,000
128,016 Inco Homes Corp.* 8,001
448,300 LASER Mortgage Management, Inc.* 1,765,181
804,400 LNR Property Corp. 16,389,650
54,400 Miix Group Inc.* 921,400
974,600 Ocwen Asset Investment Corp. 4,202,962
825,100 Ocwen Financial Corp.* 5,517,856
330,000 Prime Capital Corp., Inc.* 536,250
336,300 RB Asset, Inc.* 1,471,313
910,000 Resource America, Inc. 6,768,125
545,300 Sundance Homes, Inc.* 141,778
807,600 Ugly Duckling Corp.* 5,754,150
185,800 Virginia Capital Bancshares, Inc. 2,763,775
------------
73,411,099
------------
Total common stocks
(cost $300,773,814) 257,958,136
------------
- ------------------------------------------------------------
Warrants*
Warrant
1 Golden State Bancorp, Inc.,
expiring January '01 1
125,000 Healthcare Financial Partners, Inc.
expiring December '01 7,813
------------
Total warrants*
(cost $0) 7,814
------------
Total long-term investments
(cost $300,773,814) 257,965,950
------------
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
SHORT-TERM INVESTMENTS--7.0%
- ------------------------------------------------------------
Repurchase Agreement--7.0%
$15,764 Paribas Corp.,
5.29%, dated 9/30/99, due 10/1/99
in the amount of $15,764,000
(cost $15,764,000; collateralized
by $16,323,000 U.S. Treasury
Bonds, 6.25%, due 8/15/23, value
of collateral including interest
$16,159,770) $ 15,764,000
------------
- ------------------------------------------------------------
Certificates Of Deposit
21 Nauatuck Valley Saving & Loan
Assoc.,
3.00%, 10/13/99 20,567
21 First Fed Monesson
4.00%, 10/25/99 20,662
1 Brookline Savings
4.35%, 11/26/99 1,391
------------
42,620
------------
Total short-term investments
(cost $15,806,620) 15,806,620
------------
- ------------------------------------------------------------
Total Investments--121.6%
(cost $316,580,434; Note 3) 273,772,570
Liabilities in excess of other
assets--(21.6%) (48,543,399)
------------
Net Assets--100% $225,229,171
------------
------------
</TABLE>
- ---------------
* Non-income-producing security.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 4
<PAGE>
Statement of Assets and Liabilities (Unaudited) FIRST FINANCIAL FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets September 30, 1999
<S> <C>
Investments, at value (cost $316,580,434)............................................................... $273,772,570
Cash.................................................................................................... 2,898
Dividends and interest receivable....................................................................... 1,045,452
Receivable for investments sold......................................................................... 275,922
Other assets............................................................................................ 113,134
------------------
Total assets......................................................................................... 275,209,976
------------------
Liabilities
Loan payable (Note 4)................................................................................... 45,000,000
Payable for investments purchased....................................................................... 4,031,852
Loan interest payable (Note 4).......................................................................... 432,051
Advisory fee payable.................................................................................... 392,856
Administration fee payable.............................................................................. 90,536
Deferred directors' fees................................................................................ 21,745
Accrued expenses........................................................................................ 11,765
------------------
Total liabilities.................................................................................... 49,980,805
------------------
Net Assets.............................................................................................. $225,229,171
------------------
------------------
Net assets were comprised of:
Common stock, at par; 24,628,781 shares issued....................................................... $ 24,629
Paid-in capital in excess of par..................................................................... 270,841,378
Cost of 436,200 shares held in Treasury.............................................................. 3,617,561
------------------
274,483,568
Undistributed net investment income.................................................................. 2,253,662
Accumulated net realized losses...................................................................... (8,700,195)
Net unrealized depreciation of investments........................................................... (42,807,864)
------------------
Net assets, September 30, 1999....................................................................... $225,229,171
------------------
------------------
Net asset value per share ($225,229,171 /24,628,781 shares of common stock outstanding)................. $9.14
------------------
------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5
<PAGE>
FIRST FINANCIAL FUND, INC.
Statement of Operations (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
Net Investment Income September 30, 1999
<S> <C>
Income
Dividends............................. $ 4,287,636
Interest.............................. 386,821
------------------
Total income....................... 4,674,457
------------------
Expenses
Investment advisory fee............... 772,753
Administration fee.................... 177,960
Custodian's fees and expenses......... 41,000
Transfer agent's fees and expenses.... 34,000
Insurance expense..................... 33,000
Reports to shareholders............... 30,000
Legal fees and expenses............... 28,000
Listing fees.......................... 17,000
Audit fee and expenses................ 10,000
Directors fees........................ 8,000
Miscellaneous......................... 8,883
------------------
Total operating expenses........... 1,160,596
Loan interest (Note 4)................ 1,260,199
------------------
Total expenses..................... 2,420,795
------------------
Net investment income.................... 2,253,662
------------------
Realized and Unrealized
Gain (Loss) on Investments
Net realized loss on investment
transactions.......................... (433,679)
Net change in unrealized appreciation
(depreciation) of investments......... 5,145,997
------------------
Net gain on investments.................. 4,712,318
------------------
Net Increase in Net Assets
Resulting from Operations................ $ 6,965,980
------------------
------------------
</TABLE>
FIRST FINANCIAL FUND, INC.
Statement of Cash Flows (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
Increase (Decrease) in Cash September 30, 1999
<S> <C>
Cash flows provided from operating
activities
Dividends and interest received........ $ 3,976,634
Operating expenses paid................ (530,505)
Loan interest paid..................... (1,551,552)
Purchases of short-term portfolio
investments, net.................... (14,004,259)
Purchases of long-term portfolio
investments......................... (78,647,859)
Proceeds from disposition of long-term
portfolio investments............... 94,344,900
Other assets........................... 32,932
------------------
Net cash provided from operating
activities.......................... 3,620,291
------------------
Cash used for financing activities
Cash used to reacquire Fund shares..... (3,617,561)
------------------
Net increase in cash................... 2,730
Cash at beginning of period............ 168
------------------
Cash at end of period.................. $ 2,898
------------------
------------------
Reconciliation of Net Increase in Net
Assets to Net Cash Provided from Operating
Activities
Net increase in net assets resulting from
operations............................. $ 6,965,980
------------------
Increase in investments................... (2,579,509)
Net realized loss on investment
transactions........................... 433,679
Net increase in unrealized appreciation
(depreciation) of investments.......... (5,145,997)
Decrease in receivable for investments
sold................................... 2,170,658
Increase in dividends and interest
receivable............................. (697,823)
Decrease in other assets.................. 32,932
Increase in payable for investments
purchased.............................. 2,101,633
Increase in accrued expenses and other
liabilities............................ 338,738
------------------
Total adjustments................... (3,345,689)
------------------
Net cash provided from operating
activities............................. $ 3,620,291
------------------
------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 6
<PAGE>
FIRST FINANCIAL FUND, INC.
Statement of Changes in Net Assets (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
September Year Ended
Increase (Decrease) 30, March 31,
in Net Assets 1999 1999
------------ -------------
<S> <C> <C>
Operations
Net investment income...... $ 2,253,662 $ 2,686,510
Net realized gain (loss) on
investment
transactions............ (433,679) 31,773,999
Net change in unrealized
appreciation
(depreciation)
of investments.......... 5,145,997 (181,559,749)
------------ -------------
Net increase (decrease) in
net assets resulting
from
operations.............. 6,965,980 (147,099,240)
------------ -------------
Dividends and distributions (Note 1)
Dividends from net
investment income....... -- (1,023,852)
Distributions from net
realized gains on
investments............. -- (51,039,444)
Distributions in excess of
net
realized gains.......... -- (11,214,443)
Value of Fund shares issued to
shareholders in reinvestment
of dividends and
distributions................. -- 44,405,793
Cost of Fund shares
reacquired.................... (3,617,561) --
------------ -------------
Total increase (decrease)..... 3,348,419 (165,971,186)
Net Assets
Beginning of period........... 221,880,752 387,851,938
------------ -------------
End of period(a).............. $225,229,171 $ 221,880,752
------------ -------------
------------ -------------
- ---------------
(a) Includes undistributed net
investment income of........ $ 2,253,662 $ --
------------ -------------
</TABLE>
FIRST FINANCIAL FUND, INC.
Notes to Financial Statements (Unaudited)
- ------------------------------------------------------------
First Financial Fund, Inc. (the 'Fund') was incorporated in Maryland on March 3,
1986, as a closed-end, diversified investment company. The Fund's primary
investment objective is to achieve long-term capital appreciation with the
secondary objective of current income by investing in securities issued by
savings and banking institutions, mortgage banking institutions, and their
holding companies. The ability of issuers of debt securities held by the Fund to
meet their obligations may be affected by economic developments in a specific
industry or region.
- ------------------------------------------------------------
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Securities Valuation: Securities for which market quotations are readily
available--including securities listed on national securities exchanges and
those traded over-the-counter--are valued at the last quoted sales price on the
valuation date on which the security is traded. If such securities were not
traded on the valuation date, but market quotations are readily available, they
are valued at the most recently quoted bid price provided by an independent
pricing service or by principal market makers. Securities for which market
quotations are not readily available will be valued at fair value as determined
in good faith according to pricing procedures developed by the Investment
Adviser and approved by the Board of Directors.
Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost.
In connection with repurchase agreement transactions with financial
institutions, it is the Fund's policy that its custodian take possession of the
underlying collateral securities, the value of which exceeds the principal
amount of the repurchase transaction, including accrued interest. If the seller
defaults, and the value of the collateral declines or if bankruptcy proceedings
are commenced with respect to the seller of the security, realization of the
collateral by the Fund may be delayed or limited.
Cash Flow Information: The Fund invests in securities and pays dividends from
net investment income and distributions from net realized gains which are paid
in cash or are reinvested at the discretion of shareholders. These activities
are reported in the Statement of Changes in Net Assets and additional
information on cash receipts and cash payments is presented in the Statement of
Cash Flows. Accounting practices that do not affect reporting activities on a
cash basis include carrying investments at value and amortizing discounts on
debt obligations.
- --------------------------------------------------------------------------------
7
<PAGE>
Notes to Financial Statements (Unaudited) FIRST FINANCIAL FUND, INC.
- --------------------------------------------------------------------------------
Securities Transactions and Net Investment Income: Securities transactions are
recorded on the trade date. Realized gains or losses on sales of securities are
calculated on the identified cost basis. Dividend income is recorded on the
ex-dividend date; interest income is recorded on the accrual basis. Expenses are
recorded on the accrual basis which may require the use of certain estimates by
management.
Federal Income Taxes: It is the Fund's intention to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to shareholders.
Therefore, no federal income tax provision is required.
Withholding taxes on foreign dividends are provided in accordance with the
Fund's understanding of the applicable country's tax rules and rates.
Dividends and Distributions: The Fund expects to declare and pay, at least
annually, dividends from net investment income and any net capital gains.
Dividends and distributions are recorded on the ex-dividend date.
Income distributions and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for wash
sales.
- ------------------------------------------------------------
Note 2. Agreements
The Fund has agreements with Wellington Management Company, LLP (the 'Investment
Adviser') and with Prudential Investments Fund Management LLC (the
'Administrator'). The Investment Adviser makes investment decisions on behalf of
the Fund; the Administrator provides occupancy and certain clerical and
accounting services to the Fund. The Fund bears all other costs and expenses.
The investment advisory agreement provides for the Investment Adviser to receive
a fee, computed monthly and payable quarterly, at the following annual rates:
.75% of the Fund's average month-end net assets up to and including $50 million,
and .625% of such assets in excess of $50 million. The administration agreement
provides for the Administrator to receive a fee, computed monthly and payable
quarterly, at the annual rate of .15% of the Fund's average month-end net
assets.
Note 3. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the six months ended September 30, 1999 were $80,749,492 and $92,153,536,
respectively.
The cost basis of the Fund's investments including short-term investments, at
September 30, 1999 was $317,150,348; and, accordingly, net unrealized
depreciation for federal income tax purposes was $43,377,778 (gross unrealized
appreciation--$26,326,678; gross unrealized depreciation--$69,704,456). The Fund
elected to treat capital losses of approximately $8,003,900 incurred in the five
month period ended March 31, 1999 as having occurred in the following fiscal
year.
- ------------------------------------------------------------
Note 4. Borrowings
The Fund has a credit agreement (the 'Agreement') with an unaffiliated lender.
The maximum commitment under the Agreement is $45,000,000. These borrowings may
be set to any desired maturity at a rate of interest determined by the lender at
the time of borrowing.
While outstanding, the borrowings will bear interest, payable monthly. The
average daily balance outstanding for the six months ended September 30, 1999
was $43,579,235 at a weighted average interest rate of 5.50%. The highest face
amount of borrowing outstanding at any month-end during the period ended
September 30, 1999 was $45,000,000 (as of September 30, 1999). The current
borrowings are $45,000,000 (at an interest rate of 5.65%).
- ------------------------------------------------------------
Note 5. Capital
There are 50 million shares of $.001 par value common stock authorized. Of the
24,628,781 shares issued as of September 30, 1999, the Investment Adviser owned
10,994 shares. During the fiscal year ended March 31, 1999, the Fund issued
4,587,941 shares in connection with a cash distribution paid in stock. During
the six months ended September 30, 1999, the Fund repurchased 436,200 of its own
shares at a weighted average discount per share of 15.81%.
- ------------------------------------------------------------
Note 6. Dividends
On November 19, 1999 the Board of Directors of the Fund declared dividends of
$.08 per share from ordinary income, payable on December 10, 1999 to
shareholders of record on November 30, 1999.
- --------------------------------------------------------------------------------
8
<PAGE>
Financial Highlights (Unaudited) FIRST FINANCIAL FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six months
ended Year Ended March 31,
September 30, -----------------------------------------------
1999 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
------------- -------- -------- -------- --------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period......................... $ 8.85 $ 18.94 $ 15.26 $ 13.71 $ 11.05
------------- -------- -------- -------- --------
Income from investment operations
Net investment income........................................ .09 .11 .14 .22 .13
Net realized and unrealized gain (loss) on investments....... .17 (7.20) 6.84 4.84 4.99
------------- -------- -------- -------- --------
Total from investment operations.......................... .26 (7.09) 6.98 5.06 5.12
------------- -------- -------- -------- --------
Less dividends and distributions
Dividends from net investment income......................... -- (.05) (.14) (.21) (.15)
Distributions from net realized gains........................ -- (2.59) (2.68) (3.36) (2.31)
Distributions in excess of net realized gains................ -- (.45) (.63) -- --
------------- -------- -------- -------- --------
Total dividends and distributions......................... -- (3.09) (3.45) (3.57) (2.46)
------------- -------- -------- -------- --------
Increase resulting from Fund share repurchase................ .03 -- -- .06 --
Net change resulting from the issuance of Fund shares........ -- .09 .15 -- --
------------- -------- -------- -------- --------
Net asset value, end of period(a)............................ $ 9.14 $ 8.85 $ 18.94 $ 15.26 $ 13.71
------------- -------- -------- -------- --------
------------- -------- -------- -------- --------
Market price per share, end of period(a)..................... $ 8.0625 $ 7.3125 $ 20.813 $ 14.500 $ 12.625
------------- -------- -------- -------- --------
------------- -------- -------- -------- --------
TOTAL INVESTMENT RETURN(b):.................................. 10.26% (53.65)% 72.59% 42.10% 35.46%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000).............................. $ 225,229 $221,881 $387,852 $270,496 $214,130
Average net assets (000)..................................... $ 237,231 $296,740 $320,484 $238,967 $195,421
Ratios to average net assets:
Expenses, before loan interest, commitment fees and
nonrecurring expenses.................................. 1.06%(c) .94% .91% 1.03% 1.00%
Total expenses............................................ 2.04%(c) 1.61% 1.25% 1.56% 1.23%
Net investment income..................................... 1.89%(c) .91% .82% 1.43% .97%
Portfolio turnover rate...................................... 30% 65% 43% 70% 82%
Total debt outstanding at end of year (000 omitted).......... $ 45,000 $ 45,000 $ 20,000 $ 18,400 $ 9,700
Asset coverage per $1,000 of debt outstanding................ $ 6,005 $ 5,931 $ 20,393 $ 15,701 $ 23,075
<CAPTION>
1995
<S> <C>
--------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period......................... $ 12.74
--------
Income from investment operations
Net investment income........................................ .05
Net realized and unrealized gain (loss) on investments....... 2.76
--------
Total from investment operations.......................... 2.81
--------
Less dividends and distributions
Dividends from net investment income......................... (.03)
Distributions from net realized gains........................ (4.38)
Distributions in excess of net realized gains................ --
--------
Total dividends and distributions......................... (4.41)
--------
Increase resulting from Fund share repurchase................ --
Net change resulting from the issuance of Fund shares........ (.09)
--------
Net asset value, end of period(a)............................ $ 11.05
--------
--------
Market price per share, end of period(a)..................... $ 11.125
--------
--------
TOTAL INVESTMENT RETURN(b):.................................. 34.83%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000).............................. $158,214
Average net assets (000)..................................... $164,322
Ratios to average net assets:
Expenses, before loan interest, commitment fees and
nonrecurring expenses.................................. 1.03%
Total expenses............................................ 1.58%
Net investment income..................................... 0.46%
Portfolio turnover rate...................................... 103%
Total debt outstanding at end of year (000 omitted).......... $ 16,000
Asset coverage per $1,000 of debt outstanding................ $ 10,888
</TABLE>
- ---------------
(a) NAV and market value are published in The Wall Street Journal each Monday.
(b) Total investment return is calculated assuming a purchase of common stock at
the current market value on the first day and a sale at the current market
value on the last day of each period reported. Dividends and distributions
are assumed for purposes of this calculation to be reinvested at prices
obtained under the dividend reinvestment plan. This calculation does not
reflect brokerage commissions. Total returns for periods less than one year
are not annualized.
(c) Annualized.
Contained above is selected data for a share of common stock outstanding, total
investment return, ratios to average net assets and other supplemental data for
the periods indicated. This information has been determined based upon
information provided in the financial statements and market price data for the
Fund's shares.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 9
<PAGE>
Other Information (Unaudited) FIRST FINANCIAL FUND, INC.
- --------------------------------------------------------------------------------
Dividend Reinvestment Plan. Capital gains dividends and any accompanying income
dividend are usually declared in stock, with a shareholder election to pay cash,
but the Fund reserves its authority to declare capital gains and, or income
distributions in cash. If the Fund does not declare a capital gains dividend,
any income dividend will usually be declared in cash, but the Fund reserves its
authority to declare such dividend in stock. Shareholders may elect to have all
distributions of dividends and capital gains automatically reinvested in Fund
shares (Shares) pursuant to the Fund's Dividend Reinvestment Plan (the Plan.)
Shareholders who do not participate in the Plan will normally receive all
distributions in cash paid by check in United States dollars mailed directly to
the shareholders of record (or if the shares are held in streetname or other
nominee name, then to the nominee) by the custodian, as dividend disbursing
agent unless the Fund declares a distribution payable in shares, absent a
shareholder's specific election to receive cash. Shareholders who wish to
participate in the Plan should contact the Fund at (800) 451-6788.
State Street Bank and Trust Co. (the Plan Agent) serves as agent for the
shareholders in administering the Plan. After the Fund declares a dividend or a
capital gains distribution, if (1) the market price is lower than net asset
value, the participants in the Plan will receive the equivalent in Shares valued
at the market price determined as of the time of purchase (generally, following
the payment date of the dividend or distribution); or if (2) the market price of
Shares on the payment date of the dividend or distribution is equal to or
exceeds their net asset value, participants will be issued Shares at the higher
of net asset value or 95% of the market price. If the Fund declares a dividend
or other distribution payable only in cash and the net asset value exceeds the
market price of Shares on the valuation date, the Plan Agent will, as agent for
the participants, receive the cash payment and use it to buy Shares in the open
market. If, before the Plan Agent has completed its purchases, the market price
exceeds the net asset value per share, the Plan Agent will halt open-market
purchases of the Fund's shares for this purpose, and will request that the Fund
pay the remainder, if any, in the form of newly-issued shares. The Fund will not
issue Shares under the Plan below net asset value.
There is no charge to participants for reinvesting dividends or capital gain
distributions, except for certain brokerage commissions, as described below. The
Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Fund. There will be no brokerage commissions
charged with respect to shares issued directly by the Fund. However, each
participant will pay a pro rata share of brokerage commissions incurred with
respect to the Plan Agent's open market purchases in connection with the
reinvestment of dividends and distributions. The automatic reinvestment of
dividends and distributions will not relieve participants of any federal income
tax that may be payable on such dividends or distributions.
The Fund reserves the right to amend or terminate the Plan upon 90 days' written
notice to shareholders of the Fund.
Participants in the Plan may withdraw from the Plan upon written notice to the
Plan Agent or by telephone in accordance with specific procedures and will
receive certificates for whole Shares and cash for fractional Shares.
All correspondence concerning the Plan should be directed to the Plan Agent,
State Street Bank & Trust Company, P.O. Box 8200, Boston, MA 02266-8200.
- --------------------------------------------------------------------------------
10
<PAGE>
Supplemental Proxy Information (Unaudited) FIRST FINANCIAL FUND, INC.
- --------------------------------------------------------------------------------
The annual meeting of shareholders of First Financial Fund, Inc. was held on
August 23, 1999 at the offices of Prudential Investments Fund Management LLC,
751 Broad Street, Newark, New Jersey. The meeting was held for the following
purposes:
(1) To elect the following director to serve as follows:
Director Class Term Expiring
----------------------------- ------ -------- ---------
Eugene C. Dorsey I 3 years 2002
Directors whose term of office continued beyond this meeting are
Douglas H. McCorkindale and Thomas T. Mooney.
(2) To approve the proposed changes to the Fund's fundamental
investment restrictions, including:
(A) Clarification of conditions under which 25% or more of
the Fund's total assets may be invested in securities of
issuers having their principal business activities in the
same industry.
(B) Clarification in wording of the Fund's fundamental
restriction on portfolio diversification with respect to 75% of
the Fund's total assets.
(C) Minor wording changes in the Fund's fundamental restriction
on underwriting securities.
(D) Clarification of the Fund's fundamental restriction regarding
real estate investments and the types of real estate
related securities in which the Fund may invest.
(E) Modification of the Fund's fundamental restriction on
investing in commodities to broaden the exception to the
prohibition on buying and selling physical commodities to
cover all financial derivative instruments.
(F) Minor wording changes to the Fund's fundamental restriction
on making loans to more completely describe various debt
instruments the Fund may purchase that do not constitute
the making of a loan.
(G) Elimination of the Fund's fundamental restriction on
purchasing more than 20 percent of the Fund's total assets in
restricted securities.
(H) Elimination of the Fund's fundamental restriction on
purchasing more than 5 percent of the Fund's total assets in
marketable warrants.
(I) Elimination of the Fund's fundamental restriction on
investments in oil and gas programs.
(J) Elimination of the Fund's fundamental restriction on
selling short.
(K) Elimination of the Fund's fundamental restriction on
purchasing securities issued by other investment companies.
(L) Elimination of the Fund's fundamental restriction on
pledging assets and replacement with a similar non-fundamental
restriction.
(M) Elimination of the Fund's fundamental restriction on
entering into repurchase agreements maturing in more than seven
days.
* Approval of the revisions above to the fundamental
restrictions also resulted in the deletion of references to those
fundamental restrictions in the Fund's By-Laws.
(3) To ratify the selection of PricewaterhouseCoopers LLP as
independent public accountants for the year ending March 31,
2000.
- --------------------------------------------------------------------------------
11
<PAGE>
Supplemental Proxy Information (Unaudited) FIRST FINANCIAL FUND, INC.
- --------------------------------------------------------------------------------
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
Director/Matter Votes for Votes against Votes withheld Abstentions
---------------------------------- ----------- -------------- --------------- ------------
<C> <S> <C> <C> <C> <C> <C>
(1) Eugene C. Dorsey 13,687,118 -- 819,402 --
(2) Amendment of investment restrictions:
(A) 11,208,451 762,287 852,768 --
(B) 11,168,288 779,209 540,003 --
(C) 11,152,941 787,626 576,937 --
(D) 11,058,131 810,309 676,453 --
(E) 10,545,587 1,388,075 684,081 --
(F) 10,963,270 961,550 681,383 --
(G) 10,583,871 1,228,772 696,772 --
(H) 10,828,065 1,085,480 582,649 --
(I) 10,683,213 1,266,471 558,659 --
(J) 10,677,232 1,224,747 608,624 --
(K) 11,037,684 917,945 551,995 --
(L) 10,745,708 1,181,463 652,510 --
(M) 11,020,353 899,735 657,422 --
(3) PricewaterhouseCoopers LLP 14,132,441 268,778 -- 442,761
</TABLE>
- --------------------------------------------------------------------------------
12
<PAGE>
Directors
Eugene C. Dorsey
Douglas H. McCorkindale
Thomas T. Mooney
Investment Adviser
Wellington Management Company, LLP
75 State Street
Boston, MA 02109
Administrator
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian and Transfer Agent
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036
Notice is hereby given in accordance with Section 23(c) of the
Investment Company Act of 1940 that the Fund may purchase, from
time to time, shares of its common stock at market prices.
The accompanying financial statements as of September 30, 1999
were not audited and, accordingly, no opinion is expressed on them.
The views expressed in this report and the information about
the Fund's portfolio holdings are for the period covered by
this report and are subject to change thereafter.
This report is for stockholder information. This is not a
prospectus intended for use in the purchase or sale of Fund
shares.
First Financial Fund, Inc.
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
For information call toll-free (800) 451-6788
320228109