Portfolio Manager's Letter
FIRST INVESTORS HIGH YIELD FUND, INC.
Dear Investor:
U.S. economic growth slowed during the first six months of 1995. In
response to the Federal Reserve's tightening of monetary policy,
economic growth downshifted from an unsustainable 5.1% fourth quarter
pace to a more moderate 2.7% rate in the first quarter of 1995. By
Spring, the financial markets began to anticipate an end to the Federal
Reserve's interest rate hikes. The economic crisis in Mexico, higher
individual tax payments and excessive business inventories further
dampened the U.S. economy in the second quarter. By June, in a notable
reversal of opinion from six months earlier, the markets began to expect
the Federal Reserve to lower short-term interest rates to insure against
the possibility of a recession.
Positive returns in the equity market indicated a market consensus that
low inflation and a transition to slower growth are still compatible
with good earnings results in most companies and industries. The First
Investors High Yield Fund performed well during the first half of 1995
with a total return on a net asset value basis of 11.59% on Class A
shares and 10.79% on Class B shares (first offered for sale on January
12, 1995), which compares favorably with a 9.72% return for the average
high yield fund according to Lipper Analytical Services. During this
period, dividends paid from net investment income amounted to 24 cents
per share on Class A shares and 20.4 cents per share on Class B shares.
Fixed income investors in search of yield have continued to commit money
to the market, which sparked a rally beginning early in the year. Led at
first by lower-rated and deferred coupon bonds, several industry sectors
that had done poorly in 1994, such as gaming and housing, rebounded.
Other industries that generally outperformed due to lower interest rates
and regulatory developments were finance, media/cable,
telecommunications and energy.
Many companies sought to issue bonds under these favorable financing
conditions. The arrival of these new issues during the second quarter
coincided with some signs of a slowing economy. Market leadership began
to change as the economic outlook changed. One of the major developments
so far in 1995 has been some softening in bonds of cyclical industries
such as metals, chemicals and forest products. These industries have
contributed to the performance of the Fund and the high yield market
during the past two years, but there has been some evidence that the
volume growth and pricing flexibility that they had enjoyed may be
ending. Despite ample cash for investment, investors have become more
risk averse and regard each company selectively, bidding up the stronger
issues, refusing to fund weaker credits and requiring better terms from
those in the middle tier. The result has been that as the second quarter
progressed, the higher rating categories outperformed. With 83.6% of the
Fund's bonds rated single B or better, the First Investors High Yield
Fund was well positioned for this development.
An overweighted position of 15.9% in deferred coupon bonds increased
performance of the portfolio, which otherwise held high coupon bonds
which did not respond as sharply to the decline in interest rates. Some
excellent equity appreciation was also a positive. Two such positions,
Peebles, Inc. and CIC I Acquisition Corp., reached generous valuations
and were sold at prices well above where they began the year.
We believe that high yield bonds are positioned to perform well versus
fixed income alternatives over the balance of the year. We are unlikely
to see the kind of decisive downward move in interest rates that
occurred in the first half of the year. In a stable rate environment,
high yield bonds tend to outperform fixed income alternatives by virtue
of their higher income. Also, the economy appears to be returning to a
sustainable rate of growth after the pause we saw in the second quarter.
We expect that our credit oriented strategy of concentrating on stable
to improving bonds will continue to reward Fund shareholders.
As always we appreciate the opportunity to serve your investment needs.
Sincerely,
/s/George V. Ganter
George V. Ganter
Portfolio Manager
July 31, 1995
<TABLE>
<CAPTION>
Portfolio of Investments
First Investors High Yield Fund, Inc.
June 30, 1995
----------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS--89.9%
Aerospace/Defense--3.0%
$ 3,805M Dyncorp, PIK, 16%, 2003 $3,767,079 $205
1,750M Fairchild Industries, Inc., 12 1/4%, 1999 1,771,875 97
----------------------------------------------------------------------------------------------------------
5,538,954 302
----------------------------------------------------------------------------------------------------------
Apparel/Textiles--1.6%
3,900M +Linter Textiles Corp., Ltd., 13 3/4%, 2000 29,250 2
3,000M Westpoint Stevens, Inc., 9 3/8%, 2005 2,895,000 158
----------------------------------------------------------------------------------------------------------
2,924,250 160
----------------------------------------------------------------------------------------------------------
Automotive--2.0%
1,500M Aftermarket Technology Corp., 12%, 2004 (Note 5) 1,590,000 87
1,950M SPX Corp., 11 3/4%, 2002 2,032,875 111
----------------------------------------------------------------------------------------------------------
3,622,875 198
----------------------------------------------------------------------------------------------------------
Building Materials--2.5%
3,000M G-I Holdings, Inc., Zero Coupon, 1998 2,017,500 110
1,600M Waxman Industries, Inc., 13 3/4%, 1999 1,344,000 73
3,155M Waxman Industries, Inc., 0%-12 3/4%, 2004 1,262,000 69
----------------------------------------------------------------------------------------------------------
4,623,500 252
----------------------------------------------------------------------------------------------------------
Chemicals--7.8%
2,240M Buckeye Cellulose, Inc., 10 1/4%, 2001 2,228,800 122
2,500M Harris Chemical North America, Inc., 0%-10 1/4%, 2001 2,262,500 123
2,175M Harris Chemical North America, Inc., 10 3/4%, 2003 2,022,750 110
1,000M Huntsman Corp., 11%, 2004 1,097,500 60
1,700M OSI Specialties, Inc., 9 1/4%, 2003 1,717,000 94
2,800M Rexene Corp., 11 3/4%, 2004 3,003,000 164
2,000M Synthetic Industries, Inc., 12 3/4%, 2002 2,000,000 109
----------------------------------------------------------------------------------------------------------
14,331,550 782
----------------------------------------------------------------------------------------------------------
Computers/Software/Business Equipment--.6%
1,000M Bell & Howell Co., 10 3/4%, 2002 1,060,000 58
----------------------------------------------------------------------------------------------------------
Conglomerates--2.1%
1,255M Lexington Precision Co., Inc., 12 3/4%, 2000 1,004,000 55
5,500M Semi-Tech Corp., 0%-11 1/2%, 2003 2,750,000 150
----------------------------------------------------------------------------------------------------------
3,754,000 205
----------------------------------------------------------------------------------------------------------
Consumer Non-Durables--.8%
1,500M Calmar, Inc., 12%, 1997 1,537,500 84
----------------------------------------------------------------------------------------------------------
Containers--3.4%
5,600M Owens Illinois, Inc., 11%, 2003 6,188,000 338
----------------------------------------------------------------------------------------------------------
Durable Goods Manufacturing--2.6%
2,445M Fairfield Manufacturing, Inc., 11 3/8%, 2001 2,322,750 127
2,500M Remington Arms Company, Inc., 10%, 2003 (Note 5) 2,350,000 128
----------------------------------------------------------------------------------------------------------
4,672,750 255
----------------------------------------------------------------------------------------------------------
Electrical Equipment--2.4%
1,850M Amphenol Corp., 12 3/4%, 2002 2,090,500 114
2,200M IMO Industries, Inc., 12%, 2001 2,255,000 123
----------------------------------------------------------------------------------------------------------
4,345,500 237
----------------------------------------------------------------------------------------------------------
Energy Exploration/Production--1.6%
3,000M Gulf Canada Resources, Ltd., 9 5/8%, 2005 2,985,000 163
----------------------------------------------------------------------------------------------------------
Energy Services--2.2%
1,500M Giant Industries, Inc., 9 3/4%, 2003 1,455,000 79
2,918M Synergy Group, Inc., 9 1/2%, 2000 (Note 4) 2,626,200 143
----------------------------------------------------------------------------------------------------------
4,081,200 222
----------------------------------------------------------------------------------------------------------
Entertainment/Leisure--.3%
1,925M +SHRP Capital Corp., 11 3/4%, 1999 442,750 24
----------------------------------------------------------------------------------------------------------
Financial Services--1.7%
2,800M Lomas Mortgage, USA, 10 1/4%, 2002 1,953,000 107
1,200M Olympic Financial, Ltd., 13%, 2000 1,230,000 67
----------------------------------------------------------------------------------------------------------
3,183,000 174
----------------------------------------------------------------------------------------------------------
Food Services--.9%
2,100M Flagstar Cos., Inc., 11 1/4%, 2004 1,632,750 89
----------------------------------------------------------------------------------------------------------
Food/Beverage/Tobacco--1.7%
3,000M Fleming Co., Inc., 10 5/8%, 2001 3,165,000 173
----------------------------------------------------------------------------------------------------------
Gaming/Lodging--2.3%
2,450M Casino America, Inc., 11 1/2%, 2001 2,474,500 135
1,000M GB Property Funding, Inc., 10 7/8%, 2004 862,500 47
800M Players International, Inc., 10 7/8%, 2005 (Note 5) 784,000 43
----------------------------------------------------------------------------------------------------------
4,121,000 225
----------------------------------------------------------------------------------------------------------
Healthcare--4.8%
2,215M Continental Medical Systems, Inc., 10 7/8%, 2002 2,309,138 127
1,300M Genesis Healthcare, Inc., 9 3/4%, 2005 1,309,750 71
1,300M Hillhaven Corp., 10 1/8%, 2001 1,352,000 74
1,600M Integrated Health Service Inc., 10 3/4%, 2004 1,704,000 93
2,000M National Medical Enterprises, Inc., 10 1/8%, 2005 2,115,000 115
----------------------------------------------------------------------------------------------------------
8,789,888 480
----------------------------------------------------------------------------------------------------------
Insurance--.7%
1,300M Terra Nova Holdings, PLC, 10 3/4%, 2005 1,309,750 71
----------------------------------------------------------------------------------------------------------
Media/Cable Television--13.1%
1,400M Adelphia Communications, Inc., 9 7/8%, 2005 1,239,000 68
4,000M Bell Cablemedia, PLC, 0%-11.95%, 2004 2,670,000 146
2,000M Century Communications Corp., 9 1/2%, 2005 1,985,000 108
3,200M Garden State Newspapers, Inc., 12%, 2004 3,200,000 175
3,000M Lamar Advertising, Inc., 11%, 2003 2,981,250 163
1,000M Le Groupe Videotron, Ltee., 10 5/8%, 2005 1,052,500 57
3,625M Outdoor Systems, Inc., 10 3/4%, 2003 3,480,000 190
2,000M Rogers Cablesystems, Inc., 10%, 2005 (Note 5) 2,055,000 112
2,000M Rogers Communication, Inc., 10 7/8%, 2004 2,050,000 112
5,100M Videotron Holdings, PLC, 0%-11 1/8%, 2004 3,340,500 182
----------------------------------------------------------------------------------------------------------
24,053,250 1,313
----------------------------------------------------------------------------------------------------------
Mining/Metals--9.1%
3,000M Carbide/Graphite Group, Inc., 11 1/2%, 2003 3,150,000 172
2,475M Geneva Steel Co., Inc., 11 1/8%, 2001 1,955,250 107
4,000M Magma Copper Co., Inc., 12%, 2001 4,410,000 241
4,050M WCI Steel, Inc., 10 1/2%, 2002 3,958,875 216
3,600M Wheeling-Pittsburgh Steel Corp., 9 3/8%, 2003 3,267,000 178
----------------------------------------------------------------------------------------------------------
16,741,125 914
----------------------------------------------------------------------------------------------------------
Miscellaneous--1.3%
2,300M +Acme Holdings, Inc., 11 3/4%, 2000 1,150,000 63
1,150M Monarch Acquisition Corp., 12 1/2%, 2003 (Note 5) 1,152,875 63
----------------------------------------------------------------------------------------------------------
2,302,875 126
----------------------------------------------------------------------------------------------------------
Paper/Forest Products--9.6%
2,000M Doman Industries, Inc., 8 3/4%, 2004 1,947,500 106
3,600M Gaylord Container Corp., 11 1/2%, 2001 3,825,000 209
2,000M Riverwood International Corp., 11 1/4%, 2002 2,165,000 118
2,600M S.D. Warren Co., Inc., 12%, 2004 2,808,000 153
2,750M Stone Container Corp., 11 7/8%, 1998 2,932,187 160
4,000M Stone Container Corp., 9 7/8%, 2001 3,970,000 217
----------------------------------------------------------------------------------------------------------
17,647,687 963
----------------------------------------------------------------------------------------------------------
Retail-Food/Drug--.8%
500M Dominicks Fine Foods, Inc., 10 7/8%, 2005 (Note 5) 502,500 27
1,000M Penn Traffic Co., 10 1/4%, 2002 1,022,500 56
----------------------------------------------------------------------------------------------------------
1,525,000 83
----------------------------------------------------------------------------------------------------------
Retail-General Merchandise--1.0%
22M Barry's Jewelers, Inc., 12 5/8%, 1996 11,195 1
1,750M General Host Co., Inc., 11 1/2%, 2002 1,750,000 95
----------------------------------------------------------------------------------------------------------
1,761,195 96
----------------------------------------------------------------------------------------------------------
Technology--.6%
1,100M Lear Seating, Inc., 11 1/4%, 2000 1,144,000 62
----------------------------------------------------------------------------------------------------------
Amount
Invested
Principal For Each
Amount $10,000 of
or Shares Security Value Net Assets
----------------------------------------------------------------------------------------------------------
Telecommunications--5.9%
3,725M Echostar Communications Corp., 0%-12 7/8%, 2004 1,797,312 98
6,525M MFS Communications, Inc., 0%-9 3/8%, 2004 4,534,875 248
1,800M PanAmSat Capital Corp., 9 3/4%, 2000 1,840,500 100
3,700M PanAmSat Capital Corp., 0%-11 3/8%, 2003 2,645,500 144
----------------------------------------------------------------------------------------------------------
10,818,187 590
----------------------------------------------------------------------------------------------------------
Transportation--3.5%
3,550M Eletson Holdings, Inc., 9 1/4%, 2003 3,399,125 185
1,100M Moran Transportation Co., 11 3/4%, 2004 990,000 54
2,050M Trism, Inc., 10 3/4%, 2000 1,988,500 108
----------------------------------------------------------------------------------------------------------
6,377,625 347
----------------------------------------------------------------------------------------------------------
Total Value of Corporate Bonds (cost $172,579,746) 164,680,161 8,986
----------------------------------------------------------------------------------------------------------
COMMON STOCKS--1.0%
Building Materials--.5%
65,119 *American Buildings, Inc. 975,564 53
----------------------------------------------------------------------------------------------------------
Electrical Equipment--.1%
6,481 *Thermadyne Holdings Corp. 91,544 5
----------------------------------------------------------------------------------------------------------
Financial Services--.1%
9,600 *Olympic Financial, Ltd. (Note 4) 160,200 9
----------------------------------------------------------------------------------------------------------
Gaming/Lodging--.0%
120,498 *Divi Hotels, Inc. (Note 4) 6,025 --
----------------------------------------------------------------------------------------------------------
Paper/Forest Products--.1%
15,964 *Gaylord Container Corp., Class "A" 191,568 10
----------------------------------------------------------------------------------------------------------
Retail-General Merchandise--.2%
102,806 *Barry's Jewelers, Inc. 334,121 18
----------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $5,969,532) 1,759,022 95
----------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Shares or $10,000 of
Warrants Security Value Net Assets
----------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--2.2%
Financial Services--1.8%
20,000 California Federal Bank, 10 5/8%, Series "B" 2,130,000 116
40,800 Greater New York Savings Bank, 12%, Series "B" 1,111,800 61
----------------------------------------------------------------------------------------------------------
3,241,800 177
----------------------------------------------------------------------------------------------------------
Paper/Forest Products--.4%
30,200 S.D. Warren Co., Inc., 14% 845,600 46
----------------------------------------------------------------------------------------------------------
Total Value of Preferred Stocks (cost $3,998,050) 4,087,400 223
----------------------------------------------------------------------------------------------------------
WARRANTS--.8%
Building Materials--.0%
100,300 *Waxman Industries, Inc. (Expiring 6/1/04)(Note 5) 25,075 1
----------------------------------------------------------------------------------------------------------
Electrical Equipment--.0%
67 *Digicon, Inc. (Expiring 7/1/96) 33 --
----------------------------------------------------------------------------------------------------------
Entertainment/Leisure--.0%
7,200 *SHRP Capital Corp. (Expiring 7/15/99)(Note 5) -- --
----------------------------------------------------------------------------------------------------------
Gaming/Lodging--.1%
7,987 *Casino America, Inc. (Expiring 11/15/96) 7,987 --
12,000 *President Riverboat Casinos, Inc. (Expiring 9/23/96)(Note 5) 48,000 3
17,660 *President Riverboat Casinos, Inc. (Expiring 9/30/99)(Note 4) 70,640 4
----------------------------------------------------------------------------------------------------------
126,627 7
----------------------------------------------------------------------------------------------------------
Paper/Forest Products--.6%
84,794 *Gaylord Container Corp. (Expiring 7/31/96) 869,139 47
30,200 *S.D. Warren Co., Inc. (Expiring 12/15/06)(Note 5) 181,200 10
----------------------------------------------------------------------------------------------------------
1,050,339 57
----------------------------------------------------------------------------------------------------------
Retail-Food/Drug--.0%
3,466 *Purity Supreme, Inc. (Expiring 8/6/97)(Note 4) -- --
----------------------------------------------------------------------------------------------------------
Retail-General Merchandise--.0%
3,800 *Payless Cashways, Inc. (Expiring 11/1/96) 950 --
----------------------------------------------------------------------------------------------------------
Amount
Warrants Invested
or For Each
Principal $10,000 of
Amount Security Value Net Assets
----------------------------------------------------------------------------------------------------------
Telecommunications--.1%
22,350 *Echostar Communications Corp. (Expiring 6/1/04) 251,438 14
----------------------------------------------------------------------------------------------------------
Total Value of Warrants (cost $1,003,705) 1,454,462 79
----------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--2.2%
$ 4,000M United States Treasury Notes, 7%, 1999 (cost $4,331,875) 4,139,375 226
----------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--4.4%
4,500M GTE Southwest Inc., 5.98%, 7/6/95 4,496,263 245
1,000M New England Education Loan Marketing Corp., 6.28%, 7/5/95 999,302 55
2,500M Texaco, Inc., 5.92%, 7/6/95 2,497,944 136
----------------------------------------------------------------------------------------------------------
Total Value of Short-Term Corporate Notes (cost $7,993,509) 7,993,509 436
----------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $195,876,417) 100.5% 184,113,929 10,045
Excess of Liabilities Over Other Assets (.5) (825,849) (45)
----------------------------------------------------------------------------------------------------------
Net Assets 100.00% $183,288,080 $10,000
==========================================================================================================
* Non-income producing
+ In default as to principal and/or interest (Note 7)
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
FIRST INVESTORS HIGH YIELD FUND, INC.
June 30,1995
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments in securities, at value (identified cost $195,876,417)(Note 1A) $184,113,929
Cash 736,575
Receivables:
Interest and dividends $ 3,434,509
Capital shares sold 218,384
Investment securities sold 28,000 3,680,893
------------
Other assets 59,061
-------------
Total Assets 188,590,458
Liabilities
Payables:
Investment securities purchased 3,507,341
Dividend payable July 15, 1995 1,432,952
Capital shares redeemed 168,223
Accrued advisory fee 137,739
Accrued expenses 56,123
-----------
Total Liabilities 5,302,378
------------
Net Assets (Note 8):
Class A (35,507,491 shares outstanding) 182,841,889
Class B (86,618 shares outstanding) 446,191 $183,288,080
------------ ============
Net Assets Consist of:
Capital paid in $631,486,660
Undistributed net investment income 2,249,412
Accumulated net realized loss on investment transactions (438,685,504)
Net unrealized depreciation in value of investments (11,762,488)
------------
Total $183,288,080
============
Net asset value and redemption price per share--Class A $5.15
=====
Maximum offering price per share--Class A ($5.15/.9375)* $5.49
=====
Net asset value and offering price per share--Class B $5.15
=====
*On purchases of $25,000 or more, the sales charge is reduced.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
FIRST INVESTORS HIGH YIELD FUND, INC.
Six Months Ended June 30, 1995
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income
Income:
Interest $ 9,462,708
Dividends 143,659
Consent fees 98,500
-----------
Total income $ 9,704,867
Expenses (Note 3):
Advisory fee 885,938
Shareholder servicing costs 271,050
Distribution plan expenses - Class A 132,733
Distribution plan expenses - Class B 891
Reports and notices to shareholders 40,701
Other expenses 44,718
----------
Total expenses 1,376,031
Less: Expenses waived 88,594
-----------
Net expenses 1,287,437
-----------
Net investment income 8,417,430
Realized and Unrealized Gain (Loss) on Investments (Notes 2 and 6):
Net realized gain (loss) on investments:
Unaffiliated companies 1,886,522
Affiliated companies (2,411,012)
-----------
Net realized loss on investments (524,490)
Net unrealized appreciation of investments 11,656,965
-----------
Net gain on investments 11,132,475
-----------
Net Increase in Net Assets Resulting from Operations 19,549,905
===========
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
FIRST INVESTORS HIGH YIELD FUND, INC.
-----------------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended
June 30, 1995 December 31, 1994
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income $ 8,417,430 $ 17,082,492
Net realized gain (loss) on investments (524,490) 846,883
Net unrealized appreciation (depreciation) on investments 11,656,965 (17,368,735)
------------ ------------
Net increase in net assets resulting from operations 19,549,905 560,640
------------ ------------
Dividends to Shareholders from:
Net investment income--Class A (8,490,089) (17,023,090)
Net investment income--Class B (9,238) --
------------ ------------
Total dividends (8,499,327) (17,023,090)
Capital Share Transactions (a)
Class A:
Proceeds from shares sold 6,211,712 7,240,104
Value of dividends reinvested 5,264,687 12,643,358
Cost of shares redeemed (10,071,484) (24,351,080)
------------ ------------
1,404,915 (4,467,618)
------------ ------------
Class B:
Proceeds from shares sold 432,708 --
Value of dividends reinvested 1,828 --
Cost of shares redeemed (1,040) --
------------ ------------
433,496 --
------------ ------------
Net increase (decrease) from capital share transactions 1,838,411 (4,467,618)
------------ ------------
Net increase (decrease) in net assets 12,888,989 (20,930,068)
Net Assets
Beginning of period 170,399,091 191,329,159
------------ ------------
End of period (including undistributed net investment income of
$2,249,412 and $2,331,309, respectively) 183,288,080 170,399,091
============ ============
(a)Capital Shares Issued and Redeemed
Class A:
Sold 1,243,777 1,431,548
Issued for dividends reinvested 1,053,164 2,504,396
Redeemed (2,013,981) (4,798,027)
------------ ------------
Net increase (decrease) in Class A shares outstanding 282,960 (862,083)
============ ============
Class B:
Sold 86,460 --
Issued for dividends reinvested 360 --
Redeemed (202) --
------------ ------------
Net increase in Class B shares outstanding 86,618 --
============ ============
See notes to financial statements
</TABLE>
Notes to Financial Statements
FIRST INVESTORS HIGH YIELD FUND, INC.
1. Significant Accounting Policies--The Fund is registered under the
Investment Company Act of 1940 (the "1940 Act") as a diversified, open-
end management investment company.
A. Security Valuation--Except as provided below, a security listed or
traded on an exchange or the NASDAQ National Market System is valued at
its last sale price on the exchange or system where the security is
principally traded, and lacking any sales, the security is valued at the
last bid price. Each security traded in the over-the-counter market
(including securities listed on exchanges whose primary market is
believed to be over-the-counter) is valued at the most recent bid price
based upon quotes furnished by a market maker for such securities.
Securities may also be priced by a pricing service. The pricing service
uses quotations obtained from investment dealers or brokers, information
with respect to market transactions in comparable securities and other
available information in determining value. Short-term corporate notes
which are purchased at a discount are valued at amortized cost.
Securities for which market quotations are not readily available,
"restricted securities," and any other assets are valued on a consistent
basis at fair value as determined in good faith by or under the
supervision of the Fund's officers in a manner specifically authorized
by the Board of Directors.
B. Federal Income Taxes--No provision has been made for federal income
taxes on net income or capital gains since it is the policy of the Fund
to continue to comply with the special provisions of the Internal
Revenue Code applicable to investment companies and to make sufficient
distributions of income and capital gains (in excess of any available
capital loss carryovers) to relieve it from all, or substantially all,
such taxes. At June 30, 1995, the Fund had capital loss carryovers of
$438,050,529 of which $1,633,410 expires in 1995, $51,200,545 in 1996,
$107,418,334 in 1997, $166,492,834 in 1998, $109,407,948 in 1999,
$1,762,042 in 2001 and $135,416 in 2002.
C. Other--Security transactions are accounted for on the date the
securities are purchased or sold. Cost is determined, and gains and
losses are based, on the identified cost basis for both financial
statement and federal income tax purposes. Dividend income is recorded
on the ex-dividend date. Interest income and estimated expenses are
accrued daily. Dividends to shareholders from net investment income are
accrued daily and paid monthly.
2. Security Transactions--For the six months ended June 30, 1995,
purchases and sales of
investment securities, other than United States Government obligations
and short-term corporate notes, aggregated $40,621,142 and $36,635,629,
respectively.
At June 30, 1995, the cost of investments for
federal income tax purposes was $195,876,417. Accumulated net unrealized
depreciation on investments was $11,762,488, consisting of $5,908,920
gross unrealized appreciation and $17,671,408 gross unrealized
depreciation.
3. Advisory Fee and Other Transactions With Affiliates--Certain officers
and directors of the Fund are officers and directors of its investment
adviser, First Investors Management Company, Inc. ("FIMCO"), its
underwriter, First Investors Corporation ("FIC"), its transfer agent,
Administrative Data Management Corp. ("ADM") and/or First Financial
Savings Bank, S.L.A. ("FFS"), custodian of the Fund's Individual
Retirement Accounts. Officers and directors of the Fund received no
remuneration from the Fund for serving in such capacities. Their
remuneration (together with certain other expenses of the Fund) is paid
by FIMCO or FIC.
The Investment Advisory Agreement provides as compensation to FIMCO an
annual fee, payable monthly, at the rate of 1% on the first $200 million
of the Fund's average daily net assets, .75% on the next $300 million,
declining by .03% on each $250 million thereafter, down to .66% on
average daily net assets over $1 billion. For the six months ended June
30, 1995, Fimco has voluntarily waived .10% of the fee. This reduction
amounted to $88,594.
Pursuant to certain state regulations, FIMCO has agreed to reimburse the
Fund if and to the extent that the Fund's aggregate operating expenses,
including the advisory fee but generally excluding interest, taxes,
brokerage commissions and extraordinary expenses, exceed any limitation
on expenses applicable to the Fund in those states (unless waivers of
such limitations have been obtained). The amount of any such
reimbursement is limited to the yearly advisory fee. For the six months
ended June 30, 1995, no reimbursement was required pursuant to these
provisions.
For the six months ended June 30, 1995, FIC, as underwriter, received
$149,437 in commissions after allowing $18,931 to other dealers.
Shareholder servicing costs included $163,111 in transfer agent fees
paid to ADM and $64,483 in custodian fees paid to FFS.
Pursuant to a Distribution Plan adopted under Rule 12b-1 of the 1940
Act, the Fund is authorized to pay FIC a fee in an amount up to .30% of
the average net assets of the Class A shares and up to 1% of the average
net assets of the Class B shares on an annualized basis each year,
payable monthly. The fee consists of a distribution fee and a service
fee. The service fee is paid for the ongoing servicing of clients who
are shareholders of the Fund. However, pursuant to settlements entered
into with various state regulators, the fee is limited to .15% for Class
A and .85% for Class B until February 1, 1998. For the six months ended
June 30, 1995, this fee reduction amounted to $132,733 for Class A and
$157 for Class B.
4. Restricted Securities--The Fund held the following restricted
securities at June 30, 1995:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
Date Number
Issuer Acquired of units Type of Security Cost
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Divi Hotels, Inc. 4/23/92 120,498shs Common Stock $2,540,750
Purity Supreme, Inc. 7/29/92 3,466wts Warrants, Expiring
8/6/97 ---
President Riverboat Warrants, Expiring
Casinos, Inc. 11/10/94 17,660wts 9/30/99 84,316
Synergy Group, Inc. 3/15/95 $2,918M Sr. Sec. Incr. Rate Note,
Ser. A 9 1/2%, 9/15/00 2,704,100
Olympic Financial, Ltd. 6/30/95 9,600shs Common Stock 45,600
-----------------------------------------------------------------------------------------
</TABLE>
These securities, which have been acquired through private placements,
may not be sold or transferred without prior registration under the
Securities Act of 1933 or pursuant to an exemption therefrom. If and
when the Fund sells such portfolio securities, additional costs for
registration may be required. The restricted securities are valued
pursuant to procedures established by the Fund's Board of Directors
which include using data provided by certain dealers that participate in
any secondary market that may exist for these securities, pricing
services and other relevant criteria. At June 30, 1995, the aggregate
value of the above restricted securities was $2,863,065 representing
1.6% of the Fund's net assets.
5. Rule 144A Securities--Under Rule 144A, certain restricted securities
are exempt from the registration requirements of the Securities Act of
1933 and may only be resold to qualified institutional investors. At
June 30, 1995, the Fund held ten 144A securities with an aggregate value
of $8,688,650 representing 4.7% of the Fund's net assets. These
securities are valued as set forth in Note 1A.
6. Affiliated Companies--Investments in companies 5% or more of whose
outstanding voting securities are held by the Fund are defined as
"Affiliated Companies" in Section 2(a)(3) of the 1940 Act.
7. Concentration of Credit Risk--The Fund's investment in high yield
securities whether rated or unrated may be considered speculative and
subject to greater market fluctuations and risks of loss of income and
principal than lower yielding, higher rated, fixed income securities.
The risk of loss due to default by the issuer may be significantly
greater for the holders of high yielding securities, because such
securities are generally unsecured and are often subordinated to other
creditors of the issuer. At June 30, 1995, the Fund held three defaulted
securities with a value aggregating $1,622,000
representing 0.9% of the Fund's net assets.
8. Capital--The Fund sells two classes of shares, Class A and Class B,
each with a public offering price that reflects different sales charges
and expense levels. Class A shares are sold with an initial sales charge
of up to 6.25% of the amount invested and together with the Class B
shares are subject to 12b-1 fees as described in Note 3.
Class B shares are sold without an initial sales charge, but are
generally subject to a contingent deferred sales charge which declines
in steps from 4% to 0% during a six-year period. Class B shares
automatically convert into Class A shares after eight years. Realized
and unrealized gains or losses, investment income and expenses (other
than 12b-1 fees and certain other class expenses) are allocated daily to
each class of shares based upon the relative proportion of net assets of
each class. Of the 500,000,000 shares originally authorized, the Fund
has designated 250,000,000 shares as Class A and 250,000,000 shares as
Class B.
9. Pending Litigation--The Fund is a defendant in a number of cases
involving investors who invested in the Fund and First Investors Fund
For Income, Inc. (collectively, the "Funds"). First Investors Fund For
Income, Inc. and FIC are defendants in some or all of these cases. The
suits primarily allege that FIC sales representatives had made
misrepresentations concerning the risks of investing in the Funds. FIC
has made settlements in connection with several of these cases. In
connection with these settlements, FIC's parent company, First Investors
Consolidated Corporation ("FICC"), assumed the liability. Additionally,
FICC has agreed to assume the liability, if any, in the remaining suits.
<TABLE>
<CAPTION>
Financial Highlights
FIRST INVESTORS HIGH YIELD FUND, INC.
The following table sets forth the per share operating performance data for a share of capital stock outstanding,
total return, ratios to average net assets and other supplemental data for each period indicated.
---------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B
------------------------------------------------------------------- -------
1/1/95 Year Ended December 31 1/12/95*
to ----------------------------------------------------- to
6/30/95 1994 1993 1992 1991 1990 6/30/95
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Data
Net Asset Value, Beginning of Period $4.84 $5.30 $4.97 $4.59 $3.83 $5.26 $4.84
----- ----- ----- ----- ----- ----- -----
Income from Investment Operations
Net investment income .24 .48 .47 .53 .53 .61 .21
Net realized and unrealized
gain (loss) on investments .31 (.46) .34 .31 .75 (1.44) .30
----- ----- ----- ----- ----- ----- -----
Total from Investment Operations .55 .02 .81 .84 1.28 (.83) .51
----- ----- ----- ----- ----- ----- -----
Less Dividends from Net Investment Income .24 .48 .48 .46 .52 .60 .20
----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of Period $5.15 $4.84 $5.30 $4.97 $4.59 $3.83 $5.15
===== ===== ===== ===== ===== ===== =====
Total Return(%)+ 11.59 .39 16.95 18.94 35.87 (17.25) 10.79
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $182.8 $170.4 $191.3 $191.7 $210.7 $297.0 $.4
Ratio to Average Net Assets:(%)
Expenses 1.45(a) 1.56 1.69 1.39 1.58 1.48 2.08(a)
Net investment income 9.50(a) 9.48 8.96 10.65 12.36 13.18 9.15(a)
Ratio to Average Net Assets Before
Expenses Waived:(%)
Expenses 1.55(a) 1.59 N/A N/A N/A N/A 2.18(a)
Net investment income 9.40(a) 9.44 N/A N/A N/A N/A 9.05(a)
Portfolio Turnover Rate(%) 22 32 87 43 45 26 22
+Calculated without sales charges
*Date shares first offered
(a)Annualized
See notes to financial statements
</TABLE>
Independent Auditor's Report
To the Shareholders and Board of Directors of
First Investors High Yield Fund, Inc.
We have audited the accompanying statement of assets and liabilities of
First Investors High Yield Fund, Inc., including the portfolio of
investments, as of June 30, 1995, and the related statement of
operations for the six months then ended, the statement of changes in
net assets for the six months ended June 30, 1995 and the year ended
December 31, 1994, and financial highlights for each of the periods
presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned as of June 30,
1995, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of First Investors High Yield Fund, Inc. at June 30,
1995, and the results of its operations, changes in its net assets and
financial highlights for each of the respective periods presented, in
conformity with generally accepted accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
July 31, 1995
This page intentionally left blank.
FIRST INVESTORS HIGH YIELD FUND, INC.
Directors
-------------------------------------
James J. Coy
Roger L. Grayson
Glenn O. Head
Kathryn S. Head
F. William Ortman, Jr.
Rex R. Reed
Herbert Rubinstein
James M. Srygley
John T. Sullivan
Robert F. Wentworth
Officers
-------------------------------------
Glenn O. Head
President
George V. Ganter
Vice President
Concetta Durso
Vice President and Secretary
Joseph I. Benedek
Treasurer
Carol Lerner Brown
Assistant Secretary
FIRST INVESTORS HIGH YIELD FUND, INC.
Shareholder Information
-------------------------------------
Investment Adviser
First Investors
Management Company, Inc.
95 Wall Street
New York, NY 10005
Underwriter
First Investors Corporation
95 Wall Street
New York, NY 10005
Custodian
The Bank of New York
48 Wall Street
New York, NY 10286
Transfer Agent
Administrative Data
Management Corp.
581 Main Street
Woodbridge, NJ 07095-1198
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 M Street, N.W.
Washington, DC 20036
Auditors
Tait, Weller & Baker
Two Penn Center Plaza
Philadelphia, PA 19102
It is the Fund's practice to mail only one copy of its annual and semi-
annual reports to any address at which more than one shareholder with
the same last name has indicated that mail is to be delivered.
Additional copies of the reports will be mailed if requested by any
shareholder in writing or by calling 800-423-4026. The Fund will ensure
that separate reports are sent to any shareholder who subsequently
changes his or her mailing address.
This report is authorized for distribution only to existing
shareholders, and, if given to prospective shareholders, must be
accompanied or preceded by the Fund's prospectus.
FIRST INVESTORS HIGH YIELD FUND, INC.
95 WALL STREET
NEW YORK, NY 10005
The following appears on the bottom lefthand side:
First Investors Logo, which is described as follows: the arabic numeral
one separated into seven vertical segments followed by the word "First
Investors."
A MEMBER OF THE
FIRST INVESTORS
FINANCIAL NETWORK
FIHY150
Vertically reading from bottom to top in the center of the page the
words "FIRST INVESTORS" appear.
FIRST
INVESTORS
HIGH YIELD
FUND, INC.
SEMI-
ANNUAL
REPORT
JUNE 30, 1995
