Portfolio Manager's Letter
FIRST INVESTORS HIGH YIELD FUND, INC.
Dear Shareholder:
The principal factors that affected the Fund's performance in 1994 were
strong economic growth and fears of inflation. The U.S. economic
recovery hit full stride with gross domestic product growth of
approximately 4%. The unemployment rate fell from 6.4% to 5.4% as the
economy created 3.5 million new jobs. Feeling secure about job
prospects, consumers were willing to borrow and spend. U.S. vehicle
sales reached their highest level since 1988. Despite strong growth,
inflation remained below 3% as low labor costs, improved productivity
and international competition kept prices from accelerating.
Nonetheless, concerned that strong economic growth would eventually
lead to inflation, the Federal Reserve in February engineered the first
of six short term interest rate increases which in total raised rates
250 basis points (2.50%). As is typical at this point in the economic
cycle, long-term interest rates also rose with the benchmark 30 year
U.S. Treasury bond yield increasing approximately 155 basis points
(1.55%) during the year. With higher interest rates creating concern
that the economy might slow, broad stock market indices were unable to
advance and ended the year unchanged to slightly lower despite strong
earnings reported by many companies.
Last year began positively as high yield bonds were in great demand.
However, as rising interest rates caused bond investors to retrench,
especially in the second half of 1994, caution pervaded the market.
High yield underwriting volume fell to $43 billion from over $70
billion in 1993. A market preference for better quality credits
benefitted that sector of the market and First Investors High Yield
Fund in particular.
The high yield market was not immune to the difficult conditions in the
fixed income and equity markets with the First Boston High Yield Index
posting a total return of -.97%. The First Investors High Yield Fund,
however, performed well, posting a total return of .39% according to
Lipper Analytical Services, Inc. This compares favorably to a total
return of -3.83% for the average high yield fund (according to Lipper
Analytical Services) which exceeded the performance of the benchmark
U.S. Treasury ten year note by over four percent.
The Fund's performance benefitted from an interest rate posture that
proved to be relatively defensive. With most of the portfolio invested
in high coupon bonds that tend to be more stable in price, the Fund was
less adversely affected by the trend toward higher interest rates than
it might have been. Lower or zero coupon bonds trading at discounted
prices were negatives, but the Fund had moderate exposure to these
types of securities.
Correct industry choices and individual bond selections are the key
factors that differentiated First Investors High Yield Fund from many
of its competitors. Announcements by investment grade companies that
they were acquiring issuers whose securities were held by the Fund
bolstered the values of various Fund holdings, such as Allison Engine
10%, American Medical 13 1/2%, Healthtrust 10 3/4% and 8 3/4%, Summit
Communications 10 1/2% and Transco Energy 11 1/4%. We foresaw good
economic growth and emphasized cyclical investments benefitting from
volume growth and pricing improvement in the chemical, mining/metal,
paper/forest product sectors. As importantly, the Fund had little or no
exposure to some of the worst performing sectors: casinos, home
builders and emerging markets. Through careful management, the Fund
avoided distressed situations in all but two instances, Acme Holdings
11 3/4% and SHRP 11 3/4%. Still, credit concerns caused other bonds to
decline in value, such as Remington Arms 10%, Continental Medical
10 7/8%, Lomas Mortgage 10 1/4%, Synthetic Industries 12 3/4% and Waxman
Industries 13 3/4%. Investments that decline in value are held only if
we expect competitive future returns.
To sum up, high yield bonds were less buffeted by interest rate risk in
1994 than most fixed income alternatives. Investors who were able to
accept the inherent credit risk in the Fund were rewarded.
As always, we appreciate the opportunity to serve your investment
needs.
Sincerely,
/s/ George V. Ganter
George V. Ganter
Portfolio Manager
January 31, 1995
Cumulative Performance Information
FIRST INVESTORS HIGH YIELD FUND, INC.
Comparison of change in value of $10,000 investment in the First
Investors High Yield Fund, Inc. (Class A shares) and the First Boston
High Yield Index.
The following table is the source data for the line chart which
appears at this point in the printed document. This table is
not part of the original printed document and is shown for
reference only. The same is also true for this descriptive
paragraph.
<TABLE>
<CAPTION>
High Yield Fund First Boston High Yield Index
<S> <C> <C>
Aug-86 $ 9,375 $10,000
Dec-86 9,612 10,438
Dec-87 9,480 11,119
Dec-88 10,699 12,637
Dec-89 9,835 12,686
Dec-90 8,139 11,877
Dec-91 11,058 17,073
Dec-92 13,153 19,909
Dec-93 15,383 23,675
Dec-94 15,444 23,445
</TABLE>
<TABLE>
<CAPTION>
Class A shares Average Annual Total Return*
N.A.V. Only S.E.C. Standardized
<S> <C> <C>
One Year .39% (5.83%)
Five Years 9.44% 8.04%
Since Inception 6.12% 5.32%
S.E.C. 30-Day Yield 9.27%
</TABLE>
The graph compares a $10,000 investment made in the First Investors
High Yield Fund, Inc. on 8/12/86 (inception date) with a similar
investment in the First Boston High Yield Index. For purposes of the
graph and the accompanying table, unless otherwise indicated, it has
been assumed that the maximum sales charge was deducted from the
initial $10,000 investment in the Fund and all dividends and
distributions were reinvested. Investors investing in periodic payment
plans bear additional expenses.
The First Boston High Yield Index is designed to measure the
performance of the High Yield Bond Market. The Index consists of 661
different issues, 576 of which are cash pay, 70 are zero-coupon, 6 are
step bonds, 4 are payment-in-kind bonds and the remaining 5 are in
default. The bonds included in the Index have an average life of 8.1
years, an average maturity of 8.2 years, an average duration of 4.7
years and an average coupon of 10.65%. The Index does not take into
account fees and expenses. It is not possible to invest in the First
Boston High Yield Index.
* Average Annual Total Return figures (for the period ended 12/31/94)
include the reinvestment of all dividends and distributions. "N.A.V.
Only" returns are calculated without sales charges. The "S.E.C.
Standardized" returns shown are based on the maximum sales charge of
6.25% (prior to 7/1/93 and 12/29/89, the maximum sales charges were
6.9% and 7.25%, respectively). In addition, the Fund began reinvesting
dividends at N.A.V. on 11/30/90; previously dividends were reinvested
at offering price. Therefore, total returns and yield are higher than
they would have been had these charges not been reduced or eliminated.
Some or all of the expenses of the Fund were waived or assumed. If such
expenses had been paid by the Fund, the S.E.C. Standardized Average
Annual Total Return for One Year, Five Years and Since Inception would
have been (5.86%), 7.91%, and 5.24%, respectively and the S.E.C. Yield
for December 1994 would have been 9.22%. Results represent past
performance and do not indicate future results. Investment return and
principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than the original
cost. The unusually high current yields offered reflect the substantial
risks associated with investments in high yield bonds. The issuers of
the bonds pay higher interest rates because they have a greater
likelihood of financial difficulty which could result in their
inability to repay the bonds fully when due. Prices of high yield
bonds are also subject to greater fluctuations. The Fund was closed to
new investments from 11/9/90 to 7/27/92. First Boston High Yield Index
figures from CS First Boston and all other figures from First Investors
Management Company Inc. Class A shares were the only shares offered by
the Fund during the period.
Portfolio Composition
FIRST INVESTORS HIGH YIELD FUND, INC.
The Dollar weighted average of credit ratings of all bonds held by the
Fund during the 1994 fiscal year, and the dollar weighted average of
the total of the Fund's investments in zero coupon bonds and pay-in-
kind bonds during the 1994 fiscal year, computed on a monthly basis, is
set forth below. This information reflects the average composition of
the Fund's assets during the 1994 fiscal year and is not necessarily
representative of the Fund as of the end of its 1994 fiscal year, the
current fiscal year or at any other time in the future.
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------
Comparable Quality
Rated by of Unrated Securities
Moody's to Bonds Rated by Moody's
- - ---------------------------------------------------------------------
<S> <C> <C>
Baa2 1.15% 0.00%
Baa3 0.52 0.00
Ba1 0.76 0.00
Ba2 5.93 0.58
Ba3 10.82 0.21
B1 20.81 0.07
B2 16.72 2.57
B3 20.46 1.34
Caa 5.85 0.29
Ca 0.07 0.29
- - ---------------------------------------------------------------------
</TABLE>
Zero Coupon Bonds 9.02%
Pay-in-kind Bonds 2.01%
<TABLE>
<CAPTION>
Portfolio of Investments
FIRST INVESTORS HIGH YIELD FUND, INC.
December 31, 1994
- - --------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS-- 86.2%
Aerospace/Defense--3.5%
$ 1,200M Allison Engine Company, Inc., 10%, 2003 $ 1,230,000 $ 72
3,805M Dyncorp, PIK, 16%, 2003 3,576,822 210
1,250M Fairchild Industries, Inc., 12 1/4%, 1999 1,228,125 72
- - --------------------------------------------------------------------------------------------------------------------
6,034,947 354
- - --------------------------------------------------------------------------------------------------------------------
Apparel/Textiles--1.9%
3,900M +Linter Textiles Corp., Ltd., 13 3/4%, 2000 29,250 2
3,600M Westpoint Stevens, Inc., 9 3/8%, 2005 3,231,000 190
- - --------------------------------------------------------------------------------------------------------------------
3,260,250 192
- - --------------------------------------------------------------------------------------------------------------------
Automotive--1.7%
1,100M Lear Seating, Inc., 11 1/4%, 2000 1,115,125 65
1,800M SPX Corp., 11 3/4%, 2002 1,791,000 105
- - --------------------------------------------------------------------------------------------------------------------
2,906,125 170
- - --------------------------------------------------------------------------------------------------------------------
Building Materials--2.8%
3,000M G-I Holdings, Inc., 0%, 1998 1,837,500 108
3,155M Waxman Industries, Inc., 0%-12 3/4%, 2004 1,388,200 81
1,700M Waxman Industries, Inc., 13 3/4%, 1999 1,598,000 94
- - --------------------------------------------------------------------------------------------------------------------
4,823,700 283
- - --------------------------------------------------------------------------------------------------------------------
Chemicals--7.4%
2,240M Buckeye Cellulose, Inc., 10 1/4%, 2001 2,094,400 123
2,500M Harris Chemical North America, Inc., 0%-10 1/4%, 2001 2,062,500 121
3,175M Harris Chemical North America, Inc., 10 3/4%, 2003 2,928,938 172
1,350M OSI Specialties, Inc., 9 1/4%, 2003 1,228,500 72
1,800M Rexene Corp., 11 3/4%, 2004 1,840,500 108
2,000M Synthetic Industries, Inc., 12 3/4%, 2002 1,760,000 103
600M UCC Investors Holdings, Inc., 11%, 2003 591,000 35
- - --------------------------------------------------------------------------------------------------------------------
12,505,838 734
- - --------------------------------------------------------------------------------------------------------------------
Conglomerates--2.0%
5,500M International Semi-Tech Microelectronics, Inc., 0%-11 1/2%, 2003 2,310,000 135
1,255M Lexington Precision Co., Inc., 12 3/4%, 2000 1,116,717 66
- - --------------------------------------------------------------------------------------------------------------------
3,426,717 201
- - --------------------------------------------------------------------------------------------------------------------
Consumer Non-Durables--.9%
1,500M Calmar, Inc., 12%, 1997 1,500,000 88
- - --------------------------------------------------------------------------------------------------------------------
Containers--4.6%
5,600M Owens Illinois, Inc., 11%, 2003 5,810,000 341
2,000M Riverwood International Corp., 11 1/4%, 2002 2,040,000 120
- - --------------------------------------------------------------------------------------------------------------------
7,850,000 461
- - --------------------------------------------------------------------------------------------------------------------
Durable Goods Manufacturing--2.6%
2,460M Fairfield Manufacturing, Inc., 11 3/8%, 2001 2,300,100 135
2,500M Remington Arms Company, Inc., 9 1/2%, 2003 (Note 5) 2,100,000 123
- - --------------------------------------------------------------------------------------------------------------------
4,400,100 258
- - --------------------------------------------------------------------------------------------------------------------
Electrical Equipment--2.5%
1,850M Amphenol Corp., 12 3/4%, 2002 2,072,000 122
2,200M IMO Industries, Inc., 12%, 2001 2,200,000 129
- - --------------------------------------------------------------------------------------------------------------------
4,272,000 251
- - --------------------------------------------------------------------------------------------------------------------
Energy Services--3.5%
2,918M Synergy Group, Inc., 9 1/2%, 2000 2,334,400 137
3,400M Transco Energy Co., 11 1/4%, 1999 3,612,500 212
- - --------------------------------------------------------------------------------------------------------------------
5,946,900 349
- - --------------------------------------------------------------------------------------------------------------------
Entertainment/Leisure--.2%
1,925M +SHRP Capital Corp., 11 3/4%, 1999 288,750 17
- - --------------------------------------------------------------------------------------------------------------------
Financial Services--3.5%
1,750M American Reinsurance Co., Inc., 10 7/8%, 2004 1,884,865 111
2,800M Lomas Mortgage, USA, 10 1/4%, 2002 2,352,000 138
1,900M Olympic Financial, Ltd., 11 3/4%, 2000 1,738,500 102
- - --------------------------------------------------------------------------------------------------------------------
5,975,365 351
- - --------------------------------------------------------------------------------------------------------------------
Food/Beverage/Tobacco--1.7%
2,900M Fleming Co., Inc., 10 5/8%, 2001 2,900,000 170
- - --------------------------------------------------------------------------------------------------------------------
Food Services--1.1%
1,100M Americold Corp., 11 1/2%, 2005 990,000 58
1,100M Flagstar Cos., Inc., 11 1/4%, 2004 913,000 54
- - --------------------------------------------------------------------------------------------------------------------
1,903,000 112
- - --------------------------------------------------------------------------------------------------------------------
Gaming/Lodging--2.7%
2,450M Casino America, Inc., 11 1/2%, 2001 2,058,000 121
1,000M GB Property Funding, Inc., 10 7/8%, 2004 810,000 47
2,000M President Riverboat Casinos, Inc., 13%, 2001 (Note 5) 1,750,000 103
- - --------------------------------------------------------------------------------------------------------------------
4,618,000 271
- - --------------------------------------------------------------------------------------------------------------------
Healthcare--5.8%
900M American Medical International, Inc., 11%, 2000 936,000 55
2,800M American Medical International, Inc., 13 1/2%, 2001 3,059,000 180
2,215M Continental Medical Systems, Inc., 10 7/8%, 2002 1,827,375 107
1,000M Healthtrust, Inc., 10 3/4%, 2002 1,057,500 62
1,700M Healthtrust, Inc., 8 3/4%, 2005 1,632,000 96
1,300M Hillhaven Corp., 10 1/8%, 2001 1,300,000 76
- - --------------------------------------------------------------------------------------------------------------------
9,811,875 576
- - --------------------------------------------------------------------------------------------------------------------
Information Technology/Office Equipment--2.4%
1,000M Bell & Howell Co., 10 3/4%, 2002 952,500 56
3,000M CES Card Establishment Services, Inc., 10%, 2003 3,120,000 183
- - --------------------------------------------------------------------------------------------------------------------
4,072,500 239
- - --------------------------------------------------------------------------------------------------------------------
Media/Cable Television--10.0%
1,000M Cablevision Industries, Inc., 10 3/4%, 2002 985,000 58
2,300M Continental Broadcasting, Ltd., 10 5/8%, 2003 2,323,000 136
3,700M Garden State Newspapers, Inc., 12%, 2004 3,663,000 215
3,000M Lamar Advertising, Inc., 11%, 2003 2,857,500 168
3,625M Outdoor Systems, Inc., 10 3/4%, 2003 3,262,500 191
1,300M Summit Communications Group, 10 1/2%, 2005 1,322,750 78
5,100M Videotron Holdings, PLC., 0%-11 1/8%, 2004 2,677,500 157
- - --------------------------------------------------------------------------------------------------------------------
17,091,250 1,003
- - --------------------------------------------------------------------------------------------------------------------
Mining/Metals--9.7%
3,000M Carbide/Graphite Group, Inc., 11 1/2%, 2003 3,015,000 177
2,475M Geneva Steel Co., Inc., 11 1/8%, 2001 2,326,500 136
4,000M Magma Copper Co., Inc., 12%, 2001 4,315,000 253
4,050M WCI Steel, Inc., 10 1/2%, 2002 3,877,875 228
3,600M Wheeling-Pittsburgh Steel Corp., 9 3/8%, 2003 3,060,000 180
- - --------------------------------------------------------------------------------------------------------------------
16,594,375 974
- - --------------------------------------------------------------------------------------------------------------------
Miscellaneous--.5%
2,300M +Acme Holdings, Inc., 11 3/4%, 2000 920,000 54
- - --------------------------------------------------------------------------------------------------------------------
Paper/Forest Products--6.3%
3,600M Gaylord Container Corp., 11 1/2%, 2001 3,654,000 214
590M Seminole Kraft Corp., 13 1/2%, 1996 590,000 34
2,750M Stone Container Corp., 11 7/8%, 1998 2,842,813 167
3,800M Stone Container Corp., 9 7/8%, 2001 3,591,000 211
- - --------------------------------------------------------------------------------------------------------------------
10,677,813 626
- - --------------------------------------------------------------------------------------------------------------------
Retail-General Merchandise--.9%
33M Barry's Jewelers, Inc., 12 5/8%, 1996 16,785 1
1,750M General Host Co., Inc., 11 1/2%, 2002 1,531,250 90
- - --------------------------------------------------------------------------------------------------------------------
1,548,035 91
- - --------------------------------------------------------------------------------------------------------------------
Telecommunications--4.5%
6,525M MFS Communications, Inc., 0%-9 3/8%, 2004 3,784,500 222
1,800M PanAmSat Capital Corp., 9 3/4%, 2000 1,710,000 100
3,400M PanAmSat Capital Corp., 0%-11 3/8%, 2003 2,108,000 124
- - --------------------------------------------------------------------------------------------------------------------
7,602,500 446
- - --------------------------------------------------------------------------------------------------------------------
Transportation--3.5%
3,550M Eletson Holdings, Inc., 9 1/4%, 2003 3,163,937 185
1,100M Moran Transportation Co., 11 3/4%, 2004 1,034,000 61
1,900M Trism, Inc., 10 3/4%, 2000 1,786,000 105
- - --------------------------------------------------------------------------------------------------------------------
5,983,937 351
- - --------------------------------------------------------------------------------------------------------------------
Total Value of Corporate Bonds (cost $161,067,896) 146,913,977 8,622
- - --------------------------------------------------------------------------------------------------------------------
UNITS--1.1%
Telecommunications
3,725 Echostar Communications Corp., 0%-12 7/8%, 2004(a)(cost $2,153,714) 1,927,688 113
- - --------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--2.7%
Building Materials--.5%
65,119 *American Buildings, Inc. 920,213 54
- - --------------------------------------------------------------------------------------------------------------------
Electrical Equipment--.0%
6,481 *Thermadyne Holdings Corp. 73,721 4
- - --------------------------------------------------------------------------------------------------------------------
Gaming/Lodging--.0%
120,498 *Divi Hotels, Inc. (Note 4) 6,025 --
- - --------------------------------------------------------------------------------------------------------------------
Miscellaneous--.4%
8,832 #*CIC I Acquisition Corp. (Note 4) 635,904 37
- - --------------------------------------------------------------------------------------------------------------------
Paper/Forest Products--.1%
15,964 *Gaylord Container Corp., Class "A" 145,671 9
- - --------------------------------------------------------------------------------------------------------------------
Retail-General Merchandise--1.5%
115,806 *Barry's Jewelers, Inc. 810,645 48
115,965 *Peebles, Inc. (Note 4) 1,739,475 102
- - --------------------------------------------------------------------------------------------------------------------
2,550,120 150
- - --------------------------------------------------------------------------------------------------------------------
Transportation--.2%
13,964 *Chicago & North Western Holdings Corp. 272,298 16
- - --------------------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $12,704,755) 4,603,952 270
- - --------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--1.7%
20,000 California Federal Bank, 10 5/8%, Series "B" 1,990,000 116
40,800 Greater New York Savings Bank, 12%, Series "B" 897,600 53
- - --------------------------------------------------------------------------------------------------------------------
Total Value of Preferred Stocks (cost $3,160,000) 2,887,600 169
- - --------------------------------------------------------------------------------------------------------------------
WARRANTS--.5%
Building Materials--.0%
100,300 *Waxman Industries, Inc. (expiring 6/1/04)(Note 5) 25,075 2
- - --------------------------------------------------------------------------------------------------------------------
Electrical Equipment--.0%
202 *Digicon, Inc. (expiring 7/1/96) 13 --
- - --------------------------------------------------------------------------------------------------------------------
Entertainment/Leisure--.0%
7,200 *SHRP Capital Corp. (expiring 7/15/99) -- --
- - --------------------------------------------------------------------------------------------------------------------
Financial Services--.0%
9,600 *Olympic Financial, Ltd. (expiring 9/1/99) 16,800 1
- - --------------------------------------------------------------------------------------------------------------------
Gaming/Lodging--.1%
7,987 *Casino America, Inc. (expiring 11/15/96) 1,997 --
12,000 *Presidential Riverboat Casinos, Inc. (expiring 9/15/96)(Note 5) 48,000 3
17,660 *Presidential Riverboat Casinos, Inc. (expiring 9/30/99)(Note 4) 70,640 4
- - --------------------------------------------------------------------------------------------------------------------
120,637 7
- - --------------------------------------------------------------------------------------------------------------------
Paper/Forest Products--.4%
84,794 *Gaylord Container Corp. (expiring 7/31/96) 625,356 37
- - --------------------------------------------------------------------------------------------------------------------
Retail-Food/Drug--.0%
3,466 *Purity Supreme, Inc. (expiring 8/6/97)(Note 4) 69 --
- - --------------------------------------------------------------------------------------------------------------------
Retail-General Merchandise--.0%
3,800 *Payless Cashways, Inc. (expiring 11/1/96) 5,700 --
- - --------------------------------------------------------------------------------------------------------------------
Total Value of Warrants (cost $1,003,705) 793,650 47
- - --------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--2.3%
4,000M United States Treasury Notes, 7%, 1999 (cost $4,331,875) 3,875,625 227
- - --------------------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--4.4%
2,500M Cigna Corp., 6.1%, 1/3/95 2,499,153 147
4,000M Coca Cola Co., 5.75%, 1/9/95 3,994,889 234
1,000M Raytheon Co., 5.95%, 1/9/95 998,677 59
- - --------------------------------------------------------------------------------------------------------------------
Total Value of Short-Term Corporate Notes (cost $7,492,719) 7,492,719 440
- - --------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $191,914,664) 98.9% 168,495,211 9,888
Other Assets, Less Liabilities 1.1 1,903,880 112
- - --------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $170,399,091 $10,000
====================================================================================================================
* Non-income producing
+ In default as to principal and/or interest (Note 8)
# Affiliated company (Note 6)
(a) Each unit consists of $1,000 principal amount 12 7/8%
senior secured discount note due 6/1/04 and warrants to
purchase six shares of Class "A" common stock.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
FIRST INVESTORS HIGH YIELD FUND, INC.
December 31, 1994
- - -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments in securities, at value (Note 1A):
Unaffiliated companies (identified cost $188,684,484) $167,859,307
Affiliated companies (identified cost $3,230,180) 635,904 $168,495,211
-------------
Cash 467,366
Receivables:
Interest and dividends 3,486,402
Capital stock sold 134,387
Investment securities sold 28,000 3,648,789
-------------
Other assets 59,061
-------------
Total Assets 172,670,427
Liabilities
Payables:
Investment securities purchased 1,000,327
Capital stock redeemed 648,752
Cash portion of dividend payable January 15, 1995 363,261
Accrued advisory fee 134,059
Accrued expenses 124,937
-------------
Total Liabilities 2,271,336
-------------
Net Assets $170,399,091
=============
Net Assets Consist of:
Capital paid in $629,648,249
Undistributed net investment income 2,331,309
Accumulated net realized loss on investment transactions (438,161,014)
Net unrealized depreciation in value of investments (23,419,453)
-------------
Total $170,399,091
=============
Net Asset Value and Redemption Price Per Share--Class A (Note 9)
($170,399,091 divided by 35,224,531 shares outstanding),
250,000,000 shares authorized, $0.01 par value $4.84
=====
Maximum Offering Price Per Share--Class A ($4.84/.9375)* $5.16
=====
* 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.
Year Ended December 31, 1994
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income
Income:
Interest (Note 6) $ 19,405,929
Dividends 235,670
Other income 245,472
-------------
Total income $ 19,887,071
Expenses:
Advisory fee (Note 3) 1,801,630
Shareholder servicing costs (Note 3) 584,336
Distribution plan expenses (Note 7) 294,283
Reports and notices to shareholders 99,863
Other expenses 90,598
-------------
Total expenses 2,870,710
Less: Expenses waived (Note 3) 66,131
-------------
Net expenses 2,804,579
-------------
Net investment income 17,082,492
Realized and Unrealized Gain (Loss) on Investments (Notes 2 and 6):
Net realized gain (loss) on investments:
Unaffiliated companies 1,028,559
Affiliated companies (181,676)
-------------
Net realized gain on investments 846,883
Net unrealized depreciation of investments (17,368,735)
-------------
Net loss on investments (16,521,852)
-------------
Net Increase in Net Assets Resulting from Operations $ 560,640
============
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
FIRST INVESTORS HIGH YIELD FUND, INC.
- - --------------------------------------------------------------------------------------------------------------
Year Ended December 31 1994 1993
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income $ 17,082,492 $ 17,131,714
Net realized gain (loss) on investments 846,883 (2,829,513)
Net unrealized appreciation (depreciation) of investments (17,368,735) 15,996,568
------------- ------------
Net increase in net assets resulting from operations 560,640 30,298,769
------------- ------------
Dividends to Shareholders from:
Net investment income (17,023,090) (17,765,856)
------------- ------------
Capital Share Transactions--Class A(a)
Issued 7,240,104 2,163,475
Issued on reinvestments 12,643,358 13,081,889
Redeemed (24,351,080) (28,138,192)
------------- ------------
Net decrease from capital share transactions (4,467,618) (12,892,828)
------------- ------------
Total decrease in net assets (20,930,068) (359,915)
Net Assets
Beginning of year 191,329,159 191,689,074
------------- ------------
End of year (including undistributed net investment income of
$2,331,309 and $2,271,907, respectively) $170,399,091 $191,329,159
============= =============
(a) Capital shares issued and redeemed--Class A (Note 9)
Issued 1,431,548 417,046
Issued on reinvestments 2,504,396 2,526,676
Redeemed (4,798,027) (5,461,251)
------------- ------------
Net decrease in shares (862,083) (2,517,529)
============= =============
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 December 31, 1994, 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 year ended December 31, 1994,
purchases and sales of investment securities, other than United States
Government obligations and short-term corporate notes, aggregated
$54,443,906 and $58,263,513, respectively.
At December 31, 1994, the cost of investments for federal income tax
purposes was $191,914,664. Accumulated net unrealized depreciation on
investments was $23,419,453, consisting of $2,638,408 gross unrealized
appreciation and $26,057,861 gross unrealized depreciation.
3. Advisory Fee and Other Transactions With Affiliates (Also see Note
7)--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. Since April 1, 1994,
FIMCO has voluntary waived .05% of the fee. For the year ended December
31, 1994, this reduction amounted to $66,131.
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 year ended
December 31, 1994, no reimbursement was required pursuant to these
provisions.
For the year ended December 31, 1994, FIC, as underwriter, received
$171,682 in commissions after allowing $3,102 to other dealers.
Shareholder servicing costs included $350,193 in transfer agent fees
paid to ADM and $139,498 in custodian fees paid to FFS
4. Restricted Securities--The Fund held the following restricted
securities at December 31, 1994:
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------------
Date Number
Issuer Acquired of units Type of Security Cost
- - -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CIC I Acquisition Corp. 10/20/89 8,832shs Common Stock $3,230,180
Peebles, Inc. 2/07/92 115,965shs Common Stock 3,181,125
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 --
Presidential Riverboat 11/10/94 17,660wts Warrants, Expiring
Casinos, Inc. 9/30/99 84,316
- - -------------------------------------------------------------------------------------------------------------
</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 December 31, 1994, the
aggregate value of the above restricted securities was $2,452,113
representing 1.4% 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
December 31, 1994, the Fund held four 144A securities with an aggregate
value of $3,923,075 representing 2.3% 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. For the year
ended December 31, 1994, the Fund received interest income of $10,866
from such affiliated companies.
7. Distribution Plan--Pursuant to a Distribution Plan adopted under
Rule 12b-1 of the 1940 Act, the Fund may pay a fee to FIC in an amount
up to .30% of the Fund's average net assets on an annualized basis each
fiscal 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% until February 1, 1998. For the year ended December 31,
1994, this fee reduction amounted to $246,206.
8. 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 December 31, 1994, the Fund held three
defaulted securities with a value aggregating $1,238,000 representing
.7% of the Fund's net assets.
9. Capital Stock--By action of the Board of Directors, the Fund amended
its Articles of Incorporation on October 21, 1994 so that of the
500,000,000 shares originally authorized, 250,000,000 shares were
allocated as Class A capital stock and 250,000,000 shares were
allocated as Class B capital stock. As of December 31, 1994, only Class
A shares have been issued.
10. 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 allege that FIC sales representatives had made misrepresentations
concerning the risks of investing in the Funds. FIC has made tentative
settlements in connection with several of these cases. In connection
with these settlements, FIC's parent company, First Investors
Consolidated Corporation ("FICC"), has agreed to assume the liability.
Additionally, FICC has agreed to assume the liability, if any, in the
remaining suits.
Financial Highlights
FIRST INVESTORS HIGH YIELD FUND, INC.
The following table sets forth the per share operating performance data
for a Class A share of capital stock outstanding, total return, ratios
to average net assets and other supplemental data for each year
indicated.*
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------------------
Year Ended December 31
-----------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986**
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Data
- - --------------
Net Asset Value, Beginning of Year $5.30 $4.97 $4.59 $3.83 $5.26 $6.52 $6.51 $7.40 $7.42
----- ----- ----- ----- ----- ----- ----- ----- -----
Income from Investment Operations
Net investment income .48 .47 .53 .53 .61 .78 .81 .81 .21
Net realized and unrealized
gain (loss) on investments (.46) .34 .31 .75 (1.44) (1.26) -- (.87) (.03)
----- ----- ----- ----- ----- ----- ----- ----- -----
Total from Investment Operations .02 .81 .84 1.28 (.83) (.48) .81 (.06) .18
----- ----- ----- ----- ----- ----- ----- ----- -----
Less Distributions from:
Net investment income .48 .48 .46 .52 .60 .78 .80 .82 .20
Capital surplus -- -- -- -- -- -- -- .01 --
----- ----- ----- ----- ----- ----- ----- ----- -----
Total Distributions .48 .48 .46 .52 .60 .78 .80 .83 .20
----- ----- ----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of Year $4.84 $5.30 $4.97 $4.59 $3.83 $5.26 $6.52 $6.51 $7.40
===== ===== ===== ===== ===== ===== ===== ===== =====
Total Return(%)+ .39 16.95 18.94 35.87 (17.25) (8.07) 12.86 (1.38) 6.29(a)
- - ---------------
Ratios/Supplemental Data
- - ------------------------
Net Assets, End of Year
(in thousands) $170,399 $191,329 $191,689 $210,703 $297,039 $754,333 $636,950 $227,839 $91,926
Ratio to Average Net Assets:(%)
Expenses 1.56 1.69 1.39 1.58 1.48 1.23 1.30 1.28 1.39(a)
Net investment income 9.48 8.96 10.65 12.36 13.18 12.85 12.08 11.42 10.82(a)
Ratio to Average Net Assets
Before Expenses Waived:(%)
Expenses N/A N/A N/A N/A N/A N/A N/A 1.30 1.57(a)
Net investment income N/A N/A N/A N/A N/A N/A N/A 11.40 10.65(a)
Portfolio Turnover Rate(%) 32 87 43 45 26 45 82 80 11
+ Calculated without sales charge
(a) Annualized
* Adjusted for two-for-one stock split on March 31, 1989
** From August 12, 1986 (commencement of operations) to December 31, 1986
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 December 31, 1994, and the related statement of
operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended 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 December 31, 1994, 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 December
31, 1994, 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
January 31, 1995
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
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
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.
10 Woodbridge Center Drive
Woodbridge, NJ 07095-1198
Legal Counsel
Kirkpatrick & Lockhart
1800 M Street, N.W.
Washington, DC 20036
Auditors
Tait, Weller & Baker
Two Penn Center Plaza
Philadelphia, PA 19102-1707
For more complete information about First Investors High Yield Fund,
Inc., including charges and expenses, you may obtain a prospectus from
your registered representative or by calling 1-800-423-4026. Read it
carefully before you invest or send money.
FIRST INVESTORS HIGH YIELD FUND, INC.
95 WALL STREET
NEW YORK, NY 10005
First Investors LOGO
LOGO is described as follows: The arabic numeral one separated into seven
vertical segments followed by the words "First Investors".
A MEMBER OF THE
FIRST INVESTORS
FINANCIAL NETWORK
FIHY150
The words "BULK RATE U.S. POSTAGE PAID PERMIT NO. 7379" in a box
to the right of a circle containing the words "MAILED FROM
ZIP CODE 11201" appears to the right of the above language in the
printed piece.
Vertically reading from bottom to top in center of the page the words
"FIRST INVESTORS" appear in the printed piece.
FIRST
INVESTORS
HIGH YIELD
FUND, INC.
ANNUAL
REPORT
DECEMBER 31, 1994
