<PAGE>
PORTFOLIO MANAGER'S LETTER
FIRST INVESTORS HIGH YIELD FUND, INC.
Dear Investor:
We are pleased to present the semi-annual report for First Investors High Yield
Fund, Inc. for the six months ended June 30, 1997. During the period, the Fund
declared dividends from net investment income of 24.0 cents per share on Class A
shares and 22.2 cents per share on Class B shares. For the same period, the
Fund's return on a net asset value basis was 4.8% on Class A shares and 4.4% on
Class B shares compared to a return of 5.9% for the average of all high yield
funds as measured by Lipper Analytical Services, Inc.
The first half of 1997 ended with an ideal economy: sustained, moderate growth
with little inflation. Early in the year it appeared that the economy might be
growing too fast as gross domestic product expanded at a 4.9% annual rate during
the first quarter. Concerned by the economy's strength, the Federal Reserve
raised short-term interest rates in March for the first time in over two years
as an "insurance policy" in case faster growth led to higher inflation. The
Federal Reserve's action subsequently appeared to be unnecessary as the economy
slowed down significantly in the second quarter and consumer price inflation in
fact decelerated to an annual rate of less than 2.5%.
Although both the bond and stock markets suffered setbacks at times during the
first six months of the year, the combination of moderate growth and low
inflation ultimately provided a positive environment for investors. The markets
were also buoyed by an agreement between the President and Congress to eliminate
the Federal budget deficit over the next five years. Lastly, the markets
benefited from substantial demand for both stocks and bonds throughout the first
half of 1997.
Many of the circumstances that caused the high yield market and the First
Investors High Yield Fund to perform well in 1996 continued through the first
half of 1997. These factors include buoyant capital markets and strong equity
valuations, which in turn supported credit sensitive debt securities. Indeed,
the total return from the junk bond market was 5.9%, according to the Credit
Suisse First Boston Index, which compares with a 2.5% return on ten-year
Treasury notes. This supportive background for financial markets stimulated
demand for high yield bonds. Investors with varying objectives sensed profit
potential and committed large amounts of money to junk bonds. The market
therefore had a voracious appetite for bonds and readily absorbed a total of
$57.6 billion in new issuance by the end of June.
High yield issuers have generally benefited from the benign economic
environment. We have seen many companies carry out bold strategies for growth
and operating improvement, aided by capital available at comparatively low cost.
Financial flexibility afforded to companies is illustrated by the fact that the
amount of extra yield earned on low rated (riskier) bonds continues to decline
relative to their more highly rated peers. For example, according to Chase
Securities, yields on B rated bonds have on average declined by .26% versus BB
rated bonds. This is an obvious positive for companies coming into the market to
borrow, as it bolsters precious corporate liquidity and has helped to fuel the
record issuance. Consistent with this overall landscape, default rates have been
low, amounting to .83% according to Merrill Lynch. None have occurred in the
High Yield Fund during this period.
1
<PAGE>
PORTFOLIO MANAGER'S LETTER (continued)
FIRST INVESTORS HIGH YIELD FUND, INC.
The Fund was affected by its slightly higher than average quality distribution.
Also, its duration, or maturity schedule, is slightly shorter than some of its
competitors. This is meant to protect the Fund, and has succeeded at doing so,
but in the circumstances of early 1997, it caused the Fund to lag slightly. Two
holdings, Semi-Tech Corp. and Omnipoint, encountered some business volatility,
from which they and their bonds have substantially recovered. They continue to
offer attractive return potentials. The Fund is reaping rewards from investments
that have succeeded and redeploying cash into issuers which are at earlier
stages in their business plans. This will have the effect of linking the Fund
more closely to current market conditions.
Merger and acquisition activity has been brisk, as companies have combined to
achieve stronger market positions and operating improvements. The Fund has
participated selectively in several such transactions that we expect will lead
to credit improvement that the market will applaud. Several portfolio holdings
have appreciated when they have received significant equity investments or were
involved in a stock for stock merger that directly improved their credit
strength.
Aware that this positive environment can change, we remain watchful for
corporate and industry developments that affect the credit direction of the
Fund's holdings and the relative values within our market, as well as for
investment opportunities.
Investors who buy bond funds--whether for income or total return--should be
aware that the value of their investment fluctuates as interest rates change.
For example, a 1% increase in yield on a ten-year Treasury bond results in
roughly a 7% decrease in that bond's price. In each of the last five years, ten-
year Treasury bond yields have moved more than 1%. In addition, the value of a
fund can fluctuate based on changes in the credit quality of the bonds which it
holds. In particular, high yield funds invest in lower-rated debt obligations
which are more sensitive than higher-rated investments to adverse economic
changes or individual corporate developments, and thus can be subject to a
higher incidence of default. Investors should be aware of these risks and
recognize that successful investing generally requires a long-term commitment to
the market.
The outlook for the financial markets continues to be positive. The economy is
growing moderately, inflation is subdued and the Federal Reserve is unlikely to
tolerate unsustainably fast economic growth. Demand for financial assets is
likely to remain strong both here and overseas. While the sizable recent returns
in some markets are not likely to continue, the factors which might cause a
sustained downturn are not readily apparent. Despite this optimistic outlook,
investors should keep in mind that a diversified portfolio provides the best
insurance against unexpected changes in the financial markets.
As always, we appreciate the opportunity to serve your investment needs.
Sincerely,
[SIGNATURE]
George V. Ganter
Vice President
and Portfolio Manager
July 28, 1997
2
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS HIGH YIELD FUND, INC.
June 30, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
CORPORATE BONDS--87.8%
AEROSPACE/DEFENSE--2.2%
$ 3,000M K & F Industries, Inc., 10.375%, 2004 $ 3,180,000 $ 152
1,400M Moog, Inc., 10%, 2006 1,477,000 71
- ---------------------------------------------------------------------------------------
4,657,000 223
- ---------------------------------------------------------------------------------------
APPAREL/TEXTILES--1.5%
3,000M Westpoint Stevens, Inc., 9.375%, 2005 3,120,000 149
- ---------------------------------------------------------------------------------------
AUTOMOTIVE--2.7%
1,120M Aftermarket Technology Corp., 12%, 2004 1,246,000 60
1,100M Lear Seating, Inc., 11.25%, 2000 1,108,250 53
1,185M Safelite Glass Corp., 9.875%, 2006 (Note 4) 1,291,650 62
2,000M Walbro Corp., 9.875%, 2005 2,042,500 98
- ---------------------------------------------------------------------------------------
5,688,400 273
- ---------------------------------------------------------------------------------------
BUILDING MATERIALS--2.1%
2,500M ISP Holdings, Inc., 9.75%, 2002 2,662,500 128
1,600M Waxman USA, Inc., 11.125%, 2001 1,608,000 77
- ---------------------------------------------------------------------------------------
4,270,500 205
- ---------------------------------------------------------------------------------------
CHEMICALS--3.8%
3,000M Harris Chemical North America, Inc., 10.25%, 2001 3,082,500 148
1,700M Harris Chemical North America, Inc., 10.75%, 2003 1,721,250 82
2,800M Rexene Corp., 11.75%, 2004 3,178,000 152
- ---------------------------------------------------------------------------------------
7,981,750 382
- ---------------------------------------------------------------------------------------
CONSUMER PRODUCTS--4.5%
2,500M Herff Jones, Inc., 11%, 2005 2,700,000 129
1,900M Hines Horticulture, Inc., 11.75%, 2005 1,995,000 96
4,000M Semi-Tech Corp., 0%-11.50%, 2003 2,410,000 115
1,200M Syratech Corp., 11%, 2007 1,282,500 61
1,000M William Carter Co., 10.375%, 2006 1,050,000 50
- ---------------------------------------------------------------------------------------
9,437,500 451
- ---------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS HIGH YIELD FUND, INC.
June 30, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
CONTAINERS/PACKAGING--1.9%
$ 1,850M Radnor Holdings, Inc., 10%, 2003 $ 1,924,000 $ 92
2,000M U. S. Can Corp., 10.125%, 2006 2,130,000 102
- ---------------------------------------------------------------------------------------
4,054,000 194
- ---------------------------------------------------------------------------------------
DURABLE GOODS MANUFACTURING--2.7%
750M Amtrol, Inc., 10.625%, 2006 787,500 38
2,445M Fairfield Manufacturing, Inc., 11.375%, 2001 2,616,150 125
2,500M Remington Arms Company, Inc., 9.50%, 2003 2,175,000 104
- ---------------------------------------------------------------------------------------
5,578,650 267
- ---------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--.3%
671M Thermadyne Holdings Corp., 10.25%, 2002 701,195 34
- ---------------------------------------------------------------------------------------
ENERGY--2.8%
1,500M Giant Industries, Inc., 9.75%, 2003 1,548,750 74
1,100M Magnum Hunter Resources, Inc., 10%, 2007 (Note 4) 1,087,625 52
3,052M Maxus Energy Corp., 11.50%, 2015 3,200,785 153
- ---------------------------------------------------------------------------------------
5,837,160 279
- ---------------------------------------------------------------------------------------
ENERGY EXPLORATION/PRODUCTS--1.6%
3,000M Gulf Canada Resources, Ltd., 9.625%, 2005 3,236,250 155
- ---------------------------------------------------------------------------------------
FINANCIAL SERVICES--.7%
1,300M Terra Nova Holdings, PLC, 10.75%, 2005 1,446,250 69
- ---------------------------------------------------------------------------------------
FOOD/BEVERAGE/TOBACCO--3.6%
2,000M International Home Foods, Inc., 10.375%, 2006 2,052,500 98
2,500M TLC Beatrice International Holdings, Inc.,
11.50%, 2005 2,812,500 135
2,350M Van de Kamps, Inc., 12%, 2005 2,632,000 126
- ---------------------------------------------------------------------------------------
7,497,000 359
- ---------------------------------------------------------------------------------------
GAMING/LODGING--2.4%
2,400M Casino America, Inc., 12.50%, 2003 2,505,000 120
750M Grand Casinos, Inc., 10.125%, 2003 776,250 37
1,750M Prime Hospitality Corp., 9.25%, 2006 1,802,500 86
- ---------------------------------------------------------------------------------------
5,083,750 243
- ---------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
HEALTHCARE--4.5%
$ 1,300M Genesis Healthcare, Inc., 9.75%, 2005 $ 1,352,000 $ 65
1,600M Integrated Health Services, Inc., 10.25%, 2006
(Note 4) 1,700,000 81
2,489M Owens & Minor, Inc., 10.875%, 2006 2,688,120 129
700M Packard Bioscience Co., 9.375%, 2007 (Note 4) 708,750 34
2,700M Tenet Healthcare Corp., 10.125%, 2005 2,943,000 141
- ---------------------------------------------------------------------------------------
9,391,870 450
- ---------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY/OFFICE EQUIPMENT--.5%
1,000M Bell & Howell Co., 10.75%, 2002 1,047,500 50
- ---------------------------------------------------------------------------------------
MEDIA/CABLE TELEVISION--16.2%
1,000M Allbritton Communications Corp., 9.75%, 2007 983,750 47
4,000M Bell Cablemedia, PLC, 0%-11.95%, 2004 3,635,000 174
2,000M Century Communications Corp., 9.50%, 2005 2,057,500 99
3,725M Echostar Communications Corp., 0%-12.875%, 2004 3,129,000 150
3,200M Garden State Newspapers, Inc., 12%, 2004 3,552,000 170
2,050M Grupo Televisa, S.A., 11.875%, 2006 2,316,500 111
1,000M Le Groupe Videotron, Ltee, 10.625%, 2005 1,118,750 54
2,000M Lenfest Communication, Inc., 10.50%, 2006 2,177,500 104
2,400M Outdoor Systems, Inc., 8.875%, 2007 (Note 4) 2,328,000 112
3,700M PanAmSat Capital Corp., 0%-11.375%, 2003 3,589,000 172
2,000M Rogers Cablesystems, Inc., 10%, 2005 2,170,000 104
2,000M Rogers Communication, Inc., 10.875%, 2004 2,105,000 101
5,100M Videotron Holdings, PLC, 0%-11.125%, 2004 4,609,125 221
- ---------------------------------------------------------------------------------------
33,771,125 1,619
- ---------------------------------------------------------------------------------------
MINING/METALS--6.7%
2,755M Carbide/Graphite Group, Inc., 11.50%, 2003 3,016,725 144
2,500M Commonwealth Aluminum Corp., 10.75%, 2006 2,631,250 126
3,200M CSN Iron, S.A., 9.125%, 2007 (Note 4) 3,144,000 151
2,000M Renco Metals, Inc., 11.50%, 2003 2,140,000 102
3,200M Wheeling-Pittsburgh Steel Corp., 9.375%, 2003 3,104,000 149
- ---------------------------------------------------------------------------------------
14,035,975 672
- ---------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS HIGH YIELD FUND, INC.
June 30, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
MISCELLANEOUS--4.7%
$ 3,000M Allied Waste, North America, 10.25%, 2006 (Note
4) $ 3,217,500 $ 154
1,750M Iron Mountain, Inc., 10.125%, 2006 1,859,375 89
1,500M Kindercare Learning Centers, Inc., 9.50%, 2009 1,456,875 70
2,000M Loomis Fargo & Co., 10%, 2004 (Note 4) 2,010,000 96
1,300M Polymer Group, Inc., 9%, 2007 (Note 4) 1,279,083 61
- ---------------------------------------------------------------------------------------
9,822,833 470
- ---------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--5.9%
2,850M Fonda Group, Inc., 9.50%, 2007 (Note 4) 2,743,125 131
2,700M Gaylord Container Corp., 11.50%, 2001 2,821,500 135
2,600M S.D. Warren Co., Inc., 12%, 2004 2,899,000 139
2,750M Stone Container Corp., 11.875%, 1998 2,897,812 139
1,000M Stone Container Corp., 10.75%, 2002 1,043,750 50
- ---------------------------------------------------------------------------------------
12,405,187 594
- ---------------------------------------------------------------------------------------
REAL ESTATE/CONSTRUCTION--1.2%
2,350M Continental Homes Holding Corp., 10%, 2006 2,420,500 116
- ---------------------------------------------------------------------------------------
RETAIL - GENERAL MERCHANDISE--.7%
1,250M Barnes & Noble, Inc., 11.875%, 2003 1,353,125 65
- ---------------------------------------------------------------------------------------
TELECOMMUNICATIONS--11.2%
3,750M American Communication Services, Inc., 0%-13%,
2005 2,240,625 107
2,200M Brooks Fiber Properties, Inc., 0%-10.875%, 2006 1,501,500 72
1,400M Brooks Fiber Properties, Inc., 10%, 2007 (Note 4) 1,417,500 68
2,100M Comcast Cellular Corp., 9.50%, 2007 (Note 4) 2,113,125 101
1,750M InterCel, Inc., 0%-12%, 2006 1,126,563 54
4,100M InterCel, Inc., 0%-12%, 2006 2,557,375 122
6,525M MFS Communications, Inc., 0%-9.375%, 2004 6,035,625 289
3,000M Omnipoint Corp., 11.625%, 2006 2,895,000 139
1,300M Orion Network Systems, Inc., 11.25%, 2007 1,352,000 65
2,300M Paging Network, Inc., 10%, 2008 2,208,000 106
- ---------------------------------------------------------------------------------------
23,447,313 1,123
- ---------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
PRINCIPAL FOR EACH
AMOUNT $10,000 OF
OR SHARES SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<S> <S> <C> <C>
TRANSPORTATION--3.4%
$ 3,550M Eletson Holdings, Inc., 9.25%, 2003 $ 3,603,250 $ 173
1,350M Moran Transportation Co., 11.75%, 2004 1,498,500 72
2,050M Trism, Inc., 10.75%, 2000 1,988,500 95
- ---------------------------------------------------------------------------------------
7,090,250 340
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF CORPORATE BONDS (cost
$177,119,558) 183,375,083 8,782
- ---------------------------------------------------------------------------------------
COMMON STOCKS--.4%
ELECTRICAL EQUIPMENT--.1%
6,481 *Thermadyne Holdings Corp. 204,152 10
- ---------------------------------------------------------------------------------------
MEDIA/CABLE TELEVISION--.1%
12,623 *Echostar Communications Corp. - Class "A" 197,234 9
- ---------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--.2%
46,061 *Gaylord Container Corp. - Class "A" 354,094 17
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF COMMON STOCKS (cost $358,218) 755,480 36
- ---------------------------------------------------------------------------------------
PREFERRED STOCKS--4.0%
FINANCIAL--1.7%
20,000 California Federal Bank, 10.625%, Series "B" 2,230,000 107
40,800 Greater New York Savings Bank, 12%, Series "B" 1,295,400 62
- ---------------------------------------------------------------------------------------
3,525,400 169
- ---------------------------------------------------------------------------------------
MEDIA/CABLE TELEVISION--1.7%
34,896 Cablevision Systems Corp., 11.125%, Series "M" 3,559,392 170
- ---------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--.6%
30,200 S.D. Warren Co., Inc., 14%, Series "B" 1,298,600 62
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF PREFERRED STOCKS (cost $7,464,499) 8,383,392 401
- ---------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS HIGH YIELD FUND, INC.
June 30, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
WARRANTS INVESTED
OR FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<S> <S> <C> <C>
WARRANTS--.2%
GAMING/LODGING--.0%
17,660 *President Riverboat Casinos, Inc. (expiring
9/30/99)(Note 4) $ 17,660 $ 1
- ---------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--.1%
30,200 *S.D. Warren Co., Inc. (expiring 12/15/06)(Note
4) 151,000 7
- ---------------------------------------------------------------------------------------
TELECOMMUNICATIONS--.1%
3,750 *American Communication Services, Inc. (expiring
11/1/05)(Note 4) 178,125 9
5,600 *InterCel, Inc. (expiring 2/01/06) 22,400 1
- ---------------------------------------------------------------------------------------
200,525 10
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF WARRANTS (cost $84,316) 369,185 18
- ---------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--1.9%
$ 4,000M Federal Home Loan Bank Board, 6.02%, 1998 (cost
$4,000,000) 3,998,080 191
- ---------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--5.0%
6,000M Archer-Daniels-Midland Co., 6.20%, 7/1/97 6,000,000 288
4,500M NYNEX Credit Co., 5.55%, 7/10/97 4,493,756 215
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF SHORT-TERM CORPORATE NOTES (cost
$10,493,756) 10,493,756 503
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF INVESTMENTS (cost $199,520,347) 99.3% 207,374,976 9,931
OTHER ASSETS, LESS LIABILITIES .7 1,433,040 69
- ---------------------------------------------------------------------------------------
NET ASSETS 100.0% $208,808,016 $10,000
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
</TABLE>
* Non-income producing
See notes to financial statements
8
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
FIRST INVESTORS HIGH YIELD FUND, INC.
June 30, 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments in securities, at value
(identified cost $199,520,347) (Note
1A).................................. $ 207,374,976
Cash................................... 919,072
Receivables:
Interest............................. $ 3,665,071
Capital shares sold.................. 262,332 3,927,403
-------------
Other assets........................... 59,061
-------------
Total Assets........................... 212,280,512
LIABILITIES
Payables:
Dividend payable..................... 1,499,334
Investment securities purchased...... 1,279,083
Capital shares redeemed.............. 484,690
Accrued advisory fee................... 139,483
Accrued expenses....................... 69,906
-------------
Total Liabilities...................... 3,472,496
-------------
NET ASSETS: (Note 6)
Class A (37,579,904 shares
outstanding)....................... 203,137,574
Class B (1,048,932 shares
outstanding)....................... 5,670,442 $ 208,808,016
------------- -------------
-------------
NET ASSETS CONSIST OF:
Capital paid in........................ $ 594,704,899
Undistributed net investment income.... 1,396,172
Accumulated net realized loss on
investment transactions.............. (395,147,684)
Net unrealized appreciation in value of
investments.......................... 7,854,629
-------------
Total.................................. $ 208,808,016
-------------
-------------
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE - CLASS A.................. $5.41
------
------
MAXIMUM OFFERING PRICE PER
SHARE - CLASS A ($5.41/.9375)*....... $5.77
------
------
NET ASSET VALUE AND OFFERING PRICE PER
SHARE - CLASS B (Note 6)............. $5.41
------
------
</TABLE>
* On purchases of $25,000 or more, the sales charge is reduced.
See notes to financial statements
9
<PAGE>
STATEMENT OF OPERATIONS
FIRST INVESTORS HIGH YIELD FUND, INC.
Six Months Ended June 30, 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Income:
Interest............................. $ 9,713,756
Dividends (Note 1E).................. 345,172
Consent fees......................... 279,625
------------
Total income........................... $ 10,338,553
Expenses (Notes 1E and 3):
Advisory fee......................... 1,024,687
Shareholder servicing costs.......... 304,974
Distribution plan expenses - Class
A.................................. 151,364
Distribution plan expenses - Class
B.................................. 20,249
Professional fees.................... 27,566
Custodian fees....................... 15,119
Reports and notices to
shareholders....................... 10,491
Other expenses....................... 18,247
------------
Total expenses......................... 1,572,697
Less: Expenses waived or assumed....... (200,000)
Custodian fees paid indirectly.... (5,661)
------------
Net expenses........................... 1,367,036
------------
Net investment income.................. 8,971,517
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 2):
Net realized loss on investments....... (1,335,093)
Net unrealized appreciation of
investments.......................... 1,722,526
------------
Net gain on investments................ 387,433
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS...................... $ 9,358,950
------------
------------
</TABLE>
See notes to financial statements
10
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FIRST INVESTORS HIGH YIELD FUND, INC.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
- --------------------------------------- ---------------- -----------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS
Net investment income................ $ 8,971,517 $ 17,406,418
Net realized loss on investments..... (1,335,093) (7,765,501)
Net unrealized appreciation of
investments........................ 1,722,526 14,736,452
---------------- -----------------
Net increase in net assets
resulting from operations........ 9,358,950 24,377,369
---------------- -----------------
DIVIDENDS TO SHAREHOLDERS
Net investment income - Class A...... (8,962,166) (17,643,461)
Net investment income - Class B...... (196,007) (171,377)
---------------- -----------------
Total dividends.................... (9,158,173) (17,814,838)
---------------- -----------------
CAPITAL SHARE TRANSACTIONS (a)
Class A:
Proceeds from shares sold............ 9,970,499 20,402,130
Value of dividends reinvested........ 5,471,139 13,062,488
Cost of shares redeemed.............. (14,124,530) (25,196,197)
---------------- -----------------
1,317,108 8,268,421
---------------- -----------------
Class B:
Proceeds from shares sold............ 2,169,654 3,074,309
Value of dividends reinvested........ 85,287 88,770
Cost of shares redeemed.............. (512,431) (226,919)
---------------- -----------------
1,742,510 2,936,160
---------------- -----------------
Net increase from capital share
transactions....................... 3,059,618 11,204,581
---------------- -----------------
Net increase in net assets......... 3,260,395 17,767,112
NET ASSETS
Beginning of period.................. 205,547,621 187,780,509
---------------- -----------------
End of period (including
undistributed net investment income
of $1,396,172 and $1,582,828,
respectively)...................... $ 208,808,016 $ 205,547,621
---------------- -----------------
---------------- -----------------
(a)CAPITAL SHARES ISSUED AND REDEEMED
Class A:
Sold................................. 1,854,649 3,871,810
Issued for dividends reinvested...... 1,022,082 2,471,711
Redeemed............................. (2,631,396) (4,780,167)
---------------- -----------------
Net increase in Class A capital
shares outstanding................. 245,335 1,563,354
---------------- -----------------
---------------- -----------------
Class B:
Sold................................. 403,951 581,031
Issued for dividends reinvested...... 15,941 16,742
Redeemed............................. (95,618) (43,012)
---------------- -----------------
Net increase in Class B capital
shares outstanding................. 324,274 554,761
---------------- -----------------
---------------- -----------------
</TABLE>
See notes to financial statements
11
<PAGE>
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. The primary objective of the Fund is to seek high current
income and secondarily to seek capital appreciation.
A. Security Valuation--Except as provided below, a security listed or traded on
an exchange or the Nasdaq Stock Market is valued at its last sale price on the
exchange where the security is principally traded, and lacking any sales, the
security is valued at the mean between the closing bid and asked prices.
Effective January 2, 1997, the Board of Directors approved a change in the
pricing policy for securities traded in the over-the-counter market (including
securities listed on exchanges whose primary market is believed to be
over-the-counter). These securities, which had previously been valued at the
last bid price, are now valued at the mean between the last bid and asked prices
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 and other available information in
determining values. Short-term corporate notes which are purchased at a discount
are valued at amortized cost. Securities for which market quotations are not
readily available, 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 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, 1997, the Fund had capital loss
carryovers of $390,216,012 of which $107,418,334 expires in 1997, $166,492,834
in 1998, $109,407,948 in 1999, $1,762,042 in 2001, $135,416 in 2002, $593,956 in
2003, and $4,405,482 in 2004.
C. Distributions to Shareholders--Dividends to shareholders from net investment
income are declared daily and paid monthly. Income dividends 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 capital loss carryforwards and post
October losses.
D. Use of Estimates--The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expense during the reporting period. Actual results could differ
from those estimates.
E. 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. Shares of stock
received in lieu of cash dividends on certain preferred stock holdings are
recognized as dividend income and recorded at the market value of the shares
received. During the six months ended June 30, 1997, the Fund recognized
$177,722 of dividend income from these taxable "pay in kind"
12
<PAGE>
distributions. Interest income and estimated expenses are accrued daily. The
Fund's custodian has provided credits in the amount of $5,661 against custodian
charges based on the uninvested cash balances of the Fund.
2. SECURITIES TRANSACTIONS--For the six months ended June 30, 1997, purchases
and sales of securities, other than United States Government obligations and
short-term corporate notes, aggregated $42,659,755 and $35,277,537,
respectively.
At June 30, 1997, the cost of investments for federal income tax purposes was
$199,520,347. Accumulated net unrealized appreciation on investments was
$7,854,629, consisting of $10,049,346 gross unrealized appreciation and
$2,194,717 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. FIMCO has voluntarily waived .15% of the fee on the first $200 million
of the Fund's average daily net assets for the year 1996 and .20% since January
1997. For the six months ended June 30, 1997, this reduction amounted to
$200,000.
For the six months ended June 30, 1997, FIC, as underwriter, received $283,860
in commissions after allowing $92,571 to other dealers. Shareholder servicing
costs included $204,605 in transfer agent fees paid to ADM, and $54,688 in IRA
custodian fees paid to FFS.
Pursuant to Distribution Plans 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 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, 1997, this fee reduction amounted to $151,364 for Class A and
$3,574 for Class B.
4. 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, 1997, the Fund
held fifteen 144A securities with an aggregate value of $23,387,143 representing
11.2% of the Fund's net assets. These securities are valued as set forth in Note
1A.
5. CONCENTRATION OF CREDIT RISK--The Fund's investment in high yield securities
whether rated or unrated may be considered speculative and subject
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FIRST INVESTORS HIGH YIELD FUND, INC.
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.
6. 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
distribution plan 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% over 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
distribution plan fees) 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.
14
<PAGE>
FINANCIAL HIGHLIGHTS
FIRST INVESTORS HIGH YIELD FUND, INC.
The following table sets forth the per share operating performance for a share
of capital stock outstanding, total return, ratios to average net assets and
other supplemental data for each period indicated.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B
---------------------------------------------------- ------------------------------
1/1/97 Year Ended December 31 1/1/97
to ---------------------------------------- to
6/30/97 1996 1995 1994 1993 1992 6/30/97 1996 1995*
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period... $ 5.40 $ 5.22 $ 4.84 $ 5.30 $ 4.97 $ 4.59 $ 5.40 $ 5.23 $ 4.84
-------- ------ ------ ------ ------ -------- ------ -------- ---------
Income from Investment Operations
Net investment income................ .23 .47 .47 .48 .47 .53 .22 .44 .42
Net realized and unrealized gain
(loss) on investments.............. .02 .20 .39 (.46) .34 .31 .01 .18 .40
-------- ------ ------ ------ ------ -------- ------ -------- ---------
Total from Investment Operations... .25 .67 .86 .02 .81 .84 .23 .62 .82
-------- ------ ------ ------ ------ -------- ------ -------- ---------
Less Distributions from net
investment income.................... .24 .49 .48 .48 .48 .46 .22 .45 .43
-------- ------ ------ ------ ------ -------- ------ -------- ---------
Net Asset Value, End of Period......... $ 5.41 $ 5.40 $ 5.22 $ 4.84 $ 5.30 $ 4.97 $ 5.41 $ 5.40 $ 5.23
-------- ------ ------ ------ ------ -------- ------ -------- ---------
-------- ------ ------ ------ ------ -------- ------ -------- ---------
TOTAL RETURN (%)+...................... 4.75 13.35 18.43 .39 16.95 18.94 4.40 12.41 17.40(a)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in
millions)............................ $203 $202 $187 $170 $191 $192 $6 $4 $1
Ratio to Average Net Assets: (%)++
Expenses............................. 1.31(a) 1.37 1.45 1.56 1.69 1.39 2.02(a) 2.07 2.22(a)
Net investment income................ 8.70(a) 8.99 9.22 9.48 8.96 10.65 8.00(a) 8.28 8.45(a)
Ratio to Average Net Assets Before
Expenses Waived: (%)
Expenses............................. 1.51(a) 1.52 1.55 1.59 N/A N/A 2.22(a) 2.22 2.32(a)
Net investment income................ 8.50(a) 8.84 9.12 9.44 N/A N/A 7.80(a) 8.13 8.35(a)
Portfolio Turnover Rate (%)............ 18 29 42 32 87 43 18 29 42
</TABLE>
+ Calculated without sales charge
++ Net of expenses waived by the investment adviser (Note 3)
* For the period 1/12/95 (date Class B shares first offered) to 12/31/95
(a) Annualized
See notes to financial statements
15
<PAGE>
INDEPENDENT AUDITORS' 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, 1997, 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,
1997 and the year ended December 31, 1996, 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, 1997, 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, 1997, 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, 1997
16
<PAGE>
(This page has been left blank intentionally.)
17
<PAGE>
FIRST INVESTORS HIGH YIELD FUND, INC.
DIRECTORS
- ----------------------------------------------
JAMES J. COY (Emeritus)
ROGER L. GRAYSON
GLENN O. HEAD
KATHRYN S. HEAD
REX R. REED
HERBERT RUBINSTEIN
NANCY S. SCHAENEN
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
GREGORY R. KINGSTON
Assistant Treasurer
MARK S. SPENCER
Assistant Treasurer
18
<PAGE>
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 Massachusetts Avenue, 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.
19
<PAGE>
FIRST
INVESTORS
HIGH YIELD
FUND, INC.
SEMI-
ANNUAL
REPORT
JUNE 30, 1997
Vertically reading from bottom to top in the center of the page the words "FIRST
INVESTORS" appear.
The following appears in a box to the left of the above language:
First Investors Logo (as described above)
NEED SERVICE?
If you have questions about your account...or would like information regarding
other products or services...please contact your representative or call our
Shareholder Services Department at...
(800) 423-4026
The following appears in a box within the above box:
Our business is...putting investors first
The following appears on the bottom lefthand side:
FIHY150
