<PAGE>
CHIEF INVESTMENT OFFICER'S MARKET OVERVIEW 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, 1998. Although both the bond and
stock markets suffered setbacks at times during the first six months of the
year, the combination of moderate growth, low inflation, and respectable
corporate earnings reports helped provide a positive environment for investors
in most types of funds.
The U.S. economy remained strong for the first half of 1998, with sustained,
moderate growth and low levels of inflation and unemployment. Inflation remained
low, as the Consumer Price Index rose just 1.7% for the twelve months ended June
30. The unemployment rate continued to be low, at 4.5% as of June 30, 1998.
Consumer confidence remained high, encouraged by the robust domestic economy and
rising income levels.
In general, our long-term outlook for the financial markets continues to be
positive. The economy appears to be growing moderately, inflation remains
subdued and the Federal Reserve appears unlikely to tolerate unsustainably fast
economic growth. In regard to the stock market, we are encouraged by the
underlying fundamentals of the U.S. economy. However, we are cautioned by a
number of situations, including the struggles in Asia. We are concerned about
the effect this region's difficulties may have on U.S. growth and corporate
earnings. We are also concerned about the relative lack of pricing power and the
prospects that the lofty level of gains posted year-to-date can continue into
the second half of 1998.
With regard to the bond market, interest rates continue to remain in a tight
range; we believe the Federal Reserve is likely to maintain current interest
rates. Continued weak Asian markets, low inflation in the U.S. and the Federal
budget surplus should support an environment of low interest rates and high bond
prices. However, the continued strength of the U.S. economy could result in
higher interest rates and inflation, notwithstanding Asia. In this event, bond
fund values would decline.
Thank you for your continued confidence in First Investors. As always, we
appreciate the opportunity to serve your investment needs.
Sincerely,
[Signature]
Clark D. Wagner
Chief Investment Officer
First Investors Management Company, Inc.
July 31, 1998
1
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS HIGH YIELD FUND, INC.
June 30, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
CORPORATE BONDS--88.4%
AEROSPACE/DEFENSE--.7%
$ 1,400M Moog, Inc., 10%, 2006 $ 1,521,083 $ 71
- ---------------------------------------------------------------------------------------
AGRICULTURAL PRODUCTS--.7%
1,400M Terra Industries, Inc., 10.50%, 2005 1,515,500 70
- ---------------------------------------------------------------------------------------
APPAREL/TEXTILES--2.4%
1,000M Pillowtex Corp., 10%, 2006 1,085,000 50
1,800M Polymer Group, Inc., 9%, 2007 1,822,500 85
2,250M Worldtex, Inc., 9.625%, 2007 2,261,250 105
- ---------------------------------------------------------------------------------------
5,168,750 240
- ---------------------------------------------------------------------------------------
AUTOMOTIVE--3.5%
1,120M Aftermarket Technology Corp., 12%, 2004 1,234,800 57
2,000M Cambridge Industries, Inc., 10.25%, 2007 2,040,000 95
1,750M Cooperative Computing, Inc., 9%, 2008+ 1,592,500 74
1,185M Safelite Glass Corp., 9.875%, 2006+ 1,244,250 58
1,500M Walbro Corp., 9.875%, 2005 1,466,250 68
- ---------------------------------------------------------------------------------------
7,577,800 352
- ---------------------------------------------------------------------------------------
BUILDING MATERIALS--2.3%
1,650M American Architectural Products Corp., 11.75%,
2007 1,699,500 79
1,799M ISP Holdings, Inc., 9.75%, 2002 1,897,945 88
1,274M Waxman USA, Inc., 11.125%, 2001 1,272,407 59
- ---------------------------------------------------------------------------------------
4,869,852 226
- ---------------------------------------------------------------------------------------
CHEMICALS--5.3%
2,250M AEP Industries, Inc., 9.875%, 2007 2,311,875 108
3,000M Harris Chemical North America, Inc., 10.25%, 2001 3,125,625 145
2,800M Huntsman Polymers Corp., 11.75%, 2004 3,066,000 143
1,800M Hydrochem Industrial Services, Inc., 10.375%,
2007 1,836,000 85
1,000M Pharmaceutical Fine Chemicals, SA, 9.75%, 2007+ 1,135,000 53
- ---------------------------------------------------------------------------------------
11,474,500 534
- ---------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
CONSUMER PRODUCTS--4.4%
$ 1,000M AKI Holding Corp., 0%-13.50%, 2009+ $ 520,000 $ 24
1,000M AKI, Inc., 10.50%, 2008+ 1,000,000 47
1,000M Corning Consumer Products Co., 9.625%, 2008+ 995,000 46
2,500M Herff Jones, Inc., 11%, 2005 2,725,000 127
1,900M Hines Horticulture, Inc., 11.75%, 2005 2,080,500 97
1,200M Syratech Corp., 11%, 2007 1,068,000 50
1,000M William Carter Co., 10.375%, 2006 1,062,500 49
- ---------------------------------------------------------------------------------------
9,451,000 440
- ---------------------------------------------------------------------------------------
CONTAINERS/PACKAGING--2.9%
2,850M Radnor Holdings, Inc., 10%, 2003 2,978,250 139
1,200M Tekni-Plex, Inc., 9.25%, 2008 1,200,000 56
2,000M U. S. Can Corp., 10.125%, 2006 2,080,000 97
- ---------------------------------------------------------------------------------------
6,258,250 292
- ---------------------------------------------------------------------------------------
DURABLE GOODS MANUFACTURING--1.5%
750M Amtrol, Inc., 10.625%, 2006 744,375 35
2,445M Fairfield Manufacturing, Inc., 11.375%, 2001 2,548,912 119
- ---------------------------------------------------------------------------------------
3,293,287 154
- ---------------------------------------------------------------------------------------
ENERGY--3.5%
1,500M Giant Industries, Inc., 9.75%, 2003 1,563,750 73
3,000M Gulf Canada Resources, Ltd., 9.625%, 2005 3,236,250 151
1,100M Magnum Hunter Resources, Inc., 10%, 2007 1,122,000 52
1,600M Stone Energy Corp., 8.75%, 2007 1,598,000 74
- ---------------------------------------------------------------------------------------
7,520,000 350
- ---------------------------------------------------------------------------------------
ENTERTAINMENT/LEISURE--1.0%
2,200M Outboard Marine Corp., 10.75%, 2008+ 2,222,000 103
- ---------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS HIGH YIELD FUND, INC.
June 30, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
FOOD/BEVERAGE/TOBACCO--3.3%
$ 2,100M Fleming Companies, Inc., 10.50%, 2004 $ 2,178,750 $ 101
2,000M International Home Foods, Inc., 10.375%, 2006 2,180,000 101
2,350M Van de Kamps, Inc., 12%, 2005 2,679,000 125
- ---------------------------------------------------------------------------------------
7,037,750 327
- ---------------------------------------------------------------------------------------
GAMING/LODGING--3.0%
2,400M Casino America, Inc., 12.50%, 2003 2,709,000 126
1,750M Grand Casinos, Inc., 9%, 2004 1,907,500 89
1,750M Prime Hospitality Corp., 9.25%, 2006 1,852,812 86
- ---------------------------------------------------------------------------------------
6,469,312 301
- ---------------------------------------------------------------------------------------
HEALTHCARE--7.4%
500M Fisher Scientific International, Inc., 7.125%,
2005 482,462 22
1,700M Genesis Health Ventures, Inc., 9.75%, 2005 1,759,500 82
1,400M ICN Pharmaceuticals, Inc., 9.25%, 2005 1,484,000 69
1,600M Integrated Health Services, Inc., 10.25%, 2006 1,714,000 80
2,600M Integrated Health Services, Inc., 9.25%, 2008 2,704,000 126
1,100M Leiner Health Products, Inc., 9.625%, 2007 1,174,250 55
2,489M Owens & Minor, Inc., 10.875%, 2006 2,663,230 124
700M Packard Bioscience, Inc., 9.375%, 2007 682,500 32
700M Tenet Healthcare Corp., 8.625%, 2007 722,750 34
2,500M Vencor, Inc., 9.875%, 2005+ 2,459,500 114
- ---------------------------------------------------------------------------------------
15,846,192 738
- ---------------------------------------------------------------------------------------
MEDIA (CABLE TV/BROADCASTING)--10.3%
1,000M Allbritton Communications Corp., 9.75%, 2007 1,105,000 51
2,000M Century Communications Corp., 9.50%, 2005 2,175,000 101
3,875M Echostar Communications Corp., 0%-12.875%, 2004 3,778,125 176
1,000M Groupe Videotron, Ltee, 10.625%, 2005 1,103,100 51
2,050M Grupo Televisa, SA, 11.875%, 2006 2,285,750 106
2,000M Lenfest Communication, Inc., 10.50%, 2006 2,337,500 109
1,300M Mediacom LLC/Mediacom Capital Corp., 8.50%, 2008+ 1,295,125 60
2,000M Rogers Cablesystems, Inc., 10%, 2005 2,230,000 104
1,700M Rogers Communications, Inc., 8.875%, 2007 1,721,250 80
- ---------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
MEDIA (CABLE TV/BROADCASTING) (continued)
$ 2,000M Salem Communications Corp., 9.50%, 2007 $ 2,092,500 $ 97
2,000M Star Choice Communications, Inc., 13%, 2005 2,050,000 95
- ---------------------------------------------------------------------------------------
22,173,350 1,030
- ---------------------------------------------------------------------------------------
MEDIA (OTHER)--3.7%
3,200M Garden State Newspapers, Inc., 12%, 2004 3,552,000 165
1,800M Garden State Newspapers, Inc., 8.75%, 2009 1,827,000 85
2,400M Outdoor Systems, Inc., 8.875%, 2007 2,490,000 116
- ---------------------------------------------------------------------------------------
7,869,000 366
- ---------------------------------------------------------------------------------------
MINING/METALS--4.4%
2,500M Commonwealth Aluminum, Corp., 10.75%, 2006 2,637,500 123
3,200M CSN Iron, SA, 9.125%, 2007+ 2,600,000 121
2,000M Renco Metals, Inc., 11.50%, 2003 2,140,000 100
2,100M Wheeling-Pittsburgh Corp., 9.25%, 2007 2,142,000 100
- ---------------------------------------------------------------------------------------
9,519,500 444
- ---------------------------------------------------------------------------------------
MISCELLANEOUS--4.6%
3,000M Allied Waste North America, Inc., 10.25%, 2006 3,296,250 153
1,750M Iron Mountain, Inc., 10.125%, 2006 1,890,000 88
2,500M Kindercare Learning Centers, Inc., 9.50%, 2009 2,559,375 119
2,000M Loomis Fargo & Co., 10%, 2004 2,010,000 94
- ---------------------------------------------------------------------------------------
9,755,625 454
- ---------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--4.5%
2,850M Fonda Group, Inc., 9.50%, 2007 2,764,500 129
2,600M S.D. Warren Co., Inc., 12%, 2004 2,879,500 134
2,750M Stone Container Corp., 11.875%, 1998 2,842,813 132
1,000M Stone Container Corp., 10.75%, 2002 1,063,750 49
- ---------------------------------------------------------------------------------------
9,550,563 444
- ---------------------------------------------------------------------------------------
REAL ESTATE/CONSTRUCTION--.9%
2,200M Cathay International, Ltd., 13%, 2008+ 1,914,000 89
- ---------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS HIGH YIELD FUND, INC.
June 30, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
RETAIL - FOOD/DRUG--.5%
$ 1,000M Randall's Food Markets, Inc., 9.375%, 2007 $ 1,057,500 $ 49
- ---------------------------------------------------------------------------------------
RETAIL - GENERAL MERCHANDISE--.8%
1,700M Big 5 Corp., 10.875%, 2007 1,776,500 83
- ---------------------------------------------------------------------------------------
TELECOMMUNICATIONS--13.2%
2,000M 21st Century Telecommunications Group, Inc.,
0%-12.25%, 2008+ 1,135,000 53
2,100M Comcast Cellular Holdings, Inc., 9.50%, 2007 2,189,250 102
3,750M E Spire Communications, Inc., 0%-13%, 2005 3,121,875 145
2,000M ICG Services, Inc., 0%-10%, 2008+ 1,195,000 56
1,700M Level 3 Communications, Inc., 9.125%, 2008+ 1,657,500 77
3,000M McCaw International, Ltd., 0%-13%, 2007 1,998,750 93
2,300M McLeodUSA, Inc., 9.25%, 2007 2,392,000 111
750M Nextlink Communications, Inc., 0%-9.45%, 2008+ 460,313 21
3,000M Omnipoint Corp., 11.625%, 2006 3,195,000 149
1,300M Orion Network Systems, Inc., 11.25%, 2007 1,469,000 68
2,300M Paging Network, Inc., 10%, 2008 2,386,250 111
1,750M Powertel, Inc., 0%-12%, 2006 1,382,500 64
3,100M Powertel, Inc., 0%-12%, 2006 2,387,000 111
2,000M Qwest Communications International, Inc.,
0%-9.47%, 2007 1,500,000 70
3,000M RCN Corp., 0%-11.125%, 2007 1,935,000 90
- ---------------------------------------------------------------------------------------
28,404,438 1,321
- ---------------------------------------------------------------------------------------
TRANSPORTATION--3.6%
2,500M American Commercial Lines, LLC, 10.25%, 2008+ 2,540,625 118
3,550M Eletson Holdings, Inc., 9.25%, 2003 3,643,188 169
1,350M Moran Transportation Co., 11.75%, 2004 1,495,125 70
- ---------------------------------------------------------------------------------------
7,678,938 357
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF CORPORATE BONDS (cost
$183,510,338) 189,924,690 8,835
- ---------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
AMOUNT
INVESTED
SHARES FOR EACH
OR $10,000 OF
WARRANTS SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
COMMON STOCKS--.2%
MEDIA (CABLE TV/BROADCASTING)--.1%
8,846 *Echostar Communications Corp. - Class "A" $ 212,857 $ 10
- ---------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--.1%
17,861 *Gaylord Container Corporation - Class "A" 137,306 6
- ---------------------------------------------------------------------------------------
TECHNOLOGY--.0%
787 *Loral Space & Communications Corp. 22,233 1
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF COMMON STOCKS (cost $74,021) 372,396 17
- ---------------------------------------------------------------------------------------
PREFERRED STOCKS--3.8%
FINANCIAL--.6%
40,800 Astoria Financial Corp., 12%, Series "B" 1,229,100 57
- ---------------------------------------------------------------------------------------
MEDIA (CABLE TV/BROADCASTING)--2.5%
37,890 CSC Holdings, Inc., 11.125%, PIK, Series "M" 4,366,775 203
955 Echostar Communications Corp., 12.125%, Series
"B" 1,076,819 50
- ---------------------------------------------------------------------------------------
5,443,594 253
- ---------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--.7%
30,200 S.D. Warren Co., Inc., 14%, Series "B" 1,510,000 71
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF PREFERRED STOCKS (cost $6,752,911) 8,182,694 381
- ---------------------------------------------------------------------------------------
WARRANTS--.4%
GAMING/LODGING--.0%
17,660 *President Riverboat Casinos, Inc. (expiring
9/30/99) 177 --
- ---------------------------------------------------------------------------------------
MEDIA (CABLE TV/BROADCASTING)--.0%
46,320 *Star Choice Communications, Inc. (expiring
12/15/05)+ 121,590 6
- ---------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--.1%
30,200 *S.D. Warren Co., Inc. (expiring 12/15/06)+ 151,000 7
- ---------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
PORTFOLIO OF INVESTMENTS
FIRST INVESTORS HIGH YIELD FUND, INC.
June 30, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
WARRANTS, AMOUNT
UNITS INVESTED
OR FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C>
TELECOMMUNICATIONS--.3%
3,750 *E Spire Communications, Inc. (expiring 11/1/05)+ $ 581,250 $ 27
3,000 *McCaw International, Ltd. (expiring 4/15/07)+ 15,000 1
5,600 *Powertel, Inc. (expiring 2/1/06) 46,200 2
- ---------------------------------------------------------------------------------------
642,450 30
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF WARRANTS (cost $91,816) 915,217 43
- ---------------------------------------------------------------------------------------
UNITS--.6%
MEDIA (CABLE TV/BROADCASTING)
3,000 Diva Systems Corp. (cost $1,644,973) (a)+ 1,395,000 65
- ---------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--2.3%
$ 4,500M United States Treasury Note, 7%, 2006 (cost
$4,795,281) 4,917,658 229
- ---------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--2.8%
2,500M Ford Motor Credit Corp., 5.61%, 7/2/98 2,499,610 116
3,500M Merrill Lynch & Co., Inc., 5.82%, 7/7/98 3,496,605 163
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF SHORT-TERM CORPORATE NOTES (cost
$5,996,215) 5,996,215 279
- ---------------------------------------------------------------------------------------
TOTAL VALUE OF INVESTMENTS (cost $202,865,555) 98.5% 211,703,870 9,849
OTHER ASSETS, LESS LIABILITIES 1.5 3,251,401 151
- ---------------------------------------------------------------------------------------
NET ASSETS 100.0% $214,955,271 $10,000
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
</TABLE>
* Non-income producing
+ See Note 4
(a) Each unit consists of one 0%-12.625% senior discount note due 2008 and three
warrants to buy three shares of common stock.
See notes to financial statements
8
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
FIRST INVESTORS HIGH YIELD FUND, INC.
June 30, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments in securities, at value
(identified cost $202,865,555) (Note
1A).................................. $ 211,703,870
Cash................................... 724,030
Receivables:
Interest............................. 4,249,375
Capital shares sold.................. 155,531
Other assets........................... 59,061
-----------------
Total Assets........................... 216,891,867
LIABILITIES
Payables:
Dividend payable..................... $ 1,398,847
Capital shares redeemed.............. 337,148
Accrued advisory fee................... 135,179
Accrued expenses....................... 65,422
----------------
Total Liabilities...................... 1,936,596
-----------------
NET ASSETS (Note 6):
Class A (37,475,301 shares
outstanding)....................... 206,269,856
Class B (1,579,730 shares
outstanding)....................... 8,685,415 $ 214,955,271
----------------
-----------------
-----------------
NET ASSETS CONSIST OF:
Capital paid in........................ $ 489,639,953
Undistributed net investment income.... 763,249
Accumulated net realized loss on
investment transactions.............. (284,286,246)
Net unrealized appreciation in value of
investments.......................... 8,838,315
-----------------
Total.................................. $ 214,955,271
-----------------
-----------------
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE - CLASS A.................. $ 5.50
-----
-----
MAXIMUM OFFERING PRICE PER
SHARE - CLASS A ($5.50/.9375)*....... $ 5.87
-----
-----
NET ASSET VALUE AND OFFERING PRICE PER
SHARE - CLASS B (Note 6)............. $ 5.50
-----
-----
</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, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Income:
Interest............................. $ 9,912,562
Dividends (Note 1E).................. 353,927
Consent fees......................... 220,142
----------------
Total income........................... $ 10,486,631
Expenses (Notes 1 and 3):
Advisory fee......................... 1,068,841
Shareholder servicing costs.......... 291,041
Distribution plan expenses - Class
A.................................. 289,376
Distribution plan expenses - Class
B.................................. 38,971
Professional fees.................... 19,060
Custodian fees....................... 16,487
Reports and notices to
shareholders....................... 15,355
Other expenses....................... 15,223
----------------
Total expenses......................... 1,754,354
Less: Portion of advisory fee waived... (250,000)
Custodian fees paid indirectly.... (5,860)
----------------
Net expenses........................... 1,498,494
-----------------
Net investment income.................. 8,988,137
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 2):
Net realized gain on investments....... 1,394,483
Net unrealized depreciation of
investments.......................... (2,408,673)
----------------
Net loss on investments................ (1,014,190)
-----------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS...................... $ 7,973,947
-----------------
-----------------
</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, 1998 DECEMBER 31, 1997
- ------------------------------------------- ---------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income.................... $ 8,988,137 $ 17,677,606
Net realized gain on investments......... 1,394,483 713,528
Net unrealized appreciation
(depreciation) of investments.......... (2,408,673) 5,114,885
---------------- -----------------
Net increase in net assets resulting
from operations...................... 7,973,947 23,506,019
---------------- -----------------
DIVIDENDS TO SHAREHOLDERS
Net investment income - Class A.......... (8,673,354) (18,059,105)
Net investment income - Class B.......... (303,099) (449,764)
---------------- -----------------
Total dividends........................ (8,976,453) (18,508,869)
---------------- -----------------
CAPITAL SHARE TRANSACTIONS (a)
Class A:
Proceeds from shares sold................ 9,283,776 18,043,474
Reinvestment of dividends................ 5,306,697 12,110,096
Cost of shares redeemed.................. (15,917,265) (28,096,512)
---------------- -----------------
(1,326,792) 2,057,058
---------------- -----------------
Class B:
Proceeds from shares sold................ 2,194,509 3,582,510
Reinvestment of dividends................ 139,784 255,493
Cost of shares redeemed.................. (482,195) (1,007,361)
---------------- -----------------
1,852,098 2,830,642
---------------- -----------------
Net increase from capital share
transactions........................... 525,306 4,887,700
---------------- -----------------
Net increase (decrease) in net
assets............................... (477,200) 9,884,850
NET ASSETS
Beginning of period...................... 215,432,471 205,547,621
---------------- -----------------
End of period (including undistributed
net investment income of $763,249 and
$751,565, respectively)................ $ 214,955,271 $ 215,432,471
---------------- -----------------
---------------- -----------------
(a)CAPITAL SHARES ISSUED AND REDEEMED
Class A:
Sold..................................... 1,664,720 3,324,677
Issued for dividends reinvested.......... 951,282 2,233,259
Redeemed................................. (2,857,688) (5,175,518)
---------------- -----------------
Net increase (decrease) in Class A
capital shares outstanding............. (241,686) 382,418
---------------- -----------------
---------------- -----------------
Class B:
Sold..................................... 394,088 661,609
Issued for dividends reinvested.......... 25,090 46,771
Redeemed................................. (86,602) (185,884)
---------------- -----------------
Net increase in Class B capital shares
outstanding............................ 332,576 522,496
---------------- -----------------
---------------- -----------------
</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 or market where the security is principally traded, and lacking any
sales, the security is valued at the mean between the closing bid and asked
prices. Securities traded in the over-the-counter market (including securities
listed on exchanges whose primary market is believed to be over-the-counter) are
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 debt securities that mature in 60 days or less are valued on
the amortized cost method which approximates market value. 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, 1998, the Fund had capital loss
carryovers of $285,680,729 of which $166,492,834 expires in 1998, $109,407,948
in 1999, $1,762,042 in 2001, $135,416 in 2002, $593,956 in 2003, $4,405,482 in
2004 and $2,883,051 in 2005.
C. Distributions to Shareholders--Dividends to shareholders from net investment
income are declared daily and paid monthly. Distributions from net realized
capital gains, if any, are generally declared and paid annually. 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 capital 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, 1998, the Fund recognized
$292,727 of dividend income from these taxable "pay in kind"
12
<PAGE>
distributions. Interest income and estimated expenses are accrued daily. For the
six months ended June 30, 1998, the Fund's custodian has provided credits in the
amount of $5,860 against custodian charges based on the uninvested cash balances
of the Fund.
2. SECURITIES TRANSACTIONS--For the six months ended June 30, 1998, purchases
and sales of securities, other than United States Government obligations and
short-term corporate notes, aggregated $32,785,949 and $32,882,299,
respectively.
At June 30, 1998, the cost of investments for federal income tax purposes was
$202,865,555. Accumulated net unrealized appreciation on investments was
$8,838,315, consisting of $10,829,915 gross unrealized appreciation and
$1,991,600 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. Directors of the Fund
who are not "interested persons" of the Fund as defined in the 1940 Act are
remunerated by the Fund. For the six months ended June 30, 1998, total directors
fees accrued by the Fund amounted to $4,500.
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, 1998, FIMCO has voluntarily waived
25% of the fee on the first $200 million of the Fund's average daily net assets.
This reduction amounted to $250,000.
For the six months ended June 30, 1998, FIC, as underwriter, received $265,760
in commissions after allowing $40,886 to other dealers. Shareholder servicing
costs included $176,630 in transfer agent fees paid to ADM, and $50,476 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 daily
net assets of the Class A shares and 1% of the average daily 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 was
limited to .15% for Class A and .85% for Class B until February 1, 1998. For the
six months ended June 30, 1998, this fee reduction amounted to $26,198 for Class
A and $905 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, 1998, the Fund
held twenty-one 144A securities with an aggregate value of $26,229,653
representing 12.2% 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
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FIRST INVESTORS HIGH YIELD FUND, INC.
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.
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>
(This page has been left blank intentionally.)
15
<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
-------------------------------------------------------------
1/1/98 Year Ended December 31
to --------------------------------------------------
6/30/98 1997 1996 1995 1994 1993
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period.... $ 5.53 $ 5.40 $ 5.22 $ 4.84 $ 5.30 $ 4.97
------ ------ ------ ------ ------ ------
Income from Investment Operations
Net Investment Income................. .23 .46 .47 .47 .48 .47
Net Realized and Unrealized Gain
(Loss) on Investments............... (.03) .15 .20 .39 (.46) .34
------ ------ ------ ------ ------ ------
Total from Investment Operations.... .20 .61 .67 .86 .02 .81
------ ------ ------ ------ ------ ------
Less Dividends from
Net Investment Income................. .23 .48 .49 .48 .48 .48
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period.......... $ 5.50 $ 5.53 $ 5.40 $ 5.22 $ 4.84 $ 5.30
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
TOTAL RETURN (%)+....................... 3.66 11.84 13.35 18.43 .39 16.95
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in
millions)............................. $206 $209 $202 $187 $170 $191
Ratio to Average Net Assets:(%)++
Expenses.............................. 1.35(a) 1.29 1.37 1.45 1.56 1.69
Net investment income................. 8.26(a) 8.17 8.99 9.22 9.48 8.96
Ratio to Average Net Assets Before
Expenses Waived: (%)
Expenses.............................. 1.58(a) 1.48 1.52 1.55 1.59 N/A
Net investment income................. 8.03(a) 7.98 8.84 9.12 9.44 N/A
Portfolio Turnover Rate (%)............. 16 46 29 42 32 87
</TABLE>
+ Calculated without sales charge
++ Net after fees waived (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
16
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
Class B
----------------------------------------
Year Ended December 31
1/1/98 -----------------------------
to 1995
6/30/98 1997 1996 *
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period.... $ 5.53 $ 5.40 $ 5.23 $ 4.84
------ ------ ------ -------
Income from Investment Operations
Net Investment Income................. .22 .43 .44 .42
Net Realized and Unrealized Gain
(Loss) on Investments............... (.04) .14 .18 .40
------ ------ ------ -------
Total from Investment Operations.... .18 .57 .62 .82
------ ------ ------ -------
Less Dividends from
Net Investment Income................. .21 .44 .45 .43
------ ------ ------ -------
Net Asset Value, End of Period.......... $ 5.50 $ 5.53 $ 5.40 $ 5.23
------ ------ ------ -------
------ ------ ------ -------
TOTAL RETURN (%)+....................... 3.33 11.11 12.41 17.40(a)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in
millions)............................. $9 $7 $4 $1
Ratio to Average Net Assets:(%)++
Expenses.............................. 2.05(a) 1.99 2.07 2.22(a)
Net investment income................. 7.56(a) 7.47 8.28 8.45(a)
Ratio to Average Net Assets Before
Expenses Waived: (%)
Expenses.............................. 2.28(a) 2.18 2.22 2.32(a)
Net investment income................. 7.33(a) 7.28 8.13 8.35(a)
Portfolio Turnover Rate (%)............. 16 46 29 42
</TABLE>
+ Calculated without sales charge
++ Net after fees waived (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
17
<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, including
the portfolio of investments of First Investors High Yield Fund, Inc., as of
June 30, 1998, 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,
1998 and the year ended December 31, 1997, and financial highlights for each of
the periods indicated thereon. 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, 1998, by correspondence with the custodian. 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, 1998, and the results of its
operations, changes in its net assets and financial highlights for the periods
indicated thereon, in conformity with generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
July 31, 1998
18
<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
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
Eight Penn Center Plaza
Philadelphia, PA 19103
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.
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
FIHY-150
The words "BULK RATE U.S. POSTAGE PAID PERMIT NO. 7379" appear in a box to the
right of a circle containing the words "MAILED FROM ZIP CODE 11201" which
appears to the right of the above language in the printed piece.
Vertically reading from bottom to top in the center of the page the words "FIRST
INVESTORS" appear in the printed piece.
FIRST
INVESTORS
HIGH YIELD
FUND, INC.
SEMI-
ANNUAL
REPORT
JUNE 30, 1998
