First Investors Corporation, et al.; Notice of Application

AGENCY:

Securities and Exchange Commission (“Commission”)

ACTION:

Notice of application for an order pursuant to section 26(b) of the Investment Company Act of 1940 (the “Act”).

SUMMARY OF APPLICATION:

Applicants seek an order approving the substitution of shares of an open-end management investment company for shares of another open-end management investment company as the underlying securities of periodic payment plans organized as a unit investment trust.

APPLICANTS:

First Investors Corporation (“First Investors”) and First Investors Periodic Payment Plans for Investment in First Investors High Yield Fund, Inc. (the “Plans”).

FILING DATE:

The application was filed on October 29, 1999. Applicants have agreed to file an amendment during the notice period, the substance of which is reflected in this notice.

HEARING OR NOTIFICATION OF HEARING:

An order granting the application will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission's Secretary and serving applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on March 26, 2000, and should be accompanied by proof of service on applicants, in the form of an affidavit, or for lawyers, a certificate of service. Hearing requests should state the nature of the writer's interest, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission's Secretary.

ADDRESSES:

Secretary, Commission, 450 Fifth Street, N.W., Washington, D.C. 20549-0609. Applicants, 95 Wall Street, New York, New York 10005.

FOR FURTHER INFORMATION CONTACT:

Sara P. Crovitz, Senior Counsel, at (202) 942-0667 or Michael W. Mundt, Branch Chief, at (202) 942-0578 (Division of Investment Management, Office of Investment Company Regulation).

SUPPLEMENTARY INFORMATION:

The following is a summary of the application. The complete application may be obtained for a fee at the Commission's Public Reference Branch, 450 Fifth Street, N.W., Washington, D.C. 20549-0101, (202) 942-8090.

Applicants' Representations

1. The Plans are periodic payment plans organized as a unit investment trust and registered under the Act. First Investors is registered as a broker-dealer under the Securities Exchange Act of 1934 and is the underwriter, depositor and sponsor of the Plans. The Plans currently invest solely in Class A shares of First Investors High Yield Fund, Inc. (“High Yield Fund”), an open-end management investment company registered under the Act that seeks high current income through investment in high yield bonds. First Investors Fund for Income, Inc. (“Income Fund”) is also an open-end management investment company registered under the Act that seeks high current income through investment in high yield bonds.

2. The common board of directors of High Yield Fund and income fund (the “fund Board”) has determined that the combination of the assets of High Yield Fund and Income Fund would be in the best interests of the shareholders of each Fund. The High Yield fund has scheduled a special meeting of its shareholders on February 25, 2000, to consider and vote on a reorganization agreement between Income Fund and High Yield Fund which will involve (a) the transfer of the assets and liabilities of High Yield Fund to Income fund in Exchange for shares of common stock of Income fund having the same aggregate net asset value, (b) the distribution of Income Fund shares to High Yield fund's shareholders, and (c) the subsequent dissolution of High Yield fund (“Reorganization”). Holders of accounts of the Plans (“Planholders”) will have the right to vote their interests in the High Yield Fund on the matter of the Reorganization.

3. The Fund Board unanimously approved the proposed Reorganization and determined that participation in the Reorganization is in the best interests of the shareholders of each Fund and will not dilute the interests of shareholders of each Fund. In approving the Reorganization, the Fund Board specifically considered the following factors, among others: (a) The Funds have identical investment objectives and substantially similar management styles; (b) the Reorganization should result in greater diversification; (c) the Reorganization should result in a lower expense ratio for shareholders of each Fund; and (d) the Reorganization will be tax-free. No sales charges will be imposed in connection with the proposed Reorganization.

4. If the proposed Reorganization is consummated, shares of High Yield Fund will no longer be available for purchase by the Plans. The Plans provide that if the shares used as the underlying investment are not purchasable for a period of 90 days, and if the sponsor does not substitute other shares, the Plans must be terminated. At the time the Plans were sold, the prospectus for the Plans provided the First Investors may substitute other shares as the underlying investment of the Plans whenever First Investors deems it in the best interests of the Planholders. The substituted shares must be comparable to the previously purchased shares, and the substitution must comply with certain conditions, including Commission approval of the substitution under section 26(b) of the Act.

5. The board of directors of First Investors (“First Investors Board”) has unanimously determined that substitution of Income fund shares for High Yield Fund shares (“Substitution”) is in the best interests of Planholders. The First Investors Board approved the proposed Substitution after taking into account the factors considered by the Fund Board. In addition, the First Investors Board considered, among other things, the following factors: (a) The Plans must be terminated after the Reorganization unless a substitution is effected; (b) Income Fund is substantially similar to High Yield fund; (c) Planholders will retain all of their rights under the Plans' (d) Planholders will receive disclosure in connection with the shareholder vote on the proposed Reorganization; (e) the Reorganization will be effected at net asset value; and (f) the Reorganization will be tax-free.

6. Applicants state that the Substitution will be solely for Class A shares of Income Fund. No sales charge will be imposed in connection with the proposed Substitution. Applicants state that Planholders will be given written notice of the proposed Substitution at least 30 days prior to the Substitution. The notice will, among other things, notify each Planholder that unless the Planholder surrenders the Planholder's account within 30 days, the Planholder will have been deemed to authorize the Substitution and will receive shares of Income fund with the same aggregate net asset value as the shares of High Yield Fund held by the Planholder. If a Planholder elects to terminate a Plan account prior to or after the Substitution, the Planholder can elect to receive either (1) the net asset value of the shares held by the Planholder, or (2) the underlying High Yield Fund or Income Fund shares, as applicable, which would allow the Planholder to exchange into another First Investors fund. No sales charges will be imposed in connection with any of these options. Any expenses and charges involved in the Substitution, other than proper transfer taxes and/or charges customarily charged to shareholders by state and local authorities for securities transfers, will be borne by First Investors.

Applicants' Legal Analysis

1. Section 26(b) of the Act makes it unlawful for the depositor or trustee of a registered unit investment trust holding the security of a single issuer to substitute another security unless the Commission approves the substitution. The Commission may issue an order approving the substitution if the evidence establishes that the substitution is consistent with the protection of investors and the purposes fairly intended by the policies and provisions of the Act. Applicants submit, for the reasons stated above, that the Substitution meets the standards for an order under section 26(b).