UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------
FORM N-CSR
--------
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
INVESTMENT COMPANY ACT FILE NUMBER 811-2981
FIRST INVESTORS SPECIAL BOND FUND, INC.
(Exact name of registrant as specified in charter)
--------
95 Wall Street
New York, NY 10005
(Address of principal executive offices) (Zip code)
Joseph I. Benedek
First Investors Management Company, Inc.
581 Main Street
Woodbridge, NJ 07095
(Name and address of agent for service)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
1-212-858-8000
DATE OF FISCAL YEAR END: DECEMBER 31, 2003
DATE OF REPORTING PERIOD: JUNE 30, 2003
The words "First Investors" in a box across the top of the page.
FIRST INVESTORS
SPECIAL BOND FUND, INC.
SEMI-ANNUAL REPORT
JUNE 30, 2003
First Investors Logo
The words "A MEMBER OF THE FIRST INVESTORS FINANCIAL NETWORK"
under the First Investors logo.
LIF007
Portfolio of Investments
FIRST INVESTORS SPECIAL BOND FUND, INC.
June 30, 2003
- ---------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ---------------------------------------------------------------------------------------------------------
CORPORATE BONDS--87.8%
Aerospace/Defense--2.0%
$150M Alliant Techsystems, Inc., 8.5%, 2011 $167,250 $78
250M L-3 Communications Corp., 8%, 2008 261,250 123
- ---------------------------------------------------------------------------------------------------------
428,500 201
- ---------------------------------------------------------------------------------------------------------
Automotive--7.2%
225M Accuride Corp., 9.25%, 2008 208,406 98
75M Asbury Automotive Group, Inc., 9%, 2012 72,750 34
594M Cambridge Industries (Liquidating Trust)++** 5,938 3
500M Collins & Aikman Products Co., 11.5%, 2006 395,000 185
175M Dana Corp., 9%, 2011 190,313 89
500M Special Devices, Inc., 11.375%, 2008 402,500 188
250M TRW Automotive, Inc., 9.375%, 2013+ 272,500 128
- ---------------------------------------------------------------------------------------------------------
1,547,407 725
- ---------------------------------------------------------------------------------------------------------
Chemicals--3.6%
325M Hydrochem Industrial Services, Inc., 10.375%, 2007 229,938 108
150M Lyondell Chemical Co., 9.5%, 2008 143,250 67
200M Millennium America, Inc., 9.25%, 2008 216,000 101
150M Noveon, Inc., 11%, 2011 171,000 80
- ---------------------------------------------------------------------------------------------------------
760,188 356
- ---------------------------------------------------------------------------------------------------------
Consumer Non-Durables--3.7%
200M AKI, Inc., 10.5%, 2008 206,000 97
555M Hines Horticulture, Inc., 12.75%, 2005 585,525 275
- ---------------------------------------------------------------------------------------------------------
791,525 372
- ---------------------------------------------------------------------------------------------------------
Energy--11.5%
300M Bluewater Finance, Ltd., 10.25%, 2012 298,500 140
500M Compagnie Generale de Geophysique, 10.625%, 2007 515,000 241
125M Dresser, Inc., 9.375%, 2011 129,375 61
250M El Paso Production Holding Co., 7.75%, 2013+ 250,625 118
1,000M Giant Industries, Inc., 11%, 2012 970,000 455
300M Tesoro Petroleum Corp., 9.625%, 2008 279,000 131
- ---------------------------------------------------------------------------------------------------------
2,442,500 1,146
- ---------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
FIRST INVESTORS SPECIAL BOND FUND, INC.
June 30, 2003
- ---------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ---------------------------------------------------------------------------------------------------------
Food/Drug--1.6%
$350M Di Giorgio Corp., 10%, 2007 $348,687 $164
- ---------------------------------------------------------------------------------------------------------
Food/Tobacco--3.8%
500M Canandaigua Brands, Inc., 8.5%, 2009 527,500 247
150M Land O'Lakes, Inc., 8.75%, 2011 120,750 57
150M Pilgrim's Pride Corp., 9.625%, 2011 160,875 75
- ---------------------------------------------------------------------------------------------------------
809,125 379
- ---------------------------------------------------------------------------------------------------------
Forest Products/Containers--3.8%
250M AEP Industries, Inc., 9.875%, 2007 231,250 108
175M Potlatch Corp., 10%, 2011 195,125 91
200M Stone Container Corp., 9.75%, 2011 220,000 103
175M Tekni-Plex, Inc., 12.75%, 2010 171,500 80
- ---------------------------------------------------------------------------------------------------------
817,875 382
- ---------------------------------------------------------------------------------------------------------
Gaming/Leisure--6.0%
250M Circus & Eldorado/Silver Legacy, 10.125%, 2012 246,875 116
450M Isle of Capri Casinos, Inc., 8.75%, 2009 481,500 226
180M Outboard Marine Corp., 10.75%, 2008++** 225 --
300M Park Place Entertainment Corp., 9.375%, 2007 333,000 156
200M Universal City Development, 11.75%, 2010+ 220,500 103
- ---------------------------------------------------------------------------------------------------------
1,282,100 601
- ---------------------------------------------------------------------------------------------------------
Health Care--3.2%
ALARIS Medical Systems, Inc.:
75M 11.625%, 2006 91,500 43
15M 7.25%, 2011 15,262 7
150M Insight Health Services Corp., 9.875%, 2011 158,250 74
150M MedQuest, Inc., 11.875%, 2012 156,750 73
250M Sybron Dental Specialties, Inc., 8.125%, 2012 265,000 124
- ---------------------------------------------------------------------------------------------------------
686,762 321
- ---------------------------------------------------------------------------------------------------------
Housing--1.7%
100M Integrated Electrical Services, Inc., 9.375%, 2009 102,000 48
250M Nortek, Inc., 9.875%, 2011 264,375 124
- ---------------------------------------------------------------------------------------------------------
366,375 172
- ---------------------------------------------------------------------------------------------------------
Information Technology--.0%
150M Exodus Communications, Inc., 10.75%, 2009++** 3,000 1
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ---------------------------------------------------------------------------------------------------------
Investment/Finance Companies--.3%
$125M Finova Group, Inc., 7.5%, 2009 $55,000 $26
- ---------------------------------------------------------------------------------------------------------
Manufacturing--2.1%
600M Columbus McKinnon Corp., 8.5%, 2008 450,000 211
- ---------------------------------------------------------------------------------------------------------
Media-Broadcasting--2.3%
150M Nexstar Finance, LLC, 12%, 2008 168,000 79
150M Sinclair Broadcasting Group, Inc., 8.75%, 2011 165,375 78
136M Young Broadcasting Corp., 10%, 2011 147,900 69
- ---------------------------------------------------------------------------------------------------------
481,275 226
- ---------------------------------------------------------------------------------------------------------
Media-Cable TV--7.4%
225M Adelphia Communications Corp., 10.25%, 2011++ 145,125 68
500M Charter Communications Holdings, LLC, 10%, 2009 385,000 180
500M Mediacom LLC/Mediacom Capital Corp., 8.5%, 2008 507,500 238
500M Star Choice Communications, Inc., 13%, 2005 536,250 251
- ---------------------------------------------------------------------------------------------------------
1,573,875 737
- ---------------------------------------------------------------------------------------------------------
Media-Diversified--8.5%
460M Carmike Cinemas, Inc., 10.375%, 2009 485,300 228
500M Garden State Newspapers, Inc., 8.625%, 2011 523,750 246
600M Mail-Well I Corp., 8.75%, 2008 570,000 267
200M Quebecor Media, Inc., 11.125%, 2011 230,000 108
- ---------------------------------------------------------------------------------------------------------
1,809,050 849
- ---------------------------------------------------------------------------------------------------------
Metals/Mining--5.7%
600M Commonwealth Aluminum Corp., 10.75%, 2006 606,000 284
400M Euramax International PLC, 11.25%, 2006 414,000 194
200M Wolverine Tube, Inc., 7.375%, 2008+ 191,000 90
- ---------------------------------------------------------------------------------------------------------
1,211,000 568
- ---------------------------------------------------------------------------------------------------------
Retail-General Merchandise--1.6%
300M Michaels Stores, Inc., 9.25%, 2009 337,500 158
- ---------------------------------------------------------------------------------------------------------
Services--4.4%
400M Allied Waste NA, Inc., 10%, 2009 427,000 200
500M Kindercare Learning Centers, Inc., 9.5%, 2009 506,250 237
- ---------------------------------------------------------------------------------------------------------
933,250 437
- ---------------------------------------------------------------------------------------------------------
Portfolio of Investments (continued)
FIRST INVESTORS SPECIAL BOND FUND, INC.
June 30, 2003
- ---------------------------------------------------------------------------------------------------------
Amount
Invested
Principal For Each
Amount $10,000 of
or Shares Security Value Net Assets
- ---------------------------------------------------------------------------------------------------------
Telecommunications--.9%
$250M GT Group Telecom, Inc., 0%-13.25%, 2010++ $25 $--
600M ICG Services, Inc., 0%-10%, 2008++** -- --
500M RCN Corp., 11%, 2008 197,500 93
500M Viatel, Inc., 0%-12.5%, 2008++** 189 --
400M XO Communications, Inc., 9%, 2008++** 500 --
- ---------------------------------------------------------------------------------------------------------
198,214 93
- ---------------------------------------------------------------------------------------------------------
Utilities--.0%
125M AES Drax Energy, Ltd., 11.5%, 2010++ 1,875 1
- ---------------------------------------------------------------------------------------------------------
Wireless Communications--6.5%
300M Crown Castle International Corp., 9.375%, 2011 313,500 147
450M Nextel Communications, Inc., 9.95%, 2008 472,500 222
Triton Communications, LLC:
300M 11%, 2008 319,500 150
100M 8.75%, 2011 100,250 47
175M 8.5%, 2013+ 189,000 89
- ---------------------------------------------------------------------------------------------------------
1,394,750 655
- ---------------------------------------------------------------------------------------------------------
Total Value of Corporate Bonds (cost $20,221,894) 18,729,833 8,781
- ---------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--5.4%
1,000M U.S. Treasury Notes, 7%, 2006 (cost $1,036,952) 1,156,094 542
- ---------------------------------------------------------------------------------------------------------
COMMON STOCKS--1.2%
Media-Cable TV--.3%
2,061 * Echostar Communications Corporation--Class "A" 71,352 33
- ---------------------------------------------------------------------------------------------------------
Media-Diversified--.5%
1,500 * MediaNews Group, Inc.--Class "A" 112,500 52
- ---------------------------------------------------------------------------------------------------------
Telecommunications--.4%
1,204 * ICG Communications, Inc. 9,873 5
1,711 * NTL, Inc. 58,379 28
1,536 * Viatel Holding (Bermuda), Ltd.** 3,558 2
1,571 * World Access, Inc. 1 --
- ---------------------------------------------------------------------------------------------------------
71,811 35
- ---------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $1,057,933) 255,663 120
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Shares, Amount
Warrants Invested
or For Each
Principal $10,000 of
Amount Security Value Net Assets
- ---------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--.4%
Health Care--.0%
29 * Leiner Health Products, Inc., 9.625%, 2007** $-- $--
- ---------------------------------------------------------------------------------------------------------
Manufacturing--.4%
363 Day International Group, Inc., 12.25% 2010, PIK 73,518 35
- ---------------------------------------------------------------------------------------------------------
Total Value of Preferred Stocks (cost $292,926) 73,518 35
- ---------------------------------------------------------------------------------------------------------
WARRANTS--.1%
Media-Cable TV--.1%
11,580 * Star Choice Communications, Inc. (expiring 12/15/05)+ 30,397 14
- ---------------------------------------------------------------------------------------------------------
Telecommunications--.0%
250 * GT Group Telecom, Inc. (expiring 2/1/10) + 219 --
- ---------------------------------------------------------------------------------------------------------
Total Value of Warrants (cost $22,587) 30,616 14
- ---------------------------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--1.9%
$400M New York Times Co., 1.04%, 7/11/03 (cost $399,884) 399,884 187
- ---------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $23,032,176) 96.8% 20,645,608 9,679
Other Assets, Less Liabilities 3.2 684,167 321
- ---------------------------------------------------------------------------------------------------------
Net Assets 100.0% $21,329,775 $10,000
==========================================================================================================
* Non-income producing
** Security valued at fair value (see Note 1A)
+ See Note 5
++ In default as to principal and/or interest payment
See notes to financial statements
Statement of Assets and Liabilities
FIRST INVESTORS SPECIAL BOND FUND, INC
June 30, 2003
- ---------------------------------------------------------------------------------------------
Assets
Investments in securities, at value
(identified cost $23,032,176) (Note 1A) $20,645,608
Cash 665,622
Interest receivable 484,923
Subscription receivable 4,762
Other assets 6,230
------------
Total Assets 21,807,145
------------
Liabilities
Investment securities purchased 450,745
Accrued advisory fee 13,274
Accrued expenses 13,351
------------
Total Liabilities 477,370
------------
Net Assets $21,329,775
============
Net Assets Consist of:
Capital paid in $30,601,516
Accumulated deficit in net investment income (62,753)
Accumulated net realized loss on investment transactions (6,822,420)
Net unrealized depreciation in value of investments (2,386,568)
------------
Total $21,329,775
============
Net Asset Value, Offering Price and Redemption Price Per Share
($21,329,775 divided by 2,435,296 shares outstanding),
25,000,000 shares authorized, $1.00 par value (Note 2) $8.76
============
See notes to financial statements
Statement of Operations
FIRST INVESTORS SPECIAL BOND FUND, INC.
Six Months Ended June 30, 2003
- ---------------------------------------------------------------------------------------------
Investment Income
Income:
Interest $1,047,277
Dividends (Note 1E) 1,839
------------
Total income $1,049,116
Expenses (Notes 1 and 4):
Advisory fee 75,156
Professional fees 9,040
Custodian fees 2,269
Other expenses 4,698
------------
Total expenses 91,163
Less -- Custodian fees paid indirectly (985)
------------
Net expenses 90,178
------------
Net investment income 958,938
Realized and Unrealized Gain (Loss)
on Investments (Note 3):
Net realized loss on investments (1,095,737)
Net unrealized appreciation of investments 3,191,002
------------
Net gain on investments 2,095,265
------------
Net Increase in Net Assets Resulting from Operations $3,054,203
============
See notes to financial statements
Statement of Changes in Net Assets
FIRST INVESTORS SPECIAL BOND FUND, INC.
- ---------------------------------------------------------------------------------------------
Six Months Ended Year Ended
June 30, 2003 December 31, 2002
- ---------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
from Operations
Net investment income $ 958,938 $ 2,002,732
Net realized loss on investments (1,095,737) (2,714,834)
Net unrealized appreciation of investments 3,191,002 1,121,587
------------ ------------
Net increase in net assets resulting
from operations 3,054,203 409,485
------------ ------------
Dividends to Shareholders
Net investment income (959,807) (2,017,139)
------------ ------------
Capital Share Transactions *
Proceeds from shares sold 7,923 23,541
Reinvestment of dividends 959,807 2,017,139
Cost of shares redeemed (1,189,835) (3,033,647)
------------ ------------
Net decrease in net assets resulting
from share transactions (222,105) (992,967)
------------ ------------
Net increase (decrease) in net assets 1,872,291 (2,600,621)
Net Assets
Beginning of period 19,457,484 22,058,105
------------ ------------
End of the period (including accumulated
deficit in net investment income of
$(62,753) and $(61,884), respectively) $21,329,775 $19,457,484
============ ============
*Capital Shares Issued and Redeemed
Sold 917 3,005
Issued for dividends reinvested 112,732 248,778
Redeemed (142,396) (372,487)
------------ ------------
Net decrease in capital shares (28,747) (120,704)
============ ============
See notes to financial statements
Notes to Financial Statements
FIRST INVESTORS SPECIAL BOND FUND, INC.
June 30, 2003
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 investment objective of the Fund is to
seek high current income without undue risk to principal and secondarily to
seek growth of capital.
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 be priced by a
pricing service approved by the Fund's Board of Directors. The pricing
service considers security type, rating, market condition and yield data
as well as market quotations, prices provided by market makers and other
available information in determining value. For valuation purposes,
where applicable, quotations of foreign securities in foreign currencies
are translated to U.S. dollar equivalents using the foreign exchange
quotation in effect. Short-term debt securities that mature in 60 days
or less are valued on the amortized cost method which approximates
market value. If market quotations or prices are not readily available
or determined to be unreliable, the securities will be valued at fair
value as determined in good faith pursuant to procedures adopted by the
Fund's Board of Directors. At June 30, 2003, the Fund held eight
securities that were fair valued by its Valuation Committee with an
aggregate value of $13,410 representing .06% of the Fund's net assets.
B. Federal Income Taxes--No provision has been made for federal income
taxes on net income or capital gains, since it is the policy of the Fund to
continue to comply with the special provisions of the Internal Revenue Code
applicable to regulated 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. As of December 31, 2002, the Fund had capital loss carryovers of
$5,593,773 of which $287,903 expires in 2003, $253,501 in 2004, $636,995 in
2007, $365,853 in 2008, $1,284,606 in 2009 and $2,764,915 in 2010.
C. Distributions to Shareholders--Dividends to shareholders from net
investment income are declared daily and paid quarterly. Distributions from
net realized capital gains, if any, are normally declared and paid
annually. Income dividends and capital gain distributions are determined in
accordance with income tax regulations which may differ from accounting
principles generally accepted in the United States of America. 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 accounting principles generally accepted in the United
States of America 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 the preferred stock holdings are recognized as dividend
income and recorded at the market value of the shares received. For the
six months ended June 30, 2003, the Fund recognized $997 from these
taxable "pay-in-kind" distributions. Interest income and estimated
expenses are accrued daily. Bond premiums and discounts are
amortized/accreted using the interest method. For the six months ended
June 30, 2003, the Fund's custodian has provided credits in the amount
of $985 against custodian charges based on the uninvested cash balances
of the Fund.
2. Capital Stock--Shares of the Fund are sold only through the purchase of
First Investors Life Variable Annuity Fund A contracts issued by First
Investors Life Insurance Company.
3. Security Transactions--For the six months ended June 30, 2003, purchases
and sales of investment securities, other than United States Government
obligations and short-term corporate notes, aggregated $1,533,998 and
$1,991,185, respectively.
As of June 30, 2003, the cost of investments for federal income tax
purposes was $23,117,096. Accumulated net unrealized depreciation on
investments was $2,471,489, consisting of $1,250,349 gross unrealized
appreciation and $3,721,838 gross unrealized depreciation.
4. 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") and its
transfer agent, Administrative Data Management Corp. 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, 2003,
total directors fees accrued by the Fund amounted to $150.
The Investment Advisory Agreement provides as compensation to FIMCO an
annual fee, payable monthly, at the rate of .75% on the first $250 million
of the Fund's average daily net assets, declining by .03% on each $250
million thereafter, down to .66% on average daily net assets over $750
million.
5. Rule 144A Securities--Under Rule 144A, certain restricted securities
are exempt from the registration requirements of the Securities Act of
1933 and may only be resold to qualified institutional investors. At
June 30, 2003, the Fund held seven 144A securities with an aggregate
value of $1,154,241 representing 5.4% of the Fund's net assets. These
securities are valued as set forth in Note 1A.
6. Concentration of Credit Risk--The Fund's investment in high yield
securities, whether rated or unrated, may be considered speculative and
subject to greater market fluctuations and risk 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.
Independent Auditors' Report
To the Shareholders and Board of Directors of
First Investors Special Bond Fund, Inc.
We have audited the accompanying statement of assets and liabilities of
First Investors Special Bond Fund, Inc., including the portfolio of
investments, as of June 30, 2003, the related statement of operations,
the statement of changes in net assets, and the 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 auditing standards generally
accepted in the United States of America. 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, 2003, by correspondence with the custodian and brokers.
Where brokers have not replied to our confirmation request, we have
carried out other appropriate auditing procedures. 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 Special Bond Fund, Inc. as of June
30, 2003, and the results of its operations, changes in its net assets
and its financial highlights for the periods presented, in conformity
with accounting principles generally accepted in the United States of
America.
Tait, Weller & Baker
Philadelphia, Pennsylvania
August 1, 2003
Financial Highlights
FIRST INVESTORS SPECIAL BOND FUND, INC.
The following table sets forth the operating performance data for a
share of capital stock outstanding, total return, ratios to average net
assets and other supplemental data for each year indicated.
Year Ended December 31
1/1/03 to ----------------------------------------------------------------------------
6/30/03 2002 2001* 2000 1999 1998
------------ ------------ ------------ ------------ ------------ ------------
Per Share Data
Net Asset Value,
Beginning of Period $ 7.90 $ 8.53 $ 9.47 $11.37 $11.86 $12.89
------------ ------------ ------------ ------------ ------------ ------------
Income from Investment Operations
Net investment income .40 .80 .90 1.08 1.10 1.12
Net realized and
unrealized gain (loss)
on investments .86 (.62) (.90) (1.78) (.39) (.95)
------------ ------------ ------------ ------------ ------------ ------------
Total from Investment
Operations 1.26 .18 -- (.70) .71 .17
------------ ------------ ------------ ------------ ------------ ------------
Less Dividends from
Net Investment Income .40 .81 .94 1.20 1.20 1.20
------------ ------------ ------------ ------------ ------------ ------------
Net Asset Value,
End of Period $ 8.76 $ 7.90 $ 8.53 $ 9.47 $11.37 $11.86
============ ============ ============ ============ ============ ============
Total Return (%) + 16.10 2.20 (.01) (6.57) 6.24 1.29
Ratios/Supplemental Data
Net Assets, End of Period
(in thousands) $21,330 $19,457 $22,058 $24,135 $30,194 $32,260
Ratio to Average Net Assets: (%)
Expenses .91(a) .93 .90 .89 .87 .89
Net Investment Income 9.56(a) 9.77 9.80 10.09 9.38 8.93
Portfolio Turnover Rate (%) 8 18 35 37 32 65
* Prior to January 1, 2001, the Fund did not amortize premiums on debt
securities. The per share data and ratios prior to 2001 have not been
restated. The cumulative effect of this accounting change had no impact
on total net assets of the Fund.
+ The effect of fees and charges incurred at the separate account
level are not reflected in these performance figures.
(a) Annualized
See notes to financial statements
FIRST INVESTORS SPECIAL BOND FUND, INC.
Directors
- --------------------------------------------------
Robert M. Grohol
Glenn O. Head
Kathryn S. Head
Larry R. Lavoie
Rex R. Reed
Herbert Rubinstein
James M. Srygley
John T. Sullivan
Robert F. Wentworth
Officers
- --------------------------------------------------
Kathryn S. Head
President
Joseph I. Benedek
Treasurer
Mark S. Spencer
Assistant Treasurer
Carol Lerner Brown
Assistant Secretary
FIRST INVESTORS SPECIAL BOND FUND, INC.
Shareholder Information
Investment Adviser
First Investors Management Company, Inc.
95 Wall Street
New York, NY 10005
Custodian
The Bank of New York
One 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
1818 Market Street
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.
Item 1. Reports to Stockholders - Filed herewith
Item 2. Code of Ethics - Not applicable to Semi-Annual Report
Item 3. Audit Committee Financial Expert - Not applicable to Semi-
Annual Report
Item 4. Principal Accountant Fees and Services - Not applicable to
Semi-Annual Report
Item 5. [Reserved]
Item 6. [Reserved]
Item 7. Disclosure of Proxy Voting Policies & Procedures for
Closed-End Management Investment Companies - Not applicable
for this filing
Item 8. [Reserved]
Item 9. Controls and Procedures
(a) The Registrant's Principal Executive Officer and Principal
Financial Officer have concluded that the Registrant's disclosure controls
and procedures (as defined in Rule 30a-3(c) under the Investment Company
Act of 1940, as amended) are effective, based on their evaluation of these
disclosure controls and procedures as of a date within 90 days of the
filing date of this report.
(b) There were no significant changes in the Registrant's internal
controls or in other factors that could significantly affect these controls
subsequent to the date of their evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.
Item 10. Exhibits
(a) Code of Ethics - Not applicable to Semi-Annual Report
(b) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 - Filed herewith
(c) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 - Filed herewith
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
First Investors Special Bond Fund, Inc.
(Registrant)
By /S/ KATHRYN S. HEAD
Kathryn S. Head
President and Principal Executive Officer
Date: September 4, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and
on the dates indicated.
First Investors Special Bond Fund, Inc.
(Registrant)
By /S/ JOSEPH I. BENEDEK
Joseph I. Benedek
Treasurer and Principal Financial Officer
Date: September 4, 2003