[Federal Register Volume 65, Number 32 (Wednesday, February 16, 2000)]
[Notices]
[Pages 7901-7902]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-3594]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-24282 (812-11832)]


First Investors Corporation, et al.; Notice of Application

February 9, 2000.
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'').

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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

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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).

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-3594 Filed 2-15-00; 8:45 am]
BILLING CODE 8010-01-M