-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H2aYOVb7JxZHkE/Sq+WTZtUXZ7Hz1HgGlMKcwlQ9QibFMc8KyD7ZgunR+YbG3bmu aNiz4NZsF5HWIPNt+4HpPA== 0000790202-96-000005.txt : 19970110 0000790202-96-000005.hdr.sgml : 19970110 ACCESSION NUMBER: 0000790202-96-000005 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961209 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST FINANCIAL FUND INC CENTRAL INDEX KEY: 0000790202 STANDARD INDUSTRIAL CLASSIFICATION: 0000 IRS NUMBER: 133341573 STATE OF INCORPORATION: MD FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04605 FILM NUMBER: 96677852 BUSINESS ADDRESS: STREET 1: 199 WATER ST CITY: NEW YORK STATE: NY ZIP: 10292 BUSINESS PHONE: 2122141250 MAIL ADDRESS: STREET 1: ONE SEAPORT PLAZA CITY: NEW YORK STATE: NY ZIP: 10292 FORMER COMPANY: FORMER CONFORMED NAME: FIRST SAVINGS & BANKING INSTITUTIONS FUND INC DATE OF NAME CHANGE: 19860402 N-30D 1 FIRST FINANCIAL FUND, INC. First Financial Fund, Inc. SEMI ANNUAL REPORT Sept 30, 1996 Letter To Shareholders October 11, 1996 Fueled by a seemingly bottomless reservoir of cash inflows, the US equity market swelled to record levels yet again during the six months ended September 30, 1996. The financial sector staged its own rally of price appreciation on the strength of consistently higher earnings, stabilizing interest rates and, of course, continued consolidation. Late in the period, the sector received good news in the form of a resolution to the Savings Association Insurance Fund (SAIF). All SAIF insured financials will be required to make a "one- time" contribution to recapitalize the fund, but shortly thereafter will enjoy close to premium parity with their Bank Insurance Fund brethren. Another hurdle to bank acquisitions of thrifts crumbles. The performance of First Financial Fund and various benchmarks is shown as follows: TOTAL RETURN For The Period Ended 9/30/96
3 Mos. 6 Mos. 12 Mos. First Financial Fund's NAV 13.3% 19.0% 29.2% S&P 500 3.1 7.7 20.3 NASDAQ Composite* 3.5 11.4 17.6 NASDAQ Banks* 7.0 9.2 18.7 SNL Daily* 10.9 12.3 18.5
* Principal only. On September 30, 1996, First Financial Fund's shares closed at a market price of $14.13 per share, which represented a discount of 13.5% to the net asset value per share of $16.32. Outlook and Strategy A number of our investments have approached or exceeded what we consider full valuation. Consequently, we have begun to raise cash and shift our focus to more stable, more overcapitalized and higher yielding financial intermediaries. Particularly in the area of consumer finance, we have become more cautious as many equities in this area have discounted robust and accelerating growth. Such a scenario is unlikely given the rickety state of many consumer's balance sheets. Near-term price appreciation in the finance sector--if there is any--will occur chiefly as a result of takeover activity. Apart from a few special situations, we don't think there is a lot of "gas" left in 1 the stock market or the financial sector. Because of the large discount to net asset value, the Fund's stock has again become attractive for repurchase. Indeed, over the last six weeks we have bought back 300,000 shares. While we find the larger discount of late puzzling, we think it may provide a great opportunity to put our growing cash balances to better use. Thank you for your continued interest in First Financial Fund. Sincerely, Nicholas C. Adams Portfolio Manager Wellington Management Company, LLP 2 Portfolio of Investments as of September 30, 1996 (Unaudited) FIRST FINANCIAL FUND, INC. - - ------------------------------------------------------------ - - ------------------------------------------------------------
Shares Description Value (Note 1) - - ------------------------------------------------------------ LONG-TERM INVESTMENTS--99.7% COMMON STOCKS--94.9% - - ------------------------------------------------------------ Banks & Thrifts--71.2% 43,200 Acadiana Bancshares, Inc. $ 594,000 174,000 Affiliated Community Bancorp, Inc. 3,545,250 256,700 Ambanc Holding Co., Inc.* 2,695,350 76,600 Banknorth Group, Inc. 2,834,200 518,000 Bostonfed Bancorp, Inc. 6,863,500 211,000 Cameron Financial Corp. 3,112,250 224,000 Catskill Financial Corp.* 2,688,000 117,800 CCF Holding Co. 1,516,675 177,100 Cenfed Financial Corp. 4,250,400 106,500 Community Financial Corp.* 1,411,125 74,600 CSB Financial Group, Inc.* 699,375 308,000 Dime Bancorp, Inc.* 4,119,500 150,000 Dime Community Bancorp, Inc.* 2,025,000 271,950 Downey Financial Corp. 6,866,737 187,200 Eastern Bancorp, Inc. 3,884,400 202,900 Fidelity Federal Bancorp 2,155,812 76,200 Financial Security Corp. 2,038,350 266,500 First Defiance Financial Corp. 2,831,562 63,000 First Fed Bancorp, Inc. 1,527,750 3,000 FirstFed Bankshares, Inc. 49,500 10,000 First Financial Corp. 95,000 115,000 First Mutual Bancorp, Inc. 1,495,000 362,700 First Republic Bancorp, Inc.* 5,667,187 201,000 Flushing Financial Corp. 3,643,125 77,000 Fort Bend Holding Corp. 1,443,750 413,000 GA Financial, Inc. 5,420,625 42 Glendale Federal Bank, FSB* 746 60,000 Great American Bancorp, Inc. 825,000 316,000 GreenPoint Financial Corp. 12,047,500 57,900 Hallmark Capital Corp.* 969,825 237,000 HF Bancorp, Inc.* 2,281,125 10,000 HFB Financial Corp. 205,000 62,400 Highland Federal Bank, FSB* 889,200 175,000 Home Bancorp Elgin, Inc.* 2,078,125 49,000 HUBCO, Inc. 1,047,375 161,000 Imperial Bancorp 4,669,000 322,200 Imperial Thrift & Loan Association* 4,269,150 140,000 ISB Financial Corp. 2,170,000 271,000 Long Island Bancorp, Inc. 7,825,125 200,000 Mechanics Savings Bank* 2,975,000 181,000 Mid Continent Bancshares, Inc. 3,439,000 80,100 North Central Bancshares, Inc. $ 991,238 93,700 Ocean Financial Corp.* 2,213,662 64,800 OSB Financial Corp. 1,490,400 249,800 Park Bancorp, Inc.* 2,779,025 339,800 People's Bank 8,367,575 65,000 Peoples Financial, Corp.* 747,500 174,600 Perpetual Federal Savings Bank 2,357,100 55,000 Pittsburgh Home Financial Corp. 639,375 95,300 Prestige Bancorp, Inc.* 1,131,688 308,000 Provident Financial Holdings, Inc.* 3,811,500 357,900 Redfed Bancorp, Inc.* 4,250,062 93,800 Redwood Financial, Inc.* 867,650 470,000 River Bank America* 4,112,500 47,800 Rowan Bancorp, Inc.* 752,850 125,600 SFS Bancorp, Inc. 1,695,600 257,000 SGV Bancorp, Inc.* 2,409,375 252,000 Statewide Financial Corp. 3,213,000 50,000D Sun Bancorp, Inc.*/DD (cost $650,000-purchased 1994) 757,500 10,000 TCF Financial Corp. 376,250 10,000 Telebanc Financial Corp.* 92,500 16,500 Three Rivers Financial Corp. 212,438 41,600 Tri-County Bancorp, Inc. 748,800 24,000 Valley Federal Savings Bank 888,000 436,275 Westcorp, Inc. 9,434,447 139,800 Westernbank of Puerto Rico 2,201,850 9,500 Workingmens Capital Holdings, Inc. 203,063 168,000 Yonkers Financial Corp. 2,079,000 --------- - - --- 177,988,542 - - ------------------------------------------------------------ Other Financial Intermediaries--23.7% 73,000 Finova Group Inc. 4,380,000 112,000 First Alliance Corp.* 2,492,000 427,000 First Financial Caribbean Corp. 8,967,000 130,000 First Merchants Acceptance Corp.* 2,583,750 112,000 First Mortgage Corp.* 518,000 252,000 Imperial Credit Industries, Inc. 9,229,500 152,300 Imperial Credit Mortgage Holdings, Inc. 3,141,187 768,100 Inco Homes Corp.* 480,063 162,700 Jayhawk Acceptance Corp.* 2,277,800 - - ------------------------------------------------------------ - - -------------------- See Notes to Financial Statements. 3 Portfolio of Investments as of September 30, 1996 (Unaudited) FIRST FINANCIAL FUND, INC. - - ------------------------------------------------------------ - - ------------------------------------------------------------
Shares Description Value (Note 1) - - ------------------------------------------------------------ Other Financial Intermediaries (cont'd.) 99,000 PMC Commercial Trust, Inc. $ 1,596,375 330,000 Prime Capital Corp., Inc.* 1,815,000 190,000 Prime Retail, Inc. 2,185,000 2,036 Redwood Trust, Inc. 63,625 187,571 Resource Bancshares Mortgage Group, Inc. 2,344,638 545,300 Sundance Homes, Inc.* 2,044,875 84,000 The Money Store, Inc. 2,194,500 319,500 Thornburg Mortgage Asset Corp. 5,191,875 238,000 United Companies Financial Corp. 7,883,750 --------- - - --- 59,388,938 --------- - - --- Total common stocks (cost $186,847,278) 237,377,480 --------- - - --- - - ------------------------------------------------------------ Preferred Stocks--1.8% 100,000 Community Bank, 13.00%, Ser. B 2,725,000 66,000 Walden Residential Properties, Inc., 9.16%, Conv., Ser. A 1,683,000 --------- - - --- Total preferred stocks (cost $4,053,000) 4,408,000 --------- - - --- - - ------------------------------------------------------------ Convertible Bond--2.9% 5,475 RAC Financial Group, Inc., 7.25%, 8/15/03 (cost $5,875,500) 7,363,875 --------- - - --- - - ------------------------------------------------------------ Warrants*--0.1% Warrants 50,000 Community Banks, Inc., expiring June '99 187,500 3 Glendale Federal Bank, expiring March '99 0 300,000D UnionFed Financial Corp., expiring September '98 (cost $0-purchased 1996) 0 --------- - - --- Total warrants (cost $100,000) 187,500 --------- - - --- Total long-term investments (cost $196,875,778) 249,336,855 --------- - - --- Principal Amount (000) - - ------------------------------------------------------------ - - --------------- * Non-income producing security. D Indicates a restricted security; the cost of such securities is $650,000. The aggregate value ($757,500) is approximately 0.3% of net assets. DD Fair Valued security. - - ------------------------------------------------------------ - - -------------------- 4 See Notes to Financial Statements. Statement of Assets and Liabilities (Unaudited) FIRST FINANCIAL FUND, INC. - - ------------------------------------------------------------ - - --------------------
Assets September 30, 1996 Investments, at value (cost $209,092,134)............................................... ................ $ 261,496,616 Cash........................................................ ............................................ 1,804,317 Receivable for investments sold........................................................ ................. 10,265,113 Dividends and interest receivable.................................................. ..................... 418,620 Deferred expenses and other assets...................................................... ................ 111,425 - - ------------------ Total assets...................................................... ................................... 274,096,091 - - ------------------ Liabilities Loan payable (Note 4).......................................................... ......................... 20,000,000 Payable for investments purchased................................................... .................... 3,174,968 Advisory fee payable..................................................... ............................... 372,355 Loan interest payable (Note 4).......................................................... ................ 292,743 Administration fee payable..................................................... ......................... 85,613 Accrued expenses.................................................... .................................... 64,352 Deferred directors' fees........................................................ ........................ 21,403 - - ------------------ Total liabilities................................................. ................................... 24,011,434 - - ------------------ Net Assets...................................................... ........................................ $ 250,084,657 - - ------------------ - - ------------------ Net assets were comprised of: Common stock, at par; 17,124,177 shares issued...................................................... . $ 17,124 Paid-in capital in excess of par......................................................... ............ 172,309,516 Cost of 1,801,100 shares held in treasury.................................................... ........ (21,381,334) - - ------------------ 150,945,306 Undistributed net investment income...................................................... ............ 2,642,134 Accumulated net realized gains....................................................... ................ 44,092,735 Net unrealized appreciation of investments................................................. .......... 52,404,482 - - ------------------ Net assets, September 30, 1996........................................................ ............... $ 250,084,657 - - ------------------ - - ------------------ Net asset value per share ($250,084,657 / 15,323,077 shares of common stock outstanding)................ $16.32 - - ------------------ - - ------------------
- - ------------------------------------------------------------ - - -------------------- See Notes to Financial Statements. 5 ----- FIRST FINANCIAL FUND, INC. Statement of Operations (Unaudited) - - ------------------------------------------------------------
Six Months Ended Net Investment Income September 30, 1996 Income Dividends............................. $ 3,648,064 Interest.............................. 211,761 ---------------- - - -- Total income....................... 3,859,825 ---------------- - - -- Expenses Investment advisory fee............... 729,571 Administration fee.................... 167,597 Custodian's fees and expenses......... 50,000 Insurance expense..................... 31,000 Legal fees and expenses............... 27,000 Reports to shareholders............... 25,000 Listing fees.......................... 20,000 Director's fees and expenses.......... 17,000 Audit fee and expenses................ 15,000 Transfer agent's fees and expenses.... 12,000 Miscellaneous......................... 4,982 ---------------- - - -- Total operating expenses........... 1,099,150 Loan interest (Note 4)................ 648,526 ---------------- - - -- Total expenses..................... 1,747,676 ---------------- - - -- Net investment income.................... 2,112,149 ---------------- - - -- Realized and Unrealized Gain on Investments Net realized gain on investment transactions.......................... 24,919,729 Net change in unrealized appreciation of investments........................... 13,003,331 ---------------- - - -- Net gain on investments.................. 37,923,060 ---------------- - - -- Net Increase in Net Assets Resulting from Operations................ $ 40,035,209 ---------------- - - -- ---------------- - - --
FIRST FINANCIAL FUND, INC. Statement of Cash Flows (Unaudited) - - ------------------------------------------------------------
Six Months Ended Increase (Decrease) in Cash September 30, 1996 Cash used for operating activities Dividends and interest received........ $ 3,688,824 Operating expenses paid................ (506,703) Loan interest and commitment fees paid................................ (911,625) Purchases of short-term portfolio investments, net.................... (11,585,129) Purchases of long-term portfolio investments......................... (98,194,677) Proceeds from disposition of long-term portfolio investments............... 103,072,267 Deferred expenses and other assets..... (3,194) ---------------- - - -- Net cash used for operating activities.......................... (4,440,237) ---------------- - - -- Cash provided from financing activities Cash used to reacquire Fund shares..... (4,080,500) Net increase in notes payable.......... 10,300,000 ---------------- - - -- Net cash provided from financing activities.......................... 6,219,500 ---------------- - - -- Net increase in cash................... 1,779,263 Cash at beginning of period............ 25,054 ---------------- - - -- Cash at end of period.................. $ 1,804,317 ---------------- - - -- ---------------- - - -- Reconciliation of Net Increase in Net Assets to Net Cash Used for Operating Activities Net increase in net assets resulting from operations............................. $ 40,035,209 ---------------- - - -- Decrease in investments................... 5,514,669 Net realized gain on investment transactions........................... (24,919,729) Net change in unrealized appreciation of investments............................ (13,003,331) Increase in receivable for investments sold................................... (9,895,682) Increase in dividends and interest receivable............................. (171,001) Increase in deferred expenses and other assets................................. (3,194) Decrease in payable for investments purchased.............................. (2,326,526) Increase in accrued expenses and other liabilities............................ 329,348 ---------------- - - -- Total adjustments................... (44,475,446) ---------------- - - -- Net cash used for operating activities.... $ (4,440,237) ---------------- - - -- ---------------- - - --
- - ------------------------------------------------------------ - - -------------------- 6 See Notes to Financial Statements. FIRST FINANCIAL FUND, INC. Statement of Changes in Net Assets (Unaudited) - - ------------------------------------------------------------
Six Months Ended Year Ended Increase (Decrease) September 30, March 31, in Net Assets 1996 1996 ------------ -------- - - ---- Operations Net investment income....... $ 2,112,149 $ 1,893,711 Net realized gain on investment transactions............. 24,919,729 44,064,406 Net change in unrealized appreciation of investments.............. 13,003,331 28,675,777 ------------ -------- - - ---- Net increase in net assets resulting from operations............... 40,035,209 74,633,894 ------------ -------- - - ---- Dividends and distributions (Note 1) Dividends from net investment income........ -- (2,148,396) Distributions from net realized gains on investments.............. -- (33,085,304) Value of Fund shares issued to shareholders in reinvestment of dividends and distributions........ -- 16,515,513 Cost of Fund shares reacquired............... (4,080,500) - - -- ------------ -------- - - ---- Total increase................. 35,954,709 55,915,707 Net Assets Beginning of period............ 214,129,948 158,214,241 ------------ -------- - - ---- End of period.................. $250,084,657 $214,129,948 ------------ -------- - - ---- ------------ -------- - - ----
FIRST FINANCIAL FUND, INC. Notes to Financial Statements (Unaudited) - - ------------------------------------------------------------ First Financial Fund, Inc. (the ``Fund'') was incorporated in Maryland on March 3, 1986, as a closed-end, diversified investment company. The Fund had no operations until April 24, 1986, when it sold 10,000 shares of common stock for $100,000 to Wellington Management Company (the ``Investment Adviser''). Investment operations commenced on May 1, 1986. The Fund's primary investment objective is to achieve long-term capital appreciation with the secondary objective of current income by investing in securities issued by savings and banking institutions and their holding companies. The ability of issuers of debt securities held by the Fund to meet their obligations may be affected by economic developments in a specific industry or region. - - ------------------------------------------------------------ Note 1. Accounting Policies The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. Securities Valuation: Each security traded on a national securities exchange will be valued on the basis of the last sales price on the valuation date on the principal exchange on which the security is traded. Securities traded in the over-the-counter market and on one or more exchanges will generally be valued using the quotations the Board of Directors or its delegate believe reflect most closely the value of such securities. Securities for which no trades have taken place that day and unlisted securities for which market quotations are readily available are valued at the latest bid price. Securities for which market quotations are not readily available, including restricted securities, will be valued at fair value as determined in good faith according to pricing procedures developed by the Investment Adviser and approved by the Board of Directors. Short-term securities which mature in more than 60 days are valued at current market quotations. Short-term securities which mature in 60 days or less are valued at amortized cost. In connection with repurchase agreement transactions with financial institutions, it is the Fund's policy that its custodian take possession of the underlying collateral securities, the value of which exceeds the principal amount of the repurchase transaction, including accrued interest. If the seller defaults, and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Fund may be delayed or limited. The Fund may invest up to 20% of its total assets in securities which are not readily marketable, including those which are restricted as to disposition under securities law (``restricted securities''). With regards to the restricted securities held by the Fund at September 30, 1996, the Fund - - ------------------------------------------------------------ - - -------------------- See Notes to Financial Statements. 7 ----- Notes to Financial Statements (Unaudited) FIRST FINANCIAL FUND, INC. - - ------------------------------------------------------------ - - -------------------- may not demand registration by the issuers. Restricted securities are valued pursuant to the valuation procedures noted above. Cash Flow Information: The Fund invests in securities and pays dividends from net investment income and distributions from net realized gains which are paid in cash or are reinvested at the discretion of shareholders. These activities are reported in the Statement of Changes in Net Assets and additional information on cash receipts and cash payments is presented in the Statement of Cash Flows. Accounting practices that do not affect reporting activities on a cash basis include carrying investments at value and amortizing discounts on debt obligations. Cash, as used in the Statement of Cash Flows, is the amount reported as ``Cash'' in the Statement of Assets and Liabilities. Options: The Fund may either purchase or write options in order to hedge against adverse market movements or fluctuations in value caused by changes in prevailing interest rates or foreign currency exchange rates with respect to securities or currencies which the Fund currently owns or intends to purchase. When the Fund purchases an option, it pays a premium and an amount equal to that premium is recorded as an investment. When the Fund writes an option, it receives a premium and an amount equal to that premium is recorded as a liability. The investment or liability is adjusted daily to reflect the current market value of the option. If an option expires unexercised, the Fund realizes a gain or loss to the extent of the premium received or paid. If an option is exercised, the premium received or paid is an adjustment to the proceeds from the sale or the cost basis of the purchase in determining whether the Fund has realized a gain or loss. The difference between the premium and the amount received or paid on effecting a closing purchase or sale transaction is also treated as a realized gain or loss. Gain or loss on purchased options is included in net realized gain (loss) on investment transactions. The Fund, as writer of an option, has no control over whether the underlying securities or currencies may be sold (called) or purchased (put). As a result, the Fund bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. The Fund, as purchaser of an option, bears the risk of the potential inability of the counterparties to meet the terms of their contracts. Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains or losses on sales of securities are calculated on the identified cost basis. Dividend income is recorded on the ex-dividend date; interest income is recorded on the accrual basis. Expenses are recorded on the accrual basis which may require the use of certain estimates by management. Federal Income Taxes: It is the Fund's intention to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to shareholders. Therefore, no federal income tax provision is required. Dividends and Distributions: The Fund expects to declare and pay, at least annually, dividends from net investment income and any net capital gains. Dividends and distributions are recorded on the ex-dividend date. Income distributions 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 wash sales. - - ------------------------------------------------------------ Note 2. Agreements The Fund has agreements with the Investment Adviser and with Prudential Mutual Fund Management LLC. (the ``Administrator''). The Investment Adviser makes investment decisions on behalf of the Fund; the Administrator provides occupancy and certain clerical and accounting services to the Fund. The Fund bears all other costs and expenses. The investment advisory agreement provides for the Investment Adviser to receive a fee, computed monthly and payable quarterly, at the following annual rates: .75% of the Fund's average month-end net assets up to and including $50 million, and .625% of such assets in excess of $50 million. The administration agreement provides for the Administrator to receive a fee, computed monthly and payable quarterly, at the annual rate of .15% of the Fund's average month-end net assets. - - ------------------------------------------------------------ Note 3. Portfolio Securities Purchases and sales of investment securities, other than short-term investments, for the six months ended September 30, 1996 were $90,149,361 and $109,309,466, respectively. The cost basis of the Fund's investments, including short- term investments, at September 30, 1996 was $209,217,842; and, accordingly, net unrealized appreciation for federal income tax purposes was $52,278,774 (gross unrealized appreciation--$57,099,977; gross unrealized depreciation-- $4,821,203). - - ------------------------------------------------------------ Note 4. Borrowings The Fund has a credit agreement (the ``Agreement'') with an unaffiliated lender. The maximum commitment under the Agreement is $30,000,000. These borrowings may be set to any desired maturity from one week to - - ------------------------------------------------------------ - - -------------------- 8 Notes to Financial Statements (Unaudited) FIRST FINANCIAL FUND, INC. - - ------------------------------------------------------------ - - -------------------- one year at a rate of interest determined by the lender at the time of borrowing. While outstanding, each borrowing will bear interest, payable at maturity. The average daily balance outstanding for the six months ended September 30, 1996 was $19,508,197 at a weighted average interest rate of 6.56%. The highest face amount of borrowing outstanding at any month end during the six months ended September 30, 1996 was $20,000,000. The Fund's borrowings on September 30, 1996 ($20,000,000 at 6.60%) matures on October 31, 1996. - - ------------------------------------------------------------ Note 5. Capital There are 50 million shares of $.001 par value common stock authorized. Of the 17,124,177 shares issued as of September 30, 1996, the Investment Adviser owned 10,994 shares. During the fiscal year ended March 31, 1996, the Fund issued 1,300,435 shares in connection with cash distributions paid in stock. During the six months ended September 30, 1996, the Fund repurchased 300,000 shares at a weighted average discount per share of 13.88%. - - ------------------------------------------------------------ - - -------------------- See Notes to Financial Statements. 9 ----- Financial Highlights (Unaudited) FIRST FINANCIAL FUND, INC. - - ------------------------------------------------------------ - - --------------------
Six Months Ended Year Ended March 31, September 30, ------------------------------------------ - - ----- 1996 1996 1995 1994 1993 ---- - - --------- -------- -------- -------- ------- - - - PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period................ $ 13.71 $ 11.05 $ 12.74 $ 16.52 $ 10.50 ---- - - --------- -------- -------- -------- ------- - - - Income from investment operations Net investment income............................... .14 .13 .05 .04 .08 Net realized and unrealized gain (loss) on investments...................................... 2.43 4.99 2.76 3.27 7.89 ---- - - --------- -------- -------- -------- ------- - - - Total from investment operations................. 2.57 5.12 2.81 3.31 7.97 ---- - - --------- -------- -------- -------- ------- - - - Less dividends and distributions Dividends from net investment income................ - - -- (.15) (.03) (.05) (.02) Distributions in excess of net investment income.... - - -- -- -- -- -- Distributions from net capital gains................ - - -- (2.31) (4.38) (6.63) (2.02) ---- - - --------- -------- -------- -------- ------- - - - Total dividends and distributions................ - - -- (2.46) (4.41) (6.68) (2.04) ---- - - --------- -------- -------- -------- ------- - - - Increase resulting from Fund share repurchase....... .04 -- -- .08 .12 Capital charge resulting from the issuance of Fund shares........................................... - - -- -- (.09) (.49) (.03) ---- - - --------- -------- -------- -------- ------- - - - Net asset value, end of period(b)................... $ 16.32 $ 13.71 $ 11.05 $ 12.74 $ 16.52 ---- - - --------- -------- -------- -------- ------- - - - ---- - - --------- -------- -------- -------- ------- - - - Market price per share, end of period(b)............ $ 14.125 $ 12.625 $ 11.125 $ 12.00 $ 15.125 ---- - - --------- -------- -------- -------- ------- - - - ---- - - --------- -------- -------- -------- ------- - - - TOTAL INVESTMENT RETURN(c):......................... 11.88% 35.46% 34.83% 24.22% 72.89% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000)..................... $ 250,085 $214,130 $158,214 $143,572 $154,090 Average net assets (000)............................ $ 223,463 $195,421 $164,322 $158,100 $125,361 Ratios to average net assets: Expenses, before loan interest, commitment fees and nonrecurring expenses..................... .98%(a) 1.00% 1.03% 1.11% 1.13% Total expenses................................... 1.56%(a) 1.23% 1.58% 1.36% 1.21% Net investment income............................ 1.89%(a) .97% 0.46% 0.25% 0.62% Portfolio turnover rate............................. 38% 82% 103% 139% 105% Total debt outstanding at end of period (000 omitted)......................................... $ 20,000 $ 9,700 $ 16,000 $ 15,000 -- Asset coverage per $1,000 of debt outstanding....... $ 13,504 $ 23,075 $ 10,888 $ 10,571 -- Average commission rate paid per share.............. $ .0512 $ .0415 -- -- -- 1992 ------ - - - PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period................ $ 6.35 ------ - - - Income from investment operations Net investment income............................... .11 Net realized and unrealized gain (loss) on investments...................................... 4.15 ------ - - - Total from investment operations................. 4.26 ------ - - - Less dividends and distributions Dividends from net investment income................ (.11) Distributions in excess of net investment income.... (.01) Distributions from net capital gains................ -- ------ - - - Total dividends and distributions................ (.12) ------ - - - Increase resulting from Fund share repurchase....... .01 Capital charge resulting from the issuance of Fund shares........................................... -- ------ - - - Net asset value, end of period(b)................... $ 10.50 ------ - - - ------ - - - Market price per share, end of period(b)............ $ 10.00 ------ - - - ------ - - - TOTAL INVESTMENT RETURN(c):......................... 62.32% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000)..................... $99,067 Average net assets (000)............................ $80,947 Ratios to average net assets: Expenses, before loan interest, commitment fees and nonrecurring expenses..................... 1.23% Total expenses................................... 1.65% Net investment income............................ 1.33% Portfolio turnover rate............................. 89% Total debt outstanding at end of period (000 omitted)......................................... $ 9,000 Asset coverage per $1,000 of debt outstanding....... $12,007 Average commission rate paid per share.............. --
- - --------------- (a) Annualized. (b) NAV and market value are published in The Wall Street Journal each Monday. (c) Total investment return is calculated assuming a purchase of common stock at the current market value on the first day and a sale at the current market value on the last day of each period reported. Dividends and distributions are assumed for purposes of this calculation to be reinvested at prices obtained under the dividend reinvestment plan. This calculation does not reflect brokerage commissions. Total returns less than one year are not annualized. Contained above is selected data for a share of common stock outstanding, total investment return, ratios to average net assets and other supplemental data for the periods indicated. This information has been determined based upon information provided in the financial statements and market price data for the Fund's shares. - - ------------------------------------------------------------ - - -------------------- 10 See Notes to Financial Statements. Directors Eugene C. Dorsey Douglas H. McCorkindale Thomas T. Mooney Investment Adviser Wellington Management Company, LLP 75 State Street Boston, MA 02109 Administrator Prudential Mutual Fund Management LLC Gateway Center Three 100 Mulberry Street Newark, NJ 07102-4077 Custodian and Transfer Agent State Street Bank and Trust Company One Heritage Drive North Quincy, MA 02171 Independent Auditors Deloitte & Touche LLP Two World Financial Center New York, NY 10281 Legal Counsel Kirkpatrick & Lockhart LLP 1800 Massachusetts Avenue, N.W. Washington, D.C. 20036 Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940 that the Fund may purchase, from time to time, shares of its common stock at market prices. The accompanying financial statements as of September 30, 1996, were not audited and, accordingly, no opinion is expressed on them. The views expressed in this report and the information about the Fund's portfolio holdings are for the period covered by this report and are subject to change thereafter. This report is for stockholder information. This is not a prospectus intended for use in the purchase or sale of Fund shares. First Financial Fund, Inc. Gateway Center Three 100 Mulberry Street Newark, NJ 07102-4077 For information call toll-free (800) 451-6788 320228109 -----END PRIVACY-ENHANCED MESSAGE-----