<PAGE>
As filed with the Securities and Exchange Commission on April , 1995
Registration No. 2-71911
811-3169
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 20 X
-
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
Amendment No. 20 X
-
----------
FIRST INVESTORS GLOBAL FUND, INC.
(Exact name of Registrant as specified in charter)
Mr. Larry R. Lavoie
Secretary and General Counsel
First Investors Corporation
95 Wall Street
New York, New York 10005
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement
It is proposed that this filing will become effective on May 1, 1995 pursuant to
paragraph (b) of Rule 485.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
previously elected to register an indefinite number of shares of common stock,
par value $1.00 per share, under the Securities Act of 1933. Registrant filed a
Rule 24f-2 Notice for its fiscal year ending December 31, 1994 on February 21,
1995.
<PAGE>
FIRST INVESTORS GLOBAL FUND, INC.
CROSS-REFERENCE SHEET
N-1A Item No. Location
- ------------- --------
PART A: PROSPECTUS
1. Cover Page ............................... Cover Page
2. Synopsis ................................. Fee Table
3. Condensed Financial Information .......... Financial Highlights
4. General Description of Registrant ........ Investment Objectives and
Policies; General Information
5. Management of the Fund ................... Management
5A. Management's Discussion of
Fund Performance ........................ Performance Information
6. Capital Stock and Other Securities ....... Description of Shares;
Dividends and Other
Distributions; Taxes;
Determination of Net Asset
Value
7. Purchase of Securities Being Offered ..... Alternative Purchase Plan; How
to Buy Shares
8. Redemption or Repurchase ................. How to Exchange Shares; How to
Redeem Shares; Telephone
Transactions
9. Pending Legal Proceedings ................ Management
PART B: STATEMENT OF ADDITIONAL INFORMATION
10. Cover Page .............................. Cover Page
11. Table of Contents ....................... Table of Contents
12. General Information and History ......... General Information
13. Investment Objectives and Policies ...... Investment Policies; Investment
Restrictions; Hedging and
Option Income Strategies
14. Management of the Fund .................. Directors and Officers
15. Control Persons and Principal
Holders of Securities ................... Not Applicable
16. Investment Advisory and Other Services .. Management
17. Brokerage Allocation .................... Allocation of Portfolio
Brokerage
18. Capital Stock and Other Securities ...... Determination of Net Asset
Value
19. Purchase, Redemption and Pricing
of Securities Being Offered ............. Reduced Sales Charges,
Additional Exchange and
Redemption Information and
Other Services; Determination
of Net Asset Value
<PAGE>
FIRST INVESTORS GLOBAL FUND, INC.
FIRST INVESTORS GOVERNMENT FUND, INC.
95 Wall Street, New York, New York 10005/1-800-423-4026
This is a Prospectus for FIRST INVESTORS GLOBAL FUND, INC. ("GLOBAL FUND") and
FIRST INVESTORS GOVERNMENT FUND, INC. ("GOVERNMENT FUND"), each of which is an
open-end diversified management investment company. GLOBAL FUND and GOVERNMENT
FUND are referred to herein collectively as "Funds." Each Fund sells two
classes of shares. Investors may select Class A or Class B shares, each with a
public offering price that reflects different sales charges and expense levels.
See "Alternative Purchase Plans."
GLOBAL FUND primarily seeks long-term capital growth and secondarily seeks to
earn a reasonable level of current income. This Fund seeks to achieve these
objectives by investing, under normal market conditions, in quality common
stocks, preferred stocks, and bonds and other debt obligations issued by
companies or governments of at least three countries, including the United
States.
GOVERNMENT FUND seeks to achieve a significant level of current income which
is consistent with security and liquidity of principal by investing, under
normal market conditions, at least 80% of its assets in obligations issued or
guaranteed as to principal and interest by the U.S. Government, its agencies or
instrumentalities, including mortgage-related securities.
There is no assurance that either Fund will achieve its investment objectives.
This Prospectus sets forth concisely the information about each Fund that a
prospective investor should know before investing and should be retained for
future reference. First Investors Management Company, Inc. ("FIMCO" or
"Adviser") serves as investment adviser to the Funds and First Investors
Corporation ("FIC" or "Underwriter") serves as distributor of the Funds' shares.
A Statement of Additional Information ("SAI"), dated May 1, 1995 (which is
incorporated by reference herein), has been filed with the Securities and
Exchange Commission. The SAI is available at no charge upon request to the
Funds at the address or telephone number indicated above.
An investment in these securities is not a deposit or obligation of, or
guaranteed or endorsed by, any bank and is not federally insured or protected by
the Federal Deposit Insurance Corporation, the Federal Reserve Board or any
other government agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is May 1, 1995
<PAGE>
FEE TABLE
The following table is intended to assist investors in understanding the
expenses associated with investing in each class of shares of a Fund. Shares of
either Fund issued prior to January 12, 1995 have been designated as Class A
shares.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
Class A Class B
Shares Shares
------- -------
<S> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................. 6.25% None
Deferred Sales Load
(as a percentage of the lower of original purchase
price or redemption proceeds)....................... None* 4% in the first year;
declining to 0% after
the sixth year
Exchange Fee** None None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<CAPTION>
Global Fund Government Fund
---------------------- -----------------------
Class A Class B/(1)/ Class A Class B/(1)/
Shares Shares Shares Shares
------- ------------ ------- ------------
<S> <C> <C> <C> <C>
Management Fees/(2)/ 1.00% 1.00% 0.75%*** 0.75%***
12b-1 Fees 0.30 1.00 0.30 1.00
Other Expenses 0.54 0.54 0.35 0.35
Total Fund Operating Expenses/(3)/ 1.84 2.54 1.40*** 2.10***
</TABLE>
- --------------------------
* A contingent deferred sales charge ("CDSC") of 1.00% will be assessed on
certain redemptions of Class A shares that are purchased without a sales
charge. See "How to Buy Shares."
** Although there is a $5.00 exchange fee for exchanges into a Fund, this fee
is being assumed by that Fund for a minimum period ending December 31,
1995. Each Fund reserves the right to change or suspend this privilege
after December 31, 1995. See "How to Exchange Shares."
*** Net of waiver.
(1) Since Class B shares were not issued during each Fund's prior fiscal year,
Other Expenses and Total Fund Operating Expenses are based on annualized
estimated amounts for the fiscal year ending December 31, 1995.
(2) Management Fees have been restated. The Adviser will waive Management Fees
for GOVERNMENT FUND in excess of 0.75% for a minimum period ending December
31, 1995. Otherwise, such fee would have been 0.95%. The Securities and
Exchange Commission ("SEC") considers management fees of 0.75% or more to
be higher than those paid by most investment companies.
(3) If certain Management Fees were not waived, GOVERNMENT FUND'S Total Fund
Operating Expenses would have been 1.60% for Class A shares and are
estimated to be 2.30% for Class B shares.
2
<PAGE>
For a more complete description of the various costs and expenses, see
"Alternative Purchase Plans," "How to Buy Shares," "How to Redeem Shares,"
"Management" and "Distribution Plans." Due to the imposition of 12b-1 fees, it
is possible that long-term shareholders of a Fund may pay more in total sales
charges than the economic equivalent of the maximum front-end sales charge
permitted by the rules of the National Association of Securities Dealers, Inc.
The Fee Table does not reflect the costs incurred by shareholders who purchase
shares of the Funds through First Investors Contractual Plans.
The Example below is based on Class A expense data for each Fund's fiscal year
ended December 31, 1994. Expense data for Class B shares has been estimated
because the shares were not issued during this period.
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
GLOBAL FUND
Class A.......... $80 $117 $156 $265
Class B.......... $66 $109 $155 $270
GOVERNMENT FUND
Class A.......... $76 $104 $134 $220
Class B.......... $61 $ 96 $133 $225
</TABLE>
You would pay the following expenses on the same $1,000 investment, assuming
(1) 5% annual return and (2) no redemption at the end of each time period:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
GLOBAL FUND
Class A.......... $80 $117 $156 $265
Class B.......... $26 $ 79 $135 $270
GOVERNMENT FUND
Class A.......... $76 $104 $134 $220
Class B.......... $21 $ 66 $113 $225
</TABLE>
THE EXPENSES IN THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION BY THE
FUNDS OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES IN FUTURE YEARS MAY BE
GREATER OR LESS THAN THOSE SHOWN.
3
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables set forth the per share operating performance data for a
share of Class A capital stock outstanding, total return, ratios to average net
assets and other supplemental data for each year indicated. Financial
highlights are not presented for Class B shares since no shares of that class
were outstanding during these periods. The tables have been derived from
financial statements which have been examined by Tait, Weller & Baker,
independent certified public accountants, whose reports thereon appear in the
SAI. This information should be read in conjunction with the Financial
Statements and Notes thereto, which also appear in the SAI, available at no
charge upon request to the Funds.
GLOBAL FUND*
<TABLE>
<CAPTION>
CLASS A SHARES
- -------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31
------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
- --------------
Net Asset Value,
Beginning of Year...................... $ 6.27 $ 5.11 $ 5.41 $ 4.63 $ 5.38 $ 4.47 $ 3.85 $ 3.31 $ 2.53 $ 2.50
------ ------ ------ ------ ------- ------ ------ ------ ------ ------
Income from Investment
Operations
Net investment income (loss)........... .028 .014 .039 .005 (.023) (.019) .003 (.021) .006 .012
Net realized and
unrealized gain (loss)
from investments and
foreign transactions.................. (.265) 1.160 (.298) .775 (.634) 1.689 .617 .969 1.068 .276
------ ------ ------ ------ ------- ------ ------ ------ ------ ------
Total from Investment
Operations.......................... (.237) 1.174 (.259) .780 (.657) 1.670 .620 .948 1.074 .288
------ ------ ------ ------ ------- ------ ------ ------ ------ ------
Less Distributions from:
Net investment income.................. .028 .014 -- -- -- -- -- .008 .006 .032
Net realized gain from
investments........................... .165 -- -- -- -- .390 -- .400 .288 .226
Capital surplus........................ -- -- .041 -- .093 .370 -- -- -- --
------ ------ ------ ------ ------- ------ ------ ------ ------ ------
Total Distributions.................... .193 .014 .041 -- .093 .760 -- .408 .294 .258
------ ------ ------ ------ ------- ------ ------ ------ ------ ------
Net Asset Value, End of Year............. $ 5.84 $ 6.27 $ 5.11 $ 5.41 $ 4.63 $ 5.38 $ 4.47 $ 3.85 $ 3.31 $ 2.53
====== ====== ====== ====== ======= ====== ====== ====== ====== ======
TOTAL RETURN(%)+......................... (3.78) 22.97 (2.89) 14.56 (12.22) 37.65 16.10 28.60 45.49 11.11
- ---------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets, End of Year
(in millions)........................... $ 214 $ 210 $ 181 $ 226 $ 219 $ 182 $ 89 $ 93 $ 28 $ 30
Ratios to Average Net Assets(%):
Expenses............................... 1.84 1.87 1.83 1.95 1.88 1.75 1.74 1.73 1.75 1.70
Net investment income (loss)........... .45 .27 .73 .09 (.43) (.38) .07 (.45) .03 .52
Portfolio Turnover Rate(%)............... 56 41 45 64 116 155 115 137 94 61
</TABLE>
- --------------------
* Adjusted to reflect five-for-one stock split on March 4, 1987.
+ Calculated without sales charge.
4
<PAGE>
GOVERNMENT FUND
<TABLE>
<CAPTION>
CLASS A SHARES
- -------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31
-----------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
- --------------
Net Asset Value,
Beginning of Year.................. $11.55 $11.83 $11.92 $11.08 $11.01 $10.75 $10.79 $12.12 $12.14 $11.48
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from Investment
Operations
Net investment income.............. .69 .72 .76 .84 .90 .98 .96 .87 1.05 1.25
Net realized and unrealized
gain (loss) on investments........ (1.06) (.26) (.09) .83 .07 .26 (.04) (1.02) .31 .72
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment
Operations....................... (.37) .46 .67 1.67 .97 1.24 .92 (.15) 1.36 1.97
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less Distributions from:
Net investment income.............. .68 .74 .76 .79 .90 .98 .96 .87 1.04 1.30
Capital surplus................ -- -- -- .04 -- -- -- .31 .34 .01
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions.............. .68 .74 .76 .83 .90 .98 .96 1.18 1.38 1.31
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of Year........ $10.50 $11.55 $11.83 $11.92 $11.08 $11.01 $10.75 $10.79 $12.12 $12.14
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN(%)+.................... (3.22) 3.99 5.90 15.74 9.20 12.02 8.71 (1.13) 11.86 18.03
- ------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------
Net Assets, End of Year
(in millions)...................... $ 219 $ 288 $ 306 $ 316 $ 299 $ 237 $ 254 $ 357 $ 247 $ 103
Ratio to Average Net Assets:(%)++
Expenses........................... 1.40 1.32 1.33 1.34 1.28 1.01 .99 1.24 1.22 1.19
Net investment income.............. 6.31 6.14 6.45 7.43 8.24 8.91 8.69 7.79 8.46 10.20
Ratio to Average Net
Assets Before Expenses Waived:(%)
Expenses........................... 1.60 1.48 1.49 1.50 1.49 1.22 1.16 1.38 1.24 1.27
Net investment income.............. 6.11 5.98 6.29 7.27 8.03 8.70 8.52 7.65 8.44 10.13
Portfolio Turnover Rate(%).......... 260 584 330 117 94 117 156 74 287 107
</TABLE>
- --------------------
+ Calculated without sales charge.
++ Net after fees waived.
5
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
GLOBAL FUND
GLOBAL FUND primarily seeks long-term capital growth and secondarily seeks to
earn a reasonable level of current income. GLOBAL FUND may invest in all types
of securities issued by companies and government instrumentalities of any
nation, subject only to industry concentration and issuer diversification
restrictions described below and in the SAI. This investment flexibility
permits the Fund to react to rapidly changing economic conditions within
countries which cause the relative attractiveness of investments within their
national markets to be subject to frequent reappraisal. The Fund, under normal
market conditions, invests in quality common stocks, preferred stocks and bonds
and other debt obligations issued by companies or governments of at least three
countries, including the United States. Currently, the Fund primarily is
invested in common stocks. Investments in foreign markets involve special risks
and considerations which are in addition to the usual risks inherent in domestic
investments. See "Foreign Securities-Risk Factors," below.
GLOBAL FUND may purchase securities traded on any foreign stock exchange. The
Fund may also purchase American Depository Receipts ("ADRs") and Global
Depository Receipts ("GDRs"). See "American Depository Receipts and Global
Depository Receipts," below. GLOBAL FUND also may invest up to 25% of its total
assets in unlisted securities of foreign issuers; provided, however, that no
more than 10% of the value of its net assets may be invested in securities with
a limited trading market. The investment standards for the selection of
unlisted securities are the same as those used in the purchase of securities
traded on a stock exchange. The Fund will invest in debt securities rated in
the three highest rating categories by either Moody's Investors Service, Inc.
("Moody's) or Standard & Poor's Ratings Group ("S&P") or, if unrated, determined
to be of comparable quality by Wellington Management Company ("WMC" or the
"Subadvisor"). See Appendix A to the SAI for a description of such bond
ratings.
GLOBAL FUND may invest in securities convertible into common stocks, preferred
stock, warrants and repurchase agreements and may purchase securities on a when-
issued or delayed delivery basis. The Fund also may borrow money for temporary
or emergency purposes in amounts not exceeding 5% of its total assets and make
loans of portfolio securities. For temporary defensive purposes, the Fund may
invest up to 100% of its total assets in obligations issued or guaranteed as to
principal and interest by the U.S. Government, its agencies or instrumentalities
("U.S. Government Obligations") and cash equivalents denominated in U.S.
dollars. See the SAI for further information concerning these securities.
GOVERNMENT FUND
GOVERNMENT FUND seeks to achieve a significant level of current income which
is consistent with security and liquidity of principal by investing, under
normal market conditions, at least 80% of its assets in U.S. Government
Obligations, including mortgage-related securities. Securities issued or
guaranteed as to principal and interest by the U.S. Government include a variety
of Treasury securities, which differ only in their interest rates, maturities
and times of issuance. Although the payment of interest and principal on a
portfolio security may be guaranteed by the U.S. Government or one of its
agencies or instrumentalities, shares of GOVERNMENT FUND are not insured or
guaranteed by the U.S. Government or any agency or instrumentality. The net
asset value of shares of the Fund generally will fluctuate in response to
interest rate levels. When interest rates rise,
6
<PAGE>
prices of fixed income securities generally decline; when interest rates
decline, prices of fixed income securities generally rise. See "U.S. Government
Obligations" and "Debt Securities-Risk Factors," below.
GOVERNMENT FUND may invest in mortgage-related securities, including those
involving Government National Mortgage Association ("GNMA") certificates,
Federal National Mortgage Association ("FNMA") certificates and Federal Home
Loan Mortgage Corporation ("FHLMC") certificates. The Fund also may invest in
securities issued or guaranteed by other U.S. Government agencies or
instrumentalities, including: the Federal Farm Credit System and the Federal
Home Loan Bank (each of which may not borrow from the U.S. Treasury and the
securities of which are not guaranteed by the U.S. Government); the Tennessee
Valley Authority and the U.S. Postal Service (each of which may borrow from the
U.S. Treasury to meet its obligations); and the Farmers Home Administration and
the Export-Import Bank (the securities of which are backed by the full faith and
credit of the United States). The Fund may invest in collateralized mortgage
obligations ("CMOs") and stripped mortgage-backed securities issued or
guaranteed by the U.S. Government, its agencies, authorities or
instrumentalities. See "Mortgage-Related Securities," below.
The Fund may, from time to time or for temporary defensive purposes, invest up
to 20% of its assets in prime commercial paper, certificates of deposit of
domestic branches of U.S. banks, bankers' acceptances, repurchase agreements
(applicable to U.S. Government Obligations), participation interests, insured
certificates of deposit and certificates representing accrual on U.S. Treasury
securities. The Fund also may purchase securities on a when-issued basis and
make loans of portfolio securities. The Fund may borrow money on a temporary or
emergency basis in amounts not exceeding 5% of its total assets. See the SAI
for a further discussion of these securities.
GENERAL. Each Fund's net asset value fluctuates based mainly upon changes in
the value of its portfolio securities. Each Fund's investment objective and
certain investment policies set forth in the SAI that are designated fundamental
policies may not be changed without shareholder approval. There can be no
assurance that either Fund will achieve its investment objective.
DESCRIPTION OF CERTAIN SECURITIES, OTHER INVESTMENT POLICIES AND RISK FACTORS
AMERICAN DEPOSITORY RECEIPTS AND GLOBAL DEPOSITORY RECEIPTS. GLOBAL FUND may
invest in sponsored and unsponsored ADRs. ADRs are receipts typically issued by
a U.S. bank or trust company evidencing ownership of the underlying securities
of foreign issuers, and other forms of depository receipts for securities of
foreign issuers. Generally, ADRs, in registered form, are denominated in U.S.
dollars and are designed for use in the U.S. securities markets. Thus, these
securities are not denominated in the same currency as the securities into which
they may be converted. In addition, the issuers of the securities underlying
unsponsored ADRs are not obligated to disclose material information in the
United States and, therefore, there may be less information available regarding
such issuers and there may not be a correlation between such information and the
market value to the ADRs. GDRs are issued globally and evidence a similar
ownership arrangement. Generally, GDRs are designed for trading in non-U.S.
securities markets. ADRs and GDRs are considered to be foreign securities by
GLOBAL FUND See "Foreign Securities--Risk Factors."
CONVERTIBLE SECURITIES. A convertible security is a bond, debenture, note,
preferred stock or other security that may be converted into or exchanged for a
prescribed amount of common stock of
7
<PAGE>
the same or a different issuer within a particular period of time at a specified
price or formula. A convertible security entitles the holder to receive
interest paid or accrued on debt or dividends paid on preferred stock until the
convertible security matures or is redeemed, converted or exchanged. Convertible
securities have unique investment characteristics in that they generally (1)
have higher yields than common stocks, but lower yields than comparable non-
convertible securities, (2) are less subject to fluctuation in value than the
underlying stock because they have fixed income characteristics, and (3) provide
the potential for capital appreciation if the market price of the underlying
common stock increases. See the SAI for more information on convertible
securities.
DEBT SECURITIES--RISK FACTORS. The market value of debt securities is
influenced significantly by changes in the level of interest rates. Generally,
as interest rates rise, the market value of debt securities decreases.
Conversely, as interest rates fall, the market value of debt securities
increases. Factors which could result in a rise in interest rates, and a
decrease in market value of debt securities, include an increase in inflation or
inflation expectations, an increase in the rate of U.S. economic growth, an
expansion in the Federal budget deficit, or an increase in the price of
commodities such as oil. In addition, the market value of debt securities is
influenced by perceptions of the credit risks associated with such securities.
Debt obligations rated lower than Baa by Moody's or BBB by S&P, commonly
referred to as "junk bonds," are speculative and generally involve a higher risk
of loss of principal and income than higher-rated securities. See Appendix A to
the SAI for a description of corporate bond ratings.
FOREIGN SECURITIES--RISK FACTORS. GLOBAL FUND may sell a security denominated
in a foreign currency and retain the proceeds in that foreign currency to use at
a future date (to purchase other securities denominated in that currency) or the
Fund may buy foreign currency outright to purchase securities denominated in
that foreign currency at a future date. Because GLOBAL FUND does not intend to
hedge its foreign investments against the risk of foreign currency fluctuations,
changes in the value of these currencies can significantly affect the Fund's
share price. In addition, the Fund will be affected by changes in exchange
control regulations and fluctuations in the relative rates of exchange between
the currencies of different nations, as well as by economic and political
developments. Other risks involved in foreign securities include the following:
there may be less publicly available information about foreign companies
comparable to the reports and ratings that are published about companies in the
United States; foreign companies are not generally subject to uniform
accounting, auditing and financial reporting standards and requirements
comparable to those applicable to U.S. companies; some foreign stock markets
have substantially less volume than U.S. markets, and securities of some foreign
companies are less liquid and more volatile than securities of comparable U.S.
companies; there may be less government supervision and regulation of foreign
stock exchanges, brokers and listed companies than exist in the United States;
and there may be the possibility of expropriation or confiscatory taxation,
political or social instability or diplomatic developments which could affect
assets of the GLOBAL FUND held in foreign countries.
GLOBAL FUND may also invest in the securities of issuers in less developed
foreign countries. The Fund's investments in emerging markets include
investments in countries whose economies or securities markets are not yet
highly developed. Special considerations associated with these investments (in
addition to the considerations regarding foreign investments generally) may
include, among others, greater political uncertainties, an economy's dependence
on revenues from particular commodities or on international aid or development
assistance, currency transfer restrictions, a limited number of potential buyers
for such securities and delays and disruptions in securities settlement
procedures.
8
<PAGE>
MONEY MARKET INSTRUMENTS. Investments in commercial paper are limited to
obligations rated Prime-1 by Moody's or A-1 by S&P. Commercial paper includes
notes, drafts, or similar instruments payable on demand or having a maturity at
the time of issuance not exceeding nine months, exclusive of days of grace or
any renewal thereof. Investments in certificates of deposit are made only with
domestic institutions with assets in excess of $500 million. See the SAI for a
discussion of money market instruments and Appendix A to the SAI for a
description of commercial paper ratings.
MORTGAGE-RELATED SECURITIES
Mortgage loans made by banks, savings and loan institutions and other
lenders are often assembled into pools, the interests in which are issued and
guaranteed by an agency or instrumentality of the U.S. Government, though not
necessarily by the U.S. Government itself. Interests in such pools are referred
to herein as "mortgage-related securities." The market value of these
securities will fluctuate as interest rates and market conditions change. In
addition, prepayment of principal by the mortgagees, which often occurs with
mortgage-related securities when interest rates decline, can significantly
change the realized yield of these securities.
GNMA certificates are backed as to the timely payment of principal and
interest by the full faith and credit of the U.S. Government. Payments of
principal and interest on FNMA certificates are guaranteed only by FNMA itself,
not by the full faith and credit of the U.S. Government. FHLMC certificates
represent mortgages for which FHLMC has guaranteed the timely payment of
principal and interest but, like a FNMA certificate, they are not guaranteed by
the full faith and credit of the U.S. Government.
COLLATERALIZED MORTGAGE OBLIGATIONS AND MULTICLASS PASS-THROUGH SECURITIES.
Collateralized mortgage obligations ("CMOs") are debt obligations collateralized
by mortgage loans or mortgage pass-through securities. Typically, CMOs are
collateralized by GNMA certificates or other government mortgage-backed
securities (such collateral collectively hereinafter referred to as "Mortgage
Assets"). Multiclass pass-through securities are interests in trusts that are
comprised of Mortgage Assets. Unless the context indicates otherwise,
references herein to CMOs include multiclass pass-through securities. Payments
of principal of, and interest on, the Mortgage Assets, and any reinvestment
income thereon, provide the funds to pay debt service on the CMOs or to make
scheduled distributions on the multiclass pass-through securities. CMOs in
which GOVERNMENT FUND may invest are issued or guaranteed by U.S. Government
agencies or instrumentalities, such as FNMA and FHLMC. See the SAI for more
information on CMOs.
STRIPPED MORTGAGE-BACKED SECURITIES. GOVERNMENT FUND may invest in stripped
mortgage-backed securities ("SMBS"), which are derivative multiclass mortgage
securities. SMBS are usually structured with two classes that receive different
proportions of the interest and principal distributions from a pool of mortgage
assets. A common type of SMBS will have one class receiving most of the
interest and the remainder of the principal. In the most extreme case, one
class will receive all of the interest while the other class will receive all of
the principal. If the underlying Mortgage Assets experience greater than
anticipated prepayments of principal, the Fund may fail to fully recoup its
initial investment in these securities. The market value of the class
consisting primarily or entirely of principal payments generally is unusually
volatile in response to changes in interest rates.
9
<PAGE>
RISKS OF MORTGAGE-RELATED SECURITIES. Investments in mortgage-related
securities entail both market and prepayment risk. Fixed-rate mortgage-related
securities are priced to reflect, among other things, current and perceived
interest rate conditions. As conditions change, market values will fluctuate.
In addition, the mortgages underlying mortgage-related securities generally may
be prepaid in whole or in part at the option of the individual buyer.
Prepayments of the underlying mortgages can affect the yield to maturity on
mortgage-related securities and, if interest rates decline, the prepayment may
only be invested at the then prevailing lower interest rate. Changes in market
conditions, particularly during periods of rapid or unanticipated changes in
market interest rates, may result in volatility and reduced liquidity of the
market value of certain mortgage-related securities. CMOs and SMBS involve
similar risks, although they may be more volatile. In addition, because SMBS
were only recently introduced, established trading markets for these securities
have not yet developed, although the securities are traded among institutional
investors and investment banking firms.
PORTFOLIO TURNOVER. The sustained and substantial rise in interest rates
during 1994 caused the GOVERNMENT FUND's portfolio to be restructured several
times in order to reduce interest rate risk. In particular, rising rates slowed
prepayments on mortgage-backed securities, causing their durations to increase.
In order to offset the increase in duration, the GOVERNMENT FUND had to actively
manage its mortgage-backed holdings. This resulted in a portfolio turnover rate
of 260% for the fiscal year ended 1994. A high rate of portfolio turnover
generally leads to increased transaction costs and may result in a greater
number of taxable transactions. See "Allocation of Portfolio Brokerage" in the
SAI. See the SAI for GLOBAL FUND's portfolio turnover rate and for more
information on portfolio turnover.
PREFERRED STOCK. A preferred stock is a blend of the characteristics of a
bond and common stock. It can offer the higher yield of a bond and has priority
over common stock in equity ownership, but does not have the seniority of a bond
and, unlike common stock, its participation in the issuer's growth may be
limited. Preferred stock has preference over common stock in the receipt of
dividends and in any residual assets after payment to creditors should the
issuer be dissolved. Although the dividend is set at a fixed annual rate, in
some circumstances it can be changed or omitted by the issuer.
REPURCHASE AGREEMENTS. Repurchase agreements are transactions in which a Fund
purchases securities from a bank or recognized securities dealer and
simultaneously commits to resell the securities to the bank or dealer at an
agreed-upon date and price reflecting a market rate of interest unrelated to the
coupon rate or maturity of the purchased securities. Each Fund's risk is
limited to the ability of the seller to repurchase the securities at the agreed-
upon price upon the delivery date. See the SAI for more information regarding
repurchase agreements.
RESTRICTED AND ILLIQUID SECURITIES. Each Fund may invest up to 15% of its net
assets in illiquid securities, including (1) securities that are illiquid due to
the absence of a readily available market or due to legal or contractual
restrictions on resale and (2) repurchase agreements maturing in more than seven
days. However, illiquid securities for purposes of this limitation do not
include securities eligible for resale under Rule 144A of the Securities Act of
1933, as amended ("1933 Act"), which each Fund's Board of Directors or Adviser,
or for GLOBAL FUND, its Subadviser, has determined are liquid under Board-
approved guidelines. See the SAI for more information regarding restricted and
illiquid securities.
10
<PAGE>
Under current guidelines of the staff of the SEC, interest-only and principal-
only classes of fixed-rate mortgage-related securities in which GOVERNMENT FUND
may invest are considered illiquid. However, such securities issued by the U.S.
Government or one of its agencies or instrumentalities will not be considered
illiquid if the Adviser has determined that they are liquid pursuant to
guidelines established by the GOVERNMENT FUND's Board of Directors. The
GOVERNMENT FUND may not be able to sell illiquid securities when the Adviser
considers it desirable to do so or may have to sell such securities at a price
lower than could be obtained if they were more liquid. Also the sale of
illiquid securities may require more time and may result in higher dealer
discounts and other selling expenses than does the sale of securities that are
not illiquid. Illiquid securities may be more difficult to value due to the
unavailability of reliable market quotations for such securities, and investment
in illiquid securities may have an adverse impact on net asset value.
U.S. GOVERNMENT OBLIGATIONS. Securities issued or guaranteed as to principal
and interest by the U.S. Government include (1) U.S. Treasury obligations which
differ only in their interest rates, maturities and times of issuance as
follows: U.S. Treasury bills (maturities of one year or less), U.S. Treasury
notes (maturities of one to ten years), and U.S. Treasury bonds (generally
maturities of greater than ten years); and (2) obligations issued or guaranteed
by U.S. Government agencies and instrumentalities that are backed by the full
faith and credit of the United States, such as securities issued by the Federal
Housing Administration, GNMA, the Department of Housing and Urban Development,
the Export-Import Bank, the General Services Administration and the Maritime
Administration and certain securities issued by the Farmers Home Administration
and the Small Business Administration. The range of maturities of U.S.
Government Obligations is usually three months to thirty years.
ZERO COUPON SECURITIES. GOVERNMENT FUND may invest in zero coupon securities,
which are debt obligations that do not entitle the holder to any periodic
payment of interest prior to maturity or a specified date when the securities
begin paying current interest. They are issued and traded at a discount from
their face amount or par value, which discount varies depending on the time
remaining until cash payments begin, prevailing interest rates, liquidity of the
security and the perceived credit quality of the issuer. The market prices of
zero coupon securities generally are more volatile than the prices of securities
that pay interest periodically and in cash and are likely to respond to changes
in interest rates to a greater degree than do other types of debt securities
having similar maturities and credit quality. Original issue discount earned on
zero coupon securities must be included in the Fund's income. Thus, to continue
to qualify for tax treatment as a regulated investment company and to avoid an
excise tax on undistributed income, the Fund may be required to distribute as a
dividend an amount that is greater than the total amount of cash it actually
receives. See "Taxes" in the SAI. These distributions must be made from the
Fund's cash assets or, if necessary, from the proceeds of sales of portfolio
securities. The Fund will not be able to purchase additional income-producing
securities with cash used to make such distributions, and its current income
ultimately could be reduced as a result.
ALTERNATIVE PURCHASE PLANS
Each Fund has two classes of shares, Class A and Class B, which represent
interests in the same portfolio of securities and have identical voting,
dividend, liquidation and other rights and the same terms and conditions, except
that each class (i) is subject to a different sales charge and bears its
separate distribution and certain other class expenses; (ii) has exclusive
voting rights with respect to matters affecting only that class; and (iii) has
different exchange privileges.
11
<PAGE>
CLASS A SHARES. Class A shares are sold with an initial sales charge of up to
6.25% of the amount invested with discounts available for volume purchases.
Class A shares are subject to a maximum 12b-1 fee at the annual rate of 0.30% of
each Fund's average daily net assets attributable to Class A shares, of which no
more than 0.25% may be paid as a service fee and the balance thereof paid as an
asset-based sales charge. The initial sales charge is waived for certain
purchases and a CDSC may be imposed on such purchases. See "How to Buy Shares."
CLASS B SHARES. Class B shares are sold without an initial sales charge, but
are generally subject to a CDSC which declines in steps from 4% to 0% during a
six-year period and bear a higher 12b-1 fee than Class A shares. Class B shares
pay a 12b-1 fee at the annual rate of 1.00% of each Fund's average daily net
assets attributable to Class B shares, of which no more than 0.25% may be paid
as a service fee and the balance thereof paid as an asset-based sales charge.
Class B shares automatically convert into Class A shares after eight years. See
"How to Buy Shares."
FACTORS TO CONSIDER IN CHOOSING A CLASS OF SHARES. In deciding which
alternative is most suitable, an investor should consider several factors, as
discussed below. Regardless of whether an investor purchases Class A or Class B
shares, your Representative, as defined under "How to Buy Shares," receives
compensation for selling shares of a Fund, which may differ for each class.
The principal advantages of purchasing Class A shares are the lower overall
expenses, the availability of quantity discounts on volume purchases and certain
account privileges which are not offered to Class B shareholders. If an
investor plans to make a substantial investment, the sales charge on Class A
shares may either be lower due to the reduced sales charges available on volume
purchases of Class A shares or waived for certain eligible purchasers. Because
of the reduced sales charge available on quantity purchases of Class A shares,
it is recommended that investments of $250,000 or more be made in Class A
shares. Investments in excess of $1,000,000 must be made in Class A shares.
Distributions paid by each Fund with respect to Class A shares will also
generally be greater than those paid with respect to Class B shares because
expenses attributable to Class A shares will generally be lower.
The principal advantage of purchasing Class B shares is that, since no initial
sales charge is paid, all of an investor's money is put to work from the outset.
Furthermore, although any investment in a Fund should only be viewed as a long-
term investment, if a redemption must be made soon after purchase, an investor
will pay a lower sales charge than if Class A shares had been purchased.
Conversely, because Class B shares are subject to a higher asset-based sales
charge, long-term Class B shareholders may pay more in an asset-based sales
charge than the economic equivalent of the maximum sales charge on Class A
shares. The automatic conversion of Class B shares into Class A shares is
designed to reduce the probability of this occurring.
HOW TO BUY SHARES
You may buy shares of a Fund through a First Investors registered
representative ("FIC Representative") or through a registered representative
("Dealer Representative") of an unaffiliated broker-dealer ("Dealer") which is
authorized to sell shares of the Fund. Your FIC Representative or Dealer
Representative (collectively, "Representative") may help you complete and submit
an application to open an account with a Fund. Applications accompanied by
checks drawn on U.S. banks made payable to "FIC" received in FIC's Woodbridge
offices by the close of regular trading on
12
<PAGE>
the New York Stock Exchange ("NYSE"), generally 4:00 P.M. (New York City time),
will be processed and shares will be purchased at the public offering price
determined at the close of regular trading on the NYSE on that day. The "public
offering price" is defined in this Prospectus as net asset value plus the
applicable sales charge for Class A shares and net asset value for Class B
shares. Checks received after the close of regular trading on the NYSE will be
processed at the public offering price determined at the close of regular
trading on the NYSE on the next trading day. Orders given to Representatives
before the close of regular trading on the NYSE and received by FIC at their
Woodbridge offices before the close of its business day, generally 5:00 P.M.
(New York City time), will be executed at the public offering price determined
at the close of regular trading on the NYSE on that day. Orders received by
Representatives after the close of regular trading on the NYSE or received by
FIC after the close of its business day will be executed at the public offering
price determined after the close of regular trading on the NYSE on the next
trading day. It is the responsibility of Representatives to promptly transmit
orders they receive to FIC. Each Fund reserves the right to reject any
application or order for its shares for any reason and to suspend the offering
of its shares.
WHEN YOU OPEN A FUND ACCOUNT, YOU MUST SPECIFY WHICH CLASS OF SHARES YOU WISH
TO PURCHASE. If not, your order will be processed as follows: (1) if you are
opening an account with a new registration with First Investors your order will
not be processed until the Fund receives notification of which class of shares
to purchase; (2) if you have existing First Investors accounts solely in either
Class A shares or Class B shares with the identical registration, your
investment in the Fund will be made in the same class of shares as your existing
fund account(s); (3) if you are an existing First Investors shareholder and own
a combination of Class A and Class B shares with an identical registration, your
investment in the Fund will be made in Class B shares; and (4) if you own in the
aggregate at least $250,000 in any combination of classes, your investment will
be made in Class A shares.
INITIAL INVESTMENT IN A FUND. You may open a Fund account with as little as
$1,000. This account minimum is waived if you open an account for a particular
class of shares through a full exchange of shares of the same class of another
"Eligible Fund," as defined below. Class A share accounts opened through an
exchange of shares from First Investors Cash Management Fund, Inc. or First
Investors Tax-Exempt Money Market Fund, Inc. (collectively, "Money Market
Funds") may be subject to an initial sales charge. You may open a Fund account
with $250 for individual retirement accounts ("IRAs") or, at the Fund's
discretion, a lesser amount for Simplified Employee Pension Plans ("SEPs"),
salary reduction SEPs ("SARSEPs") and qualified or other retirement plans.
Automatic investment plans allow you to open an account with as little as $50,
provided you invest at least $600 a year. See "Systematic Investing."
ADDITIONAL PURCHASES. After you make your first investment in a Fund, you may
purchase additional shares of the Fund by mailing a check made payable to FIC,
directly to First Investors Corporation, 10 Woodbridge Center Drive, Woodbridge,
NJ 07095-1198, Attn: Dept. CP. Include your account number on the face of the
check. There is no minimum on additional purchases of Fund shares.
ELIGIBLE FUNDS. Shares of all the funds and/or series in the First Investors
family of funds, except as noted below, are eligible to participate in certain
shareholder privileges noted in this Prospectus and the SAI (singularly,
"Eligible Fund" and, collectively, "Eligible Funds"). Shares of First Investors
Special Bond Fund, Inc., First Investors Life Series Fund and First Investors
U.S.
13
<PAGE>
Government Plus Fund are not deemed to be Eligible Funds. Class A Shares of the
Money Market Funds, unless otherwise noted, are not deemed to be Eligible Funds.
Class A shares of each series of Executive Investors Trust ("Executive
Investors") are deemed to be Eligible Funds if such shares have either (a) been
acquired through an exchange from an Eligible Fund which imposes a maximum sales
charge of 6.25%, or (b) been held for at least one year from their date of
purchase.
SYSTEMATIC INVESTING
FIRST INVESTORS MONEY LINE. This service allows you to invest in a Fund
through automatic deductions from your bank checking account. Scheduled
investments may be made on a bi-weekly, semi-monthly, monthly, quarterly, semi-
annual or annual basis provided a minimum total of $600 is invested per year.
Shares of the Fund are purchased at the public offering price determined at the
close of business on the day your designated bank account is debited and a
confirmation will be sent to you after every transaction. You may decrease the
amount or discontinue this service at any time by calling Shareholder Services
or writing to Administrative Data Management Corp. (the "Transfer Agent"), 10
Woodbridge Center Drive, Woodbridge, NJ 07095-1198, Attn: Control Dept. To
increase the amount, send a written request to the Transfer Agent at the address
noted above, which may take up to five days to process. Money Line application
forms are available from your Representative or by calling Shareholder Services
at 1-800-423-4026.
AUTOMATIC PAYROLL INVESTMENT. You also may arrange for automatic
investments into a Fund on a systematic basis through salary deductions,
provided your employer has direct deposit capabilities. Shares of the Fund are
purchased at the public offering price determined as of the close of business on
the day the electronic fund transfer is received by the Fund, and a confirmation
will be sent to you after every transaction. You may change the amount or
discontinue the service by contacting your employer. An application is
available from your Representative or by calling Shareholder Services at 1-800-
423-4026. Arrangements must also be made with your employer's payroll
department.
CROSS-INVESTMENT OF CASH DISTRIBUTIONS. You may elect to invest in Class A
shares of a Fund at net asset value all the cash distributions from the same
class of shares of another Eligible Fund. You may also elect to invest cash
distributions of a Fund's Class A shares into the same class of another Eligible
Fund, including the Money Market Funds. See "Dividends and Other
Distributions." To arrange for cross-investing, call Shareholder Services at
1-800-423-4026.
INVESTMENT OF SYSTEMATIC WITHDRAWAL PLAN PAYMENTS. You may elect to invest
in Class A shares of a Fund at net asset value through payments from a
Systematic Withdrawal Plan you maintain with any other Eligible Fund. Scheduled
investments may be made on a monthly, quarterly, semi-annual or annual basis.
You may also elect to invest Systematic Withdrawal Plan payments of Class A
shares from a Fund into the same class of another Eligible Fund, including the
Money Market Funds. See "How to Redeem Shares." To arrange for Systematic
Withdrawal Plan investments, call Shareholder Services at 1-800-423-4026.
CLASS A SHARES. Class A shares of each Fund are sold at the public offering
price, which will vary with the size of the purchase, as shown in the following
table:
14
<PAGE>
<TABLE>
<CAPTION>
SALES CHARGE AS % OF
-------------------- CONCESSION TO
OFFERING NET AMOUNT DEALERS AS % OF
AMOUNT OF INVESTMENT PRICE INVESTED OFFERING PRICE
- ------------------------------- -------- ---------- ---------------
<S> <C> <C> <C>
Less than $25,000.............. 6.25% 6.67% 5.13%
$25,000 but under $50,000...... 5.75 6.10 4.72
$50,000 but under $100,000..... 5.50 5.82 4.51
$100,000 but under $250,000.... 4.50 4.71 3.69
$250,000 but under $500,000.... 3.50 3.63 2.87
$500,000 but under $1,000,000.. 2.50 2.56 2.05
</TABLE>
There is no sales charge on transactions of $1 million or more, including
transactions subject to the Cumulative Purchase Privilege or a Letter of Intent.
The Underwriter will pay from its own resources a sales commission to FIC
Representatives and a concession equal to 0.90% of the amount invested to
Dealers on such purchases. If shares are purchased on or after the date of this
Prospectus and are redeemed within 24 months of purchase (this holding period is
18 months for shares purchased prior to the date of this Prospectus), a CDSC of
1.00% will be deducted from the redemption proceeds. The CDSC will be
calculated in the same manner as the CDSC on the Class B shares. See "Class B
Shares."
WAIVERS OF CLASS A SALES CHARGES. Sales charges on Class A shares do not
apply to: (1) any purchase by an officer, director or full-time employee (who
has completed the introductory period) of the Funds, the Underwriter, the
Adviser, or their affiliates, by a Representative, or by the spouse, or by the
children and grandchildren under the age of 21 of any such person; (2) any
purchase by a former officer, director or full-time employee of the Funds, the
Underwriter, the Adviser, or their affiliates, or by a former FIC
Representative; provided they had acted as such for at least five years and had
retired or otherwise terminated the relationship in good standing; and (3) any
purchase of shares of GLOBAL FUND by any partner or employee of the Subadviser,
or by the spouse, or by the children or grandchildren under the age of 21 of any
such person.
The sales charge will be waived on any purchase of Class A shares by a
participant in a Qualified Plan account, as defined under "Retirement Plans," if
the purchase is made with the proceeds from a redemption of shares of a fund in
another fund group on which either an initial sales charge or a CDSC has been
paid.
Additionally, policyholders of participating life insurance policies issued by
First Investors Life Insurance Company, an affiliate of the Adviser and
Underwriter, may elect to invest dividends earned on such policies in Class A
shares of a Fund at net asset value, provided the annual dividend is at least
$50 and the policyholder has an existing account with the Fund.
CUMULATIVE PURCHASE PRIVILEGE AND LETTERS OF INTENT. You may purchase Class A
shares of a Fund at a reduced sales charge through the Cumulative Purchase
Privilege or by executing a Letter of Intent. You may combine your Class A and
Class B shares of any Eligible Fund (including Class B shares of the Money
Market Funds) to qualify for this reduced sales charge. Under the Cumulative
Purchase Privilege, Class A shares of a Fund are available at quantity
discounts. By completing a Letter of Intent, you state your intention to invest
a specific amount in Class A shares over the next 13 months which, if made in
one lump sum, would qualify you for a reduced sales charge. For more
information, see the SAI, call your Representative or call Shareholder Services
at 1-800-423-4026.
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<PAGE>
UNITHOLDERS. Holders of certain unit trusts ("Unitholders") who have elected
to invest the entire amount of cash distributions from either principal,
interest income or capital gains or any combination thereof ("Unit
Distributions") from the following trusts may invest such Unit Distributions in
Class A shares of a Fund at a reduced sales charge.
Unitholders of various series of New York Insured Municipals-Income Trust
sponsored by Van Kampen Merritt Inc. (the "New York Trust"); Unitholders of
various series of the Multistate Tax Exempt Trust sponsored by Advest Inc.; and
Unitholders of various series of the Municipal Insured National Trust, J.C.
Bradford & Co. as agent, may purchase Class A shares of a Fund with Unit
Distributions at an offering price which is the net asset value per share plus a
sales charge of 1.5%. Unitholders of various series of tax-exempt trusts, other
than the New York Trust, sponsored by Van Kampen Merritt Inc. may purchase Class
A shares of a Fund with Unit Distributions at an offering price which is the net
asset value per share plus a sales charge of 1.0%. Each Fund's initial minimum
investment requirement is waived for purchases of Class A shares with Unit
Distributions. Shares of a Fund purchased by Unitholders may be exchanged for
Class A shares of any Eligible Fund subject to the terms and conditions set
forth under "How to Exchange Shares."
RETIREMENT PLANS. You may invest in shares of a Fund through an IRA, SEP,
SARSEP or any retirement plan. Participant directed plans, such as 401(k)
plans, profit sharing and money purchase plans and 403(b) plans, that are
subject to Title I of ERISA (each, a "Qualified Plan") are entitled to a special
reduced sales charge based upon the number of employees who are eligible to
participate, as follows:
<TABLE>
<CAPTION>
SALES CHARGE AS % OF
---------------------- CONCESSION TO
NUMBER OF OFFERING NET AMOUNT DEALERS AS % OF
ELIGIBLE EMPLOYEES PRICE INVESTED OFFERING PRICE
- -------------------- --------- ----------- ----------------
<S> <C> <C> <C>
99 or less.......... 3.00% 3.09% 2.55%
100 or more......... 1.00% 1.01% 0.85%
</TABLE>
The reduced sales charge will be available regardless of whether the account
is registered with the Transfer Agent in the name of the individual participant
or the sponsoring employer or plan trustee. A Qualified Plan account will be
subject to the lower of the sales charge for Qualified Plans or the sales charge
for the purchase of Fund shares (see page 15).
CLASS B SHARES. The public offering price of Class B shares of each Fund is
the next determined net asset value, with no initial sales charge imposed. A
CDSC, however, is imposed upon most redemptions of Class B shares at the rates
set forth below:
16
<PAGE>
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES CHARGE
YEAR SINCE PURCHASE AS A PERCENTAGE OF DOLLARS INVESTED
PAYMENT MADE OR REDEMPTION PROCEEDS
- ------------------- -----------------------------------
<S> <C>
First................... 4%
Second.................. 4
Third................... 3
Fourth.................. 3
Fifth................... 2
Sixth................... 1
Seventh and thereafter.. 0
</TABLE>
The CDSC will not be imposed on (1) the redemption of Class B shares acquired
as dividends or other distributions, or (2) any increase in the net asset value
of redeemed shares above their initial purchase price (in other words, the CDSC
will be imposed on the lower of net asset value or purchase price). In
determining whether a CDSC is payable on any redemption, it will be assumed that
the redemption is made first of any Class B shares acquired as dividends or
distributions, second of Class B shares that have been held for a sufficient
period of time such that the CDSC no longer is applicable to such shares and
finally of Class B shares held longest during the period of time that a CDSC is
applicable to such shares. This will result in your paying the lowest possible
CDSC.
As an example, assume an investor purchased 100 shares of Class B shares at
$10 per share for a total cost of $1,000 and in the second year after purchase,
the net asset value per share is $12 and, during such time, the investor has
acquired 10 additional Class B shares as dividends. If at such time the
investor makes his or her first redemption of 50 shares (proceeds of $600), 10
shares will not be subject to a CDSC charge because redemptions are first made
of shares acquired through dividend reinvestment. With respect to the remaining
40 shares, the charge is applied only to the original cost of $10 per share and
not to the increase in net asset value of $2 per share. Therefore, $400 of the
$600 redemption proceeds will be charged at a rate of 4.00% (the applicable rate
in the second year after purchase).
For purposes of determining the CDSC on Class B shares, all purchases made
during a calendar month will be deemed to have been made on the first business
day of that month at the average cost of all purchases made during that month.
The holding period of Class B shares acquired through an exchange with another
Eligible Fund will be calculated from the first business day of the month that
the Class B shares were initially acquired in the other Eligible Fund. The
amount of any CDSC will be paid to FIC. The CDSC imposed on the purchase of
Class B shares will be waived under certain circumstances. See "Waivers of CDSC
on Class B Shares" in the SAI.
CONVERSION OF CLASS B SHARES. A shareholder's Class B shares will
automatically convert to Class A shares approximately eight years after the date
of purchase, together with a pro rata portion of all Class B shares representing
dividends and other distributions paid in additional Class B shares. The Class
B shares so converted will no longer be subject to the higher expenses borne by
Class B shares. The conversion will be effected at the relative net asset
values per share of the two classes on the first business day of the month
following that in which the eighth anniversary of the purchase of the Class B
shares occurs. If a shareholder effects one or more exchanges between Class B
shares of the Eligible Funds during the eight-year period, the holding period
for the shares so exchanged will commence upon the date of the purchase of the
original shares. Because the per
17
<PAGE>
share net asset value of the Class A shares may be higher than that of the Class
B shares at the time of conversion, a shareholder may receive fewer Class A
shares than the number of Class B shares converted. See "Determination of Net
Asset Value."
GENERAL. The Underwriter may at times agree to reallow to Dealers up to an
additional 0.25% of the dollar amount of shares of the Funds and/or certain
other First Investors or Executive Investors funds sold by such Dealers during a
specific period of time. From time to time, the Underwriter also will pay,
through additional reallowances or other sources, a bonus or other compensation
to Dealers which employ a Dealer Representative who sells a minimum dollar
amount of the shares of the Funds and/or certain other First Investors or
Executive Investors funds during a specific period of time. Such bonus or other
compensation may take the form of reimbursement of certain seminar expenses, co-
operative advertising, or payment for travel expenses, including lodging
incurred in connection with trips taken by qualifying Dealer Representatives to
the Underwriter's principal office in New York City.
HOW TO EXCHANGE SHARES
Should your investment needs change, you may exchange, at net asset value,
shares of a Fund for shares of any Eligible Fund (including the Money Market
Funds). In addition, Class A shares of a Fund may be exchanged at net asset
value for units of any single payment plan ("plan") sponsored by the
Underwriter. SHARES OF A PARTICULAR CLASS MAY BE EXCHANGED ONLY FOR SHARES OF
THE SAME CLASS OF ANOTHER FUND. For example, you can exchange Class A shares of
a Fund only for Class A shares of another Eligible Fund. Exchanges can only be
made into accounts registered to identical owners. If your exchange is into a
new account, it must meet the minimum investment and other requirements of the
fund or plan into which the exchange is being made. Additionally, the fund or
plan must be available for sale in the state where you reside. A $5.00 exchange
fee is charged for each exchange. However, currently this fee is being
voluntarily borne by the fund into which you are making the exchange and, thus,
that fund's shareholders are bearing the fee ratably. Before exchanging Fund
shares for shares of another fund or plan, you should read the Prospectus of the
fund or Plan into which the exchange is to be made. You may obtain Prospectuses
and information with respect to which funds or plans qualify for the exchange
privilege free of charge by calling Shareholder Services at 1-800-423-4026.
Exchange requests may be made in writing or by telephone (for shares held on
deposit only) if telephone privileges were elected on your application. Exchange
requests received in "good order" by the Transfer Agent before the close of
regular trading on the NYSE, generallly 4:00 P.M. (New York City time), will be
processed at the net asset value determined as of the close of regular trading
on the NYSE on that day; exchange requests received after that time will be
processed on the following trading day.
EXCHANGES BY MAIL. To exchange shares by mail, you should mail requests to
Administrative Data Management Corp., 10 Woodbridge Center Drive, Woodbridge, NJ
07095-1198. Shares will be exchanged after the request is received in "good
order" by the Transfer Agent. "Good order" means that exchange requests must
state: (1) the names of the funds; (2) account numbers (if existing accounts);
(3) the dollar amount, number of shares or percentage of the account you wish to
exchange; and (4) the exchange request must be signed by all registered owners
exactly as the account is registered. If information is missing, your request
is ambiguous or the value of your account is less than the amount indicated on
your request, the exchange will not be processed. The Transfer Agent will seek
additional information from you and process the exchange on the day it
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receives such information. Signature guarantees may be required to process
certain exchange requests. See "How to Redeem Shares--Signature Guarantees."
EXCHANGES BY TELEPHONE. See "Telephone Transactions" for instructions on
making exchanges by telephone.
ADDITIONAL EXCHANGE INFORMATION. Exchanges should be made for investment
purposes only. A pattern of frequent exchanges may be contrary to the best
interests of a Fund's other shareholders. Accordingly, each Fund has the right,
at its sole discretion, to limit the amount of an exchange, reject any exchange,
or, upon 60 days' notice, materially modify or discontinue the exchange
privilege. Each Fund will consider all relevant factors in determining whether a
particular frequency of exchanges is contrary to the best interests of the Fund
and/or a class of the Fund and its other shareholders. Any such restriction
will be made by a Fund on a prospective basis only, upon notice to the
shareholder not later than ten days following such shareholder's most recent
exchange.
HOW TO REDEEM SHARES
You may redeem your Fund shares at the next determined net asset value, less
any applicable CDSC, on any day the NYSE is open, directly through the Transfer
Agent. Your Representative may help you with this transaction. Shares may be
redeemed by mail or telephone (provided written authorization for telephone
transactions is on file). Redemption requests received in "good order" by the
Transfer Agent before the close of regular trading on the NYSE, generally 4:00
P.M. (New York City time), will be processed at the net asset value, less any
applicable CDSC, determined as of the close of regular trading on the NYSE on
that day; redemption requests received after that time will be processed on the
following trading day. Payment of redemption proceeds will be made within seven
days. If the shares being redeemed were recently purchased by check, payment
may be delayed to verify that the check has been honored, normally not more than
fifteen days.
REDEMPTIONS BY MAIL. Written redemption requests should be mailed to
Administrative Data Management Corp., 10 Woodbridge Center Drive, Woodbridge, NJ
07095-1198. For your redemption request to be in good order, you must include:
(1) the name of the Fund; (2) your account number; (3) the dollar amount, number
of shares or percentage of the account you want redeemed; (4) share
certificates, if issued; (5) the original signatures of all registered owners
exactly as the account is registered; (6) signature guarantees as described
below; and (7) additional documents required for redemptions by corporations,
trusts, partnerships, organizations, retirement, pension or profit sharing plans
and for requests from anyone other than the shareholder(s) of record. If
information is missing, your request is ambiguous or the value of your account
is less than the amount indicated on your request, the redemption will not be
processed. The Transfer Agent will seek additional information and process the
redemption on the day it receives such information.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect you, the
Funds and their agents. Members of STAMP (Securities Transfer Agents Medallion
Program), MSP (New York Stock Exchange Medallion Signature Program), SEMP (Stock
Exchanges Medallion Program) or any underwriter of any issue for which the
Transfer Agent acts as transfer agent are eligible signature guarantors. A
notary public is not an acceptable guarantor. The guarantee must be manually
signed by an authorized signatory of the guarantor and the words "Signature
Guaranteed" must appear in direct association with such signature. Although
each Fund reserves the right to require signature guarantees at any other time,
signature guarantees are required whenever: (1) the amount
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of the redemption is $50,000 or more, (2) an exchange in the amount of $50,000
or more is made into the Money Market Funds, (3) a redemption check is to be
made payable to someone other than the registered accountholder, other than
institutions on behalf of the shareholder, (4) a redemption check is to be
mailed to an address other than the address of record, (5) an account
registration is being transferred to another owner, (6) an account, other than
an individual, joint, UGMA or UTMA nonretirement account, is being exchanged or
redeemed, (7) the redemption request is for certificated shares, or (8) your
address of record has changed within 60 days prior to a redemption request or an
exchange to a Money Market Fund of $50,000 or more.
REDEMPTIONS BY TELEPHONE. See "Telephone Transactions" for instructions on
making redemptions by telephone.
SYSTEMATIC WITHDRAWAL PLAN. If you own noncertificated Class A shares with a
net asset value of $5,000 or more in a single Fund account, you may set up a
plan for redemptions to be made automatically at regular intervals. You may
elect to have the payments (a) sent directly to you or persons you designate; or
(b) automatically invested at net asset value in shares of the same class of any
other Eligible Fund, including the Money Market Funds. If you own Class B
shares in a retirement account and qualify to receive distributions under the
Internal Revenue Code of 1986, as amended (the "Code"), you may elect to receive
redemptions at regular intervals. The redemption proceeds, less any applicable
CDSC, will be automatically sent directly to you. See the SAI for more
information on the Systematic Withdrawal Plan. To establish a Systematic
Withdrawal Plan, call Shareholder Services at 1-800-423-4026.
REINVESTMENT AFTER REDEMPTION. If you redeem Class A or Class B shares in
your Fund account, you can reinvest within ninety days from the date of
redemption all or any part of the proceeds in shares of the same class of the
same Fund or any other Eligible Fund (including the Money Market Funds), at net
asset value, on the date the Transfer Agent receives your purchase request. If
you reinvest the entire proceeds of a redemption of Class B shares for which a
CDSC has been paid, you will be credited for the amount of the CDSC. If you
reinvest less than the entire proceeds, you will be credited with a pro rata
portion of the CDSC. All credits will be paid in Class B shares of the fund
into which the reinvestment is being made. The period you owned the original
Class B shares prior to redemption will be added to the period of time you own
Class B shares acquired through reinvestment for purposes of determining (a) the
applicable CDSC upon a subsequent redemption and (b) the date on which Class B
shares automatically convert to class A shares. If your reinvestment is into a
new account, it must meet the minimum investment and other requirements of the
fund into which the reinvestment is being made. To take advantage of this
option, send your reinvestment check along with a written request to the
Transfer Agent within 90 days from the date of your redemption. Include your
account number and a statement that you are taking advantage of the
"Reinvestment Privilege."
REPURCHASE THROUGH UNDERWRITER. You may redeem Class A shares for which a
certificate has been issued through a Dealer. In this event, the Underwriter,
acting as agent for each Fund, will offer to repurchase or accept an offer to
sell such shares at a price equal to the net asset value next determined after
the making of such offer. The Dealer may charge you an added commission for
handling any redemption transaction.
REDEMPTION OF LOW BALANCE ACCOUNTS. Because each Fund incurs certain fixed
costs in maintaining shareholder accounts, each Fund may redeem without your
consent, on at least 60 days'
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prior written notice (which may appear on your account statement), any Fund
account of Class A or Class B shares which has a net asset value of less than
$500. To avoid such redemption, you may, during such 60-day period, purchase
additional Fund shares of the same class so as to increase your account balance
to the required minimum. There will be no CDSC imposed on such redemptions of
Class B shares. The Funds will not redeem accounts that fall below $500 solely
as a result of a reduction in net asset value. Accounts established under a
Systematic Investment Plan which have been discontinued prior to meeting the
$1,000 minimum are subject to this policy.
Additional information concerning how to redeem shares of the Funds is
available upon request to your Representative or Shareholder Services at 1-800-
423-4026.
TELEPHONE TRANSACTIONS
Provided you have selected telephone privileges on your account application,
you may redeem or exchange noncertificated shares of a Fund by calling the
Special Services Department at 1-800-342-6221 weekdays (except holidays) between
9:00 A.M. and 5:00 P.M. (New York City time). Exchange or redemption requests
received after the close of regular trading on the NYSE, generally 4:00 P.M.
(New York City time), will be processed at the net asset value, less any
applicable CDSC, determined as of the close of business on the following
business day. For your convenience, you may authorize your FIC Representative
(or your Dealer Representative, provided certain minimum sales requirements are
met) to exchange or redeem shares for you.
TELEPHONE EXCHANGES. Telephone exchanges are available between nonretirement
accounts and between IRA accounts of the same class of shares registered in the
same name. A telephone exchange also is available from an individually
registered nonretirement account to an IRA account of the same class of shares
in the same name (provided an IRA application is on file). Telephone exchanges
are not available for exchanges of Fund shares for plan units. For joint
accounts, telephone exchange instructions will be accepted from any one owner.
You are limited to one telephone exchange within any 30-day period for each
account authorized. Telephone exchanges to Money Market Funds are not available
if your address of record has changed within 60 days prior to the exchange
request.
TELEPHONE REDEMPTIONS. The telephone redemption privilege may be used
provided: (1) the redemption proceeds are being mailed to the address of record;
(2) your address of record has not changed within the past 60 days; (3) the
shares to be redeemed have not been issued in certificate form; (4) the proceeds
of the redemption do not exceed $50,000; and (5) shares have not been redeemed
by telephone from the account in the past 30 days. Retirement plan accounts are
not eligible for the telephone redemption option. For joint accounts, telephone
redemption instructions will be accepted from any one owner.
ADDITIONAL INFORMATION. The Funds, the Underwriter and their affiliates will
not be liable for any loss, damage, cost or expense arising out of any
instruction (or any interpretation of such instruction) received by telephone
which they reasonably believe to be authentic. In acting upon telephone
instructions, these parties use procedures which are reasonably designed to
ensure that such instructions are genuine. If the Funds, the Underwriter or
their affiliates do not follow reasonable procedures, some or all of them may be
liable for any such losses. For more information on telephone transactions see
the SAI. Each Fund has the right, at its sole discretion, upon 60 days' notice,
to materially modify or discontinue the telephone exchange and redemption
privilege. During
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times of drastic economic or market changes, telephone exchanges or redemptions
may be difficult to implement. If you experience difficulty in making a
telephone exchange or redemption, your exchange or redemption request may be
made by regular or express mail, and it will be implemented at the next
determined net asset value, less any applicable CDSC, following receipt by the
Transfer Agent.
MANAGEMENT
BOARD OF DIRECTORS. Each Fund's Board of Directors, as part of its overall
management responsibility, oversees various organizations responsible for that
Fund's day-to-day management.
ADVISER. First Investors Management Company, Inc. supervises and manages each
Fund's investments, supervises all aspects of each Fund's operations and, for
GOVERNMENT FUND, determines the Fund's portfolio transactions. The Adviser is a
New York corporation located at 95 Wall Street, New York, NY 10005. The
Adviser presently acts as investment adviser to 14 mutual funds. First
Investors Consolidated Corporation ("FICC") owns all of the voting common stock
of the Adviser and all of the outstanding stock of FIC and the Transfer Agent.
Mr. Glenn O. Head (and members of his family) and Mrs. Julie W. Grayson (as
executrix of the estate of her deceased husband, David D. Grayson) are
controlling persons of FICC and, therefore, jointly control the Adviser.
As compensation for its services, the Adviser receives an annual fee from each
of the Funds, which is payable monthly. For the fiscal year ended December 31,
1994, GLOBAL FUND's advisory fees were 1.00% of its average daily net assets and
GOVERNMENT FUND's advisory fees, net of waiver, were 0.75% of its average daily
net assets.
Each Fund bears all expenses of its operations other than those incurred by
the Adviser or Underwriter under the terms of its advisory or underwriting
agreements. Fund expenses include, but are not limited to: the advisory fee;
shareholder servicing fees and expenses; custodian fees and expenses; legal and
auditing fees; expenses of communicating to existing shareholders, including
preparing, printing and mailing prospectuses and shareholder reports to such
shareholders; and proxy and shareholder meeting expenses.
PORTFOLIO MANAGERS. Since April 1995, John Tomasulo has been primarily
responsible for the day-to-day management of the GOVERNMENT FUND. Mr. Tomasulo
is also responsible for the management of the Government Series and Target
Maturity Series of First Investors Life Series Fund and for the U.S. Government
and mortgage-backed securities portion of the Total Return Series of First
Investors Series Fund. Prior to joining FIMCO, Mr. Tomasulo was affiliated with
Seligman & Co. since 1987 where he assisted in the management of a U.S.
government fund and individual accounts and had primary responsibility for three
money market funds.
As of April 1994, GLOBAL FUND is managed by WMC's Global Equity Strategy
Group, a group of global portfolio managers and senior investment professionals
headed by Trond Skramstad. Prior to joining WMC as a portfolio manager in 1993,
Mr. Skramstad was a global portfolio manager at Scudder, Stevens & Clark since
1990.
SUBADVISER-GLOBAL FUND. Wellington Management Company has been retained by
the Adviser and GLOBAL FUND as that Fund's investment subadviser. The Adviser
has delegated
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discretionary trading authority to WMC with respect to all of GLOBAL FUND's
assets, subject to the continuing oversight and supervision by the Adviser. As
compensation for its services, WMC is paid by the Adviser, and not by GLOBAL
FUND, a fee which is computed daily and paid monthly.
WMC, located at 75 State Street, Boston, MA 02109, is a Massachusetts general
partnership of which Robert W. Doran, Duncan M. McFarland and John B. Neff are
Managing Partners. WMC is a professional investment counseling firm which
provides investment services to investment companies, employee benefit plans,
endowment funds, foundations and other institutions and individuals. As of
December 31, 1994, WMC held discretionary investment authority with respect to
approximately $80.0 billion of assets. Of that amount, WMC acted as investment
adviser or subadviser to approximately 110 registered investment companies or
series of such companies, with net assets of approximately $58.3 billion as of
December 31, 1994. WMC is not affiliated with the Adviser or any of its
affiliates.
As compensation for its services, the Subadviser receives an annual fee from
the Adviser, which is payable monthly. For the fiscal year ended December 31,
1994, the Subadviser's fees amounted to 0.29% of GLOBAL FUND's average daily net
assets, all of which was paid by the Adviser and not by the Fund.
BROKERAGE. Each Fund may allocate brokerage commissions, if any, to broker-
dealers in consideration of Fund share distribution, but only when execution and
price are comparable to that offered by other broker-dealers. Brokerage may be
directed to brokers who provide research. See the SAI for more information on
allocation of portfolio brokerage.
UNDERWRITER. Each Fund has entered into an Underwriting Agreement with First
Investors Corporation, 95 Wall Street, New York, NY 10005, as Underwriter. The
Underwriter receives all sales charges in connection with the sale of each
Fund's Class A shares and all contingent deferred sales charges in connection
with each Fund's Class B shares and may receive payments under a plan of
distribution. See "How to Buy Shares" and "Distribution Plans."
REGULATORY MATTERS. In June 1992, the Funds' underwriter FIC, entered into a
settlement with the SEC to resolve allegations by the agency that certain of
FIC's sales representatives had made misrepresentations concerning the risks of
investing in two high yield bond funds, the First Investors Fund For Income,
Inc. and the First Investors High Yield Fund, Inc. ("High Yield Funds"), and had
sold these Funds to investors for whom they were not suitable. Without
admitting or denying the SEC's allegations, FIC: (a) consented to the entry of a
final judgment enjoining it from violating Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5 thereunder and Section 17(a) of the 1933
Act; (b) agreed to the entry of an administrative order censuring it and
requiring it to comply with undertakings to improve its policies and procedures
with regard to sales, training, supervision and compliance; and (c) agreed to
pay $24.7 million to certain investors who purchased shares of the High Yield
Funds from in or about November 1984 to in or about November 1990.
FIC, FIMCO and/or certain affiliated entities and persons have entered into
settlements with regulators in 29 states to resolve allegations, similar to
those made by the SEC, concerning sales of the High Yield Funds. In October
1993, as part of settlements with Maine, Massachusetts, New York, Virginia and
Washington ("State Settlements"), FIC, FIMCO and certain affiliated entities
and persons agreed, without admitting or denying any of the allegations, (a) to
be enjoined from violating certain provisions of the state securities laws, (b)
to engage in remedial measures designed
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to ensure that proper sales practices are observed in the future, and (c) to pay
$7.5 million, in addition to the $24.7 million previously paid by FIC in
connection with the SEC settlement, to investors in the High Yield Funds. In
addition, as part of those settlements, several FIC executives, including Glenn
O. Head, who is an officer and director of the Funds, agreed to be suspended and
enjoined temporarily from associating with any broker-dealer in a supervisory
capacity in certain of the states. On December 8, 1993, several present and
former FIC executives, including Mr. Head, also agreed, without admitting or
denying the allegations, to temporary SEC suspensions from associating with
broker-dealers and in some cases other regulated entities in a supervisory
capacity.
DISTRIBUTION PLANS
Pursuant to separate distribution plans pertaining to each Fund's Class A and
Class B shares ("Class A Plan" or "Class B Plan," and collectively, "Plans"),
each Fund may reimburse or compensate, as applicable, the Underwriter for
certain expenses incurred in the distribution of that Fund's shares
("distribution fees") and the servicing or maintenance of existing Fund
shareholder accounts ("service fees"). Pursuant to the Plans, distribution fees
are paid for activities relating to the distribution of Fund shares, including
costs of printing and dissemination of sales material or literature,
prospectuses and reports used in connection with the sale of Fund shares.
Service fees are paid for the ongoing maintenance and servicing of existing
shareholder accounts, including payments to Representatives who provide
shareholder liaison services to their customers who are holders of that Fund,
provided they meet certain criteria.
Pursuant to each Class A Plan, each Fund's Board of Directors, in its sole
discretion, may periodically allocate the portion of distribution fees and
services fees that Fund may spend, provided the aggregate of such fees paid by
the Fund may not exceed an annual rate of 0.30% of the Fund's average daily net
assets attributable to Class A shares in any one fiscal year. Of that amount,
no more than 0.25% of a Fund's average daily net assets attributable to Class A
shares may be paid as service fees. Payments made to the Underwriter under each
Class A Plan may only be made for reimbursement of specific expenses incurred in
connection with distribution and service activities.
Pursuant to each Class B Plan, each Fund is authorized to pay the Underwriter
a distribution fee at the annual rate of 0.75% of that Fund's average daily net
assets attributable to Class B shares and a service fee of 0.25% of the Fund's
average daily net assets attributable to Class B shares. Payments made to the
Underwriter under each Class B Plan will represent compensation for distribution
and service activities, not reimbursement for specific expenses incurred.
Although Class B shares are sold without an initial sales charge, the
Underwriter pays from its own resources a sales commission to FIC
Representatives and a concession equal to 3.5% of the amount invested to Dealers
who sell Class B shares. In addition, the Underwriter will make quarterly
payments of service fees to Representatives commencing after the thirteenth
month following the initial sale of Class B shares. The Underwriter will make
such payments at an annual rate of up to 0.25% of the average net asset value of
Class B shares which are attributable to shareholders for whom the
Representatives are designated as dealer of record.
The Funds may suspend or modify payments under the Plans at any time, and
payments are subject to the continuation of each Plan, the terms of any dealer
agreements between Dealers and the Underwriter and any applicable limits imposed
by the National Association of Securities Dealers,
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Inc. Each Fund will not carry over any fees under the Plans to the next fiscal
year. See "Distribution Plans" in the SAI for a full discussion of the various
Plans.
DETERMINATION OF NET ASSET VALUE
The net asset value of each Fund's shares fluctuates and is determined
separately for each class of shares. The per share net asset value of the Class
B shares will generally be lower than that of the Class A shares because of the
higher expenses borne by the Class B shares. The net asset value of shares of a
given class of each Fund is determined as of the close of regular trading on the
NYSE (generally 4:00 P.M., New York City time) on each day the NYSE is open for
trading, and at such other times as such Fund's Board of Directors deems
necessary, by dividing the market value of the securities held by such Fund,
plus any cash and other assets, less all liabilities attributable to that class,
by the number of shares of the applicable class outstanding. If there is no
available market value, securities will be valued at their fair value as
determined in good faith pursuant to procedures adopted by each Fund's Board of
Directors. The NYSE currently observes the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
DIVIDENDS AND OTHER DISTRIBUTIONS
Dividends from net investment income are generally declared daily by
GOVERNMENT FUND and annually by GLOBAL FUND. Unless you direct the Transfer
Agent otherwise, (a) dividends declared on a class of shares of GOVERNMENT FUND
are paid in additional shares of that class at the net asset value generally
determined as of the close of business on the first business day of the
following month and (b) dividends declared on a class of shares of GLOBAL FUND
are paid in additional shares of that class at the net asset value generally
determined as of the close of business on the business day immediately following
the record date of the dividend. If you redeem all of your shares of GOVERNMENT
FUND at any time during a month, you are paid all dividends declared through the
day prior to the date of the redemption, together with the proceeds of your
redemption, less any applicable CDSC. Net investment income includes interest
and dividends, earned discount and other income earned on portfolio securities
less expenses.
Each Fund also distributes with its regular dividend at the end of the year
substantially all of its net capital gain (the excess of net long-term capital
gain over net short-term capital loss) and net short-term capital gain, if any,
after deducting any available capital loss carryovers and, for GLOBAL FUND, any
net realized gains from foreign currency transactions. Unless you direct the
Transfer Agent otherwise, these distributions are paid in additional shares of
the same class of the distributing Fund at the net asset value generally
determined as of the close of business on the business day immediately following
the record date of the distribution. A Fund may make an additional distribution
in any year if necessary to avoid a Federal excise tax on certain undistributed
income and capital gain.
Dividends and other distributions paid on both classes of a Fund's shares are
calculated at the same time and in the same manner. Dividends on Class B shares
of a Fund are expected to be lower than those for its Class A shares because of
the higher distribution fees borne by the Class B shares. Dividends on each
class also might be affected differently by the allocation of other class-
specific expenses.
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In order to be eligible to receive a dividend or other distribution, you must
own Fund shares as of the close of business on the record date of the
distribution. You may elect to receive dividends and/or other distributions in
cash by notifying the Transfer Agent by telephone or in writing prior to the
record date of any such distribution. If you elect this form of payment, the
payment date generally is two weeks following the record date of any such
distribution. Your election remains in effect until you revoke it by notifying
the Transfer Agent.
You may elect to invest the entire amount of any cash distribution on Class A
shares in shares of the same class of any Eligible Fund, including the Money
Market Funds, by notifying the Transfer Agent. See "How to Buy Shares--Cross-
Investment of Cash Distributions." The investment will be made at the net asset
value per share of the other fund, generally determined as of the close of
business, on the business day immediately following the record date of any such
distribution.
A dividend or other distribution paid on a class of shares of a Fund will be
paid in additional shares of that class and not in cash if any of the following
events occur: (1) the total amount of the distribution is under $5, (2) the
Fund has received notice of your death on an individual account (until written
alternate payment instructions and other necessary documents are provided by
your legal representative), or (3) a distribution check is returned to the
Transfer Agent, marked as being undeliverable, by the U.S. Postal Service after
two consecutive mailings.
TAXES
Each Fund intends to continue to qualify for treatment as a regulated
investment company under the Code so that it will be relieved of Federal income
tax on that part of its investment company taxable income (consisting generally
of net investment income, net short-term capital gain and, for GLOBAL FUND, net
gains from certain foreign currency transactions) and net capital gain that is
distributed to its shareholders.
Dividends from a Fund's investment company taxable income are taxable to you
as ordinary income, to the extent of the Fund's earnings and profits, whether
paid in cash or in additional Fund shares. Distributions of a Fund's net
capital gain, when designated as such, are taxable to you as long-term capital
gain, whether paid in cash or in additional Fund shares, regardless of the
length of time you have owned your shares. If you purchase shares shortly
before the record date for a dividend or other distribution, you will pay full
price for the shares and receive some portion of the price back as a taxable
distribution. You will receive an annual statement following the end of each
calendar year describing the tax status of distributions paid by the Fund during
that year.
Each Fund is required to withhold 31% of all dividends, capital gain
distributions and redemption proceeds payable to you after any applicable CDSC
is deducted (if you are an individual or certain other non-corporate
shareholder) if the Fund is not furnished with your correct taxpayer
identification number, and that percentage of dividends and such distributions
in certain other circumstances.
Your redemption of Fund shares will result in a taxable gain or loss to you,
depending on whether the redemption proceeds are more or less than your adjusted
basis for the redeemed shares (which normally includes any initial sales charge
paid on Class A shares). An exchange of Fund shares for shares of any other
Eligible Fund generally will have similar tax consequences. However, special
tax rules apply when a shareholder (1) disposes of Class A shares through a
redemption or
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exchange within 90 days of purchase and (2) subsequently acquires Class A shares
of an Eligible Fund without paying a sales charge due to the 90-day reinvestment
privilege or exchange privilege. In these cases, any gain on the disposition of
the original Class A shares will be increased, or loss decreased, by the amount
of the sales charge paid when the shares were acquired, and that amount will
increase the basis of the Eligible Fund's shares subsequently acquired. In
addition, if you purchase Fund shares within 30 days before or after redeeming
other shares of that Fund (regardless of class) at a loss, all or a portion of
the loss will not be deductible and will increase the basis of the newly
purchased shares.
No gain or loss will be recognized to a shareholder as a result of a
conversion of Class B shares into Class A shares.
The foregoing is only a summary of some of the important Federal tax
considerations generally affecting each Fund and its shareholders; see the SAI
for a further discussion. There may be other Federal, state or local tax
considerations applicable to a particular investor. For instance, distributions
by GOVERNMENT FUND attributable to interest earned on its investments that are
direct obligations of the U.S. Government may be exempt from income tax under
state and local laws. You therefore are urged to consult your own tax adviser.
PERFORMANCE INFORMATION
For purposes of advertising, each Fund's performance may be calculated for
each class of its shares based on average annual total return and total return.
Each of these figures reflects past performance and does not necessarily
indicate future results. Average annual total return shows the average annual
percentage change in an assumed $1,000 investment. It reflects the hypothetical
annually compounded return that would have produced the same total return if a
Fund's performance had been constant over the entire period. Because average
annual total return tends to smooth out variations in a Fund's return, you
should recognize that it is not the same as actual year-by-year results.
Average annual total return includes the effect of paying the maximum sales
charge (in the case of Class A shares) or the deduction of any applicable CDSC
(in the case of Class B shares) and payment of dividends and other distributions
in additional shares. One, five and ten year periods will be shown unless the
class has been in existence for a shorter period. Total return is computed
using the same calculations as average annual total return. However, the rate
expressed is the percentage change from the initial $1,000 invested to the value
of the investment at the end of the stated period. Total return calculations
assume reinvestment of dividends and other distributions.
GOVERNMENT FUND also may advertise its yield for each class of shares. Yield
reflects investment income net of expenses over a 30-day (or one-month) period
on a Fund share, expressed as an annualized percentage of the maximum offering
price per share for Class A shares and the net asset value per share for Class B
shares at the end of the period. Yield computations differ from other
accounting methods and therefore may differ from dividends actually paid or
reported net income. GOVERNMENT FUND may also advertise its "actual
distribution rate" for each class of shares. This is computed in the same
manner as yield except that actual income dividends declared per share during
the period in question are substituted for net investment income per share. In
addition, GOVERNMENT FUND calculates its "actual distribution rate" based upon
net asset value for dissemination to existing shareholders.
27
<PAGE>
Each of the above performance calculations may be based on investment at
reduced sales charge levels or at net asset value. Any quotation of performance
figures not reflecting the maximum sales charge or CDSC will be greater than if
the maximum sales charge or CDSC were used. Additional performance information
is contained in the Funds' Annual Reports which may be obtained without charge
by contacting the Funds at 1-800-423-4026.
GENERAL INFORMATION
ORGANIZATION. GLOBAL FUND and GOVERNMENT FUND were incorporated in the state
of Maryland on March 9, 1981 and September 21, 1983, respectively. GLOBAL
FUND'S authorized capital stock consists of 100 million shares of common stock,
all of one series, with a par value per share of $1.00. GOVERNMENT FUND'S
authorized capital stock consists of 1 billion shares of common stock, all of
one series, with a par value per share of $.01. Each Fund is authorized to
issue shares of common stock in such separate and distinct series and classes of
shares as the particular Fund's Board of Directors shall from time to time
establish. The shares of common stock of each Fund are presently divided into
two classes, designated Class A shares and Class B shares. Each class of a Fund
represents interests in the same assets of that Fund. The classes differ in
that (1) each class has exclusive voting rights on matters affecting only that
class, (2) Class A shares are subject to an initial sales charge and relatively
lower ongoing distribution fees, (3) Class B shares bear higher ongoing
distribution fees, are subject to a CDSC upon certain redemptions and will
automatically convert to Class A shares approximately eight years after
purchase, (4) each class may bear differing amounts of certain other class-
specific expenses, and (5) each class has different exchange privileges. Neither
Fund's Board of Directors anticipates that there will be any conflicts among the
interests of the holders of the different classes of each Fund's shares. On an
ongoing basis, each Fund's Board of Directors will consider whether any such
conflict exists and, if so, take appropriate action. The Funds do not hold
annual shareholder meetings. If requested to do so by the holders of at least
10% of a Fund's outstanding shares, such Fund's Board of Directors will call a
special meeting of shareholders for any purpose, including the removal of
Directors. Each share of each Fund has equal voting rights except as noted
above. Each share of a Fund is entitled to participate equally in dividends and
other distributions and the proceeds of any liquidation except that, due to the
higher expenses borne by the Class B shares, such dividends and proceeds are
likely to be lower for the Class B shares than for the Class A shares.
CUSTODIAN. The Bank of New York, 48 Wall Street, New York, NY 10286, is
custodian of the securities and cash of GOVERNMENT FUND. Brown Brothers
Harriman & Co., 40 Water Street, Boston, MA 02109, is custodian of the
securities and cash of GLOBAL FUND and employs foreign sub-custodians to provide
custody of the Fund's foreign assets.
TRANSFER AGENT. Administrative Data Management Corp., 10 Woodbridge Center
Drive, Woodbridge, NJ 07095-1198, an affiliate of FIMCO and FIC, acts as
transfer and dividend disbursing agent for each Fund and as redemption agent for
regular redemptions. The Transfer Agent's telephone number is 1-800-423-4026.
SHARE CERTIFICATES. The Funds do not issue share certificates unless
requested in writing to do so. The Funds do not issue certificates for Class B
shares or for Class A shares purchased under any retirement account. Ownership
of shares of each Fund is recorded on a stock register by the Transfer Agent and
shareholders have the same rights of ownership with respect to such shares as if
certificates had been issued.
28
<PAGE>
CONFIRMATIONS AND STATEMENTS. You will receive confirmations of purchases and
redemptions of shares of a Fund. Statements of shares owned will be sent to you
following a transaction in the account, including payment of a dividend or
capital gain distribution in additional shares or cash.
SHAREHOLDER INQUIRIES. Shareholder inquiries can be made by calling
Shareholder Services at 1-800-423-4026.
ANNUAL AND SEMI-ANNUAL REPORTS TO SHAREHOLDERS. It is each 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 in
writing or by telephone by any shareholder. Each Fund will ensure that an
additional copy of such reports are sent to any shareholder who subsequently
changes his or her mailing address.
29
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<S> <C>
Fee Table.............................................................. 2
Financial Highlights................................................... 4
Investment Objectives and Policies..................................... 6
Alternative Purchase Plans............................................. 11
How to Buy Shares...................................................... 12
How to Exchange Shares................................................. 18
How to Redeem Shares................................................... 19
Telephone Transactions................................................. 21
Management............................................................. 22
Distribution Plans..................................................... 24
Determination of Net Asset Value....................................... 25
Dividends and Other Distributions...................................... 25
Taxes.................................................................. 26
Performance Information................................................ 27
General Information.................................................... 28
</TABLE>
INVESTMENT ADVISER CUSTODIANS
First Investors Management The Bank of New York
Company, Inc. 48 Wall Street
95 Wall Street New York, NY 10286
New York, NY 10005
Brown Brothers
SUBADVISER Harriman & Co.
Wellington Management 40 Water Street
Company Boston, MA 02109
75 State Street
Boston, MA 02109 AUDITORS
Tait, Weller & Baker
UNDERWRITER Two Penn Center Plaza
First Investors Corporation Philadelphia, PA 19102-1707
95 Wall Street
New York, NY 10005 LEGAL COUNSEL
Kirkpatrick & Lockhart
TRANSFER AGENT 1800 M Street, N.W.
Administrative Data Washington, D.C. 20036
Management Corp.
10 Woodbridge Center Drive
Woodbridge, NJ 07095-1198
This Prospectus is intended to constitute an offer by each Fund only of the
securities of which it is the issuer and is not intended to constitute an offer
by any Fund of the securities of any other Fund whose securities are also
offered by this Prospectus. No Fund intends to make any representation as to
the accuracy or completeness of the disclosure in this Prospectus relating to
any other Fund. No dealer, salesman or any other person has been authorized to
give any information or to make any representations other than those contained
in this Prospectus or the Statement of Additional Information, and if given or
made, such information and representation must not be relied upon as having been
authorized by either Fund, First Investors Corporation, or any affiliate
thereof. This Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy any of the shares offered hereby in any state to any person
to whom it is unlawful to make such offer in such state.
<PAGE>
First Investors
Global Fund, Inc.
- ------------------------------------
First Investors
Government Fund, Inc.
- ------------------------------------
Prospectus
- ------------------------------------
May 1, 1995
First Investors Logo
Logo is described as follows: the arabic numeral one separated into seven
vertical segments followed by the words "First Investors."
Vertical line from top to bottom in center of page about 1/2 inch in thickness.
The following language appears to the left of the above language in the printed
piece:
The words "BULK RATE U.S. POSTAGE PAID PERMIT NO. 1796" in a box to the right of
a circle containing the words "MAILED FROM ZIP CODE 17604" appears on the
righthand side.
The following language appears on the lefthand side:
FIRST INVESTORS GOVERNMENT FUND, INC.
FIRST INVESTORS GLOBAL FUND, INC.
95 WALL STREET
NEW YORK, NY 10005
First Investors Logo (as described above)
A MEMBER OF THE
FIRST INVESTORS
FINANCIAL NETWORK
FIGG001
<PAGE>
FIRST INVESTORS GLOBAL FUND, INC.
FIRST INVESTORS GOVERNMENT FUND, INC.
95 Wall Street 1-800-423-4026
New York, New York 10005
STATEMENT OF ADDITIONAL INFORMATION
DATED MAY 1, 1995
This is a Statement of Additional Information ("SAI") for FIRST INVESTORS
GLOBAL FUND, INC. ("GLOBAL FUND") and FIRST INVESTORS GOVERNMENT FUND, INC.
("GOVERNMENT FUND"), each of which is an open-end diversified management
investment company. GLOBAL FUND and GOVERNMENT FUND are referred to herein
collectively as "Funds." The investment objective of each Fund is as follows:
GLOBAL FUND primarily seeks long-term capital growth and secondarily seeks
to earn a reasonable level of current income.
GOVERNMENT FUND seeks to achieve a significant level of current income
which is consistent with security and liquidity of principal by investing, under
normal market conditions, no less than 80% of its assets in obligations issued
or guaranteed as to principal and interest by the U.S. Government, its agencies
or instrumentalities, including mortgage-related securities.
There can be no assurance that either Fund will achieve its investment
objective.
This SAI is not a prospectus. It should be read in conjunction with the
Funds' Prospectus dated May 1, 1995 which may be obtained free of cost from the
Funds at the address or telephone number noted above.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
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Page
----
<S> <C>
Investment Policies............................. 2
Investment Restrictions......................... 8
Directors and Officers.......................... 12
Management...................................... 13
Underwriter..................................... 15
Distribution Plans.............................. 16
Determination of Net Asset Value................ 18
Allocation of Portfolio Brokerage............... 18
Reduced Sales Charges, Additional Exchange and
Redemption Information and Other Services..... 19
Taxes........................................... 24
Performance Information......................... 26
General Information............................. 31
Appendix A...................................... 32
Appendix B...................................... 34
Financial Statements............................ 35
</TABLE>
-1-
<PAGE>
INVESTMENT POLICIES
BANKERS' ACCEPTANCES. Each Fund may invest in bankers' acceptances.
--------------------
Bankers' acceptances are short-term credit instruments used to finance
commercial transactions. Generally, an acceptance is a time draft drawn on a
bank by an exporter or importer to obtain a stated amount of funds to pay for
specific merchandise. The draft is then "accepted" by a bank that, in effect,
unconditionally guarantees to pay the face value of the instrument on its
maturity date. The acceptance may then be held by the accepting bank as an
asset or it may be sold in the secondary market at the going rate of interest
for a specific maturity. Although maturities for acceptances can be as long as
270 days, most acceptances have maturities of six months or less.
CERTIFICATES OF ACCRUAL ON U.S. TREASURY SECURITIES. GOVERNMENT FUND may
---------------------------------------------------
purchase certificates, not issued by the U.S. Treasury, which evidence ownership
of future interest, principal or interest and principal payments on obligations
issued by the U.S. Treasury. The actual U.S. Treasury securities will be held
by a custodian on behalf of the certificate holder. These certificates are
purchased with original issue discount and are subject to greater fluctuations
in market value, based upon changes in market interest rates, than income-
producing securities.
CERTIFICATES OF DEPOSIT. Each Fund may invest in bank certificates of
-----------------------
deposit ("CDs") subject to the restrictions set forth in the Prospectus. The
Federal Deposit Insurance Corporation is an agency of the U.S. Government which
insures the deposits of certain banks and savings and loan associations up to
$100,000 per deposit. The interest on such deposits may not be insured if this
limit is exceeded. Current Federal regulations also permit such institutions to
issue insured negotiable CDs in amounts of $100,000 or more, without regard to
the interest rate ceilings on other deposits. To remain fully insured, these
investments currently must be limited to $100,000 per insured bank or savings
and loan association.
CONVERTIBLE SECURITIES. GLOBAL FUND may invest in convertible securities.
----------------------
While no securities investment is without some risk, investments in convertible
securities generally entail less risk than the issuer's common stock, although
the extent to which such risk is reduced depends in large measure upon the
degree to which the convertible security sells above its value as a fixed income
security. The Funds' investment adviser, First Investors Management Company,
Inc. ("Adviser" or "FIMCO"), or GLOBAL FUND's subadviser, Wellington Management
Company ("Subadviser" or "WMC"), will decide to invest based upon a fundamental
analysis of the long-term attractiveness of the issuer and the underlying common
stock, the evaluation of the relative attractiveness of the current price of the
underlying common stock and the judgment of the value of the convertible
security relative to the common stock at current prices.
GLOBAL DEPOSITORY RECEIPTS. GLOBAL FUND may invest in GDRs, which are
--------------------------
receipts which represent, or are convertible into, securities of foreign issues.
GDRs are issued globally for trading in non-U.S. securities markets and evidence
ownership of the underlying foreign security.
LOANS OF PORTFOLIO SECURITIES. Each Fund may loan securities to qualified
------------------------------
broker-dealers or other institutional investors provided: the borrower pledges
to the Fund and agrees to maintain at all times with the Fund collateral equal
to not less than 100% of the value of the securities loaned (plus accrued
interest or dividend, if any); the loan is terminable at will by a Fund; the
Fund pays only reasonable custodian fees in connection with the loan; and the
Adviser monitors the creditworthiness of the borrower throughout the life of the
loan. Such loans may be terminated by the Fund at any time and a Fund may vote
the proxies if a material event affecting the investment is to occur. The
market risk applicable to any security loaned
-2-
<PAGE>
remains a risk of the Fund. The borrower must add to the collateral whenever
the market value of the securities rises above the level of such collateral. A
Fund could incur a loss if the borrower should fail financially at a time when
the value of the loaned securities is greater than the collateral. GLOBAL FUND
may make loans not in excess of 10% of its total assets. GOVERNMENT FUND may
make loans, together with repurchase agreements maturing in more than seven
days, not in excess of 15% of its net assets.
MORTGAGE-RELATED SECURITIES. GOVERNMENT FUND may invest in mortgage-backed
---------------------------
securities, including those representing an undivided ownership interest in a
pool of mortgage loans. Each of the certificates described below is
characterized by monthly payments to the security holder, reflecting the monthly
payments made by the mortgagees of the underlying mortgage loans. The payments
to the security holders (such as the Fund), like the payments on the underlying
loans, represent both principal and interest. Although the underlying mortgage
loans are for specified periods of time, such as twenty to thirty years, the
borrowers can, and typically do, repay them sooner. Thus, the security holders
frequently receive prepayments of principal, in addition to the principal which
is part of the regular monthly payments. A borrower is more likely to prepay a
mortgage which bears a relatively high rate of interest. Thus, in times of
declining interest rates, some higher yielding mortgages might be repaid
resulting in larger cash payments to the Fund, and the Fund will be forced to
accept lower interest rates when that cash is used to purchase additional
securities.
Interest rate fluctuations may significantly alter the average maturity of
mortgage-backed securities, due to the level of refinancing by homeowners. When
interest rates rise, prepayments often drop, which should increase the average
maturity of the mortgage-backed security. Conversely, when interest rates fall,
prepayments often rise, which should decrease the average maturity of the
mortgage-backed security.
GNMA CERTIFICATES. Government National Mortgage Association ("GNMA")
-----------------
certificates ("GNMA Certificates") are mortgage-backed securities, which
evidence an undivided interest in a pool of mortgage loans. GNMA Certificates
differ from bonds in that principal is paid back monthly by the borrower over
the term of the loan rather than returned in a lump sum at maturity. GNMA
Certificates that the Fund purchases are the "modified pass-through" type.
"Modified pass-through" GNMA Certificates entitle the holder to receive a share
of all interest and principal payments paid and owed on the mortgage pool net of
fees paid to the "issuer" and GNMA, regardless of whether or not the mortgagor
actually makes the payment.
GNMA GUARANTEE. The National Housing Act authorizes GNMA to guarantee
--------------
the timely payment of principal and interest on securities backed by a pool of
mortgages insured by the Federal Housing Administration ("FHA") or the Farmers'
Home Administration ("FMHA"), or guaranteed by the Department of Veteran Affairs
("VA"). The GNMA guarantee is backed by the full faith and credit of the U.S.
Government. GNMA also is empowered to borrow without limitation from the U.S.
Treasury if necessary to make any payments required under its guarantee.
LIFE OF GNMA CERTIFICATES. The average life of a GNMA Certificate is
-------------------------
likely to be substantially less than the original maturity of the mortgage pools
underlying the securities. Prepayments of principal by mortgagors and mortgage
foreclosures will usually result in the return of the greater part of principal
investment long before maturity of the mortgages in the pool. The Fund normally
will not distribute principal payments (whether regular or prepaid) to its
shareholders. Rather, it will invest such payments in additional mortgage-
related securities of the types described above. Interest received by the Fund
will, however, be distributed to shareholders. Foreclosures impose no risk to
principal investment
-3-
<PAGE>
because of the GNMA guarantee. As prepayment rates of the individual mortgage
pools vary widely, it is not possible to predict accurately the average life of
a particular issue of GNMA Certificates.
YIELD CHARACTERISTICS OF GNMA CERTIFICATES. The coupon rate of
------------------------------------------
interest on GNMA Certificates is lower than the interest rate paid on the VA-
guaranteed or FHA-insured mortgages underlying the Certificates by the amount of
the fees paid to GNMA and the issuer. The coupon rate by itself, however, does
not indicate the yield which will be earned on GNMA Certificates. First,
Certificates may trade in the secondary market at a premium or discount.
Second, interest is earned monthly, rather than semi-annually as with
traditional bonds; monthly compounding raises the effective yield earned.
Finally, the actual yield of a GNMA Certificate is influenced by the prepayment
experience of the mortgage pool underlying it. For example, if the higher-
yielding mortgages from the pool are prepaid, the yield on the remaining pool
will be reduced.
FHLMC SECURITIES. The Federal Home Loan Mortgage Corporation
----------------
("FHLMC") issues two types of mortgage pass-through securities, mortgage
participation certificates ("PCs") and guaranteed mortgage certificates
("GMCs"). PCs resemble GNMA Certificates in that each PC represents a pro rata
share of all interest and principal payments made and owed on the underlying
pool.
FNMA SECURITIES. The Federal National Mortgage Association ("FNMA")
---------------
issues guaranteed mortgage pass-through certificates ("FNMA Certificates").
FNMA Certificates resemble GNMA Certificates in that each FNMA Certificate
represents a pro rata share of all interest and principal payments made and owed
on the underlying pool. FNMA guarantees timely payment of interest on FNMA
Certificates and the full return of principal.
Risk of foreclosure of the underlying mortgages is greater with FHLMC and
FNMA securities because, unlike GNMA Certificates, FHLMC and FNMA securities are
not guaranteed by the full faith and credit of the U.S. Government.
COLLATERALIZED MORTGAGE OBLIGATIONS. In a collateralized mortgage
-----------------------------------
obligation ("CMO"), a series of bonds or certificates is usually issued in
multiple classes. Typically, CMOs are collateralized by certificates issued by
GNMA, FNMA or FHLMC (such collateral collectively herein referred to as
"Mortgage Assets"). Each class of CMOs, often referred to as a "tranche," is
issued at a specific fixed or floating coupon rate and has a stated maturity or
final distribution date. Principal prepayments on the Mortgage Assets may cause
the CMOs to be retired substantially earlier than their stated maturities or
final distribution dates. Interest is paid or accrues on all classes of the
CMOs on a monthly, quarterly or semi-annual basis. The principal of, and
interest on, the Mortgage Assets may be allocated among the several classes of a
series of a CMO in innumerable ways. In a common structure, payments of
principal, including any principal prepayments, on the Mortgage Assets are
applied to the classes of the series of a CMO in the order of their respective
stated maturities or final distribution dates, so that no payment of principal
will be made on any class of the CMO until all other classes having an earlier
stated maturity or final distribution date have been paid in full.
Parallel pay CMOs are structured to provide payments of principal on each
payment date to more than one class. These simultaneous payments are taken into
account in calculating the stated maturity date or final distribution date of
each class, which, as with other CMO structures, must be retired by its stated
maturity date or final distribution date but may be retired earlier. Planned
Amortization Class CMOs ("PAC Bonds") generally require payments of a specified
amount of principal on each payment date. PAC
-4-
<PAGE>
Bonds are always parallel pay CMOs with the required principal payment on such
securities having the highest priority after interest has been paid to all
classes.
STRIPPED MORTGAGE-BACKED SECURITIES. Stripped mortgage-backed
-----------------------------------
securities ("SMBS") are derivative multiclass mortgage securities. SMBS are
usually structured with two classes that receive different proportions of the
interest and principal distributions from a pool of mortgage assets. A common
type of SMBS will have one class receiving most of the interest and the
remainder of the principal. In the most extreme case, one class will receive
all of the interest while the other class will receive all of the principal. If
the underlying Mortgage Assets experience greater than anticipated prepayments
of principal, GOVERNMENT FUND may fail to fully recoup its initial investment in
these securities. The market value of the class consisting primarily or
entirely of principal payments generally is unusually volatile in response to
changes in interest rates. Because SMBS were only recently introduced,
established trading markets for these securities have not yet developed,
although the securities are traded among institutional investors and investment
banking firms.
PARTICIPATION INTERESTS. Participation interests which may be held by
-----------------------
GOVERNMENT FUND are pro rata interests in securities held either by banks which
are members of the Federal Reserve System or securities dealers who are members
of a national securities exchange or are market makers in government securities,
which are represented by an agreement in writing between the Fund and the entity
in whose name the security is issued, rather than possession by the Fund. The
Fund will purchase participation interests only in securities otherwise
permitted to be purchased by the Fund, and only when they are evidenced by
deposit, safekeeping receipts, or book-entry transfer, indicating the creation
of a security interest in favor of the Fund in the underlying security.
However, the issuer of the participation interests to the Fund will agree in
writing, among other things: to promptly remit all payments of principal,
interest and premium, if any, to the Fund once received by the issuer; to
repurchase the participation interest upon seven days' notice; and to otherwise
service the investment physically held by the issuer, a portion of which has
been sold to the Fund.
PORTFOLIO TURNOVER. Although the Funds generally will not invest for
------------------
short-term trading purposes, portfolio securities may be sold from time to time
without regard to the length of time they have been held when, in the opinion of
the Adviser, or for GLOBAL FUND, its Subadviser, investment considerations
warrant such action. Portfolio turnover rate is calculated by dividing (1) the
lesser of purchases or sales of portfolio securities for the fiscal year by (2)
the monthly average of the value of portfolio securities owned during the fiscal
year. A 100% turnover rate would occur if all the securities in a Fund's
portfolio, with the exception of securities whose maturities at the time of
acquisition were one year or less, were sold and either repurchased or replaced
within one year. A high rate of portfolio turnover generally leads to
transaction costs and may result in a greater number of taxable transactions.
GLOBAL FUND's portfolio turnover rate for the fiscal years ending December 31,
1993 and 1994 was 41% and 56%, respectively. See "Allocation of Portfolio
Brokerage."
REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements with
---------------------
banks which are members of the Federal Reserve System or securities dealers who
are members of a national securities exchange or are market makers in government
securities. GOVERNMENT FUND may enter into repurchase agreements only where the
debt instrument subject to the repurchase agreement is a U.S. Government
Obligation (as defined in the Prospectus). The period of these repurchase
agreements will usually be short, from overnight to one week, and at no time
will a Fund invest in repurchase agreements with more than one year in time to
maturity. The securities which are subject to repurchase agreements, however,
may
-5-
<PAGE>
have maturity dates in excess of one year from the effective date of the
repurchase agreement. Each Fund will always receive, as collateral, securities
whose market value, including accrued interest, which will at all times be at
least equal to 100% of the dollar amount invested by the Fund in each agreement,
and the Fund will make payment for such securities only upon physical delivery
or evidence of book entry transfer to the account of the custodian. If the
seller defaults, a Fund might incur a loss if the value of the collateral
securing the repurchase agreement declines, and might incur disposition costs in
connection with liquidating the collateral. In addition, if bankruptcy or
similar proceedings are commenced with respect to the seller of the security,
realization upon the collateral by a Fund may be delayed or limited. Neither
Fund may enter into a repurchase agreement with more than seven days to maturity
if, as a result more than 15% of its net assets would be invested in such
repurchase agreements, together with any other illiquid investments.
RESTRICTED AND ILLIQUID SECURITIES. No Fund will purchase or otherwise
----------------------------------
acquire any security if, as a result more than 15% of its net assets (taken at
current value) would be invested in securities that are illiquid by virtue of
the absence of a readily available market or legal or contractual restrictions
on resale. This policy includes foreign issuers' unlisted securities with a
limited trading market and repurchase agreements maturing in more than seven
days. This policy does not include restricted securities eligible for resale
pursuant to Rule 144A under the Securities Act of 1933, as amended ("1933 Act"),
which each Fund's Board of Directors or the Adviser, or for GLOBAL FUND, the
Subadviser has determined under Board-approved guidelines are liquid.
Restricted securities which are illiquid may be sold only in privately
negotiated transactions or in public offerings with respect to which a
registration statement is in effect under the 1933 Act. Such securities include
those that are subject to restrictions contained in the securities laws of other
countries. Securities that are freely marketable in the country where they are
principally traded, but would not be freely marketable in the United States,
will not be subject to this 15% limitation, as noted above. Where registration
is required, a Fund may be obligated to pay all or part of the registration
expenses and a considerable period may elapse between the time of the decision
to sell and the time a Fund may be permitted to sell a security under an
effective registration statement. If, during such a period, adverse market
conditions were to develop, a Fund might obtain a less favorable price than
prevailed when it decided to sell.
In recent years, a large institutional market has developed for certain
securities that are not registered under the 1933 Act, including private
placements, repurchase agreements, commercial paper, foreign securities and
corporate bonds and notes. These instruments are often restricted securities
because the securities are either themselves exempt from registration or sold in
transactions not requiring registration. Institutional investors generally will
not seek to sell these instruments to the general public, but instead will often
depend on an efficient institutional market in which such unregistered
securities can be readily resold or on an issuer's ability to honor a demand for
repayment. Therefore, the fact that there are contractual or legal restrictions
on resale to the general public or certain institutions is not dispositive of
the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. Institutional markets for restricted securities
that might develop as a result of Rule 144A could provide both readily
ascertainable values for restricted securities and the ability to liquidate an
investment in order to satisfy share redemption orders. An insufficient number
of qualified institutional buyers interested in purchasing Rule
-6-
<PAGE>
144A-eligible securities held by a Fund, however, could affect adversely the
marketability of such portfolio securities and a Fund might be unable to dispose
of such securities promptly or at reasonable prices.
SEPARATED OR DIVIDED U.S. TREASURY SECURITIES. GOVERNMENT FUND may invest
---------------------------------------------
in separated or divided U.S. Treasury securities. These instruments represent a
single interest, or principal, payment on a U.S. Treasury bond which has been
separated from all the other interest payments as well as the bond itself. When
the Fund purchases such an instrument, it purchases the right to receive a
single payment of a set sum at a known date in the future. The interest rate on
such an instrument is determined by the price the Fund pays for the instrument
when it purchases the instrument at a discount under what the instrument
entitles the Fund to receive when the instrument matures. The amount of the
discount the Fund will receive will depend upon the length of time to maturity
of the separated U.S. Treasury security and prevailing market interest rates
when the separated U.S. Treasury security is purchased. Separated U.S. Treasury
securities can be considered a zero coupon investment because no payment is made
to the Fund until maturity. The market values of these securities are much more
susceptible to change in market interest rates than income-producing securities.
These securities are purchased with original issue discount and such discount is
includable as gross income to a Fund shareholder over the life of the security.
WARRANTS. GLOBAL FUND may purchase warrants, which are instruments that
--------
permit the Fund to acquire, by subscription, the capital stock of a corporation
at a set price, regardless of the market price for such stock. Warrants may be
either perpetual or of limited duration. There is a greater risk that warrants
might drop in value at a faster rate than the underlying stock. The Fund may
invest up to 5% of its total assets in warrants, of which no more than 2% may
not be listed on the New York or American Stock Exchange.
WHEN-ISSUED SECURITIES. Each Fund many invest up to 5% of its net assets
----------------------
in securities issued on a when-issued or delayed delivery basis at the time the
purchase is made. A Fund generally would not pay for such securities or start
earning interest on them until they are issued or received. However, when a
Fund purchases debt obligations on a when-issued basis, it assumes the risks of
ownership, including the risk of price fluctuation, at the time of purchase, not
at the time of receipt. Failure of the issuer to deliver a security purchased
by a Fund on a when-issued basis may result in such Fund incurring a loss or
missing an opportunity to make an alternative investment. When a Fund enters
into a commitment to purchase securities on a when-issued basis, it establishes
a separate account with its custodian consisting of cash or liquid high-grade
debt securities equal to the amount of the Fund's commitment, which are valued
at their fair market value. If on any day the market value of this segregated
account falls below the value of the Fund's commitment, the Fund will be
required to deposit additional cash or qualified securities into the account
until equal to the value of the Fund's commitment. When the securities to be
purchased are issued, the Fund will pay for the securities from available cash,
the sale of securities in the segregated account, sales of other securities and,
if necessary, from sale of the when-issued securities themselves although this
is not ordinarily expected. Securities purchased on a when-issued basis are
subject to the risk that yields available in the market, when delivery takes
place, may be higher than the rate to be received on the securities a Fund is
committed to purchase. Sale of securities in the segregated account or other
securities owned by a Fund and when-issued securities may cause the realization
of a capital gain or loss.
-7-
<PAGE>
INVESTMENT RESTRICTIONS
The investment restrictions set forth below have been adopted by the
respective Fund and, unless identified as non-fundamental policies, may not be
changed without the affirmative vote of a majority of the outstanding voting
securities of that Fund. As provided in the Investment Company Act of 1940, as
amended ("1940 Act"), a "vote of a majority of the outstanding voting securities
of the Fund" means the affirmative vote of the lesser of (1) more than 50% of
the outstanding shares of the Fund or (2) 67% or more of the shares present at a
meeting, if more than 50% of the outstanding shares are represented at the
meeting in person or by proxy. Changes in values of a particular Fund's assets
will not cause a violation of the following investment restrictions so long as
percentage restrictions are observed by such Fund at the time it purchases any
security.
GLOBAL FUND. GLOBAL FUND will not:
-----------
(1) Borrow money, except from banks and only for temporary or emergency
purposes and then in amounts not in excess of 5% of its total assets taken at
cost or value, whichever is the lesser.
(2) Make loans to other persons, except that the Fund's Board of Directors
may, on the request of broker-dealers or other institutional investors that it
deems qualified, authorize the Fund to lend securities for the purpose of
covering short positions of the borrower, but only when the borrower pledges
cash collateral to the Fund and agrees to maintain such collateral so that it
amounts at all times to at least 100% of the value of the securities. Such
security loans will not be made if as a result the aggregate of such loans
exceed 10% of the value of the Fund's total assets. The purchase of a portion
of an issue of publicly distributed debt securities is not considered the making
of a loan. This restriction is not intended to prohibit the Fund from investing
in repurchase agreements.
(3) With respect to 75% of the Fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities) if, as a result, (a) more than 5%
of the Fund's total assets would be invested in the securities of that issuer,
or (b) the Fund would hold more than 10% of the outstanding voting securities of
that issuer.
(4) Invest more than 15% of the value of its total assets in warrants. As
a matter of non-fundamental policy, the Fund has undertaken to a certain state
in which shares of the Fund are sold, not to purchase warrants if as a result
the Fund would then have more than 5% of its total assets, valued at the lower
of cost or market, invested in warrants (of which no more than 2% may be
warrants not listed on the New York or American Stock Exchange).
(5) Invest more than 25% of the value of its total assets in securities of
foreign issuers, other than American Depository Receipts, that are not listed on
a recognized U.S. or foreign securities exchange, including no more than 10% of
the value of its assets in securities with a limited trading market.
(6) Invest 25% or more of the value of its total assets in a particular
industry at one time. The Fund, however, is not limited in the amount of its
total assets that may be invested in any particular country.
(7) Underwrite securities of other issuers, except to the extent that the
purchase and sale of restricted securities may be deemed to be underwriting.
-8-
<PAGE>
(8) Purchase or sell real estate, commodities or commodity contracts.
However, the Fund may purchase interests in real estate investment trusts whose
securities are registered under the 1933 Act and are readily marketable, and may
purchase or sell options on securities, securities indices and foreign
currencies, stock index futures, interest rate futures and foreign currency
futures, as well as options on such futures contracts.
(9) Invest in companies for the purpose of exercising control or
management.
(10) Purchase any securities on margin or sell any securities short, except
to make margin deposits in connection with the use of options, futures contracts
and options on futures contracts.
(11) Purchase or retain securities of any issuer if any officer or Director
of the Fund or the Adviser owns beneficially more than 1/2 of 1% of the
securities of such issuer and, together such officers and Directors own more
than 5% of the securities of such issuer.
(12) Purchase or sell portfolio securities from or to the Adviser or any
Director or officer thereof or of the Fund, as principals.
(13) Buy or sell puts, calls, straddles or spreads, except with respect to
options on securities, securities indices and foreign currencies or on futures
contracts.
(14) Issue senior securities.
(15) Invest more than 5% of the value of its total assets in securities of
issuers that have been in business for less than three years.
(16) Invest in securities of other domestic investment companies, except in
connection with a merger of another investment company, although the Fund may
purchase the securities of foreign investment companies or investment trusts in
the open market where no commissions or profits accrue to a sponsor or dealer
other than customary broker's commission, provided such securities do not have
an aggregate value (at cost) of more than 10% of the value of the Fund's total
net assets. Investment in securities of other investment companies may cause a
duplication of management and/or advisory fees.
The Fund also has filed the following undertakings to comply with the
requirements of certain states in which Fund shares are sold, which may be
changed without shareholder approval:
(1) In the event the original custodian or any successor custodian resigns
or for any reason cannot or will not continue to serve as custodian and no
successor custodian can be found, the Fund will submit to shareholders, for
their approval or disapproval, the matter of possible liquidation of the Fund.
(2) Notwithstanding fundamental investment restriction (8) above, the Fund
will not invest in real estate limited partnership interests, or in interests in
real estate investment trusts that are not readily marketable or in oil, gas or
other mineral leases or exploration or development programs.
The following investment restrictions are not fundamental and may be
changed without prior shareholder approval. These restrictions provide that the
Fund may not.
-9-
<PAGE>
(1) Purchase any security if, as a result, more than 15% of its net assets
would be invested in illiquid securities, including repurchase agreements not
entitling the holder to payment of principal and interest within seven days and
any securities that are illiquid by virtue of legal or contractual restrictions
on resale or the absence of a readily available market. The Directors, or the
Fund's investment adviser acting pursuant to authority delegated by the
Directors, may determine that a readily available market exists for securities
eligible for resale pursuant to Rule 144A under the Securities Act of 1933, as
amended, or any other applicable rule, and therefore that such securities are
not subject to the foregoing limitation.
(2) Pledge, mortgage or hypothecate any of its assets, except that the Fund
may pledge its assets to secure borrowings made in accordance with fundamental
investment restriction (1) above, provided the Fund maintains asset coverage of
at least 300% for all such borrowings.
GOVERNMENT FUND. GOVERNMENT FUND will not:
---------------
(1) Borrow money, except as a temporary or emergency measure in an amount
not to exceed 5% of the value of its assets.
(2) Pledge assets, except that the Fund may pledge its assets to secure
borrowings made in accordance with paragraph (1) above, provided the Fund
maintains asset coverage of at least 300% for pledged assets.
(3) Make loans, except by purchase of debt obligations and through
repurchase agreements. However, the Fund's Board of Directors may, on the
request of broker-dealers or other institutional investors which they deem
qualified, authorize the Fund to loan securities to cover the borrower's short
position; provided, however, the borrower pledges to the Fund and agrees to
maintain at all times with the Fund cash collateral equal to not less than 100%
of the value of the securities loaned, the loan is terminable at will by the
Fund, the Fund receives interest on the loan as well as any distributions upon
the securities loaned, the Fund retains voting rights associated with the
securities, the Fund pays only reasonable custodian fees in connection with the
loan, and the Adviser monitors the creditworthiness of the borrower throughout
the life of the loan; provided further, that such loans will not be made if the
value of all loans, repurchase agreements with more then seven days to maturity,
and other illiquid assets is greater than an amount equal to 15% of the Fund's
net assets.
(4) Purchase, with respect to only 75% of the Fund's assets, the securities
of any issuer (other than U.S. Government Obligations (as defined in the
Prospectus)) if, as a result thereof, (a) more than 5% of the Fund's total
assets (taken at current value) would be invested in the securities of such
issuer, or (b) the Fund would hold more than 10% of any class of securities
(including any class of voting securities) of such issuer (for this purpose, all
debt obligations of an issuer maturing in less than one year are treated as a
single class of securities).
(5) Purchase the securities of an issuer if such purchase, at the time
thereof, would cause more than 5% of the value of the Fund's total assets to be
invested in securities of issuers which, including predecessors, have a record
of less than three years' continuous operation.
(6) Purchase securities on margin; except that the Fund may obtain such
credits as may be necessary for the clearance of purchases and sales of
securities. (The deposit or payment by the Fund of
-10-
<PAGE>
initial or variation margin in connection with interest rate futures contracts
or related options transactions is not considered the purchase of a security on
margin.)
(7) Write put or call options; except that the Fund may write options with
respect to U.S. Government Obligations (as defined in the Prospectus) and
interest rate futures contracts. Notwithstanding the foregoing, a non-
fundamental investment restriction, adopted by the Fund's Board of Directors,
prohibits the Fund from engaging in any option transactions.
(8) Make short sales of securities.
(9) Issue senior securities.
(10) Purchase the securities of other investment trusts, except as they may
be acquired as part of a merger, consolidation or acquisition of assets.
(11) Underwrite securities issued by other persons except to the extent
that, in connection with this disposition of its portfolio investments, it may
be deemed to be an underwriter under federal securities laws.
(12) Buy or sell real estate, (unless acquired as a result of ownership of
securities) or interests in oil, gas or mineral exploration; provided, however,
the Fund may invest in securities secured by real estate or interests in real
estate.
(13) Purchase or sell commodities or commodity contracts, except that the
Fund may purchase and sell interest rate futures contracts and related options.
The Fund has filed the following undertakings to comply with requirements
of certain states in which shares of the Fund are sold, which may be changed
without shareholder approval:
(1) Notwithstanding fundamental investment restriction (2) above, the Fund
will not pledge or hypothecate more than 15% of its net assets.
(2) Notwithstanding fundamental investment restriction (4) above, the Fund
will not, as to 100% of its total assets, invest more than 5% in the securities
of any one issuer, exclusive of U.S. Government Obligations.
(3) Notwithstanding fundamental investment restriction (12) above, the Fund
will not invest in real estate limited partnership interests or interests in
real estate investment trusts that are not readily marketable.
(4) The Fund will not retain in its portfolio the securities issued by an
issuer, any of whose officers, directors or security holders is an officer or
Director of the Fund or of the Adviser to the Fund if after the purchase of the
securities of such issuer by the Fund one or more of such officers or directors
owns beneficially more than one-half of one percent (1/2%) of the shares or
securities, or both, of such issuer and such officers and directors owning more
than one-half of one percent (1/2%) of such shares or securities together own
beneficially more than 5% of such shares or securities.
-11-
<PAGE>
(5) In the event the original custodian or any successor custodian resigns
or for any reason cannot or will not continue to serve as custodian and no
successor custodian can be found, the Fund will submit to shareholders for their
approval or disapproval, the matter of possible liquidation of the Fund.
The Fund has adopted the following non-fundamental investment restriction,
which may be changed without shareholder approval. This restriction provides
that the Fund will not:
Purchase any security if, as a result, more than 15% of its net assets
would be invested in illiquid securities, including repurchase agreements not
entitling the holder to payment of principal and interest within seven days and
any securities that are illiquid by virtue of legal or contractual restrictions
on resale or the absence of a readily available market. The Directors, or the
Fund's investment adviser acting pursuant to authority delegated by the
Directors, may determine that a readily available market exists for securities
eligible for resale pursuant to Rule 144A under the Securities Act of 1933, as
amended, or any other applicable rule, and therefore that such securities are
not subject to the foregoing limitation.
DIRECTORS AND OFFICERS
The following table lists the Directors and executive officers of the
Funds, their business address and principal occupations during the past five
years. Unless otherwise noted, an individual's business address is 95 Wall
Street, New York, New York 10005.
GLENN O. HEAD*+, President and Director. Chairman of the Board, Director and
Treasurer, Administrative Data Management Corp. ("ADM"); Chairman of the Board
and Director, FIMCO, Executive Investors Management Company, Inc. ("EIMCO"),
First Investors Corporation ("FIC"), Executive Investors Corporation ("EIC") and
First Investors Consolidated Corporation ("FICC").
JAMES J. COY, Director, 90 Buell Lane, East Hampton, NY 11937. Retired;
formerly Senior Vice President, James Talcott, Inc. (financial institution).
ROGER L. GRAYSON*, Director. Director, FIC and FICC; President and Director,
First Investors Resources, Inc.; Commodities Portfolio Manager.
KATHRYN S. HEAD*+, Director, 10 Woodbridge Center Drive, Woodbridge, NJ 07095.
President, FICC and FIMCO; Vice President, Chief Financial Officer and Director,
FIC and EIC; President and Director, First Financial Savings Bank, S.L.A.;
Chief Financial Officer, ADM.
F. WILLIAM ORTMAN, JR., Director, 50 B Cambridge Circle, Lakehurst, NJ 08723.
Retired; formerly Management Consultant.
REX R. REED, Director, 76 Keats Way, Morristown, NJ 07960. Retired; formerly
Senior Vice President, American Telephone & Telegraph Company.
HERBERT RUBINSTEIN, Director, 145 Elm Drive, Roslyn, NY 11576. Retired;
formerly President, Belvac International Industries, Ltd. and President,
Central Dental Supply.
JOHN T. SULLIVAN*, Director and Chairman of the Board; Director, FIMCO, FIC,
FICC and ADM; Of Counsel, Hawkins, Delafield & Wood, Attorneys.
-12-
<PAGE>
ROBERT F. WENTWORTH, Director, RR1, Box 2554, Upland Downs Road, Manchester
Center, VT 05255. Retired; formerly, financial and planning executive with
American Telephone & Telegraph Company.
JOSEPH I. BENEDEK, Treasurer, 10 Woodbridge Center Drive, Woodbridge, NJ 07095.
Treasurer, FIC FIMCO, EIMCO and EIC.
CONCETTA DURSO, Vice President and Secretary. Vice President, FIMCO, EIMCO and
ADM; Assistant Vice President and Assistant Secretary, FIC.
CAROL LERNER BROWN, Assistant Secretary. Secretary, FIMCO, EIMCO, FIC, EIC and
ADM.
- -------------------------------
* These Directors may be deemed to be "interested persons," as defined in the
1940 Act.
+ Mr. Glenn O. Head and Ms. Kathryn S. Head are father and daughter.
All of the officers and Directors hold identical or similar positions with
Executive Investors Trust, First Investors Cash Management Fund, Inc., First
Investors High Yield Fund, Inc., First Investors Fund For Income, Inc., First
Investors Insured Tax Exempt Fund, Inc., First Investors Series Fund, First
Investors Life Fund Series, First Investors Multi-State Insured Tax Free Fund,
First Investors New York Insured Tax Free Fund, Inc., First Investors Series
Fund II, Inc., First Investors Special Bond Fund, Inc., First Investors Tax-
Exempt Money Market Fund, Inc. and First Investors U.S. Government Plus Fund.
Mr. Head is also an officer and/or Director of First Investors Asset Management
Company, Inc., First Investors Credit Funding Corporation, First Investors
Leverage Corporation, First Investors Realty Company, Inc., First Investors
Resources, Inc., N.A.K. Realty Corporation, Real Property Development
Corporation, Route 33 Realty Corporation, First Investors Life Insurance
Company, First Financial Savings Bank, S.L.A., First Investors Credit
Corporation and School Financial Management Services, Inc. Ms. Head is also an
officer and/or Director of First Investors Life Insurance Company, First
Investors Credit Corporation and School Financial Management Services, Inc.
Compensation to officers and interested Directors of the Funds is paid by
the Adviser and not by the Funds. In addition, compensation to non-interested
Directors of the Funds is currently voluntarily paid by the Adviser.
MANAGEMENT
ADVISER. Investment advisory services to each Fund are provided by First
-------
Investors Management Company, Inc. pursuant to separate Investment Advisory
Agreements (each, an "Advisory Agreement") dated June 13, 1994. Each Advisory
Agreement was approved by the Board of Directors of the applicable Fund,
including a majority of the Directors who are not parties to such Fund's
Advisory Agreement or "interested persons" (as defined in the 1940 Act) of any
such party ("Independent Directors"), in person at a meeting called for such
purpose and by a majority of the public shareholders of the applicable Fund.
Pursuant to each Advisory Agreement, FIMCO shall supervise and manage each
Fund's investments, determine each Fund's portfolio transactions and supervise
all aspects of each Fund's operations, subject to review by the applicable
Fund's Directors. However, with respect to GLOBAL FUND,
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<PAGE>
FIMCO has delegated these duties to Wellington Management Company. See
"Subadviser." Each Advisory Agreement also provides that FIMCO shall provide
the applicable Fund with certain executive, administrative and clerical
personnel, office facilities and supplies, conduct the business and details of
the operation of such Fund and assume certain expenses thereof, other than
obligations or liabilities of such Fund. Each Advisory Agreement may be
terminated at any time without penalty by the applicable Fund's Directors or by
a majority of the outstanding voting securities of such Fund, or by FIMCO, in
each instance on not less than 60 days' written notice, and shall automatically
terminate in the event of its assignment (as defined in the 1940 Act). Each
Advisory Agreement also provides that it will continue in effect, with respect
to the applicable Fund, for a period of more than two years only if such
continuance is approved annually either by such Fund's Directors or by a
majority of the outstanding voting securities of such Fund, and, in either case,
by a vote of a majority of such Fund's Independent Directors voting in person at
a meeting called for the purpose of voting on such approval.
Under each Advisory Agreement, the applicable Fund pays the Adviser an
annual fee, paid monthly, according to the following schedules:
GOVERNMENT FUND
Annual
Average Daily Net Assets Rate
- ------------------------ ------
Up to $200 million.................................................. 1.00%
In excess of $200 million up to $500 million........................ 0.75
In excess of $500 million up to $750 million........................ 0.72
In excess of $750 million up to $1.0 billion........................ 0.69
Over $1.0 billion................................................... 0.66
GLOBAL FUND
Annual
Average Daily Net Assets Rate
- ------------------------ ------
Up to $250 million.................................................. 1.00%
In excess of $250 million up to $500 million........................ 0.97
In excess of $500 million up to $750 million........................ 0.94
Over $750 million................................................... 0.91
The SEC staff takes the position that fees of 0.75% or greater are higher than
those paid by most investment companies.
For the fiscal years ended December 31, 1992, 1993 and 1994, GLOBAL FUND
paid the Adviser $2,007,009, $1,827,462 and $2,138,787, respectively, in
advisory fees. For the fiscal years ended December 31, 1992, 1993 and 1994,
GOVERNMENT FUND paid the Adviser $2,293,163, $2,279,569 and $1,844,229,
respectively, in advisory fees. With respect to GOVERNMENT FUND, for each of
the fiscal years ended December 31, 1992, 1993 and 1994, the Adviser voluntarily
waived an additional $500,000 in advisory fees.
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<PAGE>
Pursuant to certain state regulations, the Adviser has agreed to reimburse
a Fund if and to the extent that Fund's aggregate operating and management
expenses, including advisory fees but generally excluding interest, taxes,
brokerage commissions and extraordinary expenses, exceed any limitation on
expenses applicable to that Fund for any full fiscal year (unless a waiver of
such expense limitation is obtained). The amount of any such reimbursement is
limited to the amount of the advisory fees paid or accrued to the Adviser for
the fiscal year. For the fiscal year ended December 31, 1994, no reimbursement
to either Fund was required pursuant to these regulations.
The Adviser has an Investment Committee composed of George V. Ganter,
Margaret Haggerty, Glenn O. Head, Nancy W. Jones, Patricia D. Poitra, Ronald
Rolleri, Clark D. Wagner and John Tomasulo. The Committee usually meets weekly
to discuss the composition of the portfolio of each Fund and to review additions
to and deletions from the portfolios.
SUBADVISER. Wellington Management Company has been retained by the Adviser
----------
and GLOBAL FUND as the investment subadviser to GLOBAL FUND under a subadvisory
agreement dated June 13, 1994 ("Subadvisory Agreement"). The Subadvisory
Agreement was approved by the Board of Directors of the Fund, including a
majority of Independent Directors in person at a meeting called for such purpose
and by a majority of the shareholders of the GLOBAL FUND.
The Subadvisory Agreement provides that it will continue for a period of
more than two years from the date of execution only so long as such continuance
is approved annually by either GLOBAL FUND's Board of Directors or a majority of
the outstanding voting securities of the Fund and, in either case, by a vote of
a majority of the Independent Directors voting in person at a meeting called for
the purpose of voting on such approval. The Subadvisory Agreement provides that
it will terminate automatically if assigned or upon the termination of the
Advisory Agreement, and that it may be terminated at any time without penalty by
GLOBAL FUND's Board of Directors or a vote of a majority of the outstanding
voting securities of the Fund or by the Subadvisor upon not more than 60 days'
nor less than 30 days' written notice. The Subadvisory Agreement provides that
WMC will not be liable for any error of judgment or for any loss suffered by the
Fund in connection with the matters to which the Subadvisory Agreement relates,
except a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation or from willful misfeasance, bad faith, gross negligence
or reckless disregard of its obligations and duties.
Under the Subadvisory Agreement, the Adviser will pay to the Subadviser a
fee at an annual rate of 0.400% of the average daily net assets of GLOBAL FUND
up to and including $50 million; 0.275% of the average daily net assets in
excess of $50 million up to and including $150 million, 0.225% of the average
daily net assets in excess of $150 million up to and including $500 million; and
0.200% of the average daily net assets in excess of $500 million. This fee will
be computed daily and paid monthly. For the fiscal years ended December 31,
1992, 1993 and 1994, the Adviser paid the Subadviser fees of $589,081, $548,679
and $618,727, respectively.
UNDERWRITER
Each Fund has entered into an Underwriting Agreement ("Underwriting
Agreement") with First Investors Corporation ("Underwriter" or "FIC") which
requires the Underwriter to use its best efforts to sell shares of the Funds.
Pursuant to each Underwriting Agreement, the Underwriter shall bear all fees and
expenses incident to the registration and qualification of the applicable Fund's
shares. In addition,
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<PAGE>
the Underwriter shall bear all expenses of sales material or literature,
including prospectuses and proxy materials, to the extent such materials are
used in connection with the sale of the Fund's shares, unless the Fund has
agreed to bear such costs pursuant to a plan of distribution. See "Distribution
Plans." Each Underwriting Agreement was approved by the applicable Fund's Board
of Directors, including a majority of the Independent Directors. Each
Underwriting Agreement provides that it will continue in effect from year to
year only so long as such continuance is specifically approved at least annually
by the applicable Fund's Board of Directors or by a vote of a majority of the
outstanding voting securities of such Fund, and in either case by the vote of a
majority of such Fund's Independent Directors, voting in person at a meeting
called for the purpose of voting on such approval. Each Underwriting Agreement
will terminate automatically in the event of its assignment.
For the fiscal years ended December 31, 1992, 1993 and 1994, FIC received
underwriting commissions with respect to Class A shares of GLOBAL FUND of
$935,767, $955,080 and $1,529,863, respectively. For the same periods, FIC
reallowed an additional $14,673, $5,895 and $3,438, respectively, to
unaffiliated dealers. For the fiscal years ended December 31, 1992, 1993 and
1994, FIC received underwriting commissions with respect to Class A shares of
GOVERNMENT FUND of $1,270,107, $970,681 and $470,827, respectively. For the
same periods, FIC reallowed an additional $17,496, $5,787 and $1,866,
respectively, to unaffiliated dealers.
DISTRIBUTION PLANS
As stated in the Funds' Prospectus, pursuant to a separate plan of
distribution for each class of shares adopted by each Fund pursuant to Rule 12b-
1 under the 1940 Act ("Class A Plan" and "Class B Plan;" and, collectively,
"Plans"), each Fund may reimburse or compensate, as applicable, the Underwriter
for certain expenses incurred in the distribution of that Fund's shares and the
servicing or maintenance of existing Fund shareholder accounts.
Each Plan was approved by the applicable Fund's Board of Directors,
including a majority of the Independent Directors, and by a majority of the
outstanding voting securities of the relevant class of such Fund. Each Plan
will continue in effect from year to year as long as its continuance is approved
annually by either the applicable Fund's Board of Directors or by a vote of a
majority of the outstanding voting securities of the relevant class of shares of
such Fund. In either case, to continue, each Plan must be approved by the vote
of a majority of the Independent Directors of the applicable Fund. Each Fund's
Board reviews quarterly and annually a written report provided by the Treasurer
of the amounts expended under the applicable Plan and the purposes for which
such expenditures were made. While each Plan is in effect, the selection and
nomination of the applicable Fund's Independent Directors will be committed to
the discretion of such Independent Directors then in office.
Each Plan can be terminated at any time by a vote of a majority of the
applicable Fund's Independent Directors or by a vote of a majority of the
outstanding voting securities of the relevant class of shares of such Fund. Any
change to the Class B Plan that would materially increase the costs to that
class of shares of a Fund or any material change to the Class A Plan may not be
instituted without the approval of the outstanding voting securities of the
relevant class of shares of such Fund. Such changes also require approval by a
majority of the applicable Fund's Independent Directors.
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<PAGE>
In reporting amounts expended under the Plans to the Directors, FIMCO will
allocate expenses attributable to the sale of each class of a Fund's shares to
such class based on the ratio of sales of such class to the sales of both
classes of shares. The fees paid by one class of a Fund's shares will not be
used to subsidize the sale of any other class of the Fund's shares.
For the fiscal year ended December 31, 1994, GLOBAL FUND and GOVERNMENT
FUND paid $641,634 and $737,693, respectively, pursuant to their respective
Class A Plan. For the same period, the Underwriter incurred the following Class
A Plan-related expenses with respect to the Class A shares of each Fund:
<TABLE>
<CAPTION>
GLOBAL FUND GOVERNMENT FUND
----------- ---------------
<S> <C> <C>
Advertising $ 0 $ 0
Payments to Sales $231,862 $270,900
Personnel*
Expenses of the $409,777 $466,793
Underwriter**
</TABLE>
_____________________
* Represents service fees
** Represents distribution fees
In approving each Fund's overall system of distribution, that Fund's Board of
Directors considered several factors, including that implementation of the
system would (1) enable investors to choose the purchasing option better suited
to their individual situation, thereby encouraging current shareholders to make
additional investments in a Fund and attracting new investors and assets to that
Fund to the benefit of the Fund and its shareholders; (2) facilitate
distribution of each Fund's shares; and (3) maintain the competitive position of
each Fund in relation to other funds that have implemented or are seeking to
implement similar distribution arrangements.
In adopting the Class B Plan for each Fund, the applicable Fund's Board of
Directors considered all the features of the distribution system, including (1)
the conditions under which a contingent deferred sales charge ("CDSC") would be
imposed and the amount of such charge, (2) the advantage to investors in having
no initial sales charges deducted from a Fund's purchase payments and instead
having the entire amount of their purchase payments immediately invested in Fund
shares, (3) the Underwriter's belief that the ability to receive sales
commissions and service fees under the Class B Plan would prove attractive to
Representatives, resulting in greater growth of each Fund than might otherwise
be the case, (4) the advantages to the shareholders of a Fund of economies of
scale resulting from growth in such Fund's assets, and (5) the Underwriter's
shareholder service and distribution-related expenses and costs.
In adopting the Class A Plan for each Fund, the applicable Fund's Board of
Directors considered all relevant information and determined that there is a
reasonable likelihood that the Class A Plan will benefit such Fund and its
shareholders. The Board of each Fund believes that the amounts spent pursuant
to that Fund's Class A Plan have assisted the relevant Fund in providing ongoing
servicing to shareholders, in competing with other providers of financial
services and in promoting sales, thereby increasing the net assets of that Fund.
-17-
<PAGE>
DETERMINATION OF NET ASSET VALUE
Except as provided herein, a security listed or traded on an exchange or the
Nasdaq national market system is valued at its last sale price on the exchange
or market system where the security is primarily traded, and lacking any sales
on a particular day, the security is valued at the mean between the closing bid
and asked prices on that day. Each security traded in the market (including
securities listed on exchanges whose primary market is believed to be OTC) is
valued at the mean between the last bid and asked prices based upon quotes
furnished by a market maker for such securities. The U.S. Government securities
in which the Funds invest are traded primarily in the OTC markets. In the
absence of market quotations, a Fund will determine the value of bonds based
upon quotes furnished by market makers, if available, or in accordance with the
procedures described herein. In that connection, the Boards of Directors have
determined that the Funds may use an outside pricing service. The pricing
service uses quotations obtained from investment dealers or brokers for the
particular securities being evaluated, information with respect to market
transactions in comparable securities and other available information in
determining value. This service is furnished by Interactive Data Corporation.
Short-term debt securities that mature in 60 days or less are valued at
amortized cost if their original term to maturity from the date of purchase was
60 days or less, or by amortizing their value on the 61st day prior to maturity
if their term to maturity from the date of purchase exceeded 60 days, unless the
Board of Directors determines that such valuation does not represent fair value.
Securities for which market quotations are not readily available are valued at
fair value as determined in good faith by or under the direction of a Fund's
officers in a manner specifically authorized by the Board of Directors of that
Fund.
With respect to each Fund, "when-issued securities" are reflected in the
assets of the Fund as of the date the securities are purchased. Such
investments are valued thereafter at the mean between the most recent bid and
asked prices obtained from recognized dealers in such securities. For valuation
purposes, with respect to GLOBAL FUND, quotations of foreign securities in
foreign currencies are converted into U.S. dollar equivalents using the foreign
exchange equivalents in effect.
Each Fund's Board of Directors may suspend the determination of a Fund's net
asset value per share separately for each class of shares for the whole or any
part of any period (1) during which trading on the New York Stock Exchange
("NYSE") is restricted as determined by the SEC or the NYSE is closed for other
than weekend and holiday closings, (2) during which an emergency, as defined by
rules of the SEC with respect to the U.S. market, exists as a result of which
disposal by a Fund of securities owned by it is not reasonably practicable for
the Fund fairly to determine the value of its net assets, or (3) for such other
period as the SEC has by order permitted.
ALLOCATION OF PORTFOLIO BROKERAGE
Purchases and sales of portfolio securities by GOVERNMENT FUND generally are
principal transactions. In principal transactions, portfolio securities are
normally purchased directly from the issuer or from an underwriter or market
maker for the securities. There will usually be no brokerage commissions paid
by GOVERNMENT FUND for such purchases. Purchases from underwriters will include
the underwriter's commission or concession and purchases from dealers serving as
market makers will include the spread between the bid and asked price.
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<PAGE>
GLOBAL FUND may deal in securities which are not listed on a national
securities exchange or the Nasdaq national market system but are traded in the
OTC market. GLOBAL FUND also may purchase listed securities through the "third
market." When transactions are executed in the OTC market, GLOBAL FUND seeks to
deal with the primary market makers, but when advantageous it utilizes the
services of brokers.
In effecting portfolio transactions, the Adviser or, for GLOBAL FUND, its
Subadviser, seeks best execution of trades either (1) at the most favorable and
competitive rate of commission charged by any broker or member of an exchange,
or (2) with respect to agency transactions, at a higher rate of commission if
reasonable in relation to brokerage and research services provided to a Fund or
the Adviser or, for GLOBAL FUND, its Subadviser, by such member or broker. Such
services may include, but are not limited to, any one or more of the following:
information as to the availability of securities for purchase or sale and
statistical or factual information or opinions pertaining to investments. The
Adviser or, for GLOBAL FUND, its Subadviser, may use research and services
provided to it by brokers in servicing all the funds in the First Investors
Group of Funds; however, not all such services may be used by the Adviser or,
for GLOBAL FUND, its Subadviser, in connection with a Fund. No portfolio orders
are placed with an affiliated broker, nor does any affiliated broker-dealer
participate in these commissions.
The Adviser or, for GLOBAL FUND, its Subadviser, may combine transaction
orders placed on behalf of a Fund and any other Fund in the First Investors
Group of Funds, any series of Executive Investors Trust and First Investors Life
Insurance Company, affiliates of the Funds, for the purpose of negotiating
brokerage commissions or obtaining a more favorable transaction price; and where
appropriate, securities purchased or sold may be allocated, in terms of price
and amount, to a Fund according to the proportion that the size of the
transaction order actually placed by a Fund bears to the aggregate size of the
transaction orders simultaneously made by other participants in the transaction.
For the fiscal year ended December 31, 1992, GLOBAL FUND paid $585,987 in
brokerage commissions. For the fiscal year ended December 31, 1993, GLOBAL FUND
paid $382,342, in brokerage commissions, of which $6,835 was paid in brokerage
commissions to brokers who furnished research services on portfolio transactions
in the amount of $3,315,110. For the fiscal year ended December 31, 1994,
GLOBAL FUND paid $565,340 in brokerage commissions, none of which was paid in
brokerage commissions to brokers who furnished research services. For the same
periods, GOVERNMENT FUND did not pay any brokerage commissions.
REDUCED SALES CHARGES, ADDITIONAL EXCHANGE AND
REDEMPTION INFORMATION AND OTHER SERVICES
ELIGIBLE FUNDS. Shares of all the funds and/or series in the First Investors
--------------
family of funds, except as noted below, are eligible to participate in certain
shareholder privileges noted in this SAI and the Prospectus (singularly,
"Eligible Fund" and, collectively, "Eligible Funds"). Shares of First Investors
Special Bond Fund, Inc., First Investors Life Series Fund and First Investors
U.S. Government Plus Fund are not deemed to be Eligible Funds. Shares of the
Money Market Funds, unless otherwise noted, are not deemed to be Eligible Funds.
Class A Shares of each series of Executive Investors Trust are deemed to be
Eligible Funds if such shares have either (a) been acquired through an exchange
from an Eligible Fund which imposes a maximum sales charge of 6.25%, or (b) been
held for at least one year from their date of purchase.
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<PAGE>
REDUCED SALES CHARGES--CLASS A SHARES
Reduced sales charges are applicable to purchases made at one time of Class A
shares of any one or more of the Funds or of any one or more of the Eligible
Funds by "any person," which term shall include an individual, or an individual,
his or her spouse and children under the age of 21, or a trustee or other
fiduciary of a single trust, estate or fiduciary account (including a pension,
profit-sharing or other employee benefit trust created pursuant to a plan
qualified under section 401 of the Internal Revenue Code of 1986, as amended
(the "Code")), although more than one beneficiary is involved; provided,
however, that the term "any person" shall not include a group of individuals
whose funds are combined, directly or indirectly, for the purchase of redeemable
securities of a registered investment company, nor shall it include a trustee,
agent, custodian or other representative of such a group of individuals.
Ownership of Class A and Class B shares of any Eligible Fund, except as noted
below, qualify for a reduced sales charge on the purchase of Class A shares.
Class A shares purchased at net asset value, Class A shares of the Money Market
Funds, or shares owned under a Contractual Plan are not eligible for the
purchase of Class A shares of a Fund at a reduced sales charge through a Letter
of Intent or the Cumulative Purchase Privilege.
LETTER OF INTENT. Any of the eligible persons described above may, within 90
----------------
days of their investment, sign a statement of intent ("Letter of Intent") in the
form provided by the Underwriter, covering purchases of Class A shares of any
one or more of the Funds and of the other Eligible Funds to be made within a
period of thirteen months, provided said shares are currently being offered to
the general public and only in those states where such shares may be legally
sold, and thereby become eligible for the reduced sales charge applicable to the
total amount purchased. A Letter of Intent filed after the date of investment
is considered retroactive to the date of investment for determination of the
thirteen-month period. The Letter of Intent is not a binding obligation on
either the investor or the Funds. During the term of a Letter of Intent,
Administrative Data Management Corp. ("Transfer Agent") will hold Class A shares
representing 5% of each purchase in escrow, which shares will be released upon
completion of the intended investment.
Purchases of Class A Shares made under a Letter of Intent are made at the
sales charge applicable to the purchase of the aggregate amount of shares
covered by the Letter of Intent as if they were purchased in a single
transaction. The applicable quantity discount will be based on the sum of the
then current value at public offering price (i.e., net asset value plus
----
applicable sales charge) of all Class A shares and the net asset value of all
Class B shares of a Fund and of the other Eligible Funds, including Class B
shares of the Money Market Funds, currently owned, together with the aggregate
offering price of purchases to be made under the Letter of Intent. If all such
shares are not so purchased, a price adjustment is made, depending upon the
actual amount invested within such period, by the redemption of sufficient Class
A shares held in escrow in the name of the investor (or by the investor paying
the commission differential). A Letter of Intent can be amended (1) during the
thirteen-month period if the purchaser files an amended Letter of Intent with
the same expiration date as the original Letter of Intent, or (2) automatically
after the end of the period, if total purchases credited to the Letter of Intent
qualify for an additional reduction in the sales charge. The Letter of Intent
privilege may be modified or terminated at any time by the Underwriter.
CUMULATIVE PURCHASE PRIVILEGE. Upon written notice to FIC, Class A shares of
-----------------------------
a Fund are also available at a quantity discount on new purchases if the then
current value at the current public offering
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<PAGE>
price (i.e., net asset value plus applicable sales charge) of all Class A shares
----
and the net asset value of all Class B shares of a Fund and of the other
Eligible Funds, including Class B shares of the Money Market Funds, previously
purchased and then owned, plus the value of Class A shares being purchased at
the current public offering price, amount to $25,000 or more. Such quantity
discounts may be modified or terminated at any time by the Underwriter.
SYSTEMATIC WITHDRAWAL PLAN--CLASS A SHARES. Shareholders who own Class A
------------------------------------------
shares of a Fund with a net asset value of at least $5,000 may establish a
Systematic Withdrawal Plan ("Withdrawal Plan") and either (a) receive monthly,
quarterly, semi-annual or annual checks for any designated amount (minimum $25);
or (b) automatically reinvest the proceeds at net asset value in the same class
of shares in any other Eligible Fund, including the Money Market Funds.
Dividends and other distributions, if any, are reinvested in additional Class A
shares of the Fund. Shareholders may add shares to the Withdrawal Plan or
terminate the Withdrawal Plan at any time. Withdrawal Plan payments will be
suspended when a distributing Fund has received notice of a shareholder's death
on an individual account. Payments may recommence upon receipt of written
alternate payment instructions and other necessary documents from the deceased's
legal representative. Withdrawal payments will also be suspended when a payment
check is returned to the Transfer Agent marked as undeliverable by the U.S.
Postal Service after two consecutive mailings.
The withdrawal payments derived from the redemption of sufficient shares in
the account to meet designated payments in excess of dividends and other
distributions may deplete or possibly extinguish the initial investment,
particularly in the event of a market decline, and may result in a capital gain
or loss depending on the shareholder's cost. Purchases of additional shares of
a Fund concurrent with withdrawals are ordinarily disadvantageous to
shareholders because of tax liabilities and sales charges.
CONVERSION OF CLASS B SHARES. Class B Shares of a Fund will automatically
----------------------------
convert to Class A shares of that Fund, based on the relative net asset values
per share of the two classes, as of the close of business on the first business
day of the month in which the eighth anniversary of the initial purchase of such
Class B shares occurs. For these purposes, the date of initial purchase shall
mean (1) the first business day of the month in which such Class B shares were
issued, or (2) for Class B shares obtained through an exchange or a series of
exchanges, the first business day of the month in which the original Class B
shares were issued. For conversion purposes, Class B shares purchased through
the reinvestment of dividends and other distributions paid in respect of Class B
shares will be held in a separate sub-account. Each time any Class B shares in
the shareholder's regular account (other than those in the sub-account) convert
to Class A shares, a pro rata portion of the Class B shares in the sub-account
also will convert to Class A shares. The portion will be determined by the
ratio that the shareholder's Class B shares converting to Class A shares bears
to the shareholder's total Class B shares not acquired through dividends and
other distributions.
The availability of the conversion feature is subject to the continuing
applicability of a ruling of the Internal Revenue Service ("IRS"), or an opinion
of counsel, that: (1) the dividends and other distributions paid on Class A and
Class B shares will not result in "preferential dividends" under the Code; and
(2) the conversion of shares does not constitute a taxable event. If the
conversion feature ceased to be available, the Class B shares of the Funds would
not be converted and would continue to be subject to the higher ongoing expenses
of the Class B shares beyond eight years from the date of purchase. FIMCO has no
reason to believe that these conditions for the availability of the conversion
feature will not continue to be met.
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<PAGE>
If a Fund implements any amendments to its Class A Plan that would increase
materially the costs that may be borne under such Plan by Class A shareholders,
Class B shares will stop converting into Class A shares unless a majority of
Class B shareholders, voting separately as a class, approve the proposal.
WAIVERS OF CDSC ON CLASS B SHARES. The CDSC imposed on Class B shares does
---------------------------------
not apply to: (a) any redemption pursuant to the tax-free return of an excess
contribution to an IRA or other qualified retirement plan if the Fund is
notified at the time of such request; (b) any redemption of a lump-sum or other
distribution from qualified retirement plans or accounts provided the
shareholder has attained the minimum age of 70 1/2 years and has held the Class
B shares for a minimum period of three years; (c) any redemption by advisory
accounts managed by the Adviser or any of its affiliates or for shares held by
the Adviser or any of its affiliates; (d) any redemption by a tax-exempt
employee benefit plan if continuance of the investment would be improper under
applicable laws or regulations; and (e) any redemption or transfer of ownership
of Class B shares following the death or disability, as defined in Section
72(m)(7) of the Code, of a shareholder if the Fund is provided with proof of
death or disability and with all documents required by the Transfer Agent within
one year after the death or disability. For more information on what specific
documents are required, call Shareholder Services at 1-800-423-4026.
TELEPHONE TRANSACTIONS. As stated in the Funds' Prospectus, the Funds, the
----------------------
Underwriter and their affiliates will not be liable for any loss, damage, cost
or expense arising out of any instruction (or any interpretation of such
instruction) received by telephone which they reasonably believe to be
authentic. In acting upon telephone instructions, these parties use procedures
which are reasonably designed to ensure that such instructions are genuine, such
as (1) obtaining some or all of the following information: account number;
name(s) and social security number registered to the account; and personal
identification; (2) recording all telephone transactions; and (3) sending
written confirmation of each transaction to the registered owner.
RETIREMENT PLANS
PROFIT-SHARING/MONEY PURCHASE PENSION PLANS. FIC offers prototype Profit-
-------------------------------------------
Sharing, Money Purchase Pension and 401(k) Retirement Plans ("Retirement Plans")
approved by the IRS for corporations, sole proprietorships and partnerships.
The Custodial Agreement for each Profit-Sharing and Money Purchase Pension Plan
provides that First Financial Savings Bank, S.L.A. ("First Financial Savings"),
an affiliate of FIC, will furnish all required custodial services.
FIC offers additional versions of prototype qualified retirement plans for
eligible employers, including 401(k), money purchase, profit sharing and target
benefit plans.
Currently, there are no annual service fees chargeable to participants in
connection with a Retirement Plan account. Participants are, however, charged
$5.00 for opening a Retirement Plan account, other than a 401(k) Retirement Plan
account. Each Fund currently pays the annual $10.00 custodian fee for each
Retirement Plan account, if applicable, maintained with such Fund. This policy
may be changed at any time by a Fund on 45 days' written notice. First
Financial Savings has reserved the right to waive its fees at any time or to
change the fees on 45 days' prior written notice.
The Retirement Plan documents contain further specific information about the
Retirement Plans and may be obtained from your First Investors Representative.
Prior to establishing a Retirement Plan, you are advised to consult with your
legal and tax advisers.
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<PAGE>
INDIVIDUAL RETIREMENT ACCOUNTS. A qualified individual may purchase shares
------------------------------
of a Fund through an individual retirement account ("IRA") or, as an employee of
a qualified employer, through a Simplified Employee Pension-IRA ("SEP-IRA") or a
Salary Reduction Simplified Employee Pension-IRA ("SARSEP-IRA") furnished by
FIC. Under the related Custodial Agreements, First Financial Savings acts as
custodian of each of these retirement plans.
A taxpayer generally may make an annual IRA contribution no greater than the
lesser of: (a) 100% of his or her compensation, or (b) $2,000 (or $2,250 when
also contributing to a spousal IRA). However, contributions are deductible only
under certain conditions. The requirements as to SEP-IRAs and SARSEP-IRAs are
described in IRS Form 5305-SEP and 5305A-SEP, respectively, which is provided to
employers. Employers are required to provide copies of Forms 5305-SEP and
5305A-SEP to their eligible employees. A disclosure statement setting forth
complete details of the IRA is given to each participant before the contribution
is invested.
Currently, there are no annual service fees chargeable to a participant in
connection with an IRA, SEP-IRA or SARSEP-IRA. Each Fund currently pays the
annual $10.00 custodian fee for each IRA account maintained with such Fund.
This policy may be changed at any time by a Fund on 45 days' written notice to
the holder of any IRA, SEP-IRA or SARSEP-IRA. First Financial Savings has
reserved the right to waive its fees at any time or to change the fees on 45
days' prior written notice to the holder of any IRA.
An application and other documents necessary to establish an IRA, SEP-IRA or
SARSEP-IRA, are available from your Representative. Prior to establishing an
IRA, SEP-IRA or SARSEP-IRA, you are advised to consult with your legal and tax
advisers.
RETIREMENT BENEFIT PLANS FOR EMPLOYEES OF ELIGIBLE ORGANIZATIONS. FIC makes
----------------------------------------------------------------
available model custodial accounts under Section 403(b)(7) of the Code
("Custodial Accounts") to provide retirement benefits for employees of certain
eligible public educational institutions and other eligible non-profit
charitable, religious and humane organizations. The Custodial Accounts are
designed to permit contributions (up to a "maximum exclusion allowance") by
employees through salary reduction. First Financial Savings acts as custodian
of these accounts.
Contributions may be made to a Custodial Account under the Optional
Retirement Program for Employees of Texas Institutions of Higher Education
("ORP"), either by salary reduction agreement or otherwise, in accordance with
the terms and conditions of the ORP, and under the Texas Deferred Compensation
Plan Program for eligible state employees by salary reduction agreement.
Currently, there are no annual service fees chargeable to participants in
connection with a Custodial Account. Each Fund currently pays the annual $10.00
custodian fee for each Custodial Account maintained with such Fund. This policy
may be changed at any time by a Fund on 45 days' written notice to a Custodial
Account participant. First Financial Savings has reserved the right to waive
its fees at any time or to change the fees on 45 days' prior written notice to a
Custodial Account participant.
An application and other documents necessary to establish a Custodial Account
are available from your First Investors Representative. Persons desiring to
create a Custodial Account are advised to confer with their legal and tax
advisers concerning the specifics of this type of retirement benefit plan.
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<PAGE>
Mandatory income tax withholding, at the rate of 20%, may be required for
Federal income tax purposes on "eligible rollover" distributions made from any
of the foregoing retirement plans (other than IRAs, including SEP-IRAs and
SARSEP-IRAs). If the recipient elects to directly transfer an eligible rollover
distribution to an "eligible retirement plan" that permits acceptance of such
distributions, no withholding will apply. For distributions that are not
"eligible rollover" distributions, the recipient can elect, in writing, not to
require any withholding. This election must be submitted immediately before, or
must accompany, the distribution request. The amount, if any, of any such
optional withholding depends on the amount and type of the distribution.
Appropriate election forms are available from the Custodian or Shareholder
Services. Other types of withholding nonetheless may apply.
DISTRIBUTION FEES. A participant/shareholder's account under any of the
-----------------
foregoing retirement plans (including IRAs) may be charged a distribution fee
(at the time of withdrawal) of $7.00 for a single distribution of the entire
account and $1.00 for each periodic distribution therefrom.
TAXES
In order to continue to qualify for treatment as a regulated investment
company ("RIC") under the Code, each Fund must distribute to its shareholders
for each taxable year at least 90% of its investment company taxable income
(consisting generally of net investment income, net short-term capital gain and,
for GLOBAL FUND, net gains from certain foreign currency transactions)
("Distribution Requirement") and must meet several additional requirements. For
each Fund these requirements include the following: (1) the Fund must derive at
least 90% of its gross income each taxable year from dividends, interest,
payments with respect to securities loans and gains from the sale or other
disposition of securities or, for GLOBAL FUND, foreign currencies, or other
income derived with respect to its business of investing in securities or, for
GLOBAL FUND, those currencies ("Income Requirement"); (2) the Fund must derive
less than 30% of its gross income each taxable year from the sale or other
disposition of securities, or (in the case of GLOBAL FUND) foreign currencies
that are not directly related to its principal business of investing in
securities, held for less than three months ("Short-Short Limitation"); (3) at
the close of each quarter of the Fund's taxable year, at least 50% of the value
of its total assets must be represented by cash and cash items, U.S. Government
securities, securities of other RICs and other securities, with those other
securities limited, in respect of any one issuer, to an amount that does not
exceed 5% of the value of the Fund's total assets and that does not represent
more than 10% of the issuer's outstanding voting securities; and (4) at the
close of each quarter of the Fund's taxable year, not more than 25% of the value
of its total assets may be invested in securities (other than U.S. Government
securities or the securities of other RICs) of any one issuer.
Dividends and other distributions declared by a Fund in October, November or
December of any year and payable to shareholders of record on a date in any of
those months are deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from GLOBAL FUND's investment company taxable
income may be eligible for the dividends-received deduction allowed to
corporations. The eligible portion may not exceed the aggregate dividends
received by the Fund from U.S. corporations. However, dividends received by a
corporate shareholder and deducted by it pursuant to the dividends-received
deduction are subject
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<PAGE>
indirectly to the alternative minimum tax. No dividends paid by GOVERNMENT FUND
are expected to be eligible for this deduction.
If shares of a Fund are sold at a loss after being held for six months or
less, the loss will be treated as long-term, instead of short-term, capital loss
to the extent of any capital gain distributions received on those shares.
Each Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to
the extent it fails to distribute by the end of any calendar year substantially
all of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
Dividends and interest received by GLOBAL FUND may be subject to income,
withholding or other taxes imposed by foreign countries that would reduce the
yield on its securities. Tax conventions between certain countries and the
United States may reduce or eliminate these foreign taxes, however, and many
foreign countries do not impose taxes on capital gains in respect of investments
by foreign investors. If more than 50% of the value of GLOBAL FUND'S total
assets at the close of its taxable year consists of securities of foreign
corporations, it will be eligible to, and may, file an election with the IRS
that will enable its shareholders, in effect, to receive the benefit of the
foreign tax credit with respect to any foreign income taxes paid by it.
Pursuant to the election, GLOBAL FUND will treat those taxes as dividends paid
to its shareholders and each shareholder will be required to (1) include in
gross income, and treat as paid by him, his proportionate share of those taxes,
(2) treat his share of those taxes and of any dividend paid by the Fund that
represents income from foreign sources as his own income from those sources and
(3) either deduct the taxes deemed paid by him in computing his taxable income
or, alternatively, use the foregoing information in calculating the foreign tax
credit against his Federal income tax. GLOBAL FUND will report to its
shareholders shortly after each taxable year their respective shares of the
income from sources within, and taxes paid to, foreign countries if it makes
this election.
GLOBAL FUND may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of
the following tests: (1) at least 75% of its gross income is passive or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, if the Fund holds stock of a
PFIC, it will be subject to Federal income tax on a portion of any "excess
distribution" received on the stock or of any gain on disposition of the stock
(collectively "PFIC income"), plus interest thereon, even if the Fund
distributes the PFIC income as a taxable dividend to its shareholders. The
balance of the PFIC income will be included in the Fund's investment company
taxable income and, accordingly, will not be taxable to it to the extent that
income is distributed to its shareholders.
If GLOBAL FUND invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund," then in lieu of the foregoing tax and interest obligation, the
Fund would be required to include in income each year its pro rata share of the
qualified electing fund's annual ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
probably would have to be distributed to satisfy the Distribution Requirement
and avoid imposition of the Excise Tax -- even if those earnings and gain were
not received by the Fund. In most instances it will be very difficult, if not
impossible, to make this election because of certain requirements thereof.
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<PAGE>
The "Tax Simplification and Technical Corrections Bill of 1993," passed in
May 1994 by the House of Representatives would substantially modify the taxation
of U.S. shareholders of foreign corporations, including eliminating the
provisions described above dealing with PFICs and replacing them (and other
provisions) with a regulatory scheme involving entities called "passive foreign
corporations." Three similar bills passed in 1991 and 1992 were vetoed. It is
unclear at this time whether, and in what form, the proposed modifications may
be enacted into law.
Proposed regulations have been published pursuant to which open-end RICs,
such as GLOBAL FUND, would be entitled to elect to "mark-to-market" their stock
in certain PFICs. "Marking-to-market," in this context, means recognizing as
gain for each taxable year the excess, as of the end of that year, of the fair
market value of such a PFIC's stock over the adjusted basis in that stock
(including mark-to-market gain for each prior year for which an election was in
effect).
For GLOBAL FUND, income from foreign currencies (except certain gains
therefrom that may be excluded by future regulations) will qualify as
permissible income under the Income Requirement. Income from the Fund's
disposition of foreign currencies that are not directly related to its principal
business of investing in securities also will be subject to the Short-Short
Limitation if they are held for less than three months.
GOVERNMENT FUND may acquire zero coupon securities issued with original issue
discount. As a holder of those securities, the Fund must include in its income
the original issue discount that accrues on the securities for the taxable year,
even if it receives no corresponding payment on the securities during the year.
Because the Fund annually must distribute substantially all of its investment
company taxable income, including any original issue discount, in order to
satisfy the Distribution Requirement and avoid imposition of the Excise Tax, the
Fund may be required in a particular year to distribute as a dividend an amount
that is greater than the total amount of cash it actually receives. Those
distributions will be made from the Fund's cash assets or from the proceeds of
sales of portfolio securities, if necessary. The Fund may realize capital gains
or losses from those sales, which would increase or decrease its investment
company taxable income and/or net capital gain. In addition, any such gains may
be realized on the disposition of securities held for less than three months.
Because of the Short-Short Limitation, any such gains would reduce the Fund's
ability to sell other securities held for less than three months that it might
wish to sell in the ordinary course of its portfolio management.
PERFORMANCE INFORMATION
A Fund may advertise its performance in various ways.
Each Fund's "average annual total return" ("T") is an average annual
compounded rate of return. The calculation produces an average annual total
return for the number of years measured. It is the rate of return based on
factors which include a hypothetical initial investment of $1,000 ("P") over a
number of years ("n") with an Ending Redeemable Value ("ERV") of that
investment, according to the following formula:
T = [(ERV/P) to the power of 1/n] - 1
-26-
<PAGE>
The "total return" uses the same factors, but does not average the rate of
return on an annual basis. Total return is determined as follows:
[ERV-P]/P = TOTAL RETURN
Total return is calculated by finding the average annual change in the value
of an initial $1,000 investment over the period. In calculating the ending
redeemable value for Class A shares, each Fund will deduct the maximum sales
charge of 6.25% (as a percentage of the offering price) from the initial $1,000
payment and, for Class B shares, the applicable CDSC imposed on a redemption of
Class B shares held for the period is deducted. All dividends and other
distributions are assumed to have been reinvested at net asset value on the
initial investment ("P").
Return information may be useful to investors in reviewing a Fund's
performance. However, certain factors should be taken into account before using
this information as a basis for comparison with alternative investments. No
adjustment is made for taxes payable on distributions. Return will fluctuate
over time and return for any given past period is not an indication or
representation by a Fund of future rates of return on its shares. At times, the
Adviser may reduce its compensation or assume expenses of a Fund in order to
reduce the Fund's expenses. Any such waiver or reimbursement would increase the
Fund's return during the period of the waiver or reimbursement. Average annual
total return for the periods ended December 31, 1994 is listed below.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
Class A Shares*
GLOBAL FUND GOVERNMENT FUND**
----------- -----------------
<S> <C> <C>
Twelve Months (9.82)% (9.27)%
Five Years 1.61 4.80
Ten Years 13.65 7.22
</TABLE>
- --------------------
* Performance for Class B shares is not quoted because Class B shares were not
offered for sale during these periods.
** Certain expenses of GOVERNMENT FUND have been waived from commencement of
operations through December 31, 1994. Accordingly, average annual return
figures are higher than they would have been had such expenses not been waived.
Average annual total return and total return may also be based on
investment at reduced sales charge levels or at net asset value. Any quotation
of return not reflecting the maximum sales charge will be greater than if the
maximum sales charge were used. Average annual return computed at net asset
value for the period ended December 31, 1994 for each Fund's Class A shares is
set forth in the table below:
-27-
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
Class A Shares*
GLOBAL FUND GOVERNMENT FUND**
----------- -----------------
<S> <C> <C>
Twelve Months (3.78)% (3.22)%
Five Years 2.93 6.16
Ten Years 14.40 7.92
- ------------------
</TABLE>
* Performance for Class B shares is not quoted because Class B shares were not
offered for sale during these periods.
** Certain expenses of GOVERNMENT FUND have been waived from commencement of
operations through December 31, 1994. Accordingly, average annual return
figures are higher than they would have been had such expenses not been waived.
Yield is presented for a specified thirty-day period ("base period").
Yield is based on the amount determined by (i) calculating the aggregate amount
of dividends and interest earned by a Fund during the base period less expenses
accrued for that period (net of reimbursement), and (ii) dividing that amount by
the product of (A) the average daily number of shares of the Fund outstanding
during the base period and entitled to receive dividends and (B) the per share
maximum public offering price for Class A shares or the net asset value for
Class B shares of the Fund on the last day of the base period. The result is
annualized by compounding on a semi-annual basis to determine the Fund's yield.
For this calculation, interest earned on debt obligations held by the Fund is
generally calculated using the yield to maturity (or first expected call date)
of such obligations based on their market values (or, in the case of
receivables-backed securities such as GNMA Certificates, based on cost).
Dividends on equity securities are accrued daily at their estimated stated
dividend rates.
For the 30 days ended December 31, 1994, the yield for Class A shares
of GOVERNMENT FUND was 6.13%. During this period certain expenses of the Fund
were waived. Accordingly, yield is higher than it would have been if such
expenses had not been waived. The yield for Class B shares is not quoted
because Class B shares were not offered for sale during this period.
The distribution rate for GOVERNMENT FUND is presented for a twelve-
month period. It is calculated by adding the dividends for the last twelve
months and dividing the sum by the Fund's offering price per share at the end of
that period. The distribution rate is also calculated by using the Fund's net
asset value. Distribution rate calculations do not include capital gain
distributions, if any, paid. The distribution rate for the twelve-month period
ended December 31, 1994 for Class A shares of GOVERNMENT FUND calculated using
the offering price and net asset value was 6.07% and 6.48%, respectively.
During this period certain expenses of GOVERNMENT FUND were waived.
Accordingly, the distribution rates are higher than they would have been had
such expenses not been waived. The distribution rate for Class B shares is not
quoted because Class B shares were not offered for sale during this period.
Each Fund may include in advertisements and sales literature,
information, examples and statistics to illustrate the effect of compounding
income at a fixed rate of return to demonstrate the growth of an investment over
a stated period of time resulting from the payment of dividends and capital gain
distributions in additional shares. These examples may also include
hypothetical returns comparing taxable versus tax-deferred growth which would
pertain to an IRA, section 403(b)(7) Custodial Account or other
-28-
<PAGE>
qualified retirement program. The examples used will be for illustrative
purposes only and are not representations by the Fund of past or future yield or
return.
From time to time, in reports and promotional literature, each Fund
may compare its performance to, or cite the historical performance of, Overnight
Government repurchase agreements, U.S. Treasury bills, notes and bonds,
certificates of deposit, and six-month money market certificates or indices of
broad groups of unmanaged securities considered to be representative of, or
similar to, that Fund's portfolio holdings, such as:
Lipper Analytical Services, Inc. ("Lipper") is a widely-recognized
independent service that monitors and ranks the performance of
regulated investment companies. The Lipper performance analysis
includes the reinvestment of capital gain distributions and income
dividends but does not take sales charges into consideration. The
method of calculating total return data on indices utilizes actual
dividends on ex-dividend dates accumulated for the quarter and
reinvested at quarter end. This calculation is at variance with SEC
release 327 of August 8, 1972, which utilizes latest 12 month
dividends. The latter method is the one used by S&P.
Morningstar Mutual Funds ("Morningstar"), a semi-monthly publication
of Morningstar, Inc. Morningstar proprietary ratings reflect
historical risk-adjusted performance and are subject to change every
month. Funds with at least three years of performance history are
assigned ratings from one star (lowest) to five stars (highest).
Morningstar ratings are calculated from the funds' three-, five-, and
ten-year average annual returns (when available) and a risk factor
that reflects fund performance relative to three-month Treasury bill
monthly returns. Fund's returns are adjusted for fees and sales loads.
Ten percent of the funds in an investment category receive five stars,
22.5% receive four stars, 35% receive three stars, 22.5% receive two
stars, and the bottom 10% receive one star.
Salomon Brothers Inc., "Market Performance," a monthly publication
which tracks principal return, total return and yield on the Salomon
Brothers Broad Investment-Grade Bond Index and the components of the
Index.
Telerate Systems, Inc., a computer system to which the Adviser
subscribes which daily tracks the rates on money market instruments,
public corporate debt obligations and public obligations of the U.S.
Treasury and agencies of the U.S. Government.
The Wall Street Journal, a daily newspaper publication which lists the
yields and current market values on money market instruments, public
corporate debt obligations, public obligations of the U.S. Treasury
and agencies of the U.S. Government as well as common stocks,
preferred stocks, convertible preferred stocks, options and
commodities; in addition to indices prepared by the research
departments of such financial organizations as Lehman Bros., Merrill
Lynch, Pierce, Fenner and Smith, Inc., First Boston, Salomon Brothers,
Morgan Stanley, Goldman, Sachs & Co., Donaldson, Lufkin & Jenrette,
Value Line, Datastream International, James Capel, S.G. Warburg
Securities, County Natwest and UBS UK Limited, including information
provided by the Federal Reserve Board, Moody's, and the Federal
Reserve Bank.
Merrill Lynch, Pierce, Fenner & Smith, Inc., "Taxable Bond Indices," a
monthly corporate government index publication which lists principal,
coupon and total return on over 100 different
-29-
<PAGE>
taxable bond indices which Merrill Lynch tracks. They also list the
par weighted characteristics of each Index.
Lehman Brothers, Inc., "The Bond Market Report," a monthly publication
which tracks principal, coupon and total return on the Lehman
Govt./Corp. Index and Lehman Aggregate Bond Index, as well as all the
components of these Indices.
Standard & Poor's 500 Composite Stock Price Index and the Dow Jones
Industrial Average of 30 stocks are unmanaged lists of common stocks
frequently used as general measures of stock market performance. Their
performance figures reflect changes of market prices and quarterly
reinvestment of all distributions but are not adjusted for commissions
or other costs.
The Consumer Price Index, prepared by the U.S. Bureau of Labor
Statistics, is a commonly used measure of inflation. The Index shows
changes in the cost of selected consumer goods and does not represent
a return on an investment vehicle.
The NYSE composite of component indices--unmanaged indices of all
industrial, utilities, transportation, and finance stocks listed on
the NYSE.
The Russell 2500 Index, prepared by the Frank Russell Company,
consists of U.S. publicly traded stocks of domestic companies that
rank from 500 to 3000 by market capitalization. The Russell 2500
tracks the return on these stocks based on price appreciation or
depreciation and does not include dividends and income or changes in
market values caused by other kinds of corporate changes.
The Russell 2000 Index, prepared by the Frank Russell Company,
consists of U.S. publicly traded stocks of domestic companies that
rank from 1000 to 3000 by market capitalization. The Russell 2000
tracks the return on these stocks based on price appreciation or
depreciation and does not include dividends and income or changes in
market values caused by other kinds of corporate changes.
Reuters, a wire service that frequently reports on global business.
Standard & Poor's Utilities Index is an unmanaged capitalization
weighted index comprising common stock in approximately 40 electric,
natural gas distributors and pipelines, and telephone companies. The
Index assumes the reinvestment of dividends.
Moody's Stock Index, an unmanaged index of utility stock performance.
From time to time, in reports and promotional literature, performance
rankings and ratings reported periodically in national financial publications
such as MONEY, FORBES, BUSINESSWEEK, BARRON'S, FINANCIAL TIMES and FORTUNE may
also be used. In addition, quotations from articles and performance ratings and
ratings appearing in daily newspaper publications such as THE WALL STREET
JOURNAL, THE NEW YORK TIMES and NEW YORK DAILY NEWS may be cited.
-30-
<PAGE>
GENERAL INFORMATION
AUDITS AND REPORTS. The accounts of each Fund are audited twice a
------------------
year by Tait, Weller & Baker, independent certified public accountants, Two Penn
Center Plaza, Philadelphia, PA, 19102-1707. Shareholders of each Fund receive
semi-annual and annual reports, including audited financial statements, and a
list of securities owned.
TRANSFER AGENT. Administrative Data Management Corp., 10 Woodbridge
--------------
Center Drive, Woodbridge, NJ 07095-1198, an affiliate of FIMCO and FIC, acts as
transfer agent for each Fund and as redemption agent for regular redemptions.
The fees charged to a Fund by the Transfer Agent are $5.00 to open an account;
$3.00 for each certificate issued; $.65 per account per month; $10.00 for each
legal transfer of shares; $.45 per account per dividend declared; $5.00 for each
exchange of shares into a Fund; $5.00 for each partial withdrawal or complete
liquidation; and $1.00 per account per report required by any governmental
authority. Additional fees charged to a Fund by the Transfer Agent are assumed
by the Underwriter. The Transfer Agent reserves the right to change the fees on
prior notice to a Fund. The $5 administrative fee for exchange transactions
into a Fund, which is generally to be charged to the shareholder, is being borne
on a voluntary basis by that Fund for an indefinite period. Upon request from
shareholders, the Transfer Agent will provide an account history. For account
histories covering the most recent three year period, there is no charge. The
Transfer Agent charges a $5.00 administrative fee for each account history
covering the period 1983 through 1990 and $10.00 per year for each account
history covering the period 1974 through 1982. Account histories prior to 1974
will not be provided. If any communication from the Transfer Agent to a
shareholder is returned from the U.S. Postal Service marked as "Undeliverable"
two consecutive times, the Transfer Agent will cease sending any further
materials to the shareholder until the Transfer Agent is provided with a correct
address. Furthermore, if there is no known address for a shareholder for at
least one year, the Transfer Agent will charge such shareholder's account $40 to
cover the Transfer Agent's expenses in trying to locate the shareholder's
correct address. For the fiscal year ended December 31, 1994, GLOBAL FUND and
GOVERNMENT FUND paid $506,286 and $432,585, respectively, in transfer agency
fees. The Transfer Agent's telephone number is 1-800-423-4026.
5% SHAREHOLDERS. As of April 17, 1995, The Bank of New York, 48 Wall
---------------
Street, New York, NY 10286, Custodian of First Investors Single Payment and
Periodic Payment Plans for the Accumulation of Shares of First Investors Global
Fund, Inc., owned of record 15.8% of the outstanding Class A shares of GLOBAL
FUND for beneficial owners of such Plans and, as Custodian of First Investors
Single Payment and Periodic Payment Plans for Investment in First Investors
Government Fund, Inc., owned of record 19.1% of the outstanding Class A shares
of GOVERNMENT FUND for beneficial owners of such Plans.
As of April 17, 1995, the following beneficially owned more than 5% of
the outstanding Class B shares of the Funds listed below:
<TABLE>
<CAPTION>
Fund % of Shares Shareholder
- -------- ------------ -------------------------
<S> <C> <C>
Global 12.7% Stephen D. Gilbert
6 Stonecrest Ct.
Silver Springs, MD 20904
</TABLE>
-31-
<PAGE>
<TABLE>
<CAPTION>
Fund % of Shares Shareholder
- -------- ------------ -------------------------
<S> <C> <C>
Global 16.2% Don D. Stark
15115 Mesa Dr.
Humble, TX 77396
8.8% Zenon F. Zadworski
2147 Santa Cruz Ave.
Santa Clara, CA 95051
Government 24.9% Marjorie A. Engelhart
14 Revere Ct.
Suffern, N.Y. 10901
13.2 Robert Pollack and
Belle Pollack
30 Sandalwood Ave.
Valley Stream, N.Y. 11581
12.3 Florence S. Jack
1003 Bland Ave.
Hopewell, VA 23860
16.5% Frank R.H. Katterman
116 W. Old Ina Rd.
Tucson, AZ 85704
</TABLE>
TRADING BY PORTFOLIO MANAGERS AND OTHER ACCESS PERSONS. Pursuant to
------------------------------------------------------
Section 17(j) of the 1940 Act and Rule 17j-1 thereunder, each Fund and the
Adviser have adopted Codes of Ethics restricting personal securities trading by
portfolio managers and other access persons of the Funds. Among other things,
such persons: (a) must have all trades pre-cleared by the Adviser; (b) are
restricted from short-term trading; (c) must have duplicate statements and
transactions confirmations reviewed by a compliance officer; and (d) are
prohibited from purchasing securities of initial public offerings.
APPENDIX A
DESCRIPTION OF CORPORATE BOND RATINGS
STANDARD & POOR'S RATINGS GROUP
- -------------------------------
The ratings are based on current information furnished by the issuer
or obtained by S&P from other sources it considers reliable. S&P does not
perform any audit in connection with any rating and may, on occasion, rely on
unaudited financial information. The ratings may be changed, suspended, or
withdrawn as a result of changes in, or unavailability of, such information, or
based on other circumstances.
-32-
<PAGE>
The ratings are based, in varying degrees, on the following
considerations:
1. Likelihood of default-capacity and willingness of the obligor as
to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation;
2. Nature of and provisions of the obligation;
3. Protection afforded by, and relative position of, the obligation
in the event of bankruptcy, reorganization, or other arrangement
under the laws of bankruptcy and other laws affecting creditors'
rights.
AAA Debt rated "AAA" has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A Debt rated "A" has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
categories.
MOODY'S INVESTORS SERVICE, INC.
- -------------------------------
Aaa Bonds which are rated "Aaa" are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edged." Interest payments are protected by a large or exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa Bonds which are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities, fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risk appear somewhat greater than the Aaa
securities.
A Bonds which are rated "A" possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the future.
-33-
<PAGE>
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
APPENDIX B
DESCRIPTION OF COMMERCIAL PAPER RATINGS
STANDARD & POOR'S RATINGS GROUP
- -------------------------------
S&P's commercial paper rating is a current assessment of the likelihood of
timely payment of debt considered short-term in the relevant market. Ratings
are graded into several categories, ranging from "A-1" for the highest quality
obligations to "D" for the lowest.
A-1 This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus (+) designation.
MOODY'S INVESTORS SERVICE, INC.
- -------------------------------
Moody's short-term debt ratings are opinions of the ability of issuers to
repay punctually senior debt obligations which have an original maturity not
exceeding one year. Obligations relying upon support mechanisms such as
letters-of-credit and bonds of indemnity are excluded unless explicitly rated.
PRIME-1 Issuers (or supporting institutions) rated Prime-1 (P-1) have a
superior ability for repayment of senior short-term debt obligations. P-1
repayment ability will often be evidenced by many of the following
characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges and
high internal cash generation.
- Well-established access to a range of financial markets and assured
sources of alternate liquidity.
-34-
<PAGE>
Financial Statements
as of December 31, 1994
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
FIRST INVESTORS GLOBAL FUND, INC.
December 31, 1994
- --------------------------------------------------------------------------------
Amount
Invested
For Each
$10,000 of
Shares Security Value Net Assets
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS--91.7%
Japan--18.9%
310,000 Chichibu Onoda Cement Co. $1,764,830 $ 82
300 East Japan Railway Co. 1,497,444 70
98,000 Fujisawa Pharmacy Co. 1,060,830 50
150,000 Hitachi Co., Ltd. 1,486,905 70
20,000 Ito Yokado Co., Ltd. 1,068,456 50
150,000 Kajima Corp. 1,283,940 60
50,000 Kokusai Electric Co., Ltd. 962,210 45
15,000 Kyocera Corp. 1,111,055 52
6,000 Kyoritsu Air Tech., Inc. 146,737 7
15,000 Mabuchi Motor 1,127,592 53
300,000 Minebea Co., Ltd. 2,525,790 118
100,000 Mitsui Petrochemical Industries 882,020 41
22,500 Murata Mfg. Co., Ltd. 868,246 41
10,000 Nihon Jumbo Co., Ltd. 410,945 19
200 Nippon Telegraph & Telephone Corp. 1,766,062 82
500,000 *NKK Corp. 1,383,150 65
50,000 Nomura Securities Ltd. 1,037,385 48
30,000 Orix Corp. 1,106,544 52
10,000 Riso Kagaku Corp. 865,991 40
100,000 Sankyo Co., Ltd. 2,485,710 116
15,500 Sanyo Shinpan Finance Co., Ltd. 1,492,983 70
30,000 Secom Co., Ltd. 1,864,287 87
29,700 Seven Eleven Japan 2,384,453 112
40,000 Shimamura Corp. 2,004,608 94
3,000 Shohkoh Fund & Co. 619,424 29
7,000 Showa Corporation 68,056 3
37,000 Sony Corp. 2,095,317 98
253,000 Sumitomo Realty & Development 1,496,116 70
99,000 Sumitomo Trust and Banking 1,389,188 65
18,000 TDK Corp. 871,403 41
75,000 Tokio Marine & Fire Insurance Co., Ltd. 917,108 43
4,000 Tsutsumi Jewelry Co., Ltd. 364,839 17
- --------------------------------------------------------------------------------
40,409,624 1,890
- --------------------------------------------------------------------------------
United States--18.0%
25,000 American International Group, Inc. 2,450,000 114
57,000 *American Re Corporation 1,838,250 86
34,000 *AMR Corp. 1,810,500 85
45,000 A T & T Corp. 2,261,250 106
16,000 Capital Cities ABC Inc. 1,364,000 64
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
16,000 Chrysler Corp. 784,000 37
40,000 Dow Chemical Co. 2,690,000 126
30,000 Exxon Corp. 1,822,500 85
22,000 Federal National Mortgage Association 1,603,250 75
33,200 General Electric Co. 1,693,200 79
20,000 Gillette Co. 1,495,000 70
13,000 Hewlett-Packard Co. 1,298,375 61
22,000 International Paper Co. 1,658,250 77
26,000 J.C. Penney Co. 1,160,250 54
34,500 Johnson & Johnson 1,888,875 88
35,000 Kimberly Clark Corp. 1,767,500 83
85,000 MCI Communications 1,561,875 73
10,000 Minnesota Mining & Manufacturing Co. 533,750 25
50,000 Pepsico, Inc. 1,812,500 85
100,000 Unocal Corp. 2,725,000 127
6,080 *Viacom Inc. Class "A" 253,080 12
46,067 *Viacom Inc. Class "B" 1,871,472 88
55,000 York International Corp. 2,028,125 95
- --------------------------------------------------------------------------------
38,371,002 1,795
- --------------------------------------------------------------------------------
United Kingdom--8.8%
100,000 Abbey National PLC 673,510 31
300,000 Bass PLC 2,414,790 113
1,506,000 BET PLC 2,391,377 112
273,000 British Telecommunications PLC 1,612,311 75
229,500 Cadbury Schweppes PLC 1,547,496 72
434,000 General Electric PLC 1,867,198 87
120,000 Kwik Save Group PLC 1,032,564 48
303,800 Redland PLC 2,186,357 102
172,000 Smith (W.H.) & Son Group "A" PLC 1,288,951 60
572,000 Tomkins PLC 1,968,767 92
140,000 Zeneca Group PLC 1,925,266 90
- --------------------------------------------------------------------------------
18,908,587 882
- --------------------------------------------------------------------------------
France--5.8%
17,296 Compagnie De Saint Gobain 1,989,913 93
10,187 Euro Rscg Worldwide S.A. 1,049,855 49
6,000 Groupe Danone 842,080 39
42,000 *Renault SA 1,389,037 65
25,716 Societe Generale Paris 2,703,250 126
34,300 *Technip SA 1,567,565 73
33,000 Total SA 1,918,118 90
15,000 *Ugine SA (Note 4) 1,054,005 49
- --------------------------------------------------------------------------------
12,513,823 584
- --------------------------------------------------------------------------------
Australia--4.3%
101,050 Amcor Ltd. 730,501 34
223,912 Broken Hill Proprietary Ltd. 3,400,619 159
434,000 Coles Myer Ltd. 1,474,428 69
283,455 National Australia Bank Ltd. 2,273,366 106
494,603 Pacific Dunlop Ltd. 1,315,891 62
- --------------------------------------------------------------------------------
9,194,805 430
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
Germany--3.9%
7,750 Bayer AG 1,814,981 85
6,000 Deutsche Bank AG 2,787,068 130
5,875 Mannesmann AG 1,599,499 75
1,000 Schering AG 654,832 31
600 Siemens AG 249,675 12
3,500 Veba AG 1,212,117 57
- --------------------------------------------------------------------------------
8,318,172 390
- --------------------------------------------------------------------------------
Netherlands--3.8%
198,000 Elsevier NV CVA 2,065,199 97
34,000 International Nederlanden CVA 1,606,622 75
20,000 Royal Dutch Petroleum (ORD) 2,178,278 102
20,000 Unilever NV CVA 2,350,004 110
- --------------------------------------------------------------------------------
8,200,103 384
- --------------------------------------------------------------------------------
Switzerland--2.7%
4,500 Ciba-Geigy AG 2,685,569 126
3,200 Nestle AG 3,049,224 143
- --------------------------------------------------------------------------------
5,734,793 269
- --------------------------------------------------------------------------------
Malaysia--2.4%
166,666 Arab Malaysian Finance 430,765 20
616,800 Sime Darby Berhad 1,413,027 66
225,000 Telekom Malaysia 1,524,353 71
442,000 Tenaga Nasional Bhd 1,748,243 82
- --------------------------------------------------------------------------------
5,116,388 239
- --------------------------------------------------------------------------------
Singapore--2.4%
212,500 Development Bank of Singapore 2,186,243 102
333,000 Keppel Corp. 2,832,132 133
- --------------------------------------------------------------------------------
5,018,375 235
- --------------------------------------------------------------------------------
Sweden--2.3%
60,000 AGA AB Series "B" Free 552,858 26
88,000 Astra AB Series "A" Free 2,272,776 106
134,000 Pharmacia AB Series "A" Free 2,144,978 100
- --------------------------------------------------------------------------------
4,970,612 232
- --------------------------------------------------------------------------------
New Zealand--2.3%
1,050,000 Carter Holt Harvey Ltd. 2,150,820 101
525,000 Lion Nathan Ltd. 1,001,490 47
152,000 Telecom Corp. New Zealand Ltd. (Note 4) 496,234 23
25,000 Telecom Corp. New Zealand Ltd. (ADR) 1,284,375 60
- --------------------------------------------------------------------------------
4,932,919 231
- --------------------------------------------------------------------------------
Hong Kong --2.3%
201,000 China Light & Power 857,285 40
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
130,378 HSBC Holdings PLC 1,407,065 66
425,000 Swire Pacific Class "A" 2,647,623 124
- --------------------------------------------------------------------------------
4,911,973 230
- --------------------------------------------------------------------------------
Spain--2.2%
40,000 Empresa Nacional De Electricidad S.A. (ADR) 1,620,000 76
60,000 Repsol S.A. (ADR) 1,635,000 76
53,000 Tabacalera S.A. 1,413,277 66
- --------------------------------------------------------------------------------
4,668,277 218
- --------------------------------------------------------------------------------
Canada--1.8%
154,000 Canadian Pacific Ltd. (40,000 shares
restricted--Note 5) 2,310,000 108
33,000 Imperial Oil Ltd. 1,088,093 51
30,000 Westcoast Energy Inc. 475,873 22
- --------------------------------------------------------------------------------
3,873,966 181
- --------------------------------------------------------------------------------
Mexico--1.8%
137,000 Kimberly Clark Mexican "A" 1,621,740 76
54,000 Telefonos De Mexico S.A. (ADR) "L" 2,214,000 103
- --------------------------------------------------------------------------------
3,835,740 179
- --------------------------------------------------------------------------------
Denmark--1.8%
65,500 *Tele Danmark A/S (ADS) "B" 1,670,250 78
55,000 *Unidanmark A/S "A" Regd (30,000 shares
144A securities--Note 4) 2,114,855 99
- --------------------------------------------------------------------------------
3,785,105 177
- --------------------------------------------------------------------------------
Norway--1.6%
50,000 Hafslund Nyco Series "A" Free 1,068,150 50
219,000 Saga Petroleum Series "A" Free 2,379,720 111
- --------------------------------------------------------------------------------
3,447,870 161
- --------------------------------------------------------------------------------
Italy--1.2%
172,000 Istituto Mobiliare Italiano S.P.A. 1,057,060 49
580,000 Telecom Italia S.P.A. 1,508,754 71
- --------------------------------------------------------------------------------
2,565,814 120
- --------------------------------------------------------------------------------
Argentina--1.0%
29,612 Banco De Galicia Y Buenos Aires S.A.
Class "B" (ADR) 510,807 24
14,000 Telefonica Argentina S.A. Class "B" (ADR) 742,000 35
41,000 YPS Sociedad Anonima S.A. Class "D" (ADR) 876,375 41
- --------------------------------------------------------------------------------
2,129,182 100
- --------------------------------------------------------------------------------
Chile--.9%
25,000 Compania De Telefonos De Chile S.A. (ADR) 1,968,750 92
- --------------------------------------------------------------------------------
Portugal--.6%
98,600 *Banco Commercial Portuguese 1,288,238 60
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Austria--.5%
7,500 EVN 974,327 46
- --------------------------------------------------------------------------------
India--.4%
125,000 *Indo Gulf Fertilizers and Chemicals
Corp., Ltd. (GDR) (Note 4) 373,563 18
30,000 *ITC Ltd. (GDR) (Note 4) 363,417 17
10,000 *Reliance Industries Ltd. (GDR) (Note 4) 219,963 10
- --------------------------------------------------------------------------------
956,943 45
- --------------------------------------------------------------------------------
Total Value of Common Stocks (cost
$174,252,572) 196,095,388 9,170
- --------------------------------------------------------------------------------
PREFERRED STOCKS--.4%
Germany
1,500 Krones AG (cost $1,039,617) 841,926 39
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--5.3%
$11,277 M Paine Webber Inc., 5.85%., 1/3/95
(Collateralized by U.S. Treasury Notes
4 1/8%, 6/30/95) (cost $11,277,000) 11,277,000 527
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Total Value of Investments
(cost $186,569,189) 97.4% 208,214,314 9,736
Other Assets, Less Liabilities 2.6 5,639,021 264
- --------------------------------------------------------------------------------
Net Assets 100.0% $213,853,335 $10,000
================================================================================
*Non-income producing
See notes to financial statements
</TABLE>
Portfolio of Investments
FIRST INVESTORS GLOBAL FUND, INC.
At December 31, 1994, sector diversification of the portfolio was as
follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
Percentage
Sector Diversification of Net Assets Value
- ------------------------------------------------------------------
<S> <C> <C>
Financial Services 13.90% $ 29,711,565
Telecommunications 8.7 18,610,214
Energy 8.3 17,668,065
Drugs 7.9 16,933,817
Food/Beverage/Tobacco 5.2 11,030,997
Electrical Equipment 4.7 10,033,476
Industrial Services 4.4 9,332,823
Retail Trade 3.8 8,092,195
Household Products 3.4 7,234,244
Electronics/Instruments/Components 2.7 5,772,562
Transportation 2.6 5,617,944
Conglomerates 2.6 5,479,754
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Chemicals 2.5 5,377,662
Insurance 2.4 5,205,358
Building Materials 2.2 4,764,944
Media/Cable Television 2.1 4,479,054
Machinery/Diversified 1.9 4,233,708
Miscellaneous 1.6 3,610,043
Utilities 1.6 3,368,243
Real Estate/Construction 1.4 3,048,770
Manufacturing/Diversified 1.4 2,915,390
Automotive 1.0 2,173,037
Entertainment 1.0 2,124,552
Natural Gas .9 1,918,118
Paper/Forest Products .8 1,658,250
Housing .7 1,496,116
Gaming/Lodging .7 1,413,277
Retail/General Merchandise .6 1,288,951
Metals/Miscellaneous .5 1,054,005
Electric & Gas Utilities .4 857,285
Retail/Specialty .2 364,839
Consumer Durables .0 68,056
Repurchase Agreement 5.3 11,277,000
- ------------------------------------------------------------------
Total Investments 97.4 208,214,314
Other Assets, Less Liabilities 2.6 5,639,021
- ------------------------------------------------------------------
Net Assets 100.0% $213,853,335
==================================================================
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
FIRST INVESTORS GLOBAL FUND, INC.
December 31, 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments in securities, at value
(identified cost $186,569,189) (Note 1A) $208,214,314
Cash 4,794,357
Receivables:
Investment securities sold $1,721,691
Dividends and interest 741,289
Capital stock sold 469,060 2,932,040
----------
Other assets 20,335
------------
Total Assets 215,961,046
Liabilities
Payables:
Investment securities purchased 740,179
Capital stock redeemed 721,503
Dividend payable January 15, 1995 214,787
Accrued expenses 255,063
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Accrued advisory fee 176,179
----------
Total Liabilities 2,107,711
------------
Net Assets $213,853,335
Net Assets Consist of:
Capital paid in $199,409,805
Accumulated net realized loss from investments and
foreign currency transactions (7,208,770)
Net unrealized appreciation on investments and
translation of assets in foreign currencies 21,652,300
------------
Total $213,853,335
============
Net Asset Value and Redemption Price Per Share--Class
A (Note 7) ($213,853,335 divided by 36,613,393 shares
outstanding), 65,000,000 shares authorized, $1.00 par
value $5.84
=====
Maximum Offering Price Per Share--Class A ($5.84/.9375)* $6.23
=====
*On purchases of $25,000 or more, the sales charge is reduced.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
FIRST INVESTORS GLOBAL FUND, INC.
Year Ended December 31, 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Investment Income
Income:
Dividends (net of $325,441 foreign withholding
taxes) $ 4,477,522
Interest 409,780
------------
Total income 4,887,302
Expenses:
Advisory fee (Note 3) $ 2,138,787
Shareholder servicing costs (Note 3) 723,600
Distribution plan expenses (Note 6) 641,634
Custodian fees and expenses 157,741
Reports and notices to shareholders 155,554
Other expenses 116,167
-----------
Total expenses 3,933,483
------------
Net investment income 953,819
------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Realized and Unrealized Gain (Loss) from
Investments and Foreign Currency Transactions
(Note 2):
Net realized gain from:
Investments 23,911,030
Foreign currency transactions 43,179 23,954,209
-----------
Net unrealized appreciation (depreciation) on:
Investments (33,049,838)
Translation of assets in foreign currencies 7,175 (33,042,663)
----------- ------------
Net loss from investments and foreign currency (9,088,454)
------------
Net Decrease in Net Assets Resulting from
Operations $ (8,134,635)
============
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
FIRST INVESTORS GLOBAL FUND, INC.
- --------------------------------------------------------------------------------
Year Ended December 31 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income $ 953,819 $ 494,606
Net realized gain from investments and foreign
currency transactions 23,954,209 5,166,719
Net unrealized appreciation (depreciation) on
investments and translation of assets in foreign
currencies (33,042,663) 32,941,734
------------ ------------
Net increase (decrease) in net assets resulting
from operations (8,134,635) 38,603,059
------------ ------------
Distributions to Shareholders from:
Net investment income (993,371) (467,724)
Net realized gain on investments (5,853,794) --
------------ ------------
Total distributions (6,847,165) (467,724)
------------ ------------
Capital Share Transactions--Class A(a)
Issued 39,554,771 26,095,094
Issued on reinvestments 6,632,379 367,113
Redeemed (27,116,895) (35,845,632)
------------ ------------
Net increase (decrease) from capital share
transactions 19,070,255 (9,383,425)
------------ ------------
Total increase in net assets 4,088,455 28,751,910
Net Assets
Beginning of year 209,764,880 181,012,970
------------ ------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
End of year $213,853,335 $209,764,880
============ ============
(a) Capital shares issued and redeemed--Class A
(Note 7)
Issued 6,428,101 4,633,059
Issued on reinvestments 1,135,681 58,551
Redeemed (4,412,645) (6,674,210)
------------ ------------
Net increase (decrease) in shares 3,151,137 (1,982,600)
============ ============
See notes to financial statements
</TABLE>
Notes to Financial Statements
FIRST INVESTORS GLOBAL 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.
A. Security Valuation--A security listed or traded on any stock
exchange or the NASDAQ National Market System is valued at its last
sale price on that exchange or system prior to the time when assets are
valued. If no sale is reported at that time, the mean between the
current bid and asked prices is used. Securities for which over-the-counter
market quotations are readily available are valued at the mean
between the last current bid and asked prices. Securities for which
market quotations are not readily available and 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. For valuation purposes,
quotations of foreign securities in foreign currency are translated to
U.S. dollar equivalents using the foreign exchange quotation in effect.
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 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 December 31, 1994, the Fund had available capital loss
carryovers of $7,201,020, resulting from reorganizations in 1989 with
other First Investors funds. The capital loss carryovers, as limited by
the provisions of the 1986 Tax Reform Act, expire as follows:
<TABLE>
<CAPTION>
Amount of
Capital Loss
Year Carryover Expiring
- ---- ------------------
<S> <C>
1995 $1,136,862
1996 1,659,182
1997 4,404,976
</TABLE>
<PAGE>
<TABLE>
<S> <C>
----------
$7,201,020
==========
</TABLE>
C. Foreign Currency Translations--The books and records are maintained
in U.S. dollars. For valuation purposes, quotations of foreign
securities in foreign currency are translated to U.S. dollar
equivalents using the daily rate of exchange. Purchases and sales of
investment securities, dividend income and certain expenses are
translated to U.S. dollars at the rates of exchange prevailing on the
respective dates of such transactions.
The Fund does not isolate that portion of gains and losses on
investments which is due to changes in foreign exchange rates from that
which is due to changes in market prices of the investments. Such
fluctuations are included with the net realized and unrealized gains
and losses from investments.
Net realized and unrealized gain (loss) from foreign currency
transactions includes gains and losses arising from the sales of
foreign currency and gains and losses between the ex and payment dates
on dividends and foreign withholding taxes.
D. Distributions to Shareholders--Distributions to shareholders from
net investment income and net realized gains are declared and paid
annually.
The timing and characterization of income and capital gain
distributions are determined in accordance with federal tax regulations
which may differ from generally accepted accounting principles. These
differences are primarily due to differing treatments for foreign
currency transactions, capital loss carryforwards, deferral of wash
sales and post October losses.
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, except that certain dividends from foreign
securities are recorded on the ex-dividend date or as soon thereafter
as the Fund is informed of the dividend. Interest income and estimated
expenses are accrued daily.
2. Securities Transactions--For the year ended December 31, 1994,
purchases and sales of investment securities, excluding foreign
currencies, United States Treasury Bills and repurchase agreements,
aggregated $115,200,193 and $114,014,750, respectively.
At December 31, 1994, the cost of investments for federal income tax
purposes was $186,576,939. Accumulated net unrealized appreciation on
investments was $21,637,375, consisting of $28,380,312 gross unrealized
appreciation and $6,742,937 gross unrealized depreciation.
3. Advisory Fee and Other Transactions With Affiliates (Also see Note
6)--Certain officers and directors of the Fund are officers and
<PAGE>
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. Officers and directors of
the Fund received no remuneration from the Fund for serving in such
capacities. Their remuneration (together with certain other expenses of
the Fund) is paid by FIMCO or FIC.
The Investment Advisory Agreement provides as compensation to FIMCO an
annual fee, payable monthly, at the rate of 1% on the first $250
million of the Fund's average daily net assets, declining by .03% on
each $250 million thereafter, down to .91% on average daily net assets
over $750 million.
Pursuant to certain state regulations, FIMCO has agreed to reimburse
the Fund if and to the extent that the Fund's aggregate operating
expenses, including the advisory fee but generally excluding interest,
taxes, brokerage commissions and extraordinary expenses, exceed any
limitation on expenses applicable to the Fund in those states (unless
waivers of such limitations have been obtained). The amount of any such
reimbursement is limited to the yearly advisory fee. For the year ended
December 31, 1994, no reimbursement was required pursuant to these
provisions.
During the year ended December 31, 1994, FIC, as underwriter, received
$1,529,863 in commissions after allowing $3,438 to other dealers.
Shareholder servicing costs included $437,580 in transfer agent fees
paid to ADM and $217,315 in custodian fees paid to FFS.
Wellington Management Company serves as the investment subadviser to
the Fund. The subadviser is paid by FIMCO and not by the Fund.
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
December 31, 1994, the Fund held six 144A securities with an aggregate
value of $3,660,739, representing 1.7% of the Fund's net assets. These
securities are valued as set forth in Note 1A.
5. Restricted Securities--On February 14, 1994, the Fund purchased
40,000 shares of common stock of Canadian Pacific Ltd. at a cost of
$672,580. This security, which was acquired through a private
placement, may not be sold or transferred without prior registration
under the Securities Act of 1933 or pursuant to an exemption therefrom.
If and when the Fund sells this security, additional costs for
registration may be required. The security is valued based upon the
price of the unrestricted shares of common stock. At December 31, 1994,
the value of the above restricted stock was $600,000.
6. Distribution Plan--Pursuant to a Distribution Plan adopted under
Rule 12b-1 of the 1940 Act, the Fund is authorized to pay FIC a fee
equal to .30% of the Fund's average net assets on an annualized basis
each fiscal 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.
<PAGE>
7. Capital Stock--By action of the Board of Directors, the Fund amended
its Articles of Incorporation on October 21, 1994 so that of the
100,000,000 shares originally authorized, 65,000,000 shares were
allocated as Class A capital stock and 35,000,000 shares were allocated
as Class B capital stock. As of December 31, 1994, only Class A shares
have been issued.
<PAGE>
Independent Auditor's Report
To the Shareholders and Board of Directors of
First Investors Global Fund, Inc.
We have audited the accompanying statement of assets and liabilities of
First Investors Global Fund, Inc., including the portfolio of
investments, as of December 31, 1994, and the related statement of
operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended and financial
highlights for each of the ten years in the period then ended. 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
December 31, 1994, by correspondence with the custodian and brokers. 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 Global Fund, Inc. at December 31,
1994, and the results of its operations, changes in its net assets and
financial highlights for each of the respective periods presented, in
conformity with generally accepted accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
January 31, 1995
<PAGE>
Portfolio of Investments
FIRST INVESTORS GOVERNMENT FUND, INC.
December 31, 1994
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal
Amount Security Value
- --------------------------------------------------------------------------------
<S> <C> <C>
MORTGAGE-BACKED CERTIFICATES -- 82.7%
Government National Mortgage Association I
$20,275 M 7%, 10/15/2023-3/15/2024 $ 18,199,765
17,817 M 8%, 1/15/2024-4/15/2024 17,035,153
39,205 M 8 1/2%, 4/15/2016-9/15/2024 38,587,786
49,502 M 9%, 1/15/2016-10/15/2017 50,105,660
54,752 M 9 1/2%, 4/15/2016-7/15/2024 56,579,161
581 M 11 1/2%, 10/15/2012-5/15/2015 639,947
- --------------------------------------------------------------------------------
Total Value of Mortgage-Backed
Certificates (cost $188,676,054) 181,147,472
- --------------------------------------------------------------------------------
UNITED STATES TREASURY OBLIGATIONS -- 17.1%
United States Treasury Bills
2,000 M 4.87%, 1/19/1995 1,995,130
21,500 M 4.84%, 2/9/1995 21,387,269
14,250 M 5.25%, 2/9/1995 14,168,953
- --------------------------------------------------------------------------------
Total Value of United States Treasury
Obligations (cost $37,551,352) 37,551,352
- --------------------------------------------------------------------------------
Total Value of Investments (cost $226,227,406) 99.8% 218,698,824
Other Assets, Less Liabilities .2 362,122
- --------------------------------------------------------------------------------
Net Assets 100.0% $219,060,946
================================================================================
See notes to financial statements
</TABLE>
Statement of Assets and Liabilities
FIRST INVESTORS GOVERNMENT FUND, INC.
December 31,1994
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments in securities, at value (identified
cost $226,227,406) (Note 1A) $218,698,824
Cash 350,491
Receivables:
Interest $1,324,885
Capital stock sold 416,722 1,741,607
----------
Other assets 27,482
------------
Total Assets 220,818,404
Liabilities
Payables:
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Capital stock redeemed 1,225,481
Dividend payable January 20, 1995 238,545
Accrued expenses 156,083
Accrued advisory fee 137,349
----------
Total Liabilities 1,757,458
------------
Net Assets $219,060,946
============
Net Assets Consist of:
Capital paid in $252,105,245
Undistributed net investment income 318,248
Accumulated net realized loss on investment
transactions (25,833,965)
Net unrealized depreciation in value of investments (7,528,582)
------------
Total $219,060,946
============
Net Asset Value and Redemption Price Per
Share--Class A (Note 5) ($219,060,946 divided by
20,859,813 shares outstanding), 500,000,000 shares
authorized, $.01 par value $10.50
============
Maximum offering price per share--Class A
($10.50/.9375)* $11.20
============
*On purchases of $25,000 or more, the sales charge is reduced.
See notes to financial statements
</TABLE>
Statement of Operations
FIRST INVESTORS GOVERNMENT FUND, INC.
Year Ended December 31, 1994
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C> <C>
Investment Income
Interest income $ 18,949,162
Expenses:
Advisory fee (Note 3) $ 2,344,229
Distribution plan expenses (Note 4) 737,692
Shareholder servicing costs (Note 3) 588,269
Reports and notices to shareholders 125,222
Other expenses 139,124
------------
Total expenses 3,934,536
Less: Portion of advisory fee waived (Note 3) 500,000
------------
Net expenses 3,434,536
------------
Net investment income 15,514,626
Realized and Unrealized Gain (Loss) on
Investments (Note 2):
Net realized loss on investments (20,964,402)
Net unrealized depreciation of investments (3,213,275)
------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Net loss on investments (24,177,677)
------------
Net Decrease in Net Assets Resulting from
Operations ($8,663,051)
============
See notes to financial statements
</TABLE>
Statement of Changes in Net Assets
FIRST INVESTORS GOVERNMENT FUND, INC.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Year Ended December 31 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income $ 15,514,626 $ 18,673,601
Net realized loss on investments (20,964,402) (2,124,965)
Net unrealized depreciation of investments (3,213,275) (4,560,771)
------------ ------------
Net increase (decrease) in net assets resulting
from operations (8,663,051) 11,987,865
------------ ------------
Dividends to Shareholders from:
Net investment income (15,227,729) (19,189,982)
------------ ------------
Capital Share Transactions--Class A (a)
Issued 13,055,386 26,448,768
Issued on reinvestments 12,577,537 15,850,277
Redeemed (70,979,348) (52,764,698)
------------ ------------
Net decrease in net assets from capital share
transactions (45,346,425) (10,465,653)
------------ ------------
Total decrease in net assets (69,237,205) (17,667,770)
Net Assets
Beginning of year 288,298,151 305,965,921
------------ ------------
End of year (including undistributed net investment
income of $318,248 and $31,351, respectively) $219,060,946 $288,298,151
============ ============
(a) Capital Shares Issued and Redeemed--Class A
(Note 5)
Issued 1,192,645 2,241,778
Issued on reinvestments 1,159,051 1,346,765
Redeemed (6,453,882) (4,484,422)
------------ ------------
Net decrease in shares (4,102,186) (895,879)
============ ============
</TABLE>
<PAGE>
<TABLE>
<S> <C>
See notes to financial statements
</TABLE>
Notes to Financial Statements
FIRST INVESTORS GOVERNMENT 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.
A. Security Valuation--U.S. Government obligations are traded primarily
in the over-the-counter markets. Such securities are valued at the mean
between the last bid and asked prices as furnished by dealers who make
a market in such securities. Securities for which market quotations are
not readily available are valued on a consistent basis at fair value as
determined in good faith by or under the direction 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 continue 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,
federal income taxes. At December 31, 1994, the Fund had capital loss
carryovers of $23,984,420 of which $369,131 expires in 1998, $1,892,743
expires in 2001 and $21,722,546 expires in 2002.
C. Distributions to Shareholders-- Dividends to shareholders from net
investment income are declared daily and paid monthly.
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
losses.
D. 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. Interest income and
estimated expenses are accrued daily.
2. Securities Transactions--For the year ended December 31, 1994,
purchases and sales (including pay-downs) of other than short-term U.S.
Govern-ment obligations and corporate notes, aggregated $614,313,312
and $658,062,394, respectively.
At December 31, 1994, the cost of investments for federal income tax
purposes was $226,227,406. Accumulated net unrealized depreciation on
investments was $7,528,582 consisting entirely of unrealized
depreciation.
3. Advisory Fee and Other Transactions With Affiliates (Also see Note
4)--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.
<PAGE>
("ADM") and/or First Financial Savings Bank, S.L.A. ("FFS"), custodian
of the Fund's Individual Retirement Accounts. Officers and directors of
the Fund received no remuneration from the Fund for serving in such
capacities. Their remuneration (together with certain other expenses of
the Fund) is paid by FIMCO or FIC.
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. Since July 1987,
FIMCO has voluntarily waived .25% of the fee on the first $200 million
of the Fund's average daily net assets. For the year ended December 31,
1994, this reduction amounted to $500,000.
Pursuant to certain state regulations, FIMCO has agreed to reimburse
the Fund if and to the extent that the Fund's aggregate operating
expenses, including the advisory fee but generally excluding interest,
taxes, brokerage commissions and extraordinary expenses, exceed any
limitation on expenses applicable to the Fund in those states (unless
waivers of such limitations have been obtained). The amount of any such
reimbursement is limited to the yearly advisory fee. For the year ended
December 31,1994, no reimbursement was required pursuant to these
provisions.
For the year ended December 31, 1994, FIC, as underwriter, received
$470,827 in commissions after allowing $1,866 to other dealers.
Shareholder servicing costs included $344,021 in transfer agent fees
paid to ADM, and $155,684 in custodian fees paid to FFS.
4. Distribution Plan--Pursuant to a Distribution Plan adopted under
Rule 12b-1 of the 1940 Act, the Fund may pay a fee to FIC in an amount
up to .30% of the Fund's average net assets on an annualized basis each
fiscal 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.
5. Capital Stock--By the action of the Board of Directors, the Fund
amended its Articles of Incorporation on October 21, 1994 so that of
the 1,000,000,000 shares originally authorized, 500,000,000 shares were
reclassified as Class A capital stock and 500,000,000 shares as Class B
capital stock. As of December 31, 1994, only Class A shares have been
issued.
<PAGE>
Independent Auditor's Report
To the Shareholders and Board of Directors of
First Investors Government Fund, Inc.
We have audited the accompanying statement of assets and liabilities of
First Investors Government Fund, Inc., including the portfolio of
investments, as of December 31, 1994, and the related statement of
operations for the year then ended, the statement of changes in net
assets for each of the two years then ended and financial highlights
for each of the ten years in the period then ended. 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 December 31, 1994, 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 Government Fund, Inc. at December
31, 1994, and the results of its operations, changes in its net assets
and financial highlights for each of the respective years presented, in
conformity with generally accepted accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
January 31, 1995
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements: Financial Statements are set forth in Part B,
Statement of Additional Information
(b) Exhibits:
(1)/8/ Articles of Restatement
(2)/8/ Amended and Restated By-Laws
(3) Not Applicable
(4)/2/ Specimen Certificate
(5)a./8/ Investment Advisory Agreement between
Registrant and First Investors Management
Company, Inc.
b./8/ Subadvisory Agreement
(6)/7/ Underwriting Agreement between Registrant and First Investors
Corporation.
(7) Not Applicable
(8)/1/ Custodian Agreement between Registrant and Brown Brothers
Harriman & Co.
(9)/1/ Administration Agreement between Registrant, First Investors
Management Company, Inc., First Investors Corporation and
Administrative Data Management Corp.
(10)/5/ Opinion of counsel
(11)a. Consent of independent accountants
b./5/ Powers of Attorney
(12) Not Applicable
(13)/1/ Undertaking of the Co-Underwriters
C-1
<PAGE>
(14)a./4/ First Investors Profit Sharing/Money Purchase Pension
Retirement Plan for Sole Proprietor ships, Partnerships and
Corporations
b./5/ First Investors Individual Retirement Account
c./3/ First Investors 403(b) Custodial Account
d./5/ First Investors SEP-IRA and SARSEP-IRA
(15)a./8/ Amended and Restated Class A Distribution Plan
b./8/ Class B Distribution Plan
(16) Performance Calculations
________________
/1/ Previously filed with the Commission
/2/ Incorporated by reference from Post-Effective Amendment No. 10 to
Registrant's Registration Statement (File No. 2-71911) filed on October 16,
1989.
/3/ Incorporated by reference from Post-Effective Amendment No. 13 to
Registrant's Registration Statement (File No. 2-71911) filed on March 1,
1991.
/4/ Incorporated by reference from Post-Effective Amendment No. 15 to
Registrant's Registration Statement (File No. 2-71911) filed on March 15,
1992.
/5/ Incorporated by reference from Post-Effective Amendment No. 16 to
Registrant's Registration Statement (File No. 2-71911) filed on April 30,
1993.
/6/ Incorporated by reference from Registrant's Rule 24f-2 Notice for its
fiscal year ended December 31, 1994 filed on February 21, 1995.
/7/ Incorporated by reference from Post-Effective Amendment No. 17 to
Registrant's Registration Statement (File No. 2-71911) filed on April 28,
1994.
/8/ Incorporated by reference from Post-Effective Amendment No. 19 to
Registrant's Registration Statement (File No. 2-71911) filed on October 18,
1994.
Item 25. Persons Controlled by or under common control with Registrant
There are no persons controlled by or under common control with the
Registrant.
C-2
<PAGE>
Item 26. Number of Holders of Securities
<TABLE>
<CAPTION>
Number of Record
Holders as of
Title of Class February 28, 1995
- ----------------- -----------------
<S> <C>
Class A shares 41,637
Class B shares 30
</TABLE>
Item 27. Indemnification
Article X, Section 1 of the By-Laws of Registrant provides as follows:
Section 1. Every person who is or was an officer or director of the
Corporation (and his heirs, executors and administrators) shall be indemnified
by the Corporation against reasonable costs and expenses incurred by him in
connection with any action, suit or proceeding to which he may be made a party
by reason of his being or having been a director or officer of the Corporation,
except in relation to any action, suit or proceeding in which he has been
adjudged liable because of negligence or misconduct, which shall be deemed to
include willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office. In the absence of an
adjudication which expressly absolves the director or officer of liability to
the Corporation or its stockholders for negligence or misconduct, within the
meaning thereof as used herein, or in the event of a settlement, each director
or officer (and his heirs, executors and administrators) shall be indemnified by
the Corporation against payments made, including reasonable costs and expenses,
provided that such indemnity shall be conditioned upon the prior determination
by a resolution of two-thirds of the Board of Directors, who are not involved in
the action, suit or proceeding that the director or officer has no liability by
reason of negligence or misconduct within the meaning thereof as used herein,
and provided further that if a majority of the members of the Board of Directors
of the Corporation are involved in the action, suit or proceeding, such
determination shall have been made by a written opinion of independent counsel.
Amounts paid in settlement shall not exceed costs, fees and expenses which would
have been reasonably incurred if the action, suit or proceeding had been
litigated to a conclusion. Such a determination by the Board of Directors or by
independent counsel, and the payment of amounts by the Corporation on the basis
thereof, shall not prevent a stockholder from challenging such indemnification
by appropriate legal proceedings
C-3
<PAGE>
on the grounds that the person indemnified was liable to the Corporation or its
security holders by reason of negligence or misconduct within the meaning
thereof as used herein. The foregoing rights and indemnification shall not be
exclusive of any other rights to which any officer or director (or his heirs,
executors and administrators) may be entitled to according to law.
The Registrant's Investment Advisory Agreement provides as follows:
The Manager shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Company or any Series in connection with the
matters to which this Agreement relate except a loss resulting from the willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement. Any person, even though also an officer, partner, employee, or agent
of the Manager, who may be or become an officer, Board member, employee or agent
of the Company shall be deemed, when rendering services to the Company or acting
in any business of the Company, to be rendering such services to or acting
solely for the Company and not as an officer, partner, employee, or agent or one
under the control or direction of the Manager even though paid by it.
The Registrant's Underwriting Agreement provides as follows:
The Underwriter agrees to use its best efforts in effecting the sale and
public distribution of the shares of the Fund through dealers and to perform its
duties in redeeming and repurchasing the shares of the Fund, but nothing
contained in this Agreement shall make the Underwriter or any of its officers
and directors or shareholders liable for any loss sustained by the Fund or any
of its officers, directors, or shareholders, or by any other person on account
of any act done or omitted to be done by the Underwriter under this Agreement
provided that nothing herein contained shall protect the Underwriter against any
liability to the Fund or to any of its shareholders to which the Underwriter
would otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of its duties as Underwriter or by reason of its
reckless disregard of its obligations or duties as Underwriter under this
Agreement. Nothing in this Agreement shall protect the Underwriter from any
liabilities which they may have under the Securities Act of 1933 or the
Investment Company Act of 1940.
C-4
<PAGE>
Reference is hereby made to the Maryland Corporations and Associations
Annotated Code, Sections 2-417, 2-418 (1986).
The general effect of this Indemnification will be to indemnify the
officers and directors of the Registrant from costs and expenses arising from
any action, suit or proceeding to which they may be made a party by reason of
their being or having been a director or officer of the Registrant, except where
such action is determined to have arisen out of the willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the director's or officer's office.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has been
informed that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable. See Item 32 herein.
Item 28. Business and Other Connections of Investment Adviser
First Investors Management Company, Inc., the Registrant's Investment
Adviser, also serves as Investment Adviser to:
First Investors Cash Management Fund, Inc.
First Investors Series Fund
First Investors Fund For Income, Inc.
First Investors Government Fund, Inc.
First Investors High Yield Fund, Inc.
First Investors Insured Tax Exempt Fund, Inc.
First Investors Life Series Fund
First Investors Multi-State Insured Tax Free Fund
First Investors New York Insured Tax Free Fund, Inc.
First Investors Special Bond Fund, Inc.
First Investors Tax-Exempt Money Market Fund, Inc.
First Investors U.S. Government Plus Fund
First Investors Series Fund II, Inc.
Affiliations of the officers and directors of the Investment Adviser are
set forth in Part B, Statement of Additional Information, under "Directors and
Officers."
Item 29. Principal Underwriters
(a) First Investors Corporation, Underwriter of the Registrant, is also
underwriter for:
C-5
<PAGE>
First Investors Cash Management Fund, Inc.
First Investors Series Fund
First Investors Fund For Income, Inc.
First Investors Government Fund, Inc.
First Investors High Yield Fund, Inc.
First Investors Insured Tax Exempt Fund, Inc.
First Investors Multi-State Insured Tax Free Fund
First Investors New York Insured Tax Free Fund, Inc.
First Investors Tax-Exempt Money Market Fund, Inc.
First Investors U.S. Government Plus Fund
First Investors Series Fund II, Inc.
(b) The following persons are the officers and directors of the
Underwriter:
<TABLE>
<CAPTION>
Position and Position and
Name and Principal Office with First Office with
Business Address Investors Corporation Registrant
- ----------------------- --------------------- ---------------
<S> <C> <C>
Glenn O. Head Chairman and Director President
95 Wall Street and Director
New York, NY 10005
John T. Sullivan Director Chairman of the
95 Wall Street Board of
New York, NY 10005 Directors
Roger L. Grayson Director Director
95 Wall Street
New York, NY 10005
Joseph I. Benedek Treasurer Treasurer
10 Woodbridge Center
Drive
Woodbridge, NJ 07095
Concetta Durso Assistant Vice Vice President
95 Wall Street President and and Secretary
New York, NY 10005 Assistant Secretary
Lawrence A. Fauci Senior Vice President None
95 Wall Street and Director
New York, NY 10005
</TABLE>
C-6
<PAGE>
<TABLE>
<CAPTION>
Position and Position and
Name and Principal Office with First Office with
Business Address Investors Corporation Registrant
- ----------------------- --------------------- ---------------
<S> <C> <C>
Kathryn S. Head Vice President, Director
10 Woodbridge Center Chief Financial
Drive Officer and Director
Woodbridge, NJ 07095
Louis Rinaldi Senior Vice None
10 Woodbridge Center President
Drive
Woodbridge, NJ 07095
Frederick Miller Vice President None
10 Woodbridge Center
Drive
Woodbridge, NJ 07095
Larry R. Lavoie Secretary and None
95 Wall Street General Counsel
New York, NY 10005
Carol Lerner Brown Assistant Secretary Assistant
95 Wall Street Secretary
New York, NY 10005
Marvin M. Hecker President None
95 Wall Street
New York, NY 10005
Matthew Smith Vice President None
10 Woodbridge Center
Drive
Woodbridge, NJ 07095
Howard M. Factor Vice President None
95 Wall Street
New York, NY 10005
Jeremiah J. Lyons Director None
56 Weston Avenue
Chatham, NJ 07928
Jane W. Kruzan Director None
15 Norwood Avenue
Summit, NJ 07901-0493
</TABLE>
C-7
<PAGE>
<TABLE>
<CAPTION>
Position and Position and
Name and Principal Office with First Office with
Business Address Investors Corporation Registrant
- ----------------------- --------------------- ---------------
<S> <C> <C>
Kellen M. Carson Vice President None
95 Wall Street
New York, NY 10005
Anne Condon Vice President None
10 Woodbridge Center
Drive
Woodbridge, NJ 07095
</TABLE>
(c) Not applicable
Item 30. Location of Accounts and Records
Physical possession of the books, accounts and records of the
Registrant are held by First Investors Management Company, Inc. and its
affiliated companies, First Investors Corporation and Administrative Data
Management Corp., at their corporate headquarters, 95 Wall Street, New York, NY
10005 and administrative offices, 10 Woodbridge Center Drive, Woodbridge, NJ
07095, except for those maintained by the Registrant's Custodian, Brown Brothers
Harriman & Co., 40 Water Street, Boston, MA 02109.
Item 31. Management Services
Inapplicable
Item 32. Undertakings
The Registrant undertakes to carry out all indemnification provisions
of its Articles of Incorporation, Advisory Agreement, Subadvisory Agreement and
Underwriting Agreement in accordance with Investment Company Act Release No.
11330 (September 4, 1980) and successor releases.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions under Item 27 herein, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange
C-8
<PAGE>
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The Registrant hereby undertakes to furnish a copy of its latest
annual report to shareholders, upon request and without charge, to each person
to whom a prospectus is delivered.
C-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant represents that this Amendment
meets all the requirements for effectiveness pursuant to Rule 485(b) under the
Securities Act of 1933, and has duly caused this Post-Effective Amendment to
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on the
17th day of April, 1995.
FIRST INVESTORS GLOBAL
FUND, INC.
(Registrant)
By: /s/ Glenn O. Head
---------------------------
Glenn O. Head
President and Director
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Amendment to this Registration Statement
has been signed below by the following persons in the capacities and on the
dates indicated.
/s/ Glenn O. Head Principal Executive April 17, 1995
- --------------------- Officer and Director
Glenn O. Head
/s/ Joseph I. Benedek Principal Financial April 17, 1995
- --------------------- and Accounting Officer
Joseph I. Benedek
/s/ Kathryn S. Head Director April 17, 1995
- ---------------------
Kathryn S. Head
/s/ James J. Coy Director April 17, 1995
- ---------------------
James J. Coy
/s/ F. William Ortman Director April 17, 1995
- ---------------------
F. William Ortman, Jr.
/s/ Roger L. Grayson Director April 17, 1995
- ---------------------
Roger L. Grayson
/s/ Herbert Rubinstein Director April 17, 1995
- ----------------------
Herbert Rubinstein
/s/ James M. Srygley Director April 17, 1995
- ---------------------
James M. Srygley
/s/ John T. Sullivan Director April 17, 1995
- ---------------------
John T. Sullivan
/s/ Rex R. Reed Director April 17, 1995
- ---------------------
Rex R. Reed
/s/ Robert F. Wentworth Director April 17, 1995
- -----------------------
Robert F. Wentworth
*By: /s/ Larry R. Lavoie
-------------------------
Larry R. Lavoie
Attorney-in-fact
C-10
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------ -----------
11(a) Consent of Accountants
11(b) Power of Attorney
16 Performance Calculations
<PAGE>
EXHIBIT 23
Consent of Independent Certified Public Accountants
First Investors Global Fund, Inc.
95 Wall Street
New York, New York 10005
We consent to the use in Post-Effective Amendment No. 20 to the
Registration Statement on Form N-1A (File No. 2-71911) of our report dated
January 31, 1995 relating to the December 31, 1994 financial statements of First
Investors Global Fund, Inc., which are included in said Registration Statement.
/s/ Tait, Weller & Baker
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
April 11, 1995
<PAGE>
EXHIBIT 24
First Investors Global Fund, Inc.
Power of Attorney
-----------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned officer and/or director
of First Investors Global Fund, Inc. hereby appoints Larry R. Lavoie or Glenn O.
Head, and each of them, his true and lawful attorney to execute in his name,
place and stead and on his behalf a Registration Statement on Form N-1A for the
registration pursuant to the Securities Act of 1933 and the Investment Company
Act of 1940 of shares of common stock of said Maryland corporation and any and
all amendments to said Registration Statement (including post-effective
amendments), and all instruments necessary or incidental in connection therewith
and to file the same with the Securities and Exchange Commission. Said attorney
shall have full power and authority to do and perform in the name and on behalf
of the undersigned every act whatsoever requisite or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do, the undersigned hereby ratifying and approving all such acts of said
attorney.
IN WITNESS WHEREOF, the undersigned has executed this instrument this this
this 19th day of January, 1995.
/s/ James M. Srygley
--------------------
James M. Srygley
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000352564
<NAME> FIRST INVESTORS GLOBAL FUND, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 186,569
<INVESTMENTS-AT-VALUE> 208,214
<RECEIVABLES> 2,932
<ASSETS-OTHER> 4,815
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 215,961
<PAYABLE-FOR-SECURITIES> 740
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,368
<TOTAL-LIABILITIES> 2,108
<SENIOR-EQUITY> 099,410
<PAID-IN-CAPITAL-COMMON> 199,410
<SHARES-COMMON-STOCK> 36,613
<SHARES-COMMON-PRIOR> 33,462
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7,209)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21,652
<NET-ASSETS> 213,853
<DIVIDEND-INCOME> 4,477
<INTEREST-INCOME> 4100
<OTHER-INCOME> 0
<EXPENSES-NET> (3,933)
<NET-INVESTMENT-INCOME> 954
<REALIZED-GAINS-CURRENT> 23,954
<APPREC-INCREASE-CURRENT> (33,043)
<NET-CHANGE-FROM-OPS> (8,135)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (993)
<DISTRIBUTIONS-OF-GAINS> (5,854)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,428
<NUMBER-OF-SHARES-REDEEMED> 4,413
<SHARES-REINVESTED> 1,136
<NET-CHANGE-IN-ASSETS> 4,088
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (26,779)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,139
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,934
<AVERAGE-NET-ASSETS> 213,879
<PER-SHARE-NAV-BEGIN> 6.27
<PER-SHARE-NII> .028
<PER-SHARE-GAIN-APPREC> (.265)
<PER-SHARE-DIVIDEND> .028
<PER-SHARE-DISTRIBUTIONS> .165
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 5.84
<EXPENSE-RATIO> 1.84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT 99.1
SEC Standardized Total Returns
Average Annual Total Return and Total Return for First Investors
Funds are calculated using the following standardized formula:
Average Annual
Total Return = ((ERV / P) ) - 1
Total Return = ((ERV - P) / P)
WHERE: ERV = Ending redeemable value of a hypothetical
$1,000 investment made at the beginning of
1, 5, or 10 year periods (or fractional
period thereof.)
P = a hypothetical initial investment of $1,000
N = number of years
The following table lists the information used to calculate the standardized
average annual total return and total return for First Investors Global Fund,
Inc. as of December 31, 1994.
<TABLE>
<CAPTION>
AVE. ANNUAL TOTAL
ERV P N TOTAL RETURN RETURN
--- - - ------------ ------
<S> <C> <C> <C> <C> <C>
1 year: $ 901.80 $1,000.00 1.00 (9.82%) (9.82%)
5 years: $1,083.10 $1,000.00 5.00 1.61% 8.31%
10 years: $3,594.40 $1,000.00 10.00 13.65% 259.44%
</TABLE>
<PAGE>
EXHIBIT 99.2
NAV Only Total Returns
Average Annual Total Return and Total Return for First Investors
Funds are calculated using the following standardized formula:
Average Annual
Total Return = ((ERV - P) ) - 1)
Total Return = ((ERV - P) - P)
WHERE: ERV = Ending redeemable value of a hypothetical
$1,000 investment made at the beginning of
1, 5, or 10 year periods (or fractional
period thereof.)
P = a hypothetical initial investment of $1,000
N = number of years
The following table lists the information used to calculate the average annual
total return and total return for First Investors Global Fund, Inc. as of
December 31, 1994.
<TABLE>
<CAPTION>
AVE. ANNUAL TOTAL
ERV P N TOTAL RETURN RETURN
--- - - ------------ ------
<S> <C> <C> <C> <C> <C>
1 year: $ 962.20 $1,000.00 1.00 (3.78%) (3.78%)
5 years: $1,555.50 $1,000.00 5.00 2.93% 15.55%
10 years: $3,838.80 $1,000.00 10.00 14.40% 283.88%
</TABLE>
