FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
95 Wall Street, New York, New York 10005/1-800-423-4026
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND (the "Government Plus Fund") is
an open-end diversified management investment company consisting of three
separate series of investments: 1st Fund, 2nd Fund and 3rd Fund (singularly,
"Fund," and collectively, "Funds"). The shares of the Funds may be redeemed at
any time at the shareholder's request. Redemptions will be made at the next
determined net asset value. (See "Determination of Net Asset Value" and
"Redemption of Shares.")
The objective of each Fund is first to generate income and, to a lesser
extent, achieve long-term capital appreciation, by investing no less than 65% of
its total assets in zero coupon securities representing future individual
payments of principal or interest on U.S. Treasury securities ("Zero Coupon
Securities") or other U.S. Government securities (together, "Government
Securities") and by investing the remainder of its assets in relatively small,
unseasoned or unknown companies, or those companies considered to be in an early
stage of development by the Funds' investment adviser, or selected other
investments ("Other Securities"). At a predetermined maturity date, each Fund
will terminate and liquidate as soon thereafter as possible. There can be no
assurance that the objectives of each Fund will be realized.
Each Fund is distinguished by the length of time its shares are offered to
the public, the dollar amount of such Fund's shares so offered, the anticipated
maturity date, or any or all of the foregoing. Each Fund has a separate
portfolio of investments. The maturity date of each Fund is: 1st Fund, December
31, 2004; 2nd Fund, December 31, 1999; 3rd Fund, December 31, 1998.
An indefinite number of shares of each Fund was available during an initial
offering period. Government Plus Fund has terminated the initial offering period
of each Fund and no new shares of any existing Fund will be issued, except in
connection with reinvestment of dividends and capital gain distributions. To the
extent that a Fund repurchases shares of such Fund from individual investors who
wish to redeem their shares, the Fund will make available such shares at the
next determined public offering price (see "Purchase of Shares").
This Prospectus sets forth concisely the information about the Funds 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, dated April 29, 1996 (which is
incorporated by reference herein), has been filed with the Securities and
Exchange Commission. The Statement of Additional Information is available at no
charge upon request to the Fund at the address or telephone number indicated
above.
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 April 29, 1996
<PAGE>
FEE TABLE
The following table has been prepared to assist the investor in
understanding the various costs and expenses a shareholder of each Fund will
directly or indirectly bear.
<TABLE>
<CAPTION>
1st 2nd 3rd
Fund Fund Fund
---- ---- ----
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).......................... 8.00% 8.00% 8.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees............................................... 1.00% 1.00% 1.00%
12b-1 Fees.................................................... -0- -0- -0-
Other Expenses................................................ 0.60%* 0.93% 0.89%
Total Fund Operating Expenses................................. 1.60%* 1.93% 1.89%
</TABLE>
- ----------
* Net of reimbursement. Absent such reimbursement, Other Expenses would have
been 0.87% and Total Fund Operating Expenses would have been 1.87%.
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>
1st 2nd 3rd
Fund Fund Fund
---- ---- ----
<S> <C> <C> <C>
1 year $95 $98 $98
3 years 126 136 135
5 years 160 176 174
10 years 255 287 283
</TABLE>
The Example is based on expense data for each Fund's fiscal year ended December
31, 1995. For more complete descriptions of the various costs and expenses, see
"Management of the Fund," "Purchase of Shares" and "Redemption of Shares." 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.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The following table sets forth the per share operating performance data for
a share outstanding, total return, ratios to average net assets and other
supplemental data for each period indicated. The table has been derived from
financial statements which have been examined by Tait, Weller & Baker,
independent certified public accountants, whose report thereon appears in the
Statement of Additional Information ("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.
3
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
P E R S H A R E D A T A
- ----------------------------------------------------------------------------------------------------------------------------------
Income From Investment Operations Less Distributions From
Net ------------------------------------------ -----------------------------------
Asset Value Net Realized
------------ Net and Unrealized Total from Net Net
Beginning Investment Gain (Loss) on Investment Investment Realized Capital Total
of Period Income Investments Operations Income Gains Surplus Distributions
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1st SERIES
----------
1986 $ 11.04 $ 1.213 $ 3.846 $ 5.059 $ .019 $ -- $ -- $ .019
1987 16.08 1.061 (2.931) (1.870) 2.260 2.040 -- 4.300
1988 9.91 .796 .464 1.260 .810 .190 -- 1.000
1989 10.17 .722 1.398 2.120 .703 .093 .044 .840
1990 11.45 .707 (.587) .120 .707 .409 .024 1.140
1991 10.43 .686 1.670 2.356 .686 .270 -- .956
1992 11.83 .715 .042 .757 .715 .532 -- 1.247
1993 11.34 .670 1.535 2.205 .670 .525 -- 1.195
1994 12.35 .690 (2.035) (1.345) .690 .484 .001 1.175
1995 9.83 .667 2.114 2.781 .667 .364 -- 1.031
2nd SERIES
----------
3/6/86** to
12/31/86 11.04 .567 (.015) .552 .052 -- -- .052
1987 11.54 .954 (1.754) (.800) 1.480 .050 -- 1.530
1988 9.21 .762 .058 .820 .770 -- -- .770
1989 9.26 .737 .963 1.700 .718 -- .032 .750
1990 10.21 .706 (.296) .410 .706 -- .004 .710
1991 9.91 .663 1.240 1.903 .663 -- -- .663
1992 11.15 .656 .130 .786 .656 -- -- .656
1993 11.28 .643 .770 1.413 .643 -- -- .643
1994 12.05 .660 (1.484) (.824) .660 -- .006 .666
1995 10.56 .646 .970 1.616 .646 -- -- .646
3rd SERIES
----------
5/29/86** to
12/31/86 11.04 .183 .026 .209 .029 -- -- .029
1987 11.22 .680 (1.650) (.970) .840 .240 -- 1.080
1988 9.17 .605 .185 .790 .610 -- .070 .680
1989 9.28 .622 .888 1.510 .611 -- .019 .630
1990 10.16 .598 (.308) .290 .598 -- .012 .610
1991 9.84 .676 1.211 1.887 .676 -- .001 .677
1992 11.05 .576 .120 .696 .576 -- -- .576
1993 11.17 .544 1.110 1.654 .544 -- -- .544
1994 12.28 .610 (1.307) (.697) .610 -- .013 .623
1995 10.96 .568 .980 1.548 .568 -- -- .568
<CAPTION>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------------------------------------------
R A T I O S / S U P P L E M E N T A L D A T A
---------------------------------------------------------------------------------------------------
Ratio to Average Net Assets
Net -------------------------------
Asset Value Net Portfolio
------------ Total Net Assets Investment Turnover
End Return+ End of Period Expenses Income Rate
of Period (%) (in thousands) (%) (%) (%)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1st SERIES
-----------
1986 $ 16.08 45.82 $ 2,457 .58(a) 7.51(a) 21
1987 9.91 (13.28) 1,710 1.74 7.16 3
1988 10.17 12.71 1,701 1.69 7.21 9
1989 11.45 20.85 1,833 1.61 6.08 9
1990 10.43 1.05 1,591 1.90 6.16 14
1991 11.83 22.59 1,758 1.86 5.95 8
1992 11.34 6.40 1,599 1.75 5.62 8
1993 12.35 19.44 1,732 1.59(b) 4.94(b) 7
1994 9.83 (10.90) 1,330 1.60(b) 5.73(b) 8
1995 11.58 28.29 1,524 1.63(b) 5.57(b) 7
2nd SERIES
----------
3/6/86** to
12/31/86 11.54 6.09 5,392 .69* 6.85*(a) 0
1987 9.21 (7.38) 3,874 1.76 7.33 2
1988 9.26 8.90 3,561 1.65 7.10 9
1989 10.21 18.36 3,492 1.66 6.53 11
1990 9.91 4.02 2,943 1.88 6.46 12
1991 11.15 19.20 2,946 1.91 5.87 8
1992 11.28 7.05 2,784 1.77 5.46 7
1993 12.05 12.53 2,756 1.70 4.93 7
1994 10.56 (6.89) 2,360 1.78 5.48 8
1995 11.53 15.30 2,475 1.93 5.32 7
3rd SERIES
-----------
5/29/86** to
12/31/86 11.22 3.19 2,783 .54* 3.38*(a) 0
1987 9.17 (8.81) 2,121 1.61 5.92 23
1988 9.28 8.62 2,038 1.54 5.76 22
1989 10.16 16.27 2,067 1.60 5.82 25
1990 9.84 2.85 1,777 1.74 5.53 20
1991 11.05 19.18 1,355 1.83 5.17 11
1992 11.17 6.30 1,185 1.88 4.61 8
1993 12.28 14.81 1,258 1.68 4.27 11
1994 10.96 (5.78) 1,032 1.74 4.77 10
1995 11.94 14.12 1.130 1.89 4.64 8
</TABLE>
* Annualized
** Commencement of operations
+ Calculated without sales charge
4
<PAGE>
THE FUNDS
Each Fund has the same investment objectives. Each Fund is distinguished by
the dollar amount of the initial offering, the maturity date or the anticipated
minimum return, or any or all of the foregoing.
An indefinite number of shares of each Fund was available during an initial
offering period. Government Plus Fund has terminated the initial offering period
of each Fund and no new shares of any existing Fund will be issued, except in
connection with reinvestment of dividends and capital gains distributions. To
the extent that a Fund repurchases shares of such Fund from individual investors
who wish to redeem their shares, the Fund will make available such shares at the
next determined public offering price (see "Purchase of Shares").
Because each existing Fund will not offer new shares to the public,
investors are urged to consider the effects of the closing of the offerings,
including liquidity demands created by redemptions and the sale of securities at
unfavorable prices to meet redemption requests. Redemptions of each Fund's
shares prior to the maturity date will raise the remaining shareholders' pro
rata share of expenses for the Fund, but will not affect the minimum return for
each $1.00 invested for shareholders who do not redeem their shares.
Maturity Date. The maturity dates of the 1st, 2nd and 3rd Funds will be
December 31 of the years 2004, 1999 and 1998, respectively. In July of the year
in which each Fund will mature, shareholders of that Fund will be notified of
that Fund's pending liquidation. Liquidation of each Fund's portfolio will
commence the following January, and it is expected that trades and transactions
in each Fund's portfolio will be completed in order to pay cash redemptions to
shareholders no later than January 31 following the maturity date. A
shareholder's right to redemption will remain in effect until the Fund has
automatically redeemed his or her account. In addition, a shareholder's
investment will remain in his or her account until the time of payment of
liquidation proceeds, and any income thereon will be added to his or her
proceeds.
INVESTMENT OBJECTIVES AND POLICIES
Each Fund seeks first to generate income and, to a lesser extent, achieve
long-term capital appreciation, by investing no less than 65% of its total
assets in zero coupon securities representing future individual payments of
principal or interest on U.S. Treasury securities ("Zero Coupon Securities") or
other U.S. Government securities (together, "Government Securities"), and by
investing the remainder of its assets in relatively small, unseasoned or unknown
companies, or those companies considered to be in an early stage of development
by the Adviser or selected other investments ("Other Securities"). At a
predetermined maturity date, each Fund will terminate and liquidate as soon
thereafter as possible. There is no assurance that these objectives will be
achieved. The investment objectives of each Fund may not be changed unless
approved by a majority of the outstanding voting securities of that Fund.
Each Fund does not intend to trade its portfolio of Zero Coupon Securities
for short-term market considerations. No Fund will purchase a Zero Coupon
Security (defined under the heading "Government Securities") which matures on a
date following the maturity date for that Fund. Additionally, the proceeds of
any maturing Zero Coupon Security held by any Fund, which are received by that
Fund prior to its maturity date, will only be held as cash or invested in
Government Securities, certificates of deposit, prime commercial paper or
bankers' acceptances. Such investments will be made in accordance with each
Fund's investment objectives and will mature on or before the maturity date for
the corresponding Fund. The
5
<PAGE>
Adviser may trade Zero Coupon Securities for long-term market considerations to
fulfill each Fund's investment objective.
Government Securities. Each Fund seeks to achieve its objectives by
investing no less than 65% of its assets in Government Securities which are
issued or guaranteed by the U.S. Treasury. Government Securities, also known as
Treasury Securities, are debt obligations issued by the U.S. Treasury to finance
the activities of the U.S. Government. Government Securities come in the form of
Treasury bills, notes and bonds. Treasury bills mature (are payable) within one
year from the date of issuance and are issued on a discount basis. That is,
Treasury bills do not make interest payments. Rather, an investor pays less than
the face (or par) value of the Treasury bill and, by holding it to maturity,
will receive the face value. Treasury notes and bonds are intermediate and
long-term obligations, respectively, and entitle the holder to periodic interest
payments from the U.S. Treasury. Accordingly, Treasury notes and bonds are
usually issued at a price close to their face value at maturity.
Zero Coupon Securities is the term used by the Funds to describe U.S.
Treasury notes and bonds which have been stripped of their unmatured interest
payments. A Zero Coupon Security pays no cash interest to its holder during its
life. Its value to an investor consists of the difference between its face value
at the time of maturity and the price for which it was acquired, which is
generally an amount much less than its face value (sometimes referred to as a
"deep discount" price).
In the last few years a number of banks and brokerage firms have separated
("stripped") the principal portions ("corpus") from the interest portions of
U.S. Treasury bonds and notes and sold them separately in the form of receipts
or certificates representing undivided interests in these instruments (which
instruments are generally held by a bank in a custodial or trust account). More
recently, the U.S. Treasury Department has facilitated the stripping of Treasury
notes and bonds by permitting the separated corpus and interest to be
transferred directly through the Federal Reserve Bank's book-entry system. This
program, which eliminates the need for custodial or trust accounts to hold the
Treasury securities, is called "Separate Trading of Registered Interest and
Principal of Securities" ("STRIPS"). Each such stripped instrument (or receipt)
entitles the holder to a fixed amount of money from the Treasury at a single,
specified future date. The U.S. Treasury redeems Zero Coupon Securities
consisting of the corpus for the face value thereof at maturity, and those
consisting of stripped interest for the amount of interest, and at the date,
stated thereon.
The amount of the discount each 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 a Fund until maturity. These securities
are purchased with original issue discount and such discount is includable as
gross income to a Fund as it accrues over the life of the security. Because
interest on Zero Coupon Securities is compounded over the life of the
instrument, there is more income in later years, compared with earlier years,
with these securities. Although each Fund intends to hold all Zero Coupon
Securities until maturity, Government Securities' market prices move inversely
with respect to changes in interest rates prior to their maturity.
Risk Factors. 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. The income on Zero Coupon Securities is accrued by each Fund
prior to the receipt of actual
6
<PAGE>
payments. Federal income tax law requires holders of Zero Coupon Securities to
report as interest income each year the portion of the original issue discount
on such securities (other than tax-exempt original issue discount from a Zero
Coupon Security) that accrues that year, even though the holders receive no cash
payments of interest during the year. Each Fund, however, must distribute
substantially all of its income to shareholders under the Federal tax law.
Therefore, a Fund may have to dispose of its portfolio securities under
disadvantageous circumstances to generate cash to satisfy its distribution
requirements. These actions are also likely to reduce the assets to which Fund
expenses could be allocated and reduce the rate of return of a Fund. In
addition, shareholders are taxed on distributions of this interest even if the
Fund does not receive the actual payments of interest.
Other Securities. Although each Fund intends to invest no less than 65% of
its assets in Government Securities, each Fund may invest the remainder of its
assets in securities consisting of:
Equities (described below);
prime commercial paper;
domestic branches of U.S. Banks' certificates of deposit;
bankers' acceptances;
repurchase agreements; and
participation interests
Equities in which each Fund will invest are common stocks or securities
convertible into common stock issued by small, unseasoned or relatively unknown
companies, or those which are in the early stages of development, including
securities which represent a special situation. A "special situation" is one
where an unusual and possibly non-repetitive development may be occurring which,
in the opinion of the Adviser, could cause a security's price to outperform the
securities market in general.
Risk Factors. These Equities are more speculative than Zero Coupon
Securities or securities issued by established and well-seasoned issuers. The
risks connected with these Equities may include the availability of less
information about the issuer, the absence of a track record or historical
pattern of performance, as well as normal risks which accompany the development
of new products, markets or services. Equities purchased by the Funds which
represent a special situation bear the risk that the special situation will not
develop as favorably as expected, or the situation may deteriorate. For example,
a merger with favorable implications may be blocked, an industrial development
may not enjoy anticipated market acceptance, or a bankruptcy may not be as
profitably resolved as had been expected. Although these risks could have a
significant negative impact on that portion of each Fund's assets invested in
Equities which represent special situations, there may be instances of greater
financial reward from these investments when compared with other securities.
The proportion of each Fund's assets invested in various Other Securities
will shift from time to time in accordance with the judgment of the Adviser, up
to the 35% limit. The Adviser expects to have substantially all of this portion
of each Fund's assets invested in Equities. Each Fund, may, however, invest all
of this portion of its assets in prime commercial paper, certificates of
deposit, bankers' acceptances, repurchase agreements and participation interests
(as described below) when the Adviser believes market conditions warrant such
action or to satisfy redemption requests.
Investments in commercial paper are limited to obligations rated Prime-1 by
Moody's Investors Service, Inc. ("Moody's") or A-1 by Standard & Poor's Ratings
Group ("S&P"). A description of
7
<PAGE>
commercial paper ratings is contained in Appendix A to the SAI. 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, payable on demand or having a maturity likewise
limited.
Investments in certificates of deposit will be made only at domestic
institutions with assets in excess of $500 million. Under a repurchase agreement
a Fund acquires a debt instrument for a relatively short period (usually not
more than one week) subject to the obligations of the seller to repurchase and
the Fund to resell such debt instrument at a fixed price. Bankers' acceptances
are short-term credit instruments used to finance commercial transactions.
Participation interests that may be held by the Funds are pro rata
interests in securities otherwise qualified for purchase by the Funds which are
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 Government Plus Fund and the entity in whose name the security
is issued, rather than possession by the Funds. Each 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. Additionally, the Adviser will monitor
the creditworthiness of entities which are not banks, from which each Fund
purchases participation interests. However, the issuer of the participation
interest to the Funds will agree in writing, among other things: to remit
promptly all payments of principal, interest and premium, if any, to the Funds
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 Funds.
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 under the Securities Act
of 1933, as amended, which Government Plus Fund's Board of Trustees or the
Adviser has determined are liquid under Board-approved guidelines. See the SAI
for more information regarding restricted and illiquid securities.
When-Issued Securities. Government Securities or Other Securities may be
acquired by each Fund on a when-issued basis. Under such an arrangement,
delivery of, and payment for, the instruments occur up to 45 days after the
agreement to purchase the instruments is made by a Fund. The purchase price to
be paid by a Fund and the interest rate on the instruments to be purchased are
both selected when the Fund agrees to purchase the securities "when-issued."
Each Fund is permitted to sell when-issued securities prior to issuance of such
securities, but will not purchase such securities with that purpose intended.
Securities purchased on a when-issued basis are subject to the additional risk
that yields available in the market, in the period between the purchase of such
securities and when delivery takes place, may be higher or lower than the rate
to be received on the securities a Fund has purchased. After a Fund is committed
to purchase when-issued securities, but prior to the issuance of said
securities, it is subject to adverse changes in the value of these securities
based upon changes in interest rates, as well as changes based upon the public's
perception of the issuer and its creditworthiness. When-issued
8
<PAGE>
securities' market prices move inversely with respect to changes in interest
rates. Purchases of securities by each Fund on a when-issued basis are
restricted as more fully set forth in the SAI.
MANAGEMENT
Board of Trustees. Government Plus Fund's Board of Trustees, as part of its
overall management responsibility, oversees various organizations responsible
for each 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
determines each 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
controls FICC and, therefore, controls 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, 1995, each of 1st Fund, 2nd Fund and 3rd Fund paid 1.00% of its average
daily net assets in advisory fees. The SEC staff takes the position that fees of
0.75% or greater are higher than those paid by most investment companies.
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 annual meeting expenses.
Portfolio Managers. Patricia D. Poitra, Director of Equities, has been
primarily responsible for the day-to-day management of each Fund since 1988. Ms.
Poitra is assisted by a team of portfolio analysts. Ms. Poitra is responsible
for the management of the Special Situations Fund, Blue Chip Fund and the equity
portion of Total Return Fund, all series of First Investors Series Fund. Ms.
Poitra also is responsible for the management of the Blue Chip Fund and
Discovery Fund of First Investors Life Series Fund, the Blue Chip Fund of
Executive Investors Trust and the U.S.A. Mid-Cap Opportunity Fund of First
Investors Series Fund II, Inc. Ms. Poitra joined FIMCO in 1985 as a Senior
Equity Analyst.
Underwriter. Government Plus 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 the Funds' shares. See "Purchase of Shares."
PURCHASE OF SHARES
An indefinite number of shares of each Fund was available during an initial
offering period. Government Plus Fund terminated the initial offering period of
each Fund and no new shares of any existing Fund will be issued, except in
connection with reinvestment of dividends and capital gain distributions. To the
extent that a Fund repurchases shares of such Fund from individual investors who
wish to redeem their shares, the Fund will make available such shares at the
public offering price, which is the sum of the net asset value per share
(determined as described under "Determination of Net Asset
9
<PAGE>
Value") next determined after an order is received, plus a maximum sales charge
of 8.00%, as set forth below.
<TABLE>
<CAPTION>
Sales Charge as % of Concession
----------------------------- to Dealers
Offering Net Amount as % of
Amount of Investment Price Invested Offering Price
- -------------------- -------- --------- --------------
<S> <C> <C> <C>
Less than $10,000 8.00% 8.70% 6.50%
$10,000 but under $25,000 7.75 8.40 6.30
$25,000 but under $50,000 6.25 6.67 5.10
$50,000 but under $100,000 5.50 5.82 4.50
$100,000 but under $250,000 4.50 4.71 3.70
$250,000 but under $500,000 3.50 3.63 2.80
$500,000 but under $1,000,000 2.50 2.56 2.00
$1,000,000 or over 1.50 1.52 1.20
</TABLE>
Orders for the purchase of shares of the Funds will be invested at the
public offering price (net asset value plus applicable sales charge) next
determined after receipt by FIC in their offices at 581 Main Street, Woodbridge,
New Jersey 07095-1198.
Due to emergency conditions, such as snow storms, the Woodbridge offices of
FIC and Administrative Data Management Corp. (the "Transfer Agent") may not be
open for business on a day when the NYSE is open for regular trading and,
therefore, would be unable to accept purchase orders. Should this occur,
purchase orders will be executed at the public offering price determined at the
close of regular trading on the NYSE on the next business day that these offices
are open for business.
The sales charge varies depending on the size of the purchase, the value of
shares an investor owns or a Letter of Intent to purchase additional shares
during a thirteen-month period. Reductions in sales charges apply to purchases
of shares by "any person," including an individual, members of a family unit
comprising husband, wife and minor children, or a trustee or other fiduciary
purchasing for a single fiduciary account.
REDEMPTION OF SHARES
You may redeem your shares at the next determined net asset value any day
the New York Stock Exchange ("NYSE") is open, directly through the Transfer
Agent. Your First Investors Representative may help you with this transaction.
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. Upon receipt of your redemption request in good order, as
described below, shares will be redeemed at the net asset value next determined
and payment will be made within three days.
Due to emergency conditions, such as snow storms, the Woodbridge offices of
FIC and Administrative Data Management Corp. (the "Transfer Agent") may not be
open for business on a day when the NYSE is open for regular trading and,
therefore, would be unable to accept redemption orders. Should this occur,
redemption orders will be executed at the net asset value determined at the
close of regular trading on the NYSE on the next business day that these offices
are open for business.
10
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Redemptions By Mail. Written redemption requests should be mailed to
Administrative Data Management Corp., 581 Main Street, 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; and (6) signature guarantees, if required,
as described below. If your redemption request is not in good order or
information is missing, the Transfer Agent will seek additional information and
process the redemption on the day it receives such information. Certain account
registrations may require additional legal documentation in order to redeem. To
review these requirements, please call Shareholder Services at 1-800-423-4026.
Signature Guarantees. The words "Signature Guaranteed" must appear in
direct association with the signature of the guarantor. Members of the STAMP
(Securities Transfer Agents Medallion Program), MSP (New York Stock Exchange
Medallion Signature Program), SEMP (Stock Exchanges Medallion Program) and FIC
are eligible signature guarantors. Although each Fund reserves the right to
require signature guarantees at any other time, signature guarantees are
required whenever: (1) the amount of the redemption is $50,000 or more, (2) a
redemption check is to be made payable to someone other than the registered
accountholder, other than major financial institutions, as determined solely by
the Fund and its agent, on behalf of the shareholder, (3) a redemption check is
to be mailed to an address other than the address of record, or a financial
institution for the benefit of a shareholder, (4) an account registration is
being transferred to another owner, (5) a transaction requires additional legal
documentation; (6) the redemption request is for certificated shares; or (7)
your address of record has changed within 60 days prior to a redemption request.
Systematic Withdrawal Plan. If you own noncertificated shares, you may set
up a plan for redemptions to be made automatically at regular intervals. You may
elect to have the payments automatically sent directly to you or, if signature
guarantees are obtained, to persons you designate. See the SAI for more
information on the Systematic Withdrawal Plan. For information regarding the
Systematic Withdrawal Plan, call Shareholder Services at 1-800-423-4026.
Repurchase through Underwriter. You may redeem shares 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. While the
Underwriter does not charge for this service, the Dealer may charge you a
commission for handling the transaction.
Redemption of Low Balance Accounts. Because of the high cost of maintaining
smaller shareholder accounts, each Fund may redeem without your consent, on at
least 60 days' prior written notice (which may appear on your account
statement), any Fund account 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 so as to increase your account balance to the required minimum. Each
Fund does not apply this minimum account balance requirement to accounts that
fall below the minimum for reasons other than share redemptions or to accounts
that have never had a net asset value of at least $500. Accounts established
under a Systematic Investing 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.
11
<PAGE>
DETERMINATION OF NET ASSET VALUE
The net asset value of shares 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 the Board of
Trustees deems necessary, by dividing the market value of the securities held by
a Fund, plus any cash and other assets, less all liabilities, by the number of
shares 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 the Board of Trustees. 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 annually by
each Fund and paid in additional shares of the distributing Fund at the net
asset value (without sales charge) generally determined as of the close of
business on the business day immediately following the record date of such
distribution. Net investment income includes interest and dividends, earned
discount and other income earned on portfolio securities less expenses. Each
Fund also distributes 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,
with its regular dividend at the end of the year. A Fund may make an additional
distribution if necessary to avoid a Federal excise tax on certain undistributed
income and capital gain.
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.
A distribution by a Fund will be paid in additional Fund shares and not in
cash if any of the following events occurs: (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 the deceased's 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 has qualified and intends to continue to qualify for treatment as
a regulated investment company under the Internal Revenue Code of 1986, as
amended, 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
and net short-term capital gain) 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
12
<PAGE>
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 Funds
during that year.
Each Fund is required to withhold 31% of all dividends, capital gain
distributions and redemption proceeds payable to you (if you are an individual
or certain other non-corporate shareholder) if the Fund is not furnished with
your correct taxpayer identification number, and 31% of dividends and such
distributions in certain other circumstances.
Your redemption of Fund shares will result in 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 sales charge paid).
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 or state and local tax
considerations applicable to a particular investor. You therefore are urged to
consult your own tax adviser.
PERFORMANCE INFORMATION
For purposes of advertising, a Fund's performance may be calculated based
on average annual total return and total return. Average annual total return
represents the average annual percentage change in an assumed $1,000 investment
including the effect of receiving payment of dividends and other distributions
in additional Fund shares, net of the Fund's maximum 8.00% sales charge. It
reflects the hypothetical annually compounded return that would have produced
the same total return if the Fund's performance had been constant over the
entire period. Because average annual total return tends to smooth out
variations in the Fund's return, you should recognize that it is not the same as
actual year-by-year results. 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.
A Fund also may advertise its yield. 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 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. Each
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 questions are substituted for net
investment income per share.
Each of the above performance calculations may be advertised based on
investment at reduced sales charge levels or at net asset value. Any quotation
of performance figures not reflecting the maximum sales charge will be greater
than if the maximum sales charge were used. Each performance figure reflects
past performance and does not necessarily indicate future results. Additional
performance information is contained in the Funds' Annual Report, which may be
obtained without charge by contacting the Funds at 1-800-423-4026.
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<PAGE>
GENERAL INFORMATION
Organization. Government Plus Fund is a Massachusetts business trust
organized on July 8, 1985. The three series of Government Plus Fund may be
referred to as First Investors U.S. Government Plus Fund I, First Investors U.S.
Government Plus Fund II and First Investors U.S. Government Plus Fund III.
The Board of Trustees of Government Plus Fund has authority to issue an
unlimited number of shares of beneficial interest of separate series, no par
value. Shares of each Fund have equal dividend, voting, liquidation and
redemption rights. Government Plus Fund does not hold annual shareholder
meetings. If requested to do so by the holders of at least 10% of Government
Plus Fund's outstanding shares, the Board of Trustees will call a special
meeting of shareholders for any purpose, including the removal of Trustees.
Custodian. The Bank of New York, 48 Wall Street, New York, NY 10286, is
custodian of the securities and cash of each Fund.
Transfer Agent. Administrative Data Management Corp., 581 Main Street,
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 Transfer
Agent's telephone number is 1-800-423-4026.
Share Certificates. The Funds do not issue share certificates unless
requested to do so. 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.
Confirmations and Statements. You will receive confirmations of purchases
and redemptions of shares of the Funds. 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 the Funds' practice
to mail only one copy of their 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. The Funds will ensure that an
additional copy of such reports are sent to any shareholder who subsequently
changes his or her mailing address.
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TABLE OF CONTENTS
PAGE
- -------------------------
Fee Table.............................................................. 2
Financial Highlights................................................... 3
The Funds.............................................................. 5
Investment Objectives and Policies..................................... 5
Management............................................................. 9
Purchase of Shares..................................................... 9
Redemption of Shares................................................... 10
Determination of Net Asset Value....................................... 12
Dividends and Other Distributions...................................... 12
Taxes.................................................................. 12
Performance Information................................................ 13
General Information.................................................... 14
<PAGE>
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
PROSPECTUS
INVESTMENT ADVISER
First Investors Management Company, Inc.
95 Wall Street, New York, NY 10005
UNDERWRITER
First Investors Corporation
95 Wall Street, New York, NY 10005
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, DC 20036
CUSTODIAN
The Bank of New York
48 Wall Street
New York, New York 10286
TRANSFER AGENT
Administrative Data Management Corp.
581 Main Street
Woodbridge, New Jersey 07095-1198
AUDITORS
Tait, Weller & Baker
Two Penn Center Plaza
Philadelphia, Pennsylvania 19102
PROSPECTUS
April 29, 1996
This Prospectus is intended to constitute an offer by Government Plus 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 Government Plus 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 U.S. GOVERNMENT PLUS FUND
Statement of Additional Information
dated April 29, 1996
95 Wall Street 1-800-423-4026
New York, New York 10005
First Investors U.S. Government Plus Fund ("Government Plus Fund") is an
open-end diversified management investment company consisting of three separate
series of investment. The investment objectives of each Fund of Government Plus
Fund is first to generate income, and, to a lesser extent, achieve long-term
capital appreciation. There can be no assurances that the objectives of each
Fund will be realized.
This Statement of Additional Information is not a prospectus. It should be
read in conjunction with the Funds' Prospectus dated April 29, 1996, which may
be obtained free of cost from the Funds at the address or telephone number noted
above.
TABLE OF CONTENTS
-----------------
Page
----
Investment Objectives and Policies........................................ 2
Investment Restrictions................................................... 4
Trustees and Officers..................................................... 6
Management................................................................ 8
Underwriter............................................................... 9
Determination of Net Asset Value.......................................... 10
Allocation of Portfolio Brokerage......................................... 11
Purchase and Redemption of Shares......................................... 12
Taxes..................................................................... 12
Performance Information................................................... 13
General Information....................................................... 17
Appendix A................................................................ 19
Financial Statements...................................................... 20
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INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of each Fund of Government Plus Fund
is fully set forth in the Funds' Prospectus. The following information is
provided for those investors desiring additional information to that contained
in the Funds' Prospectus.
When-Issued Securities. Each Fund may 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. The Fund generally would not pay for such securities or start
earning interest on them until they are issued or received. However, when the
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
the Fund on a when-issued basis may result in the Fund's incurring a loss or
missing an opportunity to make an alternative investment. When the 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 the Fund is
committed to purchase. Sale of securities in the segregated account or other
securities owned by the Fund and when-issued securities may cause the
realization of a capital gain or loss.
Repurchase Agreements. Each Fund will enter into repurchase agreements only
with banks who 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 and, in either case, only where the debt instrument
subject to the repurchase agreement is a security which is issued by the U.S.
Government, its agencies or instrumentalities, and is backed by the full faith
and credit of the U.S. Government ("U.S. Obligation"). A repurchase agreement is
an agreement in which the seller of a security agrees to repurchase the security
sold at a mutually agreed-upon time and price. It may also be viewed as the loan
of money by the Fund to the seller. The resale price normally is in excess of
the purchase price, reflecting an agreed upon interest rate. The rate is
effective for the period of time the Fund is invested in the agreement and is
not related to the coupon rate on the underlying security. The period of these
repurchase agreements will usually be short, from overnight to one week, and at
no time will the Fund invest in repurchase agreements with more than one year in
time to maturity. The securities subject to repurchase agreements, however, may
have maturity dates in excess of one year from the effective date of the
repurchase agreement. The Fund will always receive, as collateral, securities
whose market value, including accrued interest, 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, the 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
proceedings are
2
<PAGE>
commenced with respect to the seller of the security, realization upon the
collateral by the Fund may be delayed or limited. Each Fund may not enter into a
repurchase agreement with more than seven days to maturity if, as a result, more
than 15% of the market value of the Fund's net assets would be invested in such
repurchase agreements together with any other illiquid assets. No Fund may enter
into a repurchase agreement with more than seven days to maturity if, as a
result, more than 15% of such Fund's assets would be invested in such repurchase
agreements and other illiquid securities.
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 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 the Board of Trustees or the Adviser 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 the 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 the 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 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.
3
<PAGE>
Portfolio Turnover. Although the Funds generally do 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 Funds' investment adviser, First investors Management Company, Inc.
("Adviser" or "FIMCO") investment considerations warrant such action. Portfolio
turnover rate is calculated by dividing (a) the lesser of purchases or sales of
portfolio securities for the fiscal year by (b) 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 purchase 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. See "Allocation of Portfolio Brokerage."
For the fiscal year ended December 31, 1994, the 1st Fund, 2nd Fund and 3rd Fund
had a portfolio turnover rate of 8%, 8% and 10%, respectively. For the fiscal
year ended December 31, 1995, the 1st Fund, 2nd Fund and 3rd Fund had a
portfolio turnover rate of 7%, 7% and 8%, respectively.
INVESTMENT RESTRICTIONS
Each Fund has adopted the investment restrictions set forth below, which
cannot be changed without the approval of a vote of a majority of the
outstanding shares of each Fund, voting separately from any other Fund. As
provided in the Investment Company Act of 1940, as amended (the "1940 Act"), and
used in the Prospectus and this Statement of Additional Information, a "vote of
a majority of the outstanding shares of each Fund" means the affirmative vote of
the lesser of (i) more than 50% of the outstanding shares of the Fund or (ii)
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.
The investment restrictions provide that, among other things, each Fund
will not:
1. Purchase securities on margin (but any Fund may obtain such credits as
may be necessary for the clearance of purchases and sales of securities).
2. Make short sales of securities.
3. Write put or call options.
4. 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.
5. Purchase the securities of other investment companies or investment
trusts, except as they may be acquired as part of a merger, consolidation or
acquisition of assets.
6. Underwrite securities issued by other persons except to the extent that,
in connection with the disposition of its portfolio investments, it may be
deemed to be an underwriter under Federal securities laws.
4
<PAGE>
7. Buy or sell real estate, commodities, or commodity contracts (unless
acquired as a result of ownership of securities) or interests in oil, gas or
mineral explorations, provided, however, the Fund may invest in securities
secured by real estate or interest in real estate.
8. Issue any "senior security" as such term is defined by the 1940 Act
except as expressly permitted by the 1940 Act.
9. Invest more than 25% of its assets in securities of issuers in a single
industry, excluding Government Securities.
10. Borrow money, except as a temporary or emergency measure in an amount
not to exceed 5% of the value of its assets.
11. Pledge assets, except that the Fund may pledge its assets to secure
borrowings made in accordance with investment restriction (10) above, provided
that the Fund maintains asset coverage of at least 300% for pledged assets.
12. Make loans, except by purchase of debt obligations and through
repurchase agreements. However, Government Plus Fund's Board of Trustees may, on
the request of broker-dealers or other institutional investors that they deem
qualified, authorize the Fund to loan securities to cover the borrower's short
position; provided, however, the borrower pledges to 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 than seven days to maturity, and other illiquid
assets is greater than an amount equal to 15% of the Fund's net assets.
13. Purchase the securities of any 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 that, including predecessors, have a record of
less than three years' continuous operation.
Government Plus Fund, on behalf of each Fund, has filed the following
undertakings to comply with requirements of certain states in which shares of
the Funds are sold, which may be changed without shareholder approval:
1. Notwithstanding investment restriction (7) above, each Fund will not
invest in real estate limited partnership interests or in interests in real
estate investment trusts that are not readily marketable and will not buy or
sell interests in oil, gas or mineral leases.
2. Each Fund's investment in warrants, valued at the lower of cost or
market, shall not exceed 5% of the value of such Fund's net assets. Included
within that amount but not to exceed 2% of the value of such Fund's net assets,
may be warrants which are not listed on the New York or American Stock
5
<PAGE>
Exchange. Warrants acquired by the Fund in units or attached to securities may
be deemed to be without value.
3. Each Fund will not purchase or retain the securities of any issuer if
the officers, directors or trustees of Government Plus Fund, the Adviser, or
managers own beneficially more than one-half of one percent of the securities
and together own beneficially more than five per cent of such securities.
4. Each Fund, with respect to 100% of each of its assets, will not (a)
invest more than 5% in the securities of any one issuer (exclusive of U.S.
Government securities), or (b) hold more than 10% of any class of securities
(including any class of voting securities) of any issuer (exclusive of U.S.
Government securities).
Government Plus Fund, on behalf of each Fund, has adopted the following
non-fundamental investment restriction, which may be changed without shareholder
approval. This restriction provides that each 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 Trustees, or the
Funds' investment adviser acting pursuant to authority delegated by the
Trustees, 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.
TRUSTEES AND OFFICERS
The following table lists the Trustees and executive officers of Government
Plus Fund, their age, 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*+ (70), President and Trustee. Chairman of the Board and Director,
Administrative Data Management Corp. ("ADM"), FIMCO, Executive Investors
Management Company, Inc. ("EIMCO"), First Investors Corporation ("FIC"),
Executive Investors Corporation ("EIC") and First Investors Consolidated
Corporation ("FICC").
James J. Coy (82), Trustee, 90 Buell Lane, East Hampton, NY 11937. Retired;
formerly Senior Vice President, James Talcott, Inc. (financial institution).
Roger L. Grayson* (39), Trustee. Director, FIC and FICC; President and Director,
First Investors Resources, Inc.; Commodities Portfolio Manager.
Kathryn S. Head*+ (40), Trustee, 581 Main Street, Woodbridge, NJ 07095.
President, FICC, EIMCO, FIMCO and ADM; Vice President, Chief Financial Officer
and Director, FIC and EIC; President and Director, First Financial Savings Bank,
S.L.A.
6
<PAGE>
Rex R. Reed (74), Trustee, 1381 Fairway Oaks, Kiawah Island, SC 29455. Retired;
formerly Senior Vice President, American Telephone & Telegraph Company.
Herbert Rubinstein (74), Trustee, 145 Elm Drive, Roslyn, NY 11576. Retired;
formerly President, Belvac International Industries, Ltd. and President, Central
Dental Supply.
James M. Srygley (63), Trustee, 33 Hampton Road, Chatham, NJ 07982. Principal,
Hampton Properties, Inc. (property investment company).
John T. Sullivan* (64), Trustee and Chairman of the Board; Director, FIMCO, FIC,
FICC and ADM; Of Counsel, Hawkins, Delafield & Wood, Attorneys.
Robert F. Wentworth (66), Trustee, RR1, Box 2554, Upland Downs Road, Manchester
Center, VT 05255. Retired; formerly financial and planning executive with
American Telephone & Telegraph Company.
Joseph I. Benedek (38), Treasurer, 581 Main Street, Woodbridge, NJ 07095.
Treasurer, FIC FIMCO, EIMCO and EIC; Comptroller and Treasurer, FICC.
Concetta Durso (61), Vice President and Secretary. Vice President, FIMCO, EIMCO
and ADM; Assistant Vice President and Assistant Secretary, FIC and EIC.
Patricia D. Poitra (41), Vice President. Vice President, First Investors Series
Fund, First Investors Series Fund II, Inc. and Executive Investors Trust;
Director of Equities, FIMCO.
- ----------
* These Trustees 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 Trustees, except for Ms. Poitra, hold identical or
similar positions with 13 other registered investment companies in the First
Investors Family of Funds. 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, School Financial Management Services, Inc., First
Investors Credit Funding Corporation, N.A.K. Realty Corporation, Real Property
Development Corporation, First Investors Leverage Corporation and Route 33
Realty Corporation.
The following table lists compensation paid to the Trustees of Government
Plus Fund for the fiscal year ended December 31, 1995.
7
<PAGE>
<TABLE>
<CAPTION>
Total
Compensation
Pension or Estimated From First
Aggregate Retirement Benefits Annual Benefits Investors Family
Compensation Accrued as Part of Upon of Funds
Trustee From Fund* Fund Expenses Retirement Paid to Trustees*
- ------- ------------ ------------------- - ----------------- -----------------
<S> <C> <C> <C> <C>
James J. Coy $1,800 $-0- $-0- $37,200
Roger L. Grayson -0- -0- -0- -0-
Glenn O. Head -0- -0- -0- -0-
Kathryn S. Head -0- -0- -0- -0-
F. William Ortman, Jr.** 750 -0- -0- 15,500
Rex R. Reed 1,800 -0- -0- 37,200
Herbert Rubinstein 1,800 -0- -0- 37,200
James M. Srygley*** 1,800 -0- -0- 37,200
John T. Sullivan -0- -0- -0- -0-
Robert F. Wentworth 1,800 -0- -0- 37,200
</TABLE>
* Compensation to officers and interested Trustees of Government Plus Fund is
paid by the Adviser. In addition, compensation to non-interested Trustees
of Government Plus Fund is currently voluntarily paid by the Adviser.
** For the period January 1, 1995 through September 21, 1995.
*** For the period January 19, 1995 through December 31, 1995.
MANAGEMENT
Investment advisory services to the Funds are provided by First Investors
Management Company, Inc. pursuant to an Investment Advisory Agreement ("Advisory
Agreement") dated June 13, 1994. The Advisory Agreement was approved by the
Board of Trustees of Government Plus Fund, including a majority of the Trustees
who are not parties to the Advisory Agreement or "interested persons" (as
defined in the 1940 Act) of any such party ("Independent Trustees"), in person
at a meeting called for such purpose and by a majority of the public
shareholders of each Fund.
Pursuant to the 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 Trustees. The
Advisory Agreement also provides that FIMCO shall provide Government Plus Fund
and each Fund with certain executive, administrative and clerical personnel,
office facilities and supplies, conduct the business and details of the
operation of Government Plus Fund and each Fund and assume certain expenses
thereof, other than obligations or liabilities of the Fund. The Advisory
Agreement may be terminated at any time without penalty by the Trustees or by a
majority of the outstanding voting securities of the applicable 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). The Advisory Agreement also provides that it will continue in effect, with
respect to a Fund, for a period of over two years only if such continuance is
approved annually either by the Trustees or by a majority of the outstanding
voting securities of that Fund, and, in either case, by a vote of a majority
8
<PAGE>
of the Independent Trustees voting in person at a meeting called for the purpose
of voting on such approval.
Under the Advisory Agreement, each Fund pays the Adviser an annual fee,
paid monthly, according to the following schedule:
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
For the fiscal year ended December 31, 1993, the 1st Fund, 2nd Fund and 3rd
Fund paid $17,332, $28,345 and $12,502, respectively, in advisory fees. For the
fiscal year ended December 31, 1994, the 1st Fund, 2nd Fund and 3rd Fund paid
$14,550, $25,158 and $11,190, respectively, in advisory fees. For the fiscal
year ended December 31, 1995, the 1st Fund, 2nd Fund and 3rd Fund paid $14,409,
$24,641 and $11,075, respectively, in advisory fees.
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). Additionally, the Adviser has agreed to
reimburse each Fund if and to the extent expenses exceed 0.25% of each Fund's
investment earnings. 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, 1995, no reimbursement 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, Michael
O'Keefe, Clark D. Wagner and Richard Guinnessey. 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.
UNDERWRITER
Government Plus Fund has entered into an Underwriting Agreement
("Underwriting Agreement") with First Investors Corporation ("Underwriter")
which requires the Underwriter to use its best efforts to sell shares of the
Funds. Pursuant to the Underwriting Agreement, the Underwriter shall bear all
fees and expenses incident to the registration and qualification of the Funds'
shares. In addition, 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 Funds' shares. The
Underwriting
9
<PAGE>
Agreement was approved by the Board of Trustees, including a majority of the
Trustees who are not interested persons (as defined in the 1940 Act) of
Government Plus Fund, and have no direct or indirect financial interest in the
operation of the Underwriting Agreement ("Disinterested Trustees"). The
Underwriting Agreement provides that it will continue in effect, with respect to
a Fund, from year to year only so long as such continuance is specifically
approved at least annually by the Board of Trustees or by a vote of a majority
of the outstanding voting securities of that Fund, and in either case by the
vote of a majority of the Disinterested Trustees, voting in person at a meeting
called for the purpose of voting on such approval. The Underwriting Agreement
will terminate automatically in the event of its assignment.
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 principally 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. The Treasury STRIPS in which the Funds
invest are traded primarily in the over-the-counter markets. Such securities are
valued at the mean between the last bid and asked prices based upon quotes
furnished by a market maker for 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 Government Plus
Fund's officers in a manner specifically authorized by the Board of Trustees. In
that connection, the Board of Trustees has determined that a Fund 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. 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 most recent bid price obtained
from recognized dealers in such securities. 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 Trustees determine that such valuation
does not represent fair value.
The Board of Trustees may suspend the determination of net asset value for
the whole or any part of any period (1) during which trading on the New York
Stock Exchange is restricted as determined by the Securities and Exchange
Commission or such Exchange is closed for other than weekend and holiday
closings, (2) during which an emergency, as defined by rules of the Commission
in respect to the U.S. market, exists as a result of which disposal by the Funds
of securities owned by them is not reasonably practicable for the Funds fairly
to determine the value of their net assets, or (3) for such other period as the
Commission has by order permitted such suspension. During any such period the
Funds may suspend redemption privileges or postpone the date of payment.
10
<PAGE>
ALLOCATION OF PORTFOLIO BROKERAGE
Purchases and sales of portfolio securities by the Funds generally will be
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 commission paid by
the Funds 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.
In effecting portfolio transactions for the Funds, the Adviser 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 its Adviser, 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 may use research and services provided to it by
brokers and dealers in servicing all the funds in the First Investors Group of
Funds; however, not all such services may be used by the Adviser in connection
with the Funds. No portfolio orders are placed with an affiliated broker, nor
does any affiliated broker participate in these commissions.
The Adviser may combine transaction orders placed on behalf of a Fund, any
other fund in the First Investors Group of Funds, any fund 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, 1993, the 1st Fund and 2nd Fund paid
$24 and $83, respectively, in brokerage commissions. For the fiscal year ended
December 31, 1993, the 2nd Fund paid $155 in brokerage commissions. Of that
amount, $72 was paid in brokerage commissions to brokers who furnished research
services on portfolio transactions in the amount of $31,925.
For the fiscal year ended December 31, 1994, the 1st Fund, 2nd Fund and 3rd
Fund paid $8, $141 and $137, respectively, in brokerage commissions, none of
which was paid to brokers who furnished research services on portfolio
transactions.
For the fiscal year ended December 31, 1995, the 1st Fund did not pay
brokerage commissions. For the fiscal year ended December 31, 1995, the 2nd
Series paid $21 in brokerage commissions, all of which was paid in brokerage
commissions to brokers who furnished research services on portfolio transactions
in the amount of $12,019. For the fiscal year ended December 31, 1995, the 3rd
Series paid $21 in brokerage commissions, none of which was paid to brokers who
furnished research services on portfolio transactions.
11
<PAGE>
PURCHASE AND REDEMPTION OF SHARES
Cumulative Purchase Privilege. Upon written notice to FIC, shares of a Fund
are also available at a quantity discount on new purchases if the then current
value at the current public offering price (i.e., net asset value plus
applicable sales charge) of all shares of the Fund previously purchased or
acquired and then owned, plus the value of shares being purchased at the current
public offering price, amount to $10,000 or more. Such quantity discounts may be
modified or terminated at any time by the Underwriter.
Systematic Withdrawal Plan. Shareholders who own noncertificated shares may
establish a Systematic Withdrawal Plan ("Withdrawal Plan"). If you have a Fund
account with a net asset value of at least $5,000, you may elect to receive
monthly, quarterly, semi-annual or annual checks for any designated amount
(minimum $25). You may have the payments sent directly to you or persons you
designate. Dividends and other distributions, if any, are reinvested in
additional 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. To establish a Withdrawal Plan,
call Shareholder Services at 1-800-423-4026.
TAXES
Each Fund is treated as a separate corporation for Federal income tax
purposes. In order to continue to qualify for treatment as a regulated
investment company ("RIC") under the Code, a 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 and net short-term
capital gain ("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 other income derived with respect
to its business of investing in securities ("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 that were 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
12
<PAGE>
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.
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.
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 may acquire zero coupon securities issued with original issue
discount. As a holder of those securities, each such Fund must include in its
income the original issue discount that accrues on the securities during the
taxable year, even if it receives no corresponding payment on them during the
year. Similarly, each such Fund must include in its gross income securities it
receives as "interest" on pay-in-kind securities. Because each Fund annually
must distribute substantially all of its investment company taxable income,
including any original issue discount and other non-cash income, to satisfy the
Distribution Requirement and avoid imposition of the Excise Tax, either 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 a Fund's cash assets or from the proceeds of sales of
portfolio securities, if necessary. A 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 a 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
Each Fund may advertise its performance in various ways.
Each Fund's yield is presented for a specified thirty-day period (the "base
period"). Yield is based on the amount determined by (i) calculating the
aggregate amount of dividends and interest earned by the 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 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
13
<PAGE>
is generally calculated using the yield to maturity (or first expected call
date) of such obligations based on their market values. Dividends on equity
securities are accrued daily at their estimated stated dividend rates.
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" in the
formula below) over a number of years ("n") with the Ending Redeemable Value
("ERV") of that investment, according to the following formula:
T=[(ERV/P)^1/n]-1
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
In providing such performance data, a Fund will assume the payment of the
maximum sales charge of 8.00% (as a percentage of the offering price) on the
initial investment ("P"). The Fund will assume that during the period covered
all dividends and capital gain distributions are reinvested at net asset value
per share, and that the investment is redeemed at the end of the period. Total
return may also be based on investment at reduced sales charge levels or at net
asset value. Any quotation of total return not reflecting the maximum sales
charge will be greater than if the maximum sales charge were used.
Total 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. The total return will
fluctuate over time and the total return for any given past period is not an
indication or representation by the 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 total return and yield during the period of the waiver
or reimbursement.
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 gains
distributions in additional shares. These examples may also include hypothetical
returns comparing taxable vs. tax-deferred growth which would pertain to an IRA,
403(b) or other qualified retirement program. The examples used will be for
illustrative purposes only and are not representations by the Funds of past or
future yield or return.
From time to time, in reports and promotional literature, each Fund may
compare their 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
14
<PAGE>
of broad groups of unmanaged securities considered to be representative of, or
similar to, the 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.
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 Fund's 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 taxable bond indices
which Merrill Lynch tracks. They also list the par weighted
characteristics of each Index.
15
<PAGE>
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, BUSINESS WEEK, 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.
16
<PAGE>
GENERAL INFORMATION
Audits And Reports. The accounts of the Funds are audited twice a year by
Tait, Weller & Baker, independent certified public accountants. Shareholders
receive semi-annual and annual reports of the Fund, including audited financial
statements, and a list of securities owned.
Transfer Agent. Administrative Data Management Corp., 581 Main Street,
Woodbridge, NJ 07095-1198, an affiliate of First Investors Management Company,
Inc. and First Investors Corporation, acts as transfer agent (the "Transfer
Agent") for the Funds and as redemption agent for regular redemptions. The fees
charged to the Funds 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
partial withdrawal or complete liquidation; and $1.00 per account per report
required by any government authority. Additional fees charged to the Funds 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. 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, 1995, the 1st Fund, 2nd
Fund and 3rd Fund paid $1,805, $4,356 and $1,196, respectively, in transfer
agency fees. The Transfer Agent's telephone number is 1-800-423-4026.
5% Shareholders. As of April 1, 1996, the following beneficially owned more
than 5% of the outstanding shares of the 3rd Fund:
Shareholder % of Shares
----------- -----------
Dermot F. Walsh 5.4
22 Benjamin Street
Old Greenwich, CT 06870-1832
Lew Hong Lee 11.7
1629 Telegraph Ave
Oakland, CA 94612-2197
Pulmonary Specialists Ltd. 6.5
Carrl Linquist
14860 N. Moon Valley Drive
Phoenix, AZ 85022-3662
17
<PAGE>
Purchases Made During the Initial Offering Period. At the end of the
initial offering period of each Fund's shares, the Adviser invested a sufficient
portion of each Fund's assets in Zero Coupon Securities in order to provide an
anticipated minimum return for shareholders who invested during such period. The
anticipated minimum returns were and continue to be: $4.00 for each $1.00 with a
maturity date of December 31, 2004 for the 1st Fund; $2.00 for each $1.00
invested with a maturity date of December 31, 1999 for the 2nd Fund; and $1.50
for each $1.00 with a maturity date of December 31, 1998 for the 3rd Fund. In
order to achieve these goals, at the close of each Fund's initial offering
period the Adviser made investments yielding 8.04%, 5.92% and 3.98% for the 1st
Fund, 2nd Fund and 3rd Fund, respectively, over the life of each Fund. The
Adviser does not intend to sell these investments until their ultimate maturity
date, except to meet certain redemption requests.
The Adviser was able to establish these goals because yields of Zero Coupon
Securities available in the marketplace at the time of investment exceeded the
yields necessary to produce these returns. These results will occur even if all
Other Securities purchased by each Fund pay no dividends or interest or are
worthless at the maturity date for each Fund, provided that every Zero Coupon
Security purchased by each Fund is held to maturity and the issuers of such
securities do not default.
Shareholder Liability. Government Plus Fund is organized as an entity known
as a "Massachusetts business trust." Under Massachusetts law, shareholders of
such a trust may, under certain circumstances, be held personally liable for the
obligations of Government Plus Fund. The Declaration of Trust however, contains
an express disclaimer of shareholder liability for acts or obligations of
Government Plus Fund and requires that notice of such disclaimer be given in
each agreement, obligation, or instrument entered into or executed by Government
Plus Fund or the Trustees. The Declaration of Trust provides for indemnification
out of the property of Government Plus Fund of any shareholder held personally
liable for the obligations of Government Plus Fund. The Declaration of Trust
also provides that Government Plus Fund shall, upon request, assume the defense
of any claim made against any shareholder for any act or obligation of
Government Plus Fund and satisfy any judgment thereon. Thus, the risk of a
shareholder's incurring financial loss on account of shareholder liability is
limited to circumstances in which Government Plus Fund itself would be unable to
meet its obligations. The Adviser believes that, in view of the above, the risk
of personal liability to shareholders is immaterial and extremely remote. The
Declaration of Trust further provides that the Trustees will not be liable for
errors of judgment or mistakes of fact or law, but nothing in the Declaration of
Trust protects a Trustee against any liability to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office.
Government Plus Fund may have an obligation to indemnify Trustees and officers
with respect to litigation.
18
<PAGE>
APPENDIX A
DESCRIPTION OF COMMERCIAL PAPER RATINGS
STANDARD & POOR'S RATINGS GROUP
Standard & Poor's Rating Group ("S&P") 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 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 positons 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.
19
<PAGE>
Financial Statements as of December 31, 1995
20
<PAGE>
<TABLE>
<CAPTION>
Portfolio of Investments
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
December 31, 1995
- ----------------------------------------------------------------------------------------------------------------------------------
Principal 1st SERIES 2nd SERIES 3rd SERIES
Amount or --------------- --------------- ---------------
Shares Security Value % Value % Value %
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. GOVERNMENT SECURITIES
$2,475M Treasury STRIPS, due 11/15/2004 $ 1,507,523
3,000M Treasury STRIPS, due 11/15/1999 $ 2,449,500
1,200M Treasury STRIPS, due 11/15/1998 $ 1,033,920
- ----------------------------------------------------------------------------------------------------------------------------------
Total Value of U.S. Government Securities
(cost $1,036,928, $2,213,073 and $962,602,
respectively) 1,507,523 98.9 2,449,500 99.0 1,033,920 91.5
- ----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS
Consumer Non-Durables
300 Dreyers Grand Ice Cream, Inc. 9,975 .9
- ----------------------------------------------------------------------------------------------------------------------------------
Financial
378 Southern National Corporation 9,923 .9
- ----------------------------------------------------------------------------------------------------------------------------------
Healthcare/Miscellaneous
200 Fisher Scientific International 6,675
100 VidaMed, Inc. 950
100 VidaMed, Inc. 950
200 VidaMed, Inc. 1,900
- ----------------------------------------------------------------------------------------------------------------------------------
950 .1 950 .0 8,575 .7
- ----------------------------------------------------------------------------------------------------------------------------------
Technology
160 Motorola, Inc. 9,120
400 Motorola, Inc. 22,800
400 Motorola, Inc. 22,800
- ----------------------------------------------------------------------------------------------------------------------------------
9,120 .5 22,800 .9 22,800 2.0
- ----------------------------------------------------------------------------------------------------------------------------------
Transportation
400 *Interpool, Inc. 7,150
700 Transportacion Maritima Mexicana S.A. (ADR) 5,863
- ----------------------------------------------------------------------------------------------------------------------------------
13,013 1.2
- ----------------------------------------------------------------------------------------------------------------------------------
Total Value of Common Stocks
(cost $2,675, $6,821 and $41,870 respectively) 10,070 .6 23,750 .9 64,285 5.7
- ----------------------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $1,039,603,
$2,219,895 and $1,004,472, respectively) 1,517,593 99.5 2,473,250 99.9 1,098,205 97.2
Other Assets, Less Liabilities 6,900 .5 2,120 .1 31,451 2.8
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets $ 1,524,493 100.0 $ 2,475,370 100.0 $ 1,129,656 100.0
- ----------------------------------------------------------------------------------------------------------------------------------
*Non-income producing
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
December 31, 1995
- ----------------------------------------------------------------------------------------------------------------------------------
1st Series 2nd Series 3rd Series
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Investments in securities:
At identified cost $ 1,039,603 $ 2,219,894 $ 1,004,472
--------------- --------------- ---------------
At value (Note 1A) $ 1,517,593 $ 2,473,250 $ 1,098,205
Cash 13,284 12,801 45,955
Other assets 883 972 1,010
---------------- ---------------- ----------------
Total Assets 1,531,760 2,487,023 1,145,170
---------------- ---------------- ----------------
Liabilities
Payable for capital stock redeemed -- -- 8,303
Cash portion of dividend payable January 15, 1996 1,441 3,297 1,815
Accrued advisory fees 1,258 2,053 946
Accrued expenses 4,568 6,303 4,450
---------------- ---------------- ----------------
Total Liabilities 7,267 11,653 15,514
---------------- ---------------- ----------------
Net Assets $ 1,524,493 $ 2,475,370 $ 1,129,656
================ =============== ================
Net Assets Consist of:
Capital paid in $ 1,046,503 $ 2,437,085 $ 1,076,568
Accumulated net realized gain on investments -- ( 215,071) ( 40,645)
Net unrealized appreciation in value of investments 477,990 253,356 93,733
---------------- ---------------- ----------------
Total $ 1,524,493 $ 2,475,370 $ 1,129,656
================ ================ ================
Shares of beneficial interest outstanding (Note 3) 131,683 214,771 94,632
======= ======= =======
Net Asset Value and Redemption Price Per Share
(Net assets divided by shares of beneficial interest outstanding) $11.58 $11.53 $11.94
====== ====== ======
Maximum Offering Price Per Share
(Net Asset Value /.92)* $12.59 $12.53 $12.98
====== ====== ======
*On purchases of $10,000 or more, the sales charge is reduced.
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Operations
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
Year Ended December 31, 1995
- ----------------------------------------------------------------------------------------------------------------------------------
1st Series 2nd Series 3rd Series
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income
Income:
Interest $ 103,605 $ 178,622 $ 71,526
Dividends 64 196 716
---------------- --------------- ---------------
Total income 103,669 178,818 72,242
---------------- --------------- ---------------
Expenses (Notes 1 and 4):
Advisory fees 14,409 24,641 11,075
Professional fees 6,186 8,071 5,170
Shareholder servicing costs 2,915 7,330 1,682
Reports and notices to shareholders 1,739 4,122 1,302
Custodian fees 522 938 523
Other expenses 1,245 2,556 1,147
---------------- --------------- ---------------
Total expenses 27,016 47,658 20,899
Less: Expenses assumed by investment adviser ( 3,588) -- --
Custodian fees paid indirectly ( 388) ( 723) ( 523)
---------------- --------------- ---------------
Expenses-net 23,040 46,935 20,376
---------------- --------------- ---------------
Net investment income 80,629 131,883 51,866
---------------- --------------- ---------------
Realized and Unrealized Gain (Loss) on Investments (Note 2):
Net realized gain on investments 44,088 15,932 16,394
Net unrealized appreciation of investments 232,496 196,513 73,053
---------------- --------------- ---------------
Net gain on investments 276,584 212,445 89,447
---------------- --------------- ---------------
Net Increase in Net Assets Resulting from Operations $ 357,213 $ 344,328 $ 141,313
=============== =============== ===============
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
- ----------------------------------------------------------------------------------------------------------------------------------
1st Series 2nd Series 3rd Series
----------------------- --------------------- ---------------------
Year Ended December 31 1995 1994 1995 1994 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income $ 80,629 $ 83,432 $ 131,883 $ 137,784 $ 51,866 $ 53,375
Net realized gain on investments 44,088 58,651 15,932 24,904 16,394 43,841
Net unrealized appreciation
(depreciation) of investments 232,496 ( 323,053) 196,513 ( 349,642) 73,053 ( 165,381)
------------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations 357,213 ( 180,970) 344,328 ( 186,954) 141,313 ( 68,165)
------------- ----------- ----------- ----------- ----------- -----------
Distributions to Shareholders from:
Net investment income ( 80,629) ( 83,432) ( 131,883) ( 137,784) ( 51,866) ( 53,375)
Net realized gain from security transactions ( 44,088) ( 58,651) -- -- -- --
Capital surplus ( 64) ( 102) -- ( 1,283) -- ( 1,156)
------------- ----------- ----------- ----------- ----------- -----------
Total distributions ( 124,781) ( 142,185) ( 131,883) ( 139,067) ( 51,866) ( 54,531)
------------- ----------- ----------- ----------- ----------- -----------
Trust Share Transactions(a)
Proceeds from shares sold 20,233 498 3,236 19,734 3,575 3,715
Value of distributions reinvested 123,340 139,960 128,586 133,817 50,051 52,560
Cost of shares redeemed ( 181,639) ( 218,951) ( 228,681) ( 224,200) ( 45,684) ( 159,485)
------------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) from
trust share transactions ( 38,066) ( 78,493) ( 96,859) ( 70,649) 7,942 ( 103,210)
------------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets 194,366 ( 401,648) 115,586 ( 396,670) 97,389 ( 225,906)
Net Assets
Beginning of year 1,330,127 1,731,775 2,359,784 2,756,454 1,032,267 1,258,173
------------- ----------- ----------- ----------- ----------- -----------
End of year $ 1,524,493 $ 1,330,127 $ 2,475,370 $ 2,359,784 $ 1,129,656 $ 1,032,267
=========== =========== =========== =========== =========== ===========
(a)Trust Shares Issued and Redeemed
Issued 1,712 41 300 1,527 292 315
Issued on distributions reinvested 10,654 14,238 10,618 12,861 4,014 4,795
Redeemed ( 16,034) ( 19,122) ( 19,716) ( 19,600) ( 3,865) ( 13,369)
------------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in
trust shares outstanding ( 3,668) ( 4,843) ( 8,798) ( 5,212) 441 ( 8,259)
============ ========== ========== ========== ===== ==========
See notes to financial statements
</TABLE>
<PAGE>
Notes to Financial Statements
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
1. Significant Accounting Policies - The Fund is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940 (the
"1940 Act") as a diversified open-end management investment company. The Fund
operates as a series fund, issuing shares of beneficial interest of the 1st, 2nd
and 3rd Series and accounts separately for the assets, liabilities and
operations of each Series. The Funds' objective is first to generate income,
and, to a lesser extent, achieve long-term capital appreciation.
A. Security Valuation - 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 the
system where the security is primarily traded. Securities which have no sales on
a particular day and securities traded in the over-the-counter market are valued
at the mean between the last bid and asked prices. The Treasury STRIPS in which
each Series invests are traded primarily in the over-the-counter market. Such
securities are valued at the mean between the last bid and asked prices on that
day as furnished by any dealer who makes 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 methods approved by the
trustees of the Fund.
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 each Series 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 each
Series from all, or substantially all, federal income taxes. At December 31,
1995, the following Series had capital loss carryovers expiring as follows:
Year of Expiration 2nd SERIES 3rd SERIES
------------------ ---------- ----------
1996 $ 86,500 $ --
1997 98,768 --
1998 29,803 24,741
2001 -- 15,904
---------- ----------
$ 215,071 $ 40,645
========== ==========
C. Distributions to Shareholders - Distributions to shareholders are declared
and paid annually. 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. Expense Allocation - Direct expenses attributable to a Series are charged to
and paid from the assets of that Series. Indirect or general expenses of the
Fund are allocated among and charged to the assets of each Series on a fair and
equitable basis, which may be based on the relative assets of each Series or the
nature of the services performed and relative applicability to each Series.
E. Security Transactions and Investment Income - 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
common stocks and the amortized cost basis for Treasury STRIPS for both
financial statement and federal income tax purposes. Dividend income is recorded
on the ex-dividend date. Interest income (consisting
<PAGE>
of amortized discount) and estimated expenses are accrued daily. The Fund's
Custodian has provided credits in the amount of $1,634 against custodian charges
based on the uninvested cash balances of the Fund.
2. Security Transactions - Purchases and sales of securities and long-
term U.S. Government Obligations, excluding short-term notes, were as
follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1995 1st SERIES 2nd SERIES 3rd SERIES
- ----------------------------- ---------- ---------- ----------
Securities
- ----------
<S> <C> <C> <C>
Purchases $ 876 $ 876 $ 16,553
=========== =========== ===========
Proceeds of sales $ 941 $ 13,809 $ 60,593
=========== =========== ===========
Long-Term U.S. Government Obligations
- --------------------------------------
Purchases $ 103,505 $ 178,514 $ 71,525
=========== =========== ===========
Proceeds of sales $ 186,395 $ 266,303 $ 38,477
=========== =========== ===========
</TABLE>
At December 31, 1995, aggregate cost and net unrealized appreciation of
securities for federal income tax purposes were as follows:
<TABLE>
<CAPTION>
1st SERIES 2nd SERIES 3rd SERIES
----------- ----------- -----------
<S> <C> <C> <C>
Aggregate cost of investments $ 1,039,603 $ 2,219,894 $ 1,004,472
=========== =========== ===========
Unrealized appreciation $ 477,990 $ 253,356 $ 94,563
Unrealized depreciation -- -- 830
----------- ----------- -----------
Net unrealized appreciation $ 477,990 $ 253,356 $ 93,733
=========== =========== ===========
</TABLE>
3. Trust Shares - The Declaration of Trust permits the Fund to issue an
unlimited number of shares of beneficial interest, of one or more Series.
4. Advisory Fee and Other Transactions With Affiliates - Certain officers and
trustees 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.
("ADM") and/or First Financial Savings Bank, S.L.A. ("FFS"), custodian of the
Fund's Individual Retirement Accounts. Officers and trustees 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% of the first $200 million of each
Series' 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. Expenses of the 1st Series in the amount of $3,588 were assumed
by FIMCO.
Pursuant to certain state regulations, FIMCO has agreed to reimburse a Series if
and to the extent that such Series' 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
Series 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
such Series . For the year ended December 31, 1995, no reimbursement was
required pursuant to these provisions.
For the year ended December 31, 1995, shareholder servicing costs included
$7,358 in fees paid to ADM and $4,341 in custodian fees paid to FFS.
<PAGE>
Independent Auditor's Report
To the Shareholders and Trustees of
First Investors U.S. Government Plus Fund
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the 1st, 2nd and 3rd Series of First Investors
U.S. Government Plus Fund as of December 31, 1995, 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, 1995, 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 the
1st, 2nd and 3rd Series of First Investors U.S. Government Plus Fund as of
December 31, 1995, and the results of their operations, changes in their net
assets and the financial highlights for each of the respective years indicated
thereon, in conformity with generally accepted accounting principles.
/S/ Tait, Weller & Baker
Philadelphia, Pennsylvania
January 31, 1996
