FIRST INVESTORS
FIRST INVESTORS
U.S. GOVERNMENT PLUS FUND, INC.
ANNUAL REPORT
DECEMBER 31, 1996
The following appears at the bottom left of the first page:
First Investors Logo
A MEMBER OF THE
FIRST INVESTORS
FINANCIAL NETWORK
FI6146
Portfolio Manager's Letter
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
Dear Investor:
Unlike 1995, when both the U.S. stock market
and the bond market enjoyed a banner year,
1996 saw the returns in the two markets venture
in opposite directions. In particular, shares of
large, well-known companies performed very
well as investors wary of the extended bull
market sought safety in blue chip stocks.
Smaller stocks, which make up the Fund's small
equity component, also had a good year, but
were not as strong as large stocks. The S&P
500 returned 23.0% in 1996, compared with
16.6% for the Russell 2000.
While the stock market continued its record
climb, the U.S. bond market was less
spectacular. Signs of a strengthening economy
in the first half of 1996 caused long-term interest
rates to rise as high as 7.19% from 5.95% on
January 1. However, by the end of 1996, long-
term rates settled back to 6.64% as the economic
signals became mixed. The Lehman Brothers
Long Treasury Bond Index fell 0.8% for the
year.
During 1996, First Investors U.S. Government
Plus Fund 1st Fund, 2nd Fund and 3rd Fund
returned (1.9)%, 1.0% and 1.0%, respectively,
on a net asset value basis. In 1996, dividends
declared from net investment income were 64.8,
67.5 and 59.3 cents per share to the 1st Fund,
2nd Fund and 3rd Fund, respectively. In
addition, the 1st Fund declared a capital gain
distribution of 34.7 cents per share. U.S.
Treasury STRIPS, which are zero coupon bonds,
represent the majority of the invested assets.
The performance of these bonds is more
sensitive to interest rate movements than other
bonds because they don't pay interest each year.
When rates rise, the price of zero coupon bonds
fall sharply because holders have no interest
payments to reinvest at the newer, more
attractive levels.
The Funds' equity holdings turned in mixed
performances. Stocks that positively affected
performance included Fisher Scientific, a
supplier of scientific and laboratory instruments,
Interpool, a lessor of cargo containers, and
VidaMed, a medical device maker. Stocks that
hurt performance included USCI, a marketer of
cellular phone and paging services,
Transportacion Maritima Mexicana, a Mexican
transportation company, and Bernard Chaus, a
maker of women's apparel.
Looking forward, the factors that benefited the
markets in 1996 appear likely to continue in
1997: moderate growth, low inflation, and
strong demand for financial assets. A significant
risk to the market is that inflation may increase
due to the length of the economic expansion.
This would lead the Federal Reserve to raise
interest rates which could hurt both the bond and
stock markets. On the other hand, the markets
may be positively surprised by legislation from
the President and Congress to eliminate the
federal budget deficit. We will continue to be
alert to events that could affect the value of your
investments.
As always, we appreciate the opportunity to
serve your investment needs.
Sincerely,
/s/ Patricia D. Poitra
Patricia D. Poitra
Director of Equities
and Portfolio Manager
January 31, 1997
Cumulative Performance Information
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND - 1st FUND
Comparison of change in value of $10,000 investment in the First Investors U.S.
Government Plus Fund - 1st Fund, the Lehman Brothers Intermediate Treasury
Index and the Lehman Brothers Long Term Treasury Index.
The following table is the source data for the line chart which appears at this
point in the printed document. This table is not part of the original printed
document and is shown for reference only. The same is also true for this
descriptive paragraph.
GOVT PLUS INTERMEDIATE LONG TERM
1ST FUND INDEX INDEX
Jan-87 $9,200 $10,000 $10,000
Dec-87 7,978 10,360 9,732
Dec-88 8,992 11,009 10,628
Dec-89 10,867 12,406 12,638
Dec-90 10,981 13,579 13,436
Dec-91 13,461 15,494 15,923
Dec-92 14,323 16,568 17,191
Dec-93 17,108 17,931 20,157
Dec-94 15,243 17,615 18,617
Dec-95 19,664 20,153 24,330
Dec-96 19,183 20,956 24,119
**BOXED INFORMATION INSIDE GRAPH
Average Annual Total Return*
N.A.V. Only S.E.C. Standardized
One Year (1.86)% (9.73)%
Five Years 7.35% 5.57%
Ten Years 7.63% 6.74%
The graph compares a $10,000 investment in the First Investors U.S. Government
Plus Fund - 1st Fund beginning 1/1/87 with theoretical investments in the
Lehman Brothers Intermediate Treasury Index and the Lehman Brothers Long Term
Treasury Index. The Lehman Brothers Intermediate Treasury Index is made up of
all public obligations of the U.S. Treasury with maturities of less than 10
years. The Lehman Brothers Long Term Treasury Index is made up all public
obligations of the U.S. Treasury with maturities of 10 years or greater. It is
not possible to invest directly in these Indices. In addition, the Indices do
not take into account fees and expenses. For purposes of the graph and the
accompanying table, unless otherwise indicated, it has been assumed that the
maximum sales charge was deducted from the initial $10,000 investment in the
Fund and dividends and distributions were reinvested.
*Average Annual Total Return figures (for the period ended 12/31/96) include
the reinvestment of all dividends and distributions. "N.A.V. Only" returns are
calculated without sales charges. The "S.E.C. Standardized" returns shown are
calculated without sales charges. Standardized" returns shown are based on the
maximum sales charge of 8.00%. Some expenses of the Fund were waived or
assumed. If such expenses had been paid by the Fund, the "S.E.C. Standardized"
Average Annual Total return for One Year, Five Years and Ten Years would have
been (10.53)%, 5.42% and 6.64%, respectively. Investment return and principal
value of an investment will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than original cost. Lehman Brothers
Intermediate Treasury Index and Lehman Brothers Long Term Treasury Index
figures from Lehman Brothers, Inc. and all other figures from First Investors
Management Company, Inc.
Cumulative Performance Information
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND - 2nd FUND
Comparison of change in value of $10,000 investment in the First Investors U.S.
Government Plus Fund - 2nd Fund, the Lehman Brothers Intermediate Treasury
Index and the Lehman Brothers Long Term Treasury Index.
The following table is the source data for the line chart which appears at this
point in the printed document. This table is not part of the original printed
document and is shown for reference only. The same is also true for this
descriptive paragraph.
GOVT PLUS INTERMEDIATE LONG TERM
2ND FUND INDEX INDEX
Jan-87 $9,200 $10,000 $10,000
Dec-87 8,524 10,360 9,732
Dec-88 9,283 11,009 10,628
Dec-89 10,987 12,406 12,638
Dec-90 11,428 13,579 13,436
Dec-91 13,623 15,494 15,923
Dec-92 14,583 16,568 17,191
Dec-93 16,410 17,931 20,157
Dec-94 15,279 17,615 18,617
Dec-95 17,632 20,153 24,330
Dec-96 17,793 20,956 24,119
**BOXED INFORMATION INSIDE GRAPH
Average Annual Total Return*
N.A.V. Only S.E.C. Standardized
One Year 1.00% (7.06)%
Five Years 5.49% 3.74%
Ten Years 6.82% 5.93%
The graph compares a $10,000 investment in the First Investors U.S. Government
Plus Fund - 2nd Fund beginning 1/1/87 with theoretical investments in the
Lehman Brothers Intermediate Treasury Index and the Lehman Brothers Long Term
Treasury Index. The Lehman Brothers Intermediate Treasury Index is made up of
all public obligations of the U.S. Treasury with maturities of less than 10
years. The Lehman Brothers Long Term Treasury Index is made up all public
obligations of the U.S. Treasury with maturities of 10 years or greater. It is
not possible to invest directly in these Indices. In addition, the Indices do
not take into account fees and expenses. For purposes of the graph and the
accompanying table, unless otherwise indicated, it has been assumed that the
maximum sales charge was deducted from the initial $10,000 investment in the
Fund and dividends and distributions were reinvested.
*Average Annual Total Return figures (for the period ended 12/31/96) include
the reinvestment of all dividends and distributions. "N.A.V. Only" returns are
calculated without sales charges. The "S.E.C. Standardized" returns shown are
calculated without sales charges. Standardized" returns shown are based on the
maximum sales charge of 8.00%. Results represent past performance and do not
indicate future results. Investment return and principal value of an investment
will fluctuate so that an investor's shares when redeemed, may be worth more or
less than original cost. Lehman Brothers Intermediate Treasury Index and Lehman
Brothers Long Term Treasury Index figures from Lehman Brothers, Inc. and all
other figures from First Investors Management Company, Inc.
Cumulative Performance Information
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND - 3rd FUND
Comparison of change in value of $10,000 investment in the First Investors U.S.
Government Plus Fund - 3rd Fund, the Lehman Brothers Intermediate Treasury
Index and the Lehman Brothers Long Term Treasury Index.
The following table is the source data for the line chart which appears at this
point in the printed document. This table is not part of the original printed
document and is shown for reference only. The same is also true for this
descriptive paragraph.
GOVT PLUS INTERMEDIATE LONG TERM
3RD FUND INDEX INDEX
Jan-87 $9,200 $10,000 $10,000
Dec-87 8,390 10,360 9,732
Dec-88 9,112 11,009 10,628
Dec-89 10,595 12,406 12,638
Dec-90 10,898 13,579 13,436
Dec-91 12,987 15,494 15,923
Dec-92 13,805 16,568 17,191
Dec-93 15,850 17,931 20,157
Dec-94 14,933 17,615 18,617
Dec-95 17,042 20,153 24,330
Dec-96 17,204 20,956 24,119
**BOXED INFORMATION INSIDE GRAPH
Average Annual Total Return*
N.A.V. Only S.E.C. Standardized
One Year .95% (7.14)%
Five Years 6.09% 4.33%
Ten Years 6.46% 5.58%
The graph compares a $10,000 investment in the First Investors U.S. Government
Plus Fund - 3rd Fund beginning 1/1/87 with theoretical investments in the
Lehman Brothers Intermediate Treasury Index and the Lehman Brothers Long Term
Treasury Index. The Lehman Brothers Intermediate Treasury Index is made up of
all public obligations of the U.S. Treasury with maturities of less than 10
years. The Lehman Brothers Long Term Treasury Index is made up all public
obligations of the U.S. Treasury with maturities of 10 years or greater.
It is not possible to invest directly in these Indices. In addition, the
Indices do not take into account fees and expenses. For purposes of the
graph and the accompanying table, unless otherwise indicated, it has been
assumed that the maximum sales charge was deducted from the initial $10,000
investment in the Fund and dividends and distributions were reinvested.
*Average Annual Total Return figures (for the period ended 12/31/96) include
the reinvestment of all dividends and distributions. "N.A.V. Only" returns are
calculated without sales charges. The "S.E.C. Standardized" returns shown are
calculated without sales charges. Standardized" returns shown are based on the
maximum sales charge of 8.00%. Results represent past performance and do not
indicate future results. Investment return and principal value of an investment
will fluctuate so that an investor's shares, when redeemed, may be worth more
or less than original cost. Lehman Brothers Intermediate Treasury Index and
Lehman Brothers Long Term Treasury Index figures from Lehman Brothers, Inc. and
all other figures from First Investors Management Company, Inc.
<TABLE>
<CAPTION>
Portfolio of Investments
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
December 31, 1996
- --------------------------------------------------------------------------------------------------------------------------------
Principal 1st Fund 2nd Fund 3rd Fund
Amount or -------------------- -------------------- ----------------------
Shares Security Value % Value % Value %
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. GOVERNMENT SECURITIES
$2,225M Treasury STRIPS, due 11/15/2004 $ 1,352,355
2,525M Treasury STRIPS, due 11/15/1999 $ 2,130,595
1,025M Treasury STRIPS, due 11/15/1998 $ 920,655
- --------------------------------------------------------------------------------------------------------------------------------
Total Value of U.S. Government Securities
(cost $1,027,974, $2,016,046 and $887,771,
respectively) 1,352,355 99.5 2,130,595 98.3 920,655 89.8
- --------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS
Communication Services
100 *USCI, Inc. 537
1000 *USCI, Inc. 5,375
1,800 *USCI, Inc. 9,675
- --------------------------------------------------------------------------------------------------------------------------------
537 .0 5,375 .2 9,675 .9
- --------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals
2,300 Chaus (Bernard), Inc. 3,738
300 *Scientific Games Holdings Corporation 8,025
500 *Scientific Games Holdings Corporation 13,375
- --------------------------------------------------------------------------------------------------------------------------------
8,025 .4 17,113 1.7
- --------------------------------------------------------------------------------------------------------------------------------
Consumer Staples
200 The Rival Company 4,975
400 The Rival Company 9,950
- --------------------------------------------------------------------------------------------------------------------------------
4,975 .2 9,950 1.0
- --------------------------------------------------------------------------------------------------------------------------------
Health Care/Miscellaneous
200 Fisher Scientific International 9,425
100 *VidaMed, Inc. 1,288
100 *VidaMed, Inc. 1,288
200 *VidaMed, Inc. 2,575
- --------------------------------------------------------------------------------------------------------------------------------
1,288 .1 1,288 .1 12,000 1.2
- --------------------------------------------------------------------------------------------------------------------------------
Technology
200 *Control Data Systems, Inc. 4,400
400 *Control Data Systems, Inc. 8,800
40 Motorola, Inc. 2,455
100 Motorola, Inc. 6,137
200 Motorola, Inc. 12,275
- --------------------------------------------------------------------------------------------------------------------------------
2,455 .2 10,537 .5 21,075 2.1
- --------------------------------------------------------------------------------------------------------------------------------
Transportation
400 Interpool, Inc. 9,350
1,200 Transportacion Maritima Mexicana S.A. (ADR) 6,300
- --------------------------------------------------------------------------------------------------------------------------------
15,650 1.5
- --------------------------------------------------------------------------------------------------------------------------------
Total Value of Common Stocks
(cost $1,876, $26,598 and $82,545, respectively) 4,280 .3 30,200 1.4 85,463 8.4
- --------------------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $1,029,850,
$2,042,644 and $970,316, respectively) 1,356,635 99.8 2,160,795 99.7 1,006,118 98.2
Other Assets, Less Liabilities 2,238 .2 6,768 .3 18,920 1.8
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets $ 1,358,873 100.0 $ 2,167,563 100.0 $ 1,025,038 100.0
================================================================================================================================
*Non-income producing
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
December 31,1996
- -----------------------------------------------------------------------------------------------------------------------------
1st Fund 2nd Fund 3rd Fund
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Investments in securities:
At identified cost $ 1,029,850 $ 2,042,644 $ 970,316
============== ============== ==============
At value (Note 1A) $ 1,356,635 $ 2,160,795 $ 1,006,118
Cash 8,369 18,689 25,452
Other assets 872 944 924
--------------- --------------- ---------------
Total Assets 1,365,876 2,180,428 1,032,494
--------------- --------------- ---------------
Liabilities
Cash portion of dividend payable January 15, 1997 1,166 3,976 2,734
Payable for capital stock redeemed --- 2,647 ---
Accrued advisory fees 1,136 1,814 856
Accrued expenses 4,701 4,428 3,866
--------------- --------------- ---------------
Total Liabilities 7,003 12,865 7,456
--------------- --------------- ---------------
Net Assets $ 1,358,873 $ 2,167,563 $ 1,025,038
============== =============== ===============
Net Assets Consist of:
Capital paid in $ 1,032,191 $ 2,177,983 $ 1,010,915
Accumulated net realized loss on investments ( 103) ( 128,571) ( 21,679)
Net unrealized appreciation in value of investments 326,785 118,151 35,802
-------------- -------------- --------------
Total $ 1,358,873 $ 2,167,563 $ 1,025,038
============== ============== ==============
Shares of beneficial interest outstanding (Note 3) 131,027 197,535 89,476
======= ======= =======
Net Asset Value and Redemption Price Per Share
(Net assets divided by shares of beneficial interest outstanding) $10.37 $10.97 $11.46
===== ===== =====
Maximum Offering Price Per Share
(Net Asset Value /.92)* $11.27 $11.92 $12.46
===== ===== =====
*On purchases of $10,000 or more, the sales charge is reduced
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
Year Ended December 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
1st Fund 2nd Fund 3rd Fund
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income
Income:
Interest $ 99,347 $ 167,399 $ 69,911
Dividends 38 100 918
-------------- -------------- --------------
Total income 99,385 167,499 70,829
-------------- -------------- --------------
Expenses (Notes 1 and 4):
Advisory fees 13,608 22,888 10,613
Professional fees 6,655 8,081 4,869
Shareholder servicing costs 3,063 7,571 1,951
Reports and notices to shareholders 1,952 2,805 1,850
Custodian fees 439 761 498
Other expenses 1,185 267 963
-------------- -------------- --------------
Total expenses 26,902 42,373 20,744
Less: Expenses assumed by investment adviser ( 4,770) --- ---
Custodian fees paid indirectly ( 365) ( 712) ( 498)
-------------- -------------- --------------
Expenses-net 21,767 41,661 20,246
-------------- -------------- --------------
Net investment income 77,618 125,838 50,583
-------------- -------------- --------------
Realized and Unrealized Gain (Loss) on Investments (Note 2):
Net realized gain on investments 41,339 35,135 18,966
Net unrealized depreciation of investments ( 151,205) ( 135,205) ( 57,931)
-------------- -------------- --------------
Net loss on investments ( 109,866) ( 100,070) ( 38,965)
-------------- -------------- --------------
Net Increase (Decrease) in Net Assets Resulting from Operations $ ( 32,248) $ 25,768 $ 11,618
============== ============== ==============
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
- ------------------------------------------------------------------------------------------------------------------------------
1st Fund 2nd Fund 3rd Fund
---------------------- ---------------------- ---------------------
Year Ended December 31 1996 1995 1996 1995 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income $ 77,618 $ 80,629 $ 125,838 $ 131,883 $ 50,583 $ 51,866
Net realized gain on investments 41,339 44,088 35,135 15,932 18,966 16,394
Net unrealized appreciation
(depreciation) of investments ( 151,205) 232,496 ( 135,205) 196,513 ( 57,931) 73,053
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets
resulting from operations ( 32,248) 357,213 25,768 344,328 11,618 141,313
--------- --------- --------- --------- --------- ---------
Distributions to Shareholders from:
Net investment income ( 77,618) ( 80,629) ( 125,838) ( 131,883) ( 50,583) ( 51,866)
Net realized gains from security
transactions ( 41,442) ( 44,088) --- --- --- ---
Capital surplus --- ( 64) --- --- --- ---
--------- --------- --------- --------- --------- ---------
Total distributions ( 119,060) ( 124,781) ( 125,838) ( 131,883) ( 50,583) ( 51,866)
--------- --------- --------- --------- --------- ---------
Trust Share Transactions(a)
Proceeds from shares sold 1,514 20,233 7,270 3,236 562 3,575
Value of distributions reinvested 117,893 123,340 121,862 128,586 47,849 50,051
Cost of shares redeemed ( 133,719) ( 181,639) ( 336,869) ( 228,681) ( 114,064) ( 45,684)
--------- --------- --------- --------- --------- ---------
Net increase (decrease) from
trust share transactions ( 14,312) ( 38,066) ( 207,737) ( 96,859) ( 65,653) 7,942
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets ( 165,620) 194,366 ( 307,807) 115,586 ( 104,618) 97,389
Net Assets
Beginning of year 1,524,493 1,330,127 2,475,370 2,359,784 1,129,656 1,032,267
--------- --------- --------- --------- --------- ---------
End of year $ 1,358,873 $ 1,524,493 $ 2,167,563 $ 2,475,370 $ 1,025,038 $ 1,129,656
========= ========= ========= ========= ========= =========
(a)Trust Shares Issued and Redeemed
Issued 67 1,712 1,159 300 47 292
Issued on distributions reinvested 11,369 10,654 11,109 10,618 4,176 4,014
Redeemed ( 12,092) ( 16,034) ( 29,504) ( 19,716) ( 9,379) ( 3,865)
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in
trust shares outstanding ( 656) ( 3,668) ( 17,236) ( 8,798) ( 5,156) 441
========= ========= ========= ========= ========= =========
See notes to financial statements
</TABLE>
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 Funds and accounts separately for the assets, liabilities and operations
of each Fund. 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 Fund 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 Fund to continue to
comply with the special provisions of the Internal Revenue Code applicable to
investment companies and to make sufficient distributions of income and capital
gains (in excess of any available capital loss carryovers) to relieve each Fund
from all, or substantially all, federal income taxes. At December 31, 1996, the
following Funds had capital loss carryovers expiring as follows:
Year of Expiration 2nd Fund 3rd Fund
------------------ ---------- ----------
1997 $ 98,768 $ --
1998 29,803 5,775
1999 -- 15,904
---------- ----------
$ 128,571 $ 21,679
========== ==========
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 Fund are charged to
and paid from the assets of that Fund. Indirect or general expenses of the Fund
are allocated among and charged to the assets of each Fund on a fair and
equitable basis, which may be based on the relative assets of each Fund or the
nature of the services performed and relative applicability to each Fund.
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 of amortized discount) and
estimated expenses are accrued daily. The Fund's custodian has provided credits
in the amount of $1,575 against custodian charges based on the uninvested cash
balances of the Fund.
F. Use of Estimates - The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expense during the reporting period. Actual results could differ
from those estimates.
2. Security Transactions - Purchases and sales of securities and long-term U.S.
Government Obligations, excluding short-term notes, were as follows:
Year Ended December 31, 1996 1st Fund 2nd Fund 3rd Fund
- ------------------------------ ----------- ----------- -----------
Securities
- ----------
Purchases $ 550 $ 24,236 $ 58,388
=========== =========== ===========
Proceeds of sales $ 7,202 $ 17,888 $ 30,926
=========== =========== ===========
Long-Term U.S. Government Obligations
- -------------------------------------
Purchases $ 99,347 $ 167,399 $ 69,911
=========== =========== ===========
Proceeds of sales $ 143,787 $ 386,132 $ 150,495
=========== =========== ===========
At December 31, 1996, aggregate cost and net unrealized appreciation of
securities for federal income tax purposes were as follows:
1st Fund 2nd Fund 3rd Fund
----------- ----------- -----------
Aggregate cost of investments $ 1,029,850 $ 2,042,644 $ 970,316
=========== =========== ===========
Gross unrealized appreciation $ 326,798 $ 120,819 $ 50,943
Gross unrealized depreciation 13 2,668 15,141
----------- ----------- -----------
Net unrealized appreciation $ 326,785 $ 118,151 $ 35,802
=========== =========== ===========
3. Trust Shares - The Declaration of Trust permits the Fund to issue an
unlimited number of shares of beneficial interest, of one or more Funds.
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 Fund's
average daily net assets, .75% on the next $300 million, declining by .03% on
each $250 million thereafter, down to .66% on average daily net assets over $1
billion. Expenses of the 1st Fund in the amount of $4,770 were assumed by
FIMCO.
For the year ended December 31, 1996, shareholder servicing costs included
$8,120 in fees paid to ADM and $3,460 in custodian fees paid to FFS.
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 Funds of First Investors
U.S. Government Plus Fund as of December 31, 1996, 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, 1996, 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 Funds of First Investors U.S. Government Plus Fund as of
December 31, 1996, and the results of their operations, changes in their net
assets and the financial highlights for each of the respective years presented,
in conformity with generally accepted accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
January 31, 1997
<TABLE>
<CAPTION>
Financial Highlights
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
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 year indicated.
- -------------------------------------------------------------------------------------------------------------------------------
P E R S H A R E D A T A
- -------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations Less Distributions from
Net --------------------------------------- ----------------------------------- Net
Asset Value Net Realized Asset Value
----------- Net and Unrealized Total from Net Net -----------
Beginning Investment Gain (Loss) on Investment Investment Realized Capital Total End
of Year Income Investments Operations Income Gains Surplus Distributions of Year
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1st Fund
- --------
1987 $16.08 $1.061 $(2.931) $(1.870) $2.260 $2.040 $--- $4.300 $ 9.91
1988 9.91 .796 .464 1.260 .810 .190 --- 1.000 10.17
1989 10.17 .722 1.398 2.120 .703 .093 .044 .840 11.45
1990 11.45 .707 (.587) .120 .707 .409 .024 1.140 10.43
1991 10.43 .686 1.670 2.356 .686 .270 --- .956 11.83
1992 11.83 .715 .042 .757 .715 .532 --- 1.247 11.34
1993 11.34 .670 1.535 2.205 .670 .525 --- 1.195 12.35
1994 12.35 .690 (2.035) (1.345) .690 .484 .001 1.175 9.83
1995 9.83 .667 2.114 2.781 .667 .364 --- 1.031 11.58
1996 11.58 .648 (.863) (.215) .648 .347 --- .995 10.37
2nd Fund
- --------
1987 11.54 .954 (1.754) (.800) 1.480 .050 --- 1.530 9.21
1988 9.21 .762 .058 .820 .770 --- --- .770 9.26
1989 9.26 .737 .963 1.700 .718 --- .032 .750 10.21
1990 10.21 .706 (.296) .410 .706 --- .004 .710 9.91
1991 9.91 .663 1.240 1.903 .663 --- --- .663 11.15
1992 11.15 .656 .130 .786 .656 --- --- .656 11.28
1993 11.28 .643 .770 1.413 .643 --- --- .643 12.05
1994 12.05 .660 (1.484) (.824) .660 --- .006 .666 10.56
1995 10.56 .646 .970 1.616 .646 --- --- .646 11.53
1996 11.53 .675 (.560) .115 .675 --- --- .675 10.97
3rd Fund
- --------
1987 11.22 .680 (1.650) (.970) .840 .240 --- 1.080 9.17
1988 9.17 .605 .185 .790 .610 --- .070 .680 9.28
1989 9.28 .622 .888 1.510 .611 --- .019 .630 10.16
1990 10.16 .598 (.308) .290 .598 --- .012 .610 9.84
1991 9.84 .676 1.211 1.887 .676 --- .001 .677 11.05
1992 11.05 .576 .120 .696 .576 --- --- .576 11.17
1993 11.17 .544 1.110 1.654 .544 --- --- .544 12.28
1994 12.28 .610 (1.307) (.697) .610 --- .013 .623 10.96
1995 10.96 .568 .980 1.548 .568 --- --- .568 11.94
1996 11.94 .593 (.480) .113 .593 --- --- .593 11.46
See notes to financial statements
</TABLE>
<TABLE>
<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 Portfolio
Total Net Assets Investment Turnover
Return+ End of Year Expenses Income Rate
(%) (in thousands) (%) (%) (%)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1st Fund
- --------
1987 (13.28) $1,710 1.74 7.16 3
1988 12.71 1,701 1.69 7.21 9
1989 20.85 1,833 1.61 6.08 9
1990 1.05 1,591 1.90 6.16 14
1991 22.59 1,758 1.86 5.95 8
1992 6.40 1,599 1.75 5.62 8
1993 19.44 1,732 1.59(a) 4.94(a) 7
1994 (10.90) 1,330 1.60(a) 5.73(a) 8
1995 28.29 1,524 1.60(a) 5.60(a) 7
1996 (1.86) 1,359 1.60(a) 5.70(a) 7
2nd Fund
- --------
1987 (7.38) 3,874 1.76 7.33 2
1988 8.90 3,561 1.65 7.10 9
1989 18.36 3,492 1.66 6.53 11
1990 4.02 2,943 1.88 6.46 12
1991 19.20 2,946 1.91 5.87 8
1992 7.05 2,784 1.77 5.46 7
1993 12.53 2,756 1.70 4.93 7
1994 (6.89) 2,360 1.78 5.48 8
1995 15.30 2,475 1.93 5.35 7
1996 1.00 2,168 1.85 5.50 8
3rd Fund
- --------
1987 (8.81) 2,121 1.61 5.92 23
1988 8.62 2,038 1.54 5.76 22
1989 16.27 2,067 1.60 5.82 25
1990 2.85 1,777 1.74 5.53 20
1991 19.18 1,355 1.83 5.17 11
1992 6.30 1,185 1.88 4.61 8
1993 14.81 1,258 1.68 4.27 11
1994 (5.78) 1,032 1.74 4.77 10
1995 14.12 1.130 1.89 4.68 8
1996 .95 1,025 1.95 4.77 12
+ Calculated without sales charge
(a) For the years 1993, 1994, 1995 and 1996, the investment adviser assumed expenses of the 1st Fund of $2,744, $2,594, $3,588
and $4,770, respectively. The ratios of expenses and net investment income to average net assets before the assumption of
these expenses were as follows:
1993 1994 1995 1996
----- ----- ----- -----
Expenses 1.75% 1.78% 1.87% 1.98%
Net Investment Income 4.79% 5.56% 5.32% 5.35%
</TABLE>
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
Directors
- ---------------------------------------
James J. Coy
Roger L. Grayson
Glenn O. Head
Kathryn S. Head
Rex R. Reed
Herbert Rubinstein
James M. Srygley
John T. Sullivan
Robert F. Wentworth
Officers
- ---------------------------------------
Glenn O. Head
President
Concetta Durso
Vice President and Secretary
Patricia D. Poitra
Vice President
Joseph I. Benedek
Treasurer
Carol Lerner Brown
Assistant Secretary
Gregory R. Kingston
Assistant Treasurer
Mark S. Spencer
Assistant Treasurer
Shareholder Information
- ---------------------------------------
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
Custodian
The Bank of New York
48 Wall Street
New York, NY 10286
Transfer Agent
Administrative Data
Management Corp.
581 Main Street
Woodbridge, NJ 07095-1198
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, DC 20036
Auditors
Tait, Weller & Baker
Two Penn Center Plaza
Philadelphia, PA 19102
It is the Fund's practice to mail only one copy of its
annual and semi-annual reports to any address at
which more than one shareholder with the same last
name has indicated that mail is to be delivered.
Additional copies of the reports will be mailed if
requested by any shareholder in writing or by calling
800-423-4026. The Fund will ensure that separate
reports are sent to any shareholder who subsequently
changes his or her mailing address.
This report is authorized for distribution only to
existing shareholders, and, if given to prospective
shareholders, must be accompanied or preceded by the
Fund's prospectus.
