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, 1998; 2nd Fund, December 31, 1999; 3rd Fund, December 31, 2004. Based on the
current composition of the portfolio of the 1st Fund, the Fund anticipates that
its portfolio will be entirely in cash or cash equivalents by November 15, 1998
and that distributions to shareholders will be made by 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 ("SAI"), dated April 30, 1998 (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 30, 1998,
As Amended May 22, 1998
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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.
SHAREHOLDER TRANSACTION EXPENSES
1st 2nd 3rd
Fund Fund Fund
---- ---- ----
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)*.................................. 0.60% 0.60% 0.60%
12b-1 Fees........................................... -0- -0- -0-
Other Expenses(2)*................................... 0.50% 0.50% 0.50%
Total Fund Operating Expenses(3)*.................... 1.10% 1.10% 1.10%
* Net of waiver and/or reimbursement.
(1) Management Fees have been restated for the Funds to reflect current fees.
For the fiscal year ended December 31, 1997, the Advisor waived Management
Fees for each Fund in excess of 0.80%. Absent the waiver, such fees would
have been 1.00% for each Fund. The Adviser will waive Management Fees for
the Funds in excess of 0.60% for each Fund for a minimum period ending
December 31, 1998.
(2) Other Expenses have been restated for the Funds to reflect current
expenses. For the fiscal year ended December 31, 1997, the Adviser
reimbursed each Fund for certain Other Expenses. Absent such reimbursement,
Other Expenses would have been 0.93% for the 1st Fund; 0.92% for the 2nd
Fund; and 0.93% for the 3rd Fund. The Adviser will reimburse each Fund for
Other Expenses in excess of 0.50% for a minimum period ending December 31,
1998.
(3) If certain fees and expenses had not been waived or reimbursed, Total Fund
Operating Expenses would have been 1.93% for the 1st Fund; 1.92% for the
2nd Fund; and 1.93% for the 3rd Fund. Each Fund has an expense offset
arrangement that may reduce the Fund's custodian fee based on the amount of
cash maintained by the Fund with its custodian. Any such fee reductions are
not reflected under Total Fund Operating Expenses.
The example below is based on expense data for each Fund's fiscal year
ended December 31, 1997, except that certain Operating Expenses have been
restated, as noted above. 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.
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:
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1st 2nd 3rd
Fund Fund Fund
1 year............................... $90 $90 $90
3 years.............................. 112 112 112
5 years.............................. 136 136 136
10 years............................. 203 203 203
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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. 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. The table has been derived from
financial statements which have been audited by Tait, Weller & Baker,
independent certified public accountants, whose report thereon appears in the
SAI. This information should be read in conjunction with the Financial
Statements and Notes thereto, which also appear in the SAI, available at no
charge upon request to the Funds.
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<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
P E R S H A R E D A T A
- ------------------------------------------------------------------------------------------------------------------------------------
Less Distributions
Income from Investment Operations from
Net
Realized
and
Unrealized
Net Net Gain Net Net
Asset Value Invest- (Loss) on Total from Invest- Net Total Asset Value
Beginning ment Invest- Investment ment Realized Capital Distribu End
of Year Income ment Operations Income Gains Surplus -tions of Year
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1st Fund
- --------
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
1997 10.37 .670 .274 .944 .670 .394 -- 1.064 10.25
2nd Fund
- --------
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
1997 10.97 .700 (.210) .490 .700 -- -- .700 10.76
3rd Fund
- --------
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
1997 11.46 .642 (.349) .293 .643 -- -- .643 11.11
+ Calculated without sales charge
++ Net of expenses waived or assumed
</TABLE>
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<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
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 Before Expenses
Ratio to Average Net Assets++ Waived or Assumed
Net Assets Net Portfolio
Total End of Investment Investment Turnover
Return+ Year (in Expenses Income Expenses Income Rate
(%) thousands) (%) (%) (%) (%) (%)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12.71 $1,701 1.69 7.21 -- -- 9
20.85 1,833 1.61 6.08 -- -- 9
1.05 1,591 1.90 6.16 -- -- 14
22.59 1,758 1.86 5.95 -- -- 8
6.40 1,599 1.75 5.62 -- -- 8
19.44 1,732 1.60(a) 4.94(a) 1.75 4.79 7
(10.90) 1.330 1.60(a) 5.73(a) 1.78 5.55 8
28.29 1,524 1.60(a) 5.60(a) 1.87 5.33 7
(1.86) 1,359 1.60(a) 5.70(a) 1.98 5.32 7
9.10 1,282 1.37 6.11 1.93 5.55 0
8.90 3,561 1.65 7.10 -- -- 9
18.36 3,492 1.66 6.53 -- -- 11
4.02 2,943 1.88 6.46 -- -- 12
19.20 2,946 1.91 5.87 -- -- 8
7.05 2,784 1.77 5.46 -- -- 7
12.53 2,756 1.70 4.93 -- -- 7
(6.89) 2,360 1.78 5.48 -- -- 8
15.30 2,475 1.93 5.35 -- -- 7
1.00 2,168 1.85 5.50 -- -- 8
4.47 1,965 1.56 5.93 1.92 5.57 1
8.62 2,038 1.54 5.76 -- 22
16.27 2,067 1.60 5.82 -- 25
2.85 1,777 1.74 5.53 -- 20
19.18 1,355 1.83 5.17 -- 11
6.30 1,185 1.88 4.61 -- 8
14.81 1,258 1.68 4.27 -- -- 11
(5.78) 1,032 1.74 4.77 -- -- 10
14.12 1,130 1.89 4.68 -- -- 8
.95 1,025 1.95 4.77 -- -- 12
2.56 881 1.60 5.18 1.93 4.85 6
</TABLE>
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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.
MATURITY DATE. The maturity dates of the 1st, 2nd and 3rd Funds will be
December 31 of the years 1998, 1999 and 2004, respectively. As each Fund
matures, shareholders will be notified in advance concerning the timing of the
Fund's liquidation, distribution of proceeds, and rights (if any) to exchange
proceeds into other First Investors funds without sales charge. Based on the
current composition of the portfolio of the 1st Fund, the Fund anticipates that
its portfolio will be entirely in cash or cash equivalents by November 15, 1998
and that distributions to shareholders will be made by December 31, 1998.
Shareholders who redeem between November 15, 1998 and December 31, 1998, will be
given the right to exchange the liquidation proceeds into Class A shares of
certain other First Investors funds, without sales charge, until February 28,
1999. An additional notice will be sent to shareholders of the 1st Fund in
November 1998 detailing these investment alternatives. 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.
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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 below under "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 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. 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 are 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
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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, as 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. Zero Coupon Securities are debt obligations that do not
entitle the holder to any periodic payment of interest prior to maturity or a
specified date when the securities begin paying current interest. They are
issued and traded at a discount from their face amount or par value, which
discount varies depending on the time remaining until cash payments begin,
prevailing interest rates, liquidity of the security and the perceived credit
quality of the issuer. The market prices of Zero Coupon Securities generally are
more volatile than the prices of securities that pay interest periodically and
in cash and are likely to respond to changes in interest rates to a greater
degree than do other types of debt securities having similar maturities and
credit quality. Original issue discount earned each year on Zero Coupon
Securities must be accounted for by a Fund that holds the securities for
purposes of determining the amount it must distribute that year to continue to
qualify for tax treatment as a regulated investment company. Thus, a Fund may be
required to distribute as a dividend an amount that is greater than the total
amount of cash it actually receives. See "Taxes." These distributions must be
made from a Fund's cash assets or, if necessary, from the proceeds of sales of
portfolio securities. Each Fund will not be able to purchase additional
income-producing securities with cash used to make such distributions, and its
current income ultimately could be reduced as a result.
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;
certificates of deposit of domestic branches of U.S. Banks;
bankers' acceptances;
repurchase agreements; and
participation interests.
Equities in which each Fund may 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
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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 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 a 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 SECURITIES AND ILLIQUID INVESTMENTS. Each Fund may invest up to
15% of its net assets in illiquid investments, 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 investments for purposes of this
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limitation do not include restricted securities eligible for resale under Rule
144A under the Securities Act of 1933, as amended ("Rule 144A Securities"),
which the Board of Trustees or the Adviser has determined are liquid under
Board-approved guidelines. In addition, there is a risk of increasing
illiquidity during times when qualified institutional buyers are uninterested in
purchasing Rule 144A Securities. See the SAI for more information regarding
restricted securities and illiquid investments, including the risks involved in
their use.
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 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, 1997, the advisory fees paid by each Fund, as a percentage of such Fund's
average daily net assets, net of waivers, was 0.80% for each Fund.
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
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preparing, printing and mailing prospectuses and shareholder reports to such
shareholders; and proxy and annual meeting expenses.
PORTFOLIO MANAGER. 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 also is
responsible for the management of certain other First Investors funds. 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
Value") next determined after an order is received, plus a maximum sales charge
of 8.00%, as set forth below.
Concession
Sales Charge as % of to Dealers
--------------------
Offering Net Amount as % of
Amount of Investment Price Invested Offering Price
- -------------------- -------- ---------- --------------
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
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. For a discussion of pricing practices when FIC's
Woodbridge offices are closed due to an emergency, please see the SAI.
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.
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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 Administrative
Data Management Corp. (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.
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.
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. 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. A notary public is not an acceptable
guarantor. 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 over $50,000, (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, preauthorized bank account, or to a major 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; (7) your
address of record has changed within 60 days prior to a redemption request; (8)
multiple owners have a dispute or give inconsistent instructions; and (9) the
authority of a representative of a corporation, partnership, association or
other entity has not been established to the satisfaction of a Fund or its
agents.
SYSTEMATIC WITHDRAWAL PLAN. If you own noncertificated shares, you may set
up a plan for redemptions to be made automatically at regular intervals. See the
SAI for more information on the Systematic Withdrawal Plan or 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 fee
for handling the transaction.
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<PAGE>
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 (provided such shares are available) 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.
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, Martin Luther King, Jr. 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. Net investment income includes interest and dividends, earned
discount and other income earned on portfolio securities less expenses. Each
Fund also distributes with its regular dividend at the end of each year
substantially all of its net capital gain (the excess of net long-term capital
gain over net short-term capital loss) and net short-term capital gain, if any,
after deducting any available capital loss carryovers. Unless you direct the
Transfer Agent otherwise, dividends and capital gain distributions are paid in
additional shares of the distributing Fund at the net asset value generally
determined as of the close of business on the business day immediately following
the record date of the distribution. A Fund may make an additional distribution
in any year if necessary to avoid a Federal excise tax on certain undistributed
income and capital gain.
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 the distribution. If you elect this form of payment, the payment
date generally is two weeks following the record date of the distribution. Your
election remains in effect until you revoke it by notifying the Transfer Agent.
15
<PAGE>
A dividend or other distribution will be paid in additional shares of the
distributing Fund and not in cash if either of the following events occurs: (1)
the total amount of the distribution is under $5 or (2) the Fund has received
notice of your death on an individual account (until written alternate payment
instructions and other necessary documents are provided by your legal
representative). Dividend or distribution checks returned to the Transfer Agent
marked as being undeliverable by the U.S. Postal Service after two consecutive
mailings will be held by the Transfer Agent in a non-interest bearing account
until the Transfer Agent is either provided with a current address and any
required supporting documentation or is required to escheat the funds to the
appropriate state treasury. Any subsequent dividend or other distribution will
be reinvested in additional shares at net asset value until the Fund receives
new instructions.
TAXES
Each Fund 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 it distributes to its shareholders.
Dividends from a Fund's investment company taxable income are taxable to
you as ordinary income, to the extent of the Fund's earnings and profits,
whether paid in cash or in additional Fund shares. Distributions of a Fund's net
capital gain, when designated as such, are taxable to you as long-term capital
gain, whether paid in cash or in additional Fund shares, regardless of the
length of time you have owned your shares.
If you purchase shares shortly before the record date for a dividend or
other distribution, you will pay full price for the shares and receive some
portion of the price back as a taxable distribution. You will receive an annual
statement following the end of each calendar year describing the tax status of
distributions paid by your Fund during that year. The information regarding
capital gain distributions will designate the portions thereof subject to the
different maximum rates of tax applicable to individuals' net capital gain.
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 that percentage of such
dividends and distributions in certain other circumstances.
Your redemption of Fund shares will result in a taxable gain or loss to
you, depending on whether the redemption proceeds are more or less than your
adjusted basis for the redeemed shares (which normally includes any initial
sales charge paid). In addition, if you purchase shares of a Fund within 30 days
before or after redeeming other shares of that Fund at a loss, all or a portion
of the loss will not be deductible and will increase the basis of the newly
purchased shares.
The foregoing is only a summary of some of the important Federal income
tax considerations generally affecting each Fund and its shareholders; see the
SAI for a further discussion. There may be other Federal, state and local tax
considerations applicable to a particular investor. You therefore are urged to
consult you own tax adviser.
16
<PAGE>
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.
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.
17
<PAGE>
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 a Fund. Generally, confirmation statements 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 AND PROSPECTUSES TO SHAREHOLDERS. It is
each Fund's practice to mail only one copy of its annual and semi-annual reports
to any address at which more than one shareholder with the same last name has
indicated that mail is to be delivered. Additional copies of the reports will be
mailed if requested in writing or by telephone by any shareholder. In addition,
if the SEC adopts a currently pending proposed rule, it is the Funds' intention
to mail only one copy of its Prospectus 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 Prospectus will be mailed if requested in writing or by
telephone by any shareholder.
YEAR 2000. Like other mutual funds, the Funds could be adversely affected
if the computer and other information processing systems used by the Adviser,
Transfer Agent and other service providers are not properly programmed to
process date-related information on and after January 1, 2000. Such systems
typically have been programmed to use a two-digit number to represent the year
for any date. As a result, computer systems could incorrectly misidentify "00"
as 1900, rather than 2000, and make mistakes when performing operations. The
Adviser and Transfer Agent are taking steps that they believe are reasonably
designed to address the Year 2000 problem for computer and other systems used by
them and are obtaining assurances that comparable steps are being taken by the
Funds' other service providers. However, there can be no assurance that these
steps will be sufficient to avoid any adverse impact on the Funds. Nor can the
Funds estimate the extent of any impact.
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TABLE OF CONTENTS
PAGE
----
Fee Table.....................................................................3
Financial Highlights..........................................................6
The Funds.....................................................................9
Investment Objectives and Policies............................................9
Management...................................................................13
Purchase of Shares...........................................................14
Redemption of Shares.........................................................15
Determination of Net Asset Value.............................................16
Dividends and Other Distributions............................................16
Taxes........................................................................17
Performance Information......................................................18
General Information..........................................................18
<PAGE>
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
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
8 Penn Center Plaza
Philadelphia, Pennsylvania 19103
PROSPECTUS
April 30, 1998,
As Amended May 22, 1998
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
Supplement dated May 22, 1998
to Statement of Additional Information dated April 30, 1998
The second sentence under "General Information-Purchases Made During the Initial
Offering Period" on page 16 should read as follows:
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.
GPSAI598
