FIRST INVESTORS
FIRST INVESTORS
U.S. GOVERNMENT PLUS FUND, INC.
ANNUAL REPORT
DECEMBER 31, 1997
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:
1997 was a very good year for the U.S. economy and financial markets. The
economy grew at an annual pace of 3.8%, with the unemployment rate falling to
its lowest level since the 1970's. Despite faster economic growth,
inflation, as measured by the Consumer Price Index, rose less than 2%, its
smallest increase in over ten years. Reflecting the strong economy, the
Federal budget deficit declined substantially and had almost been eliminated
by year-end. Against this backdrop, the Federal Reserve held monetary policy
steady after one small increase in the benchmark Federal funds rate in March.
Although both the U.S. bond and stock markets suffered setbacks at times
during the year, the combination of moderate growth and low inflation
ultimately provided a rewarding environment for investors. Long-term bond
yields fell to their lowest level in two years, while the broad stock market
indices recorded their third consecutive year of substantial gains. While
many overseas markets were buffeted by the economic crisis in Southeast Asia,
U.S. markets remained relatively stable or -- in the case of the bond market
- -- benefited from a "flight to safety" as investors sought the security of
the world's largest and most efficient financial markets.
During 1997, First Investors U.S. Government Plus Fund 1st Fund, 2nd Fund and
3rd Fund returned 9.1%, 4.5% and 2.6%, respectively, on a net asset value
basis. In 1997, dividends declared from net investment income were 67.0,
70.0 and 64.3 cents per share to the 1st Fund, 2nd Fund and 3rd Fund,
respectively. In addition, the 1st Fund declared a capital gain distribution
of 39.4 cents per share.
During 1997, the Funds' performance was boosted as a generally favorable
interest rate environment resulted in higher prices for the Treasury STRIPS
held in the Funds. The yield on long-term U.S. Treasury bonds fell to 5.92%
in 1997, down from 6.64% at the end of 1996. Most of the decline in yield
was in the second half of the year as concerns regarding the impact of the
Asian economic crisis sparked a "flight to safety" by investors. In an
environment of falling interest rates, Treasury STRIPS, also known as zero
coupon bonds, perform well because they do not have the re-investment risk
normally associated with interest payments on the security. When interest
rates decline, the prices of zero coupons rise sharply because holders
receive no income that needs to be re-invested at less attractive rates.
However, the investment performance of such securities is tied to their
relative maturities, with those having the earliest maturities generating
returns in line with cash or investments in commercial paper.
The equity portion of the Funds was helped by Travis Boats & Motors, which
operates a chain of boat stores and Transportacion Maritima Mexicana, a
Mexican rail and shipping company. Poor performers included Scientific
Games, a maker of instant lottery tickets and Motorola, a manufacturer of
mobile phone handsets and semiconductors.
As far as the equity components of the Funds are concerned, while we continue
to believe the fundamentals that pushed U.S. stock markets to new highs
remain in place, investors should remain aware of the risks associated with
investing in the stock markets. Stock markets tend to be cyclical requiring
a long term time- horizon when investing. Additionally, on a technical
basis, the current bull market is now the longest in history. Providing
positive economic support is the convergence of stable economic growth, low
inflation and constructive interest rates. Also supportive are the
demographic trends that are propelling "baby boomers" savings and investment
rates to continue at high levels. However, one of the risks to U.S. equity
investors is the impact which lower global growth, caused by the turmoil in
Asian economies, will have on U.S. companies' profits and therefore stock
market prices.
Following 1997's strong performance, the outlook for U.S. financial markets
continues to be positive, although uncertainties do exist. In particular, we
believe that the economic problems in Southeast Asia will slow growth in the
U.S. However, it is unclear to what extent growth will be slowed and,
consequently, what the ultimate impact will be on the financial markets. On
a positive note, Southeast Asia's problems should result in lower inflation
worldwide. Uncertainty often leads to volatile markets. During such times,
investors are generally best served by focusing on long-term objectives and
maintaining a disciplined approach to investing.
As always, we appreciate the opportunity to serve your investment needs.
Sincerely,
/s/ Patricia D. Poitra
Patricia D. Poitra
Chief Investment Officer
and Portfolio Manager
January 30, 1998
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-88 $ 9,200 $10,000 $10,000
Dec-88 10,371 10,627 10,920
Dec-89 12,533 11,975 12,986
Dec-90 12,665 13,107 13,806
Dec-91 15,526 14,955 16,361
Dec-92 16,519 15,993 17,664
Dec-93 19,731 17,308 20,711
Dec-94 17,581 17,003 19,129
Dec-95 22,680 19,453 25,000
Dec-96 22,125 20,228 24,782
Dec-97 24,139 21,783 28,519
BOXED INFORMATION INSIDE GRAPH:
Average Annual Total Return*
N.A.V. Only S.E.C. Standardized
One Year 9.10% .39%
Five Years 7.88% 6.09%
Ten Years 10.12% 9.21%
The graph compares a $10,000 investment in the First Investors U.S.
Government Plus Fund - 1st Fund beginning 1/1/88 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
of 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 12/31/97) 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. "S.E.C. 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 (.03)%, 5.86% and 9.08%, respectively. 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 - 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-88 $9,200 $10,000 $10,000
Dec-88 10,020 10,627 10,920
Dec-89 11,860 11,975 12,986
Dec-90 12,336 13,107 13,806
Dec-91 14,705 14,955 16,361
Dec-92 15,741 15,993 17,664
Dec-93 17,713 17,308 20,711
Dec-94 16,493 17,003 19,129
Dec-95 19,032 19,453 25,000
Dec-96 19,206 20,228 24,782
Dec-97 20,063 21,783 28,519
BOXED INFORMATION INSIDE GRAPH:
Average Annual Total Return*
N.A.V. Only S.E.C. Standardized
One Year 4.47% (3.86)%
Five Years 4.97% 3.24%
Ten Years 8.11% 7.21%
The graph compares a $10,000 investment in the First Investors U.S.
Government Plus Fund - 2nd Fund beginning 1/1/88 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
of 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 12/31/97) 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. "S.E.C. 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 (4.09)%, 3.19% and 7.19%, respectively.
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-88 $9,200 $10,000 $10,000
Dec-88 9,990 10,627 10,920
Dec-89 11,616 11,975 12,986
Dec-90 11,947 13,107 13,806
Dec-91 14,238 14,955 16,361
Dec-92 15,135 15,993 17,664
Dec-93 17,376 17,308 20,711
Dec-94 16,371 17,003 19,129
Dec-95 18,684 19,453 25,000
Dec-96 18,861 20,228 24,782
Dec-97 19,343 21,783 28,519
BOXED INFORMATION INSIDE GRAPH:
Average Annual Total Return*
N.A.V. Only S.E.C. Standardized
One Year 2.56% (5.67)%
Five Years 5.03% 3.29%
Ten Years 7.72% 6.82%
The graph compares a $10,000 investment in the First Investors U.S.
Government Plus Fund - 3rd Fund beginning 1/1/88 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
of 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 12/31/97) 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. "S.E.C. 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 (5.87)%, 3.25% and 6.80%, respectively.
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 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, 1997
- ------------------------------------------------------------------------------------------------------------------------------
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
$1,875M Treasury STRIPS, due 11/15/2004 $ 1,265,287
2,150M Treasury STRIPS, due 11/15/1999 $ 1,936,146
825M Treasury STRIPS, due 11/15/1998 $ 786,341
- ------------------------------------------------------------------------------------------------------------------------------
Total Value of U.S. Government Securities
(cost $954,363, $1,857,981 and $771,476,
respectively) 1,265,287 98.7 1,936,146 98.5 786,341 89.3
- ------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS
Consumer Cyclicals
300 *Scientific Games Holdings Corporation 6,075
500 *Scientific Games Holdings Corporation 10,125
800 *Travis Boats & Motors, Inc. 19,300
- ------------------------------------------------------------------------------------------------------------------------------
6,075 .3 29,425 3.4
- ------------------------------------------------------------------------------------------------------------------------------
Energy
100 *Cal Dive International, Inc. 2,450
200 *Cal Dive International, Inc. 4,900
300 *Cal Dive International, Inc. 7,350
150 *Veritas DGC, Inc. 5,925
200 *Veritas DGC, Inc. 7,900
- ------------------------------------------------------------------------------------------------------------------------------
2,450 .2 10,825 .6 15,250 1.7
- ------------------------------------------------------------------------------------------------------------------------------
Technology
100 *Envoy Corporation 2,912
200 *Envoy Corporation 5,825
400 *Envoy Corporation 11,650
40 Motorola, Inc. 2,283
100 Motorola, Inc. 5,706
200 Motorola, Inc. 11,412
- ------------------------------------------------------------------------------------------------------------------------------
5,195 .4 11,531 .6 23,062 2.6
- ------------------------------------------------------------------------------------------------------------------------------
Transportation
600 Interpool, Inc. 8,888
1,200 Transportacion Maritima Mexicana
SA de C.V. - Class "L" (ADR) 8,850
- ------------------------------------------------------------------------------------------------------------------------------
17,738 2.0
- ------------------------------------------------------------------------------------------------------------------------------
Total Value of Common Stocks
(cost $5,524, $24,611 and $67,560, respectively) 7,645 .6 28,431 1.5 85,475 9.7
- ------------------------------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $959,887,
$1,882,592 and $839,036, respectively) 1,272,932 99.3 1,964,577 100.0 871,816 99.0
Other Assets, Less Liabilities 9,067 .7 449 .0 9,131 1.0
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets $ 1,281,999 100.0 $ 1,965,026 100.0 $ 880,947 100.0
==============================================================================================================================
*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, 1997
- --------------------------------------------------------------------------------------------------------------------------
1st Fund 2nd Fund 3rd Fund
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Investments in securities:
At identified cost................................................ $ 959,887 $ 1,882,592 $ 839,036
============== ============== ==============
At value (Note 1A)................................................ $ 1,272,932 $ 1,964,577 $ 871,816
Cash................................................................ 16,244 8,966 14,187
Investment securities sold.......................................... --- 2,171 4,358
Other assets........................................................ 872 944 923
--------------- --------------- ---------------
Total Assets........................................................ 1,290,048 1,976,658 891,284
--------------- --------------- ---------------
Liabilities
Distributions payable............................................... 2,686 4,976 3,157
Investment securities purchased..................................... --- 1,826 3,653
Accrued expenses.................................................... 4,727 3,849 3,087
Accrued advisory fees............................................... 636 981 440
--------------- --------------- ---------------
Total Liabilities................................................... 8,049 11,632 10,337
--------------- --------------- ---------------
Net Assets.......................................................... $ 1,281,999 $ 1,965,026 $ 880,947
============== =============== ===============
Net Assets Consist of:
Capital paid in..................................................... $ 968,954 $ 1,916,649 $ 892,905
Accumulated net realized loss on investments........................ --- (33,608) (44,738)
Net unrealized appreciation in value of investments................. 313,045 81,985 32,780
-------------- -------------- --------------
Total............................................................... $ 1,281,999 $ 1,965,026 $ 880,947
============== ============== ==============
Shares of beneficial interest outstanding (Note 3).................. 125,022 182,599 79,300
======= ======= =======
Net Asset Value and Redemption Price Per Share
(Net assets divided by shares of beneficial interest outstanding)... $10.25 $10.76 $11.11
===== ===== =====
Maximum Offering Price Per Share
(Net Asset Value /.92)* ............................................ $11.14 $11.70 $12.08
===== ===== =====
*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, 1997
- --------------------------------------------------------------------------------------------------------------------------
1st Fund 2nd Fund 3rd Fund
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income
Income:
Interest.......................................................... $ 92,795 $ 151,284 $ 62,388
Dividends......................................................... 19 96 288
-------------- -------------- --------------
Total income........................................................ 92,814 151,380 62,676
-------------- -------------- --------------
Expenses (Notes 1 and 4):
Advisory fees..................................................... 12,442 20,299 9,323
Professional fees................................................. 6,459 7,907 4,332
Shareholder servicing costs....................................... 3,233 7,637 2,410
Reports and notices to shareholders............................... 618 1,268 422
Custodian fees.................................................... 437 787 617
Other expenses.................................................... 784 1,135 866
-------------- -------------- --------------
Total expenses...................................................... 23,973 39,033 17,970
Less: Expenses assumed by investment adviser........................ (6,969) (7,292) (3,008)
Custodian fees paid indirectly................................ (206) (664) (617)
-------------- -------------- --------------
Expenses-net........................................................ 16,798 31,077 14,345
-------------- -------------- --------------
Net investment income............................................... 76,016 120,303 48,331
-------------- -------------- --------------
Realized and Unrealized Gain (Loss) on Investments (Note 2):
Net realized gain (loss) on investments............................. 44,787 3,128 (23,059)
Net unrealized depreciation of investments.......................... (13,740) (36,166) (3,022)
-------------- -------------- --------------
Net gain (loss) on investments...................................... 31,047 (33,038) (26,081)
-------------- -------------- --------------
Net Increase in Net Assets Resulting from Operations................ $ 107,063 $ 87,265 $ 22,250
============== ============== ==============
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 1997 1996 1997 1996 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income.......................... $ 76,016 $ 77,618 $ 120,303 $ 125,838 $ 48,331 $ 50,583
Net realized gain (loss) on investments........ 44,787 41,339 3,128 35,135 (23,059) 18,966
Net unrealized depreciation of investments..... (13,740) (151,205) (36,166) (135,205) (3,022) (57,931)
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets
resulting from operations.................. 107,063 (32,248) 87,265 25,768 22,250 11,618
-------- -------- -------- -------- -------- --------
Distributions to Shareholders
Net investment income.......................... (76,047) (77,618) (120,316) (125,838) (48,373) (50,583)
Net realized gains............................. (44,720) (41,442) --- --- --- ---
-------- -------- -------- -------- -------- --------
Total distributions.......................... (120,767) (119,060) (120,316) (125,838) (48,373) (50,583)
-------- -------- -------- -------- -------- --------
Trust Share Transactions(a)
Proceeds from shares sold...................... 14,062 1,514 9,721 7,270 --- 562
Value of distributions reinvested.............. 118,080 117,893 115,340 121,862 45,216 47,849
Cost of shares redeemed........................ (195,312) (133,719) (294,547) (336,869) (163,184) (114,064)
-------- -------- -------- -------- -------- --------
Net decrease from trust share transactions .. (63,170) (14,312) (169,486) (207,737) (117,968) (65,653)
-------- -------- -------- -------- -------- --------
Net decrease in net assets....................... (76,874) (165,620) (202,537) (307,807) (144,091) (104,618)
Net Assets
Beginning of year.............................. 1,358,873 1,524,493 2,167,563 2,475,370 1,025,038 1,129,656
--------- --------- --------- --------- --------- ---------
End of year.................................... $ 1,281,999 $ 1,358,873 $ 1,965,026 $ 2,167,563 $ 880,947 $ 1,025,038
========= ========= ========= ========= ========= =========
(a)Trust Shares Issued and Redeemed
Issued........................................ 1,358 67 884 1,159 --- 47
Issued on distributions reinvested............ 11,520 11,369 10,719 11,109 4,070 4,176
Redeemed...................................... (18,883) (12,092) (26,539) (29,504) (14,246) (9,379)
-------- -------- -------- -------- -------- --------
Net decrease in trust shares outstanding.... (6,005) (656) (14,936) (17,236) (10,176) (5,156)
========= ========= ========= ========= ========= =========
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 Stock Market is valued at its last sale price on the exchange where
the security is principally 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, 1997, the following Funds had capital loss carryovers expiring
as follows:
Year of Expiration 2nd Fund 3rd Fund
------------------ ---------- ----------
1998 $ 29,803 $ 5,775
1999 -- 15,904
2005 -- 14,101
---------- ----------
$ 29,803 $ 35,780
========== ==========
C. Distributions to Shareholders - Distributions to shareholders are
generally 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 capital 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 accreted
discount) and estimated expenses are accrued daily. The Funds' custodian has
provided credits in the amount of $1,487 against custodian charges based on
the uninvested cash balances of the Funds.
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, 1997 1st Fund 2nd Fund 3rd Fund
- ---------------------------- ----------- ----------- -----------
Securities
- ----------
Purchases............................. $ 5,075 $ 21,816 $ 54,131
=========== =========== ===========
Proceeds of sales..................... $ 1,043 $ 13,957 $ 41,730
=========== =========== ===========
Long-Term U.S. Government Obligations
- -------------------------------------
Purchases............................. $ -- $ -- $ --
=========== =========== ===========
Proceeds of sales..................... $ 211,576 $ 322,323 $ 183,009
=========== =========== ===========
At December 31, 1997, 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......... $ 959,887 $ 1,882,592 $ 839,036
=========== =========== ===========
Gross unrealized appreciation......... $ 313,045 $ 82,960 $ 35,947
Gross unrealized depreciation......... -- (975) (3,167)
----------- ----------- -----------
Net unrealized appreciation........... $ 313,045 $ 81,985 $ 32,780
=========== =========== ===========
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) was paid by FIMCO or FIC. Effective January 1, 1998, independent
trustees will be remunerated by the Funds.
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. Total advisory fees accrued
to FIMCO for the year ended December 31, 1997 were $42,064 of which
$8,265 was waived. In addition, expenses of $9,004 were assumed by FIMCO.
For the year ended December 31, 1997, shareholder servicing costs included
$9,053 in transfer agent fees paid to ADM and $3,404 in IRA custodian fees
paid to FFS.
Independent Auditors' 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, 1997, 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 five 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, 1997, by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
1st, 2nd and 3rd Funds of First Investors U.S. Government Plus Fund as of
December 31, 1997, and the results of their operations for the year then
ended, changes in their net assets for each of the two years in the period
then ended and their financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting
principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
January 30, 1998
<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 Gain Surplus Distributions of Year
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1st Fund
- --------
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
- --------
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
- --------
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
<CAPTION>
Financial Highlights (continued)
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.
- ----------------------------------------------------------------------------------------------------
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
Ratio to Average Assets Before Expenses
Net Assets++ Waived or Assumed
----------------------- ----------------------- Portfolio
Total Net Assets Investment Investment Turnover
Return+ End of Year Expenses Income Expenses Income Rate
(%) (in thousands) (%) (%) (%) (%) (%)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1st Fund
- --------
1993 19.44 $1,732 1.60 4.94 1.75 4.79 7
1994 (10.90) 1,330 1.60 5.73 1.78 5.55 8
1995 28.29 1,524 1.60 5.60 1.87 5.33 7
1996 (1.86) 1,359 1.60 5.70 1.98 5.32 7
1997 9.10 1,282 1.37 6.11 1.93 5.55 0
2nd Fund
- --------
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
1997 4.47 1,965 1.56 5.93 1.92 5.57 1
3rd Fund
- --------
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
1997 2.56 881 1.60 5.18 1.93 4.85 6
+ Calculated without sales charges
++ Net of expenses waived or assumed (Note 4).
See notes to financial statements
</TABLE>
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
Trustees
- --------------------------------
James J. Coy (Emeritus)
Roger L. Grayson
Glenn O. Head
Kathryn S. Head
Rex R. Reed
Herbert Rubinstein
Nancy S. Schaenen
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
Eight Penn Center Plaza
Philadelphia, PA 19103
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.
