As filed with the Securities and Exchange Commission on April 28, 1998
Registration No. 2-94932
811-4181
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 15 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
Amendment No. 15 [X]
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
(Exact name of Registrant as specified in charter)
95 Wall Street
New York, New York 10005
(Address of Principal Executive Offices) (Zip Code)
212-858-8000
(Registrant's Telephone Number, Including Area Code)
Ms. Concetta Durso
Secretary and Vice President
First Investors U.S. Government Plus Fund
95 Wall Street
New York, New York 10005
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement
It is proposed that this filing will become effective on April 30, 1998 pursuant
to paragraph (b) of Rule 485.
<PAGE>
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
N-1A Item No. Location
- ------------- --------
<S> <C>
PART A: PROSPECTUS
1. Cover Page........................................ Cover Page
2. Synopsis.......................................... Fee Table
3. Condensed Financial Information................... Financial Highlights
4. General Description of Registrant................. Investment Objectives and Policies;
Investment Restrictions
5. Management of the Fund............................ Management of the Fund
5A. Management's Discussion
of Fund Performance.............................. Performance Information
6. Capital Stock and Other Securities................ Description of Shares; Dividends and
Distributions Determination of Net Asset
Value
7. Purchase of Securities Being Offered.............. Purchase of Shares
8. Redemption or Repurchase.......................... Redemption of Shares
9. Pending Legal Proceedings......................... Not Applicable
PART B: STATEMENT OF ADDITIONAL INFORMATION
10. Cover Page........................................ Cover Page
11. Table of Contents................................. Table of Contents
12. General Information and History................... General Information
13. Investment Objectives and Policies................ Investment Objectives and Policies;
Investment Restrictions
14. Management of the Fund............................ Trustees and Officers
15. Control Persons and Principal Holders
of Securities.................................... Not Applicable
16. Investment Advisory and Other Services............ Investment Adviser
17. Brokerage Allocation and
Other Practices.................................. Allocation of Portfolio Brokerage
18. Capital Stock and Other Securities................ Determination of Net Asset Value
19. Purchase, Redemption and Pricing of
Securities Being Offered......................... Purchase and Redemption of Shares;
Determination of Net Asset Value
20. Tax Status........................................ Taxes
21. Underwriters...................................... Underwriters
22. Calculation of Performance Data................... Performance Information
23. Financial Statements.............................. Financial Statements; Report of
Independent Accountants
</TABLE>
<PAGE>
PART C: OTHER INFORMATION
Information required to be included in Part C is set forth under the appropriate
item so numbered, in Part C hereof.
<PAGE>
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
<PAGE>
FEE TABLE
The following table has been prepared to assist the investor in
understanding the various costs and expenses a shareholder of each Fund will
directly or indirectly bear.
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:
2
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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
3
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[This Page Intentionally Left Blank]
4
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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.
5
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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
Net Unrealized Net
Asset Value Net Gain Net Asset Value
----------- Invest- (Loss) on Total from Invest- Net Total -----------
Beginning ment Invest- Investment ment Realized Capital Distribu End
of Year Income ments 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
</TABLE>
+ Calculated without sales charge
++ Net of expenses waived or assumed
6
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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> <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>
7
<PAGE>
THE FUNDS
Each Fund has the same investment objectives. Each Fund is distinguished by
the dollar amount of the initial offering, the maturity date or the anticipated
minimum return, or any or all of the foregoing.
An indefinite number of shares of each Fund was available during an initial
offering period. Government Plus Fund has terminated the initial offering period
of each Fund and no new shares of any existing Fund will be issued, except in
connection with reinvestment of dividends and capital gains distributions. To
the extent that a Fund repurchases shares of such Fund from individual investors
who wish to redeem their shares, the Fund will make available such shares at the
next determined public offering price (see "Purchase of Shares").
Because each existing Fund will not offer new shares to the public,
investors are urged to consider the effects of the closing of the offerings,
including liquidity demands created by redemptions and the sale of securities at
unfavorable prices to meet redemption requests. Redemptions of each Fund's
shares prior to the maturity date will raise the remaining shareholders' pro
rata share of expenses for the Fund.
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.
8
<PAGE>
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
are purchased with original issue discount and such discount is includable as
gross income to a Fund
9
<PAGE>
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
represent a special situation bear the risk that the special situation will not
develop as favorably as expected, or the situation may
10
<PAGE>
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
limitation do not include restricted securities eligible for resale under Rule
144A under the Securities Act of 1933,
11
<PAGE>
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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<PAGE>
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.
Sales Charge as % of Concession
---------------------- 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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<PAGE>
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 distribution check
returned in the same manner will be treated as a request by you to change your
dividend or distribution option to reinvest. The proceeds 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
16
<PAGE>
be other Federal, state and local tax considerations applicable to a particular
investor. You therefore are urged to consult you own tax adviser.
PERFORMANCE INFORMATION
For purposes of advertising, a Fund's performance may be calculated based
on average annual total return and total return. Average annual total return
represents the average annual percentage change in an assumed $1,000 investment
including the effect of receiving payment of dividends and other distributions
in additional Fund shares, net of the Fund's maximum 8.00% sales charge. It
reflects the hypothetical annually compounded return that would have produced
the same total return if the Fund's performance had been constant over the
entire period. Because average annual total return tends to smooth out
variations in the Fund's return, you should recognize that it is not the same as
actual year-by-year results. Total return is computed using the same
calculations as average annual total return. However, the rate expressed is the
percentage change from the initial $1,000 invested to the value of the
investment at the end of the stated period.
A Fund also may advertise its yield. Yield reflects investment income net
of expenses over a 30-day (or one-month) period on a Fund share, expressed as an
annualized percentage of the maximum offering price per share at the end of the
period. Yield computations differ from other accounting methods and therefore
may differ from dividends actually paid or reported net income. Each Fund may
also advertise its "actual distribution rate" for each class of shares. This is
computed in the same manner as yield except that actual income dividends
declared per share during the period in questions are substituted for net
investment income per share.
Each of the above performance calculations may be advertised based on
investment at reduced sales charge levels or at net asset value. Any quotation
of performance figures not reflecting the maximum sales charge will be greater
than if the maximum sales charge were used. Each performance figure reflects
past performance and does not necessarily indicate future results.
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.
17
<PAGE>
Transfer Agent. Administrative Data Management Corp., 581 Main Street,
Woodbridge, NJ 07095-1198, an affiliate of FIMCO and FIC, acts as transfer agent
for each Fund and as redemption agent for regular redemptions. The Transfer
Agent's telephone number is 1-800-423-4026.
Share Certificates. The Funds do not issue share certificates unless
requested to do so. Ownership of shares of each Fund is recorded on a stock
register by the Transfer Agent and shareholders have the same rights of
ownership with respect to such shares as if certificates had been issued.
Confirmations and Statements. You will receive confirmations of purchases
and redemptions of shares of 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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<PAGE>
TABLE OF CONTENTS
PAGE
----
Fee Table.................................................................. 2
Financial Highlights....................................................... 5
The Funds.................................................................. 8
Investment Objectives and Policies......................................... 8
Management................................................................. 12
Purchase of Shares......................................................... 13
Redemption of Shares....................................................... 14
Determination of Net Asset Value........................................... 15
Dividends and Other Distributions.......................................... 15
Taxes...................................................................... 16
Performance Information.................................................... 17
General Information........................................................ 17
<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
This Prospectus is intended to constitute an offer by Government Plus Fund only
of the securities of which it is the issuer and is not intended to constitute an
offer by any Fund of the securities of any other Fund whose securities are also
offered by this Prospectus. No Fund intends to make any representation as to the
accuracy or completeness of the disclosure in this Prospectus relating to any
other Fund. No dealer, salesman or any other person has been authorized to give
any information or to make any representations other than those contained in
this Prospectus or the Statement of Additional Information, and if given or
made, such information and representation must not be relied upon as having been
authorized by Government Plus Fund, First Investors Corporation, or any
affiliate thereof. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the shares offered hereby in any state to
any person to whom it is unlawful to make such offer in such state.
<PAGE>
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
Statement of Additional Information
dated April 30, 1998
95 Wall Street 1-800-423-4026
New York, New York 10005
First Investors U.S. Government Plus Fund ("Government Plus Fund") is an
open-end diversified management investment company consisting of three separate
series of investment (each a "Fund" and, collectively, the "Funds"). The
investment objectives of each Fund of Government Plus Fund is first to generate
income, and, to a lesser extent, achieve long-term capital appreciation. There
can be no assurances that the objectives of each Fund will be realized.
This Statement of Additional Information ("SAI") is not a prospectus. It
should be read in conjunction with the Funds' Prospectus dated April 30, 1998,
which may be obtained free of cost from the Funds at the address or telephone
number noted above.
TABLE OF CONTENTS
Page
----
Investment Objectives and Policies.......................................... 2
Investment Restrictions..................................................... 4
Trustees and Officers....................................................... 5
Management.................................................................. 7
Underwriter................................................................. 8
Determination of Net Asset Value............................................ 8
Allocation of Portfolio Brokerage........................................... 9
Purchase and Redemption of Shares........................................... 10
Taxes....................................................................... 11
Performance Information..................................................... 12
General Information......................................................... 15
Appendix A.................................................................. 17
Financial Statements........................................................ 18
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of each Fund of Government Plus Fund
is fully set forth in the Funds' Prospectus. The following information is
provided for those investors desiring additional information to that contained
in the Funds' Prospectus.
When-Issued Securities. Each Fund may invest up to 5% of its net assets in
securities issued on a when-issued or delayed delivery basis at the time the
purchase is made. The Fund generally would not pay for such securities or start
earning interest on them until they are issued or received. However, when the
Fund purchases debt obligations on a when-issued basis, it assumes the risks of
ownership, including the risk of price fluctuation, at the time of purchase, not
at the time of receipt. Failure of the issuer to deliver a security purchased by
the Fund on a when-issued basis may result in the Fund's incurring a loss or
missing an opportunity to make an alternative investment. When the Fund enters
into a commitment to purchase securities on a when-issued basis, it establishes
a separate account on its books and records or with its custodian consisting of
cash or liquid high-grade debt securities equal to the amount of the Fund's
commitment, which are valued at their fair market value. If on any day the
market value of this segregated account falls below the value of the Fund's
commitment, the Fund will be required to deposit additional cash or qualified
securities into the account until equal to the value of the Fund's commitment.
When the securities to be purchased are issued, the Fund will pay for the
securities from available cash, the sale of securities in the segregated
account, sales of other securities and, if necessary, from sale of the
when-issued securities themselves although this is not ordinarily expected.
Securities purchased on a when-issued basis are subject to the risk that yields
available in the market, when delivery takes place, may be higher than the rate
to be received on the securities the Fund is committed to purchase. Sale of
securities in the segregated account or sale of the when-issued securities may
cause the realization of a capital gain or loss.
Repurchase Agreements. Each Fund will enter into repurchase agreements only
with banks who are members of the Federal Reserve System or securities dealers
who are members of a national securities exchange or are market makers in
government securities and, in either case, only where the debt instrument
subject to the repurchase agreement is a security which is issued by the U.S.
Government, its agencies or instrumentalities, and is backed by the full faith
and credit of the U.S. Government. A repurchase agreement is an agreement in
which the seller of a security agrees to repurchase the security sold at a
mutually agreed-upon time and price. It may also be viewed as the loan of money
by the Fund to the seller. The resale price normally is in excess of the
purchase price, reflecting an agreed upon interest rate. The rate is effective
for the period of time the Fund is invested in the agreement and is not related
to the coupon rate on the underlying security. The period of these repurchase
agreements will usually be short, from overnight to one week, and at no time
will the Fund invest in repurchase agreements with more than one year in time to
maturity. The securities subject to repurchase agreements, however, may have
maturity dates in excess of one year from the effective date of the repurchase
agreement. The Fund will always receive, as collateral, securities whose market
value, including accrued interest, will at all times be at least equal to 100%
of the dollar amount invested by the Fund in each agreement, and the Fund will
make payment for such securities only upon physical delivery or evidence of book
entry transfer to the account of the Custodian. If the seller defaults, the Fund
might incur a loss if the value of the collateral securing the repurchase
agreement declines, and might incur disposition costs in connection with
liquidating the collateral. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the security, realization upon the collateral by
the Fund may be delayed or limited. Each Fund may not enter into a repurchase
agreement with more than seven days to maturity if, as a result, more than 15%
of the market value of the Fund's net assets would be invested in such
repurchase agreements together with any other illiquid assets. No Fund may enter
into a repurchase agreement with more than seven days to maturity if, as a
result, more than 15% of such Fund's assets would be invested in such repurchase
agreements and other illiquid securities.
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<PAGE>
Restricted Securities and Illiquid Investments. No Fund will purchase or
otherwise acquire any security if, as a result, more than 15% of its net assets
(taken at current value) would be invested in securities that are illiquid by
virtue of the absence of a readily available market or legal or contractual
restrictions on resale. This policy includes foreign issuers' unlisted
securities with a limited trading market and repurchase agreements maturing in
more than seven days. This policy does not include restricted securities
eligible for resale pursuant to Rule 144A under the Securities Act of 1933, as
amended ("1933 Act"), which the Board of Trustees or First Investors Management
Company, Inc. ("FIMCO" or the "Adviser") has determined under Board-approved
guidelines are liquid.
Restricted securities which are illiquid may be sold only in privately
negotiated transactions or in public offerings with respect to which a
registration statement is in effect under the 1933 Act. Such securities include
those that are subject to restrictions contained in the securities laws of other
countries. Securities that are freely marketable in the country where they are
principally traded, but would not be freely marketable in the United States,
will not be subject to this 15% limit. Where registration is required, a Fund
may be obligated to pay all or part of the registration expenses and a
considerable period may elapse between the time of the decision to sell and the
time the Fund may be permitted to sell a security under an effective
registration statement. If, during such a period, adverse market conditions were
to develop, a Fund might obtain a less favorable price than prevailed when it
decided to sell.
In recent years, a large institutional market has developed for certain
securities that are not registered under the 1933 Act, including private
placements, repurchase agreements, commercial paper, foreign securities and
corporate bonds and notes. These instruments are often restricted securities
because the securities are either themselves exempt from registration or sold in
transactions not requiring registration. Institutional investors generally will
not seek to sell these instruments to the general public, but instead will often
depend on an efficient institutional market in which such unregistered
securities can be readily resold or on an issuer's ability to honor a demand for
repayment. Therefore, the fact that there are contractual or legal restrictions
on resale to the general public or certain institutions is not dispositive of
the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. Institutional markets for restricted securities
that might develop as a result of Rule 144A could provide both readily
ascertainable values for restricted securities and the ability to liquidate an
investment in order to satisfy share redemption orders. An insufficient number
of qualified institutional buyers interested in purchasing Rule 144A-eligible
securities held by a Fund, however, could affect adversely the marketability of
such portfolio securities and a Fund might be unable to dispose of such
securities promptly or at reasonable prices.
Portfolio Turnover. Although the Funds generally do not invest for
short-term trading purposes, portfolio securities may be sold from without
regard to the length of time they have been held when, in the opinion of the
Adviser, investment considerations warrant such action. Portfolio turnover rate
is calculated by dividing (a) the lesser of purchases or sales of portfolio
securities for the fiscal year by (b) the monthly average of the value of
portfolio securities owned during the fiscal year. A 100% turnover rate would
occur if all the securities in a Fund's portfolio, with the exception of
securities whose maturities at the time of purchase were one year or less, were
sold and either repurchased or replaced within one year. A high rate of
portfolio turnover (100% or more) generally leads to transaction costs and may
result in a greater number of taxable transactions. See "Allocation of Portfolio
Brokerage." For the fiscal year ended December 31, 1996, the 1st Fund, 2nd Fund
and 3rd Fund had a portfolio turnover rate of 7%, 8% and 12%, respectively. For
the fiscal year ended December 31, 1997, the 1st Fund, 2nd Fund and 3rd Fund had
a portfolio turnover rate of 0%, 1% and 6%, respectively.
3
<PAGE>
INVESTMENT RESTRICTIONS
Each Fund has adopted the investment restrictions set forth below, which
cannot be changed without the approval of a vote of a majority of the
outstanding shares of each Fund, voting separately from any other Fund. As
provided in the Investment Company Act of 1940, as amended (the "1940 Act"), and
used in the Prospectus and this SAI, a "vote of a majority of the outstanding
shares of each Fund" means the affirmative vote of the lesser of (i) more than
50% of the outstanding shares of the Fund or (ii) 67% or more of the shares
present at a meeting, if more than 50% of the outstanding shares are represented
at the meeting in person or by proxy.
The investment restrictions provide that, among other things, each Fund
will not:
1. Purchase securities on margin (but any Fund may obtain such credits as
may be necessary for the clearance of purchases and sales of securities).
2. Make short sales of securities.
3. Write put or call options.
4. With respect to 75% of the Fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities) if, as a result, (a) more than 5%
of the Fund's total assets would be invested in the securities of that issuer,
or (b) the Fund would hold more than 10% of the outstanding voting securities of
that issuer.
5. Purchase the securities of other investment companies or investment
trusts, except as they may be acquired as part of a merger, consolidation or
acquisition of assets.
6. Underwrite securities issued by other persons except to the extent that,
in connection with the disposition of its portfolio investments, it may be
deemed to be an underwriter under Federal securities laws.
7. Buy or sell real estate, commodities, or commodity contracts (unless
acquired as a result of ownership of securities) or interests in oil, gas or
mineral explorations, provided, however, the Fund may invest in securities
secured by real estate or interest in real estate.
8. Issue any "senior security" as such term is defined by the 1940 Act
except as expressly permitted by the 1940 Act.
9. Invest more than 25% of its assets in securities of issuers in a single
industry, excluding Government Securities.
10. Borrow money, except as a temporary or emergency measure in an amount
not to exceed 5% of the value of its assets.
11. Pledge assets, except that the Fund may pledge its assets to secure
borrowings made in accordance with investment restriction (10) above, provided
that the Fund maintains asset coverage of at least 300% for pledged assets.
12. Make loans, except by purchase of debt obligations and through
repurchase agreements. However, Government Plus Fund's Board of Trustees may, on
the request of broker-dealers or other institutional investors that they deem
qualified, authorize the Fund to loan securities to cover the borrower's short
position; provided, however, the borrower pledges to and agrees to maintain at
all times with the Fund cash collateral equal to not less than 100% of the value
of the securities loaned, the loan is terminable at will by the Fund, the Fund
receives interest on the loan as well as any
4
<PAGE>
distributions upon the securities loaned, the Fund retains voting rights
associated with the securities, the Fund pays only reasonable custodian fees in
connection with the loan, and the Adviser monitors the creditworthiness of the
borrower throughout the life of the loan; provided further, that such loans will
not be made if the value of all loans, repurchase agreements with more than
seven days to maturity, and other illiquid assets is greater than an amount
equal to 15% of the Fund's net assets.
13. Purchase the securities of any issuer if such purchase, at the time
thereof, would cause more than 5% of the value of the Fund's total assets to be
invested in securities of issuers that, including predecessors, have a record of
less than three years' continuous operation.
Government Plus Fund, on behalf of each Fund, has adopted the following
non-fundamental investment restriction, which may be changed without shareholder
approval. This restriction provides that each Fund will not:
Purchase any security if, as a result, more than 15% of its net assets
would be invested in illiquid securities, including repurchase agreements not
entitling the holder to payment of principal and interest within seven days and
any securities that are illiquid by virtue of legal or contractual restrictions
on resale or the absence of a readily available market. The Trustees, or the
Funds' investment adviser acting pursuant to authority delegated by the
Trustees, may determine that a readily available market exists for securities
eligible for resale pursuant to Rule 144A under the Securities Act of 1933, as
amended, or any other applicable rule, and therefore that such securities are
not subject to the foregoing limitation.
TRUSTEES AND OFFICERS
The following table lists the Trustees and executive officers of Government
Plus Fund, their age, business address and principal occupations during the past
five years. Unless otherwise noted, an individual's business address is 95 Wall
Street, New York, New York 10005.
Glenn O. Head*+ (72), President and Trustee. Chairman of the Board and Director,
Administrative Data Management Corp. ("ADM"), FIMCO, Executive Investors
Management Company, Inc. ("EIMCO"), First Investors Corporation ("FIC"),
Executive Investors Corporation ("EIC") and First Investors Consolidated
Corporation ("FICC").
James J. Coy (84), Emeritus Trustee, 90 Buell Lane, East Hampton, NY 11937.
Retired; formerly Senior Vice President, James Talcott, Inc. (financial
institution).
Roger L. Grayson* (41), Trustee, FIC and FICC; President and Director, First
Investors Resources, Inc.; Commodities Portfolio Manager.
Kathryn S. Head*+ (42), Trustee, 581 Main Street, Woodbridge, NJ 07095.
President and Director, FICC, ADM and FIMCO; Vice President and Director, FIC
and EIC; President EIMCO; Chairman, President and Director, First Financial
Savings Bank, S.L.A.
Rex R. Reed (76), Trustee, 259 Governors Drive, Kiawah Island, SC 29455.
Retired; formerly Senior Vice President, American Telephone & Telegraph Company.
Herbert Rubinstein (76), Trustee, 695 Charolais Circle, Edwards, CO 81632-1136.
Retired; formerly President, Belvac International Industries, Ltd. and
President, Central Dental Supply.
Nancy Schaenen (66), Trustee, 56 Midwood Terrace, Madison, NJ 07940. Trustee,
Drew University and DePauw University.
5
<PAGE>
James M. Srygley (65), Trustee, 33 Hampton Road, Chatham, NJ 07982. Principal,
Hampton Properties, Inc. (property investment company).
John T. Sullivan* (66), Trustee and Chairman of the Board; Director, FIMCO, FIC,
FICC and ADM; Of Counsel, Hawkins, Delafield & Wood, Attorneys.
Robert F. Wentworth (68), Trustee, RR1, Box 2554, Upland Downs Road, Manchester
Center, VT 05255. Retired; formerly financial and planning executive with
American Telephone & Telegraph Company.
Joseph I. Benedek (40), Treasurer and Chief Financial Officer, 581 Main Street,
Woodbridge, NJ 07095. Treasurer, FIC, FIMCO, EIMCO and EIC; Comptroller and
Treasurer, FICC.
Concetta Durso (63), Vice President and Secretary. Vice President, FIMCO, EIMCO
and ADM; Assistant Vice President and Assistant Secretary, FIC and EIC.
Patricia D. Poitra (43), Vice President. Vice President, First Investors Series
Fund, Executive Investors Trust and First Investors Series Fund II, Inc.;
Director of Equities, FIMCO.
- ------------
* These Trustees may be deemed to be "interested persons," as defined in the
1940 Act.
+ Mr. Glenn O. Head and Ms. Kathryn S. Head are father and daughter.
The Trustees and officers, as a group, owned less than 1% of shares of any
Fund
All of the officers and Trustees, except for Ms. Poitra, hold identical or
similar positions with 14 other registered investment companies in the First
Investors Family of Funds. Mr. Head is also an officer and/or Director of First
Investors Asset Management Company, Inc., First Investors Credit Funding
Corporation, First Investors Leverage Corporation, First Investors Realty
Company, Inc., First Investors Resources, Inc., N.A.K. Realty Corporation, Real
Property Development Corporation, Route 33 Realty Corporation, First Investors
Life Insurance Company, First Financial Savings Bank, S.L.A., First Investors
Credit Corporation and School Financial Management Services, Inc. Ms. Head is
also an officer and/or Director of First Investors Life Insurance Company, First
Investors Credit Corporation, School Financial Management Services, Inc., First
Investors Credit Funding Corporation, N.A.K. Realty Corporation, Real Property
Development Corporation, First Investors Leverage Corporation and Route 33
Realty Corporation.
The following table lists compensation paid to the Trustees of Government
Plus Fund for the fiscal year ended December 31, 1997.
6
<PAGE>
<TABLE>
<CAPTION>
Pension or Total Compensation
Retirement From First
Aggregate Benefits Accrued Estimated Annual Investors Family
Compensation as Part of Fund Benefits Upon of Funds Paid to
Trustee From Fund* Expenses Retirement Trustee*
- ------- ------------ ---------------- ---------------- ------------------
<S> <C> <C> <C> <C>
James J. Coy** $672.28 $-0- $-0- $15,500.00
Roger L. Grayson -0- -0- -0- -0-
Glenn O. Head -0- -0- -0- -0-
Kathryn S. Head -0- -0- -0- -0-
Rex R. Reed 1,613.47 -0- -0- 37,200.00
Herbert Rubinstein 1,613.47 -0- -0- 37,200.00
James M. Srygley 1,613.47 -0- -0- 37,200.00
John T. Sullivan -0- -0- -0- -0-
Robert F. Wentworth 1,613.47 -0- -0- 37,200.00
Nancy Schaenen 1,210.10 -0- -0- 27,900.00
</TABLE>
- ------------
* Compensation to officers and interested Trustees of Government Plus Fund is
paid by the Adviser. In addition, prior to December 31, 1997, compensation
to non-interested Trustees of Government Plus Fund was voluntarily paid by
the Adviser. Commencing January 1, 1998, compensation to non-interested
Trustees of Government Plus Fund is being paid by Government Plus Fund.
** On March 27, 1997, Mr. Coy resigned as a Trustee of Government Plus Fund.
Mr. Coy did not resign due to a disagreement on any matters relating to
Government Plus Fund's operations, policies or practices. Mr. Coy currently
serves as an emeritus Trustee.
MANAGEMENT
Investment advisory services to the Funds are provided by First Investors
Management Company, Inc. pursuant to an Investment Advisory Agreement ("Advisory
Agreement") dated June 13, 1994. The Advisory Agreement was approved by the
Board of Trustees of Government Plus Fund, including a majority of the Trustees
who are not parties to the Advisory Agreement or "interested persons" (as
defined in the 1940 Act) of any such party ("Independent Trustees"), in person
at a meeting called for such purpose and by a majority of the public
shareholders of each Fund.
Pursuant to the Advisory Agreement, FIMCO shall supervise and manage each
Fund's investments, determine each Fund's portfolio transactions and supervise
all aspects of each Fund's operations, subject to review by the Trustees. The
Advisory Agreement also provides that FIMCO shall provide Government Plus Fund
and each Fund with certain executive, administrative and clerical personnel,
office facilities and supplies, conduct the business and details of the
operation of Government Plus Fund and each Fund and assume certain expenses
thereof, other than obligations or liabilities of the Fund. The Advisory
Agreement may be terminated at any time without penalty by the Trustees or by a
majority of the outstanding voting securities of the applicable Fund, or by
FIMCO, in each instance on not less than 60 days' written notice, and shall
automatically terminate in the event of its assignment (as defined in the 1940
Act). The Advisory Agreement also provides that it will continue in effect, with
respect to a Fund, for a period of over two years only if such continuance is
approved annually either by the Trustees or by a majority of the outstanding
voting securities of that Fund, and, in either case, by a vote of a majority of
the Independent Trustees voting in person at a meeting called for the purpose of
voting on such approval.
Under the Advisory Agreement, each Fund pays the Adviser an annual fee,
paid monthly, according to the following schedule:
7
<PAGE>
Annual
Average Daily Net Assets Rate
- ------------------------ ----
Up to $200 million.................................................. 1.00%
In excess of $200 million up to $500 million........................ 0.75
In excess of $500 million up to $750 million........................ 0.72
In excess of $750 million up to $1.0 billion........................ 0.69
Over $1.0 billion................................................... 0.66
For the fiscal year ended December 31, 1995, the 1st Fund, 2nd Fund and 3rd
Fund paid $14,409, $24,641 and $11,075, respectively, in advisory fees. For the
fiscal year ended December 31, 1996, the 1st Fund, 2nd Fund and 3rd Fund paid
$13,608, $22,888 and $10,613, respectively, in advisory fees. For the fiscal
year ended December 31, 1997, the 1st Fund, 2nd Fund and 3rd Fund paid $9,952,
$16,327, $7,520, respectively, in advisory fees. For the same period, with
respect to the 1st Fund, 2nd Fund and 3rd Fund, the Adviser voluntarily waived
$2,490, $3,972 and $1,803, respectively, in advisory fees. In addition, for the
same period, the Adviser voluntarily assumed expenses of the 1st Fund, 2nd Fund
and 3rd Fund in the amounts of $4,479, $3,320 and $1,205, respectively.
The Adviser has an Investment Committee composed of George V. Ganter,
Margaret Haggerty, Glenn O. Head, Nancy W. Jones, Patricia D. Poitra, Michael
O'Keefe, Clark D. Wagner and Richard Guinnessey. The Committee usually meets
weekly to discuss the composition of the portfolio of each Fund and to review
additions to and deletions from the portfolios.
UNDERWRITER
Government Plus Fund has entered into an Underwriting Agreement
("Underwriting Agreement") with First Investors Corporation ("Underwriter")
which requires the Underwriter to use its best efforts to sell shares of the
Funds. Pursuant to the Underwriting Agreement, the Underwriter shall bear all
fees and expenses incident to the registration and qualification of the Funds'
shares. In addition, the Underwriter shall bear all expenses of sales material
or literature, including prospectuses and proxy materials, to the extent such
materials are used in connection with the sale of the Funds' shares. The
Underwriting Agreement was approved by the Board of Trustees, including a
majority of the Trustees who are not interested persons (as defined in the 1940
Act) of Government Plus Fund, and have no direct or indirect financial interest
in the operation of the Underwriting Agreement ("Disinterested Trustees"). The
Underwriting Agreement provides that it will continue in effect, with respect to
a Fund, from year to year only so long as such continuance is specifically
approved at least annually by the Board of Trustees or by a vote of a majority
of the outstanding voting securities of that Fund, and in either case by the
vote of a majority of the Disinterested Trustees, voting in person at a meeting
called for the purpose of voting on such approval. The Underwriting Agreement
will terminate automatically in the event of its assignment.
For the fiscal year ended December 31, 1995, FIC received no underwriting
commissions with respect to the Funds. For the fiscal year ended December 31,
1996, FIC received underwriting commissions with respect to the 2nd Fund in the
amount of $18. For the fiscal year ended December 31, 1996, FIC received no
underwriting commissions with respect to the 1st Fund and the 3rd Fund. For the
fiscal year ended December 31, 1997, FIC received no underwriting commissions
with respect to the Funds.
DETERMINATION OF NET ASSET VALUE
Except as provided herein, a security listed or traded on an exchange or
the Nasdaq Stock Market is valued at its last sale price on the exchange or
market where the security is principally traded, and lacking any sales on a
particular day, the security is valued at the mean between the closing bid and
asked prices. Securities traded in the OTC market (including securities listed
on
8
<PAGE>
exchanges whose primary market is believed to be OTC) are valued at the mean
between the last bid and asked prices prior to the time when assets are valued
based upon quotes furnished by market makers for such securities. However, a
Fund may determine the value of debt securities based upon prices furnished by
an outside pricing service. The pricing services use quotations obtained from
investment dealers or brokers for the particular securities being evaluated,
information with respect to market transactions in comparable securities and
consider security type, rating, market condition, yield data and other available
information in determining value. Short-term debt securities that mature in 60
days or less are valued at amortized cost. Securities for which market
quotations are not readily available are valued on at fair value as determined
in good faith by or under the supervision of Government Plus Fund's officers in
a manner specifically authorized by the Board of Trustees. "When-issued
securities" are reflected in the assets of a Fund as of the date the securities
are purchased. Such investments are valued thereafter at the mean between the
most recent bid and asked prices obtained from recognized dealers in such
securities or by the pricing service.
The Board of Trustees may suspend the determination of net asset value for
the whole or any part of any period (1) during which trading on the New York
Stock Exchange is restricted as determined by the Securities and Exchange
Commission or such Exchange is closed for other than weekend and holiday
closings, (2) during which an emergency, as defined by rules of the Commission
in respect to the U.S. market, exists as a result of which disposal by the Funds
of securities owned by them is not reasonably practicable for the Funds fairly
to determine the value of their net assets, or (3) for such other period as the
Commission has by order permitted such suspension. During any such period the
Funds may suspend redemption privileges or postpone the date of payment.
ALLOCATION OF PORTFOLIO BROKERAGE
Purchases and sales of portfolio securities by the Funds generally will be
principal transactions. In principal transactions, portfolio securities are
normally purchased directly from the issuer or from an underwriter or market
maker for the securities. There will usually be no brokerage commission paid by
the Funds for such purchases. Purchases from underwriters will include the
underwriter's commission or concession and purchases from dealers serving as
market makers will include the spread between the bid and asked price.
In effecting portfolio transactions for the Funds, the Adviser seeks best
execution of trades either (1) at the most favorable and competitive rate of
commission charged by any broker or member of an exchange, or (2) with respect
to agency transactions, at a higher rate of commission if reasonable in relation
to brokerage and research services provided to a Fund or its Adviser, by such
member or broker. In addition, upon the instruction of the Board of Trustees,
the Adviser may use dealer concessions available in fixed-price underwritings to
pay for research services. Such services may include, but are not limited to,
any one or more of the following: information as to the availability of
securities for purchase or sale and statistical or factual information or
opinions pertaining to investments. The Adviser may use research and services
provided to it by brokers and dealers in servicing all the funds in the First
Investors Group of Funds; however, not all such services may be used by the
Adviser in connection with the Funds. No portfolio orders are placed with an
affiliated broker, nor does any affiliated broker participate in these
commissions.
The Adviser may combine transaction orders placed on behalf of a Fund, any
other fund in the First Investors Group of Funds, any fund of Executive
Investors Trust and First Investors Life Insurance Company, affiliates of the
Funds, for the purpose of negotiating brokerage commissions or obtaining a more
favorable transaction price; and where appropriate, securities purchased or sold
may be allocated in accordance with written procedures approved by the Board of
Trustees.
For the fiscal year ended December 31, 1995, the 1st Fund did not pay
brokerage commissions. For the fiscal year ended December 31, 1995, the 2nd
Series paid $21 in brokerage commissions, all of which was paid in brokerage
commissions to brokers who furnished research services on portfolio
9
<PAGE>
transactions in the amount of $12,019. For the fiscal year ended December 31,
1995, the 3rd Series paid $21 in brokerage commissions, none of which was paid
to brokers who furnished research services on portfolio transactions.
For the fiscal year ended December 31, 1996, the 1st Fund paid $41 in
brokerage commissions, all of which was paid to brokers who furnished research
services on portfolio transactions in the amount of $7,106. For the fiscal year
ended December 31, 1996, the 2nd Fund paid $91 in brokerage commissions. Of that
amount, $70 was paid in brokerage commissions to brokers who furnished research
services on portfolio transactions in the amount of $24,825. For the fiscal year
ended December 31, 1996, the 3rd Fund paid $292 in brokerage commissions. Of
that amount, $70 was paid in brokerage commissions to brokers who furnished
research services on portfolio transactions in the amount of $15,399.
For the fiscal year ended December 31, 1997, the 1st Fund did not pay
brokerage commissions For the fiscal year ended December 31, 1997, the 2nd Fund
paid $13 in brokerage commissions, all of which was paid to brokers who
furnished research services on portfolio transactions in the amount of $5,942.
For the fiscal year ended December 31, 1997, the 3rd Fund paid $60 in brokerage
commissions. Of that amount, $18 was paid in brokerage commissions to brokers
who furnished research services on portfolio transactions in the amount of
$7,768.
PURCHASE AND REDEMPTION OF SHARES
Cumulative Purchase Privilege. Upon written notice to FIC, shares of a Fund
are also available at a quantity discount on new purchases if the then current
value at the current public offering price (i.e., net asset value plus
applicable sales charge) of all shares of the Fund previously purchased or
acquired and then owned, plus the value of shares being purchased at the current
public offering price, amount to $10,000 or more. Such quantity discounts may be
modified or terminated at any time by the Underwriter.
Systematic Withdrawal Plan. Shareholders who own noncertificated shares may
establish a Systematic Withdrawal Plan ("Withdrawal Plan"). If you have a Fund
account with a value of at least $5,000 and you have dividends and other
distributions reinvested, you may elect to receive monthly, quarterly,
semi-annual or annual checks for any designated amount (minimum $25). You may
have the payments sent directly to you or persons you designate. Shareholders
may add shares to the Withdrawal Plan or terminate the Withdrawal Plan at any
time. Withdrawal Plan payments will be suspended when a distributing Fund has
received notice of a shareholder's death on an individual account. Payments may
recommence upon receipt of written alternate payment instructions and other
necessary documents from the deceased's legal representative. Withdrawal
payments will also be suspended when a payment check is returned to the Transfer
Agent marked as undeliverable by the U.S. Postal Service after two consecutive
mailings.
The withdrawal payments derived from the redemption of sufficient shares in
the account to meet designated payments in excess of dividends and other
distributions may deplete or possibly extinguish the initial investment,
particularly in the event of a market decline, and may result in a capital gain
or loss depending on the shareholder's cost. Purchases of additional shares of a
Fund concurrent with withdrawals are ordinarily disadvantageous to shareholders
because of tax liabilities and sales charges. To establish a Withdrawal Plan,
call Shareholder Services at 1-800-423-4026.
Emergency Pricing Procedures. In the event that the Funds must halt
operations during any day that they would normally be required to price under
Rule 22c-1 under the 1940 Act due to an emergency ("Emergency Closed Day"), the
Funds will apply the following procedures:
1. The Funds will make every reasonable effort to segregate orders received
on the Emergency Closed Day and give them the price that they would have
received but for the closing. The Emergency Closed Day price will be calculated
as soon as practicable after operations have
10
<PAGE>
resumed and will be applied equally to sales, redemptions and repurchases that
were in fact received in the mail or otherwise on the Emergency Closed Day.
2. For purposes of paragraph 1, an order will be deemed to have been
received by the Funds on an Emergency Closed Day, even if neither the Funds nor
the Transfer Agent is able to perform the mechanical processing of pricing on
that day, under the following circumstances:
(a) In the case of a mail order the order will be considered received
by a Fund when the postal service has delivered it to FIC's offices in
Woodbridge, New Jersey prior to the close of regular trading on the NYSE,
or at such other time as may be prescribed in its prospectus; and
(b) In the case of a wire order, including a Fund/SERV order, the
order will be considered received when it is received in good form by a FIC
branch office or an authorized dealer prior to the close of regular trading
on the NYSE, or such other time as may be prescribed in its prospectus.
3. If the Funds are unable to segregate orders received on the Emergency
Closed Day from those received on the next day the Funds are open for business,
the Funds may give all orders the next price calculated after operations resume.
4. Notwithstanding the foregoing, on business days in which the NYSE is not
open for regular trading, the Funds may determine not to price their portfolio
securities if such prices would lead to a distortion of the net asset value for
the Funds and their shareholders.
TAXES
In order to continue to qualify for treatment as a regulated investment
company ("RIC") under the Internal Revenue Code of 1986, as amended (the
"Code"), a Fund-each Fund being treated as a separate corporation for these
purposes-must distribute to its shareholders for each taxable year at least 90%
of its investment company taxable income (consisting generally of net investment
income and net short-term capital gain)("Distribution Requirement") and must
meet several additional requirements. For each Fund these requirements include
the following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities loans
and gains from the sale or other disposition of securities, or other income
derived with respect to its business of investing in securities; (2) at the
close of each quarter of the Fund's taxable year, at least 50% of the value of
its total assets must be represented by cash and cash items, U.S. Government
securities, securities of other RICs and other securities, with those other
securities limited, in respect of any one issuer, to an amount that does not
exceed 5% of the value of the Fund's total assets and that does not represent
more than 10% of the issuer's outstanding voting securities; and (3) at the
close of each quarter of the Fund's taxable year, not more than 25% of the value
of its total assets may be invested in securities (other than U.S. Government
securities or the securities of other RICs) of any one issuer.
Under the Taxpayer Relief Act of 1997, different maximum tax rates apply to
an individual's net capital gain depending on the individual's holding period
and marginal rate of federal income tax-generally, 28% for gain recognized on
capital assets held for more than one year but not more than 18 months and 20%
(10% for taxpayers in the 15% marginal tax bracket) for gain recognized on
capital assets held for more than 18 months. Pursuant to an Internal Revenue
Service notice, each Fund may divide each net capital gain distribution into a
28% rate gain distribution and a 20% rate gain distribution (in accordance with
the Fund's holding periods for the securities it sold that generated the
distributed gain) and its shareholders must treat those portions accordingly.
Dividends and other distributions declared by a Fund in December of any
year and payable to shareholders of record in that month are deemed to have been
paid by the Fund and received by the
11
<PAGE>
shareholders on December 31 if the distributions are paid by the Fund during the
following January. Accordingly, those distributions are be taxed to shareholders
for the year in which that December 31 falls.
Each Fund will be subject to a nondeductible 4% excise tax ("Excise Tax")
to the extent it fails to distribute by the end of any calendar year
substantially all of its ordinary income for that year and capital gain net
income for the one-year period ending on October 31 of that year, plus certain
other amounts.
If shares of a Fund are sold at a loss after being held for six months or
less, the loss will be treated as long-term, instead of short-term, capital loss
to the extent of any capital gain distributions received on those shares.
Each Fund may acquire zero coupon securities issued with original issue
discount. As a holder of those securities, each Fund must include in its income
the portion of the original issue discount that accrues on the securities during
the taxable year, even if it receives no corresponding payment on them during
the year. Because each Fund annually must distribute substantially all of its
investment company taxable income, including any original issue discount, to
satisfy the Distribution Requirement and avoid imposition of the Excise Tax, a
Fund may be required in a particular year to distribute as a dividend an amount
that is greater than the total amount of cash it actually receives. Those
distributions will be made from a Fund's cash assets or from the proceeds of
sales of portfolio securities, if necessary. Each Fund may realize capital gains
or losses from those sales, which would increase or decrease its investment
company taxable income and/or net capital gain (the excess of net long-term
capital gain over net short-term capital loss).
PERFORMANCE INFORMATION
A Fund may advertise its performance in various ways.
Each Fund's "average annual total return" ("T") is an average annual
compounded rate of return. The calculation produces an average annual total
return for the number of years measured. It is the rate of return based on
factors which include a hypothetical initial investment of $1,000 ("P") over a
number of years ("n") with an Ending Redeemable Value ("ERV") of that
investment, according to the following formula:
T=[(ERV/P)^(1/n)]-1
The "total return" uses the same factors, but does not average the rate of
return on an annual basis. Total return is determined as follows:
(ERV-P)/P = TOTAL RETURN
In providing such performance data, a Fund will assume the payment of the
maximum sales charge of 8.00% (as a percentage of the offering price) on the
initial investment ("P"). The Fund will assume that during the period covered
all dividends and capital gain distributions are reinvested at net asset value
per share, and that the investment is redeemed at the end of the period. Total
return may also be based on investment at reduced sales charge levels or at net
asset value. Any quotation of total return not reflecting the maximum sales
charge will be greater than if the maximum sales charge were used.
Total return information may be useful to investors in reviewing a Fund's
performance. However, certain factors should be taken into account before using
this information as a basis for comparison with alternative investments. No
adjustment is made for taxes payable on distributions. The total
12
<PAGE>
return will fluctuate over time and the total return for any given past period
is not an indication or representation by the Fund of future rates of return on
its shares.
At times, the Adviser may reduce its compensation or assume expenses of a
Fund in order to reduce the Fund's expenses. Any such waiver or reimbursement
would increase the Fund's total return and yield during the period of the waiver
or reimbursement.
Each Fund may include in advertisements and sales literature information,
examples and statistics to illustrate the effect of compounding income at a
fixed rate of return to demonstrate the growth of an investment over a stated
period of time resulting from the payment of dividends and capital gains
distributions in additional shares. The examples used will be for illustrative
purposes only and are not representations by the Funds of past or future yield
or return.
From time to time, in reports and promotional literature, each Fund may
compare their performance to, or cite the historical performance of, Overnight
Government repurchase agreements, U.S. Treasury bills, notes and bonds,
certificates of deposit, and six-month money market certificates or indices of
broad groups of unmanaged securities considered to be representative of, or
similar to, the Fund's portfolio holdings, such as:
Lipper Analytical Services, Inc. ("Lipper") is a widely-recognized
independent service that monitors and ranks the performance of regulated
investment companies. The Lipper performance analysis includes the
reinvestment of capital gain distributions and income dividends but does
not take sales charges into consideration. The method of calculating total
return data on indices utilizes actual dividends on ex-dividend dates
accumulated for the quarter and reinvested at quarter end.
Morningstar Mutual Funds ("Morningstar"), a semi-monthly publication of
Morningstar, Inc. Morningstar proprietary ratings reflect historical
risk-adjusted performance and are subject to change every month. Funds with
at least three years of performance history are assigned ratings from one
star (lowest) to five stars (highest). Morningstar ratings are calculated
from the Fund's three-, five-, and ten-year average annual returns (when
available) and a risk factor that reflects fund performance relative to
three-month Treasury bill monthly returns. Fund's returns are adjusted for
fees and sales loads. Ten percent of the funds in an investment category
receive five stars, 22.5% receive four stars, 35% receive three stars,
22.5% receive two stars, and the bottom 10% receive one star.
Salomon Brothers Inc., "Market Performance," a monthly publication which
tracks principal return, total return and yield on the Salomon Brothers
Broad Investment-Grade Bond Index and the components of the Index.
Telerate Systems, Inc., a computer system to which the Adviser subscribes
which daily tracks the rates on money market instruments, public corporate
debt obligations and public obligations of the U.S. Treasury and agencies
of the U.S. Government.
THE WALL STREET JOURNAL, a daily newspaper publication which lists the
yields and current market values on money market instruments, public
corporate debt obligations, public obligations of the U.S. Treasury and
agencies of the U.S. Government as well as common stocks, preferred stocks,
convertible preferred stocks, options and commodities; in addition to
indices prepared by the research departments of such financial
organizations as Lehman Bros., Merrill Lynch, Pierce, Fenner and Smith,
Inc., First Boston, Salomon Brothers, Morgan Stanley, Goldman, Sachs & Co.,
Donaldson, Lufkin & Jenrette, Value Line, Datastream International, James
Capel, S.G. Warburg Securities, County Natwest and UBS UK Limited,
including information provided by the Federal Reserve Board, Moody's, and
the Federal Reserve Bank.
13
<PAGE>
Merrill Lynch, Pierce, Fenner & Smith, Inc., "Taxable Bond Indices," a
monthly corporate government index publication which lists principal,
coupon and total return on over 100 different taxable bond indices which
Merrill Lynch tracks. They also list the par weighted characteristics of
each Index.
Lehman Brothers, Inc., "The Bond Market Report," a monthly publication
which tracks principal, coupon and total return on the Lehman Govt./Corp.
Index and Lehman Aggregate Bond Index, as well as all the components of
these Indices.
Standard & Poor's 500 Composite Stock Price Index and the Dow Jones
Industrial Average of 30 stocks are unmanaged lists of common stocks
frequently used as general measures of stock market performance. Their
performance figures reflect changes of market prices and quarterly
reinvestment of all distributions but are not adjusted for commissions or
other costs.
The Consumer Price Index, prepared by the U.S. Bureau of Labor Statistics,
is a commonly used measure of inflation. The Index shows changes in the
cost of selected consumer goods and does not represent a return on an
investment vehicle.
The NYSE composite of component indices--unmanaged indices of all
industrial, utilities, transportation, and finance stocks listed on the
NYSE.
The Russell 2500 Index, prepared by the Frank Russell Company, consists of
U.S. publicly traded stocks of domestic companies that rank from 500 to
3000 by market capitalization. The Russell 2500 tracks the return on these
stocks based on price appreciation or depreciation and does not include
dividends and income or changes in market values caused by other kinds of
corporate changes.
The Russell 2000 Index, prepared by the Frank Russell Company, consists of
U.S. publicly traded stocks of domestic companies that rank from 1000 to
3000 by market capitalization. The Russell 2000 tracks the return on these
stocks based on price appreciation or depreciation and does not include
dividends and income or changes in market values caused by other kinds of
corporate changes.
Reuters, a wire service that frequently reports on global business.
Standard & Poor's Utilities Index is an unmanaged capitalization weighted
index comprising common stock in approximately 40 electric, natural gas
distributors and pipelines, and telephone companies. The Index assumes the
reinvestment of dividends.
Moody's Stock Index, an unmanaged index of utility stock performance.
From time to time, in reports and promotional literature, performance
rankings and ratings reported periodically in national financial publications
such as MONEY, FORBES, BUSINESS WEEK, BARRON'S, FINANCIAL TIMES and FORTUNE may
also be used. In addition, quotations from articles and performance ratings and
ratings appearing in daily newspaper publications such as THE ALL STREET
JOURNAL, THE NEW YORK TIMES and NEW YORK DAILY NEWS may be cited.
14
<PAGE>
GENERAL INFORMATION
Audits And Reports. The accounts of the Funds are audited twice a year by
Tait, Weller & Baker, independent certified public accountants. Shareholders
receive semi-annual and annual reports of the Fund, including audited financial
statements, and a list of securities owned.
Transfer Agent. Administrative Data Management Corp., 581 Main Street,
Woodbridge, NJ 07095-11198, an affiliate of FIMCO and FIC, acts as transfer
agent for the Funds and as redemption agent for regular redemptions. The fees
charged to each Fund by the Transfer Agent are $5.00 to open an account; $3.00
for each certificate issued; $.75 per account per month; $10.00 for each legal
transfer of shares; $.45 per account per dividend declared; $5.00 for each
exchange of shares into a Fund; $5.00 for each partial withdrawal or complete
liquidation; $1.00 for each Systematic Withdrawal Plan check; $4.00 for each
shareholder services call; $20.00 for each item of correspondence; and $1.00 per
account per report required by any governmental authority. Additional fees
charged to the Funds by the Transfer Agent are assumed by the Underwriter. The
Transfer Agent reserves the right to change the fees on prior notice to the
Funds. Upon request from shareholders, the Transfer Agent will provide an
account history. For account histories covering the most recent three year
period, there is no charge. The Transfer Agent charges a $5.00 administrative
fee for each account history covering the period 1983 through 1994 and $10.00
per year for each account history covering the period 1974 through 1982. Account
histories prior to 1974 will not be provided. If any communication from the
Transfer Agent to a shareholder is returned from the U.S. Postal Service marked
as "Undeliverable" two consecutive times, the Transfer Agent will cease sending
any further materials to the shareholder until the Transfer Agent is provided
with a correct address. Efforts to locate a shareholder will be conducted in
accordance with SEC rules and regulations prior to escheatment of funds to the
appropriate state treasury. The Transfer Agent may deduct the costs of its
efforts to locate a shareholder from the shareholder's account. These costs may
include a percentage of the account if a search company charges such a fee in
exchange for its location services. The Transfer Agent is not responsible for
any fees that states and/or their representatives may charge for processing the
return of funds to investors whose funds have been escheated. For the fiscal
year ended December 31, 1997, the 1st Fund, 2nd Fund and 3rd Fund paid $2,206,
$2,403 and $1,751, respectively, in transfer agency fees and expenses. The
Transfer Agent's telephone number is 1-800-423-4026.
5% Shareholders. As of April 1, 1998, the following owned of record or
beneficially 5% or more of the outstanding shares of the applicable Fund:
Fund Shareholder % of Shares
---- ----------- -----------
2nd Fund Kenneth Held C/F 5.2
Seth E. Held U/FL/UGTMA
4300 NW 24th Way
Boca Raton, FL 33431-8430
3rd Fund Dermot F. Walsh 6.4
22 Benjamin Street
Old Greenwich, CT 06870-1832
Jenna Fraelick U/IL/UGTMA 6.3
1336 Eton Drive
Arlington Heights, IL 60004-2181
Lew Hong Lee 15.1
1629 Telegraph Avenue
Oakland, CA 94612-2197
15
<PAGE>
Pulmonary Specialists Ltd. 8.3
Carrl Lindquist TTEE
14860 N Moon Valley Drive
Phoenix, AZ 85022-3662
Purchases Made During the Initial Offering Period. At the end of the
initial offering period of each Fund's shares, the Adviser invested a sufficient
portion of each Fund's assets in Zero Coupon Securities in order to provide an
anticipated minimum return for shareholders who invested during such period. The
anticipated minimum returns were and continue to be: $4.00 for each $1.00 with a
maturity date of December 31, 1998 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, 2004 for the 3rd Fund. In
order to achieve these goals, at the close of each Fund's initial offering
period the Adviser made investments yielding 8.04%, 5.92% and 3.98% for the 1st
Fund, 2nd Fund and 3rd Fund, respectively, over the life of each Fund. The
Adviser does not intend to sell these investments until their ultimate maturity
date, except to meet certain redemption requests.
The Adviser was able to establish these goals because yields of Zero Coupon
Securities available in the marketplace at the time of investment exceeded the
yields necessary to produce these returns. These results will occur even if all
Other Securities purchased by each Fund pay no dividends or interest or are
worthless at the maturity date for each Fund, provided that every Zero Coupon
Security purchased by each Fund is held to maturity and the issuers of such
securities do not default.
Shareholder Liability. Government Plus Fund is organized as an entity known
as a "Massachusetts business trust." Under Massachusetts law, shareholders of
such a trust may, under certain circumstances, be held personally liable for the
obligations of Government Plus Fund. The Declaration of Trust however, contains
an express disclaimer of shareholder liability for acts or obligations of
Government Plus Fund and requires that notice of such disclaimer be given in
each agreement, obligation, or instrument entered into or executed by Government
Plus Fund or the Trustees. The Declaration of Trust provides for indemnification
out of the property of Government Plus Fund of any shareholder held personally
liable for the obligations of Government Plus Fund. The Declaration of Trust
also provides that Government Plus Fund shall, upon request, assume the defense
of any claim made against any shareholder for any act or obligation of
Government Plus Fund and satisfy any judgment thereon. Thus, the risk of a
shareholder's incurring financial loss on account of shareholder liability is
limited to circumstances in which Government Plus Fund itself would be unable to
meet its obligations. The Adviser believes that, in view of the above, the risk
of personal liability to shareholders is immaterial and extremely remote. The
Declaration of Trust further provides that the Trustees will not be liable for
errors of judgment or mistakes of fact or law, but nothing in the Declaration of
Trust protects a Trustee against any liability to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office.
Government Plus Fund may have an obligation to indemnify Trustees and officers
with respect to litigation.
Trading by Portfolio Managers and Other Access Persons. Pursuant to Section
17(j) of the 1940 Act and Rule 17j-1 thereunder, Government Plus Fund and the
Adviser have adopted Codes of Ethics restricting personal securities trading by
portfolio managers and other access persons of Government Plus Fund. Among other
things, such persons, except the Trustees: (a) must have all non-exempt trades
pre-cleared; (b) are restricted from short-term trading; (c) must provide
duplicate statements and transactions confirmations to a compliance officer; and
(d) are prohibited from purchasing securities of initial public offerings.
16
<PAGE>
APPENDIX A
DESCRIPTION OF COMMERCIAL PAPER RATINGS
STANDARD & POOR'S RATINGS GROUP
Standard & Poor's Rating Group ("S&P") commercial paper rating is a current
assessment of the likelihood of timely payment of debt considered short-term in
the relevant market. Ratings are graded into several categories, ranging from
"A-1" for the highest quality obligations to "D" for the lowest.
A-1 This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus (+) designation.
MOODY'S INVESTORS SERVICE, INC.
Moody's Investors Service, Inc. ("Moody's") short-term debt ratings are
opinions of the ability of issuers to repay punctually senior debt obligations
which have an original maturity not exceeding one year. Obligations relying upon
support mechanisms such as letters-of-credit and bonds of indemnity are excluded
unless explicitly rated.
Prime-1 Issuers (or supporting institutions) rated Prime-1 (P-1) have a
superior ability for repayment of senior short-term debt obligations. P-1
repayment ability will often be evidenced by many of the following
characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
- Well-established access to a range of financial markets and assured
sources of alternate liquidity.
17
<PAGE>
Financial Statements
as of December 31, 1997
18
<PAGE>
Financial Statements
as of December 31, 1997
Registrant incorporates by reference the financial statements and report of
independent auditors contained in the Annual Report to shareholders for the
fiscal year ended December 31, 1997 electronically filed with the Commission on
March 5, 1998 (Accession Number: 0000928816-98-00069.
19
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Financial Statements are set forth in Part B, Statement of Additional
Information.
(b) Exhibits:
(1)a./2/ Declaration of Trust
b./2/ Supplement to Declaration of Trust
(2)/1/ By-laws
(3) Not Applicable
(4) Shareholders' rights are contained in
(a) Articles III, VIII, X, XI and XII
of Registrant's Declaration of Trust
dated June 18, 1985, previously filed
as Exhibit 99.B1.1 to Registrant's
Registration Statement and (b) Articles
III and V of Registrant's By-laws,
previously filed as Exhibit 99.B2 to
Registrant's Registration Statement
(5)/1/ Investment Advisory Agreement
(6)/2/ Underwriting Agreement
(7) Not Applicable
(8)/2/ Custodian Agreements
(9)a./2/ Administration Agreements
b. Amended Schedule A to Administration
Agreements
(10) Opinion of Counsel
(11)a. Consent of independent accountants
b./2/ Powers of Attorney
(12) Not Applicable
(13) No Undertaking in effect
(14) Not Applicable
<PAGE>
(15) Not Applicable
(16) Not Applicable
(17) Financial Data Schedule (filed as Exhibit 27 for
electronic filing purposes)
(18) Not Applicable
- ------------
/1/ Incorporated by reference from Post-Effective Amendment No. 12 to
Registrant's Registration Statement (File No. 2-94932) filed on April 20,
1995.
/2/ Incorporated by reference from Post-Effective Amendment No. 13 to
Registrant's Registration Statement (File No. 2-94932) filed on April 18,
1996.
Item 25. Persons Controlled by or Under Common Control with Registrant
There are no persons controlled by or under common control with the
Registrant.
Item 26. Number of Holders of Securities
Number of Record
Holders as of
Title of Class February 2, 1998
-------------- ----------------
Shares of Beneficial
Interest, no par value
1st Fund 150
2nd Fund 336
3rd Fund 103
Item 27. Indemnification
Article XI, Section 2 of Registrant's Declaration of Trust provides as
follows:
"Section 1.
Provided they have exercised reasonable care and have acted under the
reasonable belief that their actions are in the best interest of the Trust, the
Trustees shall not be responsible for or liable in any event for neglect or
wrongdoing of them or any officer, agent, employee of investment adviser of the
Trust, but nothing contained herein shall protect any Trustee against any
liability to which he
21
<PAGE>
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office."
"Section 2.
"(a) Subject to the exceptions and limitations contained in Section (b)
below:
"(i) every person who is, or has been, a Trustee or officer of the Trust (a
"Covered Person") shall be indemnified by the Trust to the fullest extent
permitted by law against liability and against all expenses reasonably incurred
or paid by him in connection with any claim, action, suit or proceeding in which
he becomes involved as a party or otherwise by virtue of his being or having
been a Trustee or officer and against amounts paid or incurred by him in the
settlement thereof;
"(ii) the words "claim," "action," "suit," or "proceeding" shall apply to
all claims, actions, suits or proceedings (civil, criminal or other, including
appeals), actual or threatened, and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fine, penalties and other liabilities.
"(b) No indemnification shall be provided hereunder to a Covered Person:
"(i) who shall have been adjudicated by a court or body before which the
proceeding was brought (A) to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office or (B) not to have acted in
good faith in the reasonable belief that his action was in the best interest of
the Trust; or
"(ii) in the event of a settlement, unless there has been a determination
that such Trustee or officer did not engage in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office,
(A) by the court or other body approving the settlement; or
(B) by at least a majority of those Trustees who are neither interested
persons of the Trust nor are parties to the matter based upon a
review of readily available facts (as opposed to a full trial-type
inquiry); or
(C) by written opinion of independent legal counsel based upon a review
of readily available facts (as opposed to a full trial-type
inquiry); provided, however, that any Shareholder may, by
appropriate legal proceedings, challenge any such determination by
the Trustees, or by independent counsel.
<PAGE>
"(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not be exclusive of
or affect any other rights to which any Covered Person may now or hereafter be
entitled, shall continue as to a person who has ceased to be such Trustee or
officer and shall inure to the benefit of the heirs, executors and
administrators of such a person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel, other than Trustees and
officers, and other persons may be entitled by contract or otherwise under the
law.
"(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
paragraph (a) of this Section 2 may be paid by the Trust from time to time prior
to final disposition thereof upon receipt of an undertaking by or on behalf of
such Covered Person that such amount will be paid over by him to the Trust if it
is ultimately determined that he is not entitled to indemnification under this
Section 2; provided, however, that either (a) such Covered Person shall have
provided appropriate security for such undertaking, (b) the Trust is insured
against losses arising out of any such advance payments or (c) either a majority
of the Trustees who are neither interested persons of the Trust nor are parties
to the matter, or independent legal counsel in a written opinion, shall have
determined, based upon a review of readily available facts (as opposed to a full
trail-type inquiry), that there is a reason to believe that such Covered Person
will be found entitled to indemnification under this Section 2."
The general effect of this Indemnification will be to indemnify the
officers and Trustees of the Registrant from costs and expenses arising from any
action, suit or proceeding to which they may be made a party by reason of their
being or having been a trustee or officer of the Registrant, except where such
action is determined to have arisen out of the willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
the trustee's or officer's office.
The Registrant's Investment Advisory Agreement provides as follows:
The Manager shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Company or any Series in connection with the
matters to which this Agreement relate except a loss resulting from the willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement. Any person, even though also an officer, partner, employee, or agent
of the Manager, who may be or become an officer, Board member, employee or agent
of the Company shall be deemed, when rendering services to the Company or acting
in any business of the Company, to be rendering such services to or acting
solely for the Company and not as an officer, partner, employee, or agent or one
under the control or direction of the Manager even though paid by it.
<PAGE>
The Registrant's Underwriting Agreement provides as follows:
The Underwriter agrees to use its best efforts in effecting the sale and
public distribution of the shares of the Fund through dealers and to perform its
duties in redeeming and repurchasing the shares of the Fund, but nothing
contained in this Agreement shall make the Underwriter or any of its officers
and directors or shareholders liable for any loss sustained by the Fund or any
of its officers, trustees, or shareholders, or by any other person on account of
any act done or omitted to be done by the Underwriter under this Agreement
provided that nothing herein contained shall protect the Underwriter against any
liability to the Fund or to any of its shareholders to which the Underwriter
would otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of its duties as Underwriter or by reason of its
reckless disregard of its obligations or duties as Underwriter under this
Agreement. Nothing in this Agreement shall protect the Underwriter from any
liabilities which it may have under the Securities Act of 1933 or the Investment
Company Act of 1940.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has been
informed that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable. See Item 32 herein.
Item 28. Business and Other Connections of Investment Adviser
First Investors Management Company, Inc., the Investment Adviser to each
Series of the Registrant, also serves as Investment Adviser to:
First Investors Cash Management Fund, Inc.
First Investors Series Fund
First Investors Fund For Income, Inc.
First Investors Government Fund, Inc.
First Investors High Yield Fund, Inc.
First Investors Global Fund, Inc.
First Investors Life Series Fund
First Investors Multi-State Insured Tax Free Fund
First Investors New York Insured Tax Free Fund, Inc.
First Investors Special Bond Fund, Inc.
First Investors Insured Tax Exempt Fund, Inc.
First Investors Tax-Exempt Money Market Fund, Inc.
First Investors Series Fund II, Inc.
Affiliations of the officers and directors of the Investment Adviser are
set forth in Part B, Statement of Additional Information, under "Trustees and
Officers."
Item 29. Principal Underwriters
<PAGE>
(a) First Investors Corporation, Underwriter of each Series of the
Registrant, is also underwriter for:
First Investors Cash Management Fund, Inc.
First Investors Series Fund
First Investors Fund For Income, Inc.
First Investors Government Fund, Inc.
First Investors High Yield Fund, Inc.
First Investors Global Fund, Inc.
First Investors Multi-State Insured Tax Free Fund
First Investors New York Insured Tax Free Fund, Inc.
First Investors Insured Tax Exempt Fund, Inc.
First Investors Tax-Exempt Money Market Fund, Inc.
First Investors Series Fund II, Inc.
First Investors Life Variable Annuity Fund A
First Investors Life Variable Annuity Fund C
First Investors Life Variable Annuity Fund D
First Investors Life Level Premium Variable Life
Insurance(Separate Account B)
(b) The following persons are the officers and directors of the
Underwriter:
Position and Position and
Name and Principal Office with First Office with
Business Address Investors Corporation Registrant
---------------- --------------------- ----------
Glenn O. Head Chairman President
95 Wall Street and Director and Trustee
New York, NY 10005
Marvin M. Hecker President None
95 Wall Street
New York, NY 10005
John T. Sullivan Director Chairman of the
95 Wall Street Board of Trustees
New York, NY 10005
Roger L. Grayson Director Trustee
95 Wall Street
New York, NY 10005
Joseph I. Benedek Treasurer Treasurer
581 Main Street
Woodbridge, NJ 07095
Lawrence A. Fauci Senior Vice President None
95 Wall Street and Director
New York, NY 10005
Kathryn S. Head Vice President Trustee
<PAGE>
581 Main Street and Director
Woodbridge, NJ 07095
Louis Rinaldi Senior Vice None
581 Main Street President
Woodbridge, NJ 07095
Frederick Miller Senior Vice President None
581 Main Street
Woodbridge, NJ 07095
Larry R. Lavoie Secretary and None
95 Wall Street General Counsel
New York, NY 10005
Matthew Smith Vice President None
581 Main Street
Woodbridge, NJ 07095
Jeremiah J. Lyons Director None
56 Weston Avenue
Chatham, NJ 07928
Anne Condon Vice President None
581 Main Street
Woodbridge, NJ 07095
Jane W. Kruzan Director None
232 Adair Street
Decatur, GA 30030
Elizabeth Reilly Vice President None
581 Main Street
Woodbridge, NJ 07095
Robert Flanagan Vice President- None
95 Wall Street Sales Administration
New York, Ny 10005
William M. Lipkus Chief Financial Officer None
581 Main Street
Woodbridge, NJ 07095
(c) Not applicable
Item 30. Location of Accounts and Records
Physical possession of the books, accounts and records of the Registrant
are held by First Investors Management Company, Inc. and its affiliated
companies, First Investors Corporation and Administrative Data Management Corp.,
at their corporate headquarters, 95 Wall Street, New York, NY 10005 and
administrative
<PAGE>
offices, 581 Main Street, Woodbridge, NJ 07095, except for those maintained by
the Registrant's Custodian, The Bank of New York, 48 Wall Street, New York, NY
10286.
Item 31. Management Services
Inapplicable
Item 32. Undertakings
The Registrant undertakes to carry out all indemnification provisions of
its Declaration of Trust, Advisory Agreement and Underwriting Agreement in
accordance with Investment Company Act Release No. 11330 (September 4, 1980) and
successor releases.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of the
Registrant pursuant to the provisions under Item 27 herein, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The Registrant hereby undertakes to furnish a copy of its latest annual
report to shareholders, upon request and without charge, to each person to whom
a prospectus is delivered.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant represents that this Amendment
meets all of the requirements for effectiveness pursuant to Rule 485(b) under
the Securities Act of 1933, and has duly caused this Post-Effective Amendment to
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on the
15th day of April, 1998.
FIRST INVESTORS U.S. GOVERNMENT
PLUS FUND
(Registrant)
By: /s/ Glenn O. Head
---------------------
Glenn O. Head
President and Trustee
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Amendment to this Registration Statement
has been signed below by the following persons in the capacities and on the
dates indicated.
/s/Glenn O. Head Principal Executive April 15, 1998
- ------------------------ Officer and Trustee
Glenn O. Head
/s/Joseph I. Benedek Principal Financial April 15, 1998
- ------------------------ and Accounting Officer
Joseph I. Benedek
* Trustee April 15, 1998
- ------------------------
Kathryn S. Head
* Trustee April 15, 1998
- ------------------------
Roger L. Grayson
* Trustee April 15, 1998
- ------------------------
Herbert Rubinstein
* Trustee April 15, 1998
- ------------------------
Nancy Schaenen
<PAGE>
* Trustee April 15, 1998
- ------------------------
James M. Srygley
* Trustee April 15, 1998
- ------------------------
John T. Sullivan
* Trustee April 15, 1998
- ------------------------
Rex R. Reed
* Trustee April 15, 1998
- ------------------------
Robert F. Wentworth
* By: /s/ Larry R. Lavoie
-------------------
Larry R. Lavoie
Attorney-in-fact
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------ -----------
99.B9 Schedule A to Administration Agreement
99.B10 Opinion of counsel
99.B11 Consent of accountants
27.01 FDS-1st Series
27.02 FDS-2nd Series
27.03 FDS-3rd Series
ADMINISTRATION AGREEMENT
SCHEDULE A
Compensation and charges of Administrative Data Management Corp. for
services as Transfer Agent, Dividend Disbursing Agent and Plan Administration,
and for other services under the Administration Agreement.
Monthly Account Maintenance $0.75 per account
New Accounts $5.00 per account
Payments $0.75 per payment
Exchanges $5.00 per transaction
Liquidations $5.00 per transaction
Transfers $10.00 per transaction
Certificates Issued $3.00 per certificate
Systematic Withdrawal Checks $1.00 per check
Dividend Processing $0.45 per dividend
Reports requested by a
Government Agency $1.00 per account
Shareholder Service Calls $4.00 per call
Correspondence $20.00 per item
OUT-OF-POCKET EXPENSES: In addition to the above charges, the fund shall be
responsible for reimbursing Administrative Data Management Corp. for all
out-of-pocket costs including but not limited to postage, insurance, telephone
lines, forms relating to shareholders of the Fund, envelopes and other similar
items, and will also reimburse Administrative Data Management Corp. for counsel
fees, including fees for the preparation of the Administration Data Management
Corp. for counsel fees, including fees for the preparation of the Administration
Agreement and review of prospectus and application forms to the extent that ADM
is not otherwise reimbursed.
THE ABOVE FEES AND OUT-OF POCKET EXPENSES APPLY TO THE FOLLOWING FUNDS:
FIRST INVESTORS FUND FOR INCOME, INC., FIRST INVESTORS GLOBAL FUND, INC., FIRST
INVESTORS GOVERNMENT FUND, INC., FIRST INVESTORS HIGH YIELD FUND, INC., FIRST
INVESTORS INSURED TAX EXEMPT FUND, INC., FIRST INVESTORS NEW YORK INSURED TAX
FREE FUND, INC., FIRST INVESTORS SERIES FUND, FIRST INVESTORS SERIES FUND II,
INC., FIRST INVESTORS, U.S. GOVERNMENT PLUS FUND - 1ST, 2ND & 3RD FUND,
EXECUTIVE INVESTORS TRUST
KIRKPATRICK & LOCKHART LLP 1800
Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800
Telephone 202-778-9000
April 23, 1998
First Investors U.S. Government Plus Fund
95 Wall Street
New York, NY 10005
Ladies and Gentlemen:
You have requested our opinion, as counsel to First Investors U.S.
Government Plus Fund ("Trust"), as to certain matters regarding the issuance of
Shares of the Trust. As used in this letter, the term "Shares" means the shares
of beneficial interest of 1st Fund, 2nd Fund and 3rd Fund, the series of the
Trust, during the time that Post-Effective Amendment No. 15 to the Trust's
Registration Statement on Form N-1A ("PEA") is effective and has not been
superseded by another post-effective amendment.
As such counsel, we have examined certified or other copies, believed by us
to be genuine, of the Trust's Declaration of Trust and By-laws and such
resolutions and minutes of meetings of the Trust's Board of Trustees as we have
deemed relevant to our opinion, as set forth herein. Our opinion is limited to
the laws and facts in existence on the date hereof, and it is further limited to
the laws (other than the conflict of law rules) in the Commonwealth of
Massachusetts that in our experience are normally applicable to the issuance of
shares by unincorporated voluntary associations and to the Securities Act of
1933 ("1933 Act"), the Investment Company Act of 1940 ("1940 Act") and the
regulations of the Securities and Exchange Commission ("SEC") thereunder.
Based on the foregoing, we are of the opinion that the issuance of the
Shares has been duly authorized by the Trust and that, when sold in accordance
with the terms contemplated by the PEA, including receipt by the Trust of full
payment for the Shares and compliance with the 1933 Act and the 1940 Act, the
Shares will have been validly issued, fully paid and non-assessable.
We note, however, that the Trust is an entity of the type commonly known as
a "Massachusetts business trust." Under Massachusetts law, shareholders could,
under certain circumstances, be held personally liable for the obligations of
the Trust. The Declaration of Trust states that
<PAGE>
creditors of, contractors with and claimants against the Trust shall look only
to the assets of the Trust for payment. It also requires that notice of such
disclaimer be given in each note, bond, contract, certificate, undertaking or
instrument made or issued by the officers or the trustees of the Trust on behalf
of the Trust. The Declaration of Trust further provides: (1) for indemnification
from the assets of the Trust for all loss and expense of any shareholder held
personally liable for the obligations of the Trust by virtue of ownership of
shares of the Trust; and (2) for the Trust to assume the defense of any claim
against the shareholder for any act or obligation of the Trust. Thus, the risk
of a shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust would be unable to meet its
obligations.
We hereby consent to this opinion accompanying the PEA when it is filed
with the SEC and to the reference to our firm in the prospectus that is being
filed as part of the PEA.
Very truly yours,
KIRKPATRICK & LOCKHART LLP
By: /s/ Robert J. Zutz
------------------
Robert J. Zutz
Consent of Independent Certified Public Accountants
First Investors U.S. Government Plus Fund
95 Wall Street
New York, New York 10005
We consent to the use in Post-Effective Amendment No. 15 to the
Registration Statement on Form N-1A (File No. 2-94932) of our report dated
January 30, 1998 relating to the December 31, 1997 financial statements of First
Investors U.S. Government Plus Fund, which are included in said Registration
Statement.
/s/ Tait Weller & Baker
-----------------------
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
April 20, 1998
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