The words "First Investors" in a box across the top of the page.
FIRST INVESTORS
U.S. GOVERNMENT PLUS FUND
SEMI-ANNUAL REPORT
JUNE 30, 1999
First Investors Logo
The words "A MEMBER OF THE FIRST INVESTORS FINANCIAL NETWORK"
under the First Investors logo.
Bond Market Overview
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
Dear Investor:
We are pleased to present this Bond Market Overview for the semi-annual
report for the First Investors U.S. Government Plus Fund for the six month
period ended June 30, 1999. The period under review was characterized by a
strong U.S. economy, rising interest rates and a climbing stock market.
The U.S. economy, now in its ninth year of expansion, continued its
remarkable performance. Economic growth in the first quarter of 1999 was
strong, with the Gross Domestic Product (GDP) growing by 4.3% on an
annualized basis. The momentum continued into the second quarter, with
growth of 2.3% on an annualized basis. Although the economy continued to
expand, inflation stayed under control. As of June 30, the rate of
inflation for the previous 12 months was 2% as measured by the Consumer
Price Index (CPI). The unemployment rate remained near its lowest level in
30 years at 4.3%. Rising personal income, high consumer confidence, wealth
from stock market gains and home price appreciation combined to power
economic growth.
During the first half of 1999, interest rates moved sharply higher, causing
bond prices to decline. The 30-year U.S. Treasury rate rose from 5.10% on
December 31 to 5.96% on June 30. The bellwether rate reached a high of
6.16% in June. This rising interest rate environment was driven by a number
of factors, including the improvement of economies around the globe. With
foreign economies and markets recovering from last year's financial markets
crisis, the "flight to safety" which had benefited U.S. Treasuries
reversed, as investors returned to riskier asset classes.
As well, the Federal Reserve became concerned that the continued strength
of the U.S. economy, particularly when combined with tight labor markets,
would lead to inflation. In an effort to preempt inflation, the Fed raised
the Federal Funds rate 25 basis points (.25%) to 5% on June 30. This
tightening of monetary policy was a partial unwinding of last Fall's 75
basis point (.75%) decrease in the Federal Funds rate. Although the Fed has
currently adopted a neutral stance toward interest rates, it remains alert
to developments that may require further rate increases.
Among bond sectors, the high yield bond market provided the highest total
returns over the past six months, as companies benefited from the strong
economy and healthy earnings. The mortgage-backed bond market was the
second best performing bond sector as higher rates substantially reduced
prepayment risk. Treasury securities and investment grade corporate bonds
had the lowest total returns among bond sectors, in large part due to heavy
issuance of U.S. agency and corporate debt. Lastly, in June long-term
municipal bond yields rose to their highest level in over 18 months.
Going forward, we anticipate that the bond market will remain stable, at
best, for the next three to six months. The domestic economy remains
strong, although inflation is not yet apparent. The Fed should remain
vigilant in its mission to keep inflation under control. To this end, one
or two additional interest rate hikes over the next six months are
possible. The bond markets can potentially perform better in the next six
to nine months if the economy slows, inflation remains low and the Fed is
satisfied with the economic outlook.
Thank you for your continued confidence in First Investors. As always, we
appreciate the opportunity to serve your investment needs.
Sincerely,
/s/ Clark D. Wagner
Clark D. Wagner
Chief Investment Officer
First Investors Management Company, Inc.
July 30, 1999
<TABLE>
<CAPTION>
Portfolio of Investments
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
June 30, 1999
- ----------------------------------------------------------------------------------------------------------
Principal 1st Fund 2nd Fund
Amount or ------------------- -------------------
Shares Security Value % Value %
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. GOVERNMENT SECURITIES
$1,550M Treasury STRIPS, due 11/15/2004 $ 1,132,959
1,700M Treasury STRIPS, due 11/15/1999 $ 1,669,851
- ----------------------------------------------------------------------------------------------------------
Total Value of U.S.Government Securities
(cost $915,614 and $1,650,495, respectively) 1,132,959 99.2% 1,669,851 98.3%
- ----------------------------------------------------------------------------------------------------------
COMMON STOCKS
Consumer Cyclicals
400 Interface, Inc. 3,450 0.3%
- ----------------------------------------------------------------------------------------------------------
Healthcare
100 Jones Pharma, Incorporated 3,937
200 Jones Pharma, Incorporated 7,875
- ----------------------------------------------------------------------------------------------------------
3,937 0.4% 7,875 0.5%
- ----------------------------------------------------------------------------------------------------------
Total Value of Common Stocks
(cost $6,600 and $5,975, respectively) 7,387 0.7% 7,875 0.5%
- ----------------------------------------------------------------------------------------------------------
Total Value of Investments
(cost $922,214 and $1,656,470, respectively) 1,140,346 99.9% 1,677,726 98.8%
Other Assets, Less Liabilities 1,571 .1 20,344 1.2
- ----------------------------------------------------------------------------------------------------------
Net Assets $ 1,141,917 100.0% $ 1,698,070 100.0%
==========================================================================================================
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
June 30, 1999
- ------------------------------------------------------------------------------------------------------------------
1st Fund 2nd Fund
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments in securities:
At identified cost $ 922,214 $ 1,656,470
============== ==============
At value (Note 1A) $ 1,140,346 $ 1,677,726
Cash 3,434 19,206
Other assets 1,308 1,947
-------------- --------------
Total Assets 1,145,088 1,698,879
-------------- --------------
Liabilities
Accrued expenses 2,551 809
Accrued advisory fees 620 --
-------------- --------------
Total Liabilities 3,171 809
-------------- --------------
Net Assets $ 1,141,917 $ 1,698,070
============== ==============
Net Assets Consist of:
Capital paid in $ 880,194 $ 1,627,571
Undistributed net investment income 38,111 56,765
Accumulated net realized gain (loss) on investment transactions 5,480 (7,522)
Net unrealized appreciation in value of investments 218,132 21,256
Total $ 1,141,917 $ 1,698,070
============== ==============
Shares of beneficial interest outstanding (Note 3) 116,922 157,820
============== ==============
Net Asset Value and Redemption Price Per Share
(Net assets divided by shares of beneficial interest outstanding) $ 9.77 $ 10.76
============== ==============
Maximum Offering Price Per Share
(Net asset value /.92)* $ 10.62 $ 11.70
============== ==============
* On purchases of $10,000 or more, the sales charge is reduced.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
Six Months Ended June 30, 1999
- ------------------------------------------------------------------------------------------------------------------
1st Fund 2nd Fund
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income
Income:
Interest $ 44,552 $ 66,195
Dividends 42 13
-------------- --------------
Total income 44,594 66,208
-------------- --------------
Expenses (Notes 1 and 4):
Advisory fee 5,951 8,664
Professional fees 2,098 5,490
Shareholder servicing costs 1,300 2,908
Custodian fees 130 283
Reports and notices to shareholders 156 60
Other expenses 620 170
-------------- --------------
Total expenses 10,255 17,575
Less: Expenses waived or assumed (3,655) (8,006)
Custodian fees paid indirectly (117) (126)
-------------- --------------
Net expenses 6,483 9,443
-------------- --------------
Net investment income 38,111 56,765
-------------- --------------
Realized and Unrealized Gain (Loss) on Investments (Note 3):
Net realized gain (loss) on investments 5,480 (14)
Net unrealized depreciation of investments (99,359) (31,927)
-------------- --------------
Net loss on investments (93,879) (31,941)
-------------- --------------
Net Increase (Decrease) in Net Assets Resulting from Operations $ (55,768) $ 24,824
============== ==============
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
- -----------------------------------------------------------------------------------------------------
1st Fund 2nd Fund
---------------------- -----------------------
1/1/99 to 1/1/99 to
6/30/99 1998 6/30/99 1998
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income $ 38,111 $ 78,270 $ 56,765 $ 114,456
Net realized gain (loss) on investments 5,480 51,229 (14) 11,009
Net unrealized appreciation (depreciation)
of investments (99,359) 4,446 (31,927) (28,802)
---------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations (55,768) 133,945 24,824 96,663
---------- ---------- ---------- ----------
Distributions to Shareholders
Net investment income -- (78,307) -- (114,597)
Net realized gains -- (51,230) -- --
---------- ---------- ---------- ----------
Total distributions -- (129,537) -- (114,597)
---------- ---------- ---------- ----------
Trust Share Transactions (a)
Proceeds from shares sold -- 12,973 -- 16,820
Reinvestment of distributions -- 126,517 -- 108,843
Cost of shares redeemed (36,862) (191,350) (91,393) (308,116)
---------- ---------- ---------- ----------
Net decrease from trust share transactions (36,862) (51,860) (91,393) (182,453)
---------- ---------- ---------- ----------
Net decrease in net assets (92,630) (47,452) (66,569) (200,387)
Net Assets
Beginning of period 1,234,547 1,281,999 1,764,639 1,965,026
---------- ---------- ---------- ----------
End of period+ $1,141,917 $1,234,547 $1,698,070 $1,764,639
========== ========== ========== ==========
+ Includes undistributed net
investment income of $ 38,111 -- $ 56,765 --
(a)Trust Shares Issued and Redeemed
Sold -- 1,196 -- 1,489
Issued on dividends reinvested -- 12,368 -- 10,259
Redeemed (3,754) (17,910) (8,565) (27,962)
---------- ---------- ---------- ----------
Net decrease in trust
shares outstanding (3,754) (4,346) (8,565) (16,214)
========== ========== ========== ==========
See notes to financial statements
</TABLE>
Notes to Financial Statements
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
1. Significant Accounting Policies -- First Investors U.S. Government Plus Fund
(the "Trust") is organized as a Massachusetts business trust and is registered
under the Investment Company Act of 1940 (the "1940 Act") as a diversified
open-end management investment company. The Trust operates as a series fund,
issuing shares of beneficial interest of the 1st and 2nd Funds (each a "Fund")
and accounts separately for the assets, liabilities and operations of each
Fund. The Funds' objective is first to generate income, and, to a lesser
extent, achieve long-term capital appreciation.
A. Security Valuation -- A security listed or traded on an exchange or the
Nasdaq Stock Market is valued at its last sale price on the exchange or market
where the security is principally traded. Securities which have no sales on a
particular day and securities traded in the over-the-counter market are valued
at the mean between the closing bid and asked prices. The Treasury STRIPS in
which each Fund invests are traded primarily in the over-the-counter market.
Such securities are valued at the mean between the last bid and asked prices
based upon quotes furnished by a market maker for such securities. Securities
for which market quotations are not readily available are valued on a
consistent basis at fair value as determined in good faith under the direction
of the Trust's officers in a manner specifically authorized by the Trustees of
the Trust.
B. Federal Income Taxes -- No provision has been made for federal income taxes
on net income or capital gains, since it is the policy of each Fund to continue
to comply with the special provisions of the Internal Revenue Code applicable
to investment companies and to make sufficient distributions of income and
capital gains (in excess of any available capital loss carryovers) to relieve
each Fund from all, or substantially all, federal income taxes.
C. Distributions to Shareholders -- Distributions to shareholders are
generally declared and paid annually. Income dividends and capital gain
distributions are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. These differences
are primarily due to differing treatments for capital loss carryforwards and
post-October capital losses.
D. Expense Allocation -- Direct expenses attributable to a Fund are charged to
and paid from the assets of that Fund. Indirect or general expenses of the
Trust are allocated among and charged to the assets of each Fund on a fair and
equitable basis, which may be based on the relative assets of each Fund or the
nature of the services performed and relative applicability to each Fund.
E. Security Transactions and Investment Income -- Security transactions are
accounted for on the date the securities are purchased or sold. Cost is
determined, and gains and losses are based, on the identified cost basis for
common stocks and the amortized cost basis for Treasury STRIPS for both
financial statement and federal income tax purposes. Dividend income is
recorded on the ex-dividend date. Interest income (consisting of accreted
discount) and estimated expenses are accrued daily. For the six months ended
June 30, 1999, the Funds' custodian has provided credits in the amount of $243
against custodian charges based on the uninvested cash balances of the Funds.
F. Use of Estimates -- The preparation of the financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expense during the reporting period. Actual results could differ
from those estimates.
2. Security Transactions -- Purchases and sales of securities and long-term
U.S. Government Obligations, excluding short-term notes, were as follows:
<TABLE>
<CAPTION>
Six Months Ended June 30, 1999 1st Fund 2nd Fund
- ------------------------------ ----------- -----------
<S> <C> <C>
Securities
- ----------
Purchases $ -- $ --
=========== ===========
Proceeds of sales $ 1,410 $ 1,410
=========== ===========
Long-Term U S Government Obligations
- -------------------------------------
Purchases $ -- $ --
=========== ===========
Proceeds of sales $ 36,575 $121,357
=========== ===========
At June 30, 1999, aggregate cost and net unrealized appreciation of securities
for federal income tax purposes were as follows:
1st Fund 2nd Fund
----------- -----------
Aggregate cost of investments $922,214 $1,656,470
----------- -----------
Gross unrealized appreciation $218,295 $21,256
Gross unrealized depreciation (163) --
----------- -----------
Net unrealized appreciation $218,132 $21,256
=========== ===========
</TABLE>
3. Trust Shares -- The Declaration of Trust permits the Trust to issue an
unlimited number of shares of beneficial interest, of one or more Funds.
4. Advisory Fee and Other Transactions With Affiliates -- Certain officers and
trustees of the Trust are officers and directors of its investment adviser,
First Investors Management Company, Inc. ("FIMCO"), its underwriter, First
Investors Corporation ("FIC"), its transfer agent, Administrative Data
Management Corp. ("ADM") and/or First Financial Savings Bank, S.L.A. ("FFS"),
custodian of the Trust's Individual Retirement Accounts. Trustees of the Trust
who are not "interested persons" of the Trust as defined in the 1940 Act are
remunerated by the Funds. For the six months ended June 30, 1999, total
trustees fees accrued by the Funds amounted to $171.
The Investment Advisory Agreement provides as compensation to FIMCO, an annual
fee, payable monthly, at the rate of 1% of the first $200 million of each
Fund's average daily net assets, .75% on the next $300 million, declining by
.03% on each $250 million thereafter, down to .66% on average daily net assets
over $1 billion. Total advisory fees accrued to FIMCO for the six months ended
June 30, 1999, were $14,615 of which $5,846 was waived. In addition, expenses
of $5,815 were assumed by FIMCO.
For the six months ended June 30, 1999, shareholder servicing costs included
$2,556 in transfer agent fees paid to ADM and $1,131 in IRA custodian fees paid
to FFS.
<TABLE>
<CAPTION>
Financial Highlights
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
The following table sets forth the per share operating performance data for a share outstanding, total return, ratios to
average net assets and other supplemental data for each period indicated.
- --------------------------------------------------------------------------------------------------------------------------------
P E R S H A R E D A T A
----------------------------------------------------------------------------------------------------------------------
Income from Investment Operations Less Distributions from
Net --------------------------------------- ----------------------- Net
Asset Value Net Realized Asset Value
----------- Net and Unrealized Total from Net Net -----------
Beginning Investment Gain (Loss) on Investment Investment Realized Capital Total End
of Period Income Investments Operations Income Gain Surplus Distributions of Period
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1st Fund
- --------
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
1998 10.25 .723 .453 1.176 .723 .473 -- 1.196 10.23
1/1/99
to 6/30/99 10.23 .326 (.786) (.460) -- -- -- -- 9.77
2nd Fund
- --------
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
1998 10.76 .733 (.149) .584 .734 -- -- .734 10.61
1/1/99
to 6/30/99 10.61 .360 (.210) .150 -- -- -- -- 10.76
<CAPTION>
Financial Highlights (continued)
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
The following table sets forth the per share operating performance data for a share outstanding, total return, ratios to
average net assets and other supplemental data for each period indicated.
- -----------------------------------------------------------------------------------------------
R A T I O S / S U P P L E M E N T A L D A T A
-------------------------------------------------------------------------------------
Ratio to Average Net
Ratio to Average Assets Before Expenses
Net Assets** Waived or Assumed
---------------------- ----------------------
Net Net Portfolio
Total Net Assets Investment Investment Turnover
Return+ End of Period Expenses Income Expenses Income Rate
(%) (in thousands) (%) (%) (%) (%) (%)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1st Fund
- --------
1994 (10.90) $1,330 1.60 5.73 1.78 5.55 8
1995 28.29 1,524 1.60 5.60 1.87 5.33 7
1996 (1.86) 1,359 1.60 5.70 1.98 5.32 7
1997 9.10 1,282 1.37 6.11 1.93 5.55 0
1998 11.47 1,235 1.10 6.35 1.93 5.52 1
1/1/99
to 6/30/99 (4.50) 1,142 1.10* 6.42* 1.70* 5.82* 0
2nd Fund
- --------
1994 (6.89) $2,360 1.78 5.48 -- -- 8
1995 15.30 2,475 1.93 5.35 -- -- 7
1996 1.00 2,168 1.85 5.50 -- -- 8
1997 4.47 1,965 1.56 5.93 1.92 5.57 1
1998 5.43 1,765 1.10 6.25 1.96 5.39 1
1/1/99
to 6/30/99 1.41 1,698 1.10* 6.56* 2.02* 5.64* 0
+Calculated without sales charges
*Annualized
**Net of expenses waived or assumed (Note 4)
See notes to financial statements
</TABLE>
Independent Auditors' Report
To the Shareholders and Trustees of
First Investors U.S. Government Plus Fund
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of the 1st and 2nd Funds of First
Investors U.S. Government Plus Fund as of June 30, 1999, and the related
statement of operations for the six months then ended, the statement of
changes in net assets for the six months ended June 30, 1999 and the year
ended December 31, 1998, and financial highlights for each of the periods
indicated thereon. These financial statements and financial highlights are
the responsibility of the Trust's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of June 30, 1999, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of the 1st and 2nd Funds of First Investors U.S. Government Plus Fund as of
June 30, 1999, and the results of their operations, changes in their net
assets and the financial highlights for each of the respective periods
presented, in conformity with generally accepted accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
July 30, 1999
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
Trustees
- --------------------------------
James J. Coy (Emeritus)
Glenn O. Head
Kathryn S. Head
Larry R. Lavoie
Rex R. Reed
Herbert Rubinstein
Nancy S. Schaenen
James M. Srygley
John T. Sullivan
Robert T. Wentworth
Officers
- --------------------------------
Glenn O. Head
President
Concetta Durso
Vice President and Secretary
Patricia D. Poitra
Vice President
Joseph I. Benedek
Treasurer
Carol Lerner Brown
Assistant Secretary
Gregory R. Kingston
Assistant Treasurer
Mark S. Spencer
Assistant Treasurer
Shareholder Information
- --------------------------------
Investment Adviser
First Investors
Management Company, Inc.
95 Wall Street
New York, NY 10005
Underwriter
First Investors Corporation
95 Wall Street
New York, NY 10005
Custodian
The Bank of New York
48 Wall Street
New York, NY 10286
Transfer Agent
Administrative Data
Management Corp.
581 Main Street
Woodbridge, NJ 07095
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue
Washington, DC 20036
Auditors
Tait, Weller & Baker
Eight Penn Center Plaza
Philadelphia, PA 19103
It is the Trust's practice to mail only
one copy of its annual and semi-annual
reports to any address at which more
than one shareholder with the same last
name has indicated that mail is to be
delivered. Additional copies of the
reports will be mailed if requested by
by any shareholder in writing or by
calling 800-423-4026. The Trust will
ensure that separate reports are sent
to any shareholder who subsequently
changes his or her mailing address.
This report is authorized for
distribution only to existing
shareholders, and, if given to
prospective shareholders, must be
accompanied or preceded by the
Trust's prospectus.
