As filed with the Securities and Exchange Commission on April 27, 2000
1933 Act File No.2-94932
1940 Act File No. 811-4181
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. ___ [ ]
Post-Effective Amendment No. 18 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 18 [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)
(Registrant's Telephone Number, Including Area Code): (212) 858-8000
Ms. Concetta Durso
Secretary and Vice President
First Investors Series Fund
95 Wall Street
New York, New York 10005
(Name and Address of Agent for Service)
Copy to:
Robert J. Zutz, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, NW
Washington, D.C. 20036
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[x] on April 28, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post- effective amendment.
<PAGE>
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
CONTENTS OF REGISTRATION STATEMENT
This registration document is comprised of the following:
Cover Sheet
Contents of Registration Statement
Prospectus for the First Investors U.S. Government Plus Fund
Statement of Additional Information for the First Investors
U.S. Government Plus Fund
Part C of Form N-1A
Signature Page
Exhibits
<PAGE>
[GRAPHIC OMITTED]
U.S. GOVERNMENT PLUS FUND - 1ST FUND
The Securities and Exchange Commission has not approved or disapproved
these securities or 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 28, 2000.
<PAGE>
CONTENTS
OVERVIEW OF THE 1st FUND
|X| What is the 1st Fund?....................................................3
/_/ /_/ Objectives......................................................3
/_/ /_/ Primary Investment Strategies...................................3
/_/ /_/ Primary Risks...................................................3
|X| How has the 1st Fund performed?..........................................3
|X| What are the fees and expenses of the 1st Fund?..........................5
THE 1st FUND IN DETAIL
|X| What are the 1st Fund's objectives, principal investment
strategies and principal risks? .......................................5
|X| Who manages the 1st Fund?................................................7
BUYING AND SELLING SHARES
/_/ How and when does the Fund price its shares?.............................7
/_/ How do I buy shares?.....................................................7
/_/ How do I sell shares?....................................................7
ACCOUNT POLICIES
/_/ What about dividends and capital gain distributions?.....................8
/_/ What about taxes?........................................................8
FINANCIAL HIGHLIGHTS...........................................................9
2
<PAGE>
OVERVIEW OF THE 1st FUND
What is the 1st Fund?
OBJECTIVES: The 1st Fund seeks first to generate income and, to a lesser
extent, achieve long-term capital appreciation.
PRIMARY
INVESTMENT
STRATEGIES: The Fund primarily invests in non-callable zero coupon bonds
issued or guaranteed by the U.S. government, its agencies or
instrumentalities that mature on or around the maturity date of
the Fund (December 31, 2004). A very small portion of the Fund's
assets are invested opportunistically in equity securities of
companies with small market capitalizations ("small-cap stocks"),
which have the potential for substantial long-term growth. The
Fund looks for companies that are in the early stages of their
development, have a new product or service, are in a position to
benefit from some change in the economy, have new management, or
are experiencing some other "special situation" which makes their
stocks undervalued. The Fund generally follows a buy and hold
strategy, but may sell an investment when the Fund needs cash to
meet redemptions.
PRIMARY
RISKS: The main risk of investing in the Fund is interest rate risk. The
zero coupon bonds held by the Fund are sensitive to changes in
interest rates. When interest rates rise, they tend to decline in
price, and when interest rates fall, they tend to increase in
price. Zero coupon bonds are more interest rate sensitive than
other bonds because zero coupon bonds pay no interest to their
holders until their maturities. This means that the market prices
of zero coupon bonds will fluctuate far more than those of bonds
of the same maturities that pay interest periodically. To a
lesser degree, an investment in the Fund is subject to stock
market risk due to its holdings of small-cap stocks. Small-cap
stocks carry more risk than larger-cap stocks because they are
often in the early stages of development, dependent on a small
number of products or services, lack substantial financial
resources, and have less predictable earnings. Small-cap stocks
also tend to be less liquid, and experience sharper price
fluctuations than stocks of companies with large capitalizations.
Accordingly, the value of an investment in the Fund will go up
and down, which means that you could lose money.
AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT AND IS NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY
How has the 1st Fund performed?
The bar chart and table below show you how the Fund's performance has varied
from year to year and in comparison with a broad-based index. This information
gives you some indication of the risks of investing in the Fund.
The bar chart shows changes in the performance of the Fund's shares for each of
the last ten calendar years. The bar chart does not reflect sales charges that
you may pay upon purchase of Fund shares. If they were included, the returns
would be less than those shown.
3
<PAGE>
1ST FUND
[OBJECT OMITTED]
During the periods shown, the highest quarterly return was 11.04% (for the
quarter ended December 31, 1990), and the lowest quarterly return was -8.38%
(for the quarter ended March 31, 1990). THE FUND'S PAST PERFORMANCE DOES NOT
NECESSARILY INDICATE HOW THE FUND WILL PERFORM IN THE FUTURE.
The following table shows how the average annual total returns for the Fund's
shares compare to those of the Lehman Brothers Intermediate Treasury Index
("Intermediate Index") as of December 31, 1999. This table assumes that the
maximum sales charge was paid. The Intermediate Index is made up of all public
obligations of the U.S. Treasury with maturities of less than 10 years. The
Intermediate Index does not take into account fees and expenses that an investor
would incur in holding the securities in the index. If it did so, the returns
would be lower than those shown.
1 Year* 5 Years* 10 Years*
1st Fund (12.72)% 5.97% 6.48%
Intermediate Index 0.41% 6.92% 7.09%
* The annual returns are based upon calendar years.
4
<PAGE>
What are the fees and expenses of the 1st Fund ?
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
SHAREHOLDER FEES
(fees paid directly from your investment)
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price).......... 8.00%
Maximum deferred sales charge (load)
(as a percentage of the lower of purchase
price or redemption price)................... None
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
TOTAL
ANNUAL FUND FEE WAIVER
MANAGEMENT OTHER OPERATING AND EXPENSE
FEES(1) EXPENSES(2) EXPENSES(3) ASSUMPTION(1),(2) NET EXPENSES(3)
------- ----------- ----------- ----------------- ---------------
1.00% 1.08% 2.08% 0.98% 1.10%
(1)For the fiscal year ended December 31, 1999, the Adviser waived Management
Fees in excess of 0.60% for the Fund. The Adviser has contractually agreed
with the Fund to waive Management Fees in excess of 0.60% for the fiscal year
ending December 31, 2000.
(2)For the fiscal year ended December 31, 1999, the Adviser assumed Other
Expenses in excess of 0.50%. The Adviser has contractually agreed with the
Fund to assume Other Expenses in excess of 0.50% for the fiscal year ending
December 31, 2000.
(3)The 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 Annual Fund
Operating Expenses or Net Expenses.
EXAMPLE
This example helps you to compare the costs of investing in the Fund with the
cost of investing in other mutual funds. The example assumes that (1) you invest
$10,000 in the Fund for the time periods indicated; (2) your investment has a 5%
return each year; and (3) the Fund's operating expenses remain the same, except
in year one which is net of fees waived and expenses assumed. Although your
actual costs may be higher or lower, under these assumptions your costs would
be:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
$903 $1,313 $1,746 $2,946
THE 1ST FUND IN DETAIL
What are the 1st Fund 's objectives, principal investment strategies, and
principal risks?
OBJECTIVES: The Fund seeks first to generate income and, to a lesser extent,
achieve long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES: The Fund invests at least 65% of its total
assets in non-callable, zero coupon bonds issued or guaranteed by the U.S.
government, its agencies or instrumentalities that mature on or around the
maturity date of the Fund (December 31, 2004). Zero coupon securities are debt
obligations that do not entitle holders to any periodic payments of interest
prior to maturity and therefore are issued and traded at discounts from their
face values. The discounts from face values at which zero coupon securities are
5
<PAGE>
purchased varies depending on the time remaining until maturity, prevailing
interest rates, and the liquidity of the security. Because the discounts from
face values are known at the time of investment, investors intending to hold
zero coupon securities until maturity know the value of their investment return
at the time of investment assuming full payment is made by the issuer upon
maturity.
The Fund seeks zero coupon bonds that will mature shortly before the Fund's
maturity date. As the Fund's zero coupon bonds mature, the proceeds will be
invested in short term U.S. government securities. The Fund generally follows a
buy and hold strategy consistent with attempting to provide a predictable
compounded investment return for investors who hold their Fund shares until the
Fund's maturity.
A very small portion of the Fund's assets are invested opportunistically in
equity securities of companies with small market capitalizations, which have the
potential for substantial long-term growth. The Fund looks for companies that
are in the early stages of their development, have a new product or service, are
in a position to benefit from some change in the economy, have new management,
or are experiencing some other "special situation" which makes their stocks
undervalued. Because these companies tend to be smaller, their growth potential
is often greater.
Although the Fund generally follows a buy and hold strategy, the Fund may sell
an investment when it needs cash to meet redemptions. Information on the Fund's
recent strategies and holdings can be found in the most recent annual report
(see back cover).
PRINCIPAL RISKS: Any investment carries with it some level of risk. An
investment offering greater potential rewards generally carries greater risks.
Here are the principal risks of owning the 1st Fund:
INTEREST RATE RISK: The market value of a bond is affected by changes in
interest rates. When interest rates rise, the market value of a bond declines,
and when interest rates decline, the market value of a bond increases. The price
volatility of a bond also depends on its maturity and duration. Duration is a
measurement of a bond's sensitivity to changes in interest rates that takes into
consideration not only the maturity of the bond but also the time value of money
that will be received from the bond over its life. Generally, the longer the
maturity and duration of a bond, the greater its sensitivity to interest rates.
The market prices of zero coupon securities are generally more volatile than the
market prices of securities paying interest periodically and, accordingly, will
fluctuate far more in response to changes in interest rates than those of
non-zero coupon securities having similar maturities and yields. As a result,
the net asset value of shares of the Fund may fluctuate over a greater range
than shares of other funds that invest in securities that have similar
maturities and yields but that make current distributions of interest.
MARKET RISK: Because this Fund invests in a few stocks, an investment in the
Fund is subject to stock market risk. Stock prices in general may decline over
short or even extended periods not only because of company-specific developments
but also due to an economic downturn, a change in interest rates, or a change in
investor sentiment, regardless of the success or failure of an individual
company's operations. Stock markets tend to run in cycles with periods when
prices generally go up, known as "bull" markets and periods when stock prices
generally go down, referred to as "bear" markets. The market risk associated
with small-cap stocks is greater than that associated with larger-cap stocks
because small-cap stocks tend to experience sharper price fluctuations than
larger-cap stocks, particularly during bear markets.
Small-cap companies are generally dependent on a small number of products or
services, their earnings are less predictable, and their share prices more
volatile. These companies are also more likely to have limited markets or
financial resources, and may depend on a small, inexperienced management group.
LIQUIDITY RISK: Stocks of small-cap companies often are not as broadly traded as
those of larger-cap companies and are often subject to wider price fluctuations.
As a result, at times it may be difficult for the Fund to sell these securities
at a reasonable price.
6
<PAGE>
Who Manages the 1st Fund?
First Investors Management Company, Inc. ("FIMCO") is the investment adviser to
the Fund. Its address is 95 Wall Street, New York, NY 10005. It currently is
investment adviser to 48 mutual funds or series of funds with total net assets
of over $5 billion. FIMCO supervises all aspects of the Fund's operations and
determines the Fund's portfolio transactions. For the fiscal year ended December
31, 1999, FIMCO received advisory fees of 0.60% of average daily net assets, net
of waiver, for the 1st Fund.
Patricia D. Poitra, Director of Equities, serves as Portfolio Manager of the
Funds. Ms. Poitra is also responsible for the management of certain other First
Investors Funds. Ms. Poitra joined FIMCO in 1985 as a Senior Equity Analyst.
BUYING AND SELLING SHARES
How and when does the Fund price its shares?
The share price (which is called "net asset value" or "NAV" per share) for the
Fund is calculated once each day as of 4 p.m., Eastern Time ("ET"), on each day
the New York Stock Exchange ("NYSE") is open for regular trading. The NYSE is
closed on most holidays and Good Friday. In the event that the NYSE closes
early, the share price will be determined as of the time of the closing.
To calculate the NAV, the Fund's assets are valued and totaled, liabilities are
subtracted, and the balance, called net assets, is divided by the number of
shares outstanding.
In valuing its assets, the Fund uses the market value of securities for which
market quotations or last sale prices are readily available. If there are no
readily available quotations or last sale prices for an investment or the
available quotations are considered to be unreliable, the securities will be
valued at their fair value as determined in good faith pursuant to procedures
adopted by the Board of Directors of the Fund.
How do I buy shares?
The Fund is not currently being sold, except to existing shareholders through
reinvestment of dividends or distributions from the Fund. Dividends and
distributions are reinvested at NAV.
How do I sell shares?
You may redeem your Fund shares on any day a Fund is open for business by:
o Contacting your Representative who will place a redemption order for
you;
o Sending a written redemption request to Administrative Data
Management Corp., ("ADM") at 581 Main Street, Woodbridge, NJ
07095-1198;
o Telephoning the Special Services Department of ADM at 1-800-342-6221
(telephone redemptions are not available on retirement and certain
other types of accounts); or
o Instructing us to make an electronic transfer to a predesignated bank
account (if you have completed an application authorizing such
transfers).
Your redemption request will be processed at the price next computed after we
receive the request, in good order. For all requests, have your account number
available.
Payment of redemption proceeds generally will be made within 7 days. If you are
redeeming shares which you recently purchased by check, payment may be delayed
to verify that your check has cleared. This may take up to 15 days from the date
of your purchase. You may not redeem shares by telephone or Electronic Fund
Transfer unless you have owned the shares for at least 15 days.
7
<PAGE>
If your account fails to meet the minimum account balance as a result of a
redemption, or for any reason other than market fluctuation, the Fund reserves
the right to redeem your account without your consent or to impose a low balance
account fee of $15 annually on 60 days prior notice. The Fund may also redeem
your account or impose a low balance account fee if you have established your
account under a systematic investment program and discontinue the program before
you meet the minimum account balance. You may avoid redemption or imposition of
a fee by purchasing additional Fund shares during this 60-day period to bring
your account balance to the required minimum.
The Fund reserves the right to make in-kind redemptions. This means that it
could respond to a redemption request by distributing shares of the Fund's
underlying investments rather than distributing cash.
ACCOUNT POLICIES
What about dividends and capital gain distributions?
To the extent that it has net investment income, the Fund will declare and pay
dividends from net investment income on an annual basis. The Fund will declare
and distribute any net realized capital gains on an annual basis, usually after
the end of the Fund's fiscal year. The 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 choose to reinvest all dividends and other distributions
at NAV in additional shares of the Fund, or receive all dividends and other
distributions in cash. If you do not select an option when you open your
account, all dividends and other distributions will be reinvested in additional
shares of the Fund. If you do not cash a distribution check and do not notify
ADM to issue a new check within 12 months, the distribution may be reinvested in
a Fund. If any correspondence sent by the Fund is returned as "undeliverable,"
dividends and other distributions automatically will be reinvested in the Fund.
No interest will be paid to you while a distribution remains uninvested.
A dividend or other distribution paid on a class of shares will be paid in
additional shares of the distributing class if the total amount of the
distribution is under $5 or the Fund has received notice of your death (until
written alternate payment instructions and other necessary documents are
provided by your legal representative).
What about taxes?
Any dividends or capital gain distributions paid by the Fund are taxable to you
unless you hold your shares in an individual retirement account ("IRA"), 403(b)
account, 401(k) account, or other tax-deferred account. Dividends (including
distributions of net short-term capital gains) are taxable to you as ordinary
income. Capital gain distributions (essentially, distributions of net long-term
capital gains) by the Fund are taxed to you as long-term capital gains,
regardless of how long you owned your Fund shares. You are taxed in the same
manner whether you receive your dividends and capital gain distributions in cash
or reinvest them in additional Fund shares. Your sale or exchange of Fund shares
will be considered a taxable event for you. Depending on the purchase price and
the sale price of the shares you sell or exchange, you may have a gain or a loss
on the transaction. You are responsible for any tax liabilities generated by
your transactions.
8
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand the
financial performance of the Fund for the past five years. Certain information
reflects financial results for a single Fund share. The total returns in the
tables represent the rates that an investor would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). The information has been audited by Tait, Weller & Baker, whose
report, along with the Fund's financial statements, are included in the SAI,
which is available upon request.
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
P E R S H A R E D A T A
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS FROM
<CAPTION>
NET NET REALZIED TOTAL FROM NET INVEST- NET TOTAL NET
ASSET VALUE NET AND UNREALIZED INVESTMENT MENT INCOME REALIZED DISTRIBUTIONS ASSET VALUE
YEAR ENDED BEGINNING INCOME GAIN (LOSS) OPERATIONS GAINS END OF YEAR
12/31 OF YEAR INVESTMENT ON INVESTMENTS
- ------------- ----------------- ----------- -------------- ---------------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1ST FUND
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
1999 10.23 .681 (1.205) (.524) .681 .145 .826 8.88
9
</TABLE>
<PAGE>
<TABLE>
--------------------------------------------
R A T I O S/S U P P L E M E N T A L D A T A
--------------------------------------------
<CAPTION>
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
YEAR ENDED 12/31 RETURN YEAR (IN EXPENSES INCOME EXPENSES INCOME RATE
(%)+ THOUSANDS) (%) (%) (%) (%) (%)
- ------------------ ---------------- ----------------- ---------------- ----------------- --------------- -------------- ------------
1ST FUND
<S> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
+ Calculated without sales charge.
* Net of expenses waived or assumed.
10
<PAGE>
[GRAPHIC OMITTED]
U.S. GOVERNMENT PLUS FUND
1ST FUND
For investors who want more information about the Fund, the following documents
are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS: Additional information about the Fund's investments
is available in the Fund's annual and semi-annual reports to shareholders. In
the Fund's annual report, you will find a discussion of the market conditions
and investment strategies that significantly affected the Fund's performance
during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Fund and is incorporated by reference into this
prospectus.
You can get free copies of reports, and the SAI, request other information and
discuss your questions about the Fund by contacting the Fund at:
Administrative Data Management Corp.
581 Main Street
Woodbridge, NJ 07095-1198
Telephone: 1-800-423-4026
You can review and copy Fund documents (including reports, and SAIs) at the
Public Reference Room of the SEC in Washington, D.C. You can also obtain copies
of Fund documents after paying a duplicating fee (i) by writing to the Public
Reference Section of the SEC, Washington, D.C. 20549-0102 or (ii) by electronic
request at [email protected]. You can obtain information on the operation of
the Public Reference Room, including information about duplicating fee charges,
by calling (202) 942-8090. Text-only versions of Fund documents can be viewed
online or downloaded from the EDGAR database on the SEC's Internet website at
http://www.sec.gov.
(Investment Company Act File No. First
Investors U.S. Government Plus
Fund: 811-4181)
11
<PAGE>
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
STATEMENT OF ADDITIONAL INFORMATION
DATED APRIL 28, 2000
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 management investment company consisting of one series, the 1st Fund
(the "Fund"). The investment objectives of the Fund are, first, to generate
income and, to a lesser extent, to achieve long-term capital appreciation. There
can be no assurances that the objectives of the Fund will be realized.
The maturity date of the 1st Fund is December 31, 2004. As the 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. The Fund has
terminated offering its shares. No new shares of the Fund will be issued, except
in connection with reinvestment of dividends and capital gain distributions.
Because the Fund will not offer new shares to the public, investors are urged to
consider the effects of the closing of the offering, including liquidity demands
created by redemptions and the sale of securities at unfavorable prices to meet
redemption requests. Redemptions of the Fund's shares prior to the maturity date
will raise the remaining shareholders' pro rata share of expenses for the Fund.
This Statement of Additional Information ("SAI") is not a prospectus.
It should be read in conjunction with the Fund's Prospectus dated April 28,
2000, which may be obtained free of cost from the Fund at the address or
telephone number noted above.
TABLE OF CONTENTS
PAGE
Investment Strategies and Risks........................................... 2
Investment Policies....................................................... 3
Investment Restrictions................................................... 6
Trustees and Officers..................................................... 7
Management................................................................ 9
Underwriter............................................................... 10
Determination of Net Asset Value.......................................... 10
Allocation of Portfolio Brokerage......................................... 11
Purchase and Redemption of Shares......................................... 12
Taxes..................................................................... 14
Performance Information................................................... 15
General Information....................................................... 17
Appendix A................................................................ 20
Appendix B................................................................ 21
Financial Statements...................................................... 27
<PAGE>
INVESTMENT STRATEGIES AND RISKS
The 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 First Investors Management Company, Inc. ("FIMCO" or "Adviser") or selected
other investments ("Other Securities"). At a predetermined maturity date, the
Fund will terminate and liquidate as soon thereafter as possible. There is no
assurance that these objectives will be achieved. The investment objectives of
the Fund may not be changed unless approved by a majority of the outstanding
voting securities of the Fund.
Although the Fund intends to invest no less than 65% of its assets in
Government Securities, the 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 the Fund may invest are common stocks or securities
convertible into common stock issued by small, unseasoned or relatively unknown
companies, or those that 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.
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 that accompany the development of new products, markets or
services. Equities purchased by the Fund that represent a special situation bear
the risk that the special situation will not develop as favorably as expected,
or the situation may deteriorate. For example, a merger with favorable
implications may be blocked, an industrial development may not enjoy anticipated
market acceptance or a bankruptcy may not be as profitably resolved as had been
expected. Although these risks could have a significant negative impact on that
portion of the 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 the Fund's assets invested in 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
the Fund's assets invested in equities. The Fund, may, however, invest all of
its portion of its assets in prime commercial paper, certificates of deposit,
bankers' acceptances, repurchase agreements and participating interests (as
described below) when the Adviser believes market conditions warrant such action
or to satisfy redemption requests.
Investments in commercial paper by the Fund are limited to
obligations rated Prime-1 by Moody's Investors Service, Inc. ("Moody's") or A-1
by Standard & Poor's ("S&P"). A description of commercial paper ratings is
contained in Appendix A. 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 maturity likewise limited.
2
<PAGE>
Investments in certificates of deposit will be made only at domestic
institutions with assets in excess of $500 million. Under a repurchase agreement
the 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 Fund are pro rata
interests in securities otherwise qualified for purchase by the Fund 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 the 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 creating 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 the Fund purchases
participation interests. However, the issuer of the participation interest to
the Fund will agree in writing, among other things: to remit promptly all
payments of principal, interest and premium, if any, to the Fund once received
by the issuer; to repurchase the participating 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 Fund.
INVESTMENT POLICIES
GOVERNMENT SECURITIES. The Fund seeks to achieve its objectives by
investing no less than 65% of its total assets in Government Securities which
are issued or guaranteed by the U.S. Treasury. Government 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.
3
<PAGE>
The amount of the discount the 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 the Fund until maturity. These
securities are purchased with original issue discount, which must be included in
the gross income of the Fund as it accrues over the life of the securities.
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. While the Fund intends to hold all Zero Coupon Securities
until maturity, the market prices of Government Securities move inversely with
respect to changes in interest rates prior to their maturity.
REPURCHASE AGREEMENTS. The Fund will enter into repurchase agreements
only with banks that are members of the Federal Reserve System or securities
dealers that 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 that 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 a 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 Fund's 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. The 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.
RESTRICTED SECURITIES AND ILLIQUID INVESTMENTS. The Fund may not 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 that 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, the 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, the Fund might obtain a less favorable price than prevailed when it
decided to sell.
4
<PAGE>
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 the Fund, however, could affect adversely the marketability
of such portfolio securities and the Fund might be unable to dispose of such
securities promptly or at reasonable prices.
WHEN-ISSUED SECURITIES. The 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. 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 the Fund. The purchase price to be paid by the Fund and the interest
rate on the instruments to be purchased are both selected when the Fund agrees
to purchase the securities "when-issued." The Fund is permitted to sell
when-issued securities prior to issuance of such securities, but will not
purchase such securities with that purpose intended. 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. After the Fund is committed to purchase when-issued
securities, but prior to the issuance of the 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. Sale of securities in the segregated
account or sale of the when-issued securities may cause the realization of a
capital gain or loss.
PORTFOLIO TURNOVER. Although the Fund generally does 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 the Fund's portfolio, with the exception of
5
<PAGE>
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 years ended December 31, 1998 and 1999, the 1st Fund
had portfolio turnover rates of 1% and 1%, respectively.
INVESTMENT RESTRICTIONS
The 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 the 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, the Fund
will not:
1. Purchase securities on margin (but the 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 the Fund's total assets (taken at current
value) in the obligations of one or more issuers having their principal business
activities in the same industry.
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.
6
<PAGE>
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 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.
The Fund has adopted the following non-fundamental investment
restriction, which may be changed without shareholder approval. This restriction
provides that the 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.
JAMES J. COY (85), Emeritus Trustee, 90 Buell Lane, East Hampton, NY 11937.
Retired; formerly Senior Vice President, James Talcott, Inc. (financial
institution).
GLENN O. HEAD*+ (74), President and Trustee. Chairman of the Board and Director,
Administrative Data Management Corp. ("ADM"), FIMCO, Executive Investors
Management Company, Inc. ("EIMCO"), First Investors Asset Management Company,
Inc. ("FIAMCO"), First Investors Corporation ("FIC"), Executive Investors
Corporation ("EIC") and First Investors Consolidated Corporation ("FICC").
KATHRYN S. HEAD*+ (44), Trustee, 581 Main Street, Woodbridge, NJ 07095.
President and Director, FICC, ADM and FIMCO; Vice President and Director, FIC;
President and Chief Executive Officer, EIC; President and Director, EIMCO;
Chairman and Director, First Financial Savings Bank, S.L.A.
LARRY R. LAVOIE* (52), Trustee. Assistant Secretary, ADM, EIC, EIMCO, FIAMCO,
FICC and FIMCO; President, FIAMCO; Secretary and General Counsel, FIC.
REX R. REED** (78), Trustee, 259 Governors Drive, Kiawah Island, SC 29455.
Retired; formerly Senior Vice President, American Telephone & Telegraph Company.
7
<PAGE>
HERBERT RUBINSTEIN** (78), Trustee, 695 Charolais Circle, Edwards, CO
81632-1136. Retired; formerly President, Belvac International Industries, Ltd.
and President, Central Dental Supply.
NANCY SCHAENEN** (68), Trustee, 56 Midwood Terrace, Madison, NJ 07940. Trustee,
Drew University and DePauw University.
JAMES M. SRYGLEY** (67), Trustee, 33 Hampton Road, Chatham, NJ 07982. Principal,
Hampton Properties, Inc. (property investment company).
JOHN T. SULLIVAN* (67), Trustee and Chairman of the Board; Director, FIMCO, FIC,
FICC and ADM; Of Counsel, Hawkins, Delafield & Wood, Attorneys.
ROBERT F. WENTWORTH** (70), Trustee, 217 Upland Downs Road, Manchester Center,
VT 05255. Retired; formerly financial and planning executive with American
Telephone & Telegraph Company.
JOSEPH I. BENEDEK (42), Treasurer and Principal Accounting Officer, 581 Main
Street, Woodbridge, NJ 07095. Treasurer, FIMCO, EIMCO and FIAMCO.
CONCETTA DURSO (64), 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.
** These Trustees are members of the Board's Audit Committee.
+ 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.
8
<PAGE>
The following table lists compensation paid to the Trustees of Government
Plus Fund for the fiscal year ended December 31, 1999.
TOTAL COMPENSATION
AGGREGATE FROM FIRST INVESTORS
COMPENSATION FAMILY OF FUNDS PAID
TRUSTEE FROM FUND* TO TRUSTEE*+
- ------- ---------- ------------
James J. Coy** $-0- $-0-
Glenn O. Head $-0- $-0-
Kathryn S. Head $-0- $-0-
Larry R. Lavoie $-0- $-0-
Rex R. Reed $60 $42,950
Herbert Rubinstein $60 $42,950
James M. Srygley $60 $42,950
John T. Sullivan $-0- $-0-
Robert F. Wentworth $60 $42,950
Nancy Schaenen $60 $42,950
* Compensation to officers and interested Trustees of Government Plus Fund is
paid by the Adviser.
** On March 27, 1997, Mr. Coy resigned as a Trustee of Government Plus Fund.
Mr. Coy currently serves as an Emeritus Trustee. Mr. Coy is paid by the
Adviser.
+ The First Investors Family of Funds consists of 15 separate registered
investment companies.
MANAGEMENT
Investment advisory services to the Fund 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 the Fund. The Board of Trustees is responsible for overseeing
the management of the Fund.
Pursuant to the Advisory Agreement, FIMCO shall supervise and manage the
Fund's investments, determine the Fund's portfolio transactions and supervise
all aspects of the Fund's operations, subject to review by the Trustees. The
Advisory Agreement also provides that FIMCO shall provide Government Plus Fund
and the 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 the 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 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 the 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 the 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, the Fund pays the Adviser an annual fee,
paid monthly, according to the following schedule:
9
<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 years ended December 31, 1997, 1998 and 1999, the 1st Fund
paid $9,952, $12,389 and $11,546, respectively, in advisory fees. For the same
periods, with respect to the 1st Fund, the Adviser voluntarily waived $4,956,
$5,366 and $4,617, respectively, in advisory fees. For the fiscal year ended
December 31, 1999, the Adviser assumed $6,427 of expenses.
The Adviser has an Investment Committee composed of Dennis T.
Fitzpatrick, George V. Ganter, Michael Deneka, David Hanover, Glenn O. Head,
Kathryn S. Head, Nancy W. Jones, Michael O'Keefe, Patricia D. Poitra, Clark D.
Wagner and Matthew Wright. 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.
First Investors Consolidated Corporation ("FICC") owns all of the voting
common stock of the Adviser and all of the outstanding stock of First Investors
Corporation and the Funds' transfer agent. Mr. Glenn O. Head controls FICC and,
therefore, controls the Adviser.
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
Fund. 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 the 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 the
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.
At the present time, the Fund is not offering its shares, except in
connection with the reinvestment of dividends and distributions. For the fiscal
years ended December 31, 1997, 1998 and 1999, FIC received no underwriting
commissions with respect to the Fund.
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 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, the
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
10
<PAGE>
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 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 the 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 Fund
of securities owned by them is not reasonably practicable for the Fund 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
Fund may suspend redemption privileges or postpone the date of payment.
EMERGENCY PRICING PROCEDURES. In the event that the Fund 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 Fund 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 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 Fund on an Emergency Closed Day, even if neither the Fund 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 the 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 Fund is unable to segregate orders received on the
Emergency Closed Day from those received on the next day the Fund is open for
business, the Fund 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 Fund may determine not to price their
portfolio securities if such prices would lead to a distortion of the net asset
value for the Fund and its shareholders.
ALLOCATION OF PORTFOLIO BROKERAGE
The Adviser may purchase or sell portfolio securities on behalf of
the Fund in agency or principal transactions. In agency transactions, the Fund
generally pays brokerage commissions. In principal transactions, the Fund
generally does not pay commissions, however the price paid for the security may
11
<PAGE>
include an undisclosed dealer commission or "mark-up" or selling concessions.
The Adviser normally purchases fixed-income securities on a net basis from
primary market makers acting as principals for the securities. The Adviser may
purchase certain money market instruments directly from an issuer without paying
commissions or discounts. The Adviser may also purchase securities traded in the
OTC market. As a general practice, OTC securities are usually purchased from
market makers without paying commissions, although the price of the security
usually will include undisclosed compensation. However, when it is advantageous
to the Fund the Adviser may utilize a broker to purchase OTC securities and pay
a commission.
In purchasing and selling portfolio securities on behalf of the Fund,
the Adviser will seek to obtain best execution. The Fund may pay more than the
lowest available commission in return for brokerage and research services.
Additionally, upon instruction by the Board, the Adviser may use dealer
concessions available in fixed-priced underwritings, over-the-counter
transactions, and/or brokerage to pay for research and other services. Research
and other services may include information as to the availability of securities
for purchase or sale, statistical or factual information or opinions pertaining
to securities, reports and analysis concerning issuers and their
creditworthiness, and Lipper's Directors' Analytical Data concerning Fund
performance and fees. The Adviser generally uses the research and other services
to service all the funds in the First Investors Family of Funds, rather than the
particular Funds whose commissions may pay for research or other services. In
other words, a Fund's brokerage may be used to pay for a research service that
is used in managing another Fund within the First Investor Fund Family. The
Lipper's Directors' Analytical Data is used by the Adviser and the Fund Board to
analyze a fund's performance relative to other comparable funds.
In selecting the broker-dealers to execute the Fund's portfolio
transactions, the Adviser may consider such factors as the price of the
security, the rate of the commission, the size and difficulty of the order, the
trading characteristics of the security involved, the difficulty in executing
the order, the research and other services provided, the expertise, reputation
and reliability of the broker-dealer, access to new offerings, and other factors
bearing upon the quality of the execution. The Adviser does not place portfolio
orders with an affiliated broker, or allocate brokerage commission business to
any broker-dealer for distributing fund shares. Moreover, no broker-dealer
affiliated with the Adviser participates in commissions generated by portfolio
orders placed on behalf of the Fund.
The Adviser may combine transaction orders placed on behalf of the 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
Fund, 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 years ended December 31, 1997, 1998 and 1999, the 1st
Fund paid $0, $2 and $0, respectively, in brokerage commissions, none of which
was paid to brokers who provided research services.
PURCHASE AND 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, which may take up to fifteen days from the date of
purchase. 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.
12
<PAGE>
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 or exchange 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; (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; (10) a stock certificate is mailed to an
address other than the address of record or the dealer on the account; (11) you
establish any EFT service; (12) you request a change of the address of record to
a P.O. box or a "c/o" street address; and (13) an address is updated on an
account which has been coded "Do Not Mail" because mail has been returned as
undeliverable.
REPURCHASE THROUGH UNDERWRITER. You may redeem shares through a
dealer. In this event, the Underwriter, acting as agent for the 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.
SHARE CERTIFICATES. The Fund does not issue share certificates unless
requested to do so. Ownership of shares of the 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.
Certificates are not issued on any Class B Shares, Class A money market shares,
or any shares in retirement accounts.
CONFIRMATIONS AND STATEMENTS. You will receive confirmations of
purchases and redemptions of shares of the 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.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders who own noncertificated
shares may establish a Systematic Withdrawal Plan ("Withdrawal Plan").
Generally, if you have a Fund account with a value of at least $5,000, 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
13
<PAGE>
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.
TAXES
To continue to qualify for treatment as a regulated investment company
("RIC") under the Internal Revenue Code of 1986, as amended ("Code"), the Fund
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. 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.
By qualifying for treatment as a RIC, the Fund (but not its shareholders)
will be relieved of federal income tax on the part of its investment company
taxable income and net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) that it distributes to its shareholders.
If the Fund failed to qualify for treatment as a RIC for any taxable year, (1)
it would be taxed at corporate rates on the full amount of its taxable income
for that year without being able to deduct the distributions it makes to its
shareholders and (2) the shareholders would treat all those distributions,
including distributions of net capital gain, as dividends (that is, ordinary
income) to the extent of the Fund's earnings and profits. In addition, the Fund
could be required to recognize unrealized gains, pay substantial taxes and
interest and make substantial distributions before requalifying for RIC
treatment.
Dividends and other distributions declared by the 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 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.
The 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.
14
<PAGE>
If Fund shares 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.
The Fund may acquire zero coupon securities issued with original issue
discount. As a holder of those securities, the 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 the 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, it
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 the Fund's cash assets or from the proceeds of
sales of portfolio securities, if necessary. The 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.
PERFORMANCE INFORMATION
The Fund may advertise its performance in various ways.
The 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, the 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 the
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 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.
The 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 Fund of past or future yield or
15
<PAGE>
return. Examples of typical graphs and charts depicting such historical
performances, compounding and hypothetical returns are included in Appendix B.
From time to time, in reports and promotional literature, the 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.
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.
16
<PAGE>
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 41 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.
GENERAL INFORMATION
ORGANIZATION. Government Plus Fund is a Massachusetts business trust
organized on July 8, 1985. 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 1st 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.
AUDITS AND REPORTS. The accounts of the Fund are audited twice a year by
Tait, Weller & Baker, independent certified public accountants, 8 Penn Center
Plaza, Philadelphia, PA, 19103. Shareholders receive semi-annual and annual
17
<PAGE>
reports of the Fund, including audited financial statements, and a list of
securities owned.
LEGAL COUNSEL. Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036, serves as counsel to the Fund.
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 Fund and as redemption agent for regular redemptions. The fees
charged to the 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; $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 Fund by the Transfer Agent are assumed
by the Underwriter. The Transfer Agent reserves the right to change the fees on
prior notice to the Fund. 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. The Transfer Agent's telephone number is
1-800-423-4026.
5% SHAREHOLDERS. As of March 31, 2000, no shareholder owned of record or
beneficially 5% or more of the outstanding shares of the Fund.
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.
18
<PAGE>
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,
the Adviser, and the Underwriter have adopted Codes of Ethics ("Codes"). These
Codes permit portfolio managers and other access persons of Government Plus Fund
to invest in securities, including securities that may be owned by the Fund,
subject to certain restrictions.
19
<PAGE>
APPENDIX A
DESCRIPTION OF COMMERCIAL PAPER RATINGS
STANDARD & POOR'S
Standard & Poor's ("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.
20
<PAGE>
APPENDIX B
[The following tables are represented as graphs in the printed document.]
The following graphs and chart illustrate hypothetical returns:
INCREASE RETURNS
This graph shows over a period of time even a small increase in returns can make
a significant difference. This assumes a hypothetical investment of $10,000.
Years 10% 8% 6% 4%
----- ------- ------ ------ ------
5 16,453 14,898 13,489 12,210
10 27,070 22,196 18,194 14,908
15 44,539 33,069 24,541 18,203
20 73,281 49,268 33,102 22,226
25 120,569 73,402 44,650 27,138
INCREASE INVESTMENT
This graph shows the more you invest on a regular basis over time, the more you
can accumulate. this assumes monthly installment with a constant hypothetical
return rate of 8%.
Years $100 $250 $500 $1,000
----- ------ ------- ------- -------
5 7,348 18,369 36,738 73,476
10 18,295 43,736 91,473 182,946
15 34,604 86,509 173,019 346,038
20 58,902 147,255 294,510 589,020
25 95,103 237,757 475,513 951,026
D-1
<PAGE>
[The following table is represented as a graph in the printed document.]
This chart illustrates the time value of money based upon the following
assumptions:
If you invested $2,000 each year for 20 years, starting at 25, assuming a 9%
investment return, you would accumulate $573,443 by the time you reach age 65.
However, had you invested the same $2,000 each year for 20 years, at that rate,
but waited until age 35, you would accumulate only $242,228 - a difference of
$331,215.
25 years old .............. 573,443
35 years old .............. 242,228
45 years old .............. 103,320
For each of the above graphs and chart it should be noted that systematic
investment plans do not assume a profit or protect against loss in declining
markets. Investors should consider their financial ability to continue purchases
through periods of both high and low price levels. Figures are hypothetical and
for illustrative purposes only and do not represent any actual investment or
performance. The value of a shareholder's investment and return may vary.
D-2
<PAGE>
[The following table is represented as a chart in the printed document.]
The following chart illustrates the historical performance of the Dow Jones
Industrial Average from 1928 through 1996.
1928 .................. 300.00
1929 .................. 248.48
1930 .................. 164.58
1931 .................. 77.90
1932 .................. 59.93
1933 .................. 99.90
1934 .................. 104.04
1935 .................. 144.13
1936 .................. 179.90
1937 .................. 120.85
1938 .................. 154.76
1939 .................. 150.24
1940 .................. 131.13
1941 .................. 110.96
1942 .................. 119.40
1943 .................. 136.20
1944 .................. 152.32
1945 .................. 192.91
1946 .................. 177.20
1947 .................. 181.16
1948 .................. 177.30
1949 .................. 200.10
1950 .................. 235.40
1951 .................. 269.22
1952 .................. 291.89
1953 .................. 280.89
1954 .................. 404.38
1955 .................. 488.39
1956 .................. 499.46
1957 .................. 435.68
1958 .................. 583.64
1959 .................. 679.35
1960 .................. 615.88
1961 .................. 731.13
1962 .................. 652.10
1963 .................. 762.94
1964 .................. 874.12
1965 .................. 969.25
1966 .................. 785.68
1967 .................. 905.10
1968 .................. 943.75
1969 .................. 800.35
1970 .................. 838.91
1971 .................. 890.19
1972 .................. 1,020.01
1973 .................. 850.85
1974 .................. 616.24
1975 .................. 858.71
1976 .................. 1,004.65
1977 .................. 831.17
1978 .................. 805.01
1979 .................. 838.74
1980 .................. 963.98
1981 .................. 875.00
1982 .................. 1,046.55
1983 .................. 1,258.64
1984 .................. 1,211.56
1985 .................. 1,546.67
1986 .................. 1,895.95
1987 .................. 1,938.80
1988 .................. 2,168.60
1989 .................. 2,753.20
1990 .................. 2,633.66
1991 .................. 3,168.83
1992 .................. 3,301.11
1993 .................. 3,754.09
1994 .................. 3,834.44
1995 .................. 5,000.00
1996 .................. 6,000.00
The performance of the Dow Jones Industrial Average is not indicative of
the performance of any particular investment. It does not take into account fees
and expenses associated with purchasing mutual fund shares. Individuals cannot
invest directly in any index. Please note that past performance does not
guarantee future results.
D-3
<PAGE>
[The following table is represented as a chart in the printed document.]
The following chart shows that inflation is constantly eroding the value of your
money.
THE EFFECTS OF INFLATION OVER TIME
1966 ....................... 96.61836
1967 ....................... 93.80423
1968 ....................... 89.59334
1969 ....................... 84.36285
1970 ....................... 79.88906
1971 ....................... 77.33694
1972 ....................... 74.79395
1973 ....................... 68.80768
1974 ....................... 61.27131
1975 ....................... 57.31647
1976 ....................... 54.63915
1977 ....................... 51.20820
1978 ....................... 46.98000
1979 ....................... 41.46514
1980 ....................... 36.85790
1981 ....................... 33.84564
1982 ....................... 32.60659
1983 ....................... 31.41290
1984 ....................... 30.23378
1985 ....................... 29.12696
1986 ....................... 28.81005
1987 ....................... 27.59583
1988 ....................... 26.43279
1989 ....................... 25.27035
1990 ....................... 23.81748
1991 ....................... 23.10134
1992 ....................... 22.45028
1993 ....................... 21.86006
1994 ....................... 21.28536
1995 ....................... 20.76620
1996 ....................... 20.16135
1996 ....................... 100.00
1997 ....................... 103.00
1998 ....................... 106.00
1999 ....................... 109.00
2000 ....................... 113.00
2001 ....................... 116.00
2002 ....................... 119.00
2003 ....................... 123.00
2004 ....................... 127.00
2005 ....................... 130.00
2006 ....................... 134.00
2007 ....................... 138.00
2008 ....................... 143.00
2009 ....................... 147.00
2010 ....................... 151.00
2011 ....................... 156.00
2012 ....................... 160.00
2013 ....................... 165.00
2014 ....................... 170.00
2015 ....................... 175.00
2016 ....................... 181.00
2017 ....................... 186.00
2018 ....................... 192.00
2019 ....................... 197.00
2020 ....................... 203.00
2021 ....................... 209.00
2022 ....................... 216.00
2023 ....................... 222.00
2024 ....................... 229.00
2025 ....................... 236.00
2026 ....................... 243.00
Inflation erodes your buying power. $100 in 1966, could purchase five times the
goods and service as in 1996 ($100 vs. $20).* Projecting inflation at 3%, goods
and services costing $100 today will cost $243 in the year 2026.
* Source: Consumer Price Index, U.S. Bureau of Labor Statistics.
D-4
<PAGE>
[The following tables are represented as graphs in the printed document.]
This chart illustrates that historically, the longer you hold onto stocks, the
greater chance that you will have a positive return.
1926 through 1996*
Total Number of Percentage of
Number of Positive Positive
Rolling Period Periods Periods Periods
-------------- ------- ------- -------
1-Year 71 51 72%
5-Year 67 60 90%
10-Year 62 60 97%
15-Year 57 57 100%
20-Year 52 52 100%
The following chart shows the compounded annual return of large company stocks
compared to U.S. Treasury Bills and inflation over the most recent 15 year
period. **
Compound Annual Return from 1982 -- 1996*
Inflation ..................... 3.55
U.S. Treasury Bills ........... 6.50
Large Company Stocks .......... 16.79
The following chart illustrates for the period shown that long-term corporate
bonds have outpaced U.S. Treasury Bills and inflation.
Compound Annual Return from 1982 -- 1996*
Inflation ..................... 3.55
U.S. Treasury Bills ........... 6.50
Long-Term Corp. bonds ......... 13.66
* Source: Used with permission. (c)1997 Ibbotson Associates, Inc. All rights
reserved. [Certain provisions of this work were derived from copyrighted
works of Roger G. Ibbotson and Rex Sinquefield.]
** Please note that U.S. Treasury bills are guaranteed as to principal and
interest payments (although the funds that invest in them are not), while
stocks will fluctuate in share price. Although past performance cannot
guarantee future results, returns of U.S. Treasury bills historically have
not outpaced inflation by as great a margin as stocks.
D-5
<PAGE>
The accompanying table illustrates that if you are in the 36% tax bracket, a
tax-free yield of 3% is actually equivalent to a taxable investment earning
4.69%.
Your Taxable Equivalent Yield
Your Federal Tax Bracket
---------------------------------------------
28.0% 31.0% 36.0% 39.6%
your tax-free yield
3.00% 4.17% 4.35% 4.69% 4.97%
3.50% 4.86% 5.07% 5.47% 5.79%
4.00% 5.56% 5.80% 6.25% 6.62%
4.50% 6.25% 6.52% 7.03% 7.45%
5.00% 6.94% 7.25% 7.81% 8.25%
5.50% 7.64% 7.97% 8.59% 9.11%
This information is general in nature and should not be construed as tax advice.
Please consult a tax or financial adviser as to how this information affects
your particular circumstances.
D-6
<PAGE>
[The following table is represented as a graph in the printed document.]
The following graph illustrates how income has affected the gains from stock
investments since 1965.
S&P 500 Dividends Reinvested S&P 500 Principal Only
12/31/64 10,000 10,000
12/31/65 11,269 10,906
12/31/66 10,115 9,478
12/31/67 12,550 11,383
12/31/68 13,948 12,255
12/31/69 12,795 10,863
12/31/70 13,299 10,873
12/31/71 15,200 12,046
12/31/72 18,088 13,929
12/31/73 15,431 11,510
12/31/74 11,346 8,090
12/31/75 15,570 10,642
12/31/76 19,296 12,680
12/31/77 17,915 11,221
12/31/78 19,092 11,340
12/31/79 22,645 12,736
12/31/80 30,004 16,019
12/31/81 28,528 14,460
12/31/82 34,674 16,595
12/31/83 42,496 19,461
12/31/84 45,161 19,733
12/31/85 59,489 24,930
12/31/86 70,594 28,575
12/31/87 74,301 29,154
12/31/88 86,641 32,769
12/31/89 114,093 41,699
12/31/90 110,549 38,964
12/31/91 144,230 49,214
12/31/92 155,218 51,411
12/31/93 170,863 55,039
12/31/94 173,120 54,191
12/31/95 238,175 72,676
12/31/96 292,863 87,403
11/30/97 383,977 112,732
Source: First Investors Management Company, Inc. Standard & Poor's is a
registered trademark. The S&P 500 is an unmanaged index comprising 500 common
stocks spread across a variety of industries. The total returns represented
above compare the impact of reinvestment of dividends and illustrates past
performance of the index. The performance of any index is not indicative of the
performance of a particular investment and does not take into account the
effects of inflation or the fees and expenses associated with purchasing mutual
fund shares. Individuals cannot invest directly in any index. Mutual fund shares
will fluctuate in value, therefore, the value of your original investment and
your return may vary. Moreover, past performance is no guarantee of future
results.
D-7
<PAGE>
Financial Statements
as of December 31, 1999
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, 1999 electronically filed with the Securities and
Exchange Commission on March 2, 2000 (Accession Number:
0000928816-00-000130).
<PAGE>
PART C. OTHER INFORMATION
-------------------------
Item 23. EXHIBITS
(a)(i) Declaration of Trust(2)
(ii) Supplemental Declaration of Trust(2)
(b) By-laws(1)
(c) 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
(d) Investment Advisory Agreement between Registrant and First
Investors Management Company(1)
(e) Underwriting Agreement between Registrant and First Investors
Corporation(2)
(f) Bonus, profit sharing or pension plans - none
(g)(i) Custodian Agreement between Registrant and Irving Trust
Company(2)
(h)(i) Administration Agreement between Registrant, First Investors
Management Company, Inc., First Investors Corporation and
Administrative Data Management Corp.(2)
(ii) Amended Schedule A to Administration Agreement(2)
(iii) Transfer Agency Agreement filed herewith
(i) Opinion and Consent of Counsel -- filed herewith
(j)(i) Consent of Independent Accountants - filed herewith
(ii) Powers of Attorney(1)
(k) Financial statements omitted from prospectus -none
(l) Initial capital agreements - none
(m) Distribution Plan - none
(n) Financial Data Schedules - filed herewith
(o) 18f-3 Plan - none
(p)(i) Code of Ethics for First Investors Registered Investment
Companies - filed herewith
(ii) Code of Ethics for First Investors - filed herewith
- ------------
1 Incorporated by reference from Post-Effective Amendment No. 12 to
Registrant's Registration Statement (File No. 2-94932) filed on April 20,
1995.
<PAGE>
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 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
--------------------------------------------------------------
There are no persons controlled by or under common control with the
Registrant.
Item 25. 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 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
<PAGE>
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.
"(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
<PAGE>
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.
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 30 hereunder.
Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
----------------------------------------------------
First Investors Management Company, Inc. offers investment
management services and is a registered investment adviser. Affiliations
of the officers and directors of the Investment Adviser are set forth in
Part B, Statement of Additional Information, under "Directors or Trustees
and Officers."
Item 27. PRINCIPAL UNDERWRITERS
----------------------
(a) First Investors Corporation, Underwriter of the Registrant, is
also underwriter for:
First Investors Cash Management Fund, Inc.
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 Multi-State Insured Tax Free Fund
<PAGE>
First Investors New York Insured Tax Free Fund, Inc.
First Investors Tax-Exempt Money Market Fund, Inc.
First Investors U.S. Government Plus Fund
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
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
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 Trustee
95 Wall Street General Counsel
New York, NY 10005
<PAGE>
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 28. 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 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 29. MANAGEMENT SERVICES
-------------------
Not Applicable.
Item 30. UNDERTAKINGS
------------
The Registrant undertakes to carry out all indemnification provisions of
its Declaration of Trust, Advisory Agreement and Underwriting Agreement in
<PAGE>
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, as amended,
and the Investment Company Act of 1940, as amended, the Registrant represents
that this Post-Effective Amendment No. 18 meets all the requirements for
effectiveness pursuant to Rule 485(b) under the Securities Act of 1933, and has
duly caused this Post-Effective Amendment No. 18 to its 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 18th day of April, 2000.
FIRST INVESTORS U.S. GOVERNMENT
PLUS FUND
By: /S/ GLENN O. HEAD
-----------------
Glenn O. Head
President and Trustee
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Post-Effective Amendment No. 18 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 18, 2000
- -----------------------------
Glenn O. Head Officer and Trustee
/s/ Joseph I. Benedek Principal Financial April 18, 2000
- -----------------------------
Joseph I. Benedek and Accounting Officer
Kathryn S. Head* Trustee April 18, 2000
- -----------------------------
Kathryn S. Head
/s/ Larry R. Lavoie Trustee April 18, 2000
- -----------------------------
Larry R. Lavoie
Herbert Rubinstein* Trustee April 18, 2000
- -----------------------------
Herbert Rubinstein
Nancy Schaenen* Trustee April 18, 2000
- -----------------------------
Nancy Schaenen
<PAGE>
James M. Srygley* Trustee April 18, 2000
- -----------------------------
James M. Srygley
John T. Sullivan* Trustee April 18, 2000
- -----------------------------
John T. Sullivan
Rex R. Reed* Trustee April 18, 2000
- -----------------------------
Rex R. Reed
Robert F. Wentworth* Trustee April 18, 2000
- -----------------------------
Robert F. Wentworth
*By: /S/ LARRY R. LAVOIE
-------------------
Larry R. Lavoie
Attorney-in-fact
<PAGE>
INDEX TO EXHIBITS
Exhibit
NUMBER DESCRIPTION
- ------ -----------
23(a)(i) Declaration of Trust(2)
23(a)(ii) Supplement to Declaration of Trust(2)
23(b) By-laws(1)
23(c) 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.
23(d) Investment Advisory Agreement between Registrant and
First Investors Management Company, Inc.(1)
23(e) Underwriting Agreement between Registrant and First
Investors Corporation(2)
23(f) Bonus or Profit Sharing Contracts--None
23(g) Custodian Agreement between Registrant and Irving Trust
Company(2)
23(h)(i) Administration Agreement between Registrant, First
Investors Management Company, Inc., First Investors
Corporation and Administrative Data Management Corp.(2)
23(h)(ii) Amended Schedule A to Administration Agreement(2)
23(h)(iii) Transfer Agency Agreement - filed herewith
23(i) Opinion and Consent of Counsel - filed herewith
23(j)(i) Consent of independent accountants - filed herewith
23(j)(ii) Powers of Attorney(1)
23(k) Omitted Financial Statements -- None
23(l) Initial Capital Agreements -- None
<PAGE>
23(m) Distribution Plan - none
23(n) Financial Data Schedules - filed herewith
23(o) Rule 18f-3 Plan - none
23(p)(i) Code of Ethics for First Investors Registered Investment
Companies - filed herewith
(ii) Code of Ethics for First Investors - filed herewith
- -----------------
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.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000759696
<NAME> FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
<SERIES>
<NUMBER> 01
<NAME> 1ST SERIES
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-3-1999
<INVESTMENTS-AT-COST> 919
<INVESTMENTS-AT-VALUE> 1081
<RECEIVABLES> 0
<ASSETS-OTHER> 15
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1096
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4
<TOTAL-LIABILITIES> 4
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 929
<SHARES-COMMON-STOCK> 123
<SHARES-COMMON-PRIOR> 121
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 162
<NET-ASSETS> 1090
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 89
<OTHER-INCOME> 0
<EXPENSES-NET> (13)
<NET-INVESTMENT-INCOME> 76
<REALIZED-GAINS-CURRENT> 16
<APPREC-INCREASE-CURRENT> (156)
<NET-CHANGE-FROM-OPS> (64)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (77)
<DISTRIBUTIONS-OF-GAINS> (16)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 8
<SHARES-REINVESTED> 10
<NET-CHANGE-IN-ASSETS> (144)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (12)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (24)
<AVERAGE-NET-ASSETS> 1153
<PER-SHARE-NAV-BEGIN> 10.23
<PER-SHARE-NII> .681
<PER-SHARE-GAIN-APPREC> (1.205)
<PER-SHARE-DIVIDEND> (.681)
<PER-SHARE-DISTRIBUTIONS> (.145)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.88
<EXPENSE-RATIO> 1.10
</TABLE>
TRANSFER AGENT AGREEMENT
------------------------
This Agreement, dated as of the 20th day of May 1999, made by each FIRST
INVESTORS investment company listed on Schedule A, as amended from time to time
("Fund"), and ADMINISTRATIVE DATA MANAGEMENT CORP., a corporation duly organized
and existing under the laws of the State of New York ("ADM").
WITNESSETH THAT:
WHEREAS, ADM represents that it is currently registered and licensed with
the appropriate authorities to provide services as a transfer agent of mutual
funds, and will remain so registered for the duration of the Agreement; and
WHEREAS, the Fund desires to employ ADM to provide transfer agency and
related services under the terms and conditions described in this Agreement and
ADM is willing to provide such services;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto, intending to be legally bound, do hereby
agree as follows:
1. APPOINTMENT. The Fund hereby appoints ADM as its registrar, transfer
agent, dividend disbursing agent, shareholder servicing agent and administrator
of its dividend reinvestment, share accumulation, systematic withdrawal and
automated payment programs (collectively its "Transfer Agent") and ADM accepts
such appointment and agrees to act in such capacity upon the terms set forth in
this Agreement.
2. DEFINITIONS. As used in this Agreement capitalized terms have the
meanings specified below:
A) "Fund" means any of the Funds set forth in Schedule A existing
now or in the future that becomes a party to this Agreement, and;
B) "Shares" means the issued and outstanding shares of beneficial
interest, and any fractions thereof, of the Fund;
C) "Shareholder" means the registered owner of Shares or the beneficial
owner of Shares if the name of the beneficial owner is recorded on
the master security holder files;
D) "Account" means a separate record established on ADM's books for
each Shareholder in the Fund which identifies the legal registration
and number of Shares owned.
<PAGE>
3. RESPONSIBILITIES OF ADM. ADM in its capacity as Transfer Agent will
perform the usual duties and functions of a stock transfer agent for the Fund.
Among other things, it will:
A) maintain stock registry and record thereon the Shares and
fractions thereof of both issued and unissued Shares for each
Shareholder's Account;
B) open, maintain, service and close Accounts of Shareholders;
C) issue, redeem, exchange and transfer Shares in Accounts
established on its books and records;
D) process initial and subsequent payments on each day the Fund is
open for trading;
E) maintain a record of sales of Shares for use by the Fund in
complying with state and federal registration requirements;
F) deliver to the underwriter all payments received by ADM;
G) calculate the amounts of Shares to be issued, the amounts of
commissions owed to dealers, and the amounts to be paid to the
underwriter;
H) answer telephone and written inquiries from Shareholders,
securities brokers and others;
I) calculate the amount of, and reinvest dividends and distributions
declared upon Shares into Shareholder Accounts or, upon
Shareholder election, pay such dividends and distributions in
cash;
J) furnish to Shareholders monthly or quarterly statements,
confirmations of transactions in Shares, prospectuses, and such
other communications as may be requested by the Fund;
K) deduct and pay the Internal Revenue Service and other payees the
required amounts of tax withholdings in accordance with
applicable laws, rules and regulations;
L) mail to Shareholders such tax forms, notices, and other information
relating to purchases, redemptions, dividends and distributions, as
required by applicable laws, rules and regulations;
M) prepare, maintain and file with the Internal Revenue Service and
other appropriate taxing authorities reports relating to purchases,
redemptions, dividends and distributions, as required by applicable
laws, rules and regulations;
-2-
<PAGE>
N) mail annual and semi-annual reports and prospectuses prepared by
or on behalf of the Fund to Shareholders;
O) mail notices of Shareholder meetings, proxies, proxy statements and
other related materials upon request by the Fund;
P) maintain a disaster recovery site for emergency use and a separate
off-site storage facility for backup computer files and data;
Q) maintain all records required to be kept by applicable laws, rules
and regulations relating to the services to be performed under this
Agreement; and,
R) comply with all other laws, rules and regulations that apply to ADM
as the result of the services that it is required to perform under
this Agreement.
4. DUTY OF CARE. ADM shall exercise due care and diligence, act in good
faith, and comply with the terms and conditions contained in the Fund's
prospectuses, statements of additional information, shareholder applications
and all applicable laws, rules and regulations in performing the services
required under this Agreement.
5. LIMITATIONS ON LIABILITY. ADM shall not be liable for any losses,
claims or damages (collectively, "Damages") arising out of or in connection with
ADM's performance or failure to perform its duties under this Agreement except
to the extent that such Damages arise out of its negligence, reckless disregard
of its duties, bad faith or willful misfeasance.
Without limiting the generality of the foregoing, ADM shall not be liable
for:
A) any Damages caused by delays, errors, or loss of data occurring by
reason of circumstances beyond ADM's control, including but not
limited to acts of civil or military authorities, national
emergencies, labor difficulties, acts of God, insurrections, wars,
riots or failures of the mails, transportation providers,
communications providers or power suppliers; or,
B) any taxes, assessments or governmental charges which may be levied
or assessed on any basis whatsoever in connection with the services
performed under this Agreement, except for taxes assessed against
ADM in its corporate capacity based upon its compensation hereunder.
6. INDEMNIFICATION.
A) The Fund shall indemnify and hold ADM harmless against any Damages
or expenses (including reasonable attorneys fees) incurred in any
action, suit or proceeding brought against it by any person other
than the Fund, including a Shareholder, based upon ADM's services
-3-
<PAGE>
for the Fund or its Shareholders, if the Damages sought did not
result from ADM's negligence, reckless disregard for its duties, bad
faith or willful misfeasance.
B) The Transfer Agent shall not pay or settle any claim, demand,
expense or liability to which it may seek indemnity pursuant to
paragraph (A) above an ("Indemnifiable Claim") without the express
written consent of the Fund. The Transfer Agent shall notify the
Fund promptly of receipt of notification of an Indemnifiable Claim.
Unless the Fund notifies the Transfer Agent within 30 days of
receipt of Written Notice of such Indemnifiable Claim that the Fund
does not intend to defend such Indemnifiable Claim, the Fund shall
defend the Transfer Agent for such Indemnifiable Claim. The Fund
shall have the right to defend any Indemnifiable Claim at its own
expense, such defense to be conducted by counsel selected by the
Fund. Further, the Transfer Agent may join the Fund in such defense
at the Transfer Agent's own expense, but to the extent that it shall
so desire the Fund shall direct such defense. If the Fund shall fail
or refuse to defend, pay or settle an Indemnifiable Claim, the
Transfer Agent, at the Fund's expense, consistent with the
limitation concerning attorney's fees expressed in (A) above, may
provide its own defense.
7. DELEGATION OF DUTIES. ADM may from time to time in its sole discretion
delegate some or all of its duties hereunder to any affiliate or entity, which
shall perform such functions as the agent of ADM; provided, however, that the
delegation of any of ADM's duties under this Agreement shall not relieve ADM of
any of its responsibilities or liabilities under this Agreement.
8. INSURANCE. ADM shall maintain insurance of the types and in the amounts
deemed by it to be appropriate for the services that it provides to the Fund. To
the extent that policies of insurance may provide for coverage of claims for
liability or indemnity by the parties set forth in this Agreement, the contracts
of insurance shall take precedence, and no provision of the Agreement shall be
construed to relieve an insurer of any obligation to pay claims to the Fund, ADM
or any other insured party which could otherwise be a covered claim in the
absence of any provision of this Agreement.
9. BOOKS AND RECORDS. The books and records pertaining to the Fund which
are in the possession of the Transfer Agent shall be the property of the Fund
and shall be returned to the Fund or its designee upon request. Such books and
records shall be prepared and maintained as required by applicable laws, rules,
and regulations. The Fund, or its authorized representatives, shall have access
to such books and records at all times during the Transfer Agent's normal
business hours. Upon request of the Fund, copies of any such books and records
shall be provided by the Transfer Agent to the Fund or the Fund's authorized
representative or designee at the Fund's expense.
-4-
<PAGE>
10. RESPONSIBILITIES OF THE FUND. The Fund is responsible for:
A) providing ADM on an ongoing basis with its current prospectuses,
statements of additional information, shareholder manuals, annual
and semi-annual reports, proxy notices and proxy statements;
B) notifying ADM upon declaration of each dividend and distribution of
the date of its declaration, the amount payable per Share, the
record date, the payment date, the reinvestment date, and the price;
C) transferring, or causing the Fund's Custodian or Custodians to
transfer, to ADM by each payment date, the total amount of the
dividend or distribution currently payable in cash; and
D) providing ADM with its net asset value on each day the Fund is open
for business and the prices which are applicable to Shareholders who
are entitled to purchase Shares at reduced offering prices.
11. COMPENSATION. The Fund agrees to pay ADM compensation for its services
and to reimburse it for expenses as set forth in Schedule B attached hereto, or
as shall be set forth in amendments to such schedule approved by the parties to
this Agreement.
12. ADDITIONAL SERVICES AND COMPENSATION. The Fund may with the consent of
ADM decide to employ ADM to perform additional services and special projects
which are not covered by this Agreement, such as proxy solicitation, proxy
tabulation or special research. In such circumstances, the terms and conditions
under which ADM will perform such services and the compensation it will receive
will be set by mutual agreement.
13. HOLIDAYS. Nothing contained in this Agreement is intended to or shall
require ADM in any capacity hereunder to perform any functions or duties on any
holiday or other day of special observances on which the Fund and ADM are
closed. Functions or duties normally scheduled to be performed on such days
shall be performed on, and as of, the next business day on which both the Fund
and ADM are open.
14. COOPERATION WITH ACCOUNTANTS. The Transfer Agent shall cooperate with
the Fund's independent public accountants and shall take all reasonable action
in the performance of its obligations under this Agreement to assure that the
necessary information is made available to such accountants for the expression
of their opinion as such may be required by the Fund from time to time.
15. CONFIDENTIALITY. The Transfer Agent agrees on behalf of itself and its
employees to treat confidentially all records and other information relative to
the Fund and its prior, present or potential Shareholders and relative to the
Fund's investment advisers, sub- advisers or underwriters and their present or
-5-
<PAGE>
potential customers; provided, however that the Transfer Agent may disclose
information in response to a lawful subpoena, request from a governmental
authority, or other legal process or with the consent of the Fund.
16. ENFORCEMENT OF AGREEMENT. Notwithstanding any provision of the law to
the contrary, ADM hereby waives any right to enforce this Agreement against the
individual and separate assets of any Shareholder of the Fund. With respect to
any obligations of the Fund arising out of this Agreement, ADM shall look for
payment or satisfaction of any obligation solely to the assets and property of
the Fund.
17. ASSIGNMENT. This Agreement shall extend to, and shall be binding upon,
the parties hereto and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by any party without the
written consent of the other. In the case of the Fund, any consent to an
assignment must be approved by the Board of Directors/Trustees of the Fund.
18. TERMINATION. This Agreement may be terminated by any party to this
Agreement on at least sixty (60) days advance written notice. If ADM fails at
any time to maintain the necessary registrations or licenses required to act
lawfully as the Fund's Transfer Agent, the Fund may terminate this Agreement
upon five days written notice. In the event that ADM shall terminate this
Agreement, it shall continue to perform the services required under this
Agreement at the request of the Fund until a replacement is appointed. In such
case, ADM shall be entitled to receive all the payments and reimbursements to
which it is entitled under this Agreement.
19. AMENDMENT. This Agreement may only be amended by a written instrument
approved by both parties.
20. NON-EXCLUSIVITY. The parties understand and agree that ADM may offer
services, including the types of services covered by this Agreement, to other
parties including non-affiliated mutual funds, provided that such activities do
not adversely affect ADM's ability to perform the services to the Fund that are
required by this Agreement.
21. MISCELLANEOUS. This Agreement may be executed in one or more
counterparts, each of which when so executed shall be deemed to be original, but
such counterparts shall together constitute but one and the same instrument.
This Agreement shall be construed in accordance with the laws of the State of
New York.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
signed by their duly authorized officers and their seals hereunto duly affixed
and attested as of the day and the year first above written.
ATTEST: FIRST INVESTORS FUNDS
/s/ C. Durso BY: /s/ Glenn O. Head
- ------------ -----------------
C. Durso, Secretary Glenn O. Head, President
ATTEST: ADMINISTRATIVE DATA
MANAGEMENT CORP.
/s/ Larry R. Lavoie BY: /s/ Kathryn S. Head
- ------------------- -------------------
Larry R. Lavoie, Assistant Secretary Kathryn S. Head, President
-7-
<PAGE>
TRANSFER AGENT AGREEMENT
SCHEDULE A
CURRENT LIST OF FUNDS
---------------------
Executive Investors Trust
Executive Investors Blue Chip Fund
Executive Investors High Yield Fund
Executive Investors Insured Tax Exempt Fund
First Investors Cash Management Fund, Inc.
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 Life Series Fund
Life Blue Chip Fund Life Cash Management Fund Life Discovery Fund Life
Government Fund Life Growth Fund Life High Yield Fund Life International
Securities Fund Life Investment Grade Fund Life Target Maturity 2007 Life
Target Maturity 2010 Life Utilities Income Fund
First Investors Multi-State Insured Tax Free Fund
Arizona Fund, California Fund, Colorado Fund, Connecticut Fund, Florida
Fund, Georgia Fund, Maryland Fund, Massachusetts Fund, Michigan Fund,
Minnesota Fund, Missouri Fund, New Jersey Fund, North Carolina Fund, Ohio
Fund, Oregon Fund, Pennsylvania Fund, Virginia Fund
First Investors New York Insured Tax Free Fund, Inc.
First Investors Series Fund
First Investors Blue Chip Fund
First Investors Insured Intermediate Tax Exempt Fund
First Investors Investment Grade Fund
First Investors Special Situations Fund
First Investors Total Return Fund
First Investors Series Fund II, Inc.
First Investors Focused Equity Fund
First Investors Growth & Income Fund
First Investors Mid-Cap Opportunity Fund
First Investors Utilities Income Fund
First Investors Special Bond Fund, Inc.
First Investors Tax-Exempt Money Market Fund, Inc.
First Investors U.S. Government Plus Fund
1st Fund
2nd Fund
5/20/99
-8-
<PAGE>
TRANSFER AGENT AGREEMENT
SCHEDULE B
COMPENSATION
------------
FEES AND CHARGES:
- ----------------
The Fund shall pay the following fees and charges of Administrative Data
Management Corp. for its services under the Transfer Agent Agreement.
For all Funds except First Investors Cash Management Fund, Inc. and
First Investors Tax-Exempt Money Market Fund, Inc.:
Monthly Account Maintenance $0.75 per account
New Accounts $5.00 for each account
Payments $0.75 for each payment
Liquidations and Withdrawals $5.00 per transaction
Exchanges $5.00 per transaction
Transfers $10.00 per transaction
Certificates Issued $3.00 per certificate issued
Systematic Withdrawal Checks $1.00 per check
Dividend Processing $0.45 per dividend
Reports Requested by Government Agency $1.00 per account
Shareholder Service Calls $4.00 per call
Correspondence $20.00 per item
First Investors Cash Management Fund, Inc. and First Investors
Tax-Exempt Money Market Fund, Inc.:
Monthly Account Maintenance $2.00 per account
Reports Requested by Government Agency $1.00 per account
EXPENSES:
- --------
In addition to the above fees and charges, the Fund shall reimburse
Administrative Data Management Corp. for all out-of-pocket costs including but
not limited to the costs of postage, insurance, forms, envelopes, telephone
lines and other similar items, counsel fees, including fees for the preparation
of the Transfer Agent Agreement and review of the Fund's registration statements
and application forms.
5/20/99
-9-
KIRKPATRICK & LOCKHART 1800 MASSACHUSETTS AVENUE, NW
SECOND FLOOR
WASHINGTON, DC 20036-1800
202.778.9000
www.kl.com
ROBERT J. ZUTZ
(202) 778-9059
[email protected]
April 27, 2000
First Investors U.S. Government Plus Fund
95 Wall Street
New York, New York 10005
Ladies and Gentlemen:
You have requested our opinion, as counsel to First Investors U.S.
Government Plus Fund (the "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 the Trust, during the time this Post-Effective
Amendment No. 18 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 present laws and facts, 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 all persons
extending credit to, contracting with or having any claim against the Trust or
the Trustees shall look only to the assets of the Trust for payment under such
credit, contract or claim; and neither the Shareholders nor the Trustees, nor
any of their agents, whether past, present or future, shall be personally liable
therefor. It also requires that every note, bond, contract or other undertaking
<PAGE>
First Investors U.S. Government Plus Fund
April 27, 2000
Page 2
issued by or on behalf of the Trust or the Trustees relating to the Trust shall
include a recitation limiting the obligation represented thereby to the Trust
and its assets. 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 or series 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 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. 18 to the
Registration Statement on Form N-1A (File No. 2-94932) of our report dated
January 31, 2000 relating to the December 31, 1999 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 25, 2000
FIRST INVESTORS REGISTERED INVESTMENT COMPANIES
CODE OF ETHICS
I. INTRODUCTION
In accordance with Section 17(j) of the Investment Company Act of 1940
("Act") and Rule 17j-1 promulgated thereunder, the registered investment
companies advised or underwritten by First Investors (as defined in Article II)
("Funds") have adopted this Code of Ethics to establish procedures reasonably
designed to prevent any access person (as defined in Article II) ("Access
Person") from engaging in any act, practice, or course of business which would
be fraudulent, deceptive or manipulative with respect to the Funds.
Failure to comply with the provisions of this Code in any material respect
is a serious matter and can result in disciplinary action, including monetary
fines, disgorgement of profits, and suspension or termination of the person's
affiliations with the Funds. This Code supersedes any prior code of ethics
adopted by the Funds pursuant to Section 17(j) of the Act and Rule 17j-1
thereunder. The policies and procedures adopted herein are in addition to any
rules, regulations, laws or restrictions to which any person affiliated with the
Funds may be subject by operation of law or by any other agreement to which such
person may a be party. Nothing herein modifies or replaces any such other rule,
regulation, law or restriction.
It should be noted that this Code is primarily intended to deal with the
Disinterested Directors of the Funds (as defined in Article II). Most other
Access Persons who are subject to this Code are employees of investment
advisers, subadvisers, and underwriters of the Funds which must have their own
Codes and their compliance with the Codes of their employers will generally
satisfy requirements of this Code.
II. DEFINITIONS
Whenever the following terms are used in this Code, they shall have the
meanings set forth below, unless the context requires otherwise or such meanings
would be inconsistent with Rule 17j-1.
1. "Access Person" means any director, trustee, officer (or person holding
a similar position in a non-corporate entity) or Advisory Person of any of
the Funds.
2. "Advisory Person" means:
a. any employee of the Funds who, in connection with his or her
regular functions or duties, makes, participates in, or obtains information,
regarding the Purchase or Sale of a Security by the Funds, or whose functions
relate to the making of any recommendations with respect to such Purchase or
Sale; and
<PAGE>
b. any natural person in a control relationship (with "control"
being defined by Section 2(a)(9) of the Act) with the Funds who obtains
information concerning recommendations made to the Funds with regard to the
Purchase or Sale of a Security.
The Investment Compliance Manager will from time to time
create a list setting forth those persons considered to be Advisory Persons.
3. "Beneficial Ownership" has the meaning set forth in Section 16 of the
Securities Exchange Act of 1934 and the rules and regulations thereunder.
An Access Person shall be deemed to have a "Beneficial Ownership" interest
in the accounts of a spouse, minor child and relative residing in the
Access Person's home, as well as accounts of any other person if by reason
of any contract, understanding, relationship, agreement or other
arrangement, the Access Person obtains therefrom benefits substantially
equivalent to those of ownership.
4. "Code" means this Code of Ethics.
5. "Disinterested Director" means a director or trustee, as applicable, of
any of the Funds and any person holding a similar position with a
non-corporate Fund, who is not an interested person of the Funds within
the meaning of Section 2(a)(19) of the Act.
6. "First Investors" means First Investors Corporation, First Investors
Management Company, Inc., First Investors Asset Management Company, Inc.,
Executive Investors Management Company, Inc., Executive Investors
Corporation.
7. "Funds" means all registered investment companies which have First
Investors Management Company, Inc., or any affiliate, as their investment
adviser or principal underwriter unless such Funds are specifically
excluded from this Code pursuant to an addendum hereto.
8. For purposes of this Code, the "Investment Committee" means the
Investment Compliance Manager and Portfolio Managers of the Funds or such
other group of persons may be as designated from time to time by First
Investors.
9. "Investment Compliance Manager" means the person designated from time
to time as being responsible for receiving reports or other notices
pursuant to this Code and performing such other duties as are required by
this Code.
10. "Purchase or Sale" of a security means every contract for sale or
disposition of a security or interest in a security, for value, and
includes the writing of an option to Purchase or Sell a security.
11. "Rule 17j-1" means Rule 17j-1 promulgated under the Act.
2
<PAGE>
12. "Security" has the meaning set forth in Section 2(a)(36) of the Act,
except that it shall not include securities issued by the Government of
the United States, bankers' acceptances, bank certificates of deposit,
commercial paper and shares of registered open-end investment companies.
III. PROHIBITED ACTIVITIES
A. ANTI-FRAUD PROHIBITIONS. Access Persons, in connection with the Purchase
or Sale by them of a Security held or to be acquired by any of the Funds,
are prohibited from:
1. employing a device, scheme or artifice to defraud any of the Funds;
2. making any untrue statement of a material fact to any of the Funds
or omitting to state to any of the Funds a material fact necessary
in order to make the statements made, in light of the circumstances
under which they are made, not misleading;
3. engaging in any act, practice or course of business which operates
or would operate as a fraud or deceit upon any of the Funds; or
4. engaging in any manipulative practice with respect to any of the
Funds.
B. CORPORATE OPPORTUNITIES. All Access Persons are prohibited from taking
personal advantage of any opportunity properly belonging to any of the Funds.
C. CONFIDENTIALITY. Except as required in the normal course of carrying out the
Funds' business responsibilities, Access Persons are prohibited from revealing
to persons outside of First Investors information relating to the Securities
that are being considered for Purchase or Sale by any of the Funds. Access
Persons are prohibited from revealing such information to any Person inside
First Investors whose responsibilities do not require knowledge of such
information.
D. UNDUE INFLUENCE. No Access Person shall cause or attempt to cause any of the
Funds to Purchase, Sell or hold any Security in a manner calculated to create
any personal benefit to the Access Person. An Access Person who participates in
any research or in an investment decision concerning a particular Security must
disclose to the Investment Compliance Manager any personal or beneficial
interest that the Access Person has in that Security, or in the issuer thereof,
where such decision could create a material benefit to the Access Person. The
Investment Compliance Manager shall determine whether or not the Access Person
will be restricted in pursuing the research or recommendation.
3
<PAGE>
IV. EFFECTING TRANSACTIONS
A. LIMITATIONS ON CERTAIN PURCHASES OR SALES OF SECURITIES. Unless a transaction
is exempt under Subsection C below, no Access Person shall Purchase or Sell any
Security in which he or she has (or by reason of such transaction acquires) any
direct or indirect Beneficial Ownership interest if that Access Person knew or,
in the ordinary course of fulfilling his or her official duties for any of the
Funds, should have known at the time of such purchase or sale (or within the
15-day period preceding or after the date of the transaction) that the Security:
1. is being considered for Purchase or Sale by any of the Funds; or
2. is then being Purchased or Sold by any of the Funds or their
investment adviser.
B. CLEARANCE OF TRANSACTIONS. Every Access Person, other than a Disinterested
Director, is required to preclear every transaction in a Security in which he or
she has Beneficial Ownership interest as defined in this Code unless the
transaction is exempt under Subsection C below. Preclearance may be obtained by
submitting to the Investment Compliance Manager a fully executed Preclearance
Form in the form attached hereto as Exhibit B. The Investment Compliance Manager
shall provide the clearance by returning a signed copy of the Preclearance Form
to the Person requesting clearance only if, upon consultation with the
Investment Committee or such other persons as may be necessary, the Investment
Compliance Manager determines that none of the Funds is currently considering
the Purchase or Sale of the Security that is subject to the preclearance, that
none of the Funds has Purchased, Sold, or considered Purchasing or Selling such
Security during the prior 15-day period, and that the transaction is otherwise
consistent with Rule 17j-1. No member of the Investment Committee may
participate in such consultation with the Investment Compliance Manager with
respect to any transaction in which such member has any direct or indirect
personal economic interest.
Although a Disinterested Director is not required to preclear Securities
transactions, he or she may voluntarily preclear transactions. The fact that a
Disinterested Director or any other Access Person of the Funds files a voluntary
request to preclear a Securities transaction shall not be construed as an
admission or any indication that he or she knows or should know that the Funds
have considered or are considering Purchasing or Selling the Security or that
the Access Person has, or by reason of the transaction will acquire, a
Beneficial Ownership interest in the Security.
C. EXEMPTED TRANSACTIONS. The prohibitions of Section A of this Article IV shall
not apply to the following transactions:
1. Purchases or Sales effected in any account over which the Access Person
has no direct or indirect influence or control (for this purpose, an
Access Person is deemed to have direct or indirect influence or control
4
<PAGE>
over the accounts of a spouse, minor children and relatives residing in
the Access Person's home);
2. Purchases or Sales which are non-volitional on the part of the Access
Person;
3. Purchases which are part of an automatic dividend reinvestment plan;
4. Purchases effected upon the exercise of rights issued by an issuer
pro-rata to all holders of a class of Securities, to the extent such
rights were acquired from the issuer, and Sales of rights so acquired;
5. Purchases or Sales which are effected by or on behalf of any Fund or
any private account managed by First Investors;
6. Purchases or Sales involving options on broad based indices; and,
7. Stop, limit or stop limit orders at a level 20% BELOW the market price
of a Security held in a personal investment account, or 20% ABOVE the
market price to cover a short position at the time the orders are placed.
It should be noted that preclearance is not necessary for Purchases or
Sales of shares of registered open-end investment companies (including
such shares of the Funds), Securities issued by the Government of the
United States, bankers' acceptances, bank certificates of deposit, and
commercial paper, since they are excluded from the definition of a
Security in this Code.
V. REPORTING
A. REPORTS BY DISINTERESTED DIRECTORS. A Disinterested Director shall report to
the Investment Compliance Manager those Securities transactions in which the
Disinterested Director has, or by reason of the transactions acquires, any
direct or indirect Beneficial Ownership interest in the Security, if such a
Director at the time of the transaction, knew or, in the ordinary course of
fulfilling his or her official duties as a Director of any of the Funds, should
have known that, during the 15-day period immediately preceding or after the
date of the transaction, such Security was or was going to be Purchased or Sold
by any of the Funds or such Purchase or Sale was or was being considered by any
of the Funds or their investment advisers (including, but not limited to,
transactions regarding which prior clearance has been obtained). No
Disinterested Director shall be required to report Purchases and Sales effected
in any account over which the Disinterested Director has no direct or indirect
influence or control. The fact that a Disinterested Director voluntarily chooses
to report transactions to the Investment Compliance Manager shall not be
construed as an admission or any indication that he or she knows or should know
that the Funds have considered or are considering Purchasing or Selling such
5
<PAGE>
Security or that the Access Person has, or by reason of the transaction will
acquire, a Beneficial Ownership interest in the Security.
B. REPORTS BY ALL OTHER ACCESS PERSONS. Every Access Person other than those who
are reporting pursuant to Section A, above, must report all transactions in any
security in which such Access Person has, or by reason of such transaction
acquires, any direct or indirect Beneficial Ownership in the Security
(including, but not limited to, transactions regarding which prior clearance has
been obtained). No Access Person shall be required to report Purchases and Sales
effected in any account over which the Access Person has no direct or indirect
influence or control.
C. PROCEDURES FOR FILING INFORMATION. Information required to be reported under
Section A or Section B of this Article must be submitted to the Investment
Compliance Manager at 95 Wall Street, Suite 2300, New York, New York 10005, (1)
by requiring that the broker-dealer provide a duplicate confirmation of each
transaction, and (2) by filing a report within 10 days after the end of the
calendar quarter in which the transaction to which the report related was
effected. The report may be submitted by filling out completely the Form
attached as Exhibit C to this Code, or may be submitted by attaching a copy of
the account statements reflecting the transaction to the Form, provided the
following information is included on such statement:
1. The date of the transaction, the title and the number of shares or
bonds;
2. The nature of the transaction (i.e., Purchase, Sale or any other
type of acquisition or disposition);
3. The price at which the transaction was effected and the principal
amount involved; and
4. The name of the broker, dealer, or bank with or through whom the
transaction was effected.
Any such report may contain a statement that the report shall not be
construed as an admission by the Person making such report that he or she
has any direct or indirect Beneficial Ownership in the Security to which
the report relates.
VI. OBLIGATIONS OF INVESTMENT COMPLIANCE MANAGER
The Investment Compliance Manager shall:
1. Furnish a copy of this Code to each Access Person;
2. Annually obtain written confirmation on the Form attached hereto as an
Exhibit from each Access Person that he or she has received, has read and
understood this Code;
6
<PAGE>
3. Notify each Access Person of his or her obligation to comply with the
provisions of and to file reports as required by this Code;
4. Report to the Board of Directors of the Funds the information contained
in any reports filed with the Investment Compliance Manager or any other
Person pursuant to this Code when any such report indicates that an Access
Person engaged in a transaction in material violation of this Code;
5. Provide the Board of Directors with a summary of all violations of this
Code on at least an annual basis;
6. Maintain the records required by Rule 17j-1(d) of the Act; and
7. Maintain any records furnished pursuant to this Code.
VII. VIOLATIONS
Upon being apprised of facts which indicate that a material violation of
this Code may have occurred, the Investment Compliance Manager and General
Counsel shall conduct an investigation, make preliminary findings concerning
whether a violation of the Funds' Code has occurred, and, if they determine a
violation has occurred, make a recommendation with respect to sanctions for the
violation. The Disinterested Directors (who are not involved in the violation)
can then make final determinations and decisions regarding sanctions.
If the Board determines that a violation of this Code has occurred, the
Board may impose such sanctions as it deems appropriate under the circumstances
which may, among other actions, include fines, disgorgement, suspension or
termination of employment. If the Person whose conduct is being considered by
the Board is a Director of any of the Funds, he or she shall not be eligible to
participate in the decision of the Board as to whether a violation has occurred
or to what extent sanctions should be imposed.
VIII. ADDITIONAL INFORMATION
Access Persons who have questions about any of the provisions of this Code
should contact the Investment Compliance Manager or the First Investors Legal
Department.
7
<PAGE>
PRECLEARANCE FORM
-----------------
I, _________________________________ , request preclearance for the security
transaction or transactions set forth below. To my knowledge, the security or
securities listed below have not been purchased or sold by any First Investors
Fund or Private Account within the prior fifteen (15) days and are not currently
being considered for purchase or sale by any Fund or Private Account during the
next 15 days. Furthermore, the transaction and or transactions I am
contemplating do not involve a Purchase and Sale, or a Sale and Purchase, of the
same Security or a Related Security within any sixty (60) day period. I
recognize that I have five (5) days in which to effect the transaction or
transactions contemplated, measured from the time a transaction has been
approved.
Proposed Buy, Sell Quantity
Trade or Exchange, and/or
Date(s) et al. Amount Security Type Issuer Name
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ---------------------- ---------------------
Signature of Requester Date
Requester Comments (Include Disclosure of any Potential Conflict of Interest
Here):
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER (OR HIS OR HER DESIGNEE) AUTHORIZATION:*
EQUITIES FIXED INCOME
- -------- ------------
- --------------------------------- --------------------------------
D. Fitzpatrick G. Ganter
- --------------------------------- --------------------------------
P. Poitra N. Jones
- --------------------------------- --------------------------------
D. Hanover C. Wagner
- ---------------------------------
M. Wright
PORTFOLIO MANAGER COMMENTS: ____________________________________________
8
<PAGE>
* Authorization is not required by all Portfolio Managers. Only those Portfolio
Managers consulted by the Investment Compliance Manager need to sign this
Preclearance Form. A Portfolio Manager may designate an analyst to sign this
Preclearance Form in his or her absence.
APPROVED BY INVESTMENT COMPLIANCE MANAGER ________________________________
Signature Date
SEND TO: INVESTMENT COMPLIANCE MANAGER
FIMCO 95 WALL STREET - 23RD FLOOR
NEW YORK, NY 10005
9
<PAGE>
FIRST INVESTORS REGISTERED INVESTMENT COMPANIES
CODE OF ETHICS
ACKNOWLEDGEMENT FORM
I hereby (re) acknowledge receipt of a copy of the First Investors Code of
Ethics and agree that as an "Access Person" I am subject to and will abide by
its provisions and all amendments thereto. I also (re) acknowledge that I have
been informed of and will comply with the reporting provisions contained in the
Code and all amendments thereto.
DATED: __________ , 19__
Signature:_______________________________
Name:____________________________________
Please Print
Department:______________________________
Please send to: Investment Compliance Manager
FIMCO
95 Wall Street - 23rd Floor
New York, NY 10005
Rev. 5/8/97
10
FIRST INVESTORS
CODE OF ETHICS
I. INTRODUCTION AND STATEMENT OF PRINCIPLES
----------------------------------------
First Investors has adopted this code of ethics ("Code of Ethics" or
"Code") in accordance with the requirements of Section 17(j) of the Investment
Company Act of 1940 ("Investment Company Act") and Rule 17j-1 and Section 206 of
the Investment Advisers Act of 1940 ("Investment Advisers Act") to protect the
First Investors family of mutual funds (Funds") and private accounts ("Private
Accounts") from fraudulent or unethical conduct by access persons ("Access
Persons"). This Code does not apply to the disinterested directors of the Funds
or employees of unaffiliated subadvisers of the Funds. The disinterested
directors of the Funds are subject to a separate code of ethics (the "First
Investors Registered Investment Companies Code of Ethics") which takes their
unique status into account. Employees of non-affiliated subadvisers are subject
to the codes of ethics of their own employers. The policies and procedures set
forth herein are in addition to any policies and procedures which may apply to
any Access Person of First Investors by operation of law or contract, such as
the First Investors Insider Trading Policies and Procedures.
As reflected by this Code of Ethics, First Investors expects all Access
Persons of First Investors not only to comply with this Code but also to follow
the highest ethical standards in all business and personal dealings which could
in any way affect the Funds or any Private Accounts that are managed by First
Investors. The guiding principles for all Access Persons, including the
portfolio managers of the Funds or Private Accounts ("Portfolio Managers"),
traders ("Traders"), analysts ("Analysts"), and portfolio accountants
("Portfolio Accounts"), should be to place the interests of the Funds and
Private Accounts first at all times, to avoid placing themselves in any position
in which there is any actual or apparent conflict of interest with the interests
of the Funds or Private Accounts, and to refrain from taking any inappropriate
advantage of their positions of trust and responsibility.
II. DEFINITIONS
-----------
Unless the Investment Company Act, the Investment Advisers Act, or the
rules thereunder otherwise require, whenever the following terms are used in
this Code, they shall have the meanings set forth below.
A. ACCESS PERSON
-------------
1. With respect to any First Investors company which acts as an investment
adviser to any Fund or Private Account, Access Person means any director,
officer, general partner, or advisory person of such investment adviser;
and,
2. With respect to any First Investors company which acts as a principal
underwriter of a Fund, "Access Person" means any director, officer, or
<PAGE>
general partner of such principal underwriter who in the ordinary
course of his or her business makes, participates in or obtains
information regarding the Purchase or Sale of Securities by the Fund or
whose functions or duties as part of the ordinary course of his or her
business relate to the making of any recommendation to the Fund
regarding the Purchase or Sale of Securities.
B. ADVISORY PERSON
---------------
"Advisory Person" means:
1. any employee of First Investors or of any company which controls, is
controlled by, or under common control with, First Investors who, in
connection with his or her regular functions or duties, makes,
participates in, or obtains information regarding the Purchase or Sale of
a Security by the Funds or Private Accounts, or whose functions relate to
the making of any recommendations with respect to the Purchase or Sale of
a Security by the Funds or Private Accounts; and
2. any natural person in a control relationship (with the term "control"
being defined by Section 2(a)(9) of the Investment Company Act) with
First Investors who obtains information concerning Purchases, Sales, or
recommendations of Securities to the Funds or Private Accounts.
C. BENEFICIAL OWNERSHIP
--------------------
"Beneficial Ownership" means beneficial ownership as defined in Section 16
of the Securities Exchange Act of 1934 and the rules and regulations thereunder,
provided that an Access Person shall be deemed to have "Beneficial Ownership" of
Securities (1) owned by his or her spouse, minor children and relatives residing
in the Access Person's home, (2) Securities over which the Access Person has or
shares investment discretion or control and (3) any other Securities if by
reason of any contract, understanding, relationship, agreement or other
arrangement the Access Person obtains therefrom economic benefits which are
substantially equivalent to those of ownership.
D. DISINTERESTED DIRECTOR
----------------------
"Disinterested director" means a director of any of the Funds and any
person holding a similar position with a noncorporate Fund who is not an
interested person of the Funds within the meaning of Section 2(a)(19) of the
Investment Company Act.
E. FIRST INVESTORS
---------------
"First Investors" means First Investors Corporation, First Investors
Management Company, Inc., First Investors Asset Management Company, Inc.,
2
<PAGE>
Executive Investors Management Company, Inc., Executive Investors
Corporation, and Administrative Data Management Corp.
F. FUNDS
-----
"Funds" means all registered investment companies which have First
Investors as their investment adviser or principal underwriter (including
Executive Investors Trust), unless such Funds are specifically excluded from
this Code pursuant to an addendum hereto.
G. INVESTMENT COMPLIANCE MANAGER
-----------------------------
"Investment Compliance Manager" means the person designated from time to
time as being responsible for receiving reports or other notices pursuant to
this Code, and performing such other duties as are required by this Code.
H. INVESTMENT COMMITTEE
--------------------
For purposes of this Code, the "Investment Committee" means the Investment
Compliance Manager and the Portfolio Managers of the Funds or such other group
of persons as may be designated from time to time by First Investors.
I. PURCHASE OR SALE
----------------
"Purchase or Sale" means every contract for Purchase or Sale or
disposition of a Security or interest in a Security, for value, as well as every
option to Purchase or Sell a Security, whether the option permits the holder to
Purchase or Sell the Security or it must be settled in cash.
J. RELATED SECURITY
----------------
A "Related Security" means a Security which (i) is issued by the same
issuer as another Security or by an issuer that is controlled by, controls or is
under common control with such issuer or (ii) gives the holder any contractual
right with respect to another Security (e.g., options and warrants, rights or
other convertible Securities).
K. SECURITY
--------
"Security" means a Security as defined in Section 2(a)(36) of the
Investment Company Act, except that it does not include Securities issued by the
Government of the United States, bankers' acceptances, bank certificates of
deposit, commercial paper, and shares of registered open-end investment
companies, including the shares of the First Investors Funds.
3
<PAGE>
III. GENERAL PROHIBITIONS
--------------------
A. FRAUDULENT AND MANIPULATIVE CONDUCT
------------------------------------
No Access Person, shall, in connection with the Purchase or Sale, directly
or indirectly, of a Security held or to be acquired by any of the Funds or
Private Accounts managed by First Investors:
1. Employ any device, scheme or artifice to defraud any such Fund or
Private Account;
2. Make to any Fund or Private Account any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they are made,
not misleading;
3. Engage in any act, practice or course of business which operates
or would operate as fraud or deceit upon any Fund or Private Account;
or,
4. Engage in any manipulative practice with respect to any Fund or
Private Account.
B. CORPORATE OPPORTUNITIES
-----------------------
No Access Person shall take personal advantage of any opportunity that
properly belongs to any of the Funds or Private Accounts, provided that an
Access Person shall not be prevented from purchasing a Security or Related
Security which is an eligible investment for any of the Funds if the Access
Person obtains preclearance for the purchase in accordance with the provisions
of this Code after disclosing any actual or potential conflict of interest on
the Preclearance Form used to obtain preclearance.
C. CONFIDENTIALITY
---------------
Except as required in the normal course of carrying out First Investors'
business responsibilities, no Access Person shall reveal confidential
information relating to the investment intentions or activities of the Funds or
Private Accounts to any person outside of First Investors or any person inside
First Investors whose responsibilities do not require knowledge of such
information.
D. UNDUE INFLUENCE AND THE APPEARANCE THEREOF
------------------------------------------
No Access Person shall:
1. Cause or attempt to cause any of the Funds or Private Accounts to
Purchase, Sell or hold any Security in a manner calculated to create
any personal benefit to the Access Person;
4
<PAGE>
2. Accept any option, warrant, right, or other Security from any issuer,
person affiliated or associated with any issuer, underwriter, broker, or
dealer which has offered or sold any Security or Related Security to any
of the Funds or Private Accounts, unless the Access Person has obtained
preclearance from the Investment Compliance Manager after full disclosure
on the Preclearance Form of all material facts, including the nature of
the Security, the relationship of the party granting the Security to the
Funds or Private Accounts, and any other potential conflict of interest;
3. Accept any gift other than a nominal gift (which is defined herein as
having a value less than $100) from any person or entity that does
business with any Fund or Private Account; or
4. Use his or her knowledge of or ability to influence or control the
portfolio transactions of a Fund or Private Account for his or her
personal benefit or the personal benefit of his or her friends or
relatives.
E. DISCLOSURE OF POTENTIAL CONFLICTS OF INTEREST
---------------------------------------------
No Access Person shall fail to disclose to the Investment Compliance
Manager any personal or beneficial interest which he or she has in a Security
when the Access Person plays any part or role in any consideration of any
investment in the Security or any Related Security by a Fund or Private Account.
Thus, for example, an Access Person who has acquired warrants from an issuer in
a private placement would be required to disclose the warrants to the Investment
Compliance Manager before he or she plays any role in a Fund's subsequent
consideration of an investment in any Securities issued by the same issuer of
the warrants or any Related Securities. The Investment Compliance Manager, in
consultation with members of the Investment Committee who have no personal
interest in the transaction, shall determine whether or not the personal or
beneficial interest prevents the Access Person from being involved in
consideration of the Security.
F. SERVICE AS A DIRECTOR OF A PUBLIC COMPANY
-----------------------------------------
No Access Person shall serve on the board of directors of any publicly
traded company, absent prior authorization of the Investment Compliance Manager,
based upon a determination that the board service would be consistent with the
interests of the Funds and Private Accounts. In the rare case in which board
service is authorized, any Access Person serving as a director must be isolated
from those making investment decisions regarding the issuer through "Chinese
Wall" or other procedures.
IV. PERSONAL SECURITIES TRANSACTIONS
--------------------------------
A. RESTRICTIONS ON SECURITIES TRANSACTIONS
---------------------------------------
5
<PAGE>
1. TRANSACTIONS DURING BLACK-OUT PERIODS. Unless a transaction is exempt
under the terms of this Code, no Access Person shall purchase or sell,
directly or indirectly, any Security if that Access Person knew or should
have known at the time of such purchase or sale, that within fifteen (15)
days of his or her transaction, the Security:
(i) Is being considered for purchase or sale by any Fund or
Private Account; or
(ii) Is then being purchased or sold by any Fund or Private
Account.
2. PURCHASES DURING INITIAL PUBLIC OFFERINGS. In the absence of an
exemption under this Code, no Access Person shall purchase any Security
which is being offered as part of an initial public offering of
Securities. This prohibition does not apply to the exercise of rights
issued pro rata to all shareholders, policy holders or depositors of an
issuer. For example, it does not apply to Securities offered by savings
and loan institutions or insurance companies to policy holders or
depositors in connection with conversions from mutual to stock form.
3. PRIVATE PLACEMENTS. In the absence of an exemption under this Code or
preclearance by the Investment Compliance Manager, no Access Person shall
acquire any Security in a private placement. In determining whether to
grant preclearance, the Investment Compliance Manager shall take into
account, among other factors, whether the investment opportunity should be
reserved for any of the Funds or Private Accounts and whether the
opportunity is being offered to the Access Person by virtue of his or her
position with First Investors.
4. PURCHASES OF SECURITIES ISSUED BY BROKER-DEALERS. No Access Person
shall purchase Securities issued by any broker-dealer or parent company of
a broker-dealer (unless the parent derives 15% or less of its revenues
from all broker-dealer subsidiaries). This prohibition does not apply to
purchases of Securities issued by First Investors Consolidated Corporation
and its affiliates in connection with employee stock purchase or incentive
plans, compensation arrangements, or otherwise.
5. SHORT-TERM TRADING. Unless the transactions at issue are exempt under
the terms of this Code, no Access Person shall engage in short-term
trading in Securities. For purposes of this Code, "short-term" trading is
defined as the Purchase and Sale of the same Security or a Related
Security within sixty (60) days. The most recent transaction in a Security
will determine a new holding period. The Purchase or Sale of an option on
a Security shall be considered a Purchase or Sale of not only the option
but also the underlying Security. For example, the purchase of a call
option on a Security shall be considered a purchase not only of the option
but also the underlying Security.
The prohibition on short-term trading shall not prohibit an Access Person
6
<PAGE>
from placing a stop, limit or stop limit order at a level 20% BELOW the market
price of a Security within sixty (60) days of the date he or she purchases the
Security, provided that the stop, limit, or stop limit sell order is precleared
or exempt from preclearance. It should be noted that any subsequent modification
of a stop, limit or stop limit order is a new trade for purposes of the
short-term trading restriction and preclearance requirements.
B. PRECLEARANCE OF SECURITIES TRANSACTIONS
---------------------------------------
Every Access Person is required to obtain preclearance from the Investment
Compliance Manager prior to engaging in any transaction in any Security in which
he or she has, or by reason of the transaction will acquire, any direct or
indirect Beneficial Ownership interest, unless such transaction is exempt from
preclearance under this Code. It should be emphasized that, unless a transaction
is exempt from preclearance under this Code, it must be precleared by the
Investment Compliance Manager even if no Fund or Private Account would normally
purchase the Security at issue. For purposes of the preclearance requirement,
any amendment of an order to Purchase or Sell any Security (e.g., any change of
price, time, or amount) is considered a new order. Furthermore, any change of
the terms of a stop, limit or stop limit order is considered a new transaction
which must be precleared.
Preclearance may be obtained from the Investment Compliance Manager by
completing the Preclearance Form which is attached hereto and submitting it to
the Investment Compliance Manager. The Preclearance Form requires the Access
Person to certify that, among other things, to his or her knowledge, the
Securities listed on the Preclearance Form have not been purchased by any of the
Funds or Private Accounts within the prior fifteen (15) days and have not been
and will not be considered for Purchase or Sale by any of the Funds during the
prior fifteen (15) days and the following fifteen (15) days. The Preclearance
Form also has a comment section which should be used to disclose any potential
conflicts of interest.
The Investment Compliance Manager shall consult with the members of the
Investment Committee, or their designees to determine whether the proposed
transaction by the Access Person would conflict with the interests of any Fund
or Private Account. The Investment Compliance Manager need not consult with all
members of the Investment Committee before approving or disapproving a
transaction. No member of the Investment Committee may participate in such
consultation with the Investment Compliance Manager with respect to any
transaction in which such member has any direct or indirect personal economic
interest. No order shall be placed by the Access Person until the Investment
Compliance Manager (or the General Counsel in his or her absence) signifies his
or her approval by signing the Preclearance Form.
Personal securities transactions by the Investment Compliance Manager must
be approved by the General Counsel or, in his or her absence, Fund Counsel. The
same Preclearance Form and procedures should be used.
7
<PAGE>
C. EXEMPT TRANSACTIONS
-------------------
The following personal Securities transactions are exempt from the
preclearance and other restrictions on personal securities transactions set
forth above:
(a) Purchases or Sales of Securities for any account over which an
Access Person has no direct or indirect influence or control (for this purpose,
an Access Person is deemed to have direct or indirect influence or control over
the accounts of a spouse, a minor child or an adult relative residing in the
Access Person's home);
(b) Purchases or Sales of Securities which are non-volitional on the
part of the Access Person (Purchases and Sales of Securities in a discretionary
trading account owned by an Access Person are deemed to be non-volitional only
if the person having discretion is a non-Access Person and the owner of the
account is not consulted at all prior to the execution of transactions by the
person having discretion);
(c) Purchases of Securities which are part of an automatic
dividend reinvestment plan;
8
<PAGE>
(d) Purchases of Securities effected upon the exercise of rights
issued by an issuer pro-rata to all holders of a class of Securities, to the
extent such rights were acquired from the issuer, and subsequent sales of such
rights or the Securities acquired thereunder;
(e) Purchases or Sales of options on broad-based indices;
(f) Purchases and Sales of shares of stock issued by First
Investors Consolidated Corporation and its affiliates; and,
(g) Purchases and Sales by any Fund or Private Account.
It should be noted that preclearance is not necessary for Purchases or
Sales of shares of registered open-end investment companies (including such
shares of the Funds), securities issued by the Government of the United States,
bankers' acceptances, bank certificates of deposit, and commercial paper, since
they are excluded from the definition of a Security in this Code.
D. QUARTERLY REPORTS OF SECURITIES TRANSACTIONS
--------------------------------------------
On a quarterly basis, every Access Person of First Investors shall submit
a report, in the form attached hereto, to the Investment Compliance Manager
disclosing all transactions in any Securities in which he or she has or, by
reason of the transaction, acquires a direct or indirect Beneficial Ownership
interest. The report must be completed and returned to the Investment Compliance
Manager within ten (10) days of the end of each calendar quarter ("Quarterly
Report").
With respect to each transaction reported, the Quarterly Report shall
include the following trade information:
(i) the date of the transaction, the title and number of
shares or bonds;
(ii) the nature of the transaction (i.e., Purchase, Sale
or any other type of acquisition or disposition);
(iii) the price at which the transaction was effected and
the principal amount involved; and
(iv) the name of the broker-dealer, bank or other entity with
or through whom the transaction was effected.
Notwithstanding the foregoing, the Quarterly Report need not disclose
information about Securities transactions which have already been disclosed on
duplicate confirmation and account statements provided to the Investment
9
<PAGE>
Compliance Manager as long as the Access Person verifies on this report that he
or she has arranged to have duplicate confirmation and account statements sent
to the Investment Compliance Manager for all accounts in which the Access Person
has a direct or indirect Beneficial Ownership interest, he or she incorporates
by reference in the Quarterly Report the information contained in those
statements, and such person verifies that he or she has not engaged in any
Securities transactions which are not set forth in the statements. Moreover,
Quarterly Reports need not disclose information regarding transactions or
holdings of the Funds, since mutual fund shares are excluded from the definition
of a Security under this Code and, in any event, First Investors already
maintains information concerning such transactions and holdings.
No Access Person shall be required to report transactions in Securities
which have been effected for any account over which such Access Person does not
have any direct or indirect influence or control. Furthermore, an Access Person
may disclaim having a Beneficial Ownership interest in a Security disclosed in a
Quarterly Report by including in the report a statement that the report shall
not be construed as an admission that he or she has any direct or indirect
Beneficial Ownership in the Security.
E. OPENING AND MAINTAINING SECURITIES ACCOUNTS
-------------------------------------------
Every Access Person shall provide written notice to and obtain written
permission from the Investment Compliance Manager PRIOR to opening any account
with any broker-dealer or other entity through which Securities transactions may
be effected. If an Access Person has opened a Securities account prior to
becoming affiliated with First Investors, he or she must provide written notice
of and obtain written permission to continue to maintain the account at the time
he or she becomes affiliated with First Investors. An Access Person may also be
required by NASD rules to give written notice to the broker or other party at
which securities accounts are maintained that he or she is employed by or
associated with First Investors.
F. DUPLICATE CONFIRMATIONS AND STATEMENTS
--------------------------------------
All Access Persons shall arrange for duplicate confirmation and account
statements to be sent to the Investment Compliance Manager. This requirement
does not apply to investments in the Funds, since mutual funds are excluded from
the definition of a Security under the Code and, in any event, First Investors
already maintains records concerning such investments.
G. DISCLOSURE OF PERSONAL SECURITIES HOLDINGS
------------------------------------------
All Access Persons shall disclose all personal Securities holdings upon
commencement of employment and thereafter on an annual basis. The ongoing
disclosure requirement is satisfied by providing to the Investment Compliance
Manager duplicate confirmations and account statements if they reveal all
holdings. Otherwise, special disclosure of holdings is necessary. Thus, for
example, a special report would be necessary to disclose certificated Securities
held in a bank safety deposit.
10
<PAGE>
H. ANNUAL CERTIFICATIONS
---------------------
Every Access Person is required to certify on an annual basis that he or
she has read this Code of Ethics and agrees to abide by its requirements.
V. RESPONSIBILITIES OF THE INVESTMENT COMPLIANCE MANAGER
-----------------------------------------------------
The Investment Compliance Manager shall:
1. Identify and maintain a list of all Access Persons;
2. Furnish a copy of this Code of Ethics to each such Access Person;
3. Notify each new Access Person of his or her obligations to comply
with the provisions of this Code of Ethics and conduct an annual
meeting to remind Access Persons of their obligations;
4. Monitor reports, confirmations, and statements relating to
non-exempt Securities transactions for potential violations of this
Code;
5. Report to the Board of Directors of the Funds any violations of this
Code and any sanctions imposed no later than the next regular Board
Meeting; 6. Report to the Board of Directors of the Funds on a periodic
basis, but not less than annually, concerning the adequacy of existing
procedures, any changes or recommended changes since the prior report, and
the general level of compliance by Access Persons with this Code of
Ethics; and
7. Maintain the records required by Rule 17j-1(d).
VI. VIOLATIONS AND REMEDIES
-----------------------
The failure of any Access Person to comply with this Code of Ethics will
be viewed as a very serious matter and may result in a disciplinary action. Upon
discovering or being apprised of facts which indicate that a violation of this
Code of Ethics has or may have occurred, the Investment Compliance Manager shall
conduct a reasonable investigation or inquiry to determine whether such a
violation did occur. If the Investment Compliance Manager determines that a
violation of this Code of Ethics has occurred or appears to have occurred, he or
she shall notify the General Counsel who shall cause a further investigation to
be conducted if he or she determines it to be necessary.
In the event that any investigation or inquiry is commenced by First
Investors concerning any actual or potential violation of this Code of Ethics,
every Access Person shall be required to:
11
<PAGE>
(a) provide full access to First Investors, its agents and attorneys to
any and all records and documents which First Investors considers relevant
to any Securities transactions or other matters subject to this Code of
Ethics;
(b) cooperate with First Investors, or its agents and attorneys, in
investigating any Securities transactions or other matter subject to this
Code of Ethics; and
(c) provide First Investors, its agents and attorneys with an explanation
(in writing if requested) of the facts and circumstances surrounding any
Securities transaction or other matter subject to this Code of Ethics.
If a violation is determined to have occurred, the Investment Compliance
Manager in consultation with the General Counsel, shall impose such sanctions as
they deem appropriate under the circumstances which may include, among other
things, censure, fine, a directive to disgorge profits gained or losses avoided,
a suspension, or termination of employment. In the event that an Access Person
engages in short-term trading prohibited by this Code, the Access Person shall
generally be required to disgorge profits gained regardless of whether the
short-term trading is intentional or inadvertent or the reason for such trading.
ADOPTING ENTITIES
- -----------------
The following entities have adopted this Code of Ethics:
Administrative Data Management Corp.
Executive Investors Corporation
Executive Investors Management Company, Inc.
First Investors Asset Management Company, Inc.
First Investors Corporation
First Investors Management Company, Inc.
12
<PAGE>
PRECLEARANCE FORM
-----------------
I, , request preclearance for the security transaction or transactions set forth
below. To my knowledge, the security or securities listed below have not been
purchased or sold by any First Investors Fund or Private Account within the
prior fifteen (15) days and are not currently being considered for purchase or
sale by any Fund or Private Account during the next 15 days. Furthermore, the
transaction and or transactions I am contemplating do not involve a Purchase and
Sale, or a Sale and Purchase, of the same Security or a Related Security within
any sixty (60) day period. I recognize that I have five (5) days in which to
effect the transaction or transactions contemplated, measured from the time a
transaction has been approved.
Proposed Buy, Sell Quantity
Trade or Exchange, and/or
Date(s) et al. Amount Security Type Issuer Name
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
- --------------------- ---------------------
Signature of Requester Date
Requester Comments (Include Disclosure of any Potential Conflict of Interest
Here):
________________________________________________________________________________
PORTFOLIO MANAGER (OR HIS OR HER DESIGNEE) AUTHORIZATION:*
EQUITIES FIXED INCOME
- -------- ------------
- -------------------------------- --------------------------------
D. Fitzpatrick G. Ganter
- --------------------------------- --------------------------------
P. Poitra N. Jones
- --------------------------------- --------------------------------
D. Hanover C. Wagner
- ---------------------------------
M. Wright
PORTFOLIO MANAGER COMMENTS: ____________________________________________
* Authorization is not required by all Portfolio Managers. Only those Portfolio
Managers consulted by the Investment Compliance Manager need to sign this
Preclearance Form. A Portfolio Manager may designate an analyst to sign this
Preclearance Form in his or her absence.
APPROVED BY INVESTMENT COMPLIANCE MANAGER ______________________________________
Signature Date
13
<PAGE>
SEND TO: INVESTMENT COMPLIANCE MANAGER
FIMCO 95 WALL STREET - 23RD FLOOR
NEW YORK, NY 10005
14
<PAGE>
FIRST INVESTORS CODE OF ETHICS
------------------------------
ACKNOWLEDGEMENT FORM
--------------------
I hereby (re) acknowledge receipt of a copy of the First Investors Code of
Ethics and agree that as an "Access Person" I am subject to and will abide by
its provisions and all amendments thereto. I also (re) acknowledge that I have
been informed of and will comply with the reporting provisions contained in the
Code of Ethics and all amendments thereto.
DATED: , 19
------------
Signature:___________________________________
Name:________________________________________
Please Print
Department:__________________________________
Please send to: Investment Compliance Manager
FIMCO
95 Wall Street - 23rd Floor
New York, NY 10005
Rev. 5/8/97
15
