The words "First Investors" in a box across the top of the page.
FIRST INVESTORS
U.S. GOVERNMENT PLUS FUND
ANNUAL REPORT
DECEMBER 31, 1999
First Investors Logo
The words "A MEMBER OF THE FIRST INVESTORS FINANCIAL NETWORK"
under the First Investors logo.
Portfolio Manager's Letter
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND -- 1st FUND
Dear Investor:
We are pleased to present the annual report for the First Investors U.S.
Government Plus Fund for the fiscal year ending December 31, 1999.
During the year, the First Investors U.S. Government Plus Fund -- 1st
Fund ("the Fund") returned -5.1% on a net asset value basis. In 1999,
dividends declared from net investment income for the 1st Fund were 68.1
cents per share. In addition, the Fund declared a capital gains
distribution of 14.5 cents per share. There is no separate report for
the 2nd Fund, which matured according to schedule and was dissolved on
December 31, 1999.
The Fund's holdings were almost exclusively Treasury STRIPS, also known
as zero coupon bonds. During 1999, the Fund's return was primarily the
result of the fact that these securities decreased in price as interest
rates rose. The yield on the benchmark 30-year U.S. Treasury bond rose
from 5.10% to 6.48% -- its highest yield in over two years. In this
environment of rising interest rates, the price of Treasury STRIPS
declined as they are very interest-rate sensitive. In addition, the
investment performance of such securities is tied to their relative
maturities, with those having the earliest maturities generating returns
in line with cash or investments in commercial paper.
Because it is impossible to predict the future direction of the markets,
even over the short term, there are certain basic investment principles
that we encourage our shareholders to follow to reduce exposure to
risk.* First, we encourage shareholders to take a long-term view, and to
avoid trying to time the market. Attempting to time the market is
extremely difficult, even for professional investors. Second, we
encourage our shareholders to diversify their portfolios among stock,
bond and money market funds. Third, we encourage our shareholders to
follow a regular investment plan. This may help you to avoid getting
caught up in the excitement of a rising market and will reduce the risk
of buying at high points.
Of course, no financial plan or program, no matter how well-designed, is
guaranteed to be successful. In addition, nothing eliminates the risk
associated with overall market trends. However, utilizing these various
strategies may help to minimize the risk by reducing the extent to which
an investor may be affected by a decline in any one security or segment
of the market. If you use dollar cost averaging, you should consider
your ability to continue purchases through periods of declining prices.
Thank you for placing your trust in First Investors. As always we
appreciate the opportunity to serve your investment needs.
Sincerely,
/S/ PATRICIA D. POITRA
Patricia D. Poitra
Vice President and Portfolio Manager
January 31, 2000
* There are a variety of risks associated with investing in all stock
mutual funds including market risk (the risk that the entire stock
market will decline because of an event such as a deterioration in the
economy or a rise in interest rates), as well as special risks
associated with investing in certain types of stock mutual funds, such
as small-cap funds and global funds. There are a variety of risks
associated with investing in bond mutual funds, including interest rate
risk and credit risk. Interest rate risk is the risk that bonds will
decrease in value as interest rates rise. As a general matter, longer-
term bonds fluctuate more than shorter-term bonds in reaction to changes
in interest rates. Credit risk is the risk that bonds will decline in
value as the result of a decline in the credit rating of the bonds or
the economy as a whole. You should consult your prospectus for a precise
explanation of the risks associated with your fund.
Cumulative Performance Information
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND -- 1st FUND
Comparison of change in value of $10,000 investment in the First
Investors U.S. Government Plus Fund -- 1st Fund, the Lehman Brothers
Intermediate Treasury Index and the Lehman Brothers Long Term Treasury
Index.
As of December 31, 1999
GOVT PLUS INTERMEDIATE LONG TERM
1st FUND INDEX INDEX
Jan-90 $ 9,200 $10,000 $10,000
Dec-90 9,293 10,945 10,631
Dec-91 11,392 12,489 12,599
Dec-92 12,121 13,355 13,602
Dec-93 14,478 14,453 15,949
Dec-94 12,900 14,199 14,731
Dec-95 16,642 16,245 19,251
Dec-96 16,235 16,891 19,084
Dec-97 17,713 18,190 21,962
Dec-98 19,745 19,758 24,931
Dec-99 18,733 19,839 22,752
[INSET BOX IN CHART READS:]
Average Annual Total Return*
N.A.V. Only S.E.C. Standardized
One Year (5.12%) (12.72%)
Five Years 7.75% 5.97%
Ten Years 7.37% 6.48%
The graph compares a $10,000 investment in the First Investors
U.S. Government Plus Fund - 1st Fund beginning 1/1/90 with
theoretical investments in the Lehman Brothers Intermediate
Treasury Index and the Lehman Brothers Long Term Treasury Index.
The Lehman Brothers Intermediate Treasury Index is made up of all
public obligations of the U.S. Treasury with maturities of less
than 10 years. The Lehman Brothers Long Term Treasury Index is
made up of all public obligations of the U.S. Treasury with
maturities of 10 years or greater. It is not possible to invest
directly in these Indices. In addition, the Indices do not take
into account fees and expenses that an investor would incur in
purchasing securities in the Indices. For purposes of the graph
and the accompanying table, unless otherwise indicated, it has
been assumed that the maximum sales charge was deducted from the
initial $10,000 investment in the Fund and dividends and
distributions were reinvested.
* Average Annual Total Return figures (for the period ended
12/31/99) include the reinvestment of all dividends and
distributions. "N.A.V. Only" returns are calculated without sales
charges. The "S.E.C. Standardized" returns shown are based on the
maximum sales charge of 8.00%. During the periods shown, some
expenses of the Fund were waived or assumed. If such expenses had
been paid by the Fund, the "S.E.C. Standardized" Average Annual
Total Return for One Year, Five Years and Ten Years would have
been (13.21%), 5.63% and 6.29%, respectively. Results represent
past performance and do not indicate future results. Investment
return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less
than original cost. Lehman Brothers Intermediate Treasury Index
and Lehman Brothers Long Term Treasury Index figures from Lehman
Brothers, Inc. and all other figures from First Investors
Management Company, Inc.
<TABLE>
<CAPTION>
Portfolio of Investments
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND -- 1st FUND
December 31, 1999
- -------------------------------------------------------------------------------------------------------
Amount
Principal Invested
Amount For Each
or $10,000 of
Shares Security Value Net Assets
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT SECURITIES--98.8%
$ 1,475M Treasury STRIPS, due 11/15/2004 (cost $915,063) $1,076,961 $ 9,876
- -------------------------------------------------------------------------------------------------------
COMMON STOCKS--.4%
Basic Materials--.1%
100 Chirex, Inc. 1,463 13
- -------------------------------------------------------------------------------------------------------
Consumer Cyclicals--.3%
100 Ames Department Stores, Inc. 2,881 27
- -------------------------------------------------------------------------------------------------------
Total Value of Common Stocks (cost $4,331) 4,344 40
- -------------------------------------------------------------------------------------------------------
Total Value of Investments (cost $919,394) 99.2% 1,081,305 9,916
Other Assets, Less Liabilities .8 9,172 84
- -------------------------------------------------------------------------------------------------------
Net Assets 100.0% $1,090,477 $10,000
=======================================================================================================
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND - 1st FUND
December 31, 1999
- ------------------------------------------------------------------------------------------------
<S> <C>
Assets
Investments in securities:
At identified cost $ 919,394
==============
At value (Note 1A) $1,081,305
Cash 12,564
Other assets 2,675
--------------
Total Assets 1,096,544
--------------
Liabilities
Distributions payable 2,086
Accrued expenses 3,421
Accrued advisory fees 560
--------------
Total Liabilities 6,067
--------------
Net Assets $1,090,477
==============
Net Assets Consist of:
Capital paid in $ 928,566
Net unrealized appreciation in value of investments 161,911
--------------
Total $1,090,477
==============
Shares of beneficial interest outstanding (Note 3) 122,837
==============
Net Asset Value and Redemption Price Per Share
(Net assets divided by shares of beneficial interest outstanding) $8.88
==============
Maximum Offering Price Per Share
(Net asset value /.92)* $9.65
==============
*On purchases of $10,000 or more, the sales charge is reduced.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND - 1st FUND
Year Ended December 31, 1999
- ------------------------------------------------------------------------------------------------
<S> <C>
Investment Income
Income:
Interest $ 89,250
Dividends 64
--------------
Total income 89,314
--------------
Expenses (Notes 1 and 4):
Advisory fee 11,546
Professional fees 8,555
Shareholder servicing costs 2,312
Custodian fees 473
Reports and notices to shareholders 170
Other expenses 971
--------------
Total expenses 24,027
Less: Expenses waived or assumed (11,044)
Custodian fees paid indirectly (308)
--------------
Net expenses 12,675
--------------
Net investment income 76,639
--------------
Realized and Unrealized Gain (Loss) on Investments (Note 2):
Net realized gain on investments 16,271
Net unrealized depreciation of investments (155,580)
--------------
Net loss on investments (139,309)
--------------
Net Decrease in Net Assets Resulting from Operations $ (62,670)
==============
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND - 1st FUND
- ---------------------------------------------------------------------------------------------------
Year Ended December 31, 1999 1998
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income $ 76,639 $ 78,270
Net realized gain on investments 16,271 51,229
Net unrealized appreciation (depreciation) of investments (155,580) 4,446
----------- -----------
Net increase (decrease) in net assets resulting
from operations (62,670) 133,945
----------- -----------
Distributions to Shareholders
Net investment income (76,736) (78,307)
Net realized gains (16,271) (51,230)
----------- -----------
Total distributions (93,007) (129,537)
----------- -----------
Trust Share Transactions *
Proceeds from shares sold -- 12,973
Reinvestment of distributions 90,921 126,517
Cost of shares redeemed (79,314) (191,350)
----------- -----------
Net increase (decrease) from trust share transactions 11,607 (51,860)
----------- -----------
Net decrease in net assets (144,070) (47,452)
Net Assets
Beginning of year 1,234,547 1,281,999
----------- -----------
End of year $1,090,477 $1,234,547
=========== ===========
* Trust Shares Issued and Redeemed
Sold -- 1,196
Issued on dividends reinvested 10,239 12,368
Redeemed (8,078) (17,910)
----------- -----------
Net increase (decrease) in trust shares outstanding 2,161 (4,346)
=========== ===========
See notes to financial statements
</TABLE>
Notes to Financial Statements
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND -- 1ST FUND
1. Significant Accounting Policies -- First Investors U.S. Government
Plus Fund (the "Trust") is organized as a Massachusetts business trust
and is registered under the Investment Company Act of 1940 (the "1940
Act") as a diversified open-end management investment company. The Trust
operates as a series fund, currently issuing shares of beneficial
interest of the 1st Fund (the "Fund") only. The Fund's objective is
first to generate income, and, to a lesser extent, achieve long-term
capital appreciation.
A. Security Valuation -- Except as provided below, a security listed or
traded on an exchange or the Nasdaq Stock Market is valued at its last
sale price on the exchange or market where the security is principally
traded. Securities which have no sales on a particular day and
securities traded in the over-the-counter market are valued at the mean
between the closing bid and asked prices. The Treasury STRIPS in which
the Fund invests are traded primarily in the over-the-counter market.
Such securities are valued at the mean between the last bid and asked
prices based upon quotes furnished by a market maker for such
securities. Securities for which market quotations are not readily
available are valued on a consistent basis at fair value as determined
in good faith under the direction of the Trust's officers in a manner
specifically authorized by the Trustees of the Trust.
B. Federal Income Taxes -- No provision has been made for federal income
taxes on net income or capital gains, since it is the policy of the Fund
to continue to comply with the special provisions of the Internal
Revenue Code applicable to investment companies and to make sufficient
distributions of income and capital gains (in excess of any available
capital loss carryovers) to relieve the Fund from all, or substantially
all, federal income taxes.
C. Distributions to Shareholders -- Distributions to shareholders are
generally declared and paid annually. Income dividends and capital gain
distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. These
differences are primarily due to differing treatments for post-October
capital losses.
D. Security Transactions and Investment Income -- Security transactions
are accounted for on the date the securities are purchased or sold. Cost
is determined, and gains and losses are based, on the identified cost
basis for common stocks and the amortized cost basis for Treasury STRIPS
for both financial statement and Federal income tax purposes. Dividend
income is recorded on the ex-dividend date. Interest income (consisting
of accreted discount) and estimated expenses are accrued daily. For the
year ended December 31, 1999, the Fund's custodian has provided credits
in the amount of $308 against custodian charges based on the uninvested
cash balances of the Fund.
E. Use of Estimates -- The preparation of the financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expense during the
reporting period. Actual results could differ from those estimates.
Notes to Financial Statements (continued)
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND -- 1ST FUND
2. Security Transactions -- Purchases and sales of securities and long-
term U.S. Government Obligations, excluding short-term notes, were as
follows:
Year Ended December 31, 1999
- ----------------------------
Securities
- ----------
Purchases................................... $ 9,481
-------
Proceeds of sales........................... $14,739
-------
Long-Term U.S. Government Obligations
- -------------------------------------
Purchases................................... $ ---
-------
Proceeds of sales........................... $91,037
-------
At December 31, 1999, the cost of investments for federal income tax
purposes was $919,394. Accumulated net unrealized appreciation on
investments was $161,911, consisting of $161,948 gross unrealized
appreciation and $37 gross unrealized depreciation.
3. Trust Shares -- The Declaration of Trust permits the Trust to issue an
unlimited number of shares of beneficial interest of the Fund.
4. Advisory Fee and Other Transactions With Affiliates -- Certain
officers and trustees of the Trust are officers and directors of its
investment adviser, First Investors Management Company, Inc. ("FIMCO"),
its underwriter, First Investors Corporation ("FIC"), its transfer
agent, Administrative Data Management Corp. ("ADM") and/or First
Financial Savings Bank, S.L.A. ("FFS"), custodian of the Trust's
individual retirement accounts ("IRA"). Trustees of the Trust who are
not "interested persons" of the Trust as defined in the 1940 Act are
remunerated by the Fund. For the year ended December 31, 1999, total
trustees fees accrued by the Fund amounted to $122.
The Investment Advisory Agreement provides as compensation to FIMCO, an
annual fee, payable monthly, at the rate of 1% of the first $200 million
of the Fund's average daily net assets, .75% on the next $300 million,
declining by .03% on each $250 million thereafter, down to .66% on
average daily net assets over $1 billion. Total advisory fees accrued to
FIMCO for the year ended December 31, 1999, were $11,546 of which $4,617
was waived. In addition, expenses of $6,427 were assumed by FIMCO.
For the year ended December 31, 1999, shareholder servicing costs
included $1,580 in transfer agent fees paid to ADM and $732 in IRA
custodian fees paid to FFS.
Independent Auditors' Report
To the Shareholders and Trustees of
First Investors U.S. Government Plus Fund
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of the 1st Fund of First
Investors U.S. Government Plus Fund at December 31, 1999, and the
related statement of operations for the year then ended the statement of
changes in net assets for each of the two years in the period then ended
and financial highlights for each of the five years in the period then
ended. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to
express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned at December 31, 1999, by correspondence
with the custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of the 1st Fund of First Investors U.S. Government
Plus Fund at December 31, 1999, and the results of its operations for
the year then ended, changes in its net assets for each of the two years
in the period then ended and financial highlights for each of the five
years in the period then ended, in conformity with generally accepted
accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
January 31, 2000
<TABLE>
<CAPTION>
Financial Highlights
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND - 1st FUND
The following table sets forth the operating performance data for a share of beneficial interest outstanding,
total return, ratios to average net assets and other supplemental data for each year indicated.
-------------------------------------------------------
Year Ended December 31
-------------------------------------------------------
1999 1998 1997 1996 1995
-------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Per Share Data
- --------------
Net Asset Value, Beginning of Year $ 10.23 $10.25 $10.37 $11.58 $ 9.83
-------- --------- -------- -------- --------
Income from Investment Operations:
Net Investment Income 0.681 0.723 0.670 0.648 0.667
Net Realized and Unrealized Gain
(Loss) on Investments (1.205) 0.453 0.274 (0.863) 2.114
-------- --------- -------- -------- --------
Total from Investment Operations (0.524) 1.176 0.944 (0.215) 2.781
-------- --------- -------- -------- --------
Less Distributions from:
Net Investment Income 0.681 0.723 0.670 0.648 0.667
Net Realized Gain 0.145 0.473 0.394 0.347 0.364
-------- --------- -------- -------- --------
Total Distributions 0.826 1.196 1.064 0.995 1.031
-------- --------- -------- -------- --------
Net Asset Value, End of Year $8.88 $10.23 $10.25 $10.37 $11.58
======== ========= ======== ======== ========
Total Return (%)+ (5.12) 11.47 9.10 (1.86) 28.29
- -----------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Year (in thousands) $1,090 $1,235 $1,282 $1,359 $1,524
Ratio to Average Net Assets:(%)*
Expenses 1.10 1.10 1.37 1.60 1.60
Net Investment Income 6.65 6.35 6.11 5.70 5.60
Ratio to Average Net Assets
Before Expenses
Waived or Assumed:(%)
Expenses 2.08 1.93 1.93 1.98 1.87
Net Investment Income 5.67 5.52 5.55 5.32 5.33
Portfolio Turnover Rate (%) 1 1 0 7 7
+ Calculated without sales charges
* Net of expenses waived or assumed (Note 4)
See notes to financial statements
</TABLE>
FIRST INVESTORS U.S. GOVERNMENT PLUS FUND
Trustees
- ------------------------------
James J. Coy (Emeritus)
Glenn O. Head
Kathryn S. Head
Larry R. Lavoie
Rex R. Reed
Herbert Rubinstein
Nancy S. Schaenen
James M. Srygley
John T. Sullivan
Robert T. Wentworth
Officers
- ------------------------------
Glenn O. Head
President
Concetta Durso
Vice President and Secretary
Patricia D. Poitra
Vice President
Joseph I. Benedek
Treasurer
Mark S. Spencer
Assistant Treasurer
Carol Lerner Brown
Assistant Secretary
Shareholder Information
- ------------------------------
Investment Adviser
First Investors
Management Company, Inc.
95 Wall Street
New York, NY 10005
Underwriter
First Investors Corporation
95 Wall Street
New York, NY 10005
Custodian
The Bank of New York
48 Wall Street
New York, NY 10286
Transfer Agent
Administrative Data
Management Corp.
581 Main Street
Woodbridge, NJ 07095
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue
Washington, DC 20036
Auditors
Tait, Weller & Baker
Eight Penn Center Plaza
Philadelphia, PA 19103
It is the Trust's practice to mail only one copy of its annual and
semi-annual reports to any address at which more than one shareholder
with the same last name has indicated that mail is to be delivered.
Additional copies of the reports will be mailed if requested by any
shareholder in writing or by calling 800-423-4026. The Fund will ensure
that separate reports are sent to any shareholder who subsequently
changes his or her mailing address.
This report is authorized for distribution only to existing
shareholders, and, if given to prospective shareholders, must be
accompanied or preceded by the Fund's prospectus.
