First Investors Single
Payment and Periodic
Payment Plans for the
Accumulation of Shares of
FIRST INVESTORS
GLOBAL FUND, INC.
First Investors Single
Payment and Periodic
Payment Plans for
Investment in
FIRST INVESTORS
GOVERNMENT FUND, INC.
FIRST INVESTORS INSURED
TAX EXEMPT FUND, INC.
PROSPECTUS
April 30, 1997,
As Amended June 30, 1997
First Investors Logo
<PAGE>
First Investors Single Payment and Periodic Payment Plans for the
Accumulation of Shares of First Investors Global Fund, Inc.
First Investors Single Payment and Periodic Payment Plans for
Investment in First Investors Government Fund, Inc.
First Investors Single Payment and Periodic Payment Plans for
Investment in First Investors Insured Tax Exempt Fund, Inc.
First Investors Corporation ("FIC" or "Sponsor"), as Sponsor, offers the
following long term investment programs, each providing for investment in one of
the following open-end diversified management investment companies: First
Investors Global Fund, Inc.; First Investors Government Fund, Inc.; and First
Investors Insured Tax Exempt Fund, Inc. (singularly, "Fund," and collectively,
"Funds"). The municipal bonds in the portfolio of First Investors Insured Tax
Exempt Fund, Inc. are insured as to timely payments of principal and interest by
the issuer or under an insurance policy written by an independent insurance
company. Insurance does not protect against fluctuations in the market value of
the municipal bonds in this Fund's portfolio or in the net asset value of the
Fund's shares and does not remove market risk. For more information regarding
this Fund's insurance coverage, see "Insurance" in the Fund's prospectus.
SINGLE PAYMENT PLANS-The sales charge on these Plans, as a percent of the
offering price, ranges from 6.25% on a $1,000 Plan to 2.50% on a $500,000 but
under $1,000,000 Plan, which is 6.67% to 2.56%, respectively, of the net amount
invested. The sales charge is the only deduction from the initial investment.
There is no sales charge on single payment plans of $1,000,000 or more. This
plan is also subject to maintenance and custodian fees.
PERIODIC PAYMENT PLANS-These Plans provide for regular monthly payments for
10 or 15 years. The sales charge on 10-Year Plans ranges from 6.15% on $6,000
Plans ($50 per month) to 4.40% on $120,000 Plans ($1,000 per month) of total
payments and from 6.76% to 4.61% of the net amount invested, respectively. Total
deductions range from 10.07% to 4.88% of the net amount invested, respectively.
Plans in excess of $120,000 are subject to a sales charge of 4.40% (reducing to
3.40% on Plans of $250,000 and over, 2.40% on Plans of $500,000 and over and
1.40% on Plans of $1,000,000 and over). Plans are also subject to maintenance
and custodian fees.
The sales charge on 15-Year Plans ranges from 6.15% on $9,000 Plans ($50
per month) to 4.40% on $180,000 Plans ($1,000 per month) of total payments and
from 6.77% to 4.61% of the net amount invested, respectively. Total deductions
range from 10.08% to 4.88% of the net amount invested, respectively. Plans in
excess of $180,000 are subject to a sales charge of 4.40% (reducing to 3.40% on
Plans of $250,000 and over, 2.40% on Plans of $500,000 and over and 1.40% on
Plans of $1,000,000 and over). Plans are also subject to maintenance and
custodian fees.
A double initial payment is required on all Periodic Payment Plans. The
Planholder's net payments, after deducting all applicable fees, are invested in
Class A shares ("shares") of a Fund at net asset value. The value of Fund shares
is subject to fluctuation in accordance with the market value of the securities
it holds for investment. Furthermore, the provisions of the Periodic Payment
Plans are such that a substantial part of the costs of the Plan is charged the
first year: in fact, 50% of the first 13 monthly payments is deducted as a sales
charge. For example, even after application of the "refund privileges" described
herein under "Refund Privileges," total charges of a minimum Periodic Payment
Plan would amount to 15% of total payments if the Plan were carried for any
period of time between forty-five days and twenty-eight months. Moreover, if
such a minimum Plan were carried for nineteen months, total charges would amount
to 37.14% of total payments under the 10-year Plan and 37.75% under the 15-year
Plan; they would amount to 29.16% and 30.07%,
<PAGE>
respectively, under the 10- and 15-year Plans, if carried for two years.
Therefore, a loss would likely be incurred in the event of early withdrawal or
termination by a Planholder. Consideration should be given to these factors by a
prospective Planholder who should be reasonably certain of his or her ability to
continue the Plan to completion before considering this long-term investment
program.
Shares of a Fund may also be purchased outright at a sales charge not in
excess of 6.25%, without penalty for early termination or payment of the
maintenance and custodian fees and service charges applicable to the Plans
offered hereby. (See the prospectus of the applicable Fund and "Statistical Data
Applicable to First Investors Plans" in this Prospectus.) Direct purchases of
Fund shares enable the investor to put more of his or her money to work
immediately and over the life of a Fund account than would be possible under the
life of the Periodic Payment Plans offered hereby. Prepayment of all or any part
of the first 13 payments under a Periodic Payment Plan produces a smaller net
investment after deduction of applicable charges than would result from direct
investment of the same amount in shares of a Fund. Such prepayment would
increase possible loss in the event of early termination. An investor has (a) a
45-day right of withdrawal, and (b) a right to receive during the first 18
months of the Plan the value of his or her account and a portion of the sales
charges paid prior to his or her withdrawal. For a full discussion of these
withdrawal rights, see "Refund Privileges" in this Prospectus.
This Prospectus sets forth concisely the information about the Plans that a
prospective investor should know before investing and should be kept for future
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT
PROSPECTUS FOR FIRST INVESTORS GLOBAL FUND, INC., FIRST INVESTORS
GOVERNMENT FUND, INC. OR FIRST INVESTORS INSURED TAX EXEMPT FUND,
INC.
The date of this Prospectus is April 30, 1997,
as amended June 30, 1997
<PAGE>
Allocation of Monthly Payments and Deductions* 10-Year Plans
<TABLE>
<CAPTION>
MAINTENANCE
SALES CHARGE AND PERCENTAGE
------------------------------------------- CUSTODIAN RELATIONSHIP
From From Each FEES* OF TOTAL CHARGES
Each of Subse- % of Sales ------------- ----------------
Aggregate the First quent Total Charge to Fee Per Net To To Net
Monthly Amount of 13 Monthly Monthly Sales Aggregate Pay- Total Total Investment Aggregate Invest-
Payments Payments Payments** Payment Charge Payments ment Fee Charges in Fund Payments ment
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 50.00 $ 6,000 $ 24.75 $ .44 $ 368.83 6.15% $1.50 $180.00 $ 548.83 $ 5,451.17 9.15% 10.07%
75.00 9,000 37.00 .68 553.76 6.15 2.00 240.00 793.76 8,206.24 8.82 9.67
100.00 12,000 49.50 .88 737.66 6.15 2.00 240.00 977.66 11,022.34 8.15 8.87
125.00 15,000 62.00 1.09 922.63 6.15 2.00 240.00 1,162.63 13,837.37 7.75 8.40
150.00 18,000 74.50 1.29 1,106.53 6.15 2.00 240.00 1,346.53 16,653.47 7.48 8.09
167.00 20,040 82.95 1.44 1,232.43 6.15 2.00 240.00 1,472.43 18,567.57 7.35 7.93
175.00 21,000 87.25 1.47 1,291.54 6.15 2.00 240.00 1,531.54 19,468.46 7.29 7.87
200.00 24,000 99.50 1.71 1,476.47 6.15 2.00 240.00 1,716.47 22,283.53 7.15 7.70
225.00 27,000 112.00 .65 1,525.55 5.65 2.50 300.00 1,825.55 25,174.45 6.76 7.25
250.00 30,000 124.50 .71 1,694.47 5.65 2.50 300.00 1,994.47 28,005.53 6.65 7.12
300.00 36,000 149.50 .85 2,034.45 5.65 2.50 300.00 2,334.45 33,665.55 6.48 6.93
350.00 42,000 174.50 .98 2,373.36 5.65 2.50 300.00 2,673.36 39,326.64 6.37 6.80
400.00 48,000 199.50 1.11 2,712.27 5.65 2.50 300.00 3,012.27 44,987.73 6.28 6.70
425.00 51,000 161.50 6.12 2,754.34 5.40 2.50 300.00 3,054.34 47,945.66 5.99 6.37
500.00 60,000 190.00 7.20 3,240.40 5.40 2.50 300.00 3,540.40 56,459.60 5.90 6.27
750.00 90,000 280.00 11.40 4,859.80 5.40 2.50 300.00 5,159.80 84,840.20 5.73 6.08
1,000.00# 120,000 325.00 9.86 5,280.02 4.40 2.50 300.00 5,580.02 114,419.98 4.65 4.88
</TABLE>
* After a period of ten years from the date of a Plan or in the event no
payment has been made for a period of one year, the Plan is subject to
annual maintenance and custodian fees of 25/100 of 1% per year of the total
agreed payments (minimum $3.00 and maximum $30.00 per year) deducted from
dividend and capital gain distributions (whether paid in cash or additional
Fund shares) or from the proceeds of the redemption of Fund shares to the
extent that dividend and capital gain distributions are insufficient.
** A double initial payment is required on all Periodic Payment Plans and
deductions from this payment are double. The next regular scheduled payment
becomes due one month from the date of the initial payment.
# Periodic Payment Plans of larger denominations may be issued subject to
deductions for sales charges of 4.40% on Plans of $120,000 and over, 3.40%
on Plans of $250,000 and over, 2.40% on Plans of $500,000 and over and
1.40% on Plans of $1,000,000 and over. Deductions will be made on the same
proportionate basis as in the $1,000 per month Plan and maintenance and
custodian fees will be $300. Information regarding the sales charges and
fees for larger denomination Plans will be made available to prospective
investors upon request.
3
<PAGE>
Allocation of Monthly Payments and Deductions* 15-Year Plans
<TABLE>
<CAPTION>
MAINTENANCE
SALES CHARGE AND PERCENTAGE
------------------------------------------- CUSTODIAN RELATIONSHIP
From From Each FEES* OF TOTAL CHARGES
Each of Subse- % of Sales ------------- ----------------
Aggregate the First quent Total Charge to Fee Per Net To To Net
Monthly Amount of 13 Monthly Monthly Sales Aggregate Pay- Total Total Investment Aggregate Invest-
Payments Payments Payments** Payment Charge Payments ment Fee Charges in Fund Payments ment
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 50.00 $ 9,000 $ 24.75 $ 1.39 $ 553.88 6.15% $1.50 $270.00 $ 823.88 $ 8,176.12 9.15% 10.08%
75.00 13,500 37.00 2.09 830.03 6.15 2.00 360.00 1,190.03 12,309.97 8.82 9.67
100.00 18,000 49.50 2.78 1,107.76 6.15 2.00 360.00 1,467.76 16,532.24 8.15 8.88
125.00 22,500 62.00 3.46 1,383.82 6.15 2.00 360.00 1,743.82 20,756.18 7.75 8.40
150.00 27,000 74.50 3.34 1,526.28 5.65 2.00 360.00 1,886.28 25,113.72 6.99 7.51
167.00 30,060 82.95 3.71 1,697.92 5.65 2.00 360.00 2,057.92 28,002.08 6.85 7.35
175.00 31,500 87.25 3.87 1,780.54 5.65 2.00 360.00 2,140.54 29,359.46 6.80 7.29
200.00 36,000 99.50 4.43 2,033.31 5.65 2.00 360.00 2,393.31 33,606.69 6.65 7.12
225.00 40,500 112.00 4.98 2,287.66 5.65 2.50 450.00 2,737.66 37,762.34 6.76 7.25
250.00 45,000 124.50 5.53 2,542.01 5.65 2.50 450.00 2,992.01 42,007.99 6.65 7.12
300.00 54,000 149.50 5.82 2,915.44 5.40 2.50 450.00 3,365.44 50,634.56 6.23 6.65
350.00 63,000 174.50 6.79 3,402.43 5.40 2.50 450.00 3,852.43 59,147.57 6.11 6.51
400.00 72,000 199.50 7.75 3,887.75 5.40 2.50 450.00 4,337.75 67,662.25 6.02 6.41
500.00 90,000 190.00 14.31 4,859.77 5.40 2.50 450.00 5,309.77 84,690.23 5.90 6.27
600.00 108,000 200.00 12.89 4,752.63 4.40 2.50 450.00 5,202.63 102,797.37 4.82 5.06
750.00 135,000 205.00 19.61 5,939.87 4.40 2.50 450.00 6,389.87 128,610.13 4.73 4.97
1,000.00# 180,000 250.00 27.96 7,919.32 4.40 2.50 450.00 8,369.32 171,630.68 4.65 4.88
</TABLE>
* After a period of fifteen years from the date of a Plan or in the event no
payment has been made for a period of one year, the Plan is subject to
annual maintenance and custodian fees of 25/100 of 1% per year of the total
agreed payments (minimum $3.00 and maximum $30.00 per year) deducted from
dividend and capital gain distributions (whether paid in cash or additional
Fund shares) or from the proceeds of the redemption of Fund shares to the
extent that dividend and capital gain distributions are insufficient.
** A double initial payment is required on all Periodic Payment Plans and
deductions from this payment are double. The next regular scheduled payment
becomes due one month from the date of the initial payment.
# Periodic Payment Plans of larger denominations may be issued subject to
deductions for sales charges of 4.40% on Plans of $180,000 and over, 3.40%
on Plans of $250,000 and over, 2.40% on Plans of $500,000 and over and
1.40% on Plans of $1,000,000 and over. Deductions will be made on the same
proportionate basis as in the $1,000 per month Plan and maintenance and
custodian fees will be $450. Information regarding the sales charges and
fees for larger denomination Plans will be made available to prospective
investors upon request.
4
<PAGE>
Allocation of Payments at Various Stages ($6,000 10-Year $50 Monthly Plan)
<TABLE>
<CAPTION>
(At the End of 10 Years) (At the End of 2 Years) (At the End of 1 Year)(At the End of 6 Months)
------------------------- ---------------------- ---------------------- -----------------------
% of Amount % of Amount % of Amount % of Amount
Amount of Payments Amount of Payments Amount of Payments Amount of Payments
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Payments ........................ $6,000.00 100.00% $1,250.00** 100.00% $650.00** 100.00% $350.00** 100.00%
Amount of Sales Charge ................ 368.83 6.15 327.03 26.16 321.75 49.50 173.25 49.50
Maintenance and Custodian Fees* ....... 180.00 3.00 37.50 3.00 19.50 3.00 10.50 3.00
Total deductions ...................... 548.83 9.15+ 364.53 29.16 341.25 52.50 183.75 52.50
Net Amount Invested ................... 5,451.17 90.85 885.47 70.84 308.75 47.50 166.25 47.50
</TABLE>
+ 10.07% of net amount invested
Allocation of Payments at Various Stages ($9,000 15-Year $50 Monthly Plan)
<TABLE>
<CAPTION>
(At the End of 15 Years) (At the End of 2 Years)(At the End of 1 Year)(At the End of 6 Months)
------------------------- ----------------------- --------------------- ------------------------
% of Amount % of Amount % of Amount % of Amount
Amount of Payments Amount of Payments Amount of Payments Amount of Payments
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Payments ........................... $9,000.00 100.00% $1,250.00** 100.00% $650.00** 100.00% $350.00** 100.00%
Amount of Sales Charge ................... 553.88 6.15 338.43 27.07 321.75 49.50 173.25 49.50
Maintenance and Custodian Fees* .......... 270.00 3.00 37.50 3.00 19.50 3.00 10.50 3.00
Total deductions ......................... 823.88 9.15+ 375.93 30.07 341.25 52.50 183.75 52.50
Net Amount Invested ...................... 8,176.12 90.85 874.07 69.93 308.75 47.50 166.25 47.50
</TABLE>
+ 10.06% of net amount invested
* Reference is made to tables on Pages 3 and 4 and "Other Deductions" for
maintenance and custodian fees on Periodic Payment Plans after completion
of payments and annual charges for special administrative duties.
** Reflects equivalent of one additional monthly payment because of the
required double initial payment.
For Comparison of Cost of FIC Contractual Plan versus An Open Account in the
Same Underlying Fund See "Statistical Data Applicable to First Investors Plans."
THE PLANS
First Investors Single Payment and Periodic Payment Plans for the
Accumulation of Shares of First Investors Global Fund, Inc., First Investors
Single Payment and Periodic Payment Plans for Investment in First Investors
Government Fund, Inc. and First Investors Single Payment and Periodic Payment
Plans for Investment in First Investors Insured Tax Exempt Fund, Inc.
(singularly, "Plan," and collectively, "Plans") are long-term investment
programs. The Sponsor of the Plans is First Investors Corporation ("Sponsor").
The custodian is The Bank of New York ("Custodian"). Plan payments, after the
deduction of all applicable fees, are invested at net asset value in Class A
shares of the open-end diversified management investment company that is the
underlying investment for the Plan you have chosen. The investment choices
available to you are listed in the following paragraph.
First Investors Global Fund, Inc. ("Global Fund") primarily seeks long-term
capital growth and secondarily seeks to earn a reasonable level of current
income. First Investors Government Fund, Inc. ("Government Fund") seeks to
achieve a significant level of current income which is consistent with security
and liquidity of principal. First Investors Insured Tax Exempt Fund, Inc.
("Insured Tax Exempt Fund") seeks to provide a high level of interest income
which is exempt from Federal
5
<PAGE>
income tax and is not an item of tax preference for purposes of the Federal
alternative minimum tax. Global Fund, Government Fund and Insured Tax Exempt
Fund are sometimes herein referred to singularly as "Fund" and collectively as
"Funds." See "Underlying Investment" for a description of each Fund's investment
policies and practices.
Periodic Payment Plans
Periodic Payment Plans provide for regular and systematic monthly
investment over a period of either ten or fifteen years. From the investor's
viewpoint, the operation of the Plan is extremely simple. Once the investor
understands the Plan and decides to adopt it, the investor need only decide how
much to pay regularly--it can be as little as $50 per month, or as much as
$1,000 per month or more, limited to 120 or 180 payments. The investor can then
decide the most convenient time to make regular payments. The investor will also
probably choose to name a beneficiary by completing a Declaration of Trust.
These questions settled, with the assistance of a First Investors registered
representative, the investor completes the appropriate Plan application, writes
out a check to the order of The Bank of New York, Custodian, to cover the first
payment (the initial payment requires a sum representing two monthly payments),
and the First Investors registered representative will submit the application
and check to Administrative Data Management Corp. for processing. After the
approval of the application by the Sponsor, a First Investors Periodic Payment
Plan Certificate will be forwarded to the investor. Following the double initial
payment, subsequent Plan payments must be made through First Investors Money
Line or Automatic Payroll Investment, as described below.
First Investors Money Line. This service allows you to invest through
automatic deductions from your bank checking account. You must complete and sign
the First Investors Money Line portion of the Plan application in order to
participate in this service. Any loss or expense incurred by the Sponsor or any
delinquency in Plan payments resulting from insufficient funds in the
Planholder's checking account or otherwise will be the Planholder's liability.
You may decrease the amount or discontinue this service at any time by calling
Administrative Data Management Corp. at 1-800-423-4026 or writing to
Administrative Data Management Corp., 581 Main Street, Woodbridge, NJ
07095-1198, Attention: Control Dept. To increase the amount, send a written
request to Administrative Data Management Corp. at the address noted above.
Allow up to 5 days for processing your request. Please include the Plan name and
account number whenever writing to Administrative Data Management Corp.
Automatic Payroll Investment. You also may arrange for automatic Plan
payments on a systematic basis through salary deductions, provided your employer
has direct deposit capabilities. You must complete and sign the Automatic
Payroll Investment portion of the Plan application in order to participate in
this service. Arrangements must also be made with your employer's Payroll
Department. You may change the amount invested or discontinue the service by
contacting your employer.
When a Planholder's payment is received, the Sponsor will determine the
authorized deductions and the number of full and fractional shares of the Fund
to be acquired and will credit the requisite shares to the Planholder's account.
To the extent that there are shares to be sold for other Planholders on the same
day, new shares purchased will be offset by shares sold. The price paid for
shares is the net asset value of shares of the Fund next determined after
receipt of such payment. See the applicable Fund's Prospectus for information as
to the procedure for computing
6
<PAGE>
net asset value. Unless privileges of termination are exercised by the
Planholder or the Sponsor, each Plan shall continue in force for a period of at
least twenty years for a ten-year Periodic Payment Plan and twenty-five years
for a fifteen-year Periodic Payment Plan.
Single Payment Plans
Single Payment Plans are also available, whereby an investor may make a
single investment of $1,000 or more, with larger Plans available in $100
multiples. These Plans, providing for the same underlying investment as the
Periodic Payment Plans, offer the investment diversification, supervision and
research facilities of a Fund in a single investment with an option to have
dividend and capital gain distributions, if any, after authorized deductions,
paid in additional Fund shares without sales charge, or if income is desired, to
have the net amount of dividend and capital gain distributions, if any,
remitted. The investor may name a beneficiary by completing a Declaration of
Trust. In addition, Class A shares of a Fund may be exchanged at net asset value
for units of a Single Payment Plan. You should refer to the applicable Fund's
Prospectus for further details on this exchange privilege.
Single Payment Plans are subject to a sales charge as follows:
Percent of Sales Charge
To Net
To Total Investment in
Amount of Payment Payments Fund Shares
- ----------------- -------- ------------
Less than $25,000................................. 6.25% 6.67%
$25,000 but under $50,000......................... 5.75 6.10
$50,000 but under $100,000........................ 5.50 5.82
$100,000 but under $250,000....................... 4.50 4.71
$250,000 but under $500,000....................... 3.50 3.63
$500,000 but under $1,000,000..................... 2.50 2.56
There is no sales charge on transactions of $1 million or more.
Maintenance and custodian fees are charged against Single Payment Plans in
an amount of 25/100 of 1% annually of the single payment (minimum $3.00 and
maximum $30.00) deducted from dividend and capital gain distributions (whether
paid in cash or additional Fund shares) or from the proceeds of the redemption
of Fund shares to the extent that dividend and capital gain distributions are
insufficient.
Reduced Sales Charges. Two or more Single Payment Plans, when purchased at
the same time by a corporation, partnership, individual, an investor for his or
her own account, or for the investor, the investor's spouse and children under
age 21, or by a trustee or other fiduciary of a single trust estate or account
may be combined to attain a reduced sales charge. This privilege does not apply
to a group of individuals who combine their funds directly or indirectly for the
purchase of Plans.
Upon written notice to the Sponsor, Single Payment Plans are also available
at a quantity discount on new Single Payment Plans purchased if the then current
value at net asset value of all shares of First Investors Global Fund, Inc.,
First Investors Government Fund, Inc., First Investors High Yield Fund, Inc.,
First Investors Fund For Income, Inc. and/or First Investors Insured Tax Exempt
Fund, Inc. previously purchased and then owned under Single Payment Plans, plus
the
7
<PAGE>
face amount of the Single Payment Plan being purchased, amount to $25,000 or
more. Such quantity discounts may be modified or terminated at any time by the
Sponsor.
Letter of Intent. Individuals making application for a Single Payment Plan
(restricted to applicants as listed above) may also sign a Letter of Intent
indicating their intent to purchase additional Single Payment Plans within
thirteen months from the date of the original purchase. Such Letter of Intent
may be filed at any time during a period of 90 days from the date of the
application. A statement filed after the date is retroactive to that date for
computation of the 13-month period. A Letter of Intent can also be amended: (a)
during the 13-month period if the investor files an amended Letter of Intent
with the same expiration date as the original, or (b) automatically after the
end of the period, if total purchases credited to the Letter of Intent qualify
for an additional reduction in the sales charge. If and when such additional
purchases have been made and the total of all Single Payment Plans so purchased
have attained an aggregate amount (at least $25,000), they qualify for a
reduction of sales commission. The execution of a Letter of Intent is not a
binding obligation on the part of the investor.
If total purchases pursuant to such Letter of Intent are less than the
amount stipulated therein, the Planholder must remit to the Sponsor an amount
equal to the difference in the dollar amount of sales charges actually paid by
the Planholder and the amount of sales charges which the Planholder would have
paid on his or her aggregate purchases if the total of same had been made at a
single time. If such payment is not made following the expiration of the
13-month period, an appropriate number of Fund shares shall be surrendered for
redemption to pay such sales charge. Fund shares remaining after such redemption
shall be delivered to the Planholder or as he or she directs.
An investor can achieve the same investment results by investing directly
in a Fund under a Letter of Intent, without paying the maintenance and custodian
fees applicable to the Plan.
UNDERLYING INVESTMENT
First Investors Global Fund, Inc., an open-end diversified management
investment company, primarily seeks long-term capital growth and secondarily
seeks to earn a reasonable level of current income. The Fund seeks to achieve
these objectives by investing, under normal circumstances, in common stocks,
preferred stocks and bonds and other debt obligations issued by companies or
governments of at least three countries, including the United States. Investors
should refer to the Fund's Prospectus for a detailed description of the Fund's
investment objectives and policies. There is no assurance that the Fund's
objectives will be achieved.
First Investors Government Fund, Inc., an open-end diversified management
investment company, seeks to achieve a significant level of current income which
is consistent with security and liquidity of principal. The Fund seeks to
achieve its objective by investing, under normal circumstances, at least 80% of
its assets in obligations issued or guaranteed as to principal and interest by
the U.S. Government, its agencies or instrumentalities, including
mortgage-backed securities. Although the payment of interest and principal on a
portfolio security may be guaranteed by the U.S. Government or one of its
agencies or instrumentalities, shares of the Fund are not insured or guaranteed
by the U.S. Government or any agency or instrumentality. Investors should refer
to the Fund's Prospectus for a detailed description of the Fund's investment
objective and policies. There is no assurance that the Fund's objective will be
achieved.
8
<PAGE>
First Investors Insured Tax Exempt Fund, Inc., an open-end diversified
management investment company, seeks to provide a high level of interest income
which is exempt from Federal income tax and is not an item of tax preference for
purposes of the Federal alternative minimum tax. The Fund seeks to achieve its
objective by investing, under normal circumstances, at least 80% of its total
assets in municipal bonds issued by or on behalf of states, territories and
possessions of the United States and the District of Columbia and their
political subdivisions, agencies and instrumentalities, the interest on which is
exempt from Federal income tax and, for non-corporate shareholders, the Federal
alternative minimum tax. Investors should refer to the Fund's Prospectus for a
detailed description of the Fund's investment objective and policies. There is
no assurance that the Fund's objective will be achieved.
OTHER DEDUCTIONS
The Plan provides that there may be deducted from the assets of the
Planholder, fees or expenses as follows:
After the expiration of a period of ten years (or fifteen years for a
15-Year Plan) from the date of a Plan, or prior to the expiration of such
period, if there has been a lapse of one year from the date of the Planholder's
last payment that makes a Plan one year or more delinquent, a charge for
bookkeeping and administrative services will be made in monthly, quarterly or
semiannual installments, at the rate of 25/100 of 1% per annum of the total
agreed payments, subject to a minimum annual charge of $3 and a maximum of $30.
This fee shall be deductible from dividend and capital gain distributions
(whether paid in cash or additional Fund shares) or from the proceeds of the
redemption of Fund shares to the extent that dividend and capital gain
distributions are insufficient.
In the case of an assignment, release of an assignment, transfer of
ownership, partial withdrawal or liquidation or complete withdrawal and
termination from a non-retirement plan account (if made before completion of
Plan payments or before the expiration of 10 years from the date of issuance of
a Single Payment Plan), certain transfers or replacement of lost Plan
certificates, and reinvestment of partial liquidations, a specified service fee
of $2.25 is charged. In the case of a partial withdrawal or liquidation or
complete withdrawal and termination from a retirement plan account, a specified
service fee of $7.00 is charged. For a retirement Plan transfer, Plan
certificate transfer or replacement, reinvestment of a partial liquidation or
complete withdrawal and termination from a retirement Plan account, such fee may
be paid directly by the Planholder or deducted from the proceeds of the
redemption of Fund shares, if desired. For an assignment or release of an
assignment, such fee must be paid directly by the Planholder.
After one year from the issuance of a Single Payment Plan or after the
thirteenth payment has been made on a Periodic Payment Plan, a charge of up to
$5.00 will be deducted on an annual basis from dividend or capital gain
distributions (whether paid in cash or additional Fund shares) or from the
proceeds of the redemption of Fund shares to the extent that dividend and
capital gain distributions are insufficient. This charge is to reimburse the
Sponsor for actual expenses incurred by the Sponsor in performing certain
administrative duties, as described under "Sponsor and Underwriter." (See the
Plan's Statement of Operations for Delegated Service Fees.) Some administrative
services are performed by the Funds at no expense to shareholders.
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The foregoing fees mentioned for bookkeeping and administrative services
and for specific services are paid, as are the maintenance and custodian service
fees deducted from periodic payments, to the Sponsor as reasonable compensation
for the Sponsor's performing such services. The Sponsor reserves the right to
change the fees charged to Planholders.
Neither the Custodian nor the Sponsor shall be personally liable for any
taxes levied or assessed against them or either of them with respect to Fund
shares in the custody of the Custodian, or arising from the income therefrom or
redemption or transfer thereof. Deductions may be made from time to time to pay
tax liabilities and claims therefor, and if necessary, Fund shares may be
redeemed to provide funds for the payment of such liabilities or the creation of
reserves therefor. The term "tax liability" includes not only taxes and possible
taxes but also auditing expenses and counsel fees incurred in connection
therewith.
RIGHTS AND PRIVILEGES OF PLANHOLDERS
Each Plan issued is registered in the name of the Planholder and is in the
form of an individual agreement between First Investors Corporation, as Sponsor
of the Plan, and the Planholder. The Bank of New York is appointed Custodian
under each agreement. The Custodian performs only bare custodianship functions,
while the Sponsor has assumed bookkeeping and administrative functions as set
forth under the heading "Sponsor and Underwriter." No amendment adversely
affecting outstanding Plans may be made without the Planholder's express
consent.
Certain optional provisions are extended to Planholders, including rights
in the following respects:
(1) Dividends and Other Distributions
Dividends and other distributions received by Planholders are dependent
upon the distributions made by a Fund. Dividends from net investment income
(consisting of interest, earned discount and other income earned on portfolio
securities less expenses) are generally declared daily and paid monthly by
Government Fund and Insured Tax Exempt Fund. Unless you direct Administrative
Data Management Corp. otherwise, dividends declared by either of these Funds are
paid in additional shares of the applicable Fund at net asset value (without
sales charge) generally determined as of the close of business on the first
business day of the following month. Dividends from Global Fund's net investment
income are generally declared and paid annually. Unless you direct
Administrative Data Management Corp. otherwise, dividends declared by Global
Fund are paid in additional shares of that Fund at net asset value (without
sales charge) generally determined as of the close of business on the business
day immediately following the record date of the distribution.
Each Fund also distributes substantially all of its net capital gain (the
excess of net long-term capital gain over net short-term capital loss) and net
short-term capital gain, if any, after deducting any available capital loss
carryovers, with its regular dividend at the end of the year. Global Fund also
distributes any net realized gains from foreign currency transactions with that
dividend. Insured Tax Exempt Fund also distributes any taxable income (including
any net short-term capital gain) with that dividend. Unless you direct
Administrative Data Management Corp. otherwise, these distributions are paid in
additional shares of the applicable Fund at the net asset
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value (without sales charge) generally determined as of the close of business on
the business day immediately following the record date of the distribution.
Dividends and other distributions paid in Fund shares are added to your Plan
account.
In order to be eligible to receive a dividend or other distribution, you
must own Fund shares as of the close of business on the record date of the
distribution. You may elect to receive dividends and/or other distributions in
cash by notifying Administrative Data Management Corp. by telephone or in
writing prior to the record date. If you elect this form of payment, the payment
date generally is two weeks following the record date of any such distribution.
Your election remains in effect until you revoke it. Reference is made to the
applicable Fund's Prospectus for additional information as to the payment of
dividends and capital gain distributions by such Fund.
(2) Declaration of Trust
A Planholder may, without transferring his or her Plan, execute and file
with the Sponsor from time to time revocable Declarations of Trust in a form
acceptable to the Sponsor, declaring that the Plan and the Fund shares held
thereunder are held in trust for the benefit of the person or persons named in
such Declaration of Trust upon the terms therein stated. Declarations of Trust
are not available to UGMA or UTMA accounts.
(3) Partial Liquidation Without Termination
After six months from the date of purchase of a Single Payment Plan and
after making 20 payments or the equivalent thereof on a Periodic Payment Plan, a
Planholder may at any time withdraw a portion of the Fund shares in his or her
Plan account without terminating the Plan. In addition, if six months or more
have elapsed from the date of a substantial prepayment on a Periodic Payment
Plan (at least equal to initial payments 1-13), a Planholder may at any time
redeem a portion of the Fund shares in his or her account without terminating
the Plan. The liquidation must be for at least $50 and cannot be in excess of
80% of the value of the Planholder's account. The proceeds of the redemption of
Fund shares or the Fund share certificate will be mailed to the Planholder or
designee of the Planholder. Requests for partial liquidations must be in writing
as more fully described under "Method of Selling Shares." Where a partial
liquidation has been effected through the redemption of Fund shares, the
Planholder may reinvest in his or her existing Plan in an amount equal to the
proceeds of such redemption by sending a check payable to The Bank of New York,
Custodian, c/o First Investors Corporation, 581 Main Street, Woodbridge, New
Jersey 07095, Attention: Non-Retirement Dept. Such funds will be applied to the
purchase of Fund shares at a net asset value based on the next price computation
and held under the Planholder's account. The number of Fund shares may be more
or less than the amount redeemed due to the purchase price in effect at the time
the reinvestment is made. Where a partial liquidation has been effected through
the withdrawal of Fund shares, rather than the redemption, such shares may at
any time be replaced by redepositing the share certificate with the Custodian
c/o First Investors Corporation, 581 Main Street, Woodbridge, NJ 07095. (There
is a fee, currently $2.25, for each partial liquidation or reinvestment.)
Reinvestment of such partial liquidation will be made only upon written request
of the Planholder accompanied by the appropriate payment. The partial
liquidation and reinvestment privilege is intended to facilitate the temporary
use for emergency purposes of funds invested in a Plan. If a Planholder realizes
a gain on liquidation, such gain is taxable for Federal income tax purposes even
though all of such proceeds are reinvested.
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(4) Transfer or Assignment
A Planholder may (a) assign his or her Plan and the Fund shares held
thereunder to a bank or loan institution as security for a loan; or (b) transfer
and assign his or her Plan and Fund shares to another person, in the form and
manner acceptable to the Sponsor. If assignment is made without consent of the
Sponsor it will not be recorded on the records of the Plan. (There is a fee,
currently $2.25, for each assignment or transfer.)
(5) Complete Withdrawal and Termination
A Planholder of a Single Payment Plan or Periodic Payment Plan may, at any
time, terminate his or her Plan by surrendering the Plan Certificate and other
required documents, where applicable, to Administrative Data Management Corp.,
581 Main Street, Woodbridge, New Jersey 07095, Attention: Non-Retirement Dept.
and may request delivery of the Fund shares accumulated, registered in his or
her name, or request their redemption and remittance to the Planholder of the
proceeds of such redemption. (There is a fee, currently $2.25, for withdrawal or
liquidation prior to completion of Periodic Payment Plans or before expiration
of ten years for Single Payment Plans.) Requests for termination and complete
liquidation or withdrawal must be in writing. Please refer to "Method of Selling
Shares" for instructions on making a complete withdrawal or termination. Any
adjustment in sales or other charges occasioned by virtue of termination by the
Planholder through the exercise of the refund privileges (see "Refund
Privileges") will be made at the same time. The redemption price is the net
asset value of Fund shares effective after receipt of the request in "good
order," as defined below, by Administrative Data Management Corp., 581 Main
Street, Woodbridge, New Jersey 07095.
(6) Reports, Receipts and Notices
The Sponsor will mail to each Periodic Payment Planholder a receipt of each
payment, including a statement of the number of shares held for his or her
account, and notices of payments due in advance of their due date. The
Planholder will also be sent annual and semi-annual reports of a Fund,
distribution notices and tax statements relating to the Global Fund Plan (TIN
13-3094384), the Government Fund Plan (TIN 13-3204580) or the Insured Tax Exempt
Fund Plan (TIN 13-2873780), as applicable, and at least annually a current Fund
Prospectus.
(7) Voting Rights
The Planholder will be sent notice of any meeting at which his or her Fund
shares may be voted and will be sent voting instruction forms. The Sponsor will
cause the Custodian to vote any Planholder's shares in accordance with the
Planholder's instructions, or if the Planholder so requests, to give him or her
a proxy or otherwise arrange for his or her exercise of voting rights at any
meeting. If the Planholder does not exercise any of the above privileges, the
Sponsor will cause the Custodian to vote his or her Fund shares for or against
each matter on which the Planholder is entitled to vote, in the same proportion
as indicated in the voting instructions given the Custodian on behalf of other
Planholders.
(8) Prepayment
Planholders of Periodic Payment Plans may accelerate completion of a Plan
by making full or
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partial payments in advance of their due dates. Such prepayments do not in any
way accelerate the due dates of unpaid payments. Unpaid payments will be
considered to be due on that date on which they would have originally been
required if all prior payments (whether or not in fact made in advance) had been
made when they were respectively due. In the event the Planholder makes a
payment aggregating twelve or more monthly payments, the deductions therefrom
for maintenance and custodian fees will be reduced by 50% of the scheduled fees.
A Planholder considering advance payments should keep in mind that direct
purchases of Fund shares enable the investor to put more of his or her money to
work immediately and over the life of a Fund account than would be possible
under the life of a Plan offered hereby.
(9) Refund Privileges
Within 45 days after the issuance of the Plan Certificate, Planholders of
Periodic Payment Plans will receive a statement of charges to be deducted from
the projected Plan payments and a notice of his or her right to withdraw from
the Plan. Planholders electing to exercise this right of withdrawal will receive
a full refund of all charges deducted from payments made plus the net asset
value of Fund shares accumulated in his or her Plan account, provided the
Planholder surrenders his or her Plan Certificate to the Sponsor, First
Investors Corporation, 581 Main Street, Woodbridge, New Jersey 07095, Attention:
Non-Retirement Dept., so that it is received within 45 days after the mailing to
the Planholder of such withdrawal notice. Please refer to "Method of Selling
Shares" for instructions on making requests for refunds of sales charges.
If a Planholder misses any three payments (which need not be consecutive)
among the first fifteen payments due under his or her Plan or any one payment
thereafter, but prior to the 18th payment, the Planholder will receive a
separate written notice informing the Planholder of (1) the right to surrender
his or her Plan Certificate, (2) the value of his or her Plan account at the
time of the mailing of the notice, and (3) the amount to which he or she is
entitled. Moreover, the Planholder has a right to request a refund of the
portion of the sales charges which exceeds 15% of the gross payments he or she
has made plus the then net asset value of the Fund shares accumulated in his or
her Plan account, provided the Planholder surrenders his or her Plan Certificate
so that it is received by the Sponsor at the address in the preceding paragraph
within 18 months of the date the Plan Certificate was issued. Planholders will
be sent notices setting forth these refund privileges not less than 30 days and
not more than 60 days prior to the expiration of the 18 month right to receive a
refund.
(10) Completion of Plan
Upon completion of all Plan payments, the Planholder may elect to terminate
the Plan or have the Fund shares accumulated under the Plan held in his or her
Plan account.
A Planholder who elects to terminate the Plan account may either receive
the proceeds from the redemption of the Fund shares held in his or her account
or transfer those shares to a Fund account. Reference is made to "Method of
Selling Shares" for instructions on how to terminate a Plan. Planholders who
elect to receive the proceeds from the redemption of Fund shares will realize a
gain or loss for Federal income tax purposes.
As soon as possible after the close of each calendar year, the Planholder
will be advised of the amount and nature of the distributions declared on his or
her behalf during such year. Planholders
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<PAGE>
who elect to have their investment remain in their Plan account may make no more
payments or contributions into the account. Dividend and capital gain
distributions will continue to be paid on the Fund shares held in the
Planholder's account and annual maintenance and custodian fees will continue to
be deducted from the Planholder's account.
METHOD OF SELLING SHARES
A Planholder may, by written request filed with the Sponsor, direct the
redemption of some but not all of the Fund shares credited to his or her Plan
account or, upon surrender of the Plan Certificate, terminate the Plan and
direct the redemption of all of his or her shares. The Sponsor will cause
payment to be made by check within seven days after the written request for
liquidation or termination "in good order" is received by Administrative Data
Management Corp. Requests for liquidation or termination should be addressed to
Administrative Data Management Corp., 581 Main Street, Woodbridge, New Jersey
07095-1198, Attention: Non-Retirement Department. "Good order" means that the
request for liquidation or termination must include:
(1) a letter of instruction specifying the account number, the name of the
Plan and the number of Fund shares or dollar amount to be redeemed. This request
must be signed by all registered Planholder(s) in the exact name(s) in which the
account is registered;
(2) required signature guarantees;
(3) in the case of termination requests only, the Plan Certificate, if one
was issued; and
(4) other supporting legal documents, as required by Administrative Data
Management Corp. In the case of estates, trusts, guardianships, custodianships,
corporations, partnerships or other organizations, additional information may be
required. Please call Administrative Data Management Corp. at 1-800-423-4026 for
further information.
If information is missing, your request is ambiguous or the value of your
account is less than the amount indicated on your request, the redemption will
not be processed. Administrative Data Management Corp. will seek additional
information and process the redemption on the day it receives such information.
If the shares being redeemed were recently purchased, payment may be
delayed, normally not more than 15 days, to verify that the check has been
honored.
Signature Guarantees. A signature guarantee is designed to protect you, the
Plans and their agents. Each Plan reserves the right to require signature
guarantees in order to process certain transaction requests. A notary public is
not an acceptable guarantor. Call Shareholder Services at 1-800-423-4026 for
instances when signature guarantees are required.
The redemption price of Fund shares will be the net asset value per share
next determined after receipt by Administrative Data Management Corp. of the
request "in good order," as noted above. To the extent that there are offsetting
new purchases on the same day for the accounts of other Planholders, redemptions
will be netted against those purchases. If, on any business day, there are more
shares offered for redemption than required for new purchases, the excess will
be presented to the Fund for redemption or repurchase at the next determined net
asset value. For a
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discussion of emergency pricing practices when FIC's Woodbridge offices are
unable to open for business due to an emergency, see the Prospectus of the
applicable Fund. The right to receive cash, however, may be suspended during any
period when the Fund shall have suspended the right to redeem its shares. The
Board of Directors of each Fund may suspend the right of redemption or postpone
the date of payment during any period when (a) trading on the New York Stock
Exchange ("NYSE") is restricted as determined by the Securities and Exchange
Commission or the NYSE is closed for other than weekends and holidays, (b) the
Securities and Exchange Commission has by order permitted such suspensions, or
(c) an emergency, as defined by rules of the Commission, exists during which
time the sale of portfolio securities or valuation of securities held by a Fund
are not reasonably practicable. For additional information regarding redemption
rights and suspension thereof, refer to the Prospectus of the applicable Fund.
TERMINATION OF PLAN BY THE SPONSOR
Either the Sponsor or the Custodian may, but is not required to, terminate
a Plan as hereinafter provided, after:
a) the expiration of 20 years from the date of inception of a Single Payment
Plan;
b) the expiration of 20 years from the date of inception of a Periodic Payment
Plan providing for 120 payments over 10 years; or
c) the expiration of 25 years from the date of inception of a Periodic Payment
Plan providing for 180 payments over 15 years.
If a Planholder fails to make a Plan payment on or before the due date, he
or she will be considered in default. Should any Planholder continue in default
for a period of two years or more, the Sponsor may terminate his or her Plan as
hereinafter provided. As a matter of policy the power to terminate because of
default will usually be exercised only when the default has continued over a
comparatively long period and the dividend and capital gain distributions on the
Fund shares are insufficient to cover maintenance and custodian charges.
If the Sponsor or the Custodian shall determine to exercise its right to
terminate any Plan for the reasons noted above, the Sponsor will mail to the
Planholder at his or her address noted on its records a notice of termination.
Within 60 days of the date of such notice of termination, the Planholder must
surrender the Plan Certificate to the Sponsor and elect to receive either: (a) a
share certificate for the amount of full Fund shares and the proceeds of any
fractional Fund share accumulated in his or her Plan account or; (b) the
proceeds from the redemption of all Fund shares in the account. If the
Planholder fails to so elect, the Sponsor may, without further notice, either:
(a) cause the issuance of a share certificate in the Planholder's name for the
amount of full Fund shares accumulated in his or her Plan account and the
redemption of any fractional Fund share; or (b) cause the redemption of all Fund
shares in the Plan account. The Sponsor will hold the share certificate or the
net proceeds from the redemption of Fund shares for delivery or payment to the
Planholder upon surrender of the Plan Certificate. If the Planholder does not
surrender his or her Plan Certificate after an additional 60 days, the Sponsor
may, without receiving a Plan Certificate, mail to the Planholder at his or her
address noted on its records either: (a) a share certificate for the amount of
full Fund shares and a check for the fractional Fund shares; or (b) a check
representing the net proceeds of the redemption of all Fund shares in the Plan
account. Reference
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<PAGE>
is made to the applicable Fund's Prospectus for the method of redeeming share
certificates. Planholders who elect to receive the proceeds from the redemption
of Fund shares will realize a gain or loss for Federal income tax purposes.
Furthermore, a Planholder who does not make the regularly scheduled second
payment within a period of 60 days after it becomes due shall be considered in
default. In such event, the Sponsor reserves the right to terminate the Plan by
giving the Planholder written notice and refunding the entire initial payment,
less deductions, upon surrender of the Plan Certificate.
Reference is made to "Other Deductions" relative to charges made after
completion of ten or fifteen years or in cases of default. Such deductions that
cannot be satisfied from distributions available will be made from the
redemption of Fund shares held in the Planholder's account.
No interest will be payable on funds held for Planholders pending surrender
of Plan Certificates. Any assets undelivered to the Planholder shall be held by
the Custodian in custody, subject to disposition under applicable state law.
Any notice required or permitted to be given to the Planholder shall be
conclusively deemed to have been given when such notice is enclosed in an
envelope, addressed to the Planholder at the Planholder's address, as noted on
the records, and deposited in the United States Mail, postage prepaid. The date
of the mailing of such notice shall be deemed to be the date of giving such
notice.
EXCHANGES OF PLANS
You may exchange at relative net asset value of the underlying Fund shares
into or from any other single or periodic payment plan of the same type and
denomination for which FIC is the Sponsor without paying an additional sales
charge. If a Planholder elects to exercise this exchange privilege, he or she
pays the same sales charge on additional payments, and has the same rights and
privileges, under the new plan as under the current plan. Exchanges can only be
made into accounts registered to identical owners. If your exchange is into a
new account, it must meet the minimum investment and other requirements of the
Plan into which the exchange is being made. Additionally, the Plan must be
available for sale in the state where you reside. A $10.00 exchange fee is
charged for each such exchange. A check for the fee may be submitted to
Administrative Data Management Corp. If the exchange fee is not submitted with
the request, it will be deducted from your Plan account. In addition, the $2.25
redemption fee applicable to Plan liquidations (see "Other Deductions") is
charged for each exchange.
Before exchanging your Plan, you should read the Prospectus for the
underlying Fund investment into which the exchange is to be made. You may obtain
this Prospectus and information with respect to which plans qualify for the
exchange privilege free of charge by calling Shareholder Services at
1-800-423-4026. Exchange requests received in "good order" by Administrative
Data Management Corp., 581 Main Street, Woodbridge, New Jersey 07095, Attention:
Non-Retirement Dept., before the close of regular trading on the NYSE, generally
4:00 P.M. (New York City time), will be processed at the net asset value of the
underlying Fund shares determined as of the close of regular trading on the NYSE
on that day; exchange requests received after that time will be processed on the
following trading day.
Exchanges should be made for investment purposes only. A pattern of
frequent exchanges
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may be contrary to the best interests of a Fund's other shareholders.
Accordingly, the Sponsor has the right, at its sole discretion, to limit the
amount of an exchange, impose a holding period, reject any exchange, or, upon 60
days' notice, materially modify or discontinue the exchange privilege. The
Sponsor in consultation with the Funds' investment adviser, will consider all
relevant factors in determining whether a particular frequency of exchanges is
contrary to the best interests of a Fund and its other shareholders. Any such
restriction will be made by the Sponsor on a prospective basis only, upon notice
to the Planholder not later than ten days following such Planholder's most
recent exchange.
An exchange between Plans will result in a taxable gain or loss to you,
depending on whether the redemption proceeds from the underlying Fund shares are
more or less than your adjusted basis for the Plan you are presently
participating in (which normally includes the sales charges paid under such
Plan). Please refer to "Taxes" and the applicable Fund's Prospectus.
SUBSTITUTION OF OTHER SHARES AS
THE UNDERLYING INVESTMENT OF THE PLAN
Subject to prior approval of the Securities and Exchange Commission, the
Sponsor may, whenever the Sponsor deems it to be in the best interest of the
Planholders, substitute other shares as the underlying investment of any Plan.
Such substitution may include shares previously purchased or may affect only
shares to be purchased. Shares to be substituted must be generally comparable to
the shares previously purchasable under such Plan and as a matter of policy will
be limited to shares registered with the Securities and Exchange Commission.
Before any substitution may be made by the Sponsor it shall:
(1) Apply for and receive prior approval from the Securities and Exchange
Commission permitting such substitution under the provisions of Section 26(b) of
the Investment Company Act of 1940, as amended;
(2) Notify the Custodian of the proposed substitution;
(3) Give written notice of the proposed substitution to the Planholders,
describing the new shares and notifying them that unless they surrender their
Plan Certificates to the Sponsor for termination within 30 days, they will be
conclusively deemed to have authorized the substitution; and
(4) In the case of substitution of new shares for shares previously
purchased, furnish new shares which have an aggregate net asset value at least
equal to the aggregate value of the shares previously purchased, based on their
published or quoted bid price.
Unless the Sponsor shall receive from the Planholder, within 30 days from
the date of the Sponsor's notice, written notice that he or she desires to make
a complete withdrawal, the Sponsor is authorized to cause the purchase of new
shares and, if the old shares are to be exchanged, to exchange the old shares
for the substituted shares.
In the event of substitution the Planholder is required to be advised in
writing within 5 days after such substitution is made. Any expenses and charges
involved in such substitution, other than proper transfer taxes and charges,
will be borne by the Sponsor.
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In the event that shares used as the underlying investment of a Plan may
not be purchasable for a period of 90 days, and if the Sponsor does not
substitute other shares, it is agreed that such Plan will be terminated, and the
Sponsor is authorized to complete such termination.
SPONSOR AND UNDERWRITER
First Investors Corporation (TIN 13-2608328), 95 Wall Street, New York,
N.Y., 10005, was organized under the laws of the State of New York in February
1968. It is a member of the National Association of Securities Dealers, Inc.
First Investors Corporation is the Sponsor and the Underwriter of the Plans. The
Plans are offered for sale by registered representatives of the Underwriter.
First Investors Corporation also acts as the Sponsor and Underwriter of
Periodic and/or Single Payment Plans for investment in First Investors High
Yield Fund, Inc. and First Investors Fund For Income, Inc. and as underwriter
for the First Investors family of mutual funds.
First Investors Consolidated Corporation owns all of the outstanding stock
of First Investors Corporation and Administrative Data Management Corp. and all
of the outstanding voting common stock of First Investors Management Company,
Inc., the investment adviser to the Funds. Mr. Glenn O. Head controls First
Investors Consolidated Corporation and therefore controls First Investors
Management Company, Inc.
The Sponsor and its administrative agent, Administrative Data Management
Corp., a subsidiary of First Investors Consolidated Corporation, the Sponsor's
parent organization, are responsible for the performance of all regular
bookkeeping and administrative services with respect to the Plans, as more fully
set forth below. In addition, the Sponsor is responsible for the performance of
certain special administrative services, specifically: causing the mailing to
Planholders of prospectuses, when applicable, annual and semiannual reports of
the Funds, and required dividend and tax notices; and causing an independent
annual audit of the records of the Custodian and the preparation and filing of
required tax returns. The Sponsor receives all of the maintenance and custodian
fees deducted from payments or imposed on an annual basis as set forth on pages
3 through 5 and all of the fees for specific services as set forth under "Other
Deductions." For the year ended December 31, 1996, these fees amounted to
$29,567 with respect to the Global Fund Plan, $102,788 with respect to the
Government Fund Plan, and $75,718 with respect to the Insured Tax Exempt Fund
Plan, all of which were paid to Administrative Data Management Corp. The Sponsor
assumes no duties or obligations not specifically imposed upon it by the Plans.
In general, and without limitation, the bookkeeping and administrative
services assumed by the Sponsor and Administrative Data Management Corp. are
comprised of the maintenance of all records relating to the Planholders and
their accumulated Fund shares, the processing of payments from Planholders, the
processing of proceeds to withdrawing or terminating Planholders, the placement
of orders with the underwriter of a Fund's shares for the purchase and
redemption of Fund shares on behalf of the Planholders, the calculation of the
number of shares to be purchased or redeemed or credited as dividend or capital
gain distributions, the causing of the mailing of all required notices and other
information to Planholders and the handling of all contact and correspondence
with and inquiries from Planholders.
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First Investors Corporation paid its three highest paid officers aggregate
compensation from salaries or commissions of $1,510,325 during 1996. The
aggregate remuneration paid to all other officers during 1996 was $1,417,388.
Compensation of sales officers, sales supervisory personnel and registered
representatives totaled $28,299,685 while administrative personnel excluding
officers received $5,275,023 during 1996. The aggregate directors fees paid in
1996 totalled $15,000.
A blanket fidelity bond in an amount of $5,000,000 is carried with Gulf
Insurance Company covering the acts of Directors, Officers, Employees and Sales
Personnel of the Sponsor. An excess blanket fidelity bond in an amount of
$20,000,000 is carried with the ICI Mutual Insurance Company, covering the acts
of Directors, Officers and Employees of the Sponsor. A $30,000,000 Directors and
Officers/Errors and Omissions Liability Insurance Policy is also carried with
ICI Mutual Insurance Company.
CUSTODIAN
The Bank of New York (TIN 13-4941102), 48 Wall Street, New York, N.Y.,
10286, acts as Custodian under Custodian Agreements dated November 12, 1987. The
Custodian is subject to supervision by the New York State Banking Commission.
The duties of the Custodian under the provisions of the Custodian Agreements are
minimal. The Custodian holds all securities, cash, checks and other property in
which the funds of the Planholders are invested or are to be invested, all funds
held for such investment, all redemption proceeds, and other special funds of
the Planholders, and all income upon, accretions to, and proceeds of such
property and funds to the extent such assets are delivered to it. All such
assets are held subject to such disbursements as the Sponsor may direct and
subject to a charge for the fees of the Custodian. The Sponsor directs the
Custodian to make disbursements in accordance with the provisions of the Plan.
The Custodian assumes no duties or obligations not specifically imposed
upon it by the Plans. Without limiting the generality of the foregoing, the
Custodian assumes no responsibility for the choice of the investment, the
investment policies of the investment adviser to the Funds, or for any acts or
omissions on the part of the Sponsor. The Custodian specifically does not assume
the duties of investment ordinarily imposed upon a trustee, and its only
obligations are, as set forth above, to function as bare Custodian under the
Plans. The Custodian may not resign its custodianship under the Plans unless a
Plan has been terminated or unless a successor Custodian has been designated and
has accepted the custodianship.
The Custodian shall have a lien upon the Fund shares held for Planholders
and the proceeds from any redemption thereof for its fees and reimbursable
expenses to the extent that payments by the Planholder and distributions
received on such Fund shares may be insufficient to pay the same. For the fiscal
year ended December 31, 1996 there were no fees paid to the Custodian for
services rendered on behalf of the Plans.
TAXES
Under the Internal Revenue Code of 1986, as amended ("Code"), you are
deemed, for Federal income tax purposes, to be the owner of the underlying Fund
shares accumulated in your Plan account. Each Fund has qualified and intends to
continue to qualify for treatment as a regulated investment company under the
Code, so that it will be relieved of Federal income tax on that part
19
<PAGE>
of its investment company taxable income (consisting generally of net investment
income, net short-term capital gain and, for Global Fund, net gains from certain
foreign currency transactions) and net capital gain that is distributed to its
shareholders. In addition, Insured Tax Exempt Fund intends to continue to
qualify to pay "exempt-interest dividends."
For Global Fund and Government Fund, dividends from a Fund's investment
company taxable income are taxable to you as ordinary income, to the extent of
the Fund's earnings and profits, whether paid in cash or in additional shares of
the applicable Fund. For Insured Tax Exempt Fund, distributions by the Fund of
the excess of interest income from municipal instruments over certain amounts
disallowed as deductions, which are designated by the Fund as "exempt-interest
dividends," generally may be excluded by you from gross income. Distributions of
each Fund's net capital gain, when designated as such, are taxable to you as
long-term capital gain, whether paid in cash or in additional shares of the
applicable Fund, regardless of the length of time you have owned the shares. If
you purchase shares shortly before the record date for a dividend or other
distribution, you will pay full price for the shares and receive some portion of
the price back as a taxable distribution. You will receive an annual statement
following the end of each calendar year describing the tax status of
distributions paid by the applicable Fund during that year.
The Sponsor is required to withhold 31% of all dividends, capital gain
distributions and redemption proceeds payable to you (if you are an individual
or certain other non-corporate shareholder) if the Sponsor is not furnished with
your correct taxpayer identification number, and that percentage of dividends
and such distributions in certain other circumstances.
If you itemize deductions for Federal income tax purposes, you may deduct
maintenance and custodian fees deducted from payments and/or dividend and
capital gain distributions only if the requirements applicable to the
deductibility of "miscellaneous itemized deductions" are satisfied. The sales
charges paid in acquiring your Plan should be included for tax purposes in the
cost of the Plan and reinvested dividends or distributions.
The foregoing is only a summary of some of the important Federal tax
considerations generally affecting each Fund and its shareholders; see the
applicable Fund's Prospectus and Statement of Additional Information for a
further discussion. There may be other Federal, state or local tax
considerations applicable to a particular investor. You therefore are urged to
consult your own tax advisor.
OFFICERS AND DIRECTORS OF FIRST INVESTORS CORPORATION
The following sets forth the officers and directors of First Investors
Corporation as well as information as to their other affiliations:
GLENN O. HEAD
Chairman of the Board and Director, 95 Wall Street, New York, NY
10005. Chairman of the Board and Director of First Investors
Management Company, Inc., First Investors Consolidated Corporation and
Administrative Data Management Corp., and an officer and/or director
of other affiliated companies of First Investors Corporation as well
as the investment companies of the First Investors Group.
20
<PAGE>
MARVIN HECKER
President, 95 Wall Street, New York, NY 10005. Prior to March 1995,
First Vice President, Executive Sales.
LAWRENCE A. FAUCI
Senior Vice President and Director, 95 Wall Street, New York, NY
10005. Senior Vice President of First Investors Consolidated
Corporation.
LOUIS RINALDI
Senior Vice President, 581 Main Street, Woodbridge, NJ 07095. Senior
Vice President of Administrative Data Management Corp.
FREDERICK MILLER
Senior Vice President, 581 Main Street, Woodbridge, NJ 07095. Senior
Vice President of Administrative Data Management Corp.
KATHRYN S. HEAD
Vice President, Chief Financial Officer and Director, 581 Main Street,
Woodbridge, NJ 07095. President and Director of First Investors
Consolidated Corporation and Administrative Data Management Corp.,
Chairman, President and Director of First Financial Savings Bank,
S.L.A., President of First Investors Management Company, Inc. and an
officer and/or director of other affiliated companies of First
Investors Corporation as well as the investment companies of the First
Investors Group.
JOHN T. SULLIVAN
Director, 95 Wall Street, New York, NY 10005. Director of First
Investors Management Company, Inc., First Investors Consolidated
Corporation and Administrative Data Management Corp. and an officer
and/or director of certain affiliated companies of First Investors
Corporation as well as the investment companies of the First Investors
Group.
ROGER L. GRAYSON
Director, 95 Wall Street, New York, NY 10005. President and Director,
First Investors Resources. Director, First Investors Consolidated
Corporation. A commodities portfolio manager and a director of the
investment companies of the First Investors Group.
JEREMY J. LYONS
Director, 56 Weston Avenue, Chatham, NJ 07928. Publisher,
Springer-Verlag Inc. (publishing), New York, NY. Prior to September
1993, with W.H. Freeman & Co. (publishing), New York, NY.
JANE W. KRUZAN
Director, 232 Adair Street, Decatur, GA 30030. Corresponding Secretary
of charitable organization.
ANNE CONDON
Vice President, 581 Main Street, Woodbridge, NJ 07095. Senior Vice
President of Administrative Data Management Corp.
21
<PAGE>
MATTHEW SMITH
Vice President, 581 Main Street, Woodbridge, NJ 07095.
HOWARD M. FACTOR
Vice President, 95 Wall Street, New York, NY. Prior to June 1994, Vice
President, Oppenheimer Capital.
ELIZABETH REILLY
Vice President, 581 Main Street, Woodbridge, NJ 07095.
LARRY R. LAVOIE
Secretary and General Counsel, 95 Wall Street, New York, NY 10005.
Officer of certain affiliated companies of First Investors
Corporation. Prior to March 1993, a partner in the law firm of
Kirkpatrick & Lockhart LLP.
JOSEPH I. BENEDEK
Treasurer, 581 Main Street, Woodbridge, NJ 07095. Officer of other
affiliated companies of First Investors Corporation as well as the
investment companies of the First Investors Group.
ROBERT J. MURPHY
Comptroller, 581 Main Street, Woodbridge, NJ 07095. Officer of other
affiliated companies of First Investors Corporation.
OTHER OFFICERS
Gary Abbott, Associate Vice President
Philip Adriani, Jr., Associate Vice President
Robert Flanagan, Associate Vice President
Fred Jacobs, Associate Vice President
Concetta Durso, Assistant Vice President and Assistant Secretary
Randy Pagan, Assistant Vice President
Mark Segal, Assistant Vice President
Iris Goldberg, Assistant Vice President
Carol Lerner Brown, Assistant Secretary
Frank Williams, Assistant Secretary
<TABLE>
<CAPTION>
SALES OFFICERS
<S> <C>
ALVIN BLUMENFELD, Executive Vice President...........................................Scarsdale Division Executive
MYRON FELTHEIMER, Executive Vice President.....................................................Penn Plaza Complex
</TABLE>
22
<PAGE>
<TABLE>
<S> <C>
HOWARD FROMAN, Executive Vice President..............................................Scarsdale Division Executive
JOHN BUCSEK, Senior Vice President..........................................................Grand Central Complex
CONRAD CHARAK, Senior Vice President...........................................................Penn Plaza Complex
BRUCE COBEY, Senior Vice President...................................................Scarsdale Division Executive
GEORGE KECHEJIAN, Senior Vice President..............................................Scarsdale Division Executive
Thomas Barden, Senior Vice President,............................................................Executive Office
John Murphy, Senior Vice President............................................................Springfield Complex
Richard Nadeau, Senior Vice President............................................................Executive Office
Stuart Rudnick, Senior Vice President...........................................................Scarsdale Complex
Jay Stainsby, Senior Vice President...............................................................Buffalo Complex
Bruce Katz, Regional Vice President.................................................................Miami Complex
Andrew Levenson, Regional Vice President...........................................................Boston Complex
James Morton, Regional Vice President.............................................................Chicago Complex
Paul Prete, Regional Vice President.............................................................New Haven Complex
Ronald Rovelli, Regional Vice President...........................................................Norfolk Complex
Salvatore Talamo, Regional Vice President....................................................Indianapolis Complex
</TABLE>
<TABLE>
<CAPTION>
SALES OFFICE STATE
<S> <C>
Sam Agust, Vice President..................................................................Penn Plaza NY
Paul Caccomo, Vice President.............................................................Oakland Park FL
Avra Cohn, Vice President......................................................................Skokie IL
Denis Collins, Vice President.............................................................New Orleans LA
John Cupo, Vice President...................................................................Scarsdale NY
Richard Di Paolo, Vice President.............................................................Columbus OH
Steven Domenitz, Vice President..........................................................Philadelphia PA
Ben Gardner, Vice President...............................................................Wall Street NY
John Golden, Vice President...............................................................Garden City NY
Gus Graff, Vice President..................................................................Hicksville NY
James Hoysick, Vice President..................................................................Denver CO
Brian Kennedy, Vice President...............................................................Cleveland OH
Mary McConnell, Vice President.............................................................Penn Plaza NY
Thomas Morin, Vice President.................................................................Richmond VA
Loren Morse, Vice President................................................................Binghamton NY
Fred Nero, Vice President......................................................................Albany NY
James Reilly, Vice President.............................................................Jersey Shore NJ
Richard Risley, Vice President...............................................................Hartford CT
Malvin Scherr, Vice President..............................................................Penn Plaza CA
Norman Wigutow, Vice President.............................................................Washington DC
Frank Williams, Vice President............................................................Wall Street NY
Max Zwiebel, Vice President................................................................Penn Plaza NY
Frank Cimino, Senior Resident Vice President...........................................Central Jersey NJ
Philip Franco, Senior Resident Vice President..........................................Central Jersey NJ
Albert Gallo, Senior Resident Vice President...............................................Penn Plaza NY
Peter Kulas, Senior Resident Vice President............................................Central Jersey NJ
</TABLE>
23
<PAGE>
<TABLE>
<S> <C>
Louis Lomardi, Senior Resident Vice President...........................................Grand Central NY
Richard Paul, Senior Resident Vice President...........................................Central Jersey NJ
Edmund Reichard, Senior Resident Vice President...........................................Wall Street NY
Buddy Schiff, Senior Resident Vice President..............................................Garden City NY
Jack Tuck, Senior Resident Vice President..................................................Lauderhill FL
Janice Barlow, Resident Vice President..........................................................Tampa FL
Steve Cooper, Resident Vice President..........................................................Tucson AZ
Garrett Cutler, Resident Vice President.................................................Grand Central NY
Rufus Ensley, Resident Vice President......................................................Penn Plaza NY
Milton Fried, Resident Vice President......................................................Penn Plaza NY
Christine Froman, Resident Vice President...................................................Scarsdale NY
Sal Gallo, Resident Vice President.........................................................Penn Plaza NY
Peter Hesbacher, Resident Vice President.................................................Jersey Shore NJ
Walter Markowitz, Resident Vice President...............................................Grand Central NY
Hyman Morgenstein, Resident Vice President.................................................Penn Plaza NY
William Newman, Resident Vice President.....................................................New Haven CT
Alvin Person, Resident Vice President......................................................Penn Plaza NY
Henia Reiser, Resident Vice President......................................................Penn Plaza NY
Frank Sautner, Resident Vice President.................................................Central Jersey NJ
Bernard Shultz, Resident Vice President....................................................Penn Plaza NY
Gregory Steinmetz, Resident Vice President......................................................Miami FL
Sanford Zipser, Resident Vice President....................................................Hicksville NY
Cynthia Bordeaux, Associate Vice President..................................................Beaverton OR
Dennis Burd, Associate Vice President......................................................Pittsburgh PA
Jack Cline, Associate Vice President.......................................................Fort Worth TX
Michael Fioroni, Associate Vice President.................................................Springfield MA
Robert Flood, Associate Vice President..........................................................Tampa FL
Gregory Gelineau, Associate Vice President...........................................Narragansett Bay RI
John Gentry, Associate Vice President................................................Nebraska Central NE
Dino Giovannone, Associate Vice President....................................................Wheeling WV
Robert Graef, Associate Vice President......................................................New Haven CT
Alan Kasser, Associate Vice President.........................................................Houston TX
Christopher Kinsky, Associate Vice President...................................................Denver CO
Joy Kourkounis, Associate Vice President......................................................Buffalo NY
Stephen Krise, Associate Vice President.....................................................Charlotte NC
Christopher Long, Associate Vice President..................................................New Haven CT
Vincent Martucci, Associate Vice President...............................................North Jersey NJ
John Timothy McCue, Associate Vice President..............................................Wall Street NY
Luciano Miceli, Associate Vice President......................................................Buffalo NY
Donald Skelly, Associate Vice President.........................................................Tampa FL
Timothy Smith, Associate Vice President......................................................Newburgh NY
William Stead, Associate Vice President.......................................................Phoenix AZ
Forrest Strickland, Associate Vice President................................................Beaverton OR
Howard Washburn, Associate Vice President.....................................................Seattle WA
Terry Wasserman, Associate Vice President.................................................Center City PA
</TABLE>
24
<PAGE>
<TABLE>
<S> <C>
Rupi Arora, Assistant Vice President.......................................................Penn Plaza NY
Kofi Awere, Assistant Vice President....................................................Grand Central NY
Vera Baker, Assistant Vice President......................................................Garden City NY
Sandro Barone, Assistant Vice President...................................................Wall Street NY
Arnie Bergman, Assistant Vice President.......................................................Seattle WA
Nicholas Bollas, Assistant Vice President......................................................Boston MA
Catherine Bucsek, Assistant Vice President...................................................Hamilton NJ
Robert Bugdal, Assistant Vice President................................................Central Jersey NJ
Kelle Cline, Assistant Vice President......................................................Fort Worth TX
Paul Corapi, Assistant Vice President....................................................Jersey Shore NJ
Lisa Danielson, Assistant Vice President..................................................Center City PA
Curtis Davis, Assistant Vice President.......................................................San Jose CA
Theodore Davis, Assistant Vice President.......................................................Albany NY
Jay Epstein, Assistant Vice President.........................................................Buffalo NY
Johnny Fu, Assistant Vice President.......................................................Wall Street NY
Jack Gardner, Assistant Vice President....................................................Wall Street NY
Anne Geddes, Assistant Vice President.........................................................Detroit MI
Henry Golinski, Assistant Vice President................................................Grand Central NY
Herman Groen, Assistant Vice President.....................................................Penn Plaza NY
William Henderson, Assistant Vice President.....................................................Astro TX
Steven Hurter, Assistant Vice President.......................................................Seattle WA
Ronald Hoffer, Assistant Vice President..................................................Indianapolis IN
Fredrick Johnson, Assistant Vice President.................................................Alexandria VA
Kevin Keating, Assistant Vice President......................................................Wheeling WV
Rena Komarmy, Assistant Vice President........................................................Detroit MI
Gregory Knupp, Assistant Vice President......................................................Syracuse NY
Robert Kunin, Assistant Vice President...................................................North Jersey NJ
Robert McGeorge, Assistant Vice President...................................................Keeneland KY
Joyce Messecar, Assistant Vice President........................................................Tampa FL
Kathleen Morton, Assistant Vice President.....................................................Chicago IL
Karol Noble, Assistant Vice President........................................................Hartford CT
Susan Perry, Assistant Vice President.......................................................Beaverton OR
Anthony Philbin, Assistant Vice President..................................................Penn Plaza NY
Mark Phillips, Assistant Vice President.........................................................Tampa FL
David Roy, Assistant Vice President............................................................Boston MA
Harvey Sanders, Assistant Vice President..................................................Wall Street NY
Tim Scrodin, Assistant Vice President..........................................................Albany NY
Stephen Scully, Assistant Vice President......................................................Chicago IL
Peter Shalvoy, Assistant Vice President.................................................Grand Central NY
Judith Shedden, Assistant Vice President...................................................Penn Plaza NY
Robert Stutzman, Assistant Vice President............................................Nebraska Central NE
Albert Troisi, Assistant Vice President........................................................Elmira NY
Leslie Troisi, Assistant Vice President........................................................Elmira NY
Anthony Trozzi, Assistant Vice President...................................................Penn Plaza NY
Camille Vaccaro, Assistant Vice President................................................Philadelphia PA
Anthony Valente, Assistant Vice President...................................................Scarsdale NY
Landon Vath, Assistant Vice President.....................................................Twin Cities MN
Dan White, Assistant Vice President........................................................Penn Plaza NY
</TABLE>
25
<PAGE>
<TABLE>
<S> <C>
Casey Winningham, Assistant Vice President...................................................San Jose CA
Mary Wong, Assistant Vice President..................................................Nebraska Central NE
</TABLE>
STATISTICAL DATA APPLICABLE TO
FIRST INVESTORS PLANS
CONTRACTUAL PLAN VS. OPEN ACCOUNT
COST COMPARISON ($50 per Month--10 Year Plan)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
THE UNDERLYING FUND
FIRST INVESTORS PLAN UNDER AN OPEN ACCOUNT
----------------------------------------------------------------------------------------------------------------
Maintenance % % Net % Sales % Net
and Total Investment Total Charges Investment
Total Sales Custodian Total Sales to Total Sales to Total to Total
Payments Charge Fees Charges Charge Payments Charges Payments Payments
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6 Months.......... $ 350.00 $ 173.25 $ 10.50 $183.75 49.50% 47.50% $ 21.53 6.25% 93.75%
1 Year............ 650.00 321.75 19.50 341.25 49.50 47.50 39.98 6.25 93.75
2 Years........... 1,250.00 327.03 37.50 364.53 26.16 70.84 76.88 6.25 93.75
10 Years.......... 6,000.00 368.83 180.00 548.83 6.15 90.85 369.00 6.25 93.75
</TABLE>
26
<PAGE>
$6,000 TEN-YEAR PAYMENT PLAN
These illustrations are in terms of an assumed investment of $50 per month
for the period January 1, 1987 to December 31, 1996 with dividend and capital
gain distributions paid in additional Fund shares. The Plans provide for ten
years of investing and an additional ten years during which dividends from
investment income and distributions from capital gains on accumulated Fund
shares are paid in shares.
The period covered was one of fluctuating securities prices. The results
shown should not be considered as a representation of the dividend income or
capital gain (or loss) which may be realized from an investment made in the
applicable Fund today. Programs of the types illustrated do not assure a profit,
or protect against depreciation in declining markets.
The tables below were computed at the maximum current sales charge of 6.15%
and the current maintenance and custodian fees.
Illustration Of A Plan Under First Investors Corporation Contractual
Plans For Investment In First Investors Global Fund, Inc.
DEDUCTIONS*
-----------------
MONTHLY PAYMENTS Annual Maintenance
- ----------------------- Dividend Total and
Year Income Re- Cumulative Sales Custodian
Ended Annually Cumulative invested Cost (a) Charge Fees
- --------------------------------------------------------------------------------
1987 650.00 650.00 .16 650.16 321.75 19.50
1988 600.00 1,250.00 .00 1,250.16 5.28 18.00
1989 600.00 1,850.00 86.84 1,937.00 5.28 18.00
1990 600.00 2,450.00 5.88 2,542.88 5.28 18.00
1991 600.00 3,050.00 .00 3,142.88 5.28 18.00
1992 600.00 3,650.00 29.85 3,772.73 5.28 18.00
1993 600.00 4,250.00 11.75 4,384.48 5.28 18.00
1994 600.00 4,850.00 26.18 5,010.66 5.28 18.00
1995 600.00 5,450.00 38.13 5,648.79 5.28 18.00
1996 550.00 6,000.00 50.98 6,249.77 4.84 16.50
-------
$249.77
=======
<TABLE>
<CAPTION>
BALANCE Annual
INVESTED Capital No. of Net
AFTER DEDUCTIONS Gain Distri- Shares Asset Total
Year --------------- bution Re- Accumu- Value Value of
Ended Annually Cumulative invested lated(b) Reinvest Shares
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1987 308.91 308.91 29.49 81.364(c) 3.87(c) 314.88(c)
1988 576.72 885.63 .00 217.875(c) 4.46(c) 971.72(c)
1989 663.56 1,549.19 166.99 381.969(c) 5.29(c) 2,020.62(c)
1990 582.60 2,131.79 39.81 503.791(c) 4.63(c) 2,332.55(c)
1991 576.72 2,708.51 .00 618.163(c) 5.41(c) 3,344.26(c)
1992 606.57 3,315.08 .00 733.906(c) 5.11(c) 3,750.26(c)
1993 588.47 3,903.55 .00 841.441(c) 6.27(c) 5,275.84(c)
1994 602.90 4,506.45 154.28 965.964(c) 5.84(c) 5,641.23(c)
1995 614.85 5,121.30 291.25 1,109.235(c) 6.57(c) 7,287.67(c)
1996 579.64 5,700.94 1,049.19 1,352.473(c) 6.59(c) 8,912.80(c)
---------
$1,731.01
=========
</TABLE>
* Under the terms of this Plan, out of the initial double payment of $100,
$49.50 is deducted as a sales charge, with $24.75 being deducted as a sales
charge from each of the next 11 payments. Additional deductions include $3.00
from the initial payment and $1.50 from each of the next 11 payments for
maintenance and custodian fees. Total deductions from the first 13 payments
equal $341.25, or 52.5% of the total of the first 13 monthly payments. If all of
the first 10 years' payments are made, total sales charges and other deductions
amount to 9.15% of the total agreed payments.
(a) Reflects the cumulative total of monthly payments plus the cumulative amount
of dividends paid in shares.
(b) Shares purchased include 1,031.266 from net payments invested, 43.459 from
net dividend income and 277.748 from capital gain distributions.
(c) Reflects a 5-for-1 stock split on April 1, 1989.
27
<PAGE>
Illustration Of A Plan Under First Investors Corporation Contractual
Plans For Investment In First Investors Government Fund, Inc.
DEDUCTIONS*
-----------------
MONTHLY PAYMENTS Annual Maintenance
- ----------------------- Dividend Total and
Year Income Re- Cumulative Sales Custodian
Ended Annually Cumulative invested Cost (a) Charge Fees
- --------------------------------------------------------------------------------
1987 650.00 650.00 15.15 665.15 321.75 19.50
1988 600.00 1,250.00 56.82 1,321.97 5.28 18.00
1989 600.00 1,850.00 117.96 2,039.93 5.28 18.00
1990 600.00 2,450.00 166.24 2,806.17 5.28 18.00
1991 600.00 3,050.00 212.85 3,619.02 5.28 18.00
1992 600.00 3,650.00 247.92 4,466.94 5.28 18.00
1993 600.00 4,250.00 294.52 5,361.46 5.28 18.00
1994 600.00 4,850.00 322.91 6,284.37 5.28 18.00
1995 600.00 5,450.00 403.56 7,287.93 5.28 18.00
1996 550.00 6,000.00 414.32 8,252.25 4.84 16.50
---------
$2,252.25
=========
<TABLE>
<CAPTION>
BALANCE Annual
INVESTED Capital No. of Net
AFTER DEDUCTIONS Gain Distri- Shares Asset Total
Year --------------- bution Re- Accumu- Value Value of
Ended Annually Cumulative invested lated(b) Reinvest Shares
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1987 323.90 323.90 3.17 28.848 10.83 312.42
1988 633.54 957.44 .00 86.562 10.73 928.81
1989 694.68 1,652.12 .00 150.400 11.01 1,655.90
1990 742.96 2,395.08 .00 218.819 11.08 2,424.51
1991 789.57 3,184.65 .00 288.681 11.88 3,429.53
1992 824.64 4,009.29 .00 358.958 11.83 4,246.47
1993 871.24 4,880.53 .00 432.911 11.55 5,000.12
1994 899.63 5,780.16 .00 515.479 10.50 5,412.53
1995 980.28 6,760.44 .00 604.872 11.31 6,841.10
1996 942.98 7,703.42 .00 690.435 11.05 7,629.31
-----
$3.17
=====
</TABLE>
* Under the terms of this Plan, out of the initial double payment of $100,
$49.50 is deducted as a sales charge, with $24.75 being deducted as a sales
charge from each of the next 11 payments. Additional deductions include $3.00
from the initial payment and $1.50 from each of the next 11 payments for
maintenance and custodian fees. Total deductions from the first 13 payments
equal $341.25, or 52.5% of the total of the first 13 monthly payments. If all of
the first 10 years' payments are made, total sales charges and other deductions
amount to 9.15% of the total agreed payments.
(a) Reflects the cumulative total of monthly payments plus the cumulative amount
of dividends paid in shares.
(b) Shares purchased include 488.532 from net payments invested, 201.605 from
net dividend income and .298 from capital gain distributions.
28
<PAGE>
Illustration Of A Plan Under First Investors Corporation Contractual Plans For
Investment In First Investors Insured Tax Exempt Fund, Inc.
DEDUCTIONS*
-----------------
MONTHLY PAYMENTS Annual Maintenance
- ----------------------- Dividend Total and
Year Income Re- Cumulative Sales Custodian
Ended Annually Cumulative invested Cost (a) Charge Fees
- --------------------------------------------------------------------------------
1987 650.00 650.00 13.82 663.82 321.75 19.50
1988 600.00 1,250.00 49.27 1,313.09 5.28 18.00
1989 600.00 1,850.00 94.79 2,007.88 5.28 18.00
1990 600.00 2,450.00 141.87 2,749.75 5.28 18.00
1991 600.00 3,050.00 189.45 3,539.20 5.28 18.00
1992 600.00 3,650.00 229.60 4,368.80 5.28 18.00
1993 600.00 4,250.00 262.11 5,230.91 5.28 18.00
1994 600.00 4,850.00 289.59 6,120.50 5.28 18.00
1995 600.00 5,450.00 322.49 7,042.99 5.28 18.00
1996 550.00 6,000.00 356.67 7,949.66 4.84 16.50
---------
$1,949.66
=========
<TABLE>
<CAPTION>
BALANCE Annual
INVESTED Capital No. of Net
AFTER DEDUCTIONS Gain Distri- Shares Asset Total
Year --------------- bution Re- Accumu- Value Value of
Ended Annually Cumulative invested lated(b) Reinvest Shares
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1987 322.57 322.57 .00 32.805 9.63 315.91
1988 625.99 948.56 .00 96.691 9.91 958.21
1989 671.51 1,620.07 .00 163.837 10.02 1,641.65
1990 718.59 2,338.66 .00 236.377 9.93 2,347.22
1991 766.17 3,104.83 .00 312.627 10.23 3,198.17
1992 806.32 3,911.15 18.29 392.883 10.32 4,054.55
1993 838.83 4,749.98 71.46 478.992 10.56 5,058.16
1994 866.31 5,616.29 .00 567.093 9.42 5,342.02
1995 899.21 6,515.50 .00 657.381 10.37 6,817.04
1996 885.33 7,400.83 .00 745.180 10.14 7,556.13
------
$89.75
======
</TABLE>
* Under the terms of this Plan, out of the initial double payment of $100,
$49.50 is deducted as a sales charge, with $24.75 being deducted as a sales
charge from each of the next 11 payments. Additional deductions include $3.00
from the initial payment and $1.50 from each of the next 11 payments for
maintenance and custodian fees. Total deductions from the first 13 payments
equal $341.25, or 52.5% of the total of the first 13 monthly payments. If all of
the first 10 years' payments are made, total sales charges and other deductions
amount to 9.15% of the total agreed payments.
(a) Reflects the cumulative total of monthly payments plus the cumulative amount
of dividends paid in shares.
(b) Shares purchased include 543.310 from net payments invested, 193.331 from
net dividend income and 8.539 from capital gain distributions.
29
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
BOARD OF DIRECTORS
FIRST INVESTORS CORPORATION
AND THE PLANHOLDERS OF
FIRST INVESTORS SINGLE PAYMENT
AND PERIODIC PAYMENT PLANS FOR THE
ACCUMULATION OF CLASS A SHARES OF
FIRST INVESTORS GLOBAL FUND, INC.
NEW YORK, NEW YORK
We have audited the accompanying statement of assets and liabilities of First
Investors Single Payment and Periodic Payment Plans for the Accumulation of
Class A Shares of First Investors Global Fund, Inc. as of December 31, 1996, the
related statement of operations for the year then ended and the statement of
changes in net assets for each of the two years in the period then ended. These
financial statements are the responsibility of the plan sponsor, First Investors
Corporation. Our responsibility is to express an opinion on these financial
statements 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 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 Class A Shares held as of December 31, 1996, by correspondence
with the custodian. An audit also includes assessing the accounting principles
used and significant estimates made by the plan sponsor, 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 referred to above present fairly, in
all material respects, the financial position of First Investors Single Payment
and Periodic Payment Plans for the Accumulation of Class A Shares of First
Investors Global Fund, Inc. at December 31, 1996, and the results of its
operations for the year then ended and the changes in its net assets for each of
the two years in the period then ended, in conformity with generally accepted
accounting principles.
PHILADELPHIA, PENNSYLVANIA
MARCH 7, 1997
30
<PAGE>
FIRST INVESTORS SINGLE PAYMENT
AND PERIODIC PAYMENT PLANS FOR THE
ACCUMULATION OF CLASS A SHARES OF
FIRST INVESTORS GLOBAL FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
First Investors Global Fund, Inc. Class A Shares,
at value (Cost $23,463,886) (NOTE 3) $26,550,636
Cash 3,016
Dividend receivable 87,302
-----------
TOTAL ASSETS 26,640,954
LIABILITIES
Custodian and delegated service fees payable $66,659
Dividends payable in cash 20,643
Federal income tax withheld on liquidations 2,222
Planholders' prepayment of life insurance premiums 546
Payable for First Investors Global Fund, Inc.
Class A Shares purchased 248
-------
TOTAL LIABILITIES 90,318
-----------
NET ASSETS (Equivalent to $6.59 per share based on
4,028,928 shares of capital stock owned on outstanding plans) $26,550,636
===========
</TABLE>
- --------------------------------------------------------------------------------
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS
31
<PAGE>
FIRST INVESTORS SINGLE PAYMENT
AND PERIODIC PAYMENT PLANS FOR THE
ACCUMULATION OF CLASS A SHARES OF
FIRST INVESTORS GLOBAL FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C> <C>
DISTRIBUTIONS RECEIVED ON CLASS A SHARES OF
FIRST INVESTORS GLOBAL FUND, INC.
From: Investment Income $ 151,763
Realized gains 3,132,090
-----------
TOTAL INVESTMENT INCOME 3,283,853
EXPENSES
Custodian fees $ 47,472
Delegated service fees 19,187
------------
TOTAL EXPENSES 66,659
-----------
INVESTMENT INCOME, NET 3,217,194
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
COMPLETE AND PARTIAL LIQUIDATIONS,
INCLUDING SHARES DELIVERED TO
PLANHOLDERS AT MARKET VALUE
Proceeds received,
net of custodian fees of $1,719 4,146,827
Cost of shares 3,256,580
-----------
NET REALIZED GAIN 890,247
UNREALIZED APPRECIATION (DEPRECIATION)
Beginning of year 3,831,208
End of year 3,086,750
-----------
NET DEPRECIATION FOR THE YEAR (744,458)
-----------
NET REALIZED AND UNREALIZED GAIN
ON PLAN SHARES 145,789
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $3,362,983
===========
</TABLE>
- --------------------------------------------------------------------------------
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS
32
<PAGE>
FIRST INVESTORS SINGLE PAYMENT
AND PERIODIC PAYMENT PLANS FOR THE
ACCUMULATION OF CLASS A SHARES OF
FIRST INVESTORS GLOBAL FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 AND 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
Investment income - net $ 3,217,194 $ 1,037,879
Realized gain on plan liquidations 890,247 704,247
Unrealized appreciation (depreciation) on plan shares held (744,458) 2,005,769
------------ -----------
3,362,983 3,747,895
Distributions to Planholders from investment income - net (3,217,194) (1,037,879)
Capital share transactions - net (NOTE 2) 1,865,260 (581,283)
------------ -----------
NET INCREASE IN NET ASSETS 2,011,049 2,128,733
NET ASSETS
Beginning of year 24,539,587 22,410,854
------------ -----------
END OF YEAR $26,550,636 $24,539,587
============ ============
</TABLE>
- --------------------------------------------------------------------------------
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS
33
<PAGE>
FIRST INVESTORS SINGLE PAYMENT
AND PERIODIC PAYMENT PLANS FOR THE
ACCUMULATION OF CLASS A SHARES OF
FIRST INVESTORS GLOBAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
The Plan is a unit investment trust registered under the Investment Company
Act of 1940. The Plan provides for single payment and periodic payment
plans with regular and systematic monthly investments over periods of
either ten or fifteen years. The objective of the investment in First
Investors Global Fund, Inc. is primarily to seek long-term capital growth
and secondarily to earn a reasonable level of current income.
The following significant accounting policies, which are in conformity with
generally accepted accounting principles for unit investment trusts, are
consistently used in the preparation of its financial statements.
SECURITY VALUATION
Investments are valued at the net asset value of Fund shares held.
TRANSACTION DATES
Share transactions are recorded on the trade date. Investment income
and realized gains distributions are recorded on the ex-dividend date.
INCOME TAXES
No provision is made for federal income tax. All distributions of net
investment income and realized gains received by Planholders are
treated as if received directly from the underlying Fund. A Planholder
realizes a gain or loss on liquidation for cash but not on withdrawal
of the underlying Fund shares.
- --------------------------------------------------------------------------------
34
<PAGE>
FIRST INVESTORS SINGLE PAYMENT
AND PERIODIC PAYMENT PLANS FOR THE
ACCUMULATION OF CLASS A SHARES OF
FIRST INVESTORS GLOBAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
- --------------------------------------------------------------------------------
(2) CAPITAL SHARES
At December 31, 1996 and 1995, the Plan held 4,028,928 and 3,735,097 Class
A Shares of First Investors Global Fund, Inc., respectively. Capital
transactions in First Investors Global Fund, Inc. Class A Shares were as
follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1996 1995
------------------- ---------------------
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
Planholders' payments * $ 3,082,852 $ 3,023,708
----------- -----------
Less
Sales charges 224,879 216,008
Custodian fees 42,343 45,578
Insurance premiums ** 92 120
----------- ------------
267,314 261,706
----------- ------------
Balance invested in Class A Shares
of First Investors Global
Fund, Inc. 2,815,538 401,473 2,762,002 445,078
Class A Shares of First Investors
Global Fund, Inc. acquired
on reinvestment of
distributions received 3,196,549 485,663 1,030,873 157,126
Redemption and cancellations
of First Investors Global
Fund, Inc. Class A Shares (4,146,827) (593,305) (4,374,158) (704,582)
----------- -------- ------------ --------
NET INCREASE (DECREASE) $ 1,865,260 293,831 $ (581,283) (102,378)
=========== ======== ============ ========
</TABLE>
* NET OF REFUNDS (SEE NOTE 4)
** INCLUDES EXCESS INSURANCE PREMIUMS RETURNED UPON PLAN COMPLETIONS
- --------------------------------------------------------------------------------
35
<PAGE>
FIRST INVESTORS SINGLE PAYMENT
AND PERIODIC PAYMENT PLANS FOR THE
ACCUMULATION OF CLASS A SHARES OF
FIRST INVESTORS GLOBAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
(3) PLANHOLDERS' COST OF FIRST INVESTORS GLOBAL FUND, INC. CLASS A SHARES
The investment in First Investors Global Fund, Inc. Class A Shares is
carried at identified cost, which represents the amount available for
investment (including reinvested distributions of net investment income
and realized gains) in such shares after deduction of sales charges,
custodian fees, and insurance premiums, if applicable.
The totals for each plan type are listed below.
PLANS OUTSTANDING - DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONTHLY SINGLE
PAYMENT PAYMENT
PLANS PLANS TOTAL
------- ------- -----
<S> <C> <C> <C>
TOTAL AGREED PAYMENTS $76,240,140 $373,464 $76,613,604
=========== ======== ===========
Total payments made by Planholders
on plans outstanding $21,908,916 $373,464 $22,282,380
Reinvested distributions from
Net investment income 790,182 62,614 852,796
Realized gains 4,687,303 130,357 4,817,660
------------ --------- ------------
TOTAL 27,386,401 566,435 27,952,836
------------ --------- ------------
Deductions
Fees, taxes and service charges 2,896,804 20,490 2,917,294
Insurance premiums 10,179 - 10,179
------------ --------- ------------
TOTAL DEDUCTIONS 2,906,983 20,490 2,927,473
------------ --------- ------------
Net investment in
First Investors Global Fund, Inc.
Class A Shares 24,479,418 545,945 25,025,363
Less cost of partial withdrawals 1,601,580 23,102 1,624,682
------------ --------- ------------
NET COST OF
FIRST INVESTORS GLOBAL FUND, INC.
CLASS A SHARES 22,877,838 522,843 23,400,681
RETURN OF CAPITAL DISTRIBUTIONS REINVESTED 61,632 1,573 63,205
UNREALIZED APPRECIATION 3,043,240 43,510 3,086,750
------------ --------- ------------
NET AMOUNT APPLICABLE TO PLANHOLDERS $25,982,710 $567,926 $26,550,636
============ ========= ============
</TABLE>
36
- --------------------------------------------------------------------------------
<PAGE>
FIRST INVESTORS SINGLE PAYMENT
AND PERIODIC PAYMENT PLANS FOR THE
ACCUMULATION OF CLASS A SHARES OF
FIRST INVESTORS GLOBAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
- --------------------------------------------------------------------------------
(4) TRANSACTIONS WITH AFFILIATES
First Investors Corporation, the Plan Sponsor, receives all sponsor fees
from Plan payments and an annual delegated service fee from Plan dividends.
Administrative Data Management Corp., the Plan Transfer Agent, receives the
custodian fees from Plan payments, dividends and liquidations. Plan
payments, as shown in Note 2, are net of sponsor fee refunds of $14,956 and
$18,772, and custodian fee refunds of $132 and $140, for the years ended
December 31, 1996 and 1995, respectively.
First Investors Life Insurance Company, Inc. serves as insurer for Plans
issued with group reducing term insurance.
- --------------------------------------------------------------------------------
37
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
BOARD OF DIRECTORS
FIRST INVESTORS CORPORATION
AND THE PLANHOLDERS OF
FIRST INVESTORS SINGLE PAYMENT
AND PERIODIC PAYMENT PLANS FOR
INVESTMENT IN CLASS A SHARES OF
FIRST INVESTORS GOVERNMENT FUND, INC.
NEW YORK, NEW YORK
We have audited the accompanying statement of assets and liabilities of First
Investors Single Payment and Periodic Payment Plans for Investment in Class A
Shares of First Investors Government Fund, Inc. as of December 31, 1996, the
related statement of operations for the year then ended and the statement of
changes in net assets for each of the two years in the period then ended. These
financial statements are the responsibility of the plan sponsor, First Investors
Corporation. Our responsibility is to express an opinion on these financial
statements 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 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 Class A Shares held as of December 31, 1996, by correspondence
with the custodian. An audit also includes assessing the accounting principles
used and significant estimates made by the plan sponsor, 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 referred to above present fairly, in
all material respects, the financial position of First Investors Single Payment
and Periodic Payment Plans for Investment in Class A Shares of First Investors
Government Fund, Inc. at December 31, 1996, and the results of its operations
for the year then ended and the changes in its net assets for each of the two
years in the period then ended, in conformity with generally accepted accounting
principles.
PHILADELPHIA, PENNSYLVANIA
MARCH 7, 1997
38
<PAGE>
FIRST INVESTORS SINGLE PAYMENT
AND PERIODIC PAYMENT PLANS FOR
INVESTMENT IN CLASS A SHARES OF
FIRST INVESTORS GOVERNMENT FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
First Investors Government Fund, Inc. Class A Shares,
at value (Cost $37,207,779) (NOTE 3) $ 36,637,181
Dividend receivable 10,152
Cash 1,486
--------------
TOTAL ASSETS 36,648,819
LIABILITIES
Dividends payable in cash $ 4,610
Custodian fees payable 5,542
Payable for First Investors Government Fund, Inc.
Class A Shares purchased 1,178
Planholder prepayments of life insurance premiums 308
--------
TOTAL LIABILITIES 11,638
--------------
NET ASSETS (Equivalent to $11.05 per share based on
3,315,582 Class A Shares of capital stock owned
on outstanding plans $ 36,637,181
==============
</TABLE>
- --------------------------------------------------------------------------------
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS
39
<PAGE>
FIRST INVESTORS SINGLE PAYMENT
AND PERIODIC PAYMENT PLANS FOR
INVESTMENT IN CLASS A SHARES OF
FIRST INVESTORS GOVERNMENT FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
INVESTMENT INCOME
DISTRIBUTIONS RECEIVED ON CLASS A SHARES OF
FIRST INVESTORS GOVERNMENT FUND, INC.
<TABLE>
<S> <C> <C>
From: Net investment income $ 2,229,944
EXPENSES
Custodian fees $ 70,391
Delegated service fees 26,777
---------
TOTAL EXPENSES 97,168
------------
INVESTMENT INCOME - NET 2,132,776
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
COMPLETE AND PARTIAL LIQUIDATIONS,
INCLUDING SHARES DELIVERED TO
PLANHOLDERS AT MARKET VALUE
Proceeds received,
net of custodian fees of $2,647 8,612,889
Cost of shares 8,790,981
---------
NET REALIZED LOSS (178,092)
UNREALIZED APPRECIATION (DEPRECIATION)
Beginning of year 230,715
End of year (570,598)
---------
NET DEPRECIATION FOR THE YEAR (801,313)
------------
NET REALIZED AND UNREALIZED LOSS
ON PLAN SHARES (979,405)
------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 1,153,371
============
</TABLE>
- --------------------------------------------------------------------------------
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS
40
<PAGE>
FIRST INVESTORS SINGLE PAYMENT
AND PERIODIC PAYMENT PLANS FOR
INVESTMENT IN CLASS A SHARES OF
FIRST INVESTORS GOVERNMENT FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 AND 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
Investment income - net $ 2,132,776 $ 2,652,309
Realized loss on plan liquidations (178,092) (227,565)
Unrealized appreciation (depreciation)
on plan shares held (801,313) 3,350,297
-------------- --------------
1,153,371 5,775,041
Distributions to planholders from
investment income - net (2,132,776) (2,652,309)
Capital share transactions - net (NOTE 2) (4,492,105) (2,700,270)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS (5,471,510) 422,462
NET ASSETS
Beginning of year 42,108,691 41,686,229
-------------- --------------
END OF YEAR $ 36,637,181 $ 42,108,691
============== ==============
</TABLE>
- --------------------------------------------------------------------------------
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS
41
<PAGE>
FIRST INVESTORS SINGLE PAYMENT
AND PERIODIC PAYMENT PLANS FOR
INVESTMENT IN CLASS A SHARES OF
FIRST INVESTORS GOVERNMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
The Plan is a unit investment trust registered under the Investment
Company Act of 1940. The Plan provides for single payment and periodic
payment plans with regular and systematic monthly investments over periods
of either ten or fifteen years. The objective of the investment in First
Investors Government Fund, Inc. is to achieve a significant level of
current income which is consistent with security and liquidity of
principal.
The following significant accounting policies, which are in conformity
with generally accepted accounting principles for unit investment trusts,
are consistently used in the preparation of its financial statements.
SECURITY VALUATION
Investments are valued at the net asset value of Fund shares held.
TRANSACTION DATES
Share transactions are recorded on the trade date. Investment income
and realized gains distributions are recorded on the ex-dividend date.
INCOME TAXES
No provision is made for federal income tax. All distributions of net
investment income and realized gains received by Planholders are
treated as if received directly from the underlying Fund. A Planholder
realizes a gain or loss on liquidation for cash but not on withdrawal
of the underlying Fund shares.
- --------------------------------------------------------------------------------
42
<PAGE>
FIRST INVESTORS SINGLE PAYMENT
AND PERIODIC PAYMENT PLANS FOR
INVESTMENT IN CLASS A SHARES OF
FIRST INVESTORS GOVERNMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
- --------------------------------------------------------------------------------
(2) CAPITAL SHARES
At December 31, 1996 and 1995, the Plan held 3,315,582 and 3,723,138 Class
A Shares of First Investors Government Fund, Inc., respectively. Capital
transactions in First Investors Government Fund, Inc. Class A Shares were
as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1996 1995
---- ----
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
Planholders' payments * $ 2,193,955 $ 2,903,160
-------------- --------------
Less
Sales charges 98,835 128,543
Custodian fees 29,750 42,202
Insurance ** (16) 19
-------------- --------------
128,569 170,764
-------------- --------------
Balance invested in
First Investors
Government Fund,
Inc. Class A Shares 2,065,386 187,343 2,732,396 249,811
Class A Shares of
First Investors
Government Fund,
Inc. acquired on
reinvestment of
distributions received 2,055,398 187,300 2,551,145 232,604
Redemptions and
cancellations of
First Investors
Government Fund,
Inc. Class A Shares (8,612,889) (782,199) (7,983,811) (729,394)
-------------- --------------
NET DECREASE $ (4,492,105) (407,556) $ (2,700,270) (246,979)
============== ========== ============== =========
</TABLE>
* NET OF REFUNDS (SEE NOTE 4)
** INCLUDES EXCESS INSURANCE PREMIUMS RETURNED UPON PLAN COMPLETIONS
- --------------------------------------------------------------------------------
43
<PAGE>
FIRST INVESTORS SINGLE PAYMENT
AND PERIODIC PAYMENT PLANS FOR
INVESTMENT IN CLASS A SHARES OF
FIRST INVESTORS GOVERNMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
- --------------------------------------------------------------------------------
(3) PLANHOLDERS' COST OF FIRST INVESTORS GOVERNMENT FUND, INC.
CLASS A SHARES
The investment in First Investors Government Fund, Inc. Class A Shares is
carried at identified cost, which represents the amount available for
investment (including reinvested distributions of net investment income
and realized gains) in such shares after deduction of sales charges and
custodian fees.
The totals for each plan type are listed below.
PLANS OUTSTANDING - DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONTHLY SINGLE
PAYMENT PAYMENT
PLANS PLANS TOTAL
------- ------- -----
<S> <C> <C> <C>
TOTAL AGREED PAYMENTS $ 76,960,260 $ 1,855,712 $ 78,815,972
=============== ============ ==============
Total payments made by Planholders
on plans outstanding $ 29,763,641 $ 1,855,712 $ 31,619,353
Reinvested distributions from
Net investment income 11,536,543 687,609 12,224,152
Realized gains 44,103 15,459 59,562
--------------- ------------ --------------
TOTAL 41,344,287 2,558,780 43,903,067
--------------- ------------ --------------
Deductions
Fees and service charges 3,544,878 101,183 3,646,061
Insurance premiums 163 - 163
--------------- ------------ --------------
TOTAL DEDUCTIONS 3,545,041 101,183 3,646,224
--------------- ------------ --------------
Net investment in First Investors
Government Fund, Inc. Class A Shares 37,799,246 2,457,597 40,256,843
Less cost of partial withdrawals 2,828,502 347,100 3,175,602
--------------- ------------ --------------
NET COST OF FIRST INVESTORS
GOVERNMENT FUND, INC.
CLASS A SHARES 34,970,744 2,110,497 37,081,241
RETURN OF CAPITAL DISTRIBUTIONS
REINVESTED 113,279 13,259 126,538
UNREALIZED DEPRECIATION (486,440) (84,158) (570,598)
--------------- ------------ --------------
NET AMOUNT APPLICABLE TO PLANHOLDERS $ 34,597,583 $ 2,039,598 $ 36,637,181
=============== ============ ==============
</TABLE>
- --------------------------------------------------------------------------------
44
<PAGE>
FIRST INVESTORS SINGLE PAYMENT
AND PERIODIC PAYMENT PLANS FOR
INVESTMENT IN CLASS A SHARES OF
FIRST INVESTORS GOVERNMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
- --------------------------------------------------------------------------------
(4) TRANSACTIONS WITH AFFILIATES
First Investors Corporation, the Plan Sponsor, receives all sponsor fees
from Plan payments and an annual delegated service fee from Plan
dividends. Administrative Data Management Corp., the Plan Transfer Agent,
receives the custodian fees from Plan payments, dividends and
liquidations. Plan payments, as shown in Note 2, are net of sponsor fee
refunds of $533 and $2,631, and custodian fee refunds of $10 and $-0-, for
the years ended December 31, 1996 and 1995, respectively.
First Investors Life Insurance Company, Inc. serves as insurer for Plans
issued with group reducing term insurance.
- --------------------------------------------------------------------------------
45
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
BOARD OF DIRECTORS
FIRST INVESTORS CORPORATION
AND THE PLANHOLDERS OF
FIRST INVESTORS SINGLE PAYMENT
AND PERIODIC PAYMENT PLANS FOR
INVESTMENT IN CLASS A SHARES OF
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
NEW YORK, NEW YORK
We have audited the accompanying statement of assets and liabilities of First
Investors Single Payment and Periodic Payment Plans for Investment in Class A
Shares of First Investors Insured Tax Exempt Fund, Inc. as of December 31, 1996,
the related statement of operations for the year then ended and the statement of
changes in net assets for each of the two years in the period then ended. These
financial statements are the responsibility of the plan sponsor, First Investors
Corporation. Our responsibility is to express an opinion on these financial
statements 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 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 Class A Shares held as of December 31, 1996, by correspondence
with the custodian. An audit also includes assessing the accounting principles
used and significant estimates made by the plan sponsor, 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 referred to above present fairly, in
all material respects, the financial position of First Investors Single Payment
and Periodic Payment Plans for Investment in Class A Shares of First Investors
Insured Tax Exempt Fund, Inc. at December 31, 1996, and the results of its
operations for the year then ended and the changes in its net assets for each of
the two years in the period then ended, in conformity with generally accepted
accounting principles.
PHILADELPHIA, PENNSYLVANIA
MARCH 7, 1997
46
<PAGE>
FIRST INVESTORS SINGLE PAYMENT
AND PERIODIC PAYMENT PLANS FOR
INVESTMENT IN CLASS A SHARES OF
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
First Investors Insured Tax Exempt Fund, Inc. Class A Shares,
at value (Cost $47,988,965) (NOTE 3) $ 48,909,742
Dividend receivable 33,174
Cash 4,789
--------------
TOTAL ASSETS 48,947,705
LIABILITIES
Dividends payable in cash $ 29,595
Custodian fees payable 3,579
Payable for First Investors Insured Tax Exempt Fund, Inc.
Class A Shares purchased 1,707
Planholders' prepayments of life insurance premiums 2,750
Federal income tax withheld on liquidations 332
---------
TOTAL LIABILITIES 37,963
--------------
NET ASSETS (Equivalent to $10.14 per share based on
4,823,446 Class A Shares of capital stock owned
on outstanding plans) $ 48,909,742
==============
</TABLE>
- --------------------------------------------------------------------------------
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS
47
<PAGE>
FIRST INVESTORS SINGLE PAYMENT
AND PERIODIC PAYMENT PLANS FOR
INVESTMENT IN CLASS A SHARES OF
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C> <C>
DISTRIBUTIONS RECEIVED ON CLASS A SHARES OF
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
From: Net investment income $ 2,572,031
EXPENSES
Custodian fees $ 45,085
Delegated service fees 17,385
--------------
TOTAL EXPENSES 62,470
-------------
INVESTMENT INCOME - NET 2,509,561
-------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
COMPLETE AND PARTIAL LIQUIDATIONS,
INCLUDING SHARES DELIVERED TO
PLANHOLDERS AT MARKET VALUE
Proceeds received,
net of custodian fees of $1,102 10,030,832
Cost of shares 9,880,076
--------------
NET REALIZED GAIN 150,756
UNREALIZED APPRECIATION (DEPRECIATION)
Beginning of year 2,305,196
End of year 920,777
--------------
NET DEPRECIATION FOR THE YEAR (1,384,419)
-------------
NET REALIZED AND UNREALIZED LOSS
ON PLAN SHARES (1,233,663)
-------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 1,275,898
=============
</TABLE>
- --------------------------------------------------------------------------------
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS
48
<PAGE>
FIRST INVESTORS SINGLE PAYMENT
AND PERIODIC PAYMENT PLANS FOR
INVESTMENT IN CLASS A SHARES OF
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
Investment income - net $ 2,509,561 $ 2,802,178
Realized gain on plan liquidations 150,756 20,286
Unrealized appreciation (depreciation)
on plan shares held (1,384,419) 5,195,519
-------------- --------------
1,275,898 8,017,983
Distributions to planholders from
investment income - net (2,509,561) (2,802,178)
Capital share transactions - net (NOTE 2) (5,399,673) (2,000,968)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS (6,633,336) 3,214,837
NET ASSETS
Beginning of year 55,543,078 52,328,241
-------------- --------------
END OF YEAR $ 48,909,742 $ 55,543,078
============== ==============
</TABLE>
- --------------------------------------------------------------------------------
THE NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS
49
<PAGE>
FIRST INVESTORS SINGLE PAYMENT
AND PERIODIC PAYMENT PLANS FOR
INVESTMENT IN CLASS A SHARES OF
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
The Plan is a unit investment trust registered under the Investment
Company Act of 1940. The Plan provides for single payment and periodic
payment plans with regular and systematic monthly investments over periods
of either ten or fifteen years. The objective of the investment in First
Investors Insured Tax-Exempt Fund, Inc., is to provide a high level of
interest income which is exempt from Federal income tax.
The following significant accounting policies, which are in conformity
with generally accepted accounting principles for unit investment trusts,
are consistently used in the preparation of its financial statements.
SECURITY VALUATION
Investments are valued at the net asset value of Fund shares held.
TRANSACTION DATES
Share transactions are recorded on the trade date. Investment income
and realized gains distributions are recorded on the ex-dividend date.
INCOME TAXES
No provision is made for federal income tax. All distributions of net
investment income and realized gains received by Planholders are
treated as if received directly from the underlying Fund. A Planholder
realizes a gain or loss on liquidation for cash but not on withdrawal
of the underlying Fund shares.
- --------------------------------------------------------------------------------
50
<PAGE>
FIRST INVESTORS SINGLE PAYMENT
AND PERIODIC PAYMENT PLANS FOR
INVESTMENT IN CLASS A SHARES OF
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
- --------------------------------------------------------------------------------
(2) CAPITAL SHARES
At December 31, 1996 and 1995, the Plan held 4,823,446 and 5,356,131 Class
A Shares of First Investors Insured Tax Exempt Fund, Inc., respectively.
Capital transactions in First Investors Insured Tax Exempt Fund, Inc.
Class A Shares were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1996 1995
---- ----
AMOUNT SHARES AMOUNT SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
Planholders' payments * $ 2,634,241 $ 4,649,089
--------------- --------------
Less
Sales charges 109,657 212,906
Custodian fees 29,531 33,901
Insurance premiums ** (198) 138
--------------- --------------
138,990 246,945
--------------- --------------
Balance invested in
First Investors
Insured Tax Exempt
Fund, Inc. Class A Shares 2,495,251 248,266 4,402,144 443,041
Class A Shares of
First Investors
Insured Tax Exempt
Fund, Inc. acquired
on reinvestment of
distributions received 2,135,908 212,843 2,377,925 238,293
Redemptions and
cancellations of
First Investors
Insured Tax Exempt
Fund, Inc. Class A Shares (10,030,832) (993,794) (8,781,037) (880,218)
--------------- ---------- -------------- ----------
NET DECREASE $ (5,399,673) (532,685) $ (2,000,968) (198,884)
=============== ========== ============== ==========
</TABLE>
* NET OF REFUNDS (SEE NOTE 4)
** INCLUDES EXCESS INSURANCE PREMIUMS RETURNED UPON PLAN COMPLETIONS.
- --------------------------------------------------------------------------------
51
<PAGE>
FIRST INVESTORS SINGLE PAYMENT
AND PERIODIC PAYMENT PLANS FOR
INVESTMENT IN CLASS A SHARES OF
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
- --------------------------------------------------------------------------------
(3) PLANHOLDERS' COST OF FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
CLASS A SHARES
The investment in First Investors Insured Tax Exempt Fund, Inc. Class A
Shares is carried at identified cost, which represents the amount
available for investment (including reinvested distributions of net
investment income and realized gains) in such shares after deduction of
sales charges, custodian fees, and insurance premiums, if applicable.
The totals for each plan type are listed below.
PLANS OUTSTANDING - DECEMBER 31, 1996
-------------------------------------
<TABLE>
<CAPTION>
MONTHLY SINGLE
PAYMENT PAYMENT
PLANS PLANS TOTAL
------- ------- -----
<S> <C> <C> <C>
TOTAL AGREED PAYMENTS $ 72,429,676 $ 11,019,357 $ 83,449,033
============== ============== ==============
Total payments made by
Planholders on plans
outstanding $ 30,766,201 $ 11,019,357 $ 41,785,558
Reinvested distributions from
Net investment income 10,997,724 3,860,123 14,857,847
Realized gains 451,224 181,915 633,139
-------------- -------------- --------------
TOTAL 42,215,149 15,061,395 57,276,544
-------------- -------------- --------------
Deductions
Fees and service charges 3,198,237 548,603 3,746,840
Insurance premiums 7,276 - 7,276
-------------- -------------- --------------
TOTAL DEDUCTIONS 3,205,513 548,603 3,754,116
-------------- -------------- --------------
Net investment in
First Investors Insured Tax
Exempt Fund, Inc. Class A Shares 39,009,636 14,512,792 53,522,428
Less cost of partial withdrawals 4,338,096 1,195,367 5,533,463
-------------- -------------- --------------
NET COST OF
FIRST INVESTORS INSURED TAX
EXEMPT FUND, INC. CLASS A SHARES 34,671,540 13,317,425 47,988,965
UNREALIZED APPRECIATION 566,450 354,327 920,777
-------------- -------------- --------------
NET AMOUNT APPLICABLE
TO PLANHOLDERS $ 35,237,990 $ 13,671,752 $ 48,909,742
============== ============== ==============
</TABLE>
- --------------------------------------------------------------------------------
52
<PAGE>
FIRST INVESTORS SINGLE PAYMENT
AND PERIODIC PAYMENT PLANS FOR
INVESTMENT IN CLASS A SHARES OF
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
- --------------------------------------------------------------------------------
(4) TRANSACTIONS WITH AFFILIATES
First Investors Corporation, the Plan Sponsor, receives all sponsor fees
from Plan payments and an annual delegated service fee from Plan
dividends. Administrative Data Management Corp., the Plan Transfer Agent,
receives the custodian fees from Plan payments, dividends and
liquidations. Plan payments, as shown in Note 2, are net of sponsor fee
refunds of $7,880 and $10,819, and custodian fee refunds of $56 and $84,
for the years ended December 31, 1996 and 1995, respectively.
First Investors Life Insurance Company, Inc. serves as insurer for Plans
issued with group reducing term insurance.
- --------------------------------------------------------------------------------
53
<PAGE>
THE FINANCIAL STATEMENTS SHOWN BELOW ARE THE SPONSOR'S AND NOT THOSE OF FIRST
INVESTORS SINGLE PAYMENT PLANS AND PERIODIC PAYMENT PLANS. THEY ARE INCLUDED IN
THE PROSPECTUS FOR THE PURPOSE OF INFORMING INVESTORS AS TO THE FINANCIAL
RESPONSIBILITY OF THE SPONSOR AND ITS ABILITY TO CARRY OUT ITS CONTRACTUAL
OBLIGATIONS.
FIRST INVESTORS CORPORATION
BALANCE SHEET
DECEMBER 31, 1996
ASSETS
<TABLE>
<CAPTION>
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents.................................... $11,649,549
Marketable securities........................................ 103,676
Receivables from customers and others........................ 2,023,253
Salesmen advances--net, prepaid expenses and other
amounts receivable........................................ 2,422,729
Receivable from affiliated companies......................... 25,570
Deferred sales commissions .................................. 482,809
------------
Total current assets...................................... 16,707,586
FIXED ASSETS
Leasehold improvements and equipment (less accumulated
depreciation and amortization of $1,524,000).............. 280,560
OTHER ASSETS
Cash and cash equivalents segregated under
federal regulations (Note 2)..............................$1,013,338
Deferred sales commissions................................... 1,448,427
Other........................................................ 79,804
----------
Total other assets........................................ 2,541,569
-----------
Total assets.............................................. $19,529,715
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
CURRENT LIABILITIES
<S> <C> <C>
Payable for securities purchased............................. $ 4,948,452
Payable to dealers and customers............................. 234,694
Accrued commissions and supplier accounts payable............ 1,001,375
Other liabilities and accrued expenses....................... 7,252,678
------------
Total current liabilities................................. 13,437,199
Deferred income taxes........................................ 536,000
CONTINGENCIES (Note 6)............................................
STOCKHOLDERS' EQUITY
Common stock, no par, stated value $5,
200 shares authorized, issued and outstanding.............$ 1,000
Surplus......................................................5,555,516
---------
Total stockholder's equity................................ 5,556,516
------------
Total liabilities and stockholder's equity................ $19,529,715
===========
</TABLE>
See notes to financial statements
54
<PAGE>
THE FINANCIAL STATEMENTS SHOWN BELOW ARE THE SPONSOR'S AND NOT THOSE OF FIRST
INVESTORS SINGLE PAYMENT PLANS AND PERIODIC PAYMENT PLANS. THEY ARE INCLUDED IN
THE PROSPECTUS FOR THE PURPOSE OF INFORMING INVESTORS AS TO THE FINANCIAL
RESPONSIBILITY OF THE SPONSOR AND ITS ABILITY TO CARRY OUT ITS CONTRACTUAL
OBLIGATIONS.
FIRST INVESTORS CORPORATION
STATEMENT OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
REVENUE
<S> <C> <C>
Commissions on sales of Funds and other securities........... $21,866,624
Sales of variable life insurance products.................... 9,708,831
Sponsor fees on periodic and single payment investment
plans..................................................... 657,200
Service fees................................................. 4,130,413
-----------
36,363,068
Less commission expense................................... 24,107,335
----------
Total commissions and fees - net.......................... 12,255,733
Income from investments...................................... 330,356
Other revenue................................................ 616,288
------------
Total revenue............................................. 13,202,377
EXPENSES
Selling expenses.............................................$ 8,233,748
Administrative expenses...................................... 6,456,826
-----------
Total expenses............................................ 14,690,574
------------
Loss before income tax benefit............................... (1,488,197)
Income tax benefit (Note 8)....................................... (549,800)
------------
NET LOSS..................................................... (938,397)
Retained earnings (deficit)
Beginning of year............................................ (7,971,913)
--------------
End of year.................................................. $ (8,910,310)
=============
</TABLE>
See notes to financial statements
55
<PAGE>
THE FINANCIAL STATEMENTS SHOWN BELOW ARE THE SPONSOR'S AND NOT THOSE OF FIRST
INVESTORS SINGLE PAYMENT PLANS AND PERIODIC PAYMENT PLANS. THEY ARE INCLUDED IN
THE PROSPECTUS FOR THE PURPOSE OF INFORMING INVESTORS AS TO THE FINANCIAL
RESPONSIBILITY OF THE SPONSOR AND ITS ABILITY TO CARRY OUT ITS CONTRACTUAL
OBLIGATIONS.
FIRST INVESTORS CORPORATION
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1996
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES
Commissions and fees received - net......................$ 12,161,131
Other revenue............................................ 616,288
Investment income received............................... 329,407
Cash paid to suppliers and employees..................... (15,100,384)
Cash received from (paid to) segregated trust account.... 279,021
Income taxes refunded.................................... 870,800
------------
NET CASH USED FOR OPERATING ACTIVITIES................ (843,737)
------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds received on sale of investment securities....... 219,590
Purchase of investment securities........................ (43,200)
Capital expenditures..................................... (29,430)
-------------
NET CASH PROVIDED BY INVESTING ACTIVITIES............. 146,960
-------------
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from parent and affiliates...................... 855,008
-------------
NET CASH PROVIDED BY FINANCING ACTIVITIES............. 855,008
-------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 158,231
CASH AND CASH EQUIVALENTS
Beginning of year..................................... 11,491,318
-------------
END OF YEAR...........................................$ 11,649,549
=============
See notes to financial statements
56
<PAGE>
THE FINANCIAL STATEMENTS SHOWN BELOW ARE THE SPONSOR'S AND NOT THOSE OF FIRST
INVESTORS SINGLE PAYMENT PLANS AND PERIODIC PAYMENT PLANS. THEY ARE INCLUDED IN
THE PROSPECTUS FOR THE PURPOSE OF INFORMING INVESTORS AS TO THE FINANCIAL
RESPONSIBILITY OF THE SPONSOR AND ITS ABILITY TO CARRY OUT ITS CONTRACTUAL
OBLIGATIONS.
FIRST INVESTORS CORPORATION
STATEMENT OF CASH FLOWS--(CONTINUED)
YEAR ENDED DECEMBER 31, 1996
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH PROVIDED BY
(USED FOR) OPERATING ACTIVITIES
NET LOSS................................................. $ (938,397)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES
Depreciation and amortization - fixed assets.......... 146,818
Amortization of deferred sales commissions............ 601,212
Net unrealized (gain) loss on marketable securities... (949)
Provision for deferred income taxes................... 321,000
(Increase) decrease in
Receivable from dealers............................. (298,664)
Receivable from customers........................... 89,098
Receivable from Funds - shares redeemed............. 384,200
Receivable from Funds - distribution fees........... (110,613)
Salesmen's advances - net........................... 328,791
Prepaid expenses and miscellaneous receivables...... 10,642
Cash and cash equivalents segregated under federal r 279,021
Receivable from affiliated companies................ 39,424
Deferred sales commissions.......................... (1,526,600)
Other............................................... (4,061)
Increase (decrease) in
Payable for securities purchased.................... (60,319)
Customer credit balances............................ 13,949
Payable to dealers.................................. (105,592)
Accrued commissions payable......................... (6,661)
Accounts payable-suppliers.......................... 99,284
Accrued expenses and other liabilities.............. (105,320)
-----------
NET CASH USED FOR OPERATING ACTIVITIES...................$ (843,737)
============
See notes to financial statements
57
<PAGE>
FIRST INVESTORS CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
First Investors Corporation (the "Company"), a wholly-owned subsidiary of
First Investors Consolidated Corporation ("FICC"), is engaged in business as a
broker-dealer primarily for the First Investors family of mutual funds
("Funds").
ACCOUNTING ESTIMATES
The preparation of 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, and
disclosure of contingent assets and liabilities at the date of the financial
statements, and revenues and expenses during the reported period. Actual results
could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, accounts receivable,
accounts payable, and other liabilities approximate fair value because of the
short maturity of these items. Marketable securities are recorded at market
value in the balance sheet, therefore, these values represent fair value.
CASH EQUIVALENTS
The Company considers all investments in money market funds to be cash
equivalents.
FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
In the normal course of business, the Company's customer activities
involve the execution and settlement of customer transactions. These activities
may expose the Company to risk of loss in the event the customer is unable to
fulfill its contracted obligations, in which case the Company may have to
purchase or sell financial instruments at prevailing market prices. Any loss
from such transactions is not expected to have a material effect on the
Company's financial statements.
SECURITY TRANSACTIONS
Security transactions are recorded on a trade date basis with related
commission income and expenses recorded as of the trade date.
MARKETABLE SECURITIES
Marketable securities are valued at market and include securities acquired
for investment purposes and securities held for re-sale to customers. Marketable
securities consist principally of unit investment trusts at December 31, 1996.
Marketable securities subject to withdrawal restrictions are classified under
"Other Assets".
58
<PAGE>
FIRST INVESTORS CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996
LEASEHOLD IMPROVEMENTS AND EQUIPMENT
Leasehold improvements and equipment are recorded at cost. Depreciation
and amortization are provided on a straight-line basis over the estimated useful
life of the asset, ranging from 5 to 15 years, or the remaining life of the
lease.
SALES COMMISSIONS
Sales commissions paid on sales of "A" shares of the Funds and other
investment companies are charged to operations when paid. Sales commissions paid
on sales of "B" shares of the Funds are charged to deferred sales commissions
and amortized over four years. Early withdrawal charges on "B" shares of the
Funds received by the Company from redeeming shareholders reduce unamortized
deferred sales commissions first, with any remaining amount recorded in income.
For the year ended December 31, 1996 amortization of deferred sales commissions
amounted to approximately $601,000.
DISTRIBUTION PLANS
Pursuant to separate underwriting agreements with the Funds, the Company
is entitled to commissions on the sale of shares of the Funds in an amount
ranging from one percent to six and one-quarter percent of the amount received
on the sales. In addition, under separate distribution plans adopted under Rule
12b-1 of the Investment Company Act of 1940 for each Fund, the Company receives
distribution and service fees in an amount up to three-tenths of one percent of
the Fund's average daily net assets. The distribution fees are intended to cover
the cost of distributing the Fund shares, including cost of sales promotion and
office expenses. The service fees provide for servicing or maintenance of
shareholder accounts, including payments to registered representatives who
provide ongoing servicing to such accounts. Distribution fees are recorded in
income or as a reduction of expenses when earned. For the year ended December
31, 1996, approximately $5,687,000 of distribution fees were received from the
Funds and recorded as a reduction to selling expenses.
INCOME TAXES
The Company files consolidated federal and certain state income tax
returns with its parent and certain other wholly-owned subsidiaries of the
parent. It is the policy of the parent to allocate the applicable federal taxes
(benefits) to each subsidiary on a separate return basis.
The Company's method of accounting for income taxes conforms to Statement
of Financial Accounting Standards No. 109, "Accounting For Income Taxes". This
method requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between the financial
reporting basis and tax basis of assets and liabilities.
59
<PAGE>
FIRST INVESTORS CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996
NOTE 2--CASH AND CASH EQUIVALENTS SEGREGATED UNDER FEDERAL REGULATIONS
At December 31, 1996, cash and cash equivalents of approximately
$1,013,300 were segregated in a special reserve bank account for the benefit of
customers under Rule 15c3-3 of the Securities Exchange Act of 1934. The minimum
amount required was approximately $350,000.
NOTE 3--RELATED PARTIES
The Company and certain wholly-owned subsidiaries of its parent share
office space and data processing facilities. The Company is charged its
proportionate share of expenses based on space occupied and usage of the data
processing facilities. Additionally, the Company charges certain of its
affiliates for management, office space and other services based upon time
allocated to the management and operation of the affiliate and space occupied.
During the year 1996, the Company charged certain of its affiliates
approximately $2,615,000 for management and other services and approximately
$530,000 for office space.
The Company purchased approximately $617,000 of data processing services, and
approximately $460,000 of office space.
The Company also receives commissions and fees on the sale of various life
insurance products from an affiliated life insurance company. For 1996, these
commissions and fees amounted to approximately $9,709,000.
In addition to the outstanding advances between the Company and its
affiliates, the Company also had approximately $4,287,000 deposited in an
account of an affiliated savings bank, and approximately $7,340,000 invested in
First Investors mutual funds, principally in the money market fund, at December
31, 1996.
NOTE 4--PROFIT-SHARING PLAN
The Company is a sponsoring employer in a profit-sharing plan covering all
of its eligible employees and those of other wholly-owned subsidiaries of its
parent. Contributions to the plan are determined annually by the Board of
Directors. In addition, the Company is a sponsoring employer in a 401(k) savings
plan covering all of its eligible employees and those of other wholly-owned
subsidiaries of its parent whereby employees may voluntarily contribute a
percentage of their compensation with the Company matching a portion of the
contributions of certain employees. The amount contributed by the Company during
the year was not material. For the year, the Company charged operations
approximately $430,000 for its portion of the contribution to the profit-sharing
plan.
60
<PAGE>
FIRST INVESTORS CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996
NOTE 5--LEASES
The Company leases office space under terms of various lease agreements,
certain of which are cancelable at the end of specified time periods and others
which are non-cancelable, expiring at various times through 2010. Total rent
expense, including amounts charged from affiliates and net of amounts charged to
affiliates, was approximately $3,089,000 for 1996. The minimum annual rental
commitments relating to leases in effect as of December 31, 1996, exclusive of
taxes and other charges by lessors subject to escalation clauses, are as
follows:
1997...................................................... $ 1,826,000
1998...................................................... 2,164,000
1999...................................................... 1,845,000
2000...................................................... 1,557,000
2001 through 2010......................................... 11,501,000
-----------
$18,893,000
===========
NOTE 6--LITIGATION
The Company is a defendant in a number of sales practice cases which
allege that certain of the Company's sales representatives had made
misrepresentations concerning the risks of investing in First Investors Fund For
Income, Inc. and First Investors High Yield Fund, Inc., investment companies
which invest primarily in high yield bonds. The Company believes that these
cases will not have a material adverse effect on its financial condition.
The Company is a defendant in a number of other lawsuits involving claims
for damages of the type normally associated with the Company's business.
Management is of the opinion that such lawsuits will not result in any material
liability to the Company.
NOTE 7--NET CAPITAL REQUIREMENTS
As a registered broker-dealer the Company is subject to the Uniform Net
Capital Rule 15c3-1 under the Securities Exchange Act of 1934. Under the
alternative method permitted by this Rule, required net capital shall not be
less than 2% of aggregate debit items arising from customer security
transactions. At December 31, 1996, the Company had net capital of approximately
$792,000, or an excess of approximately $542,000, over net capital required of
$250,000.
For additional information, the Company's Annual Audited Report filed
pursuant to Rule 17a-5 under the Securities Exchange Act of 1934 is available
for inspection at the Company's main office or at the regional office of the
Securities and Exchange Commission.
61
<PAGE>
FIRST INVESTORS CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996
NOTE 8--INCOME TAXES
The provision (refund) for income taxes consists of the following:
CURRENT
Federal $ (802,400)
State and local (68,400)
------------
(870,800)
DEFERRED
Federal 286,400
State and local 34,600
------------
321,000
------------
Total $ (549,800)
============
Deferred tax liabilities (assets) are comprised of the following:
Unrealized gains $ 2,300
Accrued expenses (93,000)
Depreciation (127,300)
Deferred sales commissions 734,000
Other 20,000
------------
$ 536,000
============
A reconciliation of the Federal statutory income tax rate to the Company's
effective rate is as follows:
Statutory rate 34.0%
Increases (decreases) in effective tax rate
resulting from
State and local income taxes, net of federal tax
benefit 1.4
Other 1.5
------
Actual effective rate 36.9%
======
62
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholder
First Investors Corporation
New York, New York
We have audited the accompanying balance sheet of First Investors
Corporation as of December 31, 1996, and the related statements of operations
and retained earnings (deficit), and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit 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 are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of First Investors Corporation
at December 31, 1996 and the results of its operations and its cash flows for
the year then ended, in conformity with generally accepted accounting
principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 14, 1997
63
<PAGE>
SALES OFFICES
ARIZONA GEORGIA NEBRASKA OREGON
PHOENIX NORCROSS OMAHA BEAVERTON
TUCSON
ILLINOIS NEW JERSEY PENNSYLVANIA
CALIFORNIA ELGIN FAIRFIELD BALA CYNWYD
SAN JOSE OAKBROOK ISELIN FEASTERVILLE
WESTCHESTER MANASQUAN PHILADELPHIA
COLORADO WOODBRIDGE PITTSBURGH
DENVER INDIANA
INDIANAPOLIS NEW YORK RHODE ISLAND
CONNECTICUT ALBANY WARWICK
EAST HARTFORD KENTUCKY BINGHAMTON
NORTH HAVEN LEXINGTON ELMIRA TEXAS
FAYETTEVILLE FT. WORTH
FLORIDA LOUISIANA JERICHO HOUSTON
FORT LAUDERDALE METAIRIE MANHATTAN
LAUDERHILL MINEOLA VIRGINIA
MIAMI MAINE NEWBURGH ARLINGTON
TAMPA PORTLAND ROCHESTER GLEN ALLEN
WINTER PARK SCARSDALE HAMPTON
MARYLAND SPRING VALLEY
COLUMBIA WILLIAMSVILLE WASHINGTON
TUKWILA
MASSACHUSETTS NORTH CAROLINA
HOLYOKE CHARLOTTE WEST VIRGINIA
QUINCY WHEELING
OHIO
MICHIGAN COLUMBUS WISCONSIN
NORTHVILLE INDEPENDENCE BROOKFIELD
MINNESOTA
BLOOMINGTON
64
<PAGE>
TABLE OF CONTENTS
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Allocation of Monthly Payments and
Deductions - 10 Year Plans.......................... 3
Allocation of Monthly Payments and
Deductions - 15 Year Plans.......................... 4
Allocation of Payments at Various Stages.............. 5
The Plans............................................. 5
Underlying Investment................................. 8
Other Deductions...................................... 9
Rights and Privileges of Planholders.................. 10
Method of Selling Shares.............................. 14
Termination of Plan by the Sponsor.................... 15
Exchanges of Plans.................................... 16
Substitution of Other Shares as the
Underlying Investment of the Plan................... 17
Sponsor and Underwriter............................... 18
Custodian ............................................ 19
Taxes................................................. 19
Officers and Directors of First Investors
Corporation......................................... 20
Statistical Data Applicable to First Investors
Plans............................................... 26
Illustration of a $6,000 Ten-Year Payment Plan........ 27
Financial Statements.................................. 30
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Executive Offices
95 Wall Street, New York, NY 10005
Tel. (212) 858-8000
I hereby acknowledge receipt of FIRST INVESTORS CORPORATION'S PLAN PROSPECTUS
dated April 30, 1997, as amended June 30, 1997, to which receipt was attached,
as well as the current prospectus of FIRST INVESTORS GLOBAL FUND, INC., FIRST
INVESTORS GOVERNMENT FUND INC., or FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
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(Signed)
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(Street)
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(City) (State)
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(Date)
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(Soliciting Agent)
