FIRST INVESTORS CASH MANAGEMENT FUND, INC.
FIRST INVESTORS TAX-EXEMPT MONEY MARKET FUND, INC.
95 Wall Street, New York, New York 10005/1-800-423-4026
This is a Prospectus for FIRST INVESTORS CASH MANAGEMENT FUND, INC. ("CASH
MANAGEMENT FUND") and FIRST INVESTORS TAX-EXEMPT MONEY MARKET FUND, INC.
("TAX-EXEMPT MONEY MARKET FUND") (singularly, "Fund" and collectively, "Funds"),
each of which is an open-end diversified management investment company. Each
Fund sells two classes of shares. Investors may select Class A or Class B
shares. THIS PROSPECTUS RELATES ONLY TO CLASS B SHARES. The Funds' Class A
Prospectus is available at no charge upon request to the Funds at the address or
telephone number listed above.
CASH MANAGEMENT FUND seeks to earn a high rate of current income
consistent with the preservation of capital and maintenance of liquidity. This
Fund invests primarily in high quality money market obligations, including
securities issued or guaranteed by the U.S. Government or its agencies and
instrumentalities, bank obligations and high-grade corporate instruments.
TAX-EXEMPT MONEY MARKET FUND seeks to earn a high rate of current income
that is exempt from Federal income tax and is not an item of tax preference for
purposes of the Federal alternative minimum tax ("Tax Preference Item"),
consistent with the preservation of capital and maintenance of liquidity. This
Fund invests primarily in high-grade, short-term tax-exempt obligations issued
by state and municipal governments and by public authorities.
EACH FUND IS A MONEY MARKET FUND AND SEEKS TO MAINTAIN A STABLE NET ASSET
VALUE OF $1.00 PER SHARE. HOWEVER, THERE CAN BE NO ASSURANCE THAT EITHER FUND
WILL BE ABLE TO DO SO OR TO ACHIEVE ITS INVESTMENT OBJECTIVE. AN INVESTMENT IN
EITHER FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT.
This Prospectus sets forth concisely the information about each of the
Funds that a prospective investor should know before investing and should be
retained for future reference. First Investors Management Company, Inc. ("FIMCO"
or "Adviser") serves as investment adviser to each Fund and First Investors
Corporation ("FIC" or "Underwriter") serves as distributor of each Fund's
shares. A Statement of Additional Information ("SAI"), dated April 30, 1997
(which is incorporated by reference herein), has been filed with the Securities
and Exchange Commission. The SAI is available at no charge upon request to the
Funds at the address or telephone number indicated above.
An investment in these securities is not a deposit or obligation of, or
guaranteed or endorsed by, any bank and is not federally insured or protected by
the Federal Deposit Insurance Corporation, the Federal Reserve Board or any
other government agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is April 30, 1997,
As Amended May 7, 1997
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FEE TABLE
The following table is intended to assist investors in understanding the
expenses associated with investing in Class B shares of a Fund. Shares of either
Fund issued prior to January 12, 1995 have been designated as Class A shares.
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........................ None
Deferred Sales Load
(as a percentage of the lower of original purchase
price or redemption proceeds).............................. 4% in the first
year; declining
to 0% after the
sixth year
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
TOTAL FUND
MANAGEMENT 12B-1 OTHER OPERATING
FEES FEES(1)+ EXPENSES(2)+ EXPENSES(3)+
CASH MANAGEMENT FUND........... 0.50% 0.75% 0.30% 1.55%
TAX-EXEMPT MONEY MARKET FUND... 0.50 0.75 0.30 1.55
- ----------
+ Net of waiver and/or reimbursement.
(1) The Underwriter has agreed through December 31, 1997 to cap its right to
claim 12b-1 Fees at the annual rates listed above for the Funds. The
Fund's Class B Distribution Plans provide for a 12b-1 Fee in the total
amount of up to 1.00% on an annual basis.
(2) Other Expenses have been rested to reflect that the Adviser will reimburse
Other Expenses for each Fund in excess of 0.30% for a minimum period
ending December 31, 1997. For the fiscal year ended December 31, 1996, the
Adviser reimbursed the Funds for certain Other Expenses. Absent such
reimbursement, Other Expenses would have been 0.69% for CASH MANAGEMENT
FUND and 0.58% for TAX-EXEMPT MONEY MARKET FUND.
(3) If certain fees and expenses had not been waived or reimbursed, Total Fund
Operating Expenses would have been 2.19% for CASH MANAGEMENT FUND and
2.08% for TAX-EXEMPT MONEY MARKET FUND. Each Fund has an expense offset
arrangement that may reduce the Fund's custodian fee based on the amount
of cash maintained by the Fund with its custodian. Any such fee reductions
are not reflected under Total Fund Operating Expenses.
For a more complete description of the various costs and expenses, see
"How to Exchange Shares," "How to Redeem Shares" and "Management."
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The Example below is based on Class B expense data for each Fund's fiscal
year ended December 31, 1996, except that certain Operating Expenses have been
restated as noted above.
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming (1)
5% annual return and (2) redemption at the end of each time period:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS*
CASH MANAGEMENT FUND $56 $79 $104 $164
TAX-EXEMPT MONEY MARKET FUND 56 79 104 164
You would pay the following expenses on a $1,000 investment, assuming (1)
5% annual return and (2) no redemption at the end of each time period:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS*
CASH MANAGEMENT FUND $16 $49 $84 $164
TAX-EXEMPT MONEY MARKET FUND 16 49 84 164
* Assumes conversion to Class A shares eight years after purchase.
THE EXPENSES IN THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION BY
THE FUNDS OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES IN FUTURE YEARS MAY BE
GREATER OR LESS THAN THOSE SHOWN.
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FINANCIAL HIGHLIGHTS
The following table sets forth the per share operating performance data
for a share outstanding, total return, ratios to average net assets and other
supplemental data for each year indicated. The table has been derived from
financial statements which have been examined by Tait, Weller & Baker,
independent certified public accountants, whose report thereon appears in the
SAI. This information should be read in conjunction with the Financial
Statements and Notes thereto, which also appear in the SAI, available at no
charge upon request to the Funds.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
PER SHARE DATA
-------------------------------------------------------------------------
NET ASSET
VALUE DIVIDENDS
(UNCHANGED NET FROM NET TOTAL NET ASSETS, END
DURING EACH INVESTMENT INVESTMENT RETURN OF YEAR
YEAR) INCOME INCOME (%) (THOUSANDS)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FIRST INVESTORS CASH MANAGEMENT FUND, INC.
CLASS B
1995*............................. 1.00 .044 .044 4.46 56
1996.............................. 1.00 .040 .040 4.11 107
FIRST INVESTORS TAX-EXEMPT MONEY MARKET FUND, INC.
CLASS B
1995*............................. 1.00 .024 .024 2.40 .01
1996.............................. 1.00 .020 .020 2.04 80
</TABLE>
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+ Net of fees waived or assumed
* For the period January 12, 1995 (date Class B shares were first offered)
to December 31, 1995
(a) Annualized
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- -------------------------------------------------------------------------
RATIOS / SUPPLEMENTAL DATA
- -------------------------------------------------------------------------
RATIO TO RATIO TO AVERAGE NET ASETS
AVERAGE NET ASSETS+ PRIOR TO WAIVER OF FEES
- ------------------------------- ---------------------------------
NET INVESTMENT NET INVESTMENT INCOME
INCOME (%)
EXPENSES (%) EXPENSES
(%) (%)
- -------------------------------------------------------------------------
1.45(a) 4.54(a) 1.93(a) 4.06(a)
1.45 4.04 1.94 3.54
1.46(a) 2.43(a) 1.81(a) 2.09(a)
1.46 2.06 1.83 1.69
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INVESTMENT OBJECTIVES AND POLICIES
The investment objective of CASH MANAGEMENT FUND is to earn a high rate of
current income consistent with the preservation of capital and maintenance of
liquidity. The investment objective of TAX-EXEMPT MONEY MARKET FUND is to earn a
high rate of current income that is exempt from Federal income tax and is not a
Tax Preference Item, consistent with the preservation of capital and maintenance
of liquidity. The Funds generally can invest only in securities that mature
within 397 days from the date of purchase. In addition, each Fund maintains a
dollar-weighted average portfolio maturity of 90 days or less. There is no
assurance that either Fund will be able to achieve its investment objective.
In managing each Fund's investment portfolio, the Adviser may employ
various professional money management techniques in order to respond to changing
economic and money market conditions and to shifts in fiscal and monetary
policy. These techniques include varying the composition and the
average-weighted maturity of each Fund's portfolio based upon the Adviser's
assessment of the relative values of various money market instruments and future
interest rate patterns. The Adviser also may seek to improve a Fund's yield by
purchasing or selling securities to take advantage of yield disparities among
money market instruments that regularly occur in the money market.
In periods of declining interest rates, each Fund's yield will tend to be
somewhat higher than prevailing market rates, and in periods of rising interest
rates the opposite will be true. Also, when interest rates are falling, net cash
inflows from the continuous sale of a Fund's shares likely will be invested in
portfolio instruments producing lower yields than the balance of the Fund's
portfolio, thereby reducing the Fund's yield. In periods of rising interest
rates, the opposite may be true.
CASH MANAGEMENT FUND
CASH MANAGEMENT FUND invests primarily in (1) high quality marketable
securities issued or guaranteed as to principal and interest by the U.S.
Government, its agencies or instrumentalities, (2) bank certificates of deposit,
bankers' acceptances, time deposits and other short-term obligations issued by
banks and (3) prime commercial paper and high quality, U.S. dollar denominated
short-term corporate bonds and notes. The U.S. Government securities in which
the Fund may invest include a variety of U.S. Treasury securities that differ in
their interest rates, maturities and dates of issue. Securities issued or
guaranteed by agencies or instrumentalities of the U.S. Government may be
supported by the full faith and credit of the United States or by the right of
the issuer to borrow from the U.S. Treasury. See the SAI for additional
information on U.S. Government securities. The Fund may invest in domestic bank
certificates of deposit (insured up to $100,000) and bankers' acceptances (not
insured) issued by domestic banks and savings institutions which are insured by
the Federal Deposit Insurance Corporation ("FDIC") and that have total assets
exceeding $500 million. The Fund also may invest in certificates of deposit
issued by London branches of domestic or foreign banks ("Eurodollar CDs"). The
Fund may invest in time deposits and other short-term obligations, including
uninsured, direct obligations bearing fixed, floating or variable interest
rates, issued by domestic banks, foreign branches of domestic banks, foreign
subsidiaries of domestic banks and domestic and foreign branches of foreign
banks. The Fund also may invest in repurchase
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agreements with banks that are members of the Federal Reserve System or
securities dealers that are members of a national securities exchange or are
market makers in U.S. Government securities, and, in either case, only where the
debt instrument subject to the repurchase agreement is a U.S. Treasury or agency
obligation. Repurchase agreements maturing in over 7 days are deemed illiquid
securities, and can constitute no more than 10% of the Fund's net assets. See
"Description of Certain Securities, Other Investment Policies and Risk Factors"
for additional information on repurchase agreements.
CASH MANAGEMENT FUND also may purchase high quality, U.S. dollar
denominated short-term bonds and notes, including variable rate and master
demand notes issued by domestic and foreign corporations (including banks).
Floating and variable rate demand notes and bonds permit the Fund, as the
holder, to demand payment of principal at any time, or at specified intervals
not exceeding 397 days, in each case upon not more than 30 days' notice. The
Fund may borrow money for temporary or emergency purposes in amounts not
exceeding 5% of its total assets. When market conditions warrant, the Fund may
purchase short-term, high quality fixed and variable rate instruments issued by
state and municipal governments and by public authorities. See "Description of
Certain Securities, Other Investment Policies and Risk Factors" for additional
information concerning these securities.
CASH MANAGEMENT FUND may purchase only obligations that (1) the Adviser
determines present minimal credit risks based on procedures adopted by the
Fund's Board of Directors, and (2) are either (a) rated in one of the top two
rating categories by any two nationally recognized statistical rating
organizations ("NRSROs") (or one, if only one rated the security) or (b) unrated
securities that the Adviser determines are of comparable quality. Securities
qualify as being in the top rating category ("First Tier Securities") if at
least two NRSROs (or one, if only one rated the security) have given it the
highest rating, or unrated securities that the Adviser determines are of
comparable quality. The Fund's purchases of commercial paper are limited to
First Tier Securities. The Fund may not invest more than 5% of its total assets
in securities rated in the second highest rating category ("Second Tier
Securities"). Investments in Second Tier Securities of any one issuer are
limited to the greater of 1% of the Fund's total assets or $1 million. The Fund
generally may invest no more than 5% of its total assets in the securities of a
single issuer (other than securities issued by the U.S. Government, its agencies
or instrumentalities).
TAX-EXEMPT MONEY MARKET FUND
TAX-EXEMPT MONEY MARKET FUND invests primarily in Municipal Instruments,
as defined below. The Fund may purchase only Municipal Instruments that (1) the
Adviser determines present minimal credit risks based on procedures adopted by
the Fund's Board of Directors, and (2) are either (a) rated in one of the top
two rating categories by any two NRSROs (or one, if only one rated the security)
or (b) unrated securities that the Adviser determines are of comparable quality.
The Fund may not invest more than 5% of its total assets in securities that are:
(1) rated in the second highest rating category ("Second Tier Securities") and
(2) are issued by a state or territory of the U.S. or any political subdivision
or instrumentality thereof, but not backed by taxing authority or a revenue
source that is a public facility. Investments in such securities of any one
issuer are limited to the greater of 1% of the Fund's total assets or $1
million. The Fund generally may invest no more than 5% of its total assets in
the securities of a single issuer (other than securities issued by the U.S.
Government, its agencies or instrumentalities). While the Fund
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seeks to provide a high level of interest income that is exempt from Federal
income tax, up to 20% of the Fund's total assets may be invested in high quality
fixed-income obligations, the interest on which is subject to Federal income
tax. See "Description of Certain Securities, Other Investment Policies and Risk
Factors--Municipal Instruments" for additional information concerning these
securities.
TAX-EXEMPT MONEY MARKET FUND may invest without limit in securities that
are related to each other in such a fashion that economic, political or business
changes or developments would affect more than one security in the Fund's
investment portfolio. Securities or instruments of issuers in the same state or
involved in the same business, or interest paid from similar sources of tax
revenues, are examples of the factors that might have an effect on more than one
instrument purchased by the Fund. The Fund may invest up to 5% of its net assets
in securities issued on a when-issued or delayed delivery basis, that is, for
delivery to the Fund later than the normal settlement date for most securities,
at a stated price and yield. See the SAI for more information concerning
when-issued and delayed delivery securities. The Fund may borrow money for
temporary or emergency purposes in amounts not exceeding 5% of its total assets.
GENERAL
Each Fund's investment objective and certain other investment policies set
forth in the SAI that are designated fundamental policies may not be changed
without shareholder approval. There can be no assurance that either Fund will
achieve its investment objective.
DESCRIPTION OF CERTAIN SECURITIES, OTHER INVESTMENT POLICIES AND RISK FACTORS
GENERAL MARKET RISK
In addition to the risks associated with particular types of securities,
which are discussed below, the Funds are subject to certain other risks.
Although money market funds are considered to be among the more conservative
investment vehicles available to the public, please bear in mind that money
market mutual funds are not insured by the FDIC and are not guaranteed by a bank
or other entity. There is the additional risk that each Fund will not be able to
maintain a stable $1.00 per share net asset value as a result of a decrease in
value of one or more of that Fund's portfolio securities.
TYPES OF SECURITIES AND THEIR RISKS
BANKERS' ACCEPTANCES. Each Fund may invest in bankers' acceptances.
Bankers' acceptances are short-term credit instruments used to finance
commercial transactions. Generally, an acceptance is a time draft drawn on a
bank by an exporter or importer to obtain a stated amount of funds to pay for
specific merchandise. The draft is then "accepted" by a bank that, in effect,
unconditionally guarantees to pay the face value of the instrument on its
maturity date. The acceptance may then be held by the accepting bank as an asset
or it may be sold in the secondary market at the going rate of interest for a
specific maturity. Although maturities for acceptances can be as long as 270
days, most acceptances have maturities of six months or less.
8
<PAGE>
CERTIFICATES OF DEPOSIT. Each Fund may invest in bank certificates of
deposit ("CDs"). The FDIC is an agency of the U.S. Government which insures the
deposits of certain banks and savings and loan associations up to $100,000 per
deposit. The interest on such deposits may not be insured if this limit is
exceeded. Current Federal regulations also permit such institutions to issue
insured negotiable CDs in amounts of $100,000 or more, without regard to the
interest rate ceilings on other deposits. To remain fully insured, these
investments currently must be limited to $100,000 per insured bank or savings
and loan association.
COMMERCIAL PAPER. Commercial paper is a promissory note issued by a
corporation to finance short-term credit needs which may either be unsecured or
backed by a letter of credit. Commercial paper includes notes, drafts or similar
instruments payable on demand or having a maturity at the time of issuance not
exceeding nine months, exclusive of days of grace or any renewal thereof. See
Appendix A to the SAI for a description of commercial paper ratings.
EURODOLLAR CERTIFICATES OF DEPOSIT. Each Fund may invest in Eurodollar
CDs, which are issued by London branches of domestic or foreign banks. Such
securities involve risks that differ from certificates of deposit issued by
domestic branches of U.S. banks. These risks include future political and
economic developments, the possible imposition of United Kingdom withholding
taxes on interest income payable on the securities, the possible establishment
of exchange controls, the possible seizure or nationalization of foreign
deposits or the adoption of other foreign governmental restrictions that might
adversely affect the payment of principal and interest on such securities.
MUNICIPAL INSTRUMENTS. As used in this Prospectus and in the SAI,
Municipal Instruments include the following instruments and related
participation interests: (1) municipal bonds; (2) municipal commercial paper;
(3) municipal notes; (4) private activity bonds or industrial development bonds;
(5) put bonds; and (6) variable rate demand instruments. Some Municipal
Instruments issued by Federal instrumentalities are not backed by the full faith
and credit of the U.S. Government. However, each Fund deems any Municipal
Instrument backed directly, or indirectly through insurance or any other
arrangement, or by the full faith and credit of the U.S. Government, to be a
high-grade Municipal Instrument for the Fund's purposes. Where advisable, to
ensure that each Fund's investments are all high-grade, that Fund will require
Municipal Instruments to be supported by a standby letter of credit or a similar
obligation of a creditworthy financial institution.
MUNICIPAL BONDS. Municipal bonds are debt obligations that generally
are issued to obtain funds for various public purposes and have a time to
maturity, at issuance, of more than one year. The two principal classifications
of municipal bonds are "general obligation" and "revenue" bonds. General
obligation bonds are secured by the issuer's pledge of its full faith and credit
for the payment of principal and interest. Revenue bonds generally are payable
only from revenues derived from a particular facility or class of facilities or,
in some cases, from the proceeds of a special tax or other specific revenue
source. There are variations in the security of municipal bonds, both within a
particular classification and between classifications, depending on numerous
factors. The yields on municipal bonds depend on, among other things, general
money market conditions, the condition of the municipal bond market, the size of
a particular offering, the maturity of the obligation and the rating of the
issuer. Generally, the value of municipal
9
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bonds varies inversely to changes in interest rates. See Appendix B to the SAI
for a description of municipal bond ratings.
MUNICIPAL COMMERCIAL PAPER. Issues of municipal commercial paper are
short-term unsecured negotiable promissory notes. Municipal commercial paper is
issued usually to meet temporary capital needs of the issuer or to serve as a
source of temporary construction financing. These obligations are paid from
general revenues of the issuer or are refinanced with long-term debt. See
Appendix A to the SAI for a description of municipal commercial paper ratings.
MUNICIPAL NOTES. Municipal notes are principally tax anticipation
notes, bond anticipation notes, revenue anticipation notes and project notes.
These obligations are sold by an issuer prior to the occurrence of another
revenue producing event to bridge a financial gap for such issuer. Municipal
notes are usually general obligations of the issuing municipality. Project notes
are issued by housing agencies, but are guaranteed by the U.S. Department of
Housing and Urban Development and are secured by the full faith and credit of
the United States. See Appendix C to the SAI for a description of municipal note
ratings.
PRIVATE ACTIVITY BONDS OR INDUSTRIAL DEVELOPMENT BONDS. Certain types
of revenue bonds, referred to as private activity bonds ("PABs") or industrial
development bonds ("IDBs") are issued by or on behalf of public authorities to
obtain funds to provide various privately operated facilities, such as airports
or mass transportation facilities. Most PABs and IDBs are pure revenue bonds and
are not backed by the taxing power of the issuing agency or authority. See
"Taxes" in the SAI for a discussion of special tax consequences to "substantial
users," or persons related thereto, of facilities financed by PABs or IDBs.
PUT BONDS. A "put bond" is a municipal bond that gives the holder the
unconditional right to sell the bond back to the issuer at a specified price
with interest and exercise date, which is typically well in advance of the
bond's maturity date. Each Fund may invest in multi-modal put (or tender option)
bonds. A tender option bond generally allows the underwriter or issuer, at its
discretion over the life of the indenture, to convert the bond into one of
several enumerated types of securities or "modes" upon 30 days' notice to
holders. Within that 30 days, holders must either submit the existing security
to the paying agent to receive the new security, or put back the security and
receive principal and interest accrued up to that time. TAX-EXEMPT MONEY MARKET
FUND will only invest in put bonds as to which it can exercise the put feature
on not more than 7 days' notice if there is no secondary market available for
these obligations.
VARIABLE RATE DEMAND INSTRUMENTS. Each Fund may invest in Variable
Rate Demand Instruments ("VRDIs"). VRDIs generally are revenue bonds, issued
primarily by or on behalf of public authorities, and are not backed by the
taxing power of the issuing authority. The interest on VRDIs is adjusted
periodically, and the holder of a VRDI can demand payment of all unpaid
principal plus accrued interest from the issuer on not more than seven calendar
days' notice. An unrated VRDI purchased by the Fund must be backed by a standby
letter of credit of a creditworthy financial institution or a similar obligation
of at least equal quality. Each Fund periodically reevaluates the credit risks
of such unrated instruments. There is a recognized after-market for VRDIs. VRDIs
may include instruments where adjustments to interest rates are limited either
by state law or the instruments themselves. As a result, these instruments may
experience greater changes in value than would otherwise be the case. The
maturity of VRDIs is
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deemed to be the longer of the (a) demand period or (b) time remaining until the
next adjustment to the interest rate thereon, regardless of the stated maturity
on the instrument. Benefits of investing in VRDIs may include reduced risk of
capital depreciation and increased yield when market interest rates rise.
However, owners of such instruments forego the opportunity for capital
appreciation when market interest rates fall. See the SAI for more information
concerning VRDIs.
PARTICIPATION INTERESTS. Each Fund may acquire any eligible Municipal
Instrument in the form of a participation interest. Under such an arrangement,
the Fund acquires as much as a 100% interest in a Municipal Instrument held by a
bank or other financial institution at a negotiated yield to the Fund. Banks or
other financial institutions may retain a fee, amounting to the excess of
interest paid on an instrument over the negotiated yield to the Fund, for
issuing participation interests to the Fund. Each Fund will acquire written
participation interests in Municipal Instruments only if they are issued by
banks or other financial institutions which, in the Adviser's opinion, present
minimal credit risk to the Fund. Participation interests may be accompanied by a
standby commitment by the bank or other financial institution to repurchase the
participations at the option of the Fund. Each Fund purchases such
participations only if the issuer has a private letter ruling or an opinion of
its counsel that interest on participations in Municipal Instruments for which
standby commitments have been issued is exempt from Federal income taxation.
Participations that are not accompanied by a standby commitment may not be
liquid assets. See "Restricted and Illiquid Securities". CASH MANAGEMENT FUND
will only purchase participations accompanied by a standby commitment.
REPURCHASE AGREEMENTS. Repurchase agreements are transactions in which a
Fund purchases securities from a bank or recognized securities dealer and
simultaneously commits to resell the securities to the bank or dealer at an
agreed-upon date and price reflecting a market rate of interest unrelated to the
coupon rate or maturity of the purchased securities. Each Fund's risk is limited
primarily to the ability of the seller to repurchase the securities at the
agreed-upon price upon the delivery date. See the SAI for more information
regarding repurchase agreements.
RESTRICTED AND ILLIQUID SECURITIES. CASH MANAGEMENT FUND may invest up to
10% of its net assets in illiquid securities, including (1) securities that are
illiquid due to the absence of a readily available market or due to legal or
contractual restrictions on resale or (2) repurchase agreements maturing in more
than seven days. However, illiquid securities for purposes of this limitation do
not include securities eligible for resale under Rule 144A of the Securities Act
of 1933, as amended, which the Fund's Board of Directors or Adviser has
determined are liquid under Board-approved guidelines. See the SAI for more
information regarding restricted and illiquid securities.
STANDBY COMMITMENTS. Each Fund may acquire standby commitments from banks
with respect to the Fund's simultaneous purchases of Municipal Instruments.
Under this arrangement, a bank agrees to buy a particular Municipal Instrument
from the Fund at a specified price at the Fund's option. A standby commitment
will be secured by the value of the underlying Municipal Instruments for which
the commitment is issued. Standby commitments are acquired solely to provide the
Fund with the requisite liquidity to meet large redemptions. Upon the exercise
of a standby commitment, the Fund tenders the Municipal Instrument to the issuer
of the commitment and normally the Fund receives in return the purchase price of
the
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Municipal Instrument, adjusted to reflect any amortized market premium or
original issue discount with the interest thereon. Because each Fund values its
portfolio at amortized cost, the amount payable by a bank under a standby
commitment is almost, if not precisely, equal to the Fund's value of such
Municipal Instrument. Standby commitments are subject to certain risks,
including the issuer's inability to pay for the Municipal Instruments when the
commitment is exercised, their lack of marketability, the variance between
maturities on the commitment and the Municipal Instrument for which it was
issued, and the lack of familiarity with standby commitments in the marketplace.
See the SAI for more information concerning standby commitments.
TIME DEPOSITS. Each Fund may invest in time deposits. Time deposits are
non-negotiable deposits maintained in a banking institution for a specified
period of time at a stated interest rate. For the most part, time deposits which
may be held by each Fund would not benefit from insurance from the Bank
Insurance Fund or the Savings Association Insurance Fund administered by the
FDIC.
VARIABLE RATE AND FLOATING RATE NOTES. Each Fund may invest in derivative
variable rate and floating rate notes. Issuers of such notes include
corporations, banks, broker-dealers and finance companies. Variable rate notes
include master demand notes which are obligations permitting the holder to
invest fluctuating amounts, which may change daily without penalty, pursuant to
direct arrangements between the Fund, as lender, and the borrower. The interest
rates on these notes fluctuate from time to time. The issuer of such obligations
normally has a corresponding right, after a given period, to prepay in its
discretion the outstanding principal amount of the obligations plus accrued
interest upon a specified number of days' notice to the holders of such
obligations.
The interest rate on a floating rate obligation is based on a known
lending rate, such as a bank's prime rate, and is adjusted automatically each
time such rate is adjusted. The interest rate on a variable rate obligation is
adjusted automatically at specified intervals. Frequently, such obligations are
secured by letters of credit or other credit support arrangements provided by
banks. Because these obligations are direct lending arrangements between the
lender and borrower, it is not contemplated that such instruments generally will
be traded, and there is generally no established secondary market for these
obligations, although they are redeemable at face value. Accordingly, where
these obligations are not secured by letters of credit or other credit support
arrangements, the right of the Fund to redeem is dependent on the ability of the
borrower to pay principal and interest on demand. Such obligations frequently
are not rated by credit rating agencies. Each Fund will invest in obligations
which are unrated only if the Adviser determines that, at the time of
investment, the obligations are of comparable quality to the other obligations
in which the Fund may invest. The Adviser, on behalf of each Fund, will consider
on an ongoing basis the creditworthiness of the issuers of the floating and
variable rate obligations in the Fund's portfolio.
HOW TO INVEST
Class B shares of the Funds may be acquired only through an exchange of
Class B shares from another Eligible Fund, as defined below, or through the
payment of dividends on Class B shares. DIRECT PURCHASES OF CLASS B SHARES WILL
NOT BE ACCEPTED. The minimum initial
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investment by exchange to establish a new account in Class B shares is $1,000.
You may open a Fund account with $250 for individual retirement accounts
("IRAs") or, at the Fund's discretion, a lesser amount for Simplified Employee
Pension Plans ("SEPS"), salary reduction SEPs ("SARSEPS"), SIMPLE-IRAs and
qualified or other retirement plans. If you are opening a Fund account by
reinvesting redemption proceeds within a certain time, the minimum initial
investment is $500 (see "Reinvestment after Redemption"). There is no minimum on
subsequent investments. Class B shares of a Fund will be purchased for your
account at the net asset value on any day the New York Stock Exchange ("NYSE")
and the Federal Reserve Bank are open ("Trading Day"). Class B shares may be
subject to a contingent deferred sales charge ("CDSC") upon redemption. See "How
to Sell Shares." Orders received by the Fund's transfer agent, Administrative
Data Management Corp. ("Transfer Agent") on a Trading Day prior to 12:00 noon,
New York City time will be credited to your account on that Trading Day. Orders
received after that time will be credited to your account the morning of the
following Trading Day. For a discussion of pricing practices when FIC's
Woodbridge offices are unable to open for business due to an emergency, see the
SAI. Each Fund reserves the right to reject any order for its shares for any
reason and to suspend the offering of its shares.
RETIREMENT PLANS. You may invest in shares of CASH MANAGEMENT FUND through
an IRA, SEP, SARSEP, SIMPLE-IRA or any retirement plan.
ELIGIBLE FUNDS. With respect to certain shareholder privileges noted in
this Prospectus and the SAI, each fund in the First Investors family of funds,
except as noted below, is an "Eligible Fund" (collectively, "Eligible Funds").
First Investors Special Bond Fund, Inc., First Investors Life Series Fund, First
Investors U.S. Government Plus Fund and Executive Investors Trust are not
Eligible Funds. The Funds, unless otherwise noted, are not Eligible Funds.
GENERAL. From time to time, the Underwriter also will pay, through
additional reallowances or other sources, a bonus or other compensation to
Dealers which employ a Dealer Representative who sells a minimum dollar amount
of the shares of the Funds and/or certain other First Investors funds during a
specific period of time. Such bonus or other compensation may take the form of
reimbursement of certain seminar expenses, co-operative advertising, or payment
for travel expenses, including lodging incurred in connection with trips taken
by qualifying Dealer Representatives to the Underwriter's principle office in
New York City. FIC Representatives generally are more highly compensated for
sales of First Investors mutual funds than for sales of other mutual funds.
HOW TO EXCHANGE SHARES
Should your investment needs change, Class B shares of the Funds may be
exchanged for Class B shares of any other Eligible Fund at net asset value.
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 fund into which the exchange is being made. Additionally,
the fund must be available for sale in the state where you reside. Before
exchanging Fund shares for shares of another fund, you should read the
Prospectus of the fund into which the exchange is to be made. You may obtain
Prospectuses and information with respect to which funds qualify for the
exchange privilege free of charge by calling Shareholder Services at
1-800-423-4026. Exchange requests received in "good order," as defined below, by
the Transfer Agent by
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12:00 noon, New York City time, on a Trading Day will be processed on that
Trading Day; exchange requests received after that time will be processed the
following Trading Day.
EXCHANGES BY MAIL. To exchange shares by mail, you should mail requests to
Administrative Data Management Corp., 581 Main Street, Woodbridge, NJ
07095-1198. Shares will be exchanged after the request is received in "good
order" by the Transfer Agent. "Good order" means that an exchange request must
include: (1) the names of the funds, account number(s), the dollar amount,
number of shares or percentage of the account you wish to exchange; (2) the
signature of all registered owners exactly as the account is registered; and (3)
signature guarantees, if required (see "How to Redeem Shares-Signature
Guarantees"). If the request is not in good order or information is missing, the
Transfer Agent will seek additional information from you and process the
exchange on the day it receives such information. Certain account registrations
may require additional legal documentation in order to exchange. To review these
requirements, please call Shareholder Services at 1-800-423-4026.
EXCHANGES BY TELEPHONE. See "Telephone Transactions."
ADDITIONAL EXCHANGE INFORMATION. Exchanges should be made for investment
purposes only. A pattern of frequent exchanges may be contrary to the best
interests of a Fund's other shareholders. Accordingly, each Fund has the right,
at its sole discretion, to limit the amount of an exchange, reject any exchange,
or, upon 60 days' notice, materially modify or discontinue the exchange
privilege. Each Fund will consider all relevant factors in determining whether a
particular frequency of exchanges is contrary to the best interests of the Fund
and/or a class of the Fund and its other shareholders. Any such restriction will
be made by a Fund on a prospective basis only, upon notice to the shareholder
not later than ten days following such shareholder's most recent exchange.
HOW TO REDEEM SHARES
You may redeem your Fund shares on any Trading Day directly through the
Transfer Agent. Your Representative may help you with this transaction. Shares
may be redeemed by mail or telephone or by wire to a pre-designated account at a
financial institution. Certain account registrations may require additional
legal documentation in order to redeem. Redemption requests received in "good
order," as defined below, by the Transfer Agent before 12:00 noon, New York City
time, on a Trading Day will be processed on that Trading Day; redemption
requests received after that time will be processed on the following Trading
Day. Payment of redemption proceeds generally will be made within seven days.
For a discussion of pricing practices when FIC's Woodbridge offices are unable
to open due to an emergency, see the SAI.
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A CDSC is imposed upon most redemptions of Class B shares at the rates set
forth below:
CONTINGENT DEFERRED SALES CHARGE
YEAR SINCE PURCHASE AS A PERCENTAGE OF DOLLARS INVESTED
PAYMENT MADE OR REDEMPTION PROCEEDS
First................................. 4%
Second................................ 4
Third................................. 3
Fourth................................ 3
Fifth................................. 2
Sixth................................. 1
Seventh and thereafter................ 0
The CDSC will not be imposed on (1) the redemption of Class B shares
acquired as dividends or other distributions, or (2) any increase in the net
asset value of redeemed shares above their initial purchase price (in other
words, the CDSC will be imposed on the lower of net asset value or purchase
price). In determining whether a CDSC is payable on any redemption, it will be
assumed that the redemption is made first of any Class B shares acquired as
dividends or distributions, second of Class B shares that have been held for a
sufficient period of time such that the CDSC no longer is applicable to such
shares and finally of Class B shares held longest during the period of time that
a CDSC is applicable to such shares. This will result in your paying the lowest
possible CDSC.
For purposes of determining the CDSC on Class B shares, all purchases made
during a calendar month will be deemed to have been made on the first business
day of that month at the average cost of all purchases made during that month.
The holding period of Class B shares acquired through an exchange with another
Eligible Fund will be calculated from the first business day of the month that
the Class B shares were initially acquired in the other Eligible Fund. The
amount of any CDSC will be paid to FIC. The CDSC imposed on the purchase of
Class B shares will be waived under certain circumstances. See "Waivers of CDSC
on Class B Shares" in the SAI.
CONVERSION OF CLASS B SHARES. A shareholder's Class B shares will
automatically convert to Class A shares approximately eight years after the date
of purchase, together with a pro rata portion of all Class B shares representing
dividends and other distributions paid in additional Class B shares. The Class B
shares so converted will no longer be subject to the higher expenses borne by
Class B shares. The conversion will be effected at the relative net asset values
per share of the two classes on the first business day of the month following
the month in which the eighth anniversary of the purchase of the Class B shares
occurs. If a shareholder effects one or more exchanges between Class B shares of
the Eligible Funds during the eight-year period, the holding period for the
shares so exchanged will commence upon the date of the purchase of the original
shares.
REDEMPTIONS BY MAIL. Written redemption requests should be mailed to
Administrative Data Management Corp., 581 Main Street, Woodbridge, NJ
07095-1198. For your redemption request to be in good order, you must include:
(1) the name of the Fund; (2) your account number; (3) the dollar amount, number
of shares or percentage of the account you want redeemed; (4) the original
signatures of all registered owners exactly as the account is registered; and
(5) signature guarantees, if required. If your redemption request is not in good
order or information is missing,
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the Transfer Agent will seek additional information and process the redemption
on the day it receives such information. To review these requirements, please
call Shareholder Services at 1-800-423-4026.
SIGNATURE GUARANTEES. In order to protect you, the Funds and their agents,
each Fund reserves the right to require signature guarantees in order to process
certain exchange or redemption requests. See the SAI or call Shareholder
Services at 1-800-423-4026 for instances when signature guarantees are required.
REDEMPTIONS BY TELEPHONE. See "Telephone Transactions."
ELECTRONIC FUND TRANSFER. Shareholders who have established Electronic
Fund Transfer may have redemption proceeds electronically transferred to a
predesignated bank account. Each Fund has the right, at its sole discretion, to
limit or terminate your ability to exercise the electronic fund transfer
privilege at any time. For additional information, see the SAI. Applications to
establish Electronic Fund Transfer are available from your FIC Representative or
by calling Shareholder Services at 1-800-423-4026.
Should you desire to change the name of the financial institution or the
designation or number of the account that would receive redemption proceeds, a
written request must be sent to the Transfer Agent at the address set forth
above. All registered owners of the account must sign the request in the
identical manner as the account is registered, and each signature must be
guaranteed. The Funds and the Transfer Agent are entitled to require such
further documentation as they may deem necessary.
SYSTEMATIC WITHDRAWAL PLAN. If you own noncertificated shares, you may set
up a plan for redemptions to be made automatically at regular intervals. See the
SAI for more information on the Systematic Withdrawal Plan or call Shareholder
Services at 1-800-423-4026.
REINVESTMENT AFTER REDEMPTION. If you redeem Class B shares in your Fund
account, you can reinvest within six months from the date of redemption all or
any part of the proceeds in shares of the same class of the same Fund or any
other Eligible Fund, at net asset value, on the date the Transfer Agent receives
your purchase request. For more information on the reinvestment privilege,
please see the SAI or call Shareholder Services at 1-800-423-4026.
REPURCHASE THROUGH UNDERWRITER. You may redeem Class B shares through a
Dealer. In this event, the Underwriter, acting as agent for each Fund, will
offer to repurchase or accept an offer to sell such shares at a price equal to
the net asset value, less any applicable CDSC, next determined after the making
of such offer. The Dealer may charge you an added commission for handling any
redemption transaction.
REDEMPTION OF LOW BALANCE ACCOUNTS. Because each Fund incurs certain fixed
costs in maintaining shareholder accounts, each Fund may redeem without your
consent, on at least 60 days' prior written notice (which may appear on your
account statement), any Fund account of Class B shares which has a net asset
value of less than $500. To avoid such redemption, you may, during such 60-day
period, acquire additional Fund shares of the same class through an exchange of
Class B shares from another Eligible Fund so as to increase your account balance
to the
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required minimum. There will be no CDSC imposed on such redemptions of Class B
shares. A Fund will not redeem accounts that fall below $500 solely as a result
of a reduction in net asset value.
Additional information concerning how to redeem shares of a Fund is
available upon request to your Representative or Shareholder Services at
1-800-423-4026.
TELEPHONE TRANSACTIONS
Unless you specifically decline to have telephone privileges, you, or any
person who we reasonably believe is authorized to act on your behalf, may redeem
or exchange noncertificated shares of a Fund by calling the Special Services
Department at 1-800-342-6221 weekdays (except holidays) between 9:00 A.M. and
5:00 P.M. (New York City time). Certain accounts, however, are required to
complete additional documents in order to activate telephone privileges.
Exchange or redemption requests received before 12:00 noon, New York City time,
on a Trading Day will be processed on that Trading Day; requests received after
that time will be processed on the following Trading Day. For more information
on telephone privileges, please call Shareholder Services at 1-800-423-4026 or
see the SAI.
TELEPHONE EXCHANGES. Exchange requests may be made by telephone (for
shares held on deposit only). Telephone exchanges to the Funds are not available
if your address of record has changed within 60 days prior to the exchange
request.
TELEPHONE REDEMPTIONS. The telephone redemption privilege may be used
provided: (1) the redemption proceeds are being mailed to the address of record;
(2) your address of record has not changed within the past 60 days; (3) each
redemption does not exceed $50,000; and (4) the proceeds of the redemption,
together with all redemptions made from the account during the prior 30-day
period, do not exceed $100,000. TELEPHONE REDEMPTION INSTRUCTIONS WILL BE
ACCEPTED FROM ANY ONE OWNER OR AUTHORIZED INDIVIDUAL.
ADDITIONAL INFORMATION. The Funds, the Adviser, the Underwriter and their
officers, directors, and employees will not be liable for any loss, damage, cost
or expense arising out of any instruction (or any interpretation of such
instruction) received by telephone or which they reasonably believe to be
authentic. This policy places the entire risk of loss for unauthorized or
fraudulent transactions on the shareholder, except that if the above-referenced
parties do not follow reasonable procedures, some or all of them may be liable
for any such losses. For more information on telephone transactions see the SAI.
The Funds have the right, at their sole discretion, upon 60 days' notice, to
materially modify or discontinue the telephone exchange and redemption
privilege. During times of drastic economic or market changes, telephone
exchanges or redemptions may be difficult to implement. If you experience
difficulty in making a telephone exchange or redemption, your exchange or
redemption request may be made by regular or express mail, and it will be
implemented at the next determined net asset value, less any applicable CDSC,
following receipt by the Transfer Agent.
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MANAGEMENT
BOARD OF DIRECTORS. Each Fund's Board of Directors, as part of its overall
management responsibility, oversees various organizations responsible for that
Fund's day-to-day management.
ADVISER. First Investors Management Company, Inc. supervises and manages
each Fund's investments, supervises all aspects of each Fund's operations and
determines each Fund's portfolio transactions. The Adviser is a New York
corporation located at 95 Wall Street, New York, NY 10005. The Adviser presently
acts as investment adviser to 14 mutual funds. First Investors Consolidated
Corporation ("FICC") owns all of the voting common stock of the Adviser and all
of the outstanding stock of FIC and the Transfer Agent. Mr. Glenn O. Head
controls FICC and, therefore, controls the Adviser.
As compensation for its services, the Adviser receives a fee from each of
the Funds, which is payable monthly. For the fiscal year ended December 31,
1996, the advisory fees for CASH MANAGEMENT FUND and TAX-EXEMPT MONEY MARKET
FUND were 0.50% of each Fund's average daily net assets.
UNDERWRITER. Each Fund has entered into an Underwriting Agreement with
First Investors Corporation, 95 Wall Street, New York, NY 10005, as Underwriter.
The Underwriter receives all CDSCs in connection with each Fund's Class B shares
and may receive other payments under a plan of distribution. See "How to Buy
Shares" and "Distribution Plans."
DISTRIBUTION PLANS
Pursuant to separate distribution plans pertaining to each Fund's Class B
shares ("Class B Plans"), each Fund is authorized to compensate the Underwriter
for certain expenses incurred in the distribution of that Fund's shares
("distribution fees") and the servicing or maintenance of existing Fund
shareholder accounts ("service fees"). Pursuant to the Class B Plans,
distribution fees are paid for activities relating to the distribution of Fund
shares, including costs of printing and dissemination of sales material or
literature, prospectuses and reports used in connection with the sale of Class B
shares of a Fund. Service fees are paid for the ongoing maintenance and
servicing of existing shareholder accounts, including payments to
Representatives who provide shareholder liaison services to their customers who
are holders of that Fund, provided they meet certain criteria.
Pursuant to each Class B Plan, each Fund is authorized to pay the
Underwriter a distribution fee at the annual rate of 0.75% of that Fund's
average daily net assets attributable to Class B shares and a service fee of
0.25% of the Fund's average daily net assets attributable to Class B shares.
Payments made to the Underwriter under each Class B Plan will represent
compensation for distribution and service activities, not reimbursement for
specific expenses incurred.
Although Class B shares are sold without an initial sales charge, the
Underwriter pays from its own resources a sales commission to FIC
Representatives and a concession equal to 3.5% of the
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<PAGE>
amount invested to Dealers who sell Class B shares. In addition, the Underwriter
will make quarterly payments of service fees to Representatives commencing after
the thirteenth month following the initial sale of Class B shares. The
Underwriter will make such payments at an annual rate of up to 0.25% of the
average net asset value of Class B shares which are attributable to shareholders
for whom the Representatives are designated as dealer of record.
The Funds may suspend or modify payments under the Plans at any time, and
payments are subject to the continuation of each Plan, the terms of any dealer
agreements between Dealers and the Underwriter and any applicable limits imposed
by the National Association of Securities Dealers, Inc. Each Fund will not carry
over any fees under the Plans to the next fiscal year. See "Distribution Plans"
in the SAI for a full discussion of the various Plans.
DETERMINATION OF NET ASSET VALUE
The net asset value of each Fund is determined separately for each class
of shares at 12:00 noon (New York City time) on each Trading Day, and at such
other times as each Fund's Board of Directors deems necessary, by dividing the
value of the Fund's securities, plus any cash and other assets, less all of its
liabilities attributable to that class, by the number of shares outstanding.
Expenses (other than 12b-1 fees and certain other class expenses) are allocated
daily to Class shares based upon the relative proportion of net assets of each
class. At present, net asset value is not calculated on the following holidays:
New Year's Day, Dr. Martin Luther King, Jr. Day (observed) Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veteran's Day,
Thanksgiving Day and Christmas Day. See the SAI for more information concerning
the determination of net asset value.
DIVIDENDS
Each Fund's net income is determined daily at 12:00 noon (New York City
time). Each daily determination of a Fund's net income takes into account
accrued interest and earned discount on its portfolio investments plus or minus
all realized and unrealized gains and losses on those portfolio investments less
accrued expenses of the Fund.
Generally, all of the net income of a Fund is declared on each Trading Day
as a dividend to shareholders of record at the time of each declaration. You
will be entitled to receive the dividend for the number of Class B shares you
own, each day, after adding shares purchased and subtracting shares redeemed
that day at 12:00 noon, New York City time, provided the Fund has received, by
12:00 noon, notification of the fact that such purchase has been made and that
federal funds are being wired, and of proper account information. Generally,
each month's declared dividends are paid on the first day of the following month
in additional shares of the distributing Fund. If you redeem all of your shares
at any time during the month, you are paid all dividends declared through the
day prior to the date of redemption, together with the proceeds of the
redemption. The Fund's net income for Saturdays, Sundays and holidays is
declared as a dividend on the evening of the last business day before such day
or days.
You may elect to receive dividend distributions in cash by notifying the
Transfer Agent by telephone or in writing at least five days prior to the last
business day of the month. Your election remains in effect until you revoke it
by notifying the Transfer Agent.
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A dividend by a Fund is paid in additional Class B Fund shares and not in
cash if any of the following events occurs: (1) the total amount of the dividend
to be paid is under $5; (2) the Fund has received notice of your death on an
individual account (until written alternate payment instructions and other
necessary documents are provided by your legal representative); or (3) a
dividend check is returned to the Transfer Agent, marked as being undeliverable,
by the U. S. Postal Service after two consecutive mailings.
TAXES
Each Fund intends to continue to qualify for treatment as a regulated
investment company under the Internal Revenue Code of 1986, as amended, so that
it will be relieved of Federal income tax on that part of its investment company
taxable income (consisting generally of taxable net investment income and net
short-term capital gain) that is distributed to its shareholders. In addition,
TAX-EXEMPT MONEY MARKET FUND intends to continue to qualify to pay
"exempt-interest dividends" (as defined below), which requires, among other
things, that at the close of each calendar quarter at least 50% of the value of
its total assets must consist of Municipal Instruments.
Distributions by TAX-EXEMPT MONEY MARKET 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 by a Fund of interest income
from taxable obligations are taxable to you as ordinary income to the extent of
the Fund's earnings and profits, whether received in cash or paid in additional
Fund shares. You will receive a statement following the end of each calendar
year describing the tax status of distributions paid by a Fund during that year.
Interest on indebtedness incurred or continued to purchase or carry Class
A shares of TAX-EXEMPT MONEY MARKET FUND will not be deductible for Federal
income tax purposes to the extent the Fund's distributions consist of
exempt-interest dividends. The Fund does not intend to invest in PABs or IDBs
the interest on which is treated as a Tax Preference Item.
Proposals have been, and in the future may be, introduced before Congress
for the purpose of restricting or eliminating the Federal income tax exemption
for interest on Municipal Instruments. If such a proposal were enacted, the
availability of Municipal Instruments for investment by TAX-EXEMPT MONEY MARKET
FUND and the value of its portfolio securities would be affected. In that event,
the Fund would reevaluate its investment objective and policies.
Each Fund is required to withhold 31% of all taxable dividends, capital
gain distributions and redemption proceeds payable to you (if you are an
individual or certain other non-corporate shareholder) if the Fund is not
furnished with your correct taxpayer identification number, and the same
percentage of dividends and such distributions in certain other circumstances.
The foregoing is only a summary of some of the important Federal income
tax considerations generally affecting each Fund and its shareholders; see the
SAI for a further discussion. There
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<PAGE>
may be other Federal, state or local tax considerations applicable to a
particular investor; for example, TAX-EXEMPT MONEY MARKET FUND's distributions
may be wholly or partly taxable under state and/or local laws. You therefore are
urged to consult your own tax adviser.
PERFORMANCE INFORMATION
Each Fund may advertise current yield quotations for each class of shares
based on its daily dividends. For purposes of current yield quotations, the
dividends per share for a seven-day period are annualized (using a 365-day year
basis) and divided by a Fund's average net asset value per share for the
seven-day period.
TAX-EXEMPT MONEY MARKET FUND may also advertise its tax-equivalent yield
and tax-equivalent effective yield for each class of shares. Tax-equivalent
yields show the taxable yields an investor would have to earn to equal the
Fund's tax-free yields. The tax-equivalent yield is calculated similarly to the
yield, except that the yield is increased using a stated income tax rate to
demonstrate the taxable yield necessary to produce an after-tax yield equivalent
to the Fund's tax-free yield.
Yield will fluctuate from time to time. Yield reflects past performance
and does not necessarily indicate future results. Any performance not reflecting
the CDSC will be greater than if the CDSC were used. Each class of shares of a
Fund has different expenses which will affect its yield. Yield computations
differ from other accounting methods and therefore may differ from dividends
actually paid or reported net income. Additional performance information is
contained in each Fund's Annual Report, which may be obtained without charge by
contacting either Fund at 1-800-423-4026.
GENERAL INFORMATION
ORGANIZATION. CASH MANAGEMENT FUND and TAX-EXEMPT MONEY MARKET FUND were
incorporated in the state of Maryland on July 17, 1978 and March 11, 1983,
respectively. Each Fund's authorized capital stock consists of 5 billion shares
of common stock, all of one series, with a par value per share of $0.01. Each
Fund is authorized to issue shares of common stock in such separate and distinct
series and classes of series as the particular Fund's Board of Directors shall
from time to time establish. The shares of common stock of each Fund are
presently divided into two classes, designated Class A shares and Class B
shares. The Funds do not hold annual shareholder meetings. If requested to do so
by the holders of at least 10% of a Fund's outstanding shares, such Fund's Board
of Directors will call a special meeting of shareholders for any purpose,
including the removal of Directors. Each share of each Fund has equal voting
rights except as noted above.
CLASS A SHARES. Each of the Funds also offers Class A shares, which may be
purchased at net asset value. Class A shares may be exchanged for shares of the
same class of any other Eligible Fund. Exchanges of Class A shares of a Fund may
be subject to a sales charge. Class A shares offer investors certain account
privileges which are not available to Class B shareholders. Class A shares are
generally subject to lower overall expenses and are not subject to ongoing
distribution expenses. The Funds' Class A Prospectus is available at no charge
upon request to your Representative.
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CUSTODIAN. The Bank of New York, 48 Wall Street, New York, NY 10286, is
custodian of the securities and cash of each Fund.
TRANSFER AGENT. Administrative Data Management Corp., 581 Main Street,
Woodbridge, NJ 07095-1198, an affiliate of FIMCO and FIC, acts as transfer and
dividend disbursing agent for each Fund and as redemption agent for regular
redemptions. The Transfer Agent's telephone number is 1-800-423-4026.
SHARE CERTIFICATES. The Funds do not issue certificates for their shares.
Ownership of shares of each Fund is recorded on a stock register by the Transfer
Agent and shareholders have the same rights of ownership with respect to such
shares as if certificates had been issued.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES. Stephen Lee Wilson,
2032 Windsor Pl., Fort Worth, TX 76110 owns 94.7% of the Class B shares of
TAX-EXEMPT MONEY MARKET FUND and may, therefore, be deemed to control this class
of that Fund under the 1940 Act. Huggins B. McKinnon, 32 E. 92nd Street,
Brooklyn, NY 11212-1531 owns 28.7% of the Class B shares of CASH MANAGEMENT FUND
and may, therefore, be deemed to control this class of that Fund under the 1940
Act.
CONFIRMATIONS AND STATEMENTS. You will receive confirmations of purchases
and redemptions of shares of a Fund. Generally, confirmation statements will be
sent to you following a transaction in the account, including payment of a
dividend or capital gain distribution in additional shares or cash.
SHAREHOLDER INQUIRIES. Shareholder inquiries can be made by calling
Shareholder Services at 1-800-423-4026.
ANNUAL AND SEMI-ANNUAL REPORTS TO SHAREHOLDERS. It is each Fund's practice
to mail only one copy of its annual and semi-annual reports to any address at
which more than one shareholder with the same last name has indicated that mail
is to be delivered. Additional copies of the reports will be mailed if requested
in writing or by telephone by any shareholder.
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TABLE OF CONTENTS
================================================================================
Fee Table........................................................ 2
Financial Highlights............................................. 4
Investment Objectives and Policies............................... 6
How to Invest.................................................... 12
How to Exchange Shares........................................... 13
How to Redeem Shares............................................. 14
Telephone Transactions........................................... 17
Management....................................................... 18
Distribution Plans............................................... 18
Determination of Net Asset Value................................. 19
Dividends........................................................ 19
Taxes............................................................ 20
Performance Information.......................................... 21
General Information.............................................. 21
INVESTMENT ADVISER CUSTODIAN
First Investors Management The Bank of New York
Company, Inc. 48 Wall Street
95 Wall Street New York, NY 10286
New York, NY 10005
TRANSFER AGENT
UNDERWRITER Administrative Data
First Investors Corporation Management Corp.
95 Wall Street 581 Main Street
New York, NY 10005 Woodbridge, NJ 07095-1198
LEGAL COUNSEL AUDITORS
Kirkpatrick & Lockhart LLP Tait, Weller & Baker
1800 Massachusetts Avenue, N.W. Two Penn Center Plaza
Washington, D.C. 20036 Philadelphia, PA 19102-1707
This Prospectus is intended to constitute an offer by either Fund only of the
securities of the other Fund of which it is the issuer and is not intended to
constitute an offer by either Fund of the securities of the other Fund whose
securities are also offered by this Prospectus. Neither Fund intends to make any
representation as to the accuracy or completeness of the disclosure relating to
the other Fund in this Prospectus relating to the other Fund. No dealer,
salesman or any other person has been authorized to give any information or to
make any representations other than those contained in this Prospectus or the
Statement of Additional Information, and if given or made, such information and
representation must not be relied upon as having been authorized by either Fund,
First Investors Corporation, or any affiliate thereof. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any of the
shares offered hereby in any state to any person to whom it is unlawful to make
such offer in such state.
