FIRST INVESTORS CASH MANAGEMENT FUND INC, 485BPOS, 1997-04-22

FIRST INVESTORS CASH MANAGEMENT FUND INC
485BPOS, 1997-04-22

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As filed with the Securities and Exchange Commission on April 22, 1997

Registration No. 2-62347
811-2860
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Post-Effective Amendment No. 24 X
-
and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940

Amendment No. 24 X
-
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FIRST INVESTORS CASH MANAGEMENT FUND, INC.
(Exact name of Registrant as specified in charter)

Ms. Concetta Durso
Secretary and Vice President
First Investors Cash Management Fund, Inc.
95 Wall Street
New York, New York 10005
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement

It is proposed that this filing will become effective on April 30, 1997 pursuant
to paragraph (b) of Rule 485.

Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
previously elected to register an indefinite number of shares of common stock,
par value $.01 per share, under the Securities Act of 1933. Registrant filed a
Rule 24f-2 Notice for its fiscal year ending December 31, 1996 on February 27,
1997.

<PAGE>

FIRST INVESTORS CASH MANAGEMENT FUND, INC.
CROSS-REFERENCE SHEET

N-1A Item No. Location
- ------------- --------

PART A: PROSPECTUS

1. Cover Page.................................. Cover Page
2. Synopsis.................................... Fee Table
3. Condensed Financial Information............. Financial Highlights
4. General Description of Registrant........... Investment Objectives
and Policies; General
Information
5. Management of the Fund...................... Management
5A. Management's Discussion of
Fund Performance....................... Performance
Information
6. Capital Stock and Other Securities.......... Description of
Shares; Dividends;
Taxes; Determination
of Net Asset Value
7. Purchase of Securities Being Offered........ How to Buy Shares
8. Redemption or Repurchase.................... How to Exchange
Shares; How to Redeem
Shares; Telephone
Transactions
9. Pending Legal Proceedings................... Not Applicable

PART B: STATEMENT OF ADDITIONAL INFORMATION

10. Cover Page.................................. Cover Page
11. Table of Contents........................... Table of Contents
12. General Information and History............. General Information
13. Investment Objectives and Policies.......... Investment Policies;
Investment
Restrictions
14. Management of the Fund...................... Directors and Officers
15. Control Persons and Principal
Holders of Securities..................
16. Investment Advisory and Other Services...... Management
17. Brokerage Allocation........................ Allocation of
Portfolio Transactions
18. Capital Stock and Other Securities.......... Determination of Net
Asset Value; Daily
Dividends
19. Purchase, Redemption and Pricing
of Securities Being Offered............ Additional Exchange
and Redemption
Information and Other
Services;
Determination of Net
Asset Value
20. Tax Status.................................. Taxes
21. Underwriters................................ Underwriter
22. Performance Data............................ Performance
Information
23. Financial Statements........................ Financial Statements;
Report of Independent
Accountants

PART C: OTHER INFORMATION

Information required to be included in Part C is set forth under the appropriate
item so numbered, in Part C hereof.

<PAGE>

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 A SHARES. The Funds' Class B
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

<PAGE>

FEE TABLE

The following table is intended to assist investors in understanding the
expenses associated with investing in Class A 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)............................ None

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)

TOTAL FUND
MANAGEMENT 12B-1 OTHER OPERATING
FEES FEES EXPENSES(1)+ EXPENSES(2)+

CASH MANAGEMENT FUND.......... 0.50% -0- 0.30% 0.80%
TAX-EXEMPT MONEY MARKET FUND.. 0.50 -0- 0.30 0.80

+ Net of waiver and/or reimbursement.
(1) Other Expenses have been restated 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.
(2) If certain fees and expenses had not been waived or reimbursed, Total Fund
Operating Expenses would have been 1.19% for CASH MANAGEMENT FUND and
1.08% 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."

The Example below is based on Class A expense data for each Fund's fiscal
year ended December 31, 1996, except that certain Operating Expenses have been
restated as noted above.

2
<PAGE>

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 $ 8 $26 $44 $99
TAX-EXEMPT MONEY MARKET FUND 8 26 44 99

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.

3
<PAGE>

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.

- --------------------------------------------------------------------------------
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 A
1987................. $ 1.00 $.058 $.058 6.01 $ 218,099
1988................. 1.00 .068 .068 7.03 222,715
1989................. 1.00 .085 .085 8.80 335,678
1990................. 1.00 .074 .074 7.71 372,081
1991................. 1.00 .052 .052 5.35 217,150
1992................. 1.00 .030 .030 3.03 150,895
1993................. 1.00 .025 .025 2.57 127,178
1994................. 1.00 .036 .036 3.69 128,495
1995................. 1.00 .053 .053 5.42 128,635
1996................. 1.00 .048 .048 4.89 133,801

FIRST INVESTORS TAX-EXEMPT MONEY MARKET FUND, INC.
CLASS A
1987................. $ 1.00 $.039 $.039 4.01 $ 40,106
1988................. 1.00 .046 .046 4.68 39,467
1989................. 1.00 .055 .055 5.67 36,736
1990................. 1.00 .052 .052 5.31 40,745
1991................. 1.00 .038 .038 3.87 31,157
1992................. 1.00 .023 .023 2.36 25,399
1993................. 1.00 .018 .018 1.85 23,857
1994................. 1.00 .022 .022 2.24 26,424
1995................. 1.00 .032 .032 3.24 25,045
1996................. 1.00 .028 .028 2.85 22,888

+ Net of fees waived by the investment adviser and the transfer agent.
</TABLE>

4
<PAGE>

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RATIOS / SUPPLEMENTAL DATA
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RATIO TO RATIO TO AVERAGE NET ASETS
AVERAGE NET ASSETS+ PRIOR TO WAIVER OF FEES
- ------------------------------- ---------------------------------

NET INVESTMENT NET INVESTMENT INCOME
INCOME (%)
EXPENSES (%) EXPENSES
(%) (%)
- --------------- ---------------- ----------------- ----------------------

.98 5.84 1.02 5.80
.85 6.83 .95 6.73
.84 8.44 .96 8.32
.86 7.45 .96 7.35
.94 5.33 1.13 5.14
.87 3.02 1.16 2.72
.70 2.54 1.15 2.09
.70 3.72 1.15 3.26
.70 5.29 1.18 4.81
.70 4.78 1.19 4.29

.76 3.92 N/A N/A
.75 4.59 N/A N/A
.81 5.52 N/A N/A
.80 5.19 N/A N/A
.94 3.83 1.02 3.74
.95 2.33 1.05 2.23
.70 1.83 .92 1.61
.70 2.24 1.02 1.92
.71 3.18 1.06 2.84
.71 2.81 1.08 2.44

5
<PAGE>

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 agreements with banks

6
<PAGE>

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

7
<PAGE>

by the U.S. Government, its agencies or instrumentalities). While the Fund 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 bonds

9
<PAGE>

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

10
<PAGE>

experience greater changes in value than would otherwise be the case. The
maturity of VRDIs is 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

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<PAGE>

and normally the Fund receives in return the purchase price of the 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 BUY SHARES

You may buy shares of a Fund through a First Investors registered
representative ("FIC Representative") or through a registered representative
("Dealer Representative") of an unaffiliated

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<PAGE>

broker-dealer ("Dealer") which is authorized to sell shares of a Fund. Your FIC
Representative or Dealer Representative (each, a "Representative") may help you
complete and submit an application to open an account with a Fund. Certain
accounts may require additional documentation. Shares of a Fund will be
purchased for your account only after the Fund has received federal funds for
your purchase on any day the New York Stock Exchange ("NYSE") and the Federal
Reserve Bank are open for trading ("Trading Day"). Checks, including bank
checks, cashier's checks and certified checks received by a Fund on a Trading
Day prior to 4:00 p.m., New York City time, are presently considered to be
federal funds the morning of the following Trading Day. Checks received after
4:00 p.m. will be considered to be federal funds the morning of the second
following Trading Day. Provided the Transfer Agent has received telephone advice
prior to 12:00 noon, New York City time, advising the Fund that a wire transfer
will be made to the Fund, identifying your name, existing account number and
amount, and a federal reference number documenting such a transfer or such wire
transfer is in fact received by the Fund that day prior to 12:00 noon, such wire
transfer will be considered to be federal funds received that day. In the event
federal funds are wired to a Fund without informing the Fund as provided above,
such federal funds will be credited to the account the next Trading Day
following receipt. 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 application or order for its shares for
any reason and to suspend the offering of its shares.

You also may invest in Class A shares of the Funds through the branch
offices of FIC. You may not wire transfer funds to the Funds or make any cash
deposits into the Funds through FIC branch offices. FIC branch offices generally
send customers' investment checks to the Funds no less frequently than once each
Trading Day. However, there may be delays in the Funds' receipt of your
investment check sent through an FIC branch office and your check will not be
invested in your account until federal funds are available to the Fund as
described above. You may, therefore, wish to send your check directly to the
Transfer Agent to ensure prompt investment of your monies.

While Dealers have the responsibility of transmitting all orders and
checks promptly, if you choose to invest in the Funds through a Dealer, you
should be aware that they are not agents of the Funds, and neither Fund assumes
any responsibility for their actions. Generally, Dealers send customers'
investment checks to the Transfer Agent no less frequently than once each
Trading Day. If you send your check through a Dealer, there may be delays in the
Funds' receipt of your check and your check will not be invested in your account
until federal funds are available to the Fund as described above. You may,
therefore, wish to send your check directly to the Transfer Agent to ensure
prompt investment of your monies. While it is not common, some Dealers may
charge you a fee for processing transactions in shares of the Funds. The
Transfer Agent, or the Custodian will respond to inquiries and act upon
instructions received by them from Dealers with respect to a client's account.
Responsibility for any errors in these instructions will be borne by the Dealer
and the investors and not by the Funds.

INITIAL INVESTMENT IN A FUND. You may open a Fund account with as little
as $1,000. This account minimum is waived if you open an account for a
particular class of shares through a full exchange of shares of the same class
of another "Eligible Fund," as defined below. 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

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<PAGE>

("SARSEPs"), SIMPLE-IRAs and qualified or other retirement plans. Automatic
investment plans allow you to open an account with as little as $50, provided
you invest at least $600 a year. See "Systematic Investing."

ADDITIONAL PURCHASES. After you make your first investment in Class A
shares of a Fund, you may purchase additional Class A shares of the Fund by
mailing or delivering (or arranging for the mailing or delivery by a Dealer)
directly to the Transfer Agent at 581 Main Street, Woodbridge, NJ 07095, a check
made payable to the appropriate Fund or by arranging for wiring of funds to the
Custodian. Include your account number on the face of the check. If more than
one check deposited to purchase Fund shares is returned for insufficient funds,
there will be a $15 charge for each such subsequent returned check.

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 and
First Investors U.S. Government Plus Fund are not Eligible Funds. The Funds,
unless otherwise noted, are not Eligible Funds. The funds of Executive Investors
Trust ("Executive Investors") are Eligible Funds provided the shares of any such
fund either have been (a) acquired through an exchange from an Eligible Fund
which imposes a maximum sales charge of 6.25%, or (b) held for at least one year
from their date of purchase.

SYSTEMATIC INVESTING. Shareholders who have an account with a U.S. bank,
or other financial institution that is an Automated Clearing House member, may
arrange for automatic investments in a Fund on a systematic basis through First
Investors Money Line and through automatic payroll investments. You may also
elect to invest in Class A shares of a Fund at net asset value all the cash
distributions or Systematic Withdrawal Plan payments from the same class of
shares of an existing account in another Eligible Fund. If you wish to
participate in any of these systematic investment plans, please call Shareholder
Services at 1-800-423-4026 or see the SAI.

SUPER CHECKING PROGRAM. Class A shareholders may establish Super Checking.
Super Checking links your Fund account with a non-interest bearing checking
account at First Financial Savings Bank, S.L.A. ("FFS"), an affiliate of the
Funds. Each day, the Fund automatically "sweeps," or transfers, funds to your
FFS account to cover your withdrawals. For more information on the Super
Checking Program, call FFS at 1-800-304-7748 or see the SAI.

UNITHOLDERS. Holders of certain unit trusts ("Unitholders") who have
elected to invest the entire amount of cash distributions from either principal,
interest income or capital gains or any combination thereof ("Unit
Distributions") from the following trusts may invest such Unit Distributions in
Class A shares of a Fund. Unitholders of various series of New York Insured
Municipals-Income Trust sponsored by Van Kempen Merritt Inc. (the "New York
Trust"); Unitholders of various series of the Multistate Tax Exempt Trust
sponsored by Advest Inc.; Unitholders of various series of the Municipal Insured
National Trust, J.C. Bradford & Co. as agent; and Unitholders of various series
of tax-exempt trusts, other than the New York Trust, sponsored by Van Kempen
Merritt Inc. may purchase Class A shares of a Fund with Unit Distributions. Each
Fund's initial minimum investment requirement is waived for purchases of

14
<PAGE>

Class A shares with Unit Distributions. Shares of a Fund purchased by
Unitholders may only be exchanged for Class A shares of the other Fund.

RETIREMENT PLANS. You may invest in shares of a Fund through an IRA, SEP,
SARSEP, SIMPLE-IRA or any other retirement plan.

HOW TO EXCHANGE SHARES

Should your investment needs change, Class A shares of the Funds may be
exchanged for Class A shares of any other Eligible Fund or units of any single
payment plan ("plan") sponsored by the Underwriter at net asset value if such
Fund shares were either (a) acquired through an exchange of shares from an
Eligible Fund which imposes a maximum sales charge of 6.25%, or (b) held for at
least one year if acquired through an exchange of shares from Executive
Investors, commencing with the date the Executive Investors shares were
originally purchased. A sales charge will be imposed on all other exchanges of
Class A shares, including shares acquired as dividends on such shares. 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 or plan into which the exchange is being made.
Additionally, the fund or plan must be available for sale in the state where you
reside. Before exchanging Fund shares for shares of another fund or plan, you
should read the Prospectus of the fund or plan into which the exchange is to be
made. You may obtain Prospectuses and information with respect to which funds or
plans 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 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) share
certificates, if issued; (3) the signature of all registered owners exactly as
the account is registered; and (4) 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

15
<PAGE>

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. Shares in a retirement account may only be redeemed by
mail. 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. If the shares being redeemed
were recently purchased by check, payment may be delayed to verify that the
check has been honored, normally not more than fifteen days. For a discussion of
pricing practices when FIC's Woodbridge offices are unable to open due to an
emergency, see the SAI.

REDEMPTIONS BY MAIL. Written redemption requests should be mailed to
Administrative Data Management Corp., 581 Main Street, Woodbridge, NJ
07095-1198. For your redemption request to be in good order, you must include:
(1) the name of the Fund; (2) your account number; (3) the dollar amount, number
of shares or percentage of the account you want redeemed; (4) share
certificates, if issued; (5) the original signatures of all registered owners
exactly as the account is registered; and (6) signature guarantees, if required.
If your redemption request is not in good order or information is missing, the
Transfer Agent will seek additional information and process the redemption on
the day it receives such information. To review these requirements, please call
Shareholder Services at 1-800-423-4026.

SIGNATURE GUARANTEES. 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."

SPECIAL REDEMPTION PROCEDURES. In addition to the regular redemption
procedure, each Fund offers a Check Redemption Privilege and an Expedited
Redemption Privilege.

CHECK REDEMPTION PRIVILEGE. By an appropriate designation on the Fund
account application, by written request later sent to the Transfer Agent or by
telephone, provided your address of record has not changed in the past 60 days,
you may obtain checks for non-retirement accounts ("Redemption Checks") drawn on
each Fund's account at The Bank of New York, 48 Wall Street, New York, NY 10286.
Such Redemption Checks may be made payable to the order of any person designated
by you in an amount of $500 or more. Dividends are earned on the shares until
the Redemption Check clears, and you are subject to the rules and regulations of
the Custodian covering checking accounts. Neither the Funds nor the Custodian
charges you for the use of such

17
<PAGE>

Redemption Checks. On presentation of a Redemption Check to the Custodian for
payment, the Fund determines that a sufficient number of full and fractional
shares are available in your account to cover the amount of the Redemption
Check. Shares are considered available after a fifteen day clearing period. The
Funds return all cancelled checks to you once a month. Neither the Fund nor the
Custodian can certify or directly cash Redemption Checks. Any "stop payment"
requests must be directed to the Transfer Agent and not to the Custodian.
However, there is no guarantee that a "stop payment" request will stop the
payment of a Redemption Check. You cannot use the Check Redemption Privilege for
the redemption of shares for which certificates have been issued, for
redemptions from retirement accounts or for redemptions of shares which are
subject to a contingent deferred sales charge ("CDSC"). A CDSC may be imposed on
the redemption of Fund shares acquired through an exchange of Class A shares
from another Eligible Fund which were originally purchased at net asset value.
Because each Fund accrues dividends on a daily basis, you may not redeem your
Fund account in its entirety by the use of the Check Redemption Privilege.

It is your responsibility to be certain that sufficient shares are in your
account and available to cover the amount of the Redemption Check since, if
there are insufficient shares, the Redemption Check will be returned through
banking channels marked "insufficient funds." It is also your responsibility to
ensure that such Redemption Checks are not made available to unauthorized
individuals and to promptly notify the Funds of any lost or stolen Redemption
Checks. Either the Funds or the Custodian may at any time amend or terminate the
Check Redemption Privilege. The Funds bear all expenses relating to this Check
Redemption Privilege.

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.

EXPEDITED REDEMPTION PRIVILEGE. You may elect to have your redemption
proceeds transmitted by wire to the bank account specified on your application.
If the proceeds of your wire transfer redemption are less than $5,000, you will
be charged a $10 fee for each wire transfer redemption. If the proceeds of your
wire transfer redemption are at least $5,000, there will be no fee charged for
the first six such wire transfer redemptions made in any month. If you initiate
more than six wire transfer redemptions of at least $5,000 in any month, a $10
fee will be charged to you for each subsequent wire redemption in that month. If
you wish to use the Expedited Redemption Privilege, you must contact the
Transfer Agent. You may use the Expedited Redemption Privilege only if the
redemption proceeds are paid to the same financial institution and account
number as designated on the application. If the financial institution account is
not in the identical name(s) of the shareholder(s) as registered with the Fund,
a signature guarantee will be required. For accounts held by a corporation,
fiduciary or other holder not acting in an individual capacity, appropriate
resolutions or other proof of authority to act must be submitted with the
application. Requests for Expedited Redemptions can be made by calling the
Transfer Agent at 1-800-423-4026.

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<PAGE>

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 A shares in your Fund
account which were acquired through an exchange from an Eligible Fund which
imposes a maximum sales charge of 6.25%, 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 A 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 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 A shares which has a net asset
value of less than $500. To avoid such redemption, you may, during such 60-day
period, purchase additional Class A Fund shares so as to increase your account
balance to the required minimum. Accounts established under a Systematic
Investment Plan that have been discontinued prior to meeting the $1,000 minimum
are subject to this policy.

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.

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<PAGE>

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) the
shares to be redeemed have not been issued in certificate form; (4) each
redemption does not exceed $50,000; and (5) 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.

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.

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<PAGE>

UNDERWRITER. Each Fund has entered into an Underwriting Agreement with
First Investors Corporation, 95 Wall Street, New York, NY 10005, as Underwriter.
With respect to TAX-EXEMPT MONEY MARKET FUND, the Underwriter or Adviser may
make payments to Dealers in connection with a plan of distribution. See
"Distribution Plan."

DISTRIBUTION PLANS

TAX-EXEMPT MONEY MARKET FUND has adopted a Class A distribution plan which
permits the payment of fees to Dealers for distribution services and
administrative services. The Underwriter or the Adviser, in their sole
discretion, may make payments to Dealers. Such fees are paid out of the advisory
fee or the Underwriter's past profits or any other source available to the
Underwriter or the Adviser.

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 each class of 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 A 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. If you
purchase shares of a Fund, your shares will begin to earn dividends on the day
federal funds are credited to your Fund account. See "How To Buy Shares."
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.

20
<PAGE>

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.

A dividend by a Fund is paid in additional Class A 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.

21
<PAGE>

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 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. 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 B SHARES. Each of the Funds also offers Class B shares, which may be
acquired only through an exchange of Class B shares from another Eligible Fund
or as reinvested dividends from the same Fund paid in additional Class B shares.
Class B shares may be acquired without an initial sales charge, but are
generally subject to a contingent deferred sales charge which declines in steps
from 4% to 0% during a six-year period. Class B shares of a Fund will
automatically

22
<PAGE>

convert into Class A shares of the same Fund approximately eight years after
purchase. Class B shares may be exchanged for shares of the same class of any
other Eligible Fund. Each Fund has adopted a separate distribution plan under
Rule 12b-1 of the l940 Act which provides that the applicable Fund is authorized
to compensate the Underwriter for distribution and service activities relating
to Class B shares. The Funds' Class B Prospectus is available at no charge upon
request to your representative.

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.

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. However,
systematic investments made through First Investors Money Line or automatic
payroll deductions will only be confirmed in your monthly or quarterly
statement, showing all transactions occurring during the period.

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.

23
<PAGE>

TABLE OF CONTENTS

Fee Table............................................................. 2
Financial Highlights.................................................. 4
Investment Objectives and Policies.................................... 6
How to Buy Shares..................................................... 12
How to Exchange Shares................................................ 15
How to Redeem Shares.................................................. 16
Telephone Transactions................................................ 18
Management............................................................ 19
Distribution Plan..................................................... 20
Determination of Net Asset Value...................................... 20
Dividends............................................................. 20
Taxes................................................................. 21
Performance Information............................................... 22
General Information................................................... 22

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.

<PAGE>

First Investors
Cash Management
Fund, Inc.
- ---------------------------

First Investors
Tax-Exempt Money
Market Fund, Inc.

- ---------------------------

Prospectus

- ----------------------------

April 30, 1997

First Investors Logo

Logo is described as follows: the arabic numeral one separated into seven
vertical segments followed by the words "First Investors."

Verticle line from top to bottom in center of page about 1/2 inch in thickness

The following language appears to the left of the above language in the printed
piece:

The words "BULK RATE U.S. POSTAGE PAID PERMIT NO. 7379" in a box to the right of
a circle containing the words "MAILED FROM ZIP CODE 11201" appears on the
righthand side.

The following language appears on the lefthand side:

FIRST INVESTORS CASH MANAGEMENT FUND, INC.
FIRST INVESTORS TAX-EXEMPT MONEY MARKET FUND, INC.
95 WALL STREET
NEW YORK, NY 10005

First Investors Logo (as described above)
A MEMBER OF THE
FIRST INVESTORS
FINANCIAL NETWORK

FIMM001A

<PAGE>

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.

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

<PAGE>

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."

2
<PAGE>

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.

3
<PAGE>

FINANCIAL HIGHLIGHTS

- --------------------------------------------------------------------------------
PER SHARE DATA
---------------------------------------------------------------

<TABLE>

<CAPTION>
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>

- ----------
+ 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

4
<PAGE>

- -------------------------------------------------------------------------
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

5
<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

CASH MANAGEMENT FUND

6
<PAGE>

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.

TAX-EXEMPT MONEY MARKET FUND

7
<PAGE>

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.

GENERAL

DESCRIPTION OF CERTAIN SECURITIES, OTHER INVESTMENT POLICIES AND RISK FACTORS

GENERAL MARKET RISK

TYPES OF SECURITIES AND THEIR RISKS

8
<PAGE>

9
<PAGE>

bonds varies inversely to changes in interest rates. See Appendix B to the SAI
for a description of municipal bond ratings.

10
<PAGE>

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.

11
<PAGE>

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.

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

12
<PAGE>

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.

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

13
<PAGE>

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."

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.

A CDSC is imposed upon most redemptions of Class B shares at the rates set
forth below:

14
<PAGE>

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,

15
<PAGE>

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.

REDEMPTIONS BY TELEPHONE. See "Telephone Transactions."

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

16
<PAGE>

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 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

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

17
<PAGE>

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.

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.

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

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<PAGE>

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 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

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

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<PAGE>

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.

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

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

20
<PAGE>

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.

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 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

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

21
<PAGE>

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.

CUSTODIAN. The Bank of New York, 48 Wall Street, New York, NY 10286, is
custodian of the securities and cash of each Fund.

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.

SHAREHOLDER INQUIRIES. Shareholder inquiries can be made by calling
Shareholder Services at 1-800-423-4026.

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<PAGE>

TABLE OF CONTENTS

Fee Table............................................................. 2
Financial Highlights.................................................. 4
Investment Objectives and Policies.................................... 6
How to Buy Shares..................................................... 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

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

<PAGE>

FIRST INVESTORS CASH MANAGEMENT FUND, INC.
FIRST INVESTORS TAX-EXEMPT MONEY MARKET FUND, INC.

95 Wall Street 1-800-423-4026
New York, New York 10005

STATEMENT OF ADDITIONAL INFORMATION
DATED APRIL, 30 1997

This is a Statement of Additional Information ("SAI") for FIRST
INVESTORS CASH MANAGEMENT FUND, INC. ("CASH MANAGEMENT FUND") and FIRST
INVESTORS TAX-EXEMPT MONEY MARKET FUND, INC. ("TAX-EXEMPT MONEY MARKET FUND"),
each of which is an open-end diversified management investment company. CASH
MANAGEMENT FUND and TAX-EXEMPT MONEY MARKET FUND are referred to herein as
"Funds."

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 exempt from Federal income tax and is not an item of
tax preference for purposes of the Federal alternative minimum tax ("Tax
Preference Item"), as is consistent with the preservation of capital and
maintenance of liquidity. There can be no assurance that the objective of either
Fund will be realized.

This SAI is not a prospectus. It should be read in conjunction with the
Funds' Prospectuses dated April, 30 1997, which may be obtained free of cost
from the Funds at the address or telephone number noted above.

TABLE OF CONTENTS
Page

Investment Policies..................................................... 2
Investment Restrictions................................................. 5
Directors and Officers.................................................. 8
Management.............................................................. 10
Underwriter............................................................. 11
Distribution Plans...................................................... 12
Determination of Net Asset Value........................................ 14
Allocation of Portfolio Transactions.................................... 14
Additional Exchange and Redemption
Information and Other Services........................................ 15
Taxes................................................................... 21
Performance Information................................................. 22
General Information..................................................... 24
Appendix A.............................................................. 25
Appendix B.............................................................. 26
Appendix C.............................................................. 27
Appendix D.............................................................. 28
Financial Statements.................................................... 34

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INVESTMENT POLICIES

MUNICIPAL BONDS. Most private activity bonds ("PABs") and industrial
development bonds ("IDBs") are pure revenue bonds and are not backed by the
taxing power of the issuing authority or agency. Consequently, the payment of
principal and interest on PABs and IDBs usually depends entirely on the ability
of the owner of the project financed to meet its financial obligation to repay
the bonds. In many instances these financial obligations of private parties are
secured by liens or pledges upon real and personal property or are backed up by
a standby letter of credit issued by a commercial bank, which letter of credit
effectively guarantees payment of principal and interest on behalf of the party
obligated to pay. Banks which issue standby letters of credit to support the
payment of principal and/or interest on PABs and IDBs are restricted as to the
form the letter of credit may take, the total amount committed by standby
letters of credit that may be issued on behalf of one person or affiliates
thereof and will usually only have to fulfill their obligation when there is
little chance of recovery against the defaulting account party. If, with respect
to any security purchased by TAX-EXEMPT MONEY MARKET FUND, there is a guarantee
or letter of credit supporting that security, the guarantee or letter of credit
shall not be deemed to be a security issued by the guarantor; provided that the
value of all securities issued or guaranteed by the guarantor, and owned by the
Fund, does not exceed 10% of the total assets of the Fund.

PUT BONDS. Each Fund may invest in put bonds that have a fixed rate of
interest and a final maturity beyond the date on which the put may be exercised.
If the put is a "one time only" put, the Fund ordinarily will either sell the
bond or put the bond, depending upon the more favorable price. If the bond has a
series of puts after the first put, the bond will be held as long as, in the
judgment of the Fund's adviser, First Investors Management Company, Inc.
("Adviser" or "FIMCO"), it is in the best interest of the Fund to do so. There
is no assurance that an issuer of a put bond acquired by the Fund will be able
to repurchase the bond on the exercise date, if the Fund chooses to exercise its
right to put the bond back to the issuer.

RATING CHANGES. Following acquisition by a Fund, an instrument may no
longer be rated or may have its rating changed to one that is unacceptable to
the Fund. Either of these events will not necessarily cause the Fund to sell
such instrument. Rather, the Adviser or the applicable Fund's Board of
Directors, as appropriate, will consider the change or deletion of a rating in
assessing whether or not the Fund should continue to hold such instrument.
Unrated instruments purchased by a Fund will be periodically re-evaluated.

REPURCHASE AGREEMENTS. A repurchase agreement essentially is a
short-term collateralized loan. The lender (a Fund) agrees to purchase a
security from a borrower (typically a broker-dealer) at a specified price. The
borrower simultaneously agrees to repurchase that same security at a higher
price on a future date (which typically is the next business day). The
difference between the purchase price and the repurchase price effectively
constitutes the payment of interest. In a standard repurchase agreement, the
securities which serve as collateral are transferred to a Fund's custodian bank.
In a "tri-party" repurchase agreement, these securities would be held by a
different bank for the benefit of the Fund as buyer and the broker-dealer as
seller. In a "quad-party" repurchase agreement, the Fund's custodian bank also
is made a party to the agreement. Each Fund may enter into repurchase agreements
with banks which are members of the Federal Reserve System or securities dealers
who are members of a national securities exchange or are market makers in
government securities. The period of these repurchase agreements will usually be
short, from overnight to one week, and at no time will a Fund invest in
repurchase agreements with more than one year in time to maturity. The
securities which are subject to repurchase agreements, however, may have
maturity dates in excess of one year from the effective date of the repurchase
agreement. Each Fund will always receive, as collateral, securities whose market
value, including accrued interest, which will at all times be at least equal to
100% of the dollar amount invested by the Fund in each agreement, and the Fund
will make payment for such securities only upon physical delivery or evidence of
book entry transfer to the account of the custodian. If the seller defaults, a
Fund might incur a loss if the value of the collateral securing the

2
<PAGE>

repurchase agreement declines, and might incur disposition costs in connection
with liquidating the collateral. In addition, if bankruptcy or similar
proceedings are commenced with respect to the seller of the security,
realization upon the collateral by a Fund may be delayed or limited. Neither
Fund will enter into a repurchase agreement with more than seven days to
maturity if, as a result, more than 10% of such Fund's net assets would be
invested in such repurchase agreements and other illiquid investments.

RESTRICTED AND ILLIQUID SECURITIES. CASH MANAGEMENT FUND will not
purchase or otherwise acquire any security if, as a result more than 10% of its
net assets (taken at current value) would be invested in securities that are
illiquid by virtue of the absence of a readily available market or legal or
contractual restrictions on resale. This policy includes repurchase agreements
maturing in more than seven days. This policy does not include restricted
securities eligible for resale pursuant to Rule 144A under the Securities Act of
1933, as amended ("1933 Act"), which the Fund's Board of Directors or the
Adviser has determined under Board-approved guidelines are liquid.

Restricted securities which are illiquid may be sold only in privately
negotiated transactions or in public offerings with respect to which a
registration statement is in effect under the 1933 Act. Where registration is
required, the Fund may be obligated to pay all or part of the registration
expenses and a considerable period may elapse between the time of the decision
to sell and the time the Fund may be permitted to sell a security under an
effective registration statement. If, during such a period, adverse market
conditions were to develop, the Fund might obtain a less favorable price than
prevailed when it decided to sell.

In recent years, a large institutional market has developed for certain
securities that are not registered under the 1933 Act, including private
placements, repurchase agreements, commercial paper, foreign securities and
corporate bonds and notes. These instruments are often restricted securities
because the securities are either themselves exempt from registration or sold in
transactions not requiring registration. Institutional investors generally will
not seek to sell these instruments to the general public, but instead will often
depend on an efficient institutional market in which such unregistered
securities can be readily resold or on an issuer's ability to honor a demand for
repayment. Therefore, the fact that there are contractual or legal restrictions
on resale to the general public or certain institutions is not dispositive of
the liquidity of such investments.

Rule 144A under the 1933 Act establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. Institutional markets for restricted securities
that might develop as a result of Rule 144A could provide both readily
ascertainable values for restricted securities and the ability to liquidate an
investment in order to satisfy share redemption orders. An insufficient number
of qualified institutional buyers interested in purchasing Rule 144A-eligible
securities held by the Fund, however, could affect adversely the marketability
of such portfolio securities and the Fund might be unable to dispose of such
securities promptly or at reasonable prices.

STANDBY COMMITMENTS. Each Fund may acquire standby commitments from
banks with respect to simultaneous purchases of short-term, high quality, fixed
and variable rate instruments issued by state and municipal governments and by
public authorities ("Municipal Instruments") for the Fund's portfolio. See
"Investment Objectives and Policies" in the Prospectus. Under this arrangement,
a bank agrees to buy a particular Municipal Instrument from a Fund at a
specified price at the Fund's option. A standby commitment is similar to a put
option for a particular Municipal Instrument in a Fund's portfolio. Standby
commitments acquired by a Fund are not added to the computation of that Fund's
net asset value. Standby commitments are subject to certain risk, including the
issuer's ability to pay for the Municipal Instruments when a Fund decides to
sell the Municipal Instrument for which it is issued and the lack of familiarity
with standby commitments in the marketplace.

3
<PAGE>

The Funds' ability to exercise their rights under a standby commitment
is unconditional, without any limitation whatsoever, and non-transferable. The
Funds, however, are permitted to sell a Municipal Instrument covered by a
standby commitment at any time and to any person.

The Funds may pay a consideration to a bank for the issuance of a
standby commitment if necessary and advisable. Such a consideration may take the
form of either a payment in cash, or the payment of a higher price for Municipal
Instruments covered by such a commitment. The effect of the payment of such
consideration is to reduce the yield to maturity for the Municipal Instruments
so covered. The total amount a Fund may pay as consideration in either manner,
on an annual basis, of the issuance of standby commitments may not exceed 0.50%
of that Fund's total assets.

Standby commitments acquired by a Fund are not added to the computation
of that Fund's net asset value and are valued at zero. When a Fund pays a
consideration for the issuance of a standby commitment, the cost is treated as
unrealized depreciation for the time it is held by the Fund. The dollar weighted
average maturity calculation for the Fund is not affected by standby
commitments.

In the absence of either a favorable ruling of the Internal Revenue
Service, or opinion from the bond issuer's counsel, that the Interest on
Municipal Instruments for which standby commitments have been issued is exempt
from Federal income taxation, the Funds will not acquire standby commitments.

U.S. GOVERNMENT SECURITIES. The Funds may invest in obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities. These
obligations, including those which are guaranteed by Federal agencies or
instrumentalities, may or may not be backed by the "full faith and credit" of
the United States or by the right of the issuer to borrow from the U.S.
Treasury. In the case of securities not backed by full faith and credit of the
United States, a Fund must look principally to the agency issuing or
guaranteeing the obligation for ultimate prepayment and may not be able to
assert a claim against the United States itself in the event the agency or
instrumentality does not meet its commitments. Securities in which a Fund may
invest that are not backed by the full faith and credit of the U.S. Government
include, but are not limited to, obligations of the Tennessee Valley Authority,
the Federal National Mortgage Association and the U.S. Postal Service, each of
which has the right to borrow from the U.S. Treasury to meet its obligations,
and obligations of the Federal Farm Credit System and the Federal Home Loan
Banks, both of whose obligations may be satisfied only by the individual credits
of each issuing agency.

Securities which are backed by the full faith and credit of the U.S.
Government include Treasury bills, Treasury notes, Treasury bonds, and
obligations of the Government National Mortgage Association, the Farmers Home
Administration, and the Export-Import Bank. Treasury bills have maturities of
one year or less; Treasury notes have maturities of one to ten years; Treasury
bonds generally have maturities of greater than five years.

VARIABLE RATE DEMAND INSTRUMENTS. Each Fund may invest in Variable Rate
Demand Instruments ("VRDIs"). The interest on these instruments is adjusted at
various intervals ranging from one day to six months, and the adjustments are
based on market conditions. These instruments allow the holder to demand payment
of all unpaid principal plus accrued interest from the issuer. The Funds will
invest only in VRDIs that have a demand notice period of not more than seven
calendar days in length. Usually, the Funds may also demand payment from a
redemption agent. In either instance, the obligation to pay the holder upon
demand is usually backed by a standby letter of credit issued by a commercial
bank to support the obligation of the party which has the duty to pay upon
demand. Issuers of VRDIs may have the right to prepay the outstanding principal
and interest upon the instrument in their discretion with a notice period to the
holder for prepayment by the issuer usually equal to that for the demand
feature.

Banks issuing standby letters of credit to support VRDIs receive a fee
from or on behalf of the issuer to establish the credit and may charge other
fees if the standby letter of credit is drawn upon.

4
<PAGE>

Such banks also enter into a reimbursement agreement whereby the issuer or the
redemption agent agrees to reimburse the bank for any draw under the standby
letter of credit. Such reimbursement agreement, however, in no way affects the
obligation of the bank issuing the standby letter of credit, and payment of the
Funds under a demand feature backed by a standby letter of credit is not
conditioned upon the bank's likelihood of recovery under the reimbursement
agreement. Consequently, the Adviser will monitor the quality of the bank
issuing any standby letter of credit which supports the demand feature of any
VRDI purchased by the Funds.

VRDIs reduce the likelihood of changes in value in the obligations they
represent as is typical with fixed rate instruments. As interest rates change,
fixed rate instruments' values change as the market re-evaluates the price of
the fixed rate of income in light of new market interest rates. If interest
rates rise, the value of an existing fixed rate instrument may fail to provide a
new purchaser with the effective market rate of income then prevailing. If
interest rates fall, the value of such an instrument may rise for similar
reasons. If interest rates change, the value of a VRDI should not change as much
as a fixed rate obligation, to the extent rate adjustments on the variable rate
instrument mirror the market. Therefore, the potential risk of capital
depreciation is much lower on a VRDI than on a fixed rate obligation, although
the potential for capital appreciation is also reduced. VRDIs are not comparable
to long-term fixed-rate securities, and the rates on these instruments may be
higher or lower than simultaneous market rates for fixed rate securities of
similar quality and time to maturity.

To determine time to maturity of VRDIs for the purpose of either the
397-day maturity maximum for all of the Funds' investments or for computing the
Funds' dollar weighted average portfolio maturity, the maturity of the
instrument is deemed to be the greater of (1) the notice period required before
the Funds may receive payment under the demand feature of the instrument, or (2)
the time remaining until the next interest rate adjustment on the instrument.

WHEN-ISSUED SECURITIES. When the TAX-EXEMPT MONEY MARKET FUND enters
into a commitment to purchase securities on a when-issued or delayed delivery
basis, delivery of, and payment for, the instruments occur up to 45 days after
the Fund agrees to purchase the instruments. The purchase price to be paid by
the Fund and the interest rate on the instruments to be purchased are both
selected when the Fund agrees to purchase the securities "when-issued." The Fund
is permitted to sell when-issued securities prior to issuance of such
securities, but will not purchase such securities with that purpose intended.
The Fund establishes a separate account with the Custodian consisting of cash or
liquid debt securities equal to the amount of the Fund's commitment and valued
at their fair market value. If on any day the market value of this segregated
account falls below the value of the Fund's commitment, the Fund must deposit
additional cash or qualified securities into the account until equal to the
value of the Fund's commitment. When the securities to be purchased are issued,
the Fund will pay for the securities from available cash, the sale of other
Municipal Instruments, and, if necessary, from sale of the when-issued
securities themselves, although this is not ordinarily expected.

INVESTMENT RESTRICTIONS

The investment restrictions set forth below have been adopted by the
respective Fund and, unless identified as non-fundamental policies, may not be
changed without the affirmative vote of a majority of the outstanding voting
securities of that Fund. As provided in the Investment Company Act of 1940, as
amended ("1940 Act"), a "vote of a majority of the outstanding voting securities
of the Fund" means the affirmative vote of the lesser of (i) more than 50% of
the outstanding shares of the Fund or (ii) 67% or more of the shares present at
a meeting if more than 50% of the outstanding shares are represented at the
meeting in person or by proxy. Except with respect to borrowing, changes in
values of a particular Fund's assets will not cause a violation of the following
investment restrictions so long as percentage restrictions are observed by such
Fund at the time it purchases any security.

5
<PAGE>

CASH MANAGEMENT FUND. CASH MANAGEMENT FUND will not:

(1) Pledge assets, except that the Fund may pledge not more than
one-third of its total assets (taken at current value) to secure borrowings.

(2) Make loans, except by purchase of debt obligations and through
repurchase agreements referred to under "Investment Objective and Policies" in
the Prospectuses, provided, however, that repurchase agreements maturing in more
than seven days will not exceed 10% of the Fund's net assets (taken at current
value).

(3) Purchase the securities of any issuer (other than obligations
issued or guaranteed as to principal and interest by the Government of the
United States or any agency or instrumentality thereof) if, as a result thereof
more than 25% of the Fund's total assets (taken at current value) would be
invested in the obligations of one or more issuers having their principal
business activities in the same industry; provided, however, that the Fund may
invest more than 25% of its total assets in the obligations of banks.

(4) With respect to 75% of the Fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities) if, as a result, (a) more than 5%
of the Fund's total assets would be invested in the securities of that issuer,
or (b) the Fund would hold more than 10% of the outstanding voting securities of
that issuer.

(5) Purchase securities on margin (but the Fund may obtain such credits
as may be necessary for the clearance of purchases and sales of securities).

(6) Make short sales of securities unless at all times while a short
position is open the Fund maintains a long position in the same security in an
amount at least equal thereto.

(7) Write or purchase any put or call options.

(8) Borrow money, except as a temporary or emergency measure (not for
leveraging or investment) in an amount not to exceed 5% of the value of its
assets.

(9) Purchase the securities of a company if such purchase, at the time
thereof, would cause more than 5% of the value of the Fund's total assets to be
invested in securities of companies, which, including predecessors, have a
record of less than three years' continuous operation.

(10) Purchase the securities of other investment companies or
investment trusts.

(11) Purchase or retain any securities of another issuer if persons
affiliated with the Fund or its Adviser owning individually more than one-half
of one percent of said issuer's outstanding stock own, in the aggregate, more
than five percent of said issuer's outstanding stock.

(12) Underwrite securities issued by other persons except to the extent
that, in connection with the disposition of its portfolio investments, it may be
deemed to be an underwriter under federal securities laws.

(13) Invest in companies for the purpose of exercising control or
management.

(14) Issue senior securities.

(15) Buy or sell real estate, commodities, or commodity contracts
(unless acquired as a result of ownership of securities) or interests in oil,
gas or mineral exploration.

6
<PAGE>

CASH MANAGEMENT FUND has also filed the following undertaking to comply
with requirements of a certain state in which shares of the Fund are sold, which
may be changed without shareholder approval: Notwithstanding fundamental
investment restriction (15) above, the Fund will not invest in real estate
limited partnership interests or in interests in real estate investment trusts
that are not readily marketable.

The Fund has adopted the following non-fundamental investment
restrictions which may be changed without shareholder approval:

(1) The Fund will not purchase any security if, as a result, more than
10% of its net assets would be invested in illiquid securities, including
repurchase agreements not entitling the holder to payment of principal and
interest within seven days and any securities that are illiquid by virtue of
legal or contractual restrictions on resale or the absence of a readily
available market. The Directors, or the Fund's investment adviser acting
pursuant to authority delegated by the Directors, may determine that a readily
available market exists for securities eligible for resale pursuant to Rule 144A
under the 1933, Act or any other applicable rule, and therefore that such
securities are not subject to the foregoing limitation.

(2) Notwithstanding fundamental investment restriction (1) above, the
Fund will not pledge its assets in excess of an amount equal to 10% of its net
assets.

(3) Notwithstanding fundamental investment restriction (4) above, with
respect to 100% of its total assets, the Fund will not purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities) if, as a result, more than 5% of
the Funds total assets would be invested in the securities of that issuer.

TAX-EXEMPT MONEY MARKET FUND. TAX-EXEMPT MONEY MARKET FUND will not:

(1) Borrow money, except as a temporary or emergency measure (not for
leveraging or investment) in an amount to exceed 5% of the value of its assets.

(2) Pledge assets, except that the Fund may pledge not more than
one-third of its total assets (taken at current value) to secure borrowings made
in accordance with paragraph (1) above.

(3) Make loans, except by purchase of debt obligations and through
repurchase agreements provided.

(4) With respect to 75% of the Fund's total assets, purchase the
securities of any issuer (other than obligations issued or guaranteed as to
principal and interest by the Government of the United States or any agency or
instrumentality thereof) if, as a result thereof, (a) more than 5% of the Fund's
total assets would be invested in the securities of that issuer, or (b) the Fund
would hold more than 10% of the voting securities of that issuer. The Fund will
not invest in securities such that any one bank's letters of credit support more
than 10% of the Fund's total assets.

(5) Invest more than 25% of the Fund's total assets (taken at current
value) in the obligations of one or more issuers having their principal business
activities in the same industry.

(6) Purchase securities on margin (but the Fund may obtain such credits
as may be necessary for the clearance of purchases and sales of securities).

(7) Make short sales of securities.

(8) Write or purchase any put or call options, except stand-by
commitments.

7
<PAGE>

(9) Knowingly purchase a security which is subject to legal or
contractual restrictions on resale or for which there is no readily available
market.

(10) Purchase the securities of other investment companies or
investment trusts, except as they may be acquired as part of a merger,
consolidation or acquisition of assets.

(11) Purchase the securities of a company if such purchase, at the time
thereof, would cause more than 5% of the value of the Fund's total assets to be
invested in securities of companies which, including predecessors, have a record
of less than three years' continuous operation.

(13) Purchase or retain any securities of another issuer if persons
affiliated with the Fund or its Adviser or management owning, individually, more
than one-half of one percent of said issuer's outstanding stock (or securities
convertible into stock) own, in the aggregate, more than 5% of said issuer's
outstanding stock (or securities convertible into stock).

(14) Invest in companies for the purpose of exercising control or
management.

(15) Issue senior securities.

(16) Buy or sell real estate, commodities or commodity contracts
(unless acquired as a result of ownership of securities) or interest in oil, gas
or mineral explorations, provided, however, the Fund may invest in Municipal
Instruments secured by real estate or interests in real estate.

The Fund has adopted the following non-fundamental restrictions which
may be changed without shareholder approval:

(1) Notwithstanding fundamental investment restriction (2) above, the
Fund will not pledge its assets in excess of an amount equal to 10% of its net
assets.

(2) Notwithstanding fundamental investment restriction (4) above, with
respect to 100% of its total assets, the Fund will not purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities) if, as a result, more than 5% of
the Funds total assets would be invested in the securities of that issuer.

(3) Notwithstanding fundamental investment restriction (16) above, the
Fund will not invest in real estate limited partnership interests or in
interests in real estate investment trusts that are not readily marketable.

DIRECTORS AND OFFICERS

The following table lists the Directors and executive officers of the
Funds, their business address and principal occupations during the past five
years. Unless otherwise noted, an individual's business address is 95 Wall
Street, New York, New York 10005.

GLENN O. HEAD*+ (71), President and Director. Chairman of the Board and
Director, Administrative Data Management Corp. ("ADM"), FIMCO, Executive
Investors Management Company, Inc. ("EIMCO"), First Investors Corporation
("FIC"), Executive Investors Corporation ("EIC") and First Investors
Consolidated Corporation ("FICC").

8
<PAGE>

ROGER L. GRAYSON* (40), Director. Director, FIC and FICC; President and
Director, First Investors Resources, Inc.; Commodities Portfolio Manager.

KATHRYN S. HEAD*+ (41), Director, 581 Main Street, Woodbridge, NJ 07095.
President, FICC, EIMCO, ADM and FIMCO; Vice President, Chief Financial Officer
and Director, FIC and EIC; President and Director, First Financial Savings Bank,
S.L.A.

REX R. REED (75), Director, 259 Governors Drive, Kiawah Island, SC 29455.
Retired; formerly Senior Vice President, American Telephone & Telegraph Company.

HERBERT RUBINSTEIN (75), Director, 145 Elm Drive, Roslyn, NY 11576. Retired;
formerly President, Belvac International Industries, Ltd. and President, Central
Dental Supply.

NANCY SCHAENEN (65), Director, 56 Midwood Terrace, Madison, NJ. 07940. Trustee,
Drew University and DePauw University.

JAMES M. SRYGLEY (64), Director, 33 Hampton Road, Chatham, NJ 07982. Principal,
Hampton Properties, Inc. (property investment company).

JOHN T. SULLIVAN* (65), Director and Chairman of the Board; Director, FIMCO,
FIC, FICC and ADM; Of Counsel, Hawkins, Delafield & Wood, Attorneys.

ROBERT F. WENTWORTH (67), Director, RR1, Box 2554, Upland Downs Road, Manchester
Center, VT 05255. Retired; formerly financial and planning executive with
American Telephone & Telegraph Company.

JOSEPH I. BENEDEK (39), Treasurer, 581 Main Street, Woodbridge, NJ 07095.
Treasurer, FIC, FIMCO, EIMCO and EIC; Comptroller and Treasurer, FICC.

CONCETTA DURSO (62), Vice President and Secretary. Vice President, FIMCO, EIMCO
and ADM; Assistant Vice President and Assistant Secretary, FIC and EIC.

MICHAEL J. O'KEEFE (31), Vice President. Portfolio Manager from December 1995;
Assistant Portfolio Manager from 1985-1995.

- ----------
* These Directors may be deemed to be "interested persons," as defined in
the 1940 Act.
+ Mr. Glenn O. Head and Ms. Kathryn S. Head are father and daughter.

All of the officers and Directors, except for Mr. O'Keefe, hold
identical or similar positions with 14 other registered investment companies in
the First Investors Family of Funds. Mr. Head is also an officer and/or Director
of First Investors Asset Management Company, Inc., First Investors Credit
Funding Corporation, First Investors Leverage Corporation, First Investors
Realty Company, Inc., First Investors Resources, Inc., N.A.K. Realty
Corporation, Real Property Development Corporation, Route 33 Realty Corporation,
First Investors Life Insurance Company, First Financial Savings Bank, S.L.A.,
First Investors Credit Corporation, School Financial Management Services, Inc.
and Specialty Insurance Group, Inc. Ms. Head is also an officer and/or Director
of First Investors Life Insurance Company, First Investors Credit Corporation,
School Financial Management Services, Inc., First Investors Credit Funding
Corporation, N.A.K. Realty Corporation, Real Property Development Corporation,
First Investors Leverage Corporation, Route 33 Realty Corporation and Specialty
Insurance Group, Inc.

9
<PAGE>

The following table lists compensation paid to the Directors of Cash
Management Fund for the fiscal year ended December 31, 1996.

<TABLE>

James J. Coy*** $3,000 $-0- $-0- $37,200
Roger L. Grayson -0- -0- -0- -0-
Glenn O. Head -0- -0- -0- -0-
Kathryn S. Head -0- -0- -0- -0-
Rex R. Reed 3,000 -0- -0- 37,200
Herbert Rubinstein 3,000 -0- -0- 37,200
James M. Srygley 2,750 -0- -0- 34,100
John T. Sullivan -0- -0- -0- -0-
Robert F. Wentworth 3,000 -0- -0- 37,200

The following table lists compensation paid to the Directors of
Tax-Exempt Money Market Fund for the fiscal year ended December 31, 1996.

<CAPTION>
PENSION OR TOTAL COMPENSATION
RETIREMENT ESTIMATED FROM FIRST INVESTORS
AGGREGATE BENEFITS ACCRUED ANNUAL FAMILY
COMPENSATION AS PART OF BENEFITS UPON OF FUNDS PAID
DIRECTOR** FROM FUND* FUND EXPENSES RETIREMENT TO DIRECTORS*
- ---------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
James J. Coy*** $600 $-0- $-0- $37,200
Roger L. Grayson -0- -0- -0- -0-
Glenn O. Head -0- -0- -0- -0-
Kathryn S. Head -0- -0- -0- -0-
Rex R. Reed 600 -0- -0- 37,200
Herbert Rubinstein 600 -0- -0- 37,200
James M. Srygley 550 -0- -0- 34,100
John T. Sullivan -0- -0- -0- -0-
Robert F. Wentworth 600 -0- -0- 37,200
</TABLE>

* Compensation to officers and interested Directors of the Funds is paid by
the Adviser. In addition, compensation to non-interested Directors of the
Funds is currently voluntarily paid by the Adviser.
** Nancy Schaenen was not a Director in 1996.
*** On March 27, 1997 Mr. Coy resigned as a Director of the Funds. Mr. Coy did
not resign due to a disagreement with the Funds' management on any matter
relating to the Funds' operations, policies or practices. Mr. Coy
currently serves as an emeritus Director.

MANAGEMENT

Investment advisory services to each Fund are provided by First
Investors Management Company, Inc. pursuant to separate Investment Advisory
Agreements (each, an "Advisory Agreement") dated June 13, 1994. Each Advisory
Agreement was approved by the Board of Directors of the applicable Fund,
including a majority of the Directors who are not parties to such Fund's
Advisory Agreement or "interested persons" (as defined in the 1940 Act) of any
such party ("Independent

10
<PAGE>

Directors"), in person at a meeting called for such purpose and by a majority of
the public shareholders of the applicable Fund.

Pursuant to each Advisory Agreement, FIMCO shall supervise and manage
each Fund's investments, determine each Fund's portfolio transactions and
supervise all aspects of each Fund's operations, subject to review by the
applicable Fund's Directors. Each Advisory Agreement also provides that FIMCO
shall provide the applicable Fund with certain executive, administrative and
clerical personnel, office facilities and supplies, conduct the business and
details of the operation of such Fund and assume certain expenses thereof, other
than obligations or liabilities of such Fund. Each Advisory Agreement may be
terminated at any time without penalty by the applicable Fund's Directors or by
a majority of the outstanding voting securities of such Fund, or by FIMCO, in
each instance on not less than 60 days' written notice, and shall automatically
terminate in the event of its assignment (as defined in the 1940 Act). Each
Advisory Agreement also provides that it will continue in effect, with respect
to the applicable Fund, for a period of more than two years only if such
continuance is approved annually either by such Fund's Directors or by a
majority of the outstanding voting securities of such Fund, and, in either case,
by a vote of a majority of such Fund's Independent Directors voting in person at
a meeting called for the purpose of voting on such approval.

Under each Advisory Agreement, each Fund pays the Adviser an annual
fee, payable monthly, of 0.50% of its average daily net assets.

For the fiscal years ended December 31, 1994, 1995 and 1996, CASH
MANAGEMENT FUND paid $241,066, $257,171 and $625,485, respectively, in advisory
fees. For the fiscal years ended December 31, 1994 and 1995, the Adviser
voluntarily waived $374,848 and $354,518, respectively, in advisory fees for
that Fund. For the fiscal years ended December 31, 1994, 1995 and 1996,
TAX-EXEMPT MONEY MARKET FUND paid $74,963, $71,483 and $123,037, respectively,
in advisory fees. For the fiscal year ended December 31, 1994 and 1995, the
Adviser voluntarily waived $50,532 and $52,464, respectively, in advisory fees
for that Fund. For the fiscal year ended December 31, 1996, the Adviser
voluntarily reimbursed CASH MANAGEMENT FUND and TAX-EXEMPT MONEY MARKET FUND in
the amounts of $443,804 and $68,412, respectively.

Each Fund bears all expenses of its operations other than those
incurred by the Adviser or the Underwriter under the terms of its advisory or
underwriting agreements. Fund expenses include, but are not limited to: the
advisory fee; shareholder servicing fees and expenses; custodian fees and
expenses; legal and auditing fees; expenses of preparing and printing
prospectuses and shareholder reports; and proxy and shareholder meeting
expenses.

The Adviser has an Investment Committee composed of George V. Ganter,
Margaret Haggerty, Glenn O. Head, Nancy W. Jones, Patricia D. Poitra, Michael
O'Keefe, Clark D. Wagner and Richard Guinnessey. The Committee usually meets
weekly to discuss the composition of the portfolio of each Fund and to review
additions to and deletions from the portfolios.

UNDERWRITER

Each Fund has entered into an Underwriting Agreement ("Underwriting
Agreement") with First Investors Corporation ("Underwriter" or "FIC") which
requires the Underwriter to use its best efforts to sell shares of the Funds.
Pursuant to each Underwriting Agreement, the Underwriter shall bear all fees and
expenses incident to the registration and qualification of the applicable Fund's
shares. In addition, the Underwriter shall bear all expenses of sales material
or literature, including prospectuses and proxy materials, to the extent such
materials are used in connection with the sale of the Fund's shares, unless the
Fund has agreed to bear such costs pursuant to a plan of distribution. See
"Distribution Plans." Each Underwriting Agreement was approved by the applicable
Fund's Board of Directors, including a majority of the Independent Directors.
Each Underwriting Agreement provides

11
<PAGE>

that it will continue in effect from year to year only so long as such
continuance is specifically approved at least annually by the applicable Fund's
Board of Directors or by a vote of a majority of the outstanding voting
securities of such Fund, and in either case by the vote of a majority of such
Fund's Independent Directors, voting in person at a meeting called for the
purpose of voting on such approval. Each Underwriting Agreement will terminate
automatically in the event of its assignment.

DISTRIBUTION PLANS

As stated in the Funds' Prospectuses, pursuant to a separate plan of
distribution for Class B shares adopted by each Fund pursuant to Rule 12b-1
under the 1940 Act ("Class B Plan"), each Fund may compensate the Underwriter
for certain expenses incurred in the distribution of that Fund's Class B shares
and the servicing or maintenance of existing Fund Class B shareholder accounts.

Each Class B Plan was approved by the applicable Fund's Board of
Directors, including a majority of the Independent Directors, and by a majority
of the outstanding Class B voting securities of such Fund. Each Class B Plan
will continue in effect from year to year as long as its continuance is approved
annually by either the applicable Fund's Board of Directors or by a vote of a
majority of the outstanding Class B voting securities of such Fund. In either
case, to continue, each Class B Plan must be approved by the vote of a majority
of the Independent Directors of the applicable Fund. Each Fund's Board reviews
quarterly and annually a written report provided by the Treasurer of the amounts
expended under the each Class B Plan and the purposes for which such
expenditures were made. While each Class B Plan is in effect, the selection and
nomination of the applicable Fund's Independent Directors will be committed to
the discretion of such Independent Directors then in office.

In adopting each Class B Plan, the Board of Directors of each Fund
considered all relevant information and determined that there is a reasonable
likelihood that each Class B Plan will benefit each Fund and their Class B
shareholders. The Board of Directors of each Fund believes that amounts spent
pursuant to each Class B Plan have assisted each Fund in providing ongoing
servicing to shareholders, in competing with other providers of financial
services and in promoting sales, thereby increasing the net assets of each Fund.

Each Class B Plan can be terminated at any time by a vote of a majority
of the applicable Fund's Independent Directors or by a vote of a majority of the
outstanding Class B voting securities of such Fund. Any change to the Class B
Plan that would materially increase the costs to that class of shares of a Fund
may not be instituted without the approval of the outstanding Class B voting
securities of such Fund. Such changes also require approval by a majority of the
applicable Fund's Independent Directors.

In reporting amounts expended under the Class B Plans to the Directors,
FIMCO will allocate expenses attributable to the sale of each class of a Fund's
shares to such class based on the ratio of sales of such class to the sales of
both classes of shares. The fees paid by a Fund's Class B shares will not be
used to subsidize the sale of any other class of the Fund's shares.

For the fiscal year ending December 31, 1996, CASH MANAGEMENT FUND and
TAX-EXEMPT MONEY MARKET FUND paid $468 and $334, respectively, in fees pursuant
to their respective Class B Plan, all of which was paid as compensation to the
Underwriter as distribution fees. For the same period, the Underwriter waived
additional 12b-1 fees due from CASH MANAGEMENT FUND and TAX-EXEMPT MONEY MARKET
FUND in the amounts of $156 and $111, respectively. The Underwriter incurred the
following Class B-Plan related expenses for the fiscal year ended December 31,
1996:

12
<PAGE>

COMPENSATION TO COMPENSATION TO COMPENSATION TO
FUND UNDERWRITER DEALERS SALES PERSONNEL
- ---- --------------- --------------- ---------------
CASH MANAGEMENT FUND -0- -0- $468
TAX -EXEMPT MONEY MARKET FUND -0- -0- 334

TAX-EXEMPT MONEY MARKET FUND has adopted a plan of distribution for
Class A shares pursuant to Rule 12b-1 under the 1940 Act ("Class A Plan"). The
Class A Plan is designed to encourage Dealers, as that term is defined in the
Prospectus for Class A shares, to provide distribution services and to provide
administrative support services to the Fund and its Class A shareholders. These
services may include, but shall not be limited to, providing office space,
equipment, telephone facilities and various personnel including clerical,
supervisory and possibly computer, as is necessary or beneficial to establish
and maintain Class A shareholder accounts and records, process purchase and
redemption transactions, process automatic investments of client account cash
balances, answer routine client inquiries regarding the Fund, assist clients in
changing dividend options, account designations and addresses and providing such
other services as the Fund may reasonably request. Dealers will receive
compensation from the Underwriter or FIMCO with respect to Class A shares owned
from time to time by their clients. The schedules of fees and the basis upon
which such fees will be paid is determined from time to time by the Underwriter.

The Underwriter has the right to select, in its sole discretion,
Dealers to participate in the Class A Plan and has the right to terminate with
or without cause and in its sole discretion any agreement with a Dealer. Any
agreement may be terminated, without penalty, at any time, by a vote of a
majority of the Independent Directors upon not more than 60 days' written notice
to any Dealer, or by vote of a majority of the outstanding Class A voting
securities of TAX-EXEMPT MONEY MARKET FUND, or upon notice by the Underwriter.

The Class A Plan was adopted by TAX-EXEMPT MONEY MARKET FUND'S
Directors, including a majority of the Independent Directors. In adopting the
Class A Plan, the Fund's Board considered all relevant information and
determined that there is a reasonable likelihood that the Class A Plan will
benefit TAX-EXEMPT MONEY MARKET FUND and its shareholders.

The Class A Plan will continue in effect from year to year as long as
its continuance is approved annually by either TAX-EXEMPT MONEY MARKET FUND'S
Board of Directors or by a vote of a majority of the outstanding Class A voting
securities of the Fund. In either case, to continue, the Class A Plan must be
approved by the vote of a majority of the Independent Directors. The Board
reviews promptly after the end of each fiscal quarter and fiscal year, a written
report provided by the Treasurer of the amounts expended under the Class A Plan
and the purposes for which such expenditures were made. While the Class A Plan
is in effect, the selection and nomination of the Independent Directors of
TAX-EXEMPT MONEY MARKET FUND will be committed to the discretion of such
Independent Directors then in office.

The Class A Plan can be terminated at any time by a vote of a majority
of the Independent Directors or by a vote of a majority of the outstanding Class
A voting securities of the Fund. Any material change to the Class A Plan or any
change that would materially increase the costs to the Class A shareholders of
the Fund may not be instituted without the approval of the outstanding Class A
voting securities of the Fund. Such changes also require approval by a majority
of the Fund's Independent Directors.

13
<PAGE>

DETERMINATION OF NET ASSET VALUE

Each Fund values its portfolio securities in accordance with the
amortized cost method of valuation under Rule 2a-7 under the 1940 Act. To use
amortized cost to value its portfolio securities, a Fund must adhere to certain
conditions under that Rule relating to the Fund's investments, some of which are
discussed in the Prospectuses. Amortized cost is an approximation of market
value of an instrument, whereby the difference between its acquisition cost and
value at maturity is amortized on a straight-line basis over the remaining life
of the instrument. The effect of changes in the market value of a security as a
result of fluctuating interest rates is not taken into account and thus the
amortized cost method of valuation may result in the value of a security being
higher or lower than its actual market value. In the event that a large number
of redemptions take place at a time when interest rates have increased, a Fund
might have to sell portfolio securities prior to maturity and at a price that
might not be desirable.

The Board of Directors of each Fund has established procedures for the
purpose of maintaining a constant net asset value of $1.00 per share, which
include a review of the extent of any deviation of net asset value per share,
based on available market quotations, from the $1.00 amortized cost per share.
Should that deviation exceed 1/2 of 1% for any Fund, the Board of Directors will
promptly consider whether any action should be initiated to eliminate or reduce
material dilution or other unfair results to shareholders. Such action may
include selling portfolio securities prior to maturity, reducing or withholding
dividends and utilizing a net asset value per share as determined by using
available market quotations. Each Fund maintains a dollar weighted average
portfolio maturity of 90 days or less and does not purchase any instrument with
a remaining maturity greater than 13 months, limits portfolio investments,
including repurchase agreements, to those U.S. dollar-denominated instruments
that are of high quality and that the Directors determine present minimal credit
risks as advised by the Adviser, and complies with certain reporting and
recordkeeping procedures. There is no assurance that a constant net asset value
per share will be maintained. In the event amortized cost ceases to represent
fair value per share, the Board will take appropriate action.

Each Fund's Board of Directors may suspend the determination of the
applicable Fund's net asset value for the whole or any part of any period (1)
during which trading on the New York Stock Exchange ("NYSE") is restricted as
determined by the Securities and Exchange Commission ("SEC") or the NYSE is
closed for other than weekend and holiday closings, (2) when an emergency
exists, as defined by the SEC, that makes it not reasonably practicable for such
Fund to dispose of securities owned by it or fairly to determine the value of
its net assets, or (3) for such other period as the SEC has by order permitted.

ALLOCATION OF PORTFOLIO TRANSACTIONS

Purchases and sales of portfolio securities by a Fund generally are
principal transactions. In principal transactions, portfolio securities are
normally purchased directly from the issuer or from an underwriter or market
maker for the securities. There will usually be no brokerage commissions paid by
a Fund for such purchases. Purchases from underwriters will include the
underwriter's commission or concession and purchases from dealers serving as
market makers will include the spread between the bid and asked price. Certain
money market instruments may be purchased by the Funds directly from an issuer,
in which no commissions or discounts are paid. TAX-EXEMPT MONEY MARKET FUND may
purchase fixed income securities on a "net" basis with dealers acting as
principal for their own accounts without a stated commission, although the price
of the security usually includes a profit to the dealer.

If any transactions are effected on an agency basis, the Adviser will
seek best execution of trades either (1) at the most favorable and competitive
rate of commission charged by any broker or member of an exchange, or (2) with
respect to agency transactions, at a higher rate of commission if

14
<PAGE>

reasonable in relation to brokerage and research services provided to a Fund or
the Adviser by such member or broker. In addition, upon the instruction of each
Fund's Board of Directors, the Adviser may use dealer concessions available in
fixed price underwritings to pay for such research services. Such services may
include, but are not limited to, any one or more of the following: information
as to the availability of securities for purchase or sale and statistical or
factual information or opinions pertaining to investments. The Adviser may use
research and services provided to it by brokers in servicing all the funds in
the First Investors Group of Funds; however, not all such services may be used
by the Adviser in connection with a Fund. No portfolio orders are placed with an
affiliated broker, nor does any affiliated broker-dealer participate in these
commissions.

The Adviser may combine transaction orders placed on behalf of a Fund
and any other Fund in the First Investors Group of Funds, any series of
Executive Investors Trust and First Investors Life Insurance Company, affiliates
of the Funds, for the purpose of negotiating brokerage commissions or obtaining
a more favorable transaction price; and where appropriate, securities purchased
or sold may be allocated in accordance with written procedures approved by each
Fund's Board of Directors.

ADDITIONAL EXCHANGE AND REDEMPTION
INFORMATION AND OTHER SERVICES

SYSTEMATIC INVESTING

FIRST INVESTORS MONEY LINE. This service allows you to invest in Class
A shares of a Fund through automatic deductions from your bank checking account.
Scheduled investments in the minimum amount of $50 may be made on a bi-weekly,
semi-monthly, monthly, quarterly, semi-annual or annual basis. The maximum
amount which may be invested through First Investors Money Line is $10,000 a
month. Shares of the Fund are purchased on the Trading Day your designated bank
account is debited. You may change the amount or discontinue this service at any
time by calling Shareholder Services or writing to Administrative Data
Management Corp., 581 Main Street, Woodbridge, NJ 07095-1198, Attn: Control
Dept. It takes between three and five business days to process any changes you
request be made to your Money Line service. Money Line application forms are
available from your Representative or by calling Shareholder Services at
1-800-423-4026.

AUTOMATIC PAYROLL INVESTMENT. You also may arrange for automatic
investments in Class A shares in the minimum amount of $50 into a Fund on a
systematic basis through salary deductions, provided your employer has direct
deposit capabilities. Shares of the Fund are purchased on the Trading Day the
electronic fund transfer is received by the Fund. You may change the amount or
discontinue the service by contacting your employer. An application is available
from your Representative or by calling Shareholder Services at 1-800-423-4026.
Arrangements must also be made with your employer's payroll department.

CROSS-INVESTMENT OF CASH DISTRIBUTIONS. You may elect to invest in
Class A or Class B shares of a Fund at net asset value all the cash
distributions from the same class of shares of another Eligible Fund. The
investment will be made at the net asset value per share of the Fund, generally
determined as of the close of business, on the business day immediately
following the record date of any such distribution. You may also elect to invest
cash distributions of a Fund's Class A or Class B shares into the same class of
another Eligible Fund. Cash distributions from a Fund's Class B shares may only
be invested into an existing Class B share account. If your distributions are to
be invested in Class A shares in a new account, you must invest a minimum of $50
per month. To arrange for cross-investing, call Shareholder Services at
1-800-423-4026.

SYSTEMATIC WITHDRAWAL PLAN. Shareholders who own noncertificated Class
A or Class B shares may establish a Systematic Withdrawal Plan ("Withdrawal
Plan"). If you have a Fund account with a value of at least $5,000, you may
elect to receive monthly, quarterly, semi-annual or annual checks for any
designated amount (minimum $25). You may have the payments sent directly to you
or

15
<PAGE>

persons you designate. The $5,000 minimum account balance is currently being
waived for required minimum distributions on retirement plan accounts.
Additionally, regardless of the amount of your Class A or Class B Fund account,
you may also elect to have the Systematic Plan payments automatically (i)
invested in the same class of shares of any other Eligible Fund, or (ii) paid to
First Investors Life Insurance Company for the purchase of a life insurance
policy or a variable annuity. If your Systematic Plan payments are to be
invested in a new Class A Eligible Fund account, you must invest a minimum of
$600 per year. Systematic Plan payments from a Class B account must be invested
in an existing Class B Eligible Fund account. Dividends and other distributions,
if any, are reinvested in additional shares of the same class of the Fund.
Shareholders may add shares to the Withdrawal Plan or terminate the Withdrawal
Plan at any time. Withdrawal Plan payments will be suspended when a distributing
Fund has received notice of a shareholder's death on an individual account.
Payments may recommence upon receipt of written alternate payment instructions
and other necessary documents from the deceased's legal representative.
Withdrawal payments will also be suspended when a payment check is returned to
the Transfer Agent marked as undeliverable by the U.S. Postal Service after two
consecutive mailings.

Shareholders who own Class B shares may establish a Withdrawal Plan and
elect to receive up to 8% of the value of their account (calculated as set forth
below) each year without incurring any CDSC. Shares not subject to a CDSC (such
as shares representing reinvestment of distributions) will be redeemed first and
will count toward the 8% limitation. If the shares not subject to a CDSC are
insufficient for this purpose, then shares subject to the lowest CDSC will be
redeemed next until the 8% limit is reached. The 8% figure is calculated on a
pro rata basis at the time of the first payment made pursuant to the Plan and
recalculated thereafter on a pro rata basis at the time of each Plan payment.
Therefore, shareholders who have chosen the Plan based on a percentage of the
value of their account of up to 8% will be able to receive Plan payments without
incurring a CDSC. However, shareholders who have chosen a specific dollar amount
(for example, $100 per month) for their periodic Plan payment should be aware
that the amount of that payment not subject to a CDSC may vary over time
depending on the value of their account. For example, if the value of the
account is $15,000 at the time of payment, the shareholder will receive $100
free of the CDSC (8% of $15,000 divided by 12 monthly payments). However, if at
the time of a payment the value of the account has fallen to $14,000, the
shareholder will receive $93.33 free of any CDSC (8% of $14,000 divided by 12
monthly payments) and $6.67 subject to the lowest applicable CDSC. This
privilege may be revised or terminated at any time.

The withdrawal payments derived from the redemption of sufficient
shares in the account to meet designated payments in excess of dividends and
other distributions may deplete or possibly extinguish the initial investment,
particularly in the event of a market decline, and may result in a capital gain
or loss depending on the shareholder's cost. Purchases of additional shares of a
Fund concurrent with withdrawals are ordinarily disadvantageous to shareholders
because of tax liabilities and sales charges. To establish a Withdrawal Plan,
call Shareholder Services at 1-800-423-4026.

ELECTRONIC FUND TRANSFER. Shareholders may establish Electronic Fund
Transfers ("EFT") between Fund accounts and a predesignated bank account by
completing an application and having all shareholders' signatures guaranteed. If
the bank account registration is not identical to the Fund account, a signature
guarantee of the bank account holder is required for Money Line purchases.
Shareholders may choose EFT privileges for Money Line purchases or redemptions
or both. The minimum EFT amount is $500 and the maximum is $50,000. The total
EFT redemptions during a 30 day period may not exceed $100,000. Each Fund has
the right, at its sole discretion, to limit or terminate your ability to
exercise the EFT privileges at any time. Fund shares will be purchased on the
day the Fund receives the funds, which is normally two days after the EFT is
initiated. The EFT normally will be initiated on the next bank business day
after the redemption request is received and will ordinarily be received by the
predesignated bank account within two days after transmission. However, once the
funds are transmitted, the time of receipt and the availability of the funds are
not within the Funds' control. No dividends are paid on the proceeds of redeemed
shares awaiting EFT.

16
<PAGE>

CONVERSION OF CLASS B SHARES. Class B Shares of a Fund will
automatically convert to Class A shares of that Fund, based on the relative net
asset values per share of the two classes, as of the close of business on the
first business day of the month in which the eighth anniversary of the initial
purchase of such Class B shares occurs. For these purposes, the date of initial
purchase shall mean (1) the first business day of the month in which such Class
B shares were issued, or (2) for Class B shares obtained through an exchange or
a series of exchanges, the first business day of the month in which the original
Class B shares were issued. For conversion purposes, Class B shares purchased
through the reinvestment of dividends and other distributions paid in respect of
Class B shares will be held in a separate sub-account. Each time any Class B
shares in the shareholder's regular account (other than those in the
sub-account) convert to Class A shares, a pro rata portion of the Class B shares
in the sub-account also will convert to Class A shares. The portion will be
determined by the ratio that the shareholder's Class B shares converting to
Class A shares bears to the shareholder's total Class B shares not acquired
through dividends and other distributions.

The availability of the conversion feature is subject to the continuing
applicability of a ruling of the Internal Revenue Service ("IRS"), or the
availability of an opinion of counsel, that: (1) the dividends and other
distributions paid on Class A and Class B shares will not result in
"preferential dividends" under the Code; and (2) the conversion of shares does
not constitute a taxable event. If the conversion feature ceased to be
available, the Class B shares of the Fund would not be converted and would
continue to be subject to the higher ongoing expenses of the Class B shares
beyond eight years from the date of purchase. FIMCO has no reason to believe
that these conditions for the availability of the conversion feature will not
continue to be met.

If TAX-EXEMPT MONEY MARKET FUND implements any amendments to its Class
A Plan that would increase materially the costs that may be borne under such
Plan by Class A shareholders, a new target class into which Class B shares will
convert will be established, unless a majority of Class B shareholders, voting
separately as a class, approve the proposal.

WAIVERS OF CDSC ON CLASS B SHARES. The CDSC imposed on Class B shares
does not apply to: (a) any redemption pursuant to the tax-free return of an
excess contribution to an individual retirement account ("IRA") or other
qualified retirement plan if the Fund is notified at the time of such request;
(b) any redemption of a lump-sum or other distribution from qualified retirement
plans or accounts provided the shareholder has attained the minimum age of 70
1/2 years and has held the Class B shares for a minimum period of three years;
(c) any redemption by advisory accounts managed by the Adviser or any of its
affiliates or for shares held by the Adviser or any of its affiliates; (d) any
redemption by a tax-exempt employee benefit plan if continuance of the
investment would be improper under applicable laws or regulations; (e) any
redemption or transfer of ownership of Class B shares following the death or
disability, as defined in Section 72(m)(7) of the Code, of a shareholder if the
Fund is provided with proof of death or disability and with all documents
required by the Transfer Agent within one year after the death or disability;
and (f) certain redemptions pursuant to a Withdrawal Plan (see "Systematic
Withdrawal Plan"). For more information on what specific documents are required,
call Shareholder Services at 1-800-423-4026.

SIGNATURE GUARANTEES. The words "Signature Guaranteed" must appear in
direct association with the signature of the guarantor. Members of the STAMP
(Securities Transfer Agents Medallion Program), MSP (New York Stock Exchange
Medallion Signature Program), SEMP (Stock Exchanges Medallion Program) and FIC
are eligible signature guarantors. A notary public is not an acceptable
guarantor. Although each Fund reserves the right to require signature guarantees
at any other time, signature guarantees are required whenever: (1) the amount of
the redemption is over $50,000, (2) an exchange in the amount over $50,000 is
made into the Funds, (3) a redemption check is to be made payable to someone
other than the registered accountholder, other than major financial
institutions, as determined solely by the Fund and its agent, on behalf of the
shareholder, (4) a redemption check is to be mailed to an address other than the
address of record, preauthorized bank account, or to a major financial
institution for the benefit of a shareholder, (5) an account registration is
being transferred to

17
<PAGE>

another owner, (6) a transaction requires additional legal documentation; (7)
the redemption request is for certificated shares; (8) your address of record
has changed within 60 days prior to a redemption request; (9) multiple owners
have a dispute or give inconsistent instructions; (10) the authority of a
representative of a corporation, partnership, association or other entity has
not been established to the satisfaction of a Fund or its agents; and (11) you
elect EFT privileges. ERISA Title I 403(b) Plans and 401(k) Plans are exempt
from the signature guarantee requirement except for exchanges or redemption in
amounts greater than $50,000.

REINVESTMENT AFTER REDEMPTION. If you redeem Class A or 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 (including the Money Market Funds), at net
asset value, on the date the Transfer Agent receives your purchase request. If
you reinvest the entire proceeds of a redemption of Class B shares for which a
CDSC has been paid, you will be credited for the amount of the CDSC. If you
reinvest less than the entire proceeds, you will be credited with a pro rata
portion of the CDSC. All credits will be paid in Class B shares of the fund into
which the reinvestment is being made. The period you owned the original Class B
shares prior to redemption will be added to the period of time you own Class B
shares acquired through reinvestment for purposes of determining (a) the
applicable CDSC upon a subsequent redemption and (b) the date on which Class B
shares automatically convert to Class A shares. If your reinvestment is into a
new account, other than one of the Funds, it must meet the minimum investment
and other requirements of the fund into which the reinvestment is being made. If
you reinvest into a new Fund account within one year from the date of
redemption, the minimum investment is $500. To take advantage of this option,
send your reinvestment check along with a written request to the Transfer Agent
within six months from the date of your redemption. Include your account number
and a statement that you are taking advantage of the "Reinvestment Privilege."

SUPER CHECKING PROGRAM Class A shareholders may establish Super
Checking. Super Checking links your Fund account with a non-interest bearing
checking account at First Financial Savings Bank, S.L.A. ("FFS"), an affiliate
of the Funds. Each day, the Fund automatically "sweeps", or transfers, funds to
your FFS account to cover your withdrawals, in increments of $100 ($1000 for
Business Super Checking) to maintain a balance of $1,000 ($3,000 for Business
Super Checking). FFS will accept deposits into the FFS account only by an
electronic direct deposit, a federal funds wire transfer or by "sweep" from your
Fund account. You will receive a consolidated monthly reconciliation statement
summarizing all transactions. The Federal Deposit Insurance Corporation ("FDIC")
insures your funds in your FFS account up to $100,000. SHARES OF YOUR FUND ARE
NOT INSURED BY THE FDIC, ARE NOT OBLIGATIONS OF OR GUARANTEED BY FFS, AND ARE
SUBJECT TO RISK OF LOSS OF PRINCIPAL. For more information, see the Super
Checking Account and Sweep Agreement.

TELEPHONE TRANSACTIONS. Fund shares not held in certificate form may be
exchanged or redeemed by telephone provided you have not declined telephone
privileges. Telephone exchanges are available between non-retirement accounts.
Telephone exchanges are also available between participant directed 401(k)
accounts where First Financial Savings (as defined below) acts as Custodian, IRA
accounts or 403(b) accounts of the same class of shares registered in the same
name. Telephone exchanges are also available from an individually registered
non-retirement account to an IRA account of the same class of shares in the same
name (provided an IRA application is on file). Telephone exchanges are not
available for exchanges of Fund shares for plan units.

As stated in the Funds' Prospectus, 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 which they reasonably
believe to be authentic. In acting upon telephone instructions, these parties
use procedures which are reasonably designed to ensure that such instructions
are genuine, such as (1) obtaining some or all of the following information:
account number, address, social security number and such other information

18
<PAGE>

as may be deemed necessary; (2) recording all telephone instructions; and (3)
sending written confirmation of each transaction to the shareholder's address of
record.

CANCELLED CHECKS. Copies of cancelled purchase, liquidation, dividend
or draft checks will be provided to shareholders upon request. Shareholders will
be charged $10.00 per check.

CHECK REDEMPTION PRIVILEGE. Confirmation of redemptions effected
through the Check Redemption Privilege and the actual checks may be provided to
shareholders on a monthly basis rather than a daily basis.

REDUCED SALES CHARGES. Class B shares of the Funds are eligible for the
purchase of Class A shares of any other Eligible Fund, as defined in the
Prospectus, at a reduced sales charge through a Letter of Intent or the
Cumulative Purchase Privilege.

EMERGENCY PRICING PROCEDURES. In the event that the Funds must halt
operations during any day that they would normally be required to price under
Rule 22c-1 under the Investment Company of 1940 due to an emergency ("Emergency
Closed Day"), the Funds will apply the following procedures:

1. The Funds will make every reasonable effort to segregate orders
received on the Emergency Closed Day and give them the price that they would
have received but for the closing. The Emergency Closed Day price will be
calculated as soon as practicable after operations have resumed and will be
applied equally to sales, redemptions and repurchases that were in fact received
in the mail or otherwise on the Emergency Closed Day.

2. For purposes of paragraph 1, an order will be deemed to have been
received by the Funds on an Emergency Closed Day, even if neither the Funds nor
the Transfer Agent is able to perform the mechanical processing of pricing on
that day, under the following circumstances:

(a) In the case of a mail order, the order will be
considered received by a Fund when the postal service has delivered it to FIC's
Woodbridge offices prior to the close of regular trading on the NYSE, or such
other time as may be prescribed in the Funds' Prospectus; and

(b) In the case of a wire order, including a
Fund/SERV order, the order will be considered received when it is received in
good form by a FIC branch office or an authorized dealer prior to the close of
regular trading on the NYSE, or such other time as may be prescribed in the
Funds' Prospectus.

3. If the Funds are unable to segregate orders received on the
Emergency Closed Day from those received on the next day the Funds are open for
business, the Funds may give all orders the next price calculated after
operations resume.

4. Notwithstanding the foregoing, on business days in which the NYSE is
not open for regular trading, the Funds may determine not to price their
portfolio securities if such prices would lead to a distortion of the net asset
value for the Funds and their shareholders.

RETIREMENT PLANS

PROFIT-SHARING/MONEY PURCHASE PENSION/401(K) PLANS. FIC offers
prototype Profit-Sharing, Money Purchase Pension and 401(k) Retirement Plans
("Retirement Plans"), approved by the IRS for corporations, sole proprietorships
and partnerships. Custodial Agreements can be utilized for such Retirement Plans
that provide that First Financial Savings Bank, S.L.A. ("First Financial
Savings"), an affiliate of FIC, will furnish all required custodial services.

19
<PAGE>

FIC offers additional versions of prototype qualified retirement plans
for eligible employers, including 401(k), money purchase and profit-sharing
plans.

Currently, there are no annual service fees chargeable to participants
in connection with a Retirement Plan account. Each Fund currently pays the
annual $10.00 custodian fee for each Retirement Plan account, if applicable,
maintained with such Fund. This policy may be changed at any time by a Fund on
45 days' written notice. First Financial Savings has reserved the right to waive
its fees at any time or to change the fees on 45 days' prior written notice.

The Retirement Plan documents contain further specific information
about the Retirement Plans and may be obtained from your Representative. Prior
to establishing a Retirement Plan, you are advised to consult with your legal
and tax advisers.

INDIVIDUAL RETIREMENT ACCOUNTS. A qualified individual may purchase
shares of a Fund through an IRA or, as an employee of a qualified employer,
through a simplified employee pension-IRA ("SEP-IRA") or a salary reduction
simplified employee pension-IRA ("SARSEP-IRA") furnished by FIC. Under the
related Custodial Agreements, First Financial Savings acts as custodian of each
of these retirement plans.

Effective January 1, 1997, legislation enables certain eligible
employees to establish a Savings Incentive Match Plan for Employees of Small
Employers ("SIMPLE-IRAs"). FIC intends to offer a prototype SIMPLE-IRA plan for
eligible employers. First Financial Savings will act as Custodian for the
SIMPLE-IRA plan.

The Funds offer IRA accounts with specific provisions tailored to meet
the needs of certain groups of investors. The custodian fees are disclosed in
the IRA documents provided to investors in such accounts.

A taxpayer generally may make an annual individual IRA contribution no
greater than the lesser of (a) 100% of his or her compensation or (b) $2,000 (or
$4,000 when also contributing to a spousal IRA). However, contributions are
deductible only under certain conditions. The requirements as to SEP-IRAs,
SARSEP-IRAs and SIMPLE-IRAs are described in IRS Forms 5305-SEP, 5305A-SEP and
5305-SIMPLE, respectively, which are provided to employers. Employers are
required to provide copies of these forms to their eligible employees. A
disclosure statement setting forth complete details of the IRA should be given
to each participant before the contribution is invested.

Currently, there are no annual service fees chargeable to a participant
in connection with an IRA, SEP-IRA or SARSEP-IRA. Each Fund currently pays the
annual $10.00 custodian fee for each IRA account maintained with such Fund. This
policy may be changed at any time by a Fund on 45 days' written notice to the
holder of any IRA, SEP-IRA or SARSEP-IRA. First Financial Savings has reserved
the right to waive its fees at any time or to change the fees on 45 days' prior
written notice to the holder of any IRA.

An application and other documents necessary to establish an IRA,
SEP-IRA or SARSEP-IRA, are available from your Representative. SIMPLE-IRA
applications will also be available. Prior to establishing an IRA, SEP-IRA,
SARSEP-IRA or SIMPLE-IRA, you are advised to consult with your legal and tax
advisers.

RETIREMENT BENEFIT PLANS FOR EMPLOYEES OF ELIGIBLE ORGANIZATIONS. FIC
makes available model custodial accounts under Section 403(b)(7) of the Code
("Custodial Accounts") to provide retirement benefits for employees of certain
eligible public educational institutions and other eligible non-profit
charitable, religious and humane organizations. The Custodial Accounts are
designed to permit contributions (up to a "maximum exclusion allowance") by
employees through salary reduction. First Financial Savings acts as custodian of
these accounts.

20
<PAGE>

Contributions may be made to a Custodial Account under the Optional
Retirement Program for Employees of Texas Institutions of Higher Education
("ORP"), either by salary reduction agreement or otherwise, in accordance with
the terms and conditions of the ORP, and under the Texas Deferred Compensation
Plan Program for eligible state employees by salary reduction agreement. In
addition, contributions may also be made to other deferred compensation plans
maintained by state or local governments, or their agencies, commonly referred
to as Section 457 plans.

Currently, there are no annual service fees chargeable to participants
in connection with a Custodial Account. Each Fund currently pays the annual
$10.00 custodian fee for each Custodial Account maintained with such Fund. This
policy may be changed at any time by a Fund on 45 days' written notice to a
Custodial Account participant. First Financial Savings has reserved the right to
waive its fees at any time or to change the fees on 45 days' prior written
notice to a Custodial Account participant.

An application and other documents necessary to establish a Custodial
Account are available from your Representative. Persons desiring to create a
Custodial Account are advised to confer with their legal and tax advisers
concerning the specifics of this type of retirement benefit plan.

Mandatory income tax withholding, at the applicable rate may be
required on "eligible rollover" distributions made from any of the foregoing
retirement plans (other than IRAs, including SEP-IRAs, SARSEP-IRAs and
SIMPLE-IRAs). If the recipient elects to directly transfer an eligible rollover
distribution to an "eligible retirement plan" that permits acceptance of such
distributions, no withholding will apply. For distributions that are not
"eligible rollover" distributions, the recipient can elect, in writing, not to
require any withholding. This election must be submitted immediately before, or
must accompany, the distribution request. The amount, if any, of any such
optional withholding depends on the amount and type of the distribution.
Appropriate election forms are available from the Custodian or Shareholder
Services. Other types of withholding nonetheless may apply.

DISTRIBUTION FEES. A participant/shareholder's account under any of the
foregoing retirement plans (including IRAs) may be charged a distribution fee
(at the time of withdrawal) of $7.00 for a single distribution of the entire
account and $1.00 for each periodic distribution therefrom.

TAXES

Each Fund is treated as a separate corporation for Federal income tax
purposes. In order to continue to qualify for treatment as a regulated
investment company ("RIC") under the Code, a Fund must distribute to its
shareholders for each taxable year at least 90% of the sum of its investment
company taxable income (consisting generally of taxable net investment income
plus net short-term capital gain, if any) plus, in the case of TAX-EXEMPT MONEY
MARKET FUND, its net interest income excludable from gross income under section
103 of the Code, and must meet several additional requirements. For each Fund,
these requirements include the following: (1) the Fund must derive at least 90%
of its gross income each taxable year from dividends, interest, payments with
respect to securities loans and gains from the sale or other disposition of
securities, or certain other income derived with respect to its business of
investing in securities; (2) the Fund must derive less than 30% of its gross
income each taxable year from the sale or other disposition of securities that
were held for less than three months; (3) at the close of each quarter of the
Fund's taxable year, at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. Government securities, securities of
other RICs and other securities, with those other securities limited, in respect
of any one issuer, to an amount that does not exceed 5% of the value of the
Fund's total assets; and (4) at the close of each quarter of the Fund's taxable
year, not more than 25% of the value of its total assets may be invested in
securities (other than U.S. Government securities or the securities of other
RICs) of any one issuer.

21
<PAGE>

Each Fund will be subject to a nondeductible 4% excise tax to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.

Dividends paid by TAX-EXEMPT MONEY MARKET FUND will qualify as
"exempt-interest dividends" as defined in the Prospectuses, and thus will be
excludable from gross income by its shareholders, if the Fund satisfies the
additional requirement that, at the close of each quarter of its taxable year,
at least 50% of the value of its total assets consists of securities the
interest on which is excludable from gross income under section 103(a).
TAX-EXEMPT MONEY MARKET FUND intends to continue to satisfy this requirement.
The aggregate dividends excludable from shareholders' gross income may not
exceed the Fund's net tax-exempt income. Shareholders' treatment of dividends
from the Fund under local and state income tax laws may differ from the
treatment thereof under the Code.

Tax-exempt interest attributable to certain PABs (including, in the
case of a RIC, such as TAX-EXEMPT MONEY MARKET FUND, receiving interest on such
bonds, a proportionate part of the exempt-interest dividends paid by the RIC) is
a Tax Preference Item. Exempt-interest dividends received by a corporate
shareholder also may be indirectly subject to that tax without regard to whether
TAX-EXEMPT MONEY MARKET FUND'S tax-exempt interest is attributable to those
bonds. Entities or persons who are "substantial users" (or persons related to
"substantial users") of facilities financed by PABs or IDBs should consult their
tax advisers before purchasing shares of TAX-EXEMPT MONEY MARKET FUND because,
for users of certain of these facilities, the interest on those bonds is not
exempt from federal income tax. For these purposes, the term "substantial user"
is defined generally to include a "non-exempt person" who regularly uses in
trade or business a part of a facility financed from the proceeds of PABs or
IDBs.

Up to 85% of social security and railroad retirement benefits may be
included in taxable income for recipients whose adjusted gross income (including
income from tax-exempt sources such as the TAX-EXEMPT MONEY MARKET FUND) plus
50% of their benefits exceeds certain base amounts. Exempt-interest dividends
from the TAX-EXEMPT MONEY MARKET FUND still are tax-exempt to the extent
described in the Prospectus; they are only included in the calculation of
whether a recipient's income exceeds the established amounts.

If TAX-EXEMPT MONEY MARKET FUND invests in any instruments that
generate taxable income, under the circumstances described in the Prospectuses,
distributions of the interest earned thereon will be taxable to the Fund's
shareholders as ordinary income to the extent of the Fund's earnings and
profits. Moreover, if the Fund realizes capital gain as a result of market
transactions, any distribution of that gain will be taxable to its shareholders.
There also may be collateral Federal income tax consequences regarding the
receipt of tax-exempt dividends by shareholders such as S corporations,
financial institutions and property and casualty insurance companies. A
shareholder falling into any such category should consult his or her tax adviser
concerning its investment in shares of TAX-EXEMPT MONEY MARKET FUND.

PERFORMANCE INFORMATION

The Funds provide current yield quotations based on their daily
dividends. Each Fund declares dividends daily and pays dividends monthly from
net investment income.

For purposes of current yield quotations, dividends per share for a
seven-day period are annualized (using a 365-day year basis) and divided by the
Fund's average net asset value per share for the seven-day period. The current
yield quoted will be for a recent seven day period. Current yields will
fluctuate from time to time and are not necessarily representative of future
results. You should remember that yield is a function of the type and quality of
the instruments in the portfolio, portfolio maturity and operating expenses.
Current yield information is useful in reviewing a Fund's

22
<PAGE>

performance but, because current yield will fluctuate, such information may not
provide a basis for comparison with bank deposits or other investments which may
pay a fixed yield for a stated period of time, or other investment companies,
which may use a different method of calculating yield.

In addition to providing current yield quotations, each Fund provides
effective yield quotations for a base period return of seven days. An effective
yield quotation is determined by a formula that requires the compounding of the
unannualized base period return. Compounding is computed by adding 1 to the
annualized base period return, raising the sum to a power equal to 365 divided
by 7 and subtracting 1 from the result.

The following is an example, for purposes of illustration only, of the
current and effective yield (and for TAX-EXEMPT MONEY MARKET FUND, the
tax-equivalent yield) calculation for Class A and Class B shares for the seven
day period ended December 31, 1996.

<TABLE>
<CAPTION>
CASH MANAGEMENT FUND TAX-EXEMPT MONEY
MARKET FUND

CLASS A SHARES CLASS B SHARES CLASS A SHARES CLASS B SHARES
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Dividends per share from net investment $.0009242278 $.000780838 $.000631322 $.000488129
income (seven calendar days ended December
31, 1996) (Base Period)
Annualized (365 day basis)* $.048191834 $.040715123 $.032918930 $.025452439
Average net asset value per share of the $1.00 $1.00 $1.00 $1.00
seven calendar days ended December 31, 1996
Annualized historical yield per share for 4.82% 4.07% 3.29% 2.55%
the seven calendar days ended December 31,
1996
Effective Yield** 4.93% 4.15% 3.34% 2.58%
Tax Equivalent Yield*** N/A N/A 4.57% 3.54%
Weighted average life to maturity of the
portfolio on December 31, 1996 was 40
days for CASH MANAGEMENT FUND and 43
days for TAX-EXEMPT MONEY MARKET FUND

</TABLE>

- -----------
* This represents the average of annualized net investment income per share
for the seven calendar days ended December 31, 1996.
** Effective Yield = [(Base Period Return+1)365/7] - 1
*** Tax Equivalent Yield = (Effective Yield/(1-Tax Rate). For the purpose of
this illustration, the tax rate was assumed to be 28%. The maximum Federal
tax rate during this period was 39.6%.

The Funds may include in advertisements and sales literature
information, examples and statistics to illustrate the effect of compounding
income at a fixed rate of return to demonstrate the growth of an investment over
a stated period of time resulting from the payment of dividends in additional
Fund shares. Examples for the CASH MANAGEMENT FUND may also include hypothetical
returns comparing taxable versus tax-deferred growth which would pertain to an
IRA, Code section 403(b) or other qualified retirement program. The examples
used are for illustrative purposes only and are not representations by a Fund of
past or future yield or return. Examples of typical graphs and charts depicting
such historical performances, compounding and hypothetical returns are included
in Appendix D.

23
<PAGE>

From time to time, in reports and promotional literature, each Fund may
compare its performance to, or cite the historical performance of the relevant
Donoghue's Money Fund Average, a published statistic indicating the performance
of money market mutual funds, and the Bank Rate Monitor Index, a published
statistic indicating a composite interest rate available through banks on their
money market deposit accounts. Additionally, performance rankings and ratings
reported periodically in national financial publications such as MONEY, FORBES,
BUSINESS WEEK, BARRON'S, FINANCIAL TIMES, CHANGING TIMES, FORTUNE, etc., may
also be used. Quotations from articles appearing in daily newspaper publications
such as THE NEW YORK TIMES, THE WALL STREET JOURNAL and THE NEW YORK DAILY NEWS
may be cited.

GENERAL INFORMATION

AUDITS AND REPORTS. The accounts of each Fund are audited twice a year
by Tait, Weller & Baker, independent certified public accountants, Two Penn
Center Plaza, Philadelphia, PA 19102-1707. Shareholders of each Fund receive
semi-annual and annual reports, including audited financial statements, and a
list of securities owned.

TRANSFER AGENT. Administrative Data Management Corp., 581 Main Street,
Woodbridge, NJ 07095-1198, an affiliate of FIMCO and FIC, acts as transfer agent
for the Funds and as redemption agent for regular redemptions. The fees charged
to each Fund by the Transfer Agent are $2.00 per account per month and $1.00 per
account per report required by any governmental authority. Additional fees
charged to the Funds by the Transfer Agent are assumed by the Underwriter. The
Transfer Agent reserves the right to change the fees on prior notice to the
Funds. Upon request from shareholders, the Transfer Agent will provide an
account history. For account histories covering the most recent three year
period, there is no charge. The Transfer Agent charges a $5.00 administrative
fee for each account history covering the period 1983 through 1994 and $10.00
per year for each account history covering the period 1974 through 1982. Account
histories prior to 1974 will not be provided. If any communication from the
Transfer Agent to a shareholder is returned from the U.S. Postal Service marked
as "Undeliverable" two consecutive times, the Transfer Agent will cease sending
any further materials to the shareholder until the Transfer Agent is provided
with a correct address. Furthermore, if there is no known address for a
shareholder for at least one year, the Transfer Agent will charge such
shareholder's account $40 to cover the Transfer Agent's expenses in trying to
locate the shareholder's correct address. For the fiscal year ended December 31,
1996, CASH MANAGEMENT FUND paid $481,504 in transfer agency fees and expenses.
For the same period, an additional $172,001 in transfer agency fees and expenses
was voluntarily waived by the Transfer Agent. For the fiscal year ended December
31, 1996, TAX-EXEMPT MONEY MARKET FUND paid $64,610 in transfer agency fees and
expenses. For the same period, an additional $22,357 in transfer agency fees and
expenses was voluntarily waived by the Transfer Agent. The Transfer Agent's
telephone number is 1-800-423-4026.

5% SHAREHOLDERS. As of March 31, 1997, the following beneficially owned
more than 5% of the outstanding Class B shares of the Fund listed below:

Fund % of Shares Shareholder
- ---- ----------- -----------

TAX-EXEMPT MONEY MARKET FUND 5.2% Herman D. Robinson
5641 Wainwright Drive
Fort Worth, TX 76112

CASH MANAGEMENT FUND 7.1% David R. Dupuis
11449 Nellie Oaks Bnd.
Clermont, FL 34711-7800

24
<PAGE>

Fund % of Shares Shareholder
- ---- ----------- -----------
CASH MANAGEMENT FUND 12.8% James M. McDonough
15 Claredon Street
Malden, MA 02148

9.8% Edward J. Kosinski
184 Sandy Lane
Meriden, CT 06450

5.3% Patricia M. Coyle
1045 Ott Lane
No. Merrick, NY 11566

5.7% Meher H. Banajee
27 Madera Ct.
Kenner, LA 70065-3140

TRADING BY PORTFOLIO MANAGERS AND OTHER ACCESS PERSONS. Pursuant to
Section 17(j) of the 1940 Act and Rule 17j-1 thereunder, each Fund and the
Adviser have adopted Codes of Ethics restricting personal securities trading by
portfolio managers and other access persons of the Funds. Among other things,
such persons, except the Directors: (a) must have all non-exempt trades
pre-cleared; (b) are restricted from short-term trading; (c) must have duplicate
statements and transactions confirmations reviewed by a compliance officer; and
(d) are prohibited from purchasing securities of initial public offerings.

APPENDIX A
DESCRIPTION OF CORPORATE AND MUNICIPAL COMMERCIAL PAPER RATINGS

STANDARD & POOR'S RATINGS GROUP

S&P's commercial paper rating is a current assessment of the likelihood
of timely payment of debt considered short-term in the relevant market. Ratings
are graded into several categories, ranging from "A-1" for the highest quality
obligations to "D" for the lowest.

A-1 This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus (+) designation.

A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1."

MOODY'S INVESTORS SERVICE, INC.

Moody's short-term debt ratings are opinions of the ability of issuers
to repay punctually senior debt obligations which have an original maturity not
exceeding one year. Obligations relying upon support mechanisms such as
letters-of-credit and bonds of indemnity are excluded unless explicitly rated.

PRIME-1 Issuers (or supporting institutions) rated Prime-1 (P-1) have a
superior ability for repayment of senior short-term debt obligations. P-1
repayment ability will often be evidenced by many of the following
characteristics:

25
<PAGE>

- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structure with moderate reliance
on debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.
- Well-established access to a range of financial markets and
assured sources of alternate liquidity.

PRIME-2 Issuers (or supporting institutions) rated Prime-2 (P-2) have a
strong ability for repayment of senior short-term obligations. This will
normally be evidenced by many of the characteristics cited above, but to a
lesser degree. Earnings trends and coverage ratios, while sound, may be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.

APPENDIX B
DESCRIPTION OF CORPORATE AND MUNICIPAL BOND RATINGS

STANDARD & POOR'S RATINGS GROUP

The ratings are based on current information furnished by the issuer or
obtained by S&P from other sources it considers reliable. S&P does not perform
any audit in connection with any rating and may, on occasion, rely on unaudited
financial information. The ratings may be changed, suspended, or withdrawn as a
result of changes in, or unavailability of, such information, or based on other
circumstances.

The ratings are based, in varying degrees, on the following
considerations:

1. Likelihood of default-capacity and willingness of the obligor
as to the timely payment of interest and repayment of
principal in accordance with the terms of the obligation;

2. Nature of and provisions of the obligation;

3. Protection afforded by, and relative position of, the
obligation in the event of bankruptcy, reorganization, or
other arrangement under the laws of bankruptcy and other laws
affecting creditors' rights.

AAA Debt rated "AAA" has the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.

AA Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.

PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified
by the addition of a plus or minus sign to show relative standing within the
major categories.

26
<PAGE>

MOODY'S INVESTORS SERVICE, INC.

AAA Bonds which are rated "Aaa" are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edged." Interest payments are protected by a large or exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

AA Bonds which are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat greater than the Aaa securities.

Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.

APPENDIX C
DESCRIPTION OF MUNICIPAL NOTE RATINGS

STANDARD & POOR'S RATINGS GROUP

S&P's note rating reflects the liquidity concerns and market access
risks unique to notes. Notes due in 3 years or less will likely receive a note
rating. Notes maturing beyond 3 years will most likely receive a long-term debt
rating. The following criteria will be used in making that assessment.

- Amortization schedule (the larger the final maturity relative to
other maturities the more likely it will be treated as a note).

- Source of Payment (the more dependent the issue is on the market for
its refinancing, the more likely it will be treated as a note).

Note rating symbols are as follows:

SP-1 Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics will be
given a plus (+) designation.

SP-2 Satisfactory capacity to pay principal and interest.

MOODY'S INVESTORS SERVICE, INC.

Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade (MIG). This distinction is in
recognition of the difference between short-term credit risk and long-term risk.

MIG-1. Loans bearing this designation are of the best quality, enjoying
strong protection from established cash flows of funds for their servicing or
from established and broad-based access to the market for refinancing, or both.

MIG-2. Loans bearing this designation are of high quality, with margins
of protection ample although not as large as the preceding group.

27
<PAGE>

Financial Statements
as of December 31, 1996

First Investors Cash Management Fund, Inc. (2-62347) incorporates by reference
the financial statements and report of independent auditors contained in the
Annual Report to shareholders for the fiscal year ended December 31, 1996
electronically filed with the Commission on February 27, 1997 (Accession Number:
0000928816-97-000047).

First Investors Tax-Exempt Money Market Fund, Inc. (2-82572) incorporates by
reference the financial statements and report of independent auditors contained
in the Annual Report to shareholders for the fiscal year ended December 31, 1996
electronically filed with the Commission on February 27, 1997 (Accession Number:
0000928816-97-000048).

<PAGE>

PART C

OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements:

Financial Statements are set forth in Part B, Statement of
Additional Information.

(b) Exhibits:

(1)a./2/ Articles of Restatement

b./2/ Articles Supplementary

(2)/2/ Amended and Restated By-Laws

(3) Not Applicable

(4) Shareholders' rights are contained in (a) Articles FIFTH
and EIGHTH of Registrant's Articles of Restatement dated
September 14, 1994, previously filed as Exhibit 99.B1.1
to Registrant's Registration Statement; (b) Article
FOURTH of Registrant's Articles Supplementary to
Articles of Incorporation dated October 20, 1994,
previously filed as Exhibit 99.B1.2 to Registrant's
Registration Statement and (c) Article II of
Registrant's Amended and Restated By-laws, previously
filed as Exhibit 99.B2 to Registrant's Registration
Statement.

(5)/2/ Investment Advisory Agreement between Registrant and
First Investors Management Company, Inc.

(6)/2/ Underwriting Agreement between Registrant and First
Investors Corporation.

(7) Not Applicable

(8)a./2/ Custodian Agreement between Registrant and Irving Trust
Company

b./2/ Supplement to Custodian Agreement between Registrant
and The Bank of New York

c./2/ Payment and Redemption Agency Agreement between
Registrant and Irving Trust Company

(9)/2/ Administration Agreement between Registrant, First
Investors Management Company, Inc., First Investors
Corporation and Administrative Data Management Corp.

(10)/1/ Opinion of Counsel

(11)a. Consent of independent accountants

b./2/ Powers of Attorney

(12) Not Applicable

(13) No undertaking in effect

(14)a./3/ First Investors Profit Sharing/Money Purchase Pension
Retirement Plan for Sole Proprietor ships, Partnerships
and Corporations

b./4/ First Investors Individual Retirement Account

c./5/ First Investors 403(b) Custodial Account

d./4/ First Investors SEP-IRA and SARSEP-IRA

(15)/2/ Class B Distribution Plan

(16) Not Applicable

(17) Financial Data Schedule (filed as Exhibit 27 for
electronic filing purposes)

(18)/2/ 18f-3 Plan

- ----------
/1/ Incorporated by reference from Registrant's Rule 24f-2 Notice for its
fiscal year ended December 31, 1996 filed on February 27, 1997.
/2/ Incorporated by reference from Post-Effective Amendment No. 23 to
Registrant's Registration Statement (File No. 2-62347 filed on April 24,
1996.
/3/ Incorporated by reference from Post-Effective Amendment No. 17 to
Registrant's Registrant Statement (File No. 2-62347) filed on April 2,
1992.
/4/ Incorporated by reference from Post-Effective Amendment No. 187 to
Registrant's Registrant Station (File No. 2-62347) filed on April 30,
1993.
/5/ Incorporated by reference from Post-Effective Amendment No. 16 to
Registrant's Registrant Statement (File No. 2-62347) filed on April 24,
1991.

<PAGE>

Item 25. Persons Controlled by or under common control with Registrant

There are no persons controlled by or under common control with the
Registrant.

Item 26. Number of Holders of Securities

Number of Record
Holders as of
Title of Class February 3, 1997
-------------- ----------------
Class A Shares 22,103
Class B Shares 22

Item 27. Indemnification

Article X, Section 1 of the By-Laws of Registrant provides as
follows:

Section 1. Every person who is or was an officer or director of the
Corporation (and his heirs, executors and administrators) shall be indemnified
by the Corporation against reasonable costs and expenses incurred by him in
connection with any action, suit or proceeding to which he may be made a party
by reason of his being or having been a director or officer of the Corporation,
except in relation to any action, suit or proceeding in which he has been
adjudged liable because of negligence or misconduct, which shall be deemed to
include willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office. In the absence of an
adjudication which expressly absolves the director or officer of liability to
the Corporation or its stockholders for negligence or misconduct, within the
meaning thereof as used herein, or in the event of a settlement, each director
or officer (and his heirs, executors and administrators) shall be indemnified by
the Corporation against payments made, including reasonable costs and expenses,
provided that such indemnity shall be conditioned upon the prior determination
by a resolution of two-thirds of the Board of Directors, who are not involved in
the action, suit or proceeding that the director or officer has no liability by
reason of negligence or misconduct within the meaning thereof as used herein,
and provided further that if a majority of the members of the Board of Directors
of the Corporation are involved in the action, suit or proceeding, such
determination shall have been made by a written opinion of independent counsel.
Amounts paid in settlement shall not exceed costs, fees and expenses which would
have been reasonably incurred if the action, suit or proceeding had been
litigated to a conclusion. Such a determination by the Board of Directors or by
independent counsel, and the payment of amounts by the Corporation on the basis
thereof, shall not prevent a stockholder from challenging such indemnification
by appropriate legal proceedings on the grounds that the person indemnified was
liable to the Corporation or its security holders by reason of negligence or
misconduct within the meaning thereof as used herein. The foregoing rights and
indemnification shall not be exclusive of any other rights to which any officer
or director (or his heirs, executors and administrators) may be entitled to
according to law.

The Registrant's Investment Advisory Agreement provides as follows:

The Manager shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Company or any Series in
connection with the matters to which this Agreement relate except a loss
resulting from the willful misfeasance, bad faith or gross negligence on its
part in the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. Any person, even though also an
officer, partner, employee, or agent of the Manager, who may be or become an
officer, Board member, employee or agent of the Company shall be deemed, when
rendering services to the Company or acting in any business of the Company, to
be rendering such services to or acting solely for the Company and not as an
officer, partner, employee, or agent or one under the control or direction of
the Manager even though paid by it.

<PAGE>

The Registrant's Underwriting Agreement provides as follows:

The Underwriter agrees to use its best efforts in effecting the
sale and public distribution of the shares of the Fund through dealers and to
perform its duties in redeeming and repurchasing the shares of the Fund, but
nothing contained in this Agreement shall make the Underwriter or any of its
officers and directors or shareholders liable for any loss sustained by the Fund
or any of its officers, directors, or shareholders, or by any other person on
account of any act done or omitted to be done by the Underwriter under this
Agreement provided that nothing herein contained shall protect the Underwriter
against any liability to the Fund or to any of its shareholders to which the
Underwriter would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of its duties as Underwriter or by
reason of its reckless disregard of its obligations or duties as Underwriter
under this Agreement. Nothing in this Agreement shall protect the Underwriter
from any liabilities which they may have under the Securities Act of 1933 or the
Investment Company Act of 1940.

Reference is hereby made to the Maryland Corporations and
Associations Annotated Code, Sections 2-417, 2-418 (1986).

The general effect of this Indemnification will be to indemnify the
officers and directors of the Registrant from costs and expenses arising from
any action, suit or proceeding to which they may be made a party by reason of
their being or having been a director or officer of the Registrant, except where
such action is determined to have arisen out of the willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the director's or officer's office.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling the Registrant pursuant to the foregoing provisions, the Registrant
has been informed that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is therefore unenforceable. See Item 32 herein.

Item 28. Business and Other Connections of Investment Adviser

First Investors Management Company, Inc., the Registrant's
Investment Adviser, also serves as Investment Adviser to:

First Investors Government Fund, Inc.
First Investors Series Fund
First Investors Fund For Income, Inc.
First Investors Global Fund, Inc.
First Investors High Yield Fund, Inc.
First Investors Insured Tax Exempt Fund, Inc.
First Investors Life Series Fund
First Investors Multi-State Insured Tax Free Fund
First Investors New York Insured Tax Free Fund, Inc.
First Investors Special Bond Fund, Inc.
First Investors Tax-Exempt Money Market Fund, Inc.
First Investors U.S. Government Plus Fund
First Investors Series Fund II, Inc.

<PAGE>

Affiliations of the officers and directors of the Investment
Adviser are set forth in Part B, Statement of Additional Information, under
"Directors and Officers."

Item 29. Principal Underwriters

(a) First Investors Corporation, Underwriter of the
Registrant, is also underwriter for:

First Investors Government Fund, Inc.
First Investors Series Fund
First Investors Fund For Income, Inc.
First Investors Global Fund, Inc.
First Investors High Yield Fund, Inc.
First Investors Insured Tax Exempt Fund, Inc.
First Investors Multi-State Insured Tax Free Fund
First Investors New York Insured Tax Free Fund, Inc.
First Investors Tax-Exempt Money Market Fund, Inc.
First Investors U.S. Government Plus Fund
First Investors Series Fund II, Inc.

(b) The following persons are the officers and directors of the
Underwriter:

Position and Position and
Name and Principal Office with First Office with
Business Address Investors Corporation Registrant
- ------------------ --------------------- ------------

Glenn O. Head Chairman President
95 Wall Street and Director and Director
New York, NY 10005

Marvin M. Hecker President None
95 Wall Street
New York, NY 10005

John T. Sullivan Director Chairman of the
95 Wall Street Board of Directors
New York, NY 10005

Roger L. Grayson Director Director
95 Wall Street
New York, NY 10005

Joseph I. Benedek Treasurer Treasurer
581 Main Street
Woodbridge, NJ 07095

Robert Murphy Comptroller None
581 Main Street
Woodbridge, NJ 07095

Lawrence A. Fauci Senior Vice President None
95 Wall Street and Director
New York, NY 10005

Kathryn S. Head Vice President, Director
581 Main Street Chief Financial
Woodbridge, NJ 07095 Officer and Director

Louis Rinaldi Senior Vice None
581 Main Street President
Woodbridge, NJ 07095

Frederick Miller Vice President None
581 Main Street
Woodbridge, NJ 07095

Jane W. Kruzan Director None
232 Adair Street
Decatur, GA 30030

<PAGE>

Larry R. Lavoie Secretary and None
95 Wall Street General Counsel
New York, NY 10005

Matthew Smith Vice President None
581 Main Street
Woodbridge, NJ 07095

Jeremiah J. Lyons Director None
56 Weston Avenue
Chatham, NJ 07928

Anne Condon Vice President None
581 Main Street
Woodbridge, NJ 07095

Howard M. Factor Vice President None
95 Wall Street
New York, NY 10005

Item 30. Location of Accounts and Records

Physical possession of the books, accounts and records of the
Registrant are held by First Investors Management Company, Inc. and its
affiliated companies, First Investors Corporation and Administrative Data
Management Corp., at their corporate headquarters, 95 Wall Street, New York, NY
10005 and administrative offices, 581 Main Street, Woodbridge, NJ 07095, except
for those maintained by the Registrant's Custodian, The Bank of New York, 48
Wall Street, New York, NY 10286.

Item 31. Management Services

Inapplicable

Item 32. Undertakings

The Registrant undertakes to carry out all indemnification
provisions of its Articles of Incorporation, Advisory Agreement and Underwriting
Agreement in accordance with Investment Company Act Release No. 11330 (September
4, 1980) and successor releases.

<PAGE>

Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions under Item 27 herein, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

The Registrant hereby undertakes to furnish a copy of its latest
annual report to shareholders, upon request and without charge, to each person
to whom a prospectus is delivered.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant represents that this Amendment
meets all the requirements for effectiveness pursuant to Rule 485(b) under the
Securities Act of 1933, and has duly caused this Post-Effective Amendment to
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on the
16th day of April, 1997.

FIRST INVESTORS CASH
MANAGEMENT FUND, INC.
(Registrant)

By: /s/ Glenn O. Head
----------------
Glenn O. Head
President and Director

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this Amendment to this Registration Statement
has been signed below by the following persons in the capacities and on the
dates indicated.

/s/Glenn O. Head Principal Executive April 16, 1997
- ------------------------- Officer and Director
Glenn O. Head

/s/Joseph I. Benedek Principal Financial April 16, 1997
- ------------------------- and Accounting Officer
Joseph I. Benedek

* Director April 16, 1997
- -------------------------
Kathryn S. Head

* Director April 16, 1997
- -------------------------
Roger L. Grayson

* Director April 16, 1997
- -------------------------
Herbert Rubinstein

* Director April 16, 1997
- -------------------------
Nancy Schaenen

* Director April 16, 1997
- -------------------------
James M. Srygley

* Director April 16, 1997
- -------------------------
John T. Sullivan

* Director April 16, 1997
- -------------------------
Rex R. Reed

* Director April 16, 1997
- -------------------------
Robert F. Wentworth

*By: /s/Larry R. Lavoie
------------------
Larry R. Lavoie
Attorney-in-fact

<PAGE>

INDEX TO EXHIBITS

Exhibit
Number Description

99.B11.1 Consent of Accountants
99.B11.2 Power of Attorney
27.001 FDS-Class A Shares
27.002 FDS-Class B Shares

Consent of Independent Certified Public Accountants

First Investors Cash Management Fund, Inc.
95 Wall Street
New York, New York 10005

We consent to the use in Post-Effective Amendment No. 24 to the
Registration Statement on Form N-1A (File No. 2-62347) of our report dated
January 31, 1997 relating to the December 31, 1996 financial statements of First
Investors Cash Management Fund, Inc., which are included in said Registration
Statement.

/s/ Tait, Weller & Baker

TAIT, WELLER & BAKER

Philadelphia, Pennsylvania
April 16, 1997

First Investors Cash Management Fund, Inc.

Power of Attorney

KNOW ALL MEN BY THESE PRESENTS that the undersigned officer and/or
director of First Investors Cash Management Fund, Inc. hereby appoints Larry R.
Lavoie or Glenn O. Head, and each of them, his true and lawful attorney to
execute in his name, place and stead and on his behalf a Registration Statement
on Form N-1A for the registration pursuant to the Securities Act of 1933 and the
Investment Company Act of 1940 of shares of common stock of said Maryland
corporation and any and all amendments to said Registration Statement (including
post-effective amendments), and all instruments necessary or incidental in
connection therewith and to file the same with the Securities and Exchange
Commission. Said attorney shall have full power and authority to do and perform
in the name and on behalf of the undersigned every act whatsoever requisite or
desirable to be done in the premises, as fully and to all intents and purposes
as the undersigned might or could do, the undersigned hereby ratifying and
approving all such acts of said attorney.

IN WITNESS WHEREOF, the undersigned has executed this instrument this
3rd day of April, 1997.

/s/ Nancy Schaenen

Nancy Schaenen

<ARTICLE> 6
<CIK> 0000276461
<NAME> FIRST INVESTORS CASH MANAGEMENT FUND, INC.
<SERIES>
<NUMBER> 001
<NAME> CLASS A
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 133555
<INVESTMENTS-AT-VALUE> 133555
<RECEIVABLES> 230
<ASSETS-OTHER> 448
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 134233
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 326
<TOTAL-LIABILITIES> 326
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 133801
<SHARES-COMMON-STOCK> 133801
<SHARES-COMMON-PRIOR> 128635
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 133801
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6858
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