FIRST INVESTORS CASH MANAGEMENT FUND INC, 485BPOS, 2000-01-28

FIRST INVESTORS CASH MANAGEMENT FUND INC
485BPOS, 2000-01-28

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As filed with the Securities and Exchange Commission on January 28, 2000

1933 Act File No. 2-62347
1940 Act File No. 811-2860

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[X]
Pre-Effective Amendment No. ___ [ ]
Post-Effective Amendment No. 29 [X]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 29 [X]

FIRST INVESTORS CASH MANAGEMENT FUND, INC.
(Exact name of Registrant as specified in charter)

95 Wall Street
New York, New York 10005
(Address of Principal Executive Offices) (Zip Code)
(Registrant's Telephone Number, Including Area Code): (212) 858-8000

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

Copy to:
Robert J. Zutz, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, NW
Washington, D.C. 20036

It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[x] on January 28, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective
date for a previously filed post-effective amendment.

<PAGE>

FIRST INVESTORS CASH MANAGEMENT FUND, INC.

CONTENTS OF REGISTRATION STATEMENT

This registration document is comprised of the following:

Cover Sheet

Contents of Registration Statement

Prospectus for First Investors Cash Management Fund, Inc.

Combined Prospectus for First Investors Cash Management Fund,
Inc., First Investors Government Fund, Inc., First Investors Fund
For Income, Inc. and First Investors Investment Grade Fund, a
series of First Investors Series Fund

Combined Statement of Additional Information for First Investors
Cash Management Fund, Inc., First Investors High Yield Fund,
Inc., First Investors Government Fund, Inc., First Investors Fund
For Income, Inc. and First Investors Investment Grade Fund, a
series of First Investors Series Fund

Part C of Form N-1A

Signature Page

Exhibits

<PAGE>

[FIRST INVESTORS LOGO]

CASH MANAGEMENT FUND

The Securities and Exchange Commission has not approved or disapproved
these securities or passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.

THE DATE OF THIS PROSPECTUS IS JANUARY 28, 2000

<PAGE>

CONTENTS

OVERVIEW OF THE CASH MANAGEMENT FUND

o What is the Cash Management Fund?
oo Objective
oo Primary Investment Strategies
oo Primary Risks
o Who should consider buying the Cash Management Fund?
o How has the Cash Management Fund performed?
o What are the fees and expenses of the Cash Management Fund?

THE CASH MANAGEMENT FUND IN DETAIL

o What are the Cash Management Fund's objective, principal investment
strategies and principal risks?
o Who manages the Cash Management Fund?

BUYING AND SELLING SHARES

o How and when does the Fund price its shares?
o How do I buy shares?
o Which class of shares is best for me?
o How do I sell shares?
o Can I exchange my shares for the shares of other First Investors Funds?

ACCOUNT POLICIES

o What about dividends and capital gain distributions?
o What about taxes?
o How do I obtain a complete explanation of all account privileges and
policies?

FINANCIAL HIGHLIGHTS

2
<PAGE>

OVERVIEW OF THE
CASH MANAGEMENT FUND

What is the Cash Management Fund?

OBJECTIVE: The Fund seeks to earn a high rate of current income
consistent with the preservation of capital and maintenance of
liquidity.

PRIMARY
INVESTMENT
STRATEGIES: The Fund invests in high-quality money market instruments that
the Fund determines present minimal credit risk. These
instruments include prime commercial paper, variable and
floating rate corporate notes, and short term U.S. agency
obligations. The Fund's portfolio is managed to meet
regulatory requirements that permit the Fund to maintain a
stable net asset value ("NAV") of $1.00 per share. These
regulatory requirements include stringent credit quality
standards on investments, limits on the maturity of individual
investments and the dollar weighted average maturity of the
entire portfolio, and diversification requirements.

PRIMARY
RISKS: While money market funds are designed to be relatively low
risk investments, they are not entirely free of risk. The
following are the risks of investing in the Fund, which are
common to all money market funds:

o The Fund's NAV could decline (below $1.00 per share) if there
is a default by an issuer of one of the Fund's investments, a
credit downgrade of one of the Fund's investments, or an
unexpected change in interest rates.

o The Fund's yield will change daily based upon changes in
interest rates and other market conditions.

AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT AND IS NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUND
SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.

Who should consider buying the Cash Management Fund?

The Cash Management Fund is most appropriately used for that
portion of your investment portfolio that you may need in the
near future. Since the Fund limits its investments to
high-quality, short-term securities, it generally has a lower
risk profile but also a lower yield than funds which invest in
lower-quality, longer-term debt securities. It may be appropriate
for you if you:

o Are seeking income, and

o Are seeking a conservative investment that provides a high
degree of credit quality.

3
<PAGE>

How has the Cash Management Fund performed?

The bar chart and table below show you how the Fund's performance has varied
from year to year. This information gives you some indication of the risks of
investing in the Fund.

[OBJECT OMITTED]

During the periods shown,the highest quarterly return was 1.89% (for the quarter
ended March 31, 1990), and the lowest quarterly return was 0.62% (for the
quarter ended June 30, 1993). THE FUND'S PAST PERFORMANCE DOES NOT NECESSARILY
INDICATE HOW THE FUND WILL PERFORM IN THE FUTURE.

The following table shows the average annual total returns for Class A shares
and Class B shares. This table assumes that the maximum contingent deferred
sales charge ("CDSC") on Class B shares was paid.

Inception
Class B Shares
1 Year* 5 Years* 10 Years* (1/12/95)

Class A Shares 4.55% 4.95% 4.70% N/A
Class B Shares -0.22% N/A N/A 3.81%
* The annual returns are based upon calendar years.

4
<PAGE>

What are the fees and expenses of the Cash Management Fund?

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.

Class A Class B
SHARES SHARES
SHAREHOLDER FEES
(fees paid directly from your investment)

Maximum sales charge (load) imposed on purchases
(as a percentage of offering price).......... None None
Maximum deferred sales charge (load)
(as a percentage of the lower of purchase
price or redemption price)................... None 4%*

ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)

DISTRIBUTION TOTAL
AND SERVICE ANNUAL FUND
MANAGEMENT (12B-1) OTHER OPERATING EXPENSE NET
FEES FEES(1) EXPENSES(2) (EXPENSES(3) ASSUMPTION(2) EXPENSES(3)
---------- ---------- ----------- ------------ ------------- -----------
Class A Shares 0.50% 0.00% 0.64% 1.14% 0.34% 0.80%
Class B Shares 0.50% 0.75% 0.64% 1.89% 0.34% 1.55%
</TABLE>

(1)Because the Fund pays Rule 12b-1 fees on its Class B shares, long-term Class
B shareholders could pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. There are currently no Rule 12b-1 fees on Class A shares of
the Fund.

(2)For the fiscal year ended September 30, 1999, First Investors Management
Company, Inc. (the "Adviser") assumed for each class of shares of the Fund
certain Other Expenses that were in excess of 0.30%. The Adviser has
contractually agreed with the Fund to assume Other Expenses in excess of
0.30% for the fiscal year ending September 30, 2000.
(3)The Fund has an expense offset arrangement that may reduce the Fund's
custodian fee based on the amount of cash maintained by the Fund with its
custodian. Any such fee reductions are not reflected under Total Annual Fund
Operating Expenses or Net Expenses.

EXAMPLE

This example helps you to compare the costs of investing in the Fund with the
cost of investing in other mutual funds. The example assumes that (1) you invest
$10,000 in the Fund for the time periods indicated; (2) your investment has a 5%
return each year; and (3) the Fund's operating expenses remain the same, except
for year one, which is net of expenses assumed. Although your actual costs may
be higher or lower, under these assumptions your costs would be:

ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
If you redeem your shares:
Class A shares $ 82 $329 $ 595 $1,356
Class B shares $558 $861 $1,190 $1,988*

5
<PAGE>

If you do not redeem your shares:
Class A shares $82 $329 $595 $1,356
Class B shares $158 $561 $990 $1,988*

*Assumes conversion to Class A shares eight years after purchase.

THE CASH MANAGEMENT FUND IN DETAIL

What are the Cash Management Fund's objective, principal investment
strategies, and risks?

OBJECTIVE: The Fund seeks to earn a high rate of current income consistent
with the preservation of capital and maintenance of liquidity.

PRINCIPAL INVESTMENT STRATEGIES: The Fund invests primarily in high-quality
money market instruments that are determined by the Fund's Adviser to present
minimal credit risk. Some common types of money market instruments are Treasury
bills and notes, which are securities issued by the U.S. government; commercial
paper, which are promissory notes issued by large companies or financial firms;
banker's acceptances, which are credit instruments guaranteed by a bank;
negotiable certificates of deposit, which are issued by banks in large
denominations; and floating rate notes. The interest rate of a floating rate
instrument is generally based on a known lending rate, such as a bank's prime
rate, and is reset whenever the underlying rate is adjusted.

The Fund's portfolio is managed to meet regulatory requirements that permit the
Fund to maintain a stable NAV of $1.00 per share. These include requirements
relating to the credit quality, maturity, and diversification of the Fund's
investments. For example, to be an eligible investment for the Fund, a security
must have a remaining maturity of 397 calendar days or less. The security must
be rated in one of the two highest credit ratings categories for short-term
securities by at least two nationally recognized statistical rating
organizations (or by one, if only one rating service has rated the security), or
if unrated, be determined by the Fund's Adviser to be of quality equivalent to
those in the two highest credit ratings categories. The Fund must also maintain
a dollar-weighted average portfolio maturity of 90 days or less.

In buying and selling securities, the Fund will consider ratings assigned by
ratings services as well as its own credit analysis. The Fund considers, among
other things, the issuer's earnings and cash flow generating capabilities, the
security's yield and relative value, and the outlook for interest rates and the
economy. In the case of instruments with demand features or credit enhancements,
the Fund considers the financial strength of the party providing the demand
feature or credit enhancement, including any ratings assigned to such party.
Information on the Fund's recent holdings can be found in the most recent annual
report (see back cover).

PRINCIPAL RISKS: Any investment carries with it some level of risk. An
investment offering greater potential rewards generally carries greater risks.
Although the Fund tries to maintain a $1.00 share price, it may not be able to
do so. It is therefore possible to lose money by investing in the Fund. Here are
the principal risks of owning the Cash Management Fund:

INTEREST RATE RISK: Like the values of other debt instruments, the market values
of money market instruments are affected by changes in interest rates. When
interest rates rise, the market values of money market instruments decline; and
when interest rates decline, the market values of money market instruments
increase. The price volatility of money market instruments also depends on their
maturities and durations. Generally, the shorter the maturity and duration of a
money market instrument, the lesser its sensitivity to interest rates.

Interest rate risk also includes the risk that in a declining interest rate
environment the Fund will have to invest the proceeds of maturing investments in

6
<PAGE>

lower-yielding investments. The yields received by the Fund on some of its
investments will also decline as interest rates decline. For example, the Fund
invests in floating rate bonds and notes. When interest rates decline, the
yields paid on these securities may decline.

CREDIT RISK: A money market instrument's credit quality depends upon the
issuer's ability to pay interest on the security and, ultimately, to repay the
principal. The lower the rating by one of the independent bond-rating agencies
(for example, Moody's Investors Service, Inc. or Standard & Poor's Ratings
Group), the greater the chance (in the rating agency's opinion) the security's
issuer will default, or fail to meet its repayment obligations. Direct U.S.
Treasury obligations (securities backed by the U.S. government) carry the
highest credit ratings. All things being equal, money market instruments with
greater credit risk offer higher yields.

7
<PAGE>

Who manages the Cash Management Fund?

First Investors Management Company, Inc. ("FIMCO" or the "Adviser") is the
investment adviser to the Fund. Its address is 95 Wall Street, New York, NY
10005. It currently is investment adviser to 52 mutual funds or series of funds
with total net assets of over $5 billion. FIMCO supervises all aspects of the
Fund's operations and determines the Fund's portfolio transactions. For the
fiscal year ended September 30, 1999, FIMCO received advisory fees of 0.50% of
the Fund's average daily net assets.

BUYING AND SELLING SHARES

How and when does the Fund price its shares?

The share price (which is called "net asset value" or "NAV" per share) for the
Fund is calculated once each day as of 4 p.m., Eastern Time ("E.T."), on each
day the New York Stock Exchange ("NYSE") is open for regular trading. These are
referred to as "Trading Days." The NYSE is closed on most national holidays and
Good Friday. In the event that the NYSE closes early, the share price will be
determined as of the time of the closing.

To calculate the NAV, the Fund's assets are valued and totaled, liabilities are
subtracted, and the balance, called net assets, is divided by the number of
shares outstanding. The Fund values its assets using the amortized cost method
which is intended to permit the Fund to maintain a stable $1.00 per share for
each class of shares.

How do I buy shares?

You may buy shares of the Fund through a First Investors registered
representative or through a registered representative of an authorized
broker-dealer ("Representative"). Your Representative will help you complete and
submit an application. Your initial investment must be at least $1,000. However,
we have lower initial investment requirements and offer automatic investment
plans that allow you to open a Fund account with as little as $50. Subsequent
investments may be made in any amount. You can also arrange to make systematic
investments electronically from your bank account or through payroll deduction.
All the various ways you can buy shares are explained in the Shareholder Manual.
For further information on the procedures for buying shares, please contact your
Representative or call Shareholder Services at 1-800-423-4026. As discussed
below, Class B shares may only be purchased by means of an exchange from the
Class B shares of another First Investors Fund.

Money market fund shares will not be purchased until the Fund receives federal
funds for the purchase. Federal funds for a purchase will generally not be
received until the morning of the next Trading Day following the Trading Day on
which your purchase check or other form of payment is received in our
Woodbridge, N.J. offices. If a check is received in our Woodbridge, N.J. offices
after the close of regular trading on the NYSE, the federal funds for the
purchase will generally not be received until the morning of the second
following Trading Day.

If we receive a wire transfer for a purchase prior to 12:00 p.m., ET, and you
have previously advised us that the wire is on the way, federal funds for the
purchase will be deemed to have been received on that same day. You must call
before 12:00 p.m. and give us your name, account number, the amount of the wire,
and a federal reference number documenting the transfer. If we fail to receive
such advance notification, the federal funds for your purchase will not be
deemed to have been received until the morning of the next Trading Day following
receipt of the federal wire and your account information.

The Fund reserves the right to refuse any order to buy shares if the Fund
determines that doing so would be in the best interests of the Fund and its
shareholders.

Which class of shares is best for me?

8
<PAGE>

The Fund has two classes of shares, Class A and Class B. While each class
invests in the same portfolio of securities, the classes have separate expense
structures. Because of the different expense structures, each class of shares
generally will have different dividends.

Class A shares are available through direct investment or an exchange from the
Class A shares of another First Investors Fund. Class A shares are sold at NAV
without any initial or deferred sales charge.

Class B shares are not available for direct investment. They may be acquired
only through an exchange from the Class B shares of another First Investors
Fund. While an exchange will be processed at the relative NAVs of the shares
involved, any CDSC on the shares being exchanged will carry over to the new
shares. The CDSC declines the longer you hold your shares, as illustrated below.
Class B shares convert to Class A shares after eight years.
<TABLE>
<CAPTION>

Class B Share
<S> <C> <C>

CDSC as a Percentage of Purchase Price
YEAR OF REDEMPTION or NAV AT REDEMPTION
------------------ --------------------
Within the 1st or 2nd year...... 4%
Within the 3rd or 4th year...... 3
In the 5th year................. 2
In the 6th year................. 1
Within the 7th year and 8th year 0
</TABLE>

There is no CDSC on Class B shares which are acquired through reinvestment of
dividends or distributions. The CDSC is imposed on the lower of the original
purchase price or the net asset value of the shares being sold. For purposes of
determining the CDSC, all purchases made during a calendar month are counted as
having been made on the first day of that month at the average cost of all
purchases made during that month.

To keep your CDSC as low as possible, each time you place a request to sell
shares, we will first sell any shares in your account that carry no CDSC. If
there is an insufficient number of these shares to meet your request in full, we
will then sell those shares that have the lowest CDSC.

CDSCs may be reduced or waived under certain circumstances and for certain
groups. Consult your Representative or call us directly at 1-800-423-4026 for
details.

The Fund has adopted a plan pursuant to Rule 12b-1 that allows the Fund to pay
distribution fees for the sale and distribution of its Class B shares. Class B
shares pay Rule 12b-1 fees for the marketing of fund shares and for services
provided to shareholders. The plan provides for payments at an annual rate
(based on average daily net assets) of up to 1.00% on Class B shares. No more
than 0.25% of these payments may be for service fees. These fees are paid
monthly in arrears. Because these fees are paid out of the Fund's assets on an
on-going basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.

FOR ACTUAL PAST EXPENSES OF CLASS A AND CLASS B SHARES OF THE FUND, SEE THE
APPROPRIATE SECTION IN THIS PROSPECTUS ENTITLED "WHAT ARE THE FEES AND EXPENSES
OF THE FUND?"

How do I sell shares?

You may redeem your Fund shares on any day the Fund is open for business by:

9
<PAGE>

o Contacting your Representative who will place a redemption order for
you;

o Sending a written redemption request to Administrative Data Management
Corp., ("ADM") at 581 Main Street, Woodbridge, N.J. 07095-1198;

o Telephoning the Special Services Department of ADM at 1-800-342-6221
(telephone redemptions are not available on retirement and certain
other types of accounts);

o Instructing us to make an electronic transfer to a predesignated bank
account (if you have completed an application authorizing such
Transfers).

There are other ways you may sell your Fund shares such as by writing a check
against your money market fund account or requesting an expedited wire
redemption to a predesignated bank account. You may be charged a fee for certain
of these privileges. For example, each wire under $5,000 is subject to a $15
fee. Consult your Representative or call ADM at 1-800-423-4026 for details.

Your redemption request will be processed at the price next computed after we
receive the request, in good order, as described in the Shareholder Manual.
For all requests, have your account number available.

Payment of redemption proceeds generally will be made within 7 days. If you are
redeeming shares which you recently purchased by check, payment may be delayed
to verify that your check has cleared. This may take up to 15 days from the date
of your purchase. You may not redeem shares by telephone or Electronic Fund
Transfer unless you have owned the shares for at least 15 days.

If your account fails to meet the minimum account balance as a result of a
redemption, or for any reason other than market fluctuation, the Fund reserves
the right to redeem your account without your consent or to impose a low balance
account fee of $15 annually on 60 days prior notice. The Fund may also redeem
your account or impose a low balance account fee if you have established your
account under a systematic investment program and discontinue the program before
you meet the minimum account balance. You may avoid redemption or imposition of
a fee by purchasing additional Fund shares during this 60-day period to bring
your account balance to the required minimum. If you own Class B shares, you
will not be charged a CDSC on a low balance redemption.

The Fund reserves the right to make in-kind redemptions. This means that it
could respond to a redemption request by distributing shares of the Fund's
underlying investments rather than distributing cash.

Can I exchange my shares for the shares of other First Investors Funds?

You may exchange shares of the Fund for shares of the same class of any other
First Investors Fund without paying any additional sales charge with one
exception. If you are exchanging from the Fund to a Fund with a sales charge,
there will be a sales charge on any shares that were not previously subject to a
sales charge. Consult your Representative or call ADM at 1-800-423-4026 for
details.

The Fund reserves the right to reject any exchange request that appears to be
part of a market timing strategy based upon the holding period of the initial
investment, the amount of the investment being exchanged, the funds involved,
and the background of the shareholder or dealer involved.

ACCOUNT POLICIES

What about dividends?

10
<PAGE>

The Fund will declare daily and pay monthly dividends from net investment
income, which generally consists of interest income on investments, plus or
minus all realized short-term gains and losses on the Fund's securities, less
expenses. The Fund does not expect to realize any long-term capital gains. The
Fund may make an additional distribution in any year if necessary to avoid a
Federal excise tax on certain undistributed taxable income and capital gain, if
any.

Dividends paid on both classes of a Fund's shares are calculated at the same
time and in the same manner. Dividends on Class B shares of the Fund are
expected to be lower than those for its Class A shares because of the
distribution fees borne by the Class B shares. Dividends on each class also
might be affected differently by the allocation of other class-specific
expenses. In order to be eligible to receive a dividend, you must own Fund
shares as of the close of business on the record date of the dividend.

You may choose to reinvest all dividends at NAV in additional shares of the same
class of the Fund or certain other First Investors Funds or receive all
dividends in cash. If you do not select an option when you open your account,
all dividends will be reinvested in additional shares of the Fund. If you do not
cash a dividend check and do not notify ADM to issue a new check within 12
months, the dividend may be reinvested in the Fund. If any correspondence sent
by the Fund is returned as "undeliverable," dividends automatically will be
reinvested in the Fund. No interest will be paid to you while a dividend remains
uninvested.

A dividend paid on a class of shares will be paid in additional shares of the
distributing class if the total amount of the dividend is under $5 or the Fund
has received notice of your death (until written alternate payment instructions
and other necessary documents are provided by your legal representative).

What about taxes?

Any dividends (including distributions of net short-term capital gains) paid by
the Fund are taxable to you as ordinary income unless you hold your shares in an
individual retirement account ("IRA"), 403(b) account, 401(k) account, or other
tax-deferred account. You are taxed in the same manner whether you receive your
dividends in cash or reinvest them in additional Fund shares. If the Fund
maintains a stable share price of $1.00, your sale or exchange of Fund shares
will not result in recognition of any taxable gain or loss.

How do I obtain a complete explanation of all account privileges and policies?

The Fund offers a full range of special privileges, including special investment
programs for group retirement plans, systematic investment programs, automatic
payroll investment programs, telephone privileges, check writing privileges, and
expedited redemptions by wire order or Automated Clearing House transfer. The
full range of privileges, and related policies, are described in a special
Shareholder Manual, which you may obtain on request. For more information on the
full range of services available, please contact us directly at 1-800-423-4026.

11
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights tables are intended to help you understand the
financial performance of each Fund for the past five years. Certain information
reflects financial results for a single Fund share. The total returns in the
tables represent the rates that an investor would have earned (or lost) on an
investment in each Fund (assuming reinvestment of all dividends and
distributions). The information has been audited by Tait, Weller & Baker, whose
report, along with the Funds' financial statements, are included in the SAI,
which is available upon request.

CASH MANAGEMENT FUND
<TABLE>
<CAPTION>

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

INCOME FROM INVESTMENT OPERTIONS LESS DISTRIBUTIONS FROM
-------------------------------- -----------------------

NET NET REALIZED NET
NET ASSET INVEST- AND UNREALIZED TOTAL FROM INVEST- NET TOTAL
BEGINNING MENT GAIN (LOSS)ON INVESTMENT MENT REALIZED DISTRI-
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS BUTIONS
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
- -------
1994(d)...........$1.00....$.036.... $-- $.036 $.036 $-- $.036
1995(d)............1.00......053.... $-- .053 .053 $-- .053
1996(d)............1.00......048.... $-- .048 .048 $-- .048
1997(d)............1.00......049.... $-- .049 .049 $-- .049
1998(d)............1.00......048.... $-- .048 .048 $-- .048
1999(c)............1.00......032.... $-- .032 .032 $-- .032

CLASS B
- -------
1995(b)...........$1.00....$.044.... $-- $.044 $.044 $-- $.044
1996(d)............1.00......040.... $-- .040 .040 $-- .040
1997(d)............1.00......041.... $-- .041 .041 $-- .041
1998(d)............1.00......041.... $-- .041 .041 $-- .041
1999(c)............1.00......027.... $-- .027 .027 $-- .027
</TABLE>

* Calculated without sales charges
+ Annualized
++ Net of expenses waived or assumed
(b) For the period January 12, 1995 (date class B shares first offered) to (c)
December 31, 1995 (d) For the period January 1, 1999 to September 30, 1999
For the calendar year ended December 31

12
<PAGE>

- ------------------------------------------------------------------------------------
RATIOS / SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------
RATIO TO AVERAGE NET
RATIO TO AVERAGE ASSETS BEFORE EXPENSES
NET ASSETS++ WAIVED OR ASSUMED
------------------ ----------------------

NET NET
NET ASSET INVEST- INVEST-
VALUE AT TOTAL NET ASSETS MENT MENT PORTFOLIO
END OF RETURN* END OF PERIOD EXPENSES INCOME EXPENSES INCOME TURNOVER RATE
PERIOD (%) (IN MILLIONS) (%) (%) (%) (%) (%)
- -------------------------------------------------------------------------------------

$1.00 3.69 $128 .70 3.72 1.15 3.27 --
1.00 5.42 129 .70 5.29 1.18 4.81 --
1.00 4.89 134 .70 4.78 1.19 4.29 --
1.00 4.98 140 .77 4.87 1.19 4.45 --
1.00 4.92 160 .80 5.00 1.14 4.66 --
1.00 3.29 158 .80+ 4.33+ 1.14+ 3.99+ --

$1.00 4.46 $ .1 1.45+ 4.54+ 1.93+ 4.06+ --
1.00 4.11 .1 1.45 4.03 1.94 3.54 --
1.00 4.20 .3 1.52 4.12 1.94 3.70 --
1.00 4.14 1 1.55 4.25 1.89 3.91 --
1.00 2.72 2 1.55+ 3.58+ 1.89+ 3.24+ --
</TABLE>

13
<PAGE>

[FIRST INVESTORS LOGO]

CASH MANAGEMENT FUND

For investors who want more information about the Fund, the following documents
are available free upon request:

ANNUAL/SEMI-ANNUAL REPORTS: Additional information about the Fund's investments
is available in the Fund's annual and semi-annual reports to shareholders.

STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Fund and is incorporated by reference into this
prospectus.

SHAREHOLDER MANUAL: The Shareholder Manual provides more detailed
information about the purchase, redemption and sale of Fund shares.

You can get free copies of reports, the SAI and the Shareholder Manual, request
other information and discuss your questions about the Fund by contacting the
Fund at:

Administrative Data Management Corp.
581 Main Street
Woodbridge, NJ 07095-1198
Telephone: 1-800-423-4026

You can review and copy Fund documents (including reports, Shareholder Manuals
and SAIs) at the Public Reference Room of the SEC in Washington, D.C. You can
also obtain copies of Fund documents after paying a duplicating fee (i) by
writing to the Public Reference Section of the SEC, Washington, D.C. 20549-0102
or (ii) by electronic request at [email protected]. You can obtain information
on the operation of the Public Reference Room, including information about
duplicating fee charges, by calling (202) 942-8090. Text-only versions of Fund
documents can be viewed online or downloaded from the EDGAR database on the
SEC's Internet website at http://www.sec.gov.

(Investment Company Act File No.: First
Investors Cash Management Fund, Inc. 811-2860)

<PAGE>
[FIRST INVESTORS LOGO]

TAXABLE BOND AND MONEY MARKET FUNDS

CASH MANAGEMENT
GOVERNMENT
INVESTMENT GRADE
FUND FOR INCOME

The date of this prospectus is January 28, 2000

<PAGE>

CONTENTS

INTRODUCTION

FUND DESCRIPTIONS

Cash Management Fund
Government Fund
Investment Grade Fund
Fund For Income

FUND MANAGEMENT

BUYING AND SELLING SHARES

How and when do the Funds price their shares?
How do I buy shares?
Which class of shares is best for me?
How do I sell shares?
Can I exchange my shares for the shares of other First Investors Funds?

ACCOUNT POLICIES

What about dividends and capital gain distributions?
What about taxes?
How do I obtain a complete explanation of all account privileges and
policies?

FINANCIAL HIGHLIGHTS

Cash Management Fund
Government Fund
Investment Grade Fund
Fund For Income

2
<PAGE>

INTRODUCTION

This prospectus describes the First Investors Funds that invest primarily in
taxable bonds and the Cash Management Fund.

Each individual Fund description in this prospectus has an "Overview" which
provides a brief explanation of the Fund's objectives, its primary strategies
and primary risks, how it has performed, and its fees and expenses. To help you
decide which Funds may be right for you, we have included in each Overview a
section offering examples of who should consider buying the Fund. Each Fund
Description also contains a "Fund in Detail" section with more information on
strategies and risks of the Fund.

None of the Funds in this prospectus pursues a strategy of allocating its assets
among stocks, bonds, and money market instruments. For most investors, a
complete program should include each of these asset classes. Stocks have
historically outperformed other categories of investments over long periods of
time and are therefore considered an important part of a diversified investment
portfolio. There have been extended periods, however, during which bonds and
money market instruments have outperformed stocks. By allocating your assets
among different types of funds, you can reduce the overall risk of your
portfolio. Of course, even a diversified investment program can result in a
loss.

3
<PAGE>

FUND DESCRIPTIONS

CASH MANAGEMENT FUND

OVERVIEW

OBJECTIVE: The Fund seeks to earn a high rate of current income consistent
with the preservation of capital and maintenance of liquidity.

PRIMARY The Fund invests in high-quality money market instruments that
INVESTMENT the Fund determines present minimal credit risk. These
STRATEGIES: instruments include prime commercial paper, variable and floating
rate corporate notes, and short-term U.S. government agency
obligations. The Fund's portfolio is managed to meet regulatory
requirements that permit the Fund to maintain a stable net asset
value ("NAV") of $1.00 per share. These regulatory requirements
include stringent credit quality standards on investments, limits
on the maturity of individual investments and the dollar weighted
average maturity of the entire portfolio, and diversification
requirements.

PRIMARY While money market funds are designed to be relatively low-risk
RISKS: investments, they are not entirely free of risk. The following
are the risks of investing in the Fund, which are common to all
money market funds:

o The Fund's NAV could decline (below $1.00 per share) if
there is a default by an issuer of one of the Fund's
investments, a credit downgrade of one of the Fund's
investments, or an unexpected change in interest rates.

o The Fund's yield will change daily based upon changes in
interest rates and other market conditions.

Who should consider buying the Cash Management Fund?

o Are seeking income, and

o Are seeking a conservative investment that provides a high
degree of credit quality.

How has the Cash Management Fund performed?

The bar chart and table below show you how the Fund's performance has varied
from year to year. This information gives you some indication of the risks of
investing in the Fund.

4
<PAGE>

The chart below contains the following plot points:

1990 7.71%
1991 5.35%
1992 3.03%
1993 2.57%
1994 3.69%
1995 5.42%
1996 4.89%
1997 4.98%
1998 4.92%
1999 4.55%

During the periods shown, the highest quarterly return was 1.89% (for the
quarter ended March 31, 1990), and the lowest quarterly return was 0.62% (for
the quarter ended June 30, 1993 ). THE FUND'S PAST PERFORMANCE DOES NOT
NECESSARILY INDICATE HOW THE FUND WILL PERFORM IN THE FUTURE.

Inception
Class B Shares
1 Year* 5 Years* 10 Years* (1/12/95)

Class A Shares 4.55% 4.95% 4.70% N/A
Class B Shares -0.22% N/A N/A 3.81%
* The annual returns are based upon calendar years.

What are the fees and expenses of the Cash Management Fund?

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.

Class A Class B
Shares Shares
------ ------
SHAREHOLDER FEES
(fees paid directly from your investment)

5
<PAGE>

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)

DISTRIBUTION TOTAL
AND SERVICE ANNUAL FUND
MANAGEMENT (12B-1) OTHER OPERATING EXPENSE NET
FEES FEES (1) EXPENSES(2) EXPENSES(3) ASSUMPTION(2) EXPENSES(3)

<S> <C> <C> <C> <C> <C> <C>
Class A Shares . . . . 0.50% 0.00% 0.64% 1.14% 0.34% 0.80%
Class B Shares . . . . 0.50% 0.75% 0.64% 1.89% 0.34% 1.55%
</TABLE>

*Class B shares can only be acquired through an exchange from Class B shares of
another First Investors Fund. When shares are so acquired, the CDSC imposed on
the other Fund's Class B shares carries over to the Fund's shares. The CDSC is
4% in the first year and declines to 0% after the sixth year. Class B shares
convert to Class A shares after 8 years.
(1) Because the Fund pays Rule 12b-1 fees on its Class B shares, long-term Class
B shareholders could pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. There are currently no Rule 12b-1 fees on Class A shares of
the Fund.
(2) For the fiscal year ended September 30, 1999, First Investors Management
Company, Inc. (the "Adviser") assumed for each class of shares of the Fund
certain Other Expenses that were in excess of 0.30%. The Adviser has
contractually agreed with the Fund to assume Other Expenses in excess of
0.30% for the fiscal year ending September 30, 2000.
(3) The Fund has an expense offset arrangement that may reduce the Fund's
custodian fee based on the amount of cash maintained by the Fund with its
custodian. Any such fee reductions are not reflected under Total Annual Fund
Operating Expenses or Net Expenses.

EXAMPLE

ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
If you redeem your shares:
Class A shares $ 82 $329 $ 595 $1,356
Class B shares $558 $861 $1,190 $1,988*

If you do not redeem your shares:
Class A shares $82 $329 $595 $1,356
Class B shares $158 $561 $990 $1,988*

*Assumes conversion to Class A shares eight years after purchase.

THE FUND IN DETAIL

What are the Cash Management Fund's objective, principal investment strategies,
and risks?

OBJECTIVE: The Fund seeks to earn a high rate of current income consistent with
the preservation of capital and maintenance of liquidity.

6
<PAGE>

paper, which are promissory notes issued by large companies or financial firms;
banker's acceptances, which are credit instruments guaranteed by a bank;
negotiable certificates of deposit, which are issued by banks in large
denominations; and floating rate notes. The interest rate of a floating rate
instrument is generally based on a known lending rate, such as a bank's prime
rate, and is reset whenever the underlying rate is adjusted.

Interest rate risk also includes the risk that in a declining interest rate
environment the Fund will have to invest the proceeds of maturing investments in
lower-yielding investments. The yields received by the Fund on some of its
investments will also decline as interest rates decline. For example, the Fund
invests in floating rate bonds and notes. When interest rates decline, the
yields paid on these securities may decline.

7
<PAGE>

GOVERNMENT FUND

OVERVIEW

OBJECTIVE: The Fund seeks to achieve a significant level of current income
which is consistent with security and liquidity of principal.

PRIMARY
INVESTMENT
STRATEGIES: The Fund primarily invests in obligations issued or guaranteed as
to payment of principal and interest by the U.S. Government, its
agencies or instrumentalities. The majority of the Fund's
investments consist of mortgage-backed securities, guaranteed by
the Government National Mortgage Association ("GNMA").
Mortgage-backed securities guaranteed by the GNMA are commonly
known as Ginnie Maes. Ginnie Maes represent interests in "pools"
of mortgage loans. The yields on Ginnie Maes are higher than on
U.S. Treasury securities with comparable maturities. Because GNMA
guarantees the timely payment of principal and interest to
investors in the pools, the Fund's primary strategies revolve
around managing interest rate risk, prepayment risk and extension
risk. The Fund attempts to manage these risks by adjusting the
duration of its portfolio and the average coupon rate of its
Ginnie Mae holdings.

PRIMARY
RISKS: While Ginnie Maes are guaranteed as to payment of principal and
interest, this guarantee does not apply in any way to the market
prices of these securities or the Fund's share price, both of
which will fluctuate. There are three main risks of investing in
Ginnie Maes: interest rate risk, prepayment risk, and extension
risk. When interest rates rise, Ginnie Maes tend to decline in
price, and when interest rates fall, they tend to increase in
price. This is interest rate risk. When interest rates fall,
homeowners also tend to refinance their mortgages. When this
occurs, the Fund loses the benefit of higher yielding mortgages
and must reinvest in lower interest rate mortgages. This is
prepayment risk. Extension risk is the flip side of prepayment
risk. Rising interest rates can cause the Fund's average maturity
to lengthen unexpectedly due to a drop in mortgage prepayments.
This will increase both the Fund's sensitivity to rising interest
rates and its potential for price declines. The Fund may, at
times, engage in short-term trading, which could produce higher
brokerage costs and taxable distributions and may result in a
lower total return for the Fund. Accordingly, the value of your
investment in the Fund as well as the dividends you receive will
go up and down, which means that you could lose money.

AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT AND IS NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY.

Who should consider buying the Government Fund?

The Government Fund may be used as a core holding for an
investment portfolio or as a base on which to build a portfolio.
It may be appropriate for you if you:

o Are seeking an investment which offers both current income
and credit safety,
o Are willing to accept fluctuations in the value of your
investment and the income it produces as a result of changes
in interest rates and mortgage refinancing, and
o Have a long-term investment horizon and are able to ride out
market cycles.

8
<PAGE>

How has the Government Fund performed?

The bar chart and table below show you how the Fund's performance has varied
from year to year and in comparison with a broad-based index. This information
gives you some indication of the risks of investing in the Fund.

The Fund has two classes of shares, Class A shares and Class B shares. The bar
chart shows changes in the performance of the Fund's Class A shares for each of
the last ten calendar years. The performance of Class B shares differs from the
performance of Class A shares shown in the bar chart only to the extent that
they do not have the same expenses. The bar chart does not reflect sales charges
that you may pay upon purchase or redemption of Fund shares. If they were
included, the returns would be less than those shown.

The chart below contains the following plot points:

1990 9.20%
1991 15.74%
1992 5.90%
1993 3.99%
1994 -3.22%
1995 14.98%
1996 3.51%
1997 8.40%
1998 6.06%
1999 0.45%

During the periods shown, the highest quarterly return was 5.59% (for the
quarter ended September 30, 1991) and the lowest quarterly return was -2.81%
(for the quarter ended March 31, 1994). THE FUND'S PAST PERFORMANCE DOES NOT
NECESSARILY INDICATE HOW THE FUND WILL PERFORM IN THE FUTURE.

The following table shows how the average annual total returns for Class A
shares and Class B shares compare to those of the Salomon Brothers Mortgage
Index ("Mortgage Index") and the Salomon Brothers Government Index ("Government
Index"). This table assumes that the maximum sales charge or CDSC was paid. The
Mortgage Index is a market capitalization-weighted index that consists of all
agency pass-throughs and Federal Housing Administration ("FHA") and GNMA project
notes. The Government Index is a market capitalization-weighted index that
consists of debt issued by the U.S. Treasury and U.S. Government sponsored
agencies. The indexes do not take into account fees and expenses that an
investor would incur in holding the securities in the indexes. If they did so,
the returns would be lower than those shown.

9
<PAGE>

Inception
Class B Shares
1 Year* 5 Years* 10 Years* (1/12/95)

Class A Shares -5.86% 5.20% 5.68% N/A
Class B Shares -4.30% N/A N/A 5.47%
Mortgage Index 1.83% 7.93% 7.84% 7.93%**
Government Index -2.23% 7.49% 7.50% 7.49%**

*The annual returns are based upon calendar years.
**The average annual total return shown is for the period 1/1/95 to 12/31/99.

What are the fees and expenses of the Government Fund?

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.

Class A Class B
Shares Shares
------ ------
SHAREHOLDER FEES
(fees paid directly from your investment)

Maximum sales charge (load) imposed on purchases
(as a percentage of offering price).......... 6.25% None
Maximum deferred sales charge (load)
(as a percentage of the lower of purchase
price or redemption price)................... None* 4%**

ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)

<TABLE>
<CAPTION>
DISTRIBUTION TOTAL
AND SERVICE ANNUAL FUND
MANAGEMENT (12B-1) OTHER OPERATING FEE NET
FEES (1) FEES (2) EXPENSES EXPENSES (3) WAIVER (1), (2) EXPENSES (3)
-------- -------- -------- ------------ --------------- ------------

<S> <C> <C> <C> <C> <C> <C>
Class A Shares...... 1.00% 0.25% 0.32% 1.57% 0.40% 1.17%
Class B Shares...... 1.00% 1.00% 0.32% 2.32% 0.40% 1.92%
</TABLE>

* A contingent deferred sales charge of 1.00% will be assessed on certain
redemptions of Class A shares that are purchased without a sales charge.
** 4% in the first year; declining to 0% after the sixth year. Class B shares
convert to Class A shares after 8 years.
(1) For the fiscal year ended September 30, 1999, the Adviser waived Management
Fees in excess of 0.60% for the Fund. The Adviser has contractually agreed
with the Fund to waive Management Fees in excess of 0.60% for the fiscal
year ending September 30, 2000.
(2) For the fiscal year ended September 30, 1999, the Adviser waived 12b-1 Fees
in excess of 0.25% for the Fund. The Adviser has contractually agreed with
the Fund to waive 12b-1 Fees in excess of 0.25% for the fiscal year ending
September 30, 2000. Because the Fund pays Rule 12b-1 fees, long-term
shareholders could pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc.
(3) The Fund has an expense offset arrangement that may reduce the Fund's
custodian fee based on the amount of cash maintained by the Fund with its
custodian. Any such fee reductions are not reflected under Total Annual Fund
Operating Expenses or Net Expenses.

EXAMPLE

10
<PAGE>

for year one, which is net of fees waived. Although your actual costs may be
higher or lower, under these assumptions your costs would be:

ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ---------------------- ---------

If you redeem your shares:
Class A shares $737 $1,053 $1,391 $2,344
Class B shares $595 $ 986 $1,404 $2,437*

If you do not redeem your shares:
Class A shares $737 $1,053 $1,391 $2,344
Class B shares $195 $ 686 $1,204 $2,437*
*Assumes conversion to Class A shares eight years after purchase.

THE FUND IN DETAIL

What are the Government Fund's objective, principal investment strategies,
and risks?

OBJECTIVE: The Fund seeks to achieve a significant level of current income which
is consistent with security and liquidity of principal.

PRINCIPAL INVESTMENT STRATEGIES: The Fund invests at least 80% of its total
assets in obligations issued or guaranteed as to payment of principal and
interest by the U.S. Government, its agencies or instrumentalities. The vast
majority of the Fund's investments consist of mortgage-backed securities that
are guaranteed by the GNMA. These securities are commonly known as Ginnie Maes.
They represent interests in pools of mortgages. The principal and interest from
the underlying mortgages are passed through to investors in the pools. The GNMA
guarantees the timely payment of principal and interest to the investors in the
pools. The GNMA will only guarantee pools of mortgages that are insured by the
Federal Housing Administration, Veterans Administration, or Farmers Home
Administration.

Because there is essentially no credit risk associated with an investment in
Ginnie Maes, the Fund's investment strategy revolves around managing interest
rate risk, prepayment risk, and extension risk. Interest rate risk is managed by
adjusting the duration of the Ginnie Maes owned by the Fund. Duration is a
measurement of a bond's sensitivity to changes in interest rates that takes into
consideration not only the maturity of the bond but also the time value of money
that will be received from the bond over its life. The Fund will generally
adjust duration by buying or selling U.S. Treasury securities. For example, if
the Fund believes that interest rates are likely to rise, it will generally
attempt to reduce its duration by purchasing U.S. Treasury securities with
shorter maturities or selling U.S. Treasury securities with longer maturities.
Prepayment risk and extension risk are managed by adjusting the composition of
the Fund's holdings of Ginnie Maes. For example, if interest rates appear likely
to decline, the Fund may attempt to reduce prepayment risk by buying Ginnie Maes
with lower coupons. Conversely, if interest rates appear likely to increase, the
Fund may reduce extension risk by purchasing Ginnie Maes with higher coupons.

The Fund uses a "top-down" approach in making investment decisions based on
interest rate, economic and market conditions. In selecting investments, the
Fund considers coupon and yield, relative value and weighted average maturity of
the pool. The Fund will usually sell an investment when there are changes in the
interest rate environment that are adverse to the investment or if it fails to
meet the expectations of the portfolio manager. Information on the Fund's recent
strategies and holdings can be found in the most recent annual report (see back
cover).

PRINCIPAL RISKS: Any investment carries with it some level of risk. An
investment offering greater potential rewards generally carries greater risks.
Here are the principal risks of owning the Fund:

11
<PAGE>

INTEREST RATE RISK: Because the Fund invests primarily in mortgage-backed
securities, it is subject to interest rate risk. In general, the market prices
of Ginnie Maes rise when interest rates fall and fall when interest rates rise.
Short-term interest rates and long-term interest rates do not necessarily move
in the same direction or in the same amounts. Ginnie Maes with longer maturities
tend to be more sensitive to interest rate changes than those with shorter
maturities.

PREPAYMENT RISK: Because the Fund invests primarily in mortgage-backed
securities, it is subject to prepayment risk. When interest rates decline,
homeowners tend to refinance their mortgages. When this occurs, investors in
Ginnie Mae pools suffer a higher rate of prepayment. As a result, investors in
Ginnie Mae pools not only lose the benefit of the higher yielding underlying
mortgages that are being prepaid but they must reinvest the proceeds at lower
interest rates. This could cause a decrease in the Fund's income and share
price.

EXTENSION RISK: Extension risk is the flip side of prepayment risk. Rising
interest rates can cause the Fund's average maturity to lengthen unexpectedly
due to a drop in mortgage prepayments. This will increase both the Fund's
sensitivity to rising interest rates and its potential for price declines.

FREQUENT TRADING RISK: The Fund may, at times, engage in short-term trading,
which could produce higher brokerage costs and taxable distributions and may
result in a lower total return for the Fund.

12
<PAGE>

INVESTMENT GRADE FUND

OVERVIEW

OBJECTIVE: The Fund seeks to generate a maximum level of income consistent
with investment in investment grade debt securities.

PRIMARY
INVESTMENT
STRATEGIES: The Fund primarily invests in corporate bonds of U.S. companies
that are rated in one of the four highest ratings categories by
Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's
Ratings Group ("S&P"). Such bonds are generally called
"investment grade bonds." Investment grade bonds offer higher
yields than Treasury securities of comparable maturities to
compensate investors for the risk of default. While the Fund
primarily invests in investment grade bonds, it may also invest
to a limited extent in high yield, below investment grade bonds
(commonly called "high yield bonds" or "junk bonds"). The Fund's
investments will generally be in bonds of U.S. companies, but may
include bonds of foreign companies. The Fund's investments in
foreign companies are generally limited to bonds that are
dollar-denominated and traded in the U.S. (commonly called
"Yankee bonds").

The Fund selects bonds primarily on the basis of its own
research and investment analysis. The Fund also takes economic
and interest rate outlooks into consideration when selecting
investments.

PRIMARY
RISKS: There are two main risks of investing in the Fund: credit risk
and interest rate risk. The Fund's share price will decline if
one or more of its bond holdings is downgraded in rating, or one
or more issuers suffers a default, or there is a concern about
credit downgrades or defaults in general as a result of a
deterioration in the economy as a whole. The Fund's share price
will also decline as interest rates rise. Like all bonds,
investment grade bonds tend to rise in price when interest rates
decline, and decline in price when interest rates rise. High
yield bonds are subject to greater credit risk but slightly less
interest rate risk than investment grade bonds. High yield bonds
are also subject to greater market fluctuation. Accordingly, the
value of your investment in the Fund will go up and down, which
means that you could lose money.

AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT AND IS NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY.

Who should consider buying the Investment Grade Fund?

The Investment Grade Fund may be used as a core holding for an
investment portfolio or as a base on which to build a portfolio.
It may be appropriate for you if you:

o Are seeking an investment which offers current income and a
moderate degree of credit risk,
o Are willing to accept fluctuations in the value of your
investment and the income it produces as a result of changes
in interest rates, credit ratings, and the economy, and
o Have a long-term investment horizon and are able to ride out
market cycles.

13
<PAGE>

How has the Investment Grade Fund performed?

The Fund has two classes of shares, Class A shares and Class B shares. The bar
chart shows changes in the performance of the Fund's Class A shares from year to
year over the life of the Fund. The performance of Class B shares differs from
the performance of Class A shares shown in the bar chart only to the extent that
they do not have the same expenses. The bar chart does not reflect sales charges
that you may pay upon purchase or redemption of Fund shares. If they were
included, the returns would be less than those shown.

The chart below contains the following plot points:

1992 7.83%
1993 11.82%
1994 -4.62%
1995 19.40%
1996 2.3%
1997 9.14%
1998 8.63%
1999 -2.89%

During the periods shown, the highest quarterly return was 6.71% (for the
quarter ended June 30, 1995) and the lowest quarterly return was -4.01% (for the
quarter ended September 30, 1994). THE FUND'S PAST PERFORMANCE DOES NOT
NECESSARILY INDICATE HOW THE FUND WILL PERFORM IN THE FUTURE.

The following table shows how the average annual total returns for Class A
shares and Class B shares compare to those of the Lehman Brothers Corporate Bond
Index ("Corporate Bond Index"). This table assumes that the maximum sales charge
or CDSC was paid. The Corporate Bond Index includes all publicly issued, fixed
rate, non-convertible investment grade dollar-denominated, corporate debt which
have at least one year to maturity and an outstanding par value of at least $100
million. The Corporate Bond Index does not take into account fees and expenses
that an investor would incur in holding the securities in the Corporate Bond
Index. If it did so, the returns would be lower than those shown.

14
<PAGE>

Inception Inception
Class A Shares Class B Shares
1 Year* 5 Years* (2/19/91) (1/12/95)

Class A Shares -8.96% 5.69% 6.34% N/A
Class B Shares -7.36% N/A N/A 5.97%
Corporate Bond Index -1.96% 8.18% 8.32%** 8.18%***
*The annual returns are based upon calendar years.
** The average annual total return shown is for the period 2/1/91 to 12/31/99.
***The average annual total return shown is for the period 1/1/95 to 12/31/99.

What are the fees and expenses of the Investment Grade Fund?

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.

Class A Class B
Shares Shares
------ ------
SHAREHOLDER FEES
(fees paid directly from your investment)

ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)

<TABLE>
<CAPTION>
DISTRIBUTION TOTAL FEE WAIVER
AND SERVICE ANNUAL FUND AND/OR
MANAGEMENT (12B-1) OTHER OPERATING EXPENSE NET
FEES (1) FEES (2) EXPENSES (3) EXPENSES (4) ASSUMPTION EXPENSES
-------- -------- ------------ ------------ ----------- --------
(1),(3) (4)

<S> <C> <C> <C> <C> <C> <C>
Class A Shares.............. 0.75% 0.30% 0.33% 1.38% 0.28% 1.10%
Class B Shares.............. 0.75% 1.00% 0.33% 2.08% 0.28% 1.80%
</TABLE>

*A contingent deferred sales charge of 1.00% will be assessed on certain
redemptions of Class A shares that are purchased without a sales charge.

**4% in
the first year; declining to 0% after the sixth year. Class B shares convert to
Class A shares after 8 years.
(1) For the fiscal year ended September 30, 1999, the Adviser waived Management
Fees in excess of 0.60% for the Fund. The Adviser has contractually agreed
with the Fund to waive Management Fees in excess of 0.60% for the fiscal
year ending September 30, 2000.
(2) Because the Fund pays Rule 12b-1 fees, long-term shareholders could pay more
than the economic equivalent of the maximum front-end sales charge permitted
by the National Association of Securities Dealers, Inc.
(3) For the fiscal year ended September 30, 1999, the Adviser assumed for each
class of shares of the Fund for certain Other Expenses that were in excess
of 0.20%. The Adviser has contractually agreed with the Fund to assume Other
Expenses in excess of 0.20% for the fiscal year ending September 30, 2000.
(4) The Fund has an expense offset arrangement that may reduce the Fund's
custodian fee based on the amount of cash maintained by the Fund with its
custodian. Any such fee reductions are not reflected under Total Annual Fund
Operating Expenses or Net Expenses.

15
<PAGE>

EXAMPLE
This example helps you to compare the costs of investing in the Fund with the
cost of investing in other mutual funds. The example assumes that (1) you invest
$10,000 in the Fund for the time periods indicated; (2) your investment has a 5%
return each year; and (3) the Fund's operating expenses remain the same, except
for year one, which is net of fees waived and/or expenses assumed. Although your
actual costs may be higher or lower, under these assumptions your costs would
be:

ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------

If you redeem your shares:
Class A shares $730 $1,009 $1,308 $2,156
Class B shares $583 $925 $1,293 2,209*

If you do not redeem your shares:
Class A shares $730 $1,009 $1,308 $2,156
Class B shares $183 $ 625 $1,093 $2,209*

*Assumes conversion to Class A shares eight years after purchase.

THE FUND IN DETAIL

What are the Investment Grade Fund's objective, principal investment strategies,
and risks?

OBJECTIVE: The Fund seeks to generate a maximum level of income consistent with
investment in investment grade debt securities.

PRINCIPAL INVESTMENT STRATEGIES: The Fund invests at least 65% of its total
assets in corporate bonds of companies that are rated investment grade by
Moody's or S&P ("investment grade bonds"). These are bonds that are rated among
the four highest ratings categories by Moody's or S&P. Investment grade bonds
generally offer higher yields than Treasury securities of comparable maturities
to compensate investors for the risk of default. While the Fund primarily
invests in investment grade bonds, it may invest up to 10% of its total assets
in high yield, below investment grade bonds. The Fund's investments will
generally be in bonds of U.S. companies, but may include bonds of foreign
companies. The Fund's investments in foreign companies are generally limited to
bonds that are dollar-denominated and traded in the U.S. (commonly called
"Yankee bonds"). The Fund's investments in Yankee bonds are limited to 10% of
its total assets.

Although the Fund may diversify among the four investment grade ratings, it may
emphasize bonds with higher ratings at times when the economy appears to be
weakening and bonds with lower ratings when the economy appears to be improving.
The Fund adjusts the average weighted maturity of the bonds in its portfolio
based on its interest rate outlook. If it believes that interest rates are
likely to fall, it will attempt to buy bonds with longer maturities or sell
bonds with shorter maturities. By contrast, if it believes interest rates are
likely to rise, it will attempt to buy bonds with shorter maturities or sell
bonds with longer maturities. The Fund also attempts to stay broadly
diversified, but it may emphasize certain industries within a sector based on
the outlook for interest rates, economic forecasts, and market conditions. The
Fund may buy or sell Treasury securities instead of investment grade corporate
bonds to adjust the Fund's average weighted maturity.

Although the Fund will consider ratings assigned by ratings services in
selecting investments, it relies principally on its own research and investment
analysis. The Fund considers, among other things, the issuer's earnings and cash
flow generating capabilities, asset quality, debt levels, and management
strength. The Fund will not necessarily sell an investment if its rating is
reduced. The Fund usually will sell a bond when it shows deteriorating
fundamentals or falls short of the portfolio manager's expectations. Information
on the Fund's recent strategies and holdings can be found in the most recent
annual report (see back cover).

16
<PAGE>

PRINCIPAL RISKS: Any investment carries with it some level of risk. An
investment offering greater potential rewards generally carries greater risks.
Here are the principal risks of owning the Fund:

CREDIT RISK: This is the risk that an issuer of bonds will be unable to pay
interest or principal when due. The prices of bonds are affected by the credit
quality of the issuer. High yield bonds are subject to greater credit risk than
higher quality bonds because the companies that issue them are not as
financially strong as companies with investment grade ratings. Changes in the
financial condition of an issuer, changes in general economic conditions, and
changes in specific economic conditions that affect a particular type of issuer
can impact the credit quality of an issuer. Such changes may weaken an issuer's
ability to make payments of principal or interest, or cause an issuer of bonds
to fail to make timely payments of interest or principal. Lower quality bonds
generally tend to be more sensitive to these changes than higher quality bonds,
but BBB-rated bonds may have speculative characteristics as well. While credit
ratings may be available to assist in evaluating an issuer's credit quality,
they may not accurately predict an issuer's ability to make timely payment of
principal and interest.

INTEREST RATE RISK: The market value of a bond is affected by changes in
interest rates. When interest rates rise, the market value of a bond declines,
and when interest rates decline, the market value of a bond increases. The price
volatility of a bond also depends on its maturity and duration. Generally, the
longer the maturity and duration of a bond, the greater its sensitivity to
interest rates. To compensate investors for this higher risk, bonds with longer
maturities and durations generally offer higher yields than bonds with shorter
maturities and durations.

LIQUIDITY RISK: High yield bonds tend to be less liquid than higher quality
bonds, meaning that it may be difficult to sell high yield bonds at reasonable
prices, particularly if there is a deterioration in the economy or in the
financial prospects of their issuers. As a result, the prices of high yield
bonds may be subject to wide price fluctuations due to liquidity concerns.

FOREIGN ISSUERS RISK: Foreign investments involve additional risks, including
currency fluctuations, political instability, government regulation, unfavorable
political or legal developments, differences in financial reporting standards,
and less stringent regulation of foreign securities markets.

17
<PAGE>

FUND FOR INCOME

OVERVIEW

OBJECTIVES: The Fund primarily seeks high current income and secondarily
seeks capital appreciation.

PRIMARY
INVESTMENT
STRATEGIES: The Fund primarily invests in a diversified portfolio of
high-yield, below-investment grade corporate bonds (commonly known
as "junk bonds"). These bonds provide a higher level of income
than investment grade bonds because they have a higher risk of
default. The Fund seeks to reduce the risk of a default by
selecting bonds through careful credit research and analysis. The
Fund seeks to reduce the impact of a default by diversifying its
investments among bonds of many different companies and
industries. While the Fund invests primarily in domestic
companies, it also invests in securities of issuers domiciled in
foreign countries. These securities will generally be
dollar-denominated and traded in the U.S. The Fund seeks to
achieve capital appreciation by investing in high yield bonds with
stable to improving credit conditions.

PRIMARY
RISKS: There are four primary risks of investing in the Fund. First,
the value of the Fund's shares could decline as a result of a
deterioration of the financial condition of an issuer of bonds
owned by the Fund or as a result of a default by the issuer. This
is known as credit risk. High yield bonds carry higher credit
risks than investment grade bonds because the companies that issue
them are not as strong financially as companies with investment
grade credit ratings. High yield bonds issued by foreign companies
are subject to additional risks including currency fluctuations,
political instability, government regulation, unfavorable
political or legal developments, differences in financial
reporting standards and less stringent regulation of foreign
markets. Second, the value of the Fund's shares could decline if
the entire high yield bond market were to decline, even if none of
the Fund's bond holdings were at risk of a default. The high yield
market can experience sharp declines at times as the result of a
deterioration in the overall economy, declines in the stock
market, a change of investor tolerance for risk, or other factors.
Third, high yield bonds tend to be less liquid than other bonds,
which means that they are more difficult to sell. Fourth, while
high yield bonds are generally less interest rate sensitive than
higher quality bonds, their values generally will decline when
interest rates rise. Fluctuations in the prices of high yield
bonds can be substantial. Accordingly, the value of your
investment in the Fund will go up and down, which means that you
could lose money.

AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT AND IS NOT INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENT AGENCY.

Who should consider buying the Fund For Income?

The Fund For Income is most appropriately used to add
diversification to an investment portfolio. It may be appropriate
for you if you:

o Are seeking an investment that offers a high level of current
income and moderate growth potential,

o Are willing to accept a high degree of credit risk and market
volatility, and

o Have a long-term investment horizon and are able to ride out
market cycles.

18
<PAGE>

How has the Fund For Income performed?

[OBJECT OMITTED]

During the periods shown, the highest quarterly return was 14.74% (for the
quarter ended March 31, 1991) and the lowest quarterly return was -8.75% (for
the quarter ended September 30, 1990). THE FUND'S PAST PERFORMANCE DOES NOT
NECESSARILY INDICATE HOW THE FUND WILL PERFORM IN THE FUTURE.

The following table shows how the average annual total returns for Class A
shares and Class B shares compare to those of the Credit Suisse First Boston
High Yield Index ("High Yield Index"). This table assumes that the maximum sales
charge or CDSC was paid. The High Yield Index is designed to measure the
performance of the high yield bond market. The High Yield Index does not take
into account fees and expenses that an investor would incur in holding the
securities in the Index. If it did so, the returns would be lower than those
shown.

19
<PAGE>

Inception
Class B Shares
1 YEAR* 5 YEARS* 10 YEARS* (1/12/95)
------ ------- -------- ---------
Class A Shares -3.16% 8.69% 9.52% N/A
Class B Shares -1.54% N/A N/A 9.03%
High Yield Index 2.26% 8.86% 10.95% 8.86%**
*The annual returns are based upon calendar years.
**The average annual total return shown is for the period 1/1/95 to 12/31/99.

What are the fees and expenses of the Fund For Income?

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.

Class A Class B
SHARES SHARES
------ ------
SHAREHOLDER FEES
(fees paid directly from your investment)

ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)

DISTRIBUTION TOTAL
AND SERVICE ANNUAL FUND
MANAGEMENT (12B-1) OTHER OPERATING
FEES FEES (1) EXPENSES EXPENSES(2)
---- ---- -------- -----------
Class A Shares 0.74% 0.30% 0.25% 1.29%
Class B Shares 0.74% 1.00% 0.25% 1.99%

(2) The Fund has an expense offset arrangement that may reduce the Fund's
custodian fee based on the amount of cash maintained by the Fund with its
custodian. Any such fee reductions are not reflected under Total Annual Fund
Operating Expenses.

20
<PAGE>

EXAMPLE

This example helps you to compare the costs of investing in the Fund with the
cost of investing in other mutual funds. The example assumes that (1) you invest
$10,000 in the Fund for the time periods indicated; (2) your investment has a 5%
return each year; and (3) the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, under these assumptions your
costs would be:

ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
<S> <C> <C> <C> <C>

If you redeem your shares:
Class A shares $748 $1,008 $1,288 $2,084
Class B shares $602 $924 $1,273 $2,136*

If you do not redeem your shares:
Class A shares $748 $1,008 $1,288 $2,084
Class B shares $202 $624 $1,073 $2,136*
</TABLE>

*Assumes conversion to Class A shares eight years after purchase.

THE FUND IN DETAIL

What are the Fund For Income's objectives, principal investment strategies,
and risks?

OBJECTIVES: The Fund primarily seeks high current income and secondarily seeks
capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES: The Fund primarily invests in a diversified
portfolio of high-yield, below-investment grade corporate bonds commonly known
as "junk bonds" (those rated below Baa by Moody's Investors Service, Inc. or
below BBB by Standard & Poor's Ratings Group). High yield bonds generally
provide higher income than investment grade bonds to compensate investors for
their higher risk of default (i.e., failure to make required interest or
principal payments). High-yield bond issuers include small or relatively new
companies lacking the history or capital to merit investment grade status,
former Blue Chip companies downgraded because of financial problems, companies
using debt rather than equity to fund capital investment or spending programs,
companies electing to borrow heavily to finance or avoid a takeover or buyout,
and firms with heavy debt loads. The Fund's portfolio may include zero coupon
bonds and pay in kind bonds. While the Fund invests primarily in domestic
companies, it also invests in securities of issuers domiciled in foreign
countries. These securities will generally be dollar-denominated and traded in
the U.S. The Fund seeks to reduce the risk of a default by selecting bonds
through careful credit research and analysis. The Fund seeks to reduce the
impact of a potential default by diversifying its investments among bonds of
many different companies and industries. The Fund attempts to invest in bonds
that have stable to improving credit quality and potential for capital
appreciation because of a credit rating upgrade or an improvement in the outlook
for a particular company, industry or the economy as a whole.

Although the Fund will consider ratings assigned by ratings agencies in
selecting high yield bonds, it relies principally on its own research and
investment analysis. The Fund considers a variety of factors, including the
issuer's managerial strength, anticipated cash flow, debt maturity schedules,
borrowing requirements, interest or dividend coverage, asset coverage and
earnings prospects. The Fund will usually sell a bond when it shows
deteriorating fundamentals or falls short of the portfolio manager's
expectations. Information on the Fund's recent strategies and holdings can be
found in the most recent annual report (see back cover).

PRINCIPAL RISKS: Any investment carries with it some level of risk. An
investment offering greater potential rewards generally carries greater risks.
Here are the principal risks of owning the Fund:

21
<PAGE>

to fail to make timely payments of interest or principal. Lower quality bonds
generally tend to be more sensitive to these changes than higher quality bonds.
While credit ratings may be available to assist in evaluating an issuer's credit
quality, they may not accurately predict an issuer's ability to make timely
payments of principal and interest.

MARKET RISK: The entire junk bond market can experience sharp price swings due
to a variety of factors, including changes in economic forecasts, stock market
volatility, large sustained sales of junk bonds by major investors, high-profile
defaults, or changes in the market's psychology. This degree of volatility in
the high yield market is usually associated more with stocks than bonds. The
prices of high yield bonds held by the Fund could therefore decline, regardless
of the financial condition of the issuers of such bonds. Markets tend to run in
cycles with periods when prices generally go up, known as "bull" markets, and
periods when prices generally go down, referred to as "bear" markets.

LIQUIDITY RISK: High yield bonds tend to be less liquid than higher quality
bonds, meaning that it may be difficult to sell high yield bonds at a reasonable
price, particularly if there is a deterioration in the economy or in the
financial prospects of their issuers. As a result, the prices of high yield
bonds may be subject to wide price fluctuations due to liquidity concerns.

22
<PAGE>

FUND MANAGEMENT

First Investors Management Company, Inc. ("FIMCO") is the investment adviser to
the Funds. Its address is 95 Wall Street, New York, NY 10005. It currently
serves as investment adviser to 52 mutual funds or series of funds with total
net assets of over $5 billion. FIMCO supervises all aspects of each Fund's
operations and determines each Fund's portfolio transactions. For the fiscal
year ended September 30, 1999, FIMCO received advisory fees as follows: 0.50% of
average daily net assets for Cash Management Fund; and 0.60% of average daily
net assets, net of waiver, for Government Fund; 0.60% of average daily net
assets, net of waiver, for Investment Grade Fund; 0.74% of average daily net
assets for Fund For Income.

Clark D. Wagner serves as Portfolio Manager of the Government Fund and
Co-Portfolio Manager of the Investment Grade Fund. Mr. Wagner also serves as
Portfolio Manager of certain other First Investors Funds. Mr. Wagner has been
Chief Investment Officer of FIMCO since 1992.

Nancy W. Jones serves as Portfolio Manager of the Fund For Income. Ms. Jones
manages certain other First Investors Funds. Ms. Jones joined FIMCO in 1983 as
Director of Research in the High Yield Department.

George V. Ganter serves as Co-Portfolio Manager of the Investment Grade Fund.
Mr. Ganter also serves as Portfolio Manager of another First Investors Fund. Mr.
Ganter joined FIMCO in 1985 as a Senior Investment Analyst.

BUYING AND SELLING SHARES

How and when do the Funds price their shares?

The share price (which is called "net asset value" or "NAV" per share) for each
Fund is calculated once each day as of 4 p.m., Eastern Time ("E.T."), on each
day the New York Stock Exchange ("NYSE") is open for regular trading. These are
referred to as "Trading Days." The NYSE is closed on most national holidays and
Good Friday. In the event that the NYSE closes early, the share price will be
determined as of the time of the closing.

To calculate its NAV, each Fund, other than the Cash Management Fund, first
values its assets, subtracts its liabilities, and then divides the balance,
called net assets, by the number of shares outstanding. The prices or NAVs of
Class A shares and Class B shares will generally differ because they have
different expenses.

In valuing its assets, each Fund, other than the Cash Management Fund, uses the
market value of securities for which market quotations or last sale prices are
readily available. If there are no readily available quotations or last sale
prices for an investment or the available quotations are considered to be
unreliable, the securities will be valued at their fair value as determined in
good faith pursuant to procedures adopted by the Board of Directors of the
Funds.

The Cash Management Fund values its assets using the amortized cost method which
is intended to permit the Fund to maintain a stable $1.00 per share for each
class of shares.

23
<PAGE>

How do I buy shares?

You may buy shares of each Fund through a First Investors registered
representative or through a registered representative of an authorized
broker-dealer ("Representative"). Your Representative will help you complete and
submit an application. Your initial investment must be at least $1,000. However,
we have lower initial investment requirements and offer automatic investment
plans that allow you to open a Fund account with as little as $50. Subsequent
investments may be made in any amount. You can also arrange to make systematic
investments electronically from your bank account or through payroll deduction.
All the various ways you can buy shares are explained in the Shareholder Manual.
For further information on the procedures for buying shares, please contact your
Representative or call Shareholder Services at 1-800-423-4026.

In the case of all Funds other than the Cash Management Fund, if you send your
order directly to our Woodbridge, N.J. offices in correct form, as described in
the Shareholder Manual, prior to the close of regular trading on the NYSE, your
transaction will be priced at that day's NAV. If you place your order with your
Representative prior to the close of regular trading on the NYSE, your
transaction will also be priced at that day's NAV provided that your
Representative transmits the order to our Woodbridge, N.J. offices by 5 p.m.,
E.T. Orders placed after the close of regular trading on the NYSE will be priced
at the next business day's NAV. The procedures for processing transactions are
explained in more detail in our Shareholder Manual which is available upon
request.

In the case of the Cash Management Fund, your purchase will not be deemed to
occur until the Fund receives federal funds for the purchase. Federal funds for
a purchase will generally not be received until the morning of the next Trading
Day following the Trading Day on which your purchase check or other form of
payment is received in our Woodbridge, N.J. offices. If a check is received in
our Woodbridge, N.J. office after the close of regular trading on the NYSE, the
federal funds for the purchase will generally not be received until the morning
of the second following Trading Day.

If we receive a wire transfer for a purchase of the Cash Management Fund prior
to 12:00 p.m., E.T., and you have previously advised us that the wire is on the
way, federal funds for the purchase will be deemed to have been received on that
same day. You must call before 12:00 p.m. and give us your name, account number,
the amount of the wire, and a federal reference number documenting the transfer.
If we fail to receive such advance notification, the federal funds for your
purchase will not be deemed to have been received until the morning of the next
Trading Day following receipt of the federal wire and your account information.

The Fund reserves the right to refuse any order to buy shares if the Fund
determines that doing so would be in the best interests of the Fund and its
shareholders.

Which class of shares is best for me?

Each Fund has two classes of shares, Class A and Class B. While each class
invests in the same portfolio of securities, the classes have separate sales
charge and expense structures. Because of the different expense structures, each
class of shares generally will have different NAVs and dividends.

The principal advantages of Class A shares are the lower overall expenses, the
availability of quantity discounts on volume purchases and certain account
privileges that are available only on Class A shares. The principal advantage of
Class B shares is that all of your money is invested from the outset.

Class A shares of each Fund, except the Cash Management Fund, are sold at the
public offering price which includes a front-end sales load. This sales charge
declines with the size of your purchase, as illustrated below. The Cash
Management Fund's Class A shares are sold at NAV without any initial or deferred
sales charge.

24
<PAGE>

Class A Shares

Your investment SALES CHARGE AS A PERCENTAGE OF
offering price net amount invested

Less than $25,000 6.25% 6.67%
$25,000-$49,999 5.75 6.10
$50,000-$99,999 5.50 5.82
$100,000-$249,999 4.50 4.71
$250,000-$499,999 3.50 3.63
$500,000-$999,999 2.50 2.56
$1,000,000 or more 0* 0*

*If you invest $1,000,000 or more in Class A shares, you will not pay a
front-end sales charge. However, if you make such an investment and then sell
your shares within 24 months of purchase, you will pay a CDSC of 1.00%.

Class B shares are sold at net asset value, without any initial sales charge.
However, you may pay a CDSC when you sell your shares. The CDSC declines the
longer you hold your shares, as illustrated below. Class B shares convert to
Class A shares after eight years.

Class B Shares
<TABLE>
<CAPTION>
<S> <C> <C>

CDSC as a Percentage of Purchase Price
YEAR OF REDEMPTION OR NAV AT REDEMPTION
------------------ --------------------

Within the 1st or 2nd year...... 4%
Within the 3rd or 4th year...... 3
In the 5th year................. 2
In the 6th year................. 1
Within the 7th year and 8th year 0
</TABLE>

Class B shares of the Cash Management Fund are not available for direct
investment. They may be acquired only through an exchange from the Class B
shares of another First Investors Fund. While an exchange will be processed at
the relative NAVs of the shares involved, any CDSC on the shares being exchanged
will carry over to the new shares.

Sales charges and CDSCs may be reduced or waived under certain circumstances and
for certain groups. Consult your Representative or call us directly at
1-800-423-4026 for details.

Each Fund has adopted a plan pursuant to Rule 12b-1 that allows the Fund to pay
distribution fees for the sale and distribution of its shares. Each Fund, except
for the Cash Management Fund, has a separate Rule 12b-1 for each class of
shares. The Cash Management Fund has only one plan, which is for its Class B
Shares. The plans provide for payments at annual rates (based on average daily
net assets) of up to 0.30% on Class A shares and 1.00% on Class B shares. No

25
<PAGE>

more than 0.25% of these payments may be for service fees. These fees are paid
monthly in arrears. Because these fees are paid out of a Fund's assets on an
on-going basis, the higher fees for Class B shares will increase the cost of
your investment and over time may cost you more than paying the initial sales
charge for Class A shares.

FOR ACTUAL PAST EXPENSES OF CLASS A AND CLASS B SHARES OF A FUND, SEE THE
APPROPRIATE SECTION IN THIS PROSPECTUS ENTITLED "WHAT ARE THE FEES AND EXPENSES
OF THE FUND?"

Because of the lower overall expenses on Class A shares, we recommend Class A
shares for purchases in excess of $250,000. If you are investing in excess of
$1,000,000, we will only sell Class A shares to you. For purchases below
$250,000, the class that is best for you generally depends upon the amount you
invest, your time horizon, and your preference for paying the sales charge
initially or over time. If you fail to tell us what Class of shares you want, we
will purchase Class A shares for you.

How do I sell shares?

You may redeem your Fund shares on any day the Fund is open for business by:

o Contacting your Representative who will place a redemption order for
you;

o Sending a written redemption request to Administrative Data Management
Corp., ("ADM") at 581 Main Street, Woodbridge, N.J. 07095-1198;

o Telephoning the Special Services Department of ADM at 1-800-342-6221
(telephone redemptions are not available on retirement and certain
other types of accounts); or

o Instructing us to make an electronic transfer to a predesignated bank
(if you have completed an application authorizing such transfers).

You may also redeem Cash Management Fund shares by writing a check against your
money market fund account or requesting an expedited wire redemption to a
predesignated bank account. You may be charged a fee for certain of these
privileges. For example, each wire under $5,000 is subject to a $15 fee. Consult
your Representative or call ADM at 1-800-423-4026 for details.

Your redemption request will be processed at the price next computed after we
receive the request, in good order, as described in the Shareholder Manual. For
all requests, have your account number available.

If your account fails to meet the minimum account balance as a result of a
redemption, or for any reason other than market fluctuation, each Fund reserves
the right to redeem your account without your consent or to impose a low balance
account fee of $15 annually on 60 days prior notice. Each Fund may also redeem
your account or impose a low balance account fee if you have established your
account under a systematic investment program and discontinue the program before
you meet the minimum account balance. You may avoid redemption or imposition of
a fee by purchasing additional Fund shares during this 60-day period to bring
your account balance to the required minimum. If you own Class B shares, you
will not be charged a CDSC on a low balance redemption.

Each Fund reserves the right to make in-kind redemptions. This means that it
could respond to a redemption request by distributing shares of the Fund's
underlying investments rather than distributing cash.

26
<PAGE>

Can I exchange my shares for the shares of other First Investors
Funds?

You may exchange shares of a Fund for shares of the same class of any other
First Investors Fund without paying any additional sales charge with one
exception. If you are exchanging from the Cash Management Fund to a Fund with a
sales charge, there will be a sales charge on any shares that were not
previously subject to a sales charge. Consult your Representative or call ADM at
1-800-423-4026 for details.

Each Fund reserves the right to reject any exchange request that appears to be
part of a market timing strategy based upon the holding period of the initial
investment, the amount of the investment being exchanged, the funds involved,
and the background of the shareholder or dealer involved. Each Fund is designed
for long-term investment purposes. It is not intended to provide a vehicle for
short-term market timing.

ACCOUNT POLICIES

What about dividends and capital gain distributions?

To the extent that it has net investment income, each Fund other than Cash
Management Fund will declare on a daily basis, and pay on a monthly basis,
dividends from net investment income. Any net realized capital gains will be
declared and distributed on an annual basis, usually after the end of each
Fund's fiscal year. The Cash Management Fund will declare daily, and pay
monthly, dividends from net investment income, which generally consists of
interest income on investments, plus or minus all realized short-term gains and
losses on the Fund's securities, less expenses. The Cash Management Fund does
not expect to realize any long-term capital gains. Each Fund may make an
additional distribution in any year if necessary to avoid a Federal excise tax
on certain undistributed income and capital gain.

Dividends and other distributions paid on both classes of each Fund's shares are
calculated at the same time and in the same manner. Dividends on Class B shares
of each Fund are expected to be lower than those for its Class A shares because
of the higher distribution fees borne by the Class B shares. Dividends on each
class also might be affected differently by the allocation of other
class-specific expenses. In order to be eligible to receive a dividend or other
distribution, you must own Fund shares as of the close of business on the record
date of the distribution.

You may choose to reinvest all dividends and other distributions at NAV in
additional shares of the same class of a Fund or certain other First Investors
Funds, or receive all dividends and other distributions in cash. If you do not
select an option when you open your account, all dividends and other
distributions will be reinvested in additional shares of a Fund. If you do not
cash a distribution check and do not notify ADM to issue a new check within 12
months, the distribution may be reinvested in a Fund. If any correspondence sent
by a Fund is returned as "undeliverable," dividends and other distributions
automatically will be reinvested in a Fund. No interest will be paid to you
while a distribution remains uninvested.

A dividend or other distribution paid on a class of shares will be paid in
additional shares of the distributing class if the total amount of the
distribution is under $5 or a Fund has received notice of your death (until
written alternate payment instructions and other necessary documents are
provided by your legal representative).

What about taxes?

Any dividends or capital gain distributions paid by each Fund, other than Cash
Management Fund, are taxable to you unless you hold your shares in an individual
retirement account ("IRA"), 403(b) account, 401(k) account, or other
tax-deferred account. Dividends (including distributions of net short-term
capital gains) are taxable to you as ordinary income. Capital gain distributions

27
<PAGE>

(essentially, distributions of net long-term capital gains) by each Fund, other
than Cash Management Fund, are taxed to you as long-term capital gains,
regardless of how long you owned your Fund shares. You are taxed in the same
manner whether you receive your dividends and capital gain distributions in cash
or reinvest them in additional Fund shares. Your sale or exchange of Fund shares
will be considered a taxable event for you. Depending on the purchase price and
the sale price of the shares you sell or exchange, you may have a gain or a loss
on the transaction. You are responsible for any tax liabilities generated by
your transactions.

For Cash Management Fund, any dividends (including distributions of net
short-term capital gains) paid by the Fund are taxable to you as ordinary income
unless you hold your shares in an IRA, 403(b) account, 401(k) account, or other
tax-deferred account. You are taxed in the same manner whether you receive your
dividends in cash or reinvest them in additional Fund shares. If the Cash
Management Fund maintains a stable share price of $1.00, your sale or exchange
of Fund shares will not result in recognition of any taxable gain or loss.

How do I obtain a complete explanation of all account privileges and
policies?

The Funds offer a full range of special privileges, including special investment
programs for group retirement plans, systematic investment programs, automatic
payroll investment programs, telephone privileges, check writing privileges, and
expedited redemptions by wire order or Automated Clearing House transfer. The
full range of privileges, and related policies, are described in a special
Shareholder Manual, which you may obtain on request. For more information on the
full range of services available, please contact us directly at 1-800-423-4026.

28
<PAGE>

FINANCIAL HIGHLIGHTS

CASH MANAGEMENT FUND

--------------------------------------------------------------
PER SHARE DATA
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>

NET ASSET NET NET REALIZED NET
VALUE AT INVEST- AND UNREALIZED TOTAL FROM INVEST- NET TOTAL
BEGINNING MENT GAIN (LOSS) ON INVESTMENT MENT REALIZED DISTRI-
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS BUTIONS
- -----------------------------------------------------------------------------------------------------------

CLASS A
- -------
1994(d)...........$1.00 $.036 $-- $.036 $.036 $-- $.036
1995(d)............1.00 053 $-- .053 .053 $-- .053
1996(d)............1.00 048 $-- .048 .048 $-- .048
1997(d)............1.00 049 $-- .049 .049 $-- .049
1998(d)............1.00 048 $-- .048 .048 $-- .048
1999(c)............1.00 032 $-- .032 .032 $-- .032

CLASS B
- -------
1995(b)...........$1.00 $.044 $-- $.044 $.044 $-- $.044
1996(d)............1.00 .040 $-- .040 .040 $-- .040
1997(d)............1.00 .041 $-- .041 .041 $-- .041
1998(d)............1.00 .041 $-- .041 .041 $-- .041
1999(c)............1.00 .027 $-- .027 .027 $-- .027
</TABLE>

* Calculated without sales charges
+ Annualized
++ Net of expenses waived or assumed .
(a) For the period January 1, 1998 to September 30, 1998
(b) For the period January 12, 1995 (date class B shares first offered) to
(c) December 31, 1995
(d) For the period January 1, 1999 to September 30, 1999
(f) For the calendar year ended December 31
(e) For the fiscal year ended September 30

29
<PAGE>

- --------------------------------------------------------------------------------------------------
RATIOS / SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------

----------------
RATIO TO RATIO TO
AVERAGE AVERAGE NET
NET ASSETS ++ ASSETS BEFORE
EXPENSES WAIVED
OR ASSUMED
<S> <C> <C> <C> <C> <C> <C> <C>
NET NET
NET ASSET INVEST- INVEST-
VALUE AT TOTAL NET ASSETS MENT MENT PORTFOLIO
END OF RETURN END OF PERIOD EXPENSES INCOME EXPENSES INCOME TURNOVER RATE
PERIOD (%) (IN MILLIONS) (%) (%) (%) (%) (%)
- ---------------------------------------------------------------------------------------------------

$1.00 4.46 $ .1 1.45+ 4.54+ 1.93+ 4.06+ --
1.00 4.11 .1 1.45 4.03 1.94 3.54 --
1.00 4.20 .3 1.52 4.12 1.94 3.70 --
1.00 4.14 1 1.55 4.25 1.89 3.91 --
1.00 2.72 2 1.55+ 3.58+ 1.89+ 3.24+ --
</TABLE>

30
<PAGE>

GOVERNMENT FUND

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

INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS FROM
--------------------------------- -----------------------

NET NET REALIZED NET
VALUE AT INVEST- AND UNREALIZED TOTAL FROM INVEST- NET` TOTAL
BEGINNING MENT GAIN(LOSS) ON INVESTMENT MENT REALIZED DISTRI-
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS BUTIONS
- ----------------------------------------------------------------------------------------------------------------------------------

CLASS A
1994(d)...................... $11.55 $.69 $(1.06) $(.37) $.68 $ -- $ .68
1995(d)...................... 10.50 .71 .82 1.53 .72 -- .72
1996(d)...................... 11.31 .68 (.30) .38 .64 -- .64
1997(d)...................... 11.05 .69 .21 .90 .66 -- .66
1998(a)...................... 11.29 .49 .18 .67 .47 -- .47
1999(e)...................... 11.49 .63 (.58) .05 .61 -- .61

CLASS B
1995(b)...................... $10.52 $.63 $.80 $1.43 $.64 -- $ .64
1996(d)...................... 11.31 .60 (.31) .29 .56 -- .56
1997(d)...................... 11.04 .61 .21 .82 .59 -- .59
1998(a)...................... 11.27 .42 .19 .61 .40 -- .40
1999(e)...................... 11.48 .54 (.57) (.03) .53 -- .53
</TABLE>

* Calculated without sales charges + Annualized ++ Net of expenses waived or
assumed .

(a) For the period January 1, 1998 to September 30, 1998
(b) For the period January 12, 1995 (date class B shares first offered) to
December 31, 1995
(c) For the period January 1, 1999 to September 30, 1999
(d) For the calendar year ended December 31
(e) For the fiscal year ended September 30

31
<PAGE>

- -----------------------------------------------------------------------------------
RATIOS / SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------

----------------
RATIO TO
AVERAGE NET
RATIO TO ASSETS BEFORE
AVERAGE EXPENSES WAIVED
NET ASSETS ++ OR ASSUMED
---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>

$10.50 (3.22) $219 1.40 6.31 1.60 6.11 260
11.31 14.98 217 1.38 6.50 1.61 6.27 163
11.05 3.51 187 1.39 6.15 1.63 5.90 121
11.29 8.40 170 1.34 6.16 1.64 5.86 134
11.49 6.03 161 1.28+ 5.71+ 1.62+ 5.37+ 62
10.93 .50 140 1.19 5.58 1.57 5.20 99

$11.31 13.94 $ 1 2.13+ 5.75+ 2.37+ 5.51+ 163
11.04 2.73 1 2.09 5.45 2.34 5.20 121
11.27 7.60 2 2.04 5.46 2.34 5.16 134
11.48 5.54 3 1.98+ 5.01+ 2.32+ 4.67+ 62
10.92 (.25) 3 1.93 4.84 2.31 4.46 99
</TABLE>

32
<PAGE>

INVESTMENT GRADE FUND

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

INCOME FROM INVESTMENT OPERATION LESS DISTRIBUTIONS FROM
-------------------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NOT REALIZED NET
GAIN INVEST- AND UNREALIZED TOTAL FROM INVEST- NET TOTAL
BEGINNING MENT GAIN (LOSS) ON INVESTMENT MENT REALIZED DISTRI-
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS BUTIONS
- --------------------------------------------------------------------------------------------------------------------------------

CLASS A
1994(d)..................... $10.33 $.62 $(1.09) $(.47) $.62 $ -- $.62
1995(d)..................... 9.24 .64 1.10 1.74 .64 -- .64
1996(d)..................... 10.34 .62 (.39) .23 .62 .02 .64
1997(d)..................... 9.93 .62 .25 .87 .61 .03 .64
1998(a)..................... 10.16 .46 .36 .82 .45 -- .45
1999(e)..................... 10.53 .57 (.79) (.22) .58 .07 .65

CLASS B

1995(b)..................... $9.26 $.54 $1.10 $1.64 $.55 $ -- $.55
1996(d)..................... 10.35 .55 (.39) .16 .55 .02 .57
1997(d)..................... 9.94 .55 .26 .81 .55 .03 .58
1998(a)..................... 10.17 .41 .36 .77 .40 -- .40
1999(e)..................... 10.54 .50 (.79) (.29) .51 .07 .58
</TABLE>

* Calculated without sales charges
+ Annualized
++ Net of expenses waived or assumed .

33
<PAGE>

- ---------------------------------------------------------------------------------------------------
RATIOS / SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------

RATIO TO AVERAGE
RATIO TO AVERAGE ASSETS BEFORE EXPENSES
NET ASSETS++ WAIVED OR ASSUMED
---------------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C>

NET ASSET NET NET
VALUE AT INVEST- INVEST-
END OF TOTAL NET ASSETS MENT MENT PORTFOLIO
PERIOD RETURN* END OF PERIOD EXPENSES INCOME EXPENSES INCOME TURNOVER RATE
(%) (IN MILLIONS) (%) (%) (%) (%) (%)
- ----------------------------------------------------------------------------------------------------

$9.24 (4.62) $46 .95 6.46 1.47 5.94 17
10.34 19.40 50 1.10 6.43 1.43 6.10 27
9.93 2.39 46 1.11 5.96 1.42 5.65 22
10.16 9.14 45 1.11 6.18 1.43 5.86 34
10.53 8.29 50 1.10+ 6.02+ 1.40+ 5.72+ 49
9.66 (2.21) 49 1.10 5.70 1.38 5.42 18

$10.35 18.08 $1 1.80+ 5.73+ 2.13+ 5.40+ 27
9.94 1.64 2 1.81 5.26 2.12 4.95 22
10.17 8.40 3 1.81 5.48 2.13 5.16 34
10.54 7.73 5 1.80 5.32+ 2.10+ 5.02+ 49
9.67 (2.90) 7 1.80 5.00 2.08 4.72 18
</TABLE>

34
<PAGE>

FUND FOR INCOME

--------------------------------------------------------------------------------------------------------
PER SHARE DATA
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>

NET ASSET NET NET REALIZED NET
VALUE OF INVEST- AND UNREALIZED TOTAL FROM INVEST- NET TOTAL
BEGINNING MENT GAIN (LOSS) ON INVESTMENT MENT REALIZED DISTRI-
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS BUTIONS
- -------------------------------------------------------------------------------------------------------------------------

CLASS A
1994(d)..................... $4.17 $.37 $(.35) $.02 $.38 $-- $.38
1995(d)..................... 3.81 .38 .30 .68 .36 -- .36
1996(d)..................... 4.13 .39 .14 .53 .37 -- .37
1997(d)..................... 4.29 .38 .14 .52 .38 -- .38
1998(a)..................... 4.43 .29 (.26) .03 .29 -- .29
1999(e)..................... 4.17 .40 (.27) .13 .38 -- .38

CLASS B
1995(b)..................... $3.81 $.31 .33 $.64 $.32 $-- $.32
1996(d)..................... 4.13 .38 .12 .50 .35 -- .35
1997(d)..................... 4.28 .34 .15 .49 .35 -- .35
1998(a)..................... 4.42 .26 (.26) -- .26 -- .26
1999(e)..................... 4.16 .37 (.27) .10 .36 -- .36
</TABLE>

* Calculated without sales charges
+ Annualized
++ Net of expenses waived or assumed .

35
<PAGE>

- -----------------------------------------------------------------------------------
RATIOS / SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------

RATIO TO AVERAGE NET
RATIO TO AVERAGE ASSETS BEFORE EXPENSES
NET ASSETS ++ WAIVED OR ASSUMED
------------- ----------------------

NET NET
INVEST- INVEST-
VALUE AT TOTAL NET ASSETS MENT MENT PORTFOLIO
END OF RETURN END OF PERIOD EXPENSES INCOME EXPENSES INCOME TURNOVER RATE
PERIOD (%) (IN MILLIONS) (%) (%) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------

$3.81 .58 $401 1.22 9.34 N/A N/A 39
4.13 18.54 425 1.18 9.53 N/A N/A 33
4.29 13.40 432 1.16 9.27 N/A N/A 30
4.43 12.62 439 1.15 8.63 N/A N/A 45
4.17 .49 410 1.27+ 8.68+ N/A N/A 28
3.92 3.13 389 1.29 9.71 N/A N/A 28

$4.13 17.46 $ 2 1.92+ 8.78+ N/A N/A 33
4.28 12.51 3 1.86 8.57 N/A N/A 30
4.42 11.95 6 1.85 7.93 N/A N/A 45
4.16 (.06) 9 1.97+ 7.98+ N/A N/A 28
3.90 2.29 14 1.99 9.01 N/A N/A 28
</TABLE>

36
<PAGE>

[FIRST INVESTORS LOGO]

CASH MANAGEMENT
GOVERNMENT
INVESTMENT GRADE
FUND FOR INCOME

For investors who want more information about the Funds, the following documents
are available free upon request:

ANNUAL/SEMI-ANNUAL REPORTS: Additional information about each Fund's investments
is available in the Funds' annual and semi-annual reports to shareholders. In
the Funds' annual report, you will find a discussion of the market conditions
and investment strategies that significantly affected each Fund's performance
during its last fiscal year.

STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Funds and is incorporated by reference into this
prospectus.

SHAREHOLDER MANUAL: The Shareholder Manual provides more detailed information
about the purchase, redemption and sale of the Funds' shares.

You can get free copies of reports, the SAI and the Shareholder Manual, request
other information and discuss your questions about the Funds by contacting the
Funds at:

Administrative Data Management Corp.
581 Main Street
Woodbridge, N.J. 07095-1198
Telephone: 1-800-423-4026

(Investment Company Act File No: First
Investors Cash Management Fund, Inc.
811-2860; First Investors Government
Fund, Inc. 811-3967, First Investors
Investment Grade Fund 811-5690, First
Investors Fund For Income, Inc.
811-2107)

<PAGE>
FIRST INVESTORS CASH MANAGEMENT FUND, INC.
FIRST INVESTORS GOVERNMENT FUND, INC.
FIRST INVESTORS INVESTMENT GRADE FUND
A SERIES OF FIRST INVESTORS SERIES FUND
FIRST INVESTORS FUND FOR INCOME, INC.
FIRST INVESTORS HIGH YIELD FUND, INC.

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

STATEMENT OF ADDITIONAL INFORMATION
DATED JANUARY 28, 2000

This is a Statement of Additional Information ("SAI") for FIRST INVESTORS
CASH MANAGEMENT FUND, INC. ("CASH MANAGEMENT FUND"), FIRST INVESTORS GOVERNMENT
FUND, INC. ("GOVERNMENT FUND"), FIRST INVESTORS INVESTMENT GRADE FUND
("INVESTMENT GRADE FUND"), a series of FIRST INVESTORS SERIES FUND ("SERIES
FUND"), FIRST INVESTORS FUND FOR INCOME, INC. ("FUND FOR INCOME"), and FIRST
INVESTORS HIGH YIELD FUND, INC. ("HIGH YIELD FUND"). Each fund is an open-end
management investment company. Series Fund offers five separate series, one of
which INVESTMENT GRADE FUND, is described in this SAI, while HIGH YIELD Fund,
FUND FOR INCOME, GOVERNMENT FUND and CASH MANAGEMENT FUND each offers one
series. GOVERNMENT FUND, INVESTMENT GRADE FUND, FUND FOR INCOME, HIGH YIELD FUND
and CASH MANAGEMENT FUND are referred to herein collectively as "Funds."

This SAI is not a prospectus. It should be read in conjunction with each
Fund's Prospectus dated January 28, 2000, which may be obtained free of cost
from the Funds at the address or telephone number noted above. Information
regarding the purchase, redemption, sale and exchange of your Fund shares is
contained in the Shareholder Manual, a separate section of the SAI that is a
distinct document and may also be obtained free of charge by contacting your
Fund at the address or telephone number noted above.

TABLE OF CONTENTS

PAGE
Investment Strategies and Risks...................................... 2
Investment Policies.................................................. 5
Futures and Options Strategies...................................... 16
Investment Restrictions.............................................. 18
Portfolio Turnover................................................... 25
Directors/Trustees and Officers...................................... 25
Management........................................................... 27
Underwriter.......................................................... 29
Distribution Plans................................................... 30
Determination of Net Asset Value..................................... 31
Allocation of Portfolio Brokerage.................................... 33
Purchase, Redemption and Exchange of Shares.......................... 34
Taxes................................................................ 35
Performance Information.............................................. 37
General Information.................................................. 44
Appendix A........................................................... 48
Appendix B........................................................... 51
Appendix C........................................................... 52
Appendix D........................................................... 53
Financial Statements................................................. 59
Shareholder Manual: A Guide to your First Investors Mutual
Fund Account...................................................... 104

<PAGE>

INVESTMENT STRATEGIES AND RISKS

CASH MANAGEMENT FUND

CASH MANAGEMENT FUND seeks to earn a high rate of current income consistent
with the preservation of capital and maintenance of liquidity. The 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. 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 "U.S. Government Securities"
below. 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 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 seven days are deemed
illiquid securities, and can constitute no more than 10% of the Fund's net
assets. See "Investment Policies" for additional information on repurchase
agreements.

The 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). The Fund may invest in
floating and variable rate demand notes and bonds that 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.

Additional restrictions are set forth in the "Investment Restrictions"
section of this SAI.

GOVERNMENT FUND

GOVERNMENT FUND seeks to achieve a significant level of current income
which is consistent with security and liquidity of principal by investing, under
normal market conditions, at least 80% of its assets in U.S. Government
Obligations (including mortgage-backed securities). The Fund has no fixed policy
with respect to the duration of U.S. Government Obligations it purchases.
Securities issued or guaranteed as to payment of principal and interest (but not
market value) by the U.S. Government include a variety of Treasury securities,
which differ only in their interest rates, maturities and times of issuance.
Although the payment of interest and principal on a portfolio security may be
guaranteed by the U.S. Government or one of its agencies or instrumentalities,
shares of GOVERNMENT FUND are not insured or guaranteed by the U.S. Government
or any agency or instrumentality. The net asset value of shares of the Fund
generally will fluctuate in response to interest rate levels. When interest
rates rise, prices of fixed income securities generally decline; when interest
rates decline, prices of fixed income securities generally rise. See "U.S.
Government Obligations" and "Debt Securities," below.

2
<PAGE>

GOVERNMENT FUND may invest in mortgage-backed securities, including
Government National Mortgage Association ("GNMA") certificates, Federal National
Mortgage Association ("FNMA") certificates and Federal Home Loan Mortgage
Corporation ("FHLMC") certificates. The Fund also may invest in securities
issued or guaranteed by other U.S. Government agencies or instrumentalities,
including: the Federal Farm Credit System (obligations supported only by the
credit of the issuer, but do not give the issuer the right to borrow from the
U.S. Treasury, and are not guaranteed by the U.S. Government); the Federal Home
Loan Bank (obligations supported by the right of the issuer to borrow from the
U.S. Treasury to meet its obligations but are not guaranteed by the U.S.
Government); the Tennessee Valley Authority and the U.S. Postal Service (the
obligations of each supported by the right of the issuer to borrow from the U.S.
Treasury to meet it obligations); and the Farmers Home Administration and the
Export-Import Bank (obligations backed by the full faith and credit of the
United States). The Fund may invest in collateralized mortgage obligations
("CMOs") and stripped mortgage-backed securities issued or guaranteed by the
U.S. Government, its agencies, authorities or instrumentalities. See
"Mortgage-Backed Securities," below.

The Fund may, from time to time or for temporary defensive purposes,
invest up to 20% of its assets in prime commercial paper, certificates of
deposit of domestic branches of U.S. banks, bankers' acceptances, repurchase
agreements (applicable to U.S. Government Obligations), participation interests,
insured certificates of deposit and certificates representing accrual on U.S.
Treasury securities. The Fund also may purchase securities on a when-issued
basis and make loans of portfolio securities. The Fund may borrow money on a
temporary or emergency basis in amounts not exceeding 5% of its total assets.

Additional restrictions are set forth in the "Investment Restrictions"
section of this SAI.

INVESTMENT GRADE FUND

INVESTMENT GRADE FUND seeks to generate a maximum level of income
consistent with investment in investment grade debt securities. The Fund seeks
to achieve its objective by investing, under normal market conditions, at least
65% of its total assets in debt securities of U.S. issuers that are rated in the
four highest rating categories by Moody's Investors Service, Inc. ("Moody's") or
Standard & Poor's Ratings Group ("S&P"), or in unrated securities that are
deemed to be of comparable quality ("investment grade securities") by the Fund's
Investment Adviser, First Investors Management Company, Inc. ("FIMCO" or
"Adviser"). The Fund may invest up to 35% of its total assets in U.S. Government
Obligations (including mortgage-backed securities), dividend-paying common and
preferred stocks, obligations convertible into common stocks, repurchase
agreements, debt securities rated below investment grade and money market
instruments. The Fund may invest up to 10% of its net assets in corporate or
government debt securities of foreign issuers which are U.S. dollar denominated
and traded in U.S. markets. The Fund also may borrow money for temporary or
emergency purposes in amounts not exceeding 5% of its total assets. The Fund may
make loans of portfolios securities and invest up to 5% of its net assets in
securities issued on a when-issued or delayed delivery basis. The Fund may
invest up to 5% of its net assets in zero coupon or pay-in-kind securities.

Although up to 100% of the Fund's total assets can be invested in debt
securities rated at least Baa by Moody's or at least BBB by S&P, or unrated debt
securities deemed to be of comparable quality by the Adviser, no more than 10%
of the Fund's net assets may be invested in debt securities rated lower than Baa
by Moody's or BBB by S&P (commonly referred to as "high yield bonds" or "junk
bonds") (including securities that have been downgraded), or if unrated, deemed
to be of comparable quality by the Adviser, or in any equity securities of any
issuer if a majority of the debt securities of such issuer are rated lower than
Baa by Moody's or BBB by S&P. The Adviser continually monitors the investments
in the Fund's portfolio and carefully evaluates on a case-by-case basis whether
to dispose of or retain a debt security which has been downgraded to a rating
lower than investment grade. However, if downgrading results in the Fund holding
more than 10% of its net assets in securities rated lower than Baa by Moody's or
BBB by S&P, the Adviser will sell sufficient securities to stay within this

3
<PAGE>

limit. See "Debt Securities" and Appendix A for a description of corporate bond
ratings.

Additional restrictions are set forth in the "Investment Restrictions"
section of this SAI.

HIGH YIELD FUND AND FUND FOR INCOME

The HIGH YIELD FUND primarily seeks high current income and secondarily
seeks capital appreciation by investing, under normal market conditions, at
least 65% of its total assets in high risk, high yield securities, commonly
referred to as "junk bonds" ("High Yield Securities"). Similarly, the FUND FOR
INCOME primarily seeks to earn a high level of current income and, to the extent
possible, in view of that objective, secondarily seeks growth of capital by
emphasizing, under normal market conditions, investments in High Yield
Securities.

High Yield Securities include the following instruments: fixed, variable
or floating rate debt obligations (including bonds, debentures and notes) which
are rated below Baa by Moody's or below BBB by S&P, or are unrated and deemed to
be of comparable quality by the Fund's Adviser; preferred stocks and
dividend-paying common stocks that have yields comparable to those of high
yielding debt securities; any of the foregoing securities of companies that are
financially troubled, in default or undergoing bankruptcy or reorganization
("Deep Discount Securities"); and any securities convertible into any of the
foregoing. See "High Yield Securities" and "Deep Discount Securities," below.

Each Fund may invest in debt securities issued by foreign governments and
companies and in foreign currencies for the purpose of purchasing such
securities. However, a Fund may not invest more than 5% of its total assets in
debt securities issued by foreign governments and companies that are denominated
in foreign currencies. Each Fund may invest up to 5% of its total assets in debt
securities of issuers located in emerging market countries. Each Fund also may
borrow money for temporary or emergency purposes in amounts not exceeding 5% of
its total assets, invest up to 10% of its net assets in securities issued on a
when-issued or delayed delivery basis, invest up to 15% of its net assets in
restricted securities (which may not be publicly marketable), and invest in zero
coupon and pay-in-kind securities. In addition, HIGH YIELD FUND may make loans
of portfolio securities.

HIGH YIELD FUND may invest up to 35% of its total assets, and FUND FOR
INCOME may invest without limitation, in the following instruments: common and
preferred stocks, other than those considered to be High Yield Securities; debt
obligations of all types (including bonds, debentures and notes) rated A or
better by Moody's or S&P; securities issued by the U.S. Government or its
agencies or instrumentalities ("U.S. Government Obligations"); warrants and
money market instruments consisting of prime commercial paper, certificates of
deposit of domestic branches of U.S. banks, bankers' acceptances and repurchase
agreements.

In any period of market weakness or of uncertain market or economic
conditions, each Fund may establish a temporary defensive position to preserve
capital by having all or part of its assets invested in short-term fixed income
securities or retained in cash or cash equivalents, including bank certificates
of deposit, bankers' acceptances, U.S. Government Obligations and commercial
paper issued by domestic corporations.

The medium- to lower-rated, and certain of the unrated, securities in
which each Fund invests tend to offer higher yields than higher-rated securities
with the same maturities because the historical financial condition of the
issuers of such securities may not be as strong as that of other issuers. Debt
obligations rated lower than A by Moody's or S&P have speculative
characteristics or are speculative, and generally involve more risk of loss of
principal and income than higher-rated securities. Also, their yields and market
values tend to fluctuate more than those of higher quality securities. The
greater risks and fluctuations in yield and value occur because investors
generally perceive issuers of lower-rated and unrated securities to be less
creditworthy. These risks cannot be eliminated, but may be reduced by
diversifying holdings to minimize the portfolio impact of any single investment.

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In addition, fluctuations in market value do not affect the cash income from the
securities, but are reflected in the computation of a Fund's net asset value.
When interest rates rise, the net asset value of the Funds tends to decrease.
When interest rates decline, the net asset value of the Funds tends to increase.

Variable or floating rate debt obligations in which the Funds may invest
periodically adjust their interest rates to reflect changing economic
conditions. Thus, changing economic conditions specified by the terms of the
security would serve to change the interest rate and the return offered to the
investor. This reduces the effect of changing market conditions on the
security's underlying market value.

A High Yield Security may itself be convertible into or exchangeable for
equity securities, or may carry with it the right to acquire equity securities
evidenced by warrants attached to the security or acquired as part of a unit
with the security. Although each Fund invests primarily in High Yield
Securities, securities received upon conversion or exercise of warrants and
securities remaining upon the break-up of units or detachment of warrants may be
retained to permit orderly disposition, to establish a long-term holding period
for Federal income tax purposes, or to seek capital appreciation.

Because of the greater number of investment considerations involved in
investing in High Yield Securities, the achievement of either Fund's investment
objectives depends more on the Adviser's research abilities than would be the
case if a Fund were investing primarily in securities in the higher rated
categories. Because medium- to lower-rated securities generally involve greater
risks of loss of income and principal than higher-rated securities, investors
should consider carefully the relative risks associated with investments in
securities that carry medium to lower ratings or are unrated. See "Types of
Securities and Their Risks-High Yield Securities" and Appendix A for a
description of corporate bond ratings.

Each Fund seeks to achieve its secondary objective to the extent
consistent with its primary objective. There can be no assurance that either
Fund will be able to achieve its investment objectives. Each Fund's net asset
value fluctuates based mainly upon changes in the value of its portfolio
securities.

Additional restrictions are set forth in the "Investment Restrictions"
section of this SAI.

INVESTMENT POLICIES

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.

CERTIFICATES OF ACCRUAL ON U.S. TREASURY SECURITIES. GOVERNMENT FUND may
purchase certificates, not issued by the U.S. Treasury, which evidence ownership
of future interest, principal or interest and principal payments on obligations
issued by the U.S. Treasury. The actual U.S. Treasury securities will be held by
a custodian on behalf of the certificate holder. These certificates are
purchased with original issue discount and are subject to greater fluctuations
in market value, based upon changes in market interest rates, than
income-producing securities.

CERTIFICATES OF DEPOSIT. Each Fund may invest in bank certificates of
deposit ("CDs"). The Federal Deposit Insurance Corporation is an agency of the
U.S. Government which insures the deposits of certain banks and savings and loan

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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. Each Fund may invest in commercial paper. Commercial
paper is a promissory note issued by a corporation to finance short-term 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. Investments in commercial paper by HIGH YIELD
FUND, GOVERNMENT FUND, FUND FOR INCOME and INVESTMENT GRADE FUND are limited to
obligations rated Prime-l by Moody's or A-l by S&P. See Appendix B to the SAI
for a description of commercial paper ratings.

CONVERTIBLE SECURITIES. HIGH YIELD FUND, FUND FOR INCOME and INVESTMENT
GRADE FUND may invest in convertible securities. The convertible securities in
which the Funds may invest will be rated no higher nor lower by Moody's or by
S&P than the bonds in which each Fund may invest. While no securities investment
is without some risk, investments in convertible securities generally entail
less risk than the issuer's common stock, although the extent to which such risk
is reduced depends in large measure upon the degree to which the convertible
security sells above its value as a fixed income security. The Adviser will
decide to invest based upon a fundamental analysis of the long-term
attractiveness of the issuer and the underlying common stock, the evaluation of
the relative attractiveness of the current price of the underlying common stock
and the judgment of the value of the convertible security relative to the common
stock at current prices.

DEBT SECURITIES. Each Fund may invest in debt securities. The market value
of debt securities is influenced primarily by changes in the level of interest
rates. Generally, as interest rates rise, the market value of debt securities
decreases. Conversely, as interest rates fall, the market value of debt
securities increases. Factors which could result in a rise in interest rates,
and a decrease in the market value of debt securities, include an increase in
inflation or inflation expectations, an increase in the rate of U.S. economic
growth, an expansion in the Federal budget deficit or an increase in the price
of commodities such as oil. In addition, the market value of debt securities is
influenced by perceptions of the credit risks associated with such securities.
Credit risk is the risk that adverse changes in economic conditions can affect
an issuer's ability to pay principal and interest. See Appendix A for a
description of corporate bond ratings.

DEEP DISCOUNT SECURITIES. HIGH YIELD FUND and FUND FOR INCOME may each
invest up to 15% of its total assets in securities of companies that are
financially troubled, in default or undergoing bankruptcy or reorganization.
Such securities are usually available at a deep discount from the face value of
the instrument. A Fund will invest in Deep Discount Securities when the Adviser
believes that there exist factors that are likely to restore the company to a
healthy financial condition. Such factors include a restructuring of debt,
management changes, existence of adequate assets or other unusual circumstances.
Debt instruments purchased at deep discounts may pay very high effective yields.
In addition, if the financial condition of the issuer improves, the underlying
value of the security may increase, resulting in a capital gain. If the company
defaults on its obligations or remains in default, or if the plan of
reorganization is insufficient for debtholders, the Deep Discount Securities may
stop paying interest and lose value or become worthless. The Adviser will
attempt to balance the benefits of investing in Deep Discount Securities with
their risks. While a diversified portfolio may reduce the overall impact of a
Deep Discount Security that is in default or loses its value, the risk cannot be
eliminated. See "High Yield Securities," below.

EURODOLLAR CERTIFICATES OF DEPOSIT. CASH MANAGEMENT FUND may invest in
Eurodollar CDs, which are issued by London branches of domestic or foreign
banks. Such securities involve risks that differ from CDs 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

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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.

FOREIGN GOVERNMENT OBLIGATIONS. INVESTMENT GRADE FUND, HIGH YIELD FUND and
FUND FOR INCOME may invest in foreign government obligations, which generally
consist of obligations supported by national, state or provincial governments or
similar political subdivisions. Investments in foreign government debt
obligations involve special risks. The issuer of the debt may be unable or
unwilling to pay interest or repay principal when due in accordance with the
terms of such debt, and a Fund may have limited legal resources in the event of
default. Political conditions, especially a sovereign entity's willingness to
meet the terms of its debt obligations, are of considerable significance.

FOREIGN SECURITIES-RISK FACTORS. INVESTMENT GRADE FUND, HIGH YIELD FUND
and FUND FOR INCOME may sell a security denominated in a foreign currency and
retain the proceeds in that foreign currency to use at a future date (to
purchase other securities denominated in that currency) or the Fund may buy
foreign currency outright to purchase securities denominated in that foreign
currency at a future date. Investing in foreign securities involves more risk
than investing in securities of U.S. companies. Each Fund currently does not
intend to hedge its foreign investments against the risk of foreign currency
fluctuations. Accordingly, changes in the value of foreign currencies can
significantly affect a Fund's share price, irrespective of developments relating
to the issuers of securities held by the Funds. In addition, a Fund will be
affected by changes in exchange control regulations and fluctuations in the
relative rates of exchange between the currencies of different nations, as well
as by economic and political developments. Other risks involved in foreign
securities include the following: there may be less publicly available
information about foreign companies comparable to the reports and ratings that
are published about companies in the United States; foreign companies are not
generally subject to uniform accounting, auditing and financial reporting
standards and requirements comparable to those applicable to U.S. companies;
some foreign stock markets have substantially less volume than U.S. markets, and
securities of some foreign companies are less liquid and more volatile than
securities of comparable U.S. companies; there may be less government
supervision and regulation of foreign stock exchanges, brokers and listed
companies than exist in the United States; and there may be the possibility of
expropriation or confiscatory taxation, political or social instability or
diplomatic developments which could affect assets of a Fund held in foreign
countries.

HIGH YIELD SECURITIES. HIGH YIELD FUND, FUND FOR INCOME and INVESTMENT
GRADE FUND may invest in High Yield Securities. High Yield Securities are
subject to greater risks than those that are present with investments in higher
grade debt securities, as discussed below.

EFFECT OF INTEREST RATE AND ECONOMIC CHANGES. Debt obligations rated
lower than Baa by Moody's or BBB by S&P, commonly referred to as "junk bonds,"
are speculative and generally involve a higher risk or loss of principal and
income than higher-rated debt securities. The prices of High Yield Securities
tend to be less sensitive to interest rate changes than higher-rated
investments, but may be more sensitive to adverse economic changes or individual
corporate developments. Periods of economic uncertainty and changes generally
result in increased volatility in the market prices and yields of High Yield
Securities and thus in a Fund's net asset value. A significant economic downturn
or a substantial period of rising interest rates could severely affect the
market for High Yield Securities. In these circumstances, highly leveraged
companies might have greater difficulty in making principal and interest
payments, meeting projected business goals, and obtaining additional financing.
Thus, there could be a higher incidence of default. This would affect the value
of such securities and thus a Fund's net asset value. Further, if the issuer of
a security owned by a Fund defaults, that Fund might incur additional expenses
to seek recovery.

Generally, when interest rates rise, the value of fixed rate debt
obligations, including High Yield Securities, tends to decrease; when interest
rates fall, the value of fixed rate debt obligations tends to increase. If an
issuer of a High Yield Security containing a redemption or call provision
exercises either provision in a declining interest rate market, a Fund would
have to replace the security, which could result in a decreased return for

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shareholders. Conversely, if a Fund experiences unexpected net redemptions in a
rising interest rate market, it might be forced to sell certain securities,
regardless of investment merit. This could result in decreasing the assets to
which Fund expenses could be allocated and in a reduced rate of return for that
Fund. While it is impossible to protect entirely against this risk,
diversification of a Fund's portfolio and the Adviser's careful analysis of
prospective portfolio securities helps to minimize the impact of a decrease in
value of a particular security or group of securities in a Fund's portfolio.

THE HIGH YIELD SECURITIES MARKET. The market for below investment
grade bonds expanded rapidly in recent years and its growth paralleled a long
economic expansion. At times in the past, the prices of many lower-rated debt
securities have declined substantially, reflecting an expectation that many
issuers of such securities might experience financial difficulties. As a result,
the yields on lower-rated debt securities rose dramatically. However, such
higher yields did not reflect the value of the income streams that holders of
such securities expected, but rather the risk that holders of such securities
could lose a substantial portion of their value as a result of the issuers'
financial restructuring or default. There can be no assurance that such declines
in the below investment grade market will not reoccur. The market for below
investment grade bonds generally is thinner and less active than that for higher
quality bonds, which may limit a Fund's ability to sell such securities at
reasonable prices in response to changes in the economy or the financial
markets. Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may also decrease the values and liquidity of lower rated
securities, especially in a thinly traded market.

CREDIT RATINGS. The credit ratings issued by credit rating services
may not fully reflect the true risks of an investment. For example, credit
ratings typically evaluate the safety of principal and interest payments, not
market value risk, of High Yield Securities. Also, credit rating agencies may
fail to change on a timely basis a credit rating to reflect changes in economic
or company conditions that affect a security's market value. Each Fund which is
permitted to invest in High Yield Securities may invest in securities rated as
low as D by S&P or C by Moody's or, if unrated, deemed to be of comparable
quality by the Adviser. Debt obligations with these ratings either have
defaulted or are in great danger of defaulting and are considered to be highly
speculative. See "Deep Discount Securities." The Adviser continually monitors
the investments in a Fund's portfolio and carefully evaluates whether to dispose
of or retain High Yield Securities whose credit ratings have changed. See
Appendix A for a description of corporate bond ratings.

LIQUIDITY AND VALUATION. Lower-rated bonds are typically traded
among a smaller number of broker-dealers than in a broad secondary market.
Purchasers of High Yield Securities tend to be institutions, rather than
individuals, which is a factor that further limits the secondary market. To the
extent that no established retail secondary market exists, many High Yield
Securities may not be as liquid as higher-grade bonds. A less active and thinner
market for High Yield Securities than that available for higher quality
securities may result in more volatile valuations of a Fund's holdings and more
difficulty in executing trades at favorable prices during unsettled market
conditions.

The ability of a Fund to value or sell High Yield Securities will be
adversely affected to the extent that such securities are thinly traded or
illiquid. During such periods, there may be less reliable objective information
available and thus the responsibility of each Fund's Board of Directors to value
High Yield Securities becomes more difficult, with judgment playing a greater
role. Further, adverse publicity about the economy or a particular issuer may
adversely affect the public's perception of the value, and thus liquidity, of a
High Yield Security, whether or not such perceptions are based on a fundamental
analysis.

LOANS OF PORTFOLIO SECURITIES. While they have no present intention of
doing so, HIGH YIELD FUND, INVESTMENT GRADE FUND and GOVERNMENT FUND may loan
securities to qualified broker-dealers or other institutional investors
provided: the borrower pledges to the Fund and agrees to maintain at all times
with the Fund collateral equal to not less than 100% of the value of the
securities loaned (plus accrued interest or dividend, if any); the loan is
terminable at will by the Fund; the Fund pays only reasonable custodian fees in

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connection with the loan; and the Adviser monitors the creditworthiness of the
borrower throughout the life of the loan. Such loans may be terminated by the
Fund at any time and the Fund may vote the proxies if a material event affecting
the investment is to occur. The market risk applicable to any security loaned
remains a risk of the Fund. The borrower must add to the collateral whenever the
market value of the securities rises above the level of such collateral. The
Fund could incur a loss if the borrower should fail financially at a time when
the value of the loaned securities is greater than the collateral.

MORTGAGE-BACKED SECURITIES. GOVERNMENT FUND and INVESTMENT GRADE FUND may
invest in mortgage-backed securities, including those representing an undivided
ownership interest in a pool of mortgage loans. Each of the certificates
described below is characterized by monthly payments to the security holder,
reflecting the monthly payments made by the mortgagees of the underlying
mortgage loans. The payments to the security holders (such as the Fund), like
the payments on the underlying loans, generally represent both principal and
interest. Although the underlying mortgage loans are for specified periods of
time, such as twenty to thirty years, the borrowers can, and typically do, repay
them sooner. Thus, the security holders frequently receive prepayments of
principal, in addition to the principal which is part of the regular monthly
payments. A borrower is more likely to prepay a mortgage which bears a
relatively high rate of interest. Thus, in times of declining interest rates,
some higher yielding mortgages might be repaid resulting in larger cash payments
to the Fund, and the Fund will be forced to accept lower interest rates when
that cash is used to purchase additional securities.

Interest rate fluctuations may significantly alter the average maturity of
mortgage-backed securities by changing the rates at which homeowners refinance
mortgages. When interest rates rise, prepayments often drop, which should
increase the average maturity of the mortgage-backed security. Conversely, when
interest rates fall, prepayments often rise, which should decrease the average
maturity of the mortgage-backed security.

GNMA CERTIFICATES. GNMA Certificates are mortgage-backed securities,
which evidence an undivided interest in a pool of mortgage loans. In the case of
GNMA Certificates, principal is paid back monthly by the borrower over the term
of the loan rather than returned in a lump sum at maturity. GNMA Certificates
that the Fund purchases are the "modified pass-through" type. "Modified
pass-through" GNMA Certificates entitle the holder to receive a share of all
interest and principal payments paid and owed on the mortgage pool net of fees
paid to the "issuer" and GNMA, regardless of whether or not the mortgagor
actually makes the payment.

GNMA GUARANTEE. The National Housing Act authorizes GNMA to
guarantee the timely payment of principal and interest on securities backed by a
pool of mortgages insured by the Federal Housing Administration ("FHA") or the
Farmers' Home Administration ("FMHA"), or guaranteed by the Department of
Veteran Affairs ("VA"). The GNMA guarantee is backed by the full faith and
credit of the U.S. Government. GNMA also is empowered to borrow without
limitation from the U.S. Treasury if necessary to make any payments required
under its guarantee.

LIFE OF GNMA CERTIFICATES. The average life of a GNMA Certificate is
likely to be substantially less than the original maturity of the mortgage pools
underlying the securities. Prepayments of principal by mortgagors and mortgage
foreclosures will usually result in the return of the greater part of principal
investment long before maturity of the mortgages in the pool. The Fund normally
will not distribute principal payments (whether regular or prepaid) to its
shareholders. Rather, it will invest such payments in additional mortgage-backed
securities of the types described above. Interest received by the Fund will,
however, be distributed to shareholders. Foreclosures impose no risk to
principal investment because of the GNMA guarantee. As prepayment rates of the
individual mortgage pools vary widely, it is not possible to predict accurately
the average life of a particular issue of GNMA Certificates.

YIELD CHARACTERISTICS OF GNMA CERTIFICATES. The coupon rate of
interest on GNMA Certificates is lower than the interest rate paid on the
VA-guaranteed or FHA-insured mortgages underlying the Certificates by the amount

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of the fees paid to GNMA and the issuer. The coupon rate by itself, however,
does not indicate the yield which will be earned on GNMA Certificates. First,
Certificates may trade in the secondary market at a premium or discount. Second,
interest is earned monthly, rather than semi-annually as with traditional bonds;
monthly compounding raises the effective yield earned. Finally, the actual yield
of a GNMA Certificate is influenced by the prepayment experience of the mortgage
pool underlying it. For example, if the higher-yielding mortgages from the pool
are prepaid, the yield on the remaining pool will be reduced.

FHLMC SECURITIES. FHLMC issues two types of mortgage pass-through
securities, mortgage participation certificates ("PCs") and guaranteed mortgage
certificates ("GMCs"). PCs resemble GNMA Certificates in that each PC represents
a pro rata share of all interest and principal payments made and owed on the
underlying pool.

FNMA SECURITIES. FNMA issues guaranteed mortgage pass-through
certificates ("FNMA Certificates"). FNMA Certificates resemble GNMA Certificates
in that each FNMA Certificate represents a pro rata share of all interest and
principal payments made and owed on the underlying pool. FNMA guarantees timely
payment of interest on FNMA Certificates and the full return of principal.

Risk of foreclosure of the underlying mortgages is greater with
FHLMC and FNMA securities because, unlike GNMA Certificates, FHLMC and FNMA
securities are not guaranteed by the full faith and credit of the U.S.
Government.

MUNICIPAL SECURITIES. Each Fund may invest in the following municipal
securities.

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, condition of the municipal bond market, size of a
particular offering, the maturity of the obligation and rating of the issuer.
Generally, the value of municipal bonds varies inversely to changes in interest
rates. See Appendix A for a description of municipal bond ratings.

MUNICIPAL COMMERCIAL PAPER. Issues of 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.

MUNICIPAL NOTES. Municipal notes are principally tax anticipation notes,
bond anticipation notes, revenue anticipation notes and project notes. The
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. Such municipal notes must be rated MIG-1 by Moody's or SP-1 by S&P or
have insurance through the issuer or an independent insurance company. A
description of municipal note ratings is contained in Appendix C.

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 for various privately operated facilities, such as
airports or mass transportation facilities. Most PABs and IDBs are pure revenue

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bonds and are not backed by the taxing power of the issuing agency or authority.
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.

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. The 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. There is no assurance
that an issuer of a put bond acquired by a 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.

VARIABLE RATE DEMAND INSTRUMENTS. Variable rate demand instruments
("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 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 Fund will invest only in
VRDIs that have a demand notice period of not more than seven calendar days in
length. Usually, the Fund 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. 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 Fund 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 Fund.

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

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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 Fund's investments or for computing the Fund's
dollar weighted average portfolio maturity, the maturity of the instrument is
deemed to be the greater of (1) the notice period required before the Fund may
receive payment under the demand feature of the instrument, or (2) the time
remaining until the next interest rate adjustment on the instrument.

PARTICIPATION INTERESTS. Participation interests which may be held by
GOVERNMENT Fund are pro rata interests in securities held either by banks which
are members of the Federal Reserve System or securities dealers who are members
of a national securities exchange or are market makers in government securities,
which are represented by an agreement in writing between the Fund and the entity
in whose name the security is issued, rather than possession by the Fund. The
Fund will purchase participation interests only in securities otherwise
permitted to be purchased by the Fund, and only when they are evidenced by
deposit, safekeeping receipts, or book-entry transfer, indicating the creation
of a security interest in favor of the Fund in the underlying security. However,
the issuer of the participation interests to the Fund will agree in writing,
among other things: to promptly remit all payments of principal, interest and
premium, if any, to the Fund once received by the issuer; to repurchase the
participation interest upon seven days' notice; and to otherwise service the
investment physically held by the issuer, a portion of which has been sold to
the Fund.

CASH MANAGEMENT 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. The Fund will acquire written participation
interests in Municipal Instruments only if they are issued by banks or other
financial institutions which, in the opinion of the Fund's investment adviser,
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. The Fund purchases
such a participation only if the issuer has a private letter ruling from the
Internal Revenue Service ("IRS") or an opinion of its counsel that interest on
the participation 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. The Fund will only purchase participations
accompanied by a standby commitment.

PREFERRED STOCK. Each Fund except CASH MANAGEMENT FUND may invest in
preferred stock. A preferred stock is a security which has a blend of the
characteristics of a bond and common stock. It can offer the higher yield of a
bond and has priority over common stock in equity ownership, but does not have
the seniority of a bond and, unlike common stock, its participation in the
issuer's growth may be limited. Preferred stock has preference over common stock
in the receipt of dividends and in any residual assets after payment to
creditors should the issuer be dissolved. Although the dividend is set at a
fixed annual rate, in some circumstances it can be changed or omitted by the
issuer.

REPURCHASE AGREEMENTS. While each Fund has no present intention of doing
so, it may invest in 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

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<PAGE>

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 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. The Funds will not enter into a
repurchase agreement with more than seven days to maturity if, as a result, more
than 10% of Cash Management Fund's net assets, and more than 15% of the other
Funds' net assets, would be invested in such repurchase agreements and other
illiquid investments.

RESTRICTED SECURITIES AND ILLIQUID INVESTMENTS. None of the Funds may
purchase or otherwise acquire any security if, as a result, more than 10% of
Cash Management Fund's net assets, and more than 15% of the other Funds' net
assets, (taken at current value) would be invested in securities that are
illiquid by virtue of the absence of a readily available market or legal or
contractual restrictions on resale. This policy includes foreign issuers'
unlisted securities with a limited trading market and repurchase agreements
maturing in more than seven days. This policy does not include restricted
securities eligible for resale pursuant to Rule 144A under the Securities Act of
1933, as amended ("1933 Act"), which the Board of Directors or Trustees, as
applicable (hereinafter "Directors" or "Board"), 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. Such securities include
those that are subject to restrictions contained in the securities laws of other
countries. Securities that are freely marketable in the country where they are
principally traded, but would not be freely marketable in the United States,
will not be subject to the 10% or 15% limits, as applicable. Where registration
is required, a 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, a 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 a Fund, however, could affect adversely the marketability of
such portfolio securities and a Fund might be unable to dispose of such
securities promptly or at reasonable prices.

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<PAGE>

SEPARATED OR DIVIDED U.S. TREASURY SECURITIES. GOVERNMENT FUND may invest
in separated or divided U.S. Treasury securities. These instruments represent a
single interest, or principal, payment on a U.S. Treasury bond which has been
separated from all the other interest payments as well as the bond itself. When
the Fund purchases such an instrument, it purchases the right to receive a
single payment of a set sum at a known date in the future. The interest rate on
such an instrument is determined by the price the Fund pays for the instrument
when it purchases the instrument at a discount under what the instrument
entitles the Fund to receive when the instrument matures. The amount of the
discount the Fund will receive will depend upon the length of time to maturity
of the separated U.S. Treasury security and prevailing market interest rates
when the separated U.S. Treasury security is purchased. Separated U.S. Treasury
securities can be considered a zero coupon investment because no payment is made
to the Fund until maturity. The market values of these securities are much more
susceptible to change in market interest rates than income-producing securities.
These securities are purchased with original issue discount and such discount is
includable as gross income to a Fund shareholder over the life of the security.

STANDBY COMMITMENTS. Each Fund may acquire standby commitments from banks
with respect to simultaneous purchases of Municipal Instruments for the Fund's
portfolio. 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.

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

The Fund 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 the Fund are not added to the computation of
the Fund's net asset value and are valued at zero. When the 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 IRS, 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
Fund will not acquire 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 that
may be held by the Fund would not benefit from insurance from the Bank Insurance
Fund or the Savings Association Insurance Fund administered by the FDIC.

U.S. GOVERNMENT OBLIGATIONS. Each Fund may invest in U.S. Government
Obligations. U.S. Government Obligations include: (1) U.S. Treasury obligations
(which differ only in their interest rates, maturities and times of issuance),
and (2) obligations issued or guaranteed by U.S. Government agencies and
instrumentalities that are backed by the full faith and credit of the United
States (such as securities issued by the Federal Housing Administration,

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<PAGE>

Government National Mortgage Association, the Department of Housing and Urban
Development, the Export-Import Bank, the General Services Administration and the
Maritime Administration and certain securities issued by the Farmers Home
Administration and the Small Business Administration). The range of maturities
of U.S. Government Obligations is usually three months to thirty years.

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 that 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. The Fund will invest in obligations
that 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 the Fund, will consider on an ongoing
basis the creditworthiness of the issuers of the floating and variable rate
obligations in the Fund's portfolio.

WARRANTS. HIGH YIELD FUND, FUND FOR INCOME and INVESTMENT GRADE FUND may
purchase warrants, which are instruments that permit a Fund to acquire, by
subscription, the capital stock of a corporation at a set price, regardless of
the market price for such stock. Warrants may be either perpetual or of limited
duration. There is greater risk that warrants might drop in value at a faster
rate than the underlying stock.

WHEN-ISSUED SECURITIES. Each Fund, other than CASH MANAGEMENT FUND, may
invest in securities issued on a when-issued or delayed delivery basis at the
time the purchase is made. A Fund generally would not pay for such securities or
start earning interest on them until they are issued or received. However, when
a Fund purchases debt obligations on a when-issued basis, it assumes the risks
of ownership, including the risk of price fluctuation, at the time of purchase,
not at the time of receipt. Failure of the issuer to deliver a security
purchased by a Fund on a when-issued basis may result in such Fund incurring a
loss or missing an opportunity to make an alternative investment. When a Fund
enters into a commitment to purchase securities on a when-issued basis, it
establishes a separate account on its books and records or with its custodian
consisting of cash or liquid high-grade debt securities equal to the amount of
the Fund's commitment, which are valued at their fair market value. If on any
day the market value of this segregated account falls below the value of the
Fund's commitment, the Fund will be required to deposit additional cash or
qualified securities into the account until the value of the account is equal to
the value of the Fund's commitment. When the securities to be purchased are
issued, the Fund will pay for the securities from available cash, the sale of
securities in the segregated account, sales of other securities and, if
necessary, from the sale of the when-issued securities themselves although this
is not ordinarily expected. Securities purchased on a when-issued basis are
subject to the risk that yields available in the market, when delivery takes
place, may be higher than the rate to be received on the securities a Fund is
committed to purchase. Sale of securities in the segregated account or sale of
the when-issued securities may cause the realization of a capital gain or loss.

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<PAGE>

ZERO COUPON AND PAY-IN-KIND SECURITIES. Each Fund, other than CASH
MANAGEMENT FUND, may invest in zero coupon and pay-in-kind securities. Zero
coupon securities are debt obligations that do not entitle the holder to any
periodic payment of interest prior to maturity or a specified date when the
securities begin paying current interest. They are issued and traded at a
discount from their face amount or par value, which discount varies depending on
the time remaining until cash payments begin, prevailing interest rates,
liquidity of the security and the perceived credit quality of the issuer.
Pay-in-kind securities are those that pay interest through the issuance of
additional securities. The market prices of zero coupon and pay-in-kind
securities generally are more volatile than the prices of securities that pay
interest periodically and in cash and are likely to respond to changes in
interest rates to a greater degree than do other types of debt securities having
similar maturities and credit quality. Original issue discount earned each year
on zero coupon securities and the "interest" on pay-in-kind securities must be
accounted for by the Fund that holds the securities for purposes of determining
the amount it must distribute that year to continue to qualify for tax treatment
as a regulated investment company. Thus, a Fund may be required to distribute as
a dividend an amount that is greater than the total amount of cash it actually
receives. See "Taxes." These distributions must be made from a Fund's cash
assets or, if necessary, from the proceeds of sales of portfolio securities.
Each Fund will not be able to purchase additional income-producing securities
with cash used to make such distributions, and its current income ultimately
could be reduced as a result.

FUTURES AND OPTIONS STRATEGIES

Although they do not intend to engage in such strategies, HIGH YIELD FUND
may engage in certain futures strategies to hedge its investment portfolio and
INVESTMENT GRADE FUND may buy and sell interest rate futures contracts and buy
and sell call and put options thereon traded on a U.S. exchange or board of
trade, and may also enter into closing transactions with respect to such options
to terminate an existing position. Certain special characteristics of and risks
associated with using hedging instruments are discussed below. Use of these
instruments is subject to the applicable regulations of the Securities and
Exchange Commission ("SEC"), the Commodities Futures Trading Commission ("CFTC")
and the several futures exchanges upon which futures contracts are traded.

Participation in the futures markets involves investment risks and
transaction costs to which a Fund would not be subject absent the use of these
strategies. If the Adviser's prediction of movements in the direction of the
securities and interest rate markets are inaccurate, the adverse consequences to
the Fund may leave the Fund in a worse position than if such strategies were not
used. A Fund might not employ any of the strategies described below, and there
can be no assurance that any strategy will succeed. The use of these strategies
involve certain special risks, including (1) dependence on the Adviser's ability
to predict correctly movements in the direction of interest rates and securities
prices; (2) imperfect correlation between the price of futures contracts and
movements in the prices of the securities being hedged; (3) the fact that skills
needed to use these strategies are different from those needed to select
portfolio securities; and (4) the possible absence of a liquid secondary market
for any particular instrument at any time.

COVER FOR HEDGING STRATEGIES. In the event that the Funds engage in
hedging, they will not use leverage in their hedging strategies. In the case of
each transaction entered into as a hedge, the Funds will hold securities or
futures positions whose values are expected to offset ("cover") its obligations
thereunder. The Funds will not enter into a hedging strategy that exposes the
Funds to an obligation to another party unless it owns either (1) an offsetting
("covered") position in securities or futures contracts, or (2) cash and liquid
securities with a value sufficient at all times to cover its potential
obligations. The Funds will comply with guidelines established by the SEC with
respect to coverage of hedging strategies by mutual funds and, if required, will
set aside cash and liquid securities in a segregated account with its custodian
in the prescribed amount. Securities or futures positions used for cover and
assets held in a segregated account cannot be sold or closed out while the
hedging strategy is outstanding unless they are replaced with similar assets. As

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<PAGE>

a result, there is a possibility that the use of cover or segregation involving
a large percentage of each Fund's assets could impede portfolio management and
decrease a Fund's liquidity.

FUTURES GUIDELINES. In the event that a Fund enters into futures contracts
or options thereon other than for bona fide hedging purposes (as defined by the
CFTC), the aggregate initial margin and premiums required to establish these
positions (excluding the in-the-money amount for options that are in-the-money
at the time of purchase) will not exceed 5% of the liquidation value of the
Fund's portfolio, after taking into account unrealized profits and losses on any
contracts into which the Fund was entered. This policy does not limit a Fund's
assets at risk to 5%.

SPECIAL CHARACTERISTICS AND RISKS OF FUTURES TRADING. No price is paid
upon entering into futures contracts. Instead, upon entering into a futures
contract, the Fund is required to deposit with its custodian in a segregated
account in the name of the futures broker through which the transaction is
effected an amount of cash, U.S. Government securities or other liquid,
high-grade debt instruments generally equal to 10% or less of the contract
value. This amount is known as "initial margin." Initial margin on futures
contracts is in the nature of a performance bond or good-faith deposit that is
returned to the Fund upon termination of the transaction, assuming all
obligations have been satisfied. Under certain circumstances, such as periods of
high volatility, the Fund may be required by an exchange to increase the level
of its initial margin payment. Additionally, initial margin requirements may be
increased generally in the future by regulatory action. Subsequent payments,
called "variation margin," to and from the broker, are made on a daily basis as
the value of the futures position varies, a process known as "marking to
market." Variation margin does not involve borrowing to finance the futures
transactions, but rather represents a daily settlement of the Fund's obligation
to or from a clearing organization. The Fund is also obligated to make initial
and variation margin payments when it writes options on futures contracts.

Holders and writers of futures positions can enter into offsetting closing
transactions, similar to closing transactions on options on securities, by
selling or purchasing, respectively, a futures position with the same terms as
the position held or written. Positions in futures contracts thereon may be
closed only on an exchange or board of trade providing a secondary market for
such futures or options.

Under certain circumstances, futures exchanges may establish daily limits
on the amount that the price of a futures contract may vary either up or down
from the previous day's settlement price. Once the daily limit has been reached
in a particular contract, no trades may be made that day at a price beyond that
limit. The daily limit governs only price movements during a particular trading
day and therefore does not limit potential losses because prices could move to
the daily limit for several consecutive trading days with little or no trading
and thereby prevent prompt liquidation of unfavorable positions. In such event,
it may not be possible for the Fund to close a position and, in the event of
adverse price movements the Fund would have to make daily cash payments of
variation margin. However, in the event futures contracts have been used to
hedge portfolio securities, such securities will not be sold until the contracts
can be terminated. In such circumstances, an increase in the price of the
securities, if any, may partially or completely offset losses on the futures
contract. However, there is no guarantee that the price of the securities will,
in fact, correlate with the price movements in the contracts and thus provide an
offset to losses on the contracts.

Successful use by a Fund of futures contracts will depend upon the
Adviser's ability to predict movements in the direction of the overall interest
rate markets, which requires different skills and techniques than predicting
changes in the prices of individual securities. Moreover, futures contracts
relate not to the current price level of the underlying instrument but to the
anticipated levels at some point in the future. There is, in addition, the risk
that the movements in the price of the futures contract will not correlate with
the movements in prices of the securities being hedged. In addition, if the Fund
has insufficient cash, it may have to sell assets from its portfolio to meet
daily variation margin requirements. Any such sale of assets may or may not be
made at prices that reflect the rising market. Consequently, the Fund may need
to sell assets at a time when such sales are disadvantageous to the Fund. If the
price of the futures contract moves more than the price of the underlying
securities, the Fund will experience either a loss or a gain on the futures

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<PAGE>

contract that may or may not be completely offset by movements in the price of
the securities that are the subject of the hedge.

In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between price movements in the futures position and
the securities being hedged, movements in the prices of futures contracts may
not correlate perfectly with movements in the prices of the hedged securities
because of price distortions in the futures market. As a result, a correct
forecast of general market trends may not result in successful hedging through
the use of futures contracts over the short term.

Positions in futures contracts may be closed out only on an exchange or
board of trade that provides a secondary market for such futures contracts.
Although the Fund intends to purchase or sell futures only on exchanges or
boards of trade where there appears to be a liquid secondary market, there is no
assurance that such a market will exist for any particular contract at any
particular time. In such event, it may not be possible to close a futures
position and, in the event of adverse price movements, the Fund would continue
to be required to make variation margin payments.

Each Fund's activities in the futures markets may result in a higher
portfolio turnover rate and additional transaction costs in the form of added
brokerage commissions; however, each Fund also may save on commissions by using
futures as a hedge rather than buying or selling individual securities in
anticipation or as a result of market movements.

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 (1) more than 50% of
the outstanding shares of the Fund or (2) 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.

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.

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<PAGE>

(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.

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.

GOVERNMENT FUND will not:

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

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<PAGE>

(2) Pledge assets, except that the Fund may pledge its assets to secure
borrowings made in accordance with paragraph (1) above, provided the Fund
maintains asset coverage of at least 300% for pledged assets.

(3) Make loans, except by purchase of debt obligations and through
repurchase agreements. However, the Fund's Board of Directors may, on the
request of broker-dealers or other institutional investors which they deem
qualified, authorize the Fund to loan securities to cover the borrower's short
position; provided, however, the borrower pledges to the Fund and agrees to
maintain at all times with the Fund cash collateral equal to not less than 100%
of the value of the securities loaned, the loan is terminable at will by the
Fund, the Fund receives interest on the loan as well as any distributions upon
the securities loaned, the Fund retains voting rights associated with the
securities, the Fund pays only reasonable custodian fees in connection with the
loan, and the Adviser monitors the creditworthiness of the borrower throughout
the life of the loan; provided further, that such loans will not be made if the
value of all loans, repurchase agreements with more then seven days to maturity,
and other illiquid assets is greater than an amount equal to 15% of the Fund's
net assets.

(4) Purchase, with respect to only 75% of the Fund's assets, the
securities of any issuer (other than U.S. Government Obligations (as defined in
the Prospectus)) if, as a result thereof, (a) more than 5% of the Fund's total
assets (taken at current value) would be invested in the securities of such
issuer, or (b) the Fund would hold more than 10% of any class of securities
(including any class of voting securities) of such issuer (for this purpose, all
debt obligations of an issuer maturing in less than one year are treated as a
single class of securities).

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

(6) Concentrate its investments in any particular industry.

(7) Purchase securities on margin; except that the Fund may obtain such
credits as may be necessary for the clearance of purchases and sales of
securities. (The deposit or payment by the Fund of initial or variation margin
in connection with interest rate futures contracts or related options
transactions is not considered the purchase of a security on margin.)

(8) Write put or call options; except that the Fund may write options with
respect to U.S. Government Obligations (as defined in the Prospectus) and
interest rate futures contracts. Notwithstanding the foregoing, a
non-fundamental investment restriction, adopted by the Fund's Board of
Directors, prohibits the Fund from engaging in any option transactions.

(9) Make short sales of securities.

(10) Issue senior securities.

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

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

(13) Buy or sell real estate, (unless acquired as a result of ownership of
securities) or interests in oil, gas or mineral exploration; provided, however,
the Fund may invest in securities secured by real estate or interests in real
estate.

20
<PAGE>

(14) Purchase or sell commodities or commodity contracts, except that the
Fund may purchase and sell interest rate futures contracts and related options.

The Fund has adopted the following non-fundamental investment restriction,
which may be changed without shareholder approval. This restriction provides
that the Fund will not:

Purchase any security if, as a result, more than 15% of its net assets
would be invested in illiquid securities, including repurchase agreements not
entitling the holder to payment of principal and interest within seven days and
any securities that are illiquid by virtue of legal or contractual restrictions
on resale or the absence of a readily available market. The 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.

INVESTMENT GRADE FUND will not:

(1) Make short sales of securities "against the box" in excess of 10% of
the Fund's total assets.

(2) Issue senior securities, as defined in the 1940 Act, or borrow money,
except that the Fund may borrow money from a bank for temporary or emergency
purposes in amounts not exceeding 5% (taken at the lower of cost or current
value) of its total assets (not including the amount borrowed).

(3) Purchase any security (other than obligations of the U.S. Government,
its agencies or instrumentalities) if as a result: (1) as to 75% of the Fund's
total assets (taken at current value), more than 5% of such assets would then be
invested in securities of a single issuer, or (2) 25% or more of the Fund's
total assets (taken at current value) would be invested in a single industry.

(4) Purchase more than 10% of the outstanding voting securities of any one
issuer or more than 10% of any class of securities of one issuer (all debt and
all preferred stock of an issuer are each considered a single class for this
purpose).

(5) Pledge, mortgage or hypothecate any of its assets, except that the
Fund may pledge its assets to secure borrowings made in accordance with
paragraph (2) above, provided the Fund maintains asset coverage of at least 300%
for all such borrowings.

(6) Concentrate its investments in any particular industry.

(7) Purchase or sell commodities or commodity contracts or real estate or
interests in real estate, although it may purchase and sell securities which are
secured by real estate, securities of companies which invest or deal in real
estate and interests in real estate investment trusts. However, this restriction
will not preclude bona fide hedging transactions, including the purchase and
sale of futures contracts and related options.

(8) Act as an underwriter except to the extent that, in connection with
the disposition of portfolio securities, it may be deemed to be an underwriter
under certain federal securities laws.

(9) Make investments for the purpose of exercising control or management.

(10) Purchase any securities on margin (although the Fund may obtain such
short-term credit as may be necessary for the purchases and sales of its
portfolio securities).

(11) Make loans to others, except (a) through the purchase of debt
securities in accordance with its investment objective and policies, (b) through
the lending of its portfolio securities, or (c) to the extent a repurchase
agreement is deemed a loan.

21
<PAGE>

(12) Purchase or sell portfolio securities from or to the Adviser or any
director, officer or Trustee thereof or of Series Fund, as principals.

(13) Invest in any securities of any issuer if, to the knowledge of Series
Fund, any officer, director or Trustee of Series Fund or of the Adviser owns
more than 1/2 of 1% of the outstanding securities of such issuer, and such
officers, directors or Trustees who own more than 1/2 of 1% own in the aggregate
more than 5% of the outstanding securities of such issuer.

The following investment restriction is not fundamental and may be changed
without shareholder approval. The investment restriction provides that the Fund
will not:

Invest more than 15% of its assets in repurchase agreements maturing in
more than seven days or in other illiquid securities, including securities that
are illiquid by virtue of the absence of a readily available market or legal or
contractual restrictions as to resale. Securities that have legal or contractual
restrictions as to resale but have a readily available market are not deemed
illiquid for purposes of this limitation; the Adviser will monitor the liquidity
of such restricted securities under the supervision of the Board of Trustees.

HIGH YIELD FUND will not:

(1) Borrow money, except from banks and only for temporary or emergency
purposes and then in amounts not in excess of 5% of its total assets.

(2) Engage in "short sales" in excess of 10% of the Fund's total assets.

(3) Pledge, mortgage or hypothecate any of its assets, except that the
Fund may pledge its assets to secure borrowings made in accordance with
paragraphs (1) and (2) above and for margin to secure its obligations under
interest rate futures contracts, provided the Fund maintains asset coverage of
at least 300% for pledged assets.

(4) Make loans, except by purchase of debt obligations and through
repurchase agreements. However, the Board of Directors may, on the request of
broker-dealers or other institutional investors which they deem qualified,
authorize the Fund to loan securities to cover the borrower's short position;
provided, however, the borrower pledges to the Fund and agrees to maintain at
all times with the Fund cash collateral equal to not less than 100% of the value
of the securities loaned, the loan is terminable at will by the Fund, the Fund
receives interest on the loan as well as any distributions upon the securities
loaned, the Fund retains voting rights associated with the securities, the Fund
pays only reasonable custodian fees in connection with the loan, and the Adviser
monitors the creditworthiness of the borrower throughout the life of the loan;
provided further, that such loans will not be made if the value of all
repurchase agreements with more than seven days to maturity, and other illiquid
assets is greater than an amount equal to 15% of the Fund's net assets.

(5) 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.

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

(7) 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.

22
<PAGE>

(8) Purchase or sell real estate or commodities or commodity contracts.
However, the Fund may purchase interests in real estate investment trusts whose
securities are registered under the Act and are readily marketable and may
invest in interest rate futures contracts and options thereon (provided the
margin required does not violate the investment restrictions pertaining to
pledging assets).

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

(10) Invest in securities of other investment companies, except in
connection with a merger of another investment company.

(11) Purchase any securities on margin (however, the Fund's engaging in
"hedging transactions" and the margins required thereon shall not be considered
a violation of this provision).

(12) Purchase or retain securities of any issuer if any officer or
Director of the Fund or the Adviser owns beneficially more than 1/2 of 1% of the
securities of such issuer or if all such officers and Directors together own
more than 5% of the securities of such issuer.

(13) Invest 25% or more of the value of its total assets in a particular
industry at any one time.

(14) Invest more than 5% of the value of its net assets in warrants, with
no more than 2% in warrants not listed on either the New York or American Stock
Exchange.

(15) Purchase or sell portfolio securities from or to the Adviser or any
Director or officer thereof or of the Fund, as principals.

(16) Invest more than 15% of the value of its total assets, at the time of
purchase, in deep discount securities of companies that are financially
troubled, in default or in bankruptcy or reorganization.

(17) Issue senior securities.

(18) Invest any of its assets in interests in oil, gas or other mineral
exploration or development programs, or in puts, calls, straddles or any
combination thereof.

(19) Invest more than 10% of its net assets in when-issued securities at
the time such purchase is made.

The Fund has adopted the following non-fundamental investment restriction
which may be changed without shareholder approval. This investment restriction
provides that the Fund will not:

23
<PAGE>

FUND FOR INCOME will not:

(1) Borrow money except from banks and only for temporary or emergency
purposes and then in amounts not in excess of 5% of its total assets taken at
cost or value, whichever is the lesser.

(2) Make loans to other persons except that the Board of Directors may, on
the request of broker-dealers or other institutional investors that it deems
qualified, authorize the Fund to lend securities for the purpose of covering
short positions of the borrower, but only when the borrower pledges cash
collateral to the Fund and agrees to maintain such collateral so that it amounts
at all times to at least 100% of the value of the securities. Such security
loans will not be made if as a result the aggregate of such loans exceeds 10% of
the value of the Fund's total assets. The Fund may terminate such loans at any
time and vote the proxies if a material event affecting the investment is about
to occur. The market risk applicable to any security loaned remains a risk of
the Fund. The borrower must add to collateral whenever the market value of the
securities rises above the level of such collateral. The primary objective of
such loaning function is to supplement the Fund's income through investment of
the cash collateral in short-term interest-bearing obligations. The purchase of
a portion of an issue of publicly distributed debt securities is not considered
the making of a loan.

(3) 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.

(4) Invest more than 5% of the value of its total assets in securities of
issuers, including the operations of predecessors, that have been in business
for less than three years.

(5) Invest 25% or more of the value of its total assets in a particular
industry at one time.

(6) Underwrite securities of other issuers, except to the extent that, in
connection with the disposition of its portfolio investments, it may be deemed
to be an underwriter under Federal securities laws.

(7) Purchase or sell real estate or commodities or commodity contracts.
However, the Fund may purchase interests in real estate investment trusts whose
securities are registered under the 1933 Act and are readily marketable.

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

(9) Invest in securities of other investment companies, except in
connection with a merger of another investment company.

(10) Purchase any securities on margin or sell any securities short.

(11) Purchase or retain securities of any issuer if any officer or
Director of the Fund or the Adviser owns beneficially more than 1/2 of 1% of the
securities of such issuer and together own more than 5% of the securities of
such issuer.

(12) Purchase or sell portfolio securities from or to the Adviser or any
Director or officer thereof or of the Fund, as principals.

(13) Issue senior securities.

The Fund has adopted the following non-fundamental investment
restrictions, which may be changed without shareholder approval. These
investment restrictions provide that the Fund will not:

24
<PAGE>

(1) Purchase any security if, as a result, more than 15% of its net assets
would be invested in illiquid securities, including repurchase agreements not
entitling the holder to payment of principal and interest within seven days and
any securities that are illiquid by virtue of legal or contractual restrictions
on resale or the absence of a readily available market. The 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) Pledge, mortgage or hypothecate any of its assets, except that the
Fund may pledge its assets to secure borrowings made in accordance with
fundamental investment restriction (1) above, provided the Fund maintains asset
coverage of at least 300% for all such borrowings.

PORTFOLIO TURNOVER

Although each Fund generally will not invest for short-term trading
purposes, portfolio securities may be sold without regard to the length of time
they have been held when, in the opinion of the Adviser, investment
considerations warrant such action. Portfolio turnover rate is calculated by
dividing (1) the lesser of purchases or sales of portfolio securities for the
fiscal year by (2) the monthly average of the value of portfolio securities
owned during the fiscal year. A 100% turnover rate would occur if all the
securities in a Fund's portfolio, with the exception of securities whose
maturities at the time of acquisition were one year or less, were sold and
either repurchased or replaced within one year. A high rate of portfolio
turnover (100% or more) generally leads to high transaction costs and may result
in a greater number of taxable transactions. See "Allocation of Portfolio
Brokerage." For the fiscal years ended September 30, 1998 and September 30,
1999, HIGH YIELD FUND'S portfolio turnover rate was 20% and 30%, respectively,
FUND FOR INCOME'S portfolio turnover rate was 28% and 28%, respectively,
GOVERNMENT FUND'S portfolio turnover rate was 62% and 99%, and INVESTMENT
GRADE'S portfolio turnover rate was 49% and 18%.

DIRECTORS AND OFFICERS

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. The following table lists the Directors and executive
officers of CASH MANAGEMENT FUND, GOVERNMENT FUND, INVESTMENT GRADE FUND, FUND
FOR INCOME, and HIGH YIELD FUND, their age, business address and principal
occupations during the past five years. Unless otherwise noted, an individual's
business address is 95 Wall Street, New York, New York 10005.

GLENN O. HEAD*+ (74), President and Director. Chairman of the Board and
Director, Administrative Data Management Corp. ("ADM"), FIMCO, Executive
Investors Management Company, Inc. ("EIMCO"), First Investors Asset Management
Company, Inc. ("FIAMCO"), First Investors Corporation ("FIC"), Executive
Investors Corporation ("EIC") and First Investors Consolidated Corporation
("FICC").

JAMES J. COY (85), Emeritus Director, 90 Buell Lane, East Hampton, NY 11937.
Retired; formerly Senior Vice President, James Talcott, Inc. (financial
institution).

KATHRYN S. HEAD*+ (44), Director, 581 Main Street, Woodbridge, NJ 07095.
President and Director, FICC, ADM and FIMCO; Vice President and Director, FIC
and EIC; President EIMCO; Chairman, President and Director, First Financial
Savings Bank, S.L.A.

LARRY R. LAVOIE* (52) Director. Assistant Secretary, ADM, EIC, EIMCO, FIAMCO,
FICC, and FIMCO; President, FIAMCO; Secretary and General Counsel, FIC.

25
<PAGE>

REX R. REED** (77), Director, 259 Governors Drive, Kiawah Island, SC 29455.
Retired; formerly Senior Vice President, American Telephone & Telegraph Company.

HERBERT RUBINSTEIN** (78), Director, 695 Charolais Circle, Edwards, CO
81632-1136. Retired; formerly President, Belvac International Industries, Ltd.
and President, Central Dental Supply.

NANCY SCHAENEN** (68), Director, 56 Midwood Terrace, Madison, NJ 07940. Trustee,
Drew University and DePauw University.

JAMES M. SRYGLEY** (67), Director, 39 Hampton Road, Chatham, NJ 07928.
Principal, Hampton Properties, Inc. (property investment company).

JOHN T. SULLIVAN* (67), Director and Chairman of the Board; Director, FIMCO,
FIC, FICC and ADM; Of Counsel, Hawkins, Delafield & Wood, Attorneys.

ROBERT F. WENTWORTH** (70), Director, 217 Upland Downs Road, Manchester Center,
VT 05255. Retired; formerly financial and planning executive with American
Telephone & Telegraph Company.

JOSEPH I. BENEDEK (42), Treasurer and Principal Accounting Officer, 581 Main
Street, Woodbridge, NJ 07095. Treasurer, FIMCO, EIMCO and FIAMCO.

CONCETTA DURSO (64), Vice President and Secretary. Vice President, FIMCO, EIMCO
and ADM; Assistant Vice President and Assistant Secretary, FIC and EIC.

NANCY W. JONES (55), Vice President, FUND FOR INCOME and HIGH YIELD FUND. Vice
President, First Investors Asset Management Company, Inc., Executive Investors
Trust, First Investors Series Fund, and First Investors Special Bond Fund, Inc.;
Portfolio Manager, FIMCO.

GEORGE V. GANTER (47), Vice President, INVESTMENT GRADE FUND. Vice President,
First Investors Asset Management Company, Inc.; Portfolio Manager, FIMCO.

CLARK D. WAGNER (40), Vice President, GOVERNMENT FUND and INVESTMENT GRADE FUND.
Vice President, First Investors Multi-State Insured Tax Free Fund, Executive
Investors Trust, First Investors Series Fund, First Investors New York Insured
Tax Free Fund, Inc. and First Investors Government Fund, Inc.; Chief Investment
Officer, FIMCO.

MICHAEL J. O'KEEFE (33), Vice President, CASH MANAGEMENT FUND. Portfolio Manager
of Cash Management Fund since December 1995; Assistant Portfolio Manager from
1985-1995; Vice President, First Investors Tax-Exempt Money Market Fund, Inc.

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

* These Directors may be deemed to be "interested persons," as defined in the
1940 Act.
** These Directors are members of the Board's Audit Committee.
+ Mr. Glenn O. Head and Ms. Kathryn S. Head are father and daughter.

The Directors and officers, as a group, owned less than 1% of either Class
A or Class B shares of each Fund.

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

26
<PAGE>

Services, Inc. Ms. Head is also an officer and/or Director of First Investors
Life Insurance Company, First Investors Credit Corporation, School Financial
Management Services, Inc., First Investors Credit Funding Corporation, N.A.K.
Realty Corporation, Real Property Development Corporation, First Investors
Leverage Corporation and Route 33 Realty Corporation.

The following table lists compensation paid to the Directors of each Fund
for the fiscal year ended September 30, 1999.

<TABLE>
<CAPTION>
AGGREGATE TOTAL
COMPENSATION AGGREGATE AGGREGATE AGGREGATE AGGREGATE COMPENSATION
FROM COMPENSATION COMPENSATION COMPENSATION COMPENSATION FROM FIRST
DIRECTOR CASH FROM FROM FROM FROM INVESTORS
- -------- MANAGEMENT HIGH YIELD FUND FOR GOVERNMENT INVESTMENT FAMILY OF
FUND**++ FUND** INCOME** FUND** GRADE FUND** FUNDS PAID
---------- ---------- ----------- ----------- ------------ TO DIRECTOR+
-------------
<S> <C> <C> <C> <C> <C> <C>
James J. Coy* $0 $0 $0 $0 $0 $0
Glenn O. Head $0 $0 $0 $0 $0 $0
Kathryn S. Head $0 $0 $0 $0 $0 $0
Larry R. Lavoie $0 $0 $0 $0 $0 $0
Rex R. Reed $1,350 $1,800 $2,400 $1,800 $1,200 $41, 695
Herbert Rubinstein $1,350 $1,800 $2,400 $1,800 $1,200 $41, 695
James M. Srygley $1,350 $1,800 $2,400 $1,800 $1,200 $41, 695
John T. Sullivan $0 $0 $0 $0 $0 $0
Robert F. Wentworth $1,350 $1,800 $2,400 $1,800 $1,200 $41, 695
Nancy Schaenen $1,350 $1,800 $2,400 $1,800 $1,200 $41, 695
</TABLE>

* On March 27, 1997, Mr. Coy resigned as a Director of the Funds. Mr. Coy
currently serves as an emeritus Director.
** Compensation to officers, interested Directors of the Funds and the emeritus
Director is paid by the Adviser.
+ The First Investors Family of Funds consist of 15 separate registered
investment companies. The total compensation shown in this column is for the
twelve month period ended September 30, 1999.
++ Period covered is nine months from January 1, 1999 through September 30,
1999.

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 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
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

27
<PAGE>

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 over 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 its Advisory Agreement, CASH MANAGEMENT FUND pays the Adviser an
annual fee, payable monthly, of 0.50% of its average daily net assets. With
respect to the other Funds, under each Advisory Agreement, the applicable Fund
is obligated to pay the Adviser an annual fee, paid monthly, according to the
following schedules:

HIGH YIELD FUND
Annual
Average Daily Net Assets Rate
- ------------------------ ------
Up to $200 million..................................................... 1.00%
In excess of $200 million up to $500 million........................... 0.75
In excess of $500 million up to $750 million........................... 0.72
In excess of $750 million up to $1.0 billion........................... 0.69
Over $1.0 billion...................................................... 0.66

FUND FOR INCOME
Annual
Average Daily Net Assets Rate
- ------------------------ ------
Up to $250 million..................................................... 0.75%
In excess of $250 million up to $500 million........................... 0.72
In excess of $500 million up to $750 million........................... 0.69
Over $750 million...................................................... 0.66

GOVERNMENT FUND
Annual
Average Daily Net Assets Rate
- ------------------------ ------
Up to $200 million.................................................... 1.00%
In excess of $200 million up to $500 million.......................... 0.75
In excess of $500 million up to $750 million.......................... 0.72
In excess of $750 million up to $1.0 billion.......................... 0.69
Over $1.0 billion..................................................... 0.66

INVESTMENT GRADE FUND
Annual
Average Daily Net Assets Rate
- ------------------------ ------
Up to $300 million................................................. 0.75%
In excess of $300 million up to $500 million....................... 0.72
In excess of $500 million up to $750 million....................... 0.69
Over $750 million.................................................. 0.66

For the fiscal years ended December 31, 1997 and 1998, and the nine month
period from January 1, 1999 through September 30, 1999, CASH MANAGEMENT FUND
paid $669,184, $748,196 and $613,472, respectively, in advisory fees. For the
same periods, the Adviser voluntarily assumed expenses for CASH MANAGEMENT FUND
in the amounts of $379,265, $323,850 and $268,706, respectively. For the fiscal
years ended December 31, 1997 and September 30, 1998 and 1999, HIGH YIELD FUND
paid the Adviser $1,674,251, $1,212,262 and $1,499,122, respectively, in
advisory fees. For the same periods, the Adviser voluntarily waived $400,000,
$375,000 and $495,021, respectively, in advisory fees. For the fiscal years
ended December 31, 1997 and September 30, 1998 and 1999, FUND FOR INCOME paid

28
<PAGE>

the Adviser $3,217,285, $2,448,268 and $3,121,524, respectively, in advisory
fees. For the fiscal years ended December 31, 1997 and September 30, 1998 and
1999, GOVERNMENT FUND paid the Adviser $1,241,821, $810,988 and $951,583,
respectively, in advisory fees. For these same time periods, the Adviser
voluntarily waived $532,208, $436,686 and $600,530, respectively, in advisory
fees. For the fiscal years ended December 31, 1997 and September 30, 1998 and
1999, INVESTMENT GRADE paid the Adviser $307,123, $226,719 and $338,731,
respectively, in advisory fees. For the same periods, the Adviser voluntarily
waived $47,250, $56,680 and $84,683, respectively, in advisory fees. In
addition, for the same periods the Adviser voluntarily assumed expenses in the
amount of $105,581, $58,718 and $72,220, respectively.

Each Fund bears all expenses of its operations other than those assumed by
the Adviser or 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 communicating to existing shareholders, including
preparing, printing and mailing prospectuses and shareholder reports to such
shareholders; and proxy and shareholder meeting expenses.

The Adviser has an Investment Committee composed of Dennis T. Fitzpatrick,
George V. Ganter, Michael Deneka, David Hanover, Glenn O. Head, Kathryn S. Head,
Nancy W. Jones, Michael O'Keefe, Patricia D. Poitra, Clark D. Wagner, and
Matthew Wright. The Committee usually meets weekly to discuss the composition of
the portfolio of each Fund and to review additions to and deletions from the
portfolios.

First Investors Consolidated Corporation ("FICC") owns all of the voting
common stock of the Adviser and all of the outstanding stock of First Investors
Corporation and the Funds' transfer agent. Mr. Glenn O. Head controls FICC and,
therefore, controls the Adviser.

UNDERWRITER

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.
Each Underwriting Agreement was approved by the applicable Fund's Board,
including a majority of the Independent Directors. Each Underwriting Agreement
provides 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 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.

For the fiscal years ended December 31, 1997 and September 30, 1998 and
1999, FIC received underwriting commissions with respect to HIGH YIELD FUND of
$466,862, $383,388 and $279,503, respectively. For the same periods, FIC
reallowed an additional $133,969, $60,089 and $54,481, respectively, to
unaffiliated dealers. For the fiscal years ended December 31, 1997 and September
30, 1998 and 1999, FIC received underwriting commissions with respect to FUND
FOR INCOME of $472,941, $503,910 and $750,061, respectively. For the same
periods, FIC reallowed an additional $60,576, $102,233 and $137,914,
respectively, to unaffiliated dealers. For the fiscal years ended December 31,
1997 and September 30, 1998 and 1999, FIC received underwriting commissions with
respect to GOVERNMENT FUND of $176,381, $127,799 and $177,774, respectively. For
the same periods, FIC reallowed an additional $8,095, $8,072 and $4,677,
respectively, to unaffiliated dealers. For the fiscal years ended December 31,
1997 and September 30, 1998 and 1999, FIC received underwriting commissions with
respect to INVESTMENT GRADE FUND of $223,846, $229,010 and $371,329. For the
same periods, FIC reallowed an additional $1, $6,498 and $13,926, respectively,
to unaffiliated dealers.

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DISTRIBUTION PLANS

Each Fund except CASH MANAGEMENT FUND has adopted a separate plan of
distribution for each class of its shares pursuant to Rule 12b-1 under the 1940
Act ("Class A Plan" and "Class B Plan" and, collectively, "Plans"). CASH
MANAGEMENT FUND has adopted a Class B Plan (also a "Plan") only. Under the
Plans, each Fund may reimburse or compensate, as applicable, the Underwriter for
certain expenses incurred in the distribution of that Fund's shares and the
servicing or maintenance of existing Fund shareholder accounts. Each Class B
Plan is a compensation plan. Each Class A Plan is a reimbursement plan, except
for INVESTMENT GRADE FUND Class A Plan which is a compensation plan.

Each Plan was approved by the applicable Fund's Board, including a
majority of the Independent Directors, and by a majority of the outstanding
voting securities of the relevant class of such Fund. Each Plan will continue in
effect from year to year as long as its continuance is approved annually be
either the applicable Fund's Board or by a vote of a majority of the outstanding
voting securities of the relevant class of shares of such Fund. In either case,
to continue, each 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 applicable Plan and the purposes for which such expenditures
were made. While each 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.

Each 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 voting securities of the relevant class of shares of such Fund. Any
change to any 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
voting securities of that class of shares of such Fund as well as any class of
shares that converts into that class. Such changes also require approval by a
majority of the applicable Fund's Independent Directors.

In adopting each Plan, the Board of each Fund considered all relevant
information and determined that there is a reasonable likelihood that each Plan
will benefit each Fund and their class of shareholders. The Boards believe that
amounts spent pursuant to each 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.

In reporting amounts expended under the Plans to the Directors, in the
event that the expenses are not related solely to one class, 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 one class of a Fund's shares will not be used to
subsidize the sale of any other class of the Fund's shares.

For the fiscal year ended September 30, 1999, HIGH YIELD FUND, FUND FOR
INCOME, GOVERNMENT FUND AND INVESTMENT GRADE FUND paid $571,559, $1,234,576,
$400,309 and $149,689, respectively, pursuant to their respective Class A Plan.
For the same period, the Underwriter incurred the following Class A Plan-related
expenses with respect to each Fund:

COMPENSATION TO COMPENSATION TO COMPENSATION TO
FUND UNDERWRITER DEALERS SALES PERSONNEL

HIGH YIELD FUND $474,253 $2,152 $92,665
FUND FOR INCOME $829,266 $3,952 $395,787
GOVERNMENT FUND $234,108 $61 $164,564
INVESTMENT GRADE FUND $92,861 $504 $55,652

For the fiscal year ended September 30, 1999, CASH MANAGEMENT FUND, HIGH
YIELD FUND, FUND FOR INCOME, GOVERNMENT FUND AND INVESTMENT GRADE FUND paid
$9,498, $94,087, $116,392, $30,974 and $65,580, respectively, pursuant to their
respective Class B Plan. For the same period, the Underwriter incurred the
following Class B Plan-related expenses with respect to each Fund:

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COMPENSATION TO COMPENSATION TO COMPENSATION TO
FUND UNDERWRITER DEALERS SALES PERSONNEL

CASH MANAGEMENT FUND $0 $0 $9,498
HIGH YIELD FUND $85,346 $2,944 $5,319
FUND FOR INCOME $79,071 $34,618 $1,999
GOVERNMENT FUND $26,947 $22 $3,858
INVESTMENT GRADE FUND $61,251 $771 $3,184

DEALER CONCESSIONS. With respect to Class A shares of each Fund, the Fund
will reallow a portion of the sales load to the dealers selling the shares as
shown in the following table:

SALES CHARGES AS % OF CONCESSION TO
--------------------- -------------
OFFERING NET AMOUNT DEALERS AS % OF
AMOUNT OF INVESTMENT PRICE INVESTED OFFERING PRICE
- -------------------- ----- -------- --------------
Less than $25,000................... 6.25% 6.67% 5.13%
$25,000 but under $50,000........... 5.75 6.10 4.72
$50,000 but under $100,000.......... 5.50 5.82 4.51
$100,000 but under $250,000......... 4.50 4.71 3.69
$250,000 but under $500,000......... 3.50 3.63 2.87
$500,000 but under $1,000,000....... 2.50 2.56 2.05

DETERMINATION OF NET ASSET VALUE

CASH MANAGEMENT FUND

The 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 Fund's Prospectus. 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, the Fund
might have to sell portfolio securities prior to maturity and at a price that
might not be desirable.

The Board of Directors of the 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 the 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. The 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.

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<PAGE>

HIGH YIELD FUND, FUND FOR INCOME, GOVERNMENT FUND AND INVESTMENT GRADE FUND

Except as provided herein, a security listed or traded on an exchange or
the Nasdaq Stock Market is valued at its last sale price on the exchange or
market where the security is principally traded, and lacking any sales on a
particular day, the security is valued at the mean between the closing bid and
asked prices. Securities traded in the over-the-counter ("OTC") market
(including securities listed on exchanges whose primary market is believed to be
OTC) are valued at the mean between the last bid and asked prices based upon
quotes furnished by market makers for such securities. Securities may also be
priced by pricing services. Pricing services use quotations obtained from
investment dealers or brokers for the particular securities being evaluated,
information with respect to market transactions in comparable securities and
other available information in determining value. Short-term debt securities
that mature in 60 days or less are valued at amortized cost. Securities for
which market quotations are not readily available and other assets are valued on
a consistent basis at fair value as determined in good faith by or under the
supervision of the applicable Fund's officers in a manner specifically
authorized by the applicable Fund's Board of Directors.

"When-issued securities" are reflected in the assets of a Fund as of the
date the securities are purchased. Such investments are valued thereafter at the
mean between the most recent bid and asked prices obtained from recognized
dealers in such securities or by the pricing services. For valuation purposes,
quotations of foreign securities in foreign currencies are converted into U.S.
dollar equivalents using the foreign exchange equivalents in effect.

ALL FUNDS

Each Fund's Board may suspend the determination of a Fund's net asset
value per share 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 SEC
or the NYSE is closed for other than weekend and holiday closings, (2) during
which an emergency, as defined by rules of the SEC in respect to the U.S.
market, exists as a result of which disposal by a Fund of securities owned by it
is not reasonably practicable for the Fund fairly to determine the value of its
net assets, or (3) for such other period as the SEC has by order permitted.

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 1940 Act 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; 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.

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<PAGE>

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 NAV, for
the Funds and their shareholders.

ALLOCATION OF PORTFOLIO BROKERAGE

The Adviser may purchase or sell portfolio securities on behalf of the
Funds in agency or principal transactions. Purchases and sales of portfolio
securities by CASH MANAGEMENT FUND generally are principal transactions. In
agency transactions, a Fund generally pays brokerage commissions. In principal
transactions, a Fund generally does not pay commissions, however the price paid
for the security may include an undisclosed dealer commission or "mark-up" or
selling concessions. The Adviser normally purchases fixed-income securities on a
net basis from primary market makers acting as principals for the securities.
The Adviser may purchase certain money market instruments directly from an
issuer without paying commissions or discounts. The Adviser may also purchase
securities traded in the OTC market. As a general practice, OTC securities are
usually purchased from market makers without paying commissions, although the
price of the security usually will include undisclosed compensation. However,
when it is advantageous to the Fund the Adviser may utilize a broker to purchase
OTC securities and pay a commission.

In purchasing and selling portfolio securities on behalf of a Fund, the
Adviser will seek to obtain best execution. A Fund may pay more than the lowest
available commission in return for brokerage and research services.
Additionally, upon instruction by the Board, the Adviser may use dealer
concessions available in fixed-priced underwritings to pay for research and
other services. Research and other services may include information as to the
availability of securities for purchase or sale, statistical or factual
information or opinions pertaining to securities, reports and analysis
concerning issuers and their creditworthiness, and Lipper's Directors'
Analytical Data concerning Fund performance and fees. The Adviser generally uses
the research and other services to service all the funds in the First Investors
Family of Funds, rather than the particular Funds whose commissions may pay for
research or other services. In other words, a Fund's brokerage may be used to
pay for a research service that is used in managing another Fund within the
First Investor Fund Family. The Lipper's Directors' Analytical Data is used by
the Adviser and the Fund Board to analyze a fund's performance relative to other
comparable funds.

In selecting the broker-dealers to execute a Fund's portfolio
transactions, the Adviser may consider such factors as the price of the
security, the rate of the commission, the size and difficulty of the order, the
trading characteristics of the security involved, the difficulty in executing
the order, the research and other services provided, the expertise, reputation
and reliability of the broker-dealer, access to new offerings, and other factors
bearing upon the quality of the execution. The Adviser does not place portfolio
orders with an affiliated broker, or allocate brokerage commission business to
any broker-dealer for distributing fund shares. Moreover, no broker-dealer
affiliated with the Adviser participates in commissions generated by portfolio
orders placed on behalf of a Fund.

The Adviser may combine transaction orders placed on behalf of a Fund and
any other Fund in the First Investors Group of Funds, any fund of Executive
Investors Trust and First Investors Life Insurance Company, affiliates of the
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.

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<PAGE>

For the fiscal year ended December 31, 1997, HIGH YIELD FUND paid $2,359
in brokerage commissions, all of which was paid to brokers who furnished
research services on portfolio transactions in the amount of $385,732. For the
fiscal year ended December 31, 1997, FUND FOR INCOME paid $1,200 in brokerage
commissions, all of which was paid to brokers who furnished research services on
portfolio transactions in the amount of $538,470. For the fiscal year ended
December 31, 1997, GOVERNMENT FUND, INVESTMENT GRADE FUND and CASH MANAGEMENT
FUND did not pay any brokerage commissions.

For the fiscal year ended September 30, 1998, HIGH YIELD FUND paid $1,071
in brokerage commissions, all of which was paid to brokers who furnished
research services on portfolio transactions in the amount of $100,312. For the
fiscal year ended September 30, 1998, FUND FOR INCOME paid $4,005 in brokerage
commissions of which $2,723 was paid to brokers who furnished research services
on portfolio transactions in the amount of $463,349. For the fiscal year ended
September 30, 1998, GOVERNMENT FUND AND INVESTMENT GRADE FUND did not pay any
brokerage commissions. For the fiscal year ended December 31, 1998, CASH
MANAGEMENT FUND did not pay any brokerage commissions.

For the fiscal year ended September 30, 1999, HIGH YIELD FUND paid $2,567
in brokerage commissions $767 of which was paid to brokers who furnished
research services on portfolio transactions in the amount of $296,180. For the
fiscal year ended September 30, 1999, FUND FOR INCOME paid $218 in brokerage
commissions, all of which was paid to brokers who furnished research services on
portfolio transactions in the amount of $64,486. For the fiscal year ended
September 30, 1999, GOVERNMENT FUND, INVESTMENT GRADE FUND and CASH MANAGEMENT
FUND did not pay any brokerage commissions.

PURCHASE, REDEMPTION AND EXCHANGE OF SHARES

Information regarding the purchase, redemption and exchange of Fund shares
is contained in the Shareholder Manual, a separate section of the SAI that is a
distinct document and may be obtained free of charge by contacting your Fund.

REDEMPTIONS-IN-KIND. If each Fund's Board should determine that it would
be detrimental to the best interests of the remaining shareholders of a Fund to
make payment wholly or partly in cash, the Fund may pay redemption proceeds in
whole or in part by a distribution in kind of securities from the portfolio of
the Fund. If shares are redeemed in kind, the redeeming shareholder will likely
incur brokerage costs in converting the assets into cash. The method of valuing
portfolio securities for this purpose is described under "Determination of Net
Asset Value."

SPECIAL FEATURES WITH RESPECT TO CASH MANAGEMENT FUND

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 ($1,000 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 THE 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 on the Super Checking
Program, call FFS at 1-800-304-7748.

CHECK REDEMPTION PRIVILEGE. You may obtain checks for non-retirement Fund
accounts ("Redemption Checks"). Dividends are earned on Fund shares until a
Redemption Check clears. You are subject to the rules and regulations of the

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<PAGE>

Custodian covering checking accounts. Neither the Funds nor the Custodian
charges you for the use of such 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. The Check Redemption Privilege is not available for Super Checking.

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.

TAXES

In order to continue to qualify for treatment as a regulated investment
company ("RIC") under the Internal Revenue Code of 1986, as amended (the
"Code"), a Fund must distribute to its shareholders for each taxable year at
least 90% of its investment company taxable income (consisting generally of net
investment income, net short-term capital gain and net gains from certain
foreign currency transactions) ("Distribution Requirement") 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 foreign
currencies, or other income (including, for those Funds that can invest in
options and futures contracts, gains from options and futures contracts) derived
with respect to its business of investing in securities or those currencies
("Income Requirement"); (2) at the close of each quarter of the Fund's taxable
year, at least 50% of the value of its total assets must be represented by cash
and cash items, U.S. Government securities, securities of other RICs and other
securities, with those other securities limited, in respect of any one issuer,
to an amount that does not exceed 5% of the value of the Fund's total assets and
that does not represent more than 10% of the issuer's outstanding voting
securities; and (3) at the close of each quarter of the Fund's taxable year, not
more than 25% of the value of its total assets may be invested in securities
(other than U.S. Government securities or the securities of other RICs) of any
one issuer. If a Fund failed to qualify as a RIC for any taxable year, it would
be taxed on the full amount of its taxable income for that year without being
able to deduct the distributions it makes to its shareholders and the
shareholders would treat all those distributions, including distributions of net
capital gain (the excess of net long-term capital gain over net short-term
capital loss), as dividends (that is, ordinary income) to the extent of the
Fund's earnings and profits.

Dividends and other distributions declared by a Fund in October, November
or December of any year and payable to shareholders of record on a date in any
of those months are deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions are taxed to
shareholders for the year in which that December 31 falls.

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<PAGE>

A portion of the dividends from a Fund's investment company taxable income
may be eligible for the dividends-received deduction allowed to corporations.
The eligible portion may not exceed the aggregate dividends received by the Fund
from U.S. corporations. However, dividends received by a corporate shareholder
and deducted by it pursuant to the dividends-received deduction are subject
indirectly to the Federal alternative minimum tax. Although each Fund is
authorized to hold equity securities, it is expected that any dividend income
received by a Fund will be minimal; accordingly, very little, if any, of the
distributions made by the Funds will be eligible for the dividends-received
deduction.

If shares of a Fund are sold at a loss after being held for six months or
less, the loss will be treated as long-term, instead of short-term, capital loss
to the extent of any capital gain distributions received on those shares.

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

As applicable, dividends and interest received by a Fund, and gains
realized by a Fund, may be subject to income, withholding or other taxes imposed
by foreign countries and U.S. possessions that would reduce the yield and/or
total return on its securities. Tax conventions between certain countries and
the United States may reduce or eliminate these taxes, however, and many foreign
countries do not impose taxes on capital gains in respect of investments by
foreign investors.

Each Fund, other than CASH MANAGEMENT FUND, may each invest in the stock
of "passive foreign investment companies" ("PFICs"). A PFIC is a foreign
corporation - other than a "controlled foreign corporation" (i.e., a foreign
corporation in which, on any day during its taxable year, more than 50% of the
total voting power of all voting stock therein or the total value of all stock
therein is owned, directly, indirectly, or constructively, by "U.S.
shareholders," defined as U.S. persons that individually own, directly,
indirectly, or constructively, at least 10% of that voting power) as to which
the Fund is a U.S. shareholder ( effective after October 31, 1999) - that, in
general, meets either of the following tests: (1) at least 75% of its gross
income is passive or (2) an average of at least 50% of its assets produce, or
are held for the production of, passive income. Under certain circumstances, if
the Fund holds stock of a PFIC, it will be subject to Federal income tax on a
portion of any "excess distribution" received on the stock or of any gain on
disposition of the stock (collectively "PFIC income"), plus interest thereon,
even if the Fund distributes the PFIC income as a taxable dividend to its
shareholders. The balance of the PFIC income will be included in the Fund's
investment company taxable income and, accordingly, will not be taxable to it to
the extent that income is distributed to its shareholders.

If these Funds invest in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF") then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each year its pro
rata share of the QEF's annual ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) - which
probably would have to be distributed by the Fund to satisfy the Distribution
Requirement and avoid imposition of the Excise Tax - even if those earnings and
gain were not distributed to the Fund by the QEF. In most instances it will be
very difficult, if not impossible, to make this election because of certain
requirements thereof.

Effective for its taxable year beginning November 1, 1999, these Funds may
elect to "mark-to-market" its stock in any PFICs. "Marking-to-market," in this
context, means including in ordinary income each taxable year the excess, if
any, of the fair market value of the PFIC's stock over the Fund's adjusted basis
in that stock as of the end of that year. Pursuant to the election, the Fund
also will be allowed to deduct (as an ordinary, not capital, loss) the excess,
if any, of its adjusted basis in PFIC stock over the fair market value thereof
as of the taxable year-end, but only to the extent of any net mark-to-market
gains with respect to that stock included by the Fund for prior taxable years.
The Fund's adjusted basis in each PFIC's stock with respect to which it makes

36
<PAGE>

this election will be adjusted to reflect the amounts of income included and
deductions taken under the election. Regulations proposed in 1992 would provide
a similar election with respect to the stock of certain PFICs.

Each Fund except CASH MANAGEMENT FUND may acquire zero coupon or other
securities issued with original issue discount. As a holder of those securities,
a Fund must include in its income the portion of the original issue discount
that accrues on the securities during the taxable year, even if the Fund
receives no corresponding payment on them during the year. Similarly, a Fund
must include in its gross income securities it receives as "interest" on
pay-in-kind securities. Because a Fund annually must distribute substantially
all of its investment company taxable income, including any original issue
discount and other non-cash income, to satisfy the Distribution Requirement and
avoid imposition of the Excise Tax, a Fund may be required in a particular year
to distribute as a dividend an amount that is greater than the total amount of
cash it actually receives. Those distributions will be made from a Fund's cash
assets or from the proceeds of sales of portfolio securities, if necessary. A
Fund may realize capital gains or losses from those sales, which would increase
or decrease its investment company taxable income and/or net capital gain.

The use of hedging strategies, such as writing (selling) and purchasing
options and futures contracts, involves complex rules that will determine for
income tax purposes the amount, character and timing of recognition of the gains
and losses HIGH YIELD FUND and INVESTMENT GRADE FUND will realize in connection
therewith. Gains from options and futures contracts derived by a Fund with
respect to its business of investing in securities or foreign currencies and
gains from each Fund's disposition of foreign currencies (except certain gains
therefrom that may be excluded by future regulations) will qualify as
permissible income under the Income Requirement.

If a Fund has an "appreciated financial position" - generally, an interest
(including an interest through an option, futures contract or short sale) with
respect to any stock, debt instrument (other than "straight debt") or
partnership interest the fair market value of which exceeds its adjusted basis -
and enters into a "constructive sale" of the same or substantially similar
property, the Fund will be treated as having made an actual sale thereof, with
the result that gain will be recognized at that time. A constructive sale
generally consists of a short sale, an offsetting notional principal contract or
futures contract entered into by a Fund or a related person with respect to the
same or substantially similar property. In addition, if the appreciated
financial position is itself a short sale or such a contract, acquisition of the
underlying property or substantially similar property will be deemed a
constructive sale.

PERFORMANCE INFORMATION

CASH MANAGEMENT FUND

The Fund provides current yield quotations based on its daily dividends. The
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 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, the Fund provides
effective yield quotations for a base period return of seven days. The Fund may
also advertise yield for periods other than seven days, such as thirty days or
twelve months. In such cases, the formula for calculating seven-day effective
yield will be used, except that the base period will be thirty days or 365 days

37
<PAGE>

rather than 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 calculation for Class A and Class B shares for the
seven day period ended December 31, 1999.

CASH MANAGEMENT FUND
CLASS A CLASS B
SHARES SHARES
------ ------
Dividends per share from net investment $.000996540 $.000853434
income (seven calendar days ended December
31, 1999) (Base Period)
Annualized (365 day basis)* $.051962415 $.044500501
Average net asset value per share of the $1.00 $1.00
seven calendar days ended December 31, 1999
Annualized historical yield per share for 5.20% 4.45%
the seven calendar days ended December 31,
1999
Effective Yield** 5.33% 4.54%
Weighted average life to maturity of the
portfolio on December 31, 1999 as 64 days

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

* This represents the average of annualized net investment income per share
for the seven calendar days ended December 31, 1999.
** Effective Yield = [(Base Period Return+1)365/7] - 1

HIGH YIELD FUND, FUND FOR INCOME, GOVERNMENT FUND AND INVESTMENT GRADE FUND

A Fund may advertise its top holdings from time to time. A Fund may also
advertise performance in various ways.

Each Fund's "average annual total return" ("T") is an average annual
compounded rate of return. The calculation produces an average annual total
return for the number of years measured. It is the rate of return based on
factors which include a hypothetical initial investment of $1,000 ("P") over a
number of years ("n") with an Ending Redeemable Value ("ERV") of that
investment, according to the following formula:

T=[(ERV/P)^(1/n)]-1

The "total return" uses the same factors, but does not average the rate of
return on an annual basis. Total return is determined as follows:

(ERV-P)/P = TOTAL RETURN

Total return is calculated by finding the average annual change in the
value of an initial $1,000 investment over the period. In calculating the ending
redeemable value for Class A shares, each Fund will deduct the maximum sales
charge of 6.25% (as a percentage of the offering price) from the initial $1,000
payment and, for Class B shares, the applicable CDSC imposed on a redemption of

38
<PAGE>

Class B shares held for the period is deducted. All dividends and other
distributions are assumed to have been reinvested at net asset value on the
initial investment ("P").

Return information may be useful to investors in reviewing a Fund's
performance. However, certain factors should be taken into account before using
this information as a basis for comparison with alternative investments. No
adjustment is made for taxes payable on distributions. Return information will
fluctuate over time and return information for any given past period will not be
an indication or representation of future rates of return. At times, the Adviser
may reduce its compensation or assume expenses of a Fund in order to reduce the
Fund's expenses. Any such waiver or reimbursement would increase the Fund's
return during the period of the waiver or reimbursement.

Average annual return and total return computed at the public offering
price (maximum sales charge for Class A shares and applicable CDSC for Class B
shares) for the period ended September 30, 1999 are set forth in the tables
below:

AVERAGE ANNUAL TOTAL RETURN1, 2

High Yield Fund Fund for Income
--------------- ---------------
Class A Class B Class A Class B
Shares Shares Shares Shares
------ ------ ------ ------
One Year -3.93% -2.11% -3.36% -1.71%
Five Years 7.60% N/A 8.13% N/A
Ten Years 7.77% N/A 8.29% N/A
Life of Fund3 N/A 8.44% N/A 8.87%

Government Fund Investment Grade Fund
--------------- ---------------------
Class A Class B Class A Class B
Shares Shares Shares Shares
------ ------ ------ ------
One Year -5.81% -4.24% -8.31% -6.78%
Five Years 5.22% N/A 5.81% N/A
Ten Years 6.09% N/A N/A N/A
Life of Fund3 N/A 5.82% 6.58% 6.42%

TOTAL RETURN 1, 2

High Yield Fund Fund for Income
--------------- ---------------
Class A Class B Class A Class B
Shares Shares Shares Shares
------ ------ ------ ------
One Year -3.93% -2.11% -3.36% -1.71%
Five Years 44.20% N/A 47.82% N/A
Ten Years 111.37% N/A 121.82% N/A
Life of Fund3 N/A 46.52% N/A 49.28%

Government Fund Investment Grade Fund
--------------- ---------------------
Class A Class B Class A Class B
Shares Shares Shares Shares
------ ------ ------ ------
One Year -5.81% -4.24% -8.31% -6.78%
Five Years 28.96% N/A 32.63% N/A
Ten Years 80.62% N/A N/A N/A
Life of Fund3 N/A 30.59% 73.25% 34.11%

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

39
<PAGE>

1 All Class A total return figures assume the maximum front-end sales charge of
6.25% and dividends reinvested at net asset value. All Class B total return
figures assume the maximum applicable CDSC. Prior to July 1, 1993, the maximum
front-end sales charge was 6.90%. Prior to December 29, 1989, the maximum
front-end sales charge was 7.25% for HIGH YIELD FUND and GOVERNMENT FUND, and
8.50% for FUND FOR INCOME. Prior to December 18, 1990, HIGH YIELD FUND'S
dividends were paid in additional shares at the public offering price.
2 Certain expenses of the Funds have been waived from commencement of operations
through September 30, 1999. Accordingly, return figures are higher than they
would have been had such expenses not been waived.
3 The commencement date for the offering of Class B shares is January 12, 1995.
The inception dates for Class A shares of the funds are as follows: CASH
MANAGEMENT FUND - October 16, 1978; GOVERNMENT FUND - August 6, 1984;
INVESTMENT GRADE FUND - February 19, 1991; FUND FOR INCOME - January 1, 1971;
and HIGH YIELD FUND - August 12, 1986.

Average annual total return and total return may also be based on
investment at reduced sales charge levels or at net asset value. Any quotation
of return not reflecting the maximum sales charge will be greater than if the
maximum sales charge were used. Average annual total return and total return
computed at net asset value for the period ended September 30, 1999 are set
forth in the tables below:

AVERAGE ANNUAL TOTAL RETURN1

High Yield Fund Fund for Income
--------------- ---------------
Class A Class B Class A Class B
SHARES SHARES SHARES SHARES
------ ------ ------ ------
One Year 2.54% 1.89% 3.13% 2.29%
Five Years 8.99% N/A 9.54% N/A
Ten Years 8.46% N/A 9.00% N/A
Life of Fund2 N/A 8.75% N/A 9.18%

Government Fund Investment Grade Fund
--------------- ---------------------
Class A Class B Class A Class B
Shares Shares Shares Shares
------ ------ ------ ------
One Year 0.50% -0.25% -2.22% -2.90%
Five Years 6.58% N/A 7.20% N/A
Ten Years 6.78% N/A N/A N/A
Life of Fund2 N/A 6.17% 6.76%
7.38%

TOTAL RETURN 1

High Yield Fund Fund for Income
--------------- ---------------
Class A Class B Class A Class B
Shares Shares Shares Shares
------ ------ ------ ------
One Year 2.54% 1.89% 3.13% 2.29%
Five Years 53.78% N/A 57.73% N/A
Ten Years 125.29% N/A 136.76% N/A
Life of Fund2 N/A 48.52% N/A 51.28%

40
<PAGE>

Government Fund Investment Grade Fund
--------------- ---------------------
Class A Class B Class A Class B
Shares Shares Shares Shares
------ ------ ------ ------
One Year 0.50% -0.25% -2.22% -2.90%
Five Years 37.53% N/A 41.55% N/A
Ten Years 92.69% N/A N/A N/A
Life of Fund2 N/A 32.59% 36.11%
84.80%
- ----------------------

1 Certain expenses of the Funds have been waived from commencement of operations
through September 30, 1999. Accordingly, return figures are higher than they
would have been had such expenses not been waived.
2 The commencement date for the offering of Class B shares is January 12, 1995
The commencement date for the offering of Class B shares is January 12, 1995.
The inception dates for Class A shares of the funds are as follows: CASH
MANAGEMENT FUND - October 16, 1978; GOVERNMENT FUND - August 6, 1984;
INVESTMENT GRADE FUND - February 19, 1991; FUND FOR INCOME - January 1, 1971;
and HIGH YIELD FUND - August 12, 1986.

Yield is presented for a specified thirty-day period ("base period").
Yield is based on the amount determined by (i) calculating the aggregate amount
of dividends and interest earned by a Fund during the base period less expenses
accrued for that period (net of reimbursement), and (ii) dividing that amount by
the product of (A) the average daily number of shares of the Fund outstanding
during the base period and entitled to receive dividends and (B) the per share
maximum public offering price for Class A shares or the net asset value for
Class B shares of the Fund on the last day of the base period. The result is
annualized by compounding on a semi-annual basis to determine the Fund's yield.
For this calculation, interest earned on debt obligations held by the Fund is
generally calculated using the yield to maturity (or first expected call date)
of such obligations based on their market values (or, in the case of
receivables-backed securities such as GNMA Certificates, based on cost).
Dividends on equity securities are accrued daily at their estimated stated
dividend rates.

For the 30 days ended September 30, 1999, the yield for Class A shares and
Class B shares of HIGH YIELD FUND was 9.16% and 9.07%, respectively. For the 30
days ended September 30, 1999, the yield for Class A and Class B shares of FUND
FOR INCOME was 8.99% and 8.89%, respectively. For the 30 days ended September
30, 1999, the yield for Class A shares and Class B shares of GOVERNMENT FUND was
5.78% and 5.41%, respectively. For the 30 days ended September 30, 1999, the
yield for Class A and Class B shares of INVESTMENT GRADE FUND was 5.70% and
5.37%, respectively. During this period certain expenses of the Funds were
waived. Accordingly, yield is higher than it would have been if such expenses
had not been waived.

The distribution rate for each Fund is presented for a twelve-month
period. It is calculated by adding the dividends for the last twelve months and
dividing the sum by a Fund's offering price per share at the end of that period.
The distribution rate is also calculated by using a Fund's net asset value.
Distribution rate calculations do not include capital gain distributions, if
any, paid. The distribution rate for the twelve-month period ended September 30,
1999 for Class A shares of HIGH YIELD FUND, FUND FOR INCOME, GOVERNMENT FUND AND
INVESTMENT GRADE FUND calculated using the offering price was 8.76%, 9.19%,
5.26% and 5.59%, respectively. The distribution rate for the same period for
Class A shares of the Funds calculated using net asset value was 9.36%, 9.80%,
5.61% and 5.96%, respectively. The distribution rate for the same period for
Class B shares of HIGH YIELD FUND, FUND FOR INCOME, GOVERNMENT FUND AND
INVESTMENT GRADE FUND calculated using net asset value was 8.71%, 9.23%, 4.84%
and 5.22%, respectively. During this period certain expenses of the Funds were
waived. Accordingly, the distribution rates are higher than they would have been
had such expenses not been waived.

41
<PAGE>

ALL FUNDS

Each Fund may include in advertisements and sales literature, information,
examples and statistics to illustrate the effect of compounding income at a
fixed rate of return to demonstrate the growth of an investment over a stated
period of time resulting from the payment of dividends and capital gain
distributions in additional shares. These examples may also include hypothetical
returns comparing taxable versus tax-deferred growth which would pertain to an
IRA, section 403(b)(7) Custodial Account or other qualified retirement program.
The examples used will be for illustrative purposes only and are not
representations by the Fund of past or future yield or return. Examples of
typical graphs and charts depicting such historical performance, compounding and
hypothetical returns are included in Appendix D.

From time to time, in reports and promotional literature, each Fund may
compare its performance to, or cite the historical performance of, Overnight
Government repurchase agreements, U.S. Treasury bills, notes and bonds,
certificates of deposit, and six-month money market certificates or indices of
broad groups of unmanaged securities considered to be representative of, or
similar to, that Fund's portfolio holdings, such as:

Donoghue's Money Fund Average, a published statistic indicating the
performance of money market mutual funds.

Bank Rate Monitor Index, a published statistic indicating a composite
interest rate available through banks on their money market deposit
accounts.

Lipper Analytical Services, Inc. ("Lipper") is a widely-recognized
independent service that monitors and ranks the performance of regulated
investment companies. The Lipper performance analysis includes the
reinvestment of capital gain distributions and income dividends but does
not take sales charges into consideration. The method of calculating total
return data on indices utilizes actual dividends on ex-dividend dates
accumulated for the quarter and reinvested at quarter end.

Morningstar Mutual Funds ("Morningstar"), a semi-monthly publication of
Morningstar, Inc. Morningstar proprietary ratings reflect historical
risk-adjusted performance and are subject to change every month. Funds
with at least three years of performance history are assigned ratings from
one star (lowest) to five stars (highest). Morningstar ratings are
calculated from the funds' three-, five-, and ten-year average annual
returns (when available) and a risk factor that reflects fund performance
relative to three-month Treasury bill monthly returns. Fund's returns are
adjusted for fees and sales loads. Ten percent of the funds in an
investment category receive five stars, 22.5% receive four stars, 35%
receive three stars, 22.5% receive two stars, and the bottom 10% receive
one star.

Salomon Brothers Inc., "Market Performance," a monthly publication which
tracks principal return, total return and yield on the Salomon Brothers
Broad Investment-Grade Bond Index and the components of the Index.

Telerate Systems, Inc., a computer system to which the Adviser subscribes
which daily tracks the rates on money market instruments, public corporate
debt obligations and public obligations of the U.S. Treasury and agencies
of the U.S. Government.

THE WALL STREET JOURNAL, a daily newspaper publication which lists the
yields and current market values on money market instruments, public
corporate debt obligations, public obligations of the U.S. Treasury and
agencies of the U.S. Government as well as common stocks, preferred
stocks, convertible preferred stocks, options and commodities; in addition
to indices prepared by the research departments of such financial
organizations as Lehman Bros., Merrill Lynch, Pierce, Fenner and Smith,
Inc., Credit Suisse First Boston, Salomon Smith Barney, Morgan Stanley
Dean Witter & Co., Goldman, Sachs & Co., Donaldson, Lufkin & Jenrette,

42
<PAGE>

Value Line, Datastream International, HBSC James Capel, Warburg Dillion
Read, County Natwest and UBS UK Limited, including information provided by
the Federal Reserve Board, Moody's, and the Federal Reserve Bank.

Merrill Lynch, Pierce, Fenner & Smith, Inc., "Taxable Bond Indices," a
monthly corporate government index publication which lists principal,
coupon and total return on over 100 different taxable bond indices which
Merrill Lynch tracks. They also list the par weighted characteristics of
each Index.

Lehman Brothers, Inc., "The Bond Market Report," a monthly publication
which tracks principal, coupon and total return on the Lehman Govt./Corp.
Index and Lehman Aggregate Bond Index, as well as all the components of
these Indices.

Reuters, a wire service that frequently reports on global business.

The Consumer Price Index, prepared by the U.S. Bureau of Labor Statistics,
is a commonly used measure of inflation. The Index shows changes in the
cost of selected consumer goods and does not represent a return on an
investment vehicle.

The Credit Suisse First Boston High Yield Index is designed to measure the
performance of the high yield bond market.

The Lehman Brothers Aggregate Index is an unmanaged index which generally
covers the U.S. investment grade fixed rate bond market, including
government and corporate securities, agency mortgage pass-through
securities, and asset-backed securities.

The Lehman Brothers Corporate Bond Index includes all publicly issued,
fixed rate, nonconvertible investment grade dollar-denominated, corporate
debt which have at least one year to maturity and an outstanding par value
of at least $100 million.

The Morgan Stanley All Country World Free Index is designed to measure the
performance of stock markets in the United States, Europe, Canada,
Australia, New Zealand and the developed and emerging markets of Eastern
Europe, Latin America, Asia and the Far East. The index consists of
approximately 60% of the aggregate market value of the covered stock
exchanges and is calculated to exclude companies and share classes which
cannot be freely purchased by foreigners.

The Morgan Stanley World Index is designed to measure the performance of
stock markets in the United States, Europe, Canada, Australia, New Zealand
and the Far East. The index consists of approximately 60% of the aggregate
market value of the covered stock exchanges.

The NYSE composite of component indices--unmanaged indices of all
industrial, utilities, transportation, and finance stocks listed on the
NYSE.

The Russell 2000 Index, prepared by the Frank Russell Company, consists of
U.S. publicly traded stocks of domestic companies that rank from 1000 to
3000 by market capitalization.

The Russell 2500 Index, prepared by the Frank Russell Company, consists of
U.S. publicly traded stocks of domestic companies that rank from 500 to
3000 by market capitalization.

The Salomon Brothers Government Index is a market capitalization-weighted
index that consists of debt issued by the U.S. Treasury and U.S.
Government sponsored agencies.

The Salomon Brothers Mortgage Index is a market capitalization-weighted
index that consists of all agency pass-throughs and FHA and GNMA project
notes.

43
<PAGE>

The Standard & Poor's 400 Mid-Cap Index is an unmanaged
capitalization-weighted index that is generally representative of the U.S.
market for medium cap stocks.

The Standard & Poor's 500 Composite Stock Price Index and the Dow Jones
Industrial Average of 30 stocks are unmanaged lists of common stocks
frequently used as general measures of stock market performance. Their
performance figures reflect changes of market prices and quarterly
reinvestment of all distributions but are not adjusted for commissions or
other costs.

The Standard & Poor's Small-Cap 600 Index is a capitalization-weighted
index that measures the performance of selected U.S. stocks with a small
market capitalization.

The Standard & Poor's Utilities Index is an unmanaged capitalization
weighted index comprising common stock in approximately 41 electric,
natural gas distributors and pipelines, and telephone companies. The Index
assumes the reinvestment of dividends.

From time to time, in reports and promotional literature, performance
rankings and ratings reported periodically in national financial publications
such as MONEY, FORBES, BUSINESS WEEK, BARRON'S, FINANCIAL TIMES and FORTUNE may
also be used. In addition, quotations from articles and performance ratings and
ratings appearing in daily newspaper publications such as THE WALL STREET
JOURNAL, THE NEW YORK TIMES and NEW YORK DAILY NEWS may be cited.

GENERAL INFORMATION

CASH MANAGEMENT FUND was incorporated in the state of Maryland on
July 17, 1978 and March 11, 1983. The 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. The Fund is authorized to issue shares of common stock in such
separate and distinct series and classes of series as the Fund's Board of
Directors shall from time to time establish. The shares of common stock of the
Fund are presently divided into two classes, designated Class A shares and Class
B shares. The Fund does not hold annual shareholder meetings. If requested to do
so by the holders of at least 10% of the Fund's outstanding shares, the Board of
Directors will call a special meeting of shareholders for any purpose, including
the removal of Directors. Each share of the Fund has equal voting rights except
as noted above.

HIGH YIELD FUND and FUND FOR INCOME were incorporated in the state of
Maryland on November 14, 1984 and August 20, 1970, respectively. HIGH YIELD
FUND'S authorized capital stock consists of 500 million shares of common stock,
all of one series, with a par value per share of $0.01. FUND FOR INCOME'S
authorized capital stock consists of 1 billion shares of common stock, all of
one series, with a par value per share of $1.00. 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. Each class of a Fund
represents interests in the same assets of that Fund. 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.

GOVERNMENT FUND was incorporated in the state of Maryland on September 21,
1983. GOVERNMENT FUND'S authorized capital stock consists of 1 billion shares of
common stock, all of one series, with a par value per share of $.01. The Fund is
authorized to issue shares of common stock in such separate and distinct series
and classes of shares as the particular Fund's Board of Directors shall from
time to time establish. The shares of common stock of the Fund are presently
divided into two classes, designated Class A shares and Class B shares. Each
class of the Fund represents interests in the same assets of that Fund. The Fund
does not hold annual shareholder meetings. If requested to do so by the holders
of at least 10% of the Fund's outstanding shares, the Fund's Board of Directors
will call a special meeting of shareholders for any purpose, including the

44
<PAGE>

removal of Directors. Each share of the Fund has equal voting rights except as
noted above.

SERIES FUND is a Massachusetts business trust organized on September 23,
1988. SERIES FUND is authorized to issue an unlimited number of shares of
beneficial interest, no par value, in such separate and distinct series and
classes of shares as the Board of Trustees shall from time to time establish.
The shares of beneficial interest of SERIES FUND are presently divided into five
separate and distinct series, each having two classes, designated Class A shares
and Class B shares. SERIES FUND does not hold annual shareholder meetings. If
requested to do so by the holders of at least 10% of SERIES FUND'S outstanding
shares, SERIES FUND'S Board of Trustees will call a special meeting of
shareholders for any purpose, including the removal of Trustees. Each share of
each Fund has equal voting rights except as noted above.

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

AUDITS AND REPORTS. The accounts of each Fund are audited twice a year by
Tait, Weller & Baker, independent certified public accountants, 8 Penn Center
Plaza, Philadelphia, PA, 19103. Shareholders of each Fund receive semi-annual
and annual reports, including audited financial statements, and a list of
securities owned.

LEGAL COUNSEL. Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036 serves as counsel to the Funds.

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 $5.00 to open an account; $3.00 for each
certificate issued; $.75 per account per month; $10.00 for each legal transfer
of shares; $.45 per account per dividend declared; $5.00 for each exchange of
shares into a Fund; $5.00 for each partial withdrawal or complete liquidation;
$1.00 for each Systematic Withdrawal Plan check; $4.00 for each shareholder
services call; $20.00 for each item of correspondence; and $1.00 per account per
report required by any governmental authority. Additional fees charged to the
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. Efforts to locate a shareholder will be conducted in accordance with
SEC rules and regulations prior to escheatment of funds to the appropriate state
treasury. The Transfer Agent may deduct the costs of its efforts to locate a
shareholder from the shareholder's account. These costs may include a percentage
of the account if a search company charges such a fee in exchange for its
location services. The Transfer Agent is not responsible for any fees that
states and/or their representatives may charge for processing the return of
funds to investors whose funds have been escheated. The Transfer Agent's
telephone number is 1-800-423-4026.

5% SHAREHOLDERS. As of December 31, 1999, The Bank of New York, 48 Wall
Street, New York, NY 10286, Custodian of First Investors Periodic Payment Plans
for Investment In First Investors High Yield Fund, Inc., owned of record 7.8% of
the outstanding Class A shares of HIGH YIELD FUND for beneficial owners of such
Plans and as Custodian of First Investors Single Payment and Periodic Payment
Plans for Investment in First Investors Fund For Income, Inc. owned 22.2% of the
outstanding Class A shares of INCOME FUND for beneficial owners of such Plans.
As of December 31, 1999, The Bank of New York, 48 Wall Street, New York, NY
10286, Custodian First Investors Single Payment and Periodic Payment Plans for
Investment in First Investors Government Fund, Inc., owned of record 18.6% of
the outstanding Class A shares of GOVERNMENT FUND for beneficial owners of such
Plans.

45
<PAGE>

As of December 31, 1999 the following owned of record or beneficially 5%
or more of the outstanding Class A shares of the CASH MANAGEMENT FUND:

SHAREHOLDER % OF SHARES
- ----------- -----------
First Investors Management 8.4
Company, Inc.
95 Wall Street
New York, NY 10005

As of December 31, 1999, the following owned of record or beneficially 5%
or more of the outstanding Class B shares of the CASH MANAGEMENT FUND:

SHAREHOLDER % OF SHARES
- ----------- -----------
Maria L. Nicola Moeller 5.5
John R. Moeller JTWROS
2623 River Road
Point Pleasant Beach, NJ
08742

Wheeling Distribution 7.5
Center
FBO Dan Shay
22 Hamilton Avenue
Wheeling, WV 26003

Dean Deuster 6.1
9004 Kerrydale Ct.
Springfield, VA 22152

Estate of Hazel E.K. 11.5
Carberry
Freda L. Williams,
Executrix
c/o Koromilas & Koromilas Esq.
466 Central Avenue
Dover, NH 03820

SHAREHOLDER LIABILITY. SERIES FUND, INVESTMENT GRADE FUND is organized as
an entity known as a "Massachusetts business trust." Under Massachusetts law,
shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of INVESTMENT GRADE FUND. The Declaration
of Trust however, contains an express disclaimer of shareholder liability for
acts or obligations of INVESTMENT GRADE FUND and requires that notice of such
disclaimer be given in each agreement, obligation, or instrument entered into or
executed by the Fund or the Trustees. The Fund's Declaration of Trust provides
for indemnification out of the property of the Fund of any shareholder held
personally liable for the obligations of INVESTMENT GRADE FUND. The Declaration
of Trust also provides that the Fund shall, upon request, assume the defense of
any claim made against any shareholder for any act or obligation of the Fund and
satisfy any judgment thereon. Thus, the risk of a shareholder's incurring
financial loss on account of shareholder liability is limited to circumstances
in which the Fund itself would be unable to meet its obligations. The Adviser
believes that, in view of the above, the risk of personal liability to
shareholders is immaterial and extremely remote. The Declaration of Trust
further provides that the Trustees will not be liable for errors of judgment or
mistakes of fact or law, but nothing in the Declaration of Trust protects a
Trustee against any liability to which he would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of his office. INVESTMENT GRADE FUND may have
an obligation to indemnify Trustees and officers with respect to litigation.

TRADING BY PORTFOLIO MANAGERS AND OTHER ACCESS PERSONS. Pursuant to
Section 17(j) of the 1940 Act and Rule 17j-1 thereunder, the Funds, the Adviser
and the Distributor have adopted Codes of Ethics restricting personal securities
trading by portfolio managers and other access persons of the Funds. Among other

46
<PAGE>

things, such persons, except the Directors: (a) must have all non-exempt trades
pre-cleared; (b) are restricted from short-term trading; (c) must provide
duplicate statements and transactions confirmations to a compliance officer; and
(d) are prohibited from purchasing securities of initial public offerings.

47
<PAGE>

APPENDIX A

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.

A Debt rated "A" has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

BB, B, CCC, CC, C Debt rated "BB," "B," "CCC," "CC" and "C" is regarded,
on balance, as predominantly speculative with respect to capacity to pay
interest and repay principal. "BB" indicates the least degree of speculation and
"C" the highest. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.

BB Debt rated "BB" has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The "BB"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BBB-" rating.

48
<PAGE>

B Debt rated "B" has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
"BB" or "BB-" rating.

CCC Debt rated "CCC" has a currently identifiable vulnerability to default
and is dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The "CCC" rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
"B" or "B-" rating.

CC The rating "CC" typically is applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC" rating.

C The rating "C" typically is applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC-" debt rating. The "C" rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.

CI The rating "CI" is reserved for income bonds on which no interest is
being paid.

D Debt rated "D" is in payment default. The "D" rating category is used
when interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The "D" rating also will be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

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.

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.

A Bonds which are rated "A" possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the future.

Baa Bonds which are rated "Baa" are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba Bonds which are rated "Ba" are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

49
<PAGE>

B Bonds which are rated "B" generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.

Caa Bonds which are rated "Caa" are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.

Ca Bonds which are rated "Ca" represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.

C Bonds which are rated "C" are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

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.

50
<PAGE>

APPENDIX B

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.

MOODY'S INVESTORS SERVICE, INC.

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

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

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

51
<PAGE>

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.

52
<PAGE>

APPENDIX D

[The following tables are represented as graphs in the printed document.]

The following graphs and chart illustrate hypothetical returns:

INCREASE RETURNS

This graph shows over a period of time even a small increase in returns can make
a significant difference. This assumes a hypothetical investment of $10,000.

Years 10% 8% 6% 4%
----- ------- ------ ------ ------
5 16,453 14,898 13,489 12,210
10 27,070 22,196 18,194 14,908
15 44,539 33,069 24,541 18,203
20 73,281 49,268 33,102 22,226
25 120,569 73,402 44,650 27,138

INCREASE INVESTMENT

This graph shows the more you invest on a regular basis over time, the more you
can accumulate. this assumes monthly installment with a constant hypothetical
return rate of 8%.

Years $100 $250 $500 $1,000
----- ------ ------- ------- -------
5 7,348 18,369 36,738 73,476
10 18,295 43,736 91,473 182,946
15 34,604 86,509 173,019 346,038
20 58,902 147,255 294,510 589,020
25 95,103 237,757 475,513 951,026

D-1
<PAGE>

[The following table is represented as a graph in the printed document.]

This chart illustrates the time value of money based upon the following
assumptions:

If you invested $2,000 each year for 20 years, starting at 25, assuming a 9%
investment return, you would accumulate $573,443 by the time you reach age 65.
However, had you invested the same $2,000 each year for 20 years, at that rate,
but waited until age 35, you would accumulate only $242,228 - a difference of
$331,215.

25 years old .............. 573,443
35 years old .............. 242,228
45 years old .............. 103,320

For each of the above graphs and chart it should be noted that systematic
investment plans do not assume a profit or protect against loss in declining
markets. Investors should consider their financial ability to continue purchases
through periods of both high and low price levels. Figures are hypothetical and
for illustrative purposes only and do not represent any actual investment or
performance. The value of a shareholder's investment and return may vary.

D-2
<PAGE>

[The following table is represented as a chart in the printed document.]

The following chart illustrates the historical performance of the Dow Jones
Industrial Average from 1928 through 1996.

1928 .................. 300.00
1929 .................. 248.48
1930 .................. 164.58
1931 .................. 77.90
1932 .................. 59.93
1933 .................. 99.90
1934 .................. 104.04
1935 .................. 144.13
1936 .................. 179.90
1937 .................. 120.85
1938 .................. 154.76
1939 .................. 150.24
1940 .................. 131.13
1941 .................. 110.96
1942 .................. 119.40
1943 .................. 136.20
1944 .................. 152.32
1945 .................. 192.91
1946 .................. 177.20
1947 .................. 181.16
1948 .................. 177.30
1949 .................. 200.10
1950 .................. 235.40
1951 .................. 269.22
1952 .................. 291.89
1953 .................. 280.89
1954 .................. 404.38
1955 .................. 488.39
1956 .................. 499.46
1957 .................. 435.68
1958 .................. 583.64
1959 .................. 679.35
1960 .................. 615.88
1961 .................. 731.13
1962 .................. 652.10
1963 .................. 762.94
1964 .................. 874.12
1965 .................. 969.25
1966 .................. 785.68
1967 .................. 905.10
1968 .................. 943.75
1969 .................. 800.35
1970 .................. 838.91
1971 .................. 890.19
1972 .................. 1,020.01
1973 .................. 850.85
1974 .................. 616.24
1975 .................. 858.71
1976 .................. 1,004.65
1977 .................. 831.17
1978 .................. 805.01
1979 .................. 838.74
1980 .................. 963.98
1981 .................. 875.00
1982 .................. 1,046.55
1983 .................. 1,258.64
1984 .................. 1,211.56
1985 .................. 1,546.67
1986 .................. 1,895.95
1987 .................. 1,938.80
1988 .................. 2,168.60
1989 .................. 2,753.20
1990 .................. 2,633.66
1991 .................. 3,168.83
1992 .................. 3,301.11
1993 .................. 3,754.09
1994 .................. 3,834.44
1995 .................. 5,000.00
1996 .................. 6,000.00

The performance of the Dow Jones Industrial Average is not indicative of
the performance of any particular investment. It does not take into account fees
and expenses associated with purchasing mutual fund shares. Individuals cannot
invest directly in any index. Please note that past performance does not
guarantee future results.

D-3
<PAGE>

[The following table is represented as a chart in the printed document.]

The following chart shows that inflation is constantly eroding the value of your
money.

THE EFFECTS OF INFLATION OVER TIME

1966 ....................... 96.61836
1967 ....................... 93.80423
1968 ....................... 89.59334
1969 ....................... 84.36285
1970 ....................... 79.88906
1971 ....................... 77.33694
1972 ....................... 74.79395
1973 ....................... 68.80768
1974 ....................... 61.27131
1975 ....................... 57.31647
1976 ....................... 54.63915
1977 ....................... 51.20820
1978 ....................... 46.98000
1979 ....................... 41.46514
1980 ....................... 36.85790
1981 ....................... 33.84564
1982 ....................... 32.60659
1983 ....................... 31.41290
1984 ....................... 30.23378
1985 ....................... 29.12696
1986 ....................... 28.81005
1987 ....................... 27.59583
1988 ....................... 26.43279
1989 ....................... 25.27035
1990 ....................... 23.81748
1991 ....................... 23.10134
1992 ....................... 22.45028
1993 ....................... 21.86006
1994 ....................... 21.28536
1995 ....................... 20.76620
1996 ....................... 20.16135

1996 ....................... 100.00
1997 ....................... 103.00
1998 ....................... 106.00
1999 ....................... 109.00
2000 ....................... 113.00
2001 ....................... 116.00
2002 ....................... 119.00
2003 ....................... 123.00
2004 ....................... 127.00
2005 ....................... 130.00
2006 ....................... 134.00
2007 ....................... 138.00
2008 ....................... 143.00
2009 ....................... 147.00
2010 ....................... 151.00
2011 ....................... 156.00
2012 ....................... 160.00
2013 ....................... 165.00
2014 ....................... 170.00
2015 ....................... 175.00
2016 ....................... 181.00
2017 ....................... 186.00
2018 ....................... 192.00
2019 ....................... 197.00
2020 ....................... 203.00
2021 ....................... 209.00
2022 ....................... 216.00
2023 ....................... 222.00
2024 ....................... 229.00
2025 ....................... 236.00
2026 ....................... 243.00

Inflation erodes your buying power. $100 in 1966, could purchase five times the
goods and service as in 1996 ($100 vs. $20).* Projecting inflation at 3%, goods
and services costing $100 today will cost $243 in the year 2026.

* Source: Consumer Price Index, U.S. Bureau of Labor Statistics.

D-4
<PAGE>

[The following tables are represented as graphs in the printed document.]

This chart illustrates that historically, the longer you hold onto stocks, the
greater chance that you will have a positive return.

1926 through 1996*

Total Number of Percentage of
Number of Positive Positive
Rolling Period Periods Periods Periods
-------------- ------- ------- -------
1-Year 71 51 72%
5-Year 67 60 90%
10-Year 62 60 97%
15-Year 57 57 100%
20-Year 52 52 100%

The following chart shows the compounded annual return of large company stocks
compared to U.S. Treasury Bills and inflation over the most recent 15 year
period. **

Compound Annual Return from 1982 -- 1996*

Inflation ..................... 3.55
U.S. Treasury Bills ........... 6.50
Large Company Stocks .......... 16.79

The following chart illustrates for the period shown that long-term corporate
bonds have outpaced U.S. Treasury Bills and inflation.

Compound Annual Return from 1982 -- 1996*

Inflation ..................... 3.55
U.S. Treasury Bills ........... 6.50
Long-Term Corp. bonds ......... 13.66

* Source: Used with permission. (c)1997 Ibbotson Associates, Inc. All rights
reserved. [Certain provisions of this work were derived from copyrighted
works of Roger G. Ibbotson and Rex Sinquefield.]

** Please note that U.S. Treasury bills are guaranteed as to principal and
interest payments (although the funds that invest in them are not), while
stocks will fluctuate in share price. Although past performance cannot
guarantee future results, returns of U.S. Treasury bills historically have
not outpaced inflation by as great a margin as stocks.

D-5
<PAGE>

The accompanying table illustrates that if you are in the 36% tax bracket, a
tax-free yield of 3% is actually equivalent to a taxable investment earning
4.69%.

Your Taxable Equivalent Yield

Your Federal Tax Bracket
---------------------------------------------

28.0% 31.0% 36.0% 39.6%
your tax-free yield
3.00% 4.17% 4.35% 4.69% 4.97%
3.50% 4.86% 5.07% 5.47% 5.79%
4.00% 5.56% 5.80% 6.25% 6.62%
4.50% 6.25% 6.52% 7.03% 7.45%
5.00% 6.94% 7.25% 7.81% 8.25%
5.50% 7.64% 7.97% 8.59% 9.11%

This information is general in nature and should not be construed as tax advice.
Please consult a tax or financial adviser as to how this information affects
your particular circumstances.

D-6
<PAGE>

[The following table is represented as a graph in the printed document.]

The following graph illustrates how income has affected the gains from stock
investments since 1965.

S&P 500 Dividends Reinvested S&P 500 Principal Only

12/31/64 10,000 10,000
12/31/65 11,269 10,906
12/31/66 10,115 9,478
12/31/67 12,550 11,383
12/31/68 13,948 12,255
12/31/69 12,795 10,863
12/31/70 13,299 10,873
12/31/71 15,200 12,046
12/31/72 18,088 13,929
12/31/73 15,431 11,510
12/31/74 11,346 8,090
12/31/75 15,570 10,642
12/31/76 19,296 12,680
12/31/77 17,915 11,221
12/31/78 19,092 11,340
12/31/79 22,645 12,736
12/31/80 30,004 16,019
12/31/81 28,528 14,460
12/31/82 34,674 16,595
12/31/83 42,496 19,461
12/31/84 45,161 19,733
12/31/85 59,489 24,930
12/31/86 70,594 28,575
12/31/87 74,301 29,154
12/31/88 86,641 32,769
12/31/89 114,093 41,699
12/31/90 110,549 38,964
12/31/91 144,230 49,214
12/31/92 155,218 51,411
12/31/93 170,863 55,039
12/31/94 173,120 54,191
12/31/95 238,175 72,676
12/31/96 292,863 87,403
11/30/97 383,977 112,732

Source: First Investors Management Company, Inc. Standard & Poor's is a
registered trademark. The S&P 500 is an unmanaged index comprising 500 common
stocks spread across a variety of industries. The total returns represented
above compare the impact of reinvestment of dividends and illustrates past
performance of the index. The performance of any index is not indicative of the
performance of a particular investment and does not take into account the
effects of inflation or the fees and expenses associated with purchasing mutual
fund shares. Individuals cannot invest directly in any index. Mutual fund shares
will fluctuate in value, therefore, the value of your original investment and
your return may vary. Moreover, past performance is no guarantee of future
results.

D-7

<PAGE>

FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1999

Registrants incorporate by reference the financial statements and report of
independent accountants contained in the annual reports to shareholders for the
fiscal year ended September 30, 1999 electronically filed with the Commission on
December 6, 1999 (Accession Number: 0000912057-99-008417).

54
<PAGE>

A Guide to Your
First Investors
Mutual Fund Account

as of January 11, 2000

INTRODUCTION
Investing in mutual funds doesn't have to be complicated. Your registered
representative is available to answer your questions and help you process your
transactions. First Investors offers personalized service and a wide variety of
mutual funds. In the event you wish to process a transaction directly, the
material provided in this easy-to-follow guide tells you how to contact us and
explains our policies and procedures. Please note that there are special rules
for money market funds.

Please read this manual completely to gain a better understanding of how shares
are bought, sold, exchanged, and transferred. In addition, the manual provides
you with a description of the services we offer to simplify investing. The
services, privileges and fees referenced in this manual are subject to change.
You should call our Shareholder Services Department at 1 (800) 423-4026 before
initiating any transaction.

This manual must be preceded or accompanied by a First Investors mutual fund
prospectus. For more complete information on any First Investors Fund, including
charges and expenses, refer to the prospectus. Read the prospectus carefully
before you invest or send money.

Principal Underwriter
First Investors Corporation
95 Wall Street
New York, NY 10005
1-212-858-8000
Transfer Agent
Administrative Data Management Corp.
581 Main Street
Woodbridge, NJ 07095
1-800-423-4026
TABLE OF CONTENTS
HOW TO BUY SHARES
To Open an Account................1
To Open a Retirement Account........2
Minimum Initial Investment..........2
Additional Investments..............2
Acceptable Forms of Payment.........2
Share Classes.......................2
Share Class Specification...........3
Class A Shares......................3
Class B Shares......................5
How to Pay..........................6
HOW TO SELL SHARES
Written Redemptions.................9

<PAGE>

Telephone Redemptions...............9
Electronic Funds Transfer...........9
Systematic Withdrawal Plans.........10
Expedited Wire Redemptions..........10

HOW TO EXCHANGE SHARES
Exchange Methods....................11
Exchange Conditions.................12
Exchanging Funds with
Automatic Investments or
Systematic Withdrawals..............12

WHEN AND HOW
FUND SHARES ARE PRICED..............13

HOW PURCHASE,
REDEMPTION AND
EXCHANGE ORDERS ARE
PROCESSED AND PRICED.................13
SPECIAL RULES FOR MONEY
MARKET FUNDS ........................14

RIGHT TO REJECT PURCHASE
OR EXCHANGE ORDERS...................15

SIGNATURE GUARANTEE
POLICY .............................15

TELEPHONE SERVICES
Telephone Exchanges
and Redemptions......................16
Shareholder Services.................17

OTHER SERVICES.......................18

ACCOUNT STATEMENTS
Transaction Confirmation Statements..20
Master Account Statements 20
Annual and Semi-Annual Reports.......20

DIVIDENDS AND DISTRIBUTIONS
Dividends and Distributions..........21
Buying a Dividend....................21

TAX FORMS ..........................22
THE OUTLOOK..........................22

<PAGE>

HOW TO BUY SHARES
First Investors offers a wide variety of mutual funds to meet your financial
needs ("FI Funds"). Your registered representative will review your financial
objectives and risk tolerance, explain our product line and services, and help
you select the right investments. Call our Shareholder Services Department at 1
(800) 423-4026 or visit us on-line at www.firstinvestors.com for more
information.

TO OPEN AN ACCOUNT
Before investing, you must establish an account with your broker-dealer. At
First Investors Corporation ("FI") you do this by completing and signing a
Master Account Agreement ("MAA"). Some types of accounts require additional
paperwork.* After you determine the fund(s) you want to purchase, deliver your
completed MAA and your check, made payable to First Investors Corporation, to
your registered representative. New client accounts must be established through
your registered representative.

NON-RETIREMENT
ACCOUNTS

We offer a variety of different "non-retirement" accounts, which is the term we
use to describe all accounts other than retirement accounts.

INDIVIDUAL ACCOUNTS. These accounts may be opened by any adult individual.
Telephone privileges are automatically available, unless they are declined.

JOINT ACCOUNTS. For any account with two or more owners, all owners must
sign requests to process transactions. Telephone privileges allow any one of
the owners to process transactions independently.

GIFTS AND TRANSFERS TO MINORS. Custodial accounts for a minor may be established
under your state's Uniform Gifts/Transfers to Minors Act. Custodial accounts are
registered under the minor's social security number.

TRUSTS. A trust account may be opened only if you have a valid written trust
document.

TRANSFER ON DEATH (TOD). TOD registrations, available on all FI Funds in all
states, allow individual and joint account owners to name one or more
beneficiaries. The ownership of the account passes to the named beneficiaries in
the event of the death of all account owners.

* ADDITIONAL PAPERWORK REQUIRED FOR CERTAIN ACCOUNTS.

TYPE OF ACCOUNT ADDITIONAL DOCUMENTS REQUIRED

Corporations First Investors Certificate of Authority
Partnership
& Trusts

Transfer On Death First Investors TOD Registration Request Form
(TOD)

Estates Original or Certified Copy of Death Certificate
Certified Copy of Letters Testamentary/Administration
First Investors Executor's Certification & Indemnification Form

Conservatorships Certified copy of court document appointing Conservator/
& Guardianships Guardian

<PAGE>

RETIREMENT ACCOUNTS
We offer the following types of retirement plans for individuals and employers:

INDIVIDUAL RETIREMENT ACCOUNTS including Roth, Traditional, and Rollover IRAs.

SIMPLE IRAS for employers.

SEP-IRAS (SIMPLIFIED EMPLOYEE PENSION PLANS) for small business owners or people
with income from self-employment. SARSEP-IRAs are available as trustee to
trustee transfers.

403(B)(7) accounts for employees of eligible tax-exempt organizations such as
schools, hospitals and charitable organizations.

401(K) plans for employers.

MONEY PURCHASE PENSION
& PROFIT SHARING plans for sole proprietors and partnerships.

Currently, there are no annual service fees chargeable to a participant in
connection with an IRA, SEP-IRA, SARSEP-IRA or SIMPLE-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, SARSEP-IRA or SIMPLE-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.
(First Financial Savings Bank will change its name to First Investors Federal
Savings Bank.)

For more information about these plans call your registered representative or
our Shareholder Services Department at
1 (800) 423-4026.

MINIMUM INITIAL
INVESTMENT
Your initial investment in a non-retirement fund account may be as little as
$1,000. The minimum is waived if you use one of our Automatic Investment
Programs (see How to Pay) or if you open a Fund account through a full exchange
from another FI Fund. You can open a First Investors Traditional IRA or Roth IRA
with as little as $500. Other retirement accounts may have lower initial
investment requirements at the Fund's discretion.

ADDITIONAL INVESTMENTS
Once you have established an account, you can add to it through your
registered representative or by sending us a check directly. There is no
minimum requirement on additional purchases into existing fund accounts.
Remember to include your FI Fund account number on your check made payable to
First Investors Corporation.
Mail checks to:
FIRST INVESTORS CORPORATION
ATTN: DEPT. CP
581 MAIN STREET
WOODBRIDGE, NJ 07095-1198

ACCEPTABLE FORMS OF PAYMENT The following forms of payment are acceptable:

- -checks made payable to First Investors Corporation.

- -Money Line and Automatic Payroll Investment electronic funds transfers.

- -Federal Funds wire transfers.

<PAGE>

For your protection, never give your registered representative cash or a check
made payable to your registered representative.

We DO NOT accept:

- -Third party checks.
- -Traveler's checks.
- -Checks drawn on non-US banks.
- -Money orders.
- -Cash.

SHARE CLASSES
All FI Funds are available in Class A and Class B shares. Direct purchases into
Class B share money market accounts are not accepted. Class B money market fund
shares may only be acquired through an exchange from another Class B share
account or through Class B share dividend cross-reinvestment.

Each class of shares has its own cost structure. As a result, different classes
of shares in the same fund generally have different prices. Class A shares have
a front-end sales charge. Class B shares may have a contingent deferred sales
charge ("CDSC"). While both classes have a Rule 12b-1 fee, the fee on Class B
shares is generally higher. The principal advantages of Class A shares are that
they have lower overall expenses, the availability of quantity discounts on
sales charges, and certain account privileges that are not offered on Class B
shares. The principal advantage of Class B shares is that all your money is put
to work from the outset. Your registered representative can help you decide
which class of shares is best for you.

SHARE CLASS SPECIFICATION
It's very important to specify which class of shares you wish to purchase when
you open a new account. All First Investors account applications have a place to
designate your selection. If you do not specify which class of shares you want
to purchase, Class A shares will automatically be purchased.

CLASS A SHARES
When you buy Class A shares, you pay the offering price - the net asset value of
the fund plus a front-end sales charge. The front-end sales charge declines with
larger investments.

CLASS A SALES CHARGES

AS A % OF AS A % OF YOUR
YOUR INVESTMENT OFFERING PRICE INVESTMENT
up to $24,999 6.25% 6.67%
$25,000 - $49,999 5.75% 6.10%
$50,000 - $99,999 5.50% 5.82%
$100,000 - $249,999 4.50% 4.71%
$250,000 - $499,999 3.50% 3.63%
$500,000 - $999,999 2.50% 2.56%
$1,000,000 or more 0%* 0%*

* If you invest $1,000,000 or more in Class A shares, you will not pay a
front-end sales charge. However, if you make such an investment and then sell
your shares within 24 months of purchase, you will pay a contingent deferred
sales charge ("CDSC") of 1.00%.

Generally, you should consider purchasing Class A shares if you plan to
invest $250,000 or more either initially or over time.
SALES CHARGE WAIVERS
& REDUCTIONS ON CLASS A SHARES:

<PAGE>

If you qualify for one of the sales charge reductions or waivers, it is very
important to let us know at the time you place your order. Include a written
statement with your check explaining which privilege applies. If you do not
include this statement we cannot guarantee that you will receive the reduction
or waiver.

CLASS A SHARES MAY BE PURCHASED WITHOUT A SALES CHARGE: 1: By an officer,
trustee, director, or employee of the Fund, the Fund's adviser or subadviser,
First Investors Corporation, or any affiliates of First Investors Corporation,
or by his/her spouse, child (under age 21) or grandchild (under age 21).

2: By a former officer, trustee, director, or employee of the Fund, First
Investors Corporation, or their affiliates or by his/her spouse, child (under
age 21) or child under UTMA/UGMA provided the person worked for the company for
at least 5 years and retired or terminated employment in good standing.

3: By a FI registered representative or an authorized dealer, or by his/her
spouse, child (under age 21) or grandchild (under age 21).

4: When Class A share fund distributions are reinvested in Class A shares.

5: When Class A share Systematic Withdrawal Plan payments are reinvested in
Class A shares (except for certain payments from money market accounts which may
be subject to a sales charge).

6: When qualified retirement plan loan repayments are reinvested in Class A
shares.

7: With the liquidation proceeds from a First Investors Life Variable Annuity
Fund A, C, or D contracts or First Investors Single Premium Retirement Annuity
contract within one year of the contract's maturity date.

8: When dividends (at least $50 a year) from a First Investors Life Insurance
Company policy are invested into an EXISTING account.

9: When a group qualified plan (401(k) plans, money purchase pension plans,
profit sharing plans and 403(b) plans that are subject to Title I of ERISA) is
reinvesting redemption proceeds from another fund on which a sales charge or
CDSC was paid.

10: With distribution proceeds from a First Investors group qualified plan
account into an IRA.

11: By participant directed group qualified plans with 100 or more eligible
employees or $1,000,000 or more in assets.

12: In amounts of $1 million or more.

13: By individuals under a Letter of Intent or Cumulative Purchase Privilege of
$1 million or more.

FOR ITEMS 9 THROUGH 13 ABOVE: A CDSC OF 1.00% WILL BE DEDUCTED IF SHARES ARE
REDEEMED WITHIN 2 YEARS OF PURCHASE.

SALES CHARGES ON CLASS A SHARES MAY BE REDUCED FOR:
1: Participant directed group qualified retirement plans with 99 or fewer
eligible employees. The initial sales charge is reduced to 3.00% of the offering
price.

2: Certain unit trust holders ("unitholders") who elect to invest the entire
amount of principal, interest, and/or capital gains distributions from their
unit investment trusts in Class A shares. Unitholders of various series of New
York Insured Municipals-Income Trust sponsored by Van Kampen Merrit, Inc.,
unitholders of various series of the Multistate Tax Exempt Trust sponsored by
Advest Inc., and unitholders of various series of the Insured Municipal Insured
National Trust, J.C. Bradford & Co. as agent, may buy Class A shares of a FI
Fund with unit trust distributions at the net asset value plus a sales charge of
1.5%. Unitholders of various tax-exempt trusts, other than the New York Trust,
sponsored by Van Kampen Merritt Inc. may buy Class A shares of a FI Fund at the
net asset value plus a sales charge of 1.0%.

<PAGE>

Unitholders may make additional purchases, other than those made by unit trust
distributions, at the Fund's regular offering price.

+ CUMULATIVE PURCHASE PRIVILEGE
The Cumulative Purchase Privilege lets you add the value of all your existing FI
Fund accounts (Class A and Class B shares) to the amount of your next Class A
share investment to reach sales charge discount breakpoints. The Cumulative
Purchase Privilege lets you add the values of all of your existing FI Fund
accounts (except for amounts that have been invested directly in Cash Management
or Tax Exempt Money Market accounts on which no sales charge was previously
imposed) to the amount of your next Class A share investment in determining
whether you are entitled to a sales charge discount. While sales charge
discounts are available only on Class A shares, we will also include any Class B
shares you may own in determining whether you have achieved a discount level.
For example, if the combined current value of your existing FI Fund accounts is
$25,000 (measured by offering price), your next purchase will be eligible for a
sales charge discount at the $25,000 level. Cumulative Purchase discounts are
applied to purchases as indicated in the first column of the Class A Sales
Charge table.

All your accounts registered with the same social security number will be linked
together under the Cumulative Purchase Privilege. Your spouse's accounts and
custodial accounts held for minor children residing at your home

can also be linked to your accounts upon request.

- -Conservator accounts are linked to the social security number of the ward,
not the conservator.

- -Sole proprietorship accounts are linked to personal/family accounts only if the
account is registered with a social security number, not an employer
identification number ("EIN").

- -Testamentary trusts and living trusts may be linked to other accounts
registered under the same trust EIN, but not to the personal accounts of the
trustee(s).

-Estate accounts may only be linked to other accounts registered under the same
EIN of the estate or social security number of the decedent.

-Church and religious organizations may link accounts to others registered with
the same EIN but not to the personal accounts of any member.

+ LETTER OF INTENT
A Letter of Intent ("LOI") lets you purchase Class A shares at a discounted
sales charge level even though you do not yet have sufficient investments to
qualify for that discount level. An LOI is a commitment by you to invest a
specified dollar amount during a 13 month period. The amount you agree to invest
determines the sales charge you pay. Under an LOI, you can reduce the initial
sales charge on Class A share purchases based on the total amount you agree to
invest in both Class A and Class B shares during the 13 month period. Purchases
made 90 days before the date of the LOI may be included, in which case the 13
month period begins on the date of the first purchase. Your LOI can be amended
in two ways. First, you may file an amended LOI to raise or lower the LOI amount
during the 13 month period. Second, your LOI will be automatically amended if
you invest more than your LOI amount during the 13 month period and qualify for
an additional sales charge reduction. Amounts invested in the Cash Management or
Tax Exempt Money Market Funds are not counted toward an LOI.

By purchasing under an LOI, you acknowledge and agree to the following:

- -You authorize First Investors to reserve 5% of your total intended investment
in shares held in escrow in your name until the LOI is completed.

- -First Investors is authorized to sell any or all of the escrow shares to
satisfy any additional sales charges owed in the event you do not fulfill the
LOI.

- -Although you may exchange all your shares, you may not sell the reserve shares
held in escrow until you fulfill the LOI or pay the higher sales charge.
<PAGE>

CLASS B SHARES
Class B shares are sold without an initial sales charge, putting all your money
to work for you immediately. If you redeem Class B shares within 6 years of
purchase, a CDSC will be imposed. The CDSC declines from 4% to 0% over a 6-year
period, as shown in the chart below. Class B share money market fund shares are
not sold directly. They can only be acquired through an exchange from another
Class B fund account or through cross reinvestment of dividends from another
Class B share account. Class B shares, and the dividend and distribution shares
they earn, automatically convert to Class A shares after 8 years, reducing
future annual expenses.

Generally, you should consider purchasing Class B shares if you intend to invest
less than $250,000 and you would rather pay higher ongoing expenses than an
initial sales charge.

CLASS B SALES CHARGES

THE CDSC DECLINES OVER TIME AS SHOWN IN THE TABLE BELOW:

YEAR 1 2 3 4 5 6 7+

CDSC 4% 4% 3% 3% 2% 1% 0%

If shares redeemed are subject to a CDSC, the CDSC will be based on the lesser
of the original purchase price or redemption price. There is no CDSC on shares
acquired through dividend and capital gains reinvestment. We call these "free
shares."

Anytime you sell shares, your shares will be redeemed in the following manner to
ensure that you pay the lowest possible CDSC:

First-Class B shares representing dividends and capital gains that are not
subject to a CDSC.

Second-Class B shares held more than six years which are not subject to a CDSC.

Third-Class B shares held longest which will result in the lowest CDSC.

For purposes of calculating the CDSC, all purchases made during the calendar
month are deemed to have been made on the first business day of the month at the
average cost of the shares purchased during that period.

SALES CHARGE WAIVERS ON
CLASS B SHARES:
The CDSC on Class B shares does not apply to:

1: Appreciation on redeemed shares above their original purchase price and
shares acquired through dividend or capital gains distributions.

2: Redemptions due to the death or disability (as defined in Section 72(m)(7) of
the Internal Revenue Code) of an account owner. Redemptions following the death
or disability of one joint owner of a joint account are not deemed to be as the
result of death or disability.

3: Distributions from employee benefit plans due to plan termination.

4: Redemptions to remove an excess contribution from an IRA or qualified
retirement plan.

5: Distributions upon reaching required minimum age 70 1/2 provided you have
held the shares for at least three years.

6: Annual redemptions of up to 8% of your account's value redeemed by a
Systematic Withdrawal Plan. Free shares not subject to a CDSC will be redeemed
first and will count towards the 8% limit.

<PAGE>

7: Shares redeemed from advisory accounts managed by or held by the Fund's
investment advisor or any of its affiliates.

8: Tax-free returns of excess contributions from employee benefit plans.

9: Redemptions of non-retirement shares purchased with proceeds from the sale of
shares of another fund group between April 29, 1996 and June 30, 1996 that did
not pay a sales charge (other than money market fund accounts or retirement plan
accounts).

10: Redemptions by the Fund when the account falls below the minimum.

11: Redemptions to pay account fees.

Include a written statement with your redemption request explaining which
exemption applies. If you do not include this statement we cannot guarantee that
you will receive the waiver.

HOW TO PAY
You can invest using one or more of the following options:

+ CHECK:
You can buy shares by writing a check payable to First Investors Corporation. If
you are opening a new fund account, your check must meet the fund minimum. When
making purchases to an existing account, remember to include your fund account
number on your check.

AUTOMATIC INVESTMENTS:
We offer several automatic investment
programs to simplify investing.

+ MONEY LINE:
With our Money Line program, you can invest in a FI fund account with as little
as $50 a month or $600 each year by transferring funds electronically from your
bank account. You can invest up to $50,000 a month through Money Line.

Money Line allows you to select the payment amount and frequency that is best
for you. You can make automatic investments bi-weekly, semi-monthly, monthly,
quarterly, semi-annually, or annually.

The date you select as your Money Line investment date is the date on which
shares will be purchased. THE PROCEEDS MUST BE AVAILABLE IN YOUR BANK ACCOUNT
TWO BUSINESS DAYS PRIOR TO THE INVESTMENT DATE.

HOW TO APPLY:
1: Complete the Electronic Funds Transfer ("EFT") section of the application to
provide complete bank information and authorize EFT fund share purchases. Attach
a voided check or account statement. A signature guarantee of all shareholders
and bank account owners is required. PLEASE ALLOW AT LEAST 10 BUSINESS DAYS FOR
INITIAL PROCESSING.

2: Complete the Money Line section of the application to specify the amount,
frequency and date of the investment.

3: Submit the paperwork to your registered representative or send it to:
ADMINISTRATIVE DATA MANAGEMENT CORP.
581 MAIN STREET
WOODBRIDGE, NJ 07095-1198.
HOW TO CHANGE:
Provided you have telephone privileges, you may call Shareholder Services at 1
(800) 423-4026 to:

- -Increase the payment up to $999.99 provided bank and fund account
registrations are the same.

- -Decrease the payment.

- -Discontinue the service.

<PAGE>

To change investment amounts, reallocate or cancel Money Line, you must notify
us at least 3 business days prior to the investment date.

You must send a signature guaranteed written request to Administrative Data
Management Corp. to:

- -Increase the payment to $1,000 or more.

- -Change bank information (a new Money Line Application and voided check or
account statement is required).

A medallion signature guarantee (see Signature Guarantee Policy) is required to
increase a Money Line payment to $25,000 or more. Changing banks or bank account
numbers requires 10 days notice. Money Line service will be suspended upon
notification that all account owners are deceased.

+ AUTOMATIC PAYROLL
INVESTMENT:
With our Automatic Payroll Investment service ("API") you can systematically
purchase shares by salary reduction. To participate, your employer must offer
direct deposit and permit you to electronically transfer a portion of your
salary. Contact your company payroll department to authorize the salary
reductions. If not available, you may consider our Money Line program.

Shares purchased through API are purchased on the day the electronic transfer is
received by the Fund.

HOW TO APPLY:
1: Complete an API Application. If you are receiving a government payment and
wish to participate in the API Program you must also complete the government's
Direct Deposit Sign-up Form. Call Shareholder Services at 1 (800) 423-4026 for
more information.

2: Complete an API Authorization Form.

3: Submit the paperwork to your registered representative or send it to:
ADMINISTRATIVE DATA MANAGEMENT CORP.
581 MAIN STREET
WOODBRIDGE, NJ 07095-1198.

+ WIRE TRANSFERS:
You may purchase shares via a Federal Funds wire transfer from your bank account
into your EXISTING First Investors account. Federal Fund wire transfer proceeds
are not subject to a holding period and are available to you immediately upon
receipt, as long as we have been notified properly.

Shares will be purchased on the day we receive your wire transfer provided that
we have received adequate instructions and you have previously notified us that
the wire is on the way (by calling 1 (800) 423-4026). Your notification must
include the Federal Funds wire transfer confirmation number, the amount of the
wire, and the fund account number to receive same day credit. There are special
rules for money market fund accounts.

To wire Federal Funds to an existing First Investors account (other than money
markets), instruct your bank to wire your investment to:
FIRST FINANCIAL SAVINGS BANK, S.L.A.
ABA # 221272604
ACCOUNT # 0306142
YOUR NAME
YOUR FIRST INVESTORS FUND ACCOUNT #

(First Financial Savings Bank will change its name to First Investors Federal
Savings Bank.)

+ DISTRIBUTION
CROSS-INVESTMENT:

<PAGE>

You can invest the dividends and capital gains from one fund account, excluding
the money market funds, into another fund account in the same class of shares.
The shares will be purchased at the net asset value on the day after the record
date of the distribution.

- -You must invest at least $50 a month or $600 a year into a NEW fund account.

- -A signature guarantee is required if the ownership on both accounts is not
identical.

You may establish a Distribution Cross-Investment service by contacting your
registered representative or calling Shareholder Services at 1 (800) 423-4026.

+ SYSTEMATIC WITHDRAWAL PLAN PAYMENT INVESTMENTS: You can invest Systematic
Withdrawal Plan payments (see How to Sell Shares) from one fund account in
shares of another fund account in the same class of shares. -Payments are
invested without a sales charge. -A signature guarantee is required if the
ownership on both accounts is not
identical.
- -Both accounts must be in the same class of shares. -You must invest at least
$600 a year if into a new fund account. -You can invest on a monthly, quarterly,
semi-annual, or annual basis. Redemptions are suspended upon notification that
all account owners are deceased. Service will recommence upon receipt of written
alternative payment instructions and other required documents from the
decedent's legal representative.

HOW TO SELL SHARES
You can sell your shares on any day the New York Stock Exchange ("NYSE") is open
for regular trading. In the mutual fund industry, a sale is referred to as a
"redemption." Payment of redemption proceeds generally will be made within seven
days. If the shares being redeemed were recently purchased by check or
electronic funds transfer, payment may be delayed to verify that the check or
electronic funds transfer has been honored, which may take up to 15 days from
the date of purchase. Shareholders may not redeem shares by telephone or
electronic funds transfer unless the shares have been owned for at least 15
days.

Redemptions of shares are not subject to the 15 day verification period if the
shares were purchased via:
- -Automatic Payroll Investment.
- -FIC registered representative payroll checks.
- -First Investors Life Insurance Company checks.
- -Federal funds wire payments.

For trusts, estates, attorneys-in-fact, corporations, partnerships, and other
entities, additional documents are required to redeem shares. Call
Shareholder Services at
1 (800) 423-4026 for more information.

WRITTEN REDEMPTIONS
You can write a letter of instruction or contact your registered
representative for a liquidation request form. A written liquidation request
in

good order must include:

<PAGE>

1: The name of the fund;

2: Your account number;

3: The dollar amount, number of shares or percentage of the account you want to
redeem;

4: Share certificates (if they were issued to you);

5: Original signatures of all owners exactly as your account is registered; and

6: Signature guarantees, if required (see Signature Guarantee Policy).

If we are being asked to redeem a retirement account and transfer the proceeds
to another financial institution, we will also require a Letter of Acceptance
from the successor custodian before we effect the redemption.

For your protection, the Fund reserves the right to require additional
supporting legal documentation.

Written redemption requests should be mailed to:
ADMINISTRATIVE DATA MANAGEMENT CORP.
581 MAIN STREET
WOODBRIDGE, NJ 07095-1198.

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.

TELEPHONE REDEMPTIONS

You, or any person we believe is authorized to act on your behalf, may redeem
non-retirement shares which have been owned for at least 15 days by calling our
Special Services Department at 1 (800) 342-6221 from 9:00 a.m. to 4:00 p.m., ET,
provided:

- -Telephone privileges are available for your account registration and you
have not declined telephone privileges (see Telephone Privileges);
- -You do not hold share certificates (issued shares);
- -The redemption check is made payable to the registered owner(s) or
pre-designated bank;
- -The redemption check is mailed to your address of record or predesignated
bank account;
- -Your address of record has not changed within the past 60 days;
- -The redemption amount is $50,000 or less; AND
- -The redemption amount, combined with the amount of all telephone redemptions
made within the previous 30 days does not exceed
$100,000. Telephone redemption orders received between 4:00-5:00p.m. will be
processed on the following business day.
ELECTRONIC FUNDS TRANSFER
The Electronic Funds Transfer ("EFT") service allows you to redeem shares and
electronically transfer proceeds to your bank account.

YOU MUST ENROLL IN THE ELECTRONIC FUNDS TRANSFER SERVICE AND PROVIDE COMPLETE
BANK ACCOUNT INFORMATION BEFORE USING THE PRIVILEGE. Signature guarantees of all
shareholders and all bank account owners are required. Please allow at least 10
business days for initial processing. We will send any proceeds during the
processing period to your address of record. Call your registered representative
or Shareholder Services at 1 (800) 423-4026 for an application. You may call
Shareholder Services or send written instructions to Administrative Data
Management Corp. to request an EFT redemption of shares which have been held at
least 15 days. Each EFT redemption:

1: Must be electronically transferred to your pre-designated bank account;

2: Must be at least $500;

3: Cannot exceed $50,000; and

4: Cannot exceed $100,000 when added to the total amount of all EFT redemptions
made within the previous 30 days.

If your redemption does not qualify for an EFT redemption, your redemption
proceeds will be mailed to your address of record.

<PAGE>

The Electronic Funds Transfer service may also be used to purchase shares (see
Money Line) and transfer systematic withdrawal payments (see Systematic
Withdrawal Plans) and dividend distributions (see Other Services) to your bank
account.

SYSTEMATIC WITHDRAWAL PLANS
Our Systematic Withdrawal Plan allows you to redeem a specific dollar amount,
number of shares, or percentage from your account on a regular basis. Your
payments can be mailed to you or a pre-authorized payee by check, transferred to
your bank account electronically (if you have enrolled in the EFT service) or
invested in shares of another FI fund in the same class of shares through our
Systematic Withdrawal Plan Payment investment service (see How to Buy Shares).

You can receive payments on a monthly, quarterly, semi-annual, or annual basis.
Your account must have a value of at least $5,000 in non-certificated shares
("unissued shares"). The $5,000 minimum account balance is waived for required
minimum distributions from retirement plan accounts, payments to First Investors
Life Insurance Company, and systematic investments into another eligible fund
account. The minimum Systematic Withdrawal Plan payment is $25 (waived for
Required Minimum Distributions on retirement accounts or FIL premium payments).

Once you establish the Systematic Withdrawal Plan, you should not make
additional investments into this account (except money market funds). Buying
shares during the same period as you are selling shares is not advantageous to
you because of sales charges.

If you own Class B shares, you may establish a Systematic Withdrawal Plan and
redeem up to 8% of the value of your account annually without a CDSC.

If you own Class B shares of a retirement account and you are receiving your
Required Minimum Distribution through a Systematic Withdrawal Plan, up to 8% of
the value of your account may be redeemed annually without a CDSC. However, if
your Required Minimum Distribution exceeds the 8% limit, the applicable CDSC
will be charged if the additional shares were held less than 3 years and you
have not reached age 701/2.

To establish a Systematic Withdrawal Plan, complete the appropriate section of
the account application or contact your registered representative or call
Shareholder Services at
1 (800) 423-4026.

EXPEDITED WIRE
REDEMPTIONS
(MONEY MARKET FUNDS ONLY)
Enroll in our Expedited Redemption service to wire proceeds from your FI money
market account to your bank account. Call Shareholder Services at 1 (800)
423-4026 for an application or to discuss specific requirements.

Requests for redemptions by wire out of money market funds must be received in
writing or by phone prior to 12:00 p.m., ET on a day the NYSE is open for
trading. These days are referred to as "Trading Days" in this manual. Wire
Redemption orders received after 12:00 p.m., ET but before the close of regular
trading on the NYSE, or received on a day that the Federal Reserve system is
closed will be processed on the following business day.

- -Each wire under $5,000 is subject to a $15 fee.

- -Two wires of $5,000 or more are permitted without charge each month. Each
additional wire is $15.00.

- -Wires must be directed to your pre-designated bank account.

HOW TO EXCHANGE SHARES

<PAGE>

The exchange privilege gives you the flexibility to change investments as your
goals change without incurring a sales charge. Since an exchange of
non-retirement fund shares is a redemption and a purchase, it creates a gain or
loss which is reportable for tax purposes. You should consult your tax advisor
before requesting an exchange. Read the prospectus of the FI Fund you are
purchasing carefully. Review the differences in objectives, policies, risk,
privileges and restrictions.

EXCHANGE METHODS

METHOD STEPS TO FOLLOW

Through Your
Registered Representative Call your registered representative.

By Phone Call Special Services from 9:00 a.m. to 5:00 p.m., ET
1(800) 342-6221 Orders received after the close of the NYSE, usually
4:00 p.m., ET, are processed the following business day.

1. You must have telephone privileges.
(see Telephone Transactions.)

2. Certificate shares cannot be exchanged by phone.

3. For trusts, estates, attorneys-in-fact, corporations,
partnerships, and other entities, additional documents

are required and must be on file.

By Mail to:
ADM
581 MAIN STREET
WOODBRIDGE, NJ 07095-1198 1. Send us written instructions signed by all
account owners exactly as the account is registered.

2. Include the name and account number of your fund.

3. Indicate either the dollar amount, number of shares or
percent of the source account you want to exchange.

4. Specify the existing account number or the name of the

new Fund you want to exchange into.

5. Include any outstanding share certificates for shares you

want to exchange. A signature guarantee is required.

6. For trusts, estates, attorneys-in-fact, corporations,
partnerships, and other entities, additional
documents are required. Call Shareholder
Services at 1(800) 423-4026.

EXCHANGE CONDITIONS
1: You may only exchange shares within the same class.

2: Exchanges can only be made into identically owned accounts.

3: Partial exchanges into a new fund account must meet the new fund's minimum
initial investment.

4: The fund you are exchanging into must be eligible for sale in your state.

5: If your request does not clearly indicate the amount to be exchanged or the
accounts involved, no shares will be exchanged.

<PAGE>

6: Amounts exchanged from a non-money market fund to a money market fund may be
exchanged back along with the dividends earned on that amount at net asset
value. Dividends earned from money market fund shares will be subject to a sales
charge.

7: If you are exchanging from a money market fund to a fund with a sales charge,
there will be a sales charge on any shares that were not previously subject to a
sales charge. Dividends earned on money market shares that were purchased by an
exchange from a fund with a sales charge, may be exchanged back at net asset
value. Your request must be in writing and include a statement acknowledging
that a sales charge will be paid.

8: If you exchange Class B shares of a fund for shares of a Class B money market
fund, the CDSC will not be imposed but the CDSC and the holding period used to
calculate the CDSC will carry over to the acquired shares.

9: FI Funds reserve the right to reject any exchange order which in the opinion
of the Fund is part of a market timing strategy. In the event that an exchange
is rejected, neither the redemption nor the purchase side of the exchange will
be processed.

10: If your exchange request is not in good order or information is missing, the
Transfer Agent will seek additional information and process the exchange on the
day it receives such information.

EXCHANGING FUNDS WITH AUTOMATIC INVESTMENTS OR SYSTEMATIC WITHDRAWALS

Let us know if you want to continue automatic investments into the original fund
or the fund you are exchanging into ("receiving fund") or if you want to change
the amount or allocation. Also inform us if you wish to continue, terminate, or
change a preauthorized systematic withdrawal. Without specific instructions, we
will amend account privileges as outlined below:

EXCHANGE EXCHANGE EXCHANGE A
ALL SHARES TO ALL SHARES TO PORTION OF
ONE FUND MULTIPLE SHARES TO ONE OR
FUNDS MULTIPLE
FUNDS

MONEY LINE ML moves to ML stays with ML stays with
(ML) Receiving Fund Original Fund Original Fund

AUTOMATIC PAYROLL API moves to API Stays with API stays with
INVESTMENT (API) Receiving Fund Original Fund Original Fund

SYSTEMATIC SWP moves to SWP SWP stays
WITHDRAWALS Receiving Fund Canceled with Original Fund
(SWP)

WHEN AND HOW FUND SHARES ARE PRICED
Each FI Fund prices its shares each day that the NYSE is open for trading. The
share price is calculated as of the close of trading on the NYSE (generally 4:00
p.m., ET).

Each Fund calculates the net asset value of each class of its shares separately
by taking the total value of class assets, subtracting class expenses, and
dividing the difference by the total number of shares in the class. The price
that you will pay for a share is the NAV plus any applicable front-end sales
charge. You receive the NAV price if you redeem or exchange your shares, less
any applicable CDSC.

Fund prices are on our website (www.firstinvestors.com) the next day. The prices
for our larger funds are also reported in many newspapers, including The Wall
Street Journal and The New York Times. Special pricing procedures are employed
during emergencies. For a description of these procedures you can request, free
of charge, a copy of a Statement of Additional Information.

<PAGE>

HOW PURCHASE,
REDEMPTION AND
EXCHANGE ORDERS
ARE PROCESSED AND PRICED
The processing and price for a purchase, redemption or exchange depends upon how
your order is placed. As indicated below, in certain instances, special rules
apply to money market transactions. Special rules also apply for emergency
conditions. These are described in the Statement of Additional Information.

+ PURCHASES:
Purchases that are made by written application or order are processed when they
are received in "good order" by our Woodbridge, NJ office. To be in good order,
all required paperwork must be completed and payment received. If your order is
received prior to the close of trading on the NYSE, it will receive that day's
price (except in the case of money market funds which are discussed in the
section below called Special Rules for Money Market Funds). This procedure
applies whether your purchase order is given to your registered representative
or mailed directly by you to our Woodbridge, NJ office.

As described previously in "How to Buy Shares," certain types of purchases can
only be placed by written application. For example, purchases in connection with
the opening of retirement accounts may only be made by written application.
Furthermore, rollovers of retirement accounts will be processed only when we
have received both written application and the proceeds of the rollover. Thus,
for example, if it takes 30 days for another fund group to send us the proceeds
of a retirement account, your purchase of First Investors funds will not occur
until we receive the proceeds.

Some types of purchases may be phoned or electronically transmitted to us via
Fund/SERV by your broker-dealer. If you give your order to a registered
representative before the close

of trading on the NYSE and the order is phoned to our Woodbridge, NJ office
prior to 5:00 p.m., ET, your shares will be purchased at that day's price
(except in the case of money market funds which are discussed in the section
below called Special Rules for Money Market Funds). If you are buying a First
Investors Fund through a broker-dealer other than First Investors, other
requirements may apply. Consult with your broker-dealer about its requirements.
Payment is due within three business days of placing an order by phone or
electronic means or the trade may be cancelled. (In such event, you will be
liable for any loss resulting from the cancellation.) To avoid cancellation of
your orders, you may arrange to open a money market account and use it to pay
for subsequent purchases.

Purchases made pursuant to our Automatic Investment Programs are processed as
follows:

- -Money Line purchases are processed on the date you select on your
application.

- -Automatic Payroll Investment Service purchases are processed on the date that
we receive funds from your employer.

+ REDEMPTIONS:
As described previously in "How To Sell Shares," certain redemption orders may
only be made by written instructions or application. Unless you have declined
Telephone Privileges, most non-retirement account redemptions can be made by
phone by you or your registered representative.

Written redemption orders will be processed when received in good order in our
Woodbridge, NJ office. Phone redemption orders will be processed when received
in good order in our Woodbridge, NJ office prior to 4:00 p.m., ET.

<PAGE>

If your redemption order is received prior to the close of trading on the NYSE,
you will receive that day's price. If you redeem through a broker-dealer other
than First Investors, other requirements may apply. Consult with your
broker-dealer about its requirements.

+ EXCHANGES:
Unless you have declined telephone privileges, you or your representative may
exchange shares by phone. Exchanges can also be made by written instructions.
Exchange orders are processed when we receive them in good order in our
Woodbridge, NJ office.

Exchange orders received in good order prior to the close of trading on the NYSE
will be processed at that day's prices.

+ ORDERS PLACED VIA FIRST INVESTORS REGISTERED REPRESENTATIVES: All orders
placed through a First Investors registered representative must be reviewed and
approved by a principal officer of the branch office before being mailed or
transmitted to the Woodbridge, NJ office.

+ ORDERS PLACED VIA DEALERS:
It is the responsibility of the Dealer to forward or transmit orders to the Fund
promptly and accurately. A fund will not be liable for any change in the price
per share due to the failure of the Dealer to place or pay for the order in a
timely fashion. Any such disputes must be settled between you and the Dealer.

SPECIAL RULES FOR MONEY MARKET FUNDS
Money market fund shares will not be purchased until the Fund receives Federal
Funds for the purchase. Federal Funds for a purchase will generally not be
received until the morning of the next Trading Day following the Trading Day on
which your purchase check or other form of payment is received in our
Woodbridge, NJ office. If a check is received in our Woodbridge, NJ office after
the close of regular trading on the NYSE, the Federal Funds for the purchase
will generally not be received until the morning of the second following Trading
Day.

If we receive a wire transfer for a purchase prior to 12:00 p.m., ET and you
have previously notified us that the wire is on the way (by calling 1 (800)
423-4026) the funds for the purchase will be deemed to have been received on
that same day. Your notification must include the Federal Funds wire transfer
confirmation number, the amount of the wire, and the money market fund account
number to receive same day credit. If we fail to receive such advance
notification, the funds for your purchase will not be deemed to have been
received until the morning of the next Trading Day following receipt of the
Federal Wire and your account information.

To wire funds to an existing First Investors money market account, instruct your
bank to wire your investment, as applicable, to:

CASH MANAGEMENT FUND

BANK OF NEW YORK

ABA #021000018
FI CASH MGMT. ACCOUNT 8900005696

FOR FURTHER CREDIT TO: YOUR NAME
YOUR FIRST INVESTORS ACCOUNT #

TAX-EXEMPT MONEY MARKET FUND

BANK OF NEW YORK

ABA #021000018
FI TAX EXEMPT ACCOUNT 8900023198

FOR FURTHER CREDIT TO: YOUR NAME
YOUR FIRST INVESTORS ACCOUNT #

<PAGE>

Requests for redemptions by wire out of the money market funds must be received
in writing or by phone prior to 12:00 p.m., ET, on a Trading Day, to be
processed the same day. Wire redemption requests received after 12:00 p.m., ET,
but before the close of regular trading on the NYSE, will be processed the
following Trading Day.

There is no sales charge on Class A share money market fund purchases. However,
anytime you make a redemption from a Class A share money market account and
subsequently invest the proceeds in another eligible Class A share fund, the
purchase will incur a sales charge unless one has already been paid.

RIGHT TO REJECT
PURCHASE OR
EXCHANGE ORDERS
A fund reserves the right to reject or restrict any specific purchase or
exchange request if the fund determines that doing so is in the best interest of
the fund and its shareholders. Investments in a fund are designed for long-term
purposes and are not intended to provide a vehicle for short-term market timing.
The funds also reserve the right to reject any exchange that in the funds'
opinion is part of a market timing strategy. In the event that a fund rejects an
exchange request, neither the redemption nor the purchase side of the exchange
will be processed.

SIGNATURE
GUARANTEE POLICY
A signature guarantee protects you from the risk of a fraudulent signature and
is generally required for non-standard and large dollar transactions. A
signature guarantee may be obtained from eligible guarantor institutions
including banks, savings associations, credit unions and brokerage firms which
are members of the Securities Transfer Agents Medallion Program ("STAMP"), the
New York Stock Exchange Medallion Signature Program ("MSP"), or the Stock
Exchanges Medallion Program ("SEMP"). Please note that a notary public stamp or
seal is not acceptable.

+ SIGNATURE GUARANTEES
ARE REQUIRED:
1: For redemptions over $50,000.

2: For redemption checks made payable to any person(s) other than the registered
shareholder(s) or any entity other than a major financial institution for the
benefit of the registered shareholder(s).

3: For redemption checks mailed to an address other than the address of record,
pre-authorized bank account, or a major financial institution on your behalf.

4: For redemptions when the address of record has changed within 60 days of the
request.

5: When a stock certificate is mailed to an address other than the address of
record or the dealer on the account.

6: When shares are transferred to a new registration.

7: When certificated (issued) shares are redeemed or exchanged.

8: To establish any EFT service.

9: For requests to change the address of record to a P.O. box or a "c/o" street
address.

10: If multiple account owners of one account give inconsistent instructions.

11: When a transaction requires additional legal documentation.

<PAGE>

12: When the authority of a representative of a corporation, partnership, trust,
or other entity has not been satisfactorily established.

13: When an address is updated on an account which has been coded "Do Not Mail"
because mail has been returned as undeliverable.

14: Any other instance whereby a fund or its transfer agent deems it
necessary as a matter of prudence.

TELEPHONE
SERVICES
TELEPHONE EXCHANGES AND REDEMPTIONS
1 (800) 342-6221
You automatically receive telephone privileges when you open a First Investors
individual, joint, or custodial account unless you decline the option on your
account application or send the Fund written instructions. For trusts, estates,
attorneys-in-fact, corporations, partnerships, and other entities, telephone
privileges are not automatically granted. You must complete additional
documentation. Call Shareholder Services at 1 (800) 423-4026 for assistance.

Telephone privileges allow you to exchange or redeem eligible shares and
authorize other transactions with a simple phone call. Your registered
representative may also use telephone privileges to execute your transactions.

+ SECURITY MEASURES:
For your protection, the following security measures are taken:

1: Telephone requests are recorded to verify accuracy.

2: Some or all of the following information is obtained:

- -Account number.

- -Address.

- -Social security number.

- -Other information as deemed necessary.

3: A written confirmation of each transaction is mailed to you.

We will not be liable for following instructions if we reasonably believe the
instructions are genuine based on our verification procedures.

+ ELIGIBILITY:
NON-RETIREMENT ACCOUNTS:
You can exchange or redeem shares of any non-retirement account by phone. Shares
must be uncertificated and owned for 15 days for telephone redemption. See "How
To Sell Shares" for additional information.

Telephone exchanges and redemptions are not available on guardianship and
conservatorship accounts.

RETIREMENT ACCOUNTS:
You can exchange shares of any eligible FI fund of any participant directed FI
prototype IRA, 403(b) or 401(k) Simplifier Plan. You may also exchange shares
from an individually registered non-retirement account to an IRA account
registered to the same owner (provided an IRA application is on file). Telephone
exchanges are permitted on 401(k) Flexible plans, money purchase pension plans
and profit sharing plans if a First Investors Qualified Retirement Plan
<PAGE>

Application is on file with the fund. Contact your registered representative or
call Shareholder Services at 1 (800) 423-4026 to obtain a Qualified Retirement
Plan Application. Telephone redemptions are not permitted on First Investors
retirement accounts.

During times of drastic economic or market changes, telephone redemptions or
exchanges may be difficult to implement. If you experience difficulty in making
a telephone exchange or redemption, you may send us a written request by regular
or express mail. The written request will be processed at the next determined
net asset value, less any applicable CDSC, when received in good order in our
Woodbridge, N.J. office.

SHAREHOLDER SERVICES
1 (800) 423-4026

PROVIDED YOU HAVE NOT DECLINED TELEPHONE PRIVILEGES, CALL US TO UPDATE OR
CORRECT:
- -Your address or phone number. For security purposes, the Fund will not
honor telephone requests to change an address to a P.O. Box or "c/o" street
address.

- -Your birth date (important for retirement distributions).

- -Your distribution option to reinvest or pay in cash or initiate cross
reinvestment of dividends (non-retirement accounts only).

- -The amount of your Money Line up to $999.99 per payment provided bank and fund
account registrations are the same.

- -The allocation of your Money Line or Automatic Payroll Investment payment.

- -The amount of your Systematic Withdrawal payment on non-retirement accounts.

TO REQUEST:
- -A history of your account (the fee can be debited from your non-retirement
account).

- -A share certificate to be mailed to your address of record (non-retirement
accounts only).

- -Cancellation of your Systematic Withdrawal Plan (non-retirement accounts
only).

- -Money market fund draft checks (non-retirement accounts only). Additional
written documentation may be required for certain registrations.

- -A stop payment on a dividend, redemption or money market draft check.

- -Reactivation of your Money Line (provided an application and voided check is
on file).

- -Suspension (up to six months) or cancellation of Money Line.

- -A duplicate copy of a statement or tax form.

- -Cancellation of cross-reinvestment of dividends.

OTHER SERVICES
+ REINSTATEMENT PRIVILEGE:

<PAGE>

If you sell some or all of your Class A or Class B shares, you may be entitled
to invest all or a portion of the proceeds in the same class of shares of a FI
fund within six months of the redemption without a sales charge.

If you invest proceeds into a new fund account, you must meet the fund's minimum
initial investment requirement.

If you invest all the proceeds from a Class B share redemption, you will be
credited, in additional shares, for the full amount of the CDSC. If you invest a
portion of a Class B share redemption, you will be credited with a pro-rated
percentage of the CDSC.

The reinstatement privilege does not apply to automated purchases, automated
redemptions, or reinstatements in Class B shares of less than $1,000.

Please notify us if you qualify for this privilege. For more information, call
Shareholder Services at 1 (800) 423-4026.

+ CERTIFICATE SHARES:
Every time you make a purchase of Class A shares, we will credit shares to your
fund account. We do not issue share certificates unless you specifically request
them. Certificates are not issued on any Class B shares, Class A money market
shares, or any shares in retirement accounts.

Having us credit shares on your behalf eliminates the expense of replacing lost,
stolen, or destroyed certificates. If a certificate is lost, stolen, or damaged,
you may be charged a replacement fee of the greater of 2% of the current value
of the certificated shares or $25.

In addition, certificated shares cannot be redeemed, exchanged, or transferred
until they are returned with your transaction request. The share certificate
must be properly endorsed and signature guaranteed.

+ MONEY MARKET FUND DRAFT CHECKS:
Free draft check writing privileges are available when you open a First
Investors Cash Management Fund or a First Investors Tax Exempt Money Market Fund
account. Checks may be written for a minimum of $500. Draft checks are not
available for Class B share accounts, retirement accounts, guardianships and
conservatorships. Complete the Money Market Fund Check Redemption section of the
account application to apply for draft checks. To order additional checks, call
Shareholder Services at 1 (800) 423-4026.

Additional documentation is required to establish check writing privileges
for trusts, corporations, partnerships and other entities. Call Shareholder
Services at 1 (800) 423-4026 for further information.

FEE TABLE:
Call Shareholder Services at 1 (800) 423-4026 or send your request to FIC,
Attn: Correspondence Dept., 581 Main Street, Woodbridge, NJ 07095-1198 to
request a copy of the following records:

ACCOUNT HISTORY STATEMENTS:
1974 - 1982* $10 per year fee

1983 - present $5 total fee for all years

Current & Two Prior Years Free

*ACCOUNT HISTORIES ARE NOT AVAILABLE PRIOR TO 1974

CANCELLED CHECKS:
There is a $10 fee for a copy of a cancelled dividend, liquidation, or
investment check requested. There is a $15 fee for a copy of a cancelled money
market draft check.

<PAGE>

DUPLICATE TAX FORMS:
Current Year Free

Prior Year(s) $7.50 per tax form per year

+ RETURN MAIL:
If mail is returned to the fund marked undeliverable by the U.S. Postal Service
after two consecutive mailings, and the fund is unable to obtain a current
shareholder address, the account status will be changed to "Do Not Mail" to
discontinue future mailings and prevent unauthorized persons from obtaining
account information.

You can remove the "Do Not Mail" status on your account by submitting written
instructions including your current address signed by all shareholders with a
signature guarantee (see Signature Guarantee Policy). Additional requirements
may apply for certain accounts. Call Shareholder Services at 1 (800) 423-4026
for more information.

Returned dividend checks and other distributions will be reinvested in the fund
when an account's status has been changed to "Do Not Mail." No interest will be
paid on outstanding checks prior to reinvestment. All future dividends and other
distributions will be reinvested in additional shares until new instructions are
provided. If you cannot be located within a period of time mandated by your
state of residence your fund shares may be escheated to your state (in other
words turned over) in accordance with state laws governing abandoned property.

Prior to turning over assets to your state, the fund will seek to obtain a
current shareholder address in accordance with Securities and Exchange
Commission rules. A search company may be employed to locate a current address.
The fund may deduct the costs associated with the search from your account.

+ TRANSFERRING SHARES:
A transfer is a change of share ownership from one customer to another. Unlike
an exchange, transfers occur within the same fund. You can transfer your shares
at any time. Partial transfers must meet the minimum initial investment
requirement of the fund.

To transfer shares, submit a letter of instruction including:

- -Your account number.

- -Dollar amount, percentage, or number of shares to be transferred.

- -Existing account number receiving the shares (if any).

- -The name(S), registration, and taxpayer identification number of the
customer receiving the shares.

- -The signature of each account owner requesting the transfer with signature
guarantee(S).

If First Investors is your broker-dealer, we will request that the transferee
complete a Master Account Agreement to establish a brokerage account with First
Investors Corporation and validate his or her social security number to avoid
back-up withholding. If the transferee declines to complete a MAA, all
transactions in the account must be on an unsolicited basis and the account will
be so coded.

Depending upon your account registration, additional documentation may be
required to transfer shares. Transfers due to the death of a shareholder require
additional documentation. Please call our Shareholder Services Department at 1
(800) 423-4026 for specific transfer requirements before initiating a request.

A transfer is a change of ownership and may trigger a taxable event. You should
consult your tax advisor before initiating a transfer.

ACCOUNT STATEMENTS

<PAGE>

TRANSACTION
CONFIRMATION STATEMENTS
You will receive a confirmation statement immediately after most transactions.
These include:

- -dealer purchases.

- -check investments.

- -Federal Funds wire purchases.

- -redemptions.

- -exchanges.

- -transfers.

- -systematic withdrawals.

Money Line and Automatic Payroll Investment purchases are not confirmed for each
transaction. They will appear on your next regularly scheduled monthly or
quarterly statement (see Dividend Payment Schedule under "Dividends and
Distributions").

A separate confirmation statement is generated for each fund account you own. It
provides:

- -Your fund account number.

- -The date of the transaction.

- -A description of the transaction (PURCHASE, REDEMPTION, ETC.).

- -The number of shares bought or sold for the transaction.

- -The dollar amount of the transaction.

- -The dollar amount of the dividend payment (IF APPLICABLE).

- -The total share balance in the account.

- -The dollar amount of any dividends or capital gains paid.

- -The number of shares held by you, held for you (INCLUDING ESCROW SHARES), and
the total number of shares you own.

The confirmation statement also may provide a perforated Investment Stub with
your preprinted name, registration, and fund account number for future
investments.

MASTER ACCOUNT
STATEMENTS
If First Investors Corporation is your broker, you will receive a Master Account
Statement for all your identically owned First Investors fund accounts on at
least a quarterly basis. The Master Account Statement will also include a recap
of any First Investors Life Insurance accounts you may own. Joint accounts
registered under your taxpayer identification number will appear on a separate
Master Account Statement but may be mailed in the same envelope upon request.

The Master Account Statement provides the following information for each First
Investors fund you own:

- -fund name.

- -fund's current market value.

- -total distributions paid year-to-date.

- -total number of shares owned.

<PAGE>

ANNUAL AND
SEMI-ANNUAL REPORTS
You will also receive an Annual and a Semi-Annual Report. These financial
reports show the assets, liabilities, revenues, expenses, and earnings of the
fund as well as a detailed accounting of all portfolio holdings. You will
receive one report per household.

DIVIDENDS AND
DISTRIBUTIONS
DIVIDENDS AND
DISTRIBUTIONS
For funds that declare daily dividends, except money market funds, you start
earning dividends on the day your purchase is made. For FI money market fund
purchases, including Money Line and API purchases, you start earning dividends
on the day Federal Funds are credited to your fund account. For exchanges into
the money market funds, you start earning dividends on the day following the
Trading Day on which an exchange is processed. No dividends are earned on
exchanges out of the money market funds on the Trading Day on which an exchange
is processed. The funds declare dividends from net investment income and
distribute the accrued earnings to shareholders as noted below:

DIVIDEND PAYMENT SCHEDULE
<S> <C> <C>

MONTHLY: QUARTERLY: ANNUALLY (IF ANY):
Cash Management Fund Blue Chip Fund Focused Equity Fund
Fund for Income Growth & Income Fund Global Fund
Government Fund Total Return Fund Mid-Cap Opportunity Fund
Insured Intermediate Tax-Exempt Utilities Income Fund Special Situations Fund
Insured Tax Exempt Fund
Investment Grade Fund
Multi-State Insured Tax Free Fund
New York Insured Tax Free Fund
Tax-Exempt Money Market Fund
</TABLE>

Capital gains distributions, if any, are paid annually, usually near the end of
the fund's fiscal year. On occasion, more than one capital gains distribution
may be paid during one year.

Dividend and capital gains distributions are automatically reinvested to
purchase additional fund shares unless otherwise instructed. Dividend payments
of less than $5.00 are automatically reinvested to purchase additional fund
shares.

BUYING A DIVIDEND
If you buy shares shortly before the record date of the dividend, the entire
dividend you receive may be taxable even though a part of the distribution is
actually a return of your purchase price. This is called "buying a dividend."

There is no advantage to buying a dividend because a fund's net asset value per
share is reduced by the amount of the dividend.

<PAGE>

TAX FORMS
<S> <C> <C>

TAX FORM DESCRIPTION MAILED BY
1099-DIV Consolidated report lists all taxable dividend and capital gains January 31
distributions for all of the shareholder's accounts. Also includes
foreign taxes paid and any federal income tax withheld due to
backup withholding.

1099-B Lists proceeds from all redemptions including systematic January 31
withdrawals and exchanges. A separate form is issued for each fund
account. Includes amount of federal income tax withheld due to backup
withholding.

1099-R Lists taxable distributions from a retirement account. A separate January 31
form is issued for each fund account. Includes federal income
tax withheld due to IRS withholding requirements.

5498 Provided to shareholders who made an annual IRA May 31
contribution or rollover purchase. Also provides the account's
fair market value as of the last business day of the previous year.
A separate form is issued for each fund account.

1042-S Provided to non-resident alien shareholders to report the amount March 15
of fund dividends paid and the amount of federal taxes withheld.
A separate form is issued for each fund account.

Cost Basis Uses the "average cost-single category" method to show the cost January 31
Statement basis of any shares sold or exchanged. Information is provided to
assist shareholders in calculating capital gains or losses.
A separate statement, included with Form 1099-B, is issued for each
fund account. This statement is not reported to the IRS and does
not include money market funds or retirement accounts.

Tax Savings Consolidated report lists all amounts not subject to federal, January 31
Report for state and local income tax for all the shareholder's accounts.
Non-Taxable Also includes any amounts subject to alternative minimum tax.
Income

Tax Savings Provides the percentage of income paid by each fund that may January 31
Summary be exempt from state income tax.
</TABLE>

THE OUTLOOK

Today's strategies for tomorrow's goals are brought into focus in the Outlook,
the quarterly newsletter for clients of First Investors Corporation. This
informative tool discusses the products and services we offer to help you take
advantage of current market conditions and tax law changes. The OUTLOOK'S
straight forward approach and timely articles make it a valuable resource. As
always, your registered representative is available to provide you with
additional information and assistance. Material contained in this publication
should not be considered legal, financial, or other professional advice.

(This page Intentionally Left Blank)

<PAGE>

Principal Underwriter
First Investors Corporation
95 Wall Street
New York, NY 10005
1-212-858-8000

Transfer Agent
Administrative Data Management Corp.
581 Main Street
Woodbridge, NJ 07095
1-800-423-4026
<PAGE>

PART C. OTHER INFORMATION
-------------------------
Item 23. EXHIBITS
--------

(a)(i) Articles of Restatement(1)

(ii) Articles Supplementary(1)

(b) Amended and Restated By-laws(1)

(c) 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.

(d) Investment Advisory Agreement between Registrant and First
Investors Management Company, Inc.(1)

(e) Underwriting Agreement between Registrant and First Investors
Corporation1

(f) Bonus, profit sharing or pension plans - none

(g)(i) Custodian Agreement between Registrant and Irving Trust
Company(1)

(ii) Supplement to Custodian Agreement between Registrant and
The Bank of New York1

(iii) Payment and Redemption Agency Agreement between Registrant and
Irving Trust Company(1)

(h)(i) Administration Agreement between Registrant, First
Investors Management Company, Inc., First Investors Corporation
and Administrative Data Management Corp.1

(ii) Schedule A to Administration Agreement(2)

(iii)Transfer Agency Agreement - filed herewith

(i) Consent of Counsel - filed herewith

(j)(i) Consent of Independent Accountants - filed herewith

(ii) Powers of Attorney1

(k) Financial statements omitted from prospectus -none

(l) Initial capital agreements - none

<PAGE>

(m) Class B Distribution Plan1

(n) Financial Data Schedules - filed herewith

(o) 18f-3 Plan(1)

_________
1 Incorporated by reference from Post-Effective Amendment No. 23 to
Registrant's Registration Statement (File No. 2-62347) filed on April
24, 1996.

2 Incorporated by reference from Post-Effective Amendment No. 25 to
Registrant's Registration Statement (File No. 2-62347) filed on May 15,
1997.

Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
--------------------------------------------------------------

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

Item 25. INDEMNIFICATION
---------------

Article 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:
<PAGE>

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.

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 30 herein.

Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
----------------------------------------------------

First Investors Management Company, Inc. offers investment
management services and is a registered investment adviser. Affiliations of
the officers and directors of the Investment Adviser are set forth in Part B,
Statement of Additional Information, under "Directors or Trustees and
Officers."

<PAGE>

Item 27. PRINCIPAL UNDERWRITERS
----------------------

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

First Investors Series Fund
First Investors Fund For Income, Inc.
First Investors Global Fund, Inc.
First Investors Government Fund, Inc.
First Investors High Yield Fund, Inc.
First Investors Insured Tax Exempt Fund, Inc.
First Investors Multi-State Insured Tax Free Fund
First Investors New York Insured Tax Free Fund, Inc.
First Investors Tax-Exempt Money Market Fund, Inc.
First Investors U.S. Government Plus Fund
First Investors Series Fund II, Inc.
First Investors Life Variable Annuity Fund A
First Investors Life Variable Annuity Fund C
First Investors Life Variable Annuity Fund D
First Investors Life Level Premium Variable Life Insurance
(Separate Account B)

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

Position and Position and
Name and Principal Office with First Office with
BUSINESS ADDRESS INVESTORS CORPORATION REGISTRANT
- ---------------- --------------------- ------------

Glenn O. Head Chairman President
95 Wall Street and Director and 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

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

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

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

<PAGE>

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

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

Larry R. Lavoie Secretary and Director
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

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

Elizabeth Reilly Vice President None
581 Main Street
Woodbridge, NJ 07095

Robert Flanagan Vice President- None
95 Wall Street Sales Administration
New York, NY 10005

William M. Lipkus Chief Financial Officer None
581 Main Street
Woodbridge, NJ 07095

Item 28. LOCATION OF ACCOUNTS AND RECORDS
--------------------------------

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

<PAGE>

for those maintained by the Registrant's Custodian, The Bank of New York, 48
Wall Street, New York, NY 10286.

Item 29. MANAGEMENT SERVICES
-------------------

Not Applicable.

Item 30. UNDERTAKINGS
------------

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

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

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

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 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, duly
authorized, in the City of New York, State of New York, on the 13th day of
January, 2000.

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 January 13, 2000
- ----------------------------- Officer and Director
Glenn O. Head

/s/ Joseph I. Benedek Principal Financial January 13, 2000
- ----------------------------- and Accounting Officer
Joseph I. Benedek

* Director January 13, 2000
- -----------------------------
Kathryn S. Head

/s/ Larry R. Lavoie Director January 13, 2000
- -----------------------------
Larry R. Lavoie

* Director January 13, 2000
- -----------------------------
Herbert Rubinstein

* Director January 13, 2000
- -----------------------------
Nancy Schaenen

<PAGE>

* Director January 13, 2000
- -----------------------------
James M. Srygley

* Director January 13, 2000
- -----------------------------
John T. Sullivan

* Director January 13, 2000
- -----------------------------
Rex R. Reed

* Director January 13, 2000
- -----------------------------
Robert F. Wentworth

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

<PAGE>

INDEX TO EXHIBITS

Exhibit
NUMBER DESCRIPTION
- ------ -----------

23(a)(i) Articles of Restatement(1)

23(a)(ii) Articles Supplementary(1)

23(b) Amended and Restated By-laws(1)

23(c) 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.

23(d) Investment Advisory Agreement between Registrant and First
Investors Management Company, Inc.(1)

23(e) Underwriting Agreement between Registrant and First Investors
Corporation(1)

23(f) Bonus or Profit Sharing Contracts--None

23(g)(i) Custodian Agreement between Registrant and Irving Trust Company(1)

23(g)(ii) Supplement to Custodian Agreement between Registrant and The Bank
of New York(1)

23(g)(iii) Payment and Redemption Agency Agreement between Registrant
and Irving Trust Company

23(h)(i) Administration Agreement between Registrant, First Investors
Management Company, Inc., First Investors Corporation and
Administrative Data Management Corp.(1)

23(h)(ii) Schedule A to Administration Agreement(2)

23(h)(iii) Transfer Agency Agreement - filed herewith

23(i) Consent of Counsel - filed herewith

23(j)(i) Consent of independent accountants - filed herewith

<PAGE>

23(j)(ii) Powers of Attorney(1)

23(k) Omitted Financial Statements -- None

23(l) Initial Capital Agreements -- None

23(m) Class B Distribution Plan1

23(n) Financial Data Schedules - filed herewith

23(o) Rule 18f-3 Plan(1)

________________
1 Incorporated by reference from Post-Effective Amendment No. 23 to
Registrant's Registration Statement (File No. 2-62347) filed on April
24, 1996.

2 Incorporated by reference from Post-Effective Amendment No. 25 to
Registrant's Registration Statement (File No. 2-62347) filed on May 15,
1997.

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

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> SEP-30-1999
<INVESTMENTS-AT-COST> 167360
<INVESTMENTS-AT-VALUE> 167360
<RECEIVABLES> 1728
<ASSETS-OTHER> 2092
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 171180
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1166
<TOTAL-LIABILITIES> 1166
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 167363
<SHARES-COMMON-STOCK> 167363
<SHARES-COMMON-PRIOR> 160470
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 167363
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6200
<OTHER-INCOME> 2
<EXPENSES-NET> (966)
<NET-INVESTMENT-INCOME> 5236
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 5236
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5236)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 207642
<NUMBER-OF-SHARES-REDEEMED> 205252
<SHARES-REINVESTED> 4502
<NET-CHANGE-IN-ASSETS> 6892
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (607)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (1373)
<AVERAGE-NET-ASSETS> 163023
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .032
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.032)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .60

</TABLE>

<ARTICLE> 6
<CIK> 0000276461
<NAME> FIRST INVESTORS CASH MANAGEMENT FUND, INC.
<SERIES>
<NUMBER> 002
<NAME> CLASS B
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> SEP-30-1999
<INVESTMENTS-AT-COST> 167360
<INVESTMENTS-AT-VALUE> 167360
<RECEIVABLES> 1728
<ASSETS-OTHER> 2092
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 171180
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1166
<TOTAL-LIABILITIES> 1166
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2652
<SHARES-COMMON-STOCK> 2652
<SHARES-COMMON-PRIOR> 1495
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2652
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 65
<OTHER-INCOME> 0
<EXPENSES-NET> (20)
<NET-INVESTMENT-INCOME> 45
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 45
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (46)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2741
<NUMBER-OF-SHARES-REDEEMED> 1620
<SHARES-REINVESTED> 36
<NET-CHANGE-IN-ASSETS> 1157
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (6)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (24)
<AVERAGE-NET-ASSETS> 1681
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .027
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.027)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 1.16

</TABLE>

TRANSFER AGENT AGREEMENT
------------------------

This Agreement, dated as of the 20th day of May 1999, made by each FIRST
INVESTORS investment company listed on Schedule A, as amended from time to time
("Fund"), and ADMINISTRATIVE DATA MANAGEMENT CORP., a corporation duly organized
and existing under the laws of the State of New York ("ADM").

WITNESSETH THAT:

WHEREAS, ADM represents that it is currently registered and licensed with
the appropriate authorities to provide services as a transfer agent of mutual
funds, and will remain so registered for the duration of the Agreement; and

WHEREAS, the Fund desires to employ ADM to provide transfer agency and
related services under the terms and conditions described in this Agreement and
ADM is willing to provide such services;

NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto, intending to be legally bound, do hereby
agree as follows:

1. APPOINTMENT. The Fund hereby appoints ADM as its registrar, transfer
agent, dividend disbursing agent, shareholder servicing agent and administrator
of its dividend reinvestment, share accumulation, systematic withdrawal and
automated payment programs (collectively its "Transfer Agent") and ADM accepts
such appointment and agrees to act in such capacity upon the terms set forth in
this Agreement.

2. DEFINITIONS. As used in this Agreement capitalized terms have the
meanings specified below:

A) "Fund" means any of the Funds set forth in Schedule A existing
now or in the future that becomes a party to this Agreement, and;

B) "Shares" means the issued and outstanding shares of beneficial
interest, and any fractions thereof, of the Fund;

C) "Shareholder" means the registered owner of Shares or the beneficial
owner of Shares if the name of the beneficial owner is recorded on
the master security holder files;

D) "Account" means a separate record established on ADM's books for
each Shareholder in the Fund which identifies the legal registration
and number of Shares owned.

<PAGE>

3. RESPONSIBILITIES OF ADM. ADM in its capacity as Transfer Agent will
perform the usual duties and functions of a stock transfer agent for the Fund.
Among other things, it will:

A) maintain stock registry and record thereon the Shares and
fractions thereof of both issued and unissued Shares for each
Shareholder's Account;

B) open, maintain, service and close Accounts of Shareholders;

C) issue, redeem, exchange and transfer Shares in Accounts
established on its books and records;

D) process initial and subsequent payments on each day the Fund is
open for trading;

E) maintain a record of sales of Shares for use by the Fund in
complying with state and federal registration requirements;

F) deliver to the underwriter all payments received by ADM;

G) calculate the amounts of Shares to be issued, the amounts of
commissions owed to dealers, and the amounts to be paid to the
underwriter;

H) answer telephone and written inquiries from Shareholders,
securities brokers and others;

I) calculate the amount of, and reinvest dividends and distributions
declared upon Shares into Shareholder Accounts or, upon
Shareholder election, pay such dividends and distributions in
cash;

J) furnish to Shareholders monthly or quarterly statements,
confirmations of transactions in Shares, prospectuses, and such
other communications as may be requested by the Fund;

K) deduct and pay the Internal Revenue Service and other payees the
required amounts of tax withholdings in accordance with
applicable laws, rules and regulations;

L) mail to Shareholders such tax forms, notices, and other information
relating to purchases, redemptions, dividends and distributions, as
required by applicable laws, rules and regulations;

M) prepare, maintain and file with the Internal Revenue Service and
other appropriate taxing authorities reports relating to purchases,
redemptions, dividends and distributions, as required by applicable
laws, rules and regulations;

-2-
<PAGE>

N) mail annual and semi-annual reports and prospectuses prepared by
or on behalf of the Fund to Shareholders;

O) mail notices of Shareholder meetings, proxies, proxy statements and
other related materials upon request by the Fund;

P) maintain a disaster recovery site for emergency use and a separate
off-site storage facility for backup computer files and data;

Q) maintain all records required to be kept by applicable laws, rules
and regulations relating to the services to be performed under this
Agreement; and,

R) comply with all other laws, rules and regulations that apply to ADM
as the result of the services that it is required to perform under
this Agreement.

4. DUTY OF CARE. ADM shall exercise due care and diligence, act in good
faith, and comply with the terms and conditions contained in the Fund's
prospectuses, statements of additional information, shareholder applications
and all applicable laws, rules and regulations in performing the services
required under this Agreement.

5. LIMITATIONS ON LIABILITY. ADM shall not be liable for any losses,
claims or damages (collectively, "Damages") arising out of or in connection with
ADM's performance or failure to perform its duties under this Agreement except
to the extent that such Damages arise out of its negligence, reckless disregard
of its duties, bad faith or willful misfeasance.

Without limiting the generality of the foregoing, ADM shall not be liable
for:

A) any Damages caused by delays, errors, or loss of data occurring by
reason of circumstances beyond ADM's control, including but not
limited to acts of civil or military authorities, national
emergencies, labor difficulties, acts of God, insurrections, wars,
riots or failures of the mails, transportation providers,
communications providers or power suppliers; or,

B) any taxes, assessments or governmental charges which may be levied
or assessed on any basis whatsoever in connection with the services
performed under this Agreement, except for taxes assessed against
ADM in its corporate capacity based upon its compensation hereunder.

6. INDEMNIFICATION.

A) The Fund shall indemnify and hold ADM harmless against any Damages
or expenses (including reasonable attorneys fees) incurred in any
action, suit or proceeding brought against it by any person other
than the Fund, including a Shareholder, based upon ADM's services

-3-
<PAGE>

for the Fund or its Shareholders, if the Damages sought did not
result from ADM's negligence, reckless disregard for its duties, bad
faith or willful misfeasance.

B) The Transfer Agent shall not pay or settle any claim, demand,
expense or liability to which it may seek indemnity pursuant to
paragraph (A) above an ("Indemnifiable Claim") without the express
written consent of the Fund. The Transfer Agent shall notify the
Fund promptly of receipt of notification of an Indemnifiable Claim.
Unless the Fund notifies the Transfer Agent within 30 days of
receipt of Written Notice of such Indemnifiable Claim that the Fund
does not intend to defend such Indemnifiable Claim, the Fund shall
defend the Transfer Agent for such Indemnifiable Claim. The Fund
shall have the right to defend any Indemnifiable Claim at its own
expense, such defense to be conducted by counsel selected by the
Fund. Further, the Transfer Agent may join the Fund in such defense
at the Transfer Agent's own expense, but to the extent that it shall
so desire the Fund shall direct such defense. If the Fund shall fail
or refuse to defend, pay or settle an Indemnifiable Claim, the
Transfer Agent, at the Fund's expense, consistent with the
limitation concerning attorney's fees expressed in (A) above, may
provide its own defense.

7. DELEGATION OF DUTIES. ADM may from time to time in its sole discretion
delegate some or all of its duties hereunder to any affiliate or entity, which
shall perform such functions as the agent of ADM; provided, however, that the
delegation of any of ADM's duties under this Agreement shall not relieve ADM of
any of its responsibilities or liabilities under this Agreement.

8. INSURANCE. ADM shall maintain insurance of the types and in the amounts
deemed by it to be appropriate for the services that it provides to the Fund. To
the extent that policies of insurance may provide for coverage of claims for
liability or indemnity by the parties set forth in this Agreement, the contracts
of insurance shall take precedence, and no provision of the Agreement shall be
construed to relieve an insurer of any obligation to pay claims to the Fund, ADM
or any other insured party which could otherwise be a covered claim in the
absence of any provision of this Agreement.

9. BOOKS AND RECORDS. The books and records pertaining to the Fund which
are in the possession of the Transfer Agent shall be the property of the Fund
and shall be returned to the Fund or its designee upon request. Such books and
records shall be prepared and maintained as required by applicable laws, rules,
and regulations. The Fund, or its authorized representatives, shall have access
to such books and records at all times during the Transfer Agent's normal
business hours. Upon request of the Fund, copies of any such books and records
shall be provided by the Transfer Agent to the Fund or the Fund's authorized
representative or designee at the Fund's expense.

-4-
<PAGE>

10. RESPONSIBILITIES OF THE FUND. The Fund is responsible for:

A) providing ADM on an ongoing basis with its current prospectuses,
statements of additional information, shareholder manuals, annual
and semi-annual reports, proxy notices and proxy statements;

B) notifying ADM upon declaration of each dividend and distribution of
the date of its declaration, the amount payable per Share, the
record date, the payment date, the reinvestment date, and the price;

C) transferring, or causing the Fund's Custodian or Custodians to
transfer, to ADM by each payment date, the total amount of the
dividend or distribution currently payable in cash; and

D) providing ADM with its net asset value on each day the Fund is open
for business and the prices which are applicable to Shareholders who
are entitled to purchase Shares at reduced offering prices.

11. COMPENSATION. The Fund agrees to pay ADM compensation for its services
and to reimburse it for expenses as set forth in Schedule B attached hereto, or
as shall be set forth in amendments to such schedule approved by the parties to
this Agreement.

12. ADDITIONAL SERVICES AND COMPENSATION. The Fund may with the consent of
ADM decide to employ ADM to perform additional services and special projects
which are not covered by this Agreement, such as proxy solicitation, proxy
tabulation or special research. In such circumstances, the terms and conditions
under which ADM will perform such services and the compensation it will receive
will be set by mutual agreement.

13. HOLIDAYS. Nothing contained in this Agreement is intended to or shall
require ADM in any capacity hereunder to perform any functions or duties on any
holiday or other day of special observances on which the Fund and ADM are
closed. Functions or duties normally scheduled to be performed on such days
shall be performed on, and as of, the next business day on which both the Fund
and ADM are open.

14. COOPERATION WITH ACCOUNTANTS. The Transfer Agent shall cooperate with
the Fund's independent public accountants and shall take all reasonable action
in the performance of its obligations under this Agreement to assure that the
necessary information is made available to such accountants for the expression
of their opinion as such may be required by the Fund from time to time.

15. CONFIDENTIALITY. The Transfer Agent agrees on behalf of itself and its
employees to treat confidentially all records and other information relative to
the Fund and its prior, present or potential Shareholders and relative to the
Fund's investment advisers, sub- advisers or underwriters and their present or

-5-
<PAGE>

potential customers; provided, however that the Transfer Agent may disclose
information in response to a lawful subpoena, request from a governmental
authority, or other legal process or with the consent of the Fund.

16. ENFORCEMENT OF AGREEMENT. Notwithstanding any provision of the law to
the contrary, ADM hereby waives any right to enforce this Agreement against the
individual and separate assets of any Shareholder of the Fund. With respect to
any obligations of the Fund arising out of this Agreement, ADM shall look for
payment or satisfaction of any obligation solely to the assets and property of
the Fund.

17. ASSIGNMENT. This Agreement shall extend to, and shall be binding upon,
the parties hereto and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by any party without the
written consent of the other. In the case of the Fund, any consent to an
assignment must be approved by the Board of Directors/Trustees of the Fund.

18. TERMINATION. This Agreement may be terminated by any party to this
Agreement on at least sixty (60) days advance written notice. If ADM fails at
any time to maintain the necessary registrations or licenses required to act
lawfully as the Fund's Transfer Agent, the Fund may terminate this Agreement
upon five days written notice. In the event that ADM shall terminate this
Agreement, it shall continue to perform the services required under this
Agreement at the request of the Fund until a replacement is appointed. In such
case, ADM shall be entitled to receive all the payments and reimbursements to
which it is entitled under this Agreement.

19. AMENDMENT. This Agreement may only be amended by a written instrument
approved by both parties.

20. NON-EXCLUSIVITY. The parties understand and agree that ADM may offer
services, including the types of services covered by this Agreement, to other
parties including non-affiliated mutual funds, provided that such activities do
not adversely affect ADM's ability to perform the services to the Fund that are
required by this Agreement.

21. MISCELLANEOUS. This Agreement may be executed in one or more
counterparts, each of which when so executed shall be deemed to be original, but
such counterparts shall together constitute but one and the same instrument.
This Agreement shall be construed in accordance with the laws of the State of
New York.

-6-
<PAGE>

IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
signed by their duly authorized officers and their seals hereunto duly affixed
and attested as of the day and the year first above written.

ATTEST: FIRST INVESTORS FUNDS

/s/ C. Durso BY: /s/ Glenn O. Head
- ------------ -----------------
C. Durso, Secretary Glenn O. Head, President

ATTEST: ADMINISTRATIVE DATA
MANAGEMENT CORP.

/s/ Larry R. Lavoie BY: /s/ Kathryn S. Head
- ------------------- -------------------
Larry R. Lavoie, Assistant Secretary Kathryn S. Head, President

-7-
<PAGE>

TRANSFER AGENT AGREEMENT
SCHEDULE A

CURRENT LIST OF FUNDS
---------------------

Executive Investors Trust
Executive Investors Blue Chip Fund
Executive Investors High Yield Fund
Executive Investors Insured Tax Exempt Fund
First Investors Cash Management Fund, Inc.
First Investors Fund For Income, Inc.
First Investors Global Fund, Inc.
First Investors Government Fund, Inc.
First Investors High Yield Fund, Inc.
First Investors Insured Tax Exempt Fund, Inc.
First Investors Life Series Fund
Life Blue Chip Fund Life Cash Management Fund Life Discovery Fund Life
Government Fund Life Growth Fund Life High Yield Fund Life International
Securities Fund Life Investment Grade Fund Life Target Maturity 2007 Life
Target Maturity 2010 Life Utilities Income Fund
First Investors Multi-State Insured Tax Free Fund
Arizona Fund, California Fund, Colorado Fund, Connecticut Fund, Florida
Fund, Georgia Fund, Maryland Fund, Massachusetts Fund, Michigan Fund,
Minnesota Fund, Missouri Fund, New Jersey Fund, North Carolina Fund, Ohio
Fund, Oregon Fund, Pennsylvania Fund, Virginia Fund
First Investors New York Insured Tax Free Fund, Inc.
First Investors Series Fund
First Investors Blue Chip Fund
First Investors Insured Intermediate Tax Exempt Fund
First Investors Investment Grade Fund
First Investors Special Situations Fund
First Investors Total Return Fund
First Investors Series Fund II, Inc.
First Investors Focused Equity Fund
First Investors Growth & Income Fund
First Investors Mid-Cap Opportunity Fund
First Investors Utilities Income Fund
First Investors Special Bond Fund, Inc.
First Investors Tax-Exempt Money Market Fund, Inc.
First Investors U.S. Government Plus Fund
1st Fund
2nd Fund

5/20/99

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<PAGE>

TRANSFER AGENT AGREEMENT
SCHEDULE B

COMPENSATION
------------

FEES AND CHARGES:
- ----------------

The Fund shall pay the following fees and charges of Administrative Data
Management Corp. for its services under the Transfer Agent Agreement.

For all Funds except First Investors Cash Management Fund, Inc. and
First Investors Tax-Exempt Money Market Fund, Inc.:

Monthly Account Maintenance $0.75 per account
New Accounts $5.00 for each account
Payments $0.75 for each payment
Liquidations and Withdrawals $5.00 per transaction
Exchanges $5.00 per transaction
Transfers $10.00 per transaction
Certificates Issued $3.00 per certificate issued
Systematic Withdrawal Checks $1.00 per check
Dividend Processing $0.45 per dividend
Reports Requested by Government Agency $1.00 per account
Shareholder Service Calls $4.00 per call
Correspondence $20.00 per item

First Investors Cash Management Fund, Inc. and First Investors
Tax-Exempt Money Market Fund, Inc.:

Monthly Account Maintenance $2.00 per account
Reports Requested by Government Agency $1.00 per account

EXPENSES:
- --------

In addition to the above fees and charges, the Fund shall reimburse
Administrative Data Management Corp. for all out-of-pocket costs including but
not limited to the costs of postage, insurance, forms, envelopes, telephone
lines and other similar items, counsel fees, including fees for the preparation
of the Transfer Agent Agreement and review of the Fund's registration statements
and application forms.

5/20/99

-9-

January 28, 2000

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

Ladies and Gentlemen:

You have requested our opinion, as counsel to First Investors Cash
Management Fund, Inc. (the "Company"), as to certain matters regarding the
issuance of Shares of the Company. As used in this letter, the term "Shares"
means the Class A and Class B shares of beneficial interest of the Company,
during the time this Post-Effective Amendment No. 29 to the Company's
Registration Statement on Form N-1A ("PEA") is effective and has not been
superseded by another post-effective amendment.

As such counsel, we have examined certified or other copies, believed by
us to be genuine, of the Company's Articles of Incorporation and by-laws and
such resolutions and minutes of meetings of the Company's Board of Directors as
we have deemed relevant to our opinion, as set forth herein. Our opinion is
limited to the laws and facts in existence on the date hereof, and it is further
limited to the laws (other than the conflict of law rules) in the State of
Maryland that in our experience are normally applicable to the issuance of
shares by corporations and to the Securities Act of 1933 ("1933 Act"), the
Investment Company Act of 1940 ("1940 Act") and the regulations of the
Securities and Exchange Commission ("SEC") thereunder.

Based on present laws and facts, we are of the opinion that the issuance
of the Shares has been duly authorized by the Company and that, when sold in
accordance with the terms contemplated by the PEA, including receipt by the
Company of full payment for the Shares and compliance with the 1933 Act and the
1940 Act, the Shares will have been validly issued, fully paid and
non-assessable.

We hereby consent to this opinion accompanying the PEA when it is filed
with the SEC and to the reference to our firm in the PEA.

Very truly yours,

KIRKPATRICK & LOCKHART LLP

By:/s/Robert J. Zutz
-----------------
Robert J. Zutz

Consent of Independent Certified Public Accountants

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

We consent to the use in Post-Effective Amendment No. 29 to the
Registration Statement on Form N-1A (File No. 2-62347) of our report dated
October 30, 1999 relating to the September 30, 1999 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
January 20, 2000