FIRST INVESTORS INSURED TAX EXEMPT FUND INC, 485BPOS, 1996-04-23

FIRST INVESTORS INSURED TAX EXEMPT FUND INC
485BPOS, 1996-04-23

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<PAGE>

As filed with the Securities and Exchange Commission on April 23, 1996

Registration No. 2-57473
811-2923
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Post-Effective Amendment No. 29 X
-

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940

Amendment No. 29 X
-

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

FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
(Exact name of Registrant as specified in charter)

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

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

It is proposed that this filing will become effective on April 29, 1996 pursuant
to paragraph (b) of Rule 485.

Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
previously elected to register an indefinite number of shares of common stock,
par value $1.00 per share, under the Securities Act of 1933. Registrant filed a
Rule 24f-2 Notice for its fiscal year ending December 31, 1995 on February 27,
1996.

<PAGE>

FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
CROSS-REFERENCE SHEET
N-1A Item No. Location
- ------------- --------

PART A: PROSPECTUS

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

PART B: STATEMENT OF ADDITIONAL INFORMATION

10. Cover Page. . . . . . . . . . . . . . . . . . . . Cover Page
11. Table of Contents . . . . . . . . . . . . . . . . Table of Contents
12. General Information and History . . . . . . . . . General Information
13. Investment Objectives and Policies. . . . . . . . Investment Policies;
Investment
Restrictions; State
Specific Risk Factors;
Insurance
14. Management of the Fund. . . . . . . . . . . . . . Directors or Trustees
and Officers
15. Control Persons and Principal
Holders of Securities. . . . . . . . . . . . . .
16. Investment Advisory and Other Services. . . . . . Management
17. Brokerage Allocation. . . . . . . . . . . . . . . Allocation of Portfolio
Brokerage
18. Capital Stock and Other Securities. . . . . . . . Determination of Net
Asset Value
19. Purchase, Redemption and Pricing
of Securities Being Offered. . . . . . . . . . . . Reduced Sales Charges,
Additional Exchange and
Redemption Information
and Other Services;
Determination of Net
Asset Value

<PAGE>

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

20. Tax Status. . . . . . . . . . . . . . . . . . . . Taxes
21. Underwriters. . . . . . . . . . . . . . . . . . . Underwriter
22. Performance Data. . . . . . . . . . . . . . . . . Performance Information
23. Financial Statements. . . . . . . . . . . . . . . Financial Statements;
Report of Independent
Accountants

PART C: OTHER INFORMATION

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

C-1

<PAGE>

FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
FIRST INVESTORS INSURED INTERMEDIATE
TAX EXEMPT FUND
A SERIES OF FIRST INVESTORS SERIES FUND

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

This is a Prospectus for FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
("INSURED TAX EXEMPT FUND") and FIRST INVESTORS INSURED INTERMEDIATE TAX EXEMPT
FUND ("INSURED INTERMEDIATE FUND"). INSURED INTERMEDIATE FUND is a separate
Series of FIRST INVESTORS SERIES FUND ("Series Fund"). INSURED TAX EXEMPT FUND
and Series Fund are each an open-end diversified management investment company
(collectively, "Tax Exempt Funds"). INSURED TAX EXEMPT FUND and INSURED
INTERMEDIATE FUND are sometimes referred to herein singularly as "Fund" and
collectively as "Funds." Each Fund sells two classes of shares. Investors may
select Class A or Class B shares, each with a public offering price that
reflects different sales charges and expense levels. See "Alternative Purchase
Plans."

The investment objective of each Fund is to seek to provide a high level of
interest income which is exempt from Federal income tax and is not an item of
tax preference for purposes of the Federal alternative minimum tax ("Tax
Preference Item"). Each Fund invests primarily in tax-exempt obligations issued
by or on behalf of states, territories and possessions of the United States and
the District of Columbia and their political subdivisions, agencies and
instrumentalities, the interest on which is exempt from Federal income tax and
is not a Tax Preference Item. There can be no assurance that the objective of
either Fund will be realized.

THE FUNDS' MUNICIPAL BONDS ARE INSURED AS TO TIMELY PAYMENT OF PRINCIPAL
AND INTEREST THROUGH THE ISSUER OR UNDER INSURANCE POLICIES WRITTEN BY
INDEPENDENT INSURANCE COMPANIES. INSURANCE DOES NOT PROTECT AGAINST
FLUCTUATIONS IN THE BONDS' MARKET VALUE OR THE NET ASSET VALUE PER SHARE OF EACH
FUND. FOR MORE INFORMATION REGARDING THE FUNDS' INSURANCE COVERAGE, SEE
"INSURANCE" ON PAGE 8.

This Prospectus sets forth concisely the information about the Funds that a
prospective investor should know before investing and should be retained for
future reference. First Investors Management Company, Inc. ("FIMCO" or
"Adviser") serves as investment adviser to the Funds and First Investors
Corporation ("FIC" or "Underwriter") serves as distributor of the Funds' shares.
A Statement of Additional Information ("SAI"), dated April 29, 1996 (which is
incorporated by reference herein), has been filed with the Securities and
Exchange Commission. The SAI is available at no charge upon request to the
Funds at the address or telephone number indicated above.

AN INVESTMENT IN THESE SECURITIES IS NOT A DEPOSIT OR OBLIGATION OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK AND IS NOT FEDERALLY INSURED OR PROTECTED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER GOVERNMENT AGENCY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

The date of this Prospectus is April 29, 1996

<PAGE>

FEE TABLE

The following table is intended to assist investors in understanding the
expenses associated with investing in each class of shares of a Fund. Shares of
either Fund issued prior to January 12, 1995 have been designated as Class A
shares.

SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<CAPTION>
Class A Class B
Shares Shares
------- -------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) . . . . . . . . . . . 6.25% None
Deferred Sales Load
(as a percentage of the lower of original purchase
price or redemption proceeds) . . . . . . . . . . . . . . None* 4% in the first year;
declining to 0% after
the sixth year
</TABLE>

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

<TABLE>
<CAPTION>
Insured Insured
Intermediate Fund Tax Exempt Fund
----------------- ---------------
Class A Class B Class A Class B
Shares+ Shares Shares Shares
------- ------- ------- -------
<S> <C> <C> <C> <C>
Management Fees(1) 0.40% 0.40%+ 0.69% 0.69%
12b-1 Fees(2) -0- 1.00 0.30 1.00
Other Expenses(3) 0.10 0.10+ 0.16 0.16
Total Fund Operating Expenses(4) 0.50 1.50+ 1.15 1.85
</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.
See "How to Buy Shares."
+ Net of waiver and/or reimbursement.
(1) For the fiscal year ended December 31, 1995, the Adviser waived Management
Fees for INSURED INTERMEDIATE FUND in excess of 0.40%. Absent the waiver,
such fees would have been 0.60%. The Adviser will continue to waive such
fees for a minimum period ending December 31, 1996.
(2) The Underwriter has agreed through December 31, 1996 to cap its right to
claim Class A 12b-1 Fees at the annual rate listed above for INSURED
INTERMEDIATE FUND. Series Fund's Class A Distribution Plan provides for a
12b-1 Fee in the total amount of up to 0.30% on an annual basis.
(3) Other Expenses for INSURED INTERMEDIATE FUND have been restated to reflect
current expenses. For the fiscal year ended December 31, 1995, the Adviser
reimbursed INSURED INTERMEDIATE FUND for certain Other Expenses. Absent
such reimbursement, Other Expenses would have been 0.33% for each class of
shares. The Adviser will reimburse each class of that Fund for Other
Expenses in excess of 0.10% for a minimum period ending December 31, 1996.
(4) If certain fees and expenses had not been waived or reimbursed, Total Fund
Operating Expenses for INSURED INTERMEDIATE FUND would have been 1.23% for
Class A shares and 1.93% for Class B shares.

For more complete descriptions of the various costs and expenses, see
"Investment Objectives and Policies-Insurance," "Alternative Purchase Plans,"
"Management," "Distribution Plans," "How to Buy Shares" and "How to Redeem
Shares." Due to the imposition of 12b-1 fees, it is possible that

<PAGE>

long-term shareholders of a Fund may pay more in total sales charges than the
economic equivalent of the maximum front-end sales charge permitted by the
rules of the National Association of Securities Dealers, Inc. The Fee Table
does not reflect the costs incurred by those shareholders of INSURED TAX EXEMPT
FUND who purchase their shares through First Investors Contractual Plans.

The Example below is based on Class A and Class B expense data for each
Fund's fiscal year ended December 31, 1995, except that certain Operating
Expenses have been restated, as noted above.

EXAMPLE

You would pay the following expenses on a $1,000 investment, assuming (1)
5% annual return and (2) redemption at the end of each time period:

<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
INSURED INTERMEDIATE FUND
Class A. . . . . . . . . . . . . $67 $78 $ 89 $121
Class B. . . . . . . . . . . . . 55 77 102 152*

INSURED TAX EXEMPT FUND
Class A. . . . . . . . . . . . . 73 97 122 194
Class B. . . . . . . . . . . . . 59 88 120 199*
</TABLE>

You would pay the following expenses on a $1,000 investment, assuming (1)
5% annual return and (2) no redemption at the end of each time period:

INSURED TAX EXEMPT FUND
Class A. . . . . . . . . . . . . 73 97 122 194
Class B. . . . . . . . . . . . . 19 58 100 199*
</TABLE>

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

THE EXPENSES IN THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION BY
THE FUNDS OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES IN FUTURE YEARS MAY BE
GREATER OR LESS THAN THOSE SHOWN.

<PAGE>

FINANCIAL HIGHLIGHTS

The following tables set forth the per share operating performance data for
a share outstanding, total return, ratios to average net assets and other
supplemental data for each year indicated. The tables have been derived from
financial statements which have been examined by Tait, Weller & Baker,
independent certified public accountants, whose reports thereon appear in the
SAI. This information should be read in conjunction with the Financial
Statements and Notes thereto, which also appear in the SAI, available at no
charge upon request to the Funds.

INSURED TAX EXEMPT FUND

<TABLE>
<CAPTION>
CLASS A CLASS B
- ---------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31 1/12/95*
------------------------------------------------------------------------------ to
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 12/31/95
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value,
Beginning of Year . . . . . $9.42 $10.56 $10.32 $10.22 $9.92 $10.03 $9.91 $9.64 $10.14 $9.48 $9.48
------ ----- ------ ------ ------ ------ ------ ----- ----- ------ ------
Income from Investment
Operations
Net investment income . . .52 .56 .60 .65 .69 .70 .71 .72 .72 .75 .44
Net realized and
unrealized gain (loss)
on investments . . . . .96 (1.15) .40 .15 .30 (.11) .12 .27 (.50) .68 .89
------ ----- ------ ------ ------ ------ ------ ----- ----- ------ ------
Total from Investment
Operations . . . . . . 1.48 (.59) 1.00 .80 .99 .59 .83 .99 .22 1.43 1.33
------ ----- ------ ------ ------ ------ ------ ----- ----- ------ ------
Less Distributions from:
Net investment income . . . .53 .55 .61 .65 .69 .70 .71 .72 .72 .76 .44
Net realized gains. . . . . -- -- .15 .05 -- -- -- -- -- .01 --
------ ----- ------ ------ ------ ------ ------ ----- ----- ------ ------
Total Distributions . . . .53 .55 .76 .70 .69 .70 .71 .72 .72 .77 .44
------ ----- ------ ------ ------ ------ ------ ----- ----- ------ ------
Net Asset Value,
End of Year . . . . . . . . $10.37 $9.42 $10.56 $10.32 $10.22 $ 9.92 $10.03 $9.91 $9.64 $10.14 $10.37
------ ----- ------ ------ ------ ------ ------ ----- ----- ------ ------
------ ----- ------ ------ ------ ------ ------ ----- ----- ------ ------
TOTAL RETURN(%)+ . . . . . . . 16.01 (5.61) 9.88 8.05 10.26 6.13 8.64 10.61 2.33 15.51 14.27

RATIOS/SUPPLEMENTAL DATA

Net Assets, End of Year
(in millions) . . . . . . . $1,373 $1,302 $1,507 $1,363 $1,208 $1,132 $1,079 $971 $853 $730 $2
Ratio to Average Net Assets:(%)
Expenses. . . . . . . . . . 1.14 1.18 1.15 1.16 1.13 1.14 1.01 1.04 1.13 1.02 1.88(a)
Net Investment Income . . . 5.25 5.64 5.69 6.32 6.82 7.03 7.16 7.33 7.39 7.75 4.45(a)

Portfolio Turnover Rate(%) . . 37 57 58 52 34 28 26 43 18 16 37
</TABLE>

- ----------------------
* Date shares first offered
+ Calculated without sales charge
(a) Annualized

<PAGE>

INSURED INTERMEDIATE FUND

<TABLE>
<CAPTION>
CLASS B
CLASS A SHARES SHARES
- ------------------------------------------------------------------------------------------------
1/12/95***
to
1995 1994 1993** 12/31/95
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value, Beginning of Period . . . . . . $5.43 $5.79 $5.79 $5.45
----- ----- ----- -----
Income from Investment Operations
Net investment income . . . . . . . . . . . . .30 .24 -- .25
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . . . .42 (.36) -- .41
----- ----- ----- -----
Total from Investment Operations. . . . . . . .72 (.12) -- .66
----- ----- ----- -----
Less Distributions from:
Net Investment Income . . . . . . . . . . . . .30 .24 -- .26
----- ----- ----- -----
Net Asset Value, End of Period . . . . . . . . . $5.85 $5.43 $5.79 $5.85
----- ----- ----- -----
----- ----- ----- -----
TOTAL RETURN+(%) 13.50 (2.05) .00 12.27

RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in thousands) . . . . $7,017 $5,688 $1,615 $378

Ratio to Average Net Assets:++(%)
Expenses. . . . . . . . . . . . . . . . . . . 35 .14 -- 1.35*
Net Investment Income . . . . . . . . . . . . 5.29 4.52 .54* 4.44*

Ratio to Average Net Assets Before
Expenses Waived or Assumed:(%)
Expenses. . . . . . . . . . . . . . . . . . . 1.22 .96 1.78* 2.22*
Net Investment Income . . . . . . . . . . . . 4.42 3.70 (1.24)* 3.54*

Portfolio Turnover Rate(%) . . . . . . . . . . . 47 210 0 47
</TABLE>

+ Calculated without sales charge
++ Net of expenses waived or assumed by the investment adviser
* Annualized
** From November 22, 1993 (commencement of operations) to December 31, 1993
*** Date shares first offered

<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

INSURED TAX EXEMPT FUND

The investment objective of INSURED TAX EXEMPT FUND is to provide a high
level of interest income which is exempt from Federal income tax and is not a
Tax Preference Item. The Fund seeks to achieve its objective by investing at
least 80% of its total assets in municipal bonds issued by or on behalf of
states, territories and possessions of the United States and the District of
Columbia and their political subdivisions, agencies and instrumentalities, the
interest on which is exempt from Federal income tax and is not a Tax Preference
Item. The Fund also may invest up to 20% of its total assets in certificates of
participation, municipal notes, municipal commercial paper and variable rate
demand instruments. See "Municipal Instruments," below.

INSURED INTERMEDIATE FUND

The investment objective of INSURED INTERMEDIATE FUND is to provide a high
level of interest income which is exempt from Federal income tax and is not a
Tax Preference Item. The Fund seeks to achieve its objective by investing at
least 80% of its total assets in Municipal Instruments, as defined below, which
are issued by or on behalf of states, territories and possessions of the United
States and the District of Columbia and their political subdivisions, agencies
and instrumentalities, the interest on which is exempt from Federal income tax
and is not a Tax Preference Item. See "Municipal Instruments," below.

GENERAL POLICIES

The Funds differ in the maturities of the securities in their portfolios
and, accordingly, in their degree of risk and level of income. Generally, bonds
with longer maturities are likely to exhibit greater fluctuations in market
value and have the potential for higher levels of income than bonds with shorter
maturities. In order to reduce the effect of bond price declines on a Fund's
net asset value during periods of rising interest rates, each Fund may invest in
shorter maturity securities. Conversely, during periods of falling interest
rates, each Fund may invest in longer maturity securities. There is no limit on
the maturity of any individual security in any Fund's portfolio. See "Debt
Securities-Risk Factors."

INSURED INTERMEDIATE FUND is designed for investors seeking a higher level
of income than is generally available on short-term tax-exempt bonds and money
market securities and who are willing to accept a greater degree of fluctuation
in principal. It is expected that, under normal market conditions, the Fund
will maintain a dollar-weighted average maturity of between three and ten years.

INSURED TAX EXEMPT FUND is designed for investors seeking a higher level of
income than is generally available on short-term and intermediate tax-exempt
bonds and who are willing to accept a potentially high degree of fluctuation in
principal. The Fund generally invests in bonds with maturities of over fifteen
years.

As used in this Prospectus and in the SAI, "Municipal Instruments" include
the following: (1) municipal bonds; (2) private activity bonds or industrial
development bonds; (3) certificates of

<PAGE>

participation ("COPs"); (4) municipal notes; (5) municipal commercial paper; and
(6) variable rate demand instruments ("VRDIs").

Each Fund may make loans of portfolio securities and invest in zero coupon
municipal securities. Each Fund may invest up to 25% of its net assets in
securities on a "when-issued" basis, which involves an arrangement whereby
delivery of, and payment for, the instruments occur up to 45 days after the
agreement to purchase the instruments is made by a Fund. Each Fund also may
invest 20% of its assets, on a temporary basis, in high quality fixed income
obligations, the interest on which is subject to Federal and state or local
income taxes. Each Fund also may invest up to 10% of its total assets in
municipal obligations on which the rate of interest varies inversely with
interest rates on other municipal obligations or an index (commonly referred to
as inverse floaters). INSURED INTERMEDIATE FUND also may acquire detachable
call options relating to municipal bonds and invest in repurchase agreements.
Each Fund may borrow money for temporary or emergency purposes in amounts not
exceeding 5% of its total assets. See "Description of Certain Securities, Other
Investment Policies and Risk Factors," below, and the SAI for more information
regarding these securities.

Although each Fund generally invests in municipal bonds rated Baa or higher
by Moody's Investors Service, Inc. ("Moody's") or BBB or higher by Standard &
Poor's Ratings Group ("S&P"), each Fund may invest up to 5% of its net assets in
lower rated municipal bonds or in unrated municipal bonds deemed to be of
comparable quality by the Adviser. See "Debt Securities--Risk Factors."
However, in each instance such municipal bonds will be covered by the insurance
feature and thus are considered to be of higher quality than lower rated
municipal bonds without an insurance feature. See "Insurance" for a discussion
of the insurance feature. The Adviser will carefully evaluate on a case-by-case
basis whether to dispose of or retain a municipal bond which has been downgraded
in rating subsequent to its purchase by a Fund. A description of municipal bond
ratings is contained in Appendix A to the SAI.

Each Fund may invest more than 25% of its total assets in a particular
segment of the municipal bond market, such as hospital revenue bonds, housing
agency bonds, industrial development bonds, airport bonds and university
dormitory bonds, during periods when one or more of these segments offer higher
yields and/or profit potential. This possible concentration of the assets of a
Fund may result in the Fund being invested in securities which are related in
such a way that economic, business, political developments, or other changes
which would affect one security would probably likewise affect the other
securities within that particular segment of the bond market. Such
concentration of a Fund's investments could increase market risks, but risk of
non-payment of interest when due, or default on the payment of principal, is
covered by the insurance feature of each Fund.

Each Fund's net asset value fluctuates based mainly upon changes in the
value of its portfolio securities. Each Fund's investment objective and certain
investment policies set forth in the SAI that are designated fundamental
policies may not be changed without shareholder approval. There can be no
assurance that either Fund will achieve its investment objective.

DESCRIPTION OF CERTAIN SECURITIES, OTHER INVESTMENT POLICIES AND RISK FACTORS

DEBT SECURITIES--RISK FACTORS. The market value of debt securities is
influenced significantly by changes in the level of interest rates. Generally,
as interest rates rise, the market value of debt

<PAGE>

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 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.
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
of loss of principal and income than higher-rated securities. See Appendix A to
the SAI for a description of municipal bond ratings.

INSURANCE. All municipal bonds in each Fund's portfolio will be insured as
to their scheduled payment of principal and interest at the time of purchase
either (1) under a Mutual Fund Insurance Policy purchased by the Tax Exempt
Funds from an independent insurance company; (2) under an insurance policy
obtained subsequent to a municipal bond's original issue or (3) under an
insurance policy obtained by the issuer or underwriter of such municipal bond at
the time of original issuance. An insured municipal bond in the portfolio of a
Fund typically will be covered by only one of the three policies. All three
types of insurance policies insure the scheduled payment of all principal and
interest on the Funds' municipal bonds as they fall due. The insurance does not
guarantee the market value or yield of the insured municipal bonds or the net
asset value or yield of the shares of a Fund. Investors should note that while
all municipal bonds in which the Funds will invest will be insured, INSURED TAX
EXEMPT FUND and INSURED INTERMEDIATE FUND each may invest up to 20% and 35%,
respectively, of its total assets in portfolio securities not covered by the
insurance feature. Each Tax Exempt Fund has purchased a Mutual Fund Insurance
Policy from AMBAC Indemnity Corporation ("AMBAC"), a Wisconsin stock insurance
company with its principal executive offices in New York City. Under certain
circumstances, each Tax Exempt Fund may obtain such insurance from an insurer
other than AMBAC, provided such insurer has a claims-paying ability rated AAA by
S&P and Aaa by Moody's. Because these insurance premiums are paid by each Fund,
a Fund's yield is reduced by this expense. See "Insurance" in the SAI for a
detailed discussion of the insurance feature.

INVERSE FLOATERS. Each Fund may invest in derivative securities on which
the rate of interest varies inversely with interest rates on similar securities
or the value of an index. For example, an inverse floating rate security may
pay interest at a rate that increases as a specified interest rate index
decreases but decreases as that index increases. The secondary market for
inverse floaters may be limited. The market value of such securities generally
is more volatile than that of a fixed rate obligation and, like most debt
obligations, will vary inversely with changes in interest rates. The interest
rates on inverse floaters may be significantly reduced, even to zero, if
interest rates rise. Each Fund may invest up to 10% of its net assets in
inverse floaters.

MUNICIPAL INSTRUMENTS

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

<PAGE>

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 to the SAI for a description of municipal bond ratings.

PRIVATE ACTIVITY BONDS OR INDUSTRIAL DEVELOPMENT BONDS. Certain types
of revenue bonds, referred to as private activity bonds ("PABs") or industrial
development bonds ("IDBs"), are issued by or on behalf of public authorities to
obtain funds to provide for various privately operated facilities, such as
airports or mass transportation facilities. Most PABs and IDBs are pure revenue
bonds and are not backed by the taxing power of the issuing agency or authority.
See "Taxes" in the SAI for a discussion of special tax consequences to
"substantial users," or persons related thereto, of facilities financed by PABs
or IDBs.

CERTIFICATES OF PARTICIPATION. COPs provide participation interests
in lease revenues and each certificate represents a proportionate interest in or
right to the lease-purchase payment made under municipal lease obligations or
installment sales contracts. In certain states, COPs constitute a majority of
new municipal financing issues. The possibility that a municipality will not
appropriate funds for lease payments is a risk of investing in COPs, although
this risk is mitigated by the fact that each COP will be covered by the
insurance feature. See "Certificates of Participation" in the SAI for further
information on COPs.

MUNICIPAL COMMERCIAL PAPER. Issues of municipal commercial paper
which a Fund may purchase are rated P-1 by Moody's or A-1 by S&P or have
insurance through the issuer or an independent insurance company and include
unsecured, short-term, 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. A
description of commercial paper ratings is contained in Appendix C to the SAI.

MUNICIPAL NOTES. Municipal notes which a Fund may purchase will be
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 B to the SAI.

VARIABLE RATE DEMAND INSTRUMENTS. VRDIs are Municipal Instruments,
the interest on which is adjusted periodically, and which allow the holder to
demand payment of all unpaid principal plus accrued interest from the issuer. A
VRDI that a Fund may purchase will be selected if it meets criteria established
and designed by the applicable Tax Exempt Fund's Board of Directors or Trustees
(each, a "Board") to minimize risk to that Fund. In addition, a VRDI must be
rated MIG-1 by Moody's or SP-1 by S&P or insured by the issuer or an independent
insurance company. There is a recognized after-market for VRDIs.

<PAGE>

RESTRICTED AND ILLIQUID SECURITIES. Each Fund may invest up to 15% of its
net assets in illiquid securities, including (1) securities that are illiquid
due to the absence of a readily available market or due to legal or contractual
restrictions on resale and (2) repurchase agreements maturing in more than seven
days. However, illiquid securities for purposes of this limitation do not
include securities eligible for resale under Rule 144A under the Securities Act
of 1933, as amended, which the applicable Tax Exempt Fund's Board or the Adviser
has determined are liquid under Board-approved guidelines. See the SAI for more
information regarding restricted and illiquid securities.

TAXABLE SECURITIES. Each Fund may invest up to 20% of its assets, on a
temporary basis, in high quality fixed income obligations, the interest on which
is subject to Federal and state or local income taxes. A Fund may, for example,
invest the proceeds from the sale of portfolio securities in taxable obligations
pending the investment or reinvestment thereof in Municipal Instruments. A Fund
may invest in highly liquid taxable obligations in order to avoid the necessity
of liquidating portfolio investments to meet redemptions by Fund investors. Each
Fund's temporary investments in taxable securities may consist of: (1)
obligations of the U.S. Government, its agencies or instrumentalities; (2) other
debt securities rated within the highest grade of S&P or Moody's; (3) commercial
paper rated in the highest grade by either of such rating services; and (4)
certificates of deposit and letters of credit. Certificates of deposit are
negotiable certificates issued against funds deposited in a commercial bank or a
savings and loan association for a definite period of time and earning a
specified return.

ALTERNATIVE PURCHASE PLANS

Each Fund has two classes of shares, Class A and Class B, which represent
interests in the same portfolio of securities and have identical voting,
dividend, liquidation and other rights and the same terms and conditions, except
that each class (i) is subject to a different sales charge and bears its
separate distribution and certain other class expenses; (ii) has exclusive
voting rights with respect to matters affecting only that class; and (iii) has
different exchange privileges.

CLASS A SHARES. Class A shares are sold with an initial sales charge of up
to 6.25% of the amount invested with discounts available for volume purchases.
Class A shares are subject to a maximum 12b-1 fee at the annual rate of 0.30% of
each Fund's average daily net assets attributable to Class A shares, of which no
more than 0.25% may be paid as a service fee and the balance thereof paid as an
asset-based sales charge. The initial sales charge is waived for certain
purchases and a contingent deferred sales charge ("CDSC") may be imposed on such
purchases. See "How to Buy Shares."

CLASS B SHARES. Class B shares are sold without an initial sales charge,
but are generally subject to a CDSC which declines in steps from 4% to 0% during
a six-year period and bear a higher 12b-1 fee than Class A shares. Class B
shares pay a 12b-1 fee at the annual rate of 1.00% of each Fund's average daily
net assets attributable to Class B shares, of which no more than 0.25% may be
paid as a service fee and the balance thereof paid as an asset-based sales
charge. Class B shares automatically convert into Class A shares after eight
years. See "How to Buy Shares."

FACTORS TO CONSIDER IN CHOOSING A CLASS OF SHARES. In deciding which
alternative is most suitable, an investor should consider several factors, as
discussed below. Regardless of whether an investor purchases Class A or Class B
shares, your Representative, as defined under "How to Buy Shares," receives
compensation for selling shares of a Fund, which may differ for each class.

<PAGE>

The principal advantages of purchasing Class A shares are the lower overall
expenses, the availability of quantity discounts on volume purchases and certain
account privileges which are not offered to Class B shareholders. If an
investor plans to make a substantial investment, the sales charge on Class A
shares may either be lower due to the reduced sales charges available on volume
purchases of Class A shares or waived for certain eligible purchasers. Because
of the reduced sales charge available on quantity purchases of Class A shares,
it is recommended that investments of $250,000 or more be made in Class A
shares. Investments in excess of $1,000,000 must be made in Class A shares.
Distributions paid by each Fund with respect to Class A shares will also
generally be greater than those paid with respect to Class B shares because
expenses attributable to Class A shares will generally be lower.

The principal advantage of purchasing Class B shares is that, since no
initial sales charge is paid, all of an investor's money is put to work from the
outset. Furthermore, although any investment in a Fund should only be viewed as
a long-term investment, if a redemption must be made soon after purchase, an
investor will pay a lower sales charge than if Class A shares had been
purchased. Conversely, because Class B shares are subject to a higher asset-
based sales charge, long-term Class B shareholders may pay more in asset-based
sales charges than the economic equivalent of the maximum sales charge on Class
A shares. The automatic conversion of Class B shares into Class A shares after
eight years is designed to reduce the probability of this occurring.

HOW TO BUY SHARES

You may buy shares of a Fund through a First Investors registered
representative ("FIC Representative") or through a registered representative
("Dealer Representative") of an unaffiliated broker-dealer ("Dealer") which is
authorized to sell shares of a Fund. Your FIC Representative or Dealer
Representative (each, a "Representative") may help you complete and submit an
application to open an account with a Fund. Certain accounts may require
additional documentation. Applications accompanied by checks drawn on U.S.
banks made payable to "FIC" and received in FIC's Woodbridge offices by the
close of regular trading on the NYSE, generally 4:00 P.M. (New York City time),
will be processed and shares will be purchased at the public offering price
determined at the close of regular trading on the NYSE on that day. Orders
received by Representatives before the close of regular trading on the NYSE and
received by FIC at their Woodbridge offices before the close of its business
day, generally 5:00 P.M. (New York City time), will be executed at the public
offering price determined at the close of regular trading on the NYSE on that
day. It is the responsibility of Representatives to promptly transmit orders
they receive to FIC. The "public offering price" is the net asset value plus
the applicable sales charge for Class A shares and net asset value for Class B
shares. Each Fund reserves the right to reject any application or order for its
shares for any reason and to suspend the offering of its shares.

Due to emergency conditions, such as snow storms, the Woodbridge offices of
FIC and Administrative Data Management Corp. (the "Transfer Agent") may not be
open for business on a day when the NYSE is open for regular trading and,
therefore, would be unable to accept purchase orders. Should this occur,
purchase orders will be executed at the public offering price determined at the
close of regular trading on the NYSE on the next business day that these offices
are open for business.

<PAGE>

WHEN YOU OPEN A FUND ACCOUNT, YOU MUST SPECIFY WHICH CLASS OF SHARES YOU
WISH TO PURCHASE. If you do not specify which class of shares you wish to
purchase, your order will be processed according to procedures established by
FIC. For more information, see the SAI.

INITIAL INVESTMENT IN A FUND. You may open a Fund account with as little
as $1,000. This account minimum is waived if you open an account for a
particular class of shares through a full exchange of shares of the same class
of another "Eligible Fund," as defined below. Class A share accounts opened
through an exchange of shares from First Investors Cash Management Fund, Inc. or
First Investors Tax-Exempt Money Market Fund, Inc. (collectively, "Money Market
Funds") may be subject to an initial sales charge. Automatic investment plans
allow you to open an account with as little as $50, provided you invest at least
$600 a year. See "Systematic Investing."

ADDITIONAL PURCHASES. After you make your first investment in a Fund, you
may purchase additional shares of a Fund by mailing a check made payable to FIC,
directly to First Investors Corporation, 581 Main Street, Woodbridge, NJ 07095-
1198, Attn: Dept. CP. Include your account number on the face of the check.
There is no minimum on additional purchases of Fund shares.

ELIGIBLE FUNDS. With respect to certain shareholder privileges noted in
this Prospectus and the SAI, each fund in the First Investors family of funds,
except as noted below, is an "Eligible Fund" (collectively, "Eligible Funds").
First Investors Special Bond Fund, Inc., First Investors Life Series Fund and
First Investors U.S. Government Plus Fund are not Eligible Funds. The Money
Market Funds, unless otherwise noted, are not Eligible Funds. The funds of
Executive Investors Trust ("Executive Investors") are Eligible Funds provided
the shares of any such fund either have been (a) acquired through an exchange
from an Eligible Fund which imposes a maximum sales charge of 6.25%, or (b) held
for at least one year from their date of purchase.

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

ELECTRONIC FUNDS TRANSFER. Shareholders who have an account with a U.S.
bank, or other financial institution that is an Automated Clearing House member,
may establish Electronic Funds Transfer. This permits shareholders to purchase
shares of a Fund through electronic funds transfer from a predesignated bank
account. The minimum amount which may be electronically transferred is $500 or
$50 for systematic investment programs and the maximum amount is $50,000. You
may purchase shares of a Fund through electronic funds transfer if the amount of
the purchase, together with all other purchases made by electronic funds
transfer into the account during the prior 30-day period, does not exceed
$100,000. Each Fund has the right, at its sole discretion, to limit or
terminate your ability to exercise the electronic funds transfer privilege at
any time. For additional information, see the SAI. Applications to establish
Electronic Funds Transfer are available from your FIC Representative or by
calling Shareholder Services at 1-800-423-4026.

CLASS A SHARES. Class A shares of each Fund are sold at the public
offering price, which will vary with the size of the purchase, as shown in the
following table:

<PAGE>

<TABLE>
<CAPTION>
SALES CHARGE AS % OF
---------------------- CONCESSION TO
OFFERING NET AMOUNT DEALERS AS % OF
AMOUNT OF INVESTMENT PRICE INVESTED OFFERING PRICE
- -------------------- -------- ---------- ---------------
<S> <C> <C> <C>
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
</TABLE>

There is no sales charge on transactions of $1 million or more, including
transactions of this amount that are subject to the Cumulative Purchase
Privilege or a Letter of Intent. The Underwriter will pay from its own
resources a sales commission to FIC Representatives and a concession equal to
0.90% of the amount invested to Dealers on such purchases. If shares are
redeemed within 24 months of purchase (or 18 months for shares purchased prior
to May 1, 1995), a CDSC of 1.00% will be deducted from the redemption proceeds.
The CDSC will be applied in the same manner as the CDSC on Class B shares. See
"Class B Shares."

CUMULATIVE PURCHASE PRIVILEGE AND LETTERS OF INTENT. You may purchase
Class A shares of a Fund at a reduced sales charge through the Cumulative
Purchase Privilege or by executing a Letter of Intent. For more information,
see the SAI, call your Representative or call Shareholder Services at 1-800-423-
4026.

WAIVERS OF CLASS A SALES CHARGES. Sales charges on Class A shares do not
apply to: (1) any purchase by an officer, director, trustee or employee (who has
completed the introductory employment period) of the Tax Exempt Funds, the
Underwriter, the Adviser, or their affiliates, by a Representative, or by the
spouse, or by the children and grandchildren under the age of 21 of any such
person; (2) any purchase by a former officer, director, trustee or employee of
the Tax Exempt Funds, the Underwriter, the Adviser, or their affiliates, or by a
former FIC Representative; provided they had acted as such for at least five
years and had retired or otherwise terminated the relationship in good standing;
(3) the proceeds of any settlement reached with FIC, FIMCO and/or certain First
Investors funds; (4) any reinvestment of the loan repayments by a participant in
a loan program of any First Investors sponsored qualified retirement plan; and
(5) a purchase with proceeds from the liquidation of a First Investors Life
Variable Annuity Fund A contract or a First Investors Life Variable Annuity Fund
C contract during the one-year period preceding the maturity date of the
contract.

Additionally, policyholders of participating life insurance policies issued
by First Investors Life Insurance Company ("FIL"), an affiliate of the Adviser
and Underwriter, may elect to invest dividends earned on such policies in Class
A shares of a Fund at net asset value, provided the annual dividend is at least
$50 and the policyholder has an existing account with the Fund.

Holders of certain unit trusts ("Unitholders") who have elected to invest
the entire amount of cash distributions from either principal, interest income
or capital gains or any combination thereof ("Unit Distributions") from the
following trusts may invest such Unit Distributions in Class A shares of a Fund
at a reduced sales charge. Unitholders of various series of New York Insured
Municipals-Income Trust sponsored by Van Kampen Merritt Inc. (the "New York
Trust"); Unitholders of various series of the Multistate Tax Exempt Trust
sponsored by Advest Inc.; and Unitholders of various

<PAGE>

series of the Municipal Insured National Trust, J.C. Bradford & Co. as agent,
may purchase Class A shares of a Fund with Unit Distributions at an offering
price which is the net asset value per share plus a sales charge of 1.5%.
Unitholders of various series of tax-exempt trusts, other than the New York
Trust, sponsored by Van Kampen Merritt Inc. may purchase Class A shares of a
Fund with Unit Distributions at an offering price which is the net asset value
per share plus a sales charge of 1.0%. Each Fund's initial minimum investment
requirement is waived for purchases of Class A shares with Unit Distributions.
Shares of a Fund purchased by Unitholders may be exchanged for Class A shares of
any Eligible Fund subject to the terms and conditions set forth under "How to
Exchange Shares."

CLASS B SHARES. The public offering price of Class B shares of each Fund
is the next determined net asset value, with no initial sales charge imposed. A
CDSC, however, is imposed upon most redemptions of Class B shares at the rates
set forth below:

CONTINGENT DEFERRED SALES CHARGE
YEAR SINCE PURCHASE AS A PERCENTAGE OF DOLLARS INVESTED
PAYMENT MADE OR REDEMPTION PROCEEDS
------------------- -----------------------------------
First. . . . . . . . . . . . 4%
Second . . . . . . . . . . . 4
Third. . . . . . . . . . . . 3
Fourth . . . . . . . . . . . 3
Fifth. . . . . . . . . . . . 2
Sixth. . . . . . . . . . . . 1
Seventh and thereafter . . . 0

The CDSC will not be imposed on (1) the redemption of Class B shares
acquired as dividends or other distributions, or (2) any increase in the net
asset value of redeemed shares above their initial purchase price (in other
words, the CDSC will be imposed on the lower of net asset value or purchase
price). In determining whether a CDSC is payable on any redemption, it will be
assumed that the redemption is made first of any Class B shares acquired as
dividends or distributions, second of Class B shares that have been held for a
sufficient period of time such that the CDSC no longer is applicable to such
shares and finally of Class B shares held longest during the period of time that
a CDSC is applicable to such shares. This will result in your paying the lowest
possible CDSC.

As an example, assume an investor purchased 100 shares of Class B shares at
$10 per share for a total cost of $1,000 and in the second year after purchase,
the net asset value per share is $12 and, during such time, the investor has
acquired 10 additional Class B shares as dividends. If at such time the
investor makes his or her first redemption of 50 shares (proceeds of $600), 10
shares will not be subject to a CDSC charge because redemptions are first made
of shares acquired through dividend reinvestment. With respect to the remaining
40 shares, the charge is applied only to the original cost of $10 per share and
not to the increase in net asset value of $2 per share. Therefore, $400 of the
$600 redemption proceeds will be charged at a rate of 4.00% (the applicable rate
in the second year after purchase).

For purposes of determining the CDSC on Class B shares, all purchases made
during a calendar month will be deemed to have been made on the first business
day of that month at the average cost of all purchases made during that month.
The holding period of Class B shares acquired through

<PAGE>

an exchange with another Eligible Fund will be calculated from the first
business day of the month that the Class B shares were initially acquired in the
other Eligible Fund. The amount of any CDSC will be paid to FIC. The CDSC
imposed on the purchase of Class B shares will be waived under certain
circumstances. See "Waivers of CDSC on Class B Shares" in the SAI.

CONVERSION OF CLASS B SHARES. A shareholder's Class B shares will
automatically convert to Class A shares approximately eight years after the date
of purchase, together with a pro rata portion of all Class B shares representing
dividends and other distributions paid in additional Class B shares. The Class
B shares so converted will no longer be subject to the higher expenses borne by
Class B shares. The conversion will be effected at the relative net asset
values per share of the two classes on the first business day of the month
following the month in which the eighth anniversary of the purchase of the Class
B shares occurs. If a shareholder effects one or more exchanges between Class B
shares of the Eligible Funds during the eight-year period, the holding period
for the shares so exchanged will commence upon the date of the purchase of the
original shares. Because the per share net asset value of the Class A shares
may be higher than that of the Class B shares at the time of conversion, a
shareholder may receive fewer Class A shares than the number of Class B shares
converted. See "Determination of Net Asset Value."

GENERAL. The Underwriter may at times agree to reallow to Dealers up to an
additional 0.25% of the dollar amount of shares of the Funds and/or certain
other First Investors funds sold by such Dealers during a specific period of
time. From time to time, the Underwriter also will pay, through additional
reallowances or other sources, a bonus or other compensation to Dealers that
employ a Dealer Representative who sells a minimum dollar amount of the shares
of the Funds and/or certain other First Investors funds during a specific period
of time. Such bonus or other compensation may take the form of reimbursement of
certain seminar expenses, co-operative advertising, or payment for travel
expenses, including lodging incurred in connection with trips taken by
qualifying Dealer Representatives to the Underwriter's principal office in New
York City.

HOW TO EXCHANGE SHARES

Should your investment needs change, you may exchange, at net asset value,
shares of a Fund for shares of any Eligible Fund, including the Money Market
Funds. In addition, Class A shares of a Fund may be exchanged at net asset
value for units of any single payment plan ("plan") sponsored by the
Underwriter. SHARES OF A PARTICULAR CLASS MAY BE EXCHANGED ONLY FOR SHARES OF
THE SAME CLASS OF ANOTHER FUND. Exchanges can only be made into accounts
registered to identical owners. If your exchange is into a new account, it must
meet the minimum investment and other requirements of the fund or plan into
which the exchange is being made. Additionally, the fund or plan must be
available for sale in the state where you reside. Before exchanging Fund shares
for shares of another fund or plan, you should read the Prospectus of the fund
or plan into which the exchange is to be made. You may obtain Prospectuses and
information with respect to which funds or plans qualify for the exchange
privilege free of charge by calling Shareholder Services at 1-800-423-4026.
Exchange requests received in "good order," as defined below, by the Transfer
Agent before the close of regular trading on the NYSE will be processed at the
net asset value determined as of the close of regular trading on the NYSE on
that day; exchange requests received after that time will be processed on the
following trading day.

EXCHANGES BY MAIL. To exchange shares by mail, you should mail requests to
Administrative Data Management Corp., 581 Main Street, Woodbridge, NJ 07095-
1198. Shares will be exchanged

<PAGE>

after the request is received in "good order" by the Transfer Agent. "Good
order" means that an exchange request must include: (1) the names of the funds,
account numbers (if existing accounts), the dollar amount, number of shares or
percentage of the account you wish to exchange; (2) share certificates, if
issued; and (3) the signature of all registered owners exactly as the account is
registered. If the request is not in good order or information is missing, the
Transfer Agent will seek additional information from you and process the
exchange on the day it receives such information. Certain account
registrations may require additional legal documentation in order to exchange.
To review these requirements, please call Shareholder Services at 1-800-423-
4026.

EXCHANGES BY TELEPHONE. See "Telephone Transactions."

ADDITIONAL EXCHANGE INFORMATION. Exchanges should be made for investment
purposes only. A pattern of frequent exchanges may be contrary to the best
interests of a Fund's other shareholders. Accordingly, each Fund has the right,
at its sole discretion, to limit the amount of an exchange, reject any exchange,
or, upon 60 days' notice, materially modify or discontinue the exchange
privilege. Each Fund will consider all relevant factors in determining whether
a particular frequency of exchanges is contrary to the best interests of the
Fund and/or a class of the Fund and its other shareholders. Any such
restriction will be made by a Fund on a prospective basis only, upon notice to
the shareholder not later than ten days following such shareholder's most recent
exchange.

HOW TO REDEEM SHARES

You may redeem your Fund shares at the next determined net asset value,
less any applicable CDSC, on any day the NYSE is open, directly through the
Transfer Agent. Your Representative may help you with this transaction. Shares
may be redeemed by mail or telephone. Certain account registrations may require
additional legal documentation in order to redeem. Redemption requests received
in "good order" by the Transfer Agent before the close of regular trading on the
NYSE, will be processed at the net asset value, less any applicable CDSC,
determined as of the close of regular trading on the NYSE on that day. Payment
of redemption proceeds generally will be made within seven days. If the shares
being redeemed were recently purchased by check, payment may be delayed to
verify that the check has been honored, normally not more than fifteen days.

Due to emergency conditions, such as snow storms, the Woodbridge offices of
FIC and the Transfer Agent may not be open for business on a day when the NYSE
is open for regular trading and, therefore, would be unable to accept redemption
requests. Should this occur, redemption requests will be executed at the at the
net asset value, less any applicable CDSC, determined at the close of regular
trading on the NYSE on the next business day that these offices are open for
business.

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

<PAGE>

SIGNATURE GUARANTEES. In order to protect you, the Tax Exempt Funds and
their agents, each Fund reserves the right to require signature guarantees in
order to process certain exchange or redemption requests. A notary public is
not an acceptable guarantor. See the SAI or call Shareholder Services at 1-800-
423-4026 for instances when signature guarantees are required.

REDEMPTIONS BY TELEPHONE. See "Telephone Transactions."

ELECTRONIC FUNDS TRANSFER. Shareholders who have established Electronic
Funds Transfer may have redemption proceeds electronically transferred to a
predesignated bank account. The minimum amount which may be electronically
transferred is $500 and the maximum amount is $50,000. You may redeem shares of
a Fund through electronic funds transfer if the amount of the redemption,
together with all other redemptions made by electronic funds transfer from the
account during the prior 30-day period, does not exceed $100,000. Each Fund has
the right, at its sole discretion, to limit or terminate your ability to
exercise the electronic funds transfer privilege at any time. For additional
information, see the SAI. Applications to establish Electronic Funds Transfer
are available from your FIC Representative or by calling Shareholder Services at
1-800-423-4026.

SYSTEMATIC WITHDRAWAL PLAN. If you own noncertificated shares, you may set
up a plan for redemptions to be made automatically at regular intervals. You
may elect to have the payments automatically (a) sent directly to you or, if
signature guarantees are obtained, to persons you designate; or (b) invested in
shares of the same class of any other Eligible Fund, including the Money Market
Funds; or (c) paid to FIL for the purchase of a life insurance policy or a
variable annuity. See the SAI for more information on the Systematic Withdrawal
Plan. For information regarding the Systematic Withdrawal Plan, call
Shareholder Services at 1-800-423-4026.

REPURCHASE THROUGH UNDERWRITER. You may redeem Class A shares through a
Dealer. In this event, the Underwriter, acting as agent for each Fund, will
offer to repurchase or accept an offer to sell such shares at a price equal to
the net asset value next determined after the making of such offer. The Dealer
may charge you an added commission for handling any redemption transaction.

REDEMPTION OF LOW BALANCE ACCOUNTS. Because each Fund incurs certain fixed
costs in maintaining shareholder accounts, each Fund may redeem without your
consent, on at least 60 days' prior written notice (which may appear on your
account statement), any Fund account of Class A or Class B shares which has a
net asset value of less than $500. To avoid such redemption, you may, during
such 60-day period, purchase additional Fund shares of the same class so as to
increase your account balance to the required minimum. There will be no CDSC
imposed on such redemptions of Class B shares. A Fund will not redeem accounts
that fall below $500 solely as a result of a reduction in net asset value.
Accounts established under a Systematic Investment Plan that have been
discontinued prior to meeting the $1,000 minimum are subject to this policy.

<PAGE>

Additional information concerning how to redeem shares of a Fund is
available upon request to your Representative or Shareholder Services at
1-800-423-4026.

TELEPHONE TRANSACTIONS

Unless you specifically decline to have telephone privileges, you, or any
person who we reasonably believe is authorized to act on your behalf, may redeem
or exchange noncertificated shares of a Fund by calling the Special Services
Department at 1-800-342-6221 weekdays (except holidays) between 9:00 A.M. and
5:00 P.M. (New York City time). Exchange or redemption requests received before
the close of regular trading on the NYSE will be processed at the net asset
value, less any applicable CDSC, determined as of the close of business on that
day. For more information on telephone privileges, please call Shareholder
Services at 1-800-423-4026 or see the SAI.

TELEPHONE EXCHANGES. Exchange requests may be made by telephone (for
shares held on deposit only). Telephone exchanges to Money Market Funds are not
available if your address of record has changed within 60 days prior to the
exchange request.

TELEPHONE REDEMPTIONS. The telephone redemption privilege may be used
provided: (1) the redemption proceeds are being mailed to the address of record;
(2) your address of record has not changed within the past 60 days; (3) the
shares to be redeemed have not been issued in certificate form; (4) each
redemption does not exceed $50,000; and (5) the proceeds of the redemption,
together with all redemptions made from the account during the prior 30-day
period, do not exceed $100,000. TELEPHONE REDEMPTION INSTRUCTIONS WILL BE
ACCEPTED FROM ANY ONE OWNER OR AUTHORIZED INDIVIDUAL.

ADDITIONAL INFORMATION. The Tax Exempt Funds, the Adviser, the Underwriter
and their officers, directors, trustees and employees will not be liable for any
loss, damage, cost or expense arising out of any instruction (or any
interpretation of such instruction) received by telephone or which they
reasonably believe to be authentic. This policy places the entire risk of loss
for unauthorized or fraudulent transactions on the shareholder, except that if
the above-referenced parties do not follow reasonable procedures, some or all of
them may be liable for any such losses. For more information on telephone
transactions see the SAI. The Tax Exempt Funds have the right, at their sole
discretion, upon 60 days' notice, to materially modify or discontinue the
telephone exchange and redemption privilege. During times of drastic economic
or market changes, telephone exchanges or redemptions may be difficult to
implement. If you experience difficulty in making a telephone exchange or
redemption, your exchange or redemption request may be made by regular or
express mail, and it will be implemented at the next determined net asset value,
less any applicable CDSC, following receipt by the Transfer Agent.

MANAGEMENT

BOARD OF DIRECTORS OR TRUSTEES. Each Tax Exempt Fund's Board, as part of
its overall management responsibility, oversees various organizations
responsible for the applicable Fund's day-to-day management.

ADVISER. First Investors Management Company, Inc. supervises and manages
each Fund's investments, determines each Fund's portfolio transactions and
supervises all aspects of each Fund's operations. The Adviser is a New York
corporation located at 95 Wall Street, New York, NY 10005.

<PAGE>

The Adviser presently acts as investment adviser to 14 mutual funds. First
Investors Consolidated Corporation ("FICC") owns all of the voting common stock
of the Adviser and all of the outstanding stock of FIC and the Transfer Agent.
Mr. Glenn O. Head controls FICC and, therefore, controls the Adviser.

As compensation for its services, the Adviser receives an annual fee from
each of the Funds, which is payable monthly. For the fiscal year ended December
31, 1995, the advisory fees for INSURED TAX EXEMPT FUND were 0.69% of its
average daily net assets. For the same period, INSURED INTERMEDIATE FUND's
advisory fees, net of waiver, were 0.40%. The SEC staff takes the position that
advisory fees of 0.75% or greater are higher than those paid by most investment
companies.

PORTFOLIO MANAGER. Clark D. Wagner has been Portfolio Manager of the Funds
since he joined FIMCO in 1991. Mr. Wagner is also Portfolio Manager for all of
First Investors municipal bond funds. Mr. Wagner is also Portfolio Manager for
Government Fund, Target Maturity 2007 Fund and Target Maturity 2010 Fund of
First Investors Life Series Fund and First Investors Government Fund, Inc. Mr.
Wagner is also responsible for the day-to-day management of the U.S. Government
and mortgage-backed securities portion of Total Return Fund of First Investors
Series Fund. In 1992, he became Chief Investment Officer of FIMCO.

BROKERAGE. Each Fund may allocate brokerage commissions, if any, to
broker-dealers in consideration of Fund share distribution, but only when
execution and price are comparable to that offered by other broker-dealers.
Brokerage may be directed to brokers who provide research. See the SAI for more
information on allocation of portfolio brokerage.

UNDERWRITER. Each Tax Exempt Fund has entered into an Underwriting
Agreement with First Investors Corporation, 95 Wall Street, New York, NY 10005,
as Underwriter. The Underwriter receives all sales charges in connection with
the sale of each Fund's Class A shares and all CDSCs in connection with each
Fund's Class B shares and may receive other payments under a plan of
distribution. See "How to Buy Shares" and "Distribution Plans."

DISTRIBUTION PLANS

Pursuant to separate distribution plans pertaining to each Fund's Class A
and Class B shares ("Class A Plan" or "Class B Plan," and collectively,
"Plans"), each Fund may reimburse or compensate, as applicable, the Underwriter
for certain expenses incurred in the distribution of that Fund's shares
("distribution fees") and the servicing or maintenance of existing Fund
shareholder accounts ("service fees"). Pursuant to the Plans, distribution fees
are paid for activities relating to the distribution of Fund shares, including
costs of printing and dissemination of sales material or literature,
prospectuses and reports used in connection with the sale of Fund shares.
Service fees are paid for the ongoing maintenance and servicing of existing
shareholder accounts, including payments to Representatives who provide
shareholder liaison services to their customers who are holders of that Fund,
provided they meet certain criteria.

Pursuant to INSURED TAX EXEMPT FUND'S Class A Plan, the Fund's Board of
Directors, in its sole discretion, may periodically allocate the portion of
distribution fees and services fees that may be spent, provided the aggregate of
such fees paid by the Fund may not exceed an annual rate of 0.30% of its average
daily net assets attributable to Class A shares in any one fiscal year. Of that

<PAGE>

amount, no more than 0.25% of the Fund's average daily net assets attributable
to Class A shares may be paid as service fees. Payments made to the Underwriter
will be for reimbursement of specific expenses incurred in connection with
distribution and service activities.

Pursuant to INSURED INTERMEDIATE FUND's Class A Plan, the Fund is
authorized to pay the Underwriter a distribution fee at the annual rate of 0.05%
of the Fund's average daily net assets attributable to Class A shares and a
service fee of 0.25% of the Fund's average daily net assets attributable to
Class A shares. Payments made to the Underwriter will represent compensation
for distribution and service activities, not reimbursement for specific expenses
incurred.

Pursuant to each Class B Plan, each Fund is authorized to pay the
Underwriter a distribution fee at the annual rate of 0.75% of that Fund's
average daily net assets attributable to Class B shares and a service fee of
0.25% of the Fund's average daily net assets attributable to Class B shares.
Payments made to the Underwriter under each Class B Plan will represent
compensation for distribution and service activities, not reimbursement for
specific expenses incurred.

Although Class B shares are sold without an initial sales charge, the
Underwriter pays from its own resources a sales commission to FIC
Representatives and a concession equal to 3.5% of the amount invested to Dealers
who sell Class B shares. In addition, the Underwriter will make quarterly
payments of service fees to Representatives commencing after the thirteenth
month following the initial sale of Class B shares. The Underwriter will make
such payments at an annual rate of up to 0.25% of the average net asset value of
Class B shares which are attributable to shareholders for whom the
Representatives are designated as dealer of record.

Each Fund may suspend or modify payments under the Plans at any time, and
payments are subject to the continuation of each Plan, the terms of any dealer
agreements between Dealers and the Underwriter and any applicable limits imposed
by the National Association of Securities Dealers, Inc. Each Fund will not
carry over any fees under the Plans to the next fiscal year. See "Distribution
Plans" in the SAI for a full discussion of the various Plans.

DETERMINATION OF NET ASSET VALUE

The net asset value of each Fund's shares fluctuates and is determined
separately for each class of shares. The per share net asset value of the Class
B shares will generally be lower than that of the Class A shares because of the
higher expenses borne by the Class B shares. The net asset value of shares of a
given class of each Fund is determined as of the close of regular trading on the
NYSE (generally 4:00 P.M., New York City time) on each day the NYSE is open for
trading, and at such other times as the applicable Tax Exempt Fund's Board deems
necessary, by dividing the market value of the securities held by such Fund,
plus any cash and other assets, less all liabilities attributable to that class,
by the number of shares of the applicable class outstanding. If there is no
available market value, securities will be valued at their fair value as
determined in good faith pursuant to procedures adopted by the applicable Tax
Exempt Fund's Board. The NYSE currently observes the following holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day.

<PAGE>

DIVIDENDS AND OTHER DISTRIBUTIONS

Dividends from net investment income are generally declared daily and paid
monthly by each Fund. Unless you direct the Transfer Agent otherwise, dividends
declared on a class of shares of a Fund are paid in additional shares of that
class at the net asset value generally determined as of the close of business on
the first business day of the following month. If you redeem all of your shares
of a Fund at any time during a month, you are paid all dividends declared
through the day prior to the date of the redemption, together with the proceeds
of your redemption, less any applicable CDSC. Net investment income includes
interest, earned discount and other income earned on portfolio securities less
expenses.

Each Fund also distributes with its regular dividend at the end of each
year substantially all of its net capital gain (the excess of net long-term
capital gain over net short-term capital loss) and net short-term capital gain,
if any, after deducting any available capital loss carryovers. Unless you
direct the Transfer Agent otherwise, these distributions are paid in additional
shares of the same class of the distributing Fund at the net asset value
generally determined as of the close of business on the business day immediately
following the record date of the distribution. A Fund may make an additional
distribution in any year if necessary to avoid a Federal excise tax on certain
undistributed ordinary (taxable) income and capital gain.

Dividends and other distributions 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 a 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 elect to receive dividends and/or other distributions in
cash by notifying the Transfer Agent by telephone or in writing prior to the
record date of any such distribution. If you elect this form of payment, the
payment date generally is two weeks following the record date of any such
distribution. Your election remains in effect until you revoke it by notifying
the Transfer Agent.

You may elect to invest the entire amount of any cash distribution on Class
A shares of a Fund in Class A shares of any Eligible Fund, including the Money
Market Funds, by notifying the Transfer Agent. See "How to Buy Shares--Cross-
Investment of Cash Distributions." The investment will be made at the net asset
value per Class A share of the other fund, generally determined as of the close
of business, on the business day immediately following the record date of any
such distribution.

A dividend or other distribution paid on a class of shares of a Fund will
be paid in additional shares of that class and not in cash if any of the
following events occurs: (1) the total amount of the distribution is under $5,
(2) the Fund has received notice of your death on an individual account (until
written alternate payment instructions and other necessary documents are
provided by your legal representative), or (3) a distribution check is returned
to the Transfer Agent, marked as being undeliverable, by the U.S. Postal Service
after two consecutive mailings.

<PAGE>

TAXES

Each Fund has qualified and intends to continue to qualify for treatment as
a regulated investment company under the Internal Revenue Code of 1986, as
amended (the "Code"), so that it will be relieved of Federal income tax on that
part of its investment company taxable income (consisting generally of taxable
net investment income and net short-term capital gain) and net capital gain that
is distributed to its shareholders. In addition, each Fund intends to continue
to qualify to pay "exempt-interest dividends" (as defined below), which
requires, among other things, that at the close of each calendar quarter at
least 50% of the value of its total assets must consist of Municipal
Instruments.

Distributions by a Fund of the excess of interest income from Municipal
Instruments over certain amounts disallowed as deductions, which are designated
by the Fund as "exempt-interest dividends," generally may be excluded by you
from gross income. Distributions by a Fund of interest income from taxable
obligations and net short-term capital gain, if any, are taxable to you as
ordinary income to the extent of the Fund's earnings and profits, whether
received in cash or paid in additional Fund shares. Distributions of a Fund's
realized net capital gain, if any, when designated as such, are taxable to you
as long-term capital gains, whether received in cash or paid in additional Fund
shares, regardless of the length of time you have owned your shares. If you
purchase your shares shortly before the record date for a taxable dividend or
capital gain distribution, you will pay full price for the shares and receive
some portion of the price back as a taxable distribution. You will receive a
statement following the end of each calendar year describing the tax status of
distributions paid by your Fund during that year.

Interest on indebtedness incurred or continued to purchase or carry shares
of a Fund will not be deductible for Federal income tax purposes to the extent
the Fund's distributions consist of exempt-interest dividends. Each Fund does
not intend to invest in PABs or IDBs the interest on which is treated as a Tax
Preference Item.

Proposals have been and, in the future, may be introduced before Congress
for the purpose of restricting or eliminating the Federal income tax exemption
for interest on Municipal Instruments. If such a proposal were enacted, the
availability of Municipal Instruments for investment by each Fund and the value
of its portfolio securities would be affected. In that event, each Fund would
reevaluate its investment objective and policies.

Each Fund is required to withhold 31% of all taxable dividends, capital
gain distributions and redemption proceeds payable to you after any applicable
CDSC is deducted (if you are an individual or certain other non-corporate
shareholder) if the Fund is not furnished with your correct taxpayer
identification number, and the same percentage of dividends and such
distributions in certain other circumstances.

Your redemption of Fund shares will result in a taxable gain or loss to
you, depending on whether the redemption proceeds are more or less than your
adjusted basis for the redeemed shares (which normally includes any initial
sales charge paid on Class A shares). An exchange of Fund shares for shares of
any other Eligible Fund generally will have similar tax consequences. However,
special tax rules apply if you (1) dispose of Class A shares through a
redemption or exchange within 90 days of your purchase and (2) subsequently
acquire Class A shares of the same Fund or an Eligible Fund without paying a
sales charge due to the reinvestment privilege or exchange privilege.

<PAGE>

In these cases, any gain on your disposition of the original Class A shares will
be increased, or loss decreased, by the amount of the sales charge you paid when
the shares were acquired, and that amount will increase the basis of the
Eligible Fund's shares subsequently acquired. In addition, if you purchase
shares of a Fund within 30 days before or after redeeming other shares of that
Fund (regardless of class) at a loss, all or a portion of the loss will not be
deductible and will increase the basis of the newly purchased shares.

No gain or loss will be recognized to a shareholder as a result of a
conversion of Class B shares into Class A shares.

The foregoing is only a summary of some of the important Federal income tax
considerations generally affecting each Fund and its shareholders; see the SAI
for a further discussion. There may be other Federal, state or local tax
considerations applicable to a particular investor; for example, a Fund's
distributions may be wholly or partly taxable under state and/or local laws. You
therefore are urged to consult your own tax adviser.

PERFORMANCE INFORMATION

For purposes of advertising, each Fund's performance may be calculated for
each class of its shares based on average annual total return and total return.
Each of these figures reflects past performance and does not necessarily
indicate future results. Average annual total return shows the average annual
percentage change in an assumed $1,000 investment. It reflects the hypothetical
annually compounded return that would have produced the same total return if a
Fund's performance had been constant over the entire period. Because average
annual total return tends to smooth out variations in a Fund's return, you
should recognize that it is not the same as actual year-by-year results. Average
annual total return includes the effect of paying the maximum sales charge (in
the case of Class A shares) or the deduction of any applicable CDSC (in the case
of Class B shares) and payment of dividends and other distributions in
additional shares. One, five and ten year periods will be shown unless the
class has been in existence for a shorter period. Total return is computed
using the same calculations as average annual total return. However, the rate
expressed is the percentage change from the initial $1,000 invested to the value
of the investment at the end of the stated period. Total return calculations
assume reinvestment of dividends and other distributions.

Each Fund also may advertise its yield for each class of shares. Yield
reflects investment income net of expenses over a 30-day (or one-month) period
on a Fund share, expressed as an annualized percentage of the maximum offering
price per share for Class A shares and the net asset value per share for Class B
shares at the end of the period. Yield computations differ from other
accounting methods and therefore may differ from dividends actually paid or
reported net income.

Tax-equivalent yields show the taxable yields an investor would have to
earn to equal a Fund's tax-free yields. The tax-equivalent yield is calculated
similarly to the yield, except that the yield is increased using a stated income
tax rate to demonstrate the taxable yield necessary to produce an after-tax
yield equivalent to a Fund's tax-free yield. Each Fund may also advertise its
"actual distribution rate" for each class of shares. This is computed in the
same manner as yield except that actual income dividends declared per share
during the period in question are substituted for net investment income per
share. In addition, each Fund calculates its "actual distribution rate" based
upon net asset value for dissemination to existing shareholders.

<PAGE>

Each of the above performance calculations may be based on investment at
reduced sales charge levels or at net asset value. Any quotation of performance
figures not reflecting the maximum sales charge or CDSC will be greater than if
the maximum sales charge or CDSC were used. Each class of shares of a Fund has
different expenses which will affect its performance. Additional performance
information is contained in the Funds' Annual Reports which may be obtained
without charge by contacting the applicable Fund at 1-800-423-4026.

GENERAL INFORMATION

ORGANIZATION. INSURED TAX EXEMPT FUND was incorporated in the State of
Maryland on September 28, 1976. Series Fund is a Massachusetts business trust
organized on September 23, 1988. Each Fund is authorized to issue shares of
beneficial interest or common stock, as applicable, in such separate and
distinct series and classes of shares as that Tax Exempt Fund's Board shall from
time to time establish. The shares of common stock of INSURED TAX EXEMPT FUND
presently comprise one series and the shares of beneficial interest of Series
Fund are presently divided into five separate and distinct series. Each Tax
Exempt Fund presently has 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 Tax Exempt Funds do not hold annual shareholder meetings. If
requested to do so by the holders of at least 10% of a Tax Exempt Fund's
outstanding shares, that Tax Exempt Fund's Board will call a special meeting of
shareholders for any purpose, including the removal of Directors or Trustees.
Each share of each Fund has equal voting rights except as noted.

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

TRANSFER AGENT. Administrative Data Management Corp., 581 Main Street,
Woodbridge, NJ 07095-1198, an affiliate of FIMCO and FIC, acts as transfer and
dividend disbursing agent for each Fund and as redemption agent for regular
redemptions. The Transfer Agent's telephone number is 1-800-423-4026.

SHARE CERTIFICATES. The Funds do not issue certificates for Class B shares
or for Class A shares purchased under any retirement account. The Funds,
however, will issue share certificates for Class A shares at the shareholder's
request. Ownership of shares of each Fund is recorded on a stock register by
the Transfer Agent and shareholders have the same rights of ownership with
respect to such shares as if certificates had been issued.

CONFIRMATIONS AND STATEMENTS. You will receive confirmations of purchases
and redemptions of shares of a Fund. Statements of shares owned will be sent to
you following a transaction in the account, including payment of a dividend or
capital gain distribution in additional shares or cash.

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

ANNUAL AND SEMI-ANNUAL REPORTS TO SHAREHOLDERS. It is each Fund's practice
to mail only one copy of its annual and semi-annual reports to any address at
which more than one shareholder with the same last name has indicated that mail
is to be delivered. Additional copies of the reports will be mailed if
requested in writing or by telephone by any shareholder. Each Fund will ensure
that

<PAGE>

an additional copy of such reports are sent to any shareholder who subsequently
changes his or her mailing address.

<PAGE>

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

Fee Table. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Investment Objectives and Policies . . . . . . . . . . . . . . . . . . . . 6
Alternative Purchase Plans . . . . . . . . . . . . . . . . . . . . . . . . 10
How to Buy Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
How to Exchange Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 15
How to Redeem Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Telephone Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Distribution Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . . 20
Dividends and Other Distributions. . . . . . . . . . . . . . . . . . . . . 21
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Performance Information. . . . . . . . . . . . . . . . . . . . . . . . . . 23
General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

ADVISER CUSTODIAN
First Investors Management The Bank of New York
Company, Inc. 48 Wall Street
95 Wall Street New York, NY 10286
New York, NY 10005
TRANSFER AGENT
UNDERWRITER Administrative Data
First Investors Corporation Management Corp.
95 Wall Street 581 Main Street
New York, NY 10005 Woodbridge, NJ 07095-1198

LEGAL COUNSEL AUDITORS
Kirkpatrick & Lockhart LLP Tait, Weller & Baker
1800 Massachusetts Avenue, N.W. Two Penn Center Plaza
Washington, D.C. 20036 Philadelphia, PA 19102-1707

THIS PROSPECTUS IS INTENDED TO CONSTITUTE AN OFFER BY EACH TAX EXEMPT FUND ONLY
OF THE SECURITIES OF WHICH IT IS THE ISSUER AND IS NOT INTENDED TO CONSTITUTE AN
OFFER EITHER FUND OF THE SECURITIES OF THE OTHER FUND WHOSE SECURITIES ARE ALSO
OFFERED BY THIS PROSPECTUS. NEITHER FUND INTENDS TO MAKE ANY REPRESENTATION AS
TO THE ACCURACY OR COMPLETENESS OF THE DISCLOSURE IN THIS PROSPECTUS RELATING TO
THE OTHER FUND. NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS OR THE STATEMENT OF ADDITIONAL INFORMATION, AND IF GIVEN OR
MADE, SUCH INFORMATION AND REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY EITHER TAX EXEMPT FUND, FIRST INVESTORS CORPORATION, OR ANY
AFFILIATE THEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SHARES OFFERED HEREBY IN ANY STATE TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH STATE.

<PAGE>

First Investors
Insured Tax Exempt
Fund, Inc.
- ---------------------------

First Investors
Insured Intermediate
Tax Exempt Fund
A Series of
First Investors Series Fund

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

Prospectus

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

April 29, 1996

First Investors Logo

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

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

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

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

The following language appears on the lefthand side:

FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
FIRST INVESTORS INSURED INTERMEDIATE TAX EXEMPT FUND
a Series of First Investors Series Fund
95 WALL STREET
NEW YORK, NY 10005

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

<PAGE>

FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.

FIRST INVESTORS INSURED INTERMEDIATE
TAX EXEMPT FUND, A SERIES OF
FIRST INVESTORS SERIES FUND

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

STATEMENT OF ADDITIONAL INFORMATION
DATED APRIL 29, 1996

This is a Statement of Additional Information ("SAI") for FIRST INVESTORS
INSURED TAX EXEMPT FUND, INC. ("Insured Tax Exempt Fund") and FIRST INVESTORS
INSURED INTERMEDIATE TAX EXEMPT FUND ("INSURED INTERMEDIATE FUND"). INSURED
INTERMEDIATE FUND is a separate series of FIRST INVESTORS SERIES FUND ("Series
Fund"). Insured Tax Exempt Fund and Series Fund are each an open-end
diversified management investment company (collectively, "Tax Exempt Funds").
INSURED TAX EXEMPT FUND and INSURED INTERMEDIATE FUND are sometimes referred to
herein singularly as "Fund" and collectively as "Funds." The investment
objective of each Fund is to seek to provide a high level of interest income
which is exempt from Federal income tax and is not an item of tax preference for
purposes of the Federal alternative minimum tax ("Tax Preference Item"). There
can be no assurance that the objective of any Fund will be realized.

This SAI is not a prospectus. It should be read in conjunction with the
Tax Exempt Funds' Prospectus dated April 29, 1996, which may be obtained free of
cost from the Tax Exempt Funds at the address or telephone number noted above.

TABLE OF CONTENTS
Page
----
Investment Policies. . . . . . . . . . . . . . . . . . . . . . . . . . 2
Hedging and Option Income Strategies . . . . . . . . . . . . . . . . . 6
Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Investment Restrictions. . . . . . . . . . . . . . . . . . . . . . . . 16
Directors or Trustees and Officers . . . . . . . . . . . . . . . . . . 20
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Underwriter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Distribution Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . 26
Allocation of Portfolio Brokerage. . . . . . . . . . . . . . . . . . . 27
Reduced Sales Charges, Additional Exchange and
Redemption Information and Other Services. . . . . . . . . . . . . . 27
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Performance Information. . . . . . . . . . . . . . . . . . . . . . . . 35
General Information. . . . . . . . . . . . . . . . . . . . . . . . . . 39
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Appendix C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Appendix D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 53

<PAGE>

INVESTMENT POLICIES

BOND MARKET CONCENTRATION. Each Fund may invest more than 25% of its total
assets in a particular segment of the municipal bond market, such as hospital
revenue bonds, housing agency bonds, industrial development bonds, utility bonds
and university bonds, during periods when one or more of these segments offer
higher yields and/or profit potential. As of December 31, 1995, INSURED TAX
EXEMPT FUND had 25.43% of its assets in general obligation bonds and INSURED
INTERMEDIATE FUND had 47.64% of its assets in general obligation bonds.

CERTIFICATES OF PARTICIPATION. The applicable Tax Free Fund's Board of
Directors or Trustees (each, a "Board") has established guidelines for
determining the liquidity of the COPs in the applicable Tax Free Fund's
portfolio and, subject to review by that Tax Free Fund's Board, has delegated
that responsibility to the Adviser. Pursuant to these guidelines, the Adviser
will consider (1) the frequency of trades and quotes for the security, (2) the
number of dealers willing to purchase or sell the security and the number of
other potential buyers, (3) the willingness of dealers to undertake to make a
market in the security, (4) the nature of the marketplace, namely, the time
needed to dispose of the security, the method of soliciting offers and the
mechanics of transfer, (5) the coverage of the obligation by new issue
insurance, (6) the likelihood that the marketability of the obligation will be
maintained through the time the security is held by a Fund, and (7) for unrated
COPs, the COPs' credit status analyzed by the Adviser according to the factors
reviewed by rating agencies.

DETACHABLE CALL OPTIONS. Detachable call options are sold by issuers of
municipal bonds separately from the municipal bonds to which the call options
relate and permit the purchasers of the call options to acquire the municipal
bonds at the call prices and call dates. In the event that interest rates drop,
the purchaser could exercise the call option to acquire municipal bonds that
yield above-market rates. INSURED INTERMEDIATE FUND may acquire detachable call
options relating to municipal bonds that the Fund already owns or will acquire
in the immediate future and thereby, in effect, make such municipal bonds non-
callable so long as the Fund continues to hold the detachable call option.
INSURED INTERMEDIATE FUND will consider detachable call options to be illiquid
securities and they will be treated as such for purposes of certain investment
limitation calculations.

HIGH YIELD SECURITIES. Although each Fund may invest up to 5% of its net
assets in municipal bonds rated lower than Baa by Moody's Investors Service,
Inc. ("Moody's") or BBB by Standard & Poor's Ratings Group ("S&P"), each Fund
currently does not intend to purchase such municipal bonds. However,
occasionally a Fund may hold in its portfolio a municipal bond that has had its
rating downgraded. In each instance, such bonds will be covered by the
insurance feature and thus considered to be of higher quality than high yield
securities without an insurance feature. See "Insurance" for a detailed
discussion of the insurance feature. 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 securities ("High Yield Securities"). High Yield Securities are subject
to certain risks that may not be present with investments in high grade
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. A strong economic downturn or a substantial period
of rising interest rates could severely affect the market for High Yield
Securities.

Municipal obligations that are high yield securities rated below investment
grade ("Municipal High Yield Securities") are deemed by Moody's and S&P to be
predominantly speculative with respect to the

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<PAGE>

issuer's capacity to pay interest and repay principal and may involve major risk
exposure to adverse conditions. "Municipal High Yield Securities," unless
otherwise noted, include unrated securities deemed to be rated below investment
grade by the Funds' investment adviser, First Investors Management Company, Inc.
("Adviser" or "FIMCO"). Ratings of Municipal High Yield Securities represent
the rating agencies' opinions regarding their quality, are not a guarantee of
quality and may be reduced after a Fund has acquired the security. Credit
ratings attempt to evaluate the safety of principal and interest payments and do
not evaluate the risks of fluctuations in market value. Also, rating agencies
may fail to make timely changes in credit ratings in response to subsequent
events, so that an issuer's current financial condition may be better or worse
than the rating indicates.

Municipal High Yield Securities generally offer a higher current yield than
higher grade issues. However, Municipal High Yield Securities involve higher
risks, in that they are especially subject to adverse changes in the general
economic conditions, in economic conditions of an issuer's geographic area and
in the industries or activities in which the issuer is engaged. Municipal High
Yield Securities are also especially sensitive to changes in the financial
condition of the issuer and to price fluctuations in response to changes in
interest rates. Accordingly, the yield on lower rated Municipal High Yield
Securities will fluctuate over time. During periods of economic downturn or
rising interest rates, municipal issuers may experience financial stress which
could adversely affect their ability to make payments of principal and interest
and increase the possibility of default.

In addition, Municipal High Yield Securities are frequently traded only in
markets where the number of potential purchasers and sellers, if any, is
limited. This factor may limit a Fund's ability to acquire such securities and
to sell such securities at their fair value in response to changes in the
economy or the financial markets, especially for unrated Municipal High Yield
Securities. Although unrated Municipal High Yield Securities are not
necessarily of lower quality than rated Municipal High Yield Securities, the
market for rated Municipal High Yield Securities generally is broader than that
for unrated Municipal High Yield Securities. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may also decrease the
values and liquidity of Municipal High Yield Securities, especially in a thinly
traded market.

LOANS OF PORTFOLIO SECURITIES. Each Fund may loan securities to qualified
broker-dealers or other institutional investors provided: the borrower pledges
to a Fund and agrees to maintain at all times with that Fund cash 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 a Fund, that
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. Such loans may be terminated by a Fund at any time and that 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 a Fund. The
borrower must add to the collateral whenever the market value of the securities
rises above the level of such collateral. A 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. The primary objective of such
loaning function is to supplement a Fund's income through investment of the cash
collateral in short-term interest bearing obligations. INSURED INTERMEDIATE
FUND has a non-fundamental policy that the aggregate value of portfolio
securities it can lend will not exceed 10% of its net assets and INSURED TAX
EXEMPT FUND may not make such loans in excess of 10% of its total assets.

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

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<PAGE>

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 the 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. INSURED INTERMEDIATE FUND may enter into
repurchase agreements with banks which are members of the Federal Reserve System
or securities dealers who are members of a national securities exchange or are
market makers in government securities. The period of these repurchase
agreements will usually be short, from overnight to one week, and at no time
will the 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. The 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, the 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 the Fund may be delayed or limited. INSURED
INTERMEDIATE FUND may not enter into a repurchase agreement with more than seven
days to maturity if, as a result, more than 15% of the Fund's net assets would
be invested in such repurchase agreements and other illiquid investments.

RESTRICTED AND ILLIQUID SECURITIES. Neither Fund will purchase or
otherwise acquire any security if, as a result, more than 15% of its net assets
(taken at current value) would be invested in securities that are illiquid by
virtue of the absence of a readily available market or legal or contractual
restrictions on resale. This policy includes detachable call options 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 each Tax Exempt
Fund's Board or the Adviser has determined under Board-approved guidelines are
liquid. As a result of an undertaking to a certain state securities commission,
INSURED INTERMEDIATE FUND will not invest more than 10% of its total assets in
restricted securities, excluding Rule 144A securities.

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 this 15% limit. 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

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<PAGE>

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 the Fund might be unable to dispose of such
securities promptly or at reasonable prices.

U.S. GOVERNMENT OBLIGATIONS. Securities issued or guaranteed as to
principal and interest by the U.S. Government include (1) U.S. Treasury
obligations which differ only in their interest rates, maturities and times of
issuance as follows: U.S. Treasury bills (maturities of one year or less), U.S.
Treasury notes (maturities of one to ten years), and U.S. Treasury bonds
(generally maturities of greater than ten years); 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, 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.

WHEN-ISSUED SECURITIES. Each Fund may invest up to 25% of its net assets
in securities issued on a when-issued or delayed delivery basis, which involves
an arrangement whereby delivery of, and payment for, the instruments occur up to
45 days after the agreement to purchase the instruments is made by a Fund. The
purchase price to be paid by a Fund and the interest rate on the instruments to
be purchased are both selected when the Fund agrees to purchase the securities
on a "when-issued" basis. 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 with its custodian consisting of cash, U.S.
Government securities or other 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 equal to the value of the Fund's
commitment. When the securities to be purchased are issued, a 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 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

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<PAGE>

committed to purchase. Sale of securities in the segregated account or other
securities owned by a Fund and when-issued securities may cause the realization
of a capital gain or loss.

ZERO COUPON SECURITIES. Each Fund may invest in zero coupon municipal
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.
Original issue discount earned on zero coupon securities must be included in a
Fund's income. Thus, to continue to qualify for tax treatment as a regulated
investment company, a Fund may be required to distribute as a dividend an amount
that is greater than the total amount of cash it actually receives. These
distributions must be made from a Fund's cash assets or, if necessary, from the
proceeds of sales of portfolio securities. A 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.
The market prices of zero coupon 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.

PORTFOLIO TURNOVER. Although each Fund generally will not invest for
short-term trading purposes, portfolio securities may be sold from time to time
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 generally leads to transaction costs and may result in a
greater number of taxable transactions. See "Allocation of Portfolio
Brokerage." For the fiscal years ended December 31, 1994 and 1995, INSURED TAX
EXEMPT FUND's portfolio turnover rate was 57% and 37%, respectively. For the
fiscal years ended December 31, 1994 and 1995, INSURED INTERMEDIATE FUND'S
portfolio turnover rate was 210% and 47%, respectively.

HEDGING AND OPTION INCOME STRATEGIES

The Adviser may engage in certain options and futures strategies to hedge
each Fund's portfolio, in other circumstances permitted by the Commodities
Futures Trading Commission ("CFTC") and engage in certain options strategies to
enhance income. The instruments described below are sometimes referred to
collectively as "Hedging Instruments." Certain special characteristics of and
risks associated with using Hedging Instruments are discussed below. In
addition to the non-fundamental investment guidelines (described below) adopted
by each Tax Exempt Fund's Board to govern each Fund's investments in Hedging
Instruments, use of these instruments is subject to the applicable regulations
of the Securities and Exchange Commission ("SEC"), the several options and
futures exchanges upon which options and futures contracts are traded, the CFTC
and various state regulatory authorities. In addition, a Fund's ability to use
Hedging Instruments will be limited by tax considerations. See "Taxes."

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<PAGE>

Participation in the options or 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 a 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 options, futures contracts and options thereon 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, (4) the possible absence of a liquid secondary market for
any particular instrument at any time, and (5) the possible need to defer
closing out certain hedged positions to avoid adverse tax consequences.

Although each Fund may engage in the strategies listed below, INSURED
INTERMEDIATE FUND does not intend to do so in the coming year and INSURED TAX
EXEMPT FUND will only engage in transactions involving futures contracts and
options thereon.

COVER FOR HEDGING AND OPTION INCOME STRATEGIES. No Fund will use leverage
in its hedging and option income strategies. In the case of each transaction
entered into as a hedge, each Fund will hold securities or other options or
futures positions whose values are expected to offset ("cover") its obligations
hereunder. No Fund will enter into a hedging or option income strategy that
exposes the Fund to an obligation to another party unless it owns either (1) an
offsetting ("covered") position in securities or other options or futures
contracts or (2) cash, receivables and short-term debt securities with a value
sufficient at all times to cover its potential obligations. Each Fund will
comply with guidelines established by the SEC with respect to coverage of
hedging and option income strategies by mutual funds and, if required, will set
aside cash and/or liquid, high-grade debt securities in a segregated account
with its custodian in the prescribed amount. Securities or other options or
futures positions used for cover and securities held in a segregated account
cannot be sold or closed out while the hedging or option income strategy is
outstanding unless they are replaced with similar assets. As a result, there is
a possibility that the use of cover or segregation involving a large percentage
of a Fund's assets could impede portfolio management or the Fund's ability to
meet redemption requests or other current obligations.

OPTIONS STRATEGIES. Each Fund may purchase call options on securities that
the Adviser intends to include in its portfolio in order to fix the cost of a
future purchase. Call options also may be used as a means of participating in
an anticipated price increase of a security. In the event of a decline in the
price of the underlying security, use of this strategy would serve to limit the
Fund's potential loss to the option premium paid; conversely, if the market
price of the underlying security increases above the exercise price and a Fund
either sells or exercises the option, any profit eventually realized will be
reduced by the premium. Each Fund may purchase put options in order to hedge
against a decline in the market value of securities held in its portfolio. The
put option enables a Fund to sell the underlying security at the predetermined
exercise price; thus the potential for loss to the Fund below the exercise price
is limited to the option premium paid. If the market price of the underlying
security is higher than the exercise price of the put option, any profit the
Fund realizes on the sale of the security will be reduced by the premium paid
for the put option less any amount for which the put option may be sold.

Each Fund may write covered call options on securities to increase income
in the form of premiums received from the purchasers of the options. Because it
can be expected that a call option will

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<PAGE>

be exercised if the market value of the underlying security increases to a level
greater than the exercise price, a Fund will write covered call options on
securities generally when the Adviser believes that the premium received by the
Fund, plus anticipated appreciation in the market price of the underlying
security up to the exercise price of the option, will be greater than the total
appreciation in the price of the security. The strategy may be used to provide
limited protection against a decrease in the market price of the security in an
amount equal to the premium received for writing the call option less any
transaction costs. Thus, if the market price of the underlying security held by
a Fund declines, the amount of such decline will be offset wholly or in part by
the amount of the premium received by the Fund. If, however, there is an
increase in the market price of the underlying security and the option is
exercised, the Fund will be obligated to sell the security at less than its
market value. A Fund gives up the ability to sell the portfolio securities used
to cover the call option while the call option is outstanding. Such securities
may also be considered illiquid in the case of over-the-counter ("OTC") options
written by a Fund, to the extent described under "Investment Policies--
Restricted and Illiquid Securities" and therefore subject to each Fund's
limitation on investments in illiquid securities. In addition, a Fund could
lose the ability to participate in an increase in the value of such securities
above the exercise price of the call option because such an increase would
likely be offset by an increase in the cost of closing out the call option (or
could be negated if the buyer chose to exercise the call option at an exercise
price below the securities' current market value).

Each Fund may write put options. A put option gives the purchaser of the
option the right to sell, and the writer (seller) the obligation to buy, the
underlying security at the exercise price during the option period. So long as
the obligation of the writer continues, the writer may be assigned an exercise
notice by the broker-dealer through which such option was sold, requiring it to
make payment of the exercise price against delivery of the underlying security.
The operation of put options in other respects, including their related risks
and rewards, is substantially identical to that of call options. A Fund may
write covered put options in circumstances when the Adviser believes that the
market price of the securities will not decline below the exercise price less
the premiums received. If the put option is not exercised, a Fund will realize
income in the amount of the premium received. This technique could be used to
enhance current return during periods of market uncertainty. The risk in such a
transaction would be that the market price of the underlying security would
decline below the exercise price less the premiums received, in which case the
Fund would expect to suffer a loss.

Each Fund may purchase U.S. exchange-traded put and call options on stock
indices in much the same manner as the more traditional equity and debt options
discussed above, except that stock index options may serve as a hedge against
overall fluctuations in the securities markets (or a market sector) rather than
anticipated increases or decreases in the value of a particular security. A
stock index assigns relative values to the stock included in the index and
fluctuates with changes in such values. Stock index options operate in the same
way as the more traditional equity options, except that settlements of stock
index options are effected with cash payments and do not involve delivery of
securities. Thus, upon settlement of a stock index option, the purchaser will
realize, and the writer will pay, an amount based on the difference between the
exercise price and the closing price of the stock index. The effectiveness of
hedging techniques using stock index options will depend on the extent to which
price movements in the stock index selected correlate with price movements of
the securities in which a Fund invests.

Currently, many options on equity securities are exchange-traded, whereas
options on debt securities are primarily traded on the OTC market. Exchange-
traded options in the U.S. are issued by a clearing organization affiliated with
the exchange on which the option is listed which, in effect, guarantees

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<PAGE>

completion of every exchange-traded option transaction. In contrast, OTC
options are contracts between a Fund and the opposite party with no clearing
organization guarantee. Thus, when a Fund purchases an OTC option, it relies on
the dealer from which it has purchased the OTC option to make or take delivery
of the securities underlying the option. Failure by the dealer to do so would
result in the loss of the premium paid by the Fund as well as the loss of the
expected benefit of the transaction.

OPTIONS GUIDELINES. In view of the risks involved in using options, each
Tax Exempt Fund's Board has adopted non-fundamental investment guidelines to
govern a Fund's use of options that may be modified by each Board without
shareholder vote: (1) options will be purchased or written only when the
Adviser believes that there exists a liquid secondary market in such options;
and (2) a Fund may purchase a put or call option if the value of the option's
premium, when aggregated with the premiums on all other options held by such
Fund, exceeds 5% of that Fund's total assets.

SPECIAL CHARACTERISTICS AND RISKS OF OPTIONS TRADING. Each Fund may
effectively terminate its right or obligation under an option by entering into a
closing transaction. If a Fund wishes to terminate its obligation to sell
securities under a call option it has written, the Fund may purchase a call
option of the same series (that is, a call option identical in its terms to the
call option previously written); this is known as a closing purchase
transaction. Conversely, in order to terminate its right to purchase or sell
specified securities under a call or put option it has purchased, a Fund may
write an option of the same series as the option held; this is known as a
closing sale transaction. Closing transactions essentially permit a Fund to
realize profits or limit losses on its options positions prior to the exercise
or expiration of the option. Whether a profit or loss is realized from a
closing transaction depends on the price movement of the underlying index or
security and the market value of the option.

The value of an option position will reflect, among other things, the
current market price of the underlying security or stock index, the time
remaining until expiration, the relationship of the exercise price to the market
price, the historical price volatility of the underlying security or stock index
and general market conditions. For this reason, the successful use of options
depends upon the Adviser's ability to forecast the direction of price
fluctuations in the underlying securities or, in the case of stock index
options, fluctuations in the market sector represented by the index selected.

Options normally have expiration dates of up to nine months. Unless an
option purchased by a Fund is exercised or unless a closing transaction is
effected with respect to that position, a loss will be realized in the amount of
the premium paid and any transaction costs.

A position in an exchange-listed option may be closed out only on an
exchange that provides a secondary market for identical options. The ability to
establish and close out positions on the exchanges is subject to the maintenance
of a liquid secondary market. Although each Fund intends to purchase or write
only those exchange-traded options for which there appears to be a liquid
secondary market, there is no assurance that a liquid secondary market will
exist for any particular option at any particular time. Closing transactions
may be effected with respect to options traded in the OTC markets (currently the
primary markets for options on debt securities) only by negotiating directly
with the other party to the option contract or in a secondary market for the
option if such market exists. Although a Fund will enter into OTC options only
with dealers that agree to enter into, and that are expected to be capable of
entering into, closing transactions with a Fund, there is no assurance that the
Fund will be able to liquidate an OTC option at a favorable price at any time
prior to expiration. In the event of insolvency of the opposite party, a Fund
may be unable to liquidate an OTC option. Accordingly, it may not be possible
to effect

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<PAGE>

closing transactions with respect to certain options, with the result that a
Fund would have to exercise those options that it has purchased in order to
realize any profit. With respect to options written by a Fund, the inability to
enter into a closing transaction may result in material losses to the Fund. For
example, because a Fund must maintain a covered position with respect to any
call option it writes, the Fund may not sell the underlying assets used to cover
an option during the period it is obligated under the option. This requirement
may impair a Fund's ability to sell a portfolio security or make an investment
at a time when such a sale or investment might be advantageous.

Stock index options are settled exclusively in cash. If a Fund purchases
an option on a stock index, the option is settled based on the closing value of
the index on the exercise date. Thus, a holder of a stock index option who
exercises it before the closing index value for that day is available runs the
risk that the level of the underlying index may subsequently change. For
example, in the case of a call option, if such a change causes the closing index
value to fall below the exercise price of the option on the index, the
exercising holder will be required to pay the difference between the closing
index value and the exercise price of the option.

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

FUTURES STRATEGIES. Each Fund may engage in futures strategies to attempt
to reduce the overall investment risk that would normally be expected to be
associated with ownership of the securities in which it invests.

Each Fund may use financial futures contracts and options thereon to hedge
the debt portion of its portfolio against changes in the general level of
interest rates. A Fund may purchase a financial futures contract when it
intends to purchase debt securities but has not yet done so. This strategy may
minimize the effect of all or part of an increase in the market price of those
securities because a rise in the price of the securities prior to their purchase
may either be offset by an increase in the value of the futures contract
purchased by the Fund or avoided by taking delivery of the debt securities under
the futures contract. Conversely, a fall in the market price of the underlying
debt securities may result in a corresponding decrease in the value of the
futures position. A Fund may sell a financial futures contract in order to
continue to receive the income from a debt security, while endeavoring to avoid
part or all of the decline in the market value of that security that would
accompany an increase in interest rates.

Each Fund may purchase a call option on a financial futures contract to
hedge against a market advance in debt securities that the Fund plans to acquire
at a future date. A Fund also may write covered call options on financial
futures contracts as a partial hedge against a decline in the price of debt
securities held in the Fund's portfolio or purchase put options on financial
futures contracts in order to hedge against a decline in the value of debt
securities held in the Fund's portfolio.

Each Fund will use futures contracts and options thereon solely in bona
fide hedging transactions or under other circumstances permitted by the CFTC and
will not enter into such investments for which the aggregate initial margin and
premiums exceed 5% of such Fund's total assets. This does not limit a Fund's
assets at risk to 5%. Each Fund has represented the foregoing to the CFTC.

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FUTURES GUIDELINES. In view of the risks involved in using futures
strategies described below, each Tax Exempt Fund's Board of Directors or
Trustees has adopted non-fundamental investment guidelines to govern the use of
such investments by the Fund that may be modified by each Board without
shareholder vote. A Fund will not purchase or sell futures contracts or related
options if, immediately thereafter, the sum of the amount of initial margin
deposits on such Fund's existing futures positions and margin and premiums paid
for related options would exceed 5% of the market value of that Fund's total
assets. This does not limit a Fund's assets at risk to 5%. The value of all
futures sold will not exceed the total market value of a Fund's portfolio. In
addition, each Fund may not purchase financial futures contracts if immediately
thereafter more than 30% of its total assets would be so invested.

SPECIAL CHARACTERISTICS AND RISKS OF FUTURES TRADING. No price is paid
upon entering into futures contracts. Instead, upon entering into a futures
contract, a 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 3%-5% of the contract value. This
amount is known as "initial margin." When writing a put or call option on a
futures contract, margin also must be deposited in accordance with applicable
exchange rules. Initial margin on futures contracts is in the nature of a
performance bond or good-faith deposit that is returned to a Fund upon
termination of the transaction, assuming all obligations have been satisfied.
Under certain circumstances, such as periods of high volatility, a 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 a Fund's obligation to or from a clearing organization.

Holders and writers of futures positions and options thereon can enter into
offsetting closing transactions, similar to closing transactions on options on
securities, by selling or purchasing, respectively, a futures position or
options position with the same terms as the position or option held or written.
Positions in futures contracts and options 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 or related option 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 a 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 (except in the case of
purchased options). 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.

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<PAGE>

Successful use by a Fund of futures contracts and related options will
depend upon the Adviser's ability to predict movements in the direction of the
overall securities and 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 or related option will not correlate with the movements in prices of
the securities being hedged. In addition, if a 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, a Fund may need to sell assets at a
time when such sales are disadvantageous to the Fund. If the price of the
futures contract or related option moves more than the price of the underlying
securities, a Fund will experience either a loss or a gain on the futures
contract or related option, 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 or related
option position and the securities being hedged, movements in the prices of
futures contracts and related options 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 and
related options 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 or
related options. Although each Fund intends to purchase or sell futures and
related options 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 or option at any particular time. In such event, it may
not be possible to close a futures or option position and, in the event of
adverse price movements, a Fund would continue to be required to make variation
margin payments.

Like options on securities, options on futures contracts have a limited
life. The ability to establish and close out options on futures will be subject
to the development and maintenance of liquid secondary markets on the relevant
exchanges or boards of trade. There can be no certainty that liquid secondary
markets for all options on futures contracts will develop.

Purchasers of options on futures contracts pay a premium in cash at the
time of purchase. This amount and the transaction costs are all that is at
risk. Sellers of options on a futures contract, however, must post initial
margin and are subject to additional margin calls that could be substantial in
the event of adverse price movements. In addition, although the maximum amount
at risk when a Fund purchases an option is the premium paid for the option and
the transaction costs, there may be circumstances when the purchase of an option
on a futures contract would result in a loss to the Fund when the use of a
futures contract would not, such as when there is no movement in the level of
the underlying stock index or the value of the securities being hedged.

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

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<PAGE>

INSURANCE

The municipal bonds in each Fund's portfolio will be insured as to their
scheduled payments of principal and interest at the time of purchase either (1)
under a Mutual Fund Insurance Policy written by an independent insurance
company; (2) under an insurance policy obtained subsequent to a municipal bond's
original issue (a "Secondary Market Insurance Policy"); or (3) under an
insurance policy obtained by the issuer or underwriter of such municipal bond at
the time of original issuance (a "New Issue Insurance Policy"). An insured
municipal bond in a Fund's portfolio typically will be covered by only one of
the three policies. For instance, if a municipal bond is already covered by a
New Issue Insurance Policy or a Secondary Market Insurance Policy, then that
security will not be additionally insured under the Mutual Fund Insurance
Policy.

Each Tax Free Fund has purchased a Mutual Fund Insurance Policy ("Policy")
from AMBAC Indemnity Corporation ("AMBAC Indemnity"), a Wisconsin stock
insurance company, with its principal executive offices in New York City. The
Policy guarantees the payment of principal and interest on municipal bonds
purchased by a Fund which are eligible for insurance under the Policy.
Municipal bonds are eligible for insurance if they are approved by AMBAC
Indemnity prior to their purchase by a Fund. AMBAC Indemnity furnished each
Fund with an approved list of municipal bonds at the time the Policy was issued
and subsequently provides amended and modified lists of this type at periodic
intervals. AMBAC Indemnity may withdraw particular securities from the approved
list and may limit the aggregate amount of each issue or category of municipal
bonds therein, in each case by notice to a Fund prior to the entry by the Fund
of an order to purchase a specific amount of a particular security otherwise
eligible for insurance under the Policy. The approved list merely identifies
issuers whose issues may be eligible for insurance and does not constitute
approval of, or a commitment by, AMBAC Indemnity to insure such securities. In
determining eligibility for insurance, AMBAC Indemnity has applied its own
standards which correspond generally to the standard it normally uses in
establishing the insurability of new issues of municipal bonds and which are not
necessarily the criteria which would be used in regard to the purchase of
municipal bonds by a Fund. The Policy does not insure: (1) obligations of, or
securities guaranteed by, the United States of America or any agency or
instrumentality thereof; (2) municipal bonds which were insured as to payment of
principal and interest at the time of their issuance; (3) municipal bonds
purchased by a Fund at a time when they were ineligible for insurance; (4)
municipal bonds which are insured by insurers other than AMBAC Indemnity; and
(5) municipal bonds which are no longer owned by a Fund. AMBAC Indemnity has
reserved the right at any time, upon 90 days' prior written notice to a Fund, to
refuse to insure any additional municipal bonds purchased by a Fund, on or after
the effective date of such notice. If AMBAC Indemnity so notifies a Fund, the
Fund will attempt to replace AMBAC Indemnity with another insurer. If another
insurer cannot be found to replace AMBAC Indemnity, the Fund will ask its
shareholders to approve continuation of its business without insurance.

In the event of nonpayment of interest or principal when due, in respect of
an insured municipal bond, AMBAC Indemnity is obligated under the Policy to make
such payment not later than 30 days after it has been notified by a Fund that
such nonpayment has occurred (but not earlier than the date such payment is
due). AMBAC Indemnity, as regards insurance payments it may make, will succeed
to the rights of a Fund. Under the Policy, a payment of principal on an insured
municipal bond is due for payment when the stated maturity date has been
reached, which does not include any earlier due date by reason of redemption,
acceleration or other advancement of maturity or extension or delay in payment
by reason of governmental action.

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<PAGE>

The Policy does not guarantee the market value or yield of the insured
municipal bonds or the net asset value or yield of a Fund's shares. The Policy
will be effective only as to insured municipal bonds owned by a Fund. In the
event of a sale by a Fund of a municipal bond insured under the Policy, the
insurance terminates as to such municipal bond on the date of sale. If an
insured municipal bond in default is sold by a Fund, AMBAC Indemnity is liable
only for those payments of interest and principal which are then due and owing
and, after making such payments, AMBAC Indemnity will have no further
obligations to a Fund in respect of such municipal bond. It is the intention of
each Fund, however, to retain any insured securities which are in default or in
significant risk of default and to place a value on the defaulted securities
equal to the value of similar insured securities which are not in default.
While a defaulted bond is held by a Fund, the Fund continues to pay the
insurance premium thereon but also collects interest payments from the insurer
and retains the right to collect the full amount of principal from the insurer
when the municipal bond comes due. See "Determination of Net Asset Value" for a
more complete description of the Funds' method of valuing securities in default
and securities which have a significant risk of default.

Each Tax Free Fund may purchase a Secondary Market Insurance Policy from an
independent insurance company having a claims-paying ability rated AAA by S&P
and Aaa by Moody's which insures a particular bond for the remainder of its term
at a premium rate fixed at the time such bond is purchased by a Fund. It is
expected that these premiums will range from 1% to 5% of par value. Such
insurance coverage will be noncancellable and will continue in force so long as
such bond so insured is outstanding. Each Fund may also purchase municipal
bonds which are already insured under a Secondary Market Insurance Policy. A
Secondary Market Insurance Policy could enable a Fund to sell a municipal bond
to a third party as an AAA/Aaa rated insured municipal bond at a market price
higher than what otherwise might be obtainable if the security were sold without
the insurance coverage. (Such rating is not automatic, however, and must
specifically be requested for each bond.) Any difference between the excess of
a bond's market value as an AAA/Aaa rated bond over its market value without
such rating and the single premium payment would inure to a Fund in determining
the net capital gain or loss realized by a Fund upon the sale of the bond.

In addition to the contract of insurance relating to each Tax Exempt Fund,
there is a contract of insurance between AMBAC Indemnity and Executive Investors
Trust, between AMBAC Indemnity and First Investors Multi-State Insured Tax Fund
and between AMBAC Indemnity and First Investors New York Insured Tax Free Fund,
Inc. Otherwise, neither AMBAC Indemnity nor its parent AMBAC Inc., or any
affiliate thereof, has any material business relationship, direct or indirect,
with the Funds.

AMBAC Indemnity is a Wisconsin-domiciled stock insurance corporation
regulated by the Office of the Commissioner of Insurance of the State of
Wisconsin and licensed to do business in 50 states, the District of Columbia,
the Territory of Guam and the Commonwealth of Puerto Rico, with admitted assets
of approximately $2,439,000,000 (unaudited) and statutory capital of
approximately $1,378,000,000. (unaudited) as of December 31, 1995. Statutory
capital consists of AMBAC Indemnity's policyholders' surplus and statutory
contingency reserve. AMBAC Indemnity is a wholly owned subsidiary of AMBAC
Inc., a 100% publicly-held company. Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., Moody's Investors Service and Fitch
Investors Service L.P. have each assigned a triple-A claims-paying ability
rating to AMBAC Indemnity.

AMBAC Indemnity has obtained a ruling from the Internal Revenue Service to
the effect that the insuring of an obligation by AMBAC Indemnity will not affect
the treatment for Federal income tax

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<PAGE>

purposes of interest on such obligation and that insurance proceeds representing
maturing interest paid by AMBAC Indemnity under policy provisions substantially
identical to those contained in its municipal bond insurance policy shall be
treated for Federal income tax purposes in the same manner as if such payments
were made by the issuer of the municipal bonds.

AMBAC Indemnity makes no representation regarding the municipal bonds
included in the investment portfolio of each Fund or the advisability of
investing in such municipal bonds and makes no representation regarding, nor has
it participated in the preparation of, the Prospectus and this SAI.

The information relating to AMBAC Indemnity contained above has been
furnished by AMBAC Indemnity. No representation is made herein as to the
accuracy or adequacy of such information, or as to the existence of any adverse
changes in such information, subsequent to the date hereof.

The parent company of AMBAC Indemnity, AMBAC, Inc. (the "Company"), is
subject to the informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549
and at the Commission's regional offices at 7 World Trade Center, New York, New
York 10048 and Northwestern Atrium Center; 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can be obtained from the
public reference section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. In addition, the aforementioned
material may also be inspected at the offices of the New York Stock Exchange,
Inc. (the "NYSE") at 20 Broad Street, New York, New York 10005. The Company's
Common Stock is listed on the NYSE.

Copies of AMBAC Indemnity's financial statements prepared in accordance
with statutory accounting standards are available from AMBAC Indemnity. The
address of AMBAC Indemnity's administrative offices and its telephone number are
One State Street Plaza, 17th Floor, New York, 10004 and (212) 668-0340.

The following documents filed by the Company with the Commission (File No.
1-10777) are incorporated by reference in this SAI:

(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, filed with the Commission on March 31, 1995;

(2) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995;

(3) The Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1995;

(4) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995; filed with the Commission on November 14, 1995;

(5) The Company's Current Report on Form 8-K filed with the Commission on
July 18, 1995; and

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<PAGE>

(6) The Company's Current Report on Form 8-K dated January 31, 1996.

All documents subsequently filed by the Company pursuant to the requirements of
the Exchange Act after the date of this SAI will be available for inspection in
the same manner as described above.

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 of the Fund
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 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.

INSURED INTERMEDIATE FUND INSURED INTERMEDIATE FUND will not:

(1) Issue senior securities.

(2) Purchase any security (other than obligations of the U.S. Government,
its agencies or instrumentalities) if as a result, with respect to 75% of the
Fund's total assets more than 5% of such assets would then be invested in
securities of a single issuer.

(3) With respect to 75% of its total assets, 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).

(4) Buy or sell real estate or interests in oil, gas or mineral
exploration, or senior securities (as defined in the 1940 Act); provided,
however, the Fund may invest in Municipal Instruments secured by real estate or
interests in real estate.

(5) 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.

(6) Make loans, except loans of portfolio securities and repurchase
agreements.

(7) Borrow money except for temporary or emergency purposes (not for
leveraging or investment) in an amount not exceeding 5% of the value of its
total assets (including the amount borrowed) less liabilities (other than
borrowings). Any borrowings that exceeds 5% of the value of the Fund's total
assets by reason of a decline in net assets will be reduced within three
business days to the extent necessary to comply with the 5% limitation. This
policy shall not prohibit deposits of assets to provide margin or guarantee
positions in connection with transactions in options, futures contracts, swaps,
forward contracts, and other derivative instruments or the segregation of assets
in connection with such transactions.

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<PAGE>

The following investment restrictions are not fundamental and may be
changed without shareholder approval. The Fund will not:

(1) Invest more than 15% of its net 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.

(2) Invest more than 5% of its total assets in securities of companies
(including predecessors) which have been in operation for less than three years.

(3) Invest in securities of other registered investment companies, except
by purchases in the open market involving only customary brokerage commissions
and as a result of which not more than 5% of its total assets would be invested
in such securities, or except as part of a merger, consolidation or other
acquisition.

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

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

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

(7) Purchase or sell physical commodities unless acquired as a result of
ownership of securities (but this restriction shall not prevent the Fund from
purchasing or selling options, futures contracts, caps, floors and other
derivative instruments, engaging in swap transactions or investing in securities
or other instruments backed by physical commodities).

(8) Enter into futures contracts or options on futures contracts if
immediately thereafter the aggregate margin deposits on all outstanding futures
contracts positions held by the Fund and premiums paid on outstanding options on
futures contracts, after taking into account unrealized profits and losses,
would exceed 5% of the market value of the total assets of the Fund, or enter
into any futures contracts or options on futures contracts if the aggregate
amount of the Fund's commitments under outstanding futures contracts positions
and options on future contracts written by the Fund would exceed the market
value of the total assets of the Fund.

(9) Pledge assets, except that the Fund may pledge its assets to secure
borrowings made in accordance with fundamental investment restriction (7) above,
provided the Fund maintains asset coverage of at least 300% for pledged assets;
provided, however, this limitation will not prohibit escrow, collateral or
margin arrangements in connection with the Fund's use of options, futures
contracts or options on futures contracts.

(10) Purchase securities on margin, except that the Fund may obtain such
short-term credits as are necessary for the clearance of transactions, and
provided that margin payments and other deposits

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<PAGE>

made in connection with transactions in options, futures contracts, swaps,
forward contracts, and other derivative instruments shall not be deemed to
constitute purchasing securities on margin.

(11) Sell securities short, unless it owns or has the right to obtain
securities, without additional consideration, equivalent in kind and amount to
the securities sold short, and provided that transactions in options, futures
contracts, swaps, forward contracts, and other derivative instruments are not
deemed to constitute selling securities short.

The Series Fund, on behalf of the INSURED INTERMEDIATE FUND, has filed the
following undertakings to comply with requirements of certain states in which
shares of the Fund are sold, which may be changed without shareholder approval:

1. The Fund will not invest more than 10% of its total assets in
restricted securities, excluding Rule 144A Securities.

2. The Fund will not purchase puts, calls, straddles, spreads or any
combination thereof, if by reason thereof, the value of its aggregate investment
in such securities will exceed 5% of its total assets.

3. The Fund will not purchase or sell real estate limited partnership
interests.

INSURED TAX EXEMPT FUND. INSURED TAX EXEMPT FUND will not:

(1) Borrow money except for temporary or emergency purposes (not for
leveraging or investment) in an amount not exceeding 5% of the value of its
total assets (including the amount borrowed) less liabilities (other than
borrowings). Any borrowings that exceed 5% of the value of the Fund's total
assets by reason of a decline in net assets will be reduced within three
business days to the extent necessary to comply with the 5% limitation. This
policy shall not prohibit deposits of assets to provide margin or guarantee
positions in connection with transactions in options, futures contracts, swaps,
forward contracts, and other derivative instruments or the segregation of assets
in connection with such transactions.

(2) Make loans (the purchase of a portion of an issue of publicly
distributed debt securities is not considered the making of a loan). In
addition, the Insured Tax Exempt Fund's Board of Directors may on the request of
broker-dealers or other institutional investors, which 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 exceed 10% of the value of
the Fund's gross assets.

(3) Invest more than 5% of the value of its gross assets, at the time of
purchase, in securities of any one issuer (except obligations of the U.S.
Government).

(4) Purchase securities in an amount to exceed 5% of its gross assets, of
unseasoned issuers, including their predecessors, which have been in operation
less than three years.

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<PAGE>

(5) Invest in any municipal bonds unless they will be insured municipal
bonds or unless they are already insured under an insurance policy obtained by
the issuer or underwriter thereof.

(6) Issue senior securities.

(7) Invest in securities of other investment companies, except in the case
of money market funds offered without selling commissions, or in the event of
merger with another investment company.

(8) Underwrite any issue of securities, although the Fund may purchase
municipal bonds directly from the issuer thereof for investment in accordance
with the Fund's investment objective, policy and limitations.

(9) Purchase or sell real estate, but this shall not prevent the Fund from
investing in municipal bonds or other obligations secured by real estate or
interests therein.

(10) Invest in oil, gas or other mineral exploration or development
programs.

(11) Purchase or retain the securities of any issuer, if, to the Fund's
knowledge, those officers and directors of the Adviser, who individually own
beneficially more than 1/2 of 1% of the outstanding securities of such issuer
together own beneficially more than 5% of such outstanding securities.

(12) Purchase securities which would not enable the Fund to qualify as a
regulated investment company qualified to pay exempt-interest dividends under
the Internal Revenue Code of 1986, as amended.

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

(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 Securities Act of 1933, as
amended, or any other applicable rule, and therefore that such securities are
not subject to the foregoing limitation.

(2) Purchase or sell physical commodities unless acquired as a result of
ownership of securities (but this restriction shall not prevent the Fund from
purchasing or selling options, futures contracts, caps, floors and other
derivative instruments, engaging in swap transactions or investing in securities
or other instruments backed by physical commodities).

(3) Enter into futures contracts or options on futures contracts if
immediately thereafter the aggregate margin deposits on all outstanding futures
contracts positions held by the Fund and premiums paid on outstanding options on
futures contracts, after taking into account unrealized profits and losses,
would exceed 5% of the market value of the total assets of the Fund, or enter
into any futures contracts or options on futures contracts if the aggregate
amount of the Fund's commitments under outstanding

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<PAGE>

futures contracts positions and options on future contracts written by the Fund
would exceed the market value of the total assets of the Fund.

(4) Pledge 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 pledged assets;
provided, however, this limitation will not prohibit escrow, collateral or
margin arrangements in connection with the Fund's use of options, futures
contracts or options on futures contracts.

(5) Purchase securities on margin, except that the Fund may obtain such
short-term credits as are necessary for the clearance of transactions, and
provided that margin payments and other deposits made in connection with
transactions in options, futures contracts, swaps, forward contracts, and other
derivative instruments shall not be deemed to constitute purchasing securities
on margin.

(6) Sell securities short, unless it owns or has the right to obtain
securities, without additional consideration, equivalent in kind and amount to
the securities sold short, and provided that transactions in options, futures
contracts, swaps, forward contracts, and other derivative instruments are not
deemed to constitute selling securities short.

(7) Invest in real estate limited partnership interests or in interests in
real estate investment trusts that are not readily marketable.

The Fund has also filed the following undertaking to comply with
requirements of certain states in which shares of the Fund are sold, which may
be changed without shareholder approval. In the event the original custodian or
any successor custodian resigns or for any reason cannot or will not continue to
serve as custodian and no successor custodian can be found, the Fund will submit
to shareholders for their approval or disapproval, the matter of possible
liquidation of the Fund.

DIRECTORS OR TRUSTEES AND OFFICERS

The following table lists the Directors or Trustees and executive officers
of the Tax Exempt Funds, 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*+ (70), President and Director or Trustee. Chairman of the Board
and Director, Administrative Data Management Corp. ("ADM"), FIMCO, Executive
Investors Management Company, Inc. ("EIMCO"), First Investors Corporation
("FIC"), Executive Investors Corporation ("EIC") and First Investors
Consolidated Corporation ("FICC").

JAMES J. COY (82), Director or Trustee, 90 Buell Lane, East Hampton, NY 11937.
Retired; formerly Senior Vice President, James Talcott, Inc. (financial
institution).

ROGER L. GRAYSON* (39), Director or Trustee. Director, FIC and FICC; President
and Director, First Investors Resources, Inc.; Commodities Portfolio Manager.

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KATHRYN S. HEAD*+ (40), Director or Trustee, 581 Main Street, Woodbridge, NJ
07095. President, FICC, EIMCO, FIMCO and ADM; Vice President, Chief Financial
Officer and Director, FIC and EIC; President and Director, First Financial
Savings Bank, S.L.A.

REX R. REED (74), Director or Trustee, 1381 Fairway Oaks, Kiawah Island, SC
29455. Retired; formerly Senior Vice President, American Telephone & Telegraph
Company.

HERBERT RUBINSTEIN (74), Director or Trustee, 145 Elm Drive, Roslyn, NY 11576.
Retired; formerly President, Belvac International Industries, Ltd. and
President, Central Dental Supply.

JAMES M. SRYGLEY (63), Director or Trustee, 33 Hampton Road, Chatham, NJ 07982.
Principal, Hampton Properties, Inc. (property investment company).

JOHN T. SULLIVAN* (64), Director or Trustee and Chairman of the Board; Director,
FIMCO, FIC, FICC and ADM; Of Counsel, Hawkins, Delafield & Wood, Attorneys.

ROBERT F. WENTWORTH (66), Director or Trustee, RR1, Box 2554, Upland Downs Road,
Manchester Center, VT 05255. Retired; formerly financial and planning
executive with American Telephone & Telegraph Company.

JOSEPH I. BENEDEK (38), Treasurer, 581 Main Street, Woodbridge, NJ 07095.
Treasurer, FIC FIMCO, EIMCO and EIC; Comptroller and Treasurer, FICC.

CONCETTA DURSO (61), Vice President and Secretary. Vice President, FIMCO, EIMCO
and ADM; Assistant Vice President and Assistant Secretary, FIC and EIC.

CLARK D. WAGNER (37), Vice President. Vice President, Executive Investors
Trust, First Investors Multi-State Insured Tax Free Fund, First Investors New
York Insured Tax Free Fund, Inc. and First Investors Government Fund, Inc.

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

All of the officers and Directors or Trustees, except for Mr. Wagner, hold
identical or similar positions with 13 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 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.

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<PAGE>

The following table lists compensation paid to the Directors of Insured Tax
Exempt Fund for the fiscal year ended December 31, 1995.

Pension or Estimated Total Compensation
Aggregate Retirement Benefits Annual Benefits From First Investors
Compensation Accrued as Part of Upon Family of Funds
Director From Fund* Fund Expenses Retirement Paid to Directors*
- -------- ------------ ------------------- --------------- --------------------
<S> <C> <C> <C> <C>

James J. Coy $4,200 $-0- $-0- $37,200

Roger L. Grayson -0- -0- -0- -0-

Glenn O. Head -0- -0- -0- -0-

Kathryn S. Head -0- -0- -0- -0-

F. William Ortman, Jr.** 1,750 -0- -0- 15,500

Rex R. Reed 4,200 -0- -0- 37,200

Herbert Rubinstein 4,200 -0- -0- 37,200

James M. Srygley*** 4,200 -0- -0- 37,200

John T. Sullivan -0- -0- -0- -0-

Robert F. Wentworth 4,200 -0- -0- 37,200

</TABLE>

The following table lists compensation paid to the Trustees of Series Fund
for the fiscal year ended December 31, 1995.

James J. Coy $2,400 $-0- $-0- $37,200

Roger L. Grayson -0- -0- -0- -0-

Glenn O. Head -0- -0- -0- -0-

Kathryn S. Head -0- -0- -0- -0-

F. William Ortman, Jr.** 1,000 -0- -0- 15,500

Rex R. Reed 2,400 -0- -0- 37,200

Herbert Rubinstein 2,400 -0- -0- 37,200

James M. Srygley*** 2,400 -0- -0- 37,200

John T. Sullivan -0- -0- -0- -0-

Robert F. Wentworth 2,400 -0- -0- 37,200

</TABLE>

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* Compensation to officers and interested Directors or Trustees of the Tax
Exempt Funds is paid by the Adviser. In addition, compensation to non-
interested Directors or Trustees of the Tax Exempt Funds is currently
voluntarily paid by the Adviser.
** For the period January 1, 1995 through September 21, 1995.
*** For the period January 19, 1995 through December 31, 1995.

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MANAGEMENT

Investment advisory services to each Fund are provided by First Investors
Management Company, Inc. pursuant to separate Investment Advisory Agreements
(each, an "Advisory Agreement") dated June 13, 1994. Each Advisory Agreement
was approved by the Board of Directors or Trustees of the applicable Tax Exempt
Fund, including a majority of the Directors or Trustees 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 or Trustees"), 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 Tax
Exempt Fund's Directors or Trustees. 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, with respect to a Fund, at any time without penalty by the
applicable Tax Exempt Fund's Directors or Trustees or by a majority of the
outstanding voting securities of such Fund, or by FIMCO, in each instance on not
less than 60 days' written notice, and shall automatically terminate in the
event of its assignment (as defined in the 1940 Act). Each Advisory Agreement
also provides that it will continue in effect, with respect to a Fund, for a
period of over two years only if such continuance is approved annually either by
the applicable Tax Exempt Fund's Directors or Trustees or by a majority of the
outstanding voting securities of such Fund, and, in either case, by a vote of a
majority of that Tax Exempt Fund's Independent Directors or Trustees voting in
person at a meeting called for the purpose of voting on such approval.

Under Series Fund's Advisory Agreement, INSURED INTERMEDIATE FUND pays the
Adviser an annual fee, paid monthly of 0.60% of its average daily net assets.
Under INSURED TAX EXEMPT FUND's Advisory Agreement, it pays the Adviser an
annual fee, paid monthly, according to the following schedule:

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

Pursuant to certain state regulations, the Adviser has agreed to reimburse
a Fund if and to the extent that Fund's aggregate operating and management
expenses, including advisory fees but generally excluding interest, taxes,
brokerage commissions and extraordinary expenses, exceed any limitation on
expenses applicable to that Fund for any full fiscal year (unless a waiver of
such expense limitation is obtained). The amount of any such reimbursement is
limited to the amount of the advisory fees paid or accrued to the Adviser for
the fiscal year. For the fiscal year ended December 31, 1995, no reimbursement
was required pursuant to these regulations.

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<PAGE>

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

For the fiscal years ended December 31, 1993, 1994 and 1995, INSURED TAX
EXEMPT FUND paid $10,024,983, $9,654,489 and $9,356,534, respectively, in
advisory fees. For the fiscal period November 22, 1993 (commencement of
operations) through December 31, 1993, INSURED INTERMEDIATE FUND accrued $485 in
advisory fees, all of which were voluntarily waived by the Adviser. For the
fiscal year ended December 31, 1994, INSURED INTERMEDIATE FUND paid $6,294 in
advisory fees. For the same period, the Adviser voluntarily waived $20,794 in
advisory fees accrued by the INSURED INTERMEDIATE FUND. In addition, the
Adviser voluntarily reimbursed the INSURED INTERMEDIATE FUND $7,923 in expenses.
For the fiscal year ended December 31, 1995, INSURED INTERMEDIATE FUND paid
$22,374 in advisory fees. For the same period, the Adviser voluntarily waived
$15,982 in advisory fees accrued by the INSURED INTERMEDIATE FUND. In addition,
the Adviser voluntarily reimbursed the INSURED INTERMEDIATE FUND $11,742 in
expenses.

Each Fund bears all expenses of its operations other than those incurred 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.

UNDERWRITER

Each Tax Exempt Fund has entered into an Underwriting Agreement
("Underwriting Agreement") with First Investors Corporation ("Underwriter" or
"FIC") which requires the Underwriter to use its best efforts to sell shares of
the Funds. Pursuant to each Underwriting Agreement, the Underwriter shall bear
all fees and expenses incident to the registration and qualification of the
applicable Fund's shares. In addition, the Underwriter shall bear all expenses
of sales material or literature, including prospectuses and proxy materials, to
the extent such materials are used in connection with the sale of the Fund's
shares, unless a Fund has agreed to bear such costs pursuant to a plan of
distribution. See "Distribution Plans." Each Underwriting Agreement was
approved by the applicable Tax Exempt Fund's Board of Directors or Trustees,
including a majority of the Independent Directors or Trustees. Each
Underwriting Agreement provides that it will continue in effect, with respect to
a Fund, from year to year only so long as such continuance is specifically
approved at least annually by the applicable Tax Exempt Fund's Board of
Directors or Trustees or by a vote of a majority of the outstanding voting
securities of that Fund, and in either case by the vote of a majority of such
Tax Exempt Fund's Disinterested Directors or Trustees, 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, 1993, 1994 and 1995, FIC received
underwriting commissions with respect to INSURED TAX EXEMPT FUND of $2,547,432,
$1,033,292 and $698,289, respectively. For the same periods, FIC reallowed an
additional $495,968, $173,429 and $87,383, respectively, to unaffiliated
dealers. For the fiscal period November 22, 1993 (commencement of

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<PAGE>

operations) through December 31, 1993 and the fiscal years ended December 31,
1994 and 1995, FIC received underwriting commissions with respect to INSURED
INTERMEDIATE FUND of $37,954, $72,466 and $36,160, respectively. For the same
periods, FIC reallowed an additional $4,254, $28,882 and $10,211, respectively,
to unaffiliated dealers.

DISTRIBUTION PLANS

As stated in the Funds' Prospectus, pursuant to a separate plan of
distribution for each class of shares adopted by each Tax Exempt Fund pursuant
to Rule 12b-1 under the 1940 Act ("Class A Plan" and "Class B Plan" and,
collectively, "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 Plan was approved by the applicable Tax Exempt Fund's Board of
Directors or Trustees, including a majority of the Independent Directors or
Trustees, and by a majority of the outstanding voting securities of the relevant
class of each Fund. Each Plan will continue in effect, with respect to a Fund,
from year to year as long as its continuance is approved annually by either the
applicable Tax Exempt Fund's Board of Directors or Trustees or by a vote of a
majority of the outstanding voting securities of the relevant class of shares of
that Fund. In either case, to continue, each Plan must be approved by the vote
of a majority of the Independent Directors or Trustees of the applicable Tax
Exempt Fund. Each Tax Exempt 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 Tax
Exempt Fund's Independent Directors or Trustees will be committed to the
discretion of such Independent Directors or Trustees then in office.

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

In reporting amounts expended under the Plans to the Directors or Trustees,
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 that Fund's shares.

For the fiscal year ended December 31, 1995, INSURED TAX EXEMPT FUND paid
$3,936,480 in 12b-1 fees pursuant to its Class A Plan. For the fiscal year
ended December 31, 1995, INSURED INTERMEDIATE FUND accrued $18,835 in 12b-1 fees
pursuant to its Class A Plan, all of which were waived by the Underwriter. For
the same period, the Underwriter incurred the following Class A Plan-related
expenses with respect to INSURED TAX EXEMPT FUND:

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<PAGE>

Payments to Sales Payments to the
Advertising Personnel* Underwriter**
----------- ---------- -------------
$0 $531,156 $3,936,480

* Represents service fees
** Represents distribution fees.

For the fiscal year ended December 31, 1995, INSURED TAX EXEMPT FUND paid
$9,876 in 12b-1 fees pursuant to its Class B Plan. For the fiscal year ended
December 31, 1995, INSURED INTERMEDIATE FUND paid $1,143 in 12b-1 fees pursuant
to its Class B Plan. With respect to the Class B Plans, all amounts were paid
to the Underwriter as distribution fees.

DETERMINATION OF NET ASSET VALUE

The municipal instruments in which each Fund invests are traded primarily
in the over-the-counter markets. Such securities are valued daily at their fair
value on the basis of valuations provided by a pricing service approved by the
applicable Tax Exempt Fund's Board. The pricing service uses a computerized
matrix system, which includes considerations of security type, rating, market
condition and yield data, as well as market quotations and prices provided by
market makers.

With respect to each Fund, "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.

The Funds intend not to dispose of municipal bonds which are in significant
risk of, or are in, default in the payment of principal or interest, until the
default has been cured or the principal and interest outstanding are paid by an
insurer or the issuer of any letter of credit or other guarantee supporting such
municipal bond. In its evaluation of municipal bonds for portfolio valuation
purposes, the applicable Tax Exempt Fund's Board will consider the value of
insurance or any other type of guarantee supporting payments of principal and
interest. This will be accomplished by comparing the value of the municipal
bonds which are in significant risk of, or are in, default with other municipal
bonds of similar maturity, interest rate and type which are not in default.
This results in the applicable Tax Exempt Fund's Board ascribing a good faith
value to the insurance or guarantee on any municipal bond which is in, or is in
significant risk of, default equal to the difference between the insured or
guaranteed security's market value and the then-prevailing market rate for
other, similar non-defaulting municipal bonds.

Each Tax Exempt Fund's Board may suspend the determination of a Fund's net
asset value for the whole or any part of any period (1) during which trading on
the New York Stock Exchange ("NYSE") is restricted as determined by the
Securities and Exchange Commission ("SEC") or the NYSE is closed for other than
weekend and holiday closings, (2) 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.

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<PAGE>

ALLOCATION OF PORTFOLIO BROKERAGE

Each Fund expects that purchases and sales of portfolio securities
generally will be principal transactions. Portfolio securities are normally
purchased directly from the issuer or from an underwriter or market maker for
the securities. There will usually be no brokerage commissions paid by the Fund
for such purchases. Purchases from underwriters will include the underwriter's
commission or concession and purchases from dealers serving as market makers
will include the spread between the bid and asked price.

At times the Adviser may engage in agency transactions and, in effecting
the purchase and sale of portfolio securities for the account of each Fund, will
seek best execution of trades either (1) at the most favorable and competitive
rate of commission charged by any broker or member of an exchange, or (2) at a
higher rate of commission if reasonable in relation to brokerage and research
services provided to the Fund or the Adviser by such member or broker. Such
services may include, but are not limited to, any one or more of the following:
information as to the availability of securities for purchase or sale,
statistical or factual information or opinions pertaining to investments. The
Adviser may use research and services provided to it by brokers in servicing all
the funds in the First Investors Group of Funds; however, not all such services
will be used by the Adviser in connection with the Funds. No portfolio orders
are placed with an affiliated broker, nor does any affiliated broker participate
in these commissions.

The Adviser may combine transaction orders placed on behalf of a Fund and
any other fund in the First Investors Group of Funds, any series of Executive
Investors Trust and First Investors Life Insurance Company, affiliates of the
Funds, for the purpose of negotiating brokerage commissions or obtaining a more
favorable transaction price; and where appropriate, securities purchased or sold
may be allocated, in terms of price and amount, to a Fund according to the
proportion that the size of the transaction order actually placed by the Fund
bears to the aggregate size of the transaction orders simultaneously made by
other participants in the transaction. Each Tax Exempt Fund's Board of
Directors or Trustees has authorized and directed the Adviser to use dealer
concessions available in fixed-price underwritings of municipal bonds to pay for
research services which are beneficial in the management of each Fund's
portfolio.

INSURED TAX EXEMPT FUND paid no brokerage commissions for the fiscal years
December 31, 1993, 1994 and 1995. INSURED INTERMEDIATE FUND paid no brokerage
commissions for the period November 22, 1993 (commencement of operations)
through December 31, 1993 and for the fiscal years ended December 31, 1994 and
1995. With the approval of INSURED TAX EXEMPT FUND'S Board of Directors,
$65,007 of principal transactions were used to acquire research and other
services which benefitted the Fund.

REDUCED SALES CHARGES, ADDITIONAL EXCHANGE AND
REDEMPTION INFORMATION AND OTHER SERVICES

REDUCED SALES CHARGES--CLASS A SHARES

Reduced sales charges are applicable to purchases made at one time of Class
A shares of any one or more of the Funds or of any one or more of the Eligible
Funds, as defined in the Prospectus, by "any person," which term shall include
an individual, or an individual's spouse and children under the age of

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<PAGE>

21, or a trustee or other fiduciary of a single trust, estate or fiduciary
account (including a pension, profit-sharing or other employee benefit trust
created pursuant to a plan qualified under section 401 of the Internal Revenue
Code of 1986, as amended (the "Code")), although more than one beneficiary is
involved; provided, however, that the term "any person" shall not include a
group of individuals whose funds are combined, directly or indirectly, for the
purchase of redeemable securities of a registered investment company, nor shall
it include a trustee, agent, custodian or other representative of such a group
of individuals.

Ownership of Class A and Class B shares of any Eligible Fund, except as
noted below, qualify for a reduced sales charge on the purchase of Class A
shares. Class A shares purchased at net asset value, Class A shares of the
Money Market Funds, or shares owned under a Contractual Plan are not eligible
for the purchase of Class A shares of a Fund at a reduced sales charge through a
Letter of Intent or the Cumulative Purchase Privilege.

LETTER OF INTENT. Any of the eligible persons described above may, within
90 days of their investment, sign a statement of intent ("Letter of Intent") in
the form provided by the Underwriter, covering purchases of Class A shares of
any one or more of the Funds and of the other Eligible Funds to be made within a
period of thirteen months, provided said shares are currently being offered to
the general public and only in those states where such shares may be legally
sold, and thereby become eligible for the reduced sales charge applicable to the
total amount purchased. A Letter of Intent filed after the date of investment
is considered retroactive to the date of investment for determination of the
thirteen-month period. The Letter of Intent is not a binding obligation on
either the investor or the Fund. During the term of a Letter of Intent,
Administrative Data Management Corp. ("Transfer Agent") will hold Class A shares
representing 5% of each purchase in escrow, which shares will be released upon
completion of the intended investment.

Purchases of Class A Shares made under a Letter of Intent are made at the
sales charge applicable to the purchase of the aggregate amount of shares
covered by the Letter of Intent as if they were purchased in a single
transaction. The applicable quantity discount will be based on the sum of the
then current public offering price (I.E., net asset value plus applicable sales
charge) of all Class A shares and the net asset value of all Class B shares of a
Fund and of the other Eligible Funds, including Class B shares of the Money
Market Funds, currently owned, together with the aggregate offering price of
purchases to be made under the Letter of Intent. If all such shares are not so
purchased, a price adjustment is made, depending upon the actual amount invested
within such period, by the redemption of sufficient Class A shares held in
escrow in the name of the investor (or by the investor paying the commission
differential). A Letter of Intent can be amended (1) during the thirteen-month
period if the purchaser files an amended Letter of Intent with the same
expiration date as the original Letter of Intent, or (2) automatically after the
end of the period, if total purchases credited to the Letter of Intent qualify
for an additional reduction in the sales charge. The Letter of Intent privilege
may be modified or terminated at any time by the Underwriter.

CUMULATIVE PURCHASE PRIVILEGE. Upon written notice to FIC, Class A shares
of a Fund are also available at a quantity discount on new purchases if the then
current public offering price (I.E., net asset value plus applicable sales
charge) of all Class A shares and the net asset value of all Class B shares of a
Fund and of the other Eligible Funds, including Class B shares of the Money
Market Funds, previously purchased and then owned, plus the value of Class A
shares being purchased at the current public offering

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<PAGE>

price, amount to $25,000 or more. Such quantity discounts may be modified or
terminated at any time by the Underwriter.

PURCHASE OF SHARES. When you open a Fund account, you must specify which
class of shares you wish to purchase. If not, your order will be processed as
follows: (1) if you are opening an account with a new registration with First
Investors your order will not be processed until the Fund receives notification
of which class of shares to purchase; (2) if you have existing First Investors
accounts solely in either Class A shares or Class B shares with the identical
registration, your investment in the Fund will be made in the same class of
shares as your existing account(s); (3) if you are an existing First Investors
shareholder and own a combination of Class A and Class B shares with an
identical registration, your investment in the Fund will be made in Class B
shares; and (4) if you own in the aggregate at least $250,000 in any combination
of classes, your investment will be made in Class A shares.

SYSTEMATIC INVESTING

FIRST INVESTORS MONEY LINE. This service allows you to invest in a Fund
through automatic deductions from your bank checking account. Scheduled
investments in the minimum amount of $50 may be made on a bi-weekly, semi-
monthly, monthly, quarterly, semi-annual or annual basis. Shares of the Fund
are purchased at the public offering price determined at the close of business
on the day your designated bank account is debited and a confirmation will be
sent to you after every transaction. You may change the amount or discontinue
this service at any time by calling Shareholder Services or writing to
Administrative Data Management Corp., 581 Main Street, Woodbridge, NJ 07095-
1198, Attn: Control Dept. Money Line application forms are available from your
Representative or by calling Shareholder Services at 1-800-423-4026.

AUTOMATIC PAYROLL INVESTMENT. You also may arrange for automatic
investments in the minimum amount of $50 into a Fund on a systematic basis
through salary deductions, provided your employer has direct deposit
capabilities. Shares of the Fund are purchased at the public offering price
determined as of the close of business on the day the electronic fund transfer
is received by the Fund, and a confirmation will be sent to you after every
transaction. You may change the amount or discontinue the service by contacting
your employer. An application is available from your Representative or by
calling Shareholder Services at 1-800-423-4026. Arrangements must also be made
with your employer's payroll department.
CROSS-INVESTMENT OF CASH DISTRIBUTIONS. You may elect to invest in Class A
shares of a Fund at net asset value all the cash distributions from the same
class of shares of another Eligible Fund. The investment will be made at the
net asset value per share of the Fund, generally determined as of the close of
business, on the business day immediately following the record date of any such
distribution. You may also elect to invest cash distributions of a Fund's Class
A shares into the same class of another Eligible Fund, including the Money
Market Funds. If your distributions are to be invested in a new account, you
must invest a minimum of $50 per month. See "Dividends and Other Distributions"
in the Prospectus. To arrange for cross-investing, call Shareholder Services at
1-800-423-4026.

INVESTMENT OF SYSTEMATIC WITHDRAWAL PLAN PAYMENTS. You may elect to invest
in Class A shares of a Fund at net asset value through payments from a
Systematic Withdrawal Plan you maintain with any other Eligible Fund. Scheduled
investments may be made on a monthly, quarterly, semi-annual or annual basis.
You may also elect to invest Systematic Withdrawal Plan payments of Class A
shares from a Fund into the same class of another Eligible Fund, including the
Money Market Funds. If your

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<PAGE>

Systematic Withdrawal Payments are to be invested in a new account, you must
invest a minimum of $50 per month. See "Systematic Withdrawal Plan," below. To
arrange for Systematic Withdrawal Plan investments, call Shareholder Services at
1-800-423-4026.

SYSTEMATIC WITHDRAWAL PLAN. Shareholders who own noncertificated shares
may establish a Systematic Withdrawal Plan ("Withdrawal Plan"). If you have a
Fund account with a value of at least $5,000, you may elect to receive monthly,
quarterly, semi-annual or annual checks for any designated amount (minimum $25).
You may have the payments sent directly to you or persons you designate.
Regardless of the amount of your Fund account, you may also elect to the have
the Systematic Plan payments automatically (i) invested at net asset value in
shares of the same class of any other Eligible Fund, including the Money Market
Funds, or (ii) paid to First Investors Life Insurance Company for the purchase
of a life insurance policy or a variable annuity. If your Systematic Plan
payments are to be invested in a new Eligible Fund account, you must invest a
minimum of $600 per year. If you own Class B shares in a non-retirement
account, your Plan payments will be subject to the applicable contingent
deferred sales charge ("CDSC"). Dividends and other distributions, if any, are
reinvested in additional shares of the same class of the Fund. Shareholders may
add shares to the Withdrawal Plan or terminate the Withdrawal Plan at any time.
Withdrawal Plan payments will be suspended when a distributing Fund has received
notice of a shareholder's death on an individual account. Payments may
recommence upon receipt of written alternate payment instructions and other
necessary documents from the deceased's legal representative. Withdrawal
payments will also be suspended when a payment check is returned to the Transfer
Agent marked as undeliverable by the U.S. Postal Service after two consecutive
mailings.

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

ELECTRONIC FUNDS TRANSFER. Fund shares will be purchased on the day the
Fund receives the funds, which is normally two days after the electronic funds
transfer is initiated. The electronic transfer normally will be initiated on
the next bank business day after the redemption request is received and will
ordinarily be received by the predesignated bank account within two days after
transmission. However, once the funds are transmitted, the time of receipt and
the availability of the funds are not within the Funds' control. No dividends
are paid on the proceeds of redeemed shares awaiting electronic transmittal.

CONVERSION OF CLASS B SHARES. Class B Shares of a Fund will automatically
convert to Class A shares of that Fund, based on the relative net asset values
per share of the two classes, as of the close of business on the first business
day of the month in which the eighth anniversary of the initial purchase of such
Class B shares occurs. For these purposes, the date of initial purchase shall
mean (1) the first business day of the month in which such Class B shares were
issued, or (2) for Class B shares obtained through an exchange or a series of
exchanges, the first business day of the month in which the original Class B
shares were issued. For conversion purposes, Class B shares purchased through
the reinvestment of dividends and other distributions paid in respect of Class B
shares will be held in a separate sub-account. Each time any Class B shares in
the shareholder's regular account (other than those in the sub-account) convert
to Class A shares, a pro rata portion of the Class B shares in the sub-account
also will convert to Class A shares. The portion will be determined by the
ratio that the shareholder's Class B

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<PAGE>

shares converting to Class A shares bears to the shareholder's total Class B
shares not acquired through dividends and other distributions.

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

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

WAIVERS OF CDSC ON CLASS B SHARES. The CDSC imposed on Class B shares does
not apply to: (a) any redemption pursuant to the tax-free return of an excess
contribution to an individual retirement account ("IRA") or other qualified
retirement plan if the Fund is notified at the time of such request; (b) any
redemption of a lump-sum or other distribution from qualified retirement plans
or accounts provided the shareholder has attained the minimum age of 70 1/2
years and has held the Class B shares for a minimum period of three years; (c)
any redemption by advisory accounts managed by the Adviser or any of its
affiliates or for shares held by the Adviser or any of its affiliates; (d) any
redemption by a tax-exempt employee benefit plan if continuance of the
investment would be improper under applicable laws or regulations; (e) any
redemption or transfer of ownership of Class B shares following the death or
disability, as defined in Section 72(m)(7) of the Code, of a shareholder if the
Fund is provided with proof of death or disability and with all documents
required by the Transfer Agent within one year after the death or disability;
and (f) any redemption of shares purchased during the period April 29, 1996
through June 30, 1996 with the proceeds from a redemption of shares of a fund in
another fund group for which no sales charge was paid, other than a money market
fund or shares held in a retirement plan account. For more information on what
specific documents are required, call Shareholder Services at 1-800-423-4026.

SIGNATURE GUARANTEES. The words "Signature Guaranteed" must appear in
direct association with the signature of the guarantor. Members of the STAMP
(Securities Transfer Agents Medallion Program), MSP (New York Stock Exchange
Medallion Signature Program), SEMP (Stock Exchanges Medallion Program) and FIC
are eligible signature guarantors. Although each Fund reserves the right to
require signature guarantees at any other time, signature guarantees are
required whenever: (1) the amount of the redemption is over $50,000, (2) an
exchange in the amount over $50,000 is made into the Money Market Funds, (3) a
redemption check is to be made payable to someone other than the registered
accountholder, other than major financial institutions, as determined solely by
the Fund and its agent, on behalf of the shareholder, (4) a redemption check is
to be mailed to an address other than the address of record, preauthorized bank
account, or to a major financial institution for the benefit of a shareholder,
(5) an account registration is being transferred to another owner, (6) a
transaction requires additional legal documentation; (7) the redemption request
is for certificated shares; (8) your address of record has changed within 60
days prior to a redemption request; (9) multiple owners have a dispute or give
inconsistent

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<PAGE>

instructions; and (10) the authority of a representative of a corporation,
partnership, association or other entity has not been established to the
satisfaction of a Fund or its agents.

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

TELEPHONE TRANSACTIONS. Fund shares not held in certificate form may be
exchanged or redeemed by telephone provided you have not declined telephone
privileges. For corporations, partnerships, trusts and certain other accounts,
additional documents are required to activate telephone privileges. Telephone
exchanges are available between nonretirement accounts and between IRA and
403(b) accounts of the same class of shares registered in the same name.
Telephone exchanges are also available from an individually registered
nonretirement account to an IRA account of the same class of shares in the same
name (provided an IRA application is on file). Telephone exchanges are not
available for exchanges of Fund shares for plan units.

As stated in the Funds' Prospectus, the Tax Exempt Funds, the Adviser, the
Underwriter and their officers, directors, trustees and employees will not be
liable for any loss, damage, cost or expense arising out of any instruction (or
any interpretation of such instruction) received by telephone which they
reasonably believe to be authentic. In acting upon telephone instructions,
these parties use procedures which are reasonably designed to ensure that such
instructions are genuine, such as (1) obtaining some or all of the following
information: account number, address, social security number and such other
information as may be deemed necessary; (2) recording all telephone
instructions; and (3) sending written confirmation of each transaction to the
shareholder's address of record.

TAXES

Each Fund is treated as a separate corporation for Federal income tax
purposes. In order to continue to qualify for treatment as a regulated
investment company ("RIC") under the Code, a Fund must distribute to its
shareholders for each taxable year at least 90% of the sum of its investment
company taxable income (consisting generally of taxable net investment income
and net short-term capital gain) plus its net interest income excludable from
gross income under section 103(a) of the Code ("Distribution

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<PAGE>

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 other income (including gains from options or futures) derived
with respect to its business of investing in securities ("Income Requirement");
(2) the Fund must derive less than 30% of its gross income each taxable year
from the sale or other disposition of securities, options or futures that were
held for less than three months ("Short-Short Limitation"); (3) at the close of
each quarter of the Fund's taxable year, at least 50% of the value of its total
assets must be represented by cash and cash items, U.S. Government securities,
securities of other RICs and other securities, with those other securities
limited, in respect of any one issuer, to an amount that does not exceed 5% of
the value of the Fund's total assets; and (4) at the close of each quarter of
the Fund's taxable year, not more than 25% of the value of its total assets may
be invested in securities (other than U.S. Government securities or the
securities of other RICs) of any one issuer.

Dividends paid by a Fund will qualify as exempt-interest dividends as
defined in the Prospectus, and thus will be excludable from gross income for
Federal tax purposes by its shareholders, if the Fund satisfies the additional
requirement that, at the close of each quarter of its taxable year, at least 50%
of the value of its total assets consists of securities the interest on which is
excludable from gross income under section 103(a); each Fund intends to continue
to satisfy this requirement. The aggregate dividends excludable from a Fund
shareholder's gross income may not exceed the Fund's net tax-exempt income. The
shareholders' treatment of dividends from a Fund under state and local income
tax laws may differ from the treatment thereof under the Code. Investors should
consult their tax advisers concerning this matter.

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 will be
reported by shareholders for the year in which that December 31 falls.

Each Fund will be subject to a nondeductible 4% excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of its
ordinary (taxable) 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.

If shares of a Fund are sold at a loss after being held for six months or
less, the loss will be disallowed to the extent of any exempt-interest dividends
received on those shares, and the portion of the loss that is not disallowed, if
any, will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares.

Tax-exempt interest attributable to certain private activity bonds ("PABs")
(including, in the case of a Fund receiving interest on such bonds, a
proportionate part of the exempt-interest dividends paid by that Fund) is Tax
Preference Item. Exempt-interest dividends received by a corporate shareholder
also may be indirectly subject to the alternative minimum tax without regard to
whether the Fund's tax-exempt interest was attributable to such bonds. Entities
or other persons who are "substantial users" (or persons related to "substantial
users") of facilities financed by PABs or industrial development bonds ("IDBs")
should consult their tax advisers before purchasing shares of any Fund because,
for users of certain of these facilities, the interest on such bonds is not
exempt from Federal income tax. For these purposes,

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the term "substantial user" is defined generally to include a "non-exempt
person" who regularly uses in trade or business a part of a facility financed
from the proceeds of PABs or IDBs.

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

Each Fund may acquire zero coupon municipal securities issued with original
issue discount. As a holder of those securities, a Fund must take into account
the original issue discount that accrues on the securities during the taxable
year, even if it receives no corresponding payment on them during the year.
Because each Fund annually must distribute substantially all of its net tax-
exempt income, including any original issue discount on Municipal Instruments,
to satisfy the Distribution Requirement, 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 excess of net long-term capital gain over net short-term capital
loss). In addition, any such gains may be realized on the disposition of
securities held for less than three months. Because of the Short-Short
Limitation, any such gains would reduce the Fund's ability to sell other
securities or options or futures held for less than three months that it might
wish to sell in the ordinary course of its portfolio management.

Each Fund may invest in municipal bonds that are purchased, generally not
on their original issue, with market discount (that is, at a price less than the
principal amount of the bond or, in the case of a bond that was issued with
original issue discount, a price less than the amount of the issue price plus
accrued original issue discount) ("municipal market discount bonds"). Gain on
the disposition of a municipal market discount bond purchased by a Fund after
April 30, 1993 (other than a bond with a fixed maturity date within one year
from its issuance), generally is treated as ordinary (taxable) income, rather
than capital gain, to the extent of the bond's accrued market discount at the
time of disposition. Market discount on such a bond generally is accrued
ratably, on a daily basis, over the period from the acquisition date to the date
of maturity. In lieu of treating the disposition gain as above, a Fund may
elect to include market discount in its gross income currently, for each taxable
year to which it is attributable.

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

The use of hedging strategies, such as selling (writing) and purchasing
options and futures contracts, involves complex rules that will determine for
income tax purposes the character and timing of recognition of the gains and
losses a Fund realizes in connection therewith. Gains from options and futures
contracts derived by a Fund with respect to its business of investing in
securities will qualify as

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<PAGE>

permissible income under the Income Requirement. However, income from a Fund's
disposition of options and futures contracts will be subject to the Short-Short
Limitation if they are held for less than three months.

If a Fund satisfies certain requirements, then any increase in value of a
position that is part of a "designated hedge" will be offset by any decrease in
value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether the Fund satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. Each
Fund intends that, when it engages in hedging strategies, it will qualify for
this treatment, but at the present time it is not clear whether this treatment
will be available for all of the Funds' hedging transactions. To the extent
this treatment is not available, a Fund may be forced to defer the closing out
of certain options or futures contracts beyond the time when it otherwise would
be advantageous to do so, in order for the Fund to continue to qualify as a RIC.

PERFORMANCE INFORMATION

A Fund may advertise its 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) to the power of 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 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 will fluctuate
over time and return for any given past period is not an indication or
representation by a Fund of future rates of return on its shares. 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.

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<PAGE>

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 periods ended December 31, 1995 are set forth in the tables
below:

AVERAGE ANNUAL TOTAL RETURN(1)

Insured Intermediate Fund(2) Insured Tax Exempt Fund(2)
------------------------- -----------------------
Class A Shares Class B Shares Class A Shares Class B Shares
-------------- -------------- -------------- --------------
One Year 6.45% N/A 8.74% N/A
Five Years N/A N/A 6.09 N/A
Ten Years N/A N/A 7.32 N/A
Life of Fund(3) 1.95 N/A N/A N/A
1/12/95(4) to
12/31/95 N/A 8.00% N/A 9.99%

TOTAL RETURN(1)

Insured Intermediate Fund(2) Insured Tax Exempt Fund(2)
------------------------- -----------------------
Class A Shares Class B Shares Class A Shares Class B Shares
-------------- -------------- -------------- --------------
One Year 6.45% N/A 8.74% N/A
Five Years N/A N/A 34.41 N/A
Ten Years N/A N/A 102.62 N/A
Life of Fund(3) 4.16 N/A N/A N/A
1/12/95(4) to
12/31/95 N/A 7.73% N/A 9.64%

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 periods ended December 31, 1995 are set
forth in the tables below:

AVERAGE ANNUAL TOTAL RETURN(1)

Insured Intermediate Fund(2) Insured Tax Exempt Fund(2)
------------------------- -----------------------
Class A Shares Class B Shares Class A Shares Class B Shares
-------------- -------------- -------------- --------------
One Year 13.50% N/A 16.01% N/A
Five Years N/A N/A 7.47 N/A
Ten Years N/A N/A 8.01 N/A
Life of Fund(3) 5.16 N/A N/A N/A
1/12/95(4) to
12/31/95 N/A 12.71% N/A 14.79%

- ---------------
(1) All return figures reflect the current maximum sales charge of 6.25%.
Prior to July 1, 1993, the maximum sales charge for Insured Tax Exempt Fund was
6.90%. Prior to December 29, 1989, the maximum sales charge for Insured Tax
Exempt Fund was 7.25%. Prior to January 12, 1995, the maximum sales charge for
Insured Intermediate Fund was 3.50%.

(2) Certain expenses of the Tax Exempt Funds have been waived from commencement
of operations through December 31, 1995. Accordingly, return figures are higher
than they would have been had such expenses not been waived.

(3) INSURED INTERMEDIATE FUND commenced operations on November 22, 1993.

(4) Commencement of offering of Class B shares.

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<PAGE>

TOTAL RETURN(1)

Insured Intermediate Fund(2) Insured Tax Exempt Fund(2)
------------------------- -----------------------
Class A Shares Class B Shares Class A Shares Class B Shares
-------------- -------------- -------------- --------------
One Year 13.50% N/A 16.01% N/A
Five Years N/A N/A 43.36 N/A
Ten Years N/A N/A 116.09 N/A
Life of Fund(3) 11.18 N/A N/A N/A
1/12/95(4) to
12/31/95 N/A 12.27% N/A 14.27%

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.

Each Fund's tax-equivalent yield during the base period may be presented in
one or more stated tax brackets. Tax-equivalent yield is calculated by
adjusting a Fund's tax-exempt yield by a factor designed to show the approximate
yield that a taxable investment would have to earn to produce an after-tax yield
equal to the Fund's tax-exempt yield.

The yield and tax-equivalent yield for INSURED TAX EXEMPT FUND Class A
shares for the thirty day period ended December 31, 1995 (assuming a Federal tax
rate of 36%) was 4.56% and 7.13%, respectively. The yield and tax-equivalent
yield for INSURED TAX EXEMPT FUND Class B shares for the same period (assuming a
Federal Tax rate of 36%) was 4.19% and 6.55%, respectively. The yield and tax-
equivalent yield (assuming the same tax rate) for INSURED INTERMEDIATE FUND
Class A shares for the thirty days ended December 31, 1995 was 4.54% and 7.09%,
respectively. The yield and tax-equivalent yield for INSURED INTERMEDIATE FUND
Class B shares for the same period (assuming a Federal Tax rate of 36%) was
3.90% and 6.09%, respectively. The maximum Federal tax rate during this period
was 39.6%. During this period, certain expenses of INSURED INTERMEDIATE FUND
have been waived or

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

(1) All return figures reflect the current maximum sales charge of 6.25%.
Prior to July 1, 1993, the maximum sales charge for Insured Tax Exempt Fund was
6.90%. Prior to December 29, 1989, the maximum sales charge for Insured Tax
Exempt Fund was 7.25%. Prior to January 12, 1995, the maximum sales charge for
Insured Intermediate Fund was 3.50%.

(3) INSURED INTERMEDIATE FUND commenced operations on November 22, 1993.

(4) Commencement of offering of Class B shares.

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<PAGE>

reimbursed. Accordingly yield and tax-equivalent yield figures are higher than
they would have been had such expenses not been waived or reimbursed.

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 December 31,
1995 for Class A shares of INSURED INTERMEDIATE FUND and INSURED TAX EXEMPT FUND
calculated using the offering price was 4.81% and 4.75%, respectively. The
distribution rate for the twelve-month period ended December 31, 1995 for Class
A shares of INSURED INTERMEDIATE FUND and INSURED TAX EXEMPT FUND calculated at
net asset value was 5.13% and 5.07%, respectively. The distribution rate for
the period January 12, 1995 through December 31, 1995 for Class B shares of
INSURED INTERMEDIATE FUND and INSURED TAX EXEMPT FUND calculated using net asset
value was 4.55% and 4.23%, respectively. During this period certain expenses of
INSURED INTERMEDIATE FUND were waived. Accordingly, the distribution rates are
higher than they would have been had such expenses not been waived.

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.

A Fund may include in advertisements and sales literature, information,
examples and statistics that illustrate the effect of taxable versus tax-free
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 gains distributions in additional shares. The examples used will be
for illustrative purposes only and are not representations by any Fund of past
or future yield or return.

From time to time, in reports and promotional literature, a Fund may
compare its performance to, or cite the historical performance of, U.S. Treasury
bills, notes and bonds, or indices of broad groups of unmanaged securities
considered to be representative of, or similar to, that Fund's portfolio
holdings, such as:

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

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<PAGE>

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.

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.

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.

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

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

TRANSFER AGENT. Administrative Data Management Corp., 581 Main Street,
Woodbridge, NJ 07095-1198, an affiliate of FIMCO and FIC, acts as transfer agent
for each Fund and as redemption agent for regular redemptions. The fees charged
to a Fund by the Transfer Agent are $5.00 to open an account; $3.00 for each
certificate issued; $.65 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;
and $1.00 per account per report required by any governmental authority.
Additional fees charged to a Fund by the Transfer Agent are assumed by the
Underwriter. The Transfer Agent reserves the right to change the fees on prior
notice to the Fund. Upon request from shareholders, the Transfer Agent will
provide an account history. For account histories covering the most

-39-
<PAGE>

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 1990 and $10.00 per year for each account history covering the period
1974 through 1982. Account histories prior to 1974 will not be provided. If
any communication from the Transfer Agent to a shareholder is returned from the
U.S. Postal Service marked as "Undeliverable" two consecutive times, the
Transfer Agent will cease sending any further materials to the shareholder until
the Transfer Agent is provided with a correct address. Furthermore, if there is
no known address for a shareholder for at least one year, the Transfer Agent
will charge such shareholder's account $40 to cover the Transfer Agent's
expenses in trying to locate the shareholder's correct address. For the fiscal
year ended December 31, 1995, INSURED TAX EXEMPT FUND paid $842,095 in transfer
agency fees. For the fiscal year ended December 31, 1995, INSURED INTERMEDIATE
FUND accrued $7,523 in transfer agency fees and expenses, all of which were
voluntarily waived by the Transfer Agent. The Transfer Agent's telephone number
is 1-800-423-4026.

SHAREHOLDER LIABILITY. Series 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 the Series Fund. The Declaration of Trust however, contains an
express disclaimer of shareholder liability for acts or obligations of the
Series Fund and requires that notice of such disclaimer be given in each
agreement, obligation, or instrument entered into or executed by the Series Fund
or the Trustees. The Declaration of Trust provides for indemnification out of
the property of the Fund of any shareholder held personally liable for the
obligations of the Series Fund. The Declaration of Trust also provides that the
Series Fund shall, upon request, assume the defense of any claim made against
any shareholder for any act or obligation of the Series 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 Series
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. The Series Fund may have an obligation
to indemnify Trustees and officers with respect to litigation.

5% SHAREHOLDERS. As of April 1, 1996, John W. Roberts, 1316 Indian Mound
W, Bloomfield Hills, MI 48301, beneficially owned 6.2% of the outstanding Class
A shares of INSURED INTERMEDIATE FUND.

As of April 1, 1996, the following beneficially owned more than 5% of the
outstanding Class B shares of the Fund listed below:

Fund % of Shares Shareholder
- ---- ----------- -----------
INSURED INTERMEDIATE FUND 19.7% Alice E. Heimbold
103 Atlantic Avenue
Spring Lake, NJ 07762-1116

14.6% Alexander J. Rota
363 Van Wick Lake Road
Fishkill, NY 12524

-40-
<PAGE>

10.0% Mitchell Brodkin
Cedarbrook Hill
Apt. 109A
Vyncote, PA 19095

9.8% William A. Bloomhall
932 Mariner Point
760 Sextant Drive
Sanibel, FL 33957

9.7% Shirley M. Pusko
8129 W. 87th Street
Hickory Hills, IL 60457

7.3% James J. Rahner
424 Darby Road
Havertown, PA 19082

INSURED TAX EXEMPT FUND 12.6% David M. Watkins
5353 N. Federal Hwy, #404
Fort Lauderdale, FL 33308

8.3% Sally M. Topp
111 Elsworth Avenue
New Haven, CT 06511-4241

5.0% Mellie O. Walker
2000 English Cedar Circle
Virginia Beach, VA 23451

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

APPENDIX A
DESCRIPTION OF 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

-41-
<PAGE>

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.

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.

-42-
<PAGE>

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

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<PAGE>

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.

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.

APPENDIX B
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:

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<PAGE>

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.

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.

APPENDIX C
DESCRIPTION OF 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.

-45-

<PAGE>

- Well-established access to a range of financial markets and
assured sources of alternate liquidity.

-46-

<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.

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.

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

<PAGE>

[The following table is represented as 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 diference of
$331,215.

25 years old .............. 533,443
35 years old .............. 202,228
45 years old .............. 62,320

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.

<PAGE>

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

The following chart illustrates the historical performance of the Dow Jones
Industrial Average from 1928 through 1995.

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

<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

1995........................ 1.00
1996........................ 1.03
1997........................ 1.06
1998 ....................... 1.09
1999 ....................... 1.13
2000 ....................... 1.16
2001 ....................... 1.19
2002 ....................... 1.23
2003 ....................... 1.27
2004 ....................... 1.30
2005 ....................... 1.34
2006 ....................... 1.38
2007 ....................... 1.43
2008 ....................... 1.47
2009 ....................... 1.51
2010 ....................... 1.56
2011 ....................... 1.60
2012 ....................... 1.65
2013 ....................... 1.70
2014 ....................... 1.75
2015 ....................... 1.81
2016 ....................... 1.86
2017 ....................... 1.92
2018 ....................... 1.97
2019 ....................... 2.03
2020 ....................... 2.09
2021 ....................... 2.16
2022 ....................... 2.22
2023 ....................... 2.29
2024 ....................... 2.36
2025 ....................... 2.43

Inflation erodes your buying power. $100 in 1966, could purchase the same amount
of goods and service as $21 in 1995.* Projecting inflation at 3%, goods and
services costing $100 today will cost $243 in the year 2025.

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

<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 1995(1)

Total Number of Percentage of
Number of Positive Positive
Periods Periods Periods
------- ------- -------
1-Year Periods 70 50 71%
5-Year Periods 66 59 89%
10-Year Periods 61 59 97%
15-Year Periods 56 56 100%
20-Year Periods 51 51 100%

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. (2)

Compound Annual Return from 1981 -- 1995(1)

Inflation ..................... 3.93
U.S. Treasury Bills ........... 7.11
Large Company Stocks .......... 14.80

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

Compound Annual Return from 1981 -- 1995(1)

Inflation ..................... 3.93
U.S. Treasury Bills ........... 7.11
Long-Term Corp. bonds ......... 13.46

(1) Sources: Stocks, Bonds, Bill and Inflation 1996 Yearbook, Ibbotson
Associates, Chicago.

(2) 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, reeturns of U.S. Treasury bills historically have
not outpaced inflation by as great a margin as stocks.

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
---------------------------------------------
your tax-free yield 31.0% 36.0% 39.6%
------------------- ----- ----- -----
3.00% 4.35% 4.69% 4.97%
3.50% 5.07% 5.47% 5.79%
4.00% 5.80% 6.25% 6.62%
4.50% 6.52% 7.03% 7.45%
5.00% 7.25% 7.81% 8.25%
5.50% 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.

<PAGE>

FINANCIAL STATEMENTS
as of December 31, 1995
-------------------------

- 47 -

<PAGE>
Portfolio of Investments
FIRST INVESTORS INSURED INTERMEDIATE TAX EXEMPT SERIES
(A Series of First Investors Series Fund)
December 31, 1995

- ------------------ ----------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL BONDS--100.1%
Alaska--3.0%
$ 200M Anchorage General Obligation 6 1U2%, 7/1/2004 $ 225,000 $ 304
- ------------------ ----------------------------------------------------------------------------------------------------------
Arizona--12.3%
Maricopa County Unified School District General Obligation:
300M #11 (Peoria) 7%, 7/1/2001* 339,375 460
250M #80 (Chandler) 6.6%, 7/1/2006 286,875 387
250M Phoenix Civic Impt. Corp. Mun. Facs. Excise Tax Rev. 6 3U4%, 7/1/2004 284,375 384
- ------------------ ----------------------------------------------------------------------------------------------------------
910,625 1,231
- ------------------ ----------------------------------------------------------------------------------------------------------
Arkansas--3.0%
200M Arkansas St. Fin. Auth. Water Rev. 6.4%, 6/1/2002* 223,750 303
- ------------------ ----------------------------------------------------------------------------------------------------------
California--6.7%
150M Pittsburg Pub. Fing. Auth. Wastewater Rev. 6.8%, 6/1/2001 170,250 230
300M San Diego Pub. Fing. Auth. Sewer Rev. 6%, 5/15/2005 327,750 443
- ------------------ ----------------------------------------------------------------------------------------------------------
498,000 673
- ------------------ ----------------------------------------------------------------------------------------------------------
Illinois--23.5%
250M Chicago General Obligation 6 1U4%, 10/31/2001 271,875 368
250M Chicago Park District 6%, 1/1/2007 269,063 364
200M Chicago Wastewater Transmission Rev. 6 3U4%, 11/15/2000* 225,000 304
200M Cook County High School District General Obligation
250M Northwest Subn. Mun. Jt. Action Water Agy. 6.35%, 5/1/2006 277,812 376
400M Regional Transportation Authority 7 3U4%, 6/1/2003 478,500 647
- ------------------ ----------------------------------------------------------------------------------------------------------
1,735,500 2,347
- ------------------ ----------------------------------------------------------------------------------------------------------
Indiana--2.3%
150M Valparaiso Indpt. Multi-Schools Bldg. Corp. 6 5U8%, 7/1/2002* 170,437 230
- ------------------ ----------------------------------------------------------------------------------------------------------
Kentucky--3.7%
200M Louisville & Jefferson County Met. Sewer District 10%, 5/15/2004 270,250 365
- ------------------ ----------------------------------------------------------------------------------------------------------
Louisiana--2.7%
175M Louisiana General Obligation 7%, 5/1/2001 197,312 267
- ------------------ ----------------------------------------------------------------------------------------------------------
Michigan--10.4%
1,000M Brighton Area School District General Obligation Zero Cpn. 5/1/2005* 313,750 425
250M Grand Ledge School District 6.6%, 5/1/2004 288,750 390
150M Morley-Stanwood Cmnty. School 6 1U2%, 5/1/2005 168,563 229
- ------------------ ----------------------------------------------------------------------------------------------------------
771,063 1,044
- ------------------ ----------------------------------------------------------------------------------------------------------
New Jersey--3.1%
200M New Jersey Economic Dev. Auth. Mkt. Transition Fac. Rev. 7%, 7/1/2004 232,250 314
- ------------------ ----------------------------------------------------------------------------------------------------------
New York--10.4%
New York City General Obligati
150M 6 5U8%, 8/1/2002* 171,000 231
250M 8%, 8/1/2005 313,438 424
Niagara Falls Bridge Commission:
100M 6 1U8%, 10/1/2002 111,750 151
150M 6.3%, 10/1/2002* 169,125 229
- ------------------ ----------------------------------------------------------------------------------------------------------
765,313 1,035
- ------------------ ----------------------------------------------------------------------------------------------------------
Ohio--3.1%
200M Columbus City Sch. Dist. General Obligation 6.65%, 12/1/2002* 229,500 311
- ------------------ ----------------------------------------------------------------------------------------------------------
Pennsylvania- 3.1%
200M Pennsylvania Intergovernmental Coop. Auth. Special Tax Rev.
7%, 6/15/2004 229,750 311
- ------------------ ----------------------------------------------------------------------------------------------------------
Puerto Rico--1.9%
125M Puerto Rico Electrical Power Auth. Rev. 6 1U2%, 7/1/2005 142,031 192
- ------------------ ----------------------------------------------------------------------------------------------------------
Rhode Island--3.1%
200M Rhode Island Depositors Econ. Protection Corp. 7.1%, 8/1/2001* 230,000 311
- ------------------ ----------------------------------------------------------------------------------------------------------
Texas--4.6%
300M Harris County Toll Road General Obligation 6 1U2%, 8/15/2002* 339,375 459
Washington--3.2%
$ 200M Snohomish & Island Counties School District General Obligation
#401 (Stanwood), 7%, 12/15/2005 $235,000 $317
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Municipal Bonds (cost $7,014,821) 100.1% 7,405,156 10,014
Excess of Liabilities Over Other Assets (.1) (10,215) (4)
- ------------------ ----------------------------------------------------------------------------------------------------------
Net Assets 100.0% $7,394,941 $10,000
================== ==========================================================================================================
* Municipal Bonds which have been prerefunded are shown maturing at the prerefunded

</TABLE>

<TABLE>
<CAPTION>
Statement of Assets and Liabilities
FIRST INVESTORS SERIES FUND
December 31, 1995

- -----------------------------------------------------------------------------------------------------------------------
Insured
Intermediate Investment Special Total
Blue Chip Tax Exempt Grade Situations Return
Series Series Series Series Series
- -------------------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Assets
Investments in securities:
At identified cost 136,898,998 7,014,821 47,295,021 109,869,687 46,149,118
============ ========== =========== ============ ===========
At value (Note 1A) 175,440,598 7,405,156 50,001,625 129,622,353 53,907,522
Cash 330,859 28,926 221,518 355,194 191,372
Receivables:
Investment securities sold -- -- -- 90,000 1,319,304
Interest and dividends 273,470 107,455 945,631 25,465 388,170
Trust shares sold 706,460 3,695 181,039 647,379 50,217
Other assets 511 -- 64 32 394
------------ ---------- ------------ ------------ ------------
Total Assets 176,751,898 7,545,232 51,349,877 130,740,423 55,856,979
------------ ---------- ------------ ------------ ------------
Liabilities
Payables:
Dividends payable January 15, 1996 451,999 8,278 68,284 264,262 16,556
Trust shares redeemed 316,480 -- 70,371 392,391 39,879
Investment securities purchased -- 139,581 -- -- --
Accrued advisory fee 109,524 2,138 27,316 80,851 34,710
Accrued expenses 121,079 294 20,466 106,440 54,128
------------ ---------- ------------ ------------ ------------
Total Liabilities 999,082 150,291 186,437 843,944 145,273
------------ ---------- ------------ ------------ ------------
Net Assets $175,752,816 $7,394,941 $51,163,440 $129,896,479 $55,711,706
============ ========== =========== ============ ===========
Net Assets Consist of:
Capital paid in 136,917,426 7,213,817 48,444,877 110,143,813 47,765,707
Undistributed net investment income 293,790 2,168 36,959 -- 190,956
Accumulated net realized loss on
investment transactions -- (211,379) (25,000) -- (3,361)
Net unrealized appreciation in value
of investments 38,541,600 390,335 2,706,604 19,752,666 7,758,404
------------ ---------- ------------ ------------ ------------
Total 175,752,816 7,394,941 51,163,440 129,896,479 55,711,706
============ ========== ============ ============ ============
Trust shares outstanding (Note 2):
Class A 9,889,591 1,199,030 4,833,770 6,384,238 4,273,021
Class B 319,466 64,576 112,740 233,987 20,870
Net asset value and redemption
price per share--Class A $17.22 $5.85 $10.34 $19.63 $12.97
====== ===== ====== ====== ======

Maximum offering price per share--Class A
(Net asset value/.9375)* $18.37 $6.24 $11.03 $20.94 $13.83
====== ===== ====== ====== ======

Net asset value and offering price
per share--Class B $17.16 $5.85 $10.35 $19.51 $12.92
====== ===== ====== ====== ======

*On purchases of $25,000 or more, the sales charge is reduced.

See notes to financial

</TABLE>

<TABLE>
<CAPTION>
Statement of Operations
FIRST INVESTORS SERIES FUND
Year Ended December 31, 1995
- --------------------------------------------------------------------------------------------------------------------
Insured
Intermediate Investment Special Total
Blue Chip Tax Exempt Grade Situations Return
Series Series Series Series Series
- ------------------------------------ ------------ ------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Investment Income
Income:
Interest $713,848 $360,538 $3,576,142 $1,334,007 $1,889,963
Dividends 3,310,436 -- -- 332,633 566,696
Consent fees -- -- 68,783 -- --
----------- -------- ---------- ----------- -----------
Total income 4,024,284 360,538 3,644,925 1,666,640 2,456,659
----------- -------- ---------- ----------- -----------
Expenses (Note 4):
Advisory fee 1,483,159 38,356 363,919 1,105,516 528,053
Shareholder servicing costs 476,636 7,523 135,205 458,571 185,483
Distribution plan expenses--Class A 438,127 18,835 144,194 325,418 158,092
Distribution plan expenses--Class B 22,735 1,143 4,572 20,788 1,076
Reports and notices to shareholders 75,194 701 10,859 82,274 30,332
Professional fees 33,525 8,446 12,507 19,957 19,156
Custodian fees 22,756 1,868 8,699 21,321 24,788
Other expenses 45,217 2,596 15,443 29,535 17,677
----------- -------- ---------- ----------- -----------
Total expenses 2,597,349 79,468 695,398 2,063,380 964,657
Less: Expenses waived or assumed (370,790) (55,950) (179,800) (276,379) (132,013)
Custodian fees paid indirectly (16,780) -- (8,270) (21,316) --
----------- -------- ---------- ----------- -----------
Net expenses 2,209,779 23,518 507,328 1,765,685 832,644
----------- -------- ---------- ----------- -----------
Net investment income (loss) 1,814,505 337,020 3,137,597 (99,045) 1,624,015
----------- -------- ---------- ----------- -----------
Realized and Unrealized Gain (Loss)
on Investments (Note 3):
Net realized gain (loss) on investments 5,979,563 (12) 67,631 4,776,742 1,809,004
Net unrealized appreciation
of investments 34,678,998 454,526 5,383,848 17,856,965 8,913,490
----------- -------- ---------- ----------- -----------
Net gain on investments 40,658,561 454,514 5,451,479 22,633,707 10,722,494
----------- -------- ---------- ----------- -----------
Net Increase in Net Assets Resulting
from Operations $42,473,066 $791,534 $8,589,076 $22,534,662 $12,346,509
=========== ======== ========== =========== ===========

See notes to financial statements
</TABLE>

<TABLE>
<CAPTION>
Statement of Changes in Net Assets
FIRST INVESTORS SERIES FUND
- --------------------------------------------------------------------------------------------------------------------------------
INSURED INTERMEDIATE
BLUE CHIP SERIES TAX EXEMPT SERIES
------------------------------------------------------------------
Year Ended December 31 1995 1994 1995 1994
- ------------------------------------------------ ------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income (loss) $1,814,505 $969,020 $337,020 $204,046
Net realized gain (loss) on investments 5,979,563 12,824,558 (12) (211,367)
Net unrealized appreciation (depreciation) of investments 34,678,998 (17,486,358) 454,526 (64,191)
------------ ------------ ---------- ----------
Net increase (decrease) in net assets resulting
from operations 42,473,066 (3,692,780) 791,534 (71,512)
------------ ------------ ---------- ----------
Distributions to Shareholders:
From net investment income--Class A (1,794,647) (736,036) (330,471) (203,201)
From net investment income--Class B (28,155) -- (5,226) --
From net realized gain on investments--Class A (5,794,467) (12,824,558) -- --
From net realized gain on investments--Class B (185,096) -- -- --
In excess of realized gain from security
transactions--Class A -- -- -- --
In excess of realized gain from security
transactions--Class B -- -- -- --
------------ ------------ ---------- ----------
Total distributions (7,802,365) (13,560,594) (335,697) (203,201)
------------ ------------ ---------- ----------
Trust Share Transactions (a)
Class A:
Proceeds from shares sold 30,855,778 28,516,378 1,707,243 5,941,925
Value of distributions reinvested 7,124,835 13,336,027 251,295 146,538
Cost of shares redeemed (25,713,861) (18,834,076) (1,080,698) (1,741,446)
------------ ------------ ---------- ----------
12,266,752 23,018,329 877,840 4,347,017
------------ ------------ ---------- ----------
Class B:
Proceeds from shares sold 5,044,595 -- 372,887 --
Value of distributions reinvested 211,655 -- 2,826 --
Cost of shares redeemed (134,770) -- (2,000) --
------------ ------------ ---------- ----------
5,121,480 -- 373,713 --
------------ ------------ ---------- ----------
Net increase (decrease) from trust share transactions 17,388,232 23,018,329 1,251,553 4,347,017
------------ ------------ ---------- ----------
Net increase (decrease) in net assets 52,058,933 5,764,955 1,707,390 4,072,304
Net Assets
Beginning of year 123,693,883 117,928,928 5,687,551 1,615,247
------------ ------------ ---------- ----------
End of year+ $175,752,816 $123,693,883 $7,394,941 $5,687,551
============ ============ ========== ==========
+Includes undistributed net investment income of 293,790 302,087 2,168 845
============ ============ ========== ==========
(a)Trust shares issued and redeemed
Class A:
Sold 1,958,324 1,859,807 298,216 1,055,065
Issued for distributions reinvested 408,815 987,102 43,763 26,577
Redeemed (1,667,553) (1,228,162) (189,523) (314,040)
------------ ------------ ---------- ----------
Net increase (decrease) in Class A shares outstanding 699,586 1,618,747 152,456 767,602
============ ============ ========== ==========
Class B:
Sold 315,310 -- 64,431 --
Issued for distributions reinvested 11,994 -- 489 --
Redeemed (7,838) -- (344) --
------------ ------------ ---------- ----------
Net increase in Class B shares outstanding 319,466 -- 64,576 --
============ ============ ========== ==========

<CAPTION>
Statement of Changes in Net Assets (Continued)
FIRST INVESTORS SERIES FUND
- --------------------------------------------------------------------------------------------------------------------------------
INVESTMENT GRADE SPECIAL SITUATION
SERIES SERIES
------------------------------------------------------------------
Year Ended December 31 1995 1994 1995 1994
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income (loss) $3,137,597 $3,018,267 ($99,045) ($191,338)
Net realized gain (loss) on investments 67,631 (77,604) 4,776,742 4,914,240
Net unrealized appreciation (depreciation) of investments 5,383,848 (5,141,298) 17,856,965 (7,165,669)
----------- ----------- ------------ -----------
Net increase (decrease) in net assets resulting
from operations 8,589,076 (2,200,635) 22,534,662 (2,442,767)
----------- ----------- ------------ -----------
Distributions to Shareholders:
From net investment income--Class A (3,128,539) (2,986,294) -- --
From net investment income--Class B (26,151) -- -- --
From net realized gain on investments--Class A -- -- (4,513,641) (4,722,934)
From net realized gain on investments--Class B -- -- (164,734) --
In excess of realized gain from security
transactions--Class A (14,684) -- -- --
In excess of realized gain from security
transactions--Class B (343) -- -- --
----------- ----------- ------------ -----------
Total distributions (3,169,717) (2,986,294) (4,678,375) (4,722,934)
----------- ----------- ------------ -----------
Trust Share Transactions (a)
Class A:
Proceeds from shares sold 7,877,385 11,602,927 33,124,063 44,120,605
Value of distributions reinvested 2,435,394 2,283,004 4,251,850 4,695,874
Cost of shares redeemed (11,876,289) (11,027,449) (19,660,248) (10,892,979)
----------- ----------- ------------ -----------
(1,563,510) 2,858,482 17,715,665 37,923,500
----------- ----------- ------------ -----------
Class B:
Proceeds from shares sold 1,166,562 -- 4,418,828 --
Value of distributions reinvested 18,187 -- 162,263 --
Cost of shares redeemed (56,045) -- (162,649) --
----------- ----------- ------------ -----------
1,128,704 -- 4,418,442 --
----------- ----------- ------------ -----------
Net increase (decrease) from trust share transactions (434,806) 2,858,482 22,134,107 37,923,500
----------- ----------- ------------ -----------
Net increase (decrease) in net assets 4,984,553 (2,328,447) 39,990,394 30,757,799
Net Assets
Beginning of year 46,178,887 48,507,334 89,906,085 59,148,286
----------- ----------- ------------ -----------
End of year+ $51,163,440 $46,178,887 $129,896,479 $89,906,085
=========== =========== ============ ===========
+Includes undistributed net investment income of 36,959 54,052 -- --
=========== =========== ============ ===========
(a)Trust shares issued and redeemed
Class A:
Sold 798,381 1,196,162 1,771,857 2,520,975
Issued for distributions reinvested 245,208 238,751 211,325 285,811
Redeemed (1,206,098) (1,136,131) (1,071,368) (620,009)
----------- ----------- ------------ -----------
Net increase (decrease) in Class A shares outstanding (162,509) 298,782 911,814 2,186,777
=========== =========== ============ ===========
Class B:
Sold 116,443 -- 234,052 --
Issued for distributions reinvested 1,794 -- 8,109 --
Redeemed (5,497) -- (8,174) --
----------- ----------- ------------ -----------
Net increase in Class B shares outstanding 112,740 -- 233,987 --
=========== =========== ============ ===========

<S> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income (loss) $1,624,015 $1,050,441
Net realized gain (loss) on investments 1,809,004 1,748,894
Net unrealized appreciation (depreciation) of investments 8,913,490 (4,665,923)
----------- -----------
Net increase (decrease) in net assets resulting
from operations 12,346,509 (1,866,588)
----------- -----------
Distributions to Shareholders:
From net investment income--Class A (1,523,212) (881,057)
From net investment income--Class B (3,901) --
From net realized gain on investments--Class A (1,800,205) (1,748,894)
From net realized gain on investments--Class B (8,799) --
In excess of realized gain from security transactions--Class A (3,345) --
In excess of realized gain from security transactions--Class B (16) --
----------- -----------
Total distributions (3,339,478) (2,629,951)
----------- -----------
Trust Share Transactions (a)
Class A:
Proceeds from shares sold 3,426,577 5,931,145
Value of distributions reinvested 3,303,023 2,614,430
Cost of shares redeemed (10,998,541) (11,511,286)
----------- -----------
(4,268,941) (2,965,711)
----------- -----------
Class B:
Proceeds from shares sold 247,304 --
Value of distributions reinvested 12,704 --
Cost of shares redeemed -- --
----------- -----------
260,008 --
----------- -----------
Net increase (decrease) from trust share transactions (4,008,933) (2,965,711)
----------- -----------
Net increase (decrease) in net assets 4,998,098 (7,462,250)
Net Assets
Beginning of year 50,713,608 58,175,858
----------- -----------
End of year+ $55,711,706 $50,713,608
=========== ===========
+Includes undistributed net investment income of 190,956 123,612
=========== ===========
(a)Trust shares issued and redeemed
Class A:
Sold 279,476 509,492
Issued for distributions reinvested 252,244 237,905
Redeemed (913,524) (991,334)
----------- -----------
Net increase (decrease) in Class A shares outstanding (381,804) (243,937)
=========== ===========
Class B:
Sold 19,916 --
Issued for distributions reinvested 954 --
Redeemed -- --
----------- -----------
Net increase in Class B shares outstanding 20,870 --
=========== ===========
See notes to financial statements
</TABLE>

<PAGE>

Notes to Financial Statements
FIRST INVESTORS SERIES FUND

1. Significant Accounting Policies--The Fund, a Massachusetts business
trust, is registered under the Investment Company Act of 1940 (the "1940
Act") as a diversified, open-end management investment company. The Fund
operates as a series fund, issuing shares of beneficial interest in the
Blue Chip, Insured Intermediate Tax Exempt, Investment Grade, Special
Situations and Total Return Series and accounts separately for the
assets, liabilities and operations of each Series. The objective of each
Series is as follows:

Blue Chip Series seeks to provide investors with high total investment
return consistent with the preservation of capital.

Insured Intermediate Tax Exempt Series seeks to provide a high level of
interest income which is exempt from federal income tax.

Investment Grade Series seeks to generate a maximum level of income
consistent with investment in investment grade debt securities.

Special Situations Series seeks long-term growth of capital.

Total Return Series seeks to provide investors with high long-term total
investment return consistent with moderate investment risk.

A. Security Valuation--Except as provided below, a security listed or
traded on an exchange or the
NASDAQ National Market System is valued at its last sale price on the
exchange or system where the security is principally traded, and lacking
any sales, the security is valued at the mean between the closing bid
and asked prices. Each security traded in the over-the-counter market
(including securities listed on exchanges whose primary market is
believed to be over-the-counter) is valued at the mean between the last
bid and asked prices based upon quotes furnished by a market maker for
such securities. Securities may also be priced by a pricing service. The
pricing service uses quotations obtained from investment dealers or
brokers, information with respect to market transactions in comparable
securities and other available information in determining value. Short-
term corporate notes which are purchased at a discount 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
Fund's officers in a manner specifically authorized by the trustees of
the Fund.

The municipal bonds in which the Insured Intermediate Tax Exempt Series
invests are traded primarily in the over-the-counter markets. Such
securities are valued daily on the basis of valuations provided by a
pricing service approved by the Board of Trustees. The pricing service
considers security type, rating, market condition and yield data, as
well as market quotations and prices provided by market makers in
determining value. "When Issued Securities" are reflected in the assets
of the Series as of the date the securities are purchased.

The municipal bonds held by the Insured Intermediate Tax Exempt Series
are insured as to payment of principal and interest by the issuer or
under insurance policies written by independent insurance companies. It
is the intention of the Series to retain any insured securities which
are in default or in significant risk of default and to place a value on
the defaulted securities equal to the value of similar securities which
are not in default. The Series may invest up to 20% of its assets in
portfolio securities not covered by the insurance feature.

B. Federal Income Taxes--No provision has been made for federal income
taxes on net income or capital gains since it is the policy of each
Series to continue to comply with the special provisions of the Internal
Revenue Code applicable to investment companies and to make sufficient
distributions of income and capital gains (in excess of any available
capital loss carryovers), to relieve it from all, or substantially all,
federal income taxes. At December 31, 1995, the Insured Intermediate Tax
Exempt Series had capital loss carryovers of $211,379, of which $160,056
expires in 2002 and $51,323 expires in 2003.

C. Distributions to Shareholders--Dividends from net investment income
of the Insured Intermediate Tax Exempt Series and the Investment Grade
Series are declared daily and paid monthly. Dividends from net
investment income of the Blue Chip Series and Total Return Series are
declared and paid quarterly and dividends from net investment income of
the Special Situations Series are declared and paid annually.
Distributions from net realized capital gains of all Series are normally
declared and paid annually. Income dividends and capital gain
distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. These
differences are primarily due to differing treatments for net operating
losses, tax-exempt interest, capital loss carryforwards and post October
losses.

D. Expense Allocation--Expenses directly charged or attributable to a
Series are paid from the assets of that Series. General expenses of
First Investors Series Fund are allocated among and charged to the
assets of each Series on a fair and equitable basis, which may be based
on the relative assets of each Series or the nature of the services
performed and relative applicability to each Series.

E. Other--Security transactions are accounted for on the date the
securities are purchased or sold. Cost is determined, and gains and
losses are based, on the identified cost basis for both financial
statement and federal income tax purposes. Dividend income is recorded
on the ex-dividend date. Interest income and estimated expenses are
accrued daily. The Series' Custodian, except for the Total Return
Series, has provided credits in the amount of $48,234 against custodian
charges based on the uninvested cash balances of the Series.

2. Capital--Each Series sells two classes of shares, Class A and Class
B, each with a public offering price that reflects different sales
charges and expense levels. Class A shares are sold with an initial
sales charge of up to 6.25% of the amount invested and together with the
Class B shares are subject to 12b-1 fees as described in Note 4. Class B
shares are sold without an initial sales charge, but are generally
subject to a contingent deferred sales charge which declines in steps
from 4% to 0% over a six-year period. Class B shares automatically
convert into Class A shares after eight years. Realized and unrealized
gains or losses, investment income and expenses (other than 12b-1 fees
and certain other class expenses) are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
The Fund has established an unlimited number of shares of beneficial
interest for both Class A and Class B shares.

3. Security Transactions--For the year ended December 31, 1995,
purchases and sales of securities and long-term U.S. Government
obligations, excluding U.S. Treasury bills and short-term corporate
notes, were as follows:

Long-Term U.S.
Securities Government Obligations
-------------------------- ------------------------
Cost of Proceeds Cost of Proceeds
SERIES Purchases of Sales Purchases of Sales
- -------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
BLUE CHIP $50,645,807 $33,628,777 $ -- $ --
INSURED INTERMEDIATE
TAX EXEMPT 4,417,918 2,920,322 -- --
INVESTMENT GRADE 9,712,673 7,876,833 4,466,812 4,332,499
SPECIAL SITUATIONS 81,314,327 70,267,419 -- --
TOTAL RETURN 44,528,856 47,398,508 21,160,001 13,546,797

</TABLE>

<TABLE>
<CAPTION>
At December 31, 1995, aggregate cost and net unrealized appreciation of
securities for federal income tax purposes were as follows:

Gross Gross Net
Aggregate Unrealized Unrealized Unrealized
SERIES Cost Appreciation Depreciation Appreciation
- -------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
BLUE CHIP $136,898,998 $40,615,061 $2,073,461 $38,541,600
INSURED INTERMEDIATE
TAX EXEMPT 7,014,821 391,826 1,491 390,335
INVESTMENT GRADE 47,295,021 2,736,931 30,327 2,706,604
SPECIAL SITUATIONS 109,869,687 24,612,371 4,859,705 19,752,666
TOTAL RETURN 46,152,479 8,287,636 532,593 7,755,043

</TABLE>

4. Advisory Fee and Other Transactions With Affiliates --Certain
officers and trustees of the Fund are officers and directors of its
investment adviser, First Investors Management Company, Inc. ("FIMCO"),
its underwriter, First Investors Corporation ("FIC"), its transfer
agent, Administrative Data Management Corp. ("ADM") and/or First
Financial Savings Bank, S.L.A. ("FFS"), custodian of the Fund's
Individual Retirement Accounts. Officers and trustees of the Fund
received no remuneration from the Fund for serving in such capacities.
Their remuneration (together with certain other expenses of the Fund) is
paid by FIMCO or FIC.

The Investment Advisory Agreement provides as compensation to FIMCO for
each Series other than the Insured Intermediate Tax Exempt Series and
the Investment Grade Series, an annual fee, payable monthly, at the rate
of 1% on the first $200 million of each Series' average daily net
assets, .75% on the next $300 million, declining by .03% on each $250
million thereafter, down to .66% on average daily net assets over $1
billion. The annual fee for the Insured Intermediate Tax Exempt Series
is payable monthly, at the rate of .60% of the Series' average daily net
assets. The annual fee for the Investment Grade Series is payable
monthly, at the rate of .75% on the first $300 million of the Series'
average daily net assets, .72% on the next $200 million, .69% on the
next $250 million, and .66% on average daily net assets over $750
million. Total advisory fees accrued to FIMCO for the year ended
December 31, 1995, were $3,519,003, of which $843,687 was waived. In
addition, expenses of the Insured Intermediate Tax Exempt and Investment
Grade Series amounting to $11,742 and $51,516, respectively, were
assumed by FIMCO.

Pursuant to certain state regulations, FIMCO has agreed to reimburse
each Series if and to the extent that the Series' aggregate operating
expenses, including advisory fees but generally excluding interest,
taxes, brokerage commissions and extraordinary expenses, exceed any
limitation on expenses applicable to each Series in those states (unless
waivers of such limitations have been obtained). The amount of any such
reimbursement is limited to each Series' yearly advisory fee. For the
year ended December 31, 1995, no reimbursement was required pursuant to
these provisions.

For the year ended December 31, 1995, FIC, as underwriter, received
$3,281,399 in commissions from the sale of Fund shares after allowing
$53,159 to other dealers. Shareholder servicing costs included $904,483
in transfer agent fees and out of pocket expenses accrued to ADM (of
which $54,409 was waived by ADM) and $358,935 in custodian fees accrued
to FFS (of which $32,875 was waived by FFS).

Pursuant to a Distribution Plan adopted under Rule 12b-1 of the 1940
Act, each Series is authorized to pay FIC a fee equal to .30% of the
average net assets of the Class A shares and 1% of the average net
assets of the Class B shares on an annualized basis each year, payable
monthly. The fee consists of a distribution fee and a service fee. The
service fee is paid for the ongoing servicing of clients who are
shareholders of that Series. Total 12b-1 fees accrued to FIC amounted to
$1,134,980 (of which $18,835 was waived).
<PAGE>

Independent Auditor's Report

To the Shareholders and Trustees of
First Investors Series Fund

We have audited the accompanying statement of assets and liabilities,
including the portfolios of investments, of the Blue Chip, Insured
Intermediate Tax Exempt, Investment Grade, Special Situations and Total
Return Series (comprising First Investors Series Fund), as of December
31, 1995, the related statement of operations for the year then ended,
the statement of changes in net assets for each of the two years in the
period then ended, and financial highlights for each of the periods
indicated thereon. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is
to express an opinion on these financial statements and financial
highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1995, by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of the Blue Chip, Insured Intermediate Tax Exempt,
Investment Grade, Special Situations and Total Return Series of First
Investors Series Fund at December 31, 1995, and the results of their
operations, changes in their net assets and financial highlights for
the periods presented, in conformity with generally accepted accounting
principles.

Tait, Weller & Baker

Philadelphia, Pennsylvania
January 31, 1996
<PAGE>

<TABLE>
<CAPTION>
Portfolio of Investments
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
December 31, 1995

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Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
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<S> <C> <C> <C>
MUNICIPAL BONDS--99.6%
Alaska--.4%
$ 8,000 M North Slope Boro, Alaska General Obligation Zero Coupon 6/30/2005 $ 4,970,000 $ 36
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Arizona--1.4%
8,550 M Arizona State Municipal Financing Program Ctfs. of Partn. 7.7% 8/1/2010 10,473,750 76
7,000 M Mesa, Arizona Utility System Revenue 7 1U8% 7/1/2011 8,575,000 63
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19,048,750 139
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California--3.6%
2,865 M California Public Capital Improv. Fin. Auth. 8.1% 3/1/2018 3,108,525 23
4,220 M Long Beach Finance Authority 6% 11/1/2017 4,615,625 34
10,000 M San Francisco City & County Redev. Agcy. 6 3U4% 7/1/2025 11,125,000 81
San Jose Redevelopment Agency Tax Allocation:
5,000 M 6% 8/1/2015 5,475,000 40
12,700 M 5% 8/1/2020 12,065,000 88
5,000 M Santa Clara County Financing Authority 7 3U4% 11/15/2010 6,356,250 46
5,720 M South Orange Cnty. Public Financing Authority 6 1U2% 8/15/2010 6,463,600 47
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49,209,000 359
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Colorado--.1%
1,850 M Aurora Municipal Building Corp. 9.2% 12/1/1997* 2,041,937 15
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Connecticut--1.8%
Connecticut Special Tax Obligation Revenue:
13,500 M 6 1U2% 10/1/2011 15,440,625 112
9,000 M 6 1U8% 9/1/2012 10,035,000 73
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25,475,625 185
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Delaware--.6%
7,000 M Delaware State Econ. Dev. Auth. Rev. Pollution Control 7.15% 7/1/2018 7,822,500 57
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District of Columbia--3.0%
Washington D.C. General Obligation:
10,530 M Series "C" 8% 6/1/1998* 11,596,162 84
5,800 M Series "A" 6 1U2% 6/1/2009 6,401,750 47
8,875 M Series "A" 6% 6/1/2011 9,374,219 68
13,255 M Series "E" 6% 6/1/2012 13,718,925 100
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41,091,056 299
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Florida--4.5%
13,865 M Dade County Guaranteed Entitlement Rev. Zero Coupon 2/1/2011 6,065,937 44
2,255 M Dade County Spec. Oblig. (Miami Beach Conv. Ctr.) 8 5U8% 12/1/2008 2,497,412 18
Escambia County Utilities Authority:
5,485 M 6 1U4% 1/1/2012 6,156,913 45
5,360 M 6 1U4% 1/1/2013 6,009,900 44
1,070 M Florida Hsg. Fin. Agy. Residential Mtge. Rev. (Series 2) 8% 12/15/2016 1,117,487 8
5,000 M Florida State Turnpike Authority Revenue 5% 7/1/2019 4,831,250 35
Orange County Health Facilities:
8,410 M Mercy Medical 7 7U8% 12/1/2025 8,946,138 65
7,725 M Sarasota, Lee Memorial, Venice 7 7U8% 12/1/2025 8,217,469 60
1,750 M Palm Beach County Solid Waste Authority 8 3U8% 7/1/2010 1,909,687 14
3,000 M Plant City Utility System 6% 10/1/2015 3,277,500 24
Sunrise Utilities System Revenue:
1,500 M 10 1U4% 10/1/2000* 1,882,500 13
1,500 M 10 3U4% 10/1/2000* 1,914,375 14
5,975 M Tampa Utilities Tax & Spl. Rev. 8 1U8% 10/1/1997* 6,505,281 47
1,395 M West Coast Regional Water Supply Auth. 10.4% 10/1/2010* 2,033,213 15
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61,365,062 446
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Georgia--7.1%
3,960 M Cherokee County Water & Sewer Auth. Revenue 5.2% 8/1/2025 3,935,250 29
5,815 M Fulton County Water & Sewer Revenue 6 3U8% 1/1/2014 6,650,906 48
Georgia Municipal Electric Authority Power Revenue:
2,000 M 8 3U8% 1/1/1997* 2,117,640 15
14,000 M 8 1U8% 1/1/1998* 15,260,000 111
5,000 M 6 1U4% 1/1/2012 5,575,000 41
Metropolitan Atlanta Rapid Transit Authority:
20,500 M 6 1U4% 7/1/2011 23,011,250 167
7,500 M 6 3U4% 7/1/2013 8,390,625 61
28,165 M 6 1U4% 7/1/2020 32,319,338 235
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97,260,009 707
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Hawaii--1.4%
Hawaii State General Obligation:
5,500 M 6% 10/1/2009 6,084,375 44
6,000 M 6% 10/1/2010 6,652,500 49
6,000 M Honolulu General Obligation 5 3U4% 4/1/2012 6,337,500 46
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19,074,375 139
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Illinois--10.8%
27,200 M Chicago Board of Education Lease Certificates 6% 1/1/2020 29,546,000 215
16,660 M Chicago General Obligation 6 1U8% 1/1/2016 17,513,825 128
Chicago O'Hare International Airport Revenue:
13,090 M 6 3U8% 1/1/2012 14,219,013 104
10,000 M 6 3U8% 1/1/2015 10,775,000 78
Chicago Public Building Commission Building Revenue:
3,340 M 7 3U4% 1/1/1999* 3,732,450 27
3,500 M 8 3U4% 1/1/2007 3,738,000 27
2,500 M Des Plaines Hosp. Facs. (Holy Family Hosp.) 9 1U4% 1/1/2014 2,568,000 19
2,800 M Hazel Crest Hosp. Facs. Rev. (South Sub. Proj.) 9 1U8% 7/1/1997* 3,059,000 22
16,750 M Illinois Development Finance Auth. Poll. Control Rev. 6 3U4% 3/1/2015 18,529,687 135
Illinois Development Finance Authority Rev. (Rockford School 205):
3,400 M 6.55% 2/1/2009 3,795,250 28
5,000 M 6.6% 2/1/2010 5,631,250 41
3,000 6.65% 2/1/2011 3,412,500 25
Illinois Health Facilities Authority Revenue:
4,300 M Bromenn Healthcare Project 8% 8/15/1998* 4,789,125 35
1,500 M Grant Hospital 7 1U2% 12/1/1996* 1,580,085 11
1,765 M Mercy Hospital & Medical Center 9 1U2% 1/1/2015 1,837,700 13
1,000 M Methodist Medical Center 9 5U8% 10/1/2010 1,033,410 8
2,600 M SSM Health Care Project Series "B" 8% 6/1/1998* 2,876,250 21
4,000 M University of Chicago Hospital 8.1% 8/1/1997* 4,325,000 31
1,750 M Lansing Sales Tax Rfdg. 7.7% 12/1/1998* 1,922,812 14
4,000 M Regional Transportation Authority 7 3U4% 6/1/2019 5,285,000 38
Will County School District General Obligation:
3,600 M 7% 12/1/2007 4,270,500 31
2,080 M 7.05% 12/1/2008 2,477,800 18
1,175 M 7.1% 12/1/2009 1,404,125 10
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148,321,782 1,079
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Indiana--1.5%
4,070 M Delaware Cnty. Hosp. Auth. (Ball Memorial Hosp.) 6 5U8% 8/1/2006 4,466,825 32
4,205 M Indiana Housing Fin. Auth. Single-Family Mtge. Rev. 7.6% 1/1/2016 4,483,581 33
2,000 M Indiana State Edl. Facs. Auth. (Butler University) 8% 11/1/1998* 2,237,500 16
Indianapolis Public Improvement Bond Bank:
5,035 M 6 1U2% 1/1/2012 5,695,844 41
2,500 M 6 1U2% 1/1/2013 2,825,000 21
1,000 M Muncie Certificates of Participation 8.1% 2/1/1998* 1,088,750 8
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20,797,500 151
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Louisiana--4.9%
1,030 M Bossier Cty. Public Imp. Sales & Use Tax Rev. 9 1U4% 11/1/1997* 1,138,150 8
2,000 M Calcasieu Parish Mem. Hosp. (Lake Charles Hosp.) 8.4% 12/1/1997* 2,195,000 16
3,000 M Greater New Orleans Expressway 7.8% 11/1/1996* 3,186,090 23
Louisiana Public Facilities Authority Hospital Revenue:
1,325 M Daughters of Charity 9 3U4% 2/1/1996* 1,357,264 10
2,350 M Touro Infirmary 8% 6/1/1998* 2,596,750 19
2,400 M Womens Hospital Foundation 8 1U8% 10/1/1998* 2,685,000 20
Louisiana Public Facilities Hlth. & Ed. Cap. Fac.:
5,845 M CP Program 7.9% 12/1/2015 6,473,337 47
1,750 M Our Lady of the Lake 8.2% 12/1/1998* 1,968,750 14
Louisiana State General Obligation:
8,050 M 6.1% 5/1/2010 8,633,625 63
14,555 M 6% 5/1/2012 15,464,687 113
14,000 M 6% 5/1/2014 14,752,500 107
15,000 M New Orleans Regl. Transit Auth. Sales Tax Rev. Zero Cpn. 12/1/2021 3,487,500 25
3,000 M Regional Transportation Authority Revenue 8% 12/1/2013 3,345,000 24
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67,283,653 489
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Maryland--.4%
5,000 M Maryland Indl. Dev. Auth. 5.928% 8/26/2022 5,393,750 39
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Massachusetts--5.5%
4,750 M Boston General Obligation 7 3U8% 2/1/2000* 5,379,375 39
2,300 M Mass. Bay Transportation Authority Ctfs. of Partn. 7.65% 8/1/2000* 2,670,875 19
Mass. Bay Transportation Authority Gen. Sys. Rev.:
9,080 M 5.8% 3/1/2012 9,579,400 70
11,175 M 5.8% 3/1/2013 11,845,500 86
10,000 M 5 7U8% 3/1/2015 10,612,500 77
Mass. Health & Educational Facilities Authority:
2,300 M Berkshire Health Systems 7.6% 10/1/1998* 2,550,125 19
1,500 M Carney Hospital 7 3U4% 7/1/2000* 1,740,000 13
1,540 M Mass. Housing Finance Agency 7.7% 6/1/2017 1,634,325 12
20,550 M Massachusetts State General Obligation 6% 8/1/2009 22,656,375 165
5,000 M Mass. State Water Resource Authority 6 1U4% 12/1/2012 5,637,500 41
1,000 M Palmer General Obligation 7.3% 3/1/2000* 1,133,750 8
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75,439,725 549
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Michigan--3.5%
5,000 M Detroit Sewer Disposal System Revenue 5% 7/1/2025 4,762,500 35
2,000 M Detroit Water Supply System Revenue 5.55% 7/1/2012 2,065,000 15
10,000 M Michigan State General Obligation 6 1U4% 11/1/2012 11,275,000 82
Michigan State Housing Development
Authority Single-Family Mtge. Rev.:
4,685 M 7 1U2% 6/1/2015 4,948,531 36
2,500 M 7.3% 12/1/2016 2,628,125 19
2,135 M 7.7% 12/1/2016 2,255,094 17
4,500 M Monroe Cnty. Econ. Dev. Corp. (Detroit Edison Co.) 6.95% 9/1/2022 5,563,125 40
15,010 M Wayne Charter Cnty. Airport Rev. 5 1U4% 12/1/2021 14,615,988 106
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48,113,363 350
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Minnesota--.2%
1,315 M Eden Prairie Multi-Family Housing 8% 7/1/2026 1,405,406 10
1,240 M St. Paul Hsg. & Red. Auth. (Como-Lake Proj.) 7 1U2% 3/1/2026
(Defaulted) (Note 1A) 1,240,000 9
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2,645,406 19
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Mississippi--.5%
4,475 M Mississippi Hosp. Equip. & Facs. Auth. Rev. (Baptist Med. Ctr.)
7.6% 5/1/2000* 5,146,250 37
1,545 M Mississippi Hsg. Fin. Corp. Single-Family Mtge. Pur. Rev.
7.8% 10/15/2016 1,608,731 12
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6,754,981 49
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Missouri--2.4%
3,640 M Kansas City School District Bldg. Cap. Improvement 7.9% 2/1/1998* 3,994,900 29
Missouri State Health & Educational Facilities Authority:
BJC Health System Series "A":
6,840 M 6 3U4% 5/15/2010 7,985,700 58
10,175 M 6 3U4% 5/15/2011 11,993,781 87
10,000 M Lester Cox Zero Cpn. 9/1/2016 3,225,000 24
5,245 M SSM Health Care 6 1U4% 6/1/2007 5,690,825 41
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32,890,206 239
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Nevada--.2%
1,640 M Nevada Housing Div. Single-Family Prog. 7.6% 10/1/2018 1,740,450 13
1,195 M Reno Hosp. Rev. (St. Mary's Hospital) 7 3U4% 7/1/2000* 1,366,781 10
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3,107,231 23
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New Jersey--2.8%
7,120 M Camden County Municipal Utilities Sewer Rev. 8 1U4% 12/1/2017 7,796,400 57
11,185 M New Jersey Economic Development Auth. Market Trans. Fac. Rev.
5 7U8% 7/1/2011 11,814,156 86
New Jersey Housing & Mortgage Financing Revenue:
5,380 M 7 1U2% 4/1/2015 5,675,900 41
8,400 M 7 3U8% 10/1/2017 8,862,000 65
4,195 M 8.1% 10/1/2017 4,457,188 32
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38,605,644 281
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New Mexico--.4%
1,000 M Farmington Power Rev. Gen. Dev. 9 7U8% 1/1/2005* 1,375,000 10
New Mexico Mortgage Finance Authority, Single-Family Mortgage:
3,075 M 8% 1/1/2017 3,217,219 23
1,195 M 8 5U8% 7/1/2017 1,248,775 9
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5,840,994 42
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New York--6.3%
Metropolitan Transit Authority, Transit Facilities:
10,000 M 8% 7/1/1998* 11,125,000 81
3,500 M 7 1U2% 7/1/2000* 3,937,500 28
New York City General Obligation:
10,000 M Series "A" 8 3U4% 11/1/1997* 10,987,500 80
5,000 M Series "B" 7 3U4% 8/1/1998* 5,443,750 40
3,850 M Series "A" 8% 8/1/1998* 4,268,687 31
4,500 M New York State Dorm. Auth. Revs. City Univ.
System 7 1U2% 7/1/2000* 5,186,250 38
New York State Dorm. Auth. Revs. State Univ. Educ. System:
2,780 M 7 1U4% 5/15/2000* 3,165,725 23
11,300 M 7 3U8% 5/15/2014 12,656,000 92
5,000 M New York State General Obligation 6% 6/15/2011 5,318,750 39
New York State Med. Care Facs. Fin. Agcy. Rev.:
2,025 M Hosp. & Nursing 7.35% 2/15/2029 2,232,563 16
10,500 M St. Luke's Hosp. 7.45% 2/15/2000* 11,970,000 87
4,000 M New York State Urban Dev. Corp. 7 1U2% 1/1/2000* 4,555,000 33
5,840 M Suffolk Cnty., N.Y. Indl. Dev. Agcy. Southwest Sewer Sys. 6% 2/1/2008 6,453,200 47
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87,299,925 635
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North Carolina--2.0%
North Carolina Municipal Power Agency (Catawba):
8,950 M 6% 1/1/2010 9,755,500 71
8,945 M 6% 1/1/2011 9,738,869 71
8,900 M 5% 1/1/2018 8,555,125 62
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28,049,494 204
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North Dakota--.7%
8,000 M Mercer County Poll. Ctrl. Rev. (Basin Elec. Pwr. Coop.) 7.2% 6/30/2013 9,800,000 71
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Ohio--.8%
1,145 M Cuyahoga Cnty. Hosp. Rev. (Richmond Hts. Gen. Hosp.) 10% 12/1/2011 1,145,000 9
8,350 M Lucas Cnty. Hospital (Toledo Hosp.) 5% 11/15/2022 7,838,562 57
1,435 M Ohio State Air Quality Dev. Auth. (Ohio Power Co.) 7.4% 8/1/2009 1,551,594 11
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10,535,156 77
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Oklahoma--4.4%
4,000 M Central Oklahoma Transp. & Pkg. Rev. 8% 7/1/2006 4,159,160 30
Grand River Dam Authority Revenue:
9,000 M 5 3U4% 6/1/2008 9,686,250 71
5,100 M 5 1U2% 6/1/2010 5,361,375 39
13,660 M 6 1U4% 6/1/2011 15,555,325 113
20,895 M 5 1U2% 6/1/2013 21,887,513 159
1,495 M Muskogee County Home Fin. Auth. Single-Family Mtge. 7.6% 12/1/2010 1,569,750 12
1,420 M Tulsa County Home Fin. Auth. Single-Family Mtge. 7.35% 11/1/2010 1,533,600 11
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59,752,973 435
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Oregon--1.2%
11,000 M Oregon Health Sciences Univ. Rev. 5 1U4% 7/1/2025 10,793,750 79
6,100 M Oregon State Dept. Administrative Svcs. Certs. of Part. 5 3U8% 11/1/2016 6,054,250 44
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16,848,000 123
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Pennsylvania--4.5%
6,500 M Allegheny County Hospital Develop. Auth. Rev. (Magee-Womens)
Zero Cpn. 10/1/2017 1,974,375 14
1,225 M Allegheny County Rev. Fin. Auth. Mtge. Single-Family Mtge.
8% 6/1/2017 1,280,125 9
6,500 M Pennsylvania State Certificates of Participation 5% 7/1/2015 6,166,875 45
5,000 M Pennsylvania State General Obligation 6 3U4% 11/15/2013 5,606,250 41
11,200 M Pennsylvania State Ind. Dev. Auth. 5 1U2% 1/1/2014 11,326,000 82
5,000 M Pennsylvania State Turnpike Commission Turnpike Revenue
5 1U2% 12/1/2012 5,087,500 37
Philadelphia Water & Wastewater Revenue:
5,000 M 5% 6/15/2017 4,762,500 35
5,000 M 5% 6/15/2018 4,756,250 35
9,050 M Pittsburgh Water & Sewer Authority 6 1U2% 9/1/2013 10,384,875 76
1,000 M Sewickely Valley Hosp. Auth. (Sewickely Vy. Hosp.) 7 1U2% 10/1/1999* 1,128,750 8
Westmoreland County Municipal Authority Municipal Services Revenue:
10,800 M Zero Coupon 8/15/2018 3,091,500 22
8,880 M Zero Coupon 8/15/2019 2,408,700 18
5,880 M Zero Coupon 8/15/2020 1,506,750 11
5,880 M Zero Coupon 8/15/2021 1,425,900 10
5,000 M Zero Coupon 8/15/2022 1,150,000 8
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62,056,350 451
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Puerto Rico--1.3%
18,730 M Puerto Rico General Obligations 5% 7/1/2021 17,980,800 131
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Rhode Island--.5%
1,000 M Rhode Island Health & Ed. Bldg. Corp. (Roger Williams Hosp.)
11 3U8% 7/1/1996* 1,037,040 8
Rhode Island Housing & Mortgage Finance Corp.:
1,000 M 8 3U8% 10/1/2013 1,051,250 8
1,500 M 8 3U8% 10/1/2016 1,576,875 11
2,500 M 8 3U8% 4/1/2019 2,628,125 19
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6,293,290 46
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South Dakota--.4%
4,485 M South Dakota Health & Edl. Facs. Auth. (McKennan Hosp.) 7 5U8% 7/1/2014 5,045,625 37
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Texas--12.7%
Austin, Texas Utilities System Revenue:
Capital Appreciation:
30,465 M Zero Coupon 5/15/2018 8,872,931 64
29,410 M Zero Coupon 5/15/2019 8,087,750 59
5,120 M Series "A" 7.8% 11/15/1998* 5,715,200 42
4,280 M Series "B" 7.8% 11/15/2012 4,772,200 35
2,000 M 8 5U8% 11/15/2002* 2,452,500 18
1,000 M 8 5U8% 11/15/2002* 1,226,250 9
16,000 M 6% 11/15/2013 17,520,000 127
5,000 M Bexar County, Texas Health Facs. (Baptist Memorial) 6 3U4% 8/15/2019 5,568,750 41
10,000 M Brazos River Auth., Houston Light & Power Proj. 8.1% 5/1/2019 10,950,000 80
Brownsville Utility Systems Revenue:
3,490 M 6 1U4% 9/1/2011 3,908,800 28
5,000 M 5 1U4% 9/1/2020 4,793,750 35
9,215 M Coastal Water Auth. Water Conveyance System 8 1U8% 12/15/1997* 9,917,644 72
Harris County Toll Road Senior Lien:
3,355 M Series "B" 6 5U8% 8/15/1997* 3,560,494 26
8,375 M Series "A" 6 1U2% 8/15/2002* 9,474,219 69
11,065 M Series "A" 6 1U2% 8/15/2012 12,697,087 92
7,305 M Series "A" 6 1U2% 8/15/2013 8,327,700 61
Houston Water Conveyance System Certificates of Participation:
2,250 M 6 1U4% 12/15/2012 2,517,187 18
4,705 M 6 1U4% 12/15/2013 5,193,144 38
4,350 M 6 1U4% 12/15/2014 4,844,813 35
5,860 M 6 1U4% 12/15/2015 6,548,550 48
2,750 M Kerrville Electric System Rev. 8 3U8% 11/1/1997* 3,011,250 22
4,720 M North Cent. Texas Hlth. Fac. Dev. Corp. (Presbyt. "A" & "B")
8 7U8% 12/1/1997* 5,227,400 38
1,500 M Northeast Hospital Auth. Rev. (Northeast Med. Ctr. Hosp.) 8 1U8% 7/1/1998* 1,668,750 12
Rio Grande Valley Hlth. Fac. Dev. Corp. (Valley Baptist Med. Ctr.):
3,910 M 8% 8/1/1998* 4,349,875 32
5,300 M 6.4% 8/1/2012 5,697,500 41
1,500 M Sabine River Auth. Poll. Control (Texas Util. Co. Proj.) 7 3U4% 4/1/2016 1,539,840 11
San Antonio Electric & Gas Revenue:
3,000 M 8% 2/1/1998* 3,288,750 24
1,850 M 10 1U2% 2/1/1998* 2,118,250 15
1,800 M Texas Health Facs. Dev. Corp. (Fort Worth Med. Ctr.) 8 1U8% 6/1/1998* 1,998,000 15
5,000 M Texas Public Fin. Auth. 6.2% 2/1/2005 5,518,750 40
2,700 M Texas Public Ppty. Fin. Corp. Rev. (Mental Health & Retardation)
7 7U8% 1/1/1998* 2,899,125 21
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174,266,459 1,268
- -------------------------------------------------------------------------------------------------------------------
Utah--1.1%
Intermountain Power Agency (Utah Power Supply):
4,000 M Series C, 8 3U8% 7/1/1997* 4,330,000 31
2,500 M Series D, 8 3U8% 7/1/2012 2,706,250 20
2,000 M Provo, Utah Electric System Revenue 10 3U8% 9/15/2015 3,000,000 22
Salt Lake County Water Conservancy District Revenue:
3,800 M Zero Cpn. 10/1/2011 1,638,750 12
3,800 M Zero Cpn. 10/1/2012 1,553,250 11
3,760 M Zero Cpn. 10/1/2013 1,447,600 11
- -------------------------------------------------------------------------------------------------------------------
14,675,850 107
- -------------------------------------------------------------------------------------------------------------------
Virginia--.9%
11,000 M Hanover County Indl. Dev. Auth. (Mem. Regl. Med. Ctr. Proj.)
6 3U8% 8/15/2018 12,567,500 91
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Washington--2.4%
2,710 M Benton County Public Utilties District #001 11 5U8% 11/1/1997* 3,065,688 22
5,000 M Tacoma Electric System Revenue 8% 1/1/1998* 5,468,750 40
Washington Public Power Supply System:
5,000 M Project No. 2 - 7 3U8% 7/1/2000* 5,712,500 42
4,960 M Project No. 2 - 7 3U8% 7/1/2001* 5,704,000 41
934 M Project Nos. 4 & 5 - 8 1U2% 7/1/2017 (Defaulted) (Note 1A) 934,080 7
5,000 M Washington State General Obligation 6.4% 6/1/2017 5,700,000 41
2,500 M Washington State Hlth. & Educ. Facs. (Mason Med. Ctr.) 8% 7/1/2015 2,690,625 20
3,900 M Washington State Hsg. Fin. Comm. Single-Family Mtge. 7.7% 7/1/2016 4,129,125 30
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33,404,768 243
- -------------------------------------------------------------------------------------------------------------------
West Virginia--1.0%
1,050 M West Virginia State Hosp. Fin. Auth. (Monongalia Hosp.) 8 1U2% 7/1/1997* 1,118,250 8
13,885 M West Virginia Water Development Authority 5% 11/1/2018 12,965,119 94
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14,083,369 102
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Wisconsin--2.4%
5,000 M Superior, Wisconsin Ltd. Oblig. Rev. (Midwest Energy) 6.9% 8/1/2021 6,043,750 44
Wisconsin Housing & Economic Development Authority:
1,435 M 7 1U2% 9/1/2017 1,495,988 11
4,145 M 7.6% 9/1/2017 4,378,156 32
14,840 M 7 3U4% 9/1/2017 15,730,400 115
1,545 M Wisconsin Municipal Insurance Comm. Rev. 8.7% 4/1/2007 1,658,944 12
Wisconsin State Health & Educational Facilities Authority Revenue:
2,000 M Hospital Sisters Services Inc. 7 5U8% 11/15/1998* 2,225,000 16
1,500 M Novus Health Group 8% 12/1/1998* 1,683,750 12
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33,215,988 242
- -------------------------------------------------------------------------------------------------------------------
Total Value of Municipal Bonds (cost $1,244,526,025) 1,368,428,096 9,955
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SHORT-TERM TAX EXEMPT INVESTMENTS--1.1%
Michigan--.9%
13,000 M Michigan State Underground Storage Tank Fin. Auth. Floating Rate
Note 5.15%** 13,000,000 94
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New York--.1%
2,000 M New York City General Obligation Floating Rate Note 5%** 2,000,000 14
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Tennessee--.1%
1,000 M Hamilton Cnty, Tenn. Ind'l Dev. Rev. Floating Rate Note 5.3%** 1,000,000 7
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Total Value of Short-Term Tax Exempt Investments (cost $16,000,000) 16,000,000 115
- -------------------------------------------------------------------------------------------------------------------
Total Value of Municipal Investments (cost $1,260,526,025) 100.7% 1,384,428,096 10,070
Excess of Liabilities Over Other Assets (.7) (9,656,916) (70)
- -------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $1,374,771,180 $10,000
============== ===============
* Municipal Bonds which have been prerefunded are shown maturing at the prerefunded call date.
** Interest rates on Floating Rate Notes are determined and reset at least weekly by the issuer.
Interest rate shown is the rate in effect at December 31, 1995.

See notes to financial statements
</TABLE>

<TABLE>
<CAPTION>
Statement of Assets and Liabilities
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
December 31, 1995

- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments in securities, at value (identified cost $1,260,526,025)
(Note 1A) $1,384,428,096
Cash 132,381
Receivables:
Interest $ 24,233,847
Investment securities sold 5,319,292
Capital shares sold 574,692 30,127,831
--------------
Other assets 81,733
--------------
Total Assets 1,414,770,041
Liabilities
Payables:
Investment securities purchased 36,154,107
Capital shares redeemed 1,334,164
Dividend payable January 10, 1996 1,257,076
Accrued advisory fee 788,845
Accrued expenses 464,669
--------------
Total Liabilities 39,998,861
--------------
Net Assets (Note 4):
Class A (132,331,251 shares outstanding) 1,372,751,820
Class B (194,664 shares outstanding) 2,019,360 $1,374,771,180
-------------- ===============

Net Assets Consist of:
Capital paid in $1,264,512,987
Undistributed net investment income 232,483
Accumulated net realized loss on investment transactions (13,876,361)
Net unrealized appreciation in value of investments 123,902,071
--------------
Total $1,374,771,180
===============

Net asset value and redemption price per share--Class A $10.37
======

Maximum offering price per share--Class A ($10.37/.9375)* $11.06
======

Net asset value and offering price per share--Class B $10.37
======

* On purchases of $25,000 or more, the sales charge is reduced.

See notes to financial statements
</TABLE>

<TABLE>
<CAPTION>
Statement of Operations
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
Year Ended December 31, 1995

- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income

Interest income $ 86,308,137
Expenses (Notes 1 and 3):
Advisory fee $ 9,356,534
Distribution plan expenses-Class A 3,936,480
Distribution plan expenses-Class B 9,876
Shareholder servicing costs 1,037,407
Bond insurance premiums 322,978
Reports and notices to shareholders 127,623
Custodian fees 119,117
Professional fees 87,258
Other expenses 421,114
------------
Total expenses 15,418,387
Less: Custodian fees paid indirectly 53,091
------------
Net expenses 15,365,296
------------
Net investment income 70,942,841
Realized and Unrealized Gain (Loss) on Investments (Note 2):
Net realized gain on investments 8,136,087
Net unrealized appreciation of investments 122,110,841
------------
Net gain on investments 130,246,928
------------
Net Increase in Net Assets Resulting from Operations $201,189,769
===========

See notes to financial statements
</TABLE>

Statement of Changes in Net Assets
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.

- ---------------------------------------------------------------------------------------------------------
Year Ended December 31 1995 1994
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income $ 70,942,841 $ 78,721,451
Net realized gain (loss) on investments 8,136,087 (21,856,239)
Net unrealized appreciation (depreciation) of investments 122,110,841 (141,170,233)
-------------- --------------
Net increase (decrease) in net assets resulting from operations 201,189,769 (84,305,021)
-------------- --------------
Dividends to Shareholders from:
Net investment income--Class A (71,159,718) (78,422,877)
Net investment income--Class B (44,535) --
-------------- --------------
Total dividends (71,204,253) (78,422,877)
-------------- --------------
Capital Share Transactions (a)
Class A:
Proceeds from shares sold 68,618,192 98,224,276
Value of dividends reinvested 55,351,361 61,033,013
Cost of shares redeemed (182,664,583) (202,387,164)
-------------- --------------
(58,695,030) (43,129,875)
-------------- --------------
Class B:
Proceeds from shares sold 2,088,764 --
Value of dividends reinvested 34,823 --
Cost of shares redeemed (179,527) --
-------------- --------------
1,944,060 --
-------------- --------------
Net decrease from capital share transactions (56,750,970) (43,129,875)
-------------- --------------
Net increase (decrease) in net assets 73,234,546 (205,857,773)
Net Assets
Beginning of year 1,301,536,634 1,507,394,407
-------------- --------------
End of year (including undistributed net investment income of
$232,483 and $493,895, respectively) $1,374,771,180 $1,301,536,634
============= ==============

(a)Capital shares issued and redeemed
Class A:
Sold 6,907,266 9,853,687
Issued for dividends reinvested 5,532,051 6,238,112
Redeemed (18,333,002) (20,662,077)
-------------- --------------
Net decrease in Class A shares outstanding (5,893,685) (4,570,278)
=========== ==============

Class B:
Sold 209,525 --
Issued for dividends reinvested 3,441 --
Redeemed (18,302) --
-------------- --------------
Net increase in Class B shares outstanding 194,664 --
============== ===============
See notes to financial statements
</TABLE>

<PAGE>

Notes to Financial Statements
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.

1. Significant Accounting Policies-The Fund is registered under the
Investment Company Act of 1940 (the "1940 Act") as a diversified, open-
end management investment company. The investment objective of the Fund
is to seek to provide a high level of interest income which is exempt
from federal income tax.

A. Security Valuation-The Municipal Bonds in which the Fund invests are
traded primarily in the over-the-counter markets. Such securities are
valued daily at their fair value on the basis of valuations provided by
a pricing service approved by the Board of Directors. The pricing
service considers security type, rating, market condition and yield
data, as well as market quotations and prices provided by market makers.
"When Issued Securities" are reflected in the assets of the Fund as of
the date the securities are purchased.

The Fund's Municipal Bonds are insured as to payment of principal and
interest by the issuer or under insurance policies written by
independent insurance companies. It is the intention of the Fund to
retain any insured securities which are in default or in significant
risk of default and to place a value on the defaulted securities equal
to the value of similar securities which are not in default.

B. Federal Income Taxes-It is the policy of the Fund to continue to
qualify as a regulated investment company, which can distribute exempt-
interest dividends, by complying with the provisions available to
certain investment companies, as defined in the Internal Revenue Code,
and to make distributions of income and net realized capital gains (in
excess of any available capital loss carryovers), sufficient to relieve
it from all, or substantially all, federal income taxes. At December
31, 1995, the Fund had a capital loss carryover of $13,869,892 expiring
in the year 2002.

C. Distributions to Shareholders-Dividends from net investment income
are declared daily and paid monthly. Distributions from net realized
capital gains are normally declared and paid annually. Income dividends
and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments
for capital loss carryforwards and post October losses.

D. Security Transactions and Investment Income-Security transactions are
accounted for on the date the securities are purchased or sold. Cost is
determined, and gains and losses are based, on the identified cost basis
for both financial statement and federal income tax purposes. Interest
income is earned from settlement date and recorded on the accrual basis.
Estimated expenses are accrued daily. The Fund's Custodian has provided
credits in the amount of $53,091 against custodian charges based on the
uninvested cash balances of the Fund.

2. Securities Transactions-For the year ended December 31, 1995,
purchases and sales of investment securities, other than United States
Government obligations and short-term notes, aggregated $494,660,447 and
$562,561,301, respectively.

At December 31, 1995, the cost of investments for federal income tax
purposes was $1,260,532,495. Accumulated net unrealized appreciation on
investments was $123,895,601, consisting of $123,904,051 gross
unrealized appreciation and $8,450 gross unrealized depreciation.

3. Advisory Fee and Other Transactions With Affiliates-Certain officers
and directors of the Fund are officers and directors of its investment
adviser, First Investors Management Company, Inc. ("FIMCO"), its
underwriter, First Investors Corporation ("FIC") and/or its transfer
agent, Administrative Data Management Corp. ("ADM"). Officers and
directors of the Fund received no remuneration from the Fund for serving
in such capacity. Their remuneration (together with certain other
expenses of the Fund) is paid by FIMCO or FIC.

The Investment Advisory Agreement provides as compensation to FIMCO an
annual fee, payable monthly, at the rate of .75% of the first $250
million of the Fund's average daily net assets, declining by .03% on
each $250 million thereafter, down to .66% on average daily net assets
over $750 million.

Pursuant to certain state regulations, FIMCO has agreed to reimburse the
Fund if and to the extent that the Fund's aggregate operating expenses,
including the advisory fee but generally excluding interest, bond
insurance premiums, taxes, brokerage commissions and extraordinary
expenses, exceed any limitation on expenses applicable to the Fund in
those states (unless waivers of such limitation have been obtained). The
amount of any such reimbursement is limited to the amount of the yearly
advisory fee. For the year ended December 31, 1995, no reimbursement was
required pursuant to these provisions.

For the year ended December 31, 1995, FIC, as underwriter, received
$698,289 in commissions, after allowing $87,383 to other dealers.
Shareholder servicing costs included $842,095 in transfer agent fees
paid to ADM.

Pursuant to a Distribution Plan adopted under Rule 12b-1 of the 1940
Act, the Fund is authorized to pay FIC a fee equal to .30% of the
average net assets of the Class A shares and 1% of the average net
assets of the Class B shares on an annualized basis each year, payable
monthly. The fee consists of a distribution fee and a service fee. The
service fee is paid for the ongoing servicing of clients who are
shareholders of the Fund.

4. Capital-The Fund sells two classes of shares, Class A and Class B,
each with a public offering price that reflects different sales charges
and expense levels. Class A shares are sold with an initial sales charge
of up to 6.25% of the amount invested and together with the Class B
shares are subject to 12b-1 fees as described in Note 3. Class B shares
are sold without an initial sales charge, but are generally subject to a
contingent deferred sales charge which declines in steps from 4% to 0%
over a six-year period. Class B shares automatically convert into Class
A shares after eight years. Realized and unrealized gains or losses,
investment income and expenses (other than 12b-1 fees and certain other
class expenses) are allocated daily to each class of shares based upon
the relative proportion of net assets of each class. Of the 500,000,000
shares originally authorized, the Fund has designated 300,000,000 shares
as Class A and 200,000,000 shares as Class B.

<PAGE>

Independent Auditor's Report

To the Shareholders and Board of Directors of
First Investors Insured Tax Exempt Fund, Inc.

We have audited the accompanying statement of assets and liabilities of
First Investors Insured Tax Exempt Fund, Inc., including the portfolio
of investments, as of December 31, 1995, and the related statement of
operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended and financial
highlights for each of the years presented. These financial statements
and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.

In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of First Investors Insured Tax Exempt Fund, Inc. at
December 31, 1995, and the results of its operations, changes in its net
assets and financial highlights for each of the respective years
presented, in conformity with generally accepted accounting principles.

Tait, Weller & Baker

Philadelphia, Pennsylvania
January 31, 1996
<PAGE>

PART C

OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements:

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

(b) Exhibits:

(1)a. Articles of Restatement

b. Articles Supplementary

(2) Amended and Restated By-Laws

(3) Not Applicable

(4)(1) Specimen Certificate

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

(6) Underwriting Agreement between Registrant and First
Investors Corporation

(7) Not Applicable

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

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

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

(10)(2) Opinion of Counsel

(11)a. Consent of independent accountants

b. Powers of Attorney

(12) Not Applicable

(13)(1) Undertaking of the Co-Underwriters

<PAGE>

(14) Not Applicable

(15)a. Amended and Restated Class A Distribution Plan

b. Class B Distribution Plan

(16) Performance Calculations

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

(18) 18f-3 Plan

- ---------------
(1) Previously filed with the Commission
(2) Incorporated by reference from Registrant's Rule 24f-2 Notice for its
fiscal year ending December 31, 1995 filed on February 27, 1996.

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

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

Item 26. Number of Holders of Securities

Number of Record
Holders as of
Title of Class February 9, 1996
-------------- ----------------

Class A Shares 54,062
Class B Shares 146

Item 27. Indemnification

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

Section 1. Every person who is or was an officer or director of the
Corporation (and his heirs, executors and administrators) shall be indemnified
by the Corporation against reasonable costs and expenses incurred by him in
connection with any action, suit or proceeding to which he may be made a party
by reason of his being or having been a director or officer of the Corporation,
except in relation to any action, suit or proceeding in which he has been
adjudged liable because of negligence or misconduct, which shall be deemed to
include willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office. In the absence of an

<PAGE>

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

The Registrant's Investment Advisory Agreement provides as follows:

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

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

<PAGE>

sustained by the Fund or any of its officers, directors, or shareholders, or by
any other person on account of any act done or omitted to be done by the
Underwriter under this Agreement provided that nothing herein contained shall
protect the Underwriter against any liability to the Fund or to any of its
shareholders to which the Underwriter would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of its
duties as Underwriter or by reason of its reckless disregard of its obligations
or duties as Underwriter under this Agreement. Nothing in this Agreement shall
protect the Underwriter from any liabilities which they may have under the
Securities Act of 1933 or the Investment Company Act of 1940.

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

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

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

Item 28. Business and Other Connections of Investment Adviser

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

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

<PAGE>

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

Item 29. Principal Underwriters

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

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

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

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

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

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

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

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

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

<PAGE>

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

Robert Murphy Comptroller None
581 Main Street
Woodbridge, NJ 07095

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

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

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

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

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

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

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

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

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

Jane W. Kruzan Director None
15 Norwood Avenue
Summit, NJ 07901

<PAGE>

Item 30. Location of Accounts and Records

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

Item 31. Management Services

Inapplicable

Item 32. Undertakings

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

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

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

<PAGE>

INDEX TO EXHIBITS

Exhibit
Number Description
- ------- -----------

99.B1.1 Articles of Restatement
99.B1.2 Articles Supplementary
99.B2 Amended and Restated By-laws
99.B5 Advisory Agreement
99.B6 Underwriting Agreement
99.B8.1 Custodian Agreement
99.B8.2 Supplement to Custodian Agreement
99.B9 Administration Agreement
99.B11.1 Consent of accountants
99.B11.2 Powers of Attorney
99.B15.1 Class A Distribution Plan
99.B15.2 Class B Distribution Plan
99.B16 Performance Calculations
99.B18 18f-3 Plan
27.001 FDS-Class A Shares
27.002 FDS-Class B Shares

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant represents that this Amendment
meets all the requirements for effectiveness pursuant to Rule 485(b) under the
Securities Act of 1933, and has duly caused this Post-Effective Amendment to
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on the
17th day of April, 1996.

FIRST INVESTORS INSURED
TAX EXEMPT FUND, INC.
(Registrant)

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

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

/s/Glenn O. Head Principal Executive April 17, 1996
- --------------------- Officer and Director
Glenn O. Head

/s/Joseph I. Benedek Principal Financial April 17, 1996
- --------------------- and Accounting Officer
Joseph I. Benedek

* Director April 17, 1996
- --------------------
Kathryn S. Head

* Director April 17, 1996
- --------------------
James J. Coy

<PAGE>

* Director April 17, 1996
- --------------------
Roger L. Grayson

* Director April 17, 1996
- --------------------
Herbert Rubinstein

* Director April 17, 1996
- --------------------
James M. Srygley

* Director April 17, 1996
- --------------------
John T. Sullivan

* Director April 17, 1996
- --------------------
Rex R. Reed

* Director April 17, 1996
- --------------------
Robert F. Wentworth

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

<PAGE>

ARTICLES OF RESTATEMENT

FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.

To the State Department
of Assessments and Taxation
State of Maryland

Pursuant to the provisions of Section 2-608 of the Maryland General
Corporation Law, First Investors Insured Tax Exempt Fund, Inc. (the
"corporation"), a Maryland corporation having its principal office in Baltimore
City, hereby certifies that:

FIRST: The corporation desires to restate its charter as currently in
effect.

SECOND: The provisions hereinafter set forth in the Articles of
Restatement are all the provisions of the charter of the corporation as
currently in effect.

THIRD: The restatement of the charter of the corporation has been approved
by a majority of the entire Board of Directors of the corporation.

FOURTH: The charter of the corporation is not amended by these Articles of
Restatement.

FIFTH: The current address of the principal office of the corporation in
the State of Maryland is c/o The Prentice-Hall Corporation System, Maryland, 11
East Chase Street, Baltimore, Maryland 21202.

<PAGE>

SIXTH: The name and the address of the current resident agent of the
corporation in the State of Maryland are The Prentice-Hall Corporation System,
Maryland, 11 East Chase Street, Baltimore, Maryland 21202.

SEVENTH: The number of directors of the corporation is nine, and the names
of the directors of the corporation currently in office are Glenn O. Head, James
J. Coy, Roger L. Grayson, Kathryn S. Head, F. William Ortman, Jr., Rex R. Reed,
Herbert Rubinstein, John T. Sullivan and Robert F. Wentworth.

ARTICLES OF RESTATEMENT

FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.

SECOND: The name of the corporation is
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
(hereinafter called the "Corporation").

THIRD: The purposes for which the Corporation is formed and the
business to be carried on and promoted by it are as follows:

To engage generally in the business of an incorporated investment
company of the management type, investing and reinvesting its assets in all
forms of securities and other personal and real property, of every kind and
description, all as more specifically set forth herein, subject to the
provisions of these Articles of Incorporation and the By-Laws of the
Corporation; to consolidate or merge with, to acquire and take over the assets
of, and to assume the liabilities of, any other corporation or trust with
similar powers, to make contracts, and, generally, to do any or all acts and
things necessary or desirable in furtherance of any of the corporate purposes or
designed to protect, preserve, or enhance the value of the corporate assets, or
to the extent permitted to business corporations authorized under the laws of
the State of Maryland as now or may in the future be enforced; and to do any or
all of the things in furtherance of the above purposes as natural persons might
do.

To subscribe for, receive, purchase and otherwise acquire, own, hold,
sell, exchange, transfer, mortgage, pledge, hypothecate and otherwise dispose
of, and generally deal in and with all or any of the following (hereinafter
sometimes referred to collectively as "securities" or individually as
"security") namely: All kinds of

<PAGE>

shares, stocks, voting trust certificates, trust certificates, bonds,
debentures, mortgages, trust receipts, notes and other securities, obligations,
contracts, certificates of interest, choses in action and evidences of
indebtedness generally of any corporation, association, partnership, syndicate,
entity, person, or governmental, municipal or public authority, domestic or
foreign, and evidences of any interest therein or in respect thereto, subject to
such restrictions as may be set forth from time to time in the By-Laws of the
Corporation; to acquire or become interested in any such securities by original
subscription, underwriting, participation in syndicates or otherwise and while
the owner or holder of any such securities to exercise all the rights, powers
and privileges of ownership or interest in respect thereof.

To purchase, acquire, hold, exchange, sell, deal in and dispose of,
alone or in syndicates or otherwise in conjunction with others, commodities and
other personal property of every kind, character and description whatsoever and
wheresoever situated, and any interest therein.

To conduct researches, investigations, enterprises, and otherwise
transact all kinds of business relating to the gathering, publishing and
distribution of financial and investment information and statistics or such
business as may be carried on in connection therewith throughout the world.

To enter into, make and perform contracts of every lawful kind,
without limitation as to amount, except as expressly provided to the contrary in
the By-Laws, with any person, firm, association, partnership, corporation or
entity including but not by way of limitation, agreements for the disposition or
acquisition of the corporate stock of the Corporation, agreements for the
management, supervision and overseeing of its assets or activities, and the
rendering of services with reference thereto, agreements for the holding or
custody of its assets, the acquisition and disposition of its securities,
agreements for the conduct of administrative, accounting or other activities,
and agreements relating to borrowing or repayment of money.

The foregoing statements of objects and purposes except as otherwise
expressly provided shall not be held to limit or restrict in any manner the
powers of the Corporation, and are in furtherance of, and in addition to, and
not in limitation of the general powers conferred upon the Corporation by the
laws of the State of Maryland or otherwise.

FOURTH: The post office address of the principal office of the
Corporation in this State is c/o The Prentice-Hall Corporation System, Maryland,
11 East Chase Street, Baltimore, Maryland 21202. The name of the resident agent
of the Corporation in this State is The Prentice-Hall Corporation System,
Maryland, a corporation of the State of Maryland, and the post office address of
the resident agent is 11 East Chase Street, Baltimore, Maryland 21202.

<PAGE>

FIFTH: Section 5.1. The total number of shares of all classes of
stock which the Corporation shall have authority to issue is five hundred
million (500,000,000) shares of capital stock of the par value of one dollar
($1.00) each, having an aggregate par value of $500,000,000. The Shares may be
issued by the Board of Directors in such separate and distinct series ("Series")
and classes of series ("Classes") as the Board of Directors shall from time to
time create and establish. The Board of Directors shall have full power and
authority, in its sole discretion, to create and establish Shares of said Series
and Classes having such preferences, rights, voting power, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption as shall be fixed and determined from time to time by resolution or
resolutions providing for the issuance of such Shares adopted by the Board of
Directors. In the event of establishment of Classes, each Class of a Series
shall represent interests in the assets of that Series and have identical
voting, dividend, liquidation and other rights and the same terms and conditions
as any other Class of that Series, except as provided in these Articles of
Incorporation, and except that expenses allocated to the Class of a Series may
be borne solely by such Class as shall be determined by the Board of Directors
and a Class of a Series may have exclusive voting rights with respect to matters
affecting only that Class. Expenses related to the distribution of, and other
identified expenses that should properly be allocated to, the Shares of a
particular Class or Series may be charged to and borne solely by such Class or
Series and the bearing of expenses solely by a Class or Series may be
appropriately reflected (in a manner determined by the Board of Directors) and
cause differences in the net asset value attributable to, and the dividend,
redemption and liquidation rights of, the Shares of each Class or Series. In
addition, the Board of Directors is hereby expressly granted authority to
increase or decrease the number of Shares of any Series or Class, but the number
of Shares of any Series or Class shall not be decreased by the Board of
Directors below the number of Shares thereof then outstanding.

The Board of Directors is authorized, from time to time, to classify or to
reclassify, as the case may be, any unissued Shares of the Corporation in
separate Series or Classes. The Shares of said Series and Classes of stock
shall have such preferences, rights, voting powers, restrictions, limitations as
to dividends, qualifications and terms and conditions of redemption as shall be
fixed and determined from time to time by the Board of Directors. The
Corporation may hold as treasury shares, reissue for such consideration and on
such terms as the Board of Directors may determine, or cancel, at its discretion
from time to time, any Shares reacquired by the Corporation. No holder of any
of the Shares shall be entitled as of right to subscribe for, purchase, or
otherwise acquire any Shares of the Corporation that the Corporation proposes to
issue or reissue.

The Corporation shall have authority to issue any additional shares
hereafter authorized and any Shares redeemed or repurchased by the Corporation.
All Shares of any Series or Class when properly issued in accordance with these
Articles of Incorporation shall be fully paid and nonassessable.

<PAGE>

Section 5.2. The establishment of any Series or Class, in addition to
those established in Section 5.1 hereof, shall be effective upon the adoption of
a resolution by a majority of the then Directors setting forth such
establishment and designation and the relative rights and preferences of the
Shares of such Series or Class. At any time that there are no Shares
outstanding of any particular Series or Class previously established and
designated, the Directors may by a majority vote abolish that Series or Class
and the establishment and designation thereof.

Section 5.3. Dividends and distributions on Shares with respect to each
Series or Class may be declared and paid with such frequency, in such form and
in such amount as the Board of Directors may from time to time determine.
Dividends may be declared daily or otherwise pursuant to a standing resolution
or resolutions adopted only once or with such frequency as the Board of
Directors may determine.

All dividends and distributions on Shares of each Series shall be
distributed pro rata to the holders of that Series in proportion to the number
of Shares of that Series held by such holders at the date and time of record
established for the payment of such dividends or distributions, except that such
dividends and distributions shall appropriately reflect expenses allocated to a
particular Class of such Series.

The Board of Directors shall have the power, in its sole discretion, to
distribute in any fiscal year as dividends (including dividends designated in
whole or in part as capital gain distributions) amounts sufficient, in the
opinion of the Board of Directors, to enable the Corporation, or where
applicable each Series of the Corporation, to qualify as a regulated investment
company under the Internal Revenue Code of 1986, as amended, or any successor or
comparable statute thereto, and regulations promulgated thereunder, and to avoid
liability of income tax in respect of that year. However, nothing in the
foregoing shall limit the authority of the Board of Directors to make
distributions greater than or less than the amount necessary to qualify as a
regulated investment company and to avoid liability of the Corporation, or any
Series of the Corporation, for such tax.

Dividends and distributions may be paid in cash, property or Shares, or a
combination thereof, as determined by the Board of Directors or pursuant to any
program that the Board of Directors may have in effect at the time. Any such
dividend or distribution paid in Shares will be paid at the current net asset
value thereof as defined in Section 5.7.

Section 5.4. All consideration received by the Corporation for the issue
or sale of Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits,

<PAGE>

and proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall be
referred to as "assets belonging to" that Series. In addition, any assets,
income, earnings, profits, and proceeds thereof, funds, or payments or any
general liabilities, expenses, costs, charges or reserves which are not readily
identifiable as belonging to or chargeable to any particular Series, shall be
allocated by the Board of Directors between and among any one or more of the
Series in such manner as the Board of Directors, in its sole discretion, deems
fair and equitable. Each such allocation shall be conclusive and binding upon
the stockholders of all Series for all purposes, and shall be referred to as
assets belonging to that Series. The assets belonging to a particular Series
shall be so recorded upon the books of the Corporation.

Section 5.5. On each matter submitted to a vote of the stockholders, each
holder of a Share shall be entitled to one vote for each Share and fractional
votes for fractional Shares standing in his name on the books of the
Corporation; provided, however, that when required by the Investment Company Act
of 1940, as amended ("1940 Act"), or rules thereunder or when the Board of
Directors has determined that the matter affects only the interests of one
Series or Class, matters may be submitted to a vote of the stockholders of a
particular Series or Class, and each holder of Shares thereof shall be entitled
to votes equal to the number of full and fractional Shares of the Series or
Class standing in his name on the books of the Corporation. The presence in
person or by proxy of the holders of one-third of the Shares of capital stock of
the Corporation outstanding and entitled to vote thereat shall constitute a
quorum for the transaction of business at a stockholders' meeting, except that
where any provision of law or of these Articles of Incorporation permit or
require that holders of any Series or Class shall vote as a Series or Class,
then one-third of the aggregate number of Shares of capital stock of that Series
or Class outstanding and entitled to vote shall constitute a quorum for the
transaction of business by that Series or Class.

Section 5.6. Each holder of Shares shall have the right at such times as
may be permitted by the Corporation to require the Corporation to redeem all or
any part of his Shares at a redemption price per Share equal to the net asset
value per Share as of such time as the Board of Directors shall have prescribed
by resolution. In the absence of such resolution, the redemption price per
Share shall be the net asset value next determined (in accordance with Section
5.7) after receipt by the Corporation of a request for redemption in proper form
less such charges as are determined by the Board of Directors and described in
the Corporation's registration statement under the Securities Act of 1933, as
amended. The Board of Directors may specify conditions, prices, and places of
redemption, and may specify binding requirements for the proper form or forms of
requests for redemption. Payment of the redemption price may be wholly or
partly in securities or other assets at the value of such securities or assets
used in such determination of net asset value, or may be in cash.
Notwithstanding the foregoing, the Board of Directors may postpone payment of
the redemption price and may suspend the rights of the holders of Shares to
require the Corporation to redeem Shares during any period or at any time when
and to the extent permissible under the 1940 Act. The Corporation reserves the
right, upon 60 days' notice, to reduce the redemption price in certain

<PAGE>

circumstances by an amount not in excess of 1% of net asset value of the shares
to be redeemed.

Section 5.7. The net asset value of each Share of the Corporation, or
each Series or Class, shall be the quotient obtained by dividing the value of
the net assets of the Corporation, or if applicable of the Series (being the
value of the assets of the Corporation or of the particular Series less its
actual and accrued liabilities exclusive of capital stock and surplus), by the
total number of Shares of the Corporation, or of the Series. Such determination
may be made on a Series-by-Series basis or made or adjusted on a Class-by- Class
basis, as appropriate, and shall include any expenses allocated to a specific
Series or Class thereof. The Board of Directors shall have the power and duty
to determine the net asset value per Share at such times and by such methods as
it shall determine subject to any restrictions or requirements under the 1940
Act and the rules, regulations and interpretations thereof promulgated or issued
by the Securities and Exchange Commission applicable to the Corporation. The
Board of Directors may delegate such power and duty to any one or more of the
directors and officers of the Corporation, to the Corporation's investment
adviser, to the custodian or depository of the Corporation's assets, or to
another agent of the Corporation.

Section 5.8. The Board of Directors may cause the Corporation to redeem
at current net asset value all Shares owned or held by any one stockholder
having an aggregate current net asset value of such amount as set by the Board
of Directors in accordance with applicable state laws. No such redemption shall
be effected unless the Corporation has given the stockholder at least sixty (60)
days' notice of its intention to redeem the Shares and an opportunity to
purchase a sufficient number of additional Shares to bring the aggregate current
net asset value of his Shares to such amount as set by the Board of Directors.
Upon redemption of Shares pursuant to this Section, the Corporation shall
promptly cause payment of the full redemption price, in any permissible form, to
be made to the holder of Shares so redeemed. The Board of Directors may by a
majority vote establish from time to time amounts less than the current amount
at which the Corporation will redeem Shares pursuant to this Section.

SIXTH: The number of directors of the Corporation shall be nine
(9), which number may be increased or decreased as may be provided by the By-
Laws, but in no case shall the number be less than three (3) or more than
fifteen (15). The names of the directors who shall act until their successors
are duly chosen and qualified are:

Herbert Rubinstein
James J. Coy
Roger L. Grayson
Glenn O. Head
F. William Ortman, Jr.
John T. Sullivan
Robert F. Wentworth
Kathryn S. Head
Rex R. Reed

<PAGE>

SEVENTH: In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized

To make, alter or repeal the By-Laws of the Corporation except as
therein provided.

To set apart out of any of the funds of the Corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserves in the manner in which it was created. Such reserve or reserves may be
invested and reinvested by the Board of Directors in the same way and subject to
the same restrictions as are provided for the investment and reinvestment of the
capital of the Corporation. When and only when the Board of Directors shall
decide that it is advisable or necessary to pay dividends out of the reserve,
shall such funds be subject to the payment of dividends.

To specify by the By-Laws the number of directors constituting the
whole Board of Directors, which number shall not be less than three (3) and
which may be increased or decreased as provided in the By-Laws; and if there be
a vacancy on the Board of Directors by reason of death, resignation or otherwise
to fill such vacancy for the unexpired term by a majority vote of the remaining
directors; and to fill a vacancy created by an increase in the number of
directors by a majority vote of the entire Board of Directors. A director
elected by the Board of Directors to fill a vacancy shall be elected to hold
office until the next annual meeting of stockholders or until his successor is
elected and qualifies. Notwithstanding the foregoing, any such election by the
Board of Directors is subject to the restrictions relating thereto set forth in
the By-Laws.

To designate one or more committees, each committee to consist of two
or more of the directors of the Corporation, which to the extent provided in the
Resolution or Resolutions of the Board of Directors or in the By-Laws of the
Corporation, shall have and may exercise the powers of the Board of Directors in
the management of the business and affairs of the Corporation, except the power
to declare dividends, to issue stock or to recommend to stockholders any action
requiring stockholders' approval, and have the power to authorize the seal of
the Corporation to be affixed to all papers which may require it.

Subject to all applicable provisions of the By-Laws, and of the 1940
Act and the rules and regulations thereunder, to authorize the Corporation to
enter into a written agreement or agreements with any person, firm or
corporation to act as manager, investment adviser, underwriter, distributor,
fiscal agent, depository or custodian of the Corporation.

From time to time to offer for subscription or otherwise issue or
sell, for such consideration as the Board of Directors may determine and which
may be permitted by law at any time of such subscription, any or all of the
authorized stock of the Corporation not then issued or which may have been
issued and reacquired by the Corporation and any or all of any increased stock
that may hereafter be authorized.

<PAGE>

EIGHTH: The holders of the capital stock of this Corporation shall
have no preemptive or preferential rights to subscribe for, purchase or receive
any part of any new or additional issues of any stock or any bonds or other
obligations of the Corporation convertible into stock whether now or hereafter
authorized. The Board of Directors of the Corporation may in its discretion
from time to time grant rights to stockholders to subscribe to or purchase
additional shares or bonds of the Corporation. Stockholders shall have no right
to cumulative voting.

NINTH: The Corporation is to have perpetual existence.

TENTH: The Corporation reserves the right from time to time to make
any amendment of these Articles of Incorporation, now or hereafter authorized by
law, including any amendment which alters contract rights, as expressly set
forth in these Articles of Incorporation, of any outstanding Shares. Any
amendment to these Articles of Incorporation may be adopted at either an annual
or special meeting of the stockholders upon receiving an affirmative vote of a
majority of all votes entitled to be cast thereon. The Board of Directors may,
without a shareholder vote, order the filing of Articles Supplementary
increasing or decreasing the aggregate number of Shares or the number of Shares
of any class that the Corporation has authority to issue, establishing new
classes and describing Shares thereof or taking any such other action now or
hereafter authorized by law.

ELEVENTH: The directors shall have power, if the By-Laws so provide,
to hold their meetings either within or without the State of Maryland; and the
Corporation may have one or more offices in addition to the principal office in
Maryland, and keep its books (subject to the provisions of the statutes) outside
of the State of Maryland at such places as may from time to time be designated
by the Board.

TWELFTH: No directors shall be disqualified from voting or acting on
behalf of the Corporation, in contracting with any other corporation in which he
may be a director, officer or a stockholder, nor shall any director of the
Corporation be disqualified from voting or acting in its behalf by reason of any
personal interest.

<PAGE>

IN WITNESS WHEREOF, First Investors Insured Tax Exempt Fund, Inc., has
caused these presents to be signed in its name and on its behalf by its Vice
President and attested by its Assistant Secretary on September 14, 1994.

FIRST INVESTORS INSURED TAX
EXEMPT FUND, INC.

ATTEST:
/s/C. Durso
------------------------------
Concetta Durso, Vice President

/s/Carol R. Lerner
- -------------------
Carol R. Lerner,
Assistant Secretary

STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )

I HEREBY CERTIFY that on the 14th day of September, 1994, before me
the subscriber, a Notary Public of the State of New York, personally appeared
CONCETTA DURSO, Vice President of First Investors Insured Tax Exempt Fund, Inc.,
a Maryland corporation, and in the name and on behalf of said corporation
acknowledged the foregoing Articles of Restatement to be the corporate act of
said corporation and further made oath in due form of law that the matters and
facts set forth in the said Articles of Restatement with respect to the approval
thereof are true to the best of his knowledge, information and belief.

WITNESS, my hand and notarial seal, the day and year above written.

/s/Dale Kaplan
----------------
Notary Public

[SEAL] Dale Kaplan
Notary Public, State of New York
No. 31-4504204
Qualified in New York County
Commission Expires August 31, 1995

<PAGE>

ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.

First Investors Insured Tax Exempt Fund, Inc. ("Company"), a Maryland
corporation, having its principal office in Baltimore, Maryland, organized on
September 28, 1976 hereby certifies to the State Department of Assessments and
Taxation of Maryland that:

FIRST: The Company is authorized to issue five hundred million
(500,000,000) shares of capital stock in such separate and distinct classes or
series of shares as shall be determined from time to time by the Board of
Directors of the Company. The Company presently offers one series of shares.

SECOND: By action of the Board of Directors of the Company in
accordance with the Company's charter, three hundred million (300,000,000)
shares of capital stock of the Company, including all currently issued and
outstanding shares of capital stock of the Company, are hereby classified as
Class A capital stock of the Company.

THIRD: By action of the Board of Directors of the Company in
accordance with the Company's charter, two hundred million (200,000,000) shares
of capital stock that the Company is authorized to issue are hereby classified
as Class B capital stock of the Company.

FOURTH: The Class A capital stock and Class B capital stock of the
Company represents interests in the same investment portfolio of the Company.
All shares of each particular class of the Company shall represent an equal
proportionate interest in that class and each share of any particular class of
the Company shall be equal to each other share of that class. Class A shares
and Class B shares of the Company shall be subject to all provisions of Article
V in the Company's Articles of Incorporation relating to stock of the Company
generally and shall have the same preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption, except as follows:

(1) The Class B capital stock of the Company may convert into Class A
capital stock of the Company in the manner as determined by the Board of
Directors;

- 1 -

<PAGE>

(2) Each class of the Company shall have separate exchange privileges
as determined by the Board of Directors from time to time;

(3) The Class A capital stock of the Company shall be subject to a
front-end sales load and a Rule 12b-1 service and distribution fee as determined
by the Board of Directors from time to time;

(4) The Class B capital stock of the Company shall be subject to a
contingent deferred sales charge and a Rule 12b-1 service and distribution fee
as determined by the Board of Directors from time to time; and

(5) Unless otherwise expressly provided in the Articles of
Incorporation, including any Articles Supplementary creating any class or series
of capital stock, on each matter submitted to a vote of stockholders of the
Company, each holder of a share of capital stock of the Company shall be
entitled to one vote for each share standing in such holders's name on the books
of the Company, irrespective of the class or series thereof, and all shares of
all classes and series shall vote together as a single class; provided, however,
that

(a) as to any matter with respect to which a separate vote of any
class or series is required by the Investment Company Act of 1940, as amended
("1940 Act"), or any rules, regulations or orders issued thereunder, or by the
Maryland General Corporation Law, such requirement as to a separate vote by that
class or series shall apply in lieu of a general vote of all classes and series
as described above; and

(b) as to any matter which in the judgment of the Board of Directors
(which shall be conclusive) does not affect the interest of a particular class
or series, such class or series shall not be entitled to any vote and only the
holders of shares of the one or more affected classes and series shall be
entitled to vote.

FIFTH: The Company is registered with the Securities and Exchange
Commission as an open-end investment company under the 1940 Act.

- 2 -
<PAGE>

FIRST INVESTORS INSURED
TAX EXEMPT FUND, INC.

ATTEST:
/s/Concetta Durso
----------------------------------
Concetta Durso, Vice President

/s/Carol R. Lerner
- ------------------------
Carol R. Lerner,
Assistant Secretary

STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )

I HEREBY CERTIFY that on the 20th day of October, 1994, before me the
subscriber, a Notary Public of the State of New York, personally appeared
CONCETTA DURSO, Vice President of First Investors Insured Tax Exempt Fund, Inc.,
a Maryland corporation, and in the name and on behalf of said corporation
acknowledged the foregoing Articles Supplementary to be the corporate act of
said corporation and further made oath in due form of law that the matters and
facts set forth in the said Articles Supplementary with respect to the approval
thereof are true to the best of his knowledge, information and belief.

WITNESS, my hand and notarial seal, the day and year above written.

/s/Dale Kaplan
----------------------------
Notary Public

[SEAL]

- 3 -

<PAGE>

AMENDED AND RESTATED BY-LAWS

FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.

*******

ARTICLE I

OFFICES

SECTION 1. The principal office of the Corporation shall be in the
City of Baltimore, State of Maryland. The Corporation may also have offices at
such other places both within and without the State of Maryland as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
STOCKHOLDERS

SECTION 1. The annual meeting of stockholders shall be held on such
day during the month of April or on such other date and at such time and place
within or without the State of Maryland as may be fixed by the Board of
Directors for the purpose of electing directors and of transacting such other
business as may properly be brought before the meeting; PROVIDED, however, that
an annual meeting of stockholders shall not be required to be held in any year
in which none of the following is required, under the Investment Company Act of
1940, to be acted on by the stockholders: election of directors; approval of the
investment advisory agreement; ratification of independent public accountants or
approval of a distribution agreement.

- 1 -
<PAGE>

SECTION 2. Special meetings of the stockholders for any purpose or
purposes may be called by the Board of Directors or by the President, and must
be called at the written request of stockholders owning not less than
twenty-five percent of the stock then outstanding and entitled to vote. Special
meetings of the stockholders for the purpose of voting on the removal of one or
more directors must be called at the written request of stockholders owning not
less than ten percent of the stock then outstanding and entitled to vote. Any
such meeting shall be held at such time and such place within or without the
State of Maryland as may be stated in the call and notice.

SECTION 3. Written or printed notice of every annual or special
meeting of stockholders, stating the time and place thereof and the general
nature of the business proposed to be transacted at any such meeting, shall be
delivered personally or mailed at least ten days previous thereto to each
stockholder of record entitled to vote at the meeting at his address as the same
appears on the books of the Corporation. Such further notice shall be given as
may be required by law. Meetings may be held without notice if all of the
stockholders entitled to vote are present or represented at the meeting, or if
notice is waived in writing, either before or after the meeting, by those not
present or represented at the meeting. No notice of an adjourned meeting of
stockholders other than an announcement of the time and place thereof at the
preceding meeting shall be required.

SECTION 4. At every meeting of stockholders the holders of record of
a majority of the outstanding shares of the stock of the Corporation entitled to
vote at the meeting, whether present in person or represented by proxy, shall,

- 2 -
<PAGE>

except as otherwise provided by law, constitute a quorum. If at any meeting
there shall be no quorum, the holders of record, entitled to vote at the
meeting, of a majority of such shares so present or represented may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall have been obtained when any business may be
transacted which might have been transacted at the meeting as first convened had
there been a quorum.

SECTION 5. Each stockholder entitled to vote at any meeting shall
(except as otherwise provided in the Articles of Incorporation) have one vote in
person or by proxy for each share of stock held by him. No share shall be
entitled to vote if any installment payable thereon is overdue and unpaid. All
elections of directors shall be held and all questions, except as otherwise
provided by law or by the Articles of Incorporation or by these By-Laws shall be
decided by a majority of the votes cast by stockholders present or represented
and entitled to vote thereat in person or by proxy.

SECTION 6. Meetings of the stockholders shall be presided over by the
Chairman of the Board, if he is not present, by the President or a Vice
President or in their absence, by a Chairman to be chosen at the meeting. The
Secretary of the Corporation, or, if he is not present, an Assistant Secretary
of the Corporation or, if neither is present, a secretary to be chosen at the
meeting shall act as secretary of the meeting.

SECTION 7. The vote on the election of directors, and other questions
properly brought before any meeting, need not be by ballot except when so
demanded by a majority vote of the shares present in person or by proxy and
entitled to

- 3 -
<PAGE>

vote thereon, or when so ordered by the Chairman of such meeting. The Chairman
of each meeting at which directors are to be elected by ballot or at which any
question is to be voted on shall, at the request of any stockholder present or
represented by proxy at the meeting and entitled to vote at such election or on
such question, appoint two inspectors of election. No director or candidate for
the office of director shall be appointed as such inspector. Inspectors shall
first take and subscribe an oath or affirmation faithfully to execute the duties
of inspector at such meeting with strict impartiality and according to the best
of their ability, and shall take charge of the polls and after the balloting
shall make a certificate of the result of the vote taken.

SECTION 8. The Board of Directors may close the stock transfer books
of the Corporation for a period not exceeding twenty days preceding the date of
any meeting of stockholders, or the date for the payment of any dividend or the
date for the allotment of rights, or the date when any change or conversion or
exchange of stock shall go into effect; or in lieu of closing the stock transfer
books, the Board of Directors may fix in advance a date, not exceeding ninety
days and not less than ten days preceding the date of any meeting of
stockholders, and not exceeding forty days preceding the date for the payment of
any dividend or the date for the allotment of rights, or the date when any
change or conversion or exchange of stock shall go into effect, or a date in
connection with the obtaining of any consent, as a record date, for the
determination of the stockholders entitled to notice of, and to vote at any such
meeting and at any adjournments thereof, or entitled to receive payment of any
such dividend, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion

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<PAGE>

or exchange of stock, or to give consent and in such case such stockholders, and
only such stockholders, as shall be stockholders of record on the date so fixed,
shall be entitled to such notice of, and to vote at, such meeting and any
adjournment thereof, or to receive payment of such dividend, or to receive such
allotment of rights, or to exercise such rights, or to give such consent as the
case may be, notwithstanding any transfer of any stock on the books of the
corporation after any such record date fixed as aforesaid.

ARTICLE III

BOARD OF DIRECTORS

SECTION 1. The Board of Directors of the Corporation shall consist of
not less than three nor more than fifteen persons. The number of directors
(within the above limits) shall be determined by the Board of Directors from
time to time as it sees fit, by vote of a majority of the whole Board. Each
director shall hold office until such time as less than a majority of the
directors then holding office have been elected by the stockholders or upon the
occurrence of any of the conditions described under Section 16 of the Investment
Company Act of 1940, as amended. At such time, a meeting of the stockholders
shall be called for the purpose of electing the Board of Directors and the terms
of office of the directors then in office shall terminate upon the election and
qualification of such Board of Directors. Directors need not be stockholders. A
majority of the whole Board, but in no event less than three, shall constitute a
quorum for the transaction of business, but if at any meeting of the Board there
shall be less than a quorum present, a majority of the directors present may
adjourn the meeting from time to time, until a quorum shall have been obtained

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where any business may be transacted which might have been transacted at the
meeting as first convened had there been a quorum. No notice of an adjourned
meeting of the directors other than an announcement of the time and place
thereof at the preceding meeting shall be required. The acts of the majority of
the directors present at any meeting at which there is a quorum, shall, except
as otherwise provided by law, by the Articles of Incorporation or by the
By-Laws, be the acts of the Board.

SECTION 2. The Board of Directors, by a vote of a majority of the
whole Board, may elect directors to fill vacancies in the Board resulting from
an increase in the number of Directors or from any other cause. A director so
chosen shall hold office until the next meeting of stockholders or their
respective successors are elected and qualify, unless sooner displaced pursuant
to law or these By-Laws. The stockholders, at any meeting called for the
purpose, may, with or without cause, remove any director by the affirmative vote
of the holders of a majority of the votes entitled to be cast and at any meeting
called for that purpose, fill the vacancy in the Board thus caused.

SECTION 3. Meetings of the Board of Directors shall be held at such
place, within or without the State of Maryland, as may from time to time be
fixed by resolution of the Board as may be specified in the call of any meeting.
Regular meetings of the Board of Directors shall be held at such times as may
from time to time be fixed by resolution of the Board, and special meetings may
be held at any time upon the call of a majority of the persons constituting the
Board of Directors or by the President or the Secretary, by oral, telephonic,
telegraphic or written notice, duly served on or sent or mailed to each director
at least twenty-four hours

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<PAGE>

before the meeting. The notice of any special meeting shall specify the
purposes thereof. Notice need not be given of regular meetings of the Board
held at times fixed by resolution of the Board. Meetings may be held at any time
without notice if all of the directors are present or if notice is waived in
writing, either before or after the meeting of those not present.

SECTION 4. Meetings of the Board of Directors shall be presided over
by the Chairman of the Board or the President, or if neither of the above is
present, by a Chairman to be chosen at the meeting; and the Secretary or, if he
is not present, an Assistant Secretary, or if neither is present, a Secretary to
be chosen at the meeting shall act as Secretary of the Meeting.

SECTION 5. Except as otherwise provided by law or in the Articles of
Incorporation, a director of the Corporation shall, not in the absence of fraud,
be disqualified by his office from dealing or contracting with the Corporation
either as a vendor, purchaser or otherwise, nor in the absence of fraud shall
any transaction or contract of the Corporation be void or voidable or affected
by reason of the fact that any director, or any firm of which any director is a
member, or any corporation of which any director is an officer, director or
stockholder, is in any way interested in such transaction or contract; provided
that at the meeting of the Board of Directors, authorizing or confirming said
contract or transaction, the existence of an interest of such director, firm or
corporation is disclosed or made known and there shall be present a quorum of
the Board of Directors, and such contract or transaction shall be approved by a
majority of such quorum, which majority shall consist of directors not so
interested or connected. Nor shall any

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<PAGE>

director be liable to account to the Corporation for any profit realized by him
or through any such transaction or contract of the Corporation ratified or
approved as aforesaid, by reason of the fact that he or any firm of which he is
a member, or any corporation of which he is an officer, director or stockholder,
was interested in such transaction or contract. Directors so interested may be
counted when present at meetings of the Board of Directors for purposes of
determining the existence of a quorum. Any contract, transaction or act of the
Corporation or of the Board of Directors (whether or not approved or ratified as
hereinabove provided) which shall be ratified by a majority in interest of a
quorum of the stockholders having voting power at any annual meeting or any
special meeting called for such purpose or approved in writing by a majority in
interest of the stockholders having voting power without a meeting shall, except
as otherwise provided by law, be valid and as binding as though ratified by
every stockholder of the Corporation.

SECTION 6. The Board of Directors may, by resolution or resolutions,
passed by a majority of the whole Board, designate one or more of the directors
of the Corporation, which, to the extent permitted by law and provided in said
resolution or resolutions, shall have and may exercise the powers of the Board
over the business and affairs of the Corporation and may have power to authorize
the seal of the Corporation to be affixed to all papers which may require it.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the Board of Directors. A majority
of the members of such committee may determine its action and fix the time and
place of its meetings unless the Board of Directors shall otherwise provide.
The Board of Directors shall have the power at any

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<PAGE>

time to change the membership of, or to fill vacancies in, or to dissolve any
such committees.

SECTION 7. The Board may, from time to time, elect one or more
persons to the position of Director Emeritus, which election need not be
submitted for stockholder approval. Such person(s) shall be non-voting honorary
directors who shall not be considered in determining whether a quorum exists,
shall have no right to vote and shall not be responsible for the actions of the
Board.

ARTICLE IV

OFFICERS

SECTION 1. The Board of Directors shall appoint a President of the
Corporation and a Secretary and a Treasurer, and may appoint one or more Vice
Presidents, Assistant Secretaries and Assistant Treasurers and, from time to
time, any other officers and agents as it may deem proper. The President shall
be selected from among the Directors. Any two of the above-mentioned offices,
except those of President and a Vice President, may be held by the same person,
but no officer shall execute, acknowledge or verify any instrument in more than
one capacity if such instrument be required by law or by these By-Laws to be
executed, acknowledged or verified by any two or more officers.

SECTION 2. The term of office of all officers shall be one year until
their respective successors are chosen; but any officer or agent chosen or
appointed by the Board of Directors may be removed, with or without cause, at
any time, by the affirmative vote of a majority of the members of the Board then
in office.

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<PAGE>

SECTION 3. Subject to such limitations as the Board of Directors may
from time to time prescribe, the officers of the Corporation shall each have
such powers and duties as generally appertain to their respective offices, as
well as such powers and duties as from time to time may be conferred by the
Board of Directors. Any officer, agent, or employee of the Corporation may be
required by the Board of Directors to give bond for the faithful discharge of
his duties, in such sum and of such character as the Board may from time to time
prescribe.

ARTICLE V
CERTIFICATES OF STOCK

SECTION 1. The Board of Directors of the Corporation may authorize
the issuance of some or all of the shares of any or all of its classes or series
without certificates. In the event a certificate shall be issued, such
certificate shall present the number of shares of stock of such class or series
of the Corporation owned by the stockholder, which certificate or certificates
shall be in such form as the Board of Directors may from time to time prescribe
by a recording of each stockholder's interest on the records of the
Corporation's Transfer Agent. The certificates for shares of stock of the
Corporation shall bear the signature, either manual or facsimile, of the
President or a Vice President and the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary, and shall be sealed with the seal of the
Corporation or bear a facsimile of such seal. The validity of any stock
certificate shall not be affected if any officer whose signature appears thereon
ceases to be an officer of the Corporation before such certificate is issued.

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<PAGE>

SECTION 2. The shares of stock of the Corporation shall be
transferable on the books of the Corporation by the holder thereof in person or
by a duly authorized attorney, upon surrender for cancellation of a certificate
or certificates for a like number of shares, with a duly executed assignment and
power of transfer endorsed thereon or attached thereto, and with such proof of
the authenticity of the signatures as the Corporation or its agent may
reasonably require.

SECTION 3. No certificate for shares of stock of the Corporation
shall be issued in place of any certificate alleged to have been lost, stolen,
mutilated or destroyed, except upon production of such evidence of the loss,
theft, mutilation or destruction, and upon indemnification of the Corporation
and its agents to such extent and in such manner as the Board of Directors may
from time to time prescribe.

ARTICLE VI

CORPORATE BOOKS

SECTION 1. The books of the Corporation, except the original or a
duplicate stock ledger, may be kept outside the State of Maryland at such place
or places as the Board of Directors may from time to time determine.

ARTICLE VII

SIGNATURES

SECTION 1. Except as otherwise provided in these By-Laws or as the
Board of Directors may generally or in particular cases authorize the execution
thereof in some other manner, all deeds, leases, transfers, contracts, bonds,
notes, checks, drafts and other obligations made, accepted or endorsed by the
Corporation and all endorsements,

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<PAGE>

assignments, transfers, stock powers or other instruments of transfer of
securities owned by or standing in the name of the Corporation shall be signed
or executed by two officers of the Corporation who shall be the President or a
Vice President and a Vice President, the Secretary or the Treasurer.

SECTION 2. The President of the Corporation or, in his absence or
disability or at his request, a Vice President of the Corporation may authorize
from time to time the signature and issuance of proxies to vote upon shares of
stock of other corporations owned by the Corporation unless otherwise provided
by the Board of Directors. All proxies for shares held in the name of the
Corporation shall be signed in the name of the Corporation by two officers of
the Corporation, who shall be the President or a Vice President and a Vice
President, the Secretary or the Treasurer.

ARTICLE VIII

FISCAL YEAR

SECTION 1. The fiscal year of the Corporation shall be the calendar
year or such other period as may be prescribed by the Board of Directors.

ARTICLE IX

CORPORATE SEAL

SECTION 1. The corporate seal of the Corporation shall consist of a
flat faced circular die with the word "Maryland" together with the name of the
Corporation, the year of its organization and such other appropriate legend as
the Board of Directors may from time to time determine, cut or engraved thereon.
In lieu of the corporate seal when so authorized by the Board of Directors or a
duly empowered

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<PAGE>

committee thereof, a facsimile thereof may be impressed or affixed or
reproduced.

ARTICLE X

INDEMNIFICATION OF OFFICERS AND DIRECTORS

SECTION 1. Every person who is or was a director or officer of this
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
to 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 any 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 and officer (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 those members of the Board of
Directors of the Corporation 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

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<PAGE>

of independent counsel. Amounts paid in settlement shall not exceed the costs,
fees and expenses which would have been incurred had such action, suit or
proceeding been litigated to a conclusion. Such a determination by the Board of
Directors or by independent counsel, and the payments 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 right 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 according to law.

ARTICLE XI

INVESTMENT RESTRICTIONS

SECTION 1. Notwithstanding any of the foregoing provisions, the power
of the Corporation to invest and reinvest its assets and to hold, sell,
exchange, pledge, mortgage, hypothecate or otherwise dispose of or turn to
account or realize upon and generally deal in securities and investments of
every kind or description or in and with its own credit, shall be expressly
limited as follows.

(a) The Corporation shall not borrow money for temporary or emergency purposes
(not for leveraging or investment) in an amount not exceeding 5% of the value of
its total assets (including the amount borrowed) less liabilities (other than
borrowings). Any borrowings that exceed 5% of the value of the Corporation's
total assets by reason of a decline in net assets will be reduced within three
business days to the extent necessary to comply with the 5% limitation. This
policy shall not prohibit deposits of assets to provide margin or guarantee
positions in connection with transactions in options, futures contracts, swaps,
forward contracts, and

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<PAGE>

other derivative instruments or the segregation of assets in connection with
such transactions.

(b) The Corporation shall not engage in making of loans to other persons.
The Corporation's Board of Directors, however, may on the request of
broker-dealers or other institutional investors, which it deems qualified,
authorize the Corporation to lend securities for the purpose of covering
short positions of the borrower, but only when the borrower pledges cash
collateral to the Corporation 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 exceed 10% of the value of the Corporation's total assets. Voting
rights may pass under such loans but the Corporation may call any loan to
exercise a vote in the event of a material issue affecting the portfolio
company. Such loans may have adverse tax consequences under Subchapter M of
the Internal Revenue Code.

(d) The Corporation shall not purchase or sell real estate.

(e) The Corporation may not acquire more than 10% of the outstanding
voting securities of any one issuer, nor invest more than 5% of the value of its
gross assets, at the time of purchase, in securities of any one issuer (except
obligations of the United States Government).

(f) The Corporation shall not invest in companies for the purpose of
exercising control or management.

(g) The Corporation shall not purchase any securities if such purchase
would cause the Corporation to own, at the time of purchase, more than 10% of
the outstanding securities of any class of any one issuer. For the purposes of
this restriction, all kinds of securities of a company representing debt shall
be deemed to constitute a single class and all kinds of stock of a company
preferred over the common stock as to dividends or in liquidation shall be
deemed to constitute a single class.

(h) The Corporation shall not purchase or retain in its portfolio the
securities of any issuer if, to the knowledge of the Corporation, any officer or
director of the Corporation, any person or organization which is an investment
adviser of the Corporation (as defined in the Investment Company Act of 1940),
or any officer, director,

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<PAGE>

partner or trustee of, or person owning of record more than 10% of the stock of,
any such investment adviser, owns beneficially more than 1/2 of 1% of the
outstanding securities of any class of such issuer and the persons or
organization so owning more than 1/2 of 1% of such securities together own
beneficially more than 5% of such securities.

(i) The Corporation shall not invest in the securities of issuers which
have been in operation for less than three years (including the operations of
predecessors) if such investment at the time thereof would cause more than 5% of
the total assets of the Corporation, taken at market, to be invested in
securities of all such issuers.

(j) The Corporation shall not purchase the securities of other investment
companies except in connection with a merger of another investment company. In
this connection, however, the Corporation may invest on a temporary basis in
"money market funds" offered without selling commission which invest in the
following types of securities: notes of issuers having, at the time of
purchase, an issue of outstanding Municipal Bonds rated within the three highest
grades by S&P or Moody's; obligations of the United States Government, its
agencies or instrumentalities; other debt securities rated within the three
highest grades by S&P or Moody's; commercial paper rated in the highest grade by
either of such rating services, certificates of deposit, letters of credit and
bankers' acceptances of domestic banks with capital, surplus and undivided
profits in excess of $100 million.

(l) The Corporation shall not invest more than 25% of the value of its
assets in a particular industry at any one time.

(m) The Corporation shall require its officers and directors and any firm
or organization through which the Corporation issues its own shares and with
which the Corporation has contractual relations, not to take a short position in
the stock of the Corporation or to hold back orders to purchase stock of the
Corporation or to buy stock of the Corporation in anticipation of orders to
purchase such stock.

(n) The securities and all other investments of the Corporation shall be
held by an independent custodian which shall be a bank or trust company having
not less than $2,000,000 aggregate capital and surplus.

SECTION 2. The Corporation shall not purchase or sell any securities
(other then the capital stock of the

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<PAGE>

Corporation) from or to any of the following acting as principals, and shall not
make any loan to (i) officers or directors of the Corporation, (ii) any
partnership of which any officer or director of the Corporation is a member,
(iii) any corporation or association of which any officer or director of the
Corporation is an officer, director or trustee, except as permitted by
applicable law or regulation; (iv) any person or organization furnishing
advisory or supervisory services to the Corporation, (v) any officer, director,
partner or trustee of, or person owning of record 10% or more of the stock of,
any person or organization furnishing such advisory or supervisory services,
(vi) any partnership of which any officer, director, partner or trustee of, or
person owning of record 10% or more of the stock of, any person or organization
furnishing such advisory or supervisory services, is a member, or (vii) any
corporation or association of which any officer, director, partner or trustee of
or person owning of record 10% or more of the stock of, any person or
organization furnishing such advisory or supervisory services, is an officer or
director or trustee; provided, however, that nothing contained in (iii) or (vii)
shall prevent the purchase of additional securities from any corporation or
association referred to in such clauses upon the exercise of rights issued to
the Corporation as a part of a general offering to the holders of securities of
such corporation or association.

SECTION 3. The Corporation may enter into advisory or supervisory
contracts and other contracts with, and may otherwise do business with, First
Investors Management Company, Inc. and First Investors Corporation,
notwithstanding that the Board of Directors of the Corporation may be composed
in part of directors, officers or employees of said corporations and officers of
the

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<PAGE>

Corporation may have been or may be or become directors, officers or employees
of said corporations, and notwithstanding that First Investors Management
Company, Inc. may act as investment advisor to other investment companies
investing in securities similar or identical with those owned by the Corporation
and may at or about the same time recommend, purchase or sell the same
securities to the Corporation and such other investment companies, and in the
absence of fraud the Corporation and said corporations may deal freely with each
other, and neither such advisory or supervisory contract nor any other contract
or transaction between the Corporation and said corporations shall be
invalidated or in any manner affected thereby, nor shall any director or officer
of the Corporation be liable to the Corporation or any stockholder or creditor
thereof or to any other person for any loss incurred by it or him by reason of
any such contract or transaction; provided that nothing herein shall protect any
director or officer of the Corporation against any liability 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; and
provided always that such contracts or transactions shall have been on terms
that were not unfair at the time at which it was entered into.

ARTICLE XII

ADDITIONAL PROVISIONS

SECTION 1. The books of account of the Corporation shall be examined
by an independent firm of public accountants, selected as required by law, at
the close of each fiscal year of the Corporation and at such other times, if
any, as may be directed by the Board of Directors of the

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<PAGE>

Corporation. A report to the shareholders based upon each such examination
shall be mailed to each shareholder of the Corporation, of record on such date
with respect to each report as may be determined by the Board of Directors, at
his address as the same appears on the books of the Corporation. Each such
report shall show the assets and liabilities of the Corporation as of the close
of the period covered by the report, its income and expenses, the net asset
value of its outstanding shares, the securities in which the funds of the
Corporation were invested and such other matters as the Board of Directors shall
determine.

ARTICLE XIII

AMENDMENTS

SECTION 1. The By-Laws of the Corporation may be amended, added to,
rescinded or repealed at any meeting of the shareholders, or by a majority vote
of the directors then in office at any meeting of the Board of Directors,
provided notice of the substance of the proposed change is contained in the
notice of the meeting or any waiver thereof; except that after the initial issue
of any shares of capital stock of the Corporation, the provisions of Section 1
of Article XI hereof and this Article XIII, may be altered, amended or repealed
only upon the affirmative vote of the lesser of (i) more than fifty percent
(50%) of the outstanding shares of

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<PAGE>

the capital stock of the Corporation, or (ii) sixty-seven percent (67%) or more
of the shares of capital stock present at a meeting if more than fifty percent
(50%) of the outstanding shares of capital stock of the Corporation are
represented at the meeting in person or by proxy.

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<PAGE>

FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
INVESTMENT ADVISORY AGREEMENT

This Agreement is made as of June 13, 1994, by and between FIRST INVESTORS
INSURED TAX EXEMPT FUND, INC., a Maryland corporation ("Company"), and FIRST
INVESTORS MANAGEMENT COMPANY INC., a New York corporation ("Manager").

WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end, diversified management investment
company consisting of one or more separate series of shares ("Series"), each
having its own assets and investment policies; and

WHEREAS, the Manager is an investment adviser under the Investment Advisers
Act of 1940, as amended; and

WHEREAS, the Company desires to retain the Manager as investment adviser to
furnish investment advisory and portfolio management services to each Series of
the Company as now exists and to each such other Series of the Company
hereinafter established as agreed to from time to time by the parties hereto
(hereinafter, "Series" shall refer to each Series of the Company which is
subject to this Agreement), and the Manager is willing to furnish such services.

NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:

1. APPOINTMENT. The Company hereby appoints the Manager as investment
adviser of the Company and each Series listed on Schedule A of this Agreement
(as such Schedule may be amended from time to time) for the period and on the
terms set forth in this Agreement. The Manager accepts such appointment and
agrees to render the services herein set forth for compensation as set forth on
Schedule A. In the performance of its duties, the Manager will act in the best
interests of the Company and the Series and will comply with (a) applicable laws
and regulations, including, but not limited to, the 1940 Act, (b) the terms of
this Agreement, (c) the Company's Articles of Incorporation, By-Laws and
currently effective registration statement under the Securities Act of 1933, as
amended, and the 1940 Act, and any amendments thereto, (d) relevant undertakings
to state securities regulators which also have been provided to the Manager, (e)
the stated investment objective(s), policies and restrictions of each applicable
Series, and (f) such other guidelines as the Company's Board of Directors
("Board") reasonably may establish.

<PAGE>

2. DUTIES OF THE MANAGER.

(a) INVESTMENT PROGRAM. Subject to supervision by the Board, the
Manager will provide a continuous investment program for each Series and shall
determine what securities and other investments will be purchased, retained or
sold by each Series. The Manager will exercise full discretion and act for each
Series in the same manner and with the same force and effect as such Series
itself might or could do with respect to purchases, sales, or other
transactions, as well as with respect to all other things necessary or
incidental to the furtherance or conduct of such purchases, sales or other
transactions.

(b) OTHER MANAGEMENT SERVICES. The Manager agrees to conduct the
business and details of the operation of the Series as shall be agreed to from
time to time by the parties hereto; provided, however, that the Manager shall
not act as custodian for Series assets. The Manager also agrees, at its own
cost, to provide the Series with certain executive, administrative and clerical
personnel and to provide the Series with office facilities and supplies.

(c) EXECUTION OF TRANSACTIONS. The Manager will place orders pursuant
to its investment determinations for each Series either directly with the issuer
or through any brokers or dealers. In the selection of brokers or dealers and
the placement of orders for the purchase and sale of portfolio investments for
each Series, the Manager shall use its best efforts to obtain for each Series
the most favorable price and execution available, except to the extent that it
may be permitted to pay higher brokerage commissions for brokerage or research
services as described below. In using its best efforts to obtain the most
favorable price and execution available, the Manager, bearing in mind each
Series' best interests at all times, shall consider all factors it deems
relevant, including by way of illustration, price, the size of the transaction,
the nature of the market for the security, the amount of the commission, the
timing of the transaction taking into account market prices and trends, the
reputation, experience and financial stability of the broker or dealer involved
and the quality of service rendered by the broker or dealer in other
transactions. Subject to such policies as the Board may determine, the Manager
shall not be deemed to have acted unlawfully or to have breached any duty
created by this Agreement or otherwise solely by reason of its having caused a
Series to pay a broker that provides brokerage or research services to the
Manager an amount of commission for effecting a portfolio investment transaction
in excess of the amount of commission another broker would have charged for
effecting that transaction if the Manager determines in good faith that such
amount of commission is reasonable in relation to the value of the brokerage or
research services provided by such broker or dealer, viewed in terms of either
that particular transaction or the Manager's overall responsibilities with
respect to such Series and to other clients of the Manager as to which the
Manager exercises investment discretion.

<PAGE>

(d) REPORTS TO THE BOARD. Upon request, the Manager will provide the
Board with economic and investment analyses and reports and make available to
the Board any economic, statistical and investment services normally available
to institutional or other customers of the Manager.

(e) DELEGATION OF AUTHORITY. Any of the foregoing duties specified in
this paragraph 2 with respect to one or more Series may be delegated by the
Manager, at the Manager's expense, to an appropriate party, subject to such
approval by the Board and shareholders of the applicable Series as may be
required by the 1940 Act. The Manager shall oversee the performance of delegated
duties by any such other party and shall furnish the Board with periodic reports
concerning the performance of delegated responsibilities by such party.

3. SERVICES NOT EXCLUSIVE. The services furnished by the Manager
hereunder are not to be deemed exclusive and the Manager shall be free to
furnish similar services to others so long as its services under this Agreement
are not impaired thereby. Nothing in this Agreement shall limit or restrict the
right of any director, officer or employee of the Manager, who may also be a
Director, officer or employee of the Company, to engage in any other business or
to devote his or her time and attention in part to the management or other
aspects of any other business, whether of a similar nature or a dissimilar
nature.

4. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Manager hereby agrees that all records which it
maintains for the Company are the property of the Company and further agrees to
surrender promptly to the Company any of such records upon the Company's
request. The Manager further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act the records required to be maintained by Rule 31a-
1 under the 1940 Act.

5. EXPENSES.

(a) EXPENSES OF THE COMPANY. During the term of this Agreement, each
Series will bear all expenses not specifically assumed by the Manager incurred
in its operations and the offering of its shares. Expenses borne by each Series
will include, but not be limited to, the following (or each Series'
proportionate share of the following): brokerage commissions relating to
securities purchased or sold by the Series or any losses incurred in connection
therewith; fees payable to and expenses incurred on behalf of the Series by the
Manager; expenses of organizing the Series; filing fees and expenses relating to
the registration and qualification of the Series' shares under federal or state
securities laws and maintaining such registrations and qualifications;
distribution fees; fees and salaries payable to the members of the Board and
officers who are not officers or employees of the Manager; taxes (including any
income or franchise taxes) and governmental fees; costs of any liability,
uncollectible items of

<PAGE>

deposit and other insurance or fidelity bonds; any costs, expenses or losses
arising out of any liability of or claim for damage or other relief asserted
against the Company or Series for violation of any law; legal, accounting and
auditing expenses, including legal fees of special counsel for the independent
directors; charges of custodians, transfer agents and other agents; costs of
preparing share certificates; expenses of setting in type and printing
prospectuses and supplements thereto for existing shareholders, reports and
statements to shareholders and proxy materials; any extraordinary expenses
(including fees and disbursements of counsel) incurred by the Company or Series;
and fees and other expenses incurred in connection with membership in investment
company organizations.

(b) FEE WAIVERS AND REIMBURSEMENTS. If the expenses borne by a Series
in any fiscal year exceed the applicable expense limitations imposed by the
securities regulations of any state in which shares are registered or qualified
for sale to the public, the Manager will waive its fee or reimburse such Series
for any excess up to the amount of the fee payable to it during that fiscal year
pursuant to paragraph 6 hereof.

6. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement with respect to each Series, the Company will pay the
Manager, effective from the date of this Agreement, a fee which is computed
daily and paid monthly from each Series' assets at the annual rates as
percentages of that Series' average daily net assets as set forth in the
attached Schedule A, which Schedule can be modified from time to time to reflect
changes in annual rates or the addition or deletion of a Series from the terms
of this Agreement, subject to appropriate approvals required by the 1940 Act. If
this Agreement becomes effective or terminates with respect to any Series before
the end of any month, the fee for the period from the effective date to the end
of the month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion that such period
bears to the full month in which such effectiveness or termination occurs.

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

<PAGE>

8. DURATION AND TERMINATION.

(a) EFFECTIVENESS. This Agreement shall become effective upon the
date hereinabove written, provided that, with respect to a Series, this
Agreement shall not take effect unless it has first been approved (i) by a vote
of a majority of those members of the Board who are not parties to this
Agreement or interested persons of any such party ("Independent Board Members")
cast in person at a meeting called for the purpose of voting on such approval,
and (ii) by an affirmative vote of a majority of the outstanding voting
securities of such Series.

(b) RENEWAL. Unless sooner terminated as provided herein, this
Agreement shall continue in effect for two years from the above written date.
Thereafter, if not terminated, this Agreement shall continue automatically for
successive periods of twelve months each, provided that such continuance is
specifically approved at least annually (i) by a vote of a majority of the
Independent Board Members cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by the Board or, with respect to any given
Series, by an affirmative vote of a majority of the outstanding voting
securities of such Series.

(c) TERMINATION. Notwithstanding the foregoing, with respect to any
Series, this Agreement may be terminated at any time by vote of the Board or by
vote of a majority of the outstanding voting securities of such Series on 60
days' written notice delivered or mailed by registered mail, postage prepaid, to
the Manager. The Manager may at any time terminate this Agreement on 60 days'
written notice delivered or mailed by registered mail, postage prepaid, to the
Company. This Agreement automatically and immediately will terminate in the
event of its assignment. Termination of this Agreement pursuant to this
paragraph 8 shall be without the payment of any penalty. Termination of this
Agreement with respect to a given Series shall not affect the continued validity
of this Agreement or the performance thereunder with respect to any other
Series.

9. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no material amendment of this Agreement
as to a given Series shall be effective until approved by vote of the holders of
a majority of the outstanding voting securities of such Series.

10. NAME OF COMPANY. The Company or any Series may use the name "First
Investors" only for so long as this Agreement or any extension, renewal or
amendment hereof remains in effect, including any similar agreement with any
organization which shall have succeeded to the business of the Manager. At such
time as such an agreement shall no longer be in effect, the Company and each
Series will (to the extent that it lawfully can) cease to use any name

<PAGE>

derived from First Investors Management Company, Inc. or any successor
organization.

11. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of New York, without giving effect to the conflicts of
laws principles thereof, and in accordance with the 1940 Act. To the extent that
the applicable laws of the State of New York conflict with the applicable
provisions of the 1940 Act, the latter shall control.

12. DEFINITIONS. As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested person," and "assignment" shall have
the same meanings as such terms have in the 1940 Act.

13. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors.

14. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.

FIRST INVESTORS INSURED TAX EXEMPT
Attest: FUND, INC.

By: /s/C. Durso By: /s/Glenn O. Head
-------------------- ---------------------------
C. Durso, Secretary Glenn O. Head, President

FIRST INVESTORS MANAGEMENT
Attest: COMPANY, INC.

By: /s/Carol R. Lerner By: /s/Kathryn S. Head
-------------------- ----------------------------
Carol R. Lerner, Kathryn S. Head, President
Secretary

<PAGE>

FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
INVESTMENT ADVISORY AGREEMENT

SCHEDULE A

Compensation pursuant to Paragraph 6 of this First Investors Insured Tax
Exempt Fund, Inc. Investment Advisory Agreement shall be calculated in
accordance with the following schedule:

Advisory Fee as %
Average Daily of Average Daily
Net Assets Net Assets
----------------- --------------------
Up to $250 million 0.75%
In excess of $250 million to $500 million 0.72%
In excess of $500 million to $750 million 0.69%
Over $750 million 0.66%

Dated: June 13, 1994
7

<PAGE>

UNDERWRITING AGREEMENT

BETWEEN

FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.

AND

FIRST INVESTORS CORPORATION

This AGREEMENT entered into the 17th day of March, 1994, by and between
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC., a Maryland corporation, with an
office located at 95 Wall Street, New York, New York 10005 (the "Fund"), and
FIRST INVESTORS CORPORATION, a New York corporation with its principal office
located at 95 Wall Street, New York, New York 10005 (the "Underwriter").

In consideration of the mutual covenants and agreements of the parties
hereto, the parties mutually covenant and agree with each other as follows:

1. APPOINTMENT. The Fund hereby appoints the Underwriter as agent of the
Fund to effect the sale and public distribution of shares of each series and
each class of common stock of the Fund as now exists or is hereafter established
("Shares"). This appointment is made by the Fund and accepted by the
Underwriter upon the understanding that (a) upon the request of the Underwriter,
the Fund will prepare, execute and file such applications for registration and
qualification of the Shares as are required by federal and state law in such
amounts as the Underwriter reasonably may determine, (b) the distribution of the
Shares to the public be effected by the Underwriter or through various
securities dealers, and (c) the distribution of the Shares shall be done in such
manner that the Fund shall be under no responsibility or liability to any person
whatsoever on account of the acts and statements of any such person or their
agents or employees. The Underwriter shall have the sole right to select the
security dealers to whom the Shares will be offered by it and, subject to
express provisions of this Agreement, the Articles of Incorporation, By-Laws and
the Fund's then current Registration Statement, to determine the terms and
prices in any contract for the sale of Shares to any dealer made by it as such
agent for the Fund.

2. UNDERWRITER AS EXCLUSIVE AGENT. The Underwriter shall be the
exclusive agent for the Fund for the sale of the Shares and the Fund agrees that
it will not sell any Shares to any person except to fill orders for the Shares
received through the Underwriter, provided, however, that the foregoing
exclusive right shall not apply to: (a) Shares issued or sold in connection with
the merger or consolidation of any other investment company with the Fund or the
acquisition by purchase or otherwise of all or substantially all the outstanding
shares of any such company by the Fund, (b) Shares which may be offered by the
Fund to its shareholders for reinvestment of cash distributed from capital gains
or net

<PAGE>

investment income of the Fund, or such gains or income paid in the form of
Shares, or (c) Shares which may be issued to shareholders of other investment
companies who exercise the exchange and/or cross-investment privileges set forth
in the Fund's then current Registration Statement.

3. SALES TO DEALERS. The Underwriter shall have the right to sell the
Shares to dealers, as needed (making reasonable allowance for clerical errors
and errors of transmission), but not more than the Shares needed to fill
unconditional orders for Shares placed with the Underwriter by dealers. In
every case the Fund shall receive the net asset value for the Shares sold,
determined as provided in Paragraph 4 hereof. The Underwriter shall notify the
Fund at the close of each business day of the number of Shares sold during each
day.

4. DETERMINATION OF NET ASSET VALUE. The net asset value of each series
or class of Shares shall be determined by the Fund or the Fund's custodian, or
such officer or officers or other persons as the Board of Directors of the Fund
may designate. The determinations shall be made once a day on each day that the
New York Stock Exchange is open for a full business day and in accordance with
the method set forth in the Fund's then current Registration Statement.

5. PUBLIC OFFERING PRICE. The public offering price of each series or
class of Shares shall be the net asset value per Share (as determined by the
Fund) of the outstanding Shares of such series or class, plus any applicable
sales charge as described in the Fund's then current Registration Statement.
The Fund shall furnish (or arrange for another person to furnish) the
Underwriter with quotations of public offering prices on each business day.

6. REPURCHASE AND REDEMPTION OF SHARES.

(a) The Fund appoints and designates the Underwriter as agent of the Fund,
and the Underwriter accepts such appointment as such agent, to redeem or
repurchase for retirement the Shares in accordance with the provisions of the
Articles of Incorporation and By-Laws of the Fund.

(b) In connection with such redemptions or repurchases the Fund authorizes
and designates the Underwriter to take any action, to make any adjustments in
net asset value (including the deduction of a contingent deferred sales charge,
if applicable, as provided in Paragraph 8 hereof) and to make any arrangements
for the payment of the redemption or repurchase price authorized or permitted to
be taken or made as set forth in the By-Laws and the Fund's then current
Registration Statement.

(c) The authority of the Underwriter under this Paragraph 6 may, with the
consent of the Fund, be re-delegated in whole or in part to another person or
firm.

- 2 -

<PAGE>

(d) To the extent permitted by law and applicable regulations, the
authority granted in this Paragraph 6 may be suspended by the Fund at any time
or from time to time until further notice to the Underwriter.

7. ALLOCATION OF EXPENSES. The Underwriter (or one of its non-investment
company affiliates) shall bear all fees and expenses incident to the
registration and qualification of the Shares, the cost of preparing and
disseminating sales material or literature, as well as the costs of preparing
and disseminating prospectuses, proxy material and shareholder reports used in
connection with the sale of the Shares except, as discussed below, to the extent
that such materials are being sent to existing shareholders or the Fund has
agreed to bear the cost of such expenses under a Plan (as defined in Paragraph 8
hereof). The Fund shall bear all expenses related to communications with its
existing shareholders, including the costs of preparing, printing and mailing
prospectuses, statements of additional information, proxy materials and other
materials sent to such shareholders.

8. COMPENSATION. As compensation for providing services under this
Agreement, the Underwriter shall retain the sales charge, if any (including a
contingent deferred sales shares, if applicable), on purchases or, if
applicable, on redemptions of Shares as set forth in the Fund's then current
Registration Statement. With regard to purchases, the Underwriter is authorized
to collect the gross proceeds derived from the sale of the Shares, remit the net
asset value thereof to the Fund upon receipt of the proceeds and retain the
sales charge, if any. With regard to redemptions, the Underwriter is authorized
to retain the contingent deferred sales charge, if any, imposed on the
redemption of Shares as may be authorized by the Board of Directors and set
forth in the Fund's then current Registration Statement. The Underwriter may
reallow any or all of such sales charges to such dealers as it may from time to
time determine. Whether a sales charge shall be retained by the Underwriter
shall be determined in accordance with the Fund's then current Registration
Statement and applicable law. The Underwriter may also receive from the Fund a
distribution and/or service fee at the rate and under the terms and conditions
of any plan or plans of distribution (collectively and singularly, "Plan") as
have been or may be adopted by the Fund, subject to any further limitations on
such fee as the Board of Directors may impose.

9. EFFECTIVENESS OF AGREEMENT. This Agreement shall become effective
upon the date hereabove written, provided that, with respect to any series or
class of Shares created after the date of this Agreement, this Agreement shall
not take effect unless such action has first been approved by vote of a majority
of the Board of Directors and by vote of a majority of those directors of the
Fund who are not interested persons of the Fund and have no direct or indirect
financial interest in the operation of the Plan or in any agreements related
thereto (all such directors collectively being referred to herein as the
"Independent Directors"), cast in

- 3 -

<PAGE>

person at a meeting called for the purpose of voting on such action.

10. TERMINATION OF AGREEMENT. This Agreement shall continue in effect for
a period of more than one year from its effective date only as long as such
continuance is approved, at least annually, by the Board of Directors of the
Fund, including a majority of the Independent Directors, voting in person at a
meeting called for the purpose of voting on such approval. This Agreement may
be terminated by either party hereto upon thirty (30) days' written notice to
the other party. This Agreement shall automatically terminate in the event of
its assignment by the Underwriter, as the term "assignment" is defined by the
Investment Company Act of 1940, as amended ("1940 Act"), unless the Securities
Exchange Commission ("SEC") has issued an order exempting the Fund and the
Underwriter from the provisions of the 1940 Act which would otherwise have
effected the termination of this Agreement.

11. AMENDMENTS. No amendment to this Agreement shall be executed or
become effective unless its terms have been approved: (a) by a majority of the
Directors of the Fund, or (b) by the vote of a majority of the outstanding
voting securities of the Fund and, in either case, by a vote of a majority of
the Independent Directors.

12. LIMITATION OF LIABILITY. The Underwriter agrees to use its best
efforts in effecting the sale and public distribution of the Shares through
dealers and in performing its duties in redeeming and repurchasing the Shares,
but nothing contained in this Agreement shall make the Underwriter or any of its
officers, 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 contained herein 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, 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 it may have under the Securities Act of 1933, as
amended ("1933 Act"), or the 1940 Act.

13. DEFINITIONS. The terms "assignment," "interested person," and
"majority of the outstanding voting securities" shall have the meanings given to
them by Section 2(a) of the 1940 Act, subject to such exemptions as may be
granted by the SEC by any rule, regulation or order. Additionally, the term
"Registration Statement" shall mean the registration statement most recently
filed by the Fund with the SEC and effective under the 1940 Act and 1933 Act, as
such Registration Statement is amended from time to time, and the terms
"Prospectus" and "Statement of Additional Information" shall mean, respectively,
the form of prospectus(es)

- 4 -

<PAGE>

and statement(s) of additional information with respect to the Fund filed by it
as part of the Registration Statement.

14. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of New York, without giving effect to the conflicts of
laws principles thereof, and in accordance with the 1940 Act. To the extent
that the applicable laws of the State of New York conflict with the applicable
provisions of the 1940 Act, the latter shall control.

15. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors.

16. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.

IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.

FIRST INVESTORS INSURED TAX EXEMPT
FUND, INC.

By: /s/Glenn O. Head
------------------------------
Glenn O. Head
President
ATTEST:

/s/C. Durso
- ------------------------------
Concetta Durso
Secretary

FIRST INVESTORS CORPORATION

By: /s/Michael S. Miller
------------------------------
Michael S. Miller
Chief Executive Officer
ATTEST:

/s/Carol R. Lerner
- ------------------------------
Carol R. Lerner
Assistant Secretary

- 5 -

<PAGE>

CUSTODIAN AGREEMENT
BETWEEN
IRVING TRUST COMPANY
AND
FIRST INVESTORS TAX EXEMPT FUND, INC.

CUSTODIAN AGREEMENT, made this 7th day of March, 1985, between FIRST
INVESTORS TAX EXEMPT FUND, INC., a corporation organized and existing under the
laws of the State of Maryland, having its office and place of business at 120
Wall Street, New York, New York 10005 (hereinafter called the "Fund") and Irving
Trust Company, a banking corporation organized and existing under the laws of
the State of New York, having its principal office and place of business at One
Wall Street, New York, New York 10015 (hereinafter called the "Custodian").

WITNESSETH:

That for and in consideration of the mutual promises hereinafter set forth
the Fund and the Custodian agree as follows:

APPOINTMENT OF CUSTODIAN

1. The Fund hereby constitutes and appoints the Custodian as custodian of
all the securities and monies at any time owned by the Fund during the period of
this Agreement.

2. The Custodian hereby accepts appointment as such custodian and agrees
to perform the duties thereof as hereinafter set forth.

CUSTODY OF CASH AND SECURITIES

1. The Fund will deliver or cause to be delivered to the Custodian all
securities and all monies owned by it, including cash received for the issuance
of its shares, at any time during the period of this Agreement. The Custodian
will not be responsible for such securities and such monies until actually
received by it.

2. The Custodian shall credit to a separate account in the name of the
Fund all monies received by it for the account of the Fund, and shall disburse
the same only:

(a) In payment for securities purchased, as provided in Article III
hereof;

(b) In payment of dividends or distributions as provided in Article V
hereof;

<PAGE>

(d) In payment for capital stock of the Fund redeemed by it, as
provided in Article VI hereof;

(e) Pursuant to an officers certificate, or with respect to money
market securities, as defined in Article IX, the oral instructions of an
authorized person, as defined in Article IX, setting forth the name and address
of the person to whom payment is to be made, the amount to be paid, and the
corporate purpose for which payment is to be made; and

(f) In payment of the fees and in reimbursement of the expenses and
liabilities of the Custodian, as provided in Article VII hereof.

3. The Custodian shall provide the Fund promptly after the close of
business on each day with a statement summarizing all transactions and entries
for the account of the Fund during said day, and it shall, at lease monthly and
from time to time, at the reasonable request of the Fund, render a detailed
statement of the securities and monies held for the Fund under this Agreement.

4. All securities held for the Fund, which are issued or issuable only in
bearer form, shall be held by the Custodian in that form; all other securities
held for the Fund may be registered in the name of the Fund or in the name of
any duly appointed and registered nominee of the Custodian, as the Custodian may
from time to time determine. The Fund agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold or deliver in proper
form for transfer, or to register in the name of its registered nominee, any
securities which it may hold for the account of the Fund and which may from time
to time be registered in the name of the Fund. The Custodian shall hold all
securities in a separate account in the name of the Fund physically segregated
at all times from those of any person or persons. Notwithstanding the
foregoing, to the extent authorized by the Board of Directors of the Fund, the
Custodian may deposit securities in a clearing agency or the book entry system
of the Federal Reserve Banks, as provided in Rule 17f-4 of the Investment
Company Act of 1940, as amended, and securities deposited in such agency in such
agency may be registered in the name of such agency or its nominee.

5. Unless otherwise instructed to the contrary by an officers
certificate, the Custodian shall, with respect to all securities held for the
Fund:

(a) Collect all income due or payable;

<PAGE>

(b) Present for payment and collect the amount payable upon all
securities which may mature or be called, redeemed, or retired, or otherwise
become payable;

(d) Execute, as custodian, any necessary declarations or certificates
of ownership under the Federal Income Tax laws or the laws or regulations of any
other taxing authority now or hereafter in effect; and

(e) Hold for the account of the Fund all stock dividends, rights and
similar securities issued with respect to any securities held by it hereunder.

6. Upon receipt of an officers certificate and not otherwise, the
Custodian shall:

(a) Execute and deliver to such persons as may be designated in such
officers certificate, proxies, consents, authorizations, and any other
instruments whereby the authority of the Fund as owner of any securities may be
exercised;

(b) Deliver any securities held for the Fund in exchange for other
securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation or the exercise of any conversion privilege;

(c) Deliver any securities held for the Fund to any protective
committee, reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or sale of
assets of any corporation, and receive and hold under the terms of this
Agreement, such certificates of deposit, interim receipts or other instruments
or documents as may be issued to it to evidence such delivery;

(d) Take such other action as may be authorized in such officers
certificate.

III
PURCHASE AND SALE OF INVESTMENTS OF THE FUND

1. Promptly after each purchase of securities by the Fund, the Fund shall
deliver to the Custodian (i) with respect to each purchase of securities which
are not money market securities an officers certificate and (ii) with respect to
each purchase of money market securities such an officers certificate or oral
instructions from an authorized person, specifying with respect to

<PAGE>

each such purchase: (a) the name of the issuer and the title of the securities,
(b) the number of shares or the principal amount purchased, and accrued
interest, if any, (c) the date of purchase and settlement, (d) the purchase
price per unit, (e) the total amount payable upon such purchase, (f) the name of
the person from whom or the broker through whom the purchase was made and (g)
such other information as shall be necessary for the issuance by the Custodian
or a depository of escrow receipts relating to options purchased by the Fund, if
the issuance of escrow receipts is requested by the officers certificate. The
Custodian shall receive all securities purchased by or for the Fund from the
persons through or from whom the same were purchased, and shall pay out the
monies held for the account of the Fund, the total amount payable upon such
purchase as set forth in such officers certificate or such oral instructions, as
the case may be, provided that the same conforms to the total amount payable as
set forth on such officers certificate or in such oral instructions. The
Custodian may make payment in such forms as shall be satisfactory to it and may
accept securities in accordance with the customs prevailing among dealers in
securities.

2. Promptly after each sale of securities by the Fund, the Fund shall
deliver to the Custodian, (i) with respect to each sale of securities which are
not money market securities an officers certificate and (ii) with respect to
each sale of money market securities such an officers certificate or oral
instructions from an authorized person specifying with respect to each such
sale: (a) the name of the issuer and the title of the securities, (b) the number
of shares of principal amount sold, and accrued interest, if any, (c) the date
of sale, (d) the sale price per unit, (e) the total amount payable to the Fund
upon such sale and (f) the name of the broker through whom or the person to whom
the sale was made. The Custodian shall deliver the securities thus designated
to the broker or other person named in such officers certificate upon receipt of
the total amount payable to the Fund as set forth in such officers certificates
or such oral instructions as the case may be, with respect to such sale. The
Custodian may accept payment in such form as shall be satisfactory to it, and
may deliver securities and arrange for payment, in accordance with the customs
prevailing among delivers in securities.

LOAN OF PORTFOLIO SECURITIES OF THE FUND

1. Where the Fund is permitted to lend its portfolio securities and
wishes to lend its portfolio securities, the Fund shall deliver to the Custodian
an officers certificate specifying with respect to each such loan: (a) the
number of the issuers and the title of the securities, (b) the number of shares
or the principal amount loaned, (c) the date of loan and delivery, (d) the total
amount to be delivered to the Custodian against the loan of the

<PAGE>

securities including the amount of cash collateral and the premium, if any,
separately identified and (e) the name of the broker to whom the loan was made.
The Custodian shall deliver the securities thus designated to the broker to whom
the loan was made upon receipt of he total amount designated as to be delivered
against the loan of securities. The Custodian may accept payment only in the
form of immediately available funds or a certificate or bank cashier's check
payable to the order of the Fund or the Custodian drawn on New York Clearing
House funds and may deliver securities in accordance with the customs prevailing
among dealers in securities.

2. Promptly after each termination of the loan of securities by the Fund,
the Fund shall deliver to the Custodian an officers certificate specifying with
respect to each such loan termination and return of securities: (a) the name of
the issuer and the title of the securities to be returned, (b) the number of
shares or the principal amount to be returned, (c) the date of termination, (d)
the total amount to be delivered by the Custodian (including the cash collateral
for such securities minus any offsetting credits as described in said officers
certificate) and (e) the name of he broker from whom the securities will be
returned. The Custodian shall receive all securities returned from the broker
to whom such securities were loaned and upon receipt thereof shall pay, out of
the monies held for the account of the Fund, the total amount payable upon such
return of securities as set forth in the officers certificates.

PAYMENT OF DIVIDENDS OR DISTRIBUTIONS

1. The Fund shall furnish to the Custodian a copy of any resolution of
its Board of Directors, certified by the Secretary or any Assistant Secretary,
authorizing the declaration of dividends on a monthly, quarterly, semi-annual,
annual or other basis, and authorizing the Custodian to rely on the oral
instructions from an authorized officer of the Fund, setting forth the date of
the declaration of such dividend or distribution, the date of payment thereof,
the record date as of which stockholders entitled to payment thereof, the record
date as of which stockholders entitled to payment shall be determined, and the
amount payable per share to the stockholders of record as of that date and the
total amount payable to the Dividend Agent or the payment date.
2. Upon the payment date specified in such officers certificate or oral
instructions the Custodian shall pay out the monies held for the account of the
Fund the total amount payable to the Dividend Agent for the Fund.

<PAGE>

SALE AND REDEMPTION OF CAPITAL STOCK OF THE FUND

1. Whenever the Fund shall sell any shares of its capital stock, it shall
cause to be delivered to the Custodian an officers certificate duly specifying:

(a) The number of shares sold, trade date, and price; and

(b) The amount of money to be received by the Custodian for the sale
of such shares.

2. Upon receipt of such money the Custodian shall credit such money into
the account of the Fund.

3. Upon the issuance of any of the capital stock of the Fund in
accordance with the foregoing provisions of this Article, the Custodian shall
pay, out of the money held for the account of the Fund, all original issue or
other taxes required to be paid by the Fund in connection with such issuance
upon the receipt of an officers certificate specifying the amount to be paid.

4. Except as provided hereinafter, whenever the Fund shall hereafter
redeem any shares of its capital stock, it shall furnish to the Custodian an
officers certificate specifying:

(a) The number of shares of capital stock redeemed; and

(b) The amount to be paid for the shares redeemed.

5. Upon receipt from the Transfer Agent of an advice setting forth the
number of shares received by the Transfer Agent for redemption and that such
shares are valid and in good form for redemption, the Custodian shall make
payment to the Transfer Agent out of the monies held for the account of the
Fund, of the total amount specified in the officers certificate issued pursuant
to the foregoing paragraph 4 of this Article.

VII

CONCERNING THE CUSTODIAN

1. Neither the Custodian nor its nominee shall be liable for any loss or
damage including counsel fees, resulting from its action or omission to act or
otherwise, except for any such loss or damage arising out of its own negligence
or willful misconduct. The Custodian may, with respect to questions of law,
apply for and obtain the advice and opinion of counsel to the Fund or of its own
counsel, at the expense of the Fund, and shall be fully protected with respect
to anything done or omitted by it in good faith in conformity with such advice
or opinion.

<PAGE>

2. Without limiting the generality of the foregoing, the Custodian shall
be under no duty or obligation to require into, and shall not be liable for:

(a) The validity of the issue of any securities purchased by or for
the Fund, the legality of the purchase thereof, or the propriety of the amount
paid therefor;

(b) The legality of the sale of any securities by or for the Fund or
the propriety of the amount for which the same are sold;

(c) The legality of the issue or sale of any shares of the capital
stock of the Fund, or the sufficiency of the amount to be received therefor;

(d) The legality of the redemption of any shares of the capital stock
of the Fund, or the propriety of the amount to be paid therefor;

(e) The legality of the declaration of any dividend by the Fund or
the legality of the issue of any shares of the Fund's capital stock in payment
of any stock dividend;

(f) The legality of any loan of portfolio securities pursuant to
Article IV of this Agreement, nor shall the Custodian be under any duty or
obligation to see to it that any cash collateral delivered to it by the
brokerage firm or held by it at any time as a result of such loan of the
portfolio securities of the Fund is adequate collateral for the Fund against any
loss it might sustain as a result of such loan. The Custodian specifically, but
not by way of limitation, shall not be under any duty or obligation to
periodically check or notify the Fund that the amount of such cash collateral
held by it for the Fund is sufficient collateral for the Fund, but such duty or
obligation shall be the sole responsibility of the Fund. In addition, the
Custodian shall be under no duty or obligation to see that any brokerage firm to
whom portfolio securities of the Fund are lent pursuant to Article IV of this
Agreement makes payment to it of any dividends or interest which are payable to
or for the account of the Fund during the period of such loan or at the
termination of such loan, provided however, that the Custodian shall promptly
notify the Fund in the event that such dividends or interest are not paid and
received when due;

(g) The legality of a payment made pursuant to an officers
certificate or, in the case of money market securities, pursuant to oral
instructions of any authorized person.

3. The custodian shall not be liable for, or considered to be the
Custodian of, any money represented by any check, draft, or

<PAGE>

other instrument for the payment of money received by it on behalf of the Fund,
until the Custodian actually receives such money.

4. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount due to the Fund from the Transfer Agent of
the Fund nor to take any action to effect payment or distribution by the
Transfer Agent of the Fund of any amount paid by the Custodian to the Transfer
Agent of the Fund in accordance with this Agreement.

5. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount, if the securities upon which such amount is
payable are in default or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to take such action by
an officers certificate and (ii) it shall be assured to its satisfaction of
reimbursement of its costs and expenses in connection with any such action.

6. The Custodian may appoint one or more banking institutions, including,
but not limited to, banking institutions located in foreign countries, as
Depository or Depositories or as a Sub-Custodian of securities and monies at any
time owned by the Fund, upon terms and conditions approved in written
instructions from two officers of the Fund.

7. The Custodian shall not be under any duty or obligation to ascertain
whether any securities at any time delivered to or held by it for the account of
the Fund are such as may properly be held by he fund under the provisions of its
Articles of Incorporation.

8. The Custodian shall be entitled to receive and the Fund agrees to pay
to the Custodian, such compensation as may be agreed upon from time to time
between the Custodian and the Fund. The Custodian may charge such compensation
and any expenses incurred by the Custodian in the performance of its duties
pursuant to such agreement against any money held by it for the account of the
Fund. The Custodian shall also be entitled to charge against any money held by
it for the account of the Fund the amount of any loss, damage, liability or
expense, including counsel fees, for which it shall be entitled to reimbursement
under the provisions of this Agreement. The expenses which the Custodian may
charge against the account of the Fund include, but are not limited to, the
expenses of Sub-Custodians and foreign branches of the Custodian incurred in
settling transactions involving the purchase and sale of securities of the Fund.

9. The Custodian shall be entitled to rely upon any officers certificate,
notice or other instrument in writing received by the Custodian and believed by
the Custodian to be genuine and to be signed by two officers of the Fund as
defined in Article IX. The Custodian shall be entitled to rely upon any oral
instructions received by the Custodian pursuant to Article III or V hereof and

<PAGE>

believed by the Custodian to be genuine and to be given by an authorized person.
The Fund agrees to forward to the Custodian written instructions from an
authorized person confirming such oral instructions in such manner so that such
written instructions are received by the Custodian, whether by hand delivery,
telex or otherwise, by the close of business of the same day that such oral
instructions are given to the Custodian. The Custodian's understanding of any
oral instructions on which it has acted shall be binding on the Fund
notwithstanding receipt by the Custodian of written confirmation of such oral
instructions which is inconsistent with the Custodian's understanding thereof.
The Fund agrees that the fact that such confirming written instructions are not
received by the Custodian shall in no way affect the validity of the
transactions or enforceability of the transactions hereby authorized by the
Fund. The Fund agrees that the Custodian shall incur no liability to the Fund
in acting upon oral instructions given to the Custodian hereunder concerning
such transactions provided such instructions reasonably appear to have been
received from a duly authorized person.

VIII
TERMINATION

1. Either of the parties hereto may terminate this Agreement by giving to
the other party of notice in writing specifying the date of such termination,
which shall be not less than 60 days after the date f the giving of such notice.
In the event such notice is given by the Fund, it shall be accompanied by a copy
of a resolution of the Board of Directors of the Fund, certified by the
Secretary or any Assistant Secretary, electing to terminate this Agreement and
designating a successor custodian or custodians, each of which shall be a bank
or trust company having not less than $2,000,000 aggregate capital, surplus and
undivided profits. In the event such notice is given by the Custodian, the Fund
shall, on or before the termination date, deliver to the Custodian a copy of
resolution of its Board of Directors, certified by the Secretary or any
Assistant Secretary, designating a successor custodian or custodians. In the
absence of such designation by the Fund, the Custodian may apply to any court of
competent jurisdiction for the appointment of a successor custodian which shall
be a bank or a trust company having not less than $2,000,000 aggregate capital,
surplus and undivided profits. If the Fund fails to designate a successor
custodian, the Fund shall, upon the date specified in the notice of termination
of this Agreement and upon the delivery by the Custodian of all securities and
monies then owned by the Fund be deemed to be its own custodian and the
Custodian shall thereby be relieved of all duties and responsibilities pursuant
to this Agreement.

2. Upon the date set forth in such notice, this Agreement shall terminate
and the Custodian shall, upon receipt of a notice

<PAGE>

of acceptance by the successor custodian, on that date deliver directly to the
successor custodian all securities and monies then owned by the Fund and held by
it as Custodian, after deducting all fees, expenses and other amounts for the
payment or reimbursement of which it shall be entitled.

IX
MISCELLANEOUS

1. The term "officers certificate" shall mean any notice, instruction or
other instrument in writing, authorized or required by this Agreement to be
given to the Custodian signed by two officers on behalf of the Fund.

2. The term "Officers" shall be deemed to include the President, Vice-
President, the Secretary, the Treasurer, any Assistant Secretary, any Assistant
Treasurer, or any other person or persons duly authorized by the Board of
Directors to execute any certificate, instruction, notice or other instrument on
behalf of the Fund. The term "securities" shall include, but shall not be
limited to, stocks, bonds, debentures, notices, bankers' acceptances,
certificates of deposit, options, securities covered by options, and money
market instruments.

3. Annexed hereto as Appendix A, is a certificate signed by two of the
present officers of the Fund under its corporate seal, setting forth the names
and the signatures of the present officers of the Fund. The Fund agrees to
notify the Custodian promptly if any such present officer ceases to be an
officer of the Fund, and to furnish the Custodian a new certificate in similar
form in the event other or additional officers as defined in Article IX are
elected or appointed. Until such new certificate shall be received, the
Custodian shall be fully protected in acting under the provisions of this
Agreement upon the signatures of the present officers as set forth in said
annexed certificate or upon the signatures of the present officers as set forth
in subsequently issued certificates.

4. The term "authorized person" shall be deemed to include the Treasurer,
the Secretary or any other persons, whether or not any such person is an officer
or employee of the Fund, duly authorized by the Board of Directors to execute
any certificate, instruction, notice or other instrument or to deliver oral
instructions on behalf of the Fund.

5. Annexed hereto as Appendix B is a certificate signed by two of the
present officers of the Fund under its corporate seal, setting forth the names
and signatures of the present authorized persons. The Fund agrees to notify the
Custodian promptly if any such present authorized person ceases to be an
authorized person and to furnish to the Custodian a new certificate in similar
form

<PAGE>

in the event that other or additional authorized persons are elected or
appointed. Until such new certificate shall be received, the Custodian shall be
fully protected in acting under the provisions of this Agreement upon oral
instructions or signatures of the present authorized persons as set forth in
such annexed certificate or upon oral instructions or the signatures of the
present authorized persons as set forth in a subsequently issued certificate.

6. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at One
Wall Street, New York, New York 10015, Attn: Institutional Custody
Administration Department or at such other place as the Custodian may from time
to time designate in writing.

7. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given if addressed
to the Fund and mailed or delivered to it at its office, at 120 Wall Street, New
York, New York 10005, or at such other place as the Fund may from time to time
designate in writing.

8. This Agreement may not be amended or modified in any manner except by
a written agreement executed by both parties with the same formality as this
Agreement, and authorized and approved by a resolution of the Board of Directors
of the Fund.

9. The term "money market securities" shall be deemed to include, but not
be limited to, debt obligations issued or guaranteed as to interest and
principal by the Government of the United States or agencies or
instrumentalities thereof, bank deposits, certificates of deposit, commercial
paper and bankers' acceptances, where the purchase or sale of such securities
normally requires settlement in federal funds on the same day as such purchase
or sale.

10. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigned; provided, however, that
this Agreement shall not be assignable by the Fund without the written consent
of the Custodian and shall not be assignable by the Custodian without the
written consent of the Fund, authorized or approved by a resolution of its Board
of Directors.

11. This Agreement shall be construed in accordance with the laws of the
State of New York.

12. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original but such counterparts shall, together,
constitute only one instrument.

<PAGE>

13. The term "written instructions" shall mean written communications by
telex or any other such system whereby the receiver of such communications is
able to verify by codes or otherwise with a reasonable degree of certainty the
authenticity of the sender of such communication.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective corporate officers, thereunto duly authorized and
their respective corporate seals to be hereunto affixed as of the day and year
first above written.

FIRST INVESTORS TAX EXEMPT FUND, INC.

By: /s/Andrew J. Donohue
--------------------------------
Andrew J. Donohue, President

ATTEST:

/s/C. Durso
- -----------------------------------
Concetta Durso, Secretary

IRIVING TRUST COMPANY

By: /s/Michael A. Mertz
--------------------------------
Michael A. Mertz
Vice President

ATTEST:

/s/Maria P. Fernandes
- -------------------------------
Assistant Secretary

- 12 -

<PAGE>

SUPPLEMENT
TO
CUSTODIAN AGREEMENT

This Supplement is added to and forms a part of the Custodian Agreement
between First Investors Insured Tax Exempt Fund, Inc. (the "Fund") and The Bank
of New York, as successor-in-interest to Irving Trust Company (the "Custodian")
dated March 7, 1985 (the "Agreement"). All defined terms used herein shall have
the meanings ascribed to them in the Agreement.

1. If the Custodian in its sole discretion advances Funds on behalf of
the Fund or any series thereof which results in an overdraft because the moneys
held by the Custodian in the separate account for the Fund or such series shall
be insufficient to pay the total amount payable upon a purchase of securities
specifically allocated to the Fund or such series, as set forth in an officer's
certificate, oral instructions or written instructions, or which results in an
overdraft in the separate account of the Fund or such series for some other
reason, or if the Fund or such series is indebted to The Bank of New York as the
issuer of any letter of credit on behalf of the Fund or such series, such
overdraft or indebtedness shall be deemed to be a loan made by the Custodian to
the Fund (allocated to the appropriate series, if any) payable on demand and
shall bear interest from the date incurred at a rate per annum (based on a 360-
day year for the actual number of days involved) equal to the Federal Funds Rate
in effect from time to time plus 1%, such rate to be adjusted on the effective
date of any change in the Federal Funds Rate, but in no event to be less than 6%
per annum. Promptly upon the occurrence of any overdraft, the Custodian will
notify the Fund of the amount of such overdraft and the series to which it
relates. In addition, the Fund hereby agrees that the Custodian shall have a
continuing lien and security interest in and to any property of the Fund or
specifically allocated the Fund's series (if applicable) at any time held by it
for the benefit of the Fund or such series or in which the Fund may have an
interest which is then in the Custodian's possession or control or in possession
or control of any third party acting in the Custodian's behalf. If, one
business day after the Custodian has demanded repayment of any overdraft or
indebtedness, the Fund fails to pay the same in full, the Custodian shall be
entitled, in its sole discretion, at any time to charge any outstanding
overdraft or indebtedness together with interest due thereon against any balance
of account standing to the Fund's or the appropriate series' credit on the
Custodian's books.

2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the Custodian)
for which it borrows money for investment or for temporary or emergency purposes
using securities held by the Custodian hereunder as collateral for such
borrowings, a notice or undertaking in the form currently employed by any such
bank setting forth the amount which such bank will loan to the Fund against
delivery of a stated amount of collateral. The Fund shall promptly deliver to
the Custodian an officer's certificate specifying with respect to each such
borrowing:

- 1 -

<PAGE>

(a) the series to which such borrowing relates (if applicable); (b) the name of
the bank, (c) the amount and terms of the borrowing, which may be set forth by
incorporating by reference an attached promissory not, duly endorsed by the
Fund, or other loan agreement, (d) the time and date, if known, on which the
loan is to be entered into, (e) the date on which the loan becomes due and
payable, (f) the total amount payable to the Fund on the borrowing date, (g) the
market value of securities to be delivered as collateral for such loan,
including the name of the issuer, the title and the number of shares or the
principal amount of any particular securities, and (h) a statement specifying
whether such loan is for investment purposes or for temporary or emergency
purposes and that such loan is in conformance with the Investment Company Act of
1940 and the Fund's prospectus. The Custodian shall deliver on the borrowing
date specified in an officer's certificate the specified collateral and the
executed promissory note, if any, against delivery by the lending bank of the
total amount of the loan payable, provided that the same conforms to the total
amount payable as set forth in the officer's certificate. The Custodian may, at
the option of the lending bank, keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the lending bank by
virtue of any promissory note or loan agreement. The Custodian shall deliver
such securities as additional collateral as may be specified in an officer's
certificate to collateralize further any transaction described in this
paragraph. If the Custodian keeps the collateral in its possession, it shall
release such collateral as may be specified in a notice or undertaking in the
form currently used by the lending bank, provided that the same conforms to the
total amount set forth in an officer's certificate. The Fund shall cause all
securities released from collateral status to be returned directly to the
Custodian, and the Custodian shall receive from time to time such return of
collateral as may be tendered to it. In the event that the Fund fails to
specify in an officer's certificate the series (if applicable), the name of the
issuer, the title and number of shares or the principal amount of any particular
securities to be delivered as collateral by the Custodian, the Custodian shall
not be under any obligation to deliver any securities.

3. This Supplement shall be effective as of the date hereof upon
execution by the parties hereto, and any reference to the Agreement shall be a
reference to the Agreement as supplemented hereby.

4. In the event of any conflict between the provisions of the Agreement
and the provisions of this Supplement, the provisions of this Supplement shall
control.

5. With respect to any obligations of the Fund on behalf of a series
arising out of this agreement, including, without limitation, the obligations
arising under this Supplement, the Custodian shall look for payment or
satisfaction of any obligation solely to the assets and property of the series
to which such obligation relates as though the Fund had separately contracted
with the Custodian by separate written instrument with respect to each series.

6. Notwithstanding the provisions of any applicable law, including
without limitation the Uniform Commercial Code, the remedy set

- 2 -

<PAGE>

forth in this Section 1 shall be the only right or remedy to which the Custodian
is entitled with respect to the lien and security interest granted pursuant to
this Section 1. Without limiting the foregoing, the Custodian hereby waives and
relinquishes all contractual and common law rights of set off to which it may
now or hereafter be or become entitled with respect to any obligations of the
Fund to the Custodian arising under the Supplement.

IN WITNESS WHEREOF, the parties hereto have executed this SUPPLEMENT as of
the date first above written.

First Investors Insured Tax Exempt Fund, Inc.

By:/s/C. Durso
-------------------------------------------
Title: Vice President & Secretary

ATTEST:

/s/Susan I. Grant
- ------------------

THE BANK OF NEW YORK

By: /s/S. Grunston
------------------------------------------
Title: Vice President

ATTEST:

/s/Octavio Cabrero
- ------------------

- 3 -

<PAGE>

ADMINISTRATION AGREEMENT

This Agreement, dated as of the 14th of September 1979, made by and between
FIRST INVESTORS TAX EXEMPT FUND, INC. (the Fund), a corporation duly organized
and existing under the laws of the State of Maryland; FIRST INVESTORS MANAGEMENT
COMPANY, INC. (FIMCO), a corporation duly organized and existing under the laws
of the State of New York; FIRST INVESTORS CORPORATION (FIC), a corporation duly
organized and existing under the laws of the State of New York; ADMINISTRATIVE
DATA MANAGEMENT CORP. (ADM), a corporation duly organized and existing under the
laws of the State of New York.

WITNESSETH THAT:

WHEREAS, FIMCO and FIC are the national distributors of the shares of the
Fund; and

WHEREAS, ADM has agreed to act as transfer agent of the Fund, as its
dividend disbursing agent, and as administrator of the Dividend Reinvestment,
Share Accumulation and Systematic Withdrawal Accounts of the Fund, and ADM also
agreed to act for the Fund in other respects as hereinafter stated; and

WHEREAS, the parties hereto desire to set forth certain terms relating to
the activities of ADM under this Agreement.

NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto, intending to be legally bound, do hereby
agree as follows:

THE TRANSFER AGENCY

Section 1. The Fund hereby appoints ADM as its transfer agent, and ADM
accepts such appointment and agrees to act in such capacity upon the terms set
forth in this Agreement.

Section 2. ADM will maintain stock registry records in the usual form
in which it will note the issuance and redemption of Shares and the issuance and
transfer of Share Certificates, and is also authorized to maintain an account
entitled Unissued Share Certificate Account in which it will record the Shares
and fractions issued and outstanding from time to time for which issuance of
Share Certificates is deferred. ADM is also authorized to keep records, which
will be part of the stock transfer records, as well as its records of the Plans,
in which it will note the names and registered addresses of Planholders, and the
number of shares and fractions from time to time owned by them for which no
Share Certificates are outstanding. Each Shareholder or Planholder whether he
holds one or more Share Certificates or owns Shares held

-1-

<PAGE>

under one or more Plans, or whether he holds or owns Shares by both methods,
will be assigned a single account number.

Section 3. Whenever Shares are purchased for Planholders, the Fund
authorizes ADM to dispense with the issuance and countersignature of Share
Certificates. In such case ADM, as transfer agent, shall merely note on its
stock registry records the issuance of the Shares and fractions, (if any), shall
credit the Unissued Share Certificate Account with the Shares and fractions to
the respective Planholders. Likewise, whenever ADM has occasion to surrender
for redemption Shares and fractions owned by Planholders, it shall be
unnecessary to issue Share Certificates for redemption purposes. The Fund
authorizes ADM in such cases to process the transactions by appropriate entries
in its stock transfer records, and debiting of the Unissued Share Certificate
Account and the record of issued Shares outstanding. Whenever Planholders are
entitled to the issuance of Share Certificates for Shares held under Plans, the
Fund authorizes ADM as transfer agent, to countersign Share Certificates for
issuance and delivery, and to debit the Unissued Certificate Account.

Section 4. ADM in its capacity as transfer agent will, in addition to
the duties and functions above-mentioned, perform the usual duties and functions
of a stock transfer agent for a corporation. It will countersign for issuance
or reissuance of Share Certificates representing original issue or reissued
treasury Shares as directed by the Written Instructions of the Fund, and will
transfer Share Certificates registered in the name of Shareholders from one
Shareholder to another in the usual manner. ADM may rely conclusively and act
without further investigation upon any list, instruction, certification,
authorization, Share Certificate or other instrument or paper believed by it in
good faith to be genuine and unaltered, and to have been signed, countersigned,
or executed by a duly authorized person or persons, or upon the instructions of
any Officer of the Fund, or upon the advice of counsel for the Fund or for ADM.
ADM may record any transfer of Share Certificates which is believed by it in
good faith to have been duly authorized or may refuse to record any transfer of
Share Certificates if in good faith ADM in its capacity as transfer agent deems
such refusal necessary in order to avoid any liability either to the Fund or
ADM. The Fund agrees to indemnify and hold harmless ADM from and against any
and all losses, costs, claims and liability which it may suffer or incur by
reason of so relying or acting or refusing to act in good faith.

THE DIVIDEND DISBURSEMENT AGENCY

Section 5. Upon declaration of each dividend and each capital gains
distribution by the Board of Directors of the Fund, the Fund shall notify ADM of
the date of such declaration, the amount payable per share, the record date for
determining the

-2-

<PAGE>

Shareholders entitled to payment, the payment date, and the reinvestment date,
the price for which is to be used to purchase Shares for reinvestment.

Section 6. On or before each payment date, the Fund will transfer, or
cause the Custodian to transfer, to ADM in its capacity as dividend disbursing
agent, the total amount of the dividend or distribution currently payable and
ADM in such capacity will on the designated payment date mail distribution
checks to the Shareholders for the proper amounts payable to them except as
follows:

(a) Dividends and capital gains distributions directed to be reinvested
under Plans will be transferred to ADM in its capacity as administrator for
application as provided in Section 11.

ADMINISTRATION OF THE PLANS

Section 7. The Fund, FIMCO and FIC hereby appoint ADM as administrator
of the Plans, and ADM accepts such appointment and agrees to act in such
capacity upon the terms set forth in this Agreement. As provided Section 2, ADM
will maintain records, which will be part of the stock registry records as well
as its records of the administration of the Plans, in which it will note the
transactions effected for the respective Planholders and the number of Shares
and fractions from time to time owned by them for which no Share Certificates
are outstanding.

Section 8. FIMCO, FIC and the Fund will from time to time keep ADM
fully informed of the names of all Planholders who are entitled to purchase
Shares at reduced offering prices and of the respective prices which are
applicable to each of such Planholders. ADM may conclusively rely on such
information in placing orders for Shares on behalf of Planholders.

Section 9. It will be the practice of ADM to process payments by
planholders received by its mutual funds department in acceptable form until the
time of the closing of the New York Stock Exchange on each day on which said
exchange is open since the same time on the prior business day in which said
exchange was open, and to obtain from FIMCO, FIC or the Fund a quotation (on
which it may conclusively rely) as of the close of the said exchange. ADM will
proceed to calculate the amount available for investment in Shares at the public
offering price so quoted, (and, if applicable), the amounts to be invested as
between commissions of dealers, shares of FIMCO, or FIC and net asset value to
be deposited with the Custodian. ADM while the public offering price so quoted
is still in effect, will, as agent for sundry Planholders, place an order with
FIMCO or FIC for the proper number of Shares and fractions, will advise FIMCO or
FIC of the breakdown of the total purchase price as between discount of dealers,
shares of FIMCO or FIC and

-3-

<PAGE>

net asset value and will confirm said figures to FIMCO or FIC in writing.

Section 10. ADM will thereupon set aside the commissions of dealers, and
share of FIMCO and FIC and will pay over the balance available (net asset value)
to the custodian and will furnish said custodian with the Statements required by
the Custodian Agreement. Said Custodian will deposit the net asset value in the
Principal Account under the Custodian Agreement. ADM will credit the Bank's
account of FIMCO or FIC for its share. The proper number of Shares and
fractions will then be issued and credited to the Unissued Certificate Account,
and the Shares and fractions purchased for each Planholder will be credited to
his separate account. ADM will thereupon mail to each Planholder a confirmation
of the purchase, with copies to the Fund and the proper dealers, if the Fund so
requests. Such confirmation will show the prior and new share balance, the
Shares held under the Plans and Shares (if any) for which Stock Certificates are
outstanding, the amount invested, the price paid and other data.

ADM will remit commissions to the proper dealers weekly or at other
convenient intervals, as agreed upon between the Fund and ADM.

Section 11. As and when the Fund declares dividends or capital gains
distributions, it will promptly quote to ADM the net asset value per share at
the close of business in the reinvestment date, whereupon as soon as it can
calculate the total of such dividend or distributions it will receive for
reinvestment, ADM will advise the Fund of the amount which will be available for
reinvestment on the payment date and the number of Shares and fractions to be
issued. Upon receipt of the amount of the dividends or distributions to be
reinvested under Plans, ADM will pay over such amount to the Custodian for
deposit in the Principal Account under the Custodian Agreement, whereupon the
Shares and fractions purchased for the Plans will be issued pursuant to a
Statement of ADM and will be credited to the Unissued Certificate Account. ADM
will credit the Shares and fractions so purchased to the separate accounts
maintained for the respective Planholders, and will promptly mail to each
Planholder a confirmation of the purchase, with a copy to the Fund, showing the
prior and new share balance.

Section 12. Whenever a Shareholder shall deposit Shares represented by
Share Certificates in an investment plan or systematic withdrawal plan or other
plan permitting deposit of Shares thereunder, ADM as transfer agent is
authorized upon receipt of Share Certificates registered in the name of the
Shareholder, or if not so registered in due form for transfer, to cancel such
Share Certificates, to debit the individual stock accounts and to credit the
Shares to the Unissued Certificate Account. ADM as plan

-4-

<PAGE>

administrator will credit the Shares to be deposited to the proper plan
accounts. In the event that a Planholder shall desire to deposit under a
systematic withdrawal plan Shares held in an investment plan or other like plan,
ADM will accomplish such deposit by proper debiting and crediting of plan
accounts.

Section 13. ADM will administer the systematic withdrawal plans for the
Planholders. ADM will note in such accounts the share balances from time to
time, the additional Shares purchased with the reinvested dividends and
distributions, and the Shares redeemed to provide the withdrawal payments.
Confirmations will be mailed to the Planholders reflecting each transaction,
with copies to the Fund.

Section 14. Whenever ADM shall have received requests from Planholders
to redeem Shares and remit proceeds, or whenever ADM is required to redeem
Shares to make withdrawal payments under systematic withdrawal plans or the
like, ADM will advise the Fund that it has Shares for redemption, stating the
number of Shares and fractions to be redeemed. The Fund will then quote to ADM
the applicable net asset value of redemption price, whereupon ADM will furnish
the Fund with an appropriate confirmation of the redemption and will process the
redemption by filing with the Custodian an appropriate statement of ADM as may
be required by the Custodian Agreement. The Custodian shall be authorized to
pay over to ADM as administrator, the total redemption price stated in the
Statement of ADM for proper distribution and application. The stock registry
books recording outstanding Shares, the Unissued Certificate Account and the
individual accounts of the Shareholders shall be properly debited.

Section 15. The practices and procedures of ADM and the Fund above
outlined in Sections 7 to 14, inclusive, may be altered or modified from time to
time as may be mutually agreed by the parties to this Agreement, so long as the
intent and purposes of the Plans, as stated from time to time in the prospectus
of the Fund, are observed. For special cases, the parties hereto may adopt such
procedures as may be appropriate or practical under the circumstances and ADM
may conclusively assume that any special procedure which has been approved by
the Fund, does not conflict with or violate any requirements of its Articles of
Incorporation, By-Laws or prospectus, or any rule,
regulation or requirement of any regulatory body.

Section 16. ADM in acting for Planholders, or in any other capacity set
forth in this Agreement, shall incur no liability for any actions taken or
omitted in good faith, nor shall ADM be personally liable for any taxes,
assessments or governmental charges which may be levied or assessed on any basis
whatsoever in connection with the administration of the Plans, excepting only
for

-5-

<PAGE>

taxes assessed against it in its corporate capacity out of its compensation
hereunder.

MISCELLANEOUS

Section 17. In addition to the services as transfer agent, dividend
disbursing agent and administrator as above set forth, ADM will perform other
services for the Fund as agreed from time to time, including but not limited to
preparation of Federal 1099 forms, mailing of quarterly and semi-annual reports
of the Fund, preparation of one annual list of Shareholders, and preparing
notices of Shareholders meeting, proxies and proxy statements.

Section 18. The Fund, FIMCO and FIC agree to pay ADM compensation for
its services and to reimburse it for expenses, as set forth in Schedule A
attached hereto, or as shall be set forth in amendments to such schedule
approved by the Fund, FIMCO FIC and ADM. Said payments and reimbursements shall
be allocated between the Fund, FIMCO and FIC as they may agree.

Section 19. ADM may from time to time in its sole discretion delegate
some or all of its duties hereunto to any affiliate(s) which shall perform such
functions as the agent of ADM. To the extent of such delegation, the term "ADM"
in this Agreement shall be deemed to refer to both ADM and such affiliate(s) or
either of them, as the context may indicate.

Section 20. 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 observance on which ADM is 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 New York Stock Exchange and
the Bank are open.

Section 21. All terms used herein, which are defined in the Custodian
Agreement, shall have the same meanings as set forth therein. In addition, the
following terms as used in this Agreement shall have the meaning set forth below
unless the context otherwise requires:

Plan: The term Plan shall include such Dividend Reinvestment
Accounts, Share Accumulation Accounts, Systematic Withdrawal Plans and other
types of plans or accounts in form acceptable to ADM, which the Fund may from
time to time adopt and make available to its Shareholders, including plans or
accounts adopted for pension and profit sharing plans established by self-
employed individuals, partnerships, individuals, corporations and not for profit
organizations.

-6-

<PAGE>

Planholder: The term Planholder shall mean a Shareholder who at the time
of reference is participating in a Plan.

Section 22. This Agreement may be terminated by any party to this
Agreement by giving at least sixty (60) days advance written notice stating when
thereafter such termination shall be effective. Such termination shall only be
effective with respect to the rights, obligations and duties as between the non-
terminating parties. In case such notice of termination is given by either ADM
or the Fund, the Board of Directors of the Fund shall, by resolution duly
adopted, promptly appoint a successor to ADM, to serve upon the terms set forth
in this Agreement as then amended and supplemented. Unless and until a
successor to ADM has been appointed as above, provided ADM shall continue to
perform according to the terms of this Agreement and shall be entitled to
receive all the payments and reimbursement to which it is entitled under this
Agreement.

Notwithstanding the foregoing, ADM agrees that it will not terminate this
Agreement prior to May 1, 1980.

Section 23. This Agreement may be executed in two or more counterparts,
each of which when so executed shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.

Section 24. 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 the Fund without the written
consent of the Fund, authorized or approved by a resolution of its Board of
Directors.
Section 25. This Agreement shall be governed by the laws of the State of
New York.

-7-

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized officers and their corporate seals hereunto duly
affixed and attested, as of the day and the year first above written.

ATTEST: FIRST INVESTORS TAX EXEMPT FUND, INC.

/s/Andrew J. Donohue BY: /s/Joseph M. O'Brien
- ------------------------------ -----------------------------
Andrew J. Donohue, Secretary Joseph M. O'Brien, President
[Seal]

ATTEST: FIRST INVESTORS MANAGEMENT COMPANY, INC.

/s/Andrew J. Donohue BY: /s/Joseph M. O'Brien
- ------------------------------ ---------------------------
Andrew J. Donohue, Secretary Joseph M. O'Brien, President
[Seal]

ATTEST: FIRST INVESTORS CORPORATION

/s/Andrew J. Donohue BY: /s/David D. Grayson
- ------------------------------ ---------------------------
Andrew J. Donohue, Secretary David D. Grayson, President
[Seal]

ATTEST: ADMINISTRATIVE DATA MANAGEMENT CORP.

/s/Andrew J. Donohue BY: /s/David D. Grayson
- ------------------------------ -----------------------------
Andrew J. Donohue, Secretary David D. Grayson, President
[Seal]

-8-

<PAGE>

ADMINISTRATION AGREEMENT
SCHEDULE A

Compensation and charges of Administrative Data Management Corp. for
services as Transfer Agent, Dividend Disbursing Agent and Plan Administration,
and for other services under the Administration Agreement.

Opening New Account $5.00 for each account

Processing Payments $0.75 for each payment*

Processing Share Certificates $3.00 per certificate issued

General Account Maintenance $0.65 per account per month

Legal Transfers of Shares $10.00 per transfer

Dividend Processing $0.45 per account per dividend
declared

Partial Withdrawals and
Complete Liquidations $5.00 per transaction

Reports Required by
Governmental Authorities $1.00 for each account

Exchange Fee $5.00 for each exchange of shares into a
Fund

Systematic Withdrawal Plans $1.00 for each SWP check*

OUT-OF-POCKET EXPENSES: In addition to the above charges, the Fund, First
Investors Management Company, Inc. or First Investors Corporation shall
reimburse Administrative Data Management Corp. for all out-of-pocket costs
including but not limited to postage, insurance, forms relating to shareholders
of the Fund, envelopes and other similar items, and will also reimburse
Administrative Data Management Corp. for counsel fees, including fees for the
preparation of the Administration Agreement and review of prospectus and
application forms.

THE ABOVE FEES AND OUT-OF-POCKET EXPENSES APPLY TO THE FOLLOWING FUNDS:

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 SERIES FUND, FIRST INVESTORS SERIES FUND II, INC., FIRST INVESTORS
U.S. GOVERNMENT PLUS FUND - 1st, 2nd & 3rd SERIES, EXECUTIVE INVESTORS TRUST

* Administrative Data Management Corp. (ADM) bills the Fund. ADM is then paid
by the Fund, after which FIMCO reimburses the Fund.

-9-

<PAGE>

Consent of Independent Certified Public Accountants

First Investors Insured Tax Exempt 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. 2-57473) of our report dated
January 31, 1996 relating to the December 31, 1995 financial statements of First
Investors Insured Tax Exempt Fund, Inc., which are included in said Registration
Statement.

/s/Tait, Weller & Baker

TAIT, WELLER & BAKER

Philadelphia, Pennsylvania
April 16, 1996

<PAGE>

First Investors Insured Tax Exempt Fund, Inc.

POWER OF ATTORNEY

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

IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st
day of September, 1995.

/s/Robert F. Wentworth
------------------------------
Robert F. Wentworth
<PAGE>

First Investors Insured Tax Exempt Fund, Inc.

POWER OF ATTORNEY

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

IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st
day of September, 1995.

/s/John T. Sullivan
------------------------------
John T. Sullivan

<PAGE>

First Investors Insured Tax Exempt Fund, Inc.

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st
day of September, 1995.

/s/Herbert Rubinstein
------------------------------
Herbert Rubinstein

<PAGE>

First Investors Insured Tax Exempt Fund, Inc.

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st
day of September, 1995.

/s/James M. Srygley
------------------------------
James M.Srygley

<PAGE>

First Investors Insured Tax Exempt Fund, Inc.

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st
day of September, 1995.

/s/Rex R. Reed
------------------------------
Rex R. Reed

<PAGE>

First Investors Insured Tax Exempt Fund, Inc.

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st
day of September, 1995.

/s/Kathryn S. Head
------------------------------
Kathryn S. Head

<PAGE>
First Investors Insured Tax Exempt Fund, Inc.

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st
day of September, 1995.

/s/Roger L. Grayson
------------------------------
Roger L. Grayson

<PAGE>

First Investors Insured Tax Exempt Fund, Inc.

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st
day of September, 1995.

/s/Glenn O. Head
------------------------------
Glenn O. Head

<PAGE>

First Investors Insured Tax Exempt Fund, Inc.

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has executed this instrument this 21st
day of September, 1995.

/s/James J. Coy
------------------------------
James J. Coy

<PAGE>

AMENDED AND RESTATED
CLASS A DISTRIBUTION PLAN
OF
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.

WHEREAS, FIRST INVESTORS INSURED TAX EXEMPT FUND, INC. (the "Fund") is
a diversified open-end management investment company duly registered with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended (the "1940 Act");

WHEREAS, the Fund employs one or more broker-dealers as distributors
of its shares ("Underwriter") pursuant to a written agreement ("Underwriting
Agreement");

WHEREAS, Rule 12b-1 under the 1940 Act permits registered investment
companies to bear certain expenses associated with the distribution of their
shares;

WHEREAS, the Fund offers multiple classes of shares for purchase by
shareholders;

WHEREAS, the Board of Directors has determined that the payment of
certain expenses involved in distributing Class A shares of the Fund and the
servicing or maintenance of such Class A shareholder accounts would be
beneficial to the Fund and its shareholders; and

WHEREAS, the Fund wishes to adopt a plan under Rule 12b-1 to permit it
to pay some of the expenses involved in distributing its Class A shares and the
servicing or maintenance of its Class A shareholder accounts.

NOW THEREFORE, in consideration of the foregoing, the Fund hereby
adopts the following distribution plan in accordance with Rule 12b-1 (the "Class
A Plan"):

1. PAYMENT OR REIMBURSEMENT. Pursuant to one or more Underwriting
Agreements which the Fund can enter into from time to time and the Class A Plan,
the Fund periodically may pay directly or reimburse the Underwriter for expenses
incurred in the distribution of Class A Fund shares ("Distribution Expenses")
and the servicing or maintenance of Class A Fund shareholder accounts ("Service
Expenses"). The Fund may pay for or reimburse such expenses, as determined from
time to time by the Board of Directors of the Fund, in an amount up to 0.30 of
1% of its average daily net assets attributable to Class A shares (referred to
herein as the "Class A 12b-1 fee") on an annualized basis each fiscal year,

- 1 -
<PAGE>

payable monthly, or at such other intervals as shall be determined by the Board
of Directors in the manner provided for approval of the Class A Plan in
paragraph 5(a).

2. EXPENSES FOR DISTRIBUTION AND SHAREHOLDER SERVICING.
"Distribution Expenses" are expenses paid or incurred for the distribution of
the Fund's Class A shares, including continuing payments to registered
representatives and dealers for sales of the Fund's Class A shares, the costs of
printing and dissemination of sales material or literature, prospectuses used as
sales material and reports or proxy material prepared for the Fund's Class A
shareholders to the extent that such material is used in connection with the
sales of the Fund's Class A shares, and general overhead of an Underwriter.
"Service Expenses" are expenses paid or incurred for services related to the
maintenance and servicing of existing Class A shareholder accounts, including
shareholder liaison services, whether provided by individual representatives,
dealers, an Underwriter or others entitled to receive such fees.

3. EXPENSES IN EXCESS OF THE ANNUAL RATE. An Underwriter may pay
from its own resources for Distribution and Service Expenses whether or not such
expenses exceed the Class A 12b-1 fee.

4. REPORTS TO DIRECTORS. At least quarterly and annually in each
year that the Class A Plan remains in effect, the Underwriter shall prepare and
furnish to the Board of Directors of the Fund a written report of the amounts so
expended and the purposes for which such expenditures were made under the Class
A Plan.

5. APPROVAL OF THE PLAN. The Class A Plan shall become effective
immediately upon the approval by the majority vote of (a) the Fund's Board of
Directors and of the Directors who are not interested persons of the Fund,
within the meaning of the 1940 Act, and who have no direct or indirect financial
interest in the operation of the Class A Plan or in any agreements related to
the Class A Plan (the "Independent Directors") cast in person at a meeting
called for the purpose of voting on such Class A Plan and (b) the outstanding
Class A voting securities of the Fund, voting separately from any other class of
the Fund, which for this purpose is defined in Section 2(a)(42) of the 1940 Act
and means the affirmative vote of 67% or more of the voting shares present at
such meeting, if more than 50% of the outstanding shares of the Fund are
represented at the meeting in person or by proxy, or more than 50% of the
outstanding shares of the Fund, whichever is less.

6. TERM. The Class A Plan shall remain in effect for one year from
the date of its approval in accordance with Rule 12b-1(b) of the 1940 Act and
may continue thereafter only if the Class

- 2 -

<PAGE>

A Plan is approved at least annually by a majority of the Directors of the Fund
and a majority of the Independent Directors cast in person at a meeting called
for the purpose of voting on the Class A Plan.

7. TERMINATION. The Class A Plan can be terminated at any time
without the payment of any penalty by vote of a majority of the Independent
Directors or by vote of a majority of the outstanding Class A voting securities
of the Fund, voting separately from any other class of the Fund (as defined in
Section 2(a)(42) of the 1940 Act), on not more than 60 days' written notice to
any other party to the Class A Plan.

8. PAYMENT OF INTEREST; CARRYOVER OF EXPENSES. The Fund will not
pay, directly or indirectly, interest, carrying charges, or other financing
costs in connection with the Class A Plan. Expenses of the Class A Plan will
not be carried over from year to year. If the Class A Plan is terminated or not
continued, unreimbursed amounts expended by the Underwriter in excess of the
Class A 12b-1 fee may not be paid to the Underwriter in subsequent years.

9. AMENDMENTS. Any material amendment to the Class A Plan may not
be instituted without the approval of a majority of the Fund's Board of
Directors and the Independent Directors and a majority of the outstanding Class
A voting securities of the Fund, voting separately from any other class of the
Fund (as defined in the 1940 Act). If Class B shares of the Fund are
convertible into Class A shares, and if the Fund implements any amendment to the
Class A Plan that would increase materially the amount that may be borne by the
Class A shareholders under the Class A Plan, then Class B shares will stop
converting into Class A shares unless the holders of a majority of Class B
shares, voting separately as a class, (as defined in the 1940 Act), also approve
the amendment.

10. NOMINATION OF DIRECTORS. While the Class A Plan shall be in
effect, the selection and nomination of the Independent Directors of the Fund
shall be committed to the discretion of the Independent Directors then in
office.

11. PAYMENTS OUTSIDE OF THE PLAN. To the extent any payments made by
the Fund to its investment advisor, its transfer agent or any company affiliated
with an Underwriter, may be deemed to be indirect financing of any monies paid
by the Underwriter or investment advisor out of their own assets for
distribution expenses, such payments are permissible under the Class A Plan.
Permissible payments may include, but are not limited to, the payment by the
Fund of investment advisory and service fees.

- 3 -

<PAGE>

12. TREATMENT OF EXPENSES. The Directors, including all of the
Independent Directors, have determined that the amounts paid under the Class A
Plan will not be an operating expense of the Fund. However, while it is
expected that the Fund's payments under the Class A Plan will be excluded from
the Fund's total expenses for purposes of determining compliance with a state
expense limitation, whether any expenditure under the Class A Plan is subject to
a state expense limitation will depend upon the nature of the expenditure and
the terms of the state law, regulation or order imposing the limitation. In any
event, the amount paid under the Class A Plan will be an expense for accounting
purposes.

Dated: November 1990, as amended and restated as of
September 22, 1994

- 4 -

<PAGE>

CLASS B DISTRIBUTION PLAN
OF
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.

WHEREAS, FIRST INVESTORS INSURED TAX EXEMPT FUND, INC. (the "Fund") is a
diversified open-end management investment company duly registered with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended (the "1940 Act");

WHEREAS, the Fund employs one or more broker-dealers as distributors of its
shares ("Underwriter") pursuant to a written agreement ("Underwriting
Agreement");

WHEREAS, Rule 12b-1 under the 1940 Act permits registered investment
companies to bear certain expenses associated with the distribution of their
shares;

WHEREAS, the Fund offers multiple classes of shares for purchase by
shareholders;

WHEREAS, the Board of Directors believes that payment of certain expenses
associated with the distribution of Class B shares of the Fund and the servicing
or maintenance of such Class B shareholder accounts would be beneficial to the
Fund and its shareholders; and

WHEREAS, the Fund, on behalf of its separate designated series presently
existing or hereafter established (individually and collectively, "Series"),
wishes to adopt a plan under Rule 12b-1 to permit each Series to pay some of the
expenses involved in distributing its Class B shares and the servicing or
maintenance of its Class B shareholder accounts.

NOW, THEREFORE, in consideration of the foregoing, the Fund hereby adopts
the following distribution plan in accordance with Rule 12b-1 (the "Class B
Plan"):

1. PAYMENT OF THE FEE. Pursuant to one or more Underwriting Agreements
which the Fund can enter into from time to time and this Class B Plan, each
Series shall pay as compensation for the Underwriter's services an annualized
Rule 12b-1 fee of an aggregate of 1% of each Series' average daily net assets
attributable to Class B shares (referred to herein as the "Class B 12b-1 fee").
The Class B 12b-1 fee is payable by each Series monthly or at such intervals as
shall be determined by the Board of Directors in the manner provided for
approval of this Class B Plan in paragraph 5(a). The Class B 12b-1 fee shall
consist of a distribution fee and a service fee, in the following proportions:
(a) the distribution fee shall be at the rate of 0.75% of the average daily net
assets attributable to Class B shares, and (b) the service fee shall be at the
rate of 0.25% of the average daily net assets attributable to Class B shares.
The Class B 12b-1 fee shall be payable regardless of whether that amount exceeds
or is less than the actual expenses incurred by the Underwriter in distributing
Class B shares of such Series in a particular year.

- 1 -

<PAGE>

2. EXPENSES DIFFERENT FROM ANNUAL RATE. To the extent that the Class B
12b-1 fee paid by each Series in a particular year exceeds actual expenses
attributable to Class B Shares incurred by an Underwriter in that year, the
Underwriter may realize a profit in that year. If the expenses attributable to
Class B Shares incurred by an Underwriter in a particular year are greater than
the Class B 12b-1 fee, the Underwriter may incur a loss in that year and may not
recover from such Series such excess of expenses attributable to Class B Shares
over the Class B 12b-1 fee unless actual expenses attributable to Class B shares
incurred in a subsequent year in which the Class B Plan remained in effect were
less than the Class B 12b-1 fee paid under the Class B Plan in that year.

3. DISTRIBUTION AND SERVICE FEES. "Distribution" fees are fees paid for
the distribution of the Series' Class B shares, including continuing payments to
registered representatives and dealers for sales of such shares, the costs of
printing and dissemination of sales material or literature, prospectuses used as
sales material and reports or proxy material prepared for the Series' Class B
shareholders to the extent that such material is used in connection with the
sales of the Series' Class B shares, and general overhead of an Underwriter.
"Service" fees are fees paid for services related to the maintenance and
servicing of existing Class B shareholder accounts, including shareholder
liaison services, whether provided by individual representatives, dealers, an
Underwriter or others entitled to receive such fees.

4. REPORTS TO DIRECTORS. Quarterly and annually in each year that the
Class B Plan remains in effect, the Treasurer of the Fund shall prepare and
furnish to the Board of Directors of the Fund a written report of the amounts so
expended and the purposes for which such expenditures were made under the Class
B Plan. The Board of Directors will promptly review the Treasurer's report.

5. APPROVAL OF PLAN. The Class B Plan shall become effective with
respect to any Series of the Fund immediately upon the approval by the majority
vote of (a) the Fund's Board of Directors and of the Directors who are not
"interested persons" of the Fund, within the meaning of the 1940 Act, and have
no direct or indirect financial interest in the operation of the Class B Plan or
in any agreements related to the Class B Plan (the "Independent Directors") cast
in person at a meeting called for the purpose of voting on such Class B Plan and
(b) the outstanding Class B voting securities of such Series, voting separately
from any other class or Series of the Fund, which for this purpose is defined in
Section 2(a)(42) of the 1940 Act and means the lesser of (1) more than 50% of
the outstanding shares, or (2) 67% or more of the shares present or represented
at a shareholders meeting if more than 50% of the outstanding shares are
represented at the meeting in person or by proxy, whichever is less.

6. TERMINATION OF PLAN. The Class B Plan can be terminated by any Series
at any time without the payment of any penalty by vote of a majority of the
Independent Directors or by vote of a majority of the outstanding Class B voting
securities of such Series, voting separately from any other class or Series of
the Fund (as defined in Section 2(a)(42) of the 1940 Act), on not more than 60
days' written notice to any other party to the Class B Plan.

- 2 -

<PAGE>

7. AMENDMENTS. Any amendment to increase materially the cost to any
Series of the Fund under the Class B Plan may not be instituted without the
approval of the outstanding Class B voting securities of such Series, voting
separately from any other class or Series of the Fund (as defined in Section
2(a)(42) of the 1940 Act).

8. NOMINATION OF DIRECTORS. While the Class B Plan shall be in effect,
the selection and nomination of the Independent Directors shall be committed to
the discretion of the Independent Directors then in office.

9. TERM. The Class B Plan shall remain in effect with respect to any
Series for one year from the date of its approval by the Class B shareholders of
such Series and may continue thereafter only if the Class B Plan is approved at
least annually by either the Board of Directors or by a vote of a majority of
the outstanding Class B voting securities of such Series, voting separately from
any other class or Series of the Fund, and in either case by a majority vote of
the Independent Directors, cast in person at a meeting called for the purpose of
voting on the Class B Plan.

10. PAYMENTS OUTSIDE OF THE PLAN. To the extent any payments made by any
Series to its investment advisor, its transfer agent or any company affiliated
with an Underwriter, may be deemed to be indirect financing of any monies paid
by the Underwriter or investment advisor out of their own assets for
distribution expenses, such payments are permissible under the Class B Plan.
Permissible payments may include, but are not limited to, the payment by the
Series of investment advisory and service fees.

11. TREATMENT OF EXPENSES. The Directors, including all of the
Independent Directors, have determined that the Class B 12b-1 fee will not be an
operating expense of the Series. However, while it is expected that the
payments under the Class B Plan will be excluded from each Series' total
expenses for purposes of determining compliance with any state expense
limitation, whether any expenditure under the Class B Plan is subject to any
such state expense limitation will depend upon the nature of the expenditure and
the terms of the state regulation imposing the limitation. In any event, the
amounts paid under the Class B Plan will be an expense for accounting purposes.

Dated: September 22, 1994

- 3 -

<PAGE>

Yields for First Investor's Funds are calculated using the following formula:

2(((((a-b) + ((cd)-e))+1)-)-1)

Where:

a = dividends and interest earned during the 30 day period.

b = expenses accrued for the period (net of reimbursements).

c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.

d = the maximum offering price per share on the last day of the
period.

e = undeclared earned income.

The following is a list of the information used to calculate the formula for
the First Investors Insured Tax Exempt Fund, Inc. (Class B shares) as of
December 31, 1995.

*Tax
Equivalent
a b c d e Yield Yield
- - - - - ----- ----------
<S> <C> <C> <C> <C> <C> <C>
$9,594 $2,807 189,192 $10.37 $.00 4.19% 6.55%

</TABLE>

*Tax Equivalent Yields are computed assuming a maximum federal tax rate of 36%.

<PAGE>

Yields for First Investor's Funds are calculated using the following formula:

2(((((a-b) + ((cd)-e))+1)-)-1)

Where:

a = dividends and interest earned during the 30 day period.

b = expenses accrued for the period (net of reimbursements).

c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.

d = the maximum offering price per share on the last day of the
period.

e = undeclared earned income.

The following is a list of the information used to calculate the formula for
the First Investors Insured Tax Exempt Fund, Inc. (Class A shares) as of
December 31, 1995.

*Tax
Equivalent
a b c d e Yield Yield
- - - - - ----- ----------
<S> <C> <C> <C> <C> <C> <C>
$6,698,286 $1,191,475 132,166,561 $11.06 $.00 4.56% 7.13%

</TABLE>

*Tax Equivalent Yields are computed assuming a maximum federal tax rate of 36%.

<PAGE>

SEC Standardized Total Returns - Class A Shares

Average Annual Total Return and Total Return for First Investors
Funds are calculated using the following standardized formula:

Average Annual
Total Return = ((ERV DIVIDED BY P) ) - 1

Total Return = ((ERV - P) DIVIDED BY P)

WHERE: ERV = Ending redeemable value of a hypothetical
$1,000 investment made at the beginning of
1, 5, or 10 year periods (or fractional
period there of.)

P = a hypothetical initial investment of $1,000

N = number of years

The following table lists the information used to calculate the standardized
average annual total return and total return for First Investors Insured Tax
Exempt Fund, Inc. (Class A shares) as of December 31, 1995.

AVE. ANNUAL TOTAL
ERV P N TOTAL RETURN RETURN
--- - -- ------------ ------
<S> <C> <C> <C> <C> <C>
1 year: $1,087.40 $1,000.00 1.00 8.74% 8.74%

5 years: $1,344.10 $1,000.00 5.00 6.09% 34.41%

10 years: $2,026.20 $1,000.00 10.00 7.32% 102.62%

</TABLE>

<PAGE>

SEC Standardized Total Returns - Class B Shares

Average Annual Total Return and Total Return for First Investors
Funds are calculated using the following standardized formula:

Average Annual
Total Return = ((ERV DIVIDED BY P) ) - 1

Total Return = ((ERV - P) DIVIDED BY P)

WHERE: ERV = Ending redeemable value of a hypothetical
$1,000 investment made at the beginning of
1, 5, or 10 year periods (or fractional
period there of.)

P = a hypothetical initial investment of $1,000

N = number of years

TOTAL
ERV P N RETURN
--- - -- ------
<S> <C> <C> <C> <C>
1/12/95 to 12/31/95 $1,096.40 $1,000.00 .97 9.64%

</TABLE>

<PAGE>

NAV Only Total Returns - Class A Shares

Average Annual Total Return and Total Return for First Investors
Funds are calculated using the following standardized formulas:

Average Annual
Total Return = ((ERV DIVIDED BY P) ) - 1

Total Return = ((ERV - P) DIVIDED BY P)

WHERE: ERV = Ending redeemable value of a hypothetical
$1,000 investment made at the beginning of
1, 5, or 10 year periods (or fractional
period there of.)

P = a hypothetical initial investment of $1,000

N = number of years

The following table lists the information used to calculate the average annual
total return and total return for First Investors Insured Tax Exempt Fund,
Inc. (Class A shares) as of December 31, 1995.

AVE. ANNUAL TOTAL
ERV P N TOTAL RETURN RETURN
--- - - ------------- ------
<S> <C> <C> <C> <C> <C>
1 year: $1,160.10 $1,000.00 1.00 16.01% 16.01%

5 years: $1,433.60 $1,000.00 5.00 7.47% 43.36%

10 years: $2,160.90 $1,000.00 10.00 8.01% 116.09%

</TABLE>

<PAGE>

NAV Only Total Returns - Class B Shares

Average Annual Total Return and Total Return for First Investors
Funds are calculated using the following standardized formula:

Average Annual
Total Return = ((ERV DIVIDED BY P) ) - 1

Total Return = ((ERV - P) DIVIDED BY P)

WHERE: ERV = Ending redeemable value of a hypothetical
$1,000 investment made at the beginning of
1, 5, or 10 year periods (or fractional
period there of.)

P = a hypothetical initial investment of $1,000

N = number of years

The following table lists the information used to calculate the average annual
total return and total return for First Investors Insured Tax Exempt Fund, Inc.
(Class B shares) as of December 31, 1995.

TOTAL
ERV P N RETURN
--- - -- ------
<S> <C> <C> <C> <C>
1/12/95 to 12/31/95 $1,142.70 $1,000.00 .97 14.27%

</TABLE>

<PAGE>

Distribution yields for First Investor's Funds are calculated using the
following formula:

Yield = (a/b)

Where:

a = dividends declared during the last 12 months.

b = Net asset value per share on the last day of the period.

The following is a list of the information used to calculate the distribution
yield for First Investors Insured Tax Exempt Fund, Inc. (Class A shares) as of
December 31, 1995.

Distribution
a b Yield
- - -----
<S> <C> <C>
$.526 $10.37 5.07%

</TABLE>

<PAGE>

Distribution yields for First Investor's Funds are calculated using the
following formula:

Yield = (a/b)

Where:

a = dividends declared during the last 12 months.

b = Maximum offering price per share on the last day of the period.

The following is a list of the information used to calculate the distribution
yield for First Investors Insured Tax Exempt Fund, Inc. (Class A shares) as of
December 31, 1995.

Distribution
a b Yield
- - -----
<S> <C> <C>
$.526 $11.06 4.75%

</TABLE>

<PAGE>

Distribution yields for First Investor's Funds are calculated using the
folllowing formula:

Yield = (a/b)

Where:

a = dividends declared during the last 12 months.

b = Net asset value per share on the last day of the period.

The following is a list of the information used to calculate the distribution
yield for First Investors Insured Tax Exempt Fund, Inc. (Class B shares) as
of December 31, 1995.

<TABLE>
<CAPTION>
Distribution
a b Yield
- - -----
<S> <C> <C>
$.439 $10.37 4.23%

</TABLE>

<PAGE>

NAV Only Total Returns - Class B Shares

Average Annual Total Return and Total Return for First Investors Funds are
calculated using the following standardized formula:

Average Annual
Total Return = ((ERV DIVIDED BY P) ) - 1

Total Return = ((ERV - P) DIVIDED BY P)

WHERE: ERV = Ending redeemable value of a hypothetical $1,000 investment
made at the beginning of 1, 5, or 10 year periods (or
fractional period there of.)

P = a hypothetical initial investment of $1,000

N = number of years

The following table lists the information used to calculate the average
annual total return and total return for First Investors Insured Tax Exempt
Fund, Inc. (Class B shares) as of December 31, 1995.

<TABLE>
<CAPTION>
AVE. ANNUAL TOTAL
ERV P N TOTAL RETURN RETURN
--- - -- ------------ ------

<S> <C> <C> <C> <C> <C>
Life of fund: $1,142.70 $1,000.00 .97 14.79% 14.27%

</TABLE>

<PAGE>

SEC Standardized Total Returns - Class B Shares

Average Anuual Total Return and Total Return for First Investors Funds are
calculated using the following standardized formula:

Average Annual
Total Return = ((ERV DIVIDED BY P) ) - 1

Total Return = ((ERV - P) DIVIDED BY P)

WHERE: ERV = Ending redeemable value of a hypothetical $1,000 investment
made at the beginning of 1, 5, or 10 year periods (or
fractional period there of.)

P = a hypothetical initial investment of $1,000

N = number of years

<TABLE>
<CAPTION>
AVE. ANNUAL TOTAL
ERV P N TOTAL RETURN RETURN
--- - -- ------------ ------

<S> <C> <C> <C> <C> <C>
Life of fund: $1,096.40 $1,000.00 .97 9.99% 9.64%

</TABLE>

<PAGE>

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 MULTI-STATE INSURED TAX FREE FUND
FIRST INVESTORS NEW YORK INSURED TAX FREE FUND, INC.
FIRST INVESTORS SERIES FUND
FIRST INVESTORS SERIES FUND II, INC.
FIRST INVESTORS TAX-EXEMPT MONEY MARKET FUND, INC.

Plan Pursuant to Rule 18f-3

Each of the above-referenced funds (each a "Fund" and, collectively, the
"Funds") hereby adopt this Plan pursuant to Rule 18f-3 under the Investment
Company Act of 1940, as amended (the "1940 Act"), to address the differing
requirements and preferences of potential investors.

A. CLASSES OFFERED. The Funds offer the following classes of shares:

1. CLASS A. Class A shares of each Fund, other than First Investors Cash
Management Fund, Inc. and First Investors Tax-Exempt Money Market Fund, Inc.
(the "Money Market Funds") are sold with an initial sales charge of up to 6.25%
of the amount invested, which is waived for certain purchases. Class A shares
of the Money Market Funds are sold at net asset value, with no sales charge. The
minimum initial investment is $1,000, which is likewise waived for certain
purchases. However, the initial minimum investment for IRA accounts is $250 and
the initial minimum investment for shareholders who invest under a systematic
investment plan is $50. Purchases of Class A shares which aggregate at least $1
million are sold at net asset value. However, if such shares are redeemed
within 24 months of purchase, they are subject to a contingent deferred sales
charge ("CDSC") of 1.00%. Pursuant to a plan of distribution adopted pursuant
to Rule 12b-1 under the 1940 Act ("12b-1 Plan"), Class A shares are subject to a
12b-1 fee in an amount up to an annual rate of 0.30% of each Fund's average
daily net assets attributable to Class A shares, of which no more than 0.25% may
be paid as a service fee and the balance thereof paid as an asset-based sales
charge. These 12b-1 fees are paid to First Investors Corporation ("FIC") as
compensation for distribution- related expenses or shareholder services.

2. CLASS B. Class B shares are sold without an initial sales charge, but
are generally subject to a CDSC which declines in steps from 4% to 0% during a
six-year period. At the time of redemption, the CDSC will be imposed on the
lower of net asset value or the purchase price. The CDSC is waived for certain
purchases. Class B shares automatically convert into Class A shares after eight

<PAGE>

years on the basis of their relative net asset values. The minimum initial
investment is the same as that for Class A shares. Pursuant to a 12b-1 Plan,
Class B shares pay a 12b-1 fee in an amount up to an annual rate of 1.00% of
each Fund's average daily net assets attributable to Class B shares, of which no
more than 0.25% may be paid as a service fee and the balance thereof up to 0.75%
paid as an asset-based sales charge. These 12b-1 fees are paid to FIC as
compensation for distribution-related expenses or shareholder services.

B. EXPENSES. The expenses of the Funds that cannot be attributed to any one
Fund generally are allocated to each Fund based on the relative net assets of
the Funds. Certain expenses that may be attributable to a particular Fund, but
not a particular Class, are allocated based on the relative daily net assets of
each Class. Finally, certain expenses may be attributable to a particular Class
of shares of a Fund ("Class Expenses"). Class Expenses are charged directly to
the net assets of the particular Class and, thus, are borne on a pro rata basis
by the outstanding shares of that Class.

Examples of Class Expenses may include, but are not limited to, (1) 12b-1
fees, (2) transfer agent fees identified as being attributable to a specific
Class, (3) stationery, printing, postage, and delivery expenses related to
preparing and distributing materials such as shareholder reports, prospectuses,
and proxy statements to current shareholders of a Class, (4) Blue Sky
registration fees incurred by a Class, (5) Securities and Exchange Commission
registration fees incurred by a Class, (6) expenses of administrative and
personnel services as required to support the shareholders of a Class; (7)
trustees' or directors' fees or expenses incurred as a result of issues relating
to one Class, (8) accounting expenses relating solely to one Class, (9)
auditors' fees, litigation expenses, and legal fees and expenses relating to a
Class, and (10) expenses incurred in connection with shareholders meetings as a
result of issues relating to one Class.

C. CLASS DIFFERENCES. Other than the differences as a result of the Class A
and Class B 12b-1 Plans and certain shareholder purchase privileges available to
Class A shareholders (as discussed in the prospectus for each Fund), there are
no material differences in the services offered to each Class. This Rule 18f-3
Plan is qualified and subject to the terms of the then current prospectus for
the applicable Fund; provided, however, that none of the terms set forth in any
such prospectus shall be inconsistent with the terms of the Classes set forth in
this Plan. The prospectus for each Fund contains additional information about
the Classes.

D. EXCHANGE FEATURE. Exchanges are not permitted between the Classes.
However, each Class offers exchange privileges within that Class. These
exchange privileges may be modified or terminated by a Fund.

Dated: September 25, 1995

<PAGE>
<ARTICLE> 6
<CIK> 0000315177
<NAME> FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
<SERIES>
<NUMBER> 001
<NAME> CLASS A
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 1260526
<INVESTMENTS-AT-VALUE> 1384428
<RECEIVABLES> 30128
<ASSETS-OTHER> 214
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1414770
<PAYABLE-FOR-SECURITIES> 36154
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3845
<TOTAL-LIABILITIES> 39999
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1262569
<SHARES-COMMON-STOCK> 132331
<SHARES-COMMON-PRIOR> 138225
<ACCUMULATED-NII-CURRENT> 232
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (13885)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 123836
<NET-ASSETS> 1372752
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 86237
<OTHER-INCOME> 9
<EXPENSES-NET> (15347)
<NET-INVESTMENT-INCOME> 70899
<REALIZED-GAINS-CURRENT> 8127
<APPREC-INCREASE-CURRENT> 122045
<NET-CHANGE-FROM-OPS> 201071
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (71160)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6907
<NUMBER-OF-SHARES-REDEEMED> 18333
<SHARES-REINVESTED> 5532
<NET-CHANGE-IN-ASSETS> 71216
<ACCUMULATED-NII-PRIOR> 494
<ACCUMULATED-GAINS-PRIOR> (22012)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9350
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 15354
<AVERAGE-NET-ASSETS> 1348567
<PER-SHARE-NAV-BEGIN> 9.42
<PER-SHARE-NII> .52
<PER-SHARE-GAIN-APPREC> .96
<PER-SHARE-DIVIDEND> .53
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.37
<EXPENSE-RATIO> 1.14
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>
<ARTICLE> 6
<CIK> 0000315177
<NAME> FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
<SERIES>
<NUMBER> 002
<NAME> CLASS B
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1944
<SHARES-COMMON-STOCK> 195
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 9
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 66
<NET-ASSETS> 2019
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 62
<OTHER-INCOME> 0
<EXPENSES-NET> (18)
<NET-INVESTMENT-INCOME> 44
<REALIZED-GAINS-CURRENT> 9
<APPREC-INCREASE-CURRENT> 66
<NET-CHANGE-FROM-OPS> 119
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (44)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 210
<NUMBER-OF-SHARES-REDEEMED> 18
<SHARES-REINVESTED> 3
<NET-CHANGE-IN-ASSETS> 2019
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11
<AVERAGE-NET-ASSETS> 987
<PER-SHARE-NAV-BEGIN> 9.48
<PER-SHARE-NII> .44
<PER-SHARE-GAIN-APPREC> .89
<PER-SHARE-DIVIDEND> .44
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.37
<EXPENSE-RATIO> 1.88
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>