FIRST INVESTORS NEW YORK INSURED TAX FREE FUND INC, 485BPOS, 1996-04-25

FIRST INVESTORS NEW YORK INSURED TAX FREE FUND INC
485BPOS, 1996-04-25

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<PAGE>

As filed with the Securities and Exchange Commission on April 25, 1996

Registration No. 2-86489
811-3843
-------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Post-Effective Amendment No. 16 X

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940

Amendment No. 16 X

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

Ms. Concetta Durso
Secretary and Vice President
First Investors New York Insured Tax Free 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 $.01 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 NEW YORK INSURED TAX FREE 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

<PAGE>

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

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

PART C: OTHER INFORMATION

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

FIRST INVESTORS NEW YORK INSURED TAX FREE FUND, INC.
FIRST INVESTORS MULTI-STATE INSURED TAX FREE FUND

CONNECTICUT FUND, FLORIDA FUND, GEORGIA FUND, MARYLAND FUND,
MASSACHUSETTS FUND, NEW JERSEY FUND, NORTH CAROLINA FUND,
PENNSYLVANIA FUND AND VIRGINIA FUND

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

This is a Prospectus for FIRST INVESTORS NEW YORK INSURED TAX FREE FUND,
INC. ("NEW YORK INSURED") and FIRST INVESTORS MULTI-STATE INSURED TAX FREE FUND
(collectively, "Tax Free Funds"), each an open-end diversified management
investment company. NEW YORK INSURED consists of a single investment series and
FIRST INVESTORS MULTI-STATE INSURED TAX FREE FUND ("Multi-State Insured")
consists of seventeen separate investment series. This Prospectus relates to
NEW YORK INSURED and the nine series of Multi-State Insured listed above
(singularly, "Fund," and collectively, "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."

NEW YORK INSURED. The investment objective of NEW YORK INSURED is to
provide a high level of interest income which is exempt from Federal income tax,
New York State and New York City personal income taxes and is not an item of tax
preference for purposes of the Federal alternative minimum tax ("Tax Preference
Item").

MULTI-STATE INSURED. The investment objective of each Fund of Multi-State
Insured is to achieve a high level of interest income which is exempt from
Federal income tax and, to the extent indicated for a particular Fund, from
state and local income taxes for residents of that state and is not a Tax
Preference Item.

Each Fund invests primarily in tax-exempt obligations issued by or on
behalf of the states or a particular state, its municipal governments and public
authorities, as well as tax-exempt obligations issued by territories or
possessions of the United States, the interest on which is exempt from Federal
income tax, the income or other taxes of a particular state and is not a Tax
Preference Item. There can be no assurance that the objective of any 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 EACH FUND'S NET ASSET VALUE PER
SHARE. FOR MORE INFORMATION REGARDING THE FUNDS' INSURANCE COVERAGE, SEE
"INSURANCE" ON PAGE 17.

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
the Funds issued prior to the January 12, 1995 have been designated as Class A
shares.

SHAREHOLDER TRANSACTION EXPENSES

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)

MANAGEMENT TOTAL FUND
FEES(1) 12b-1 FEES(2) OTHER EXPENSES(3) OPERATING EXPENSES(4)
----------------- ----------------- ----------------- ---------------------
Class A Class B Class A Class B Class A Class B Class A Class B
Shares Shares Shares Shares Shares Shares Shares Shares
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NEW YORK INSURED 0.75% 0.75% 0.30% 1.00% 0.18% 0.18% 1.23% 1.93%
CONNECTICUT FUND 0.50+ 0.50+ 0.20+ 1.00 0.10+ 0.10+ 0.80+ 1.60+
FLORIDA FUND 0.50+ 0.50+ 0.20+ 1.00 0.10+ 0.10+ 0.80+ 1.60+
GEORGIA FUND 0.20+ 0.20+ 0.20+ 1.00 -0-+ -0-+ 0.40+ 1.20+
MARYLAND FUND 0.30+ 0.30+ 0.20+ 1.00 -0-+ -0-+ 0.50+ 1.30+
MASSACHUSETTS FUND 0.50+ 0.50+ 0.20+ 1.00 0.10+ 0.10+ 0.80+ 1.60+
NEW JERSEY FUND 0.60+ 0.60+ 0.20+ 1.00 0.19 0.19 0.99+ 1.79+
NORTH CAROLINA FUND 0.20+ 0.20+ 0.20+ 1.00 -0-+ -0-+ 0.40+ 1.20+
PENNSYLVANIA FUND 0.50+ 0.50+ 0.20+ 1.00 0.16 0.16 0.86+ 1.66+
VIRGINIA FUND 0.50+ 0.50+ 0.20+ 1.00 0.10+ 0.10+ 0.80+ 1.60+
- -----------------------

</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) Management Fees have been restated for each Fund, other than NEW YORK
INSURED, MASSACHUSETTS FUND, NEW JERSEY FUND and PENNSYLVANIA FUND, to
reflect current fees. For the fiscal year ended December 31, 1995, the
Adviser waived certain Management Fees for all the Funds, other than NEW
YORK INSURED. Absent the waiver, such fees would have been 0.75% for each
of these Funds. For a minimum period ending December 31, 1996, the Adviser
will waive Management Fees as follows: in excess of 0.50% for CONNECTICUT
FUND, FLORIDA FUND, MASSACHUSETTS FUND, PENNSYLVANIA FUND and VIRGINIA
FUND; in excess of 0.20% for GEORGIA FUND and NORTH CAROLINA FUND; in
excess of 0.30% for MARYLAND FUND; and in excess of 0.60% for NEW JERSEY
FUND.

(2) The Underwriter has agreed through December 31, 1996 to cap its right to
claim Class A 12b-1 Fees at the annual rates listed above for all the
Funds, other than NEW YORK INSURED. Multi-State Insured's Class A
Distribution Plan provides for a 12b-1 Fee in the total amount of up to
0.30% on an annual basis.

<PAGE>

(3) Other Expenses have been restated for each class of shares of the Funds
other than NEW YORK INSURED, NEW JERSEY FUND and PENNSYLVANIA FUND, to
reflect current expenses. For the fiscal year ended December 31, 1995, the
Adviser reimbursed all the Funds, other than NEW YORK INSURED, NEW JERSEY
FUND and PENNSYLVANIA FUND, for certain Other Expenses. Absent such
reimbursement, Other Expenses for each class of shares would have been
0.25% for CONNECTICUT FUND, 0.20% for FLORIDA FUND, 0.52% for GEORGIA FUND,
0.29% for MARYLAND FUND, 0.20% for MASSACHUSETTS FUND, 0.45% for NORTH
CAROLINA FUND and 0.21% for VIRGINIA FUND.

(4) If certain fees and expenses had not been waived or reimbursed, Total Fund
Operating Expenses for Class A shares would have been 1.30% for CONNECTICUT
FUND, 1.25% for FLORIDA FUND, 1.57% for GEORGIA FUND, 1.34% for MARYLAND
FUND, 1.25% for MASSACHUSETTS FUND, 1.24% for NEW JERSEY FUND, 1.50% for
NORTH CAROLINA FUND, 1.21% for PENNSYLVANIA FUND, 1.26% for VIRGINIA FUND;
and for Class B shares would have been 2.00% for CONNECTICUT FUND, 1.95%
for FLORIDA FUND, 2.27% for GEORGIA FUND, 2.04% for MARYLAND FUND, 1.95%
for MASSACHUSETTS FUND, 1.94% for NEW JERSEY FUND, 2.20% for NORTH CAROLINA
FUND, 1.91% for PENNSYLVANIA FUND, and 1.96% for VIRGINIA FUND.

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

ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
NEW YORK INSURED
Class A . . . . . . . . . . $74 $99 $126 $202
Class B . . . . . . . . . . 60 91 124 207*

CONNECTICUT FUND
Class A . . . . . . . . . . 70 86 104 155
Class B . . . . . . . . . . 56 80 107 169*

FLORIDA FUND
Class A . . . . . . . . . . 70 86 104 155
Class B . . . . . . . . . . 56 80 107 169*

GEORGIA FUND
Class A . . . . . . . . . . 66 75 84 110
Class B . . . . . . . . . . 52 68 86 123*

MARYLAND FUND
Class A . . . . . . . . . . 67 78 89 121
Class B . . . . . . . . . . 53 71 91 135*

<PAGE>

<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
MASSACHUSETTS FUND
Class A . . . . . . . . . . $70 $86 $104 $155
Class B . . . . . . . . . . 56 80 107 169*

NEW JERSEY FUND
Class A . . . . . . . . . . 72 92 114 176
Class B . . . . . . . . . . 58 86 117 189*

NORTH CAROLINA FUND
Class A . . . . . . . . . . 66 75 84 110
Class B . . . . . . . . . . 52 68 86 123*

PENNSYLVANIA FUND
Class A . . . . . . . . . . 71 88 107 162
Class B . . . . . . . . . . 57 82 110 175*

VIRGINIA FUND
Class A . . . . . . . . . . 70 86 104 155
Class B . . . . . . . . . . 56 80 107 169*

</TABLE>

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

<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
NEW YORK INSURED
Class A . . . . . . . . . . $74 $99 $126 $202
Class B . . . . . . . . . . 20 61 104 207*

CONNECTICUT FUND
Class A . . . . . . . . . . 70 86 104 155
Class B . . . . . . . . . . 16 50 87 169*

FLORIDA FUND
Class A . . . . . . . . . . 70 86 104 155
Class B . . . . . . . . . . 16 50 87 169*

GEORGIA FUND
Class A . . . . . . . . . . 66 75 84 110
Class B . . . . . . . . . . 12 38 66 123*

MARYLAND FUND
Class A . . . . . . . . . . 67 78 89 121
Class B . . . . . . . . . . 13 41 71 135*

MASSACHUSETTS FUND
Class A . . . . . . . . . . 70 86 104 155
Class B . . . . . . . . . . 16 50 87 169*

4
<PAGE>

ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
NEW JERSEY FUND
Class A . . . . . . . . . . $72 $92 $114 $176
Class B . . . . . . . . . . 18 56 97 189*

NORTH CAROLINA FUND
Class A . . . . . . . . . . 66 75 84 110
Class B . . . . . . . . . . 12 38 66 123*

PENNSYLVANIA FUND
Class A . . . . . . . . . . 71 88 107 162
Class B . . . . . . . . . . 17 52 90 175*

VIRGINIA FUND
Class A . . . . . . . . . . 70 86 104 155
Class B . . . . . . . . . . 16 50 87 169*

</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>

[This page intentionally left blank]

<PAGE>

FINANCIAL HIGHLIGHTS

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

<PAGE>

<TABLE>
<CAPTION>
PER SHARE DATA
--------------------------------------------------------------------
Income From Investment Operations
--------------------------------------------------
Net Asset Value Net Realixed Total
-------------- Net and Unrealized from
Beginning of Investment Gain (Loss) Investment
Period Income on Investment Operations
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

FIRST INVESTORS NEW YORK
INSURED TAX FREE FUND, INC.
CLASS A
1986 . . . . . . . . . . $13.03 $.932 $1.238 $2.170
1987 . . . . . . . . . . 14.25 .919 (1.109) (.190)
1988 . . . . . . . . . . 13.15 .902 .388 1.290
1989 . . . . . . . . . . 13.51 .901 .339 1.240
1990 . . . . . . . . . . 13.87 .889 (.119) .770
1991 . . . . . . . . . . 13.75 .881 .574 1.455
1992 . . . . . . . . . . 14.33 .844 .386 1.230
1993 . . . . . . . . . . 14.72 .809 .608 1.417
1994 . . . . . . . . . . 15.18 .758 (1.510) (.752)
1995 . . . . . . . . . . 13.66 .738 1.331 2.069
CLASS B
1/12/95* to 12/31/95 . . 13.76 .616 1.232 1.848

FIRST INVESTORS MULTI-STATE
INSURED TAX FREE FUND
CONNECTICUT FUND
CLASS A
10/8/90* to 12/31/90 . . 11.17 .034 (.014) .020
1991 . . . . . . . . . . 11.19 .630 .449 1.079
1992 . . . . . . . . . . 11.64 .669 .401 1.070
1993 . . . . . . . . . . 12.05 .615 1.053 1.668
1994 . . . . . . . . . . 13.05 .609 (1.480) (.871)
1995 . . . . . . . . . . 11.57 .617 1.333 1.950
CLASS B
1/12/95* to 12/31/95 . . 11.67 .512 1.242 1.754

Less Distributions from
-------------------------------
Net Net Realized Net Asset Value
Investment Gain on Total ---------------
Income Investments Distributions End of Period
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

FIRST INVESTORS NEW YORK
INSURED TAX FREE FUND, INC.
CLASS A
1986 . . . . . . . . . . $.950 $-- $.950 $14.25
1987 . . . . . . . . . . .910 -- .910 13.15
1988 . . . . . . . . . . .930 -- .930 13.51
1989 . . . . . . . . . . .880 -- .880 13.87
1990 . . . . . . . . . . .890 -- .890 13.75
1991 . . . . . . . . . . .875 -- .875 14.33
1992 . . . . . . . . . . .840 -- .840 14.72
1993 . . . . . . . . . . .820 .137 .957 15.18
1994 . . . . . . . . . . .768 -- .768 13.66
1995 . . . . . . . . . . .740 .059 .799 14.93
CLASS B
1/12/95* to 12/31/95 . . .619 .059 .678 14.93

FIRST INVESTORS MULTI-STATE
INSURED TAX FREE FUND
CONNECTICUT FUND
CLASS A
10/8/90* to 12/31/90 . . -- -- -- 11.19
1991 . . . . . . . . . . .625 .004 .629 11.64
1992 . . . . . . . . . . .660 -- .660 12.05
1993 . . . . . . . . . . .625 .043 .668 13.05
1994 . . . . . . . . . . .609 -- .609 11.57
1995 . . . . . . . . . . .620 -- .620 12.90
CLASS B
1/12/95* to 12/31/95 . . .524 -- .524 12.90

</TABLE>

* Commencement of operations of Class A shares or date Class B shares were
first offered
** Calculated without sales charges
+ Annualized
++ Net of expenses waived or assumed by the investment adviser and the
transfer agent from the commencement of operations through December 31,
1995.

<PAGE>

- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS / SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio to Average Net
Ratio to Average Assets Before Expenses
Net Assets++ Waived or Assumed
-------------------------- -------------------------
Net Assets Net Net Portfolio
Total End of Period Investment Investment Turnover
Return**(%) (in thousands) Expenses(%) Income(%) Expenses(%) Income(%) Rate(%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>

FIRST INVESTORS NEW YORK
INSURED TAX FREE FUND, INC.
CLASS A
1986 . . . . . . . . . . 17.03 $83,760 1.13 6.90 N/A N/A 10
1987 . . . . . . . . . . (1.25) 103,892 1.10 6.91 N/A N/A 2
1988 . . . . . . . . . . 10.10 121,017 1.26 6.77 N/A N/A 21
1989 . . . . . . . . . . 9.43 150,154 1.14 6.57 N/A N/A 13
1990 . . . . . . . . . . 5.81 156,022 1.23 6.53 N/A N/A 33
1991 . . . . . . . . . . 10.89 162,296 1.24 6.29 N/A N/A 25
1992 . . . . . . . . . . 8.84 181,389 1.29 5.84 N/A N/A 46
1993 . . . . . . . . . . 9.82 211,967 1.27 5.35 N/A N/A 31
1994 . . . . . . . . . . (5.03) 193,916 1.28 5.30 N/A N/A 55
1995 . . . . . . . . . . 15.45 215,259 1.23 5.10 N/A N/A 53
CLASS B
1/12/95* to 12/31/95 . . 13.66 1,156 2.00+ 4.55+ N/A N/A 53

FIRST INVESTORS MULTI-STATE
INSURED TAX FREE FUND
CONNECTICUT FUND
CLASS A
10/8/90* to 12/31/90 . . 7.71+ 625 -- 1.75+ 1.46+ .28+ 0
1991 . . . . . . . . . . 9.92 5,050 .06 5.83 1.60 4.28 35
1992 . . . . . . . . . . 9.49 10,828 .33 5.73 1.20 4.86 46
1993 . . . . . . . . . . 14.10 17,202 .80 4.83 1.15 4.48 29
1994 . . . . . . . . . . (6.75) 14,848 .87 5.01 1.22 4.66 63
1995 . . . . . . . . . . 17.18 16,725 .85 4.96 1.20 4.61 26
CLASS B
1/12/95* to 12/31/95 . . 15.28 857 1.71+ 4.30+ 2.07+ 3.94+ 26

</TABLE>

<PAGE>

PER SHARE DATA
--------------------------------------------------------------------
Income From Investment Operations
--------------------------------------------------
Net Asset Value Net Realixed Total
-------------- Net and Unrealized from
Beginning of Investment Gain (Loss) Investment
Period Income on Investment Operations
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

FIRST INVESTORS MULTI-STATE
INSURED TAX FREE FUND

FLORIDA FUND
CLASS A
10/5/90* to 12/31/90 . . . $11.17 $.018 $ (.058) $ (.040)
1991 . . . . . . . . . . . 11.13 .658 .582 1.240
1992 . . . . . . . . . . . 11.70 .702 .508 1.210
1993 . . . . . . . . . . . 12.21 .664 1.032 1.696
1994 . . . . . . . . . . . 13.14 .642 (1.346) (.704)
1995 . . . . . . . . . . . 11.79 .640 1.527 2.167
CLASS B
1/12/95* to 12/31/95 . . . 11.87 .529 1.460 1.989

GEORGIA FUND
CLASS A
5/1/92* to 12/31/92. . . . 11.17 .267 .233 .500
1993 . . . . . . . . . . . 11.42 .603 1.091 1.694
1994 . . . . . . . . . . . 12.49 .584 (1.165) (.581)
1995 . . . . . . . . . . . 11.33 .653 1.387 2.040
CLASS B
1/12/95* to 12/31/95 . . . 11.42 .529 1.303 1.832

MARYLAND FUND
CLASS A
10/8/90* to 12/31/90 . . . 11.17 .021 .189 .210
1991 . . . . . . . . . . . 11.38 .628 .287 .915
1992 . . . . . . . . . . . 11.68 .669 .426 1.095
1993 . . . . . . . . . . . 12.11 .653 1.083 1.736
1994 . . . . . . . . . . . 13.15 .644 (1.373) (.729)
1995 . . . . . . . . . . . 11.77 .668 1.348 2.016
CLASS B
1/12/95* to 12/31/95 . . . 11.85 .561 1.279 1.840

FIRST INVESTORS MULTI-STATE
INSURED TAX FREE FUND

FLORIDA FUND
CLASS A
10/5/90* to 12/31/90 . . . $ -- $ -- $ -- $11.13
1991 . . . . . . . . . . . .640 .030 .670 11.70
1992 . . . . . . . . . . . .700 -- .700 12.21
1993 . . . . . . . . . . . .671 .095 .766 13.14
1994 . . . . . . . . . . . .646 -- .646 11.79
1995 . . . . . . . . . . . .647 -- .647 13.31
CLASS B
1/12/95* to 12/31/95 . . . .549 -- .549 13.31

GEORGIA FUND
CLASS A
5/1/92* to 12/31/92. . . . .250 -- .250 11.42
1993 . . . . . . . . . . . .619 .005 .624 12.49
1994 . . . . . . . . . . . .579 -- .579 11.33
1995 . . . . . . . . . . . .650 -- .650 12.72
CLASS B
1/12/95* to 12/31/95 . . . .542 -- .542 12.71

MARYLAND FUND
CLASS A
10/8/90* to 12/31/90 . . . -- -- -- 11.38
1991 . . . . . . . . . . . .615 -- .615 11.68
1992 . . . . . . . . . . . .665 -- .665 12.11
1993 . . . . . . . . . . . .660 .036 .696 13.15
1994 . . . . . . . . . . . .651 -- .651 11.77
1995 . . . . . . . . . . . .666 -- .666 13.12
CLASS B
1/12/95* to 12/31/95 . . . .570 -- .570 13.12

</TABLE>

<PAGE>

FIRST INVESTORS MULTI-STATE
INSURED TAX FREE FUND

FLORIDA FUND
CLASS A
10/5/90* to 12/31/90 . . . (1.48)+ $1,339 -- 1.20+ 1.03+ .17+ 0
1991 . . . . . . . . . . . 11.45 6,891 .06 6.12 1.12 5.06 70
1992 . . . . . . . . . . . 10.67 12,678 .29 5.97 1.17 5.10 65
1993 . . . . . . . . . . . 14.19 21,397 .45 5.20 1.10 4.55 53
1994 . . . . . . . . . . . (5.39) 19,765 .62 5.24 1.19 4.67 98
1995 . . . . . . . . . . . 18.77 22,229 .75 5.03 1.15 4.63 68
CLASS B
1/12/95* to 12/31/95 . . . 17.06 299 1.68+ 4.29+ 2.09+ 3.88+ 68

GEORGIA FUND
CLASS A
5/1/92* to 12/31/92. . . . 6.75+ 365 -- 4.45+ 3.32+ 1.13+ 53
1993 . . . . . . . . . . . 15.16 1,469 .13 4.96 1.84 3.24 50
1994 . . . . . . . . . . . (4.69) 2,065 .20 4.99 1.93 3.26 78
1995 . . . . . . . . . . . 18.40 3,047 .20 5.41 1.42 4.20 45
CLASS B
1/12/95* to 12/31/95 . . . 16.34 97 1.00+ 4.80+ 2.22+ 3.59+ 45

MARYLAND FUND
CLASS A
10/8/90* to 12/31/90 . . . 8.08+ 403 -- 1.69+ 2.88+ (1.19)+ 0
1991 . . . . . . . . . . . 8.30 1,543 .05 5.74 1.88 3.92 26
1992 . . . . . . . . . . . 9.64 3,575 .20 5.72 1.38 4.55 38
1993 . . . . . . . . . . . 14.62 6,643 .45 5.16 1.28 4.33 50
1994 . . . . . . . . . . . (5.59) 6,904 .45 5.27 1.34 4.37 44
1995 . . . . . . . . . . . 17.50 8,666 .48 5.29 1.24 4.52 49
CLASS B
1/12/95* to 12/31/95 . . . 15.82 423 1.38+ 4.59+ 2.19+ 3.77+ 49

</TABLE>

<PAGE>

FIRST INVESTORS NEW YORK
INSURED TAX FREE FUND, INC.

MASSACHUSETTS FUND
CLASS A
1987 . . . . . . . . . . $11.13 $.533 $(1.143) $ (.610)
1988 . . . . . . . . . . 10.01 .753 .547 1.300
1989 . . . . . . . . . . 10.54 .725 .345 1.070
1990 . . . . . . . . . . 10.88 .748 (.038) .710
1991 . . . . . . . . . . 10.84 .732 .468 1.200
1992 . . . . . . . . . . 11.31 .687 .399 1.086
1993 . . . . . . . . . . 11.71 .653 .716 1.369
1994 . . . . . . . . . . 12.28 .627 (1.267) (.640)
1995 . . . . . . . . . . 11.01 .612 1.227 1.839
CLASS B
1/12/95* to 12/31/95 . . 11.09 .508 1.155 1.663

NEW JERSEY FUND
CLASS A
9/13/88* to 12/31/88 . . 11.13 .083 .117 .200
1989 . . . . . . . . . . 11.33 .797 .373 1.170
1990 . . . . . . . . . . 11.73 .787 .013 .800
1991 . . . . . . . . . . 11.73 .762 .548 1.310
1992 . . . . . . . . . . 12.29 .716 .439 1.155
1993 . . . . . . . . . . 12.67 .680 .947 1.627
1994 . . . . . . . . . . 13.51 .659 (1.448) (.789)
1995 . . . . . . . . . . 12.06 .648 1.291 1.939
CLASS B
1/12/95* to 12/31/95 . . 12.14 .526 1.199 1.725

FIRST INVESTORS NEW YORK
INSURED TAX FREE FUND, INC.

MASSACHUSETTS FUND
CLASS A
1987 . . . . . . . . . . $.510 $ -- $.510 $10.01
1988 . . . . . . . . . . .770 -- .770 10.54
1989 . . . . . . . . . . .730 -- .730 10.88
1990 . . . . . . . . . . .750 -- .750 10.84
1991 . . . . . . . . . . .730 -- .730 11.31
1992 . . . . . . . . . . .676 .010 .686 11.71
1993 . . . . . . . . . . .660 .139 .799 12.28
1994 . . . . . . . . . . .630 -- .630 11.01
1995 . . . . . . . . . . .613 .016 .629 12.22
CLASS B
1/12/95* to 12/31/95 . . .527 .016 .543 12.21

NEW JERSEY FUND
CLASS A
9/13/88* to 12/31/88 . . -- -- -- 11.33
1989 . . . . . . . . . . .770 -- .770 11.73
1990 . . . . . . . . . . .800 -- .800 11.73
1991 . . . . . . . . . . .750 -- .750 12.29
1992 . . . . . . . . . . .716 .059 .775 12.67
1993 . . . . . . . . . . .684 .103 .787 13.51
1994 . . . . . . . . . . .661 -- .661 12.06
1995 . . . . . . . . . . .652 .097 .749 13.25
CLASS B
1/12/95* to 12/31/95 . . .528 .097 .625 13.24

</TABLE>

<PAGE>

FIRST INVESTORS NEW YORK
INSURED TAX FREE FUND, INC.

MASSACHUSETTS FUND
CLASS A
1987 . . . . . . . . . . 5.43 $ 1,595 .05 6.32 1.13 5.24 16
1988 . . . . . . . . . . 13.40 2,901 .10 7.33 1.29 6.14 31
1989 . . . . . . . . . . 10.43 8,292 .10 6.78 1.03 5.85 11
1990 . . . . . . . . . . 6.85 12,760 .06 7.01 .99 6.09 22
1991 . . . . . . . . . . 11.45 17,608 .28 6.66 .99 5.94 4
1992 . . . . . . . . . . 9.90 20,067 .70 5.99 1.17 5.52 28
1993 . . . . . . . . . . 11.93 23,653 .90 5.37 1.15 5.12 32
1994 . . . . . . . . . . (5.30) 20,838 .95 5.45 1.20 5.20 64
1995 . . . . . . . . . . 17.07 23,180 .90 5.20 1.15 4.95 40
CLASS B
1/12/95* to 12/31/95 . . 15.28 314 1.76+ 4.55+ 2.01+ 4.29+ 40

NEW JERSEY FUND
CLASS A
9/13/88* to 12/31/88 . . 5.96+ 2,148 -- 4.95+ .95+ 3.99+ 0
1989 . . . . . . . . . . 10.61 17,380 .03 6.82 .92 5.93 10
1990 . . . . . . . . . . 7.10 30,686 .10 6.93 .91 6.12 16
1991 . . . . . . . . . . 11.52 42,475 .44 6.38 .98 5.84 22
1992 . . . . . . . . . . 9.74 54,372 .78 5.76 1.13 5.41 42
1993 . . . . . . . . . . 13.09 64,558 .96 5.12 1.11 4.97 44
1994 . . . . . . . . . . (5.91) 55,379 .99 5.21 1.14 5.06 60
1995 . . . . . . . . . . 16.41 59,153 .99 5.05 1.14 4.90 30
CLASS B
1/12/95* to 12/31/95 . . 14.45 957 1.81+ 4.43+ 1.97+ 4.28+ 30

</TABLE>

<PAGE>

FIRST INVESTORS MULTI-STATE
INSURED TAX FREE FUND

NORTH CAROLINA FUND
CLASS A
5/4/92* to 12/31/92. . . $11.17 $.272 $ .188 $ .460
1993 . . . . . . . . . . 11.37 .595 .962 1.557
1994 . . . . . . . . . . 12.28 .594 (1.380) (.786)
1995 . . . . . . . . . . 10.90 .608 1.391 1.999
CLASS B
1/12/95* to 12/31/95 . . 10.99 .492 1.307 1.799

PENNSYLVANIA FUND
CLASS A
4/30/90* to 12/31/90 . . 11.17 .296 .214 .510
1991 . . . . . . . . . . 11.41 .714 .429 1.143
1992 . . . . . . . . . . 11.85 .699 .427 1.126
1993 . . . . . . . . . . 12.26 .667 1.048 1.715
1994 . . . . . . . . . . 13.16 .627 (1.447) (.820)
1995 . . . . . . . . . . 11.71 .638 1.463 2.101
CLASS B
1/12/95* to 12/31/95 . . 11.81 .539 1.376 1.915

VIRGINIA FUND
CLASS A
4/30/90* to 12/31/90 . . 11.17 .320 .080 .400
1991 . . . . . . . . . . 11.27 .715 .523 1.238
1992 . . . . . . . . . . 11.80 .683 .481 1.164
1993 . . . . . . . . . . 12.23 .636 .915 1.551
1994 . . . . . . . . . . 13.06 .611 (1.383) (.772)
1995 . . . . . . . . . . 11.68 .625 1.370 1.995
CLASS B
1/12/95* to 12/31/95 . . 11.76 .510 1.286 1.796

FIRST INVESTORS MULTI-STATE
INSURED TAX FREE FUND

NORTH CAROLINA FUND
CLASS A
5/4/92* to 12/31/92. . . $.260 $ -- $.260 $11.37
1993 . . . . . . . . . . .604 .043 .647 12.28
1994 . . . . . . . . . . .594 -- .594 10.90
1995 . . . . . . . . . . .609 -- .609 12.29
CLASS B
1/12/95* to 12/31/95 . . .499 -- .499 12.29

PENNSYLVANIA FUND
CLASS A
4/30/90* to 12/31/90 . . .270 -- .270 11.41
1991 . . . . . . . . . . .695 .008 .703 11.85
1992 . . . . . . . . . . .716 -- .716 12.26
1993 . . . . . . . . . . .663 .152 .815 13.16
1994 . . . . . . . . . . .630 -- .630 11.71
1995 . . . . . . . . . . .635 .036 .671 13.14
CLASS B
1/12/95* to 12/31/95 . . .549 .036 .585 13.14

VIRGINIA FUND
CLASS A
4/30/90* to 12/31/90 . . .300 -- .300 11.27
1991 . . . . . . . . . . .690 .018 .708 11.80
1992 . . . . . . . . . . .702 .032 .734 12.23
1993 . . . . . . . . . . .639 .082 .721 13.06
1994 . . . . . . . . . . .608 -- .608 11.68
1995 . . . . . . . . . . .629 .036 .665 13.01
CLASS B
1/12/95* to 12/31/95 . . .520 .036 .556 13.00
</TABLE>
- ---------------------------

<PAGE>

FIRST INVESTORS MULTI-STATE
INSURED TAX FREE FUND

NORTH CAROLINA FUND
CLASS A
5/4/92* to 12/31/92. . . 6.21+ 1,084 -- 4.53+ 2.20+ 2.33+ 10
1993 . . . . . . . . . . 13.98 3,883 .13 4.99 1.28 3.83 32
1994 . . . . . . . . . . (6.45) 3,872 .20 5.22 1.44 3.99 61
1995 . . . . . . . . . . 18.72 4,984 .20 5.18 1.36 4.03 76
CLASS B
1/12/95* to 12/31/95 . . 16.65 75 1.00+ 4.57+ 2.16+ 3.41+ 76

PENNSYLVANIA FUND
CLASS A
4/30/90* to 12/31/90 . . 6.88+ 6,252 .05+ 5.39+ 1.05+ 4.39+ 1
1991 . . . . . . . . . . 10.24 16,118 .29 6.28 1.03 5.54 26
1992 . . . . . . . . . . 9.81 26,036 .56 5.84 1.12 5.28 18
1993 . . . . . . . . . . 14.28 35,514 .79 5.17 1.10 4.86 37
1994 . . . . . . . . . . (6.31) 33,542 .88 5.11 1.13 4.86 81
1995 . . . . . . . . . . 18.29 39,980 .86 5.05 1.11 4.80 48
CLASS B
1/12/95* to 12/31/95 . . 16.49 247 1.72+ 4.39+ 1.98+ 4.13+ 48

VIRGINIA FUND
CLASS A
4/30/90* to 12/31/90 . . 5.40+ 3,327 .08+ 5.56+ 1.22+ 4.43+ 0
1991 . . . . . . . . . . 11.31 9,756 .13 6.32 1.10 5.36 15
1992 . . . . . . . . . . 10.19 16,507 .56 6.75 1.22 5.09 41
1993 . . . . . . . . . . 12.94 24,684 .81 4.97 1.16 4.62 39
1994 . . . . . . . . . . (5.97) 22,325 .85 5.01 1.20 4.66 55
1995 . . . . . . . . . . 17.42 25,193 .81 4.99 1.16 4.64 34
CLASS B
1/12/95* to 12/31/95 . . 15.53 991 1.66+ 4.34+ 2.02+ 3.98+ 34

</TABLE>

<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

NEW YORK INSURED

The investment objective of NEW YORK INSURED is to provide a high level of
interest income which is exempt from Federal income tax, New York State and New
York City personal income taxes and iS not a tax preference item. NEW YORK
INSURED seeks to achieve its objective by investing at least 80% of its total
assets in Municipal Instruments, as defined below, issued by or on behalf of New
York State and its municipal governments and by public authorities in New York
State, as well as by 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, New
York State and New York City personal income taxes and is not a tax preference
item. See "Municipal Instruments."

MULTI-STATE INSURED

The investment objective of each Fund of Multi-State Insured is to achieve
a high level of interest income which is exempt from Federal income tax and, to
the extent indicated for a particular Fund, from state and local income taxes
for residents of that state and is not a tax preference item. Each Fund of
Multi-State Insured seeks to achieve its objective by investing at least 80% of
its total assets in Municipal Instruments, as defined below, 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,
state and local income taxes in the states for whose residents the particular
Fund is established and is not a tax preference item. See "Municipal
Instruments."

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

GENERAL POLICIES

Each Fund may 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 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. 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) and may acquire detachable call
options relating to municipal bonds. Each Fund may borrow money for temporary
or emergency purposes in amounts not exceeding 5% of its total assets and invest
in repurchase agreements. 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"),

<PAGE>

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 any 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 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 NEW YORK INSURED
and by Multi-State Insured, on behalf of the 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

<PAGE>

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, each Fund may invest up to 35% of its total assets in
portfolio securities not covered by the insurance feature. Each Tax Free 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 Free 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 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

<PAGE>

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 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 that Tax Free 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.

VARIABLE RATE AND FLOATING RATE NOTES. Each Fund may invest in
variable rate and floating rate notes, which are derivatives, issued by
municipalities. Variable rate notes include master demand notes which are
obligations permitting the holder to invest fluctuating amounts, which may
change daily without penalty, pursuant to direct arrangements between the Fund,
as lender, and the borrower. The interest rates on these notes fluctuate from
time to time. The issuer of such obligations normally has a corresponding
right, after a given period, to prepay in its discretion the outstanding
principal amount of the obligations plus accrued interest upon a specified
number of days' notice to the holders of such obligations.

The interest rate on a floating rate obligation is based on a known
lending rate, such as a bank's prime rate, and is adjusted automatically each
time such rate is adjusted. The interest rate on a variable rate obligation is
adjusted automatically at specified intervals. Frequently, such obligations are
secured by letters of credit or other credit support arrangements provided by
banks. Because these obligations are direct lending arrangements between the
lender and borrower, it is not contemplated that such instruments generally will
be traded, and there is generally no established secondary market for these
obligations, although they are redeemable at face value. Accordingly, where
these obligations are not secured by letters of credit or other credit support
arrangements, the right of the Fund to redeem is dependent on the ability of the
borrower to pay agencies.

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 each Tax Free 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.

<PAGE>

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.

STATE SPECIFIC RISK FACTORS

Most of the securities in which each Fund invests are issued within that
Fund's state. Thus, each Fund's yield and share price stability are closely
tied to conditions within that state and to the financial conditions of that
state, its authorities and municipalities. In addition, economic developments
within a single state or region could have a greater impact on a Fund's
portfolio than on an investment portfolio composed of securities of more
geographically diverse issuers. Each Fund seeks to mitigate these potential
risks through careful credit risk analysis and the use of insurance, as
previously discussed. Summaries of certain relevant information regarding each
state's economy are set forth below. For an expanded discussion, see "State
Specific Risk Factors" in the SAI.

RISK FACTORS FOR THE CONNECTICUT FUND. Connecticut's economy is generally
diverse, but concentration in several important sectors, including
manufacturing, finance, insurance and real estate, wholesale and retail trade
and services, may cause the state's economy to be adversely affected by cyclical
changes. The state government derives more than 60% of its revenue from the
collection of taxes, the majority of which is comprised of personal income,
sales and use, corporation and motor fuel taxes. The state finances a wide
array of capital programs and projects through the issuance of general
obligation bonds backed by the general taxing authority of the state and special
tax obligation bonds backed by a dedicated stream of revenue. Although the
State Comptroller reported a surplus in the state's General Fund operations for
fiscal years 1993 and 1994, fiscal year 1995 showed a General Fund operating
deficit of $242 million, the first such deficit since 1992. In addition, in
fiscal year 1995, the state incurred a deficit in government operations of $623
million, an increase of more than 70% from fiscal year 1994.

RISK FACTORS FOR THE FLORIDA FUND. Florida's economy has diversified and
has shifted emphasis from resource manufacturing to tourism, other services and
trade. Economic developments affecting the service industry, the tourism
industry and high-tech manufacturing could have severe effects on the Florida
economy. Due to the development of amusement and educational theme parks, the
seasonal and cyclical character of Florida's tourist industry has been reduced.
However, a decline in the national economy, competition from other tourist
destinations, crime and international developments all may affect Florida
tourism. While Florida's population growth has traditionally helped its economy
to perform above the national average, the rapid population growth experienced
by the State in the 1980s has slowed down in the 1990s. Due to the large number
of retirees, Florida personal income has generally been insulated from certain
national economic effects. A reduction in the number of retirees moving to
Florida and an increasing native birthrate may increase the

<PAGE>

susceptibility of Florida's economy to national economic effects affecting
personal income. In addition, the economic well-being of Florida's retirees
could be adversely affected by federal entitlement cuts. Various limitations on
Florida, its governmental agencies and Florida local governmental agencies,
including constitutional and statutory balanced budget requirements, may inhibit
the ability of the issuers to repay existing municipal indebtedness and issue
additional indebtedness. The value of Florida municipal instruments may also be
affected by general conditions in the money markets or the municipal bond
markets, the levels of Federal income tax rates, the supply of tax-exempt bonds,
the credit quality and rating of the issues and perceptions with respect to the
level of interest rates.

RISK FACTORS FOR THE GEORGIA FUND. The GEORGIA FUND will concentrate its
investments in debt obligations of the state of Georgia and guaranteed revenue
debt of its instrumentalities (the "Georgia Obligations"). The Georgia
Obligations may be adversely affected by economic and political conditions and
developments within the state. In both economic and demographic arenas,
Georgia's growth continues to exceed that of its neighboring Southeastern
states. Georgia's economy is expected to improve in most sectors during 1996,
as the 1996 Summer Olympic Games approach. The unemployment rate in Georgia is
currently at one of the lowest levels it has been and remains below the national
average. Actual revenues for the state of Georgia have increased and recently
proposed legislation may lower income tax for certain businesses and
individuals. While Georgia's immediate financial future appears sound, should
the above-mentioned trends slow or reverse themselves, the Georgia economy and
state revenues could be adversely affected. There can be no assurance that the
events discussed above will not negatively affect the market of the Georgia
Obligations or the ability of either the state or its instrumentalities to pay
interest and repay principal on the Georgia Obligations in a timely manner.

RISK FACTORS FOR THE MARYLAND FUND. Maryland's rate of economic growth has
been slower in the early 1990s than it had been during the 1980s. State
revenues in recent years have been less than expected and, because Maryland's
constitution requires a balanced budget, expenditures have been cut. While the
ratings assigned to Maryland municipal instruments by nationally recognized
statistical ratings organizations indicate that Maryland and its principal
subdivisions and agencies are overall in satisfactory economic health, there
can, of course, be no assurance that this will continue or that particular bond
issues may not be adversely affected by changes in state or local economic or
political conditions. Maryland tax-free securities include obligations issued
by the state of Maryland or its counties, municipalities, authorities, or other
subdivisions. The performance of these securities is closely tied to economic
and political conditions within the state.

RISK FACTORS FOR THE MASSACHUSETTS FUND. The Commonwealth of Massachusetts
and certain of its cities and towns have at certain times in the past
experienced serious financial difficulties which have adversely affected their
credit standing. The recurrence of such financial difficulties could adversely
affect the market values and marketability of, or result in default in payment
on, outstanding obligations issued by the Commonwealth or its public authorities
or municipalities. In Massachusetts, the tax on personal property and real
estate is the principal source of tax revenues available to cities and towns to
meet local costs. "Proposition 2 1/2" an initiative petition adopted by the
voters of the Commonwealth of Massachusetts in November 1980, limits the power
of Massachusetts cities and towns and certain tax-supported districts and public
agencies to raise revenue from property taxes to support their operations,
including the payment of debt service, and could impair on their obligations.
Massachusetts cities and towns also receive substantial local aid from the
Commonwealth. The ability of the Commonwealth to pay its

<PAGE>

obligations and to provide local aid will affected by, among other things,
future social, environmental and economic conditions, many of which are not
within the control of the Commonwealth, as well as by questions of legislative
policy and the financial condition of the Commonwealth.

RISK FACTORS FOR THE NEW JERSEY FUND. New Jersey has a diversified
economic base consisting of, among others, commerce and service industries,
selective commercial agriculture, insurance, tourism, petroleum refining and
manufacturing, although New Jersey's manufacturing industry has shown a downward
trend in the last few years. New Jersey is a major recipient of Federal
assistance. Hence, a decrease in Federal financial assistance may adversely
affect New Jersey's financial condition. As a result of high levels of
unemployment in the 1970s, New Jersey defaulted on employment benefits in 1974
and received advances from the U.S. Department of Labor in order to continue
meeting benefit obligations. In the early 1980s New Jersey's trust fund for
unemployment insurance was bankrupt and until 1984 the trust fund was subject to
a Federal penalty surtax. While New Jersey's economic base has become more
diversified over time and thus its economy appears to be less vulnerable during
recessionary periods, a recurrence of high levels of unemployment could
adversely affect New Jersey's overall economy and its ability to meet its
financial obligations. New Jersey law requires a municipality to maintain a
balanced budget and generally to restrict increases of certain appropriations,
excluding debt service, to the lesser of a certain price index or 5% annually.
Maintaining a balanced budget may adversely affect a municipality's ability to
repay its obligations. The value of New Jersey obligations may also be affected
by general conditions in the money markets or the municipal bond markets, the
levels of Federal and New Jersey income tax rates, the supply of tax-exempt
bonds, the size of the particular offering, the maturity of the obligation, the
credit quality and rating of the issue and perceptions with respect to the level
of interest rates.

RISK FACTORS FOR NEW YORK INSURED. New York is still experiencing
financial difficulties as a result of the national recession that commenced in
mid-1990. Although a recovery commenced near the start of the 1993 calendar
year, the recession had been more severe in the State owing to a significant
retrenchment in the financial services industry, cutbacks in defense spending,
and an overbuilt real estate market. Although the recovery is expected to
continue, there can be no assurance that the state economy will not experience
worse than predicted results. NEW YORK INSURED's performance is closely tied to
conditions within the state and its authorities and municipalities, particularly
the City of New York (the "City"). To the extent the state experiences economic
difficulties, its ability to assist its public authorities and subdivisions is
impaired. Debt service on outstanding obligations of the state's authorities
("Authorities") is normally paid out of revenues generated by the Authorities'
projects, such as fares, user fees, bridge and tunnel tolls and rentals for
dormitory rooms and housing. In recent years, however, the state has provided
special financial assistance, in some cases on a recurring basis, to certain
Authorities for operating and other expenses, and for debt service pursuant to
moral obligations indebtedness provisions or otherwise. Certain Authorities
continue to experience financial difficulties. Failure of the state to
appropriate necessary amounts or to take other action to permit the Authorities
to meet their obligations could result in a default by one or more of the
Authorities. If a default were to occur, it would likely have a significant
adverse effect on the market price of obligations of the state and its
Authorities. The fiscal health of the state is closely related to that of its
localities, including the City. Primarily as a result of falling tax revenues,
the City faces substantial budget gaps for upcoming fiscal years that require
significant actions be taken by the City, including reductions in spending and
tax increases. Certain lawsuits pending against the state or its officers or
employees could have a substantial or long-term adverse effect on state
finances. There are also outstanding claims against the City and

<PAGE>

other localities in the state. The state has historically been one of the
wealthiest states in the nation. For decades, however, the state economy has
grown more slowly than that of the nation as a whole, resulting in the gradual
erosion of its relative economic affluence. The causes of the relative decline
are varied and complex, in many cases involving national and international
developments beyond the state's control. Part of the reasons for the long-term
relative decline in the state's economy has been attributed to the combined
state and local tax burden, which is among the highest in the nation. The
existence of this tax burden limits the state's ability to impose higher taxes
in the event of future financial difficulties.

RISK FACTORS FOR THE NORTH CAROLINA FUND. The economic profile of the
state consists of a combination of industry, agriculture and tourism. The labor
force has undergone significant changes during recent years. The state has
moved from a predominantly agricultural economy to a service and goods producing
economy. The majority of non-agricultural employment is spread among
manufacturing, retail trade, services and the government sector. In North
Carolina the issuance of municipal debt is overseen by the North Carolina Local
Government Commission. This Commission handles the approval, sale and delivery
of all local bonds and notes issued in North Carolina and monitors fiscal
accounting standards prescribed by the Local Government Budget and Fiscal
Control Act. No unit of local government can incur bonded indebtedness without
the Commission's prior approval. If approved, the obligations are sold by the
Commission on a sealed bid basis. The Commission then monitors the local unit's
debt service through a system of monthly reports. Over the past twenty years,
North Carolina state debt obligations have maintained ratings of Aaa by Moody's
and AAA by S&P. North Carolina state and municipal securities may be adversely
affected by economic and political conditions and developments within the state
of North Carolina. The North Carolina Constitution requires a balanced budget,
and the state has not realized any revenue shortfalls in recent years. The
state has realized budgetary credit balances in the last several years; however,
during the 1989-90 and 1990-91 fiscal years, the state realized revenue
shortfalls requiring the Governor and General Assembly to mandate significant
spending constraints to fulfill the constitutional requirement of a balanced
budget. Therefore, there is no guarantee that budgetary credit balances will
continue to be realized in future periods.

RISK FACTORS FOR THE PENNSYLVANIA FUND. Pennsylvania's economy is based on
a mixture of manufacturing, mining, trade, medical and health services,
education and financial institutions. Pennsylvania's continued dependence on
manufacturing, mining, steel and coal, however, has made the state vulnerable to
cyclical fluctuations, foreign imports and environmental concerns.
Pennsylvania's population and per capita income have been increasing slightly
over the past five years, and it's employment and unemployment rates have
generally not been significantly different over the past five years from that of
the United States. Pennsylvania is engaged in certain litigation matters which
are described briefly in the SAI.

RISK FACTORS FOR THE VIRGINIA FUND. Virginia's economy is based primarily
on manufacturing, the government and service sectors, agriculture, mining and
tourism, and unemployment rates are typically below the national average. The
Commonwealth has a long history of fiscal stability, due in large part to a
conservative financial philosophy, broad-based employment opportunities and
diverse sources of revenue. The 1996-98 biennium budget for the Commonwealth
forecasts economic growth in the Commonwealth will slightly outperform the
nation at large despite federal government downsizing. The Constitution of
Virginia requires a balanced budget and limits the ability of the Commonwealth
to create debt. General obligation debt may be incurred to meet certain short-
term needs, to finance capital projects and, under less stringent restriction,
to finance

23
<PAGE>

revenue-producing capital projects. Also, "special fund" revenue bonds, to
which the constitutional debt restrictions do not apply and which are not
supported by the full faith and credit of the Commonwealth, may be issued to
finance qualifying Commonwealth revenue projects. General obligations of
cities, towns and counties are payable from the general revenues of the entity,
including ad valorem tax revenues on property within the jurisdiction. Revenue
obligations issued by other entities are payable only from revenues from the
particular project or projects involved. Securities held in the VIRGINIA FUND
that are not general obligations of the Commonwealth may be subject to economic
risks or uncertainties peculiar to the issuers of such securities or the sources
from which they are to be paid.

GENERAL. There can be no assurances that future national, regional or
state-wide economic developments will not adversely affect the market value of
Municipal Instruments held by a Fund or the ability of particular obligors to
make timely payments of debt service on (or lease payments relating to) those
obligations. In addition, there can be no assurances that future court
decisions or legislative actions will not affect the ability of the issuer of a
Municipal Instrument to repay its obligations or the tax status of a Fund's
distributions relating to investments in Municipal Instruments.

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 pay a 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.

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

<PAGE>

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 will only be
accepted as purchases of 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.

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.

<PAGE>

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>

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 Free 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 Free 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
------------------- ----------------------------------
<S> <C>
First . . . . . . . . . . . . . 4%
Second. . . . . . . . . . . . . 4
Third . . . . . . . . . . . . . 3
Fourth. . . . . . . . . . . . . 3
Fifth . . . . . . . . . . . . . 2
Sixth . . . . . . . . . . . . . 1
Seventh and thereafter. . . . . 0

</TABLE>
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

28
<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 Free 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.

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. For
more information on the reinvestment privilege, please see the SAI or call
Shareholder Services at 1-800-423-4026.

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

REDEMPTION OF LOW BALANCE ACCOUNTS. Because each Fund incurs certain fixed
costs in maintaining shareholder accounts, each Fund may redeem without your
consent, on at least 60 days' prior written notice (which may appear on your
account statement), any Fund account of Class A 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 Free 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 Free 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 Free 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, NEW YORK INSURED paid 0.75% of its average daily net assets in
advisory fees. For the fiscal year ended December 31, 1995, the advisory fees
paid by each Fund of Multi-State Insured, as a percentage of such Fund's average
daily net assets, net of waivers, were as follows: CONNECTICUT FUND - 0.40%;
FLORIDA FUND - 0.35%; MASSACHUSETTS FUND - 0.50%; NEW JERSEY FUND - 0.60%;
PENNSYLVANIA FUND - 0.50%; and VIRGINIA FUND - 0.40%. The advisory fees accrued
by the GEORGIA FUND, MARYLAND FUND and NORTH CAROLINA FUND were voluntary waived
by the Adviser in their entirety. 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 Tax
Free 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 Free 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.

<PAGE>

Pursuant to each Class A Plan, the applicable Tax Free Fund's Board, in its
sole discretion, may periodically allocate the portion of distribution fees and
services fees that each Fund may spend, provided the aggregate of such fees paid
by that Fund may not exceed an annual rate of 0.30% of the Fund's average daily
net assets attributable to Class A shares in any one fiscal year. Of that
amount, no more than 0.25% of a Fund's average daily net assets attributable to
Class A shares may be paid as service fees. Payments made to the Underwriter
under each Class A Plan may only be made for reimbursement of specific expenses
incurred in connection with distribution and service activities.

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 Free 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
Free 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.

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

<PAGE>

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.

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

<PAGE>

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. 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.

<PAGE>

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.

STATE INCOME TAXES.

CONNECTICUT. In the opinion of Kelley Drye & Warren, Connecticut tax
counsel to Multi-State Insured, shareholders who are Connecticut resident
individuals will not be subject to the Connecticut personal income tax on
distributions from the CONNECTICUT FUND to the extent that these distributions
qualify as (i) exempt-interest dividends, as defined in section 852(b)(5) of the
Code, that are attributable to interest on obligations issued by or on behalf of
the State of Connecticut, any political subdivision thereof, or any public
instrumentality, state or local authority, district or similar public entity
created under the laws of the State of Connecticut, or (ii) "exempt dividends"
for Connecticut tax purposes. Distributions to Connecticut shareholders of the
CONNECTICUT FUND that are attributable to sources other than those described
above will generally be includible in the Connecticut income of such
shareholders. See "State Income Taxes" in the SAI for additional Connecticut
tax information.

FLORIDA. In the opinion of Rudnick & Wolfe, Florida tax counsel to
Multi-State Insured, under existing law, shareholders of the FLORIDA FUND will
not be subject to the Florida intangible personal property tax on their
ownership of FLORIDA FUND shares or on distributions of income or gains made by
the FLORIDA FUND to the extent that such distributions are attributable solely
to certain assets exempt from intangible tax taxation under Florida law.
Because Florida does not impose an income tax on individuals, individual
shareholders will not be subject to any Florida income tax on income or gains
distributed by the FLORIDA FUND or on gains resulting from the redemption or
exchange of shares of the FLORIDA FUND. Corporate shareholders may be subject
to the Florida income tax on distributions received from the FLORIDA FUND.
Shareholders of the FLORIDA FUND will be subject to Florida estate tax on their
FLORIDA FUND shares only if they are Florida residents, certain natural persons
not domiciled in Florida, or certain natural persons not residents of the United
States. Interests held by shareholders of the FLORIDA FUND will not be subject
to the Florida ad valorem property tax, the Florida sales and use tax or the
Florida documentary stamp tax.

GEORGIA. In the opinion of Kutak Rock, Georgia tax counsel to Multi-State
Insured, shareholders of the GEORGIA FUND that are individuals, estates, trusts,
and corporations subject to Georgia income tax may exclude from income for
Georgia taxable net income purposes, distributions from the GEORGIA FUND that
are derived from interest on obligations issued by the State of Georgia or any
political subdivision thereof, exempt from Federal taxation under section 103(a)
of the Code. Individuals, estates, trusts and corporations may exclude from
income for Georgia taxable net income purposes, interest or dividend
distributions from the GEORGIA FUND on obligations of the United States or of
any authority, commission, instrumentality or possession thereof exempt from
state income tax under Federal law. Individuals, estates, trusts and
corporations are required to include in income for Georgia taxable net income
purposes, distributions from the GEORGIA FUND attributable to short or long-term
capital gains.

<PAGE>

MARYLAND. In the opinion of Venable, Baetjer and Howard, LLP, tax counsel
to Multi-State Insured, holders of shares of the MARYLAND FUND who are subject
to Maryland state and local income tax, will not be subject to tax in Maryland
on MARYLAND FUND dividends to the extent that such dividends are attributable to
interest on tax-exempt obligations of the State of Maryland or its political
subdivisions, interest on obligations of the United States or its possessions
and territories or gains realized from the disposition of either of these
categories of obligations (with the express exception of dividends attributable
to gain from the disposition of obligations of a United States territory or
possession which are subject to Maryland state and local income tax). In
addition, dividends attributable to interest on obligations issued by states
other than Maryland and income from repurchase contracts are subject to Maryland
state and local income tax.

MASSACHUSETTS. In the opinion of Palmer & Dodge, Massachusetts tax counsel
to Multi-State Insured, holders of shares of the MASSACHUSETTS FUND who are
subject to Massachusetts personal income tax will not be subject to tax on
distributions from the MASSACHUSETTS FUND to the extent that these distributions
(1) qualify as exempt interest dividends of a regulated investment company
within the meaning of Code section 852(b)(5) that are directly attributable to
interest on obligations issued by the Commonwealth of Massachusetts, its
instrumentalities or its political subdivisions or (2) qualify as capital gain
dividends as defined in Code section 852(b)(3)(C), that are attributable to gain
on obligations issued by the Commonwealth of Massachusetts, its
instrumentalities or political subdivisions. If a holder of shares of the
MASSACHUSETTS FUND is a corporation subject to the Massachusetts corporate
excise tax, distributions received from the MASSACHUSETTS FUND are includable in
gross income and generally may not be deducted by such a corporate holder in
computing its net income. The shares of the MASSACHUSETTS FUND will be
includable in the gross estate of a deceased individual holder who is a resident
of Massachusetts for purposes of the Massachusetts Estate Tax.

NEW JERSEY. In the opinion of Hawkins, Delafield & Wood, New Jersey tax
counsel to Multi-State Insured, provided that the NEW JERSEY FUND qualifies as a
qualified investment fund under New Jersey law, shareholders of the NEW JERSEY
FUND who are New Jersey resident individuals, estates and trusts will not be
subject to the New Jersey Gross Income Tax on (1) distributions of the interest
and capital gains made by the NEW JERSEY FUND to the extent that such
distributions are with respect to New Jersey state and local bonds and (2) on
gains resulting from the redemption or sale of shares of the NEW JERSEY FUND. A
description of a qualified investment fund and of New Jersey state and local
bonds is contained in the SAI. A corporate shareholder of the NEW JERSEY FUND
subject to the New Jersey Corporation Business Tax or the New Jersey Corporation
Income Tax will be required to include in its corporate tax base (1)
distributions of interest and capital gains made by the NEW JERSEY FUND and (2)
gains resulting from the redemption or sale of shares of the NEW JERSEY FUND.

NEW YORK. In the opinion of Hawkins, Delafield & Wood, tax counsel to
Multi-State Insured, New York resident individual shareholders will not be
subject to the personal income taxes imposed by New York State and by New York
City on distributions from NEW YORK INSURED to the extent that these
distributions qualify as exempt-interest dividends, as defined in section
852(b)(5) of the Code, and are attributable to interest on obligations issued by
or on behalf of the State of New York or any political subdivision thereof.
Information concerning NEW YORK INSURED income attributable to sources other
than from New York and the tax treatment of interest on indebtedness incurred to
purchase or carry shares of NEW YORK INSURED is provided in the SAI. NEW YORK
INSURED

<PAGE>

distributions are not excluded from the determination of the franchise and
corporation taxes that are based on entire net income and respectively imposed
by the State and City of New York.

NORTH CAROLINA. In the opinion of Wyrick, Robbins, Yates & Ponton L.L.P.,
North Carolina tax counsel to Multi-State Insured, individual shareholders of
the NORTH CAROLINA FUND who are subject to North Carolina income taxation will
not be subject to such tax on NORTH CAROLINA FUND dividend distributions to the
extent that such distributions qualify as exempt-interest dividends under the
Code and represent (a) interest on direct obligations of the United States or
its possessions, (b) obligations of the State of North Carolina, its political
subdivisions or a commission, an authority, or another agency of the State of
North Carolina or its political subdivisions, or (c) obligations of nonprofit
educational institutions organized or chartered under the laws of the State of
North Carolina. The above exemptions from North Carolina income tax do not
apply to capital gain distributions received from the NORTH CAROLINA FUND.

This opinion and the information appearing in the SAI are based on the
current administrative position of the North Carolina Department of Revenue (the
"Revenue Department") as found in Chapter 105 of the North Carolina General
Statutes, the North Carolina Administrative Rules, and other rules, bulletins
and statements issued by the Revenue Department.

PENNSYLVANIA. In the opinion of Kirkpatrick & Lockhart LLP, Pennsylvania
tax counsel to Multi-State Insured, individual shareholders of the PENNSYLVANIA
FUND will not be subject to Pennsylvania personal income taxes on distributions
of interest attributable to Exempt Obligations, but will be subject to those
taxes on distributions of gains and most other sources of income from the
PENNSYLVANIA FUND. "Exempt Obligations" generally means obligations issued by
Pennsylvania and its agencies, public authorities, municipalities and other
political subdivisions as well as obligations of the United States. Exempt
interest in Pennsylvania is referred to as excludible exempt-interest dividends
and will be identified by the PENNSYLVANIA FUND.

Shares of the PENNSYLVANIA FUND will be exempt from any Pennsylvania county
personal property tax to the extent that the PENNSYLVANIA FUND'S portfolio
consists of Exempt Obligations on the annual assessment date. This tax is
imposed by most, but not all, counties in Pennsylvania. Distributions of
interest derived from Exempt Obligations are not subject to the Philadelphia
School District investment net income tax provided that the PENNSYLVANIA FUND
reports to its shareholders the percentage of Exempt Obligations held by it for
the year. The PENNSYLVANIA FUND will report this percentage to its
shareholders. Exempt-interest dividends are not subject to the Pennsylvania
corporate net income tax. Gains on Exempt Obligations are, however, subject to
this tax. Shares of the PENNSYLVANIA FUND are not considered by Pennsylvania to
be exempt when determining Pennsylvania capital stock and franchise taxes.
Please see "Federal Income Taxes" above for a discussion of "exempt-interest
dividends".

VIRGINIA. In the opinion of Sands, Anderson, Marks & Miller, a
Professional Corporation, Virginia tax counsel to Multi-State Insured, interest
on exempt obligations in the VIRGINIA FUND passed through to shareholders in
qualifying distributions will retain its exempt status in the hands of the
shareholders. Accordingly, individual shareholders of the VIRGINIA FUND subject
to Virginia personal income tax will not be required to include in their gross
income, for Virginia personal income tax purposes, distributions made by the
VIRGINIA FUND that are exclusively (1) both tax-exempt for Federal income tax
purposes and derived from interest on obligations of the Commonwealth of
Virginia or any of its political subdivisions, or (2) without regard to any
exemption

<PAGE>

from Federal income tax, derived from interest in certain obligations for which
a Virginia income tax exemption is independently provided. If a distribution
includes both taxable and tax-exempt interest, the entire distribution is
included in the gross income of the shareholder for Virginia personal income tax
purposes unless the exempt portion is designated with reasonable certainty.
Counsel has been advised that, in the event any such commingled distributions
are made by the VIRGINIA FUND, the VIRGINIA FUND intends to provide such
designation in a manner acceptable to the Virginia Department of Taxation, to
shareholders of the VIRGINIA FUND.

See "State Income Taxes" in the SAI for additional state tax information.
Investors should consult their own tax advisers for appropriate state advice.

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. 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
questions 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.

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 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

40
<PAGE>

of shares of a Fund has different expenses which will affect its performance.
Additional performance information is contained in the Tax Free Funds' Annual
Reports which may be obtained without charge by contacting the applicable Tax
Free Fund at 1-800-423-4026.

GENERAL INFORMATION

ORGANIZATION. NEW YORK INSURED was incorporated in the State of Maryland
on July 5, 1983. New York Insured's authorized capital stock consists of one
billion shares of common stock, with a par value of $.01 per share. Multi-State
Insured was organized as a Massachusetts business trust on October 30, 1985.
The seventeen series of Multi-State Insured may be referred to as:
First Investors Arizona Insured Tax Free Fund, First Investors California
Insured Tax Free Fund, First Investors Connecticut Insured Tax Free Fund, First
Investors Colorado Insured Tax Free Fund, First Investors Florida Insured Tax
Free Fund, First Investors Georgia Insured Tax Free Fund, First Investors
Maryland Insured Tax Free Fund, First Investors Massachusetts Insured Tax Free
Fund, First Investors Michigan Insured Tax Free Fund, First Investors Minnesota
Insured Tax Free Fund, First Investors Missouri Insured Tax Free Fund, First
Investors New Jersey Insured Tax Free Fund, First Investors North Carolina
Insured Tax Free Fund, First Investors Ohio Insured Tax Free Fund, First
Investors Oregon Insured Tax Free Fund, First Investors Pennsylvania Insured Tax
Free Fund and First Investors Virginia Insured Tax Free Fund.

Each Tax Free 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 the applicable Tax Free Fund's Board shall from time to time
establish. The shares of beneficial interest of Multi-State Insured are
presently divided into seventeen separate and distinct series and the shares of
common stock of NEW YORK INSURED presently comprise one series. Each Tax Free
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 Free Funds do not hold annual shareholder meetings. If requested to do so
by the holders of at least 10% of a Tax Free Fund's outstanding shares, the
applicable Tax Free 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 above.

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.

<PAGE>

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.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES. Albert R. Gordon,
8100 Connecticut Ave. #1025, Chevy Chase, MD 10815 owns 28.7% of the Class B
shares of the MARYLAND FUND and may, therefore, be deemed to control this class
of that Fund under the 1940 Act. Paul A. D'Oliveira, 2540 Pawtucket Avenue,
East Providence, RI 02915 owns 51.0% of the Class B shares of the MASSACHUSETTS
FUND and may, therefore, be deemed to control this class of that Fund under the
1940 Act. James C. Rutledge, 1615 Eastwood Drive, Kannapolis, NC 28083 owns
30.4% of the Class B shares of the NORTH CAROLINA FUND and may, therefore, be
deemed to control this class of that Fund under the 1940 Act.

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

ANNUAL AND SEMI-ANNUAL REPORTS TO SHAREHOLDERS. It is the Tax Free Funds'
practice to mail only one copy of their 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. The Tax Free Funds
will ensure that 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 . . . . . . . . . . . . . . . . . . . . . . . . 7
Investment Objectives and Policies . . . . . . . . . . . . . . . . . 16
Alternative Purchase Plans . . . . . . . . . . . . . . . . . . . . . 24
How to Buy Shares. . . . . . . . . . . . . . . . . . . . . . . . . . 25
How to Exchange Shares . . . . . . . . . . . . . . . . . . . . . . . 29
How to Redeem Shares . . . . . . . . . . . . . . . . . . . . . . . . 30
Telephone Transactions . . . . . . . . . . . . . . . . . . . . . . . 32
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Distribution Plans . . . . . . . . . . . . . . . . . . . . . . . . . 33
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . 34
Dividends and Other Distributions. . . . . . . . . . . . . . . . . . 34
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Performance Information. . . . . . . . . . . . . . . . . . . . . . . 40
General Information. . . . . . . . . . . . . . . . . . . . . . . . . 41

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

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

THIS PROSPECTUS IS INTENDED TO CONSTITUTE AN OFFER BY EACH TAX FREE FUND ONLY OF
THE SECURITIES OF WHICH IT IS THE ISSUER AND IS NOT INTENDED TO CONSTITUTE AN
OFFER BY ANY FUND OF THE SECURITIES OF ANY OTHER FUND WHOSE SECURITIES ARE ALSO
OFFERED BY THIS PROSPECTUS. NO FUND INTENDS TO MAKE ANY REPRESENTATION AS TO
THE ACCURACY OR COMPLETENESS OF THE DISCLOSURE IN THIS PROSPECTUS RELATING TO
ANY 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 FREE 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
New York Insured
Tax Free Fund, Inc.
- ---------------------------

First Investors
Multi-State
Insured Tax Free Fund
- ---------------------------

Connecticut Fund Massachusetts Fund
Florida Fund New Jersey Fund
Georgia Fund North Carolina Fund
Maryland Fund Pennsylvania Fund
Virginia 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 NEW YORK INSURED TAX FREE FUND, INC.
FIRST INVESTORS MULTI-STATE INSURED TAX FREE 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 NEW YORK INSURED TAX FREE FUND, INC.

FIRST INVESTORS MULTI-STATE INSURED TAX FREE FUND

ARIZONA FUND, CALIFORNIA FUND, COLORADO FUND, CONNECTICUT FUND, FLORIDA
FUND, GEORGIA FUND, MARYLAND FUND, MASSACHUSETTS FUND, MICHIGAN FUND,
MINNESOTA FUND, MISSOURI FUND, NEW JERSEY FUND, NORTH CAROLINA FUND, OHIO
FUND, OREGON FUND, PENNSYLVANIA FUND, VIRGINIA FUND

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
NEW YORK INSURED TAX FREE FUND, INC. ("NEW YORK INSURED") and FIRST INVESTORS
MULTI-STATE INSURED TAX FREE FUND (collectively, the "Tax Free Funds"), each an
open-end diversified management investment company. NEW YORK INSURED consists
of a single investment series and FIRST INVESTORS MULTI-STATE INSURED TAX FREE
FUND ("Multi-State Insured") consists of seventeen separate investment series
(singularly, "Fund," and collectively, "Funds").

NEW YORK INSURED. The investment objective of NEW YORK INSURED is to
provide a high level of interest income that is exempt from Federal income tax,
New York State, New York City personal income taxes and is not an item of tax
preference for purposes of the Federal alternative minimum tax ("Tax Preference
Item").

MULTI-STATE INSURED. The investment objective of each Fund of Multi-State
Insured is to achieve a high level of interest income that is exempt from
Federal income tax and, to the extent indicated for a particular Fund, from
state and local income taxes for residents of that state and is not a Tax
Preference Item.

There can be no assurance that any Fund will achieve its investment
objective.

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

<PAGE>

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

Investment Policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Hedging and Option Income Strategies . . . . . . . . . . . . . . . . . . . 8
Investment Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . 14
Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
State Specific Risk Factors. . . . . . . . . . . . . . . . . . . . . . . . 22
Directors or Trustees and Officers . . . . . . . . . . . . . . . . . . . . 59
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Underwriter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Distribution Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . . 66
Allocation of Portfolio Brokerage. . . . . . . . . . . . . . . . . . . . . 67
Reduced Sales Charges, Additional Exchange and
Redemption Information and Other Services. . . . . . . . . . . . . . . . 67
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Performance Information. . . . . . . . . . . . . . . . . . . . . . . . . . 84
General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Appendix C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Appendix D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . .

<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, airport bonds
and university dormitory bonds, during periods when one or more of these
segments offer higher yields and/or profit potential. As of December 31, 1995,
the percentage of assets of each Fund concentrated in a particular segment of
the bond market is as follows: NEW YORK INSURED - 29.6% in transportation
bonds; ARIZONA FUND - 47.8% in general obligation bonds; COLORADO FUND - 46.0%
in general obligation bonds; CONNECTICUT FUND - 39.4% in general obligation
bonds; FLORIDA FUND - 42.9% in utilities bonds; GEORGIA FUND - 25.1% in general
obligation bonds and 36.0% in utilities bonds; MARYLAND FUND - 34.4% in general
obligation bonds; MASSACHUSETTS FUND - 32.0% in hospital bonds; MICHIGAN FUND -
54.8% in general obligation bonds; MINNESOTA FUND - 48.5% in general obligation
bonds and 26.4% in hospital bonds; MISSOURI FUND - 27.7% in hospital bonds; NEW
JERSEY FUND - 24.7% in hospital bonds; NORTH CAROLINA FUND - 53.0% in general
obligation bonds; OHIO FUND - 75.3% in general obligation bonds; OREGON FUND -
37.5% in general obligation bonds; PENNSYLVANIA FUND - 33.6% in utilities bonds;
and VIRGINIA FUND - 28.1% in utilities 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. Each 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. Each 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

<PAGE>

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 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. NEW YORK INSURED may loan securities to
qualified broker-dealers or other institutional investors provided: the borrower
pledges to the Fund and agrees to maintain at all times with the Fund 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
the Fund, the Fund pays only reasonable custodian fees in connection with the
loan, and the Adviser monitors the creditworthiness of the borrower throughout
the life of the loan. Such loans may be terminated by the Fund at any time and
the Fund may vote the proxies if a material event affecting the investment is to
occur. The market risk applicable to any security loaned remains a risk of the
Fund. The borrower must add to the collateral whenever the market value of the
securities rises above the level of such collateral. The Fund could incur

<PAGE>

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 the Fund's income through investment of the
cash collateral in short-term interest bearing obligations. The Fund may make
loans, together with illiquid securities, not in excess of 15% of its net
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 price. The borrower
simultaneously agrees to repurchase that same security at a higher price on a
future date (which typically is the next business day). The difference between
the purchase price and the repurchase price effectively constitutes the payment
of interest. In a standard repurchase agreement, the securities which serve as
collateral are transferred to a Fund's custodian bank. In a "tri-party"
repurchase agreement, these securities would be held by a different bank for the
benefit of the Fund as buyer and the broker-dealer as seller. In a "quad-party"
repurchase agreement, the Fund's custodian bank also is made a party to the
agreement. Each Fund may enter into repurchase agreements with banks which are
members of the Federal Reserve System or securities dealers who are members of a
national securities exchange or are market makers in government securities. The
period of these repurchase agreements will usually be short, from overnight to
one week, and at no time will a Fund invest in repurchase agreements with more
than one year in time to maturity. The securities which are subject to
repurchase agreements, however, may have maturity dates in excess of one year
from the effective date of the repurchase agreement. Each Fund will always
receive, as collateral, securities whose market value, including accrued
interest, which will at all times be at least equal to 100% of the dollar amount
invested by the Fund in each agreement, and the Fund will make payment for such
securities only upon physical delivery or evidence of book entry transfer to the
account of the custodian. If the seller defaults, a Fund might incur a loss if
the value of the collateral securing the repurchase agreement declines, and
might incur disposition costs in connection with liquidating the collateral. In
addition, if bankruptcy or similar proceedings are commenced with respect to the
seller of the security, realization upon the collateral by a Fund may be delayed
or limited. No Fund may enter into a repurchase agreement with more than seven
days to maturity if, as a result, more than 15% of such Fund's net assets would
be invested in such repurchase agreements and other illiquid investments.

RESTRICTED AND ILLIQUID SECURITIES. No 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 the applicable Tax Free
Fund's Board or the Adviser has determined under Board-approved guidelines are
liquid.

Restricted securities which are illiquid may be sold only in privately
negotiated transactions or in public offerings with respect to which a
registration statement is in effect under the 1933 Act. Such securities include
those that are subject to restrictions contained in the securities laws of other
countries. Securities that are freely marketable in the country where they are
principally traded, but would not be freely marketable in the United States,
will not be subject to 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.

<PAGE>

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

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

<PAGE>

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 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. The Adviser manages each Fund's portfolio by the
purchase and sale of securities with a view to achieving its investment
objective. Securities are purchased and sold in response to their current
yields and evaluation of an issuer's ability to meet its debt obligations in the
future and assessment of future changes in the levels of the interest rates on
municipal bonds of varying maturities. Although each Fund has no current
intention of purchasing securities for this purpose, each Fund may engage to a
limited extent in short-term trading consistent with its investment objective
and policies (to secure higher income, to preserve capital or to upgrade the
quality of bonds held). A portfolio turnover rate of 100% would occur, for
example, 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 replaced in a single 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, the portfolio turnover rate for NEW YORK
INSURED was 55% and 53%, respectively. For the fiscal years ended December 31,
1994 and 1995, the portfolio turnover rate for each Fund of Multi-State Insured
was as follows:

<PAGE>

<TABLE>
<CAPTION>
Fiscal Year Fiscal Year
Ended Ended
December 31, 1994 December 31, 1995
----------------- -----------------
<S> <C> <C>
ARIZONA FUND 63% 36%
CALIFORNIA FUND 83 53
COLORADO FUND 108 45
CONNECTICUT FUND 63 26
FLORIDA FUND 98 68
GEORGIA FUND 78 45
MARYLAND FUND 44 49
MASSACHUSETTS FUND 64 40
MICHIGAN FUND 60 45
MINNESOTA FUND 34 53
MISSOURI FUND 98 50
NEW JERSEY FUND 60 30
NORTH CAROLINA FUND 61 76
OHIO FUND 57 70
OREGON FUND 135 36
PENNSYLVANIA FUND 81 48
VIRGINIA FUND 55 34
</TABLE>

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 Free 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."

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.

<PAGE>

Although each Fund may engage in the strategies listed below, they intend
only to engage in transactions involving financial 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 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

<PAGE>

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
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 Free 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.

<PAGE>

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 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

<PAGE>

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 Tax Free Fund has represented the foregoing to the
CFTC.

FUTURES GUIDELINES. In view of the risks involved in using futures
strategies described below, each Tax Free Fund's Board of Directors or Trustees
has adopted non-fundamental investment guidelines to govern the use of such
investments by the Funds 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

<PAGE>

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.

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.

<PAGE>

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.

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 approval of a 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 that
Fund at the time it purchases any security.

<PAGE>

NEW YORK INSURED. NEW YORK INSURED 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, except by purchase of debt obligations and through
repurchase agreements. However, the Fund's Board of Directors may, on the
request of broker-dealers or other institutional investors which they deem
qualified, authorize the Fund to loan securities to cover the borrower's short
position; provided, however, the borrower pledges to the Fund and agrees to
maintain at all times with the Fund cash collateral equal to not less than 100%
of the value of the securities loaned; and, further provided, that such loans
will not be made if the value of all such loans, repurchase agreements maturing
in more than seven days and other illiquid assets is greater than an amount
equal to 15% of the Fund's net assets.

(3) Purchase the securities of any issuer (other than obligations issued
or guaranteed as to principal and interest by the Government of the United
States or any agency or instrumentality thereof) if, as a result thereof, (a)
more than 5% of the Fund's total assets (taken at current value) would be
invested in the securities of such issuer, or (b) the Fund would hold more than
10% of any class of securities (including any class of voting securities) of
each issuer (for this purpose, all debt obligations of an issuer maturing in
less than one year are treated as a single class of securities).

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

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

(6) Purchase a Municipal Instrument unless it is an Insured Municipal
Instrument, or is already insured by a policy of insurance or, as to uninsured
municipal commercial paper or municipal notes, is supported by a letter of
credit or other similar guarantee obtained by the issuer or underwriter thereof.

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

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

<PAGE>

(9) Buy or sell real estate or interests in oil, gas or mineral
exploration, or issue 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.

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

<PAGE>

MULTI-STATE INSURED. Each Fund of Multi-State Insured 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 a 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) Purchase, as to 75% of each Fund's total assets (taken at current
value), the securities of any issuer (other than the U.S. Government) if, as a
result thereof, more than 5% of the total assets of such Fund would be invested
in the securities of such issuer. When the assets and revenues of an agency,
instrumentality or political subdivision issuing a Municipal Instrument or other
security are distinct from the assets and revenues of the government which
created the issuing entity, and the Municipal Instrument is supported by the
issuing entity's assets and revenues, the issuing entity is deemed to be the
sole issuer of the Municipal Instrument or security. If an industrial
development bond is supported only by the payments of the nongovernmental
beneficiary of the industrial development bond, then such nongovernmental entity
is deemed to be the sole issuer. With respect to pre-refunded bonds, the
Adviser considers an escrow account to be the issuer of such bonds when the
escrow account consists solely of U.S. Government obligations fully substituted
for the obligation of the issuing municipality.

(3) Purchase the securities of any issuer (other than the U.S. Government)
if, as a result thereof, any Fund would hold more than 10% of any class of
securities (including any class of voting securities) of such issuer.

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

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

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

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

(8) Make loans, except by purchase of debt obligations, publicly
distributed bonds or debentures (which are not considered loans), and through
repurchase agreements.

Multi-State Insured, on behalf of the Funds, has adopted the following
non-fundamental investment restrictions, which may be changed without
shareholder approval. They provide that each Fund will not:

<PAGE>

(1) Purchase any security if, as a result, more than 15% of its net assets
would be invested in illiquid securities, including repurchase agreements not
entitling the holder to payment of principal and interest within seven days and
any securities that are illiquid by virtue of legal or contractual restrictions
on resale or the absence of a readily available market. The Trustees, or the
Funds' investment adviser acting pursuant to authority delegated by the
Trustees, 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 each 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 a 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 such Fund, or enter
into any futures contracts or options on futures contracts if the aggregate
amount of a Fund's commitments under outstanding futures contracts positions and
options on future contracts written by such Fund would exceed the market value
of the total assets of such Fund.

(4) Pledge assets, except that a Fund may pledge its assets to secure
borrowings made in accordance with fundamental investment restriction (1) above,
provided such 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 a Fund's use of options, futures
contracts or options on futures contracts.

(5) Purchase securities on margin, except that a 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.

Multi-State Insured, on behalf of the Funds, has filed the following
undertaking to comply with the requirements of a certain state in which shares
of the Funds are sold, which may be changed without shareholder approval: Each
Fund will not purchase or retain the securities of any issuer if the officers,
directors or trustees of Multi-State Insured, the Adviser, or managers own
beneficially more than one-half of one percent of the securities and together
own beneficially more than five per cent of such securities.

<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.

<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 Fund, there is a
contract of insurance between AMBAC Indemnity and Executive Investors Trust,
between AMBAC Indemnity and First Investors Series Fund and between AMBAC
Indemnity and First Investors Insured Tax Exempt 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

<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 Prospectuses and this Statement of
Additional Information.

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

<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.

STATE SPECIFIC RISK FACTORS

Set forth below is additional discussion of risk factors to the discussion
in the Prospectus with respect to some of the Fund that invest primarily in
obligations of issuers from a particular state. Neither Multi-State Insured nor
NEW YORK INSURED have independently verified this information.

RISK FACTORS FOR THE ARIZONA FUND. Arizona's economy relies in part on
services, manufacturing dominated by electrical, transportation and military
equipment, government, tourism and the military. State unemployment rates have
remained generally comparable to the national average in recent years.
Arizona's economy is continuing to expand at a moderate but consistent rate.
Restrictive government spending, weak export markets, resizing of the defense
industry and layoffs in the private sector are expected to continue to restrain
the pace of expansion. The condition of the national economy will continue to
be a significant factor influencing Arizona's economy.

With respect to issuers in the securities of which the ARIZONA FUND will
invest, Arizona's state constitution limits the amount of debt payable from
general tax revenue that may be contracted by the State to $350,000. However,
certain other issuers have the power to issue obligations payable from a source
of revenue which affect the whole or large portions of the State. For example,
the Transportation Board of the State of Arizona Department of Transportation
may issue obligations for highways which are paid from revenues generated from,
among other sources, state gasoline taxes. Salt River Project Agricultural &
Improvement District, an agricultural improvement district that operates the
Salt River Project (a Federal reclamation project and an electric system which
generates, purchases, and distributes electric power to residential, commercial,
industrial, and agricultural power users in a 2,900 square-mile service area
around Phoenix), may issue obligations payable from a number of sources.

Arizona's state constitution also restricts the debt payable from general
tax revenues of certain of the State's political subdivisions and municipal
corporations. No county, city, town, school district, or other municipal
corporation of the State may for any purpose become indebted in any manner in an
amount exceeding six percent of the taxable property in such county, city, town,
school district, or other municipal corporation without the assent of a majority
of the qualified electors thereof voting at an election provided by law to be
held for that purpose; provided, however, that (a) under no circumstances may
any county or school district of the State become indebted in an amount
exceeding fifteen percent (or thirty percent in the case of a unified school
district) of such taxable property and (b) any incorporated city or town of the
State with such assent may be allowed to become indebted up to a twenty percent
additional amount for (i) supplying such city or town water, artificial light,
or sewers, when the works for supplying such water, light or sewers are or shall
be owned and controlled by the municipality and (ii) the acquisition and
development by the incorporated city or town of land or interests therein for
open space preserves, parks, playgrounds and recreational facilities.
Irrigation, power, electrical, agricultural improvement, drainage, flood control
and tax levying public improvement districts are, however, exempt from such
restrictions of the constitution. There are also restrictions relating to such
entities implemented by statute.

<PAGE>

Annual property tax levies for the payment of general obligation bonded
indebtedness of political subdivisions and municipal corporations are unlimited
as to rate or amount (other than for purposes of refunding when there are
certain limits). Other obligations may be issued by such entities, sometimes
without an election, which are payable from, among other sources, project
revenues, special assessments and excise taxes.

Arizona political subdivisions and municipal corporations are subject to
certain other limitations on their ability to assess taxes and levies which
could affect their ability to meet their financial obligations. Subject to
certain exceptions, the maximum amount of property taxes levied by any Arizona
county, city, town or community college district for their operations and
maintenance expenditures cannot exceed the amount levied in a proceeding year by
more than two percent. Certain taxes are specifically exempt from this limit,
including taxes levied for debt service payments.

RISK FACTORS FOR THE CALIFORNIA FUND. Changes in California constitutional
and other laws during the last several years have restricted the ability of
California taxing entities to increase real property tax revenues and other tax
sources and, through limiting various other taxes, have resulted in a reduction
in the absolute amount, or in the rate of growth, of certain components of state
and local revenues. These actions have raised additional questions about the
ability of California State and municipal issuers to obtain sufficient revenue
to pay their bond obligations. In 1978, California voters approved an amendment
to the California Constitution known as "Proposition 13." Proposition 13 limits
ad valorem taxes on real property and restricts the ability of taxing entities
to increase real property taxes. Legislation passed subsequent to Proposition
13, however, provided for the redistribution of California's General Fund
surplus to local agencies, the reallocation of revenues to local agencies and
the assumption of certain local obligations by the State so as to help
California municipal issuers to raise revenue to pay their bond obligations. It
is unknown, however, whether additional revenue redistribution legislation will
be enacted in the future and whether, if enacted such legislation would provide
sufficient revenue for such California issuers to pay their obligations.

The State is also subject to Article XIIIB of the State's Constitution,
which may have an adverse impact on California State and municipal issuers.
Article XIIIB restricts the State from spending certain appropriations in excess
of an appropriations limit imposed for each State and local government entity.
If revenues exceed such appropriations limit, such revenues must be returned to
the taxpayers.

In 1988, Proposition 98 was enacted by the voters of California.
Proposition 98 changed state funding of public education below university level,
primarily by guaranteeing K-12 schools a minimum share of General Fund revenues.
Currently, the Proposition 98 formulas require the allocation of approximately
40% of General Fund revenues to such educational support.

Expenditures exceeded revenues for four of the five fiscal years ending
with 1991-1992. Revenue and expenditures were essentially equal in 1992-1993,
but the original budget for that year projected revenues exceeding expenditures
by $2.6 billion. By June 30, 1993, according to the Department of Finance, the
State's Reserves for Economic Uncertainties had a deficit, on a budget basis, of
approximately $2.8 billion. The 1993-94 Budget Act planned to retire the
accumulated $2.8 billion prior year budget deficit by December 31, 1994.
Although the full amount of this accumulated deficit was not eliminated by
December 31, 1995, the State projects the elimination of this accumulated
deficit by the end of 1996. There is no assurance that any of these assumed
events will occur or that the accumulated deficit will be eliminated or even
reduced within the contemplated timeframe.

<PAGE>

In January, 1996, the Governor submitted a proposed budget for 1996-97
which projects a $400 million surplus.

Local agency and municipal revenues are often highly dependent upon the
level of state appropriations. Accordingly, constraints at the state level tend
to result in revenue reductions at the local level. Thus, the substantial
fiscal pressures that are currently being experienced on the state level, and
which are expected to continue into subsequent years, are expected to be
mirrored at the local level.

The rights of owners of California governmental securities are subject to
the limitations on legal remedies against the governmental entity issuing such
securities, including a limitation on enforcement of judgments against funds
needed to service the public welfare and interest, and in some instances a
limitation on the enforcement of judgments against the entity's funds of a
fiscal year other than the fiscal year in which the payments were due.

As indicated in the Prospectus, the CALIFORNIA FUND holds securities of
certain agencies that invested in the Pool, including OCTA and SOCPA (as defined
in the Prospectus). As of the date of this SAI, all principal and interest
payments have been made by OCTA and SOCPA when due, but there is no guarantee
that they will be made in the future. Both securities issues are insured by a
nationally recognized municipal bond insurance corporation. As of the date of
this Prospectus, neither security has had its rating downgraded by a nationally
recognized rating agency. However, although each insurance company that has
insured obligations of entities who were invested in the Pool have indicated its
intention to honor its policies, there can be no assurance at this time that
each such insurance company will have the ability to pay the debt service on
these obligations when due or whether it may raise defenses with respect to such
policy.

In addition, should OCTA and/or SOCPA not make debt service payments when
due, enforceability of either's obligations may become subject to the Federal
Bankruptcy Code and applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws relating to or affecting the enforcement of
creditors' rights generally, now or hereafter in effect; equity principals which
may limit the specific enforcement under State law of certain remedies; the
exercise by the United States of America of the powers delegated to it by the
Constitution; and the reasonable and necessary exercise, in certain exceptional
situations, of the police powers inherent in the sovereignty of the State of its
governmental bodies in the interest of serving a significant and legitimate
public purpose. Bankruptcy proceedings, or the exercise of powers by the
federal or state governments, if initiated, could subject the owners of the
securities of any governmental entity to judicial discretion and interpretation
of their rights in bankruptcy or otherwise, and consequently may entail risks of
delay, limitation, or modification of their rights.

RISK FACTORS FOR THE COLORADO FUND. The COLORADO FUND will concentrate its
investments in debt obligations of the State of Colorado and its local
government entities (the "Colorado Obligations"). The information contained
herein is not intended to be a complete discussion of all relevant risk factors,
and there may be other factors not discussed herein that may adversely affect
the value of and the payment of interest and principal on the Colorado
Obligations.

Colorado's economy began to improve in the late 1980's, recovering from a
recession largely caused by contractions in the energy, high technology and
construction industries. The recovery has been fueled, in part, by large public
construction projects, net in-migration, a healthy tourist economy, and
increases in the wholesale and retail trade sector and the general services
sector. Now, however, most of

<PAGE>

the large public works projects are completed, net migration is slowing as the
national economy improves, and tourism is troubled since the voters failed in
1993 to approve an extension of the statewide tourism tax. "Consequently, the
Colorado Office of State Planning and Budgeting has stated that Colorado's
economic forecast is fraught with more uncertainty than at any time in the past
several years. The proposed changes in the federal budget will shift more
responsibilities to the State, just as the State's economy is slowing down.
Colorado's non-agricultural job growth will barely stay ahead of U.S. rates in
1996 and 1997."

Employment in the service and trade industries represents approximately 54%
of the State's nonagricultural wage and salary jobs, and government employment
represents approximately 17%. Manufacturing represents only 11% and, while
total jobs in the sector are increasing, manufacturing is slowly falling as a
percentage of total employment, due in part to a concentration in defense-
related production. Colorado's unemployment rate was 4.0% in 1995, a 17-year
low and below the national rate of 5.6%. Colorado added 60,000 jobs in 1995,
to reach an all time high of 2,001,000.

There are approximately 2,000 units of local government in Colorado,
including counties, statutory cities and towns, home-rule cities and counties,
school districts and a variety of water, sewer and other special districts, all
with various constitutional and statutory authority to levy taxes and incur
indebtedness. The major sources of revenue for payment of indebtedness are the
ad valorem property tax, which presently is imposed and collected solely at the
local level, sales and use taxes (for cities and counties) and revenue from
special projects. Residential real property is assessed at 10.36% of its actual
value for 1996 ad valorem taxes. All other property is assessed at 29% of its
actual value except producing mines and oil and gas properties. Oil and gas
properties are assessed at 87.5%. In 1994, the last year for which such
information is currently available, the assessed valuation of all real and
personal property in Colorado was $29,831,046,660, an increase of 3.2% from 1993
levels. In 1993 and 1994, $2,421,892,140 and $2,512,514,138, respectively, were
collected in property taxes throughout Colorado.

RISK FACTORS FOR THE CONNECTICUT FUND. Traditionally, Connecticut has been
viewed primarily as a manufacturing and industrial state. While manufacturing
remains a dominant factor in the State's economy, other sectors, particularly
finance, insurance, real estate, trade (wholesale and retail) and services, have
expanded to provide diversification tending to somewhat dilute the influence of
manufacturing. Manufacturing provided approximately 18.3% of total employment
in fiscal year 1995.

An important sector of Connecticut's economy, defense-related business
(approximately 2.7% of gross state product), has declined significantly since
the late 1980's and early 1990's, which has negatively affected Connecticut's
economy. Defense contract awards to Connecticut firms have traditionally been
among the highest in the nation, ranking from sixth to fourteenth among all
states in total contract awards. For the fiscal year ending June 30, 1994,
Connecticut firms were awarded contracts totalling $2.45 billion or 2.2% of all
contracts awarded. This figure was down 15.4% from the previous fiscal year,
due largely to the reduction in the federal government defense-related spending.

In recent years, a variety of factors, including difficulties in the
banking and insurance industries in New England (which resulted in the
tightening of credit), the reduction in defense employment, and the softening of
the real estate and construction markets, have impeded the growth of the
Connecticut economy which has, however, begun a modest recovery over the past
three years. Connecticut housing starts, for example, have increased for the
fourth consecutive year over the prior year's housing starts.

<PAGE>

Housing starts increased by 11.8% for the fiscal year ended June 30, 1995; by
1.3% for the fiscal year ended June 30, 1994; and by 2.3% for the fiscal year
ended June 30, 1993.

The annual average unemployment rate (seasonally adjusted) in Connecticut
decreased to 5.3% in the fiscal year ended June 30, 1995 from 5.6% in the fiscal
year ended June 30, 1994. This decrease in unemployment resulted primarily from
an increase in non-manufacturing employment which is expected to continue as the
economy expands. However, continued improvement may be jeopardized due to the
expected ongoing contraction in defense manufacturing employment and
restructuring in the insurance and banking industries. The State unemployment
rate for January 1996 was reported at 5.3% (seasonally adjusted), which was up
slightly from 5.2% (seasonally adjusted) in December 1995.

Fiscal year 1995 ended with a deficit of $242 million, the first deficit
since 1992, with expenditures growing faster than revenues. The State
Comptroller reported a deficit from the State's General Fund operations of
approximately $77 million for the fiscal year ended June 30, 1992 (excluding
proceeds received from deficit financing); a surplus of $93 million for the
fiscal year ended June 30, 1993; and a surplus of $51 million for the fiscal
year ended June 30, 1994. On March 1, 1996, the State Comptroller's office
reported that it was projected that the General Fund operations were projected
to show a deficit of $23.2 million for the 1996 fiscal year. The Governor's
recommended budget for the upcoming biennium includes a plan to substantially
reduce this deficit primarily through legislative action to reduce spending and
taxes and to create jobs.

Historically, deficits have been funded by appropriations from a Budget
Reserve Fund comprised of unappropriated budget surpluses from previous fiscal
years. To help fund the cumulative General Fund deficit of approximately $1.2
billion, the State issued $966 million in long-term debt obligations (Economic
Recovery Fund Notes) in the 1992 fiscal year and approximately $25 million in
the 1993 fiscal year. Payments of principal and interest on the Economic
Recovery Fund Notes are projected to be paid from tax revenues transferred from
the State's General Fund to the Economic Recovery Fund, a fund specifically
established for the purpose of retiring the deficit notes. For the fiscal years
ended June 30, 1994 and 1995, $149.6 million and $106.6 million, respectively,
were transferred from the General Fund to the Economic Recovery Fund. The
issuance of these deficit notes could impact the State's bond ratings and
increase the State's interest cost on all borrowings. In addition, deficit
notes may reduce the State's flexibility in future budgets due to the higher
fixed costs for debt service.

In addition to the General Fund, the State also operates several Special
Revenue Funds which are often used as a means of earmarking or reserving certain
revenues to finance particular activities. These include, among others, the
Transportation Fund, the Grant and Loan Programs Fund and the Housing Programs
Fund. These Special Revenue Funds are generally funded by each fund's operating
revenues. According to the State Comptroller's report, the Special Revenue
Funds incurred an aggregate net operating deficit of $381 million in the fiscal
year ended June 30, 1995 (excluding proceeds received from debt financing) which
is a decrease from $416 million incurred in the fiscal year ended June 30, 1994.
This deficit was incurred primarily by the Grant and Loan Programs Fund ($307
million operating deficit) and was financed by bond proceeds.

The three major sources of revenue for the State are the personal income
tax, the sales and use taxes, and the corporation business tax. According to
the State Comptroller, the imposition of the personal income tax, which began in
fiscal year 1991, raised approximately $2.5 billion in revenues in each of
fiscal years 1994 and 1995.

<PAGE>

The authorization and issuance of State and municipal debt, including the
purpose, amount and nature thereof, the method and manner of the incurrence of
such debt, the maturity and terms of repayment thereof, and other related
matters are governed by statute and, pursuant to various public acts or special
bond acts, the State has authorized and issued bonds for a variety of projects
and purposes. The State has no constitutional or other limit on its power to
issue obligations or incur indebtedness other than that it may only borrow for
public purposes. Section 3-21 of the Connecticut General Statutes does,
however, provide that no indebtedness for borrowed money payable from the
General Fund tax receipts of the State may be authorized by the General Assembly
except such as shall not cause the aggregate amount of such indebtedness (with
certain exclusions) to exceed 1.6 times the total estimated General Fund tax
receipts of the State during the fiscal year in which any such authorization
will become effective.

In each of fiscal years 1994 and 1995, the State issued approximately $1
billion in long term general obligation bonds. Debt service as a percent of
governmental expenditures for the fiscal year ended June 30, 1995 increased to
8.4% from 7.3% for the fiscal year ended June 30, 1994. Public debt per capita
increased to $2,473 for the fiscal year ended June 30, 1995 from $2,271 for the
fiscal year ended June 30, 1994 and is currently 48% more than the fiscal year
ended June 30, 1990. For the fiscal year ended June 30, 1995, State general
obligation bonds were rated Aa, AA-, and AA by Moody's, S&P, and Fitch Investors
Service ("Fitch"), respectively. Fitch reduced its rating from AA+ in March,
1995 due to a weak recovery from the recession compounded by continuing defense
industry cutbacks and downsizing and mergers in the high profile insurance and
financial sectors. For the fiscal year ended June 30, 1995, transportation-
related special tax obligation bonds were rated A1, AA- and AA- by Moody's,
S&P, and Fitch, respectively.

In general, the State has borrowed money through the issuance of general
obligation bonds, the payment of which is backed by the full faith and credit of
the State. However, the State also has the power to authorize, and has
authorized and issued, revenue bonds payable from project revenues and to some
extent, supported by a pledge of certain taxes. Such bonds are not backed by
the full faith and credit of the State. For example, the State adopted
legislation that provides for the issuance of the transportation-related special
tax obligation bonds, the proceeds of which are to be used to pay for
improvements to the State's transportation system. The bonds are payable solely
from motor vehicle, motor fuel and other transportation-related taxes and fees,
charges and other receipts pledged therefor and deposited in the Special
Transportation Fund. The amount of revenues for any such project is dependent
on the occurrence of future events and may thus differ materially from projected
amounts.

In addition, the State has established various statewide authorities and
two regional water authorities, one of which has since become independent, to
finance revenue producing projects. Five of such statewide authorities have the
power to incur, under certain circumstances, indebtedness for which the State
has contingent or, in limited cases, direct liability. In addition, recent
State statutes have been enacted with respect to certain bonds issued by the
City of Bridgeport for which the State has contingent liability and by the City
of West Haven for which the State has direct guarantee liability. From time to
time, pursuant to public or special acts, the State has created or authorized
the creation of other authorities with power to incur indebtedness and to
finance projects, such as a statewide health and educational facilities
authority. Indebtedness of such authorities does not constitute a liability or
debt of the State.

RISK FACTORS FOR THE FLORIDA FUND. The following information is a brief
summary of factors affecting the economy of the state and does not purport to be
a complete description. This summary is

<PAGE>

based on publicly available information. The FLORIDA FUND has not independently
verified the information.

Municipal instruments of Florida issuers may be adversely affected by
political, economic and legal conditions and developments within the State of
Florida. In addition, the Florida constitution and statutes mandate a balanced
budget as a whole, and require each of the separate funds (General Revenue Fund,
Trust Funds and Working Capital Fund) within the budget to be kept in balance
from currently available revenues each State fiscal year (July 1 - June 30).
The balanced budget requirement necessitates a continuous evaluation of receipts
and expenditures and makes Florida vulnerable to a sharp unexpected decrease in
revenues.

The State of Florida is not authorized by law to issue obligations to fund
governmental operations; but is authorized to issue bonds pledging its full
faith and credit to finance or refinance the cost of state fixed capital outlay
projects upon approval by a vote of the electors. However, Florida may issue
revenue bonds without a vote to finance or refinance the cost of state fixed
capital outlay projects which are payable solely from funds other than state tax
revenues. Municipal instruments issued by cities, counties and other
governmental authorities are payable either from their general revenues
(including ad valorem and other taxes) within their jurisdiction or revenues
from the underlying project. Revenue obligations issued by such governmental
bodies and other entities are customarily payable only from revenues from the
particular project or projects involved. The limitations on the State of
Florida and its governmental agencies and Florida local governmental agencies
may inhibit the ability of such issuers to repay existing municipal indebtedness
and otherwise may affect their credit standing. In addition, the ability of
such issuers to repay revenue bonds will be dependent on the success of the
particular project to which such bonds relate.

The State of Florida has grown dramatically. In 1950, Florida was the
twentieth most populous state with a population of 2.8 million. In 1980,
Florida was the seventh most populous state with a population of 9.7 million.
As of April 1, 1994, Florida's population was approximately 13.9 million,
ranking Florida as the fourth most populous state nationally and the most
populous of the southeastern states. Florida continues to be the fastest
growing of the 11 largest states.

Florida's growth is partially caused by the number of retirees moving to
take advantage of the favorable climate. In-migration has historically been a
major driving force of Florida's economy. However, nationally, the growth in
the number of young adults and retirees, the two groups most likely to move to
Florida, is expected to decline significantly, as a result of changes in the
overall age structure of the U.S. population. Demographers expect Florida
population growth in the 1990s to be significantly below the level of the 1980s.
Since 1983, the State's average annual rate of population increase has been
approximately 2.5%, as compared to an approximately 1.0% average annual increase
for the nation as a whole. The State's annual population growth is expected to
hover close to the 250,000 range throughout the 1990s.

Florida's population growth is one reason Florida's economy has generally
performed better than the nation as a whole. However, continued population
growth is no assurance of a strong economy. In addition, despite projections
for slower overall population growth, an acceleration in the growth rate of
Florida's school age population and over-80 population is expected, increasing
the demands for government services particularly in the education and health
care areas.

<PAGE>

Because Florida has a proportionally greater retirement age population,
property income (dividends, interest, and rent) and transfer payments (including
social security and pension benefits) are a relatively more important source of
income than in the nation and the southeast. Property income, and transfer
payments are typically less sensitive to national business cycles than
employment income and therefore, have traditionally acted as a stabilizing force
within Florida's economy. Florida's retirement age population, living in part
on interest income, will be adversely affected by any drops in interest rates.
Efforts at both the state and federal level are underway to reduce health care
expenditures and Florida relies more than most other states on federal Medicare
and Medicaid dollars targeted to the elderly. In addition, cuts in entitlements
such as Social Security could have an adverse impact on Florida's economy.
Feared entitlement cuts themselves have the effect of reducing the consumer
confidence of Florida's elderly population.

The service sector is Florida's largest employer. Florida is predominantly
a service-oriented state, in the bottom fifth of states in per capita value
added to the economy by manufacturing. In contrast, the southeast and the
nation have a greater proportion of manufacturing jobs which tend to pay higher
wages. Recent consolidations, restructurings and failures in the service sector
have adversely affected the Florida economy. In addition, manufacturing jobs in
Florida differ substantially from those available nationwide and in the
southeast, which are more concentrated in areas such as heavy equipment, primary
metals, chemicals and textile mill products. Florida has a concentration of
manufacturing jobs in high-tech and high value-added sectors, such as electrical
and electronic equipment, as well as printing and publishing. These kinds of
manufacturing jobs tend to be less cyclical than other forms of manufacturing
employment. From 1980 to 1994, the total number of manufacturing jobs in
Florida has increased by over 27,000, compared to a significant decline in
national manufacturing employment. However, defense cutbacks and a diminished
space program will make it difficult to expand or even maintain Florida's
existing small high-tech manufacturing base.

In the area of international trade, Florida is considered well positioned
to take advantage of strong economic growth in Latin America. Florida's exports
to its top five Latin American markets (Brazil, Columbia, Argentina, Venezuela
and Dominican Republic) reached a record $10 billion in 1994.

In 1994, Florida's job base grew by about 225,000 or 4%, however,
approximately 25% of the new jobs were temporary positions. It is estimated
that 80% of Florida's job growth will continue to be in services, retail and
government. The average unemployment rate in Florida since 1985 has been
approximately 6.3%, while the national average is 6.4%.

Florida's economy has been and currently is dependent on the highly
cyclical construction and construction related manufacturing sectors. Florida's
single and multi-family housing starts accounted for approximately 8.5% of total
U.S. housing starts in 1994, although Florida's population is 5.3% of the U.S.
population. Traditionally, Florida's rapid growth in population has been a
driving force behind Florida's construction industry. However, factors such as
Federal tax reform, the availability and cost of financing, overdevelopment,
impact and other development fees and Florida's growth management legislation
and comprehensive planning requirements may adversely affect construction
activity. Lower interest rates will tend to stimulate construction, while
increased rates will diminish construction activity.

Tourism is one of Florida's most important industries. Approximately 39.9
million domestic and international tourists visited Florida in 1994. Crimes and
violence against tourists have been publicized in the national and international
media and have adversely affected tourism in Florida. Due to these and

<PAGE>

other factors, there was a 2.7% decrease in the number of tourists visiting
Florida from 1993 to 1994. Competition from other destinations could also
adversely affect the tourist industry. Nevertheless, tourist arrivals are
expected to increase by 1.3% this year.

The greatest single source of tax receipts in Florida is the sales and use
tax, which accounted for approximately $10.7 billion of revenue in the 1994-1995
fiscal year. The State's dependence on sales taxes keeps the state susceptible
to economic downturns which could cause a reduction in sales tax collections.

Florida depends more on sales taxes than most other states. This reliance
has increased over time primarily because of a constitutional prohibition of a
personal income tax and the reservation of ad valorem property taxes to local
governments. The State does not levy ad valorem taxes on real property or
tangible personal property. Counties, school districts and municipalities are
authorized by law, and special districts may be authorized by law, to levy ad
valorem taxes.

Slightly less than 10% of the sales tax is designated for local governments
and is distributed to the counties in which collected for local use by such
counties and their municipalities. In addition, local governments have limited
authority to assess discretionary local sales surtaxes within their counties.

Due to its involvement in a wide range of activities and the complexity of
its system of taxation, Florida is a party to various legal actions. The
outcomes of some of these actions could significantly reduce Florida's ability
to collect taxes, force Florida to refund taxes already collected, require the
State to pay damage awards, or result in the loss of valuable state property.
Furthermore, past and pending litigation, to which Florida is not a party, may
create precedents which may effectively result in future costs or revenue
losses. In addition, the issuers may be involved in a variety of litigation
which could have a significant adverse impact on their financial standing.

Florida's local governments operate in a restrictive legal and political
fiscal environment. They are faced with state imposed revenue raising and
revenue expenditure constraints, fast paced population growth, and citizen's
expectations for expanded services without higher property taxes. The Florida
Constitution preempts to the state all revenue sources not specifically provided
by law, except for the ad valorem property tax. It also limits levies of local
governments to 10 mills ($10 per thousand dollars of taxable assessed
valuation). A constitutionally mandated homestead tax exemption ($25,000) also
has eroded the tax base of many less populated counties. In addition, a recent
constitutional amendment limits the ability of local governments to increase the
assessed valuation of homestead property, which, together with the 10 mill
limitation, could have a substantial adverse affect on local governments in the
future. The state also requires that agricultural property be assessed
according to its value in current use rather than its fair market value.
Florida's local governments cannot impose a personal income or payroll tax.

Florida's Growth Management Act requires local governments to prepare
growth plans for approval by the state. These growth plans must insure that new
development will not be permitted unless adequate infrastructure such as roads,
sewer, water and parks are available concurrently with the development. Known
as "concurrency," this requirement has put heavy economic and political pressure
on local governments. In addition, the Growth Management Act has spawned
litigation involving local governments, which itself consumes resources, and in
which an adverse outcome can adversely affect the local governments involved.

<PAGE>

In November, 1994, the voters of Florida approved the State legislature's
joint resolution to amend the Florida Constitution. This amendment limits the
amount of taxes, fees, licenses and charges imposed by the legislature and
collected during any fiscal year to the amount of revenues allowed for the prior
fiscal year, plus an adjustment for growth. Growth is defined as the amount
equal to the average annual rate of growth in Florida personal income over the
most recent twenty quarters times the State revenues allowed for the prior
fiscal year. The revenues allowed for any fiscal year can be increased by a
two-thirds vote of the State legislature. Any excess revenues generated must be
put into the Budget Stabilization Fund until it is fully funded and then
refunded to taxpayers. Included among the categories of revenues which are
exempt from the revenue limitation, however, are revenues pledged to State
bonds.

The value of Florida municipal instruments may also be affected by general
conditions in the money markets or the municipal bond markets, the levels of
Federal income tax rates, the supply of tax-exempt bonds, the size of offerings,
maturity of the obligations, the credit quality and rating of the issues and
perceptions with respect to the level of interest rates.

General obligation bonds issued by the State of Florida have consistently
been rated Aa and AA by Moody's and S&P, respectively. There is no assurance
that such ratings will be maintained for any given period of time or that they
may not be lowered, suspended or withdrawn entirely by such rating agencies, or
either of them if circumstances warrant. Any such downward change in,
suspension of, or withdrawal of such ratings, may have an adverse affect on the
market price of Florida municipal instruments. Moreover, the rating of a
particular series of revenue bonds or municipal obligations relates primarily to
the project, facility, governmental entity or other revenue source which will
fund repayment.

Florida's rapid growth is straining resources but has also permitted the
expansion of local governments and creates greater economic depth and diversity.
While infrastructure developments have lagged behind population growth, it is
expected that more infrastructure projects will be created, thereby increasing
Florida's governmental indebtedness and the issuance of additional municipal
instruments.

While the bond ratings and some of the information presented above indicate
that Florida is in satisfactory economic health, there can be no assurance that
there will not be a decline in economic conditions or that particular municipal
instruments in the portfolio of the FLORIDA FUND will not be adversely affected
by any changes in the economy. In addition, the economic condition in Florida
as a whole is only one factor affecting individual municipal instruments, which
are subject to the influence of a multitude of local political, economic and
legal conditions and developments.

As of June 30, 1995 (the end of fiscal year 1995), Georgia's total
outstanding debt in general obligation bonds was $4,047,250,000. For fiscal
year 1996, the Georgia General Assembly authorized $417,500,665 in general
obligation debt. The 1995 series of Georgia general obligation bonds are rated
Aaa, AA+, and AAA by Moody's, S&P and Fitch, respectively. the 1996A and 1996B
series of Georgia general obligation bonds have not yet been rated.

<PAGE>

Georgia's revenue collections from taxes and fees for fiscal year 1995
amounted to $9,625,658,475. Additional revenues of $514,881,260 were derived
from lottery proceeds. The revenue collections from taxes and fees for fiscal
year 1996 are projected to be $10,134,000,000.

It is estimated that $1.3 billion dollars will be generated from visitor
spending on the Summer Olympic Games to be held in Atlanta in 1996. Hosting the
Games should increase revenue collections by $199,000,000. The Games only
enhance Georgia's already thriving, established Hospitality Industry.

According to the Department of Labor for the State of Georgia, unemployment
decreased to 4.8% in 1995, placing Georgia well below the national average
unemployment rate. Georgia's low unemployment rate can be partially attributed
to Georgia's diversified economy. Only four other states will produce more jobs
than Georgia. Georgia's low unemployment rate is not expected to continue to
decrease significantly, however, and many workers are worried about job
security. In addition, the outlook for 1996 is that while inflation-adjusted
personal income will increase by 3.5%, most gains may come from employment
growth rather than from actual wage and salary increases. Personal income may
increase due to House Bills 21 and 44 pending in the Georgia General Assembly,
which propose an incremental reduction in state income tax rates for
individuals, partnerships and fiduciaries until the year 2000, when the state
individual income tax would be abolished altogether.

Georgia's population increased by 2% from 1994-1995-the fastest growth in
the Southeast. Georgia's civil labor force increased to 3,656,549 in 1995, an
increase of approximately 3% from 1994. Georgia's population is expected to
remain steady through 1996 with projected population to increase to 7.7 million
by the year 2000.

RISK FACTORS FOR THE MARYLAND FUND. Some of the significant financial
considerations relating to the investments of the MARYLAND FUND are summarized
below. This information is derived principally from official statements and
preliminary official statements released on or before February 14, 1996,
relating to issues of Maryland obligations and does not purport to be a complete
description.

The State's total expenditures for the fiscal years ending June 30, 1993,
June 30, 1994 and June 30, 1995 were $11.786 billion, $12.351 billion and
$13.528 billion, respectively. As of February 14, 1996, it was estimated that
total expenditures for fiscal year 1996 would be $14.611 billion. The State's
General Fund, representing approximately 55% - 60% of each year's total budget,
had an unreserved surplus on a budgetary basis of $10.5 million in fiscal year
1993, an unreserved surplus of $60 million in fiscal year 1994 and an unreserved
surplus of $132.5 million in fiscal year 1995. The Governor of Maryland reduced
fiscal year 1993 appropriations by approximately $56 million to offset the
fiscal year 1992 deficit. The State Constitution mandates a balanced budget.

In April 1995, the General Assembly approved the $14.429 billion 1996
fiscal year budget. The Budget includes $2.8 billion in aid to local
governments (reflecting a $161 million increase in funding over 1995 that
provides for substantial increases in education, health and police aid), and
$134.1 million in general fund deficiency appropriations for fiscal year 1995,
of which $60.1 million is a legislatively mandated appropriation to the Revenue
Stabilization Account of the State Reserve Fund. The Revenue Stabilization
Account was established in 1986 to retain State revenues for future needs and to
reduce the need for future tax increases. It is anticipated that the balance of
the Revenue Stabilization Account as of June 30, 1996 will be $500 million. The
1996 Budget does not include any proposed expenditures dependent on additional
revenue from new or broad-based taxes. When the 1996 Budget was enacted,

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it was estimated that the general fund unreserved surplus on a budgetary basis
at June 30, 1996, would be approximately $7.8 million; as of February 14, 1996
that surplus estimation had fallen to $1 million. In addition, on December 12,
1995 the Board of Revenue Estimates lowered the estimate of fiscal year 1995
general fund revenues by $92 million. To address this shortfall, the Governor
has proposed to reduce fiscal year 1996 general fund appropriations by $26
million and to simultaneously obtain additional monies for the general fund from
other available sources.

In January of 1996 the Governor submitted his proposed fiscal year 1997
Budget to the General Assembly. The Budget includes $2.9 billion in aid to
local governments (reflecting a $121.5 million increase over 1996 that provides
for substantial increases in education, health and police aid), and $7.7 million
in general fund deficiency appropriations for fiscal year 1996. It is estimated
that the general fund surplus on a budgetary basis at June 30, 1997 will be
approximately $500 thousand. In addition, it is estimated that the balance in
the Revenue Stabilization Account of the State Reserve Fund at June 30, 1997
will be $538 million.

The public indebtedness of Maryland and its instrumentalities is divided
into three basic types. The State issues general obligation bonds for capital
improvements and for various State-sponsored projects. The State Constitution
prohibits the contracting of State debt unless the debt is authorized by a law
levying an annual tax or taxes sufficient to pay the debt service within 15
years and prohibiting the repeal of the tax or taxes or their use for another
purpose until the debt has been paid. The Department of Transportation of
Maryland issues limited, special obligation bonds for transportation purposes
payable primarily from specific, fixed-rate excise taxes and other revenues
related mainly to highway use. Certain authorities issue obligations payable
solely from specific non-tax enterprise fund revenues and for which the State
has no liability and has given no moral obligation assurance.

According to recent available ratings, general obligation bonds of the
State of Maryland are rated "Aaa" by Moody's and "AAA" by S&P, as are those of
the largest county of the State, i.e., Montgomery County in the suburbs of
Washington, D.C. General obligation bonds of Baltimore County, a separate
political entity surrounding Baltimore City and the third largest county in the
State, are rated "Aaa" by Moody's and "AAA" by S&P. General obligation bonds of
Prince George's County, the second largest county, which is also in the suburbs
of Washington, D.C., are rated "Aa" by Moody's and "AA-" by S&P. The general
obligation bonds of those other counties of the State that are rated by Moody's
carry an "A" rating or better except for those of Allegheny County, which are
rated "Baa". The general obligation bonds of Baltimore City, one of the most
populous municipalities in Maryland, are rated "A1" by Moody's and "A" by S&P.
The Washington Suburban Sanitary District, a bi-county agency providing water
and sewerage services in Montgomery and Prince George's Counties, issues general
obligation bonds rated "A" by Moody's and "AA" by S&P. Most Maryland Health and
Higher Education Authority and State Department of Transportation revenue bonds
issues have received an "A" rating or better from Moody's. See Appendix A for a
description of municipal bond ratings.

While the ratings and other factors mentioned above indicate that Maryland
and its principal subdivisions and agencies are overall in satisfactory economic
health, there can, of course, be no assurance that this will continue or that
particular bond issues may not be adversely affected by changes in state or
local economic or political conditions.

RISK FACTORS FOR THE MASSACHUSETTS FUND. Some of the significant financial
considerations relating to the investments of the MASSACHUSETTS FUND are
summarized below. This information is

<PAGE>

derived principally from official statements and preliminary official statements
released on or before March 13, 1996, relating to issues of Massachusetts
obligations and does not purport to be a compete description.

Annual expenditures by the Commonwealth of Massachusetts for programs and
services provided by state government for fiscal years 1990 and 1991 exceeded
total current year revenues. The fiscal 1990 and 1991 budgetary deficits were
in effect funded by the issue of $1.42 billion of bonds. Total revenues and
other sources exceeded total expenditures and other uses in fiscal 1992, 1993,
1994 and 1995 by approximately $312.3 million, $13.1 million, $26.8 million and
$136.7 million, respectively.

The Commonwealth's fiscal 1996 budget is based on estimated total revenues
and other sources of approximately $17.226 billion. Total expenditures and
other uses for fiscal 1996 are currently estimated at approximately $17.399
billion. The fiscal 1996 budget proposes that the $173 million difference
between estimated revenues and other sources and expenditures and other uses be
provided for by application of the beginning fund balances for fiscal 1996, to
produce estimated ending fund balances for fiscal 1996 of approximately $554
million. The fiscal 1996 budget is based upon numerous spending and revenue
estimates, the achievement of which cannot be assured.

On January 23, 1996 the Governor submitted his fiscal 1997 budget
recommendations to the legislature which provide for budgeted expenditures and
other uses of approximately $17.360 billion. The recommended fiscal 1997
spending level is approximately $425 million above the currently estimated
fiscal 1996 budgeted expenditures and other uses of $16.935 billion. The
Governor's recommendations project fiscal 1997 ending fund balances of
approximately $622 million. The Governor's recommendations are, of course,
subject to legislative consideration.

In Massachusetts the tax on personal property and real estate is the
principal source of tax revenues available to cities and towns to meet local
costs. "Proposition 2 1/2", an initiative petition adopted by the voters of the
Commonwealth of Massachusetts on November 4, 1980, limits the power of
Massachusetts cities and towns and certain tax-supported districts and public
agencies to raise revenue from property taxes to support their operations,
including the payment of debt service, by limiting the amount by which the total
property taxes may increase from year to year. The reductions in local revenues
and anticipated reductions in local personnel and services resulting from
Proposition 2 1/2 created strong demand for substantial increases in
Commonwealth funded local aid, which increased significantly in fiscal years
1982 through 1989. The effect of this increase in local aid was to shift a
major part of the impact of Proposition 2 1/2 to the Commonwealth. Because of
decreased Commonwealth revenues, local aid declined significantly in fiscal
1990, 1991 and 1992. Local aid increased somewhat in fiscal 1993, 1994 and 1995
and is expected to increase again in fiscal 1996.

Limitations on Commonwealth tax revenues have been established by enacted
legislation approved by the Governor on October 25, 1986 and by public approval
of an initiative petition on November 4, 1986. The two measures are
inconsistent in several respects, including the methods of calculating the
limits and the exclusions from the limits. The initiative petition, which took
effect on December 4, 1986, contains no exclusion for debt service on
Commonwealth bond and notes or for payments on Commonwealth guarantees.
Commonwealth tax revenues in fiscal 1987 exceeded the limit imposed by the
initiative petition resulting in an estimated $29.2 million reduction which was
distributed to taxpayers in the form of a tax credit against calendar year 1987
personal income tax liability pursuant to the provisions of the initiative
petition. Tax revenues since fiscal 1988 have not exceeded the limit set by
either the initiative petition or the legislative enactment.

<PAGE>

The Commonwealth maintains financial information on a budgetary basis.
Since fiscal year 1986, the Comptroller also has prepared annual financial
statements in accordance with generally accepted accounting principals (GAAP) as
defined by the Government Accounting Standards Board. GAAP basis financial
statements indicate that the Commonwealth ended fiscal 1990, 1991, 1992, 1993
and 1994 with fund deficits of approximately $1.896 billion, $761.2 million,
$381.6 million, $184.1 million and $72 million, respectively. GAAP basis
financial statements for fiscal 1995 indicate that the Commonwealth ended such
year with a fund equity of approximately $287 million.

RISK FACTORS FOR THE MICHIGAN FUND. The information set forth below is
derived in part from the official statements prepared in connection with the
issuance of Michigan municipal bonds and similar obligations and other sources
that are generally available to investors. The information is provided as
general information intended to give a recent historical description and is not
intended to indicate future or continuing trends in the financial or other
positions of the State of Michigan (the "State").

The principal sectors of Michigan's diversified economy are manufacturing
of durable goods (including automobiles and components and office equipment),
tourism and agriculture. As reflected in historical employment figures, the
State's economy has lessened its dependence upon durable goods manufacturing,
however, such manufacturing continues to be an important part of the State's
economy. These particular industries are highly cyclical and in the period
1994-95 operated at somewhat less than full capacity but at higher levels than
in the immediate prior years. The cyclical nature of these industries and the
Michigan economy can adversely affect the revenue streams of the State and its
political subdivisions because it may adversely impact tax sources, particularly
sales taxes, income taxes and single business taxes.

The State finances its operations through the State's General Fund and
special revenue funds. The General Fund receives revenues of the State that are
not specifically required to be included in the special revenue funds. For
fiscal year 1993-1994, General Fund revenues derived approximately 59 percent
from the payment of State taxes and 41 percent from federal and non-tax revenue
sources. The majority of the revenues from State taxes are from the State's
personal income tax, single business tax, use tax and sales tax. Significant
portions of tax revenues are designated for the State's School Aid Fund and are
transferred to school districts for the financing of primary and secondary
school operations.

The Michigan State General Fund balances for the 1989-90 and 1990-91 fiscal
years were negative $310 million and $169.4 million, respectively. This
negative balance had been eliminated as of the end of fiscal year 1991-92, which
ended September 30, 1992. The State ended fiscal year 1992-93 with a General
Fund balance of $26 million after the transfer of $282.5 million to its Counter-
Cyclical Budget and Economic Stabilization Fund ("BSF"). The State ended fiscal
year 1993-94 with a General Fund balance of $460.2 million which also was
transferred to the BSF. The State's fiscal year 1994-95 budget was adopted by
the legislature in July, 1994 and the fiscal year 1995-96 budget was adopted in
June 1995. The State's Annual Financial report for fiscal years ending
September 30 is generally available at the end of March of the following year.

Beginning in 1993, the Michigan Legislature enacted several statutes which
significantly affect Michigan property taxes and the financing of primary and
secondary school operations. The property tax and school finance reform
measures included a ballot proposal ("Proposal A") which was approved by voters
on March 15, 1994. Under Proposal A as approved, effective May 1, 1994, the
State sales and use tax imposed on sales and rentals of tangible personal
property and telecommunications services was

<PAGE>

increased from 4% to 6%, the State income tax was decreased from 4.6% to 4.4%,
the cigarette tax was increased from $.25 to $.75 per pack and an additional tax
of 16% of the wholesale price was imposed on certain other tobacco products. A
real estate transfer tax became effective January 1, 1995, at a rate that was
ultimately adjusted to 0.75% in April of 1995. Beginning in 1994, a State
property tax of 6 mills is now imposed on all real and personal property
currently subject to the general property tax. Proposal A contains additional
provisions regarding the ability of local school districts to levy supplemental
property taxes for operating purposes as well as a limit on assessment increases
for each parcel of property, beginning in 1995 to the lesser of 5% or the rate
of inflation.

Under Proposal A, much of the additional revenue generated by the new taxes
will be dedicated to the School Aid Fund. Proposal A shifts significant
portions of the cost of local school operations from local school districts to
the State and raises additional State revenues to fund these additional State
expenses. These additional revenues will be included within the State's
constitutional revenue limitations and may impact the State's ability to raise
additional revenues in the future.

Currently, the State's general obligation bonds are rated Aa by Moody's, AA
by S&P and AA by Fitch. Moody's upgraded its rating from A1 to Aa in July,
1995. To the extent that the portfolio of the MICHIGAN FUND is comprised of
revenue or general obligations of local governments or authorities, rather than
general obligations of the State of Michigan, ratings on such Michigan
obligations will be different from those given to the State of Michigan and
their value may be independently affected by economic matters not directly
impacting the State.

RISK FACTORS FOR THE MINNESOTA FUND. The information set forth below is
derived from official statements prepared in connection with the issuance of
obligations of the State of Minnesota and other sources that are generally
available to investors. The information is provided as general information
intended to give a recent historical description and is not intended to indicate
further or continuing trends in the financial or other positions of the State of
Minnesota. Such information constitutes only a brief summary, relates primarily
to the State of Minnesota, does not purport to include details relating to all
potential issuers within the State of Minnesota whose securities may be
purchased by the MINNESOTA FUND, and does not purport to be a complete
description.

The State of Minnesota has experienced certain budgeting and financial
problems since 1980.

In February 1992 the Commissioner of Finance estimated the Accounting
General Fund balance at June 30, 1993, at negative $569 million. The balance at
June 30, 1995, was projected at negative $1.75 billion.

The 1992 Legislature reduced expenditures by $262 million for the biennium
ending June 30, 1993, enacted revenue measures expected to increase revenue by
$149 million, and reduced the budget reserve by $160 million to $240 million.

After the Legislature adjourned in April 1992, the Commissioner of Finance
estimated the Accounting General Fund balance at June 30, 1993, at $2.4 million,
and projected the balance at June 30, 1995, at negative $837 million. A
November 1992 forecast estimated the balance at June 30, 1993, at positive $217
million and projected the balance at June 30, 1995, at negative $769 million.

<PAGE>

A March 1993 forecast projected an Accounting General Fund balance at
June 30, 1995, at negative $163 million out of a budget for the biennium of
approximately $16.7 billion, and estimated a balance at June 30, 1997, at
negative $1.6 billion out of a budget of approximately $18.7 billion.

The 1993 Legislature authorized $16.519 billion in spending for the 1993-
1995 biennium, an increase of 13.0 percent from 1991-1993 expenditures.
Resources for the 1993-1995 biennium were projected to be $16.895 billion,
including $657 million carried forward from the previous biennium. The $16.238
billion in projected non-dedicated and dedicated revenues was 10.3 percent
greater than in the previous biennium and included $175 million from revenue
measures enacted by the 1993 Legislature. The Legislature increased the health
care provider tax to raise $79 million, transferred $39 million into the
Accounting General Fund and improved collection of accounts receivable to
generate $41 million.

After the Legislature adjourned in May 1993, the Commissioner of Finance
estimated that at June 30, 1995, the Accounting General Fund balance would be
$16 million and the budget reserve, as approved by the 1993 Legislature, would
be $360 million. The Accounting General Fund balance at June 30, 1993, was $463
million.

The Commissioner of Finance, in a November 1993 forecast, estimated the
Accounting General Fund balance at June 30, 1995, at $430 million, due to
projected increases in revenues and reductions in expenditures, and the balance
at June 30, 1997, at $389 million. The Commissioner recommended that the budget
reserve be increased to $500 million. He estimated that if current laws and
policies continued unchanged, revenue would grow 7.7 percent and expenditures
6.0 percent in the 1995-1997 biennium.

A March 1994 forecast projected an Accounting General Fund balance at June
30, 1995, at $623 million, principally due to a projected $235 million increase
in revenues to $16.6 billion for the biennium. The balance at June 30, 1997,
was estimated to be $247 million.

The 1994 Legislature provided for a $500 million budget reserve;
appropriated to school districts $172 million to allow the districts, for
purposes of state aid calculations, to reduce the portion of property tax
collections that the school districts must recognize in the fiscal year during
which they receive the property taxes; increased expenditures $184 million; and
increased expected revenues $4 million.

Of the $184 million in increased expenditures, criminal justice initiatives
totaled $45 million, elementary and higher education $31 million, environment
and flood relief $18 million, property tax relief $55 million, and transit $11
million. A six-year strategic capital budget plan was adopted with $450 million
in projects financed by bonds supported by the Accounting General Fund. Other
expenditure increases totaled $16.5 million.

Included in the expected revenue increase of $4 million were conformity
with federal tax changes to increase revenues $27.5 million, a sales tax
phasedown on replacement capital equipment and miscellaneous sales tax
exemptions decreasing revenues $17.3 million, and other measures decreasing
revenues $6.2 million.

After the Legislature adjourned in May 1994, the Commissioner of Finance
estimated the Accounting General Fund balance at June 30, 1995, at $130 million.

<PAGE>

The Commissioner of Finance, in a November 1994 forecast, estimated the
Accounting General Fund balance at June 30, 1995, at $268 million, due to
projected increases in revenues and decreases in expenditures, and the balance
at June 30, 1997, at $190 million.

A February 1995 forecast projected an Accounting General Fund balance at
June 30, 1995, at $383 million, due to a $93.5 million increase in projected
revenues and a $21.0 million decrease in expenditures. The balance at June 30,
1997, was projected at $250 million.

The 1995 Legislature authorized $18.220 billion in spending for the 1995-
1997 biennium, an increase of $1.395 billion, 8.3 percent, from 1993-1995
expenditures. Resources for the 1995-1997 biennium were projected to be $18.774
billion, including $921 million carried forward from the previous biennium.

The Legislature authorized 7.1 percent more spending for elementary and
secondary education in the 1995-1997 biennium than in 1993-1995, 0.9 percent
more in local government aids, 14.2 percent more for health and human services,
2.3 percent more for higher education, and 25.1 percent more for corrections.
The Legislature set the budget reserve at $350 million and established a
supplementary reserve of $204 million in view of predicted federal cutbacks.

After the Legislature adjourned in May 1995, the Commissioner of Finance
estimated that at June 30, 1997, the Accounting General Fund balance would be
zero. The Accounting General Fund balance at June 30, 1995, was $481 million.

The Commissioner of Finance, in a November 1995 forecast, estimated the
Accounting General Fund balance at June 30, 1997, at $824 million, due to a $490
million increase in revenues from those projected in May 1995, a $199 million
reduction in projected expenditures, and a $135 million increase in the amount
carried forward from the 1993-1995 biennium. An improved national economic
outlook increased projected net sales tax revenue $257 million and reduced
projected human services expenditures $231 million. The Commissioner estimated
the Accounting General Fund balance at June 30, 1999, at negative $28 million.

Only $15 million of the $824 million projected 1995-1997 surplus was
available for spending. The statute requires that an additional $15 million be
placed in the supplementary budget reserve, and an additional $794 million must
be appropriated to school districts to allow the districts, for purposes of
state aid calculations, to eliminate the 48 percent of property tax collections
that the school districts must recognize in the fiscal year during which they
receive the property taxes.

A February 1996 forecast projected an Accounting General Fund balance at
June 30, 1997, at $873 million, due to a $104 million increase in projected
revenues, a $19 million increase in expenditures, and a $36 million reduction in
the June 30, 1995, ending balance. The amount available for spending increased
from $15 million to $64 million.

In February 1996, the Commissioner of Finance estimated the Accounting
General Fund balance at June 30, 1999, at $54 million.

The State of Minnesota has no obligation to pay any bonds of its political
or governmental subdivisions, municipalities, governmental agencies, or
instrumentalities. The creditworthiness of local

<PAGE>

general obligation bonds is dependent upon the financial condition of the local
government issuer, and the creditworthiness of revenue bonds is dependent upon
the availability of particular designated revenue sources or the financial
conditions of the underlying obligors. Although most of the bonds owned by the
MINNESOTA FUND are expected to be obligations other than general obligations of
the State of Minnesota itself, there can be no assurance that the same factors
that adversely affect the economy of the State generally will not also affect
adversely the market value or marketability of such other obligations, or the
ability of the obligors to pay the principal of or interest on such obligations.

At the local level, the property tax base has recovered after its growth
was slowed in many communities in the early 1990s by overcapacity in certain
segments of the commercial real estate market. Local finances are also affected
by the amount of state aid that is made available. Further, various of the
issuers within the State of Minnesota, as well as the State of Minnesota itself,
whose securities may be purchased by the MINNESOTA FUND, may now or in the
future be subject to lawsuits involving material amounts. It is impossible to
predict the outcome of these lawsuits. Any losses with respect to these
lawsuits may have an adverse impact on the ability of these issuers to meet
their obligations.

Legislation enacted in 1995 provides that it is the intent of the Minnesota
legislature that interest income on obligations of Minnesota governmental units,
and exempt-interest dividends that are derived from interest income on such
obligations, be included in the net income of individuals, estates, and trusts
for Minnesota income tax purposes if it is judicially determined that the
exemption by Minnesota of such interest or such exempt-interest dividends
unlawfully discriminates against interstate commerce because interest income on
obligations of governmental issuers located in other states, or exempt-interest
dividends derived from such obligations, is so included. This provision applies
to taxable years that begin during or after the calendar year in which such
judicial decision becomes final, regardless of the date on which the obligations
were issued, and other remedies apply for previous taxable years. The United
States Supreme Court recently denied certiorari in an Ohio case which upheld an
exemption for interest income on obligations of Ohio governmental issuers, even
though interest income on obligations of non-Ohio governmental issuers was
subject to tax. However, it cannot be predicted whether a similar case will be
brought in Minnesota or elsewhere, or what the outcome of such case would be.
Should an adverse decision be rendered, the value of the securities purchased by
the MINNESOTA FUND might be adversely affected, and the value of the shares of
the MINNESOTA FUND might also be adversely affected.

In August 1995 the State's bond ratings were Aa1 by Moody's, AA+ by S&P,
and AAA by Fitch.

Economic difficulties and the resultant impact on State and local
government finances may adversely affect the market value of obligations in the
portfolio of the MINNESOTA FUND or the ability of respective obligors to make
timely payment of the principal and interest on such obligations.

RISK FACTORS FOR THE MISSOURI FUND. The following is a discussion of
certain risk factors relevant to the MISSOURI FUND. The MISSOURI FUND will
concentrate its investments in debt obligations of the State of Missouri and its
local governmental entities ("Missouri Obligations"). The value of and the
payment of interest and principal on the Missouri Obligations may be adversely
affected by economic and political conditions and developments within or without
the State of Missouri. The information contained herein is not intended to be a
complete discussion of all relevant risk factors, and there may be other factors
not discussed herein that may adversely affect the value of the Missouri
Obligations. The facts discussed herein were obtained primarily from published
information regarding Missouri state entities. The information relates
exclusively to the State of Missouri and is not intended to include any

<PAGE>

details relating to debt obligations of local governmental entities located in
the State of Missouri that may be acquired by the MISSOURI FUND. The discussion
is limited to the general economic conditions in the State of Missouri.

POPULATION. The following information was obtained from the report of the
Bureau of the Census, United States Department of Commerce, in the 1991
Statistical Abstract of the United States (the "1990 Census"). As of 1990, the
population of the State of Missouri was 5,117,073, which caused Missouri to rank
15th in total population among the states. The portion of Missouri's population
that was comprised of individuals classified as minorities was 13.1% as compared
to the United States ("U.S.") average of 24.4%. According to the 1990 Census,
the population of the State of Missouri increased 4.1% from 1980 to 1990, while
the population of the U.S. increased 9.8% during the same period. Comparatively,
during the decade between 1970 and 1980, Missouri's population increased 5.1%
while the U.S. population increased 11.4%. The Missouri Department of Economic
Development has projected that the population of Missouri will increase 3.5%
from 1990 to 2000 and 2.4% from 2000 to 2010, so that Missouri will have a total
estimated population of approximately 5,458,000 by 2010. Without an adequate
population to support a meaningful tax base, state tax revenues may not be
sufficient for the State of Missouri to make payments on its debt obligations.

ECONOMY. Missouri's economy is divided primarily among agriculture,
manufacturing, services, trade and government. The Missouri Division of
Employment Security reported in December, 1995, that the largest non-
agricultural employers were services with 26.9% of the non-agricultural work
force, trade (wholesale and retail) with 24.1% of the non-agricultural work
force, manufacturing with 16.5% of the non-agricultural work force and
government with 15.8% of the non-agricultural work force. According to the U.S.
Department of Commerce, Missouri's gross state product, the aggregate of all
economic activity and wealth produced in the State of Missouri, rose from
$53.1 billion in 1980 to $101.5 billion in 1990, representing an average annual
increase of approximately 6.7%. During the same period, the U.S. gross national
product increased approximately 7.0% per year. The annual per capita personal
income for the State of Missouri for 1992, 1993 and 1994 was $18,970, $19,557
and $20,717, respectively, while the U.S. annual per capita income for the same
years was $19,802, $20,810 and $21,846. The University of Missouri in Columbia,
Missouri (the "University") has projected that the per capita income for
Missouri residents will increase 4.5% in calendar year 1996 and 5.0% in calendar
year 1997; while per capita income for U.S. residents will increase 4.0% and
4.9%, respectively, during the same periods. Inadequate state gross product or
per capita income could adversely affect the State's tax revenues and,
therefore, its ability to meet its current debt obligations.

EMPLOYMENT. The Missouri Department of Labor and Industrial Relations has
reported that Missouri's unemployment rates for fiscal years 1993, 1994 and 1995
were 6.0%, 5.8% and 4.6%, respectively, while the U.S. unemployment rates for
the same periods were 7.2%, 6.5% and 5.7%. The University has projected that
Missouri's unemployment rate for calendar year 1996 will be 4.6%, dropping to
4.3% in 1997, and falling under 4.0% by the year 2000, while the U.S.
unemployment rate for the same periods will be 5.6% in 1996, rising further to
the 5.7%-5.8% range by the year 2000. If the State has significant unemployment
in future years, the State's tax revenues may not be adequate to pay its debt
obligations.

STATE REVENUES. The State of Missouri operates from a General Revenue Fund
("General Fund"). The General Fund includes funds received from tax revenues
and federal grants. For fiscal year 1995, the

<PAGE>

State derived approximately 17.0% of the General Fund revenue from sales and use
taxes, 31.5% from individual income taxes and 4.6% from corporate income taxes.

The Missouri Constitution imposes a limit on the amount of taxes that may
be imposed by the General Assembly during any fiscal year. This limit is
related to total state revenues for fiscal year 1981, as defined in Article X,
Sections 16 through 24 of the Missouri State Constitution, and is adjusted
annually in accordance with a formula related to increases in the average
personal income of Missouri residents for certain designated periods.
Inadequate tax revenues due to the constitutional limitations may adversely
affect the State's ability to pay its debt obligations.

Federal grants account for approximately 29.8% of the General Fund revenues
for fiscal year 1995. No assurances can be given that the amount of federal
grants previously provided to the State will continue, and the amount of federal
grants received by the State may have an effect on its ability to pay its debts.

The U.S. District Courts in St. Louis and Kansas City ordered the State to
make payments totalling $314.3 million during fiscal year 1995 and $277.5
million during fiscal year 1994 to fund the State's share of certain court-
ordered desegregation plans. These amounts constituted approximately 6.0% of
the State's General Fund revenue (exclusive of federal grants)for fiscal years
1994 and 1995. The amount, if any, of future court-ordered expenditures from
the State regarding desegregation cannot be predicted accurately, but it is
anticipated that state-supported school desegregation payments may decrease in
future years. The State has budgeted $262 million in total for the Kansas City
and St. Louis school desegregation programs for the 1995-1996 school year. This
is down from the $294.2 million budgeted for the 1994-1995 school year.

The Missouri State Constitution mandates a balanced annual state budget.
The requirement of a balanced state budget may affect the ability of the State
of Missouri to repay its debt obligations. For fiscal year 1994, the General
Fund revenue, minus federal grants, amounted to $4,660.2 million, which
represented a 7.1% increase in General Fund revenue over the previous fiscal
year. The balance in the General Fund as of the end of the 1994 fiscal year was
$513.4 million. This represented a 21.9% increase in the General Fund balance
from the end of fiscal year 1993.

For fiscal year 1995, the State budgeted, exclusive of federal grants,
$5,117.4 million in General Fund revenue, which represented a 9.8% increase from
the actual revenue amount for fiscal year 1994. However, for fiscal year 1995,
the actual General Fund revenue, exclusive of federal grants, was approximately
$5,390.2 million, which was 5.3% higher than budgeted and represented a 15.7%
increase from fiscal year 1994. The actual General Fund balance at the end of
fiscal year 1995 was $780.2 million, which was 52.0% higher than the balance at
the end of fiscal year 1994. This increase, along with increases in fiscal
years 1992, 1993 and 1994, helped to offset decreases in fiscal years 1990 and
1991 which had reduced the General Fund balance from $436.5 million at the end
of fiscal year 1989 to $214.7 million at the end of fiscal year 1991. For
fiscal year 1996, the State of Missouri budgeted, exclusive of federal grants,
$5,455.6 million in General Fund revenue, which represents a 1.2% increase from
the actual revenue amount for fiscal year 1995. There are no assurances that
the revenues and fund balances budgeted will be attained in the future.
Decreases in revenues and the General Fund balance could adversely affect the
State's ability to pay its debt obligations.

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STATE BOND INDEBTEDNESS. The State of Missouri is barred by Article III,
Section 37 of the Missouri State Constitution from issuing debt instruments to
fund government operations. However, it is authorized to issue bonds to finance
or refinance the cost of capital projects upon approval by the voters. In the
past, the State has issued two types of bonds to raise capital - general
obligation bonds and revenue bonds. The State has authorized and issued general
obligation bonds through two state agencies for two specific needs. Water
Pollution Control Bonds have been issued to provide funds for the protection of
the environment through the control of water pollution. State Building Bonds
have been issued to provide funds to improve state buildings and property.
Payments on the general obligation bonds are made from the General Fund.
Therefore, if the State is unable to increase its tax revenues, the State's
ability to make the payments on the existing obligations may be adversely
affected.

In addition to state general obligation bonds, the State of Missouri has
statutes that enable certain local political or governmental authorities, such
as cities, counties and school districts, to issue general obligation bonds.
These local general obligation bonds are required to be registered with the
State Auditor's Office. Local general obligation bonds are backed by the
general revenues (including ad valorem and other taxes) of the particular local
governmental or political authority issuing such bonds. The State of Missouri
generally has no obligation with respect to such bonds.

The State is also authorized to issue revenue bonds. Revenue bonds
generally provide funds for a specific project, and repayments are generally
limited to the revenues from that project. However, the State may enact a tax
specifically to repay the State's revenue bonds. Therefore, a reduction of
revenues from a project financed by revenue bonds may adversely affect the
State's ability to make payments on such bonds. No assurances can be given that
the State will receive sufficient revenues from the projects, or that the State
will enact and collect a tax to be used to make the required payments on such
bonds.

As of June 30, 1995, according to the Committee on Legislative Research of
the State of Missouri, the State of Missouri had outstanding total state general
obligation bond debt amounting to $933,745,000 in principal and $510,977,776 in
interest to be paid over the period such debt remains outstanding. On the same
date, the State had outstanding total state revenue bond debt amounting to
$127,595,000 in principal and $68,424,408 in interest to be paid over the period
such debt remains outstanding. In addition to the state bond debt, as of
June 30, 1995, the total outstanding principal amount of debt issued by
independent statutory authorities in Missouri was $10,379,088,016. Factors that
may adversely affect the ability of the issuers to repay their debts include
(1) statutory and constitutional limitations on the State of Missouri, and its
agencies and local political and governmental authorities and (2) the success of
the projects to which the debts relate.

MISSOURI BOND RATINGS. S&P and Moody's rating service of state bond
issuers generally rate a bond issuer's ability to repay debt obligations. The
general obligation bonds issued by the State of Missouri are currently rated AAA
by S&P and Aaa by Moody's, the highest rating for each agency. However,
prolonged uncertainty over the State's current financial outlook could impair
the State's ability to maintain such ratings. No assurances can be given that
the State's current ratings will be maintained for any given period or that such
ratings will not be lowered, suspended or withdrawn entirely by either rating
agency. Any reduction in, suspension of, or withdrawal of such ratings may have
an adverse effect on the resale market price of Missouri bonds. With respect to
the rating of revenue bonds, such rating generally depends on the amount of the
revenue from the specific project.

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RISK FACTORS FOR NEW YORK INSURED. NEW YORK INSURED is highly sensitive
and vulnerable to the fiscal stability of New York State (the "State") and its
subdivisions, agencies, instrumentalities and authorities that issue the
Municipal Instruments in which NEW YORK INSURED concentrates its investments.
The following information as to certain risk factors associated with New York
Insured's concentration in Municipal Instruments issued by New York issuers is
only a brief summary, does not purport to be a complete description, and is
based upon disclosure in Official Statements relating to offers of Municipal
Instruments, and other publicly available information, prior to the end of
March, 1996. 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 after the date thereof.

The annual growth rates of most economic indicators for the State improved
from 1994 to 1995, as the pace of private sector employment expansion and
personal income and wage growth all accelerated. Government employment fell as
workforce reductions were implemented at federal, State and local levels.
Similar to the nation, some moderation of growth is expected in the year ahead.
Private sector employment is expected to continue to rise, although somewhat
more slowly than in 1995, while public employment should continue to fall,
reflecting government budget cutbacks. Anticipated continued restraint in wage
settlements, a lower rate of employment growth and falling interest rates are
expected to slow personal income growth significantly.

Significant uncertainties exist in the forecasts with respect to matters
such as consumer spending, interest rates, financial matters in other countries,
economic growth estimates and the effect of corporate and government downsizing.

EXECUTIVE BUDGET. The Governor presented his 1996-97 Executive Budget to
the Legislature on December 15, 1995, one month before the legal deadline. The
Executive Budget also contains financial projections for the State's 1997-98 and
1998-99 fiscal years and an updated Capital Plan. As provided by the State
Constitution, the Governor submitted amendments to his 1996-97 Executive Budget
within 30 days following submission. There can be no assurance that the
legislature will enact the Executive Budget as proposed by the Governor into
law, or that the State's adopted budget projections will not differ materially
and adversely from the projections set forth herein.

The 1996-97 Financial Plan projects balance on a cash basis in the General
Fund. It reflects a continuing strategy of substantially reduced State
spending, including program restructurings, reductions in social welfare
spending, and efficiency and productivity initiatives. Total general Fund
receipts and transfers from other funds are projected to be $31.32 billion, a
decrease of $1.4 billion from total receipts projected in the current fiscal
year. Total General Fund disbursements and transfers to the other funds are
projected to be $31.22 billion, a decrease of $1.5 billion from spending totals
projected for the current fiscal year. After adjustments and transfers for
comparability between the 1995-96 and 1996-97 State Financial Plans, the
Executive Budget proposes an absolute year-to-year decline in General Fund
spending of 5.8 percent. Spending from all funding sources (including federal
aid) is proposed to increase by 0.4 percent from the prior fiscal year after
adjustments and transfers for comparability.

There are, however, risks and uncertainties concerning whether or not
certain tax and spending cuts proposed in the Executive Budget will be enacted,
or if enacted, will be upheld in the face of actual and potential legal
challenges. For example, among other matters, the Comptroller has initiated a
legal challenge in court with respect to the use of certain pension reserves in
the Executive Budget. There can be no assurance that other items affecting the
budget will not also be challenged in court.

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The Executive Budget proposes $3.9 billion in actions to balance the
1996-97 Financial Plan. Before reflecting any actions proposed by the Governor
to restrain spending, General Fund disbursements for 1996-97 were projected at
$35 billion, an increase of $2.3 billion or 7 percent from 1995-96. This
increase would have resulted from growth in Medicaid, inflationary increases in
school aid, higher fixed costs such as pensions and debt service, collective
bargaining agreements, inflation, and the loss of non-recurring resources that
offset spending in 1995-96. Receipts would have been expected to fall by $1.6
billion. This reduction would have been attributable to modest growth in the
State's economy and underlying tax base, the loss of non-recurring revenues
available in 1995-96 and implementation of previously enacted tax reduction
programs.

The Executive Budget proposes to close this gap primarily through a series
of spending reductions and cost containment measures. The Executive Budget
projects (i) over $1.8 billion in savings from cost containment and other
actions in social welfare programs, including Medicaid, welfare and various
health and mental health programs; (ii) $1.3 billion in savings from a reduced
State General Fund share of Medicaid made available from anticipated changes in
the federal Medicaid program, including an increase in the federal share of
Medicaid; (iii) over $450 million in savings from reforms and cost avoidance in
educational services (including school aid and higher education), while
providing fiscal relief from certain State mandates that increase local
spending; and (iv) $350 million in savings from efficiencies and reductions in
other State programs. The assumption regarding an increased share of federal
Medicaid funding has received bipartisan Congressional support and would benefit
32 states, including New York.

The 1996-97 Financial Plan projects receipts of $31.32 billion and spending
of $31.22 billion, allowing for a deposit of $85 million to the Contingency
Reserve Fund and a required repayment of $15 million to the Tax Stabilization
Reserve Fund.

There can, however, be no assurances that the tax and spending cuts
proposed in the Executive Budget will be enacted as proposed, or that if
enacted, will eliminate potential imbalances in future fiscal years. The
Governor's recommended multi-year personal income tax cuts are designed to
reduce the yield on that tax by about one-third by 1998, and could require
significant additional spending cuts in those years, increased economic growth
to provide additional revenues, additional revenue measures, or a combination of
those factors.

AUTHORITIES. The fiscal stability of the State is related, in part, to the
fiscal stability of its Authorities. There are numerous Authorities, with
various responsibilities, including those which finance, construct and/or
operate revenue producing public facilities. Public authority operating
expenses and debt service costs are generally paid by revenues generated by the
project financed or operated, such as tolls charged for the use of highways,
bridges or tunnels, rentals charged for housing units, and charges for occupancy
at medical care facilities. Authorities are not subject to the constitutional
restrictions on the incurrence of debt which apply to the State itself and may
issue bonds and notes within the amounts of, and as otherwise restricted by,
their legislative authorization. State legislation authorizes financing
techniques for Authorities such as State (i) guarantees of Authority
obligations, (ii) lease-purchase and contractual-obligation financing
arrangements and (iii) statutory moral obligation provisions. The State's
access to the public credit markets could be impaired, and the market price of
its outstanding debt may be materially adversely affected, if any of its
Authorities, particularly those using the financing techniques specified above,
were to default on their respective obligations. In addition, certain statutory
arrangements provide for State local assistance payments, otherwise payable to
localities, to be made under certain circumstances to certain Authorities. The
State has no obligation to provide additional assistance to

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localities whose local assistance payments have been paid to Authorities under
these arrangements. However, in the event that such local assistance payments
are so diverted, the affected localities could seek additional State funds.

Debt service on outstanding Authority obligations is normally paid out of
revenues generated by the Authorities' projects or programs, but in recent years
the State has provided special financial assistance, in some cases of a
recurring nature, to certain Authorities, for operating and other expenses and
for debt service pursuant to its moral obligation indebtedness provisions or
otherwise. Additional assistance is expected to be required in the State's
1996-97 fiscal year and in future years. The State's experience has been that if
any Authority suffers serious financial difficulties, both the ability of the
State and the Authorities to obtain financial assistance in the public credit
markets and the market price of the State's and Authorities' outstanding bonds
and notes may be adversely affected.

Some Authorities also receive moneys from State appropriations to pay for
the operating costs of certain of their programs. For example, the Metropolitan
Transportation Authority receives the bulk of this money in order to carry out
mass transit and commuter services.

MUNICIPALITIES. The counties, cities, towns and villages of the State are
political subdivisions of the State with the powers granted by the State
Constitution and statutes. As the sovereign, the State retains broad powers and
responsibilities with respect to the finances and welfare of such subdivisions
as well as school districts, fire districts and other district corporations,
especially in the areas of education and social services. In recent years the
State has been called upon to provide added financial assistance to certain
localities. The fiscal stability of the State is thus related to the fiscal
stability of its localities, including New York City (the "City"). A number of
factors could affect localities during the State's and 1995-1996 and 1996-1997
fiscal years and thereafter.

NEW YORK CITY

Although the City has balanced its budget since 1981, estimates of the
City's future revenues and expenditures, which are based on numerous
assumptions, are subject to various uncertainties. If, for example, expected
Federal or State aid is not forthcoming; if unforeseen developments in the
economy significantly reduce revenues derived from economically sensitive taxes,
or necessitate increased expenditures for public assistance; if the City should
negotiate wage increases for its employees greater than the amounts provided for
in the City's financial plan; or if other uncertainties materialize that reduce
expected revenues or increase projected expenditures, then, to avoid operating
deficits, the City may be required to implement additional actions, including
increases in taxes and reductions in essential City services. The City might
also seek additional assistance from the State.

In response to the City's fiscal crisis in 1975, the State took action to
assist the City in returning to fiscal stability. Among those actions, the
State established the Municipal Assistance Corporation for The City of New York
("MAC") to provide financing assistance to the City; the New York State
Financial Control Board (the "Control Board") to oversee the City's financial
affairs; the Office of the State Deputy Comptroller for the City of New York
("OSDC") to assist the Control Board in exercising its powers and
responsibilities; and a "Control Period" from 1975 to 1986 during which the City
was subject to certain statutorily-prescribed fiscal controls. Although the
Control Board terminated the Control Period in 1986 when certain statutory
conditions were met, thus suspending certain Control Board powers, the Control
Board, MAC and OSDC continue to exercise various fiscal monitoring functions
over the City, and upon

<PAGE>

the occurrence or "substantial likelihood and imminence" of the occurrence of
certain events, including, but not limited to a City operating budget deficit of
more than $100 million, the Control Board is required by law to reimpose a
Control Period. Currently, the City and its Covered Organizations (i.e., those
which receive or may receive monies from the City directly, indirectly or
contingently) operate under a four-year financial plan which the City prepares
annually and periodically updates.

The City's financial projections are based on various assumptions and
contingencies, some of which are uncertain and may not materialize. Unforeseen
developments and changes in major assumptions could significantly affect the
City's ability to balance its budget as required by State law and to meet its
annual cash flow and financing requirements.

The State could be affected by the ability of the City and certain Covered
Organizations to market their securities successfully in the public credit
markets. Future developments concerning the City or certain of the Covered
Organizations, and public discussion of such developments, as well as prevailing
market conditions and securities credit ratings, may affect the ability or cost
to sell securities issued by the City or such Covered Organizations and may also
affect the market for their outstanding securities.

The staffs of OSDC and the Control Board issue periodic reports on the
City's financial plans, as modified, analyzing forecasts of revenues and
expenditures, cash flow, and debt service requirements, as well as compliance
with the financial plan, as modified, by the City and its Covered Organizations.
OSDC staff reports issued during the mid-1980's noted that the City's budgets
benefited from a rapid rise in the City's economy, which boosted the City's
collection of property, business and income taxes. These resources were used to
increase the City's workforce and the scope of discretionary and mandated City
services. Subsequent OSDC staff reports, including its periodic economic
reports, examined the 1987 stock market crash and the 1989-92 recession, which
affected the New York City region more severely than the nation, and these
reports attributed an erosion of City revenues and increasing strain on City
expenditures to that recession. According to a recent OSDC staff report, the
City's economy was slow to recover from the recession and is expected to
experience a weak employment situation, and moderate wage and income growth,
during the 1995-96 period. Also, reports of OSDC, the Control Board and the
City Comptroller have variously indicated that many of the City's recent
balanced budgets have been accomplished, in part, through the use of non-
recurring resources, tax and fee increases, personnel reductions and additional
State assistance; that the City has not yet brought its long-term expenditures
in line with recurring revenues; that the City's proposed gap-closing programs,
if implemented, would narrow future budget gaps; that these programs tend to
rely heavily on actions outside the direct control of the City; and that the
City is therefore likely to continue to face future projected budget gaps
requiring the City to increase revenues and/or reduce expenditures. According
to the most recent staff reports of OSDC, the Control Board and the City
Comptroller, during the four-year period covered by the current financial plan,
the City is relying on obtaining substantial resources from initiatives needing
approval and cooperation of its municipal labor unions, Covered Organizations
and City Council, as well as the State and Federal governments, among others,
and there can be no assurance that such approval can be obtained.

The City has issued $2.4 billion of short-term obligations in fiscal year
1995-96 to finance the City's current estimate of its seasonal cash flow needs
for the 1995-96 fiscal year. Seasonal financing requirements for the 1994-95
fiscal year increased to $2.2 billion from $1.75 billion and $1.4 billion in the
1993-94 and 1992-93 fiscal years, respectively. The City makes substantial
capital expenditures to reconstruct and rehabilitate the City's infrastructure
and physical assets, including City mass transit facilities, sewers, streets,
bridges and tunnels, and to make capital investments that will improve

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productivity in City operations. The major areas of capital commitment
projected for the 1995-96 through 1998-99 fiscal years aggregate approximately
$15.75 billion.

OTHER LOCALITIES

Certain localities in addition to the City could have financial problems
leading to requests for additional State assistance during the State's 1995-96
fiscal year and thereafter. The potential impact on the State of such requests
by localities is not included in the projections of the State's receipts and
disbursements for the State's 1995-96 fiscal year.

Fiscal difficulties experienced by the City of Yonkers resulted in the re-
establishment of the Financial Control Board for the City of Yonkers by the
State in 1984. That Board is charged with oversight of the fiscal affairs of
Yonkers. Future actions taken by the State to assist Yonkers could result in
allocation of State resources in amounts that cannot yet be determined.

Municipalities and school districts have engaged in substantial short-term
and long-term borrowings. In 1993, the total indebtedness of all localities in
the State other than the City was approximately $17.7 billion. A small portion
(approximately $105 million) of that indebtedness represented borrowing to
finance budgetary deficits and was issued pursuant to State enabling
legislation. State law requires the Comptroller to review and make
recommendations concerning the budgets of those local government units other
than the City authorized by State law to issue debt to finance deficits during
the period that such deficit financing is outstanding. Fifteen localities had
outstanding indebtedness for deficit financing at the close of their fiscal year
ending in 1993.

From time to time, Federal expenditure reductions could reduce, or in some
cases eliminate, Federal funding of some local programs and accordingly might
impose substantial increased expenditure requirements on affected localities.
If the State, the City or any of the Authorities were to suffer serious
financial difficulties jeopardizing their respective access to the public credit
markets, the marketability of notes and bonds issued by localities within the
State could be adversely affected. Localities also face anticipated and
potential problems resulting from certain pending litigation, judicial
decisions, and long-range economic trends. Long-range potential problems of
declining urban population, increasing expenditures and other economic trends
could adversely affect certain localities and result in increasing State
assistance in the future.

LITIGATION. Various legal proceedings in which the State is involved
concern State finances, State programs and miscellaneous tort, real property and
contract claims in which the State is a defendant and the monetary damages
sought are substantial. These proceedings could affect adversely the financial
condition of the State in the 1995-96 fiscal year or thereafter.

Adverse developments in these proceedings or the initiation of new
proceedings could affect the ability of the State to maintain a balanced 1995-96
State Financial Plan. The State believes that the 1995-96 State Financial Plan
includes sufficient reserves for the payment of judgments that may be required
during the 1995-96 fiscal year. There can be no assurance, however, that an
adverse decision in any of these proceedings would not exceed the amount of the
1995-96 State Financial Plan reserves for the payment of judgments and,
therefore, could affect the ability of the State to maintain a balanced 1995-96
State Financial Plan.

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Although other litigation is pending against the State, except as described
below, no current litigation involves the State's authority, as a matter of law,
to contract indebtedness, issue its obligations, or pay such indebtedness when
it matures, or affects the State's power or ability, as a matter of law, to
impose or collect significant amounts of taxes and revenues.

RISK FACTORS FOR THE NORTH CAROLINA FUND. North Carolina state and
municipal securities may be adversely affected by economic and political
conditions and developments within the State of North Carolina.

ECONOMIC PROFILE. The economic profile of the State consists of a
combination of agriculture, industry and tourism. The State is moving away from
its traditional agricultural base towards a service and goods producing economy.
The State labor force reflects this increased emphasis toward non-agricultural
production. According to the North Carolina Employment Security Commission,
total non-agricultural employment as of January 1996 was approximately 3,433,500
jobs, of which 843,800 were in the manufacturing industry. These figures have
risen since 1991, when total non-agricultural employment was approximately
3,072,200, of which 826,100 jobs were in the manufacturing industry; but have
fallen slightly since 1995 when total non-agricultural employment was
approximately 3,436,800, of which 871,500 were in the industry. A majority of
the employment that was available within the non-manufacturing industry as of
January, 1996 was provided by retail trade, the services industry and the
government sector. In January, 1996, retail trade provided approximately
613,100 jobs, services provided approximately 752,100 jobs and the government
sector provided approximately 570,000 jobs. In 1991, these figures were
703,400, 602,000 and 501,700, respectively.

Based upon the unofficial 1990 census estimates of population growth, the
population of North Carolina increased 12.70% from 5,881,766 in 1980 to
6,628,637 in 1990. According to the Employment Security Commission, the labor
force grew 5.9% to 3,649,400 by January, 1996, from 3,445,000 in 1991. The
Employment Security Commission also estimates the unadjusted unemployment rate
in January, 1996 to have been 5.5% of the labor force, as compared with the
nationwide unadjusted unemployment rate of 6.3%. The North Carolina annual
average unemployment rate over the past seven years has ranged from a high of
5.9% in 1992 to a low of 3.5% in 1989.

Agriculture remains a basic economic element in North Carolina. North
Carolina ranked eighth (8th) in the nation in 1994 total farm income. Total
gross agricultural income in 1994 was approximately $6.4 billion, up from 5.2
billion in 1991. Poultry and eggs remain the leading source of agricultural
non-crop income in the State. Income from the production of poultry and eggs
for 1994 was approximately $1.9 billion, accounting for approximately 30.0% of
the gross agricultural income. These figures are up from $1.5 billion in 1991.
In addition, tobacco production remains the leading source of agricultural crop
income in the State. Income from the production of tobacco for 1994 was
approximately $943 million, accounting for approximately 14.8% of the gross
agricultural income. These figures are down from $1.1 billion and 21.2% in
1992. Federal legislation and regulatory measures regarding tobacco production
and marketing, along with international competition have and are expected to
continue to affect tobacco farming in North Carolina. Changes in such factors
or any other adverse conditions in the tobacco farming sector could have
negative effects on farm income and the North Carolina economy as a whole.

In 1995 there were approximately 58,000 farms in the State, compared to
60,000 in 1992 and 72,000 in 1978. Even though the total number of farms in
North Carolina has decreased, the diversity of agriculture in North Carolina and
a continuing push in agriculture marketing efforts have protected farm

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income from some of the wide variations that have been experienced in other
states where most of the agricultural economy is dependent on a small number of
agricultural commodities. According to the State Commissioner of Agriculture,
in 1994 North Carolina ranked first in the nation in the production of
flue-cured tobacco, total tobacco, turkeys raised and sweet potatoes; second in
the production of cucumbers for pickles, the number of hogs on farms, and trout
sales; third in poultry and egg products cash receipts, net farm income,
greenhouse and nursery receipts, and peanuts; fourth in commercial broilers,
blueberries and strawberries; fifth in burley tobacco; sixth in peaches; and
seventh in apples, pecans and rye. A strong agribusiness sector also supports
farmers with farm inputs (fertilizer, insecticide, pesticide and farm machinery)
and processing of commodities produced by farmers (vegetable canning and
cigarette manufacturing).

The North Carolina Department of Commerce, Travel and Tourism Division, has
reported that North Carolina's travel industry grew by more than eight percent
(8%) in 1995, the highest growth rate in five years. This growth rate is three
percent (3%) higher than the national average. In 1995 approximately $9.2
billion was spent on travel and tourism in the State, compared to approximately
$8.5 billion in 1994, $8.0 billion in 1993, $7.4 billion in 1992 and $7.0
billion in 1991. In 1995 the State's travel industry generated more than $700
million in state and local taxes and provided approximately 250,000
tourism-related jobs. The greatest number of visitors to the State come from
Virginia, Florida, Pennsylvania, Maryland and South Carolina.

LEGISLATIVE AND JUDICIAL DEVELOPMENTS. The following represents an
overview of the State budgetary system and a discussion of legislation passed by
the General Assembly in recent years along with current judicial developments
effecting the State budget and fiscal health.

In North Carolina the issuance of municipal debt is overseen by the North
Carolina Local Government Commission. This Commission is composed of nine
members including the State Treasurer, the Secretary of State, the State
Auditor, and the Secretary of Revenue. This Commission handles the approval,
sale, and delivery of all local bonds and notes issued in North Carolina and
monitors certain fiscal and accounting standards prescribed by The Local
Government Budget and Fiscal Control Act. No unit of local government can incur
bonded indebtedness without the Commission's prior approval. If approved, the
obligations are sold by the Commission on a sealed bid basis. The Commission
then monitors the local unit's debt service through a system of monthly reports.

Over the past twenty years, North Carolina State debt obligations have
maintained ratings of Aaa in Moody's and AAA in S&P. There can be no assurance
that the State's current ratings will be maintained for any given period or that
such ratings will not be lowered, suspended or withdrawn entirely by either
rating agency.

The North Carolina State Constitution requires that the total expenditures
of the State for the fiscal period covered by the budget shall not exceed the
total receipts during that fiscal period plus the surplus remaining in the State
Treasury at the beginning of the period. The State has not realized any revenue
shortfalls in recent fiscal years. For the three most recent fiscal periods
ending June 30, 1993, 1994, and 1995 the State realized budgetary credit
balances of approximately $578.9 million, $887.5 million and $892.2 million,
respectively. However, during the 1989-90 and 1990-91 fiscal years, the State
had revenue shortfalls of approximately $346.2 million and $727.3 million,
respectively, requiring the Governor and General Assembly to mandate significant
spending constraints through reductions in spending authorizations and hiring
restrictions to fulfill the constitutional requirement of maintaining a balanced

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budget. Therefore, even though the State has not experienced any revenue
shortfalls in recent years, there is no guarantee that a budgetary credit
balance will continue to be realized in future periods.

The State budget is based upon a correlation between estimated revenues and
expenditures for the State and various State and non-State factors. These
factors include State and national economic conditions, federal government
legislation and policies, and international activities and economic conditions.
The General Fund and the Highway Fund represent the two major operating funds.

Revenues from the General Fund are used to finance virtually all
non-highway operations of the State Government, while revenues from the Highway
Fund, the majority of which are generated by taxes and fees related to motor
vehicles and highway use, are primarily used for the maintenance and upkeep of
the State highway system.

Legislation enacted by the 1991 General Assembly increased state sales
taxes, individual and corporate income taxes, cigarette taxes, real estate
conveyance taxes, alcoholic beverage fees and taxes, insurance taxes, and
certain other taxes and fees. The State's portion of the sales tax was increased
from 3% to 4% increasing the sales tax revenue by $507.9 million in the 1992-93
fiscal year. The General Assembly also increased the corporate income tax rate
from 7% to 7.75% in addition to imposing a temporary surtax of 4% beginning in
1991 (creating an effective corporate tax rate of 8.06% in 1991), decreasing by
1% each year thereafter and ending in 1995, which increased corporate income tax
revenue by $91.7 million in the 1992-93 fiscal year. The addition of a 7.75%
tax bracket for taxable personal income above $100,000 for married taxpayers
filing a joint tax return, and an equivalent increase for other categories
increased individual income tax revenue by $52 million in the 1992-93 fiscal
year. The increase in the cigarette excise tax from $0.02 to $0.05 per pack of
20 raised tax revenue by $17.2 million in the 1992-93 fiscal period. The
increase in the deed stamp tax on real estate conveyances from $1 per $1,000 of
consideration to $2 per $1,000 of the value of the property transferred
generated a tax revenue increase in the 1992-93 fiscal year of $12.5 million.

Besides adopting a biennium budget for the 1991-1993 fiscal periods, the
1991 General Assembly also adopted other legislation addressing future budget
enactments. This budget reform package placed restrictions on the growth in the
total number of state employees, placed limitations on the growth of the second
year of a biennium budget, and established funding for a budget stabilization
reserve. These restrictions are currently still in place.

The 1991 General Assembly also appropriated $3.0 million for the 1991-92
fiscal year to contract for performance audits of the Executive and Legislative
Branches of the State Government. The Government Performance Audit Committee
was formed to study ways in which the state government could be streamlined and
made more efficient. The Committee's report submitted to the 1993 General
Assembly recommended short-term initiatives and long-term strategies including
changes in education, the institution of an Economic Development Board,
improvements in the State's information technology, a downsizing in the State's
mental health facilities, expansion of the Carolina Access Program (Medicaid
Managed Care), and a reorganization of the Departments of Transportation,
Correction and Revenue. In 1993, the General Assembly passed legislation based
on the Committee's recommendations. As these recommendations are fully
implemented, future savings are anticipated by the Commission. The effect these
legislative changes have had, or may have, on the long term fiscal condition of
the State and its political subdivisions cannot be presently determined.

<PAGE>

The 1993 General Assembly enacted a total 1993-95 budget of $33.2 billion,
representing a 19.8% increase over the 1991-93 budget of $27.9 billion. The
1994 General Assembly passed in a special legislative session, an anti-crime
package totalling $257 million. It included a 3,000-bed increase in prison
space, stricter sentencing guidelines and early intervention programs for
children and those with drug problems. This anti-crime legislation was funded
from beginning budgetary credit balances and operational revenues.

The Regular Session of the 1994 General Assembly authorized additional
General Fund expenditures of $1.02 billion in excess of the previously
authorized 1994-95 budget. A major portion of these additional expenses
consisted of a $427.1 million compensation package for public school teachers,
state employees and employees of state-funded local programs. The funding of
these additional expenditures came from the collection of additional revenues
and a reduction in existing programs.

The 1995 General Assembly enacted a total 1995-97 state budget of $36.4
billion, representing a 9.6% increase over the 1993-95 budget of $33.2 billion,
and enacted a tax relief package which included legislation (1) increasing the
personal exemption for each member of a household from $2,000 to $2,500; (2)
creating a $60 per child tax credit; and (3) eliminating the state intangible
tax on stocks and bonds. The 1995 General Assembly focused much of its
attention on the continuing effort of reducing the cost of government through
downsizing organizations, efficiencies in operations, and maximizing certain
resources available to the State. Through this effort, the General Assembly
adopted budget reductions totaling $170.8 million for 1995-96 and $162.3 million
for 1996-97. These reductions assisted in the enactment of a tax reduction
package which will provide tax relief of $364.6 million in 1995-96 and $401.7
million in 1996-97.

The Governor had requested an analysis of the State's tax structure. The
study found that North Carolina had a broad-based tax structure with a low
overall tax burden. The property tax burden on both families and businesses was
very low, while the sales and excise tax burden was slightly below average.
However, North Carolina's individual income tax burden was higher than most
states, the corporate income tax rate was above average, and North Carolina was
one of the few states with a broad-based intangibles tax. As a result, at the
beginning of the Regular Session of the 1995 General Assembly, the Governor
proposed a new tax relief plan which, if enacted by the General Assembly, would
have been the biggest tax cut in North Carolina history. The Governor proposed
(1) a reduction in the corporate income tax rate from 7.75% to 7%; (2) the
repeal of the intangibles tax on stocks and bonds; (3) the creation of a new tax
credit in the amount of $50 per child; (4) the increase in the personal
exemption for each member of a household from $2,000 to $2,500; and (5) the
increase in the homestead exemption for low-income elderly people such that the
income eligibility would rise from $11,000 to $15,000 and the property exemption
would be increased from $15,000 to $18,000.

Most of the Governor's tax package was enacted by the 1995 General
Assembly, which passed legislation increasing personal exemptions from $2,000 to
$2,250 in 1995, and to $2,500 in 1996. A $60 per child tax credit was enacted,
and the General Assembly eliminated the intangibles tax effective January 1,
1995. However, the General Assembly did not increase the homestead exemption or
reduce the corporate income tax rate.

Additionally, the North Carolina Supreme Court recently decided FULTON
CORN. V. JUSTUS. In this case, the plaintiff challenged the constitutionality
of a North Carolina intangibles tax levied on ownership of corporate stock. The
plaintiff alleged that this intangibles tax violated the Commerce Clause of the

<PAGE>

United States Constitution because it taxed more heavily the stock of
corporations not doing business in North Carolina. However, the Court found
that this taxing scheme treated all corporations with substantial equality
because the intangibles tax imposed on a corporation's stock was directly and
inversely proportional to the issuing corporation's taxable income in North
Carolina. The effect was to reduce the intangibles tax liability on a
corporation's stock to the extent the corporation's income was taxed in North
Carolina; and to increase the intangibles tax liability on a corporation's stock
to the extent the corporation's income was not taxed in North Carolina. The
plaintiff's petition for certiorari to the United States Supreme Court was
granted, and in February, 1996, the United States Supreme Court held that the
State's intangibles tax on shares of corporate stock was unconstitutional. In
accordance therewith, the State Secretary of Revenue has announced plans to
issue refunds, pending approval by the State Supreme Court, during the last
quarter of 1996, to those taxpayers who paid their intangibles tax under protest
from 1991 (the date the case was originally filed) until January, 1995 (the
effective date of the General Assembly's repeal of the tax; See above
discussion). The Department of Revenue estimates that 233,000 taxpayers paid
their intangibles tax under protest during the tax years 1991-94 totaling
approximately $123 million. The Governor plans to recommend that the refunds be
financed by the State's "Rainy Day Fund," which will require action by the
General Assembly.

Also, the North Carolina Supreme Court recently decided SWANSON V. STATE OF
NORTH CAROLINA. This case involved class action plaintiffs (former federal
employees and active duty federal military personnel and reservists) who were
seeking full refunds for North Carolina income taxes paid on federal pension
benefits during tax years 1985-1988. The plaintiffs claimed they were due a
refund because state employee pension benefits were exempted from income
taxation, while federal employee benefits were exempt only up to $3,000. The
State Supreme Court held that because the plaintiffs had not complied with
procedural requirements, they were not entitled to tax refunds for the years
1985-1988. The plaintiffs petitioned for certiorari to the United States
Supreme Court, but were denied on November 6, 1995. While the case was being
litigated, the State Department of Revenue stopped further collection efforts
against federal retirees, pending outcome of the case. Now, the Department has
to proceed with collection efforts for the assessments and any applicable
interest.

RISK FACTORS FOR THE OHIO FUND. The OHIO FUND will invest most of its net
assets in securities issued by or on behalf of (or in certificates of
participation in lease-purchase obligations of) the State of Ohio, political
subdivisions of the State, or agencies or instrumentalities of the State or its
political subdivisions (Ohio Obligations). The OHIO FUND is therefore
susceptible to general or particular economic, political, or regulatory factors
that may affect issuers of Ohio Obligations. The following information
constitutes only a brief summary of some of the many complex factors that may
have an effect. The information does not apply to "conduit" obligations on
which the public issuer itself has no financial responsibility. This
information is derived from official statements of certain Ohio issuers
published in connection with their issuance of securities and from other
publicly available information, and is believed to be accurate. No independent
verification has been made of any of the following information.

Generally, the creditworthiness of Ohio Obligations of local issuers is
unrelated to that of obligations of the State itself, and the State has no
responsibility to make payments on those local obligations.

There may be specific factors that at particular times apply in connection
with investment in particular Ohio Obligations or in those obligations of
particular Ohio issuers. It is possible that the

<PAGE>

investment may be in particular Ohio Obligations, or in those of particular
issuers, as to which those factors apply. However, the information below is
intended only as a general summary, and is not intended as a discussion of any
specific factors that may affect any particular obligation or issuer.

The timely payment of principal and interest on Ohio Obligations has been
guaranteed by bond insurance purchased by the issuers, the OHIO FUND or other
parties. Those Ohio Obligations may not be subject to the factors referred to
in this section of the SAI.

Ohio is the seventh most populous state. The 1990 Census count of
10,847,000 indicated a 0.5% population increase from 1980. The Census estimate
for 1994 is 11,102,000.

While diversifying more into the service and other non-manufacturing areas,
the Ohio economy continues to rely in part on durable goods manufacturing
largely concentrated in motor vehicles and equipment, steel, rubber products and
household appliances. As a result, general economic activity, as in many other
industrially-developed states, tends to be more cyclical than in some other
states and in the nation as a whole. Agriculture is an important segment of the
economy, with over half the State's area devoted to farming and approximately
16% of total employment in agribusiness.

In prior years, the State's overall unemployment rate was commonly somewhat
higher than the national figure. For example, the reported 1990 average monthly
State rate was 5.7%, compared to the 5.5% national figure. However, for the
last five years the State rates were below the national rates (4.8% versus 5.6%
in 1995). The unemployment rate and its effects vary among geographic areas of
the State.

There can be no assurance that future national, regional or state-wide
economic difficulties, and the resulting impact on State or local government
finances generally, will not adversely affect the market value of Ohio
Obligations held by the OHIO FUND or the ability of particular obligors to make
timely payments of debt service on (or lease payments relating to) those
Obligations.

The State operates on the basis of a fiscal biennium for its appropriations
and expenditures, and is precluded by law from ending its July 1 to June 30
fiscal year (FY) or fiscal biennium in a deficit position. Most State
operations are financed through the General Revenue Fund (GRF), for which the
personal income and sales-use taxes are the major sources. Growth and depletion
of GRF ending fund balances show a consistent pattern related to national
economic conditions, with the ending FY balance reduced during less favorable
and increased during more favorable economic periods. The State has well-
established procedures for, and has timely taken, necessary actions to ensure
resource/expenditure balances during less favorable economic periods. Those
procedures included general and selected reductions in appropriations spending.

Key biennium-ending fund balances at June 30, 1989 were $475.1 million in
the GRF and $353 million in the Budget Stabilization Fund (BSF, a cash and
budgetary management fund). June 30, 1991 ending fund balances were $135.3
million (GRF) and $300 million (BSF).

The next biennium, 1992-93, presented significant challenges to State
finances, successfully addressed. To allow time to resolve certain budget
differences an interim appropriations act was enacted effective July 1, 1991; it
included GRF debt service and lease rental appropriations for the entire
biennium, while continuing most other appropriations for a month. Pursuant to
the general appropriations

<PAGE>

act for the entire biennium passed on July 11, 1991, $200 million was
transferred from the BSF to the GRF in FY 1992.

Based on updated results and forecasts in the course of that FY, both in
light of a continuing uncertain nationwide economic situation, there was
projected and then timely addressed an FY 1992 imbalance in GRF resources and
expenditures. In response, the Governor ordered most State agencies to reduce
GRF spending in the last six months of FY 1992 by a total of approximately $184
million; the $100.4 million BSF balance and additional amounts from certain
other funds were transferred late in the FY to the GRF; and adjustments made in
the timing of certain tax payments.

A significant GRF shortfall (approximately $520 million) was then projected
for FY 1993. It was addressed by appropriate legislative and administrative
actions, including the Governor's ordering $300 million in selected GRF spending
reductions and subsequent executive and legislative actions (a combination of
tax revisions and additional spending reductions). The June 30, 1993 ending GRF
fund balance was approximately $111 million, of which as a first step to BSF
replenishment, $21 million was deposited in the BSF.

None of the spending reductions were applied to appropriations needed for
debt service or lease rentals relating to any State obligations.

The 1994-95 biennium presented a more affirmative financial picture. Based
on June 30, 1994 balances, an additional $260 million was deposited in the BSF.
The biennium ended June 30, 1995 with a GRF ending fund balance of $928 million,
of which $535.2 million has been transferred into the BSF (which had a January
4, 1996 balance of over $828 million).

The GRF appropriations act for the 1995-96 biennium was passed on June 28,
1995 and promptly signed (after selective vetoes) by the Governor. All
necessary GRF appropriations for State debt service and lease rental payments
then projected for the biennium were included in that act. In accordance with
the appropriations act, the significant June 30, 1995 GRF fund balance, after
leaving in the GRF an unreserved and undesignated balance of $70 million, has
been transferred to the BSF and other funds including school assistance funds
and, in anticipation of possible federal program changes, a human services
stabilization fund.

The State's incurrence or assumption of debt without a vote of the people
is, with limited exceptions, prohibited by current State constitutional
provisions. The State may incur debt, limited in amount to $750,000, to cover
casual deficits or failures in revenues or to meet expenses not otherwise
provided for. The Constitution expressly precludes the State from assuming the
debts of any local government or corporation. (An exception is made in both
cases for any debt incurred to repel invasion, suppress insurrection or defend
the State in war.)

By 14 constitutional amendments, the last adopted in 1995, Ohio voters have
authorized the incurrence of State debt and the pledge of taxes or excises to
its payment. At February 13, 1996, $898 million (excluding certain highway
bonds payable primarily from highway use charges) of this debt was outstanding.
The only such State debt at that date still authorized to be incurred were
portions of the highway bonds, and the following: (a) up to $100 million of
obligations for coal research and development may be outstanding at any one time
($45.3 million outstanding); (b) $240 million of obligations previously
authorized for local infrastructure improvements, no more than $120 million of

<PAGE>

which may be issued in any calendar year ($805.4 million outstanding) and (c) up
to $200 million in general obligation bonds for parks, recreation and natural
resources purposes which may be outstanding at any one time ($47.2 million
outstanding, with no more than $50 million to be issued in any one year).

The electors approved in November 1995 a constitutional amendment that
extends the local infrastructure bond program (authorizing an additional $1.2
billion of State full faith and credit obligations to be issued over 10 years
for the purpose), and authorizes additional highway bonds (expected to be
payable primarily from highway use receipts). The latter supersedes the prior
$500 million highway obligation authorization, and authorizes not more that $1.2
billion to be outstanding at any time and not more than $220 million to be
issued in a fiscal year.

Common resolutions are pending in both houses of the General Assembly that
would submit a constitutional amendment relating to certain other aspects of
State debt. The proposal would authorize, among other things, the issuance of
State general obligation debt for a variety of purposes, with debt service on
all State general obligation debt and GRF-supported obligations not to exceed 5%
of the preceding fiscal year's GRF expenditures.

The Constitution also authorizes the issuance of State obligations for
certain purposes, the owners of which do not have the right to have excises or
taxes levied to pay debt service. Those special obligations include obligations
issued by the Ohio Public Facilities Commission and the Ohio Building Authority,
and certain obligations issued by the State Treasurer, over $4.7 billion of
which was outstanding or awaiting delivery at February 13, 1996.

A 1990 constitutional amendment authorizes greater State and political
subdivision participation (including financing) in the provision of housing.
The General Assembly may for that purpose authorize the issuance of State
obligations secured by a pledge of all or such portion as it authorizes of State
revenues or receipts (but not by a pledge of the State's full faith and credit).

A 1994 constitutional amendment pledges the full faith and credit and
taxing power of the State to meeting certain guarantees under the State's
tuition credit program which provides for purchase of tuition credits, for the
benefit of State residents, guaranteed to cover a specified amount when applied
to the cost of higher education tuition. (A 1965 constitutional provision that
authorized student loan guarantees payable from available State moneys has never
been implemented, apart from a "guaranteed fund" approach funded essentially
from program revenues.)

The House has adopted a resolution that would submit to the electors a
constitutional amendment prohibiting the General Assembly from imposing a new
tax or increasing an existing tax unless approved by a three-fifths vote of each
house or by a majority vote of the electors. It cannot be predicted whether
required Senate concurrence to submission will be received.

State and local agencies issue obligations that are payable from revenues
from or relating to certain facilities (but not from taxes). By judicial
interpretation, these obligations are not "debt" within constitutional
provisions. In general, payment obligations under lease-purchase agreements of
Ohio public agencies (in which certificates of participation may be issued) are
limited in duration to the agency's fiscal period, and are renewable only upon
appropriations being made available for the subsequent fiscal period.

<PAGE>

Local school districts in Ohio receive a major portion (state-wide
aggregate approximately 44% in recent years) of their operating moneys from
State subsidies, but are dependent on local property taxes, and in 117 districts
from voter-authorized income taxes, for significant portions of their budgets.
Litigation, similar to that in other states, is pending questioning the
constitutionality of Ohio's system of school funding. The trial court concluded
that aspects of the system (including basic operating assistance) are
unconstitutional, and ordered the State to provide for and fund a system
complying with the Ohio Constitution. The State appealed and a court of appeals
reversed the trial court's findings for plaintiff districts. The case is now
pending on appeal in the Ohio Supreme Court. A small number of the State's 612
local school districts have in any year required special assistance to avoid
year-end deficits. A current program provides for school district cash need
borrowing directly from commercial lenders, with diversion of State subsidy
distributions to repayment if needed. Recent borrowings under this program
totalled $94.5 million for 27 districts (including $75 million for one) in FY
1993, $41.1 million for 28 districts in FY 1994, and $71.1 million for 29
districts in FY 1995.

Ohio's 943 incorporated cities and villages rely primarily on property and
municipal income taxes for their operations. With other subdivisions, they also
receive local government support and property tax relief moneys distributed by
the State. For those few municipalities that on occasion have faced significant
financial problems, there are statutory procedures for a joint State/local
commission to monitor the municipality's fiscal affairs and for development of a
financial plan to eliminate deficits and cure any defaults. Since inception in
1979, these procedures have been applied to 23 cities and villages; for 19 of
them the fiscal situation was resolved and the procedures terminated.

At present the State itself does not levy ad valorem taxes on real or
tangible personal property. Those taxes are levied by political subdivisions
and other local taxing districts. The Constitution has since 1934 limited to 1%
of true value in money the amount of the aggregate levy (including a levy for
unvoted general obligations) of property taxes by all overlapping subdivisions,
without a vote of the electors or a municipal charter provision, and statutes
limit the amount of that aggregate levy to 10 mills per $1 of assessed valuation
(commonly referred to as the "ten-mill limitation"). Voted general obligations
of subdivisions are payable from property taxes that are unlimited as to amount
or rate.

RISK FACTORS FOR THE OREGON FUND. Oregon's economy historically has relied
heavily on the timber industry. Recently, the State has encouraged
diversification of the economy, with emphasis on such industries as high
technology, foreign trade and tourism, but the timber industry remains a
significant component of the economy. The vitality of that industry is
particularly vulnerable to recessionary cycles. The availability of timber for
harvesting in Oregon remains in doubt as a result of the ongoing controversy
with respect to protection of the habitat of the Northern Spotted Owl.
Environmental groups are advocating restrictions on logging to protect the
habitat of this bird, which restrictions may have a significant adverse impact
on the timber industry. The federal government is developing and implementing a
plan to restore native salmon runs in the Pacific Northwest. This plan will
necessarily involve some restrictions on the use of dams to generate electricity
on some of Oregon's major rivers. Oregon's economy is heavily dependent on
hydroelectric power, so it is uncertain how the salmon recovery plan may impact
the economy through utility rate increases. In 1990, Oregon voters approved
Measure 5, a property tax limitation measure. Measure 5 puts a cap on local ad
valorem property taxes which cap is to be phased in over time until 1996. It is
uncertain how the legislature will restructure the general fund in response to
Measure 5. Alternatives may include budget cuts, a sales tax or higher
corporate and individual income taxes. Because of the State's need to replace
lost tax revenues, Measure 5 could adversely affect the State's credit rating.
If rating agencies were to lower Oregon's credit rating, the State

<PAGE>

would have to pay a higher interest rate on the money it borrows. There is a
relatively inactive trading market for municipal instruments of Oregon issuers
in other than general obligations of the State. The market price of these other
municipal instruments may be particularly sensitive to changes in the supply of,
and the demand for, the instruments, and, if the OREGON FUND were forced to sell
a large volume of these instruments for any reason, the value of the OREGON
FUND'S portfolio may be adversely affected.

RISK FACTORS FOR THE PENNSYLVANIA FUND. Pennsylvania may incur debt to
rehabilitate areas affected by disaster, debt approved by the electorate, debt
for certain capital projects (for projects such as highways, public
improvements, transportation assistance, flood control, redevelopment
assistance, site development and industrial development) and tax anticipation
debt payable in the fiscal year of issuance. Pennsylvania had outstanding
general obligation debt of $5,045 million at June 30, 1995. Pennsylvania is not
permitted to fund deficits between fiscal years with any form of debt. All
year-end deficit balances must be funded within the succeeding fiscal year's
budget. At December 28, 1995, all outstanding general obligation bonds of
Pennsylvania were rated AA- by S & P and Al by Moody's (see Appendix A). There
can be no assurance that the current ratings will remain in effect in the
future. The PENNSYLVANIA FUND assumes no obligation to update this rating
information. Over the five-year period ending June 30, 2000, Pennsylvania has
projected that it will issue bonds totaling $2,195 million and retire bonded
debt in the principal amount of $2,327 million. Certain agencies created by
Pennsylvania have statutory authorization to incur debt for which Pennsylvania
appropriations to pay debt service thereon is not required. As of June 30,
1995, total combined debt outstanding for these agencies was $6,963 million.
The debt of these agencies is supported by assets of, or revenues derived from,
the various projects financed and is not an obligation of Pennsylvania. Some of
these agencies, however, are indirectly dependent on Pennsylvania
appropriations. The only obligations of agencies in Pennsylvania that bear a
moral obligation of Pennsylvania are those issued by the Pennsylvania Housing
Finance Agency ("PHFA"), a state-created agency which provides housing for lower
and moderate income families, and The Hospitals and Higher Education Facilities
Authority of Philadelphia (the "Hospital Authority"), an agency created by the
City of Philadelphia to acquire and prepare various sites for use as
intermediate care facilities for the mentally retarded. As of June 30, 1995,
PHFA has $2,154 million of revenue bonds and notes outstanding.

Numerous local government units in Pennsylvania issue general obligation
debt, including counties, cities, boroughs, townships and school districts.
School district obligations are supported indirectly by Pennsylvania. The
issuance of non-electoral general obligation debt is limited by constitutional
and statutory provision. Electoral debt.,I.E., that approved by the voters, is
unlimited. In addition, local government units and municipal and other
authorities may issue revenue obligations that are supported by the revenues
generated from particular projects or enterprises. Examples include municipal
authorities (frequently operating water and sewer systems), municipal
authorities formed to issue obligations benefitting hospitals and educational
institutions, and industrial development authorities, whose obligations benefit
industrial or commercial occupants. In some cases, sewer or water revenue
obligations are guaranteed by taxing bodies and have the credit characteristics
of general obligation debt.

Pennsylvania historically has been identified as a heavy industry state,
although that reputation has changed with the decline of the coal, steel and
railroad industries and the resulting diversification of Pennsylvania's
industrial composition. The major new sources of growth are in the service
sector, including trade, medical and health services, education and financial
institutions. Manufacturing has fallen behind both the services sector and the
trade sector as the largest single source of employment in Pennsylvania.

<PAGE>

Since 1985, employment in Pennsylvania has grown by approximately 10%,
while employment for the Middle Atlantic region and for the United States for
the same period has grown by approximately 4% and 17%, respectively.
Pennsylvania's average annual unemployment rate for the years 1988, 1989 and
1990 remained slightly below the nation's annual average unemployment rate, and
Pennsylvania's average annual unemployment rate for the years 1992, 1993, and
1994 remained slightly above the nation's annual average unemployment rate. The
seasonally adjusted unemployment rate for Pennsylvania for January, 1996 was
6.1% compared to 5.8% for the United States. The unadjusted unemployment rate
for Pennsylvania and the United States for January, 1996 was 6.7% and 6.3%,
respectively. The population of Pennsylvania, 12,052 million people as of July
1, 1994, according to the U. S. Bureau of the Census, represents an increase
from the July 1, 1985 estimate of 11,772 million. Per capita income in
Pennsylvania for calendar 1994 of $22,196 was higher than the per capita income
of the United States of $21,699. Pennsylvania's General Fund, which receives
all tax receipts and most other revenues and through which debt service on all
general obligations of Pennsylvania are made, closed fiscal years ended June 30,
1992, June 30, 1993 and June 30, 1994 with positive fund balances of $87
million, $699 million, and $893 million, respectively.

Pennsylvania is currently involved in certain litigation where adverse
decisions could have an adverse impact on its ability to pay debt service. In
BABY NEAL V. COMMONWEALTH, the American Civil Liberties Union filed a lawsuit
against the Commonwealth seeking an order that would require the Commonwealth to
provide additional funding for child welfare services. COUNTY OF ALLEGHENY V.
COMMONWEALTH OF PENNSYLVANIA involves litigation regarding the state
constitutionality of the statutory scheme for county funding of the judicial
system. In PENNSYLVANIA ASSOCIATION OF RURAL AND SMALL SCHOOLS V. CASEY, the
constitutionality of Pennsylvania's system for funding local school districts
has been challenged. No estimates for the amount of these claims are available.

RISK FACTORS FOR THE VIRGINIA FUND. The Commonwealth of Virginia has had a
tradition of low debt, and a large proportion of its general obligation bonds
has been supported by particular revenue-producing projects. However, use of
non-general obligation debt, which is not subject to constitutional limits on
borrowing, has changed the Commonwealth's debt profile. During the last decade,
the Commonwealth has expended its limited obligation borrowings through various
financing vehicles such as the Virginia Public Building Authority, the Virginia
College Building Authority and a substantial transportation bonding program. In
1991, the Virginia Supreme Court in a case know as the DYKES DECISION, on a
split vote upheld on rehearing, the ability of counties to enter into
obligations which were "subject to appropriation" and confirmed that such
obligations were not to be considered as "debts" under the Virginia
Constitution.

While the Commonwealth has had a long history of sound financial
operations, variations of a cyclical nature have occurred during he past several
years. Since the Virginia Constitution requires a balanced budget, the 1996-98
biennium budget, as adopted by the Virginia General Assembly at its 1996
session, reflected spending cuts, deferrals and fund transfers (principally from
state lottery proceeds and a negotiated settlement with Trigon Blue Cross-Blue
Shield for the assumed conversion of the company from not-for-profit to publicly
held status) to accommodate anticipated modest revenue growth. The Commonwealth
expects to conclude the fiscal year ending June 30, 1996 with a surplus of
$103.8 million (on an accrual basis). There have been no provisions in the
Commonwealth's budget for general tax increases.

<PAGE>

The general fund is the Commonwealth's major operating fund and accounts
for about half of Commonwealth expenditures. It covers all functions except
highways and Federal grant disbursements, for which there are special revenue
funds.

Virginia's economy is generally affected by economic trends throughout the
country and in the Mid-Atlantic region, and it is particularly influenced by
Federal civilian and miliary installations and the growth of suburban
communities around Washington, D.C. Also significant to the economy of Virginia
are manufacturing (such as electronic equipment, shipbuilding and chemical
products), minerals (chiefly coal), service sector occupations (including
banking and insurance), agriculture and tourism. Unemployment rates are
typically below the national average, but because of a large military and
civilian government employment component, and the related civilian employment,
the expected continued decrease in defense or other governmental spending due to
federal government downsizing, while significantly affecting Virginia's economic
growth rates, the economy of Virginia is expected by the Virginia Department of
Planning and Budget, to slightly outperform the nation in terms of job growth.
Due to the anticipated mix of new jobs; however, Virginia's personal income
growth is expected to underperform the nation.

DIRECTORS OR TRUSTEES AND OFFICERS

The following table lists the Directors or Trustees and executive officers
of the 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.

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).

<PAGE>

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 Insured Tax Exempt Fund, Inc., First Investors Series
Fund and First Investors Government Fund, Inc.

- ---------------
* 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.

The following table lists compensation paid to the Trustees of Multi-State
Insured for the fiscal year ended December 31, 1995.

<PAGE>

<TABLE>
<CAPTION>
PENSION OR ESTIMATED TOTAL COMPENSATION
AGGREGATE RETIREMENT BENEFITS ANNUAL BENEFITS FROM FIRST INVESTORS
COMPENSATION ACCRUED AS PART OF UPON FAMILY OF FUNDS
TRUSTEE FROM FUND* FUND EXPENSES RETIREMENT PAID TO TRUSTEES*
- ------- ------------ ------------------- --------------- --------------------
<S> <C> <C> <C> <C>
James J. Coy $3,600 $-0- $-0- $37,200
Roger L. Grayson -0- -0- -0- -0-
Glenn O. Head -0- -0- -0- -0-
Kathryn S. Head -0- -0- -0- -0-
F. William Ortman,Jr.** 1,500 -0- -0- 15,500
Rex R. Reed 3,600 -0- -0- 37,200
Herbert Rubinstein 3,600 -0- -0- 37,200
James M. Srygley*** 3,600 -0- -0- 37,200
John T. Sullivan -0- -0- -0- -0-
Robert F. Wentworth 3,600 -0- -0- 37,200

</TABLE>

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

<TABLE>
<CAPTION>
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 $1,800 $-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.** 750 -0- -0- 15,500
Rex R. Reed 1,800 -0- -0- 37,200
Herbert Rubinstein 1,800 -0- -0- 37,200
James M. Srygley*** 1,800 -0- -0- 37,200
John T. Sullivan -0- -0- -0- -0-
Robert F. Wentworth 1,800 -0- -0- 37,200
</TABLE>

* 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.

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 Free
Fund, including a majority of the Directors or Trustees who are not parties to
such Tax Free

<PAGE>

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
Fund's Directors or Trustees. Each Advisory Agreement also provides that FIMCO
shall provide the applicable Tax Free 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 Free 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 Free 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 Free Fund's Independent Directors or
Trustees voting in person at a meeting called for the purpose of voting on such
approval.

Under each Advisory Agreement, each Fund pays the Adviser an annual fee,
paid monthly, according to the following schedule:

<TABLE>
<CAPTION>
Annual
Average Daily Net Assets Rate
- ------------------------ ------
<S> <C>
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
</TABLE>

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.

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 NEW YORK
INSURED'S advisory fees were $1,489,284, $1,526,855 and $1,564,094,
respectively. For the fiscal years ended December 31, 1993, 1994 and 1995, the
advisory fees for each Fund of Multi-State Insured were as follows:

<PAGE>

<TABLE>
<CAPTION>
FISCAL YEAR ENDED FISCAL YEAR ENDED FISCAL YEAR ENDED
DECEMBER 31, 1993 DECEMBER 31, 1994 DECEMBER 31, 1995
---------------------- ---------------------- ----------------------
ADVISORY ADVISORY ADVISORY
FEES PAID WAIVED FEES PAID WAIVED FEES PAID WAIVED
--------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C>
ARIZONA FUND $ -0- $ 50,845 $ 8,856 $ 57,074 $ 27,587 $ 41,379
CALIFORNIA FUND 81,670 40,835 81,473 40,737 84,232 42,116
COLORADO FUND -0- 14,252 -0- 22,258 -0- 25,413
CONNECTICUT FUND 57,991 50,742 63,996 55,997 65,966 57,720
FLORIDA FUND 17,168 111,593 37,734 119,394 74,240 84,845
GEORGIA FUND -0- 6,462 -0- 12,122 -0- 20,345
MARYLAND FUND -0- 38,038 -0- 51,149 -0- 61,997
MASSACHUSETTS FUND 110,362 55,181 110,003 55,002 111,740 55,870
MICHIGAN FUND 128,246 64,123 151,201 75,601 169,741 84,871
MINNESOTA FUND 36,222 18,111 19,482 38,968 19,536 39,073
MISSOURI FUND -0- 7,074 -0- 11,913 -0- 12,994
NEW JERSEY FUND 362,752 90,624 361,014 90,254 345,714 86,428
NORTH CAROLINA FUND -0- 19,422 -0- 32,570 -0- 33,343
OHIO FUND 71,558 62,613 77,233 67,578 77,612 67,910
OREGON FUND -0- 16,047 -0- 31,725 -0- 43,844
PENNSYLVANIA FUND 94,783 137,366 173,125 86,564 185,169 92,584
VIRGINIA FUND 84,139 73,621 94,200 82,424 99,511 87,072
</TABLE>

In addition, for the fiscal year ended December 31, 1995, the Adviser
voluntarily reimbursed the Funds as follows: ARIZONA FUND - $18,709; COLORADO
FUND - $6,886; GEORGIA FUND - $9,934; MARYLAND FUND - $1,098; MINNESOTA FUND -
$10,113; MISSOURI FUND - $5,703; NORTH CAROLINA FUND - $13,742; and OREGON FUND
- - $7,720.

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 Free 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
Funds' 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 Funds' 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 Free 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 Free 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 the applicable Tax Free Fund's Disinterested
Directors or Trustees, voting in person at

<PAGE>

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 fees with respect to NEW YORK INSURED of $823,827, $425,087 and
$372,094, respectively. For the same periods relating to NEW YORK INSURED, FIC
reallowed an additional $56,733, $30,213 and 66,820, respectively, to
unaffiliated dealers. For the fiscal years ended December 31, 1993, 1994 and
1995, underwriting fees with respect to Multi-State Insured were as follows:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED FISCAL YEAR ENDED FISCAL YEAR ENDED
DECEMBER 31, 1993 DECEMBER 31, 1994 DECEMBER 31, 1995
--------------------------------- --------------------------------- ---------------------------------
AMOUNTS ADDITIONAL AMOUNTS AMOUNTS ADDITIONAL AMOUNTS AMOUNTS ADDITIONAL AMOUNTS
RECEIVED REALLOWED TO RECEIVED REALLOWED TO RECEIVED REALLOWED TO
BY FIC UNAFFILIATED DEALERS BY FIC UNAFFILIATED DEALERS BY FIC UNAFFILIATED DEALERS
-------- -------------------- -------- -------------------- -------- --------------------
<S> <C> <C> <C> <C> <C> <C>
ARIZONA FUND $ 120,518 $ 39,279 $ 85,274 $ 45,361 $ 44,034 $ 11,959
CALIFORNIA FUND 85,174 65,980 51,684 30,409 60,316 73,860
COLORADO FUND 57,984 10,571 44,696 4,478 19,703 1,865
CONNECTICUT FUND 221,231 48,428 96,040 1,882 82,853 1,180
FLORIDA FUND 228,035 148,148 118,132 45,843 69,192 35,117
GEORGIA FUND 40,488 10,699 30,024 677 34,592 2,031
MARYLAND FUND 71,735 20,220 53,730 13,153 46,485 24,155
MASSACHUSETTS FUND 212,690 23,579 94,581 3,604 94,207 770
MICHIGAN FUND 163,640 234,174 109,150 169,948 85,095 66,718
MINNESOTA FUND 52,909 39,220 15,664 5,835 17,882 566
MISSOURI FUND 20,758 13,655 8,315 375 6,159 -0-
NEW JERSEY FUND 467,063 158,856 235,885 43,823 181,391 48,275
NORTH CAROLINA FUND 60,543 58,710 41,196 14,413 15,684 6,122
OHIO FUND 172,496 149,611 73,355 39,102 44,826 16,113
OREGON FUND 113,925 13,486 70,522 15,455 99,226 10,676
PENNSYLVANIA FUND 199,051 249,214 116,174 117,846 87,083 147,749
VIRGINIA FUND 341,464 39,621 132,302 18,947 133,425 17,310
</TABLE>

DISTRIBUTION PLANS

As stated in the Funds' Prospectuses, pursuant to a separate plan of
distribution for each class of shares adopted by each Tax Free 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 Free 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 be either the applicable
Tax Free 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 Free Fund. Each
Tax Free 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 Free Fund's Independent
Directors or Trustees will be committed to the discretion of such Independent
Directors or Trustees then in office.

<PAGE>

Each Plan can be terminated, with respect to a Fund, at any time by a vote
of a majority of the applicable Tax Free 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
Free 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, NEW YORK INSURED paid $624,331
pursuant to its Class A Plan. For the fiscal year ended December 31, 1995, each
Fund of Multi-State Insured paid the following amounts pursuant to their Class A
Plan: ARIZONA FUND - $18,180; CALIFORNIA FUND - $33,604; COLORADO FUND -
$6,657; CONNECTICUT FUND - $32,082; FLORIDA FUND - $42,094; GEORGIA FUND -
$5,328; MARYLAND FUND - $16,110; MASSACHUSETTS FUND - $44,279; MICHIGAN FUND -
$67,474; MINNESOTA FUND - $15,628; MISSOURI FUND - $3,465; NEW JERSEY FUND -
$114,669; NORTH CAROLINA FUND - $8,776; OHIO FUND - $38,531; OREGON FUND -
$11,455; PENNSYLVANIA FUND - $73,856; and VIRGINIA FUND - $48,660. The
Underwriter incurred the following Class A Plan-related expenses with respect to
each Fund during the fiscal year ended December 31, 1995:

<TABLE>
<CAPTION>
Payments Payments to
Advertising To Sales Personnel* Underwriter**
----------- ------------------- -------------
<S> <C> <C> <C>
NEW YORK INSURED $0 $174,933 $449,398
ARIZONA FUND 0 5,641 12,539
CALIFORNIA FUND 0 9,853 23,751
COLORADO FUND 0 2,947 3,710
CONNECTICUT FUND 0 13,340 18,742
FLORIDA FUND 0 13,053 29,041
GEORGIA FUND 0 1,905 3,423
MARYLAND FUND 0 4,483 11,627
MASSACHUSETTS FUND 0 18,746 25,533
MICHIGAN FUND 0 15,200 52,274
MINNESOTA FUND 0 4,438 11,190
MISSOURI FUND 0 1,262 2,203
NEW JERSEY FUND 0 45,442 69,227
NORTH CAROLINA FUND 0 2,841 5,935
OHIO FUND 0 12,963 25,568
OREGON FUND 0 5,121 6,334
PENNSYLVANIA FUND 0 10,883 62,973
VIRGINIA FUND 0 19,650 29,010
</TABLE>

* Amounts paid were for service fees
** Amounts paid were for distribution fees

For the fiscal year ended December 31, 1995, NEW YORK INSURED paid $4,353
pursuant to its Class B Plan. For the fiscal year ended December 31, 1995, each
Fund of Multi-State Insured paid the

<PAGE>

following amounts pursuant to their Class B Plan: ARIZONA FUND - $1,052;
CALIFORNIA FUND - $452; COLORADO FUND - $597; CONNECTICUT FUND - $4,460;
FLORIDA FUND - $1,647; GEORGIA FUND - $492; MARYLAND FUND - $2,110;
MASSACHUSETTS FUND - $2,089; MICHIGAN FUND - $2,111; NEW JERSEY FUND - $2,836;
NORTH CAROLINA FUND - $570; OHIO FUND - $1,387; OREGON FUND - $1,174;
PENNSYLVANIA FUND - $1,055; and VIRGINIA FUND - $5,483. With respect to the
Class B Plans, all amounts were paid to the Underwriter for 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 Free 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 Free 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 Free 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 Free 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.

<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 the Funds
and any other fund in the First Investors Group of Funds, any fund of Executive
Investors Trust and First Investors Life Insurance Company, affiliates of the
Funds, for the purpose of negotiating brokerage commissions or obtaining a more
favorable transaction price; and where appropriate, securities purchased or sold
may be allocated, in terms of price and amount, to the Funds according to the
proportion that the size of the transaction order actually placed by a Fund
bears to the aggregate size of the transaction orders simultaneously made by
other participants in the transaction. Each Tax Free 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. The
Funds did not pay brokerage commissions for the fiscal years ending December 31,
1993, 1994 and 1995.

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 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.

<PAGE>

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 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

<PAGE>

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 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

<PAGE>

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 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

<PAGE>

has no reason to believe that these conditions for the availability of the
conversion feature will not continue to be met.

If either Tax Free 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 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

<PAGE>

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' Prospectuses, the Tax Free 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 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,

<PAGE>

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 Prospectuses, 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, 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.

<PAGE>

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 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

<PAGE>

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.

STATE INCOME TAXES

ARIZONA. Interest on indebtedness incurred (directly and indirectly) by an
investor to purchase or carry an investment in the ARIZONA FUND should not be
deductible for Arizona income tax purposes to the extent that the ARIZONA FUND
holds tax-exempt obligations of the state of Arizona or obligations of the
United States, Puerto Rico, the Virgin Islands or Guam. The discussion of
Arizona taxes in the Prospectus assumes that in each taxable year the ARIZONA
FUND qualifies and elects to be taxed as a regulated investment company for
federal income tax purposes. In addition, such discussion assumes that in each
taxable year the ARIZONA FUND qualifies to pay exempt-interest dividends by
complying with the requirements of the Code that at least 50% of its assets at
the close of each quarter of its taxable year is invested in state, municipal or
other obligations, the interest on which is excluded from gross income for
federal income tax purposes pursuant to section 103(a) of the Code.

CALIFORNIA. Corporations subject to the California franchise tax or
California corporate income tax are required to include in their gross income
and in income subject to the corporate alternative minimum tax all distributions
received from the CALIFORNIA FUND, including exempt-interest dividends.
California law generally follows Federal law on matters such as denial or
limitation of deductions for short-term losses where exempt-interest dividends
have recently been received, wash sales, limitations on tax basis for certain
sales charges and the nondeductibility of interest on indebtedness incurred by
shareholders to purchase or carry shares of tax-exempt instruments, such as the
CALIFORNIA FUND. It is the intent of the Fund, as represented to and relied
upon by California tax counsel in rendering their opinion, that except when
acceptable investments are unavailable for the CALIFORNIA FUND, the CALIFORNIA
FUND will maintain at least 80% of the value of its net assets in debt
obligations of the State of California, its localities and political
subdivisions, which are exempt from regular Federal income tax and California
personal income tax.

CONNECTICUT. Corporate shareholders of the CONNECTICUT FUND subject to tax
in Connecticut will be required to include in net income, for purposes of
calculating the Connecticut corporation business tax, distributions made by the
CONNECTICUT FUND and gains resulting from the redemption or sale of shares of
the CONNECTICUT FUND. Such corporate shareholders, in determining net income,
will be entitled to deduct 70% of the amount of includable distributions that
qualify as dividends under Section 316 of the Code.

FLORIDA. In the opinion of Rudnick & Wolfe, Florida tax counsel to Multi-
State Insured, under existing law, shareholders of the FLORIDA FUND will not be
subject to the Florida intangible personal property tax on their ownership of
FLORIDA FUND shares or on distributions of income or gains made by the FLORIDA
FUND to the extent that such distributions are attributable solely to
(i) obligations issued by the United States government and its agencies, or by
the Commonwealths of Puerto Rico, Guam, the Virgin Islands, American Samoa, or
the Northern Mariana Islands (collectively, "Exempt Instruments") or (ii) to
money, notes, bonds, and other obligations issued by the State of Florida and
its municipalities, counties, and other taxing districts ("Florida
Instruments"). If the FLORIDA FUND is not invested solely in Exempt Instruments
and Florida Instruments, then the Florida intangible personal property tax
("Intangible Tax") will apply as follows:

<PAGE>

(a) The portion of the net asset value of the FLORIDA FUND'S
portfolio that is attributable to Exempt Instruments will be exempt from
the Intangible Tax.

(b) If the remaining portion of the net asset value of the FLORIDA
FUND'S portfolio, after removing the portion representing Exempt
Instruments, represents assets which are themselves exempt from the
Intangible Tax, then this portion will also be exempt from the Intangible
Tax.

(c) If the remaining portion of the net asset value of the FLORIDA
FUND'S portfolio, after removing the portion representing Exempt
Instruments, represents any asset which is subject to the Intangible Tax
under Florida law, then the remaining portion of the net asset value of the
FLORIDA FUND'S portfolio will be subject to the Intangible Tax.

Shareholders of the FLORIDA FUND will be exempt from the Intangible Tax on
their shares to the extent that the net asset value of the FLORIDA FUND'S
portfolio is exempt. (The FLORIDA FUND has no present intention of investing in
assets which will be subject to the Intangible Tax.)

Because Florida does not impose an income tax on individuals, individual
shareholders will not be subject to any Florida income tax on income or gains
distributed by the FLORIDA FUND or on gains resulting from the redemption or
exchange of shares of the FLORIDA FUND. Corporate shareholders will be subject
to the Florida income tax on all distributions received from the FLORIDA FUND,
regardless of the tax-exempt status of interest received from the FLORIDA FUND
which is attributable to bonds under section 103(a) of the Code or any other
Federal law; however, if a corporation does not have its commercial domicile
within the State of Florida, its non-business income generated from the FLORIDA
FUND is not allocated as Florida income subject to Florida corporate income tax.
Non-business income includes capital gains and interest to the extent they do
not arise from transactions and activities in the regular course of a taxpayer's
business.

For Florida state income tax purposes, the FLORIDA FUND itself will not be
subject to the Florida income tax so long as it has no income subject to Federal
taxation.

Shareholders of the FLORIDA FUND will be subject to Florida estate tax on
their FLORIDA FUND shares only if they are Florida residents, certain natural
persons not domiciled in Florida, or certain natural persons not residents of
the United States. However, the Florida estate tax is limited to the amount of
the credit allowable under the Code (currently section 2011 and in some cases
section 2102 of the Code) for death taxes actually paid to the several states.

Neither interests held by shareholders of the FLORIDA FUND nor Exempt
Instruments nor money, notes, bonds, and other obligations issued by the State
of Florida and its municipalities, counties, and other taxing districts held by
the FLORIDA FUND will be subject to the Florida ad valorem property tax, the
Florida sales and use tax or the Florida documentary stamp tax.

GEORGIA. In the opinion of Kutak Rock, Georgia tax counsel to Multi-State
Insured, capital gains recognized as a result of the sale of shares in the
GEORGIA FUND can not be excluded for purposes of calculating the Georgia income
tax by individuals, estates, trusts and corporations. The Georgia intangible
personal property tax was repealed, effective March 21, 1996, affecting shares
in the GEORGIA FUND, formerly believed to be subject to the intangible tax,
separate from an ownership interest in the underlying

<PAGE>

Georgia obligations exempt from such tax. House Bill 6430 pending in the
Georgia General Assembly at the time of this SAI's publication proposes
abolishing the Georgia individual income tax altogether by the year 2000.
Georgia tax counsel urges each potential investor in the GEORGIA FUND to consult
his or her own tax advisor regarding the application of the Georgia intangible
personal property tax and regarding all GEORGIA FUND income tax related matters
specifically pertaining to them.

MARYLAND. In the opinion of Venable, Baetjer and Howard, LLP, Maryland tax
counsel to Multi-State Insured, holders of shares of the MARYLAND FUND who are
individuals, corporations, estates or trusts and who are subject to Maryland
state and local income tax will not be subject to tax in Maryland on MARYLAND
FUND dividends to the extent that such dividends qualify as exempt-interest
dividends of a RIC under section 852(b)(5) of the Code and which are
attributable to (1) interest on tax-exempt obligations of the State of Maryland
or its political subdivisions or authorities, (2) interest on obligations of the
United States or an authority, commission, instrumentality, possession or
territory of the United States, or (3) gain realized by the MARYLAND FUND from
the sale or exchange of bonds issued by Maryland or a political subdivision of
Maryland or of the United States or an authority, commission or instrumentality
of the United States. To the extent that distributions of the MARYLAND FUND are
attributable to sources other than those described above, such as (1) interest
on obligations issued by states other than Maryland or (2) income from
repurchase contracts, such distributions will not be exempt from Maryland state
and local income taxes. In addition, gain realized by a shareholder upon a
redemption or exchange of MARYLAND FUND shares will be subject to Maryland
taxation. In the event the MARYLAND FUND fails to qualify as a regulated
investment company, the MARYLAND FUND would be subject to corporate Maryland
income tax and distributions would be taxable as ordinary income to the
shareholders. Maryland presently includes in taxable net income items of tax
preferences as defined in the Code. Interest paid on certain private activity
bonds constitutes a tax preference. Accordingly, subject to a threshold amount,
50% of any distributions on the MARYLAND FUND attributable to such private
activity bonds will not be exempt from Maryland state and local income taxes.
Interest on indebtedness incurred (directly or indirectly) by a shareholder of
the MARYLAND FUND to purchase or carry shares of the MARYLAND FUND will not be
deductible for Maryland state and local income tax purposes to the extent such
interest is allocable to exempt-interest dividends.

MASSACHUSETTS. Distributions to holders of shares of the MASSACHUSETTS
FUND who are subject to Massachusetts personal income tax that do not qualify as
exempt interest dividends, as defined in Code section 852(b)(5), or capital gain
dividends, as defined in Code section 852(b)(3)(C), directly attributable to
interest or capital gain exempt from Massachusetts taxation on obligations
issued by the Commonwealth of Massachusetts, its instrumentalities or its
political subdivisions will generally be subject to Massachusetts income tax.
Among the items that will not be subject to Massachusetts income tax are the
following: exempt interest dividends attributable to interest on obligations
issued by the Commonwealth of Puerto Rico, the government of Guam, the
government of the Virgin Islands or their respective authorities, and
distributions attributable to interest on obligations of the United States
exempt from state income taxation. The MASSACHUSETTS FUND must identify the
items not subject to tax in a written notice to the shareholders. The holders
of shares of the MASSACHUSETTS FUND will recognize taxable gain or loss upon an
exchange or redemption of their shares.

MICHIGAN. In the opinion of Dickinson, Wright, Moon, Van Dusen & Freeman,
Michigan tax counsel to Multi-State Insured, holders of the MICHIGAN FUND will
not be subject to the Michigan income tax or single business tax on MICHIGAN
FUND dividends to the extent that such distributions qualify as exempt-interest
dividends of a RIC under Code section 852(b)(5) which are attributable to
interest on tax-

<PAGE>

exempt obligations of the State of Michigan, its political or governmental
subdivisions, or its governmental agencies or instrumentalities (as well as
certain other Federally tax-exempt obligations, the interest on which is exempt
from Michigan tax, such as certain obligations of Puerto Rico). To the extent
that distributions on the MICHIGAN FUND are attributable to sources other than
those described above, such distributions, including, but not limited to, long
or short-term capital gains, will not be exempt from Michigan income tax or
single business tax. Holders of the MICHIGAN FUND are exempt from the Michigan
intangibles tax to the extent that the investment portfolio consists of the
aforementioned obligations and certain U.S. obligations. In addition, MICHIGAN
FUND shares owned by certain financial institutions or by certain other persons
subject to the Michigan single business tax are not subject to Michigan
intangibles tax. (The Michigan intangibles tax is being phased out over a four-
year period beginning with 1994 and will be fully repealed in 1998.) To the
extent that distributions on the MICHIGAN FUND are not subject to Michigan
income tax, they are not subject to the uniform city income tax imposed by
certain Michigan cities.

MINNESOTA. Subject to certain limitations that are set forth in the
Minnesota rules, MINNESOTA FUND dividends, if any, that are derived from
interest on certain United States obligations are not subject to the regular
Minnesota personal income tax or the Minnesota alternative minimum tax, in the
case of shareholders of the MINNESOTA FUND who are individuals, estates or
trusts. MINNESOTA FUND distributions, including exempt-interest dividends, are
not excluded in determining the Minnesota franchise tax on corporations that is
measured by taxable income and alternative minimum taxable income. Such
distributions may also be taken into account in certain cases in determining the
minimum fee that is imposed on corporations, S corporations and partnerships.
Interest on indebtedness incurred or continued by a shareholder to purchase or
carry shares of the MINNESOTA FUND will generally not be deductible for regular
Minnesota personal income tax purposes or Minnesota alternative minimum tax
purposes, in the case of shareholders who are individuals, estates or trusts.
Except during temporary defensive periods or when acceptable investments are
unavailable to the MINNESOTA FUND, at least 80% of the value of the net assets
of the MINNESOTA FUND will be maintained in debt obligations the interest on
which is exempt from the Federal income tax and the Minnesota personal income
tax, subject to the discussion in the Prospectus and this SAI relating to
legislation enacted in Minnesota in 1995. The MINNESOTA FUND seeks to invest so
that the 95% test described in the Prospectus will be met.

Minnesota presently imposes an alternative minimum tax on individuals,
estates, and trusts that is based, in part, on such taxpayers' Federal
alternative minimum taxable income, which includes Federal tax preference items.
Accordingly, exempt-interest dividends that constitute tax preference items for
purposes of the Federal alternative minimum tax, even though they are derived
from interest income on tax-exempt obligations of the State of Minnesota, or its
political or governmental subdivisions, municipalities, governmental agencies or
instrumentalities ("Minnesota Sources"), will be included in the base upon which
such Minnesota alternative minimum tax is computed. (The MINNESOTA FUND has no
present intention of investing in tax-exempt securities that are subject to the
alternative minimum tax.) In addition, the entire portion of exempt-interest
dividends that is derived from sources other than the Minnesota Sources is also
subject to the Minnesota alternative minimum tax imposed on individuals,
estates, and trusts. Further, should the 95% test that is described above fail
to be met, all of the exempt-interest dividends that are paid by the MINNESOTA
FUND, including all of those that are derived from the Minnesota Sources, will
be subject to the Minnesota alternative minimum tax imposed on such
shareholders.

<PAGE>

MISSOURI. In the opinion of Shook, Hardy & Bacon P.C., Missouri tax
counsel to Multi-State Insured, if a dividend paid by the MISSOURI FUND
qualifies as an exempt-interest dividend under the Code, the portion of such
exempt-interest dividend that is attributable to interest received by the
MISSOURI FUND on obligations of (1) Missouri or its political subdivisions
("Missouri Obligations"), or (2) territories or possessions of the United States
(to the extent Federal law exempts interest on such obligations from state
taxation), will not be subject to the Missouri income tax when received by a
shareholder of the MISSOURI FUND, provided that the MISSOURI FUND properly
designates such portion as an exempt dividend (a "Missouri Dividend") under
Missouri law. At the present time, the MISSOURI FUND does not intend to invest
in obligations the interest on which is subject to Federal income taxation.
However, to the extent any dividend (or portion thereof) paid by the MISSOURI
FUND is attributable to net interest earned by the MISSOURI FUND on obligations
of the United States, such dividend (or portion thereof) will not be subject to
the Missouri income tax when received by a shareholder of the MISSOURI FUND,
provided (1) the MISSOURI FUND properly designates such dividend (or portion
thereof) as a "state income tax exempt-interest dividend" under Missouri law,
and (2) the MISSOURI FUND and the shareholder meet certain recordkeeping
requirements specified under Missouri law. Except as provided in the preceding
paragraphs, the State of Missouri has no special exemption provisions for (1)
dividends received by shareholders of a RIC or (2) capital gains realized by
shareholders of a RIC upon the sale or exchange of shares of such RIC. Thus, in
the case of shareholders who are subject to the Missouri income tax and who,
under applicable law, are required to include capital gain, dividend and
interest income in their Missouri taxable income, all dividends, except Missouri
Dividends and dividends properly designated as "state income tax exempt-interest
dividends" under Missouri law, paid by the MISSOURI FUND to such shareholders,
and all gains realized by such shareholders on the redemption or sale of shares
of the MISSOURI FUND, will be subject to the Missouri income tax.

Except as set forth in paragraph (a) below, dividends received by (1) an
individual shareholder of the MISSOURI FUND who is not engaged in a trade or
business, or (2) any other shareholder of the MISSOURI FUND (a "Business
Taxpayer") who holds shares of the MISSOURI FUND for investment purposes and not
as part of its ordinary trade or business, will not be subject to the city
earnings and profits tax of St. Louis or Kansas City, Missouri (the "City Tax").
With respect to dividends received by a Business Taxpayer who holds shares as
part of its ordinary trade or business, each dividend (or portion thereof) paid
by the MISSOURI FUND that is attributable to interest earned on Missouri
Obligations, or on obligations of the United States or its possessions, will not
be subject to the City Tax; however, except as set forth in paragraph (b) below,
other dividends received by such Business Taxpayer (and all gains realized by
such Business Taxpayer on the redemption or sale of shares of the MISSOURI FUND)
will be subject to the applicable City Tax, to the extent such Business Taxpayer
is otherwise subject to such tax.

(a) The taxing authorities in St. Louis take the position that all of
the assets of a partnership or corporation having its business domicile in St.
Louis should be treated as held as part of such entity's ordinary trade or
business. Under this position, dividends received on shares of the MISSOURI
FUND held by such partnership or corporation, whether or not held for investment
purposes, could be subject to the City Tax of St. Louis. There is no express
authority for this position, and a taxpayer could take the position that
dividends received by any corporation or partnership that holds shares of the
MISSOURI FUND for investment purposes ("Investment Dividends") should not be
subject to the City Tax of St. Louis. Therefore, Shook, Hardy & Bacon P.C.
specifically refrains from expressing an opinion as to whether Investment
Dividends received by a partnership or corporation having its business domicile
in St. Louis (to the extent such Investment Dividends are not attributable to
interest earned on Missouri Obligations, or on obligations of the United States
or its possessions to the City Tax of St. Louis.

<PAGE>

(b) The enabling statutes for the City Tax do not indicate whether
obligations of territories (as opposed to possessions) of the United States are
exempt from the City Tax. Therefore, Shook, Hardy & Bacon P.C. specifically
refrains from expressing an opinion as to whether dividends attributable to
interest earned on obligations of territories of the United States are exempt
from the City Tax.

NEW YORK. Distributions to New York resident individual shareholders of
NEW YORK INSURED that are attributable to sources other than from obligations
issued by or on behalf of the State of New York or any political subdivision
thereof will generally be includable in New York personal income of such
shareholder. Additionally, interest on indebtedness incurred or continued to
purchase or carry shares of NEW YORK INSURED will not be deductible for New York
personal income tax purposes to the extent that such interest is allocable to
exempt-interest dividends paid by NEW YORK INSURED.

NEW JERSEY. Qualified investment funds described in N.J.S.A. 54A:6-14.1
are any investment company or trust registered with the Securities and Exchange
Commission, or any series of such investment company or trust, which for the
calendar year in which the distribution is paid (a) has no investments other
than interest-bearing obligations, obligations issued at a discount, cash and
cash items (including receivables), and financial options, futures, forward
contracts or other similar financial instruments related to interest-bearing
obligations, obligations issued at a discount or bond indexes related thereto;
and (b) has not less than 80% of the aggregate principal amount of all of its
investments, excluding cash and cash items (including receivables) and financial
options, futures, forward contracts, or other similar financial instruments
related to interest-bearing obligations, obligations issued at a discount or
bond indexes related thereto to the extent the instruments are authorized by
section 851(b) of the Code in obligations described in N.J.S.A. 54A:6-14.

New Jersey state and local bonds described in N.J.S.A. 54A:6-14 are
obligations (1) issued by or on behalf of the State of New Jersey or any county,
municipality, school or other district, agency, authority, commission,
instrumentality, public corporation, body corporate and politic or political
subdivision of the State of New Jersey, and (2) obligations statutorily free
from state or local taxation under any New Jersey or United States laws.

Except when acceptable investments are unavailable to the NEW JERSEY FUND,
it will maintain at least 80% of the value of its investments in debt
obligations which are exempt from Federal income tax and New Jersey Gross Income
Tax.

NORTH CAROLINA. Based on the current administrative position of the North
Carolina Department of Revenue (the "Revenue Department"), as found in Chapter
105 of the North Carolina General Statutes, the North Carolina Administrative
Rules, and other rules, bulletins and statements issued by the Revenue
Department, shareholders of the NORTH CAROLINA FUND will be subject to the
following tax consequences.

Individual shareholders of the NORTH CAROLINA FUND who are subject to North
Carolina income taxation will not be subject to such tax on NORTH CAROLINA FUND
dividend distributions to the extent that such distributions qualify as exempt-
interest dividends under the Code and represent (a) interest on direct
obligations of the United States or its possessions, (b) obligations of the
State of North Carolina, its political subdivisions or a commission, an
authority, or another agency of the State of North Carolina or its political
subdivisions, or (c) obligations of nonprofit educational institutions organized
or chartered under the laws of the State of North Carolina.

<PAGE>

Corporate shareholders of the NORTH CAROLINA FUND that are subject to North
Carolina income taxation will not be subject to such tax on NORTH CAROLINA FUND
dividend distributions to the extent that such distributions qualify as exempt-
interest dividends under the Code and represent (a) interest on direct
obligations of the United States or its possessions, provided that, interest
upon obligations of the State of North Carolina or any of its political
subdivisions is exempt from income taxes imposed by the United States, or (b)
interest on obligations of the State of North Carolina and any of its cities,
towns or counties. (All obligations that are exempt from North Carolina
taxation are collectively referred to as "North Carolina Exempt Obligations").

The above exemptions from North Carolina income tax do not apply to capital
gain distributions received from the NORTH CAROLINA FUND.

The non-taxability of dividends paid by the NORTH CAROLINA FUND to a
shareholder is conditioned upon the NORTH CAROLINA FUND providing a supporting
statement to the shareholder verifying the amount received by the shareholder
which represents distributions on North Carolina Exempt Obligations. In the
absence of a supporting statement, the total amount designated by the NORTH
CAROLINA FUND as exempt from tax is subject to North Carolina income tax. The
NORTH CAROLINA FUND will provide to the shareholders a supporting statement
which meets the Revenue Department's requirements.

Interest earned on obligations that are merely backed or guaranteed by the
United States Government do not represent direct obligations of the United
States or its possessions and do not qualify for exemption from North Carolina
income taxation. For instance, interest income realized on obligations of the
Federal National Mortgage Association and interest paid by the issuer of
mortgage-backed certificates guaranteed by the Federal government, Federal
agencies or corporations formed by the Federal government is not considered
income from obligations of the United States and is subject to North Carolina
income taxation. Also, interest paid in connection with repurchase agreements
issued by banks and savings and loan associations is subject to North Carolina
income taxation.

Interest from obligations issued under the borrowing power of Puerto Rico,
the Virgin Islands, Guam, a Federal Land Bank, a Federal Home Loan Bank, a
Federal Intermediate Bank, Farm Home Administration, Export-Import Bank of the
United States, Tennessee Valley Authority, Banks for Cooperatives, U.S. Treasury
bonds, notes, bills, certificates and savings bonds, Production Credit
Association, Student Loan Marketing Association, Commodity Credit Corporation,
Federal Deposit Insurance Corporation, A Federal Farm Credit Bank, Federal
Financing Bank, Federal Savings and Loan Insurance Corporation, General
Insurance Fund, United States Postal Service, Resolution Funding Corporation,
and Financing Corporation (chartered by the Federal Housing Finance Board - 12
U.S.C.S. 12-1441) are considered to be interest from obligations of the United
States and its possessions and is tax exempt.

Distributions by the NORTH CAROLINA FUND of interest on Federal obligations
are treated as flowing through to the shareholders, and thus, will not be
treated as dividends for purposes of the North Carolina six percent dividend tax
credit.

In general, a shareholder of the NORTH CAROLINA FUND who is subject to
North Carolina income tax will recognize capital gains for North Carolina income
tax purposes to the same extent a shareholder would for Federal income tax
purposes when the NORTH CAROLINA FUND makes a capital gain distribution or a
shareholder redeems or exchanges shares.

<PAGE>

OHIO. In the opinion of Squire, Sanders & Dempsey, Ohio tax counsel to
Multi-State Insured, provided that the OHIO FUND continues to qualify as a
registered investment company for Federal income tax purposes and that at all
times at least 50 percent of the value of the total assets of the OHIO FUND
consists of obligations issued by or on behalf of the State of Ohio, political
subdivisions thereof or agencies or instrumentalities of the State or its
political subdivisions ("Ohio Obligations") or similar obligations of other
states or their subdivisions, shareholders of the OHIO FUND who are otherwise
subject to the Ohio personal income tax, or municipal or school district income
taxes in Ohio will not be subject to such taxes on distributions with respect to
shares of the OHIO FUND to the extent that such distributions are properly
attributable to (1) interest on and profits made on the sale, exchange or other
disposition of Ohio Obligations or (2) interest on obligations of the United
States or its territories or possessions or of any authority, commission or
instrumentality of the United States that is exempt from state income taxes
under the laws of the United States (e.g., obligations issued by the Governments
of Puerto Rico, the Virgin Islands and Guam and their authorities and
municipalities) ("Federal and Possessions Obligations").

It is further the opinion of Squire, Sanders & Dempsey that, subject to the
proviso stated in the previous paragraph, shareholders who are otherwise subject
to the Ohio corporation franchise tax will not be required to include
distributions with respect to shares of the OHIO FUND in their tax base for
purposes of computing such tax on the net income basis to the extent that such
distributions are (1) properly attributable to interest on and profits made on
the sale, exchange or other disposition of Ohio Obligations, (2) properly
attributable to interest on Federal and Possessions Obligations, or (3) exempt-
interest dividends for Federal income tax purposes. However, shares of the OHIO
FUND will be includable in a shareholder's tax base for purposes of computing
the Ohio corporation franchise tax on the net worth basis. Corporate
shareholders that are subject to Ohio municipal income taxes will not be subject
to such tax on distributions received from the OHIO FUND to the extent such
distributions consist of interest on or gain from the sale, exchange, or other
disposition of Ohio Obligations.

Except when acceptable investments are unavailable to the OHIO FUND, it
will maintain at least 80% of the value of its net assets in obligations that
are exempt from Federal income tax and that are exempt from Ohio personal income
tax and the net income base of the Ohio corporation franchise tax.

OREGON. In the opinion of Weiss, Jensen, Ellis & Howard, Oregon tax
counsel to Multi-State Insured, shareholders of the OREGON FUND who are subject
to the Oregon personal income tax will not be required to include in their
Oregon personal income distributions from the OREGON FUND to the extent that
(1) such distributions qualify as exempt-interest dividends of a RIC under
section 852(b)(5) of the Code that are attributable to interest from tax-exempt
obligations of the State of Oregon or its political subdivisions or authorities;
(2) such distributions are attributable to interest from obligations issued by
the territories of Guam, Puerto Rico, Samoa, Virgin Islands, or their
authorities, or the Commonwealth of Puerto Rico or its authority; or (3) such
distributions are attributable to interest from obligations issued by the
U.S. Government, its agencies and instrumentalities and are exempted from state
income tax under the laws of the United States. To the extent that
distributions from the OREGON FUND are attributable to sources other than those
described in the preceding sentence, such distributions will not be exempt from
the Oregon personal income tax. Also, distributions that qualify as capital
gain dividends under section 852(b)(3)(C) of the Code and that are includable in
Federal gross income will be includable as capital gains in Oregon income of a
shareholder.

<PAGE>

Interest on indebtedness incurred (directly or indirectly) by a shareholder
of the OREGON FUND to purchase or carry shares of the OREGON FUND will not be
deductible for purposes of the Oregon personal income tax.

Shareholders of the OREGON FUND that are otherwise subject to the Oregon
corporate excise tax must include in income distributions with respect to shares
of the OREGON FUND.

PENNSYLVANIA. Individual shareholders of the PENNSYLVANIA FUND who are
otherwise subject to the Pennsylvania personal income tax will not be subject to
that tax on distributions of interest by the PENNSYLVANIA FUND that are
attributable to obligations issued by Pennsylvania, public authorities,
commissions, boards or agencies created by Pennsylvania, political subdivisions
of Pennsylvania or public authorities created by any such political subdivision
or obligations of the United States and certain qualifying agencies,
instrumentalities, territories and possessions of the United States ("Exempt
Obligations"). Distributions of gains on Exempt Obligations will be subject to
Pennsylvania personal income taxes in the hands of shareholders who are
otherwise subject to the Pennsylvania personal income tax. Distributions
attributable to most other sources will not be exempt from Pennsylvania personal
income tax.

Shares of the PENNSYLVANIA FUND that are held by individual shareholders
who are Pennsylvania residents will be exempt from the Pennsylvania county
personal property tax to the extent that the PENNSYLVANIA FUNDS portfolio
consists of Exempt Obligations on the annual assessment date. Non-residents of
the Commonwealth of Pennsylvania are not subject to this tax. Individual
shareholders who are residents of Allegheny County, the City of Pittsburgh or
the School District of Pittsburgh, have no obligation to pay a personal property
tax. Corporations are not subject to Pennsylvania personal property taxes. For
shareholders who are residents of the City of Philadelphia, distributions of
interest derived from Exempt Obligations are not taxable for purposes of the
Philadelphia School District investment net income tax provided that the
PENNSYLVANIA FUND reports to its investors the percentage of Exempt Obligations
held by it for the year. The PENNSYLVANIA FUND will report such percentage to
its shareholders.

The Pennsylvania Department of Revenue takes the position that a regulated
investment company is a separate entity under Pennsylvania corporate net income
tax law and, therefore, the characteristics of income received by such company,
to the extent that such income would otherwise be includable in Pennsylvania
corporate taxable income, will not flow through to a corporate shareholder.
However, because the Pennsylvania corporate net income tax is based upon Federal
taxable income, items excluded from Federal taxable income and not required to
be added to taxable income by Pennsylvania law will also be excluded from
Pennsylvania corporate taxable income. Accordingly, "exempt-interest
dividends," which are not required to be so added, are also excluded from the
Pennsylvania corporate taxable income. Gains on Exempt Obligations are,
however, subject to the corporate net income tax in the hands of a corporate
shareholder. The Pennsylvania Department of Revenue also takes the position
that shares of funds similar to the PENNSYLVANIA FUND are not considered exempt
assets of a corporation for the purpose of determining its capital stock value
subject to the Pennsylvania capital stock and franchise taxes.

Except when acceptable investments are unavailable to the PENNSYLVANIA
FUND, at least 80% of the value of its net assets will be maintained in debt
obligations of the Commonwealth of Pennsylvania, its localities and political
subdivisions, which are exempt from regular Federal income tax and Pennsylvania
personal income tax and personal property taxes.

<PAGE>

VIRGINIA. Individual shareholders of the VIRGINIA FUND subject to Virginia
personal income tax will not be required to include in their gross income, for
Virginia personal income tax purposes, distributions made by the VIRGINIA FUND
that, without regard to any exemption from Federal income tax, are derived from
interest in certain obligations for which a Virginia income tax exemption is
independently provided, including, among others, obligations issued under the
Virginia Public Finance Act, certain revenue bonds for transportation
facilities, and obligations issued by the Virginia Housing Development
Authority, the Virginia Education Loan Authority, and industrial development
authorities created pursuant to the Virginia Industrial Development and Revenue
Bond Act.

In general, an individual shareholder of the VIRGINIA FUND who is a
Virginia resident will recognize capital gains for virginia income tax purposes
to the same extent that he or she would for Federal income tax purposes when the
VIRGINIA FUND makes a capital gains distribution or the shareholder redeems or
sells shares. In certain instances, however, legislation creating the entity
issuing debt obligations expressly exempts profit on the sale of the obligation
from Virginia income taxation.

Interest on indebtedness incurred (directly or indirectly) by shareholders
to purchase or carry shares of the VIRGINIA FUND will not be deductible for
Virginia income tax purposes.

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" in the
formula below) over a number of years ("n") with an Ending Redeemable Value
("ERV") of that investment, according to the following formula:

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

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

[ERV-P]/P = TOTAL RETURN

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

<PAGE>

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.

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:

<PAGE>

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN(1)

ONE YEAR FIVE YEARS TEN YEARS LIFE OF FUND(2) 1/12/95(3) TO 12/31/95
-------- ---------- --------- --------------- ----------------------
Class A Class B Class A Class B Class A Class B Class A Class B Class A Class B
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NEW YORK INSURED 8.24% N/A 6.38% N/A 7.22% N/A N/A N/A N/A 9.46%
ARIZONA FUND 11.01 N/A 7.88 N/A N/A N/A 7.54% N/A N/A 12.00
CALIFORNIA FUND 10.76 N/A 7.55 N/A N/A N/A 6.78 N/A N/A 11.70
COLORADO FUND 10.85 N/A N/A N/A N/A N/A 6.82 N/A N/A 11.98
CONNECTICUT FUND 9.87 N/A 7.05 N/A N/A N/A 6.78 N/A N/A 11.01
FLORIDA FUND 11.30 N/A 8.21 N/A N/A N/A 7.75 N/A N/A 12.87
GEORGIA FUND 10.96 N/A N/A N/A N/A N/A 6.82 N/A N/A 12.06
MARYLAND FUND 10.19 N/A 7.18 N/A N/A N/A 7.25 N/A N/A 11.62
MASSACHUSETTS FUND 9.79 N/A 7.35 N/A N/A N/A 6.79 N/A N/A 11.08
MICHIGAN FUND 10.17 N/A 7.77 N/A N/A N/A 7.20 N/A N/A 11.34
MINNESOTA FUND 8.43 N/A 6.58 N/A N/A N/A 6.12 N/A N/A 9.90
MISSOURI FUND 11.15 N/A N/A N/A N/A N/A 6.49 N/A N/A 12.15
NEW JERSEY FUND 9.25 N/A 7.27 N/A N/A N/A 7.66 N/A N/A 10.19
NORTH CAROLINA FUND 11.27 N/A N/A N/A N/A N/A 5.96 N/A N/A 12.40
OHIO FUND 10.04 N/A 7.50 N/A N/A N/A 7.09 N/A N/A 11.03
OREGON FUND 10.66 N/A N/A N/A N/A N/A 5.58 N/A N/A 11.74
PENNSYLVANIA FUND 10.91 N/A 7.54 N/A N/A N/A 7.48 N/A N/A 12.28
VIRGINIA FUND 10.08 N/A 7.48 N/A N/A N/A 7.24 N/A N/A 11.30
</TABLE>

<TABLE>
<CAPTION>
TOTAL RETURN(1)
ONE YEAR FIVE YEARS TEN YEARS LIFE OF FUND(2) 1/12/95(3) TO 12/31/95
-------- ---------- --------- --------------- ----------------------
Class A Class B Class A Class B Class A Class B Class A Class B Class A Class B
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NEW YORK INSURED 8.24% N/A 36.24% N/A 100.76% N/A N/A N/A N/A 9.14%
ARIZONA FUND 11.01 N/A 46.11 N/A N/A N/A 45.62% N/A N/A 11.58
CALIFORNIA FUND 10.76 N/A 43.92 N/A N/A N/A 78.82 N/A N/A 11.30
COLORADO FUND 10.85 N/A N/A N/A N/A N/A 27.39 N/A N/A 11.56
CONNECTICUT FUND 9.87 N/A 40.61 N/A N/A N/A 40.97 N/A N/A 10.63
FLORIDA FUND 11.30 N/A 48.37 N/A N/A N/A 47.87 N/A N/A 12.42
GEORGIA FUND 10.96 N/A N/A N/A N/A N/A 27.40 N/A N/A 11.64
MARYLAND FUND 10.19 N/A 41.41 N/A N/A N/A 44.26 N/A N/A 11.22
MASSACHUSETTS FUND 9.79 N/A 42.54 N/A N/A N/A 80.33 N/A N/A 10.69
MICHIGAN FUND 10.17 N/A 45.40 N/A N/A N/A 86.66 N/A N/A 10.94
MINNESOTA FUND 8.43 N/A 37.55 N/A N/A N/A 70.44 N/A N/A 9.56
MISSOURI FUND 11.15 N/A N/A N/A N/A N/A 25.95 N/A N/A 11.73
NEW JERSEY FUND 9.25 N/A 42.05 N/A N/A N/A 71.30 N/A N/A 9.84
NORTH CAROLINA FUND 11.27 N/A N/A N/A N/A N/A 23.67 N/A N/A 11.97
OHIO FUND 10.04 N/A 43.59 N/A N/A N/A 84.94 N/A N/A 10.64
OREGON FUND 10.66 N/A N/A N/A N/A N/A 22.04 N/A N/A 11.33
PENNSYLVANIA FUND 10.91 N/A 43.84 N/A N/A N/A 50.54 N/A N/A 11.85
VIRGINIA FUND 10.08 N/A 43.43 N/A N/A N/A 48.69 N/A N/A 10.91
</TABLE>

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

(1) All average annual total return figures reflect the maximum sales charge of
6.25%. Prior to July 1, 1993, the Fund's maximum sales charge was 6.90%. Prior
to January 29, 1989 the Fund's maximum sales charge was 7.25%. Certain expenses
of Multi-State Insured have been waived or reimbursed from commencement of
operations through December 31, 1995. Accordingly, return figures are higher
than they would have been had such expenses not been waived or reimbursed.
(2) The inception dates for the Funds are as follows: ARIZONA FUND - November
1, 1990; CALIFORNIA FUND - February 23, 1987; COLORADO FUND, MISSOURI FUND,
NORTH CAROLINA FUND and OREGON FUND - May 4, 1992; CONNECTICUT FUND and MARYLAND
FUND - October 8, 1990; FLORIDA FUND - October 5, 1990; GEORGIA FUND - May 1,
1992; MASSACHUSETTS FUND, MICHIGAN FUND, MINNESOTA FUND and OHIO FUND - January
1, 1987; NEW JERSEY FUND - September 13, 1988; PENNSYLVANIA FUND and VIRGINIA
FUND - April 30, 1990.
(3) Commencement of offering of Class B shares.

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

<PAGE>

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)

<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS TEN YEARS LIFE OF FUND(2) 1/12/95(3) TO 12/31/95
-------- ---------- --------- --------------- ----------------------
Class A Class B Class A Class B Class A Class B Class A Class B Class A Class B
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NEW YORK INSURED 15.45% N/A 7.77% N/A 7.91% N/A N/A N/A N/A 14.16%
ARIZONA FUND 18.41 N/A 9.28 N/A N/A N/A 8.89 N/A N/A 16.80
CALIFORNIA FUND 18.16 N/A 8.95 N/A N/A N/A 7.56 N/A N/A 16.49
COLORADO FUND 18.25 N/A N/A N/A N/A N/A 8.71 N/A N/A 16.78
CONNECTICUT FUND 17.18 N/A 8.45 N/A N/A N/A 8.10 N/A N/A 15.83
FLORIDA FUND 18.77 N/A 9.61 N/A N/A N/A 9.08 N/A N/A 17.69
GEORGIA FUND 18.40 N/A N/A N/A N/A N/A 8.71 N/A N/A 16.94
MARYLAND FUND 17.50 N/A 8.57 N/A N/A N/A 8.58 N/A N/A 16.40
MASSACHUSETTS FUND 17.07 N/A 8.74 N/A N/A N/A 7.55 N/A N/A 15.84
MICHIGAN FUND 17.47 N/A 9.17 N/A N/A N/A 7.97 N/A N/A 16.12
MINNESOTA FUND 15.68 N/A 7.98 N/A N/A N/A 6.88 N/A N/A 14.65
MISSOURI FUND 18.55 N/A N/A N/A N/A N/A 8.37 N/A N/A 17.02
NEW JERSEY FUND 16.50 N/A 8.66 N/A N/A N/A 8.61 N/A N/A 14.97
NORTH CAROLINA FUND 18.72 N/A N/A N/A N/A N/A 7.83 N/A N/A 17.27
OHIO FUND 17.34 N/A 8.90 N/A N/A N/A 7.86 N/A N/A 15.86
OREGON FUND 17.99 N/A N/A N/A N/A N/A 7.44 N/A N/A 16.59
PENNSYLVANIA FUND 18.29 N/A 8.94 N/A N/A N/A 8.70 N/A N/A 17.10
VIRGINIA FUND 17.42 N/A 8.87 N/A N/A N/A 8.46 N/A N/A 16.10
</TABLE>

TOTAL RETURN(1)

<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS TEN YEARS LIFE OF FUND(2) 1/12/95(3) TO 12/31/95
-------- ---------- --------- --------------- ----------------------
Class A Class B Class A Class B Class A Class B Class A Class B Class A Class B
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NEW YORK INSURED 14.45% N/A 45.36% N/A 114.16% N/A N/A N/A N/A 13.66%
ARIZONA FUND 18.41 N/A 55.82 N/A N/A N/A 55.27 N/A N/A 16.20
CALIFORNIA FUND 18.61 N/A 53.54 N/A N/A N/A 90.72 N/A N/A 15.91
COLORADO FUND 18.25 N/A N/A N/A N/A N/A 35.83 N/A N/A 16.18
CONNECTICUT FUND 17.18 N/A 50.04 N/A N/A N/A 50.31 N/A N/A 15.28
FLORIDA FUND 18.77 N/A 58.23 N/A N/A N/A 57.68 N/A N/A 17.06
GEORGIA FUND 18.40 N/A N/A N/A N/A N/A 35.84 N/A N/A 16.34
MARYLAND FUND 17.50 N/A 50.84 N/A N/A N/A 53.81 N/A N/A 15.82
MASSACHUSETTS FUND 17.07 N/A 52.02 N/A N/A N/A 92.32 N/A N/A 15.28
MICHIGAN FUND 17.47 N/A 55.06 N/A N/A N/A 99.05 N/A N/A 15.55
MINNESOTA FUND 15.68 N/A 46.77 N/A N/A N/A 81.76 N/A N/A 14.13
MISSOURI FUND 18.55 N/A N/A N/A N/A N/A 34.30 N/A N/A 16.41
NEW JERSEY FUND 16.50 N/A 51.50 N/A N/A N/A 82.70 N/A N/A 14.45
NORTH CAROLINA FUND 18.72 N/A N/A N/A N/A N/A 31.86 N/A N/A 16.66
OHIO FUND 17.34 N/A 53.17 N/A N/A N/A 97.24 N/A N/A 15.30
OREGON FUND 17.99 N/A N/A N/A N/A N/A 30.12 N/A N/A 16.00
PENNSYLVANIA FUND 18.29 N/A 53.41 N/A N/A N/A 60.51 N/A N/A 16.49
VIRGINIA FUND 17.42 N/A 52.98 N/A N/A N/A 58.55 N/A N/A 15.53
</TABLE>

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

<PAGE>

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.

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.

To calculate a taxable bond yield which is equivalent to a tax-exempt bond
yield (for Federal tax purposes), shareholders may use the following formula:

Tax Free Yield
-------------------- = Taxable Equivalent Yield
1 - Your Tax Bracket

To calculate a taxable bond yield which is equivalent to a tax-exempt bond
yield (for state and Federal tax purposes), shareholders may use the following
formula:

Tax Free Yield
---------------------------------- = Taxable Equivalent Yield
1 - [[(1-Your Federal Tax Bracket)
x State Rate]
+ Your Federal Tax Bracket]

The yield and tax-equivalent yield for the thirty days ended December 31,
1995 (assuming a Federal tax rate of 36% as well as the maximum rate for the
appropriate state) is shown below. During this period, certain expenses of
Multi-State Insured have been waived or reimbursed. Accordingly, yield and tax-
exempt yield figures are higher than they would have been had such expenses not
been waived or reimbursed. During this period, the maximum Federal tax rate was
39.6%.

<PAGE>

<TABLE>
<CAPTION>
YIELD TAX-EQUIVALENT YIELD
------------------- --------------------
Class A Class B Class A Class B
Shares Shares Shares Shares
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NEW YORK INSURED 4.54% 4.19% 7.70% 7.11%
ARIZONA FUND 4.48 4.00 7.53 6.72
CALIFORNIA FUND 4.41 3.91 7.74 6.86
COLORADO FUND 4.80 4.34 7.89 7.14
CONNECTICUT FUND 4.38 3.89 7.17 6.36
FLORIDA FUND 4.53 4.05 7.08 6.33
GEORGIA FUND 4.71 4.25 7.83 7.06
MARYLAND FUND 4.72 4.25 7.85 7.06
MASSACHUSETTS FUND 4.47 4.00 7.94 7.10
MICHIGAN FUND 4.64 4.17 7.60 6.83
MINNESOTA FUND 4.81 4.29 8.21 7.33
MISSOURI FUND 4.89 4.66 8.13 7.75
NEW JERSEY FUND 4.48 3.99 7.50 6.68
NORTH CAROLINA FUND 4.75 4.28 8.05 7.25
OHIO FUND 4.68 4.21 7.91 7.11
OREGON FUND 4.81 4.35 8.26 7.47
PENNSYLVANIA FUND 4.55 4.06 7.31 6.53
VIRGINIA FUND 4.53 4.05 7.51 6.71
</TABLE>

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 that Fund's offering price per share at the end of that period. The
distribution rate is also calculated by using the Fund's net asset value.
Distribution rate calculations do not include capital gain distributions, if
any, paid. The distribution rate for each Fund's Class A shares for the twelve-
month period ended December 31, 1995 calculated using both offering price and
net asset value is shown below. The distribution rate for each Fund's Class B
shares for the period January 12, 1995 through December 31, 1995 calculated
using net asset value is also shown below. During these periods certain
expenses of Multi-State Insured were waived or reimbursed. Accordingly,
distribution rates are higher than they would have been if such expenses had not
been waived or reimbursed.

<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
DISTRIBUTION RATE CALCULATED USING DISTRIBUTION RATE CALCULATED
----------------------------------
OFFERING PRICE NET ASSET VALUE USING NET ASSET VALUE
---------------------------------- ----------------------------
<S> <C> <C> <C>
NEW YORK INSURED 4.65% 4.96% 4.14%
ARIZONA FUND 4.80 5.12 4.21
CALIFORNIA FUND 4.61 4.92 4.03
COLORADO FUND 4.98 5.13 4.55
CONNECTICUT FUND 4.51 4.81 4.06
FLORIDA FUND 4.56 4.86 4.13
GEORGIA FUND 4.79 5.11 4.37
MARYLAND FUND 4.76 5.08 4.35
MASSACHUSETTS FUND 4.71 5.02 4.31
MICHIGAN FUND 4.65 4.96 4.21
MINNESOTA FUND 4.82 5.14 4.48
MISSOURI FUND 5.03 5.36 4.37
NEW JERSEY FUND 4.61 4.92 3.99
NORTH CAROLINA FUND 4.65 4.96 4.02
OHIO FUND 4.64 4.95 4.11
OREGON FUND 4.82 5.14 4.46
PENNSYLVANIA FUND 4.53 4.83 4.18
VIRGINIA FUND 4.53 4.83 4.00
</TABLE>

<PAGE>

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. Examples of typical graphs and charts depicting such
historical performance, compounding and hypothetical returns are included in
Appendix D.

From time to time, in reports and promotional literature, the Fund may
compare their 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, the 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 from one star
(lowest) to five stars (highest). Morningstar ratings are calculated from
the Fund's 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.

<PAGE>

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

TRANSFER AGENT. Administrative Data Management Corp., 581 Main Street,
Woodbridge, NJ 07095-1198, an affiliate of FIMCO and FIC, acts as transfer agent
for the Funds and as redemption agent for regular redemptions. The fees charged
to each Fund by the Transfer Agent are $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 the Funds by the Transfer Agent are assumed by the
Underwriter. The Transfer Agent reserves the right to change the fees on prior
notice to the Funds. Upon request from shareholders, the Transfer Agent will
provide an account history. For account histories covering the most recent
three year period, there is no charge. The Transfer Agent charges a $5.00
administrative fee for each account history covering the period 1983 through
1990 and $10.00 per year for each account history covering the period 1974
through 1982. 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.
Account histories prior to 1974 will not be provided. The Transfer Agent's
telephone number is 1-800-423-4026.

<PAGE>

The table below sets forth transfer agency fees and expenses accrued and
the amounts waived by the Transfer Agent for each Fund for the fiscal year ended
December 31, 1995:

AMOUNT AMOUNT
ACCRUED WAIVED
--------- ---------

NEW YORK INSURED $157,861 $ -0-
ARIZONA FUND 9,281 9,281
CALIFORNIA FUND 10,339 -0-
COLORADO FUND 6,030 6,030
CONNECTICUT FUND 15,439 -0-
FLORIDA FUND 15,723 -0-
GEORGIA FUND 3,386 3,386
MARYLAND FUND 9,215 -0-
MASSACHUSETTS FUND 18,745 -0-
MICHIGAN FUND 24,807 -0-
MINNESOTA FUND 7,397 -0-
MISSOURI FUND 2,482 2,482
NEW JERSEY FUND 37,637 -0-
NORTH CAROLINA FUND 4,970 4,970
OHIO FUND 18,215 -0-
OREGON FUND 9,380 9,380
PENNSYLVANIA FUND 26,120 -0-
VIRGINIA FUND 21,503 -0-

5% SHAREHOLDERS. As of April 1, 1996, the following beneficially owned
more than 5% of the outstanding Class A shares of each of the Funds listed
below:

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

COLORADO FUND 5.2% Holly K. Strong
9625 West 18th Drive
Lakewood, CO 80215

GEORGIA FUND 8.2% George W. Nalley
1984 Old Alpharetta Road
Cumming, GA 30131

MARYLAND FUND 6.9% Dallas E. Polek
539 Wyngate Road "Timonium"
Timonium, MD 21093

5.5% Dorothy B. Sigel
15107 Interlachen Drive
Apt. 810
Silver Spring, MD 20906

MISSOURI FUND 16.3% Virginia Allen Hess
4545 Wornall Road
Apt. 1102
Kansas City, MO 64111-3215

<PAGE>

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

8.9% Maryle Seipel
207 Clayton Avenue
Maryville, MO 64468-2039

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

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

NEW YORK INSURED 12.5% Rosalie Lamet
845 West End Avenue
New York, NY 10025-4918

12.5% Issac Lamet
845 West End Avenue
New York, NY 10025-4918

11.1% Harry Torczyner
146 West 57th Street
Suite 43A
New York, NY 10019-3323

9.9% Manuel Lorenzo Viruet
128 Fort Washington Avenue
Apt. 5J
New York, NY 10023

6.2% Marjorie A. Engelhart
14 Revere Ct., #2308
Suffeen, NY 10901-7444

ARIZONA FUND 22.9% Lillian Smith Apple
1030 Scott Drive
Apt. 206
Prescott, AZ 86301

15.6% Murilyn H. Racine
15606 S. Gilbert, #99
Chandler, AZ 85225

10.3% Norma L. Loveland
9242 Lakeside Drive
Sun Lakes, AZ 85248

<PAGE>

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

10.0% Ralph Roethler
1813 Camino Pradera
Yuma, AZ 85364

9.9% Catherine T. McAllister
2231 Elks Ln., #83
Yuma, AZ 85364

8.1% Lillian Smith Apple
1030 Scott Drive
Apt. 206
Prescott, AZ 86301

8.1% Judith B. Haas
P.O. Box 896
Payson, AZ 85547-0896

7.5% Delmar O. Randall
8043 N. Firethorn
Tucson, AZ 85741

CALIFORNIA FUND 21.2% Ethel M. June
433 W. Green Acres Dr.
Porterville, CA 93257

7.3% Suelynn Lucas
300 Clydesdale Dr.
Vallejo, CA 94591

COLORADO FUND 14.8% Corinne B. Weber
1624 N. Garfield
Loveland, CO 80538

6.8% Raymond D. Baros
2620 Pegasus Drive
Colorado Springs, CO 80906

CONNECTICUT FUND 18.3% Lucille P. Gee
115 Vernon St.
Manchester, CT 06040

11.4% Evelyn Comeau Lucashu
990 North St.
Greenwich, CT 06831-2845

<PAGE>

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

10.0% Gustave W. Peschell
85 Fairchild Road
Stratford, CT 06497

7.6% David R. Fray
58 Old North Road
Washington Depot, CT 06793

6.5% Sally M. Topp
111 Elsworth Avenue
New Haven, CT 06511-4241

5.1% Robert J. Heinig
160 Wall St.
Meriden, CT 06450

FLORIDA FUND 24.8% Joseph F. Craco
11989 N.E. 7th Avenue
Biscayne Park, FL 33161-6347

12.7% Lamaris S. Hill
8037 Gibson Terrace
Leesburg, FL 34748

9.2% Margie B. McAfee
150 Islander Ct., #1496
Longwood, FL 32750-4927

7.9% Edward W. Selby
3610 Lazy Lake Drive N.
Lakeland, FL 33801-6410

5.3% Freda Hechter Trust
7950 W. McNab Road
Apt. 221
Tamarac, FL 33321

GEORGIA FUND 24.1% Geraldyne P. Miller
3357 Collier Court N.W.
Atlanta, GA 30331

23.4% Emma G. Burroughs
3631 Nassau Drive
Augusta, GA 30909

<PAGE>

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

9.6% Elisha A. Shephard
225 Little Vine Road
Bremen, GA 30110

9.0% Betty S. Cabaniss
1001 Clifton Road N.E.
Atlanta, GA 30307-1227

7.8% Allen Vegotsky
2215 Greencrest Drive
Atlanta, GA 30345

7.6% Daniel Lee
3357 Collier Court N.W.
Atlanta, GA 30331

5.3% R. Brooks Powell
1618 Avon Avenue
Tucker, GA 30084

MARYLAND FUND 15.6% David B. Lloyd
4651A Ocean Pines
Berlin, MD 21811

5.7% Doris Louise Lloyd
4651A Ocean Pines
Berlin, MD 21811

MASSACHUSETTS FUND 6.2% Theron A. Flint, Jr.
142 Pleasant Street
Winchendon, MA 01475-1638

6.0% Ruth A. Bigwood
1548 Great Plain Avenue
Needham, MA 02192-1209

MICHIGAN FUND 17.5% Thomas W. Stone
2802 N. Chipman St.
Owosso, MI 48867

12.4% David C. Sanders
W. 8485 Old Carney Lake Rd.
Iron Mountain, MI 49801

<PAGE>

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

9.9% Blanche Paula Ebenhoeh
21420 Goethe
Grosse Pointe Woods, MI 48236

9.6% George Shamie
21719 Harper Avenue
St. Clair Shores, MI 48080

7.1% Ronald E. Flowers
504 Burr Oak Dr.
Ann Arbor, MI 48103-2076

7.1% Julius Theriault
5251 Flushing Road
Flushing, MI 48433-2556

6.5% Albert E. Niemann
15212 Huron River Drive
Romulus, MI 48174-3623

NEW JERSEY FUND 17.8% Merrill William Yeager
1411 Thomas Street
Point Pleasant, NJ 08742-3959

17.3% David Weber
42 Pleasant Avenue
Passaic, NJ 07055-2449

7.5% Nancy M. Pasternak
504 Grove Avenue
Edison, NJ 08820-3647

7.4% Mary Shannon
625 E. Washington Avenue
Woodbridge, NJ 07095

7.3% John J. Gabriel
264 W. 16th Street
Ship Bottom, NJ 08008-4403

6.4% Helen Bodnar
17 B Aldrich Drive
Edison, NJ 08837-3305

<PAGE>

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

5.9% Mae J. Andreini
1170 Cumbermeade Road
Fort Lee, NJ 07024-4238

NORTH CAROLINA FUND 8.4% Bernestine W. Sanders
820 S. State Street
Raleigh, NC 27601-2050

7.6% Abby Elizabeth Rutledge
1615 Eastwood Drive
Kannapolis, NC 28083

6.5% Thomas T. Henry
7 Gate 10 Carolina Shores
Calabash, NC 28467

OHIO FUND 24.7% Irene M. Knight
1586 J First St., N.E.
Massillon, OH 44646

18.6% Esther Lashley
State Route 313
Quaker City, OH 43773

15.2% Leroy W. Gagle
353 Southwood Dr.
Perrysburg, OH 43551

9.4% James R. Hunkler
887 West 8th Avenue
Columbus, OH 43212

OREGON FUND 23.2% John E. Laney
14315 S.W. Stallion Dr.
Beaverton, OR 97008

13.1% James M. Hogan
Rt. 1 Box 917A
Astoria, OR 97103

12.7% Ned E. Wagner/Shirley J. Wagner
13825 S.W. 22nd Street
Beaverton, OR 97008

<PAGE>

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

11.1% Conrad Krening
6954 S.E. Ranada Street
Milwaukie, OR 97267

8.2% Donald L. Phillips Sr.
18729 S. Lyons
Oregon City, OR 97045-9623

7.0% Nancy L. Ware
1691 S.W. 16th Street
West Linn, OR 97068

PENNSYLVANIA FUND 23.6% Peter Hesbacher
1200 Continental Blvd.
Danville, PA 17821

12.9% James J. Rahner
424 Darby Road
Havertown, PA 19082

12.6% Lynette M. Joyce
226 Mohawk Dr.
Erie, PA 16505-2414

11.4% Eugene A. Gade
910 Scenic Drive
Washington, PA 15301

5.9% Margaret M. Malley
21 W. Springfield Avenue
Philadelphia, PA 19118

5.0% Mary M. Kelly
Box 108
Lawrence, PA 15055

VIRGINIA FUND 16.4% Sutton Manufacturing Corp.
7601 Gleneagles Road
Norfolk, VA 23505

15.2% Una H. Harris
P.O. Box 28
Boydton, VA 23917-0028

<PAGE>

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

13.4% A. Harry Wagner
4901 New Kent Road
Richmond, VA 23225

5.6% Walter Lilkendey
1304 Cumberland Dr.
Harrisonburg, VA 22801

5.4% A. Harry Wagner
4901 New Kent Road
Richmond, VA 23225

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

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

100

<PAGE>

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 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

101

<PAGE>

"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.

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.

102

<PAGE>

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

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

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

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).

103

<PAGE>

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

Note rating symbols are as follows:

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

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.

104

<PAGE>

- Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
- Well-established access to a range of financial markets and assured
sources of alternate liquidity.

105

<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.

<TABLE>
<CAPTION>
Years 10% 8% 6% 4%
----- ------- ------ ------ ------
<S> <C> <C> <C> <C>
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
</TABLE>

INCREASE INVESTMENT

This graph shows the more you invest on a regular basis over time, the more you
can accumulate.

<TABLE>
<CAPTION>
Years $100 $250 $500 $1,000
----- ------ ------- ------- -------
<S> <C> <C> <C> <C>
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
</TABLE>

<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.

<TABLE>
<S> <C>
25 years old .............. 533,443
35 years old .............. 202,228
45 years old .............. 62,320
</TABLE>

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.

<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

<TABLE>
<S> <C>
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
</TABLE>

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)

<TABLE>
<CAPTION>
Total Number of Percentage of
Number of Positive Positive
Periods Periods Periods
------- ------- -------
<S> <C> <C> <C>
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%
</TABLE>

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)

<TABLE>
<S> <C>
Inflation ..................... 3.93
U.S. Treasury Bills ........... 7.11
Large Company Stocks .......... 14.80
</TABLE>

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)

<TABLE>
<S> <C>
Inflation ..................... 3.93
U.S. Treasury Bills ........... 7.11
Long-Term Corp. bonds ......... 13.46
</TABLE>

(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

<TABLE>
<CAPTION>
Your Federal Tax Bracket
---------------------------------------------
your tax-free yield 31.0% 36.0% 39.6%
------------------- ----- ----- -----
<S> <C> <C> <C>
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%
</TABLE>

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

106

<PAGE>

Portfolio of Investments
First Investors Multi-State Insured Tax Free Fund--ARIZONA SERIES
December 31, 1995

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL BONDS--98.1%
Certificates of Participation--7.1%
Arizona State:
$ 100 M 6.1% 5/1/2007 $ 107,375 $ 119
375 M 6 1/4% 9/1/2010 405,000 450
100 M Arizona State Municipal Financing Program 7.7% 8/1/2010 122,500 136
- --------------------------------------------------------------------------------------------------------------
634,875 705
- --------------------------------------------------------------------------------------------------------------
Education--1.8%
140 M Arizona State University Revenue 7% 7/1/2001* 160,475 178
- --------------------------------------------------------------------------------------------------------------
General Obligation--47.8%
600 M Chandler, Arizona 6 1/4% 7/1/2011 667,500 741
Maricopa County, Arizona:
235 M School District 3 (Tempe) 7.3% 7/1/2009 287,875 320
400 M School District 11 (Peoria) 6.1% 7/1/2010 429,000 476
100 M School District 14 (Creighton) 7 7/8% 7/1/2006 124,875 139
1,000 M School District 41 (Gilbert) Zero Coupon 1/1/2008 542,500 602
300 M School District 68 (Alhambra) 6 3/4% 7/1/2014 339,375 377
100 M School District 92 (Pendergast Elementary) 6 5/8% 7/1/2000* 110,625 123
200 M School District 231 (Tempe) 7% 7/1/2008 238,500 265
225 M Mohave County, Arizona High School District 30, 6.7% 7/1/2001* 252,844 281
250 M Phoenix, Arizona 6 1/4% 7/1/2016 283,437 314
145 M Pima County, Arizona Unified School District 13 (Tanque Verde)
6.7% 7/1/2010 161,494 179
140 M Puerto Rico Commonwealth 6.6% 7/1/2002* 159,600 177
200 M Santa Cruz County, Arizona School District 35, 6% 7/1/2008 214,000 238
Yavapai County, Arizona:
230 M Elementary School District 6 (Cottonwood-Oak Creek) 6.7% 7/1/2009 256,737 284
215 M Elementary School District 28 (Camp Verde) 6% 7/1/2008 233,006 259
- --------------------------------------------------------------------------------------------------------------
4,301,368 4,775
- --------------------------------------------------------------------------------------------------------------

Hospital--13.6%
650 M Maricopa County, Arizona Ind. Dev. Auth. (Samaritan Health Svcs.)
7% 12/1/2016 798,688 886
100 M Mohave County, Arizona Hosp. Dist. 1 (Kingman Reg. Med. Ctr.)
6.45% 6/1/2008 107,750 120
300 M Pima County, Arizona Ind. Dev. Auth. (Tucson Med. Ctr.)
6 3/8% 4/1/2012 322,500 358
- --------------------------------------------------------------------------------------------------------------
1,228,938 1,364

<PAGE>

- --------------------------------------------------------------------------------------------------------------
Housing--1.4%
125 M Phoenix, Arizona Hsg. Fin. Corp. Mtg. Rev. 6.65% 7/1/2006 127,344 142
- --------------------------------------------------------------------------------------------------------------
Transportation--5.9%
385 M Phoenix, Arizona Airport Revenue 6 1/4% 7/1/2012 417,244 463
100 M Phoenix, Arizona Street & Highway User Revenue 6 1/4% 7/1/2002* 112,250 125
- --------------------------------------------------------------------------------------------------------------
529,494 588
- --------------------------------------------------------------------------------------------------------------
Utilities--5.3%
200 M Central Arizona Water Conservation District Zero Cpn. 5/1/2005 125,250 138
225 M Gilbert, Arizona Water & Sewer Revenue 6 1/2% 7/1/2012 247,500 275
100 M Peoria, Arizona Water & Sewer Revenue 6.6% 7/1/2004 108,625 121
- --------------------------------------------------------------------------------------------------------------
481,375 534
- --------------------------------------------------------------------------------------------------------------
Other Revenue--15.2%
305 M Casa Grande, Arizona Excise Tax Rev. 6.1% 4/1/2009 325,588 362
250 M Phoenix, Arizona Civic Impt. Mun. Facs. Excise Tax Rev.
6.6% 7/1/2008 279,375 310
300 M Puerto Rico Public Buildings Authority Revenue 6 1/4% 7/1/2012 340,875 378
400 M Sierra Vista, Arizona Mun. Ppty. Corp. Mun. Facs. Rev. 6% 1/1/2011 426,000 473
- --------------------------------------------------------------------------------------------------------------
1,371,838 1,523
- --------------------------------------------------------------------------------------------------------------
Total Value of Municipal Bonds (cost $7,973,261) 98.1% 8,835,707 9,809
Other Assets, Less Liabilities 1.9 171,826 191
- --------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $ 9,007,533 $10,000
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* Municipal Bonds which have been prerefunded are shown maturing at the
prerefunded call date.
See notes to financial statements

Portfolio of Investments
First Investors Multi-State Insured Tax Free Fund--CALIFORNIA SERIES
December 31, 1995

<PAGE>

715 M Berkeley, Calif. Unified School District 5 1/4% 8/1/2018 708,744 426
370 M Greenfield, Calif. School District 7.1% 8/1/2012 396,362 239
660 M Orchard, Calif. School District Zero Coupon 2/1/2015 231,825 140
550 M Puerto Rico Commonwealth 5.65% 7/1/2015 577,500 348
750 M Walnut Valley, Calif. School District 6% 8/1/2012 823,125 496
- --------------------------------------------------------------------------------------------------------------
2,737,556 1,649
- --------------------------------------------------------------------------------------------------------------
Hospital--1.6%
California Health Facilities Financing Authority Revenue:
155 M Episcopal Homes 7.85% 7/1/2015 159,715 96
100 M R.F. Kennedy Hospital 7 3/4% 3/1/2014 107,375 65
- --------------------------------------------------------------------------------------------------------------
267,090 161
- --------------------------------------------------------------------------------------------------------------
Transportation--3.4%
500 M Los Angeles County, Calif. Trans. Comm. Sales Tax Rev.
6 3/4% 7/1/2001* 567,500 342
- --------------------------------------------------------------------------------------------------------------
Utilities--15.1%
200 M California State Dept. Water Resources (Central Valley Proj.)
6.9% 6/1/2000* 224,000 135
East Bay Municipal Utility District:
300 M 7.2% 6/1/2000* 340,875 205
750 M 6.4% 6/1/2013 827,813 498
750 M Fresno, Calif. Sewer Revenue 6 1/4% 9/1/2014 840,937 506
250 M Los Angeles, Calif. Wastewater System 7% 6/1/2011 274,063 165
- --------------------------------------------------------------------------------------------------------------
2,507,688 1,509
- --------------------------------------------------------------------------------------------------------------
Other Revenue--52.3%
500 M Barstow, Calif. Redevelopment Agency 7% 9/1/2014 605,000 364
110 M California Public Capital Impt. Fin. Auth. Rev. 8.1% 3/1/2018 119,350 72
1,315 M California State Public Works Board 6 1/2% 12/1/2008 1,497,456 902
1,000 M Long Beach, Calif. Fing. Auth. Rev. 6% 11/1/2017 1,093,750 659
300 M Sacramento, Calif. Redev. Agency Merged Downtown Redev. Proj.
6 3/4% 11/1/2005 333,000 200
640 M San Francisco, Calif. City & Cnty. Pkg. Auth. Rev. 7% 6/1/2011 750,400 452
500 M San Francisco, Calif. City & Cnty. Redev. Agy. (Moscone Ctr.)
6 3/4% 7/1/2015 558,125 336
500 M San Jose, Calif. Redevelopment Agency 6% 8/1/2015 547,500 330
500 M San Rafael, Calif. Redev. Agency 6.45% 12/1/2017 542,500 327
500 M Santa Ana, Calif. Fin. Auth. Lease Rev. 6 1/4% 7/1/2015 562,500 339
750 M Santa Margarita/Dana Point, Calif. Impt. Dist. 7 1/4% 8/1/2010 912,188 549
South Orange County, Calif. Public Finance Authority:
500 M 6 1/2% 8/15/2010 565,000 340
500 M 7% 9/1/2011 591,250 356
- --------------------------------------------------------------------------------------------------------------
8,678,019 5,226
- --------------------------------------------------------------------------------------------------------------
Total Value of Municipal Bonds (cost $14,641,260) 98.2% 16,308,503 9,821
Other Assets, Less Liabilities 1.8 297,196 179
- --------------------------------------------------------------------------------------------------------------
Net Asset 100.0% $16,605,699 $10,000
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* Municipal Bonds which have been prerefunded are shown maturing at the
prerefunded call date.

<PAGE>

See notes to financial statements

Portfolio of Investments
First Investors Multi-State Insured Tax Free Fund--COLORADO SERIES
December 31, 1995

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL BONDS--98.9%
Education--13.6%
$ 225 M Colorado Postsecondary Educ. Facs. Auth. Rev. (Auroria Fndtn. Proj.)
6% 9/1/2015 $ 235,406 $ 644
150 M Colorado State Board Cmnty. Colleges & Occupational Ed. Rev.
5.7% 11/1/2015 153,938 421
100 M University of Northern Colorado Revenue 6% 6/1/2014 106,500 292
- --------------------------------------------------------------------------------------------------------------
495,844 1,357
- --------------------------------------------------------------------------------------------------------------
General Obligation--46.0%
150 M Bayfield, Colo. School District 10, 6 1/2% 6/1/2009 165,375 453
250 M Douglas County., Colo. School District RE 1, 8% 12/15/2009 323,125 884
150 M Eagle Garfield & Routt Cntys., Colo. School District RE 50J,
6.3% 12/1/2012 164,250 449
El Paso County, Colo. School District:
150 M 020, 6.2% 6/15/2007 168,375 461
250 M Zero Coupon 12/15/2012 94,687 259
150 M Garfield County, Colo. School District RE-2, 6.15% 12/1/2009 161,625 442
150 M Garfield Pitkin & Eagle Cntys., Colo. School District RE 1,
6.6% 12/15/2014 163,125 446
150 M Puerto Rico Commonwealth 6 1/4% 7/1/2012 169,313 463
100 M Summit County, Colo. School District RE 1, 6.55% 12/1/2009 111,000 304
150 M Yuma Hospital District, Colo. 6.4% 11/1/2014 162,750 445
- --------------------------------------------------------------------------------------------------------------
1,683,625 4,606
- --------------------------------------------------------------------------------------------------------------
Hospital--10.5%
100 M Colorado Health Facilities Authority (Sisters of Charity)
6 1/4% 5/15/2012 112,125 306
260 M Colorado Springs, Colo. Hospital Revenue 5 3/4% 12/15/2010 273,650 749
- --------------------------------------------------------------------------------------------------------------
385,775 1,055
- --------------------------------------------------------------------------------------------------------------
Utilities--10.9%
125 M Thornton County, Colo. Sewer Revenue 5.7% 5/15/2010 130,469 357
150 M Westminster, Colo. Water & Wastewater Util. Enterprise Rev.
6% 12/1/2009 160,125 438
100 M Woodland Park, Colo. Wastewater Util. Rev. 6.05% 12/1/2013 106,875 292
- --------------------------------------------------------------------------------------------------------------
397,469 1,087
- --------------------------------------------------------------------------------------------------------------
Transportation--2.9%

<PAGE>

100 M Arapahoe Cnty, Colo. Capital Improv. Highway Rev. 6.05% 8/31/2015 106,875 292
- --------------------------------------------------------------------------------------------------------------
Other Revenue--15.0%
150 M Aurora, Colo. Municipal Building Corp. 1st Mtge. 9.2% 12/1/1997* 165,563 453
100 M Pueblo, Colo. Urban Renewal Authority Tax Increment Rev.
6.05% 12/1/2012 106,250 291
100 M Puerto Rico Mun. Fin. Agy. Series "A" 6% 7/1/2014 105,250 288
150 M Puerto Rico Public Buildings Authority 6 1/4% 7/1/2012 170,437 466
- --------------------------------------------------------------------------------------------------------------
547,500 1,498
- --------------------------------------------------------------------------------------------------------------
Total Value of Municipal Bonds (cost $3,359,121) 98.9% 3,617,088 9,895
Other Assets, Less Liabilitie 1.1 38,533 105
- --------------------------------------------------------------------------------------------------------------
Net Asset 100.0% $ 3,655,621 $10,000
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* Municipal Bonds which have been prerefunded are shown maturing at the
prerefunded call date.
See notes to financial statements

Portfolio of Investments
First Investors Multi-State Insured Tax Free Fund--MICHIGAN SERIES
December 31, 1995

<PAGE>

1,000 M Michigan State Environmental Protection Program 6 1/4% 11/1/2012 1,127,500 303
450 M Oak Park, Michigan 7.2% 5/1/2002* 525,375 141
270 M Oakland County, Michigan 7.1% 5/1/2007 283,838 76
1,000 M Portage Lake, Michigan Water & Sewer Authority 6.1% 10/1/2014 1,061,250 285
1,500 M Reeths Puffer Schools 5 3/4% 5/1/2015 1,533,750 412
800 M Rochester, Michigan School District 5 5/8% 5/1/2011 838,000 225
300 M Rockford, Michigan Public Schools 7 3/8% 5/1/2000* 339,000 91
250 M Romulus, Michigan Community Schools 6 3/4% 5/1/2001* 282,813 76
380 M Saline, Michigan Building Authority 7.1% 7/1/2009 428,925 115
1,000 M Waterford Township, Michigan School District 6 1/4% 6/1/2012 1,075,000 289
450 M White Cloud, Michigan Public Schools 7.1% 5/1/2000* 505,688 136
1,725 M Williamston, Michigan Community School District 5 1/2% 5/1/2025 1,755,187 472
1,000 M Zeeland, Michigan Public Schools 6% 5/1/2014 1,050,000 282
- --------------------------------------------------------------------------------------------------------------
20,391,569 5,478
- --------------------------------------------------------------------------------------------------------------
Hospital--2.9%
1,000 M Michigan State Hospital Finance Authority (St. John's Hospital)
6% 5/15/2008 1,063,750 286
- --------------------------------------------------------------------------------------------------------------
Housing--1.4%
500 M Michigan State Housing Dev. Auth. Single-Family Mtge. Rev.
7.3% 12/1/2016 525,625 141
- --------------------------------------------------------------------------------------------------------------
Transportation--3.6%
1,190 M Wayne Charter County, Michigan (Detroit Metro. Airport)
6 3/4% 12/1/2001* 1,359,575 365
- --------------------------------------------------------------------------------------------------------------
Utilities--21.7%
Detroit, Michigan Water Supply System:
400 M 6 3/8% 7/1/2002* 450,000 121
970 M 5.55% 7/1/2012 1,001,525 269
1,275 M 6 1/2% 7/1/2015 1,471,031 395
1,240 M Kalamazoo, Michigan Water Revenue 6% 9/1/2015 1,306,650 351
500 M Kent County, Michigan Refuse Disposal System 8.4% 11/1/2010 540,000 145
Michigan State Strategic Fund (Detroit Edison Co.):
1,750 M 6.95% 5/1/2011 2,080,312 559
500 M 7% 5/1/2021 622,500 167
500 M Monroe County, Michigan Econ. Dev. Corp. (Detroit Edison)
6.95% 9/1/2022 618,125 166
- --------------------------------------------------------------------------------------------------------------
8,090,143 2,173
- --------------------------------------------------------------------------------------------------------------
Other Revenue--8.7%
1,000 M Grand Rapids, Michigan Downtown Dev. Auth. Zero Cpn. 6/1/2009 485,000 131
Michigan Municipal Bond Authority Revenue:
1,500 M 6.55% 11/1/2008 1,672,500 449
1,000 M 6 1/8% 5/1/2014 1,066,200 287
- --------------------------------------------------------------------------------------------------------------
3,223,700 867
- --------------------------------------------------------------------------------------------------------------
Total Value of Municipal Bonds (cost $33,396,015) 36,910,362 9,916
- --------------------------------------------------------------------------------------------------------------
SHORT-TERM TAX EXEMPT INVESTMENTS--1.6%
University of Michigan Revenue Floating Rate Notes:**
400 M 5.9% 12/1/2019 400,000 107

<PAGE>

200 M 5.9% 12/1/2027 200,000 54
- --------------------------------------------------------------------------------------------------------------
Total of Value of Short-Term Tax Exempt Investments (cost $600,000) 600,000 161
- --------------------------------------------------------------------------------------------------------------
Total Value of Municipal Investments (cost $33,996,015) 100.8% 37,510,362 10,077
Excess of Liabilities Over Other Assets (.8) (285,480) (77)
- --------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $37,224,882 $10,000
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* Municipal Bonds which have been prerefunded are shown maturing at the
prerefunded call date.
** Interest rates are determined and reset daily by the issuer. Interest rate
shown is the rate in effect at December 31, 1995.
See notes to financial statements

Portfolio of Investments
First Investors Multi-State Insured Tax Free Fund--MINNESOTA SERIES
December 31, 1995

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL BONDS--97.7%
General Obligation--48.5%
$ 75 M Annandale, Minn. Independent School District 876, 6.9% 2/1/1999* $ 81,000 $ 99
75 M Baxter, Minn. 6.9% 2/1/1999* 81,094 99
325 M Becker, Minn. Wastewater Treatment 5.8% 2/1/2010 338,406 415
180 M Blaine, Minn. Series "A" Fire Impt. 6.8% 2/1/2007 195,525 240
150 M Cass Lake, Minn. Independent School District 115, 6 5/8% 2/1/2007* 165,375 203
250 M Faribault, Minn. Independent School District 656, 5 3/4% 6/1/2015 258,437 317
280 M Lakeville, Minn. 5 1/2% 2/1/2011 285,250 349
250 M Maccray, Minn. Independent School District 2180, 5 3/4% 2/1/2015 256,563 314
125 M Mahnomen, Minn. Independent School District 432, 6 1/2% 2/1/2011 131,094 161
80 M Mahtomedi, Minn. 7.1% 2/1/1998* 85,100 104
70 M Metropolitan Council, Minn. Minneapolis-St. Paul Met. Area
7.3% 12/1/1999* 77,875 95
275 M Minnesota State 6 1/4% 8/1/2002* 303,875 372
500 M North Branch, Minn. Independent School District 5 1/2% 2/1/2012 509,375 624
350 M North St. Paul Maplewood, Minn. Independent School District 622,
7.1% 2/1/2019 399,875 491
75 M Ramsey County, Minn. 7% 2/1/2008 81,187 99
100 M Rockford, Minn. Independent School District No. 883, 7.2% 12/15/1998* 108,750 133
70 M South Washington County, Minn. Independent School District 833,
6 7/8% 6/1/2000* 77,437 95
300 M Spring Lake Park, Minn. Independent School District 016,
5 1/4% 2/1/2010 299,625 367
350 M West St. Paul, Minn. Independent School District 197,
Zero Coupon 2/1/2005 223,125 273
- --------------------------------------------------------------------------------------------------------------
3,958,968 4,850
- --------------------------------------------------------------------------------------------------------------
Hospital--26.4%

<PAGE>

300 M Brainerd, Minn. Health Care Facilities (St. Joseph's)
5 7/8% 2/15/2013 314,625 385
240 M Duluth, Minn. Economic Dev. Auth. (Duluth Clinic) 6.2% 11/1/2012 258,300 316
Minneapolis & St. Paul, Minn. Hsg. & Redev. Auth. Health Care System:
Childrens Health Care:
300 M 5.7% 8/15/2016 309,750 379
250 M 5 1/2% 8/15/2025 252,188 309
180 M Health One 7.4% 8/15/2011 203,175 249
250 M Minneapolis, Minn. Hospital Revenue (Fairview Hospital)
6 1/2% 1/1/2011 275,938 339
170 M St. Cloud, Minn. Facs. Rev. (St. Cloud Hospital) 7% 7/1/2020 194,862 239
St. Louis Park, Minn. Hosp. Rev. Facs. (Methodist Hospital):
200 M 7 1/4% 7/1/2000* 228,000 279
100 M 7 1/4% 7/1/2000* 112,875 139
- --------------------------------------------------------------------------------------------------------------
2,149,713 2,634
- --------------------------------------------------------------------------------------------------------------
Housing--11.4%
20 M Dakota County, Minn. Housing & Redev. 8.1% 9/1/2012 21,225 26
120 M Eagen, Minn. Multi-Family Housing (Forest Ridge Apts.)
7 1/2% 3/1/2027 125,100 153
Minnesota State Housing Finance Authority:
95 M 6.9% 7/1/2009 103,669 127
80 M 7.7% 7/1/2014 86,200 106
250 M 6.4% 1/1/2015 264,687 324
St. Paul, Minn. Housing & Redevelopment Authority:
65 M Multi-Family Housing Revenue 7 1/2% 3/1/2026 (Defaulted)(Note 1A) 65,000 80
250 M Single Family Mortgage Revenue 6 1/4% 9/1/2014 262,500 321
- --------------------------------------------------------------------------------------------------------------
928,381 1,137
- --------------------------------------------------------------------------------------------------------------
Utilities--7.0%
Northern Municipal Power Agency, Minn. Electric System Revenue:
120 M 7.4% 1/1/1999* 133,200 163
200 M 7 1/4% 1/1/2016 215,500 264
210 M Southern Minn. Municipal Power Agency, Power Supply System
5 3/4% 7/1/2016* 226,013 277
- --------------------------------------------------------------------------------------------------------------
574,713 704
- --------------------------------------------------------------------------------------------------------------
Other Revenue--4.4%
350 M St. Paul, Minn. Hsg. & Redev. Auth. Pkg. Rev. 5 3/4% 8/1/2013 360,500 442
- --------------------------------------------------------------------------------------------------------------
Total Value of Municipal Bonds (cost $7,425,492) 97.7% 7,972,275 9,767
Other Assets, Less Liabilities 2.3 189,871 233
- --------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $ 8,162,146 $10,000
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* Municipal Bonds which have been prerefunded are shown maturing at the
prerefunded call date.
See notes to financial statements

Portfolio of Investments
First Investors Multi-State Insured Tax Free Fund--MISSOURI SERIES
December 31, 1995

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Amount

<PAGE>

Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL BONDS--96.7%
General Obligation--10.6%
$ 50 M Lincoln County, Mo. Reorg. School District 3, 6.1% 3/1/201 $ 52,563 $ 278
50 M Springfield, Mo. School District 7% 3/1/2008 59,687 316
80 M St. Charles, Mo. School District 6 1/2% 2/1/2011 88,300 467
- --------------------------------------------------------------------------------------------------------------
200,550 1,061
- --------------------------------------------------------------------------------------------------------------
Hospital--27.7%
Missouri State Health & Educational Facilities Authority:
140 M BJC Health System 6 3/4% 5/15/2011 165,025 873
35 M Christian Health 6 7/8% 2/15/2001* 39,725 210
90 M Health Midwest 6.1% 6/1/2011 97,088 514
125 M Sisters of Sorrowful Mother Healthcare 6 1/4% 6/1/2007 135,625 718
80 M Puerto Rico Indl. Tourist Edl. Med. & Env. Ctl. Facs.
6 1/4% 7/1/2016 86,300 457
- --------------------------------------------------------------------------------------------------------------
523,763 2,772
- --------------------------------------------------------------------------------------------------------------
Transportation--4.5%
75 M Kansas City, Mo. Airport Revenue 6 7/8% 9/1/2014 84,656 448
- --------------------------------------------------------------------------------------------------------------
Utilities--22.3%
80 M Liberty, Mo. Sewer System Revenue 6.15% 2/1/2015 86,600 458
Missouri State Env. Impt. & Energy Res. Auth. Water Poll. Control:
80 M 6% 1/1/2016 84,900 449
85 M 6.05% 7/1/2016 90,100 477
150 M St. Louis, Mo. Water and Sewer Revenue 6% 7/1/2014 160,125 847
- --------------------------------------------------------------------------------------------------------------
421,725 2,231
- --------------------------------------------------------------------------------------------------------------
Other Revenue--31.6%
50 M Clay County, Mo. Public Bldg. Auth. Leasehold Rev. 7% 5/15/2014 57,063 302
80 M Excelsior Springs, Mo. School Dist. Bldg. Corp. Leasehold Rev.
6 1/2% 3/1/2009 86,000 455
50 M Kansas City, Mo. Redevelopment Authority Lease Revenue
5.6% 12/1/2010 51,875 275
75 M Northwest R-I, Mo. Edl. Facs. Auth. Leasehold Rev. Jefferson Cnty.
5.65% 3/1/2010 77,531 410
75 M Puerto Rico Public Buildings Authority 6 1/4% 7/1/2012 85,219 451
St. Louis, Mo. Municipal Financing Corp. Leasehold Revenue:
65 M 6 1/4% 2/15/2012 69,956 370
80 M 5 3/4% 8/1/2013 83,500 442
80 M Warren County, Mo. Pub. Facs. Auth. Leasehold Rev. 6.3% 6/1/2010 86,300 457
- --------------------------------------------------------------------------------------------------------------
597,444 3,162
- --------------------------------------------------------------------------------------------------------------
Total Value of Municipal Bonds (cost $1,680,783) 96.7% 1,828,138 9,674
Other Assets, Less Liabilities 3.3 61,607 326
- --------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $ 1,889,745 $10,000
- --------------------------------------------------------------------------------------------------------------

<PAGE>

- --------------------------------------------------------------------------------------------------------------
</TABLE>
* Municipal Bonds which have been prerefunded are shown maturing at the
prerefunded call date.
See notes to financial statements

Portfolio of Investments
First Investors Multi-State Insured Tax Free Fund--OHIO SERIES
December 31, 1995

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL BONDS--99.1%
Education--2.6%
$ 500 M Ohio State Higher Educ. Fac. Rev. (University of Dayton)
5.8% 12/1/2014 $ 521,250 $ 265
- --------------------------------------------------------------------------------------------------------------
General Obligation--75.3%
1,000 M Adams County Ohio Valley Local School District 7% 12/1/2015 1,222,500 621
500 M Batavia, Ohio Local School District 7% 12/1/2014 574,375 292
425 M Bedford Heights, Ohio 6 1/2% 12/1/2014 465,906 237
215 M Bellefontaine, Ohio City School District 7 1/8% 12/1/2001* 248,594 126
500 M Buckeye Valley, Ohio Local School District 6.85% 12/1/2012 605,625 308
250 M Cardington & Lincoln, Ohio Local School District 6.6% 12/1/2014 269,687 137
500 M Chardon, Ohio 5.8% 12/15/2015 518,750 264
Cleveland, Ohio:
500 M 6 3/8% 7/1/2012 537,500 273
250 M 6 5/8% 11/15/2014 277,187 141
500 M Clyde-Green Springs, Ohio Exempted Village School District
7% 12/1/2013 573,750 291
500 M Delaware, Ohio City School District 5 3/4% 12/1/2015 514,375 261
450 M Dublin, Ohio 6.4% 12/1/2014 510,750 259
525 M East Clinton, Ohio Local School District 6 7/8% 12/1/2009 599,813 305
700 M Garfield Heights, Ohio 6.3% 12/1/2014 761,250 387
500 M Lakeview, Ohio Local School District 6.9% 12/1/2014 563,750 286
500 M Lakewood, Ohio City School District 6.95% 12/1/2015 565,625 287
215 M Logan Hocking, Ohio Local School District Series "A" 7.1% 12/1/2012 247,787 126
270 M Muskingum County, Ohio 7.2% 12/1/2010 303,413 154
250 M North Canton, Ohio City School District 5.9% 12/1/2014 261,563 133
500 M North Royalton, Ohio City School District 6% 12/1/2014 536,875 273
250 M Olmsted Falls, Ohio Local School District 6.85% 12/15/2011 283,437 144
700 M Parma, Ohio 5 3/4% 12/1/2015 721,000 366
350 M Portage County, Ohio 6.2% 12/1/2014 377,563 192
600 M Puerto Rico Commonwealth 6 1/4% 7/1/2012 677,250 344
285 M Shaker Heights, Ohio City School District 7.1% 12/15/2010 346,631 176
250 M Springfield, Ohio Local School District 7 1/8% 12/1/2012 280,938 143
Summit County, Ohio:
250 M 6.9% 8/1/2012 276,875 141
550 M 6.4% 12/1/2014 603,625 307
250 M Toledo, Ohio 6 1/2% 12/1/2011 272,500 138
500 M Tuscarawas Valley, Ohio Local School District 6.6% 12/1/2015 555,000 282

<PAGE>

250 M Valley View, Ohio 7% 12/1/2011 273,750 139
- --------------------------------------------------------------------------------------------------------------
14,827,644 7,533
- --------------------------------------------------------------------------------------------------------------
Hospital--9.8%
Franklin County, Ohio Hospital Revenue:
255 M Holy Cross Health System 7 5/8% 6/1/2009 280,500 143
250 M Riverside United Hospital 7 1/4% 5/15/2020 273,125 139
325 M Lucas County, Ohio Hosp. Imp. Rev. (St. Vincent Med. Ctr.)
6 3/4% 8/15/2000* 361,156 182
Montgomery County, Ohio:
100 M Dayton Osteopathic Hospital 7.4% 12/1/2008 104,125 53
300 M Sisters of Charity Health Care 6 1/4% 5/15/2008 324,375 165
125 M Parma, Ohio Hosp. Impt. (Parma Cmnty. General Hosp. Assoc.)
7.2% 11/15/2008 136,250 69
400 M Trumbull County, Ohio Hospital Revenue 6.9% 11/15/2012 442,000 225
- --------------------------------------------------------------------------------------------------------------
1,921,531 976
- --------------------------------------------------------------------------------------------------------------
Utilities--8.8%
600 M Alliance, Ohio Sewer System Revenue 6% 10/15/2010 644,250 327
340 M Cleveland, Ohio Waterworks Revenue 6 1/2% 1/1/2021 382,500 194
165 M Ohio State Air Quality Dev. Auth. Rev. (Ohio Power Co.) 7.4% 8/1/2009 178,406 91
250 M Ohio State Water Dev. Auth. Rev. Pure Water Series 7% 12/1/2009 302,500 154
200 M Toledo, Ohio Water Revenue 6% 11/15/2007 216,500 110
- --------------------------------------------------------------------------------------------------------------
1,724,156 876
- --------------------------------------------------------------------------------------------------------------
Other Revenue--2.6%
200 M Franklin County, Ohio Conv. Facs. Auth. Tax & Lease Rev. Ant.
7% 12/1/2000* 227,750 116
250 M Ohio State Building Auth. (Juvenile Correction Projects)
6.6% 10/1/2014 277,188 141
- --------------------------------------------------------------------------------------------------------------
504,938 257
- --------------------------------------------------------------------------------------------------------------
Total Value of Municipal Bonds (cost $17,810,400) 99.1% 19,499,519 9,907
Other Assets, Less Liabilities .9 180,599 93
- --------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $19,680,118 $10,000
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* Municipal Bonds which have been prerefunded are shown maturing at the
prerefunded call date.
See notes to financial statements

Portfolio of Investments
First Investors Multi-State Insured Tax Free Fund--OREGON SERIES
December 31, 1995

<PAGE>

Certificates of Participation--3.1%
<S> <C> <C> <C>
100 M Oregon State Dept. of General Services 6% 9/1/2010 105,500 147
100 M Washington County, Oregon Educational Service District
7% 6/1/2016 118,125 164
- --------------------------------------------------------------------------------------------------------------
223,625 311
- --------------------------------------------------------------------------------------------------------------
Education--13.0%
200 M Chemeketa, Oregon Commmunity College District 6.4% 7/1/2009 219,250 305
250 M Oregon Health Sciences Univ. Rev. 5 1/4% 7/1/2015 247,500 345
200 M Oregon State Hlth. & Hsg. Educl. & Cult. Facs. (Lewis & Clark College)
6% 10/1/2013 212,500 296
250 M Southwestern Oregon Community College District 5.6% 6/1/2016 255,000 355
- --------------------------------------------------------------------------------------------------------------
934,250 1,301
- --------------------------------------------------------------------------------------------------------------
General Obligation--37.5%
200 M Clackamas County, Oregon School District 115, 5.8% 6/1/2008 213,250 297
200 M Josephine County, Oregon School District (Three Rivers)
5.65% 12/1/2008 209,750 292
200 M Lane County, Oregon School District 019 (Springfield)
6 1/4% 10/15/2011 217,250 302
115 M Lane County, Oregon School District 052 (Bethel) 7% 12/1/2006 136,131 190
200 M Lincoln County, Oregon School District 51/4% 6/15/2012 201,250 280
100 M Marion & Linn Counties, Oregon Elem. School Dist. 077J (Stayton)
6.1% 7/1/2009 108,250 151
200 M Polk Marion & Benton Counties, Oregon School District 13,
5 1/2% 12/1/2008 209,500 292
Puerto Rico Commonwealth:
255 M 6 1/4% 7/1/2012 287,831 401
250 M 6 1/4% 7/1/2013 281,875 392
200 M Umatilla County, Oregon School District 16 (Pendleton) 6% 7/1/2014 212,500 296
170 M Washington County, Oregon School District 003 (Hillsboro)
6% 11/1/2008 183,388 255
200 M Washington County, Oregon School District 88 (Sherwood)
6.1% 6/1/2012 215,750 300
200 M Yamhill County, Oregon School District 029, 6.1% 6/1/2011 214,500 299
- --------------------------------------------------------------------------------------------------------------
2,691,225 3,747
- --------------------------------------------------------------------------------------------------------------
Hospital--6.9%
25 M Clackamas County, Oregon Health Facs. Auth. (Adventist Health)
6.35% 3/1/2009 27,094 38
200 M Ontario, Oregon Catholic Health (Holy Rosary Med. Ctr.)
5 1/2% 11/15/2012 203,750 284
250 M Western Lane Hosp. Dist. Oregon (Sisters of St. Joseph)
5 7/8% 8/1/2012 262,812 365
- --------------------------------------------------------------------------------------------------------------
493,656 687
- --------------------------------------------------------------------------------------------------------------
Housing--3.7%
250 M Oregon State Housing & Community Svcs. Dept. Mtge. Rev.
6% 7/1/2012 264,375 368
- --------------------------------------------------------------------------------------------------------------
Transportation--7.6%
Oregon State Department of Transportation Revenue:

<PAGE>

100 M 7% 6/1/2004 115,875 161
100 M 6.2% 6/1/2008 109,625 153
200 M 6 1/4% 6/1/2009 219,250 305
100 M Puerto Rico Highway & Transportation Auth. Hwy. Rev.
5 1/2% 7/1/2013 104,000 145
- --------------------------------------------------------------------------------------------------------------
548,750 764
- --------------------------------------------------------------------------------------------------------------
Utilities--20.1%
100 M Emerald, Oregon Peoples Utility District 6.4% 11/1/2002 111,000 154
200 M Klamath Falls, Oregon Water Revenue 6.1% 6/1/2014 213,750 298
250 M Northern Wasco County, Oregon Peoples Utility District
5 1/2% 12/1/2012 256,250 357
Portland, Oregon Sewer System Revenue:
400 M 6.2% 6/1/2012 434,250 605
200 M 6 1/4% 6/1/2015 216,500 301
200 M South Fork Water Board, Oregon Water Revenue 6% 2/1/2014 212,000 295
- --------------------------------------------------------------------------------------------------------------
1,443,750 2,010
- --------------------------------------------------------------------------------------------------------------
Other Revenue--5.8%
100 M Puerto Rico Municipal Finance Agency 6% 7/1/2014 105,250 147
275 M Puerto Rico Public Buildings Authority 6 1/4% 7/1/2012 312,469 435
- --------------------------------------------------------------------------------------------------------------
417,719 582
- --------------------------------------------------------------------------------------------------------------
Total Value of Municipal Bonds (cost $6,578,711) 97.7% 7,017,350 9,770
Other Assets, Less Liabilities 2.3 164,910 230
- --------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $ 7,182,260 $10,000
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* Municipal Bonds which have been prerefunded are shown maturing at the
prerefunded call date.
See notes to financial statements

This page left blank intentionally.

Statements of Assets and Liabilities
December 31, 1995

ARIZONA CALIFORNIA COLORADO MICHIGAN
- ----------------------------------------------------------------------------------------------------------
Assets
Investments in securities:
<S> <C> <C> <C> <C>
At identified cost $7,973,261 $14,641,260 $3,359,121 $33,996,015
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------

At value (Note 1A) $8,835,707 $16,308,503 $3,617,088 $37,510,362

<PAGE>

Cash 13,520 51,530 10,125 102,274
Receivables:
Interest 218,943 295,438 34,728 431,910
Investment securities sold 5,000 -- -- 965,912
Trust shares sold 28,819 38,040 763 55,582
Other assets 10 628 -- 608
---------- ---------- --------- ----------
Total Assets 9,101,999 16,694,139 3,662,704 39,066,648
---------- ---------- --------- ----------
Liabilities
Payables:
Investment securities purchased -- -- -- 1,727,108
Trust shares redeemed 72,824 -- 2,000 23,960
Dividends payable January 20, 1996 17,772 73,115 4,394 61,015
Accrued advisory fees 2,253 6,861 -- 9,684
Accrued expenses 1,617 8,464 689 19,999
---------- ---------- --------- ----------
Total Liabilities 94,466 88,440 7,083 1,841,766
---------- ---------- --------- ----------
Net Assets $9,007,533 $16,605,699 $3,655,621 $37,224,882
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------

Net Assets Consist of:
Capital paid in $8,235,353 $14,935,767 $3,452,306 $33,763,342
Undistributed net investment income (deficit) 1,544 2,689 453 10,309
Accumulated net realized loss on investments (91,810) -- (55,105) (63,116)
Net unrealized appreciation in value
of investments 862,446 1,667,243 257,967 3,514,347
---------- ---------- --------- ----------
Total $9,007,533 $16,605,699 $3,655,621 $37,224,882
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------

Trust shares outstanding (Note 2):
Class A 671,841 1,383,665 280,252 2,876,937
Class B 13,176 4,912 10,392 30,320
Net asset value and redemption price
per share--Class A $13.15 $11.96 $12.58 $12.80
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------

Maximum offering price per share--Class A* $14.03 $12.76 $13.42 $13.65
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------

Net asset value and offering price
per share--Class B $13.15 $11.95 $12.58 $12.80
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>

<PAGE>

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

At value (Note 1A) $7,972,275 $1,828,138 $19,499,519 $7,017,350
Cash 11,306 28,994 42,512 241,978
Receivables:
Interest 183,041 35,830 182,122 106,354
Investment securities sold -- -- -- --
Trust shares sold 14,096 47 33,418 88,760
Other assets 528 -- 572 --

Total Assets 8,181,246 1,893,009 19,758,143 7,454,442
--------- --------- ---------- ---------
Liabilities
Payables:
Investment securities purchased -- -- -- 245,243
Trust shares redeemed 3,751 -- 1,294 19,000
Dividends payable January 20, 1996 9,684 2,952 59,786 6,549
Accrued advisory fees 1,688 -- 6,534 --
Accrued expenses 3,977 312 10,411 1,390
--------- --------- ---------- ---------
Total Liabilities 19,100 3,264 78,025 272,182
---------- ---------- --------- ----------
Net Assets $8,162,146 $1,889,745 $19,680,118 $7,182,260
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------

Net Assets Consist of:
Capital paid in $7,759,561 $1,816,939 $17,991,292 $6,912,932
Undistributed net investment income (deficit) 367 192 (293) 1,480
Accumulated net realized loss on investments (144,565) (74,741) -- (170,791)
Net unrealized appreciation in value
of investments 546,783 147,355 1,689,119 438,639
--------- --------- ---------- ---------
Total $8,162,146 $1,889,745 $19,680,118 $7,182,260
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Trust shares outstanding (Note 2):
Class A 709,520 151,518 1,550,004 562,533
Class B 10 10 22,537 28,175
Net asset value and redemption price
per share--Class A $11.50 $12.47 $12.51 $12.16
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------

Maximum offering price per share--Class A* $12.27 $13.30 $13.34 $12.97
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------

Net asset value and offering price
per share--Class B $11.50 $12.48 $12.51 $12.15
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>

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

See notes to financial statements

<TABLE>
<CAPTION>
Statement of Operations

<PAGE>

Year Ended December 31, 1995
- ----------------------------------------------------------------------------------------------------------
FIRST INVESTORS MULTI-STATE INSURED TAX FREE FUND
-------------------------------------------------------------------------
ARIZONA CALIFORNIA COLORADO MICHIGAN
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income
Interest income $530,519 $995,987 $194,496 $2,047,123
--------- --------- ---------- ---------
Expenses (Notes 1 and 5):
Advisory fees 68,966 126,348 25,413 254,612
Distribution plan expenses-Class A 18,180 33,604 6,657 67,474
Distribution plan expenses-Class B 1,052 452 597 2,111
Shareholder servicing costs 9,281 10,339 6,030 24,807
Custodian fees 2,412 3,201 1,292 5,429
Professional fees 2,991 8,001 4,175 9,125
Reports to shareholders 2,665 3,736 1,781 8,937
Bond insurance premiums 314 2,187 -- 5,034
Other expenses 3,449 5,405 899 10,269
--------- --------- ---------- ---------
Total expenses 109,310 193,273 46,844 387,798
Less: Expenses waived or assumed (62,500) (42,116) (39,621) (84,871)
Custodian fees paid indirectly -- (2,590) -- (5,429)
--------- --------- ---------- ---------
Net expenses 46,810 148,567 7,223 297,498
--------- --------- ---------- ---------
Net investment income 483,709 847,420 187,273 1,749,625
--------- --------- ---------- ---------
Realized and Unrealized Gain (Loss)
on Investments (Note 4):
Net realized gain (loss) on investments 136,808 194,904 21,845 154,848
Net unrealized appreciation of investments 932,271 1,706,296 355,512 3,505,678
--------- --------- ---------- ---------
Net gain on investments 1,069,079 1,901,200 377,357 3,660,526
--------- --------- ---------- ---------
Net Increase in Net Assets Resulting
from Operations $1,552,788 $2,748,620 $564,630 $5,410,151
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
FIRST INVESTORS MULTI-STATE INSURED TAX FREE FUND
-------------------------------------------------------------------------
MINNESOTA MISSOURI OHIO OREGON
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income
Interest income $464,008 $100,111 $1,153,726 $325,157
--------- --------- ---------- ---------
Expenses (Notes 1 and 5):
Advisory fees 58,609 12,994 145,522 43,844
Distribution plan expenses-Class A 15,628 3,465 38,531 11,455
Distribution plan expenses-Class B -- -- 1,387 1,174
Shareholder servicing costs 7,397 2,482 18,215 9,380

<PAGE>

Custodian fees 2,221 668 4,137 1,800
Professional fees 10,759 3,443 13,430 2,423
Reports to shareholders 2,696 830 6,449 2,547
Bond insurance premiums 2,159 59 1,725 549
Other expenses 2,731 1,365 9,430 2,140
--------- --------- ---------- ---------
Total expenses 102,200 25,306 238,826 75,312
Less: Expenses waived or assumed (49,186) (21,847) (67,910) (62,744)
Custodian fees paid indirectly (2,221) -- (3,636) --
--------- --------- ---------- ---------
Net expenses 50,793 3,459 167,280 12,568
--------- --------- ---------- ---------
Net investment income 413,215 96,652 986,446 312,589
--------- --------- ---------- ---------
Realized and Unrealized Gain
on Investments (Note 4):
Net realized gain (loss) on investments (59,330) 2,044 309,448 43,911
Net unrealized appreciation of investments 782,041 196,908 1,786,218 588,160
--------- --------- ---------- ---------
Net gain on investments 722,711 198,952 2,095,666 632,071
--------- --------- ---------- ---------
Net Increase in Net Assets Resulting
from Operations $1,135,926 $295,604 $3,082,112 $944,660
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>

See Notes to Financial Statements

Statement of Changes in Net Assets

<PAGE>

Net increase (decrease) in net assets
resulting from operations 1,552,788 (539,870) 2,748,620 (1,053,794)
---------- ---------- ---------- ----------
Distributions to Shareholders from:
Net investment income--Class A (485,518) (487,439) (858,894) (891,640)
Net investment income--Class B (4,775) -- (1,957) --
Net realized gains--Class A -- -- (185,698) --
Net realized gains--Class B -- -- (657) --
---------- ---------- ---------- ----------
Total distributions (490,293) (487,439) (1,047,206) (891,640)
---------- ---------- ---------- ----------
Trust Share Transactions (a)
Class A:
Proceeds from shares sold 1,445,438 3,427,567 2,525,229 2,286,986
Value of distributions reinvested 250,290 268,008 622,341 503,739
Cost of shares redeemed (2,719,374) (2,112,368) (3,633,802) (3,134,493)
---------- ---------- ---------- ----------
(1,023,646) 1,583,207 (486,232) (343,768)
---------- ---------- ---------- ----------
Class B:
Proceeds from shares sold 161,953 -- 52,477 --
Value of distributions reinvested 3,412 -- 2,614 --
Cost of shares redeemed -- -- -- --
---------- ---------- ---------- ----------
165,365 -- 55,091 --
Net increase (decrease) from ---------- ---------- ---------- ----------
trust share transactions (858,281) 1,583,207 (431,141) (343,768)
---------- ---------- ---------- ----------
Net increase (decrease) in net assets 204,214 555,898 1,270,273 (2,289,202)
Net Assets
Beginning of year 8,803,319 8,247,421 15,335,426 17,624,628

<PAGE>

---------- ---------- ---------- ----------
End of year+ $9,007,533 $8,803,319 $16,605,699 $15,335,426
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
+ Includes undistributed net investment
income (deficit) of $ 1,544 $ 8,128 $ 2,689 $ 16,120
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
(a) Trust Shares Issued and Redeemed
Class A:
Sold 114,860 276,121 220,361 199,720
Issued for distributions reinvested 19,770 22,128 53,402 44,854
Redeemed (214,683) (175,117) (314,099) (274,794)
---------- ---------- ---------- ----------
Net increase (decrease) in Class A trust
shares outstanding (80,053) 123,132 (40,336) (30,220)
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Class B:
Sold 12,909 -- 4,689 --
Issued for distributions reinvested 267 -- 223 --
Redeemed -- -- -- --
---------- ---------- ---------- ----------
Net increase in Class B trust shares outstanding 13,176 -- 4,912 --
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>

<PAGE>

Net realized gain (loss) on investments 21,845 (76,950) 154,848 (217,964)
Net unrealized appreciation (depreciation)
of investments 355,512 (260,352) 3,505,678 (3,292,803)
---------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations 564,630 (176,873) 5,410,151 (1,964,056)
---------- ---------- ---------- ----------
Distributions to Shareholders from:
Net investment income--Class A (184,373) (162,310) (1,741,474) (1,539,297)
Net investment income--Class B -- (9,443) -- (2,882)
Net realized gains--Class A -- -- -- --
Net realized gains--Class B -- -- -- --
---------- ---------- ---------- ----------
Total distributions (187,255) (162,310) (1,750,917) (1,539,297)
---------- ---------- ---------- ----------
Trust Share Transactions (a)
Class A:
Proceeds from shares sold 568,153 1,041,474 4,302,109 6,577,080
Value of distributions reinvested 132,179 120,485 1,056,208 966,749
Cost of shares redeemed (656,430) (600,150) (2,525,215) (3,959,063)
---------- ---------- ---------- ----------
43,902 561,809 2,833,102 3,584,766
---------- ---------- ---------- ----------
Class B:
Proceeds from shares sold 121,871 -- 363,013 --
Value of distributions reinvested 2,882 -- 7,158 --
Cost of shares redeemed -- -- -- --
---------- ---------- ---------- ----------
124,753 -- 370,171 --
---------- ---------- ---------- ----------
Net increase (decrease) from
trust share transactions 168,655 561,809 3,203,273 3,584,766

<PAGE>

---------- ---------- ---------- ----------
Net increase (decrease) in net assets 546,030 222,626 6,862,507 81,413
Net Assets
Beginning of year 3,109,591 2,886,965 30,362,375 30,280,962
---------- ---------- ---------- ----------
End of year+ $3,655,621 $3,109,591 $37,224,882 $30,362,375
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
(a)Trust Shares Issued and Redeemed
+ Includes undistributed net investment
income (deficit) of $ 453 $ 435 $ 10,309 $ 11,601
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Class A:
Sold 47,198 88,330 348,278 542,805
Issued for distributions reinvested 10,906 10,357 85,474 81,294
Redeemed (54,519) (51,065) (204,470) (326,423)
---------- ---------- ---------- ----------
Net increase (decrease) in Class A trust 3,585 47,622 229,282 297,676
shares outstanding -------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------

Class B:
Sold 10,158 -- 29,747 --
Issued for distributions reinvested 234 -- 573 --
Redeemed -- -- -- --
---------- ---------- ---------- ----------
Net increase in Class B trust shares outstanding 10,392 -- 30,320 --
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>

<PAGE>

Minnesota Missouri
--------------------------------- ---------------------------
Year Ended December 31 1995 1994 1995 1994
- --------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations
<S> <C> <C> <C> <C>
Net investment income $ 413,215 $ 420,623 $ 96,652 $ 86,522
Net realized gain (loss) on investments (59,330) (85,235) 2,044 (76,785)
Net unrealized appreciation (depreciation)
of investments 782,041 (827,572) 196,908 (115,009)
---------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations 1,135,926 (492,184) 295,604 (105,272)
---------- ---------- ---------- ----------
Distributions to Shareholders from:
Net investment income--Class A (414,790) (426,080) (97,491) (85,819)
Net investment income--Class B (5) -- (6) --
Net realized gains--Class A -- -- -- --
Net realized gains--Class B -- -- -- --
---------- ---------- ---------- ----------
Total distributions (414,795) (426,080) (97,497) (85,819)
---------- ---------- ---------- ----------
Trust Share Transactions (a)
Class A:
Proceeds from shares sold 449,758 782,210 187,513 452,897
Value of distributions reinvested 296,914 312,864 64,248 61,785
Cost of shares redeemed (680,483) (920,314) (171,398) (252,327)
---------- ---------- ---------- ----------
66,189 174,760 80,363 262,355
---------- ---------- ---------- ----------
Class B:
Proceeds from shares sold 105 -- 112 --
Value of distributions reinvested 5 -- 5 --

<PAGE>

Cost of shares redeemed -- -- -- --
---------- ---------- ---------- ----------
110 -- 117 --
---------- ---------- ---------- ----------
Net increase (decrease) from
trust share transactions 66,299 174,760 80,480 262,355
---------- ---------- ---------- ----------
Net increase (decrease) in net assets 787,430 (743,504) 278,587 71,264
Net Assets
Beginning of year+ 7,374,716 8,118,220 1,611,158 1,539,894
---------- ---------- ---------- ----------
End of year $8,162,146 $7,374,716 $1,889,745 $1,611,158
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
income (deficit) of $ 367 $ 1,947 $ 192 $ 1,037
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
(a)Trust Shares Issued and Redeemed
Class A:
Sold 40,306 70,506 15,600 38,682
Issued for distributions reinvested 26,574 28,719 5,350 5,356
Redeemed (61,161) (85,260) (14,294) (22,393)
---------- ---------- ---------- ----------
Net increase (decrease) in Class A trust
shares outstanding 5,719 13,965 6,656 21,645
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Class B:
Sold 10 -- 10 --
Issued for distributions reinvested -- -- -- --
Redeemed -- -- -- --
---------- ---------- ---------- ----------
Net increase in Class B trust shares outstanding 10 -- 10 --
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
FIRST INVESTORS MULTI-STATE INSURED TAX FREE FUND
--------------------------------------------------------------------
Ohio Oregon
--------------------------------- ----------------------------
Year Ended December 31 1995 1994 1995 1994
- --------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations
<S> <C> <C> <C> <C>
Net investment income $ 986,446 $ 1,000,909 $ 312,589 $ 226,913
Net realized gain (loss) on investments 309,448 (147,400) 43,911 (212,062)
Net unrealized appreciation (depreciation)
of investments 1,786,218 (2,064,948) 588,160 (289,223)
---------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations 3,082,112 (1,211,439) 944,660 (274,372)
---------- ---------- ---------- ----------
Distributions to Shareholders from:
Net investment income--Class A (987,315) (1,012,934) (306,767) (228,557)
Net investment income--Class B (6,065) -- (5,293) --
Net realized gains--Class A (140,604) -- -- --
Net realized gains--Class B (2,044) -- -- --
---------- ---------- ---------- ----------
Total distributions (1,136,028) (1,012,934) (312,060) (228,557)
---------- ---------- ---------- ----------
Trust Share Transactions (a)
Class A:
Proceeds from shares sold 1,421,785 2,394,093 2,009,314 1,814,006
Value of distributions reinvested 783,800 701,544 238,909 180,991
Cost of shares redeemed (2,914,284) (3,068,271) (725,112) (542,460)
---------- ---------- ---------- ----------

<PAGE>

(708,699) 27,366 1,523,111 1,452,537
---------- ---------- ---------- ----------
Class B:
Proceeds from shares sold 311,376 -- 325,063 --
Value of distributions reinvested 7,386 -- 5,268 --
Cost of shares redeemed (44,835) -- -- --
---------- ---------- ---------- ----------
273,927 -- 330,331 --
---------- ---------- ---------- ----------
Net increase (decrease) from
trust share transactions (434,772) 27,366 1,853,442 1,452,537
---------- ---------- ---------- ----------
Net increase (decrease) in net assets 1,511,312 (2,197,007) 2,486,042 949,608
Net Assets
Beginning of year 18,168,806 20,365,813 4,696,218 3,746,610
---------- ---------- ---------- ----------
End of year+ $19,680,118 $18,168,806 $7,182,260 $4,696,218
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
(a)Trust Shares Issued and Redeemed
+ Includes undistributed net investment
income (deficit) of $ (293) $ 6,641 $ 1,480 $ 951
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Class A:
Sold 117,955 200,153 172,409 159,521
Issued for distributions reinvested 64,351 59,779 20,390 16,104
Redeemed (239,475) (261,699) (62,339) (48,313)
---------- ---------- ---------- ----------
Net increase (decrease) in Class A trust
shares outstanding (57,169) (1,767) 130,460 127,312
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Class B:
Sold 25,538 -- 27,733 --

25
<PAGE>

Issued for distributions reinvested 600 -- 442 --
Redeemed (3,601) -- -- --
---------- ---------- ---------- ----------
Net increase in Class B trust shares outstanding 22,537 -- 28,175 --
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>

See notes to financial statements

Notes to Financial Statements
First Investors Multi-State Insured Tax Free Fund
Arizona, California, Colorado, Michigan, Minnesota,
Missouri, Ohio and Oregon Series

1. Significant Accounting Policies -- First Investors Multi-State Insured Tax
Free Fund ("Multi-State Insured") is registered under the Investment Company Act
of 1940 (the "1940 Act") as a diversified, open-end management investment
company. Multi-State Insured consists of seventeen separate investment series.
This report relates to the eight series of Multi-State Insured listed above
(collectively, "Series"). Multi-State Insured operates as a series fund, issuing
shares of beneficial interest in each Series and accounts separately for the
assets, liabilities and operations of each Series.

The investment objective of each Series is to achieve a high level of interest
income which is exempt from Federal income tax and, for a particular Series,
from state income taxes for residents of that state.

A. Security Valuation -- The municipal securities in which the Series invest 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 Trustees. 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 Series as of the date the securities are purchased.

The municipal bonds held by the 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. Each Series may invest up to 20% of its assets in
portfolio securities not covered by the insurance feature.

B. Federal Income Taxes -- It is the policy of each Series to continue to
qualify as a regulated investment company, which can distribute tax exempt
dividends, by complying with the provisions available to certain

<PAGE>

investment companies, as defined in the Internal Revenue Code. The Series make
distributions of income and net realized capital gains (in excess of any
available capital loss carryovers) sufficient to relieve them from all, or
substantially all, federal income taxes. At December 31, 1995, the Series had
the following capital loss carryovers, all expiring in the year 2002:

Amount
----------
MULTI-STATE INSURED
-------------------
ARIZONA Series $ 91,810
COLORADO Series 55,105
MICHIGAN Series 63,116
MINNESOTA Series 144,565
MISSOURI Series 74,741
OREGON Series 168,584

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

D. Expense Allocation -- Direct expenses attributable to a Series are charged
to and paid from the assets of that Series. Indirect or general expenses 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. 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 Series' Custodian has provided credits in the
amount of $20,048 against custodian charges based on the uninvested cash
balances of each 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 5. 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. Multi-
State Insured has established an unlimited number of Class A and

<PAGE>

Class B shares of beneficial interest.

3. Concentration of Credit Risk -- The Series invest in debt instruments of
municipal issuers whose ability to meet their obligations may be affected by
economic developments in a State, industry or region.

4. Security Transactions -- For the year ended December 31, 1995, purchases
and sales of municipal securities were as follows:

Cost Proceeds
of of
Purchases Sales
---------- ------------
MULTI-STATE INSURED
- -------------------
ARIZONA Series $ 3,262,386 $ 4,088,321
CALIFORNIA Series 8,683,412 9,385,478
COLORADO Series 1,686,558 1,468,390
MICHIGAN Series 18,319,777 15,142,491
MINNESOTA Series 4,142,272 4,046,733
MISSOURI Series 920,560 858,512
OHIO Series 13,385,920 13,971,048
OREGON Series 4,031,851 2,081,518

At December 31, 1995, aggregate cost and net unrealized appreciation
(depreciation) of securities for federal income tax purposes were as follows:

<TABLE>
<CAPTION>
Gross Gross Net
Aggregate Unrealized Unrealized Unrealized
Cost Appreciation Depreciation Appreciation
MULTI-STATE INSURED
- ------------------------
<S> <C> <C> <C> <C>
ARIZONA Series $ 7,973,261 $ 862,446 $ -- $ 862,446
CALIFORNIA Series 14,641,260 1,667,243 -- 1,667,243
COLORADO Series 3,359,121 257,967 -- 257,967
MICHIGAN Series 33,996,015 3,514,347 -- 3,514,347
MINNESOTA Series 7,425,492 548,210 1,427 546,783
MISSOURI Series 1,680,783 147,355 -- 147,355
OHIO Series 17,810,400 1,689,119 -- 1,689,119
OREGON Series 6,580,918 436,432 -- 436,432
</TABLE>

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

The Investment Advisory Agreements provide as compensation to FIMCO an annual
fee, payable monthly, at the rate of .75% on the first $250

<PAGE>

million of the average daily net assets of each Series, declining by .03% on
each $250 million thereafter, down to .66% on average daily net assets over
$750 million. For the year ended December 31, 1995, advisory fees amounted to
$736,308, of which $357,600 was waived; other expenses in the amount of $49,131
were assumed by FIMCO.

For the year ended December 31, 1995, FIC, as underwriter, received $377,241 in
commissions on sales of shares after allowing $181,757 to other dealers.
Shareholder servicing costs consisted of $87,931, in transfer agent fees and out
of pocket expenses accrued to ADM. Transfer agent fees and out of pocket
expenses attributable to the Colorado, Missouri and Oregon Series, in the amount
of $17,892, were waived by the transfer agent for the year ended December 31,
1995.

Pursuant to a Distribution Plan adopted under Rule 12b-1 of the 1940 Act, each
Series is authorized to pay FIC a fee up to .30% of the average net assets of
the Class A shares and up to 1% of the average net assets of the Class B shares,
on an annualized basis each fiscal 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.

Independent Auditor's Report
To the Shareholders and Trustees of
First Investors Multi-State Insured Tax Free Fund
Arizona, California, Colorado, Michigan, Minnesota,
Missouri, Ohio and Oregon Series
We have audited the accompanying statement of assets and liabilities, including
the portfolios of investments, of the eight series of First Investors Multi-
State Insured Tax Free Fund listed above 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 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 audits 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
each of the eight series of First Investors Multi-

<PAGE>

State Insured Tax Free Fund listed above as of December 31, 1995, and the
results of their operations, changes in their net assets and the financial
highlights for the periods indicated thereon, in conformity with generally
accepted accounting principles. Tait, Weller & Baker Philadelphia,
Pennsylvania January 31, 1996

<PAGE>

Portfolio of Investments
FIRST INVESTORS NEW YORK INSURED TAX FREE FUND, INC.
December 31, 1995

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
MUNICIPAL BONDS--97.9%
Education--15.4%
New York State Dormitory Authority Revenues:
City University:
$ 1,500M 8.2% 7/1/1998* $ 1,659,375 $ 77
10,750M 5 3/8% 7/1/2025 10,629,062 491
1,000M Iona College 7 5/8% 7/1/2009 1,106,250 51
2,800M Manhattanville College 7 1/2% 7/1/2000* 3,227,000 149
1,250M Skidmore College 7 3/4% 7/1/1997* 1,345,313 62
State University Educational Facilities:
1,880M 7 1/4% 5/15/2000* 2,140,850 99
1,000M 5 7/8% 5/15/2011 1,073,750 50
2,000M 5 1/2% 5/15/2013 2,067,500 96
3,700M 7 3/8% 5/15/2014 4,144,000 191
2,000M 5 1/4% 5/15/2015 2,000,000 92
4,000M University of Puerto Rico University Revenues 5 1/4% 6/1/2025 3,960,000 183
- ------------------------------------------------------------------------------------------------------------------------------
33,353,100 1,541
- ------------------------------------------------------------------------------------------------------------------------------
General Obligation--20.7%
Nassau County, N.Y.:
4,355M 5.7% 8/1/2012 4,534,644 210
3,845M 6 1/2% 11/1/2012 4,291,981 198
New York City, N.Y.:
4,250M 8% 8/1/1997* 4,595,312 212
1,000M 8 1/8% 11/1/1997* 1,087,500 50
1,000M 8% 6/1/1998* 1,102,500 51
3,000M 6.2% 8/1/2008 3,352,500 155
3,500M 6.95% 8/15/2012 3,985,625 184
1,000M 7 1/4% 3/15/2018 1,141,250 53
Niagara Falls, N. Y. Public Improvement:
1,680M 7 1/2% 3/1/2015 2,118,900 98
1,100M 7 1/2% 3/1/2018 1,386,000 64
1,750M North Hempstead, N.Y. 6.4% 4/1/2012 1,955,625 90

Puerto Rico Commonwealth:
$ 2,000M 7.9% 7/1/1996* 2,102,000 97
1,250M 6 1/4% 7/1/2013 1,409,375 65
4,090M 5.65% 7/1/2015 4,294,500 199
7,750M 5% 7/1/2021 7,440,000 344

<PAGE>

- ------------------------------------------------------------------------------------------------------------------------------
44,797,712 2,070
- ------------------------------------------------------------------------------------------------------------------------------
Hospital--12.6%
1,000M New York State Dormitory Auth. Revs. (Devereux Foundation)
5% 7/1/2015 953,750 44
New York State Medical Care Facilities Agency:
3,690M Beth Israel Hospital 7 1/2% 11/1/2010 4,174,313 193
1,000M Good Samaritan Hospital 8% 11/1/2013 1,073,750 49
1,850M Long Term Health Care 7 3/8% 11/1/2011 2,053,500 95
Mental Health Services Facilities:
1,595M 7.7% 2/15/1998* 1,746,525 81
2,115M 7 3/4% 2/15/2000* 2,434,894 113
2,015M 7 3/8% 2/15/2014 2,224,056 103
1,405M 7.7% 2/15/2018 1,515,644 70
2,080M 7 3/4% 2/15/2020 2,334,800 108
4,915M 6 1/2% 8/15/2024 5,302,056 245
3,000M St. Luke's Hospital 7.45% 2/15/2000* 3,420,000 158
- ------------------------------------------------------------------------------------------------------------------------------
27,233,288 1,259
- ------------------------------------------------------------------------------------------------------------------------------
Housing--5.1%
New York City Housing Development Corp.:
2,250M Insured Multi-Family (Sheridan Manor) 7.45% 10/1/2008 2,387,813 110
6,500M Insured Residential Charter 7 3/8% 4/1/2017 6,833,125 316
1,730M New York State Hsg. Fin. Agcy. Series "A" 7.45% 11/1/2028 1,842,450 85
- ------------------------------------------------------------------------------------------------------------------------------
11,063,388 511
- ------------------------------------------------------------------------------------------------------------------------------
Transportation--29.6%
Metropolitan Transit Authority of New York:
5,000M Commuter Facilities Series 6 1/8% 7/1/2014 5,325,000 246
- ------------------------------------------------------------------------------------------------------------------------------
Transit Facilities Series:
1,500M 8 1/2% 7/1/1996* 1,565,340 72
1,500M 8 1/2% 7/1/1997* 1,629,375 75
5,000M 8% 7/1/1998* 5,562,500 257
7,900M New York City Transit Auth. Rev. (Livingston Plaza Proj.) 7 1/2 1/1/2000 8,996,125 416
10,500M New York Thruway Authority 5 1/2% 4/1/2015 10,591,875 490
4,000M Port Authority New York & New Jersey 5 1/8% 10/1/2021 3,880,000 179
2,000M Puerto Rico Commonwealth Highway & Transportation Authority 5 1/2 7/1/2015 2,060,000 95
Triborough Bridge & Tunnel Authority:
1,000M Special Obligation 8% 1/1/1998* 1,091,250 50
1,500M Series "L" 8 1/8% 1/1/1998* 1,640,625 76
3,000M Series "O" 7.7% 1/1/1999* 3,345,000 155
6,900M Series "Y" 6% 1/1/2012 7,512,375 347
10,595M Series "Y" 5 1/2% 1/1/2017 10,912,850 504
- ------------------------------------------------------------------------------------------------------------------------------
64,112,315 2,962
- ------------------------------------------------------------------------------------------------------------------------------
Utilities--7.2%
New York City Municipal Water Finance Authority:
4,975M 5 7/8% 6/15/2012 5,373,000 248
2,000M 5 7/8% 6/15/2013 2,152,500 100
1,500M New York State Energy Res. & Dev. Auth. (Brooklyn Union Gas) 9% 5/15/2015 1,529,610 71
2,000M New York State Power Authority General Purpose Bonds 8% 1/1/1998* 2,187,500 101

<PAGE>
4,000M Suffolk County, N. Y. Water Authority 6% 6/1/2017 4,355,000 201
- ------------------------------------------------------------------------------------------------------------------------------
15,597,610 721
- ------------------------------------------------------------------------------------------------------------------------------
Other Revenue--7.3%
1,000M Monroe Cnty. N.Y. Indl. Dev. Agcy. (Rochester Inst. Tech.)
1,000M New York State Dorm. Auth. Rev. (Suffolk County Jud. Facs.)
- ------------------------------------------------------------------------------------------------------------------------------
New York State Urban Development Corporation Correctional Facilities:
$ 2,000M Series "C" 7 3/4% 1/1/1998* 2,182,500 101
3,000M Series "F" 7 1/2% 1/1/1999* 3,330,000 154
Puerto Rico Public Buildings Authority:
2,250M 6 1/4% 7/1/2012 2,556,562 118
1,000M 6 1/4% 7/1/2013 1,136,250 53
4,000M 5 1/2% 7/1/2021 4,135,000 191
- ------------------------------------------------------------------------------------------------------------------------------
15,746,562 728
- ------------------------------------------------------------------------------------------------------------------------------
Total Value of Municipal Bonds (cost $193,249,671) 97.9% 211,903,975 9,792
Other Assets, Less Liabilities 2.1 4,511,078 208
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $216,415,053 $10,000
==============================================================================================================================
</TABLE>

* Municipal Bonds which have been prerefunded are shown maturing at the
prerefunded call date.
See notes to financial statements

Portfolio of Investments
First Investors Multi-State Tax Free Fund - CONNECTICUT SERIES
December 31, 1995

<PAGE>

500M Loomis Chafee School Project-Series "B" 6% 7/1/2015 526,875 299
1,000M Trinity College 6 1/8% 7/1/2014 1,073,750 611
- ------------------------------------------------------------------------------------------------------------------------------
2,418,062 1,375
- ------------------------------------------------------------------------------------------------------------------------------
General Obligation--39.4%
100M Bethel, Conn. 6 1/2% 2/15/2011 114,500 65
50M Bristol, Conn. 6 1/2% 6/15/2006 56,812 32
30M Colchester, Conn. 7.3% 1/15/2007 36,038 20
Connecticut State:
500M 6 1/2% 3/15/2002* - Series "A" 562,500 320
620M 6% 3/15/2012 - Series "E" 679,675 387
130M Coventry, Conn. 6.7% 12/15/2009 151,937 86
Griswold, Conn.:
250M 5 3/4% 4/15/2010 260,312 148
100M 6 1/4% 6/15/2010 110,875 63
100M Groton City, Conn. 6 3/4% 6/1/2007 115,375 66
390M Hartford, Conn. 5.6% 10/1/2011 399,750 227
800M New Britain, Conn. 6% 3/1/2012 876,000 498
625M New Haven, Conn. 5 3/4% 2/15/2011 652,344 371
500M New Haven, Conn. 5 3/4% 2/15/2012 520,625 296
130M Newton, Conn. 6.7% 8/15/2010 151,288 86
30M North Canaan, Conn. 6.9% 1/15/2006 34,313 20
40M Old Saybrook, Conn. 6 1/2% 2/15/2009 45,700 26
250M Plainfield, Conn. 6 3/8% 8/1/2011 270,937 154
450M Puerto Rico Commonwealth 6 1/4% 7/1/2013 507,375 289
290M Regional School District #5, Conn. 6.3% 3/1/2009 311,387 177
255M Salisbury, Conn. 5 1/2% 6/1/2008 261,694 149
330M Southington, Conn. 6.55% 4/1/2012 360,112 205
90M Stafford, Conn. 6.55% 11/15/2008 103,838 59
50M Stratford, Conn. 6.6% 3/1/2007 57,125 32
250M Westbrook, Conn. 6.4% 3/15/2010 279,688 159
- ------------------------------------------------------------------------------------------------------------------------------
6,920,200 3,935
- ------------------------------------------------------------------------------------------------------------------------------
Hospital--17.5%
Conn. State Health & Educationial Facilities Authority Revenue:
450M Bridgeport Hospital 6 1/2% 7/1/2012 494,438 281
60M Danbury Hospital-University of New Haven 6 7/8% 1/1/2010 66,450 38
500M Lawrence & Memorial Hospital 6 3/8% 7/1/2002* 562,500 320
700M New Britain General Hospital 6 1/8% 7/1/2014 755,125 429
325M Stamford Hospital 6 1/2% 7/1/2006 356,281 203
280M Yale-New Haven Hospital 7% 7/1/2010 311,850 177
500M Puerto Rico Indl. Tourist Edl. Med. & Env. Ctl. Facs. 6 1/4% 7/1/2016 539,375 307
- ------------------------------------------------------------------------------------------------------------------------------
3,086,019 1,755
- ------------------------------------------------------------------------------------------------------------------------------
Housing--3.8%
650M Connecticut State Housing Finance Authority 6.1% 5/15/2013 674,375 384
- ------------------------------------------------------------------------------------------------------------------------------
Transportation--9.3%

<PAGE>

250M 6.1% 10/1/2012 268,750 153
- ------------------------------------------------------------------------------------------------------------------------------
1,637,844 932
- ------------------------------------------------------------------------------------------------------------------------------
Utilities--6.4%
300M Connecticut State Resource Recovery Auth. Mid. Conn. Sys. 7.3% 11/15/2012 317,478 181
South Central Conn. Regl. Water Auth. Water Sys. Rev.:
250M 5 7/8% 8/1/2002* 273,750 156
500M 6 1/8% 8/1/2014 538,750 306
- ------------------------------------------------------------------------------------------------------------------------------
1,129,978 643
- ------------------------------------------------------------------------------------------------------------------------------
Other Revenue--29.0%
545M Connecticut State Dev. Auth. Govtl. Lease Rev. 6 1/2% 6/15/2008 609,719 347
325M Puerto Rico Public Buildings Authority 6 1/4% 7/1/2015 370,094 210
- ------------------------------------------------------------------------------------------------------------------------------
979,813 557
- ------------------------------------------------------------------------------------------------------------------------------
Total Value of Municipal Bonds (cost $15,710,781) 97.8% 17,203,341 9,784
Other Assets, Less Liabilities 2.2 378,934 216
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $17,582,275 $10,000
==============================================================================================================================
</TABLE>
* Municipal Bonds which have been prerefunded are shown maturing at the
prerefunded call date.

See notes to financial statements

Portfolio of Investments
First Investors Multi-State Tax Free Fund - FLORIDA SERIES
December 31, 1995

<PAGE>

400M Miami, Fla. Health Facs. Auth. (Mercy Hospital) 6 3/4% 8/1/2001* 455,500 202
350M North Broward, Fla. Hosp. Dist. 6 1/2% 1/1/2012 384,563 171
750M Puerto Rico Indl. Tourist Edl. Med. & Env. Ctl. Facs. 6 1/4% 7/1/2016 809,062 359
- ------------------------------------------------------------------------------------------------------------------------------
1,649,125 732
- ------------------------------------------------------------------------------------------------------------------------------
Housing--2.0%
250M Dade County, Fla. Hsg. Fin. Auth. Single-Family Mtge. 6.95% 12/15/2012 268,125 119
175M Florida Housing Finance Agency-Residential Mtge. (Series 2) 8% 12/15/2016 182,767 81
- ------------------------------------------------------------------------------------------------------------------------------
450,892 200
- ------------------------------------------------------------------------------------------------------------------------------
Transportation--10.4%
500M Dade County, Fla. Aviation Revenue Series "A" 6% 10/1/2010 533,125 237
Florida State Turnpike Authority Turnpike Revenue:
300M 6.35% 7/1/2002* 336,000 149
1,000M 5% 7/1/2016 971,250 431
455M Port Palm Beach District, Fla. Revenue 6 1/4% 9/1/2008 499,363 222
- ------------------------------------------------------------------------------------------------------------------------------
2,339,738 1,039
Utilities--42.9%
250M Broward County, Fla. Water & Sewer Utilities Rev. 6 1/2% 10/1/2001* 280,313 124
750M Charlotte County, Fla. Utilities Revenue 6 3/4% 10/1/2013 852,187 378
Escambia County, Fla. Utilities Authority Util. Sys. Rev.:
500M 6 1/4% 1/1/2013 560,625 249
1,000M 6 1/4% 1/1/2015 1,130,000 502
690M Jacksonville Beach, Fla. Utilities Rev. 6 3/4% 10/1/2001* 787,462 350
300M Kissimmee, Fla. Utility Authority Electric System Revenue 6 1/2 10/1/2001* 338,625 150
500M Miramar, Fla. Util. Impt. Rev. 6.4% 10/1/2007 559,375 248
1,000M Plant City, Fla. 6% 10/1/2015 1,092,500 485
300M Reedy Creek, Fla. Impt. Dist. Utilities Revenue 6 1/2% 10/1/2001* 336,375 149
500M Sarasota County, Fla. Utility System Revenue 6 1/2% 10/1/2014 565,000 251
Seminole County, Fla. Water & Sewer Revenue:
500M 6% 10/1/2009 549,375 244
500M 6% 10/1/2019 551,250 245
Tampa, Fla. Water & Sewer Revenue:
200M 6.3% 10/1/2006 221,750 98
1,000M 5 1/8% 10/1/2017 982,500 436
750M West Melbourne, Fla. Water & Sewer Revenue 6 3/4% 10/1/2014 862,500 383
- ------------------------------------------------------------------------------------------------------------------------------
9,669,837 4,292
- ------------------------------------------------------------------------------------------------------------------------------
Other Revenue--29.0%
400M Florida State Div. Bd. Fin. Dept. General Services 6 3/4% 7/1 2013 444,000 197
1,000M Indian Trace Community Dev. District 5 3/4% 5/1/2011 1,048,750 465
1,000M Jacksonville, Fla. Cap. Improv. (Gator Bowl Project) 5 7/8% 10/1/2015 1,050,000 466
350M Jacksonville, Fla. Excise Taxes Revenue 6 1/2% 10/1/2013 387,187 172
600M Orange County, Fla. Tourist Dev. Tax Revenue 5.9% 10/1/2010 653,250 290
1,000M Palm Beach County, Fla. Criminal Justice Facs. Rev. 5 3/8% 6/1/2011 1,027,500 456
500M Pembroke Pines, Fla. Capital Improvement Revenue 5.9% 10/1/2015 521,875 232
300M St. Lucie County, Fla. Sales Tax Revenue 6 1/2% 10/1/2002* 341,625 152
1,000M Tampa, Fla. Sales Tax Revenue 5 3/4% 10/1/2020 1,061,250 471
- ------------------------------------------------------------------------------------------------------------------------------
6,535,437 2,901
- ------------------------------------------------------------------------------------------------------------------------------

<PAGE>

Total Value of Municipal Bonds (cost $19,952,814) 97.7% 22,009,654 9,770
Other Assets, Less Liabilities 2.3 518,193 230
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $22,527,847 $10,000
==============================================================================================================================
</TABLE>
* Municipal Bonds which have been prerefunded are shown maturing at the
prerefunded date.

See notes to financial statements

Portfolio of Investments
First Investors Multi-State Tax Free Fund - MARYLAND SERIES
December 31, 1995

<PAGE>

Puerto Rico Commonwealth:
105M 6.6% 7/1/2002* 119,700 132
520M 6 1/4% 7/1/2012 586,950 646
250M 5.65% 7/1/2015 262,500 289
325M Washington County, Maryland 5.8% 1/1/2013 340,031 374
- ------------------ ----------------------------------------------------------------------------------------------------------
3,122,713 3,436
- ------------------ ----------------------------------------------------------------------------------------------------------
Hospital--22.6%
250M Maryland Industrial Financing Authority (Bon Secours Health System)
5 1/2% 8/15/20 255,000 280
Maryland State Health & Higher Education Facilities Authority:
35M Baltimore County General Hospital 6.9% 7/1/2001* 39,944 44
90M Francis Scott Key Medical Center 6 3/4% 7/1/2000* 100,800 111
500M Maryland General Hospital 6 1/8% 7/1/2014 535,000 589
20M Memorial Hospital 7% 7/1/2007 22,050 24
140M Sinai Hospital of Baltimore 7% 7/1/2000* 158,200 174
110M Suburban Hospital 6% 7/1/2002* 119,900 132
65M University of Maryland Medical System 7% 7/1/2001* 74,506 82
325M Puerto Rico Indl. Tourist Edl. Med. and Env. Ctl. Facs. 6 1/4% 7/1/2016 350,594 386
350M Takoma Park, Maryland Hosp. Facs. (Adventist Hosp.) 6 1/2% 9/1/2012 401,625 442
- ------------------ ----------------------------------------------------------------------------------------------------------
2,057,619 2,264
- ------------------ ----------------------------------------------------------------------------------------------------------
Housing--10.6%
250M Baltimore County, Maryland Mtge. Rev. (Old Orchard Apts.)
7% 7/1/2016 270,625 298
Maryland State Community Dev. Admin. Dept. Hsg. & Cmnty. Dev.:
45M 7% 6/1/2011 48,206 53
350M 7% 4/1/2014 381,938 420
250M Montgomery County, Maryland Single Family Mtge. Rev.
6 1/2% 7/1/2011 266,563 293
- ------------------ ----------------------------------------------------------------------------------------------------------
967,332 1,064
- ------------------ ----------------------------------------------------------------------------------------------------------
Transportation--3.0%
Maryland State Department of Transportation:
60M 6 3/8% 9/1/2006 64,575 71
500M Zero Cpn. 7/1/2012 210,000 231
- ------------------ ----------------------------------------------------------------------------------------------------------
274,575 302
- ------------------ ----------------------------------------------------------------------------------------------------------
Utilities--7.1%
Baltimore, Maryland Wastewater Utilities Revenue:
165M 6 1/2% 7/1/2000* 180,469 199
215M 6 1/4% 7/1/2002* 240,531 264
200M 6% 7/1/2015 221,750 244
- ------------------ ----------------------------------------------------------------------------------------------------------
642,750 707
- ------------------ ----------------------------------------------------------------------------------------------------------
Other Revenue--9.2%
250M Baltimore, Maryland (Convention Center) 6.1% 9/1/2013 266,250 293
35M Maryland Industrial Financing Authority 7% 7/1/2010 39,331 43
100M Montgomery County, Maryland Pkg. Rev. (Bethesda Pkg. Lot)
6 1/4% 6/1/2009 108,750 120
375M Puerto Rico Public Buildings Authority 6 1/4% 7/1/2015 427,031 470

<PAGE>

- ------------------ ----------------------------------------------------------------------------------------------------------
841,362 926
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Municipal Bonds (cost $8,135,724) 97.7% 8,881,338 9,772
Other Assets, Less Liabilities 2.3 206,941 228
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $9,088,279 $10,000
================== ==========================================================================================================
</TABLE>
* Municipal Bonds which have been prerefunded are shown maturing at the
prerefunded call date.

See notes to financial statements

Portfolio of Investments
First Investors Multi-State Tax Free Fund - GEORGIA SERIES
December 31, 1995

<PAGE>

150M Crisp County, Ga. Hosp. Auth. Crisp Regional Hosp. Proj.
5.45% 7/1/2015 151,125 480
125M Puerto Rico Indl. Tourist Edl. Med. & Env. Ctl. Facs. 6 1/4% 7/1/2016 134,844 429
- ------------------ ----------------------------------------------------------------------------------------------------------
285,969 909
- ------------------ ----------------------------------------------------------------------------------------------------------
Transportation--8.9%
250M Metropolitan Atlanta Rapid Transit Authority 6 1/4% 7/1/2011 280,625 892
- ------------------ ----------------------------------------------------------------------------------------------------------
Utilities--36.0%
25M Bartow County, Ga. Water & Sewer Revenue 6.05% 9/1/2007 26,969 86
95M Brunswick, Ga. Water & Sewer Revenue 6.1% 10/1/2019 106,281 338
85M Conyers, Ga. Water & Sewer Revenue 6.45% 7/1/2010 93,713 298
80M Cordele, Ga. Comb. Public Utilities Revenue 6.4% 11/1/2014 87,000 277
210M Douglasville-Douglas County, Ga. Water & Sewer Authority
5 5/8% 6/1/2015 220,237 700
250M Fulton County, Ga. Water & Sewer Revenue 6 3/8% 1/1/2014 285,937 909
100M Georgia Municipal Electric Authority, Special Obligation 6 1/2% 1/1/2017 114,625 364
80M Georgia Municipal Gas Authority Revenue 6.8% 11/1/2009 90,100 287
95M Henry County, Ga. Water & Sewer Auth. Revenue 7.1% 2/1/2000* 106,875 340
- ------------------ ----------------------------------------------------------------------------------------------------------
1,131,737 3,599
- ------------------ ----------------------------------------------------------------------------------------------------------
Other Revenue--11.9%
80M Appling County, Ga. Dev. Auth. Poll. Ctl. Rev. 7.1% 1/1/2014 89,400 284
80M Downtown Smyrna, Ga. Dev. Auth. Rev. 6.7% 2/1/2020 88,200 280
50M East Point, Ga. Building Authority Revenue 6% 2/1/2011 53,000 169
125M Puerto Rico Public Buildings Authority 6 1/4% 7/1/2013 142,031 452
- ------------------ ----------------------------------------------------------------------------------------------------------
372,631 1,185
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Municipal Bonds (cost $2,886,666) 99.9% 3,142,606 9,993
Other Assets, Less Liabilities .1 2,123 7
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $3,144,729 $10,000
================== ==========================================================================================================
</TABLE>
* Municipal Bonds which have been prerefunded are shown maturing at the
prerefunded call date.

See notes to financial statements

Portfolio of Investments
First Investors Multi-State Tax Free Fund - MASSACHUSETTS SERIES
December 31, 1995

<PAGE>

<TABLE>
<CAPTION>
- ------------------ ----------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
MUNICIPAL BONDS--97.6%
Certificates of Participation-
$ 690M Massachusetts Bay Transportation Authority Series "A" 7.65% 8/1/2000* $ 801,263 $ 341
- ------------------ ----------------------------------------------------------------------------------------------------------
Education--12.7%
425M Massachusetts Health & Educ. Facs. Auth. (Northeastern Univ.)
7 1/8% 10/1/2000* 474,938 202
200M Massachusetts State College Bldg. Auth. Series "A" 7 1/4% 5/1/1996* 206,302 88
1,100M Massachusetts State Indl. Fin. (Babson College-Series "A")
5 3/4% 10/1/2015 1,148,125 489
1,100M Southeastern Massachusetts Univ. Bldg. 5 3/4% 5/1/2016 1,142,625 486
- ------------------ ----------------------------------------------------------------------------------------------------------
2,971,990 1,265
- ------------------ ----------------------------------------------------------------------------------------------------------
General Obligation--22.3%
Boston, Massachusetts:
250M 7 3/8% 2/1/2000* 283,125 121
750M 5 7/8% 8/1/2012 787,500 335
1,140M Franklin, Massachusetts 5 1/4% 11/15/2013 1,131,450 482
Massachusetts General Obligations:
300M 7% 7/1/2009 355,125 151
1,000M 6% 8/1/2010 1,097,500 467
150M North Borough, Massachusetts 7.2% 11/1/2003 162,187 69
150M Rochester, Massachusetts 7 1/4% 3/1/2007 164,813 70
400M Rockport, Massachusetts Unlimited Tax Sch. Proj. Loan 6.9% 12/15/2007 445,000 189
Wareham, Massachusetts:
225M 7.05% 1/15/2007 253,125 108
500M 7.1% 1/15/2008 563,125 240
- ------------------ ----------------------------------------------------------------------------------------------------------
5,242,950 2,232
- ------------------ ----------------------------------------------------------------------------------------------------------
Hospital--32.0%
Massachusetts Health & Educational Facilities Authority:
295M Berkshire Hospital 7.6% 10/1/1998* 327,081 139
Capital Asset Program:
225M 7.35% 8/1/2008 252,000 107
400M 7.2% 7/1/2009 446,000 190
500M Carney Hospital 7 3/4% 7/1/2000* 580,000 247
Massachusetts General Hospital:
750M 6 1/4% 7/1/2012 839,062 357
1,250M 5 1/4% 7/1/2023 1,237,500 527
570M Milton Hospital 7% 7/1/2016 640,537 273
1,500M Mt. Auburn Hospital 6 1/4% 8/15/2014 1,621,875 690
510M Newton-Wellesley Hospital 8% 7/1/1998* 567,375 242
400M South Shore Hospital 7 1/2% 7/1/2000* 460,000 196
490M University Hospital 7 1/4% 7/1/2019 553,088 235
- ------------------ ----------------------------------------------------------------------------------------------------------

<PAGE>

7,524,518 3,203
- ------------------ ----------------------------------------------------------------------------------------------------------
Housing--.7%
160M Massachusetts Housing Finance Agency 7.7% 12/1/2017 169,200 72
- ------------------ ----------------------------------------------------------------------------------------------------------
Transportation--5.0%
1,100M Massachusetts Bay Transportation Authority Series "A" 5.8% 3/1/2013* 1,166,000 496
- ------------------ ----------------------------------------------------------------------------------------------------------
Utilities--21.5%
Boston, Massachusetts Water & Sewer Commission:
850M 7% 11/1/2001* 980,687 417
100M 7 1/4% 11/1/2006 109,625 47
1,035M 5 3/4% 11/1/2013 1,102,275 469
475M Lynn, Massachusetts Water & Sewer Commission 7 1/4% 12/1/2000* 546,250 233
1,250M Massachusetts State Water Resource Authority 5% 3/1/2022 1,196,875 509
1,000M South Essex, Massachusetts Sewer District 6 3/4% 6/1/2013 1,122,500 478
- ------------------ ----------------------------------------------------------------------------------------------------------
5,058,212 2,153
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Municipal Bonds (cost $20,610,028) 97.6% 22,934,133 9,762
Other Assets, Less Liabilities 2.4 559,577 238
Net Assets 100.0% $23,493,710 $10,000
================== ==========================================================================================================
</TABLE>

* Municipal Bonds which have been prerefunded are shown maturing at the
prerefunded call date.
See notes to financial statements

Portfolio of Investments
First Investors Multi-State Tax Free Fund - NEW JERSEY SERIES
December 31, 1995

<PAGE>

- ------------------ ----------------------------------------------------------------------------------------------------------
Education--4.8%
1,300M New Jersey Edl. Facs. Fing. Auth. (Seton Hall Univ.) 6 1/4% 7/1/2010 1,408,875 234
1,500M University of Puerto Rico 5 1/4% 6/1/2025 1,485,000 247
- ------------------ ----------------------------------------------------------------------------------------------------------
2,893,875 481
- ------------------ ----------------------------------------------------------------------------------------------------------
General Obligation--17.2%
Essex County, N.J. Improvement Authority:
955M County College Project 6.9% 12/1/2014 1,098,250 183
545M Jail & Youth House Project 6.9% 12/1/2014 615,850 102
Orange School District:
1,025M Series "A" 6.95% 7/1/2014 1,182,594 197
1,220M Series "B" 6.95% 7/1/2014 1,407,575 234
1,000M New Jersey State Various Purposes 6% 2/15/2011 1,091,250 182
Puerto Rico Commonwealth:
1,340M 6 1/4% 7/1/2012 1,512,525 252
1,050M 6 1/4% 7/1/2013 1,183,875 197
Union City, N.J.:
1,000M 6.7% 9/1/2012 1,101,250 183
995M 6.4% 11/1/2013 1,134,300 189
- ------------------ ----------------------------------------------------------------------------------------------------------
10,327,469 1,719
- ------------------ ----------------------------------------------------------------------------------------------------------
Hospital--24.7%
New Jersey Health Care Facilities Financing Authority:
1,250M Bayonne Hospital 6 1/4% 7/1/2012 1,357,812 226
400M Community Medical Center 7% 7/1/2009 438,500 73
1,745M General Hospital Center at Passaic 6% 7/1/2014 1,851,881 308
750M Holy Name Hospital 7% 7/1/2008 833,400 138
1,100M Hunterdon Hospital 7% 7/1/2020 1,225,125 204
1,750M Monmouth Medical Center 6 1/4% 7/1/2016 1,896,562 316
1,500M Ocean County Medical Center 6.9% 7/1/2007 1,691,250 281
3,120M Riverview Medical Center 6 1/4% 7/1/2011 3,510,000 584
825M St. Barnabas Medical Center 7 1/4% 7/1/2018 912,656 152
1,000M St. Peter's Medical Center Series "E" 6 7/8% 7/1/2001* 1,140,000 190
- ------------------ ----------------------------------------------------------------------------------------------------------
14,857,186 2,472
- ------------------ ----------------------------------------------------------------------------------------------------------
Housing--4.6%
New Jersey State Housing & Mortgage Financing Agency:
380M Series "A" 7 1/2% 4/1/2015 400,900 67
420M Series "E" 7.65% 10/1/2016 449,400 75
1,385M Series "C" 7 3/8% 10/1/2017 1,461,175 243
450M Series "B" 8.1% 10/1/2017 478,125 79
- ------------------ ----------------------------------------------------------------------------------------------------------
2,789,600 464
- ------------------ ----------------------------------------------------------------------------------------------------------
Transportation--10.0%
900M Delaware River Port Authority 7 3/8% 1/1/2007 986,625 164
1,000M New Jersey State Highway Authority (Garden State Parkway)
6.2% 1/1/2010 1,096,250 182
New Jersey State Transportation Fund Transit System Series "A":
500M 5 1/4% 6/15/2014 500,000 83
1,500M 5% 6/15/2015 1,455,000 242
2,000M Port Authority, New York & New Jersey 5 1/4% 7/15/2017 1,980,000 330

<PAGE>

- ------------------ ----------------------------------------------------------------------------------------------------------
6,017,875 1,001
- ------------------ ----------------------------------------------------------------------------------------------------------
Utilities--12.4%
1,000M Bergen County, N.J. Util. Auth. Water Pollution Ctl. 6 1/2% 12/15/2012 1,091,250 182
380M Camden County, N.J. Municipal Utilities Sewer Revenue 8 1/4% 12/1/2017 416,100 69
1,000M Evesham, N.J. Municipal Utilities Authority 7% 7/1/2000* 1,113,750 185
500M Long Branch, N.J. Sewer Authority 7 1/4% 6/1/2000* 569,375 95
500M Lower Township, N.J. Municipal Utilities Authority 7% 12/1/2000* 569,375 95
250M Montville Township, N.J. Municipal Utilities Authority 7% 12/1/2011 282,813 47
500M Musconetcong, N.J. Sewer Authority 7.15% 1/1/2000* 561,875 93
1,435M New Jersey Wastewater Treatment Trust 6 1/4% 4/1/2010 1,555,181 259
1,140M Passaic Valley, N.J. Water Commn. 6.4% 12/15/2002* 1,292,475 215
- ------------------ ----------------------------------------------------------------------------------------------------------
7,452,194 1,240
- ------------------ ----------------------------------------------------------------------------------------------------------
Other Revenue--20.1%
1,900M Atlantic County, N.J. Impt. Auth. Lux. Tax. (Convention Center)
7.4% 7/1/2016 2,382,125 396
1,250M Camden County, N.J. Impt. Auth. Lease Revenue 5 5/8% 10/1/2015 1,282,813 213
350M Cape May County, N.J. Indl. Pollution Control Fin. Auth. 6.8% 3/1/2021 430,500 72
1,000M New Brunswick, N.J. Parking Authority 7.2% 9/1/1999* 1,115,000 186
New Jersey Economic Development Authority:
Educational Testing Service:
1,000M 5.9% 5/15/2015 1,046,250 174
2,000M 6 1/8% 5/15/2015 2,120,000 353
1,500M Market Transition Facility 5 7/8% 7/1/2011 1,584,375 264
875M Puerto Rico Public Buildings Authority Series "A" 6 1/4% 7/1/2013 994,219 165
1,000M Salem County, N.J. Impt. Auth. Rev. County Corr. Facs.
7 1/8% 5/1/1998* 1,108,750 184
- ------------------ ----------------------------------------------------------------------------------------------------------
12,064,032 2,007
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Municipal Bonds (cost $53,055,392) 97.8% 58,808,981 9,784
Other Assets, Less Liabilities 2.2 1,301,157 216
- ------------------ ----------------------------------------------------------------------------------------------------------
Net Assets 100.0% $60,110,138 $10,000
================== ==========================================================================================================
</TABLE>

* Municipal Bonds which have been prerefunded are shown maturing at the
prerefunded call date.
See notes to fiancial statements

Portfolio of Investments
First Investors Multi-State Tax Free Fund - NORTH CAROLINA SERIES
December 31, 1995

<PAGE>

<TABLE>
<CAPTION>
- ------------------ ----------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ------------------ ----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
MUNICIPAL BONDS--96.5%
Certificates of Participation-4.4%
$100M Charlotte, N.C. Convention Facilities Project 6 3/4% 12/1/2001* $ 114,250 $ 226
100M Cumberland County, N.C. Civic Center Project 6.3% 12/1/2008 110,000 217
- ------------------ ----------------------------------------------------------------------------------------------------------
224,250 443
- ------------------ ----------------------------------------------------------------------------------------------------------
General Obligation--53.0%
200M Cumberland County, N.C. 5 1/2% 4/1/2012 205,500 406
200M Currituck County, N.C. 5.4% 4/1/2013 202,750 401
200M Gaston County, N.C. 5.7% 3/1/2013 211,000 417
220M Laurinburg, N.C. 5.3% 6/1/2012 225,775 446
200M Mecklenburg County, N.C. 6.2% 1/1/2002* 220,250 435
200M Morganton, N.C. 5.7% 6/1/2014 209,250 414
400M Onslow County, N.C. 5.7% 3/1/2011 422,500 835
200M Puerto Rico Commonwealth 6 1/4% 7/1/2012 225,750 446
280M Rowan County, N.C. 5.6% 4/1/2014 291,900 577
250M Salisbury, N.C. 5.3% 5/1/2013 253,125 500
200M Watauga County, N.C. 5.9% 6/1/2014 212,500 420
- ------------------ ----------------------------------------------------------------------------------------------------------
2,680,300 5,297
- ------------------ ----------------------------------------------------------------------------------------------------------
Hospital--6.9%
140M North Carolina Med. Care Commn. (Presbyterian Hosp.)
7 3/8% 10/1/2000* 161,175 319
175M Puerto Rico Indl. Tourist Edl. Med. and Env. Ctl. Facs. 6 1/4% 7/1/2016 188,781 373
- ------------------ ----------------------------------------------------------------------------------------------------------
349,956 692
- ------------------ ----------------------------------------------------------------------------------------------------------
Housing--2.6%
125M North Carolina Housing Finance Agency 6.6% 7/1/2017 133,906 265
- ------------------ ----------------------------------------------------------------------------------------------------------
Transportation--2.1%
100M Puerto Rico Commonwealth Highway & Transportation Authority
5 1/2% 7/1/2013 104,000 206
- ------------------ ----------------------------------------------------------------------------------------------------------
Utilities--22.4%
200M Concord, N.C. Utility Systems 5 1/2% 12/1/2014 203,750 403
200M Dare County, N.C. Utility System 5 3/4% 6/1/2014 210,500 416
300M Fayetteville, N.C. Public Works Commission Revenue 5 1/4% 3/1/2013 300,375 593
200M North Carolina Municipal Power Agency 6% 1/1/2010 218,000 431
200M Shelby, N.C. Comb. Enterprise System Revenue 5 1/2% 5/1/2017 201,750 399
- ------------------ ----------------------------------------------------------------------------------------------------------
1,134,375 2,242
- ------------------ ----------------------------------------------------------------------------------------------------------
Other Revenue--5.1%
225M Puerto Rico Public Buildings Authority 6 1/4% 7/1/2012 255,656 505
- ------------------ ----------------------------------------------------------------------------------------------------------

<PAGE>

Total Value of Municipal Bonds (cost $4,613,767) 96.5% 4,882,443 9,650
Other Assets, Less Liabilities 3.5 177,316 350
- ------------------ ----------------------------------------------------------------------------------------------------------
Net Assets 100.0% $5,059,759 $10,000
================== ==========================================================================================================
</TABLE>

* Municipal Bonds which have been prerefunded are shown maturing at the
prerefunded call date.
See notes to financial statements

Portfolio of Investments
First Investors Multi-State Tax Free Fund - PENNSYLVANIA SERIES
December 31, 1995

<PAGE>

Hospital--11.2%
1,000M Allegheny County, Pa. Hosp. Dev. Auth. (Allegheny Gen. Hosp.)
6.2% 9/1/2015 1,068,750 265
1,500M Berks County, Pa. Mun. Auth. Hosp. (Reading Hosp. Med. Ctr.)
5.7% 10/1/2014 1,575,000 392
1,100M Blair County, Pa. Hosp. Auth. Rev.(Altoona Hosp.) 6 3/8% 7/1/2014 1,177,000 293
135M Delaware County, Pa. Auth. Hosp. Rev. (Memorial Hosp.)
7 1/8% 8/15/2009 150,694 37
500M St. Mary Hosp. Auth., Langhorne, Pa. (Franciscan Health) 7% 7/1/2014 535,000 133
- ------------------ ----------------------------------------------------------------------------------------------------------
4,506,444 1,120
- ------------------ ----------------------------------------------------------------------------------------------------------
Housing--4.0%
Pennsylvania Housing Finance Agency Single-Family Mtge.:
500M 7.15% 4/1/2015 534,375 133
1,000M 7.3% 10/1/2017 1,065,000 265
- ------------------ ----------------------------------------------------------------------------------------------------------
1,599,375 398
- ------------------ ----------------------------------------------------------------------------------------------------------
Transportation--4.8%
1,600M Pennsylvania State Turnpike Commission Oil Franchise Rev.
5 1/2% 12/1/2012 1,628,000 405
260M Pennsylvania State Turnpike Commission Turnpike Revenue
7.4% 12/1/2000* 300,300 74
- ------------------ ----------------------------------------------------------------------------------------------------------
1,928,300 479
- ------------------ ----------------------------------------------------------------------------------------------------------
Utilities--33.6%
Allegheny County, Pa. Sanitation Authority Sewer Revenue:
1,100M 6 1/2% 12/1/2001* 1,222,375 304
1,000M 6 1/4% 12/1/2014 1,072,500 267
175M Beaver County, Pa. Indl. Dev. Auth. Poll. Ctl. (Ohio Edison)
7 3/4% 9/1/2024 192,719 48
230M Fairview Township, Pa. Authority Sewer Revenue 7% 11/1/2000* 257,312 64
Harrisburg, Pa. Authority Water Revenue:
250M 7% 7/15/2001* 282,188 70
350M 6 1/2% 8/15/2002* 390,687 97
1,000M North Pennsylvania, Pa. Water Authority 6 7/8% 11/1/2004* 1,170,000 291
1,000M North Wales, Pa. Water Authority 6 3/4% 11/1/2004* 1,155,000 287
Philadelphia, Pa. Water & Wastewater:
1,230M 6 1/4% 8/1/2011 1,374,525 342
2,000M 6 1/4% 8/1/2012 2,237,500 556
Pittsburgh, Pa. Water & Sewer Auth. Water & Sewer System:
275M 6 3/4% 9/1/2001* 312,125 77
2,450M 6 1/2% 9/1/2013 2,811,375 699
1,000M Washington County, Pa. Indl. Dev. Auth. (West Penn. Power)
6.05% 4/1/2014 1,045,000 260
- ------------------ ----------------------------------------------------------------------------------------------------------
13,523,306 3,362
- ------------------ ----------------------------------------------------------------------------------------------------------
Other Revenue--16.4%
1,000M Pennsylvania Intergovernmental Coop. Auth. Spl. Tax Rev.
7% 6/15/2014 1,146,250 285
Pennsylvania State Industrial Development Authority:
1,000M 6% 1/1/2012 1,055,000 262
2,750M 5 1/2% 1/1/2014 2,780,938 691
400M Puerto Rico Public Buildings Authority Series "A" 6 1/4% 7/1/2015 455,500 113

<PAGE>

500M Somerset County, Pa. Gen. Auth. Commonwealth Lease Rev.
7% 10/15/2001* 566,875 141
500M Washington County, Pa. Auth. Lease Rev. 7.45% 6/15/2000* 576,875 144
- ------------------ ----------------------------------------------------------------------------------------------------------
6,581,438 1,636
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Municipal Bonds (cost $36,051,489) 98.0% 39,434,062 9,803
Other Assets, Less Liabilities 2.0 792,931 197
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $40,226,993 $10,000
================== ==========================================================================================================
</TABLE>
* Municipal Bonds which have been prerefunded are shown maturing at the
prerefunded call date.

See notes to financial statements

Portfolio of Investments
First Investors Multi-State Tax Free Fund - VIRGINIA SERIES
December 31, 1995

<PAGE>

1,000M Richmond, Va. 5 1/2% 1/15/2013 1,010,000 386
500M Virginia State Public School Authority 6 1/2% 8/1/2013 549,375 210
- ------------------ ----------------------------------------------------------------------------------------------------------
5,051,370 1,929
- ------------------ ----------------------------------------------------------------------------------------------------------
Hospital--18.3%
125M Charlottesville, Va. Indl. Dev. Auth. (Martha Jefferson Hosp.)
7 3/8% 10/1/2000* 143,906 55
1,150M Danville, Va. Ind. Dev. Auth. (Danville Reg. Med. Ctr.)
6 3/8% 10/1/2014 1,243,437 475
500M Hanover County, Va. Indl. Dev. Auth. (Bon Secours Health Sys. Projs.)
6% 8/15/2010 546,875 209
Roanoke, Va. Indl. Dev. Auth. (Roanoke Memorial Hospitals Projects):
295M 6 1/2% 7/1/2000* 322,656 123
355M 7 1/4% 7/1/2000* 404,700 155
1,675M 6 1/8% 7/1/2017 1,855,062 708
250M Winchester, Va. Indl. Dev. Auth. (Winchester Med.Ctr.) 7 1/4% 1/1/2000* 281,875 108
- ------------------ ----------------------------------------------------------------------------------------------------------
4,798,511 1,833
- ------------------ ----------------------------------------------------------------------------------------------------------
Transportation--9.5%
280M Richmond, Va. Metro. Auth. Expressway Rev. 7% 10/15/2000* 308,000 117
Washington, D.C. Metropolitan Area Transportation Authority:
1,000M 6% 7/1/2008 1,088,750 416
1,000M 6% 7/1/2010 1,088,750 416
- ------------------ ----------------------------------------------------------------------------------------------------------
2,485,500 949
- ------------------ ----------------------------------------------------------------------------------------------------------
Utilities--28.1%
225M Fairfax County, Va. Sewer Revenue 7% 11/15/99* 251,438 96
170M Fairfax County, Va. Water Authority Water Revenue 7 1/4% 1/1/2000* 191,675 73
275M Henry County, Va. Public Service Auth. Water & Sewer Rev.
7.2% 11/15/2000* 313,156 119
750M Leesburg, Va. Utility System Revenue 6.3% 7/1/2012 804,375 307
Loudoun County, Va. Sanitation Authority Water & Sewer Revenue:
500M 6 1/4% 1/1/2010 541,250 207
1,000M 5 1/2% 1/1/2015 1,012,500 387
Norfolk, Va. Water Revenue:
250M 5.6% 11/1/2011 257,500 98
1,000M 5 7/8% 11/1/2015 1,047,500 400
1,000M Prince William County, Va. Svce. Auth. Water Sewer Sys.Rev.
6 1/2% 7/1/2001* 1,117,500 427
560M Roanoke County, Va. Water System Revenue 6 1/2% 7/1/2001* 628,600 240
625M Upper Occoquan Sewer Authority, Va. Regional Sewer Revenue
6 1/2% 7/1/2001* 701,563 268
500M Virginia Beach, Va. Water & Sewer Revenue 5 1/8% 2/1/2014 491,250 188
- ------------------ ----------------------------------------------------------------------------------------------------------
7,358,307 2,810
- ------------------ ----------------------------------------------------------------------------------------------------------
Other Revenue--11.2%
700M Frederick County, Va. Indl. Dev. Auth. (Govt. Complex Proj.)
6 1/2% 12/1/2014 769,125 294
1,000M Richmond, Va. Redev. & Hsg. Auth. (Old Manchester Proj.)
6.8% 3/1/2015 1,110,000 424
1,000M Riverside, Va. Regl. Jail Authority 5 7/8% 7/1/2014 1,050,000 401
- ------------------ ----------------------------------------------------------------------------------------------------------

<PAGE>

2,929,125 1,119
- ------------------ ----------------------------------------------------------------------------------------------------------
Total Value of Municipal Bonds (cost $23,442,366) 97.4% 25,513,969 9,744
Other Assets, Less Liabilities 2.6 669,717 256
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $26,183,686 $10,000
================== ==========================================================================================================
</TABLE>
* Municipal Bonds which have been prerefunded are shown maturing at the
prerefunded call date.

See notes to financial statements

Statement of Assets and Liabilities
December 31, 1995

<TABLE>
<CAPTION>
- --------------------------------------------------- ------------------------------------------------------------------------
FIRST INVESTORS MULTI-STATE INSURED TAX FREE FUND
FIRST INVESTORS ------------------------------------------------------------
NEW YORK INSURED
TAX FREE FUND, INC. CONNECTICUT FLORIDA GEORGIA MARYLAND
- ----------------------------------------------------
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets
Investments in securities:
At identified cost $193,249,671 $15,710,781 $19,952,814 $2,886,666 $8,135,724
------------------------------------------------------------------------
------------------------------------------------------------------------
At Value (Note 1A) $211,903,975 $17,203,341 $22,009,654 $3,142,606 $8,881,338
Cash 312,441 49,631 94,151 92,027 7,170
Receivables:
Interest 4,796,364 350,444 344,053 64,038 227,381
Shares sold 217,219 9,060 142,781 229 587
Other assets 10,408 16 31 -- 7
--------------------------------------------------------------------------
Total Assets 217,240,407 17,612,492 22,590,670 3,298,900 9,116,483
--------------------------------------------------------------------------
Liabilities
Payables:
Dividends payable January 20, 1996 368,656 14,975 47,608 3,067 14,443
Shares redeemed 221,319 3,500 -- -- 6,655
Investment securities purchased -- -- -- 150,522 --
Accrued advisory fees 134,347 5,827 6,457 -- 1,056
Accrued expenses 101,032 5,915 8,758 582 6,050

<PAGE>

--------------------------------------------------------------------------
Total Liabilities 825,354 30,217 62,823 154,171 28,204
--------------------------------------------------------------------------
Net Assets $216,415,053 $17,582,275 $22,527,847 $3,144,729 $9,088,279
==========================================================================
Net Assets Consist of:
Capital paid in $197,746,644 $16,329,576 $20,542,601 $2,924,603 $8,448,414
Undistributed net investment income 20,945 903 4,871 2,014 3,403
Accumulated net realized loss on investments (6,840) (240,764) (76,465) (37,828) (109,152)
Net unrealized appreciation in value of investments 18,654,304 1,492,560 2,056,840 255,940 745,614
--------------------------------------------------------------------------
Total $216,415,053 $17,582,275 $22,527,847 $3,144,729 $9,088,279
==========================================================================
Shares outstanding (Note 2):
Class A 14,415,096 1,296,176 1,670,061 239,559 660,469
Class B 77,405 66,443 22,438 7,671 32,211
Net asset value and redemption price
per share--Class A $14.93 $12.90 $13.31 $12.72 $13.12
======= ======= ======= ======= ======
Maximum offering price per share--Class A* $15.93 $13.76 $14.20 $13.57 $13.99
======= ======= ======= ======= ======
Net asset value and offering price per share--Class B $14.93 $12.90 $13.31 $12.71 $13.12
======= ======= ======= ======= ======
</TABLE>

See notes to finacial statements

Statement of Assets and Liabilities
December 31, 1995

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------
NORTH
MASSACHUSETTS NEW JERSEY CAROLINA PENNSYLVANIA VIRGINIA
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets
Investments in securities:
At identified cost $20,610,028 $53,055,392 $4,613,767 $36,051,489 $23,442,366
=======================================================================
At value (Note 1A) $22,934,133 $58,808,981 $4,882,443 $39,434,062 $25,513,969
Cash 157,723 98,379 97,584 93,569 184,949
Receivables:
Interest 441,570 1,338,286 83,215 665,897 540,570
Shares sold 14,529 112,982 5,394 172,148 33,614
Other assets 644 277 -- 81 47
------------------------------------------------------------------------
Total Assets 23,548,599 60,358,905 5,068,636 40,365,757 26,273,149
------------------------------------------------------------------------
Liabilities
Payables:
Dividends payable January 20, 1996 28,087 170,913 7,998 76,242 50,749

<PAGE>

Shares redeemed 5,150 14,992 -- 28,435 17,350
Investment securities purchased -- -- -- -- --
Accrued advisory fees 9,684 29,849 -- 16,626 8,654
Accrued expenses 11,968 33,013 879 17,461 12,710
------------------------------------------------------------------------
Total Liabilities 54,889 248,767 8,877 138,764 89,463
------------------------------------------------------------------------
Net Assets $23,493,710 $60,110,138 $5,059,759 $40,226,993 $26,183,686
========================================================================
Net Assets Consist of:
Capital paid in $21,167,837 $54,350,990 $4,878,612 $36,826,829 $24,109,866
Undistributed net investment income 1,768 5,559 767 17,591 2,217
Accumulated net realized loss on investments -- -- (88,296) -- --
Net unrealized appreciation in value of investments 2,324,105 5,753,589 268,676 3,382,573 2,071,603
------------------------------------------------------------------------
Total $23,493,710 $60,110,138 $5,059,759 $40,226,993 $26,183,686
========================================================================
Shares outstanding (Note 2):
Class A 1,896,952 4,463,965 405,508 3,043,574 1,936,855
Class B 25,688 72,272 6,132 18,783 76,242
Net asset value and redemption price
per share--Class A $12.22 $13.25 $12.29 $13.14 $13.01
======= ======= ======= ======= =======
Maximum offering price per share--Class A* $13.03 $14.13 $13.11 $14.02 $13.88
======= ======= ======= ======= =======
Net asset value and offering price per share--Class B $12.21 $13.24 $12.29 $13.14 $13.00
======= ======= ======= ======= =======
*On purchases of $25,0000 or more,
the sales charge is reduced
</TABLE>

See notes to financial statements

Statement of Operations
Year Ended December 31, 1995

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
First Investors FIRST INVESTORS MULTI-STATE INSURED TAX FREE FUND
New York Insure --------------------------------------------------
TAX FREE FUND, CONNECTICUT FLORIDA GEORGIA MARYLAND
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income

<PAGE>

Interest income $13,208,031 $957,844 $1,225,122 $152,232 $476,651
----------- ---------- ---------- -------- ----------
Expenses (Notes 1 and 5):
Advisory fees 1,564,094 123,686 159,085 20,345 61,997
Distribution plan expenses-Class A 624,331 32,082 42,094 5,328 16,110
Distribution plan expenses-Class B 4,353 4,460 1,647 492 2,110
Shareholder servicing costs 157,861 15,439 15,723 3,386 9,251
Professional fees 36,306 10,749 13,256 7,840 6,078
Reports to shareholders 31,682 3,282 1,409 585 1,921
Bond insurance premiums 66,798 3,332 161 147 1,643
Custodian fees 26,309 3,802 4,531 1,255 2,531
Other expenses 65,588 5,348 6,484 1,338 2,871
----------- ---------- ---------- -------- ----------
Total expenses 2,577,322 202,180 244,390 40,716 104,512
Less: Expenses waived or assumed -- (57,720) (84,845) (34,914) (63,095)
Custodian fees paid indirectly (10,081) (3,802) (4,531) -- (2,531)
----------- ---------- ---------- -------- ----------
Expenses-net 2,567,241 140,658 155,014 5,802 38,886
----------- ---------- ---------- -------- ----------
Net investment income 10,640,790 817,186 1,070,108 146,430 437,765
----------- ---------- ---------- -------- ----------
Realized and Unrealized Gain (Loss) on
Investments (Note 4):
Net realized gain (loss) on investments 3,236,161 114,073 188,468 2,973 22,502
Net unrealized appreciation of investments 15,830,893 1,646,045 2,343,973 290,945 845,062
----------- ---------- ---------- -------- ----------
Net gain on investments 19,067,054 1,760,118 2,532,441 293,918 867,564
----------- ---------- ---------- -------- ----------
Net Increase in Net Assets Resulting from Operations $29,707,844 $2,577,304 $3,602,549 $440,348 $1,305,329
=========== ========== ========== ======== ==========
</TABLE>

Statement of Operations (Continued)
Year Ended December 31, 1995

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
FIRST INVESTORS MULTI-STATE INSURED TAX FREE FUND
- -------------------------------------------------------------------------
NORTH
MASSACHUSETTS NEW JERSEY CAROLINA PENNSYLVANIA VIRGINIA
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income
Interest income $1,362,856 $3,479,819 $239,282 $2,188,512 $1,443,421
---------- ---------- -------- ---------- ----------
Expenses (Notes 1 and 5):
Advisory fees 167,610 432,142 33,343 277,753 186,583
Distribution plan expenses-Class A 44,279 114,669 8,776 73,856 48,660
Distribution plan expenses-Class B 2,089 2,836 570 1,055 5,483
Shareholder servicing costs 18,745 37,637 4,970 26,120 21,503

<PAGE>

Professional fees 8,941 27,683 10,236 9,522 9,840
Reports to shareholders 3,948 7,764 852 5,347 4,584
Bond insurance premiums 1,118 5,214 766 985 4,736
Custodian fees 4,264 11,204 1,462 6,386 4,461
Other expenses 7,013 17,268 1,880 11,153 7,859
---------- ---------- -------- ---------- ----------
Total expenses 258,007 656,417 62,855 412,177 293,709
Less: Expenses waived or assumed (55,870) (86,428) (53,517) (92,584) (87,072)
Custodian fees paid indirectly (4,264) (4,195) -- (6,386) (4,116)
---------- ---------- -------- ---------- ----------
Expenses-net 197,873 565,794 9,338 313,207 202,521
---------- ---------- -------- ---------- ----------
Net investment income 1,164,983 2,914,025 229,944 1,875,305 1,240,900
---------- ---------- -------- ---------- ----------
Realized and Unrealized Gain (Loss) on
Investments (Note 4):
Net realized gain (loss) on investments 360,045 657,781 (4,494) 179,294 133,406
Net unrealized appreciation of investments 1,956,930 5,200,017 526,683 4,079,329 2,554,416
---------- ---------- -------- ---------- ----------
Net gain on investments 2,316,975 5,857,798 522,189 4,258,623 2,687,822
---------- ---------- -------- ---------- ----------
Net Increase in Net Assets Resulting from Operations $3,481,958 $8,771,823 $752,133 $6,133,928 $3,928,722
========== ========== ======== ========== ==========
</TABLE>

Statement of Changes in Net Assets
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
FIRST INVESTORS MULTI-STATE
FIRST INVESTORS INSURED TAX FREE FUND
NEW YORK INSURED ------------------------------
TAX FREE FUND, INC. CONNECTICUT
- ----------------------------------------------------------------------------------------------------------------------
Year Ended December 31 1995 1994 1995 1994
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets From Operations
Net investment income $ 10,640,790 $ 10,780,042 $ 817,186 $ 801,496
Net realized gain (loss) on investments 3,236,161 (2,398,261) 114,073 (313,831)
Net unrealized appreciation (depreciation)
of investments 15,830,893 (19,225,762) 1,646,045 (1,639,963)
------------ ------------ ----------- -----------
Net increase (decrease) in net assets resulting
from operations. 29,707,844 (10,843,981) 2,577,304 (1,152,298)
------------ ------------ ----------- -----------
Distributions to Shareholders from:
Net investment income--Class A (10,644,109) (10,924,339) (802,390) (801,765)
Net investment income--Class B (19,054) -- (19,148) --
Net realized gains--Class A (840,260) -- -- --
Net realized gains--Class B (4,480) -- -- --

<PAGE>
------------ ------------ ----------- ---------
Total distributions (11,507,903) (10,924,339) (821,538) (801,765)
------------ ------------ ----------- ---------
Share Transactions (a)
Class A:
Proceeds from shares sold 20,127,144 24,920,224 2,072,940 2,473,254
Value of distributions reinvested 8,499,603 8,056,192 634,983 613,310
Cost of shares redeemed (25,461,327) (29,259,279) (2,553,706) (3,486,374)
------------ ------------ ----------- -----------
3,165,420 3,717,137 154,217 (399,810)
------------ ------------ ----------- -----------
Class B:
Proceeds from shares sold 1,324,490 -- 805,158 --
Value of distributions reinvested 16,591 -- 19,148 --
Cost of shares redeemed (207,131) -- -- --
------------ ------------ ----------- -----------
1,133,950 -- 824,306 --
------------ ------------ ----------- -----------
Net increase (decrease) from share transactions 4,299,370 3,717,137 978,523 (399,810)
------------ ------------ ----------- -----------
Net increase (decrease) in net assets 22,499,311 (18,051,183) 2,734,289 (2,353,873)
Net Assets
Beginning of year 193,915,742 211,966,925 14,847,986 17,201,859
------------ ------------ ----------- -----------
End of year+ $216,415,053 $193,915,742 $17,582,275 $14,847,986
============ ============ =========== ===========
+Includes undistributed net investment income of 20,945 43,318 903 5,255
============ ============ =========== ===========
(a) Shares Issued and Redeemed

Class A:
Sold 1,396,279 1,733,745 167,960 203,067
Issued for distributions reinvested 584,026 566,477 51,005 51,022
Redeemed (1,762,820) (2,070,038) (206,220) (288,696)
------------ ------------ ----------- -----------
Net increase (decrease) in Class A shares
outstanding 217,485 230,184 12,745 (34,607)
============ ============ =========== ===========
Class B:
Sold 90,459 -- 64,921 --
Issued for distributions reinvested 1,128 -- 1,522 --
Redeemed (14,182) -- -- --
------------ ------------ ----------- -----------
Net increase in Class B shares
outstanding 77,405 -- 66,443 --
============ ============ =========== ===========
</TABLE>

Statement of Changes in Net Assets (Cont.)

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
FIRST INVESTORS MULTI-STATE INSURED TAX FREE FUND
----------------------------------------------------------------
FLORIDA GEORGIA
- ----------------------------------------------------------------------------------------------------------------------
Year Ended December 31 1995 1994 1995 1994

<PAGE>

- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets From Operations
Net investment income $1,070,108 $1,097,381 $146,430 $80,665
Net realized gain (loss) on investments 188,468 (264,933) 2,973 (40,801)
Net unrealized appreciation (depreciation)
of investments 2,343,973 (2,040,709) 290,945 (110,067)
----------- ----------- ---------- ----------
Net increase (decrease) in net assets resulting
from operations. 3,602,549 (1,208,261) 440,348 (70,203)
----------- ----------- ---------- ----------
Distributions to Shareholders from:
Net investment income--Class A (1,074,302) (1,102,831) (143,122) (79,754)
Net investment income--Class B (7,399) -- (2,344) --
Net realized gains--Class A -- -- -- --
Net realized gains--Class B -- -- -- --
----------- ----------- ---------- ----------
Total distributions (1,081,701) (1,102,831) (145,466) (79,754)
----------- ----------- ---------- ----------
Share Transactions (a)
Class A:
Proceeds from shares sold 3,558,826 4,193,910 1,042,204 927,355
Value of distributions reinvested 502,849 513,004 116,431 73,507
Cost of shares redeemed (4,103,965) (4,027,836) (466,779) (254,666)
----------- ----------- ---------- ----------
(42,290) 679,078 691,856 746,196
----------- ----------- ---------- ----------
Class B:
Proceeds from shares sold 327,260 -- 96,664 --
Value of distributions reinvested 5,044 -- 2,348 --
Cost of shares redeemed (48,025) -- (6,238) --
----------- ----------- ---------- ----------
284,279 -- 92,774 --
----------- ----------- ---------- ----------
Net increase (decrease) from share transactions 241,989 679,078 784,630 746,196
----------- ----------- ---------- ----------
Net increase (decrease) in net assets 2,762,837 (1,632,014) 1,079,512 596,239
Net Assets
Beginning of year 19,765,010 21,397,024 2,065,217 1,468,978
----------- ----------- ---------- ----------
End of year+ $22,527,847 $19,765,010 $3,144,729 $2,065,217
=========== =========== ========== ==========
+Includes undistributed net investment income of 4,871 16,464 2,014 1,050
=========== =========== ========== ==========
(a) Shares Issued and Redeemed
Class A:
Sold 279,362 337,394 86,530 80,499
Issued for distributions reinvested 39,482 42,134 9,542 6,313
Redeemed (324,510) (332,533) (38,851) (22,084)
----------- ----------- ---------- ----------
Net increase (decrease) in Class A shares
outstanding (5,666) 46,995 57,221 64,728
=========== =========== ========== ==========
Class B:
Sold 25,731 -- 7,980 --
Issued for distributions reinvested 392 -- 190 --

<PAGE>

Redeemed (3,685) -- (499) --
----------- ----------- ---------- ----------
Net increase in Class B shares
outstanding 22,438 -- 7,671 --
=========== =========== ========== ==========
</TABLE>

Statement of Changes in Net Assets (Cont.)

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
FIRST INVESTORS MULTI-STATE INSURED TAX FREE FUND
-------------------------------------------------
MARYLAND
- ------------------------------------------------------------------------------------
Year Ended December 31 1995 1994
- ------------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets From Operations
Net investment income $437,765 $359,177
Net realized gain (loss) on investments 22,502 (115,472)
Net unrealized appreciation (depreciation)
of investments 845,062 (639,993)
---------- ----------
Net increase (decrease) in net assets resulting
from operations. 1,305,329 (396,288)
---------- ----------
Distributions to Shareholders from:
Net investment income--Class A (426,969) (362,227)
Net investment income--Class B (9,709) --
Net realized gains--Class A -- --
Net realized gains--Class B -- --
---------- ----------
Total distributions (436,678) (362,227)
---------- ----------
Share Transactions (a)
Class A:
Proceeds from shares sold 1,624,609 1,928,630
Value of distributions reinvested 275,270 254,066
Cost of shares redeemed (989,316) (1,164,023)
---------- ----------
910,563 1,018,673
---------- ----------
Class B:
Proceeds from shares sold 524,692 --
Value of distributions reinvested 9,187 --
Cost of shares redeemed (128,337) --
---------- ----------
405,542 --
---------- ----------
Net increase (decrease) from share transactions 1,316,105 1,018,673
---------- ----------
Net increase (decrease) in net assets 2,184,756 260,158
Net Assets
Beginning of year 6,903,523 6,643,365
---------- ----------
End of year+ $9,088,279 $6,903,523

<PAGE>

========== ==========
+Includes undistributed net investment income of 3,403 2,316
shares issued and redeemed ========== ==========
(a)
Class A:
Sold 130,068 156,671
Issued for distributions reinvested 21,809 20,852
Redeemed (78,092) (96,175)
---------- ----------
Net increase (decrease) in Class A shares
outstanding 73,785 81,348
========== ==========
Class B:
Sold 41,606 --
Issued for distributions reinvested 718 --
Redeemed (10,113) --
---------- ----------
Net increase in Class B shares
outstanding 32,211 --
========== ==========
</TABLE>
See notes to finanacial statements

Statement of Changes in Net Assets
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
FIRST INVESTORS MULTI-STATE INSURED TAX FREE FUND
----------------------------------------------------------
MASSACHUSETTS NEW JERSEY
- ----------------------------------------------------------------------------------------------------------------
Year Ended December 31 1995 1994 1995 1994
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets From Operations
Net investment income $1,164,983 $1,198,075 $2,914,025 $3,137,659
Net realized gain (loss) on investments 360,045 (329,395) 657,781 (225,780)
Net unrealized appreciation (depreciation)
of investments 1,956,930 (2,097,875) 5,200,017 (6,767,311)
----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations. 3,481,958 (1,229,195) 8,771,823 (3,855,432)
----------- ----------- ----------- -----------
Distributions to Shareholders from:
Net investment income--Class A (1,157,985) (1,203,624) (2,918,856) (3,146,005)
Net investment income--Class B (9,593) -- (11,913) --
Net realized gains--Class A (30,240) -- (425,117) --
Net realized gains--Class B (410) -- (6,884) --
----------- ----------- ----------- -----------
Total distributions (1,198,228) (1,203,624) (3,362,770) (3,146,005)
----------- ----------- ----------- -----------
Share Transactions (a)

<PAGE>

Class A:
Proceeds from shares sold 2,470,541 2,473,916 5,310,392 7,713,722
Value of distributions reinvested 919,516 933,965 2,248,846 2,084,420
Cost of shares redeemed (3,317,029) (3,789,844) (9,176,935) (11,976,023)
----------- ----------- ----------- -----------
73,028 (381,963) (1,617,697) (2,177,881)
----------- ----------- ----------- -----------
Class B:
Proceeds from shares sold 289,235 -- 925,149 --
Value of distributions reinvested 9,486 -- 14,857 --
Cost of shares redeemed -- -- (15) --
----------- ----------- ----------- -----------
298,721 -- 939,991 --
----------- ----------- ----------- -----------
Net increase (decrease) from share transactions 371,749 (381,963) (677,706) (2,177,881)
----------- ----------- ----------- -----------
Net increase (decrease) in net assets 2,655,479 (2,814,782) 4,731,347 (9,179,318)
Net Assets
Beginning of year 20,838,231 23,653,013 55,378,791 64,558,109
----------- ----------- ----------- -----------
End of year+ $23,493,710 $20,838,231 $60,110,138 $55,378,791
=========== =========== =========== ===========

+Includes undistributed net investment income of $1,768 $4,363 $5,559 $22,303
=========== =========== =========== ===========

(a) Shares Issued and Redeemed
Class A:
Sold 210,626 214,343 415,051 601,287
Issued for distributions reinvested 78,127 81,626 174,001 166,135
Redeemed (283,611) (329,777) (718,864) (951,262)
----------- ----------- ----------- -----------
Net increase (decrease) in Class A shares
outstanding 5,142 (33,808) (129,812) (183,840)
=========== =========== =========== ===========

Class B:
Sold 24,887 -- 71,143 --
Issued for distributions reinvested 801 -- 1,130 --
Redeemed -- -- (1) --
----------- ----------- ----------- -----------
Net increase in Class B shares outstanding 25,688 -- 72,272 --
=========== =========== =========== ===========

<CAPTION>
Statement of Changes in Net Assets (Cont.)

- ----------------------------------------------------------------------------------------------------------------
FIRST INVESTORS MULTI-STATE INSURED TAX FREE FUND
----------------------------------------------------------
NORTH CAROLINA PENNSYLVANIA
- ----------------------------------------------------------------------------------------------------------------
Year Ended December 31 1995 1994 1995 1994
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

<PAGE>

Increase (Decrease) in Net Assets From Operations
Net investment income $229,944 $226,865 $1,875,305 $1,771,003
Net realized gain (loss) on investments (4,494) (83,803) 179,294 (72,097)
Net unrealized appreciation (depreciation)
of investments 526,683 (437,561) 4,079,329 (3,989,085)
---------- ---------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations. 752,133 (294,499) 6,133,928 (2,290,179)
---------- ---------- ----------- -----------
Distributions to Shareholders from:
Net investment income--Class A (227,689) (226,667) (1,862,206) (1,777,494)
Net investment income--Class B (2,522) -- (4,635) --
Net realized gains--Class A -- -- (106,537) --
Net realized gains--Class B -- -- (659) --
---------- ---------- ----------- -----------
Total distributions (230,211) (226,667) (1,974,037) (1,777,494)
---------- ---------- ----------- -----------
Share Transactions (a)
Class A:
Proceeds from shares sold 759,377 1,415,758 5,109,553 5,661,896
Value of distributions reinvested 143,540 127,189 1,181,930 1,033,699
Cost of shares redeemed (306,492) (1,032,579) (4,005,976) (4,599,995)
---------- ---------- ----------- -----------
596,425 510,368 2,285,507 2,095,600
---------- ---------- ----------- -----------
Class B:
Proceeds from shares sold 67,909 -- 234,237 --
Value of distributions reinvested 1,218 -- 5,250 --
Cost of shares redeemed -- -- -- --
---------- ---------- ----------- -----------
69,127 -- 239,487 --
---------- ---------- ----------- -----------
Net increase (decrease) from share transactions 665,552 510,368 2,524,994 2,095,600
---------- ---------- ----------- -----------
Net increase (decrease) in net assets 1,187,474 (10,798) 6,684,885 (1,972,073)
Net Assets
Beginning of year 3,872,285 3,883,083 33,542,108 35,514,181
---------- ---------- ----------- -----------
End of year+ $5,059,759 $3,872,285 $40,226,993 $33,542,108
========== ========== =========== ===========

+Includes undistributed net investment income of $767 $1,034 $17,591 $9,127
========== ========== =========== ===========

(a) Shares Issued and Redeemed
Class A:
Sold 64,567 121,402 402,916 457,976
Issued for distributions reinvested 12,164 11,292 93,037 84,890
Redeemed (26,571) (93,643) (316,221) (377,755)
---------- ---------- ----------- -----------
Net increase (decrease) in Class A shares
outstanding 50,160 39,051 179,732 165,111
========== ========== =========== ===========

Class B:
Sold 6,029 -- 18,376 --

<PAGE>

Issued for distributions reinvested 103 -- 407 --
Redeemed -- -- -- --
---------- ---------- ----------- -----------
Net increase in Class B shares outstanding 6,132 -- 18,783 --
========== ========== =========== ===========

Statement of Changes in Net Assets (Cont.)
<CAPTION>
- ----------------------------------------------------------------------------------
FIRST INVESTORS MULTI-STATE INSURED TAX FREE FUND
-------------------------------------------------
VIRGINIA
- ----------------------------------------------------------------------------------
Year Ended December 31 1995 1994
- ----------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets From Operations
Net investment income $1,240,900 $1,180,699
Net realized gain (loss) on investments 133,406 (61,681)
Net unrealized appreciation (depreciation)
of investments 2,554,416 (2,611,443)
----------- -----------
Net increase (decrease) in net assets resulting
from operations. 3,928,722 (1,492,425)
----------- -----------
Distributions to Shareholders from:
Net investment income--Class A (1,226,418) (1,175,046)
Net investment income--Class B (23,560) --
Net realized gains--Class A (68,578) --
Net realized gains--Class B (2,616) --
----------- -----------
Total distributions (1,321,172) (1,175,046)
----------- -----------
Share Transactions (a)
Class A:
Proceeds from shares sold 3,246,591 3,263,981
Value of distributions reinvested 805,092 721,894
Cost of shares redeemed (3,742,909) (3,677,279)
----------- -----------
308,774 308,596
----------- -----------
Class B:
Proceeds from shares sold 947,469 --
Value of distributions reinvested 23,492 --
Cost of shares redeemed (28,539) --
----------- -----------
942,422 --
----------- -----------
Net increase (decrease) from share transactions 1,251,196 308,596
----------- -----------
Net increase (decrease) in net assets 3,858,746 (2,358,875)
Net Assets
Beginning of year 22,324,940 24,683,815
----------- -----------

31
<PAGE>

End of year+ $26,183,686 $22,324,940
=========== ===========

+Includes undistributed net investment income of $2,217 $11,295
=========== ===========

(a) Shares Issued and Redeemed
Class A:
Sold 259,461 265,790
Issued for distributions reinvested 64,025 59,666
Redeemed (297,826) (304,592)
----------- -----------
Net increase (decrease) in Class A shares
outstanding 25,660 20,864
=========== ===========

Class B:
Sold 76,625 --
Issued for distributions reinvested 1,850 --
Redeemed (2,233) --
----------- -----------
Net increase in Class B shares outstanding 76,242 --
=========== ===========
</TABLE>

See notes to financial statements

<PAGE>

>Notes to Financial Statements
First Investors New York Insured Tax Free Fund, Inc.
First Investors Multi-State Insured Tax Free Fund
Connecticut, Florida, Georgia, Maryland, Massachusetts, New Jersey,
North Carolina, Pennsylvania and Virginia Series

1. Significant Accounting Policies--First Investors New York Insured Tax Free
Fund, Inc. and First Investors Multi-State Insured Tax Free Fund (collectively,
the "Funds") are registered under the Investment Company Act of 1940 (the "1940
Act") as diversified, open-end management investment companies. First Investors
New York Insured Tax Free Fund, Inc. ("New York Insured") consists of a single
investment series and First Investors Multi-State Insured Tax Free Fund ("Multi-
State Insured") Insured") consists of seventeen separate investment series. This
report relates to New York Insured and the nine series of Multi-State Insured
listed above (singularly and collectively, "Series"). Multi-State Insured
operates as a series fund, issuing shares of beneficial interest in each Series
and accounts separately for the assets, liabilities and operations of each
Series.

The investment objective of New York Insured is to provide a high level of
interest income which is exempt from federal income tax, New York State and New
York City personal income taxes.

The investment objective of each Series of Multi-State Insured is to achieve a
high level of interest income which is exempt from federal

<PAGE>

income tax and, for a particular Series, from state income taxes for residents
of that state.

A. Security Valuation--The municipal securities in which the Series invest 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/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
valuations. "When Issued Securities" are reflected in the assets of the Series
as of the date the securities are purchased.

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

MULTI-STATE INSURED Amount
---------------------------- ----------
CONNECTICUT Series $240,764
FLORIDA Series 76,465
GEORGIA Series. 37,828
MARYLAND Series 109,152
NORTH CAROLINA Series 88,296

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,
deferral of wash sales and post October losses.

D. Expense Allocation--Direct expenses attributable to a Series of Multi-State
Insured are charged to and paid from the assets of that Series. Indirect or
general expenses of Multi-State Insured 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.

<PAGE>

E. 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 Series' Custodian has provided credits in the
amount of $42,617 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 5. 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
1,000,000,000 shares originally authorized, New York Insured has designated
500,000,000 shares as Class A and 500,000,000 shares as Class B. Multi-State
Insured has established an unlimited number of shares of beneficial interest
for both Class A and Class B shares.

3. Concentration of Credit Risk--The Series invest in debt instruments of
municipal issuers whose ability to meet their obligations may be affected by
economic developments in a State, industry or region.

4. Security Transactions--For the year ended December 31, 1995, purchases
and sales of municipal securities were as follows:

Cost Proceeds
of of
Purchases Sales
-------------- --------------
NEW YORK INSURED $109,070,508 $111,060,012
MULTI-STATE INSURED
--------------------------
CONNECTICUT Series 5,242,420 4,203,941
FLORIDA Series 14,294,072 14,161,484
GEORGIA Series 2,007,927 1,172,739
MARYLAND Series 5,315,948 3,970,993
MASSACHUSETTS Series 9,037,600 8,774,336
NEW JERSEY Series 16,851,428 18,566,826
NORTH CAROLINA Series 3,832,775 3,235,234
PENNSYLVANIA Series 20,455,200 17,582,892
VIRGINIA Series 8,965,570 8,202,993

Notes to Financial Statements
First Investors New York Insured Tax Free Fund, Inc.
First Investors Multi-State Insured Tax Free Fund

34
<PAGE>

Connecticut, Florida, Georgia, Maryland, Massachusetts,
New Jersey, North Carolina, Pennsylvania and Virginia Series

At December 31, 1995, aggregate cost and net unrealized appreciation
(depreciation) of securities for federal income tax purposes were as follows:

<TABLE>
<CAPTION>
Gross Gross Net
Aggregate Unrealized Unrealized Unrealized
Cost Appreciation Depreciation Apppreciation
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
NEW YORK INSURED $193,256,511 $18,647,464 $ -- $18,647,464
MULTI-STATE INSURED
----------------------
CONNECTICUT Series 15,710,781 1,492,560 -- 1,492,560
FLORIDA Series 19,952,814 2,056,840 -- 2,056,840
GEORGIA Series 2,886,666 255,940 -- 255,940
MARYLAND Series 8,135,724 745,614 -- 745,614
MASSACHUSETTS Series 20,610,028 2,324,105 -- 2,324,105
NEW JERSEY Series 53,055,392 5,753,589 -- 5,753,589
NORTH CAROLINA Series. 4,613,767 268,676 -- 268,676
PENNSYLVANIA Series 36,051,489 3,382,573 -- 3,382,573
VIRGINIA Series. 23,442,366 2,071,603 -- 2,071,603
</TABLE>

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

The Investment Advisory Agreements provide as compensation to FIMCO an annual
fee, payable monthly, at the rate of .75% on the first $250 million of the
average daily net assets of New York Insured and of the average daily net assets
of each Series of the Multi-State Insured, declining by .03% on each $250
million thereafter, down to .66% on average daily net assets over $750 million.
For the year ended December 31, 1995, advisory fees of New York Insured amounted
to $1,564,094. For the same period, advisory fees for the nine Series of Multi-
State Insured included in this report amounted to $1,462,544, of which $580,204
was waived; other expenses in the amount of $24,774 were assumed by FIMCO.

For the year ended December 31, 1995, FIC, as underwriter, received $372,094 in
commissions on sales of shares of New York Insured, after allowing $66,820, to
other dealers, and $744,912 in commissions on sales of shares of the nine Series
of Multi-State Insured included in this report, after allowing $282,709 to other
dealers. Shareholder servicing costs of New York Insured and the nine Series of
Multi-State Insured

<PAGE>

consisted of $157,861 and $152,774, respectively, in transfer agent fees and out
of pocket expenses accrued to ADM. Transfer agent fees and out of pocket
expenses attributable to the Georgia and North Carolina Series of Multi-
State Insured, in the amount of $8,356, were waived by the transfer agent for
the year ended December 31, 1995.

Pursuant to a Distribution Plan adopted by the Series under Rule 12b-1 of the
1940 Act, each Series is authorized to pay FIC a fee up to .30% of the average
net assets of the Class A shares and up to 1% of the average net assets of the
Class B shares on an annualized basis each fiscal 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.

36
<PAGE>

Independent Auditor's Report

To the Shareholders and Boards of Directors/Trustees of
First Investors New York Insured Tax Free Fund, Inc. and
First Investors Multi-State Insured Tax Free Fund
Connecticut, Florida, Georgia, Maryland, Massachusetts,
New Jersey, North Carolina, Pennsylvania and Virginia Series

We have audited the accompanying statement of assets and liabilities, including
the portfolios of investments, of First Investors New York Insured Tax Free
Fund, Inc. and the nine series of First Investors Multi-State Insured Tax Free
Fund listed above 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 the
periods indicated thereon. These financial statements and financial highlights
are the responsibility of the Funds' 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 audits 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 First
Investors New York Insured Tax Free Fund, Inc. and each of the nine series of
First Investors Multi-State Insured Tax Free Fund listed above as of
December 31, 1995, and the results of their operations, changes in their net
assets and financial highlights for each of the respective periods 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)(2) 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

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

(10)(3) Opinion of Counsel

(11)a. Consent of independent accountants

b. Powers of Attorney

c. Consent of New York tax counsel

(12) Not Applicable

<PAGE>

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

(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 Post-Effective Amendment No. 6 to
Registrant's Registration Statement (File No. 2-86489) filed on
April 27, 1989.
3 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 8,144
Class B shares 64

Item 27. Indemnification

The Articles and By-laws of the Registrant do not contain any
provisions or reference to indemnification.

The Registrant's Investment Advisory Agreement provides as follows:

<PAGE>

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

The Registrant's Underwriting Agreement provides as follows:

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

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

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

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling the Registrant pursuant to the foregoing provisions, the Registrant
has been informed that, in the opinion of the Securities and

<PAGE>

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 Special Bond Fund, Inc.
First Investors Insured Tax Exempt Fund, Inc.
First Investors Tax-Exempt Money Market Fund, Inc.
First Investors U.S. Government Plus Fund
First Investors Series Fund II, Inc.

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 Insured Tax Exempt Fund, Inc.
First Investors Tax-Exempt Money Market Fund, Inc.
First Investors U.S. Government Plus Fund
First Investors Series Fund II, Inc.

<PAGE>

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

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

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

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

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

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

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

Robert Murphy Comptroller None
581 Main Street
Woodbridge, NJ 07095

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

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

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

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

<PAGE>

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

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

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.

<PAGE>

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.B11.3 Consent of New York tax counsel
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 NEW YORK
INSURED TAX FREE 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
Glenn O. Head Officer and Director

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

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

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

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

<PAGE>

*
- -------------------- 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 NEW YORK INSURED TAX FREE 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 New York Insured Tax Free 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.
SIXTH: The name and the address of the current resident agent of the
corporation in the State of Maryland are The Prentice-Hall

<PAGE>

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 NEW YORK INSURED TAX FREE FUND, INC.

SECOND: The name of the corporation is
FIRST INVESTORS NEW YORK INSURED TAX FREE 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 shares, stocks, bonds, debentures, mortgages,
trust receipts, certificates of deposit, bankers acceptances, commercial paper,
notes and other securities, obligations, contracts, certificates of interest,
choses in action and evidences of indebtedness generally of any

<PAGE>

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
transactions in 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.

FIFTH: Section 5.1. The total number of shares of all classes of
stock which the Corporation shall have authority to issue is one billion
(1,000,000,000) shares of capital stock of the par value of one cent ($0.01)
each, having an aggregate par value of $10,000,000. The Shares may be issued by
the Board of Directors in such separate and

<PAGE>

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.

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

<PAGE>

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, 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

<PAGE>

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
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

<PAGE>

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

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.

<PAGE>

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 stockholder's 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 with any person, firm or corporation to act as
manager, investment adviser, underwriter, distributor, fiscal agent, transfer
agent, dividend disbursing 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 and reacquired by the
Corporation and any or all of any increased stock that may hereafter be
authorized.

When and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding given at a stockholders' meeting
duly called for that purpose or when authorized by the written consent of the
holders of a majority of the stock issued and outstanding, to sell, lease or
exchange all of the property and assets of the Corporation including its
goodwill and its corporate franchise

<PAGE>

upon such terms and conditions and for such consideration which may be in whole
or in part shares of stock in and/or other securities of any other corporations,
as the Board of Directors shall deem expedient and for the best interest of the
Corporation.

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 to amend, alter, change
or repeal any provisions contained in these Articles of Incorporation when and
as authorized by the affirmative vote of the holders of a majority of the stock
issued and outstanding given at a stockeholders' meeting duly called for that
purpose or when authorized by the written consent of the holders of a majority
of the stock issued and outstanding and otherwise in the manner now or hereafter
prescribed by statute and all rights conferred upon stockholders herein are
granted subject to this reservation.

IN WITNESS WHEREOF, First Investors New York Insured Tax Free 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 NEW YORK INSURED
TAX FREE FUND, INC.

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

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

<PAGE>

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 New York Insured Tax Free
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 NEW YORK INSURED TAX FREE FUND, INC.

First Investors New York Insured Tax Free Fund, Inc. ("Company"), a
Maryland corporation, having its principal office in Baltimore, Maryland,
organized on July 5, 1983 hereby certifies to the State Department of
Assessments and Taxation of Maryland that:

FIRST: The Company is authorized to issue one billion (1,000,000,000)
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, five hundred million (500,000,000) 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, five hundred million (500,000,000) 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>

IN WITNESS WHEREOF, First Investors New York Insured Tax Free 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 October 20, 1994.

FIRST INVESTORS NEW YORK INSURED
TAX FREE 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 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 New York Insured Tax Free
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

DALE KAPLAN
Notary Public, State of New York
No. 31-4504204
Qualified in New York County
Commission Expires August 31, 1995
(SEAL)

- 3 -

<PAGE>

AMENDED AND RESTATED BY-LAWS

FIRST INVESTORS NEW YORK INSURED TAX FREE 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

-1-

<PAGE>

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.

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

-2-

<PAGE>

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,
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

-3-

<PAGE>

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 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

-4-

<PAGE>

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

-5-

<PAGE>

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 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

-6-

<PAGE>

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 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

-7-

<PAGE>

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 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.

-8-

<PAGE>

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

-9-

<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

-10-

<PAGE>

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 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

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<PAGE>

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.

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.

-12-

<PAGE>

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.

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,

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<PAGE>

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.

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<PAGE>

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, 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.

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<PAGE>

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 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

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<PAGE>

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 of independent counsel. Amounts paid in
settlement shall not exceed the costs, fees and expenses which would have been

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<PAGE>

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

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<PAGE>

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 other derivative
instruments or the segregation of assets in connection with such transactions.
(b) The Corporation shall not make loans, except by purchase of debt
obligations and through repurchase agreements, provided, however, that
repurchase agreements maturing in more than seven days, along with all illiquid
assets, will not exceed 15% of the Corporation's total assets (taken at current
value). However, the Corporation's Board of Directors may, on the request of
broker-dealers or other institutional investors which they deem qualified,
authorize the Corporation to loan securities to cover a borrower's short
position; PROVIDED, HOWEVER, the borrower pledges to the Corporation and agrees
to maintain at all times with the Corporation cash collateral equal to not less
than 100% of the value of the securities loaned; PROVIDED, FURTHER that such
loans will not be made if the value of all loans, repurchase agreements and
other illiquid assets is greater

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<PAGE>

than an amount equal to 15% of the Corporation's total assets.
(c) The Corporation shall not purchase the securities of any issuer (other
than obligations issued or guaranteed as to principal and interest by the
government of the United States or any agency or instrumentality thereof) if, as
a result thereof, (a) more than 5% of the Corporation's total assets (taken at
current value) would be invested in the securities of such issuer, (b) the
Corporation would hold more than 10% of any class of securities (including any
class of voting securities) of such issuer (for this purpose, all debt
obligations of an issuer maturing in less than one year are treated as a single
class of securities), or (c) more than 25% of the Corporation's total assets
(taken at current value) would be invested in the obligations of one or more
issuers having their principal business activities in the same industry;
provided, however, that the Corporation may invest more than 25% of its total
assets in the obligations of Domestic Branches of U.S. Banks.
(d) The Corporation shall not purchase the securities of other investment
companies or investment trusts, except as they may be acquired as part of a
merger, consolidation or acquisition of assets.
(e) The Corporation shall not purchase the securities of an issuer if such
purchase, at the time thereof, would cause more than 5% of the value of the
Corporation's total assets

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<PAGE>

to be invested in securities of issuers which, including predecessors, have a
record of less than three years' continuous operation.
(f) The Corporation shall not purchase or retain any securities of another
issuer if persons affiliated with the Corporation or its Investment Advisor or
management who own, individually, more than one-half of one percent of said
issuer's outstanding stock (or securities convertible into stock) own, in the
aggregate, more than five percent of said issuer's outstanding stock (or
securities convertible into stock).
(g) The Corporation shall not underwrite securities issued by other
persons except to the extend that, in connection with the disposition of its
portfolio investments, it may be deemed to be an underwriter under federal
securities laws.
(h) The Corporation shall not invest in companies for the purpose of
exercising control or management.
(i) The Corporation shall not buy or sell real estate (unless acquired as
a result of ownership of securities) or interests in oil, gas or mineral
explorations, provided, however, the Fund may invest in Municipal Instruments
secured by real estate or interests in real estate.
(j) The Corporation shall not purchase any security issued by a municipal
issuer unless it is insured by a policy

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<PAGE>

of insurance procured either by the Corporation or the issuer or underwriter of
such security.

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

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<PAGE>

(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 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

-23-

<PAGE>

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 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

-24-

<PAGE>

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 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.

-25-

<PAGE>

FIRST INVESTORS NEW YORK INSURED TAX FREE FUND, INC.
INVESTMENT ADVISORY AGREEMENT

This Agreement is made as of June 13, 1994, by and between FIRST INVESTORS
NEW YORK INSURED TAX FREE 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.

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.

<PAGE>

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.

(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.

<PAGE>

(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 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

<PAGE>

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.

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

<PAGE>

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 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

<PAGE>

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 NEW YORK INSURED
Attest: TAX FREE 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 NEW YORK INSURED TAX FREE FUND, INC.
INVESTMENT ADVISORY AGREEMENT

SCHEDULE A

Compensation pursuant to Paragraph 6 of this First Investors New York
Insured Tax Free 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

<PAGE>

UNDERWRITING AGREEMENT

BETWEEN

FIRST INVESTORS NEW YORK INSURED TAX FREE FUND, INC.

AND

FIRST INVESTORS CORPORATION

This AGREEMENT entered into the 17th day of March, 1994, by and between
FIRST INVESTORS NEW YORK INSURED TAX FREE 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

<PAGE>

reinvestment of cash distributed from capital gains or net 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 NEW YORK INSURED TAX FREE
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 NEW YORK TAX FREE FUND, INC.

CUSTODIAN AGREEMENT, made this 30th day of May, 1984, between FIRST
INVESTORS NEW YORK TAX FREE 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 least 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 held 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 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 instruments, 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.

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 or 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 certificate
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 dealers 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 name
of the issuer and the title of the securities, (b) the number of shares or the
principal amount loaned, (c) the date of the 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 the 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 certified 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 the 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
certificate.

PAYMENT OF DIVIDENDS OR DISTRIBUTIONS

1. The Fund shall furnish to the Custodian a copy of any resolution of
its Board of Directors, 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
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 on the
payment date.

2. Upon the payment date specified in such officers certificate or oral
instructions, the Custodian shall pay out of 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 inquire 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 a 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 the 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 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 a notice in writing specifying the date of such termination,
which shall be no less than 60 days after the date of 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.

MISCELLANEOUS

1. The term "officers certificate" shall mean any notice, instructions 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
said 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 security" 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 assigns; 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 communications.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective corporate officers, thereunder duly authorized and
their respective corporate seals to be hereunto affixed as of the day and year
first above written.

FIRST INVESTORS NEW YORK TAX FREE
FUND, INC.

By: /s/ Andrew J. Donohue
-------------------------------
Andrew J. Donohue, President
ATTEST:

/S/ C. Durso
- -------------------------
Concetta Durso, Secretary

IRVING TRUST COMPANY

By:/s/ Michael A. Mertz
---------------------
Michael A. Mertz
Vice President
ATTEST:

/s/ Signature Illegible
- -------------------------
Vice President

<PAGE>

APPENDIX A

I, Andrew J. Donohue, President and I, Connie Durso, Secretary of First
Investors New York Tax Free Fund, Inc., a Maryland corporation (the "Fund"), do
hereby certify that:

The following individuals serve in the following positions with the Fund
and each individual has been duly elected or appointed to each such position and
qualified therefor in conformity with the Fund's Articles of Incorporation and
By-Laws and the signatures set forth opposite their respective names are true
and correct signatures:

NAME POSITION SIGNATURE
- ---- -------- ---------

Andrew J. Donohue President /s/ Andrew J. Donohue
------------------------

David D. Grayson Vice President /s/ David D. Grayson
------------------------

Glenn O Head. Vice President /s/ Glenn O. Head
------------------------

Connie Durso Secretary /s/ C. Durso
------------------------

Nicholas Orros Treasurer /s/ Nicholas Orros
------------------------

Joseph P. Abbamont Assistant Treasurer /s/ Joseph P. Abbamont
------------------------

Sonja Weitzberg Assistant Secretary /s/ Sonja Weitzberg
------------------------

Max Gartner Authorized Signer /s/ Max Gartner
------------------------

I, Andrew J. Donohue, in my official capacity as President of First Investors
New York Tax Free Fund, Inc., hereby certify that Concetta Durso is currently
the duly elected and appointed Secretary of First Investors New York Tax Free
Fund, Inc., and that the above named individuals have been duly appointed to
each such position and that the signatures appearing opposite their names are
true and correct signatures.

/s/ Andrew J. Donohue
------------------------
Andrew J. Donohue, President
Dated: , 1984

I, Concetta Durso, Secretary of First Investors New York Tax Free Fund, Inc.,
hereby certify that the above named individuals have been duly elected and
appointed to each position and that the signature appearing opposite their names
are true and correct signatures.

<PAGE>

/s/ C. Durso
------------------------
Connie Durso, Secretary
Dated: , 1984

<PAGE>

APPENDIX B

I, Andrew J. Donohue, President, and I, Concetta Durso, Secretary of First
Investors New York Tax Free Fund, Inc., the "Fund"), do hereby certify that:

The following individuals are duly authorized to execute any certificate,
instruction, notice or other instrument or to give oral instructions on behalf
of the Fund, and the signatures set forth opposite their respective names are
their true and correct signatures:

NAME SIGNATURE
- ---- ---------

Andrew J. Donohue /s/ Andrew J. Donohue
------------------------

David D. Grayson /s/ David D. Grayson

Glenn O. Head /s/ Glenn O. Head
------------------------

Connie Durso /s/ C. Durso
------------------------

Nicholas Orros /s/ Nicholas Orros
------------------------

Joseph P. Abbamont /s/ Joseph P. Abbamont
------------------------

Sonja Weitzberg /s/ Sonja Weitzberg
------------------------

Max Gartner /s/ Max Gartner
------------------------

I, Andrew J. Donohue, in my official capacity as President of First Investors
New York Tax Free Fund, Inc., hereby certify that Concetta Durso is currently
the duly elected and appointed Secretary of First Investors New York Tax Free
Fund, Inc., and that the above named individuals have been duly authorized to
execute any certificate, instruction, notice or other instrument or to give oral
instructions on behalf of the Fund and the signatures set forth opposite their
names are true and correct signatures.

/s/ Andrew J. Donohue, President
--------------------------------
Andrew J. Donohue, President
Dated: , 1984

I, Concetta Durso, Secretary of First Investors New York Tax Free Fund, Inc.,
hereby certify that the above named individuals have been duly authorized to
execute any certificate, instruction, notice, or other instrument or to give
oral instructions on behalf of the Fund and the signatures set forth opposite
their names are true and correct signatures.

<PAGE>

/s/ C. Durso, secretary
--------------------------
Connie Durso, Secretay
Dated: , 1984

<PAGE>

SUPPLEMENT
TO
CUSTODIAN AGREEMENT

This Supplement is added to and forms a part of the Custodian Agreement
between First Investors New York Insured Tax Free Fund, Inc. (the "Fund") and
The Bank of New York, as successor-in-interest to Irving Trust Company (the
"Custodian") dated May 30, 1984 (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 New York Insured
Tax Free 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 4th of June, 1981, made by and between
FIRST INVESTORS NEW YORK TAX FREE 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.

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 NEW YORK TAX FREE FUND,
INC.

/s/ C. Durso BY: /s/Andrew J. Donohue
- ----------------------------------- --------------------------------------
Concetta Durso, Secretary Andrew J. Donohue, President
[Seal]

ATTEST: FIRST INVESTORS MANAGEMENT COMPANY, INC.

/s/ Andrew J. Donohue BY: /s/ Glenn O. Head
- ----------------------------------- ----------------------------------
Andrew J. Donohue, Secretary Glenn O. Head, Chairman
[Seal]

ATTEST: FIRST INVESTORS CORPORATION

/s/ Andrew J. Donohue BY:/s/ Glenn O. Head
- ----------------------------------- ------------------------------------
Andrew J. Donohue, Secretary Glenn O. Head, Chairman
[Seal]

ATTEST: ADMINISTRATIVE DATA MANAGEMENT CORP.

/s/ Andrew J. Donohue BY:/s/ Glenn O. Head
- ----------------------------------- --------------------------------------
Andrew J. Donohue, Secretary Glenn O. Head, Chairman
[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 New York Insured Tax Free Fund, Inc.
95 Wall Street
New York, New York 10005

We consent to the use in Post-Effective Amendment No. 16 to the
Registration Statement on Form N-1A (File No. 2-86489) of our report dated
January 31, 1996 relating to the December 31, 1995 financial statements of First
Investors New York Insured Tax Free Fund, Inc., which are included in said
Registration Statement.

/s/Tait, Weller & Baker

TAIT, WELLER & BAKER

Philadelphia, Pennsylvania
April 16, 1996

<PAGE>

First Investors New York Insured Tax Free Fund, Inc.

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS that the undersigned officer and/or director
of First Investors New York Insured Tax Free 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 New York Insured Tax Free Fund, Inc.

POWER OF 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 New York Insured Tax Free 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 New York Insured Tax Free 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 New York Insured Tax Free 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 New York Insured Tax Free 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 New York Insured Tax Free 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 New York Insured Tax Free 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 New York Insured Tax Free 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>

Hawkins, Delafield & Wood
67 Wall Street, New York 10005

April 11, 1996

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

Re: First Investors New York
Insured Tax Free Fund, Inc.
---------------------------

Gentlemen:

We hereby consent to the use of our name and the reference of our firm
in Post-Effective Amendment No. 16 to the Registration Statement on Form N-1A of
First Investors New York Insured Tax Free Fund, Inc. and the related prospectus.

Very truly yours,

/S/Hawkins, Delafield & Wood

<PAGE>

AMENDED AND RESTATED
CLASS A DISTRIBUTION PLAN
OF
FIRST INVESTORS NEW YORK INSURED TAX FREE FUND, INC.

WHEREAS, FIRST INVESTORS NEW YORK INSURED TAX FREE 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 Under-writer 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 NEW YORK INSURED TAX FREE FUND, INC.

WHEREAS, FIRST INVESTORS NEW YORK INSURED TAX FREE 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>

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 New York Insured Tax Free Fund, Inc. (Class B shares)
as of December 31, 1995.

Distribution
a b Yield
- - -----
$.619 $14.93 4.14%

<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

The following table lists the information used to calculate the standardized
average annual total return and total return for First Investors New York
Insured Tax Free Fund, Inc. (Class B shares) as December 31, 1995.

AVE. ANNUAL TOTAL
ERV P N TOTAL RETURN RETURN
--- - - ------------ ------

Life of fund: $1,091.40 $1,000.00 .97 9.46% 9.14%

<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 New York Insured Tax Free
Fund, Inc. (Class B shares) as December 31, 1995.

AVE. ANNUAL TOTAL
ERV P N TOTAL RETURN RETURN
--- - - ------------ ------

Life of fund: $1.136.60 1,000.00 .97 14.16% 13.66%

<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 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 New York Insured Tax Free
Fund, Inc. (Class A shares) as of December 31, 1995.

AVE. ANNUAL TOTAL
ERV P N TOTAL RETURN RETURN
--- - - ------------ ------

1 year: $1,154.50 $1,000.00 1.00 15.45% 15.45%

5 years: $1,453.60 $1,000.00 5.00 7.77% 45.36%

10 years: $2,141.60 $1,000.00 10.00 7.91% 114.16%

<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

TOTAL
ERV P N RETURN
--- - - ------

1/12/95 to 12/31/95 $1,136.60 $1,000.00 .97 13.66%

<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
--- - - ------

1/12/95 to 12/31/95 $1,091.40 $1,000.00 .97 9.14%

<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

AVE. ANNUAL TOTAL
ERV P N TOTAL RETURN RETURN
--- - - ------------ ------

1 year: $1,082.40 $1,000.00 1.00 8.24% 8.24%

5 years: $1,362.40 $1,000.00 5.00 6.38% 36.24%

10 years: $2.007.60 $1,000.00 10.00 7.22% 100.76%

<PAGE>

Yields for First Investor's Funds are calculated using the following formula:

2(((((a-b) - ((cd)-a))+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 New York Insured Tax Free Fund, Inc. (Class B shares) as
of December 31, 1995.

*Tax
Equivalent
a b c d e Yield Yield
- - - - - ----- ----------

$4,528 $1,374 60,965 $14.93 $.00 4.19% 7.11%

*Tax Equivalent Yields are computed assuming a maximum federal tax rate of
36% as well as the maximum rate for New York State which is 7.875%. The
formula is listed below.

Tax Equivalent Yield = Yield / ((1 - Maximum Federal Rate - Maximum State
Rate) / (Maximum Federal Rate * Maximum State Rate))

<PAGE>

Yields for First Investor's Funds are calculated using the following formula:

2(((((a-b) + ((cd)-a))+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 New York Insured Tax Free Fund, Inc. (Class A shares) as
of December 31, 1995

*Tax
Equivalent
a b c d e Yield Yield
- - - - - ----- ----------

$1,065,586 $209,998 14,339,095 $15.93 $.00 4.54% 7.70%

*Tax Equivalent Yields are computed assuming a maximum federal tax rate of
36% as well as the maximum rate for New York State which is 7.875%. The
formula is listed below.

Tax Equivalent Yield = Yield / ((1 - Maximum Federal Rate - Maximum State
Rate) / (Maximum Federal Rate * Maximum State Rate))

<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 New York Insured Tax Free Fund, Inc. (Class A
shares) as of December 31, 1995.

Distribution
a b Yield
- - -----

$.741 $15.93 4.65%

<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 New York Insured Tax Free Fund, Inc. (Class A shares)
as of December 31, 1995.

Distribution
a b Yield
- - -----

$.741 $14.93 4.96%

<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> 0000727586
<NAME> FIRST INVESTORS NEW YORK INSURED TAX FREE FUND, INC
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<NUMBER> 001
<NAME> CLASS A
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</TABLE>

<PAGE>
<ARTICLE> 6
<CIK> 0000727586
<NAME> FIRST INVESTORS NEW YORK INSURED TAX FREE FUND, INC.
<SERIES>
<NUMBER> 002
<NAME> CLASS B
<MULTIPLIER> 1000

<S> <C>
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> DEC-31-1995
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<REALIZED-GAINS-CURRENT> 10
<APPREC-INCREASE-CURRENT> 17
<NET-CHANGE-FROM-OPS> 46
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<DISTRIBUTIONS-OF-GAINS> (5)
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<NUMBER-OF-SHARES-SOLD> 90
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<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 1156
<ACCUMULATED-NII-PRIOR> 0
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<OVERDIST-NET-GAINS-PRIOR> 0
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<PER-SHARE-NII> .616
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<EXPENSE-RATIO> 2
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>