FIRST
INVESTORS
INSURED
TAX EXEMPT
FUND, INC.
SEMI-
ANNUAL
REPORT
JUNE 30, 1996
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FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
95 WALL STREET
NEW YORK, NY 10005
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A MEMBER OF THE
FIRST INVESTORS
FINANCIAL NETWORK
FITE113
Portfolio Manager's Letter
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
Dear Investor:
As 1996 began, most investors expected the U.S. economy to continue to
slow or even enter a recession. Instead, the economy accelerated
throughout the first half of the year. After growing at an annualized
rate of only .5% in the fourth quarter of 1995, the economy expanded at
a 2.2% pace during the first quarter of this year and at an estimated
3.5%-4% during the second quarter. Concern that faster growth would lead
to higher inflation contributed to a sharp rise in interest rates with
the yield on long-term U.S. Treasury bonds increasing from 5.95% to
6.87%. Despite higher interest rates the stock market continued to rally
with the broad stock market averages hitting record highs during the
second quarter.
Faster economic growth, expectations of inflation, and the failure of
Congress and the President to agree on a balanced budget plan
contributed to a 50 basis point (.5%) increase in long-term municipal
bond yields during the first half of 1996. In comparison, long-term
Treasury bond yields rose almost 1% over the same time period. The
relatively strong performance of the municipal bond market was
attributable to two factors. First, municipal bonds began the year at
attractive levels relative to taxable bonds because of concern over tax
reform. As those concerns diminished, demand for tax-exempt bonds
increased. Second, rising yields increased demand for municipal bonds as
investors took advantage of the highest tax-exempt interest rates
available since August 1995.
During the first half of 1996 the Insured Tax Exempt Fund had a total
return on a net asset value basis of -1.5% on Class A shares and -1.8%
on Class B shares. These returns are comparable to the average return
for insured municipal bond funds of -1.8% according to Lipper Analytical
Services, Inc. Management of the Fund focused on reducing interest rate
exposure to protect the Fund's investments as the market declined. The
Fund accomplished this by reducing the average maturity of its holdings.
As in the past, the Fund improved call protection where possible,
particularly by purchasing noncallable bonds.
The Fund distributed dividends from net investment income of 25.5 cents
per Class A share and 22.0 cents per Class B share. The Fund sought to
enhance current income in two ways. First, it remained fully invested,
holding less than 1% of its assets in cash. Second, the Fund took
advantage of the market's decline by selling bonds purchased at lower
yields and replacing them with higher yielding securities.
Investors who buy bond funds -- whether for income or total return --
should be aware that the value of their investment fluctuates as
interest rates change. For example, a 100 basis point (or 1%) increase
in yield on a ten year bond results in roughly a 7% decrease in that
bond's price. In each of the last four years and the first half of 1996,
ten year Treasury bond yields have moved more than 100 basis points. In
addition, while the Fund's municipal bonds are insured as to timely
payment of principal and interest, this insurance does not protect the
bonds against changes in market value. Investors should be aware of
these risks and recognize that successful investing generally requires a
long-term commitment to the market.
Looking forward, inflation shows few signs of accelerating, despite the
market's concern. In addition, the pace of economic growth is likely to
slow during the second half of the year. A combination of stable
inflation and moderate growth should provide a comfortable environment
for investors throughout the remainder of 1996.
As always, we appreciate the opportunity to serve your investment needs.
Sincerely,
/S/Clark D. Wagner
Clark D. Wagner
Chief Investment Officer
and Portfolio Manager
July 8, 1996
<TABLE>
<CAPTION>
Portfolio of Investments
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
June 30, 1996
- -------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS--99.0%
Alaska--.4%
$ 8,000M North Slope Boro, Alaska General Obligation Zero Coupon 6/30/2005 $5,020,000 $39
- -------------------------------------------------------------------------------------------------------------------------
Arizona--.8%
8,550M Arizona State Municipal Financing Program Ctfs. of Partn. 7.7% 8/1/2010 9,960,750 78
- -------------------------------------------------------------------------------------------------------------------------
California--3.1%
3,500M California Edl. Facs. Auth. (Univ. of San Francisco) 6% 10/1/2016 3,543,750 28
2,835M California Public Capital Improv. Fin. Auth. 8.1% 3/1/2018 3,019,275 24
4,220M Long Beach Finance Authority 6% 11/1/2017 4,367,700 34
10,000M San Francisco City & County Redev. Agcy. 6 3/4% 7/1/2025 10,787,500 84
5,000M San Jose Redevelopment Agency Tax Allocation 6% 8/1/2015 5,168,750 40
5,000M Santa Clara County Financing Authority 7 3/4% 11/15/2010 6,075,000 48
5,720M South Orange Cnty. Public Financing Authority 6 1/2% 8/15/2010 6,213,350 49
- -------------------------------------------------------------------------------------------------------------------------
39,175,325 307
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Colorado--.1%
1,850M Aurora Municipal Building Corp. 9.2% 12/1/1997* 1,998,000 16
- -------------------------------------------------------------------------------------------------------------------------
Connecticut--1.9%
Connecticut Special Tax Obligation Revenue:
13,500M 6 1/2% 10/1/2011 14,799,375 116
9,000M 6 1/8% 9/1/2012 9,517,500 74
- -------------------------------------------------------------------------------------------------------------------------
24,316,875 190
- -------------------------------------------------------------------------------------------------------------------------
Delaware--.6%
7,000M Delaware State Econ. Dev. Auth. Rev. Pollution Control 7.15% 7/1/2018 7,813,750 61
- -------------------------------------------------------------------------------------------------------------------------
District of Columbia--3.1%
Washington D.C. General Obligation:
10,530M Series "C" 8% 6/1/1998* 11,411,887 89
5,800M Series "A" 6 1/2% 6/1/2009 6,242,250 49
8,875M Series "A" 6% 6/1/2011 9,074,688 71
13,255M Series "E" 6% 6/1/2012 13,304,706 104
- -------------------------------------------------------------------------------------------------------------------------
40,033,531 313
- -------------------------------------------------------------------------------------------------------------------------
Florida--4.7%
2,255M Dade County Spec. Oblig. (Miami Beach Conv. Ctr.) 8 5/8% 12/1/2008 2,432,581 19
Escambia County Utilities Authority:
5,485M 6 1/4% 1/1/2012 5,862,094 46
5,360M 6 1/4% 1/1/2013 5,728,500 45
1,070M Florida Hsg. Fin. Agy. Residential Mtge. Rev. (Series 2) 8% 12/15/2016 1,107,739 9
10,000M Lakeland, Fla. Electric & Water Revenue 6% 10/1/2012 10,637,500 83
Orange County Health Facilities:
8,365M Mercy Medical 7 7/8% 12/1/2025 8,772,041 69
7,705M Sarasota, Lee Memorial, Venice 7 7/8% 12/1/2025 8,079,925 63
1,750M Palm Beach County Solid Waste Authority 8 3/8% 7/1/2010 1,867,933 15
3,000M Plant City Utility System 6% 10/1/2015 3,120,000 24
Sunrise Utilities System Revenue:
1,500M 10 1/4% 10/1/2000* 1,816,875 14
1,500M 10 3/4% 10/1/2000* 1,845,000 15
5,975M Tampa Utilities Tax & Spl. Rev. 8 1/8% 10/1/1997* 6,393,250 50
1,395M West Coast Regional Water Supply Auth. 10.4% 10/1/2010* 1,918,125 15
- -------------------------------------------------------------------------------------------------------------------------
59,581,563 467
- -------------------------------------------------------------------------------------------------------------------------
Georgia--6.9%
5,815M Fulton County Water & Sewer Revenue 6 3/8% 1/1/2014 6,323,813 50
Georgia Municipal Electric Authority Power Revenue:
2,000M 8 3/8% 1/1/1997* 2,081,120 16
14,000M 8 1/8% 1/1/1998* 14,980,000 117
5,000M 6 1/4% 1/1/2012 5,331,250 42
Metropolitan Atlanta Rapid Transit Authority:
20,450M 6 1/4% 7/1/2011 21,881,500 171
28,605M 6% 7/1/2013 29,927,981 234
7,500M 6 3/4% 7/1/2013 8,118,750 64
- -------------------------------------------------------------------------------------------------------------------------
88,644,414 694
- -------------------------------------------------------------------------------------------------------------------------
Hawaii--1.4%
Hawaii State General Obligation:
5,500M 6% 10/1/2009 5,788,750 45
6,000M 6% 10/1/2010 6,300,000 49
6,000M Honolulu General Obligation 5 3/4% 4/1/2012 6,052,500 48
- -------------------------------------------------------------------------------------------------------------------------
18,141,250 142
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Illinois--13.0%
Chicago Board of Education Lease Certificates:
5,000M 6% 1/1/2016 5,118,750 40
29,200M 6% 1/1/2020 29,273,000 229
Chicago General Obligation:
7,000M 6% 1/1/2010 7,183,750 56
16,660M 6 1/8% 1/1/2016 16,909,900 132
Chicago O'Hare International Airport Revenue:
14,570M 6 3/8% 1/1/2012 15,316,712 120
10,000M 6 3/8% 1/1/2015 10,362,500 81
Chicago Public Building Commission Building Revenue:
3,340M 7 3/4% 1/1/1999* 3,661,475 29
3,500M 8 3/4% 1/1/2007 3,644,795 29
2,500M Des Plaines Hosp. Facs. (Holy Family Hosp.) 9 1/4% 1/1/2014 2,538,475 20
2,800M Hazel Crest Hosp. Facs. Rev. (South Sub. Proj.) 9 1/8% 7/1/1997* 2,995,216 23
16,750M Illinois Development Finance Auth. Poll. Control Rev. 6 3/4% 3/1/2015 17,880,625 140
Illinois Development Finance Authority Rev. (Rockford School 205):
3,400M 6.55% 2/1/2009 3,680,500 29
5,000M 6.6% 2/1/2010 5,431,250 43
3,000M 6.65% 2/1/2011 3,262,500 26
Illinois Health Facilities Authority Revenue:
4,300M Bromenn Healthcare Project 8% 7/15/1998* 4,708,500 37
1,500M Grant Hospital 7 1/2% 12/1/1996* 1,553,115 12
1,000M Methodist Medical Center 9 5/8% 10/1/2010 1,023,760 8
2,600M SSM Health Care Project Series "B" 8% 6/1/1998* 2,827,500 22
4,000M University of Chicago Hospital 8.1% 8/1/1997* 4,252,160 33
1,750M Lansing Sales Tax Rfdg. 7.7% 12/1/1998* 1,890,000 15
Regional Transportation Authority:
4,000M 7 3/4% 6/1/2019 4,930,000 39
9,000M 6.7% 11/1/2021 10,012,500 78
Will County School District General Obligation:
3,600M 7% 12/1/2007 4,117,500 32
2,080M 7.05% 12/1/2008 2,384,200 19
1,175M 7.1% 12/1/2009 1,349,781 11
- -------------------------------------------------------------------------------------------------------------------------
166,308,464 1,303
- -------------------------------------------------------------------------------------------------------------------------
Indiana--1.6%
4,070M Delaware Cnty. Hosp. Auth. (Ball Memorial Hosp.) 6 5/8% 8/1/2006 4,380,338 34
4,205M Indiana Housing Fin. Auth. Single-Family Mtge. Rev. 7.6% 1/1/2016 4,404,737 35
2,000M Indiana State Edl. Facs. Auth. (Butler University) 8% 11/1/1998* 2,200,000 17
Indianapolis Public Improvement Bond Bank:
5,035M 6 1/2% 1/1/2012 5,488,150 43
2,500M 6 1/2% 1/1/2013 2,721,875 21
1,000M Muncie Certificates of Participation 8.1% 2/1/1998* 1,068,750 9
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20,263,850 159
- -------------------------------------------------------------------------------------------------------------------------
Louisiana--5.0%
1,030M Bossier Cty. Public Impt. Sales & Use Tax Rev. 9 1/4% 11/1/1997* 1,113,688 9
2,000M Calcasieu Parish Mem. Hosp. (Lake Charles Hosp.) 8.4% 12/1/1997* 2,155,000 17
3,000M Greater New Orleans Expressway 7.8% 11/1/1996* 3,128,760 24
Louisiana Public Facilities Authority Hospital Revenue:
2,350M Touro Infirmary 8% 6/1/1998* 2,552,688 20
2,400M Womens Hospital Foundation 8 1/8% 10/1/1998* 2,637,000 21
Louisiana Public Facilities Hlth. & Ed. Cap. Fac.:
5,845M CP Program 7.9% 12/1/2015 6,334,519 50
1,750M Our Lady of the Lake 8.2% 12/1/1998* 1,920,625 15
Louisiana State General Obligation:
8,050M 6.1% 5/1/2010 8,261,313 65
14,555M 6% 5/1/2012 14,827,906 116
14,000M 6% 5/1/2014 14,192,500 111
15,000M New Orleans Regl. Transit Auth. Sales Tax Rev. Zero Coupon 12/1/2021 3,206,250 25
3,000M Regional Transportation Authority Revenue 8% 12/1/2013 3,266,250 25
- -------------------------------------------------------------------------------------------------------------------------
63,596,499 498
- -------------------------------------------------------------------------------------------------------------------------
Maryland--.4%
5,000M Maryland Indl. Dev. Auth. 5.928% 8/26/2022 4,993,750 39
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Massachusetts--7.5%
4,750M Boston General Obligation 7 3/8% 2/1/2000* 5,242,812 41
10,025M Boston, Mass. Water & Sewer 5 3/4% 11/1/2013 10,100,188 79
2,300M Mass. Bay Transportation Authority Ctfs. of Partn. 7.65% 8/1/2000* 2,596,125 20
Mass. Bay Transportation Authority Gen. Sys. Rev.:
9,080M 5.8% 3/1/2012 9,216,200 72
10,775M 5.8% 3/1/2013 10,909,688 85
10,000M 5 7/8% 3/1/2015 10,200,000 80
Mass. Health & Educational Facilities Authority:
2,300M Berkshire Health Systems 7.6% 10/1/1998* 2,509,875 20
1,500M Carney Hospital 7 3/4% 7/1/2000* 1,693,125 13
Mass. Housing Finance Agency:
6,610M 6% 12/1/2012 6,618,262 52
1,540M 7.7% 6/1/2017 1,613,150 13
Massachusetts State General Obligation:
20,550M 6% 8/1/2009 21,783,000 170
14,200M 5 1/8% 11/1/2014 13,117,250 103
1,000M Palmer General Obligation 7.3% 3/1/2000* 1,105,000 9
- -------------------------------------------------------------------------------------------------------------------------
96,704,675 757
- -------------------------------------------------------------------------------------------------------------------------
Michigan--2.0%
10,000M Michigan State General Obligation 6 1/4% 11/1/2012 10,766,600 84
Michigan State Housing Development Auth. Single-Family Mtge. Rev.:
4,685M 7 1/2% 6/1/2015 4,848,975 38
2,500M 7.3% 12/1/2016 2,571,875 20
2,135M 7.7% 12/1/2016 2,220,400 18
4,500M Monroe Cnty. Econ. Dev. Corp. (Detroit Edison Co.) 6.95% 9/1/2022 5,225,625 41
- -------------------------------------------------------------------------------------------------------------------------
25,633,475 201
- -------------------------------------------------------------------------------------------------------------------------
Minnesota--.2%
1,315M Eden Prairie Multi-Family Housing 8% 7/1/2026 1,379,106 11
1,240M St. Paul Hsg. & Red. Auth. (Como-Lake Proj.) 7 1/2% 3/1/2026
(Defaulted) (Note 1A) 1,240,000 10
- -------------------------------------------------------------------------------------------------------------------------
2,619,106 21
- -------------------------------------------------------------------------------------------------------------------------
Mississippi--.5%
4,475M Mississippi Hosp. Equip. & Facs. Auth. Rev. (Baptist Med. Ctr.)
7.6% 5/1/2000* 5,006,406 39
1,470M Mississippi Hsg. Fin. Corp. Single-Family Mtge. Pur. Rev.
7.8% 10/15/2016 1,508,587 12
- -------------------------------------------------------------------------------------------------------------------------
6,514,993 51
- -------------------------------------------------------------------------------------------------------------------------
Missouri--2.5%
3,640M Kansas City School District Bldg. Cap. Improvement 7.9% 2/1/1998* 3,922,100 31
Missouri State Health & Educational Facilities Authority:
BJC Health System Series "A":
6,840M 6 3/4% 5/15/2010 7,652,250 60
10,175M 6 3/4% 5/15/2011 11,332,406 89
10,000M Lester Cox Zero Coupon 9/1/2016 3,025,000 24
5,245M SSM Health Care 6 1/4% 6/1/2007 5,553,144 43
- -------------------------------------------------------------------------------------------------------------------------
31,484,900 247
- -------------------------------------------------------------------------------------------------------------------------
Nevada--.2%
1,640M Nevada Housing Div. Single-Family Prog. 7.6% 10/1/2018 1,709,700 13
1,155M Reno Hosp. Rev. (St. Mary's Hospital) 7 3/4% 1/1/2000* 1,286,381 10
- -------------------------------------------------------------------------------------------------------------------------
2,996,081 23
- -------------------------------------------------------------------------------------------------------------------------
New Jersey--2.9%
Camden County Municipal Utilities Sewer Revenue:
4,300M 8 1/4% 12/1/1997* 4,633,250 36
2,820M 8 1/4% 12/1/2017 3,017,400 24
11,185M New Jersey Economic Development Auth. Market Trans. Fac. Rev.
5 7/8% 7/1/2011 11,198,981 88
New Jersey Housing & Mortgage Financing Revenue:
5,380M 7 1/2% 4/1/2015 5,561,575 44
8,400M 7 3/8% 10/1/2017 8,704,500 68
4,195M 8.1% 10/1/2017 4,404,750 34
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37,520,456 294
- -------------------------------------------------------------------------------------------------------------------------
New Mexico--.4%
1,000M Farmington Power Rev. Gen. Dev. 9 7/8% 1/1/2005* 1,307,500 10
New Mexico Mortgage Finance Authority, Single-Family Mortgage:
3,075M 8% 1/1/2017 3,178,781 25
1,095M 8 5/8% 7/1/2017 1,131,956 9
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5,618,237 44
- -------------------------------------------------------------------------------------------------------------------------
New York--6.7%
Metropolitan Transit Authority, Transit Facilities:
10,000M 8% 7/1/1998* 10,912,500 85
3,500M 7 1/2% 7/1/2000* 3,836,875 30
10,000M Series "A" 8 3/4% 11/1/1997* 10,762,500 84
5,000M Series "B" 7 3/4% 2/1/1998* 5,343,750 42
3,850M Series "A" 8% 8/1/1998* 4,191,688 33
4,500M New York State Dorm. Auth. Revs. City Univ. System 7 1/2% 7/1/2000* 5,040,000 40
New York State Dorm. Auth. Revs. State Univ. Educ. System:
2,780M 7 1/4% 5/15/2000* 3,078,850 24
11,300M 7 3/8% 5/15/2014 12,415,875 97
5,000M New York State General Obligation 6% 6/15/2011 5,112,500 40
New York State Med. Care Facs. Fin. Agcy. Rev.:
2,025M Hosp. & Nursing 7.35% 2/15/2029 2,197,125 17
10,500M St. Luke's Hosp. 7.45% 2/15/2000* 11,641,875 91
4,000M New York State Urban Dev. Corp. 7 1/2% 1/1/2000* 4,430,000 35
5,840M Suffolk Cnty., N.Y. Indl. Dev. Agcy. Southwest Sewer Sys. 6% 2/1/2008 6,197,700 49
- -------------------------------------------------------------------------------------------------------------------------
85,161,238 667
- -------------------------------------------------------------------------------------------------------------------------
North Carolina--1.5%
North Carolina Municipal Power Agency (Catawba):
8,950M 6% 1/1/2010 9,386,313 74
8,945M 6% 1/1/2011 9,347,525 73
- -------------------------------------------------------------------------------------------------------------------------
18,733,838 147
- -------------------------------------------------------------------------------------------------------------------------
North Dakota--.9%
10,000M Mercer County Poll. Ctrl. Rev. (Basin Elec. Pwr. Coop.) 7.2% 6/30/2013 11,575,000 91
- -------------------------------------------------------------------------------------------------------------------------
Ohio--.2%
1,145M Cuyahoga Cnty. Hosp. Rev. (Richmond Hts. Gen. Hosp.) 10% 12/1/2011 1,145,000 9
1,435M Ohio State Air Quality Dev. Auth. (Ohio Power Co.) 7.4% 8/1/2009 1,519,306 12
- -------------------------------------------------------------------------------------------------------------------------
2,664,306 21
- -------------------------------------------------------------------------------------------------------------------------
Oklahoma--4.5%
4,000M Central Oklahoma Transp. & Pkg. Rev. 8% 7/1/2006 4,131,560 32
Grand River Dam Authority Revenue:
9,000M 5 3/4% 6/1/2008 9,326,250 73
5,100M 5 1/2% 6/1/2010 5,112,750 40
13,660M 6 1/4% 6/1/2011 14,769,875 116
20,895M 5 1/2% 6/1/2013 20,790,525 163
1,395M Muskogee County Home Fin. Auth. Single-Family Mtge. 7.6% 12/1/2010 1,436,850 11
1,420M Tulsa County Home Fin. Auth. Single-Family Mtge. 7.35% 11/1/2010 1,492,775 12
- -------------------------------------------------------------------------------------------------------------------------
57,060,585 447
- -------------------------------------------------------------------------------------------------------------------------
Oregon--.4%
5,000M Oregon State Dept. Administrative Svcs. Ctfs. of Partn. 5 3/8% 11/1/2016 4,775,000 37
- -------------------------------------------------------------------------------------------------------------------------
Pennsylvania--3.0%
6,500M Allegheny County Hospital Develop. Auth. Rev. (Magee-Womens)
Zero Coupon 10/1/2017 1,820,000 14
1,180M Allegheny County Rev. Fin. Auth. Mtge. Single-Family Mtge.
8% 6/1/2017 1,218,350 9
5,500M Pennsylvania State Certificates of Participation 5% 7/1/2015 4,936,250 39
5,000M Pennsylvania State General Obligation 6 3/4% 11/15/2013 5,475,000 43
5,000M Pennsylvania State Turnpike Commission Turnpike Revenue
5 1/2% 12/1/2012 4,925,000 39
9,050M Pittsburgh Water & Sewer Authority 6 1/2% 9/1/2013 9,841,875 77
1,000M Sewickely Valley Hosp. Auth. (Sewickely Vy. Hosp.) 7 1/2% 10/1/1999* 1,105,000 9
Westmoreland County Municipal Authority Municipal Services Revenue:
10,800M Zero Coupon 8/15/2018 2,889,000 23
8,880M Zero Coupon 8/15/2019 2,231,100 17
5,880M Zero Coupon 8/15/2020 1,396,500 11
5,880M Zero Coupon 8/15/2021 1,315,650 10
5,000M Zero Coupon 8/15/2022 1,050,000 8
- -------------------------------------------------------------------------------------------------------------------------
38,203,725 299
- -------------------------------------------------------------------------------------------------------------------------
Puerto Rico--1.6%
Puerto Rico Commonwealth Highway & Transportation Authority Revenue:
4,585M 6 1/4% 7/1/2013 4,951,800 39
2,500M 6 1/4% 7/1/2015 2,681,250 21
4,000M 5% 7/1/2016 3,660,000 29
10,000M Puerto Rico General Obligations 5% 7/1/2021 8,987,500 70
- -------------------------------------------------------------------------------------------------------------------------
20,280,550 159
- -------------------------------------------------------------------------------------------------------------------------
Rhode Island--.4%
Rhode Island Housing & Mortgage Finance Corp.:
1,000M 8 3/8% 10/1/2013 1,038,750 8
1,500M 8 3/8% 10/1/2016 1,558,125 12
2,500M 8 3/8% 4/1/2019 2,596,875 21
- -------------------------------------------------------------------------------------------------------------------------
5,193,750 41
- -------------------------------------------------------------------------------------------------------------------------
South Dakota--.4%
4,485M South Dakota Health & Edl. Facs. Auth. (McKennan Hosp.) 7 5/8% 7/1/2014 4,927,894 39
- -------------------------------------------------------------------------------------------------------------------------
Texas--12.7%
Austin, Texas Utilities System Revenue:
Capital Appreciation:
30,465M Zero Coupon 5/15/2018 8,225,550 65
29,410M Zero Coupon 5/15/2019 7,499,550 59
5,120M Series "A" 7.8% 11/15/1998* 5,625,600 44
4,280M Series "B" 7.8% 11/15/2012 4,659,850 37
3,000M 8 5U8% 5/15/2002* 3,555,000 28
16,000M 6% 11/15/2013 16,640,000 130
5,000M Bexar County, Texas Health Facs. (Baptist Memorial) 6 3/4% 8/15/2019 5,443,750 43
10,000M Brazos River Auth., Houston Light & Power Proj. 8.1% 5/1/2019 10,775,000 84
3,490M Brownsville Utility Systems Revenue 6 1/4% 9/1/2011 3,716,850 29
9,215M Coastal Water Auth. Water Conveyance System 8 1/8% 12/15/1997* 9,744,863 76
Harris County Toll Road Senior Lien:
3,355M Series "B" 6 5/8% 8/15/1997* 3,518,556 28
8,375M Series "A" 6 1/2% 8/15/2002* 9,202,031 72
11,065M Series "A" 6 1/2% 8/15/2012 12,143,838 95
7,305M Series "A" 6 1/2% 8/15/2013 7,998,975 63
Houston Water Conveyance System Certificates of Participation:
2,250M 6 1/4% 12/15/2012 2,407,500 19
4,705M 6 1/4% 12/15/2013 5,022,587 39
4,350M 6 1/4% 12/15/2014 4,627,312 36
5,860M 6 1/4% 12/15/2015 6,204,275 49
2,750M Kerrville Electric System Rev. 8 3/8% 11/1/1997* 2,956,250 23
4,720M North Cent. Texas Hlth. Fac. Dev. Corp. (Presbyt. "A" & "B")
8 7/8% 12/1/1997* 5,121,200 40
1,500M Northeast Hospital Auth. Rev. (Northeast Med. Ctr. Hosp.) 8 1/8% 7/1/1998* 1,638,750 13
Rio Grande Valley Hlth. Fac. Dev. Corp. (Valley Baptist Med. Ctr.):
3,910M 8% 8/1/1998* 4,276,563 34
5,300M 6.4% 8/1/2012 5,525,250 43
San Antonio Electric & Gas Revenue:
3,000M 8% 2/1/1998* 3,232,500 25
1,850M 10 1/2% 2/1/1998* 2,060,438 16
1,800M Texas Health Facs. Dev. Corp. (Fort Worth Med. Ctr.) 8 1/8% 6/1/1998* 1,962,000 15
5,000M Texas Public Fin. Auth. 6.2% 2/1/2005 5,337,500 42
2,700M Texas Public Ppty. Fin. Corp. Rev. (Mental Health & Retardation)
7 7/8% 1/1/1998 2,845,125 22
- -------------------------------------------------------------------------------------------------------------------------
161,966,663 1,269
- -------------------------------------------------------------------------------------------------------------------------
Utah--1.1%
Intermountain Power Agency (Utah Power Supply):
4,000M Series C, 8 3/8% 7/1/1997* 4,249,880 33
2,500M Series D, 8 3/8% 7/1/2012 2,657,450 21
2,000M Provo, Utah Electric System Revenue 10 3/8% 9/15/2015 2,760,000 22
Salt Lake County Water Conservancy District Revenue:
3,800M Zero Coupon 10/1/2011 1,572,250 12
3,800M Zero Coupon 10/1/2012 1,467,750 11
3,760M Zero Coupon 10/1/2013 1,358,300 11
- -------------------------------------------------------------------------------------------------------------------------
14,065,630 110
- -------------------------------------------------------------------------------------------------------------------------
Virginia--.9%
11,000M Hanover County Indl. Dev. Auth. (Mem. Regl. Med. Ctr. Proj.)
6 3/8% 8/15/2018 11,783,750 92
- -------------------------------------------------------------------------------------------------------------------------
Washington--2.9%
2,710M Benton County Public Utilities District #001 11 5/8% 11/1/1997* 2,970,837 23
5,000M Tacoma Electric System Revenue 8% 1/1/1998* 5,368,750 42
Washington Public Power Supply System:
5,000M Project No. 2 - 7 3/8% 7/1/2000* 5,562,500 44
4,960M Project No. 2 - 7 3/8% 1/1/2001* 5,549,000 43
934M Project Nos. 4 & 5 - 8 1/2% 7/1/2017 (Defaulted) (Note 1A) 934,080 7
9,000M Washington State General Obligation 6.4% 6/1/2017 9,740,340 76
2,500M Washington State Hlth. & Educ. Facs. (Mason Med. Ctr.) 8% 7/1/2015 2,635,000 21
3,665M Washington State Hsg. Fin. Comm. Single-Family Mtge. 7.7% 7/1/2016* 3,797,856 30
- -------------------------------------------------------------------------------------------------------------------------
36,558,363 286
- -------------------------------------------------------------------------------------------------------------------------
West Virginia--.1%
1,050M West Virginia State Hosp. Fin. Auth. (Monongalia Hosp.) 8 1/2% 7/1/1997* 1,096,662 9
- -------------------------------------------------------------------------------------------------------------------------
Wisconsin--2.5%
5,000M Superior, Wisconsin Ltd. Oblig. Rev. (Midwest Energy) 6.9% 8/1/2021 5,718,750 45
Wisconsin Housing & Economic Development Authority:
1,435M 7 1/2% 9/1/2017 1,469,081 11
4,145M 7.6% 9/1/2017 4,290,075 34
13,940M 7 3/4% 9/1/2017 14,497,600 113
1,545M Wisconsin Municipal Insurance Comm. Rev. 8.7% 4/1/2007 1,620,859 13
Wisconsin State Health & Educational Facilities Authority Revenue:
2,000M Hospital Sisters Services Inc. 7 5/8% 11/15/1998* 2,190,000 17
1,500M Novus Health Group 8% 6/1/1998* 1,653,750 13
- -------------------------------------------------------------------------------------------------------------------------
31,440,115 246
- -------------------------------------------------------------------------------------------------------------------------
Total Value of Municipal Bonds (cost $1,192,300,685) 1,264,427,013 9,904
- -------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- -------------------------------------------------------------------------------------------------------------------------
SHORT-TERM TAX EXEMPT INVESTMENTS--.4%
Colorado--.2%
$ 2,200M Moffat County Pollution Control Rev. Adjustable Rate Note 3.6%** $2,200,000 $17
- -------------------------------------------------------------------------------------------------------------------------
Florida--.2%
2,800M Hillsborough County Indl. Dev. Auth. Adjustable Rate Note 3.6%** 2,800,000 22
- -------------------------------------------------------------------------------------------------------------------------
Total Value of Short-Term Tax Exempt Investments (cost $5,000,000) 5,000,000 39
- -------------------------------------------------------------------------------------------------------------------------
Total Value of Municipal Investments (cost $1,197,300,685) 99.4% 1,269,427,013 9,943
Other Assets, Less Liabilities .6 7,308,280 57
- -------------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $1,276,735,293 $10,000
=========================================================================================================================
* Municipal Bonds which have been prerefunded are shown maturing at the prerefunded call date.
** Interest rates on Adjustable Rate Notes are determined and reset daily by the issuer. Interest rate shown is the
rate in effect at June 30, 1996.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
June 30, 1996
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments in securities, at value (identified cost $1,197,300,685)
(Note 1A) $1,269,427,013
Cash 1,816,224
Receivables:
Interest $23,682,443
Investment securities sold 330,000
Capital shares sold 199,333 24,211,776
--------------
Other assets 81,733
--------------
Total Assets 1,295,536,746
Liabilities
Payables:
Investment securities purchased 10,539,400
Dividend payable July 10, 1996 5,408,073
Capital shares redeemed 1,738,358
Accrued advisory fee 735,011
Accrued expenses 380,611
--------------
Total Liabilities 18,801,453
--------------
Net Assets (Note 4):
Class A (127,913,042 shares outstanding) 1,274,193,738
Class B (255,169 shares outstanding) 2,541,555 $1,276,735,293
-------------- ==============
Net Assets Consist of:
Capital paid in $1,220,714,835
Undistributed net investment income 148,670
Accumulated net realized loss on investment transactions (16,254,540)
Net unrealized appreciation in value of investments 72,126,328
--------------
Total $1,276,735,293
==============
Net asset value and redemption price per share--Class A $9.96
======
Maximum offering price per share--Class A ($9.96/.9375)* $10.62
======
Net asset value and offering price per share--Class B $9.96
======
* On purchases of $25,000 or more, the sales charge is reduced.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
Six Months Ended June 30, 1996
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income
Interest income $40,594,537
Expenses (Notes 1 and 3):
Advisory fee $4,567,872
Distribution plan expenses-Class A 1,960,172
Distribution plan expenses-Class B 11,699
Shareholder servicing costs 484,184
Bond insurance premiums 128,765
Professional fees 55,722
Custodian fees 53,683
Reports and notices to shareholders 50,122
Other expenses 152,996
------------
Total expenses 7,465,215
Less: Custodian fees paid indirectly 36,200
------------
Net expenses 7,429,015
------------
Net investment income 33,165,522
Realized and Unrealized Gain (Loss) on Investments (Note 2):
Net realized loss on investments (2,378,178)
Net unrealized depreciation of investments (51,775,743)
------------
Net loss on investments (54,153,921)
------------
Net Decrease in Net Assets Resulting from Operations $(20,988,399)
============
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
- --------------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended
June 30, 1996 December 31, 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income $33,165,522 $70,942,841
Net realized gain (loss) on investments (2,378,178) 8,136,087
Net unrealized appreciation (depreciation) of investments (51,775,743) 122,110,841
-------------- --------------
Net increase (decrease) in net assets resulting from operations (20,988,399) 201,189,769
-------------- --------------
Dividends to Shareholders from:
Net investment income--Class A (33,197,917) (71,159,718)
Net investment income--Class B (51,418) (44,535)
-------------- --------------
Total dividends (33,249,335) (71,204,253)
-------------- --------------
Capital Share Transactions (a)
Class A:
Proceeds from shares sold 24,695,272 68,618,192
Value of dividends reinvested 21,558,436 55,351,361
Cost of shares redeemed (90,665,838) (182,664,583)
-------------- --------------
(44,412,130) (58,695,030)
-------------- --------------
Class B:
Proceeds from shares sold 972,709 2,088,764
Value of dividends reinvested 34,676 34,823
Cost of shares redeemed (393,408) (179,527)
-------------- --------------
613,977 1,944,060
-------------- --------------
Net decrease from capital share transactions (43,798,153) (56,750,970)
-------------- --------------
Net increase (decrease) in net assets (98,035,887) 73,234,546
Net Assets
Beginning of period 1,374,771,180 1,301,536,634
-------------- --------------
End of period (including undistributed net investment income of
$148,670 and $232,483, respectively) $1,276,735,293 $1,374,771,180
============== ==============
(a)Capital Shares Issued and Redeemed
Class A:
Sold 2,443,423 6,907,266
Issued for dividends reinvested 2,132,459 5,532,051
Redeemed (8,994,091) (18,333,002)
-------------- --------------
Net decrease in Class A shares outstanding (4,418,209) (5,893,685)
============== ==============
Class B:
Sold 96,931 209,525
Issued for dividends reinvested 3,435 3,441
Redeemed (39,861) (18,302)
-------------- --------------
Net increase in Class B shares outstanding 60,505 194,664
============== ==============
See notes to financial statements
</TABLE>
Notes to Financial Statements
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
1. Significant Accounting Policies -- The Fund is registered under the
Investment Company Act of 1940 (the "1940 Act") as a diversified, open-
end management investment company. The investment objective of the Fund
is to seek to provide a high level of interest income which is exempt
from federal income tax.
A. Security Valuation -- The municipal bonds in which the Fund invests
are traded primarily in the over-the-counter markets. Such securities
are valued daily at their fair value on the basis of valuations provided
by a pricing service approved by the Board of Directors. The pricing
service considers security type, rating, market condition and yield
data, as well as market quotations and prices provided by market makers.
"When Issued Securities" are reflected in the assets of the Fund as of
the date the securities are purchased.
The Fund's municipal bonds are insured as to payment of principal and
interest by the issuer or under insurance policies written by
independent insurance companies. It is the intention of the Fund to
retain any insured securities which are in default or in significant
risk of default and to place a value on the defaulted securities equal
to the value of similar securities which are not in default.
B. Federal Income Taxes -- It is the policy of the Fund to continue to
qualify as a regulated investment company, which can distribute exempt-
interest dividends, by complying with the provisions available to
certain investment companies, as defined in the Internal Revenue Code,
and to make distributions of income and net realized capital gains (in
excess of any available capital loss carryovers), sufficient to relieve
it from all, or substantially all, federal income taxes.
At June 30, 1996, the Fund had a capital loss carryover of $13,869,892
expiring in the year 2002.
C. Distributions to Shareholders -- Dividends from net investment income
are declared daily and paid monthly. Distributions from net realized
capital gains are normally declared and paid annually. Income dividends
and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments
for capital loss carryforwards and post October losses.
D. Security Transactions and Investment Income -- Security transactions
are accounted for on the date the securities are purchased or sold. Cost
is determined, and gains and losses are based, on the identified cost
basis for both financial statement and federal income tax purposes.
Interest income is earned from settlement date and recorded on the
accrual basis. Estimated expenses are accrued daily. The Fund's
Custodian has provided credits in the amount of $36,200 against
custodian charges based on the uninvested cash balances of the Fund.
2. Securities Transactions -- For the six months ended June 30, 1996,
purchases and sales of investment securities, other than United States
Government obligations and short-term notes, aggregated $174,671,992 and
$224,519,154, respectively.
At June 30, 1996, the cost of investments for federal income tax
purposes was $1,197,304,105. Accumulated net unrealized appreciation on
investments was $72,122,908, consisting of $73,261,352 gross unrealized
appreciation and $1,138,444 gross unrealized depreciation.
3. Advisory Fee and Other Transactions With Affiliates -- Certain
officers and directors of the Fund are officers and directors of its
investment adviser, First Investors Management Company, Inc. ("FIMCO"),
its underwriter, First Investors Corporation ("FIC") and/or its transfer
agent, Administrative Data Management Corp. ("ADM"). Officers and
directors of the Fund received no remuneration from the Fund for serving
in such capacity. Their remuneration (together with certain other
expenses of the Fund) is paid by FIMCO or FIC.
The Investment Advisory Agreement provides as compensation to FIMCO an
annual fee, payable monthly, at the rate of .75% of the first $250
million of the Fund's average daily net assets, declining by .03% on
each $250 million thereafter, down to .66% on average daily net assets
over $750 million.
Pursuant to certain state regulations, FIMCO has agreed to reimburse the
Fund if and to the extent that the Fund's aggregate operating expenses,
including the advisory fee but generally excluding interest, bond
insurance premiums, taxes, brokerage commissions and extraordinary
expenses, exceed any limitation on expenses applicable to the Fund in
those states (unless waivers of such limitation have been obtained). The
amount of any such reimbursement is limited to the amount of the yearly
advisory fee. For the six months ended June 30, 1996, no reimbursement
was required pursuant to these provisions.
For the six months ended June 30, 1996, FIC, as underwriter, received
$487,281 in commissions, after allowing $28,910 to other dealers.
Shareholder servicing costs included $392,998 in transfer agent fees
paid to ADM.
Pursuant to a Distribution Plan adopted under Rule 12b-1 of the 1940
Act, the Fund is authorized to pay FIC a fee equal to .30% of the
average net assets of the Class A shares and 1% of the average net
assets of the Class B shares on an annualized basis each year, payable
monthly. The fee consists of a distribution fee and a service fee. The
service fee is paid for the ongoing servicing of clients who are
shareholders of the Fund.
4. Capital -- The Fund sells two classes of shares, Class A and Class B,
each with a public offering price that reflects different sales charges
and expense levels. Class A shares are sold with an initial sales charge
of up to 6.25% of the amount invested and together with the Class B
shares are subject to 12b-1 fees as described in Note 3. Class B shares
are sold without an initial sales charge, but are generally subject to a
contingent deferred sales charge which declines in steps from 4% to 0%
during a six-year period. Class B shares automatically convert into
Class A shares after eight years. Realized and unrealized gains or
losses, investment income and expenses (other than 12b-1 fees and
certain other class expenses) are allocated daily to each class of
shares based upon the relative proportion of net assets of each class.
Of the 500,000,000 shares originally authorized, the Fund has designated
300,000,000 shares as Class A and 200,000,000 shares as Class B.
<TABLE>
<CAPTION>
Financial Highlights
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
The following table sets forth the per share operating performance for a share
of capital stock outstanding, total return, ratios to average net
assets and other supplemental data for each period indicated.
- ------------------------------------------------------------------------------------------------------------------------
Class A Class B
---------------------------------------------------------- -----------------
1/1/96 Year Ended December 31 1/1/96 1/12/95*
to ----------------------------------------------- to to
6/30/96 1995 1994 1993 1992 1991 6/30/96 12/31/95
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Data
Net Asset Value, Beginning of Period $10.37 $9.42 $10.56 $10.32 $10.22 $9.92 $10.37 $9.48
------ ------ ------ ------ ------ ------ ------ ------
Income from Investment Operations
Net investment income .25 .52 .56 .60 .65 .69 .22 .44
Net realized and unrealized gain
(loss) on investments (.40) .96 (1.15) .40 .15 .30 (.41) .89
------ ------ ------ ------ ------ ------ ------ ------
Total from Investment Operations (.15) 1.48 (.59) 1.00 .80 .99 (.19) 1.33
------ ------ ------ ------ ------ ------ ------ ------
Less Distributions from:
Net investment income .26 .53 .55 .61 .65 .69 .22 .44
Net realized gains -- -- -- .15 .05 -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Total Distributions .26 .53 .55 .76 .70 .69 .22 .44
------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of Period $9.96 $10.37 $9.42 $10.56 $10.32 $10.22 $9.96 $10.37
====== ====== ====== ====== ====== ====== ====== ======
Total Return(%)+ (1.50) 16.01 (5.61) 9.88 8.05 10.26 (1.83) 14.27
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $1,274 $1,373 $1,302 $1,507 $1,363 $1,208 $3 $2
Ratio to Average Net Assets:(%)
Expenses 1.13(a) 1.14 1.18 1.15 1.16 1.13 1.90(a) 1.88(a)
Net Investment Income 5.04(a) 5.26 5.64 5.69 6.32 6.82 4.27(a) 4.52(a)
Portfolio Turnover Rate (%) 13 37 57 58 52 34 13 37
* Date shares first offered
+ Calculated without sales charges
(a) Annualized
See notes to financial statements
</TABLE>
Independent Auditor's Report
To the Shareholders and Board of Directors of
First Investors Insured Tax Exempt Fund, Inc.
We have audited the accompanying statement of assets and liabilities of
First Investors Insured Tax Exempt Fund, Inc., including the portfolio
of investments, as of June 30, 1996, and the related statement of
operations for the six months then ended, the statement of changes in
net assets for the six months ended June 30, 1996 and the year ended
December 31, 1995 and financial highlights for each of the periods
presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.
Our procedures included confirmation of securities owned as of June 30, 1996,
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 Insured Tax Exempt Fund, Inc. at
June 30, 1996, and the results of its operations, changes in its net
assets and financial highlights for each of the respective periods
presented, in conformity with generally accepted accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
July 31, 1996
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
Directors
- ----------------------------------
James J. Coy
Roger L. Grayson
Glenn O. Head
Kathryn S. Head
Rex R. Reed
Herbert Rubinstein
James M. Srygley
John T. Sullivan
Robert F. Wentworth
Officers
- -----------------------------------
Glenn O. Head
President
Concetta Durso
Vice President and Secretary
Clark D. Wagner
Vice President
Joseph I. Benedek
Treasurer
Carol Lerner Brown
Assistant Secretary
Gregory R. Kingston
Assistant Treasurer
Mark S. Spencer
Assistant Treasurer
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
Shareholder Information
- -----------------------------------
Investment Adviser
First Investors
Management Company, Inc.
95 Wall Street
New York, NY 10005
Underwriter
First Investors Corporation
95 Wall Street
New York, NY 10005
Custodian
The Bank of New York
48 Wall Street
New York, NY 10286
Transfer Agent
Administrative Data
Management Corp.
581 Main Street
Woodbridge, NJ 07095-1198
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, DC 20036
Auditors
Tait, Weller & Baker
Two Penn Center Plaza
Philadelphia, PA 19102
It is the Fund's practice to mail only one copy of its annual and
semi-annual reports to any address at which more than one shareholder
with the same last name has indicated that mail is to be delivered.
Additional copies of the reports will be mailed if requested by any
shareholder in writing or by calling 800-423-4026. The Fund will ensure
that separate reports are sent to any shareholder who subsequently
changes his or her mailing address.
This report is authorized for distribution only to existing
shareholders, and, if given to prospective shareholders, must be
accompanied or preceded by the Fund's prospectus.
