FIRST
INVESTORS
INSURED
TAX EXEMPT
FUND, INC.
SEMI-
ANNUAL
REPORT
JUNE 30, 1997
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"FIRST INVESTORS" appear.
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NEED SERVICE?
If you have questions about your account...or would like information
regarding other products or services...please contact your representative
or call our Shareholder Services Department at...
(800) 423-4026
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Our business is...putting investors first
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FITE113
Portfolio Manager's Letter
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
Dear Investor:
We are pleased to present the semi-annual report for First Investors
Insured Tax Exempt Fund, Inc. for the six months ended June 30, 1997.
During the period, the Fund declared dividends from net investment
income of 25.2 cents per share on Class A shares and 21.6 cents per
share on Class B shares. For the same period, the Fund's return on a net
asset value basis was 2.4% on Class A shares and 2.1% on Class B shares.
These returns are comparable to the average return for insured municipal
bond funds of 2.4% according to Lipper Analytical Services, Inc.
The first half of 1997 ended with an ideal economy: sustained, moderate
growth with little inflation. Early in the year it appeared that the
economy might be growing too fast as gross domestic product expanded at
a 4.9% annual rate during the first quarter. Concerned by the economy's
strength, the Federal Reserve raised short-term interest rates in March
for the first time in over two years as an "insurance policy" in case
faster growth led to higher inflation. The Federal Reserve's action
subsequently appeared to be unnecessary as the economy slowed down
significantly in the second quarter and consumer price inflation in fact
decelerated to an annual rate of less than 2.5%.
Although both the bond and stock markets suffered setbacks at times
during the first six months of the year, the combination of moderate
growth and low inflation ultimately provided a positive environment for
investors. The markets were also buoyed by an agreement between the
President and Congress to eliminate the Federal budget deficit over the
next five years. Lastly, the markets benefited from substantial demand
for both stocks and bonds throughout the first half of 1997.
Like most of the financial markets, the municipal bond market was
characterized by strong demand from investors throughout the first half
of the year. Despite issuance of close to $94 billion, the market rarely
had trouble distributing supply due to demand from individuals,
insurance companies and non-traditional buyers of municipal bonds. The
strength of this demand is best indicated by the fact that, during the
first six months of 1997, long-term municipal bond prices rose while
long-term Treasury bond prices fell. As a result, tax exempt bonds
provided after-tax returns that significantly surpassed those on taxable
bonds for most investors.
Interest rates moved higher during the first quarter. The Fund took
advantage of higher rates by selling some of its lowest yielding
securities, replacing them with higher yielding bonds. As the market
rallied during the second quarter, interest rates fell to year-to-date
lows in June. The Fund kept pace on a total return basis with other
insured municipal bond funds due to its substantial holdings of non-
callable bonds, while providing above average current yield.
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 Treasury bond results in roughly a 7% decrease in
that bond's price. In each of the last five years, 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, the 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.
The outlook for the financial markets continues to be positive. The
economy is growing moderately, inflation is subdued and the Federal
Reserve is unlikely to tolerate unsustainably fast economic growth.
Demand for financial assets is likely to remain strong both here and
overseas. While the sizable recent returns in some markets are not
likely to continue, the factors which might cause a sustained downturn
are not readily apparent. Despite this optimistic outlook, investors
should keep in mind that a diversified portfolio provides the best
insurance against unexpected changes in the financial markets.
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 28, 1997
<TABLE>
<CAPTION>
Portfolio of Investments
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
June 30, 1997
- ----------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL BONDS--98.6%
Alaska--.5%
$ 8,000M North Slope Boro, Alaska General Obligation Zero
Coupon 6/30/2005 $ 5,360,000 $ 45
- ----------------------------------------------------------------------------------------------------------------------
Arizona--.9%
8,550M Arizona State Municipal Financing Program Ctfs. of Partn.
7.7% 8/1/2010 10,356,188 87
- ----------------------------------------------------------------------------------------------------------------------
California--3.4%
2,775M California Public Capital Improv. Fin. Auth. 8.1% 3/1/2018 2,883,724 24
4,750M California State Public Works Board Lease Rev. Dept. of
Corrections 5% 12/1/2019 4,447,188 37
4,220M Long Beach Finance Authority 6% 11/1/2017 4,504,850 38
10,000M San Francisco City & County Redev. Agcy. 6 3/4% 7/1/2025 11,037,500 93
5,000M San Jose Redevelopment Agency Tax Allocation 6% 8/1/2015 5,375,000 45
5,000M Santa Clara County Financing Authority 7 3/4% 11/15/2010 6,256,250 52
5,520M South Orange County Public Financing Authority 6 1/2% 8/15/2010 6,265,200 53
- ----------------------------------------------------------------------------------------------------------------------
40,769,712 342
- ----------------------------------------------------------------------------------------------------------------------
Colorado--.2%
1,850M Aurora Municipal Building Corp. 9.2% 12/1/1997* 1,908,719 16
- ----------------------------------------------------------------------------------------------------------------------
Connecticut--2.1%
Connecticut Special Tax Obligation Revenue:
13,500M 6 1/2% 10/1/2011 15,373,125 129
9,000M 6 1/8% 9/1/2012 9,877,500 83
- ----------------------------------------------------------------------------------------------------------------------
25,250,625 212
- ----------------------------------------------------------------------------------------------------------------------
Delaware--.6%
7,000M Delaware State Econ. Dev. Auth. Rev. Pollution Control 7.15%
7/1/2018 7,691,250 64
- ----------------------------------------------------------------------------------------------------------------------
District of Columbia--2.6%
Washington D.C. General Obligation:
10,530M Series "C" 8% 6/1/1998* 11,119,364 93
5,800M Series "A" 6 1/2% 6/1/2009 6,397,748 54
13,255M Series "E" 6% 6/1/2012 13,648,806 114
- ----------------------------------------------------------------------------------------------------------------------
31,165,918 261
- ----------------------------------------------------------------------------------------------------------------------
Florida--3.6%
2,255M Dade County Spec. Oblig. (Miami Beach Conv. Ctr.) 8 5/8%
12/1/1997* 2,343,080 20
Escambia County Utilities Authority:
5,485M 6 1/4% 1/1/2012 6,067,781 51
5,360M 6 1/4% 1/1/2013 5,936,200 50
1,070M Florida Hsg. Fin. Agy. Residential Mtge. Rev. (Series 2) 8%
12/15/2016 1,098,794 9
10,000M Lakeland, Florida Electric & Water Revenue 6% 10/1/2012 10,850,000 90
4,500M Orlando Regional Healthcare 6 1/4% 10/1/2021 5,000,625 42
Sunrise Utilities System Revenue:
1,500M 10 1/4% 10/1/2000* 1,762,500 15
1,500M 10 3/4% 10/1/2000* 1,785,000 15
5,975M Tampa Utilities Tax & Spl. Rev. 8 1/8% 10/1/1997* 6,156,162 52
1,395M West Coast Regional Water Supply Auth. 10.4% 10/1/2010* 1,907,663 16
- ----------------------------------------------------------------------------------------------------------------------
42,907,805 360
- ----------------------------------------------------------------------------------------------------------------------
Georgia--7.9%
6,315M Fulton County Water & Sewer Revenue 6 3/8% 1/1/2014 7,064,906 59
Georgia Municipal Electric Authority Power Revenue:
14,000M 8 1/8% 1/1/1998* 14,547,960 122
5,000M 6 1/4% 1/1/2012 5,481,250 46
5,000M 7 1/4% 1/1/2024 6,175,000 52
Metropolitan Atlanta Rapid Transit Authority:
7,500M 6 3/4% 7/1/2004* 8,512,500 71
20,450M 6 1/4% 7/1/2011 22,469,438 189
28,605M 6% 7/1/2013 30,571,594 256
- ----------------------------------------------------------------------------------------------------------------------
94,822,648 795
- ----------------------------------------------------------------------------------------------------------------------
Hawaii--1.6%
Hawaii State General Obligation:
5,500M 6% 10/1/2009 5,940,935 50
6,000M 6% 10/1/2010 6,448,800 54
6,000M Honolulu General Obligation 5 3/4% 4/1/2012 6,267,000 52
- ----------------------------------------------------------------------------------------------------------------------
18,656,735 156
- ----------------------------------------------------------------------------------------------------------------------
Illinois--12.8%
Chicago Board of Education Lease Certificates:
5,000M 6% 1/1/2016 5,312,500 45
33,200M 6% 1/1/2020 35,067,500 294
Chicago General Obligation:
7,000M 6% 1/1/2010 7,446,250 62
16,660M 6 1/8% 1/1/2016 17,409,700 146
Chicago O'Hare International Airport Revenue:
14,570M 6 3/8% 1/1/2012 15,699,175 132
10,000M 6 3/8% 1/1/2015 10,712,500 90
3,340M Chicago Public Building Commission Building Revenue 7 3/4%
1/1/1999* 3,573,800 30
2,500M Des Plaines Hosp. Facs. (Holy Family Hosp.) 9 1/4% 1/1/2014 2,519,700 21
16,750M Illinois Development Finance Auth. Poll. Control Rev. 6 3/4%
3/1/2015 18,362,188 154
Illinois Development Finance Authority Rev. (Rockford School 205):
3,400M 6.55% 2/1/2009 3,820,750 32
5,000M 6.6% 2/1/2010 5,631,250 47
3,000M 6.65% 2/1/2011 3,397,500 28
Illinois Health Facilities Authority Revenue:
4,300M Bromenn Healthcare Project 8% 7/15/1998* 4,563,375 38
1,000M Methodist Medical Center 9 5/8% 10/1/2010 1,014,100 9
2,600M SSM Health Care Project Series "B" 8% 6/1/1998* 2,745,522 23
1,750M Lansing Sales Tax Rfdg. 7.7% 12/1/1998* 1,835,312 15
4,000M Regional Transportation Authority 7 3/4% 6/1/2019 5,160,000 43
Will County School District General Obligation:
3,600M 7% 12/1/2007 4,207,500 35
2,080M 7.05% 12/1/2008 2,444,000 21
1,175M 7.1% 12/1/2009 1,387,969 12
- ----------------------------------------------------------------------------------------------------------------------
152,310,591 1,277
- ----------------------------------------------------------------------------------------------------------------------
Indiana--1.0%
4,070M Delaware County Hosp. Auth. (Ball Memorial Hosp.) 6 5/8% 8/1/2006 4,405,775 37
4,205M Indiana Housing Fin. Auth. Single-Family Mtge. Rev. 7.6% 1/1/2016 4,420,505 37
2,000M Indiana State Edl. Facs. Auth. (Butler University) 8% 11/1/1998* 2,137,500 18
1,000M Muncie Certificates of Participation 8.1% 2/1/1998* 1,033,720 9
- ----------------------------------------------------------------------------------------------------------------------
11,997,500 101
- ----------------------------------------------------------------------------------------------------------------------
Louisiana--5.2%
1,030M Bossier County Public Impt. Sales & Use Tax Rev. 9 1/4% 11/1/1997* 1,063,187 9
2,000M Calcasieu Parish Mem. Hosp. (Lake Charles Hosp.) 8.4% 12/1/1997* 2,076,300 17
Louisiana Public Facilities Authority Hospital Revenue:
2,350M Touro Infirmary 8% 6/1/1998* 2,481,530 21
2,400M Womens Hospital Foundation 8 1/8% 10/1/1998* 2,559,000 21
Louisiana Public Facilities Hlth. & Ed. Cap. Fac.:
5,770M CP Program 7.9% 12/1/2015 6,137,838 51
1,750M Our Lady of the Lake 8.2% 12/1/1998* 1,870,312 16
Louisiana State General Obligation:
8,050M 6.1% 5/1/2010 8,574,457 72
14,555M 6% 5/1/2012 15,264,556 128
14,000M 6% 5/1/2014 14,682,500 124
15,000M New Orleans Regional Transit Auth. Sales Tax Rev. Zero
Coupon 12/1/2021 3,618,750 30
3,000M Regional Transportation Authority Revenue 8% 12/1/2013 3,202,500 27
- ----------------------------------------------------------------------------------------------------------------------
61,530,930 516
- ----------------------------------------------------------------------------------------------------------------------
Massachusetts--8.5%
4,750M Boston General Obligation 7 3/8% 2/1/2000* 5,177,500 43
10,025M Boston, Mass. Water & Sewer 5 3/4% 11/1/2013 10,563,844 89
2,300M Mass. Bay Transportation Authority Ctfs. of Partn. 7.65% 8/1/2000* 2,555,875 21
Mass. Bay Transportation Authority Gen. Sys. Rev.:
9,080M 5.8% 3/1/2012 9,604,460 81
10,775M 5.8% 3/1/2013 11,366,009 95
10,000M 5 7/8% 3/1/2015 10,558,800 89
Mass. Health & Educational Facilities Authority:
2,300M Berkshire Health Systems 7.6% 10/1/1998* 2,440,875 21
1,500M Carney Hospital 7 3/4% 7/1/2000* 1,666,875 14
Mass. Housing Finance Agency:
6,610M 6% 12/1/2012 6,808,300 57
1,540M 7.7% 6/1/2017 1,607,375 13
Mass. State General Obligation:
20,550M 6% 8/1/2009 22,356,140 187
15,605M 5 1/8% 11/1/2014 15,158,697 127
1,000M Palmer General Obligation 7.3% 3/1/2000* 1,092,500 9
- ----------------------------------------------------------------------------------------------------------------------
100,957,250 846
- ----------------------------------------------------------------------------------------------------------------------
Michigan--2.2%
10,000M Michigan State General Obligation 6 1/4% 11/1/2012 11,110,100 93
Michigan State Housing Development Auth. Single-Family Mtge. Rev.:
4,685M 7 1/2% 6/1/2015 4,884,113 41
2,500M 7.3% 12/1/2016 2,600,000 22
2,135M 7.7% 12/1/2016 2,220,400 19
4,500M Monroe County Econ. Dev. Corp. (Detroit Edison Co.) 6.95% 9/1/2022 5,394,375 45
- ----------------------------------------------------------------------------------------------------------------------
26,208,988 220
- ----------------------------------------------------------------------------------------------------------------------
Minnesota--.6%
1,295M Eden Prairie Multi-Family Housing 8% 7/1/2026 1,364,606 12
1,240M St. Paul Hsg. & Red. Auth. (Como-Lake Proj.) 7 1/2% 3/1/2026
(Defaulted) (Note 1A) 1,240,000 10
4,795M University of Minnesota Series "A" 5 3/4% 7/1/2017 4,980,806 42
- ----------------------------------------------------------------------------------------------------------------------
7,585,412 64
- ----------------------------------------------------------------------------------------------------------------------
Mississippi--.5%
4,475M Mississippi Hosp. Equip. & Facs. Auth. Rev. (Baptist Med. Ctr.)
7.6% 5/1/2000* 4,939,281 41
1,255M Mississippi Hsg. Fin. Corp. Single-Family Mtge. Rev. 7.8%
10/15/2016 1,289,199 11
- ----------------------------------------------------------------------------------------------------------------------
6,228,480 52
- ----------------------------------------------------------------------------------------------------------------------
Missouri--2.7%
3,640M Kansas City School District Bldg. Cap. Improvement 7.9% 2/1/1998* 3,796,410 32
Missouri State Health & Educational Facilities Authority:
BJC Health System Series "A":
6,840M 6 3/4% 5/15/2010 7,831,800 66
10,175M 6 3/4% 5/15/2011 11,675,813 98
10,000M Lester Cox Zero Coupon 9/1/2016 3,362,500 28
5,245M SSM Health Care 6 1/4% 6/1/2007 5,638,375 47
- ----------------------------------------------------------------------------------------------------------------------
32,304,898 271
- ----------------------------------------------------------------------------------------------------------------------
Nevada--.2%
1,585M Nevada Housing Div. Single-Family Prog. 7.6% 10/1/2018 1,658,306 14
1,120M Reno Hosp. Rev. (St. Mary's Hospital) 7 3/4% 1/1/2000* 1,229,200 10
- ----------------------------------------------------------------------------------------------------------------------
2,887,506 24
- ----------------------------------------------------------------------------------------------------------------------
New Jersey--2.2%
Camden County Municipal Utilities Sewer Revenue:
4,300M 8 1/4% 12/1/1997* 4,463,271 37
2,820M 8 1/4% 12/1/2017 2,924,340 25
New Jersey Housing & Mortgage Financing Revenue:
5,380M 7 1/2% 4/1/2015 5,682,625 48
8,400M 7 3/8% 10/1/2017 8,736,000 72
4,195M 8.1% 10/1/2017 4,366,366 37
- ----------------------------------------------------------------------------------------------------------------------
26,172,602 219
- ----------------------------------------------------------------------------------------------------------------------
New Mexico--.5%
1,000M Farmington Power Rev. Gen. Dev. 9 7/8% 7/1/2005* 1,316,250 11
New Mexico Mortgage Finance Authority, Single-Family Mortgage:
3,075M 8% 1/1/2017 3,163,406 26
1,010M 8 5/8% 7/1/2017 1,039,038 9
- ----------------------------------------------------------------------------------------------------------------------
5,518,694 46
- ----------------------------------------------------------------------------------------------------------------------
New York--9.6%
Metropolitan Transit Authority, Transit Facilities:
10,000M 8% 7/1/1998* 10,597,600 89
3,500M 7 1/2% 7/1/2000* 3,836,875 32
New York City General Obligation:
10,000M Series "A" 8 3/4% 11/1/1997* 10,309,600 86
5,000M Series "B" 7 3/4% 2/1/1998* 5,183,200 43
3,850M Series "A" 8% 8/1/1998* 4,065,562 34
22,250M New York City Municipal Water Finance Auth. Rev. 6% 6/15/2021 23,640,625 198
4,500M New York State Dorm. Auth. Revs. City Univ. System 7 1/2% 7/1/2000* 4,972,500 42
New York State Dorm. Auth. Revs. State Univ. System:
2,780M 7 1/4% 5/15/2000* 3,047,575 26
11,300M 7 3/8% 5/15/2014 12,345,250 105
5,000M New York State General Obligation 6% 6/15/2011 5,261,200 44
6,500M New York State Housing Finance Agency Rev. 5 7/8% 11/1/2010 6,719,375 56
New York State Med. Care Facs. Fin. Agcy. Rev.:
2,005M Hosp. & Nursing 7.35% 2/15/2029 2,152,868 18
10,500M St. Luke's Hosp. 7.45% 2/15/2000* 11,497,500 96
4,000M New York State Urban Dev. Corp. 7 1/2% 1/1/2000* 4,370,000 37
5,840M Suffolk County, N.Y. Indl. Dev. Agcy. Southwest Sewer Sys.
6% 2/1/2008 6,321,800 53
- ----------------------------------------------------------------------------------------------------------------------
114,321,530 959
- ----------------------------------------------------------------------------------------------------------------------
North Carolina--1.6%
North Carolina Municipal Power Agency (Catawba):
8,950M 6% 1/1/2010 9,598,875 81
8,945M 6% 1/1/2011 9,582,331 80
- ----------------------------------------------------------------------------------------------------------------------
19,181,206 161
- ----------------------------------------------------------------------------------------------------------------------
North Dakota--1.0%
10,500M Mercer County Poll. Ctrl. Rev. (Basin Elec. Pwr. Coop.) 7.2%
6/30/2013 12,573,750 105
- ----------------------------------------------------------------------------------------------------------------------
Ohio--.1%
1,435M Ohio State Air Quality Dev. Auth. (Ohio Power Co.) 7.4% 8/1/2009 1,515,719 13
- ----------------------------------------------------------------------------------------------------------------------
Oklahoma--2.2%
Grand River Dam Authority Revenue:
9,000M 5 3/4% 6/1/2008 9,618,750 80
13,000M 6 1/4% 6/1/2011 14,365,000 120
1,100M Muskogee County Home Fin. Auth. Single-Family Mtge.
7.6% 12/1/2010 1,141,250 10
1,420M Tulsa County Home Fin. Auth. Single-Family Mtge. 7.35% 11/1/2010 1,499,875 13
- ----------------------------------------------------------------------------------------------------------------------
26,624,875 223
- ----------------------------------------------------------------------------------------------------------------------
Pennsylvania--1.8%
1,080M Allegheny County Rev. Fin. Auth. Mtge. Single-Family Mtge.
8% 6/1/2017 1,113,750 9
5,000M Pennsylvania State General Obligation 6 3/4% 11/15/2013 5,572,300 47
12,050M Pittsburgh Water & Sewer Authority 6 1/2% 9/1/2013 13,586,375 114
1,000M Sewickely Valley Hosp. Auth. (Sewickely Vy. Hosp.) 7 1/2%
10/1/1999* 1,085,000 9
- ----------------------------------------------------------------------------------------------------------------------
21,357,425 179
- ----------------------------------------------------------------------------------------------------------------------
Puerto Rico--1.7%
Puerto Rico Commonwealth Highway & Transportation Auth. Revenue:
4,510M 6 1/4% 7/1/2013 5,023,012 42
4,250M 6 1/4% 7/1/2015 4,744,063 40
5,000M 6% 7/1/2018 5,443,750 46
5,000M Puerto Rico Electric Power Authority Revenue 5 1/4% 7/1/2015 4,931,250 41
- ----------------------------------------------------------------------------------------------------------------------
20,142,075 169
- ----------------------------------------------------------------------------------------------------------------------
Rhode Island--.3%
Rhode Island Housing & Mortgage Finance Corp.:
1,000M 8 3/8% 10/1/2013 1,030,320 9
1,500M 8 3/8% 10/1/2016 1,545,480 13
1,545M 8 3/8% 4/1/2019 1,591,844 13
- ----------------------------------------------------------------------------------------------------------------------
4,167,644 35
- ----------------------------------------------------------------------------------------------------------------------
South Dakota--.4%
4,485M South Dakota Health & Edl. Facs. Auth. (McKennan Hosp.)
7 5/8% 7/1/2014 4,843,800 41
- ----------------------------------------------------------------------------------------------------------------------
Texas--13.2%
Austin, Texas Utilities System Revenue:
5,120M Series "A" 7.8% 11/15/1998* 5,465,600 46
4,280M Series "B" 7.8% 11/15/1998* 4,568,900 38
3,000M 8 5/8% 5/15/2002* 3,525,000 30
16,000M 6% 11/15/2013 17,180,000 144
30,465M Zero Coupon 5/15/2018 9,367,988 79
29,410M Zero Coupon 5/15/2019 8,565,663 72
5,000M Bexar County, Texas Health Facs. (Baptist Memorial) 6 3/4%
8/15/2004* 5,550,000 47
10,000M Brazos River Auth., Houston Light & Power Proj. 8.1% 5/1/2019 10,502,900 88
9,215M Coastal Water Auth. Water Conveyance System 8 1/8% 12/15/1997* 9,392,297 79
Harris County Toll Road Senior Lien:
8,375M Series "A" 6 1/2% 8/15/2002* 9,243,906 78
11,065M Series "A" 6 1/2% 8/15/2012 12,457,862 104
7,305M Series "A" 6 1/2% 8/15/2013 8,220,974 69
Houston Water Conveyance System Certificates of Participation:
2,250M 6 1/4% 12/15/2012 2,480,625 21
4,705M 6 1/4% 12/15/2013 5,181,380 43
4,350M 6 1/4% 12/15/2014 4,779,563 40
5,860M 6 1/4% 12/15/2015 6,424,025 54
2,750M Kerrville Electric System Rev. 8 3/8% 11/1/1997* 2,844,930 24
North Central Texas Hlth. Fac. Dev. Corp. (Presbyterian Healthcare):
1,000M Series "A" 8 7/8% 12/1/1997* 1,040,280 9
3,720M Series "B" 8 7/8% 12/1/1997* 3,869,842 32
1,500M Northeast Hospital Auth. Rev. (Northeast Med. Ctr. Hosp.)
8 1/8% 7/1/1998* 1,590,705 13
Rio Grande Valley Hlth. Fac. Dev. Corp. (Valley Baptist Med. Ctr.):
3,910M 8% 8/1/1998* 4,145,538 35
5,300M 6.4% 8/1/2012 5,611,375 47
San Antonio Electric & Gas Revenue:
3,000M 8% 2/1/1998* 3,128,820 26
1,850M 10 1/2% 2/1/1998* 1,955,043 16
1,800M Texas Health Facs. Dev. Corp. (Fort Worth Med. Ctr.)
8 1/8% 6/1/1998* 1,902,744 16
5,000M Texas Public Fin. Auth. 6.2% 2/1/2005 5,425,000 45
2,700M Texas Public Ppty. Fin. Corp. Rev. (Mental Health & Retardation)
7 7/8% 1/1/1998* 2,752,569 23
- ----------------------------------------------------------------------------------------------------------------------
157,173,529 1,318
- ----------------------------------------------------------------------------------------------------------------------
Utah--.7%
2,000M Provo, Utah Electric System Revenue 10 3/8% 9/15/2015 2,852,500 24
Salt Lake County Water Conservancy District Revenue:
3,800M Zero Coupon 10/1/2011 1,762,250 15
3,800M Zero Coupon 10/1/2012 1,610,250 14
3,760M Zero Coupon 10/1/2013 1,485,200 12
- ----------------------------------------------------------------------------------------------------------------------
7,710,200 65
- ----------------------------------------------------------------------------------------------------------------------
Virginia--1.0%
11,000M Hanover County Indl. Dev. Auth. (Mem. Regl. Med. Ctr. Proj.)
6 3/8% 8/15/2018 12,196,250 102
- ----------------------------------------------------------------------------------------------------------------------
Washington--2.5%
2,545M Benton County Public Utilties District #001 11 5/8% 11/1/1997* 2,608,752 22
5,000M Tacoma Electric System Revenue 8% 1/1/1998* 5,198,500 44
Washington Public Power Supply System:
5,000M Project No. 2 - 7 3/8% 7/1/2000* 5,500,000 46
4,960M Project No. 2 - 7 3/8% 1/1/2001* 5,505,600 46
934M Project Nos. 4 & 5 - 8 1/2% 7/1/2017 (Defaulted) (Note 1A) 934,080 8
5,000M Washington State General Obligation 6.4% 6/1/2017 5,611,600 47
2,500M Washington State Hlth. & Educ. Facs. (Mason Med. Ctr.) 8% 7/1/2015 2,598,250 22
2,205M Washington State Hsg. Fin. Comm. Single-Family Mtge. 7.7% 7/1/2016 2,306,981 19
- ----------------------------------------------------------------------------------------------------------------------
30,263,763 254
- ----------------------------------------------------------------------------------------------------------------------
Wisconsin--2.7%
6,000M Superior, Wisconsin Limited Obligation Rev. (Midwest Energy)
6.9% 8/1/2021 7,080,000 59
Wisconsin Housing & Economic Development Authority:
1,435M 7 1/2% 9/1/2017 1,494,194 13
4,145M 7.6% 9/1/2017 4,331,525 36
12,895M 7 3/4% 9/1/2017 13,507,513 113
1,545M Wisconsin Municipal Insurance Comm. Rev. 8.7% 4/1/2007 1,592,400 13
Wisconsin State Health & Educational Facilities Authority Revenue:
2,000M Hospital Sisters Services Inc. 7 5/8% 11/15/1998* 2,130,000 18
1,500M Novus Health Group 8% 6/1/1998* 1,606,875 14
- ----------------------------------------------------------------------------------------------------------------------
31,742,507 266
- ----------------------------------------------------------------------------------------------------------------------
Total Value of Municipal Bonds (cost $1,089,440,678) 1,176,406,724 9,864
- ----------------------------------------------------------------------------------------------------------------------
SHORT-TERM TAX EXEMPT INVESTMENTS--.0%
Virginia
100M Lynchburg Indl. Dev. Auth. Hosp. Facs. Rev. Adjustable Rate Note
(4.2%)** (cost $100,000) 100,000 1
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C>
Total Value of Municipal Investments (cost $1,089,540,678) 98.6% 1,176,506,724 9,865
Other Assets, Less Liabilities 1.4 16,180,112 135
- ----------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $1,192,686,836 $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 weekly by the issuer. Interest rate shown is the
rate in effect at June 30, 1997.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
June 30, 1997
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments in securities, at value (identified cost $1,089,540,678)
(Note 1A) $1,176,506,724
Cash 1,555,404
Receivables:
Interest $ 21,569,867
Investment securities sold 780,000
Capital shares sold 109,555 22,459,422
--------------
Other assets 81,733
--------------
Total Assets 1,200,603,283
Liabilities
Payables:
Dividend payable 4,970,926
Capital shares redeemed 1,875,292
Investment securities purchased 100,300
Accrued advisory fee 698,491
Accrued expenses 271,438
--------------
Total Liabilities 7,916,447
--------------
Net Assets (Note 4):
Class A (117,467,080 shares outstanding) 1,189,369,499
Class B (327,681 shares outstanding) 3,317,337 $1,192,686,836
-------------- ==============
Net Assets Consist of:
Capital paid in $1,116,330,331
Undistributed net investment income 832,854
Accumulated net realized loss on investment transactions (11,442,395)
Net unrealized appreciation in value of investments 86,966,046
--------------
Total $1,192,686,836
==============
Net asset value and redemption price per share--Class A $10.13
======
Maximum offering price per share--Class A ($10.13/.9375)* $10.81
======
Net asset value and offering price per share--Class B (Note 4) $10.12
======
* 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, 1997
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income
Interest income $37,637,502
Expenses (Notes 1 and 3):
Advisory fee $ 4,235,364
Distribution plan expenses--Class A 1,757,447
Distribution plan expenses--Class B 16,148
Shareholder servicing costs 570,979
Bond insurance premiums 108,619
Custodian fees 63,991
Professional fees 50,986
Reports and notices to shareholders 33,824
Other expenses 199,154
------------
Total expenses 7,036,512
Less: Custodian fees paid indirectly 21,570
------------
Net expenses 7,014,942
--------------
Net investment income 30,622,560
Realized and Unrealized Gain (Loss) on Investments (Note 2):
Net realized gain on investments 2,954,808
Net unrealized depreciation of investments (4,876,404)
------------
Net loss on investments (1,921,596)
--------------
Net Increase in Net Assets Resulting from Operations $28,700,964
==============
See notes to financial statements
</TABLE>
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<TABLE>
<CAPTION>
Statement of Changes in Net Assets
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
- -------------------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended
June 30, 1997 December 31, 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income $ 30,622,560 $ 65,345,832
Net realized gain (loss) on investments 2,954,808 (520,841)
Net unrealized depreciation of investments (4,876,404) (32,059,622)
-------------- --------------
Net increase in net assets resulting from operations 28,700,964 32,765,369
-------------- --------------
Dividends to Shareholders
Net investment income--Class A (30,321,224) (64,864,256)
Net investment income--Class B (69,313) (113,228)
-------------- --------------
Total dividends (30,390,537) (64,977,484)
-------------- --------------
Capital Share Transactions (a)
Class A:
Proceeds from shares sold 12,333,755 41,005,690
Value of dividends reinvested 19,207,385 50,176,505
Cost of shares redeemed (93,091,873) (179,154,717)
-------------- --------------
(61,550,733) (87,972,522)
-------------- --------------
Class B:
Proceeds from shares sold 500,986 1,664,703
Value of dividends reinvested 42,834 87,336
Cost of shares redeemed (270,351) (684,909)
-------------- --------------
273,469 1,067,130
-------------- --------------
Net decrease from capital share transactions (61,277,264) (86,905,392)
-------------- --------------
Net decrease in net assets (62,966,837) (119,117,507)
Net Assets
Beginning of period 1,255,653,673 1,374,771,180
-------------- --------------
End of period (including undistributed net investment income of
$832,854 and $600,831, respectively) $1,192,686,836 $1,255,653,673
============== ==============
(a)Capital Shares Issued and Redeemed
Class A:
Sold 1,192,942 4,066,223
Issued for dividends reinvested 1,940,277 4,977,355
Redeemed (9,244,705) (17,796,263)
-------------- --------------
Net decrease in Class A shares outstanding (6,111,486) (8,752,685)
============== ==============
Class B:
Sold 49,790 166,049
Issued for dividends reinvested 4,262 8,669
Redeemed (26,893) (68,860)
-------------- --------------
Net increase in Class B shares outstanding 27,159 105,858
============== ==============
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. The Fund
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 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,
1997, the Fund had capital loss carryovers of $14,393,783 of which
$13,869,892 expires in 2002 and $523,891 expires in 2004.
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 deferral of wash sales.
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 $21,570 against
custodian charges based on the uninvested cash balances of the Fund.
E. Use of Estimates -- The preparation of the financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expense during the
reporting period. Actual results could differ from those estimates.
2. Securities Transactions -- For the six months ended June 30, 1997,
purchases and sales of investment securities, other than short-term
notes, aggregated $40,797,479 and $106,121,673, respectively.
At June 30, 1997, the cost of investments for federal income tax purposes
was $1,089,540,678. Accumulated net unrealized appreciation on
investments was $86,966,046, consisting entirely of gross unrealized
appreciation.
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.
For the six months ended June 30, 1997, FIC, as underwriter, received
$222,499 in commissions, after allowing $21,804 to other dealers.
Shareholder servicing costs included $462,821 in transfer agent fees
paid to ADM.
Pursuant to Distribution Plans 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 distri-bution 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 distribution plan fees as described in Note 3.
Class B shares are sold without an initial sales charge, but are
generally subject to a contingent deferred sales charge which declines
in steps from 4% to 0% over a six-year period. Class B shares
automatically convert into Class A shares after eight years. Realized
and unrealized gains or losses, investment income and expenses (other
than distribution plan fees) 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
-------------------------------------------------- --------------------------
1/1/97 Year Ended December 31 1/1/97
to ---------------------------------------- to
6/30/97 1996 1995 1994 1993 1992 6/30/97 1996 1995*
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Data
Net Asset Value, Beginning of Period $10.14 $10.37 $ 9.42 $10.56 $10.32 $10.22 $10.13 $10.37 $ 9.48
------ ------ ------ ------ ------ ------ ------ ------ ------
Income from Investment Operations
Net investment income .25 .51 .52 .56 .60 .65 .22 .44 .44
Net realized and unrealized gain (loss)
on investments (.01) (.23) .96 (1.15) .40 .15 (.01) (.24) .89
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment Operations .24 .28 1.48 (.59) 1.00 .80 .21 .20 1.33
------ ------ ------ ------ ------ ------ ------ ------ ------
Less Distributions from:
Net investment income .25 .51 .53 .55 .61 .65 .22 .44 .44
Net realized gains -- -- -- -- .15 .05 -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions .25 .51 .53 .55 .76 .70 .22 .44 .44
------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of Period $10.13 $10.14 $10.37 $ 9.42 $10.56 $10.32 $10.12 $10.13 $10.37
====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return (%)+ 2.43 2.81 16.01 (5.61) 9.88 8.05 2.07 2.03 14.27
Ratios/Supplemental Data
Net Assets, End of Period (in millions) $1,189 $1,253 $1,373 $1,302 $1,507 $1,363 $3 $3 $2
Ratio to Average Net Assets: (%)
Expenses 1.16(a) 1.14 1.14 1.18 1.15 1.16 1.87(a) 1.83 1.88(a)
Net Investment Income 5.04(a) 5.06 5.25 5.64 5.69 6.32 4.33(a) 4.37 4.45(a)
Portfolio Turnover Rate (%) 3 21 37 57 58 52 3 21 37
* For the period 1/12/95 (date Class B shares first offered) to 12/31/95
+ 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, 1997, 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, 1997 and the year ended
December 31, 1996 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, 1997, 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, 1997, 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, 1997
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
Directors
James J. Coy (Emeritus)
Roger L. Grayson
Glenn O. Head
Kathryn S. Head
Rex R. Reed
Herbert Rubinstein
Nancy S. Schaenen
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
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.
