FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
95 WALL STREET
NEW YORK, NY 10005
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FIRST
INVESTORS
INSURED
TAX EXEMPT
FUND, INC.
SEMI-
ANNUAL
REPORT
JUNE 30, 1998
Chief Investment Officer's Market Overview 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, 1998.
Although both the bond and stock markets suffered setbacks at times
during the first six months of the year, the combination of moderate
growth, low inflation, and respectable corporate earnings reports helped
provide a positive environment for investors in most types of funds.
The U.S. economy remained strong for the first half of 1998, with
sustained, moderate growth and low levels of inflation and unemployment.
Inflation remained low, as the Consumer Price Index rose just 1.7% for
the twelve months ended June 30. The unemployment rate continued to be
low, at 4.5% as of June 30, 1998. Consumer confidence remained high,
encouraged by the robust domestic economy and rising income levels.
In general, our long-term outlook for the financial markets continues to
be positive. The economy appears to be growing moderately, inflation
remains subdued and the Federal Reserve appears unlikely to tolerate
unsustainably fast economic growth. In regard to the stock market, we
are encouraged by the underlying fundamentals of the U.S. economy.
However, we are cautioned by a number of situations, including the
struggles in Asia. We are concerned about the effect this region's
difficulties may have on U.S. growth and corporate earnings. We are also
concerned about the relative lack of pricing power and the prospects
that the lofty level of gains posted year-to-date can continue into the
second half of 1998.
With regard to the bond market, interest rates continue to remain in a
tight range; we believe the Federal Reserve is likely to maintain
current interest rates. Continued weak Asian markets, low inflation in
the U.S. and the Federal budget surplus should support an environment of
low interest rates and high bond prices. However, the continued strength
of the U.S. economy could result in higher interest rates and inflation,
notwithstanding Asia. In this event, bond fund values would decline.
Thank you for your continued confidence in First Investors. As always,
we appreciate the opportunity to serve your investment needs.
Sincerely,
/s/ Clark D. Wagner
Clark D. Wagner
Chief Investment Officer
First Investors Management Company, Inc.
July 31, 1998
<TABLE>
<CAPTION>
Portfolio of Investments
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
June 30, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Amount
Invested
For Each
Principal $10,000 of
Amount Security Value Net Assets
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS--99.0%
Alaska--.5%
$ 8,000M North Slope Boro, Alaska General Obligation Zero Coupon 6/30/2005 $ 5,819,120 $ 51
- -----------------------------------------------------------------------------------------------------------------------------------
Arizona--.9%
8,550M Arizona State Municipal Financing Program Ctfs. of Partn. 7.7% 8/1/2010 10,666,125 93
- -----------------------------------------------------------------------------------------------------------------------------------
California--6.1%
2,750M California Public Capital Improv. Fin. Auth. 8.1% 3/1/2018 2,825,130 25
15,770M California State Public Works Board Lease Rev. Dept. of Corrections
5% 12/1/2019 15,710,862 137
4,220M Long Beach Finance Authority 6% 11/1/2017 4,768,600 42
10,000M San Francisco City & County Redev. Agcy. 6 3/4% 7/1/2004* 11,350,000 99
5,000M San Jose Redevelopment Agency Tax Allocation 6% 8/1/2015 5,631,250 49
Santa Clara County Financing Authority:
5,000M 7 3/4% 11/15/2010 6,481,250 56
8,900M 5 3/4% 11/15/2013 9,812,250 86
6,220M South Orange County Public Financing Authority 6 1/2% 8/15/2010 7,316,275 64
5,000M Walnut Valley Unified School District 7.2% 2/1/2016 6,306,250 55
- -----------------------------------------------------------------------------------------------------------------------------------
70,201,867 613
- -----------------------------------------------------------------------------------------------------------------------------------
Colorado--.5%
5,000M Denver City & County Airport Revenue 6% 11/15/2013 5,743,750 50
- -----------------------------------------------------------------------------------------------------------------------------------
Connecticut--2.3%
Connecticut Special Tax Obligation Revenue:
13,500M 6 1/2% 10/1/2011 15,795,000 138
9,000M 6 1/8% 9/1/2012 10,192,500 89
- -----------------------------------------------------------------------------------------------------------------------------------
25,987,500 227
- -----------------------------------------------------------------------------------------------------------------------------------
Delaware--.7%
7,000M Delaware State Econ. Dev. Auth. Rev. Pollution Control 7.15% 7/1/2018 7,673,750 67
- -----------------------------------------------------------------------------------------------------------------------------------
District of Columbia--2.3%
Washington D.C. General Obligation:
5,800M Series "A" 6 1/2% 6/1/2009 6,660,894 58
13,255M Series "E" 6% 6/1/2003* 14,181,922 124
5,030M Series "E" 6% 6/1/2016 5,582,093 49
- -----------------------------------------------------------------------------------------------------------------------------------
26,424,909 231
- -----------------------------------------------------------------------------------------------------------------------------------
Florida--4.7%
Escambia County Utilities Authority:
5,485M 6 1/4% 1/1/2012 6,300,894 55
5,360M 6 1/4% 1/1/2013 6,197,500 54
Florida State Board of Education Lottery Revenue:
3,085M RITES-PA 371A Variable Rate 6.74863% 7/1/2011 (Note 5)** 3,316,375 29
3,245M RITES-PA 371B Variable Rate 6.74863% 7/1/2012 (Note 5)** 3,435,644 30
3,410M RITES-PA 371C Variable Rate 6.74863% 7/1/2013 (Note 5)** 3,563,450 31
10,000M Lakeland, Florida Electric & Water Revenue 6% 10/1/2012 11,287,500 99
4,500M Orlando Regional Healthcare 6 1/4% 10/1/2021 5,191,875 45
Sunrise Utilities System Revenue:
1,500M 10 1/4% 10/1/2000* 1,698,750 15
1,500M 10 3/4% 10/1/2000* 1,713,750 15
9,000M 5% 10/1/2028 8,808,750 77
1,395M West Coast Regional Water Supply Auth. 10.4% 10/1/2010* 1,942,537 17
- -----------------------------------------------------------------------------------------------------------------------------------
53,457,025 467
- -----------------------------------------------------------------------------------------------------------------------------------
Georgia--7.4%
6,315M Fulton County Water & Sewer Revenue 6 3/8% 1/1/2014 7,364,869 64
Georgia Municipal Electric Authority Power Revenue:
5,000M 6 1/4% 1/1/2012 5,737,500 50
5,000M 7 1/4% 1/1/2024 6,550,000 57
Metropolitan Atlanta Rapid Transit Authority:
7,500M 6 3/4% 7/1/2004* 8,615,625 75
20,450M 6 1/4% 7/1/2011 23,569,443 206
28,605M 6% 7/1/2013 32,681,213 286
- -----------------------------------------------------------------------------------------------------------------------------------
84,518,650 738
- -----------------------------------------------------------------------------------------------------------------------------------
Hawaii--2.5%
Hawaii State General Obligation:
5,500M 6% 10/1/2009 6,158,955 54
6,000M 6% 10/1/2010 6,718,980 59
4,660M RITES-PA 358A Variable Rate 6.99863% 4/1/2011 (Note 5)** 5,026,975 44
2,000M RITES-PA 358B Variable Rate 6.99863% 4/1/2012 (Note 5)** 2,112,500 18
1,865M RITES-PA 358C Variable Rate 6.99863% 4/1/2013 (Note 5)** 1,951,256 17
6,000M Honolulu General Obligation 5 3/4% 4/1/2012 6,580,620 57
- -----------------------------------------------------------------------------------------------------------------------------------
28,549,286 249
- -----------------------------------------------------------------------------------------------------------------------------------
Illinois--13.2%
Chicago Board of Education Lease Certificates:
5,000M 6% 1/1/2016 5,578,200 49
33,200M 6% 1/1/2020 37,212,552 325
Chicago General Obligation:
7,000M 6% 7/1/2005* 7,813,750 68
16,660M 6 1/8% 1/1/2016 18,133,744 158
Chicago O'Hare International Airport Revenue:
14,570M 6 3/8% 1/1/2012 16,190,912 141
10,000M 6 3/8% 1/1/2015 11,050,000 97
3,340M Chicago Public Building Commission Building Revenue 7 3/4% 1/1/1999* 3,470,961 30
16,750M Illinois Development Finance Auth. Poll. Control Rev. 6 3/4% 3/1/2015 19,011,250 166
Illinois Development Finance Authority Rev. (Rockford School 205):
3,400M 6.55% 2/1/2009 3,962,258 35
5,000M 6.6% 2/1/2010 5,869,500 51
3,000M 6.65% 2/1/2011 3,544,050 31
4,300M Illinois Health Facs. Auth. Rev. (Bromenn Healthcare Proj.) 8% 8/15/1998* 4,405,780 38
1,750M Lansing Sales Tax Rfdg. 7.7% 12/1/1998* 1,778,997 16
4,000M Regional Transportation Authority 7 3/4% 6/1/2019 5,371,560 47
Will County School District General Obligation:
3,600M 7% 12/1/2007 4,271,400 37
2,080M 7.05% 12/1/2008 2,499,349 22
1,175M 7.1% 12/1/2009 1,434,487 13
- -----------------------------------------------------------------------------------------------------------------------------------
151,598,750 1,324
- -----------------------------------------------------------------------------------------------------------------------------------
Indiana--.9%
4,070M Delaware County Hosp. Auth. (Ball Memorial Hosp.) 6 5/8% 8/1/2001* 4,441,387 39
3,555M Indiana Housing Fin. Auth. Single-Family Mtge. Rev. 7.6% 1/1/2016 3,737,194 32
2,000M Indiana State Edl. Facs. Auth. (Butler University) 8% 11/1/1998* 2,067,320 18
- -----------------------------------------------------------------------------------------------------------------------------------
10,245,901 89
- -----------------------------------------------------------------------------------------------------------------------------------
Louisiana--5.1%
2,400M Louisiana Public Facs. Auth. Hosp. Rev. (Womens Hosp. Found.)
8 1/8% 10/1/1998* 2,472,576 22
Louisiana Public Facilities Hlth. & Ed. Cap. Fac.:
5,690M CP Program 7.9% 12/1/2015 5,891,369 51
1,750M Our Lady of the Lake 8.2% 12/1/1998* 1,812,195 16
Louisiana State General Obligation:
14,555M 6% 5/1/2004* 16,046,888 140
14,000M 6% 5/1/2004* 15,435,000 135
8,050M 6.1% 5/1/2004* 8,915,375 78
15,000M New Orleans Regional Transit Auth. Sales Tax Rev.
Zero Coupon 12/1/2021 4,443,750 39
3,000M Regional Transportation Authority Revenue 8% 12/1/1998* 3,111,210 27
- -----------------------------------------------------------------------------------------------------------------------------------
58,128,363 508
- -----------------------------------------------------------------------------------------------------------------------------------
Massachusetts--8.3%
4,750M Boston General Obligation 7 3/8% 2/1/2000* 5,088,438 44
10,025M Boston, Mass. Water & Sewer 5 3/4% 11/1/2013 11,152,813 97
2,300M Mass. Bay Transportation Authority Ctfs. of Partn. 7.65% 8/1/2000* 2,512,750 22
Mass. Bay Transportation Authority Gen. Sys. Rev.:
9,080M 5.8% 3/1/2012 10,000,167 87
10,775M 5.8% 3/1/2013 11,862,629 104
10,000M 5 7/8% 3/1/2015 11,064,200 97
Mass. Health & Educational Facilities Authority:
2,300M Berkshire Health Systems 7.6% 10/1/1998* 2,367,321 21
1,500M Carney Hospital 7 3/4% 7/1/2000* 1,636,875 14
Mass. Housing Finance Agency:
6,575M 6% 12/1/2012 7,059,906 62
1,540M 7.7% 6/1/2017 1,583,859 14
20,550M Mass. State General Obligation 6% 8/1/2009 23,232,391 203
5,400M Mass. State Water Resource Authority 6% 8/1/2013 6,061,500 53
1,000M Palmer General Obligation 7.3% 3/1/2000* 1,072,500 9
- -----------------------------------------------------------------------------------------------------------------------------------
94,695,349 827
- -----------------------------------------------------------------------------------------------------------------------------------
Michigan--2.3%
10,000M Michigan State General Obligation 6 1/4% 11/1/2012 11,589,900 101
Michigan State Housing Development Auth. Single-Family Mtge. Rev.:
4,685M 7 1/2% 6/1/2015 4,901,681 43
2,500M 7.3% 12/1/2016 2,618,750 23
1,215M 7.7% 12/1/2016 1,255,703 11
4,500M Monroe County Econ. Dev. Corp. (Detroit Edison Co.) 6.95% 9/1/2022 5,776,875 50
- -----------------------------------------------------------------------------------------------------------------------------------
26,142,909 228
- -----------------------------------------------------------------------------------------------------------------------------------
Minnesota--.7%
1,290M Eden Prairie Multi-Family Housing 8% 7/1/2026 1,360,950 12
1,240M St. Paul Hsg. & Red. Auth. (Como-Lake Proj.) 7 1/2% 3/1/2026
(Defaulted) (Note 1A) 1,298,404 11
4,795M University of Minnesota Series "A" 5 3/4% 7/1/2017 5,244,531 46
- -----------------------------------------------------------------------------------------------------------------------------------
7,903,885 69
- -----------------------------------------------------------------------------------------------------------------------------------
Mississippi--.5%
4,475M Mississippi Hosp. Equip. & Facs. Auth. Rev. (Baptist Med. Ctr.)
7.6% 5/1/2000* 4,849,781 42
1,075M Mississippi Hsg. Fin. Corp. Single-Family Mtge. Rev.
7.8% 10/15/2016 1,100,252 10
- -----------------------------------------------------------------------------------------------------------------------------------
5,950,033 52
- -----------------------------------------------------------------------------------------------------------------------------------
Missouri--2.6%
Missouri State Health & Educational Facilities Authority:
BJC Health System Series "A":
6,840M 6 3/4% 5/15/2010 8,103,006 71
10,175M 6 3/4% 5/15/2011 12,115,678 106
10,000M Lester E. Cox Medical Center Zero Coupon 9/1/2016 4,000,000 35
5,245M SSM Health Care 6 1/4% 6/1/2007 5,695,441 49
- -----------------------------------------------------------------------------------------------------------------------------------
29,914,125 261
- -----------------------------------------------------------------------------------------------------------------------------------
Nevada--.2%
1,365M Nevada Housing Div. Single-Family Prog. 7.6% 10/1/2018 1,424,719 12
1,120M Reno Hosp. Rev. (St. Mary's Hospital) 7 3/4% 1/1/2000* 1,202,600 11
- -----------------------------------------------------------------------------------------------------------------------------------
2,627,319 23
- -----------------------------------------------------------------------------------------------------------------------------------
New Jersey--2.1%
4,440M New Jersey Health Care Facs. Fing. Auth. (AHS Hosp. Corp.)
6% 7/1/2013 5,078,250 44
New Jersey Housing & Mortgage Financing Revenue:
5,380M 7 1/2% 4/1/2015 5,618,980 49
8,400M 7 3/8% 10/1/2017 8,799,000 77
4,195M 8.1% 10/1/2017 4,338,721 38
- -----------------------------------------------------------------------------------------------------------------------------------
23,834,951 208
- -----------------------------------------------------------------------------------------------------------------------------------
New Mexico--.4%
1,000M Farmington Power Rev. Gen. Dev. 9 7/8% 7/1/2005* 1,297,500 11
3,075M New Mexico Mortgage Finance Authority, Single-Family
Mortgage 8% 1/1/2017 3,144,187 28
- -----------------------------------------------------------------------------------------------------------------------------------
4,441,687 39
- -----------------------------------------------------------------------------------------------------------------------------------
New York--7.9%
1,930M Metropolitan Transit Authority Commuter Facilities Revenue
RITES-PA 359C Variable Rate 6.57452% 7/1/2013 (Note 5)** 2,026,500 18
3,500M Metropolitan Transit Authority Transit Facilities 7 1/2% 7/1/2000* 3,788,750 33
3,000M New York City General Obligation Series "A" 8% 8/1/98* 3,053,970 27
22,250M New York City Municipal Water Finance Auth. Rev. 6% 6/15/2021 25,253,750 221
4,500M New York State Dorm. Auth. Revs. City Univ. System 7 1/2% 7/1/2000* 4,888,125 43
New York State Dorm. Auth. Revs. State Univ. System:
2,780M 7 1/4% 5/15/2000* 2,998,925 26
11,300M 7 3/8% 5/15/2014 12,189,875 107
5,000M New York State General Obligation 6% 6/15/2011 5,395,700 47
6,385M New York State Housing Finance Agency Rev. 5 7/8% 11/1/2010 6,879,837 60
New York State Med. Care Facs. Fin. Agcy. Rev.:
1,970M Hosp. & Nursing 7.35% 2/15/2029 2,078,350 18
10,500M St. Luke's Hosp. 7.45% 2/15/2000* 11,274,375 98
4,000M New York State Urban Dev. Corp. 7 1/2% 1/1/2000* 4,285,000 37
5,840M Suffolk County, N.Y. Indl. Dev. Agcy. Southwest Sewer Sys.
6% 2/1/2008 6,526,200 57
- -----------------------------------------------------------------------------------------------------------------------------------
90,639,357 792
- -----------------------------------------------------------------------------------------------------------------------------------
North Carolina--1.8%
North Carolina Municipal Power Agency (Catawba):
8,950M 6% 1/1/2010 10,024,179 88
8,945M 6% 1/1/2011 9,970,992 87
- -----------------------------------------------------------------------------------------------------------------------------------
19,995,171 175
- -----------------------------------------------------------------------------------------------------------------------------------
North Dakota--1.1%
10,500M Mercer County Poll. Ctrl. Rev. (Basin Elec. Pwr. Coop.) 7.2% 6/30/2013 13,151,250 115
- -----------------------------------------------------------------------------------------------------------------------------------
Ohio--.1%
1,435M Ohio State Air Quality Dev. Auth. (Ohio Power Co.) 7.4% 8/1/2009 1,504,339 13
- -----------------------------------------------------------------------------------------------------------------------------------
Oklahoma--2.3%
Grand River Dam Authority Revenue:
9,000M 5 3/4% 6/1/2008 9,973,890 87
13,000M 6 1/4% 6/1/2011 15,082,730 132
1,420M Tulsa County Home Fin. Auth. Single-Family Mtge. 7.35% 11/1/2010 1,503,425 13
- -----------------------------------------------------------------------------------------------------------------------------------
26,560,045 232
- -----------------------------------------------------------------------------------------------------------------------------------
Pennsylvania--2.8%
6,000M Allegheny County Hosp. Dev. Auth. (UPMC Health Center) 6% 7/1/2024 6,742,500 59
1,010M Allegheny County Rev. Fin. Auth. Mtge. Single-Family Mtge.
8% 6/1/2017 1,035,220 9
3,210M Lycoming County General Obligation 5% 11/15/2022 3,138,995 28
5,000M Pennsylvania State General Obligation 6 3/4% 11/15/2013 5,672,150 50
12,050M Pittsburgh Water & Sewer Authority 6 1/2% 9/1/2013 14,249,125 124
1,000M Sewickely Valley Hosp. Auth. (Sewickely Vy. Hosp.) 7 1/2% 10/1/1999* 1,063,750 9
- -----------------------------------------------------------------------------------------------------------------------------------
31,901,740 279
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico--.5%
5,000M Puerto Rico Commonwealth Highway & Transportation Auth. Rev.
6% 7/1/2018 5,700,000 50
- -----------------------------------------------------------------------------------------------------------------------------------
Rhode Island--.1%
1,240M Rhode Island Housing & Mortgage Finance Corp. 8 3/8% 10/1/2016 1,269,834 11
- -----------------------------------------------------------------------------------------------------------------------------------
South Dakota--.4%
3,855M South Dakota Health & Edl. Facs. Auth. (McKennan Hosp.)
7 5/8% 7/1/2006* 4,809,113 42
- -----------------------------------------------------------------------------------------------------------------------------------
Texas--10.9%
Austin, Texas Utilities System Revenue:
5,120M Series "A" 7.8% 11/15/1998* 5,297,357 46
4,280M Series "A" 7.8% 11/15/1998 4,430,185 39
3,000M 8 5/8% 5/15/2002* 3,476,250 30
16,000M 6% 11/15/2013 18,220,000 159
30,465M Zero Coupon 5/15/2018 10,967,400 96
29,410M Zero Coupon 5/15/2019 9,999,400 87
5,000M Bexar County, Texas Health Facs. (Baptist Memorial) 6 3/4% 8/15/2004* 5,743,750 50
Harris County Toll Road Senior Lien:
8,375M Series "A" 6 1/2% 8/15/2002* 9,264,844 81
11,065M Series "A" 6 1/2% 8/15/2012 12,951,251 113
7,305M Series "A" 6 1/2% 8/15/2013 8,567,596 75
Houston Water Conveyance System Certificates of Participation:
2,250M 6 1/4% 12/15/2012 2,598,750 23
4,705M 6 1/4% 12/15/2013 5,440,156 48
4,950M 6 1/4% 12/15/2014 5,729,625 50
6,035M 6 1/4% 12/15/2015 6,985,512 61
Rio Grande Valley Hlth. Fac. Dev. Corp. (Valley Baptist Med. Ctr.):
3,910M 8% 8/1/1998* 3,999,695 35
5,300M 6.4% 8/1/2012 5,743,875 50
5,000M Texas Public Fin. Auth. 6.2% 2/1/2005 5,520,450 48
- -----------------------------------------------------------------------------------------------------------------------------------
124,936,096 1,091
- -----------------------------------------------------------------------------------------------------------------------------------
Utah--.8%
2,000M Provo, Utah Electric System Revenue 10 3/8% 9/15/2015 2,912,500 26
Salt Lake County Water Conservancy District Revenue:
3,800M Zero Coupon 10/1/2011 1,996,976 17
3,800M Zero Coupon 10/1/2012 1,890,500 17
3,760M Zero Coupon 10/1/2013 1,767,200 15
- -----------------------------------------------------------------------------------------------------------------------------------
8,567,176 75
- -----------------------------------------------------------------------------------------------------------------------------------
Virginia--1.1%
11,000M Hanover County Indl. Dev. Auth. (Mem. Regl. Med. Ctr. Proj.)
6 3/8% 8/15/2018 13,048,750 114
- -----------------------------------------------------------------------------------------------------------------------------------
Washington--1.7%
Washington Public Power Supply System:
5,000M Project No. 2 - 73/8% 7/1/2000* 5,418,750 47
4,960M Project No. 2 - 73/8% 1/1/2001* 5,437,400 48
934M Projects No. 4 & 5 - 81/2% 7/1/2017 (Defaulted) (Note 1A) 933,706 8
5,000M Washington State General Obligation 6.4% 6/1/2017 5,842,450 51
1,680M Washington State Hsg. Fin. Comm. Single-Family Mtge. 7.7% 7/1/2016 1,761,900 15
- -----------------------------------------------------------------------------------------------------------------------------------
19,394,206 169
- -----------------------------------------------------------------------------------------------------------------------------------
Wisconsin--3.3%
12,000M Superior, Wisconsin Limited Obligation Rev. (Midwest Energy)
6.9% 8/1/2021 15,045,000 131
Wisconsin Housing & Economic Development Authority:
1,405M 7 1/2% 9/1/2017 1,455,931 13
4,145M 7.6% 9/1/2017 4,352,250 38
12,370M 7 3/4% 9/1/2017 12,957,575 113
Wisconsin State Health & Educational Facilities Authority Revenue:
2,000M Hospital Sisters Services Inc. 7 5/8% 11/15/1998* 2,068,060 18
1,500M Novus Health Group 8% 12/1/1998* 1,555,905 14
- -----------------------------------------------------------------------------------------------------------------------------------
37,434,721 327
- -----------------------------------------------------------------------------------------------------------------------------------
Total Value of Municipal Bonds (cost $1,016,112,029) 99.0% 1,133,437,052 9,899
Other Assets, Less Liabilities 1.0 11,616,266 101
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $1,145,053,318 $10,000
===================================================================================================================================
* Municipal Bonds which have been prerefunded are shown maturing at the prerefunded call date.
** The interest rates on these securities (commonly referred to as inverse floaters) vary inversely with interest rates on other
municipal obligations or an index and are reset weekly by the issuer. The interest rate shown on these securities is the rate in
effect at June 30, 1998.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
FIRST INVESTORS INSURED TAX EXEMPT FUND, INC.
June 30, 1998
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments in securities, at value (identified cost $1,016,112,029) (Note 1A) $1,133,437,052
Cash 1,255,556
Receivables:
Interest 19,308,692
Investment securities sold 13,212,019
Capital shares sold 184,147
Other assets 81,733
------------------
Total Assets 1,167,479,199
Liabilities
Payables:
Investment securities purchased $ 15,624,297
Dividend payable 4,160,710
Capital shares redeemed 1,868,533
Accrued advisory fee 671,125
Accrued expenses 101,216
------------------
Total Liabilities 22,425,881
------------------
Net Assets (Note 4):
Class A (109,440,040 shares outstanding) 1,141,251,708
Class B (364,480 shares outstanding) 3,801,610 $1,145,053,318
------------------ ==================
Net Assets Consist of:
Capital paid in $1,033,487,244
Undistributed net investment income 27,968
Accumulated net realized loss on investment transactions (5,786,917)
Net unrealized appreciation in value of investments 117,325,023
------------------
Total $1,145,053,318
==================
Net asset value and redemption price per share--Class A $10.43
========
Maximum offering price per share--Class A ($10.43/.9375)* $11.13
========
Net asset value and offering price per share--Class B (Note 4) $10.43
========
* 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, 1998
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income
Interest income $ 33,253,199
Expenses (Notes 1 and 3):
Advisory fee $ 4,086,951
Distribution plan expenses--Class A 1,633,360
Distribution plan expenses--Class B 18,014
Shareholder servicing costs 514,039
Bond insurance premiums 72,937
Custodian fees 43,923
Professional fees 35,129
Reports and notices to shareholders 19,728
Other expenses 38,775
-------------
Total expenses 6,462,856
Less: Custodian fees paid indirectly (16,420)
-------------
Net expenses 6,446,436
-------------
Net investment income 26,806,763
Realized and Unrealized Gain (Loss) on Investments (Note 2):
Net realized gain on investments 2,308,339
Net unrealized depreciation of investments (5,028,392)
-------------
Net loss on investments (2,720,053)
-------------
Net Increase in Net Assets Resulting from Operations $24,086,710
=============
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, 1998 December 31, 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in Net Assets from Operations
Net investment income $ 26,806,763 $ 59,282,250
Net realized gain on investments 2,308,339 6,301,947
Net unrealized appreciation (depreciation) of investments (5,028,392) 30,510,966
------------------ ------------------
Net increase in net assets resulting from operations 24,086,710 96,095,163
------------------ ------------------
Dividends to Shareholders
Net investment income--Class A (27,028,034) (59,425,389)
Net investment income--Class B (69,000) (139,453)
------------------ ------------------
Total dividends (27,097,034) (59,564,842)
------------------ ------------------
Capital Share Transactions (a)
Class A:
Proceeds from shares sold 10,002,644 25,022,487
Reinvestment of dividends 17,477,858 45,619,578
Cost of shares redeemed (75,040,539) (167,860,367)
------------------ ------------------
(47,560,037) (97,218,302)
------------------ ------------------
Class B:
Proceeds from shares sold 403,335 784,544
Reinvestment of dividends 46,919 106,089
Cost of shares redeemed (101,203) (581,697)
------------------ ------------------
349,051 308,936
------------------ ------------------
Net decrease from capital share transactions (47,210,986) (96,909,366)
------------------ ------------------
Net decrease in net assets (50,221,310) (60,379,045)
Net Assets
Beginning of period 1,195,274,628 1,255,653,673
------------------ ------------------
End of period (including undistributed net investment income of
$27,968 and $318,239, respectively) $1,145,053,318 $1,195,274,628
================== ==================
(a)Capital Shares Issued and Redeemed
Class A:
Sold 958,685 2,452,421
Issued for dividends reinvested 1,678,201 4,476,197
Redeemed (7,193,648) (16,510,382)
------------------ ------------------
Net decrease in Class A shares outstanding (4,556,762) (9,581,764)
================== ==================
Class B:
Sold 38,703 77,307
Issued for dividends reinvested 4,505 10,406
Redeemed (9,729) (57,234)
------------------ ------------------
Net increase in Class B shares outstanding 33,479 30,479
================== ==================
See notes to financial statements
</TABLE>
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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. The Fund may retain any insured
municipal bond which is in default in the payment of principal or
interest until the default has been cured, or the principal and interest
outstanding are paid by an insurer or the issuer of any letter of credit
or other guarantee supporting such municipal bond. In such case, it is
the Fund's policy to value the defaulted bond daily based upon the
value of a comparable bond which is insured and not in default. In
selecting a comparable bond, the Fund will consider security type,
rating, market condition and yield. 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,
1998, the Fund had capital loss carryovers of $8,095,256 of which
$7,571,365 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, if any, are generally 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.
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. For the six months
ended June 30, 1998, the Fund's Custodian has provided credits in the
amount of $16,420 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, 1998,
purchases and sales of investment securities, other than short-term
notes, aggregated $139,533,529 and $200,572,862, respectively.
At June 30, 1998, the cost of investments for federal income tax
purposes was $1,016,112,029. Accumulated net unrealized appreciation on
investments was $117,325,023, consisting of unrealized appreciation of
$117,346,584 and $21,561 of 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"). Directors of the
Fund who are not "interested persons" of the Fund as defined in the 1940
Act are remunerated by the Fund. For the six months ended June 30, 1998,
total directors fees accrued by the Fund amounted to $10,500.
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, 1998, FIC, as underwriter, received
$225,129 in commissions, after allowing $10,940 to other dealers.
Shareholder servicing costs included $399,274 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 up to .30% of the average daily
net assets of the Class A shares and 1% of the average daily net assets
of the Class B shares on an annualized basis each year, payable monthly.
For the six months ended June 30, 1998, FIC was paid a fee of .28% of
the average net assets of the Class A shares. The fee consists of a
distribution fee and a service fee. The service fee is paid for the
ongoing servicing of clients who are shareholders of the Fund.
4. Capital -- The Fund sells two classes of shares, Class A and Class B,
each with a public offering price that reflects different sales charges
and expense levels. Class A shares are sold with an initial sales charge
of up to 6.25% of the amount invested and together with the Class B
shares are subject to 12b-1 fees as described in Note 3. Class B shares
are sold without an initial sales charge, but are generally subject to a
contingent deferred sales charge which declines in steps from 4%
to 0% over a six-year period. Class B shares automatically convert into
Class A shares after eight years. Realized and unrealized gains or
losses, investment income and expenses (other than 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.
5. Rule 144A Securities -- Under Rule 144A, certain restricted
securities are exempt from the registration requirements of the
Securities Act of 1933 and may only be resold to qualified investors. At
June 30, 1998, the Fund held seven 144A securities with an aggregate
value of $21,432,700 representing approximately 1.87% of the Fund's net
assets. These securities are valued as set forth in Note 1A.
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<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
--------------------------------------------------- ----------------------------------------
1/1/98 Year Ended December 31 1/1/98 Year Ended December 31
to ---------------------------------------- to -----------------------------
6/30/98 1997 1996 1995 1994 1993 6/30/98 1997 1996 1995*
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Data
- --------------
Net Asset Value, Beginning
of Period $10.45 $10.14 $10.37 $9.42 $10.56 $10.32 $10.45 $10.13 $10.37 $9.48
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from Investment Operations
Net investment income .24 .50 .51 .52 .56 .60 .20 .43 .44 .44
Net realized and unrealized gain
(loss) on investments (.02) .31 (.23) .96 (1.15) .40 (.02) .32 (.24) .89
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment Operations .22 .81 .28 1.48 (.59) 1.00 .18 .75 .20 1.33
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less Distributions from:
Net investment income .24 .50 .51 .53 .55 .61 .20 .43 .44 .44
Net realized gains -- -- -- -- -- .15 -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions .24 .50 .51 .53 .55 .76 .20 .43 .44 .44
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of Period $10.43 $10.45 $10.14 $10.37 $9.42 $10.56 $10.43 $10.45 $10.13 $10.37
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return (%)+ 2.16 8.27 2.81 16.01 (5.61) 9.88 1.75 7.62 2.03 14.27
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period
(in millions) $1,141 $1,192 $1,253 $1,373 $1,302 $1,507 $4 $3 $3 $2
Ratio to Average Net Assets: (%)
Expenses 1.10(a) 1.14 1.14 1.14 1.18 1.15 1.82(a) 1.85 1.83 1.88(a)
Net Investment Income 4.58(a) 4.93 5.06 5.25 5.64 5.69 3.86(a) 4.22 4.37 4.45(a)
Portfolio Turnover Rate (%) 12 13 21 37 57 58 12 13 21 37
* For the period 1/12/95 (date shares first offered) to 12/31/95
+ Calculated without sales charges
(a) Annualized
See notes to financial statements
</TABLE>
Independent Auditors' 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, 1998, 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, 1998 and the year ended December 31,
1997 and financial highlights for the periods indicated thereon. These
financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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, 1998, 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, 1998, and the results of its operations, changes in its net
assets and financial highlights for the periods indicated thereon, in
conformity with generally accepted accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
July 31, 1998
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
Eight Penn Center Plaza
Philadelphia, PA 19103
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.
