FUND FOR TAX FREE INVESTORS INC, 485BPOS, 1996-04-30

FUND FOR TAX FREE INVESTORS INC
485BPOS, 1996-04-30

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As Filed With The Securities And Exchange Commission on April
30, 1996.

File Nos. 2-83299 and 811-3720

SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (X)

Pre-Effective Amendment No. ( )

Post-Effective Amendment No. 14 (X)

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940 (X)

Amendment No. 14 (X)

FUND FOR TAX-FREE INVESTORS, INC.
(Exact Name of Registrant as Specified in Charter)

4922 Fairmont Avenue, Bethesda, Maryland 20814
(Address of Principal Executive Offices) (Zip Code)

(301) 657-1500
(Registrant's Telephone Number, Including Area Code)

Richard J. Garvey
4922 Fairmont Avenue
Bethesda, Maryland 20814
(Name and Address of Agent for Service of Process)

Copies to:
James Bernstein, Esq.
Jorden Burt Berenson & Johnson LLP
1025 Thomas Jefferson Street, N.W.
Suite 400 East
Washington, D. C. 20007

Approximate Date of Commencement of the Proposed Public
Offering of the Securities:

It is proposed that this filing will become effective (check
appropriate box):

X immediately upon filing pursuant to paragraph (b) of

rule 485.
on (date) pursuant to paragraph (b) (1) (v) of rule
485.
60 days after filing pursuant to paragraph (a) (1) of
rule 485.
on (date) pursuant to paragraph (a) (1) of rule 485.
75 days after filing pursuant to paragraph (a) (2) of
rule 485.
on (date) pursuant to paragraph (a) (2) of rule 485.

If appropriate, check the following box:

This post-effective amendment designates a new
effective date for a previously-filed post-effective
amendment.

The Registrant has previously filed a declaration of
indefinite registration of its shares pursuant to Rule 24f-2
under the Investment Company Act of 1940. The Rule 24f-2
Notice for the Registrant s fiscal year ended December 31,
1995 was filed on February 28, 1996.

TOTAL NUMBER OF PAGES____

FUND FOR TAX-FREE INVESTORS, INC.

REGISTRATION STATEMENT ON FORM N-1A

CROSS REFERENCE SHEET

Form N-1A Location in
Item No. Registration Statement

Part A. Information Required in Prospectus

1. Cover Page Outside Front Cover Page
of Prospectus
2. Synopsis Fee Table

3. Condensed Financial Financial Highlights
Information

4. General Description of Organization and
Registrant Description of Common
Stock; Investment
Objective and Policies;
Management of the Fund
5. Management of the Fund Management of the Fund

5A. Management's Discussion Management's Discussion
of Fund of Fund Performance
Performance

6. Capital Stock and Other Organization and
Securities Description Common
Stock; Dividends and
Distribution; Taxes

7. Purchase of Securities How to Invest in the
Being Offered Portfolio(s); Exchanges;
Net Asset Value

8. Redemption or Repurchase How to Redeem an
Investment (Withdrawals)

Form N-1A Location in
Item No. Registration Statement

9. Legal Proceedings Not Applicable

Part B: Information Required In
Statement of Additional Information

10. Cover Page Outside Front Cover Page
of Statement of
Additional Information

11. Table of Contents Table of Contents

12. General Information and Not Applicable
History

13. Investment Objectives and Investment Policies;
Policies Investment Restrictions

14. Management of the Management of the Fund
Registrant

15. Control Persons and Principal Holders of
Principal Securities
Holders of Securities

16. Investment Advisory and Management of the Fund
Other Services
17. Brokerage Allocation Investment Policies

18. Capital Stock and Other Not Applicable
Securities
19. Purchase, Redemption and Not Applicable
Pricing of Securities
Being Offered

20. Tax Status Dividends,
Distributions, and Taxes

21. Underwriters Management of the Fund

Form N-1A Location in
Item No. Registration Statement

22. Calculations of Performance Information;
Performance Data Calculation of Return
Quotations

23. Financial Statements Financial Statements

Part C: Other Information

24. Financial Statements and Financial Statements and
Exhibits Exhibits

25. Persons Controlled by or Persons Controlled by or
Under Under Common Control
Common Control

26. Number of Holders of Numbers of Holders of
Securities Securities

27. Indemnification Indemnification

28. Business and Other Business and Other
Connections Connections of
of Investment Adviser Investment Adviser

29. Principal Underwriters Principal Underwriters

30. Location of Accounts and Location of Accounts and
Records Records

31. Management Services Management Services

32. Undertakings Undertakings

33. Signatures Signatures

Fund for Tax-Free Investors, Inc.
4922 Fairmont Avenue
Bethesda, MD 20814
(800) 343-3355 (301) 657-1500

Rushmore Tax-Free Money Market Portfolio

Fund for Tax-Free Investors, Inc. (the "Fund") is a no-load,
open-end, management company consisting of three separate
portfolios, Tax-Free Money Market Portfolio, Rushmore Maryland
Tax-Free Portfolio and Rushmore Virginia Tax-Free Portfolio.

This Prospectus is a concise presentation of information about
the Tax-Free Money Market Portfolio (the "Portfolio").

Investors should read this Prospectus and retain it for future
reference. It is designed to set forth concisely the
information an investor should know before investing in the
Portfolio. A Statement of Additional Information ("SAI")
dated April 30, 1996 containing additional information about
the Portfolio has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. A copy of
the SAI may be obtained, without charge, by writing or
telephoning the Fund.

THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY
BANK, AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
U.S. GOVERNMENT AGENCY.

THE SECURITIES OF THE PORTFOLIO ARE NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT AND THERE CAN BE NO
ASSURANCE THAT THE PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE
NET ASSET VALUE OF $1.00 PER SHARE.

The date of this prospectus is April 30, 1996.

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

FEE TABLE

The following table illustrates all expenses and fees that a
shareholder of the Portfolio will incur:

Shareholder Transaction Expenses
Sales Load Imposed on Purchases . . None
Sales Load Imposed on Reinvested
Dividends . . . . . . . . . . . . . None
Deferred Sales Load . . . . . . . . None
Redemption Fees . . . . . . . . . . None
Exchange Fees . . . . . . . . . . . None
Monthly Account Fee (for accounts
under $500)* . . . . . . . . . . . $5.00

Annual Portfolio Operating Expenses
(as a percentage of average net assets)
Management Fees 0.50%
12b-1 Fees None
Other Expenses 0.25%
Total Portfolio Operating Expenses 0.75%

* A charge of $5 per month may be imposed on any account whose
average daily balance for the month falls below $500 due to
redemptions. See "Transaction Charges."

Example

Assuming a hypothetical investment of $1,000 in the Portfolio,
a 5% annual return, and redemption at the end of each time
period, an investor in the Portfolio would pay transaction and
operating expenses at the end of each year as follows:

1 Year 3 Years 5 Years 10 Years

The same level of expenses would be incurred if the investment
were held throughout the period indicated.

The preceding table of fees and expenses is provided to assist
investors in understanding the various costs and expenses that
an investor in the Portfolio will incur directly or
indirectly. The 5% assumed annual return is for comparison
purposes only. The actual annual return may be more or less

depending on market conditions, and the actual expenses an
investor incurs in future periods may be more or less than
those shown above and will depend on the amount invested and
on the actual growth rate of the Portfolio. The example
should not be considered a representation of past or future
expenses. For more complete information about the various
costs and expenses, see "Management of the Fund" in the
Prospectus and SAI.

Fund for Tax-Free Investors, Inc.
Financial Highlights
RUSHMORE TAX-FREE MONEY MARKET PORTFOLIO
Audited

<TABLE>
<CAPTION>
For The Year Ended December 31,

1995 1994 1993
<S> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value - Beginning $ 1.00 $ 1.00 $ 1.00
of Year

Net Investment Income 0.030 0.020 0.016
Net Realized and Unrealized
Gains on Securities -- -- --

Net Increase in Net Asset 0.030 0.020 0.016
Value Resulting from (0.030) (0.020) (0.016)
Operations Dividends to
Shareholders -- -- --
Distributions to Shareholders
from Net

Realized Capital Gains

Net Increase in Net Asset -- -- --
Value

Net Asset Value - End of Year $ 1.00 $ 1.00 $ 1.00

Total Investment Return 3.09% 2.02% 1.66%

Ratios to Average Net Assets:
Expenses 0.75% 0.75% 0.78%
Net Investment Income 3.04% 1.99% 1.65%

Supplementary Data:
Portfolio Turnover Rate -- -- --
Number of Shares Outstanding
at End of Year (000s omitted) 20,792 25,604 23,312
</TABLE>

The auditors report is incorporated by reference in the
registration statement. The auditors report and further

information about the performance of the Portfolio are
contained in the annual report to shareholders which may be
obtained without charge by calling or writing the Fund.

Fund for Tax-Free Investors, Inc.
Financial Highlights
RUSHMORE TAX-FREE MONEY MARKET PORTFOLIO
Audited

For The Year Ended December 31,

1992 1991 1990

<S> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value - Beginning $ 1.00 $ 1.00 $ 1.00
of Year

0.023 Net Investment Income 0.040 0.052

Net Realized and Unrealized
Gains on Securities -- -- --

Net Increase in Net Asset 0.023 0.040 0.052
Value (0.023) (0.040) (0.052)
Resulting from Operations

Dividends to Shareholders -- -- --
Distributions to
Shareholders from Net

Realized Capital Gains

Net Increase in Net Asset -- -- --
Value

Net Asset Value - End of $ 1.00 $ 1.00 $ 1.00
Year
2.25% 4.01% 5.31%

Total Investment Return

Ratios to Average Net 0.80% 0.77% 0.79%
Assets: 2.25% 4.01% 5.19%
Expenses
Net Investment Income

Supplementary Data:
Portfolio Turnover Rate -- -- --
Number of Shares
Outstanding at
25,964 29,736 43,716 End of Year (000s omitted)

</TABLE>

The auditors report is incorporated by reference in the
registration statement. The auditors report and further
information about the performance of the Portfolio are
contained in the annual report to shareholders which may be
obtained without charge by calling or writing the Fund.

Fund for Tax-Free Investors, Inc.
Financial Highlights
RUSHMORE TAX-FREE MONEY MARKET PORTFOLIO
Audited

For The Year Ended December 31,

1989 1988
<S> <C> <C>
Per Share Operating
Performance: $ 1.00 $ 1.00
Net Asset Value -
Beginning of Year
0.056 0.046
Net Investment Income

Net Realized and -- --
Unrealized Gains
on Securities

Net Increase in Net 0.056 0.046
sset Value (0.056) (0.046)
Resulting from
Operations
-- --
Dividends to
Shareholders
Distributions to
Shareholders from Net

Realized Capital Gains

Net Increase in Net -- --
Asset Value

Net Asset Value - End $ 1.00 $ 1.00
of Year
5.76% 4.61%

Total Investment Return

Ratios to Average Net 0.79% 0.80%
Assets: 5.62% 4.56%
Expenses
Net Investment Income

Supplementary Data:
Portfolio Turnover Rate -- --
Number of Shares
Outstanding at End of
42,871 48,747 Year (000s omitted)

</TABLE>

Fund for Tax-Free Investors, Inc.
Financial Highlights
RUSHMORE TAX-FREE MONEY MARKET PORTFOLIO
Audited

For The Year Ended December 31,

1987 1986
<S> <C> <C>
Per Share Operating
Performance:
Net Asset Value -
Beginning of Year
$ 1.00 $ 1.00

Net Investment Income 0.038 0.040
Net Realized and
Unrealized Gains -- --
on Securities

Net Increase in Net
Asset Value
Resulting from
Operations 0.038 0.040
Dividends to (0.038) (0.040)
Shareholders
Distributions to
-- -- Shareholders from Net

Realized Capital Gains

Net Increase in Net -- --
Asset Value

Net Asset Value - End $ 1.00 $ 1.00
of Year

Total Investment Return 3.90% 4.18%

Ratios to Average Net 0.80% 0.81%
Assets: 3.82% 4.10%
Expenses
Net Investment Income

Supplementary Data:
Portfolio Turnover Rate -- --
Number of Shares
Outstanding at End of 34,346 41,242
Year (000s omitted)
</TABLE>

PERFORMANCE DATA

From time to time the Portfolio advertises its "yield" and
"effective yield." Both yield figures are based on historical
earnings and are not intended to indicate future performance.
The "yield" of the Portfolio refers to the income generated by
an investment in the Portfolio over a seven-day period (which
period will be stated in the advertisement). That is, the
amount of income generated by the investment during that week
is assumed to be generated each week over a 52-week period and
is shown as a percentage of the investment. The "effective
yield" is calculated similarly but, when annualized, the
income earned by an investment in the Portfolio is assumed to
be reinvested. The "effective yield" will be slightly higher
than the "yield" because of the compounding effect of this
assumed reinvestment.

For the seven-day period ended December 31, 1995, the
Portfolio s annualized yield was 3.00%. The annual effective
yield was 3.04%.

INVESTMENT OBJECTIVE, POLICIES AND PRACTICES

Investment Objective
The investment objective of the Portfolio is to provide
investors with maximum current income available from
investments made primarily in securities exempt from federal
income tax, to the extent such investment is consistent with
safety of principal. The Portfolio will pursue this objective
through investment in a portfolio consisting primarily of high
quality, tax-exempt municipal securities selected on the basis
of liquidity and safety of principal.

As a fundamental policy, the Portfolio will invest at least
80% of the value of its net assets in securities, the interest
on which is exempt from federal income taxes, including the
individual alternative minimum tax. This policy may not be
changed without prior approval of a majority of the
Portfolio s outstanding voting shares.

Investment Policies and Practices
The Portfolio seeks to achieve its investment objective by
investing at least 80% of its total assets, under normal
conditions, in short-term, municipal obligations which, at the
time of purchase, are rated within the top two grades assigned
by Moody's Investors Service, Inc. ("Moody's") or Standard &

Poor's Corporation ("S&P"). The Portfolio may also purchase,
without limitation, unrated municipal securities if, in the
opinion of the Adviser, they are of an investment quality
comparable to that of rated securities eligible for purchase
by the Portfolio.

The Portfolio may not borrow money, except that as a temporary
measure, the Portfolio may borrow money to facilitate
redemptions. Such a borrowing may be in an amount not to
exceed 30% of the Portfolio s total assets, taken at current
value, before such borrowing. The Portfolio may not purchase
a portfolio security if a borrowing by the Portfolio is
outstanding.

The Portfolio will not invest in securities having a remaining
maturity greater than 397 days at the time of purchase, nor
will the dollar-weighted average maturity of its portfolio
exceed 90 days. The Portfolio will value its investment
securities at amortized cost and seek to maintain, although it
cannot assure, a constant net asset value of $1.00 per share.

Although it is the intention of the Portfolio to invest all of
its assets in municipal securities, market conditions may
arise from time to time that limit the availability of such
obligations. During such periods, the Portfolio may invest up
to 20% of its assets in short-term, taxable obligations of the
United States government, its agencies and instrumentalities,
or repurchase agreements secured by such securities. A
repurchase agreement arises when a buyer purchases a security
and simultaneously agrees to sell it to the seller at an
agreed upon future date, normally one day or a few days later.
The resale price is greater than the purchase price,
reflecting an agreed upon market rate which is effective for
the period of time the buyer s money is invested.

The Portfolio will invest in taxable securities only as a
temporary measure, either because of their liquidity or
because of the unavailability of short-term, tax-exempt
securities meeting the quality characteristics specified
above. Income from such securities may be taxable for federal
and/or state income tax purposes.

Municipal Securities

Municipal securities are debt obligations of states, cities,
municipalities and other public authorities and are
principally classified as notes and bonds. The yields on
municipal securities are dependent on a variety of factors,

including the general level of interest rates, the
creditworthiness of a particular issuer, the size of a
specific issue, the maturity date of the issue, and its rating
by the various rating services. The market value of
outstanding municipal securities will also vary with the
changes in interest rates and with rating changes of the
securities.

Municipal Bonds
Municipal bonds generally have maturities of more than one
year when issued and are issued to obtain funds for various
public purposes. Municipal bonds may be categorized as
"general obligation" or "revenue" bonds.

General obligation bonds are secured by the issuer's pledge of
its full faith, credit and taxing power for the payment of
principal and interest. Revenue bonds are secured by the net
revenue derived from a particular facility or group of
facilities or, in some cases, the proceeds of a special excise
or other specific revenue source, but not by the general
taxing power. Industrial development and pollution control
bonds are municipal bonds which are issued by or on behalf of
public authorities to provide funding for the construction,
equipment, repair or improvement of various privately-operated
facilities. Industrial development and pollution control bonds
are, in most cases, revenue bonds and do not generally carry
the pledge of credit of the issuing municipality or public
authority. The Portfolio may invest in either general
obligation or revenue bonds.

Municipal Notes
Municipal notes generally are used to provide for short-term
capital needs and ordinarily have maturities of one year or
less. The Portfolio intends to invest in various types of
municipal notes, including tax anticipation notes, revenue
anticipation notes, construction loan notes, and tax-exempt
commercial paper.

"When-Issued" Securities

New issues of municipal securities are often sold on a "when-
issued" basis; that is, payment and delivery of the securities
normally occur 15 to 45 days after the date of the commitment
to purchase. At the time of the purchase commitment, both the
interest and principal amount are fixed. During the period
between the purchase commitment and actual delivery, no
interest accrues to the purchaser and the market value of the
security may fluctuate. The Portfolio intends to enter into

purchase orders for "when-issued" securities with the
intention of actually taking delivery of such securities, but
it may sell "when-issued" securities prior to delivery if it
is deemed advisable as a matter of investment strategy. The
Portfolio will maintain short-term assets in a separate
account with the Fund's custodian bank in an amount equal in
value to the amount of the purchase commitment for "when-
issued" securities. The Portfolio does not intend to invest
more than 25% of its net assets in "when-issued" securities.

Variable Rate Securities
The Portfolio may purchase certain tax-exempt municipal
obligations which have a variable rate of interest. Such
obligations bear interest at rates which vary with changes in
specific market rates or indices, such as the bank prime rate.
These securities will be permitted for inclusion in the Money
Market Portfolio even though they may have a maturity which is
greater than one year. Each Portfolio of the Portfolio
intends to invest in long-term variable rate securities in
order to take advantage of the higher yield that is usually
paid on long-term securities. Investment in these securities
will be made only if a secondary market for them exists or if
the Portfolio may redeem them on demand within seven days.

The Adviser will periodically analyze the credit-worthiness of
any unrated variable rate securities to ensure that such
obligations meet the quality standards of the Portfolio.
Because variable rate securities may have a maturity greater
than one year, the Portfolio will use as the basis of
calculation for computing its dollar-weighted average maturity
the longer of (a) the notice period required for demand of
redemption by the holder or (b) the period remaining until the
next interest rate adjustment.

RISK CONSIDERATIONS

Quality
At least 80% of its investment portfolio will consist of high
quality notes rated A-l by S&P, or MIG 1, MIG 2, or P-l by
Moody's, and of tax-exempt municipal bonds holding one of the
two highest ratings assigned by Moody's (Aaa or Aa) or by S&P
(AAA or AA) or, if unrated, are believed by the Board of
Directors to be of a quality comparable to that of rated
obligations eligible for purchase by the Portfolio.

Market Risk
Market risk is the risk of price fluctuations of a security
and is generally a function of the underlying credit rating of
an issuer, the maturity length of a security, a security's
yield, and general economic and interest rate conditions.
Because, however, the Portfolio will not invest in securities
having a remaining maturity greater than 397 days at the time
of purchase, nor will the dollar-weighted average maturity of
its portfolio exceed 90 days, market risk is minimized in the
Portfolio.

Credit Risk
Credit risk is a function of the ability of the issuer to make
timely interest payments and to pay the principal at maturity.

The Portfolio is not required to sell a security which, once
purchased, ceases to be rated or has its rating reduced below
the minimum required for purchase by the Portfolio. However,
the Adviser will consider such event in determining whether
the Portfolio should continue to hold the security.

Other Considerations

The ability of the Portfolio to achieve its investment
objective is dependent on a number of factors. These factors
include the ability of the Adviser to choose suitable tax-
exempt securities at a market rate of return.

Except as stated above, the foregoing investment objective and
policies are not fundamental policies of the Portfolio and may
be changed by the Board of Directors of the Fund without
shareholder approval.

HOW TO INVEST IN THE PORTFOLIO

The Fund continuously offers shares for sale. There is no
sales charge. The minimum initial investment is $2,500.
There is no minimum amount for subsequent investments.

By Mail
Complete an application and make a check payable to: "Fund

for Tax-Free Investors, Inc." Mail the check, along with the
application, to:

Fund for Tax-Free Investors, Inc.
4922 Fairmont Avenue

Bethesda, MD 20814

Be certain to specify the portfolio(s) you wish to purchase
and the amount of your purchase on the account application
form. Foreign checks will not be accepted.

By Bank Wire
Speak to the Branch Manager of your bank. Request a wire
transfer of federal funds to Rushmore, instructing the bank to
wire transfer the money before 12 Noon, Eastern time, to:

Rushmore Trust and Savings, FSB
Bethesda, MD

Routing Number 0550-71084
For Account of Fund for Tax-Free Investors, Inc.
Account Number 029385770

AFTER INSTRUCTING YOUR BANK TO TRANSFER FEDERAL FUNDS, YOU
MUST TELEPHONE THE FUND AT (800) 622-1386 OR (301) 657-1510
BETWEEN 8:30 A.M. AND NOON, EASTERN TIME, AND TELL US THE
AMOUNT YOU TRANSFERRED AND THE NAME OF THE BANK SENDING THE
TRANSFER. YOUR BANK MAY CHARGE A FEE FOR SUCH SERVICES.
REMEMBER THAT IT IS IMPORTANT TO COMPLETE THE WIRE TRANSFER
BEFORE NOON, EASTERN TIME.

Through Brokers

Investors may invest in the Portfolio by purchasing shares
through registered broker-dealers. Such broker-dealers who
process orders may charge a fee for such service.

The municipal securities market, in which the Portfolio buys
and sells its securities, usually requires immediate
settlement in federal funds for all securities transactions.
Therefore, payment for the purchase of Portfolio shares not

received in the form of federal funds will be invested in
Portfolio shares and will begin receiving dividends the
following day. Payments received by bank wire are converted
immediately into federal funds. Orders received prior to 12
Noon, Eastern time, will be invested in shares of the
Portfolio at the next determined net asset value.

The Fund reserves the right to reject any purchase order. All
accounts will be held in book entry form. No certificates for
shares will be issued. There will be a $10 charge for items
returned for insufficient or uncollectible funds.

HOW TO REDEEM AN INVESTMENT (WITHDRAWALS)

On any day the Fund is open for business, an investor may
withdraw all or any portion of his investment by redeeming
shares at the next determined net asset value per share after
receipt of the order by writing the Fund at 4922 Fairmont
Avenue, Bethesda, Maryland 20814, or telephoning (800) 622-
1386 or (301) 657-1510. There are no fees charged for
redeeming shares.

The proceeds of redemptions will be sent directly to the
investor s address of record, or bank account or brokerage
firm specified on the account application. If the investor
requests payment of redemptions to a third party or to a
location other than his residence, commercial bank(s) or a
brokerage firm(s) listed on the account application, the
investor s signature must be guaranteed by an eligible
institution. Eligible institutions generally include banking
institutions, securities exchanges, associations, agencies or
broker/dealers, and "STAMP" program participants.

Normally, the Fund will make payment within one business day
for all shares redeemed. However, for investments that have
been made by check, withdrawal requests may be delayed up to
ten business days, or until the check clears, whichever occurs
first. This delay is necessary to assure the Fund that
investments made by checks are good funds. The proceeds of
the redemption will be forwarded promptly upon confirmation of
receipt of good funds.

The right of redemption may also be suspended, or the date of
payment postponed, (a) for any period during which the New
York Stock Exchange is closed (other than customary weekend or
holiday closings); or (b) when trading on the exchange is
restricted, or an emergency exists, as determined by the
Securities and Exchange Commission, so that disposal of the
Portfolio s investments for determination of net asset value
is not reasonably practicable; or (c) for such other periods
as the Commission, by order, may permit for protection of the
Portfolio s investors. Investor's should also be aware that
telephone redemptions or exchanges may be difficult to
implement in a timely manner during periods of drastic
economic or market changes. If such conditions occur,
redemptions or exchange orders can be made by mail.

Telephone Redemption
The privilege to initiate redemption transactions by telephone
will be made available to Portfolio shareholders
automatically. Telephone redemption privileges may be
terminated or modified by the Fund upon 60 days notice to all
shareholders of the Portfolio.

Redemptions in the Money Market Portfolio may be made the same
day if the request is received before 12 Noon, Eastern time.

Telephone redemptions will only be sent to your address of
record or to bank accounts specified in the account
application. When acting on instructions believed to be
genuine, the Fund is not liable for any loss resulting from a
fraudulent telephone redemption request and the investor would
bear the risk of any such loss.

The Fund will employ reasonable procedures to confirm that
redemption instructions communicated by telephone are genuine;
and if the Fund does not employ such procedures, the Fund may
be liable for any losses due to unauthorized or fraudulent
instructions. The Fund follows specific procedures for
transactions initiated by telephone, including among others,
requiring some form of personal identification prior to acting
on instructions received by telephone, providing written
confirmation not later than five business days after such
transactions, and/or tape recording of telephone transactions.

Bank Wire Transfers
When you redeem at least $5,000 for deposit to your commercial

bank account, the Fund will wire transfer the amount.

Check Transfers
For amounts less than $5,000, investors utilizing certain
Washington, D.C. banks may have checks deposited directly into
their account. Check deposits to other banks will be mailed.

Draft Check Redemption
Investors may elect to redeem shares of the Money Market
Portfolio by draft check (minimum check - $250) made payable
to the order of any person or institution. Shares of the
Maryland and Virginia Portfolios cannot be redeemed by draft
check. Upon the Fund's receipt of a completed signature card,
investors will be supplied with draft checks which are drawn
on the Fund's account and are paid through Rushmore Trust and
Savings, FSB. The Fund reserves the right to change or
suspend the checking service. THESE DRAFT CHECKS CANNOT BE
CERTIFIED, NOR CAN THESE CHECKS BE NEGOTIATED FOR CASH AT
RUSHMORE TRUST AND SAVINGS, FSB. There will be a $10 charge
for each stop payment request on the draft checks. Investors
will be subject to the same rules and regulations that the
bank applies to checking accounts. Shares held in certificate
form may not be redeemed, and investors accounts may not be
closed by writing a draft check.

Exchange Privileges
The Portfolio s shares may be exchanged, without cost, for
shares of any other Tax-Free Portfolio or for shares of Fund
for Government Investors, The Rushmore Fund, Inc., American
Gas Index Fund, Inc., or Cappiello-Rushmore Trust, on the
basis of the respective net asset values of the shares
involved, provided such exchange is permitted under the
applicable laws of the state of the investor s residence.
Shareholders contemplating such an exchange should obtain and
review the prospectuses of those funds.

DIVIDENDS

The Portfolio distributes all of its net income on a daily
basis. Net income consists of all interest income accrued and
discount earned, less estimated expenses of the Portfolio.
Capital gains, if any, will be distributed on an annual basis.

Dividends are declared each day that the Portfolio is open for
business. Investors receive dividends in additional shares
unless they elect to receive cash. Payment, either in

additional shares or in cash, is made on a monthly basis at
the net asset value on the payable date. Investors wishing to
change the method of receiving dividends must notify the
Portfolio in writing at least one week before payment is to be
made.

NET ASSET VALUE

Net asset value of the Portfolio will be determined as of 12
Noon, Eastern time, on days when there is sufficient trading
in portfolio securities of the Portfolio to affect the net
asset value materially. The net asset value per share is
calculated by adding the appraised value of all securities and
all other assets, deducting liabilities and dividing by the
number of shares outstanding. To the extent market quotations
are not readily available, the Board of Directors will value
the Portfolio s portfolio securities in good faith.

In determining fair market value, the Portfolio may take into
consideration prices supplied by a pricing service, provided
the use of the pricing service has been approved by the Board
of Directors. Valuations provided by pricing services are
generally determined without exclusive regard to quoted
prices. Generally, pricing services consider in their
valuation the market activity of similar groups of securities,
their yields, quality ratings, maturities, and other
characteristics.

The Directors will continuously review this method of
valuation and recommend changes which may be necessary to
assure that the Fund's portfolio instruments are valued at
fair value.

The Portfolio intends to value its portfolio securities at
their amortized cost value pursuant to Rule 2a-7 under the
Investment Company Act of 1940. The Money Market Portfolio
will seek to maintain, but cannot assure, a constant net asset
value of $1.00 per share.

INVESTOR ACCOUNTS

The Portfolio maintains an account for each investor in full
and fractional shares. Statements of account will be sent

monthly showing the beginning balance, detail of all
transactions for the month and the ending balance.
Confirmations of individual transactions in the Money Market
Portfolio will not be sent.

TRANSACTION CHARGES

In addition to charges described elsewhere in this Prospectus,
the Portfolio may impose a charge of $5 per month for any
account whose average daily balance is below $500 due to
redemptions. The fee will continue to be imposed during
months when the account balance remains below $500. The fee
will be imposed on the last business day of the month. This
fee will be paid to Rushmore Trust and Savings, FSB. The fee
will not be imposed on tax-sheltered retirement plans or
accounts established under the Uniform Gifts or Transfers to
Minors Act. Because of the expense of handling small
accounts, the Portfolio reserves the right to involuntarily
redeem an investor s account which falls below $500 in total
value in all Tax-Free Portfolios of the Fund due to
redemptions or exchanges after providing 60 days written
notice. The Portfolio may also assess a charge of $10 for
items returned for insufficient or uncollectible funds.

TAXES

The Portfolio has qualified (and intends to continue to
qualify) as a regulated investment company under Subchapter M
of the Internal Revenue Code. Because of this qualification
the Portfolio will not be liable for federal income taxes to
the extent its earnings are distributed. Additionally, the
Portfolio qualifies to pay "exempt-interest dividends" within
the meaning of the Internal Revenue Code. The qualification
will continue if the Portfolio meets certain requirements.
One requirement is that at least 50% of the value of the
Portfolio s total assets at the close of each quarter of its
taxable year consist of obligations, on which the interest is
exempt from federal income tax.

Dividends derived from interest on municipal obligations,
which constitute exempt-interest dividends, will not be
subject to federal income tax, except to the extent such
interest is subject to the alternative minimum tax. Net
interest on certain "private activity bonds" issued on or
after August 8, 1986 is treated as an item of tax preference
and may, therefore, be subject to both the individual and
corporate alternative minimum tax. To the extent provided by
regulations to be issued by the Secretary of the Treasury,
exempt-interest dividends from the Portfolio are to be treated

as interest on "private activity bonds" in proportion to the
interest the Portfolio receives from private activity bonds,
reduced by allowable deductions. Regarding dividends derived
from taxable money market securities, the amount received,
subject to repurchase agreements and distributions of the
Portfolio s net short-term capital gains, if any, will be
taxed as ordinary income whether they are invested in
additional shares of the Portfolio or received in cash. The
Portfolio anticipates that any such amounts would be
insubstantial in relation to the tax-exempt interest generated
by the Portfolio.

The exemption of interest income for federal income tax
purposes may not produce similar exemptions under the tax laws
of state or local taxing authorities. In general, only
interest earned on obligations issued by the state or locality
in which the investor resides will be exempt from state and
local taxes. Shareholders should consult their tax advisers
concerning the tax status of the dividends from the Portfolio
in their own states and localities.

Statements as to the federal tax status of shareholders
dividends and distributions will be mailed by February 15 of
each year. The Portfolio will also report to its shareholders
annually the percentage and source, on a state-by-state basis,
of interest income received by the Portfolio on municipal
obligations.

ORGANIZATION AND DESCRIPTION OF COMMON STOCK

The Fund was incorporated in Maryland on April 8, 1983, and
has a present authorized capital of 200,000,000 shares of
$.001 par value common stock, which may be issued in three
separate classes: the Money Market Portfolio, the Rushmore
Maryland Tax-Free Portfolio and the Rushmore Virginia Tax-Free
Portfolio.

All shares of the Fund are freely transferable. The shares do
not have preemptive rights, and none of the shares has any
preference to conversion, exchange, dividends, retirements,
liquidation, redemption or any other feature. Shares have
equal voting rights, except that in a matter affecting only a
single Portfolio (such as the proposed sale of all the assets
of one Portfolio), only shares of that Portfolio may be
entitled to vote on the matter. Because the shares have non-
cumulative voting rights, the holders of more than 50% of the
shares voting for the election of directors can elect 100% of
the directors, if they choose to do so. In such event, the

holders of the remaining less than 50% of the shares voting
will not be able to elect any directors.

The Board of Directors of the Fund has the authority to
classify or reclassify any unissued shares by fixing the
number of shares in each of the Portfolios.

Shareholders having inquiries about the Fund's organization or
operation should contact the Fund in writing at 4922 Fairmont
Avenue, Bethesda, Maryland 20814 or by telephone at (301) 657-
1500.

Officers and directors of the Fund, as a group, own less than
1% of the shares outstanding.

MANAGEMENT OF THE FUND

Officers and Directors
The Fund has a Board of Directors which is responsible for the
general supervision of the Fund's business. The day-to-day
operations of the Fund are the responsibility of the Fund's
officers. A complete list of the Fund's directors and
officers is contained in the SAI.

Investment Adviser and Administrative Servicing Agent
The Portfolio is provided investment advisory and management
services by Money Management Associates (the "Adviser"), 1001
Grand Isle Way, Palm Beach Gardens, Florida 33418. The
Adviser is a limited partnership which was formed under the
laws of the District of Columbia on August 15, 1974. Its
primary business since inception has been to serve as the
Adviser to Fund for Government Investors, Inc., The Rushmore
Fund, Inc., Fund for Tax-Free Investors, Inc. and American Gas
Index Fund, Inc. Daniel L. O Connor, is the sole general
partner of the Adviser, and as such, exercises control of the
Adviser.

Under an Agreement with the Adviser, the Portfolio pays the
Adviser a fee at an annual rate based on 0.50% of the net
assets of the Money Market Portfolio, 0.625% of the net assets
of the Rushmore Virginia Tax-Free Portfolio and 0.625% of the
net assets of the Rushmore Maryland Tax-Free Portfolio. The
Adviser may, from time to time, agree to reimburse a Portfolio
for expenses above a specified percentage of average net
assets. Reimbursement arrangements, which may be terminated

at any time without notice, will increase the Portfolio s
yield. If the Adviser discontinues a reimbursement
arrangement, the Portfolio s expenses will go up and its yield
will be reduced. The Adviser retains the ability to be repaid
for expense reimbursements if expenses fall below the limit
prior to the end of the fiscal year. Repayment by a Portfolio
will reduce its yield. The Rushmore Maryland Tax-Free and
Rushmore Virginia Tax-Free Portfolios total operating
expenses were 0.77%, after reimbursements for the 1995 fiscal
year.

Effective September 1, 1993, the Board of Directors approved
an arrangement whereby Rushmore Trust and Savings, FSB, 4922
Fairmont Avenue, Bethesda, Maryland 20814, a majority-owned
subsidiary of the Adviser, provides the Portfolio with
custodial, transfer agency, dividend-disbursing, and other
services. The Portfolio pays an annual fee of 0.25% (25/100 of
1%) of average daily net assets for the Money Market Portfolio
and 0.30% (30/100 of 1%) of average daily net assets for the
Rushmore Maryland Tax-Free and Rushmore Virginia Tax-Free
Portfolios for these services.

CONTENTS

Page

Fee Table . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial Highlights . . . . . . . . . . . . . . . . . . . .

Performance Data . . . . . . . . . . . . . . . . . . . . . .

Investment Objective, Policies and Practices . . . . . . . .

How to Invest in the Portfolio . . . . . . . . . . . . . . .

How to Redeem and Investment (Withdrawals) . . . . . . . . .

Dividends . . . . . . . . . . . . . . . . . . . . . . . . . .

Net Asset Value . . . . . . . . . . . . . . . . . . . . . . .

Investor Accounts . . . . . . . . . . . . . . . . . . . . . .

Transaction Charges . . . . . . . . . . . . . . . . . . . . .

Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Organization and Description of Common Stock . . . . . . . .

Management of the Fund . . . . . . . . . . . . . . . . . . .

FUND

FOR

TAX-FREE

INVESTORS,

INC.

Prospectus

Rushmore Tax-Free Money Market Portfolio

April 30, 1996

FUND FOR TAX-FREE INVESTORS, INC.
4922 Fairmont Avenue
Bethesda, MD 20814
(800) 343-3355 (301) 657-1500

Rushmore Maryland Tax-Free Portfolio
and
Rushmore Virginia Tax-Free Portfolio

Fund for Tax-Free Investors (the "Fund") is a no-load, open-
end, management company consisting of three separate
portfolios, Tax-Free Money Market Portfolio, Rushmore Maryland
Tax-Free Portfolio and Rushmore Virginia Tax-Free Portfolio.

This Prospectus is a concise presentation of information about
the Rushmore Maryland Tax-Free Portfolio ("Maryland
Portfolio") and the Rushmore Virginia Tax-Free Portfolio
("Virginia Portfolio"), each a non-diversified series of the
Fund.

Investors should read this Prospectus and retain it for future
reference. It is designed to set forth concisely the
information an investor should know before investing in the
Portfolios. A Statement of Additional Information ("SAI")
dated April 30, 1996 containing additional information about
the Portfolios has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. A copy of
the SAI may be obtained, without charge, by writing or
telephoning the Fund.

The date of this prospectus is April 30, 1996.

ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

FEE TABLE
<TABLE>

CAPTION>

The following table illustrates all expenses and fees that a
shareholder of each Portfolio will incur:

Maryland Virginia
Portfolio Portfolio
Shareholder Transaction Expenses

<S> <C> <C>
Sales Load Imposed on Purchases None None
Sales Load Imposed on Reinvested Dividends None None

Deferred Sales Load None None
Redemption Fees None None
Exchange Fees None None
Monthly Account Fee
(for accounts under $500)* $5.00 $5.00

Annual Operating Expenses of the Portfolios
(as a percentage of average net assets)

Management Fees 0.625% 0.625%

12b-1 Fees None None
Other Expenses 0.30% 0.30%
Total Operating Expenses of the Portfolios 0.925% 0.925%

</TABLE>

* A charge of $5 per month may be imposed on any account
whose average daily balance for the month falls below
$500 due to redemptions. See "Transaction Charges."

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

1 Year 3 Years 5 Years 10 Years

Maryland Portfolio $ 10 $ 30 $ 53 $ 117
Virginia Portfolio 10 30 53 117

</TABLE>

The same level of expenses would be incurred if the investment
were held throughout the period indicated. The preceding
table is provided to assist the investor in understanding the
various costs and expenses that the investor will incur
directly or indirectly. The five percent assumed annual
return is for comparison purposes only. The actual return may
be more or less depending on market conditions. The example
should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those
shown. For more complete information about the various costs
and expenses, see "Management of the Fund" in the Prospectus
and SAI.

Money Management Associates, the Fund's investment adviser,
has agreed to reimburse the Maryland and Virginia Portfolios
(the "Portfolios") for expenses, (including the investment
advisory fee, and excluding interest and extraordinary legal
expenses) which exceed one percent of the average daily net
assets per annum. No reimbursement was required for the
fiscal year ended December 31, 1995. However, for that
period, Money Management Associates voluntarily reimbursed the
Portfolios for a portion of their expenses, which
reimbursement reduced the Portfolios' total operating expenses
to 0.77%, respectively.

Fund for Tax-Free Investors, Inc.
Financial Highlights
RUSHMORE VIRGINIA TAX-FREE PORTFOLIO
Audited

For The Year Ended December 31,

1995 1994 1993 1992

Per Share Operating
Performance:
Net Asset Value -
Beginning of Year . . . .
$ 10.36 $ 11.51 $ 10.84 $ 10.63

Net Investment Income . 0.564 0.578 0.582 0.610

Net Realized and
Unrealized

Gains (Loses) on
Securities . . . . . . . 0.953 (1.150) 0.670 0.210

Net Increase (Decrease) in
Net Asset Value Resulting
from Operations . . . . .
1.517 (0.572) 1.252 0.820

Dividends to Shareholders (0.564) (0.578) (0.582) (0.610)

Distributions to
Shareholders from Net
Realized Capital Gains . -- -- -- --

Net Increase (Decrease) in
Net Asset Value . . . . .
0.95 (1.15) 0.67 0.21

Net Asset Value-End of
Year . . . . . . . . . .
$ 11.31 $ 10.36 $11.51 $ 10.84

Total Investment Return 14.92% (5.02)% 11.80% 7.98%

Ratios to Average Net
Assets:
Expenses . . . . . . . 0.77% 0.55% 0.50% 0.50%

Expenses Before
Reimbursement
from Adviser . . . . . . 0.93% 0.93% 0.93% 0.93%

Net Investment Income . . 5.17% 5.35% 5.15% 5.71%

Supplementary Data:
Portfolio Turnover Rate . 55% 33% 43% 50%
Number of Shares
Outstanding at End of Year
2,957,858 2,697,151 2,985,125 2,354,055

</TABLE>

Fund for Tax-Free Investors, Inc.
Financial Highlights
RUSHMORE VIRGINIA TAX-FREE PORTFOLIO
Audited

For The Year Ended December 31,

1991 1990 1989 1988

Per Share Operating
Performance:
Net Asset Value -
Beginning of Year . . . .
$ 10.17 $ 10.31 $ 10.12 $ 9.99

Net Investment Income . 0.615 0.578 0.595 0.601

Net Realized and
Unrealized

Gains (Loses) on
Securities . . . . . . . 0.460 (0.140) 0.190 0.130

Net Increase (Decrease) in
Net Asset Value Resulting
from Operations . . . . .
1.075 (0.438) 0.785 0.731

Dividends to Shareholders (0.615) (0.578) (0.595) (0.601)

Distributions to
Shareholders from Net
Realized Capital Gains . -- -- -- --

Net Increase (Decrease) in
Net Asset Value . . . . .
0.46 (0.14) 0.19 0.13

Net Asset Value-End of
Year . . . . . . . . . .
$ 10.63 $ 10.17 $10.31 $ 10.12

Total Investment Return 10.85% 4.42% 7.95% 7.56%

Ratios to Average Net
Assets:
Expenses . . . . . . . 0.61% 0.93% 0.94% 0.93%

Expenses Before
Reimbursement
from Adviser . . . . . . 0.93% 0.93% 0.94% 0.93%

Net Investment Income . . 5.91% 5.70% 5.82% 5.92%

Supplementary Data:
Portfolio Turnover Rate . 74% 202% 150% 78%
Number of Shares
Outstanding at End of Year
1,576,102 721,172 666,829 768,252

</TABLE>

Fund for Tax-Free Investors, Inc.
Financial Highlights
RUSHMORE VIRGINIA TAX-FREE PORTFOLIO
Audited

For The Year Ended December 31,

1987 1986

Per Share Operating
Performance:
Net Asset Value -
Beginning of Year . . . . $ 10.74 $ 10.26

Net Investment Income . 0.630 0.718

Net Realized and
Unrealized
Gains (Loses) on
Securities . . . . . . .
(0.750) 0.480

Net Increase (Decrease) in
Net Asset Value Resulting
from Operations . . . . .
(0.120) 1.198

Dividends to Shareholders (0.630) (0.718)

Distributions to
Shareholders from Net
Realized Capital Gains . -- --

Net Increase (Decrease) in
Net Asset Value . . . . . ( 0.75) 0.48

Net Asset Value-End of
Year . . . . . . . . . .
$9.99 $ 10.74

Total Investment Return (1.12%) 12.06%

Ratios to Average Net
Assets:
Expenses . . . . . . . 0.92% 0.94%

Expenses Before
Reimbursement
from Adviser . . . . . . 0.92% 0.94%

Net Investment Income . . 6.18% 6.87%

Supplementary Data:
Portfolio Turnover Rate . 125% 42%
Number of Shares
Outstanding at End of Year
823,672 880,463

</TABLE>

Fund for Tax-Free Investors, Inc.
Financial Highlights
RUSHMORE MARYLAND TAX-FREE PORTFOLIO

Audited

For The Year Ended December 31,

1995 1994 1993 1992

<S> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value -
Beginning of Year . . . .
$ 10.11 $ 11.27 $ 10.60 $ 10.39

Net Investment Income . 0.550 0.565 0.568 0.594

Net Realized and
Unrealized
Gains (Loses) on
Securities . . . . . . . 0.869 (1.157) 0.670 0.210

Net Increase (Decrease) in
Net Asset Value Resulting
from Operations . . . . . 1.419 (0.592) 1.238 0.804

Dividends to Shareholders (0.551) (0.565) (0.568) (0.594)

Distributions to
Shareholders from Net
Realized Capital Gains .
-- (0.003) -- --

Net Increase (Decrease) in
Net Asset Value . . . . . 0.87 (1.16) 0.67 0.21

Net Asset Value-End of
Year . . . . . . . . . .
$ 10.98 $ 10.11 $11.27 $ 10.60

Total Investment Return 14.35% (5.24)% 11.91% 8.00%

Ratios to Average Net
Assets:
Expenses . . . . . . . 0.77% 0.55% 0.50% 0.50%

Expenses Before
Reimbursement
from Adviser . . . . . . 0.93% 0.93% 0.93% 0.93%

Net Investment Income . . 5.16% 5.36% 5.13% 5.67%

Supplementary Data:
Portfolio Turnover Rate . 37% 38% 30% 21%
Number of Shares
Outstanding at End of Year
4,527,324 4,390,634 5,156,988 4,144,846

</TABLE>

Fund for Tax-Free Investors, Inc.
Financial Highlights
RUSHMORE MARYLAND TAX-FREE PORTFOLIO
Audited

For The Year Ended December 31,

1991 1990 1989 1988

Per Share Operating
Performance:
Net Asset Value -
Beginning of Year . . . .
$ 9.99 $ 10.33 $ 10.34 $ 10.09

Net Investment Income . 0.594 0.620 0.679 0.702

Net Realized and
Unrealized

Gains (Loses) on
Securities . . . . . . . 0.400 (0.340) (0.010) 0.250

Net Increase (Decrease) in
Net Asset Value Resulting
from Operations . . . . .
0.994 0.280 0.669 0.952

Dividends to Shareholders (0.594) (0.620) (0.679) (0.702)

Distributions to
Shareholders from Net
Realized Capital Gains . -- -- -- --

Net Increase (Decrease) in
Net Asset Value . . . . .
0.40 (0.34) (0.01) 0.25

Net Asset Value-End of
Year . . . . . . . . . .
$ 10.39 $ 9.99 $10.33 $ 10.34

Total Investment Return 10.24% 2.89% 6.68% 9.67%

Ratios to Average Net
Assets:
Expenses . . . . . . . 0.62% 0.93% 0.92% 0.93%

Expenses Before
Reimbursement
from Adviser . . . . . . 0.93% 0.93% 0.92% 0.93%

Net Investment Income . . 5.85% 6.19% 6.56% 6.81%

Supplementary Data:
Portfolio Turnover Rate . 61% 244% 173% 102%
Number of Shares
Outstanding at End of Year
2,294,224 976,110 1,088,642 902,779

</TABLE>

Fund for Tax-Free Investors, Inc.
Financial Highlights
RUSHMORE MARYLAND TAX-FREE PORTFOLIO
Audited

For The Year Ended December 31,

1987 1986

Per Share Operating
Performance:
Net Asset Value -
Beginning of Year . . . .
$ 10.71 $ 10.33

Net Investment Income . 0.728 0.795

Net Realized and
Unrealized

Gains (Loses) on
Securities . . . . . . . (0.620) 0.380

Net Increase (Decrease) in
Net Asset Value Resulting
from Operations . . . . .
0.108 (1.175)

Dividends to Shareholders (0.728) (0.795)

Distributions to
Shareholders from Net
Realized Capital Gains . -- --

Net Increase (Decrease) in
Net Asset Value . . . . .
(0.62) 0.38

Net Asset Value-End of
Year . . . . . . . . . .
$ 10.09 $ 10.71

Total Investment Return 1.08% 11.80%

Ratios to Average Net
Assets:
Expenses . . . . . . . 0.93% 0.95%

Expenses Before
Reimbursement
from Adviser . . . . . . 0.93% 0.95%

Net Investment Income . . 7.04% 7.60%

Supplementary Data:
Portfolio Turnover Rate . 84% 40%
Number of Shares
Outstanding at End of Year
933,778 934,973

</TABLE>

MANAGEMENT S DISCUSSION OF PERFORMANCE

Clearly, there were several key events which shaped the
municipal bond market in 1995. Some of these were tax reform,
declining interest rates, lack of supply, and lack of demand
to mention a few.

After numerous interest rate increases in 1994 and early 1995
by the Federal Reserve, inflation fears subsided. In July and
December 1995, the Federal Reserve reduced rates which lead to
a strong rally in the municipal market. It appears that rates
will continue to remain low well into 1996.

The Maryland Portfolio had a total return of 14.35% for the
year ended December 31, 1995. On an annualized basis, net

income averaged 5.16% of net assets for the year. Net assets
for the Maryland Portfolio stood at $49.7 million on December
31, 1995. The Maryland Portfolio had an average maturity of
16.0 years on December 31, 1995. The State of Maryland
continued to retain its AAA rating and has excellent credit
quality and prospects. This is based on a diverse economy,
high wealth and income, sound financial performance, and a
manageable debt burden. While economic growth has been slow,
strong financial management has enabled the state to replenish
its reserves.

The Virginia Portfolio ended 1995 with a 14.92% total return.
On an annualized basis, net income averaged 5.17% of net
assets for the year ended December 31, 1995. Net assets for
the Virginia Portfolio stood at $33.5 million as of December
31, 1995. The Virginia Portfolio had an average maturity of
16.5 years on December 31, 1995. The State of Virginia also
retained its AAA rating. Moderate economic growth continues
in the state. Virginia's conservative approach to financial
operations and careful attention to debt offers good
protection to bond holders. The economy is expanding and the
growth in high technology businesses will substantially offset
any military downsizing in the years ahead.

In the Fund's semi-annual report to shareholders we mentioned
that inflationary pressures were receding and the economy was
beginning to slow. This scenario continues into 1996 and we
see no reason to change our opinion. Fears of a flat tax and
other tax reforms in 1995 caused many investors to miss one of
the best municipal bond rallies in a long time. All other
signs suggest this is a good time to invest in municipal
bonds: interest rates are stable, inflation seems to be under
control, and the supply of municipal bonds will remain
relatively low compared with other years.

PERFORMANCE DATA

The Portfolios may from time to time include total return in
advertisements or reports to shareholders or prospective
shareholders. Quotations of average annual total return for
the Portfolios will be expressed in terms of the average
annual compounded rate of return on a hypothetical investment
in the Portfolio(s) over a period of at least one, five and
ten years, or up to the life of each Portfolio (the ending
date of the period will be stated). Total return is

calculated from two factors: the amount of dividends earned
by each share and by the increase or decrease in value of a
Portfolio s share price.

Performance information for the Portfolios contained in
reports and promotional literature may be compared to various
unmanaged indices, including, but not limited to, the Standard
& Poor's 500 Stock Index ("S&P 500") or the Dow Jones
Industrial Average ("DJIA"). Such unmanaged indices may
assume the reinvestment of dividends but generally do not
reflect deductions for operating costs and expenses. In
addition, each Portfolio s total return may be compared to the
performance of other mutual funds and may quote rankings in
the relevant fund category as published by such organizations
as Lipper Analytical Services, Inc. and CDA Investment
Technologies, Inc., among others.

The Portfolios may also provide yield and tax-equivalent yield
quotations and quote fund rankings. Yield and tax-equivalent
yield quotations are based on each Portfolio s annualized net
investment income per share over a 30 day period stated as a
percent of the maximum public offering price on the last day
of the period.

Annualized yields of each of the Fund's Portfolios during a
particular period are computed by taking the Portfolio s
average daily net investment income, dividing by the net
assets of the Portfolio, and multiplying the result by 365
days. The quoted yield of a Portfolio for any particular
period of time should not be considered as representation of
future yield of the Portfolio.

For the 30-day period ended December 31, 1995, the yields on
the Maryland and Virginia Portfolios were 4.32% and 4.29%,
respectively.

[Graph appears here showing the comparison of change in the
value of a $10,000 investment made on December 31, 1985 in the
Lehman Brothers Municipal Bond Index, the Virginia Tax-Free
Portfolio, and the Maryland Tax-Free Portfolio].

Lehman Virginia Maryland
Brothers Tax-Free Tax-Free
Muni Bond Portfolio
PortfolioIndex

12/31/86 $11,932 $11,206 $11,181
12/31/87 $12,112 $11,081 $11,302
12/31/88 $13,343 $11,919 $12,395
12/31/89 $14,783 $12,867 $13,223
12/31/90 $15,861 $13,436 $13,605
12/31/91 $17,787 $14,893 $14,997
12/31/92 $19,354 $16,082 $16,196
12/31/93 $21,733 $17,979 $18,126
12/31/94 $20,609 $17,076 $17,159

12/31/95 $24,205 $19,624 $19,620

</TABLE>

Past performance is not predictive of future performance. The
Lehman Brothers Municipal Bond Index is an unmanaged index
and, unlike the Portfolios, has no management fees or other
operating expenses to reduce its reported return. Returns are
historical and include changes in principal and reinvested
dividends and capital gains.

Average Annual Total Return
Period Ending
December 31, 1995
<TABLE>
<CAPTION>

One Year Five Years Ten Years

Rushmore Virginia Tax-Free 14.92% 7.87% 6.97%
Rushmore Maryland Tax-Free 14.35% 7.60% 6.97%

</TABLE>

INVESTMENT OBJECTIVES, POLICIES AND PRACTICES

The investment objectives listed below cannot be changed
without shareholder approval. In view of the risks inherent
in all investments in securities, there is no assurance that
these objectives will be achieved. The investment policies
and practices employed in pursuit of each Portfolio s
objective may be changed without shareholder approval.

Investment Objective
The investment objective of both of the Portfolios is to
maximize income for investors that is exempt from federal and
state income taxes.

Each Portfolio will, as a matter of fundamental policy, invest
at least 80% of the value of its net assets in securities, the
interest on which is exempt from federal income taxes,
including the individual alternative minimum tax, and from
personal state income taxes.

Investment Policies and Practices
Each Portfolio seeks to achieve the investment objective by
investing at least 80% of its total assets under normal
conditions in securities issued by the state, its political
subdivisions, agencies and instrumentalities and other issuers
exempt from state income tax. Each Portfolio will generally
invest in long-term investment grade securities. The average
portfolio maturity will ordinarily exceed ten years, although
when, in the opinion of the investment adviser, it is in the
best interest of shareholders, the average maturity may be
reduced to less than ten years. The Portfolios may buy
without limitation unrated securities which are believed by
the Board of Directors to be of a quality comparable to that
of rated bonds eligible for purchase by the Portfolios. From
time to time, the Portfolios may purchase securities that are
rated below investment grade, however, such purchases will be
limited to 5% of net assets.

Although each Portfolio seeks to invest its total assets in
securities described in the preceding paragraph, market
conditions may from time to time limit the availability of
such obligations. During such periods, the Portfolios will
seek to invest in municipal obligations, the interest on which
may be subject to personal income taxes in the shareholder s
state of residence. Also as a temporary defensive measure or
to provide liquidity, the portfolios may hold up to 30% of
their total assets in obligations issued or guaranteed by the
U.S. government, its agencies or instrumentalities or
repurchase agreements secured by such securities. Income from
such securities may be taxable for federal and state income

tax purposes.

Municipal Securities
Municipal securities are debt obligations of states, cities,
municipalities and other public authorities and are
principally classified as notes and bonds. The yields on
municipal securities are dependent on a variety of factors,
including the general level of interest rates, the credit-
worthiness of a particular issuer, the size of a particular
issue, the maturity date of the issue, and its rating by the
various rating services. The market value of outstanding
municipal securities will also vary with the changes in
interest rates and with rating changes of the securities.

General obligation bonds are secured by the issuer's pledge of
its full faith, credit and taxing power for the payment of the
principal and interest. Revenue bonds are secured by the net
revenue derived from a particular facility or group of
facilities or, in some cases, the proceeds of a special excise
or other specific revenue source, but not by the general
taxing power. Industrial development and pollution control
bonds are municipal bonds which are issued by or on behalf of
public authorities to provide funding for the construction,
equipment, repair or improvement of various privately-operated
facilities. Industrial development and pollution control
bonds are, in most cases, revenue bonds and do not generally
carry the pledge of credit of the issuing municipality or
public authority. Each Portfolio may invest in either general
obligation or revenue bonds.

Municipal Notes
Municipal notes generally are used to provide for short-term
capital needs and ordinarily have maturities of one year or
less. Each Portfolio intends to invest in various types of
municipal notes, including tax anticipation notes, revenue
anticipation notes, construction loan notes and tax-exempt
commercial paper.

"When-Issued" Securities
New issues of municipal securities are often sold on a "when-
issued" basis; that is, payment and delivery of the securities
usually occurs 15 to 45 days after the date of the commitment
to purchase. At the time of the purchase commitments, both
the interest and principal amounts are fixed. During the
period between the purchase commitment and actual delivery, no
interest accrues to the purchaser and the market value of the

security may fluctuate. Each Portfolio of the Fund may enter
into purchase orders for "when-issued" securities with the
intention of actually taking delivery of such securities, but
may sell "when-issued" securities prior to delivery if it is
deemed advisable as a matter of investment strategy. Each
Portfolio will maintain short-term assets in a separate
account with the Fund's custodian bank in an amount equal to
the amount of purchase commitment for "when-issued"
securities. Each Portfolio does not intend to invest more
than 25% of its net assets in "when-issued" securities.

Variable Rate Securities
Each Portfolio may purchase certain tax-exempt municipal
obligations which have a variable rate of interest. Such
obligations bear interest at rates which vary with changes in
specific market rates or indices, such as a bank prime rate.
Both Portfolios intend to invest in such securities in order
to take advantage of the higher yield that is usually paid on
long-term securities. However, investment in these securities
will be made only if each Portfolio may redeem them on demand
within seven days.

The investment adviser will periodically analyze the credit-
worthiness of any unrated variable rate securities to insure
that such obligations meet the quality standards of the
particular Portfolio. Because variable rate securities may
have a maturity greater than one year, each Portfolio will
use, as the basis of calculation for computing its dollar-
weighted average maturity, the longer of (a) the notice period
required for demand of redemption by the holder or (b) the
period remaining until the next interest rate adjustment.

RISK CONSIDERATIONS

Quality
The Maryland and Virginia Portfolios generally invest in long-
term obligations that, on the date of purchase, are rated in
the four highest ratings of Standard & Poor's Corporation
("S&P") (AAA, AA, A and BBB) or Moody's Investors Service,
Inc. ("Moody's") (Aaa, Aa, A and Baa) or, if unrated, are
believed by the Board of Directors to be of a quality
comparable to that of rated bonds eligible for purchase by the
Portfolios. In addition, the Portfolios may purchase
securities that are rated below investment grade, however,
such purchases will be limited to 5% of each Portfolio s net
assets. Purchase of unrated securities and securities rated
below investment grade may expose the Portfolios to greater
market and credit risk than purchases of investment grade-
rated securities.

Market Risk
Market risk is the risk of price fluctuations of a security
and is generally a function of the underlying credit rating of
an issuer, the maturity length of a security, a security s
yield, and general economic and interest rate conditions. The
average portfolio maturities will ordinarily exceed ten years
although when, in the opinion of the investment advisor, it is
in the best interests of shareholders, average maturities may
be reduced to less than ten years.

Credit Risk
Credit risk is a function of the ability of the issuer to make
timely interest payments and to pay the principal at maturity.

Since each Portfolio generally will invest only in the
securities of its respective state, there are certain specific
factors and considerations concerning the states which may
subject the Portfolios to greater market or credit risk than
if the municipal securities purchased by each Portfolio were
more broadly diversified geographically. Such factors and
considerations are discussed below.

Diversification
A "diversified" investment company under the federal
securities laws may not, with respect to 75% of its total
assets, invest more than 5% of its total assets in any one
issuer. Each Portfolio is "non-diversified" for securities
law purposes and is not subject to this limitation. However,
each Portfolio intends to qualify as a "regulated investment
company" under the Internal Revenue Code. Such qualification
requires each Portfolio to limit its investments so that, with
respect to at least 50% of its total assets, not more than 5%
of such assets are invested in the securities of a single
issuer, and with respect to the remaining 50% of its total
assets, not more than 25% of such assets are invested in the
securities of a single issuer. Since, as a "non-diversified"
investment company, the Portfolio is permitted to invest a
greater proportion of its assets in the securities of a
smaller number of issuers, each Portfolio may be subject to
greater credit risk with respect to its portfolio securities
than an investment company which is more broadly diversified.

Rushmore Maryland Tax-Free Portfolio
The investment objective for the Portfolio is to maximize
income for investors that is exempt from federal and Maryland
state income taxes. As a matter of fundamental policy, the
Portfolio will invest at least 80% of the value of its net
assets in securities, the interest on which is exempt from
federal income taxes, including the individual alternative

minimum tax, and from personal income taxes of the State of
Maryland.

While such concentration in securities issued by the State of
Maryland and its political subdivisions involves greater risk
than a portfolio more broadly invested across many states and
municipalities, the Portfolio s investment restrictions should
be viewed in light of the economic condition of such entities.
Some risk factors affecting Maryland are discussed below.

Maryland has a well-diversified economy with wealth and income
levels above the national average. Economic diversity is a
key factor when assessing credit worthiness in that it reduces
reliance on any one type of industry or economic activity.
Principal employment sectors in Maryland are services,
wholesale and retail trade, government and manufacturing.

General obligations of the State of Maryland carry the highest
rating of AAA by the three major rating services: Standard
and Poor's, Moody's and Fitch as of the writing of this
Prospectus. All but three of Maryland's twenty-four counties
carry general obligation debt ratings of A or higher by at
least one of the three major rating agencies with Montgomery
County, Baltimore County, and Howard County carrying an AAA
rating by at least one of the rating agencies.

The State of Maryland has paid the principal and interest on
its general obligation bonds when due for over one hundred
twenty years. The state has the authority to make short-term
borrowings in anticipation of tax or other receipts, but has
not done so for its own needs for over one hundred years.

The factors mentioned above indicate that Maryland and its
larger political subdivisions are in satisfactory economic
condition. There can, of course, be no assurances made that
particular bond issues will not be adversely affected by
changes in national, state, or local economic or political
conditions.

Rushmore Virginia Tax-Free Portfolio
The investment objective for the Rushmore Virginia Tax-Free
Portfolio is to maximize income for investors that is exempt
from federal and Virginia state income taxes. The Portfolio
will, as a matter of fundamental policy, invest at least 80%
of the value of its net assets in securities, the interest on
which is exempt from federal income taxes, including the
individual alternative minimum tax, and from personal income
taxes of the Commonwealth of Virginia.

While such concentration in securities issued by the
Commonwealth of Virginia and its political subdivisions

involves greater risk than a portfolio more broadly invested
across many states and municipalities, the Portfolio s
investment restrictions should be viewed in light of the
economic condition of such entities.

The Constitution of Virginia limits the ability of the
Commonwealth to create debt. An amendment to the Constitution
of Virginia, approved by voters in 1984, requires a balanced
budget.

General obligation bonds of the Commonwealth of Virginia
carried ratings of AAA by Standard and Poor's Corporation and
Aaa by Moody's Investors Service, Inc. as of the writing of
this Prospectus.

General obligations of cities, towns or counties are payable
from the general revenues of the entity, including ad valorem
tax revenues on property within the jurisdiction. While the
obligation to levy taxes could be enforced by mandamus, such a
remedy may be impracticable and difficult to enforce.

A holder of any general obligation bond of any governmental
issuer in the Commonwealth of Virginia that is in default, may
file an affidavit with the Governor setting forth such
default. If the Governor determines that such default exists,
he is directed to order the state comptroller to withhold
funds appropriated and payable by the Commonwealth to the
defaulting governmental unit and apply the amount so withheld
to cover the default as to such bonds and interest thereon.

Other Considerations
The ability of the Portfolios to achieve their investment
objectives are dependent on a number of factors. These
factors include the ability of the Adviser to choose suitable
tax-exempt securities at a market rate of yield. Municipal
securities with longer maturities and a constant interest rate
to maturity are generally subject to greater decline in market
value than short-term securities when interest rates increase.

Except as stated above, the foregoing investment objective and
policies are not fundamental policies of the Fund and may be
changed by the Board of Directors of the Fund without
shareholder approval.

HOW TO INVEST IN THE PORTFOLIOS

The Fund continuously offers shares for sale. There is no
sales charge. The minimum initial investment is $2,500. There
is no minimum for subsequent investments.

By Mail
Complete an application and make a check payable to: "Fund for

Tax-Free Investors, Inc." Mail the check, along with the
application, to:

Fund for Tax-Free Investors, Inc.
4922 Fairmont Avenue
Bethesda, MD 20814

Be certain to specify the portfolio(s) you wish to purchase
and the amount of your purchase on the account application
form. Foreign checks will not be accepted.

By Bank Wire
Speak to the Branch Manager of your bank. Request a wire
transfer of federal funds to Rushmore Trust and Savings, FSB,
instructing the bank to wire transfer the money before 4:00
P.M., Eastern time, to:

Rushmore Trust and Savings, FSB
Bethesda, MD
Routing Number 0550-71084
For Account of Fund for Tax-Free Investors, Inc.
Account Number 029385770

AFTER INSTRUCTING YOUR BANK TO TRANSFER FEDERAL FUNDS, YOU
MUST TELEPHONE THE FUND AT (800) 622-1386 OR (301) 657-1510
BETWEEN 8:30 A.M. AND 4:00 P.M. EASTERN TIME AND TELL US THE
AMOUNT YOU TRANSFERRED AND THE NAME OF THE BANK SENDING THE
TRANSFER. YOUR BANK MAY CHARGE A FEE FOR SUCH SERVICES.
REMEMBER THAT IT IS IMPORTANT TO COMPLETE THE WIRE TRANSFER
BEFORE 4:00 P.M. EASTERN TIME.

Through Brokers
Investors may invest in the Portfolios by purchasing shares
through registered broker-dealers. Such broker-dealers who
process orders may charge a fee for such service.

The municipal securities market, in which each Portfolio buys
and sells its securities, usually requires immediate
settlement in federal funds for all securities transactions.
Therefore, payment for the purchase of each Portfolio's shares
not received in the form of federal funds will be invested in
specified Portfolio shares and will begin earning dividends
the following day. Payments received by bank wire are
converted immediately into federal funds. Orders received
prior to 4:00 P.M., Eastern time, will be invested in shares
of the specified Portfolio at the next determined net asset
value. The Fund reserves the right to reject any purchase
orders. All accounts will be held in book entry form. No

certificates for shares will be issued. There will be a $10
charge for items returned for insufficient or uncollectible
funds.

Purchase orders which do not specify the portfolio in which an
investment is to be made will be invested in the Rushmore Tax-
Free Money Market Portfolio.

HOW TO REDEEM AN INVESTMENT (WITHDRAWALS)

On any day the Fund is open for business, an investor may
withdraw all or any portion of his investment by redeeming
shares at the next determined net asset value per share after
receipt of the order by writing the Fund, or telephoning (800)
622-1386 or (301) 657-1510. There are no fees charged for the
redemption of shares.

The proceeds of redemptions will be sent directly to the
investor s address of record or bank account or brokerage firm
specified in the account application. If the investor
requests payment of redemptions to a third party or to a
location other than his residence, commercial bank(s) or a
brokerage firm(s) listed on the account application, the
investor s signature must be guaranteed by an eligible
institution. Eligible institutions generally include banking
institutions, securities exchanges, associations, agencies or
broker/dealers, and "STAMP" program participants.

Normally, the Fund will make payment within one business day
for all shares redeemed. However, for investments that have
been made by check, withdrawal requests may be delayed up to
ten business days or until the check clears, whichever occurs
first. This delay is necessary to assure the Fund that
investments made by checks are good funds. The proceeds of
the redemption will be forwarded promptly upon confirmation of
receipt of good funds.

The right of redemption may also be suspended, or the date of
payment postponed, (a) for any period during which the New
York Stock Exchange is closed (other than customary weekend or
holiday closings); or (b) when trading on the exchange is
restricted, or an emergency exists, as determined by the
Securities and Exchange Commission, so that disposal of each
Portfolio's investments for determination of net asset value
is not reasonably practicable; or (c) for such other periods
as the Commission, by order, may permit for protection of each
Portfolio's investors. Investors should also be aware that
telephone redemptions or exchanges may be difficult to

implement in a timely manner during periods of drastic
economic or market changes. If such conditions occur,
redemption or exchange orders can be made by mail.

Telephone Redemption
The privilege to initiate redemption transactions by telephone
will be made available to each Portfolio's shareholders
automatically. Redemptions will be mailed or wired the next
business day.

Telephone redemptions will only be sent to the address of
record or to bank accounts specified in the account
application. When acting on instructions believed to be
genuine, the Fund will not be liable for any loss resulting
from a fraudulent telephone redemption requests and the
investor would bear the risk of any such loss. The Fund will
employ reasonable procedures to confirm that redemption
instructions communicated by telephone are genuine; and if the
Fund does not employ such procedures, then the Fund may be
liable for any losses due to unauthorized or fraudulent
instructions. The Fund follows specific procedures for
transactions initiated by telephone, including among others,
requiring some form of personal identification prior to
acting on instructions received by telephone, providing
written confirmation not later than five business days after
such transactions, and/or tape recording of telephone
transactions.

Bank Wire Transfers
When you redeem at least $5,000 for deposit to your commercial
bank account, the Fund will automatically wire transfer the
amount.

Check Transfers
For amounts less than $5,000, investors utilizing certain
Washington, D.C. banks may have checks deposited directly.
Check deposits to other banks, or brokerage firms, will be
mailed.

Exchange Privilege
Each Portfolio s shares may be exchanged, without cost, for
shares of any other Portfolio or for shares of Fund for
Government Investors, Inc., The Rushmore Fund, Inc., American
Gas Index Fund, Inc. or Cappiello-Rushmore Trust on the basis
of the respective net asset values of the shares involved,
provided such exchange is permitted under the applicable laws
of the state of the investor's residence. Shareholders
contemplating such an exchange should obtain and review the
prospectuses of those funds. Telephone exchange privileges
may be terminated or modified by the Fund upon 60 days notice

to all shareholders of the Portfolios.

TRANSACTION CHARGES

In addition to charges described elsewhere in this Prospectus,
each Portfolio may impose a charge of $5 per month for any
account whose average daily balance is below $500 due to
redemptions. The fee will continue to be imposed during
months when the account balance remains below $500. The fee
will be imposed on the last business day of the month. This
fee will be paid to Rushmore Trust and Savings, FSB. The fee
will not be imposed on tax-sheltered retirement plans or
accounts established under the Uniform Gifts or Transfers to
Minors Act. Each Portfolio may also assess a charge of $10
for items returned for insufficient or uncollectible funds.
Because of the expense of handling small accounts, each
Portfolio reserves the right to involuntarily redeem an
investor s account which falls below $500 in total value in
all Tax-Free Portfolios of the Fund due to redemptions or
exchanges after providing 60 days written notice.

DIVIDENDS

Each Portfolio distributes all of its net income on a daily
basis. Net income consists of all interest income accrued and
discount earned, less estimated expenses of the Fund. Capital
gains, if any, will be distributed on an annual basis.

Dividends are declared each day that the Fund is open for
business. Investors receive dividends in additional shares
unless they elect to receive cash. Payment, either in
additional shares or in cash, is made on a monthly basis at
the net asset value on the payable date. Investors wishing to
change the method of receiving dividends must notify the Fund
in writing at least one week before payment is to be made.

NET ASSET VALUE

Net asset value of the Portfolios shares will be determined
as of 4:00 P.M. on days when there is sufficient trading in
Portfolio securities of each Portfolio to affect the net asset
value materially. The net asset value per share of each of
the Portfolios is calculated by adding the appraised value of
all securities and all other assets, deducting liabilities and
dividing by the number of shares outstanding. To the extent
market quotations are not readily available, the Board of
Directors will value each Portfolio's portfolio securities in
good faith. The Directors will continuously review this
method of valuation and recommend changes which may be
necessary to assure that the Fund's portfolio instruments are

valued at fair value.

The securities of each Portfolio will be valued on the basis
of the average of quoted bid and ask prices when market
quotations are available. In the absence of readily available
market quotations, the Fund may value the securities in good
faith based on fair market value. In determining fair market
value, the Fund may take into consideration prices supplied by
a pricing service, provided the use of the pricing service has
been approved by the Board of Directors.

Valuations provided by pricing services are generally
determined without exclusive regard to quoted prices.
Generally, pricing services consider in their valuation the
market activity of similar groups of securities, their yields,
quality ratings, maturities, and other characteristics. The
share prices of investments in the Portfolios are expected to
fluctuate with the movement of municipal bond prices.

INVESTOR ACCOUNTS

The Fund maintains an account for each investor in full and
fractional shares. All purchase and sale transactions will be
confirmed to the investor. Statements of account showing
dividends paid will be sent at least quarterly.

TAXES

Each Portfolio has qualified (and intends to continue to
qualify) as a regulated investment company under Subchapter M
of the Internal Revenue Code. Because of this qualification
each Portfolio will not be liable for federal income taxes to
the extent its earnings are distributed. Additionally, each
Portfolio qualifies to pay "exempt-interest dividends" within
the meaning of the Internal Revenue Code. The qualification
will continue if each Portfolio meets certain requirements.
One requirement is that at least 50% of the value of each
Portfolio s total assets at the close of each quarter of its
taxable year consists of obligations, on which the interest is
exempt from federal income tax.

corporate alternative minimum tax. To the extent provided by
regulations to be issued by the Secretary of the Treasury,
exempt-interest dividends from each Portfolio are to be
treated as interest on "private activity bonds" in proportion
to the interest each Portfolio receives from private activity
bonds, reduced by allowable deductions. Regarding dividends
derived from taxable money market securities, the amount
received, subject to repurchase agreements and distributions
of each Portfolio's net short-term capital gains, if any, will
be taxed as ordinary income whether they are invested in
additional shares of either Portfolio or received in cash.
Each Portfolio anticipates that any such amounts would be
insubstantial in relation to the tax-exempt interest generated
by each Portfolio. Each Portfolio will distribute such short-
term gains at least annually. Distribution of net long-term
capital gains, if any, realized by each Portfolio and
designated as capital gains dividends will be made at least
annually and will be taxed to shareholders at capital gains
rates regardless of the length of time the shares have been
held. Currently, long-term capital gains are taxed at
ordinary income rates.

The exemption of interest income for federal income tax
purposes may not produce similar exemptions under the tax laws
of state or local taxing authorities. In general, only
interest earned on obligations issued by the state or
locality in which the investor resides will be exempt from
state and local taxes. Shareholders should consult their tax
advisers concerning the tax status of the dividends from each
Portfolio in their own states and localities.

Statements as to the federal tax status of shareholders
dividends and distributions will be mailed by February 15 of
each year. Each Portfolio will also report to its
shareholders annually the percentage and source, on a state-
by-state basis, of interest income received by each Portfolio
on municipal obligations.

ORGANIZATION AND DESCRIPTION OF COMMON STOCK

The Fund was incorporated in Maryland on April 8, 1983, and
has a present authorized capital of 200,000,000 shares of
$.001 par value common stock, which may be issued in three
separate classes: the Rushmore Tax-Free Money Market
Portfolio, Rushmore Maryland Tax-Free Portfolio and Rushmore
Virginia Tax-Free Portfolio.

All shares of the Fund are freely transferable. The shares do
not have preemptive rights, and none of the shares has any
preference to conversion, exchange, dividends, retirements,

liquidation, redemption or any other feature. Shares have
equal voting rights, except that in a matter affecting only a
single Portfolio (such as the proposed sale of all the assets
of one Portfolio), only shares of that Portfolio may be
entitled to vote on the matter. Because the shares have non-
cumulative voting rights, the holders of more than 50% of the
shares voting for the election of directors can elect 100% of
the directors, if they choose to do so. In such event, the
holders of the remaining less than 50% of the shares voting
will not be able to elect any directors.

The Board of Directors of the Fund has the authority to
classify or reclassify any unissued shares by fixing the
number of shares in each of the Portfolios.

Officers and directors of the Fund, as a group, own less than
1% of the shares outstanding.

Shareholders having inquires about the Fund's organization or
operation should contact the Fund in writing at 4922 Fairmont
Avenue, Bethesda, Maryland, or by telephone at (301) 657-1500
or (800) 343-3355.

MANAGEMENT OF THE FUND

Investment Adviser and Administrative Servicing Agent
The Fund is provided investment advisory and management
services by Money Management Associates (the "Adviser"), 1001
Grand Isle Way, Palm Beach Gardens, Florida 33418. The
Adviser is a limited partnership which was formed under the
laws of the District of Columbia on August 15, 1974. Its
primary business since inception has been to serve as the
Adviser to Fund for Government Investors, The Rushmore Fund,
Inc., Fund for Tax-Free Investors, Inc. and American Gas Index
Fund, Inc. Daniel L. O Connor is the sole general partner of
the Adviser, and as such, exercises control of the Adviser.
Investment decisions are made by committee and no person is
primarily responsible for making recommendations to that
committee.

Under an Agreement with the Adviser, the Fund pays the Adviser
a fee at an annual rate based on 0.50% of the net assets of

the Money Market Portfolio, 0.625% of the net assets of
Maryland Portfolio and 0.625% of the net assets of the
Virginia Portfolio. The Adviser may, from time to time, agree
to reimburse a Portfolio for expenses above a specified
percentage of average net assets. Reimbursement arrangements,
which may be terminated at any time without notice, will
increase the Portfolio s yield. If the Adviser discontinues a
reimbursement arrangement, Portfolio expenses will increase
and yield will be reduced. The Adviser retains the ability to
be repaid for expense reimbursements if expenses fall below
the limit prior to the end of the fiscal year. Repayment by a
Portfolio will reduce its yield. The Maryland and Virginia
Portfolios total operating expenses were 0.77% after
reimbursement for the 1995 fiscal year.

Effective September 1, 1993, the Board of Directors approved
an arrangement whereby Rushmore Trust and Savings, FSB, 4922
Fairmont Avenue, Bethesda, Maryland, a majority-owned
subsidiary of the Adviser, provides the Fund with custodial,
transfer agency, dividend-disbursing, and other services. The
Fund pays an annual fee of 0.25% (25/100 of 1%) of average
daily net assets for the Money Market Portfolio and 0.30%
(30/100 of 1%) of average daily net assets for the Maryland
and Virginia Portfolios for these services.

CONTENTS

Page

Fee Table . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial Highlights . . . . . . . . . . . . . . . . . . . .

Performance Data . . . . . . . . . . . . . . . . . . . . . .

Investment Objective, Policies and Practices . . . . . . .

Risk Considerations . . . . . . . . . . . . . . . . . . . . .

How to Invest in the Portfolios . . . . . . . . . . . . . . .

How to Redeem an Investment
(Withdrawals) . . . . . . . . . . . . . . . . . . . . . . .

Transaction Charges . . . . . . . . . . . . . . . . . . . . .

Dividends . . . . . . . . . . . . . . . . . . . . . . . . . .

Net Asset Value . . . . . . . . . . . . . . . . . . . . . . .

Investor Accounts . . . . . . . . . . . . . . . . . . . . . .

Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .

Organization and Description of
Common Stock . . . . . . . . . . . . . . . . . . . . . .

Management of the Fund . . . . . . . . . . . . . . . . . . .

FUND
FOR
TAX-FREE
INVESTORS,
INC.
Rushmore Maryland Tax-Free Portfolio
Rushmore Virginia Tax-Free Portfolio

PROSPECTUS
April 30, 1996

PART B

FUND FOR TAX-FREE INVESTORS, INC.

4922 Fairmont Avenue, Bethesda, MD 20814
(301) 657-1500
(800) 343-3355

STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information is not a prospectus.
It should be read in conjunction with the Fund's Prospectus,
dated April 30, 1996. A copy of the Prospectus may be
obtained without charge by writing or telephoning the Fund.

The date of this Statement of Additional Information is April
30, 1996.

FUND FOR TAX-FREE INVESTORS, INC.

STATEMENT OF ADDITIONAL INFORMATION

Table of Contents

Cross Reference to Related Item in Prospectus

Page Page in
Rushmore
Maryland Page in
Page in and Tax-Free
Statement Virginia Money
of Tax-Free Market
Additional Portfolios Portfolio
Information Prospectus Prospectus

Investment Objective and Policies

Investment Restrictions

Management of the Fund

Principal Holders of Securities

Investment Advisory and Other Services

Net Asset Value

Comparative Performance Data

Calculation of Yield Quotations

Auditors and Financial Statements

</TABLE>

INVESTMENT OBJECTIVES AND POLICIES

The Fund may invest only in municipal obligations and United
States Government securities of the quality specified in the
prospectus under "Investment Objectives and Policies." The
Fund has therefore adopted the investment restrictions listed
below. These restrictions, which apply to each Portfolio, may
not be changed without prior approval of a majority of holders
of the Fund's outstanding voting shares. As defined in the
Investment Company Act of 1940, the term "majority" means the
vote of the lesser of (a) 67% of the shares of the Fund at a
meeting where more than 50% of the outstanding shares are
present in person or by proxy; or (b) more than 50% of the
outstanding shares of the Fund.

1. The Fund may not borrow money, except that as a temporary
measure the Fund may borrow money to facilitate
redemptions. Such a borrowing may be in an amount not to
exceed 30% of the Fund's total assets, taken at current
value, before such borrowing. The Fund may not purchase a
portfolio security if a borrowing by the Fund is
outstanding.

2. The Fund may not make short sales of securities or
purchase any securities on margin, except for such short-
term credits as are necessary for the clearance of
transactions. The Fund may not enter into put or call
options except in connection with stand-by commitments.

3. The Fund may not make loans except through repurchase
agreements. (See "Investment Objectives and Policies")

4. The Fund may not underwrite securities of any other
issuer.

5. The Fund may not purchase or sell real estate; however,
the Fund may invest in municipal obligations secured by
real estate or interests therein.

6. The Fund may not purchase or sell restricted securities,
commodities or commodity contracts, nor may it issue
senior securities.

7. The Fund may not purchase securities of any issuer if, as
a result of such a purchase, more than 25% of the Fund's
total assets would be invested in any one industry. There
is no limitation, however, as to investments in municipal
obligations issued or guaranteed by the United States
Government, its agencies or instrumentalities, or in
obligations of the United States Government, its agencies
or instrumentalities, which are purchased on a temporary
basis in accordance with the Fund's investment objective

and policies.

MANAGEMENT OF THE FUND

Directors and Officers of the Fund and Officers of the
Adviser, together with information as to their principal
business occupations during the past five years, are set forth
below. Officers of the Fund do not receive salaries or other
forms of compensation from the Fund. Non-interested
Directors fees and expenses will be paid by the servicing
agent. Non-interested Directors were paid an annual fee of
$3,000. For the year ended December 31, 1995, such fees
amounted to $9,000.

*Daniel L. O Connor, 54 - Chairman of the Board, Treasurer and
Director of the Fund. President, 1974 to 1981. Partner and
Chief Operating Officer of the Adviser. Address: 1001 Grand
Isle Way, Palm Beach Gardens, Florida 33418.

*Richard J. Garvey, 63 - President and Director of the Fund.
Executive Vice President, 1974 to 1981. Limited Partner of the
Adviser. Address: 4922 Fairmont Avenue, Bethesda, Maryland
20814.

Patrick F. Noonan, 53 - Director. Chairman and Chief
Executive Officer of the Conservation Fund since 1986. Vice
Chairman, American Farmland Trust and Trustee, American
Conservation Association since 1985. President, Conservation
Resources, Inc. since 1981. Address: 11901 Glen Mill Drive,
Potomac, Maryland 20854.

Jeffrey R. Ellis, 51 - Director. Vice President of LottoFone,
a telephone lottery system, since 1993. Vice President
Shoppers Express, Inc. through 1992. Address: 513 Kerry Lane,
Virginia Beach, Virginia 23451.

Bruce C. Ellis, 51 - Director of the Fund. Vice President,
LottoFone, Inc., a telephone state lottery service, since
1991. Vice President, Shoppers' Express, Inc., 1986-1992.
Address: 7108 Heathwood Court, Bethesda, Maryland 20817.

*Rita A. Gardner, 52 - Director. Limited partner of the
Adviser. Address: 4922 Fairmont Avenue, Bethesda, Maryland
20814.

Michael D. Lange, 54 - Director of the Fund. Vice President,
Capital Hill Management Corporation since 1967. Owner of
Michael D. Lange, Ltd., a builder and developer since 1980.
Partner of Greatfull Falls, a building developer, since 1994.
Address: 7521 Pepperell Drive, Bethesda, Maryland 20817.

Leo Seybold, 82 - Director. Retired. Address: 5804 Rockmere
Drive, Bethesda, Maryland 20816.

*Martin M. O Connor, 51 - Vice President since 1974. A
limited partner of the Adviser since 1979. Address: 4922
Fairmont Avenue, Bethesda, Maryland 20814.

*John R. Cralle, 56 - Vice President since 1978. A limited
partner of the Adviser since 1979.
Address: 4922 Fairmont Avenue, Bethesda, Maryland 20814.

*Timothy N. Coakley, CPA, 28 - Vice President and Controller
of the Fund. Chief Financial Officer, Rushmore Trust and
Savings, FSB since 1995. Audit Manager Deloitte & Touche LLP
until 1994. Address: 4922 Fairmont Avenue, Bethesda, Maryland
20814.

*Stephenie E. Adams, 26 - Secretary. Director of Marketing,
Rushmore Services, Inc., from July 1994 to present. Regional
Sales Coordinator, Media General Cable, from June 1993 to June
1994. Graduate Student, Northwestern University, M.S., from
September 1991 to December 1992. Student, Stephens College,
Columbia, Missouri, B.S., from August 1987 to May 1991.
Address: 4922 Fairmont Avenue, Bethesda, Maryland 20814.

Daniel L. O Connor and Martin M. O Connor are brothers.

* Indicates interested person as defined by the Investment
Company Act of 1940.

PRINCIPAL HOLDERS OF SECURITIES

On April 4, 1996, there were outstanding 20,754,802.04 shares
of the Money Market Portfolio, 4,591,200.51 shares of the
Rushmore Maryland Tax-Free Portfolio, and 2,963,237.06 shares
of the Rushmore Virginia Tax-Free Portfolio. Shareholder John
Ballenger, Potomac, Maryland owned 8.98% of the Tax-Free Money
Market Portfolio. Charles Schwab & Co., San Francisco,
California, held for the benefit of others, 7.53% of the
Virginia Tax-Free Portfolio. Shareholder Roger W. Jones,
Falls Church, Virginia, owned 6.97% of the Virginia-Tax Free
Portfolio. Officers and directors of the Fund, as a group own
less than 1% of the shares outstanding.

INVESTMENT ADVISER AND OTHER SERVICES

The Fund is provided investment advisory and management
services by Money Management Associates (the "Adviser"), 1001
Grand Isle Way, Palm Beach Gardens, Florida 33418. The
Adviser is a limited partnership which was formed under the
laws of the District of Columbia on August 15, 1974. Its
primary business since inception has been to serve as the

investment adviser to Fund for Government Investors, Inc.,
Fund for Tax-Free Investors, Inc., The Rushmore Fund, Inc.,
and American Gas Index Fund, Inc. Certain officers and
directors of the Fund are affiliated with Fund for Government
Investors, Inc., The Rushmore Fund, Inc., American Gas Index
Fund, Inc. or with the Adviser. (See "Management of the
Fund.")

Under an Investment Advisory Agreement with the Adviser, dated
July 12, 1983 (the "Agreement"), the Adviser provides
investment advice to the Fund and oversees its day-to-day
operations, subject to direction and control by the Fund's
Board of Directors. Pursuant to the Agreement, the Fund pays
the Adviser a fee at an annual rate based on 0.50% of the net
assets of the Money Market Portfolio, 0.625% of the net assets
of the Rushmore Maryland Tax-Free Portfolio and 0.625% of the
net assets of the Rushmore Virginia Tax-Free Portfolio. Under
the Agreement, the Adviser will reimburse the Fund for
expenses which exceed one percent of the average daily net
assets per annum. Reimbursable expenses include the
investment advisory fee, but exclude interest and
extraordinary legal expenses. Normal expenses which are borne
by the Fund, include, but are not limited to, taxes, corporate
fees, interest expenses (if any), office expenses, the costs
incident to preparing, registering and redeeming stock
certificates for shareholders, custodian charges, the expenses
of shareholders and directors meetings, data processing,
preparation, printing and distribution of all reports and
proxy materials, legal services rendered to the Fund,
compensation for those directors who do not serve as employees
of the Adviser, insurance coverage for the Fund and its
directors and officers, and its membership in trade
associations. The Adviser may, from time to time, make
payments to broker-dealers and others for their expenses in
connection with the distribution of Fund shares. Although
such payments may be based upon the number of shares
distributed, it is the understanding of the Adviser that such
payments will be for reimbursement and will not exceed the
expenses of the recipients in arranging for and administering
distribution of Fund shares. For the fiscal year ended
December 31, 1995, 1994 and 1993, the Fund paid the following
advisory fees to the Adviser:

Tax-Free Money Market Portfolio $ 112,637 $ 122,333 $ 143,953
Maryland Tax-Free Portfolio $ 297,506 $ 330,178 $ 328,929
Virginia Tax-Free Portfolio $ 195,452 $ 200,478 $ 207,238

Daniel L. O Connor is the sole general partner of the Adviser,
and, as such, exercises control thereof.

The Agreement was last renewed by the Board of Directors on
October 31, 1995 and shall be renewed annually, if approved by
either of two methods: (1) by the Board of Directors,
including approval by a majority of the non-interested
directors by vote cast in person at a meeting called for that
purpose, or (2) by a majority of those shareholders of the
outstanding voting securities of the Fund and the non-
interested directors. The Agreement may be cancelled without
penalty on sixty days notice by the Board of Directors of the
Fund, by the Adviser or by vote of the holders of a majority
of the Fund's shares. The agreement will terminate
automatically in the event it is assigned.

Effective September 1, 1993, the Board of Directors approved
an arrangement whereby Rushmore Trust and Savings, FSB
("RTS"), 4922 Fairmont Avenue, Bethesda, Maryland 20814, a
majority-owned subsidiary of the Adviser, acts as the Fund's
custodian, transfer agent, dividend disbursing agent and
shareholder servicing agent. The Fund pays RTS an annual fee
of 0.25% (25/100 of 1%) of average daily net assets for the
Money Market Portfolio and 0.30% (30/100 of 1%) of average
daily net assets for the Rushmore Maryland Tax-Free and
Rushmore Virginia Tax-Free Portfolios for these services. The
non-interested directors of the Fund have reviewed the fee
structure and determined that it is competitive and in the
best interests of the shareholders of the Fund. The fees will
be reviewed and approved annually by the non-interested
directors. The Fund is subject to the self-custodian rules of
the Securities and Exchange Commission. These rules require
that the custodian be subject to three securities verification
examinations each year conducted by the Fund's independent
accountants. Two of the examinations must be performed on an
unannounced surprise basis.

PRICING OF SECURITIES BEING OFFERED

Net asset value of the Fund's Money Market shares will be
determined as of 12:00 Noon, and the net asset value of
Rushmore Maryland Tax-Free and Rushmore Virginia Tax-Free
Portfolio shares will be determined as of 4:00 P.M., Eastern
time, on days when there is sufficient trading in portfolio
securities of the Fund to affect the net asset value
materially. The net asset value per share of each of the
Portfolios is calculated by adding the appraised value of all
securities and all other assets, deducting liabilities and
dividing by the number of shares outstanding. To the extent
market quotations are not readily available, the Board of
Directors will value the Fund's portfolio securities in good
faith. The directors will continuously review this method of

valuation and recommend changes which may be necessary to
assure that the Fund's Portfolio instruments are valued at
fair value.

Money Market Portfolio
The Money Market Portfolio intends to value its Portfolio
securities at their amortized cost value pursuant to Rule 2a-7
under the Investment Company Act of 1940. This method does
not take into account unrealized securities gains or losses.
It involves valuing a security at its cost and thereafter
assuming a constant amortization to maturity of any purchase
discount or premium. While this method provides certainty in
calculation, it may result in periods during which the value,
as determined by amortized cost, is higher or lower than the
price which the Fund would receive if the security were sold.
During periods of declining interest rates, the daily yield on
shares of the Money Market Portfolio may tend to be higher
than a like computation made by a fund with identical
investments using a method of valuation based upon market
prices of its portfolio securities. The converse would apply
in a period of rising interest rates.

As a condition to the use of amortized cost and maintenance of
the Fund's per share net asset value of $1.00, the Fund has
agreed that the Money Market Portfolio will maintain a dollar-
weighted average maturity of 90 days or less and, except for
certain variable rate securities, will purchase only
securities having remaining maturities of 397 days or less.
The Board of Directors has also agreed to establish
procedures designed to stabilize, to the extent reasonably
possible, the Money Market Portfolio s price per share, as
computed for the purpose of sales and redemptions, at $1.00.
Such procedures will include review by the Board of Directors,
at such intervals as it may be deemed appropriate, to
determine whether the Money Market Portfolio s net asset
value, calculated by using available market quotations,
deviates from $1.00 per share based on amortized cost. The
extent of any deviation between the Money Market Portfolio s
net asset value based on market value and the $1.00 per share
based on amortized cost will be examined by the Board of
Directors. If such deviation exceeds 1/2 of 1% the Board of
Directors will promptly consider what action, if any, will be
initiated. If the Board of Directors determines that a
deviation exists, which may result in material dilution or
other unfair results to new investors or existing
shareholders, it will consider corrective action. This action
might include selling securities prior to maturity to realize
capital gains or losses or to shorten average portfolio
maturity, withholding dividends, or establishing a net asset
value per share by using available market quotations.

Rushmore Maryland Tax-Free and Rushmore Virginia Tax-Free
Portfolios
The securities of these Portfolios will be valued on the basis
of the average of quoted bid and ask prices when market
quotations are available. In the absence of readily available
market quotations, the Fund may value the securities in good
faith based on fair market value. In determining fair market
value, the Fund may take into consideration prices supplied by
a pricing service, provided the use of the pricing service has
been approved by the Board of Directors. Valuations provided
by pricing services are generally determined without exclusive
regard to quoted prices. Generally, pricing services consider
in their valuation the market activity of similar groups of
securities, their yields, quality ratings, maturities, and
other characteristics. The share prices of investments in the
Rushmore Maryland Tax-Free and Rushmore Virginia Tax-Free
Portfolios are expected to fluctuate with the movement of
municipal bond prices.

TAXES

Interest incurred on borrowings made to purchase shares of the
Fund is not deductible. In addition, entities or persons who
are "substantial users" (or persons related to "substantial
users"), as defined by the Internal Revenue Code and the
regulations thereunder, of facilities financed by industrial
development bonds should consult their tax advisers before
purchasing shares of the Fund. The income from those bonds
may not be tax-exempt for "substantial users."

CALCULATION OF PERFORMANCE DATA

The yield for the Rushmore Tax-Free Money Market Portfolio is
calculated by multiplying the total dollar amount of dividends
declared on the Portfolio by 365 days and dividing the results
by the net assets of the Portfolio. The total amount of
dividends earned is equal to the earnings realized on the
investment securities held by the portfolio less management
fees and a provision for ordinary expenses.

The yield quotation for the Rushmore Maryland Tax-Free and
Rushmore Virginia Tax-Free Portfolios are based on the 30-day
period ended December 31, 1995 computed by dividing the net
investment income per share earned during the period by the
offering price per share on December 31, 1995.

Total returns for the Rushmore Maryland Tax-Free and Rushmore
Virginia Tax-Free Portfolios are computed by calculating the
average annual compounded rates of return over the one-year,
five-year and ten year periods ending December 31, 1995.

Comparative Performance Data
The Fund's performance may be compared in advertising to the
performance of other mutual funds in general or to the
performance of particular types of mutual funds, especially
those with similar objectives. More up-to-date performance
data may be provided as it becomes available. From time to
time, the Fund may provide information concerning general
economic conditions, financial trends, and analysis and supply
comparative performance and rankings, with respect to
comparable investments for the same period, for unmanaged
market indexes such as the Dow Jones Industrial Average,
Standard & Poor's 500 IndexTM, Shearson Lehman Bond Indexes,
Merrill Lynch Bond Indexes, Bond Buyer Index, and from
recognized independent sources such as Donoghue s Money Fund
Report, Donoghue Money Letter, Bank Rate Monitor, Money
Magazine, Forbes, Lipper, Standard & Poor's Corporation, CDA
Investment Technologies, Inc. ("CDA"), Wiesenberger Investment
Companies Service, Mutual Fund Values, Mutual Fund Forecaster,
Mutual Fund Sourcebook, Fortune, Business Week, Changing
Times, The Wall Street Journal, Investor s Daily and
Schabacker Investment Management, Inc. Comparisons may also
be made to Consumer Price Index, rate of inflation, bank money
market rates, rates of certificates of deposit, Treasury Bills
and Treasury Bond rates and yields.

AUDITORS AND CUSTODIAN

Deloitte & Touche LLP independent certified public
accountants, are the auditors of the Fund. Rushmore Trust and
Savings, FSB, Bethesda, Maryland, acts as custodian bank for
the Fund.

FINANCIAL STATEMENTS

The Fund incorporates by reference in this Statement of
Additional Information the financial statements and notes
contained in its annual report to the shareholders for the
year ended December 31, 1995.

ANNUAL REPORT, DECEMBER 31, 1995

[LOGO OF RUSHMORE
APPEARS HERE]

FUND FOR TAX-FREE INVESTORS, INC.
4922 FAIRMONT AVENUE, BETHESDA, MD 20814
(800) 622-1386 (301) 657-1510

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

Dear Shareholders:

Clearly, there were several key events which shaped the
municipal bond market in 1995. Some of these were tax reform,
declining interest rates, lack of supply, and lack of demand
to mention a few.

After numerous interest rate increases in 1994 and early
1995 by the Federal Reserve, inflation fears subsided. In
July and December 1995, the Federal Reserve reduced rates
which lead to a strong rally in the municipal market. It
appears that rates will continue to remain low well into 1996.

TAX-FREE MONEY MARKET PORTFOLIO

The Tax-Free Money Market Portfolio invests in high-quality,
tax-exempt municipal bonds with maturities of less than one
year. Fund for Tax-Free Investors Money Market Portfolio had
an annualized net investment income of 3.04% of net assets for
the year ended December 31, 1995, compared to 1.99% for 1994.
On December 31, 1995, the Portfolio's average maturity was 61
days.

MARYLAND AND VIRGINIA TAX-FREE PORTFOLIOS

Fund for Tax-Free Investors Maryland Portfolio has a total
return of 14.35% for the year ended December 31, 1995. On an
annualized basis, net income averaged 5.16% of net assets for
the year. Net assets for the Maryland Portfolio stood at
$49.7 million on December 31, 1995. The Fund had an average
maturity of 16.0 years on December 31, 1995.

The State of Maryland continued to retain its AAA rating and
has excellent credit quality and prospects. This is based on
a diverse economy, high wealth and income, sound financial
performance, and a manageable debt burden. While economic
growth has been slow, strong financial management has enabled
the state to replenish its reserves.

Fund for Tax-Free Investors Virginia Portfolio ended 1995
with a 14.92% total return. On an annualized basis, net

income averaged 5.17% of net assets for the year ended
December 31, 1995. Net assets for the Virginia Portfolio
stood at $33.5 million as of December 31, 1995. The Fund had
an average maturity of 16.5 years on December 31, 1995.

The State of Virginia also retained its AAA rating.
Moderate economic growth continues in the state. Virginia's
conservative approach to financial operations and careful
attention to debt offers good protection to bond holders. The
economy is expanding and the growth in high technology
businesses will substantially offset any military downsizing
in the years ahead.

OUTLOOK

In our six-month report we mentioned that inflationary
pressures were receding and the economy was beginning to slow.
This scenario continues into 1996 and we see no reason to
change our opinion. Fears of a flat tax and other tax reforms
in 1995 caused many investors to miss one of the best
municipal bond rallies in a long time. All other signs
suggest this is a good time to invest in municipal bonds:
interest rates are stable, inflation seems to be under
control, and the supply of municipal bonds will remain
relatively low compared with other years.

Currently, Fund for Tax-Free Investors, Inc. holdings
consist of approximately 36% general obligation issues and 64%
revenue issues.

Fund for Tax-Free Investors, Inc. adheres to a long-term and
conservative investment strategy. Management selects high
quality bonds with competitive yields to insure long-term
performance. We look forward to continuing to serve your
investment needs.

Sincerely,

/s/ Daniel L. O'Connor /s/ Richard J. Garvey
Daniel L. O'Connor Richard J. Garvey
Chairman President

February 16, 1996

FUND FOR TAX-FREE INVESTORS, INC.
STATEMENT OF NET ASSETS
MONEY MARKET PORTFOLIO

December 31, 1995

</TABLE>
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>

CALIFORNIA 7.75%
California Revenue Anticipation Warrants
5.75%, 4/25/96 SP1.................................... $ 800,000 $ 805,186
California School Cash Reserve Program
4.75%, 7/03/96 SP1.................................... 800,000 803,875
-----------
State Total........................................... 1,609,061
-----------
COLORADO 13.48%
Colorado Student Obligation Board Authority Floating
Rate Notes
5.05%, 8/1/00+ AAA.................................... 1,000,000 1,000,000
Denver Airport Floating Rate Notes
5.90%, 12/1/25+ A..................................... 1,000,000 1,000,000
El Paso County School District Revenue
3.95%, 6/28/96 SP1.................................... 800,000 800,571
-----------
State Total........................................... 2,800,571
-----------
CONNECTICUT 4.00%
South Central Connecticut Regional Water System
Authority Revenue
7.125%, 08/01/96 A.................................... 800,000 831,159
-----------
DELAWARE 0.61%
Delaware State General Obligation
5.50%, 8/15/96 AA..................................... 125,000 126,359
-----------
ILLINOIS 3.37%
Chicago Public Building Revenue
7.40%, 1/01/96 AAA.................................... 500,000 500,000
Du Page General Obligation
3.75%, 1/01/96 AAA.................................... 200,000 200,000
-----------
State Total........................................... 700,000
-----------
LOUISIANA 4.33%
New Orleans Aviation Floating Rate Notes
4.95%, 8/01/16+ A..................................... 900,000 900,000
-----------

</TABLE>

<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>

MARYLAND 0.48%
Baltimore Industrial Development Authority Floating
Rate Notes
5.35%, 8/01/16+ A..................................... $ 100,000 $ 100,000
-----------
MINNESOTA 18.89%
City of Minneapolis Housing Development Floating Rate
Notes
5.10%, 9/01/08+ VMIG1................................. 500,000 500,000
Minnesota State General Obligation
6.80%, 8/01/96 AA..................................... 350,000 356,462
Minnesota State Housing Finance Authority Revenue
5.25%, 1/16/96 AA..................................... 500,000 500,235
Southern Minnesota Municipal Power Revenue
7.125%, 1/01/96 AAA................................... 360,000 367,200
St. Paul District Cooling Floating Rate Notes
5.20%, 6/01/15+ A..................................... 1,000,000 1,000,000
St. Paul Housing Development Floating Rate Notes
5.20%, 3/01/13+ A..................................... 800,000 800,000
St. Paul United Way Project Floating Rate Notes
5.25%, 12/01/18+ A.................................... 400,000 400,000
-----------
State Total........................................... 3,923,897
-----------
MISSOURI 1.44%
Northwest Education Facility Revenue
3.80%, 03/01/96 AAA................................... 300,000 300,000
-----------
NEW YORK 13.07%
Nassau County Tax Anticipation Notes General Obligation
4.50%, 3/15/96 SP1.................................... 610,000 611,189
New York General Obligation
4.50%, 2/15/96 SP1.................................... 500,000 500,459
New York General Obligation
4.50%, 4/11/96 SP1.................................... 500,000 501,061
New York General Obligation
4.75%, 6/28/96 SP1.................................... 500,000 502,263
</TABLE>

STATEMENT OF NET ASSETS
MONEY MARKET PORTFOLIO (Continued)

December 31, 1995
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>

NEW YORK (continued)
New York City General Obligation Floating Rate Notes
5.90%, 8/15/23+ AAA................................... $ 300,000 $ 300,000
New York City Municipal Water Finance Authority
Floating Rate Notes
5.90%, 6/15/22+ AAA................................... 300,000 300,000
-----------
State Total........................................... 2,714,972
-----------
NORTH CAROLINA 3.85%
City of Winston-Salem Floating Rate Notes
5.10%, 4/01/00+ A..................................... 800,000 800,000
-----------
OHIO 2.41%
Ohio State Education Facility Floating Rate Notes
4.80%, 10/01/15+ AA................................... 500,000 500,000
-----------
PENNSYLVANIA 1.17%
East Stroudsburg Area School District General
Obligation
6.70%, 5/15/96 A...................................... 240,000 242,738
-----------
RHODE ISLAND 1.45%
Rhode Island State Public Buildings Authority Revenue
3.90%, 2/01/96 AAA.................................... 300,000 299,986
-----------
SOUTH CAROLINA 3.97%
Piedmont Municipal Power Agency Revenue
9.70%, 1/01/96 AAA.................................... 800,000 824,000
-----------
TENNESSEE 1.21%
Nashville Metropolitan Government General Obligation
5.25%, 5/15/96 AA..................................... 250,000 251,224
-----------
TEXAS 8.52%
Austin General Obligation
6.50%, 9/01/96 AA..................................... 100,000 101,780
Austin Utility Systems Revenue
5.50%, 4/01/96 AAA.................................... 400,000 401,733

</TABLE>
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>

TEXAS (continued)
Fort Worth Water and Sewer Revenue
5.20%, 2/15/96 AA..................................... $ 450,000 $ 450,804
Judson Independent School District Revenue
8.375%, 2/01/96 AAA................................... 500,000 511,914
San Antonio Industrial Development Authority Revenue
6.75%, 10/01/96 AAA................................... 100,000 102,146
Tarrant County Junior College District General
Obligation
7.80%, 2/15/96 AA..................................... 200,000 200,983
-----------
State Total........................................... 1,769,360
-----------
VIRGINIA 4.95%
Henrico Industrial Development Authority Floating Rate
Notes
6.10%, 5/01/24+ AA.................................... 700,000 700,000
Richmond General Obligation
6.00%, 7/15/96 AA..................................... 325,000 329,094
-----------
State Total........................................... 1,029,094
-----------
WYOMING 1.44%
Lincoln County Pollution Control Revenue Floating Rate
Notes
5.90%, 11/01/14+ AAA.................................. 300,000 300,000
-----------
TOTAL INVESTMENTS 96.39%
(Cost $20,022,421*)................................... 20,022,421
OTHER ASSETS LESS LIABILITIES 3.61%.................... 750,055
-----------
NET ASSETS (NOTE 6) 100%............................... $20,772,476
===========
Net Asset Value Per Share (Based on 20,792,035 Shares
Outstanding).......................................... $ 1.00
===========
</TABLE>

*Same cost is used for Federal income tax purposes.
Security ratings are unaudited.
See Notes to Financial Statements.
--------
+--Daily or Weekly Tender Bond.

FUND FOR TAX-FREE INVESTORS, INC.
STATEMENT OF NET ASSETS
VIRGINIA PORTFOLIO

December 31, 1995
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>

Alexandria Industrial Development Authority Revenue
7.40%, 1/01/08 A....................................... $ 175,000 $ 178,759
Arlington County General Obligation
6.00%, 8/01/12 AAA..................................... 500,000 536,440
Augusta County Industrial Development Authority Revenue
5.50%, 09/01/15 AAA.................................... 500,000 505,940
Big Stone Gap Redevelopment Housing Authority Revenue
5.50%, 09/01/15 AA..................................... 250,000 250,835
Chesapeake Bay Bridge & Tunnel Revenue
5.875%, 7/01/10 AAA.................................... 250,000 265,480
6.375%, 7/01/22 AAA.................................... 250,000 264,012
Chesapeake Water & Sewer System Revenue
6.50%, 7/01/05 A....................................... 270,000 299,835
Chesterfield County General Obligation
6.25%, 7/15/11 AA...................................... 300,000 322,215
Chesterfield County Water & Sewer Revenue
6.375%, 11/01/07 AA.................................... 300,000 328,914
6.375%, 11/01/10 AA.................................... 500,000 544,835
Danville General Obligation
6.50%, 5/01/11 A....................................... 250,000 268,560
Fairfax County Health Systems Revenue
5.25%, 8/15/19 AA...................................... 500,000 502,670
Fairfax County Resource Recovery Revenue
7.75%, 2/01/11 A....................................... 300,000 327,693
Fairfax County Water Authority Revenue
5.15%, 4/01/11 AA...................................... 500,000 501,540
5.80%, 1/01/16 AAA..................................... 500,000 526,795
6.00%, 4/01/22 AA...................................... 1,000,000 1,052,300
Falls Church General Obligation
6.65%, 4/01/09 AA...................................... 250,000 269,148
Hampton General Obligation
6.00%, 1/15/14 AA...................................... 350,000 371,780
Henrico County Development Authority Revenue
7.125%, 8/01/21 AA..................................... 400,000 458,668
</TABLE>

<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>

Henrico County Water & Sewer Revenue
6.45%, 5/01/02 AAA..................................... $ 300,000 $ 332,802
6.25%, 5/01/13 AA...................................... 500,000 523,330
Henry County General Obligation
8.825%, 11/05/05 AAA................................... 200,000 266,168
Isle of Wight County General Obligation
6.70%, 1/01/12 A....................................... 200,000 217,918
James City County General Obligation
5.25%, 12/15/15 AAA.................................... 1,000,000 1,002,620
Loudoun County General Obligation
7.20%, 10/01/00 NR..................................... 675,000 770,918
Loudoun County Sanitation Authority Revenue
6.25%, 1/01/10 AAA..................................... 550,000 593,918
6.25%, 1/01/16 AAA..................................... 500,000 535,145
Metropolitan Washington DC Airport Authority Revenue
6.50%, 10/01/06 AAA.................................... 300,000 331,440
5.90%, 10/01/09 AAA.................................... 300,000 315,591
5.375%, 10/01/13 AAA................................... 500,000 505,635
7.60%, 10/01/14 AA..................................... 125,000 141,306
Newport News General Obligation
5.25%, 6/01/10 AA...................................... 500,000 503,300
6.125%, 6/01/12 AA..................................... 270,000 286,980
Norfolk General Obligation
5.75%, 6/01/13 AAA..................................... 500,000 521,480
Norfolk Water Revenue
5.75%, 11/01/12 AAA.................................... 500,000 515,120
5.875%, 11/01/15 AAA................................... 500,000 524,335
Portsmouth General Obligation
6.375%, 8/01/11 AA..................................... 200,000 213,610
Portsmouth Redevelopment & Housing Authority Revenue
6.05%, 12/01/08 AAA.................................... 500,000 527,370
Potomac & Rappahannock Transportation District
Commission
6.70%, 3/01/11 AAA..................................... 600,000 653,388
</TABLE>

STATEMENT OF NET ASSETS
VIRGINIA PORTFOLIO (Continued)

December 31, 1995
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>

Prince William County General Obligation
6.20%, 12/01/11 AA..................................... $ 300,000 $ 316,881
Prince William County Industrial Development Authority
7.25%, 3/01/11 A....................................... 250,000 282,572
Prince William County Park Authority
6.875%, 10/15/16 A..................................... 500,000 544,610
Richmond General Obligation
5.50%, 1/15/13 AA...................................... 210,000 211,481
5.50%, 7/15/13 AA...................................... 750,000 755,513
Richmond Metro Authority Revenue
6.10%, 7/15/06 AAA..................................... 300,000 326,604
6.375%, 7/15/16 AAA.................................... 500,000 531,425
Roanoke County Water Authority Revenue
5.125%, 7/01/13 AAA.................................... 750,000 744,007
Roanoke County General Obligation
6.35%, 8/01/08 AA...................................... 225,000 247,959
5.15%, 8/01/12 AA...................................... 500,000 496,670
Southeastern Va. Public Service Authority
5.15%, 7/01/09 AAA..................................... 500,000 495,680
Suffolk General Obligation
6.00%, 8/01/13 A....................................... 500,000 522,120
Upper Occoquan Sewer Authority Revenue
6.50%, 7/01/01 AAA..................................... 300,000 336,012
Virginia Beach General Obligation
6.60%, 8/01/01 NR...................................... 200,000 225,248
6.50%, 8/01/07 AA...................................... 500,000 556,725
5.90%, 9/01/08 AA...................................... 500,000 534,265
5.85%, 11/01/12 AA..................................... 500,000 523,675
Virginia Beach Water & Sewer Revenue
6.50%, 2/01/02 A....................................... 200,000 224,708
Virginia College Building Authority
6.25%, 11/01/12 AA..................................... 250,000 269,645
5.75%, 1/01/14 AA...................................... 500,000 518,475
5.80%, 1/01/24 AA...................................... 500,000 515,695
</TABLE>

Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>

Virginia General Obligation
6.00%, 6/01/09 AAA..................................... $ 200,000 $ 215,096
Virginia Housing Development Authority Revenue
6.70%, 7/01/08 AA...................................... 200,000 206,044
7.40%, 7/01/09 AA...................................... 200,000 211,310
7.10%, 5/01/13 AA...................................... 200,000 212,630
6.625%, 7/01/13 AA..................................... 275,000 287,147
5.95%, 7/01/13 AA...................................... 500,000 510,440
Virginia Peninsula Jail Authority Revenue
5.50%, 10/01/18 AAA.................................... 200,000 200,000
Virginia Public Building Authority Revenue
6.50%, 8/01/11 AA...................................... 500,000 543,735
6.625%, 5/01/13 A...................................... 300,000 321,669
5.20%, 8/01/16 AA...................................... 1,000,000 994,950
Virginia Public School Authority Revenue
6.20%, 8/01/13 AA...................................... 320,000 344,976
Virginia Resource Authority Revenue
6.75%, 10/01/04 AA..................................... 240,000 277,759
6.00%, 10/01/12 AA..................................... 400,000 418,804
6.45%, 4/01/13 AA...................................... 300,000 321,132
Virginia Resource Authority Waste Disposal Revenue
5.50%, 5/01/12 AA...................................... 400,000 404,628
Virginia Transportation Board Revenue
6.00%, 4/01/10 AA...................................... 300,000 315,504
5.25%, 5/15/12 AA...................................... 250,000 248,628
5.625%, 5/15/13 AA..................................... 500,000 510,930
-----------
TOTAL INVESTMENTS 97.96%
(Cost $30,688,411*).................................... 32,784,145
OTHER ASSETS LESS LIABILITIES 2.04%..................... 683,713
-----------
NET ASSETS (NOTE 6) 100%................................ $33,467,858
===========
Net Asset Value Per Share (Based on 2,957,858 Shares
Outstanding)........................................... $ 11.31
===========
</TABLE>

*Same cost is used for Federal income tax purposes.
Security ratings are unaudited.

See Notes to Financial Statements.

FUND FOR TAX-FREE INVESTORS, INC.
STATEMENT OF NET ASSETS
MARYLAND PORTFOLIO

December 31, 1995
<TABLE>
<CAPTION>
Face Value
Amount (Note 1)
---------- -----------
<S> <C> <C>

Anne Arundel County General Obligation
6.20%, 8/01/12 AA...................................... $ 725,000 $ 782,449
6.30%, 8/01/16 AA...................................... 500,000 546,525
Anne Arundel County Pollution Control Revenue
6.00%, 4/01/24 A....................................... 1,230,000 1,265,928
Anne Arundel County Water & Sewer General Obligation
6.00%, 7/15/13 AA...................................... 500,000 525,185
6.30%, 8/01/19 AA...................................... 500,000 540,600
Baltimore City General Obligation
6.40%, 10/15/02 AAA.................................... 965,000 1,074,219
6.30%, 10/15/04 AAA.................................... 200,000 224,042
Baltimore City Wastewater Project Revenue
6.25%, 7/01/02 AAA..................................... 250,000 278,933
Baltimore City Revenue
6.00%, 7/01/15 AAA..................................... 500,000 545,430
Baltimore County General Obligation
6.90%, 4/01/00 AA...................................... 325,000 363,613
6.30%, 10/15/07 AAA.................................... 100,000 108,600
6.125%, 7/01/08 AA..................................... 500,000 541,805
6.70%, 7/01/09 AA...................................... 200,000 214,882
7.15% 10/15/09 A....................................... 120,000 142,168
6.70%, 7/01/11 AAA..................................... 900,000 966,969
6.70%, 7/01/16 AAA..................................... 500,000 536,585
Baltimore Port Facility Revenue
6.50%, 12/01/10 AA..................................... 400,000 433,024
6.50%, 10/01/11 AA..................................... 250,000 270,477
6.50%, 10/01/11 AA..................................... 250,000 269,610
Calvert County General Obligation
6.50%, 7/01/05 A....................................... 265,000 294,190
Carroll County General Obligation
6.10%, 10/01/08 AA..................................... 380,000 414,527
7.10%, 10/01/09 AA..................................... 235,000 267,390
7.25%, 10/01/15 AA..................................... 300,000 339,102
5.30%, 11/01/15 AA..................................... 1,000,000 1,005,170
6.50%, 10/01/24 AA..................................... 225,000 249,052
</TABLE>

<TABLE>
<CAPTION>
Face Value
Amount (Note 1)
----------- ----------
<S> <C> <C>

Frederick County General Obligation
6.60%, 5/01/01 AAA..................................... $ 200,000 $ 224,398
6.30%, 7/01/06 AA...................................... 500,000 548,830
6.125%, 12/01/07 AAA................................... 500,000 542,575
5.60%, 7/01/11 AA...................................... 500,000 519,350
City of Frederick General Obligation
6.00%, 10/01/11 AAA.................................... 300,000 320,574
Harford County Water & Sewer Revenue
6.40%, 12/01/00 AAA.................................... 200,000 222,162
Howard County Public Improvement General Obligation
5.60%, 2/15/12 AA...................................... 500,000 512,895
6.00%, 5/15/14 AA...................................... 500,000 523,280
Howard County Metropolitan District General Obligation
6.00%, 8/15/19 AA...................................... 500,000 517,540
Howard County Special Facilities Revenue
6.10%, 2/15/13 AA...................................... 500,000 528,985
Laurel General Obligation
6.70%, 7/01/04 AAA..................................... 600,000 676,584
6.85%, 7/01/06 AAA..................................... 110,000 123,630
Maryland Community Development Administration Revenue
6.60%, 4/01/06 AA...................................... 200,000 211,646
7.375%, 4/01/10 AA..................................... 495,000 526,616
7.25%, 4/01/11 AA...................................... 200,000 214,126
7.15%, 4/01/11 AA...................................... 405,000 432,937
7.00%, 6/01/11 AAA..................................... 100,000 110,318
7.25%, 4/01/16 AA...................................... 275,000 283,932
7.70%, 5/15/20 AA...................................... 250,000 265,082
7.40%, 5/15/24 AA...................................... 125,000 133,500
7.25%, 4/01/27 AA...................................... 385,000 409,324
7.45%, 4/01/32 AA...................................... 100,000 106,692
Maryland Department of Transportation Revenue
6.375%, 9/01/06 AA..................................... 500,000 544,875
</TABLE>

STATEMENT OF NET ASSETS
MARYLAND PORTFOLIO (Continued)

December 31, 1995
<TABLE>
<CAPTION>
Face Value
Amount (Note 1)
----------- ----------
<S> <C> <C>

Maryland General Obligation
6.60%, 7/15/01 AAA.................................... $ 250,000 $ 274,907
6.40%, 7/15/03 AAA.................................... 300,000 330,561
6.50%, 7/15/05 AAA.................................... 200,000 222,294
Maryland Health & Higher Education Facilities Authority
Revenue
5.25%, 7/01/12 AAA.................................... 500,000 497,270
5.375% 7/01/13 AAA.................................... 1,000,000 1,009,630
5.000% 7/01/13 AAA.................................... 500,000 481,370
6.125%, 7/01/14 AAA................................... 500,000 529,810
6.50%, 7/01/17 A...................................... 200,000 210,390
5.00%, 7/01/18 AAA.................................... 500,000 478,515
6.125%, 7/01/19 AAA................................... 500,000 527,755
Maryland Industrial Development Revenue
7.125%, 7/01/06 A..................................... 300,000 313,122
5.50%, 12/01/15 AA.................................... 700,000 713,370
Maryland National Park and Planning Commission Prince
Georges County General Obligation
6.125%, 7/01/08 AA.................................... 250,000 268,867
Maryland Stadium Authority Sports Revenue
7.375%, 12/15/04 AA................................... 425,000 475,095
7.50%, 12/15/10 AA.................................... 695,000 778,011
5.375%, 12/15/15 AA................................... 500,000 500,395
7.60%, 12/15/19 AA.................................... 500,000 560,545
Maryland Transportation Authority Revenue
6.50%, 7/01/04 A...................................... 500,000 549,165
Maryland Water Quality Finance Administration Revenue
7.10%, 9/01/01 AA..................................... 530,000 610,825
6.70%, 9/01/13 AA..................................... 400,000 453,036
6.00%, 9/01/15 AA..................................... 1,000,000 1,045,960
Montgomery County Housing Opportunity Commission
Revenue
7.125%, 7/01/06 AA.................................... 100,000 103,771
6.70%, 7/01/11 AA..................................... 390,000 416,220
7.80%, 7/01/12 N/R.................................... 200,000 211,448
7.875%, 7/01/13 A..................................... 400,000 412,296
7.375%, 7/01/17 AA.................................... 180,000 190,325
6.65%, 7/01/17 AA..................................... 245,000 260,616
7.00%, 7/01/23 A...................................... 250,000 265,440
</TABLE>

<TABLE>
<CAPTION>
Face Value
Amount (Note 1)
----------- ----------
<S> <C> <C>

Montgomery County Parking Revenue
6.25%, 6/01/09 AAA.................................... $ 300,000 $ 320,826
Montgomery County Waste Disposal Authority Revenue
5.875%, 6/01/13 AAA................................... 250,000 256,902
North East Maryland Waste Disposal Authority Revenue
6.20%, 7/01/10 A...................................... 500,000 515,930
6.30%, 7/01/16 A...................................... 1,000,000 1,033,920
Prince Georges County General Obligation
6.625%, 7/01/03 AA.................................... 275,000 304,186
5.75%, 3/15/08 AAA.................................... 500,000 526,990
Prince Georges County Housing Authority Revenue
6.35%, 7/20/20 AAA.................................... 700,000 725,305
Prince Georges County Parking Authority Revenue
6.25%, 5/01/03 AA..................................... 200,000 217,382
Prince Georges County Pollution Control Revenue
5.75%, 3/15/10 A...................................... 1,000,000 1,054,680
Prince Georges County Solid Waste Management System
Revenue
6.80%, 6/30/00 AAA.................................... 250,000 280,015
7.00%, 6/30/00 AAA.................................... 250,000 282,043
St. Mary's County General Obligation
5.50%, 11/01/07 AAA................................... 400,000 418,848
5.85%, 11/01/18 AAA................................... 500,000 521,220
Talbot County General Obligation
6.625%, 5/01/09 A..................................... 100,000 108,204
University of Maryland System Auxiliary Revenue
7.20%, 10/01/09 AA.................................... 75,000 83,298
5.00%, 10/01/10 AA.................................... 1,000,000 984,550
6.30%, 2/01/12 AA..................................... 115,000 123,158
5.60%, 4/01/16 AA..................................... 500,000 515,545
University of Maryland Tuition Revenue
6.375%, 2/01/01 AAA................................... 350,000 387,569
6.375%, 4/01/09 AA.................................... 500,000 544,775
</TABLE>

STATEMENT OF NET ASSETS
MARYLAND PORTFOLIO (Continued)

December 31, 1995
<TABLE>
<CAPTION>
Face Value
Amount (Note 1)
----------- ----------
<S> <C> <C>

Washington County General Obligation
6.375%, 1/01/02 AAA................................... $ 275,000 $ 304,670
6.20%, 1/01/05 A...................................... 300,000 323,619
Washington, D.C. Metropolitan Area Transportation
Authority Revenue
6.00%, 7/01/10 AAA.................................... 275,000 295,468
5.25%, 7/01/14 AAA.................................... 750,000 752,895
Washington Suburban Sanitary District Revenue
5.25%, 6/01/11 AA..................................... 850,000 861,951
6.20%, 6/01/12 AA..................................... 900,000 955,035
Washington Suburban Sanitary District General
Obligation
6.20%, 6/01/09 AA..................................... 300,000 321,504
5.20%, 6/01/10 AA..................................... 1,000,000 1,008,110
5.375%, 6/01/11 AA.................................... 500,000 511,855
5.40%, 6/01/12 AA..................................... 440,000 447,124
</TABLE>

<TABLE>
<CAPTION>
Face Value
Amount (Note 1)
----------- -----------
<S> <C> <C>

Worcester County General Obligation
6.20%, 8/15/05 AA..................................... $ 300,000 $ 330,849
6.75%, 5/01/14 AA..................................... 100,000 110,283
6.75%, 5/01/15 AA..................................... 100,000 109,689
-----------
TOTAL INVESTMENTS 98.40%
(Cost $46,019,287*)................................... 48,929,733
OTHER ASSETS LESS LIABILITIES 1.60%.................... 794,971
-----------
NET ASSETS (NOTE 6) 100%............................... $49,724,704
===========
Net Asset Value Per Share (Based on 4,527,324 Shares
Outstanding).......................................... $ 10.98
===========
</TABLE>

*Same cost is used for Federal income tax purposes.
Security ratings are unaudited.

See Notes to Financial Statements.

FUND FOR TAX-FREE INVESTORS, INC.
STATEMENTS OF OPERATIONS

For the Year Ended December 31, 1995

<TABLE>
<CAPTION>
Money
Market Virginia Maryland
Portfolio Portfolio Portfolio
--------- ---------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME (Note 1).................... $854,777 $1,856,592 $2,823,652
-------- ---------- ----------
EXPENSES
Investment Advisory Fee (Note 2)............. 112,637 195,452 297,506
Administrative Fee (Note 2).................. 56,319 93,817 142,803
-------- ---------- ----------
Total Expenses............................... 168,956 289,269 440,309
Less Expenses Reimbursed by Investment
Adviser..................................... -- 48,792 75,000
-------- ---------- ----------
Net Expenses................................. 168,956 240,477 365,309
-------- ---------- ----------
NET INVESTMENT INCOME......................... 685,821 1,616,115 2,458,343
NET REALIZED GAIN ON INVESTMENT TRANSACTIONS.. -- 520,780 703,293
NET CHANGE IN UNREALIZED APPRECIATION OF IN-
VESTMENTS (Note 5)........................... -- 2,211,797 3,181,300
-------- ---------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.................................. $685,821 $4,348,692 $6,342,936
======== ========== ==========
</TABLE>

See Notes to Financial Statements.

FUND FOR TAX-FREE INVESTORS, INC.
STATEMENTS OF CHANGES IN NET ASSETS

For the Year Ended December 31,

<TABLE>
<CAPTION>
Money Market Virginia
Portfolio Portfolio
------------------------ ------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES
Net Investment Income.. $ 685,821 $ 487,187 $ 1,616,115 $ 1,709,701
Net Realized Gain
(Loss) on Investments. -- 2,764 520,780 (805,650)

Net Change in
Unrealized
Appreciation
(Depreciation) of
Investments........... -- -- 2,211,797 (2,772,398)
----------- ----------- ----------- -----------
Net Increase (Decrease)
in Net Assets
Resulting from
Operations............ 685,821 489,951 4,348,692 (1,868,347)

DISTRIBUTIONS TO
SHAREHOLDERS:
From Net Investment
Income (Note 1)....... (685,821) (489,951) (1,616,115) (1,709,701)
From Net Realized Gain. -- -- -- --

FROM SHARE TRANSACTIONS
(Note 4)............... (4,813,924) 2,303,335 2,806,204 (2,864,018)
----------- ----------- ----------- -----------
Total Increase
(Decrease) in Net
Assets................. (4,813,924) 2,303,335 5,538,781 (6,442,066)

NET ASSETS -
Beginning of Year...... 25,586,400 23,283,065 27,929,077 34,371,143
44,385,463 58,094,054
----------- ----------- ----------- -----------
NET ASSETS -
End of Year............ $20,772,476 $25,586,400 $33,467,858 $27,929,077
=========== =========== =========== ===========
</TABLE>

See Notes to Financial Statements.

FUND FOR TAX-FREE INVESTORS, INC.
STATEMENTS OF CHANGES IN NET ASSETS

For the Year Ended December 31,

<TABLE>
<CAPTION>
Maryland
Portfolio
------------------------
1995 1994
----------- -----------
<S> <C> <C>
FROM INVESTMENT
ACTIVITIES
Net Investment Income.. $ 2,458,343 $ 2,818,529
Net Realized Gain
(Loss) on Investments. 703,293 (1,645,034)
Net Change in
Unrealized
Appreciation
(Depreciation) of
Investments........... 3,181,300 (4,328,762)
----------- -----------
Net Increase (Decrease)
in Net Assets
Resulting from
Operations............ 6,342,936 (3,155,267)
DISTRIBUTIONS TO
SHAREHOLDERS:
From Net Investment
Income (Note 1)....... (2,462,951) (2,813,921)
From Net Realized Gain. -- (16,030)
FROM SHARE TRANSACTIONS
(Note 4)............... 1,459,256 (7,723,373)
----------- -----------
Total Increase
(Decrease) in Net
Assets................. 5,339,241 (13,708,591)
NET ASSETS -
Beginning of Year...... 44,385,463 58,094,054
----------- -----------
NET ASSETS -
End of Year............ $49,724,704 $44,385,463
=========== ===========
</TABLE>

See Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

MONEY MARKET PORTFOLIO

For the Year Ended December 31,

<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value -
Beginning of Year..$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- ---------- ---------- ---------- ----------
Net Investment 0.030 0.020 0.016 0.023 0.040
Income
Net Realized and
Unrealized Gains on
Securities.......... -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Net Increase in Net
Asset Value Resulting
from Operations....... 0.030 0.020 0.016 0.023 0.040
Dividends to
Shareholders.......... (0.030) (0.020) (0.016) (0.023) (0.040)
Distributions to
Shareholders from Net
Realized Capital
Gains................. -- -- -- -- --
---------- ---------- ---------- ---------- ---------
Net Increase (Decrease)
in Net Asset Value.... -- -- -- -- --
---------- ---------- ---------- ---------- ---------
Net Asset Value - End
of Year..............$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Investment 3.09% 2.02% 1.66% 2.25% 4.01%
Return
Ratio to Average Net
Assets:
Expenses........... 0.75% 0.75% 0.78% 0.80% 0.77%
Net Investment Income.. 3.04% 1.99% 1.65% 2.25% 4.01%
Supplementary Data:
Portfolio Turnover
Rate.................. -- -- -- -- --
Number of Shares
Outstanding at
End of Year....... 20,792,035 25,603,675 23,312,290 25,964,308 29,736,105
</TABLE>

See Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

VIRGINIA PORTFOLIO

For the Year Ended December 31,

<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value -
Beginning of Year.... $ 10.36 $ 11.51 $ 10.84 $ 10.63 $ 10.17
--------- --------- --------- --------- ---------
Net Investment Income.. 0.564 0.578 0.582 0.610 0.615
Net Realized and
Unrealized Gains
(Losses)
on Securities......... 0.953 (1.150) 0.670 0.210 0.460
--------- --------- --------- --------- ---------
Net Increase (Decrease)
in Net Asset Value
Resulting from
Operations............ 1.517 (0.572) 1.252 0.820 1.075
Dividends to
Shareholders.......... (0.564) (0.578) (0.582) (0.610) (0.615)
Distributions to
Shareholders from Net
Realized Capital
Gains................. -- -- -- -- --
--------- --------- --------- --------- ---------
Net Increase (Decrease)
in Net Asset Value.... 0.95 (1.15) 0.67 0.21 0.46
--------- --------- --------- --------- ---------
Net Asset Value - End
of Year............... $ 11.31 $ 10.36 $ 11.51 $ 10.84 $ 10.63
========= ========= ========= ========= =========
Total Investment Return. 14.92% (5.02)% 11.80% 7.98% 10.85%
Ratios to Average Net
Assets:
Expenses............... 0.77% 0.55% 0.50% 0.50% 0.61%
Expenses Before
Reimbursement from
Adviser............... 0.93% 0.93% 0.93% 0.93% 0.93%
Net Investment Income.. 5.17% 5.35% 5.15% 5.71% 5.91%
Supplementary Data:
Portfolio Turnover
Rate.................. 55% 33% 43% 50% 74%
Number of Shares
Outstanding at

End of Year........... 2,957,858 2,697,151 2,985,125 2,354,055 1,576,102
</TABLE>

See Notes to Financial Statements.

FINANCIAL HIGHLIGHTS

MARYLAND PORTFOLIO

For the Year Ended December 31,

<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value -
Beginning of Year.... $ 10.11 $ 11.27 $ 10.60 $ 10.39 $ 9.99
--------- --------- --------- --------- ---------
Net Investment Income.. 0.550 0.565 0.568 0.594 0.594
Net Realized and
Unrealized Gains
(Losses)
on Securities......... 0.869 (1.157) 0.670 0.210 0.400
--------- --------- --------- --------- ---------
Net Increase (Decrease)
in Net Asset Value
Resulting from
Operations............ 1.419 (0.592) 1.238 0.804 0.994
Dividends to
Shareholders.......... (0.551) (0.565) (0.568) (0.594)
(0.594)
Distributions to
Shareholders from Net
Realized Capital
Gains................. -- (0.003) -- -- --
--------- --------- --------- --------- ---------
Net Increase (Decrease)
in Net Asset Value.... 0.87 (1.16) 0.67 0.21 0.40
--------- --------- --------- --------- ---------
Net Asset Value - End
of Year............... $ 10.98 $ 10.11 $ 11.27 $ 10.60 $ 10.39
========= ========= ========= ========= =========
Total Investment Return. 14.35% (5.24)% 11.91% 8.00% 10.24%
Ratios to Average Net
Assets:
Expenses............... 0.77% 0.55% 0.50% 0.50% 0.62%
Expenses Before
Reimbursement from
Adviser............... 0.93% 0.93% 0.93% 0.93% 0.93%
Net Investment Income.. 5.16% 5.36% 5.13% 5.67% 5.85%
Supplementary Data:
Portfolio Turnover
Rate.................. 37% 38% 30% 21% 61%
Number of Shares

Outstanding at
End of Year........... 4,527,324 4,390,634 5,156,988 4,144,846 2,294,224
</TABLE>

See Notes to Financial Statements.

FUND FOR TAX-FREE INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995

1. SIGNIFICANT ACCOUNTING POLICIES

Fund for Tax-Free Investors, Inc. (the Fund) is registered
with the Securities and Exchange Commission under the
Investment Company Act of 1940 as a no-load, open-end,
investment company. The Fund consists of three separate
portfolios which invest primarily in securities exempt from
Federal income taxes. The following is a summary of
significant accounting policies which the Fund
consistently follows:

(a) Securities of the Money Market Portfolio are valued at
amortized cost, which approximates market value. Securities of
the Virginia and Maryland Portfolios are valued by a pricing
service approved by the Board of Directors. The valuation
methods used are reviewed by the Board of Directors to
determine that they reflect fair value.

(b) Investment income is recorded as earned.

(c) Net investment income is computed, and dividends are
declared daily. Dividends are paid monthly and reinvested in
additional shares unless shareholders request payment. Net
capital gains, if any, will be distributed to shareholders
annually.

(d) The Fund complies with the provisions of the Internal
Revenue Code applicable to regulated investment companies and
distributes all net investment income to its shareholders.
Therefore, no Federal income tax provision is required. The
Fund also meets the requirements that allow it to designate
distributions from interest income on obligations which are
exempt from Federal income tax as exempt-interest dividends.

2. INVESTMENT ADVISER AND SHAREHOLDER SERVICING AGENT

Investment advisory and management services are provided by
Money Management Associates (the Adviser) under an agreement
whereby the Fund pays a fee at an annual rate of 0.50% of the
average daily net assets of the Money Market
Portfolio and 0.625% of the average daily net assets of the
Virginia Portfolio and of the Maryland Portfolio. The Adviser
has agreed to reimburse the Fund for expenses, (including
investment advisory fee), excluding interest and
extraordinary legal expenses, which exceed one percent of the
average daily net assets per annum. No reimbursement was
required for the period ended December 31, 1995. However, the
Adviser voluntarily reimbursed the Virginia and Maryland

Portfolios for a portion of their expenses. Certain Officers
and Directors of the Fund are also affiliated with the
Adviser.

Rushmore Trust and Savings, FSB, (Rushmore Trust), a
majority-owned subsidiary of Money Management Associates,
provides transfer agency, dividend disbursing and other
shareholder services to the Fund. In addition, Rushmore
Trust serves as custodian of the Fund's assets and pays the
operating expenses of the Fund. For these services, Rushmore
Trust receives an annual fee of 0.25% of the average net
assets of the Money Market Portfolio, and 0.30% of the average
net assets of the Virginia and Maryland Portfolios.

3. SECURITIES TRANSACTIONS

Security transactions are recorded on the trade date. For
the year ended December 31, 1995, purchases and sales
(including maturities), of securities, excluding short-term
securities, were as follows:

Virginia Maryland
Portfolio Portfolio
----------- -----------
<S> <C> <C>
Purchases........................................ $18,808,101 $18,703,510
----------- -----------
Sales........................................$16,656,367 $17,113,500
---------- -----------
</TABLE>

4. SHARES TRANSACTIONS

On December 31, 1995, there were 200,000,000 shares of $.001
par value capital stock authorized. Transactions in shares
and dollars of the Fund for the year ended December 31, 1995
were as follows:

<TABLE>
<CAPTION>
Money Market Virginia Maryland
Portfolio Portfolio Portfolio
------------ ----------- -----------
<S> <C> <C> <C>
In Shares
Shares Sold........................... 35,510,140 592,898 780,823
Shares Issued in Reinvestment of
Dividends............................... 654,122 122,110 195,235
------------ ----------- -----------

36,164,262 715,008 976,058
Shares Redeemed...................... (40,978,186) (454,301) (839,368)
------------ ----------- -----------
Net Increase (Decrease) in Shares..... (4,813,924) 260,707 136,690
============ =========== ===========
In Dollars
Shares Sold........................... $ 35,510,140 $ 6,434,659 $ 8,322,830
Shares Issued in Reinvestment of
Dividends............................ 654,122 1,335,827 2,084,415
------------ ----------- -----------
36,164,262 7,770,486 10,407,245
Shares Redeemed....................... (40,978,186) (4,964,282) (8,947,989)
------------ ----------- -----------
Net Increase (Decrease) in Dollars.... $(4,813,924) $ 2,806,204 $ 1,459,256
============ =========== ===========
</TABLE>

5. NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS

As of December 31, 1995, net unrealized appreciation of
investments in the Virginia Portfolio for Federal income tax
purposes aggregated $2,095,734 of which $2,097,019 related to
appreciated investments and $1,285 related to depreciated
investments. In the Maryland Portfolio, net unrealized
appreciation of investments for Federal income tax purposes
totaled $2,910,446 of which $2,915,299 related to appreciated
investments and $4,853 related to depreciated investments.

6. NET ASSETS

At December 31, 1995, net assets consisted of the following:

<TABLE>
<CAPTION>
Money Market Virginia Maryland
Portfolio Portfolio Portfolio
------------ ----------- -----------
<S> <C> <C> <C>
Paid-in Capital......................... $20,772,476 $31,656,993 $47,755,999
Undistributed Net Investment Income..... -- -- --
Accumulated Net Realized Loss on
Investments............................ -- (284,869) (941,741)
Net Unrealized Appreciation of
Investments............................ -- 2,095,734 2,910,446
----------- ----------- -----------
NET ASSETS.............................. $20,772,476 $33,467,858 $49,724,704
=========== =========== ===========
</TABLE>

7. INCOME TAXES

Effective January 1, 1994, each Portfolio of the Fund has
adopted Statement of Position 93-2; Determination, Disclosure,
and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions of Investment Companies.
Adoption of this standard results in the reclassification to
paid-in capital of permanent differences between tax and
financial reporting of net investment income and realized
gains/(losses). As of December 31, 1995, the effect of
permanent differences between tax and financial reporting of
realized gains/(losses) as shown below resulted in a
reclassification of such amounts to paid-in-capital:

<TABLE>
<CAPTION>
Money Market Virginia Maryland
Portfolio Portfolio Portfolio
------------ --------- ---------
<S> <C> <C> <C>
Increase of paid-in capital.............. $ -- $7,672 $26,199
</TABLE>

At December 31, 1995, for Federal income tax purposes, the
following Portfolios had capital loss carryforwards which may
be applied against future net taxable realized gains of each
succeeding year until the earlier of its utilization or its
expiration:

<TABLE>
<CAPTION>
Money Market Virginia Maryland
Expires December 31, Portfolio Portfolio Portfolio
-------------------- ------------ --------- ---------
<S> <C> <C> <C>
2002.................................... $ -- $284,869 $941,741

</TABLE>

INDEPENDENT AUDITORS' REPORT

The Shareholders and Board of Directors
of Fund for Tax-Free Investors, Inc.:

We have audited the statements of assets and liabilities,
including the portfolios of investments, of the Money Market,
Virginia and Maryland Portfolios of Fund for Tax-Free
Investors, Inc. (the Fund) as of December 31, 1995, the
related statements of operations for the year then ended and
of changes in net assets for the years ended December 31, 1995
and 1994, and the financial highlights for each of the five
years in the period ended December 31, 1995. 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 at December 31, 1995 by
correspondence with the custodian. 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, such financial statements and financial
highlights present fairly, in all material respects, the net
assets of the Money Market, Virginia and Maryland Portfolios
of Fund for Tax-Free Investors, Inc. at December 31, 1995, the
results of their operations, the changes in their net assets,
and the financial highlights for the respective stated periods
in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Washington, D.C.
February 16, 1996

[THIS PAGE INTENTIONALLY LEFT BLANK]

FUND

FOR

TAX-FREE

INVESTORS
--------------------------------------------------------------

ANNUAL REPORT

December 31, 1995

[LOGO OF RUSHMORE

APPEARS HERE]

PART C

PART C

OTHER INFORMATION
Fund for Tax-Free Investors, Inc.

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

a. Financial statements:

The Financial Highlights in Part A (for each of the
Portfolios) and the following financial statements in Part B
(for each of the Portfolios) of this registration
statement s amendment are incorporated by reference.

Statements of Net Assets as of December 31, 1995
Statements of Operations for the year ended December 31,
1995
Statements of Changes in Net Assets for the years ended
December 31, 1995 and 1994
Financial Highlights for each of the five years in the
period ended December 31, 1995

b. Exhibits:

11 Consent of Deloitte & Touche LLP independent auditors
for Registrant
16 Schedule for computation of performance quotations

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT

None

ITEM 26. NUMBER OF HOLDERS OF SECURITIES

Approximate Number of
Shareholders of Record
Title of Class at April 4, 1996

Common Stock, $.001 par value

Money Market Portfolio 613
Rushmore Virginia Tax-Free Portfolio 924
Rushmore Maryland Tax-Free Portfolio 1,063

ITEM 27. INDEMNIFICATION

The Articles of Incorporation of the Fund provide that
officers and directors shall be indemnified by the Fund
against liabilities and expenses of defense in proceedings
against them by reason of the fact that they serve as
officers or directors of the Fund or as an officer or
director of another entity at the request of the entity.
The indemnification is subject to the following conditions:

(a) no director or officer is indemnified against all
liability to the Fund or its security holders which was the
result of any willful misfeasance, bad faith, gross
negligence or reckless disregard of his duties;

(b) officers and directors are only indemnified for actions
taken in good faith which they believed were in or not
opposed to the best interests of the Fund;

(c) expenses of any suit or proceeding will be paid in
advance only if the persons who will benefit by such advance
undertake to repay the expenses unless it is subsequently
determined that they are entitled to indemnification.

The Articles provide that if indemnification is not ordered
by a court, it may be authorized upon determination by
shareholders, by a majority vote of a quorum of the
directors who were not parties to the proceedings or if a
quorum is not obtainable, or if directed by a quorum of
disinterested directors, by independent legal counsel in a
written opinion that the persons to be indeminified have met
the applicable standard.

In connection with the approval of indemnification to
officers and directors, the Fund hereby undertakes in all
cases where indemnification is not ordered by a court not to
submit any proposed indemnification to a vote of its
shareholders or directors unless it has obtained a legal
opinion from independent counsel that the product of the
persons seeking indemnification did not involve willful
misfeasance, bad faith, gross negligence or reckless
disregard of their duties.

Insofar as indemnification for liability arising under the
Securities Act of 1933, as amended (the "1933 Act"), may be
permitted to directors, officers, and controlling persons of
the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that, in the
opinion of the Securities and Exchange Commission, such

indemnification is against public policy as expressed in the
1933 Act and, therefore, is unenforceable. In the event
that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any
action, suit, or proceeding) is asserted by such director,
officer, or controlling persons in connection with the
securities being registered, the Registrant, unless in the
opinion of the Registrant's counsel the matter has been
settled by controlling precedent, will submit to a court of
appropriate jurisdiction the question whether such
indemnification by the Registrant is against public policy
as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

Money Management Associates ("MMA"), 1001 Grand Isle Way,
Palm Beach Gardens, Florida 33418, a limited partnership
organized under the laws of the District of Columbia on
August 15, 1974, has one general partner and five limited
partners. Daniel L. O Connor is the general partner and
sole employee of MMA. Limited partners Richard J. Garvey,
Martin M. O Connor, Rita A. Gardner, and John R. Cralle, are
full-time employees of Rushmore Services, Inc. ("RSI"), a
subsidiary of MMA, at 4922 Fairmont Avenue, Bethesda,
Maryland 20814. Limited partner William L. Major is a
retired employee of RSI.

MMA also serves as the investment adviser to The Rushmore
Fund, Inc., Fund For Government Investors, Inc., and
American Gas Index Fund, Inc., all regulated investment
companies since their inception.

ITEM 29. PRINCIPAL UNDERWRITERS

Not applicable

ITEM 30. LOCATIONS OF ACCOUNTS AND RECORDS

The physical location for all accounts, books and records
required to be maintained and preserved by Section 31(a) of
the Investment Company Act of 1940, as amended, and Rules
31a-1 and 31a-2 thereunder, is 4922 Fairmont Avenue,
Bethesda, Maryland 20814.

ITEM 31. MANAGEMENT SERVICES

None

ITEM 32. UNDERTAKINGS

None

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended,
the Registrant certifies that it meets all the requirements
for effectiveness of this Registration Statement to Rule
485(b) under the Securities Act of 1933 and has duly caused
this Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Bethesda
and the State of Maryland, on the 29th day of April, 1996.

Registrant:

FUND FOR TAX-FREE INVESTORS, INC.

By: /s/ Daniel L. O'Connor
Daniel L. O'Connor
Chairman of the Board

As required by the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.

Name Title Date

/s/ Daniel L. O'Connor Chairman of the Board, April 29, 1996
Daniel L. O'Connor Treasurer, Director
/s/ Richard J. Garvey Director, President April 29, 1996
Richard J. Garvey

/s/Timothy N. Coakley Vice President, April 29, 1996
Timothy N. Coakley Controller

/s/ Bruce C. Ellis Director April 29, 1996
Bruce C. Ellis
/s/ Jeffrey R. Ellis Director April 29, 1996
Jeffrey R. Ellis

/s/ Rita A. Gardner Director April 29, 1996
Rita A. Gardner
/s/ Michael D. Lange Director April 29, 1996
Michael D. Lange

/s/ Patrick F. Noonan Director April 29, 1996
Patrick F. Noonan

/s/ Leo Seybold Director April 29, 1996
Leo Seybold

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned
constitutes and appoints Richard J. Garvey, John R. Cralle,
and Stephenie E. Adams, and each of them, his or her true and
lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or
her name, place, and stead, in and all of his or her
capacities as a Director of Fund for Tax-Free Investors, Inc.
(the "Fund"), a Maryland corporation, to sign on his or her
behalf any and all Registration Statements (including any
post-effective amendments to Registration Statements) under
the Securities Act of 1933, as amended, and/or the Investment
Company Act of 1940, as amended, filed by the Fund and any
amendments and supplements thereto, and other documents in
connection therewith, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the
U.S. Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, and each of them, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises,
as fully as to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent, and each of them, may
lawfully do or cause to be done by virtue hereof. This power
of attorney hereby revokes any and all powers of attorney
previously granted by the undersigned in connection with the
aforementioned matters.

DATED this 30th day of April, 1996

/s/Daniel L. O'Connor

POWER OF ATTORNEY

DATED this 30th day of April, 1996

/s/Richard J. Garvey

POWER OF ATTORNEY

DATED this 30th day of April, 1996

/s/Bruce C. Ellis

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned
constitutes and appoints Richard J. Garvey, John R. Cralle,
and Stephenie E. Adams, and each of them, his or her true and
lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or
her name, place, and stead, in and all of his or her
capacities as a Director of The Rushmore Fund, Inc. (the
"Fund"), a Maryland corporation, to sign on his or her behalf
any and all Registration Statements (including any post-
effective amendments to Registration Statements) under the
Securities Act of 1933, as amended, and/or the Investment
Company Act of 1940, as amended, filed by the Fund and any
amendments and supplements thereto, and other documents in
connection therewith, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the
U.S. Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, and each of them, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises,
as fully as to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent, and each of them, may
lawfully do or cause to be done by virtue hereof. This power
of attorney hereby revokes any and all powers of attorney
previously granted by the undersigned in connection with the
aforementioned matters.

DATED this 30th day of April, 1996

/s/Jeffrey R. Ellis

POWER OF ATTORNEY

DATED this 30th day of April, 1996

/s/Rita A. Gardner

POWER OF ATTORNEY

DATED this 30th day of April, 1996

/s/Michael C. Lange

POWER OF ATTORNEY

DATED this 30th day of April, 1996

/s/Patrick F. Noonan

POWER OF ATTORNEY

DATED this 30th day of April, 1996

/s/Leo Seybold

CONSENT OF INDEPENDENT AUDITORS

Fund for Tax-Free Investors, Inc.

We consent to the incorporation by reference in this Post-
Effective Amendment No. 14 to Registration Statement No. 2-
83299 of our report dated February 16, 1996 appearing in the
Annual Report of Fund for Tax-Free Investors, Inc. for the
year ended December 31, 1995, and to the references to us
under the caption "Financial Highlights" appearing in the
Prospectuses for the Money Market Portfolio and the Maryland
Tax-Free and Virginia Tax-Free Portfolio, respectively, which
are also a part of such Registration Statement.

/s/Deloitte & Touche LLP
Washington, D.C.
April 29, 1996
<PAGE>

FUND FOR TAX-FREE INVESTORS, INC.
Money Market Portfolio

Exhibit 16

Computation of Yield Quotation

Item 22, Part B

<TABLE>
<CAPTION>
Net Investment Shares Daily Yield
Income Outstanding (income divided
by shares
multiplied by
365)

<S> <C> <C> <C>
December 25, 1995 $ 1,732.64 21,081,621.78 3.00 %
December 26, 1995 $ 1,718.70 20,915,162.25 3.00 %
December 27, 1995 $ 1,725.26 20,973,230.26 3.00 %
December 28, 1995 $ 1,689.54 20,551,576.60 3.00 %
December 29, 1995 $ 1,702.56 20,731,700.67 3.00 %
December 30, 1995 $ 1,702.56 20,731,700.67 3.00 %
December 31, 1995 $ 1,702.56 20,731,700.67 3.00 %

Average 7-Day Yield 3.00 %

Annual Effective Yield 3.04 %

</TABLE>
<PAGE>

FUND FOR TAX-FREE INVESTORS, INC.

Exhibit 16

Computation of Yield Quotation
Rushmore Maryland Tax-Free Portfolio

<S> <C> <C>
a. Interest Income $ 215,624
b. Less: Management Fees and
Fund Expenses 37,726

Net Income $ 177,898

c. Average Number of Shares
Outstanding
4,536,365

d. Closing Share Price 12/31/95 $ 10.98

Value of Shares $49,809,287.70

</TABLE>

Yield: 2[(a-b/cd + 1)6 - 1] = 4.32 %

Computation of Yield Quotation
Rushmore Virginia Tax-Free Portfolio

<S> <C> <C>
a. Interest Income $ 144,048
b. Less: Management Fees and
Fund Expenses 25,351

Net Income $ 118,697
<PAGE>

c. Average Number of Shares
Outstanding 2,960,830

$ 11.31
d. Closing Share Price 12/31/95

Value of Shares $ 33,486,987.30

</TABLE>

Yield: 2[(a-b/cd + 1)6 - 1] = 4.29 %
<PAGE>

FUND FOR TAX-FREE INVESTORS, INC.

Exhibit 16

Total Return Calculations

<TABLE>
<CAPTION>
Rushmore Maryland Rushmore Virginia Tax-
Tax-Free Portfolio Free Portfolio

<C> <C><S>
One Year P (1+T) n = ERV P (1+T) n = ERV
(1/1/95-
12/31/95)
ERV = 1,143.50 ERV = 1,149.21
n = 1 n = 1
T = 14.35 % T = 14.92 %

Five Years P (1+T) n = ERV P (1+T) n = ERV
(1/1/90-
12/31/95)
ERV = 1,442 ERV = 1,460.58
n = 5 n = 5
T = 7.60 % T = 7.87 %

Ten Years P (1+T) n = ERV P (1+T) n = ERV
(1/1/85-
1/31/95)
ERV = 1,962 ERV = 1,962.37
n = 10 n = 10
T = 6.97 % T = 6.97 %
</TABLE>

<PAGE>

<ARTICLE> 6
<CIK> 0000718824
<NAME> FUND FOR TAX-FREE INVESTORS, INC.
<SERIES>
<NUMBER> 3
<NAME> MARYLAND PORTFOLIO
<MULTIPLIER> 1

<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 440,309
<AVERAGE-NET-ASSETS> 47,601,000
<PER-SHARE-NAV-BEGIN> 10.110
<PER-SHARE-NII> 0.550
<PER-SHARE-GAIN-APPREC> 0.869
<PER-SHARE-DIVIDEND> (0.551)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.980
<EXPENSE-RATIO> 0.770
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000

<PAGE>

</TABLE>

<ARTICLE> 6
<CIK> 0000718824
<NAME> FUND FOR TAX-FREE INVESTORS, INC.
<SERIES>
<NUMBER> 2
<NAME> VIRGINIA PORTFOLIO
<MULTIPLIER> 1

<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 289,269
<AVERAGE-NET-ASSETS> 31,272,333
<PER-SHARE-NAV-BEGIN> 10.360
<PER-SHARE-NII> 0.564
<PER-SHARE-GAIN-APPREC> 0.953
<PER-SHARE-DIVIDEND> (0.564)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.310
<EXPENSE-RATIO> 0.770
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000

<PAGE>

</TABLE>

<ARTICLE> 6
<CIK> 0000718824
<NAME> FUND FOR TAX-FREE INVESTORS, INC.
<SERIES>
<NUMBER> 1
<NAME> MONEY MARKET PORTFOLIO
<MULTIPLIER> 1

<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 168,956
<AVERAGE-NET-ASSETS> 22,527,331
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.030
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> (0.030)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.750
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000

<PAGE>

</TABLE>