<PAGE>
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SEMI-ANNUAL REPORT, JUNE 30, 1996
[LOGO OF RUSHMORE APPEARS HERE]
FUND FOR TAX-FREE INVESTORS, INC.
4922 FAIRMONT AVENUE, BETHESDA, MD 20814
(800) 622-1386 (301) 657-1510
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Dear Shareholders:
The Federal Reserve continued where it left off in 1995 by lowering interest
rates one more time by 25 basis points in January 1996. We were surprised by
the economy's vitality during the first half of 1996, and as we mentioned in
our year-end report, inflationary pressures were relatively non-existent and
believe this will continue for the balance of the year.
Over the past six months, the supply of municipal bonds has been outweighed
by the demand for tax-exempt bonds. This recent supply and demand relationship
has obviously been good for the tax-exempt market.
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
2.62% of net assets for the six months ended June 30, 1996, compared to 3.04%
for the year ended December 31, 1995. The Portfolio's average maturity was 63
days.
MARYLAND AND VIRGINIA TAX-FREE PORTFOLIOS
The State of Maryland has again maintained its AAA rating with a diverse
economy and relatively low unemployment, along with high wealth and income and
sound financial performance.
As of June 30, 1996, Maryland Tax-Free Portfolio net assets were $46.8
million. For the six months ended June 30, 1996, the Portfolio had an average
annual total return of -0.98% with an average maturity of 15.9 years. The
average annual total return of a portfolio assumes reinvested dividends and
capital gains.
The State of Virginia has also maintained its AAA rating. Virginia has a
diversified economy, high wealth level, low debt burden, and sound financial
position.
For the six-month period ended June 30, 1996, the Virginia Tax-Free
Portfolio had an average annual total return of -1.72%, with net assets of
$32.6 million. The average maturity was 17.4 years.
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<PAGE>
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OUTLOOK
The economy is moderating and will continue to do so for the balance of the
year. With the latest economic data it appears that the economy will not
continue to grow as it did during the first half of 1996. This may mean the
Federal Reserve will not need to tighten monetary policy in the coming months.
Currently, Fund for Tax-Free Investors, Inc. holdings consist of
approximately 38% general obligation issues and 62% 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
August 6, 1996
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<PAGE>
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FUND FOR TAX-FREE INVESTORS, INC.
PORTFOLIO OF INVESTMENTS
MONEY MARKET PORTFOLIO
June 30, 1996
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
CALIFORNIA 10.25%
California School Cash Reserve
Program Revenue
4.75%, 7/03/96 SP1+.................................... $ 800,000 $ 800,043
4.75%, 7/02/97 SP1+.................................... 800,000 806,912
California State Public Works
Board State Prison--Corcoran
Series A Revenue
7.00%, 9/01/96 AAA..................................... 300,000 307,632
-----------
State Total............................................ 1,914,587
-----------
COLORADO 8.57%
Colorado Student Obligation
Board Authority Floating Rate
Notes
3.30%, 8/01/00+ A-1+................................... 800,000 800,000
Denver Airport Floating Rate
Notes
3.80%, 12/01/25+ A-1+.................................. 800,000 800,000
-----------
State Total............................................ 1,600,000
-----------
CONNECTICUT 4.38%
South Central Connecticut
Regional Water System Authority
Revenue
7.125%, 08/01/96 A+.................................... 800,000 818,146
-----------
DELAWARE 3.35%
Delaware State General
Obligation
5.50%, 8/15/96 AA+..................................... 625,000 626,444
-----------
FLORIDA 1.08%
Port Everglades Port Authority
Revenue
6.80%, 9/01/96 AAA..................................... 200,000 200,978
-----------
GEORGIA 2.89%
Georgia Municipal Electric
Authority Revenue
7.75%, 1/01/97 AAA..................................... 520,000 540,366
-----------
HAWAII 2.17%
Honolulu City and County
General Obligation
6.10%, 12/01/96 AAA.................................... 400,000 404,565
-----------
</TABLE>
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- ----------
<S> <C> <C>
ILLINOIS 2.69%
Chicago Park District Tax Revenue Anticipation
Warrants
5.00%, 10/30/96 SP1+.................................... $ 500,000 $ 502,277
----------
IOWA 1.61%
Iowa Housing Financial Authority
Floating Rate Notes
3.50%, 5/01/97+ A-1+.................................... 300,000 300,000
----------
KANSAS 2.15%
Douglas County General
Obligation
5.20%, 9/01/96 AA....................................... 400,000 401,123
----------
LOUISIANA 4.82%
New Orleans Aviation Floating
Rate Notes
3.25%, 8/01/16+ A-1+.................................... 900,000 900,000
----------
MARYLAND 3.21%
Baltimore Industrial Development
Authority Floating Rate Notes
3.55%, 8/01/16+ A-1+.................................... 100,000 100,000
Maryland Health and Higher Education Floating Rate Notes
3.60%, 7/01/24+ A-1...................................... 500,000 500,000
----------
State Total............................................. 600,000
----------
MINNESOTA 14.27%
Beltrami County Environmental
Floating Rate Notes
3.60%, 12/01/21+ A-1+................................... 100,000 100,000
City of Minneapolis Housing
Development Floating Rate Notes
3.60%, 9/01/08+ VMIG1................................... 200,000 200,000
Minnesota State General
Obligation
6.80%, 8/01/96 AA+...................................... 350,000 350,940
Minnesota State Higher Education
Floating Rate Notes
3.65%, 12/01/24+ VMIG1.................................. 500,000 500,000
Olmsted County General
Obligation
6.55%, 2/01/97 AA+...................................... 800,000 813,705
St. Paul Housing Development
Floating Rate Notes
3.40%, 3/01/13+ A-1+.................................... 300,000 300,000
</TABLE>
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<PAGE>
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PORTFOLIO OF INVESTMENTS
MONEY MARKET PORTFOLIO (Continued)
June 30, 1996
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
MINNESOTA (continued)
St. Paul United Way Project
Floating Rate Notes
3.45%, 12/01/18+ A-1................................... $ 400,000 $ 400,000
-----------
State Total............................................ 2,664,645
-----------
MONTANA 2.68%
Montana State Health Floating
Rate Notes
3.40%, 12/01/15+ A-1+.................................. 500,000 500,000
-----------
NEW HAMPSHIRE 2.68%
New Hamphshire Health
Floating Rate Notes
3.50%, 11/01/21+ VMIG1................................. 500,000 500,000
-----------
NEW YORK 6.44%
Metropolitan Transportation
Authority Revenue Anticipation
Notes
4.25%, 12/12/96 SP1.................................... 500,000 501,537
New York City General Obligation Floating
Rate Notes
3.65%, 8/15/04+ A-1+................................... 400,000 400,000
New York City Municipal Water
Finance Authority Floating Rate
Notes
3.60%, 6/15/22+ A-1+................................... 300,000 300,000
-----------
State Total............................................ 1,201,537
-----------
NORTH CAROLINA 4.29%
City of Winston-Salem Floating
Rate Notes
3.40%, 4/01/00+ A-1+................................... 800,000 800,000
-----------
OHIO 2.68%
Ohio State Education Facility
Floating Rate Notes
3.35%, 10/01/15+ A-1+.................................. 500,000 500,000
-----------
OKLAHOMA 2.69%
Tulsa Metropolitan Utility
Authority Revenue
5.60%, 9/01/96 AA-..................................... 500,000 501,778
-----------
PENNSYLVANIA 0.54%
Luzerne County General Obligation
5.95%, 9/15/96 AAA..................................... 100,000 100,388
-----------
</TABLE>
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
TEXAS 4.97%
Austin General Obligation
6.50%, 9/01/96 AA...................................... $ 100,000 $ 100,452
Houston Water & Sewer System
Revenue
6.60%, 12/01/96 AAA.................................... 500,000 516,077
San Antonio Industrial
Development Authority Revenue
6.75%, 10/01/96 AAA.................................... 100,000 100,721
Trinity River Wastewater System
Authority Revenue
7.70%, 8/01/96 AAA..................................... 210,000 210,746
-----------
State Total............................................ 927,996
-----------
VIRGINIA 10.24%
Henrico Industrial Development
Authority Floating Rate Notes
3.80%, 5/01/24+ VMIG1.................................. 800,000 800,000
Richmond General Obligation
6.00%, 7/15/96 AA...................................... 325,000 325,293
Virginia Public School
Authority Revenue
7.40%, 1/01/97 AA...................................... 600,000 610,743
Virginia State General Obligation
4.90%, 8/01/96 AAA..................................... 175,000 175,155
-----------
State Total............................................ 1,911,191
-----------
WISCONSIN 1.35%
Wisconsin Health and Education
Facilities Authority Revenue--St.
Catherine's Hospital
6.60%, 10/01/96 AAA.................................... 250,000 251,902
-----------
Total Investments--100.00%
(Cost $18,667,923*).................................... $18,667,923
===========
</TABLE>
*Same cost is used for Federal income tax purposes.
See Notes to Financial Statements.
- --------
+--Daily or Weekly Tender Bond.
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<PAGE>
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FUND FOR TAX-FREE INVESTORS, INC.
PORTFOLIO OF INVESTMENTS
VIRGINIA PORTFOLIO
June 30, 1996
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Alexandria Industrial
Development Authority Revenue
7.40%, 1/01/08 A+...................................... $ 175,000 $ 177,578
Arlington County General
Obligation
6.00%, 8/01/12 AAA..................................... 500,000 514,840
Big Stone Gap Redevelopment
Housing Authority Revenue
5.50%, 9/01/15 AA...................................... 250,000 239,138
Chesapeake Bay Bridge & Tunnel
Revenue
5.875%, 7/01/10 AAA.................................... 250,000 255,077
5.25%, 7/01/19 AAA..................................... 1,000,000 916,380
Chesapeake Water & Sewer
System Revenue
6.50%, 7/01/05 A+...................................... 270,000 289,561
Chesterfield County General
Obligation
6.25%, 7/15/11 AA+..................................... 300,000 310,863
Chesterfield County Water &
Sewer Revenue
6.375%, 11/01/07 AA.................................... 300,000 318,483
6.375%, 11/01/10 AA.................................... 500,000 524,655
Danville General Obligation
6.50%, 5/01/11 A....................................... 250,000 260,225
Fairfax County EDA Lease Revenue
5.50%, 5/15/18 AA...................................... 1,000,000 952,310
Fairfax County General Obligation
7.25%, 6/01/01 AAA..................................... 350,000 392,242
Fairfax County IDA Revenue
5.25%, 8/15/19 AA...................................... 500,000 461,600
Fairfax County Resource
Recovery Revenue
7.75%, 2/01/11 A+...................................... 300,000 324,351
Fairfax County Water Authority
Revenue
5.80%, 1/01/16 AAA..................................... 500,000 496,535
6.00%, 4/01/22 AA-..................................... 1,000,000 1,006,980
Hampton General Obligation
6.00%, 1/15/14 AA-..................................... 350,000 355,453
Hanover City Water & Sewer Revenue
5.25%, 2/01/16 AAA..................................... 500,000 468,580
</TABLE>
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Henrico County Development
Authority Revenue
7.125%, 8/01/21 AA..................................... $ 400,000 $ 443,732
Henrico County Water & Sewer
Revenue
6.45%, 5/01/02 AA...................................... 300,000 324,141
6.25%, 5/01/13 AA-..................................... 500,000 507,755
Henry County General Obligation
8.825%, 11/01/05 AAA................................... 200,000 256,446
Isle of Wight County General
Obligation
6.70%, 1/01/12 A....................................... 200,000 211,302
James City County General
Obligation
5.25%, 12/15/15 AAA.................................... 1,000,000 924,240
Leesburg General Obligation
5.50%, 6/01/13 AAA..................................... 500,000 479,780
Loudoun County Sanitation
Authority Revenue
6.25%, 1/01/10 AAA..................................... 550,000 574,310
6.25%, 1/01/16 AAA..................................... 500,000 514,265
Metropolitan Washington, D.C.
Airport Authority Revenue
6.50%, 10/01/06 AAA.................................... 300,000 322,923
5.90%, 10/01/09 AAA.................................... 300,000 304,581
7.60%, 10/01/14 AA-.................................... 125,000 137,767
Newport News General
Obligation
6.125%, 6/01/12 AA-.................................... 270,000 280,460
5.20%, 1/15/17 AA-..................................... 750,000 698,910
Norfolk General Obligation
5.75%, 6/01/13 AAA..................................... 500,000 496,770
Norfolk Water Revenue
5.75%, 11/01/12 AAA.................................... 500,000 495,775
City of Norfolk Revenue
5.875%, 11/01/15 AAA................................... 500,000 494,830
Portsmouth General Obligation
6.375%, 8/01/11 AA-.................................... 200,000 208,300
5.00%, 8/01/14 AAA..................................... 1,000,000 904,800
Portsmouth Redevelopment &
Housing Authority Revenue
6.05%, 12/01/08 AAA.................................... 500,000 515,170
Potomac & Rappahannock
Transportation District
Commission Revenue
6.70%, 3/01/11 AAA..................................... 600,000 636,732
</TABLE>
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<PAGE>
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PORTFOLIO OF INVESTMENTS
VIRGINIA PORTFOLIO (Continued)
June 30, 1996
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Prince William County General
Obligation
6.20%, 12/01/11 AA..................................... $ 300,000 $ 311,058
Prince William County Industrial
Development Authority Revenue
7.25%, 3/01/00 A....................................... 250,000 276,375
Prince William County Park
Authority Revenue
6.875%, 10/15/16 A-.................................... 500,000 525,545
Richmond Metro Authority
Revenue
6.10%, 7/15/06 AAA..................................... 300,000 319,590
6.375%, 7/15/16 AAA.................................... 500,000 517,130
Roanoke County General
Obligation
6.35%, 8/01/08 AA...................................... 225,000 238,322
Southeastern Va. Public Service
Authority Revenue
5.15%, 7/01/09 AAA..................................... 500,000 479,850
Suffolk General Obligation
6.00%, 8/01/13 A....................................... 500,000 502,830
Upper Occoquan Sewer Authority
Revenue
5.00%, 7/01/15 AAA..................................... 490,000 438,457
5.15%, 7/01/20 AAA..................................... 1,000,000 909,110
Virginia Beach General
Obligation
6.50%, 8/01/07 AA...................................... 500,000 540,390
5.90%, 9/01/08 AA...................................... 500,000 519,730
5.85%, 11/01/12 AA..................................... 500,000 506,535
Virginia College Building
Authority Revenue
6.25%, 11/01/12 AA-.................................... 250,000 259,677
6.625%, 5/01/13 A-..................................... 300,000 309,954
5.75%, 1/01/14 AA...................................... 500,000 495,645
5.80%, 1/01/24 AA...................................... 1,000,000 998,630
</TABLE>
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Virginia General Obligation
6.00%, 6/01/09 AAA..................................... $ 200,000 $ 207,646
Virginia Housing Development
Authority Revenue
6.70%, 7/01/08 AA+..................................... 200,000 203,772
7.40%, 7/01/09 AA+..................................... 200,000 207,848
7.10%, 5/01/13 AA+..................................... 200,000 208,758
5.95%, 7/01/13 AA+..................................... 500,000 493,165
6.625%, 7/01/13 A+..................................... 275,000 281,991
Virginia Peninsula Jail Authority
Revenue
5.50%, 10/01/18 AAA.................................... 200,000 192,534
Virginia Public Building
Authority Revenue
5.20%, 8/01/16 AA...................................... 1,650,000 1,529,649
Virginia Public School Authority
Revenue
6.20%, 8/01/13 AA...................................... 320,000 330,394
Virginia Resource Authority
Revenue
6.75%, 10/01/04 AA..................................... 240,000 268,970
6.00%, 10/01/12 AA..................................... 400,000 406,196
6.45%, 4/01/13 AA...................................... 300,000 312,771
Virginia State School Revenue
5.00%, 8/01/16 AA...................................... 500,000 455,080
Virginia Transportation Board
Revenue
6.00%, 4/01/10 AA...................................... 300,000 308,007
-----------
Total Investments
(Cost $31,212,439*).................................... $31,553,449
===========
</TABLE>
*Same cost is used for Federal income tax purposes.
See Notes to Financial Statements.
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<PAGE>
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FUND FOR TAX-FREE INVESTORS, INC.
PORTFOLIO OF INVESTMENTS
MARYLAND PORTFOLIO
June 30, 1996
<TABLE>
<CAPTION>
Face Value
Amount (Note 1)
---------- -----------
<S> <C> <C>
Anne Arundel County General
Obligation
6.20%, 8/01/12 AA+..................................... $ 725,000 $ 755,668
6.00%, 7/15/13 AA+..................................... 500,000 507,945
6.30%, 8/01/16 AA+..................................... 500,000 528,765
6.30%, 8/01/19 AA+..................................... 725,000 762,997
Anne Arundel County Pollution
Control Revenue
6.00%, 4/01/24 A....................................... 1,230,000 1,233,469
Anne Arundel County Solid
Waste Project General
Obligation
5.50%, 9/01/15 AA+..................................... 500,000 473,880
Baltimore City General
Obligation
6.40%, 10/15/02 AAA.................................... 465,000 503,669
6.30%, 10/15/04 AAA.................................... 200,000 215,632
7.15% 10/15/09 A....................................... 120,000 134,857
Baltimore City Revenue
6.00%, 7/01/15 AAA .................................... 500,000 510,840
Baltimore County General
Obligation
6.125%, 7/01/08 AAA.................................... 500,000 525,140
6.70%, 7/01/09 AAA..................................... 200,000 210,908
6.70%, 7/01/11 AAA..................................... 600,000 632,724
5.50%, 6/01/12 AAA..................................... 1,000,000 989,500
5.00%, 8/01/13 AAA..................................... 1,000,000 927,220
6.70%, 7/01/16 AAA..................................... 500,000 527,860
Baltimore Port Facility Revenue
6.50%, 12/01/10 AA-.................................... 400,000 423,268
6.50%, 10/01/11 AA-.................................... 250,000 263,260
6.50%, 10/01/11 AA-.................................... 250,000 263,260
Carroll County General
Obligation
6.10%, 10/01/08 AA..................................... 380,000 400,091
7.10%, 10/01/09 AA..................................... 235,000 261,336
7.25%, 10/01/15 AA..................................... 300,000 329,097
5.30%, 11/01/15 AA..................................... 1,000,000 942,240
6.50%, 10/01/24 AA..................................... 225,000 241,159
Frederick County General
Obligation
6.60%, 5/01/01 AAA..................................... 200,000 219,006
6.30%, 7/01/06 AA-..................................... 500,000 539,995
6.125%, 12/01/07 AAA................................... 500,000 527,200
5.60%, 7/01/11 AA-..................................... 500,000 495,995
</TABLE>
<TABLE>
<CAPTION>
Face Value
Amount (Note 1)
---------- -----------
<S> <C> <C>
City of Frederick General
Obligation
6.00%, 10/01/11 AAA.................................... $ 300,000 $ 307,590
Harford County Water & Sewer
Revenue
6.40%, 12/01/00 AAA.................................... 200,000 217,528
Howard County Metropolitan
District General Obligation
6.00%, 8/15/19 AA+..................................... 500,000 505,225
Howard County Public
Improvement General Obligation
5.60%, 2/15/12 AA+..................................... 500,000 500,000
6.00%, 5/15/14 AA+..................................... 500,000 507,550
5.50%, 2/15/16 AA+..................................... 1,500,000 1,462,995
Howard County Special Facilities
Revenue
6.10%, 2/15/13 AA-..................................... 500,000 508,335
Laurel General Obligation
6.70%, 7/01/04 AAA..................................... 600,000 658,830
6.85%, 7/01/06 AAA..................................... 110,000 120,636
Maryland Community
Development Administration
Revenue
6.60%, 4/01/06 AA...................................... 200,000 208,478
7.375%, 4/01/10 AA..................................... 495,000 518,478
7.25%, 4/01/11 AA...................................... 200,000 210,524
7.15%, 4/01/11 AA...................................... 405,000 422,978
7.00%, 6/01/11 AAA..................................... 100,000 108,236
7.25%, 4/01/16 AA...................................... 275,000 281,762
7.70%, 5/15/20 AA...................................... 250,000 262,592
7.40%, 5/15/24 AA...................................... 125,000 131,149
7.25%, 4/01/27 AA...................................... 385,000 402,460
7.45%, 4/01/32 AA...................................... 100,000 104,837
Maryland Department of
Transportation Revenue
6.375%, 9/01/06 AA..................................... 500,000 532,250
Maryland General Obligation
6.60%, 7/15/01 AAA..................................... 250,000 268,935
6.40%, 7/15/03 AAA..................................... 300,000 323,439
6.50%, 7/15/05 AAA..................................... 200,000 218,942
5.25%, 6/15/11 AAA..................................... 500,000 484,875
</TABLE>
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- 7 -
<PAGE>
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PORTFOLIO OF INVESTMENTS
MARYLAND PORTFOLIO (Continued)
June 30, 1996
<TABLE>
<CAPTION>
Face Value
Amount (Note 1)
---------- -----------
<S> <C> <C>
Maryland Health & Higher
Education Facilities Authority
Revenue
5.70%, 7/01/09 AAA..................................... $ 500,000 $ 500,000
5.25%, 7/01/13 AAA..................................... 500,000 469,485
6.125%, 7/01/14 AAA.................................... 500,000 508,980
6.50%, 7/01/17 A....................................... 200,000 204,374
6.125%, 7/01/19 AAA.................................... 500,000 510,495
Maryland Industrial Development
Revenue
7.125%, 7/01/06 A-..................................... 300,000 310,404
Maryland National Park and
Planning Commission Prince
Georges County General
Obligation
6.125%, 7/01/02 AA..................................... 250,000 270,125
Maryland Stadium Authority
Sports Revenue
7.375%, 12/15/04 AA- .................................. 425,000 463,968
7.50%, 12/15/10 AA-.................................... 695,000 758,314
5.375%, 12/15/15 AA.................................... 500,000 473,985
7.60%, 12/15/19 AA-.................................... 500,000 543,290
Maryland Transportation
Authority Revenue
6.50%, 7/01/04 A+...................................... 500,000 535,840
Maryland Water Quality Finance
Administration Revenue
7.10%, 9/01/01 AAA..................................... 230,000 258,129
6.00%, 9/01/15 AA...................................... 1,000,000 1,013,430
Montgomery County Housing
Opportunity Commission
Revenue
7.125%, 7/01/06 AA..................................... 100,000 103,632
6.70%, 7/01/11 AA...................................... 380,000 398,130
7.80%, 7/01/12 N/R..................................... 200,000 204,450
7.875%, 7/01/13 A...................................... 400,000 398,144
7.375%, 7/01/17 AA..................................... 180,000 187,848
6.65%, 7/01/17 AA...................................... 180,000 185,972
7.00%, 7/01/23 A....................................... 250,000 260,553
Montgomery County Parking
Revenue
6.25%, 6/01/09 AAA..................................... 300,000 312,912
Montgomery County Public
Improvement General Obligation
5.80%, 7/01/07 AAA..................................... 500,000 522,345
</TABLE>
<TABLE>
<CAPTION>
Face Value
Amount (Note 1)
---------- -----------
<S> <C> <C>
Montgomery County Waste
Disposal Authority Revenue
5.875%, 6/01/13 AAA.................................... $ 250,000 $ 244,227
North East Maryland Waste
Disposal Authority Revenue
6.20%, 7/01/10 A....................................... 500,000 499,535
6.30%, 7/01/16 A....................................... 1,000,000 996,610
Prince Georges County General
Obligation
6.625%, 7/01/03 AA-.................................... 275,000 296,656
5.75%, 3/15/08 AAA..................................... 500,000 510,595
Prince Georges County Housing
Authority Revenue
6.35%, 7/20/20 AAA..................................... 700,000 711,970
Prince Georges County Parking
Authority Revenue
6.25%, 5/01/03 AA-..................................... 200,000 211,708
Prince Georges County Pollution
Control Revenue
5.75%, 3/15/10 A....................................... 1,000,000 1,000,000
Prince Georges County Solid
Waste Management System
Revenue
6.80%, 6/30/00 AAA..................................... 250,000 274,078
7.00%, 6/30/00 AAA..................................... 250,000 275,888
St. Mary's County General
Obligation
5.85%, 11/01/18 AAA.................................... 500,000 504,970
Talbot County General Obligation
6.625%, 5/01/09 A1..................................... 100,000 105,027
University of Maryland System
Auxiliary Revenue
6.375%, 4/01/09 AA+.................................... 500,000 530,550
7.20%, 10/01/09 AA+.................................... 75,000 81,150
5.60%, 4/01/12 AA+..................................... 1,000,000 992,670
5.60%, 4/01/16 AA+..................................... 500,000 490,005
Washington County General
Obligation
6.375%, 1/01/02 AAA.................................... 275,000 297,105
6.20%, 1/01/05 A+...................................... 300,000 315,588
5.125%, 1/01/12 AAA.................................... 500,000 467,955
5.25%, 1/01/16 AAA..................................... 500,000 465,365
Washington, D.C. Metropolitan
Area Transportation Authority
Revenue
6.00%, 7/01/10 AAA..................................... 275,000 285,579
5.25%, 7/01/14 AAA..................................... 750,000 705,870
</TABLE>
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- 8 -
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
MARYLAND PORTFOLIO (Continued)
June 30, 1996
<TABLE>
<CAPTION>
Face Value
Amount (Note 1)
---------- -----------
<S> <C> <C>
Washington Suburban Sanitary
District General Obligation
6.20%, 6/01/09 AA...................................... $ 300,000 $ 312,156
5.20%, 6/01/10 AA...................................... 1,000,000 963,500
6.20%, 6/01/12 AA...................................... 900,000 929,484
Worcester County General
Obligation
6.75%, 5/01/01 AA...................................... 100,000 110,145
6.75%, 5/01/01 AA...................................... 100,000 110,145
6.20%, 8/15/05 AA...................................... 300,000 322,065
-----------
Total Investments
(Cost $45,059,730*).................................... $46,021,006
===========
</TABLE>
*Same cost is used for Federal income tax purposes.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
- 9 -
<PAGE>
- --------------------------------------------------------------------------------
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1996
<TABLE>
<CAPTION>
Money
Market Virginia Maryland
Portfolio Portfolio Portfolio
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Securities at Value (Note 1, see portfo-
lios for cost information)............... $18,667,923 $31,553,449 $46,021,006
Cash in Custodian Bank.................... 824,050 405,790 435,592
Interest Receivable....................... 236,485 660,513 885,503
Receivable for Securities Sold............ -- -- 481,190
Receivable for Shares Sold................ 21,055 5,025 8,968
----------- ----------- -----------
Total Assets............................. 19,749,513 32,624,777 47,832,259
----------- ----------- -----------
LIABILITIES
Dividends Payable......................... 1,444 21,003 31,014
Investment Advisory Fee Payable........... 7,898 16,482 23,749
Administration Fee Payable................ 3,949 7,911 11,400
Liability for Shares Redeemed............. 89 13,080 2,500
Liability for Securities Purchased........ 806,912 -- 987,537
----------- ----------- -----------
Total Liabilities........................ 820,292 58,476 1,056,200
----------- ----------- -----------
NET ASSETS................................. $18,929,221 $32,566,301 $46,776,059
=========== =========== ===========
SHARES OUTSTANDING......................... 18,929,221 3,002,729 4,409,748
=========== =========== ===========
NET ASSET VALUE PER SHARE.................. $1.00 $10.85 $10.61
=========== =========== ===========
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
- 10 -
<PAGE>
- --------------------------------------------------------------------------------
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1996
<TABLE>
<CAPTION>
Money
Market Virginia Maryland
Portfolio Portfolio Portfolio
--------- ---------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME (Note 1).................. $ 346,991 $ 933,468 $ 1,410,691
--------- ---------- -----------
EXPENSES
Investment Advisory Fee (Note 2)........... 51,475 101,101 151,068
Administrative Fee (Note 2)................ 25,738 48,529 72,512
--------- ---------- -----------
Total Expenses............................ 77,213 149,630 223,580
--------- ---------- -----------
NET INVESTMENT INCOME....................... 269,778 783,838 1,187,111
--------- ---------- -----------
Net Realized Gain on Investment Transac-
tions...................................... -- 368,367 239,537
Net Change in Unrealized Appreciation
(Depreciation) of Investments.............. -- (1,754,724) (1,949,170)
--------- ---------- -----------
NET LOSS ON INVESTMENTS..................... -- (1,386,357) (1,709,633)
--------- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.................. $ 269,778 $ (602,519) $ (522,522)
========= ========== ===========
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
- 11 -
<PAGE>
- --------------------------------------------------------------------------------
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended June 30,
<TABLE>
<CAPTION>
Money Market Virginia Maryland
Portfolio Portfolio Portfolio
------------------------ ------------------------ ------------------------
1996 1995 1996 1995 1996 1995
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES
Net Investment Income
...................... $ 269,778 $ 353,044 $ 783,838 $ 813,944 $ 1,187,111 $ 1,246,195
Net Realized Gain on
Investment
Transactions.......... -- 3,517 368,367 227,059 239,537 233,961
Net Change in
Unrealized
Appreciation
(Depreciation) of
Investments........... -- -- (1,754,724) 1,242,217 (1,949,170) 2,168,031
----------- ----------- ----------- ----------- ----------- -----------
Net Increase (Decrease)
in Net Assets
Resulting from
Operations............ 269,778 356,561 (602,519) 2,283,220 (522,522) 3,648,187
----------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS
From Net Investment
Income (Note 1)....... (269,778) (356,561) (783,838) (812,615) (1,187,111) (1,248,725)
From Net Realized Capi-
tal Gains............. -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total Distributions to
Shareholders.......... (269,778) (356,561) (783,838) (812,615) (1,187,111) (1,248,725)
----------- ----------- ----------- ----------- ----------- -----------
FROM SHARE TRANSACTIONS
Net Proceeds from Sales
of Shares............. 17,592,075 19,982,090 3,896,923 3,704,694 3,740,155 4,758,370
Reinvestment of
Distributions......... 258,165 326,238 657,300 673,289 999,487 1,062,304
Cost of Shares
Redeemed.............. (19,693,495) (23,248,792) (4,069,423) (2,682,222) (5,978,654) (4,598,210)
----------- ----------- ----------- ----------- ----------- -----------
Net Increase (Decrease)
in Net Assets
Resulting from Share
Transactions.......... (1,843,255) (2,940,464) 484,800 1,695,761 (1,239,012) 1,222,464
----------- ----------- ----------- ----------- ----------- -----------
TOTAL INCREASE
(DECREASE) IN NET
ASSETS................. (1,843,255) (2,940,464) (901,557) 3,166,366 (2,948,645) 3,621,926
NET ASSETS - Beginning
of
Period................. 20,772,476 25,586,400 33,467,858 27,929,077 49,724,704 44,385,463
----------- ----------- ----------- ----------- ----------- -----------
NET ASSETS - End of
Period................. $18,929,221 $22,645,936 $32,566,301 $31,095,443 $46,776,059 $48,007,389
=========== =========== =========== =========== =========== ===========
SHARES
Sold................... 17,572,516 19,982,090 355,326 345,194 346,906 450,191
Issued in Reinvestment
of Distributions...... 258,165 326,238 59,790 62,339 93,040 100,624
Redeemed............... (19,693,495) (23,248,792) (370,245) (248,055) (557,522) (435,421)
----------- ----------- ----------- ----------- ----------- -----------
Net Increase (Decrease)
in Shares............. (1,862,814) (2,940,464) 44,871 159,478 (117,576) 115,394
=========== =========== =========== =========== =========== ===========
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
- 12 -
<PAGE>
- --------------------------------------------------------------------------------
FUND FOR TAX-FREE INVESTORS, INC.
FINANCIAL HIGHLIGHTS
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
For the Six
Months Ended For the Year Ended December 31,
June 30, -------------------------------------------
1996 1995 1994 1993 1992 1991
------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net Asset Value -
Beginning of Period.. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Income from Investment
Operations:
Net Investment Income. 0.013 0.030 0.020 0.016 0.023 0.040
Net Realized and
Unrealized Gains on
Securities........... -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total from Investment
Operations........... 0.013 0.030 0.020 0.016 0.023 0.040
------- ------- ------- ------- ------- -------
Distributions to Share-
holders:
From Net Investment
Income............... (0.013) (0.030) (0.020) (0.016) (0.023) (0.040)
From Net Realized
Capital Gains........ -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total Distributions to
Shareholders......... (0.013) (0.030) (0.020) (0.016) (0.023) (0.040)
------- ------- ------- ------- ------- -------
Net Increase in Net
Asset Value........... -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Net Asset Value - End
of Period............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN. 1.31%/A/ 3.09% 2.02% 1.66% 2.25% 4.01%
RATIOS TO AVERAGE NET
ASSETS:
Expenses............... 0.75%/B/ 0.75% 0.75% 0.78% 0.80% 0.77%
Net Investment Income.. 2.62%/B/ 3.04% 1.99% 1.65% 2.25% 4.01%
SUPPLEMENTARY DATA:
Portfolio Turnover
Rate.................. -- -- -- -- -- --
Net Assets at End of
Period
(000's omitted)....... $18,929 $20,772 $25,586 $23,283 $25,935 $29,707
Number of Shares
Outstanding at End of
Period (000's
omitted).............. 18,929 20,792 25,604 23,312 25,964 29,736
</TABLE>
- --------
/(A)/ Total Investment Return for periods of less than one year are not
annualized.
/(B)/ Annualized.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
- 13 -
<PAGE>
- --------------------------------------------------------------------------------
FUND FOR TAX-FREE INVESTORS, INC.
FINANCIAL HIGHLIGHTS
VIRGINIA PORTFOLIO
<TABLE>
<CAPTION>
For the Six
Months Ended For the Year Ended December 31,
June 30, -------------------------------------------
1996 1995 1994 1993 1992 1991
------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net Asset Value -
Beginning of Period.. $ 11.31 $ 10.36 $ 11.51 $ 10.84 $ 10.63 $ 10.17
------- ------- ------- ------- ------- -------
Income from Investment
Operations:
Net Investment Income. 0.265 0.564 0.578 0.582 0.610 0.615
Net Realized and
Unrealized Gains
(Losses) on
Securities........... (0.460) 0.953 (1.150) 0.670 0.210 0.460
------- ------- ------- ------- ------- -------
Total from Investment
Operations........... (0.195) 1.517 (0.572) 1.252 0.820 1.075
------- ------- ------- ------- ------- -------
Distributions to Share-
holders:
From Net Investment
Income............... (0.265) (0.564) (0.578) (0.582) (0.610) (0.615)
From Net Realized
Capital Gains........ -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total Distributions to
Shareholders......... (0.265) (0.564) (0.578) (0.582) (0.610) (0.615)
------- ------- ------- ------- ------- -------
Net Increase (Decrease)
in Net Asset Value.... (0.46) 0.95 (1.15) 0.67 0.21 0.46
------- ------- ------- ------- ------- -------
Net Asset Value - End
of Period............. $ 10.85 $ 11.31 $ 10.36 $ 11.51 $ 10.84 $ 10.63
======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN. (1.72)%/A/ 14.92% (5.02)% 11.80% 7.98% 10.85%
RATIOS TO AVERAGE NET
ASSETS:
Expenses............... 0.93%/B/ 0.77% 0.55% 0.50% 0.50% 0.61%
Expenses Before
Reimbursement from
Adviser............... 0.93%/B/ 0.93% 0.93% 0.93% 0.93% 0.93%
Net Investment Income.. 4.85%/B/ 5.17% 5.35% 5.15% 5.71% 5.91%
SUPPLEMENTARY DATA:
Portfolio Turnover
Rate.................. 25% 55% 33% 43% 50% 74%
Net Assets at End of
Period
(000's omitted)....... $32,566 $33,468 $27,929 $34,371 $25,513 $16,751
Number of Shares
Outstanding at End of
Period (000's
omitted).............. 3,003 2,958 2,697 2,985 2,354 1,576
</TABLE>
- --------
/(A)/ Total Investment Return for periods of less than one year are not
annualized.
/(B)/ Annualized.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
- 14 -
<PAGE>
- --------------------------------------------------------------------------------
FUND FOR TAX-FREE INVESTORS, INC.
FINANCIAL HIGHLIGHTS
MARYLAND PORTFOLIO
<TABLE>
<CAPTION>
For the Six
Months Ended For the Year Ended December 31,
June 30, -------------------------------------------
1996 1995 1994 1993 1992 1991
------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net Asset Value -
Beginning of Period.. $ 10.98 $ 10.11 $ 11.27 $ 10.60 $ 10.39 $ 9.99
------- ------- ------- ------- ------- -------
Income from Investment
Operations:
Net Investment Income. 0.263 0.550 0.565 0.568 0.594 0.594
Net Realized and
Unrealized Gains
(Losses) on
Securities........... (0.370) 0.869 (1.157) 0.670 0.210 0.400
------- ------- ------- ------- ------- -------
Total from Investment
Operations........... (0.107) 1.419 (0.592) 1.238 0.804 0.994
------- ------- ------- ------- ------- -------
Distributions to
Shareholders:
From Net Investment
Income............... (0.263) (0.551) (0.565) (0.568) (0.594) (0.594)
From Net Realized
Capital Gains........ -- -- (0.003) -- -- --
------- ------- ------- ------- ------- -------
Total Distributions to
Shareholders......... (0.263) (0.551) (0.568) (0.568) (0.594) (0.594)
------- ------- ------- ------- ------- -------
Net Increase (Decrease)
in Net Asset Value.... (0.37) 0.87 (1.16) 0.67 0.21 0.40
------- ------- ------- ------- ------- -------
Net Asset Value - End
of Period............. $ 10.61 $ 10.98 $ 10.11 $ 11.27 $ 10.60 $ 10.39
======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN. (0.98)%/A/ 14.35% (5.24)% 11.91% 8.00% 10.24%
RATIOS TO AVERAGE NET
ASSETS:
Expenses............... 0.93%/B/ 0.77% 0.55% 0.50% 0.50% 0.62%
Expenses Before
Reimbursement from
Adviser............... 0.93%/B/ 0.93% 0.93% 0.93% 0.93% 0.93%
Net Investment Income.. 4.91%/B/ 5.16% 5.36% 5.13% 5.67% 5.85%
SUPPLEMENTARY DATA:
Portfolio Turnover
Rate.................. 18% 37% 38% 30% 21% 61%
Net Assets at End of
Period
(000's omitted)....... $46,776 $49,725 $44,385 $58,094 $43,921 $23,833
Number of Shares
Outstanding at End of
Period (000's
omitted).............. 4,410 4,527 4,391 5,157 4,145 2,294
</TABLE>
- --------
/(A)/ Total Investment Return for periods of less than one year are not
annualized.
/(B)/ Annualized.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
- 15 -
<PAGE>
- -------------------------------------------------------------------------------
FUND FOR TAX-FREE INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
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. On June 30, 1996, there were 200,000,000 shares of $0.001 par value
capital stock authorized. The financial statements have been prepared in
conformity with generally accepted accounting principles which permit
management to make certain estimates and assumptions at the date of the
financial statements. 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 June
30, 1996. 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.
- -------------------------------------------------------------------------------
- 16 -
<PAGE>
- -------------------------------------------------------------------------------
3. SECURITIES TRANSACTIONS
Security transactions are recorded on the trade date. For the period ended
June 30, 1996, purchases and sales (including maturities), of securities,
excluding short-term securities, were as follows:
<TABLE>
<CAPTION>
Virginia Maryland
Portfolio Portfolio
----------- -----------
<S> <C> <C>
Purchases.......................................... $ 8,269,938 $ 8,596,502
----------- -----------
Sales.............................................. $ 8,114,277 $ 9,795,596
----------- -----------
</TABLE>
4. NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS
As of June 30, 1996, net unrealized appreciation of investments in the
Virginia Portfolio for Federal income tax purposes aggregated $341,010 of
which $760,958 related to appreciated investments and $419,948 related to
depreciated investments. In the Maryland Portfolio, net unrealized
appreciation of investments for Federal income tax purposes totaled $961,276
of which $1,276,934 related to appreciated investments and $315,658 related to
depreciated investments.
5. NET ASSETS
At June 30, 1996, net assets consisted of the following:
<TABLE>
<CAPTION>
Money Market Virginia Maryland
Portfolio Portfolio Portfolio
------------ ------------ ------------
<S> <C> <C> <C>
Paid-in-Capital........................ $ 18,929,221 $ 32,141,793 $ 46,516,987
Undistributed Net Investment Income.... -- -- --
Accumulated Net Realized Gain (Loss) on
Investments........................... -- 83,498 (702,204)
Net Unrealized Appreciation of Invest-
ments................................. -- 341,010 961,276
------------ ------------ ------------
NET ASSETS............................. $ 18,929,221 $ 32,566,301 $ 46,776,059
============ ============ ============
</TABLE>
6. INCOME TAXES
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
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:
Money Market Virginia Maryland
Expires December 31, Portfolio Portfolio Portfolio
------------------------------------------ ------------ --------- ---------
2002...................................... -- $ 284,869 $ 941,741
</TABLE>
- -------------------------------------------------------------------------------
- 17 -
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
FUND
FOR
TAX-FREE
INVESTORS
- --------------------------------------------------------------------------------
SEMI - ANNUAL REPORT
June 30, 1996
[LOGO OF RUSHMORE APPEARS HERE]
