<PAGE>
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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.
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<PAGE>
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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
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<PAGE>
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FUND FOR TAX-FREE INVESTORS, INC.
STATEMENT OF NET ASSETS
MONEY MARKET PORTFOLIO
December 31, 1995
<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>
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<PAGE>
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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.
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- 4 -
<PAGE>
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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>
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- 5 -
<PAGE>
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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>
<TABLE>
<CAPTION>
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.
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<PAGE>
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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>
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<PAGE>
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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>
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- 8 -
<PAGE>
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
- 9 -
<PAGE>
- --------------------------------------------------------------------------------
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 Advis-
er........................................... -- 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 OPER-
ATIONS........................................ $685,821 $4,348,692 $6,342,936
======== ========== ==========
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
- 10 -
<PAGE>
- --------------------------------------------------------------------------------
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
For the Year Ended December 31,
<TABLE>
<CAPTION>
Money Market Virginia Maryland
Portfolio Portfolio Portfolio
------------------------ ------------------------ ------------------------
1995 1994 1995 1994 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES
Net Investment Income.. $ 685,821 $ 487,187 $ 1,616,115 $ 1,709,701 $ 2,458,343 $ 2,818,529
Net Realized Gain
(Loss) on Investments. -- 2,764 520,780 (805,650) 703,293 (1,645,034)
Net Change in
Unrealized
Appreciation
(Depreciation) of
Investments........... -- -- 2,211,797 (2,772,398) 3,181,300 (4,328,762)
----------- ----------- ----------- ----------- ----------- -----------
Net Increase (Decrease)
in Net Assets
Resulting from
Operations............ 685,821 489,951 4,348,692 (1,868,347) 6,342,936 (3,155,267)
DISTRIBUTIONS TO
SHAREHOLDERS:
From Net Investment
Income (Note 1)....... (685,821) (489,951) (1,616,115) (1,709,701) (2,462,951) (2,813,921)
From Net Realized Gain. -- -- -- -- -- (16,030)
FROM SHARE TRANSACTIONS
(Note 4)............... (4,813,924) 2,303,335 2,806,204 (2,864,018) 1,459,256 (7,723,373)
----------- ----------- ----------- ----------- ----------- -----------
Total Increase
(Decrease) in Net
Assets................. (4,813,924) 2,303,335 5,538,781 (6,442,066) 5,339,241 (13,708,591)
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 $49,724,704 $44,385,463
=========== =========== =========== =========== =========== ===========
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
- 11 -
<PAGE>
- --------------------------------------------------------------------------------
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 Income.. 0.030 0.020 0.016 0.023 0.040
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 Return. 3.09% 2.02% 1.66% 2.25% 4.01%
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.
- --------------------------------------------------------------------------------
- 12 -
<PAGE>
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
- 13 -
<PAGE>
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
- 14 -
<PAGE>
- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
- 15 -
<PAGE>
- -------------------------------------------------------------------------------
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:
<TABLE>
<CAPTION>
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 Divi-
dends................................ 654,122 122,110 195,235
------------ ----------- -----------
36,164,262 715,008 976,058
Shares Reedeemed...................... (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 Divi-
dends................................ 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.
- -------------------------------------------------------------------------------
- 16 -
<PAGE>
- -------------------------------------------------------------------------------
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 Invest-
ments.................................. -- (284,869) (941,741)
Net Unrealized Appreciation of Invest-
ments.................................. -- 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>
- -------------------------------------------------------------------------------
- 17 -
<PAGE>
- -------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------
- 18 -
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
FUND
FOR
TAX-FREE
INVESTORS
- --------------------------------------------------------------------------------
ANNUAL REPORT
December 31, 1995
[LOGO OF RUSHMORE
APPEARS HERE]
