As Filed With The Securities And Exchange Commission on April 30, 1997.
File Nos. 2-83299 and 811-3720
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (X)
Pre-Effective Amendment No. ( )
Post-Effective Amendment No. 15 (X)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 (X)
Amendment No. 15 (X)
FUND FOR TAX-FREE INVESTORS, INC.
(Exact Name of Registrant as Specified in Charter)
4922 Fairmont Avenue, Bethesda, Maryland 20814
(Address of Principal Executive Offices) (Zip Code)
(301) 657-1500
(Registrant's Telephone Number, Including Area Code)
Timothy N. Coakley
4922 Fairmont Avenue
Bethesda, Maryland 20814
(Name and Address of Agent for Service of Process)
Copies To:
Michael L. Sapir, Esq.
Law Offices of Michael L. Sapir
3813 T Street, N.W.
Washington, D.C. 20007
Approximate Date of Commencement of the Proposed Public Offering
of the Securities:
It is proposed that this filing will become effective (check
appropriate box):
___ immediately upon filing pursuant to paragraph (b) of rule 485.
X on May 1, 1997 pursuant to paragraph (b)(1)(v) of rule 485.
___ 60 days after filing pursuant to paragraph (a)(1) of rule 485.
___ on (date) pursuant to paragraph (a)(1) of rule 485.
___ 75 days after filing pursuant to paragraph (a)(2) of rule 485.
___ on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
___ This post-effective amendment designates a new effective date
for a previously-filed post-effective amendment.
The Registrant has previously filed a declaration of indefinite registration
of its shares pursuant to Rule 24f-2 under the Investment Company Act of 1940.
The Rule 24f-2 Notice for the Registrant's fiscal year ended December 31, 1996
was filed on February 27, 1997.
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET
Form N-1A Location in
Item No. Registration Statement
Part A. Information Required in Prospectus
1. Cover Page Outside Front Cover Page of
Prospectus
2. Synopsis Fee Table
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Organization and Description
of Common Stock; Investment
Objective and Policies;
Management of the Fund
5. Management of the Fund Management of the Fund
5A. Management's Discussion of Fund Management's Discussion of
Performance Fund Performance
6. Capital Stock and Other Securities Organization and Description
Common Stock; Dividends and
Distribution; Taxes
7. Purchase of Securities Being Offered How to Invest in the
Portfolio(s); Exchanges; Net
Asset Value
8. Redemption or Repurchase How to Redeem an Investment
(Withdrawals)
9. Legal Proceedings Not Applicable
Part B: Information Required In
Statement of Additional Information
10. Cover Page Outside Front Cover Page of
Statement of Additional
Information
11. Table of Contents Table of Contents
12. General Information and History Not Applicable
13. Investment Objectives and Policies Investment Policies;
Investment Restrictions
14. Management of the Registrant Management of the Fund
15. Control Persons and Principal Principal Holders of
Holders of Securities Securities
16. Investment Advisory and Other Services Management of the Fund
17. Brokerage Allocation Investment Policies
18. Capital Stock and Other Securities Not Applicable
19. Purchase, Redemption and Not Applicable
Pricing of Securities Being Offered
20. Tax Status Dividends, Distributions, and
Taxes
21. Underwriters Management of the Fund
22. Calculations of Performance Data Performance Information;
Calculation of Return
Quotations
23. Financial Statements Financial Statements
Part C: Other Information
24. Financial Statements and Exhibits Financial Statements and
Exhibits
25. Persons Controlled by or Under Persons Controlled by or Under
Common Control Common Control
26. Number of Holders of Securities Numbers of Holders of
Securities
27. Indemnification Indemnification
28. Business and Other Connections Business and Other Connections
of Investment Adviser of Investment Adviser
29. Principal Underwriters Principal Underwriters
30. Location of Accounts and Records Location of Accounts and
Records
31. Management Services Management Services
32. Undertakings Undertakings
33. Signatures Signatures
<PAGE>
Fund for Tax-Free Investors, Inc.
4922 Fairmont Avenue
Bethesda, Maryland 20814
(800) 343-3355 (301) 657-1500
Rushmore Tax-Free Money Market Portfolio
Fund for Tax-Free Investors, Inc. (the "Fund") is a no-load, open-
end, management company consisting of three separate portfolios,
Tax-Free Money Market Portfolio, Rushmore Maryland Tax-Free
Portfolio and Rushmore Virginia Tax-Free Portfolio.
This Prospectus is a concise presentation of information about
the Tax-Free Money Market Portfolio (the "Portfolio").
Investors should read this Prospectus and retain it for future
reference. It is designed to set forth concisely the information
an investor should know before investing in the Portfolio. A
Statement of Additional Information ("SAI") dated May 1, 1997
containing additional information about the Portfolio has been
filed with the Securities and Exchange Commission and is
incorporated herein by reference. A copy of the SAI may be
obtained, without charge, by writing or telephoning the Fund.
The shares offered by this Prospectus are not deposits or
obligations of any bank, are not endorsed or guaranteed by any
bank, and are not insured or guaranteed by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other
U.S. Government agency.
The securities of the Portfolio are neither insured nor
guaranteed by the U.S. Government and there can be no assurance
that the Portfolio will be able to maintain a stable net asset
value of $1.00 per share.
The date of this Prospectus is May 1, 1997.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
FEE TABLE
The following table illustrates all expenses and fees that a
shareholder of the Portfolio will incur:
Shareholder Transaction Expenses
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fees None
Monthly Account Fee (for accounts under $500)* $5.00
Annual Portfolio Operating Expenses
(as a percentage of average net assets)
Management Fees 0.50%
12b-1 Fees None
Other Expenses 0.25%
Total Portfolio Operating Expenses 0.75%
* A charge of $5 per month may be imposed on any account
whose average daily balance for the month falls below $500.
See "Transaction Charges."
Example
Assuming a hypothetical investment of $1,000 in the Portfolio, a
5% annual return, and redemption at the end of each time period,
an investor in the Portfolio would pay transaction and operating
expenses at the end of each year as follows:
1 Year 3 Years 5 Years 10 Years
$ 8 $ 25 $ 43 $ 95
The same level of expenses would be incurred if the investment
were held throughout the period indicated.
The preceding table of fees and expenses is provided to assist
investors in understanding the various costs and expenses that an
investor in the Portfolio will incur directly or indirectly. The
5% assumed annual return is for comparison purposes only. The
actual annual return may be more or less depending on market
conditions, and the actual expenses an investor incurs in future
periods may be more or less than those shown above and will
depend on the amount invested and on the actual growth rate of
the Portfolio. The example should not be considered a
representation of past or future expenses. For more complete
information about the various costs and expenses, see "Management
of the Fund" in the Prospectus and SAI.
<PAGE>
<TABLE>
FUND FOR TAX-FREE INVESTORS, INC.
Financial Highlights
RUSHMORE TAX-FREE MONEY MARKET PORTFOLIO
Audited
<CAPTION>
For The Year Ended December 31,
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C> <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 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment
Operations:
Net Investment Income 0.027 0.030 0.020 0.016 0.023 0.040 0.052 0.056 0.046 0.038
Net Realized and
Unrealized Gains
on Securities - - - - - - - - - -
Total from Investment
Operations 0.027 0.030 0.020 0.016 0.023 0.040 0.052 0.056 0.046 0.038
Distributions to
Shareholders:
From Net Investment
Income (0.027) (0.030) (0.020) (0.016) (0.023) (0.040) (0.052) (0.056) (0.046) (0.038)
From Net Realized
Capital Gains - - - - - - - - - -
Total Distributions to
Shareholders (0.027) (0.030) (0.020) (0.016) (0.023) (0.040) (0.052) (0.056) (0.046) (0.038)
Net Increase in Net Asset
Value - - - - - - - - - -
Net Asset Value - End of
Year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Investment Return 2.69% 3.09% 2.02% 1.66% 2.25% 4.01% 5.31% 5.76% 4.61% 3.90%
Ratios to Average Net
Assets:
Expenses 0.75% 0.75% 0.75% 0.78% 0.80% 0.77% 0.79% 0.79% 0.80% 0.80%
Net Investment Income 2.67% 3.04% 1.99% 1.65% 2.25% 4.01% 5.19% 5.62% 4.56% 3.82%
Supplementary Data:
Portfolio Turnover Rate - - - - - - - - - -
Net Assets at End of Year
(000s omitted) $18,890 $20,772 $25,586 $23,283 $25,935 $29,707 $43,684 $42,840 $48,715 $34,315
Number of Shares
Outstanding at End of Year
(000s omitted) 18,890 20,792 25,604 23,312 25,964 29,736 43,716 42,871 48,747 34,346
The auditors' report is incorporated by reference in the registration statement. The auditors' report and further information
about the performance of the Portfolio are contained in the annual report to shareholders which may be obtained without charge
by calling or writing the Fund.
</TABLE>
PERFORMANCE DATA
From time to time the Portfolio advertises its "yield" and
"effective yield." Both yield figures are based on historical
earnings and are not intended to indicate future performance.
The "yield" of the Portfolio refers to the income generated by an
investment in the Portfolio over a seven-day period (which period
will be stated in the advertisement). That is, the amount of
income generated by the investment during that week is assumed to
be generated each week over a 52-week period and is shown as a
percentage of the investment. The "effective yield" is
calculated similarly but, when annualized, the income earned by
an investment in the Portfolio is assumed to be reinvested. The
"effective yield" will be slightly higher than the ``yield''
because of the compounding effect of this assumed reinvestment.
For the seven-day period ended December 31, 1996, the Portfolio's
annualized yield was 3.12%. The annual effective yield was 3.16%.
INVESTMENT OBJECTIVE, POLICIES AND PRACTICES
Investment Objective
The investment objective of the Portfolio is to provide investors
with maximum current income available from investments made
primarily in securities exempt from federal income tax, to the
extent such investment is consistent with safety of principal.
The Portfolio will pursue this objective through investment in a
portfolio consisting primarily of high quality, tax-exempt
municipal securities selected on the basis of liquidity and
safety of principal.
As a fundamental policy, the Portfolio will invest at least 80%
of the value of its net assets in securities, the interest on
which is exempt from federal income taxes, including the
individual alternative minimum tax. This policy may not be
changed without prior approval of a majority of the Portfolio's
outstanding voting shares.
Investment Policies and Practices
The Portfolio seeks to achieve its investment objective by
investing at least 80% of its total assets, under normal
conditions, in short-term, municipal obligations which, at the
time of purchase, are rated within the top two grades assigned by
Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's
Corporation ("S&P"). The Portfolio may also purchase, without
limitation, unrated municipal securities if, in the opinion of
the Adviser, they are of an investment quality comparable to that
of rated securities eligible for purchase by the Portfolio.
The Portfolio may not borrow money, except that as a temporary
measure, the Portfolio may borrow money to facilitate
redemptions. Such a borrowing may be in an amount not to exceed
30% of the Portfolio's total assets, taken at current value,
before such borrowing. The Portfolio may not purchase a
portfolio security if a borrowing by the Portfolio is
outstanding.
The Portfolio will not invest in securities having a remaining
maturity greater than 397 days at the time of purchase, nor will
the dollar-weighted average maturity of its portfolio exceed 90
days. The Portfolio will value its investment securities at
amortized cost and seek to maintain, although it cannot assure, a
constant net asset value of $1.00 per share.
Although it is the intention of the Portfolio to invest all of
its assets in municipal securities, market conditions may arise
from time to time that limit the availability of such
obligations. During such periods, the Portfolio may invest up to
20% of its assets in short-term, taxable obligations of the
United States government, its agencies and instrumentalities, or
repurchase agreements secured by such securities. A repurchase
agreement arises when a buyer purchases a security and
simultaneously agrees to sell it to the seller at an agreed upon
future date, normally one day or a few days later. The resale
price is greater than the purchase price, reflecting an agreed
upon market rate which is effective for the period of time the
buyer's money is invested.
The Portfolio will invest in taxable securities only as a
temporary measure, either because of their liquidity or because
of the unavailability of short-term, tax-exempt securities
meeting the quality characteristics specified above. Income from
such securities may be taxable for federal and/or state income
tax purposes.
Municipal Securities
Municipal securities are debt obligations of states, cities,
municipalities and other public authorities and are principally
classified as notes and bonds. The yields on municipal
securities are dependent on a variety of factors, including the
general level of interest rates, the creditworthiness of a
particular issuer, the size of a specific issue, the maturity
date of the issue, and its rating by the various rating services.
The market value of outstanding municipal securities will also
vary with the changes in interest rates and with rating changes
of the securities.
Municipal Bonds
Municipal bonds generally have maturities of more than one year
when issued and are issued to obtain funds for various public
purposes. Municipal bonds may be categorized as "general
obligation" or "revenue" bonds.
General obligation bonds are secured by the issuer's pledge of
its full faith, credit and taxing power for the payment of
principal and interest. Revenue bonds are secured by the net
revenue derived from a particular facility or group of facilities
or, in some cases, the proceeds of a special excise or other
specific revenue source, but not by the general taxing power.
Industrial development and pollution control bonds are municipal
bonds which are issued by or on behalf of public authorities to
provide funding for the construction, equipment, repair or
improvement of various privately-operated facilities. Industrial
development and pollution control bonds are, in most cases,
revenue bonds and do not generally carry the pledge of credit of
the issuing municipality or public authority. The Portfolio may
invest in either general obligation or revenue bonds.
Municipal Notes
Municipal notes generally are used to provide for short-term
capital needs and ordinarily have maturities of one year or less.
The Portfolio intends to invest in various types of municipal
notes, including tax anticipation notes, revenue anticipation
notes, construction loan notes, and tax-exempt commercial paper.
"When-Issued" Securities
New issues of municipal securities are often sold on a "when-
issued" basis; that is, payment and delivery of the securities
normally occur 15 to 45 days after the date of the commitment to
purchase. At the time of the purchase commitment, both the
interest and principal amount are fixed. During the period
between the purchase commitment and actual delivery, no interest
accrues to the purchaser and the market value of the security may
fluctuate. The Portfolio intends to enter into purchase orders
for "when-issued" securities with the intention of actually
taking delivery of such securities, but it may sell "when-issued"
securities prior to delivery if it is deemed advisable as a
matter of investment strategy. The Portfolio will maintain short-
term assets in a separate account with the Fund's custodian bank
in an amount equal in value to the amount of the purchase
commitment for "when-issued" securities. The Portfolio does not
intend to invest more than 25% of its net assets in "when-issued"
securities.
Variable Rate Securities
The Portfolio may purchase certain tax-exempt municipal
obligations which have a variable rate of interest. Such
obligations bear interest at rates which vary with changes in
specific market rates or indices, such as the bank prime rate.
These securities will be permitted for inclusion in the Money
Market Portfolio even though they may have a maturity which is
greater than one year. The Portfolio intends to invest in long-
term variable rate securities in order to take advantage of the
higher yield that is usually paid on long-term securities.
Investment in these securities will be made only if a secondary
market for them exists or if the Portfolio may redeem them on
demand within seven days.
The Adviser will periodically analyze the credit-worthiness of
any unrated variable rate securities to ensure that such
obligations meet the quality standards of the Portfolio. Because
variable rate securities may have a maturity greater than one
year, the Portfolio will use as the basis of calculation for
computing its dollar-weighted average maturity the longer of (a)
the notice period required for demand of redemption by the holder
or (b) the period remaining until the next interest rate
adjustment.
RISK CONSIDERATIONS
Quality
At least 80% of its investment portfolio will consist of high
quality notes rated A-l by S&P, or MIG 1, MIG 2, or P-l by
Moody's, and of tax-exempt municipal bonds holding one of the two
highest ratings assigned by Moody's (Aaa or Aa) or by S&P (AAA or
AA) or, if unrated, are believed by the Board of Directors to be
of a quality comparable to that of rated obligations eligible for
purchase by the Portfolio.
Market Risk
Market risk is the risk of price fluctuations of a security and
is generally a function of the underlying credit rating of an
issuer, the maturity length of a security, a security's yield,
and general economic and interest rate conditions. Because,
however, the Portfolio will not invest in securities having a
remaining maturity greater than 397 days at the time of purchase,
nor will the dollar-weighted average maturity of its portfolio
exceed 90 days, market risk is minimized in the Portfolio.
Credit Risk
Credit risk is a function of the ability of the issuer to make
timely interest payments and to pay the principal at maturity.
The Portfolio is not required to sell a security which, once
purchased, ceases to be rated or has its rating reduced below the
minimum required for purchase by the Portfolio. However, the
Adviser will consider such event in determining whether the
Portfolio should continue to hold the security.
Other Considerations
The ability of the Portfolio to achieve its investment objective
is dependent on a number of factors. These factors include the
ability of the Adviser to choose suitable tax-exempt securities
at a market rate of return.
Except as stated above, the foregoing investment objective and
policies are not fundamental policies of the Portfolio and may be
changed by the Board of Directors of the Fund without shareholder
approval.
HOW TO INVEST IN THE PORTFOLIO
The Fund continuously offers shares for sale. There is no sales
charge. The minimum initial investment is $2,500. There is no
minimum amount for subsequent investments.
By Mail
Complete an application and make a check payable to: "Fund for
Tax-Free Investors, Inc." Mail the check, along with the
application, to:
Fund for Tax-Free Investors, Inc.
4922 Fairmont Avenue
Bethesda, MD 20814
Be certain to specify the portfolio(s) you wish to purchase and
the amount of your purchase on the account application form.
Foreign checks will not be accepted.
By Bank Wire
Speak to the Branch Manager of your bank. Request a wire
transfer of federal funds to Rushmore, instructing the bank to
wire transfer the money before 12 Noon, Eastern time, to:
Rushmore Trust and Savings, FSB
Bethesda, MD
Routing Number 0550-71084
For Account of:
Fund for Tax-Free Investors, Inc.
Account Number 029385770
AFTER INSTRUCTING YOUR BANK TO TRANSFER FEDERAL FUNDS, YOU MUST
TELEPHONE THE FUND AT (800) 622-1386 OR (301) 657-1510 BETWEEN
8:30 A.M. AND 12 NOON, EASTERN TIME, AND TELL US THE AMOUNT YOU
TRANSFERRED AND THE NAME OF THE BANK SENDING THE TRANSFER. YOUR
BANK MAY CHARGE A FEE FOR SUCH SERVICES. REMEMBER THAT IT IS
IMPORTANT TO COMPLETE THE WIRE TRANSFER BEFORE 12 NOON, EASTERN
TIME.
Through Brokers
Investors may invest in the Portfolio by purchasing shares
through registered broker-dealers. Such broker-dealers who
process orders may charge a fee for such service.
The municipal securities market, in which the Portfolio buys and
sells its securities, usually requires immediate settlement in
federal funds for all securities transactions. Therefore, payment
for the purchase of Portfolio shares not received in the form of
federal funds will be invested in Portfolio shares and will begin
receiving dividends the following day. Payments received by bank
wire are converted immediately into federal funds. Orders
received prior to 12 Noon, Eastern time, will be invested in
shares of the Portfolio at the next determined net asset value.
The Fund reserves the right to reject any purchase order. All
accounts will be held in book entry form. No certificates for
shares will be issued. There will be a $10 charge for items
returned for insufficient or uncollectible funds.
HOW TO REDEEM AN INVESTMENT (WITHDRAWALS)
On any day the Fund is open for business, an investor may
withdraw all or any portion of his investment by redeeming shares
at the next determined net asset value per share after receipt of
the order by writing the Fund at 4922 Fairmont Avenue, Bethesda,
Maryland 20814, or telephoning (800) 622-1386 or (301) 657-1510.
There are no fees charged for redeeming shares.
The proceeds of redemptions will be sent directly to the
investor's address of record, or bank account or brokerage firm
specified on the account application. If the investor requests
payment of redemptions to a third party or to a location other
than his residence, commercial bank(s) or a brokerage firm(s)
listed on the account application, the investor's signature must
be guaranteed by an eligible institution. Eligible institutions
generally include banking institutions, securities exchanges,
associations, agencies or broker/dealers, and "STAMP" program
participants.
Normally, the Fund will make payment within one business day for
all shares redeemed. However, for investments that have been made
by check, withdrawal requests may be delayed up to ten business
days, or until the check clears, whichever occurs first. This
delay is necessary to assure the Fund that investments made by
checks are good funds. The proceeds of the redemption will be
forwarded promptly upon confirmation of receipt of good funds.
The right of redemption may also be suspended, or the date of
payment postponed, (a) for any period during which the New York
Stock Exchange is closed (other than customary weekend or holiday
closings); or (b) when trading on the exchange is restricted, or
an emergency exists, as determined by the Securities and Exchange
Commission, so that disposal of the Portfolio's investments for
determination of net asset value is not reasonably practicable;
or (c) for such other periods as the Commission, by order, may
permit for protection of the Portfolio's investors. Investor's
should also be aware that telephone redemptions or exchanges may
be difficult to implement in a timely manner during periods of
drastic economic or market changes. If such conditions occur,
redemptions or exchange orders can be made by mail.
Telephone Redemption
The privilege to initiate redemption transactions by telephone
will be made available to Fund shareholders automatically.
Telephone redemption privileges may be terminated or modified by
the Fund upon 60 days notice to all shareholders of the
Portfolio.
Redemptions in the Money Market Portfolio may be made the same
day if the request is received before 12 Noon, Eastern time.
Telephone redemptions will only be sent to your address of record
or to bank accounts specified in the account application. When
acting on instructions believed to be genuine, the Fund is not
liable for any loss resulting from a fraudulent telephone
redemption request and the investor would bear the risk of any
such loss.
The Fund will employ reasonable procedures to confirm that
redemption instructions communicated by telephone are genuine;
and if the Fund does not employ such procedures, the Fund may be
liable for any losses due to unauthorized or fraudulent
instructions. The Fund follows specific procedures for
transactions initiated by telephone, including among others,
requiring some form of personal identification prior to acting on
instructions received by telephone, providing written
confirmation not later than five business days after such
transactions, and/or tape recording of telephone transactions.
Bank Wire Transfers
When you redeem at least $5,000 for deposit to your commercial
bank account, the Fund will wire transfer the amount.
Check Transfers
For amounts less than $5,000, investors utilizing certain
Washington, D.C. banks may have checks deposited directly into
their account. Check deposits to other banks will be mailed.
Exchange Privileges
The Portfolio's shares may be exchanged, without cost, for shares
of any other Tax-Free Portfolio or for shares of Fund for
Government Investors, The Rushmore Fund, Inc., American Gas Index
Fund, Inc., or Cappiello-Rushmore Trust, on the basis of the
respective net asset values of the shares involved, provided such
exchange is permitted under the applicable laws of the state of
the investor's residence. Shareholders contemplating such an
exchange should obtain and review the prospectuses of those
funds.
DIVIDENDS
The Portfolio distributes all of its net income on a daily basis.
Net income consists of all interest income accrued and discount
earned, less estimated expenses of the Portfolio. Capital gains,
if any, will be distributed on an annual basis.
Dividends are declared each day that the Portfolio is open for
business. Investors receive dividends in additional shares
unless they elect to receive cash. Payment, either in additional
shares or in cash, is made on a monthly basis at the net asset
value on the payable date. Investors wishing to change the
method of receiving dividends must notify the Portfolio in
writing at least one week before payment is to be made.
NET ASSET VALUE
Net asset value of the Portfolio will be determined as of 12
Noon, Eastern time, on days when there is sufficient trading in
portfolio securities of the Portfolio to affect the net asset
value materially. The net asset value per share is calculated by
adding the appraised value of all securities and all other
assets, deducting liabilities and dividing by the number of
shares outstanding. To the extent market quotations are not
readily available, the Board of Directors will value the
Portfolio's portfolio securities in good faith.
In determining fair market value, the Portfolio may take into
consideration prices supplied by a pricing service, provided the
use of the pricing service has been approved by the Board of
Directors. Valuations provided by pricing services are generally
determined without exclusive regard to quoted prices. Generally,
pricing services consider in their valuation the market activity
of similar groups of securities, their yields, quality ratings,
maturities, and other characteristics.
The Directors will continuously review this method of valuation
and recommend changes which may be necessary to assure that the
Fund's portfolio instruments are valued at fair value.
The Portfolio intends to value its portfolio securities at their
amortized cost value pursuant to Rule 2a-7 under the Investment
Company Act of 1940. The Money Market Portfolio will seek to
maintain, but cannot assure, a constant net asset value of $1.00
per share.
INVESTOR ACCOUNTS
The Portfolio maintains an account for each investor in full and
fractional shares. Statements of account will be sent monthly
showing the beginning balance, detail of all transactions for the
month and the ending balance. Confirmations of individual
transactions in the Money Market Portfolio will not be sent.
TRANSACTION CHARGES
In addition to charges described elsewhere in this Prospectus,
the Fund may impose a charge of $5 per month for any account
whose average daily balance is below $500. The fee will continue
to be imposed during months when the account balance remains
below $500. This fee will be paid to Rushmore Trust and Savings,
FSB. The fee will not be imposed on tax-sheltered retirement
plans or accounts established under the Uniform Gifts or
Transfers to Minors Act. Because of the expense of handling
small accounts, the Fund reserves the right to involuntarily
redeem an investor's account which falls below $500 in total
value in all Tax-Free Portfolios of the Fund due to redemptions
or exchanges after providing 60 days written notice. The Fund
may also assess a charge of $10 for items returned for
insufficient or uncollectible funds.
TAXES
The Portfolio has qualified (and intends to continue to qualify)
as a regulated investment company under Subchapter M of the
Internal Revenue Code. Because of this qualification the
Portfolio will not be liable for federal income taxes to the
extent its earnings are distributed. Additionally, the Portfolio
qualifies to pay "exempt-interest dividends" within the meaning
of the Internal Revenue Code. The qualification will continue if
the Portfolio meets certain requirements. One requirement is
that at least 50% of the value of the Portfolio's total assets at
the close of each quarter of its taxable year consist of
obligations, on which the interest is exempt from federal income
tax.
Dividends derived from interest on municipal obligations, which
constitute exempt-interest dividends, will not be subject to
federal income tax, except to the extent such interest is subject
to the alternative minimum tax. Net interest on certain "private
activity bonds" issued on or after August 8, 1986 is treated as
an item of tax preference and may, therefore, be subject to both
the individual and corporate alternative minimum tax. To the
extent provided by regulations to be issued by the Secretary of
the Treasury, exempt-interest dividends from the Portfolio are to
be treated as interest on "private activity bonds" in proportion
to the interest the Portfolio receives from private activity
bonds, reduced by allowable deductions. Regarding dividends
derived from taxable money market securities, the amount
received, subject to repurchase agreements and distributions of
the Portfolio's net short-term capital gains, if any, will be
taxed as ordinary income whether they are invested in additional
shares of the Portfolio or received in cash. The Portfolio
anticipates that any such amounts would be insubstantial in
relation to the tax-exempt interest generated by the Portfolio.
The exemption of interest income for federal income tax purposes
may not produce similar exemptions under the tax laws of state or
local taxing authorities. In general, only interest earned on
obligations issued by the state or locality in which the investor
resides will be exempt from state and local taxes. Shareholders
should consult their tax advisers concerning the tax status of
the dividends from the Portfolio in their own states and
localities.
Statements as to the federal tax status of shareholders'
dividends and distributions will be mailed by February 15 of each
year. The Portfolio will also report to its shareholders
annually the percentage and source, on a state-by-state basis, of
interest income received by the Portfolio on municipal
obligations.
ORGANIZATION AND DESCRIPTION OF COMMON STOCK
The Fund was incorporated in Maryland on April 8, 1983, and has a
present authorized capital of 200,000,000 shares of $.001 par
value common stock, which may be issued in three separate
classes: the Money Market Portfolio, the Rushmore Maryland Tax-
Free Portfolio and the Rushmore Virginia Tax-Free Portfolio.
All shares of the Fund are freely transferable. The shares do
not have preemptive rights, and none of the shares has any
preference to conversion, exchange, dividends, retirements,
liquidation, redemption or any other feature. Shares have equal
voting rights, except that in a matter affecting only a single
Portfolio (such as the proposed sale of all the assets of one
Portfolio), only shares of that Portfolio may be entitled to vote
on the matter. Because the shares have non-cumulative voting
rights, the holders of more than 50% of the shares voting for the
election of directors can elect 100% of the directors, if they
choose to do so. In such event, the holders of the remaining
less than 50% of the shares voting will not be able to elect any
directors.
The Board of Directors of the Fund has the authority to classify
or reclassify any unissued shares by fixing the number of shares
in each of the Portfolios.
Shareholders having inquiries about the Fund's organization or
operation should contact the Fund in writing at 4922 Fairmont
Avenue, Bethesda, Maryland 20814 or by telephone at (301) 657-
1500.
Officers and directors of the Fund, as a group, own less than 1%
of the shares outstanding.
MANAGEMENT OF THE FUND
Officers and Directors
The Fund has a Board of Directors which is responsible for the
general supervision of the Fund's business. The day-to-day
operations of the Fund are the responsibility of the Fund's
officers. A complete list of the Fund's directors and officers
is contained in the SAI.
Investment Adviser and Administrative Servicing Agent
The Portfolio is provided investment advisory and management
services by Money Management Associates (the "Adviser"), 1001
Grand Isle Way, Palm Beach Gardens, Florida 33418. The Adviser
is a limited partnership which was formed under the laws of the
District of Columbia on August 15, 1974. Its primary business
since inception has been to serve as the Adviser to Fund for
Government Investors, The Rushmore Fund, Inc., Fund for Tax-Free
Investors, Inc. and American Gas Index Fund, Inc. Daniel L.
O'Connor, is the sole general partner of the Adviser, and as
such, exercises control of the Adviser.
Under an Agreement with the Adviser, the Portfolio pays the
Adviser a fee at an annual rate based on 0.50% of the net assets
of the Money Market Portfolio, 0.625% of the net assets of the
Rushmore Virginia Tax-Free Portfolio and 0.625% of the net assets
of the Rushmore Maryland Tax-Free Portfolio. The Rushmore Tax-
Free Money Market Portfolio's total operating expenses were 0.75%
for the 1996 fiscal year.
Effective September 1, 1993, the Board of Directors approved an
arrangement whereby Rushmore Trust and Savings, FSB, 4922
Fairmont Avenue, Bethesda, Maryland 20814, a majority-owned
subsidiary of the Adviser, provides the Portfolio with custodial,
transfer agency, dividend-disbursing, and other shareholder
services. The Portfolio pays an annual fee of 0.25% (25/100 of
1%) of average daily net assets for the Money Market Portfolio
and 0.30% (30/100 of 1%) of average daily net assets for the
Rushmore Maryland Tax-Free and Rushmore Virginia Tax-Free
Portfolios for these services.
<PAGE>
CONTENTS
Page [LOGO]
Fee Table 2
FUND FOR TAX-FREE INVESTORS
Financial Highlights 3
Tax-Free Money Market Portfolio
Performance Data 4
Prospectus
Investment Objective, Policies
and Practices 4
May 1, 1997
Risk Considerations 6
How to Invest in the Portfolio 6
How to Redeem an Investment
(Withdrawals) 7
Dividends 9
Net Asset Value 9
Investor Accounts 9
Transaction Charges 9
Taxes 10
Organization and Description of
Common Stock 10
Management of the Fund 11
<PAGE>
Fund for Tax-Free Investors, Inc.
4922 Fairmont Avenue
Bethesda, Maryland 20814
(800) 343-3355 (301) 657-1500
Rushmore Maryland Tax-Free Portfolio
and
Rushmore Virginia Tax-Free Portfolio
Fund for Tax-Free Investors, Inc. (the "Fund") is a no-load, open-
end management company consisting of three separate portfolios,
Rushmore Tax-Free Money Market Portfolio, Rushmore Maryland Tax-Free
Portfolio and Rushmore Virginia Tax-Free Portfolio.
This Prospectus is a concise presentation of information about
the Rushmore Maryland Tax-Free Portfolio ("Maryland Portfolio")
and the Rushmore Virginia Tax-Free Portfolio ("Virginia Portfolio"),
each a non-diversified series of the Fund.
Investors should read this Prospectus and retain it for future
reference. It is designed to set forth concisely the information
an investor should know before investing in the Portfolios. A
Statement of Additional Information ("SAI") dated May 1, 1997
containing additional information about the Portfolios has been
filed with the Securities and Exchange Commission and is
incorporated herein by reference. A copy of the SAI may be
obtained, without charge, by writing or telephoning the Fund.
The shares offered by this Prospectus are not deposits or
obligations of any bank, are not endorsed or guaranteed by any
bank, and are not insured or guaranteed by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other
U.S. Government agency.
The date of this Prospectus is May 1, 1997.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
FEE TABLE
The following table illustrates all expenses and fees that a
shareholder of each Portfolio will incur:
Maryland Virginia
Portfolio Portfolio
Shareholder Transaction Expenses
Sales Load Imposed on Purchases None None
Sales Load Imposed on Reinvested Dividends None None
Deferred Sales Load None None
Redemption Fees None None
Exchange Fees None None
Monthly Account Fee (for accounts under $500)* $5.00 $5.00
Annual Operating Expenses of the Portfolios
(as a percentage of average net assets)
Management Fees 0.625% 0.625%
12b-1 Fees None None
Other Expenses 0.30% 0.30%
Total Operating Expenses of the Portfolios 0.925% 0.925%
* A charge of $5 per month may be imposed on any account whose average
daily balance for the month falls below $500.
See "Transaction Charges."
Example
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time period:
1 Year 3 Years 5 Years 10 Years
Maryland Portfolio $ 10 $ 30 $ 53 $ 117
Virginia Portfolio 10 30 53 117
The same level of expenses would be incurred if the investment
were held throughout the period indicated. The preceding table
is provided to assist the investor in understanding the various
costs and expenses that the investor will incur directly or
indirectly. The five percent assumed annual return is for
comparison purposes only. The actual return may be more or less
depending on market conditions. The example should not be
considered a representation of past or future expenses. Actual
expenses may be greater or less than those shown. For more
complete information about the various costs and expenses, see
"Management of the Fund" in the Prospectus and SAI.
Money Management Associates, the Fund's investment adviser, has
agreed to reimburse the Maryland and Virginia Portfolios (the
"Portfolios") for expenses (including the investment advisory
fee, and excluding interest and extraordinary legal expenses)
which exceed one percent of the average daily net assets per
annum. No reimbursement was required for the fiscal year ended
December 31, 1996.
<PAGE>
<TABLE>
FUND FOR TAX-FREE INVESTORS, INC.
FINANCIAL HIGHLIGHTS
Rushmore Virginia Tax-Free Portfolio
Audited
<CAPTION>
For The Year Ended December 31,
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value -
Beginning of Year $ 11.31 $ 0.36 $ 11.51 $ 10.84 $ 10.63 $ 10.17 $ 10.31 $ 10.12 $ 9.99 $ 10.74
Income from Investment
Operations:
Net Investment Income 0.534 0.564 0.578 0.582 0.610 0.615 0.578 0.595 0.601 0.630
Net Realized and Unrealized
Gains(Losses) on (0.221) 0.953 (1.150) 0.670 0.210 0.460 (0.140) 0.190 0.130 (0.750)
Securities
Total from Investment
Operations 0.313 1.517 (0.572) 1.252 0.820 1.075 0.438 0.785 0.731 (0.120)
Distributions to
Shareholders: (0.533) (0.564) (0.578) (0.582) (0.610) (0.615) (0.578) (0.595) (0.601) (0.630)
From Net Investment Income
From Net Realized Capital
Gains - - - - - - - - - -
Net Increase (Decrease) in
Net Asset Value (0.22) 0.95 (1.15) 0.67 0.21 0.46 (0.14) 0.19 0.13 (0.75)
Net Asset Value - End of
Year $ 11.09 $ 1.31 $ 10.36 $ 11.51 $ 10.84 $ 10.63 $ 10.17 $ 10.31 $ 10.12 $ 9.99
Total Investment Return 2.91% 14.92% (5.02%) 11.80% 7.98% 10.85% 4.42% 7.95% 7.56% (1.12%)
Ratios to Average Net Assets:
Expenses 0.93% 0.77% 0.55% 0.50% 0.50% 0.61% 0.93% 0.94% 0.93% 0.92%
Expenses Before Reimbursement
from Investment Adviser 0.93% 0.93% 0.93% 0.93% 0.93% 0.93% 0.93% 0.94% 0.93% 0.92%
Net Investment Income 4.84% 5.17% 5.35% 5.15% 5.71% 5.91% 5.70% 5.82% 5.92% 6.18%
Supplementary Data:
Portfolio Turnover Rate 46% 55% 33% 43% 50% 74% 202% 150% 78% 125%
Net Assets at End of Year
(000s omitted) $32,355 $33,468 $27,929 $34,371 $25,513 $16,753 $ 7,333 $ 6,877 $ 7,772 $ 8,232
Number of Shares Outstanding
at End of Year (000s
omitted) 2,917 2,958 2,697 2,985 2,354 1,576 721 667 768 824
The auditors' report is incorporated by reference in the registration statement. The auditors' report and further information
about the performance of the Portfolio are contained in the annual report to shareholders which may be obtained without charge
by calling or writing the Fund.
</TABLE>
<PAGE>
<TABLE>
FUND FOR TAX-FREE INVESTORS, INC.
FINANCIAL HIGHLIGHTS
Rushmore Maryland Tax-Free Portfolio
Audited
<CAPTION>
For The Year Ended December 31,
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value - Beginning
of Year $ 10.98 $ 10.11 $ 11.27 $ 10.60 $ 10.39 $ 9.99 $ 10.33 $ 10.34 $ 10.09 $ 10.71
Income from Investment
Operations:
Net Investment Income 0.528 0.550 0.565 0.568 0.594 0.594 0.620 0.679 0.702 0.728
Net Realized and
Unrealized Gains(Losses) (0.190) 0.869 (1.157) 0.670 0.210 0.400 (0.340) 0.010 0.250 (0.620)
on Securities
Total from Investment
Operations 0.338 1.419 (0.592) 1.238 0.804 0.994 0.280 0.669 0.952 0.108
Distributions to
Shareholders:
From Net Investment Income (0.528) (0.551) (0.565) (0.568) (0.594) (0.594) (0.620) (0.679) (0.702) (0.728)
From Net Realized Capital
Gains - - (0.003) - - - - - - -
Net Increase (Decrease) in
Net Asset Value (0.19) 0.87 (1.16) 0.67 0.21 0.40 (0.34) (0.01) 0.25 (0.62)
Net Asset Value -
End of Year $ 10.79 $ 10.98 $ 10.11 $ 11.27 $ 10.60 $ 10.39 $ 9.99 $ 10.33 $ 10.34 $ 10.09
Total Investment Return 3.21% 14.35% (5.24%) 11.91% 8.00% 10.24% 2.89% 6.68% 9.67% 1.08%
Ratios to Average Net Assets:
Expenses 0.93% 0.77% 0.55% 0.50% 0.50% 0.62% 0.93% 0.92% 0.93% 0.93%
Expenses Before Reimbursement
from Investment Adviser 0.93% 0.93% 0.93% 0.93% 0.93% 0.93% 0.93% 0.92% 0.93% 0.93%
Net Investment Income 4.92% 5.16% 5.36% 5.13% 5.67% 5.85% 6.19% 6.56% 6.81% 7.04%
Supplementary Data:
Portfolio Turnover Rate 31% 37% 38% 30% 21% 61% 244% 173% 102% 84%
Net Assets at End of Year
(000s omitted) $44,410 $49,725 $44,385 $58,094 $43,921 $23,835 $ 9,750 $11,249 $ 9,337 $ 9,424
Number of Shares Outstanding
at End of Year
(000s omitted) 4,116 4,527 4,391 5,157 4,145 2,294 976 1,089 903 934
The auditors' report is incorporated by reference in the registration statement. The auditors' report and further information
about the performance of the Portfolio are contained in the annual report to shareholders which may be obtained without charge
by calling or writing the Fund.
</TABLE>
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
Maryland and Virginia Tax-Free Portfolios
Total Return Comparison
Lehman Brothers Muni Virginia Tax-Free Maryland Tax-Free
Bond Index Portfolio Portfolio
12/31/87 $10,000 $10,000 $10,000
12/31/88 $11,016 $10,756 $10,967
12/31/89 $12,205 $11,612 $11,700
12/31/90 $13,095 $12,125 $12,038
12/31/91 $14,685 $13,440 $13,269
12/31/92 $15,979 $14,513 $14,330
12/31/93 $17,943 $16,225 $16,038
12/31/94 $17,015 $15,410 $15,182
12/31/95 $19,984 $17,710 $17,360
12/31/96 $20,869 $18,225 $17,917
Past performance is not predictive of future performance. The Lehman
Brothers Municipal Bond Index is an unmanaged index and, unlike the
Portfolios, has no management fees or other operating expenses to reduce
its reported return. Returns are historical and include changes in
principal and reinvested dividends and capital gains.
Average Annual Total Return
Period Ending
December 31, 1996
One Year Five Years Ten Years
Rushmore Virginia Tax-Free 2.91% 6.28% 6.07%
Rushmore Maryland Tax-Free 3.21% 6.19% 6.12%
<PAGE>
PERFORMANCE DATA
The Portfolios may from time to time include total return in
advertisements or reports to shareholders or prospective
shareholders. Quotations of average annual total return for the
Portfolios will be expressed in terms of the average annual
compounded rate of return on a hypothetical investment in the
Portfolio(s) over a period of at least one, five and ten years,
or up to the life of each Portfolio (the ending date of the
period will be stated). Total return is calculated from two
factors: the amount of dividends earned by each share and by the
increase or decrease in value of a Portfolio's share price.
Performance information for the Portfolios contained in reports
and promotional literature may be compared to various unmanaged
indices, including, but not limited to, the Standard & Poor's 500
Stock Index ("S&P 500") or the Dow Jones Industrial Average
("DJIA"). Such unmanaged indices may assume the reinvestment of
dividends but generally do not reflect deductions for operating
costs and expenses. In addition, each Portfolio's total return
may be compared to the performance of other mutual funds and may
quote rankings in the relevant fund category as published by such
organizations as Lipper Analytical Services, Inc. and CDA
Investment Technologies, Inc., among others.
The Portfolios may also provide yield and tax-equivalent yield
quotations and quote fund rankings. Yield and tax-equivalent
yield quotations are based on each Portfolio's annualized net
investment income per share over a 30 day period stated as a
percent of the maximum public offering price on the last day of
the period.
Annualized yields of each of the Fund's Portfolios during a
particular period are computed by taking the Portfolio's average
daily net investment income, dividing by the net assets of the
Portfolio, and multiplying the result by 365 days. The quoted
yield of a Portfolio for any particular period of time should not
be considered as representation of future yield of the Portfolio.
For the 30-day period ended December 31, 1996, the yields on the
Maryland and Virginia Portfolios were 4.50% and 4.51%, respectively.
INVESTMENT OBJECTIVES, POLICIES AND PRACTICES
The investment objectives listed below cannot be changed without
shareholder approval. In view of the risks inherent in all
investments in securities, there is no assurance that these
objectives will be achieved. The investment policies and
practices employed in pursuit of each Portfolio's objective may
be changed without shareholder approval.
Investment Objective
The investment objective of both of the Portfolios is to maximize
income for investors that is exempt from federal and state income
taxes.
Each Portfolio will, as a matter of fundamental policy, invest at
least 80% of the value of its net assets in securities, the
interest on which is exempt from federal income taxes, including
the individual alternative minimum tax, and from personal state
income taxes.
Investment Policies and Practices
Each Portfolio seeks to achieve the investment objective by
investing at least 80% of its total assets under normal
conditions in securities issued by the state, its political
subdivisions, agencies and instrumentalities and other issuers
exempt from state income tax. Each Portfolio will generally
invest in long-term investment grade securities. The average
portfolio maturity will ordinarily exceed ten years, although
when, in the opinion of the investment adviser, it is in the best
interest of shareholders, the average maturity may be reduced to
less than ten years. The Portfolios may buy without limitation
unrated securities which are believed by the Board of Directors
to be of a quality comparable to that of rated bonds eligible for
purchase by the Portfolios. From time to time, the Portfolios
may purchase securities that are rated below investment grade,
however, such purchases will be limited to 5% of net assets.
Although each Portfolio seeks to invest its total assets in
securities described in the preceding paragraph, market
conditions may from time to time limit the availability of such
obligations. During such periods, the Portfolios will seek to
invest in municipal obligations, the interest on which may be
subject to personal income taxes in the shareholder's state of
residence. Also as a temporary defensive measure or to provide
liquidity, the Portfolios may hold up to 30% of their total
assets in obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities or repurchase
agreements secured by such securities. Income from such
securities may be taxable for federal and state income tax
purposes.
Municipal Securities
Municipal securities are debt obligations of states, cities,
municipalities and other public authorities and are principally
classified as notes and bonds. The yields on municipal
securities are dependent on a variety of factors, including the
general level of interest rates, the credit-worthiness of a
particular issuer, the size of a particular issue, the maturity
date of the issue, and its rating by the various rating services.
The market value of outstanding municipal securities will also
vary with the changes in interest rates and with rating changes
of the securities.
Municipal Bonds
Municipal bonds generally have maturities of more than one year
when issued and are issued to obtain funds for various public
purposes. Municipal bonds may be categorized as "general
obligation" or "revenue" bonds.
General obligation bonds are secured by the issuer's pledge of
its full faith, credit and taxing power for the payment of the
principal and interest. Revenue bonds are secured by the net
revenue derived from a particular facility or group of facilities
or, in some cases, the proceeds of a special excise or other
specific revenue source, but not by the general taxing power.
Industrial development and pollution control bonds are municipal
bonds which are issued by or on behalf of public authorities to
provide funding for the construction, equipment, repair or
improvement of various privately-operated facilities. Industrial
development and pollution control bonds are, in most cases,
revenue bonds and do not generally carry the pledge of credit of
the issuing municipality or public authority. Each Portfolio may
invest in either general obligation or revenue bonds.
Municipal Notes
Municipal notes generally are used to provide for short-term
capital needs and ordinarily have maturities of one year or less.
Each Portfolio intends to invest in various types of municipal
notes, including tax anticipation notes, revenue anticipation
notes, construction loan notes and tax-exempt commercial paper.
"When-Issued" Securities
New issues of municipal securities are often sold on a "when-
issued" basis; that is, payment and delivery of the securities
usually occurs 15 to 45 days after the date of the commitment to
purchase. At the time of the purchase commitments, both the
interest and principal amounts are fixed. During the period
between the purchase commitment and actual delivery, no interest
accrues to the purchaser and the market value of the security may
fluctuate. Each Portfolio of the Fund may enter into purchase
orders for "when-issued" securities with the intention of
actually taking delivery of such securities, but may sell "when-
issued" securities prior to delivery if it is deemed advisable as
a matter of investment strategy. Each Portfolio will maintain
short-term assets in a separate account with the Fund's custodian
bank in an amount equal to the amount of purchase commitment for
"when-issued" securities. Each Portfolio does not intend to
invest more than 25% of its net assets in "when-issued"
securities.
Variable Rate Securities
Each Portfolio may purchase certain tax-exempt municipal
obligations which have a variable rate of interest. Such
obligations bear interest at rates which vary with changes in
specific market rates or indices, such as a bank prime rate.
Both Portfolios intend to invest in such securities in order to
take advantage of the higher yield that is usually paid on long-
term securities. However, investment in these securities will be
made only if each Portfolio may redeem them on demand within
seven days.
The investment adviser will periodically analyze the credit-
worthiness of any unrated variable rate securities to insure that
such obligations meet the quality standards of the particular
Portfolio. Because variable rate securities may have a maturity
greater than one year, each Portfolio will use, as the basis of
calculation for computing its dollar-weighted average maturity,
the longer of (a) the notice period required for demand of
redemption by the holder or (b) the period remaining until the
next interest rate adjustment.
RISK CONSIDERATIONS
Quality
The Maryland and Virginia Portfolios generally invest in long-
term obligations that, on the date of purchase, are rated in the
four highest ratings of Standard & Poor's Corporation ("S&P")
(AAA, AA, A and BBB) or Moody's Investors Service, Inc.
("Moody's") (Aaa, Aa, A and Baa) or, if unrated, are believed by
the Board of Directors to be of a quality comparable to that of
rated bonds eligible for purchase by the Portfolios. In
addition, the Portfolios may purchase securities that are rated
below investment grade, however, such purchases will be limited
to 5% of each Portfolio's net assets. Purchase of unrated
securities and securities rated below investment grade may expose
the Portfolios to greater market and credit risk than purchases
of investment grade-rated securities.
Market Risk
Market risk is the risk of price fluctuations of a security and
is generally a function of the underlying credit rating of an
issuer, the maturity length of a security, a security's yield,
and general economic and interest rate conditions. The average
portfolio maturities will ordinarily exceed ten years although
when, in the opinion of the investment advisor, it is in the best
interests of shareholders, average maturities may be reduced to
less than ten years.
Credit Risk
Credit risk is a function of the ability of the issuer to make
timely interest payments and to pay the principal at maturity.
Since each Portfolio generally will invest only in the securities
of its respective state, there are certain specific factors and
considerations concerning the states which may subject the
Portfolios to greater market or credit risk than if the municipal
securities purchased by each Portfolio were more broadly
diversified geographically. Such factors and considerations are
discussed below.
Diversification
A "diversified" investment company under the federal securities
laws may not, with respect to 75% of its total assets, invest
more than 5% of its total assets in any one issuer. Each
Portfolio is "non-diversified" for securities law purposes and is
not subject to this limitation. However, each Portfolio intends
to qualify as a "regulated investment company" under the Internal
Revenue Code. Such qualification requires each Portfolio to
limit its investments so that, with respect to at least 50% of
its total assets, not more than 5% of such assets are invested in
the securities of a single issuer, and with respect to the
remaining 50% of its total assets, not more than 25% of such
assets are invested in the securities of a single issuer. Since,
as a "non-diversified" investment company, each Portfolio is
permitted to invest a greater proportion of its assets in the
securities of a smaller number of issuers, each Portfolio may be
subject to greater credit risk with respect to its portfolio
securities than an investment company which is more broadly
diversified.
Rushmore Maryland Tax-Free Portfolio
The investment objective for the Portfolio is to maximize income
for investors that is exempt from federal and Maryland state
income taxes. As a matter of fundamental policy, the Portfolio
will invest at least 80% of the value of its net assets in
securities, the interest on which is exempt from federal income
taxes, including the individual alternative minimum tax, and from
personal income taxes of the State of Maryland.
While such concentration in securities issued by the State of
Maryland and its political subdivisions involves greater risk
than a portfolio more broadly invested across many states and
municipalities, the Portfolio's investment restrictions should be
viewed in light of the economic condition of such entities. Some
risk factors affecting Maryland are discussed below.
Maryland has a well-diversified economy with wealth and income
levels above the national average. Economic diversity is a key
factor when assessing credit worthiness in that it reduces
reliance on any one type of industry or economic activity.
Principal employment sectors in Maryland are services, wholesale
and retail trade, government and manufacturing.
General obligations of the State of Maryland carry the highest
rating of AAA by the three major rating services: Standard and
Poor's, Moody's and Fitch as of the writing of this Prospectus.
All but three of Maryland's twenty-four counties carry general
obligation debt ratings of A or higher by at least one of the
three major rating agencies with Montgomery County, Baltimore
County, and Howard County carrying an AAA rating by at least one
of the rating agencies.
The State of Maryland has paid the principal and interest on its
general obligation bonds when due for over one hundred twenty
years. The state has the authority to make short-term borrowings
in anticipation of tax or other receipts, but has not done so for
its own needs for over one hundred years.
The factors mentioned above indicate that Maryland and its larger
political subdivisions are in satisfactory economic condition.
There can, of course, be no assurances made that particular bond
issues will not be adversely affected by changes in national,
state, or local economic or political conditions.
Rushmore Virginia Tax-Free Portfolio
The investment objective for the Rushmore Virginia Tax-Free
Portfolio is to maximize income for investors that is exempt from
federal and Virginia state income taxes. The Portfolio will, as
a matter of fundamental policy, invest at least 80% of the value
of its net assets in securities, the interest on which is exempt
from federal income taxes, including the individual alternative
minimum tax, and from personal income taxes of the Commonwealth
of Virginia.
While such concentration in securities issued by the Commonwealth
of Virginia and its political subdivisions involves greater risk
than a portfolio more broadly invested across many states and
municipalities, the Portfolio's investment restrictions should be
viewed in light of the economic condition of such entities.
The Constitution of Virginia limits the ability of the
Commonwealth to create debt. An amendment to the Constitution of
Virginia, approved by voters in 1984, requires a balanced budget.
General obligation bonds of the Commonwealth of Virginia carried
ratings of AAA by Standard and Poor's Corporation and Aaa by
Moody's Investors Service, Inc. as of the writing of this
Prospectus.
General obligations of cities, towns or counties are payable from
the general revenues of the entity, including ad valorem tax
revenues on property within the jurisdiction. While the
obligation to levy taxes could be enforced by mandamus, such a
remedy may be impracticable and difficult to enforce.
A holder of any general obligation bond of any governmental
issuer in the Commonwealth of Virginia that is in default, may
file an affidavit with the Governor setting forth such default.
If the Governor determines that such default exists, he is
directed to order the state comptroller to withhold funds
appropriated and payable by the Commonwealth to the defaulting
governmental unit and apply the amount so withheld to cover the
default as to such bonds and interest thereon.
Other Considerations
The ability of the Portfolios to achieve their investment
objectives are dependent on a number of factors. These factors
include the ability of the Adviser to choose suitable tax-exempt
securities at a market rate of yield. Municipal securities with
longer maturities and a constant interest rate to maturity are
generally subject to greater decline in market value than short-
term securities when interest rates increase.
Except as stated above, the foregoing investment objective and
policies are not fundamental policies of the Fund and may be
changed by the Board of Directors of the Fund without shareholder
approval.
HOW TO INVEST IN THE PORTFOLIOS
The Fund continuously offers shares for sale. There is no sales
charge. The minimum initial investment is $2,500. There is no
minimum for subsequent investments.
By Mail
Complete an application and make a check payable to: "Fund for
Tax-Free Investors, Inc." Mail the check, along with the
application, to:
Fund for Tax-Free Investors, Inc.
4922 Fairmont Avenue
Bethesda, MD 20814
Be certain to specify the portfolio(s) you wish to purchase and
the amount of your purchase on the account application form.
Foreign checks will not be accepted.
By Bank Wire
Speak to the Branch Manager of your bank. Request a wire
transfer of federal funds to Rushmore Trust and Savings, FSB,
instructing the bank to wire transfer the money before 4:00 P.M.,
Eastern time, to:
Rushmore Trust and Savings, FSB
Bethesda, MD
Routing Number 0550-71084
For Account of:
Fund for Tax-Free Investors, Inc.
Account Number 029385770
AFTER INSTRUCTING YOUR BANK TO TRANSFER FEDERAL FUNDS, YOU MUST
TELEPHONE THE FUND AT (800) 622-1386 OR (301) 657-1510 BETWEEN
8:30 A.M. AND 4:00 P.M. EASTERN TIME AND TELL US THE AMOUNT YOU
TRANSFERRED AND THE NAME OF THE BANK SENDING THE TRANSFER. YOUR
BANK MAY CHARGE A FEE FOR SUCH SERVICES. REMEMBER THAT IT IS
IMPORTANT TO COMPLETE THE WIRE TRANSFER BEFORE 4:00 P.M. EASTERN
TIME.
Through Brokers
Investors may invest in the Portfolios by purchasing shares
through registered broker-dealers. Such broker-dealers who
process orders may charge a fee for such service.
The municipal securities market, in which each Portfolio buys and
sells its securities, usually requires immediate settlement in
federal funds for all securities transactions. Therefore,
payment for the purchase of each Portfolio's shares not received
in the form of federal funds will be invested in specified
Portfolio shares and will begin earning dividends the following
day. Payments received by bank wire are converted immediately
into federal funds. Orders received prior to 4:00 P.M., Eastern
time, will be invested in shares of the specified Portfolio at
the next determined net asset value. The Fund reserves the right
to reject any purchase orders. All accounts will be held in book
entry form. No certificates for shares will be issued. There
will be a $10 charge for items returned for insufficient or
uncollectible funds.
Purchase orders which do not specify the portfolio in which an
investment is to be made will be invested in the Rushmore Tax-
Free Money Market Portfolio.
HOW TO REDEEM AN INVESTMENT (WITHDRAWALS)
On any day the Fund is open for business, an investor may
withdraw all or any portion of his investment by redeeming shares
at the next determined net asset value per share after receipt of
the order by writing the Fund, or telephoning (800) 622-1386 or
(301) 657-1510. There are no fees charged for the redemption of
shares.
The proceeds of redemptions will be sent directly to the
investor's address of record or bank account or brokerage firm
specified in the account application. If the investor requests
payment of redemptions to a third party or to a location other
than his residence, commercial bank(s) or a brokerage firm(s)
listed on the account application, the investor's signature must
be guaranteed by an eligible institution. Eligible institutions
generally include banking institutions, securities exchanges,
associations, agencies or broker/dealers, and "STAMP" program
participants.
Normally, the Fund will make payment within one business day for
all shares redeemed. However, for investments that have been
made by check, withdrawal requests may be delayed up to ten
business days or until the check clears, whichever occurs first.
This delay is necessary to assure the Fund that investments made
by check are good funds. The proceeds of the redemption will be
forwarded promptly upon confirmation of receipt of good funds.
The right of redemption may also be suspended, or the date of
payment postponed, (a) for any period during which the New York
Stock Exchange is closed (other than customary weekend or holiday
closings); or (b) when trading on the exchange is restricted, or
an emergency exists, as determined by the Securities and Exchange
Commission, so that disposal of each Portfolio's investments for
determination of net asset value is not reasonably practicable;
or (c) for such other periods as the Commission, by order, may
permit for protection of each Portfolio's investors. Investors
should also be aware that telephone redemptions or exchanges may
be difficult to implement in a timely manner during periods of
drastic economic or market changes. If such conditions occur,
redemption or exchange orders can be made by mail.
Telephone Redemption
The privilege to initiate redemption transactions by telephone
will be made available to each Portfolio's shareholders
automatically. Redemptions will be mailed or wired the next
business day.
Telephone redemptions will only be sent to the address of record
or to bank accounts specified in the account application. When
acting on instructions believed to be genuine, the Fund will not
be liable for any loss resulting from a fraudulent telephone
redemption requests and the investor would bear the risk of any
such loss. The Fund will employ reasonable procedures to
confirm that redemption instructions communicated by telephone
are genuine; and if the Fund does not employ such procedures,
then the Fund may be liable for any losses due to unauthorized or
fraudulent instructions. The Fund follows specific procedures
for transactions initiated by telephone, including among others,
requiring some form of personal identification prior to acting
on instructions received by telephone, providing written
confirmation not later than five business days after such
transactions, and/or tape recording of telephone transactions.
Bank Wire Transfers
When you redeem at least $5,000 for deposit to your commercial
bank account, the Fund will automatically wire transfer the
amount.
Check Transfers
For amounts less than $5,000, investors utilizing certain
Washington, D.C. banks may have checks deposited directly. Check
deposits to other banks, or brokerage firms, will be mailed.
Exchange Privilege
Each Portfolio's shares may be exchanged, without cost, for
shares of any other Portfolio or for shares of Fund for
Government Investors, The Rushmore Fund, Inc., American Gas Index
Fund, Inc. or Cappiello-Rushmore Trust on the basis of the
respective net asset values of the shares involved, provided such
exchange is permitted under the applicable laws of the state of
the investor's residence. Shareholders contemplating such an
exchange should obtain and review the prospectuses of those
funds. Telephone exchange privileges may be terminated or
modified by the Fund upon 60 days notice to all shareholders of
the Portfolios.
TRANSACTION CHARGES
In addition to charges described elsewhere in this Prospectus,
the Fund may impose a charge of $5 per month for any account
whose average daily balance is below $500. The fee will continue
to be imposed during months when the account balance remains
below $500. This fee will be paid to Rushmore Trust and Savings,
FSB. The fee will not be imposed on tax-sheltered retirement
plans or accounts established under the Uniform Gifts or
Transfers to Minors Act. The Fund may also assess a charge of
$10 for items returned for insufficient or uncollectible funds.
Because of the expense of handling small accounts, the Fund
reserves the right to involuntarily redeem an investor's account
which falls below $500 in total value in all Tax-Free Portfolios
of the Fund due to redemptions or exchanges after providing 60
days written notice.
DIVIDENDS
Each Portfolio distributes all of its net income on a daily
basis. Net income consists of all interest income accrued and
discount earned, less estimated expenses of the Fund. Capital
gains, if any, will be distributed on an annual basis.
Dividends are declared each day that the Fund is open for
business. Investors receive dividends in additional shares
unless they elect to receive cash. Payment, either in additional
shares or in cash, is made on a monthly basis at the net asset
value on the payable date. Investors wishing to change the
method of receiving dividends must notify the Fund in writing at
least one week before payment is to be made.
NET ASSET VALUE
Net asset value of the Portfolios' shares will be determined as
of 4:00 P.M. on days when there is sufficient trading in
portfolio securities of each Portfolio to affect the net asset
value materially. The net asset value per share of each of the
Portfolios is calculated by adding the appraised value of all
securities and all other assets, deducting liabilities and
dividing by the number of shares outstanding. To the extent
market quotations are not readily available, the Board of
Directors will value each Portfolio's portfolio securities in
good faith. The Directors will continuously review this method
of valuation and recommend changes which may be necessary to
assure that the Fund's portfolio instruments are valued at fair
value.
The securities of each Portfolio will be valued on the basis of
the average of quoted bid and ask prices when market quotations
are available. In the absence of readily available market
quotations, the Fund may value the securities in good faith based
on fair market value. In determining fair market value, the Fund
may take into consideration prices supplied by a pricing service,
provided the use of the pricing service has been approved by the
Board of Directors.
Valuations provided by pricing services are generally determined
without exclusive regard to quoted prices. Generally, pricing
services consider in their valuation the market activity of
similar groups of securities, their yields, quality ratings,
maturities, and other characteristics. The share prices of
investments in the Portfolios are expected to fluctuate with the
movement of municipal bond prices.
INVESTOR ACCOUNTS
The Fund maintains an account for each investor in full and
fractional shares. All purchase and sale transactions will be
confirmed to the investor. Statements of account showing
dividends paid will be sent at least quarterly.
TAXES
Each Portfolio has qualified (and intends to continue to qualify)
as a regulated investment company under Subchapter M of the
Internal Revenue Code. Because of this qualification, each
Portfolio will not be liable for federal income taxes to the
extent earnings are distributed. Additionally, each Portfolio
qualifies to pay "exempt-interest dividends" within the meaning
of the Internal Revenue Code. The qualification will continue if
each Portfolio meets certain requirements. One requirement is
that at least 50% of the value of each Portfolio's total assets
at the close of each quarter of the taxable year consists of
obligations, on which the interest is exempt from federal income
tax.
Dividends derived from interest on municipal obligations, which
constitute exempt-interest dividends, will not be subject to
federal income tax, except to the extent such interest is subject
to the alternative minimum tax. Net interest on certain "private
activity bonds" issued on or after August 8, 1986, is treated as
an item of tax preference and may, therefore, be subject to both
the individual and corporate alternative minimum tax. To the
extent provided by regulations to be issued by the Secretary of
the Treasury, exempt-interest dividends from each Portfolio are
to be treated as interest on "private activity bonds" in
proportion to the interest each Portfolio receives from private
activity bonds, reduced by allowable deductions. Regarding
dividends derived from taxable money market securities, the
amount received, subject to repurchase agreements and
distributions of each Portfolio's net short-term capital gains,
if any, will be taxed as ordinary income whether they are
invested in additional shares of either Portfolio or received in
cash. Each Portfolio anticipates that any such amounts would be
insubstantial in relation to the tax-exempt interest generated by
each Portfolio. Each Portfolio will distribute such short-term
gains at least annually. Distribution of net long-term capital
gains, if any, realized by each Portfolio and designated as
capital gains dividends will be made at least annually and will
be taxed to shareholders at capital gains' rates regardless of
the length of time the shares have been held. Currently, long-
term capital gains are taxed at ordinary income rates.
The exemption of interest income for federal income tax purposes
may not produce similar exemptions under the tax laws of state or
local taxing authorities. In general, only interest earned on
obligations issued by the state or locality in which the investor
resides will be exempt from state and local taxes. Shareholders
should consult their tax advisers concerning the tax status of
the dividends from each Portfolio in their own states and
localities.
Statements as to the federal tax status of shareholders'
dividends and distributions will be mailed by February 15 of each
year. Each Portfolio will also report to its shareholders
annually the percentage and source, on a state-by-state basis, of
interest income received by each Portfolio on municipal
obligations.
ORGANIZATION AND DESCRIPTION OF COMMON STOCK
The Fund was incorporated in Maryland on April 8, 1983, and has a
present authorized capital of 200,000,000 shares of $.001 par
value common stock, which may be issued in three separate
classes: the Rushmore Tax-Free Money Market Portfolio, Rushmore
Maryland Tax-Free Portfolio and Rushmore Virginia Tax-Free
Portfolio.
All shares of the Fund are freely transferable. The shares do
not have preemptive rights, and none of the shares has any
preference to conversion, exchange, dividends, retirements,
liquidation, redemption or any other feature. Shares have equal
voting rights, except that in a matter affecting only a single
portfolio (such as the proposed sale of all the assets of one
Portfolio), only shares of that portfolio may be entitled to vote
on the matter. Because the shares have non-cumulative voting
rights, the holders of more than 50% of the shares voting for the
election of directors can elect 100% of the directors, if they
choose to do so. In such event, the holders of the remaining
less than 50% of the shares voting will not be able to elect any
directors.
The Board of Directors of the Fund has the authority to classify
or reclassify any unissued shares by fixing the number of shares
in each of the Portfolios.
Officers and directors of the Fund, as a group, own less than 1%
of the shares outstanding.
Shareholders having inquires about the Fund's organization or
operation should contact the Fund in writing at 4922 Fairmont
Avenue, Bethesda, Maryland, or by telephone at (301) 657-1500 or
(800) 343-3355.
MANAGEMENT OF THE FUND
Officers and Directors
The Fund has a Board of Directors which is responsible for the
general supervision of the Fund's business. The day-to-day
operations of the Fund are the responsibility of the Fund's
officers. A complete list of the Fund's directors and officers
is contained in the Statement of Additional Information.
Investment Adviser and Administrative Servicing Agent
The Fund is provided investment advisory and management services
by Money Management Associates (the "Adviser"), 1001 Grand Isle
Way, Palm Beach Gardens, Florida 33418. The Adviser is a limited
partnership which was formed under the laws of the District of
Columbia on August 15, 1974. Its primary business since
inception has been to serve as the Adviser to Fund for Government
Investors, The Rushmore Fund, Inc., Fund for Tax-Free Investors,
Inc. and American Gas Index Fund, Inc. Daniel L. O'Connor is the
sole general partner of the Adviser, and as such, exercises
control of the Adviser. Investment decisions are made by
committee and no person is primarily responsible for making
recommendations to that committee.
Under an Agreement with the Adviser, the Fund pays the Adviser a
fee at an annual rate based on 0.50% of the net assets of the
Money Market Portfolio, 0.625% of the net assets of Maryland
Portfolio and 0.625% of the net assets of the Virginia Portfolio.
The Rushmore Virginia and Maryland Tax-Free Portfolios' total
operating expenses were 0.93% and 0.93%, respectively, for the
1996 fiscal year.
Effective September 1, 1993, the Board of Directors approved an
arrangement whereby Rushmore Trust and Savings, FSB, 4922
Fairmont Avenue, Bethesda, Maryland, a majority-owned subsidiary
of the Adviser, provides the Fund with custodial, transfer
agency, dividend-disbursing, and other shareholder services. The
Fund pays an annual fee of 0.25% (25/100 of 1%) of average daily
net assets for the Money Market Portfolio and 0.30% (30/100 of
1%) of average daily net assets for the Maryland and Virginia
Portfolios for these services.
<PAGE>
CONTENTS
Page [LOGO]
Fee Table 2
FUND FOR TAX-FREE INVESTORS
Financial Highlights 3,4
Maryland Tax-Free Portfolio
Virginia Tax-Free Portfolio
Performance Data 6 Prospectus
Investment Objectives, Policies and May 1, 1997
Practices 6
Risk Considerations 8
How to Invest in the Portfolios 10
How to Redeem an Investment
(Withdrawals) 11
Transaction Charges 12
Dividends 13
Net Asset Value 13
Investor Accounts 13
Taxes 13
Organization and Description of
Common Stock 14
Management of the Fund 15
<PAGE>
PART B
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
4922 Fairmont Avenue, Bethesda, MD 20814
(301) 657-1500
(800) 343-3355
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a prospectus. It
should be read in conjunction with the Fund's Prospectus, dated
May 1, 1997. A copy of the Prospectus may be obtained without
charge by writing or telephoning the Fund.
The date of this Statement of Additional Information is May 1, 1997.
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENT OF ADDITIONAL INFORMATION
Table of Contents
Cross Reference to Related Item in Prospectus
Page in
Page in Rushmore Page in
Statement Maryland Tax-Free
of and Virginia Money Market
Additional Tax-Free Portfolio
Information Portfolios' Prospectus
Prospectus
Investment Objective and Policies 3 6 4
Investment Restrictions 3 6 4
Management of the Fund 3 15 11
Principal Holders of Securities 4 -- --
Investment Advisory and
Other Services 4 15 11
Net Asset Value 5 13 9
Calculation of Performance Data 6 6 4
Calculation of Yield Quotations 6 6 4
Auditors and Financial Statements 7 3,4 3
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The Fund may invest only in municipal obligations and United
States Government securities of the quality specified in the
prospectus under "Investment Objectives and Policies." The Fund
has therefore adopted the investment restrictions listed below.
These restrictions, which apply to each Portfolio, may not be
changed without prior approval of a majority of holders of the
Fund's outstanding voting shares. As defined in the Investment
Company Act of 1940, the term "majority" means the vote of the
lesser of (a) 67% of the shares of the Fund at a meeting where
more than 50% of the outstanding shares are present in person or
by proxy; or (b) more than 50% of the outstanding shares of the
Fund.
1. The Fund may not borrow money, except that as a temporary
measure the Fund may borrow money to facilitate redemptions.
Such a borrowing may be in an amount not to exceed 30% of the
Fund's total assets, taken at current value, before such
borrowing. The Fund may not purchase a portfolio security if
a borrowing by the Fund is outstanding.
2. The Fund may not make short sales of securities or purchase
any securities on margin, except for such short-term credits
as are necessary for the clearance of transactions. The Fund
may not enter into put or call options except in connection
with stand-by commitments.
3. The Fund may not make loans except through repurchase
agreements. (See "Investment Objectives and Policies")
4. The Fund may not underwrite securities of any other issuer.
5. The Fund may not purchase or sell real estate; however, the
Fund may invest in municipal obligations secured by real
estate or interests therein.
6. The Fund may not purchase or sell restricted securities,
commodities or commodity contracts, nor may it issue senior
securities.
7. The Fund may not purchase securities of any issuer if, as a
result of such a purchase, more than 25% of the Fund's total
assets would be invested in any one industry. There is no
limitation, however, as to investments in municipal
obligations issued or guaranteed by the United States
Government, its agencies or instrumentalities, or in
obligations of the United States Government, its agencies or
instrumentalities, which are purchased on a temporary basis in
accordance with the Fund's investment objective and policies.
HOW TO REDEEM AN INVESTMENT (WITHDRAWALS)
Tax-Free Money Market Portfolio Draft Check Redemption
Investors may elect to redeem shares of the Money Market
Portfolio by draft check (minimum check - $250) made payable to
the order of any person or institution. Shares of the Maryland
and Virginia Portfolios cannot be redeemed by draft check. Upon
the Fund's receipt of a completed signature card, investors will
be supplied with draft checks which are drawn on the Fund's
account and are paid through Rushmore Trust and Savings, FSB.
The Fund reserves the right to change or suspend the checking
service. THESE DRAFT CHECKS CANNOT BE CERTIFIED, NOR CAN THESE
CHECKS BE NEGOTIATED FOR CASH AT RUSHMORE TRUST AND SAVINGS, FSB.
There will be a $10 charge for each stop payment request on the
draft checks. Investors will be subject to the same rules and
regulations that the bank applies to checking accounts. Shares
held in certificate form may not be redeemed, and investors'
accounts may not be closed by writing a draft check.
MANAGEMENT OF THE FUND
Directors and Officers of the Fund and Officers of the Adviser,
together with information as to their principal business
occupations during the past five years, are set forth below.
Officers of the Fund do not receive salaries or other forms of
compensation from the Fund. Non-interested Directors' fees and
expenses will be paid by the servicing agent. Non-interested
Directors were paid an annual fee of $3,000. For the year ended
December 31, 1996, such fees amounted to $14,250.
*Daniel L. O'Connor, 55 - Chairman of the Board of Directors,
Treasurer and Director of the Fund. President of the Fund 1974 to
1981. General Partner of the adviser since 1975. President of
Rushmore Trust and Savings, FSB since 1989. Address: 1001 Grand
Isle Way, Palm Beach Gardens, FL 33418.
*Richard J. Garvey, 64 - President and Director of the Fund.
Executive Vice President, 1974 to 1981. Employee of Rushmore
Services, Inc., a subsidiary of the Adviser, since 1995. Limited
Partner of the Adviser since 1975. Address: 4922 Fairmont
Avenue, Bethesda, Maryland 20814.
Jeffrey R. Ellis, 52 - Director of the Fund. Vice President,
LottoFone, Inc., a telephone state lottery service, since 1993.
Vice President Shoppers Express, Inc. 1988-1992. Address: 513
Kerry Lane, Virginia Beach, Virginia 23451.
Bruce C. Ellis, 52 - Director of the Fund. Vice President,
LottoFone, Inc., a telephone state lottery service, since 1991.
Vice President, Shoppers' Express, Inc. 1986-1992. Address: 7108
Heathwood Court Bethesda, Maryland 20817.
Patrick F. Noonan, 54 - Director of the Fund. Chairman and Chief
Executive Officer of the Conservation Fund since 1986. Chairman,
American Farmland Trust and Trustee, American Conservation
Association since 1985. President, Conservation Resources, Inc.
since 1981. Address: 11901 Glen Mill Drive, Potomac, Maryland
20854.
Michael D. Lange, 55 - Director of the Fund. Vice President,
Capital Hill Management Corporation since 1967. Owner of Michael
D. Lange, Ltd., a builder and developer since 1980. Partner of
Greatful Falls, a building developer since 1994. Address: 7521
Pepperell Drive, Bethesda, Maryland 20817.
Leo Seybold, 83 - Director of the Fund. Retired 1988. Address:
5804 Rockmere Drive, Bethesda, Maryland 20816.
*Rita A. Gardner, 53 - Director of the Fund. Retired 1996.
Limited Partner of the Adviser since 1979. Vice President and
Director of MMA Services, Inc. until 1993. Address: 311
Yorktown Village Pass, Annandale, Virginia 22003.
*Timothy N. Coakley, CPA, 30 - Vice President and Controller
since 1994. Chief Financial Officer, Rushmore Trust and Savings,
FSB since 1995. Formerly Audit Manager, Deloitte & Touche LLP
until 1994. Address: 4922 Fairmont Avenue, Bethesda, MD 20814.
*Stephenie E. Adams, 28 - Secretary. Manager, Fund
Administration and Marketing, Rushmore Services, Inc., from July
1994 to present. Regional Sales Coordinator, Media General
Cable, from June 1993 to June 1994. Graduate Student,
Northwestern University, M.S., from September 1991 to December
1992. Address: 4922 Fairmont Avenue, Bethesda, Maryland 20814.
* Indicates interested person as defined by the Investment Company Act of 1940.
PRINCIPAL HOLDERS OF SECURITIES
On April 3, 1997, there were outstanding 21,250,847.23 shares of
the Money Market Portfolio, 4,144,631.81 shares of the Rushmore
Maryland Tax-Free Portfolio, and 2,956,669.09 shares of the
Rushmore Virginia Tax-Free Portfolio. Shareholders Roger W.
Jones, Falls Church, Virginia, and Robert P. and Maryann Nirschl,
McLean, Virginia, owned 9.39% and 5.12%, respectively, of the
Virginia Tax-Free Portfolio. Charles Schwab & Co., San
Francisco, California, held for the benefit of others, 6.64% of
the Virginia Tax-Free Portfolio. No shareholder owned more than
5% of the outstanding shares of the Tax-Free Money Market
Portfolio or the Maryland Tax-Free Portfolio. Officers and
directors of the Fund, as a group own less than 1% of the shares
outstanding.
INVESTMENT ADVISER AND OTHER SERVICES
The Fund is provided investment advisory and management services
by Money Management Associates (the "Adviser"), 1001 Grand Isle
Way, Palm Beach Gardens, Florida 33418. The Adviser is a limited
partnership which was formed under the laws of the District of
Columbia on August 15, 1974. Its primary business since
inception has been to serve as the investment adviser to Fund for
Government Investors, Fund for Tax-Free Investors, Inc., The
Rushmore Fund, Inc., and American Gas Index Fund, Inc. Certain
officers and directors of the Fund are affiliated with Fund for
Government Investors, The Rushmore Fund, Inc., American Gas Index
Fund, Inc. or with the Adviser. (See "Management of the Fund.")
Under an Investment Advisory Agreement with the Adviser, dated
July 12, 1983 (the "Agreement"), the Adviser provides investment
advice to the Fund and oversees its day-to-day operations,
subject to direction and control by the Fund's Board of
Directors. Pursuant to the Agreement, the Fund pays the Adviser
a fee at an annual rate based on 0.50% of the net assets of the
Money Market Portfolio, 0.625% of the net assets of the Rushmore
Maryland Tax-Free Portfolio and 0.625% of the net assets of the
Rushmore Virginia Tax-Free Portfolio. Under the Agreement, the
Adviser will reimburse the Fund for expenses which exceed one
percent of the average daily net assets per annum. Reimbursable
expenses include the investment advisory fee, but exclude
interest and extraordinary legal expenses. Normal expenses which
are borne by the Fund, include, but are not limited to, taxes,
corporate fees, interest expenses (if any), office expenses, the
costs incident to preparing, registering and redeeming stock
certificates for shareholders, custodian charges, the expenses of
shareholders' and directors' meetings, data processing,
preparation, printing and distribution of all reports and proxy
materials, legal services rendered to the Fund, compensation for
those directors who do not serve as employees of the Adviser,
insurance coverage for the Fund and its directors and officers,
and its membership in trade associations. The Adviser may, from
time to time, make payments to broker-dealers and others for
their expenses in connection with the distribution of Fund
shares. Although such payments may be based upon the number of
shares distributed, it is the understanding of the Adviser that
such payments will be for reimbursement and will not exceed the
expenses of the recipients in arranging for and administering
distribution of Fund shares. For the fiscal year ended December
31, 1996, 1995 and 1994, the Fund paid the following advisory
fees to the Adviser:
1996 1995 1994
Tax-Free Money Market Portfolio $ 98,353 $ 112,637 $ 122,333
Maryland Tax-Free Portfolio $ 297,831 $ 297,506 $ 330,178
Virginia Tax-Free Portfolio $ 203,550 $ 195,452 $ 200,478
Daniel L. O'Connor is the sole general partner of the Adviser,
and, as such, exercises control thereof.
The Agreement was last renewed by the Board of Directors on
October 31, 1996 and shall be renewed annually, if approved by
either of two methods: (1) by the Board of Directors, including
approval by a majority of the non-interested directors by vote
cast in person at a meeting called for that purpose, or (2) by a
majority of those shareholders of the outstanding voting
securities of the Fund and the non-interested directors. The
Agreement may be canceled without penalty on sixty days' notice
by the Board of Directors of the Fund, by the Adviser or by vote
of the holders of a majority of the Fund's shares. The agreement
will terminate automatically in the event it is assigned.
Effective September 1, 1993, the Board of Directors approved an
arrangement whereby Rushmore Trust and Savings, FSB ("RTS"), 4922
Fairmont Avenue, Bethesda, Maryland 20814, a majority-owned
subsidiary of the Adviser, acts as the Fund's custodian, transfer
agent, dividend disbursing agent and shareholder servicing agent.
The Fund pays RTS an annual fee of 0.25% (25/100 of 1%) of
average daily net assets for the Money Market Portfolio and 0.30%
(30/100 of 1%) of average daily net assets for the Rushmore
Maryland Tax-Free and Rushmore Virginia Tax-Free Portfolios for
these services. The non-interested directors of the Fund have
reviewed the fee structure and determined that it is competitive
and in the best interests of the shareholders of the Fund. The
fees will be reviewed and approved annually by the non-interested
directors. The Fund is subject to the self-custodian rules of
the Securities and Exchange Commission. These rules require that
the custodian be subject to three securities verification
examinations each year conducted by the Fund's independent
accountants. Two of the examinations must be performed on an
unannounced surprise basis.
NET ASSET VALUE
Net asset value of the Fund's Money Market shares will be
determined as of 12:00 Noon, and the net asset value of Rushmore
Maryland Tax-Free and Rushmore Virginia Tax-Free Portfolio shares
will be determined as of 4:00 P.M., Eastern time, on days when
there is sufficient trading in portfolio securities of the Fund
to affect the net asset value materially. The net asset value
per share of each of the Portfolios is calculated by adding the
appraised value of all securities and all other assets, deducting
liabilities and dividing by the number of shares outstanding. To
the extent market quotations are not readily available, the Board
of Directors will value the Fund's portfolio securities in good
faith. The Directors will continuously review this method of
valuation and recommend changes which may be necessary to assure
that the Fund's Portfolio instruments are valued at fair value.
Money Market Portfolio
The Money Market Portfolio intends to value its Portfolio
securities at their amortized cost value pursuant to Rule 2a-7
under the Investment Company Act of 1940. This method does not
take into account unrealized securities gains or losses. It
involves valuing a security at its cost and thereafter assuming a
constant amortization to maturity of any purchase discount or
premium. While this method provides certainty in calculation, it
may result in periods during which the value, as determined by
amortized cost, is higher or lower than the price which the Fund
would receive if the security were sold. During periods of
declining interest rates, the daily yield on shares of the Money
Market Portfolio may tend to be higher than a like computation
made by a fund with identical investments using a method of
valuation based upon market prices of its portfolio securities.
The converse would apply in a period of rising interest rates.
As a condition to the use of amortized cost and maintenance of
the Fund's per share net asset value of $1.00, the Fund has
agreed that the Money Market Portfolio will maintain a dollar-
weighted average maturity of 90 days or less and, except for
certain variable rate securities, will purchase only securities
having remaining maturities of 397 days or less. The Board of
Directors has also agreed to establish procedures designed to
stabilize, to the extent reasonably possible, the Money Market
Portfolio's price per share, as computed for the purpose of sales
and redemptions, at $1.00. Such procedures will include review
by the Board of Directors, at such intervals as it may be deemed
appropriate, to determine whether the Money Market Portfolio's
net asset value, calculated by using available market quotations,
deviates from $1.00 per share based on amortized cost. The
extent of any deviation between the Money Market Portfolio's net
asset value based on market value and the $1.00 per share based
on amortized cost will be examined by the Board of Directors. If
such deviation exceeds 1/2 of 1% the Board of Directors will
promptly consider what action, if any, will be initiated. If the
Board of Directors determines that a deviation exists, which may
result in material dilution or other unfair results to new
investors or existing shareholders, it will consider corrective
action. This action might include selling securities prior to
maturity to realize capital gains or losses or to shorten average
portfolio maturity, withholding dividends, or establishing a net
asset value per share by using available market quotations.
Rushmore Maryland Tax-Free and Rushmore Virginia Tax-Free Portfolios
The securities of these Portfolios will be valued on the basis of
the average of quoted bid and ask prices when market quotations
are available. In the absence of readily available market
quotations, the Fund may value the securities in good faith based
on fair market value. In determining fair market value, the Fund
may take into consideration prices supplied by a pricing service,
provided the use of the pricing service has been approved by the
Board of Directors. Valuations provided by pricing services are
generally determined without exclusive regard to quoted prices.
Generally, pricing services consider in their valuation the
market activity of similar groups of securities, their yields,
quality ratings, maturities, and other characteristics. The
share prices of investments in the Rushmore Maryland Tax-Free and
Rushmore Virginia Tax-Free Portfolios are expected to fluctuate
with the movement of municipal bond prices.
TAXES
Interest incurred on borrowings made to purchase shares of the
Fund is not deductible. In addition, entities or persons who are
"substantial users" (or persons related to "substantial users"),
as defined by the Internal Revenue Code and the regulations
thereunder, of facilities financed by industrial development
bonds should consult their tax advisers before purchasing shares
of the Fund. The income from those bonds may not be tax-exempt
for "substantial users."
CALCULATION OF PERFORMANCE DATA
The yield for the Rushmore Tax-Free Money Market Portfolio is
calculated by multiplying the total dollar amount of dividends
declared on the Portfolio by 365 days and dividing the results by
the net assets of the Portfolio. The total amount of dividends
earned is equal to the earnings realized on the investment
securities held by the portfolio less management fees and a
provision for ordinary expenses.
The yield quotation for the Rushmore Maryland Tax-Free and
Rushmore Virginia Tax-Free Portfolios are based on the 30-day
period ended December 31, 1996 computed by dividing the net
investment income per share earned during the period by the
offering price per share on December 31, 1996.
Total returns for the Rushmore Maryland Tax-Free and Rushmore
Virginia Tax-Free Portfolios are computed by calculating the
average annual compounded rates of return over the one-year, five-
year and ten year periods ending December 31, 1996.
Comparative Performance Data
The Fund's performance may be compared in advertising to the
performance of other mutual funds in general or to the
performance of particular types of mutual funds, especially those
with similar objectives. More up-to-date performance data may be
provided as it becomes available. From time to time, the Fund
may provide information concerning general economic conditions,
financial trends, and analysis and supply comparative performance
and rankings, with respect to comparable investments for the same
period, for unmanaged market indexes such as the Dow Jones
Industrial Average, Standard & Poor's 500 IndexTM, Shearson
Lehman Bond Indexes, Merrill Lynch Bond Indexes, Bond Buyer
Index, and from recognized independent sources such as Donoghue's
Money Fund Report, Donoghue Money Letter, Bank Rate Monitor,
Money Magazine, Forbes, Lipper, Standard & Poor's Corporation,
CDA/Wiesenberger Investment Technologies, Inc. ("CDA"), Mutual
Fund Values, Mutual Fund Forecaster, Mutual Fund Sourcebook,
Fortune, Business Week, Changing Times, The Wall Street Journal,
Investor's Daily and Schabacker Investment Management, Inc.
Comparisons may also be made to Consumer Price Index, rate of
inflation, bank money market rates, rates of certificates of
deposit, Treasury Bills and Treasury Bond rates and yields.
AUDITORS AND CUSTODIAN
Deloitte & Touche LLP independent certified public accountants,
are the auditors of the Fund. Rushmore Trust and Savings, FSB,
Bethesda, Maryland, acts as custodian bank for the Fund.
FINANCIAL STATEMENTS
The Fund incorporates by reference in this Statement of
Additional Information the financial statements and notes
contained in its annual report to the shareholders for the year
ended December 31, 1996.
<PAGE>
ANNUAL REPORT, December 31, 1996
FUND FOR TAX-FREE INVESTORS, INC.
Deleted 4922 Fairmont Avenue, Bethesda, MD 20814
Rushmore Logo (800) 622-1386 (301) 657-1510
Dear Shareholders:
The Federal Reserve began last year by reducing interest rates by
25 basis points in January, and as it turns out, that would be
the last adjustment for 1996. Inflationary fears began to creep
into the market culminating in a peak in rates above 7% in the 30
year Treasury bond, before retracing much of this increase by
year end, as these fears began to subside.
The municipal bond market was affected by several factors in
1996. Included among them were the continued stock market surge,
with over 40 new record highs in the Dow, an ease in tax-reform
fears, and an increased volatility on individual economic data
releases. All eyes will continue to be on the Federal Reserve's
take of the economy in 1997, for clues to their interest rate
policy. Another key to the municipal market in 1997 will be the
performance of the streaking equity markets. Should these
markets start to show signs of slowing, bonds stand to benefit
from crossover interest.
Tax-Free Money Market Portfolio
The Tax-Free Money Market Portfolio invests in high quality, tax-
exempt municipal securities with maturities of less than one
year. Fund For Tax-Free Investors Money Market Portfolio had
an annualized net investment income of 2.67% of net assets for
the year ended December 31, 1996, compared to 3.04% for 1995. On
December 31, 1996, the Portfolio's average maturity was 55 days.
Maryland and Virginia Tax-Free Portfolios
Both the State of Maryland and the State of Virginia remain in a
group of nine states to hold a debt rating of AAA, with each
state benefiting from a wealthy and diversified economic base, as
well as a conservative approach to debt policy and financial
operations. Maryland has been able to adjust its budget to
compensate for slower growth, and as a result has rebuilt its
reserves. Virginia continues to see moderate growth in its
economy, with unemployment staying below the national level.
Fund for Tax-Free investors Maryland Portfolio had a total return
of 3.21% for the year ended December 31, 1996. On an annualized
basis, net income averaged 4.92% of net assets for the year. Net
assets for the Maryland Portfolio stood at $44.4 million at 1996
year end, and had an average maturity of 16.4 years.
The Maryland Portfolio continues to maintain investment in high
quality bonds with over 87% of the Portfolio having a rating of
AA or better.
Fund for Tax-Free Virginia Portfolio ended 1996 with a 2.91%
total return. On an annualized basis, net income averaged 4.84%
of net assets for the year ended December 31, 1996. Net assets
for the Virginia Portfolio stood at $32.4 million at year end,
and had an average maturity of 16.8 years. The quality of
securities in the Virginia Portfolio remain high with over 88%
its bonds rated AA or above.
Outlook
We look for the economy to continue to grow at a moderate and
sustainable pace in 1997. Economic data will remain a prominent
factor, as market participants keep watch for any potential
inflationary data that could cause the Fed to intervene, which
may result in some market volatility. The performance of the
stock markets will also play a major role, as its record
breaking performance has kept the spotlight on equities. Should
sentiment begin to change, bonds could begin to see more money
come in from these markets. We also look for municipal
issuance not to increase in 1997, as municipalities adhere to
budget constraints.
As always management will maintain its long-term, conservative
investment strategy. Fund for Tax-Free Investors, Inc. invests
in only high quality issues that we feel provide the best value
along the yield curve. We thank you for your continued support,
and look forward to serving your investment needs in the future.
Sincerely,
Daniel L. O'Connor Richard J. Garvey
Chairman President
February 10, 1997
- 2 -
<PAGE>
<TABLE>
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENT OF NET ASSETS
MONEY MARKET PORTFOLIO
December 31, 1996
<CAPTION>
Face Value Face Value
Value (Note 1) Value (Note 1)
<S> <C> <C> <S> <C> <C>
Arizona 2.55% Maryland 6.88%
Glendale General Obligation Baltimore Industrial
7.00%, 7/01/97 AAA $ 475,000 $ 482,121 Development
Authority Floating Rate Notes
California 6.92% 3.70%, 8/01/16# A-1 $ 100,000 $ 100,000
California School Cash Reserve Maryland Health and Higher
Program Revenue Education
4.75%, 7/02/97 SP1+ 800,000 803,456 Loyola College Issue B
San Diego Area Local Floating Rate Notes
Government Revenue 4.30%, 10/01/13# AAA 400,000 400,000
Anticipation Note General Washington Suburban
Obligation Sanitation
4.75%, 10/01/97 SP1+ 500,000 503,765 Floating Rate Notes
4.10%, 1/01/99# A-1+ 800,000 800,000
State Total 1,307,221
State Total 1,300,000
Colorado 11.12%
Colorado Student Obligation Minnesota 21.93%
Board Authority Floating Rate Beltrami County
Notes Environmental
3.90%, 8/01/00# A-1+ 800,000 800,000 Floating Rate Notes
Denver Airport Floating Rate 5.00%, 12/01/21# A-1+ 100,000 100,000
Notes City of Minneapolis Housing
4.35%, 12/01/25# A-1+ 800,000 800,000 Development Floating Rate
Pitkin County Housing Notes
Revenue Series 1996A Floating 4.15%, 9/01/26# VMIG1 500,000 500,000
Rate Notes City of St. Louis Park
4.20%, 12/01/24# A-1+ 500,000 500,000 Series 1985 Floating Rate
Notes
State Total 2,100,000 4.15%, 2/01/06# A-1 230,000 230,000
Minnesota State General
Georgia 2.81% Obligation
Georgia Municipal Electric 7.10%, 8/01/97 AAA 500,000 509,609
Authority Revenue Minnesota State Higher
7.75%, 1/01/97 AAA 520,000 530,400 Education Floating Rate Notes
Iowa 1.59% 4.35%, 12/01/24# VMIG1 500,000 500,000
Iowa Housing Financial Olmsted County General
Authority Obligation
Floating Rate Notes 6.55%, 2/01/97 AA+ 800,000 801,976
4.25%, 5/01/97# A-1+ 300,000 300,000 St. Paul Housing Development
Floating Rate Notes
4.15%, 3/01/13# A-1+ 300,000 300,000
Louisiana 6.68% St. Paul United Way Project
Louisiana State Floating Rate Notes
General Obligation 4.20%, 12/01/18# A-1 400,000 400,000
7.00%, 8/01/97 AAA 350,000 362,304 Waconia Industrial
New Orleans Aviation Floating Development Revenue Floating
Rate Notes Rate Notes
3.45%, 8/01/16# A-1+ 900,000 900,000 4.40%, 10/01/16# A-1 800,000 800,000
State Total 1,262,304 State Total 4,141,585
</TABLE>
- 3 -
<PAGE>
<TABLE>
STATEMENT OF NET ASSETS
MONEY MARKET PORTFOLIO (Continued)
December 31, 1996
<CAPTION>
Face Value Face Value
Value (Note 1) Value (Note 1)
<S> <C> <C> <S> <C> <C>
Montana 3.18% Texas 6.73%
Montana State Health Floating Port Arthur Floating Rate
Rate Notes Notes
4.20%, 12/01/15# A-1+ $ 600,000 $ 600,000 5.10%, 5/01/03# P-1 $ 700,000 $ 700,000
Wichita Falls General
New Hampshire 2.65% Obligation
New Hamphshire Health 4.10%, 9/01/97 AAA 570,000 571,645
Floating Rate Notes
4.25%, 11/01/21# VMIG1 500,000 500,000 State Total 1,271,645
New Mexico 2.65% Virginia 8.48%
New Mexico State Severence Fairfax County General
Tax Series B Revenue Obligation
4.00%, 7/01/97 AA 500,000 500,850 6.85%, 4/01/97 AAA 400,000 402,924
Henrico Industrial
New York 7.94% Development Authority
Nassau County Bond Floating Rate Notes
Anticipation Notes Series C 5.10%, 5/01/24# VMIG1 600,000 600,000
General Obligation Virginia Public School
4.25%, 3/14/97 SP1 400,000 400,552 Authority Revenue
Nassau County Revenue 7.40%, 1/01/97 AA 600,000 600,000
Anticipation Notes General
Obligation State Total 1,602,924
3.50%, 3/05/97 SP1 200,000 199,943 West Virginia 3.83%
New York, New York Series B Kanawha County Building
Subseries B2 Floating Rate Commission Charleston Area
Notes Medical Center Revenue
5.00%, 8/15/03# A-1+ 100,000 100,000 7.10%, 6/01/97 AAA 700,000 724,017
New York, New York
Subseries A5 Floating Rate Total Investments 102.83%
Notes (Cost $19,423,562*) 19,423,562
5.00%, 8/01/15# A-1+ 100,000 100,000 Liabilities Less Other Assets
New York City Municipal (2.83)% (534,040)
Water Finance Authority
Floating Rate Notes Net Assets (Note 5) 100.00% $18,889,522
5.00%, 6/15/22# A-1+ 700,000 700,000 Net Asset Value Per Share
(Based on 18,889,522 shares
State Total 1,500,495 Outstanding) $1.00
North Carolina 4.24%
City of Winston-Salem Floating *Same cost is used for Federal income tax purposes.
Rate Notes Security ratings are unaudited.
4.30%, 4/01/00# A-1+ 800,000 800,000 See Notes to Financial Statements.
Ohio 2.65%
Ohio State Education Facility #-Daily or Weekly Tender Bond
Floating Rate Notes
2.80%, 10/01/15# A-1+ 500,000 500,000
- 4 -
</TABLE>
<PAGE>
<TABLE>
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENT OF NET ASSETS
VIRGINIA PORTFOLIO
December 31, 1996
<CAPTION>
Face Value Face Value
Value (Note 1) Value (Note 1)
<S> <C> <C> <S> <C> <C>
Alexandria Industrial Henrico County Industrial
Development Authority Development Authority
Revenue Revenue
7.40%, 1/01/08 A+ $ 175,000 $ 176,173 7.125%, 8/01/21 AA $ 400,000 $ 449,444
Arlington County General Henrico County Industrial
Obligation Development Authority
6.00%, 8/01/12 AAA 500,000 529,865 Floating Rate Notes
5.40%, 6/01/13 AAA 1,000,000 1,010,140 5.10%, 5/01/24# VMIG1 200,000 200,000
5.375%, 12/01/16 AAA 1,000,000 1,000,820 Henrico County Water &
Chesapeake Bay Bridge & Sewer Revenue
Tunnel Revenue 6.45%, 5/01/02 AAA 300,000 327,144
5.25%, 7/01/19 AAA 1,000,000 959,240 6.25%, 5/01/13 AA- 500,000 514,525
Chesapeake Water & Sewer Henry County General
System Revenue Obligation
6.50%, 7/01/05 A+ 270,000 294,883 8.825%, 11/01/05 Aaa 200,000 258,652
Chesterfield County General Isle of Wight County General
Obligation Obligation
6.25%, 7/15/11 AA+ 300,000 319,218 6.70%, 1/01/12 A 200,000 215,054
Chesterfield County Water & James City County General
Sewer Revenue Obligation
6.375%, 11/01/07 AA 300,000 325,683 5.25%, 12/15/15 AAA 1,000,000 971,910
6.375%, 11/01/10 AA 500,000 533,230 Leesburg General Obligation
Danville General Obligation 5.50%, 6/01/13 AAA 500,000 500,365
6.50%, 5/01/11 A 250,000 265,140 Loudoun County Sanitation
Fairfax County Economic Authority Revenue
Development Authority Lease 6.25%, 1/01/10 AAA 550,000 585,926
Revenue 6.25%, 1/01/16 AAA 500,000 524,670
5.50%, 5/15/18 AA 2,000,000 1,958,040 Metropolitan Washington, D.C.
Fairfax County Industrial Airport Authority Revenue
Development Authority 6.50%, 10/01/06 AAA 300,000 325,791
Revenue 5.90%, 10/01/09 AAA 300,000 310,536
5.25%, 8/15/19 AA 500,000 473,995 7.60%, 10/01/14 AA- 125,000 137,735
Fairfax County Resource Newport News General
Recovery Revenue Obligation
7.75%, 2/01/11 A+ 300,000 323,610 6.125%, 6/01/12 AA- 270,000 283,316
Fairfax County Water Authority Norfolk General Obligation
Revenue 5.75%, 6/01/13 AAA 500,000 509,065
5.80%, 1/01/16 AAA 500,000 512,195 Norfolk Water Revenue
6.00%, 4/01/22 AA- 1,000,000 1,028,750 5.75%, 11/01/12 AAA 500,000 512,520
Hampton General Obligation 5.875%, 11/01/15 AAA 500,000 513,670
6.00%, 1/15/14 AA- 350,000 363,353 Portsmouth General Obligation
Hanover City Water & Sewer 6.375%, 8/01/11 AA- 200,000 210,656
Revenue Portsmouth Redevelopment &
5.25%, 2/01/16 AAA 500,000 485,320 Housing Authority Revenue
6.05%, 12/01/08 AAA 500,000 525,065
- 5 -
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF NET ASSETS
VIRGINIA PORTFOLIO (Continued)
December 31, 1996
<CAPTION>
Face Value Face Value
Value (Note 1) Value (Note 1)
<S> <C> <C> <S> <C> <C>
Potomac & Rappahannock Virginia Port Authority
Transportation District Revenue
Commission Revenue 5.90%, 7/01/16 A+ $ 500,000 $ 509,195
6.70%, 3/01/11 AAA $ 600,000 $ 638,466 Virginia Public Building
Prince William County General Authority Revenue
Obligation 5.00%, 8/01/15 AA 1,000,000 942,210
6.20%, 12/01/11 AA 300,000 314,163 5.20%, 8/01/16 AA 1,000,000 964,250
Prince William County Virginia Public School
Industrial Development Authority Revenue
Authority Revenue 6.20%, 8/01/13 AA 320,000 340,416
7.25%, 3/01/00 NR 250,000 275,810 5.00%, 8/01/16 AA 500,000 470,230
Prince William County Park Virginia Resource Authority
Authority Revenue Revenue
6.875%, 10/15/16 A- 500,000 533,320 6.75%, 10/01/04 NR 240,000 272,126
Richmond Metro Authority 6.00%, 10/01/12 AA 400,000 408,900
Revenue 6.45%, 4/01/13 AA 300,000 316,086
6.10%, 7/15/06 AAA 300,000 324,294 Virginia Transportation Board
6.375%, 7/15/16 AAA 500,000 530,015 Revenue
Southeastern Virginia Public 6.00%, 4/01/10 AA 300,000 313,026
Service Authority Revenue Total Investments 97.13%
5.15%, 7/01/09 AAA 500,000 494,105 (Cost $30,263,876*) 31,427,273
Suffolk General Obligation Other Assets Less Liabilities
6.00%, 8/01/13 A 500,000 513,745 2.87% 927,471
Upper Occoquan Sewer
Authority Revenue Net Assets (Note 5) 100.00% $32,354,744
5.15%, 7/01/20 AAA 1,000,000 941,590 Net Asset Value Per Share
Virginia Beach General (Based on 2,917,394 Shares
Obligation Outstanding) $11.09
6.50%, 8/01/07 AA 500,000 544,995
5.90%, 9/01/08 AA 500,000 530,580 *Same cost is used for Federal income tax purposes.
5.85%, 11/01/12 AA 500,000 517,335 Security ratings are unaudited.
Virginia College Building See Notes to Financial Statements.
Authority Revenue
6.625%, 5/01/13 A- 300,000 313,401
5.75%, 1/01/14 AA 500,000 506,305 #-Daily or Weekly Tender Bond
Virginia Housing Development
Authority Revenue
7.40%, 7/01/09 AA+ 200,000 208,444
6.625%, 7/01/13 A+ 275,000 284,787
5.95%, 7/01/13 AA+ 500,000 510,965
5.35%, 7/01/16 AA+ 500,000 472,815
- 6 -
</TABLE>
<PAGE>
<TABLE>
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENT OF NET ASSETS
MARYLAND PORTFOLIO
December 31, 1996
<CAPTION>
Face Value Face Value
Value (Note 1) Value (Note 1)
<S> <C> <C> <S> <C> <C>
Anne Arundel County Water & Howard County Public
Sewer General Obligation Improvement General
6.20%, 8/01/12 AA+ $ 725,000 $ 770,508 Obligation
6.00%, 7/15/13 AA+ 500,000 518,675 6.00%, 5/15/14 AA+ $ 500,000 $ 515,415
6.30%, 8/01/16 AA+ 500,000 535,860 5.50%, 2/15/16 AA+ 1,500,000 1,511,610
6.30%, 8/01/19 AA+ 725,000 774,409 Howard County Special
Anne Arundel County Facilities Revenue
Pollution Control Revenue 6.10%, 2/15/13 AA- 500,000 515,110
6.00%, 4/01/24 A 1,230,000 1,250,812 Laurel General Obligation
Anne Arundel County Solid 6.70%, 7/01/01 AAA 600,000 665,130
Waste Project General Maryland Community
Obligation Development Administration
5.50%, 9/01/15 AA+ 500,000 489,680 Revenue
Baltimore City General 6.60%, 4/01/06 Aa 200,000 211,050
Obligation 7.375%, 4/01/10 Aa 495,000 519,413
6.40%, 10/15/02 AAA 465,000 509,054 7.25%, 4/01/11 Aa 200,000 211,260
5.50%, 10/15/10 AAA 1,000,000 1,020,800 7.15%, 4/01/11 Aa 405,000 424,845
Baltimore City Revenue 7.25%, 4/01/16 Aa 275,000 281,108
6.00%, 7/01/15 AAA 500,000 523,450 7.70%, 5/15/20 Aa 250,000 263,293
Baltimore County General 7.40%, 5/15/24 Aa 125,000 131,711
Obligation 7.25%, 4/01/27 Aa 385,000 404,212
6.125%, 7/01/08 AAA 500,000 537,765 Maryland General Obligation
6.70%, 7/01/11 AAA 600,000 630,348 5.00%, 10/15/11 AAA 1,000,000 976,440
5.50%, 6/01/12 AAA 1,000,000 1,017,780 Maryland Health & Higher
6.70%, 7/01/16 AAA 500,000 525,140 Education Facilities Authority
Baltimore Port Facility Revenue
Revenue 5.70%, 7/01/09 A 500,000 512,170
6.50%, 12/01/10 AA- 400,000 432,744 5.25%, 7/01/13 AAA 500,000 482,355
6.50%, 10/01/11 AA- 250,000 269,505 6.125%, 7/01/14 AAA 500,000 521,200
6.50%, 10/01/11 AA- 250,000 269,505 5.50%, 10/01/16 AAA 1,000,000 1,000,000
Calvert County Pollution 6.50%, 7/01/17 A 200,000 207,188
Control Revenue 6.125%, 7/01/19 AAA 500,000 519,330
5.55%, 7/15/14 A 1,000,000 987,840 Maryland Industrial
Carroll County General Development Revenue
Obligation 7.125%, 7/01/06 A- 300,000 310,941
6.10%, 10/01/08 AA 380,000 410,085 Maryland Stadium Authority
7.10%, 10/01/09 AA 235,000 261,376 Sports Revenue
7.25%, 10/01/15 AA 300,000 331,908 7.375%, 12/15/04 AA- 425,000 465,473
5.30%, 11/01/15 AA 1,000,000 985,870 7.50%, 12/15/10 AA- 695,000 758,196
6.50%, 10/01/24 AA 225,000 244,805 5.875%, 12/15/13 AAA 1,000,000 1,029,590
Frederick County General 5.375%, 12/15/15 AA 500,000 490,090
Obligation 7.60%, 12/15/19 AA- 500,000 542,350
6.30%, 7/01/06 AA- 500,000 547,145 Maryland Transportation
6.125%, 12/01/07 AAA 500,000 537,150 Authority Revenue
5.60%, 7/01/11 AA- 500,000 511,150 6.50%, 7/01/04 A+ 500,000 540,210
City of Frederick General Maryland Water Quality
Obligation Finance Administration
6.00%, 10/01/11 AAA 300,000 313,476 Revenue
Howard County Metropolitan 7.10%, 9/01/01 AAA 230,000 259,468
District General Obligation 6.00%, 9/01/15 AA 1,000,000 1,033,370
6.00%, 8/15/19 AA+ 500,000 510,045
- 7 -
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF NET ASSETS
MARYLAND PORTFOLIO (Continued)
December 31, 1996
<CAPTION>
Face Value Face Value
Value (Note 1) Value (Note 1)
<S> <C> <C> <S> <C> <C>
Montgomery County Housing University of Maryland System
Opportunity Commission Auxiliary Revenue
Revenue 6.375%, 4/01/09 AA+ $ 500,000 $ 539,000
6.70%, 7/01/11 Aa $ 380,000 $ 402,040 5.60%, 4/01/12 AA+ 1,000,000 1,018,290
7.80%, 7/01/12 N/R 200,000 207,460 5.60%, 4/01/16 AA+ 1,000,000 1,010,000
7.875%, 7/01/13 A 400,000 401,204 Washington County General
7.375%, 7/01/17 Aa 180,000 187,898 Obligation
6.65%, 7/01/17 Aa 180,000 188,910 5.125%, 1/01/12 AAA 500,000 488,240
7.00%, 7/01/23 A 250,000 262,157 5.25%, 1/01/16 AAA 500,000 482,525
Montgomery County Parking Washington, D.C. Metropolitan
Revenue Area Transit Authority
6.25%, 6/01/09 AAA 300,000 318,975 Revenue
Montgomery County Waste 6.00%, 7/01/10 AAA 275,000 292,575
Disposal Authority Revenue 5.25%, 7/01/14 AAA 650,000 633,308
5.875%, 6/01/13 AAA 250,000 250,000 Washington Suburban Sanitary
North East Maryland Waste District General Obligation
Disposal Authority Revenue 6.20%, 6/01/09 AA 300,000 320,589
6.20%, 7/01/10 A 500,000 508,580 6.20%, 6/01/12 AA 900,000 952,488
6.30%, 7/01/16 A 1,000,000 1,012,450 Total Investments 98.69%
Prince Georges County (Cost $42,319,545*) 43,829,444
General Obligation Other Assets Less Liabilities
5.75%, 3/15/08 AAA 500,000 522,210 1.31% 580,913
Prince Georges County
Housing Authority Revenue Net Assets (Note 5) 100.00% $44,410,357
6.35%, 7/20/20 AAA 700,000 723,555
Prince Georges County Net Asset Value Per Share
Pollution Control Revenue (Based on 4,116,494 Shares
5.75%, 3/15/10 A 1,000,000 1,027,890 Outstanding) $10.79
Prince Georges County Solid *Same cost is used for Federal income tax purposes.
Waste Management System Security ratings are unaudited.
Revenue
6.80%, 6/30/00 AAA 250,000 274,230 See Notes to Financial Statements.
7.00%, 6/30/00 AAA 250,000 275,837
St. Mary's County General
Obligation
5.85%, 11/01/18 AAA 500,000 509,620
</TABLE>
- 8 -
<PAGE>
<TABLE>
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1996
<CAPTION>
Money
Market Virginia Maryland
Portfolio Portfolio Portfolio
<S> <C> <C> <C>
Investment Income (Note 1) $ 672,036 $ 1,877,579 $ 2,784,078
Expenses
Investment Advisory Fee (Note 2) 98,353 203,550 297,831
Administrative Fee (Note 2) 49,176 97,704 142,959
Total Expenses 147,529 301,254 440,790
Net Investment Income 524,507 1,576,325 2,343,288
Net Realized Gain on Investment Transactions - 262,689 484,951
Net Change in Unrealized Appreciation (Depreciation) of Investments - (932,337) (1,400,547)
Net Loss on Investments - (669,648) (915,596)
Net Increase in Net Assets Resulting from Operations $ 524,507 $ 906,677 $ 1,427,692
See Notes to Financial Statements.
</TABLE>
- 9 -
<PAGE>
<TABLE>
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
For the Year Ended December 31,
<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 $ 524,507 $ 685,821 $ 1,576,325 $ 1,616,115 $ 2,343,288 $ 2,458,343
Net Realized Gain on Investment
Transactions - - 262,689 520,780 484,951 703,293
Net Change in Unrealized
Appreciation (Depreciation) of
Investments - - (932,337) 2,211,797 (1,400,547) 3,181,300
Net Increase in Net Assets
Resulting from Operations 524,507 685,821 906,677 4,348,692 1,427,692 6,342,936
DISTRIBUTIONS TO
SHAREHOLDERS
From Net Investment Income
(Note 1) (524,507) (685,821) (1,575,364) (1,616,115) (2,341,219) (2,462,951)
From Net Realized Capital Gains - - - - - -
Total Distributions to Shareholders (524,507) (685,821) (1,575,364) (1,616,115) (2,341,219) (2,462,951)
FROM SHARE
TRANSACTIONS
Net Proceeds from Sales of Shares 33,109,020 35,510,140 9,574,030 6,434,659 6,196,673 8,322,830
Reinvestment of Distributions 501,351 654,122 1,309,667 1,335,827 1,976,301 2,084,415
Cost of Shares Redeemed (35,493,325) (40,978,186) (11,328,124) (4,964,282) (12,573,794) (8,947,989)
Net Increase (Decrease) in Net
Assets Resulting from Share
Transactions (1,882,954) (4,813,924) (444,427) 2,806,204 (4,400,820) 1,459,256
TOTAL INCREASE
(DECREASE) IN NET
ASSETS (1,882,954) (4,813,924) (1,113,114) 5,538,781 (5,314,347) 5,339,241
NET ASSETS - Beginning of Year 20,772,476 25,586,400 33,467,858 27,929,077 49,724,704 44,385,463
NET ASSETS - End of Year $ 18,889,522 $ 20,772,476 $ 32,354,744 $ 33,467,858 $ 44,410,357 $ 49,724,704
SHARES
Sold 33,089,461 35,510,140 871,229 592,898 576,046 780,823
Issued in Reinvestment of
Distributions 501,351 654,122 118,996 122,110 184,046 195,235
Redeemed (35,493,325) (40,978,186) (1,030,689) (454,301) (1,170,922) (839,368)
Net Increase (Decrease) in Shares (1,902,513) (4,813,924) (40,464) 260,707 (410,830) 136,690
See Notes to Financial Statements.
</TABLE>
- 10 -
<PAGE>
<TABLE>
FUND FOR TAX-FREE INVESTORS, INC.
FINANCIAL HIGHLIGHTS
Money Market Portfolio
<CAPTION>
For the Year Ended December 31,
1996 1995 1994 1993 1992
<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
Income from Investment Operations:
Net Investment Income 0.027 0.030 0.020 0.016 0.023
Net Realized and Unrealized Gains on Securities - - - - -
Total from Investment Operations 0.027 0.030 0.020 0.016 0.023
Distributions to Shareholders:
From Net Investment Income (0.027) (0.030) (0.020) (0.016) (0.023)
From Net Realized Capital Gains - - - - -
Total Distributions to Shareholders (0.027) (0.030) (0.020) (0.016) (0.023)
Net Increase in Net Asset Value - - - - -
Net Asset Value - End of Year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Investment Return 2.69% 3.09% 2.02% 1.66% 2.25%
Ratios to Average Net Assets:
Expenses 0.75% 0.75% 0.75% 0.78% 0.80%
Net Investment Income 2.67% 3.04% 1.99% 1.65% 2.25%
Supplementary Data:
Portfolio Turnover Rate - - - - -
Net Assets at End of Year (000's omitted) $ 18,890 $ 20,772 $ 25,586 $ 23,283 $ 25,935
Number of Shares Outstanding at End of Year (000's
omitted) 18,890 20,792 25,604 23,312 25,964
See Notes to Financial Statements.
</TABLE>
- 11 -
<PAGE>
<TABLE>
FUND FOR TAX-FREE INVESTORS, INC.
FINANCLAL HIGHLIGHTS
Virginia Portfolio
<CAPTION>
For the Year Ended December 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value - Beginning of Year $ 11.31 $ 10.36 $ 11.51 $ 10.84 $ 10.63
Income from Investment Operations:
Net Investment Income 0.534 0.564 0.578 0.582 0.610
Net Realized and Unrealized Gains (Losses) on
Securities (0.221) 0.953 (1.150) 0.670 0.210
Total from Investment Operations 0.313 1.517 (0.572) 1.252 0.820
Distributions to Shareholders:
From Net Investment Income (0.533) (0.564) (0.578) (0.582) (0.610)
From Net Realized Capital Gains - - - - -
Total Distributions to Shareholders (0.533) (0.564) (0.578) (0.582) (0.610)
Net Increase (Decrease) in Net Asset Value (0.22) 0.95 (1.15) 0.67 0.21
Net Asset Value - End of Year $ 11.09 $ 11.31 $ 10.36 $ 11.51 $ 10.84
Total Investment Return 2.91% 14.92% (5.02)% 11.80% 7.98%
Ratios to Average Net Assets:
Expenses 0.93% 0.77% 0.55% 0.50% 0.50%
Expenses Before Reimbursement from Adviser 0.93% 0.93% 0.93% 0.93% 0.93%
Net Investment Income 4.84% 5.17% 5.35% 5.15% 5.71%
Supplementary Data:
Portfolio Turnover Rate 46% 55% 33% 43% 50%
Net Assets at End of Year (000's omitted) $ 32,355 $ 33,468 $ 27,929 $ 34,371 $ 25,513
Number of Shares Outstanding at End of Year (000's
omitted) 2,917 2,958 2,697 2,985 2,354
See Notes to Financial Statements.
</TABLE>
- 12 -
<PAGE>
<TABLE>
FUND FOR TAX-FREE INVESTORS, INC.
FINANCIAL HIGHLIGHTS
Maryland Portfolio
<CAPTION>
For the Year Ended December 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value - Beginning of Year $ 10.98 $ 10.11 $ 11.27 $ 10.60 $ 10.39
Income from Investment Operations:
Net Investment Income 0.528 0.550 0.565 0.568 0.594
Net Realized and Unrealized Gains (Losses) on
Securities (0.190) 0.869 (1.157) 0.670 0.210
Total from Investment Operations 0.338 1.419 (0.592) 1.238 0.804
Distributions to Shareholders:
From Net Investment Income (0.528) (0.551) (0.565) (0.568) (0.594)
From Net Realized Capital Gains - - (0.003) - -
Total Distributions to Shareholders (0.528) (0.551) (0.568) (0.568) (0.594)
Net Increase (Decrease) in Net Asset Value (0.19) 0.87 (1.16) 0.67 0.21
Net Asset Value - End of Year $ 10.79 $ 10.98 $ 10.11 $ 11.27 $ 10.60
Total Investment Return 3.21% 14.35% (5.24)% 11.91% 8.00%
Ratios to Average Net Assets:
Expenses 0.93% 0.77% 0.55% 0.50% 0.50%
Expenses Before Reimbursement from Adviser 0.93% 0.93% 0.93% 0.93% 0.93%
Net Investment Income 4.92% 5.16% 5.36% 5.13% 5.67%
Supplementary Data:
Portfolio Turnover Rate 31% 37% 38% 30% 21%
Net Assets at End of Year (000's omitted) $ 44,410 $ 49,725 $ 44,385 $ 58,094 $ 43,921
Number of Shares Outstanding at End of Year (000's
omitted) 4,116 4,527 4,391 5,157 4,145
See Notes to Financial Statements.
</TABLE>
- 13 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
NOTES TO FINANCLAL STATEMENTS
December 31, 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
December 31, 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 ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
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 year ended December 31, 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 the Adviser, 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.
- 14 -
3. SECURITIES TRANSACTIONS
Security transactions are recorded on the trade date. For the
year ended December 31, 1996, purchases and sales (including
maturities), of securities, excluding short-term securities, were
as follows:
Virginia Maryland
Portfolio Portfolio
Purchases $14,760,466 $14,666,158
Sales $15,463,095 $18,848,087
4. NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS
As of December 31, 1996, net unrealized appreciation of
investments in the Virginia Portfolio for Federal income tax
purposes aggregated $1,163,397 of which $1,190,533 related to
appreciated investments and $27,136 related to depreciated
investments. In the Maryland Portfolio, net unrealized
appreciation of investments for Federal income tax purposes
totaled $1,509,899 of which $1,550,245 related to appreciated
investments and $40,346 related to depreciated investments.
5. NET ASSETS
At December 31, 1996, net assets consisted of the following:
<TABLE>
<CAPTION>
Money
Market Virginia Maryland
Portfolio Portfolio Portfolio
<S> <C> <C> <C>
Paid-in-Capital $18,889,522 $31,212,566 $43,355,179
Undistributed Net Investment Income - 961 2,069
Accumulated Net Realized Loss on Investments - (22,180) (456,790)
Net Unrealized Appreciation of Investments - 1,163,397 1,509,899
NET ASSETS $18,889,522 $32,354,744 $44,410,357
</TABLE>
6. CAPITAL LOSS CARRYOVERS
At December 31, 1996, 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 - $22,180 $456,790
- 15 -
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors
of Fund for Tax-Free Investors, Inc.:
We have audited the statements of net assets of the Money Market,
Virginia and Maryland Portfolios of Fund for Tax-Free Investors,
Inc. (the Fund) as of December 31, 1996, the related statements
of operations for the year then ended and of changes in net
assets for the years ended December 31, 1996 and 1995, and the
financial highlights for each of the five years in the period
ended December 31, 1996. 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 audit 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, 1996 by correspondence with the
custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, 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, 1996, 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
Princeton, New Jersey
January 24, 1997
- 16 -
<PAGE>
DELETED RUSHMORE LOGO
FUND FOR TAX-FREE INVESTORS
Annual Report
December 31, 1996
<PAGE>
PART C
<PAGE>
OTHER INFORMATION
Fund for Tax-Free Investors, Inc.
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
a. Financial statements:
The Financial Highlights in Part A (for each of the
Portfolios) and the following financial statements in
Part B (for each of the Portfolios) of this registration
statement's amendment are incorporated by reference.
Statements of Net Assets as of December 31, 1996
Statements of Operations for the year ended December 31, 1996
Statements of Changes in Net Assets for the years ended
December 31, 1996 and 1995
Financial Highlights for each of the five years in the
period ended December 31, 1996
b. Exhibits:
11 Consent of Deloitte & Touche LLP independent
auditors for Registrant
16 Schedule for computation of performance quotations
27 Financial Data Schedules
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
Approximate Number of
Shareholders of Record
Title of Class at April 3, 1997
Common Stock, $.001 par value
Money Market Portfolio 576
Rushmore Virginia Tax-Free Portfolio 809
Rushmore Maryland Tax-Free Portfolio 960
ITEM 27. INDEMNIFICATION
The Articles of Incorporation of the Fund provide that
officers and directors shall be indemnified by the Fund
against liabilities and expenses of defense in
proceedings against them by reason of the fact that they
serve as officers or directors of the Fund or as an
officer or director of another entity at the request of
the entity. The indemnification is subject to the
following conditions:
(a) no director or officer is indemnified against all
liability to the Fund or its security holders which was
the result of any willful misfeasance, bad faith, gross
negligence or reckless disregard of his duties;
(b) officers and directors are only indemnified for
actions taken in good faith which they believed were in
or not opposed to the best interests of the Fund;
(c) expenses of any suit or proceeding will be paid in
advance only if the persons who will benefit by such
advance undertake to repay the expenses unless it is
subsequently determined that they are entitled to
indemnification.
The Articles provide that if indemnification is not
ordered by a court, it may be authorized upon
determination by shareholders, by a majority vote of a
quorum of the directors who were not parties to the
proceedings or if a quorum is not obtainable, or if
directed by a quorum of disinterested directors, by
independent legal counsel in a written opinion that the
persons to be indemnified have met the applicable
standard.
In connection with the approval of indemnification to
officers and directors, the Fund hereby undertakes in
all cases where indemnification is not ordered by a
court not to submit any proposed indemnification to a
vote of its shareholders or directors unless it has
obtained a legal opinion from independent counsel that
the product of the persons seeking indemnification did
not involve willful misfeasance, bad faith, gross
negligence or reckless disregard of their duties.
Insofar as indemnification for liability arising under
the Securities Act of 1933, as amended (the "1933 Act"),
may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been
advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against
public policy as expressed in the 1933 Act and,
therefore, is unenforceable. In the event that a claim
for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or
paid by a director, officer, or controlling person of
the Registrant in the successful defense of any action,
suit, or proceeding) is asserted by such director,
officer, or controlling person in connection with the
securities being registered, the Registrant, unless in
the opinion of the Registrant's counsel the matter has
been settled by controlling precedent, will submit to a
court of appropriate jurisdiction the question whether
such indemnification by the Registrant is against public
policy as expressed in the 1933 Act and will be governed
by the final adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Money Management Associates ("MMA"), 1001 Grand Isle
Way, Palm Beach Gardens, Florida 33418, a limited
partnership organized under the laws of the District of
Columbia on August 15, 1974, has one general partner and
four limited partners. Daniel L. O'Connor is the
general partner and sole employee of MMA. Limited
partners Richard J. Garvey, Martin M. O'Connor, and John
R. Cralle, are full-time employees of Rushmore Services,
Inc. ("RSI"), a subsidiary of MMA, at 4922 Fairmont
Avenue, Bethesda, Maryland 20814. Limited partner Rita
A. Gardner is a retired employee of Rushmore Trust and
Savings, FSB, the Fund's transfer agent and custodian.
MMA also serves as the investment adviser to Fund for
Government Investors, The Rushmore Fund, Inc., and
American Gas Index Fund, Inc., all regulated investment
companies since their inception.
ITEM 29. PRINCIPAL UNDERWRITERS
Not applicable
ITEM 30. LOCATIONS OF ACCOUNTS AND RECORDS
The physical location for all accounts, books and
records required to be maintained and preserved by
Section 31(a) of the Investment Company Act of 1940, as
amended, and Rules 31a-1 and 31a-2 thereunder, is 4922
Fairmont Avenue, Bethesda, Maryland 20814.
ITEM 31. MANAGEMENT SERVICES
None
ITEM 32. UNDERTAKINGS
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that
it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in this City of Bethesda and State of Maryland
on the 24th day of April, 1997.
Fund for Tax-Free Investors, Inc.
By:
/s/ Daniel L. O'Connor*
Daniel L. O'Connor, Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 15 to the Registration Statement has been signed
below by the following persons in the capacities and on the dates
indicated.
Name Title Date
/s/ Daniel L. O'Connor* Chairman of the Board, April 24, 1997
Daniel L. O'Connor Treasurer, Director
/s/ Richard J. Garvey President, Director April 24, 1997
Richard J. Garvey
/s/ Timothy N. Coakley Vice President, Controller April 24, 1997
Timothy N. Coakley
/s/ Jeffrey R. Ellis* Director April 24, 1997
Jeffrey R. Ellis
/s/ Bruce C. Ellis* Director April 24, 1997
Bruce C. Ellis
/s/ Rita A. Gardner Director April 24, 1997
Rita A. Gardner
/s/ Michael D. Lange* Director April 24, 1997
Michael D. Lange
/s/ Patrick F. Noonan* Director April 24, 1997
Patrick F. Noonan
/s/ Leo Seybold* Director April 24, 1997
Leo Seybold
*Richard J. Garvey, Attorney-in-Fact
EXHIBIT 11
CONSENT OF DELOITTE & TOUCHE LLP
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
Fund for Tax-Free Investors, Inc.:
We consent to the incorporation by reference in this Post-
Effective Amendment No. 15 to Registration Statement No. 2-83299
of our report dated January 24, 1997 appearing in the Annual
Report of Fund for Tax-Free Investors, Inc. for the year ended
December 31, 1996 and to the reference to us under the caption
"Financial Highlights" appearing in the Prospectuses, which are
also a part of such Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Washington, D.C.
April 25, 1997
EXHIBIT 16
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
Rushmore Tax-Free Money Market Portfolio
Exhibit 16
Computation of Yield Quotation
Item 22, Part B
Daily Yield
Net (income divided by
Investment Shares shares multiplied
Income Outstanding by 365)
December 25, 1996 $ 1,567.53 18,894,065.00 3.04%
December 26, 1996 $ 1,610.03 19,058,934.81 3.09%
December 27, 1996 $ 1,604.09 18,881,572.24 3.11%
December 28, 1996 $ 1,604.09 18,881,572.24 3.11%
December 29, 1996 $ 1,604.09 18,881,572.24 3.11%
December 30, 1996 $ 1,622.84 18,766,611.89 3.16%
December 31, 1996 $ 1,658.58 18,775,945.07 3.23%
Average 7-Day Yield 3.12%
Annual Effective Yield 3.16%
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
Exhibit 16
Computation of Yield Quotation
Rushmore Maryland Tax-Free Portfolio
a. Interest Income $229,254
b. Less: Management Fees and Fund Expenses 36,413
Net Income $192,841
c. Average Number of Shares Outstanding 4,293,775
d. Closing Share Price 12/31/96 $ 10.97
Value of Shares $ 47,102.711.75
6
Yield: 2[(a-b/cd + 1) - 1] = 4.50%
Computation of Yield Quotation
Rushmore Virginia Tax-Free Portfolio
a. Interest Income $159,938
b. Less: Management Fees and Fund Expenses 25,628
Net Income $134,310
c. Average Number of Shares Outstanding 2,942,532
d. Closing Share Price 12/31/96 $ 11.09
Value of Shares $ 32,632,679.88
6
Yield: 2[(a-b/cd + 1) - 1] = 4.51%
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
Exhibit 16
Total Return Calculations
Rushmore Maryland Rushmore Virginia
Tax-Free Portfolio Tax-Free Portfolio
n n
One Year P (1+T) = ERV P (1+T) = ERV
(1/1/96-12/31/96)
ERV = 1,032.10 ERV = 1,029.10
n = 1 n = 1
T = 3.21% T = 2.91%
n n
Five Years P (1+T) = ERV P (1+T) = ERV
(1/1/91-12/31/96)
ERV = 1,355.99 ERV = 1,350.26
n = 5 n = 5
T = 6.28% T = 6.19%
n n
Ten Years P (1+T) = ERV P (1+T) = ERV
(1/1/86-1/31/96)
ERV = 1,802.71 ERV = 1,811.23
n = 10 n = 10
T = 6.07% T = 6.12%
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000718824
<NAME> FUND FOR TAX-FREE INVESTORS, INC.
<SERIES>
<NUMBER> 1
<NAME> MONEY MARKET PORTFOLIO
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 19,423,562
<INVESTMENTS-AT-VALUE> 19,423,562
<RECEIVABLES> 284,793
<ASSETS-OTHER> 439,926
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 20,148,281
<PAYABLE-FOR-SECURITIES> 1,229,202
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 29,557
<TOTAL-LIABILITIES> 1,258,759
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 18,889,522
<SHARES-COMMON-STOCK> 18,889,522
<SHARES-COMMON-PRIOR> 20,792,035
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 18,889,522
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 672,036
<OTHER-INCOME> 0
<EXPENSES-NET> (147,529)
<NET-INVESTMENT-INCOME> 524,507
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 524,507
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (524,507)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 33,089,461
<NUMBER-OF-SHARES-REDEEMED> (35,493,325)
<SHARES-REINVESTED> 501,351
<NET-CHANGE-IN-ASSETS> (1,882,954)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 98,353
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 147,529
<AVERAGE-NET-ASSETS> 19,670,525
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.027
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<PER-SHARE-DIVIDEND> (0.027)
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<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.750
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000718824
<NAME> FUND FOR TAX-FREE INVESTORS, INC.
<SERIES>
<NUMBER> 2
<NAME> VIRGINIA PORTFOLIO
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 30,263,876
<INVESTMENTS-AT-VALUE> 31,427,273
<RECEIVABLES> 618,989
<ASSETS-OTHER> 394,265
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 32,440,527
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 85,783
<TOTAL-LIABILITIES> 85,783
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 31,212,566
<SHARES-COMMON-STOCK> 2,917,394
<SHARES-COMMON-PRIOR> 2,957,858
<ACCUMULATED-NII-CURRENT> 961
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (22,180)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,163,397
<NET-ASSETS> 32,354,744
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,877,579
<OTHER-INCOME> 0
<EXPENSES-NET> (301,254)
<NET-INVESTMENT-INCOME> 1,576,325
<REALIZED-GAINS-CURRENT> 262,689
<APPREC-INCREASE-CURRENT> (932,337)
<NET-CHANGE-FROM-OPS> 906,677
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,575,364)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 871,229
<NUMBER-OF-SHARES-REDEEMED> (1,030,689)
<SHARES-REINVESTED> 118,996
<NET-CHANGE-IN-ASSETS> (1,113,114)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (284,869)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 203,550
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 301,254
<AVERAGE-NET-ASSETS> 32,568,049
<PER-SHARE-NAV-BEGIN> 11.310
<PER-SHARE-NII> 0.534
<PER-SHARE-GAIN-APPREC> (0.221)
<PER-SHARE-DIVIDEND> (0.533)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.090
<EXPENSE-RATIO> 0.930
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000718824
<NAME> FUND FOR TAX-FREE INVESTORS, INC.
<SERIES>
<NUMBER> 3
<NAME> MARYLAND PORTFOLIO
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 42,319,545
<INVESTMENTS-AT-VALUE> 43,829,444
<RECEIVABLES> 814,455
<ASSETS-OTHER> 23,450
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 44,667,349
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 256,992
<TOTAL-LIABILITIES> 256,992
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 43,355,179
<SHARES-COMMON-STOCK> 4,116,494
<SHARES-COMMON-PRIOR> 4,527,324
<ACCUMULATED-NII-CURRENT> 2,069
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (456,790)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,509,899
<NET-ASSETS> 44,410,357
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,784,078
<OTHER-INCOME> 0
<EXPENSES-NET> (440,790)
<NET-INVESTMENT-INCOME> 2,343,288
<REALIZED-GAINS-CURRENT> 484,951
<APPREC-INCREASE-CURRENT> (1,400,547)
<NET-CHANGE-FROM-OPS> 1,427,692
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,341,219)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 576,046
<NUMBER-OF-SHARES-REDEEMED> (1,170,922)
<SHARES-REINVESTED> 184,046
<NET-CHANGE-IN-ASSETS> (5,314,347)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (941,741)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 297,831
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 440,790
<AVERAGE-NET-ASSETS> 47,652,923
<PER-SHARE-NAV-BEGIN> 10.980
<PER-SHARE-NII> 0.528
<PER-SHARE-GAIN-APPREC> (0.190)
<PER-SHARE-DIVIDEND> (0.528)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.790
<EXPENSE-RATIO> 0.930
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
