<PAGE>
[LOGO]
SEMIANNUAL REPORT, JUNE 30, 1999
FUND FOR TAX-FREE INVESTORS, INC.
4922 FAIRMONT AVENUE, BETHESDA, MD 20814
(800) 622-1386 (301) 657-1510
- --------------------------------------------------------------------------------
August 1, 1999
Dear Shareholders:
The economy of the U.S. was expected by many to show some signs of slowing down
in 1999. As it became apparent that a slowdown was not imminent, market analysts
began to raise their growth estimates for the economy. The prolonged strength in
the economy as well as an improving outlook for previously troubled foreign
economies led to a renewed concern over inflation and in turn, to higher yields
on bonds. Yields on fixed income securities rose in anticipation of an interest
rate hike by the Federal Reserve. Indeed, the Federal Reserve did decide to
raise the Fed Funds rate by 25 basis points at its June Federal Open Market
Committee (FOMC) meeting, raising the level of Fed Funds to 5%.
While yields on municipals rose, they did not increase as much as treasuries.
The yield on 30-year AAA municipal bonds rose approximately 42 basis points,
while the benchmark 30-year treasury bond rose over 90 basis points. Decreased
supply in the municipal market has been the major factor in lower volatility in
municipal bonds relative to treasuries.
TAX-FREE MONEY MARKET PORTFOLIO
The Tax-Free Money Market Portfolio invests in high-quality, tax-exempt
municipal bonds with maturities of less than one year. The portfolio had an
annualized net investment income of 2.38% of net assets for the six months ended
June 30, 1999, with an average maturity of 53 days.
VIRGINIA AND MARYLAND TAX-FREE PORTFOLIOS
The Virginia Tax-Free Portfolio had a total return of (1.29)% for the six months
ended June 30, 1999, which included annualized net investment income of 4.39%.
The net assets for the portfolio were 33.7 million, and the average maturity was
15 years. The credit quality in the Fund remains high with over 90% being rated
AA or better.
The Maryland Tax-Free Portfolio had a total return of (0.75)% for the six months
ended June 30, 1999, and its annualized net investment income was 4.50%. Net
assets of the portfolio at the end of this period were 45.9 million, and the
average maturity was 13 years. The credit
<PAGE>
quality in the Maryland portfolio was also high with over 85% of its holdings
being rated AA or better.
Both Maryland and Virginia have retained their AAA credit ratings.
OUTLOOK
Although the Federal Reserve moved to a neutral directive on interest rate
policy after its rate increase at the June FOMC meeting, Alan Greenspan has let
it be known that the Fed will not hesitate to raise rates again should the
threat of inflation become enough of a concern. This threat of increased
inflation and further rate hikes may lead to further volatility of yields in the
fixed income market, but we do not anticipate that yields will move
significantly higher than their current levels. As for municipals, continued
lack of supply should help maintain a lower level of volatility in bond yields.
The Fund for Tax-Free Investors maintains its long-term, conservative investment
philosophy. We will continue to invest in high quality issues we feel provide
the best value along the yield curve. Thank you for your continued support and
we look forward to serving your investment needs in the future.
Sincerely,
[SIGNATURE] [SIGNATURE]
Daniel L. O'Connor Richard J. Garvey
Chairman President
- 2 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENT OF NET ASSETS
MONEY MARKET PORTFOLIO
June 30, 1999
(unaudited)
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
--------- -----------
<S> <C> <C>
CALIFORNIA 4.4%
California School Cash Reserve
Program Revenue
4.5%, 7/2/99 SPI+.............. $ 800,000 $ 800,017
-----------
COLORADO 2.7%
Pitkin County Multi Family
Housing Floating Rate Notes
3.75%, 12/1/24+ A-1+........... 500,000 500,000
-----------
FLORIDA 2.0%
Tallahassee Revenue Bonds
6.9%, 10/1/99^ AAA............. 350,000 360,280
-----------
GEORGIA 4.1%
Richmond County Board of
Education General Obligation
4%, 9/1/99 AA-................. 750,000 751,108
-----------
IOWA 4.4%
Ottumwa Regional Health Center
Floating Rate Notes
3.65%, 10/1/06+ A-1+........... 800,000 800,000
-----------
LOUISIANA 1.6%
Jefferson Special Sales Tax
Revenue Series A
8%, 7/1/99^ AAA................ 295,000 295,000
-----------
MARYLAND 13.1%
Anne Arundel County General
Obligation
6.9%, 1/15/00 AA1.............. 250,000 254,762
Baltimore County General
Obligation
5.7%, 7/15/99 AAA.............. 340,000 340,347
Baltimore County Revenue Floating
Rate Notes
3.65%, 1/1/16+ A-1............. 200,000 200,000
Maryland State General Obligation
9%, 9/1/99 AAA................. 600,000 605,881
Maryland Health and Higher
Education Loyola College Issue B
Floating Rate Notes
3.7%, 10/1/13+ A-1............. 400,000 400,000
Maryland Health and Higher
Education North Arundel Hospital
Floating Rate Notes
3.75%, 7/1/32+ VMIGI........... 300,000 300,000
<CAPTION>
Face Value
Value (Note 1)
--------- -----------
<S> <C> <C>
MARYLAND (CONTINUED)
North East Maryland Waste
Disposal Authority Floating Rate
Notes
3.75%, 1/1/08+ A-1+............ $ 300,000 $ 300,000
-----------
State Total.................... 2,400,990
-----------
MICHIGAN 2.6%
Michigan State Building Authority
4.5%, 10/15/99 Aa2............. 475,000 476,733
-----------
MINNESOTA 17.2%
Minneapolis General Obligation
Floating Rate Notes
3.5%, 12/1/05+ A-1+............ 700,000 700,000
Minnesota State Higher Education
Floating Rate Notes
3.7%, 12/1/24+ VMIG1........... 500,000 500,000
St. Paul Housing and
Redevelopment Authority Floating
Rate Notes
3.75%, 12/1/12+ A-1+........... 700,000 700,000
St. Paul Housing and
Redevelopment Authority United
Way Project Floating Rate Notes
3.75%, 12/1/18+ A-1............ 500,000 500,000
Waconia Industrial Development
Revenue Floating Rate Notes
3.9%, 10/1/16+ A-1............. 745,000 745,000
-----------
State Total.................... 3,145,000
-----------
MISSOURI 3.8%
Missouri State Health and
Education Drury College Floating
Rate Notes
3.65%, 8/15/21+ VMIG1.......... 700,000 700,000
-----------
MONTANA 3.3%
Montana State Health Floating
Rate Notes
3.55%, 12/1/15+ A-1+........... 600,000 600,000
-----------
NEW HAMPSHIRE 7.1%
New Hamphshire Health and Higher
Education Floating Rate Notes
3.55%, 11/1/21+ VMIG1.......... 500,000 500,000
</TABLE>
- 3 -
<PAGE>
STATEMENT OF NET ASSETS
MONEY MARKET PORTFOLIO (continued)
June 30, 1999
(unaudited)
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
--------- -----------
<S> <C> <C>
NEW HAMPSHIRE (CONTINUED)
New Hampshire State Business
Finance Authority Foundation for
Seacoast Health Series A Floating
Rate Notes
3.7%, 6/1/28+ A-1.............. $ 800,000 $ 800,000
-----------
State Total.................... 1,300,000
-----------
NEW YORK 2.7%
Nassau County Revenue
Anticipation Notes
3.75%, 3/15/00 SP1............. 500,000 501,726
-----------
NORTH CAROLINA 3.8%
City of Winston-Salem Floating
Rate Notes
3.65%, 4/1/00+, A-1+........... 700,000 700,000
-----------
PENNSYLVANIA 7.2%
Emmaus General Authority Floating
Rate Notes
3.45%, 12/1/28+ A-1+........... 800,000 800,000
Allegheny County General
Obligation
6.7%, 12/1/99^ AAA............. 500,000 507,279
-----------
State Total.................... 1,307,279
-----------
TENNESSEE 4.8%
Metropolitan Government Nashville
and Davidson County
4%, 11/15/99 AA2............... 360,000 361,044
Metropolitan Government Nashville
and Davidson County
6.5%, 12/01/99^ AA2............ 500,000 516,426
-----------
State Total.................... 877,470
-----------
TEXAS 2.2%
Port Arthur Revenue Floating Rate
Notes
3.75%, 5/1/03+ P1.............. 400,000 400,000
-----------
<CAPTION>
Face Value
Value (Note 1)
--------- -----------
<S> <C> <C>
VIRGINIA 8.0%
Fairfax County Water Authority
Revenue
7.25%, 1/1/00^ AAA............. $ 400,000 $ 415,802
Fairfax County Water Authority
Revenue
6.125%, 1/1/00^ AAA............ 210,000 213,005
Hampton General Obligation
6.625%, 1/1/00^ AA............. 800,000 827,936
-----------
State Total.................... 1,456,743
-----------
WASHINGTON 2.5%
King and Snohomish County
General Obligation
4%, 12/15/99 AA3............... 456,087 457,719
-----------
WISCONSIN 2.9%
Wisconsin State Transportation
Revenue
6.2%, 7/1/99^ AA-.............. 500,000 510,002
-----------
TOTAL INVESTMENTS 100.4%
(Cost $18,340,067*)....................... 18,340,067
LIABILITIES IN EXCESS OF OTHER ASSETS
(0.4%)...................................... (75,148)
-----------
NET ASSETS (NOTE 5) 100.0%.................. $18,264,919
-----------
-----------
NET ASSET VALUE PER SHARE
(Based on 18,264,919 Shares Outstanding).. $1.00
-----------
-----------
</TABLE>
- ---------
+ Daily or Weekly Tender Bond
^ Date represents pre-refunded date.
* Same cost is used for Federal income tax purposes.
See Notes to Financial Statements.
- 4 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENT OF NET ASSETS
VIRGINIA PORTFOLIO
June 30, 1999
(unaudited)
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Arlington County General
Obligation
6%, 8/1/04 AAA............... $ 500,000 $ 543,380
5.4%, 6/1/13 AAA............. 1,000,000 1,032,090
5.375%, 12/1/16 AAA.......... 1,000,000 1,014,720
Brunswick County Industrial
Development Authority Revenue
5.5%, 7/1/17 AAA............. 1,000,000 1,014,170
Fairfax City EDA Lease Revenue
5.5%, 5/15/18 AA............. 2,000,000 2,012,360
Fairfax County Industrial
Development Authority Revenue
5.25%, 8/15/19 AA............ 650,000 632,125
Fairfax County Water Authority
Revenue
6%, 4/1/07^ AA-.............. 605,000 664,000
5.8%, 1/1/16 AAA............. 500,000 523,900
6%, 4/1/22 AA-............... 630,000 681,137
Hampton General Obligation
6%, 1/15/14 AA-.............. 350,000 380,419
Hanover County Water and Sewer
Revenue
5.25%, 2/1/16 AAA............ 500,000 496,150
Hanover County Virginia General
Obligation
5.4%, 7/15/16 AA............. 1,000,000 1,008,510
Henrico County Industrial
Development Authority Revenue
7.125%, 8/1/21 AA............ 400,000 452,860
Henrico County Water and Sewer
Revenue
6.25%, 5/1/02^ AA-........... 200,000 210,840
6.25%, 5/1/13 AA-............ 300,000 316,260
Henry County General Obligation
8.825%, 11/1/05^ Aaa......... 200,000 246,780
James City County General
Obligation
5.25%, 12/15/15 AAA.......... 1,000,000 1,004,720
Leesburg General Obligation
5.5%, 6/1/05 AAA............. 500,000 532,585
Loudoun County General
Obligation
5%, 12/1/18 AA............... 1,000,000 963,850
Loudoun County Sanitation
Authority Revenue
6.25%, 1/1/16 AAA............ 500,000 539,500
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Lynchburg General Obligation
5%, 5/1/18 AA................ $1,000,000 $ 965,610
Lynchburg Industrial
Development Authority Revenue
5.2%, 1/1/18 A+.............. 500,000 481,035
Manassas Park General
Obligation
5.1%, 4/1/22 AAA............. 500,000 479,810
Manassas General Obligation
5%, 1/1/14 AA-............... 1,000,000 985,810
Montgomery Industrial
Development Authority
5.125%, 1/15/19 AAA.......... 500,000 483,215
Newport News General Obligation
5%, 3/1/18 AA................ 795,000 764,154
Norfolk General Obligation
5.75%, 6/1/13 AAA............ 500,000 525,560
Norfolk Water Revenue
5.75%, 11/1/12 AAA........... 500,000 531,575
5.875%, 11/1/15 AAA.......... 500,000 527,925
Portsmouth Redevelopment and
Housing Authority Revenue
6.05%, 12/1/08 AAA........... 500,000 527,435
Potomac and Rappahannock
Transportation District
Commission Revenue
6.7%, 3/1/00^ AAA............ 600,000 624,570
Prince William County Park
Authority Revenue
6.875%, 10/15/16 A-.......... 500,000 550,160
Rappanhannock Jail Facilities
Revenue
5%, 12/1/20 AAA.............. 1,000,000 951,980
Richmond Metro Authority
Revenue
6.375%, 7/15/02^ AAA......... 500,000 539,480
Richmond General Obligation
5.125%, 1/15/16 Aaa.......... 500,000 491,235
Richmond Public Utilities
Revenue
5.25%, 1/15/18 A+............ 1,000,000 985,990
Upper Occoquan Sewer Authority
Revenue
5.15%, 7/1/20 AAA............ 500,000 491,185
Virginia Beach General
Obligation
6.5%, 8/1/01 AA.............. 500,000 533,965
5%, 8/1/17 AA................ 1,075,000 1,034,096
</TABLE>
- 5 -
<PAGE>
STATEMENT OF NET ASSETS
VIRGINIA PORTFOLIO (continued)
June 30, 1999
(unaudited)
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Virginia Housing Development
Authority Revenue
6.625%, 7/1/13 A+............ $ 275,000 $ 283,159
5.95%, 7/1/13 AA+............ 500,000 511,165
5.1%, 7/1/14 AA+............. 1,000,000 975,440
5.75%, 1/1/19 AAA............ 1,000,000 1,017,300
Virginia Port Authority Revenue
5.9%, 7/1/16 AA.............. 500,000 513,335
Virginia Public Building
Authority Revenue
5.2%, 8/1/16 AA.............. 1,000,000 988,800
Virginia Public School
Authority Revenue
6.2%, 8/1/13 AA.............. 320,000 346,832
5%, 8/1/18 AA+............... 1,000,000 964,210
Virginia Resource Authority
Revenue
6.75%, 10/1/04^ NR........... 240,000 265,819
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Virginia Transportation Board
Revenue
5.125%, 5/15/17 AA........... $ 500,000 $ 486,280
-----------
TOTAL INVESTMENTS 98.1% OF NET ASSETS
(Cost $32,272,886*)...................... 33,097,486
OTHER ASSETS LESS LIABILITIES 1.9%......... 645,819
-----------
NET ASSETS (NOTE 5) 100.0%................. $33,743,305
-----------
-----------
NET ASSET VALUE PER SHARE
(Based on 3,060,011 Shares
Outstanding)............................. $11.03
-----------
-----------
</TABLE>
- ---------
^ Date represents
pre-refunded date.
* Same cost is used for
Federal income tax
purposes.
NR Not Rated
See Notes to Financial Statements.
- 6 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENT OF NET ASSETS
MARYLAND PORTFOLIO
June 30, 1999
(unaudited)
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Anne Arundel County Water and
Sewer General Obligation
6.2%, 8/1/02^ AA+............ $ 725,000 $ 794,259
6%, 8/1/02^ AA+.............. 500,000 534,250
6.3%, 8/1/05^ AA+............ 500,000 550,400
6.3%, 8/1/05^ AA+............ 725,000 798,080
Anne Arundel County Pollution
Control Revenue
6%, 4/1/24 A................. 1,230,000 1,284,600
Anne Arundel County Solid Waste
Project General Obligation
5.5%, 9/1/15 Aa1............. 500,000 508,965
Baltimore City General
Obligation
6.4%, 10/15/02^ AAA.......... 465,000 496,109
5.5%, 10/15/10 AAA........... 1,000,000 1,051,900
Baltimore Wastewater Project
Revenue
6%, 7/1/15 AAA............... 500,000 544,235
Baltimore County General
Obligation
6.125%, 7/1/02^ AAA.......... 500,000 535,645
5.5%, 6/1/12 AAA............. 1,000,000 1,045,560
Baltimore Port Facility Revenue
6.5%, 12/1/10 AA-............ 400,000 426,480
Carroll County General
Obligation
7.1%, 10/1/00^ AA............ 235,000 249,974
7.25%, 10/1/00^ AA........... 300,000 319,662
5.3%, 11/1/15 AA............. 1,000,000 1,002,600
6.5%, 10/1/24 AA............. 225,000 250,171
Frederick County General
Obligation
6.125%, 12/1/07 AAA.......... 500,000 533,480
5.6%, 7/1/11 AA.............. 500,000 531,665
City of Frederick General
Obligation
6%, 10/1/11 AAA.............. 300,000 322,932
Howard County Metropolitan
District General Obligation
6%, 8/15/19 AAA.............. 840,000 870,904
Howard County Public
Improvement General Obligation
6%, 5/15/03^ AAA............. 500,000 529,465
5.5%, 2/15/04^ AAA........... 1,000,000 1,052,420
Howard County Special
Facilities Revenue
6.1%, 2/15/13 AA-............ 500,000 529,910
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Laurel General Obligation
6.7%, 7/1/01^ AAA............ $ 600,000 $ 641,970
Maryland Community Development
Administration Revenue
6.6%, 4/1/06 Aa2............. 200,000 208,302
7.375%, 4/1/10 Aa2........... 495,000 510,211
7.25%, 4/1/11 Aa2............ 200,000 208,258
7.15%, 4/1/11 Aa2............ 405,000 426,825
5%, 4/1/17 Aa2............... 500,000 480,615
7.7%, 5/15/20 Aa2............ 250,000 260,885
7.25%, 4/1/27 Aa2............ 385,000 398,679
Maryland General Obligation
5%, 10/15/11 AAA............. 1,000,000 999,010
5%, 3/1/12 AAA............... 1,500,000 1,486,020
Maryland Health and Higher
Education Facilities Authority
Revenue
5.7%, 7/1/09 A............... 500,000 531,330
5.25%, 7/1/13 AAA............ 500,000 504,945
6.125%, 7/1/14 AAA........... 500,000 537,625
5.5%, 10/1/16 AAA............ 1,000,000 1,024,680
6.125%, 7/1/19 AAA........... 500,000 532,555
5%, 7/1/19 A2................ 500,000 474,545
5%, 7/1/27 AAA............... 1,500,000 1,432,605
Maryland Health and Higher
Education Facilities Authority
Floating Rate Note
3.7%, 10/1/13+ AAA........... 200,000 200,000
3.75%, 7/1/32+ VMIG1......... 300,000 300,000
Maryland Industrial Development
Revenue
7.125%, 7/1/06 A-............ 220,000 222,719
Maryland Stadium Authority
Sports Revenue
7.5%, 12/15/10 AA-........... 695,000 718,845
5.55%, 3/1/13 AAA............ 500,000 519,240
5.875%, 12/15/13 AAA......... 1,000,000 1,071,750
5.375%, 12/15/15 AA.......... 500,000 505,495
7.6%, 12/15/19 AA-........... 500,000 516,960
Maryland Water Quality Finance
Administration Revenue
6%, 9/1/15 AA................ 1,000,000 1,044,050
Montgomery County General
Obligation
5%, 5/1/19 AAA............... 500,000 486,475
</TABLE>
- 7 -
<PAGE>
STATEMENT OF NET ASSETS
MARYLAND PORTFOLIO (continued)
June 30, 1999
(unaudited)
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Montgomery County Housing
Opportunity Commission Revenue
6.7%, 7/1/11 Aa2............. $ 345,000 $ 359,473
7.375%, 7/1/17 Aa2........... 175,000 179,263
6.65%, 7/1/17 Aa2............ 170,000 179,418
7%, 7/1/23 A3................ 250,000 259,685
Montgomery County Waste
Disposal Authority Revenue
5.875%, 6/1/13 AAA........... 250,000 261,535
North East Maryland Waste
Disposal Authority Revenue
6.2%, 7/1/10 A2.............. 500,000 528,605
6.3%, 7/1/16 A2.............. 1,000,000 1,043,540
Prince Georges County General
Obligation
5.25%, 3/15/15 AAA........... 1,000,000 994,630
Prince Georges County Housing
Authority Revenue
6.35%, 7/20/20 AAA........... 700,000 726,768
Prince Georges County Pollution
Control Revenue
5.75%, 3/15/10 A............. 1,000,000 1,077,870
Prince Georges County Solid
Waste Management System Revenue
7%, 6/30/00^ AAA............. 250,000 263,533
St. Mary's County General
Obligation
5.85%, 11/1/18 AAA 500,000 525,565
University of Maryland System
Auxiliary Revenue
6.375%, 10/1/02^ AA+......... 500,000 541,365
5.6%, 4/1/12 AA+............. 1,000,000 1,044,610
5.125%, 4/1/15 AA+........... 1,000,000 977,720
5.6%, 4/1/16 AA+............. 1,000,000 1,026,450
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Washington County General
Obligation
5.125%, 1/1/12 AAA........... $ 500,000 $ 499,540
5.25%, 1/1/16 AAA............ 500,000 494,025
Washington, D.C. Metropolitan
Area Transportation Authority
Revenue
6%, 7/1/09 AAA............... 500,000 537,755
6%, 7/1/10 AAA............... 275,000 296,227
Washington Suburban Sanitary
District General Obligation
6.2%, 6/1/12 AA.............. 900,000 957,699
5.%, 6/1/23 AA............... 900,000 951,740
-----------
TOTAL INVESTMENTS 97.4% OF NET
ASSETS
(Cost $43,180,571*)...................... 44,735,276
OTHER ASSETS LESS LIABILITIES
2.6%..................................... 1,179,409
-----------
NET ASSETS (NOTE 5) 100.0%................. $45,914,685
-----------
-----------
NET ASSET VALUE PER SHARE
(Based on 4,214,277 Shares
Outstanding)............................. $10.90
-----------
-----------
</TABLE>
- ---------
^ Date represents
pre-refunded date.
+ Daily or Weekly Tender
Bond
* Same cost is used for
Federal income tax
purposes.
See Notes to Financial Statements.
- 8 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1999
(unaudited)
<TABLE>
<CAPTION>
Money
Market Virginia Maryland
Portfolio Portfolio Portfolio
----------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME (Note 1)............................................ $ 292,670 $ 911,675 $ 1,259,554
----------- ----------- -----------
EXPENSES
Investment Advisory Fee (Note 2).................................... 46,702 107,195 145,212
Administrative Fee (Note 2)......................................... 23,351 51,454 69,702
Other Fees.......................................................... 71 -- --
----------- ----------- -----------
Total Expenses.................................................... 70,124 158,649 214,914
----------- ----------- -----------
NET INVESTMENT INCOME................................................. 222,546 753,026 1,044,640
----------- ----------- -----------
Net Realized Gain (Loss) on Investment Transactions................... -- 1,125 (30,662)
Change in Net Unrealized Appreciation of Investments.................. -- (1,210,187) (1,395,356)
----------- ----------- -----------
NET LOSS ON INVESTMENTS............................................... -- (1,209,062) (1,426,018)
----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....... $ 222,546 $ (456,036) $ (381,378)
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See Notes to Financial Statements.
- 9 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Money Market Virginia Maryland
Portfolio Portfolio Portfolio
--------------------------- -------------------------- -----------
For the Six For the Six For the Six
Months Ended For the Year Months For the Year Months
June 30, Ended Ended June Ended Ended June
1999 December 31, 30, 1999 December 31, 30, 1999
(unaudited) 1998 (unaudited) 1998 (unaudited)
------------ ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES
Net Investment Income.......................... $ 222,546 $ 496,758 $ 753,026 $ 1,464,437 $1,044,640
Net Realized Gain (Loss) on Investment
Transactions................................. -- -- 1,125 515,403 (30,662)
Change in Net Unrealized Appreciation of
Investments.................................. -- -- (1,210,187) (155,249) (1,395,356)
------------ ------------ ----------- ------------ -----------
Net Increase (Decrease) in Net Assets Resulting
from Operations.............................. 222,546 496,758 (456,036) 1,824,591 (381,378)
------------ ------------ ----------- ------------ -----------
DISTRIBUTIONS TO
SHAREHOLDERS
From Net Investment Income (Note 1)............ (222,546) (496,758) (753,026) (1,464,437) (1,044,640)
From Net Realized Gain......................... -- -- -- (466,429) --
------------ ------------ ----------- ------------ -----------
Total Distributions to Shareholders............ (222,546) (496,758) (753,026) (1,930,866) (1,044,640)
------------ ------------ ----------- ------------ -----------
FROM SHARE
TRANSACTIONS
Net Proceeds from Sales of Shares.............. 14,638,202 35,657,860 3,069,592 11,697,514 5,289,354
Reinvestment of Distributions.................. 214,858 473,977 648,561 1,651,857 897,718
Cost of Shares Redeemed........................ (16,371,032) (35,526,092) (3,308,772) (11,607,428) (4,673,408)
------------ ------------ ----------- ------------ -----------
Net Increase (Decrease) in Net Assets Resulting
from Share Transactions...................... (1,517,972) 605,745 409,381 1,741,943 1,513,664
------------ ------------ ----------- ------------ -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS.......... (1,517,972) 605,745 (799,681) 1,635,668 87,646
NET ASSETS - Beginning of Period................. 19,782,891 19,177,146 34,542,986 32,907,318 45,827,039
------------ ------------ ----------- ------------ -----------
NET ASSETS - End of Period....................... $18,264,919 $19,782,891 $33,743,305 $34,542,986 $45,914,685
------------ ------------ ----------- ------------ -----------
------------ ------------ ----------- ------------ -----------
SHARES
Sold........................................... 14,638,202 35,657,860 269,728 1,018,080 473,435
Issued in Reinvestment of Distributions........ 214,858 473,977 57,318 143,753 80,589
Redeemed....................................... (16,371,032) (35,526,092) (291,121) (1,009,987) (418,981)
------------ ------------ ----------- ------------ -----------
Net Increase (Decrease) in Shares.............. (1,517,972) 605,745 35,925 151,846 135,043
------------ ------------ ----------- ------------ -----------
------------ ------------ ----------- ------------ -----------
<CAPTION>
For the Year
Ended
December 31,
1998
------------
<S> <C>
FROM INVESTMENT
ACTIVITIES
Net Investment Income.......................... $ 2,115,375
Net Realized Gain (Loss) on Investment
Transactions................................. 98,804
Change in Net Unrealized Appreciation of
Investments.................................. 454,108
------------
Net Increase (Decrease) in Net Assets Resulting
from Operations.............................. 2,668,287
------------
DISTRIBUTIONS TO
SHAREHOLDERS
From Net Investment Income (Note 1)............ (2,115,375)
From Net Realized Gain......................... --
------------
Total Distributions to Shareholders............ (2,115,375)
------------
FROM SHARE
TRANSACTIONS
Net Proceeds from Sales of Shares.............. 8,091,036
Reinvestment of Distributions.................. 1,783,553
Cost of Shares Redeemed........................ (9,944,519)
------------
Net Increase (Decrease) in Net Assets Resulting
from Share Transactions...................... (69,930)
------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.......... 482,982
NET ASSETS - Beginning of Period................. 45,344,057
------------
NET ASSETS - End of Period....................... $45,827,039
------------
------------
SHARES
Sold........................................... 724,881
Issued in Reinvestment of Distributions........ 159,779
Redeemed....................................... (890,970)
------------
Net Increase (Decrease) in Shares.............. (6,310)
------------
------------
</TABLE>
See Notes to Financial Statements.
- 10 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
FINANCIAL HIGHLIGHTS
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
For the Six
Months Ended For the Years Ended December 31,
June 30, 1999 -----------------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
--------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value - Beginning of
Period.............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- --------- --------- --------- --------- ---------
Income from Investment Operations:
Net Investment Income............... 0.01 0.03 0.03 0.03 0.03 0.02
------- --------- --------- --------- --------- ---------
Total from Investment
Operations...................... 0.01 0.03 0.03 0.03 0.03 0.02
------- --------- --------- --------- --------- ---------
Distributions to Shareholders:
From Net Investment Income.......... (0.01) (0.03) (0.03) (0.03) (0.03) (0.02)
------- --------- --------- --------- --------- ---------
Total Distributions to
Shareholders.................... (0.01) (0.03) (0.03) (0.03) (0.03) (0.02)
------- --------- --------- --------- --------- ---------
Net Increase in Net Asset Value....... 0.00 0.00 0.00 0.00 0.00 0.00
------- --------- --------- --------- --------- ---------
Net Asset Value - End of Period....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- --------- --------- --------- --------- ---------
------- --------- --------- --------- --------- ---------
TOTAL INVESTMENT RETURN................. 2.39%(A) 2.73% 2.93% 2.69% 3.09% 2.02%
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................. 0.75%(A) 0.75% 0.75% 0.75% 0.75% 0.75%
Net Investment Income................. 2.38%(A) 2.70% 2.89% 2.67% 3.04% 1.99%
SUPPLEMENTARY DATA:
Net Assets at End of Period (in
thousands).......................... $ 18,265 $ 19,783 $ 19,177 $ 18,890 $ 20,772 $ 25,586
Number of Shares Outstanding at End of
Period (in thousands)............... 18,265 19,783 19,177 18,890 20,792 25,604
</TABLE>
- ---------
(A) Annualized
See Notes to Financial Statements.
- 11 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
FINANCIAL HIGHLIGHTS
VIRGINIA PORTFOLIO
<TABLE>
<CAPTION>
For the Six
Months Ended For the Years Ended December 31,
June 30, 1999 -----------------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
--------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value - Beginning of Period....... $ 11.42 $ 11.46 $ 11.09 $ 11.31 $ 10.36 $ 11.51
------- --------- --------- --------- --------- ---------
Income from Investment Operations:
Net Investment Income..................... 0.25 0.52 0.52 0.53 0.56 0.58
Net Realized and Unrealized Gain (Loss) on
Investments............................. (0.39) 0.12 0.39 (0.22) 0.95 (1.15)
------- --------- --------- --------- --------- ---------
Total from Investment Operations........ (0.14) 0.64 0.91 0.31 1.51 (0.57)
------- --------- --------- --------- --------- ---------
Distributions to Shareholders:
From Net Investment Income................ (0.25) (0.52) (0.52) (0.53) (0.56) (0.58)
From Net Realized Gain.................... -- (0.16) (0.02) -- -- --
------- --------- --------- --------- --------- ---------
Total Distributions to Shareholders..... (0.25) (0.68) (0.54) (0.53) (0.56) (0.58)
------- --------- --------- --------- --------- ---------
Net Increase (Decrease) in Net Asset
Value..................................... (0.39) (0.04) 0.37 (0.22) 0.95 (1.15)
------- --------- --------- --------- --------- ---------
Net Asset Value - End of Period............. $ 11.03 $ 11.42 $ 11.46 $ 11.09 $ 11.31 $ 10.36
------- --------- --------- --------- --------- ---------
------- --------- --------- --------- --------- ---------
TOTAL INVESTMENT RETURN....................... (1.29)%(A) 5.64% 8.45% 2.91% 14.92% (5.02)%
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................... 0.93%(B) 0.93% 0.93% 0.93% 0.77% 0.55%
Expenses Before Reimbursement from
Adviser................................... 0.93%(B) 0.93% 0.93% 0.93% 0.93% 0.93%
Net Investment Income....................... 4.39%(B) 4.48% 4.70% 4.84% 5.17% 5.35%
SUPPLEMENTARY DATA:
Portfolio Turnover Rate..................... 17% 25% 27% 46% 55% 33%
Net Assets at End of Period (in
thousands)................................ $ 33,743 $ 34,543 $ 32,907 $ 32,355 $ 33,468 $ 27,929
Number of Shares Outstanding at End of
Period (in thousands)..................... 3,060 3,024 2,872 2,917 2,958 2,697
</TABLE>
- ---------
(A) Total Investment Return for periods of less than one year are not
annualized.
(B) Annualized
See Notes to Financial Statements.
- 12 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
FINANCIAL HIGHLIGHTS
MARYLAND PORTFOLIO
<TABLE>
<CAPTION>
For the Six
Months Ended For the Years Ended December 31,
June 30, 1999 -----------------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
--------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value - Beginning of Period...... $ 11.23 $ 11.10 $ 10.79 $ 10.98 $ 10.11 $ 11.27
------- --------- --------- --------- --------- ---------
Income from Investment Operations:
Net Investment Income.................... 0.25 0.51 0.51 0.53 0.55 0.57
Net Realized and Unrealized Gain (Loss)
on Investments......................... (0.33) 0.13 0.31 (0.19) 0.87 (1.16)
------- --------- --------- --------- --------- ---------
Total from Investment Operations....... (0.08) 0.64 0.82 0.34 1.42 (0.59)
------- --------- --------- --------- --------- ---------
Distributions to Shareholders:
From Net Investment Income............... (0.25) (0.51) (0.51) (0.53) (0.55) (0.57)
------- --------- --------- --------- --------- ---------
Total Distributions to Shareholders.... (0.25) (0.51) (0.51) (0.53) (0.55) (0.57)
------- --------- --------- --------- --------- ---------
Net Increase (Decrease) in Net Asset
Value.................................... (0.33) 0.13 0.31 (0.19) 0.87 (1.16)
------- --------- --------- --------- --------- ---------
Net Asset Value - End of Period............ $ 10.90 $ 11.23 $ 11.10 $ 10.79 $ 10.98 $ 10.11
------- --------- --------- --------- --------- ---------
------- --------- --------- --------- --------- ---------
TOTAL INVESTMENT RETURN...................... (0.75)%(A) 5.90% 7.85% 3.21% 14.35% (5.24)%
RATIOS TO AVERAGE NET ASSETS:
Expenses................................... 0.93%(B) 0.93% 0.93% 0.93% 0.77% 0.55%
Expenses Before Reimbursement from
Adviser.................................. 0.93%(B) 0.93% 0.93% 0.93% 0.93% 0.93%
Net Investment Income...................... 4.50%(B) 4.58% 4.73% 4.92% 5.16% 5.36%
SUPPLEMENTARY DATA:
Portfolio Turnover Rate.................... 9% 5% 22% 31% 37% 38%
Net Assets at End of Period (in
thousands)............................... $ 45,915 $ 45,827 $ 45,344 $ 44,410 $ 49,725 $ 44,385
Number of Shares Outstanding at End of
Period (in thousands).................... 4,214 4,079 4,086 4,116 4,527 4,391
</TABLE>
- ---------
(A) Total Investment Return for periods of less than one year are not
annualized.
(B) Annualized
See Notes to Financial Statements.
- 13 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Fund for Tax-Free Investors, Inc. (the "Fund") is registered with the Securities
and Exchange Commission under the Investment Company Act of 1940 as a no-load,
open-end, investment company. The Fund consists of three separate portfolios
which invest primarily in securities exempt from Federal income taxes. On June
30, 1999, 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. Securities for which market
quotations are not readily available are valued at their fair value as
determined in good faith by the Board of Directors.
(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 six months ended June
30, 1999. 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
daily net assets of the Money Market Portfolio, and 0.30% of the average daily
net assets of the Virginia and Maryland
- 14 -
<PAGE>
Portfolios. The Fund has an agreement with Rushmore Trust to receive short-term
borrowings to cover share redemptions. No borrowings were outstanding at June
30, 1999.
3. SECURITIES TRANSACTIONS
Security transactions are recorded on the trade date. For the six months ended
June 30, 1999, purchases and sales (including maturities), of securities,
excluding short-term securities, were as follows:
<TABLE>
<CAPTION>
Virginia Maryland
Portfolio Portfolio
------------ ------------
<S> <C> <C>
Purchases................................................... $ 6,263,257 $ 4,143,443
------------ ------------
------------ ------------
Sales....................................................... $ 5,731,177 $ 4,517,862
------------ ------------
------------ ------------
</TABLE>
4. UNREALIZED APPRECIATION AND DEPRECIATION OF INVESTMENTS
As of June 30, 1999, net unrealized appreciation of investments in the Virginia
Portfolio for Federal income tax purposes aggregated $824,600 of which
$1,131,753 related to appreciated investments and $307,153 related to
depreciated investments. In the Maryland Portfolio, net unrealized appreciation
of investments for Federal income tax purposes totaled $1,554,705 of which
$1,753,517 related to appreciated investments and $198,812 related to
depreciated investments.
5. NET ASSETS
At June 30, 1999, net assets consisted of the following:
<TABLE>
<CAPTION>
Money Market Virginia Maryland
Portfolio Portfolio Portfolio
------------- ------------- -------------
<S> <C> <C> <C>
Paid-in-Capital............................................... $18,264,919 $ 32,868,606 $ 44,422,256
Accumulated Net Realized Gain (Loss) on Investments........... -- 50,099 (62,276)
Net Unrealized Appreciation of Investments.................... -- 824,600 1,554,705
------------- ------------- -------------
NET ASSETS.................................................... $18,264,919 $ 33,743,305 $ 45,914,685
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
6. CAPITAL LOSS CARRYOVERS
At December 31, 1998, for Federal income tax purposes, the following Portfolios
had capital loss carryforwards which may be applied against future net taxable
realized gains of each succeeding year until the earlier of its utilization or
its expiration:
<TABLE>
<CAPTION>
Maryland
Portfolio
----------
<S> <C>
Expires December 31, 2002................................................... $ 31,614
</TABLE>
- 15 -
<PAGE>
[LOGO]
Fund for Tax-Free Investors
Semiannual Report
June 30, 1999
