FUND FOR TAX FREE INVESTORS INC, 485BPOS, 1999-04-15

FUND FOR TAX FREE INVESTORS INC
485BPOS, 1999-04-15

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As Filed With The Securities And Exchange Commission on April 15, 1999.

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. 18 (X)
and/or

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

Amendment No. 18 (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)

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, 1999 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.

<PAGE>

CROSS REFERENCE SHEET

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

Part A. Information Required in Prospectus

1. Front and Back Cover Pages Front Cover Page of Prospectus;
Back Cover Page of Prospectus

2. Risk/Return Summary Risk and Return Summary

3. Risk/Return Summary: Fee Risk/Return Bar Chart and Table;
Table Performance Table; Fees and
Expenses

4. Investment Objectives, Investment Objectives, Principal
Principal Investment Investment Strategies, and Related
Strategies, and Related Risks Risks

5. Management's Discussion of Management Discussion of Fund
Fund Performance Performance: Performance
Comparison

6. Management, Organization, and Management, Organization, and
Capital Structure Capital Structure: Investment
Adviser; Year 2000 Preparations

7. Shareholder Information Shareholder Information: How to
Invest in the Fund; How to Redeem
Your Investment; Additional
Information About the Fund:
Exchanging Fund Shares; Pricing of
Fund Shares; Dividends and
Distributions; Tax Consequences of
Investing in the Fund

8. Distribution Arrangements Not Applicable

9. Financial Highlights Financial Highlights
Information

Part B: Information Required In
Statement of Additional Information

10. Cover Page and Table of Cover Page and Table of Contents
Contents

11. Fund History Not Applicable

12. Description of the Fund and Fund Description, Investments, and
Its Investments and Risks Risks; Investment Limitations

13. Management of the Fund Management of the Fund

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

15. Investment Advisory and Other Investment Advisory and Other
Services Services: Investment Adviser;
Custodian and Independent Public
Accountant

16. Brokerage Allocation and Other Brokerage Allocation and Other
Practices Practices

17. Capital Stock and Other Not Applicable
Securities

18. Purchase, Redemption and Purchase and Redemption of Shares
Pricing of Shares

19. Taxation of the Fund Taxation of the Fund

20. Underwriters Not Applicable

<PAGE>

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

21. Calculation of Performance Calculation of Performance Data:
Data Average Annual Total Return
Quotation; Computation of Yield

22. Financial Statements Financial Statements

Part C: Other Information

23. Exhibits Exhibits

24. Persons Controlled by or Under Persons Controlled by or Under
Common Control with the Fund Common Control with the Fund

25. Indemnification Indemnification

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

27. Principal Underwriters Not Applicable

28. Location of Accounts and Location of Accounts and Records
Records

29. Management Services Not Applicable

32. Undertakings Not Applicable

Signatures Signatures

<PAGE>

PART A

<PAGE>

FUND for TAX-FREE INVESTORS, INC.

Rushmore Tax-Free Money Market Portfolio

Prospectus
May 1, 1999

Fund for Tax-Free Investors, Inc. is a no-load investment company with
three separate portfolios. The Rushmore Tax-Free Money Market
Portfolio (the "Fund"), one of the three portfolios, is described in
this Prospectus.

This Prospectus contains important information about the Fund and
should be read before investing. Please keep the Prospectus on file
for future reference.

As with all mutual funds, the Securities and Exchange Commission has
not approved or disapproved of the Fund's shares or determined whether
this prospectus is truthful or complete. To state otherwise is a
crime.

<PAGE>

TABLE of CONTENTS

Page

Risk and Return Summary:
Investments, Risks, and Performance 3
Risk/Return Bar Chart and Table 3
Performance Table and Yields 4

Fees and Expenses 4

Investment Objectives, Principal Investment
Strategies, and Related Risks 5

Shareholder Information 6
How to Invest in the Fund 6
How to Redeem Your Investment 6

Additional Information About the Fund 8
Exchanging Fund Shares 8
Pricing of Fund Shares 8
Dividends and Distributions 8
Tax Consequences of Investing in the Fund 8

Management, Organization, and Capital Structure
9
Investment Adviser 9
Year 2000 Preparations 9

Financial Highlights 10

<PAGE>

RISK and RETURN SUMMARY
Investments, Risks, and Performance

Fund Investment Objective
Consistent with preservation of capital, the Rushmore Tax-Free Money
Market Portfolio seeks to provide investors with current income
derived from investments made principally in short-term municipal
securities exempt from federal income tax.

Principal Fund Investment Strategy
In attempting to achieve this objective, the Fund invests in short-
term high quality, tax-exempt municipal securities selected on the
basis of liquidity and safety of principal.

Principal Risks of Investing in the Fund
Because the Fund invests in municipal money market securities, the
Fund's performance may be affected by state and local economic
conditions and political developments, as well as the ability of
issuers to meet their obligations. Moreover, as a debt security,
municipal money market securities are effected by changing interest
rates. During a period of falling interest rates, it is likely that
debt securities will be prepaid, or "called", prior to maturity,
requiring the proceeds to be invested at a generally lower interest
rate.

An investment in the Fund is not a deposit of any bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. Although the Fund seeks to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in the Fund

Risk/Return Bar Chart and Tables
The chart and table below shows the annual calendar-year returns and
the performance of the Fund. The Fund commenced operations on
September 9, 1983, and has a fiscal year-end of December 31. The
information in the chart and the table provides some indication of the
risks of investing in the Fund by showing changes in Fund performance
from year to year.

The chart and the table below assume the reinvestment of dividends and
distributions. Please keep in mind that how the Fund has performed in
the past does not necessarily indicate how the Fund will perform in
the future.

[DELETED BAR CHART]

ANNUAL TOTAL RETURN CHART

5.76% 5.31% 4.01% 2.25% 1.66% 2.02% 3.09% 2.69% 2.93% 2.73%

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Best Quarter: 1.51% 2nd Qtr of 1989 Worst Quarter: 0.38% 1st Qtr of 1994

The Fund's year-to-date total return as of March 31, 1999 was 0.56%.

<PAGE>

Performance Table
Average Annual Total Returns
(for Periods Ended December 31, 1998)

One Year 2.73%
Five Years 2.69%
Ten Years 3.24%

Yields
(as of December 31, 1998)

Tax-Equivalent* 4.93%
7-Day 2.93%
7-Day Effective 2.98%

*Assuming a 39.6% tax bracket.

For current yield information please call 1-800-622-1386.

FEES and EXPENSES

This tables describes the fees and expenses that you may pay if you
buy and hold shares of the Fund. The following expenses are deducted
from Fund assets.

Annual Fund Operating Expenses

Management Fees 0.50%
Other Expenses 0.25%
------
Total Annual Fund Operating Expenses 0.75%
======

If your monthly account balance averages less than $500 you may be
charged a $5 fee.

Example

This Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Fund for the time
periods indicated below and then redeem all of your shares at the end
of those periods. The Example also assumes that your investment has a
5% return each year, that all dividends are reinvested, and that the
Fund's operating expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:

1 year 3 years 5 years 10 years
$ 77 $ 240 $ 417 $ 930

<PAGE>

INVESTMENT OBJECTIVES, PRINCIPAL
INVESTMENT STRATEGIES, and RELATED RISKS

Principal and Other Investment Strategies
In attempting to achieve its objective, the Fund will invest at least
80% of the value of its net assets in short-term, tax-exempt municipal
obligations which, at the time of purchase, are rated within the top
two grades assigned by Moody's Investors Service, Inc. or Standard &
Poor's Corporation. The Fund 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 Fund. The Fund will not, under normal
conditions, 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 Fund may also purchase new issues of municipal securities on a
"when issued" basis; that is, at the time of the purchase commitment,
both the interest and principal amount are fixed and payment and
delivery of the securities normally occurs in 15 to 45 days. The Fund
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 Fund does not
intend to invest more than 25% of its net assets in these securities.

Although it is the intention of the Fund to invest all of its assets
in municipal securities, market conditions may arise that limit the
availability of such obligations. During such periods, the Fund may
invest up to 20% of its assets in short-term, taxable obligations of
the United States government, federal agencies and government-
sponsored enterprises, or in repurchase agreements secured by such
securities (although the Fund has never invested in repurchase
agreements and has no intentions of doing so). The Fund 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. Additionally, the Fund may invest up to 20% of
its net assets in securities that are subject to the alternative
minimum tax.

The Portfolio may also 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 Fund's portfolio even though they
may have a maturity which is greater than one year. Investment in
these securities will be made only if a secondary market for them
exists or if the Fund may redeem them on demand within seven days.

Risks of Investing in the Fund
Because the Fund invests in municipal money market securities, the
Fund's performance may be affected by state and local economic
conditions and political developments, as well as the ability of
issuers to meet their obligations.

During the period between the purchase commitment of a "when issued"
security and actual delivery, no interest accrues to the purchaser and
the market value of the security may fluctuate (although the Fund
intends to take immediate delivery of these securities upon purchase).

Although the Fund invests in variable rate securities that entitle the
Fund to demand repayment in full (thus reducing credit risk), the
demand feature is not always unconditional and may make the securities
more difficult to sell quickly or without loss. Moreover, as a debt
security, municipal money market securities are effected by changing
interest rates. During a period of falling interest rates, it is
likely that debt securities will be prepaid, or "called", prior to
maturity, requiring the proceeds to be invested at a generally lower
interest rate.

<PAGE>

SHAREHOLDER INFORMATION

How to Invest In The Fund

Facts To Know Before You Invest
- The minimum initial investment is $2,500
- There are no minimum amounts for subsequent investments
- There are no sales charges
- The Fund reserves the right to reject any purchase order
- All shares are electronically recorded; the Fund will not issue
certificates
- A $10 fee may be charged for items returned for insufficient or
uncollectible funds
- The securities market, in which the Fund buys and sells its
securities, usually requires settlement in Federal funds for all
transactions. Payments received by bank wire can be converted
immediately into Federal funds and will begin earning dividends the
same day provided the order was received prior to 12 Noon, Eastern
time. Payment for the purchase of Fund shares not received in the
form of Federal funds (i.e., by check) will normally begin earning
dividends within two business days.

Purchasing Shares:

By Mail
Complete an application and make a check payable to "Fund for Tax-
Free Investors, Inc." Send your completed and signed application
and check drawn on a U.S. bank to:

Fund for Tax-Free Investors, Inc.
4922 Fairmont Avenue
Bethesda, Maryland 208l4

By Bank Wire
Speak to the branch manager of your bank. Request a transfer of
Federal funds to Rushmore Trust and Savings, FSB, instructing the
bank to wire transfer the money before 12:00 Noon, Eastern time to:

Rushmore Trust and Savings, FSB
Bethesda, Maryland
Routing # 0550-71084

Specify the Fund name, your account number (if assigned), and the
name(s) in which the account is registered.

After instructing your bank to transfer Federal funds, you must
telephone Shareholder Services at (800) 622-1386 or (301) 657-1510
between 8:30 A.M. and 12:00 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 its services. Remember
that it is important to complete the wire transfer before 12:00
Noon Eastern time.

Through Brokers
You may invest in the Fund by purchasing shares through registered
broker-dealers, banks or other financial institutions that purchase
securities for their customers. Please note that such third
parties may charge a fee for their services.

How To Redeem Your Investment

Redeeming Shares:

<PAGE>

By Telephone
Contact Shareholder Services at 1-800-622-1386
between the hours of 8:30 A.M. and 4:30 P.M., Eastern time

For your protection, we will take measures to verify your identity
by requiring some form of personal identification prior to acting
on telephone instructions and may also record telephone
transactions. A written confirmation will be mailed to you within
five business days after your redemption. Please note that we may
terminate or modify telephone redemption privileges upon 60 days
notice.

By Mail or Fax
Mail your instructions for Fax your instructions for
redemption to: redemption to:

Rushmore Trust and Savings, FSB (301) 657-1520
4922 Fairmont Avenue Attn: Shareholder Services
Bethesda, MD 20814
Attn: Shareholder Services

Include the following information in your redemption request:
- the name of the Fund and account number you are redeeming from;
- your name(s) and address as it appears on your account;
- the dollar amount or number of shares you wish to redeem;
- your signature(s) as it appears on your account; and
- a daytime telephone number.

Additional Information You Should Know When You Redeem:

- There are no fees charged for redemptions.

- You may receive redemption proceeds by bank wire, check, or
through the Automated Clearing House System (ACH). When the amount
to be redeemed is at least $5,000, we will, upon instruction, wire
transfer the amount to your commercial bank or brokerage account
specified in your account application. For amounts less than
$5,000, you may have redemption proceeds deposited directly into an
account specified on the account application or request that a
redemption check be delivered by mail to your address of record.

- If you request payment of redemptions to a third party or to a
location other than an address on record, the request must be in
writing and your 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, payment for all shares redeemed will be issued within
one business day. However, withdrawal requests on investments that
have been made by check may be delayed up to ten calendar days
following the investment or until the check clears, whichever
occurs first. This delay is necessary to assure us that investments
made by check are good funds. You will receive redemption proceeds
promptly upon confirmation of receipt of good funds.

- If your monthly account balance averages less than $500 you may
be charged a $5 fee. The fee will not be imposed on accounts
established under the Uniform Gifts or Transfers to Minors Acts.
Additionally, we reserve the right to involuntarily redeem accounts
which fall below $500 after providing 60 days written notice.

- The right of redemption may be suspended, or the date of payment
postponed during the following periods: (a) periods during which
the New York Stock Exchange (NYSE) is closed (other than customary
weekend or holiday closings); (b) periods when trading on the NYSE
is restricted, or an emergency exists, as determined by the
Securities and Exchange Commission, so that disposal of the Fund's
investments or 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 Fund's investors.

<PAGE>

ADDITIONAL INFORMATION ABOUT THE FUND

Exchanging Fund Shares
You may exchange shares of the Fund, without cost, for shares of any
of the following Rushmore Funds: Fund for Government Investors,
American Gas Index Fund, U.S. Government Bond Portfolio, Maryland Tax-
Free Portfolio, or the Virginia Tax-Free Portfolio. You may also
exchange shares of the Fund for shares of the Cappiello-Rushmore
Emerging Growth, Growth and Utility Income Funds. The fund you are
exchanging into must be available for sale in your state and the
registration for both accounts must be identical. You should obtain a
current prospectus for the fund into which you are exchanging by
calling 1-800-343-3355. Exchanges will be effected at the respective
net asset values of the Funds involved as next determined after
receipt of the exchange request. The Fund may change or cancel their
exchange policies at any time, upon 60 days' notice to shareholders.

Pricing of Fund Shares
The price of a fund's shares on any given day is its net asset value
per share. This figure is computed by dividing the total amortized
value (which approximates market value) of the Fund's investments and
other assets, less any liabilities, by the number of fund shares
outstanding. The net asset value per share of the Fund is determined
as of 12:00 Noon Eastern time on days when the New York Stock Exchange
and the custodian bank are open for business.

The value of the Fund's portfolio of securities is determined on the
basis of fair value as determined in good faith by the Fund's
Directors. In determining fair value, the Fund uses the amortized
cost method of valuing the securities in its portfolio, which method
involves valuing a security at its cost adjusted by a constant
amortization to maturity of any discount or premium, regardless of the
impact of fluctuating interest rates on the market value of the
instrument. The purpose of this method of calculation is to
facilitate the maintenance of a constant Fund net asset value per
share of $1.00. Since the Fund commenced operations in 1983, it has
had a constant net asset value of $1.00; however, there is no
assurance the $1.00 net asset value will be maintained.

Dividends and Distributions
Dividends of the Fund are declared each day the Fund is open for
business and paid monthly. Dividends of the Fund will automatically
be reinvested in additional shares (including fractional shares where
necessary) unless you elect to receive the dividends in cash.
Dividends paid in cash to those investors so electing will be mailed
on the second business day of the following month. Account statements
showing dividends paid will be mailed to shareholders monthly.

Net income of the Fund shall consist of all interest income accrued
and discount earned, plus or minus any realized gains or losses, less
estimated expenses of the Fund. The Fund does not expect to realize
any long-term capital gains.

"Undeliverable" or "Uncashed" Dividend Checks
If you elect to receive dividends and distributions in cash and the
payment (1) is returned and marked as "undeliverable" or (2)
remains uncashed for six months, your cash election will be changed
automatically and future dividends will be reinvested in the Fund
at the per share net asset value determined as of the date of
payment (normally $1.00). In addition, any undeliverable checks or
checks that remain uncashed for six months will be canceled and
then reinvested in the Fund at the per share net asset value
determined as of the date of cancellation (normally $1.00).

Tax Consequences of Investing
Taxability of Distributions
As long as the Fund meets the requirements for being tax-qualified
regulated investment company, which the Fund intends to do, the
Fund pays no federal income tax on the earnings distributed to
shareholders. As a result, dividends and any short-term capital
gains you receive, whether reinvested or taken as cash, are
generally considered taxable as ordinary income. The Form 1099 that
is mailed to you each January details your dividends and their
federal tax category, although you should verify your tax liability
with your tax professional.

<PAGE>

Taxability of Transactions
Any time you sell or exchange shares of the Fund, it is considered
a taxable event for you. For example, if you exchange shares of
the Fund for shares of another Rushmore or Cappiello-Rushmore fund,
the transaction would be treated as a sale. Consequently, any gain
resulting from the transaction would be subject to federal income
tax.

Shareholders are required by law to certify that their tax
identification number is correct and that they are not subject to
back-up withholding. In the absence of this certification, the
Fund is required to withhold taxes at the rate of 31% on
dividends, capital gains distributions, and redemptions.
Shareholders who are non-resident aliens may be subject to a
withholding tax on dividends earned.

MANAGEMENT, ORGANIZATION and CAPITAL STRUCTURE

Investment Adviser
Money Management Associates ("Adviser"), 100 Lakeshore Drive, Suite
1555, North Palm Beach, Florida 33408, has served as the Fund's
investment adviser since the Fund commenced operations on September 9,
1983. Established in 1974, the Adviser manages six no-load mutual
funds (including the Fund) with total assets under management of
approximately $900 million.

Subject to the general supervision of the Board of Directors of the
Fund, the Adviser manages the investment and reinvestment of the
assets of the Fund and is responsible for the overall management of
the Fund's business affairs. An Adviser Group makes investment
decisions; therefore, no one person is primarily responsible for
making investment decisions. For the advisory services performed, the
Adviser received 0.50% of the average net assets of the Fund for the
fiscal year ended December 31, 1998.

Year 2000 Preparations
The day-to-day operations of the Fund are dependent upon the Fund's
service providers, principally the Adviser, Rushmore Trust and
Savings, FSB and Rushmore Services, Inc. (collectively, the
"Servicers"), and upon the smooth functioning of the computer systems
that they utilize. Many computer systems currently cannot properly
recognize or process date-sensitive information relating to the year
2000 and beyond. Like other mutual funds and financial and business
organizations around the world, the Fund, therefore, could be
adversely affected if the computer systems used by these Servicers,
and their vendors, do not properly process and calculate date-related
information and data on and after January 1, 2000. The Servicers have
been evaluating the impact that the year 2000 issue may have on the
computer systems that they utilize and are making appropriate
modifications to these systems in order to assure that they will be
prepared for the year 2000. The Fund and the Servicers expect that
any further modifications to their computer systems necessary to
address the year 2000 issue will be made and tested in a timely
manner. The Servicers also are working with their outside vendors,
and other persons whose systems are linked to those of the Fund and
the Servicers, to obtain satisfactory assurances regarding the year
2000 issue. The costs of this systems remediation will not be paid
directly by the Fund. Inadequate remediation could have an adverse
effect on the Fund's operations, including pricing and securities
trading and settlement, and the provision of shareholder services.
Although, at this time, there can be no assurance that the remedial
action taken by the Servicers will be sufficient or timely, the
Servicers do not anticipate that the transition to the 21st century
will have a material impact on the ability of the Servicers to
continue to service the Fund at current levels.

<PAGE>

FINANCIAL HIGHLIGHTS

The following financial highlights table is intended to help you
understand the Fund's financial performance for the past 5 years.
Certain information reflects financial results for a single Fund
share. The total returns in the table represent the rate that you
would have earned (or lost) on an investment in the Fund (assuming
reinvestment of all dividends and distributions). This information has
been audited by Deloitte & Touche LLP, whose report, along with the
Fund's financial statements, is included in the annual report, which
is available upon request.

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

1998 1997 1996 1995 1994
<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 0.03 0.03 0.03 0.03 0.02
-------- -------- -------- -------- --------
Total from Investment Operations 0.03 0.03 0.03 0.03 0.02
-------- -------- -------- -------- --------
Distributions to Shareholders:
Dividends (from net investment income) (0.03) (0.03) (0.03) (0.03) (0.02)
-------- -------- -------- -------- --------
Total Distributions to Shareholders (0.03) (0.03) (0.03) (0.03) (0.02)
-------- -------- -------- -------- --------
Net Asset Value, End of Year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Investment Return 2.73% 2.93% 2.69% 3.09% 2.02%
Ratios and Supplemental Data:
Net Assets at End of Year (in thousands) $19,783 $19,177 $18,890 $20,772 $25,586
Ratio of Expenses to Average Net Assets 0.75% 0.75% 0.75% 0.75% 0.75%
Ratio of Net Income to Average Net Assets 2.70% 2.89% 2.67% 3.04% 1.99%

</TABLE>

<PAGE>

In addition to this prospectus, the following information is available
to assist you in making an investment decision:

Information Available Upon Request Description

Statement of Additional Information A document that includes additional
information about the Fund.

Annual and Semiannual Reports Reports that contain information
about the Fund's investments. The
reports also discuss the market
conditions and investment strategies
that significantly affected the
Fund's performance during its last
fiscal year.

There are a variety of ways to receive the above information and make
other inquiries of the Fund. You may contact the Fund directly by
telephone at 1-800-343-3355, visit our internet site at
http://www.rushmorefunds.com, or you may send a written request to the
Fund's offices at 4922 Fairmont Avenue, Bethesda, Maryland 20814.
Additional information about the Fund can also be reviewed and copied
at the Securities and Exchange Commission's Public Reference Room in
Washington D.C. (for hours of operation please call the Commission at
1-800-SEC-0330). You may also obtain copies of the information by
visiting the Commission's internet site at http://www.sec.gov, or,
upon payment of a duplicating fee, by writing the Public Reference
Section of the Commission at 450 Fifth Street, N.W. Washington, D.C.
20549.

Fund for Tax-Free Investors, Inc. Investment Company Act File No. 811-3720

<PAGE>

FUND for TAX-FREE INVESTORS, INC.

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

Prospectus
May 1, 1999

Fund for Tax-Free Investors, Inc. is a no-load investment company with
three separate portfolios. Two of the portfolios, the Rushmore
Maryland Tax-Free Portfolio ("Maryland Portfolio") and the Rushmore
Virginia Tax-Free Portfolio ("Virginia Portfolio") are described in
this Prospectus.

This Prospectus contains important information about the Maryland and
Virginia Portfolios (the "Funds") and should be read before investing.
Please keep the Prospectus on file for future reference.

<PAGE>

TABLE of CONTENTS

Page

Risk and Return Summary:
Investments, Risks, and Performance
Risk/Return Bar Chart and Table
Performance Table

Fees and Expenses

Investment Objectives, Principal Investment
Strategies, and Related Risks
Maryland Tax-Free Portfolio
Virginia Tax-Free Portfolio

Management's Discussion of Fund Performance
Performance Comparison

Shareholder Information
How to Invest in the Funds
How to Redeem Your Investment

Additional Information About the Fund
Exchanging Fund Shares
Pricing of Fund Shares
Dividends and Distributions
Tax Consequences of Investing in the Funds

Management, Organization, and Capital
Structure
Investment Adviser
Year 2000 Preparations

Financial Highlights
Maryland Tax-Free Portfolio
Virginia Tax-Free Portfolio

<PAGE>

RISK and RETURN SUMMARY
Investments, Risks, and Performance

Maryland Tax-Free Portfolio

Fund Investment Objective
The Maryland Tax-Free Portfolio seeks to provide investors with
income derived from investments exempt from federal and Maryland
state and local income taxes, including the individual alternative
minimum tax.

Principal Fund Investment Strategy
In attempting to achieve this objective, the Fund invests
principally in long-term, investment grade tax-exempt securities
issued by the State of Maryland, its political subdivisions and
other issuers exempt from Maryland state income tax.

Principal Risks of Investing in the Fund
Because the Fund is non-diversified, investing solely in securities
issued by the State of Maryland and its political subdivisions, the
Fund's performance may be affected by Maryland state and local
economic conditions and political developments, as well as the
ability of issuers to meet their obligations. Moreover, because
the Fund invests in debt securities, it is effected by changing
interest rates. During a period of falling interest rates, it is
likely that debt securities will be prepaid, or "called", prior to
maturity, requiring the proceeds to be invested at a generally
lower interest rate. Moreover, the decline in bond prices that
usually accompanies an interest rate increase can effect the Fund.
Longer maturity bonds generally suffer greater declines than those
with shorter maturities.

Virginia Tax-Free Portfolio

Fund Investment Objective
The Virginia Tax-Free Portfolio seeks to provide investors with
income derived from investments exempt from federal and Virginia
state and local income taxes, including the individual alternative
minimum tax.

Principal Fund Investment Strategy
In attempting to achieve this objective, the Fund invests
principally in long-term, investment grade tax-exempt securities
issued by the Commonwealth of Virginia, its political subdivisions
and other issuers exempt from Virginia state income tax.

Principal Risks of Investing in the Fund
Because the Fund is non-diversified, investing solely in securities
issued by the Commonwealth of Virginia and its political
subdivisions, the Fund's performance may be affected by Virginia
state and local economic conditions and political developments, as
well as the ability of issuers to meet their obligations.
Moreover, because the Fund invests in debt securities, it is
effected by changing interest rates. During a period of falling
interest rates, it is likely that debt securities will be prepaid,
or "called", prior to maturity, requiring the proceeds to be
invested at a generally lower interest rate. Moreover, the decline
in bond prices that usually accompanies an interest rate increase
can effect the Fund. Longer maturity bonds generally suffer
greater declines than those with shorter maturities.

Loss of money is a risk of investing in the Maryland and Virginia Tax-
Free Portfolios. An investment in the Funds is not a deposit of any
bank and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.

Risk/Return Bar Chart and Table
The chart and table below shows the annual calendar-year returns and
the performance of the Funds. The Funds commenced operations on
September 9, 1983, and have a fiscal year-end of December 31. The
information in the chart and the table provides some indication of the
risks of investing in the Funds by showing changes in the Funds'
performance from year to year.

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The chart and the table below assume the reinvestment of dividends and
distributions. Please keep in mind that how the Funds have performed
in the past does not necessarily indicate how the Funds will perform
in the future.

[DELETED BAR CHART]

<TABLE>

ANNUAL TOTAL RETURN CHART

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maryland Tax-Free
Portfolio 6.68% 2.89% 10.24% 8.00% 11.91% -5.24% 14.35% 3.21% 7.85% 5.90%

Virginia Tax-Free
Portfolio 7.95% 4.42% 10.85% 7.98% 11.80% -5.02% 14.92% 2.91% 8.45% 5.64%

</TABLE>

Maryland Tax-Free
Portfolio Best Quarter: 7.75% 3rd Qtr of 1984
Worst Quarter: (6.40)% 2nd Qtr of 1984
The Fund's year-to-date total return as of March 31, 1999 was 0.57%.

Virginia Tax-Free
Portfolio Best Quarter: 6.55% 4th Qtr of 1985
Worst Quarter: (4.71)% 1st Qtr of 1994
The Fund's year-to-date total return as of March 31, 1999 was 0.55%.

Performance Table
Average Annual Total Returns
(for Periods Ended December 31, 1998)

Maryland Virginia Lehman Brothers
Tax-Free Tax-Free Municipal Bond
Portfolio Portfolio Index
One Year 5.90% 5.64% 6.48%
Five Years 5.00% 5.17% 6.22%
Ten Years 6.44% 6.86% 8.22%

<PAGE>

FEES and EXPENSES

This tables describes the fees and expenses that you may pay if you
buy and hold shares of the Funds. The following expenses are deducted
from Fund assets.

Maryland Virginia
Portfolio Portfolio
Annual Fund Operating Expenses

Management Fees 0.625% 0.625%
Other Expenses 0.300% 0.300%
------ ------
Total Annual Fund Operating Expenses 0.925% 0.925%
====== ======

If your monthly account balance averages less than $500 due to
redemptions you may be charged a $5 fee.

Example

This Example is intended to help you compare the cost of investing in
the Funds with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Funds for the time
periods indicated below and then redeem all of your shares at the end
of those periods. The Example also assumes that your investment has a
5% return each year, that all dividends are reinvested, and that the
Funds' operating expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:

1 Year 3 Years 5 Years 10 Years
Maryland Portfolio $94 $295 $512 $1,137
Virginia Portfolio $94 $295 $512 $1,137

INVESTMENT OBJECTIVES, PRINCIPAL
INVESTMENT STRATEGIES, and RELATED RISKS

Maryland Tax-Free Portfolio

Principal and Other Investment Strategies
In managing its portfolio, the Fund considers economic conditions
and interest rate trends in determining what securities to
purchase. The Fund seeks to achieve its investment objective by
investing at least 80% of its net assets under normal conditions
in securities issued by the State of Maryland, its political
subdivisions, agencies and instrumentalities exempt from Maryland
state income tax. The Fund will generally invest in long-term
investment grade securities (i.e., securities rated in the top
four rating categories established by nationally recognized rating
organizations), and may also invest in either general obligation
or revenue bonds. The average portfolio maturity will ordinarily

<PAGE>

exceed ten years; however, when, in the opinion of the Adviser, it
is in the best interest of shareholders, the average maturity may
be reduced to less than ten years. The Fund 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 Fund. Additionally, the Fund may purchase securities that are
rated below investment grade; such purchases will be limited to 5%
of net assets.

Although the Fund seeks to invest its net assets in securities
described in the preceding paragraph, market conditions may
occasionally limit the availability of such obligations. During
such periods, the Fund will seek to invest in municipal
obligations, the interest on which may be subject to personal
income taxes in your state of residence. Also, as a temporary
defensive measure or to provide liquidity, the Fund may hold up to
30% of its total assets in obligations issued or guaranteed by the
U.S. government, its agencies or government sponsored enterprises
or repurchase agreements secured by such securities. Income from
such securities may be taxable for federal and state income tax
purposes. (Please note that the Fund has never invested in
repurchase agreements and has no intentions of doing so.)
Additionally, the Fund may invest up to 20% of its net assets in
securities that are subject to the alternative minimum tax.

The Fund may also purchase new issues of municipal securities on a
"when issued" basis; that is, at the time of the purchase
commitment, both the interest and principal amount are fixed and
payment and delivery of the securities normally occurs in 15 to 45
days. The Fund 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 Fund does not intend to invest more than 25% of its
net assets in these securities.

The Fund may also 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.
Investment in these securities will be made only if the Fund may
redeem them on demand within seven days.

Risks of Investing in the Fund
Since the Fund intends to invest only in the securities of the
State of Maryland, the Fund may be affected by state and local
economic conditions and political developments, and may be subject
to greater market or credit risk than if the securities purchased
by the Fund were more geographically diversified. Furthermore, as
a debt security, municipal securities are effected by changing
interest rates. During a period of falling interest rates, it is
likely that debt securities will be prepaid, or "called", prior to
maturity, requiring the proceeds to be invested at a generally
lower interest rate.

During the period between the purchase commitment of a "when
issued" security and actual delivery, no interest accrues to the
purchaser and the market value of the security may fluctuate
(although the Fund intends to take immediate delivery of these
securities upon purchase).

Virginia Tax-Free Portfolio

Principal and Other Investment Strategies
In managing its portfolio, the Fund considers economic conditions
and interest rate trends in determining what securities to
purchase. The Fund seeks to achieve its investment objective by
investing at least 80% of its net assets under normal conditions
in securities issued by the Commonwealth of Virginia, its
political subdivisions, agencies and instrumentalities and other
issuers exempt from Virginia state income tax. The Fund will
generally invest in long-term investment grade securities (i.e.,
securities rated in the top four rating categories established by

<PAGE>

nationally recognized rating organizations), and may also invest
in either general obligation or revenue bonds. The average
portfolio maturity will ordinarily exceed ten years; however,
when, in the opinion of the Adviser, it is in the best interest of
shareholders, the average maturity may be reduced to less than ten
years. The Fund 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 Fund. Additionally, the Fund may
purchase securities that are rated below investment grade; such
purchases will be limited to 5% of net assets.

The Fund may also purchase new issues of municipal securities on a
"when issued" basis; that is, at the time of the purchase
commitment, both the interest and principal amount are fixed and
payment and delivery of the securities normally occurs in 15 to 45
days. The Fund 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 Fund does not intend to invest more than 25% of its
net assets in these securities.

Risks of Investing in the Fund
Since the Fund intends to invest only in the securities of the
Commonwealth of Virginia, the Fund may be affected by state and
local economic conditions and political developments, and may be
subject to greater market or credit risk than if the securities
purchased by the Fund were more geographically diversified.
Furthermore, as a debt security, municipal securities are effected
by changing interest rates. During a period of falling interest
rates, it is likely that debt securities will be prepaid, or
"called", prior to maturity, requiring the proceeds to be invested
at a generally lower interest rate.

During the period between the purchase commitment of a "when
issued" security and actual delivery, no interest accrues to the
purchaser and the market value of the security may fluctuate
(although the Fund intends to take immediate delivery of these
securities upon purchase).

MANAGEMENT'S DISCUSSION of FUND PERFORMANCE

Interest rates continued to fall during 1998 as inflation remained
relatively nonexistent throughout the year. The yield on the
benchmark 30-year Treasury was lower by over 80 basis points ending
the year yielding 5.08%, and 30-year AAA municipal yields declined by
approximately ten basis points and closed the year at 4.94%. The
Federal Reserve lowered the overnight Federal Funds rate a total of 75
basis points to 4.75%.

<PAGE>

markets to begin to deteriorate and credit spreads to widen as
investors turned their backs on risky investments. The Federal
Reserve cut the Fed Funds rate 25 basis points three different times
during late 1998, in an attempt to calm fears that this foreign
financial turmoil could lead to a recession in the U.S. economy. The
easing of monetary policy succeeded in putting investors at ease and
the financial markets were able to stabilize.

Municipal bonds had another positive year, with the greatest increases
occurring in securities with ten years or less to maturity.
Municipals, however, were unable to keep up with the stunning
performance of Treasuries. Yields on Treasury securities dropped
significantly due to several factors, the most notable being: low
inflation, flight-to-safety caused by instability in the financial
markets, and an increased budget surplus resulting in less need for
the Treasury to borrow (i.e., less supply). The under-performance by
municipals has resulted in them remaining "cheap" relative to their
Treasury counterparts, in relation to their historical percentages.
Even though municipals offer an attractive investment on a relative
basis, demand has remained weak. For many investors the focus has
returned back to equities, their confidence having been restored
after performance in the stock markets picked up following the Fed
intervention on short-term rates.

What happens in the year ahead will be dictated primarily by how the
current financial situation in the various troubled foreign economies
plays out. If the international financial woes persist we could see
deflationary pressures remain in the picture leading to possible
further rate cuts by the Federal Reserve. Further rate cuts should
lead to lower yield and higher prices for bonds. On the other hand,
should these economies rebound we would probably see the ugly head of
inflation creep back onto the radar screen of the financial markets.
Inflationary fears would at best put a halt to further advances in the
bond markets, but at worst lead to a tightening in monetary policy,
higher interest rates and lower bond prices.

We believe a scenario closer to the former to be the case in the
coming year. Our economy should slow down from the pace it has
exhibited over the last several years, as the affect of troubled
foreign economies continues to put the brakes on the economy here in
the United States. This moderation of the economy will keep inflation
in check and low interest rates will remain the trend in 1999. We
think the Fed is finished for the time being, however, lowering short-
term interest rates so as not to unnecessarily jump-start inflationary
pressures.

Municipals are poised technically to perform well due to their high
ratios relative to Treasuries, as well as the forecast for lower
issuance of new securities in the year ahead. The relative value of
municipals leaves room for strong performance should investors begin
to divest from equities and into debt securities. If the low interest
rate environment holds for 1999 as we think it should, municipals will
have another positive year as they come back in line with historical
spreads to Treasuries.

Performance Comparison
Assuming a $10,000 initial investment, the following graph compares
each Fund's total return to the performance of the Lehman Brothers
Municipal Bond Index since the Funds began operating on September 9,
1983. Please remember that past performance does not necessarily
reflect how the Funds may perform in the future.

<PAGE>

[DELETED LINE GRAPH]

Account Value
Total Return Lehman Brothers Virginia Tax-Free Maryland Tax-Free
(as of) Muni Bond Index Portfolio Portfolio
12/31/88 $10,000 $10,000 $10,000
12/31/89 $11,079 $10,795 $10,668
12/31/90 $11,887 $11,272 $10,976
12/31/91 $13,330 $12,495 $12,100
12/31/92 $14,504 $13,492 $13,068
12/31/93 $16,287 $15,084 $14,625
12/31/94 $15,445 $14,327 $13,858
12/31/95 $18,140 $16,465 $15,847
12/31/96 $18,943 $16,944 $16,356
12/31/97 $20,684 $18,376 $17,640
12/31/98 $22,024 $19,412 $18,680

Average Annual Total Returns as of December 31, 1998

Maryland Virginia Lehman Brothers
Tax-Free Tax-Free Municipal Bond
Portfolio Portfolio Index
One Year 5.90% 5.64% 6.48%
Five Years 5.00% 5.17% 6.22%
Ten Years 6.44% 6.86% 8.22%

<PAGE>

SHAREHOLDER INFORMATION

How to Invest In The Funds

Facts To Know Before You Invest:
- The minimum initial investment is $2,500
- There are no minimum amounts for subsequent investments
- There are no sales charges
- The Funds reserve the right to reject any purchase order
- All shares are electronically recorded; the Funds will not issue
certificates
- A $10 fee may be charged for items returned for insufficient or
uncollectible funds
- The securities market, in which the Funds buy and sell their
securities, usually requires settlement in Federal funds for all
transactions. Payments received by bank wire can be converted
immediately into Federal funds and will begin earning dividends the
same day provided the order was received prior to 4:00 P.M.,
Eastern time. Payment for the purchase of each Fund's shares not
received in the form of Federal funds (i.e., by check) will
normally begin earning dividends within two business days.

Purchasing Shares:

By Mail
Complete an application, specifically noting which Fund into which
you are investing, and make a check payable to "Fund for Tax-Free
Investors, Inc." Send your completed and signed application and
check drawn on a U.S. bank to:

Fund for Tax-Free Investors, Inc.
4922 Fairmont Avenue
Bethesda, Maryland 208l4

Rushmore Trust and Savings, FSB
Bethesda, Maryland
Routing # 0550-71084

Specify the Fund name, your account number (if assigned), and the
name(s) in which the account is registered.

After instructing your bank to transfer Federal funds, you must
telephone Shareholder Services 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 its services. Remember that it is
important to complete the wire transfer before 4:00 P.M. Eastern
time.

Through Brokers
You may invest in the Funds by purchasing shares through registered
broker-dealers, banks or other financial institutions that purchase
securities for their customers. Please note that such third
parties may charge a fee for their services.

How To Redeem Your Investment

Redeeming Shares:

<PAGE>

By Telephone
Contact Shareholder Services at 1-800-622-1386
between the hours of 8:30 A.M. and 4:30 P.M., Eastern time

By Mail or Fax

Mail your instructions for Fax your instructions for
redemption to: redemption to:

Rushmore Trust and Savings, FSB (301) 657-1520
4922 Fairmont Avenue Attn: Shareholder Services
Bethesda, MD 20814
Attn: Shareholder Services

Additional Information You Should Know When You Redeem:

- There are no fees charged for redemptions.

- If your monthly account balance averages less than $500 due to
redemptions you may be charged a $5 fee. The fee will not be
imposed on accounts established under the Uniform Gifts or
Transfers to Minors Acts. Additionally, we reserve the right to
involuntarily redeem accounts which fall below $500 after providing
60 days written notice.

<PAGE>

ADDITIONAL INFORMATION ABOUT THE FUND

Exchanging Fund Shares
You may exchange shares of the Funds, without cost, for shares of any
of the following Rushmore Funds: Fund for Government Investors,
American Gas Index Fund, U.S. Government Bond Portfolio, or the Tax-
Free Money Market Portfolio. You may also exchange shares of the
Funds for shares of the Cappiello-Rushmore Emerging Growth, Growth and
Utility Income Funds. The fund you are exchanging into must be
available for sale in your state and the registration for both
accounts must be identical. You should obtain a current prospectus
for the fund into which you are exchanging by calling 1-800-343-3355.
Exchanges will be effected at the respective net asset values of the
Funds involved as next determined after receipt of the exchange
request. The Maryland and Virginia Portfolios may change or cancel
their exchange policies at any time, upon 60 days' notice to
shareholders.

Pricing of Fund Shares
The price of a fund's shares on any given day is its net asset value
per share. This figure is computed by adding the appraised value of
all securities and all other assets, deducting liabilities and
dividing by the number of shares outstanding. The net asset value per
share of the Funds is determined as of 4:00 P.M. Eastern time on days
when the New York Stock Exchange and the bond markets are open for
trading.

The securities of each Fund will be valued on the basis of the mid-
point of quoted bid and ask prices when market quotations are
available. In the absence of readily available market quotations,
securities will be valued in good faith based on fair value as
determined by the Board of Directors. In determining fair market
value, prices are supplied by an independent pricing service.

Dividends and Distributions
Dividends of the Funds are declared each day the Funds are open for
business and paid monthly. Capital gains, if any, will be distributed
on an annual basis usually in November of December. Fund
distributions will automatically be reinvested in additional shares
(including fractional shares where necessary) unless you elect to
receive them in cash. Distributions paid in cash to those investors so
electing will be mailed on the second business day of the following
month. Account statements showing dividends paid will be mailed to
shareholders monthly.

Net income of the Funds shall consist of all interest income accrued
and discount earned, plus or minus any realized gains or losses, less
estimated expenses of the Funds.

"Undeliverable" or "Uncashed" Dividend Checks
If you elect to receive dividends and distributions in cash and the
payment (1) is returned and marked as "undeliverable" or (2)
remains uncashed for six months, your cash election will be changed
automatically and future dividends will be reinvested in the
applicable Fund at the per share net asset value determined as of
the date of payment (normally $1.00). In addition, any
undeliverable checks or checks that remain uncashed for six months
will be canceled and then reinvested in the applicable Fund at the
per share net asset value determined as of the date of cancellation
(normally $1.00).

Tax Consequences of Investing
Taxability of Distributions
As long as the Funds meet the requirements for being tax-qualified
regulated investment companies, which each Fund intends to do, the
Funds pay no federal income tax on the earnings distributed to
shareholders. As a result, dividends and any short-term capital
gains you receive, whether reinvested or taken as cash, are
generally considered taxable as ordinary income. The Form 1099 that
is mailed to you each January details your dividends and their
federal tax category, although you should verify your tax liability
with your tax professional.

<PAGE>

Taxability of Transactions
Any time you sell or exchange shares of the Funds, it is considered
a taxable event for you. For example, if you exchange shares of
the Maryland Tax-Free Portfolio for shares of another Rushmore or
Cappiello-Rushmore fund, the transaction would be treated as a
sale. Consequently, any gain resulting from the transaction would
be subject to federal income tax.

MANAGEMENT, ORGANIZATION and CAPITAL STRUCTURE

Investment Adviser
Money Management Associates ("Adviser"), 100 Lakeshore Drive, Suite
1555, North Palm Beach, Florida 33408, has served as the Funds'
investment adviser since the Funds' commenced operations on September
9, 1983. Established in 1974, the Adviser manages six no-load mutual
funds (including the Funds) with total assets under management of
approximately $900 million.

Subject to the general supervision of the Funds' Board of Directors,
the Adviser manages the investment and reinvestment of the assets of
the Funds and is responsible for the overall management of the Funds'
business affairs. An Adviser Group makes investment decisions;
therefore, no one person is primarily responsible for making
investment decisions. For the advisory services performed, the
Adviser received 0.625% of the average net assets of both the Maryland
and Virginia Portfolios for the fiscal years ended December 31, 1998.

Year 2000 Preparations
The day-to-day operations of the Funds are dependent upon the Funds'
service providers, principally the Adviser, Rushmore Trust and
Savings, FSB and Rushmore Services, Inc. (collectively, the
"Servicers"), and upon the smooth functioning of the computer systems
that they utilize. Many computer systems currently cannot properly
recognize or process date-sensitive information relating to the year
2000 and beyond. Like other mutual funds and financial and business
organizations around the world, the Funds, therefore, could be
adversely affected if the computer systems used by these Servicers,
and their vendors, do not properly process and calculate date-related
information and data on and after January 1, 2000. The Servicers have
been evaluating the impact that the year 2000 issue may have on the
computer systems that they utilize and are making appropriate
modifications to these systems in order to assure that they will be
prepared for the year 2000. The Funds and the Servicers expect that
any further modifications to their computer systems necessary to
address the year 2000 issue will be made and tested in a timely
manner. The Servicers also are working with their outside vendors,
and other persons whose systems are linked to those of the Funds and
the Servicers, to obtain satisfactory assurances regarding the year
2000 issue. The costs of this systems remediation will not be paid
directly by the Funds. Inadequate remediation could have an adverse
effect on the Funds' operations, including pricing and securities
trading and settlement, and the provision of shareholder services.
Although, at this time, there can be no assurance that the remedial
action taken by the Servicers will be sufficient or timely, the
Servicers do not anticipate that the transition to the 21st century
will have a material impact on the ability of the Servicers to
continue to service the Funds at current levels.

FINANCIAL HIGHLIGHTS

Rushmore Maryland Tax-Free Portfolio

The following financial highlights tables are intended to help you
understand the Funds' financial performance for the past 5 years.
Certain information reflects financial results for a single Fund
share. The total returns in the table represent the rate that you
would have earned (or lost) on an investment in the Funds (assuming
reinvestment of all dividends and distributions). This information has
been audited by Deloitte & Touche LLP, whose report, along with the
Funds' financial statements, is included in the annual report, which
is available upon request.

For The Years Ended December 31,

1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value, Beginning of Year $ 11.10 $ 10.79 $ 10.98 $ 10.11 $ 11.27
-------- -------- -------- -------- --------
Income from Investment Operations:
Net Investment Income 0.51 0.51 0.53 0.55 0.57
Net Realized and Unrealized Gain (Loss) on
Investments 0.13 0.31 (0.19) 0.87 (1.16)
-------- -------- -------- -------- --------
Total from Investment Operations 0.64 0.82 0.34 1.42 (0.59)
-------- -------- -------- -------- --------
Distributions to Shareholders:
Dividends (from net investment income) (0.51) (0.51) (0.53) (0.55) (0.57)
-------- -------- -------- -------- --------
Total Distributions to Shareholders (0.51) (0.51) (0.53) (0.55) (0.57)
-------- -------- -------- -------- --------
Net Asset Value, End of Year $ 11.23 $ 11.10 $ 10.79 $ 10.98 $ 10.11
======== ======== ======== ======== ========
Total Investment Return 5.90% 7.85% 3.21% 14.35% (5.24)%
Ratios and Supplemental Data:
Net Assets at End of Year (in thousands) $45,827 $45,344 $44,410 $49,725 $44,385
Ratio of Expenses to Average Net Assets 0.93% 0.93% 0.93% 0.77% 0.55%
Ratio of Expenses to Average Net Assets Before
Reimbursement from Investment Adviser 0.93% 0.93% 0.93% 0.93% 0.93%
Ratio of Net Income to Average Net Assets 4.58% 4.73% 4.92% 5.16% 5.36%

Portfolio Turnover Rate 5% 22% 31% 37% 38%

</TABLE>

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<TABLE>

FINANCIAL HIGHLIGHTS
Rushmore Virginia Tax-Free Portfolio

<CAPTION>
For The Year Ended December 31,

1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value, Beginning of Year $ 11.46 $ 11.09 $ 11.31 $ 10.36 $ 11.51
-------- -------- -------- -------- --------

Income from Investment Operations:
Net Investment Income 0.52 0.52 0.53 0.56 0.58
Net Realized and Unrealized Gain (Loss) on
Investments 0.12 0.39 (0.22) 0.95 (1.15)
-------- -------- -------- -------- --------
Total from Investment Operations 0.64 0.91 0.31 1.51 (0.57)
-------- -------- -------- -------- --------
Distributions to Shareholders:
Dividends (from net investment income) (0.52) (0.52) (0.53) (0.56) (0.58)
Distributions (from capital gains) (0.16) (0.02) - - -
-------- -------- -------- -------- --------
Total Distributions to Shareholders (0.68) (0.54) (0.53) (0.56) (0.58)
-------- -------- -------- -------- --------
Net Asset Value, End of Year $ 11.42 $ 11.46 $ 11.09 $ 11.31 $ 10.36
======== ======== ======== ======== ========
Total Investment Return 5.64% 8.45% 2.91% 14.92% (5.02)%
Ratios and Supplemental Data:
Net Assets at End of Year (in thousands) $34,543 $32,907 $32,355 $33,468 $27,929
Ratio of Expenses to Average Net Assets 0.93% 0.93% 0.93% 0.77% 0.55%
Ratio of Expenses to Average Net Assets
Before Reimbursement from Investment Adviser 0.93% 0.93% 0.93% 0.93% 0.93%

Ratio of Net Income to Average Net Assets 4.48% 4.70% 4.84% 5.17% 5.35%
Portfolio Turnover Rate 25% 27% 46% 55% 33%

</TABLE>

<PAGE>

In addition to this prospectus, the following information is available
to assist you in making an investment decision:

Information Available Upon Request Description

Statement of Additional Information A document that includes
additional information about the
Funds.

Annual and Semiannual Reports Reports that contain information
about the Funds' investments.
The reports also discuss the
market conditions and investment
strategies that significantly
affected the Funds' performance
during its last fiscal year.

There are a variety of ways to receive the above information and make
other inquiries of the Funds. You may contact the Funds directly by
telephone at 1-800-343-3355, visit our internet site at
http://www.rushmorefunds.com, or you may send a written request to the
Funds' offices at 4922 Fairmont Avenue, Bethesda, Maryland 20814.
Additional information about the Funds can also be reviewed and copied
at the Securities and Exchange Commission's Public Reference Room in
Washington D.C. (for hours of operation please call the Commission at
1-800-SEC-0330). You may also obtain copies of the information by
visiting the Commission's internet site at http://www.sec.gov, or,
upon payment of a duplicating fee, by writing the Public Reference
Section of the Commission at 450 Fifth Street, N.W. Washington, D.C.
20549.

Fund for Tax-Free Investors, Inc. Investment Company Act File No. 811-3720

<PAGE>

PART B

<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
Rushmore Maryland Tax-Free Portfolio
Rushmore Virginia Tax-Free Portfolio

Statement of Additional Information
May 1, 1999

This Statement of Additional Information is not a Prospectus. It
should be read in conjunction with the Funds' Prospectuses, dated May
1, 1999. A copy of the Funds' Prospectuses may be obtained without
charge by writing or telephoning the Fund at the above address or
telephone numbers.

The audited financial statements of the Funds, for the Funds' fiscal
year ended December 31, 1998, are included in the Funds' 1998 Annual
Report to Shareholders, which has been filed with the Securities and
Exchange Commission and is incorporated herein by reference. Copies
of the Funds' 1998 Annual Report are available, without charge, by
request by writing or telephoning the Funds at the above address or
telephone numbers.

<PAGE>

Table of Contents

Page in
Maryland
and Page in Tax-
Page in Virginia Free Money
Statement of Tax-Free Market
Additional Portfolios Prospectus
Information Prospectus
Fund Description,
Investments, and Risks

Investment Limitations - -

Management of the Fund

Control Persons and - -
Principal Holders of
Securities

Investment Advisory and
Other Services

Brokerage Allocation - -
and Portfolio
Transactions

Taxation of the Fund - -

Calculation of - -
Performance Data

Financial Statements

<PAGE>

FUND DESCRIPTION, INVESTMENTS and RISKS

Description

The Fund for Tax-Free Investors, Inc. (the "Fund") is an open-end
management investment company incorporated in the State of Maryland on
April 8, 1983. The following are the investment strategies and risks
associated with investing in the Rushmore Tax-Free Money Market
Portfolio ("Money Market Portfolio"), the Rushmore Maryland Tax-Free
Portfolio ("Maryland Portfolio"), and the Virginia Tax-Free Portfolio
("Virginia Portfolio") (collectively, the "Funds").

Investments

The Funds' principal investment strategies are detailed in each Fund's
prospectus. The following paragraphs detail the Fund's investment
limitations. 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, Principal Investment Strategies, and
Related Risks.")

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 government sponsored
enterprises, or in obligations of the United States Government, its
agencies or government sponsored enterprises, which are purchased on a
temporary basis in accordance with each Fund's investment objective
and policies.

8. The Funds will invest 80% of the value of their respective net
assets in tax-exempt securities.

<PAGE>

MANAGEMENT OF THE FUND

A Board of Directors governs the Fund. The Directors are responsible
for overseeing the management of the Fund's business affairs and play
a vital role in protecting the interests of Fund shareholders. Among
other things, the Directors approve and review the Fund's contracts
and other arrangements and monitor Fund performance and operations.
The names, ages and addresses of the Directors and officers of the
Fund, together with information as to their principal business
occupations during the past five years are set forth below.

Name, Age, Address Position Held Principal Occupation(s)
With Fund During Past 5 Years

<S> <C> <C>
Daniel L. O'Connor*, 57 Chairman, General Partner of Money Management Associates,
100 Lakeshore Drive Treasurer, registered investment adviser of the Rushmore
Suite 1555 and Director Funds, since 1975. Director, Rushmore Trust
North Palm Beach, FL 33408 and Savings, FSB, the Trust's transfer agent
and custodian. Director of four Rushmore Fund
Boards. Director of the Cappiello-Rushmore
Trust.

Richard J. Garvey*, 65 President and Limited Partner of Money Management Associates
730 Southwest 67th Place Director and Vice President of Rushmore Services, Inc.
Portland, OR 97225 until 1998. Director of four Rushmore Fund
Boards.

Bruce C. Ellis,** 53 Director A private investor in start-up companies. Vice
7108 Heathwood Court President, LottoPhone, Inc., a telephone state
Bethesda, MD 20817 lottery service, September 1991-1995.
Director, The Torray Fund, since 1994;
Director, the Sheppard Fund, Since 1994.
Director on three Rushmore Fund Boards and the
Cappiello-Rushmore Trust.

Jeffrey R. Ellis,** 53 Director Executive Vice President, Buddy Systems, Inc.,
513 Kerry Lane a manufacturing-marketing company in Virginia
Virginia Beach, VA 23451 Beach, Virginia since January 1996. Vice
President, LottoPhone, Inc., a telephone state
lottery service, September 1993-1995. Director
on three Rushmore Fund Boards and the Cappiello-
Rushmore Trust.

Michael D. Lange, *55 Director Vice President, Capital Hill Management
407 River Bend Road Corporation since 1967. Owner of Michael D.
Great Falls, VA 22066 Lange, Ltd., a builder and developer since
1980. Partner of Greatful Falls, a building
developer since 1994. Director, Rushmore Trust
and Savings, FSB, the Trust's transfer agent
and custodian. Director of three Rushmore Fund
Boards.

Patrick F. Noonan, 55 Director Chairman and Chief Executive Officer of the
11901 Glen Mill Drive Conservation Fund since 1986. Vice Chairman,
Potomac, MD 20854 American Farmland Trust and Trustee, American
Conservation Association since 1985.
President, Conservation Resources, Inc. since
1981. Director of four Rushmore Fund Boards.

Leo Seybold, **83 Director Retired 1988. Director of three Rushmore Fund
5804 Rockmere Drive Boards.
Bethesda, MD 20816

Timothy N. Coakley, CPA*, 31 Vice President Chief Financial Officer and Treasurer, Rushmore
4922 Fairmont Avenue Trust and Savings, FSB, since 1995. Vice
Bethesda, MD 20814 President of four Rushmore Funds and the
Cappiello-Rushmore Trust (collectively, the
"Funds"). Controller of the Funds, 1995-1997.
Formerly Audit Manager, Deloitte & Touche LLP
until 1994.

Edward J. Karpowicz, CPA*, 35 Controller Vice President of Rushmore Trust and Savings,
4922 Fairmont Avenue FSB, since 1997. Controller of the Funds.
Bethesda, MD 20814 Treasurer, Bankers Finance Investment
Management Corp., August 1993 to June 1997.
Senior Accountant, Ernst & Young, September
1989 to February 1993.

Stephenie E. Adams*, 29 Secretary Secretary of three Rushmore Funds and the
4922 Fairmont Avenue Cappiello-Rushmore Trust. Assistant Secretary
Bethesda, MD 20814 of one Rushmore Fund. 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.

* Indicates an "interested" person. An interested person has any one of
several close business or family ties to the Fund, the Fund's investment
adviser, or an affiliated company of the Fund.

** Bruce C. Ellis and Jeffrey R. Ellis are brothers.

</TABLE>

<PAGE>

The aggregate compensation paid to the Directors serving during the fiscal
year ended December 31, 1998, is set forth in the table below:

Total
Compensation Paid
Pension or Estimated to Directors for
Aggregate Retirement Annual Services to the
Name of Person Compensation Benefits Benefits Upon Fund and Fund
and Position Paid Accrued Retirement Complex

<S> <C> <C> <C> <C>
Daniel L. O'Connor,*
Chairman, Treasurer and
Director $0 $0 $0 $0

Richard J. Garvey,*
President and Director $0 $0 $0 $0

Bruce C. Ellis,
Director $3,000 $0 $0 $9,000

Jeffrey R. Ellis,
Director $3,000 $0 $0 $9,000

Michael D. Lange,*
Director $3,000 $0 $0 $9,000

Patrick F. Noonan,
Director $3,000 $0 $0 $10,000

Leo Seybold,
Director $3,000 $0 $0 $9,000

</TABLE>

* Indicates an "interested" person. An interested person has any one of
several close business or family ties to the Fund, the Fund's adviser, or an
affiliated company of the Fund.

<PAGE>

CONTROL PERSONS and PRINCIPAL HOLDERS of SECURITIES

As of April 1, 1999, the following parties were the only owners of record owning
5% or more of the shares of the Fund.

Portfolio Controlling Party or Shares % Owned
Principal Holder of Securities Outstanding
Address
<S> <C> <C> <C>
Tax-Free Money Market Portfolio John G. Ballenger. 1,929,730.04 10.380% 1/
10830 Pleasant Hill Drive
Potomac, MD 20854

Virginia Tax-Free Portfolio Charles Schwab & Co., Inc. 384,987.53 12.452% 2/
101 California Street
San Francisco, CA 94101

Roger W. Jones 220,668.13 7.138% 1/
Post Office Box 248
Sperryville, VA 22740

Robert P. and Maryann Nirschl 1,908,972.62 5.440%1/
4143 North River Street
McLean, VA 22101

1/ Beneficial owner only.
2/ Record owner only.

</TABLE>

As of the date of this Statement of Additional Information, no
shareholder owned of record or beneficially, more than 5% of the
Maryland Tax-Free Portfolio. Officers and Directors of the Fund, as a
group, owned, of record and beneficially, less than 1% of the
outstanding shares of the Fund.

INVESTMENT ADVISORY and OTHER SERVICES

Investment Adviser
Money Management Associates (the "Adviser"), 100 Lakeshore Drive,
Suite 1555, North Palm Beach, Florida 33408, has served as the Fund's
investment adviser since the Fund commenced operations on September 9,
1983. 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. For its services, the Adviser receives 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 Maryland Portfolio,
and 0.625% of the net assets of the Virginia Portfolio. For the fiscal
years ended December 31, 1998, 1997, and 1996, the Funds paid the
following investment advisory fees to the Adviser:

1998 1997 1996

Tax-Free Money Market Portfolio $ 92,105 $ 99,510 $ 98,353
Maryland Tax-Free Portfolio $ 288,928 $ 283,756 $ 297,831
Virginia Tax-Free Portfolio $ 204,458 $ 202,010 $ 203,550

<PAGE>

The Adviser also advises: Fund for Government Investors, a money
market fund established in 1975 that invests only in U.S. Treasury
securities; The Rushmore Fund, Inc., which was established in 1985 and
currently consists of one series, the U.S. Government Bond Portfolio;
and American Gas Index Fund, Inc., a common stock index fund
established in 1989 that seeks to provide investment results that
correlate to those of an index comprising the common stocks of natural
gas distribution and transmission company members of the American Gas
Association. As of December 31, 1998, total assets under the
Adviser's management were approximately $900 million.

Fund expenses which are paid by the Adviser include, but are not
limited to: the expenses of shareholders and directors meetings, the
cost of office space, and the preparation, filing, printing and
distribution of the Fund's prospectus and Statement of Additional
Information. Additionally, the Adviser may, from its own resources,
including profits from advisory fees received from the Fund provided
such fees are legitimate and not excessive, make payments to broker-
dealers and other financial institutions for their expenses in
connection with the distribution of Fund shares.

Administrator
Under an Administrative Services Agreement between the Fund and
Rushmore Trust and Savings, FSB ("RTS"), 4922 Fairmont Avenue,
Bethesda, Maryland 20814, a majority-owned subsidiary of the Adviser,
RTS provides transfer agency, dividend-disbursing, fund accounting and
administrative services to the Fund. Under the Administrative
Services Agreement with RTS, which has been approved by the Board of
Directors, RTS receives an annual fee of 0.25% of average daily net
assets for the Money Market Portfolio and 0.30% of average daily net
assets for the Rushmore Maryland Tax-Free and Rushmore Virginia Tax-
Free Portfolios for the services it provides. For the fiscal years
ended December 31, 1998, 1997, and 1996, the Fund paid the following
administrative services fees to the RTS:

1998 1997 1996

Tax-Free Money Market Portfolio $ 46,053 $ 49,755 $ 49,176
Maryland Tax-Free Portfolio $138,690 $136,203 $142,959
Virginia Tax-Free Portfolio $ 98,140 $ 96,964 $ 97,704

As the Administrator, RTS is responsible for all costs of the Fund
except for the investment advisory fee, extraordinary legal expenses,
interest and the expenses paid by the Adviser. Specifically, RTS pays
costs of registration of the Funds' shares with the Securities and
Exchanges commission and the various states, all expenses of dividend
and transfer agent services, outside auditing and legal fees,
preparation of shareholders reports, and all costs incurred in
providing custodial services.

Other Servicer
Under an agreement between the Adviser and Rushmore Services, Inc.
("RSI"), 4922 Fairmont Avenue, Bethesda, Maryland 20814, a wholly-
owned subsidiary of the Adviser, certain administrative services
provided to the Fund by the adviser, such as prospectus preparation,
are provided by RSI.

Custodian and Independent Public Accountant
RTS is the Fund's custodian and is responsible for safeguarding and
controlling the Fund's cash and securities, handling the securities,
and collecting interest on the Fund's investments.

Independent certified public accountants, Deloitte & Touche LLP,
University Square, 117 Campus Drive, Princeton, New Jersey 08540, are
responsible for auditing the annual financial statements of the Fund.

Brokerage Allocation and Other Practices
The Fund's portfolio securities are normally purchased on a net basis
which does not involve payment of brokerage commissions.

DRAFT REDEMPTIONS

Redemptions by check or wire transfer are discussed in the Money
Market Fund's Prospectus. Investors may also elect to redeem shares
by draft check (minimum check - $250) made payable to the order of any
person or institution. Upon the Fund's receipt of a completed
signature card, investors will be supplied with draft checks which are

<PAGE>

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 and to charge for the reorder of draft checks. 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 Rushmore Trust
and Savings, FSB applies to checking accounts. Investors' accounts
may not be closed by draft check.

TAXATION OF THE FUND

The Fund currently qualifies, and will seek to continue to qualify, as
a regulated investment company (a "RIC") under Subchapter M of the
U.S. Internal Revenue Code of 1986, as amended (the "Code"). As a RIC,
the Fund will not be subject to federal income taxes on the net
investment income and capital gains that the Fund distributes to its
shareholders. The distribution of net investment income and capital
gains by the Fund to a Fund shareholder will be taxable to the
shareholder regardless of whether the shareholder elects to receive
these distributions in cash or in additional shares. Distributions
reported to a Fund shareholder as long-term capital gains shall be
taxable as such, regardless of how long the shareholder has owned the
shares. Fund shareholders will be notified annually by the Fund as to
the federal tax status of all distributions made by the Fund.
Distributions may be subject to state and local taxes.

If the Fund fails to qualify as a RIC for any taxable year, the Fund
would be taxed in the same manner as an ordinary corporation. In that
event, the Fund would not be entitled to deduct the distributions
which the Fund had paid to shareholders and, thus, would incur a
corporate income tax liability on all of the Fund's taxable income
whether or not distributed. The imposition of corporate income taxes
on the Fund would directly reduce the return a shareholder would
receive from an investment in the Fund.

CALCULATION OF PERFORMANCE DATA

Average Annual Total Return Quotations
For purposes of quoting and comparing the performance of the Fund to
that of other mutual funds and to other relevant market indices in
advertisements or in reports to shareholders, performance may be
stated in terms of total return. Under the rules of the Securities
and Exchange Commission (the "SEC Rules"), Fund advertising stating
performance must include total return quotes calculated according to
the following formula:

n
P (1+T) = ERV

Where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1-, 5-, or 10- year
periods at the end of the 1-, 5-, or 10-year periods (or
fractional portion thereof).

Under the foregoing formula, the time periods used in advertising will
be based on rolling calendar quarters, updated to the last day of the
most recent quarter prior to submission of the advertising for
publication, and will cover 1, 5, and 10 year periods or a shorter
period dating from the effectiveness of the Registration Statement of
the Fund. In calculating the ending redeemable value, all dividends
and distributions by the Fund are assumed to have been reinvested at
net asset value as described in the Prospectus for the Fund on the
reinvestment dates during the period. Total return, or "T" in the
formula above, is computed by finding the average annual compounded
rates of return over the 1, 5, and 10 year periods (or fractional
portion thereof) that would equate the initial amount invested to the
ending redeemable value.

The Fund, from time to time, also may include in such advertising a
total return figure that is not calculated according to the formula
set forth above in order to compare more accurately the performance of
the Funds with other measures of investment return. For example, in
comparing the total return of the Funds with data published by Lipper
Analytical Services, Inc., or with the performance of the Lehman
Brothers Intermediate Government and Long Treasury Bond Indexes, as
appropriate, the Funds calculate their aggregate total return for the
specified periods of time by assuming the investment of $10,000 in a
Fund's shares and assuming the reinvestment of each dividend or other
distribution at net asset value on the reinvestment date. Percentage

<PAGE>

increases are determined by subtracting the initial value of the
investment from the ending value and by dividing the remainder by the
beginning value. Such alternative total return information will be
given no greater prominence in such advertising than the information
prescribed under SEC Rules.

The average annual compounded rates of return, assuming the
reinvestment of all dividends and distributions, for the Funds, as of
December 31, 1998, are as follows:

Tax-Free Maryland Virginia
Money Market Tax-Free Tax-Free
Portfolio Portfolio Portfolio
One Year 2.73% 5.90% 5.64%
Five Years 2.69% 5.00% 5.17%
Ten Years 3.24% 6.44% 6.86%

Computation of Yield
In addition to the total return quotations discussed above, the Fund
also may advertise its yield based on a thirty-day (or one month)
period ended on the date of the most-recent balance sheet included in
the Fund's Registration Statement, computed by dividing the net
investment income per share of a fund earned during the period by the
maximum offering price per Fund share on the last day of the period,
according to the following formula:

6
YIELD = 2[(a-b/cd+1) -1]

Where: a = income earned during the period;
b = expenses accrued for the period (net of
reimbursements);
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends; and
d = the maximum offering price per share on the last
day of the period.

Under this formula, interest earned on debt obligations for purposes
of "a" above, is calculated by (i) computing the yield to maturity of
each obligation held by the Portfolio based on the market value of the
obligation (including actual accrued interest) at the close of
business on the last day of each month, or, with respect to
obligations purchased during the month, the purchase price (plus
actual accrued interest), (ii) dividing that figure by 360 and
multiplying the quotient by the market value of the obligation
(including actual accrued interest as referred to above) to determine
the interest income on the obligation that is in the Portfolio's
portfolio (assuming a month of thirty days), and (iii) computing the
total of the interest earned on all debt obligations and all dividends
accrued on all equity securities during the thirty-day or one month
period. In computing dividends accrued, dividend income is recognized
by accruing 1/360 of the stated dividend rate of a security each day
that the security is in the Portfolio's portfolio. Undeclared earned
income, computed in accordance with generally accepted accounting
principles, may be subtracted from the maximum offering price
calculation required pursuant to "d" above.

Financial Statements
Copies of the Fund's audited financial statements for the fiscal year
ended December 31, 1998, may be obtained without charge by contacting
the Fund at 4922 Fairmont Avenue, Bethesda, Maryland 20814, or by
telephoning the Fund at (800) 343-3355 or (301) 657-1500.

<PAGE>

Fund for Tax-Free Investors, Inc.

FINANCIAL STATEMENTS

<PAGE>
[LOGO]

ANNUAL REPORT, December 31, 1998
FUND FOR TAX-FREE INVESTORS, INC.
4922 FAIRMONT AVENUE, BETHESDA, MD 20814
(800) 622-1386 (301) 657-1510

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

January 22, 1999

Dear Shareholders:

Interest rates continued to fall during 1998 as inflation remained relatively
nonexistent throughout the year. The yield on the benchmark 30-year Treasury was
lower by over 80 basis points ending the year yielding 5.08%, and 30-year AAA
municipal yields declined by approximately ten basis points and closed the year
at 4.94%. The Federal Reserve lowered the overnight Federal Funds rate a total
of 75 basis points to 4.75%.

Although employment levels remained high and domestic consumer demand remained
strong, inflation was held in check primarily due to persistent global financial
crises, low import prices, and continued gains in productivity by U.S. firms.
The growing financial problems, such as those in Asia, Brazil, and Russia,
caused the financial markets to begin to deteriorate and credit spreads to widen
as investors turned their backs on risky investments. The Federal Reserve cut
the Fed Funds rate 25 basis points three different times during late 1998, in an
attempt to calm fears that this foreign financial turmoil could lead to a
recession in the U.S. economy. The easing of monetary policy succeeded in
putting investors at ease and the financial markets were able to stabilize.

Municipal bonds had another positive year, with the greatest increases occurring
in securities with ten years or less to maturity. Municipals, however, were
unable to keep up with the stunning performance of Treasuries. Yields on
Treasury securities dropped significantly due to several factors, the most
notable being: low inflation, flight-to-safety caused by instability in the
financial markets, and an increased budget surplus resulting in less need for
the Treasury to borrow (i.e., less supply). The under-performance by municipals
has resulted in them remaining "cheap" relative to their Treasury counterparts,
in relation to their historical percentages. Even though municipals offer an
attractive investment on a relative basis, demand has remained weak. For many
investors the focus has returned back to equities, their confidence having been
restored after performance in the stock markets picked up following the Fed
intervention on short-term rates.

TAX-FREE MONEY MARKET

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

<PAGE>
an annualized net investment income of 2.70% of net assets for the year ended
December 31, 1998, compared to 2.89% for 1997. On December 31, 1998, the
Portfolio's average maturity was 50 days.

MARYLAND AND VIRGINIA TAX-FREE PORTFOLIOS

Fund for Tax-Free Investors Maryland Portfolio had a total return of 5.90% for
the year ended December 31, 1998. On an annualized basis, net investment income
averaged 4.58% of net assets for the year. Net assets for the Maryland Portfolio
stood at $45.8 million at 1998 year-end, and the average maturity was 14.5
years. More than 85% of the Portfolio had a rating of AA or higher.

The total return for the Fund for Tax-Free Investors Virginia Portfolio was
5.64% for 1998 and net investment income averaged 4.48% of net assets for the
year. Net assets for the Virginia Portfolio were $34.5 million at year-end, and
it had an average maturity of 15.3 years. The percentage of securities with a
rating of AA or better was over 87% of the Portfolio.

The general obligation debt for both Maryland and Virginia have retained the
highest credit rating of AAA by all three rating agencies: Moody's, S&P and
Fitch.

OUTLOOK

What happens in the year ahead will be dictated primarily by how the current
financial situation in the various troubled foreign economies plays out. If the
international financial woes persist we could see deflationary pressures remain
in the picture leading to possible further rate cuts by the Federal Reserve.
Further rate cuts should lead to lower yield and higher prices for bonds. On the
other hand, should these economies rebound we would probably see the ugly head
of inflation creep back onto the radar screen of the financial markets.
Inflationary fears would at best put a halt to further advances in the bond
markets, but at worst lead to a tightening in monetary policy, higher interest
rates and lower bond prices.

We believe a scenario closer to the former to be the case in the coming year.
Our economy should slow down from the pace it has exhibited over the last
several years, as the affect of troubled foreign economies continues to put the
brakes on the economy here in the United States. This moderation of the economy
will keep inflation in check and low interest rates will remain the trend in
1999. We think the Fed is finished for the time being, however, lowering
short-term interest rates so as not to unnecessarily jump-start inflationary
pressures.

Municipals are poised technically to perform well due to their high ratios
relative to Treasuries, as well as the forecast for lower issuance of new
securities in the year ahead. The relative value of municipals leaves room for
strong performance should investors begin to divest from equities and into debt
securities. If the low interest rate environment holds for 1999 as we think it
should, municipals will have another positive year as they come back in line
with historical spreads to Treasuries.

- 2 -
<PAGE>
Management continues to adhere to its strategy of long-term, conservative
investing. Fund for Tax-Free Investors, Inc. invests in only high quality issues
we believe provide the best opportunity to meet the Funds' investment
objectives. As always, we thank you for your continued support and look forward
to serving your investment needs in 1999.

Sincerely,

[SIGNATURE] [SIGNATURE]
Daniel L. O'Connor Richard J. Garvey
Chairman President

- 3 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.

STATEMENT OF NET ASSETS
MONEY MARKET PORTFOLIO

December 31, 1998
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
--------- -----------
<S> <C> <C>
CALIFORNIA 4.1%
California School Cash Reserve
Program Revenue
4.5%, 7/2/99 SPI+.............. $ 800,000 $ 802,920
-----------
COLORADO 8.5%
Colorado State Revenue
Anticipation Notes
4.25%, 6/25/99 SP1+............ 375,000 376,940
Colorado Student Obligation Board
Authority Floating Rate Notes
3.85%, 8/1/00+ A-1+............ 800,000 800,000
Pitkin County Multifamily Housing
Floating Rate Notes
4%, 12/1/24+ A-1+.............. 500,000 500,000
-----------
State Total.................... 1,676,940
-----------
ILLINOIS 3.7%
Illinois State Sales Tax Revenue
6.8%, 6/15/99^ AAA............. 700,000 723,209
-----------
LOUISIANA 1.5%
Jefferson Special Sales Tax
Revenue Series A
8.0%, 7/1/99^ AAA.............. 295,000 302,139
-----------
MARYLAND 15.3%
Baltimore County Revenue Floating
Rate Notes
4.05%, 1/1/16+ A-1............. 200,000 200,000
Maryland Department of
Transportation Revenue
3.8%, 6/15/99 AA............... 500,000 501,557
Maryland State General Obligation
9%, 9/1/99 AAA................. 600,000 623,049
Maryland Health and Higher
Education Loyola College Issue B
Floating Rate Notes
4.15%, 10/1/13+ AAA............ 800,000 800,000
Maryland Health and Higher
Education North Arundel Hospital
Floating Rate Notes
4.2%, 7/1/32+ VMIGI............ 500,000 500,000
North East Maryland Waste
Disposal Authority Floating Rate
Notes
3.75%, 1/1/08+ A-1+............ 400,000 400,000
-----------
State Total.................... 3,024,606
-----------

<CAPTION>
Face Value
Value (Note 1)
--------- -----------
<S> <C> <C>
MINNESOTA 22.2%
Minneapolis General Obligation
Floating Rate Notes
3.85%, 12/1/07+ A-1+........... $ 700,000 $ 700,000
Minneapolis Housing Authority
Revenue Floating Rate Notes
4%, 9/1/08+ VMIG1.............. 390,000 390,000
Minnesota State Higher Education
Floating Rate Notes
4.2%, 12/1/24+ VMIG1........... 500,000 500,000
Northern Municipal Power Revenue
7.2%, 1/1/99 AAA............... 550,000 551,116
St. Louis Park Tax Increment
General Obligation Floating Rate
Notes
4.4%, 2/1/06+ VMIG1............ 305,000 305,000
St. Paul Housing and
Redevelopment Authority Floating
Rate Notes
3.95%, 12/1/12+ A-1+........... 700,000 700,000
St. Paul Housing and
Redevelopment Authority United
Way Project Floating Rate Notes
3.95%, 12/1/18+ A-1............ 500,000 500,000
Waconia Industrial Development
Revenue Floating Rate Notes
4%, 10/1/16+ A-1............... 745,000 745,000
-----------
State Total.................... 4,391,116
-----------
MISSOURI 6.8%
Jackson County School District
4.75%, 3/1/99 AA............... 640,000 640,901
Missouri State Health and
Education Drury College Floating
Rate Notes
5.15%, 8/15/21+ VMIG1.......... 700,000 700,000
-----------
State Total.................... 1,340,901
-----------
MONTANA 3.1%
Montana State Health Floating
Rate Notes
4%, 12/1/15+ A-1+.............. 600,000 600,000
-----------
NEW HAMPSHIRE 4.0%
New Hamphshire Health and Higher
Education Floating Rate Notes
4.05%, 11/1/21+ VMIG1.......... 500,000 500,000
</TABLE>

- 4 -
<PAGE>
STATEMENT OF NET ASSETS
MONEY MARKET PORTFOLIO (continued)

December 31, 1998
<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
4.15%, 6/1/28+ A-1............. $ 300,000 $ 300,000
-----------
State Total.................... 800,000
-----------
NEW YORK 9.9%
New York City General Obligation
Floating Rate Notes
5.1%, 8/15/18+ A-1+............ 400,000 400,000
New York City General Obligation
Floating Rate Notes
5.1%, 8/15/23+ A-1+............ 400,000 400,000
Nassau County Revenue
Anticipation Notes
4%, 3/10/99 SP1................ 700,000 700,375
Suffolk County Water Authority
Revenue
3.6%, 6/1/99 AAA............... 460,000 460,000
-----------
State Total.................... 1,960,375
-----------
NORTH CAROLINA 3.5%
City of Winston-Salem Floating
Rate Notes
4.1%, 4/1/00+ A-1+............. 700,000 700,000
-----------
PENNSYLVANIA 4.0%
Emmaus General Authority Floating
Rate Notes
4.1%, 12/1/28+ A-1+............ 800,000 800,000
-----------
SOUTH CAROLINA 3.5%
Piedmont Municipal Power Agency
Electric Revenue
5%, 1/1/99 AAA................. 700,000 700,000
-----------

<CAPTION>
Face Value
Value (Note 1)
--------- -----------
<S> <C> <C>
TEXAS 1.5%
Port Arthur Revenue Floating Rate
Notes
5.15%, 5/1/03+ P1.............. $ 300,000 $ 300,000
-----------
VIRGINIA 2.6%
Richmond General Obligation
6.5%, 1/15/99^ AAA............. 500,000 505,621
-----------
WISCONSIN 2.6%
Wisconsin State Transportation
Revenue
6.2%, 7/1/99^ AA............... 500,000 517,422
-----------
TOTAL INVESTMENTS 96.8%
(Cost $19,145,249*)....................... 19,145,249
OTHER ASSETS LESS LIABILITIES 3.2%.......... 637,642
-----------
NET ASSETS (NOTE 5) 100.0%.................. $19,782,891
-----------
-----------
NET ASSET VALUE PER SHARE
(Based on 19,782,891 Shares
Outstanding).............................. $1.00
-----------
-----------
</TABLE>

- ---------

+ Daily or Weekly Tender Bond

^ Date represents pre-refunded date.

* Same cost is used for Federal income tax purposes.

Security Ratings are unaudited.

See Notes to Financial Statements.

- 5 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENT OF NET ASSETS
VIRGINIA PORTFOLIO

December 31, 1998
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>

Arlington County General
Obligation
6%, 8/1/04 AAA............... $ 500,000 $ 560,265
5.4%, 6/1/13 AAA............. 1,000,000 1,063,790
5.375%, 12/1/16 AAA.......... 1,000,000 1,049,340
Brunswick County Virginia
Revenue
5.5%, 7/1/17 AAA............. 1,000,000 1,052,900
Chesapeake Water and Sewer
System Revenue
6.5%, 7/1/05 A+.............. 270,000 295,707
Fairfax City EDA Lease Revenue
5.5%, 5/15/18 AA............. 2,000,000 2,068,380
Fairfax County Industrial
Development Authority Revenue
5.2%, 8/15/05 AA............. 300,000 317,349
5.25%, 8/15/19 AA............ 650,000 681,012
Fairfax County Resource
Recovery Revenue
7.75%, 2/1/11 A+............. 300,000 310,137
Fairfax County Water Authority
Revenue
5.8%, 1/1/16 AAA............. 500,000 550,900
6%, 4/1/07^ AA-.............. 605,000 693,384
6%, 4/1/22 AA-............... 630,000 700,434
Hampton General Obligation
6%, 1/15/14 AA-.............. 350,000 392,728
Hanover County Water and Sewer
Revenue
5.25%, 2/1/16 AAA............ 500,000 514,530
Hanover County Virginia General
Obligation
5.4%, 7/15/16 AA............. 1,000,000 1,042,360
Henrico County Industrial
Development Authority Revenue
7.125%, 8/1/21 AA............ 400,000 465,340
6.25%, 5/1/13 AA-............ 500,000 529,625
Henry County General Obligation
8.825%, 11/1/05^ AAA......... 200,000 257,122
Isle of Wight County General
Obligation
6.7%, 1/1/02^ A.............. 200,000 220,472
James City County General
Obligation
5.25%, 12/15/15 AAA.......... 1,000,000 1,035,370
Leesburg General Obligation
5.5%, 6/1/13 AAA............. 500,000 532,165

<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Loudoun County General
Obligation
5%, 12/1/18 AA............... $1,000,000 $ 1,011,610
Loudoun County Sanitation
Authority Revenue
6.25%, 1/1/16 AAA............ 500,000 544,110
Lynchburg General Obligation
5%, 5/1/18 AA................ 1,000,000 1,006,820
Lynchburg Industrial
Development Authority Revenue
5.2%, 1/1/18 A+.............. 500,000 503,330
Manassas General Obligation
5%, 1/1/14 AAA............... 1,000,000 1,021,230
Metropolitan Washington D.C.
Airport Authority Revenue
6.5%, 10/1/06 AAA............ 300,000 329,811
Newport News General Obligation
5%, 3/1/18 AA................ 795,000 799,683
Norfolk General Obligation
5.75%, 6/1/13 AAA............ 500,000 540,265
Norfolk Water Revenue
5.75%, 11/1/12 AAA........... 500,000 544,380
5.875%, 11/1/15 AAA.......... 500,000 545,400
Portsmouth Redevelopment and
Housing Authority Revenue
6.05%, 12/1/08 AAA........... 500,000 537,780
Potomac and Rappahannock
Transportation District
Commission Revenue
6.7%, 3/1/00^ AAA............ 600,000 634,320
Prince William County
Industrial Development
Authority Revenue
7.25%, 3/1/00^ NR............ 250,000 265,858
Prince William County Park
Authority Revenue
6.875%, 10/15/16 A-.......... 500,000 567,485
Rappanhannock Jail Facilities
Revenue
5%, 12/1/20 AAA.............. 1,000,000 1,000,000
Richmond Metro Authority
Revenue
6.375%, 7/15/02^ AAA......... 500,000 552,675
Richmond Public Utilities
Revenue
5.25%, 1/15/18 A+............ 1,000,000 1,024,400
Upper Occoquan Sewer Authority
Revenue
5.15%, 7/1/20 AAA............ 500,000 515,155
</TABLE>

- 6 -
<PAGE>
STATEMENT OF NET ASSETS
VIRGINIA PORTFOLIO (continued)

December 31, 1998
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Virginia Beach General
Obligation
6.5%, 8/1/01^ AA............. $ 500,000 $ 544,565
5%, 8/1/17 AA................ 1,075,000 1,082,482
Virginia College Building
Authority Revenue
6.625%, 5/1/13 A-............ 300,000 332,526
Virginia Housing Development
Authority Revenue
6.625%, 7/1/13 A+............ 275,000 286,533
5.95%, 7/1/13 AA+............ 500,000 521,665
5.75%, 1/1/19 AAA............ 1,000,000 1,032,550
Virginia Port Authority Revenue
5.9%, 7/1/16 AA.............. 500,000 531,310
Virginia Public Building
Authority Revenue
5.2%, 8/1/16 AA.............. 1,000,000 1,024,290
Virginia Public School
Authority Revenue
6.2%, 8/1/13 AA.............. 320,000 356,112
5%, 8/1/18 AA+............... 1,000,000 1,011,360
Virginia Resource Authority
Revenue
6.75%, 10/1/04^ AA........... 240,000 274,910

<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Virginia Transportation Board
Revenue
5.125%, 5/15/17 AA........... $ 500,000 $ 508,160
-----------
TOTAL INVESTMENTS 97.8% OF NET
ASSETS
(Cost $31,749,298*)...................... 33,784,085
OTHER ASSETS LESS LIABILITIES 2.2%......... 758,901
-----------
NET ASSETS (NOTE 5) 100.0%................. $34,542,986
-----------
-----------
NET ASSET VALUE PER SHARE
(Based on 3,024,087 Shares
Outstanding)............................. $11.42
-----------
-----------
</TABLE>

- ---------

^ Date represents pre-refunded date.

* Same cost is used for Federal income tax purposes.

NR Not Rated

Security ratings are unaudited.

See Notes to Financial Statements.

- 7 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.

STATEMENT OF NET ASSETS
MARYLAND PORTFOLIO

December 31, 1998
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>

Anne Arundel County Water and
Sewer General Obligation
6.2%, 8/1/12 AA+............. $ 725,000 $ 805,178
6%, 7/15/13 AA+.............. 500,000 536,735
6.3%, 8/1/16 AA+............. 500,000 554,495
6.3%, 8/1/19 AA+............. 725,000 808,846
Anne Arundel County Pollution
Control Revenue
6.%, 4/1/24 A................ 1,230,000 1,316,260
Anne Arundel County Solid Waste
Project General Obligation
5.5%, 9/1/15 AA1............. 500,000 520,110
Baltimore City General
Obligation
6.4%, 10/15/02^ AAA.......... 465,000 508,975
5.5%, 10/15/10 AAA........... 1,000,000 1,085,360
Baltimore Wastewater Project
Revenue
6%, 7/1/15 AAA............... 500,000 577,170
Baltimore County General
Obligation
6.125%, 7/1/02^ AAA.......... 500,000 548,180
5.5%, 6/1/12 AAA............. 1,000,000 1,072,230
Baltimore Port Facility Revenue
6.5%, 12/1/10 AA-............ 400,000 435,228
Carroll County General
Obligation
7.1%, 10/1/00^ AA............ 235,000 254,275
7.25%, 10/1/00^ AA........... 300,000 325,365
5.3%, 11/1/15 AA............. 1,000,000 1,036,310
6.5%, 10/1/24 AA............. 225,000 258,460
Frederick County General
Obligation
6.125%, 12/1/07 AAA.......... 500,000 546,620
5.6%, 7/1/11 AA.............. 500,000 549,260
City of Frederick General
Obligation
6%, 10/1/11 AAA.............. 300,000 332,196
Harford County General
Obligation
5%, 3/1/14 AA-............... 500,000 508,425
Howard County Metropolitan
District General Obligation
6%, 8/15/19 AAA.............. 810,000 847,438
Howard County Public
Improvement General Obligation
6%, 5/15/03^ AA+............. 500,000 543,900
5.5%, 2/15/04^ AA+........... 1,000,000 1,081,800

<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Howard County Special
Facilities Revenue
6.1%, 2/15/13 AA-............ $ 500,000 $ 545,155
Laurel General Obligation
6.7%, 7/1/01^ AAA............ 600,000 655,068
Maryland Community Development
Administration Revenue
6.6%, 4/1/06 AA.............. 200,000 210,728
7.375%, 4/1/10 AA............ 495,000 515,409
7.25%, 4/1/11 AA............. 200,000 210,654
7.15%, 4/1/11 AA............. 405,000 425,732
7.7%, 5/15/20 AA............. 250,000 263,985
7.25%, 4/1/27 AA............. 385,000 402,756
Maryland General Obligation
5%, 10/15/11 AAA............. 1,000,000 1,054,750
5%, 3/1/12 AAA............... 1,500,000 1,572,450
Maryland Health and Higher
Education Facilities Authority
Revenue
5.7%, 7/1/09 A............... 500,000 557,755
5.25%, 7/1/13 AAA............ 500,000 530,845
6.125%, 7/1/14 AAA........... 500,000 552,065
5.5%, 10/1/16 AAA............ 1,000,000 1,070,810
6.125%, 7/1/19 AAA........... 500,000 545,115
5%, 7/1/19 A2................ 500,000 498,730
5%, 7/1/27 AAA............... 1,500,000 1,497,735
Maryland Health and Higher
Education Facilities Authority
4.2%, 7/1/32+ VMIG1.......... 400,000 400,000
Maryland Industrial Development
Revenue
7.125%, 7/1/06 A-............ 300,000 306,000
Maryland Stadium Authority
Sports Revenue
7.5%, 12/15/10 AA-........... 695,000 732,773
5.55%, 3/1/13 AAA............ 500,000 536,410
5.875%, 12/15/13 AAA......... 1,000,000 1,101,670
5.375%, 12/15/15 AA.......... 500,000 518,985
7.6%, 12/15/19 AA-........... 500,000 526,375
Maryland Water Quality Finance
Administration Revenue
6%, 9/1/15 AA................ 1,000,000 1,074,740
Montgomery County Housing
Opportunity Commission Revenue
6.7%, 7/1/11 AA.............. 345,000 363,637
7.8%, 7/1/12 NR.............. 200,000 214,926
7.375%, 7/1/17 AA............ 175,000 179,762
6.65%, 7/1/17 AA............. 170,000 182,617
7%, 7/1/23 A................. 250,000 263,555
</TABLE>

- 8 -
<PAGE>
STATEMENT OF NET ASSETS
MARYLAND PORTFOLIO (continued)

December 31, 1998
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Montgomery County Waste
Disposal Authority Revenue
5.875%, 6/1/13 AAA........... $ 250,000 $ 267,782
North East Maryland Waste
Disposal Authority Revenue
6.2%, 7/1/10 A............... 500,000 540,975
6.3%, 7/1/16 A............... 1,000,000 1,073,270
Prince Georges County
Dimensions Health Care Revenue
5.375%, 7/1/14 A............. 500,000 507,395
Prince Georges County General
Obligation
5.25%, 3/15/15 AAA........... 1,000,000 1,042,460
Prince Georges County Housing
Authority Revenue
6.35%, 7/20/20 AAA........... 700,000 739,102
Prince Georges County Pollution
Control Revenue
5.75%, 3/15/10 A............. 1,000,000 1,125,890
Prince Georges County Solid
Waste Management System Revenue
7%, 6/30/00^ AAA............. 250,000 267,975
St. Mary's County General
Obligation
5.85%, 11/1/18 AAA........... 500,000 538,870
University of Maryland System
Auxiliary Revenue
6.375%, 4/1/09 AA+........... 500,000 555,025
5.6%, 4/1/12 AA+............. 1,000,000 1,070,730
5.125%, 4/1/15 AA+........... 1,000,000 1,032,140
5.6%, 4/1/16 AA+............. 1,000,000 1,059,480
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Washington County General
Obligation
5.125%, 1/1/12 AAA........... $ 500,000 $ 522,100
5.25%, 1/1/16 AAA............ 500,000 513,710
Washington, D.C. Metropolitan
Area Transportation Authority
Revenue
6%, 7/1/10 AAA............... 275,000 317,067
Washington Suburban Sanitary
District General Obligation
6.2%, 6/1/12 AA.............. 900,000 971,712
-----------
TOTAL INVESTMENTS 97.6% OF NET
ASSETS
(Cost $41,759,630*)...................... 44,709,691
OTHER ASSETS LESS LIABILITIES 2.4%......... 1,117,348
-----------
NET ASSETS (NOTE 5) 100.0%................. $45,827,039
-----------
-----------
NET ASSET VALUE PER SHARE
(Based on 4,079,234 Shares
Outstanding)............................. $11.23
-----------
-----------
</TABLE>

- ---------

^ Date represents
pre-refunded date.

+ Daily or Weekly Tender
Bond

NR Not Rated

* Same cost is used for
Federal income tax
purposes.

Security ratings are
unaudited.

See Notes to Financial Statements.

- 9 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENTS OF OPERATIONS

For the Year Ended December 31, 1998

<TABLE>
<CAPTION>
Money
Market Virginia Maryland
Portfolio Portfolio Portfolio
----------- ---------- ----------

<S> <C> <C> <C>
INVESTMENT INCOME (Note 1).............................................. $ 635,148 $1,767,035 $2,542,993
----------- ---------- ----------
EXPENSES
Investment Advisory Fee (Note 2)...................................... 92,105 204,458 288,928
Administrative Fee (Note 2)........................................... 46,053 98,140 138,690
Other Fees............................................................ 232 -- --
----------- ---------- ----------
Total Expenses...................................................... 138,390 302,598 427,618
----------- ---------- ----------
NET INVESTMENT INCOME................................................... 496,758 1,464,437 2,115,375
----------- ---------- ----------
Net Realized Gain on Investment Transactions............................ -- 515,403 98,804
Change in Net Unrealized Appreciation of Investments.................... -- (155,249) 454,108
----------- ---------- ----------
NET GAIN ON INVESTMENTS................................................. -- 360,154 552,912
----------- ---------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................... $ 496,758 $1,824,591 $2,668,287
----------- ---------- ----------
----------- ---------- ----------
</TABLE>

See Notes to Financial Statements.

- 10 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENTS OF CHANGES IN NET ASSETS

For the Years Ended December 31,
<TABLE>
<CAPTION>
Money Market Virginia Maryland
Portfolio Portfolio Portfolio
----------------------------- ----------------------------- ------------
1998 1997 1998 1997 1998
------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES
Net Investment Income................. $ 496,758 $ 574,669 $ 1,464,437 $ 1,518,094 $ 2,115,375
Net Realized Gain on Investment
Transactions........................ -- -- 515,403 70,517 98,804
Change in Net Unrealized Appreciation
of Investments...................... -- -- (155,249) 1,026,639 454,108
------------- ------------- ------------- ------------- ------------
Net Increase in Net Assets Resulting
from Operations..................... 496,758 574,669 1,824,591 2,615,250 2,668,287
------------- ------------- ------------- ------------- ------------
DISTRIBUTIONS TO
SHAREHOLDERS
From Net Investment Income
(Note 1)............................ (496,758) (574,669) (1,464,437) (1,519,055) (2,115,375)
From Net Realized Gain................ -- -- (466,429) (48,336) --
------------- ------------- ------------- ------------- ------------
Total Distributions to Shareholders... (496,758) (574,669) (1,930,866) (1,567,391) (2,115,375)
------------- ------------- ------------- ------------- ------------
FROM SHARE
TRANSACTIONS
Net Proceeds from Sales of Shares..... 35,657,860 31,756,045 11,697,514 12,324,705 8,091,036
Reinvestment of Distributions......... 473,977 547,728 1,651,857 1,308,417 1,783,553
Cost of Shares Redeemed............... (35,526,092) (32,016,149) (11,607,428) (14,128,407) (9,944,519)
------------- ------------- ------------- ------------- ------------
Net Increase (Decrease) in Net Assets
Resulting from Share Transactions... 605,745 287,624 1,741,943 (495,285) (69,930)
------------- ------------- ------------- ------------- ------------
TOTAL INCREASE IN NET ASSETS.......... 605,745 287,624 1,635,668 552,574 482,982

NET ASSETS - Beginning of Year.......... 19,177,146 18,889,522 32,907,318 32,354,744 45,344,057
------------- ------------- ------------- ------------- ------------
NET ASSETS - End of Year................ $ 19,782,891 $ 19,177,146 $ 34,542,986 $ 32,907,318 $ 45,827,039
------------- ------------- ------------- ------------- ------------
------------- ------------- ------------- ------------- ------------
SHARES
Sold.................................. 35,657,860 31,756,045 1,018,080 1,104,589 724,881
Issued in Reinvestment of
Distributions....................... 473,977 547,728 143,753 116,812 159,779
Redeemed.............................. (35,526,092) (32,016,149) (1,009,987) (1,266,554) (890,970)
------------- ------------- ------------- ------------- ------------
Net Increase (Decrease) in Shares..... 605,745 287,624 151,846 (45,153) (6,310)
------------- ------------- ------------- ------------- ------------
------------- ------------- ------------- ------------- ------------

<CAPTION>
1997
------------
<S> <C>
FROM INVESTMENT
ACTIVITIES
Net Investment Income................. $ 2,149,276
Net Realized Gain on Investment
Transactions........................ 326,372
Change in Net Unrealized Appreciation
of Investments...................... 986,054
------------
Net Increase in Net Assets Resulting
from Operations..................... 3,461,702
------------
DISTRIBUTIONS TO
SHAREHOLDERS
From Net Investment Income
(Note 1)............................ (2,151,344)
From Net Realized Gain................ --
------------
Total Distributions to Shareholders... (2,151,344)
------------
FROM SHARE
TRANSACTIONS
Net Proceeds from Sales of Shares..... 6,860,756
Reinvestment of Distributions......... 1,803,253
Cost of Shares Redeemed............... (9,040,667)
------------
Net Increase (Decrease) in Net Assets
Resulting from Share Transactions... (376,658)
------------
TOTAL INCREASE IN NET ASSETS.......... 933,700
NET ASSETS - Beginning of Year.......... 44,410,357
------------
NET ASSETS - End of Year................ $ 45,344,057
------------
------------
SHARES
Sold.................................. 633,250
Issued in Reinvestment of
Distributions....................... 165,933
Redeemed.............................. (830,133)
------------
Net Increase (Decrease) in Shares..... (30,950)
------------
------------
</TABLE>

See Notes to Financial Statements.

- 11 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.

FINANCIAL HIGHLIGHTS

MONEY MARKET PORTFOLIO

<TABLE>
<CAPTION>
For the Years Ended December 31,
-----------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- --------- ---------
<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................... 0.03 0.03 0.03 0.03 0.02
--------- --------- --------- --------- ---------
Total from Investment Operations...... 0.03 0.03 0.03 0.03 0.02
--------- --------- --------- --------- ---------
Distributions to Shareholders:
From Net Investment Income.............. (0.03) (0.03) (0.03) (0.03) (0.02)
--------- --------- --------- --------- ---------
Total Distributions to Shareholders... (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
--------- --------- --------- --------- ---------
Net Asset Value - End of Year............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------

TOTAL INVESTMENT RETURN..................... 2.73% 2.93% 2.69% 3.09% 2.02%

RATIOS TO AVERAGE NET ASSETS:
Expenses.................................. 0.75% 0.75% 0.75% 0.75% 0.75%
Net Investment Income..................... 2.70% 2.89% 2.67% 3.04% 1.99%

SUPPLEMENTARY DATA:
Net Assets at End of Year (in
thousands).............................. $ 19,783 $ 19,177 $ 18,890 $ 20,772 $ 25,586
Number of Shares Outstanding at End of
Year
(in thousands).......................... 19,783 19,177 18,890 20,792 25,604
</TABLE>

See Notes to Financial Statements.

- 12 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.

FINANCIAL HIGHLIGHTS

VIRGINIA PORTFOLIO

<TABLE>
<CAPTION>
For the Years Ended December 31,
-----------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value - Beginning of Year............ $ 11.46 $ 11.09 $ 11.31 $ 10.36 $ 11.51
--------- --------- --------- --------- ---------
Income from Investment Operations:
Net Investment Income........................ 0.52 0.52 0.53 0.56 0.58
Net Realized and Unrealized Gain (Loss) on
Investments................................ 0.12 0.39 (0.22) 0.95 (1.15)
--------- --------- --------- --------- ---------
Total from Investment Operations........... 0.64 0.91 0.31 1.51 (0.57)
--------- --------- --------- --------- ---------
Distributions to Shareholders:
From Net Investment Income................... (0.52) (0.52) (0.53) (0.56) (0.58)
From Net Realized Gain....................... (0.16) (0.02) -- -- --
--------- --------- --------- --------- ---------
Total Distributions to Shareholders........ (0.68) (0.54) (0.53) (0.56) (0.58)
--------- --------- --------- --------- ---------
Net Increase (Decrease) in Net Asset Value..... (0.04) 0.37 (0.22) 0.95 (1.15)
--------- --------- --------- --------- ---------
Net Asset Value - End of Year.................. $ 11.42 $ 11.46 $ 11.09 $ 11.31 $ 10.36
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------

TOTAL INVESTMENT RETURN.......................... 5.64% 8.45% 2.91% 14.92% (5.02)%

RATIOS TO AVERAGE NET ASSETS:
Expenses....................................... 0.93% 0.93% 0.93% 0.77% 0.55%
Expenses Before Reimbursement from Adviser..... 0.93% 0.93% 0.93% 0.93% 0.93%
Net Investment Income.......................... 4.48% 4.70% 4.84% 5.17% 5.35%

SUPPLEMENTARY DATA:
Portfolio Turnover Rate........................ 25% 27% 46% 55% 33%
Net Assets at End of Year (in thousands)....... $ 34,543 $ 32,907 $ 32,355 $ 33,468 $ 27,929
Number of Shares Outstanding at End of Year (in
thousands)................................... 3,024 2,872 2,917 2,958 2,697
</TABLE>

See Notes to Financial Statements.

- 13 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
FINANCIAL HIGHLIGHTS

MARYLAND PORTFOLIO

<TABLE>
<CAPTION>
For the Years Ended December 31,
-----------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value - Beginning of Year............ $ 11.10 $ 10.79 $ 10.98 $ 10.11 $ 11.27
--------- --------- --------- --------- ---------
Income from Investment Operations:
Net Investment Income........................ 0.51 0.51 0.53 0.55 0.57
Net Realized and Unrealized Gain (Loss) on
Investments................................ 0.13 0.31 (0.19) 0.87 (1.16)
--------- --------- --------- --------- ---------
Total from Investment Operations........... 0.64 0.82 0.34 1.42 (0.59)
--------- --------- --------- --------- ---------
Distributions to Shareholders:
From Net Investment Income................... (0.51) (0.51) (0.53) (0.55) (0.57)
--------- --------- --------- --------- ---------
Total Distributions to Shareholders........ (0.51) (0.51) (0.53) (0.55) (0.57)
--------- --------- --------- --------- ---------
Net Increase (Decrease) in Net Asset Value..... 0.13 0.31 (0.19) 0.87 (1.16)
--------- --------- --------- --------- ---------
Net Asset Value - End of Year.................. $ 11.23 $ 11.10 $ 10.79 $ 10.98 $ 10.11
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------

TOTAL INVESTMENT RETURN.......................... 5.90% 7.85% 3.21% 14.35% (5.24)%

SUPPLEMENTARY DATA:
Portfolio Turnover Rate........................ 5% 22% 31% 37% 38%
Net Assets at End of Year (in thousands)....... $ 45,827 $ 45,344 $ 44,410 $ 49,725 $ 44,385
Number of Shares Outstanding at End of Year (in
thousands)................................... 4,079 4,086 4,116 4,527 4,391
</TABLE>

See Notes to Financial Statements.

- 14 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 1998

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, 1998, 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 year ended December 31,
1998. 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 Portfolios. The Fund has an agreement
with Rushmore Trust to receive short-term borrowings to cover share redemptions.
No borrowings were outstanding at December 31, 1998.

- 15 -
<PAGE>
3. SECURITIES TRANSACTIONS

Security transactions are recorded on the trade date. For the year ended
December 31, 1998, purchases and sales (including maturities), of securities,
excluding short-term securities, were as follows:

<TABLE>
<CAPTION>
Virginia Maryland
Portfolio Portfolio
------------ ------------
<S> <C> <C>
Purchases................................................... $ 9,621,041 $ 2,289,225
------------ ------------
------------ ------------
Sales....................................................... $ 7,867,684 $ 2,985,792
------------ ------------
------------ ------------
</TABLE>

4. NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS

As of December 31, 1998, net unrealized appreciation of investments in the
Virginia Portfolio for Federal income tax purposes aggregated $2,034,787 of
which $2,051,025 related to appreciated investments and $16,238 related to
depreciated investments. In the Maryland Portfolio, net unrealized appreciation
of investments for Federal income tax purposes totaled $2,950,061 of which
$2,965,590 related to appreciated investments and $15,529 related to depreciated
investments.

5. NET ASSETS

At December 31, 1998, net assets consisted of the following:

<TABLE>
<CAPTION>
Money Market Virginia Maryland
Portfolio Portfolio Portfolio
------------- ------------- -------------
<S> <C> <C> <C>
Paid-in-Capital............................................... $19,782,891 $ 32,459,225 $ 42,908,592
Accumulated Net Realized Gain (Loss) on Investments........... -- 48,974 (31,614)
Net Unrealized Appreciation of Investments.................... -- 2,034,787 2,950,061
------------- ------------- -------------
NET ASSETS.................................................... $19,782,891 $ 34,542,986 $ 45,827,039
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

6. CAPITAL LOSS CARRYOVERS

At December 31, 1998, for Federal income tax purposes, the Maryland Portfolio
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>

- 16 -
<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, 1998, the related statements of operations for the year then ended
and of changes in net assets for the years ended December 31, 1998 and 1997, and
the financial highlights for each of the five years in the period ended December
31, 1998. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free from 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, 1998, by correspondence with the custodian and broker. 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,
1998, 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.

[LOGO]

Princeton, New Jersey
January 27, 1999

- 17 -

<PAGE>

PART C

<PAGE>

PART C
OTHER INFORMATION

Fund for Tax-Free Investors, Inc.

ITEM 23. Exhibits
(a) Articles of Incorporation of Registrant.1/
(b) Bylaws of Registrant. 1/
(c) Voting Trust Agreement. 2/
(d) Management Contract between Registrant and Money Management
Associates. 3/
(e) Underwriting Contracts. 2/
(f) Bonus or Profit Sharing Contracts. 2/
(g) Custody Agreement between Registrant and Rushmore Trust and
Savings, FSB. 3/
(h)(1)Administrative Services Agreement between Registrant and
Rushmore Trust and Savings, FSB. 3/
(h)(2)Agreement between Money Management Associates and Rushmore
Services, Inc. as amended. 3/
(i) Opinion of counsel regarding the legality of securities being
registered. 1/
(j) Consent of Deloitte & Touche LLP, independent public accountants
for the Registrant. 3/
(k) Omitted Financial Statements. 2/
(l) Initial Capital Agreements. 2/
(m) Rule 12b-1 Plan. 2/
(n) Financial Data Schedule for the Registrant. 4/
(o) Rule 18f-3 Plan. 2/
(p) Powers of Attorney. 3/

1/ Incorporated by reference to the Registrant's initial
registration statement on Form N-1 filed on July 19, 1983
(Registration Nos. 33-63313 and 811-4369).

2/ None.

3/ Incorporated by reference to the Registrant's Registration
Statement on Form N-1A, previously filed with the Securities and
Exchange Commission on February 26, 1999 (Registration Nos. 33-63313
and 811-4369).

4/ Filed herewith.

ITEM 24. Persons Controlled By or Under Common Control with the Fund

The following persons may be deemed to be directly or indirectly
controlled by or under common control with the Fund, a Maryland
corporation:

Percentage of Voting Securities
Owned and/or Controlled by the
State of Organization and Controlling Persons or
Company Relationship (if any) to the Fund Other Basis of Common Control

<S> <S> <S>
Money Management Associates a District of Columbia limited Daniel L. O'Connor holds 100%
("MMA" or the "Adviser") partnership, registered transfer of the voting authority in MMA
agent and registered investment in Daniel L. O'Connor's
adviser to four investment capacity as the sole general
companies, including the Fund partner of MMA.

Rushmore Trust and Savings, FSB a Maryland corporation, and a 72.2% of the voting securities
("RTS" or the "Administrator") registered transfer agent, which of RTS is held by MMA, and
provides transfer agency, dividend 27.6% of the voting securities
disbursing, and shareholder of RTS is held by Daniel L.
services to the Fund, and serves O'Connor, the sole general
as the Fund's custodian partner of MMA.

Rushmore Services, Inc. ("RSI") a Maryland Corporation which 100% of the voting securities
provides certain services to the of RSI is owned by MMA.
Fund

The Rushmore Fund, Inc. a Maryland corporation, and a
registered investment company,
which is advised by MMA

Fund for Government Investors a Delaware business trust, and a
registered investment company,
which is advised by MMA

American Gas Index Fund, Inc. a Maryland corporation, and a
registered investment company,
which is advised by MMA

Cappiello-Rushmore Trust a Delaware business trust, and a
registered investment company, of
which MMA is the administrator

</TABLE>

ITEM 25. Indemnification

The Registrant was incorporated in the State of Maryland on April
8, 1983, and is operated pursuant to the Articles of Incorporation
of the Registrant, dated as of April 6, 1983, that permit the
Registrant to indemnify its directors and officers under certain
circumstances. Such indemnification, however, is subject to the
limitations imposed by the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended.

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.
This indemnification is subject to the following conditions:

(a) no director or officer is indemnified against any 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 indemnified only for actions
taken in good faith which the officers and directors believed
were in or not opposed to the best interests of the Fund; and

(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.

<PAGE>

The Articles of Incorporation of the Registrant provide that if
indemnification is not ordered by a court, indemnification may be
authorized upon determination by shareholders, or 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 so directs, by independent legal
counsel in a written opinion that the persons to be indemnified
have met the applicable standard.

ITEM 26. Business and Other Connections of the Investment Adviser

Money Management Associates ("MMA"), 100 Lakeshore Drive, Suite
1555, North Palm Beach, Florida 33408, a limited partnership
organized under the laws of the District of Columbia on August 15,
1974, has one general partner and two limited partners. Daniel L.
O'Connor is the general partner and sole employee of MMA. Limited
partners 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.

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 27. Principal Underwriters

Not applicable

ITEM 28. Location 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 29. Management Services

Not Applicable

ITEM 30. Undertakings

None.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the
Registrant has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereto duly authorized, in this City
of Bethesda in the State of Maryland, on the 14th day of April, 1999.

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
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 14, 1999
Daniel L. O'Connor Treasurer, Director

/s/ Richard J. Garvey* President, Director April 14, 1999
Richard J. Garvey

/s/ Jeff Ellis* Director April 14, 1999
Jeffrey R. Ellis

/s/ Bruce Ellis* Director April 14, 1999
Bruce C. Ellis

/s/ Michael D. Lange* Director April 14, 1999
Michael D. Lange

/s/ Patrick F. Noonan* Director April 14, 1999
Patrick F. Noonan

/s/ Leo Seybold* Director April 14, 1999
Leo Seybold

*Stephenie E. Adams, attorney-in-fact

<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> MONEY MARKET PORTFOLIO

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 19,145,249
<INVESTMENTS-AT-VALUE> 19,145,249
<RECEIVABLES> 340,744
<ASSETS-OTHER> 326,333
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 19,812,326
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 29,435
<TOTAL-LIABILITIES> 29,435
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 19,782,891
<SHARES-COMMON-STOCK> 19,782,891
<SHARES-COMMON-PRIOR> 19,177,146
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 19,782,891
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 635,148
<OTHER-INCOME> 0
<EXPENSES-NET> (138,390)
<NET-INVESTMENT-INCOME> 496,758
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 496,758
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (496,758)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 35,657,860
<NUMBER-OF-SHARES-REDEEMED> (35,526,092)
<SHARES-REINVESTED> 473,977
<NET-CHANGE-IN-ASSETS> 605,745
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 92,105
<INTEREST-EXPENSE> 232
<GROSS-EXPENSE> 138,390
<AVERAGE-NET-ASSETS> 18,424,895
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.030
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> (0.030)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.750
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> VIRGINIA PORTFOLIO

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 31,749,298
<INVESTMENTS-AT-VALUE> 33,784,085
<RECEIVABLES> 577,609
<ASSETS-OTHER> 262,162
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 34,623,856
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 80,870
<TOTAL-LIABILITIES> 80,870
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 32,459,225
<SHARES-COMMON-STOCK> 3,024,087
<SHARES-COMMON-PRIOR> 2,872,241
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 48,974
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,034,787
<NET-ASSETS> 34,542,986
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,767,035
<OTHER-INCOME> 0
<EXPENSES-NET> (302,598)
<NET-INVESTMENT-INCOME> 1,464,437
<REALIZED-GAINS-CURRENT> 515,403
<APPREC-INCREASE-CURRENT> (155,249)
<NET-CHANGE-FROM-OPS> 1,824,591
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,464,437)
<DISTRIBUTIONS-OF-GAINS> (466,429)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,018,080
<NUMBER-OF-SHARES-REDEEMED> (1,009,987)
<SHARES-REINVESTED> 143,753
<NET-CHANGE-IN-ASSETS> 1,635,668
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 204,458
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 302,598
<AVERAGE-NET-ASSETS> 32,713,025
<PER-SHARE-NAV-BEGIN> 11.460
<PER-SHARE-NII> 0.520
<PER-SHARE-GAIN-APPREC> 0.120
<PER-SHARE-DIVIDEND> (0.520)
<PER-SHARE-DISTRIBUTIONS> (0.160)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.420
<EXPENSE-RATIO> 0.930
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> MARYLAND PORTFOLIO

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 41,759,630
<INVESTMENTS-AT-VALUE> 44,709,691
<RECEIVABLES> 845,261
<ASSETS-OTHER> 448,633
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 46,003,585
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 176,546
<TOTAL-LIABILITIES> 176,546
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 42,908,592
<SHARES-COMMON-STOCK> 4,079,234
<SHARES-COMMON-PRIOR> 4,085,544
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (31,614)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,950,061
<NET-ASSETS> 45,827,039
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,542,993
<OTHER-INCOME> 0
<EXPENSES-NET> (427,618)
<NET-INVESTMENT-INCOME> 2,115,375
<REALIZED-GAINS-CURRENT> 98,804
<APPREC-INCREASE-CURRENT> 454,108
<NET-CHANGE-FROM-OPS> 2,668,287
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,115,375)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 724,881
<NUMBER-OF-SHARES-REDEEMED> (890,970)
<SHARES-REINVESTED> 159,779
<NET-CHANGE-IN-ASSETS> 482,982
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 288,928
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 427,618
<AVERAGE-NET-ASSETS> 46,230,758
<PER-SHARE-NAV-BEGIN> 11.100
<PER-SHARE-NII> 0.510
<PER-SHARE-GAIN-APPREC> 0.130
<PER-SHARE-DIVIDEND> (0.510)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 11.230
<EXPENSE-RATIO> 0.930
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000

</TABLE>