SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A) of the Securities
Exchange Act of 1934
Filed by the Registrant _X_
Filed by a Party other than the Registrant ___
Check the appropriate box:
_X_ Preliminary Proxy Statement __ Confidential, for use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
Definitive Proxy Statement
Definitive additional materials
Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
FUND FOR TAX-FREE INVESTORS, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
_X_ No fee required.
___ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
___ Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
___ Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
4922 Fairmont Avenue
Bethesda, Maryland 20814
(800) 343-3355
----------
Rushmore Tax-Free Money Market Portfolio
Rushmore Maryland Tax-Free Portfolio
Rushmore Virginia Tax-Free Portfolio
----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held June 1, 2000
----------
To the Shareholders of the Fund for Tax-Free Investors, Inc.:
Notice is hereby given that an annual meeting of shareholders of the
Rushmore Tax-Free Money Market Portfolio, Rushmore Maryland Tax-Free Portfolio,
and Rushmore Virginia Tax-Free Portfolio of the Fund for Tax-Free Investors,
Inc. (the "Fund") will be held at 10:00 a.m. Eastern Time on June 1, 2000 at the
offices of the Fund, 4922 Fairmont Avenue, Bethesda, Maryland 20814, or as
adjourned from time to time (the "Meeting"), for the purposes listed below. The
Meeting will be held:
I. To elect the Board of Directors of the Fund;
II. To approve a new investment advisory contract;
III. To ratify the selection of independent auditors; and
IV. To transact such other business as may properly come before
the Meeting.
After careful consideration, the Directors of the Fund unanimously
approved each of the nominees to the Board of Directors and unanimously approved
each of the other proposals and recommend that shareholders vote "FOR" each of
the nominees and "FOR" each other proposal.
The matters referred to above are discussed in detail in the proxy
statement attached to this notice. The Board of Directors has fixed the close of
business on March 17, 2000 as the record date for determining shareholders
entitled to notice of and to vote at the Meeting. Each share of a Portfolio is
entitled to one vote with respect to proposals on which that Portfolio's
shareholders are entitled to vote, with fractional votes for fractional shares.
If you held shares of more than one Portfolio on the record date, you will
receive separate proxy cards for each Portfolio.
Regardless of whether you plan to attend the Meeting, PLEASE COMPLETE,
SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED,
SO THAT YOU WILL BE REPRESENTED AT THE MEETING. If you have returned a proxy
card and are present at the Meeting, you may change the vote specified in the
proxy at that time. However, attendance in person at the Meeting, by itself,
will not revoke a previously tendered proxy.
By Order of the Board of Directors
Stephenie E. Adams, Secretary
Bethesda, Maryland
April 10, 2000
YOUR VOTE IS IMPORTANT NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE. IN
ORDER TO AVOID THE UNNECESSARY EXPENSE OF FURTHER SOLICITATION, WE URGE YOU TO
INDICATE VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD.
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
4922 Fairmont Avenue
Bethesda, Maryland 20814
(800) 343-3355
--------
Rushmore Tax-Free Money Market Portfolio
Rushmore Maryland Tax-Free Portfolio
Rushmore Virginia Tax-Free Portfolio
--------
PROXY STATEMENT
--------
Annual Meeting of Shareholders
To be held June 1, 2000
This proxy statement and enclosed form of proxy are being furnished in
connection with the solicitation of proxies by the Board of Directors (the
"Board" or "Directors") of the Fund for Tax-Free Investors, Inc. (the "Fund")
for use at an annual meeting of shareholders of the Rushmore Tax-Free Money
Market Portfolio, Rushmore Maryland Tax-Free Portfolio, and Rushmore Virginia
Tax-Free Portfolio to be held at 10:00 a.m. Eastern Time on June 1, 2000 at the
offices of the Fund, 4922 Fairmont Avenue, Bethesda, Maryland 20814, or as
adjourned from time to time (the "Meeting"). The Board is soliciting proxies
from shareholders of the Portfolios with respect to the proposals set forth in
the accompanying notice.
It is anticipated that the first mailing of proxies and proxy
statements to shareholders will be on or about April 10, 2000.
Shareholder Reports. Shareholders can find important information about
the Portfolios in the Fund's annual report dated December 31, 1999, which
previously has been furnished to shareholders. Shareholders may request another
copy of this report by writing to the Fund at the above address, or by calling
the telephone number above. A copy of such report will be provided free of
charge.
Introduction. On October 20, 1999, Money Management Associates, L.P.
("MMA"), the Portfolios' investment adviser, entered into a definitive agreement
pursuant to which Friedman, Billings, Ramsey Group, Inc. ("FBR"), and certain of
its affiliates, will acquire all of the outstanding ownership interests in MMA,
as well as certain other assets. Under the Investment Company Act of 1940, as
amended (the "1940 Act"), consummation of the transaction will result in the
assignment and automatic termination of the Fund's current investment advisory
contract with MMA. The Board of the Fund has met and considered the proposed
transaction and its consequences for the Fund and has determined to (1) approve
a new investment advisory contract with MMA which would take effect upon
consummation of the transaction, (2) recommend that shareholders approve such
contract, and (3) take certain other actions necessitated by the transaction,
including reconstitution of the Fund's Board. For more information concerning
the transaction, see "Proposal II. Approval of New Investment Advisory Contract
Description of the Transaction."
<PAGE>
PROPOSAL I.
ELECTION OF DIRECTORS
In light of the proposed transaction, the Board has determined to
reconstitute the Board so that at least 75% of the Directors are not "interested
persons", as defined in the 1940 Act, of the Fund, MMA or FBR. These persons are
commonly referred to as "independent Directors."
At its meeting held on January 27, 2000, the Board appointed a
Nominating Committee consisting of Patrick F. Noonan and Bruce C. Ellis, each of
whom is an independent Director, to consider and recommend to the Board nominees
for service on the Board. The Nominating Committee consulted with counsel and
other independent Directors, as well as representatives of MMA and FBR, and
recommended to the Board that the size of the Board be fixed at eight members
and that the following persons be nominated for election to the Board
("Nominees"):
Daniel L. O'Connor Jeffrey R. Ellis
Richard J. Garvey F. David Fowler
Louis T. Donatelli Patrick F. Noonan
Bruce C. Ellis Michael A. Willner
Messrs. Daniel L. O'Connor, Richard J. Garvey, Bruce C. Ellis, Jeffrey
R. Ellis, and Patrick F. Noonan, currently serve as Directors of the Fund and
are proposed for re-election to the Board.
On March 17, 2000, the Board met to consider the Nominating Committee's
recommendations and the background, experience and credentials of each nominee,
as well as any relationships such nominee has or has had with the Fund, MMA and
FBR. Based upon such consideration, the Board unanimously agreed to nominate
each such person and recommended that the nominations be submitted to
shareholders for approval.
If the Nominees are elected at the Meeting, there will be a total of
eight Directors on the Board, six of whom will be independent Directors.
The Nominees have indicated their willingness to serve as Directors.
The Board knows of no reason why the Nominees would be unable to serve, but in
the event of any such unavailability, the proxies received will be voted for
such substituted nominee as the Board may recommend.
The persons named as proxies on the enclosed proxy card will vote your
shares for the election of the Nominees unless you withhold authority to vote
for the Nominees in your proxy. If elected by shareholders, the Nominees will
continue to serve as Directors of the Fund until the next meeting of
shareholders, if any, called for the purpose of electing Directors, unless
sooner succeeded as provided in the Fund's Articles of Incorporation and Bylaws.
It is proposed, and the Board recommends, that shareholders elect the Nominees.
<PAGE>
The following table sets forth certain information concerning each of
the Nominees.
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------- -------------------- ---------------------------------- ---------------------
Shares Owned
Position with Principal Occupations During Beneficially on
Name, Address and Age Fund Last Five Years March 17, 2000
- -------------------------------------------------------------------------------------------------------------------
Daniel L. O'Connor,* 58 Chairman, General Partner of MMA, N/A
100 Lakeshore Drive Treasurer, and registered investment adviser of
Suite 1555 Director four registered investment
North Palm Beach, FL 33408 companies (the
"Rushmore Funds"), since 1975.
Director, Rushmore Trust and
Savings, FSB, the Fund's
transfer agent and custodian.
Director or Trustee of four
Rushmore Funds. Trustee of the
Cappiello-Rushmore Trust.
- -------------------------------------------------------------------------------------------------------------------
Richard J. Garvey,* 67 President and Limited Partner of MMA and Vice N/A
730 Southwest 67th Place Director President of Rushmore Services,
Portland, OR 97225 Inc. until 1998. Director or
Trustee of four Rushmore Funds.
- -------------------------------------------------------------------------------------------------------------------
Louis T. Donatelli, 63 President of Donatelli and N/A
7200 Wisconsin Avenue Klein, Inc., engaged in the
Bethesda, MD 20814 acquisition of real estate,
primarily office buildings and
multi-family housing projects,
since 1993. Director, American
Gas Index Fund, Inc.
- -------------------------------------------------------------------------------------------------------------------
Bruce C. Ellis,** 55 Director A private investor in start-up N/A
7108 Heathwood Court companies. Vice President,
Bethesda, MD 20817 LottoPhone, Inc., a telephone
state lottery service, September
1991-1995. Director, The Torray
Fund, since 1994; Director, the
Sheppard Fund, since 1994.
Director or Trustee of three
Rushmore Funds, and Trustee of
the Cappiello-Rushmore Trust.
<PAGE>
- -------------------------------------------------------------------------------------------------------------------
Jeffrey R. Ellis,** 55 Director President, Innovative LLC, a N/A
513 Kerry Lane manufacturing-marketing company
Virginia Beach, VA 23451 in Virginia Beach, since 1999.
Executive Vice President, Buddy
Systems, Inc., a manufacturing-marketing
company in Virginia Beach,
Virginia from January 1996 to January 1999.
Vice President, LottoPhone, Inc.,
a telephone state lottery service,
September 1993-1995. Director or
Trustee of three Rushmore Funds,
and Trustee of the Cappiello-Rushmore Trust.
- -------------------------------------------------------------------------------------------------------------------
F. David Fowler, 66 Private investor. Dean, The N/A
9450 Newbridge Drive George Washington University
Potomac, MD 20854 School of Business and Public
Management, 1992-1997; Partner,
KPMG Peat Marwick from
October 1969 to June 1992.
Trustee, The FBR Family of Funds.
- -------------------------------------------------------------------------------------------------------------------
Patrick F. Noonan, 57 Director Chairman and Chief Executive N/A
11901 Glen Mill Drive Officer of the Conservation Fund
Potomac, MD 20854 since 1985. Vice Chairman,
American Farmland Trust, and
Trustee, American Conservation
Association since 1985.
President, Conservation
Resources, Inc. since 1981.
Director or Trustee of four
Rushmore Funds.
<PAGE>
- -------------------------------------------------------------------------------------------------------------------
Michael A. Willner, 43 President, Catalyst Advisers, N/A
11521 Potomac Road Inc., a news organization, from
Lorton, VA 22079 September 1996 to Present;
President, Federal Filings,
Inc., a news organization from
July 1994 to July 1995.
Trustee, The FBR Family of Funds
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
* Messrs. O'Connor and Garvey are "interested persons" of the Fund (as that
term is defined in the 1940 Act) because of their current or former
affiliations with MMA. Mr. O'Connor also is an "interested person" of the
Fund by virtue of his officer position with the Fund.
** Bruce C. Ellis and Jeffrey R. Ellis are brothers.
The following table sets forth certain information concerning the current
Directors who are not standing for re-election.
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
Shares Owned
Position with Principal Occupations During Beneficially on
Name, Address and Age Fund Last Five Years March 17, 2000
- -------------------------------------------------------------------------------------------------------------------
Michael D. Lange,* 58 Director Vice President, Capital Hill N/A
407 River Bend Road Management Corporation since
Great Falls, VA 22066 1967. Owner of Michael D.
Lange, Ltd., a builder
and developer, since
1980. Partner of Greatful
Falls, a building developer,
since 1994. Director,
Rushmore Trust and Savings,
FSB, the Fund's transfer
agent and custodian.
Director or Trustee of three
Rushmore Funds.
- --------------------------------------------------------------------------------------------------------------------
Leo Seybold, 86 Director Retired 1988. Director or Maryland Tax-Free
5804 Rockmere Drive Trustee of three Rushmore Funds. Portfolio: 90,490.38.
Bethesda, MD 20816
Tax-Free Money
Market Portfolio:
1,811.83.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
* Mr. Lange is an "interested person" of the Fund because of his affiliation
with Rushmore Trust and Savings, FSB.
<PAGE>
During the fiscal year ended December 31, 1999, there were four
meetings of the Board. There was 100% attendance by Directors at the meetings of
the Board throughout the period.
As of March 17, 2000, the Directors and officers of the Fund, as a
group, owned less than one percent of the outstanding shares of any Portfolio,
or the Fund in the aggregate, except Leo Seybold who owned 90,490,382 shares
(3.4%) of the Tax-Free Money Market Portfolio.
Board of Directors - Committees. In addition to the Nominating
Committee, the Fund has a standing Audit Committee that currently consists of
Messrs. Bruce C. Ellis, Jeffrey R. Ellis, Michael D. Lange, Patrick F. Noonan,
and Leo Seybold, each of whom (except Michael D. Lange) is an independent
Director. The Audit Committee reviews both the audit and non-audit work of the
Fund's independent public accountants, submits a recommendation to the Board as
to the selection of independent auditors, and reviews generally the maintenance
of the Fund's records and the safekeeping arrangements of the Fund's custodian.
During the fiscal year ended December 31, 1999, the Audit Committee met one
time. Each member of the Audit Committee attended all meetings during the period
in which he was a member of the Audit Committee. There were no meetings of any
other committee during such fiscal year.
Remuneration of Directors. The following table sets forth the
compensation received by the Directors for their services to the Fund during the
fiscal year ended December 31, 1999. In addition to the fees listed below, the
Directors are also reimbursed for all reasonable expenses incurred during the
execution of their duties.
<TABLE>
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Pension or
Retirement Total Compensation From
Aggregate Benefits Accrued Estimated Annual the Fund Complex* Paid
Compensation as part of the Benefits Upon to the Director
Name of Director from the Fund Fund Expenses Retirement
- -------------------------- -------------------- -------------------- -------------------- -------------------------
Bruce C. Ellis $3,000 $0 $0 $9,000
- -------------------------- -------------------- -------------------- -------------------- -------------------------
Jeffrey R. Ellis $3,000 $0 $0 $9,000
- -------------------------- -------------------- -------------------- -------------------- -------------------------
Richard J. Garvey $0 $0 $0 $0
- -------------------------- -------------------- -------------------- -------------------- -------------------------
Michael D. Lange $3,000 $0 $0 $9,000
- -------------------------- -------------------- -------------------- -------------------- -------------------------
Patrick F. Noonan $3,000 $0 $0 $10,000
- -------------------------- -------------------- -------------------- -------------------- -------------------------
Daniel L. O'Connor $0 $0 $0 $0
- -------------------------- -------------------- -------------------- -------------------- -------------------------
Leo Seybold $3,000 $0 $0 $9,000
- -------------------------- -------------------- -------------------- -------------------- -------------------------
</TABLE>
* The "Fund Complex" includes the Fund, Fund for Government Investors, The
Rushmore Fund, Inc., and American Gas Index Fund, Inc.
Material Interest of Director. Daniel O'Connor has a direct material
interest in the transaction described below in Proposal II, pursuant to which
Mr. O'Connor, as the sole general partner of MMA, the investment adviser of the
Portfolios, and a shareholder of Rushmore Trust and Savings, FSB ("RTS"), will
receive compensation for consulting services and other benefits. For a complete
discussion of the transaction, see Proposal II.
THE BOARD, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE NOMINEES UNDER PROPOSAL I. UNMARKED PROXIES WILL BE
SO VOTED.
<PAGE>
PROPOSAL II.
APPROVAL OF A NEW INVESTMENT
ADVISORY CONTRACT
Introduction. MMA, a District of Columbia limited partnership located
at 100 Lakeshore Drive, Suite 1555, North Palm Beach, Florida 33408, has served
as the Portfolios' investment adviser since the organization of the Fund in
1983. MMA currently serves as investment adviser to the Portfolios pursuant to
an investment advisory contract dated July 12, 1983 (the "Current Advisory
Contract"). RTS, a federal savings bank, serves as the administrator, transfer
agent, portfolio accountant, and custodian to the Portfolios, and provides
shareholder services to the Portfolios. MMA is the majority shareholder of RTS,
whose address is 4922 Fairmont Avenue, Bethesda, Maryland 20814.
As noted above, MMA will undergo a "change in control" as a result of
the consummation of the transaction described below, which, under applicable
law, will terminate the Current Advisory Contract. It is proposed that MMA
continue to serve as investment adviser to the Portfolios following completion
of the transaction. Therefore, in connection with the transaction and as
required by the 1940 Act, shareholders of each Portfolio of the Fund are being
asked in Proposal II to approve a new investment advisory contract between the
Fund, on behalf of each Portfolio, and MMA which is substantially comparable to
the Current Advisory Contract (the "New Advisory Contract"). The Board
recommends that shareholders approve the New Advisory Contract, a form of which
is attached as Appendix A.
Description of the Transaction. On October 20, 1999, MMA, RTS, Daniel
O'Connor, the limited partners of MMA, Money Management Associates, Inc. ("MMA
Buyer"), and Money Management Associates (LP), Inc. ("LP Buyer" and, together
with MMA Buyer, the "Buyers"), and FBR entered into a Purchase and Sale
Agreement (the "Agreement") pursuant to which the Buyers will acquire ownership
of MMA and RTS (the "Transaction").
The Agreement provides for the purchase by MMA Buyer of all of the
outstanding general partnership interests in MMA from Mr. O'Connor, the sole
general partner of MMA, and the purchase by LP Buyer of all of the outstanding
limited partnership interests in MMA from the current limited partners of MMA.
MMA currently owns 72.4% of the outstanding capital stock of RTS, and Daniel
O'Connor owns 27.6% of the outstanding capital stock of RTS. The Agreement
further provides that Mr. O'Connor will sell to MMA Buyer all of the RTS stock
owned by him. As a result of the Transaction, the Buyers will control MMA,
having acquired all of the outstanding general partnership and limited
partnership interests in MMA for a total consideration of $17.5 million, minus
the book value of the outstanding shares of RTS stock not owned by MMA, and an
installment note unconditionally guaranteed by FBR in the amount of $9.7 million
dollars. MMA Buyer also will purchase the shares of RTS stock owned by Daniel
O'Connor, and other shareholders, as part of the Transaction.
The purchase price of the RTS stock owned by Daniel O'Connor is
expected to be approximately $1,261,000, based on the October 20, 1999 book
value of all shares not owned by MMA, subject to adjustment to reflect any
changes occurring in the ordinary course of business prior to the closing of the
Transaction. Further, Daniel O'Connor will receive approximately $11,038,000 for
the sale of his partnership interests in MMA. In addition, Martin O'Connor and
John Cralle, each of whom is a Vice President of the Fund, will receive
compensation for the sale of their limited partnership interests in MMA. By
virtue of these payments, each of Daniel O'Connor, Martin O'Connor, and John
Cralle may be considered to have a material interest in the approval of the New
Advisory Contract.
<PAGE>
FBR and the Buyers are seeking federal approval to acquire Rushmore
National Bank, Bethesda, Maryland ("RNB"). RNB will be the successor institution
to RTS, which will convert from a federal savings bank to a national banking
association immediately prior to the proposed acquisition pursuant to a
conversion application that will be filed with the Office of the Comptroller of
the Currency. Upon conversion, RNB will engage in the same activities as RTS,
but will no longer be subject to various legal restraints imposed upon federal
savings banks, such as holding at least 65% of the institution's assets in
mortgage-related investments. Moreover, FBR anticipates that RNB's activities
will be augmented by offering personal trust services. Thus, those services that
RTS currently provides to the Portfolios will be able to be provided by RNB.
The closing date for the Transaction has not yet been determined, and
there is no assurance that the Transaction will be completed. Completion of the
Transaction is subject to a number of conditions including, among others, (i)
the receipt of certain regulatory approvals, (ii) approval of the New Advisory
Contract by Shareholders of each Portfolio, and (iii) assets under management
and net management fees (excluding market-based changes) for all accounts
managed by MMA as of two days prior to closing must be at least 80% of the
corresponding amounts during the second half of 1999. Accordingly, if the New
Advisory Contract is not approved by shareholders, the Transaction will not be
consummated unless this condition is waived. If the Transaction is not completed
for any reason, the Current Advisory Contract will remain in effect.
Post-Transaction Structure and Operations. Upon completion of the
Transaction, MMA will be controlled by the Buyers, each of which is a Delaware
corporation whose principal business address is Potomac Tower, 1001 Nineteenth
Street North, Arlington, Virginia 22209. Each Buyer is a wholly owned subsidiary
of FBR, a Virginia corporation whose address is Potomac Tower, 1001 Nineteenth
Street North, Arlington, Virginia 22209. FBR is a public company that is a
holding company for a number of subsidiaries engaged in the business of
investment banking and asset management. Subsidiaries of FBR manage
approximately $800 million for numerous clients, including individuals, banks
and thrift institutions, investment companies, pension and profit sharing plans
and trusts, estates and charitable organizations.
Subsidiaries of FBR include Friedman, Billings, Ramsey & Co., Inc. and
FBR Investment Services, Inc., separately registered broker-dealers (the
"Affiliated Brokers"). Once the Transaction is completed, absent an SEC
exemption or other relief, the Portfolios generally would be precluded from
effecting principal transactions with the Affiliated Brokers, and their ability
to purchase securities being underwritten by an Affiliated Broker or to utilize
the Affiliated Brokers for agency transactions would be subject to restrictions.
FBR and MMA do not believe that the restrictions on transactions with the
Affiliated Brokers described above will materially adversely affect MMA's
ability, post-closing, to provide services to the Portfolios, the Portfolios'
ability to take advantage of market opportunities, or the Portfolios' overall
performance.
Anticipated Impact of the Transaction on Management of the Portfolios.
Except as described below, the Transaction should have no immediate impact on
the management of the Portfolios or MMA's capacity to provide the type, quality,
or quantity of services that it currently provides, and the Portfolios should
continue to receive high quality services after the Transaction. Information
about the current management of the Fund is presented in Appendix B. To help
ensure continuity in the operations of MMA, Daniel O'Connor, Martin O'Connor,
and John Cralle have contractually agreed to provide consulting and other
services to MMA for significant periods following the Transaction.
Historically, each of the Portfolios has been managed by a portfolio
management team under which no individual is primarily responsible for making
investment decisions on behalf of the Portfolio. Following the Transaction, it
is anticipated that David Ellison will join such portfolio management team for a
transition period and eventually will have primary portfolio management
responsibility for each Portfolio. Mr. Ellison currently is a Director of FBR
Fund Advisers, Inc., an asset management subsidiary of FBR, and serves as the
portfolio manager of the FBR Financial Services Fund and FBR Small Cap Financial
Fund, two series of The FBR Family of Funds, a registered investment company.
Prior to joining FBR Fund Advisers, Inc. in 1997, Mr. Ellison was portfolio
manager of the Fidelity Select Home Finance Fund from December 1985 until
January 1997.
<PAGE>
Section 15(f) of the 1940 Act. Section 15(f) provides that an
investment adviser to an investment company or any affiliated person thereof may
receive any amount or benefit in connection with a "change in control" of the
investment adviser as long as two conditions are satisfied. First, an "unfair
burden" (as defined in the 1940 Act) must not be imposed on investment company
clients of the adviser as a result of the transaction, or any express or implied
terms, conditions or understandings applicable to the transaction. The Board has
been advised by FBR and MMA that they are not aware of any circumstances arising
from the Transaction that might result in an unfair burden being imposed on the
Fund or any Portfolio. The second condition of Section 15(f) is that during the
three-year period after the transaction, at least 75% of the investment
company's board of directors must not be "interested persons" (as defined in the
1940 Act) of the investment adviser (or predecessor or successor adviser). The
Board of the Fund has determined to reconstitute the Board, subject to
shareholder approval, to comply with this requirement and MMA and MMA Buyer have
agreed to use commercially reasonable best efforts to ensure compliance with
Section 15(f) for the applicable periods following completion of the
Transaction.
The Contracts. The Current Advisory Contract. MMA has served as
investment adviser to the Portfolios since each Portfolio's commencement of
investment operations. The Current Advisory Contract was last submitted for
approval by shareholders of the Portfolios at a meeting held on May 27, 1984,
for the purpose of implementing the Portfolios' current investment advisory
arrangements.
Under the terms of the Current Advisory Contract, MMA is responsible
for making investment decisions and placing orders for the purchase and sale of
each Portfolio's investments directly with the issuers or with brokers or
dealers selected by it in its discretion. MMA also furnishes to the Board, which
has overall responsibility for the business and affairs of the Portfolios,
periodic reports on the investment performance of the Portfolios.
MMA is obligated to manage each Portfolio in accordance with the
applicable policies of the Portfolio. The investment advisory services of MMA to
the Portfolios are not exclusive under the terms of the Current Advisory
Contract. MMA is free to, and does, render investment advisory services to
others. Information about MMA's other investment company clients is presented in
Appendix C.
Consistent with the requirements of the 1940 Act, the Current Advisory
Contract provides that MMA generally is not liable to the Portfolios for any
mistake in judgment, or otherwise, except by reason of willful misfeasance, bad
faith or gross negligence in the performance of MMA's duties or by reason of its
reckless disregard of its obligations under the Current Advisory Contract.
The Current Advisory Contract may be terminated by a Portfolio without
penalty upon 60 days' notice by the Board or by a vote of the holders of a
majority of the Portfolio's outstanding voting securities, or upon 60 days'
notice by MMA. As noted above, the Current Advisory Contract terminates
automatically in the event of its "assignment" (as defined in the 1940 Act).
For its services, MMA receives an investment advisory 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 year ended December 31, 1999, the Portfolios
paid the following investment advisory fees to MMA: Money Market Portfolio -
$91,951; Maryland Portfolio - $284,560; and Virginia Portfolio - $206,583.
<PAGE>
The New Advisory Contract. The New Advisory Contract is substantially
identical to the Current Advisory Contract, except for the absence of a
provision in the Current Advisory Contract whereby MMA undertakes to reimburse
expenses of a Portfolio, exclusive of taxes, brokerage, interest and
extraordinary legal expenses, if the Portfolio's aggregate expenses in any
fiscal year exceed 1.00% of the average market value of the Portfolio's net
assets. However, this expense reimbursement obligation will be set forth in a
separate agreement between MMA and the Fund, which shall continue until the
first anniversary of the New Advisory Contract, and shall thereafter
automatically continue for one-year periods unless terminated in accordance with
its terms. During the fiscal year ended December 31, 1999, MMA did not reimburse
any Portfolio expenses in accordance with the Current Advisory Contract.
As noted previously, MMA does not anticipate that the Transaction will
cause any reduction in the quality or types of services now provided to the
Portfolios or have any adverse effect on MMA's ability to fulfill its
obligations to the Portfolios. No change is anticipated in the investment
philosophies and practices currently followed by the Portfolios. There will be
no change in advisory fees for the Portfolios.
At the March 17, 2000 meeting of the Board, the New Advisory Contract
was approved unanimously by the Board, including all of the Directors who are
not parties to the New Advisory Contract or "interested persons" (as defined in
the 1940 Act) of any such party (other than as Directors of the Fund). The New
Advisory Contract, as approved by the Board, is submitted for approval by the
shareholders of the Portfolios.
If the New Advisory Contract is approved by shareholders, it will take
effect immediately upon the closing of the Transaction. The New Advisory
Contract will remain in effect for two years from the date it takes effect, and,
unless earlier terminated, will continue from year to year with respect to each
Portfolio thereafter, provided that each such continuance is approved annually
with respect to the contract and Portfolio (i) by the Board or by the vote of a
majority of the outstanding voting securities of the particular Portfolio, and,
in either case, (ii) by a majority of the Directors who are not parties to the
New Advisory Contract or interested persons of any such party (other than as
Directors of the Fund).
Payments to RTS/RNB. RTS provides administrative services to each
Portfolio, as well as transfer agency, shareholder servicing, custodial and
portfolio accounting services, for which it receives compensation from the
Portfolios at an annual rate of 0.25% of the average net assets of the Money
Market Portfolio and 0.30% of the average net assets of the Maryland and
Virginia Portfolios. For the fiscal year ended December 31, 1999, the Portfolios
paid RTS the following fees for such services: Money Market Portfolio - $45,976;
Maryland Portfolio - $136,589; and Virginia Portfolio - $99,192. RNB, the
successor to RTS, will continue to provide these services after the Transaction.
Evaluation by the Board of Directors. The Board, advised by counsel,
has determined that in approving the New Advisory Contract on behalf of the
Portfolios, the Fund can best assure itself that the services currently provided
to the Portfolios by MMA will continue without interruption after the
Transaction. The Board believes that, like the Current Advisory Contract, the
New Advisory Contract will enable the Portfolios to obtain high quality services
at a cost that is appropriate, reasonable, and in the best interests of each
Portfolio and its shareholders.
In determining whether or not it was appropriate to approve the New
Advisory Contract and to recommend approval to shareholders, the Board,
including the Directors who are not parties to the New Advisory Contract or
interested persons of such parties, considered various materials and
representations provided by MMA and FBR (including information concerning
compensation and consulting arrangements to be implemented in connection with
the Transaction), information provided by representatives of the Buyers, and was
advised by legal counsel with respect to these matters.
<PAGE>
The Directors also considered the following information, among other
things: (1) Daniel O'Connor and others have agreed to provide consulting and
other services to MMA for significant periods following the Transaction, thus
helping to ensure continuity of management; (2) that the compensation to be
received by MMA under the New Advisory Contract is the same as the compensation
paid under the Current Advisory Contract; (3) the fairness of the compensation
payable to MMA under the Current Advisory Contract; (4) the commonality of the
terms and provisions of the New Advisory Contract with the terms of the Current
Advisory Contract; (5) representations made by FBR concerning the potential
impact of affiliated brokerage relationships on MMA's ability to provide
services to the Portfolios, and on the Portfolios' ability to engage in
portfolio transactions; and (6) the financial condition of FBR and the expertise
of its personnel and the personnel of its affiliates, particularly those who
will be involved in the management of the Portfolios.
Based upon its review, the Board determined that, by approving the New
Advisory Contract, the Portfolios can best be assured that services from MMA
will be provided without interruption. The Board also determined that the New
Advisory Contract is in the best interests of each Portfolio and its
shareholders. Accordingly, after consideration of the above factors, and such
other factors and information it considered relevant, the Board unanimously
approved the New Advisory Contract and voted to recommend its approval by each
Portfolio's shareholders.
THE BOARD, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE NEW INVESTMENT ADVISORY CONTRACT AS
PROVIDED UNDER PROPOSAL II. UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL III.
RATIFICATION OF INDEPENDENT AUDITORS
The Board, including a majority of the independent Directors, has
selected the firm of Deloitte & Touche LLP, to serve as the Fund's independent
auditors and to examine the Portfolios' financial statements for the current
fiscal year. The Fund knows of no direct or indirect financial interest of such
firm in the Fund or its Portfolios. Representatives of Deloitte & Touche LLP, if
requested by any shareholder, will be present at the Meeting, will be available
to respond to appropriate questions from shareholders, and will have the
opportunity to make a statement if they so desire.
THE BOARD, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE
LLP AS INDEPENDENT AUDITORS. UNMARKED PROXIES WILL BE SO VOTED.
OTHER BUSINESS
The Directors do not know of any matters to be presented at the Meeting
other than those set forth in this proxy statement. If other business should
properly come before the Meeting, proxies will be voted in accordance with the
judgment of the persons named in the accompanying proxy.
VOTING INFORMATION
Proxy Solicitation. The costs of the Meeting, including the
solicitation of proxies, will be paid by FBR. The principal solicitation will be
by mail, but proxies also may be solicited by telephone, telegraph, the Internet
or personal interview by officers or agents of the Fund. The Fund will forward
to record owners proxy materials for any beneficial owners that such record
owners may represent.
<PAGE>
Shareholder Voting. Shareholders of record at the close of business on
March 17, 2000 (the "Record Date") are entitled to notice of, and to vote at,
the Meeting. Each shareholder is entitled to one vote for each full share and an
appropriate fraction of a vote for each fractional share held.
As of the Record Date, the following number of shares of each
Portfolio, representing the corresponding number of votes, were outstanding:
<TABLE>
<S> <C> <C>
----------------------------------------------------------------------------------------------------
Portfolio Number of Shares Outstanding (Votes)
----------------------------------------------------------------------------------------------------
Rushmore Tax-Free Money Market Portfolio 17,196,998.19
----------------------------------------------------------------------------------------------------
Rushmore Maryland Tax-Free Portfolio 3,745,481.06
----------------------------------------------------------------------------------------------------
Rushmore Virginia Tax-Free Portfolio 2,664,448.64
------------------------------------------------------------- ---------------------------------------
</TABLE>
The persons owning of record or beneficially 5% or more of any
Portfolio as of the Record Date are set forth in Appendix D.
The presence in person or by proxy of the holders of a majority of the
outstanding shares of each Portfolio is required to constitute a quorum at the
Meeting. Shares held by shareholders present in person or represented by proxy
at the Meeting will be counted both for the purposes of determining the presence
of a quorum and for calculating the votes cast on the issues before the Meeting.
Proxies that reflect abstentions or broker "non-votes" (that is, shares
held by brokers or nominees as to which (a) such persons have not received
instructions from the beneficial owner or other persons entitled to vote and (b)
the brokers or nominees do not have discretionary voting power on a particular
matter) will be counted as shares that are present and entitled to vote for
purposes of determining the presence of a quorum. Pursuant to the rules and
policies of the New York Stock Exchange (the "Exchange"), members of the
Exchange may vote on the proposals to be considered at the Meeting without
instructions from the beneficial owners of the Portfolios' shares.
In the event that a quorum is present at the Meeting but sufficient
votes to approve any proposal are not received, the persons named as proxies may
propose one or more adjournments of the Meeting to permit further solicitation
of proxies or to obtain the vote required for approval of one or more proposals.
Any such adjournment will require the affirmative vote of a majority of those
shares represented at the Meeting in person or by proxy. If a quorum is present,
the persons named as proxies will vote those proxies which they are entitled to
vote FOR the proposal in favor of such an adjournment and will vote those
proxies required to be voted AGAINST the proposal against any such adjournment.
A shareholder vote may be taken prior to any adjournment of the Meeting on any
proposal for which there are sufficient votes for approval, even though the
Meeting is adjourned as to other proposals.
Timely, properly executed proxies will be voted as instructed by
shareholders. A shareholder may revoke his or her proxy at any time prior to its
exercise by written notice addressed to the Secretary of the Fund at 4922
Fairmont Avenue, Bethesda, Maryland 20814 or by voting in person at the Meeting.
However, attendance in person at the Meeting, by itself, will not revoke a
previously tendered proxy.
Electronic Voting. Shareholders may give voting instructions via the
Internet (www.proxyvote.com) or by touchtone telephone (1-800-690-6903) by
following the instructions enclosed with the proxy card.
Voting by Mail. In addition to voting in person at the Meeting, via the
Internet, or by touchtone telephone, shareholders also may sign and mail the
proxy card received with the proxy statement.
<PAGE>
Required Vote. Shareholders of all Portfolios vote together on
Proposals I and III, shareholders vote separately by Portfolio on Proposal II,
and shareholders will vote as necessary on any other proposal. Approval of
Proposals I and III requires the vote of shareholders owning of record a
plurality of the shares of the Fund voting at the Meeting, if a quorum is
present. Approval of Proposal II requires the vote of a "majority of the
outstanding voting securities" entitled to vote on the proposal, as defined in
the 1940 Act, which means that the vote of 67% or more of the voting securities
entitled to vote on the proposal that are present at the Meeting, if the holders
of more than 50% of the outstanding shares are present or represented by proxy,
or the vote of more than 50% of the outstanding voting securities entitled to
vote on the proposal, whichever is less. Accordingly, assuming the presence of a
quorum, abstentions and non-votes have the effect of a negative vote on Proposal
II, and will have no effect on Proposals I and III.
Shareholder Proposals. The Fund does not hold regular shareholders'
meetings. Shareholders wishing to submit proposals for inclusion in a proxy
statement for a subsequent shareholders' meeting should send their written
proposals to the Secretary of the Fund at the address set forth on the cover of
this proxy statement.
Proposals must be received a reasonable time prior to the date of a
meeting of shareholders to be considered for inclusion in the proxy materials
for a meeting. Timely submission of a proposal does not, however, necessarily
mean that the proposal will be included. Persons named as proxies for any
subsequent shareholders' meeting will vote in their discretion with respect to
proposals submitted on an untimely basis.
To ensure the presence of a quorum at the Meeting, prompt execution and
return of the enclosed proxy is requested. A self-addressed, postage-paid
envelope is enclosed for your convenience.
By Order of the Board of Directors
Stephenie E. Adams, Secretary
Bethesda, Maryland
April 10, 2000
<PAGE>
APPENDIX A
INVESTMENT ADVISORY CONTRACT
Between
FUND FOR TAX-FREE INVESTORS, INC.
And
MONEY MANAGEMENT ASSOCIATES, L.P.
This Contract (the "Contract"), dated as of the _____ day of
__________, 2000, is entered into by and between Fund for Tax-Free Investors,
Inc. (the "Corporation") on behalf of its portfolios, Rushmore Tax-Free Money
Market Portfolio, Rushmore Maryland Tax-Free Portfolio and Rushmore Virginia
Tax-Free Portfolio (hereinafter individually sometimes referred to as the "Fund"
and collectively as the "Funds") and Money Management Associates, L. P.
(hereinafter sometimes referred to as the "Manager").
THAT in consideration of the mutual covenants hereinafter contained, it
is agreed as follows:
1. The Corporation hereby employs the Manager to manage the investment
and reinvestment of the assets of each Fund and to administer the affairs of
each Fund, subject to the control of the officers and Board of Directors of the
Corporation, for the period and on the terms set forth in this Agreement. The
Manager hereby accepts such employment and agrees during such period to render
the services and to assume the obligations set forth, for the compensation
herein provided.
2. The Manager assumes and shall pay or reimburse each Fund for: (a)
all expenses in connection with the management of the investment and
reinvestment of the assets of such Fund, except that each Fund assumes and shall
pay all broker's commissions and issue and transfer taxes chargeable to the Fund
in connection with securities transactions to which the Fund is a party; (b) the
compensation (if any) of those directors and officers of the Corporation who
also serve as directors, officers or employees of the Manager; and (c) all
expenses not hereinafter specifically assumed by the Corporation or a Fund where
such expenses are incurred by the Manager or by a Fund in connection with the
administration of the affairs of the Fund.
Each Fund assumes and shall pay or reimburse the Manager for the Fund's
taxes, corporate fees, interest expenses (if any) and its allocable share of all
charges, costs and expenses incurred in connection with : (a) maintaining its
offices, determining from time to time the net assets of the Fund, maintaining
its books and records, and preparing, reproducing and filing its tax returns and
reports to governmental agencies; (b) auditing its financial statements; (c)
providing stock certificates representing shares of the Fund and the services
rendered in the registration or transfer of such shares, in the payment and
disbursement of dividends and distributions by the Fund, and in the custody of
the cash, securities and other assets of the Fund; (d) stockholders' and
directors' meetings, and preparation, printing and distribution of all reports
and proxy materials; (e) printing the Fund's prospectus on at least an annual
basis, and distributing it to its then-existing shareholders; (f) legal services
rendered to the Fund; (g) retaining and compensating those directors, officers
and employees of the Corporation who do not also serve as directors, officers of
employees of the Manager; (h) maintaining appropriate insurance coverage for the
Corporation and its directors and officers; and (i) its membership in trade
associations.
<PAGE>
At the request of the Corporation, the Manager shall make available to
each Fund all necessary office facilities, equipment and personnel that the Fund
may require. Such office facilities, equipment, personnel and services, the
charges and expenses of which are to be paid by the Fund under the provisions of
this Section 2, may be provided for or rendered to the Fund by the Manager and
billed to the Fund at the Manager's cost.
3. In connection with the management of the investment and reinvestment
of the assets of each Fund, the Manager is authorized on behalf of such Fund, to
place orders for the execution of the Fund's portfolio transactions in
accordance with the applicable policies of the Fund as set forth in the Fund's
registration statements under the Securities Act of 1933 and the Investment
Company Act of 1940, as such registration statements may be amended from time to
time, and is directed to use its best efforts to obtain the best available price
and most favorable execution with respect to all such transactions for the Fund.
4. As compensation for the services to be rendered and the charges and
expenses to be assumed and paid by the Manager as provided in Section 2, each
Fund shall pay the Manager an annual fee of one-half of one percent of the
average daily net asset value of the Rushmore Tax-Free Money Market Portfolio,
and five-eights of one percent of the average daily net asset value of each of
the Rushmore Maryland Tax-Free Portfolio and the Rushmore Virginia Tax-Free
Portfolio. The fees will be paid monthly.
In the event of termination of this Contract, the fee shall be computed
on the basis of the period ending on the last business day on which this
Contract is in effect subject to a pro rata adjustment based on the number of
days elapsed in the current month as a percentage of the total number of days in
such month.
5. The directors of the Corporation acknowledge that, in further
consideration of the services of the Manager hereunder, the Manager has reserved
for itself all rights to, and interest in, the name "Fund for Tax-Free
Investors, Inc.," or any similar name, and that use of the name shall continue
only with the continuing consent of the Manager, which consent may be withdrawn
at any time, effective immediately upon written notice thereof to the
Corporation.
6. Subject to and in accordance with the governing instruments of the
Corporation and of the Manager respectively, directors, officers, agents and
stockholders of the Corporation are or may be interested in the Manager (or any
successor thereof) as partners or otherwise; partners and agents of the Manager
are or may be interested in the Corporation as directors, officers, agents,
stockholders or otherwise; the Manager (or any successor) is or may be
interested in the Corporation as a stockholder or otherwise; and the effect of
any such interrelationships shall be governed by said governing instruments and
the applicable provisions of the Investment Company Act of 1940.
7. This Contract shall continue in effect until two years from the data
hereof, and thereafter only so long as such continuance is approved at least
annually by votes of a majority of the Corporation's Board of Directors,
including the votes of a majority of the directors who are not parties to such
contract or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval. In addition, the questions of
continuance of this Contract may be presented to stockholders of the Fund; in
such event, such continuance shall be effected only if approved by the
affirmative vote of a majority of the outstanding voting securities of a Fund.
Provided, however, that (a) this Contract may at any time be terminated without
payment of any penalty either by vote of the Board of Directors of the
Corporation or by vote of a majority of the outstanding voting securities of a
Fund, on sixty days prior written notice to the Manager, (b) this Contract shall
automatically terminate in the event of its assignment (within the meaning of
the Investment Company Act of 1940), and (c) this Contract may be terminated by
the Manager on sixty days prior written notice to a Fund. Any notice under this
contract shall be given in writing, addressed and delivered, or mailed post
paid, to the other party at any office of such party.
<PAGE>
As used in this Section 6, the terms "interested persons" and "vote of
a majority of the outstanding securities" shall have the respective meanings set
forth in Section 2(a)(9) and Section 2(a)(42) of the Investment Company Act of
1940.
8. The services of the Manager to each Fund hereunder are not to be
deemed exclusive, and the Manager shall be free to render similar services to
others so long as its services hereunder are not impaired thereby. The Manager
shall for all purposes herein be deemed to be an independent contractor and
shall, unless otherwise expressly provided or authorized, have no authority to
act for or represent any Fund in any way or otherwise be deemed an agent of any
Fund.
9. No provision of this Contract shall be deemed to protect the Manager
against any liability to a Fund or its stockholders to which it might otherwise
be subject by reasons of any willful misfeasance, bad faith or gross negligence
in the performance of its duties or the reckless disregard of its obligations
under this Contract. Nor shall any provision hereof be deemed to protect any
director or officer of the Corporation against any such liability to which he
might otherwise be subject by reason of any willful misfeasance, bad faith or
gross negligence in the performance of his duties or the reckless disregard of
his obligations. If any provision of this Contract shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of this Contract
shall not be affected thereby.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be
executed on the day and year first above written.
FUND FOR TAX-FREE INVESTORS, INC.
WITNESS:
________________________________ By:_______________________________
MONEY MANAGEMENT ASSOCIATES, L.P.
WITNESS:
________________________________ By:_______________________________
<PAGE>
APPENDIX B
Officers of the Fund
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Principal Occupations During Last
Name, Address, and Age Position with Fund Five Years
- --------------------------------------------------------------------------------------------------------------------
Daniel L. O'Connor, 58 Chairman, Treasurer, and Director General Partner of MMA, registered
100 Lakeshore Drive investment adviser of the Rushmore
Suite 1555 Funds, since 1975. Director,
North Palm Beach, FL 33408 RTS. Director or Trustee of four
Rushmore Funds. Trustee of the
Cappiello-Rushmore Trust.
- --------------------------------------------------------------------------------------------------------------------
Richard J. Garvey, 67 President and Director Limited Partner of MMA and Vice
730 Southwest 67th Place President of Rushmore Services,
Portland, OR 97225 Inc. until 1998. Director or
Trustee of four Rushmore Funds.
- --------------------------------------------------------------------------------------------------------------------
John R. Cralle, 59 Vice President A limited partner of MMA since
4922 Fairmont Avenue 1979. Employee of Rushmore
Bethesda, MD 20814 Services, Inc. 1995-1999. Vice
President of three Rushmore
Funds.
- --------------------------------------------------------------------------------------------------------------------
Martin M. O'Connor, 55 Vice President A limited partner of MMA since
4922 Fairmont Avenue 1979. Employee of Rushmore
Bethesda, MD 20814 Services, Inc. 1995-1999. Vice
President of three Rushmore
Funds.
- --------------------------------------------------------------------------------------------------------------------
Edward J. Karpowicz, CPA, 37 Controller Vice President of RTS since 1997.
4922 Fairmont Avenue Controller of the Rushmore Funds
Bethesda, MD 20814 and the Cappiello-Rushmore Trust.
Treasurer, Bankers Finance
Investment Management Corp.,
August 1993 to June 1997.
- -------------------------------------------------------------------------------------------------------------------
Stephenie E. Adams, 30 Secretary Secretary of three Rushmore Funds
4922 Fairmont Avenue and the Cappiello-Rushmore Trust.
Bethesda, MD 20814 Assistant Secretary of one
Rushmore Fund. Manager, Fund
Administration and Compliance,
RTS, from October 1999 to
Present. Manager, Fund
Administration and Marketing,
Rushmore Services, Inc., from July
1994 to October 1999.
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
APPENDIX C
Other Investment Company Clients
MMA also serves as investment adviser to the following investment
companies, at the fee rates set forth below, which had the indicated net assets
as of December 31, 1999.
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Name of Fund Advisory Fee Rate Approximate Assets
- ------------------------------------------------------------------------------------------------------------------------
American Gas Index Fund, Inc. .40% of the average daily net assets $183,943,443
- ------------------------------------------------------------------------------------------------------------------------
Fund for Government Investors .50% of the first $500 million of $492,627,189
net assets, .45% of the next $250
million of net assets, .40% of the
next $250 million of net assets,
and .35% of the net assets over $1
billion
- ------------------------------------------------------------------------------------------------------------------------
The Rushmore Fund, Inc. .50% of the average daily net $ 11,105,541
assets.
- --------------------------------------------- ------------------------------------- --------------------------------------
</TABLE>
<PAGE>
APPENDIX D
As of the Record Date, the following persons owned of record or
beneficially 5% or more of the shares of the following Portfolios:
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Controlling Party or Principal
Holder of Securities and Address
Portfolio Shares Owned % Owned
- -------------------------------------------------------------------------------------------------------------------
Tax-Free Money Market Eugene R. Elrod 1,091,664.24 6.3%1
Portfolio 4300 Hawthrone Street, N.W.
Washington, D.C. 20016-3571
Wendie L. Wachtel 869,537.82 5.1%1
1101 Fourteenth Street, N.W.
Washington, D.C. 20005-5601
- -------------------------------------------------------------------------------------------------------------------
Virginia Tax-Free Portfolio Charles Schwab & Co, Inc. 265,721.16 10.0%2
101 California Street
San Francisco, CA 94101
Roger W. Jones 254,973.04 9.6%1
P.O. Box 248
Sperryville, VA 22740
Robert P. and Maryann Nirschl 175,750.17 6.6%1
4143 North River Street
McLean, VA 22101
- -------------------------------------------------------------------------------------------------------------------
Maryland Tax-Free Portfolio Charles Schwab & Co., Inc. 189,322.98 5.1%2
101 California Street
San Francisco, CA 94101
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Beneficial owner.
2 Record owner.
<PAGE>
To vote by telephone:
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903.
3) Enter the 12-digit control number set forth on the proxy card and
follow the simple instructions.
To vote by Internet:
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com.
3) Enter the 12-digit control number set forth on the Proxy card and
follow the simple instructions.
- --------------------------------------------------------------------------------
PROXY
FUND FOR TAX-FREE INVESTORS, INC.
[Name of Portfolio]
ANNUAL MEETING OF SHAREHOLDERS
June 1, 2000
The undersigned hereby appoints Stephenie E. Adams and Edward J.
Karpowicz and each of them, as his/her attorneys and proxies with full power of
substitution to vote and act with respect to all shares of the ______ Portfolio
held at 10:00 a.m. Eastern Time on June 1, 2000 at 4922 Fairmont Avenue,
Bethesda, Maryland 20814, or as adjourned from time to time (the "Meeting"), and
instructs them to vote as indicated on the matters referred to in the Proxy
Statement for the Meeting, receipt of which is hereby acknowledged, with
discretionary power to vote upon such other business as may properly come before
the Meeting.
<TABLE>
<S> <C> <C>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE FUND. The
Board of Directors recommends that you vote FOR each of the Nominees and FOR
each of the following proposals:
I. To elect the Board of Directors of the Fund.
Daniel L. O'Connor Jeffrey R. Ellis
Richard J. Garvey F. David Fowler
Louis T. Donatelli Patrick F. Noonan
Bruce C. Ellis Michael A. Willner
[ ] FOR ALL [ ] AGAINST ALL [ ] WITHHOLD AUTHORITY
[ ] FOR ALL EXCEPT ______________________________
(Only use to withhold authority to vote on individual Nominees)
II. To approve a new investment advisory contract.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
III. To ratify the selection of independent auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IV. To transact such other business as may properly come before the Meeting.
This proxy will be voted as specified. IF NO SPECIFICATION IS MADE,
THIS PROXY WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.
<PAGE>
Receipt of the Notice of Meeting and Proxy Statement is hereby
acknowledged.
Dated _____________, 2000
-------------------------------------
Name of Shareholder(s) -- Please print or type
-------------------------------------
Signature(s) of Shareholder(s)
-------------------------------------
Signature(s) of Shareholder(s)
</TABLE>
This proxy must be signed by the beneficial owner of Portfolio shares.
If signing as attorney, executor, guardian or in some representative capacity or
as an officer of a corporation, please add title as such.
PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.
