<PAGE>
<TABLE>
<S> <C>
ANNUAL REPORT, DECEMBER 31, 1999
FUND FOR TAX-FREE INVESTORS, INC.
RUSHMORE LOGO 4922 FAIRMONT AVENUE, BETHESDA,
MD 20814
(800) 622-1386 (301) 657-1510
- --------------------------------------------------------
</TABLE>
January 20, 2000
Dear Shareholders:
TAX-FREE MONEY MARKET
Tax-Free Money Market portfolio's net investment income for the year averaged
2.47%, down from 2.70% last year. The weighted average maturity of the portfolio
at year-end was 44 days.
TAX-FREE VIRGINIA
Tax-Free Virginia portfolio's net investment income for the year averaged 4.51%,
up from 4.48% last year. The weighted average maturity of the portfolio at
year-end was 14.7 years.
TAX-FREE MARYLAND
Tax-Free Maryland portfolio's net investment income for the year averaged 4.59%,
up from 4.58% last year. The weighted average maturity of the portfolio at
year-end was 13.2 years.
In 1999 interest rates remained fairly stable during the first half of the year,
however, the second half of the year saw rising interest rates increase in all
sectors of the debt markets. This year, the U.S. economy should continue to
prosper and causing the Federal Reserve to continue to try to subdue the growth
of the economy to prevent it from overheating. The effect on short-term and
long-term interest rates should be minimal if the Federal Reserve is successful
in its policy of gradual restraint. Another restraint on rising interest rates
is the continuing federal and state budget surpluses. Furthermore, the announced
pay-down and buy-back of outstanding U.S. Treasury debt will have a lowering
effect on interest rates in all sectors of the debt markets.
Fund for Tax-Free Investors will continue to provide you with its conservative
and high-quality portfolios. We thank you for your continued support and look
forward to serving you in the year 2000.
Sincerely,
/s/ Daniel L. O'Connor /s/ Richard J. Garvey
Daniel L. O'Connor Richard J. Garvey
Chairman President
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENT OF NET ASSETS
MONEY MARKET PORTFOLIO
December 31, 1999
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
-------- -----------
<S> <C> <C>
COLORADO 2.9%
Pitkin County Multi Family
Housing Floating Rate Notes
5.45%, 12/1/24+ A-1+........ $500,000 $ 500,000
-----------
FLORIDA 3.0%
Jacksonville, FL Electric
Authority Revenue
6.7%, 10/1/00^ AA........... 500,000 518,799
-----------
HAWAII 2.9%
Hawaii State General
Obligation
4.5%, 9/1/00 AAA............ 500,000 501,431
-----------
ILLINOIS 8.4%
Chicago Metropolitan Water
Capital Improvement
6.8%, 1/1/00^ AA............ 500,000 510,000
Illinois State
6%, 10/1/00 AA.............. 500,000 507,258
Illinois Student Assistance
Community Student Living
5.65%, 3/1/00 AAA........... 450,000 451,585
-----------
State Total................. 1,468,843
-----------
INDIANA 4.0%
Princeton Indiana Pollution
Control Revenue Floating Rate
Notes
5%, 4/1/22+ A-1+............ 700,000 700,000
-----------
IOWA 8.0%
Iowa Finance Authority
Hospital Facility Revenue
Floating Rate Notes
5.65%, 7/1/13+ A-1+......... 700,000 700,000
Ottumwa Regional Health Center
Floating Rate Notes
5.55%, 10/1/06+ A-1+........ 700,000 700,000
-----------
State Total................. 1,400,000
-----------
KENTUCKY 2.9%
Kentucky Economic Development
Hospital Revenue Catholic
Healthcare Floating Rate Notes
5.65%, 12/1/27+ A-1+........ 500,000 500,000
-----------
MARYLAND 11.8%
Anne Arundel County General
Obligation
6.9%, 1/15/00 AA+........... 250,000 250,337
</TABLE>
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
-------- -----------
<S> <C> <C>
MARYLAND (continued)
Baltimore County Revenue
Floating Rate Notes
5.5%, 1/1/16+ A-1........... $200,000 $ 200,000
Maryland State General
Obligation
5%, 10/15/00 AAA............ 305,000 307,246
Maryland Health and Higher
Education Loyola College
Issue B Floating Rate Notes
5.65%, 10/1/13+ AAA......... 600,000 600,000
Maryland Health and Higher
Education North Arundel
Hospital Floating Rate Notes
5.65%, 7/1/32+ VMIGI........ 400,000 400,000
North East Maryland Waste
Disposal Authority Floating
Rate Notes
5.05%, 1/1/08+ AAA.......... 300,000 300,000
-----------
State Total................. 2,057,583
-----------
MASSACHUSETTS 3.0%
Massachusetts State General
Obligation
5%, 6/1/00 AAA.............. 350,000 351,341
Massachusetts State Water
Resource Authority
7.5%, 4/1/00^ A+............ 170,000 174,803
-----------
State Total................. 526,144
-----------
MINNESOTA 20.4%
Hennepin County General
Obligation Floating Rate Notes
5.4%,12/1/10+ A-1+.......... 400,000 400,000
Minneapolis General Obligation
Floating Rate Notes
5.4%,12/1/05+ A-1........... 500,000 500,000
Minneapolis University Gateway
Project Series B Floating Rate
Notes
5.4%,12/1/27+ A-1........... 250,000 250,000
Minnesota State Higher
Education Floating Rate Notes
5.55%, 12/1/24+ VMIG1....... 500,000 500,000
St. Paul Housing and
Redevelopment Authority
Floating Rate Notes
5.45%, 12/1/12+ A-1+........ 700,000 700,000
St. Paul Housing and
Redevelopment Authority United
Way Project Floating Rate
Notes
5.45%, 12/1/18+ A+.......... 500,000 500,000
</TABLE>
- 2 -
<PAGE>
STATEMENT OF NET ASSETS
MONEY MARKET PORTFOLIO (continued)
December 31, 1999
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
-------- -----------
<S> <C> <C>
MINNESOTA (continued)
Waconia Industrial Development
Revenue Floating Rate Notes
5.55%, 10/1/16+ A-1......... $715,000 $ 715,000
-----------
State Total................. 3,565,000
-----------
MONTANA 3.4%
Montana State Health Floating
Rate Notes
5.4%, 12/1/15+ AAA.......... 600,000 600,000
-----------
NEW HAMPSHIRE 4.6%
New Hampshire State Business
Finance Authority Foundation
for Seacoast Health Series A
Floating Rate Notes
5.7%, 6/1/28+ A-1........... 800,000 800,000
-----------
NEW YORK 9.1%
Nassau County Revenue
Anticipation Notes
3.75%, 3/15/00 SP-2......... 500,000 500,495
New York City General
Obligation Floating Rate Notes
5%, 8/1/15+ A-1............. 300,000 300,000
New York City General
Obligation Floating Rate Notes
5%, 8/15/18+ A-1+........... 800,000 800,000
-----------
State Total................. 1,600,495
-----------
NORTH CAROLINA 4.0%
City of Winston-Salem Floating
Rate Notes
5.65%, 4/1/00 A-1+.......... 700,000 700,000
-----------
TENNESSEE 5.7%
Knox County Health & Housing
Facilities Mercy Health System
Floating Rate Notes
5.65%, 12/1/15+ VMIG1....... 500,000 500,000
Knox County Health & Housing
Facilities Catholic Healthcare
Floating Rate Notes
5.65%, 12/01/27+ A-1+....... 500,000 500,000
-----------
State Total................. 1,000,000
-----------
</TABLE>
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
-------- -----------
<S> <C> <C>
TEXAS 2.3%
Port Arthur Revenue Floating
Rate Notes
5.05%, 5/1/03+ PRIM1........ $400,000 $ 400,000
-----------
VIRGINIA 9.3%
Fairfax County Water Authority
Revenue
7.25%, 1/1/00^ AAA.......... 400,000 408,000
Fairfax County Water Authority
Revenue
6.125%, 1/1/00^ AAA......... 210,000 210,000
Hampton General Obligation
6.625%, 1/1/00^ AA.......... 800,000 816,000
Richmond General Obligation
4.7%, 7/15/00 AA............ 200,000 200,940
-----------
State Total................. 1,634,940
-----------
WASHINGTON 1.3%
Vancouver General Obligation
3.75%, 12/1/00 AAA.......... 225,000 224,699
-----------
TOTAL INVESTMENTS 107.0%
(Cost $18,697,934*)................... 18,697,934
-----------
LIABILITIES IN EXCESS OF OTHER ASSETS
(7.0%).................................. (1,223,383)
-----------
NET ASSETS (NOTE 6) 100.0%.............. $17,474,551
===========
NET ASSET VALUE PER SHARE
(Based on 17,474,551 Shares
Outstanding).......................... $1.00
===========
</TABLE>
- -------------
+ Daily or Weekly Tender Bond
^ Date represents pre-refunded or call date.
* Same cost is used for Federal income tax purposes.
Security Ratings are unaudited.
See Notes to Financial Statements.
- 3 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENT OF NET ASSETS
VIRGINIA PORTFOLIO
December 31, 1999
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Arlington County General
Obligation
6%, 8/1/12 AAA............ $ 500,000 $ 533,510
5.4%, 6/1/13 AAA.......... 1,000,000 993,360
5.375%, 12/1/16 AAA....... 1,000,000 965,480
Brunswick County Industrial
Development Authority
Revenue
5.5%, 7/1/17 AAA.......... 1,000,000 968,360
Fairfax City EDA Lease
Revenue
5.5%, 5/15/18 AA.......... 1,000,000 953,270
Fairfax County Industrial
Development Authority
Revenue
5.25%, 8/15/19 AA......... 650,000 586,547
Fairfax County Water
Authority Revenue
5.8%, 1/1/16 AAA.......... 500,000 497,940
6%, 4/1/22 AA............. 630,000 631,260
Hanover County Water and
Sewer Revenue
5.25%, 2/1/16 AAA......... 500,000 468,485
Hanover County Virginia
General Obligation
5.4%, 7/15/16 AA.......... 1,000,000 967,080
Henrico County Industrial
Development Authority
Revenue
7.125%, 8/1/05^ AA........ 400,000 450,048
Henrico County Water and
Sewer Revenue
6.25%, 5/1/02^ AA-........ 200,000 207,342
6.25%, 5/1/13 AA-......... 300,000 311,013
Henry County General
Obligation
8.825%, 11/1/05^ AAA...... 200,000 239,900
Leesburg General Obligation
5.5%, 6/1/05^ AAA......... 500,000 523,010
Loudoun County General
Obligation
5%, 12/1/18 AA............ 1,000,000 902,410
5.25%, 12/1/14 AA......... 1,000,000 967,810
Loudoun County Sanitation
Authority Revenue
6.25%, 1/1/16 AAA......... 500,000 530,585
Lynchburg General Obligation
5%, 5/1/18 AA............. 1,000,000 900,940
</TABLE>
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Lynchburg Industrial
Development Authority
Revenue
5.2%, 1/1/18 A+........... $ 500,000 $ 450,230
Montgomery Industrial
Development Authority
5.125%, 1/15/19 AAA....... 500,000 450,450
Newport News General
Obligation
5%, 3/1/18 AA............. 795,000 714,196
Norfolk General Obligation
5.75%, 6/1/13 AAA......... 500,000 508,275
Norfolk Water Revenue
5.75%, 11/1/12 AAA........ 500,000 516,170
5.875%, 11/1/15 AAA....... 500,000 511,920
Portsmouth Redevelopment and
Housing Authority Revenue
6.05%, 12/1/08 AAA........ 500,000 510,145
Potomac and Rappahannock
Transportation District
Commission Revenue
6.7%, 3/1/00^ AAA......... 600,000 614,514
Prince William County Park
Authority Revenue
6.875%, 10/15/04^ BBB+.... 500,000 552,865
Prince William County Water
and Sewer System Revenue
5.5%, 7/1/19 AAA.......... 500,000 474,240
Richmond Metro Authority
Revenue
6.375%, 7/15/02^ AAA...... 500,000 530,250
Richmond General Obligation
5.125%, 1/15/16 AAA....... 500,000 462,830
Richmond Public Utilities
Revenue
5.25%, 1/15/18 A+......... 1,000,000 915,940
Upper Occoquan Sewer
Authority Revenue
5.15%, 7/1/20 AAA......... 500,000 455,185
Virginia Beach General
Obligation
6.5%, 8/1/01^ AA.......... 500,000 525,200
5%, 8/1/17 AA............. 1,075,000 973,230
Virginia Housing Development
Authority Revenue
5.95%, 7/1/13 AA+......... 500,000 506,025
5.1%, 7/1/14 AA+.......... 1,000,000 931,990
</TABLE>
- 4 -
<PAGE>
STATEMENT OF NET ASSETS
VIRGINIA PORTFOLIO (continued)
December 31, 1999
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Virginia Housing Development
Authority Revenue
5.75%, 1/1/19 AAA......... $1,000,000 $ 980,760
Virginia Port Authority
Revenue
5.9%, 7/1/16 AA........... 500,000 503,985
Virginia Public Building
Authority Revenue
5.2%, 8/1/16 AA........... 1,000,000 932,550
Virginia Public School
Authority Revenue
6.2%, 8/1/13 AA........... 320,000 335,088
5%, 8/1/18 AA+............ 1,000,000 895,020
Virginia Resource Authority
Revenue
6.75%, 10/1/04^ NR........ 240,000 260,174
<CAPTION>
Value
(Note 1)
-----------
<S> <C> <C>
Virginia State General
Obligation
5.25%, 6/1/19 AAA......... $1,250,000 $ 1,156,750
-----------
TOTAL INVESTMENTS 97.7%
(Cost $28,770,102*)................... 28,266,332
OTHER ASSETS LESS LIABILITIES 2.3%...... 659,322
-----------
NET ASSETS (NOTE 6) 100.0%.............. $28,925,654
===========
NET ASSET VALUE PER SHARE
(Based on 2,757,349 Shares
Outstanding).......................... $10.49
===========
</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.
- 5 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENT OF NET ASSETS
MARYLAND PORTFOLIO
December 31, 1999
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Anne Arundel County Water
and Sewer General Obligation
6.2%, 8/1/05^ AA+......... $ 725,000 $ 777,882
6%, 7/15/02^ AA+.......... 500,000 525,860
6.3%, 8/1/05^ AA+......... 500,000 538,890
6.3%, 8/1/05^ AA+......... 725,000 781,390
Anne Arundel County
Pollution Control Revenue
6%, 4/1/24 A.............. 1,230,000 1,208,290
Anne Arundel County Solid
Waste Project General
Obligation
5.5%, 9/1/15 AA+.......... 500,000 488,675
Baltimore City General
Obligation
6.4%, 10/15/02^ AAA....... 465,000 487,004
5.5%, 10/15/10 AAA........ 1,000,000 1,025,120
5.5%, 10/15/15 AAA........ 500,000 525,355
Baltimore Wastewater Project
Revenue
6%, 7/1/15 AAA............ 500,000 515,305
Baltimore County General
Obligation
6.125%, 7/1/02^ AAA....... 500,000 527,045
5.5%, 6/1/12 AAA.......... 1,000,000 1,008,660
Baltimore Port Facility
Revenue
6.5%, 12/1/10 AA-......... 400,000 420,652
Carroll County General
Obligation
7.1%, 10/1/09 AA.......... 235,000 244,872
7.25%, 10/1/15 AA......... 300,000 312,930
5.3%, 11/1/15 AA.......... 1,000,000 967,670
6.5%, 10/1/04^ AA......... 225,000 245,147
Frederick County General
Obligation
6.125%, 12/1/07 AAA....... 500,000 522,960
5.6%, 7/1/11 AA........... 500,000 521,755
City of Frederick General
Obligation
6%, 10/1/11 AAA........... 300,000 312,276
Howard County Metropolitan
District General Obligation
6%, 8/15/19 AAA........... 840,000 841,470
Howard County Public
Improvement General
Obligation
6%, 5/15/03^ AAA.......... 500,000 520,495
5.5%, 2/15/04^ AAA........ 1,000,000 1,035,960
</TABLE>
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Howard County Special
Facilities Revenue
6.1%, 2/15/13 AAA......... $ 500,000 $ 515,670
Laurel General Obligation
6.7%, 7/1/01^ AAA......... 600,000 631,062
Maryland Community
Development Administration
Revenue
7.375%, 4/1/10 AA2........ 495,000 505,880
7.25%, 4/1/11 AA2......... 200,000 205,066
7.15%, 4/1/11 AA2......... 405,000 420,289
5%, 4/1/17 AA2............ 500,000 445,690
7.7%, 5/15/20 AA3......... 250,000 256,953
7.25%, 4/1/27 AA2......... 385,000 390,925
Maryland General Obligation
5%, 10/15/11 AAA.......... 1,000,000 979,870
5%, 3/1/12 AAA............ 1,000,000 971,530
Maryland Health and Higher
Education Facilities
Authority Revenue
5.7%, 7/1/09 A1........... 500,000 520,075
5.25%, 7/1/13 AAA......... 500,000 484,495
6.125%, 7/1/14 AAA........ 500,000 523,975
5.5%, 10/1/16 AAA......... 1,000,000 982,730
6.125%, 7/1/19 AAA........ 500,000 505,065
5%, 7/1/19 A2............. 500,000 419,220
5%, 7/1/27 AAA............ 1,500,000 1,317,420
6%, 7/1/39 AA............. 500,000 491,835
Maryland Health and Higher
Education Facilities
Authority Floating Rate Note
5.65%, 1/1/32+ VMIG1...... 200,000 200,000
Maryland Industrial
Development Revenue
7.125%, 7/1/06 A-......... 200,000 200,294
Maryland Stadium Authority
Sports Revenue
5.55%, 3/1/13 AAA......... 500,000 505,255
5.875%, 12/15/13 AAA...... 1,000,000 1,043,400
5.375%, 12/15/15 AA....... 500,000 482,845
Maryland Water Quality
Finance Administration
Revenue
6%, 9/1/15 AA............. 1,000,000 1,017,780
Montgomery County General
Obligation
5%, 5/1/19 AAA............ 500,000 451,140
</TABLE>
- 6 -
<PAGE>
STATEMENT OF NET ASSETS
MARYLAND PORTFOLIO (continued)
December 31, 1999
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Montgomery County Housing
Opportunity Commission
Revenue
6.7%, 7/1/11 AA2.......... $ 315,000 $ 322,267
7.375%, 7/1/17 AA2........ 95,000 96,029
6.65%, 7/1/17 AA2......... 160,000 163,547
7%, 7/1/23 A3............. 250,000 253,548
Montgomery County Waste
Disposal Authority Revenue
5.875%, 6/1/13 AAA........ 250,000 255,560
North East Maryland Waste
Disposal Authority Revenue
6.2%, 7/1/10 A2........... 500,000 518,095
6.3%, 7/1/16 A2........... 1,000,000 1,013,880
Prince Georges County
General Obligation
5.25%, 3/15/15 AAA........ 1,000,000 949,680
Prince Georges County
Housing Authority Revenue
6.35%, 7/20/20 AAA........ 700,000 708,386
Prince Georges County
Pollution Control Revenue
5.75%, 3/15/10 A.......... 1,000,000 1,044,650
Prince Georges County Solid
Waste Management System
Revenue
7%, 6/30/00^ AAA.......... 250,000 258,557
St. Mary's County General
Obligation
5.85%, 11/1/18 AAA........ 500,000 499,385
</TABLE>
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
University of Maryland
System Auxiliary Revenue
6.375%, 10/1/02^ AA+...... $ 500,000 $ 531,800
5.6%, 4/1/12 AA+.......... 1,000,000 1,016,410
5.125%, 4/1/15 AA+........ 1,000,000 944,260
5.6%, 4/1/16 AA+.......... 1,000,000 985,230
Washington County General
Obligation
5.25%, 1/1/16 AAA......... 500,000 470,090
Washington, D.C.
Metropolitan Area
Transportation Authority
Revenue
6%, 7/1/09 AAA............ 500,000 530,460
6%, 7/1/10 AAA............ 275,000 291,486
Washington Suburban Sanitary
District General Obligation
6.2%, 6/1/12 AA........... 900,000 942,327
5%, 6/1/23 AA............. 1,000,000 876,170
-----------
TOTAL INVESTMENTS 98.5%
(Cost $41,320,628*)................... 41,495,944
OTHER ASSETS LESS LIABILITIES 1.5%...... 636,541
-----------
NET ASSETS (NOTE 6) 100.0%.............. $42,132,485
===========
NET ASSET VALUE PER SHARE
(Based on 3,992,515 Shares
Outstanding).......................... $10.55
===========
</TABLE>
- -------------
^ Date represents pre-refunded date.
+ Daily or Weekly Tender Bond
* Same cost is used for Federal income tax purposes.
Security Ratings are unaudited.
See Notes to Financial Statements.
- 7 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1999
<TABLE>
<CAPTION>
Money
Market Virginia Maryland
Portfolio Portfolio Portfolio
--------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME (Note 1).................................. $591,590 $ 1,794,885 $ 2,511,776
-------- ----------- -----------
EXPENSES
Investment Advisory Fee (Note 2).......................... 91,951 206,583 284,560
Administrative Fee (Note 2)............................... 45,976 99,192 136,589
Other Fees................................................ 146 -- 15
-------- ----------- -----------
Total Expenses.......................................... 138,073 305,775 421,164
-------- ----------- -----------
NET INVESTMENT INCOME....................................... 453,517 1,489,110 2,090,612
-------- ----------- -----------
Net Realized Loss on Investment Transactions................ -- (194,916) (58,384)
Change in Net Unrealized Appreciation/Depreciation of
Investments................................................. -- (2,538,557) (2,774,745)
-------- ----------- -----------
NET LOSS ON INVESTMENTS..................................... -- (2,733,473) (2,833,129)
-------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS.................................................. $453,517 $(1,244,363) $ (742,517)
======== =========== ===========
</TABLE>
See Notes to Financial Statements.
- 8 -
<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
-------------------------- -------------------------- ------------------------
1999 1998 1999 1998 1999 1998
------------ ------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Income................. $ 453,517 $ 496,758 $ 1,489,110 $ 1,464,437 $ 2,090,612 $ 2,115,375
Net Realized Gain (Loss) on Investment
Transactions........................ -- -- (194,916) 515,403 (58,384) 98,804
Change in Net Unrealized Appreciation/
Depreciation of Investments......... -- -- (2,538,557) (155,249) (2,774,745) 454,108
------------ ------------ ----------- ------------ ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations........... 453,517 496,758 (1,244,363) 1,824,591 (742,517) 2,668,287
------------ ------------ ----------- ------------ ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income
(Note 1)............................ (453,517) (496,758) (1,489,110) (1,464,437) (2,090,612) (2,115,375)
From Net Realized Gain................ -- -- (48,974) (466,429) -- --
------------ ------------ ----------- ------------ ----------- -----------
Total Distributions to Shareholders... (453,517) (496,758) (1,538,084) (1,930,866) (2,090,612) (2,115,375)
------------ ------------ ----------- ------------ ----------- -----------
FROM SHARE TRANSACTIONS
Net Proceeds from Sales of Shares..... 29,881,644 35,657,860 5,047,389 11,697,514 7,111,506 8,091,036
Reinvestment of Distributions......... 428,371 473,977 1,320,279 1,651,857 1,797,355 1,783,553
Cost of Shares Redeemed............... (32,618,355) (35,526,092) (9,202,553) (11,607,428) (9,770,286) (9,944,519)
------------ ------------ ----------- ------------ ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Share Transactions... (2,308,340) 605,745 (2,834,885) 1,741,943 (861,425) (69,930)
------------ ------------ ----------- ------------ ----------- -----------
TOTAL INCREASE (DECREASE) IN NET
ASSETS.............................. (2,308,340) 605,745 (5,617,332) 1,635,668 (3,694,554) 482,982
NET ASSETS - Beginning of Year.......... 19,782,891 19,177,146 34,542,986 32,907,318 45,827,039 45,344,057
------------ ------------ ----------- ------------ ----------- -----------
NET ASSETS - End of Year................ $ 17,474,551 $ 19,782,891 $28,925,654 $ 34,542,986 $42,132,485 $45,827,039
============ ============ =========== ============ =========== ===========
SHARES
Sold.................................. 29,881,644 35,657,860 453,773 1,018,080 643,043 724,881
Issued in Reinvestment of
Distributions....................... 428,371 473,977 120,013 143,753 164,735 159,779
Redeemed.............................. (32,618,355) (35,526,092) (840,524) (1,009,987) (894,497) (890,970)
------------ ------------ ----------- ------------ ----------- -----------
Net Increase (Decrease) in Shares..... (2,308,340) 605,745 (266,738) 151,846 (86,719) (6,310)
============ ============ =========== ============ =========== ===========
</TABLE>
See Notes to Financial Statements.
- 9 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
FINANCIAL HIGHLIGHTS
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
For the Years Ended December 31,
-----------------------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<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.............................. 0.02 0.03 0.03 0.03 0.03
------- ------- ------- ------- -------
Distributions to Shareholders:
From Net Investment Income......................... (0.02) (0.03) (0.03) (0.03) (0.03)
------- ------- ------- ------- -------
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................................ 2.50% 2.73% 2.93% 2.69% 3.09%
RATIOS TO AVERAGE NET ASSETS:
Expenses............................................. 0.75% 0.75% 0.75% 0.75% 0.75%
Net Investment Income................................ 2.47% 2.70% 2.89% 2.67% 3.04%
SUPPLEMENTARY DATA:
Net Assets at End of Year (in thousands)............. $17,475 $19,783 $19,177 $18,890 $20,772
Number of Shares Outstanding at End of Year
(in thousands)..................................... 17,475 19,783 19,177 18,890 20,792
</TABLE>
See Notes to Financial Statements.
- 10 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
FINANCIAL HIGHLIGHTS
VIRGINIA PORTFOLIO
<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value - Beginning of Year....................... $ 11.42 $ 11.46 $ 11.09 $ 11.31 $ 10.36
------- ------- ------- ------- -------
Income from Investment Operations:
Net Investment Income................................... 0.50 0.52 0.52 0.53 0.56
Net Realized and Unrealized Gain (Loss) on
Investments........................................... (0.91) 0.12 0.39 (0.22) 0.95
------- ------- ------- ------- -------
Total from Investment Operations...................... (0.41) 0.64 0.91 0.31 1.51
------- ------- ------- ------- -------
Distributions to Shareholders:
From Net Investment Income.............................. (0.50) (0.52) (0.52) (0.53) (0.56)
From Net Realized Gain.................................. (0.02) (0.16) (0.02) -- --
------- ------- ------- ------- -------
Total Distributions to Shareholders................... (0.52) (0.68) (0.54) (0.53) (0.56)
------- ------- ------- ------- -------
Net Increase (Decrease) in Net Asset Value................ (0.93) (0.04) 0.37 (0.22) 0.95
------- ------- ------- ------- -------
Net Asset Value - End of Year............................. $ 10.49 $ 11.42 $ 11.46 $ 11.09 $ 11.31
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN..................................... (3.75)% 5.64% 8.45% 2.91% 14.92%
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................. 0.93% 0.93% 0.93% 0.93% 0.77%
Expenses Before Reimbursement from Adviser................ 0.93% 0.93% 0.93% 0.93% 0.93%
Net Investment Income..................................... 4.51% 4.48% 4.70% 4.84% 5.17%
SUPPLEMENTARY DATA:
Portfolio Turnover Rate................................... 26% 25% 27% 46% 55%
Net Assets at End of Year (in thousands).................. $28,926 $34,543 $32,908 $32,355 $33,468
Number of Shares Outstanding at End of Year (in
thousands).............................................. 2,757 3,024 2,872 2,917 2,958
</TABLE>
See Notes to Financial Statements.
- 11 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
FINANCIAL HIGHLIGHTS
MARYLAND PORTFOLIO
<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value - Beginning of Year....................... $ 11.23 $ 11.10 $ 10.79 $ 10.98 $ 10.11
------- ------- ------- ------- -------
Income from Investment Operations:
Net Investment Income................................... 0.50 0.51 0.51 0.53 0.55
Net Realized and Unrealized Gain (Loss) on
Investments........................................... (0.68) 0.13 0.31 (0.19) 0.87
------- ------- ------- ------- -------
Total from Investment Operations...................... (0.18) 0.64 0.82 0.34 1.42
------- ------- ------- ------- -------
Distributions to Shareholders:
From Net Investment Income.............................. (0.50) (0.51) (0.51) (0.53) (0.55)
------- ------- ------- ------- -------
Net Increase (Decrease) in Net Asset Value................ (0.68) 0.13 0.31 (0.19) 0.87
------- ------- ------- ------- -------
Net Asset Value - End of Year............................. $ 10.55 $ 11.23 $ 11.10 $ 10.79 $ 10.98
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN..................................... (1.63)% 5.90% 7.85% 3.21% 14.35%
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................. 0.93% 0.93% 0.93% 0.93% 0.77%
Expenses Before Reimbursement from Adviser................ 0.93% 0.93% 0.93% 0.93% 0.93%
Net Investment Income..................................... 4.59% 4.58% 4.73% 4.92% 5.16%
SUPPLEMENTARY DATA:
Portfolio Turnover Rate................................... 12% 5% 22% 31% 37%
Net Assets at End of Year (in thousands).................. $42,132 $45,827 $45,346 $44,410 $49,725
Number of Shares Outstanding at End of Year (in
thousands).............................................. 3,993 4,079 4,086 4,116 4,527
</TABLE>
See Notes to Financial Statements.
- 12 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
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, 1999, there were 200,000,000 shares of $0.001 par value capital
stock authorized. When preparing the Fund's financial statements, management
makes estimates and assumptions to comply with generally accepted accounting
principles. These estimates affect 1) the assets and liabilities that we report
at the date of the financial statements; 2) the contingent assets and
liabilities that we disclose at the date of the financial statements; and
3) the revenues and expenses that we report for the period. These estimates
could be different from the actual results. 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 using the policies and
proceedures set forth by the Adviser as approved 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,
1999. Certain Officers and Directors of the Fund are also affiliated with the
Adviser.
Rushmore Trust and Savings, FSB ("Rushmore Trust"), a majority-owned subsidiary
of the Adviser, provides transfer agency, dividend disbursing and other
shareholder services to the Fund. In addition, Rushmore Trust serves as
custodian of the Fund's assets and pays the operating expenses of the Fund. For
these services, Rushmore Trust receives an annual fee of 0.25% of the average
daily net assets of the Money Market Portfolio, and 0.30% of the average daily
net assets of the Virginia and Maryland Portfolios. The Fund has an agreement
with Rushmore Trust to receive short-term borrowings to
- 13 -
<PAGE>
cover share redemptions. Borrowings pursuant to the credit facility are subject
to interest at the overdraft Federal Funds rate. The credit facility may be
drawn upon for temporary purposes and is subject to certain other customary
restrictions. For each short-term borrowing the Fund pledges collateral. No
borrowings were outstanding at December 31, 1999.
3. AGREEMENT WITH FRIEDMAN BILLINGS RAMSEY GROUP, INC.
On October 20, 1999, the Adviser and Rushmore Trust reached a definitive
agreement to be aquired by Friedman Billings Ramsey Group, Inc. The transaction
is subject to various regulatory approvals.
4. SECURITIES TRANSACTIONS
Security transactions are recorded on the trade date. For the year ended
December 31, 1999, purchases and sales (including maturities), of securities,
excluding short-term securities, were as follows:
<TABLE>
<CAPTION>
Virginia Maryland
Portfolio Portfolio
----------- ----------
<S> <C> <C>
Purchases...................................... $ 8,318,157 $5,145,068
=========== ==========
Sales.......................................... $11,130,578 $5,338,499
=========== ==========
</TABLE>
5. NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS
As of December 31, 1999, net unrealized depreciation of investments in the
Virginia Portfolio for Federal income tax purposes aggregated $503,770 of which
$414,348 related to appreciated investments and $918,118 related to depreciated
investments. In the Maryland Portfolio, net unrealized appreciation of
investments for Federal income tax purposes totaled $175,316 of which $852,030
related to appreciated investments and $676,714 related to depreciated
investments.
6. NET ASSETS
At December 31, 1999, net assets consisted of the following:
<TABLE>
<CAPTION>
Money Market Virginia Maryland
Portfolio Portfolio Portfolio
------------ ----------- -----------
<S> <C> <C> <C>
Paid-in-Capital.................................... $17,474,551 $29,624,340 $42,047,167
Accumulated Net Realized Loss on Investments....... -- (194,916) (89,998)
Net Unrealized Appreciation (Depreciation) of
Investments....................................... -- (503,770) 175,316
----------- ----------- -----------
NET ASSETS......................................... $17,474,551 $28,925,654 $42,132,485
=========== =========== ===========
</TABLE>
- 14 -
<PAGE>
7. CAPITAL LOSS CARRYOVERS
At December 31, 1999, for Federal income tax purposes, the following Portfolios
had capital loss carryforwards which may be applied against future net taxable
realized gains of each succeeding year until the earlier of its utilization or
its expiration:
<TABLE>
<CAPTION>
Virginia Maryland
Portfolio Portfolio
--------- ---------
<S> <C> <C>
Expires December 31,
2002................................................ $ -- $31,614
2007................................................ 194,916 58,384
</TABLE>
- 15 -
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
of Fund for Tax-Free Investors, Inc.:
We have audited the accompanying 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, 1999, and the related statements of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1999, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Money Market, Virginia and Maryland Portfolios of Fund for Tax-Free Investors,
Inc. as of December 31, 1999, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Princeton, New Jersey
January 20, 2000
- 16 -
<PAGE>
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<PAGE>
[PICTURE]
FUND FOR TAX-FREE INVESTORS
ANNUAL REPORT
DECEMBER 31, 1999
