<PAGE>
[LOGO]
SEMIANNUAL REPORT, JUNE 30, 2000
FUND FOR TAX-FREE INVESTORS, INC.
4922 FAIRMONT AVENUE, BETHESDA, MD 20814
(800) 622-1386 (301) 657-1510
--------------------------------------------------------------------------------
August 15, 2000
Dear Shareholders:
Although the U.S. economy remains healthy, it shows signs of slowing. To
forestall an overheated economy and inflation, the Federal Reserve raised the
federal funds target rate 50 basis points on May 16. Yields on short-term
municipal securities also increased, benefiting money fund investors. Yields on
long-term municipal securities changed only slightly.
TAX-FREE MONEY MARKET PORTFOLIO
The Tax-Free Money Market Portfolio invests in high-quality, tax-exempt
municipal bonds with maturities of less than one year. The Money Market
Portfolio had an annualized net investment income of 3.03% of net assets for the
six months ended June 30, 2000. The Portfolio's average maturity was 35 days.
MARYLAND AND VIRGINIA TAX-FREE PORTFOLIOS
As of June 30, 2000, Maryland Tax-Free Portfolio assets were $38.9 million. For
the six months ended June 30, 2000, the Portfolio had a total return of 2.92%.
The Portfolio's average maturity for the period was 13.8 years.
For the six-month period ended June 30, 2000, the Virginia Tax-Free Portfolio
had a total return of 3.68%, with net assets of $28.0 million. The average
maturity was 14.4 years.
OUTLOOK
The economy is moderating and should continue to do so for the balance of the
year. With the latest economic data we believe that additional rate hikes by the
Federal Reserve are unlikely. We anticipate that municipal bonds will continue
to have attractive after-tax yields when compared to their taxable counterparts.
The three portfolios of Fund for Tax-Free Investors, Inc. adhere to a long-term
and conservative investment strategy. Management selects high quality bonds with
competitive yields to insure long-term performance. We look forward to
continuing to serve your investment needs.
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
June 30, 2000
(unaudited)
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
-------- -----------
<S> <C> <C>
ALABAMA 3.0%
Athens AL
Water & Sewer Rev Wts
5.10%, 8/1/00 AAA............ $320,000 $ 320,161
University of South Alabama
Univ Rev Series F
6.0%, 11/1/00 AAA............ 200,000 201,269
-----------
State Total.................. 521,430
-----------
ARIZONA 4.5%
Pima County AZ
Indl Rev - Tucson Elec
4.85%, 12/1/22+ A-1+......... 800,000 800,000
-----------
COLORADO 2.8%
Pitkin County
Multi Family Housing
4.85%, 12/1/24+ A-1+......... 500,000 500,000
-----------
FLORIDA 3.2%
Jacksonville, FL
Electric Authority Revenue
6.7%, 10/1/00^ AA............ 250,000 258,150
Miami - Dade County FL
Aviation Rev Ref - Ser B
4.0%, 10/1/00 AAA............ 300,000 300,000
-----------
State Total.................. 558,150
-----------
GEORGIA 5.1%
Dekalb County GA
Electric Authority Revenue
4.3%, 11/1/00 AA............. 400,000 400,252
Georgia State
Ser D General Obligation
6.8%, 8/1/00 AAA............. 500,000 501,125
-----------
State Total.................. 901,377
-----------
HAWAII 2.8%
Hawaii State
General Obligation
4.5%, 9/1/00 AAA............. 500,000 500,363
-----------
ILLINOIS 1.1%
Illinois State
6%, 10/1/00 AA............... 200,000 200,974
-----------
INDIANA 4.0%
Princeton Indiana
Pollution Control Revenue
4.45%, 4/1/22+ A-1+.......... 700,000 700,000
-----------
</TABLE>
<TABLE>
IOWA 8.0%
<CAPTION>
Face Value
Value (Note 1)
-------- -----------
<S> <C> <C>
Iowa Finance Authority
Hospital Facility Revenue
4.85%, 7/1/13+ A-1+.......... $700,000 $ 700,000
Ottumwa Regional Health Center
4.75%, 10/1/06+ A-1+......... 700,000 700,000
-----------
State Total.................. 1,400,000
-----------
KENTUCKY 2.8%
Kentucky Economic Development
Hospital Revenue Catholic
Healthcare
4.9%, 12/1/27+ A-1+.......... 500,000 500,000
-----------
LOUISIANA 2.9%
Louisiana State
Ref Ser A
General Obligation
6.0%, 8/1/00 AAA............. 500,000 500,793
-----------
MARYLAND 9.1%
Baltimore County Revenue
4.3%, 1/1/16+ A-1............ 200,000 200,000
Maryland Health and Higher
Education
Loyola College Issue B
4.8%, 10/1/13+ AAA........... 600,000 600,000
Maryland Health and Higher
Education
North Arundel Hospital
4.8%, 7/1/32+ VMIGI.......... 500,000 500,000
North East Maryland Waste
Disposal Authority Floating
Rate Notes
4.6%, 1/1/08+ AAA............ 300,000 300,000
-----------
State Total.................. 1,600,000
-----------
MICHIGAN 2.8%
Michigan Municipal Bd
Auth Rev
4.5%, 12/1/00 AA............. 500,000 500,607
-----------
MINNESOTA 16.5%
Minneapolis General Obligation
4.85%,12/1/05+ A-1........... 500,000 500,000
Minnesota State Higher
Education
4.75%, 12/1/24+ VMIG1........ 500,000 500,000
St. Paul Housing and
Redevelopment Authority
4.8%, 12/1/12+ A-1+.......... 700,000 700,000
</TABLE>
- 2 -
<PAGE>
STATEMENT OF NET ASSETS
MONEY MARKET PORTFOLIO (continued)
June 30, 2000
(unaudited)
<TABLE>
MINNESOTA (CONTINUED)
<CAPTION>
Face Value
Value (Note 1)
-------- -----------
<S> <C> <C>
St. Paul Housing and
Redevelopment
Authority United Way Project
4.8%, 12/1/18+ A+............ $500,000 $ 500,000
Waconia Industrial Development
Revenue
5%, 10/1/16+ A-1............. 715,000 715,000
-----------
State Total.................. 2,915,000
-----------
MONTANA 3.4%
Montana State Health
4.6%, 12/1/15+ AAA........... 600,000 600,000
-----------
NEW HAMPSHIRE 4.5%
New Hampshire State Business
Finance
Authority Foundation for
Seacoast Health Series A
4.9%, 6/1/28+ A-1............ 800,000 800,000
-----------
NEVADA 1.7%
Clark County NV, Ref Ser. B
4%, 11/1/00 AA............... 300,000 299,894
-----------
NEW YORK 8.2%
Hempstead Town NY
Indl Dv Agy Res Recov American
Fuel Co Proj
4.25%, 12/1/00 AAA........... 250,000 250,043
New York General Obligation
4.45%, 8/15/18+ A-1+......... 400,000 400,000
New York State
Dorm Auth Revs- N Shore Univ
4.45%, 11/1/00 AAA........... 500,000 499,420
Westchester County NY
Indl Dv Agy Resource Recovery
Resco Co Proj - Ser A
4.85%, 7/1/00 AAA............ 300,000 300,000
-----------
State Total.................. 1,449,463
-----------
TENNESSEE 2.8%
Knox County Health & Housing
Facilities-Catholic Healthcare
4.85%, 12/01/27+ A-1+........ 500,000 500,000
-----------
</TABLE>
<TABLE>
TEXAS 5.1%
<CAPTION>
Face Value
Value (Note 1)
-------- -----------
<S> <C> <C>
Houston TX
Idp Schdst Pub Fac Cp Lse Rev
Cesar E Chavez
0%, 9/15/00(a) AAA........... $500,000 $ 495,785
Port Arthur Revenue
Floating Rate Notes
4.5%, 5/1/03+ PRIM1.......... 400,000 400,000
-----------
State Total.................. 895,785
-----------
VIRGINIA 1.2%
Henry County VA
Pub Svc Auth Water & Sewer Rev
7.2%, 11/15/00^ AAA.......... 200,000 203,402
-----------
WASHINGTON 1.3%
Vancouver WA, General
Obligation
3.75%, 12/1/00 AAA........... 225,000 224,863
-----------
TOTAL INVESTMENTS - 96.8%
(Cost $17,072,101*).................... 17,072,101
OTHER ASSETS LESS LIABILITIES 3.2%....... 557,593
-----------
NET ASSETS (NOTE 5) 100.0%............... $17,629,694
===========
NET ASSET VALUE PER SHARE
(Based on 17,629,694 Shares
Outstanding)........................... $1.00
===========
NET ASSETS CONSIST OF:
Paid-in-Capital........................ $17,629,694
-----------
NET ASSETS $17,629,694
===========
</TABLE>
---------
+ Daily or Weekly Tender Bond
^ Date represents pre-refunded or call date.
* Same cost is used for Federal income tax purposes.
(a) Zero coupon bond.
See Notes to Financial Statements.
- 3 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENT OF NET ASSETS
VIRGINIA PORTFOLIO
June 30, 2000
(unaudited)
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Arlington County General
Obligation
6%, 8/1/12 AAA............ $ 500,000 $ 531,885
5.4%, 6/1/13 AAA.......... 250,000 251,678
5.375%, 12/1/16 AAA....... 1,000,000 991,700
Brunswick County Industrial
Development Authority
Revenue
5.5%, 7/1/17 AAA.......... 1,000,000 993,290
Fairfax City EDA Lease
Revenue
5.5%, 5/15/18 AA.......... 1,000,000 987,480
Fairfax County Industrial
Development Authority
Revenue
5.25%, 8/15/19 AA......... 650,000 592,664
Fairfax County Water
Authority Revenue
5.8%, 1/1/16 AAA.......... 500,000 513,820
6%, 4/1/22 AAA............ 630,000 643,318
Hampton Roads
5.5%, 7/1/24 AAA.......... 300,000 290,670
Hanover County Virginia
General Obligation
5.4%, 7/15/16 AA.......... 1,000,000 987,120
Henrico County Industrial
Development Authority
Revenue
7.125%, 8/1/05^ AA........ 400,000 447,680
Henrico County Water and
Sewer Revenue
6.25%, 5/1/02^ AA-........ 200,000 205,752
6.25%, 5/1/13 AA-......... 300,000 306,891
Henry County General
Obligation
8.825%, 11/1/05^ AAA...... 200,000 237,376
Leesburg General Obligation
5.5%, 6/1/05^ AAA......... 500,000 524,150
Loudoun County General
Obligation
5%, 12/1/18 AA............ 1,000,000 915,620
5.25%, 12/1/14 AA......... 1,000,000 982,830
Loudoun County Sanitation
Authority Revenue
6.25%, 1/1/16 AAA......... 500,000 515,100
Lynchburg General Obligation
5%, 5/1/18 AA............. 1,000,000 913,110
Lynchburg Industrial
Development Authority
Revenue
5.2%, 1/1/18 A+........... 500,000 446,535
</TABLE>
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Montgomery Industrial
Development Authority
5.125%, 1/15/19 AAA....... $ 500,000 $ 470,005
Newport News General
Obligation
5.75%, 1/15/17 AA......... 750,000 757,605
Newport News General
Obligation
5%, 3/1/18 AA............. 795,000 728,657
Norfolk General Obligation
5.75%, 6/1/13 AAA......... 500,000 512,660
Norfolk Water Revenue
5.75%, 11/1/12 AAA........ 500,000 517,435
5.875%, 11/1/15 AAA....... 500,000 512,620
Portsmouth Redevelopment and
Housing Authority Revenue
6.05%, 12/1/08 AAA........ 500,000 524,445
Prince William County Park
Authority Revenue
6.875%, 10/15/04^ BBB+.... 500,000 547,580
Prince William County Water
and Sewer System Revenue
5.5%, 7/1/19 AAA.......... 500,000 490,705
Richmond General Obligation
4.7%, 7/15/00 AAA......... 200,000 199,998
Richmond Metro Authority
Revenue
6.375%, 7/15/02^ AAA...... 500,000 526,285
Richmond General Obligation
5.125%, 1/15/16 AAA....... 500,000 479,960
Richmond Public Utilities
Revenue
5.25%, 1/15/18 A+......... 1,000,000 937,380
Upper Occoquan Sewer
Authority Revenue
5.15%, 7/1/20 AAA......... 500,000 469,755
Virginia Beach General
Obligation
6.5%, 8/1/01^ AA.......... 500,000 520,750
5%, 8/1/17 AA............. 1,075,000 995,289
Virginia Housing Development
Authority Revenue
5.95%, 7/1/13 AA+......... 500,000 508,750
5.1%, 7/1/14 AA+.......... 1,000,000 936,440
5.75%, 1/1/19 AAA......... 1,000,000 1,000,910
Virginia Port Authority
Revenue
5.9%, 7/1/16 AA........... 500,000 507,960
</TABLE>
- 4 -
<PAGE>
STATEMENT OF NET ASSETS
VIRGINIA PORTFOLIO (continued)
June 30, 2000
(unaudited)
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Virginia Public School
Authority Revenue
6.2%, 8/1/13 AA........... $ 320,000 $ 336,057
5%, 8/1/18 AA+............ 1,000,000 915,910
Virginia Resource Authority
Revenue
6.75%, 10/1/04^ NR........ 240,000 258,581
Virginia State General
Obligation
5.25%, 6/1/19 AAA......... 1,250,000 1,194,937
-----------
TOTAL INVESTMENTS 96.7%
(Cost $27,227,975*)................... 27,129,343
OTHER ASSETS LESS LIABILITIES
3.3%.................................. 917,135
-----------
NET ASSETS (NOTE 6) 100.0%.............. $28,046,478
===========
NET ASSET VALUE PER SHARE
(Based on 2,639,893 Shares
Outstanding).......................... $10.62
===========
<CAPTION>
Value
(Note 1)
-----------
<S> <C> <C>
NET ASSETS CONSIST OF:
Paid-in-Capital....................... $28,406,790
Accumulated Net Realized Loss on
Investments......................... (261,680)
Net Unrealized Depreciation of
Investments......................... (98,632)
-----------
NET ASSETS.............................. $28,046,478
===========
</TABLE>
---------
^ Date represents pre-refunded date.
* Same cost is used for Federal income tax purposes.
NR Not Rated
See Notes to Financial Statements.
- 5 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENT OF NET ASSETS
MARYLAND PORTFOLIO
June 30, 2000
(unaudited)
<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 $ 775,866
6%, 7/15/02^ AA+.......... 250,000 261,103
6.3%, 8/1/05^ AA+......... 500,000 537,305
6.3%, 8/1/05^ AA+......... 725,000 779,092
Anne Arundel County
Pollution Control Revenue
6%, 4/1/24 A.............. 1,230,000 1,232,706
Anne Arundel County Solid
Waste Project General
Obligation
5.5%, 9/1/15 AA+.......... 500,000 496,795
Baltimore City General
Obligation
5.5%, 10/15/10 AAA........ 1,000,000 1,032,210
5.5%, 10/15/15 AAA........ 500,000 511,825
Baltimore Wastewater Project
Revenue
6%, 7/1/15 AAA............ 500,000 533,115
Baltimore County General
Obligation
6.125%, 7/1/02^ AAA....... 500,000 522,185
5.5%, 6/1/12 AAA.......... 1,000,000 1,023,140
Baltimore Port Facility
Revenue
6.5%, 12/1/10 AA-......... 400,000 421,060
Carroll County General
Obligation
7.1%, 10/1/09 AA.......... 235,000 241,136
5.3%, 11/1/15 AA.......... 500,000 496,225
6.5%, 10/1/04^ AA......... 225,000 234,990
Frederick County General
Obligation
6.125%, 12/1/07 AAA....... 500,000 522,715
City of Frederick General
Obligation
6%, 10/1/11 AAA........... 300,000 314,520
Howard County Cons Pub Impt
Series A
5.5%, 2/15/19 AAA......... 500,000 494,180
Howard County Metropolitan
District General Obligation
6%, 8/15/19 AAA........... 840,000 843,772
Howard County Public
Improvement General
Obligation
6%, 5/15/03^ AAA.......... 500,000 516,080
5.5%, 2/15/04^ AAA........ 500,000 515,490
</TABLE>
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Howard County Special
Facilities Revenue
6.1%, 2/15/13 AAA......... $ 500,000 $ 517,985
Laurel General Obligation
6.7%, 7/1/01^ AAA......... 600,000 624,786
Maryland Community
Development Administration
Revenue
7.375%, 4/1/10 AA2........ 485,000 494,249
7.25%, 4/1/11 AA2......... 200,000 205,608
7.15%, 4/1/11 AA2......... 405,000 417,644
5%, 4/1/17 AA2............ 500,000 448,030
7.7%, 5/15/20 AA3......... 250,000 257,062
7.25%, 4/1/27 AA2......... 385,000 394,298
Maryland General Obligation
5%, 3/1/12 AAA............ 1,000,000 983,080
Maryland Health and Higher
Education Facilities
Authority Revenue
5.7%, 7/1/09 A1........... 500,000 522,875
5.25%, 7/1/13 AAA......... 500,000 497,510
6.125%, 7/1/14 AAA........ 500,000 517,445
5.5%, 10/1/16 AAA......... 1,000,000 999,310
6.125%, 7/1/19 AAA........ 500,000 508,755
5%, 7/1/19 A2............. 250,000 210,095
5%, 7/1/27 AAA............ 1,500,000 1,317,750
6%, 7/1/39 AA............. 1,000,000 1,014,010
Maryland Health and Higher
Education Facilities
Authority Floating Rate Note
4.8%, 1/1/32+ VMIG1....... 100,000 100,000
Maryland Industrial
Development Revenue
7.125%, 7/1/06 A-......... 160,000 160,448
Maryland Stadium Authority
Sports Revenue
5.55%, 3/1/13 AAA......... 500,000 506,830
5.875%, 12/15/13 AAA...... 1,000,000 1,030,850
5.375%, 12/15/15 AA....... 500,000 496,505
Maryland Water Quality
Finance Administration
Revenue
6%, 9/1/15 AA............. 1,000,000 1,023,330
Montgomery County General
Obligation
5%, 5/1/19 AAA............ 500,000 460,955
</TABLE>
- 6 -
<PAGE>
STATEMENT OF NET ASSETS
MARYLAND PORTFOLIO (continued)
June 30, 2000
(unaudited)
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Montgomery County Housing
Opportunity Commission
Revenue
6.7%, 7/1/11 AA2.......... $ 310,000 $ 319,247
7.375%, 7/1/17 AA2........ 90,000 90,950
6.65%, 7/1/17 AA2......... 160,000 166,230
7%, 7/1/23 A3............. 250,000 258,058
Montgomery County Waste
Disposal Authority Revenue
5.875%, 6/1/13 AAA........ 250,000 256,025
North East Maryland Waste
Disposal Authority Revenue
6.2%, 7/1/10 A2........... 500,000 516,430
6.3%, 7/1/16 A2........... 1,000,000 1,011,930
Prince Georges County
General Obligation
5.25%, 3/15/15 AAA........ 1,000,000 980,610
Prince Georges County
Housing Authority Revenue
6.35%, 7/20/20 AAA........ 700,000 711,165
Prince Georges County
Pollution Control Revenue
5.75%, 3/15/10 A.......... 1,000,000 1,029,650
St. Mary's County General
Obligation
5.85%, 11/1/18 AAA........ 500,000 506,155
University of Maryland
System Auxiliary Revenue
6.375%, 10/1/02^ AA+...... 500,000 526,770
5.6%, 4/1/12 AA+.......... 1,000,000 1,022,590
5.125%, 4/1/15 AA+........ 1,000,000 966,030
5.6%, 4/1/16 AA+.......... 1,000,000 1,004,780
Washington, D.C.
Metropolitan Area
Transportation Authority
Revenue
6%, 7/1/09 AAA............ 500,000 530,745
6%, 7/1/10 AAA............ 275,000 292,064
</TABLE>
<TABLE>
<CAPTION>
Face Value
Value (Note 1)
---------- -----------
<S> <C> <C>
Washington Suburban Sanitary
District General Obligation
6.2%, 6/1/12 AA........... $ 900,000 $ 937,377
5%, 6/1/23 AA............. 1,000,000 904,800
-----------
TOTAL INVESTMENTS 97.8%
(Cost $37,664,040*)................... 38,046,526
OTHER ASSETS LESS LIABILITIES
2.2%.................................. 874,539
-----------
NET ASSETS 100.0%....................... $38,921,065
===========
NET ASSET VALUE PER SHARE
(Based on 3,670,436 Shares
Outstanding).......................... $10.60
===========
NET ASSETS CONSIST OF:
Paid-in-Capital....................... $38,667,331
Accumulated Net Realized Loss on
Investments......................... (128,752)
Net Unrealized Appreciation of
Investments......................... 382,486
-----------
NET ASSETS.............................. $38,921,065
===========
</TABLE>
---------
^ Date represents pre-refunded date.
+ Daily or Weekly Tender Bond
* Same cost is used for Federal income tax purposes.
See Notes to Financial Statements.
- 7 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 2000
(unaudited)
<TABLE>
<CAPTION>
Money
Market Virginia Maryland
Portfolio Portfolio Portfolio
--------- ---------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME (NOTE 1).................................. $324,581 $ 793,037 $1,134,630
-------- ---------- ----------
EXPENSES
Investment Advisory Fee (Note 2).......................... 42,926 86,578 122,658
Administrative Fee (Note 2)............................... 21,463 41,557 58,875
Other Fees................................................ 129 15 15
-------- ---------- ----------
Total Expenses.......................................... 64,518 128,150 181,548
-------- ---------- ----------
NET INVESTMENT INCOME....................................... 260,063 664,887 953,082
-------- ---------- ----------
Net Realized Loss on Investment Transactions................ -- (66,762) (38,754)
Change in Net Unrealized Appreciation (Depreciation) of
Investments................................................. -- 405,138 207,170
-------- ---------- ----------
NET LOSS ON INVESTMENTS..................................... -- 338,376 168,416
-------- ---------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $260,063 $1,003,263 $1,121,498
======== ========== ==========
</TABLE>
See Notes to Financial Statements.
- 8 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Money Market Virginia Maryland
Portfolio Portfolio Portfolio
----------------------------- ----------------------------- -----------------------------
For the Six For the Six For the Six
Months For the Year Months For the Year Months For the Year
Ended Ended Ended Ended Ended Ended
June 30, 2000 December 31, June 30, 2000 December 31, June 30, 2000 December 31,
(unaudited) 1999 (unaudited) 1999 (unaudited) 1999
-------------- ------------- -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES
Net Investment Income............. $ 260,063 $ 453,517 $ 664,887 $ 1,489,110 $ 953,082 $ 2,090,612
Net Realized Loss on Investment
Transactions.................... -- -- (66,762) (194,916) (38,754) (58,384)
Change in Net Unrealized
Appreciation/Depreciation of
Investments..................... -- -- 405,138 (2,538,557) 207,170 (2,774,745)
------------ ------------ ----------- ------------ ----------- -----------
Net Increase (Decrease) in Net
Assets Resulting from
Operations...................... 260,063 453,517 1,003,263 (1,244,363) 1,121,498 (742,517)
------------ ------------ ----------- ------------ ----------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS
From Net Investment Income (Note
1).............................. (260,063) (453,517) (664,887) (1,489,110) (953,082) (2,090,612)
From Net Realized Gain............ -- -- -- (48,974) -- --
------------ ------------ ----------- ------------ ----------- -----------
Total Distributions to
Shareholders.................... (260,063) (453,517) (664,887) (1,538,084) (953,082) (2,090,612)
------------ ------------ ----------- ------------ ----------- -----------
FROM SHARE
TRANSACTIONS
Net Proceeds from Sales of
Shares.......................... 16,317,751 29,881,644 2,127,909 5,047,389 1,005,172 7,111,506
Reinvestment of Distributions..... 236,926 428,371 554,168 1,320,279 804,745 1,797,355
Cost of Shares Redeemed........... (16,399,534) (32,618,355) (3,899,629) (9,202,553) (5,189,753) (9,770,286)
------------ ------------ ----------- ------------ ----------- -----------
Net Increase (Decrease) in Net
Assets Resulting from Share
Transactions.................... 155,143 (2,308,340) (1,217,552) (2,834,885) (3,379,836) (861,425)
------------ ------------ ----------- ------------ ----------- -----------
TOTAL INCREASE (DECREASE) IN NET
ASSETS............................ 155,143 (2,308,340) (879,176) (5,617,332) (3,211,420) (3,694,554)
NET ASSETS - Beginning of Period.... 17,474,551 19,782,891 28,925,654 34,542,986 42,132,485 45,827,039
------------ ------------ ----------- ------------ ----------- -----------
NET ASSETS - End of Period.......... $ 17,629,694 $ 17,474,551 $28,046,478 $ 28,925,654 $38,921,065 $42,132,485
============ ============ =========== ============ =========== ===========
SHARES
Sold.............................. 16,317,751 29,881,644 202,626 453,773 95,607 643,043
Issued in Reinvestment of
Distributions................... 236,926 428,371 52,867 120,013 76,543 164,735
Redeemed.......................... (16,399,534) (32,618,355) (372,949) (840,524) (494,229) (894,497)
------------ ------------ ----------- ------------ ----------- -----------
Net Increase (Decrease) in
Shares.......................... 155,143 (2,308,340) (117,456) (266,738) (322,079) (86,719)
============ ============ =========== ============ =========== ===========
</TABLE>
See Notes to Financial Statements.
- 9 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
FINANCIAL HIGHLIGHTS
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
For the Six
Months Ended For the Years Ended December 31,
June 30, 2000 -----------------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
-------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value - Beginning of
Period.............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Income from Investment Operations:
Net Investment Income............... 0.02 0.02 0.03 0.03 0.03 0.03
------- ------- ------- ------- ------- -------
Distributions to Shareholders:
From Net Investment Income.......... (0.02) (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 0.00
------- ------- ------- ------- ------- -------
Net Asset Value - End of Period....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN................. 3.06%(A) 2.50% 2.73% 2.93% 2.69% 3.09%
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................. 0.75%(A) 0.75% 0.75% 0.75% 0.75% 0.75%
Net Investment Income................. 3.03%(A) 2.47% 2.70% 2.89% 2.67% 3.04%
SUPPLEMENTARY DATA:
Net Assets at End of Period (in
thousands).......................... $17,630 $17,475 $19,783 $19,177 $18,890 $20,772
Number of Shares Outstanding at End of
Period (in thousands)............... 17,630 17,475 19,783 19,177 18,890 20,792
</TABLE>
------------
(A) Annualized
See Notes to Financial Statements.
- 10 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
FINANCIAL HIGHLIGHTS
VIRGINIA PORTFOLIO
<TABLE>
<CAPTION>
For the Six
Months Ended For the Years Ended December 31,
June 30, 2000 ----------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
-------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value - Beginning of Period....... $ 10.49 $ 11.42 $ 11.46 $ 11.09 $ 11.31 $ 10.36
------- ------- ------- ------- ------- -------
Income from Investment Operations:
Net Investment Income..................... 0.25 0.50 0.52 0.52 0.53 0.56
Net Realized and Unrealized Gain (Loss) on
Investments............................. 0.13 (0.91) 0.12 0.39 (0.22) 0.95
------- ------- ------- ------- ------- -------
Total from Investment Operations........ 0.38 (0.41) 0.64 0.91 0.31 1.51
------- ------- ------- ------- ------- -------
Distributions to Shareholders:
From Net Investment Income................ (0.25) (0.50) (0.52) (0.52) (0.53) (0.56)
From Net Realized Gain.................... -- (0.02) (0.16) (0.02) -- --
------- ------- ------- ------- ------- -------
Total Distributions to Shareholders..... (0.25) (0.52) (0.68) (0.54) (0.53) (0.56)
------- ------- ------- ------- ------- -------
Net Increase (Decrease) in Net Asset
Value..................................... 0.13 (0.93) (0.04) 0.37 (0.22) 0.95
------- ------- ------- ------- ------- -------
Net Asset Value - End of Period............. $ 10.62 $ 10.49 $ 11.42 $ 11.46 $ 11.09 $ 11.31
======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN....................... 3.68%(B) (3.75)% 5.64% 8.45% 2.91% 14.92%
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................... 0.93%(A) 0.93% 0.93% 0.93% 0.93% 0.77%
Expenses Before Reimbursement from
Adviser................................... 0.93%(A) 0.93% 0.93% 0.93% 0.93% 0.93%
Net Investment Income....................... 4.80%(A) 4.51% 4.48% 4.70% 4.84% 5.17%
SUPPLEMENTARY DATA:
Portfolio Turnover Rate..................... 4% 26% 25% 27% 46% 55%
Net Assets at End of Period (in
thousands)................................ $28,046 $28,926 $34,543 $32,908 $32,355 $33,468
Number of Shares Outstanding at End of
Period (in thousands)..................... 2,640 2,757 3,024 2,872 2,917 2,958
</TABLE>
------------
(A) Annualized
(B) Total Investment Return for periods less than one year are not annualized.
See Notes to Financial Statements.
- 11 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
FINANCIAL HIGHLIGHTS
MARYLAND PORTFOLIO
<TABLE>
<CAPTION>
For the Six
Months Ended For the Years Ended December 31,
June 30, 2000 ----------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995
-------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value - Beginning of Period...... $ 10.55 $ 11.23 $ 11.10 $ 10.79 $ 10.98 $ 10.11
------- ------- ------- ------- ------- -------
Income from Investment Operations:
Net Investment Income.................... 0.25 0.50 0.51 0.51 0.53 0.55
Net Realized and Unrealized Gain (Loss)
on Investments......................... 0.05 (0.68) 0.13 0.31 (0.19) 0.87
------- ------- ------- ------- ------- -------
Total from Investment Operations....... 0.30 (0.18) 0.64 0.82 0.34 1.42
------- ------- ------- ------- ------- -------
Distributions to Shareholders:
From Net Investment Income............... (0.25) (0.50) (0.51) (0.51) (0.53) (0.55)
------- ------- ------- ------- ------- -------
Net Increase (Decrease) in Net Asset
Value.................................... 0.05 (0.68) 0.13 0.31 (0.19) 0.87
------- ------- ------- ------- ------- -------
Net Asset Value - End of Period............ $ 10.60 $ 10.55 $ 11.23 $ 11.10 $ 10.79 $ 10.98
======= ======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN...................... 2.92%(B) (1.63)% 5.90% 7.85% 3.21% 14.35%
RATIOS TO AVERAGE NET ASSETS:
Expenses................................... 0.93%(A) 0.93% 0.93% 0.93% 0.93% 0.77%
Expenses Before Reimbursement from
Adviser.................................. 0.93%(A) 0.93% 0.93% 0.93% 0.93% 0.93%
Net Investment Income...................... 4.80%(A) 4.59% 4.58% 4.73% 4.92% 5.16%
SUPPLEMENTARY DATA:
Portfolio Turnover Rate.................... 3% 12% 5% 22% 31% 37%
Net Assets at End of Period (in
thousands)............................... $38,921 $42,132 $45,827 $45,346 $44,410 $49,725
Number of Shares Outstanding at End of
Period (in thousands).................... 3,670 3,993 4,079 4,086 4,116 4,527
</TABLE>
---------
(A) Annualized
(B) Total Investment Return for periods less than one year are not annualized.
See Notes to Financial Statements.
- 12 -
<PAGE>
FUND FOR TAX-FREE INVESTORS, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Fund for Tax-Free Investors, Inc. (the "Fund") is registered with the Securities
and Exchange Commission under the Investment Company Act of 1940 as a no-load,
open-end, investment company. The Fund consists of three separate portfolios
which invest primarily in securities exempt from Federal income taxes. On
June 30, 1999, there were 200,000,000 shares of $0.001 par value capital stock
authorized. 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
procedures 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 six month ended
June 30, 2000. 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.
- 13 -
<PAGE>
For these services, Rushmore Trust receives an annual fee of 0.25% of the
average daily net assets of the Money Market Portfolio, and 0.30% of the average
daily net assets of the Virginia and Maryland Portfolios. The Fund has an
agreement with Rushmore Trust to receive short-term borrowings to cover share
redemptions. 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 June 30, 2000.
3. AGREEMENT WITH FRIEDMAN BILLINGS RAMSEY GROUP, INC.
On October 20, 1999, the Adviser and Rushmore Trust reached a definitive
agreement to be acquired 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 six months ended
June 30, 2000, purchases and sales (including maturities), of securities,
excluding short-term securities, were as follows:
<TABLE>
<CAPTION>
Virginia Maryland
Portfolio Portfolio
---------- ----------
<S> <C> <C>
Purchases....................................... $1,040,670 $ 992,750
========== ==========
Sales........................................... $2,717,418 $4,517,706
========== ==========
</TABLE>
5. NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS
As of June 30, 2000, net unrealized depreciation of investments in the Virginia
Portfolio for Federal income tax purposes aggregated $98,632 of which $518,961
related to appreciated investments and $617,593 related to depreciated
investments. In the Maryland Portfolio, net unrealized appreciation of
investments for Federal income tax purposes totaled $382,486 of which $848,755
related to appreciated investments and $466,269 related to depreciated
investments.
6. 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
Expires December 31, Portfolio Portfolio
-------------------- --------- ---------
<S> <C> <C>
2002................................................ $ -- $31,614
2007................................................ $194,916 $58,384
-------- -------
$194,916 $89,998
======== =======
</TABLE>
- 14 -
<PAGE>
[LOGO]
Fund for Tax-Free Investors
Semiannual Report
June 30, 2000
