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Rule 497(b)
File Nos. 333-777 and 811-
2539
March 27, 1996
Dear Shareholder:
Enclosed is a proxy statement and a detailed shareholder
letter describing the proposed combination of your Portfolio,
the Rushmore Money Market Portfolio, and Fund for Government
Investors. Your Portfolio and Fund for Government Investors
are similar and are both money market funds. The Money Market
Portfolio and Fund for Government Investors have virtually
identical investment objectives and comparable investment
policies and can invest in most of the same types of
securities. This combination will provide the opportunity for
you to continue to pursue your investment goals and the
potential to benefit from the lower expenses paid by a larger
fund. It is being recommended by your Board of Directors.
Please review the attached materials carefully and return
your proxy as soon as possible.
/s/ Richard J. Garvey
Richard J. Garvey
President
The Rushmore Fund, Inc.
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THE RUSHMORE FUND, INC.
4922 Fairmont Avenue
Bethesda, Maryland 20814
March 27, 1996
To the Shareholders of
The Rushmore Money Market Portfolio
Dear Shareholder:
A special meeting of the shareholders of the Rushmore Money
Market Portfolio (the "Money Market Portfolio"), a series of
The Rushmore Fund, Inc. (the "Rushmore Fund"), will be held at
1:00 P.M., Eastern Time, on Friday, May 24, 1996, at the
offices of the Rushmore Fund, at 4922 Fairmont Avenue,
Bethesda, Maryland 20814 (the "Meeting"). At the Meeting, the
shareholders of the Money Market Portfolio will vote on an
Agreement and Plan of Reorganization (the "Plan"). Under the
Plan, the Money Market Portfolio will merge into Fund for
Government Investors, Inc. ("FGI"), a separate investment
company within the Rushmore Group that has an investment
objective that is virtually identical to that of the Money
Market Portfolio and investment policies that are comparable
to those of the Money Market Portfolio (the "Reorganization").
If the Plan is approved by the shareholders of the Money
Market Portfolio and implemented by the Rushmore Fund, you
will become a shareholder of FGI and will receive shares of
FGI having an aggregate value equal to the aggregate value of
your investment in the Money Market Portfolio. No sales
charge will be imposed as the result of the Reorganization.
The Reorganization will be conditioned upon receipt of an
opinion of counsel indicating that the Reorganization will
qualify as a tax-free reorganization for Federal income tax
purposes.
The Board of Directors of the Rushmore Fund (the "Rushmore
Fund Board") believes that the proposed Reorganization should
benefit shareholders by facilitating a potentially larger
mutual fund. A larger mutual fund should enhance the ability
of the adviser of the combined mutual fund to effect portfolio
transactions on more favorable terms as well as promote more
efficient operations and enable the combined mutual fund to
diversify investments to a greater extent. The Rushmore Fund
Board further anticipates that the Reorganization should
permit the reduction or elimination of certain duplicative
costs and expenses, presently incurred for services that are
separately performed for both the Money Market Portfolio and
FGI.
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The Rushmore Fund Board has carefully considered and has
unanimously approved the proposed Reorganization, as described
in the accompanying materials. The Rushmore Fund Board
believes that the Reorganization is in the best interests of
the Money Market Portfolio and its shareholders and,
therefore, recommends that you vote in favor of approving the
Plan.
Concurrently with the solicitation of the shareholders of the
Money Market Portfolio for the approval of the Reorganization,
the approval by the shareholders of FGI of an agreement and
plan of redomestication, whereby FGI would change its form of
organization from a Maryland corporation to a Delaware
business trust (the "FGI Redomestication"), also is being
solicited. The Board of Directors of FGI (the "FGI Board")
has approved such agreement and plan of redomestication. The
FGI Board believes that the shareholders of FGI will benefit
from the redomestication because a Delaware business trust
pays lower expenses than a Maryland corporation and provides
greater operational and administrative flexibility.
Accordingly, should shareholders of FGI approve the FGI
Redomestication and the shareholders of the Money Market
Portfolio approve the Reorganization, as described in the
accompanying materials, the Money Market Portfolio will merge
into FGI, a Maryland corporation, which, in turn, will
redomesticate into a Delaware business trust.
We strongly urge you to review, complete, and return your
proxy as soon as possible. Your vote is important no matter
how many shares you own. Voting your shares early will help
to avoid costly follow-up mail and telephone solicitation.
After reviewing the enclosed materials, please exercise your
right to vote today by completing, dating, and signing each
proxy card you receive and mailing the proxy in the self-
addressed, postage-paid envelope that has been enclosed for
your convenience. It is very important that you vote and that
your voting instructions be received no later than 12:00 Noon,
Eastern Time, on Friday, May 24, 1996.
Please note that you may receive more than one proxy package
if you hold shares of the Money Market Portfolio in more than
one account, and you should return separate proxy cards for
such accounts. If you have any questions, please call
Rushmore Trust and Savings, FSB, toll-free at (800) 343-3355.
Sincerely,
/s/ Richard J. Garvey
Richard J. Garvey
President
The Rushmore Fund, Inc.
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THE RUSHMORE FUND, INC.
4922 Fairmont Avenue
Bethesda, Maryland 20814
____________
The Rushmore Money Market Portfolio
____________
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
To be held on May 24, 1996
____________
TO THE SHAREHOLDERS:
Notice hereby is given that a special meeting of the
shareholders of the Rushmore Money Market Portfolio, a series
of The Rushmore Fund, Inc., will be held at 1:00 P.M., Eastern
Time, on Friday, May 24, 1996, at the offices of the Rushmore
Fund, 4922 Fairmont Avenue, Bethesda, Maryland 20814 (the
"Meeting"), for the following purposes:
PROPOSAL 1.
To approve or disapprove an Agreement and Plan of
Reorganization among The Rushmore Fund, Inc., the
Rushmore Money Market Portfolio, and Fund for
Government Investors, Inc. (the "Plan"), and the
transactions contemplated thereby, pursuant to which
Plan the Rushmore Money Market Portfolio would
transfer all of its assets to Fund for Government
Investors, Inc., in exchange for (i) shares of
common stock in the Fund for Government Investors,
Inc., that would be distributed to the shareholders
of the Rushmore Money Market Portfolio and (ii) the
assumption by the Fund for Government Investors,
Inc. of all the liabilities of the Rushmore Money
Market Portfolio.
PROPOSAL 2.
To transact such other business as properly may come
before the Meeting or any adjournment(s) thereof.
The transactions contemplated by the Plan, and related
matters, are described in the attached Combined
Prospectus/Proxy Statement. A copy of the form of the Plan is
attached as Exhibit A thereto.
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You are entitled to vote at the Meeting, and any
adjournment(s) thereof, if you owned shares of the Money
Market Portfolio at the close of business on March 6, 1996.
If you attend the Meeting, you may vote your shares in person.
If you do not expect to attend the Meeting, please complete,
date, sign, and return the enclosed proxy card in the enclosed
self-addressed, postage-paid return envelope.
By Order of the Board of
Directors
/s/ Stephenie E. Adams
Stephenie E. Adams
Secretary
The Rushmore Fund, Inc.
March 27, 1996
4922 Fairmont Avenue
Bethesda, Maryland 20814
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YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on the enclosed
proxy card, then please date and sign the card and return the
proxy card in the envelope provided. If you sign, date, and
return the proxy card but give no voting instructions, your
shares will be voted "FOR" each applicable proposal noticed
above. In order to avoid the additional expense and delay of
further solicitation, we ask your cooperation in mailing in
your proxy card promptly so that a quorum may be ensured.
Unless proxy cards submitted by corporations and partnerships
are signed by the appropriate persons as indicated in the
voting instructions on the proxy card, such proxy cards cannot
be voted.
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PART A
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THE RUSHMORE FUND, INC.
____________
The Rushmore Money Market Portfolio
____________
4922 Fairmont Avenue
Bethesda, Maryland 20814
(800) 343-3355
COMBINED PROSPECTUS/PROXY STATEMENT
This Combined Prospectus/Proxy Statement is being furnished in
connection with the solicitation of proxies by the Board of
Directors of The Rushmore Fund, Inc. (the "Rushmore Fund"),
for use at a special meeting of the shareholders of the
Rushmore Money Market Portfolio (the "Money Market
Portfolio"), to be held at 1:00 P.M., Eastern Time, on Friday,
May 24, 1996, at the offices of the Rushmore Fund, 4922
Fairmont Avenue, Bethesda, Maryland 20814, and at any
adjournment(s) thereof (the "Meeting"). The Rushmore Fund is
a diversified, open-end management investment company
incorporated in the State of Maryland with three separate
classes of common stock outstanding, with each such class
representing an interest in a separate series of the Rushmore
Fund. The Money Market Portfolio is one of the three series
of the Rushmore Fund. Only shareholders of the Money Market
Portfolio (the "Shareholders") are being solicited in
connection with the Meeting.
The purpose of the Meeting is to consider the Agreement and
Plan of Reorganization (the "Plan"), which would effect the
reorganization of the Money Market Portfolio into Fund for
Government Investors, Inc. ("FGI"), a separate investment
company within the Rushmore Group, and the transactions
contemplated thereby, as described below (the
"Reorganization"). The Plan has been unanimously approved by
the Board of Directors of the Rushmore Fund (the "Rushmore
Board") and the Board of Directors of FGI (the "FGI Board").
Pursuant to the Plan, all of the assets of the Money Market
Portfolio would be acquired by FGI, which has an investment
objective virtually identical to and investment policies
comparable to those of the Money Market Portfolio, in exchange
for shares of common stock in FGI ("FGI Shares") and the
assumption by FGI of all the liabilities of the Money Market
Portfolio. Following such transfer of assets from the Money
Market Portfolio to FGI, the FGI Shares received by the Money
Market Portfolio then would be distributed pro rata to the
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Shareholders of the Money Market Portfolio. As a result of
the proposed transactions, each Shareholder of the Money
Market Portfolio would receive a number of full and fractional
FGI Shares having a total net asset value equal, on the
effective date of the Reorganization, to the net asset value
of the Shareholder's shares of common stock in the Money
Market Portfolio.
This Combined Prospectus/Proxy Statement, which should be
retained for future reference, sets forth concisely the
information about the Rushmore Fund, the Money Market
Portfolio, and FGI, and the transactions contemplated by the
proposed Reorganization, that an investor should know before
voting on the proposed Reorganization. A copy of the current
Prospectus of the Money Market Portfolio, dated January 1,
1996, is included in this Combined Prospectus/Proxy Statement
for each Shareholder of the Money Market Portfolio and is
incorporated by reference herein. A copy of the current
Prospectus of FGI, dated March 27, 1996, is included in this
Combined Prospectus/Proxy Statement for each Shareholder of
the Money Market Portfolio and is incorporated by reference
herein.
A Statement of Additional Information regarding the Rushmore
Fund and the Money Market Portfolio, dated January 1, 1996,
has been filed with the Securities and Exchange Commission
(the "Commission") and is incorporated by reference herein. A
Statement of Additional Information Regarding FGI, dated March
27, 1996, has been filed with the Commission and is
incorporated by reference herein. Copies of these documents
also may be obtained without charge by contacting Rushmore
Trust and Savings, FSB ("RTS"), which provides all
administrative services to both the Money Market Portfolio and
FGI, at 4922 Fairmont Avenue, Bethesda, Maryland 20814, or by
telephoning RTS toll-free at (800) 343-3355. RTS is a
majority-owned subsidiary of Money Management Associates, the
investment adviser to both the Money Market Portfolio and FGI.
A Statement of Additional Information, dated March 27, 1996,
relating to the proposed transactions described in this
Combined Prospectus/Proxy Statement, including historical
financial statements, has been filed with the Commission and
is incorporated by reference herein. Copies of this Statement
of Additional Information may be obtained without charge by
contacting RTS, at 4922 Fairmont Avenue, Bethesda, Maryland
20814, or by telephoning RTS toll-free at (800) 343-3355.
THE SHARES OFFERED BY THIS COMBINED PROSPECTUS/PROXY STATEMENT
ARE NOT DEPOSITS OR OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED
OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED OR GUARANTEED
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BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER U.S. GOVERNMENT AGENCY.
AN INVESTMENT IN EITHER FUND FOR GOVERNMENT INVESTORS, INC. OR
THE RUSHMORE MONEY MARKET PORTFOLIO IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT AND THERE CAN BE NO
ASSURANCE THAT EITHER FUND FOR GOVERNMENT INVESTORS, INC. OR
THE RUSHMORE MONEY MARKET PORTFOLIO WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.
_______________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
______________________
The date of this Combined Prospectus/Proxy Statement is March
27, 1996.
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COMBINED PROSPECTUS/PROXY STATEMENT
TABLE OF CONTENTS
Page
Introduction and Voting Information . . . . . . . . . . . . 5
Special Meeting; Voting of Proxies; Adjournment . . . 5
Proxy Solicitation . . . . . . . . . . . . . . . . . . 6
Revocation of Proxies . . . . . . . . . . . . . . . . 6
No Dissenters' Rights of Appraisal . . . . . . . . . . 6
Additional Voting Information . . . . . . . . . . . . 6
Summary of the Proposed Redomestication of FGI . . . . 6
Fee Table . . . . . . . . . . . . . . . . . . . . . . . . . 7
Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . 8
The Proposed Reorganization . . . . . . . . . . . . . 8
Investment Objectives and Policies . . . . . . . . . . 9
Management Fees, Administrative Fees,10
and Other Operating Expenses . . . . . . . . . . . . 10
Purchases and Exchanges . . . . . . . . . . . . . . . 11
Redemption Procedures and Fees . . . . . . . . . . . . 11
Dividends and Distributions; Automatic Reinvestment . 11
Federal Tax Consequences of the Proposed
Reorganization . . . . . . . . . . . . . . . . . . . 11
Costs and Expenses of the Reorganization . . . . . . . 11
Continuation of Shareholder Accounts; Share
Certificates . . . . . . . . . . . . . . . . . . . . 12
Form of Organization of FGI . . . . . . . . . . . . . 12
Form of Organization of the Rushmore Fund . . . . . . 12
Operations of FGI Following the Reorganization . . . . 12
The Proposed Redomestication of FGI . . . . . . . . . 13
Principal Risk Factors . . . . . . . . . . . . . . . . . . 13
Comparison of Investment Objectives and Policies . . . . . 14
Investment Objectives and Policies . . . . . . . . . . 14
Investment Restrictions and Limitations . . . . . . . 15
The Proposed Reorganization . . . . . . . . . . . . . . . . 16
Agreement and Plan of Reorganization . . . . . . . . . 16
Reasons For the Proposed Reorganization . . . . . . . 17
Description of Securities To Be Issued
In Connection With the Reorganization . . . . . . . 18
Description of Securities To Be Issued
In Connection With the Redomestication . . . . . . . 19
Federal Income Tax Consequences . . . . . . . . . . . 20
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Page
Pro Forma Capitalization and Ratios . . . . . . . . . 21
Cessation of Existence . . . . . . . . . . . . . . . . 21
Required Vote and Board Recommendation With
Respect to the Reorganization Plan . . . . . . . . . 21
Additional Information About FGI and the FGI Shares . . . . 22
Additional Information About the Rushmore Fund,
the Money Market Portfolio, and the Money Market
Portfolio Shares . . . . . . . . . . . . . . . . . . . . . 22
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 22
Available Information . . . . . . . . . . . . . . . . 22
Legal Matters . . . . . . . . . . . . . . . . . . . . 22
Financial Statements and Experts . . . . . . . . . . . 22
Other Business . . . . . . . . . . . . . . . . . . . . . . 23
Proxy for a Special Meeting of Shareholders . . Separate Page
Appendix A: Form of Agreement and Plan of
Reorganization . . . . . . . . . . . . . . A-1
Appendix B: Investment Management Agreement Between
Fund for Government Investors, Inc. and
Money Management Associates . . . . . . . B-1
Appendix C: Current Prospectus of Fund for
Government Investors, Inc.,
Dated March 27, 1996 . . . . . . . . . . . C-1
Appendix D: Current Prospectus of the Rushmore
Money Market Portfolio,
Dated January 1, 1996 . . . . . . . . . . D-1
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THE RUSHMORE FUND, INC.
____________
The Rushmore Money Market Portfolio
_______________
COMBINED PROSPECTUS/PROXY STATEMENT
Special Meeting of Shareholders
to be held on
May 24, 1996
______________
INTRODUCTION AND VOTING INFORMATION
Special Meeting; Voting of Proxies; Adjournment
This Combined Prospectus/Proxy Statement is being furnished to
the shareholders of the Rushmore Money Market Portfolio (the
"Money Market Portfolio"), which is a series of The Rushmore
Fund, Inc. (the "Rushmore Fund"), in connection with the
solicitation by the Board of Directors of the Rushmore Fund
(the "Rushmore Board") of proxies to be used at a special
meeting of the shareholders of the Money Market Portfolio (the
"Shareholders") to be held on May 24, 1996, at the offices of
the Rushmore Fund, 4922 Fairmont Avenue, Bethesda, Maryland
20814, and at any adjournment(s) thereof (the "Meeting"). The
purpose of the Meeting is to vote on the proposed
reorganization of the Money Market Portfolio into Fund for
Government Investors, Inc. ("FGI"), which is a separate
investment company within the Rushmore Group, pursuant to the
terms and conditions of an agreement and plan of
reorganization ("Plan"), as described below in greater detail
(the "Reorganization").
Shareholders of record of the Money Market Portfolio at the
close of business on March 6, 1996 (the "Record Date"), will
be entitled to vote at the Meeting. Such holders of shares of
Common Stock, $.001 par value per share, in the Money Market
Portfolio ("Money Market Portfolio Shares") are entitled to
one vote for each Money Market Portfolio Share held and to
fractional votes for fractional Money Market Portfolio Shares
held. A quorum must be present for the transaction of
business at the Meeting. The holders of record of a majority
of the Money Market Portfolio Shares outstanding at the close
of business on the Record Date present in person or
represented by proxy will constitute a quorum for the Meeting
of the Shareholders. A quorum being present, the approval of
the Reorganization at the Meeting by the Shareholders requires
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the affirmative vote of a majority of all the outstanding
voting shares of the Money Market Portfolio.
If either (i) a quorum is not present at the Meeting or (ii) a
quorum is present but sufficient votes in favor of a matter
proposed at the Meeting (a "Proposal"), as set forth in the
Notice of this Meeting, are not received by 12:00 Noon,
Eastern Time, May 24, 1996, then the persons named as
attorneys and proxies in the enclosed proxy ("Proxies") may
propose one or more adjournments of the Meeting to permit
further solicitation of proxies. Any such adjournment will
require the affirmative vote of at least a majority of the
Money Market Portfolio Shares represented, in person or by
proxy, at the session of the Meeting to be adjourned. The
persons named as Proxies will vote those proxies that such
persons are required to vote FOR such Proposal in favor of
such an adjournment and will vote those proxies required to be
voted AGAINST such Proposal against such an adjournment. A
Shareholder vote may be taken on a Proposal in this Combined
Prospectus/Proxy Statement prior to any such adjournment if
sufficient votes have been received and it is otherwise
appropriate.
The individuals named as Proxies on the enclosed proxy card
will vote in accordance with your direction, as indicated
thereon, if your proxy card is received and is properly
executed. If you properly execute your proxy and give no
voting instructions with respect to a Proposal, your shares
will be voted in favor of the Proposal. The duly-appointed
Proxies, in their discretion, may vote upon such other matters
as may properly come before the Meeting. The Rushmore Board
is not aware of any other matters to come before the Meeting.
Since the Proposal to approve the Plan, or any other Proposal,
requires the affirmative vote of a majority of the outstanding
Money Market Portfolio Shares, an abstention from voting on
the Plan, or any other Proposal, effectively is a vote against
the Plan, or any such other Proposal. If a broker returns a
"non-vote" proxy, indicating a lack of authority to vote on
the Plan, or any other Proposal, then the Money Market
Portfolio Shares covered by such broker non-vote shall be
deemed present at the Meeting for the purpose of determining a
quorum, but shall not be deemed to be represented at the
Meeting for the purpose of calculating the number of Money
Market Portfolio Shares present in person or represented by
proxy at the Meeting with respect to the Plan or any other
Proposal.
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Proxy Solicitation
Proxies will be solicited by mail and, if necessary to obtain
the requisite representation of Shareholders, the Rushmore
Fund also may solicit proxies by personal interview by
representatives of the Rushmore Fund, by employees of Money
Management Associates ("MMA"), the investment adviser to both
the Rushmore Fund and FGI, or their affiliates, and by
representatives of any independent proxy solicitation service
retained for the Meeting. MMA, whose principal location is
1001 Grand Isle Way, Palm Beach Gardens, Florida 33418, will
bear the costs of the Meeting, including costs such as the
preparation and mailing of the notice, the Combined
Prospectus/Proxy Statement, and the proxy, and the
solicitation of proxies, including reimbursement to persons
who forward proxy materials to their clients, and the expenses
connected with the solicitation of these proxies. MMA's toll-
free telephone number is (800) 343-3355. Banks, brokers, and
other persons holding Money Market Portfolio Shares registered
in their names or in the names of their nominees will be
reimbursed for their expenses incurred in sending proxy
materials to and obtaining proxies from the beneficial owners
of such Money Market Portfolio Shares.
The vote of the shareholders of FGI is not being solicited,
since their approval or consent is not necessary for the
approval of the Reorganization.
Revocation of Proxies
You may revoke your proxy: (i) at any time prior to the
proxy's exercise by written notice to the Secretary or the
Assistant Secretary of the Rushmore Fund, at 4922 Fairmont
Avenue, Bethesda, Maryland 20814, prior to the Meeting; (ii)
by the subsequent execution and return of another proxy prior
to the Meeting; or (iii) by being present and voting in person
at the Meeting and giving oral notice of revocation to the
Chairman of the Meeting.
No Dissenters' Rights of Appraisal
The purpose of the Meeting is to vote on the proposed
Reorganization of the Money Market Portfolio into FGI, as
described below in greater detail. The Money Market Portfolio
is a separate series of the Rushmore Fund, a Maryland
corporation. The Articles of Incorporation of the Rushmore
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Fund, as amended, do not entitle Shareholders to appraisal
rights (i.e., to demand the fair value of their shares) in the
event of a reorganization or merger. Consequently, the
Shareholders will be bound by the terms of the Plan, if the
Plan is approved at the Meeting. Any Shareholder, however,
may redeem his Money Market Portfolio Shares at net asset
value prior to the closing date of the proposed Reorganization
of the Money Market Portfolio.
Additional Voting Information
As of the Record Date, there were outstanding and entitled to
be voted 38,637,874 Money Market Portfolio Shares of the Money
Market Portfolio. As of the Record Date, Rushmore Trust and
Savings, FSB, held for the benefit of others 38.9% of the
Money Market Portfolio Shares. Directors and officers of the
Rushmore Fund own in the aggregate less than 1% of the Money
Market Portfolio Shares. To the knowledge of the Rushmore
Fund, no other person then owned more than 5% of the
outstanding Money Market Portfolio Shares.
Summary of the Proposed Redomestication of FGI
The approval by the shareholders of FGI of an agreement and
plan of redomestication, whereby FGI would change its form of
organization from a Maryland corporation to a Delaware
business trust (the "FGI Redomestication"), also is being
solicited, pursuant to a separate proxy statement,
concurrently with the solicitation of the Money Market
Portfolio Shareholders for the approval of the Reorganization.
Copies of this separate proxy statement may be obtained by
shareholders of the Money Market Portfolio without charge by
contacting RTS at 4922 Fairmont Avenue, Bethesda, Maryland
20814, or by telephoning RTS toll-free at (800) 343-3355. The
Board of Directors of FGI (the "FGI Board") has approved such
agreement and plan of redomestication. The FGI Board believes
that the shareholders of FGI will benefit from the
redomestication because a Delaware business trust pays lower
expenses than a Maryland corporation and provides greater
operational and administrative flexibility.
The approval of the Reorganization by the Money Market
Portfolio Shareholders is not contingent upon the approval by
the shareholders of FGI of the FGI Redomestication. Likewise,
the approval of the FGI Redomestication by the shareholders of
FGI is not contingent upon approval of the Reorganization by
the Money Market Portfolio Shareholders. If approved by the
shareholders of FGI, the proposed FGI Redomestication is
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anticipated to occur on (or shortly after) May 31, 1996, the
same date as the Reorganization is anticipated to occur.
Money Market Portfolio Shareholders are not being asked to
vote on the FGI Redomestication because Money Market Portfolio
Shareholders are not presently shareholders of FGI and,
therefore, have no voting interest with respect to the FGI
Redomestication (unless, of course, a Money Market Portfolio
Shareholder also owns shares of FGI as of the record date for
the special meeting of the FGI shareholders in connection with
the FGI Redomestication) (see "Synopsis -- The Proposed
Redomestication of FGI," below).
Accordingly, should shareholders of FGI approve the FGI
Redomestication and Money Market Portfolio Shareholders
approve the Reorganization, the Money Market Portfolio will
merge into FGI, a Maryland corporation, which, in turn, will
redomesticate into a Delaware business trust. Additional
information regarding the proposed FGI Redomestication is set
forth below under "Form of Organization of FGI," "Operations
of FGI Following the Reorganization," and "The Proposed
Redomestication of FGI" in the "Synopsis," and also under
"Description of Securities To Be Issued In Connection With the
Reorganization" and "Description of Securities To Be Issued In
Connection With the Redomestication" in "The Proposed
Reorganization" in this Combined Prospectus/Proxy Statement.
As more fully described in this Combined Prospectus/Proxy
Statement, the Meeting has been called for the following
purposes:
PROPOSAL 1.
To approve or disapprove an Agreement and Plan of
Reorganization among the Rushmore Fund, the Money
Market Portfolio, and FGI (the "Plan"), and the
transactions contemplated thereby, pursuant to which
Plan the Money Market Portfolio would transfer all
of its assets to FGI in exchange for (i) shares of
common stock in FGI that would be distributed to the
Shareholders of the Money Market Portfolio and (ii)
the assumption by FGI of all the liabilities of the
Money Market Portfolio.
PROPOSAL 2.
To transact such other business as properly may come
before the Meeting or any adjournment(s) thereof.
As described below, a quorum being present, the approval by
the Shareholders of the Money Market Portfolio of any Proposal
considered at the Meeting requires the affirmative vote of a
majority of all the outstanding voting shares of the Money
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Market Portfolio. In the event that the Shareholders of the
Money Market Portfolio do not approve the Plan, and the
Reorganization of the Money Market Portfolio contemplated
thereunder, the Rushmore Board will consider possible
alternative arrangements and MMA will continue to render
services to the Money Market Portfolio.
The Board of Directors of the Rushmore Fund has unanimously
approved and recommends that, with respect to the
Reorganization of the Money Market Portfolio into FGI, the
Shareholders of the Money Market Portfolio vote FOR Proposal
One, the proposed Agreement and Plan of Reorganization for the
Money Market Portfolio and the transactions contemplated
thereby, as described herein.
<PAGE> -11-
<PAGE>
FEE TABLE
The following tables illustrate all expenses and fees that a
shareholder of Money Market Portfolio or FGI will incur:
<TABLE>
<CAPTION>
<S> <C> <C>
Money Market Fund For
Shareholder Transaction Expenses* Portfolio Government
Investors, Inc.**
Maximum Sales Load Imposed on Purchases,
Including Reinvested Dividends
(as a percentage of offering price) None None
Redemption Fees None None
Exchange Fees None None
Monthly Account Fee (for accounts under $5.00 $5.00
$500)
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 0.50% 0.50%
12b-1 Fees None None
Other Expenses 0.25% 0.25%
Total Fund Operating Expenses 0.75% 0.75%
</TABLE>
_________________
*Securities dealers may charge a transaction fee for purchase
and sale orders effected for their clients.
**The current Shareholder Transaction Expenses and Annual Fund
Operating Expenses for FGI will remain unchanged following the
Reorganization described in this Combined Prospectus/Proxy
Statement; accordingly, this table for FGI also reflects the
pro forma Shareholder Transaction Expenses and Annual Fund
Operating Expenses after the consummation of the
Reorganization.
Example
<PAGE> -12-
<PAGE>
Assuming a hypothetical investment of $1,000 in either the
Money Market Portfolio or FGI, a 5% annual return, and
redemption at the end of each time period, an investor in
would pay transaction and operating expenses at the end of
each year as follows:
1 Year 3 Years 5 Years 10 Years
$ 8 $ 25 $ 43 $ 95
The same level of expenses would be incurred if an investment
in either the Money Market Portfolio or FGI was held
throughout the period indicated.
The preceding table of fees and expenses is provided to assist
investors in understanding the various costs and expenses that
an investor in either the Money Market Portfolio or FGI (both
before and after the Reorganization) will incur directly or
indirectly. The percentages shown above are based on actual
expenses incurred by the Money Market Portfolio and FGI. The
5% assumed annual return is for comparison purposes only. The
actual annual return for both the Money Market Portfolio or
FGI may be more or less depending on market conditions, and
the actual expenses an investor incurs in future periods may
be more or less than those shown above and will depend on the
amount invested and on the actual growth rate of either the
Money Market Portfolio or FGI. The example should not be
considered a representation of past or future expenses. For
discussion regarding the operating expenses of FGI Following
the Reorganization, see "Synopsis -- Operations of FGI
following the Reorganization" and "The Proposed Reorganization
-- Reasons For the Proposed Reorganization," below.
SYNOPSIS
The following is a summary of certain information contained
elsewhere in this Combined Prospectus/Proxy Statement,
including the prospectuses of the Money Market Portfolio and
FGI and the Agreement and Plan of Reorganization.
Shareholders should read this entire Combined Prospectus/Proxy
Statement carefully.
The Proposed Reorganization
Shareholders of the Money Market Portfolio will be asked at
the Meeting to vote upon and approve the Plan, which provides
<PAGE> -13-
<PAGE>
for the Reorganization of the Money Market Portfolio into FGI.
A copy of the form of the Plan is set forth in Appendix A to
this Combined Prospectus/Proxy Statement. Pursuant to the
Plan, the Money Market Portfolio, which is a series of the
Rushmore Fund, a diversified, open-end management investment
company incorporated under the laws of the State of Maryland,
would be reorganized into FGI. FGI is a separate, open-end,
management investment company within the Rushmore Group. The
Plan sets forth the terms and conditions under which the
proposed transactions contemplated by the Reorganization may
be consummated. The Rushmore Board, including the directors
who are not "interested persons" of the Rushmore Fund (the
"Independent Rushmore Directors"), as that term is defined at
Section 2(a)(19) of the Investment Company Act of 1940, as
amended (the "1940 Act"), has unanimously approved the Plan.
The FGI Board, including the directors who are not "interested
persons" of FGI (the "Independent FGI Directors"), as that
term is defined at Section 2(a)(19) of the 1940 Act, also has
unanimously approved the Plan.
The consummation of the proposed transactions contemplated by
the Reorganization is subject to a number of conditions set
forth in the Plan, some of which conditions may be waived by
the Rushmore Board or by an authorized officer of the Rushmore
Fund, as appropriate. See "The Proposed Reorganization --
Agreement and Plan of Reorganization." Among the significant
conditions (which may not be waived) for the Reorganization of
the Money Market Portfolio are (i) the receipt by the Rushmore
Fund of an opinion of counsel (or a revenue ruling of the U.S.
Internal Revenue Service) as to certain Federal income tax
aspects of the Reorganization (see "The Proposed
Reorganization -- Federal Income Tax Consequences") and (ii)
the approval of the Plan at the Meeting by the affirmative
vote of the holders of a majority of all the outstanding Money
Market Portfolio Shares of the Money Market Portfolio. The
Plan provides for the acquisition of all the assets of the
Money Market Portfolio by FGI in exchange for FGI Shares and
the assumption by FGI of all the liabilities of the Money
Market Portfolio. The FGI Shares received by the Money Market
Portfolio then would be distributed pro rata to the
Shareholders of the Money Market Portfolio, and the
outstanding Money Market Portfolio Shares of the Money Market
Portfolio would be canceled and the Money Market Portfolio
would cease to exist. The Reorganization is anticipated to
occur on May 31, 1996, or such later date as the parties may
agree (the "Closing Date"). As a result of the proposed
transactions contemplated by the Reorganization, each
Shareholder would receive a number of full and fractional
shares of FGI having a total net asset value equal in value to
the net asset value of his or her Money Market Portfolio
<PAGE> -14-
<PAGE>
Shares in the Money Market Portfolio as of the Closing Date of
the Reorganization.
For the reasons set forth below under "The Proposed
Reorganization -- Reasons for the Proposed Reorganization,"
the Rushmore Board, including all of the Independent Rushmore
Directors, has unanimously concluded that the Reorganization
would be in the best interests of the Money Market Portfolio
and its Shareholders and that the interests of existing
Shareholders will not be diluted as a result of the
transactions contemplated by the Reorganization. The Rushmore
Board, therefore, has submitted the Plan effecting the
Reorganization for approval at the Meeting by the Shareholders
of the Money Market Portfolio, and recommends approval of the
Plan. In addition, the FGI Board, including all of the
Independent FGI Directors, has unanimously concluded that the
Reorganization would be in the best interests of FGI and the
shareholders of FGI and that the interests of existing FGI
shareholders will not be diluted as a result of the
transactions contemplated by the Reorganization.
Investment Objectives and Policies
Both the Money Market Portfolio and FGI are money market funds
and both strive to maintain their respective net asset values
at $1.00 per share. The investment objectives of both the
Money Market Portfolio and FGI are virtually identical. The
investment objective of the Money Market Portfolio is to
provide investors with maximum current income to the extent
that such investment is consistent with safety of principal.
The investment objective of FGI is to achieve current income
with safety of principal. To achieve its investment
objective, the Money Market Portfolio invests principally in
U.S. Government securities and agency securities, bank money
market instruments, and commercial paper. To achieve its
investment objective, FGI invests exclusively in marketable
debt securities issued by the U.S. Government, its agencies
and instrumentalities, and in repurchase agreements secured by
such securities. FGI, unlike the Money Market Portfolio, does
not, and following the Reorganization will not, invest in bank
money market instruments or commercial paper.
As money market funds, both the Money Market Portfolio and FGI
are required to follow stringent guidelines under the 1940
Act, which guidelines apply only to money market funds, with
respect to the types of securities in which such a fund may
invest. While the Money Market Portfolio may seek to attain
its investment objective (which is essentially the same as the
<PAGE> -15-
<PAGE>
investment objective of FGI), in part, through investment in
certain securities with different characteristics than those
securities invested in by FGI, the portfolio securities of
both the Money Market Portfolio and FGI must meet the 1940 Act
guidelines imposed upon money market funds. The most notable
difference between the investment policies of the Money Market
Portfolio and the investment policies of FGI is that the Money
Market Portfolio may invest in a broader range of securities
than FGI, including bank money market instruments and
commercial paper. Both FGI and the Money Market Portfolio,
however, may invest only in securities that meet the
aforementioned stringent 1940 Act guidelines, and both the
Money Market Portfolio and FGI seek to maximize current income
and, at the same time, to preserve principal, while
maintaining a stable net asset value at $1.00 per share. The
1940 Act money market fund guidelines are briefly reviewed
below in "Investment Objectives and Policies -- General" under
"Comparison of Investment Objectives and Policies."
The investment objective of each of the Money Market Portfolio
and FGI is a fundamental policy which may not be changed
without the approval of a vote of at least a "majority" of the
outstanding shares (as that term is defined at Section
2(a)(42) of the 1940 Act) of the Money Market Portfolio or
FGI, respectively. All other investment policies of the Money
Market Portfolio and FGI that are not specified as fundamental
are not fundamental policies and may be changed by the
Rushmore Board or the FGI Board, respectively, without
shareholder approval.
The Money Market Portfolio and FGI are both subject to
investment restrictions, which are fundamental policies of the
respective fund. The investment restrictions of the Money
Market Portfolio and FGI are substantially similar. The most
notable difference between the investment restrictions of the
Money Market Portfolio and the investment restrictions of FGI
is that FGI is expressly prohibited from selling securities
short and writing options, while the Money Market Portfolio is
prohibited from purchasing or selling restricted securities or
warrants. FGI, however, has never purchased or sold
restricted securities or warrants and does not presently
intend, following the Reorganization, to invest in restricted
securities or warrants.
For further discussion of the differences in the investment
policies and restrictions of FGI and the Money Market
Portfolio, see "Comparison of Investment Objectives and
Policies" in this Combined Prospectus/Proxy Statement.
<PAGE> -16-
<PAGE>
Risk Factors. The market value of U.S. Government securities,
including U.S. Treasury securities (which include U.S.
Treasury bills, notes, and bonds) and other debt securities,
will fluctuate due to the movement of interest rates, and is
inversely related to such movement. When interest rates rise,
therefore, one can expect that the market value of the U.S.
Government securities (and other debt securities) held by
either the Money Market Portfolio or FGI will decline, and,
conversely, when interest rates fall, one can expect the
market value of the U.S. Government securities (and other debt
securities) held by either the Money Market Portfolio or FGI
will increase. U.S. Government securities with longer
maturities are more sensitive to interest rate movements than
are U.S. Government securities with shorter maturities. In
this respect, the value of the portfolio securities of both
the Money Market Portfolio and FGI may fluctuate as interest
rates change; both the Money Market Portfolio and FGI,
however, strive to maintain stable net asset values at $1.00
per share, though there is no assurance that either the Money
Market Portfolio or FGI will be able to achieve this goal.
Management Fees, Administrative Fees, and Other Operating
Expenses
1. Management Fees. MMA currently acts as the investment
adviser to both the Money Market Portfolio and FGI pursuant to
an investment management agreement between the Rushmore Fund
and MMA (the "Rushmore Fund Management Agreement") and an
investment management agreement between FGI and MMA (the "FGI
Management Agreement"), respectively. Under the Rushmore Fund
Management Agreement and the FGI Management Agreement, MMA
manages the investment and reinvestment of the assets of both
the Money Market Portfolio and FGI, respectively, and also
administers the affairs of the Money Market Portfolio and FGI,
subject to the control of the officers and directors of the
Money Market Portfolio and FGI, respectively. Pursuant to the
Rushmore Fund Management Agreement and the FGI Management
Agreement, the Money Market Portfolio and FGI presently each
pays MMA a management fee at the identical annual rate of
0.50% of the aggregate average daily net assets of the Money
Market Portfolio and FGI, respectively. MMA will continue to
provide investment advisory services to FGI after the
consummation of the Reorganization (and the FGI
Redomestication). Pursuant to the FGI Management Agreement,
as the asset base of FGI grows, FGI will recognize a decrease
in the management fee payable to MMA. FGI will pay MMA a
management fee equal to 0.50% of the aggregate average daily
net assets of FGI on the first $500 million of assets. The
<PAGE> -17-
<PAGE>
annual rate is reduced to 0.45% on net assets from $500
million to $750 million; to 0.40% on net assets from $750
million to $1 billion; and to 0.35% on net assets over $1
billion. For the year ended December 31, 1995, FGI paid MMA
investment advisory fees of 0.49% (49/100%) of the average
daily net assets of FGI.
MMA complies with any applicable state regulations which may
require MMA to make reimbursements, respectively, to the Money
Market Portfolio or FGI in the event that the Money Market
Portfolio's or FGI's respective aggregate operating expenses,
including the management fee, but generally excluding taxes,
interest, brokerage commissions, distribution fees, and
extraordinary expenses, are in excess of specific applicable
limitations.
2. Administrative Fees and Other Operating Expenses. Under
a service agreement between the Rushmore Fund and Rushmore
Trust and Savings, FSB ("RTS") a majority-owned subsidiary of
MMA, (the "Rushmore Fund Service Agreement"), and a service
agreement between FGI and RTS (the "FGI Service Agreement"),
RTS provides both the Money Market Portfolio and FGI with
general administrative, shareholder, dividend disbursement,
transfer agent, and registrar services and pays all fees and
ordinary operating expenses that are directly related to the
services that RTS provides to the Money Market Portfolio and
FGI, respectively. Except for extraordinary legal expenses or
interest expense and the Money Market Portfolio's pro rata
share of the fees paid to the Independent Rushmore Directors
by the Rushmore Fund and FGI's fees paid to its independent
directors, there are no additional respective expenses to the
Money Market Portfolio and FGI. Under the Rushmore Fund
Service Agreement, the Money Market Portfolio pays RTS an
administrative fee at an annual rate of 0.25% of the aggregate
average daily net asset value of the Money Market Portfolio.
Under the FGI Service Agreement, FGI pays RTS an
administrative fee at an annual rate of 0.25% of the aggregate
average daily net asset value of FGI. RTS will continue to
provide administrative services to FGI at the annual rate of
0.25% of the aggregate average daily net asset value of FGI
after consummation of the Reorganization.
The following sets forth the fund operating expenses (as a
percentage of the average daily net assets) for the Money
Market Portfolio for the Rushmore Fund's fiscal year ended
August 31, 1995, and the fund operating expenses (as a
percentage of the average daily net assets) for FGI, for FGI's
fiscal year ended December 31, 1995, into which the Money
Market Portfolio would merge under the Plan:
<PAGE> -18-
<PAGE>
<TABLE>
<CAPTION>
Money Market
Portfolio FGI
<S> <C> <C>
Management Fees: 0.50% 0.50%
Other Expenses: 0.25% 0.25%
Total Portfolio
Operating
Expenses: 0.75% 0.75%
</TABLE>
As reflected above, FGI has total operating expenses equal to
those historically incurred by the Money Market Portfolio.
For further discussion regarding the operating expenses of FGI
following the Reorganization, see "Synopsis -- Operations of
FGI Following the Reorganization" and "The Proposed
Reorganization -- Reasons For the Proposed Reorganization,"
below.
Purchases and Exchanges
FGI Shares and Money Market Portfolio Shares both are sold in
a continuous offering and are offered to the public, and may
be purchased through securities dealers or directly from FGI
or the Rushmore Fund, respectively, at the net asset value
next computed after the receipt of a purchase order. No sales
charge is imposed by FGI or the Rushmore Fund on any
respective purchase of FGI Shares or Money Market Portfolio
Shares; however, securities dealers may charge a processing
fee for orders transmitted by such dealers to FGI or the
Rushmore Fund.
The Rushmore Fund is composed of three separate series
investment portfolios, including the Rushmore Money Market
Portfolio, the Rushmore U.S. Government Bond Portfolio, and
the Rushmore Nova Portfolio (collectively, the "Rushmore Fund
Portfolios") (though shares in the Rushmore Nova Portfolio
<PAGE> -19-
<PAGE>
currently are not available or sold to the public).
Shareholders may exchange shares of any Rushmore Fund
Portfolio for shares of any other Rushmore Fund Portfolio
(other than the Rushmore Nova Portfolio). Shares of any
Rushmore Fund Portfolio also may be exchanged for shares of
the Fund for Tax-Free Investors, Inc. or the American Gas
Index Fund, Inc., each an open-end, management investment
company (i.e., a mutual fund) incorporated in the State of
Maryland, or for shares of the Cappiello-Rushmore Trust, an
open-end, management investment company organized as a
Delaware business trust, or for shares of FGI, which will
become a Delaware business trust upon approval of the FGI
Redomestication by the shareholders of FGI. Shares of FGI
also may be exchanged for shares of any Rushmore Fund
Portfolio (except the Nova Portfolio), the Fund for Tax-Free
Investors, Inc., the Cappiello-Rushmore Trust, or the American
Gas Index Fund, Inc. All of these exchanges are based upon
each mutual fund's net asset value per share next computed
following receipt of a properly-executed exchange request,
without any sales charge. Exchanges of Rushmore Fund
Portfolio shares (except the Nova Portfolio shares) may be
made only between identically-registered accounts, and this
exchange privilege is available only in states where the
shares to be acquired may be legally sold. Upon the
effectiveness of the Reorganization (and the FGI
Redomestication), shareholders of the FGI Shares will continue
to be entitled to the exchange privilege currently offered by
both the Money Market Portfolio and FGI. There are no
material differences between the exchange privilege which
Shareholders of the Money Market Portfolio currently have and
the exchange privilege which such Shareholders will have as
shareholders of FGI upon effectiveness of the Reorganization.
Redemption Procedures and Fees
FGI Shares and Money Market Portfolio Shares both may be
redeemed at a redemption price equal to the net asset value of
the shares as next computed following the receipt of a request
for redemption in proper form. Payment of redemption proceeds
for redeemed FGI Shares and for redeemed Money Market
Portfolio Shares ordinarily are made within seven days after
receipt of a redemption request in proper form and
documentation. FGI Shares and Money Market Portfolio Shares
may be redeemed without charge.
Dividends and Distributions; Automatic Reinvestment
Both the Money Market Portfolio and FGI declare dividends
daily. Investors automatically will receive dividends in
additional shares at the end of the month unless such persons
elect in writing to receive cash. Dividends paid in cash to
those investors so electing will be mailed on the second
business day of the following month. Statements of account
<PAGE> -20-
<PAGE>
showing dividends paid will be sent at least quarterly. Long-
term capital gains, if any, will be distributed on an annual
basis while short-term capital gains, if any will be
distributed quarterly.
Federal Tax Consequences of the Proposed Reorganization
Both the Rushmore Fund, on behalf of the Money Market
Portfolio, and FGI will receive, as a condition to the
Reorganization, an opinion of Jorden Burt Berenson & Johnson
LLP, counsel to both the Rushmore Fund and FGI, to the effect,
for Federal income tax purposes, that the proposed
Reorganization will constitute a tax-free reorganization
within the meaning of Section 368(a)(1)(C) of the U.S.
Internal Revenue Code of 1986, as amended (the "Code").
Accordingly, no gain or loss generally will be recognized by
the Rushmore Fund or the Money Market Portfolio, by FGI, or by
their respective shareholders. See "The Proposed
Reorganization -- Federal Income Tax Consequences," below.
Costs and Expenses of the Reorganization
MMA will bear the costs of the Meeting. These costs and
expenses include the costs of the Meeting, such as the costs,
expenses, and professional fees incurred in the preparation
and mailing of the notice and this Combined Prospectus/Proxy
Statement and the proxy, and in the solicitation of proxies,
which may include reimbursement to broker-dealers and others
who forward proxy materials to their clients. See
"Introduction and Voting Information -- Proxy Solicitation,"
above.
Continuation of Shareholder Accounts; Share Certificates
As a result of the proposed transactions contemplated by the
Reorganization of the Money Market Portfolio into FGI, each
Shareholder would cease to be a shareholder of the Money
Market Portfolio and would receive that number of full and
fractional FGI Shares having an aggregate net asset value
equal to the aggregate net asset value of the Shareholder's
Money Market Portfolio Shares as of the close of business on
the Closing Date.
FGI will establish accounts on the Closing Date for
Shareholders which will contain the appropriate number of FGI
Shares. Acceptance of FGI Shares by a Shareholder will be
deemed to be authorization of FGI and its agents to establish,
with respect to FGI, all of the account options, including
telephone redemptions, if any, and dividend and distribution
options, as have been established for the Shareholder's Money
Market Portfolio account. Shareholders who are receiving
<PAGE> -21-
<PAGE>
payments under an Automatic Investment Plan, with respect to
Money Market Portfolio Shares, will retain the same rights and
privileges as to FGI Shares under such an Automatic Investment
Plan after the Reorganization. Similarly, no further action
will be necessary in order to continue, with respect to FGI
Shares, any retirement plan currently maintained by a
Shareholder with respect to Money Market Portfolio Shares.
Neither the Rushmore Fund nor FGI currently issue certificates
evidencing ownership of shares. Assuming approval by the FGI
shareholders of the FGI Redomestication, FGI, as a Delaware
business trust, also will not issue certificates evidencing
ownership of FGI Shares. Shareholders to whom Money Market
Portfolio Share certificates have been issued, if any, will be
required to surrender their certificates in order to receive
orto redeem FGIShares receivedas a resultof the Reorganization.
No sales or other charges will be imposed in connection with
the issuance of FGI Shares to the Shareholders pursuant to the
Reorganization.
Form of Organization of FGI
FGI currently is organized as a corporation under the laws of
the State of Maryland and operates under its articles of
incorporation and by-laws. Assuming shareholders of FGI
approve the FGI Redomestication, however, FGI, immediately
following the Reorganization described in this Combined
Prospectus/ Proxy Statement, will become an unincorporated
voluntary association organized under the laws of the State of
Delaware which form of organization is known as a Delaware
business trust. The operations of FGI then will be governed
by its Declaration of Trust, by-laws, and Delaware law, as
applicable. FGI is subject to the provisions of the 1940 Act,
and the rules and regulations of the Commission thereunder.
FGI will be authorized to issue an unlimited number of shares
of beneficial interest after the FGI Redomestication. See
"The Proposed Redomestication of FGI," below.
Form of Organization of the Rushmore Fund
The Rushmore Fund was organized as a corporation under the
laws of the State of Maryland, pursuant to the Rushmore Fund's
Articles of Incorporation, dated July 17, 1985, and as last
amended on October 29, 1991 (the "Rushmore Fund Articles").
The operations of the Rushmore Fund and the Money Market
Portfolio are governed by these Rushmore Fund Articles, the
Rushmore Fund's By-Laws, and by Maryland law, as applicable.
The Rushmore Fund (as well as the Rushmore Fund's series
investment portfolios), is subject to the provisions of the
1940 Act, and the rules and regulations of the Commission
thereunder. Currently, the Rushmore Fund is composed of three
<PAGE> -22-
<PAGE>
separate investment portfolios: the Rushmore Money Market
Portfolio, the Rushmore U.S. Government Bond Portfolio, and
the Rushmore Nova Portfolio (though shares in the Rushmore
Nova Portfolio currently are not available or sold to the
public). See "The Proposed Reorganization -- Description of
Securities To Be Issued," below.
Operations of FGI Following the Reorganization
Notwithstanding the FGI Redomestication, FGI will continue to
operate substantially the same as FGI did prior to the
Reorganization. Assuming approval of the FGI Redomestication
by the shareholders of FGI, FGI will merge into a Delaware
business trust all of whose shareholders and assets will be
those shareholders and assets, respectively, of FGI at the
time of the FGI Redomestication. Following the FGI
Redomestication, the Board of Trustees of FGI will be composed
of the same members of the FGI Board. The Board of Trustees
of FGI will have virtually identical responsibilities, powers,
and fiduciary duties after the FGI Redomestication as the
Board of Directors of FGI had prior to the FGI
Redomestication. FGI, however, will not be subject to the
same laws and corporate organizational documents as before the
Reorganization due to the FGI Redomestication. Subject to the
provisions of FGI's Declaration of Trust, dated January 25,
1996 (the "Trust Instrument"), the business of FGI following
the FGI Redomestication will be managed by the Board of
Trustees, which has all powers necessary and appropriate to
carry out that business responsibility. The Board of Trustees
of FGI will supervise the business affairs and investments of
FGI. FGI will continue to receive investment advisory
services from MMA, and also will continue to receive
administrative services from RTS, following the Reorganization
and FGI Redomestication.
The Proposed Redomestication of FGI
FGI presently is organized as a Maryland corporation.
Concurrent with the solicitation of proxies for the
Reorganization described in this Combined Prospectus/Proxy
Statement, however, the FGI Board is soliciting the proxies of
shareholders of record of FGI at the close of business on
March 6, 1996, to approve an agreement and plan of
redomestication whereby FGI would change its form of
organization from a Maryland corporation to an unincorporated
voluntary association known as a Delaware business trust.
Money Market Portfolio Shareholders are not being asked to
vote on the FGI Redomestication because Money Market Portfolio
Shareholders are not presently shareholders of FGI and,
<PAGE> -23-
<PAGE>
therefore, have no voting interest with respect to the FGI
Redomestication (unless, of course, a Money Market Portfolio
Shareholder also owns shares of FGI as of the immediately
aforementioned record date). Although Money Market Portfolio
Shareholders may not vote on the FGI Redomestication, the
proposed FGI Redomestication may impact the voting decision of
a Money Market Portfolio Shareholder in connection with the
Reorganization of the Money Market Portfolio into FGI. If the
shareholders of FGI approve the FGI Redomestication and the
Money Market Portfolio Shareholders approve the
Reorganization, the Money Market Portfolio would merge into a
Delaware business trust. If the FGI shareholders do not
approve the FGI Redomestication and the Money Market Portfolio
shareholders approve the Reorganization, the Money Market
Portfolio would merge into a Maryland corporation.
The FGI Board has unanimously approved the FGI
Redomestication. The primary reason for proposing the FGI
Redomestication is that FGI, as a Delaware business trust,
will have greater operational, administrative, and marketing
flexibility than a Maryland corporation. For instance, as a
Delaware business trust, FGI would not be required to file
annual reports with the State of Delaware, not be required to
hold annual shareholder meetings, and not be subject to any
Delaware state franchise taxes or any other state taxes, but
would be able to make changes in its manner of doing business
without making any filing with the State of Delaware. The
foregoing are just some of the advantages of a Delaware
business trust organization form. If the shareholders of FGI
approve the FGI Redomestication, the investment objective,
policies, and restrictions of FGI following the FGI
Redomestication would remain identical to the current
respective investment objective, policies, and restrictions of
FGI.
The approval of the Reorganization by the Money Market
Portfolio Shareholders is not contingent upon the approval of
the FGI Redomestication by the shareholders of FGI. Likewise,
the approval of the FGI Redomestication by the shareholders of
FGI is not contingent upon the approval of the Reorganization
by the Money Market Portfolio Shareholders.
PRINCIPAL RISK FACTORS
Because the investment objective of FGI is virtually identical
to the investment objective of the Money Market Portfolio, and
because the investment policies and investment restrictions
and limitations of FGI and the Money Market Portfolio are
substantially similar, the risks associated with the
<PAGE> -24-
<PAGE>
particular investment policies and strategies that FGI and the
Money Market Portfolio are authorized to employ in seeking to
meet their investment objectives also are substantially
similar.
Full Faith and Credit Obligations. Both the Money Market
Portfolio and FGI may invest in U.S. Treasury bills, U.S.
Treasury notes, and U.S. Treasury bonds, which securities are
backed by the full faith and credit of the United States. The
Money Market Portfolio and FGI also may invest in securities
backed by the full faith and credit of the United States,
including Government National Mortgage Association ("GNMA")
certificates. The Money Market Portfolio and FGI also may
invest in non-full faith and credit obligations of U.S.
Government agencies and instrumentalities, such as Federal
National Mortgage Association ("FNMA") securities. In
addition, both the Money Market Portfolio and FGI may also
invest in repurchase agreements secured by such securities.
Because full faith and credit obligations of the U.S.
Government are backed by the strongest assurance of repayment
offered by the U.S. Government, these obligations are
considered to be more credit-worthy than non-full faith and
credit obligations.
Repurchase Agreements and Other Investments. Both FGI and the
Money Market Portfolio may invest in repurchase agreements.
The Money Market Portfolio and FGI may invest only in
repurchase agreements secured by U.S. Treasury obligations and
in repurchase agreements secured by securities issued or
guaranteed by the U.S. Government, its agencies, and
instrumentalities. The Money Market Portfolio, unlike FGI,
also may invest in bank money market instruments and
commercial paper and may lend its portfolio securities. The
Money Market Portfolio and FGI will enter into repurchase
agreement transactions and the Money Market Portfolio will
enter into securities lending transactions only with parties
who meet credit-worthiness standards approved by the Rushmore
Board and the FGI Board, as applicable. In the event of a
default or bankruptcy by a seller or borrower, the Money
Market Portfolio and FGI will promptly liquidate collateral.
The exercise of the Money Market Portfolio's or FGI's right to
liquidate such collateral, as noted above, however, could
involve certain costs or delays, and, to the extent that
proceeds from any sale of collateral on a default of the
seller or borrower were less than the seller's or borrower's
obligation, the Money Market Portfolio or FGI, as the case may
be, could suffer a loss.
<PAGE> -25-
<PAGE>
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
As discussed below, the investment objective and policies of
FGI and the Money Market Portfolio are similar, except for
certain differences as to particular investment policies,
which differences are outlined below.
Investment Objectives and Policies
General. The investment objectives of the Money Market
Portfolio and FGI are virtually identical. The investment
objective of the Money Market Portfolio is to provide
investors with maximum current income to the extent that such
investment is consistent with safety of principal. The
investment objective of FGI is to achieve current income with
safety of principal. To achieve its investment objective, the
Money Market Portfolio invests in U.S. Government and agency
securities, bank money market instruments, and commercial
paper. To achieve its investment objective, FGI invests
exclusively in marketable debt securities issued by the U.S.
Government, its agencies and instrumentalities, and in
repurchase agreements secured by these securities.
Both FGI and the Money Market Portfolio are money market
funds. As money market funds, FGI and the Money Market
Portfolio are required to follow stringent guidelines under
the 1940 Act, in particular those requirements set forth in
Rule 2a-7 under the 1940 Act. Moreover, both the Money Market
Portfolio and FGI strive to maintain stable net asset values
at $1.00 per share. Rule 2a-7 under the 1940 Act requires, in
part, that a money market fund may neither purchase any
instrument with a remaining maturity of greater than 397
calendar days nor maintain a dollar-weighted average portfolio
maturity that exceeds 90 days. Rule 2a-7 also imposes certain
portfolio quality and diversification requirements.
The principal difference between the investment policies of
FGI and the investment policies of the Money Market Portfolio
is the types of securities that each of FGI and the Money
Market Portfolio may invest. As money market funds, both the
Money Market Portfolio and FGI may invest only in those
securities which the Commission, by regulation, deems to be an
"Eligible Security" at the time of such security's
acquisition. The Money Market Portfolio and FGI, though,
differ in that the Money Market Portfolio may invest in a
broader range of "Eligible Securities" than FGI. Both the
Money Market Portfolio and FGI may invest in marketable debt
securities issued by the U.S. Treasury, which securities
<PAGE> -26-
<PAGE>
include U.S. Treasury bills, U.S. Treasury notes, and U.S.
Treasury bonds, and which securities are backed by the full
faith and credit of the U.S. Government. Both the Money
Market Portfolio and FGI also may invest in securities issued
by agencies and instrumentalities of the U.S. Government.
These securities include: (1) securities issued by U.S.
Government agencies and instrumentalities, such as GNMA
certificates and securities issued by the Small Business
Administration ("SBA"), which securities, like U.S. Treasury
obligations, are backed by the full faith and credit of the
U.S. Government; and (2) securities issued by other U.S.
Government agencies and instrumentalities, such as those
securities issued by Federal Home Loan Banks ("FHLBs") and
FNMA, which securities are not backed by the full faith and
credit of the U.S. Government. In addition, both the Money
Market Portfolio and FGI may invest in repurchase agreements
secured by the aforementioned securities issued by the U.S.
Government (and U.S. Government agencies and
instrumentalities). The Money Market Portfolio, however, may
invest in other "Eligible Securities" in which FGI may not
invest. The Money Market Portfolio, but not FGI, also may
invest in bank money market instruments and commercial paper
and also may lend portfolio securities held by the Money
Market Portfolio.
U.S. Government Securities. As noted above, both the Money
Market Portfolio and FGI will invest only in securities deemed
to be "Eligible Securities" under Commission rule. Certain
U.S. Government securities are "Eligible Securities." Both
the Money Market Portfolio and FGI invest in securities issued
by the U.S. Treasury and in securities issued or guaranteed by
the U.S. Government, its agencies and instrumentalities. Such
U.S. Government agencies and instrumentalities include
organizations such as the GNMA, the SBA, the FHLBs, the
Federal Home Loan Mortgage Corporation, and the FNMA. As
described below, the Money Market Portfolio and FGI each also
may purchase U.S. Government securities as security for
repurchase agreements entered into by the Money Market
Portfolio and FGI, respectively.
U.S. Government bonds typically pay coupon interest semi-
annually and repay the principal at maturity. GNMA
certificates differ from other U.S. Government securities in
that monthly payments of both principal and interest are made.
GNMA certificates represent an ownership in a pool of either
Federal Housing Administration (FHA)-insured or Veterans
Administration (VA)-guaranteed mortgages. These certificates
have yield and maturity characteristics corresponding to the
underlying mortgages and a certificate's term may be shortened
by unscheduled or early payments of principal on the
underlying mortgages. The actual yield of each certificate
will be influenced by the prepayment experience of the
mortgage pool.
<PAGE> -27-
<PAGE>
While U.S. Treasury securities and those Federal agency
securities issued by GNMA and SBA are backed by the full faith
and credit of the United States, other Federal agency
securities, such as the securities issued by the FHLBs and
FNMA, are not guaranteed by the U.S. Treasury, but rather are
supported by the ability of that agency to borrow from the
U.S. Treasury or by the credit of the agency itself.
Repurchase Agreements. In order to utilize effectively cash
reserves kept for liquidity, the Money Market Portfolio and
FGI each may invest in repurchase agreements. A repurchase
agreement arises when a buyer purchases a security and
simultaneously agrees to sell the security back to the seller
at an agreed-upon future date, normally one day or a few days
later; the resale price of the security is greater than the
purchase price, reflecting an agreed-upon interest rate. Each
of the Money Market Portfolio and FGI may enter into
repurchase agreements only with member banks of the Federal
Reserve System or primary dealers of U.S. Government
securities. In the event of a default or bankruptcy by the
seller, the Money Market Portfolio and FGI will liquidate
those securities held as security under repurchase agreements.
Liquidation of these securities, however, could involve costs
or delays and, to the extent proceeds from the sale of such
securities were less than the agreed-upon repurchase price,
the Money Market Portfolio or FGI, as the case may be, could
suffer a loss. Both the Money Market Portfolio and FGI will
invest in repurchase agreements only when such repurchase
agreements are secured by securities issued or guaranteed by
the U.S. Government, its agencies and instrumentalities.
Lending of Securities. The Money Market Portfolio may lend
its portfolio securities to broker-dealers registered as
members with the National Association of Securities Dealers,
Inc. and to Federal Reserve-member banks for the purpose of
earning additional income. Such loans by the Money Market
Portfolio are made pursuant to agreements requiring the
broker-dealer or bank fully and continuously to secure the
loan by cash or other securities in which the Money Market
Portfolio may invest equal to the market value of the
securities loan. The Money Market Portfolio receives
compensation for lending its securities in the form of fees.
FGI may not lend its portfolio securities.
Borrowing. The Money Market Portfolio and FGI each may borrow
money only as a temporary measure to facilitate redemptions.
Such a borrowing may not exceed 30% of the Money Market
Portfolio's or FGI's total assets, taken at current net asset
value before any borrowing. Neither the Money Market
Portfolio nor FGI may purchase securities if a borrowing by
the Money Market Portfolio or FGI, as the case may be, is
outstanding.
<PAGE> -28-
<PAGE>
Investment Restrictions and Limitations
The respective investment restrictions and limitations of the
Money Market Portfolio and FGI are substantially similar.
Unless otherwise specified, the investment restrictions and
limitations are considered to be "fundamental" policies, and,
as such, may not be changed without approval of the holders of
a "majority" of the Money Market Portfolio's or FGI's
respective outstanding voting shares. As defined at Section
2(a)(42) of the 1940 Act, the term "majority" of the
outstanding voting securities means the vote of the lesser of:
(i) 67% of the voting shares of the Money Market Portfolio or
FGI, as applicable, at a meeting where more than 50% of the
outstanding voting shares are present in person or represented
by proxy; or (ii) more than 50% of the outstanding voting
shares of the Money Market Portfolio or FGI, as applicable.
As a matter of fundamental policy, neither the Money Market
Portfolio nor FGI may:
1. underwrite securities of other issuers;
2. purchase or sell real estate (including limited
partnership interests for the Money Market
Portfolio);
3. borrow money (except as described above under
"Investment Objectives and Policies --
Borrowing");
4. issue senior securities; or
5. loan money;
As a matter of fundamental policy, FGI also may not:
1. sell securities short; or
2. write options
As a matter of fundamental policy, the Money Market Portfolio
also may not:
1. purchase or sell restricted securities or
warrants;
2. purchase any security whereby it would account
for more than 10% of any issuer's outstanding
shares;
3. purchase securities of any issuer if, as a
result of such a purchase, such securities
<PAGE> -29-
<PAGE>
would account for more than 5% of the Money
Market Portfolio's assets (excluding securities
issued or guaranteed by the U.S. Government,
its agencies or instrumentalities); or
4. Concentrate more than 25% of its assets in any
one industry.
FGI has never purchased or sold restricted securities or
warrants, has never purchased any securities whereby that
security would account for more than 10% of any issuer's
outstanding shares, has never purchased securities of any
issuer if, as a result of such a purchase, such securities
would account for more than 5% of FGI's assets (excluding
securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities), and has never concentrated
more than 25% of FGI's assets in any one industry. In
addition, FGI does not presently intend, following the
Reorganization, to purchase or sell restricted securities or
warrants, to purchase any securities whereby that security
would account for more than 10% of any issuer's outstanding
shares, to purchase securities of any issuer if, as a result
of such a purchase, such securities would account for more
than 5% of FGI's assets (excluding securities issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities), or to concentrate more than 25% of FGI's
assets in any one industry.
THE PROPOSED REORGANIZATION
Agreement and Plan of Reorganization
The terms and conditions under which the proposed
transactions, as contemplated by the Reorganization, may be
consummated are set forth in the Plan. Significant provisions
of the Plan are summarized immediately below. This summary,
however, is qualified in its entirety by reference to the
Plan, a form of which is attached to this Combined
Prospectus/Proxy Statement as Appendix A.
The Plan contemplates (i) FGI, on the Closing Date of the
Reorganization, acquiring all of the assets of the Money
Market Portfolio in exchange for FGI Shares and the assumption
by FGI of all the liabilities of the Money Market Portfolio
and (ii) the constructive distribution of FGI Shares to the
Shareholders of the Money Market Portfolio in exchange for the
Money Market Portfolio Shares of such Shareholders, all as
provided for by the Plan.
<PAGE> -30-
<PAGE>
The assets of the Money Market Portfolio to be acquired by FGI
include all property, including, without limitation, all cash,
securities, commodities and futures interests, and dividends
or interest receivables which are owned by the Money Market
Portfolio and any deferred or prepaid expenses shown as an
asset on the books of the Money Market Portfolio on the
Closing Date of the Reorganization. FGI will assume from the
Money Market Portfolio all liabilities, expenses, costs,
charges, and reserves reflected on an unaudited statement of
assets and liabilities of the Money Market Portfolio. FGI
also will deliver FGI Shares to the Money Market Portfolio,
which FGI Shares the Money Market Portfolio then shall
distribute to the Shareholders of the Money Market Portfolio
in exchange for such Shareholders' Money Market Portfolio
Shares. The exchange of the Money Market Portfolio's assets
for FGI Shares is anticipated to occur on the Closing Date.
The value of the Money Market Portfolio's assets to be
acquired by, and the value of the Money Market Portfolio's
liabilities to be assumed by, FGI and the net asset value of a
share of FGI will be determined as of immediately after the
close of regular trading on the New York Stock Exchange (the
"NYSE") at 4:00 P.M., Eastern Time, on the Closing Date, using
the valuation procedures set forth in FGI's then-current
Prospectus and Statement of Additional Information.
Upon the Closing Date, the Money Market Portfolio will
distribute pro rata to its Shareholders of record the FGI
Shares received by the Money Market Portfolio in exchange for
such Shareholders' interests in the Money Market Portfolio, as
evidenced by such Shareholders' Money Market Portfolio Shares.
This distribution will be accomplished by opening accounts on
the books of FGI in the name of each Shareholder of record in
the Money Market Portfolio and by crediting thereon the shares
previously credited to the Money Market Portfolio account of
the Shareholder on those books, as described above (see
"Synopsis -- Continuation of Shareholder Accounts; Share
Certificates"). Each such FGI shareholder account shall
represent the respective pro-rata number of FGI Shares due
such Shareholder.
Accordingly, every Shareholder will own FGI Shares immediately
after the Reorganization, the value of which FGI Shares will
be equal to the value of such Shareholder's Money Market
Portfolio Shares immediately prior to the Reorganization.
Moreover, because the FGI Shares will be issued at net asset
value in exchange for the net assets of the Money Market
Portfolio that will equal the aggregate value of those FGI
Shares, the net asset value per share of each FGI Share will
be unchanged. Thus, the Reorganization will not result in a
dilution of any Shareholder account.
<PAGE> -31-
<PAGE>
The consummation of the proposed transactions contemplated by
the Reorganization is subject to a number of conditions set
forth in the Plan, some of which conditions may be waived by
either the Rushmore Board or the FGI Board, or by an
authorized officer of the Rushmore Fund or FGI, as
appropriate. Among the significant conditions (which may not
be waived) for the Reorganization of the Money Market
Portfolio into FGI are: (i) the receipt by the Rushmore Fund
and FGI of an opinion of counsel to the Rushmore Fund and FGI
(or a revenue ruling of the U.S. Internal Revenue Service) as
to certain Federal income tax aspects of the Reorganization
(see "The Proposed Reorganization -- Federal Income Tax
Consequences," below); and (ii) the approval of the Plan at
the Meeting by the affirmative vote of the holders of a
majority of all the outstanding voting shares of the Money
Market Portfolio. The Plan may be terminated and the
Reorganization abandoned at any time, before or after approval
by the Shareholders, prior to the applicable Closing Date, by
mutual consent of the Money Market Portfolio and FGI. In
addition, the Plan may be amended in any mutually-agreeable
manner, except that no amendment may be made to the Plan
subsequent to the Meeting that would be materially detrimental
to the Shareholders.
Management contemplates that the Money Market Portfolio's
assets at the date of the transactions of the Reorganization
will be invested in a manner consistent with the investment
objectives and policies of both the Money Market Portfolio and
FGI. To the extent that any portfolio asset of the Money
Market Portfolio is inconsistent with the investment
requirements of FGI on that date, the Money Market Portfolio
will bear the transaction costs associated with replacement of
that asset, including any adverse tax consequences if losses
are incurred in replacing such asset. The Money Market
Portfolio, however, intends to conform its securities
portfolio to meet the investment objective and policies of FGI
prior to the Closing Date.
Reasons For the Proposed Reorganization
As described below in greater detail, the Rushmore Board and
the FGI Board believe the Reorganization would benefit
Shareholders by enhancing the ability of MMA, the investment
adviser to both the Money Market Portfolio and FGI, to effect
portfolio transactions on more favorable terms and give MMA
greater investment flexibility as well as promote more
efficient operations and enable greater diversification of
investments. In addition, the Rushmore Board and the FGI
Board also believe that the Reorganization would result in
certain economies which would increase the ability of the
<PAGE> -32-
<PAGE>
combined fund to continue to obtain management and
administrative services in connection with Shareholders'
assets at acceptable levels, and the Reorganization also may
result in reduced total portfolio operating expenses by reason
of an anticipated larger asset base resulting from the
Reorganization (see "Synopsis -- Management Fees,
Administrative Fees, and Other Operating Expenses," above).
The Rushmore Board, including all of the Independent Rushmore
Directors, has determined that the interests of the
Shareholders of the Money Market Portfolio will not be diluted
as a result of the proposed transactions contemplated by the
Reorganization and that the proposed transactions contemplated
by the Reorganization are in the best interests of the
Shareholders of the Money Market Portfolio. In addition, the
FGI Board, including all of the Independent FGI Directors, has
unanimously concluded that the Reorganization would be in the
best interests of FGI and the shareholders of FGI and that the
interests of existing FGI shareholders will not be diluted as
a result of the transactions contemplated by the
Reorganization. The proposed Reorganization was recommended
to the Rushmore Board and the FGI Board by MMA, the investment
adviser to both the Money Market Portfolio and FGI, and was
considered and unanimously approved by each of the Rushmore
Board and the FGI Board at separate board of directors
meetings held on July 27, 1995.
The unanimous decision by the Rushmore Board to recommend that
the Shareholders of the Money Market Portfolio vote to approve
the Reorganization of the Money Market Portfolio into FGI was
based on a number of factors, first and foremost that the
Reorganization would be a means of combining similar
portfolios with virtually identical investment objectives and
comparable investment policies and would permit the
Shareholders of the Money Market Portfolio to pursue
substantially the same investment goals in a potentially
larger fund. The Rushmore Board believes that the
Reorganization, if effected, would enable the resulting larger
fund, with its larger asset base, to achieve enhanced
investment performance and distribution capability. These
goals are anticipated to be achieved by the Reorganization
because the expected increase in the size of the combined FGI-
Money Market Portfolio should potentially increase the larger,
resulting fund's operating efficiencies, enhance the ability
of the investment adviser to this larger fund to effect
portfolio transactions on more favorable terms, and spread
investment risks among a larger number of portfolio
securities.
The Rushmore Board further considered that, without the larger
asset base resulting from the proposed Reorganization, the
<PAGE> -33-
<PAGE>
Money Market Portfolio might not be able to continue to retain
investment management and administrative services assuming the
continuation of the relative low asset level of the Money
Market Portfolio. The Rushmore Board considered that the
present asset base of the Money Market Portfolio may not be
large enough to generate sufficient management fees to MMA in
order for this arrangement to continue to be economically
feasible for MMA, and could result in the cancellation by MMA
of the Rushmore Fund Management Agreement as this agreement
pertains to the management of the Money Market Portfolio. The
Rushmore Board anticipates that the larger asset base of the
fund resulting from the Reorganization would produce economies
that would enable services to continue to be provided to FGI
at acceptable compensation levels. These economies should
permit the reduction or elimination of certain duplicative
costs and expenses presently incurred for services that are
separately performed for both the Money Market Portfolio and
FGI. As a general rule, economies can be expected to be
realized primarily with respect to fixed expenses, such as
costs of printing and fees for professional services.
Expenses that are based on the value of assets or the number
of shareholder accounts, such as custody and transfer agent
fees, however, would be largely unaffected by the
Reorganization. Achievement of these goals, of course, cannot
be assured.
The Rushmore Board and the FGI Board believe that the
essential aspect of the Reorganization is that the interest of
a Shareholder in FGI would be virtually identical to that
Shareholder's interest in the predecessor Money Market
Portfolio; the Rushmore Board and the FGI Board further
believe that the Reorganization would have no material impact
on the economic interests of the Shareholders and, as
discussed above, would not result in the dilution of any
Shareholder account. A condition precedent to the
Reorganization will be the receipt by the Rushmore Fund, on
behalf of the Money Market Portfolio, and FGI of an opinion of
counsel to the effect that the Reorganization will not result
in the recognition of any gain or loss for Federal income tax
purposes either to FGI or the Money Market Portfolio or to the
shareholders of either FGI or the Money Market Portfolio.
The Rushmore Board based its decision to recommend the
proposed Reorganization, and the transactions contemplated
thereby, to the Shareholders of the Money Market Portfolio for
the reasons set forth above as well as on a number of other
factors, including the following:
1. the terms and conditions of the Reorganization
and the fact that the Reorganization would not
result in dilution of Shareholder interests;
<PAGE> -34-
<PAGE>
2. the relative, comparative past growth in assets
and investment performance of the Money Market
Portfolio and FGI;
3. the future prospects of the Money Market
Portfolio and FGI if the Reorganization of the
Money Market Portfolio into FGI is effected and
if such Reorganization is not effected;
4. the fact that the investment objectives,
policies, and restrictions of the Money Market
Portfolio and FGI are compatible;
5. service features available to shareholders in
the Money Market Portfolio and FGI;
6. the anticipated benefits to the Shareholders of
continuing to be part of the same mutual fund
complex;
7. the tax-free nature and consequences of the
Reorganization; and
8. alternatives to the Reorganization.
Description of Securities To Be Issued In Connection With the
Reorganization
General. The FGI Shares to be issued to the Shareholders of
the Money Market Portfolio pursuant to the proposed
Reorganization will represent shares of common stock, $.001
par value per share, in FGI, which is a diversified, open-end
management investment company, and which, at the time of the
Reorganization and immediately prior to the FGI
Redomestication, will continue to be organized as a
corporation under the laws of the State of Maryland, pursuant
to the Articles of Incorporation of the Fund for Government
Investors, Inc. (the "FGI Articles"). The FGI Articles
authorize the Board of Trustees of FGI to issue 3,000,000,000
shares of common stock. Each FGI Share represents an equal
proportionate interest with each other FGI Share, and each
such FGI Share is entitled to equal voting, dividend,
liquidation, and redemption rights. FGI Shares entitle their
holders to one vote per full share held and to fractional
votes for fractional shares held. The FGI Shares do not have
cumulative voting rights, preemptive rights, or subscription
rights, and are fully paid, nonassessable, redeemable, and
freely transferable. Currently, each shareholder of FGI is
permitted to inspect the records, accounts, and books of FGI
for any legitimate business purpose.
<PAGE> -35-
<PAGE>
Meetings. As a Maryland corporation, FGI is not required to
hold an annual shareholders' meeting if the 1940 Act does not
require such a meeting. The By-Laws of FGI provide that a
special meeting of the shareholders of FGI may be called by
the directors of FGI (the "FGI Directors") and shall be called
by the FGI Directors upon the written request of shareholders
owning at least 25% of all of the outstanding voting shares of
FGI entitled to be cast at such meeting. FGI will hold
special shareholder meetings as required or deemed desirable
by the FGI Board for such purposes as electing FGI Directors,
changing fundamental policies, or approving an investment
advisory or shareholder services agreement. Pursuant to
Maryland law, any FGI Director may be removed from office with
or without cause at any time by the affirmative vote of a
majority of all the votes of FGI shareholders entitled to vote
for the election of directors. If requested by shareholders
of at least 10% of the outstanding voting shares of FGI, FGI
will call a shareholder meeting for the purpose of voting upon
the question of the removal of an FGI Director and will assist
in communications with other FGI shareholders as required by
Section 16(c) of the 1940 Act.
Shareholder Liability. Shareholders of a Maryland
corporation, such as FGI, except to the extent otherwise
provided in the governing instrument of the corporation, are
entitled to limited personal liability. FGI's governing
instrument, the FGI Articles, specifically disclaims
shareholder liability for acts or obligations of FGI and
provides that FGI shareholders shall not be subject to any
personal liability for the acts or obligations of FGI. The
FGI Articles further provide for indemnification, out of the
property of FGI with respect to which such shareholder's
shares are issued, for all losses and expenses of any FGI
shareholder held personally liable solely by reason of the
shareholder being or having been a shareholder of FGI and not
because of the shareholder's acts or omissions or for some
other reason. Thus, the risk of a shareholder of FGI
incurring financial loss on account of shareholder liability
is considered remote since such liability is limited to
circumstances in which a disclaimer is inoperative and FGI
would be unable to meet its obligations.
Liability of Directors. Under the FGI Articles, an FGI
Director will be held personally liable only for the FGI
Director's own willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in
the conduct of the office of an FGI Director. Under the FGI
Articles, FGI Directors and officers of FGI ("Officers") will
be indemnified for the expenses of litigation against such FGI
Directors and Officers unless it is determined that the person
did not act in good faith in the reasonable belief that the
person's action was in or not opposed to the best interests of
<PAGE> -36-
<PAGE>
FGI or if the person's conduct is determined to constitute
willful misfeasance, bad faith, gross negligence, or reckless
disregard of that person's duties. FGI also may advance money
for these expenses provided that the FGI Director or the
Officer undertakes to repay FGI if that person's conduct later
is determined to preclude indemnification.
The foregoing is only a summary of certain characteristics of
(i) the shares of common stock of FGI to be issued pursuant to
the proposed Reorganization and immediately prior to the
proposed FGI Redomestication, (ii) the operations of FGI and
the FGI Articles and the By-Laws of FGI immediately prior to
the proposed FGI Redomestication, and (iii) Maryland law. The
foregoing is not a complete description of the shares of
common stock of FGI nor of the documents or laws cited.
Shareholders should refer to the provisions of Maryland law
directly for a more thorough description.
Description of Securities To Be Issued In Connection With the
Redomestication
General. As discussed above under "Form of Organization of
FGI" and "The Proposed Redomestication of FGI" in the
"Synopsis," if the shareholders of FGI approve the proposed
FGI Redomestication, then FGI will change its form of
organization from a Maryland corporation to an unincorporated
voluntary association known as a Delaware business trust; and
only those persons who are shareholders of FGI as of March 4,
1996, are being solicited to approve the FGI Redomestication
(Money Market Portfolio Shareholders are not being asked to
vote on the FGI Redomestication because Money Market Portfolio
Shareholders are not presently shareholders of FGI and,
therefore, have no voting interest with respect to the FGI
Redomestication). If the shareholders of FGI approve the
proposed FGI Redomestication, then the FGI Shares to be issued
pursuant to the FGI Redomestication will represent shares of
beneficial interest in the redomesticated FGI, which will
continue to be a diversified, open-end management investment
company, but which will then be organized as a business trust
under the laws of the State of Delaware, pursuant to the Trust
Instrument. The Trust Instrument will authorize the Board of
Trustees of FGI to issue an unlimited number of shares of
beneficial interest. Accordingly, if the Shareholders of the
Money Market Portfolio approve the proposed Reorganization and
the shareholders of FGI approve the proposed FGI
Redomestication, then, immediately following the
Reorganization and the FGI Redomestication (which are proposed
to occur nearly simultaneously), the Shareholders of the Money
Market Portfolio will receive shares of beneficial interest in
<PAGE> -37-
<PAGE>
the redomesticated FGI in exchange for their shares of common
stock, $.001 par value per share, in the formerly-incorporated
FGI. The Trust Instrument of the redomesticated FGI will
authorize the Board of Trustees of FGI to issue an unlimited
number of shares of beneficial interest in FGI. Currently,
FGI does not operate as a series fund. The redomesticated
FGI, however, will have the ability to operate as a series
fund and series in the redomesticated FGI may be added in the
future. Each share of the redomesticated FGI will represent
an equal proportionate interest with each other share of the
redomesticated FGI, and each such share of the redomesticated
FGI will be entitled to equal voting, dividend, liquidation,
and redemption rights. Shares of the redomesticated FGI will
entitle their holders to one vote per full share held and to
fractional votes for fractional shares held. The shares of
the redomesticated FGI will not have cumulative voting rights,
preemptive rights, or subscription rights, and will be fully
paid, nonassessable, redeemable, and freely transferable.
Each shareholder of the redomesticated FGI will be permitted
to inspect the records, accounts, and books of the
redomesticated FGI for any legitimate business purpose.
Meetings. As a Delaware business trust, the redomesticated
FGI will not be required to hold an annual shareholders'
meeting if the 1940 Act does not require such a meeting. The
By-Laws of the redomesticated FGI will provide that a special
meeting of redomesticated FGI shareholders shall be called by
the Secretary of the redomesticated FGI when ordered by the
trustees of the redomesticated FGI (the "Trustees") or shall
be called by the Secretary of the redomesticated FGI upon the
written request of shareholders owning at least 10% of all of
the outstanding voting shares entitled to be cast at such
meeting. The redomesticated FGI will hold special shareholder
meetings as required or deemed desirable by the Board of
Trustees of the redomesticated FGI for such purposes as
electing Trustees, changing fundamental policies, or approving
an investment advisory or shareholder services agreement.
Pursuant to the Trust Instrument, any Trustee may be removed
from office by the affirmative vote of at least two-thirds of
all the voting shares of the redomesticated FGI. If requested
by shareholders of at least 10% of the outstanding voting
shares of the redomesticated FGI, the redomesticated FGI will
call a shareholder meeting for the purpose of voting upon the
question of the removal of a Trustee and will assist in
communications with other redomesticated FGI shareholders as
required by Section 16(c) of the 1940 Act.
Shareholder Liability. Shareholders of a Delaware business
trust, such as FGI immediately following the FGI
Redomestication, except to the extent otherwise provided in
<PAGE> -38-
<PAGE>
the governing instrument of the trust, are entitled to limited
personal liability. The redomesticated FGI's governing
instrument, the Trust Instrument, will specifically disclaim
shareholder liability for acts or obligations of the
redomesticated FGI and will provide that redomesticated FGI
shareholders shall not be subject to any personal liability
for the acts or obligations of the redomesticated FGI. The
Trust Instrument will further provide for indemnification, out
of the property of the redomesticated FGI, for all losses and
expenses of any redomesticated FGI shareholder held personally
liable solely by reason of the shareholder being or having
been a shareholder and not because of the shareholder's acts
or omissions or for some other reason. Thus, the risk of a
shareholder of the redomesticated FGI incurring financial loss
on account of shareholder liability is considered remote since
such liability is limited to circumstances in which a
disclaimer is inoperative and the redomesticated FGI would be
unable to meet its obligations.
Liability of Trustees. Under the Trust Instrument, a Trustee
will be held personally liable only for the Trustee's own
willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of the office
of a trustee. Under the Trust Instrument, Trustees and
Officers of the redomesticated FGI will be indemnified for the
expenses of litigation against such Trustees and Officers
unless it is determined that the person did not act in good
faith in the reasonable belief that the person's action was in
or not opposed to the best interests of the redomesticated FGI
or if the person's conduct is determined to constitute willful
misfeasance, bad faith, gross negligence, or reckless
disregard of that person's duties. The redomesticated FGI
also may advance money for these expenses provided that the
Trustee or the Officer undertakes to repay the redomesticated
FGI if that person's conduct later is determined to preclude
indemnification.
The foregoing is only a summary of certain characteristics of
(i) the shares of beneficial interest of the redomesticated
FGI to be issued pursuant to the proposed FGI Redomestication,
(ii) the operations of the redomesticated FGI and the Trust
Instrument and the By-Laws of the redomesticated FGI
immediately following the proposed FGI Redomestication, and
(iii) Delaware law. The foregoing is not a complete
description of the shares of beneficial interest of the
redomesticated FGI nor of the documents or laws cited.
Shareholders should refer to the provisions of Delaware law
directly for a more thorough description.
Federal Income Tax Consequences
<PAGE> -39-
<PAGE>
The Rushmore Fund, on behalf of the Money Market Portfolio,
and FGI will receive, as a condition to the Reorganization, an
opinion from Jorden Burt Berenson & Johnson LLP, counsel to the
Rushmore Fund and FGI, to the effect, for Federal income tax
purposes and with respect to the Reorganization, that:
1. the proposed Reorganization and the
transactions contemplated thereby, as described
herein, will constitute a tax-free
"reorganization" within the meaning of Section
368(a)(1)(C) of the U.S. Internal Revenue Code
of 1986, as amended (the "Code");
2. no gain or loss generally will be recognized to
the Money Market Portfolio upon the transfer of
all of the Money Market Portfolio's assets to
FGI in exchange solely for FGI Shares and the
assumption by FGI of all the liabilities of the
Money Market Portfolio and the subsequent
distribution of those FGI Shares to the Money
Market Portfolio's Shareholders of record;
3. no gain or loss will be recognized to FGI upon
the receipt of those Money Market Portfolio
assets in exchange solely for FGI Shares and
the assumption by FGI of those Money Market
Portfolio liabilities;
4. FGI's basis for those Money Market Portfolio
assets transferred by the Money Market
Portfolio to FGI will be the same as the basis
thereof in the Money Market Portfolio's hands
immediately before the Reorganization, and
FGI's holding period for those assets will
include the Money Market Portfolio's holding
period therefor;
5. each Shareholder of record of the Money Market
Portfolio will recognize no gain or loss upon
the constructive exchange of all such
Shareholder's Money Market Portfolio Shares
solely for FGI Shares pursuant to the
Reorganization;
6. each Shareholder's basis for the FGI Shares to
be received by the Shareholder pursuant to the
Reorganization will be the same as the
Shareholder's basis in the Money Market
Portfolio Shares to be constructively
surrendered in exchange therefor; and
<PAGE> -40-
<PAGE>
7. each such Shareholder's holding period for
those FGI Shares will include the period during
which the Money Market Portfolio Shares to be
constructively surrendered in exchange therefor
were held, provided the Money Market Portfolio
Shares were held as capital assets by that
Shareholder on the date of the Reorganization.
A revenue ruling of the Internal Revenue Service is not
expected to be obtained by either FGI or the Rushmore Fund, on
behalf of the Money Market Portfolio. A similar tax opinion
will be issued by Jorden Burt Berenson & Johnson LLP in
connection with the FGI Redomestication.
As of December 31, 1995 neither the Money Market Portfolio nor
FGI had any capital or other loss carryover. Pursuant to the
Reorganization of the Money Market Portfolio into FGI, FGI
would retain any capital loss carryover and would succeed to
any capital loss carryover of the Money Market Portfolio,
subject, in both cases, to the limitations of Sections 381,
382, 383, and 384 of the Code.
THE FOREGOING IS INTENDED TO BE ONLY A SUMMARY OF THE
PRINCIPAL FEDERAL INCOME TAX CONSEQUENCES OF THE
REORGANIZATION AND SHOULD NOT BE CONSIDERED TO BE TAX ADVICE.
THERE CAN BE NO ASSURANCE THAT THE INTERNAL REVENUE SERVICE
WILL CONCUR ON ALL OR ANY OF THE ISSUES DISCUSSED ABOVE.
SHAREHOLDERS OF THE RUSHMORE MONEY MARKET PORTFOLIO MAY WISH
TO CONSULT WITH THEIR OWN TAX ADVISORS REGARDING THE FEDERAL,
STATE, AND LOCAL TAX CONSEQUENCES WITH RESPECT TO THE
FOREGOING MATTERS AND ANY OTHER CONSIDERATIONS WHICH MAY BE
APPLICABLE TO THE SHAREHOLDERS OF THE RUSHMORE MONEY MARKET
PORTFOLIO.
Pro Forma Capitalization and Ratios
The following tables show the capitalization of the Money
Market Portfolio and FGI separately, as of December 31, 1995,
and combined in the aggregate on a pro forma basis
(unaudited), as of that date, giving effect to the
Reorganization:
<PAGE> -41-
<PAGE>
<TABLE>
<CAPTION>
Money Market Pro Forma
Portfolio FGI Combined
<S> <C> <C> <C>
Net Assets: $22,387,968 $577,194,431 $599,582,399
Net Asset Value
Per Share: $1.00 $1.00 $1.00
Shares
Outstanding: 22,387,968 577,194,431 599,582,399
</TABLE>
Cessation of Existence
If the Plan is approved by the Shareholders of the Money
Market Portfolio and the Reorganization is completed, the
Money Market Portfolio, as described above, thereafter will
cease to exist. See "The Proposed Reorganization -- Agreement
and Plan of Reorganization."
Required Vote and Board Recommendation With Respect to the
Reorganization Plan
As described above, the Rushmore Board, including all of the
Independent Rushmore Directors, has unanimously concluded,
after due consideration of the direct and indirect costs of
the transactions contemplated by the proposed Reorganization
and all other factors and information deemed by the Rushmore
Board to be relevant, that the Reorganization would be in the
best interests of the Money Market Portfolio and its
Shareholders and that the interests of existing Shareholders
of the Money Market Portfolio will not be diluted as a result
of the transactions contemplated by the Reorganization. In
addition, as described above, the FGI Board, including all of
the Independent FGI Directors, has unanimously concluded,
after due consideration of the direct and indirect costs of
the transactions contemplated by the proposed Reorganization
and all other factors and information deemed by the FGI Board
to be relevant, that the Reorganization would be in the best
interests of FGI and its shareholders and that the interests
of existing shareholders of FGI and its shareholders and that
the interests of existing shareholders of FGI will not be
diluted as a result of the transactions contemplated by the
<PAGE> -42-
<PAGE>
Reorganization. The Rushmore Board, therefore, has submitted
the Plan for the Reorganization, and the transactions
contemplated thereby, as set forth in the Plan, for approval
by the Shareholders at the Meeting. As described above, a
quorum being present, the approval of the Plan by the
Shareholders of the Money Market Portfolio under Proposal One
requires the affirmative vote of a majority of all the
outstanding voting shares of the Money Market Portfolio. In
the event that the Shareholders of the Money Market Portfolio
do not approve the Plan, and the Reorganization of the Money
Market Portfolio contemplated thereunder, the Rushmore Board
will consider possible alternative arrangements and MMA will
continue to render services to the Money Market Portfolio.
The Board of Directors of The Rushmore Fund, Inc. has
unanimously approved and recommends that, with respect to the
Reorganization of the Money Market Portfolio into FGI, the
Shareholders of the Money Market Portfolio vote FOR Proposal
One, the proposed Agreement and Plan of Reorganization for the
Money Market Portfolio and the transactions contemplated
thereby, as described above.
ADDITIONAL INFORMATION ABOUT FGI
AND THE FGI SHARES
Additional information about FGI is included in the current
Prospectus of the Fund for Government Investors, Inc., dated
March 27, 1996. A copy of this prospectus has been filed with
the Securities and Exchange Commission (the "Commission") and
is incorporated by reference herein. A Shareholder will
receive with this Combined Prospectus/Proxy Statement a copy
of the current Prospectus for the Fund for Government
Investors, Inc. Further information about FGI is included in
the Statement of Additional Information for the Fund for
Government Investors, Inc., dated March 27, 1996, which also
has been filed with the Commission and is incorporated by
reference herein. Copies of this Statement of Additional
Information for FGI may be obtained without charge by
contacting Rushmore Trust and Savings, FSB ("RTS"), a
majority-owned subsidiary of MMA, which provides all
administrative services to FGI, at 4922 Fairmont Avenue,
Bethesda, Maryland 20814, or by telephoning RTS toll-free at
(800) 343-3355.
<PAGE> -43-
<PAGE>
ADDITIONAL INFORMATION ABOUT THE RUSHMORE FUND,
THE MONEY MARKET PORTFOLIO,
AND THE MONEY MARKET PORTFOLIO SHARES
Additional information about the Rushmore Fund and the Money
Market Portfolio is included in the current Prospectus of the
Money Market Portfolio, dated January 1, 1996. A copy of this
prospectus has been filed with the Commission and is
incorporated by reference herein. A Shareholder will receive
with this Combined Prospectus/Proxy Statement a copy of the
current Prospectus for the Money Market Portfolio. Further
information about the Money Market Portfolio is included in
the Statement of Additional Information for the Money Market
Portfolio, dated January 1, 1996, which also has been filed
with the Commission and is incorporated by reference herein.
A copy of this Statement of Additional Information for the
Money Market Portfolio may be obtained without charge by
contacting RTS, which provides all administrative services to
the Money Market Portfolio, at 4922 Fairmont Avenue, Bethesda,
Maryland 20814, or by telephoning RTS toll-free at (800) 343-
3355.
MISCELLANEOUS
Available Information
FGI and the Rushmore Fund are registered under the 1940 Act
and are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and the 1940 Act,
and, in accordance therewith, file reports, proxy materials,
and other information with the Commission. Such reports,
proxy materials, and other information can be inspected at the
Securities and Exchange Commission at 450 Fifth Street, N.W.,
Washington, D. C. 20549. Copies of such material also can be
obtained from the Public Reference Branch, Office of Consumer
Affairs and Information Services, Securities and Exchange
Commission, 450 Fifth Street, N.W., Washington, D. C. 20549,
at prescribed rates.
Legal Matters
Certain legal matters in connection with the issuance of the
FGI Shares will be passed upon by Messrs. Jorden Burt Berenson
& Johnson LLP, 1025 Thomas Jefferson Street, N.W., Suite 400
East, Washington, D.C. 20007-0805 ("Counsel"). Counsel also
will render an opinion as to certain Federal income tax
consequences of the Reorganization.
Financial Statements and Experts
<PAGE> -44-
<PAGE>
Both the audited financial statements of FGI included in the
Statement of Additional Information related to this Combined
Prospectus/Proxy Statement (the "SAI") and the audited
financial statements of the Money Market Portfolio included in
the SAI have been audited by Deloitte & Touche LLP, independent
accountants, for the periods indicated in the reports of
independent accountants thereon which appear in the SAI. Such
financial statements are incorporated herein by reference in
reliance upon such reports of independent accountants given on
the authority of such firm as experts in accounting and
auditing. Copies of these financial statements, as included
in the SAI, may be obtained without charge by contacting RTS,
at 4922 Fairmont Avenue, Bethesda, Maryland 20814, or by
telephoning RTS toll-free at (800) 343-3355.
OTHER BUSINESS
The Board of Directors of The Rushmore Fund, Inc. knows of no
business to be brought before the Meeting other than the
matters set forth in this Combined Prospectus/Proxy Statement.
Should any other matter requiring a vote of Shareholders
arise, however, the Proxies will vote thereon according to
their best judgment in the interests of the Money Market
Portfolio and the Shareholders of the Money Market Portfolio.
By Order of the Board of Directors
/s/ Richard J. Garvey
Richard J. Garvey, President
The Rushmore Fund, Inc.
4922 Fairmont Avenue
Bethesda, Maryland
March 27, 1996
<PAGE> -45-
<PAGE>
P R O X Y P R O X Y
THE RUSHMORE MONEY MARKET PORTFOLIO
The Rushmore Fund, Inc.
4922 Fairmont Avenue
Bethesda, Maryland 20814
(800) 343-3355 (301) 657-1500
____________
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS
May 24, 1996
THIS PROXY IS SOLICITED BY THE Board of Directors of The
Rushmore Fund, Inc. (the "Rushmore Fund") for use at a special
meeting of the shareholders of the Rushmore Money Market
Portfolio, a series of the Rushmore Fund, which meeting will
be held at 1:00 P.M., Eastern Time, on Friday, May 24, 1996,
at the offices of the Rushmore Fund, 4922 Fairmont Avenue,
Bethesda, Maryland 20814 (the "Meeting").
The undersigned shareholder of the Rushmore Money Market
Portfolio, revoking any and all previous proxies heretofore
given for shares of the Rushmore Money Market Portfolio held
by the undersigned ("Shares"), does hereby appoint Daniel L.
O'Connor, Richard J. Garvey, Timothy N. Coakley, and Stephenie
E. Adams, and each and any of them, with full power of
substitution to each, to be the attorneys and proxies of the
undersigned (the "Proxies"), to attend the Meeting of the
shareholders of the Rushmore Money Market Portfolio, and to
represent and direct the voting interest represented by the
undersigned as of the record date for said Meeting for the
Proposals specified below.
This proxy, if properly executed, will be voted in the
manner as directed herein by the undersigned shareholder.
Unless otherwise specified below in the squares provided, the
undersigned's vote will be cast "FOR" each Proposal. If no
direction is made for any Proposals, this proxy will be voted
"FOR" any and all such Proposals. In their discretion, the
Proxies are authorized to transact and vote upon such other
matters and business as may come before the Meeting or any
adjournments thereof.
<PAGE>
<PAGE>
Proposal 1. To approve or disapprove an Agreement and Plan
of Reorganization among The Rushmore Fund,
Inc., the Rushmore Money Market Portfolio, and
Fund for Government Investors, Inc. (the
"Plan"), and the transactions contemplated
thereby, pursuant to which Plan the Rushmore
Money Market Portfolio would transfer all of
its assets to the Fund for Government
Investors, Inc., in exchange for (i) shares of
common stock in the Fund for Government
Investors, Inc. that would be distributed to
the shareholders of the Rushmore Money Market
Portfolio and (ii) the assumption by the Fund
for Government Investors, Inc. of all the
liabilities of the Rushmore Money Market
Portfolio.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Proposal 2. To transact such other business as properly may
come before the Meeting or any adjournment(s)
thereof.
To avoid the expense of adjourning the Meeting to a
subsequent date, please return this proxy in the enclosed
self-addressed, postage-paid envelope. THIS PROXY IS
SOLICITED ON BEHALF OF THE Board of Directors OF THE RUSHMORE
FUND, INC., WHICH RECOMMENDS A VOTE FOR THE PROPOSAL.
Dated: __________________, 1996
_______________________________
Signature of Shareholder
_______________________________
Signature of Shareholder
This proxy may be revoked by the
shareholder(s) at any time prior to
the special meeting.
NOTE: Please sign exactly as your name appears hereon. If
shares are registered in more than one name, all registered
shareholders should sign this proxy; but if one shareholder
signs, this signature binds the other shareholder. When
signing as an attorney, executor, administrator, agent,
trustee, or guardian, or custodian for a minor, please give
full title as such. If a corporation, please sign in full
corporate name by an authorized person. If a partnership,
please sign in partnership name by an authorized person.
<PAGE> -47-
<PAGE>
APPENDIX A:
FORM OF
AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>
<PAGE>
APPENDIX A:
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the
"Agreement") is made as of this ___ day of May, 1996, by and
among The Rushmore Fund, Inc. (the "Rushmore Fund"), a
Maryland corporation, the Rushmore Money Market Portfolio (the
"Money Market Portfolio"), a series of the Rushmore Fund, and
Fund for Government Investors, Inc. ("FGI"), also a Maryland
corporation. The Rushmore Fund, the Money Market Portfolio,
and FGI have their respective principal places of business at
4922 Fairmont Avenue, Bethesda, Maryland 20814.
This Agreement is intended to be and is adopted as a plan
of reorganization within the meaning of Section 368(a) of the
United States Internal Revenue Code of 1986, as amended (the
"Code"), with respect to the proposed reorganization of the
Money Market Portfolio, pursuant to which the Money Market
Portfolio will become part of FGI (the "Reorganization").
Specifically, this Agreement is intended to be and is adopted
for the purpose of providing for the Reorganization of the
Money Market Portfolio into FGI. The Reorganization will
consist of the transfer of all of the assets of the Money
Market Portfolio to FGI in exchange solely for (i) shares of
common stock in FGI (the "FGI Shares") and (ii) the assumption
by FGI of all the liabilities of the Money Market Portfolio,
and the distribution of the FGI Shares to the shareholders of
the Money Market Portfolio, as provided herein, all upon the
terms and conditions hereinafter set forth in this Agreement.
WHEREAS, the Rushmore Fund and FGI are open-end,
registered investment companies of the management type and the
Money Market Portfolio owns securities which generally are
assets of the character in which FGI is permitted to invest;
WHEREAS, the Board of Directors of FGI has determined,
with respect to the Reorganization, that the exchange of all
of the assets of the Money Market Portfolio for FGI shares and
the assumption of all the liabilities of the Money Market
Portfolio by FGI is in the best interests of FGI and its
shareholders and that the interests of the existing
shareholders of FGI would not be diluted as a result of this
transaction;
WHEREAS, the Board of Directors of the Rushmore Fund has
determined, with respect to the Reorganization, that the
exchange of all of the assets of the Money Market Portfolio
for FGI Shares and the assumption of all the liabilities of
<PAGE>
<PAGE>
the Money Market Portfolio by FGI is in the best interests of
the Money Market Portfolio and its shareholders and that the
interests of the existing shareholders of the Money Market
Portfolio would not be diluted as a result of this
transaction; and
WHEREAS, the purpose of the Reorganization is to combine
the assets of FGI with those of the Money Market Portfolio in
an attempt to achieve greater operating economies and
increased portfolio diversification.
NOW, THEREFORE, in consideration of the promises and of
the covenants and agreements hereinafter set forth, the
parties hereto covenant and agree, with respect to the
Reorganization, as follows:
1. THE TRANSFER OF ASSETS OF THE MONEY MARKET PORTFOLIO TO
FGI IN EXCHANGE FOR THE FGI SHARES, AND THE ASSUMPTION OF
ALL THE LIABILITIES OF THE MONEY MARKET PORTFOLIO
1.1 A closing shall take place as provided for in
paragraph 3.1 ("Closing") and the provisions of paragraphs 1
through 8 of this Agreement shall apply. At the Closing,
subject to the terms and conditions herein set forth and on
the basis of the representations and warranties contained
herein, the Money Market Portfolio agrees to transfer all of
the Money Market Portfolio's assets, as set forth in paragraph
1.2, to FGI, and FGI agrees in exchange therefor: (i) to
deliver to the Money Market Portfolio the number of FGI
Shares, including fractional FGI Shares, determined by
dividing the value of the Money Market Portfolio's net assets
computed in the manner and as of the time and date set forth
in paragraph 2.1 by the net asset value of one FGI Share
computed in the manner and as of the time and date set forth
in paragraph 2.2; and (ii) to assume all the liabilities of
the Money Market Portfolio, as set forth in paragraph 1.3.
1.2 The assets of the Money Market Portfolio to be
acquired by FGI shall consist of all property, including,
without limitation, all cash, securities, commodities and
futures interests, and dividends or interest receivable which
are owned by the Money Market Portfolio and any deferred or
prepaid expenses shown as an asset on the books of the Money
Market Portfolio on the closing date provided in paragraph 3.1
(the "Closing Date").
1.3 The Money Market Portfolio will endeavor to
discharge all of its known liabilities and obligations prior
to the Closing Date. FGI shall assume all liabilities,
expenses, costs, charges, and reserves reflected on an
<PAGE> A-2
<PAGE>
unaudited statement of assets and liabilities of the Money
Market Portfolio prepared by the administrator of the Rushmore
Fund and the Money Market Portfolio, as of the Valuation Date
(as defined in paragraph 2.1), in accordance with generally
accepted accounting principles consistently applied from the
prior audited period.
1.4 Immediately after the transfer of assets provided
for in paragraph 1.1, the Money Market Portfolio will
distribute pro rata to the Money Market Portfolio's
shareholders of record, determined as of immediately after the
close of business on the Closing Date (the "Money Market
Portfolio Shareholders"), the FGI Shares received by the Money
Market Portfolio pursuant to paragraph 1.1. Such distribution
will be accomplished by the transfer of the FGI Shares then
credited to the account of the Money Market Portfolio on the
books of FGI to open accounts on the share records of FGI in
the names of the Money Market Portfolio Shareholders and
representing the respective pro rata number of the FGI Shares
due such shareholders. All issued and outstanding shares of
the Money Market Portfolio will simultaneously be canceled on
the books of the Money Market Portfolio, although share
certificates representing interests in the Money Market
Portfolio will represent a number of FGI Shares after the
Closing Date as determined in accordance with Section 2.3.
FGI shall not issue certificates representing the FGI Shares
in connection with such exchange. Ownership of FGI Shares
will be shown on the books of FGI's transfer agent.
2. VALUATION
2.1 The value of the Money Market Portfolio's assets to
be acquired by FGI hereunder shall be the value of such assets
computed as of immediately after the close of business of the
New York Stock Exchange (the "NYSE") at 4:00 P.M., Eastern
Time, on the Closing Date (such time and date being
hereinafter called the "Valuation Date"), using the valuation
procedures set forth in the Rushmore Fund's Articles of
Incorporation and the Money Market Portfolio's then-current
prospectus or statement of additional information.
2.2 The net asset value of an FGI Share shall be the net
asset value per share computed as of immediately after the
close of business of the New York Stock Exchange on the
Valuation Date, using the valuation procedures set forth in
FGI's Articles of Incorporation and FGI's then-current
prospectus or statement of additional information.
2.3 The number of the FGI Shares to be issued (including
fractional shares, if any) in exchange for the Money Market
Portfolio's assets shall be determined by dividing the value
of the net assets of the Money Market Portfolio determined
<PAGE> A-3
<PAGE>
using the same valuation procedures referred to in paragraph
2.1 by the net asset value of an FGI Share determined in
accordance with paragraph 2.2.
2.4 All computations of value for the Rushmore Fund, the
Money Market Portfolio, and FGI shall be made by Money
Management Associates ("MMA").
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be May 31, 1996 or such other
date as the parties may agree to in writing. All acts taking
place at the Closing shall be deemed to take place
simultaneously as of immediately after the close of business
on the Closing Date unless otherwise agreed to by the parties.
The close of business on the Closing Date shall be as of 4:00
P.M., Eastern Time. The Closing shall be held at the offices
of the Rushmore Fund, 4922 Fairmont Avenue, Bethesda, Maryland
20814, or at such other time and/or place as the parties may
agree.
3.2 Rushmore Trust and Savings, FSB, Bethesda, Maryland,
as custodian for the Money Market Portfolio (the "Custodian"),
a majority-owned subsidiary of MMA with offices at 4922
Fairmont Avenue, Bethesda, Maryland 20814, shall deliver at
the Closing a certificate of an authorized officer stating
that: (i) the Money Market Portfolio's portfolio securities,
cash, and any other assets shall have been delivered in proper
form to FGI within two business days prior to or on the
Closing Date; and (ii) all necessary taxes, including all
applicable Federal and state stock transfer stamps, if any,
shall have been paid, or provision for payment shall have been
made, in conjunction with the delivery of the Money Market
Portfolio's portfolio securities.
3.3 Rushmore Trust and Savings, FSB, Bethesda, Maryland,
as the transfer agent for the Rushmore Fund and FGI (the
"Transfer Agent"), on behalf of FGI and the Money Market
Portfolio, shall deliver at the Closing a certificate of an
authorized officer stating that its records contain the names
and addresses of the Money Market Portfolio Shareholders and
the number and percentage ownership of outstanding shares
owned by each such shareholder immediately prior to the
Closing. FGI shall issue and deliver a confirmation
evidencing the FGI Shares to be credited on the Closing Date
to the Secretary of the Money Market Portfolio or provide
evidence satisfactory to the Money Market Portfolio that such
FGI Shares have been credited to the Money Market Portfolio's
account on the books of the FGI. At the Closing, each party
shall deliver to the other such bills of sales, checks,
assignments, share certificates, if any, receipts, or other
<PAGE> A-4
<PAGE>
documents as such other party or its counsel may reasonably
request.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Rushmore Fund, on its own behalf and on behalf
of the Money Market Portfolio, represents and warrants to FGI
as follows:
(a) The Rushmore Fund is a corporation duly organized,
validly existing, and in good standing under the laws of the
State of Maryland;
(b) The Rushmore Fund is a registered investment company
classified as a management company of the open-end type, and
its registration with the Securities and Exchange Commission
(the "Commission"), as an investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"),
and the registration of its shares, under the Securities Act
of 1933, as amended (the "1933 Act"), are in full force and
effect;
(c) Neither the Rushmore Fund nor the Money Market
Portfolio is in, and the execution, delivery, and performance
of this Agreement will not result in, a material violation of
the Rushmore Fund's Articles of Incorporation or By-Laws or of
any agreement, indenture, instrument, contract, lease, or
other undertaking to which the Rushmore Fund or the Money
Market Portfolio is a party or by which either or both of the
Rushmore Fund and the Money Market Portfolio are bound;
(d) Neither the Rushmore Fund nor the Money Market
Portfolio has any material contracts or other commitments
(other than this Agreement) which will be terminated with
liability to the Rushmore Fund or the Money Market Portfolio
prior to the Closing Date;
(e) Except as otherwise disclosed in writing to and
accepted by FGI, no material litigation or administrative
proceeding or investigation of or before any court or
governmental body is presently pending or to their knowledge
threatened against the Rushmore Fund or the Money Market
Portfolio or any of their properties or assets which, if
adversely determined, would materially and adversely affect
the Rushmore Fund's or the Money Market Portfolio's financial
condition or the conduct of either the Rushmore Fund's or the
Money Market Portfolio's business. Neither the Rushmore Fund
nor the Money Market Portfolio knows of any facts which might
<PAGE> A-5
<PAGE>
form the basis for the institution of such proceedings and
neither the Rushmore Fund nor the Money Market Portfolio is a
party to or subject to the provisions of any order, decree, or
judgment of any court or governmental body which materially
and adversely affects the business or the ability of the
Rushmore Fund or the Money Market Portfolio to consummate the
transactions herein contemplated;
(f) The Statement of Assets and Liabilities of the Money
Market Portfolio at August 31, 1995 has been audited by
Deloitte & Touche LLP, independent accountants, and is in
accordance with generally accepted accounting principles
consistently applied, and such statement (a copy of which has
been furnished to FGI) fairly reflects the financial condition
of the Money Market Portfolio as of such date, and there are
no known contingent liabilities of the Money Market Portfolio
as of such date not disclosed therein;
(g) Since August 31, 1995, there has not been any
material adverse change in the Money Market Portfolio's
financial condition, assets, liabilities, or business other
than changes occurring in the ordinary course of business, or
any incurrence by the Money Market Portfolio of indebtedness
maturing more than one year from the date such indebtedness
was incurred, except as otherwise disclosed to and accepted by
FGI. For the purposes of this subparagraph (g), a decline in
net asset value per share of the Money Market Portfolio, the
discharge of Money Market Portfolio liabilities, or the
redemption of Money Market Portfolio shares by Money Market
Portfolio Shareholders shall not constitute a material adverse
change;
(h) At the Closing Date, all material Federal and other
tax returns and reports of the Rushmore Fund and the Money
Market Portfolio required by law to have been filed by such
date shall have been filed and are or will be correct, and all
Federal and other taxes shown as due or required to be shown
as due on said returns and reports shall have been paid or
provision shall have been made for the payment thereof, and to
the best knowledge of the Rushmore Fund and the Money Market
Portfolio no such return is currently under audit and no
assessment has been asserted with respect to such returns;
(i) For each taxable year of its operation, the Money
Market Portfolio has met the requirements of Subchapter M of
the Code for qualification as a regulated investment company
and has elected to be treated as such;
(j) All issued and outstanding shares of the Money
Market Portfolio are, and at the Closing Date will be, duly
and validly issued and outstanding, fully paid, and non-
assessable by the Money Market Portfolio. All of the issued
<PAGE> A-6
<PAGE>
and outstanding shares of the Money Market Portfolio will, at
the time of closing, be held by the persons and in the amount
set forth in the records of the Transfer Agent, on behalf of
the Money Market Portfolio as provided in paragraph 3.3. The
Money Market Portfolio does not have outstanding any options,
warrants, or other rights to subscribe for or to purchase any
of the Money Market Portfolio shares, nor is there outstanding
any security convertible into any of the Money Market
Portfolio shares;
(k) At the Closing Date, the Money Market Portfolio will
have good and marketable title to the Money Market Portfolio's
assets to be transferred to FGI pursuant to paragraph 1.2 and
full right, power, and authority to sell, assign, transfer,
and deliver such assets hereunder, and, upon delivery and
payment for such assets, FGI will acquire good and marketable
title thereto, subject to any restrictions as might arise
under the 1933 Act, other than as disclosed to FGI;
(l) The execution, delivery, and performance of this
Agreement will have been duly authorized prior to the Closing
Date by all necessary action on the part of the Rushmore
Fund's directors, and, subject to the approval of the Money
Market Portfolio Shareholders, this Agreement will constitute
a valid and binding obligation of the Rushmore Fund and the
Money Market Portfolio, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium, and other laws relating to or
affecting creditors' rights, and to general equity principles;
(m) The information to be furnished by the Rushmore Fund
and the Money Market Portfolio for use in registration
statements, proxy materials, and other documents which may be
necessary in connection with the transactions contemplated
hereby shall be accurate and complete in all material respects
and shall comply in all material respects with Federal
securities and other laws and regulations thereunder
applicable thereto; and
(n) The proxy statement of the Rushmore Fund (the "Proxy
Statement") to be included in the Registration Statement
referred to in paragraph 5.6 (other than information therein
that relates to FGI) will, on the effective date of the
Registration Statement and on the Closing Date, not contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which such statements were made, not materially
misleading.
4.2 FGI represents and warrants to the Money Market
Portfolio as follows:
<PAGE> A-7
<PAGE>
(a) FGI is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Maryland;
(b) FGI is a registered investment company classified as
a management company of the open-end type, and its
registration with the Commission, as an investment company
under the 1940 Act, and the registration of its shares, under
the 1933 Act, are in full force and effect;
(c) The current prospectus and statement of additional
information of FGI conform in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and
the rules and regulations of the Commission thereunder and do
not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not materially
misleading;
(d) At the Closing Date, FGI will have good and
marketable title to FGI's assets;
(e) FGI is not in, and the execution, delivery, and
performance of this Agreement will not result in, a material
violation of FGI's Articles of Incorporation or By-Laws or of
any agreement, indenture, instrument, contract, lease, or
other undertaking to which FGI is a party or by which FGI is
bound;
(f) No material litigation or administrative proceeding
or investigation of or before any court or governmental body
is presently pending or threatened against FGI or any of its
properties or assets, except as previously disclosed in
writing to the Rushmore Fund, on behalf of the Money Market
Portfolio. FGI knows of no facts which might form the basis
for the institution of such proceedings and FGI is not a party
to or subject to the provisions of any order, decree, or
judgment of any court or governmental body which materially
and adversely affects the business or the ability of FGI to
consummate the transactions contemplated herein;
(g) The Statement of Assets and Liabilities of FGI at
December 31, 1995, audited by Deloitte & Touche LLP,
independent accountants, and a copy of which has been
furnished to the Rushmore Fund, on behalf of the Money Market
Portfolio, fairly and accurately reflects the financial
condition of FGI as of such date in accordance with generally
accepted accounting principles consistently applied;
(h) Since December 31, 1995, there has not been any
material adverse change in FGI's financial condition, assets,
<PAGE> A-8
<PAGE>
liabilities, or business other than changes occurring in the
ordinary course of business, or any incurrence by FGI of
indebtedness maturing more than one year from the date such
indebtedness was incurred. For the purposes of this
subparagraph (h), a decline in net asset value per share of
the FGI shares, the discharge of FGI liabilities, or the
redemption of FGI shares by FGI Shareholders shall not
constitute a material adverse change;
(i) At the Closing Date, all material Federal and other
tax returns and reports of FGI required by law to have been
filed by such date shall have been filed and are or will be
correct, and all Federal and other taxes shown as due or
required to be shown as due on said returns and reports shall
have been paid or provision shall have been made for the
payment thereof, and, to the best knowledge of FGI, no such
return is currently under audit and no assessment has been
asserted with respect to such returns;
(j) For each taxable year of its operation, FGI has met
the requirements of Subchapter M of the Code for qualification
as a regulated investment company and has elected to be
treated as such;
(k) All issued and outstanding FGI Shares are, and at
the Closing Date will be, duly and validly issued and
outstanding, fully paid, and non-assessable by FGI. FGI does
not have outstanding any options, warrants, or other rights to
subscribe for or to purchase the FGI Shares, nor is there
outstanding any security convertible into the FGI Shares;
(l) The execution, delivery, and performance of this
Agreement will have been fully authorized prior to the Closing
Date by all necessary action, if any, on the part of the
directors of FGI and this Agreement will constitute a valid
and binding obligation of FGI enforceable in accordance with
its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium, and other laws
relating to or affecting creditors' rights, and to general
equity principles;
(m) The FGI Shares to be issued and delivered to the
Money Market Portfolio, for the account of the Money Market
Portfolio Shareholders, pursuant to the terms of this
Agreement, will, at the Closing Date, have been duly
authorized and, when so issued and delivered, will be duly and
validly issued FGI Shares, and will be fully paid and non-
assessable by FGI;
(n) The information to be furnished by FGI for use in
registration statements, proxy materials, and other documents
which may be necessary in connection with the transactions
<PAGE> A-9
<PAGE>
contemplated hereby shall be accurate and complete in all
material respects and shall comply in all material respects
with Federal securities and other laws and regulations
applicable thereto;
(o) The Proxy Statement to be included in the
Registration Statement (only insofar as it relates to FGI)
will, on the effective date of the Registration Statement and
on the Closing Date, not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statement herein, in
light of the circumstances under which such statements were
made, not materially misleading; and
(p) FGI agrees to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the
1940 Act, and such of the state blue sky or securities laws as
may be necessary in order to continue its operations after the
Closing Date.
5. COVENANTS OF THE RUSHMORE FUND, THE MONEY MARKET
PORTFOLIO, AND FGI
The following covenants of the Money Market Portfolio and
FGI, as applicable, are made, respectively, by the Rushmore
Fund (on behalf of the Money Market Portfolio) and FGI:
5.1 FGI and the Money Market Portfolio each will operate
its business in the ordinary course between the date hereof
and the Closing Date, it being understood that such ordinary
course of business will include the declaration and payment of
customary dividends and distributions, and any other
distribution that may be advisable.
5.2 The Money Market Portfolio will call a meeting of
the Money Market Portfolio Shareholders to consider and act
upon this Agreement and to take all other action necessary to
obtain approval of the transactions contemplated herein.
5.3 The Money Market Portfolio covenants that the FGI
Shares to be issued hereunder are not being acquired for the
purpose of making any distribution thereof other than in
accordance with the terms of this Agreement.
5.4 The Money Market Portfolio will assist FGI in
obtaining such information as FGI reasonably requests
concerning the beneficial ownership of the shares of the Money
Market Portfolio.
5.5 Subject to the provisions of this Agreement, FGI and
the Money Market Portfolio will each take, or cause to be
taken, all action, and do, or cause to be done, all things,
<PAGE> A-10
<PAGE>
reasonably necessary, proper, or advisable to consummate and
make effective the transactions contemplated by this
Agreement.
5.6 The Money Market Portfolio will provide FGI with
information reasonably necessary for the preparation of a
prospectus (the "Prospectus") which will include the Proxy
Statement, referred to in paragraph 4.1(n), all to be included
in a Registration Statement on Form N-14 of FGI (the
"Registration Statement"), in compliance with the 1933 Act,
the Securities Exchange Act of 1934, as amended (the "1934
Act"), and the 1940 Act, in connection with the meeting of the
Money Market Portfolio Shareholders to consider approval of
this Agreement and the transactions contemplated herein (the
"Meeting").
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE RUSHMORE FUND
AND THE MONEY MARKET PORTFOLIO
The obligations of the Rushmore Fund and the Money Market
Portfolio to consummate the transactions provided for herein
shall be subject, at their election, to the performance by FGI
of all the obligations to be performed by FGI hereunder on or
before the Closing Date, and, in addition thereto, to the
following further conditions:
6.1 All representations and warranties of FGI contained
in this Agreement shall be true and correct in all material
respects as of the date hereof and, except as they may be
affected by the transactions contemplated by this Agreement,
as of the Closing Date with the same force and effect as if
made on and as of the Closing Date; and
6.2 FGI, shall have delivered to the Rushmore Fund, on
behalf of the Money Market Portfolio, on the Closing Date, a
certificate executed in FGI's name by FGI's President or Vice
President, and FGI's Treasurer or Assistant Treasurer, in a
form reasonably satisfactory to the Rushmore Fund, on behalf
of the Money Market Portfolio, and dated as of the Closing
Date, to the effect that the representations and warranties of
FGI made in this Agreement are true and correct at and as of
the Closing Date, except as these representations and
warranties may be affected by the transactions contemplated by
this Agreement and as to such other matters as the Rushmore
Fund shall reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF FGI
<PAGE> A-11
<PAGE>
The obligations of FGI to complete the transactions
provided for herein shall be subject, at its election, to the
performance by the Rushmore Fund and the Money Market
Portfolio of all of the obligations to be performed by the
Rushmore Fund and the Money Market Portfolio hereunder on or
before the Closing Date and, in addition thereto, to the
following conditions:
7.1 All representations and warranties of the Rushmore
Fund and the Money Market Portfolio contained in this
Agreement shall be true and correct in all material respects
as of the date hereof and, except as these representations and
warranties may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date;
7.2 The Rushmore Fund shall have delivered to FGI a
statement of the Money Market Portfolio's assets and
liabilities, as of the Closing Date, certified by the
Treasurer or the Assistant Treasurer of the Rushmore Fund; and
7.3 The Rushmore Fund shall have delivered to FGI, on
the Closing Date, a certificate executed in the Rushmore
Fund's name and the Money Market Portfolio's name by the
Rushmore Fund's President or Vice President, and the Rushmore
Fund's Treasurer or Assistant Treasurer, in form and substance
satisfactory to FGI, and dated as of the Closing Date, to the
effect that the representations and warranties of the Rushmore
Fund and the Money Market Portfolio, with respect to the
Rushmore Fund and the Money Market Portfolio, made in this
Agreement are true and correct at and as of the Closing Date,
except as these representations and warranties may be affected
by the transactions contemplated by this Agreement, and as to
such other matters as FGI shall reasonably request.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF FGI AND
THE MONEY MARKET PORTFOLIO
If any of the conditions set forth below do not exist on
or before the Closing Date, with respect to the Money Market
Portfolio or FGI, then the other party to this Agreement
shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1 The Agreement and the transactions contemplated
herein shall have been approved by the requisite vote of the
holders of the outstanding shares of Common Stock, $.001 par
value per share, of the Money Market Portfolio in accordance
with the provisions of the Rushmore Fund's Articles of
Incorporation and By-Laws, and certified copies of the
resolutions evidencing such approval shall have been delivered
to FGI. Notwithstanding anything herein to the contrary, the
<PAGE> A-12
<PAGE>
Rushmore Fund, the Money Market Portfolio, or FGI may not
waive the conditions set forth in this paragraph 8.1;
8.2 On the Closing Date, no action, suit, or other
proceeding shall be threatened or pending before any court or
governmental agency in which it is sought to restrain or
prohibit, or to obtain damages or other relief in connection
with, this Agreement or the transactions contemplated herein;
8.3 All consents of other parties and all other
consents, orders, and permits of Federal, state, and local
regulatory authorities deemed necessary by the Rushmore Fund
or FGI to permit consummation, in all material respects, of
the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order, or
permit would not involve a risk of a material adverse effect
on the assets or properties of the Rushmore Fund, the Money
Market Portfolio, or FGI, provided that the parties hereto
may, for themselves, waive any of such conditions;
8.4 The Registration Statement shall have become
effective under the 1933 Act and no stop orders suspending the
effectiveness thereof shall have been issued and, to the best
knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be
pending, threatened, or contemplated under the 1933 Act; and
8.5 The parties shall have received the opinion of
Messrs. Jorden Burt Berenson & Johnson LLP, addressed to the
Rushmore Fund and FGI, substantially to the effect that the
transactions contemplated by this Agreement shall constitute a
tax-free reorganization for Federal income tax purposes. The
delivery of such opinion is conditioned upon receipt by
Messrs. Jorden Burt Berenson & Johnson LLP of representations
that such firm shall request of the Rushmore Fund, the Money
Market Portfolio, and FGI. Notwithstanding anything herein to
the contrary, the Rushmore Fund, the Money Market Portfolio,
or FGI may not waive the conditions set forth in this
paragraph 8.5.
9. BROKERAGE FEES AND EXPENSES
9.1 FGI and the Rushmore Fund, on behalf of the Money
Market Portfolio, represents and warrants to the other that
there are no brokers or finders entitled to receive any
payments in connection with the transactions provided for
herein.
9.2 MMA will bear the aggregate expenses and costs of
the Reorganization.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
<PAGE> A-13
<PAGE>
10.1 FGI and the Rushmore Fund, on behalf of the Money
Market Portfolio, agree that neither party has made any
representation, warranty, or covenant not set forth herein and
that this Agreement constitutes the entire agreement between
the parties.
10.2 The representations, warranties, and covenants
contained in this Agreement, or in any document delivered
pursuant hereto or in connection herewith, shall survive the
consummation of the transactions contemplated hereunder.
11. TERMINATION
This Agreement and the transactions contemplated hereby
may be terminated and abandoned by either party by resolution
of the Rushmore Fund's Board of Directors or FGI's Board of
Directors; at any time prior to the Closing Date, if
circumstances should develop that, in the opinion of such
Boards of Directors, make proceeding with the Agreement
inadvisable.
12. WAIVER
The Rushmore Fund, on behalf of the Money Market
Portfolio, and FGI, after consultation with their respective
counsel and by consent of the Rushmore Fund's Board of
Directors and FGI's Board of Directors, respectively, may
waive any condition to the respective obligations of FGI and
the Money Market Portfolio hereunder, except as provided
herein.
13. AMENDMENTS
This Agreement may be amended, modified, or supplemented
in such manner as may be mutually agreed upon in writing by
the authorized officers of the Rushmore Fund and FGI;
provided, however, that, following the Meeting of the Money
Market Portfolio Shareholders called by the Money Market
Portfolio pursuant to paragraph 5.2 of this Agreement, no such
amendment may have the effect of changing the provisions for
determining the number of the FGI Shares to be issued to the
Money Market Portfolio Shareholders under this Agreement to
the detriment of such shareholders without their further
approval.
14. NOTICES
Any notice, report, statement, or demand required or
permitted by any provisions of this Agreement shall be in
writing and shall be given by prepaid telegraph, telecopy, or
certified mail addressed to the Rushmore Fund at 4922 Fairmont
<PAGE> A-14
<PAGE>
Avenue, Bethesda, Maryland 20814 or FGI at 4922 Fairmont
Avenue, Bethesda, Maryland 20814.
15. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
15.1 The Article and paragraph headings contained in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement.
15.2 This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
15.3 This Agreement shall be governed by and construed
in accordance with the laws of the State of Maryland.
15.4 This Agreement shall bind and inure to the benefit
of the parties hereto and their respective successors and
assigns, but no assignment or transfer hereof or of any rights
or obligations hereunder shall be made by any party without
the written consent of the other party. Nothing herein
expressed or implied is intended or shall be construed to
confer upon or to give any person, firm, or corporation, other
than the parties hereto and their respective successors and
assigns, any rights or remedies under or by reason of this
Agreement.
15.5 It is expressly agreed that the obligations of the
Rushmore Fund and the Money Market Portfolio hereunder shall
not be binding upon any of the directors, shareholders,
nominees, officers, agents, or employees of the Rushmore Fund
personally, but shall bind only the corporate property of the
Rushmore Fund and the Money Market Portfolio, as provided in
the Articles of Incorporation of the Rushmore Fund. The
execution and delivery by such officers of the Rushmore Fund
shall not be deemed to have been made by any of them
individually or to impose any liability on any of them
personally, but shall bind only the corporate property of the
Rushmore Fund and the Money Market Portfolio as provided in
the Articles of Incorporation of the Rushmore Fund.
15.6 It is expressly agreed that the obligations of FGI
hereunder shall not be binding upon any of the directors,
shareholders, nominees, officers, agents, or employees of FGI
personally, but shall bid only the corporate property of FGI,
as provided in the Articles of Incorporation of FGI. The
execution and delivery by such officers of FGI shall not be
deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bid
only the corporate property of FGI as provided in the Articles
of Incorporation of FGI.
<PAGE> A-15
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed by its President or Vice
President and its seal to be affixed hereto and attested by
its Secretary or Assistant Secretary.
Attest: THE RUSHMORE FUND, INC.
[Seal]
By: By:
Title: Title:
Attest: THE RUSHMORE FUND, INC., on
behalf of THE RUSHMORE
MONEY
MARKET PORTFOLIO
[Seal]
By: By:
Title: Title:
Attest: FUND FOR GOVERNMENT
INVESTORS,
INC.
[Seal]
By: By:
Title: Title:
<PAGE> A-16
<PAGE>
APPENDIX B:
INVESTMENT MANAGEMENT AGREEMENT
BETWEEN
FUND FOR GOVERNMENT INVESTORS, INC.
AND
MONEY MANAGEMENT ASSOCIATES
<PAGE>
<PAGE>
MANAGEMENT CONTRACT
Between
FUND FOR GOVERNMENT INVESTORS, INC.
And
MONEY MANAGEMENT ASSOCIATES
AGREEMENT dated as of the 2nd day of December, 1974
by and between Fund For Government Investors, Inc. (herein
sometimes called the "FUND") and Money Management Associates
(herein sometimes called the "Manager").
WITNESSETH:
THAT, in consideration of the mutual covenants
hereinafter contained, it is agreed as follows:
1. THE FUND hereby employs the Manager to manage
the investment and reinvestment of the assets of the Fund and
to administer the affairs of the Fund, subject to the control
of the officers and Board of Directors of the Fund, 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
herein set forth, for the compensation herein provided.
2. THE MANAGER assumes and shall pay or reimburse
the Fund for: (1) all expenses in connection with the
management of the investment and reinvestment of the assets of
the Fund, except that the Fund assumes and shall pay all
broker's commissions and issue and transfer taxes chargeable
to the Fund in connection with securities transactions to
<PAGE>
<PAGE>
which the Fund is a party; (2) the compensation (if any) of
those directors and officers of the Fund who also serve as
directors, officers or employees of the Manager; and (3) all
expenses not hereinafter specifically assumed by the Fund
where such expenses are incurred by the Manager or by the Fund
in connection with the administration of the affairs of the
Fund.
THE 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: (1)
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; (2) auditing its financial
statements; (3) 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; (4) stockholders' and directors' meetings, and
preparation, printing and distribution of all reports and
proxy materials; (5) legal services rendered to the Fund; (6)
retaining and compensating those directors, officers and
employees of the Fund who do not also serve as directors,
officers or employees of the Manager; (7) maintaining
<PAGE> B-2
<PAGE>
appropriate insurance coverage for the Fund and its directors
and officers; and (8) its membership in trade associations.
At the request of the Fund, the Manager shall make
available to the Fund all necessary office facilities,
equipment and personnel that the Fund may require. Such
office facilities, equipment, personnel and service, the
charges and expenses for 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 the Fund, the
Manager is authorized to buy and sell marketable debt
obligations of the United States Government, its agencies and
instrumentalities and money market obligations secured by such
obligations for the Fund 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, the Fund shall pay the
Manager an annual fee of one-half of one percent of the
average daily net asset value, payable monthly on the average
daily net assets of the Fund during that month.
If in any fiscal year the aggregate expenses of the
Fund, exclusive of taxes, brokerage, interest and
<PAGE> B-3
<PAGE>
extraordinary legal expenses, but including the management
fee, exceed 1% of the average market value of the net assets
for that fiscal year of the Fund, the Manager will refund to
the Fund, or bear, the excess expenses over 1%. These expense
reimbursements, if any, will be estimated, reconciled and paid
on a monthly basis.
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 fiscal quarter as a percentage of the total
number of days in such quarter.
5. Subject to and in accordance with the corporate
charters of the Fund and of the Manager respectively,
directors, officers and agents and stockholders of the Fund
are or may be interested in the Manager (or any successor
thereof) as directors, officers or partners or otherwise;
directors, officers, agents and partners of the Manager are or
may be interested in the Fund as directors, officers,
stockholders or otherwise; the Manager (or any successor) is
or may be interested in the Fund as stockholder or otherwise;
and the effect of any such interrelationships shall be
governed by said corporate charters and provisions of the
Investment Company Act of 1940.
6. This contract shall continue in effect until
the first meeting of the Account Owners of the Fund and if
<PAGE> B-4
<PAGE>
approved therein until December 1, 1976, and thereafter only
so long as such continuance is approved at least annually by
votes of the Fund'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, in person at
a meeting called for the purpose of voting such approval. In
addition the question of continuance of the 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 the Fund voting as a simple class. Provided,
however, that (1) this contract may at any time be terminated
without payment of any penalty either by vote of the Board of
Directors of the Fund or by vote of a majority of the
outstanding voting securities of the Fund, on sixty days
written notice to the Manager, (2) this contract shall
automatically terminate in the event of its assignment (within
the meaning of the Investment Company Act of 1940), and (3)
this contract may be terminated by the Manager on sixty days
written notice to the 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.
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
<PAGE> B-5
<PAGE>
Section 2(a)(19) and Section 2(a)(42) of the Investment
Company Act of 1940.
7. The services of the Manager to the 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 the Fund
in any way or otherwise be deemed an agent of the Fund.
8. No provisions of this contract shall be deemed
to protect the Manager against any liability to the Fund or
its stockholders to which it might otherwise be subject by
reason 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 provisions hereof be deemed to protect any director or
officer of the Fund 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> B-6
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused
this contract to be executed on the day and year first above
written.
FUND FOR GOVERNMENT INVESTORS,
INC.
WITNESS
By /s/ J. Michael Farrell
Secretary
/s/ Rosemary D. Vance
MONEY MANAGEMENT ASSOCIATES
WITNESS
By /s/ Daniel L. O'Connor
Partner
/s/ Patricia F. Havener
<PAGE> B-7
<PAGE>
AMENDMENT TO
MANAGEMENT CONTRACT
Between
FUND FOR GOVERNMENT INVESTORS, INC.
And
MONEY MANAGEMENT ASSOCIATES
Section 4. of this Management Contract between Fund for
Government Investors, Inc. and Money Management Associates
dated December 2, 1974, referring to the compensation to be
paid by the Fund to the Manager is amended as follows:
Delete: the Fund shall pay the Manager an annual fee of one-
half of one percent of the average daily net asset
value,
Add: The Fund shall pay the Manager an annual fee of .50%
of the first $500 million of 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,
WITNESS FUND FOR GOVERNMENT INVESTORS,
INC.
/s/ Lisa D. Kniotek by /s/ Richard J. Garvey
Secretary
WITNESS MONEY MANAGEMENT ASSOCIATES
/s/ Glenda Cherry by /s/ Daniel L. O'Connor
Partner
<PAGE>
Date: 6-5-80
<PAGE> B-9
<PAGE>
AMENDMENT TO
MANAGEMENT CONTRACT
Between
FUND FOR GOVERNMENT INVESTORS, INC.
And
MONEY MANAGEMENT ASSOCIATES
Pursuant to Section 205 of the Investment Advisers Act of
1940, the following amends the Management Contract between
Fund for Government Investors, Inc. and Money Management
Associates, dated December 2, 1974:
Money Management Associates will notify
Fund for Government Investors, Inc. of
any change in the membership of such
partnership within a reasonable time
after such change.
FUND FOR GOVERNMENT INVESTORS,
INC.
WITNESS
By /s/ Richard J. Garvey
Secretary
/s/ Michael W. Gergulis
MONEY MANAGEMENT ASSOCIATES
WITNESS
By /s/ Daniel L. O'Connor
Partner
/s/ Rita A. Gardner
Date: 6-1-76
<PAGE> B-10
<PAGE>
APPENDIX C:
CURRENT PROSPECTUS OF
FUND FOR GOVERNMENT INVESTORS, INC.,
DATED MARCH 27, 1996
<PAGE>
<PAGE>
FUND FOR GOVERNMENT INVESTORS, INC.
A Money Market Fund
4922 Fairmont Avenue, Bethesda, Maryland 208l4
(800) 343-3355
(301) 657-1500
Fund For Government Investors, Inc. (the "Fund") is an
investment company that invests in short-term marketable debt
securities issued by the United States Government, its
agencies and instrumentalities, and repurchase agreements
secured by such securities, with the sole objective of
achieving current income with safety of principal.
Investors should read this Prospectus and retain it for future
reference. It is designed to set forth concisely the
information an investor should know before investing in the
Fund. A Statement of Additional Information, dated March 27,
1996, containing additional information about the Fund has
been filed with the Securities and Exchange Commission and is
incorporated herein by reference. A copy of the Statement of
Additional Information may be obtained, without charge, by
writing or telephoning the Fund.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK AND ARE NOT GUARANTEED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR
ANY OTHER U.S. GOVERNMENT AGENCY.
THE SECURITIES OF THE FUND ARE NEITHER INSURED NOR GUARANTEED
BY THE U.S. GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE
FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE.
The date of this Prospectus and of the Statement of Additional
Information is March 27, 1996.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> C-1
<PAGE>
FEE TABLE
The following table illustrates all expenses and fees that a
shareholder of the Fund will incur:
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases,
Including Reinvested Dividends
(as a percentage of offering price) None
Redemption Fees None
Exchange Fees None
Monthly Account Fee (for accounts under $500) $5.00
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 0.50 %
12b-1 Fees None
Other Expenses 0.25 %
Total Fund Operating Expenses 0.75 %
Example
Assuming a hypothetical investment of $1,000 in the Fund, a 5%
annual return, and redemption at the end of each time period,
an investor in the Fund would pay transaction and operating
expenses at the end of each year as follows:
1 Year 3 Years 5 Years 10 Years
$ 8 $ 25 $ 43 $ 95
The same level of expenses would be incurred if the investment
were held throughout the period indicated.
The preceding table of fees and expenses is provided to assist
investors in understanding the various costs and expenses that
an investor in the Fund will incur directly or indirectly.
The percentages shown above are based on actual expenses
incurred by the Fund. The 5% assumed annual return is for
comparison purposes only. The actual annual return for the
Fund may be more or less depending on market conditions, and
the actual expenses an investor incurs in future periods may
be more or less than those shown above and will depend on the
amount invested and on the actual growth rate of the Fund.
<PAGE> C-2
<PAGE>
The example should not be considered a representation of past
or future expenses. For more complete information about the
various costs and expenses of the Fund, see "Management of the
Fund" in the Prospectus and in the Statement of Additional
Information.
<PAGE> C-3
<PAGE>
Fund For Government Investors, Inc.
FINANCIAL HIGHLIGHTS
Audited
<TABLE>
<CAPTION>
For the Year Ended December 31,
1995 1994 1993 1992
<S> <C> <C> <C> <C>
Per share Operating
Performance:
Net Asset Value -
Beginning of Year $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income 0.049 0.033 0.023 0.030
Net Realized and
Unrealized Gains on
Securities --- --- --- ---
Net Increase in Net Asset
Value Resulting from
Operations 0.049 0.033 0.023 0.030
Dividends to Shareholders (0.049) (0.033) (0.023) (0.030)
Distributions to
Shareholders from Net
Realized Capital Gains --- --- --- ---
Net Increase in Net Asset
Value 0.00 0.00 0.00 0.00
Net Assets Value - End of
Year $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Investment Return 5.04% 3.38% 2.37% 3.02%
Ratios to Average Net
Assets:
Expenses 0.74% 0.75% 0.75% 0.71%
Net Investment Income 4.93% 3.31% 2.32% 3.00%
Supplementary Data:
Portfolio Turnover Rate --- --- --- ---
Number of Shares
Outstanding at End of
Year (000's omitted) 577,194 524,154 600,766 751,925
<PAGE> C-4
<PAGE>
For the Year Ended December 31,
1991 1990 1989
<S> <C> <C> <C>
Per share Operating
Performance:
Net Asset Value -
Beginning of Year $ 1.00 $ 1.00 $ 1.00
Net Investment Income 0.053 0.071 0.082
Net Realized and
Unrealized Gains on
Securities --- --- ---
Net Increase in Net Asset
Value Resulting from
Operations 0.053 0.071 0.082
Dividends to Shareholders (0.053) (0.071) (0.082)
Distributions to
Shareholders from Net
Realized Capital Gains --- --- ---
Net Increase in Net Asset
Value 0.00 0.00 0.00
Net Assets Value - End of
Year $ 1.00 $ 1.00 $ 1.00
Total Investment Return 5.38% 7.38% 8.51%
Ratios to Average Net
Assets:
Expenses 0.69% 0.71% 0.72%
Net Investment Income 5.29% 7.13% 8.19%
Supplementary Data:
Portfolio Turnover Rate --- --- ---
Number of Shares
Outstanding at End of
Year (000's omitted) 796,655 857,418 704,479
<PAGE> C-5
<PAGE>
For the Year Ended December 31,
1988 1987 1986
<S> <C> <C> <C>
Per share Operating
Performance:
Net Asset Value -
Beginning of Year $ 1.00 $ 1.00 $ 1.00
Net Investment Income 0.064 0.057 0.058
Net Realized and
Unrealized Gains on
Securities --- --- ---
Net Increase in Net Asset
Value Resulting from
Operations 0.064 0.057 0.058
Dividends to Shareholders (0.064) (0.057) (0.058)
Distributions to
Shareholders from Net
Realized Capital Gains --- --- ---
Net Increase in Net Asset
Value 0.00 0.00 0.00
Net Assets Value - End of
Year $ 1.00 $ 1.00 $ 1.00
Total Investment Return 6.66% 5.81% 5.97%
Ratios to Average Net
Assets:
Expenses 0.73% 0.72% 0.73%
Net Investment Income 6.44% 5.66% 5.81%
Supplementary Data:
Portfolio Turnover Rate --- --- ---
Number of Shares
Outstanding at End of
Year (000's omitted) 634,723 695,554 686,195
</TABLE>
The auditors report is incorporated by reference in the
registration statement. The auditors report and further
information about the performance of the Fund are contained in
the annual report to shareholders which may be obtained
without charge by calling or writing the Fund.
<PAGE> C-6
<PAGE>
PERFORMANCE DATA
From time to time the Fund advertises its "yield" and
"effective yield". Both yield figures are based on historical
earnings and are not intended to indicate future performance.
The yield of the Fund refers to the income generated by an
investment in the Fund over a seven-day period (which period
will be stated in the advertisement). This income is then
"annualized". That is, the amount of income generated by the
investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of the
investment. The effective yield is calculated similarly, but,
when annualized, the income earned by the investment in the
Fund is assumed to be reinvested. The "effective yield" will
be slightly higher than the "yield" because of the compounding
effect of this assumed reinvestment. Comparative performance
and relative ranking information may be used from time to time
in advertising or marketing the Fund s shares, including data
from Lipper Analytical Services, Inc., Donoghue s Money Fund
Report and other industry publications.
For the seven day period ended December 31, 1995, the Fund s
annualized average yield was 4.64%. The effective annual
yield was 4.75%.
INVESTMENT OBJECTIVE AND POLICIES
General
The sole objective of the Fund is to achieve current income
with safety of principal. Although there is no assurance that
this objective will be achieved, the Fund will pursue this
objective by investing exclusively in marketable debt
securities issued by the United States Government or by
agencies and instrumentalities of the U.S. Government
(collectively, "U.S. Government Securities") and in repurchase
agreements secured by U.S. Government Securities. Repurchase
agreements are fully collateralized, but the value of the
underlying collateral may be affected by sharp fluctuations in
short-term interest rates.
The Fund will invest in short-term United States Government
Securities, including U.S. Treasury bills, U.S. Treasury
notes, and U.S. Treasury bonds that mature within one year.
All securities purchased by the Fund are held by the Fund's
custodian bank, Rushmore Trust and Savings, FSB (the
"Custodian"). U.S. Treasury securities are backed by the full
faith and credit of the United States Government.
The Fund may not borrow money, except that as a temporary
measure the Fund may borrow money to facilitate redemptions.
Such a borrowing may be in an amount not to exceed 30% of the
<PAGE> C-7
<PAGE>
Fund's total assets, taken at current value before such
borrowing. The Fund may borrow only to accommodate requests
for redemption of shares of the Fund while effecting an
orderly liquidation of portfolio securities.
The investment objective and the investment policies of the
Fund may not be changed without the approval of a majority of
the shareholders, as defined in the Investment Company Act of
1940.
U.S. Government Securities
U.S. Treasury securities are backed by the full faith and
credit of the U.S. Treasury. U.S. Treasury securities differ
only in their interest rates, maturities, and dates of
issuance. Treasury bills have maturities of one year or less.
Treasury notes have maturities of one to ten years, and
Treasury bonds generally have maturities of greater than ten
years at the date of issuance. Yields on short-,
intermediate-, and long-term U.S. Government Securities are
dependent on a variety of factors, including the general
conditions of the money and bond markets, the size of a
particular offering, and the maturity of the obligation. Debt
securities with longer maturities tend to produce higher
yields and are generally subject to potentially greater
capital appreciation and depreciation than obligations with
shorter maturities and lower yields. The market value of U.S.
Government Securities generally varies inversely with changes
in market interest rates. An increase in interest rates,
therefore, would generally reduce the market value of the
Fund s portfolio investments in U.S. Government Securities,
while a decline in interest rates would generally increase the
market value of the Fund s portfolio investments in these
securities.
Certain U.S. Government Securities are issued or guaranteed by
agencies or instrumentalities of the U.S. Government
including, but not limited to, obligations of U.S. Government
agencies or instrumentalities such as the Federal National
Mortgage Association, the Government National Mortgage
Association, the Small Business Administration, the Export-
Import Bank, the Federal Farm Credit Administration, the
Federal Home Loan Banks, Banks for Cooperatives (including the
Central Bank for Cooperatives), the Federal Land Banks, the
Federal Intermediate Credit Banks, the Tennessee Valley
Authority, the Export-Import Bank of the United States, the
Commodity Credit Corporation, the Federal Financing Bank, the
Student Loan Marketing Association, and the National Credit
Union Administration.
Some obligations issued or guaranteed by agencies or
instrumentalities of the U.S. Government are backed by the
<PAGE> C-8
<PAGE>
full faith and credit of the U.S. Treasury. Such agencies and
instrumentalities may borrow funds from the U.S. Treasury.
However, no assurances can be given that the U.S. Government
will provide such financial support to the obligations of the
other U.S. Government agencies or instrumentalities in which
the Fund invests, since the U.S. Government is not obligated
to do so. These other agencies and instrumentalities are
supported by either the issuer s right to borrow, under
certain circumstances, an amount limited to a specific line of
credit from the U.S. Treasury, the discretionary authority of
the U.S. Government to purchase certain obligations of an
agency or instrumentality, or the credit of the agency or
instrumentality itself.
U.S. Government Securities may be purchased at a discount.
Such securities, when held to maturity or retired, may include
an element of capital gain. Capital losses may be realized
when such securities purchased at a premium are held to
maturity or are called or redeemed at a price lower than their
purchase price. Capital gains or losses also may be realized
upon the sale of securities.
Repurchase Agreements
The Fund may also invest in repurchase agreements secured by
U.S. Government Securities. Under a repurchase agreement, the
Fund purchases a debt security and simultaneously agrees to
sell the security back to the seller at a mutually agreed-upon
future price and date, normally one day or a few days later.
The resale price is greater than the purchase price,
reflecting an agreed-upon market interest rate during the
purchaser s holding period. While the maturities of the
underlying securities in repurchase transactions may be more
than one year, the term of each repurchase agreement will
always be less than one year. The Fund will enter into
repurchase agreements only with member banks of the Federal
Reserve System or primary dealers of U.S. Government
Securities. The Fund's investment adviser will monitor the
creditworthiness of each of the firms which is a party to a
repurchase agreement with the Fund. In the event of a default
or bankruptcy by the seller, the Fund will liquidate those
securities (whose market value, including accrued interest,
must be at least equal to 100% of the dollar amount invested
by the Fund in each repurchase agreement) held under the
applicable repurchase agreement, which securities constitute
collateral for the seller s obligation to pay. However,
liquidation could involve costs or delays and, to the extent
proceeds from the sales of these securities were less than the
agreed-upon repurchase price, the Fund would suffer a loss.
The Fund also may experience difficulties and incur certain
costs in exercising its rights to the collateral and may lose
the interest the Fund expected to receive under the repurchase
<PAGE> C-9
<PAGE>
agreement. Repurchase agreements usually are for short
periods, such as one week or less, but may be longer. It is
the current policy of the Fund to treat repurchase agreements
that do not mature within seven days as illiquid for the
purposes of the Fund's investment policies.
DIVIDENDS
The Fund distributes all of its net income on a daily basis.
Dividends are declared on each day that the Fund is open for
business. Investors receive dividends in the form of
additional shares unless they elect to receive cash. Payment
is made in additional shares at the net asset value on the
payable date or in cash, on a monthly basis. To change the
method of receiving dividends, investors must notify the Fund
in writing at least one week before payment is to be made.
Net income of the Fund shall consist of all interest income
accrued and discount earned, plus or minus any realized gains
or losses, less estimated expenses of the Fund. The Fund does
not expect to realize any long-term capital gains.
NET ASSET VALUE
The Fund's net asset value per share will be determined as of
12:00 noon, Eastern time, on days when the Custodian bank is
open for business. The net asset value per share is
determined by adding the appraised value of all securities and
all other assets, deducting liabilities and dividing by the
number of shares outstanding. The value of the Fund's
portfolio of securities is determined on the basis of fair
value as determined in good faith by the Fund's Directors. In
determining fair value, the Fund uses the amortized cost
method of valuing the securities in its portfolio pursuant to
an exemption granted to it by the Securities and Exchange
Commission on August 8, 1979.
INVESTORS ACCOUNTS
The Fund maintains an account for each investor in full and
fractional shares. Statements of account will be sent monthly
showing the beginning balance and the ending balance and
detailing transactions for the month. Confirmations of
individual transactions will not be sent.
The Fund reserves the right to reject any purchase order. All
accounts will be held in book entry form. No certificates for
shares will be issued.
LOW BALANCE ACCOUNT FEE
<PAGE> C-10
<PAGE>
In addition to charges described elsewhere in this Prospectus,
the Fund may impose a charge of $5 per month for any account
whose month-end balance is below $500. The fee will continue
to be imposed during the months when the account balance
remains below $500. The fee will be imposed on the last
business day of the month. This fee will be paid to Rushmore
Trust and Savings, FSB. The fee will not be imposed on tax-
sheltered retirement plans or accounts established under the
Uniform Gifts or Transfers to Minors Act. Because of the
administrative expense of handling small accounts, the Fund
reserves the right to involuntarily redeem an investor's
account which falls below $500 due to redemptions or exchanges
after providing 60 days' written notice.
TAXES
The Fund intends to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code. Because of
this qualification, the Fund will not be liable for Federal
income taxes to the extent its earnings are distributed.
Dividends derived from interest and dividends received by the
Fund, together with distributions of any short-term capital
gains, are taxable as ordinary income whether or not
reinvested. Statements as to the Federal tax status of
shareholders' dividends and distributions will be mailed
annually. Shareholders should consult their tax advisers
concerning the tax status of the Fund's dividends in their own
states and localities.
Shareholders are required by law to certify that their tax
identification number is correct and that they are not subject
to back-up withholding. In the absence of this certification,
the Fund is required to withhold taxes at the rate of 31% on
dividends, capital gains distributions, and redemptions.
Shareholders who are non-resident aliens may be subject to a
withholding tax on dividends earned.
HOW TO INVEST IN THE FUND
Shares of the Fund are offered for sale continuously by the
Fund. There is no sales charge. The minimum initial
investment is $2,500. Retirement accounts may be opened with a
$500 minimum investment. There is no minimum amount for
subsequent investments.
By Mail. Fill out an application and make a check payable to
"Fund For Government Investors, Inc." Mail the check, and the
completed application to:
Fund For Government Investors, Inc.
4922 Fairmont Avenue
<PAGE> C-11
<PAGE>
Bethesda, Maryland 208l4
By Bank Wire. Speak to the Branch Manager of your bank.
Request a transfer of Federal funds to Rushmore Trust and
Savings, FSB, instructing the bank to wire transfer the money
before 12 noon, Eastern time to:
Rushmore Trust and Savings, FSB
Bethesda, Maryland
Routing No. 0550-71084
For Account of Fund For Government Investors, Inc.
Account No. 029385770
AFTER INSTRUCTING YOUR BANK TO TRANSFER FEDERAL FUNDS, YOU
MUST TELEPHONE THE FUND AT (800) 622-1386 OR (301) 657-1510
BETWEEN 8:30 A.M. AND NOON EASTERN TIME AND TELL US THE AMOUNT
YOU TRANSFERRED AND THE NAME OF THE BANK SENDING THE TRANSFER.
YOUR BANK MAY CHARGE A FEE FOR SUCH SERVICES. REMEMBER THAT
IT IS IMPORTANT TO COMPLETE THE WIRE TRANSFER BEFORE 12 NOON
EASTERN TIME.
Through Brokers. Investors may invest in the Fund by
purchasing shares through registered broker-dealers. Such
broker-dealers who process orders may charge a fee for such
service.
The Government securities market, in which the Fund buys and
sells its securities, usually requires immediate settlement in
Federal funds for all security transactions. Payments
received by bank wire can be converted immediately into
Federal funds and will begin earning dividends the same day.
Payment for the purchase of Fund shares not received in the
form of Federal funds will begin earning dividends the
following day. Foreign checks will not be accepted. Orders
received prior to 12 noon, Eastern time, will be invested in
shares of the Fund at the next determined net asset value.
The Fund may impose a charge of $10 for items returned for
insufficient or uncollectible funds.
HOW TO REDEEM AN INVESTMENT (WITHDRAWALS)
An investor may withdraw all or any portion of his investment
by redeeming shares on any day that the Fund is open for
business at the next determined net asset value per share
after receipt of the order by writing the Fund or telephoning
(800) 622-1386 or (301) 657-1510. Telephone redemption
privileges may be terminated or modified by the Fund upon 60
days notice to all shareholders of the Fund. Telephone orders
for redemptions must be received by noon Eastern time to be
effective that day. The privilege to initiate redemption
transactions by telephone will be made available to Fund
shareholders automatically.
<PAGE> C-12
<PAGE>
Telephone redemptions will only be sent to the address of
record or to bank accounts specified in the account
applications. When acting on instructions believed to be
genuine, the Fund will not be liable for any loss resulting
from a fraudulent telephone redemption request and the
investor would bear the risk of any such loss. The Fund will
employ reasonable procedures to confirm that redemption
instructions communicated by telephone are genuine; and if the
Fund does not employ such procedures, then the Fund may be
liable for any losses due to unauthorized or fraudulent
instructions. The Fund follows specific procedures for
transactions initiated by telephone, including among others
requiring some form of personal identification prior to acting
on instructions received by telephone, providing written
confirmation not later than five business days after such
transactions, and/or tape recording of telephone transactions.
The proceeds of redemptions will be sent directly to the
investor's address of record. If the investor requests
payment of redemptions to a third party or to a location other
than his address of record listed on the account application,
the request must be in writing and the investor's signature
must be guaranteed by an eligible institution. Eligible
institutions generally include banking institutions,
securities exchanges, associations, agencies or
broker/dealers, and "STAMP" program participants. There are
no fees charged for redemptions.
Normally, the Fund will make payment for all shares redeemed
within one business day. However, withdrawal requests upon
investments that have been made by check may be delayed up to
ten calendar days following such investment or until the check
clears, whichever occurs first. This delay is necessary to
assure the Fund that investments made by check are good funds.
The proceeds of the redemption will be forwarded promptly upon
confirmation of receipt of good funds.
The right of redemption may be suspended, or the date of
payment postponed during the following periods: (a) periods
during which the New York Stock Exchange (the "NYSE") is
closed (other than customary weekend or holiday closings); (b)
periods when trading on the NYSE is restricted, or an
emergency exists, as determined by the Securities and Exchange
Commission, so that disposal of the Fund s investments for
determination of net asset value is not reasonably
practicable; or (c) for such other periods as the Commission,
by order, may permit for protection of the Fund s investors.
To provide the utmost liquidity for investors' money, there
are four forms of redemption:
<PAGE> C-13
<PAGE>
Bank Wire Transfers. When the amount to be redeemed is at
least $5,000, the Fund, upon telephone instructions, will
automatically wire transfer the amount to the investor's
commercial bank or brokerage account specified in the account
application. The Fund will also accept written instructions
for wire transfers of funds.
Check Transfers. For amounts less than $5,000, investors
utilizing certain Washington, D.C. banks may have checks
deposited directly into their account. For redemptions by
investors utilizing banks in other states, including Virginia
and Maryland, checks will be delivered by mail.
Draft Checks. Investors may elect to redeem shares by draft
check (minimum check - $250) made payable to the order of any
person or institution. Upon the Fund's receipt of a completed
signature card, investors will be supplied with draft checks
which are drawn on the Fund's account and are paid through
Rushmore Trust and Savings, FSB. The Fund reserves the right
to change or suspend the checking service and to charge for
the reorder of draft checks. These draft checks cannot be
certified, nor can these checks be negotiated for cash at
Rushmore Trust and Savings, FSB. There will be a $10 charge
for each stop payment request on the draft checks. Investors
will be subject to the same rules and regulations that
Rushmore Trust and Savings, FSB applies to checking accounts.
Investors' accounts may not be closed by draft check.
Exchanges. Shares of the Fund may be exchanged for shares of
Fund For Tax-Free Investors, Inc., The Rushmore Fund, Inc.,
the American Gas Index Fund, Inc., or the Cappiello-Rushmore
Trust on the basis of the respective net asset values of the
shares involved, provided such exchange is permitted under the
applicable laws of the state of the investor's residence.
Shareholders contemplating such an exchange should obtain and
review the prospectuses of those funds. Exchanges may be made
by telephone or letter. Written requests should be sent to
Fund For Government Investors, Inc., 4922 Fairmont Avenue,
Bethesda, Maryland 20814 and be signed by the record owner or
owners. Telephone exchange requests may be made by
telephoning the Fund at (800) 622-1386 or (301) 657-1510. To
implement an exchange, shareholders should provide the
following information: account registration including address
and number, taxpayer identification number, number, percentage
or dollar value of shares to be redeemed, name and account
number of the portfolio to which the investment is to be
transferred. Exchanges may be made only if they are between
identically registered accounts. Telephone exchange
privileges may be terminated or modified by the Fund upon 60
days notice to all shareholders of the Fund.
TAX-SHELTERED RETIREMENT PLANS
<PAGE> C-14
<PAGE>
Tax-Sheltered Retirement Plans of the following types are
available to investors:
Individual Retirement Accounts (IRAs)
Keogh Accounts - Defined Contribution
Plan (Profit Sharing Plan)
Keogh Accounts - Money Purchase Plan
(Pension Plan)
Internal Revenue Code Section 401(k) Plans
Internal Revenue Code Section 403(b) Plans
Additional information regarding these accounts may be
obtained by contacting the Fund.
MANAGEMENT OF THE FUND
Officers and Directors. The Fund has a Board of Directors
which is responsible for the general supervision of the Fund s
business. The day-to-day operations of the Fund are the
responsibility of the Fund's officers. A complete list of the
Fund's directors and officers is provided in the Statement of
Additional Information.
Investment Adviser and Administrative Servicing Agent. The
Fund is provided investment advisory and management services
by Money Management Associates (the "Adviser"), 1001 Grand
Isle Way, Palm Beach Gardens, Florida 33418. The Adviser is
a limited partnership which was formed under the laws of the
District of Columbia on August 15, 1974. Its primary business
since inception has been to serve as the investment adviser of
the Fund. Daniel L. O'Connor is the sole general partner of
the Adviser, and, as such, exercises control of the Adviser.
Money Management Associates provides investment advice and
management to other mutual funds including The Rushmore Fund,
Inc., Fund For Tax-Free Investors, Inc., and the American Gas
Index Fund, Inc. Net assets under management currently
approximate $1 billion.
Under an agreement with the Adviser, the Fund pays a fee at an
annual rate based on the size of the Fund s net assets as
follows:
0.50% of the first $500 million;
0.45% of the next $250 million;
0.40% of the next $250 million;
0.35% of the net assets over $1 billion.
For the year ended December 31, 1995, the Fund paid the
Adviser investment advisory fees of 0.49% (49/100 of 1%) of
the average daily net assets of the Fund.
<PAGE> C-15
<PAGE>
Effective September 1, 1993, the Board of Directors approved
an arrangement whereby Rushmore Trust and Savings, FSB, 4922
Fairmont Avenue, Bethesda, Maryland 20814, a majority-owned
subsidiary of the Adviser, provides the Fund with custodial
services, transfer agency, dividend disbursing, and other
shareholder services. The Fund pays an annual fee of 0.25%
(25/100 of 1%) of the average daily net assets of the Fund for
these services.
ORGANIZATION AND DESCRIPTION OF COMMON STOCK
The Fund is a no-load, open-end diversified investment
company. The Fund was incorporated in Maryland on October 30,
1974 and has a present authorized capital of three billion
shares of $.001 par value common stock. All shares are of the
same class and are freely transferrable. Shares have equal
voting rights, and no preferences to conversion, exchange,
dividends, retirement or any other feature. These shares have
non-cumulative voting rights, which means that the holders of
more than 50% of the shares voting for the election of
Directors can elect 100% of the Directors, if they choose to
do so. In such event, the holders of the remaining shares
voting (less than 50%) will be unable to elect any Directors.
Under Maryland Corporate law, a registered investment company
is not required to hold an annual shareholders meeting if the
Investment Company Act of 1940 does not require a meeting.
The Act does require a meeting if the following actions are
necessary: ratification of the selection of independent public
accountants, approval of the investment advisory agreement,
election of the board of directors or approval of the
appointment of directors to board vacancies when such
vacancies cause less than two-thirds of the board to have been
elected.
Under the Investment Company Act of 1940, shareholders of the
Fund have the right to remove directors and, if holders of 10%
of the outstanding shares request in writing, a shareholder's
meeting must be called.
Shareholders of the Fund having inquiries about the Fund s
organization or operation should contact the Fund in writing
at 4922 Fairmont Avenue, Bethesda, Maryland 20814 or by
telephone at (301) 657-1500 or (800) 343-3355.
<PAGE> C-16
<PAGE>
FUND FOR GOVERNMENT INVESTORS, INC.
PROSPECTUS
CONTENTS
Page
Fee Table . . . . . . . . . . . . . . . . . . . . . . . . . 2
Financial Highlights . . . . . . . . . . . . . . . . . . . 3
Performance Data . . . . . . . . . . . . . . . . . . . . . 4
Investment Objective and Policies . . . . . . . . . . . . . 4
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . 6
Net Asset Value . . . . . . . . . . . . . . . . . . . . . . 6
Investors' Accounts . . . . . . . . . . . . . . . . . . . . 7
Low Balance Account Fee . . . . . . . . . . . . . . . . . . 7
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
How to Invest in the Fund . . . . . . . . . . . . . . . . . 7
How to Redeem an Investment
(Withdrawals) . . . . . . . . . . . . . . . . . . . . . . 8
Tax-Sheltered Retirement Plans . . . . . . . . . . . . . . 10
Management of the Fund . . . . . . . . . . . . . . . . . . 10
Organization and Description of
Common Stock . . . . . . . . . . . . . . . . . . . . . . 11
<PAGE> C-17
<PAGE>
APPENDIX D:
CURRENT PROSPECTUS OF
THE RUSHMORE MONEY MARKET PORTFOLIO,
DATED JANUARY 1, 1996
<PAGE>
<PAGE>
THE RUSHMORE FUND, INC.
4922 Fairmont Avenue
Bethesda, Maryland 20814
(800) 343-3355
(301) 657-1500
RUSHMORE MONEY MARKET PORTFOLIO
INVESTMENT OBJECTIVES AND POLICIES
The Rushmore Money Market Portfolio (the "Portfolio") is one
of a series of portfolios in The Rushmore Fund, Inc. (the
"Fund"), an open-end management investment company. The
objective of the Portfolio is to provide investors with
maximum current income to the extent that such investment is
consistent with safety of principal. To attain this
investment objective, the Portfolio will invest in U.S.
Government and agency securities, bank money market
instruments, and commercial paper.
The shares offered by this Prospectus are not deposits or
obligations of any bank, are not endorsed or guaranteed by any
bank, and are not insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other
governmental agency.
ADDITIONAL INFORMATION
Investors should read this prospectus and retain it for future
reference. It is designed to set forth concisely the
information an investor should know before investing in the
Fund. A Statement of Additional Information dated January 1,
1996 containing additional information about the Fund has been
filed with the Securities and Exchange Commission and is
incorporated herein by reference. A copy of the Statement may
be obtained, without charge, by writing or telephoning the
Fund.
The securities of the Portfolio are neither insured nor
guaranteed by the U.S. Government and there can be no
assurance that the Portfolio will be able to maintain a stable
net asset value of $1.00 per share.
The date of this Prospectus is January 1, 1996.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
<PAGE>
FEE TABLE
The following table illustrates all expenses and fees that a
shareholder of the Portfolio will incur:
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases . . . . . . . . . . None
Sales Load Imposed on Reinvested Dividends . . . . . None
Deferred Sales Load . . . . . . . . . . . . . . . . None
Redemption Fees . . . . . . . . . . . . . . . . . . None
Exchange Fees . . . . . . . . . . . . . . . . . . . None
Monthly Account Fee (for accounts under $500)* . . $5.00
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees. . . . . . . . . . . . . . . . . 0.50%
12b-1 Fees . . . . . . . . . . . . . . . . . . . None
Other Expenses . . . . . . . . . . . . . . . . . 0.25%
Total Fund Operating Expenses . . . . . . . . . 0.75%
* A charge of $5 per month may be imposed on any account
whose average daily balance for the month falls below
$500 due to redemptions. See "Transaction Charges."
EXAMPLE
You would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return and (2) redemption at the end of
each time period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$8 $25 $43 $95
The same level of expenses would be incurred if the investment
were held throughout the period indicated.
The purpose of this table is to assist the investor in
understanding the various expenses that an investor in the
Portfolio will bear directly or indirectly. The five percent
assumed annual return is for comparison purposes only. The
actual return may be more or less depending on market
conditions. The example should not be considered a
<PAGE> D-2
<PAGE>
representation of past or future expenses. Actual expenses
may be greater or less than those shown. For more complete
information about the various costs and expenses, see
"Management of the Fund" in this Prospectus and Statement of
Additional Information.
<PAGE> D-3
<PAGE>
THE RUSHMORE FUND, INC.
Financial Highlights
Rushmore Money Market Portfolio
<TABLE>
<CAPTION>
For the Year Ended August 31,
1995 1994 1993
<S> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value - Beginning
of Year . . . . . . . . . $1.00 $1.00 $1.00
Net Investment Income. . . . . . . . . . .0.049 0.027 0.024
Net Realized and Unrealized
Gains (Losses)
on Securities . . . . . -- -- --
Net Increase in Net Asset
Value
Resulting from Operations 0.049 0.027 0.024
Dividends to Shareholders (0.049) (0.027) (0.024)
Distributions to
Shareholders from Net
Realized
Capital Gains . . . . . -- -- --
Net Increase (Decrease) in
Net Asset Value . . . . .
0.00 0.00 0.00
Net Asset Value - End of Year. . . . . . . . . . . $1.00 $1.00 $1.00
Total Investment Return . . 5.03% 2.88% 2.43%
Ratios to Average Net
Assets:
Expenses . . . . . . . . .
0.75% 0.75% 0.78%
Net Investment Income . . . 4.92% 2.73% 2.40%
Supplementary Data:
Portfolio Turnover Rate .
-- -- -- Number of Shares
Outstanding at End of Year
(000s omitted) . . . .
21,985 22,261 56,759
</TABLE>
<PAGE> D-4
<PAGE>
THE RUSHMORE FUND, INC.
Financial Highlights
Rushmore Money Market Portfolio
Audited
<TABLE>
<CAPTION>
1992 1991 1990
<S> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value - Beginning
$1.00 $1.00 $1.00 of Year. . . . . . . . .
Net Investment Income . . 0.037 0.061 0.076
Net Realized and Unrealized
Gains (Losses)
on Securities . . . . . -- -- --
Net Increase in Net Asset
Value
Resulting from Operations
Dividends to Shareholders 0.037 0.061 0.076
Distributions to (0.037) (0.061) (0.076)
Shareholders from Net
Realized
Capital Gains . . . . . -- -- --
Net Increase (Decrease) in
Net Asset Value . . . . .
0.00 0.00 0.00
Net Asset Value - End of
Year . . . . . . . . . .
$1.00 $1.00 $1.00
Total Investment Return . . 3.71% 6.33% 7.92%
Ratios to Average Net
Assets:
Expenses . . . . . . . . 0.80% 0.79% 0.80%
Net Investment Income . . 3.71% 6.14% 7.62%
Supplementary Data:
Portfolio Turnover Rate . -- -- --
Number of Shares
Outstanding at End of Year
(000's omitted) . . . . 98,606 115,539 140,718
</TABLE>
<PAGE> D-5
<PAGE>
THE RUSHMORE FUND, INC.
Financial Highlights
Rushmore Money Market Portfolio
Audited
<TABLE>
<CAPTION>
1989 1988 1987 1986*
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value - Beginning of
Year . . . . . . . . . . . .
$1.00 $1.00 $1.00 $1.00
Net Investment Income . . . . 0.084 0.065 0.063 0.041
Net Realized and Unrealized
Gains (Losses)
on Securities . . . . . . . -- -- -- --
Net Increase in Net Asset Value
Resulting from Operations . 0.084 0.065 0.063 0.041
Dividends to Shareholders . . (0.084) (0.065) (0.063) (0.041)
Distributions to Shareholders
from Net Realized
Capital Gains . . . . . . . -- -- -- --
Net Increase (Decrease) in Net
Asset Value . . . . . . . . . 0.00 0.00 0.00 0.00
Net Asset Value - End of Year
$1.00 $1.00 $1.00 $1.00
Total Investment Return . . . . 8.64% 6.47% 5.59% 4.40%
Ratios to Average Net Assets:
Expenses . . . . . . . . . .
Net Investment Income . . . . 0.80% 0.82% 0.76% 1.00%
8.35% 6.37% 6.33% 5.88%
Supplementary Data:
Portfolio Turnover Rate . . . -- -- -- --
Number of Shares Outstanding at
End of Year
(000's omitted) . . . . . . . 84,549 54,789 10,465 1,027
</TABLE>
<PAGE> D-6
<PAGE>
*From inception December 18, 1985.
The above financial highlights relating to the Portfolio, for
the periods identified, have been audited by Deloitte & Touche
LLP, independent certified public accountants, whose report
thereon appears in the Fund's 1995 Annual Report to
Shareholders for the Rushmore Money Market Portfolio and is
incorporated by reference in the Statement of Additional
Information. This information should be read in conjunction
with the financial statements and related notes thereto
included in the Statement of Additional Information. A copy
of the Fund's 1995 Annual Report to Shareholders for the
Rushmore Money Market Portfolio, and further information about
the performance of the Portfolio, may be obtained, without
charge, by contacting the Fund at 4922 Fairmont Avenue,
Bethesda, Maryland 20814, or by telephoning the Fund at (800)
343-3355 or (301) 657-1500.
PERFORMANCE DATA
From time to time the Portfolio advertises its "yield" and
"effective yield". Both yield figures are based on historical
earnings and are not intended to indicate future performance.
The "yield" of the Portfolio refers to the income generated by
an investment in the Portfolio over a seven-day period (which
period will be stated in the advertisement). This income is
then "annualized". That is, the amount of income generated by
the investment during that week is assumed to be generated
each week over a 52-week period and is shown as a percentage
of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an
investment in the Portfolio is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed
reinvestment.
For the seven day period ended August 31, 1995, the
Portfolio's annualized yield was 5.14%. The effective yield
was 5.27%.
INVESTMENT OBJECTIVE AND POLICIES
General
The investment objective of the Rushmore Money Market
Portfolio is to provide investors with maximum current income
<PAGE> D-7
<PAGE>
to the extent that such investment is consistent with safety
of principal. To attain this investment objective, the
Portfolio will invest in U.S. Government and agency
securities, bank money market instruments, and commercial
paper.
The Portfolio will limit its investments to those securities
that at the time of acquisition are "Eligible Securities." An
"Eligible Security" is one that is in one of the two highest
rating categories for short-term debt obligations given by the
Nationally Recognized Statistical Rating Organizations
("NRSRO"). In addition, the Portfolio will invest at least
95% of its total assets in instruments that receive the
highest NRSRO rating and not more than 5% of its total assets
in the securities of any single issuer. Up to 5% of the
Portfolio's total assets may be invested in securities that
receive the second highest NRSRO rating, however, not more
than the greater of 1 % of total assets or $1 million may be
invested in securities of any single issuer of such second
rated securities.
The Portfolio may also invest in short-term United States
Government securities, consisting primarily of Treasury Bills,
short-term notes of the Federal National Mortgage Association,
Federal Home Loan Banks and the Federal Farm Credit Agencies.
In addition, the Portfolio will invest in bonds, debentures
and notes of these issuers and other Federal agencies and
instrumentalities that mature within 397 calendar days.
All of the Portfolio's assets will consist of securities
maturing within 397 calendar days of purchase, and the dollar
weighted average maturity of the Portfolio will not exceed 90
days. The Portfolio will value its investment securities at
amortized cost and will seek to maintain a constant net asset
value of $1.00 per share.
Specialized Investment Practices and Risks
Repurchase Agreements and Federal Agency Securities
In order to effectively utilize cash reserves kept for
liquidity, the Portfolio may invest in repurchase agreements
secured by securities issued or guaranteed by the U.S.
Government, its agencies and instrumentalities and in
securities and certificates evidencing ownership of future
interest and principal payments on the above securities. A
repurchase agreement arises when a buyer purchases a security
and simultaneously agrees to sell it to the seller at an
agreed upon future date, normally one day or a few days later.
<PAGE> D-8
<PAGE>
The resale price is greater than the purchase price,
reflecting an agreed upon market rate. A Portfolio may enter
into repurchase agreements only with member banks of the
Federal Reserve system or primary dealers of U.S. Government
securities. In the event of a default or bankruptcy by the
seller, the Portfolio will liquidate those securities held
under repurchase agreements. However, liquidation of the
securities could involve costs or delays and, to the extent
proceeds from their sale were less than the agreed upon
repurchase price, the Portfolio could suffer a loss.
While U.S. Treasury securities and those of the Government
National Mortgage Association and the Small Business
Administration are backed by the full faith and credit of the
United States, other Federal agency securities such as the
Federal Home Loan Banks and the Federal National Mortgage
Association are not guaranteed by the U.S. Treasury. These
Federal agency securities are supported by the ability to
borrow from the U. S. Treasury or by the credit of the agency
itself.
Lending of Securities
The Portfolio may lend its securities to National Association
of Securities Dealers, Inc. (the "NASD") registered broker-
dealers and Federal Reserve member banks for the purpose of
earning additional income. Such loans will be pursuant to
agreements requiring the broker-dealer or bank to fully and
continuously secure the loan by cash or other securities in
which the Portfolio may invest equal to the market value of
the securities loan. The Portfolio receives compensation for
lending its securities in the form of fees.
The Portfolio will enter into securities lending and
repurchase transactions only with parties who meet credit
worthiness standards approved by the Fund's Board of
Directors. In the event of a default or bankruptcy by a
seller or borrower, the Portfolio will promptly liquidate
collateral. However, the exercise of the Portfolio's right to
liquidate such collateral could involve certain costs or
delays and, to the extent that proceeds from any sale of
collateral on a default of the seller or borrower were less
than the seller's or borrower's obligation, the Portfolio
could suffer a loss.
Borrowings
The Portfolio may not borrow money except as a temporary
measure to facilitate redemptions. Such a borrowing may not
<PAGE> D-9
<PAGE>
exceed 30% of the Portfolio's total assets, taken at current
net asset value before any borrowing. The Portfolio may not
purchase securities if a borrowing is outstanding.
HOW TO INVEST IN THE PORTFOLIO
The minimum initial investment is $2,500 which may be divided
between the Rushmore Money Market Portfolio and the Rushmore
U.S. Government Bond Portfolio. Retirement accounts may be
opened with a $500 minimum investment. The shares of the
Portfolio are offered at the daily public offering price which
is the net asset value per share (See "Net Asset Value") next
computed after receipt of your order. There is no minimum
amount for subsequent investments.
Investments in the Portfolio can be made directly with the
Fund or through securities dealers who have the responsibility
to transmit orders promptly and may charge a processing fee.
The Fund reserves the right to reject any purchase order. All
accounts will be held in book entry form. No certificates for
shares will be issued.
By Mail: Fill out an application and make a check payable to
"The Rushmore Fund, Inc." Mail the check along with the
application, to:
The Rushmore Fund, Inc.
4922 Fairmont Avenue
Bethesda, Maryland 20814
Purchases by check will normally be credited to an account
within one business day after receipt of payment. Foreign
checks will not be accepted.
By Bank Wire: Request a wire transfer to:
Rushmore Trust and Savings, FSB
Bethesda, Maryland
Routing Number 0550-71084
For Account of The Rushmore Fund, Inc.
Account Number 029385-770
AFTER INSTRUCTING YOUR BANK TO TRANSFER MONEY BY WIRE, YOU
MUST TELEPHONE THE FUND AT (800) 622-1386 OR (301) 657-1510
<PAGE> D-10
<PAGE>
BETWEEN 8:30 AM AND 12 NOON, EASTERN TIME AND TELL US THE
AMOUNT YOU TRANSFERRED AND THE NAME OF THE BANK SENDING THE
TRANSFER. YOUR BANK MAY CHARGE A FEE FOR SUCH SERVICES. IF THE
PURCHASE IS CANCELLED BECAUSE YOUR WIRE TRANSFER IS NOT
RECEIVED, YOU MAY BE LIABLE FOR ANY LOSS THE FUND MAY INCUR.
HOW TO REDEEM AN INVESTMENT (WITHDRAWALS)
On any day the Portfolio is open for business, an investor may
withdraw all or any portion of his investment by redeeming
shares at the next determined net asset value per share after
receipt of the order by writing the Fund or telephoning (800)
622-1386 or (301) 657-1510. Telephone redemption privileges
may be terminated or modified by the Fund upon 60 days notice
to all shareholders of the Fund. Telephone orders for
redemptions in the Rushmore Money Market Portfolio must be
received by 12 Noon, Eastern time to be effective that day.
The privilege to initiate redemption transactions by telephone
will be made available to Fund shareholders automatically.
Telephone redemptions will only be sent to the address of
record or to bank accounts specified in the account
application. When acting on instructions believed to be
genuine, the Fund will not be liable for any loss resulting
from a fraudulent telephone redemption request and the
investor would bear the risk of any such loss.
The Fund will employ reasonable procedures to confirm that
redemption instructions communicated by telephone are genuine;
and if the Fund does not employ such procedures, then the Fund
may be liable for any losses due to unauthorized or fraudulent
instructions. The Fund follows specific procedures for
transactions initiated by telephone, including among others,
requiring some form of personal identification prior to acting
on instructions received by telephone, providing written
confirmation not later than five business days after such
transactions, and/or tape recording of telephone transactions.
The proceeds of redemptions will be sent directly to the
investor's address of record. If the investor requests
payment of redemptions to a third party or to a location other
than his address of record listed on the account application,
the request must be in writing and the investor's signature
must be guaranteed by an eligible institution. Eligible
institutions generally include banking institutions,
securities exchanges, associations, agencies or
broker/dealers, and ''STAMP'' program participants. There are
no fees charged for redemptions.
<PAGE> D-11
<PAGE>
The Fund will redeem its shares at a redemption price equal to
their net asset value as next computed following the receipt
of a request for redemption. There is no redemption charge.
For investments that have been made by check, payment on
withdrawal requests may be delayed for up to ten business days
or until the check clears, whichever occurs first. This delay
is necessary to assure the Fund that investments made by
checks are good funds. The proceeds of the redemption will be
forwarded promptly upon confirmation of receipt of good funds.
The right of redemption may also be suspended, or the date of
payment postponed, (a) for any period during which the New
York Stock Exchange ("NYSE") is closed (other than customary
weekend or holiday closings); or (b) when trading on the NYSE
is restricted, or an emergency exists, as determined by the
Securities and Exchange Commission, so that disposal of the
Fund's investments for determination of net asset value is not
reasonably practicable; or (c) for such other periods as the
Commission, by order, may permit for protection of the Fund's
investors. Investors should also be aware that telephone
redemptions or exchanges may be difficult to implement in a
timely manner during periods of drastic economic or market
changes. If such conditions occur, redemption or exchange
orders can be made by mail. Because of the administrative
expense of handling small accounts, the Fund reserves the
right to involuntarily redeem an investor's account which
falls below $500 in total value in all portfolios of the Fund
due to redemptions or exchanges after providing 60 days
written notice.
EXCHANGES
The Fund is composed of three separate portfolios. This
Prospectus describes the features of the Rushmore Money Market
Portfolio. The other portfolios of the Fund are the Rushmore
Nova Portfolio and the Rushmore U.S. Government Bond
Portfolio, however, shares of the Rushmore Nova Portfolio
currently are not available or sold to the public. Investors
may invest in either the Rushmore Money Market Portfolio or
the Rushmore U.S. Government Portfolio, and may exchange
shares in one portfolio, at no charge, for shares of the other
portfolio at their relative net asset values. Shares of The
Rushmore Fund, Inc. may also be exchanged for shares of Fund
for Government Investors, Inc., Fund for Tax-Free Investors,
Inc., American Gas Index Fund, Inc., or the Cappiello-Rushmore
Trust on the basis of the respective net asset values of the
shares involved. Exchanges may be made by telephone or
letter. Written requests should be sent to The Rushmore Fund,
Inc., 4922 Fairmont Avenue, Bethesda, Maryland 20814 and be
signed by the record owner or owners. Telephone exchange
<PAGE> D-12
<PAGE>
requests may be made by calling the Fund at (800) 622-1386 or
(301) 657-1510 between 8:30 A.M. and 12 Noon, Eastern time.
Exchanges will be affected at the respective net asset values
of the portfolios as next determined after receipt of the
exchange request. To implement an exchange, shareholders
should provide the following information: account
registration including address and number, taxpayer
identification number, number, percentage or dollar value of
shares to be redeemed, name and account number of the
portfolio to which the investment is to be transferred.
Exchanges may be made only if they are between identically
registered accounts. Shareholders contemplating such an
exchange should obtain and review the prospectuses of those
funds. The exchange privilege is available only in states
where the exchange may legally be made. Telephone exchange
privileges may be terminated or modified by the Fund upon 60
days notice to all shareholders of the Fund.
TRANSACTION CHARGES
In addition to charges described elsewhere in this Prospectus,
the Fund may impose a charge of $5 per month for any account
whose average daily balance is below $500 due to redemptions.
The fee will continue to be imposed during months when the
account balance remains below $500. The fee will be imposed
on the last business day of the month. This fee will be paid
to Rushmore Trust and Savings, FSB. The fee will not be
imposed on tax-sheltered retirement plans or accounts
established under the Uniform Gifts or Transfers to Minors
Act. The Fund may also assess a charge of $10 for items
returned for insufficient or uncollectible funds.
TAX-SHELTERED RETIREMENT PLANS
Tax-sheltered retirement plans of the following types will be
available to investors:
Individual Retirement Accounts (IRAs)
Defined Contribution Plans
(Profit-Sharing Plans)
Money Purchase Plans (Pension Plans)
Internal Revenue Code
Section 401(k) Plans
Internal Revenue Code
Section 403(b) Plans
<PAGE> D-13
<PAGE>
Additional information regarding these accounts may be
obtained by contacting the Fund.
DIVIDENDS AND DISTRIBUTIONS
Dividends of the Portfolio will be declared daily. Investors
will receive dividends in additional shares at month end
unless they elect in writing to receive cash. Dividends paid
in cash to those investors so electing will be mailed on the
second business day of the following month. Statements of
account showing dividends paid will be sent to shareholders at
least quarterly.
Long-term capital gains, if any, will be distributed on an
annual basis while short-term capital gains, if any, will be
distributed quarterly.
NET ASSET VALUE
The net asset value of the Portfolio's shares is determined at
4:00 P.M., Eastern time each day on which the NYSE is open for
business. Currently, the NYSE is closed on weekends and on
the following holidays: (i) New Year's Day, President's Day,
Good Friday, Memorial Day, July Fourth, Labor Day,
Thanksgiving Day, and Christmas Day; and (ii) the preceding
Friday when any of those holidays falls on a Saturday or the
subsequent Monday when any one of those holidays falls on a
Sunday. The net asset value per share of the Portfolio is
calculated by dividing the net worth of the Portfolio by the
number of shares outstanding of the Portfolio.
The Portfolio will utilize the amortized cost method in
valuing the Portfolio's portfolio securities, which method
involves valuing a security at its cost adjusted by a constant
amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the
market value of the instrument. The purpose of this method of
calculation is to facilitate the maintenance of a constant net
asset value per share of $1.00. However, there is no
assurance that the $1.00 net asset value will be maintained.
For further information regarding the amortized cost method
for valuing the Portfolio's portfolio securities, see "Net
Asset Value," in the Statement of Additional Information.
TAXES
<PAGE> D-14
<PAGE>
The Portfolio intends to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code.
Because of this qualification, the Portfolio will not be
liable for Federal income taxes to the extent its earnings are
distributed.
Dividends derived from interest and dividends received by the
Fund, together with distributions of any short-term capital
gains, are taxable as ordinary income whether or not
reinvested.
Statements as to the Federal tax status of shareholders'
dividends and distributions will be mailed annually.
Shareholders should consult their tax advisers concerning the
tax status of the Fund's dividends in their own states and
localities.
Shareholders are required by law to certify that their tax
identification number is correct and that they are not subject
to back-up withholding. In the absence of this certification,
the Fund is required to withhold taxes at the rate of 31% on
dividends, capital gains distributions and redemptions.
Shareholders who are non-resident aliens may be subject to a
withholding tax on dividends earned.
ORGANIZATION AND DESCRIPTION OF COMMON STOCK
The Fund is an open-end, diversified investment company. It
was incorporated in Maryland on July 24, 1985 and has a
present authorized capital of 1,000,000,000 shares of $.001
par value common stock which may be issued in three separate
classes: Rushmore U.S. Government Bond Portfolio, the Rushmore
Nova Portfolio, and the Rushmore Money Market Portfolio.
All shares of the Fund are freely transferable. The shares do
not have preemptive rights, and none of the shares have any
preference to conversion, exchange, dividends, retirements,
liquidation, redemption or any other feature. Shares have
equal voting rights, except that in a matter affecting only a
particular Portfolio, such as a change in investment policy,
only shares of that Portfolio may be entitled to vote on the
matter. Because the shares have non-cumulative voting rights,
the holders of more than 50% of the shares voting for the
election of directors can elect 100% of the directors, if they
choose to do so. In such event, the holders of the remaining
less than 50% of the shares voting will not be able to elect
any directors. Shareholder inquiries can be made by telephone
((800) 343-3355) or by mail (4922 Fairmont Avenue, Bethesda,
Maryland 20814).
<PAGE> D-15
<PAGE>
Under Maryland Corporate law, a registered investment company
is not required to hold an annual shareholders' meeting if the
Investment Company Act of 1940 does not require a meeting.
The Act does require a meeting if the following actions are
necessary: ratification of the selection of independent
public accountants, approval of the investment advisory
agreement, election of the board of directors or approval of
the appointment of directors to board vacancies when such
vacancies cause less than two-thirds of the board to have been
elected. Under the Investment Company Act of 1940,
shareholders have the right to remove directors and, if
holders of 10% of the outstanding shares request in writing, a
shareholders' meeting must be called. As of the date of this
Prospectus, officers and directors of the Fund, as a group,
own less than 1% of the shares outstanding.
MANAGEMENT OF THE FUND
Investment Adviser and Administrative Servicing Agent
The Fund is provided investment advice and management services
by Money Management Associates, 1001 Grand Isle Way, Palm
Beach Gardens, Florida 33418 (the "Adviser"). The Adviser
provides investment advice and management to other mutual
funds including Fund for Government Investors, Inc., Fund for
Tax-Free Investors, Inc. and the American Gas Index Fund, Inc.
As of August 31, 1995, total assets under the Adviser s
management were approximately $950 million.
Under an Agreement with the Adviser, the Portfolio pays the
Adviser a fee at an annual rate based on 0.50% of the net
assets of the Portfolio. The Adviser manages the investment
and reinvestment of the assets of the portfolios of the Fund
and administers the affairs of the Fund, subject to the
control of the officers and the Board of Directors of the
Fund. Investment decisions are made by committee. The
Adviser bears all costs associated with providing these
services. For the fiscal year ended August 31, 1995, the
Portfolio paid the Adviser investment advisory fees of 0.50%
(50/100 of 1%) of average daily net assets of the Portfolio.
The Portfolio's net expenses exclusive of the investment
advisory fees were 0.25% (25/100 of 1%) for the fiscal year.
Effective September 1, 1993, the Board of Directors approved
an arrangement whereby Rushmore Trust and Savings, FSB, 4922
Fairmont Avenue, Bethesda, Maryland 20814, a majority-owned
subsidiary of the Adviser, provides transfer agency, dividend-
disbursing and administrative services to the Fund. The
<PAGE> D-16
<PAGE>
Portfolio pays an annual fee of 0.25% (25/100 of 1%) of
average daily net assets for these services.
Officers and Directors
The Fund has a Board of Directors which is responsible for the
general supervision of the Fund's business. The day-to-day
operations of the Fund are the responsibility of the Fund's
officers.
<PAGE> D-17
<PAGE>
THE RUSHMORE FUND, INC.
RUSHMORE MONEY MARKET PORTFOLIO
PROSPECTUS
January 1, 1996
Table of Contents
Page
Fee Table . . . . . . . . . . . . . . . . . . . . . . . . . 2
Financial Highlights . . . . . . . . . . . . . . . . . . . 3
Performance Data . . . . . . . . . . . . . . . . . . . . . 4
Investment Objective and Policies . . . . . . . . . . . . . 4
How to Invest in the Portfolio . . . . . . . . . . . . . . 5
How to Redeem an Investment (Withdrawals) . . . . . . . . . 6
Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . 7
Transaction Charges . . . . . . . . . . . . . . . . . . . . 8
Tax-Sheltered Retirement Plans . . . . . . . . . . . . . . 8
Dividends and Distributions . . . . . . . . . . . . . . . . 8
Net Asset Value . . . . . . . . . . . . . . . . . . . . . . 8
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Organization and Description of Common Stock . . . . . . . 9
Management of the Fund . . . . . . . . . . . . . . . . . . 10
<PAGE> D-18
<PAGE>
PART B
<PAGE>
<PAGE>
FUND FOR GOVERNMENT INVESTORS, INC.
____________
4922 Fairmont Avenue
Bethesda, Maryland 20814
(800) 343-3355
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a prospectus
and should be read in conjunction with the Combined
Prospectus/Proxy Statement dated March 27, 1996 (the "Combined
Prospectus/Proxy Statement"), for the special meeting (the
"Meeting") of the shareholders of the shares of Common Stock,
$.001 par value per share, of the Rushmore Money Market
Portfolio (the "Money Market Portfolio"), which Money Market
Portfolio is a separate series of The Rushmore Fund, Inc. (the
"Rushmore Fund"), a diversified, open-end management
investment company. This Meeting is to be held on Friday, May
24, 1996.
The Combined Prospectus/Proxy Statement describes certain
transactions and other actions contemplated by the proposed
reorganization of the Money Market Portfolio into Fund for
Government Investors ("FGI") (the "Reorganization"). Pursuant
to an Agreement and Plan of Reorganization in connection with
the Reorganization (the "Reorganization Plan"), FGI would
acquire all of the assets of the Money Market Portfolio in
exchange solely for shares of common stock in FGI and the
assumption by FGI of all the liabilities of the Money Market
Portfolio.
Pursuant to the Reorganization Plan, neither the Money Market
Portfolio nor FGI will bear any costs associated with the
Reorganization. As described in the Combined Prospectus/Proxy
Statement, FGI has an investment objective that is virtually
identical to the investment objective of the Money Market
Portfolio and has investment policies that are comparable to
the investment policies of the Money Market Portfolio. The
shareholders of the Money Market Portfolio are being requested
to approve the Reorganization Plan at the Meeting.
The Combined Prospectus/Proxy Statement may be obtained free
of charge by contacting Rushmore Trust and Savings, FSB
<PAGE>
<PAGE>
("RTS"), which provides all administrative services to both
the Money Market Portfolio and FGI, at 4922 Fairmont Avenue,
Bethesda, Maryland 20814, or by telephoning RTS toll-free at
(800) 343-3355. This Statement of Additional Information
contains additional and more detailed information about the
operations and activities of FGI and the operations and
activities of the Money Market Portfolio.
The date of this Statement of Additional Information is March
27, 1996.
<PAGE> B-2
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Current Statement of Additional Information for the Fund for
Government Investors, Inc., dated March 27, 1996
Current Statement of Additional Information for the Rushmore
Money Market Portfolio, dated January 1, 1996
Current Annual Report of the Fund for Government Investors,
Inc., for the fiscal year ended December 31, 1995
Current Annual Report of The Rushmore Fund, Inc., for the
fiscal year ended August 31, 1995
Pro Forma Financial Statements
<PAGE> B-3
<PAGE>
CURRENT STATEMENT OF ADDITIONAL INFORMATION
OF FUND FOR GOVERNMENT INVESTORS, INC.,
DATED MARCH 27, 1996
<PAGE>
<PAGE>
FUND FOR GOVERNMENT INVESTORS, INC.
A Money Market Fund
4922 Fairmont Avenue, Bethesda, Maryland 20814
(301) 657-1500 (800) 343-3355
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a prospectus.
This Statement of Additional Information should be read in
conjunction with the Fund s Prospectus, dated March 27, 1996.
A copy of the Fund's Prospectus may be obtained without charge
by writing or telephoning the Fund.
The date of this Statement of Additional Information is March
27, 1996.
<PAGE>
<PAGE>
FUND FOR GOVERNMENT INVESTORS, INC.
A Money Market Fund
STATEMENT OF ADDITIONAL INFORMATION
Table of Contents
<TABLE>
<CAPTION>
Cross Reference to Related Item in Prospectus
Page in Statement
of Additional Page in
Information Prospectus
<S> <C> <C>
Investment Objective and Policies . . . . 3 4
Investment Restrictions . . . . . . . . . 3 4
Management of the Fund . . . . . . . . . 4 10
Principal Holders of Securities . . . . . 5 --
Investment Advisory and Other Services . 5 10
Net Asset Value . . . . . . . . . . . . . 6 6
Comparative Performance Data . . . . . . 6 4
Calculation of Yield Quotations . . . . . 7 4
Auditors and Financial Statements . . . . 7 3
</TABLE>
<PAGE> 2
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
General
The Fund may invest only in marketable debt securities of the
United States Government, its agencies and instrumentalities
(collectively, "U.S. Government Securities"), and in
repurchase agreements secured by such securities. The
investment objective, the investment policies, and the
investment restrictions of the Fund may not be changed without
the approval of a majority of the shareholders, as defined in
the Investment Company Act of 1940.
Portfolio turnover of the Fund will be high due to the short-
term nature of the Fund's investments. High turnover will not
adversely affect the Fund's yield because brokerage
commissions are not normally paid on investments the Fund
makes.
U.S. Government Securities
The Fund invests primarily in U.S. Government Securities.
Securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities include U.S. Treasury
securities, which differ only in their interest rates,
maturities, and times of issuance. U.S. Treasury bills have
initial maturities of one year or less; U.S. Treasury notes
have initial maturities of one to ten years; and U.S. Treasury
bonds generally have initial maturities of greater than ten
years. Some obligations issued or guaranteed by U.S.
Government agencies and instrumentalities, including, for
example, Government National Mortgage Association pass-through
certificates, are supported by the full faith and credit of
the U.S. Treasury. Other obligations issued by or guaranteed
by Federal agencies, such as those securities issued by the
Federal National Mortgage Association, are supported by the
discretionary authority of the U.S. Government to purchase
certain obligations of the Federal agency, while other
obligations issued by or guaranteed by Federal agencies, such
as those of the Federal Home Loan Banks, are supported by the
right of the issuer to borrow from the U.S. Treasury. While
the U.S. Government provides financial support to such U.S.
Government-sponsored Federal agencies, no assurance can be
given that the U.S. Government will always do so, since the
U.S. Government is not so obligated by law. U.S. Treasury
notes and bonds typically pay coupon interest semi-annually
and repay the principal at maturity. The Fund will invest in
such U.S. Government Securities only when the Fund's
<PAGE> 3
<PAGE>
investment adviser (the "Adviser") is satisfied that the
credit risk with respect to the issuer is minimal.
Repurchase Agreements
As discussed in the Fund's Prospectus, the Fund also may enter
into repurchase agreements with financial institutions. The
Fund follows certain procedures designed to minimize the risks
inherent in such agreements. These procedures include
effecting repurchase transactions only with large, well-
capitalized and well-established financial institutions whose
condition will be continually monitored by the Adviser. In
addition, the value of the collateral underlying the
repurchase agreement will always be at least equal to the
repurchase price, including any accrued interest earned on the
repurchase agreement. In the event of a default or bankruptcy
by a selling financial institution, the Fund will seek to
liquidate such collateral. However, the exercising of the
Fund's right to liquidate such collateral could involve
certain costs or delays and, to the extent that proceeds from
any sale upon a default of the obligation to repurchase were
less than the repurchase price, the Fund could suffer a loss.
It is the current policy of the Fund not to invest in
repurchase agreements that do not mature within seven days if
any such investment, together with any other illiquid assets
held by the Fund, amounts to more than 10% of the Fund's total
assets. The investments of the Fund in repurchase agreements,
at times, may be substantial when, in the view of the Adviser,
liquidity or other considerations so warrant.
INVESTMENT RESTRICTIONS
As stated above, the Fund may invest only in U.S. Government
Securities and in repurchase agreements secured by such
securities, although the Fund did not invest in repurchase
agreements during 1995 and has no intentions to do so. The
Fund may not invest in any other securities.
The Fund may not borrow money, except that as a temporary
measure the Fund may borrow money to facilitate redemptions.
Such a borrowing may be in an amount not to exceed 30% of the
Fund's total assets, taken at current value before such
borrowing. The Fund may borrow only to accommodate requests
for redemption of shares of the Fund while effecting an
orderly liquidation of portfolio securities. Additionally,
the Fund may not sell securities short, write options,
underwrite securities of other issuers, purchase or sell real
estate, commodities or commodity contracts, or loan money to
others (except securities under repurchase agreements). The
<PAGE> 4
<PAGE>
Fund may not purchase a portfolio security if a borrowing by
the Fund is outstanding. No other senior securities may be
issued by the Fund.
MANAGEMENT OF THE FUND
Directors and Officers of the Fund and Officers of the
Adviser, together with information as to their principal
business occupations during the past five years, are set forth
below. Officers of the Fund do not receive salaries or other
forms of compensation from the Fund. Non-interested
Directors fees and expenses will be paid by the servicing
agent. Non-interested Directors were paid an annual fee of
$3,000. For the year ended December 31, 1995, such fees
amounted to $16,500.
*Daniel L. O Connor, 54 - Chairman of the Board, Treasurer and
Director of the Fund. President, 1974 to 1981. Partner and
Chief Operating Officer of the Adviser. Address: 1001 Grand
Isle Way, Palm Beach, Florida 33418.
*Richard J. Garvey, 63 - President and Director of the Fund.
Executive Vice President, 1974 to 1981. Limited Partner of the
Adviser. Address: 4922 Fairmont Avenue, Bethesda, Maryland
20814.
Patrick F. Noonan, 53 - Director. Chairman and Chief
Executive Officer of the Conservation Fund since 1986. Vice
Chairman, American Farmland Trust and Trustee, American
Conservation Association since 1985. President, Conservation
Resources, Inc. since 1981. Address: 11901 Glen Mill Drive,
Potomac, Maryland 20854.
Jeffrey R. Ellis, 51 - Director. Vice President of LottoFone,
a telephone lottery system, since 1993. Vice President
Shoppers Express, Inc. through 1992. Address: 513 Kerry Lane,
Virginia Beach, Virginia 23451.
Bruce C. Ellis, 51 - Director of the Fund. Vice President,
LottoFone, Inc., a telephone state lottery service, since
1991. Vice President, Shoppers' Express, Inc., 1986-1992.
Address: 7108 Heathwood Court, Bethesda, Maryland 20817.
*Rita A. Gardner, 52 - Director. Limited partner of the
Adviser. Address: 4922 Fairmont Avenue, Bethesda, Maryland
20814.
<PAGE> 5
<PAGE>
Michael D. Lange, 54 - Director of the Fund. Vice President,
Capital Hill Management Corporation since 1967. Owner of
Michael D. Lange, Ltd., a builder and developer since 1980.
Partner of Greatfull Falls, a building developer, since 1994.
Address: 7521 Pepperell Drive, Bethesda, Maryland 20817.
Leo Seybold, 82 - Director. Retired. Address: 5804 Rockmere
Drive, Bethesda, Maryland 20816.
*Martin M. O'Connor, 51 - Vice President since 1974. A
limited partner of the Adviser since 1979. Address: 4922
Fairmont Avenue, Bethesda, Maryland 20814.
*John R. Cralle, 56 - Vice President since 1978. A limited
partner of the Adviser since 1979.
Address: 4922 Fairmont Avenue, Bethesda, Maryland 20814.
*Timothy N. Coakley, CPA, 28 - Vice President and Controller.
Audit Manager Deloitte & Touche LLP until 1994. Address: 4922
Fairmont Avenue, Bethesda, Maryland 20814.
*Stephenie E. Adams, 26 - Secretary. Director of Marketing,
Rushmore Services, Inc., from July 1994 to present. Regional
Sales Coordinator, Media General Cable, from June 1993 to June
1994. Graduate Student, Northwestern University, M.S., from
September 1991 to December 1992. Student, Stephens College,
Columbia, Missouri, B.S., from August 1987 to May 1991.
Address: 4922 Fairmont Avenue, Bethesda, Maryland 20814.
Daniel L. O'Connor and Martin M. O'Connor are brothers.
* Indicates interested person as defined by the Investment
Company Act of 1940.
Certain Directors and Officers of the Fund are also Directors
and Officers of Fund For Tax-Free Investors, Inc., The
Rushmore Fund, Inc., and American Gas Index Fund, Inc., other
investment companies managed by the Adviser.
PRINCIPAL HOLDERS OF SECURITIES
On March 4, 1996, there were 591,862,316 shares of the Fund s
common stock outstanding. National Automobile Dealers
Association, McLean, Virginia, owned of record 8.17% of the
<PAGE> 6
<PAGE>
Fund. No other shareholder owned more than 5% of the
outstanding common shares. Officers and Directors of the
Fund, as a group, own less than 1% of shares outstanding.
INVESTMENT ADVISORY AND OTHER SERVICES
The Fund is provided investment advisory and management
services by Money Management Associates (the "Adviser"), 1001
Grand Isle Way, Palm Beach Gardens, Florida 33418. The
Adviser is a limited partnership which was formed under the
laws of the District of Columbia on August 15, 1974. Certain
Officers and Directors of the Fund are affiliated with the
Adviser. Under an Agreement (the "Agreement") with the
Adviser, the Fund pays a fee at an annual rate based on the
size of the Fund s net assets as follows:
0.50% of the first $500 million;
0.45% of the next $250 million;
0.40% of the next $250 million;
0.35% of the net assets over $1 billion.
Under the Agreement, the Adviser will reimburse the Fund for
expenses (including management fee) but excluding interest and
extraordinary legal expenses, which exceed one percent of the
average daily net assets per annum.
Normal expenses which are borne by the Fund include, but are
not limited to, taxes, corporate fees, interest expenses (if
any), office expenses, the costs incident to preparing reports
to governmental agencies, auditing and accounting, the costs
incident to providing stock certificates for shareholders, and
of registering and redeeming such certificates, custodian
charges, the expense of shareholders and Directors meetings,
data processing, preparation, printing and distribution of all
reports and proxy materials, legal services rendered to the
Fund, compensation for those Directors, Officers and employees
of the Fund who do not also serve as Officers or employees of
the Adviser, insurance coverage for the Fund and its Directors
and Officers, and its membership in trade associations. The
Adviser may, from time to time, make payments to broker-
dealers and others for their expenses in connection with the
distribution of Fund shares. Although such payments may be
based upon the number of shares distributed, it is the
understanding of the Adviser that such payments will be for
reimbursement and will not exceed the expenses of the
recipients in arranging for and administering distribution of
Fund shares. Salaries of the Directors of the Fund, who are
not affiliated with the Adviser, are expenses of the Fund and
are established annually by the Board of Directors. This
<PAGE> 7
<PAGE>
includes a majority of those Directors who are non-interested
persons of the Adviser. All fees and expenses are estimated
and accrued daily. For the years: 1995, 1994 and 1993, the
Adviser earned $2,787,502, $2,754,339 and $3,228,059,
respectively in management fees.
Daniel L. O Connor is the sole general partner of the Adviser
and, as such, exercises control of the Adviser.
The Agreement between the Adviser and the Fund was last
renewed by the Board of Directors on October 31, 1995. The
Agreement shall be renewed annually, if approved by either of
two methods: (1) by the Board of Directors, including approval
by a majority of the non-interested Directors by vote cast in
person at a meeting called for such purpose; or (2) by a
majority of the shareholders of the outstanding voting
securities of the Fund.
The Agreement may be canceled by the Fund without penalty on
sixty days' notice by the Board of Directors of the Fund or by
vote of the holders of a majority of the Fund's shares. The
Agreement may also be canceled by the Adviser without penalty
on sixty days' notice. The Agreement will terminate
automatically in the event of its assignment.
Under an Agreement approved by the Board of Directors on July
21, 1993, and renewed on October 31, 1995, Rushmore Trust and
Savings, FSB ("RTS"), 4922 Fairmont Avenue, Bethesda, Maryland
20814, a majority-owned subsidiary of the Adviser, acts as the
Fund's custodian, transfer agent, dividend disbursing agent
and shareholder servicing agent. The Fund pays RTS an annual
fee of 0.25% of the average daily net assets of the Fund for
these services. The fee will be reviewed and approved
annually by the non-interested directors. The Fund is subject
to the self-custodian rules of the Securities and Exchange
Commission. These rules require that the custodian be subject
to three securities verification examinations each year
conducted by the Fund's independent accountants. Two of the
examinations must be performed on an unannounced surprise
basis.
NET ASSET VALUE
The Fund s net asset value per share will be determined as of
12:00 noon, Eastern time, on days when the Custodian bank is
open for business. The net asset value per share is
determined by adding the appraised value of all securities and
all other assets, deducting liabilities and dividing by the
number of shares outstanding. The value of the Fund's
<PAGE> 8
<PAGE>
portfolio of securities is determined on the basis of fair
value as determined in good faith by the Fund's Directors. In
determining fair value, the Fund uses the amortized cost
method of valuing the securities in its portfolio pursuant to
an exemption granted to it by the Securities and Exchange
Commission on August 8, 1979. The Fund's Directors
continuously review this method of valuation and recommend
changes which may be necessary to assure that the portfolio
instruments of the Fund are valued at their fair value. In
its review, the Directors of the Fund consider the relevant
factors which may affect the value of the portfolio
investments, such as maturity, yield, stability, special
circumstances or trading markets, and any other factors which
they deem pertinent. Amortized cost is the purchase price of
the security plus accumulated discount or accrued interest
from the date of purchase. This method of valuation does not
take into account unrealized gains or losses due to short-term
market fluctuations and tends to stabilize the price of the
Fund's shares. Under the exemption, the Fund will not
purchase any securities with a remaining maturity of greater
than 397 days, or maintain a dollar weighted average portfolio
maturity in excess of 90 days. When interest rates decline,
the market value of the Fund's portfolio rises; when rates
rise, the market value declines. To the extent that the
Fund s amortized cost valuation of its short-term securities
differs from the actual liquidation value, the price at which
an investor purchases or redeems will correspondingly differ
from the per share liquidation value of the portfolio. Thus,
when interest rates are declining and purchases of Fund shares
exceed redemptions, the interest of existing investors may be
diluted. When interest rates are rising and redemptions
exceed share purchases, the interest of existing investors may
be diluted. Declining interest rates and net redemption of
Fund shares or rising interest rates and new purchases of Fund
shares may enhance the interest of existing investors. When
interest rates are declining, the Fund s valuation method
tends to understate the percentage rate of net investment
income per share. When interest rates are rising, the reverse
is true. The Board of Directors of the Fund believes that the
amortized cost basis offers the most consistent and
conservative method of valuing short-term investments.
COMPARATIVE PERFORMANCE DATA
The Fund's performance may be compared in advertising to the
performance of other money market and mutual funds in general
or to the performance of particular types of money market
funds, especially those with similar objectives. More up-to-
date performance data may be provided as it becomes available.
From time to time, the Fund may provide information concerning
general economic conditions, financial trends, analysis and
<PAGE> 9
<PAGE>
supply comparative performance and rankings, with respect to
comparable investments for the same period, for unmanaged
market indexes such as the Dow Jones Industrial Average,
Standard & Poor s 500 IndexTM, Shearson Lehman Bond Indexes,
Merrill Lynch Bond Indexes, Bond Buyer Index, and from
recognized independent sources such as Donoghue s Money Fund
Report, Donoghue Money Letter, Bank Rate Monitor, Money
Magazine, Forbes, Lipper, Standard & Poor's Corporation, CDA
Investment Technologies, Inc. ("CDA"), Wiesenberger Investment
Companies Service, Mutual Fund Values, Mutual Fund Forecaster,
Mutual Fund Sourcebook, Fortune, Business Week, Kiplinger's
Personal Finance, Wall Street Journal, Investor's Business
Daily and Schabacker Investment Management, Inc. Comparisons
may also be made to Consumer Price Index, rate of inflation,
bank money market rates, rates of certificates of deposit,
Treasury Bills and Treasury Bond rates and yields.
CALCULATION OF YIELD QUOTATIONS
The Fund's annualized current yield, as may be quoted from
time to time in advertisements and other communications to
shareholders and potential investors, is computed by
determining, for a stated seven-day period, the net change,
exclusive of capital changes and including the value of
additional shares purchased with dividends and any dividends
declared therefrom (which reflect deductions of all expenses
of the Fund such as management fees), in the value of a
hypothetical pre-existing account having a balance of one
share at the beginning of the period, and dividing the
difference by the value of the account at the beginning of the
base period to obtain the base period return, and then
multiplying the base period return by (365/7).
The Fund's annualized effective yield, as may be quoted from
time to time in advertisements and other communications to
shareholders and potential investors, is computed by
determining (for the same stated seven-day period as the
current yield), the net change, exclusive of capital changes
and including the value of additional shares purchased with
dividends and any dividends declared therefrom (which reflect
deductions of all expenses of the Fund such as management
fees), in the value of a hypothetical pre-existing account
having a balance of one share at the beginning of the period,
and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return,
and then compounding the base period return by adding 1,
raising the sum to a power equal to 365 divided by 7, and
subtracting 1 from the result.
<PAGE> 10
<PAGE>
The yields quoted in any advertisement or other communication
should not be considered a representation of the yields of the
Fund in the future since the yield is not fixed. Actual
yields will depend not only on the type, quality, and
maturities of the investments held by the Fund and changes in
interest rates on such investments, but also on changes in the
Fund's expenses during the period.
Yield information may be useful in reviewing the performance
of the Fund and for providing a basis for comparison with
other investment alternatives. However, unlike bank deposits
or other investments which typically pay a fixed yield for a
stated period of time, the Fund's yield fluctuates.
AUDITORS AND FINANCIAL STATEMENTS
Deloitte & Touche LLP, independent certified public
accountants, are the auditors of the Fund. The Fund
incorporates by reference in this statement of additional
information the financial statements and notes contained in
its annual report to the shareholders for the year ended
December 31, 1995.
<PAGE> 11
<PAGE>
CURRENT STATEMENT OF ADDITIONAL INFORMATION
OF THE RUSHMORE MONEY MARKET PORTFOLIO,
DATED JANUARY 1, 1996
<PAGE>
<PAGE>
THE RUSHMORE FUND, INC.
RUSHMORE MONEY MARKET PORTFOLIO
4922 Fairmont Avenue, Bethesda, Maryland 20814
(301) 657-1517 (800) 621-7874
STATEMENT OF ADDITIONAL INFORMATION
The Rushmore Money Market Portfolio (the "Portfolio") is one
of a series of portfolios in The Rushmore Fund, Inc. (the
"Fund"), an open-end management investment company. The
objective of the Portfolio is to provide investors with
maximum current income to the extent that such investment is
consistent with safety of principal. To attain this
investment objective, the Portfolio will invest in U.S.
Government and agency securities, bank money market
instruments, and commercial paper.
This Statement of Additional Information is not a Prospectus.
It should be read in conjunction with the Portfolio's
Prospectus, dated January 1, 1996. A copy of the Prospectus
may be obtained without charge by writing or telephoning the
Fund.
The date of this Statement of Additional Information is
January 1, 1996.
<PAGE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Cross Reference to Related
Item in Prospectus
Page in
Statement of Page in
Addition Prospectus
Information
<S> <C> <C>
Investment Policies 3 1,4
Investment Restrictions 3 4
Management of the Fund 4 9
Principal Holders of 6 --
Securities
Net Asset Value 6 8
Calculation of Yield and 8 4
Return Quotations
Dividends, Distributions, 8 8
and Taxes
Auditors and Custodian 9 10
Financial Statements 9 3
</TABLE>
<PAGE> 2
<PAGE>
INVESTMENT POLICIES
Lending of Securities
Subject to the investment restrictions set forth below, the
Portfolio may lend portfolio securities to brokers, dealers,
and financial institutions, provided that cash equal to at
least 100% of the market value of the securities loaned is
deposited by the borrower with the Portfolio and is maintained
each business day in a segregated account pursuant to
applicable regulations. While such securities are on loan,
the borrower will pay the Portfolio any income accruing
thereon, and the Portfolio may invest the cash collateral in
portfolio securities, thereby earning additional income. The
Portfolio will not lend its portfolio securities if such loans
are not permitted by the laws or regulations of any state in
which the Portfolio shares are qualified for sale, and the
Portfolio will not lend more than 33-1/3% of the value of the
Portfolio's total assets. Loans would be subject to
termination by the Portfolio on four business days' notice, or
by the borrower on one day's notice. Borrowed securities must
be returned when the loan is terminated. Any gain or loss in
the market price of the borrowed securities which occurs
during the term of the loan inures to the lending Portfolio
and that Portfolio's shareholders. The Portfolio may pay
reasonable finders, borrowers, administrative, and custodial
fees in connection with a loan.
Portfolio Transactions
The Portfolio's securities are normally purchased on a net
basis which does not involve payment of brokerage commissions.
INVESTMENT RESTRICTIONS
The following investment restrictions supplement those set
forth in the Portfolio's Prospectus. These restrictions are
fundamental and may not be changed without prior approval of a
majority of the Portfolio's outstanding voting shares. As
defined in the Investment Company Act of 1940, as amended, the
term "majority" means the vote of the lesser of (a) 67% of the
shares of the Portfolio at a meeting where more than 50% of
the outstanding shares are present in person or by proxy; or
(b) more than 50% of the outstanding shares of the Portfolio.
<PAGE> 3
<PAGE>
The Portfolio may not:
1. borrow money except as a temporary measure to facilitate
redemptions. Such borrowing may be in an amount not to
exceed 30% of the Portfolio's total assets, taken at
current value, before such borrowing. The Portfolio may
not purchase an investment security if a borrowing by the
Portfolio is outstanding.
2. make loans except through repurchase agreements and
through the lending of portfolio securities provided the
borrower maintains collateral equal to at least 100% of
the value of the borrowed security, and marked to market
daily.
3. underwrite securities of any other issuer.
4. purchase or sell real estate, including limited
partnership interests.
5. purchase or sell restricted securities or warrants, nor
may it issue senior securities.
6. purchase any security whereby it would account for more
than 10% of any issuer's outstanding shares.
7. purchase securities of any issuer if, as a result of such
a purchase, such securities would account for more than
5%, (as defined by Section 5 (b)(1) of the Investment
Company Act of 1940), of the Fund's assets. There is no
limitation, however, as to investments issued or
guaranteed by the United States Government, its agencies
or instrumentalities, or in obligations of the United
States Government, its agencies or instrumentalities,
which are purchased in accordance with the Fund's
investment objective and policies.
8. purchase or sell commodities or commodities contracts.
9. concentrate more than 25% of its assets in any one
industry.
The following restrictions have been adopted by the Fund for
the Portfolio but are not considered fundamental and may be
changed by the Board of Directors of the Fund.
<PAGE> 4
<PAGE>
The Portfolio may not:
1. invest in companies for the purpose of exercising
management or control.
2. purchase more than 10% of the voting securities of any
one issuer, or more than 10% of the securities of any
class of any one issuer.
3. purchase or hold the securities of any issuer if those
officers or directors of the Fund, or of Money Management
Associates, who individually own beneficially more than
0.5% of the outstanding securities of the issuer,
together own beneficially more than 5% of those
securities.
4. invest in securities of other investment companies,
except at customary brokerage commission rates or in
connection with mergers, consolidations or offers of
exchange.
5. purchase the securities of companies which, including
predecessors, have a record of less than three years
continuous operation if, as a result, more than 5% of the
market value of the Portfolio's assets would be invested
in such companies.
6. invest more than 10% of their assets in illiquid
securities.
7. invest in oil, gas or other mineral leases.
8. issue shares for other than cash.
MANAGEMENT OF THE FUND
The names and addresses of the directors and officers of the
Fund and officers of the Fund's Adviser, Money Management
Associates (the "Adviser"), together with information as to
their principal business occupations during the past five
years, are set forth below. Fees and expenses for non-
interested directors will be paid by the Fund.
<PAGE> 5
<PAGE>
*Daniel L. O'Connor, 53 - Chairman of the Board of Directors,
President, and Treasurer of the Fund. General Partner and
Chief Operating Officer of the Adviser. Address: 1001 Grand
Isle Way, Palm Beach Gardens, Florida 33418.
*Richard J. Garvey, 62 - Director of the Fund. Limited
Partner of the Adviser. Address: 4922 Fairmont Avenue,
Bethesda, Maryland 20814.
Jeffrey R. Ellis, 51 - Director of the Fund. Vice President,
LottoFone, Inc., a telephone state lottery service, since
1993. Vice President Shoppers Express, Inc. 1988-1992.
Address: 513 Kerry Lane, Virginia Beach, Virginia 23451.
Bruce C. Ellis, 51 - Director of the Fund. Vice President,
LottoPhone, Inc., a telephone state lottery service, since
1991. Vice President, Shoppers Express, Inc. 1986-1992.
Address: 7108 Heathwood Court Bethesda, Maryland 20817.
Patrick F. Noonan, 53 - Director of the Fund. Chairman and
Chief Executive Officer of the Conservation Fund since 1986.
Vice Chairman, American Farmland Trust and Trustee, American
Conservation Association since 1985. President, Conservation
Resources, Inc. since 1981. Address: 11901 Glen Mill Drive,
Potomac, Maryland 20854.
Michael D. Lange, 54 - Director of the Fund. Vice President,
Capital Hill Management Corporation since 1967. Owner of
Michael D. Lange, Ltd., a builder and developer since 1980.
Partner of Greatfull Falls, a building developer since 1994.
Address: 7521 Pepperell Drive, Bethesda, Maryland 20817.
Leo Seybold, 80 - Director of the Fund. Retired. Address:
5804 Rockmere Drive, Bethesda, Maryland 20816.
*Rita A. Gardner, 52 - Director of the Fund. Limited Partner
of the Adviser. Vice President and Director of MMA Services,
Inc. until 1993. Address: 4922 Fairmont Avenue, Bethesda,
Maryland 20814.
Timothy N. Coakley, CPA, 28 - Controller. Audit Manager,
Deloitte & Touche LLP, until 1994. Address: 4922 Fairmont
Avenue, Bethesda, Maryland 20814.
Stephenie E. Adams, 26 - Secretary. Director of Marketing,
Rushmore Services, Inc., from July 1994 to present. Regional
Sales Coordinator, Media General Cable, from June 1993 to June
<PAGE> 6
<PAGE>
1994. Graduate Student, Northwestern University, M.S., from
September 1991 to December 1992. Student, Stephens College,
Columbia, Missouri, B.S., from August 1987 to May 1991.
Address: 4922 Fairmont Avenue, Bethesda, Maryland 20814.
* Indicates interested person as defined in the Investment
Company Act of 1940.
Certain Directors and Officers of the Fund are also Directors
and Officers of Fund for Government Investors, Inc., Fund for
Tax-Free Investors, Inc., and American Gas Index Fund, Inc.,
other investment companies that are managed by the Adviser.
The Adviser, Money Management Associates, which has its office
at 1001 Grand Isle Way, Palm Beach Gardens, Florida 33418,
provides the Fund with investment advisory services. The
Adviser is a limited partnership which was formed under the
laws of the District of Columbia on August 15, 1974. Its
primary business since inception has been to serve as the
Investment Adviser to Fund for Government Investors, Inc.,
Fund for Tax-Free Investors, Inc.. The Rushmore Fund, Inc.,
and the American Gas Index Fund, Inc. Daniel L. O'Connor is
the sole general partner of the Adviser, and, as such,
exercises control thereof.
Under an Investment Advisory Agreement with the Adviser, dated
October 10, 1985 (the "Agreement"), the Adviser provides
investment advice to the Fund and oversees its day-to-day
operations, subject to direction and control by the Fund's
Board of Directors. Pursuant to the Agreement, the Fund pays
the Adviser a fee at an annual rate based on 0.50% of the net
assets of the Fund. Normal expenses which are borne by the
Fund, include, but are not limited to, taxes, corporate fees,
federal and state registration fees, interest expenses (if
any), office expenses, the costs incident to preparing,
registering and redeeming stock certificates for shareholders,
custodian charges, the expenses of shareholders' and
directors' meetings, data processing, preparation, printing
and distribution of all reports and proxy materials, legal
services rendered to the Fund, compensation for those
directors who do not serve as employees of the Adviser,
insurance coverage for the Fund and its directors and
officers, and its membership in trade associations. The
Adviser will pay the costs of office space. The Adviser may,
from its own resources, including profits from advisory fees
received from the Fund provided such fees are legitimate and
not excessive, make payments to broker-dealers and other
financial institutions for their expenses in connection with
the distribution of Fund shares.
<PAGE> 7
<PAGE>
For the fiscal years ended August 31, 1995, 1994, and 1993,
the Portfolio paid advisory fees to the Adviser of
approximately $111,227, $156,752, and $314,296, respectively.
Under an Agreement dated September 1, 1993, Rushmore Trust and
Savings, FSB ("RTS"), 4922 Fairmont Avenue, Bethesda, Maryland
20814, a majority-owned subsidiary of the Adviser, provides
transfer agency, dividend-disbursing and administrative
services to the Fund. The services of RTS are provided to the
Fund on a fee basis and are paid by the Fund. RTS will charge
an annual fee of 25 basis points (0.25%) of the average daily
net assets of the Portfolio. The non-interested directors of
the Fund have reviewed the fee structure and determined that
it is competitive and in the best interest of the shareholders
of the Fund. The fees will be reviewed and approved annually
by the non-interested directors. The Fund is subject to the
self-custodian rules of the Securities and Exchange
Commission. These rules require that the Custodian be subject
to three securities verification examinations each year
conducted by the Fund's independent accountant. Two of the
examinations must be performed on an unannounced surprise
basis.
PRINCIPAL HOLDERS OF SECURITIES
On December 8, 1995, there were 24,781,866 shares of the
Portfolio outstanding. Rushmore Trust and Savings, FSB held,
for the benefit of others, 5.07% of the Portfolio shares.
Officers and Directors of the Fund, as a group, own less than
1% of the shares outstanding.
NET ASSET VALUE
The net asset value of the Portfolio's shares will be
determined daily as of 4:00 P.M., Eastern time, except on
customary national business holidays which result in the
closing of the New York Stock Exchange, and weekends.
The Portfolio will utilize the amortized cost method in
valuing its portfolio securities for purposes of determining
the net asset value of the shares of the Portfolio. The
Portfolio will utilize the amortized cost method in valuing
its portfolio securities even though the portfolio securities
may increase or decrease in market value, generally, in
connection with changes in interest rates. The amortized cost
<PAGE> 8
<PAGE>
method of valuation involves valuing a security at its cost
adjusted by a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. While
this method provides certainty in valuation, this method may
result in periods during which value, as determined by
amortized cost, is higher or lower than the price the
Portfolio would receive if the Portfolio sold the instrument.
During such periods, the yield to investors in the Portfolio
may differ somewhat from that obtained in a similar company
which uses mark-to-market values for all its portfolio
securities. For example, if the use of amortized cost
resulted in a lower (higher) aggregate portfolio value on a
particular day, a prospective investor in the Portfolio would
be able to obtain a somewhat higher (lower) yield than would
result from investment in such a similar company and existing
investors would receive less (more) investment income. The
purpose of this method of calculation is to facilitate the
maintenance of a constant net asset value per share of $1.00.
The Portfolio's use of the amortized cost method to value its
portfolio securities and the maintenance of the per share net
asset value of $1.00 is permitted pursuant to Rule 2a-7 under
the 1940 Act (the "Rule"), and is conditioned on the
Portfolio's compliance with various conditions including: (a)
the Board is obligated, as a particular responsibility within
the overall duty of care owed to the Portfolio's shareholders,
to establish written procedures reasonably designed, taking
into account current market conditions and the Portfolio's
investment objectives, to stabilize the net asset value per
share as computed for the purpose of distribution and
redemption at $1.00 per share; (b) the procedures should
provide for (i) the calculation, at such intervals as the
Board determines are appropriate and as are reasonable in
light of current market conditions, of the deviation, if any,
between net asset value per share using amortized cost to
value portfolio securities and net asset value per share based
upon available market quotations with respect to such
portfolio securities; (ii) the periodic review by the Board of
the amount of deviation as well as methods used to calculate
the amount of deviation; and (iii) the maintenance of written
records of the procedures, the Board's considerations made
pursuant to the procedures and any actions taken upon such
considerations; (c) the Board should consider what steps
should be taken, if any, in the event of a difference of more
than 1/2 of 1% between the two methods of valuation; and (d)
the Board should take such action as the Board deems
appropriate (such as shortening the average portfolio
maturity, realizing gains or losses, or, as provided by the
Articles of Incorporation, reducing the number of the
outstanding shares of the Portfolio) to eliminate or reduce to
<PAGE> 9
<PAGE>
the extent reasonably practicable material dilution or other
unfair results to investors or existing shareholders. Any
reduction of outstanding shares will be effected by having
each shareholder proportionately contribute to the Portfolio's
capital the shares necessary to eliminate or reduce the
material dilution or other unfair results to investors or
existing shareholders. Each shareholder will be deemed to
have agreed to such contribution in these circumstances by
investment in the Portfolio.
The Rule further requires that the Portfolio limits its
investments to U.S. dollar-denominated instruments which the
Board determines present minimal credit risks and which are
Eligible Securities (as defined below). The Rule also
requires the Portfolio to maintain a dollar-weighted average
portfolio maturity (not more than 90 days) appropriate to the
Portfolio's objective of maintaining a stable net asset value
of $1.00 per share and precludes the purchase of any
instrument with a remaining maturity of more than thirteen
months. Should the disposition of a portfolio security result
in a dollar-weighted average portfolio maturity of more than
90 days, the Portfolio would be required to invest its
available cash in such a manner as to reduce such maturity to
90 days or less as soon as reasonably practicable.
Generally, for purposes of the procedures adopted under the
Rule, the maturity of a portfolio instrument is deemed to be
the period remaining (calculated from the trade date or such
other date on which the Portfolio's interest in the instrument
is subject to market action) until the date noted on the face
of the instrument as the date on which the principal amount
must be paid, or, in the case of an instrument called for
redemption, the date on which the redemption payment must be
made.
A variable rate obligation that is subject to a demand feature
is deemed to have a maturity equal to the longer of the period
remaining until the next readjustment of the interest rate or
the period remaining until the principal amount can be
recovered through demand. A floating rate instrument that is
subject to a demand feature is deemed to have a maturity equal
to the period remaining until the principal amount can be
recovered through demand.
An Eligible Security is defined in the Rule to mean a security
which: (a) has a remaining maturity of thirteen months or
less; (b) either (i) is rated in the two highest short-term
rating categories by any two nationally-recognized statistical
rating organizations ("NRSROs") that have issued a short-term
rating with respect to the security or class of debt
<PAGE> 10
<PAGE>
obligations of the issuer, or (ii) if only one NRSRO has
issued a short-term rating with respect to the security, then
by that NRSRO; (c) was a long-term security at the time of
issuance whose issuer has outstanding a short-term debt
obligation which is comparable in priority and security and
has a rating as specified in clause (b) above; or (d) if no
rating is assigned by any NRSRO as provided in clauses (b) and
(c) above, the unrated security is determined by the Board to
be of comparable quality to any such rated security.
As permitted by the Rule, the Board has delegated to the
Fund's Adviser, subject to the Board's oversight pursuant to
guidelines and procedures adopted by the Board, the authority
to determine which securities present minimal credit risks and
which unrated securities are comparable in quality to rated
securities.
If the Board determines that it is no longer in the best
interests of the Portfolio and its shareholders to maintain a
stable price of $1.00 per share, or if the Board believes that
maintaining such price no longer reflects a market-based net
asset value per share, the Board has the right to change from
an amortized cost basis of valuation to valuation based on
market quotations. The Portfolio will notify shareholders of
any such change.
The Portfolio will manage its portfolio in an effort to
maintain a constant $1.00 per share price, but the Portfolio
cannot assure that the value of the Portfolio's shares will
never deviate from this price. Since dividends from net
investment income (and net short-term capital gains, if any)
are declared and accrued on a daily basis, the net asset value
per share, under ordinary circumstances, is likely to remain
constant. Otherwise, realized and unrealized gains and losses
will not be distributed on a daily basis but will be reflected
in the Portfolio's net asset value. The amounts of such gains
and losses will be considered by the Board in determining the
action to be taken to maintain the Fund's $1.00 per share net
asset value. Such action may include distribution at any time
of part or all of the then-accumulated undistributed net
realized capital gains, or reduction or elimination of daily
dividends by an amount equal to part or all of the then-
accumulated net realized capital losses. However, if realized
losses should exceed the sum of net investment income plus
realized gains on any day, the net asset value per share on
that day might decline below $1.00 per share. In such
circumstances, the Portfolio may reduce or eliminate the
payment of daily dividends for a period of time in an effort
to restore the Fund's $1.00 per share net asset value. A
decline in prices of securities could result in significant
<PAGE> 11
<PAGE>
unrealized depreciation on a mark-to-market basis. Under
these circumstances the Portfolio may reduce or eliminate the
payment of dividends, and utilize a net asset value per share
as determined by using available market quotations, or reduce
the number of its shares outstanding.
CALCULATION OF YIELD AND RETURN QUOTATIONS
The Portfolio's annualized current yield, as may be quoted
from time to time in advertisements and other communications
to shareholders and potential investors, is computed by
determining, for a stated seven-day period, the net change,
exclusive of capital changes and including the value of
additional shares purchased with dividends and any dividends
declared therefrom (which reflect deductions of all expenses
of the Portfolio such as management fees), in the value of a
hypothetical pre-existing account having a balance of one
share at the beginning of the period, and dividing the
difference by the value of the account at the beginning of the
base period to obtain the base period return, and then
multiplying the base period return by (365/7).
The Portfolio's annualized effective yield, as may be quoted
from time to time in advertisements and other communications
to shareholders and potential investors, is computed by
determining (for the same stated seven-day period as the
current yield), the net change, exclusive of capital changes
and including the value of additional shares purchased with
dividends and any dividends declared therefrom (which reflect
deductions of all expenses of the Portfolio such as management
fees), in the value of a hypothetical pre-existing account
having a balance of one share at the beginning of the period,
and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return,
and then compounding the base period return by adding 1,
raising the sum to a power equal to 365 divided by 7, and
subtracting 1 from the result.
The yields quoted in any advertisement or other communication
should not be considered a representation of the yields of the
Portfolio in the future since the yield is not fixed. Actual
yields will depend not only on the type, quality, and
maturities of the investments held by Portfolio and changes in
interest rates on such investments, but also on changes in the
Portfolio's expenses during the period.
Yield information may be useful in reviewing the performance
of the Portfolio and for providing a basis for comparison with
<PAGE> 12
<PAGE>
other investment alternatives. However, unlike bank deposits
or other investments which typically pay a fixed yield for a
stated period of time, the Portfolio's yield fluctuates.
DIVIDENDS, DISTRIBUTIONS, AND TAXES
Dividends and Distributions. As discussed in the Prospectus,
the Portfolio intends to declare dividends daily from net
investment income (and net short-term capital gains, if any)
and distribute such dividends monthly. Net income, for
dividend purposes, includes accrued interest and amortization
of original issue and market discount, plus or minus any
short-term gains or losses realized on sales of portfolio
securities, less the amortization of market premium and the
estimated expenses of the Portfolio. Net income will be
calculated immediately prior to the determination of net asset
value per share of the Portfolio.
The Board may revise the dividend policy, or postpone the
payment of dividends, if the Portfolio should have or
anticipate any large unexpected expense, loss, or fluctuation
in net assets which, in the opinion of the Board, might have a
significant adverse effect on shareholders. On occasion, in
order to maintain a constant $1.00 per share net asset value,
the Board may direct that the number of outstanding shares be
reduced in each shareholder's account. Such reduction may
result in taxable income to a shareholder in excess of the net
increase (i.e., dividends, less such reduction), if any, in
the shareholder's account for a period of time. Furthermore,
such reduction may be realized as a capital loss when the
shares are liquidated.
Taxes. The Portfolio intends to qualify as a regulated
investment company under Subchapter M of the U.S. Internal
Revenue Code of 1986, as amended. If so qualified, the
Portfolio will not be subject to Federal income taxes,
provided that the Portfolio distributes all of the Portfolio's
taxable net investment income and all of the Portfolio's net
realized gains.
Shareholders will be subject to Federal income tax on
dividends paid from interest income derived from taxable
securities and on distributions of realized net short-term
capital gains. Interest and realized net short-term capital
gains distributions are taxable to the shareholder as ordinary
dividend income regardless of whether the shareholder receives
such distributions in additional shares or in cash. Since the
Portfolio's income is expected to be derived entirely from
<PAGE> 13
<PAGE>
interest rather than dividends, none of such distributions
will be eligible for the Federal dividends received deduction
available to corporations.
The Portfolio may be subject to tax or taxes in certain states
where the Portfolio does business. Furthermore, in those
states which have income tax laws, the tax treatment of the
Portfolio and of Portfolio shareholders with respect to
distributions by the Portfolio may differ from Federal tax
treatment.
Shareholders are urged to consult their own tax advisers
regarding specific questions as to Federal, state or local
taxes.
AUDITORS AND CUSTODIAN
Deloitte & Touche LLP, independent certified public
accountants, are the auditors of the Portfolio. Rushmore Trust
and Savings, FSB, Bethesda, Maryland acts as custodian bank
for the Portfolio.
FINANCIAL STATEMENTS
The Portfolio incorporates by reference in this Statement of
Additional Information the financial statements and notes
contained in its annual report to the shareholders for the
year ended August 31, 1995, which must accompany this
Statement of Additional Information.
<PAGE> 14
<PAGE>
CURRENT ANNUAL REPORT OF
FUND FOR GOVERNMENT INVESTORS, INC.,
FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1995
<PAGE>
<PAGE>
--------------------------------------------------------------
--
[LOGO OF FUND FOR GOVERNMENT INVESTORS, INC. APPEARS
HERE]
A MONEY MARKET FUND
ANNUAL REPORT
December 31, 1995
--------------------------------------------------------------
--
Dear Shareholders:
Fund for Government Investors, Inc. ended the year with
net assets of $577.2 million on December 31, 1995, an increase
of $53 million for the year. Net income averaged 4.93% of net
assets for the year.
After the Federal Reserve raised interest rates for more
than a year, the economy started to show signs of slowing in
1995. The slowing economy prompted the Federal Reserve to
reverse its course and reduce short-term rates in July by 25
basis points and again in December by an additional 25 basis
points. This reduction in short-term rates brought the Federal
funds' rate down to 5.50%.
The near term outlook continues to look sluggish with no
recession anticipated in 1996. With low inflation and
continued slow growth, expectations are that the Federal
Reserve will again lower interest rates in 1996. Also during
the year, we expect the Administration and Congress to reach a
balanced budget agreement which should bode well for the
economy.
Going forward, Fund for Government Investors, Inc. will
continue its conservative investment philosophy, and as
always, safety of assets will be our primary concern. Thank
you for your continued support.
/s/ Daniel L. O'Connor /s/ Richard J. Garvey
------------------------
--------------------------
Daniel L. O'Connor Richard J. Garvey
Chairman of the Board President
<PAGE>
<PAGE>
----------------------------------------------------------------
4922 Fairmont Avenue Bethesda, Maryland 20814 800-621-7874
301-657-1517
FUND FOR GOVERNMENT INVESTORS, INC.
STATEMENT OF NET ASSETS
December 31, 1995
<TABLE>
<CAPTION>
YIELD AT
PAYABLE AT MATURITY DATE OF VALUE
MATURITY DATE PURCHASE (%) (NOTE 1)
<S> <C> <C> <C>
----------------------------------------------------------------
----------------------------------------------------------------
UNITED STATES TREASURY BILLS
$ 25,000,000 January 4, 1996 5.47 $ 24,988,916
50,000,000 January 11, 1996 5.44 49,926,528
50,000,000 January 18, 1996 5.42 49,875,510
50,000,000 February 1, 1996 5.40 49,773,743
75,000,000 February 8, 1996 5.49 74,577,118
75,000,000 February 15, 1996 5.56 74,492,812
50,000,000 February 22, 1996 5.49 49,614,333
25,000,000 February 29, 1996 5.46 24,782,233
50,000,000 March 7, 1996 5.30 49,527,000
50,000,000 March 14, 1996 5.31 49,475,819
25,000,000 March 21, 1996 5.16 24,721,111
25,000,000 March 28, 1996 4.94 24,709,396
23,000,000 December 12, 1996 5.20 21,919,040
------------ ------------
$573,000,000 Total Investments -- 98.47%
============ (Cost $568,383,559*) 568,383,559
Other Assets Less
less Liabilities -- 1.53% 8,810,872
------------
<PAGE> 2
<PAGE>
Net Assets -- 100.0% $577,194,431
============
Net Asset value per share
(Based on 577,194,431
shares outstanding) $1.00
=====
</TABLE>
*Same cost is used for Federal income tax purposes.
Weighted Average Maturity of Portfolio: 57 Days
See Notes to Financial Statements.
<PAGE> 3
<PAGE>
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS:
INVESTMENT INCOME (Note 1) $31,976,884
EXPENSES
Investment Advisory Fee (Note 2) $2,787,502
Administrative Fee (Note 2) 1,409,761 4,197,263
---------- -----------
NET INVESTMENT INCOME $27,779,621
===========
</TABLE>
See Notes to Financial Statements.
<PAGE> 4
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Year Ended
December 31,
---------------------------------
1995 1994
-------------- -------------
<S> <C> <C>
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS
AND DECLARED AS DIVIDENDS TO
SHAREHOLDERS (Note 1) $ 27,779,621 $ 18,389,220
============== =============
FROM SHARE TRANSACTIONS
(at constant net asset value of $1)
Shares Purchased $2,611,795,994 $2,391,380,226
Dividends Reinvested 26,793,106 17,600,081
--------------- --------------
Total 2,638,589,100 2,408,980,307
Shares Redeemed (2,585,548,223) (2,485,592,551)
--------------- --------------
Increase (Decrease)
in Net Assets 53,040,877 (76,612,244)
NET ASSETS - Beginning of Year 524,153,554 600,765,798
--------------- --------------
NET ASSETS - End of Year $ 577,194,431 $ 524,153,554
=============== ==============
</TABLE>
See Notes to Financial Statements.
<PAGE> 5
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION
For the Year Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
------ ------ ------
Per Share Operating Performance: $1.00 $1.00 $1.00
Net Asset Value - Beginning of Year ------ ------ ------
Net Investment Income 0.049 0.033 0.023
Net Realized and Unrealized Gains
on Securities -- -- --
------ ------ ------
Net Increase in Net Asset Value
Resulting from Operations 0.049 0.033 0.023
Dividends to Shareholders (0.049) (0.033) (0.023)
Distributions to Shareholders from
Net Realized Capital Gains -- -- --
------ ------ ------
Net Increase in Net Asset Value 0.00 0.00 0.00
------ ------ ------
Net Asset Value - End of Year $1.00 $1.00 $1.00
====== ====== ======
Total Investment Return 5.04% 3.38% 2.37%
Ratios to Average Net Assets:
Expenses 0.74% 0.75% 0.75%
Net Investment Income 4.93% 3.31% 2.32%
Supplementary Data:
Portfolio Turnover Rate -- -- --
Number of Shares Outstanding at
End of Year (000's omitted) 577,194 524,154 600,766
See Notes to Financial Statements.
<PAGE> 6
<PAGE>
For the Year Ended December 31,
1992 1991
------ ------
Per Share Operating Performance: $1.00 $1.00
Net Asset Value - Beginning of Year ------ ------
Net Investment Income 0.030 0.053
Net Realized and Unrealized Gains
on Securities -- --
------ ------
Net Increase in Net Asset Value
Resulting from Operations 0.030 0.053
Dividends to Shareholders (0.030) (0.053)
Distributions to Shareholders from
Net Realized Capital Gains -- --
------ ------
Net Increase in Net Asset Value 0.00 0.00
------ ------
Net Asset Value - End of Year $1.00 $1.00
====== ======
Total Investment Return 3.02% 5.38%
Ratios to Average Net Assets:
Expenses 0.71% 0.69%
Net Investment Income 3.00% 5.29%
Supplementary Data:
Portfolio Turnover Rate -- --
Number of Shares Outstanding at
End of Year (000's omitted) 751,925 796,655
</TABLE>
See Notes to Financial Statements.
<PAGE> 7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
1. SIGNIFICANT ACCOUNTING POLICIES
Fund for Government Investors, Inc. is registered with the
Securities and Exchange Commission under the Investment
Company Act of 1940 and invests only in U.S. Government
Securities. The following is a summary of significant
accounting policies which the Fund consistently follows:
(a) Investments are valued at amortized cost, which
approximates market value. Amortized cost is the
purchase price of the security plus accumulated
discount or minus amortized premium from the date of
purchase.
(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.
(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.
2. INVESTMENT ADVISER AND SHAREHOLDER SERVICING AGENT
Investment advisory and management services are provided by
Money Management Associates under an agreement whereby the
Fund pays a fee at an annual rate based on the Fund's net
assets as follows: 0.50% of the first $500 million; 0.45% of
the next $250 million; 0.40% of the next $250 million; and
0.35% of the net assets that exceed $1 billion. Certain
Officers and Directors of the Fund are affiliated with Money
Management Associates.
Rushmore Trust and Savings, FSB, a majority-owned subsidiary
of Money Management Associates, provides custodial services,
transfer agency, dividend disbursing and other shareholder
services to the Fund. Rushmore Trust is paid an administrative
fee of 0.25% of average net assets to cover the cost of these
<PAGE> 8
<PAGE>
services as well as other expenses of the Fund except for
interest and extraordinary legal expenses.
<PAGE> 9
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors
of Fund for Government Investors, Inc.:
We have audited the statement of net assets of Fund for
Government Investors, Inc. (the Fund) as of December 31, 1995,
the related statements of operations for the year then ended
and of changes in net assets for the years ended December 31,
1995 and 1994, and the financial highlights for each of the
five years in the period ended December 31, 1995. 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 at
December 31, 1995 by correspondence with the custodian. An
audit also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial
highlights present fairly, in all material respects, the net
assets of Fund for Government Investors, Inc. at December 31,
1995, the results of its operations, the changes in its net
assets, and the financial highlights for the respective stated
periods in conformity with generally accepted accounting
principles .
DELOITTE & TOUCHE LLP
Washington, D.C.
January 30, 1996
<PAGE> 10
<PAGE>
FUND
FOR
GOVERNMENT
INVESTORS
--------------------------------------------------------------
-
ANNUAL REPORT
December 31, 1995
[LOGO OF RUSHMORE APPEARS HERE]
<PAGE>
<PAGE>
CURRENT ANNUAL REPORT OF
THE RUSHMORE FUND, INC.,
FOR THE FISCAL YEAR ENDED
AUGUST 31, 1995
<PAGE>
<PAGE>
ANNUAL REPORT, AUGUST 31, 1995
THE RUSHMORE FUND, INC.
4922 FAIRMONT AVENUE, BETHESDA, MARYLAND 20814
(800) 343-3355 (301) 657-1500
[LOGO OF RUSHMORE
APPEARS HERE]
--------------------------------------------------------------
Dear Shareholders:
In early 1994, the Federal Reserve began what was to be the
first of seven interest rate increases between February 1994
and February 1995, with the two most sizable increases of 75
and 50 basis points occurring in November 1994 and February
1995, respectively. Yet, the bear market environment of 1994
did not abate until late in the first quarter of 1995, when
the Fed's interest rate increases finally took hold and the
economy began to slow. The economic environment turned more
favorable for notes and bonds in the second quarter of 1995,
but was somewhat tempered by the weakening of the U.S. dollar.
Finally in July 1995 the Federal Reserve reduced rates 25
basis points, which marked a turning point for monetary policy
from one of restraint to one of accommodation.
RUSHMORE MONEY MARKET PORTFOLIO invests in the highest quality
commercial paper 81.70%, and U.S. Treasury repurchase
agreements 18.30%. The Portfolio had an average maturity of 17
days on August 31, 1995. For the fiscal year ended August 31,
1995, net income averaged 4.92% of net assets. We look for
short-term rates to have a market decline for the next few
months.
RUSHMORE U.S. GOVERNMENT INTERMEDIATE-TERM SECURITIES
PORTFOLIO invests primarily in the current ten-year Treasury
note. The objective of the Portfolio is to provide high
current income, while maintaining the safety of principal.
For the fiscal year ended August 31, 1995, the Portfolio
posted a total return
of 12.07%.
RUSHMORE U.S. GOVERNMENT LONG-TERM SECURITIES PORTFOLIO
invests in 10 and 30 year U.S. Treasury securities and, like
the Intermediate-Term Portfolio, strives to earn the highest
income possible while maintaining the safety of principal.
For the fiscal year ended August 31, 1995, the Portfolio
posted a total return of 16.35%.
<PAGE>
<PAGE>
The Federal Reserve, pleased that the economy looks
substantially healthier than in July when it cut interest
rates, will likely put further rate cuts on hold until at
least its next policy meeting in November 1995. The economy,
now operating close to full employment, can grow without an
acceleration of inflation. For the short-term, rates will stay
around present levels. Going forward, however, the situation
for notes and bonds is extremely attractive because of the
progress against inflation. For the balance of the calendar
year, we look for the economy to accelerate and rates to move
lower, this all being done quite possibly without further rate
cuts by the Federal Reserve.
We will continue our conservative investment philosophy and,
as always, thank you for your continued investment in The
Rushmore Fund, Inc.
Sincerely,
/s/ Daniel L. O'Connor /s/ Richard J. Garvey
Daniel L. O'Connor Richard J. Garvey
Chairman of the Board President
<PAGE> 2
<PAGE>
THE RUSHMORE FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 1995
<TABLE>
<CAPTION>
Face Value
Amount (Note 1)
<S> <C> <C>
COMMERCIAL PAPER 82.18%
Abbott Lab Co., 5.68%, 9/25/95........................ $1,000,000 $ 996,213
American Express Credit Corp., 5.70%, 9/05/95.......... 1,000,000 999,367
AT&T Corp., 5.70%, 9/27/95............................. 1,000,000 995,883
Chevron Oil Finance Co., 5.70%, 10/04/95............... 800,000 795,820
Dover Corp., 5.71%, 9/11/95............................ 1,000,000 998,414
Exxon Asset Management Corp., 5.70%, 9/14/95........... 1,000,000 997,942
Ford Motor Credit Co., 5.72%, 10/19/95................. 800,000 793,899
General Electric Capital Corp., 5.73%, 9/21/95......... 800,000 797,453
Heinz Co., 5.67%, 9/01/95.............................. 800,000 800,000
Kellogg Co., 5.70%, 9/18/95............................ 750,000 747,981
Merrill Lynch Co., 5.73%, 10/20/95..................... 800,000 793,761
Pepsi Co., 5.68%, 9/12/95.............................. 800,000 798,612
Philip Morris Co., 5.70%, 10/04/95..................... 800,000 795,820
Pitney Bowes Credit Corp., 5.72%, 9/15/95.............. 775,000 773,276
Raytheon Co., 5.70%, 9/21/95........................... 800,000 797,467
Safeco Credit Corp., 5.71%, 9/22/95.................... 800,000 797,335
Texaco, Inc., 5.68%, 9/01/95........................... 1,000,000 1,000,000
Transamerica Corp, 5.73%, 10/03/95..................... 1,000,000 994,907
United Parcel Service of America, Inc., 5.70%, 9/18/95. 800,000 797,847
US West Corp., 5.65%, 9/13/95.......................... 800,000 798,493
Xerox Corp., 5.70%, 9/26/95............................ 800,000 796,833
-----------
Total Commercial Paper (Cost $18,067,323).............. 18,067,323
-----------
REPURCHASE AGREEMENTS 18.41%
With Paine Webber at 5.75%, dated 8/31/95, due 9/1/95,
collateralized by
U.S. Treasury Notes, due 11/30/96 (Cost $4,047,622)... 4,047,622
<PAGE> 3
<PAGE>
-----------
Total Investments 100.59% (Cost $22,114,945*).......... 22,114,945
-----------
Other Liabilities in excess of Assets -0.59%........... (129,662)
-----------
Net Assets (Note 6) 100.00%............................ $21,985,283
===========
Net Asset Value Per Share (Based on 21,985,283 Shares
Outstanding).......................................... $ 1.00
===========
</TABLE>
*Same cost is used for Federal income tax purposes.
See Notes to Financial Statements.
<PAGE> 4
<PAGE>
THE RUSHMORE FUND, INC.
U.S. GOVERNMENT INTERMEDIATE-TERM SECURITIES PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 1995
<TABLE>
<CAPTION>
Face Value
Amount (Note 1)
---------- -----------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS 97.93%
U.S. Treasury Notes, 5.875%, 2/15/04.................... $8,900,000 $ 8,644,125
U.S. Treasury Notes, 7.875%, 11/15/04................... 300,000 331,500
U.S. Treasury Bonds, 7.50%, 2/15/05..................... 700,000 756,438
U.S. Treasury Notes, 6.50%, 5/15/05..................... 1,600,000 1,620,499
-----------
Total U.S. Treasury Obligations (Cost $10,950,968)...... 11,352,562
-----------
REPURCHASE AGREEMENTS 1.02%
With Paine Webber at 5.75%, dated 8/31/95, due 9/1/95,
collateralized by
U.S. Treasury Notes, due 11/30/96 (Cost $118,204)...... 118,204
-----------
Total Investments 98.95% (Cost $11,069,172*)............ 11,470,766
-----------
Other Assets Less Liabilities 1.05%..................... 122,079
-----------
Net Assets (Note 6) 100.00%............................. $11,592,845
===========
Net Asset Value Per Share (Based on 1,227,678 Shares
Outstanding)........................................... $ 9.44
===========
</TABLE>
* Same cost is used for Federal income tax purposes.
See Notes to Financial Statements.
<PAGE> 5
<PAGE>
THE RUSHMORE FUND, INC.
U.S. GOVERNMENT LONG-TERM SECURITIES PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 1995
<TABLE>
<CAPTION>
Face Value
Amount (Note 1)
---------- -----------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS 94.37%
U.S. Treasury Bonds, 8.00%, 11/15/21.................... $ 800,000 $ 917,749
U.S. Treasury Bonds, 7.50%, 11/15/24.................... 7,400,000 8,112,250
U.S. Treasury Bonds, 7.625%, 2/15/25.................... 4,850,000 5,409,263
U.S. Treasury Bonds, 6.875%, 8/15/25.................... 1,000,000 1,029,062
-----------
Total U.S. Treasury Obligations (Cost $14,301,989)...... 15,468,324
-----------
REPURCHASE AGREEMENTS 4.43%
With Paine Webber at 5.75%, dated 8/31/95, due 9/1/95,
collateralized by
U.S. Treasury Notes, due 11/30/96 (Cost $725,055)...... 725,055
-----------
Total Investments 98.80% (Cost $15,027,044*)............ 16,193,379
-----------
Other Assets Less Liabilities 1.20%..................... 197,327
-----------
Net Assets (Note 6) 100.00%............................. $16,390,706
===========
Net Asset Value Per Share (Based on 1,657,846 Shares
Outstanding)........................................... $ 9.89
===========
</TABLE>
* Same cost is used for Federal income tax purposes.
See Notes to Financial Statements.
<PAGE> 6
<PAGE>
THE RUSHMORE FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1995
<TABLE>
<CAPTION>
U.S. Government U.S. Government
Intermediate-Term Long-Term
Money Market Securities Securities
Portfolio Portfolio Portfolio
------------ ----------------- ---------------
<S> <C> <C> <C>
INVESTMENT INCOME (Note 1)...... $1,260,190 $ 784,865 $2,029,836
---------- ---------- ----------
EXPENSES
Investment Advisory Fee (Note
2)............................ 111,227 55,386 134,573
Administrative Fee (Note 2).... 55,614 33,231 80,744
---------- ---------- ----------
Total Expenses................ 166,841 88,617 215,317
---------- ---------- ----------
NET INVESTMENT INCOME........... 1,093,349 696,248 1,814,519
---------- ---------- ----------
Net Realized Loss on
Investments................... -- (233,727) (162,740)
Net Change in Unrealized
Appreciation of Investments... -- 652,352 1,939,775
---------- ---------- ----------
NET GAIN ON INVESTMENTS......... -- 418,625 1,777,035
---------- ---------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS...... $1,093,349 $1,114,873 $3,591,554
========== ========== ==========
</TABLE>
See Notes to Financial Statements.
<PAGE> 7
<PAGE>
THE RUSHMORE FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED AUGUST 31,
<TABLE>
<CAPTION>
Money Market
Portfolio
1995 1994
----------- ------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Income.. $ 1,093,349 $ 884,972
Net Realized Losses on Investment
Transactions.......... -- --
Net Change in Unrealized
Appreciation (Depreciation) of
Investments........... -- --
----------- ------------
Net Increase (Decrease) in Net Assets
Resulting from Operations............ 1,093,349 884,972
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income................ (1,093,349) (895,876)
From Realized Gains on Investments........... -- --
FROM SHARE TRANSACTIONS (Note 4)............... (275,242) (34,498,161)
----------- ------------
Net Increase (Decrease) in Net Assets......... (275,242) (34,509,065)
NET ASSETS--Beginning of Year................... 22,260,525 56,769,590
----------- ------------
NET ASSETS--End of Year. $21,985,283 $ 22,260,525
=========== ============
</TABLE>
See Notes to Financial Statements.
<PAGE> 8
<PAGE>
THE RUSHMORE FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED AUGUST 31,
<TABLE>
<CAPTION>
U.S. Government
Intermediate-Term
Securities
Portfolio
------------------------
1995 1994
----------- ------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Income.. $ 696,248 $ 1,054,991
Net Realized Losses on
Investment Transactions.......... (233,727) (746,062)
Net Change in Unrealized Appreciation
(Depreciation) of Investments........... 652,352 (1,585,722)
---------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations............ 1,114,873 (1,276,793)
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income................ (696,248) (1,059,384)
From Realized Gains on Investments........... -- (331,837)
FROM SHARE TRANSACTIONS (Note 4)............... (2,188,052) (4,320,098)
----------- ------------
Net Increase (Decrease) in Net Assets......... (1,769,427) (6,988,112)
NET ASSETS--Beginning of Year................... 13,362,272 20,350,384
---------- -----------
NET ASSETS--End of Year. $11,592,845 $13,362,272
=========== ===========
</TABLE>
See Notes to Financial Statements.
<PAGE> 9
<PAGE>
THE RUSHMORE FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED AUGUST 31,
<TABLE>
<CAPTION>
U.S. Government
Long-Term
Securities
Portfolio
------------------------
1995 1994
----------- ------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Income.. $ 1,814,519 $ 1,336,390
Net Realized Losses on Investment
Transactions.......... (162,740) (271,328)
Net Change in Unrealized
Appreciation (Depreciation) of
Investments........... 1,939,775 (2,738,037)
---------- ----------
Net Increase (Decrease) in Net Assets
Resulting from Operations............ 3,591,554 (1,672,975)
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income................ (1,814,519) (1,341,699)
From Realized Gains on Investments........... -- (1,300,316)
FROM SHARE TRANSACTIONS (Note 4)............... (14,662,722) 9,497,713
------------ -----------
Net Increase (Decrease) in Net Assets......... (12,885,687) 5,182,723
NET ASSETS--Beginning of Year................... 29,276,393 24,093,670
---------- -----------
NET ASSETS--End of Year. $ 16,390,706 $29,276,393
=========== ===========
</TABLE>
See Notes to Financial Statements.
<PAGE> 10
<PAGE>
THE RUSHMORE FUND, INC.
FINANCIAL HIGHLIGHTS
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
For the Year Ended August 31,
-------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<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
------- ------- ------- ------- -------
Net Investment Income............ 0.049 0.027 0.024 0.037 0.061
Net Realized and Unrealized Gains
(Losses) on Securities.......... -- -- -- -- --
------- ------- ------- ------- -------
Net Increase in Net Asset Value
Resulting from Operations....... 0.049 0.027 0.024 0.037 0.061
Dividends to Shareholders........ (0.049) (0.027) (0.024) (0.037) (0.061)
Distributions to Shareholders
From Net Realized Capital Gains. -- -- -- -- --
------- ------- ------- ------- -------
Net Increase (Decrease) 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........... 5.03% 2.88% 2.43% 3.71% 6.33%
Ratios to Average Net Assets:
Expenses......................... 0.75% 0.75% 0.78% 0.80% 0.79%
Net Investment Income............ 4.92% 2.73% 2.40% 3.71% 6.14%
Supplementary Data:
Portfolio Turnover Rate.......... -- -- -- -- --
Number of Shares Outstanding at
End of Year
(000's omitted)................. 21,985 22,261 56,759 98,606 115,539
</TABLE>
See Notes to Financial Statements.
<PAGE> 11
<PAGE>
THE RUSHMORE FUND, INC.
FINANCIAL HIGHLIGHTS
U.S. GOVERNMENT INTERMEDIATE-TERM SECURITIES PORTFOLIO
<TABLE>
<CAPTION>
For the Year Ended August 31,
--------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value--Beginning of
Year........................... $ 8.97 $ 10.22 $ 10.73 $ 9.93 $ 9.39
------- ------- ------- ------- -------
Net Investment Income........... 0.564 0.527 0.596 0.681 0.702
Net Realized and Unrealized
Gains (Losses) on Securities... 0.470 (1.080) 0.492 0.799 0.539
------- ------- ------- ------- -------
Net Increase (Decrease) in Net
Asset Value Resulting from
Operations..................... 1.034 (0.553) 1.088 1.480 1.241
Dividends to Shareholders....... (0.564) (0.530) (0.596) (0.680) (0.701)
Distributions to Shareholders
from Net Realized Capital
Gains.......................... -- (0.166) (1.002) -- --
------- ------- ------- ------- -------
Net Increase (Decrease) in Net
Asset Value.................... 0.47 (1.25) (0.51) 0.80 0.54
------- ------- ------- ------- -------
Net Asset Value--End of Year.... $ 9.44 $ 8.97 $ 10.22 $ 10.73 $ 9.93
======= ======= ======= ======= =======
Total Investment Return.......... 12.07% (5.64)% 14.47% 15.37% 13.86%
Ratios to Average Net Assets:
Expenses........................ 0.80% 0.80% 0.80% 0.80% 0.80%
Net Investment Income........... 6.30% 5.50% 5.91% 6.63% 7.21%
Supplementary Data:
Portfolio Turnover Rate......... 28.9% 174.0% 113.3% 199.8% 195.8%
Number of Shares Outstanding at
End of Year
(000's omitted)................ 1,228 1,489 1,990 1,502 2,322
</TABLE>
See Notes to Financial Statements.
<PAGE> 12
<PAGE>
THE RUSHMORE FUND, INC.
FINANCIAL HIGHLIGHTS
U.S. GOVERNMENT LONG-TERM SECURITIES PORTFOLIO
<TABLE>
<CAPTION>
For the Year Ended August 31,
--------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value--Beginning of
Year........................... $ 9.08 $ 11.55 $ 10.62 $ 9.97 $ 9.14
------- ------- ------- ------- -------
Net Investment Income........... 0.606 0.599 0.650 0.697 0.718
Net Realized and Unrealized
Gains (Losses) on Securities... 0.810 (1.880) 1.304 0.649 0.829
------- ------- ------- ------- -------
Net Increase (Decrease) in Net
Asset Value Resulting from
Operations..................... 1.416 (1.281) 1.954 1.346 1.547
Dividends to Shareholders....... (0.606) (0.602) (0.650) (0.696) (0.717)
Distributions to Shareholders
from Net Realized Capital
Gains.......................... -- (0.583) (0.374) -- --
------- ------- ------- ------- -------
Net Increase (Decrease) in Net
Asset Value.................... 0.81 (2.47) 0.93 0.65 0.83
------- ------- ------- ------- -------
Net Asset Value--End of Year.... $ 9.89 $ 9.08 $ 11.55 $ 10.62 $ 9.97
======= ======= ======= ======= =======
Total Investment Return.......... 16.35% (10.29)% 20.92% 13.97% 17.61%
Ratios to Average Net Assets:
Expenses........................ 0.80% 0.80% 0.80% 0.80% 0.80%
Net Investment Income........... 6.75% 5.97% 6.08% 6.80% 7.43%
Supplementary Data:
Portfolio Turnover Rate......... 63.3% 188.3% 173.6% 298.0% 235.7%
Number of Shares Outstanding at
End of Year
(000's omitted)................ 1,658 3,225 2,085 2,148 1,452
</TABLE>
See Notes to Financial Statements.
<PAGE> 13
<PAGE>
THE RUSHMORE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1995
1. SIGNIFICANT ACCOUNTING POLICIES
The Rushmore Fund, Inc. ("Fund") is registered with the
Securities and Exchange Commission under the Investment
Company Act of 1940 as an open-end, diversified investment
company. The Fund consists of four separate portfolios each
with its own investment objectives and policies. These
financial statements report on three of the four portfolios:
Money Market Portfolio, U.S. Government Intermediate-Term
Securities Portfolio, and U.S. Government Long-Term Securities
Portfolio. The following is a summary of significant
accounting policies which the Fund follows.
(a) Securities of the Money Market Portfolio are valued
at amortized cost which approximates market value.
Securities of the U.S. Government Intermediate-Term
Securities Portfolio and U.S. Government Long-Term
Securities Portfolio are valued on the basis of the
average of quoted bid and ask prices when market
quotations are available. If market quotations are
not readily available, the Board of Directors will
value the portfolios' securities in good faith.
(b) Security transactions are recorded on the trade date
the date the order to buy or sell is executed).
Interest income is accrued on a daily basis.
Realized gains and losses from securities
transactions are computed on an identified cost
basis.
(c) Net investment income is computed, and dividends are
declared daily, in the Money Market, U.S. Government
Intermediate-Term Securities and U.S. Government
Long-Term Securities Portfolios. Income dividends in
these portfolios are paid monthly. Dividends are
reinvested in additional shares unless shareholders
request payment in cash. Generally, short-term
capital gains are distributed quarterly in the Money
Market, U.S. Government Intermediate-Term Securities
and U.S. Government Long-Term Securities Portfolios.
Long-term capital gains, if any, are distributed
annually.
<PAGE> 14
<PAGE>
(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.
2. INVESTMENT ADVISORY AND SHAREHOLDER SERVICES
Investment advisory and management services are provided by
Money Management Associates, ("Adviser"). Under an agreement
with the Adviser, each portfolio of the Fund pays a fee for
such services at an annual rate of 0.50% of the average daily
net assets of the portfolio.
Rushmore Trust and Savings, FSB (Trust), a wholly owned
subsidiary of the Adviser, provides transfer agency,
dividend-disbursing and shareholder services to the Fund. In
addition, the Trust serves as custodian of the Fund's assets
and pays the operating expenses of the Fund. For these
services, the Trust receives an annual fee of 0.25% of the
average net assets of the Money Market Portfolio, 0.30% of the
average net assets of the U.S. Government Intermediate-Term
Securities and U.S. Government Long-Term Securities
Portfolios.
3. SECURITIES TRANSACTIONS
For the year ended August 31, 1995, purchases and sales
(including maturities) of securities (excluding short-term
securities) were as follows:
<TABLE>
<CAPTION>
U.S. Government U.S. Government
Intermediate-Term Long-Term
Money Market Securities Securities
Portfolio Portfolio Portfolio
------------ ----------------- ---------------
<S> <C> <C> <C>
Purchases...................... -- $ 3,078,328 $ 16,414,844
------------ ----------- ------------
Sales.......................... -- $ 4,982,766 $ 30,998,133
------------ ----------- ------------
</TABLE>
<PAGE> 15
<PAGE>
4. SHARE TRANSACTIONS
On August 31, 1995, there were 1,000,000,000 shares of $.001
par value capital stock authorized. Transactions in shares of
the Fund were as follows:
<TABLE>
<CAPTION>
U.S. Government U.S. Government
Intermediate-Term Long-Term
Money Market Securities Securities
Portfolio Portfolio Portfolio
------------ ----------------- ---------------
<S> <C> <C> <C>
In Shares
Shares Sold................... 49,791,377 573,883 2,729,920
Shares Issued in Reinvestment
of Dividends................. 1,055,000 66,809 183,562
------------ ----------- ------------
50,846,377 640,692 2,913,482
Shares Redeemed............... (51,121,619) (902,155) (4,480,768)
------------ ----------- ------------
(275,242) (261,463) (1,567,286)
============ =========== ============
In Dollars
Shares Sold................... $ 49,791,377 $ 5,208,101 $ 24,815,509
Shares Issued in Reinvestment
of Dividends................. 1,055,000 598,933 1,657,955
------------ ----------- ------------
50,846,377 5,807,034 26,473,464
Shares Redeemed............... (51,121,619) (7,995,086) (41,136,186)
------------ ----------- ------------
$ (275,242) $(2,188,052) $(14,662,722)
============ =========== ============
</TABLE>
5. NET UNREALIZED APPRECIATION/DEPRECIATION OF INVESTMENTS
Unrealized appreciation (depreciation) as of August 31, 1995,
based on the cost for Federal income tax purposes is as
follows:
<PAGE> 16
<PAGE>
<TABLE>
<CAPTION>
U.S. Government U.S. Government
Intermediate-Term Long-Term
Money Market Securities Securities
Portfolio Portfolio Portfolio
------------ ----------------- ---------------
<S> <C> <C> <C>
Gross Unrealized Appreciation... -- $ 406,076 $ 1,234,225
Gross Unrealized Depreciation... -- (4,482) (67,890)
----------- ----------- -----------
Net Unrealized Appreciation..... -- $ 401,594 $ 1,166,335
=========== =========== ===========
Cost of Investments for Federal
Income Tax purposes............ $22,114,945 $11,069,172 $15,027,044
=========== =========== ===========
</TABLE>
6. NET ASSETS
At August 31, 1995, net assets consisted of the following:
<TABLE>
<CAPTION>
U.S. Government U.S. Government
Intermediate-Term Long-Term
Money Market Securities Securities
Portfolio Portfolio Portfolio
------------ --------------- -------------
<S> <C> <C> <C>
Paid-in Capital................. $21,985,283 $12,170,348 $15,848,714
Undistributed Net Investment In-
come........................... -- -- --
Accumulated Net Realized Loss on
Investments.................... -- (979,097) (624,343)
Net Unrealized Appreciation on
Investments.................... -- 401,594 1,166,335
----------- ----------- -----------
NET ASSETS...................... $21,985,283 $11,592,845 $16,390,706
=========== =========== ===========
</TABLE>
<PAGE> 17
<PAGE>
7. CAPITAL LOSS CARRYOVERS
At August 31, 1995, for Federal income tax purposes, the
following portfolio's had capital loss carryovers 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>
U.S. Government U.S. Government
Intermediate-Term Long-Term
Securities Securities
Expires August 31, Portfolio Portfolio
------------------ --------------- ---------------
<S> <C> <C>
2002.......................................... $745,370 $461,603
2003.......................................... 233,727 162,740
-------- --------
$979,097 $624,343
======== ========
</TABLE>
Permanent differences between tax and financial reporting of
accumulated realized losses have been reclassified to
paid-in-capital. As of August 31, 1995 the effect of
permanent differences between tax and financial reporting of
realized losses of $1,331 and $591,157 for the U.S. Government
Intermediate-Term Securities Portfolio and the U.S. Government
Long-Term Securities Portfolio, respectively, resulted in a
reclassification of such losses to paid-in-capital.
8. REORGANIZATION PLAN
On July 27, 1995, the Board of Directors approved the
development of an Agreement and Plan of Reorganization to be
voted upon by shareholders of the U.S. Government
Intermediate-Term Securities Portfolio at a December 22, 1995
meeting of shareholders. Shareholders of record as of October
27, 1995 will receive a combined prospectus/proxy statement
(on or about November 13, 1995), and upon their approval, the
U.S. Government Long-Term Securities Portfolio would acquire
<PAGE> 18
<PAGE>
the assets and liabilities of the U.S. Government
Intermediate-Term Securities Portfolio in exchange for shares
of the U.S. Government Long-Term Securities Portfolio at the
Net Asset Value as of December 31, 1995.
<PAGE> 19
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors
of The Rushmore Fund, Inc.:
We have audited the statements of net assets of the Money
Market, U.S. Government Intermediate-Term Securities, and U.S.
Government Long-Term Securities Portfolio (three of the
Portfolios) of The Rushmore Fund, Inc. as of August 31, 1995,
the related statements of operations and changes in net assets
and the financial highlights for the periods presented. 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 at August 31, 1995 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, such financial statements and financial
highlights present fairly, in all material respects, the
financial position of the Money Market, U.S. Government
Intermediate-Term Securities, and U.S. Government Long-Term
Securities Portfolios (three of the Portfolios) of The
Rushmore Fund, Inc. at August 31,1995, the results of their
operations, the changes in their net assets and the financial
highlights for the respective stated periods in
conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Washington, DC
September 29, 1995
<PAGE> 20
<PAGE>
RUSHMORE FUND
--------------------------------------------------------------
ANNUAL REPORT
August 31, 1995
[LOGO OF
RUSHMORE APPEARS HERE]
<PAGE> 21
<PAGE>
PRO FORMA FINANCIAL STATEMENTS
<PAGE>
<PAGE>
FUND FOR GOVERNMENT INVESTORS, INC.
AND
RUSHMORE MONEY MARKET PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
(unaudited)
<TABLE>
<CAPTION>
Face Amount
Fund Rushmore
for Money
Government Market Pro Forma
Investors Portfolio Combined
<S> <C> <C> <C>
COMMERCIAL PAPER 3.31%
American Express Credit Corp.
5.70%, 1/17/96 $1,000,000 $1,000,000
AT&T Corp.
5.61%, 1/8/96 800,000 800,000
Bank America Corp.
5.53%, 1/25/96 1,000,000 1,000,000
Bell South Telecommunications
5.70%, 1/24/96 800,000 800,000
Cargill, Inc.
5.68%, 1/12/96 800,000 800,000
Chevron Oil Finance Co.
5.77%, 2/1/96 800,000 800,000
<PAGE>
<PAGE>
Coca Cola Co.
5.57%, 1/22/96 1,000,000 1,000,000
Dover Corp.
5.73%, 1/9/96 1,000,000 1,000,000
Exxon Asset Management Corp.
5.75%, 1/5/96 1,000,000 1,000,000
Ford Motor Credit Co.
5.75%, 1/11/96 800,000 800,000
General Electric Capital Corp.
5.76%, 1/31/96 800,000 800,000
Heinz Co.
5.71%, 1/16/96 800,000 800,000
IBM Credit Corp.
5.62%, 2/13/96 800,000 800,000
Kellogg Co.
5.65%, 1/26/96 1,000,000 1,000,000
Merrill Lynch & Co., Inc.
5.80%, 1/4/96 800,000 800,000
Pepsico, Inc.
5.72%, 1/18/96 800,000 800,000
Phillip Morris Co.
5.68%, 1/19/96 800,000 800,000
Safeco Credit Corp.
5.69%, 1/16/96 1,000,000 1,000,000
<PAGE>
<PAGE>
Southern California Edison Co.
5.80%, 1/12/96 1,000,000 1,000,000
Transamerica Corp.
5.77%, 1/5/96 1,000,000 1,000,000
U. S. West Corp.
5.69%, 1/10/96 1,000,000 1,000,000
Xerox Corp.
5.70%, 1/10/96 800,000 800,000
Total Commercial Paper
</TABLE>
<PAGE>
<PAGE>
FUND FOR GOVERNMENT INVESTORS, INC.
AND
RUSHMORE MONEY MARKET PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS (continued)
DECEMBER 31, 1995
(unaudited)
<TABLE>
<CAPTION>
Value
Fund Rushmore
for Money
Government Market Pro Forma
Investors Portfolio Combined
<S> <C> <C> <C>
COMMERCIAL PAPER 3.31%
American Express Credit Corp.
5.70%, 1/17/96 $997,467 $997,467
AT&T Corp.
5.61%, 1/8/96 799,127 799,127
Bank America Corp.
5.53%, 1/25/96 996,313 996,313
Bell South Telecommunications
5.70%, 1/24/96 797,087 797,087
Cargill, Inc.
5.68%, 1/12/96 798,612 798,612
Chevron Oil Finance Co.
5.77%, 2/1/96 796,025 796,025
<PAGE>
<PAGE>
Coca Cola Co.
5.57%, 1/22/96 996,751 996,751
Dover Corp.
5.73%, 1/9/96 998,727 998,727
Exxon Asset Management Corp.
5.75%, 1/5/96 999,361 999,361
Ford Motor Credit Co.
5.75%, 1/11/96 798,722 798,722
General Electric Capital Corp.
5.76%, 1/31/96 796,160 796,160
Heinz Co.
5.71%, 1/16/96 798,097 798,097
IBM Credit Corp.
5.62%, 2/13/96 794,630 794,630
Kellogg Co.
5.65%, 1/26/96 996,076 996,076
Merrill Lynch & Co., Inc.
5.80%, 1/4/96 799,613 799,613
Pepsico, Inc.
5.72%, 1/18/96 797,839 797,839
Phillip Morris Co.
5.68%, 1/19/96 797,728 797,728
Safeco Credit Corp.
5.69%, 1/16/96 997,629 997,629
<PAGE>
<PAGE>
Southern California Edison Co.
5.80%, 1/12/96 998,228 998,228
Transamerica Corp.
5.77%, 1/5/96 999,359 999,359
U. S. West Corp.
5.69%, 1/10/96 998,577 998,577
Xerox Corp.
5.70%, 1/10/96 798,860 798,860
Total Commercial Paper 0 19,550,988 19,550,988
</TABLE>
<PAGE>
<PAGE>
FUND FOR GOVERNMENT INVESTORS, INC.
AND RUSHMORE MONEY MARKET PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS (continued)
DECEMBER 31, 1995
(unaudited)
<TABLE>
<CAPTION>
Face Amount
Fund Rushmore
for Money
Government Market Pro Forma
Investors Portfolio Combined
<S> <C> <C> <C>
UNITED STATES TREASURY BILLS 96.20%
U.S. Treasury Bills
5.47%, 1/4/96 $ 25,000,000 $ 25,000,000
U.S. Treasury Bills
5.44%, 1/11/96 50,000,000 50,000,000
U.S. Treasury Bills
5.42%, 1/18/96 50,000,000 50,000,000
U.S. Treasury Bills
5.40%, 2/1/96 50,000,000 50,000,000
U.S. Treasury Bills
5.49%, 2/8/96 75,000,000 75,000,000
U.S. Treasury Bills
5.56%, 2/15/96 75,000,000 75,000,000
U.S. Treasury Bills
5.49%, 2/22/96 50,000,000 50,000,000
U.S. Treasury Bills
5.46%, 2/29/96 25,000,000 25,000,000
U.S. Treasury Bills
5.30%, 3/7/96 50,000,000 50,000,000
U.S. Treasury Bills
5.31%, 3/14/96 50,000,000 50,000,000
<PAGE>
<PAGE>
Face Amount
Fund Rushmore
for Money
Government Market Pro Forma
Investors Portfolio Combined
<S> <C> <C> <C>
U.S. Treasury Bills
5.16%, 3/21/96 25,000,000 25,000,000
U.S. Treasury Bills
4.94%, 3/28/96 25,000,000 25,000,000
U.S. Treasury Bills
5.20%, 12/12/96 23,000,000 23,000,000
Total U.S. Treasury Bills
REPURCHASE AGREEMENTS 0.49%
With Paine Webber at 5.70%,
dated 12/29/95, due 1/2/96,
collateralized by U.S. Treasury
Notes, due 12/31/96 2,890,749 2,890,749
Total Investments - Amortized Cost 100.00%
<PAGE>
<PAGE>
FUND FOR GOVERNMENT INVESTORS, INC.
AND RUSHMORE MONEY MARKET PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS (continued)
DECEMBER 31, 1995
(unaudited)
Value
Fund Rushmore
for Money
Government Market Pro Forma
Investors Portfolio Combined
<S> <C> <C> <C>
UNITED STATES TREASURY BILLS 96.20%
U.S. Treasury Bills
5.47%, 1/4/96 $ 24,988,916 $ 24,988,916
U.S. Treasury Bills
5.44%, 1/11/96 49,926,528 49,926,528
U.S. Treasury Bills
5.42%, 1/18/96 49,875,510 49,875,510
U.S. Treasury Bills
5.40%, 2/1/96 49,773,743 49,773,743
U.S. Treasury Bills
5.49%, 2/8/96 74,577,118 74,577,118
U.S. Treasury Bills
5.56%, 2/15/96 74,492,812 74,492,812
U.S. Treasury Bills
5.49%, 2/22/96 49,614,333 49,614,333
U.S. Treasury Bills
5.46%, 2/29/96 24,782,233 24,782,233
U.S. Treasury Bills
5.30%, 3/7/96 49,527,000 49,527,000
U.S. Treasury Bills
5.31%, 3/14/96 49,475,819 49,475,819
U.S. Treasury Bills
5.16%, 3/21/96 24,721,111 24,721,111
<PAGE>
<PAGE>
Value
Fund Rushmore
for Money
Government Market Pro Forma
Investors Portfolio Combined
<S> <C> <C> <C>
U.S. Treasury Bills
4.94%, 3/28/96 24,709,396 24,709,396
U.S. Treasury Bills
5.20%, 12/12/96 21,919,040 21,919,040
Total U.S. Treasury Bills 568,383,559 0 568,383,559
REPURCHASE AGREEMENTS 0.49%
With Paine Webber at 5.70%,
dated 12/29/95, due 1/2/96,
collateralized by U.S.
Treasury Notes, due 12/31/96 2,890,749 2,890,749
Total Investments - Amortized
Cost 100.00% $ 568,383,559 $ 22,441,737 $ 590,825,296
</TABLE>
<PAGE>
<PAGE>
PRO FORMA COMBINED
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
(unaudited)
<TABLE>
<CAPTION>
Fund Rushmore
for Money
Government Market
Investors Portfolio
<S> <C> <C>
ASSETS
Cash $ 5,381,532 $ 0
Securities at Amortized Cost 568,383,559 22,441,737
Investment Income Receivable 0 1,369
Receivable for Shares Purchased 4,435,404 220,239
Total Assets 578,200,495 22,663,345
LIABILITIES
Dividends Payable 89,166 10,205
Investment Advisory Fee Payable 731,136 10,206
Administration Fee Payable 125,822 5,103
Liability for Shares Redeemed 59,940 249,863
Total Liabilities 1,006,064 275,377
Net Assets $577,194,431 $ 22,387,968
Net Assets Consist of:
Capital paid in on shares of
common stock $577,194,431 $ 22,387,968
Accumulated net realized gain (loss) 0 0
Net change in unrealized appreciation
of investments 0 0
$577,194,431 $ 22,387,968
Shares Outstanding 577,194,431 22,387,968
Net Asset Value Per Share $1.00 $1.00
<PAGE>
<PAGE>
PRO FORMA COMBINED
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995 (Continued)
(unaudited)
Pro Forma Pro Forma
Adjustments Combined
<S> <C> <C>
ASSETS
Cash $ 5,381,532
Securities at Amortized Cost 590,825,296
Investment Income Receivable 1,369
Receivable for Shares Purchased 4,655,643
Total Assets 600,863,840
LIABILITIES
Dividends Payable 99,371
Investment Advisory Fee Payable 741,342
Administration Fee Payable 130,925
Liability for Shares Redeemed 309,803
Total Liabilities 1,281,441
Net Assets $ 599,582,399
Net Assets Consist of:
Capital paid in on shares of
common stock $ 599,582,399
Accumulated net realized gain (loss) 0
Net change in unrealized appreciation
of investments 0
$ 599,582,399
Shares Outstanding 599,582,399
Net Asset Value Per Share $1.00
</TABLE>
<PAGE>
<PAGE>
PRO FORMA COMBINED
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(unaudited)
<TABLE>
<CAPTION>
Fund Rushmore
for Money
Government Market Pro Forma Pro Forma
Investors Portfolio Adjustments Combined
<S> <C> <C> <C> <C>
INVESTMENT INCOME $ 31,976,884 $ 1,338,441 $ 0 $ 33,315,325
EXPENSES
Investment Advisory
Fee 2,787,502 113,363 (11,205) 2,889,660
Administrative Fee 1,409,761 56,681 1,466,442
Total Expenses 4,197,263 170,044 (11,205) 4,356,102
Net Investment Income $ 27,779,621 $ 1,168,397 $ 11,205 $ 28,959,223
</TABLE>
<PAGE>
<PAGE>
FUND FOR GOVERNMENT INVESTORS, INC.
AND
RUSHMORE MONEY MARKET PORTFOLIO
Notes to Pro Forma Combined Financial Statements
December 31, 1995
(unaudited)
1. BASIS OF PRESENTATION
Subject to the Agreement and Plan of Reorganization
("Agreement") by the shareholders of the Rushmore Money
Market Portfolio, the Fund for Government Investors, Inc.
would acquire substantially all of the assets of the
Rushmore Money Market Portfolio in exchange for shares of
the Fund for Government Investors, Inc. at the net asset
value of the Fund for Government Investors, Inc. as of the
Valuation Date as defined in the Agreement (the
"Reorganization"). Shares of the Fund for Government
Investors, Inc. would then be distributed pro-rata to the
shareholders of the Rushmore Money Market Portfolio.
The pro forma information is intended to provide the
shareholders of the Rushmore Money Market Portfolio with
information about the impact of the proposed Reorganization
by showing how it might have affected historical financial
statements if the transaction had been consummated at an
earlier time. The pro forma combined Schedule of
Investments and Statement of Assets and Liabilities have
been presented as if the proposed Reorganization had taken
place on December 31, 1995; the pro forma combined
Statement of Operations for the year ended December 31,
1995, has been presented as if the proposed Reorganization
had taken place on January 1, 1995. This information is
based upon historical financial statement data giving
effect to the pro forma adjustments described below. The
accounting policies of the Rushmore Money Market Portfolio
and the Fund for Government Investors, Inc. are not
materially different. The pro forma financial statements
should be read in conjunction with the separate financial
statements of the Rushmore Money Market Portfolio and the
Fund for Government Investors, Inc. incorporated by
reference into this Registration Statement on Form N-14.
<PAGE>
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2. PRO FORMA ADJUSTMENTS
The pro forma combined Statement of Operations of Rushmore
Money Market Portfolio and the Fund for Government
Investors, Inc. reflects the net decrease in Investment
Advisory Fee expense and net increase in Net Investment
Income resulting from the lower expense ratio of the Fund
for Government Investors, Inc. The pro forma combined
Investment Advisory expenses are calculated by multiplying
the combined net assets by the annual rate determined as
follows: 0.50% of the first $500 million; 0.45% of the
next $250 million; 0.40% of the next $250 million; and
0.35% of the net assets that exceed $1 billion.
3. COSTS AND EXPENSES OF REORGANIZATION
Money Management Associates, the investment adviser to both
the Rushmore Money Market Portfolio and Fund for Government
Investors, Inc., will bear all the costs and expenses
related to the Reorganization. It is estimated that the
costs and expenses of the Reorganization will be
approximately $43,000.
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