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SCHEDULE 14A INFORMATION
File No. 811-2539
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No.__)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-
11(c) or Section 240.14a-12
Fund For Government Investors, Inc.
(Name of Registrant as Specified in its Charter)
Mr. Richard J. Garvey
Fund For Government Investors, Inc.
4922 Fairmont Avenue
Bethesda, Maryland 20814
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-
6(i)(1), or 14a-6(j)(2) or per Investment Company
Act Rule 20a-1(c).
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and O-11.
(1) Title of each class of securities to which
transaction applies:
____________________________________________
(2) Aggregate number of securities to which
transaction applies:
____________________________________________
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(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act
Rule O-11*/:
____________________________________________
(4) Proposed maximum aggregate value of transaction:
____________________________________________
*/ Set forth the amount on which the filing fee is
calculated and state how it was determined.
[X] Check box if any part of the fee is offset as
provided by Exchange Act Rule O-11(a)(2) and
identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by
registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid: $125.00
(2) Form, Schedule or Registration No.:
Preliminary Proxy
(3) Filing Party: Registrant
(4) Date Filed: March 6, 1996
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FUND FOR GOVERNMENT INVESTORS, INC.
4922 Fairmont Avenue
Bethesda, Maryland 20814
March 27, 1996
Dear Shareholder:
Enclosed is a proxy statement and a detailed shareholder
letter describing the proposed redomiciling and reorganization
of your Fund, the Fund For Government Investors, Inc. (the
"Fund"), a Maryland corporation, into a Delaware business
trust (the "New Fund"). Your Fund and the New Fund are
substantially similar, have identical investment objectives
and policies, and can invest in the same types of securities.
The proposed redomiciling and reorganization of your Fund will
have no material impact on your investment in the Fund and,
therefore, is being recommended by your Board of Directors.
Organizing an investment company in the form of a
Delaware business trust offers numerous advantages, including
lower expenses and taxes and greater operational and
administrative flexibility, and is an attractive venue for the
organization of investment companies, in particular because
the Delaware business trust incorporates many of the
protections and advantages of the traditional Delaware
corporation structure, while specifically addressing the needs
and goals of investment companies under the Federal securities
laws.
Please review the attached materials carefully and return
your proxy as soon as possible.
/s/ Richard J. Garvey
Richard J. Garvey
President
Fund For Government Investors, Inc.
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FUND FOR GOVERNMENT INVESTORS, INC.
4922 Fairmont Avenue
Bethesda, Maryland 20814
March 27, 1996
To the Shareholders of
Fund For Government Investors, Inc.
Dear Shareholder:
A special meeting of the shareholders of the Fund For
Government Investors, Inc. (the "Fund"), is to be held at 1:30
P.M., Eastern Time, on Friday, May 24, 1996, at the offices of
the Fund, at 4922 Fairmont Avenue, Bethesda, Maryland 20814
(the "Meeting"). At the Meeting, the shareholders of the Fund
(the "Fund Shareholders") will vote on an Agreement and Plan
of Reorganization and Redomestication (the "Plan") under which
the Fund will change its domicile and form from a Maryland
corporation to a Delaware business trust, the Fund For
Government Investors (the "New Fund"), and the Fund will
transfer all of its assets and liabilities to the New Fund
(the "Reorganization"). The New Fund will have an investment
objective, policies, and restrictions that are identical to
those of the Fund.
If the proposed Plan is approved by the Fund Shareholders and
implemented by the Fund and the New Fund, you will become a
shareholder of the New Fund and will receive shares of the New
Fund having an aggregate value equal to the aggregate net
asset value of your investment in the Fund. No sales charge
will be imposed as a result of the Reorganization. Money
Management Associates ("MMA"), the investment adviser for the
Fund ("MMA"), will pay all costs of the Reorganization. The
Reorganization will be conditioned upon the receipt by the
Fund and the New Fund of an opinion of counsel to the effect
that the Reorganization will qualify as a tax-free
reorganization for Federal income tax purposes.
Pursuant to the Investment Company Act of 1940, as amended
(the "1940 Act"), the Reorganization will result in the
automatic termination of the agreement under which MMA
currently provides investment advisory services to the Fund
(the "Current Advisory Agreement"). The approval by the Fund
Shareholders of the Plan also will be deemed to constitute the
approval and ratification by the Fund Shareholders of a new
investment advisory agreement between the New Fund and MMA
(the "New Advisory Agreement"), as well as the election by the
Fund Shareholders of the Trustees of the Trust and the
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ratification by the Fund Shareholders of Deloitte & Touche LLP
as the independent certified public accountants of the New
Fund. The aggregate contractual rate chargeable for
investment advisory services rendered to the New Fund, and all
other terms and conditions of the New Advisory Agreement, will
be the same as under the Current Advisory Agreement.
The Board of Directors of the Fund (the "Board") has carefully
considered and has unanimously approved the proposed
Reorganization and the New Advisory Agreement, as described in
the accompanying materials. The Board believes that the
Reorganization is in the best interests of the Fund and its
shareholders and, therefore, recommends that the Fund
Shareholders vote in favor of approving the Plan.
We strongly urge you to review the enclosed Proxy Statement
regarding the Meeting and to 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 then by 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 P.M.,
Eastern Time, May 24, 1996.
Please note that you may receive more than one proxy package
if you hold shares of the Fund in more than one account, and
you should return separate proxy cards for such accounts. We
have provided postage-paid return envelopes for each account
in which you hold shares of the Fund. 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
Fund For Government Investors,
Inc.
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FUND FOR GOVERNMENT INVESTORS, INC.
____________
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 Fund For Government Investors, Inc. (the
"Fund"), will be held at the offices of the Fund, at 4922
Fairmont Avenue, Bethesda, Maryland 20814, on Friday, May 24,
1996, at 1:30 P.M., Eastern Time (the "Meeting"), for the
following purposes:
1. To approve or disapprove an Agreement and Plan of
Reorganization and Redomestication (the "Plan"),
with respect to changing the Fund's domicile and
form from a Maryland corporation to a Delaware
business trust, the Fund For Government Investors
(the "New Fund"), and the transactions
contemplated thereby, pursuant to which change in
domicile and form the Fund would transfer all of
its assets to the New Fund in exchange for (i)
shares of beneficial interest in the New Fund that
would be distributed to the shareholders of the
Fund (the "Fund Shareholders") in exchange for
their Fund shares and (ii) the assumption by the
New Fund of all the liabilities of the Fund (the
"Reorganization"). The approval by the Fund
Shareholders of the Plan also will be deemed to
constitute: (i) the approval and ratification by
the Fund Shareholders of a new investment advisory
agreement between the New Fund and Money
Management Associates, the investment adviser for
the Fund; (ii) the election by the Fund
Shareholders of the Trustees of the Trust; and
(iii) the ratification by the Fund Shareholders of
Deloitte & Touche LLP as the independent certified
public accountants of the New Fund.
2. In the discretion of the persons named as
attorneys and proxies in the attached proxy, to
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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 Proxy Statement. A
copy of the form of the Plan is attached as Exhibit A thereto.
You are entitled to vote at the Meeting, and any
adjournment(s) thereof, if you owned shares of the Fund at the
close of business on March 4, 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
Fund For Government Investors, 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" the 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. 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 will not be voted.
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FUND FOR GOVERNMENT INVESTORS, INC.
4922 Fairmont Avenue
Bethesda, Maryland 20814
(800) 343-3355 (301) 657-1500
PROXY STATEMENT
FOR
SPECIAL MEETING OF SHAREHOLDERS
To Be Held on May 24, 1996
VOTING, REVOCATION, AND SOLICITATION OF PROXIES
Special Meeting; Voting of Proxies; Adjournments
This Proxy Statement is being furnished to the shareholders of
the Fund For Government Investors, Inc. (the "Fund"), an open-
end management investment company incorporated in the State of
Maryland (the "Fund"), in connection with the solicitation by
the Board of Directors of the Fund (the "Board") of proxies to
be used at a special meeting of the shareholders of the Fund
(the "Fund Shareholders") to be held at the offices of the
Fund, at 4922 Fairmont Avenue, Bethesda, Maryland 20814, on
Friday, May 24, 1996, at 1:30 P.M., Eastern Time, and at any
adjournment(s) thereof (the "Meeting"). The purpose of the
Meeting is to vote on the proposed redomiciling and
reorganization of the Fund from a Maryland corporation into
the Fund For Government Investors (the "New Fund"), an open-
end management investment company organized as a Delaware
business trust, pursuant to the terms and conditions of an
Agreement and Plan of Reorganization and Redomestication (the
"Plan"), as described herein (the "Reorganization").
Shareholders of record of the Fund at the close of business on
March 4, 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 Fund ("Fund Shares") are entitled
to one vote for each Fund Share held and to fractional votes
for fractional Fund Shares held. A quorum must be present for
the transaction of business at the Meeting. Fund Shareholders
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are entitled to one vote for each Fund share held and to a
proportionate vote for each fraction of a Fund share held.
The holders of record of a majority of the shares of the Fund
(the "Fund Shares") outstanding at the close of business on
that Record Date present in person or represented by proxy
will constitute a quorum for the Meeting of the Fund
Shareholders. A quorum must be present for the transaction of
business at the Meeting. A quorum being present, the approval
of the Reorganization at the Meeting by the Fund Shareholders
requires the affirmative vote of a majority of all the
outstanding voting shares of the Fund. 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 P.M., Eastern Time, on Friday, 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 Fund 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 Fund Shareholder vote may be taken on
a Proposal in this 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.
Since the Proposal to approve the Plan, or any other Proposal,
requires the affirmative vote of a majority of the outstanding
Fund 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 Fund Shares covered by such broker
non-vote shall be deemed present at the Meeting for the
purposes of determining a quorum, but shall not be deemed to
be represented at the Meeting for the purposes of calculating
the number of Fund Shares present in person or represented by
proxy at the Meeting with respect to voting on 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 Fund Shareholders, the Fund
also may solicit proxies by personal interview by
representatives of the Fund, by employees of Money Management
Associates ("MMA"), the investment adviser to the Fund, 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 the 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 Fund 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 Fund Shares.
Revocation of Proxies
You may revoke your proxy: (i) at any time prior to the
proxy's exercise by providing written notice to the Secretary
or the Assistant Secretary of the 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 Fund into the New Fund pursuant to the
terms and conditions of the Plan, as described below in
greater detail. The Fund is a Maryland corporation. Under
the laws of the State of Maryland, shareholders of a
registered investment company such as the Fund are not
entitled to appraisal rights (i.e., to demand fair value of
their shares) in the event of a reorganization or merger. In
addition, the Articles of Incorporation of the Fund, as
amended (the "Fund Articles"), also do not entitle Fund
Shareholders to appraisal rights in the event of a
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reorganization or merger. Consequently, the Fund Shareholders
will be bound by the terms of the Plan, if the Plan is
approved at the Meeting. Any Fund Shareholder, however, may
redeem his or her Fund Shares at net asset value prior to the
closing date of the proposed Reorganization of the Fund.
Additional Voting Information
As of the Record Date, there were outstanding and entitled to
be voted 591,862,316 Fund Shares. As of the Record Date,
National Automobile Dealers Association held 48,364,410
(approximately 8.17%) of the Fund Shares. As of the Record
Date, Directors and officers of the Fund owned in the
aggregate less than 1% of the shares of the Fund. Also as of
the Record Date, MMA and certain of MMA's affiliates were the
record owners of Fund Shares as follows: MMA owned 1,062,834
Fund Shares (approximately 1.80%) and Rushmore Trust and
Savings, FSB owned 17,892,385 Fund Shares (approximately
3.02%). To the knowledge of the Fund, no other person then
owned, beneficially and/or of record, more than 5% of the
outstanding shares of the Fund.
As more fully described in this Proxy Statement, the Meeting
has been called for the following purposes:
1. To approve or disapprove an Agreement and Plan of
Reorganization and Redomestication (the "Plan"), with
respect to changing the Fund's domicile and form from
a Maryland corporation to a Delaware business trust,
the Fund For Government Investors (the "New Fund"),
and the transactions contemplated thereby, pursuant to
which change in domicile and form the Fund would
transfer all of its assets to the New Fund in exchange
for (i) shares of beneficial interest in the New Fund
that would be distributed to the shareholders of the
Fund (the "Fund Shareholders") in exchange for their
Fund shares and (ii) the assumption by the New Fund of
all the liabilities of the Fund (the
"Reorganization"). The approval by the Fund
Shareholders of the Plan also will be deemed to
constitute: (i) the approval and ratification by the
Fund Shareholders of a new investment advisory
agreement between the New Fund and MMA, the investment
adviser for the Fund, (ii) the election by the Fund
Shareholders of the Trustees of the Trust; and (iii)
the ratification by the Fund Shareholders of Deloitte
& Touche LLP as the independent certified public
accountants of the New Fund.
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2. In the discretion of the Proxies, 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 of
each of these Proposals requires the affirmative vote of a
majority of the outstanding securities of the Fund. As
defined in the Investment Company Act of 1940, as amended (the
"1940 Act"), the term "majority" means the vote of the lesser
of: (i) 67% of the shares of the Fund at a meeting where more
than 50% of the outstanding shares of the Fund are present in
person or by proxy; or (ii) more than 50% of the outstanding
shares of the Fund.
Pursuant to the 1940 Act, the Reorganization will result in
the automatic termination of the agreement under which MMA
currently provides investment advisory services to the Fund
(the "Current Advisory Agreement"). As noted above, the
approval of the Plan by the Fund Shareholders also will be
deemed to constitute the approval and ratification by the Fund
Shareholders of a new investment advisory agreement between
the New Fund and MMA (the "New Advisory Agreement"). The
aggregate contractual rate chargeable for investment advisory
services rendered to the New Fund, and all other terms and
conditions of the New Advisory Agreement, will be the same as
under the Current Advisory Agreement.
In the event that the Fund Shareholders do not approve the
Plan, and the Reorganization of the Fund contemplated
thereunder, the Board will consider possible alternative
arrangements and MMA will continue to render services to the
Fund.
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PROPOSAL ONE:
TO APPROVE A PROPOSED AGREEMENT AND PLAN
OF REORGANIZATION AND REDOMESTICATION FOR THE FUND
AND THE TRANSACTIONS CONTEMPLATED THEREBY
The Proposed Reorganization
The purpose of the proposed Reorganization is to redomicile
and reorganize the Fund, an open-end management investment
company incorporated in the State of Maryland, into a the New
Fund, an open-end management investment company organized as a
Delaware business trust. In order to effectuate the
Reorganization, the Fund Shareholders must approve the Plan, a
copy of which is set forth in Exhibit A to this Proxy
Statement. The Plan sets forth the terms and conditions under
which the proposed transactions contemplated by the
Reorganization may be consummated. For the reasons set forth
below under "Reasons for the Proposed Reorganization," the
directors of the Board (the "Directors"), including the
Directors who are not "interested persons" of the Fund, as
that term is defined in the 1940 Act (the "Independent
Directors"), and the New Fund's Board of Trustees (the "New
Board"), including the trustees of the New Fund (the
"Trustees") who are not "interested persons" of the New Fund,
as that term is defined in the 1940 Act (the "Independent
Trustees"), have approved the Plan, significant provisions of
which are summarized below. This summary, however, is
qualified in its entirety by reference to the Plan.
The Plan contemplates (i) the New Fund on the closing date of
the Reorganization acquiring all of the assets of the Fund in
exchange solely for shares of beneficial interest in the New
Fund and the assumption by the New Fund of the Fund's
liabilities and (ii) the constructive distribution of the
shares of the New Fund to the Fund Shareholders in exchange
for such Fund Shareholders' Fund Shares, all as provided for
by the Plan.
The assets of the Fund to be acquired by the New Fund include
all cash, cash equivalents, securities, receivables, and other
property owned by the Fund. The New Fund will assume from the
Fund all debts, liabilities, obligations, and duties of the
Fund of whatever kind or nature. The New Fund also will
deliver to the Fund shares of beneficial interest in the New
Fund, which New Fund shares the Fund then shall distribute to
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the Fund Shareholders in exchange for such Fund Shareholders'
Fund Shares. The exchange of the Fund's assets and the Fund
Shares for shares of the New Fund is anticipated to occur on
or around May 31, 1996, or such later date as the parties may
agree (the "Closing Date").
The value of the Fund's assets to be acquired and the Fund's
liabilities to be assumed by the New Fund and the net asset
value of a share of the New Fund will be determined as of the
close of regular trading on the New York Stock Exchange on the
Closing Date, using the valuation procedures set forth in the
Fund's then-current Prospectus and Statement of Additional
Information.
As soon as practicable after the Closing Date, the Fund will
distribute pro rata to its Fund Shareholders of record as of
the Closing Date the shares of the New Fund received by the
Fund in exchange for such Fund Shareholders' interests in the
Fund, as evidenced by the Fund Shares of such Fund
Shareholders, and thereafter the Fund will cease to exist.
This distribution will be accomplished by opening accounts on
the books of the New Fund in the name of each shareholder of
record in the Fund and by transferring thereto the shares
previously credited to the account of the Fund on those books,
as described below (see "Continuation of Shareholder Accounts;
Share Certificates"). Each New Fund shareholder account shall
represent the respective pro-rata number of the shares of the
New Fund due to such Fund Shareholder. Fractional shares will
be rounded to the third decimal place.
Accordingly, every Fund Shareholder will own shares of the New
Fund immediately after the Reorganization, the value of which
New Fund shares will be equal to the value of the
shareholder's Fund Shares immediately prior to the
Reorganization. Moreover, because shares of the New Fund will
be issued at net asset value in exchange for the net assets of
the Fund that will equal the aggregate value of those New Fund
shares, the net asset value per share of the New Fund will be
unchanged from the net asset value per share of the Fund.
Thus, the Reorganization will not result in a dilution of any
Fund Shareholder account or any New Fund shareholder account.
Any transfer taxes payable upon issuance of shares of the New
Fund in a name other than the registered holder of the shares
on the books of the Fund as of that time shall be paid by the
person to whom such shares are to be issued as a condition of
such transfer. Any reporting responsibility of the Fund will
continue to be the responsibility of the Fund up to and
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including the Closing Date and such later date on which the
Fund is liquidated.
The initial shareholder of the New Fund has approved both the
Trustees and the New Advisory Agreement between MMA and the
New Fund, a copy of which New Advisory Agreement is attached
hereto as Exhibit B. The Trustees and the New Advisory
Agreement are described more fully below. The approval of the
Plan by the Fund Shareholders also will be deemed to
constitute the approval and ratification by the Fund
Shareholders of both the Trustees and the New Advisory
Agreement. The aggregate contractual rate chargeable for
investment advisory services rendered to the New Fund, and all
other terms and conditions of the New Advisory Agreement, will
be the same as under the Current Advisory Agreement.
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 Board and/or the New Board, and/or by an authorized
officer of the Fund and/or the New Fund, as appropriate.
Among the more significant conditions, which may not be
waived, are: (i) the receipt by the Fund and the New Fund of
an opinion of counsel to the Fund and the New Fund (or a
revenue ruling of the U.S. Internal Revenue Service) as to
certain Federal income tax aspects of the Reorganization (see
"Federal Income Tax Consequences"); and (ii) approval of the
Plan by the affirmative vote of the holders of a majority of
the outstanding Fund Shares. The Plan may be terminated and
the Reorganization abandoned at any time, before or after
approval by the Fund Shareholders, prior to the Closing Date,
by mutual consent of the Fund and the New Fund. 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 of the Fund Shareholders that detrimentally would
affect the value of the shares of the New Fund to be
distributed.
Costs and Expenses of the Reorganization
The Plan provides that MMA will bear all costs and expenses of
the Reorganization, including professional fees and the costs
of the Meeting, such as the preparation and mailing of the
notice, this Proxy Statement and the proxy, and the
solicitation of proxies, which may include reimbursement to
broker-dealers and others who forward proxy materials to their
clients. It is presently estimated that the aggregate costs
and expenses of the Reorganization will be approximately
$45,000.
Continuation of Shareholder Accounts; Share Certificates
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As a result of the proposed transactions contemplated by the
Reorganization, each Fund Shareholder will cease to be a
shareholder of the Fund and will receive that number of full
and fractional shares of the New Fund having an aggregate net
asset value equal to the aggregate net asset value of such
shareholder's Fund Shares as of the close of business on the
date next preceding the Closing Date of the Reorganization.
The New Fund will establish accounts for all Fund Shareholders
containing the appropriate number of New Fund shares. Such
accounts will be identical in all respects to the accounts
currently maintained by the Fund for each Fund Shareholder.
Acceptance of shares of the New Fund by a Fund Shareholder
will be deemed to be authorization of the New Fund and its
agents to establish, with respect to the New Fund, all of the
account options, including telephone redemptions, if any, and
dividend and distribution options, as have been established
for the Fund Shareholder's Fund account. Fund Shareholders
who are receiving payments under an Automatic Withdrawal Plan,
with respect to Fund Shares, will retain the same rights and
privileges as to New Fund shares under such an Automatic
Withdrawal Plan after the Reorganization. Similarly, no
further action will be necessary in order to continue any
retirement plan currently maintained by a Fund Shareholder,
with respect to New Fund shares.
As a Delaware business trust, the New Fund will not be
required to issue certificates evidencing ownership of New
Fund shares, and the New Fund presently intends not to issue
share certificates. Fund Shareholders to whom certificates
have been issued are required to surrender their certificates
in order to redeem shares of the New Fund.
No sales charge will be imposed in connection with the
issuance of shares of the New Fund to the Fund Shareholders
pursuant to the Reorganization.
Form of Organization of the New Fund
The New Fund is an unincorporated voluntary association
organized under the laws of the State of Delaware as a
business trust pursuant to a Declaration of Trust, dated
January 25, 1996. The operations of the New Fund are governed
by this Declaration of Trust, by the New Fund's Bylaws, and by
Delaware law. The Fund, on the other hand, is a Maryland
corporation and its operations are governed by its Articles of
Incorporation, its Bylaws, and Maryland law (see "Reasons For
the Proposed Reorganization; Favorable Form of Organization").
Both the New Fund and the Fund are subject to the provisions
of the 1940 Act, and the rules and regulations of the
Securities and Exchange Commission (the "Commission")
thereunder, and each is or will be registered as an open-end,
<PAGE> 9
<PAGE>
management investment company under the 1940 Act. The New
Fund's Declaration of Trust provides that the New Fund may
issue its shares in series, with each series representing a
separately-managed investment portfolio of securities. The
New Fund currently has one series of shares outstanding and
presently does not intend to organize other separate
investment fund series. The Fund is not currently authorized
under the Fund Articles to issue its shares in series.
As discussed below under "Reasons For the Proposed
Reorganization," organizing an investment company in the form
of a Delaware business trust offers numerous advantages,
including operational simplicity and limited liability of
shareholders, and is an attractive venue for the organization
of investment companies, in particular because the Delaware
business trust incorporates many of the protections and
advantages of the traditional Delaware corporation structure,
while specifically addressing the needs and goals of
investment companies under the 1940 Act.
Investment Objective and Policies of the New Fund
The New Fund will have an investment objective, policies, and
restrictions that are identical to those of the Fund.
The sole objective of the New Fund is to provide investors
with maximum current income to the extent that such investment
is consistent with safety of principal. To achieve this
objective, the New Fund will invest in marketable debt
securities issued by the United States Government, including
U.S. Treasury bills, U.S. Treasury notes, and U.S. Treasury
bonds that mature within one year, and also may invest in
other short-term securities issued by the U.S. Government, its
agencies and instrumentalities (collectively, "U.S. Government
Securities"). Accordingly, the New Fund may invest in short-
term notes of the Federal National Mortgage Association,
Federal Home Loan Banks, and the Federal Farm Credit Agencies.
In addition, the New Fund also may invest in bonds,
debentures, and notes of these issuers and other Federal
agencies and instrumentalities that mature within one year.
The New Fund also may invest in repurchase agreements secured
by U.S. Government Securities. All of the New Fund's assets
will consist of securities maturing within one year of
purchase, and the dollar-weighted average maturity of the New
Fund will not exceed 90 days. The New Fund will value its
investment securities at amortized costs and will seek to
maintain a constant net asset value of $1.00 per share.
The New Fund may not borrow money, except that the New Fund,
as a temporary measure, may borrow money to facilitate
redemptions. Such a borrowing may be in an amount not to
exceed 30% of the New Fund's total assets, taken at current
<PAGE> 10
<PAGE>
value before such borrowing. The New Fund may borrow only to
accommodate requests for redemption of shares of the New Fund
while effecting an orderly liquidation of portfolio
securities.
Reasons For The Proposed Reorganization
1. Favorable Form of Organization. The Board and the New
Board have concluded that the organizational form of a
Delaware business trust is advantageous over the current form
of the Fund, a Maryland corporation, for, among others, the
following reasons. In order to organize a Delaware business
trust, no Delaware resident trustee, registered agent, or
principal Delaware office is required. Delaware business
trusts also need not file annual reports, may make changes in
their manner of doing business without making any filing with
the State of Delaware, are not required to hold annual
shareholder meetings, and are not subject to any Delaware
state franchise taxes or any other state taxes. In addition,
the Delaware Business Trust Act provides that Delaware
business trusts may provide not only for very broad
limitations on shareholder and trustee liability, but also for
indemnification out of the trust property of any shareholder
held personally liable for the obligations of the trust. In
addition, a Delaware business trust, subject to certain
limitations imposed by the 1940 Act, has the power to
indemnify and to hold harmless any trustee or beneficial owner
or other person from and against all claims and demands.
Delaware business trusts also may create additional new series
by resolution of the trustees without any vote or approval of
the trustees or shareholders and without making any filing
with the State of Delaware. Moreover, a Delaware business
trust registered under the 1940 Act which has created one or
more series may protect individual series from the debts and
liabilities of other series. The governing instrument for a
Delaware business trust may: (i) provide authority for
certain actions, such as incorporating the trust, merging or
consolidating the trust, or changing the trust's domicile,
without any vote or approval of the trustees or shareholders;
and (ii) permit improved procedures for shareholder voting
(permitting, for example, shareholders to vote their proxies
by telephone, thereby reducing costs). Such advantages in
certain respects may be limited by the Federal securities
laws. The Board is proposing the Reorganization, in part, in
order to provide greater operational, administrative, and
marketing flexibility which is afforded by a Delaware business
trust organizational form.
<PAGE> 11
<PAGE>
2. No Dilution of Fund Shareholder Interests or New Fund
Shareholder Interests. The Board and the New Board further
believe that, by reorganizing and redomiciling the Fund into a
Delaware business trust, the investment needs and goals of the
Fund Shareholders will be better served and protected. The
essential aspect of the Reorganization, though, is that the
interest of a Fund Shareholder in the New Fund would be
virtually identical to that shareholder's interest in the
Fund; the Reorganization would have no material impact on the
economic interests of the Fund Shareholders. The Board,
including a majority of the Independent Directors, determined
that the interests of the Fund Shareholders will not be
diluted as a result of the proposed transactions, and that the
proposed transactions contemplated by the Reorganization are
in the best interests of the Fund Shareholders. In addition,
the New Board, including a majority of the Independent
Trustees, also determined that the interests of the New Fund
Shareholders will not be diluted as a result of the proposed
transactions, and that the proposed transactions contemplated
by the Reorganization are in the best interests of the New
Fund Shareholder. The proposed Reorganization was recommended
to the Board and the New Board by MMA, the Fund's and the New
Fund's investment adviser, and was considered and approved by
the Board, including a majority of the Fund's Independent
Directors, at a Board meeting held on July 27, 1995 and also
was considered and approved by the New Board, including a
majority of the Independent Trustees, at a New Board meeting
held on January 25, 1996. A condition precedent to the
Reorganization will be the receipt by both the Fund and the
New Fund 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 to the Fund or the New
Fund or to the Fund Shareholders or the shareholders of the
New Fund.
3. General Factors. The Board based its decision to
recommend the proposed Reorganization, and the transactions
contemplated thereby, to the Fund Shareholders on a number of
additional factors, including the following:
1. the terms and conditions of the Reorganization
and whether the Reorganization would result in
dilution of Fund shareholder interests;
2. the future prospects of the Fund and the New
Fund both under circumstances where the Fund
and the New Fund are not reorganized and if the
Reorganization is effected;
<PAGE> 12
<PAGE>
3. the compatibility of the investment objectives,
policies, and restrictions of the Fund and the
New Fund;
4. service features available to shareholders in
the respective Fund and the New Fund;
5. the costs to be incurred by the Fund and the
New Fund as a result of the Reorganization;
6. the tax-free nature and consequences of the
Reorganization; and
7. alternatives to the Reorganization.
Operations of the New Fund Following the Reorganization
Subject to the provisions of the New Fund's Declaration of
Trust, the business of the New Fund is managed by its Board of
Trustees, which Trustees have all powers necessary and
appropriate to carry out that responsibility. The
responsibilities, powers, and fiduciary duties of the Trustees
of the New Fund are substantially similar to those of the
Directors of the Fund. As discussed above, MMA will serve as
the investment adviser to the New Fund, pursuant to the New
Advisory Agreement, which is substantially identical to the
Current Advisory Agreement between MMA and the Fund. Rushmore
Trust and Savings, FSB (the "Servicer"), a majority-owned
subsidiary of MMA, will provide the New Fund with shareholder
servicing, transfer agent, dividend-disbursing, custodian, and
administrative services, pursuant to an administrative
services agreement, which is substantially identical to the
current administrative services agreement between the Servicer
and the Fund. Daniel L. O'Connor, the Chairman of the Board
of Directors, the Treasurer, and a Director of the Fund, is
the general partner of MMA; Mr. O'Connor owns approximately
33.3% of MMA. Richard J. Garvey, the President and a Director
of the Fund, is a limited partner of MMA; Mr. Garvey owns
approximately 16.7% of MMA.
Set forth below is certain information regarding the Trustees
and the officers of the New Fund (the "Officers"), including
each such Trustee's and Officer's position with the Trust, if
any, principal occupation for the past five years, age, and
the number of shares of the Fund beneficially owned by such
Trustee or Officer. None of the Trustees or Officers of the
New Fund owns any of the outstanding shares of beneficial
interest in the New Fund. Unless noted otherwise, each
Trustee and Officer has engaged in the principal occupation
listed in the following table for more than five years, but
not necessarily in the same capacity.
<PAGE> 13
<PAGE>
The approval by the Fund Shareholders of the Plan under this
Proposal One will be deemed to constitute the election by the
Fund Shareholders of the Trustees.
<TABLE>
<CAPTION>
<S> <C> <C>
Trustee/ Principal Occupation or Employment Position
Officer During the Past Five Years (and With the
(Age) Address) Trust
Daniel L. Chairman of the Board of Directors and Chairman
O'Connor Treasurer of the Fund; President of the of the
(54)* Fund, 1974 to 1981. General Partner of Board of
Money Management Associates, a Trustees
registered investment adviser and the and
adviser to the Fund. Address: 1001 Treasurer
Grand Isle Way, Palm Beach Gardens,
Florida 33418.
Richard J. President and Director of the Fund; President
Garvey Executive Vice President of the Fund, and
(63)* 1974 to 1981. Limited Partner of MMA. Trustee
Address: 4922 Fairmont Avenue,
Bethesda, Maryland 20814.
Bruce C. Director of the Fund. Vice President, Trustee
Ellis (51) LottoFone, Inc., a telephone state
lottery service, since 1991. Vice
President, Shoppers' Express, Inc.,
1986-1992. Address: 7108 Heathwood
Court, Bethesda, Maryland 20817.
Jeffrey R. Director of the Fund. Vice President Trustee
Ellis (51) of LottoFone, a telephone lottery
system, since 1993. Vice President
Shoppers Express, Inc. through 1992.
Address: 513 Kerry Lane, Virginia
Beach, Virginia 23451.
Rita A. Director of the Fund; Limited Partner Trustee
Gardner of MMA. Address: 4922 Fairmont Avenue,
(52)* Bethesda, Maryland 20814.
<PAGE> 14
<PAGE>
Michael D. Director of the Fund. Vice President, Trustee
Lange (54) 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.
Patrick F. Director of the Fund. Chairman and Trustee
Noonan Chief Executive Officer of the
(53) 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.
Leo Director of the Fund. Retired. Trustee
Seybold Address: 5804 Rockmere Drive, Bethesda,
(82) Maryland 20816.
Martin M. Vice President of the Fund, 1974 to Vice
O'Connor present. Limited Partner of MMA, 1979 President
(51)* to present. Address: 4922 Fairmont
Avenue, Bethesda, Maryland 20814.
John R. Vice President of the Fund, 1978 to Vice
Cralle present. Limited Partner of MMA, 1979 President
(56)* to present. Address: 4922 Fairmont
Avenue, Bethesda, Maryland 20814.
Timothy N. Vice President and Controller. Audit Vice
Coakley, Manager Deloitte & Touche LLP until President
CPA (28)* 1994. Address: 4922 Fairmont Avenue, and
Bethesda, Maryland 20814. Controller
Stephenie Secretary of the Fund, 1995 to present. Secretary
E. Adams Director of Marketing, Rushmore
(26)* Services, Inc., 1994 to present;
Regional Sales Coordinator, Media
General Cable, 1993 to 1994; Graduate
Student, Northwestern University, M.S.,
1991 to 1992; Student, Stephens
College, Columbia, Missouri, B.S., 1987
to 1991. Address: 4922 Fairmont
Avenue, Bethesda, Maryland 20814.
_________________________
</TABLE>
<PAGE> 15
<PAGE>
* These Trustees and officers are deemed to be "interested
persons" of the Trust, within the meaning of Section
2(a)(19) of the 1940 Act, inasmuch as they are affiliated
with MMA and/or the Fund, as described herein.
The executive officers and "interested" Trustees of the Trust,
as that term is defined in Section 2(a)(19) of the 1940 Act,
will receive no direct remuneration from the New Fund. Such
executive officers and "interested" Trustees of the New Fund
will receive remuneration from MMA and its affiliates.
Trustees who are not "interested persons" of the New Fund will
be compensated by the New Fund on the basis of $750 for
attendance at each meeting of the New Board, as well as
reimbursed for reasonable expenses incurred in attending any
New Board meeting.
The policies of the New Fund regarding the purchase of shares
of the New Fund are the same as the current policies of the
Fund regarding the purchase of Fund Shares. Accordingly,
shares of the New Fund will be available at the public
offering price through the New Fund directly or through
broker-dealers who have sales agreements with the Trust.
Generally, the minimum initial investment in the New Fund will
be $2,500. The New Fund, at its discretion, may accept lesser
amounts in certain limited circumstances. Retirement accounts
may be opened with a $500 minimum investment. The shares of
the New Fund will be offered at the daily public offering
price, which is the net asset value per share next computed
after receipt of the investor's order. There will be no
minimum amount for subsequent investments. Shares of the New
Fund will not be sold subject to any sales charge.
The exchange privileges of the New Fund regarding exchanges of
shares of the New Fund are the same as the current exchange
privileges of the Fund regarding exchanges of Fund Shares.
Accordingly, shares of the New Fund will be able to be
exchanged, at no charge, for shares of any investment
portfolio series of The Rushmore Fund, Inc., for shares of any
investment portfolio series of the Cappiello-Rushmore Trust,
for shares of the American Gas Index Fund, and for shares of
the Fund For Tax-Free Investors, Inc. (such funds collectively
referred to as the "Eligible Rushmore Funds"), on the basis of
the respective net asset values of the New Fund and Eligible
Rushmore Fund shares involved. This exchange privilege is
available only in states where the exchange legally may be
made.
As currently is the policy of the Fund, the New Fund also may
impose a charge of $5 per month for any account whose average
daily balance is below $500 due to redemptions. This low
balance account fee will continue to be imposed during the
<PAGE> 16
<PAGE>
months when the account balance remains below $500. Because
of the administrative expense of handling small accounts, the
New Fund, as also currently is the policy of the Fund, will
reserve the right to redeem involuntarily an investor's
account (other than a retirement account) which falls below
$500 in total value, and also to redeem involuntarily an
investor's retirement account which falls below $500 in total
value, in the New Fund due to redemptions or exchanges after
providing sixty days written notice to the investor.
Currently, it is the Fund's policy (i) to declare dividends to
Fund Shareholders from the net investment income of the Fund
on a daily basis, which net investment income consists 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), and (ii) to pay such dividends on a monthly basis.
The New Fund will have the same policy.
The Proposed Investment Advisory Agreement
Ratification of the New Advisory Agreement. The approval by
the Fund Shareholders of the Plan, as described in this
Proposal One, will be deemed to be the approval and
ratification by the Fund Shareholders of the New Advisory
Agreement. The New Advisory Agreement, a copy of which
agreement is attached hereto as Exhibit B, provides that MMA,
whose principal location is 1001 Grand Isle Way, Palm Beach
Gardens, Florida 33418. (MMA's toll-free telephone number is
(800) 343-3355)), will serve as the investment adviser to the
New Fund. Under the New Advisory Agreement, MMA will manage
the investment and reinvestment of the assets of the New Fund,
in accordance with the New Fund's investment objective,
policies, and restrictions, subject to the general supervision
and control of the Officers of the New Fund and the New Board.
MMA currently provides investment advisory services to the
Fund pursuant to the Current Advisory Agreement, dated
December 2, 1974, which agreement, as described below, is
substantially identical to the New Advisory Agreement. The
rate of fees for the fees to be paid by the New Fund to MMA
under the New Advisory Agreement is the same as the rate of
fees for the fees that currently are paid by the Fund to MMA
under the Current Advisory Agreement. MMA was formed under
the laws of the District of Columbia as a partnership on
August 15, 1974, and MMA's primary business since inception
has been to provide investment advice and management services
to mutual funds, including the Fund, for whom MMA has served
as the investment adviser since the commencement of the Fund's
operations in 1974.
<PAGE> 17
<PAGE>
A copy of the audited balance sheet of MMA, as of December 31,
1994, which has been prepared by independent certified public
accountants, is attached hereto as Exhibit C.
Consideration By the Fund's Board of Directors. The New
Advisory Agreement was approved both by a vote of the
Directors of the Fund, including a majority of the Fund's
Independent Directors, who met to review the terms of the New
Advisory Agreement, at the Board meeting held on July 27,
1995, and by a vote of the Trustees of the New Fund, including
a majority of the New Fund's Independent Trustees, who met to
review the terms of the New Advisory Agreement, at the New
Board meeting held on January 25, 1996. The New Board at this
January 25, 1996 meeting also recommended that the Fund
Shareholders approve and ratify the New Advisory Agreement by
approving the Plan at the meeting. The New Advisory
Agreement, if so approved and ratified by the Fund
Shareholders at the Meeting, will continue in effect for two
years and thereafter from year to year only so long as the
agreement's continuance is specifically approved at least
annually by the vote of a majority of the members of the New
Fund's Board of Trustees, including the vote of a majority of
the Independent Trustees, cast in person at a meeting called
for the purpose of voting on such approval. The New Advisory
Agreement may be terminated, without penalty, on sixty days'
prior written notice by the New Board, by the vote of the
holders of a majority of the New Fund's outstanding voting
securities, or by MMA, and automatically terminates in the
event of the agreement's assignment.
In approving the New Advisory Agreement, the Board, including
the Independent Directors of the Fund, and the New Board,
including the Independent Trustees of the New Fund,
considering the best interests of the Fund Shareholders, took
into account all the factors the Directors of the Fund and the
Trustees of the New Fund, respectively, deemed relevant.
Among such factors were the nature, quality, and extent of the
services which will be furnished by MMA to the New Fund; the
necessity of MMA maintaining its ability to retain and attract
capable personnel to serve the New Fund; the investment record
of MMA's principals; possible economies of scale; MMA's
potential profitability from serving the New Fund before
marketing expenses paid by MMA; comparative data as to
investment performance, advisory fees, and expense ratios; the
risks to be assumed by MMA; possible benefits to MMA from
serving as investment adviser to the New Fund; the special
expertise, background, and financial resources of MMA, and the
appropriate incentives (e.g., fees) to assure that MMA will
furnish high quality services to the New Fund; and various
other factors.
<PAGE> 18
<PAGE>
Description of Current and New Advisory Agreements. Pursuant
to the Current Advisory Agreement between MMA and the Fund,
MMA provides the Fund with investment research, advice, and
supervision and also will furnish continuously an investment
program and determine what securities shall be purchased,
held, or sold and what portion of the Fund's assets shall be
held uninvested, subject to such policies and instructions as
the Directors of the Fund may determine. Under the Current
Advisory Agreement, the Fund pays a fee to MMA based, on an
annual basis, on the Fund's daily average net assets as
follows:
0.50% of the first $500 million in net assets;
0.45% of the next $250 million in net assets;
0.40% of the next $250 million in net assets; and
0.35% of the net assets over $1 billion
Under the Current Advisory Agreement, MMA reimburses the Fund
for expenses which exceed 1.00% of the Fund's average daily
net assets per annum. Such reimbursable expenses include the
investment management fee, but exclude interest and
extraordinary legal expenses. 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, 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 MMA, insurance coverage for the Fund and its Directors and
officers, and its membership in trade associations. MMA pays
the costs of office space and may make payments, from its own
resources, including profits and advisory fees received from
the Fund, provided such fees are legitimate and not excessive,
to broker-dealers and other financial institutions for their
expenses in connection with the distribution of Fund Shares.
Pursuant to the New Advisory Agreement between MMA and the New
Fund, MMA will provide the New Fund with investment research,
advice, and supervision and also will furnish continuously an
investment program and determine what securities shall be
purchased, held, or sold and what portion of the New Fund's
assets shall be held uninvested, subject to such policies and
instructions as the Trustees may determine. In connection
with the investment and reinvestment of the assets of the New
Fund, MMA will be authorized, on behalf of the New Fund, to
place orders for the execution of the New Fund portfolio
transactions in accordance with the investment policies of the
New Fund. Under the New Advisory Agreement, the New Fund will
pay a monthly investment management fee to MMA based, on an
estimated annual basis, on the New Fund's daily average net
assets as follows:
<PAGE> 19
<PAGE>
0.50% of the first $500 million in net assets;
0.45% of the next $250 million in net assets;
0.40% of the next $250 million in net assets; and
0.35% of the net assets over $1 billion
Under the New Advisory Agreement, MMA will reimburse the New
Fund for expenses which exceed 1.00% of the New Fund's average
daily net assets per annum. The New Advisory Agreement
provides that MMA: (i) pays all expenses in connection with
the management of the investment and reinvestment of the
portfolio assets of the New Fund, except that the New Fund
pays all broker's commissions and transfer taxes chargeable to
the New Fund in connection with securities transactions to
which the New Fund is a party; (ii) pays the compensation and
expenses of all Trustees and Officers of the New Fund who are
"affiliated persons" of MMA, as defined in the 1940 Act; (iii)
makes available, without expense to the New Fund, the services
of such of its Officers and employees as may be duly-elected
Officers or Trustees of the New Fund, subject to their
individual consent to serve and to any limitations imposed by
law; (iv) pays the New Fund's office rent; and (v) provides
investment advisory, research, and statistical facilities, and
all clerical services relating to research, statistical, and
investment work. These provisions are substantially identical
to those currently in effect under the Current Advisory
Agreement.
In determining whether or not it was appropriate to approve
the New Advisory Agreement, and to recommend approval to Fund
Shareholders, the Board and the New Board considered various
matters, evaluated extensive data, and considered such factors
as the Board and the New Board deemed reasonably necessary,
including: (i) the nature, quality, and extent of the
services rendered and the results anticipated to be achieved
by MMA in the areas of investment performance; (ii) the
payments received by MMA and its affiliates from all sources
involving the Fund; (iii) financial, personnel, and structural
information as to the MMA organization, including the costs
borne by, and the profitability of, MMA in providing services
of all types to the New Fund; (iv) a comparison of the fees
currently paid by the Fund to MMA under the Current Advisory
Agreement with the fees that would be paid to MMA under the
New Advisory Agreement; (v) information concerning the New
Fund's expense ratios on both an existing and a pro forma
basis; (vi) competitive industry fee structures and expense
ratios (with respect to fees charged by other investment
advisers that manage funds with similar investment objectives
and policies); (vii) the organizational capabilities and
financial condition of MMA; and (viii) the terms of the New
Advisory Agreement.
<PAGE> 20
<PAGE>
The New Administrative Services Agreement. Rushmore Trust
and Savings, FSB (the "Servicer"), 4922 Fairmont Avenue,
Bethesda, Maryland 20814, a majority-owned subsidiary of MMA,
will provide transfer agent, shareholder servicing, dividend
distribution, and other administrative services to the New
Fund pursuant to a separate administrative services agreement
between the New Fund and the Servicer, dated March 1, 1996,
and subject to the general supervision and control of the New
Board and the Officers of the New Fund. The Servicer
currently provides administrative services to the Fund
pursuant to an administrative services agreement, dated
September 1, 1993, that is substantially identical to the new
administrative services agreement between the New Fund and the
Servicer. The rate of fees for the fees to be paid by the New
Fund to the Servicer under the new administrative services
agreement between the New Fund and the Servicer is the same as
the rate of fees for the fees that currently are paid by the
Fund to the Servicer under the current administrative services
agreement between the New Fund and the Servicer.
Under the new administrative services agreement, the New Fund
will pay a monthly service fee to the Servicer equal on an
estimated annual basis to 0.25% of the New Fund's daily
average net assets. Pursuant to this agreement, the Servicer
will maintain the shareholder account records for the New
Fund, distribute dividends and distributions payable by the
New Fund, and produce statements with respect to account
activity for the New Fund and its shareholders. The Servicer
also will prepare and file various state registration
statements required of the New Fund. Except for extraordinary
legal expenses or interest expense and expenses paid by MMA,
the Servicer will pay all expenses of the New Fund. These
provisions are substantially identical to those currently
provided for under the current administrative services
agreement between the Fund and the Servicer.
Annual Fund Operating Expenses. A table comparing the New
Fund's expected annual fund operating expenses and the Fund's
annual fund operating expenses is provided below.
Annual Fund Operating Expenses (as a percentage of
average net assets)
<TABLE>
<CAPTION>
The New Fund The Fund
<S> <C> <C>
Management Fees 0.50% 0.50%
Administrative Fees 0.25% 0.25%
<PAGE> 21
<PAGE>
12b-1 Fees (Distribution Fees) None None
Other Expenses None None
Total Fund Operating Expenses 0.75% 0.75%
</TABLE>
Portfolio Transactions and Brokerage Commissions
In connection with the investment and reinvestment of the New
Fund's assets, MMA will be authorized on behalf of the New
Fund to place orders for the execution of the New Fund's
portfolio transactions in accordance with the applicable
investment policies of the New Fund. As described below,
decisions as to the assignment of portfolio business for the
New Fund will be made by MMA, whose policy is to obtain the
"best execution" of all portfolio transactions.
Subject to the general supervision by the New Board, MMA will
be responsible for decisions to buy and sell securities for
the New Fund, the selection of brokers and dealers to effect
the transactions, and the negotiation of brokerage
commissions, if any. Purchases and sales of portfolio
securities of the New Fund normally will be transacted through
issuers, underwriters, or major dealers in U.S. Government
securities acting as principals. Such transactions will be
made on a net basis and will not involve payment of brokerage
commissions. The cost of securities to be purchased from an
underwriter usually will include a commission to be paid by
the issuer to the underwriters; transactions with dealers
normally will reflect the spread between bid and asked prices.
MMA may serve as the investment adviser to a number of
clients, including other investment companies. It will be the
practice of MMA to cause purchase and sale transactions to be
allocated among the New Fund and others whose assets MMA
manages in such manner as MMA deems equitable. In making such
allocations among the New Fund and other client accounts, the
main factors that will be considered by MMA will be the
respective investment objectives, the relative size of
portfolio holdings of the same or comparable securities, the
availability of cash for investment, the size of investment
commitments generally held, and the opinions of the persons
responsible for managing the portfolios of the New Fund and
other client accounts. The policy of the New Fund regarding
purchases and sales of securities for its portfolio is that
primary consideration will be given to obtaining the most
<PAGE> 22
<PAGE>
favorable and best prices and efficient executions for all of
its securities transactions.
Description of Securities To Be Issued
General. The shares of the New Fund represent shares of
beneficial interest in the New Fund, which is an open-end
management investment company. The New Fund was organized as
a Delaware business trust on January 25, 1996. The New Fund's
capital consists of an unlimited number of authorized shares
of beneficial interest in the New Fund, which shares have no
par value, and which shares may be issued in separate classes.
As noted above, the New Fund currently has one series of
shares outstanding and presently does not intend to organize
other separate investment fund series (though other separate
classes may be added in the future). The Fund is not
currently authorized under the Fund Articles to issue its
shares in series.
Voting Rights. Each share of the New Fund represents an
equal proportionate interest in the New Fund with each other
share, and each share is entitled to equal voting, dividend,
liquidation, and redemption rights. Shares of the New Fund
entitle their holders to one vote for each full share held and
a proportionate vote for each fraction of a share held. The
New Fund's Declaration of Trust provides that shareholders of
the New Fund shall be entitled to vote only on the following
matters:
1. for the initial election of Trustees;
2. for the removal of Trustees;
3. with respect to any investment advisory or
management contract entered into by the New
Fund to the extent that New Fund shareholder
approval is required by the 1940 Act, as
provided for in the New Fund's Declaration of
Trust; and
4. with respect to such additional matters
relating to the New Fund as may be required by
law, the New Fund's Declaration of Trust or
Bylaws, any registration of the New Fund under
the 1940 Act with the Commission, or as the
Trustees may consider necessary or desirable.
The New Fund's Declaration of Trust provides that, with
respect to any matter submitted to a vote of the shareholders
of the New Fund, all New Fund shares entitled to vote,
irrespective of series, shall be voted by series except where
it is required by the 1940 Act that shareholders of all series
<PAGE> 23
<PAGE>
vote as a single class and except that, if any matter does not
affect the interests of a particular series, only New Fund
shareholders of the affected series shall be entitled to vote
thereon. For example, a change in a fundamental investment
policy for one series of the New Fund would be voted upon only
by shareholders of that series of the New Fund. Rule 18f-2
under the 1940 Act further provides that the interests of a
particular series shall be deemed to be affected by a matter
unless it is clear that the interests of each series in the
matter are identical or that the matter does not effect any
interest of such series, but provides that shares of all
series would vote together in the election of trustees,
selection of accountants, and approval of underwriting
agreements. The shares of the New Fund have noncumulative
voting rights, do not have preemptive or subscription rights,
and are freely transferable.
Meetings. Under the Delaware Business Trust Act, a
registered investment company, including a Delaware business
trust, is not required to hold an annual shareholders' meeting
if the 1940 Act does not require such a meeting. Pursuant to
the terms of the New Fund's Declaration of Trust, no annual or
special meetings of the shareholders of the New Fund are
required. Therefore, there ordinarily will be no New Fund
shareholder meetings unless required by the 1940 Act.
Under the New Fund's Declaration of Trust, any Trustee may be
removed with or without cause at any time: (i) by written
instrument, signed by at least two-thirds of the number of
Trustees in office immediately prior to such removal and
specifying the date upon which such removal shall become
effective; or (ii) by vote of shareholders of the New Fund
holding not less than two-thirds of the shares of the New Fund
then outstanding, cast in person or by proxy at any meeting
called for that purpose. Holders of 10% or more of the
outstanding shares of the New Fund can require Trustees to
call a meeting of New Fund shareholders for purposes of voting
upon the question of the removal of one or more Trustees and
will assist in communications with other New Fund shareholders
as required by Section 16(c) of the 1940 Act.
Shareholder Liability. Under the Delaware Business Trust
Act, shareholders of a Delaware business trust, except to the
extent otherwise provided in the trust's governing instrument,
are entitled to the same limitation of personal liability
extended to shareholders of private, for-profit corporations.
The New Fund's Declaration of Trust expressly disclaims
shareholder liability for acts or obligations of the
shareholder's trust. The Declaration of Trust further
provides for indemnification, out of the property of the New
Fund series with respect to which such shareholder's shares
are issued, for all losses and expenses of any shareholder
<PAGE> 24
<PAGE>
held personally liable for the obligations of the New Fund by
reason of being or having been a shareholder.
Rights of Inspection. Shareholders of the New Fund generally
have the same rights, under the Delaware General Corporation
Law, to inspect the records, accounts, and books of the New
Fund as are permitted, under the Maryland General Corporation
Law, to shareholders of the Fund. Currently, each shareholder
of a Maryland corporation and each shareholder of a Delaware
business trust is permitted to inspect the records, accounts,
and books of a corporation for any legitimate business
purpose.
Liability and Indemnification of Trustees. Under the terms
of the New Fund's Declaration of Trust, a Trustee will be
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 Trustee, and a Trustee shall not be liable for errors of
judgment or mistakes of fact or law. The Declaration of Trust
of the New Fund provides that Trustees and Officers of the New
Fund 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 New Fund 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 New Fund also may advance money for these expenses
provided that the Trustee or Officer undertakes to repay the
New Fund if this person's conduct later is determined to
preclude indemnification. These liability and indemnification
provisions are substantially identical to those currently in
effect with respect to the Directors and officers of the Fund.
Insofar as indemnification for liabilities under the
Securities Act of 1933, as amended (the "1933 Act"), may be
permitted to the Trustees and Officers, the New Fund has been
advised that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the
1933 Act and, therefore, is unenforceable. If a claim for
indemnification against such liabilities under the 1933 Act
(other than for expenses incurred in a successful defense) is
asserted against the Trust by the Trustees or Officers in
connection with the New Fund shares, the New Fund will, unless
in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by
the New Fund is against public policy as expressed in the 1933
Act and will be governed by the final adjudication of such
issue.
<PAGE> 25
<PAGE>
The foregoing description is only a summary of (i) certain
characteristics of the securities of the New Fund to be issued
pursuant to the proposed Reorganization, (ii) the operations
of the New Fund and certain provisions of the New Fund's
Declaration of Trust, and (iii) certain provisions of Maryland
and Delaware law. The foregoing does not purport to be a
complete description of the New Fund securities nor of the
documents or laws cited, and is qualified in all respects by
reference to the provisions of Maryland and Delaware law and
the New Fund's Declaration of Trust, itself. Fund
Shareholders should refer to the provisions of Maryland and
Delaware law directly for a more thorough description. A copy
of the New Fund's Declaration of Trust will be provided upon
request and without charge to any holder of Fund Shares
entitled to vote at the Meeting. The New Fund's Declaration
of Trust provides that each New Fund shareholder, by virtue of
having become a New Fund shareholder, will be held to have
expressly assented and agreed to the terms of the New Fund's
Declaration of Trust and to have become a party thereto.
Federal Income Tax Consequences
The Fund and the New Fund will receive, as a condition to the
Reorganization, an opinion from Jorden Burt Berenson & Johnson
LLP, counsel to the Fund and the New Fund, to the effect, for
Federal income tax purposes, 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)(F) of the U.S. Internal Revenue Code
of 1986, as amended;
2. no gain or loss generally will be recognized to
the Fund upon the transfer of the Fund's assets
to the New Fund in exchange solely for shares
of beneficial interest in the New Fund and the
assumption by the New Fund of the Fund's
liabilities and the subsequent distribution of
those New Fund shares to the Fund Shareholders
of record in liquidation thereof;
3. no gain or loss will be recognized to the New
Fund upon the receipt of those Fund assets in
exchange solely for shares of beneficial
interest in the New Fund and the assumption by
the New Fund of the Fund's liabilities;
<PAGE> 26
<PAGE>
4. the New Fund's basis for those Fund assets
transferred by the Fund to the New Fund will be
the same as the basis thereof in the Fund's
hands immediately before the Reorganization,
and the New Fund's holding period for those
assets will include the Fund's holding period
therefor;
5. each Fund Shareholder of record will recognize
no gain or loss upon the constructive exchange
of all such shareholder's Fund Shares solely
for shares of the New Fund pursuant to the
Reorganization;
6. each such Fund Shareholder's basis for the
shares of the New Fund to be received by the
Fund Shareholder pursuant to the Reorganization
will be the same as the shareholder's basis in
the Fund Shares to be constructively
surrendered in exchange therefor; and
7. each such Fund Shareholder's holding period for
those shares of the New Fund will include the
period during which the Fund Shares to be
constructively surrendered in exchange therefor
were held, provided the Fund Shares were held
as capital assets by that Fund Shareholder on
the date of the Reorganization.
A revenue ruling of the U.S. Internal Revenue Service will not
be obtained by the New Fund or the Fund.
Pro Forma Capitalization and Ratios
The following table shows the capitalization of the Fund and
the New Fund 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:
<TABLE>
<CAPTION> Pro Forma
Fund New Fund Combined
<S> <C> <C> <C>
Net Assets: $577,194,431 $ 0 $577,194,431
Net Asset Value ("NAV")
Per Share: $1.00 $ 0 $1.00
Shares Outstanding: 577,194,431 0 577,194,431
<PAGE> 27
<PAGE>
</TABLE>
The following table shows the ratio of expenses to average net
assets and the ratio of net investment income to average net
assets of the Fund and the New Fund separately for the one-
year period ended December 31, 1995, and combined in the
aggregate on a pro forma basis (unaudited), as of that date,
giving effect to the Reorganization:
<TABLE>
<CAPTION>
Pro Forma
Fund New Fund Combined
<S> <C> <C> <C>
Ratio of Expenses to 0.74% 0% 0.74%
Average Net Assets
Ratio of Net Investment
Income to Average
Net Assets 4.93% 0% 4.93%
</TABLE>
Cessation of Existence
If the Plan is approved by the Fund Shareholders and the
Reorganization is completed, the Fund, as described above,
thereafter will cease to exist (see "The Proposed
Reorganization").
Transfer Agent and Depository
Rushmore Trust and Savings, FSB, 4922 Fairmont Avenue,
Bethesda, Maryland 20814, a majority-owned subsidiary of MMA,
currently acts as the transfer agent and depository for the
Fund and also will serve in the same capacities for the New
Fund.
Accountants
Deloitte & Touche LLP, Washington, D. C., presently are the
independent certified public accountants for the Fund and will
be the independent certified public accountants for the New
Fund, subject to required approvals. The approval by the Fund
Shareholders of the Plan also will be deemed to constitute the
ratification by the Fund Shareholders of Deloitte & Touche LLP
as the independentcertified public accountants for theNew Fund.
<PAGE> 28
<PAGE>
Board Recommendation
The Board, including a majority of the Fund's Independent
Directors, has 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 Board to be relevant, that the
Reorganization would be in the best interests of the Fund and
its shareholders and that the interests of existing
shareholders of the Fund will not be diluted as a result of
the transactions contemplated by the Reorganization. In
addition, the New Board, including a majority of the New
Fund's Independent Trustees, has concluded that the
Reorganization would be in the best interests of the New Fund
and its shareholders and that the interests of existing
shareholders of the New Fund will not be diluted as a result
of the transactions contemplated by Reorganization. The
Board, therefore, has submitted the Agreement and Plan of
Reorganization and Redomestication for approval by the Fund
Shareholders at the Meeting.
The Board of Directors of the Fund For Government Investors,
Inc. has approved and recommends that the Fund Shareholders
vote FOR Proposal One, the proposed Agreement and Plan of
Reorganization and Redomestication for the Fund For Government
Investors, Inc. and the transactions contemplated thereby, as
described above.
Required Vote
A quorum being present, the approval of the Agreement and Plan
of Reorganization and Redomestication with respect to the Fund
For Government Investors, Inc. requires the affirmative vote
of a majority of the outstanding securities of the Fund under
Proposal One. As defined in the 1940 Act, the term "majority"
means the vote of the lesser of: (i) 67% of the shares of the
Fund at a meeting where more than 50% of the outstanding
shares of the Fund are present in person or by proxy; or (ii)
more than 50% of the outstanding shares of the Fund. If
Proposal One is not approved, then the Board will consider
possible alternative arrangements and MMA will continue to
render services to the Fund.
OTHER BUSINESS
Other Matters
<PAGE> 29
<PAGE>
The Board knows of no business to be brought before the
Meeting other than the matters set forth above in this Proxy
Statement. Should any other matter requiring a vote of Fund
Shareholders arise, however, the Proxies will vote thereon
according to their best judgment in the interests of the Fund
and the Fund Shareholders.
Available Information
Both the Fund and the New Fund are registered under the 1940
Act and are subject to the informational requirements of the
Securities Exchange Act of 1934 and the 1940 Act, and, in
accordance therewith, are required to file reports, proxy
materials, and other information with the Commission. Such
reports, proxy materials, and other information can be
inspected at the 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.
Shareholder Proposals
The Fund, as a general matter, does not hold regular annual or
other meetings of shareholders. Any shareholder who wishes to
submit proposals to the principal executive officers of the
Fund should send such proposals to the principal executive
offices of the Fund, located at 4922 Fairmont Avenue,
Bethesda, Maryland 20814. It is suggested that Fund
shareholder proposals be submitted by certified mail, return
receipt requested. Similarly, New Fund shareholders who wish
to submit proposals to the principal executive officers of the
New Fund should send their proposals to the principal
executive offices of the New Fund, located at 4922 Fairmont
Avenue, Bethesda, Maryland 20814. It is suggested that New
Fund shareholder proposals also be submitted by certified
mail, return receipt requested.
By Order of the Board of
Directors
/s/ Richard J. Garvey
Richard J. Garvey
President and Director
Fund For Government Investors,
Inc.
Bethesda, Maryland
March 27, 1996
<PAGE> 30
<PAGE>
P R O X Y P R O X Y
FUND FOR GOVERNMENT INVESTORS, INC.
4922 Fairmont Avenue
Bethesda, Maryland 20814
(800) 343-3355 (301) 657-1500
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS
May 24, 1996
The undersigned shareholder of Fund For Government
Investors, Inc. (the "Fund"), revoking any and all previous
proxies heretofore given for shares of the Fund held by the
undersigned (the "Fund 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 each, to be the attorneys and proxies of the
undersigned (the "Proxies"), to attend the Special Meeting of
the Shareholders of the Fund (the "Fund Shareholders") to be
held on Friday, May 24, 1996, at 1:30 P.M., Eastern Time, at
4922 Fairmont Avenue, Bethesda, Maryland 20814, and at any
adjournments thereof (the "Meeting"), 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" Proposals 1 and 2. If
no direction is made for Proposals 1 and/or 2, this proxy will
be voted "FOR" any and all such Proposals.
Proposal 1. To approve or disapprove an Agreement and Plan
of Reorganization and Redomestication (the
"Plan"), with respect to changing the Fund's
domicile and form from a Maryland corporation
to a Delaware business trust, the Fund For
Government Investors (the "New Fund"), and the
transactions contemplated thereby, pursuant to
which change in domicile and form the Fund
would transfer all of its assets to the New
Fund in exchange for (i) shares of beneficial
interest in the New Fund that would be
distributed to the shareholders of the Fund
(the "Fund Shareholders") in exchange for their
Fund shares and (ii) the assumption by the New
Fund of all the liabilities of the Fund. The
approval by the Fund Shareholders of the Plan
also will be deemed to constitute: (i) the
<PAGE> 31
<PAGE>
approval and ratification by the Fund
Shareholders of a new investment advisory
agreement between the New Fund and MMA, the
investment adviser for the Fund; (ii) the
election by the Fund Shareholders of the
Trustees of the Trust; and (iii) the
ratification by the Fund Shareholders of
Deloitte & Touche LLP as the independent
certified public accountants of the New Fund.
FOR [ ] AGAINST [ ] ABSTAIN [
]
Proposal 2. In the discretion of the Proxies, 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 FUND FOR
GOVERNMENT INVESTORS, INC., WHICH RECOMMENDS A VOTE FOR EACH
OF THE PROPOSALS.
Dated: _________________________,
1996
_______________________________
Signature of Shareholder
_______________________________
Signature of Shareholder
This proxy may be revoked by the
shareholder(s) at any time prior
to the 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> 32
<PAGE>
<PAGE> 33
<PAGE>
EXHIBIT A:
FORM OF
AGREEMENT AND PLAN
OF
REORGANIZATION AND REDOMESTICATION
<PAGE>
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION AND REDOMESTICATION
THIS AGREEMENT AND PLAN OF REORGANIZATION AND
REDOMESTICATION ("Agreement") is made as of this ____ day of
________, 1996, by and between: (i) Fund For Government
Investors, Inc., a diversified investment company
incorporated, on October 30, 1974, and existing in the State
of Maryland, with its principal place of business at 4922
Fairmont Avenue, Bethesda, Maryland 20814 (the "Fund"); and
(ii) Fund For Government Investors, a diversified investment
company that is an unincorporated voluntary association
organized and existing under the laws of the State of Delaware
as a business trust pursuant to a Declaration of Trust, dated
January 25, 1996, with its principal place of business at 4922
Fairmont Avenue, Bethesda, Maryland 20814 (the "New Fund").
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 and
redomestication of the Fund, pursuant to which the Fund will
become part of the New Fund (the "Reorganization").
Specifically, this Agreement is intended to be and is adopted
for the purpose of providing for the Reorganization of the
Fund into the New Fund. The Reorganization will consist of
the transfer of all of the assets of the Fund to the New Fund
in exchange solely for (i) shares of beneficial interest in
the New Fund (the "New Fund Shares") and (ii) the assumption
by the New Fund of all the liabilities of the Fund, and the
distribution of the New Fund Shares to the shareholders of the
Fund (the "Fund Shareholders"), as provided herein, all upon
the terms and conditions hereinafter set forth in this
Agreement and pursuant to the provisions of Section
368(a)(1)(F) of the Code.
WHEREAS, the Fund and the New Fund (collectively, the
"Funds") are open-end investment companies of the management
type and the Fund owns securities which are assets of the
character in which the New Fund is permitted to invested;
WHEREAS, the Board of Directors of the Fund has
determined, with respect to the Reorganization, that the
exchange of all of the assets of the Fund for New Fund Shares
and the assumption of all the liabilities of the Fund by the
New Fund is in the best interests of the Fund and the New Fund
and their shareholders and that the interests of the existing
Fund Shareholders would not be diluted as a result of this
transaction;
<PAGE>
<PAGE>
WHEREAS, the Board of Trustees of the New Fund has
determined, with respect to the Reorganization, that the
exchange of all of the assets of the Fund for New Fund Shares
and the assumption of all the liabilities of the Fund by the
New Fund is in the best interests of the New Fund and the Fund
and their Shareholders and that the interests of the existing
New Fund Shareholders would not be diluted as a result of this
transaction; and
WHEREAS, the purpose of the Reorganization is to
reorganize and redomicile the Fund into a Delaware business
trust because the organizational form of a Delaware business
trust offers numerous advantages for investment companies,
including operational simplicity and limited liability of
shareholders, and provides an attractive venue for the
organization of investment companies, in particular because
the Delaware business trust incorporates many of the
protections and advantages of the traditional Delaware
corporation structure, while specifically addressing the needs
and goals of investment companies under the Investment Company
Act of 1940, as amended (the "1940 Act").
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 FUND TO THE NEW FUND IN
EXCHANGE FOR THE NEW FUND SHARES, AND THE ASSUMPTION OF
ALL THE LIABILITIES OF THE FUND
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 Fund agrees to transfer all of the Fund's assets,
as set forth in paragraph 1.2, to the New Fund, and the New
Fund agrees in exchange therefor: (i) to deliver to the Fund
the number of New Fund Shares, including fractional New Fund
Shares, determined by dividing the value of the Fund'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 New Fund
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 Fund, as set forth in paragraph 1.3.
1.2 The assets of the Fund to be acquired by the New
Fund shall consist of all property, including, without
limitation, all cash, securities, commodities and futures
<PAGE> A-2
<PAGE>
interests, and dividends or interest receivable which are
owned by the Fund and any deferred or prepaid expenses shown
as an asset on the books of the Fund on the closing date
provided in paragraph 3.1 (the "Closing Date").
1.3 The Fund will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date. The
New Fund shall assume all liabilities, expenses, costs,
charges, and reserves reflected on an unaudited statement of
assets and liabilities of the Fund prepared by the
administrator of the New Fund and the Fund, 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 Fund will distribute pro rata to the
Fund's shareholders of record, determined as of immediately
after the close of business on the Closing Date (the "Fund
Shareholders"), the New Fund Shares received by the Fund
pursuant to paragraph 1.1. Such distribution will be
accomplished by the transfer of the New Fund Shares then
credited to the account of the Fund on the books of the New
Fund to open accounts on the share records of the New Fund in
the names of the Fund Shareholders and representing the
respective pro rata number of the New Fund Shares due such
shareholders. All issued and outstanding shares of the Fund
will simultaneously be canceled on the books of the Fund,
although share certificates representing interests in the Fund
will represent a number of New Fund Shares after the Closing
Date as determined in accordance with Section 2.3. The New
Fund shall not issue certificates representing the New Fund
Shares in connection with such exchange. Ownership of New
Fund Shares will be shown on the books of the New Fund's
transfer agent.
2. VALUATION
2.1 The value of the Fund's assets to be acquired by the
New Fund 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 Fund's Articles of Incorporation and the Fund's then-
current prospectus or statement of additional information.
2.2 The net asset value of a New Fund Share shall be the
net asset value per share computed as of immediately after the
close of business of the NYSE on the Valuation Date, using the
valuation procedures set forth in the New Fund's Declaration
<PAGE> A-3
<PAGE>
of Trust and the New Fund's then-current prospectus or
statement of additional information.
2.3 The number of the New Fund Shares to be issued
(including fractional shares, if any) in exchange for the
Fund's assets shall be determined by dividing the value of the
net assets of the Fund determined using the same valuation
procedures referred to in paragraph 2.1 by the net asset value
of an NewFund Share determined in accordance withparagraph 2.2.
2.4 All computations of value for the Fund and the New
Fund 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 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,
a majority-owned subsidiary of MMA, as custodian for the Fund
(the "Custodian"), shall deliver at the Closing a certificate
of an authorized officer stating that: (i) the Fund's
portfolio securities, cash, and any other assets shall have
been delivered in proper form to the New Fund 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 Fund's portfolio securities.
3.3 Rushmore Trust and Savings, FSB, Bethesda, Maryland,
a majority-owned subsidiary of MMA, as the transfer agent for
the Fund (the "Transfer Agent"), on behalf of the New Fund and
the Fund, shall deliver at the Closing a certificate of an
authorized officer stating that the Transfer Agent's records
contain the names and addresses of the Fund Shareholders and
the number and percentage ownership of outstanding shares
owned by each such shareholder immediately prior to the
Closing. The New Fund shall issue and deliver a confirmation
evidencing the New Fund Shares to be credited on the Closing
Date to the Secretary of the Fund or provide evidence
satisfactory to the Fund that such New Fund Shares have been
credited to the Fund's account on the books of the New Fund.
At the Closing, each party shall deliver to the other such
bills of sales, checks, assignments, share certificates, if
<PAGE> A-4
<PAGE>
any, receipts, or other documents as such other party or its
counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Fund represents and warrants to the New Fund as
follows:
(a) The Fund is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Maryland;
(b) The 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 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) The Fund is not in, and the execution, delivery, and
performance of this Agreement will not result in, a material
violation of the Fund's Articles of Incorporation or By-Laws
or of any agreement, indenture, instrument, contract, lease,
or other undertaking to which the Fund is a party or by which
the Fund is bound;
(d) The Fund has no material contracts or other
commitments (other than this Agreement) which will be
terminated with liability to the Fund prior to the Closing
Date;
(e) Except as otherwise disclosed in writing to and
accepted by the Fund, 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 Fund or any of the Fund's properties or
assets which, if adversely determined, would materially and
adversely affect the Fund's financial condition or the conduct
of the Fund's business. The Fund does not know of any facts
which might form the basis for the institution of such
proceedings and the Fund 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 the Fund to consummate the
transactions herein contemplated;
(f) The Statement of Assets and Liabilities of the Fund
at December 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 the
<PAGE> A-5
<PAGE>
Fund) fairly reflects the financial condition of the Fund as
of such date, and there are no known contingent liabilities of
the Fund as of such date not disclosed therein;
(g) Since December 31, 1995, there has not been any
material adverse change in the Fund's financial condition,
assets, liabilities, or business other than changes occurring
in the ordinary course of business, or any incurrence by the
Fund of indebtedness maturing more than one year from the date
such indebtedness was incurred, except as otherwise disclosed
to and accepted by the New Fund. For the purposes of this
subparagraph (g), a decline in net asset value per share of
the Fund, the discharge of Fund liabilities, or the redemption
of Fund shares by Fund Shareholders shall not constitute a
material adverse change;
(h) At the Closing Date, all material Federal and other
tax returns and reports of the Fund 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 Fund 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 Fund 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 Fund are,
and at the Closing Date will be, duly and validly issued and
outstanding, fully paid, and non-assessable by the Fund. All
of the issued and outstanding shares of the Fund 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
Fund as provided in paragraph 3.3. The Fund does not have
outstanding any options, warrants, or other rights to
subscribe for or to purchase any of the Fund shares, nor is
there outstanding any security convertible into any of the
Fund shares;
(k) At the Closing Date, the Fund will have good and
marketable title to the Fund's assets to be transferred to the
New Fund 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, the
New Fund will acquire good and marketable title thereto,
subject to any restrictions as might arise under the 1933 Act,
other than as disclosed to the New Fund;
<PAGE> A-6
<PAGE>
(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 Fund's
directors, and, subject to the approval of the Fund
Shareholders, this Agreement will constitute a valid and
binding obligation of the Fund, 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 Fund 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 Fund (the "Proxy
Statement") referred to in paragraph 5.6 (other than
information therein that relates to the New Fund) will, on the
effective date of the Proxy 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 The New Fund represents and warrants to the Fund as
follows:
(a) The New Fund is an unincorporated voluntary
association duly organized, validly existing, and in good
standing under the laws of the State of Delaware as a business
trust pursuant to a Declaration of Trust, dated January 25,
1996;
(b) The New Fund 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, will be in full force and effect immediately
following the close of business on the Closing Date;
(c) The current prospectus and statement of additional
information of the New Fund immediately following the close of
business on the Closing Date will 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 will not include any untrue statement of a
material fact or omit to state any material fact required to
<PAGE> A-7
<PAGE>
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, the New Fund will have good and
marketable title to the New Fund's assets;
(e) The New Fund is not in, and the execution, delivery,
and performance of this Agreement will not result in, a
material violation of the New Fund's Declaration of Trust or
By-Laws or of any agreement, indenture, instrument, contract,
lease, or other undertaking to which the New Fund is a party
or by which the New Fund 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 the New Fund or any
of its properties or assets, except as previously disclosed in
writing to the Fund. The New Fund does not know of any facts
which might form the basis for the institution of such
proceedings and the New Fund 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 the New Fund to consummate the
transactions contemplated herein;
(g) The Statement of Assets and Liabilities of the New
Fund at December 31, 1995, audited by Deloitte & Touche LLP,
independent accountants, and a copy of which has been
furnished to the Fund, fairly and accurately reflects the
financial condition of the New Fund 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 the New Fund's financial condition,
assets, liabilities, or business other than changes occurring
in the ordinary course of business, or any incurrence by the
New Fund 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 New Fund shares, the discharge of New Fund liabilities, or
the redemption of New Fund shares by New Fund Shareholders
shall not constitute a material adverse change;
(i) At the Closing Date, all material Federal and other
tax returns and reports of the New Fund 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 New Fund,
<PAGE> A-8
<PAGE>
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, the New Fund
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 New Fund Shares are, and
at the Closing Date will be, duly and validly issued and
outstanding, fully paid, and non-assessable by the New Fund.
The New Fund does not have outstanding any options, warrants,
or other rights to subscribe for or to purchase the New Fund
Shares, nor is there outstanding any security convertible into
the New Fund 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
trustees of the New Fund and this Agreement will constitute a
valid and binding obligation of the New Fund 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 New Fund Shares to be issued and delivered to
the Fund, for the account of the Fund 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 New Fund Shares, and will be
fully paid and non-assessable by the New Fund;
(n) The information to be furnished by the New Fund 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 applicable thereto;
(o) The Proxy Statement (only insofar as it relates to
the New Fund) will, on the effective date of the Proxy
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) The New Fund 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
<PAGE> A-9
<PAGE>
securities laws as may be necessary in order to continue their
operations after the Closing Date.
5. COVENANTS OF THE NEW FUND AND THE FUND
The New Fund and the Fund, as applicable, covenant as
follows:
5.1 The New Fund and the Fund 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 Fund will call a meeting of the Fund
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 Fund covenants that the New Fund 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 Fund will assist the New Fund in obtaining such
information as the New Fund reasonably requests concerning the
beneficial ownership of the shares of the Fund.
5.5 Subject to the provisions of this Agreement, the New
Fund and the Fund will each take, or cause to be taken, all
action, and do, or cause to be done, all things, reasonably
necessary, proper, or advisable to consummate and make
effective the transactions contemplated by this Agreement.
5.6 The Fund will provide the New Fund with information
reasonably necessary for the preparation of the Proxy
Statement, referred to in paragraph 4.1(n), in compliance with
the 1933 Act, the Securities Exchange Act of 1934, as amended
(the "1934 Act"), and the 1940 Act, as applicable, in
connection with the meeting of the Fund Shareholders to
consider the approval of this Agreement and the transactions
contemplated herein (the "Meeting").
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE FUND
The obligations of the Fund to consummate the
transactions provided for herein shall be subject, at the
Fund's election, to the performance by the New Fund of all the
obligations to be performed by the New Fund hereunder on or
before the Closing Date, and, in addition thereto, to the
following further conditions:
<PAGE> A-10
<PAGE>
6.1 All representations and warranties of the New Fund
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 The New Fund shall have delivered to the Fund, on
the Closing Date, a certificate executed in the New Fund's
name by the New Fund's President or Vice President, and the
New Fund's Controller, Treasurer, or Assistant Treasurer, in a
form reasonably satisfactory to the Fund, and dated as of the
Closing Date, to the effect that the representations and
warranties of the New Fund 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 Fund shall reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE NEW FUND
The obligations of the New Fund to complete the
transactions provided for herein shall be subject, at the New
Fund's election, to the performance by the Fund of all of the
obligations to be performed by the Fund hereunder on or before
the Closing Date and, in addition thereto, to the following
conditions:
7.1 All representations and warranties of the Fund
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 Fund shall have delivered to the New Fund a
statement of the Fund's assets and liabilities, as of the
Closing Date, certified by the Controller, the Treasurer, or
the Assistant Treasurer of the Fund; and
7.3 The Fund shall have delivered to the New Fund, on
the Closing Date, a certificate executed in the Fund's name by
the Fund's President or Vice President, and the Fund's
Controller, Treasurer, or Assistant Treasurer, in form and
substance satisfactory to the New Fund, and dated as of the
Closing Date, to the effect that the representations and
warranties of the Fund 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 New Fund shall reasonably request.
<PAGE> A-11
<PAGE>
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE NEW
FUND AND THE FUND
If any of the conditions set forth below do not exist on
or before the Closing Date, with respect to the Fund or the
New Fund, 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 Fund in accordance with the provisions
of the Fund's Articles of Incorporation and By-Laws, and
certified copies of the resolutions evidencing such approval
shall have been delivered to the New Fund. Notwithstanding
anything herein to the contrary, neither the Fund nor the New
Fund may 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 Fund and the
New Fund 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 Fund or the New Fund,
provided that the parties hereto may, for themselves, waive
any of such conditions;
8.4 The Proxy Statement shall have become effective
under the 1934 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 1934 Act; and
8.5 The parties shall have received the opinion of
Messrs. Jorden Burt Berenson & Johnson LLP, addressed to both
the New Fund and the Fund, 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 Fund and
the New Fund. Notwithstanding anything herein to the
<PAGE> A-12
<PAGE>
contrary, neither the Fund nor the New Fund may waive the
conditions set forth in this paragraph 8.5.
9. BROKERAGE FEES AND EXPENSES
9.1 The Fund and the New Fund each 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
10.1 The Fund and the New Fund 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 Fund's Board of Directors or the New Fund's Board of
Trustees at any time prior to the Closing Date, if
circumstances should develop that, in the opinion of such
Board of Directors or such Board of Trustees, respectively,
make proceeding with the Agreement inadvisable.
12. WAIVER
The Fund, after consultation with the Fund's counsel and
by consent of the Fund's Board of Directors, may waive any
condition to the obligations of the New Fund hereunder, except
as provided herein. The New Fund, after consultation with the
New Fund's counsel and by consent of the New Fund's Board of
Trustees, may waive any condition to the obligations of the
Fund hereunder, except as provided herein.
<PAGE> A-13
<PAGE>
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 Fund and the New Fund;
provided, however, that, following the Meeting of the Fund
Shareholders called by the Fund 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 New
Fund Shares to be issued to the Fund 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 Fund at 4922 Fairmont Avenue,
Bethesda, Maryland 20814, and to the New Fund 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
affectin any waythe meaning or interpretationof 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
Fund hereunder shall not be binding upon any of the directors,
shareholders, nominees, officers, agents, or employees of the
Fund personally, but shall bind only the corporate property of
the Fund, as provided in the Articles of Incorporation of the
Fund. The execution and delivery by such officers of the Fund
<PAGE> A-14
<PAGE>
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
Fund as provided in the Articles of Incorporation of the Fund.
15.6 It is expressly agreed that the obligations of the
New Fund hereunder shall not be binding upon any of the
trustees, shareholders, nominees, officers, agents, or
employees of the New Fund personally, but shall bind only the
corporate property of the New Fund, as provided in the
Declaration of Trust of the New Fund. The execution and
delivery by such officers of the New 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 New Fund as provided in the
Declaration of Trust of the New Fund.
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: FUND FOR GOVERNMENT INVESTORS, INC.
[Seal]
_____________________ _______________________________
By: By:
Title: Title:
Attest: FUND FOR GOVERNMENT INVESTORS
[Seal]
________________________ _______________________________
By: By:
Title: Title:
<PAGE> A-15
<PAGE>
EXHIBIT B:
INVESTMENT ADVISORY AGREEMENT
BETWEEN
FUND FOR GOVERNMENT INVESTORS
AND
MONEY MANAGEMENT ASSOCIATES
<PAGE>
<PAGE>
MANAGEMENT CONTRACT
Between
FUND FOR GOVERNMENT INVESTORS
And
MONEY MANAGEMENT ASSOCIATES
AGREEMENT dated as of the 25th day of January, 1996 by
and between Fund For Government Investors (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 Trustees 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 brokers
commissions and issue and transfer taxes chargeable to the
Fund in connection with securities transactions to which the
Fund is a party; (2) the compensation (if any) of those
trustees and officers of the Fund who are also partners 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.
3. 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) 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
trustees meetings, and preparation, printing and distribution
of all reports and proxy materials; (5) legal services
<PAGE>
<PAGE>
rendered to the Fund; (6) retaining and compensating those
trustees, officers and employees of the Fund who are not
partners of the Manager; (7) maintaining appropriate insurance
coverage for the Fund and its trustees and officers; and (8)
its membership in trade associations.
4. 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.
5. 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.
6. 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 0.50% of the first $500 million of net assets,
0.45% of the next $250 million of net assets, 0.40% of the
next $250 million of net assets, and 0.35% of the net assets
over $1 billion.
7. If in any fiscal year the aggregate expenses of the
Fund, exclusive of taxes, brokerage, interest, and
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 Adviser 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.
8. 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.
9. Subject to and in accordance with the Fund s
Declaration of Trust and of the Partnership Agreement of the
Manager, trustees, officers, agents, and stockholders of the
Fund are or may be interested in the Manager (or any successor
<PAGE> B-2
<PAGE>
thereof); partners of the Manager are or may be interested in
the Fund as trustees, officers, stockholders or otherwise; the
Manager (or any successor) is or may be interested in the Fund
as a stockholder or otherwise. The effect of any such
interrelationships shall be governed by said Trust Charter and
provisions of the Investment Company Act of 1940.
10. This contract shall continue in effect until the
first meeting of the account owners of the Fund and if
approved therein until January 4, 1998, and thereafter only so
long as such continuance is approved at least annually by
votes of the Fund s Board of Trustees, including the votes of
a majority of the trustees 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
Trustees 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.
11. As used in Section 10, the terms "interested
persons" and "vote of a majority of the outstanding
securities" shall have the respective meaning set forth in
Section 2(a) (19) and Section 2(a) (42) of the Investment
Company Act of 1940.
12. 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.
13. The Manager will notify the Fund of any change in
the membership of such partnership within a reasonable time
after such change, pursuant to Section 205 of the Investment
Advisers Act of 1940.
<PAGE> B-3
<PAGE>
14. 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 trustee 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.
IN WITNESS WHEREOF the parties hereto have caused this
contract to be executed on the day and year first above
written.
WITNESS FUND FOR GOVERNMENT INVESTORS
/s/ Kimberly French /s/ Stephenie E. Adams
Stephenie E. Adams
Secretary
WITNESS MONEY MANAGEMENT ASSOCIATES
/s/ Richard J. Garvey /s/ Daniel L. O'Connor
Daniel L. O Connor
General Partner
<PAGE> B-4
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EXHIBIT C:
AUDITED FINANCIAL STATEMENTS OF
MONEY MANAGEMENT ASSOCIATES
<PAGE>
<PAGE>
MONEY MANAGEMENT ASSOCIATES
(a limited partnership)
Financial Statements and
Independent Auditors' Report
December 31, 1994
<PAGE>
<PAGE>
YOUNG, BROPHY & CO. P.C.
Certified Public Accountants
Independent Auditors' Report
To the Partners of
Money Management Associates:
We have audited the statement of assets, liabilities and
partners' capital-income tax basis of Money Management
Associates (a limited partnership) as of December 31, 1994 and
the related statements of revenue and expenses and changes in
partners' capital-income tax basis for the year then ended.
These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit 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 are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. 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 audit provides a reasonable
basis for our opinion.
As described in Note 1, these financial statements were
prepared on the income tax basis; consequently, certain
revenues and the related assets are recognized when received
rather than when earned, and certain expenses are recognized
when paid rather than when the obligation is incurred.
Accordingly, the accompanying financial statements are not
intended to present financial position and results of
operations in conformity with generally accepted accounting
principles.
In our opinion, the financial statements referred to above
present fairly in all material respects, the financial
position of Money Management Associates as of December 31,
1994 and the results of its operations for the year then ended
on the basis of accounting described in Note 1.
/s/ YOUNG, BROPHY & CO., P.C.
March 7, 1995
<PAGE> C-1
<PAGE>
12501 Prosperity Drive, Suite 250 Silver Spring, MD 20904-
1689 (301) 680-0040 Fax (301) 680-0560
<PAGE> C-2
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MONEY MANAGEMENT ASSOCIATES
(a limited partnership)
Statement of Assets, Liabilities and Partners' Capital-
Income Tax Basis
December 31, 1994
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents (note 3) . . . . . . $ 1,121,571
Notes receivable, net . . . . . . . . . . . . . 21,482
Investment securities . . . . . . . . . . . . . 134,675
Investment in subsidiaries (note 4) . . . . . . 1,665,098
Fixed assets, net (note 5) . . . . . . . . . . -
$ 2,942,826
Liabilities and Partners' Capital
Liabilities:
Profit sharing plan (note 6) . . . . . . . . $ 15,422
Other liabilities . . . . . . . . . . . . . 7,630
Total liabilities . . . . . . . . . . . . 23,052
Partners' capital . . . . . . . . . . . . . . . 2,919,774
$ 2,942,826
</TABLE>
See accompanying notes to financial statements.
<PAGE> C-3
<PAGE>
MONEY MANAGEMENT ASSOCIATES
(a limited partnership)
Statement of Revenue and Expenses
and Changes in Partners' Capital-
Income Tax Basis
For the Year Ended December 31, 1994
<TABLE>
<CAPTION>
<S> <C>
Revenue received (note 3):
Investment advisory fees . . . . . . . . . . $ 3,824,948
Administrative services,
Cappiello-Rushmore Trust . . . . . . . . . 420,445
Total revenue received . . . . . . . . . . 4,245,393
Operating expenses paid:
Salaries and benefits . . . . . . . . . . . 924,097
Advertising and promotion . . . . . . . . . 284,542
Management services (note 3) . . . . . . . . 392,582
Shareholder services,
Cappiello-Rushmore Trust (note 3) . . . . 360,000
Depreciation . . . . . . . . . . . . . . . . 25,607
Other operating (note 7) . . . . . . . . . . 729,151
Total operating expenses paid . . . . . . 2,715,979
Excess of revenue received over expenses paid
from operations . . . . . . . . . . . . . . 1,529,414
Other:
Trading and investments, net . . . . . . . . (15,480)
Interest on notes payable . . . . . . . . . (31,271)
Other income . . . . . . . . . . . . . . . . 12,239
Total other . . . . . . . . . . . . . . . (34,512)
Excess of revenue received over expenses paid . 1,494,902
Partners' capital, beginning . . . . . . . . . 2,359,955
Distribution to partners . . . . . . . . . . . 935,083
Partners' capital, ending . . . . . . . . . . . $ 2,919,774
</TABLE>
See accompanying notes to financial statements.
<PAGE> C-4
<PAGE>
MONEY MANAGEMENT ASSOCIATES
(a limited partnership)
Notes to Financial Statements
December 31, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
The partnership agreement of Money Management Associates
(a limited partnership) provides for one general partner
(Daniel L. O'Connor) and up to 200 limited partnership
units, with 60 units issued and outstanding as of
December 31, 1994. The Partnership is a registered
investment advisor under the Investment Advisors Act of
1940.
Cash and Cash Equivalents
The Partnership maintains its cash in bank deposit
accounts which at times may exceed federally insured
limits. The Partnership believes it is not exposed to
any significant credit risk on cash and cash equivalents.
Basis of Accounting
The financial statements are prepared on the basis of
accounting used by the Partnership to file its federal
income tax return. This method involves recording
transactions on the basis of cash receipts and
disbursements modified to reflect depreciation,
amortization and the accrual of retirement contributions
in accordance with income tax regulations. In addition,
majority owned subsidiaries are carried at cost instead
of on the equity method or being consolidated, and
marketable securities are carried at their tax basis
instead of a lower of cost or market, as would be
required by generally accepted accounting principles.
Depreciation and amortization
Fixed assets are recorded at cost. Depreciation of
furniture and equipment is computed over the useful lives
of the assets using tax methods.
<PAGE> C-5
<PAGE>
Income Taxes
The Partnership is not subject to income taxes and
therefore does not provide for income tax expense. The
partners are required to include in their income tax
returns their share of the Partnership's income or loss.
2. ALLOCATION OF THE EXCESS OF REVENUE RECEIVED OVER
EXPENSES PAID
The excess of revenue collected over expenses paid has
been allocated to the partners' capital accounts in
accordance with the partnership agreement. The
partnership agreement states that first there shall be
allocated an eight percent return on partner capital
accounts, compounded quarterly. The remainder is
allocated seventy-five percent to the limited partners
and twenty-five percent to the general partner. Losses
are allocated to the limited partners in proportion to
limited partnership units outstanding.
3. SPONSORED FUNDS, INVESTMENT ADVISORY AND ADMINISTRATIVE
AGREEMENTS
The Partnership provides investment advisory services to
Fund for Government Investors, Inc., Fund for Tax-Free
Investors, Inc., The Rushmore Fund, Inc. and American Gas
Index Fund, Inc. The Partnership receives a fee based on
an annual percentage of average daily net assets of the
Funds. The investment advisory agreements provide for
reimbursement by the Partnership to the Funds for fund
expenses which exceed certain specified limitations. No
reimbursement was required for the year ended December
31, 1994. However, the Partnership voluntarily
reimbursed the Virginia and Maryland Tax-Free Portfolios
for a potion of their expenses. The Partnership also is
under agreement to provide administrative services
(including shareholder accounting and transfer agency) to
Cappiello-Rushmore Trust. The Partnership receives a fee
based on an annual percentage of average daily net assets
of the Trust for these services.
The Partnership has made arrangements for certain fund
management, administrative, and shareholder accounting
functions to be provided to sponsored funds by subsidiary
companies (see note 4).
The Partnership has entered into an agreement with
Rushmore Trust and Savings, FSB (the Bank) to provide
shareholders accounting and transfer agency services for
<PAGE> C-6
<PAGE>
Cappiello-Rushmore Trust. The agreement provides that
the Bank will receive fifty percent of the fee paid tot
he Partnership under its agreement with the Trust with a
minimum of $7,500 per month for each of the four
Cappiello-Rushmore funds. The Partnership paid the Bank
a fee of $360,000 for these services for the year ended
December 31, 1994.
Beginning July 1, 1994, Rushmore Services, Inc., began
providing certain management services on behalf of the
Partnership to sponsored funds. These services consist
of portfolio accounting, maintenance of various state
registration, and assistance with certain management and
promotional activities. The fee for these services
amounted to $392,582 for the year ended December 31,
1994.
Daniel L. O'Connor, the sole general partner of the
Partnership, is also Chairman of the Board and Treasurer
of the Funds. The Partnership occupied space in a
building owned by Mr. O'Connor until July 1, 1994. Rent
for Partnership space approximates fair market value and
was $52,500 for the year ended December 31, 1994.
Certain other limited partners of Money Management
Associates are also officers of the Funds.
4. INVESTMENT IN SUBSIDIARIES
The Partnership owns 100 percent of Rushmore Services,
Inc. which provides administrative services to sponsored
funds on behalf of the Partnership; 100 percent of
Rushmore Investment Brokers, Inc. which is a regulated
securities broker-dealer; and 99 percent of Rushmore
Trust & Savings, FSB which is a federally insured savings
bank providing shareholder servicing, custodial and other
banking services to the funds.
Investment in subsidiaries as of December 31, 1994 is
summarized as follows:
<TABLE>
<CAPTION>
Cost
adjusted for
equity and
income of
Cost subsidiary
<S> <C> <C>
Rushmore Trust & Savings, FSB $ 994,962 $ 1,903,372
Rushmore Investment Brokers, Inc. 125,000 59,669
Rushmore Services, Inc. 545,136 315,923
<PAGE> C-7
<PAGE>
$1,665,098 $ 2,278,964
</TABLE>
The Partnership shared in certain expenses of majority
owned subsidiary in conjunction with their involvement in
promoting sponsored funds and related activities.
5. FIXED ASSETS
<TABLE>
<CAPTION>
Fixed assets as of December 31, 1994 are summarized as
follows:
<S> <C>
Computer equipment . . . . . $ 5,500
5,500
Accumulated depreciation . . 5,500
Book Value . . . . . . . . . $ -
</TABLE>
The Partnership transferred $494,363 net book value of
fixed assets to Rushmore Services, Inc. on December 31,
1994 for additional paid-in-capital of Rushmore Services,
Inc. The fixed assets were previously used by the
Partnership before the Partnership moved its operations
to Florida during 1994.
6. PROFIT SHARING PLAN
The Partnership has a qualified 401(k) plan which covers
partners and employees who meet the specified age and
employment requirements. Contributions other than
employee deferrals are at the discretion of the
management. Contributions to the plan amounted to
$43,976 for the year ended December 31, 1994.
<PAGE> C-8
<PAGE>
7. OTHER OPERATING EXPENSES PAID
<TABLE>
<CAPTION>
The components of other operating expenses paid for the year ended
December 31, 1994 are:
<S> <C>
Printing and office supplies . . . . . $160,176
Legal and accounting . . . . . . . . . 132,097
Postage . . . . . . . . . . . . . . . 101,362
Broker-dealer administrative expenses 93,789
Occupancy . . . . . . . . . . . . . . 83,280
Other consulting . . . . . . . . . . . 44,029
Miscellaneous . . . . . . . . . . . . 28,908
Travel and entertainment . . . . . . . 28,716
Dues and subscriptions . . . . . . . . 20,952
Telephone . . . . . . . . . . . . . . 17,949
Reimbursement of expenses of
sponsored funds . . . . . . . . . . 17,893
Total other operating expenses paid $729,151
</TABLE>
(concluded)
<PAGE> C-9
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000039436
<NAME> FUND FOR GOVERNMENT INVESTORS, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 568,383,559
<INVESTMENTS-AT-VALUE> 568,383,559
<RECEIVABLES> 4,435,404
<ASSETS-OTHER> 5,381,532
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 578,200,495
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,006,064
<TOTAL-LIABILITIES> 1,006,064
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 577,194,431
<SHARES-COMMON-STOCK> 577,194,431
<SHARES-COMMON-PRIOR> 524,153,554
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 577,194,431
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 31,976,884
<OTHER-INCOME> 0
<EXPENSES-NET> (4,197,263)
<NET-INVESTMENT-INCOME> 27,779,621
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 27,779,621
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (27,779,621)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,611,795,994
<NUMBER-OF-SHARES-REDEEMED> (2,585,548,223)
<SHARES-REINVESTED> 26,793,106
<NET-CHANGE-IN-ASSETS> 53,040,877
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<PAGE>
<GROSS-ADVISORY-FEES> 2,787,502
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,197,263
<AVERAGE-NET-ASSETS> 563,913,507
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.049
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.049)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
</TABLE>
