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As Filed With The Securities And Exchange Commission On
February 7, 1996
Registration No. 33-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (X)
Pre-Effective Amendment No. ( )
Post-Effective Amendment No. ( )
Fund for Government Investors, Inc.
(Exact Name of Registrant as Specified in Charter)
4922 Fairmont Avenue, Bethesda, Maryland 20814
(Address of Principal Executive Offices) (Zip Code)
(301) 657-1500
(Registrant's Telephone Number, Including Area Code)
Mr. Richard J. Garvey
Fund for Government Investors, Inc.
4922 Fairmont Avenue
Bethesda, Maryland 20814
(Name and Address of Agent for Service of Process)
Copies to:
James Bernstein, Esq.
Jorden Burt Berenson & Johnson LLP
1025 Thomas Jefferson Street, N.W.
Suite 400 East
Washington, D. C. 20007
Approximate Date of Proposed Public Offering: As soon as
practicable after this Registration Statement becomes
effective.
It is proposed that this filing will become effective thirty
days after filing pursuant to paragraph (a) of Rule 488.
The Registrant has registered an indefinite amount of
securities under the Securities Act of 1933 pursuant to
Section 24(f) under the Investment Company Act of 1940;
accordingly, no fee is payable herewith. The Registrant filed
a Rule 24f-2 Notice for its most recent fiscal year ended
December 31, 1994 on February 22, 1995.
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FUND FOR GOVERNMENT INVESTORS, INC.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following pages
and documents:
Front Cover
Contents Page
Cross-Reference Sheet
Letters to Shareholders
Notice of Special Meeting
PART A
Combined Prospectus/Proxy Statement
PART B
Statement of Additional Information
PART C
Other Information
Signatures
Exhibits
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FUND FOR GOVERNMENT INVESTORS, INC.
REGISTRATION STATEMENT ON FORM N-14
CROSS REFERENCE SHEET
N-14 Location in
Item No. Registration Statement
Part A: Information Required In
Prospectus/Proxy Statement
1. Beginning of Registration Cover Page; Cross Reference
Statement and Outside Front Sheet
Cover Page of Prospectus
2. Beginning and Outside Back Table of Contents
Cover Page of Prospectus
3. Synopsis and Risk Factors Synopsis; Principal Risk
Factors
4. Information about the Synopsis; The Proposed
Transaction Reorganization; Appendix A
5. Information about the Synopsis; Comparison of
Registrant Investment Objectives and
Policies; Principal Risk
Factors; Additional
Information About FGI and
the FGI Shares;
Miscellaneous; Current
Prospectus of Fund for
Government Investors, Inc.
6. Information about the Synopsis; Comparison of
Companyt Being Acquired Investment Objectives and
Policies; Principal Risk
Factors; Additional
Information About the Money
Market Portfolio and the
Money Market Portfolio
Shares; Current Prospectus
of The Rushmore Money
Market Portfolio
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N-14 Location in
Item No. Registration Statement
7. Voting Information Introduction and Voting
Information; Synopsis
8. Interest of Certain Persons Introduction and Voting
and Experts Information; The Proposed
Reorganization;
Miscellaneous
9. Additional Information Not Applicable
Required for Reoffering by
Persons Deemed to be
Underwriters
Part B: Information Required In
Statement of Additional Information
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. Additional Information about Current Statement of
the Registrant Additional Information of
Fund for Government
Investors, Inc.
13. Additional Information about Current Statement of
the Company Being Acquired Additional Information of
The Rushmore Fund, Inc.
14. Financial Statements Current Annual Report of
Fund for Government
Investors, Inc.; Semi-
Annual Report of Fund for
Government Investors, Inc.;
Current Annual Report of
The Rushmore Fund, Inc.;
Pro Forma Financial
Statements
Part C: Other Information
15. Indemnification Indemnification
16. Exhibits Exhibits
17. Undertakings Undertakings
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March ___, 1996
Dear Shareholder:
Enclosed is a proxy statement and a detailed shareholder
letter describing the proposed combination of your Portfolio,
the Rushmore Money Market Portfolio, and Fund for Government
Investors. Your Portfolio and Fund for Government Investors
are similar and are both money market funds. The Money Market
Portfolio and Fund for Government Investors have virtually
identical investment objectives and comparable investment
policies and can invest in most of the same types of
securities. This combination will provide the opportunity for
you to continue to pursue your investment goals and the
potential to benefit from the lower expenses paid by a larger
fund. It is being recommended by your Board of Directors.
Please review the attached materials carefully and return
your proxy as soon as possible.
/s/ Richard J. Garvey
Richard J. Garvey
President
The Rushmore Fund, Inc.
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THE RUSHMORE FUND, INC.
4922 Fairmont Avenue
Bethesda, Maryland 20814
March ___, 1996
To the Shareholders of
The Rushmore Money Market Portfolio
Dear Shareholder:
A special meeting of the shareholders of the Rushmore Money
Market Portfolio (the "Money Market Portfolio"), a series of
The Rushmore Fund, Inc. (the "Rushmore Fund"), will be held at
1:00 P.M., Eastern Time, on Friday, May 24, 1996, at the
offices of the Rushmore Fund, at 4922 Fairmont Avenue,
Bethesda, Maryland 20814 (the "Meeting"). At the Meeting, the
shareholders of the Money Market Portfolio will vote on an
Agreement and Plan of Reorganization (the "Plan"). Under the
Plan, the Money Market Portfolio will merge into Fund for
Government Investors, Inc. ("FGI"), a separate investment
company within the Rushmore Group that has an investment
objective that is virtually identical to that of the Money
Market Portfolio and investment policies that are comparable
to those of the Money Market Portfolio (the "Reorganization").
If the Plan is approved by the shareholders of the Money
Market Portfolio and implemented by the Rushmore Fund, you
will become a shareholder of FGI and will receive shares of
FGI having an aggregate value equal to the aggregate value of
your investment in the Money Market Portfolio. No sales
charge will be imposed as the result of the Reorganization.
The Reorganization will be conditioned upon receipt of an
opinion of counsel indicating that the Reorganization will
qualify as a tax-free reorganization for Federal income tax
purposes.
The Board of Directors of the Rushmore Fund (the "Rushmore
Fund Board") believes that the proposed Reorganization should
benefit shareholders by facilitating a potentially larger
mutual fund. A larger mutual fund should enhance the ability
of the adviser of the combined mutual fund to effect portfolio
transactions on more favorable terms as well as promote more
efficient operations and enable the combined mutual fund to
diversify investments to a greater extent. The Rushmore Fund
Board further anticipates that the Reorganization should
permit the reduction or elimination of certain duplicative
costs and expenses, presently incurred for services that are
separately performed for both the Money Market Portfolio and
FGI.
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The Rushmore Fund Board has carefully considered and has
unanimously approved the proposed Reorganization, as described
in the accompanying materials. The Rushmore Fund Board
believes that the Reorganization is in the best interests of
the Money Market Portfolio and its shareholders and,
therefore, recommends that you vote in favor of approving the
Plan.
Concurrently with the solicitation of the shareholders of the
Money Market Portfolio for the approval of the Reorganization,
the approval by the shareholders of FGI of an agreement and
plan of redomestication, whereby FGI would change its form of
organization from a Maryland corporation to a Delaware
business trust (the "FGI Redomestication"), also is being
solicited. The Board of Directors of FGI (the "FGI Board")
has approved such agreement and plan of redomestication. The
FGI Board believes that the shareholders of FGI will benefit
from the redomestication because a Delaware business trust
pays lower expenses than a Maryland corporation and provides
greater operational and administrative flexibility.
Accordingly, should shareholders of FGI approve the FGI
Redomestication and the shareholders of the Money Market
Portfolio approve the Reorganization, as described in the
accompanying materials, the Money Market Portfolio will merge
into FGI, a Maryland corporation, which, in turn, will
redomesticate into a Delaware business trust.
We strongly urge you to review, complete, and return your
proxy as soon as possible. Your vote is important no matter
how many shares you own. Voting your shares early will help
to avoid costly follow-up mail and telephone solicitation.
After reviewing the enclosed materials, please exercise your
right to vote today by completing, dating, and signing each
proxy card you receive and mailing the proxy in the self-
addressed, postage-paid envelope that has been enclosed for
your convenience. It is very important that you vote and that
your voting instructions be received no later than 12:00 Noon,
Eastern Time, on Friday, May 24, 1996.
Please note that you may receive more than one proxy package
if you hold shares of the Money Market Portfolio in more than
one account, and you should return separate proxy cards for
such accounts. If you have any questions, please call
Rushmore Trust and Savings, FSB, toll-free at (800) 343-3355.
Sincerely,
/s/ Richard J. Garvey
Richard J. Garvey
President
The Rushmore Fund, Inc.
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THE RUSHMORE FUND, INC.
4922 Fairmont Avenue
Bethesda, Maryland 20814
____________
The Rushmore Money Market Portfolio
____________
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
To be held on May 24, 1996
____________
TO THE SHAREHOLDERS:
Notice hereby is given that a special meeting of the
shareholders of the Rushmore Money Market Portfolio, a series
of The Rushmore Fund, Inc., will be held at 1:00 P.M., Eastern
Time, on Friday, May 24, 1996, at the offices of the Rushmore
Fund, 4922 Fairmont Avenue, Bethesda, Maryland 20814 (the
"Meeting"), for the following purposes:
PROPOSAL 1.
To approve or disapprove an Agreement and Plan of
Reorganization among The Rushmore Fund, Inc., the
Rushmore Money Market Portfolio, and Fund for
Government Investors, Inc. (the "Plan"), and the
transactions contemplated thereby, pursuant to which
Plan the Rushmore Money Market Portfolio would
transfer all of its assets to Fund for Government
Investors, Inc., in exchange for (i) shares of
common stock in the Fund for Government Investors,
Inc., that would be distributed to the shareholders
of the Rushmore Money Market Portfolio and (ii) the
assumption by the Fund for Government Investors,
Inc. of all the liabilities of the Rushmore Money
Market Portfolio.
PROPOSAL 2.
To transact such other business as properly may come
before the Meeting or any adjournment(s) thereof.
The transactions contemplated by the Plan, and related
matters, are described in the attached Combined
Prospectus/Proxy Statement. A copy of the form of the Plan is
attached as Exhibit A thereto.
You are entitled to vote at the Meeting, and any
adjournment(s) thereof, if you owned shares of the Money
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Market Portfolio at the close of business on _____________
1996. If you attend the Meeting, you may vote your shares in
person. If you do not expect to attend the Meeting, please
complete, date, sign, and return the enclosed proxy card in
the enclosed self-addressed, postage-paid return envelope.
By Order of the Board of
Directors
/s/ Stephenie E. Adams
Stephenie E. Adams
Secretary
The Rushmore Fund, Inc.
March ___, 1996
4922 Fairmont Avenue
Bethesda, Maryland 20814
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YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on the enclosed
proxy card, then please date and sign the card and return the
proxy card in the envelope provided. If you sign, date, and
return the proxy card but give no voting instructions, your
shares will be voted "FOR" each applicable proposal noticed
above. In order to avoid the additional expense and delay of
further solicitation, we ask your cooperation in mailing in
your proxy card promptly so that a quorum may be ensured.
Unless proxy cards submitted by corporations and partnerships
are signed by the appropriate persons as indicated in the
voting instructions on the proxy card, such proxy cards cannot
be voted.
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PART A
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THE RUSHMORE FUND, INC.
____________
The Rushmore Money Market Portfolio
____________
4922 Fairmont Avenue
Bethesda, Maryland 20814
(800) 343-3355
COMBINED PROSPECTUS/PROXY STATEMENT
This Combined Prospectus/Proxy Statement is being furnished in
connection with the solicitation of proxies by the Board of
Directors of The Rushmore Fund, Inc. (the "Rushmore Fund"),
for use at a special meeting of the shareholders of the
Rushmore Money Market Portfolio (the "Money Market
Portfolio"), to be held at 1:00 P.M., Eastern Time, on Friday,
May 24, 1996, at the offices of the Rushmore Fund, 4922
Fairmont Avenue, Bethesda, Maryland 20814, and at any
adjournment(s) thereof (the "Meeting"). The Rushmore Fund is
a diversified, open-end management investment company
incorporated in the State of Maryland with three separate
classes of common stock outstanding, with each such class
representing an interest in a separate series of the Rushmore
Fund. The Money Market Portfolio is one of the three series
of the Rushmore Fund. Only shareholders of the Money Market
Portfolio (the "Shareholders") are being solicited in
connection with the Meeting.
The purpose of the Meeting is to consider the Agreement and
Plan of Reorganization (the "Plan"), which would effect the
reorganization of the Money Market Portfolio into Fund for
Government Investors, Inc. ("FGI"), a separate investment
company within the Rushmore Group, and the transactions
contemplated thereby, as described below (the
"Reorganization"). The Plan has been unanimously approved by
the Board of Directors of the Rushmore Fund (the "Rushmore
Board"). Pursuant to the Plan, all of the assets of the Money
Market Portfolio would be acquired by FGI, which has an
investment objective virtually identical to and investment
policies comparable to those of the Money Market Portfolio, in
exchange for shares of common stock in FGI ("FGI Shares") and
the assumption by FGI of all the liabilities of the Money
Market Portfolio. Following such transfer of assets from the
Money Market Portfolio to FGI, the FGI Shares received by the
Money Market Portfolio then would be distributed pro rata to
the Shareholders of the Money Market Portfolio. As a result
of the proposed transactions, each Shareholder of the Money
Market Portfolio would receive a number of full and fractional
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FGI Shares having a total net asset value equal, on the
effective date of the Reorganization, to the net asset value
of the Shareholder's shares of common stock in the Money
Market Portfolio.
This Combined Prospectus/Proxy Statement, which should be
retained for future reference, sets forth concisely the
information about the Rushmore Fund, the Money Market
Portfolio, and FGI, and the transactions contemplated by the
proposed Reorganization, that an investor should know before
voting on the proposed Reorganization. A copy of the current
Prospectus of the Money Market Portfolio, dated January 1,
1996, is included in this Combined Prospectus/Proxy Statement
for each Shareholder of the Money Market Portfolio and is
incorporated by reference herein. A copy of the current
Prospectus of FGI, dated March 30, 1995, is included in this
Combined Prospectus/Proxy Statement for each Shareholder of
the Money Market Portfolio and is incorporated by reference
herein.
A Statement of Additional Information regarding the Rushmore
Fund and the Money Market Portfolio, dated January 1, 1996,
has been filed with the Securities and Exchange Commission
(the "Commission") and is incorporated by reference herein. A
Statement of Additional Information Regarding FGI, dated March
30, 1995, has been filed with the Commission and is
incorporated by reference herein. Copies of these documents
also may be obtained without charge by contacting Rushmore
Trust and Savings, FSB ("RTS"), which provides all
administrative services to both the Money Market Portfolio and
FGI, at 4922 Fairmont Avenue, Bethesda, Maryland 20814, or by
telephoning RTS toll-free at (800) 343-3355. RTS is a
majority-owned subsidiary of Money Management Associates, the
investment adviser to both the Money Market Portfolio and FGI.
A Statement of Additional Information, dated March ___, 1996,
relating to the proposed transactions described in this
Combined Prospectus/Proxy Statement, including historical
financial statements, has been filed with the Commission and
is incorporated by reference herein. Copies of this Statement
of Additional Information may be obtained without charge by
contacting RTS, at 4922 Fairmont Avenue, Bethesda, Maryland
20814, or by telephoning RTS toll-free at (800) 343-3355.
_______________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
______________________
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The date of this Combined Prospectus/Proxy Statement is March
___, 1996.
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COMBINED PROSPECTUS/PROXY STATEMENT
TABLE OF CONTENTS
Page
Introduction and Voting Information . . . . . . . . . . . . .
Special Meeting; Voting of Proxies; Adjournment . . . .
Proxy Solicitation . . . . . . . . . . . . . . . . . . .
Revocation of Proxies . . . . . . . . . . . . . . . . .
No Dissenters' Rights of Appraisal . . . . . . . . . . .
Additional Voting Information . . . . . . . . . . . . .
Summary of the Proposed Redomestication of FGI . . . . .
Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . .
The Proposed Reorganization . . . . . . . . . . . . . .
Investment Objectives and Policies . . . . . . . . . . .
Management Fees, Administrative Fees,
and Other Operating Expenses . . . . . . . . . . . . .
Purchases and Exchanges . . . . . . . . . . . . . . . .
Redemption Procedures and Fees . . . . . . . . . . . . .
Dividends and Distributions; Automatic Reinvestment . .
Federal Tax Consequences of the Proposed
Reorganization . . . . . . . . . . . . . . . . . . . .
Costs and Expenses of the Reorganization . . . . . . . .
Continuation of Shareholder Accounts; Share
Certificates . . . . . . . . . . . . . . . . . . . . .
Form of Organization of FGI . . . . . . . . . . . . . .
Form of Organization of the Rushmore Fund . . . . . . .
Operations of FGI Following the Reorganization . . . . .
The Proposed Redomestication of FGI . . . . . . . . . .
Comparison of Investment Objectives and Policies . . . . . .
Investment Objectives and Policies . . . . . . . . . . .
Investment Restrictions and Limitations . . . . . . . .
Principal Risk Factors . . . . . . . . . . . . . . . . . . .
The Proposed Reorganization . . . . . . . . . . . . . . . . .
Agreement and Plan of Reorganization . . . . . . . . . .
Reasons For the Proposed Reorganization . . . . . . . .
Description of Securities To Be Issued
In Connection With the Reorganization . . . . . . . .
Description of Securities To Be Issued
In Connection With the Redomestication . . . . . . . .
Federal Income Tax Consequences . . . . . . . . . . . .
Pro Forma Capitalization and Ratios . . . . . . . . . .
Cessation of Existence . . . . . . . . . . . . . . . . .
Required Vote and Board Recommendation With
Respect to the Reorganization Plan . . . . . . . . . .
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Page
Additional Information About FGI and the FGI Shares . . . . .
Additional Information About the Rushmore Fund,
the Money Market Portfolio, and the Money Market
Portfolio Shares . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . .
Available Information . . . . . . . . . . . . . . . . .
Legal Matters . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Experts . . . . . . . . . . . .
Other Business . . . . . . . . . . . . . . . . . . . . . . .
Proxy for a Special Meeting of Shareholders . . . . . . . . .
Appendix A: Form of Agreement and Plan of
Reorganization . . . . . . . . . . . . . . . .
Appendix B: Investment Management Agreement Between
Fund for Government Investors, Inc. and
Money Management Associates . . . . . . . . .
Appendix C: Current Prospectus of Fund for
Government Investors, Inc.,
Dated March 30, 1995 . . . . . . . . . . . . .
Appendix D: Current Prospectus of the Rushmore
Money Market Portfolio,
Dated January 1, 1996 . . . . . . . . . . . .
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THE RUSHMORE FUND, INC.
____________
The Rushmore Money Market Portfolio
_______________
COMBINED PROSPECTUS/PROXY STATEMENT
Special Meeting of Shareholders
to be held on
May 24, 1996
______________
INTRODUCTION AND VOTING INFORMATION
Special Meeting; Voting of Proxies; Adjournment
This Combined Prospectus/Proxy Statement is being furnished to
the shareholders of the Rushmore Money Market Portfolio (the
"Money Market Portfolio"), which is a series of The Rushmore
Fund, Inc. (the "Rushmore Fund"), in connection with the
solicitation by the Board of Directors of the Rushmore Fund
(the "Rushmore Board") of proxies to be used at a special
meeting of the shareholders of the Money Market Portfolio (the
"Shareholders") to be held on May 24, 1996, at the offices of
the Rushmore Fund, 4922 Fairmont Avenue, Bethesda, Maryland
20814, and at any adjournment(s) thereof (the "Meeting"). The
purpose of the Meeting is to vote on the proposed
reorganization of the Money Market Portfolio into Fund for
Government Investors, Inc. ("FGI"), which is a separate
investment company within the Rushmore Group, pursuant to the
terms and conditions of an agreement and plan of
reorganization ("Plan"), as described below in greater detail
(the "Reorganization").
Shareholders of record of the Money Market Portfolio at the
close of business on __________, 1996 (the "Record Date"),
will be entitled to vote at the Meeting. Such holders of
shares of Common Stock, $.001 par value per share, in the
Money Market Portfolio ("Money Market Portfolio Shares") are
entitled to one vote for each Money Market Portfolio Share
held and to fractional votes for fractional Money Market
Portfolio Shares held. A quorum must be present for the
transaction of business at the Meeting. The holders of record
of a majority of the Money Market Portfolio Shares outstanding
at the close of business on the Record Date present in person
or represented by proxy will constitute a quorum for the
Meeting of the Shareholders. A quorum being present, the
approval of the Reorganization at the Meeting by the
Shareholders requires the affirmative vote of a majority of
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all the outstanding voting shares of the Money Market
Portfolio.
If either (i) a quorum is not present at the Meeting or (ii) a
quorum is present but sufficient votes in favor of a matter
proposed at the Meeting (a "Proposal"), as set forth in the
Notice of this Meeting, are not received by 12:00 Noon,
Eastern Time, May 24, 1996, then the persons named as
attorneys and proxies in the enclosed proxy ("Proxies") may
propose one or more adjournments of the Meeting to permit
further solicitation of proxies. Any such adjournment will
require the affirmative vote of at least a majority of the
Money Market Portfolio Shares represented, in person or by
proxy, at the session of the Meeting to be adjourned. The
persons named as Proxies will vote those proxies that such
persons are required to vote FOR such Proposal in favor of
such an adjournment and will vote those proxies required to be
voted AGAINST such Proposal against such an adjournment. A
Shareholder vote may be taken on a Proposal in this Combined
Prospectus/Proxy Statement prior to any such adjournment if
sufficient votes have been received and it is otherwise
appropriate.
The individuals named as Proxies on the enclosed proxy card
will vote in accordance with your direction, as indicated
thereon, if your proxy card is received and is properly
executed. If you properly execute your proxy and give no
voting instructions with respect to a Proposal, your shares
will be voted in favor of the Proposal. The duly-appointed
Proxies, in their discretion, may vote upon such other matters
as may properly come before the Meeting. The Rushmore Board
is not aware of any other matters to come before the Meeting.
Since the Proposal to approve the Plan, or any other Proposal,
requires the affirmative vote of a majority of the outstanding
Money Market Portfolio Shares, an abstention from voting on
the Plan, or any other Proposal, effectively is a vote against
the Plan, or any such other Proposal. If a broker returns a
"non-vote" proxy, indicating a lack of authority to vote on
the Plan, or any other Proposal, then the Money Market
Portfolio Shares covered by such broker non-vote shall be
deemed present at the Meeting for the purpose of determining a
quorum, but shall not be deemed to be represented at the
Meeting for the purpose of calculating the number of Money
Market Portfolio Shares present in person or represented by
proxy at the Meeting with respect to the Plan or any other
Proposal.
Proxy Solicitation
Proxies will be solicited by mail and, if necessary to obtain
the requisite representation of Shareholders, the Rushmore
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Fund also may solicit proxies by telephone, telegraph, and/or
personal interview by representatives of the Rushmore Fund, by
employees of Money Management Associates ("MMA"), the
investment adviser to both the Rushmore Fund and FGI, or their
affiliates, and by representatives of any independent proxy
solicitation service retained for the Meeting. MMA, whose
principal location is 1001 Grand Isle Way, Palm Beach Gardens,
Florida 33418, will bear the costs of the Meeting, including
costs such as the preparation and mailing of the notice, the
Combined Prospectus/Proxy Statement, and the proxy, and the
solicitation of proxies, including reimbursement to persons
who forward proxy materials to their clients, and the expenses
connected with the solicitation of these proxies in person, by
telephone, or by telegraph. MMA's toll-free telephone number
is (800) 343-3355. Banks, brokers, and other persons holding
Money Market Portfolio Shares registered in their names or in
the names of their nominees will be reimbursed for their
expenses incurred in sending proxy materials to and obtaining
proxies from the beneficial owners of such Money Market
Portfolio Shares.
The vote of the shareholders of FGI is not being solicited,
since their approval or consent is not necessary for the
approval of the Reorganization.
Revocation of Proxies
You may revoke your proxy: (i) at any time prior to the
proxy's exercise by written notice to the Secretary or the
Assistant Secretary of the Rushmore Fund, at 4922 Fairmont
Avenue, Bethesda, Maryland 20814, prior to the Meeting; (ii)
by the subsequent execution and return of another proxy prior
to the Meeting; or (iii) by being present and voting in person
at the Meeting and giving oral notice of revocation to the
Chairman of the Meeting.
No Dissenters' Rights of Appraisal
The purpose of the Meeting is to vote on the proposed
Reorganization of the Money Market Portfolio into FGI, as
described below in greater detail. The Money Market Portfolio
is a separate series of the Rushmore Fund, a Maryland
corporation. The Articles of Incorporation of the Rushmore
Fund, as amended, do not entitle Shareholders to appraisal
rights (i.e., to demand the fair value of their shares) in the
event of a reorganization or merger. Consequently, the
Shareholders will be bound by the terms of the Plan, if the
Plan is approved at the Meeting. Any Shareholder, however,
may redeem his Money Market Portfolio Shares at net asset
value prior to the closing date of the proposed Reorganization
of the Money Market Portfolio.
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Additional Voting Information
As of the Record Date, there were outstanding and entitled to
be voted ________ Money Market Portfolio Shares of the Money
Market Portfolio. As of the Record Date,
_____________________, held for the benefit of others _______%
of the Money Market Portfolio Shares, and
_________________________, ______________________,
_____________________, and ________________________,
_______________, ______________________, held _______% and
_______%, respectively, of the Money Market Portfolio Shares.
Directors and officers of the Rushmore Fund own in the
aggregate less than 1% of the Money Market Portfolio Shares.
To the knowledge of the Rushmore Fund, no other person then
owned more than 5% of the outstanding Money Market Portfolio
Shares.
Summary of the Proposed Redomestication of FGI
The approval by the shareholders of FGI of an agreement and
plan of redomestication, whereby FGI would change its form of
organization from a Maryland corporation to a Delaware
business trust (the "FGI Redomestication"), also is being
solicited, pursuant to a separate proxy statement,
concurrently with the solicitation of the Money Market
Portfolio Shareholders for the approval of the Reorganization.
Copies of this separate proxy statement may be obtained by
shareholders of the Money Market Portfolio without charge by
contacting RTS at 4922 Fairmont Avenue, Bethesda, Maryland
20814, or by telephoning RTS toll-free at (800) 343-3355. The
Board of Directors of FGI (the "FGI Board") has approved such
agreement and plan of redomestication. The FGI Board believes
that the shareholders of FGI will benefit from the
redomestication because a Delaware business trust pays lower
expenses than a Maryland corporation and provides greater
operational and administrative flexibility.
The approval of the Reorganization by the Money Market
Portfolio Shareholders is not contingent upon the approval by
the shareholders of FGI of the FGI Redomestication. Likewise,
the approval of the FGI Redomestication by the shareholders of
FGI is not contingent upon approval of the Reorganization by
the Money Market Portfolio Shareholders. If approved by the
shareholders of FGI, the proposed FGI Redomestication is
anticipated to occur on (or shortly after) May 31, 1996, the
same date as the Reorganization is anticipated to occur.
Money Market Portfolio Shareholders are not being asked to
vote on the FGI Redomestication because Money Market Portfolio
Shareholders are not presently shareholders of FGI and,
therefore, have no voting interest with respect to the FGI
Redomestication (unless, of course, a Money Market Portfolio
Shareholder also owns shares of FGI as of the record date for
<PAGE> -9-
<PAGE>
the special meeting of the FGI shareholders in connection with
the FGI Redomestication) (see "Synopsis -- The Proposed
Redomestication of FGI," below).
Accordingly, should shareholders of FGI approve the FGI
Redomestication and Money Market Portfolio Shareholders
approve the Reorganization, the Money Market Portfolio will
merge into FGI, a Maryland corporation, which, in turn, will
redomesticate into a Delaware business trust. Additional
information regarding the proposed FGI Redomestication is set
forth below under "Form of Organization of FGI," "Operations
of FGI Following the Reorganization," and "The Proposed
Redomestication of FGI" in the "Synopsis," and also under
"Description of Securities To Be Issued In Connection With the
Reorganization" and "Description of Securities To Be Issued In
Connection With the Redomestication" in "The Proposed
Reorganization" in this Combined Prospectus/Proxy Statement.
As more fully described in this Combined Prospectus/Proxy
Statement, the Meeting has been called for the following
purposes:
PROPOSAL 1.
To approve or disapprove an Agreement and Plan of
Reorganization among the Rushmore Fund, the Money
Market Portfolio, and FGI (the "Plan"), and the
transactions contemplated thereby, pursuant to which
Plan the Money Market Portfolio would transfer all
of its assets to FGI in exchange for (i) shares of
common stock in FGI that would be distributed to the
Shareholders of the Money Market Portfolio and (ii)
the assumption by FGI of all the liabilities of the
Money Market Portfolio.
PROPOSAL 2.
To transact such other business as properly may come
before the Meeting or any adjournment(s) thereof.
As described below, a quorum being present, the approval by
the Shareholders of the Money Market Portfolio of any Proposal
considered at the Meeting requires the affirmative vote of a
majority of all the outstanding voting shares of the Money
Market Portfolio. In the event that the Shareholders of the
Money Market Portfolio do not approve the Plan, and the
Reorganization of the Money Market Portfolio contemplated
thereunder, the Rushmore Board will consider possible
alternative arrangements and MMA will continue to render
services to the Money Market Portfolio.
<PAGE> -10-
<PAGE>
The Board of Directors of the Rushmore Fund has unanimously
approved and recommends that, with respect to the
Reorganization of the Money Market Portfolio into FGI, the
Shareholders of the Money Market Portfolio vote FOR Proposal
One, the proposed Agreement and Plan of Reorganization for the
Money Market Portfolio and the transactions contemplated
thereby, as described herein.
<PAGE> -11-
<PAGE>
SYNOPSIS
The following is a summary of certain information contained
elsewhere in this Combined Prospectus/Proxy Statement,
including the prospectuses of the Money Market Portfolio and
FGI and the Agreement and Plan of Reorganization.
Shareholders should read this entire Combined Prospectus/Proxy
Statement carefully.
The Proposed Reorganization
Shareholders of the Money Market Portfolio will be asked at
the Meeting to vote upon and approve the Plan, which provides
for the Reorganization of the Money Market Portfolio into FGI.
A copy of the form of the Plan is set forth in Appendix A to
this Combined Prospectus/Proxy Statement. Pursuant to the
Plan, the Money Market Portfolio, which is a series of the
Rushmore Fund, a diversified, open-end management investment
company incorporated under the laws of the State of Maryland,
would be reorganized into FGI. FGI is a separate, open-end,
management investment company within the Rushmore Group. The
Plan sets forth the terms and conditions under which the
proposed transactions contemplated by the Reorganization may
be consummated. The Rushmore Board, including the directors
who are not "interested persons" of the Rushmore Fund (the
"Independent Rushmore Directors"), as that term is defined at
Section 2(a)(19) of the Investment Company Act of 1940, as
amended (the "1940 Act"), has unanimously approved the Plan.
The consummation of the proposed transactions contemplated by
the Reorganization is subject to a number of conditions set
forth in the Plan, some of which conditions may be waived by
the Rushmore Board or by an authorized officer of the Rushmore
Fund, as appropriate. See "The Proposed Reorganization --
Agreement and Plan of Reorganization." Among the significant
conditions (which may not be waived) for the Reorganization of
the Money Market Portfolio are (i) the receipt by the Rushmore
Fund of an opinion of counsel (or a revenue ruling of the U.S.
Internal Revenue Service) as to certain Federal income tax
aspects of the Reorganization (see "The Proposed
Reorganization -- Federal Income Tax Consequences") and (ii)
the approval of the Plan at the Meeting by the affirmative
vote of the holders of a majority of all the outstanding Money
Market Portfolio Shares of the Money Market Portfolio. The
Plan provides for the acquisition of all the assets of the
Money Market Portfolio by FGI in exchange for FGI Shares and
the assumption by FGI of all the liabilities of the Money
Market Portfolio. The FGI Shares received by the Money Market
Portfolio then would be distributed pro rata to the
Shareholders of the Money Market Portfolio, and the
outstanding Money Market Portfolio Shares of the Money Market
Portfolio would be canceled and the Money Market Portfolio
<PAGE> -12-
<PAGE>
would cease to exist. The Reorganization is anticipated to
occur on May 31, 1996, or such later date as the parties may
agree (the "Closing Date"). As a result of the proposed
transactions contemplated by the Reorganization, each
Shareholder would receive a number of full and fractional
shares of FGI having a total net asset value equal in value to
the net asset value of his or her Money Market Portfolio
Shares in the Money Market Portfolio as of the Closing Date of
the Reorganization.
For the reasons set forth below under "The Proposed
Reorganization -- Reasons for the Proposed Reorganization,"
the Rushmore Board, including all of the Independent Rushmore
Directors, has unanimously concluded that the Reorganization
would be in the best interests of the Money Market Portfolio
and its Shareholders and that the interests of existing
Shareholders will not be diluted as a result of the
transactions contemplated by the Reorganization. The Rushmore
Board, therefore, has submitted the Plan effecting the
Reorganization for approval at the Meeting by the Shareholders
of the Money Market Portfolio, and recommends approval of the
Plan.
Investment Objectives and Policies
Both the Money Market Portfolio and FGI are money market funds
and both strive to maintain their respective net asset values
at $1.00 per share. The investment objectives of both the
Money Market Portfolio and FGI are virtually identical. The
investment objective of the Money Market Portfolio is to
provide investors with maximum current income to the extent
that such investment is consistent with safety of principal.
The investment objective of FGI is to achieve current income
with safety of principal. To achieve its investment
objective, the Money Market Portfolio invests principally in
U.S. Government securities and agency securities, bank money
market instruments, and commercial paper. To achieve its
investment objective, FGI invests exclusively in marketable
debt securities issued by the U.S. Government, its agencies
and instrumentalities, and in repurchase agreements secured by
such securities. FGI does not, and following the
Reorganization will not, invest in bank money market
instruments or commercial paper.
As money market funds, both the Money Market Portfolio and FGI
are required to follow stringent guidelines under the 1940
Act, which guidelines apply only to money market funds, with
respect to the types of securities in which such a fund may
invest. While the Money Market Portfolio may seek to attain
its investment objective (which is essentially the same as the
investment objective of FGI), in part, through investment in
certain securities with different characteristics than those
<PAGE> -13-
<PAGE>
securities invested in by FGI, the portfolio securities of
both the Money Market Portfolio and FGI must meet the 1940 Act
guidelines imposed upon money market funds. The most notable
difference between the investment policies of the Money Market
Portfolio and the investment policies of FGI is that the Money
Market Portfolio may invest in a broader range of securities
than FGI, including bank money market instruments and
commercial paper. Both FGI and the Money Market Portfolio,
however, may invest only in securities that meet the
aforementioned stringent 1940 Act guidelines, and both the
Money Market Portfolio and FGI seek to maximize current income
and, at the same time, to preserve principal, while
maintaining a stable net asset value at $1.00 per share. The
1940 Act money market fund guidelines are briefly reviewed
below in "Investment Objectives and Policies -- General" under
"Comparison of Investment Objectives and Policies."
The investment objective of each of the Money Market Portfolio
and FGI is a fundamental policy which may not be changed
without the approval of a vote of at least a "majority" of the
outstanding shares (as that term is defined at Section
2(a)(42) of the 1940 Act) of the Money Market Portfolio or
FGI, respectively. All other investment policies of the Money
Market Portfolio and FGI that are not specified as fundamental
are not fundamental policies and may be changed by the
Rushmore Board or the FGI Board, respectively, without
shareholder approval.
The market value of U.S. Government securities, including U.S.
Treasury securities (which include U.S. Treasury bills, notes,
and bonds) and other debt securities, will fluctuate due to
the movement of interest rates, and is inversely related to
such movement. When interest rates rise, therefore, one can
expect that the market value of the U.S. Government securities
(and other debt securities) held by either the Money Market
Portfolio or FGI will decline, and, conversely, when interest
rates fall, one can expect the market value of the U.S.
Government securities (and other debt securities) held by
either the Money Market Portfolio or FGI will increase. U.S.
Government securities with longer maturities are more
sensitive to interest rate movements than are U.S. Government
securities with shorter maturities. In this respect, the
value of the portfolio securities of both the Money Market
Portfolio and FGI may fluctuate as interest rates change; both
the Money Market Portfolio and FGI, however, strive to
maintain stable net asset values at $1.00 per share, though
there is no assurance that either the Money Market Portfolio
or FGI will be able to achieve this goal.
For further discussion of the differences in the investment
policies of FGI and the Money Market Portfolio, see
<PAGE> -14-
<PAGE>
"Comparison of Investment Objectives and Policies" in this
Combined Prospectus/Proxy Statement.
Management Fees, Administrative Fees, and Other Operating
Expenses
1. Management Fees. MMA currently acts as the investment
adviser to both the Money Market Portfolio and FGI pursuant to
an investment management agreement between the Rushmore Fund
and MMA (the "Rushmore Fund Management Agreement") and an
investment management agreement between FGI and MMA (the "FGI
Management Agreement"), respectively. Under the Rushmore Fund
Management Agreement and the FGI Management Agreement, MMA
manages the investment and reinvestment of the assets of both
the Money Market Portfolio and FGI, respectively, and also
administers the affairs of the Money Market Portfolio and FGI,
subject to the control of the officers and directors of the
Money Market Portfolio and FGI, respectively. Pursuant to the
Rushmore Fund Management Agreement and the FGI Management
Agreement, the Money Market Portfolio and FGI presently each
pays MMA a management fee at the identical annual rate of
0.50% of the aggregate average daily net assets of the Money
Market Portfolio and FGI, respectively. MMA will continue to
provide investment advisory services to FGI after the
consummation of the Reorganization (and the FGI
Redomestication). Pursuant to the FGI Management Agreement,
as the asset base of FGI grows, FGI will recognize a decrease
in the management fee payable to MMA. FGI will pay MMA a
management fee equal to 0.50% of the aggregate average daily
net assets of FGI on the first $500 million of assets. The
annual rate is reduced to 0.45% on net assets from $500
million to $750 million; to 0.40% on net assets from $750
million to $1 billion; and to 0.35% on net assets over $1
billion.
MMA complies with any applicable state regulations which may
require MMA to make reimbursements, respectively, to the Money
Market Portfolio or FGI in the event that the Money Market
Portfolio's or FGI's respective aggregate operating expenses,
including the management fee, but generally excluding taxes,
interest, brokerage commissions, distribution fees, and
extraordinary expenses, are in excess of specific applicable
limitations.
2. Administrative Fees and Other Operating Expenses. Under
a service agreement between the Rushmore Fund and Rushmore
Trust and Savings, FSB ("RTS") a majority-owned subsidiary of
MMA, (the "Rushmore Fund Service Agreement"), and a service
agreement between FGI and RTS (the "FGI Service Agreement"),
RTS provides both the Money Market Portfolio and FGI with
general administrative, shareholder, dividend disbursement,
transfer agent, and registrar services and pays all fees and
<PAGE> -15-
<PAGE>
ordinary operating expenses that are directly related to the
services that RTS provides to the Money Market Portfolio and
FGI, respectively. Except for extraordinary legal expenses or
interest expense and the Money Market Portfolio's pro rata
share of the fees paid to the Independent Rushmore Directors
by the Rushmore Fund and FGI's fees paid to its independent
directors, there are no additional respective expenses to the
Money Market Portfolio and FGI. Under the Rushmore Fund
Service Agreement, the Money Market Portfolio pays RTS an
administrative fee at an annual rate of 0.25% of the aggregate
average daily net asset value of the Money Market Portfolio.
Under the FGI Service Agreement, FGI pays RTS an
administrative fee at an annual rate of 0.25% of the aggregate
average daily net asset value of FGI. RTS will continue to
provide administrative services to FGI at the annual rate of
0.25% of the aggregate average daily net asset value of FGI
after consummation of the Reorganization.
The following sets forth the fund operating expenses (as a
percentage of the average daily net assets) for the Money
Market Portfolio for the Rushmore Fund's fiscal year ended
August 31, 1995, and the fund operating expenses (as a
percentage of the average daily net assets) for FGI, for FGI's
fiscal year ended December 31, 1995, into which the Money
Market Portfolio would merge under the Plan:
<TABLE>
<CAPTION>
Money Market
Portfolio FGI
<S> <C> <C>
Management Fees: 0.50% 0.50%
Other Expenses: 0.25% 0.25%
Total Portfolio
Operating
Expenses: 0.75% 0.75%
</TABLE>
As reflected above, FGI has total operating expenses equal to
those historically incurred by the Money Market Portfolio.
For further discussion regarding the operating expenses of FGI
following the Reorganization, see "Synopsis -- Operations of
FGI Following the Reorganization" and "The Proposed
Reorganization -- Reasons For the Proposed Reorganization,"
below.
<PAGE> -16-
<PAGE>
Purchases and Exchanges
FGI Shares and Money Market Portfolio Shares both are sold in
a continuous offering and are offered to the public, and may
be purchased through securities dealers or directly from FGI
or the Rushmore Fund, respectively, at the net asset value
next computed after the receipt of a purchase order. No sales
charge is imposed by FGI or the Rushmore Fund on any
respective purchase of FGI Shares or Money Market Portfolio
Shares; however, securities dealers may charge a processing
fee for orders transmitted by such dealers to FGI or the
Rushmore Fund.
The Rushmore Fund is composed of three separate series
investment portfolios, including the Rushmore Money Market
Portfolio, the Rushmore U.S. Government Bond Portfolio, and
the Rushmore Nova Portfolio (collectively, the "Rushmore Fund
Portfolios") (though shares in the Rushmore Nova Portfolio
currently are not available or sold to the public).
Shareholders may exchange shares of any Rushmore Fund
Portfolio for shares of any other Rushmore Fund Portfolio
(other than the Rushmore Nova Portfolio). Shares of any
Rushmore Fund Portfolio also may be exchanged for shares of
the Fund for Tax-Free Investors, Inc. or the American Gas
Index Fund, Inc., each an open-end, management investment
company (i.e., a mutual fund) incorporated in the State of
Maryland, or for shares of the Cappiello-Rushmore Trust, an
open-end, management investment company organized as a
Delaware business trust, or for shares of FGI, which will
become a Delaware business trust upon approval of the FGI
Redomestication by the shareholders of FGI. Shares of FGI
also may be exchanged for shares of any Rushmore Fund
Portfolio (except the Nova Portfolio), the Fund for Tax-Free
Investors, Inc., the Cappiello-Rushmore Trust, or the American
Gas Index Fund, Inc. All of these exchanges are based upon
each mutual fund's net asset value per share next computed
following receipt of a properly-executed exchange request,
without any sales charge. Exchanges of Rushmore Fund
Portfolio shares (except the Nova Portfolio shares) may be
made only between identically-registered accounts, and this
exchange privilege is available only in states where the
shares to be acquired may be legally sold. Upon the
effectiveness of the Reorganization (and the FGI
Redomestication), shareholders of the FGI Shares will continue
to be entitled to the exchange privilege currently offered by
both the Money Market Portfolio and FGI. There are no
material differences between the exchange privilege which
Shareholders of the Money Market Portfolio currently have and
the exchange privilege which such Shareholders will have as
shareholders of FGI upon effectiveness of the Reorganization.
Redemption Procedures and Fees
<PAGE> -17-
<PAGE>
FGI Shares and Money Market Portfolio Shares both may be
redeemed at a redemption price equal to the net asset value of
the shares as next computed following the receipt of a request
for redemption in proper form. Payment of redemption proceeds
for redeemed FGI Shares and for redeemed Money Market
Portfolio Shares ordinarily are made within seven days after
receipt of a redemption request in proper form and
documentation. FGI Shares and Money Market Portfolio Shares
may be redeemed without charge.
Dividends and Distributions; Automatic Reinvestment
Both the Money Market Portfolio and FGI declare dividends
daily. Investors automatically will receive dividends in
additional shares at the end of the month unless such persons
elect in writing to receive cash. Dividends paid in cash to
those investors so electing will be mailed on the second
business day of the following month. Statements of account
showing dividends paid will be sent at least quarterly. Long-
term capital gains, if any, will be distributed on an annual
basis while short-term capital gains, if any will be
distributed quarterly.
Federal Tax Consequences of the Proposed Reorganization
Both the Rushmore Fund, on behalf of the Money Market
Portfolio, and FGI will receive, as a condition to the
Reorganization, an opinion of Jorden Burt Berenson & Johnson
LLP, counsel to both the Rushmore Fund and FGI, to the effect,
for Federal income tax purposes, that the proposed
Reorganization will constitute a tax-free reorganization
within the meaning of Section 368(a)(1)(C) of the U.S.
Internal Revenue Code of 1986, as amended (the "Code").
Accordingly, no gain or loss generally will be recognized by
the Rushmore Fund or the Money Market Portfolio, by FGI, or by
their respective shareholders. See "The Proposed
Reorganization -- Federal Income Tax Consequences," below.
Costs and Expenses of the Reorganization
MMA will bear the costs of the Meeting. These costs and
expenses include the costs of the Meeting, such as the costs,
expenses, and professional fees incurred in the preparation
and mailing of the notice and this Combined Prospectus/Proxy
Statement and the proxy, and in the solicitation of proxies,
which may include reimbursement to broker-dealers and others
who forward proxy materials to their clients. See
"Introduction and Voting Information -- Proxy Solicitation,"
above.
<PAGE> -18-
<PAGE>
Continuation of Shareholder Accounts; Share Certificates
As a result of the proposed transactions contemplated by the
Reorganization of the Money Market Portfolio into FGI, each
Shareholder would cease to be a shareholder of the Money
Market Portfolio and would receive that number of full and
fractional FGI Shares having an aggregate net asset value
equal to the aggregate net asset value of the Shareholder's
Money Market Portfolio Shares as of the close of business on
the Closing Date.
FGI will establish accounts on the Closing Date for
Shareholders which will contain the appropriate number of FGI
Shares. Acceptance of FGI Shares by a Shareholder will be
deemed to be authorization of FGI and its agents to establish,
with respect to FGI, all of the account options, including
telephone redemptions, if any, and dividend and distribution
options, as have been established for the Shareholder's Money
Market Portfolio account. Shareholders who are receiving
payments under an Automatic Investment Plan, with respect to
Money Market Portfolio Shares, will retain the same rights and
privileges as to FGI Shares under such an Automatic Investment
Plan after the Reorganization. Similarly, no further action
will be necessary in order to continue, with respect to FGI
Shares, any retirement plan currently maintained by a
Shareholder with respect to Money Market Portfolio Shares.
Neither the Rushmore Fund nor FGI currently issue certificates
evidencing ownership of shares. Assuming approval by the FGI
shareholders of the FGI Redomestication, FGI, as a Delaware
business trust, also will not issue certificates evidencing
ownership of FGI Shares. Shareholders to whom Money Market
Portfolio Share certificates have been issued, if any, will be
required to surrender their certificates in order to receive
or to redeem FGI Shares received as a result of the
Reorganization.
No sales or other charges will be imposed in connection with
the issuance of FGI Shares to the Shareholders pursuant to the
Reorganization.
Form of Organization of FGI
FGI currently is organized as a corporation under the laws of
the State of Maryland and operates under its articles of
incorporation and by-laws. Assuming shareholders of FGI
approve the FGI Redomestication, however, FGI, immediately
following the Reorganization described in this Combined
Prospectus/ Proxy Statement, will become an unincorporated
voluntary association organized under the laws of the State of
Delaware which form of organization is known as a Delaware
business trust. The operations of FGI then will be governed
<PAGE> -19-
<PAGE>
by its Declaration of Trust, by-laws, and Delaware law, as
applicable. FGI is subject to the provisions of the 1940 Act,
and the rules and regulations of the Commission thereunder.
FGI will be authorized to issue an unlimited number of shares
of beneficial interest after the FGI Redomestication. See
"The Proposed Redomestication of FGI," below.
Form of Organization of the Rushmore Fund
The Rushmore Fund was organized as a corporation under the
laws of the State of Maryland, pursuant to the Rushmore Fund's
Articles of Incorporation, dated July 17, 1985, and as last
amended on October 29, 1991 (the "Rushmore Fund Articles").
The operations of the Rushmore Fund and the Money Market
Portfolio are governed by these Rushmore Fund Articles, the
Rushmore Fund's By-Laws, and by Maryland law, as applicable.
The Rushmore Fund (as well as the Rushmore Fund's series
investment portfolios), is subject to the provisions of the
1940 Act, and the rules and regulations of the Commission
thereunder. Currently, the Rushmore Fund is composed of three
separate investment portfolios: the Rushmore Money Market
Portfolio, the Rushmore U.S. Government Bond Portfolio, and
the Rushmore Nova Portfolio (though shares in the Rushmore
Nova Portfolio currently are not available or sold to the
public). See "The Proposed Reorganization -- Description of
Securities To Be Issued," below.
Operations of FGI Following the Reorganization
Notwithstanding the FGI Redomestication, FGI will continue to
operate substantially the same as FGI did prior to the
Reorganization. Assuming approval of the FGI Redomestication
by the shareholders of FGI, FGI will merge into a Delaware
business trust all of whose shareholders and assets will be
those shareholders and assets, respectively, of FGI at the
time of the FGI Redomestication. Following the FGI
Redomestication, the Board of Trustees of FGI will be composed
of the same members of the FGI Board. The Board of Trustees
of FGI will have virtually identical responsibilities, powers,
and fiduciary duties after the FGI Redomestication as the
Board of Directors of FGI had prior to the FGI
Redomestication. FGI, however, will not be subject to the
same laws and corporate organizational documents as before the
Reorganization due to the FGI Redomestication. Subject to the
provisions of FGI's Declaration of Trust, dated January 25,
1996 (the "Trust Instrument"), the business of FGI following
the FGI Redomestication will be managed by the Board of
Trustees, which has all powers necessary and appropriate to
carry out that business responsibility. The Board of Trustees
of FGI will supervise the business affairs and investments of
FGI. FGI will continue to receive investment advisory
services from MMA, and also will continue to receive
<PAGE> -20-
<PAGE>
administrative services from RTS, following the Reorganization
and FGI Redomestication.
The Proposed Redomestication of FGI
FGI presently is organized as a Maryland corporation.
Concurrent with the solicitation of proxies for the
Reorganization described in this Combined Prospectus/Proxy
Statement, however, the FGI Board is soliciting the proxies of
shareholders of record of FGI at the close of business on
________________, 1996, to approve an agreement and plan of
redomestication whereby FGI would change its form of
organization from a Maryland corporation to an unincorporated
voluntary association known as a Delaware business trust.
Money Market Portfolio Shareholders are not being asked to
vote on the FGI Redomestication because Money Market Portfolio
Shareholders are not presently shareholders of FGI and,
therefore, have no voting interest with respect to the FGI
Redomestication (unless, of course, a Money Market Portfolio
Shareholder also owns shares of FGI as of the immediately
aforementioned record date). Although Money Market Portfolio
Shareholders may not vote on the FGI Redomestication, the
proposed FGI Redomestication may impact the voting decision of
a Money Market Portfolio Shareholder in connection with the
Reorganization of the Money Market Portfolio into FGI. If the
shareholders of FGI approve the FGI Redomestication and the
Money Market Portfolio Shareholders approve the
Reorganization, the Money Market Portfolio would merge into a
Delaware business trust. If the FGI shareholders do not
approve the FGI Redomestication and the Money Market Portfolio
shareholders approve the Reorganization, the Money Market
Portfolio would merge into a Maryland corporation.
The FGI Board has unanimously approved the FGI
Redomestication. The primary reason for proposing the FGI
Redomestication is that FGI, as a Delaware business trust,
will have greater operational, administrative, and marketing
flexibility than a Maryland corporation. For instance, as a
Delaware business trust, FGI would not be required to file
annual reports with the State of Delaware, not be required to
hold annual shareholder meetings, and not be subject to any
Delaware state franchise taxes or any other state taxes, but
would be able to make changes in its manner of doing business
without making any filing with the State of Delaware. The
foregoing are just some of the advantages of a Delaware
business trust organization form. If the shareholders of FGI
approve the FGI Redomestication, the investment objective,
policies, and restrictions of FGI following the FGI
Redomestication would remain identical to the current
respective investment objective, policies, and restrictions of
FGI.
<PAGE> -21-
<PAGE>
The approval of the Reorganization by the Money Market
Portfolio Shareholders is not contingent upon the approval of
the FGI Redomestication by the shareholders of FGI. Likewise,
the approval of the FGI Redomestication by the shareholders of
FGI is not contingent upon the approval of the Reorganization
by the Money Market Portfolio Shareholders.
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
As discussed below, the investment objective and policies of
FGI and the Money Market Portfolio are similar, except for
certain differences as to particular investment policies,
which differences are outlined below.
Investment Objectives and Policies
General. The investment objectives of the Money Market
Portfolio and FGI are virtually identical. The investment
objective of the Money Market Portfolio is to provide
investors with maximum current income to the extent that such
investment is consistent with safety of principal. The
investment objective of FGI is to achieve current income with
safety of principal. To achieve its investment objective, the
Money Market Portfolio invests in U.S. Government and agency
securities, bank money market instruments, and commercial
paper. To achieve its investment objective, FGI invests
exclusively in marketable debt securities issued by the U.S.
Government, its agencies and instrumentalities, and in
repurchase agreements secured by these securities.
Both FGI and the Money Market Portfolio are money market
funds. As money market funds, FGI and the Money Market
Portfolio are required to follow stringent guidelines under
the 1940 Act, in particular those requirements set forth in
Rule 2a-7 under the 1940 Act. Moreover, both the Money Market
Portfolio and FGI strive to maintain stable net asset values
at $1.00 per share. Rule 2a-7 under the 1940 Act requires, in
part, that a money market fund may neither purchase any
instrument with a remaining maturity of greater than 397
calendar days nor maintain a dollar-weighted average portfolio
maturity that exceeds 90 days. Rule 2a-7 also imposes certain
portfolio quality and diversification requirements.
The principal difference between the investment policies of
FGI and the investment policies of the Money Market Portfolio
is the types of securities that each of FGI and the Money
Market Portfolio may invest. As money market funds, both the
Money Market Portfolio and FGI may invest only in those
securities which the Commission, by regulation, deems to be an
"Eligible Security" at the time of such security's
acquisition. The Money Market Portfolio and FGI, though,
<PAGE> -22-
<PAGE>
differ in that the Money Market Portfolio may invest in a
broader range of "Eligible Securities" than FGI. Both the
Money Market Portfolio and FGI may invest in marketable debt
securities issued by the U.S. Treasury, which securities
include U.S. Treasury bills, U.S. Treasury notes, and U.S.
Treasury bonds, and which securities are backed by the full
faith and credit of the U.S. Government. Both the Money
Market Portfolio and FGI also may invest in securities issued
by agencies and instrumentalities of the U.S. Government.
These securities include: (1) securities issued by U.S.
Government agencies and instrumentalities, such as Government
National Mortgage Association ("GNMA") certificates and
securities issued by the Small Business Administration
("SBA"), which securities, like U.S. Treasury obligations, are
backed by the full faith and credit of the U.S. Government;
and (2) securities issued by other U.S. Government agencies
and instrumentalities, such as those securities issued by
Federal Home Loan Banks ("FHLBs") and the Federal National
Mortgage Association ("FNMA"), which securities are not backed
by the full faith and credit of the U.S. Government. In
addition, both the Money Market Portfolio and FGI may invest
in repurchase agreements secured by the aforementioned
securities issued by the U.S. Government (and U.S. Government
agencies and instrumentalities). The Money Market Portfolio,
however, may invest in other "Eligible Securities" in which
FGI may not invest. The Money Market Portfolio, but not FGI,
also may invest in bank money market instruments and
commercial paper and also may lend portfolio securities held
by the Money Market Portfolio.
U.S. Government Securities. As noted above, both the Money
Market Portfolio and FGI will invest only in securities deemed
to be "Eligible Securities" under Commission rule. Certain
U.S. Government securities are "Eligible Securities." Both
the Money Market Portfolio and FGI invest in securities issued
by the U.S. Treasury and in securities issued or guaranteed by
the U.S. Government, its agencies and instrumentalities. Such
U.S. Government agencies and instrumentalities include
organizations such as the GNMA, the SBA, the FHLBs, the
Federal Home Loan Mortgage Corporation, and the FNMA. As
described below, the Money Market Portfolio and FGI each also
may purchase U.S. Government securities as security for
repurchase agreements entered into by the Money Market
Portfolio and FGI, respectively.
U.S. Government bonds typically pay coupon interest semi-
annually and repay the principal at maturity. GNMA
certificates differ from other U.S. Government securities in
that monthly payments of both principal and interest are made.
GNMA certificates represent an ownership in a pool of either
Federal Housing Administration (FHA)-insured or Veterans
Administration (VA)-guaranteed mortgages. These certificates
have yield and maturity characteristics corresponding to the
<PAGE> -23-
<PAGE>
underlying mortgages and a certificate's term may be shortened
by unscheduled or early payments of principal on the
underlying mortgages. The actual yield of each certificate
will be influenced by the prepayment experience of the
mortgage pool.
While U.S. Treasury securities and those Federal agency
securities issued by GNMA and SBA are backed by the full faith
and credit of the United States, other Federal agency
securities, such as the securities issued by the FHLBs and
FNMA, are not guaranteed by the U.S. Treasury, but rather are
supported by the ability of that agency to borrow from the
U.S. Treasury or by the credit of the agency itself.
Repurchase Agreements. In order to utilize effectively cash
reserves kept for liquidity, the Money Market Portfolio and
FGI each may invest in repurchase agreements. A repurchase
agreement arises when a buyer purchases a security and
simultaneously agrees to sell the security back to the seller
at an agreed-upon future date, normally one day or a few days
later; the resale price of the security is greater than the
purchase price, reflecting an agreed-upon interest rate. Each
of the Money Market Portfolio and FGI may enter into
repurchase agreements only with member banks of the Federal
Reserve System or primary dealers of U.S. Government
securities. In the event of a default or bankruptcy by the
seller, the Money Market Portfolio and FGI will liquidate
those securities held as security under repurchase agreements.
Liquidation of these securities, however, could involve costs
or delays and, to the extent proceeds from the sale of such
securities were less than the agreed-upon repurchase price,
the Money Market Portfolio or FGI, as the case may be, could
suffer a loss. Both the Money Market Portfolio and FGI will
invest in repurchase agreements only when such repurchase
agreements are secured by securities issued or guaranteed by
the U.S. Government, its agencies and instrumentalities.
Lending of Securities. The Money Market Portfolio may lend
its portfolio securities to broker-dealers registered as
members with the National Association of Securities Dealers,
Inc. and to Federal Reserve-member banks for the purpose of
earning additional income. Such loans by the Money Market
Portfolio are made pursuant to agreements requiring the
broker-dealer or bank fully and continuously to secure the
loan by cash or other securities in which the Money Market
Portfolio may invest equal to the market value of the
securities loan. The Money Market Portfolio receives
compensation for lending its securities in the form of fees.
FGI may not lend its portfolio securities.
Borrowing. The Money Market Portfolio and FGI each may borrow
money only as a temporary measure to facilitate redemptions.
<PAGE> -24-
<PAGE>
Such a borrowing may not exceed 30% of the Money Market
Portfolio's or FGI's total assets, taken at current net asset
value before any borrowing. Neither the Money Market
Portfolio nor FGI may purchase securities if a borrowing by
the Money Market Portfolio or FGI, as the case may be, is
outstanding.
Investment Restrictions and Limitations
The respective investment restrictions and limitations of the
Money Market Portfolio and FGI are substantially similar.
Unless otherwise specified, the investment restrictions and
limitations are considered to be "fundamental" policies, and,
as such, may not be changed without approval of the holders of
a "majority" of the Money Market Portfolio's or FGI's
respective outstanding voting shares. As defined at Section
2(a)(42) of the 1940 Act, the term "majority" of the
outstanding voting securities means the vote of the lesser of:
(i) 67% of the voting shares of the Money Market Portfolio or
FGI, as applicable, at a meeting where more than 50% of the
outstanding voting shares are present in person or represented
by proxy; or (ii) more than 50% of the outstanding voting
shares of the Money Market Portfolio or FGI, as applicable.
As a matter of fundamental policy, neither the Money Market
Portfolio nor FGI may:
1. underwrite securities of other issuers;
2. purchase or sell real estate (including limited
partnership interests for the Money Market
Portfolio);
3. borrow money (except as described above under
"Investment Objectives and Policies --
Borrowing");
4. issue senior securities; or
5. loan money;
As a matter of fundamental policy, FGI also may not:
1. sell securities short; or
2. write options
As a matter of fundamental policy, the Money Market Portfolio
also may not:
1. purchase or sell restricted securities or
warrants;
<PAGE> -25-
<PAGE>
2. purchase any security whereby it would account
for more than 10% of any issuer's outstanding
shares;
3. purchase securities of any issuer if, as a
result of such a purchase, such securities
would account for more than 5% of the Money
Market Portfolio's assets (excluding securities
issued or guaranteed by the U.S. Government,
its agencies or instrumentalities); or
4. Concentrate more than 25% of its assets in any
one industry.
PRINCIPAL RISK FACTORS
Because the investment objective of FGI is virtually identical
to the investment objective of the Money Market Portfolio, and
because the investment policies and investment restrictions
and limitations of FGI and the Money Market Portfolio are
substantially similar, the risks associated with the
particular investment policies and strategies that FGI and the
Money Market Portfolio are authorized to employ in seeking to
meet their investment objectives also are substantially
similar.
Full Faith and Credit Obligations. Both the Money Market
Portfolio and FGI may invest in U.S. Treasury bills, U.S.
Treasury notes, and U.S. Treasury bonds, which securities are
backed by the full faith and credit of the United States. The
Money Market Portfolio and FGI also may invest in securities
backed by the full faith and credit of the United States,
including GNMA certificates. The Money Market Portfolio and
FGI also may invest in non-full faith and credit obligations
of U.S. Government agencies and instrumentalities, such as
FNMA securities. In addition, both the Money Market Portfolio
and FGI may also invest in repurchase agreements secured by
such securities. Because full faith and credit obligations of
the U.S. Government are backed by the strongest assurance of
repayment offered by the U.S. Government, these obligations
are considered to be more credit-worthy than non-full faith
and credit obligations.
Repurchase Agreements and Other Investments. Both FGI and the
Money Market Portfolio may invest in repurchase agreements.
The Money Market Portfolio and FGI may invest only in
repurchase agreements secured by U.S. Treasury obligations and
in repurchase agreements secured by securities issued or
guaranteed by the U.S. Government, its agencies, and
instrumentalities. The Money Market Portfolio, unlike FGI,
also may invest in bank money market instruments and
<PAGE> -26-
<PAGE>
commercial paper and may lend its portfolio securities. The
Money Market Portfolio and FGI will enter into repurchase
agreement transactions and the Money Market Portfolio will
enter into securities lending transactions only with parties
who meet credit-worthiness standards approved by the Rushmore
Board and the FGI Board, as applicable. In the event of a
default or bankruptcy by a seller or borrower, the Money
Market Portfolio and FGI will promptly liquidate collateral.
The exercise of the Money Market Portfolio's or FGI's right to
liquidate such collateral, as noted above, however, could
involve certain costs or delays, and, to the extent that
proceeds from any sale of collateral on a default of the
seller or borrower were less than the seller's or borrower's
obligation, the Money Market Portfolio or FGI, as the case may
be, could suffer a loss.
THE PROPOSED REORGANIZATION
Agreement and Plan of Reorganization
The terms and conditions under which the proposed
transactions, as contemplated by the Reorganization, may be
consummated are set forth in the Plan. Significant provisions
of the Plan are summarized immediately below. This summary,
however, is qualified in its entirety by reference to the
Plan, a form of which is attached to this Combined
Prospectus/Proxy Statement as Appendix A.
The Plan contemplates (i) FGI, on the Closing Date of the
Reorganization, acquiring all of the assets of the Money
Market Portfolio in exchange for FGI Shares and the assumption
by FGI of all the liabilities of the Money Market Portfolio
and (ii) the constructive distribution of FGI Shares to the
Shareholders of the Money Market Portfolio in exchange for the
Money Market Portfolio Shares of such Shareholders, all as
provided for by the Plan.
The assets of the Money Market Portfolio to be acquired by FGI
include all property, including, without limitation, all cash,
securities, commodities and futures interests, and dividends
or interest receivables which are owned by the Money Market
Portfolio and any deferred or prepaid expenses shown as an
asset on the books of the Money Market Portfolio on the
Closing Date of the Reorganization. FGI will assume from the
Money Market Portfolio all liabilities, expenses, costs,
charges, and reserves reflected on an unaudited statement of
assets and liabilities of the Money Market Portfolio. FGI
also will deliver FGI Shares to the Money Market Portfolio,
which FGI Shares the Money Market Portfolio then shall
distribute to the Shareholders of the Money Market Portfolio
in exchange for such Shareholders' Money Market Portfolio
<PAGE> -27-
<PAGE>
Shares. The exchange of the Money Market Portfolio's assets
for FGI Shares is anticipated to occur on the Closing Date.
The value of the Money Market Portfolio's assets to be
acquired by, and the value of the Money Market Portfolio's
liabilities to be assumed by, FGI and the net asset value of a
share of FGI will be determined as of immediately after the
close of regular trading on the New York Stock Exchange (the
"NYSE") at 4:00 P.M., Eastern Time, on the Closing Date, using
the valuation procedures set forth in FGI's then-current
Prospectus and Statement of Additional Information.
Upon the Closing Date, the Money Market Portfolio will
distribute pro rata to its Shareholders of record the FGI
Shares received by the Money Market Portfolio in exchange for
such Shareholders' interests in the Money Market Portfolio, as
evidenced by such Shareholders' Money Market Portfolio Shares.
This distribution will be accomplished by opening accounts on
the books of FGI in the name of each Shareholder of record in
the Money Market Portfolio and by crediting thereon the shares
previously credited to the Money Market Portfolio account of
the Shareholder on those books, as described above (see
"Synopsis -- Continuation of Shareholder Accounts; Share
Certificates"). Each such FGI shareholder account shall
represent the respective pro-rata number of FGI Shares due
such Shareholder.
Accordingly, every Shareholder will own FGI Shares immediately
after the Reorganization, the value of which FGI Shares will
be equal to the value of such Shareholder's Money Market
Portfolio Shares immediately prior to the Reorganization.
Moreover, because the FGI Shares will be issued at net asset
value in exchange for the net assets of the Money Market
Portfolio that will equal the aggregate value of those FGI
Shares, the net asset value per share of each FGI Share will
be unchanged. Thus, the Reorganization will not result in a
dilution of any Shareholder account.
The consummation of the proposed transactions contemplated by
the Reorganization is subject to a number of conditions set
forth in the Plan, some of which conditions may be waived by
either the Rushmore Board or the FGI Board, or by an
authorized officer of the Rushmore Fund or FGI, as
appropriate. Among the significant conditions (which may not
be waived) for the Reorganization of the Money Market
Portfolio into FGI are: (i) the receipt by the Rushmore Fund
and FGI of an opinion of counsel to the Rushmore Fund and FGI
(or a revenue ruling of the U.S. Internal Revenue Service) as
to certain Federal income tax aspects of the Reorganization
(see "The Proposed Reorganization -- Federal Income Tax
Consequences," below); and (ii) the approval of the Plan at
the Meeting by the affirmative vote of the holders of a
<PAGE> -28-
<PAGE>
majority of all the outstanding voting shares of the Money
Market Portfolio. The Plan may be terminated and the
Reorganization abandoned at any time, before or after approval
by the Shareholders, prior to the applicable Closing Date, by
mutual consent of the Money Market Portfolio and FGI. In
addition, the Plan may be amended in any mutually-agreeable
manner, except that no amendment may be made to the Plan
subsequent to the Meeting that would be materially detrimental
to the Shareholders.
Management contemplates that the Money Market Portfolio's
assets at the date of the transactions of the Reorganization
will be invested in a manner consistent with the investment
objectives and policies of both the Money Market Portfolio and
FGI. To the extent that any portfolio asset of the Money
Market Portfolio is inconsistent with the investment
requirements of FGI on that date, the Money Market Portfolio
will bear the transaction costs associated with replacement of
that asset, including any adverse tax consequences if losses
are incurred in replacing such asset. The Money Market
Portfolio, however, intends to conform its securities
portfolio to meet the investment objective and policies of FGI
prior to the Closing Date.
Reasons For the Proposed Reorganization
As described below in greater detail, the Rushmore Board and
the FGI Board believe the Reorganization would benefit
Shareholders by enhancing the ability of MMA, the investment
adviser to both the Money Market Portfolio and FGI, to effect
portfolio transactions on more favorable terms and give MMA
greater investment flexibility as well as promote more
efficient operations and enable greater diversification of
investments. In addition, the Rushmore Board and the FGI
Board also believe that the Reorganization would result in
certain economies which would increase the ability of the
combined fund to continue to obtain management and
administrative services in connection with Shareholders'
assets at acceptable levels, and the Reorganization also may
result in reduced total portfolio operating expenses by reason
of an anticipated larger asset base resulting from the
Reorganization (see "Synopsis -- Management Fees,
Administrative Fees, and Other Operating Expenses," above).
The Rushmore Board, including all of the Independent Rushmore
Directors, has determined that the interests of the
Shareholders of the Money Market Portfolio will not be diluted
as a result of the proposed transactions contemplated by the
Reorganization and that the proposed transactions contemplated
by the Reorganization are in the best interests of the
Shareholders of the Money Market Portfolio. The proposed
Reorganization was recommended to the Rushmore Board by MMA,
the investment adviser to the Money Market Portfolio, and was
<PAGE> -29-
<PAGE>
considered and unanimously approved by the Rushmore Board at a
meeting held on July 27, 1995.
The unanimous decision by the Rushmore Board to recommend that
the Shareholders of the Money Market Portfolio vote to approve
the Reorganization of the Money Market Portfolio into FGI was
based on a number of factors, first and foremost that the
Reorganization would be a means of combining similar
portfolios with virtually identical investment objectives and
comparable investment policies and would permit the
Shareholders of the Money Market Portfolio to pursue
substantially the same investment goals in a potentially
larger fund. The Rushmore Board believes that the
Reorganization, if effected, would enable the resulting larger
fund, with its larger asset base, to achieve enhanced
investment performance and distribution capability. These
goals are anticipated to be achieved by the Reorganization
because the expected increase in the size of the combined FGI-
Money Market Portfolio should potentially increase the larger,
resulting fund's operating efficiencies, enhance the ability
of the investment adviser to this larger fund to effect
portfolio transactions on more favorable terms, and spread
investment risks among a larger number of portfolio
securities.
The Rushmore Board further considered that, without the larger
asset base resulting from the proposed Reorganization, the
Money Market Portfolio might not be able to continue to retain
investment management and administrative services assuming the
continuation of the relative low asset level of the Money
Market Portfolio. The Rushmore Board considered that the
present asset base of the Money Market Portfolio may not be
large enough to generate sufficient management fees to MMA in
order for this arrangement to continue to be economically
feasible for MMA, and could result in the cancellation by MMA
of the Rushmore Fund Management Agreement as this agreement
pertains to the management of the Money Market Portfolio. The
Rushmore Board anticipates that the larger asset base of the
fund resulting from the Reorganization would produce economies
that would enable services to continue to be provided to FGI
at acceptable compensation levels. These economies should
permit the reduction or elimination of certain duplicative
costs and expenses presently incurred for services that are
separately performed for both the Money Market Portfolio and
FGI. As a general rule, economies can be expected to be
realized primarily with respect to fixed expenses, such as
costs of printing and fees for professional services.
Expenses that are based on the value of assets or the number
of shareholder accounts, such as custody and transfer agent
fees, however, would be largely unaffected by the
Reorganization. Achievement of these goals, of course, cannot
be assured.
<PAGE> -30-
<PAGE>
The Rushmore Board and the FGI Board believe that the
essential aspect of the Reorganization is that the interest of
a Shareholder in FGI would be virtually identical to that
Shareholder's interest in the predecessor Money Market
Portfolio; the Rushmore Board and the FGI Board further
believe that the Reorganization would have no material impact
on the economic interests of the Shareholders and, as
discussed above, would not result in the dilution of any
Shareholder account. A condition precedent to the
Reorganization will be the receipt by the Rushmore Fund, on
behalf of the Money Market Portfolio, and FGI of an opinion of
counsel to the effect that the Reorganization will not result
in the recognition of any gain or loss for Federal income tax
purposes either to FGI or the Money Market Portfolio or to the
shareholders of either FGI or the Money Market Portfolio.
The Rushmore Board based its decision to recommend the
proposed Reorganization, and the transactions contemplated
thereby, to the Shareholders of the Money Market Portfolio for
the reasons set forth above as well as on a number of other
factors, including the following:
1. the terms and conditions of the Reorganization
and the fact that the Reorganization would not
result in dilution of Shareholder interests;
2. the relative, comparative past growth in assets
and investment performance of the Money Market
Portfolio and FGI;
3. the future prospects of the Money Market
Portfolio and FGI if the Reorganization of the
Money Market Portfolio into FGI is effected and
if such Reorganization is not effected;
4. the fact that the investment objectives,
policies, and restrictions of the Money Market
Portfolio and FGI are compatible;
5. service features available to shareholders in
the Money Market Portfolio and FGI;
6. the anticipated benefits to the Shareholders of
continuing to be part of the same mutual fund
complex;
7. the tax-free nature and consequences of the
Reorganization; and
8. alternatives to the Reorganization.
<PAGE> -31-
<PAGE>
Description of Securities To Be Issued In Connection With the
Reorganization
General. The FGI Shares to be issued to the Shareholders of
the Money Market Portfolio pursuant to the proposed
Reorganization will represent shares of common stock, $.001
par value per share, in FGI, which is a diversified, open-end
management investment company, and which, at the time of the
Reorganization and immediately prior to the FGI
Redomestication, will continue to be organized as a
corporation under the laws of the State of Maryland, pursuant
to the Articles of Incorporation of the Fund for Government
Investors, Inc. (the "FGI Articles"). The FGI Articles
authorize the Board of Trustees of FGI to issue 3,000,000,000
shares of common stock. Each FGI Share represents an equal
proportionate interest with each other FGI Share, and each
such FGI Share is entitled to equal voting, dividend,
liquidation, and redemption rights. FGI Shares entitle their
holders to one vote per full share held and to fractional
votes for fractional shares held. The FGI Shares do not have
cumulative voting rights, preemptive rights, or subscription
rights, and are fully paid, nonassessable, redeemable, and
freely transferable. Currently, each shareholder of FGI is
permitted to inspect the records, accounts, and books of FGI
for any legitimate business purpose.
Meetings. As a Maryland corporation, FGI is not required to
hold an annual shareholders' meeting if the 1940 Act does not
require such a meeting. The By-Laws of FGI provide that a
special meeting of the shareholders of FGI may be called by
the directors of FGI (the "FGI Directors") and shall be called
by the FGI Directors upon the written request of shareholders
owning at least 25% of all of the outstanding voting shares of
FGI entitled to be cast at such meeting. FGI will hold
special shareholder meetings as required or deemed desirable
by the FGI Board for such purposes as electing FGI Directors,
changing fundamental policies, or approving an investment
advisory or shareholder services agreement. Pursuant to
Maryland law, any FGI Director may be removed from office with
or without cause at any time by the affirmative vote of a
majority of all the votes of FGI shareholders entitled to vote
for the election of directors. If requested by shareholders
of at least 10% of the outstanding voting shares of FGI, FGI
will call a shareholder meeting for the purpose of voting upon
the question of the removal of an FGI Director and will assist
in communications with other FGI shareholders as required by
Section 16(c) of the 1940 Act.
Shareholder Liability. Shareholders of a Maryland
corporation, such as FGI, except to the extent otherwise
provided in the governing instrument of the corporation, are
entitled to limited personal liability. FGI's governing
<PAGE> -32-
<PAGE>
instrument, the FGI Articles, specifically disclaims
shareholder liability for acts or obligations of FGI and
provides that FGI shareholders shall not be subject to any
personal liability for the acts or obligations of FGI. The
FGI Articles further provide for indemnification, out of the
property of FGI with respect to which such shareholder's
shares are issued, for all losses and expenses of any FGI
shareholder held personally liable solely by reason of the
shareholder being or having been a shareholder of FGI and not
because of the shareholder's acts or omissions or for some
other reason. Thus, the risk of a shareholder of FGI
incurring financial loss on account of shareholder liability
is considered remote since such liability is limited to
circumstances in which a disclaimer is inoperative and FGI
would be unable to meet its obligations.
Liability of Directors. Under the FGI Articles, an FGI
Director will be held personally liable only for the FGI
Director's own willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in
the conduct of the office of an FGI Director. Under the FGI
Articles, FGI Directors and officers of FGI ("Officers") will
be indemnified for the expenses of litigation against such FGI
Directors and Officers unless it is determined that the person
did not act in good faith in the reasonable belief that the
person's action was in or not opposed to the best interests of
FGI or if the person's conduct is determined to constitute
willful misfeasance, bad faith, gross negligence, or reckless
disregard of that person's duties. FGI also may advance money
for these expenses provided that the FGI Director or the
Officer undertakes to repay FGI if that person's conduct later
is determined to preclude indemnification.
The foregoing is only a summary of certain characteristics of
(i) the shares of common stock of FGI to be issued pursuant to
the proposed Reorganization and immediately prior to the
proposed FGI Redomestication, (ii) the operations of FGI and
the FGI Articles and the By-Laws of FGI immediately prior to
the proposed FGI Redomestication, and (iii) Maryland law. The
foregoing is not a complete description of the shares of
common stock of FGI nor of the documents or laws cited.
Shareholders should refer to the provisions of Maryland law
directly for a more thorough description.
<PAGE> -33-
<PAGE>
Description of Securities To Be Issued In Connection With the
Redomestication
General. As discussed above under "Form of Organization of
FGI" and "The Proposed Redomestication of FGI" in the
"Synopsis," if the shareholders of FGI approve the proposed
FGI Redomestication, then FGI will change its form of
organization from a Maryland corporation to an unincorporated
voluntary association known as a Delaware business trust; and
only those persons who are shareholders of FGI as of
_____________, 1996, are being solicited to approve the FGI
Redomestication (Money Market Portfolio Shareholders are not
being asked to vote on the FGI Redomestication because Money
Market Portfolio Shareholders are not presently shareholders
of FGI and, therefore, have no voting interest with respect to
the FGI Redomestication). If the shareholders of FGI approve
the proposed FGI Redomestication, then the FGI Shares to be
issued pursuant to the FGI Redomestication will represent
shares of beneficial interest in the redomesticated FGI, which
will continue to be a diversified, open-end management
investment company, but which will then be organized as a
business trust under the laws of the State of Delaware,
pursuant to the Trust Instrument. The Trust Instrument will
authorize the Board of Trustees of FGI to issue an unlimited
number of shares of beneficial interest. Accordingly, if the
Shareholders of the Money Market Portfolio approve the
proposed Reorganization and the shareholders of FGI approve
the proposed FGI Redomestication, then, immediately following
the Reorganization and the FGI Redomestication (which are
proposed to occur nearly simultaneously), the Shareholders of
the Money Market Portfolio will receive shares of beneficial
interest in the redomesticated FGI in exchange for their
shares of common stock, $.001 par value per share, in the
formerly-incorporated FGI. The Trust Instrument of the
redomesticated FGI will authorize the Board of Trustees of FGI
to issue an unlimited number of shares of beneficial interest
in FGI. Currently, FGI does not operate as a series fund.
The redomesticated FGI, however, will have the ability to
operate as a series fund and series in the redomesticated FGI
may be added in the future. Each share of the redomesticated
FGI will represent an equal proportionate interest with each
other share of the redomesticated FGI, and each such share of
the redomesticated FGI will be entitled to equal voting,
dividend, liquidation, and redemption rights. Shares of the
redomesticated FGI will entitle their holders to one vote per
full share held and to fractional votes for fractional shares
held. The shares of the redomesticated FGI will not have
cumulative voting rights, preemptive rights, or subscription
rights, and will be fully paid, nonassessable, redeemable, and
freely transferable. Each shareholder of the redomesticated
FGI will be permitted to inspect the records, accounts, and
<PAGE> -34-
<PAGE>
books of the redomesticated FGI for any legitimate business
purpose.
Meetings. As a Delaware business trust, the redomesticated
FGI will not be required to hold an annual shareholders'
meeting if the 1940 Act does not require such a meeting. The
By-Laws of the redomesticated FGI will provide that a special
meeting of redomesticated FGI shareholders shall be called by
the Secretary of the redomesticated FGI when ordered by the
trustees of the redomesticated FGI (the "Trustees") or shall
be called by the Secretary of the redomesticated FGI upon the
written request of shareholders owning at least 10% of all of
the outstanding voting shares entitled to be cast at such
meeting. The redomesticated FGI will hold special shareholder
meetings as required or deemed desirable by the Board of
Trustees of the redomesticated FGI for such purposes as
electing Trustees, changing fundamental policies, or approving
an investment advisory or shareholder services agreement.
Pursuant to the Trust Instrument, any Trustee may be removed
from office by the affirmative vote of at least two-thirds of
all the voting shares of the redomesticated FGI. If requested
by shareholders of at least 10% of the outstanding voting
shares of the redomesticated FGI, the redomesticated FGI will
call a shareholder meeting for the purpose of voting upon the
question of the removal of a Trustee and will assist in
communications with other redomesticated FGI shareholders as
required by Section 16(c) of the 1940 Act.
Shareholder Liability. Shareholders of a Delaware business
trust, such as FGI immediately following the FGI
Redomestication, except to the extent otherwise provided in
the governing instrument of the trust, are entitled to limited
personal liability. The redomesticated FGI's governing
instrument, the Trust Instrument, will specifically disclaim
shareholder liability for acts or obligations of the
redomesticated FGI and will provide that redomesticated FGI
shareholders shall not be subject to any personal liability
for the acts or obligations of the redomesticated FGI. The
Trust Instrument will further provide for indemnification, out
of the property of the redomesticated FGI, for all losses and
expenses of any redomesticated FGI shareholder held personally
liable solely by reason of the shareholder being or having
been a shareholder and not because of the shareholder's acts
or omissions or for some other reason. Thus, the risk of a
shareholder of the redomesticated FGI incurring financial loss
on account of shareholder liability is considered remote since
such liability is limited to circumstances in which a
disclaimer is inoperative and the redomesticated FGI would be
unable to meet its obligations.
Liability of Trustees. Under the Trust Instrument, a Trustee
will be held personally liable only for the Trustee's own
<PAGE> -35-
<PAGE>
willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of the office
of a trustee. Under the Trust Instrument, Trustees and
Officers of the redomesticated FGI will be indemnified for the
expenses of litigation against such Trustees and Officers
unless it is determined that the person did not act in good
faith in the reasonable belief that the person's action was in
or not opposed to the best interests of the redomesticated FGI
or if the person's conduct is determined to constitute willful
misfeasance, bad faith, gross negligence, or reckless
disregard of that person's duties. The redomesticated FGI
also may advance money for these expenses provided that the
Trustee or the Officer undertakes to repay the redomesticated
FGI if that person's conduct later is determined to preclude
indemnification.
The foregoing is only a summary of certain characteristics of
(i) the shares of beneficial interest of the redomesticated
FGI to be issued pursuant to the proposed FGI Redomestication,
(ii) the operations of the redomesticated FGI and the Trust
Instrument and the By-Laws of the redomesticated FGI
immediately following the proposed FGI Redomestication, and
(iii) Delaware law. The foregoing is not a complete
description of the shares of beneficial interest of the
redomesticated FGI nor of the documents or laws cited.
Shareholders should refer to the provisions of Delaware law
directly for a more thorough description.
Federal Income Tax Consequences
The Rushmore Fund, on behalf of the Money Market Portfolio,
and FGI will receive, as a condition to the Reorganization, an
opinion from Jorden Burt Berenson & Johnson LLP, counsel to the
Rushmore Fund and FGI, to the effect, for Federal income tax
purposes and with respect to the Reorganization, that:
1. the proposed Reorganization and the
transactions contemplated thereby, as described
herein, will constitute a tax-free
"reorganization" within the meaning of Section
368(a)(1)(C) of the U.S. Internal Revenue Code
of 1986, as amended (the "Code");
2. no gain or loss generally will be recognized to
the Money Market Portfolio upon the transfer of
all of the Money Market Portfolio's assets to
FGI in exchange solely for FGI Shares and the
assumption by FGI of all the liabilities of the
Money Market Portfolio and the subsequent
distribution of those FGI Shares to the Money
Market Portfolio's Shareholders of record;
<PAGE> -36-
<PAGE>
3. no gain or loss will be recognized to FGI upon
the receipt of those Money Market Portfolio
assets in exchange solely for FGI Shares and
the assumption by FGI of those Money Market
Portfolio liabilities;
4. FGI's basis for those Money Market Portfolio
assets transferred by the Money Market
Portfolio to FGI will be the same as the basis
thereof in the Money Market Portfolio's hands
immediately before the Reorganization, and
FGI's holding period for those assets will
include the Money Market Portfolio's holding
period therefor;
5. each Shareholder of record of the Money Market
Portfolio will recognize no gain or loss upon
the constructive exchange of all such
Shareholder's Money Market Portfolio Shares
solely for FGI Shares pursuant to the
Reorganization;
6. each Shareholder's basis for the FGI Shares to
be received by the Shareholder pursuant to the
Reorganization will be the same as the
Shareholder's basis in the Money Market
Portfolio Shares to be constructively
surrendered in exchange therefor; and
7. each such Shareholder's holding period for
those FGI Shares will include the period during
which the Money Market Portfolio Shares to be
constructively surrendered in exchange therefor
were held, provided the Money Market Portfolio
Shares were held as capital assets by that
Shareholder on the date of the Reorganization.
A revenue ruling of the Internal Revenue Service is not
expected to be obtained by either FGI or the Rushmore Fund, on
behalf of the Money Market Portfolio. A similar tax opinion
will be issued by Jorden Burt Berenson & Johnson LLP in
connection with the FGI Redomestication.
As of December 31, 1995 neither the Money Market Portfolio nor
FGI had any capital or other loss carryover. Pursuant to the
Reorganization of the Money Market Portfolio into FGI, FGI
would retain any capital loss carryover and would succeed to
any capital loss carryover of the Money Market Portfolio,
subject, in both cases, to the limitations of Sections 381,
382, 383, and 384 of the Code.
<PAGE> -37-
<PAGE>
THE FOREGOING IS INTENDED TO BE ONLY A SUMMARY OF THE
PRINCIPAL FEDERAL INCOME TAX CONSEQUENCES OF THE
REORGANIZATION AND SHOULD NOT BE CONSIDERED TO BE TAX ADVICE.
THERE CAN BE NO ASSURANCE THAT THE INTERNAL REVENUE SERVICE
WILL CONCUR ON ALL OR ANY OF THE ISSUES DISCUSSED ABOVE.
SHAREHOLDERS OF THE RUSHMORE MONEY MARKET PORTFOLIO MAY WISH
TO CONSULT WITH THEIR OWN TAX ADVISORS REGARDING THE FEDERAL,
STATE, AND LOCAL TAX CONSEQUENCES WITH RESPECT TO THE
FOREGOING MATTERS AND ANY OTHER CONSIDERATIONS WHICH MAY BE
APPLICABLE TO THE SHAREHOLDERS OF THE RUSHMORE MONEY MARKET
PORTFOLIO.
Pro Forma Capitalization and Ratios
The following tables show the capitalization of the Money
Market Portfolio and FGI separately, as of December 31, 1995,
and combined in the aggregate on a pro forma basis
(unaudited), as of that date, giving effect to the
Reorganization:
<TABLE>
<CAPTION>
Money Market Pro Forma
Portfolio FGI Combined
<S> <C> <C> <C>
Net Assets: $22,387,968 $577,194,431 $599,582,399
Net Asset Value
Per Share: $1.00 $1.00 $1.00
Shares
Outstanding: 22,387,968 577,194,431 599,582,399
</TABLE>
Cessation of Existence
If the Plan is approved by the Shareholders of the Money
Market Portfolio and the Reorganization is completed, the
Money Market Portfolio, as described above, thereafter will
cease to exist. See "The Proposed Reorganization -- Agreement
and Plan of Reorganization."
Required Vote and Board Recommendation With Respect to the
Reorganization Plan
As described above, the Rushmore Board, including all of the
Independent Rushmore Directors, has unanimously concluded,
<PAGE> -38-
<PAGE>
after due consideration of the direct and indirect costs of
the transactions contemplated by the proposed Reorganization
and all other factors and information deemed by the Rushmore
Board to be relevant, that the Reorganization would be in the
best interests of the Money Market Portfolio and its
Shareholders and that the interests of existing Shareholders
of the Money Market Portfolio will not be diluted as a result
of the transactions contemplated by the Reorganization. The
Rushmore Board, therefore, has submitted the Plan for the
Reorganization, and the transactions contemplated thereby, as
set forth in the Plan, for approval by the Shareholders at the
Meeting. As described above, a quorum being present, the
approval of the Plan by the Shareholders of the Money Market
Portfolio under Proposal One requires the affirmative vote of
a majority of all the outstanding voting shares of the Money
Market Portfolio. In the event that the Shareholders of the
Money Market Portfolio do not approve the Plan, and the
Reorganization of the Money Market Portfolio contemplated
thereunder, the Rushmore Board will consider possible
alternative arrangements and MMA will continue to render
services to the Money Market Portfolio.
The Board of Directors of The Rushmore Fund, Inc. has
unanimously approved and recommends that, with respect to the
Reorganization of the Money Market Portfolio into FGI, the
Shareholders of the Money Market Portfolio vote FOR Proposal
One, the proposed Agreement and Plan of Reorganization for the
Money Market Portfolio and the transactions contemplated
thereby, as described above.
ADDITIONAL INFORMATION ABOUT FGI
AND THE FGI SHARES
Additional information about FGI is included in the current
Prospectus of the Fund for Government Investors, Inc., dated
March 30, 1995. A copy of this prospectus has been filed with
the Securities and Exchange Commission (the "Commission") and
is incorporated by reference herein. A Shareholder will
receive with this Combined Prospectus/Proxy Statement a copy
of the current Prospectus for the Fund for Government
Investors, Inc. Further information about FGI is included in
the Statement of Additional Information for the Fund for
Government Investors, Inc., dated March 30, 1995, which also
has been filed with the Commission and is incorporated by
reference herein. Copies of this Statement of Additional
Information for FGI may be obtained without charge by
contacting Rushmore Trust and Savings, FSB ("RTS"), a
majority-owned subsidiary of MMA, which provides all
administrative services to FGI, at 4922 Fairmont Avenue,
Bethesda, Maryland 20814, or by telephoning RTS toll-free at
(800) 343-3355.
<PAGE> -39-
<PAGE>
ADDITIONAL INFORMATION ABOUT THE RUSHMORE FUND,
THE MONEY MARKET PORTFOLIO,
AND THE MONEY MARKET PORTFOLIO SHARES
Additional information about the Rushmore Fund and the Money
Market Portfolio is included in the current Prospectus of the
Money Market Portfolio, dated January 1, 1996. A copy of this
prospectus has been filed with the Commission and is
incorporated by reference herein. A Shareholder will receive
with this Combined Prospectus/Proxy Statement a copy of the
current Prospectus for the Money Market Portfolio. Further
information about the Money Market Portfolio is included in
the Statement of Additional Information for the Money Market
Portfolio, dated January 1, 1996, which also has been filed
with the Commission and is incorporated by reference herein.
A copy of this Statement of Additional Information for the
Money Market Portfolio may be obtained without charge by
contacting RTS, which provides all administrative services to
the Money Market Portfolio, at 4922 Fairmont Avenue, Bethesda,
Maryland 20814, or by telephoning RTS toll-free at (800) 343-
3355.
MISCELLANEOUS
Available Information
FGI and the Rushmore Fund are registered under the 1940 Act
and are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and the 1940 Act,
and, in accordance therewith, file reports, proxy materials,
and other information with the Commission. Such reports,
proxy materials, and other information can be inspected at the
Securities and Exchange Commission at 450 Fifth Street, N.W.,
Washington, D. C. 20549. Copies of such material also can be
obtained from the Public Reference Branch, Office of Consumer
Affairs and Information Services, Securities and Exchange
Commission, 450 Fifth Street, N.W., Washington, D. C. 20549,
at prescribed rates.
Legal Matters
Certain legal matters in connection with the issuance of the
FGI Shares will be passed upon by Messrs. Jorden Burt Berenson
& Johnson LLP, 1025 Thomas Jefferson Street, N.W., Suite 400
East, Washington, D.C. 20007-0805 ("Counsel"). Counsel also
will render an opinion as to certain Federal income tax
consequences of the Reorganization.
Financial Statements and Experts
<PAGE> -40-
<PAGE>
Both the audited financial statements of FGI included in the
Statement of Additional Information related to this Combined
Prospectus/Proxy Statement (the "SAI") and the audited
financial statements of the Money Market Portfolio included in
the SAI have been audited by Deloitte & Touche LLP, independent
accountants, for the periods indicated in the reports of
independent accountants thereon which appear in the SAI. Such
financial statements are incorporated herein by reference in
reliance upon such reports of independent accountants given on
the authority of such firm as experts in accounting and
auditing. Copies of these financial statements, as included
in the SAI, may be obtained without charge by contacting RTS,
at 4922 Fairmont Avenue, Bethesda, Maryland 20814, or by
telephoning RTS toll-free at (800) 343-3355.
OTHER BUSINESS
The Board of Directors of The Rushmore Fund, Inc. knows of no
business to be brought before the Meeting other than the
matters set forth in this Combined Prospectus/Proxy Statement.
Should any other matter requiring a vote of Shareholders
arise, however, the Proxies will vote thereon according to
their best judgment in the interests of the Money Market
Portfolio and the Shareholders of the Money Market Portfolio.
By Order of the Board of Directors
/s/ Richard J. Garvey
Richard J. Garvey, President
The Rushmore Fund, Inc.
4922 Fairmont Avenue
Bethesda, Maryland
March ___, 1996
<PAGE> -41-
<PAGE>
P R O X Y P R O X Y
THE RUSHMORE MONEY MARKET PORTFOLIO
The Rushmore Fund, Inc.
4922 Fairmont Avenue
Bethesda, Maryland 20814
____________
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS
May 24, 1996
THIS PROXY IS SOLICITED BY THE Board of Directors of The
Rushmore Fund, Inc. (the "Rushmore Fund") for use at a special
meeting of the shareholders of the Rushmore Money Market
Portfolio, a series of the Rushmore Fund, which meeting will
be held at 1:00 P.M., Eastern Time, on Friday, May 24, 1996,
at the offices of the Rushmore Fund, 4922 Fairmont Avenue,
Bethesda, Maryland 20814 (the "Meeting").
The undersigned shareholder of the Rushmore Money Market
Portfolio, revoking any and all previous proxies heretofore
given for shares of the Rushmore Money Market Portfolio held
by the undersigned ("Shares"), does hereby appoint Daniel L.
O'Connor, Richard J. Garvey, John R. Cralle, and Stephenie E.
Adams, and each and any of them, with full power of
substitution to each, to be the attorneys and proxies of the
undersigned (the "Proxies"), to attend the Meeting of the
shareholders of the Rushmore Money Market Portfolio, and to
represent and direct the voting interest represented by the
undersigned as of the record date for said Meeting for the
Proposals specified below.
This proxy, if properly executed, will be voted in the
manner as directed herein by the undersigned shareholder.
Unless otherwise specified below in the squares provided, the
undersigned's vote will be cast "FOR" each Proposal. If no
direction is made for any Proposals, this proxy will be voted
"FOR" any and all such Proposals. In their discretion, the
Proxies are authorized to transact and vote upon such other
matters and business as may come before the Meeting or any
adjournments thereof.
Proposal 1. To approve or disapprove an Agreement and Plan
of Reorganization among The Rushmore Fund,
Inc., the Rushmore Money Market Portfolio, and
Fund for Government Investors, Inc. (the
"Plan"), and the transactions contemplated
thereby, pursuant to which Plan the Rushmore
Money Market Portfolio would transfer all of
its assets to the Fund for Government
<PAGE>
<PAGE>
Investors, Inc., in exchange for (i) shares of
common stock in the Fund for Government
Investors, Inc. that would be distributed to
the shareholders of the Rushmore Money Market
Portfolio and (ii) the assumption by the Fund
for Government Investors, Inc. of all the
liabilities of the Rushmore Money Market
Portfolio.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Proposal 2. To transact such other business as properly may
come before the Meeting or any adjournment(s)
thereof.
To avoid the expense of adjourning the Meeting to a
subsequent date, please return this proxy in the enclosed
self-addressed, postage-paid envelope. THIS PROXY IS
SOLICITED ON BEHALF OF THE Board of Directors OF THE RUSHMORE
FUND, INC., WHICH RECOMMENDS A VOTE FOR THE PROPOSAL.
Dated: __________________, 1996
_______________________________
Signature of Shareholder
_______________________________
Signature of Shareholder
This proxy may be revoked by the
shareholder(s) at any time prior to
the special meeting.
NOTE: Please sign exactly as your name appears hereon. If
shares are registered in more than one name, all registered
shareholders should sign this proxy; but if one shareholder
signs, this signature binds the other shareholder. When
signing as an attorney, executor, administrator, agent,
trustee, or guardian, or custodian for a minor, please give
full title as such. If a corporation, please sign in full
corporate name by an authorized person. If a partnership,
please sign in partnership name by an authorized person.
<PAGE> -43-
<PAGE>
APPENDIX A:
FORM OF
AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>
<PAGE>
APPENDIX A:
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the
"Agreement") is made as of this ___ day of May, 1996, by and
among The Rushmore Fund, Inc. (the "Rushmore Fund"), a
Maryland corporation, the Rushmore Money Market Portfolio (the
"Money Market Portfolio"), a series of the Rushmore Fund, and
Fund for Government Investors, Inc. ("FGI"), also a Maryland
corporation. The Rushmore Fund, the Money Market Portfolio,
and FGI have their respective principal places of business at
4922 Fairmont Avenue, Bethesda, Maryland 20814.
This Agreement is intended to be and is adopted as a plan
of reorganization within the meaning of Section 368(a) of the
United States Internal Revenue Code of 1986, as amended (the
"Code"), with respect to the proposed reorganization of the
Money Market Portfolio, pursuant to which the Money Market
Portfolio will become part of FGI (the "Reorganization").
Specifically, this Agreement is intended to be and is adopted
for the purpose of providing for the Reorganization of the
Money Market Portfolio into FGI. The Reorganization will
consist of the transfer of all of the assets of the Money
Market Portfolio to FGI in exchange solely for (i) shares of
common stock in FGI (the "FGI Shares") and (ii) the assumption
by FGI of all the liabilities of the Money Market Portfolio,
and the distribution of the FGI Shares to the shareholders of
the Money Market Portfolio, as provided herein, all upon the
terms and conditions hereinafter set forth in this Agreement.
WHEREAS, the Rushmore Fund and FGI are open-end,
registered investment companies of the management type and the
Money Market Portfolio owns securities which generally are
assets of the character in which FGI is permitted to invest;
WHEREAS, the Board of Directors of FGI has determined,
with respect to the Reorganization, that the exchange of all
of the assets of the Money Market Portfolio for FGI shares and
the assumption of all the liabilities of the Money Market
Portfolio by FGI is in the best interests of FGI and its
shareholders and that the interests of the existing
shareholders of FGI would not be diluted as a result of this
transaction;
WHEREAS, the Board of Directors of the Rushmore Fund has
determined, with respect to the Reorganization, that the
exchange of all of the assets of the Money Market Portfolio
for FGI Shares and the assumption of all the liabilities of
the Money Market Portfolio by FGI is in the best interests of
the Money Market Portfolio and its shareholders and that the
<PAGE>
<PAGE>
interests of the existing shareholders of the Money Market
Portfolio would not be diluted as a result of this
transaction;
WHEREAS, the purpose of the Reorganization is to combine
the assets of FGI with those of the Money Market Portfolio in
an attempt to achieve greater operating economies and
increased portfolio diversification.
NOW, THEREFORE, in consideration of the promises and of
the covenants and agreements hereinafter set forth, the
parties hereto covenant and agree, with respect to the
Reorganization, as follows:
1. THE TRANSFER OF ASSETS OF THE MONEY MARKET PORTFOLIO TO
FGI IN EXCHANGE FOR THE FGI SHARES, AND THE ASSUMPTION OF
ALL THE LIABILITIES OF THE MONEY MARKET PORTFOLIO
1.1 A closing shall take place as provided for in
paragraph 3.1 ("Closing") and the provisions of paragraphs 1
through 8 of this Agreement shall apply. At the Closing,
subject to the terms and conditions herein set forth and on
the basis of the representations and warranties contained
herein, the Money Market Portfolio agrees to transfer all of
the Money Market Portfolio's assets, as set forth in paragraph
1.2, to FGI, and FGI agrees in exchange therefor: (i) to
deliver to the Money Market Portfolio the number of FGI
Shares, including fractional FGI Shares, determined by
dividing the value of the Money Market Portfolio's net assets
computed in the manner and as of the time and date set forth
in paragraph 2.1 by the net asset value of one FGI Share
computed in the manner and as of the time and date set forth
in paragraph 2.2; and (ii) to assume all the liabilities of
the Money Market Portfolio, as set forth in paragraph 1.3.
1.2 The assets of the Money Market Portfolio to be
acquired by FGI shall consist of all property, including,
without limitation, all cash, securities, commodities and
futures interests, and dividends or interest receivable which
are owned by the Money Market Portfolio and any deferred or
prepaid expenses shown as an asset on the books of the Money
Market Portfolio on the closing date provided in paragraph 3.1
(the "Closing Date").
1.3 The Money Market Portfolio will endeavor to
discharge all of its known liabilities and obligations prior
to the Closing Date. FGI shall assume all liabilities,
expenses, costs, charges, and reserves reflected on an
unaudited statement of assets and liabilities of the Money
Market Portfolio prepared by the administrator of the Rushmore
Fund and the Money Market Portfolio, as of the Valuation Date
(as defined in paragraph 2.1), in accordance with generally
<PAGE> A-2
<PAGE>
accepted accounting principles consistently applied from the
prior audited period.
1.4 Immediately after the transfer of assets provided
for in paragraph 1.1, the Money Market Portfolio will
distribute pro rata to the Money Market Portfolio's
shareholders of record, determined as of immediately after the
close of business on the Closing Date (the "Money Market
Portfolio Shareholders"), the FGI Shares received by the Money
Market Portfolio pursuant to paragraph 1.1. Such distribution
will be accomplished by the transfer of the FGI Shares then
credited to the account of the Money Market Portfolio on the
books of FGI to open accounts on the share records of FGI in
the names of the Money Market Portfolio Shareholders and
representing the respective pro rata number of the FGI Shares
due such shareholders. All issued and outstanding shares of
the Money Market Portfolio will simultaneously be canceled on
the books of the Money Market Portfolio, although share
certificates representing interests in the Money Market
Portfolio will represent a number of FGI Shares after the
Closing Date as determined in accordance with Section 2.3.
FGI shall not issue certificates representing the FGI Shares
in connection with such exchange. Ownership of FGI Shares
will be shown on the books of FGI's transfer agent.
2. VALUATION
2.1 The value of the Money Market Portfolio's assets to
be acquired by FGI hereunder shall be the value of such assets
computed as of immediately after the close of business of the
New York Stock Exchange (the "NYSE") at 4:00 P.M., Eastern
Time, on the Closing Date (such time and date being
hereinafter called the "Valuation Date"), using the valuation
procedures set forth in the Rushmore Fund's Articles of
Incorporation and the Money Market Portfolio's then-current
prospectus or statement of additional information.
2.2 The net asset value of an FGI Share shall be the net
asset value per share computed as of immediately after the
close of business of the New York Stock Exchange on the
Valuation Date, using the valuation procedures set forth in
FGI's Articles of Incorporation and FGI's then-current
prospectus or statement of additional information.
2.3 The number of the FGI Shares to be issued (including
fractional shares, if any) in exchange for the Money Market
Portfolio's assets shall be determined by dividing the value
of the net assets of the Money Market Portfolio determined
using the same valuation procedures referred to in paragraph
2.1 by the net asset value of an FGI Share determined in
accordance with paragraph 2.2.
<PAGE> A-3
<PAGE>
2.4 All computations of value for the Rushmore Fund, the
Money Market Portfolio, and FGI shall be made by Money
Management Associates ("MMA").
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be May 31, 1996 or such other
date as the parties may agree to in writing. All acts taking
place at the Closing shall be deemed to take place
simultaneously as of immediately after the close of business
on the Closing Date unless otherwise agreed to by the parties.
The close of business on the Closing Date shall be as of 4:00
P.M., Eastern Time. The Closing shall be held at the offices
of the Rushmore Fund, 4922 Fairmont Avenue, Bethesda, Maryland
20814, or at such other time and/or place as the parties may
agree.
3.2 Rushmore Trust and Savings, FSB, Bethesda, Maryland,
as custodian for the Money Market Portfolio (the "Custodian"),
a majority-owned subsidiary of MMA with offices at 4922
Fairmont Avenue, Bethesda, Maryland 20814, shall deliver at
the Closing a certificate of an authorized officer stating
that: (i) the Money Market Portfolio's portfolio securities,
cash, and any other assets shall have been delivered in proper
form to FGI within two business days prior to or on the
Closing Date; and (ii) all necessary taxes, including all
applicable Federal and state stock transfer stamps, if any,
shall have been paid, or provision for payment shall have been
made, in conjunction with the delivery of the Money Market
Portfolio's portfolio securities.
3.3 Rushmore Trust and Savings, FSB, Bethesda, Maryland,
as the transfer agent for the Rushmore Fund and FGI (the
"Transfer Agent"), on behalf of FGI and the Money Market
Portfolio, shall deliver at the Closing a certificate of an
authorized officer stating that its records contain the names
and addresses of the Money Market Portfolio Shareholders and
the number and percentage ownership of outstanding shares
owned by each such shareholder immediately prior to the
Closing. FGI shall issue and deliver a confirmation
evidencing the FGI Shares to be credited on the Closing Date
to the Secretary of the Money Market Portfolio or provide
evidence satisfactory to the Money Market Portfolio that such
FGI Shares have been credited to the Money Market Portfolio's
account on the books of the FGI. At the Closing, each party
shall deliver to the other such bills of sales, checks,
assignments, share certificates, if any, receipts, or other
documents as such other party or its counsel may reasonably
request.
4. REPRESENTATIONS AND WARRANTIES
<PAGE> A-4
<PAGE>
4.1 The Rushmore Fund, on its own behalf and on behalf
of the Money Market Portfolio, represents and warrants to FGI
as follows:
(a) The Rushmore Fund is a corporation duly organized,
validly existing, and in good standing under the laws of the
State of Maryland;
(b) The Rushmore Fund is a registered investment company
classified as a management company of the open-end type, and
its registration with the Securities and Exchange Commission
(the "Commission"), as an investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"),
and the registration of its shares, under the Securities Act
of 1933, as amended (the "1933 Act"), are in full force and
effect;
(c) Neither the Rushmore Fund nor the Money Market
Portfolio is in, and the execution, delivery, and performance
of this Agreement will not result in, a material violation of
the Rushmore Fund's Articles of Incorporation or By-Laws or of
any agreement, indenture, instrument, contract, lease, or
other undertaking to which the Rushmore Fund or the Money
Market Portfolio is a party or by which either or both of the
Rushmore Fund and the Money Market Portfolio are bound;
(d) Neither the Rushmore Fund nor the Money Market
Portfolio has any material contracts or other commitments
(other than this Agreement) which will be terminated with
liability to the Rushmore Fund or the Money Market Portfolio
prior to the Closing Date;
(e) Except as otherwise disclosed in writing to and
accepted by FGI, no material litigation or administrative
proceeding or investigation of or before any court or
governmental body is presently pending or to their knowledge
threatened against the Rushmore Fund or the Money Market
Portfolio or any of their properties or assets which, if
adversely determined, would materially and adversely affect
the Rushmore Fund's or the Money Market Portfolio's financial
condition or the conduct of either the Rushmore Fund's or the
Money Market Portfolio's business. Neither the Rushmore Fund
nor the Money Market Portfolio knows of any facts which might
form the basis for the institution of such proceedings and
neither the Rushmore Fund nor the Money Market Portfolio is a
party to or subject to the provisions of any order, decree, or
judgment of any court or governmental body which materially
and adversely affects the business or the ability of the
Rushmore Fund or the Money Market Portfolio to consummate the
transactions herein contemplated;
<PAGE> A-5
<PAGE>
(f) The Statement of Assets and Liabilities of the Money
Market Portfolio at August 31, 1995 has been audited by
Deloitte & Touche LLP, independent accountants, and is in
accordance with generally accepted accounting principles
consistently applied, and such statement (a copy of which has
been furnished to FGI) fairly reflects the financial condition
of the Money Market Portfolio as of such date, and there are
no known contingent liabilities of the Money Market Portfolio
as of such date not disclosed therein;
(g) Since August 31, 1995, there has not been any
material adverse change in the Money Market Portfolio's
financial condition, assets, liabilities, or business other
than changes occurring in the ordinary course of business, or
any incurrence by the Money Market Portfolio of indebtedness
maturing more than one year from the date such indebtedness
was incurred, except as otherwise disclosed to and accepted by
FGI. For the purposes of this subparagraph (g), a decline in
net asset value per share of the Money Market Portfolio, the
discharge of Money Market Portfolio liabilities, or the
redemption of Money Market Portfolio shares by Money Market
Portfolio Shareholders shall not constitute a material adverse
change;
(h) At the Closing Date, all material Federal and other
tax returns and reports of the Rushmore Fund and the Money
Market Portfolio required by law to have been filed by such
date shall have been filed and are or will be correct, and all
Federal and other taxes shown as due or required to be shown
as due on said returns and reports shall have been paid or
provision shall have been made for the payment thereof, and to
the best knowledge of the Rushmore Fund and the Money Market
Portfolio no such return is currently under audit and no
assessment has been asserted with respect to such returns;
(i) For each taxable year of its operation, the Money
Market Portfolio has met the requirements of Subchapter M of
the Code for qualification as a regulated investment company
and has elected to be treated as such;
(j) All issued and outstanding shares of the Money
Market Portfolio are, and at the Closing Date will be, duly
and validly issued and outstanding, fully paid, and non-
assessable by the Money Market Portfolio. All of the issued
and outstanding shares of the Money Market Portfolio will, at
the time of closing, be held by the persons and in the amount
set forth in the records of the Transfer Agent, on behalf of
the Money Market Portfolio as provided in paragraph 3.3. The
Money Market Portfolio does not have outstanding any options,
warrants, or other rights to subscribe for or to purchase any
of the Money Market Portfolio shares, nor is there outstanding
<PAGE> A-6
<PAGE>
any security convertible into any of the Money Market
Portfolio shares;
(k) At the Closing Date, the Money Market Portfolio will
have good and marketable title to the Money Market Portfolio's
assets to be transferred to FGI pursuant to paragraph 1.2 and
full right, power, and authority to sell, assign, transfer,
and deliver such assets hereunder, and, upon delivery and
payment for such assets, FGI will acquire good and marketable
title thereto, subject to any restrictions as might arise
under the 1933 Act, other than as disclosed to FGI;
(l) The execution, delivery, and performance of this
Agreement will have been duly authorized prior to the Closing
Date by all necessary action on the part of the Rushmore
Fund's directors, and, subject to the approval of the Money
Market Portfolio Shareholders, this Agreement will constitute
a valid and binding obligation of the Rushmore Fund and the
Money Market Portfolio, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium, and other laws relating to or
affecting creditors' rights, and to general equity principles;
(m) The information to be furnished by the Rushmore Fund
and the Money Market Portfolio for use in registration
statements, proxy materials, and other documents which may be
necessary in connection with the transactions contemplated
hereby shall be accurate and complete in all material respects
and shall comply in all material respects with Federal
securities and other laws and regulations thereunder
applicable thereto; and
(n) The proxy statement of the Rushmore Fund (the "Proxy
Statement") to be included in the Registration Statement
referred to in paragraph 5.6 (other than information therein
that relates to FGI) will, on the effective date of the
Registration Statement and on the Closing Date, not contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which such statements were made, not materially
misleading.
4.2 FGI represents and warrants to the Money Market
Portfolio as follows:
(a) FGI is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Maryland;
(b) FGI is a registered investment company classified as
a management company of the open-end type, and its
<PAGE> A-7
<PAGE>
registration with the Commission, as an investment company
under the 1940 Act, and the registration of its shares, under
the 1933 Act, are in full force and effect;
(c) The current prospectus and statement of additional
information of FGI conform in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and
the rules and regulations of the Commission thereunder and do
not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not materially
misleading;
(d) At the Closing Date, FGI will have good and
marketable title to FGI's assets;
(e) FGI is not in, and the execution, delivery, and
performance of this Agreement will not result in, a material
violation of FGI's Articles of Incorporation or By-Laws or of
any agreement, indenture, instrument, contract, lease, or
other undertaking to which FGI is a party or by which FGI is
bound;
(f) No material litigation or administrative proceeding
or investigation of or before any court or governmental body
is presently pending or threatened against FGI or any of its
properties or assets, except as previously disclosed in
writing to the Rushmore Fund, on behalf of the Money Market
Portfolio. FGI knows of no facts which might form the basis
for the institution of such proceedings and FGI is not a party
to or subject to the provisions of any order, decree, or
judgment of any court or governmental body which materially
and adversely affects the business or the ability of FGI to
consummate the transactions contemplated herein;
(g) The Statement of Assets and Liabilities of FGI at
December 31, 1995, audited by Deloitte & Touche LLP,
independent accountants, and a copy of which has been
furnished to the Rushmore Fund, on behalf of the Money Market
Portfolio, fairly and accurately reflects the financial
condition of FGI as of such date in accordance with generally
accepted accounting principles consistently applied;
(h) Since December 31, 1995, there has not been any
material adverse change in FGI's financial condition, assets,
liabilities, or business other than changes occurring in the
ordinary course of business, or any incurrence by FGI of
indebtedness maturing more than one year from the date such
indebtedness was incurred. For the purposes of this
subparagraph (h), a decline in net asset value per share of
the FGI shares, the discharge of FGI liabilities, or the
<PAGE> A-8
<PAGE>
redemption of FGI shares by FGI Shareholders shall not
constitute a material adverse change;
(i) At the Closing Date, all material Federal and other
tax returns and reports of FGI required by law to have been
filed by such date shall have been filed and are or will be
correct, and all Federal and other taxes shown as due or
required to be shown as due on said returns and reports shall
have been paid or provision shall have been made for the
payment thereof, and, to the best knowledge of FGI, no such
return is currently under audit and no assessment has been
asserted with respect to such returns;
(j) For each taxable year of its operation, FGI has met
the requirements of Subchapter M of the Code for qualification
as a regulated investment company and has elected to be
treated as such;
(k) All issued and outstanding FGI Shares are, and at
the Closing Date will be, duly and validly issued and
outstanding, fully paid, and non-assessable by FGI. FGI does
not have outstanding any options, warrants, or other rights to
subscribe for or to purchase the FGI Shares, nor is there
outstanding any security convertible into the FGI Shares;
(l) The execution, delivery, and performance of this
Agreement will have been fully authorized prior to the Closing
Date by all necessary action, if any, on the part of the
directors of FGI and this Agreement will constitute a valid
and binding obligation of FGI enforceable in accordance with
its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium, and other laws
relating to or affecting creditors' rights, and to general
equity principles;
(m) The FGI Shares to be issued and delivered to the
Money Market Portfolio, for the account of the Money Market
Portfolio Shareholders, pursuant to the terms of this
Agreement, will, at the Closing Date, have been duly
authorized and, when so issued and delivered, will be duly and
validly issued FGI Shares, and will be fully paid and non-
assessable by FGI;
(n) The information to be furnished by FGI for use in
registration statements, proxy materials, and other documents
which may be necessary in connection with the transactions
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;
<PAGE> A-9
<PAGE>
(o) The Proxy Statement to be included in the
Registration Statement (only insofar as it relates to FGI)
will, on the effective date of the Registration Statement and
on the Closing Date, not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statement herein, in
light of the circumstances under which such statements were
made, not materially misleading; and
(p) FGI agrees to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the
1940 Act, and such of the state blue sky or securities laws as
may be necessary in order to continue its operations after the
Closing Date.
<PAGE> A-10
<PAGE>
5. COVENANTS OF THE RUSHMORE FUND, THE MONEY MARKET
PORTFOLIO, AND FGI
The following covenants of the Money Market Portfolio and
FGI, as applicable, are made, respectively, by the Rushmore
Fund (on behalf of the Money Market Portfolio) and FGI:
5.1 FGI and the Money Market Portfolio each will operate
its business in the ordinary course between the date hereof
and the Closing Date, it being understood that such ordinary
course of business will include the declaration and payment of
customary dividends and distributions, and any other
distribution that may be advisable.
5.2 The Money Market Portfolio will call a meeting of
the Money Market Portfolio Shareholders to consider and act
upon this Agreement and to take all other action necessary to
obtain approval of the transactions contemplated herein.
5.3 The Money Market Portfolio covenants that the FGI
Shares to be issued hereunder are not being acquired for the
purpose of making any distribution thereof other than in
accordance with the terms of this Agreement.
5.4 The Money Market Portfolio will assist FGI in
obtaining such information as FGI reasonably requests
concerning the beneficial ownership of the shares of the Money
Market Portfolio.
5.5 Subject to the provisions of this Agreement, FGI and
the Money Market Portfolio will each take, or cause to be
taken, all action, and do, or cause to be done, all things,
reasonably necessary, proper, or advisable to consummate and
make effective the transactions contemplated by this
Agreement.
5.6 The Money Market Portfolio will provide FGI with
information reasonably necessary for the preparation of a
prospectus (the "Prospectus") which will include the Proxy
Statement, referred to in paragraph 4.1(n), all to be included
in a Registration Statement on Form N-14 of FGI (the
"Registration Statement"), in compliance with the 1933 Act,
the Securities Exchange Act of 1934, as amended (the "1934
Act"), and the 1940 Act, in connection with the meeting of the
Money Market Portfolio Shareholders to consider approval of
this Agreement and the transactions contemplated herein (the
"Meeting").
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE RUSHMORE FUND
AND THE MONEY MARKET PORTFOLIO
<PAGE> A-11
<PAGE>
The obligations of the Rushmore Fund and the Money Market
Portfolio to consummate the transactions provided for herein
shall be subject, at their election, to the performance by FGI
of all the obligations to be performed by FGI hereunder on or
before the Closing Date, and, in addition thereto, to the
following further conditions:
6.1 All representations and warranties of FGI contained
in this Agreement shall be true and correct in all material
respects as of the date hereof and, except as they may be
affected by the transactions contemplated by this Agreement,
as of the Closing Date with the same force and effect as if
made on and as of the Closing Date; and
6.2 FGI, shall have delivered to the Rushmore Fund, on
behalf of the Money Market Portfolio, on the Closing Date, a
certificate executed in FGI's name by FGI's President or Vice
President, and FGI's Treasurer or Assistant Treasurer, in a
form reasonably satisfactory to the Rushmore Fund, on behalf
of the Money Market Portfolio, and dated as of the Closing
Date, to the effect that the representations and warranties of
FGI made in this Agreement are true and correct at and as of
the Closing Date, except as these representations and
warranties may be affected by the transactions contemplated by
this Agreement and as to such other matters as the Rushmore
Fund shall reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF FGI
The obligations of FGI to complete the transactions
provided for herein shall be subject, at its election, to the
performance by the Rushmore Fund and the Money Market
Portfolio of all of the obligations to be performed by the
Rushmore Fund and the Money Market Portfolio hereunder on or
before the Closing Date and, in addition thereto, to the
following conditions:
7.1 All representations and warranties of the Rushmore
Fund and the Money Market Portfolio contained in this
Agreement shall be true and correct in all material respects
as of the date hereof and, except as these representations and
warranties may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date;
7.2 The Rushmore Fund shall have delivered to FGI a
statement of the Money Market Portfolio's assets and
liabilities, as of the Closing Date, certified by the
Treasurer or the Assistant Treasurer of the Rushmore Fund; and
7.3 The Rushmore Fund shall have delivered to FGI, on
the Closing Date, a certificate executed in the Rushmore
<PAGE> A-12
<PAGE>
Fund's name and the Money Market Portfolio's name by the
Rushmore Fund's President or Vice President, and the Rushmore
Fund's Treasurer or Assistant Treasurer, in form and substance
satisfactory to FGI, and dated as of the Closing Date, to the
effect that the representations and warranties of the Rushmore
Fund and the Money Market Portfolio, with respect to the
Rushmore Fund and the Money Market Portfolio, made in this
Agreement are true and correct at and as of the Closing Date,
except as these representations and warranties may be affected
by the transactions contemplated by this Agreement, and as to
such other matters as FGI shall reasonably request.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF FGI AND
THE MONEY MARKET PORTFOLIO
If any of the conditions set forth below do not exist on
or before the Closing Date, with respect to the Money Market
Portfolio or FGI, then the other party to this Agreement
shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1 The Agreement and the transactions contemplated
herein shall have been approved by the requisite vote of the
holders of the outstanding shares of Common Stock, $.001 par
value per share, of the Money Market Portfolio in accordance
with the provisions of the Rushmore Fund's Articles of
Incorporation and By-Laws, and certified copies of the
resolutions evidencing such approval shall have been delivered
to FGI. Notwithstanding anything herein to the contrary, the
Rushmore Fund, the Money Market Portfolio, or FGI may not
waive the conditions set forth in this paragraph 8.1;
8.2 On the Closing Date, no action, suit, or other
proceeding shall be threatened or pending before any court or
governmental agency in which it is sought to restrain or
prohibit, or to obtain damages or other relief in connection
with, this Agreement or the transactions contemplated herein;
8.3 All consents of other parties and all other
consents, orders, and permits of Federal, state, and local
regulatory authorities deemed necessary by the Rushmore Fund
or FGI to permit consummation, in all material respects, of
the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order, or
permit would not involve a risk of a material adverse effect
on the assets or properties of the Rushmore Fund, the Money
Market Portfolio, or FGI, provided that the parties hereto
may, for themselves, waive any of such conditions;
8.4 The Registration Statement shall have become
effective under the 1933 Act and no stop orders suspending the
effectiveness thereof shall have been issued and, to the best
<PAGE> A-13
<PAGE>
knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be
pending, threatened, or contemplated under the 1933 Act; and
8.5 The parties shall have received the opinion of
Messrs. Jorden Burt Berenson & Johnson LLP, addressed to the
Rushmore Fund and FGI, substantially to the effect that the
transactions contemplated by this Agreement shall constitute a
tax-free reorganization for Federal income tax purposes. The
delivery of such opinion is conditioned upon receipt by
Messrs. Jorden Burt Berenson & Johnson LLP of representations
that such firm shall request of the Rushmore Fund, the Money
Market Portfolio, and FGI. Notwithstanding anything herein to
the contrary, the Rushmore Fund, the Money Market Portfolio,
or FGI may not waive the conditions set forth in this
paragraph 8.5.
9. BROKERAGE FEES AND EXPENSES
9.1 FGI and the Rushmore Fund, on behalf of the Money
Market Portfolio, represents and warrants to the other that
there are no brokers or finders entitled to receive any
payments in connection with the transactions provided for
herein.
9.2 MMA will bear the aggregate expenses and costs of
the Reorganization.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 FGI and the Rushmore Fund, on behalf of the Money
Market Portfolio, agree that neither party has made any
representation, warranty, or covenant not set forth herein and
that this Agreement constitutes the entire agreement between
the parties.
10.2 The representations, warranties, and covenants
contained in this Agreement, or in any document delivered
pursuant hereto or in connection herewith, shall survive the
consummation of the transactions contemplated hereunder.
11. TERMINATION
This Agreement and the transactions contemplated hereby
may be terminated and abandoned by either party by resolution
of the Rushmore Fund's Board of Directors or FGI's Board of
Directors; at any time prior to the Closing Date, if
circumstances should develop that, in the opinion of such
Boards of Directors, make proceeding with the Agreement
inadvisable.
12. WAIVER
<PAGE> A-14
<PAGE>
The Rushmore Fund, on behalf of the Money Market
Portfolio, and FGI, after consultation with their respective
counsel and by consent of the Rushmore Fund's Board of
Directors and FGI's Board of Directors, respectively, may
waive any condition to the respective obligations of FGI and
the Money Market Portfolio hereunder, except as provided
herein.
13. AMENDMENTS
This Agreement may be amended, modified, or supplemented
in such manner as may be mutually agreed upon in writing by
the authorized officers of the Rushmore Fund and FGI;
provided, however, that, following the Meeting of the Money
Market Portfolio Shareholders called by the Money Market
Portfolio pursuant to paragraph 5.2 of this Agreement, no such
amendment may have the effect of changing the provisions for
determining the number of the FGI Shares to be issued to the
Money Market Portfolio Shareholders under this Agreement to
the detriment of such shareholders without their further
approval.
14. NOTICES
Any notice, report, statement, or demand required or
permitted by any provisions of this Agreement shall be in
writing and shall be given by prepaid telegraph, telecopy, or
certified mail addressed to the Rushmore Fund at 4922 Fairmont
Avenue, Bethesda, Maryland 20814 or FGI at 4922 Fairmont
Avenue, Bethesda, Maryland 20814.
15. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
15.1 The Article and paragraph headings contained in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement.
15.2 This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
15.3 This Agreement shall be governed by and construed
in accordance with the laws of the State of Maryland.
15.4 This Agreement shall bind and inure to the benefit
of the parties hereto and their respective successors and
assigns, but no assignment or transfer hereof or of any rights
or obligations hereunder shall be made by any party without
the written consent of the other party. Nothing herein
expressed or implied is intended or shall be construed to
confer upon or to give any person, firm, or corporation, other
<PAGE> A-15
<PAGE>
than the parties hereto and their respective successors and
assigns, any rights or remedies under or by reason of this
Agreement.
15.5 It is expressly agreed that the obligations of the
Rushmore Fund and the Money Market Portfolio hereunder shall
not be binding upon any of the directors, shareholders,
nominees, officers, agents, or employees of the Rushmore Fund
personally, but shall bind only the corporate property of the
Rushmore Fund and the Money Market Portfolio, as provided in
the Articles of Incorporation of the Rushmore Fund. The
execution and delivery by such officers of the Rushmore Fund
shall not be deemed to have been made by any of them
individually or to impose any liability on any of them
personally, but shall bind only the corporate property of the
Rushmore Fund and the Money Market Portfolio as provided in
the Articles of Incorporation of the Rushmore Fund.
15.6 It is expressly agreed that the obligations of FGI
hereunder shall not be binding upon any of the directors,
shareholders, nominees, officers, agents, or employees of FGI
personally, but shall bid only the corporate property of FGI,
as provided in the Articles of Incorporation of FGI. The
execution and delivery by such officers of FGI shall not be
deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bid
only the corporate property of FGI as provided in the Articles
of Incorporation of FGI.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed by its President or Vice
President and its seal to be affixed hereto and attested by
its Secretary or Assistant Secretary.
Attest: THE RUSHMORE FUND, INC.
[Seal]
By: By:
Title: Title:
Attest: THE RUSHMORE FUND, INC., on
behalf of THE RUSHMORE
MONEY
MARKET PORTFOLIO
[Seal]
By: By:
<PAGE> A-16
<PAGE>
Title: Title:
Attest: FUND FOR GOVERNMENT
INVESTORS,
INC.
[Seal]
By: By:
Title: Title:
<PAGE> A-17
<PAGE>
APPENDIX B:
INVESTMENT MANAGEMENT AGREEMENT
BETWEEN
FUND FOR GOVERNMENT INVESTORS, INC.
AND
MONEY MANAGEMENT ASSOCIATES
<PAGE>
<PAGE>
MANAGEMENT CONTRACT
Between
FUND FOR GOVERNMENT INVESTORS, INC.
And
MONEY MANAGEMENT ASSOCIATES
AGREEMENT dated as of the 2nd day of December, 1974
by and between Fund For Government Investors, Inc. (herein
sometimes called the "FUND") and Money Management Associates
(herein sometimes called the "Manager").
WITNESSETH:
THAT, in consideration of the mutual covenants
hereinafter contained, it is agreed as follows:
1. THE FUND hereby employs the Manager to manage
the investment and reinvestment of the assets of the Fund and
to administer the affairs of the Fund, subject to the control
of the officers and Board of Directors of the Fund, for the
period and on the terms set forth in this Agreement. The
Manager hereby accepts such employment and agrees during such
period to render the services and to assume the obligations
herein set forth, for the compensation herein provided.
2. THE MANAGER assumes and shall pay or reimburse
the Fund for: (1) all expenses in connection with the
management of the investment and reinvestment of the assets of
the Fund, except that the Fund assumes and shall pay all
broker's commissions and issue and transfer taxes chargeable
to the Fund in connection with securities transactions to
<PAGE>
<PAGE>
which the Fund is a party; (2) the compensation (if any) of
those directors and officers of the Fund who also serve as
directors, officers or employees of the Manager; and (3) all
expenses not hereinafter specifically assumed by the Fund
where such expenses are incurred by the Manager or by the Fund
in connection with the administration of the affairs of the
Fund.
THE FUND assumes and shall pay or reimburse the
Manager for the Fund's taxes, corporate fees, interest
expenses (if any) and its allocable share of all charges,
costs and expenses incurred in connection with: (1)
maintaining its offices, determining from time to time the net
assets of the Fund, maintaining its books and records, and
preparing, reproducing and filing its tax returns and reports
to governmental agencies; (2) auditing its financial
statements; (3) providing stock certificates representing
shares of the Fund and the services rendered in the
registration or transfer of such shares, in the payment and
disbursement of dividends and distributions by the Fund, and
in the custody of the cash, securities and other assets of the
Fund; (4) stockholders' and directors' meetings, and
preparation, printing and distribution of all reports and
proxy materials; (5) legal services rendered to the Fund; (6)
retaining and compensating those directors, officers and
employees of the Fund who do not also serve as directors,
officers or employees of the Manager; (7) maintaining
<PAGE> B-2
<PAGE>
appropriate insurance coverage for the Fund and its directors
and officers; and (8) its membership in trade associations.
At the request of the Fund, the Manager shall make
available to the Fund all necessary office facilities,
equipment and personnel that the Fund may require. Such
office facilities, equipment, personnel and service, the
charges and expenses for which are to be paid by the Fund
under the provisions of this Section 2, may be provided for or
rendered to the Fund by the Manager and billed to the Fund at
the Manager's cost.
3. In connection with the management of the
investment and reinvestment of the assets of the Fund, the
Manager is authorized to buy and sell marketable debt
obligations of the United States Government, its agencies and
instrumentalities and money market obligations secured by such
obligations for the Fund and is directed to use its best
efforts to obtain the best available price and most favorable
execution with respect to all such transactions for the Fund.
4. As compensation for the services to be rendered
and the charges and expenses to be assumed and paid by the
Manager as provided in Section 2, the Fund shall pay the
Manager an annual fee of one-half of one percent of the
average daily net asset value, payable monthly on the average
daily net assets of the Fund during that month.
If in any fiscal year the aggregate expenses of the
Fund, exclusive of taxes, brokerage, interest and
<PAGE> B-3
<PAGE>
extraordinary legal expenses, but including the management
fee, exceed 1% of the average market value of the net assets
for that fiscal year of the Fund, the Manager will refund to
the Fund, or bear, the excess expenses over 1%. These expense
reimbursements, if any, will be estimated, reconciled and paid
on a monthly basis.
In the event of termination of this contract, the
fee shall be computed on the basis of the period ending on the
last business day on which this contract is in effect subject
to a pro rata adjustment based on the number of days elapsed
in the current fiscal quarter as a percentage of the total
number of days in such quarter.
5. Subject to and in accordance with the corporate
charters of the Fund and of the Manager respectively,
directors, officers and agents and stockholders of the Fund
are or may be interested in the Manager (or any successor
thereof) as directors, officers or partners or otherwise;
directors, officers, agents and partners of the Manager are or
may be interested in the Fund as directors, officers,
stockholders or otherwise; the Manager (or any successor) is
or may be interested in the Fund as stockholder or otherwise;
and the effect of any such interrelationships shall be
governed by said corporate charters and provisions of the
Investment Company Act of 1940.
6. This contract shall continue in effect until
the first meeting of the Account Owners of the Fund and if
<PAGE> B-4
<PAGE>
approved therein until December 1, 1976, and thereafter only
so long as such continuance is approved at least annually by
votes of the Fund's Board of Directors, including the votes of
a majority of the directors who are not parties to such
contract or interested persons of any such party, in person at
a meeting called for the purpose of voting such approval. In
addition the question of continuance of the contract may be
presented to stockholders of the Fund; in such event, such
continuance shall be effected only if approved by the
affirmative vote of a majority of the outstanding voting
securities of the Fund voting as a simple class. Provided,
however, that (1) this contract may at any time be terminated
without payment of any penalty either by vote of the Board of
Directors of the Fund or by vote of a majority of the
outstanding voting securities of the Fund, on sixty days
written notice to the Manager, (2) this contract shall
automatically terminate in the event of its assignment (within
the meaning of the Investment Company Act of 1940), and (3)
this contract may be terminated by the Manager on sixty days
written notice to the Fund. Any notice under this contract
shall be given in writing, addressed and delivered, or mailed
post paid, to the other party at any office of such party.
As used in this Section 6, the terms "interested
persons" and "vote of a majority of the outstanding
securities" shall have the respective meanings set forth in
<PAGE> B-5
<PAGE>
Section 2(a)(19) and Section 2(a)(42) of the Investment
Company Act of 1940.
7. The services of the Manager to the Fund
hereunder are not to be deemed exclusive, and the Manager
shall be free to render similar services to others so long as
its services hereunder are not impaired thereby. The Manager
shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Fund
in any way or otherwise be deemed an agent of the Fund.
8. No provisions of this contract shall be deemed
to protect the Manager against any liability to the Fund or
its stockholders to which it might otherwise be subject by
reason of any willful misfeasance, bad faith or gross
negligence in the performance of its duties or the reckless
disregard of its obligations under this contract. Nor shall
any provisions hereof be deemed to protect any director or
officer of the Fund against any such liability to which he
might otherwise be subject by reason of any willful
misfeasance, bad faith or gross negligence in the performance
of his duties or the reckless disregard of his obligations.
If any provision of this contract shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder of this contract shall not be affected thereby.
<PAGE> B-6
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused
this contract to be executed on the day and year first above
written.
FUND FOR GOVERNMENT INVESTORS,
INC.
WITNESS
By /s/ J. Michael Farrell
Secretary
/s/ Rosemary D. Vance
MONEY MANAGEMENT ASSOCIATES
WITNESS
By /s/ Daniel L. O'Connor
Partner
/s/ Patricia F. Havener
<PAGE> B-7
<PAGE>
AMENDMENT TO
MANAGEMENT CONTRACT
Between
FUND FOR GOVERNMENT INVESTORS, INC.
And
MONEY MANAGEMENT ASSOCIATES
Section 4. of this Management Contract between Fund for
Government Investors, Inc. and Money Management Associates
dated December 2, 1974, referring to the compensation to be
paid by the Fund to the Manager is amended as follows:
Delete: the Fund shall pay the Manager an annual fee of one-
half of one percent of the average daily net asset
value,
Add: The Fund shall pay the Manager an annual fee of .50%
of the first $500 million of net assets, .45% of the
next $250 million of net assets, .40% of the next
$250 million of net assets, and .35% of the net
assets over $1 billion,
WITNESS FUND FOR GOVERNMENT INVESTORS,
INC.
/s/ Lisa D. Kniotek by /s/ Richard J. Garvey
Secretary
WITNESS MONEY MANAGEMENT ASSOCIATES
/s/ Glenda Cherry by /s/ Daniel L. O'Connor
Partner
<PAGE>
Date: 6-5-80
<PAGE> B-9
<PAGE>
AMENDMENT TO
MANAGEMENT CONTRACT
Between
FUND FOR GOVERNMENT INVESTORS, INC.
And
MONEY MANAGEMENT ASSOCIATES
Pursuant to Section 205 of the Investment Advisers Act of
1940, the following amends the Management Contract between
Fund for Government Investors, Inc. and Money Management
Associates, dated December 2, 1974:
Money Management Associates will notify
Fund for Government Investors, Inc. of
any change in the membership of such
partnership within a reasonable time
after such change.
FUND FOR GOVERNMENT INVESTORS,
INC.
WITNESS
By /s/ Richard J. Garvey
Secretary
/s/ Michael W. Gergulis
MONEY MANAGEMENT ASSOCIATES
WITNESS
By /s/ Daniel L. O'Connor
Partner
/s/ Rita A. Gardner
Date: 6-1-76
<PAGE> B-10
<PAGE>
APPENDIX C:
CURRENT PROSPECTUS OF
FUND FOR GOVERNMENT INVESTORS, INC.,
DATED MARCH 30, 1995
<PAGE>
<PAGE>
Fund for Government Investors, Inc.
4922 Fairmont Avenue, Bethesda, MD 208l4
(800) 343-3355
(301) 657-1500
Fund for Government Investors, Inc. (the Fund) is an
investment company that invests in short-term marketable debt
securities issued by the United States Treasury, with the sole
objective of achieving current income with safety of
principal.
Investors should read this prospectus and retain it for future
reference. It is designed to set forth concisely the
information an investor should know before investing in the
Fund. A "Statement of Additional Information" dated March 30,
1995 containing additional information about the Fund has been
filed with the Securities and Exchange Commission and is
incorporated herein by reference. A copy of the Statement may
be obtained, without charge, by writing or telephoning the
Fund.
THE SECURITIES OF THE FUND ARE NEITHER INSURED NOR GUARANTEED
BY THE U.S. GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE
FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE.
The date of this prospectus and of the Statement of Additional
Information is March 30, 1995.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
FEE TABLE
The following table illustrates all expenses and fees that a
shareholder of the Fund will incur:
<S> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases,
Including Reinvested Dividends
(as a percentage of offering price) -0- %
Redemption Fees -0- %
Exchange Fees -0- %
Monthly Account Fee (for accounts under $5.00
$500)
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees .50 %
12b-1 Fees -0-
Other Expenses .25
Total Fund Operating Expenses .75 %
</TABLE>
<TABLE>
<CAPTION>
Example
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
You would pay the
following expenses on
a $1,000 investment, assuming
(1) 5% annual return and
(2) redemption at the end
of each time period. $ 8 $ 24 $ 42 $ 93
</TABLE>
The same level of expenses would be incurred if the investment
were held throughout the period indicated.
The preceding table is provided to assist the investor in
understanding the various costs and expenses that the investor
<PAGE> 2
<PAGE>
will incur directly or indirectly. The 5% assumed annual
return is for comparison purposes only. The actual annual
return may be more or less depending on market conditions.
The example should not be considered a representation of past
or future expenses. Actual expenses may be greater or less
than those shown. For more complete information about the
various costs and expenses, see "Management of the Fund" in
the prospectus and Statement of Additional Information.
<PAGE> 3
<PAGE>
<TABLE>
<CAPTION>
Fund for Government Investors, Inc.
FINANCIAL HIGHLIGHTS
Audited
1994 1993 1992
<S> <C> <C> <C>
Per share Operating Performance:
Net Asset Value - Beginning of Year $ 1.00 $ 1.00 $ 1.00
Net Investment Income 0.033 0.023 0.030
Net Realized and Unrealized Gains
on Securities -- -- --
Net Increase in Net Assset Value
Resulting from Operations 0.033 0.023 0.030
Dividends to Shareholders (0.033) (0.023) (0.030)
Distributions to Shareholders from Net
Realized Capital Gains -- -- --
Net Increase in Net Asset Value 0.00 0.00 0.00
Net Assets Value - End of Year $ 1.00 $ 1.00 $ 1.00
Total Investment Return 3.38% 2.37% 3.02%
Ratios to Average Net Assets:
Expenses 0.75% 0.75% 0.71%
Net Investment Income 3.31% 2.32% 3.00%
Supplementary Data:
Portfolio Turnover Rate -- -- --
Number of Shares Outstanding at End
of Year (000's omitted) 524,154 600,766 751,925
<PAGE> 4
<PAGE>
1991 1990 1989
<S> <C> <C> <C>
Per share Operating Performance:
Net Asset Value - Beginning of Year $ 1.00 $ 1.00 $ 1.00
Net Investment Income 0.053 0.071 0.082
Net Realized and Unrealized Gains
on Securities -- -- --
Net Increase in Net Assset Value
Resulting from Operations 0.053 0.071 0.082
Dividends to Shareholders (0.053) (0.071) (0.082)
Distributions to Shareholders from Net
Realized Capital Gains -- -- --
Net Increase in Net Asset Value 0.00 0.00 0.00
Net Assets Value - End of Year $ 1.00 $ 1.00 $ 1.00
Total Investment Return 5.38% 7.38% 8.51%
Ratios to Average Net Assets:
Expenses 0.69% 0.71% 0.72%
Net Investment Income 5.29% 7.13% 8.19%
Supplementary Data:
Portfolio Turnover Rate -- -- --
Number of Shares Outstanding at End
of Year (000's omitted) 796,655 857,418 704,479
<PAGE> 5
<PAGE>
1988 1987 1986 1985
<S> <C> <C> <C> <C>
Per share Operating Performance:
Net Asset Value - Beginning
of Year $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income 0.064 0.057 0.058 0.074
Net Realized and Unrealized Gains
on Securities -- -- -- --
Net Increase in Net Assset Value
Resulting from Operations 0.064 0.057 0.058 0.074
Dividends to Shareholders (0.064) (0.057) (0.058) (0.074)
Distributions to Shareholders from
Net Realized Capital Gains -- -- -- --
Net Increase in Net Asset Value 0.00 0.00 0.00 0.00
Net Assets Value - End of Year $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Investment Return 6.66% 5.81% 5.97% 7.65%
Ratios to Average Net Assets:
Expenses 0.73% 0.72% 0.73% 0.70%
Net Investment Income 6.44% 5.66% 5.81% 7.40%
Supplementary Data:
Portfolio Turnover Rate -- -- -- --
Number of Shares Outstanding at
End of Year (000's omitted) 634,723 695,554 686,195 791,706
</TABLE>
The auditors report is incorporated by reference in the
registration statement. The auditors report and further
information about the performance of the Fund are contained in
the annual report to shareholders which may be obtained
without charge by calling or writing the Fund.
PERFORMANCE DATA
From time to time the Fund advertises its "yield" and
"effective yield". Both yield figures are based on historical
earnings and are not intended to indicate future performance.
The yield of the Fund refers to the income generated by an
investment in the Fund over a seven-day period (which period
will be stated in the advertisement). This income is then
"annualized". That is, the amount of income generated by the
investment during that week is assumed to be generated each
<PAGE> 6
<PAGE>
week over a 52-week period and is shown as a percentage of the
investment. The effective yield is calculated similarly, but,
when annualized, the income earned by the investment in the
Fund is assumed to be reinvested. The "effective yield" will
be slightly higher than the "yield" because of the compounding
effect of this assumed reinvestment. Comparative performance
and relative ranking information may be used from time to time
in advertising or marketing the Fund s shares, including data
from Lipper Analytical Services, Inc., Donoghue s Money Fund
Report and other industry publications.
For the seven day period ended December 31, 1994, the Fund s
annualized average yield was 4.71%. The effective annual
yield was 4.82%.
INVESTMENT OBJECTIVE AND POLICIES
The sole objective of the Fund is to achieve current income
with safety of principal. Although there is no assurance that
this objective will be achieved, the Fund will pursue this
objective by investing exclusively in marketable debt
securities issued by the United States Treasury.
The Fund will invest in short-term United States Government
securities, consisting of U.S. Treasury bills, U.S. Treasury
notes and U.S. Treasury bonds that mature within one year.
All securities purchased by the Fund are held by the Fund's
custodian bank, Rushmore Trust and Savings, FSB (the
"Custodian"). U.S. Treasury securities are backed by the full
faith and credit of the United States Government.
The Fund may not borrow money, except that as a temporary
measure the Fund may borrow money to facilitate redemptions.
Such a borrowing may be in an amount not to exceed 30% of the
Fund's total assets, taken at current value before such
borrowing. The Fund may borrow only to accommodate requests
for redemption of shares of the Fund while effecting an
orderly liquidation of portfolio securities.
The investment objective and the investment policies of the
Fund may not be changed without the approval of a majority of
the shareholders, as defined in the Investment Company Act of
1940.
DIVIDENDS
The Fund distributes all of its net income on a daily basis.
Dividends are declared on each day that the Fund is open for
business. Investors receive dividends in the form of
additional shares unless they elect to receive cash. Payment
is made in additional shares at the net asset value on the
payable date or in cash, on a monthly basis. To change the
<PAGE> 7
<PAGE>
method of receiving dividends, investors must notify the Fund
in writing at least one week before payment is to be made.
Net income of the Fund shall consist of all interest income
accrued and discount earned, plus or minus any realized gains
or losses, less estimated expenses of the Fund. The Fund does
not expect to realize any long-term capital gains.
NET ASSET VALUE
The Fund's net asset value per share will be determined as of
12:00 noon, Eastern time, on days when the Custodian Bank is
open for business. The net asset value per share is
determined by adding the appraised value of all securities and
all other assets, deducting liabilities and dividing by the
number of shares outstanding. The value of the Fund's
portfolio of securities is determined on the basis of fair
value as determined in good faith by the Fund's Directors. In
determining fair value, the Fund uses the amortized cost
method of valuing the securities in its portfolio pursuant to
an exemption granted to it by the Securities and Exchange
Commission on August 8, 1979.
INVESTORS ACCOUNTS
The Fund maintains an account for each investor in full and
fractional shares. Statements of account will be sent monthly
showing the beginning balance, detail transactions for the
month and the ending balance. Confirmations of individual
transactions will not be sent.
The Fund reserves the right to reject any purchase order. All
accounts will be held in book entry form. No certificates for
shares will be issued.
LOW BALANCE ACCOUNT FEE
In addition to charges described elsewhere in this prospectus,
the Fund may impose a charge of $5 per month for any account
whose month-end balance is below $500. The fee will continue
to be imposed during the months when the account balance
remains below $500. The fee will be imposed on the last
business day of the month. This fee will be paid to Rushmore
Trust and Savings, FSB. The fee will not be imposed on tax-
sheltered retirement plans or accounts established under the
Uniform Gifts or Transfers to Minors Act. Because of the
administrative expense of handling small accounts, the Fund
reserves the right to involuntarily redeem an investor's
account which falls below $500 due to redemptions or exchanges
after providing 60 days written notice.
TAXES
<PAGE> 8
<PAGE>
The Fund intends to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code. Because of
this qualification, the Fund will not be liable for Federal
income taxes to the extent its earnings are distributed.
Dividends derived from interest and dividends received by the
Fund, together with distributions of any short-term capital
gains, are taxable as ordinary income whether or not
reinvested. Statements as to the Federal tax status of
shareholders' dividends and distributions will be mailed
annually. Shareholders should consult their tax advisers
concerning the tax status of the Fund's dividends in their own
states and localities.
Shareholders are required by law to certify that their tax
identification number is correct and that they are not subject
to back-up withholding. In the absence of this certification,
the Fund is required to withhold taxes at the rate of 20% on
dividends, capital gains distributions and redemptions.
Shareholders who are non-resident aliens may be subject to a
withholding tax on dividends earned.
HOW TO INVEST IN THE FUND
Shares of the Fund are offered for sale continuously by the
Fund. There is no sales charge. The minimum initial
investment is $2,500. Retirement accounts may be opened with a
$500 minimum investment. There is no minimum amount for
subsequent investments.
By Mail. Fill out an application and make a check payable to
"Fund for Government Investors, Inc." Mail the check, and the
completed application to:
Fund for Government Investors, Inc.
4922 Fairmont Avenue
Bethesda, MD 208l4
By Bank Wire. Speak to the Branch Manager of your bank.
Request a transfer of Federal funds to Rushmore Trust and
Savings, FSB, instructing the bank to wire transfer the money
before 12 noon, Eastern time to:
Rushmore Trust & Savings, FSB
Bethesda, MD
Routing No. 0550-71084
For Account of Fund for Government Investors
Account No. 029385770
AFTER INSTRUCTING YOUR BANK TO TRANSFER FEDERAL FUNDS, YOU
MUST TELEPHONE THE FUND AT 1-800-622-1386 OR (301) 657-1510
BETWEEN 8:30 A.M. AND NOON EASTERN TIME AND TELL US THE AMOUNT
<PAGE> 9
<PAGE>
YOU TRANSFERRED AND THE NAME OF THE BANK SENDING THE TRANSFER.
YOUR BANK MAY CHARGE A FEE FOR SUCH SERVICES. REMEMBER THAT
IT IS IMPORTANT TO COMPLETE THE WIRE TRANSFER BEFORE 12 NOON
EASTERN TIME.
Through Brokers. Investors may invest in the Fund by
purchasing shares through registered broker-dealers. Such
broker-dealers who process orders may charge a fee for such
service.
The Government securities market, in which the Fund buys and
sells its securities, usually requires immediate settlement in
Federal funds for all security transactions. Payments
received by bank wire can be converted immediately into
Federal funds and will begin earning dividends the same day.
Payment for the purchase of Fund shares not received in the
form of Federal funds will begin earning dividends the
following day. Foreign checks will not be accepted. Orders
received prior to 12 noon, Eastern time, will be invested in
shares of the Fund at the next determined net asset value.
The Fund may impose a charge of $10 for items returned for
insufficient or uncollectible funds.
HOW TO REDEEM AN INVESTMENT (WITHDRAWALS)
An investor may withdraw all or any portion of his investment
by redeeming shares on any day that the Fund is open for
business at the next determined net asset value per share
after receipt of the order by writing the Fund or telephoning
1-800-622-1386 or (301) 657-1510. Telephone redemption
privileges may be terminated or modified by the Fund upon 60
days notice to all Shareholders of the Fund. Telephone orders
for redemptions must be received by noon Eastern time to be
effective that day. The privilege to initiate redemption
transactions by telephone will be made available to Fund
Shareholders automatically.
Telephone redemptions will only be sent to the address of
record or to bank accounts specified in the account
applications. When acting on instructions believed to be
genuine, the Fund will not be liable for any loss resulting
from a fraudulent telephone redemption request and the
investor would bear the risk of any such loss. The Fund will
employ reasonable procedures to confirm that redemption
instructions communicated by telephone are genuine; and if the
Fund does not employ such procedures, then the Fund may be
liable for any losses due to unauthorized or fraudulent
instructions. The Fund follows specific procedures for
transactions initiated by telephone, including among others
requiring some form of personal identification prior to acting
on instructions received by telephone, providing written
<PAGE> 10
<PAGE>
confirmation not later than five business days after such
transactions, and/or tape recording of telephone transactions.
The proceeds of redemptions will be sent directly to the
investor's address of record. If the investor requests
payment of redemptions to a third party or to a location other
than his address of record listed on the account application,
the request must be in writing and the investor's signature
must be guaranteed by an eligible institution. Eligible
institutions generally include banking institutions,
securities exchanges, associations, agencies or
broker/dealers, and "STAMP" program participants. There are
no fees charged for redemptions.
Normally, the Fund will make payment for all shares redeemed
within one business day. However, withdrawal requests upon
investments that have been made by check may be delayed up to
ten business days following such investment or until the check
clears, whichever occurs first. This delay is necessary to
assure the Fund that investments made by check are good funds.
The proceeds of the redemption will be forwarded promptly upon
confirmation of receipt of good funds.
The right of redemption may be suspended, or the date of
payment postponed during the following periods: (a) periods
during which the New York Stock Exchange is closed (other than
customary weekend or holiday closings); (b) periods when
trading on the Exchange is restricted, or an emergency exists,
as determined by the Securities and Exchange Commission, so
that disposal of the Fund s investments for determination of
net asset value is not reasonably practicable; or (c) for such
other periods as the Commission, by order, may permit for
protection of the Fund s investors.
To provide the utmost liquidity for investors' money, there
are four forms of redemption:
Bank Wire Transfers. When the amount to be redeemed is at
least $5,000, the Fund, upon telephone instructions, will
automatically wire transfer the amount to the investor's
commercial bank or brokerage account specified in the account
application. The Fund will also accept written instructions
for wire transfers of funds.
Check Transfers. For amounts less than $5,000, investors
utilizing certain Washington, D.C. banks may have checks
deposited directly into their account. For redemptions by
investors utilizing banks in other states, including Virginia
and Maryland, checks will be delivered by mail.
Draft Checks. Investors may elect to redeem shares by draft
check (minimum check - $250) made payable to the order of any
<PAGE> 11
<PAGE>
person or institution. Upon the Fund's receipt of a completed
signature card, investors will be supplied with draft checks
which are drawn on the Fund's account and are paid through
Rushmore Trust and Savings, FSB. The Fund reserves the right
to change or suspend the checking service and to charge for
the reorder of draft checks. These draft checks cannot be
certified, nor can these checks be negotiated for cash at
Rushmore Trust and Savings, FSB. There will be a $10 charge
for each stop payment request on the draft checks. Investors
will be subject to the same rules and regulations that the
bank applies to checking accounts. Investors' accounts may
not be closed by draft check.
Exchanges. Shares of the Fund may be exchanged for shares of
Fund for Tax-Free Investors, Inc., The Rushmore Fund, Inc.,
the American Gas Index Fund, Inc., or the Cappiello-Rushmore
Trust on the basis of the respective net asset values of the
shares involved, provided such exchange is permitted under the
applicable laws of the state of the investor's residence.
Shareholders contemplating such an exchange should obtain and
review the prospectuses of those funds. Exchanges may be made
by telephone or letter. Written requests should be sent to
Fund for Government Investors, Inc., 4922 Fairmont Avenue,
Bethesda, Maryland 20814 and be signed by the record owner or
owners. Telephone exchange requests may be made by
telephoning the Fund at 1-800-622-1386 or (301) 657-1510. To
implement an exchange, shareholders should provide the
following information: account registration including address
and number, taxpayer identification number, number, percentage
or dollar value of shares to be redeemed, name and account
number of the portfolio to which the investment is to be
transferred. Exchanges may be made only if they are between
identically registered accounts. Telephone exchange
privileges may be terminated or modified by the Fund upon 60
days notice to all shareholders of the Fund.
TAX-SHELTERED RETIREMENT PLANS
Tax-Sheltered Retirement Plans of the following types are
available to investors:
Individual Retirement Accounts (IRAs)
Keogh Accounts - Defined Contribution
Plan (Profit Sharing Plan)
Keogh Accounts - Money Purchase Plan
(Pension Plan)
401(k) Plans
403(b) Plans
Additional information regarding these accounts may be
obtained by contacting the Fund.
<PAGE> 12
<PAGE>
MANAGEMENT OF THE FUND
Officers and Directors. The Fund has a Board of Directors
which is responsible for the general supervision of the Fund s
business. The day-to-day operations of the Fund are the
responsibility of the Fund's officers. A complete list of the
Fund's directors and officers is provided in the Statement of
Additional Information.
Investment Adviser and Administrative Servicing Agent. The
Fund is provided investment advisory and management services
by Money Management Associates ("the Adviser"), 4922 Fairmont
Avenue, Bethesda, Maryland 20814. The Adviser is a limited
partnership which was formed under the laws of the District of
Columbia on August 15, 1974. Its primary business since
inception has been to serve as the investment adviser of the
Fund. Daniel L. O'Connor is the sole general partner of the
Adviser, and, as such, exercises control of the Adviser.
Money Management Associates provides investment advice and
management to other mutual funds including The Rushmore Fund,
Inc., Fund for Tax-Free Investors, Inc., and the American Gas
Index Fund, Inc. Net assets under management currently
approximate $1 billion.
Under an agreement with the Adviser, the Fund pays a fee at an
annual rate based on the size of the Fund s net assets as
follows:
.50% of the first $500 million;
.45% of the next $250 million;
.40% of the next $250 million;
.35% of the net assets over $1 billion.
For the year ended December 31, 1994, the Fund paid the
Adviser investment advisory fees of .50% (50/100 of 1%) of
average daily net assets.
Effective September 1, 1993, the Board of Directors approved
an arrangement whereby Rushmore Trust and Savings, FSB, 4922
Fairmont Avenue, Bethesda, Maryland 20814, provides the Fund
with shareholder servicing, transfer agent, dividend-
disbursing agent, custodian and administrative services. The
Fund pays an annual fee of .25% (25/100 of 1%) of average
daily net assets for these services.
ORGANIZATION AND DESCRIPTION OF COMMON STOCK
The Fund is a no-load, open-end diversified investment
company. The Fund was incorporated in Maryland on October 30,
1974 and has a present authorized capital of three billion
shares of $.001 par value common stock. All shares are of the
same class and are freely transferrable. Shares have equal
<PAGE> 13
<PAGE>
voting rights, and no preferences to conversion, exchange,
dividends, retirement or any other feature. These shares have
non-cumulative voting rights, which means that the holders of
more than 50% of the shares voting for the election of
Directors can elect 100% of the Directors, if they choose to
do so. In such event, the holders of the remaining shares
voting (less than 50%) will be unable to elect any Directors.
Under Maryland Corporate law, a registered investment company
is not required to hold an annual shareholders meeting if the
Investment Company Act of 1940 does not require a meeting.
The Act does require a meeting if the following actions are
necessary: ratification of the selection of independent public
accountants, approval of the investment advisory agreement,
election of the board of directors or approval of the
appointment of directors to board vacancies when such
vacancies cause less than two-thirds of the board to have been
elected.
Under the Investment Company Act of 1940, Shareholders have
the right to remove directors and, if holders of 10% of the
outstanding shares request in writing, a shareholder's meeting
must be called.
Shareholders having inquiries about the Fund s organization
or operation should contact the Fund in writing at 4922
Fairmont Avenue, Bethesda, MD 20814 or by telephone at (301)
657-1500 or (800) 343-3355.
<PAGE> 14
<PAGE>
CONTENTS
Page
Fee Table . . . . . . . . . . . . . . . . . . . . . . . . . 2
Financial Highlights . . . . . . . . . . . . . . . . . . . 3
Performance Data . . . . . . . . . . . . . . . . . . . . . 4
Investment Objective and Policies . . . . . . . . . . . . . 4
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . 4
Net Asset Value . . . . . . . . . . . . . . . . . . . . . . 5
Investors' Accounts . . . . . . . . . . . . . . . . . . . . 5
Low Balance Account Fee . . . . . . . . . . . . . . . . . . 5
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
How to Invest in the Fund . . . . . . . . . . . . . . . . . 6
How to Redeem an Investment
(Withdrawals) . . . . . . . . . . . . . . . . . . . . . . 6
Tax-Sheltered Retirement Plans . . . . . . . . . . . . . . 8
Management of the Fund . . . . . . . . . . . . . . . . . . 8
Organization and Description of
Common Stock . . . . . . . . . . . . . . . . . . . . . . 9
<PAGE> 15
<PAGE>
FUND
FOR
GOVERNMENT
INVESTORS
PROSPECTUS
March 30, 1995
<PAGE> 16
<PAGE>
APPENDIX D:
CURRENT PROSPECTUS OF
THE RUSHMORE MONEY MARKET PORTFOLIO,
DATED JANUARY 1, 1996
<PAGE>
<PAGE>
THE RUSHMORE FUND, INC.
4922 Fairmont Avenue
Bethesda, Maryland 20814
(800) 343-3355
(301) 657-1500
RUSHMORE MONEY MARKET PORTFOLIO
INVESTMENT OBJECTIVES AND POLICIES
The Rushmore Money Market Portfolio (the "Portfolio") is one
of a series of portfolios in The Rushmore Fund, Inc. (the
"Fund"), an open-end management investment company. The
objective of the Portfolio is to provide investors with
maximum current income to the extent that such investment is
consistent with safety of principal. To attain this
investment objective, the Portfolio will invest in U.S.
Government and agency securities, bank money market
instruments, and commercial paper.
The shares offered by this Prospectus are not deposits or
obligations of any bank, are not endorsed or guaranteed by any
bank, and are not insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other
governmental agency.
ADDITIONAL INFORMATION
Investors should read this prospectus and retain it for future
reference. It is designed to set forth concisely the
information an investor should know before investing in the
Fund. A Statement of Additional Information dated January 1,
1996 containing additional information about the Fund has been
filed with the Securities and Exchange Commission and is
incorporated herein by reference. A copy of the Statement may
be obtained, without charge, by writing or telephoning the
Fund.
The securities of the Portfolio are neither insured nor
guaranteed by the U.S. Government and there can be no
assurance that the Portfolio will be able to maintain a stable
net asset value of $1.00 per share.
The date of this Prospectus is January 1, 1996.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
<PAGE>
FEE TABLE
The following table illustrates all expenses and fees that a
shareholder of the Portfolio will incur:
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases . . . . . . . . . . None
Sales Load Imposed on Reinvested Dividends . . . . . None
Deferred Sales Load . . . . . . . . . . . . . . . . None
Redemption Fees . . . . . . . . . . . . . . . . . . None
Exchange Fees . . . . . . . . . . . . . . . . . . . None
Monthly Account Fee (for accounts under $500)* . . $5.00
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees. . . . . . . . . . . . . . . . . 0.50%
12b-1 Fees . . . . . . . . . . . . . . . . . . . None
Other Expenses . . . . . . . . . . . . . . . . . 0.25%
Total Fund Operating Expenses . . . . . . . . . 0.75%
* A charge of $5 per month may be imposed on any account
whose average daily balance for the month falls below
$500 due to redemptions. See "Transaction Charges."
EXAMPLE
You would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return and (2) redemption at the end of
each time period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$8 $25 $43 $95
The same level of expenses would be incurred if the investment
were held throughout the period indicated.
The purpose of this table is to assist the investor in
understanding the various expenses that an investor in the
Portfolio will bear directly or indirectly. The five percent
assumed annual return is for comparison purposes only. The
actual return may be more or less depending on market
conditions. The example should not be considered a
<PAGE> 2
<PAGE>
representation of past or future expenses. Actual expenses
may be greater or less than those shown. For more complete
information about the various costs and expenses, see
"Management of the Fund" in this Prospectus and Statement of
Additional Information.
<PAGE> 3
<PAGE>
THE RUSHMORE FUND, INC.
Financial Highlights
Rushmore Money Market Portfolio
<TABLE>
<CAPTION>
For the Year Ended August 31,
1995 1994 1993
<S> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value - Beginning
of Year . . . . . . . . . $1.00 $1.00 $1.00
Net Investment Income. . . . . . . . . . .0.049 0.027 0.024
Net Realized and Unrealized
Gains (Losses)
on Securities . . . . . -- -- --
Net Increase in Net Asset
Value
Resulting from Operations 0.049 0.027 0.024
Dividends to Shareholders (0.049) (0.027) (0.024)
Distributions to
Shareholders from Net
Realized
Capital Gains . . . . . -- -- --
Net Increase (Decrease) in
Net Asset Value . . . . .
0.00 0.00 0.00
Net Asset Value - End of Year. . . . . . . . . . . $1.00 $1.00 $1.00
Total Investment Return . . 5.03% 2.88% 2.43%
Ratios to Average Net
Assets:
Expenses . . . . . . . . .
0.75% 0.75% 0.78%
Net Investment Income . . . 4.92% 2.73% 2.40%
Supplementary Data:
Portfolio Turnover Rate .
-- -- -- Number of Shares
Outstanding at End of Year
(000s omitted) . . . .
21,985 22,261 56,759
</TABLE>
<PAGE> 4
<PAGE>
THE RUSHMORE FUND, INC.
Financial Highlights
Rushmore Money Market Portfolio
Audited
<TABLE>
<CAPTION>
1992 1991 1990
<S> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value - Beginning
$1.00 $1.00 $1.00 of Year. . . . . . . . .
Net Investment Income . . 0.037 0.061 0.076
Net Realized and Unrealized
Gains (Losses)
on Securities . . . . . -- -- --
Net Increase in Net Asset
Value
Resulting from Operations
Dividends to Shareholders 0.037 0.061 0.076
Distributions to (0.037) (0.061) (0.076)
Shareholders from Net
Realized
Capital Gains . . . . . -- -- --
Net Increase (Decrease) in
Net Asset Value . . . . .
0.00 0.00 0.00
Net Asset Value - End of
Year . . . . . . . . . .
$1.00 $1.00 $1.00
Total Investment Return . . 3.71% 6.33% 7.92%
Ratios to Average Net
Assets:
Expenses . . . . . . . . 0.80% 0.79% 0.80%
Net Investment Income . . 3.71% 6.14% 7.62%
Supplementary Data:
Portfolio Turnover Rate . -- -- --
Number of Shares
Outstanding at End of Year
(000's omitted) . . . . 98,606 115,539 140,718
</TABLE>
<PAGE> 5
<PAGE>
THE RUSHMORE FUND, INC.
Financial Highlights
Rushmore Money Market Portfolio
Audited
<TABLE>
<CAPTION>
1989 1988 1987 1986*
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value - Beginning of
Year . . . . . . . . . . . .
$1.00 $1.00 $1.00 $1.00
Net Investment Income . . . . 0.084 0.065 0.063 0.041
Net Realized and Unrealized
Gains (Losses)
on Securities . . . . . . . -- -- -- --
Net Increase in Net Asset Value
Resulting from Operations . 0.084 0.065 0.063 0.041
Dividends to Shareholders . . (0.084) (0.065) (0.063) (0.041)
Distributions to Shareholders
from Net Realized
Capital Gains . . . . . . . -- -- -- --
Net Increase (Decrease) in Net
Asset Value . . . . . . . . . 0.00 0.00 0.00 0.00
Net Asset Value - End of Year
$1.00 $1.00 $1.00 $1.00
Total Investment Return . . . . 8.64% 6.47% 5.59% 4.40%
Ratios to Average Net Assets:
Expenses . . . . . . . . . .
Net Investment Income . . . . 0.80% 0.82% 0.76% 1.00%
8.35% 6.37% 6.33% 5.88%
Supplementary Data:
Portfolio Turnover Rate . . . -- -- -- --
Number of Shares Outstanding at
End of Year
(000's omitted) . . . . . . . 84,549 54,789 10,465 1,027
</TABLE>
<PAGE> 6
<PAGE>
*From inception December 18, 1985.
The above financial highlights relating to the Portfolio, for
the periods identified, have been audited by Deloitte & Touche
LLP, independent certified public accountants, whose report
thereon appears in the Fund's 1995 Annual Report to
Shareholders for the Rushmore Money Market Portfolio and is
incorporated by reference in the Statement of Additional
Information. This information should be read in conjunction
with the financial statements and related notes thereto
included in the Statement of Additional Information. A copy
of the Fund's 1995 Annual Report to Shareholders for the
Rushmore Money Market Portfolio, and further information about
the performance of the Portfolio, may be obtained, without
charge, by contacting the Fund at 4922 Fairmont Avenue,
Bethesda, Maryland 20814, or by telephoning the Fund at (800)
343-3355 or (301) 657-1500.
PERFORMANCE DATA
From time to time the Portfolio advertises its "yield" and
"effective yield". Both yield figures are based on historical
earnings and are not intended to indicate future performance.
The "yield" of the Portfolio refers to the income generated by
an investment in the Portfolio over a seven-day period (which
period will be stated in the advertisement). This income is
then "annualized". That is, the amount of income generated by
the investment during that week is assumed to be generated
each week over a 52-week period and is shown as a percentage
of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an
investment in the Portfolio is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed
reinvestment.
For the seven day period ended August 31, 1995, the
Portfolio's annualized yield was 5.14%. The effective yield
was 5.27%.
INVESTMENT OBJECTIVE AND POLICIES
General
The investment objective of the Rushmore Money Market
Portfolio is to provide investors with maximum current income
<PAGE> 7
<PAGE>
to the extent that such investment is consistent with safety
of principal. To attain this investment objective, the
Portfolio will invest in U.S. Government and agency
securities, bank money market instruments, and commercial
paper.
The Portfolio will limit its investments to those securities
that at the time of acquisition are "Eligible Securities." An
"Eligible Security" is one that is in one of the two highest
rating categories for short-term debt obligations given by the
Nationally Recognized Statistical Rating Organizations
("NRSRO"). In addition, the Portfolio will invest at least
95% of its total assets in instruments that receive the
highest NRSRO rating and not more than 5% of its total assets
in the securities of any single issuer. Up to 5% of the
Portfolio's total assets may be invested in securities that
receive the second highest NRSRO rating, however, not more
than the greater of 1 % of total assets or $1 million may be
invested in securities of any single issuer of such second
rated securities.
The Portfolio may also invest in short-term United States
Government securities, consisting primarily of Treasury Bills,
short-term notes of the Federal National Mortgage Association,
Federal Home Loan Banks and the Federal Farm Credit Agencies.
In addition, the Portfolio will invest in bonds, debentures
and notes of these issuers and other Federal agencies and
instrumentalities that mature within 397 calendar days.
All of the Portfolio's assets will consist of securities
maturing within 397 calendar days of purchase, and the dollar
weighted average maturity of the Portfolio will not exceed 90
days. The Portfolio will value its investment securities at
amortized cost and will seek to maintain a constant net asset
value of $1.00 per share.
Specialized Investment Practices and Risks
Repurchase Agreements and Federal Agency Securities
In order to effectively utilize cash reserves kept for
liquidity, the Portfolio may invest in repurchase agreements
secured by securities issued or guaranteed by the U.S.
Government, its agencies and instrumentalities and in
securities and certificates evidencing ownership of future
interest and principal payments on the above securities. A
repurchase agreement arises when a buyer purchases a security
and simultaneously agrees to sell it to the seller at an
agreed upon future date, normally one day or a few days later.
<PAGE> 8
<PAGE>
The resale price is greater than the purchase price,
reflecting an agreed upon market rate. A Portfolio may enter
into repurchase agreements only with member banks of the
Federal Reserve system or primary dealers of U.S. Government
securities. In the event of a default or bankruptcy by the
seller, the Portfolio will liquidate those securities held
under repurchase agreements. However, liquidation of the
securities could involve costs or delays and, to the extent
proceeds from their sale were less than the agreed upon
repurchase price, the Portfolio could suffer a loss.
While U.S. Treasury securities and those of the Government
National Mortgage Association and the Small Business
Administration are backed by the full faith and credit of the
United States, other Federal agency securities such as the
Federal Home Loan Banks and the Federal National Mortgage
Association are not guaranteed by the U.S. Treasury. These
Federal agency securities are supported by the ability to
borrow from the U. S. Treasury or by the credit of the agency
itself.
Lending of Securities
The Portfolio may lend its securities to National Association
of Securities Dealers, Inc. (the "NASD") registered broker-
dealers and Federal Reserve member banks for the purpose of
earning additional income. Such loans will be pursuant to
agreements requiring the broker-dealer or bank to fully and
continuously secure the loan by cash or other securities in
which the Portfolio may invest equal to the market value of
the securities loan. The Portfolio receives compensation for
lending its securities in the form of fees.
The Portfolio will enter into securities lending and
repurchase transactions only with parties who meet credit
worthiness standards approved by the Fund's Board of
Directors. In the event of a default or bankruptcy by a
seller or borrower, the Portfolio will promptly liquidate
collateral. However, the exercise of the Portfolio's right to
liquidate such collateral could involve certain costs or
delays and, to the extent that proceeds from any sale of
collateral on a default of the seller or borrower were less
than the seller's or borrower's obligation, the Portfolio
could suffer a loss.
Borrowings
The Portfolio may not borrow money except as a temporary
measure to facilitate redemptions. Such a borrowing may not
<PAGE> 9
<PAGE>
exceed 30% of the Portfolio's total assets, taken at current
net asset value before any borrowing. The Portfolio may not
purchase securities if a borrowing is outstanding.
<PAGE> 10
<PAGE>
HOW TO INVEST IN THE PORTFOLIO
The minimum initial investment is $2,500 which may be divided
between the Rushmore Money Market Portfolio and the Rushmore
U.S. Government Bond Portfolio. Retirement accounts may be
opened with a $500 minimum investment. The shares of the
Portfolio are offered at the daily public offering price which
is the net asset value per share (See "Net Asset Value") next
computed after receipt of your order. There is no minimum
amount for subsequent investments.
Investments in the Portfolio can be made directly with the
Fund or through securities dealers who have the responsibility
to transmit orders promptly and may charge a processing fee.
The Fund reserves the right to reject any purchase order. All
accounts will be held in book entry form. No certificates for
shares will be issued.
By Mail: Fill out an application and make a check payable to
"The Rushmore Fund, Inc." Mail the check along with the
application, to:
The Rushmore Fund, Inc.
4922 Fairmont Avenue
Bethesda, Maryland 20814
Purchases by check will normally be credited to an account
within one business day after receipt of payment. Foreign
checks will not be accepted.
By Bank Wire: Request a wire transfer to:
Rushmore Trust and Savings, FSB
Bethesda, Maryland
Routing Number 0550-71084
For Account of The Rushmore Fund, Inc.
Account Number 029385-770
AFTER INSTRUCTING YOUR BANK TO TRANSFER MONEY BY WIRE, YOU
MUST TELEPHONE THE FUND AT (800) 622-1386 OR (301) 657-1510
BETWEEN 8:30 AM AND 12 NOON, EASTERN TIME AND TELL US THE
AMOUNT YOU TRANSFERRED AND THE NAME OF THE BANK SENDING THE
TRANSFER. YOUR BANK MAY CHARGE A FEE FOR SUCH SERVICES. IF THE
PURCHASE IS CANCELLED BECAUSE YOUR WIRE TRANSFER IS NOT
RECEIVED, YOU MAY BE LIABLE FOR ANY LOSS THE FUND MAY INCUR.
<PAGE> 11
<PAGE>
HOW TO REDEEM AN INVESTMENT (WITHDRAWALS)
On any day the Portfolio is open for business, an investor may
withdraw all or any portion of his investment by redeeming
shares at the next determined net asset value per share after
receipt of the order by writing the Fund or telephoning (800)
622-1386 or (301) 657-1510. Telephone redemption privileges
may be terminated or modified by the Fund upon 60 days notice
to all shareholders of the Fund. Telephone orders for
redemptions in the Rushmore Money Market Portfolio must be
received by 12 Noon, Eastern time to be effective that day.
The privilege to initiate redemption transactions by telephone
will be made available to Fund shareholders automatically.
Telephone redemptions will only be sent to the address of
record or to bank accounts specified in the account
application. When acting on instructions believed to be
genuine, the Fund will not be liable for any loss resulting
from a fraudulent telephone redemption request and the
investor would bear the risk of any such loss.
The Fund will employ reasonable procedures to confirm that
redemption instructions communicated by telephone are genuine;
and if the Fund does not employ such procedures, then the Fund
may be liable for any losses due to unauthorized or fraudulent
instructions. The Fund follows specific procedures for
transactions initiated by telephone, including among others,
requiring some form of personal identification prior to acting
on instructions received by telephone, providing written
confirmation not later than five business days after such
transactions, and/or tape recording of telephone transactions.
The proceeds of redemptions will be sent directly to the
investor's address of record. If the investor requests
payment of redemptions to a third party or to a location other
than his address of record listed on the account application,
the request must be in writing and the investor's signature
must be guaranteed by an eligible institution. Eligible
institutions generally include banking institutions,
securities exchanges, associations, agencies or
broker/dealers, and ''STAMP'' program participants. There are
no fees charged for redemptions.
The Fund will redeem its shares at a redemption price equal to
their net asset value as next computed following the receipt
of a request for redemption. There is no redemption charge.
For investments that have been made by check, payment on
withdrawal requests may be delayed for up to ten business days
or until the check clears, whichever occurs first. This delay
<PAGE> 12
<PAGE>
is necessary to assure the Fund that investments made by
checks are good funds. The proceeds of the redemption will be
forwarded promptly upon confirmation of receipt of good funds.
The right of redemption may also be suspended, or the date of
payment postponed, (a) for any period during which the New
York Stock Exchange ("NYSE") is closed (other than customary
weekend or holiday closings); or (b) when trading on the NYSE
is restricted, or an emergency exists, as determined by the
Securities and Exchange Commission, so that disposal of the
Fund's investments for determination of net asset value is not
reasonably practicable; or (c) for such other periods as the
Commission, by order, may permit for protection of the Fund's
investors. Investors should also be aware that telephone
redemptions or exchanges may be difficult to implement in a
timely manner during periods of drastic economic or market
changes. If such conditions occur, redemption or exchange
orders can be made by mail. Because of the administrative
expense of handling small accounts, the Fund reserves the
right to involuntarily redeem an investor's account which
falls below $500 in total value in all portfolios of the Fund
due to redemptions or exchanges after providing 60 days
written notice.
EXCHANGES
The Fund is composed of three separate portfolios. This
Prospectus describes the features of the Rushmore Money Market
Portfolio. The other portfolios of the Fund are the Rushmore
Nova Portfolio and the Rushmore U.S. Government Bond
Portfolio, however, shares of the Rushmore Nova Portfolio
currently are not available or sold to the public. Investors
may invest in either the Rushmore Money Market Portfolio or
the Rushmore U.S. Government Portfolio, and may exchange
shares in one portfolio, at no charge, for shares of the other
portfolio at their relative net asset values. Shares of The
Rushmore Fund, Inc. may also be exchanged for shares of Fund
for Government Investors, Inc., Fund for Tax-Free Investors,
Inc., American Gas Index Fund, Inc., or the Cappiello-Rushmore
Trust on the basis of the respective net asset values of the
shares involved. Exchanges may be made by telephone or
letter. Written requests should be sent to The Rushmore Fund,
Inc., 4922 Fairmont Avenue, Bethesda, Maryland 20814 and be
signed by the record owner or owners. Telephone exchange
requests may be made by calling the Fund at (800) 622-1386 or
(301) 657-1510 between 8:30 A.M. and 12 Noon, Eastern time.
Exchanges will be affected at the respective net asset values
of the portfolios as next determined after receipt of the
exchange request. To implement an exchange, shareholders
should provide the following information: account
<PAGE> 13
<PAGE>
registration including address and number, taxpayer
identification number, number, percentage or dollar value of
shares to be redeemed, name and account number of the
portfolio to which the investment is to be transferred.
Exchanges may be made only if they are between identically
registered accounts. Shareholders contemplating such an
exchange should obtain and review the prospectuses of those
funds. The exchange privilege is available only in states
where the exchange may legally be made. Telephone exchange
privileges may be terminated or modified by the Fund upon 60
days notice to all shareholders of the Fund.
TRANSACTION CHARGES
In addition to charges described elsewhere in this Prospectus,
the Fund may impose a charge of $5 per month for any account
whose average daily balance is below $500 due to redemptions.
The fee will continue to be imposed during months when the
account balance remains below $500. The fee will be imposed
on the last business day of the month. This fee will be paid
to Rushmore Trust and Savings, FSB. The fee will not be
imposed on tax-sheltered retirement plans or accounts
established under the Uniform Gifts or Transfers to Minors
Act. The Fund may also assess a charge of $10 for items
returned for insufficient or uncollectible funds.
TAX-SHELTERED RETIREMENT PLANS
Tax-sheltered retirement plans of the following types will be
available to investors:
Individual Retirement Accounts (IRAs)
Defined Contribution Plans
(Profit-Sharing Plans)
Money Purchase Plans (Pension Plans)
Internal Revenue Code
Section 401(k) Plans
Internal Revenue Code
Section 403(b) Plans
Additional information regarding these accounts may be
obtained by contacting the Fund.
<PAGE> 14
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
Dividends of the Portfolio will be declared daily. Investors
will receive dividends in additional shares at month end
unless they elect in writing to receive cash. Dividends paid
in cash to those investors so electing will be mailed on the
second business day of the following month. Statements of
account showing dividends paid will be sent to shareholders at
least quarterly.
Long-term capital gains, if any, will be distributed on an
annual basis while short-term capital gains, if any, will be
distributed quarterly.
NET ASSET VALUE
The net asset value of the Portfolio's shares is determined at
4:00 P.M., Eastern time each day on which the NYSE is open for
business. Currently, the NYSE is closed on weekends and on
the following holidays: (i) New Year's Day, President's Day,
Good Friday, Memorial Day, July Fourth, Labor Day,
Thanksgiving Day, and Christmas Day; and (ii) the preceding
Friday when any of those holidays falls on a Saturday or the
subsequent Monday when any one of those holidays falls on a
Sunday. The net asset value per share of the Portfolio is
calculated by dividing the net worth of the Portfolio by the
number of shares outstanding of the Portfolio.
The Portfolio will utilize the amortized cost method in
valuing the Portfolio's portfolio securities, which method
involves valuing a security at its cost adjusted by a constant
amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the
market value of the instrument. The purpose of this method of
calculation is to facilitate the maintenance of a constant net
asset value per share of $1.00. However, there is no
assurance that the $1.00 net asset value will be maintained.
For further information regarding the amortized cost method
for valuing the Portfolio's portfolio securities, see "Net
Asset Value," in the Statement of Additional Information.
TAXES
The Portfolio intends to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code.
Because of this qualification, the Portfolio will not be
<PAGE> 15
<PAGE>
liable for Federal income taxes to the extent its earnings are
distributed.
Dividends derived from interest and dividends received by the
Fund, together with distributions of any short-term capital
gains, are taxable as ordinary income whether or not
reinvested.
Statements as to the Federal tax status of shareholders'
dividends and distributions will be mailed annually.
Shareholders should consult their tax advisers concerning the
tax status of the Fund's dividends in their own states and
localities.
Shareholders are required by law to certify that their tax
identification number is correct and that they are not subject
to back-up withholding. In the absence of this certification,
the Fund is required to withhold taxes at the rate of 31% on
dividends, capital gains distributions and redemptions.
Shareholders who are non-resident aliens may be subject to a
withholding tax on dividends earned.
ORGANIZATION AND DESCRIPTION OF COMMON STOCK
The Fund is an open-end, diversified investment company. It
was incorporated in Maryland on July 24, 1985 and has a
present authorized capital of 1,000,000,000 shares of $.001
par value common stock which may be issued in three separate
classes: Rushmore U.S. Government Bond Portfolio, the Rushmore
Nova Portfolio, and the Rushmore Money Market Portfolio.
All shares of the Fund are freely transferable. The shares do
not have preemptive rights, and none of the shares have any
preference to conversion, exchange, dividends, retirements,
liquidation, redemption or any other feature. Shares have
equal voting rights, except that in a matter affecting only a
particular Portfolio, such as a change in investment policy,
only shares of that Portfolio may be entitled to vote on the
matter. Because the shares have non-cumulative voting rights,
the holders of more than 50% of the shares voting for the
election of directors can elect 100% of the directors, if they
choose to do so. In such event, the holders of the remaining
less than 50% of the shares voting will not be able to elect
any directors. Shareholder inquiries can be made by telephone
((800) 343-3355) or by mail (4922 Fairmont Avenue, Bethesda,
Maryland 20814).
<PAGE> 16
<PAGE>
Under Maryland Corporate law, a registered investment company
is not required to hold an annual shareholders' meeting if the
Investment Company Act of 1940 does not require a meeting.
The Act does require a meeting if the following actions are
necessary: ratification of the selection of independent
public accountants, approval of the investment advisory
agreement, election of the board of directors or approval of
the appointment of directors to board vacancies when such
vacancies cause less than two-thirds of the board to have been
elected. Under the Investment Company Act of 1940,
shareholders have the right to remove directors and, if
holders of 10% of the outstanding shares request in writing, a
shareholders' meeting must be called. As of the date of this
Prospectus, officers and directors of the Fund, as a group,
own less than 1% of the shares outstanding.
MANAGEMENT OF THE FUND
Investment Adviser and Administrative Servicing Agent
The Fund is provided investment advice and management services
by Money Management Associates, 1001 Grand Isle Way, Palm
Beach Gardens, Florida 33418 (the "Adviser"). The Adviser
provides investment advice and management to other mutual
funds including Fund for Government Investors, Inc., Fund for
Tax-Free Investors, Inc. and the American Gas Index Fund, Inc.
As of August 31, 1995, total assets under the Adviser s
management were approximately $950 million.
Under an Agreement with the Adviser, the Portfolio pays the
Adviser a fee at an annual rate based on 0.50% of the net
assets of the Portfolio. The Adviser manages the investment
and reinvestment of the assets of the portfolios of the Fund
and administers the affairs of the Fund, subject to the
control of the officers and the Board of Directors of the
Fund. Investment decisions are made by committee. The
Adviser bears all costs associated with providing these
services. For the fiscal year ended August 31, 1995, the
Portfolio paid the Adviser investment advisory fees of 0.50%
(50/100 of 1%) of average daily net assets of the Portfolio.
The Portfolio's net expenses exclusive of the investment
advisory fees were 0.25% (25/100 of 1%) for the fiscal year.
Effective September 1, 1993, the Board of Directors approved
an arrangement whereby Rushmore Trust and Savings, FSB, 4922
Fairmont Avenue, Bethesda, Maryland 20814, a majority-owned
subsidiary of the Adviser, provides transfer agency, dividend-
disbursing and administrative services to the Fund. The
<PAGE> 17
<PAGE>
Portfolio pays an annual fee of 0.25% (25/100 of 1%) of
average daily net assets for these services.
Officers and Directors
The Fund has a Board of Directors which is responsible for the
general supervision of the Fund's business. The day-to-day
operations of the Fund are the responsibility of the Fund's
officers.
<PAGE> 18
<PAGE>
THE RUSHMORE FUND, INC.
RUSHMORE MONEY MARKET PORTFOLIO
PROSPECTUS
January 1, 1996
Table of Contents
Page
Fee Table . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Highlights . . . . . . . . . . . . . . . . . . . .
Performance Data . . . . . . . . . . . . . . . . . . . . . .
Investment Objective and Policies . . . . . . . . . . . . . .
How to Invest in the Portfolio . . . . . . . . . . . . . . .
How to Redeem an Investment (Withdrawals) . . . . . . . . . .
Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . .
Transaction Charges . . . . . . . . . . . . . . . . . . . . .
Tax-Sheltered Retirement Plans . . . . . . . . . . . . . . .
Dividends and Distributions . . . . . . . . . . . . . . . . .
Net Asset Value . . . . . . . . . . . . . . . . . . . . . . .
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Organization and Description of Common Stock . . . . . . . .
Management of the Fund . . . . . . . . . . . . . . . . . . .
<PAGE> 19
<PAGE>
PART B
<PAGE>
<PAGE>
FUND FOR GOVERNMENT INVESTORS, INC.
____________
4922 Fairmont Avenue
Bethesda, Maryland 20814
(800) 343-3355
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a prospectus
and should be read in conjunction with the Combined
Prospectus/Proxy Statement dated March ___ 1996 (the "Combined
Prospectus/Proxy Statement"), for the special meeting (the
"Meeting") of the shareholders of the shares of Common Stock,
$.001 par value per share, of the Rushmore Money Market
Portfolio (the "Money Market Portfolio"), which Money Market
Portfolio is a separate series of The Rushmore Fund, Inc. (the
"Rushmore Fund"), a diversified, open-end management
investment company. This Meeting is to be held on Friday, May
24, 1996.
The Combined Prospectus/Proxy Statement describes certain
transactions and other actions contemplated by the proposed
reorganization of the Money Market Portfolio into Fund for
Government Investors ("FGI") (the "Reorganization"). Pursuant
to an Agreement and Plan of Reorganization in connection with
the Reorganization (the "Reorganization Plan"), FGI would
acquire all of the assets of the Money Market Portfolio in
exchange solely for shares of common stock in FGI and the
assumption by FGI of all the liabilities of the Money Market
Portfolio.
Pursuant to the Reorganization Plan, neither the Money Market
Portfolio nor FGI will bear any costs associated with the
Reorganization. As described in the Combined Prospectus/Proxy
Statement, FGI has an investment objective that is virtually
identical to the investment objective of the Money Market
Portfolio and has investment policies that are comparable to
the investment policies of the Money Market Portfolio. The
shareholders of the Money Market Portfolio are being requested
to approve the Reorganization Plan at the Meeting.
The Combined Prospectus/Proxy Statement may be obtained free
of charge by contacting Rushmore Trust and Savings, FSB
("RTS"), which provides all administrative services to both
the Money Market Portfolio and FGI, at 4922 Fairmont Avenue,
Bethesda, Maryland 20814, or by telephoning RTS toll-free at
(800) 343-3355. This Statement of Additional Information
<PAGE>
<PAGE>
contains additional and more detailed information about the
operations and activities of FGI and the operations and
activities of the Money Market Portfolio.
The date of this Statement of Additional Information is March
___, 1996.
<PAGE> B-2
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Current Statement of Additional Information for the Fund for
Government Investors, Inc., dated March 30, 1995
Current Statement of Additional Information for the Rushmore
Money Market Portfolio, dated January 1, 1996
Current Annual Report of the Fund for Government Investors,
Inc., for the fiscal year ended December 31, 1994
Semi-Annual Report of the Fund for Government Investors, Inc.,
for the six-month period ended June 30, 1995
Current Annual Report of The Rushmore Fund, Inc., for the
fiscal year ended August 31, 1995
Pro Forma Financial Statements
<PAGE> B-3
<PAGE>
CURRENT STATEMENT OF ADDITIONAL INFORMATION
OF FUND FOR GOVERNMENT INVESTORS, INC.,
DATED MARCH 30, 1995
<PAGE>
<PAGE>
FUND FOR GOVERNMENT INVESTORS, INC.
4922 Fairmont Avenue, Bethesda, Maryland 20814
(301) 657-1500 (800) 343-3355
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a prospectus.
It should be read in conjunction with the Fund s prospectus,
dated March 30, 1995. A copy of the Prospectus may be
obtained without charge by writing or telephoning the Fund.
The date of this Statement of Additional Information is March
30, 1995.
<PAGE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Table of Contents
Page
Investment Objective and Policies . . . . . . . . . . . . . 3
Investment Restrictions . . . . . . . . . . . . . . . . . . 3
Management of the Fund . . . . . . . . . . . . . . . . . . 3
Principal Holders of Securities . . . . . . . . . . . . . . 4
Investment Adviser and Other Services . . . . . . . . . . . 4
Net Asset Value . . . . . . . . . . . . . . . . . . . . . . 5
Comparative Performance Data . . . . . . . . . . . . . . . 6
Calculation of Yield Quotation . . . . . . . . . . . . . . 6
Auditors and Financial . . . . . . . . . . . . . . . . . . 6
<PAGE> 2
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The Fund may invest only in marketable debt securities of the
United States Government and repurchase agreements secured by
such securities. The investment objective, the investment
policies, and the investment restrictions of the Fund may not
be changed without the approval of a majority of the
shareholders, as defined in the Investment Company Act of
1940.
Portfolio turnover of the Fund will be high due to the short-
term nature of the Fund's investments. High turnover will not
adversely affect the Fund's yield because brokerage
commissions are not normally paid on investments the Fund
makes.
INVESTMENT RESTRICTIONS
As stated above, the Fund may invest only in marketable debt
securities of the United States Government and repurchase
agreements secured by such securities, although the Fund did
not invest in repurchase agreements during 1994 and has no
intentions to do so. The Fund may not invest in any other
securities .
The Fund may not borrow money, except that as a temporary
measure the Fund may borrow money to facilitate redemptions.
Such a borrowing may be in an amount not to exceed 30% of the
Fund's total assets, taken at current value before such
borrowing. The Fund may borrow only to accommodate requests
for redemption of shares of the Fund while effecting an
orderly liquidation of portfolio securities. Additionally,
the Fund may not sell securities short, write options,
underwrite securities of other issuers, purchase or sell real
estate, commodities or commodity contracts, or loan money to
others (except securities under repurchase agreements). The
Fund may not purchase a portfolio security if a borrowing by
the Fund is outstanding. No other senior securities may be
issued by the Fund.
MANAGEMENT OF THE FUND
Directors and Officers of the Fund and Officers of the
Adviser, together with information as to their principal
business occupations during the past five years, are set forth
below. Officers of the Fund do not receive salaries or other
forms of compensation from the Fund. Outside Directors fees
and expenses will be paid by the servicing agent. Outside
<PAGE> 3
<PAGE>
directors were paid an annual fee of $3,000. For the year
ended December 31, 1994, such fees amounted to $15,000.
*Daniel L. O Connor, 53 - Chairman of the Board, Treasurer and
Director of the Fund. President, 1974 to 1981. Partner and
Chief Operating Officer of the Adviser. Address: 4922
Fairmont Avenue, Bethesda, Maryland 20814.
*Richard J. Garvey, 61 - President and Director of the Fund.
Executive Vice President, 1974 to 1981. Limited Partner of the
Adviser. Address: 4922 Fairmont Avenue, Bethesda, Maryland
20814.
*William L. Major, 56 - Vice President and Secretary.
Employee of the Fund s investment adviser since 1988, a
limited partner since 1994. Address: 4922 Fairmont Avenue,
Bethesda, Maryland 20814.
+Patrick F. Noonan, 52 - Director. Chairman and Chief
Executive Officer of the Conservation Fund since 1986. Vice
Chairman, American Farmland Trust and Trustee, American
Conservation Association since 1985. President, Conservation
Resources, Inc. since 1981. Address: 11901 Glen Mill Drive,
Potomac, Maryland 20854.
Jeffrey R. Ellis, 50 - Director. Vice President of LottoFone,
a telephone lottery system, since 1993. Vice President
Shoppers Express, Inc. through 1992. Address: 5525 Dorsey
Lane, Bethesda, Maryland 20816.
*Rita A. Gardner, 51 - Director. Limited partner of the
Adviser. Address: 4922 Fairmont Avenue, Bethesda, Maryland
20814.
+Leo Seybold, 80 - Director. Retired. Address: 5804 Rockmere
Drive, Bethesda, Maryland 20816.
+Michael G. Trainer, 53 - Director. Attorney at Law.
Address: 4922 Fairmont Avenue, Bethesda, Maryland 20814.
Martin M. O Connor, 50 - Vice President since 1974. A limited
partner of the Adviser since 1979. Address: 4922 Fairmont
Avenue, Bethesda, Maryland 20814.
John R. Cralle, 55 - Vice President since 1978. A limited
partner of the Adviser since 1979. Address: 4922 Fairmont
Avenue, Bethesda, Maryland 20814.
<PAGE> 4
<PAGE>
Timothy N. Coakley, CPA, 27 - Controller. Audit Manager
Deloitte & Touche LLP until 1994. Address: 4922 Fairmont
Avenue, Bethesda, Maryland 20814.
Daniel L. O Connor and Martin M. O Connor are brothers.
*Indicates interested person as defined by the Investment
Company Act of 1940.
+Indicates Member of the Audit Committee.
Certain Directors and Officers of the Fund are also Directors
and Officers of Fund for Tax-Free Investors, Inc., The
Rushmore Fund, Inc., and American Gas Index Fund, Inc., other
investment companies managed by the Adviser.
PRINCIPAL HOLDERS OF SECURITIES
On March 7, 1995, there were 575,546,098 shares of the Fund s
common stock outstanding. Rushmore FSB/Trust of Bethesda,
Maryland, as Custodian, held for the benefit of others 5.55%
of the Fund. No other shareholder owned more than 5% of the
outstanding common shares. Officers and Directors of the
Fund, as a group, own less than 1% of shares outstanding.
INVESTMENT ADVISER AND OTHER SERVICES
The Fund is provided investment advisory and management
services by Money Management Associates ("the Adviser"), 4922
Fairmont Avenue, Bethesda, Maryland 20814. The Adviser is a
limited partnership which was formed under the laws of the
District of Columbia on August 15, 1974. Certain Officers and
Directors of the Fund are affiliated with the Adviser. Under
an Agreement (the "Agreement") with the Adviser, the Fund pays
a fee at an annual rate based on the size of the Fund s net
assets as follows:
.50% of the first $500 million;
.45% of the next $250 million;
.40% of the next $250 million;
.35% of the net assets over $1 billion.
Under the Agreement, the Adviser will reimburse the Fund for
expenses (including management fee) but excluding interest and
extraordinary legal expenses, which exceed one percent of the
average daily net assets per annum.
<PAGE> 5
<PAGE>
Normal expenses which are borne by the Fund include, but are
not limited to, taxes, corporate fees, interest expenses (if
any), office expenses, the costs incident to preparing reports
to governmental agencies, auditing and accounting, the costs
incident to providing stock certificates for shareholders, and
of registering and redeeming such certificates, custodian
charges, the expense of shareholders and Directors meetings,
data processing, preparation, printing and distribution of all
reports and proxy materials, legal services rendered to the
Fund, compensation for those Directors, Officers and employees
of the Fund who do not also serve as Officers or employees of
the Adviser, insurance coverage for the Fund and its Directors
and Officers, and its membership in trade associations. The
Adviser may, from time to time, make payments to broker-
dealers and others for their expenses in connection with the
distribution of Fund shares. Although such payments may be
based upon the number of shares distributed, it is the
understanding of the Adviser that such payments will be for
reimbursement and will not exceed the expenses of the
recipients in arranging for and administering distribution of
Fund shares. Salaries of the Directors of the Fund, who are
not affiliated with the Adviser, are expenses of the Fund and
are established annually by the Board of Directors. This
includes a majority of those Directors who are non-interested
persons of the Adviser. All fees and expenses are estimated
and accrued daily. For the years: 1994, 1993 and 1992, the
Adviser earned $2,754,339, $3,228,059 and $3,695,113,
respectively in management fees.
Daniel L. O Connor is the sole general partner of the Adviser
and, as such, exercises control of the Adviser.
The Agreement between the Adviser and the Fund was last
renewed by the Board of Directors on October 27, 1994. The
Agreement shall be renewed annually, if approved by either of
two methods: (1) by the Board of Directors, including approval
by a majority of the non-interested Directors by vote cast in
person at a meeting called for such purpose, or (2) by a
majority of those shareholders of the outstanding voting
securities of the Fund.
The Agreement may be cancelled by the Fund without penalty on
sixty days' notice by the Board of Directors of the Fund or by
vote of the holders of a majority of the Fund's shares. The
Agreement may also be cancelled by the Adviser without penalty
on sixty days' notice. The Agreement will terminate
automatically in the event of its assignment.
Under an Agreement approved by the Board of Directors on July
21, 1993, and renewed on October 27, 1994, Rushmore Trust and
<PAGE> 6
<PAGE>
Savings, FSB, ("RTSB"), a wholly-owned subsidiary of the
Adviser, acts as the Fund's custodian, transfer agent,
dividend disbursing agent and shareholder servicing agent.
The Fund pays RTSB an annual fee of .25% of average daily net
assets for these services. The fee will be reviewed and
approved annually by the non-interested directors. The Fund
is subject to the self-custodian rules of the Securities and
Exchange Commission. These rules require that the custodian
be subject to three securities verification examinations each
year conducted by the Fund's independent accountants. Two of
the examinations must be performed on an unannounced surprise
basis.
NET ASSET VALUE
The Fund s net asset value per share will be determined as of
12:00 noon, Eastern time, on days when the Custodian Bank is
open for business. The net asset value per share is
determined by adding the appraised value of all securities and
all other assets, deducting liabilities and dividing by the
number of shares outstanding. The value of the Fund's
portfolio of securities is determined on the basis of fair
value as determined in good faith by the Fund's Directors. In
determining fair value, the Fund uses the amortized cost
method of valuing the securities in its portfolio pursuant to
an exemption granted to it by the Securities and Exchange
Commission on August 8, 1979. The Fund's Directors
continuously review this method of valuation and recommend
changes which may be necessary to assure that the portfolio
instruments of the Fund are valued at their fair value. In
its review, the Directors of the Fund consider the relevant
factors which may affect the value of the portfolio
investments, such as maturity, yield, stability, special
circumstances or trading markets, and any other factors which
they deem pertinent. Amortized cost is the purchase price of
the security plus accumulated discount or accrued interest
from the date of purchase. This method of valuation does not
take into account unrealized gains or losses due to short-term
market fluctuations and tends to stabilize the price of the
Fund's shares. Under the exemption, the Fund will not
purchase any securities with a remaining maturity of greater
than 397 days, or maintain a dollar weighted average portfolio
maturity in excess of 90 days. When interest rates decline,
the market value of the Fund's portfolio rises; when rates
rise, the market value declines. To the extent that the
Fund s amortized cost valuation of its short-term securities
differs from the actual liquidation value, the price at which
an investor purchases or redeems will correspondingly differ
from the per share liquidation value of the portfolio. Thus,
when interest rates are declining and purchases of Fund shares
exceed redemptions, the interest of existing investors may be
<PAGE> 7
<PAGE>
diluted. When interest rates are rising and redemptions
exceed share purchases, the interest of existing investors may
be diluted. Declining interest rates and net redemption of
Fund shares or rising interest rates and new purchases of Fund
shares may enhance the interest of existing investors. When
interest rates are declining, the Fund s valuation method
tends to understate the percentage rate of net investment
income per share. When interest rates are rising, the reverse
is true. The Board of Directors of the Fund believes that the
amortized cost basis offers the most consistent and
conservative method of valuing short-term investments.
COMPARATIVE PERFORMANCE DATA
The Fund's performance may be compared in advertising to the
performance of other money market and mutual funds in general
or to the performance of particular types of money market
funds, especially those with similar objectives. More up-to-
date performance data may be provided as it becomes available.
From time to time, the Fund may provide information concerning
general economic conditions, financial trends, analysis and
supply comparative performance and rankings, with respect to
comparable investments for the same period, for unmanaged
market indexes such as the Dow Jones Industrial Average,
Standard & Poor s 500 IndexTM, Shearson Lehman Bond Indexes,
Merrill Lynch Bond Indexes, Bond Buyer Index, and from
recognized independent sources such as Donoghue s Money Fund
Report, Donoghue Money Letter, Bank Rate Monitor, Money
Magazine, Forbes, Lipper, Standard & Poor's Corporation, CDA
Investment Technologies, Inc. ("CDA"), Wiesenberger Investment
Companies Service, Mutual Fund Values, Mutual Fund Forecaster,
Mutual Fund Sourcebook, Fortune, Business Week, Changing
Times, Wall Street Journal, Investor's Daily and Schabacker
Investment Management, Inc. Comparisons may also be made to
Consumer Price Index, rate of inflation, bank money market
rates, rates of certificates of deposit, Treasury Bills and
Treasury Bond rates and yields.
CALCULATION OF YIELD QUOTATION
The Fund s daily annualized yield is calculated by multiplying
the total dollar amount of dividends declared by the Fund by
365 days and dividing the results by the net assets of the
Fund. The total amount of dividends earned is equal to the
earnings realized on the investment securities held by the
Fund less management fees and a provision for ordinary
expenses.
AUDITORS AND FINANCIAL
<PAGE> 8
<PAGE>
Deloitte & Touche LLP, independent certified public
accountants, are the auditors of the Fund. The Fund
incorporates by reference in this statement of additional
information the financial statements and notes contained in
its annual report to the shareholders for the year ended
December 31, 1994.
<PAGE> 9
<PAGE>
CURRENT STATEMENT OF ADDITIONAL INFORMATION
OF THE RUSHMORE MONEY MARKET PORTFOLIO,
DATED JANUARY 1, 1996
<PAGE>
<PAGE>
THE RUSHMORE FUND, INC.
RUSHMORE MONEY MARKET PORTFOLIO
4922 Fairmont Avenue, Bethesda, Maryland 20814
(301) 657-1517 (800) 621-7874
STATEMENT OF ADDITIONAL INFORMATION
The Rushmore Money Market Portfolio (the "Portfolio") is one
of a series of portfolios in The Rushmore Fund, Inc. (the
"Fund"), an open-end management investment company. The
objective of the Portfolio is to provide investors with
maximum current income to the extent that such investment is
consistent with safety of principal. To attain this
investment objective, the Portfolio will invest in U.S.
Government and agency securities, bank money market
instruments, and commercial paper.
This Statement of Additional Information is not a Prospectus.
It should be read in conjunction with the Portfolio's
Prospectus, dated January 1, 1996. A copy of the Prospectus
may be obtained without charge by writing or telephoning the
Fund.
The date of this Statement of Additional Information is
January 1, 1996.
<PAGE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Cross Reference to Related
Item in Prospectus
Page in
Statement of Page in
Addition Prospectus
Information
<S> <C> <C>
Investment Policies 3 1,4
Investment Restrictions 3 4
Management of the Fund 4 9
Principal Holders of 6 --
Securities
Net Asset Value 6 8
Calculation of Yield and 8 4
Return Quotations
Dividends, Distributions, 8 8
and Taxes
Auditors and Custodian 9 10
Financial Statements 9 3
</TABLE>
<PAGE> 2
<PAGE>
INVESTMENT POLICIES
Lending of Securities
Subject to the investment restrictions set forth below, the
Portfolio may lend portfolio securities to brokers, dealers,
and financial institutions, provided that cash equal to at
least 100% of the market value of the securities loaned is
deposited by the borrower with the Portfolio and is maintained
each business day in a segregated account pursuant to
applicable regulations. While such securities are on loan,
the borrower will pay the Portfolio any income accruing
thereon, and the Portfolio may invest the cash collateral in
portfolio securities, thereby earning additional income. The
Portfolio will not lend its portfolio securities if such loans
are not permitted by the laws or regulations of any state in
which the Portfolio shares are qualified for sale, and the
Portfolio will not lend more than 33-1/3% of the value of the
Portfolio's total assets. Loans would be subject to
termination by the Portfolio on four business days' notice, or
by the borrower on one day's notice. Borrowed securities must
be returned when the loan is terminated. Any gain or loss in
the market price of the borrowed securities which occurs
during the term of the loan inures to the lending Portfolio
and that Portfolio's shareholders. The Portfolio may pay
reasonable finders, borrowers, administrative, and custodial
fees in connection with a loan.
Portfolio Transactions
The Portfolio's securities are normally purchased on a net
basis which does not involve payment of brokerage commissions.
INVESTMENT RESTRICTIONS
The following investment restrictions supplement those set
forth in the Portfolio's Prospectus. These restrictions are
fundamental and may not be changed without prior approval of a
majority of the Portfolio's outstanding voting shares. As
defined in the Investment Company Act of 1940, as amended, the
term "majority" means the vote of the lesser of (a) 67% of the
shares of the Portfolio at a meeting where more than 50% of
the outstanding shares are present in person or by proxy; or
(b) more than 50% of the outstanding shares of the Portfolio.
<PAGE> 3
<PAGE>
The Portfolio may not:
1. borrow money except as a temporary measure to facilitate
redemptions. Such borrowing may be in an amount not to
exceed 30% of the Portfolio's total assets, taken at
current value, before such borrowing. The Portfolio may
not purchase an investment security if a borrowing by the
Portfolio is outstanding.
2. make loans except through repurchase agreements and
through the lending of portfolio securities provided the
borrower maintains collateral equal to at least 100% of
the value of the borrowed security, and marked to market
daily.
3. underwrite securities of any other issuer.
4. purchase or sell real estate, including limited
partnership interests.
5. purchase or sell restricted securities or warrants, nor
may it issue senior securities.
6. purchase any security whereby it would account for more
than 10% of any issuer's outstanding shares.
7. purchase securities of any issuer if, as a result of such
a purchase, such securities would account for more than
5%, (as defined by Section 5 (b)(1) of the Investment
Company Act of 1940), of the Fund's assets. There is no
limitation, however, as to investments issued or
guaranteed by the United States Government, its agencies
or instrumentalities, or in obligations of the United
States Government, its agencies or instrumentalities,
which are purchased in accordance with the Fund's
investment objective and policies.
8. purchase or sell commodities or commodities contracts.
9. concentrate more than 25% of its assets in any one
industry.
The following restrictions have been adopted by the Fund for
the Portfolio but are not considered fundamental and may be
changed by the Board of Directors of the Fund.
<PAGE> 4
<PAGE>
The Portfolio may not:
1. invest in companies for the purpose of exercising
management or control.
2. purchase more than 10% of the voting securities of any
one issuer, or more than 10% of the securities of any
class of any one issuer.
3. purchase or hold the securities of any issuer if those
officers or directors of the Fund, or of Money Management
Associates, who individually own beneficially more than
0.5% of the outstanding securities of the issuer,
together own beneficially more than 5% of those
securities.
4. invest in securities of other investment companies,
except at customary brokerage commission rates or in
connection with mergers, consolidations or offers of
exchange.
5. purchase the securities of companies which, including
predecessors, have a record of less than three years
continuous operation if, as a result, more than 5% of the
market value of the Portfolio's assets would be invested
in such companies.
6. invest more than 10% of their assets in illiquid
securities.
7. invest in oil, gas or other mineral leases.
8. issue shares for other than cash.
MANAGEMENT OF THE FUND
The names and addresses of the directors and officers of the
Fund and officers of the Fund's Adviser, Money Management
Associates (the "Adviser"), together with information as to
their principal business occupations during the past five
years, are set forth below. Fees and expenses for non-
interested directors will be paid by the Fund.
<PAGE> 5
<PAGE>
*Daniel L. O'Connor, 53 - Chairman of the Board of Directors,
President, and Treasurer of the Fund. General Partner and
Chief Operating Officer of the Adviser. Address: 1001 Grand
Isle Way, Palm Beach Gardens, Florida 33418.
*Richard J. Garvey, 62 - Director of the Fund. Limited
Partner of the Adviser. Address: 4922 Fairmont Avenue,
Bethesda, Maryland 20814.
Jeffrey R. Ellis, 51 - Director of the Fund. Vice President,
LottoFone, Inc., a telephone state lottery service, since
1993. Vice President Shoppers Express, Inc. 1988-1992.
Address: 513 Kerry Lane, Virginia Beach, Virginia 23451.
Bruce C. Ellis, 51 - Director of the Fund. Vice President,
LottoPhone, Inc., a telephone state lottery service, since
1991. Vice President, Shoppers Express, Inc. 1986-1992.
Address: 7108 Heathwood Court Bethesda, Maryland 20817.
Patrick F. Noonan, 53 - Director of the Fund. Chairman and
Chief Executive Officer of the Conservation Fund since 1986.
Vice Chairman, American Farmland Trust and Trustee, American
Conservation Association since 1985. President, Conservation
Resources, Inc. since 1981. Address: 11901 Glen Mill Drive,
Potomac, Maryland 20854.
Michael D. Lange, 54 - Director of the Fund. Vice President,
Capital Hill Management Corporation since 1967. Owner of
Michael D. Lange, Ltd., a builder and developer since 1980.
Partner of Greatfull Falls, a building developer since 1994.
Address: 7521 Pepperell Drive, Bethesda, Maryland 20817.
Leo Seybold, 80 - Director of the Fund. Retired. Address:
5804 Rockmere Drive, Bethesda, Maryland 20816.
*Rita A. Gardner, 52 - Director of the Fund. Limited Partner
of the Adviser. Vice President and Director of MMA Services,
Inc. until 1993. Address: 4922 Fairmont Avenue, Bethesda,
Maryland 20814.
Timothy N. Coakley, CPA, 28 - Controller. Audit Manager,
Deloitte & Touche LLP, until 1994. Address: 4922 Fairmont
Avenue, Bethesda, Maryland 20814.
Stephenie E. Adams, 26 - Secretary. Director of Marketing,
Rushmore Services, Inc., from July 1994 to present. Regional
Sales Coordinator, Media General Cable, from June 1993 to June
<PAGE> 6
<PAGE>
1994. Graduate Student, Northwestern University, M.S., from
September 1991 to December 1992. Student, Stephens College,
Columbia, Missouri, B.S., from August 1987 to May 1991.
Address: 4922 Fairmont Avenue, Bethesda, Maryland 20814.
* Indicates interested person as defined in the Investment
Company Act of 1940.
Certain Directors and Officers of the Fund are also Directors
and Officers of Fund for Government Investors, Inc., Fund for
Tax-Free Investors, Inc., and American Gas Index Fund, Inc.,
other investment companies that are managed by the Adviser.
The Adviser, Money Management Associates, which has its office
at 1001 Grand Isle Way, Palm Beach Gardens, Florida 33418,
provides the Fund with investment advisory services. The
Adviser is a limited partnership which was formed under the
laws of the District of Columbia on August 15, 1974. Its
primary business since inception has been to serve as the
Investment Adviser to Fund for Government Investors, Inc.,
Fund for Tax-Free Investors, Inc.. The Rushmore Fund, Inc.,
and the American Gas Index Fund, Inc. Daniel L. O'Connor is
the sole general partner of the Adviser, and, as such,
exercises control thereof.
Under an Investment Advisory Agreement with the Adviser, dated
October 10, 1985 (the "Agreement"), the Adviser provides
investment advice to the Fund and oversees its day-to-day
operations, subject to direction and control by the Fund's
Board of Directors. Pursuant to the Agreement, the Fund pays
the Adviser a fee at an annual rate based on 0.50% of the net
assets of the Fund. Normal expenses which are borne by the
Fund, include, but are not limited to, taxes, corporate fees,
federal and state registration fees, interest expenses (if
any), office expenses, the costs incident to preparing,
registering and redeeming stock certificates for shareholders,
custodian charges, the expenses of shareholders' and
directors' meetings, data processing, preparation, printing
and distribution of all reports and proxy materials, legal
services rendered to the Fund, compensation for those
directors who do not serve as employees of the Adviser,
insurance coverage for the Fund and its directors and
officers, and its membership in trade associations. The
Adviser will pay the costs of office space. The Adviser may,
from its own resources, including profits from advisory fees
received from the Fund provided such fees are legitimate and
not excessive, make payments to broker-dealers and other
financial institutions for their expenses in connection with
the distribution of Fund shares.
<PAGE> 7
<PAGE>
For the fiscal years ended August 31, 1995, 1994, and 1993,
the Portfolio paid advisory fees to the Adviser of
approximately $111,227, $156,752, and $314,296, respectively.
Under an Agreement dated September 1, 1993, Rushmore Trust and
Savings, FSB ("RTS"), 4922 Fairmont Avenue, Bethesda, Maryland
20814, a majority-owned subsidiary of the Adviser, provides
transfer agency, dividend-disbursing and administrative
services to the Fund. The services of RTS are provided to the
Fund on a fee basis and are paid by the Fund. RTS will charge
an annual fee of 25 basis points (0.25%) of the average daily
net assets of the Portfolio. The non-interested directors of
the Fund have reviewed the fee structure and determined that
it is competitive and in the best interest of the shareholders
of the Fund. The fees will be reviewed and approved annually
by the non-interested directors. The Fund is subject to the
self-custodian rules of the Securities and Exchange
Commission. These rules require that the Custodian be subject
to three securities verification examinations each year
conducted by the Fund's independent accountant. Two of the
examinations must be performed on an unannounced surprise
basis.
PRINCIPAL HOLDERS OF SECURITIES
On December 8, 1995, there were 24,781,866 shares of the
Portfolio outstanding. Rushmore Trust and Savings, FSB held,
for the benefit of others, 5.07% of the Portfolio shares.
Officers and Directors of the Fund, as a group, own less than
1% of the shares outstanding.
NET ASSET VALUE
The net asset value of the Portfolio's shares will be
determined daily as of 4:00 P.M., Eastern time, except on
customary national business holidays which result in the
closing of the New York Stock Exchange, and weekends.
The Portfolio will utilize the amortized cost method in
valuing its portfolio securities for purposes of determining
the net asset value of the shares of the Portfolio. The
Portfolio will utilize the amortized cost method in valuing
its portfolio securities even though the portfolio securities
may increase or decrease in market value, generally, in
connection with changes in interest rates. The amortized cost
<PAGE> 8
<PAGE>
method of valuation involves valuing a security at its cost
adjusted by a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. While
this method provides certainty in valuation, this method may
result in periods during which value, as determined by
amortized cost, is higher or lower than the price the
Portfolio would receive if the Portfolio sold the instrument.
During such periods, the yield to investors in the Portfolio
may differ somewhat from that obtained in a similar company
which uses mark-to-market values for all its portfolio
securities. For example, if the use of amortized cost
resulted in a lower (higher) aggregate portfolio value on a
particular day, a prospective investor in the Portfolio would
be able to obtain a somewhat higher (lower) yield than would
result from investment in such a similar company and existing
investors would receive less (more) investment income. The
purpose of this method of calculation is to facilitate the
maintenance of a constant net asset value per share of $1.00.
The Portfolio's use of the amortized cost method to value its
portfolio securities and the maintenance of the per share net
asset value of $1.00 is permitted pursuant to Rule 2a-7 under
the 1940 Act (the "Rule"), and is conditioned on the
Portfolio's compliance with various conditions including: (a)
the Board is obligated, as a particular responsibility within
the overall duty of care owed to the Portfolio's shareholders,
to establish written procedures reasonably designed, taking
into account current market conditions and the Portfolio's
investment objectives, to stabilize the net asset value per
share as computed for the purpose of distribution and
redemption at $1.00 per share; (b) the procedures should
provide for (i) the calculation, at such intervals as the
Board determines are appropriate and as are reasonable in
light of current market conditions, of the deviation, if any,
between net asset value per share using amortized cost to
value portfolio securities and net asset value per share based
upon available market quotations with respect to such
portfolio securities; (ii) the periodic review by the Board of
the amount of deviation as well as methods used to calculate
the amount of deviation; and (iii) the maintenance of written
records of the procedures, the Board's considerations made
pursuant to the procedures and any actions taken upon such
considerations; (c) the Board should consider what steps
should be taken, if any, in the event of a difference of more
than 1/2 of 1% between the two methods of valuation; and (d)
the Board should take such action as the Board deems
appropriate (such as shortening the average portfolio
maturity, realizing gains or losses, or, as provided by the
Articles of Incorporation, reducing the number of the
outstanding shares of the Portfolio) to eliminate or reduce to
<PAGE> 9
<PAGE>
the extent reasonably practicable material dilution or other
unfair results to investors or existing shareholders. Any
reduction of outstanding shares will be effected by having
each shareholder proportionately contribute to the Portfolio's
capital the shares necessary to eliminate or reduce the
material dilution or other unfair results to investors or
existing shareholders. Each shareholder will be deemed to
have agreed to such contribution in these circumstances by
investment in the Portfolio.
The Rule further requires that the Portfolio limits its
investments to U.S. dollar-denominated instruments which the
Board determines present minimal credit risks and which are
Eligible Securities (as defined below). The Rule also
requires the Portfolio to maintain a dollar-weighted average
portfolio maturity (not more than 90 days) appropriate to the
Portfolio's objective of maintaining a stable net asset value
of $1.00 per share and precludes the purchase of any
instrument with a remaining maturity of more than thirteen
months. Should the disposition of a portfolio security result
in a dollar-weighted average portfolio maturity of more than
90 days, the Portfolio would be required to invest its
available cash in such a manner as to reduce such maturity to
90 days or less as soon as reasonably practicable.
Generally, for purposes of the procedures adopted under the
Rule, the maturity of a portfolio instrument is deemed to be
the period remaining (calculated from the trade date or such
other date on which the Portfolio's interest in the instrument
is subject to market action) until the date noted on the face
of the instrument as the date on which the principal amount
must be paid, or, in the case of an instrument called for
redemption, the date on which the redemption payment must be
made.
A variable rate obligation that is subject to a demand feature
is deemed to have a maturity equal to the longer of the period
remaining until the next readjustment of the interest rate or
the period remaining until the principal amount can be
recovered through demand. A floating rate instrument that is
subject to a demand feature is deemed to have a maturity equal
to the period remaining until the principal amount can be
recovered through demand.
An Eligible Security is defined in the Rule to mean a security
which: (a) has a remaining maturity of thirteen months or
less; (b) either (i) is rated in the two highest short-term
rating categories by any two nationally-recognized statistical
rating organizations ("NRSROs") that have issued a short-term
rating with respect to the security or class of debt
<PAGE> 10
<PAGE>
obligations of the issuer, or (ii) if only one NRSRO has
issued a short-term rating with respect to the security, then
by that NRSRO; (c) was a long-term security at the time of
issuance whose issuer has outstanding a short-term debt
obligation which is comparable in priority and security and
has a rating as specified in clause (b) above; or (d) if no
rating is assigned by any NRSRO as provided in clauses (b) and
(c) above, the unrated security is determined by the Board to
be of comparable quality to any such rated security.
As permitted by the Rule, the Board has delegated to the
Fund's Adviser, subject to the Board's oversight pursuant to
guidelines and procedures adopted by the Board, the authority
to determine which securities present minimal credit risks and
which unrated securities are comparable in quality to rated
securities.
If the Board determines that it is no longer in the best
interests of the Portfolio and its shareholders to maintain a
stable price of $1.00 per share, or if the Board believes that
maintaining such price no longer reflects a market-based net
asset value per share, the Board has the right to change from
an amortized cost basis of valuation to valuation based on
market quotations. The Portfolio will notify shareholders of
any such change.
The Portfolio will manage its portfolio in an effort to
maintain a constant $1.00 per share price, but the Portfolio
cannot assure that the value of the Portfolio's shares will
never deviate from this price. Since dividends from net
investment income (and net short-term capital gains, if any)
are declared and accrued on a daily basis, the net asset value
per share, under ordinary circumstances, is likely to remain
constant. Otherwise, realized and unrealized gains and losses
will not be distributed on a daily basis but will be reflected
in the Portfolio's net asset value. The amounts of such gains
and losses will be considered by the Board in determining the
action to be taken to maintain the Fund's $1.00 per share net
asset value. Such action may include distribution at any time
of part or all of the then-accumulated undistributed net
realized capital gains, or reduction or elimination of daily
dividends by an amount equal to part or all of the then-
accumulated net realized capital losses. However, if realized
losses should exceed the sum of net investment income plus
realized gains on any day, the net asset value per share on
that day might decline below $1.00 per share. In such
circumstances, the Portfolio may reduce or eliminate the
payment of daily dividends for a period of time in an effort
to restore the Fund's $1.00 per share net asset value. A
decline in prices of securities could result in significant
<PAGE> 11
<PAGE>
unrealized depreciation on a mark-to-market basis. Under
these circumstances the Portfolio may reduce or eliminate the
payment of dividends, and utilize a net asset value per share
as determined by using available market quotations, or reduce
the number of its shares outstanding.
CALCULATION OF YIELD AND RETURN QUOTATIONS
The Portfolio's annualized current yield, as may be quoted
from time to time in advertisements and other communications
to shareholders and potential investors, is computed by
determining, for a stated seven-day period, the net change,
exclusive of capital changes and including the value of
additional shares purchased with dividends and any dividends
declared therefrom (which reflect deductions of all expenses
of the Portfolio such as management fees), in the value of a
hypothetical pre-existing account having a balance of one
share at the beginning of the period, and dividing the
difference by the value of the account at the beginning of the
base period to obtain the base period return, and then
multiplying the base period return by (365/7).
The Portfolio's annualized effective yield, as may be quoted
from time to time in advertisements and other communications
to shareholders and potential investors, is computed by
determining (for the same stated seven-day period as the
current yield), the net change, exclusive of capital changes
and including the value of additional shares purchased with
dividends and any dividends declared therefrom (which reflect
deductions of all expenses of the Portfolio such as management
fees), in the value of a hypothetical pre-existing account
having a balance of one share at the beginning of the period,
and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return,
and then compounding the base period return by adding 1,
raising the sum to a power equal to 365 divided by 7, and
subtracting 1 from the result.
The yields quoted in any advertisement or other communication
should not be considered a representation of the yields of the
Portfolio in the future since the yield is not fixed. Actual
yields will depend not only on the type, quality, and
maturities of the investments held by Portfolio and changes in
interest rates on such investments, but also on changes in the
Portfolio's expenses during the period.
Yield information may be useful in reviewing the performance
of the Portfolio and for providing a basis for comparison with
<PAGE> 12
<PAGE>
other investment alternatives. However, unlike bank deposits
or other investments which typically pay a fixed yield for a
stated period of time, the Portfolio's yield fluctuates.
DIVIDENDS, DISTRIBUTIONS, AND TAXES
Dividends and Distributions. As discussed in the Prospectus,
the Portfolio intends to declare dividends daily from net
investment income (and net short-term capital gains, if any)
and distribute such dividends monthly. Net income, for
dividend purposes, includes accrued interest and amortization
of original issue and market discount, plus or minus any
short-term gains or losses realized on sales of portfolio
securities, less the amortization of market premium and the
estimated expenses of the Portfolio. Net income will be
calculated immediately prior to the determination of net asset
value per share of the Portfolio.
The Board may revise the dividend policy, or postpone the
payment of dividends, if the Portfolio should have or
anticipate any large unexpected expense, loss, or fluctuation
in net assets which, in the opinion of the Board, might have a
significant adverse effect on shareholders. On occasion, in
order to maintain a constant $1.00 per share net asset value,
the Board may direct that the number of outstanding shares be
reduced in each shareholder's account. Such reduction may
result in taxable income to a shareholder in excess of the net
increase (i.e., dividends, less such reduction), if any, in
the shareholder's account for a period of time. Furthermore,
such reduction may be realized as a capital loss when the
shares are liquidated.
Taxes. The Portfolio intends to qualify as a regulated
investment company under Subchapter M of the U.S. Internal
Revenue Code of 1986, as amended. If so qualified, the
Portfolio will not be subject to Federal income taxes,
provided that the Portfolio distributes all of the Portfolio's
taxable net investment income and all of the Portfolio's net
realized gains.
Shareholders will be subject to Federal income tax on
dividends paid from interest income derived from taxable
securities and on distributions of realized net short-term
capital gains. Interest and realized net short-term capital
gains distributions are taxable to the shareholder as ordinary
dividend income regardless of whether the shareholder receives
such distributions in additional shares or in cash. Since the
Portfolio's income is expected to be derived entirely from
<PAGE> 13
<PAGE>
interest rather than dividends, none of such distributions
will be eligible for the Federal dividends received deduction
available to corporations.
The Portfolio may be subject to tax or taxes in certain states
where the Portfolio does business. Furthermore, in those
states which have income tax laws, the tax treatment of the
Portfolio and of Portfolio shareholders with respect to
distributions by the Portfolio may differ from Federal tax
treatment.
Shareholders are urged to consult their own tax advisers
regarding specific questions as to Federal, state or local
taxes.
<PAGE> 14
<PAGE>
AUDITORS AND CUSTODIAN
Deloitte & Touche LLP, independent certified public
accountants, are the auditors of the Portfolio. Rushmore Trust
and Savings, FSB, Bethesda, Maryland acts as custodian bank
for the Portfolio.
FINANCIAL STATEMENTS
The Portfolio incorporates by reference in this Statement of
Additional Information the financial statements and notes
contained in its annual report to the shareholders for the
year ended August 31, 1995, which must accompany this
Statement of Additional Information.
<PAGE> 15
<PAGE>
CURRENT ANNUAL REPORT OF
FUND FOR GOVERNMENT INVESTORS, INC.,
FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1994
<PAGE>
<PAGE>
Fund for Government Investors, Inc.
A MONEY MARKET FUND
Annual Report
December 31, 1994
Dear Shareholders:
Fund for Government Investors, Inc. ended the year with net
assets of $524.2 million on December 31, 1994. Net income
averaged 3.31% of net assets for the year, up from 2.32% for
the 1993 calendar year. The increase in the return on net
assets is due to an increase in short-term interest rates
during 1994.
The Federal Reserve raised short-term rates six times in 1994.
It increased the federal-funds rate from 3.00% to 5.50% and
the discount rate from 3.00% to 4.75%. The federal funds rate
is the level at which banks lend each other money overnight,
while the discount rate is the rate at which the Federal
Reserve lends banks money. In the last move of 1994, the
Federal Reserve raised both the federal funds rate and the
discount rate each by three-quarters of a percentage point.
Through rate increases, the Federal Reserve endeavors to slow
inflation and temper economic growth. There is little
question that the Federal Reserve will continue to push short-
term interest rates higher until the economy shows clear signs
of decelerating. We look for rates to continue to rise in
early 1995.
Going forward, Fund for Government Investors, Inc. will
continue its conservative investment philosophy. The Fund has
not, nor will it invest in derivatives; safety of assets will
continue to be of primary concern. We are here to serve you
and will always strive to merit your support.
/s/Daniel L. O'Connor /s/Richard J. Garvey
Daniel L. O'Connor Richard J. Garvey
Chairman of the Board President
<PAGE>
<PAGE>
FUND FOR GOVERNMENT INVESTORS, INC.
STATEMENT OF NET ASSETS
December 31, 1994
<TABLE>
<CAPTION>
PAYABLE AT MATURITY YIELD AT DATE OF VALUE*
MATURITY DATE PURCHASE(%) (NOTE 1)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
UNITED STATES TREASURY BILLS
<S> <C> <C> <C>
$ 50,000,000 ......January 5, 1995 ........... 5.08 ...........$49,972,528
50,000,000 ......January 12, 1995 ........... 5.03 ........... 49,925,101
50,000,000 ......January 19, 1995 ........... 5.06 ........... 49,876,813
25,000,000 ......January 26, 1995 ........... 5.19 ........... 24,912,326
75,000,000 .....February 2, 1995 ........... 5.25 ........... 74,658,556
25,000,000 .....February 9, 1995 ........... 5.38 ........... 24,858,219
34,781,032 .....February 16, 1995 ........... 4.82 ........... 34,572,066
25,000,000 ........March 2, 1995 ........... 5.55 ........... 24,775,208
50,000,000 ........March 9, 1995 ........... 5.92 ........... 49,464,465
50,000,000 ........March 16, 1995 ........... 5.90 ........... 49,410,569
60,000,000 ........March 23, 1995 ........... 5.68 ........... 59,254,744
25,000,000 ........March 30, 1995 ........... 5.66 ........... 24,663,155
$519,781,032 Total Investments -- 98.5% 516,343,750
(original cost $513,101,619*)
Other Assets less Liabilities -- 1.5% 7,809,804
Net Assets -- 100.0% $524,153,554
Net Asset value per share
(Based on 524,153,554
shares outstanding) $1.00
</TABLE>
<PAGE> -2-
<PAGE>
*Same cost is used for Federal income tax purposes.
Weighted Average Maturity of Portfolio: 45 Days
See Notes to Financial Statements.
<PAGE> -3-
<PAGE>
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1994
<TABLE>
<CAPTION>
<S> <C>
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS:
INVESTMENT INCOME (Note 1) $22,534,859
EXPENSES
Investment Advisory Fee (Note 2) $2,754,339
Administrative Fee (Note 2) 1,391,300
4,145,639
NET INVESTMENT INCOME $18,389,220
</TABLE>
See Notes to Financial Statements.
<PAGE> -4-
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
For the Year Ended December 31,
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS
AND DECLARED AS DIVIDENDS TO
SHAREHOLDERS (Note 1).. $18,389,220 $15,342,118
FROM SHARE TRANSACTIONS
(at constant net asset value of $1)
Shares Purchased........ $2,391,380,226 $3,052,160,291
Dividends Reinvested...... 17,600,081 14,189,726
Total.................... 2,408,980,307 3,066,350,017
Shares Redeemed................. (2,485,592,551) (3,217,509,437)
Decrease in Net Assets. (76,612,244) (151,159,420)
NET ASSETS - Beginning of Year 600,765,798 751,925,218
NET ASSETS - End of Year 524,153,554 $600,765,798
</TABLE>
See Notes to Financial Statements.
<PAGE> -5-
<PAGE>
FINANCIAL HIGHLIGHTS
For the Year Ended December 31,
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value -
Beginning of Year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment
Income 0.033 0.023 0.030 0.053 0.071
Net Realized and
Unrealized Gains
on Securities --- --- --- --- ---
Net Increase in Net
Asset Value
Resulting from
Operations 0.033 0.023 0.030 0.053 0.071
Dividends to
Shareholders (0.033) (0.023) (0.030) (0.053) (0.071)
Distributions to
Shareholders from
Net Realized
Capital Gains --- --- --- --- ---
Net Increase in Net
Asset Value 0.00 0.00 0.00 0.00 0.00
Net Asset Value - End
of Year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Investment Return 3.38% 2.37% 3.02% 5.38% 7.38%
Ratios to Average Net
Assets:
Expenses 0.75% 0.75% 0.71% 0.69% 0.71%
Net Investment
Income 3.31% 2.32% 3.00% 5.29% 7.13%
Supplementary Data:
<PAGE> -6-
<PAGE>
Portfolio Turnover
Rate --- --- --- --- ---
Number of Shares
Outstanding at End
of Year (000 s
omitted) 524,154 600,766 751,925 796,655 857,418
</TABLE>
See Notes to Financial Statements.
<PAGE> -7-
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
1. SIGNIFICANT ACCOUNTING POLICIES
Fund for Government Investors, Inc. is registered with the
Securities and Exchange Commission under the Investment
Company Act of 1940 and invests only in U.S. Government
Securities. The following is a summary of significant
accounting policies which the Fund consistently follows:
(a) Investments are valued at amortized cost, which
approximates market value. Amortized cost is the
purchase price of the security plus accumulated
discount or minus amortized premium from the date of
purchase.
(b) Investment income is recorded as earned.
(c) Net investment income is computed, and dividends are
declared daily. Dividends are paid monthly and
reinvested in additional shares unless shareholders
request payment.
(d) The Fund complies with the provisions of the
Internal Revenue Code applicable to regulated
investment companies and distributes all net
investment income to its shareholders. Therefore,
no Federal income tax provision is required.
(e) The Fund periodically purchases United States
Treasury Notes and at the same time makes
commitments to sell the same notes at specified
future dates and prices. At December 31, 1994, no
such commitments were outstanding.
2. INVESTMENT ADVISER AND SHAREHOLDER SERVICING AGENT
Investment advisory and management services are provided by
Money Management Associates under an agreement whereby the
Fund pays a fee at an annual rate based on the Fund s net
assets as follows: .50% of the first $500 million; .45% of
the next $250 million; .40% of the next $250 million; and .35%
of the net assets that exceed $1 billion.
Rushmore Trust & Savings, FSB, which is wholly owned by Money
Management Associates, provides custodial services, transfer
<PAGE> -8-
<PAGE>
agency, dividend disbursing and other shareholder services to
the Fund. Expenses of the Fund other than interest and
extraordinary legal expenses are paid by Rushmore Trust, which
is paid an administrative fee of .25% of average net assets.
<PAGE> -9-
<PAGE>
INDEPENDENT AUDITORS REPORT
The Shareholders and Board of Directors
of Fund for Government Investors, Inc.:
We have audited the statement of net assets of Fund for
Government Investors, Inc. (the Fund) as of December 31, 1994,
the related statements of operations for the year then ended
and of changes in net assets for the years ended December 31,
1994 and 1993, and the financial highlights for each of the
five years in the period ended December 31, 1994. These
financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned at December 31, 1994 by correspondence with
the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial
highlights present fairly, in all material respects, the net
assets of Fund for Government Investors, Inc. at December 31,
1994, the results of its operations, the changes in its net
assets, and the financial highlights for the respective stated
periods in conformity with generally accepted accounting
principles.
/S/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Washington, D.C.
February 6, 1995
<PAGE> -10-
<PAGE>
SEMI-ANNUAL REPORT OF
FUND FOR GOVERNMENT INVESTORS, INC.,
FOR THE SIX-MONTH PERIOD ENDED
JUNE 30, 1995
<PAGE>
<PAGE>
FUND FOR GOVERNMENT INVESTORS, INC.
A MONEY MARKET FUND
SEMI-ANNUAL REPORT
June 30, 1995
Dear Shareholders:
On June 30, 1995 Fund for Government Investors, Inc. net
assets were $579 million. Net income as a percentage of net
assets averaged 5.09% for the six months ended June 30, 1995,
up from 3.31% for the year ended December 31, 1994.
There has been a radical change in expectations concerning the
Federal Reserve's policy since the beginning of 1995. Early
in the year, it was expected the Federal Reserve would
continue with its dramatic raising of interest rates. That
view was supported in February, when the Fed increased the
Federal Fund's rate 50 basis points to 6%. Since then, a
steady stream of weak economic news has changed expectations
to a Fed easing. In July, the Federal Reserve did indeed cut
the Federal Fund's rate 25 basis points to 5 3/4%.
Looking to the remainder of the year, we expect mild growth in
the economy. There is little threat of recession since there
are no sector imbalances and interest rates have retreated
from their highs. This should limit the Federal Reserve on
interest rate cuts. However, we do look for one more rate cut
by year end.
Going forward, Fund for Government Investors, Inc. will
maintain its conservative investment philosophy, and as
always, safety of assets will be our primary concern. Thank
you for your continued support.
/s/ Daniel L. O'Connor /s/ Richard J. Garvey
Daniel L. O'Connor Richard J. Garvey
Chairman of the Board President
4922 Fairmont Avenue Bethesda, Maryland 20814 800-621-7874
301-657-1517
<PAGE>
<PAGE>
FUND FOR GOVERNMENT INVESTORS, INC.
STATEMENT OF NET ASSETS
June 30, 1995
<TABLE>
<CAPTION>
PAYABLE AT MATURITY YIELD AT DATE VALUE*
MATURITY DATE OF PURCHASE(%) (NOTE 1)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
UNITED STATES TREASURY BILLS
<S> <C> <C> <C>
$ 25,000,000 ........... July 6, 1995 ........... 5.92 ........... $
24,980,035
50,000,000 ........... July 13, 1995 ........... 5.86 ...........
49,905,000
25,000,000 ........... July 20, 1995 ........... 5.71 ...........
24,926,771
75,000,000 ..........August 3, 1995 ........... 5.88 ...........
74,606,521
50,000,000 ..........August 10, 1995 ........... 5.76 ...........
49,688,472
75,000,000 ..........August 17, 1995 ........... 5.87 ...........
74,441,712
53,000,000 ..........August 24, 1995 ........... 5.88 ...........
52,562,060
25,000,000 ..........August 31, 1995 ........... 5.80 ...........
24,761,295
75,000,000 .......September 7, 1995 ........... 5.58 ...........
74,232,638
50,000,000 .......September 14, 1995 ........... 5.73 ...........
49,420,313
50,000,000 .......September 21, 1995 ........... 5.60 ...........
49,379,305
25,000,000 .......September 28, 1995 ........... 5.34 ...........
24,670,113
$578,000,000 Total Investments -- 99.05%
(original cost $569,989,236*)
573,574,235
Other Assets less Liabilities -- 0.95%
5,510,003
<PAGE> -2-
<PAGE>
Net Assets -- 100.0%
$579,084,238
Net Asset value per share
(Based on 579,084,238
shares outstanding)
$1.00
</TABLE>
*Same value is used for Federal income tax purposes.
Weighted Average Maturity of Portfolio: 51 Days
See Notes to Financial Statements.
<PAGE> -3-
<PAGE>
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS:
INVESTMENT INCOME (Note 1)......................................... $15,442,916
EXPENSES
Investment Advisory Fee (Note 2)................... $1,315,156
Administrative Fee (Note 2)........................ 661,806 1,976,962
---------- -----------
NET INVESTMENT INCOME.............................................. $13,465,954
===========
</TABLE>
See Notes to Financial Statements.
<PAGE> -4-
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six Months Ended
June 30,
--------------------------------
1995 1994
--------------- ---------------
<S> <C> <C>
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS
AND DECLARED AS DIVIDENDS TO
SHAREHOLDERS (Note 1)......................... $ 13,465,954 $ 7,675,350
=============== ===============
FROM SHARE TRANSACTIONS
(at constant net asset value of $1)
Shares Purchased............................ $ 1,236,855,106 $ 1,263,499,971
Dividends Reinvested........................ 13,016,151 7,020,134
--------------- ---------------
Total....................................... 1,249,871,257 1,270,520,105
Shares Redeemed............................. (1,194,940,573)
(1,321,578,807)
--------------- ---------------
Increase (Decrease) in Net Assets........... 54,930,684
(51,058,702)
NET ASSETS - Beginning of Period.............. 524,153,554 600,765,798
--------------- ---------------
NET ASSETS - End of Period.................... $ 579,084,238 $ 549,707,096
=============== ===============
</TABLE>
See Notes to Financial Statements.
<PAGE> -5-
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the Six
Months Ended For the Year Ended December 31,
June 30, ----------------------------------
1995 1994 1993 1992 1991
------------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value -
Beginning of Period..... $1.00 $1.00 $1.00 $1.00 $1.00
------- ------- ------- ------- -------
Net Investment Income..... 0.025 0.033 0.023 0.030 0.053
Net Realized and
Unrealized Gains
on Securities............ ----- ----- ----- ----- -----
------- ------- ------- ------- -------
Net Increase in Net Asset
Value
Resulting from
Operations............... 0.025 0.033 0.023 0.030 0.053
Dividends to Shareholders. (0.025) (0.033) (0.023) (0.030)
(0.053)
Distributions to
Shareholders from
Net Realized Capital
Gains.................... ----- ----- ----- ----- -----
------- ------- ------- ------- -------
Net Increase in Net Asset
Value.................... 0.00 0.00 0.00 0.00 0.00
------- ------- ------- ------- -------
Net Asset Value - End of
Period................... $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= =======
Total Investment Return.... 5.13%A 3.38% 2.37% 3.02% 5.38%
Ratios to Average Net
Assets:
<PAGE> -6-
<PAGE>
Expenses.................. 0.75%A 0.75% 0.75% 0.71% 0.69%
Net Investment Income..... 5.09%A 3.31% 2.32% 3.00% 5.29%
Supplementary Data:
Portfolio Turnover Rate... ----- ----- ----- ----- -----
Number of Shares
Outstanding at
End of Period (000's
omitted)................. 579,084 524,154 600,766 751,925 796,655
</TABLE>
--------
A Annualized.
See Notes to Financial Statements.
<PAGE> -7-
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
1. SIGNIFICANT ACCOUNTING POLICIES
Fund for Government Investors, Inc. is registered with the
Securities and Exchange Commission under the Investment
Company Act of 1940 and invests only in U.S. Government
Securities. The following is a summary of significant
accounting policies which the Fund consistently follows:
(a) Investments are valued at amortized cost, which
approximates market value. Amortized cost is the
purchase price of the security plus accumulated
discount or minus amortized premium from the date of
purchase.
(b) Investment income is recorded as earned.
(c) Net investment income is computed, and dividends are
declared daily. Dividends are paid monthly and
reinvested in additional shares unless shareholders
request payment.
(d) The Fund complies with the provisions of the
Internal Revenue Code applicable to regulated
investment companies and distributes all net
investment income to its shareholders. Therefore, no
Federal income tax provision is required.
2. INVESTMENT ADVISER AND SHAREHOLDER SERVICING AGENT
Investment advisory and management services are provided by
Money Management Associates under an agreement whereby the
Fund pays a fee at an annual rate based on the Fund's net
assets as follows: 0.50% of the first $500 million; 0.45% of
the next $250 million; 0.40% of the next $250 million; and
0.35% of the net assets that exceed $1 billion. Certain
officers and Directors of the Fund are also officers and
Directors of Money Management Associates.
Rushmore Trust and Savings, FSB, which is wholly owned by
Money Management Associates, provides custodial services,
transfer agency, dividend disbursing and other shareholder
services to the Fund. Rushmore Trust is paid an
administrative fee of 0.25% of average net assets to cover the
<PAGE> -8-
<PAGE>
cost of these services as well as other expenses of the Fund
except for interest and extraordinary legal expenses.
<PAGE> -9-
<PAGE>
FUND
FOR
GOVERNMENT
INVESTORS
--------------------------------------------------------------
SEMIANNUAL REPORT
June 30, 1995
[LOGO OF RUSHMORE
APPEARS HERE]
<PAGE> -10-
<PAGE>
CURRENT ANNUAL REPORT OF
THE RUSHMORE FUND, INC.,
FOR THE FISCAL YEAR ENDED
AUGUST 31, 1995
<PAGE>
<PAGE>
ANNUAL REPORT, AUGUST 31, 1995
THE RUSHMORE FUND, INC.
4922 FAIRMONT AVENUE, BETHESDA, MARYLAND 20814
(800) 343-3355 (301) 657-1500
[LOGO OF RUSHMORE
APPEARS HERE]
--------------------------------------------------------------
Dear Shareholders:
In early 1994, the Federal Reserve began what was to be the
first of seven interest rate increases between February 1994
and February 1995, with the two most sizable increases of 75
and 50 basis points occurring in November 1994 and February
1995, respectively. Yet, the bear market environment of 1994
did not abate until late in the first quarter of 1995, when
the Fed's interest rate increases finally took hold and the
economy began to slow. The economic environment turned more
favorable for notes and bonds in the second quarter of 1995,
but was somewhat tempered by the weakening of the U.S. dollar.
Finally in July 1995 the Federal Reserve reduced rates 25
basis points, which marked a turning point for monetary policy
from one of restraint to one of accommodation.
RUSHMORE MONEY MARKET PORTFOLIO invests in the highest quality
commercial paper 81.70%, and U.S. Treasury repurchase
agreements 18.30%. The Portfolio had an average maturity of 17
days on August 31, 1995. For the fiscal year ended August 31,
1995, net income averaged 4.92% of net assets. We look for
short-term rates to have a market decline for the next few
months.
RUSHMORE U.S. GOVERNMENT INTERMEDIATE-TERM SECURITIES
PORTFOLIO invests primarily in the current ten-year Treasury
note. The objective of the Portfolio is to provide high
current income, while maintaining the safety of principal.
For the fiscal year ended August 31, 1995, the Portfolio
posted a total return
of 12.07%.
RUSHMORE U.S. GOVERNMENT LONG-TERM SECURITIES PORTFOLIO
invests in 10 and 30 year U.S. Treasury securities and, like
the Intermediate-Term Portfolio, strives to earn the highest
income possible while maintaining the safety of principal.
For the fiscal year ended August 31, 1995, the Portfolio
posted a total return of 16.35%.
<PAGE>
<PAGE>
The Federal Reserve, pleased that the economy looks
substantially healthier than in July when it cut interest
rates, will likely put further rate cuts on hold until at
least its next policy meeting in November 1995. The economy,
now operating close to full employment, can grow without an
acceleration of inflation. For the short-term, rates will stay
around present levels. Going forward, however, the situation
for notes and bonds is extremely attractive because of the
progress against inflation. For the balance of the calendar
year, we look for the economy to accelerate and rates to move
lower, this all being done quite possibly without further rate
cuts by the Federal Reserve.
We will continue our conservative investment philosophy and,
as always, thank you for your continued investment in The
Rushmore Fund, Inc.
Sincerely,
/s/ Daniel L. O'Connor /s/ Richard J. Garvey
Daniel L. O'Connor Richard J. Garvey
Chairman of the Board President
<PAGE> 2
<PAGE>
THE RUSHMORE FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 1995
<TABLE>
<CAPTION>
Face Value
Amount (Note 1)
<S> <C> <C>
COMMERCIAL PAPER 82.18%
Abbott Lab Co., 5.68%, 9/25/95........................ $1,000,000 $ 996,213
American Express Credit Corp., 5.70%, 9/05/95.......... 1,000,000 999,367
AT&T Corp., 5.70%, 9/27/95............................. 1,000,000 995,883
Chevron Oil Finance Co., 5.70%, 10/04/95............... 800,000 795,820
Dover Corp., 5.71%, 9/11/95............................ 1,000,000 998,414
Exxon Asset Management Corp., 5.70%, 9/14/95........... 1,000,000 997,942
Ford Motor Credit Co., 5.72%, 10/19/95................. 800,000 793,899
General Electric Capital Corp., 5.73%, 9/21/95......... 800,000 797,453
Heinz Co., 5.67%, 9/01/95.............................. 800,000 800,000
Kellogg Co., 5.70%, 9/18/95............................ 750,000 747,981
Merrill Lynch Co., 5.73%, 10/20/95..................... 800,000 793,761
Pepsi Co., 5.68%, 9/12/95.............................. 800,000 798,612
Philip Morris Co., 5.70%, 10/04/95..................... 800,000 795,820
Pitney Bowes Credit Corp., 5.72%, 9/15/95.............. 775,000 773,276
Raytheon Co., 5.70%, 9/21/95........................... 800,000 797,467
Safeco Credit Corp., 5.71%, 9/22/95.................... 800,000 797,335
Texaco, Inc., 5.68%, 9/01/95........................... 1,000,000 1,000,000
Transamerica Corp, 5.73%, 10/03/95..................... 1,000,000 994,907
United Parcel Service of America, Inc., 5.70%, 9/18/95. 800,000 797,847
US West Corp., 5.65%, 9/13/95.......................... 800,000 798,493
Xerox Corp., 5.70%, 9/26/95............................ 800,000 796,833
-----------
Total Commercial Paper (Cost $18,067,323).............. 18,067,323
-----------
REPURCHASE AGREEMENTS 18.41%
With Paine Webber at 5.75%, dated 8/31/95, due 9/1/95,
collateralized by
U.S. Treasury Notes, due 11/30/96 (Cost $4,047,622)... 4,047,622
<PAGE> 3
<PAGE>
-----------
Total Investments 100.59% (Cost $22,114,945*).......... 22,114,945
-----------
Other Liabilities in excess of Assets -0.59%........... (129,662)
-----------
Net Assets (Note 6) 100.00%............................ $21,985,283
===========
Net Asset Value Per Share (Based on 21,985,283 Shares
Outstanding).......................................... $ 1.00
===========
</TABLE>
*Same cost is used for Federal income tax purposes.
See Notes to Financial Statements.
<PAGE> 4
<PAGE>
THE RUSHMORE FUND, INC.
U.S. GOVERNMENT INTERMEDIATE-TERM SECURITIES PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 1995
<TABLE>
<CAPTION>
Face Value
Amount (Note 1)
---------- -----------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS 97.93%
U.S. Treasury Notes, 5.875%, 2/15/04.................... $8,900,000 $ 8,644,125
U.S. Treasury Notes, 7.875%, 11/15/04................... 300,000 331,500
U.S. Treasury Bonds, 7.50%, 2/15/05..................... 700,000 756,438
U.S. Treasury Notes, 6.50%, 5/15/05..................... 1,600,000 1,620,499
-----------
Total U.S. Treasury Obligations (Cost $10,950,968)...... 11,352,562
-----------
REPURCHASE AGREEMENTS 1.02%
With Paine Webber at 5.75%, dated 8/31/95, due 9/1/95,
collateralized by
U.S. Treasury Notes, due 11/30/96 (Cost $118,204)...... 118,204
-----------
Total Investments 98.95% (Cost $11,069,172*)............ 11,470,766
-----------
Other Assets Less Liabilities 1.05%..................... 122,079
-----------
Net Assets (Note 6) 100.00%............................. $11,592,845
===========
Net Asset Value Per Share (Based on 1,227,678 Shares
Outstanding)........................................... $ 9.44
===========
</TABLE>
* Same cost is used for Federal income tax purposes.
See Notes to Financial Statements.
<PAGE> 5
<PAGE>
THE RUSHMORE FUND, INC.
U.S. GOVERNMENT LONG-TERM SECURITIES PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 1995
<TABLE>
<CAPTION>
Face Value
Amount (Note 1)
---------- -----------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS 94.37%
U.S. Treasury Bonds, 8.00%, 11/15/21.................... $ 800,000 $ 917,749
U.S. Treasury Bonds, 7.50%, 11/15/24.................... 7,400,000 8,112,250
U.S. Treasury Bonds, 7.625%, 2/15/25.................... 4,850,000 5,409,263
U.S. Treasury Bonds, 6.875%, 8/15/25.................... 1,000,000 1,029,062
-----------
Total U.S. Treasury Obligations (Cost $14,301,989)...... 15,468,324
-----------
REPURCHASE AGREEMENTS 4.43%
With Paine Webber at 5.75%, dated 8/31/95, due 9/1/95,
collateralized by
U.S. Treasury Notes, due 11/30/96 (Cost $725,055)...... 725,055
-----------
Total Investments 98.80% (Cost $15,027,044*)............ 16,193,379
-----------
Other Assets Less Liabilities 1.20%..................... 197,327
-----------
Net Assets (Note 6) 100.00%............................. $16,390,706
===========
Net Asset Value Per Share (Based on 1,657,846 Shares
Outstanding)........................................... $ 9.89
===========
</TABLE>
* Same cost is used for Federal income tax purposes.
See Notes to Financial Statements.
<PAGE> 6
<PAGE>
THE RUSHMORE FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1995
<TABLE>
<CAPTION>
U.S. Government U.S. Government
Intermediate-Term Long-Term
Money Market Securities Securities
Portfolio Portfolio Portfolio
------------ ----------------- ---------------
<S> <C> <C> <C>
INVESTMENT INCOME (Note 1)...... $1,260,190 $ 784,865 $2,029,836
---------- ---------- ----------
EXPENSES
Investment Advisory Fee (Note
2)............................ 111,227 55,386 134,573
Administrative Fee (Note 2).... 55,614 33,231 80,744
---------- ---------- ----------
Total Expenses................ 166,841 88,617 215,317
---------- ---------- ----------
NET INVESTMENT INCOME........... 1,093,349 696,248 1,814,519
---------- ---------- ----------
Net Realized Loss on
Investments................... -- (233,727) (162,740)
Net Change in Unrealized
Appreciation of Investments... -- 652,352 1,939,775
---------- ---------- ----------
NET GAIN ON INVESTMENTS......... -- 418,625 1,777,035
---------- ---------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS...... $1,093,349 $1,114,873 $3,591,554
========== ========== ==========
</TABLE>
See Notes to Financial Statements.
<PAGE> 7
<PAGE>
THE RUSHMORE FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED AUGUST 31,
<TABLE>
<CAPTION>
Money Market
Portfolio
1995 1994
----------- ------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Income.. $ 1,093,349 $ 884,972
Net Realized Losses on Investment
Transactions.......... -- --
Net Change in Unrealized
Appreciation (Depreciation) of
Investments........... -- --
----------- ------------
Net Increase (Decrease) in Net Assets
Resulting from Operations............ 1,093,349 884,972
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income................ (1,093,349) (895,876)
From Realized Gains on Investments........... -- --
FROM SHARE TRANSACTIONS (Note 4)............... (275,242) (34,498,161)
----------- ------------
Net Increase (Decrease) in Net Assets......... (275,242) (34,509,065)
NET ASSETS--Beginning of Year................... 22,260,525 56,769,590
----------- ------------
NET ASSETS--End of Year. $21,985,283 $ 22,260,525
=========== ============
</TABLE>
See Notes to Financial Statements.
<PAGE> 8
<PAGE>
THE RUSHMORE FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED AUGUST 31,
<TABLE>
<CAPTION>
U.S. Government
Intermediate-Term
Securities
Portfolio
------------------------
1995 1994
----------- ------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Income.. $ 696,248 $ 1,054,991
Net Realized Losses on
Investment Transactions.......... (233,727) (746,062)
Net Change in Unrealized Appreciation
(Depreciation) of Investments........... 652,352 (1,585,722)
---------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations............ 1,114,873 (1,276,793)
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income................ (696,248) (1,059,384)
From Realized Gains on Investments........... -- (331,837)
FROM SHARE TRANSACTIONS (Note 4)............... (2,188,052) (4,320,098)
----------- ------------
Net Increase (Decrease) in Net Assets......... (1,769,427) (6,988,112)
NET ASSETS--Beginning of Year................... 13,362,272 20,350,384
---------- -----------
NET ASSETS--End of Year. $11,592,845 $13,362,272
=========== ===========
</TABLE>
See Notes to Financial Statements.
<PAGE> 9
<PAGE>
THE RUSHMORE FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED AUGUST 31,
<TABLE>
<CAPTION>
U.S. Government
Long-Term
Securities
Portfolio
------------------------
1995 1994
----------- ------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Income.. $ 1,814,519 $ 1,336,390
Net Realized Losses on Investment
Transactions.......... (162,740) (271,328)
Net Change in Unrealized
Appreciation (Depreciation) of
Investments........... 1,939,775 (2,738,037)
---------- ----------
Net Increase (Decrease) in Net Assets
Resulting from Operations............ 3,591,554 (1,672,975)
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income................ (1,814,519) (1,341,699)
From Realized Gains on Investments........... -- (1,300,316)
FROM SHARE TRANSACTIONS (Note 4)............... (14,662,722) 9,497,713
------------ -----------
Net Increase (Decrease) in Net Assets......... (12,885,687) 5,182,723
NET ASSETS--Beginning of Year................... 29,276,393 24,093,670
---------- -----------
NET ASSETS--End of Year. $ 16,390,706 $29,276,393
=========== ===========
</TABLE>
See Notes to Financial Statements.
<PAGE> 10
<PAGE>
THE RUSHMORE FUND, INC.
FINANCIAL HIGHLIGHTS
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
For the Year Ended August 31,
-------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value--Beginning of
Year............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
Net Investment Income............ 0.049 0.027 0.024 0.037 0.061
Net Realized and Unrealized Gains
(Losses) on Securities.......... -- -- -- -- --
------- ------- ------- ------- -------
Net Increase in Net Asset Value
Resulting from Operations....... 0.049 0.027 0.024 0.037 0.061
Dividends to Shareholders........ (0.049) (0.027) (0.024) (0.037) (0.061)
Distributions to Shareholders
From Net Realized Capital Gains. -- -- -- -- --
------- ------- ------- ------- -------
Net Increase (Decrease) in Net
Asset Value..................... 0.00 0.00 0.00 0.00 0.00
------- ------- ------- ------- -------
Net Asset Value--End of Year..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= =======
Total Investment Return........... 5.03% 2.88% 2.43% 3.71% 6.33%
Ratios to Average Net Assets:
Expenses......................... 0.75% 0.75% 0.78% 0.80% 0.79%
Net Investment Income............ 4.92% 2.73% 2.40% 3.71% 6.14%
Supplementary Data:
Portfolio Turnover Rate.......... -- -- -- -- --
Number of Shares Outstanding at
End of Year
(000's omitted)................. 21,985 22,261 56,759 98,606 115,539
</TABLE>
See Notes to Financial Statements.
<PAGE> 11
<PAGE>
THE RUSHMORE FUND, INC.
FINANCIAL HIGHLIGHTS
U.S. GOVERNMENT INTERMEDIATE-TERM SECURITIES PORTFOLIO
<TABLE>
<CAPTION>
For the Year Ended August 31,
--------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value--Beginning of
Year........................... $ 8.97 $ 10.22 $ 10.73 $ 9.93 $ 9.39
------- ------- ------- ------- -------
Net Investment Income........... 0.564 0.527 0.596 0.681 0.702
Net Realized and Unrealized
Gains (Losses) on Securities... 0.470 (1.080) 0.492 0.799 0.539
------- ------- ------- ------- -------
Net Increase (Decrease) in Net
Asset Value Resulting from
Operations..................... 1.034 (0.553) 1.088 1.480 1.241
Dividends to Shareholders....... (0.564) (0.530) (0.596) (0.680) (0.701)
Distributions to Shareholders
from Net Realized Capital
Gains.......................... -- (0.166) (1.002) -- --
------- ------- ------- ------- -------
Net Increase (Decrease) in Net
Asset Value.................... 0.47 (1.25) (0.51) 0.80 0.54
------- ------- ------- ------- -------
Net Asset Value--End of Year.... $ 9.44 $ 8.97 $ 10.22 $ 10.73 $ 9.93
======= ======= ======= ======= =======
Total Investment Return.......... 12.07% (5.64)% 14.47% 15.37% 13.86%
Ratios to Average Net Assets:
Expenses........................ 0.80% 0.80% 0.80% 0.80% 0.80%
Net Investment Income........... 6.30% 5.50% 5.91% 6.63% 7.21%
Supplementary Data:
Portfolio Turnover Rate......... 28.9% 174.0% 113.3% 199.8% 195.8%
Number of Shares Outstanding at
End of Year
(000's omitted)................ 1,228 1,489 1,990 1,502 2,322
</TABLE>
See Notes to Financial Statements.
<PAGE> 12
<PAGE>
THE RUSHMORE FUND, INC.
FINANCIAL HIGHLIGHTS
U.S. GOVERNMENT LONG-TERM SECURITIES PORTFOLIO
<TABLE>
<CAPTION>
For the Year Ended August 31,
--------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value--Beginning of
Year........................... $ 9.08 $ 11.55 $ 10.62 $ 9.97 $ 9.14
------- ------- ------- ------- -------
Net Investment Income........... 0.606 0.599 0.650 0.697 0.718
Net Realized and Unrealized
Gains (Losses) on Securities... 0.810 (1.880) 1.304 0.649 0.829
------- ------- ------- ------- -------
Net Increase (Decrease) in Net
Asset Value Resulting from
Operations..................... 1.416 (1.281) 1.954 1.346 1.547
Dividends to Shareholders....... (0.606) (0.602) (0.650) (0.696) (0.717)
Distributions to Shareholders
from Net Realized Capital
Gains.......................... -- (0.583) (0.374) -- --
------- ------- ------- ------- -------
Net Increase (Decrease) in Net
Asset Value.................... 0.81 (2.47) 0.93 0.65 0.83
------- ------- ------- ------- -------
Net Asset Value--End of Year.... $ 9.89 $ 9.08 $ 11.55 $ 10.62 $ 9.97
======= ======= ======= ======= =======
Total Investment Return.......... 16.35% (10.29)% 20.92% 13.97% 17.61%
Ratios to Average Net Assets:
Expenses........................ 0.80% 0.80% 0.80% 0.80% 0.80%
Net Investment Income........... 6.75% 5.97% 6.08% 6.80% 7.43%
Supplementary Data:
Portfolio Turnover Rate......... 63.3% 188.3% 173.6% 298.0% 235.7%
Number of Shares Outstanding at
End of Year
(000's omitted)................ 1,658 3,225 2,085 2,148 1,452
</TABLE>
See Notes to Financial Statements.
<PAGE> 13
<PAGE>
THE RUSHMORE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1995
1. SIGNIFICANT ACCOUNTING POLICIES
The Rushmore Fund, Inc. ("Fund") is registered with the
Securities and Exchange Commission under the Investment
Company Act of 1940 as an open-end, diversified investment
company. The Fund consists of four separate portfolios each
with its own investment objectives and policies. These
financial statements report on three of the four portfolios:
Money Market Portfolio, U.S. Government Intermediate-Term
Securities Portfolio, and U.S. Government Long-Term Securities
Portfolio. The following is a summary of significant
accounting policies which the Fund follows.
(a) Securities of the Money Market Portfolio are valued
at amortized cost which approximates market value.
Securities of the U.S. Government Intermediate-Term
Securities Portfolio and U.S. Government Long-Term
Securities Portfolio are valued on the basis of the
average of quoted bid and ask prices when market
quotations are available. If market quotations are
not readily available, the Board of Directors will
value the portfolios' securities in good faith.
(b) Security transactions are recorded on the trade date
the date the order to buy or sell is executed).
Interest income is accrued on a daily basis.
Realized gains and losses from securities
transactions are computed on an identified cost
basis.
(c) Net investment income is computed, and dividends are
declared daily, in the Money Market, U.S. Government
Intermediate-Term Securities and U.S. Government
Long-Term Securities Portfolios. Income dividends in
these portfolios are paid monthly. Dividends are
reinvested in additional shares unless shareholders
request payment in cash. Generally, short-term
capital gains are distributed quarterly in the Money
Market, U.S. Government Intermediate-Term Securities
and U.S. Government Long-Term Securities Portfolios.
Long-term capital gains, if any, are distributed
annually.
<PAGE> 14
<PAGE>
(d) The Fund complies with the provisions of the
Internal Revenue Code applicable to regulated
investment companies and distributes all net
investment income to its shareholders. Therefore, no
Federal income tax provision is required.
2. INVESTMENT ADVISORY AND SHAREHOLDER SERVICES
Investment advisory and management services are provided by
Money Management Associates, ("Adviser"). Under an agreement
with the Adviser, each portfolio of the Fund pays a fee for
such services at an annual rate of 0.50% of the average daily
net assets of the portfolio.
Rushmore Trust and Savings, FSB (Trust), a wholly owned
subsidiary of the Adviser, provides transfer agency,
dividend-disbursing and shareholder services to the Fund. In
addition, the Trust serves as custodian of the Fund's assets
and pays the operating expenses of the Fund. For these
services, the Trust receives an annual fee of 0.25% of the
average net assets of the Money Market Portfolio, 0.30% of the
average net assets of the U.S. Government Intermediate-Term
Securities and U.S. Government Long-Term Securities
Portfolios.
3. SECURITIES TRANSACTIONS
For the year ended August 31, 1995, purchases and sales
(including maturities) of securities (excluding short-term
securities) were as follows:
<TABLE>
<CAPTION>
U.S. Government U.S. Government
Intermediate-Term Long-Term
Money Market Securities Securities
Portfolio Portfolio Portfolio
------------ ----------------- ---------------
<S> <C> <C> <C>
Purchases...................... -- $ 3,078,328 $ 16,414,844
------------ ----------- ------------
Sales.......................... -- $ 4,982,766 $ 30,998,133
------------ ----------- ------------
</TABLE>
<PAGE> 15
<PAGE>
4. SHARE TRANSACTIONS
On August 31, 1995, there were 1,000,000,000 shares of $.001
par value capital stock authorized. Transactions in shares of
the Fund were as follows:
<TABLE>
<CAPTION>
U.S. Government U.S. Government
Intermediate-Term Long-Term
Money Market Securities Securities
Portfolio Portfolio Portfolio
------------ ----------------- ---------------
<S> <C> <C> <C>
In Shares
Shares Sold................... 49,791,377 573,883 2,729,920
Shares Issued in Reinvestment
of Dividends................. 1,055,000 66,809 183,562
------------ ----------- ------------
50,846,377 640,692 2,913,482
Shares Redeemed............... (51,121,619) (902,155) (4,480,768)
------------ ----------- ------------
(275,242) (261,463) (1,567,286)
============ =========== ============
In Dollars
Shares Sold................... $ 49,791,377 $ 5,208,101 $ 24,815,509
Shares Issued in Reinvestment
of Dividends................. 1,055,000 598,933 1,657,955
------------ ----------- ------------
50,846,377 5,807,034 26,473,464
Shares Redeemed............... (51,121,619) (7,995,086) (41,136,186)
------------ ----------- ------------
$ (275,242) $(2,188,052) $(14,662,722)
============ =========== ============
</TABLE>
5. NET UNREALIZED APPRECIATION/DEPRECIATION OF INVESTMENTS
Unrealized appreciation (depreciation) as of August 31, 1995,
based on the cost for Federal income tax purposes is as
follows:
<PAGE> 16
<PAGE>
<TABLE>
<CAPTION>
U.S. Government U.S. Government
Intermediate-Term Long-Term
Money Market Securities Securities
Portfolio Portfolio Portfolio
------------ ----------------- ---------------
<S> <C> <C> <C>
Gross Unrealized Appreciation... -- $ 406,076 $ 1,234,225
Gross Unrealized Depreciation... -- (4,482) (67,890)
----------- ----------- -----------
Net Unrealized Appreciation..... -- $ 401,594 $ 1,166,335
=========== =========== ===========
Cost of Investments for Federal
Income Tax purposes............ $22,114,945 $11,069,172 $15,027,044
=========== =========== ===========
</TABLE>
6. NET ASSETS
At August 31, 1995, net assets consisted of the following:
<TABLE>
<CAPTION>
U.S. Government U.S. Government
Intermediate-Term Long-Term
Money Market Securities Securities
Portfolio Portfolio Portfolio
------------ --------------- -------------
<S> <C> <C> <C>
Paid-in Capital................. $21,985,283 $12,170,348 $15,848,714
Undistributed Net Investment In-
come........................... -- -- --
Accumulated Net Realized Loss on
Investments.................... -- (979,097) (624,343)
Net Unrealized Appreciation on
Investments.................... -- 401,594 1,166,335
----------- ----------- -----------
NET ASSETS...................... $21,985,283 $11,592,845 $16,390,706
=========== =========== ===========
</TABLE>
<PAGE> 17
<PAGE>
7. CAPITAL LOSS CARRYOVERS
At August 31, 1995, for Federal income tax purposes, the
following portfolio's had capital loss carryovers which may be
applied against future net taxable realized gains of each
succeeding year until the earlier of its utilization or its
expiration:
<TABLE>
<CAPTION>
U.S. Government U.S. Government
Intermediate-Term Long-Term
Securities Securities
Expires August 31, Portfolio Portfolio
------------------ --------------- ---------------
<S> <C> <C>
2002.......................................... $745,370 $461,603
2003.......................................... 233,727 162,740
-------- --------
$979,097 $624,343
======== ========
</TABLE>
Permanent differences between tax and financial reporting of
accumulated realized losses have been reclassified to
paid-in-capital. As of August 31, 1995 the effect of
permanent differences between tax and financial reporting of
realized losses of $1,331 and $591,157 for the U.S. Government
Intermediate-Term Securities Portfolio and the U.S. Government
Long-Term Securities Portfolio, respectively, resulted in a
reclassification of such losses to paid-in-capital.
8. REORGANIZATION PLAN
On July 27, 1995, the Board of Directors approved the
development of an Agreement and Plan of Reorganization to be
voted upon by shareholders of the U.S. Government
Intermediate-Term Securities Portfolio at a December 22, 1995
meeting of shareholders. Shareholders of record as of October
27, 1995 will receive a combined prospectus/proxy statement
(on or about November 13, 1995), and upon their approval, the
U.S. Government Long-Term Securities Portfolio would acquire
<PAGE> 18
<PAGE>
the assets and liabilities of the U.S. Government
Intermediate-Term Securities Portfolio in exchange for shares
of the U.S. Government Long-Term Securities Portfolio at the
Net Asset Value as of December 31, 1995.
<PAGE> 19
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors
of The Rushmore Fund, Inc.:
We have audited the statements of net assets of the Money
Market, U.S. Government Intermediate-Term Securities, and U.S.
Government Long-Term Securities Portfolio (three of the
Portfolios) of The Rushmore Fund, Inc. as of August 31, 1995,
the related statements of operations and changes in net assets
and the financial highlights for the periods presented. These
financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned at August 31, 1995 by correspondence with the
custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial
highlights present fairly, in all material respects, the
financial position of the Money Market, U.S. Government
Intermediate-Term Securities, and U.S. Government Long-Term
Securities Portfolios (three of the Portfolios) of The
Rushmore Fund, Inc. at August 31,1995, the results of their
operations, the changes in their net assets and the financial
highlights for the respective stated periods in
conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Washington, DC
September 29, 1995
<PAGE> 20
<PAGE>
RUSHMORE FUND
--------------------------------------------------------------
ANNUAL REPORT
August 31, 1995
[LOGO OF
RUSHMORE APPEARS HERE]
<PAGE> 21
<PAGE>
PRO FORMA FINANCIAL STATEMENTS
<PAGE>
<PAGE>
FUND FOR GOVERNMENT INVESTORS, INC.
AND
RUSHMORE MONEY MARKET PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
(unaudited)
<TABLE>
<CAPTION>
Face Amount
Fund Rushmore
for Money
Government Market Pro Forma
Investors Portfolio Combined
<S> <C> <C> <C>
COMMERCIAL PAPER 3.31%
American Express Credit Corp.
5.70%, 1/17/96 $1,000,000 $1,000,000
AT&T Corp.
5.61%, 1/8/96 800,000 800,000
Bank America Corp.
5.53%, 1/25/96 1,000,000 1,000,000
Bell South Telecommunications
5.70%, 1/24/96 800,000 800,000
Cargill, Inc.
5.68%, 1/12/96 800,000 800,000
Chevron Oil Finance Co.
5.77%, 2/1/96 800,000 800,000
<PAGE>
<PAGE>
Coca Cola Co.
5.57%, 1/22/96 1,000,000 1,000,000
Dover Corp.
5.73%, 1/9/96 1,000,000 1,000,000
Exxon Asset Management Corp.
5.75%, 1/5/96 1,000,000 1,000,000
Ford Motor Credit Co.
5.75%, 1/11/96 800,000 800,000
General Electric Capital Corp.
5.76%, 1/31/96 800,000 800,000
Heinz Co.
5.71%, 1/16/96 800,000 800,000
IBM Credit Corp.
5.62%, 2/13/96 800,000 800,000
Kellogg Co.
5.65%, 1/26/96 1,000,000 1,000,000
Merrill Lynch & Co., Inc.
5.80%, 1/4/96 800,000 800,000
Pepsico, Inc.
5.72%, 1/18/96 800,000 800,000
Phillip Morris Co.
5.68%, 1/19/96 800,000 800,000
Safeco Credit Corp.
5.69%, 1/16/96 1,000,000 1,000,000
<PAGE>
<PAGE>
Southern California Edison Co.
5.80%, 1/12/96 1,000,000 1,000,000
Transamerica Corp.
5.77%, 1/5/96 1,000,000 1,000,000
U. S. West Corp.
5.69%, 1/10/96 1,000,000 1,000,000
Xerox Corp.
5.70%, 1/10/96 800,000 800,000
Total Commercial Paper
</TABLE>
<PAGE>
<PAGE>
FUND FOR GOVERNMENT INVESTORS, INC.
AND
RUSHMORE MONEY MARKET PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS (continued)
DECEMBER 31, 1995
(unaudited)
<TABLE>
<CAPTION>
Value
Fund Rushmore
for Money
Government Market Pro Forma
Investors Portfolio Combined
<S> <C> <C> <C>
COMMERCIAL PAPER 3.31%
American Express Credit Corp.
5.70%, 1/17/96 $997,467 $997,467
AT&T Corp.
5.61%, 1/8/96 799,127 799,127
Bank America Corp.
5.53%, 1/25/96 996,313 996,313
Bell South Telecommunications
5.70%, 1/24/96 797,087 797,087
Cargill, Inc.
5.68%, 1/12/96 798,612 798,612
Chevron Oil Finance Co.
5.77%, 2/1/96 796,025 796,025
<PAGE>
<PAGE>
Coca Cola Co.
5.57%, 1/22/96 996,751 996,751
Dover Corp.
5.73%, 1/9/96 998,727 998,727
Exxon Asset Management Corp.
5.75%, 1/5/96 999,361 999,361
Ford Motor Credit Co.
5.75%, 1/11/96 798,722 798,722
General Electric Capital Corp.
5.76%, 1/31/96 796,160 796,160
Heinz Co.
5.71%, 1/16/96 798,097 798,097
IBM Credit Corp.
5.62%, 2/13/96 794,630 794,630
Kellogg Co.
5.65%, 1/26/96 996,076 996,076
Merrill Lynch & Co., Inc.
5.80%, 1/4/96 799,613 799,613
Pepsico, Inc.
5.72%, 1/18/96 797,839 797,839
Phillip Morris Co.
5.68%, 1/19/96 797,728 797,728
Safeco Credit Corp.
5.69%, 1/16/96 997,629 997,629
<PAGE>
<PAGE>
Southern California Edison Co.
5.80%, 1/12/96 998,228 998,228
Transamerica Corp.
5.77%, 1/5/96 999,359 999,359
U. S. West Corp.
5.69%, 1/10/96 998,577 998,577
Xerox Corp.
5.70%, 1/10/96 798,860 798,860
Total Commercial Paper 0 19,550,988 19,550,988
</TABLE>
<PAGE>
<PAGE>
FUND FOR GOVERNMENT INVESTORS, INC.
AND RUSHMORE MONEY MARKET PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS (continued)
DECEMBER 31, 1995
(unaudited)
<TABLE>
<CAPTION>
Face Amount
Fund Rushmore
for Money
Government Market Pro Forma
Investors Portfolio Combined
<S> <C> <C> <C>
UNITED STATES TREASURY BILLS 96.20%
U.S. Treasury Bills
5.47%, 1/4/96 $ 25,000,000 $ 25,000,000
U.S. Treasury Bills
5.44%, 1/11/96 50,000,000 50,000,000
U.S. Treasury Bills
5.42%, 1/18/96 50,000,000 50,000,000
U.S. Treasury Bills
5.40%, 2/1/96 50,000,000 50,000,000
U.S. Treasury Bills
5.49%, 2/8/96 75,000,000 75,000,000
U.S. Treasury Bills
5.56%, 2/15/96 75,000,000 75,000,000
U.S. Treasury Bills
5.49%, 2/22/96 50,000,000 50,000,000
U.S. Treasury Bills
5.46%, 2/29/96 25,000,000 25,000,000
U.S. Treasury Bills
5.30%, 3/7/96 50,000,000 50,000,000
U.S. Treasury Bills
5.31%, 3/14/96 50,000,000 50,000,000
<PAGE>
<PAGE>
Face Amount
Fund Rushmore
for Money
Government Market Pro Forma
Investors Portfolio Combined
<S> <C> <C> <C>
U.S. Treasury Bills
5.16%, 3/21/96 25,000,000 25,000,000
U.S. Treasury Bills
4.94%, 3/28/96 25,000,000 25,000,000
U.S. Treasury Bills
5.20%, 12/12/96 23,000,000 23,000,000
Total U.S. Treasury Bills
REPURCHASE AGREEMENTS 0.49%
With Paine Webber at 5.70%,
dated 12/29/95, due 1/2/96,
collateralized by U.S. Treasury
Notes, due 12/31/96 2,890,749 2,890,749
Total Investments - Amortized Cost 100.00%
<PAGE>
<PAGE>
FUND FOR GOVERNMENT INVESTORS, INC.
AND RUSHMORE MONEY MARKET PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS (continued)
DECEMBER 31, 1995
(unaudited)
Value
Fund Rushmore
for Money
Government Market Pro Forma
Investors Portfolio Combined
<S> <C> <C> <C>
UNITED STATES TREASURY BILLS 96.20%
U.S. Treasury Bills
5.47%, 1/4/96 $ 24,988,916 $ 24,988,916
U.S. Treasury Bills
5.44%, 1/11/96 49,926,528 49,926,528
U.S. Treasury Bills
5.42%, 1/18/96 49,875,510 49,875,510
U.S. Treasury Bills
5.40%, 2/1/96 49,773,743 49,773,743
U.S. Treasury Bills
5.49%, 2/8/96 74,577,118 74,577,118
U.S. Treasury Bills
5.56%, 2/15/96 74,492,812 74,492,812
U.S. Treasury Bills
5.49%, 2/22/96 49,614,333 49,614,333
U.S. Treasury Bills
5.46%, 2/29/96 24,782,233 24,782,233
U.S. Treasury Bills
5.30%, 3/7/96 49,527,000 49,527,000
U.S. Treasury Bills
5.31%, 3/14/96 49,475,819 49,475,819
U.S. Treasury Bills
5.16%, 3/21/96 24,721,111 24,721,111
<PAGE>
<PAGE>
Value
Fund Rushmore
for Money
Government Market Pro Forma
Investors Portfolio Combined
<S> <C> <C> <C>
U.S. Treasury Bills
4.94%, 3/28/96 24,709,396 24,709,396
U.S. Treasury Bills
5.20%, 12/12/96 21,919,040 21,919,040
Total U.S. Treasury Bills 568,383,559 0 568,383,559
REPURCHASE AGREEMENTS 0.49%
With Paine Webber at 5.70%,
dated 12/29/95, due 1/2/96,
collateralized by U.S.
Treasury Notes, due 12/31/96 2,890,749 2,890,749
Total Investments - Amortized
Cost 100.00% $ 568,383,559 $ 22,441,737 $ 590,825,296
</TABLE>
<PAGE>
<PAGE>
PRO FORMA COMBINED
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
(unaudited)
<TABLE>
<CAPTION>
Fund Rushmore
for Money
Government Market
Investors Portfolio
<S> <C> <C>
ASSETS
Cash $ 5,381,532 $ 0
Securities at Amortized Cost 568,383,559 22,441,737
Investment Income Receivable 0 1,369
Receivable for Shares Purchased 4,435,404 220,239
Total Assets 578,200,495 22,663,345
LIABILITIES
Dividends Payable 89,166 10,205
Investment Advisory Fee Payable 731,136 10,206
Administration Fee Payable 125,822 5,103
Liability for Shares Redeemed 59,940 249,863
Total Liabilities 1,006,064 275,377
Net Assets $577,194,431 $ 22,387,968
Net Assets Consist of:
Capital paid in on shares of
common stock $577,194,431 $ 22,387,968
Accumulated net realized gain (loss) 0 0
Net change in unrealized appreciation
of investments 0 0
$577,194,431 $ 22,387,968
Shares Outstanding 577,194,431 22,387,968
Net Asset Value Per Share $1.00 $1.00
<PAGE>
<PAGE>
PRO FORMA COMBINED
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995 (Continued)
(unaudited)
Pro Forma Pro Forma
Adjustments Combined
<S> <C> <C>
ASSETS
Cash $ 5,381,532
Securities at Amortized Cost 590,825,296
Investment Income Receivable 1,369
Receivable for Shares Purchased 4,655,643
Total Assets 600,863,840
LIABILITIES
Dividends Payable 99,371
Investment Advisory Fee Payable 741,342
Administration Fee Payable 130,925
Liability for Shares Redeemed 309,803
Total Liabilities 1,281,441
Net Assets $ 599,582,399
Net Assets Consist of:
Capital paid in on shares of
common stock $ 599,582,399
Accumulated net realized gain (loss) 0
Net change in unrealized appreciation
of investments 0
$ 599,582,399
Shares Outstanding 599,582,399
Net Asset Value Per Share $1.00
</TABLE>
<PAGE>
<PAGE>
PRO FORMA COMBINED
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(unaudited)
<TABLE>
<CAPTION>
Fund Rushmore
for Money
Government Market Pro Forma Pro Forma
Investors Portfolio Adjustments Combined
<S> <C> <C> <C> <C>
INVESTMENT INCOME $ 31,976,884 $ 1,338,441 $ 0 $ 33,315,325
EXPENSES
Investment Advisory
Fee 2,787,502 113,363 (11,205) 2,889,660
Administrative Fee 1,409,761 56,681 1,466,442
Total Expenses 4,197,263 170,044 (11,205) 4,356,102
Net Investment Income $ 27,779,621 $ 1,168,397 $ 11,205 $ 28,959,223
</TABLE>
<PAGE>
<PAGE>
FUND FOR GOVERNMENT INVESTORS, INC.
AND
RUSHMORE MONEY MARKET PORTFOLIO
Notes to Pro Forma Combined Financial Statements
December 31, 1995
(unaudited)
1. BASIS OF PRESENTATION
Subject to the Agreement and Plan of Reorganization
("Agreement") by the shareholders of the Rushmore Money
Market Portfolio, the Fund for Government Investors, Inc.
would acquire substantially all of the assets of the
Rushmore Money Market Portfolio in exchange for shares of
the Fund for Government Investors, Inc. at the net asset
value of the Fund for Government Investors, Inc. as of the
Valuation Date as defined in the Agreement. Shares of the
Fund for Government Investors, Inc. would then be
distributed pro-rata to the shareholders of the Rushmore
Money Market Portfolio.
The pro forma information is intended to provide the
shareholders of the Rushmore Money Market Portfolio with
information about the impact of the proposed merger by
showing how it might have affected historical financial
statements if the transaction had been consummated at an
earlier time. The pro forma combined Schedule of
Investments and Statement of Assets and Liabilities have
been presented as if the proposed merger had taken place on
December 31, 1995; the pro forma combined Statement of
Operations for the year ended December 31, 1995, has been
presented as if the proposed merger had taken place on
January 1, 1995. This information is based upon historical
financial statement data giving effect to the pro forma
adjustments described below. The accounting policies of
the Rushmore Money Market Portfolio and the Fund for
Government Investors, Inc. are not materially different.
The pro forma financial statements should be read in
conjunction with the separate financial statements of the
Rushmore Money Market Portfolio and the Fund for Government
Investors, Inc. incorporated by reference into this
Registration Statement on Form N-14.
2. PRO FORMA ADJUSTMENTS
<PAGE>
<PAGE>
The pro forma combined Statement of Operations of Rushmore
Money Market Portfolio and the Fund for Government
Investors, Inc. reflects the net decrease in Investment
Advisory Fee expense and net increase in Net Investment
Income resulting from the lower expense ratio of the Fund
for Government Investors, Inc. The pro forma combined
Investment Advisory expenses are calculated by multiplying
the combined net assets by the annual rate determined as
follows: 0.50% of the first $500 million; 0.45% of the
next $250 million; 0.40% of the next $250 million; and
0.35% of the net assets that exceed $1 billion.
<PAGE>
<PAGE>
PART C
<PAGE>
<PAGE>
FUND FOR GOVERNMENT INVESTORS, INC.
PART C. OTHER INFORMATION
ITEM 15. Indemnification
Fund for Government Investors, Inc. (the "Registrant" or
"FGI"), was incorporated in the State of Maryland on
October 30, 1974, and is operated pursuant to the
Articles of Incorporation of the Registrant, dated as of
October 29, 1974, and as amended February 14, 1975,
January 7, 1976, November 20, 1979, June 10, 1981, and
June 25, 1982 (the "FGI Articles"). The FGI Articles
permit the Registrant to indemnify its directors and
officers under certain circumstances. Such
indemnification, however, is subject to the limitations
imposed by the Securities Act of 1933, as amended (the
"1933 Act"), and the Investment Company Act of 1940, as
amended (the "1940 Act").
The Articles of Incorporation of FGI provide that
officers and directors of FGI shall be indemnified by FGI
against liabilities and expenses of defense in
proceedings against such persons by reason of the fact
that such persons serve as officers or directors of FGI
or as an officer or director of another entity at the
request of the entity. This indemnification is subject
to the following conditions:
(a) no director or officer of FGI is indemnified against
any liability to FGI or FGI's security holders which
was the result of any willful misfeasance, bad faith,
gross negligence, or reckless disregard of such
person's duties;
(b) officers and directors of FGI are indemnified only
for actions taken in good faith which the officers
and directors believed were in or not opposed to the
best interests of FGI; and
(c) expenses of any suit or proceeding will be paid in
advance only if the persons who will benefit by such
advance undertake to repay the expenses unless it is
subsequently determined that such persons are
entitled to indemnification.
<PAGE>
<PAGE>
The FGI Articles provide that if indemnification of the
directors and/or the officers of FGI is not ordered by a
court, such indemnification may be authorized upon
determination by the shareholders of FGI, or by a
majority vote of a quorum of the directors who were not
parties to the proceedings or, if a quorum is not
obtainable, or if a quorum of disinterested directors so
directs, by independent legal counsel in a written
opinion that the persons to be indemnified have met the
applicable standard.
Insofar as indemnification for liability arising under
the 1933 Act may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has
been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against
public policy as expressed in the 1933 Act and, there-
fore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by
a director, officer, or controlling person of the
Registrant in the successful defense of any action, suit,
or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities
being registered, the Registrant 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 as to whether such
indemnification by the Registrant is against public
policy as expressed in the 1933 Act and will be governed
by the final adjudication of such issue.
ITEM 16. Exhibits
(1)(a) Articles of Incorporation of Registrant.4/
(1)(b) Articles of Amendment.4/
(2) By-Laws of Registrant.4/
(3) Voting Trust Agreement.1/
(4) Agreement and Plan of Reorganization.2/
(5) Specimen share certificate.1/
(6) Management Contract between Registrant and Money
Management Associates.3/
(7) Form of Underwriting Agreement.1/
(8) Bonus, Profit Sharing, or Pension Plans.1/
<PAGE> C-2
<PAGE>
(9) Custody and Administrative Services Agreement
between Registrant and Rushmore Trust and Savings,
FSB4/
(10) Form of Rule 12b-1 Distribution Plan.1/
(11) Opinion of Jorden Burt Berenson & Johnson LLP,
regarding the legality of securities being
registered.4/
(12) Opinion of Jorden Burt Berenson & Johnson LLP,
regarding certain tax matters and consequences to
shareholders discussed in Part A.4/
(13) Transfer Agent and Shareholder Services Agent
Agreement between Registrant and Rushmore Trust and
Savings, FSB (see exhibit (9)).
(14)(a) Consent of Deloitte & Touche LLP, independent
accountants for Registrant. 4/
(14)(b) Consent of Deloitte & Touche LLP, independent
accountants for The Rushmore Fund, Inc.4/
(14)(c) Consent of Jorden Burt Berenson & Johnson LLP (see
exhibit (11)).
(14)(d) Consent of Jorden Burt Berenson & Johnson LLP (see
exhibit (12)).
(15) Financial Statements Omitted Pursuant to Item
14(a)(1).1/
(16) Powers of Attorney.1/
(17) Rule 24f-2 Notice.4/
________________________
1/ None.
2/ Filed herewith as Appendix A to Part A.
3/ Filed herewith as Appendix B to Part A.
4/ Filed herewith.
ITEM 17. Undertakings
(1) The Registrant agrees that prior to any public reoffering
of the securities registered through the use of a
prospectus which is a part of this Registration Statement
by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c) under the Securities
Act of 1933, as amended, the reoffering prospectus will
contain the information called for by the applicable
registration form for reofferings by persons who may be
deemed underwriters, in addition to the information
called for by the other items of the applicable form.
<PAGE> C-3
<PAGE>
(2) The Registrant agrees that every prospectus that is filed
under paragraph (1), above, will be filed as a part of an
amendment to this Registration Statement and will not be
used until the amendment is effective, and that, in
determining any liability under the Securities Act of
1933, as amended, each post-effective amendment shall be
deemed to be a new registration statement for the
securities offered therein, and the offering of the
securities at that time shall be deemed to be the initial
bona fide offering of them.
<PAGE> C-4
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, as amended, this
Registration Statement has been signed on behalf of the
Registrant, in the City of Bethesda and the State of Maryland,
on the 2nd day of February, 1996.
Registrant:
FUND FOR GOVERNMENT INVESTORS, INC.
By: /s/ Daniel L. O'Connor
Daniel L. O'Connor
Chairman of the Board
As required by the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Daniel L. O'Connor Chairman of the February 2, 1996
Board, Treasurer,Daniel L. O'Connor
and Director
/s/ Richard J. Garvey Director and February 1, 1996
PresidentRichard J. Garvey
/s/ Bruce C. Ellis Director February 1, 1996
Bruce C. Ellis
/s/ Patrick F. Noonan Director February 1, 1996
Patrick F. Noonan
/s/ Rita A. Gardner Director February 1, 1996
Rita A. Gardner
/s/ Michael D. Lange Director February 1, 1996
Michael D. Lange
/s/ Jeffrey R. Ellis Director February 1, 1996
Jeffrey R. Ellis
<PAGE> S-1
<PAGE>
/s/ Leo Seybold Director February 1, 1996
Leo Seybold
/s/ Timothy N. Coakley Vice President February 1, 1996
and ControllerTimothy N. Coakley
<PAGE> S-2
<PAGE>
EXHIBIT 1(a)
ARTICLES OF INCORPORATION
<PAGE>
ARTICLES OF INCORPORATION
FUND FOR GOVERNMENT INVESTORS, INC.
FIRST: I, The Undersigned, Daniel L. O'Connor, III,
whose address is 9436 Rosehill Drive, Bethesda, Maryland
20034, being at least twenty-one years of age, do under and by
virtue of the General Laws of the State of Maryland
authorizing the formation of corporations, associate myself as
incorporator with the intention of forming a corporation
(hereinafter called the "Corporation").
SECOND: The name of the Corporation is Fund for
Government Investors, Inc.
THIRD: The purpose for which the Corporation is
formed is to act as a diversified, open-end investment company
under the Federal Investment Company Act of 1940 (hereinafter
referred to as "Investment Company Act of 1940") and to
exercise and enjoy all of the powers, rights and privileges
granted to, or conferred upon, corporations of a similar
character by the General Laws of the State of Maryland now or
hereafter in force.
FOURTH: The post office address of the principal
office of the Corporation in this State is c/o The Corporation
Trust Incorporated, 25 South Charles Street, Baltimore,
Maryland 21202. The name of the resident agent of the
Corporation in this State is The Corporation Trust
Incorporated, a corporation of this State, and the post office
address of the resident agent is 25 South Charles Street,
Baltimore, Maryland 21202.
<PAGE>
FIFTH: The total number of shares of stock which
the Corporation shall have authority to issue is 20,000,000
shares, all of one class called Common Stock, of the par value
of one cent ($.01) per share and of the aggregate par value of
$200,000. Each share shall be entitled to full and equal
voting rights.
SIXTH: (a) The shares of the Common Stock of the
Corporation may be issued to such persons and at such prices
from time to time as the Board of Directors may determine.
Such issuance shall be on a non-assessable basis. No holder
of shares of Common Stock shall have preemptive rights, and
the Corporation shall have the right to issue and sell to any
person or persons any shares of its Common Stock without first
offering such shares to the holders of any shares of its
Common Stock.
(b) Holders of Common Stock of the Corporation shall
have the right, at any time after purchase, to require the
Corporation to redeem their shares at a redemption price per
share equal to the net asset value per share of the
Corporation's Common Stock determined in accordance with the
provisions of the Investment Company Act of 1940, as amended,
and the Rules and Regulations promulgated thereunder, and
under procedures set forth in the Corporation's prospectus.
SEVENTH: The number of directors of the Corporation
shall be five, provided, however, that the number may be
increased or decreased in accordance with the Bylaws, so long
- 2 -
<PAGE>
as the number is never less than three. The names of the
directors who shall act until the first annual meeting or
until their successors are duly chosen and qualified are:
Daniel L. O'Connor, III
John F. Griffin
William L. Major
Richard J. Garvey
J. Michael Farrell
EIGHTH: The Corporation is expressly empowered, as
follows:
(a) The Corporation may enter into a written
contract or contracts with any person, including any firm,
corporation, trust or association in which any officer, other
employee, director or stockholder of this Corporation may be
interested, providing for a delegation of the management of
all or part of this Corporation's securities portfolio and
also for the delegation of the performance of administrative
corporate functions, subject always to the direction of the
Board of Directors. The compensation payable by this
Corporation under such contracts shall be such as is deemed
fair and equitable to both parties by the said Board of
Directors.
Any such contracts shall in all respects be
consistent with and subject to the requirements of the
Investment Company Act of 1940 as then in effect and
regulations of the Securities and Exchange Commission (or any
succeeding governmental authority) promulgated thereunder.
- 3 -
<PAGE>
(b) The Corporation may employ such custodian or
custodians for the safekeeping of the property of the
Corporation and of its shares, such dividend disbursing agent
or agents, and such transfer agent or agents and registrant or
registrars for its shares, and may make and perform such
contracts for the aforesaid purposes as in the opinion of the
Board of Directors of this Corporation may be reasonable,
necessary, or proper for the conduct of the affairs of the
Corporation, and may pay the fees and disbursements of such
custodians, dividend disbursing agents, transfer agents and
registrars out of the income and/or any other property of the
Corporation. Notwithstanding any other provisions of these
Articles of Incorporation or the Bylaws of the Corporation,
the Board of Directors may cause any or all of the property of
the Corporation to be transferred or to be acquired and held
in the name of a custodian so appointed or in the name of any
nominee or nominees of this Corporation or nominee or nominees
of such custodian satisfactory to the said Board of Directors.
(c) The same person, partnership (general or
limited), association, trust or corporation may be employed in
any multiple capacity under subsections (a) and (b) of this
Article EIGHT and may receive compensation from the
Corporation in as many capacities in which such persons,
partnerships (general or limited), associations, trusts or
corporation shall serve the Corporation.
- 4 -
<PAGE>
NINTH: (a) The Corporation shall indemnify any
person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
Corporation) by reason of the fact that he is or was a
director or officer of the Corporation, or is or was serving
at the request of the Corporation as a director or officer of
another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with
such action, suit or proceeding if he acted in good faith in a
manner he reasonably believed to be in or not opposed to the
best interests of the Corporation and, with respect to any
criminal action or proceeding, has no reasonable cause to
believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its
equivalent, shall not, in itself, create a presumption that
the person did not act in good faith and in a manner which he
reasonably believed to be in the best interests of the
Corporation, and, with respect to any criminal action or
proceeding, had reasonable base to believe that his conduct
was unlawful.
- 5 -
<PAGE>
(b) The Corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director or officer of
the Corporation, or is or was serving at the request of the
Corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement
of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the
best interests of the Corporation and except that no
indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged to
be liable for negligence or misconduct in the performance of
his duty to the Corporation unless and only to the extent that
a court shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
(c) To the extent that a director or officer of the
Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in
subsections (a) and (b), or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses
- 6 -
<PAGE>
(including attorneys' fees) actually and reasonably incurred
by him in connection therewith.
(d) Any indemnification under subsections (a) and
(b) (unless otherwise ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a
determination that indemnification of the director or officer
is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a)and
(b). Such determination shall be made (1) by the board of
directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or
proceeding, or (a) if such a quorum is not obtainable, or,
even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or
(3) by the stockholders.
(e) Expenses incurred in defending a civil or
criminal action suit or proceeding may be paid by the
Corporation in advance of the final disposition of such
action, suit or proceeding as authorized by the board of
directors in the specific case upon receipt of any undertaking
by or on behalf of the director or officer to repay such
amount unless it shall ultimately be determined that he is
entitled to be indemnified by the Corporation as authorized in
this Article.
(f) The indemnification provided by this Article
shall not be deemed exclusive of any other rights to which
- 7 -
<PAGE>
those seeking indemnification may be entitled under any
bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding
such office, and shall continue as to a person who has ceased
to be a director or officer and shall inure to the benefit of
the heirs, executors and administrators of such a person.
(g) The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director or
officer of the Corporation, or is or was serving at the
request of the Corporation as a director, or officer of
another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation would have
the power to indemnify him against such liability under the
provisions of this section.
(h) Anything to the contrary in the foregoing
clauses (a) through (g) notwithstanding, no director or
officer shall be indemnified against any liability to the
Corporation or to its security holders to which he would
otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
- 8 -
<PAGE>
TENTH: In furtherance and not in limitation of the
powers conferred by the laws of the State of Maryland, the
Board of Directors is expressly authorized:
(i) To make, alter or repeal the Bylaws of the
Corporation, except where such power is reserved by the Bylaws
to the stockholders, and except as otherwise required by the
Investment Company Act of 1940.
(ii) From time to time to determine whether and to what
extent and at what times and places and under what conditions
and regulations the books and accounts of the Corporation, or
any of them other than the stock ledger, shall be open to the
inspection of the stockholders, and no stockholder shall have
any right to inspect any account or book or document of the
Corporation, except as conferred by law or authorized by
resolution of the Board of Directors or of the stockholders.
(iii) Without the assent or vote of the stockholders, to
authorize and issue obligations of the Corporation, secured
and unsecured, as the Board of Directors may determine, and to
authorize and cause to be executed mortgages and liens upon
the property of the Corporation, real or personal but only to
the extent permitted by the fundamental policies of the
Corporation recited in its registration statement filed
pursuant to the Investment Company Act of 1940.
(iv) In addition to the powers and authorizes granted
herein by statute expressly conferred upon it, the Board of
Directors may exercise all such powers and do all such acts
- 9 -
<PAGE>
and things as may be exercised or done by the Corporation,
subject, nevertheless, to the provisions of Maryland law, of
these Articles of Incorporation and of the Bylaws of the
Corporation.
ELEVENTH: The books of the Corporation may be kept
(subject to any provisions contained in the statutes) outside
the State of Maryland at such place or places as may be
designated from time to time by the Board of Directors or in
the Bylaws of the Corporation. Elections of directors need
not be by ballot unless the Bylaws of the Corporation shall so
provide.
TWELFTH: The Corporation reserves the right to
amend, alter, change or repeal any provision contained in
these Articles of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
THIRTEENTH: Notwithstanding any provision of
Maryland Law requiring more than a majority vote of the Common
Stock in connection with any corporate action (including but
not limited to the amendment of the Articles of Incorporation)
unless otherwise provided in the Articles of Incorporation,
the Corporation may take or authorize such action upon the
favorable vote of the holders of a majority of the outstanding
shares of Common Stock.
FOURTEENTH: The duration of the Corporation shall
be perpetual.
- 10 -
<PAGE>
IN WITNESS WHEREOF, the undersigned incorporator of
Fund for Government Investors, Inc. who executed the foregoing
Articles of Incorporation hereby acknowledges the same to be
his act and further acknowledges that, to the best of his
knowledge the matters and facts set forth therein are true in
all material respects under the penalties of perjury.
Dated this 29th day of October, 1974.
/s/Daniel L. O'Connor, III
Daniel L. O'Connor, III
DISTRICT OF COLUMBIA SS:
THIS IS TO CERTIFY THAT on this 29th day of October,
1974, before me, the subscriber a Notary Public in and for the
District of Columbia, personally appeared Daniel L. O'Connor,
III, and acknowledged the foregoing Articles of Incorporation
to be his act and deed and that the facts therein stated are
truly set forth.
WITNESS my hand and Notarial Seal the day and year
last above written.
/s/Rosemary D. Vance
Notary Public
My Commission Expires: September 1, 1979
- 11 -
<PAGE>
ARTICLES OF INCORPORATION
OF
FUND FOR GOVERNMENT INVESTORS, INC.
approved and received for record by the State Department of
Assessments and Taxation of Maryland October 30, 1974 at 12:10
o'clock P.M. in conformity with law and ordered recorded.
11
Recorded in Liber 2115, folio 310, one of the Charter
Records of the State Department of Assessments and Taxation of
Maryland.
Bonus tax paid $40.00 Recording fee paid $25.00
To the clerk of Superior Court of Baltimore City
IT IS HEREBY CERTIFIED, that the within instrument,
together with all endorsements thereon, has been received,
approved and recorded by the State Department of Assessments
and Taxation of Maryland.
AS WITNESS my hand and seal of the said Department at
Baltimore.
/s/William J. Simmons
<PAGE>
EXHIBIT 1(b)
ARTICLES OF AMENDMENT
<PAGE>
AMENDMENT TO
ARTICLES OF INCORPORATION
FUND FOR GOVERNMENT INVESTORS, INC.
This is to certify:
That, at a special meeting of the Board of Directors
and sole shareholder of the Fund, held February 13, 1975,
Article SIXTH of the Articles of Incorporation was amended to
read, as follows:
SIXTH: (a) The shares of the Common Stock of the
Corporation may be issued to such persons and at such prices
from time to time as the Board of Directors may determine.
Such issuance shall be on a non-assessable basis. No holder
of shares of Common Stock shall have preemptive rights, and
the Corporation shall have the right to issue and sell to any
person or persons any shares of its Common Stock without first
offering such shares to the holders of any shares of its
Common Stock.
(b) Holders of Common Stock of the Corporation shall
have the right, at any time after purchase, to require the
Corporation to redeem their shares at a redemption price per
share equal to the net asset value per share of the
Corporation's Common Stock determined in accordance with the
provisions of the Investment Company Act of 1940, as amended,
and the Rules and Regulations promulgated thereunder, and
under procedures set forth in the Corporation's prospectus.
Notwithstanding the foregoing, the Corporation
reserves the right to redeem shareholder accounts of less than
250 shares of Common Stock; provided, however, that each
<PAGE>
shareholder shall be notified that his account contains less
than 250 shares and allowed thirty days to make an additional
share purchase before such redemption is processed by the
Corporation.
IN WITNESS WHEREOF, the undersigned President and
Secretary of Fund For Government Investors, Inc., who executed
the foregoing Amendment to Articles of Incorporation hereby
acknowledge the same to be their act and further acknowledge
that, to the best of their knowledge the matters and facts set
forth therein are true in all material respects under the
penalties of perjury.
Dated this 14th day of February, 1975.
/s/ Daniel L. O'Connor, III
Daniel L. O'Connor, III
President
/s/ J. Michael Farrell
J. Michael Farrell
Secretary
DISTRICT OF COLUMBIA SS:
THIS IS TO CERTIFY That, on the 14th day of
February, 1975, before me, the subscriber, a Notary Public in
and for the District of Columbia, personally appeared Daniel
L. O'Connor III and J. Michael Farrell and acknowledged the
foregoing Amendment to Articles of Incorporation to be their
- 2 -
<PAGE>
act and deed and that the facts therein stated are truly set
forth.
WITNESS my hand and Notarial Seal the day and year
last above written.
/s/ Rosemary D. Vance
Notary Public
My Commission Expires: September 1, 1979
- 3 -
<PAGE>
ARTICLES OF AMENDMENT
OF
FUND FOR GOVERNMENT INVESTORS, INC.
approved and received for record by the State Department of
Assessments and Taxation of Maryland February 19, 1975 at 8:30
o'clock A.M. in conformity with law and ordered recorded.
3
Recorded in Liber 2148, folio 4, one of the Charter
Records of the State Department of Assessments and Taxation of
Maryland.
Bonus tax paid $_________ Recording fee paid $15.00
To the clerk of Superior Court of Baltimore City
IT IS HEREBY CERTIFIED, that the within instrument,
together with all endorsements thereon, has been received,
approved and recorded by the State Department of Assessments
and Taxation of Maryland.
AS WITNESS my hand and seal of the said Department at
Baltimore.
/s/ Richard
Keller
<PAGE>
- 2 -
<PAGE>
AMENDMENT TO
ARTICLES OF INCORPORATION
FUND FOR GOVERNMENT INVESTORS, INC.
THIS IS TO CERTIFY:
That on December 22, 1975, a special meeting of the
Board of Directors of the Fund for Government Investors, Inc.
was held at which the Board unanimously approved a ten-for-one
stock split for each share outstanding and there were no
shares entitled to vote at said meeting, wherefore, Article
FIFTH of the Articles of Incorporation was amended to read as
follows:
"FIFTH: the total number of shares of
stock which the Corporation shall have
authority to issue is 200,000,000 shares,
all of one class called common stock, of
the par value of one tenth of one cent
($0.001) per share and of the aggregate
par value of $200,000. Each share shall
be entitled to full and equal voting
rights."
IN WITNESS WHEREOF, the undersigned President and
Secretary of Fund for Government Investors, Inc., who executed
the foregoing Amendment to Articles of Incorporation hereby
<PAGE>
acknowledge the same to be their act and further acknowledge
that, to the best of their knowledge the matters and facts set
forth therein are true in all material respects under the
penalties of perjury.
Dated this 7th day of January, 1976.
/s/ Daniel L. O'Connor III
Daniel L. O'Connor III
President
ATTEST:
/s/Richard J. Garvey
Richard J. Garvey, Secretary
DISTRICT OF COLUMBIA, SS:
THIS IS TO CERTIFY That, on the 7th day of January,
1976, before me, the subscriber, a Notary Public in and for
the District of Columbia, personally appeared DANIEL L.
O'CONNOR III and RICHARD J. GARVEY, and acknowledged the
foregoing Amendment to Articles of Incorporation to be their
act and deed and that the facts therein stated are truly set
forth.
WITNESS my hand and Notarial Seal the day and year
last above written.
/s/Mildred M. Keeree
Notary Public
- 2 -
<PAGE>
My Commission Expires: May 31, 1978
- 3 -
<PAGE>
ARTICLES OF AMENDMENT
OF
FUND FOR GOVERNMENT INVESTORS, INC.
approved and received for record by the State Department of
Assessments and Taxation of Maryland January 8, 1976 at 3:00
o'clock P.M. as in conformity with law and ordered recorded.
3
Recorded in Liber 2244, folio 610, one of the Charter
Records of the State Department of Assessments and Taxation of
Maryland.
Bonus tax paid $______ Recording fee paid $15.00
To the clerk of the Superior Court of Baltimore City
IT IS HEREBY CERTIFIED, that the within instrument,
together with all endorsements thereon, has been received,
approved and recorded by the State Department of Assessments
and Taxation of Maryland.
AS WITNESS my hand and seal of the said Department at
Baltimore.
/s/Richard H. Keller
<PAGE>
AMENDMENT TO
ARTICLES OF INCORPORATION
FUND FOR GOVERNMENT INVESTORS, INC.
THIS IS TO CERTIFY:
That on October 19, 1979, the quarterly meeting of
the Board of Directors of the Fund for Government Investors,
Inc. was held at which the Board unanimously approved an
increase in Authorized Capital from 200,000,000 shares of the
par value of one tenth of one cent ($0.001) per share to
1,000,000,000 shares of the par value of one tenth of one cent
($0.001) per share. On November 20, 1979 at a special meeting
of shareholders the majority of which also voted to approve
the increase of Authorized Capital to 1,000,000,000 shares.
This vote is sufficient pursuant to the charter provisions,
allowing a majority vote. Wherefore Article Fifth of the
Articles of Incorporation was amended to read as follows:
"FIFTH: the total number of shares of
stock which the Corporation shall have
authority to issue is 1,000,000,000
shares, all of one class called Common
Stock, of the par value of one tenth of
one cent ($0.001) per share and of the
aggregate par value of $1,000,000. Each
<PAGE>
share shall be entitled to full and equal
voting rights."
IN WITNESS WHEREOF, the undersigned President and
Secretary of Fund For Government Investors, Inc., who executed
the foregoing Amendment to Articles of Incorporation hereby
acknowledge the same to be their act and further acknowledge
that, to the best of their knowledge the matters and facts set
forth therein are true in all material respects under the
penalties of perjury.
Dated this 20th day of November, 1979.
/s/ Daniel L. O'Connor, III
Daniel L. O'Connor, III
President
ATTEST:
/s/Richard J. Garvey
Richard J. Garvey, Secretary
DISTRICT OF COLUMBIA, SS:
THIS IS TO CERTIFY That, on this 20th day of November, 1979,
before me, the subscriber, a Notary Public in and for the
District of Columbia, personally appeared DANIEL L. O'CONNOR
III and RICHARD J. GARVEY, and acknowledged the foregoing
Amendment to Articles of Incorporation to be their act and
deed and that the facts therein stated are truly set forth.
- 2 -
<PAGE>
WITNESS my hand and Notarial Seal the day and year last above
written.
/s/Margaret R. Conley
Notary Public
My Commission Expires: April 14,
1984
- 3 -
<PAGE>
ARTICLES OF AMENDMENT
OF
FUND FOR GOVERNMENT INVESTORS, INC.
approved and received for record by the State Department of
Assessments and Taxation of Maryland November 21, 1979 at 3:00
o'clock P.M. as in conformity with law and ordered recorded.
3
Recorded in Liber 2460, folio 000219, one of the Charter
Records of the State Department of Assessments and Taxation of
Maryland.
Bonus tax paid $160.00 Recording fee paid $20.00 Special Fee
paid $_______
To the clerk of the Superior Court of Baltimore City
IT IS HEREBY CERTIFIED, that the within instrument,
together with all endorsements thereon, has been received,
approved and recorded by the State Department of Assessments
and Taxation of Maryland.
AS WITNESS my hand and seal of the said Department at
Baltimore.
/s/William J. Simmons
<PAGE>
AMENDMENT TO
ARTICLES OF INCORPORATION
FUND FOR GOVERNMENT INVESTORS, INC.
THIS IS TO CERTIFY:
THAT this amendment was advised by the board of
directors and was approved by the stockholders.
THAT immediately before this amendment the total
number of shares which the corporation had authority to issue
was 1,000,000,000 shares of the par value of one tenth of one
cent ($0.001) per share and of the aggregate par value of
$1,000,000. All shares of the same class.
THAT immediately upon this amendment taking effect,
the total number of shares which the corporation has authority
to issue is 2,000,000,000 shares of the par value of one tenth
of one cent ($0.001) per share and of the aggregate par value
of $2,000,000. All shares are of the same class.
WHEREFORE, Article Fifth of the Articles of
Incorporation was amended to read as follows:
"FIFTH: The total number of shares of
stock which the Corporation shall have
authority to issue is 2,000,000,000
shares, all of one class called Common
Stock, of the par value of one tenth of
one cent ($0.001) per share and of the
aggregate par value of $2,000,000. Each
share shall be entitled to full and equal
voting rights."
IN WITNESS WHEREOF, the undersigned President and
Secretary of Fund For Government Investors, Inc., who executed
<PAGE>
the foregoing Amendment to Articles of Incorporation hereby
acknowledge the same to be their act and further acknowledge
that, to the best of their knowledge the matters and facts set
forth therein are true in all material respects under the
penalties of perjury.
Dated this 10th day of June, 1981.
/s/Richard J. Garvey
Richard J. Garvey,
President
ATTEST:
/s/Lisa D. Kniotek
Lisa D. Kniotek, Assistant Secretary
DISTRICT OF COLUMBIA, SS:
THIS IS TO CERTIFY That, on the 10th day of June, 1981,
before me, the subscriber, a Notary Public in and for the
District of Columbia, personally appeared RICHARD J. GARVEY
and LISA D. KNIOTEK and acknowledged the foregoing Amendment
to Articles of Incorporation to be their act and deed and that
the facts therein stated are truly set forth.
WITNESS my hand and Notarial Seal this 10th day of June,
1981.
/s/Carol L. Feistel
- 2 -
<PAGE>
Notary Public
My Commission Expires: April 14, 1983
- 3 -
<PAGE>
ARTICLES OF AMENDMENT
OF
FUND FOR GOVERNMENT INVESTORS, INC.
approved and received for record by the State Department of
Assessments and Taxation of Maryland June 10, 1981 at 2:00
o'clock P.M. as in conformity with law and ordered recorded.
3
Recorded in Liber 2511 folio 2295, one of the Charter
Records of the State Department of Assessments and Taxation of
Maryland.
Bonus tax paid $100.00 Recording fee paid $20.00 Special Fee
paid $_____
To the clerk of the Superior Court of Baltimore City
IT IS HEREBY CERTIFIED, that the within instrument,
together with all endorsements thereon, has been received,
approved and recorded by the State Department of Assessments
and Taxation of Maryland.
AS WITNESS my hand and seal of the said Department at
Baltimore.
/s/J. Kevin Neally
<PAGE>
AMENDMENT TO
ARTICLES OF INCORPORATION
OF
FUND FOR GOVERNMENT INVESTORS, INC.
THIS IS TO CERTIFY:
THAT this amendment was advised by the Board of Directors
and was approved by the stockholders.
THAT immediately before this amendment the total number
of shares which the corporation had authority to issue was
2,000,000,000 shares of the par value of one tenth of one cent
($0.001) per share and of the aggregate par value of
$2,000,000. All shares are the same class.
THAT immediately upon this amendment taking effect, the
total number of shares which the corporation has authority to
issue is 3,000,000,000 shares of the par value of one tenth of
one cent ($0.001) per share and of the aggregate par value of
$3,000,000. All shares are of the same class.
WHEREFORE, Article FIFTH of the Articles of Incorporation
was amended to read as follows:
"FIFTH: The total number of shares of
stock which the Corporation shall have
authority to issue is 3,000,000,000
shares, all of one class called Common
Stock, of the par value of one tenth of
one cent ($0.001) per share and of the
<PAGE>
aggregate par value of $3,000,000. Each
share shall be entitled to full and equal
voting rights."
IN WITNESS WHEREOF, the undersigned President and
Secretary of Fund For Government Investors, Inc., who executed
the foregoing Amendment to Articles of Incorporation hereby
acknowledge the same to be their act and further acknowledge
that, to the best of their knowledge the matters and facts set
forth therein are true in all material respects under the
penalties of perjury.
Dated this 25th day of June, 1982.
/s/Richard J. Garvey
Richard J. Garvey
President
ATTEST:
/s/Lisa D. Kelelis
Lisa D. Kelelis, Assistant Secretary
DISTRICT OF COLUMBIA, SS:
THIS IS TO CERTIFY That, on this 25th day of June, 1982,
before me, the subscriber, a Notary Public in and for the
District of Columbia, personally appeared RICHARD J. GARVEY
and LISA D. KELELIS and acknowledged the foregoing Amendment
to Articles of Incorporation to be their act and deed and that
the facts therein stated are truly set forth.
WITNESS my hand and Notarial Seal this 25th day of June,
1982.
- 2 -
<PAGE>
/s/Margaret R. Conley
Notary Public
My Commission Expires: April 14, 1984
- 3 -
<PAGE>
ARTICLES OF AMENDMENT
OF
FUND FOR GOVERNMENT INVESTORS, INC.
approved and received for record by the State Department of
Assessments and Taxation of Maryland June 28, 1982 at 9:28
o'clock A.M. as in conformity with law and ordered recorded.
3
Recorded in Liber 2547 folio 1932, one of the Charter
Records of the State Department of Assessments and Taxation of
Maryland.
Bonus tax paid $30.00 Recording fee paid $20.00 Special Fee
paid $_____
To the clerk of the Superior Court of Baltimore City
IT IS HEREBY CERTIFIED, that the within instrument,
together with all endorsements thereon, has been received,
approved and recorded by the State Department of Assessments
and Taxation of Maryland.
AS WITNESS my hand and seal of the said Department at
Baltimore.
/s/Dan W. Kittman
<PAGE>
EXHIBIT 2:
BY-LAWS
<PAGE>
BY LAWS
FUND FOR GOVERNMENT INVESTORS, INC.
ARTICLE I
Section 1. The title of this corporation is FUND FOR
GOVERNMENT INVESTORS, INC.
Section 2. The post office address of the principal
office of the Corporation in this State is 4922 Fairmont
Avenue, Bethesda, Maryland 20814. The name of the resident
agent of the Corporation in this State is William L. Major, a
resident of this State, and the post office address of the
resident agent is 4922 Fairmont Avenue, Bethesda, Maryland
20814.
The Corporation may also have an office and keep its
records at such places as the Board of Directors may from time
to time designate.
Section 3. The corporate seal shall be circular in
form and have inscribed thereon the name of the Corporation
and the year of its incorporation and the words "Corporate
Seal, Maryland". Said seal may be used by causing it or a
facsimile thereof to be imprinted or affixed or otherwise
reproduced.
ARTICLE II
MEETING OF STOCKHOLDERS
Section 1. Meetings of the Stockholders for the
election of Directors shall be held in such places as the
<PAGE>
Board of Directors may by resolution establish. Meetings of
Stockholders for any other purpose may be held at such place
and time as shall be stated in the notice of the meeting, or
in a duly executed waiver of notice thereof.
Section 2. Meetings of the Stockholders may be called
by the President, or by a majority of the Board of Directors
and shall be called by the President or Secretary upon the
written request of the holders of stock entitled to cast not
less than 25% of all the votes entitled to be cast at such
meeting. Costs of preparing and mailing the notice of such
meeting shall be paid in advance by the requesting
shareholders.
Section 3. Not less than ten nor more than sixty days
before the date of every Stockholders' Meeting, the Secretary
shall give to each Stockholder entitled to vote at such
meeting written notice stating time and place of the meeting
and the purpose or purposes for which the meeting is called.
Business transacted at any Meeting of Stockholders shall be
limited to the purposes stated in the Notice.
Section 4. The Board of Directors may fix in advance
a date not less than ten days nor more than sixty days, prior
to the date of any Meeting of the Stockholders, as a record
date for the determination of the Stockholders entitled to
receive a notice of, and to vote at any meeting and any
adjournment thereof, and in such case such Stockholders and
only such Stockholders as shall be Stockholders of record on
- 3 -
<PAGE>
the date so fixed shall be entitled to receive notice of and
to vote at such meeting and any adjournment thereof, as the
case may be, notwithstanding any transfer of any stock on the
books of the Corporation after any such record date fixed as
aforesaid.
Section 5. At any meeting of Stockholders, the
presence in person or by proxy of the Stockholders entitled to
cast majority of the votes thereof shall constitute a quorum.
If, however, such quorum shall not be present or represented
at any meeting, the Stockholders entitled to vote thereat,
present in person or represented by proxy, shall have the
power to adjourn the meeting from time to time, without notice
other than announcement at the meeting until a quorum shall be
present or represented. At such adjourned meeting at which a
quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as
originally convened.
Section 6. The vote of the holders of a majority of
the stock having voting power, present in person or
represented by proxy, at a meeting duly called and at which a
quorum is present, shall decide any question brought before
such meeting, unless a greater proportion than a majority is
required for such question by applicable statutes, the
Certificate of Incorporation, or these By-Laws.
Section 7. Each stockholder shall have one vote in
person or by proxy for each share of stock having voting power
- 4 -
<PAGE>
held by such Stockholder on each matter submitted to a vote at
a meeting of Stockholders, but no proxy shall be valid after
eleven months from its date, unless otherwise provided in the
proxy. At all meetings of Stockholders, unless the voting is
conducted by inspectors, all questions relating to the
qualification of voters and the validity of proxies and the
acceptance or rejection of votes shall be decided by the
Chairman of the meeting.
Section 8. At any election of Directors, the Board of
Directors prior thereto may, or if they have not so acted, the
Chairman of the meeting may, and upon the request of the
holders of ten percent (10%) of the shares entitled to vote at
such election shall, appoint two inspectors of election who
shall first subscribe an oath or affirmation to execute
faithfully the duties of inspectors at such election with
strict impartiality and according to the best of their
ability, and shall after the election make a certification of
its result of the vote taken. No candidate for the Board of
Directors shall be appointed such inspector. The Chairman of
the meeting may cause a vote by ballot to be taken upon the
request of the holders of ten percent (10%) of the stock
entitled to vote on such election or matter.
Section 9. The Officer who has charge of the stock
ledger of the Corporation shall, at least ten days before
every election of Directors, prepare and make a complete list
of the Stockholders entitled to vote at said election, arrange
- 5 -
<PAGE>
in alphabetical order, showing the address of and the number
of shares registered in the name of each Stockholder. Such
list shall be available to the inspectors so appointed at any
Stockholders' meeting. If no inspectors are appointed, all
questions relating to the qualification of voters and the
validity of proxies and the acceptance or rejection of votes
shall be decided by the Chairman of the meeting.
Section 10. Notwithstanding anything contained in
these By-Laws to the contrary, there shall be no requirement
to have an Annual Meeting of Stockholders in any year in which
none of the following matters are required to be acted upon by
the stockholders pursuant to the Investment Company Act of
1940, as amended: (i) the election of directors; (ii)
approval of the investment advisory agreement; (iii) approval
of a distribution agreement; or (iv) ratification of the
selection of independent public accountants for the
Corporation.
ARTICLE III
DIRECTORS
Section 1. The business of the Corporation shall be
managed by its Board of Directors, which may exercise all
powers of the Corporation, except such as are by statute, or
Certificate of Incorporation, or by these By-Laws conferred
upon or reserved to the Stockholders.
- 6 -
<PAGE>
Section 2. The number of Directors which shall
constitute the whole Board shall be determined from time to
time by the Board of Directors, but shall not be fewer than
three or more than fifteen. Each Director elected shall hold
office until his successor is elected and qualifies.
Directors need not be Stockholders.
Section 3. The Directors shall be elected by the
Stockholders, except that any vacancy in the Board resulting
from any cause other than an increase in the authorized number
of Directors may be filled by majority vote of the entire
Board of Directors. However, if at any time after the filling
of any vacancy, less than a majority of the Directors then
holding office were elected by Stockholders, a Stockholders'
meeting shall be called as soon as possible, and in any event,
within sixty days, for the purpose of electing an entire new
Board of Directors.
Section 4. Meetings of the Board of Directors,
regular or special, may be held at any place within or outside
the State of Maryland as the Board may from time to time
determine.
Section 5. At all meetings of the Board of Directors,
a majority of the entire Board of Directors shall constitute a
quorum for the transaction of business and the action of a
majority of the Directors present at any meeting at which a
quorum is present shall be the action of the Board of
Directors unless the concurrence of a greater proportion is
- 7 -
<PAGE>
required for such action by the laws of Maryland, these By-
Laws or the Articles of Incorporation. If a quorum shall not
be present at any meeting of Directors, the Directors present
thereat may by a majority vote adjourn the meeting from time
to time, without notice other than announcement at the meeting
until a quorum shall be present.
Section 6. The first meeting of each newly elected
Board of Directors shall be held as soon as practical
following the Meeting of Stockholders. The meeting may be
held at such time and place as shall be specified in a notice
given as hereinafter provided for Special Meetings of the
Board of Directors, or as shall be specified in a written
waiver signed by all of the Directors.
Section 7. Regular meetings of the Board of Directors
may be held without notice at such time and place as shall
from time to time be determined by the Board of Directors.
Section 8. Special Meetings of the Board of Directors
may be called by the President on one day's notice to each
Director; Special Meetings shall be called by the President or
Secretary in like manner and on like notice on the written
request of two Directors.
Section 9. Any action required or permitted to be
taken at any meeting of the Board of Directors or of the
Committee thereof may be taken without a meeting, if a written
consent to such action is signed in one or more counterparts
by all members of the Board or of such Committee, as the case
- 8 -
<PAGE>
may be, and such written consent is filed with the minutes of
proceedings of the Board or Committee.
Section 10. The Board of Directors may, by resolution
passed by a majority of the whole Board, appoint from among
its members an Executive Committee and other Committees
composed of two or more Directors, and may delegate to such
Committees, in the intervals between meetings of the Board of
Directors, any or all of the powers of the Board of Directors
in the management of the business and affairs of the
Corporation except the power to declare dividends, to issue
stock or to recommend to Stockholders any action requiring
Stockholders' approval. In the absence of any member of such
committee, the members thereof present at any meeting, whether
or not they constitute a quorum, may appoint a member of the
Board of Directors to act in the place of such absent member.
Section 11. The Committees shall keep minutes of their
proceedings and shall report the same to the Board of
Directors at the meeting next succeeding, and any action by
the Committees shall be subject to revision and alteration by
the Board of Directors, provided that no rights of third
persons shall be affected by any such revision or alteration.
Section 12. Any Director, whether or not he is a
salaried officer or employee of the Corporation, may be
compensated for his services as Director or as a member of a
Committee of Directors, or as Chairman of the Board or
Chairman of a Committee, by fixed periodic payments or by fees
- 9 -
<PAGE>
for attendance at meetings or by both, and in any event, may
be reimbursed for transportation and other expenses, in such
manner and amounts at the Board of Directors may from time to
time determine.
ARTICLE IV
NOTICES
Section 1. Notices to Stockholders shall be in
writing and delivered personally or mailed to the Stockholders
at their addresses appearing on the books of the Corporation.
Notices to Directors shall be oral or by telephone or
telegraph or in writing or delivered personally or mailed to
the Directors at their addresses appearing on the books of the
Corporation. Notices by mail shall be deemed to be given at
the time when the same shall be mailed. Notice to Directors
need not state the purpose of a Regular or Special Meeting.
Section 2. Whenever any notice of the time, place or
purpose of any meeting of Stockholders, Directors or Committee
is required to be given under the provisions of Maryland Law
or under the provisions of the Articles of Incorporation or
these By-Laws, a waiver thereof in writing, signed by the
person or persons entitled to such notice and filed with the
records of the meeting, whether before or after the holding
thereof, or actual attendance at the meeting of Stockholders
in person or by proxy, or at the meeting of Directors or
- 10 -
<PAGE>
Committee in person shall be deemed equivalent to the giving
of such notice to such persons.
ARTICLE V
OFFICER
Section 1. The Officers of the Corporation shall be
chosen by the Board of Directors and shall include a
President, who shall be a Director, a Secretary and a
Treasurer. The Board of Directors may also choose one or more
Vice Presidents, Assistant Secretaries and Assistant
Treasurers. Two or more offices may be held by the same
person but no Officer shall execute, acknowledge or verify any
instrument in more than one capacity, if such instrument is
required by law, the Articles of Incorporation or these By-
Laws to be executed, acknowledged or verified by two or more
Officers.
Section 2. The Board of Directors at its first
meeting after each Meeting of Stockholders shall choose a
President, a Secretary and a Treasurer.
Section 3. The Board of Directors from time to time
may appoint such other Officers and agents as its shall deem
advisable, who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be
determined from time to time by the Board. The Board of
Directors from time to time may delegate to one or more
Officers or agents the power to appoint any such subordinate
- 11 -
<PAGE>
officers or agents and to prescribe the respective rights,
terms of office, authorities and duties.
Section 4. The salaries or other compensation of all
Officers and agents of the Corporation shall be fixed by the
Board of Directors, except that the Board of Directors may
delegate to any person or group of persons the power to fix
the salary or other compensation of any subordinate officers
or agents appointed pursuant to Section 3 of this Article V.
Section 5. The Officers of the Corporation shall
serve for one year and until the successors are chosen and
qualify. Any Officer or agent may be removed by the
affirmative vote of a majority of the Board of Directors
whenever, in its judgment, the best interests of the
Corporation will be served thereby. Any vacancy occurring in
any office of the Corporation by death, resignation, removal
or otherwise shall be filled by the Board of Directors.
Section 6. The Chairman of the Board shall be the
Chief Executive Officer of the Corporation; he shall preside
at all meetings of the Stockholders and Directors, shall be
ex-officio a member of all standing committees and shall see
that all orders and resolutions of the Board are carried into
effect.
Section 7. The President shall be the Chief
Administrative Officer of the Corporation. In addition, he
shall, at the request or in the absence or disability of the
Chairman of the Board perform the duties and exercise the
- 12 -
<PAGE>
powers of the Chairman of the Board, and shall perform such
other duties and have such other powers as the Board of
Directors may from time to time prescribe.
Section 8. The Vice Presidents, in the order of their
seniority, shall in the absence or disability of the
President, perform the duties and exercise the powers of the
President and shall perform such other duties as the Board of
Directors may from time to time prescribe.
Section 9. The Secretary shall attend all meetings of
the Board of Directors and all meetings of the Stockholders
and record all the proceedings thereof and shall perform like
duties for any committee when required. He shall give, or
cause to be given, notice of meetings of the Stockholders and
of the Board of Directors, and shall perform such other duties
as may be prescribed by the Board of Directors or President,
under whose supervision he shall be. He shall keep in safe
custody the seal of the Corporation and when authorized by the
Board of Directors, affix and attest the name to any
instrument requiring it. The Board of Directors may give
general authority to any other Officer to affix the seal of
the Corporation and to attest the affixing of his signature.
Section 10. The Assistant Secretaries, in order of
their seniority, shall in the absence or disability of the
Secretary, perform the duties and exercise the powers of the
Secretary and shall perform such other duties as the Board of
Directors shall prescribe.
- 13 -
<PAGE>
Section 11. The Treasurer shall be the Chief Financial
Officer of the Corporation. He shall be responsible for the
maintenance of its accounting records and shall render to the
Board of Directors, at its Regular Meetings, or when the Board
of Directors so requires, an account of all the Corporation's
financial transactions and a report of the financial condition
of the Corporation.
Section 12. The Assistant Treasurers, in order of
their seniority, shall in the absence or disability of the
Treasurer, perform the duties and exercise the powers of the
Treasurer and shall perform such other duties as the Board of
Directors shall from time to time prescribe.
ARTICLE VI
SALE AND REDEMPTION OF SHARES
Section 1. The shares of stock of the Corporation
shall be issued and redeemed at the net asset value of the
shares, with such net asset value being calculated in good
faith at such times and in accordance with such procedures as
the Board of Directors may from time to time establish in
accordance with applicable law.
Section 2. All consideration received by the
Corporation for the issue or sale of stock of each class,
together with all income, earnings, profits and proceeds
thereof, including any proceeds derived from the sale,
exchange or liquidation thereof, and any funds or payments
- 14 -
<PAGE>
derived from any reinvestment of such proceeds in whatever
form the same may be, shall irrevocably belong to the class of
shares of stock with respect to which such assets, payments or
funds were received by the Corporation for all purposes,
subject only to the rights of creditors, and shall be so
handled upon the books of account of the Corporation. Such
assets, income, earnings, profits and proceeds thereof,
including any proceeds derived from the sale, exchange or
liquidation thereof and any asset derived from any
reinvestment of such proceeds in whatever form the same may
be, are herein referred to as "assets belonging to" such
class.
Section 3. In the event of the liquidation or
dissolution of the Corporation, shareholders of each class
shall be entitled to receive, as a class, out of the assets of
the Corporation, available to distribution to shareholders,
but other than general assets not belonging to any particular
class of stock, the assets belonging to such class, and the
assets so distributable to the shareholders of any class shall
be distributed among such shareholders in proportion to the
number of shares of such class held by them and recorded on
the books of the Corporation. In the event that there are any
general assets not belonging to any particular class of stock
and available for distribution, such distribution shall be
made to the holders of stock of all classes in proportion to
- 15 -
<PAGE>
the asset value of the respective classes determined as
hereinafter provided.
Section 4. The assets belonging to any class of stock
shall be charged with the liabilities in respect to such
class, and shall also be charged with its share of the general
liabilities of the Corporation, in proportion to the asset
value of the respective classes determined as hereinafter set
out. The determination of the Board of Directors shall be
conclusive as to the amount of liabilities, including accrued
expenses and reserves, as to the allocation of the same as to
a given class, and as to whether the same or general assets of
the Corporation are allocable to one or more classes.
Section 5. Each holder of any class of stock of the
Corporation, who surrenders his certificate in good delivery
form to the Corporation or, if the shares in question are not
represented by certificates, who delivers to the Corporation a
written request in good order signed by the shareholder, shall
be entitled to convert the shares in question on the basis
hereinafter set forth, into shares of any other class of the
Corporation. The Corporation shall determine the net asset
value, as hereinafter defined, of the shares to be converted
and shall deduct therefrom such conversion cost, hereinafter
described and, within five (5) business days after such
surrender and payment, shall issue to the shareholder such
number of shares of stock of the class desired, taken at the
net asset value thereof determined in the same manner and at
- 16 -
<PAGE>
the same time as that of the shares surrendered, necessary to
equal the net asset value of the shares surrendered less the
conversion cost as aforesaid. Any amount representing a
fraction of a share may be paid in cash at the option of the
Corporation. The conversion cost above mentioned shall be
determined by adding a transaction charge as determined by the
Board of Directors. The transaction charge may be paid and/or
assigned by the Corporation to the underwriter and/or to any
other agency, as it may elect. Upon the conversion taking
place, proper transfer shall be made between the assets
belonging to the respective classes of stock. The Board of
Directors may limit this conversion privilege to shares which
have been held for such reasonable period of time as the
Directors may determine.
ARTICLE VII
STOCK
Section 1. Each Stockholder shall be entitled to a
certificate or certificates which shall certify the number of
shares owned by him in the Corporation. Each certificate
shall be signed by the President or a Vice President and
countersigned by the Secretary or an Assistant Secretary or
the Treasurer or an Assistant Treasurer and shall be sealed
with the Corporate Seal. The signatures may be either manual
or facsimile signatures and the seal may be either facsimile
or any other form. If certificates are not requested by the
- 17 -
<PAGE>
Stockholder, his shares will be held on deposit by the
Corporation.
Section 2. In case any Officer who has signed any
certificate ceases to be an Officer of the Corporation before
the certificate is issued, the certificate may nevertheless be
issued by the Corporation with the same effect as if the
Officer had not ceased to be such Officer as of the date of
its issue.
Section 3. Notwithstanding the foregoing provisions
of this Article VII the Corporation shall have full power to
participate in any program approved by the Board of Directors
providing for the recording and transfer of ownership of
shares of the Corporation's stock by electronic or other means
without the issuance of certificates.
Section 4. The Board of Directors may direct a new
certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the
Corporation alleged to have been stolen, lost or destroyed,
upon the taking of an affidavit of that fact by the person
claiming the certificate of stock to be stolen, lost or
destroyed, or upon other satisfactory evidence of such loss or
destruction. When authorizing such issuance of a new
certificate or certificates, the Board of Directors may, in
its discretion and as a condition precedent to the issuance
thereof, require the owner of such stolen, lost or destroyed
certificate or certificates, or his legal representative, to
- 18 -
<PAGE>
advertise the same in such manner as it shall require and to
give the Corporation a bond, with sufficient surety to the
Corporation to indemnify it against any loss or claim that may
be made by reason of the issuance of a new certificate.
Section 5. The Board of Directors may fix, in
advance, a record date in order to make a determination of
Stockholders for any proper purpose as provided in Article II,
Section 5 of these By-Laws.
Section 6. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares
endorsed or accompanied by proper evidence of succession,
assignment, or authority to transfer, it shall be the duty of
the Corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 7. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its
books as the owner of shares to receive dividends and to vote
as such owner. The Corporation shall not be bound to
recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as
otherwise provided by the Laws of Maryland.
Section 8. The Board of Directors may from time to
time appoint or remove transfer agents and/or registrars of
transfers of shares of stock of the Corporation, and it may
- 19 -
<PAGE>
appoint the same person as both transfer agent and registrar.
Upon any such appointment being made, all certificates
representing shares of stock thereafter issued shall be
countersigned by one of such transfer agents or by one of such
registrars of transfers or by both and shall not be valid
unless so countersigned. If the same person shall be both
transfer agent and registrar, only one countersignature by
such person shall be required.
Section 9. The Corporation shall maintain an original
stock ledger containing the names and addresses of all
Stockholders and the number of shares held by each
Stockholder. Such stock ledger may be in written form or any
other form capable of being converted into written form within
a reasonable time for visual inspection.
ARTICLE VIII
AMENDMENTS OF BY-LAWS
Section 1. These By-Laws may be amended, altered,
repealed, or added to at any meeting of the Stockholders or
Board of Directors by affirmative vote of a majority of the
stock issued and outstanding entitled to vote or of a majority
of the whole authorized number of Directors, as the case may
be.
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<PAGE>
EXHIBIT 9:
CUSTODY AND ADMINISTRATIVE SERVICES AGREEMENT
BETWEEN
REGISTRANT AND RUSHMORE TRUST AND SAVINGS, FSB
<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
BETWEEN
FUND FOR GOVERNMENT INVESTORS, INC.
AND
RUSHMORE TRUST AND SAVINGS, FSB
This Administrative Services Agreement (the "Agreement") is
entered into this 1st day of September, 1993 by and between Fund
for Government Investors, Inc. (the "Fund") and Rushmore Trust
and Savings, FSB ("RTS" sometimes hereinafter referred to as the
"Administrator").
RECITALS
I. WHEREAS RTS and its personnel have expertise and
experience in providing custodian, transfer agent, shareholder
accounting and other administrative services to registered
investment management companies, and
II. WHEREAS the parties wish to set forth herein the manner
and terms upon which services will be provided.
NOW THEREFORE, the parties hereto agree as follows:
EMPLOYMENT OF RTS
1. The fund hereby employs RTS to perform the services as
set forth in Schedule 1 to this agreement.
2. As compensation for the services to be rendered The
Fund shall pay RTS an annual fee based on 25 basis points (.25 of
1%) of the average daily net asset value of the Fund.
The fee will be accrued by The Fund daily and paid on such
terms as may from time-to-time be mutually agreeable to The Fund
and RTS. In the event of termination of this contract, the fee
shall be computed on the basis of the period ending on the last
business day on which this contract is in effect subject to a pro
rata adjustment based on the number of days elapsed in the
current month as a percentage of the total number of days in such
month.
In addition to the fees described above, RTS may impose a
charge of $5 per month on any account whose average daily balance
for the month falls below $500 due to redemptions. The fee will
continue to be imposed during months when the account balance
remains below $500. The fee will be imposed on the last business
day of the month. This fee will not be imposed on tax-sheltered
retirement plans or accounts established under the Uniform Gifts
or Transfers to Minors Act.
<PAGE>
3. Subject to and in accordance with the governing
instruments of the Fund and of RTS respectively, directors,
officers, agents and stockholders of the Fund are or may be
interested in RTS (or any successor thereof) as shareholders or
otherwise; and the effect of any such inter-relationships shall
be governed by said governing instruments and the applicable
provisions of the Investment Company Act of 1940.
4. This contract shall continue in effect so long as such
continuance is approved at least annually by a vote of a majority
of the Fund's Board of Directors, including the votes of a
majority of the Directors who are not parties to such contract or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting such approval. Provided,
however, that (a) this Contract may be terminated without penalty
either by vote of the Board of Directors of the Fund or by vote
of a majority of the outstanding voting securities of the Fund,
on sixty-days prior written notice to RTS, (b) this Contract
shall automatically terminate in the event of its assignment
(within the meaning of the Investment Company Act of 1940), and
(c) this Contract may be terminated by RTS on sixty-days prior
written notice to the Fund. Any notice under this Contract shall
be given in writing, addressed and delivered, or mailed postpaid,
to the other party at any office of such party. As used in this
Agreement, the terms "interested persons" and "vote of a majority
of the outstanding securities" shall have the respective meanings
set forth in Section 2(a)(19) and Section 2(a)(42) of the
Investment Company Act of 1940.
5. The services of RTS to the Fund hereunder are not to be
deemed exclusive, and RTS shall be free to render similar
services to others so long as its services hereunder are not
impaired thereby. RTS shall for 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.
6. No provisions of this Agreement shall be deemed to
protect RTS against any liability to the Fund or its shareholders
to which it otherwise would 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 Agreement. Nor shall any provisions hereof be deemed to
protect any Director or officer of the Fund against any such
liability to which he might otherwise be subject by reason of any
willful misfeasance, bad faith or gross negligence in the
performance of his duties or the reckless disregard of his
obligations. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
Page 3
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7. Upon delivery of services by RTS to the Fund, RTS shall
prepare and submit to the Fund, an invoice for the amounts to be
paid by the Fund under the Agreement. The invoice shall contain
a description of the services rendered. The calculation of the
amount of the invoice shall be in accordance with the fee
schedule as set forth in Section 2. which has been reviewed as to
the reasonableness of the amounts by the Directors of the Fund
who are not "interested persons" of the Fund. Unless agreed
otherwise, within thirty (30) days of receipt of such invoice,
the Fund shall pay to RTS all amounts indicated as due and
payable notwithstanding the provisions of Section 8. of this
Agreement.
8. If the Fund or its designees shall determine any
discrepancy in the invoice, the Fund shall give RTS written
notice of such discrepancy and the amount thereof. Within ten
(10) days after receipt of such notice, RTS shall either pay the
Fund the amount of the discrepancy or inform the Fund in writing
that RTS disputes the existence or amount of the discrepancy. If
RTS disputes the existence or amount of the discrepancy, the
parties agree that for a period of thirty (30) days they shall
use their best efforts to resolve such dispute on a mutually
satisfactory basis.
9. Any dispute or disagreement arising between RTS and the
Fund in conjunction with any provision of this Agreement, or the
compliance or non-compliance therewith, or the validity or
enforceability thereof which is not settled within thirty (30)
days (or such other period as may be mutually agreed upon) from
the date that either party informs the other in writing that such
dispute or disagreement exists, shall be settled by arbitration
in accordance with rules set by a three member panel, one member
each selected by RTS and the Fund and the third being an attorney
selected by mutual agreement of RTS and the Fund, the aforesaid
with all charges submitted by said attorney to be shared equally
by RTS and the Fund. The member representing the Fund shall be
selected by a majority of the Directors of the Fund who are not
"interested persons" of the Fund. A decision shall be rendered
by the panel within thirty (30) days of a meeting held in such
place or places as may be agreed by the panel, and RTS and the
Fund shall comply with such decision. The decision of the panel
shall be final and not subject to judicial review, and judgment
may be entered thereon in accordance with applicable law in any
court having jurisdiction thereof.
10. Absent willful misfeasance, bad faith, gross negligence
or reckless disregard of duties, RTS shall not be liable to the
Fund for any special, incidental, or consequential damages for
losses arising out of or relating to the performance of its
obligations under this Agreement, whether or not such damages or
losses were caused by the acts or omissions of RTS or its
employees. RTS is fully responsible for the accurate
Page 4
<PAGE>
transmission to the Fund of information provided to RTS by third
parties but is not responsible for the accuracy of the
information so provided.
11. All documents and files which may be or have been
furnished by RTS to the Fund and which may be produced or
prepared by RTS in connection with this Agreement shall be and
remain the exclusive property of the Fund.
11. RTS will preserve for the periods required in Rule 31a-
2 of the General Rules and Regulations under the Investment
Company Act of 1940 such records maintained by it as are required
to be maintained by Rule 31a-1 of such rules.
12. At the option of a majority of the Directors of the
Fund who are not "interested persons" of the Fund, the books and
records of RTS, insofar as such books and records pertain to the
services, shall be available for inspection by the Fund and its
agents at the offices of RTS during regular business hours, upon
prior written notice to RTS by the Fund.
13. Neither RTS nor the Fund shall be considered to be in
default in the performance of their respective obligations
hereunder to the extent that the performance of any such
obligation or obligations is prevented or delayed by Act of God
or any cause beyond the control of RTS or the Fund, as the case
may be. In the event of equipment breakdown beyond its control,
RTS shall take reasonable steps to minimize service
interruptions.
14. The services as provided by RTS in accordance with this
Agreement shall not be deemed accepted until the Fund has
verified the content and accuracy of those services provided by
RTS. The Fund shall notify RTS in writing within ten (10) days
of the Fund's receipt of services of its acceptance or rejection
of such services. If such notification is not received within
ten (10) days of the Trust's receipt of services, the services
will be deemed to have been accepted.
15. In the event that RTS fails to meet the performance
schedules (if any) contained herein and such failure is not
caused by the Fund, RTS shall take such steps as may be necessary
to improve the schedule(s) in such form as is required to meet
such performance or delivery schedules (if any) described herein.
16. RTS and the Fund may amend, modify or supplement this
Agreement only by a written instrument executed by both RTS and
the Fund. If any such amendment, modification, or supplement
causes an increase or decrease in the price of, or time required
for, the performance of this Agreement, an equitable adjustment
shall be made, and this adjustment shall be mutually agreed upon
Page 5
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by RTS and the Fund and the Agreement modified in writing
accordingly.
17. All notices, demand and other communications required
or permitted to be given hereunder shall be made in writing and
shall be deemed to be duly given if personally delivered or if
deposited in the United States mail, registered or certified
mail, with postage prepaid, and addressed to the appropriate
party at the address set forth below, or at such other address as
the parties may designate in writing delivered in accordance with
the provisions of this Section 17.
If to RTS:
Rushmore Trust and Savings, FSB
4922 Fairmont Avenue
Bethesda, MD 20814
Attention:
If to the Fund:
Fund for Government Investors, Inc.
4922 Fairmont Avenue
Bethesda, MD 20814
Attention: Daniel L. O'Connor, Chairman
18. This Agreement is intended by the parties as a full
expression of their agreement with respect to the subject matter
hereof and a complete and exclusive statement of the terms
thereof. No course of prior dealings between the parties and no
usage of trade shall be relevant or admissible to supplement,
explain, or vary any of the terms of this Agreement. Acceptance
of, or acquiescence in, a course of performance rendered under
this Agreement shall not be relevant or admissible to vary the
terms and meaning of this Agreement, even though the accepting or
acquiescing party has knowledge of the nature of the performance
and the opportunity to make objection. No representations,
undertakings, or agreements have been made or relied upon in the
making of this Agreement other than those specifically set forth
herein.
19. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland and shall be
binding upon and shall inure to the benefit of the parties
hereto.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.
WITNESS: FUND FOR GOVERNMENT INVESTORS, INC.
Page 6
<PAGE>
/s/
By: Chairman
WITNESS: RUSHMORE TRUST AND SAVINGS
/s/
By: Senior Vice President and
Chief Financial Officer
Page 7
<PAGE>
EXHIBIT I
RUSHMORE TRUST AND SAVINGS, FSB
DESCRIPTION OF SERVICES
SHAREHOLDER SERVICING AND TRANSFER AGENT SERVICES
Services included:
Maintenance of individual shareholder accounts
Posting all transactions
Preparation of periodic shareholder statements
Preparation of transaction confirmations
Income distributions
Respond to inquiries from shareholders
Process account changes such as name or address
CUSTODIAN SERVICES
Services included:
Safekeeping of securities
Delivery of securities sold
Receipt of securities purchased
Retain Fund cash in separate account(s)
ADMINISTRATIVE SERVICES
Services Included:
General ledger accounting
Portfolio accounting
Daily share pricing
Maintenance of records per SEC regulations
SEC registration fees
State "blue-sky" fees
Directors fees and expenses
Insurance
Legal fees
Prospectus preparation
Tax return preparation
Shareholder report preparation
Printing
Postage
Printing of statement stock
Mailing envelopes
Postage
<PAGE>
AMENDMENT TO
SHAREHOLDER SERVICES AGREEMENT
Between
FUND FOR GOVERNMENT INVESTORS, INC.
And
RUSHMORE SERVICES, INC.
Section 2. of this Shareholder Services Agreement dated
November 18, 1992 between the Fund for Government Investors, Inc.
and Rushmore Services, Inc. is deleted in its entirety and a new
Section 2. as follows is added:
Section 2. As compensation for the services to be rendered, the
Fund shall pay RTS an annual fee based on 25 basis points (25 of
1%) of the average daily net asset value of the Fund.
FUND FOR GOVERNMENT INVESTORS, INC.
By: /s/
Vice President and Secretary
RUSHMORE SERVICES, INC.
By: /s/
President
Date: April 21, 1993
<PAGE>
EXHIBIT 11:
OPINION AND CONSENT OF
JORDEN BURT BERENSON & JOHNSON LLP
<PAGE>
JORDEN BURT BERENSON & JOHNSON LLP
Suite 400 East
1025 Thomas Jefferson Street, N.W.
Washington, DC 20007-0805
February 6, 1996
Fund for Government Investors, Inc.
4922 Fairmont Avenue
Bethesda, Maryland 20814
Re: Fund for Government Investors, Inc.
Combined Registration Statement/Proxy Statement
on Form N-14
Ladies and Gentlemen:
This opinion is furnished in connection with the registra-
tion under the Securities Act of 1933, as amended, of shares (the
"Shares") of Fund for Government Investors, Inc. ("FGI"), an
open-end, diversified management investment company under the
Investment Company Act of 1940 whose Shares are the subject of a
Combined Registration Statement/Proxy Statement on Form N-14 to
be filed with the Securities and Exchange Commission (the
"Commission") in connection with the proposed reorganization of
the Rushmore Money Market Portfolio, a series of The Rushmore
Fund, Inc., into FGI (the "Reorganization").
In rendering our opinion, we have examined such documents,
records, and matters of law as we deemed necessary for purposes
of this opinion, including the Combined Registration
Statement/Proxy Statement on Form N-14, FGI's Articles of
Incorporation, FGI's By-Laws, and the proceedings of FGI's Board
of Directors. We have assumed the genuineness of all signatures
of all parties, the authenticity of all documents submitted as
originals, the correctness of all copies, the correctness of all
facts set forth in the certificates delivered to us, and the
correctness of all written or oral statements made to us.
Based upon and subject to the foregoing, it is our opinion
that the Shares that will be issued by FGI in connection with the
Reorganization, when sold, will be legally issued, fully paid,
and nonassessable.
<PAGE>
Fund For Government Investors, Inc.
February 6, 1996
Page 2
Our opinion is rendered solely in connection with the
Combined Registration Statement/Proxy Statement on Form N-14
under which the Shares will be registered and may not be relied
upon for any other purposes without our written consent first had
and obtained. We hereby consent to the use of this opinion as an
exhibit to such Combined Registration Statement/Proxy Statement
and to our being named under the "Legal Matters" section therein.
Sincerely,
/s/ JORDEN BURT BERENSON & JOHNSON LLP
JORDEN BURT BERENSON & JOHNSON LLP
<PAGE>
EXHIBIT 12:
OPINION AND CONSENT OF
JORDEN BURT BERENSON & JOHNSON LLP
<PAGE>
JORDEN BURT BERENSON & JOHNSON LLP
Suite 400 East
1025 Thomas Jefferson Street, N.W.
Washington, DC 20007-0805
February 6, 1996
Board of Directors
The Rushmore Fund, Inc.
4922 Fairmont Avenue
Bethesda, Maryland 20814
Board of Directors
Fund For Government Investors, Inc.
4922 Fairmont Avenue
Bethesda, Maryland 20814
Re: Federal Income Tax Consequences of Proposed Reorganization
Ladies and Gentlemen:
We have acted as counsel to The Rushmore Fund, Inc. (the
"Fund"), a Maryland corporation, and Fund For Government
Investors, Inc., a Maryland corporation, in connection with a
reorganization transaction, described herein, that is to be
entered into between
(1) The Rushmore Money Market Portfolio (the "Acquired
Portfolio"), a series of the Fund, and
(2) Fund For Government Investors, Inc. (the
"Acquiring Fund"),
pursuant to the Agreement and Plan of Reorganization (the
"Reorganization Plan"), and which reorganization transaction was
unanimously approved by the Board of Directors of the Fund (the
"Board") on July 27, 1995, and by the Board of Directors of the
Acquiring Fund (the "Acquiring Fund Board") on July 27, 1995.
The Reorganization Plan provides that, pursuant to the
reorganization transaction, all of the assets of the Acquired
Portfolio (the "Acquired Portfolio Assets") are to be transferred
to the Acquiring Fund in exchange solely for voting shares of
common stock in the Acquiring Fund ("Acquiring Fund Shares") and
the assumption by the Acquiring Fund of all the liabilities of
the Acquired Portfolio (the "Reorganization"). This opinion is
given pursuant to Section 8.5 of the Reorganization Plan.
<PAGE>
Board of Directors February 6, 1996
The Rushmore Fund, Inc. Page 2
Board of Directors
Fund For Government Investors, Inc.
<PAGE>
Board of Directors February 6, 1996
The Rushmore Fund, Inc. Page 3
Board of Directors
Fund For Government Investors, Inc.
SOURCES OF INFORMATION
In forming our opinion, we have examined those documents and
legal authorities that we deemed appropriate for this purpose.
These authorities included various provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), and the U.S.
Treasury Income Tax Regulations promulgated thereunder ("Treasury
Regulations" or "Treas. Regs."), judicial decisions, and
administrative pronouncements by the Internal Revenue Service
(the "Service"). In addition to the legal authorities mentioned
above, we also have reviewed various documents, including:
(1) the Reorganization Plan;
(2) Post-Effective Amendment No. 19 to the
Registration Statement on Form N-1A of the Fund,
as filed with the Securities and Exchange
Commission (the "Commission") on December 29,
1995;
(3) the Articles of Incorporation of the Fund, dated
July 17, 1985, as last amended October 29, 1991
(the "Rushmore Articles");
(4) the By-Laws of the Fund;
(5) the minutes of the July 27, 1995 meeting of the
Board (Nos. 2-5 collectively, the "Fund
Documents");
(6) Post-Effective Amendment No. 28 to the
Registration Statement on Form N-1A of the
Acquiring Fund, as filed with the Commission on
March 31, 1995;
(7) Articles of Incorporation of the Acquiring Fund,
dated October 30, 1974, as last amended June 28,
1982 (the "Acquiring Fund Articles");
(8) the By-Laws of the Acquiring Fund;
(9) the minutes of the July 27, 1995 meeting of the
Acquiring Fund Board (Nos. 6-9 collectively, the
"Acquiring Fund Documents").
<PAGE>
Board of Directors February 6, 1996
The Rushmore Fund, Inc. Page 4
Board of Directors
Fund For Government Investors, Inc.
<PAGE>
Board of Directors February 6, 1996
The Rushmore Fund, Inc. Page 5
Board of Directors
Fund For Government Investors, Inc.
SUMMARY OF OPINION
Our opinion set forth below assumes:
(1) the accuracy of the statements and facts
concerning the Reorganization, as set forth in
this letter, the Reorganization Plan, the Fund
Documents, including the business purposes for
consummating the Reorganization as stated therein,
and the Acquiring Fund Documents, including the
business purposes for consummating the
Reorganization as stated therein; and
(2) the accuracy of the representations made to us by
the Fund, on behalf of the Acquired Portfolio and
by the Acquiring Fund, which representations are
set forth in the Fund Officer's Certificate and
the Acquiring Fund Officer's Certificate both of
even date herewith (the "Representations"), and
are set forth below under the heading
"ASSUMPTIONS"; and
(3) that the Reorganization will be consummated in the
manner contemplated by and in accordance with the
terms and conditions set forth in the
Reorganization Plan and in the Combined
Registration Statement\Proxy Statement on Form N-
14 of the Acquiring Fund, as filed with the
Commission on or about February 6, 1996 (the
"Reorganization Registration Statement").
This opinion is conditioned upon there being no relevant
change in the Code, Treasury Regulations, judicial decisions, or
administrative pronouncements by the Service between the date
hereof and the closing date of the Reorganization. This opinion
is further conditioned upon our receiving such executed letters
of representation from the Fund, on behalf of the Acquired
Portfolio, and the Acquiring Fund, as we shall request. This
opinion shall be effective only at such time as we receive those
letters and confirm our opinion in writing on the closing date of
the Reorganization and, in the absence of such confirmation, will
be deemed to have been withdrawn.
Based upon the facts and assumptions stated herein, and for
the reasons set forth below, it is our opinion that, for federal
<PAGE>
Board of Directors February 6, 1996
The Rushmore Fund, Inc. Page 6
Board of Directors
Fund For Government Investors, Inc.
income tax purposes, the Reorganization will constitute a tax-
free "reorganization" within the meaning of Section 368(a)(1)(C)
of the Code. The consequences of this tax treatment of the
Reorganization are described more fully below under the heading
"CONCLUSIONS."
FACTS
1. The Fund and the Acquired Portfolio
The Fund was organized as a corporation under the laws of
the State of Maryland pursuant to the Rushmore Articles. The
Fund is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end, diversified management
investment company. Accordingly, the Fund is subject to the
provisions of the 1940 Act, and the rules and regulations of the
Commission thereunder. The operations of the Fund are further
governed by the Rushmore Articles, by the Fund's By-Laws, and by
Maryland law, as applicable. The Fund presently is authorized to
issue 1,000,000,000 shares of Common Stock, $.001 par value per
share, which may be issued in three separate classes: the
Rushmore Money Market Portfolio, the Rushmore Nova Portfolio, and
the Rushmore U.S. Government Bond Portfolio. The Fund is
qualified to be taxed as a regulated investment company ("RIC")
under the Code, has elected to be taxed as a RIC for federal
income tax purposes under Section 851 of the Code continuously
since the Fund's organization, and has qualified to be taxed as a
RIC under Section 851 of the Code continuously since the Fund's
organization.
Article TENTH, Section (d), of the Rushmore Articles
provides that:
In furtherance and not in limitation of the powers
conferred by the laws of the State of Maryland, the
Board of Directors is expressly authorized: (d) In
addition to the powers and authorities granted herein
by statute expressly conferred upon it, the Board of
Directors may exercise all such powers and do all such
acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the provisions
of Maryland law, of these Articles of Incorporation,
and of the By-Laws of the Corporation.
<PAGE>
Board of Directors February 6, 1996
The Rushmore Fund, Inc. Page 7
Board of Directors
Fund For Government Investors, Inc.
Article THIRTEENTH, of the Rushmore Articles provides that:
Notwithstanding any provision of Maryland Law requiring
more than a majority vote of the Common Stock in
connection with any corporate action (including, but
not limited to, the amendment of the Articles of
Incorporation) unless otherwise provided in the
Articles of Incorporation, the Corporation may take or
authorize such action upon the favorable vote of the
holders of a majority of the outstanding shares of
Common Stock.
Article II, Section 5, "Meetings of Stockholders," of the
Fund's By-Laws provides that:
At any meeting of Stockholders, the presence in person
or by proxy of the Stockholders entitled to cast a
majority of the votes thereof shall constitute a
quorum. If, however, such quorum shall not be present
or represented at any meeting, the Stockholders
entitled to vote thereat, present in person or
represented by proxy, shall have the power to adjourn
the meeting from time to time, without notice other
than announcement at the meeting until a quorum shall
be present or represented. At such adjourned meeting
at which a quorum shall be present or represented any
business may be transacted which might have been
transacted at the meeting as originally convened.
Article II, Section 6, "Meetings of Stockholders," of the
Fund's By-Laws provides that:
The vote of the holders of a majority of the stock
having voting power, present in person or represented
by proxy, at a meeting duly called and at which a
quorum is present, shall decide any question brought
before such meeting, unless a greater proportion than a
majority is required for such question by applicable
statutes, the Certificate of Incorporation, or these
By-Laws.
Article III, Section 1, "Directors," of the Fund's By-Laws
provides that:
<PAGE>
Board of Directors February 6, 1996
The Rushmore Fund, Inc. Page 8
Board of Directors
Fund For Government Investors, Inc.
The business of the Corporation shall be managed by the
Board of Directors, which may exercise all powers of
the Corporation, except as are, by statute, or
Certificate of Incorporation, or by these By-Laws,
conferred or reserved to the Stockholders.
The provisions of Article TENTH, Section (d), and Article
THIRTEENTH of the Rushmore Articles, and Article II, Section 5,
Article II, Section 6, and Article III, Section 1, of the Fund's
By-Laws, as set forth above, thus, provide the authority under
which the Reorganization was proposed and will be undertaken by
the Fund.
2. The Acquiring Fund
The Acquiring Fund was organized as a corporation under the
laws of the State of Maryland pursuant to the Acquiring Fund
Articles. The Acquiring Fund is registered under the 1940 Act as
an open-end, diversified management investment company.
Accordingly, the Acquiring Fund is subject to the provisions of
the 1940 Act, and the rules and regulations of the Commission
thereunder. The operations of the Acquiring Fund are further
governed by the Acquiring Fund Articles, by the Acquiring Fund's
By-Laws, and by Maryland law, as applicable. The Acquiring Fund
presently is authorized to issue 3,000,000,000 shares of Common
Stock, $.001 par value per share. The Acquiring Fund is
qualified to be taxed as RIC under the Code, has elected to be
taxed as a RIC for Federal income tax purposes under Section 851
of the Code continuously since the Acquiring Fund's organization,
and has qualified to be taxed as a RIC under Section 851 of the
Code continuously since the Acquiring Fund's organization.
Article TENTH, Section (iv) of the Acquiring Fund Articles
provides that:
In furtherance and not in limitation of the powers
conferred by the laws of the State of Maryland, the
Board of Directors is expressly authorized: (iv) In
addition to the powers and authorities granted herein
by statute expressly conferred upon it, the Board of
Directors may exercise all such powers and do all such
acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the provisions
of Maryland law, of these Articles of Incorporation,
and of the By-Laws of the Corporation.
<PAGE>
Board of Directors February 6, 1996
The Rushmore Fund, Inc. Page 9
Board of Directors
Fund For Government Investors, Inc.
<PAGE>
Board of Directors February 6, 1996
The Rushmore Fund, Inc. Page 10
Board of Directors
Fund For Government Investors, Inc.
Maryland Code Ann., Corporations and Associations Section
3-105(a)(3) provides that:
A consolidation, merger, share exchange, or transfer of
assets shall be approved in the manner provided by this
section, except that: (3) A transfer of assets need be
approved by a Maryland transferee corporation only by
its board of directors and by any other action required
by its charter.
The provisions of Article TENTH, Section (iv) of the Acquiring
Fund Articles and Maryland Code Ann., Corporations and
Associations Section 3-105(a)(3), as set forth above, thus, provide
the authority under which the Reorganization was proposed and will
be undertaken by the Acquiring Fund.
3. The Acquiring Fund Redomestication
The Acquiring Fund Board is currently soliciting the proxies
of persons who are shareholders of the Acquiring Fund ("Acquiring
Fund Shareholders") to approve an agreement and plan of
redomestication whereby the Acquiring Fund would continue to be a
diversified, open-end management investment company, but would
change its form of organization from a Maryland corporation to an
unincorporated voluntary organization known as a Delaware
business trust (the "Acquiring Fund Redomestication"). The
Acquiring Fund Redomestication is proposed to occur immediately
following the Reorganization.
The Acquiring Fund Board has unanimously approved the
Acquiring Fund Redomestication. The primary reason for proposing
the Acquiring Fund =Redomestication is that the Acquiring Fund,
as a Delaware business trust, will have greater operational,
administrative, and marketing flexibility than a Maryland
corporation.
If the Acquiring Fund Shareholders approve the Acquiring
Fund Redomestication, but the shareholders of the Acquired
Portfolio ("Acquired Portfolio Shareholders") do not approve the
Reorganization, then the Acquired Portfolio Shareholders will not
receive Acquiring Fund Shares. If the Acquired Portfolio
Shareholders approve the Reorganization and the Acquiring Fund
Shareholders do not approve the Acquiring Fund Redomestication,
then the Acquired Portfolio Shareholders will receive Acquiring
Fund Shares. If the Acquired Portfolio Shareholders approve the
<PAGE>
Board of Directors February 6, 1996
The Rushmore Fund, Inc. Page 11
Board of Directors
Fund For Government Investors, Inc.
Reorganization and the Acquiring Fund Shareholders approve the
Acquiring Fund Redomestication, then the Acquiring Fund Shares
received by the Acquired Portfolio Shareholders automatically
will be exchanged for shares of beneficial interest in a Delaware
business trust. For federal income tax purposes, the direct
issuance of trust shares of beneficial interest by the Delaware
business trust should be treated as (i) a deemed transfer of
Acquiring Fund Shares to the Acquired Portfolio, followed by (ii)
a deemed distribution of such Acquiring Fund Shares to the
Acquired Portfolio Shareholders and (iii) a deemed exchange of
such Acquiring Fund Shares for trust shares of beneficial
interest in the Delaware business trust.
The approval of the Reorganization by the Acquired Portfolio
is not contingent upon the approval of the Acquiring Fund
Redomestication by the Acquiring Fund Shareholders. Likewise,
the approval of the Acquiring Fund Redomestication is not
contingent upon the approval of the Acquired Portfolio
Shareholders.
4. The Reorganization
The Reorganization will be submitted for approval at a
special meeting of the Acquired Portfolio Shareholders (the
"Special Meeting") by Acquired Portfolio Shareholders who own at
least a majority of all outstanding shares of common stock of the
Acquired Portfolio (the "Acquired Portfolio Shares"). Neither
the proxy rules under the Securities Exchange Act of 1934, as
amended, nor the Rushmore Articles entitle Acquired Portfolio
Shareholders to appraisal rights (i.e., to demand the fair value
of their shares) in the event of a reorganization or merger.
Consequently, all of the Acquired Portfolio Shareholders will be
bound by the terms of the Reorganization Plan if such
Reorganization Plan is approved at the Special Meeting. All
Acquired Portfolio Shareholders, however, retain their rights to
redeem their Acquired Portfolio Shares at net asset value at any
time prior to the closing date of the proposed Reorganization.
Pursuant to the Reorganization, the Acquired Portfolio will
transfer to the Acquiring Fund all of the existing Acquired
Portfolio Assets and the Acquiring Fund will assume all the
liabilities of the Acquired Portfolio. The Acquiring Fund will
also deliver full and fractional Acquiring Fund Shares to the
Acquired Portfolio in an amount equal in value to the net asset
value of the issued and outstanding full and fractional shares of
<PAGE>
Board of Directors February 6, 1996
The Rushmore Fund, Inc. Page 12
Board of Directors
Fund For Government Investors, Inc.
common stock in the Acquired Portfolio as of the date of the
Reorganization. The exact number of such Acquiring Fund Shares
to be transferred will be determined by using a net asset value
exchange ratio.
On the effective date of the Reorganization, pursuant to the
Reorganization Plan, the Acquiring Fund Shares received by the
Acquired Portfolio in the transaction (or the trust shares of
beneficial interest received in exchange for such Acquiring Fund
Shares if the Acquiring Fund Redomestication is approved by the
Acquiring Fund Shareholders) will be distributed pro rata to the
Acquired Portfolio Shareholders, the Acquired Portfolio will
cease to exist, and all Acquired Portfolio Shares will be
canceled.
As affirmed in the Representations (and as described more
fully below under the heading "ASSUMPTIONS"), with respect to the
Reorganization:
(1) to the best knowledge of the management of the
Fund, there is no plan or intention on the part of
the Acquired Portfolio Shareholders to sell, to
exchange, or otherwise to dispose of any of the
Acquiring Fund Shares received in the
Reorganization (or the trust shares of beneficial
interest received in exchange for such Acquiring
Fund Shares if the Acquiring Fund Redomestication
is approved by the Acquiring Fund Shareholders),
except to exchange such Acquiring Fund Shares for
shares of beneficial interest in a Delaware
business trust pursuant to the Acquiring Fund
Redomestication if the Acquiring Fund
Redomestication is approved by the Acquiring Fund
Shareholders, and except pursuant to investment
decisions made in the ordinary course of investing
in mutual funds
(2) the Acquiring Fund will continue to use the
Acquired Portfolio's historic business assets
received by the Acquiring Fund in the
Reorganization in the Acquiring Fund's continuing
business enterprises;
(3) there is no plan or intention by the Acquiring
Fund to sell or dispose of the Acquired Portfolio
<PAGE>
Board of Directors February 6, 1996
The Rushmore Fund, Inc. Page 13
Board of Directors
Fund For Government Investors, Inc.
Assets received in the Reorganization, except to
contribute the Acquired Portfolio Assets to a
Delaware business trust pursuant to the Acquiring
Fund Redomestication if the Acquiring Fund
Redomestication is approved by the Acquiring Fund
Shareholders, and except in the normal course of
the Acquiring Fund's business operations as a
mutual fund;
(4) the Reorganization is not a tax-motivated
transaction and has been proposed and is being
undertaken for a number of business and economic
reasons, such as promoting more efficient
operations, enabling greater diversification, and
continuing to obtain management and administrative
services at acceptable levels, as described in the
Reorganization Registration Statement;
(5) the Acquiring Fund Redomestication is not a tax-
motivated transaction and has been proposed and
is being undertaken for a number of business and
economic reasons, such as achieving greater
operational, administrative, and marketing
flexibility, as described in the Reorganization
Registration Statement; and
(6) the approval of the Reorganization by the
Acquired Portfolio Shareholders is not contingent
upon the approval of the Acquiring Fund
Redomestication by the Acquiring Fund
Shareholders, and the approval of the Acquiring
Fund Redomestication by the Acquiring Fund
Shareholders is not contingent on upon the
approval of the Reorganization by the Acquired
Portfolio Shareholders.
The Reorganization Plan provides that Money Management
Associates ("MMA"), the investment adviser to the Acquired
Portfolio and the Acquiring Fund, will bear the aggregate
expenses and costs of the Reorganization.
ASSUMPTIONS
<PAGE>
Board of Directors February 6, 1996
The Rushmore Fund, Inc. Page 14
Board of Directors
Fund For Government Investors, Inc.
Our opinion assumes the accuracy of the following
assumptions in connection with the proposed Reorganization (the
"Assumptions"):
(1) Immediately following the consummation of the
Reorganization, every Acquired Portfolio
Shareholder will own full and fractional Acquiring
Fund Shares, the value of which Acquiring Fund
Shares will be approximately equal to the value of
such Acquired Portfolio Shareholder's full and
fractional Acquired Portfolio Shares immediately
prior to the Reorganization, and every such
Acquired Portfolio Shareholder will own such full
and fractional Acquiring Fund Shares solely by
reason of the ownership by the Acquired Portfolio
Shareholder of full and fractional Acquired
Portfolio Shares immediately prior to the
Reorganization.
(2) To the best knowledge of the management of the
Fund, there is no plan or intention on the part of
the Acquired Portfolio Shareholders to sell, to
exchange, or otherwise to dispose of any of the
Acquiring Fund Shares received in the
Reorganization (or the trust shares of beneficial
interest received in exchange for such Acquiring
Fund Shares if the Acquiring Fund Redomestication
is approved by the Acquiring Fund Shareholders),
except to exchange such Acquiring Fund Shares for
shares of beneficial interest in a Delaware
business trust pursuant to the Acquiring Fund
Redomestication if the Acquiring Fund
Redomestication is approved by the Acquiring Fund
Shareholders, and except pursuant to investment
decisions made in the ordinary course of investing
in mutual funds;
(3) Immediately following the consummation of the
Reorganization, the Acquiring Fund will possess
all of the assets and liabilities possessed by the
Acquired Portfolio immediately prior to the
Reorganization. The Acquired Portfolio will
continue to make redemptions required by Section
22(e) of the 1940 Act and regular, normal
dividends declared and paid in order to ensure the
<PAGE>
Board of Directors February 6, 1996
The Rushmore Fund, Inc. Page 15
Board of Directors
Fund For Government Investors, Inc.
Acquired Portfolio's continued RIC qualification
under Section 851 of the Code, but none of these
redemptions or distributions will be made in
anticipation of, or in connection with, the
Reorganization.
(4) The Acquiring Fund has no plan or intention to
issue additional Acquiring Fund Shares (or
additional trust shares of beneficial interest if
the Acquiring Fund Redomestication is approved by
the Acquiring Fund Shareholders) following the
Reorganization, except such shares as the
Acquiring Fund will issue in the ordinary course
of business as an investment company which
continuously offers its shares to the public at
net asset value.
(5) The Acquiring Fund has no plan or intention to
reacquire any of the Acquiring Fund Shares issued
in the Reorganization (or the trust shares of
beneficial interest issued in exchange for such
Acquiring Fund Shares if the Acquiring Fund
Redomestication is approved by the Acquiring Fund
Shareholders), except as required by Section 22(e)
of the 1940 Act.
(6) The Acquiring Fund has no plan or intention to
sell or otherwise to dispose of any of the
Acquired Portfolio Assets acquired in the
Reorganization, except to contribute the Acquired
Portfolio Assets to a Delaware business trust
pursuant to the Acquiring Fund Redomestication if
the Acquiring Fund Redomestication is approved by
the Acquiring Fund Shareholders, and except in the
normal course of the Acquiring Fund's business
operations as a mutual fund;
(7) The Acquired Portfolio will distribute the
Acquiring Fund Shares it receives in the
Reorganization (or the trust shares of beneficial
interest received in exchange for such Acquiring
Fund Shares if the Acquiring Fund Redomestication
is approved by the Acquiring Fund Shareholders) in
pursuance of the Reorganization Plan.
<PAGE>
Board of Directors February 6, 1996
The Rushmore Fund, Inc. Page 16
Board of Directors
Fund For Government Investors, Inc.
(8) All of the liabilities of the Acquired Portfolio
that are to be assumed by the Acquiring Fund and
all of the liabilities, if any, to which the
transferred Acquired Portfolio Assets are subject
were incurred by the Acquired Portfolio in the
ordinary course of the Acquired Portfolio's
business and are associated with the Acquired
Portfolio Assets transferred in the
Reorganization.
(9) Following the Reorganization (and the Acquiring
Fund Redomestication, if the Acquiring Fund
Redomestication is approved by the Acquiring Fund
Shareholders), the Acquiring Fund will continue
the historic business of the Acquired Portfolio
and will use a significant portion of the Acquired
Portfolio's historic business assets, received by
the Acquiring Fund in the Reorganization, in the
Acquiring Fund's continuing business enterprises.
(10) All expenses and costs incurred in connection with
the Reorganization and the transactions and other
actions contemplated thereby will be paid by MMA,
including legal and accounting expenses, and
administrative costs of the Reorganization, such
as printing, clerical work, security underwriting
and registration costs, transfer taxes, and
transfer agent's fees, and as otherwise provided
for in the Reorganization Registration Statement.
(11) The Acquiring Fund does not own, directly or
indirectly, nor has the Acquiring Fund owned
during the past five (5) years, directly or
indirectly, any stock of the Acquired Portfolio.
(12) At the time of the Reorganization, the Acquired
Portfolio will not have outstanding any warrants,
options, convertible securities, or any other type
of right pursuant to which any person could
acquire stock in the Acquired Portfolio, except
for the right to purchase stock at its fair market
value in the ordinary course of business.
(13) There is no intercorporate indebtedness existing
between the Acquiring Fund and the Acquired
<PAGE>
Board of Directors February 6, 1996
The Rushmore Fund, Inc. Page 17
Board of Directors
Fund For Government Investors, Inc.
Portfolio that was issued, was acquired, or will
be settled at a discount.
(14) The fair market value of the Acquired Portfolio
Assets transferred to the Acquiring Fund will
equal or exceed the sum of the liabilities of the
Acquired Portfolio assumed by the Acquiring Fund,
plus the amount of liabilities, if any, to which
the transferred Acquired Portfolio Assets are
subject.
(15) The Acquired Portfolio is not under the
jurisdiction of a court in a Title 11 or similar
case within the meaning of Section 368(a)(3)(A) of
the Code.
(16) The Reorganization is not a tax-motivated
transaction and has been proposed and is being
undertaken for a number of business and economic
reasons, such as promoting more efficient
operations, enabling greater diversification, and
continuing to obtain management and administrative
services at acceptable levels, as described in the
Reorganization Registration Statement.
(17) The Acquiring Fund Redomestication is not a tax-
motivated transaction and has been proposed and
is being undertaken for a number of business and
economic reasons, such as achieving greater
operational, administrative, and marketing
flexibility, as described in the Reorganization
Registration Statement.
(18) The approval of the Reorganization by the
Acquired Portfolio Shareholders is not contingent
upon the approval of the Acquiring Fund
Redomestication by the Acquiring Fund
Shareholders, and the approval of the Acquiring
Fund Redomestication by the Acquiring Fund
Shareholders is not contingent on upon the
approval of the Reorganization by the Acquired
Portfolio Shareholders.
CONCLUSIONS
<PAGE>
Board of Directors February 6, 1996
The Rushmore Fund, Inc. Page 18
Board of Directors
Fund For Government Investors, Inc.
For the reasons set forth above, and based solely on the
information and the Assumptions set forth above, our opinion is
that, for federal income tax purposes, the Reorganization will
qualify for non-recognition treatment under Section 368(a)(1)(C)
of the Code. Accordingly, the following tax consequences should
result with respect to the Reorganization:
(1) The acquisition by the Acquiring Fund of all of
the Acquired Portfolio Assets solely in exchange
for the Acquiring Fund Shares received in the
Reorganization and the assumption of the accrued
liabilities of the Acquired Portfolio, followed by
the actual or deemed distribution by the Acquired
Portfolio to the Acquired Portfolio Shareholders
of such Acquiring Fund Shares will constitute a
reorganization within the meaning of Section
368(a)(1)(C) of the Code.
(2) The Acquired Portfolio and the Acquiring Fund each
will be treated as a "party to a reorganization"
within the meaning of Section 368(b) of the Code.
(3) Pursuant to Sections 361(a) and 357(a) of the
Code, no gain or loss will be recognized to the
Acquired Portfolio upon the transfer of all of the
Acquired Portfolio Assets to the Acquiring Fund
solely in exchange for the Acquiring Fund Shares
received in the Reorganization and the assumption
by the Acquiring Fund of all the liabilities of
the Acquired Portfolio. In addition, pursuant to
Section 361(c)(1) of the Code, no gain or loss
will be recognized to the Acquired Portfolio upon
the actual or deemed distribution by the Acquired
Portfolio to the Acquired Portfolio Shareholders
of the Acquiring Fund Shares received in the
Reorganization in exchange for the Acquired
Portfolio Shareholders' Acquired Portfolio Shares
pursuant to the Reorganization Plan.
(4) Pursuant to Section 362(b) of the Code, the tax
basis of the Acquired Portfolio Assets in the
hands of the Acquiring Fund will be the same as
the tax basis of such assets in the hands of the
Acquired Portfolio immediately prior to the
proposed Reorganization.
<PAGE>
Board of Directors February 6, 1996
The Rushmore Fund, Inc. Page 19
Board of Directors
Fund For Government Investors, Inc.
(5) Pursuant to Section 1032(a) of the Code, no gain
or loss will be recognized to the Acquiring Fund
upon the Acquiring Fund's receipt of the Acquired
Portfolio Assets pursuant to the Reorganization in
exchange solely for the Acquiring Fund Shares or
upon the actual or deemed distribution of those
Acquiring Fund Shares to the Acquired Portfolio
Shareholders in exchange for the Acquired
Portfolio Shareholders' Acquired Portfolio Shares.
(6) Pursuant to Section 1223(2) of the Code, the
holding period of the Acquired Portfolio Assets to
be received by the Acquiring Fund in the
Reorganization will include the holding period
during which such Acquired Portfolio Assets were
held by the Acquired Portfolio immediately prior
to the Reorganization.
(7) Pursuant to Section 354(a)(1) of the Code, no gain
or loss will be recognized to the Acquired
Portfolio Shareholders pursuant to the
Reorganization upon the receipt by the Acquired
Portfolio Shareholders of the full and fractional
Acquiring Fund Shares received solely in exchange
for the Acquired Portfolio Shareholders' full and
fractional Acquired Portfolio Shares.
(8) Pursuant to Section 358(a)(1) of the Code, the tax
basis of the full and fractional Acquiring Fund
Shares to be received by the Acquired Portfolio
Shareholders pursuant to the Reorganization will
be the same as the tax basis of the full and
fractional Acquired Portfolio Shares surrendered
by the Acquired Portfolio Shareholders in exchange
therefor.
(9) Pursuant to Section 1223(1) of the Code, the
holding period of the full and fractional
Acquiring Fund Shares to be received by the
Acquired Portfolio Shareholders in the
Reorganization will include the holding period
during which the full and fractional Acquired
Portfolio Shares surrendered by the Acquired
Portfolio Shareholders in exchange therefor were
held; provided, that those full and fractional
<PAGE>
Board of Directors February 6, 1996
The Rushmore Fund, Inc. Page 20
Board of Directors
Fund For Government Investors, Inc.
Acquired Portfolio Shares were held as capital
assets in the hands of the Acquired Portfolio
Shareholders on the date of the Reorganization.
(10) Pursuant to Section 381(a) of the Code and
Section 1.381(a)-1 of the Treasury Regulations,
the Acquiring Fund will succeed to and take into
account the items of the Acquired Portfolio
described in Section 381(c) of the Code, subject
to the provisions and limitations specified in
Sections 381, 382, 383, and 384 of the Code and
the Treasury Regulations thereunder.
(11) Pursuant to Section 381(c)(2) of the Code and
Section 1.381(c)(2)-1 of the Treasury Regulations,
the Acquiring Fund will succeed to and take into
account the earnings and profits, or deficit in
earnings and profits, of the Acquired Portfolio as
of the date of transfer. Any deficit in earnings
and profits of either the Acquired Portfolio or
the Acquiring Fund will be used only to offset the
earnings and profits accumulated after the date of
the transfer.
As stated above, our opinion is based upon and subject to
the facts, Assumptions, and reasons discussed herein. No opinion
is expressed or implied with respect to any entity's
qualification as a RIC or with respect to any other tax matters
aside from the qualification of the Reorganization under
Section 368(a)(1)(C) of the Code and the related tax consequences
as set forth above. Our opinion is based upon our analysis of
the current law, but neither the courts nor the Service are, in
any way, bound by our analysis. We consent to the use of this
opinion as an exhibit to the Reorganization Registration
Statement on Form N-14 under which the Acquiring Fund Shares will
be registered.
Sincerely,
/s/ JORDEN BURT BERENSON & JOHNSON LLP
JORDEN BURT BERENSON & JOHNSON LLP
<PAGE>
EXHIBIT 14(a):
CONSENT OF
DELOITTE & TOUCHE LLP
<PAGE>
INDEPENDENT AUDITORS' CONSENT
Fund for Government Investors, Inc.:
We consent to the use in this Registration Statement on Form
N-14 of our report dated February 6, 1995, appearing in the
Annual Report of Fund for Government Investors, Inc. for the
year ended December 31, 1994, and to the reference to us under
the caption "Financial Statements and Experts" appearing in
the Combined Prospectus/Proxy Statement, which is a part of
such Registration Statement. We also consent to the reference
to us under the caption "Financial Highlights" included in the
current Prospectus of Fund for Government Investors, Inc.
dated March 30, 1995, which is part of such Registration
Statement.
/s/Deloitte & Touche LLP
Deloitte & Touche LLP
Washington, DC
February 5, 1996
<PAGE>
EXHIBIT 14(b):
CONSENT OF
DELOITTE & TOUCHE LLP
<PAGE>
INDEPENDENT AUDITORS' CONSENT
The Rushmore Fund, Inc.:
We consent to the use in this Registration Statement on Form
N-14 of our report dated September 29, 1995, appearing in the
Annual Report of The Rushmore Fund, Inc. for the year ended
August 31, 1995, and to the reference to us under the caption
"Financial Statements and Experts" appearing in the Combined
Prospectus/Proxy Statement, which is a part of such
Registration Statement. We also consent to the reference to
us under the caption "Financial Highlights" included in the
current Prospectus of The Rushmore Fund, Inc. Money Market
Portfolio dated January 1, 1996, which is part of such
Registration Statement.
/s/Deloitte & Touche LLP
Deloitte & Touche LLP
Washington, DC
February 5, 1996
<PAGE>
EXHIBIT 17:
RULE 24f-2 NOTICE
<PAGE>
RUSHMORE TRUST & SAVINGS, FSB
February 22, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Rule 24f-2 Notice
Fund for Government Investors, Inc.
File No. 2-52552
Dear Sir or Madam:
The following is duly submitted pursuant to Rule 24f-2 of
the Investment Company Act of 1940 as amended:
1. For fiscal year ended December 31, 1994
2. There were no registered shares under the Securities
Act of 1933 remaining unsold at the beginning of said
fiscal year
3. No shares were registered during the fiscal year other
than pursuant to the Investment Company Act of 1940 as
amended.
4. The aggregate number of shares sold during the fiscal
year was 2,408,980,307.
5. The aggregate number of shares sold during the fiscal
year in reliance on the relevant section of the Act was
2,408,980,307.
The proceeds from the sale of Fund shares in 1994
totalled $2,408,980,307. Disbursements due to the
redemption of Fund shares in 1994 were $2,485,592,551.
As redemptions exceeded sales of Fund shares, no
registration fee is due.
Sincerely,
/s/ William L. Major
Vice President & Secretary
4922 Fairmont Avenue, Bethesda, Maryland 20814-6076
3621 East Lombard Street, Baltimore, Maryland 21224-2408
<PAGE>
