RUSHMORE FUND INC, 497, 1995-11-14

RUSHMORE FUND INC
497, 1995-11-14

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Rule 497(b) Filing
File Nos.: 33-63313 and 811-
4369

<REDLINE>
November 13, 1995
<\REDLINE>

Dear Shareholder:

Enclosed is a proxy statement and a detailed shareholder
letter describing the proposed combination of your Portfolio, the
Rushmore U.S. Government Intermediate-Term Securities Portfolio,
and the Rushmore U.S. Government Long-Term Securities Portfolio.
Your Portfolio and the Long-Term Securities Portfolio are similar
and are both series of The Rushmore Fund, Inc. These two
Portfolios have 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.

THE RUSHMORE FUND, INC.
4922 Fairmont Avenue
Bethesda, Maryland 20814
<REDLINE>
November 13, 1995
<\REDLINE>
To the Shareholders of

The Rushmore U.S. Government Intermediate-Term Securities
Portfolio

Dear Shareholder:

<REDLINE>
A special meeting of the shareholders of the Rushmore U.S.
Government Intermediate-Term Securities Portfolio, a series of
The Rushmore Fund, Inc. (the "Fund"), will be held at 1:00 P.M.,
Eastern Time, on Friday, December 22, 1995, at the offices of the
Fund, at 4922 Fairmont Avenue, Bethesda, Maryland 20814 (the
"Meeting"). At the Meeting, the shareholders of the
Intermediate-Term Securities Portfolio will vote on an Agreement
and Plan of Reorganization (the "Plan"). Under the Plan, the
Intermediate-Term Securities Portfolio will merge into the
Rushmore U.S. Government Long-Term Securities Portfolio, a
separate series of the Fund that has an investment objective that
is identical to that of the Intermediate-Term Securities
Portfolio and investment policies that are comparable to those of
the Intermediate-Term Securities Portfolio (the
"Reorganization"). Immediately following the Reorganization, the
Long-Term Securities Portfolio will be renamed "The Rushmore U.S.
Government Bond Portfolio."

<\REDLINE>

If the Plan is approved by the shareholders and implemented by
the Fund, you will become a shareholder of the Long-Term
Securities Portfolio and will receive shares of the Long-Term
Securities Portfolio having an aggregate value equal to the
aggregate value of your investment in the Intermediate-Term
Securities 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 Fund (the "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 Board further anticipates that the Reorganization
should permit the reduction or elimination of certain duplicative
<PAGE>

costs and expenses, presently incurred for services that are
separately performed for both the Intermediate-Term Securities
Portfolio and the Long-Term Securities Portfolio.

The Board has carefully considered and has unanimously approved
the proposed Reorganization, as described in the accompanying
materials. The Board believes that the Reorganization is in the
best interests of the Rushmore U.S. Government Intermediate-Term
Securities Portfolio and its shareholders and, therefore,
recommends that you vote in favor of approving the Plan.

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 on Friday, December 22, 1995.

<\REDLINE>

Please note that you may receive more than one proxy package if
you hold shares of the Intermediate-Term Securities 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, F.S.B., toll-free at (800) 343-3355.

Sincerely,

/s/ Richard J. Garvey
Richard J. Garvey
President
The Rushmore Fund, Inc.

THE RUSHMORE FUND, INC.
4922 Fairmont Avenue
Bethesda, Maryland 20814
____________

The Rushmore U.S. Government Intermediate-Term Securities
Portfolio
____________

NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS

To be held on December 22, 1995
____________

TO THE SHAREHOLDERS:

Notice hereby is given that a special meeting of the
shareholders of The Rushmore U.S. Government Intermediate-Term
Securities Portfolio (the "Acquired Portfolio"), a series of The
Rushmore Fund, Inc. (the "Fund"), will be held at 1:00 P.M.,
Eastern Time, on Friday, December 22, 1995, at the offices of the
Fund, 4922 Fairmont Avenue, Bethesda, Maryland 20814 (the
"Meeting"), for the following purposes:

<\REDLINE>

PROPOSAL 1.

To approve or disapprove an Agreement and Plan of
Reorganization among the Fund, the Acquired Portfolio,
and The Rushmore U.S. Government Long-Term Securities
Portfolio (the "Acquiring Portfolio"), another series
of the Fund (the "Plan"), and the transactions
contemplated thereby, pursuant to which Plan the
Acquired Portfolio would transfer all of its assets to
the Acquiring Portfolio in exchange for (i) shares of
common stock in the Acquiring Portfolio that would be
distributed to the shareholders of the Acquired
Portfolio and (ii) the assumption by the Acquiring
Portfolio of all the liabilities of the Acquired
Portfolio (the "Reorganization"). Immediately
following the Reorganization, the Acquiring Portfolio
will be renamed "The Rushmore U.S. Government Bond
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 Acquired
Portfolio at the close of business on October 27, 1995. 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.

<\REDLINE>
By Order of the Board of Directors
<REDLINE>

/s/ Stephenie E. Adams

Stephenie E. Adams
Secretary
The Rushmore Fund, Inc.
<\REDLINE>

November 13, 1995

4922 Fairmont Avenue
Bethesda, Maryland 20814

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.

THE RUSHMORE FUND, INC.
____________

The Rushmore U.S. Government
Intermediate-Term Securities 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 "Fund"), for use at a

special meeting of shareholders ("Shareholders") of The Rushmore

U.S. Government Intermediate-Term Securities Portfolio (the

"Acquired Portfolio"), to be held at 1:00 P.M., Eastern Time, on

Friday, December 22, 1995, at the offices of the Fund, 4922

Fairmont Avenue, Bethesda, Maryland 20814, and at any

adjournment(s) thereof (the "Meeting"). The Fund is a

diversified, open-end management investment company incorporated

in the State of Maryland with four separate classes of common

stock outstanding, with each such class representing an interest

in a separate series of the Fund. The Acquired Portfolio is one

of the four series of the Fund. Only Shareholders of the

Acquired Portfolio are being solicited in connection with the

Meeting.

<\REDLINE>

The purpose of the Meeting is to consider the Agreement and Plan

of Reorganization (the "Plan"), which would effect the

reorganization of the Acquired Portfolio into The Rushmore U.S.

Government Long-Term Securities Portfolio (the "Acquiring

Portfolio"), another series of the Fund, and the transactions

contemplated thereby, as described below (the "Reorganization").

The Plan has been unanimously approved by the Board of Directors

of the Fund (the "Board"). Pursuant to the Plan, all of the

assets of the Acquired Portfolio would be acquired by the

Acquiring Portfolio, which has investment policies comparable to

those of the Acquired Portfolio, in exchange for shares of common

stock in the Acquiring Portfolio ("Acquiring Portfolio Shares")

and the assumption by the Acquiring Portfolio of all the

liabilities of the Acquired Portfolio. Following such transfer

of assets from the Acquired Portfolio to the Acquiring Portfolio,

the Acquiring Portfolio Shares received by the Acquired Portfolio

then would be distributed pro rata to the shareholders of the

Acquired Portfolio. As a result of the proposed transactions,

each Shareholder of the Acquired Portfolio would receive a number

of full and fractional Acquiring Portfolio 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 Acquired Portfolio. Immediately

following the Reorganization, the Acquiring Portfolio will be

renamed "The Rushmore U.S. Government Bond Portfolio."

This combined prospectus/proxy statement, which should be

retained for future reference, sets forth concisely the

information about the Acquired Portfolio and the Acquiring

Portfolio, the Fund, and the transactions contemplated by

proposed Reorganization, that an investor should know before

voting on the proposed Reorganization. A copy of the current

Prospectus of the Fund (for both the Acquired Portfolio and the

Acquiring Portfolio), dated December 21, 1994, is included with

this combined prospectus/proxy statement for each Shareholder of

the Acquired Portfolio and is incorporated by reference herein.

A Statement of Additional Information regarding the Fund and both

the Acquired Portfolio and the Acquiring Portfolio, dated

December 21, 1994, has been filed with the Securities and

Exchange Commission (the "Commission") and is incorporated by

reference herein. Copies of this document also may be obtained

without charge by contacting Rushmore Trust and Savings, F.S.B.

("RTS"), which provides all administrative services to both the

Acquired Portfolio and the Acquiring Portfolio, at 4922 Fairmont

Avenue, Bethesda, Maryland 20814, or by telephoning RTS toll-free

at (800) 343-3355.

<\REDLINE>

A Statement of Additional Information, dated November 13, 1995,

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.
______________________

The date of this Combined Prospectus/Proxy Statement is November
13, 1995.

<\REDLINE>

COMBINED PROSPECTUS/PROXY STATEMENT

TABLE OF CONTENTS

<REDLINE>
Page

Introduction and Voting Information . . . . . . . . . . . . . . 1

Special Meeting; Voting of Proxies; Adjournment . . . . . 1
Proxy Solicitation . . . . . . . . . . . . . . . . . . . . 2
Revocation of Proxies . . . . . . . . . . . . . . . . . . 2
No Dissenters' Rights of Appraisal . . . . . . . . . . . . 2
Additional Voting Information . . . . . . . . . . . . . . 2

Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

The Proposed Reorganization . . . . . . . . . . . . . . . 3
Investment Objectives and Policies . . . . . . . . . . . . 4
Operations of the Fund and the Acquiring Portfolio
Following the Reorganization . . . . . . . . . . . . . . . 4
Management Fees, Administrative Fees, and Other
Operating Expenses . . . . . . . . . . . . . . . . . . . . 4
Purchases and Exchanges . . . . . . . . . . . . . . . . . 5
Redemption Procedures and Fees . . . . . . . . . . . . . . 5
Dividends and Distributions; Automatic Reinvestment . . . 6
Federal Tax Consequences of the Proposed Reorganization . 6
Costs and Expenses of the Reorganization . . . . . . . . . 6
Continuation of Shareholder Accounts; Share Certificates . 6
Form of Organization of the Fund . . . . . . . . . . . . . 6

Comparison of Investment Objectives and Policies . . . . . . . 7

Investment Objectives and Policies . . . . . . . . . . . . 7
Investment Restrictions and Limitations . . . . . . . . . 8

Principal Risk Factors . . . . . . . . . . . . . . . . . . . . 8

The Proposed Reorganization . . . . . . . . . . . . . . . . . . 9

Agreement and Plan of Reorganization . . . . . . . . . . . 9
Reasons For the Proposed Reorganization . . . . . . . . 10
Description of Securities To Be Issued . . . . . . . . . 11
Federal Income Tax Consequences . . . . . . . . . . . . 12
Pro Forma Capitalization and Ratios . . . . . . . . . . 13
Cessation of Existence . . . . . . . . . . . . . . . . . 13
Required Vote and Board Recommendation With
Respect to the Reorganization Plan . . . . . . . . . . 13

Additional Information About the Acquiring Portfolio
and the Acquiring Portfolio Shares . . . . . . . . . . . . . 13

Additional Information About the Acquired Portfolio
and the Acquired Portfolio Shares . . . . . . . . . . . . . . 14
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 14

Available Information . . . . . . . . . . . . . . . . . 14
Legal Matters . . . . . . . . . . . . . . . . . . . . . 14
Financial Statements and Experts . . . . . . . . . . . . 14

Other Business . . . . . . . . . . . . . . . . . . . . . . . 14

Proxy for a Special Meeting of Shareholders . . . . . . Separate
Page

Appendix A: Form of Agreement and Plan of Reorganization . A-1

Appendix B: Form of Investment Management Agreement
Between The Rushmore Fund, Inc.
and Money Management Associates . . . . . . . B-1

Appendix C: Current Prospectus of The Rushmore U.S.
Government Intermediate-Term Securities
Portfolio and The Rushmore U.S. Government
Long-Term Securities Portfolio, Dated
December 21, 1994 . . . . . . . . . . . . . . C-1

<\REDLINE>

THE RUSHMORE FUND, INC.
____________

The Rushmore U.S. Government
Intermediate-Term Securities Portfolio
_______________

COMBINED PROSPECTUS/PROXY STATEMENT

Special Meeting of Shareholders
to be held on
December 22, 1995
______________

INTRODUCTION AND VOTING INFORMATION

Special Meeting; Voting of Proxies; Adjournment

This combined prospectus/proxy statement is being furnished to

the Shareholders of The Rushmore U.S. Government Intermediate-

Term Securities Portfolio (the "Acquired Portfolio"), which is a

series of The Rushmore Fund, Inc. (the "Fund"), in connection

with the solicitation by the Board of proxies to be used at a

special meeting of the shareholders of the Acquired Portfolio

(the "Shareholders") to be held on Friday, December 22, 1995, at

the offices of the 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 Acquired Portfolio into The Rushmore U.S. Government Long-

Term Securities Portfolio (the "Acquiring Portfolio"), which also

is a series of the Fund, pursuant to the terms and conditions of

the Plan, as described below in greater detail.

Shareholders of record of the Acquired Portfolio at the close of

business on October 27, 1995 (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 Acquired

Portfolio ("Acquired Portfolio Shares") are entitled to one vote

for each Acquired Portfolio Share held and to fractional votes

for fractional Acquired 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 Acquired Portfolio Shares

outstanding at the close of business on that Record Date present

in person or represented by proxy will constitute a quorum for

the Meeting of the Shareholders. A quorum being present, the

approval of the Reorganization at the Meeting by the Shareholders

requires the affirmative vote of a majority of all the

outstanding voting shares of the Acquired Portfolio.

<\REDLINE>

If, for the Acquired Portfolio, 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 Friday, December 22, 1995, 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 Acquired 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.

<\REDLINE>

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 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

Acquired 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 Acquired Portfolio Shares covered by such

broker non-vote shall be deemed present at the Meeting for the

purposes of determining a quorum, but shall not be deemed to be

represented at the Meeting for the purposes of calculating the

number of Acquired 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 Fund also may

solicit proxies by telephone, telegraph, and/or personal

interview by representatives of the Fund, by employees of Money

Management Associates ("MMA"), the investment adviser to the

Fund, or their affiliates, and by representatives of any

independent proxy solicitation service retained for the Meeting.

MMA, whose principal location is No. 2201 East Tower, 4000 North

Ocean Drive, Singer Island, Florida 33404, will bear the costs of

the Meeting, including the costs such as the preparation and

mailing of the notice, the combined prospectus/proxy statement,

and the proxy, and the solicitation of proxies, including

reimbursement to persons who forward proxy materials to their

clients, and the expenses connected with the solicitation of

these proxies in person, by telephone, or by telegraph. MMA's

toll-free telephone number is (800) 343-3355. Banks, brokers,

and other persons holding Acquired 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 Acquired

Portfolio Shares.

The vote of the shareholders of the Acquiring Portfolio 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 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 Acquired Portfolio into the Acquiring

Portfolio, as described below in greater detail. Each of the

Acquired Portfolio and the Acquiring Portfolio is a separate

series of the Fund, a Maryland corporation. The Articles of

Incorporation of the Fund, as amended (the "Rushmore Articles"),

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 Acquired Portfolio Shares at

net asset value prior to the closing date of the proposed

Reorganization of the Acquired Portfolio.

Additional Voting Information

As of the Record Date, there were outstanding and entitled to be

voted 1,282,352.05 Acquired Portfolio Shares. As of the Record

Date, Charles Schwab & Company, San Francisco, California, held

for the benefit of others 38.795% of the Acquired Portfolio

Shares. Directors and officers of the Fund own in the aggregate

less than 1% of the shares of the Acquired Portfolio. To the

knowledge of the Fund, no other person then owned more than 5% of

the outstanding shares of the Acquired Portfolio.

<\REDLINE>

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 Fund, the Acquired Portfolio,

and the Acquiring Portfolio (the "Plan"), and the

transactions contemplated thereby, pursuant to which

Plan the Acquired Portfolio would transfer all of its

assets to the Acquiring Portfolio in exchange for (i)

shares of common stock in the Acquiring Portfolio that

would be distributed to the shareholders of the

Acquired Portfolio and (ii) the assumption by the

Acquiring Portfolio of all the liabilities of the

Acquired Portfolio (the "Reorganization"). Immediately

following the Reorganization, the Acquiring Portfolio

will be renamed "The Rushmore U.S. Government Bond

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

Acquired Portfolio of any Proposal considered at the Meeting

requires the affirmative vote of a majority of all the

outstanding voting shares of the Acquired Portfolio. In the

event that the shareholders of the Acquired Portfolio do not

approve the Plan, and the Reorganization of the Acquired

Portfolio contemplated thereunder, the Board will consider

possible alternative arrangements and MMA will continue to render

services to the Acquired Portfolio.

The Board of Directors of the Fund has unanimously approved and

recommends that, with respect to the Reorganization of the

Acquired Portfolio into the Acquiring Portfolio, the Shareholders

of the Acquired Portfolio vote FOR Proposal One, the Proposed

Agreement and Plan of Reorganization for the Acquired Portfolio

and the transactions contemplated thereby, as described herein.

SYNOPSIS

The following is a summary of certain information contained

elsewhere in this combined prospectus/proxy statement, including

the prospectus of the Acquired Portfolio and the Acquiring

Portfolio and the Agreement and Plan of Reorganization.

Shareholders should read this entire combined prospectus/proxy

statement carefully.

The Proposed Reorganization

Shareholders of the Acquired Portfolio will be asked at the

Meeting to vote upon and approve the Plan, which provides for the

Reorganization of the Acquired Portfolio. 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 Acquired

Portfolio, which is a series of the Fund, a diversified, open-end

management investment company incorporated under the laws of the

State of Maryland, would be reorganized into the Acquiring

Portfolio. The Acquiring Portfolio is also a series of the Fund.

The Plan sets forth the terms and conditions under which the

proposed transactions contemplated by the Reorganization may be

consummated. The Board, including the directors who are not

"interested persons" of the Fund (the "Independent 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 Board or

by an authorized officer of the 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 Acquired Portfolio are (i) the receipt

by the 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 Acquired Portfolio Shares of the

Acquired Portfolio. The Plan provides for the acquisition of all

the assets of the Acquired Portfolio by the Acquiring Portfolio

in exchange for Acquiring Portfolio Shares and the assumption by

that Acquiring Portfolio of all the liabilities of the Acquired

Portfolio. The Acquiring Portfolio Shares received by the

Acquired Portfolio then would be distributed pro rata to the

Shareholders of the Acquired Portfolio, and the outstanding

Acquired Portfolio Shares of the Acquired Portfolio would be

canceled and the Acquired Portfolio would cease to exist. The

Reorganization is anticipated to occur on December 31, 1995, 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 the Acquiring Portfolio having a total

net asset value equal in value to the net asset value of his or

her Acquired Portfolio Shares in the Acquired Portfolio as of the

Closing Date of the Reorganization. Immediately following the

Reorganization, the Acquiring Portfolio will be renamed "The

Rushmore U.S. Government Bond Portfolio."

<\REDLINE>

For the reasons set forth below under "The Proposed

Reorganization -- Reasons for the Proposed Reorganization," the

Board, including all of the Independent Directors, has

unanimously concluded that the Reorganization would be in the

best interests of the Acquired 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 Board, therefore, has submitted the Plan

effecting the Reorganization for approval at the Meeting by the

Shareholders of the Acquired Portfolio, and recommends approval

of the Plan.

Investment Objectives and Policies

The investment objective of both the Acquired Portfolio and the

Acquiring Portfolio is to provide investors with maximum current

income to the extent that such investment is consistent with

safety of principal. To achieve its investment objective, the

Acquired Portfolio invests principally in the current ten-year

U.S. Treasury note and in other U.S. Government securities with

maturities of ten years or less. To achieve its investment

objective, the Acquiring Portfolio invests principally in the

current thirty-year U.S. Treasury bond and in other U.S.

Government securities with maturities of ten years or more. Both

the Acquired Portfolio and the Acquiring Portfolio invest only in

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 (zero coupon bonds).

The most notable different between the investment policies of the

Acquired Portfolio and the investment policies of the Acquiring

Portfolio is that the maturities of the U.S. Government

securities in which the Acquired Portfolio invests generally are

shorter than the maturities of the U.S. Government securities in

which the Acquiring Portfolio invests. Both the Acquired

Portfolio and the Acquiring Portfolio seek to maximize current

income while, at the same time, to preserve principal.

The investment objective of each of the Acquired Portfolio and

the Acquiring Portfolio 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 Acquired Portfolio or the

Acquiring Portfolio, respectively. All other investment policies

of the Acquired Portfolio and the Acquiring Portfolio that are

not specified as fundamental are not fundamental policies and may

be changed by the Board without shareholder approval.

The market value of U.S. Government securities will fluctuate due

to the movement of interest rates, and is inversely related to

the such movement. When interest rates rise, therefore, one can

expect that the market value of the U.S. Government securities

held by either the Acquired Portfolio or the Acquiring Portfolio

will decline, and, conversely, when interest rates fall, one can

expect the market value of the U.S. Government securities held by

either the Acquired Portfolio or the Acquiring Portfolio to

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 net asset value of both the Acquired Portfolio and the

Acquiring Portfolio will fluctuate as interest rates change.

For further discussion of the differences in the investment

policies of the Acquiring Portfolio and the Acquired Portfolio,

see "Comparison of Investment Objectives and Policies" in this

combined prospectus/proxy statement.

Operations of the Fund and the Acquiring Portfolio Following the

Reorganization

The Fund and the Acquiring Portfolio will continue to operate

substantially the same as each did prior to the Reorganization.

Following the Reorganization, the Board of Directors of the Fund

will be composed of the same members and will be subject to the

same laws and corporate organizational documents as before the

Reorganization, and, therefore, will have the identical

responsibilities, powers, and fiduciary duties after the

Reorganization as such Board had prior to the Reorganization.

Subject to the provisions of the Fund's Articles of

Incorporation, dated July 14, 1985 (the "Rushmore Articles"), the

business of the Fund and the Acquiring Portfolio is managed by

the Board, which has all powers necessary and appropriate to

carry out that business responsibility. The Board supervises the

business affairs and investments of the Acquiring Portfolio. The

Acquiring Portfolio receives investment advisory services from

MMA. Administrative services for the Fund are provided for by

MMA.

Management Fees, Administrative Fees, and Other Operating

Expenses

1. Management Fees. MMA currently acts as the investment

adviser to the Acquired Portfolio and the Acquiring Portfolio

pursuant to an investment management agreement between the Fund

and MMA (the "Rushmore Management Agreement"). Under the

Rushmore Management Agreement, MMA manages the investment and

reinvestment of the assets of both the Acquired Portfolio and the

Acquiring Portfolio and administers the affairs of the Fund,

subject to the control of the officers and directors of the Fund.

Pursuant to this Rushmore Management Agreement, the Acquired

Portfolio and the Acquiring Portfolio each pays MMA a management

fee at the identical annual rate of 0.50% of the aggregate

average daily net assets of the Acquired Portfolio and the

Acquiring Portfolio, respectively.

MMA complies with any applicable state regulations which may

require MMA to make reimbursements, respectively, to the Acquired

Portfolio or the Acquiring Portfolio in the event that the

Acquired Portfolio's or the Acquiring Portfolio'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 Fund and Rushmore Trust and

Savings, F.S.B. ("RTS") (the "Service Agreement"), RTS provides

both the Acquired Portfolio and the Acquiring Portfolio with

general administrative, shareholder, dividend disbursement,

transfer agent, and registrar services and pays all fees and

ordinary operating expenses that are directly related to the

services that RTS provides to the Acquired Portfolio and the

Acquiring Portfolio. Except for extraordinary legal expenses or

interest expense and the Acquired Portfolio's and the Acquiring

Portfolio's pro rata share of the fees paid to the Independent

Directors by the Fund, there are no additional expenses to the

Acquired Portfolio and the Acquiring Portfolio. Under the

Service Agreement, the Acquired Portfolio and the Acquiring

Portfolio each pays RTS an administrative fee at an annual rate

of 0.30% of the aggregate average daily net asset value of the

Acquired Portfolio and the Acquiring Portfolio, respectively.

The following sets forth the fund operating expenses (as a

percentage of the average daily net assets) for the Acquired

Portfolio for the Fund's fiscal year ended August 31, 1995, and

the expected fund operating expenses (as a percentage of the

average daily net assets) for the Acquiring Portfolio into which

the Acquired Portfolio would merge under the Plan:

<TABLE>

<CAPTION> Acquired Portfolio Acquiring Portfolio
<C> <C>
0.50% 0.50%
<S>
Management 0.30% 0.30%
Fees:

Other 0.80% 0.80%
Expenses:

Total
Portfolio
Operating
Expenses:
</TABLE>

As reflected above, the Acquiring Portfolio has total operating

expenses equal to those historically incurred by the Acquired

Portfolio. See "The Proposed Reorganization -- Reasons For the

Proposed Reorganization."

Purchases and Exchanges

Acquiring Portfolio Shares and Acquired 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 the

Fund at the net asset value next computed after the receipt of a

purchase order. No sales charge is imposed by the Fund on any

purchase of Acquired Portfolio Shares or Acquiring Portfolio

Shares; however, securities dealers may charge a processing fee

for orders transmitted by such dealers to the Fund.

The Fund is composed of four separate series investment

portfolios, including The Rushmore Money Market Portfolio, The

Rushmore U.S. Government Intermediate-Term Securities Portfolio,

The Rushmore U.S. Government Long-Term Securities Portfolio, and

The Rushmore Nova Portfolio (collectively, the "Rushmore

Portfolios") (though shares in The Rushmore Nova Portfolio

currently are not available or sold to the public). Shareholders

may exchange shares of any Rushmore Portfolio for shares of any

other Rushmore Portfolio (other than The Rushmore Nova

Portfolio). Shares of any Rushmore Portfolio also may be

exchanged for shares of the Fund for Government Investors, Inc.,

the Fund for Tax-Free Investors, Inc., the Cappiello-Rushmore

Trust, 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. 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 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, Shareholders of the

Acquiring Portfolio Shares will continue to be entitled to the

exchange privilege currently offered by the Fund. There are no

material differences between the exchange privilege which

Shareholders of the Acquired Portfolio currently have and the

exchange privilege which such Shareholders will have as

shareholders of the Acquiring Portfolios upon effectiveness of

the Reorganization.

The Acquiring Portfolio has reserved the right to reject or

refuse, at the Acquiring Portfolio's discretion, any order for

the purchase of its shares in whole or in part.

Redemption Procedures and Fees

Acquiring Portfolio Shares and Acquired 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 Acquiring Portfolio Shares and for redeemed Acquired

Portfolio Shares ordinarily are made within seven days after

receipt of a redemption request in proper form and documentation.

Acquiring Portfolio Shares and Acquired Portfolio Shares may be

redeemed without charge.

Dividends and Distributions; Automatic Reinvestment

Both the Acquired Portfolio and the Acquiring Portfolio declare

dividends daily. Investors 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

The Fund will receive, as a condition to the Reorganization, an

opinion of Jorden Burt Berenson & Johnson LLP, counsel to the

Fund, 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 Fund, the

Acquiring Portfolio, or the Acquired Portfolio, or by their

respective shareholders (see "The Proposed Reorganization --

Federal Income Tax Consequences").

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."

Continuation of Shareholder Accounts; Share Certificates

As a result of the proposed transactions contemplated by the

Reorganization of the Acquired Portfolio into the Acquiring

Portfolio, Shareholders would cease to be shareholders of the

Acquired Portfolio and would receive that number of full and

fractional Acquiring Portfolio Shares having an aggregate net

asset value equal to the aggregate net asset value of his or her

Acquired Portfolio Shares as of the close of business on the

Closing Date.

The Acquiring Portfolio will establish accounts on the Closing

Date for Shareholders which will contain the appropriate number

of Acquiring Portfolio Shares. Acceptance of Acquiring Portfolio

Shares by a Shareholder will be deemed to be authorization of the

Acquiring Portfolio and its agents to establish, with respect to

the Acquiring Portfolio, all of the account options, including

telephone redemptions, if any, and dividend and distribution

options, as have been established for the Shareholder's Acquired

Portfolio account. Shareholders who are receiving payments under

an Automatic Investment Plan, with respect to Acquired Portfolio

Shares, will retain the same rights and privileges as to

Acquiring Portfolio Shares under such an Automatic Investment

Plan after the Reorganization. Similarly, no further action will

be necessary in order to continue, with respect to Acquiring

Portfolio Shares, any retirement plan currently maintained by a

Shareholder with respect to Acquired Portfolio Shares.

As series of a Maryland corporation, the Acquiring Portfolio will

not issue certificates evidencing ownership of Acquiring

Portfolio Shares. Shareholders to whom Acquired Portfolio Share

certificates have been issued will be required to surrender their

certificates in order to receive or to redeem Acquiring Portfolio

Shares received as a result of the Reorganization.

No sales or other charges will be imposed in connection with the

issuance of Acquiring Portfolio Shares to the Shareholders

pursuant to the Reorganization.

Form of Organization of the Fund

The Fund was organized as a corporation under the laws of the

State of Maryland, pursuant to the Fund's Articles of

Incorporation, dated July 17, 1985, and as last amended on

October 29, 1991 (the "Rushmore Articles"). The operations of

the Fund, the Acquired Portfolio, and the Acquiring Portfolio are

governed by these Rushmore Articles, the Fund's By-Laws, and by

Maryland law, as applicable. The Fund, as well as its series

investment portfolios, are subject to the provisions of the 1940

Act, and the rules and regulations of the Commission thereunder.

The Fund is authorized to issue an unlimited number of shares of

common stock in one or more series investment portfolios or

funds. Currently, the Fund is composed of four separate

investment portfolios: The Rushmore Money Market Portfolio, The

Rushmore U.S. Government Intermediate-Term Securities Portfolio,

The Rushmore U.S. Government Long-Term Securities 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."

COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES

As discussed below, the investment objective and policies of the

Acquiring Portfolio and the Acquired Portfolio are similar,

except for certain differences as to particular investment

policies, which differences are outlined below.

Investment Objectives and Policies

General. The investment objective of both the Acquired Portfolio

and the Acquiring Portfolio is to provide investors with maximum

current income to the extent that such investment is consistent

with safety of principal. To achieve its investment objective,

the Acquired Portfolio invests principally in the current ten-

year U.S. Treasury note and in other U.S. Government securities

with maturities of ten years or less, whereas the Acquiring

Portfolio, to achieve its investment objective, invests

principally in the current thirty-year U.S. Treasury bond and in

other U.S. Government securities with maturities of ten years or

more. Both the Acquired Portfolio and the Acquiring Portfolio

invest only in 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 (zero coupon bonds).

As noted above, the most notable different between the investment

policies of the Acquired Portfolio and the investment policies of

the Acquiring Portfolio is that the maturities of the U.S.

Government securities in which the Acquired Portfolio invests

generally are shorter than the maturities of the U.S. Government

securities in which the Acquiring Portfolio invests. Both the

Acquired Portfolio and the Acquiring Portfolio seek to maximize

current income while, at the same time, to preserve principal.

U.S. Government Securities. The Acquired Portfolio and Acquiring

Portfolio differ primarily in the maturities of the U.S.

Government securities in which the Acquired Portfolio and the

Acquiring Portfolio invest. Both the Acquired Portfolio and the

Acquiring Portfolio will invest only in 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 (zero coupon bonds). Such U.S. Government agencies

and instrumentalities include organizations such as the

Government National Mortgage Association ("GNMA"), the Small

Business Administration ("SBA"), the Federal Home Loan Banks

("FHLBs"), the Federal Home Loan Mortgage Corporation, and the

Federal National Mortgage Association ("FNMA"). As described

below, the Acquired Portfolio and the Acquiring Portfolio each

also may purchase U.S. Government securities under repurchase

agreements and lend portfolio securities held by the Acquired

Portfolio and the Acquiring Portfolio, respectively.

U.S. Government bonds typically pay coupon interest semi-annually

and repay the principal at maturity. GNMA certificates differ

from other U.S. Government securities in that monthly payments of

both principal and interest are made. GNMA certificates

represent an ownership in a pool of either Federal Housing

Administration (FHA) insured or Veterans Administration (VA)

guaranteed mortgages. These certificates have yield and maturity

characteristics corresponding to the underlying mortgages and a

certificate's term may be shortened by unscheduled or early

payments of principal on the underlying mortgages. The actual

yield of each certificate will be influenced by the prepayment

experience of the mortgage pool.

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.

Zero-Coupon Bonds. Both the Acquired Portfolio and Acquiring

Portfolio may buy and sell zero coupon U.S. Treasury securities.

These securities are U.S. Treasury notes and bonds which have

been stripped of their unmatured interest coupons, the coupons

themselves, and receipts or certificates representing interests

in such stripped debt obligations and coupons. Interest on these

securities is not paid in cash during the term of these

securities, but is accrued and paid at maturity. These

securities are purchased at a discount from face value,

reflecting the current value of the deferred interest. The

discount on these securities is taxable even though there is no

cash return until maturity. Price volatility is greater than

normal interest-paying securities, and the value of the zero

coupon securities reacts more quickly to changes in interest

rates than do coupon bonds. Neither the Acquired Portfolio nor

the Acquiring Portfolio invests more than 10% of its assets in

the current value of zero coupon securities at any time.

Repurchase Agreements. In order to utilize cash reserves kept

for liquidity effectively, the Acquired Portfolio and the

Acquiring Portfolio each may invest in repurchase agreements

secured by securities issued or guaranteed by the U.S.

Government, and its agencies and instrumentalities, and in

securities and certificates evidencing ownership of future

interest and principal payments on such securities. 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 is greater than the purchase price, reflecting

an agreed-upon interest rate. Each of the Acquired Portfolio and

the Acquiring 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 Acquired Portfolio and the

Acquiring Portfolio will liquidate those securities held 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 Acquired Portfolio or the Acquiring

Portfolio, as the case may be, could suffer a loss.

Lending of Securities. Each of the Acquired Portfolio and the

Acquiring 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 will be

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 Acquired Portfolio or the Acquiring

Portfolio may invest equal to the market value of the securities

loan. The Acquired Portfolio and the Acquiring Portfolio receive

compensation for lending their securities in the form of fees.

The Acquired Portfolio and the Acquiring Portfolio will enter

into securities lending and repurchase agreement transactions

only with parties who meet credit-worthiness standards approved

by the Board. In the event of a default or bankruptcy by a

seller or borrower, the Acquired Portfolio and the Acquiring

Portfolio will promptly liquidate collateral. The exercise of

the Acquired Portfolio's or Acquiring Portfolio's right to

liquidate such collateral, 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 Acquired Portfolio or

the Acquiring Portfolio, as the case may be, could suffer a loss.

Borrowings. The Acquired Portfolio and the Acquiring Portfolio

each may borrow money only as a temporary measure to facilitate

redemptions. Such a borrowing may not exceed 30% of the Acquired

Portfolio's or the Acquiring Portfolio's total assets, taken at

current net asset value before any borrowing. Neither the

Acquired Portfolio nor the Acquiring Portfolio may purchase

securities if a borrowing by the Acquired Portfolio or the

Acquiring Portfolio, as the case may be, is outstanding.

Investment Restrictions and Limitations.

The respective investment restrictions and limitations of the

Acquired Portfolio and the Acquiring Portfolio (collectively, the

"Portfolios") are identical. 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 Acquired

Portfolio's or the Acquiring Portfolio'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

Portfolio 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

Portfolio.

PRINCIPAL RISK FACTORS

Because the investment objective and investment restrictions of

the Acquiring Portfolio are identical to those of the Acquired

Portfolio, and because the investment policies of the Acquiring

Portfolio and the Acquired Portfolio, other than with respect to

the maturities of the U.S. Government securities in which the

Acquiring Portfolio and the Acquired Portfolio each invests, also

are identical, the risks associated with the particular

investment policies and strategies that the Acquiring Portfolio

and the Acquired Portfolio are authorized to employ in seeking to

meet their investment objectives also are identical, except, as

described below, for the fluctuation due to interest rate

movements in the market value of certain of the securities in

which the Acquiring Portfolio and the Acquired Portfolio invest.

As described above, the Acquiring Portfolio invests principally

in the current thirty-year U.S. Treasury bond and in other U.S.

Government securities with maturities of ten years or more,

whereas the Acquired Portfolio invests principally in the current

ten-year U.S. Treasury note and in other U.S. Government

securities with maturities of ten years or less. The market

values of the investment securities of both the Acquiring

Portfolio and the Acquired Portfolio will vary inversely with

interest rate movements and, therefore, the per share value of

the Acquiring Portfolio and the Acquired Portfolio each also will

fluctuate as interest rates change. As interest rates fluctuate,

however, debt securities with longer maturities, such as GNMA

certificates and the longer-term securities in which the

Acquiring Portfolio may invest, generally experience greater

price movement compared to the shorter-term securities in which

the Acquired Portfolio may invest. Accordingly, investment in

the Acquiring Portfolio may involve a somewhat higher degree of

risk than investment in the Acquired Portfolio. Because of the

fluctuation of per share values, investment in either the

Acquired Portfolio or the Acquiring Portfolio (both before and

after the proposed Reorganization) may not be suitable for

investors with short-term investment objectives.

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) the Acquiring Portfolio, on the closing

date of the Reorganization, acquiring all of the assets of the

Acquired Portfolio in exchange for Acquiring Portfolio Shares and

the assumption by the Acquiring Portfolio of all the liabilities

of the Acquired Portfolio and (ii) the constructive distribution

of Acquiring Portfolio Shares to the Shareholders of the Acquired

Portfolio in exchange for the Acquired Portfolio Shares of such

Shareholders, all as provided for by the Plan. Immediately

following the Reorganization, the Acquiring Portfolio will be

renamed "The Rushmore U.S. Government Bond Portfolio."

<\REDLINE>

The assets of the Acquired Portfolio to be acquired by the

Acquiring Portfolio include all property, including, without

limitation, all cash, securities, commodities and futures

interests, and dividends or interest receivables which are owned

by the Acquired Portfolio and any deferred or prepaid expenses

shown as an asset on the books of the Acquired Portfolio on the

closing date of the Reorganization. The Acquiring Portfolio will

assume from the Acquired Portfolio all liabilities, expenses,

costs, charges, and reserves reflected on an unaudited statement

of assets and liabilities of the Acquired Portfolio. The

Acquiring Portfolio also will deliver Acquiring Portfolio Shares

to the Acquired Portfolio, which Acquiring Portfolio Shares the

Acquired Portfolio then shall distribute to the Shareholders of

the Acquired Portfolio in exchange for such Shareholders'

Acquired Portfolio Shares. The exchange of the Acquired

Portfolio's assets for the Acquiring Portfolio Shares is

anticipated to occur on December 31, 1995, or such later date as

the parties may agree (the "Closing Date").

The value of the Acquired Portfolio's assets to be acquired by,

and the value of the Acquired Portfolio's liabilities to be

assumed by, the Acquiring Portfolio and the net asset value of a

share of the Acquiring Portfolio 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 the

Acquiring Portfolio's then-current Prospectus and Statement of

Additional Information.

Upon the Closing Date, the Acquired Portfolio will distribute pro

rata to its Shareholders of record the Acquiring Portfolio Shares

received by the Acquired Portfolio in exchange for such

Shareholders' interests in the Acquired Portfolio, as evidenced

by such Shareholders' Acquired Portfolio Shares. This

distribution will be accomplished by opening accounts on the

books of the Acquiring Portfolio in the name of each Shareholder

of record in the Acquired Portfolio and by crediting thereon the

shares previously credited to the Acquired Portfolio account of

the Shareholder on those books, as described above (see "Synopsis

- -- Continuation of Shareholder Accounts; Share Certificates").

Each such Acquiring Portfolio shareholder account shall represent

the respective pro-rata number of the Acquiring Portfolio Shares

due such Shareholder.

Accordingly, every Shareholder will own Acquiring Portfolio

Shares immediately after the Reorganization, the value of which

Acquiring Portfolio Shares will be equal to the value of such

Shareholder's Acquired Portfolio Shares immediately prior to the

Reorganization. Moreover, because the Acquiring Portfolio Shares

will be issued at net asset value in exchange for the net assets

of the Acquired Portfolio that will equal the aggregate value of

those Acquiring Portfolio Shares, the net asset value per share

of each Acquiring Portfolio 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 the Board, or

by an authorized officer of the Fund, as appropriate. Among the

significant conditions (which may not be waived) for the

Reorganization of the Acquired Portfolio are: (i) the receipt by

the Fund of an opinion of counsel to the Fund (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 voting

shares of the Acquired 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 Acquired Portfolio and the

Acquiring Portfolio. 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 Acquired 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 Acquired Portfolio and the corresponding

Acquiring Portfolio. To the extent that any portfolio asset of

the Acquired Portfolio is inconsistent with the investment

requirements of the Acquiring Portfolio on that date, the

Acquired 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

Acquired Portfolio, however, intends to conform its securities

portfolio to meet the investment objective and policies of the

Acquiring Portfolio prior to the Closing Date.

Reasons For the Proposed Reorganization

As described below in greater detail, the Board believes the

Reorganization would benefit Shareholders by enhancing the

ability of the Fund's adviser to effect portfolio transactions on

more favorable terms and give the Fund's adviser greater

investment flexibility as well as promote more efficient

operations and enable greater diversification of investments. In

addition, the Board also believes that the investment policies of

the Acquiring Portfolio may be more advantageous to Shareholders

than the investment policies of the Acquired Portfolio, and

present the potential for greater capital growth, and 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. The Board, including

all of the Independent Directors, has determined that the

interests of the Shareholders of the Acquired 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 Acquired Portfolio. The proposed

Reorganization was recommended to the Board by MMA, the

investment adviser to the Acquired Portfolio, and was considered

and unanimously approved by the Board at a meeting held on July

27, 1995.

The unanimous decision by the Board to recommend that the

Shareholders of the Acquired Portfolio vote to approve the

Reorganization of the Acquired Portfolio was based on a number of

factors, first and foremost that the Reorganization would be a

means of combining similar portfolios with identical investment

objectives and comparable investment policies and would permit

the Shareholders of the Acquired Portfolio to pursue

substantially the same investment goals in a potentially larger

fund. The 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 Acquiring Portfolio-Acquired 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 give the investment adviser greater

investment flexibility and the ability to select a larger number

of portfolio securities for the larger, resulting fund, with the

attendant ability to spread investment risks among a larger

number of portfolio securities.

The Board further considered that, without the larger asset base

resulting from the proposed Reorganization, the Acquired

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 Acquired Portfolio. The

Board considered that the present asset base of the Acquired

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 of the Rushmore Management Agreement by MMA. The

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 the Acquiring

Portfolio 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 Acquired Portfolio and the

Acquiring Portfolio. As a general rule, economies can be

expected to be realized primarily with respect to fixed expenses,

such as costs of printing and fees for professional services.

Expenses that are based on the value of assets or the number of

shareholder accounts, such as custody and transfer agent fees,

however, would be largely unaffected by the Reorganization.

Achievement of these goals, of course, cannot be assured.

The Board believes that the essential aspect of the

Reorganization is that the interest of a Shareholder in the

Acquiring Portfolio would be virtually identical to that

Shareholder's interest in the predecessor Acquired Portfolio; the

Board further believes 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 Fund of an opinion of counsel to the

effect that the Reorganization will not result in the recognition

of any gain or loss for Federal income tax purposes either to the

Acquiring Portfolio or the Acquired Portfolio or to the

shareholders of either the Acquiring Portfolio or the Acquired

Portfolio.

The Board based its decision to recommend the proposed

Reorganization, and the transactions contemplated thereby, to the

Shareholders 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 Acquired

Portfolio and the Acquiring Portfolio;

3. the future prospects of the Acquired Portfolio and

the Acquiring Portfolio if the Reorganization of

such Acquired Portfolio into such Acquiring

Portfolio is effected and if such Reorganization

is not effected;

4. the fact that the investment objectives, policies,

and restrictions of the Acquired Portfolio and the

Acquiring Portfolio are compatible;

5. service features available to shareholders in the

Acquired Portfolio and the Acquiring Portfolio;

6. the anticipated benefits to the Shareholders of

continuing to be part of the same mutual fund;

7. the tax-free nature and consequences of the

Reorganization; and

8. alternatives to the Reorganization.

Description of Securities To Be Issued

General. The Acquiring Portfolio Shares to be issued pursuant to

the proposed Reorganization represent shares of common stock in

the Fund, which is a diversified, open-end management investment

company, organized as a corporation under the laws of the State

of Maryland, pursuant to the Rushmore Articles. The Rushmore

Articles authorize the Board to issue an unlimited number of

shares of common stock in one or more series. Currently, the

Fund has authorized four series: The Rushmore Money Market

Portfolio, The Rushmore U.S. Government Intermediate-Term

Securities Portfolio, The Rushmore U.S. Government Long-Term

Securities Portfolio, and The Rushmore Nova Portfolio (though

shares in The Rushmore Nova Portfolio currently are not available

or sold to the public). Other series in the Fund, however, may

be added in the future. Each Acquiring Portfolio Share

represents an equal proportionate interest with each other

Acquiring Portfolio Share of the Fund, and each such Acquiring

Portfolio Share is entitled to equal voting, dividend,

liquidation, and redemption rights. Acquiring Portfolio Shares

entitle their holders to one vote per full share held and to

fractional votes for fractional shares held. The Acquiring

Portfolio 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 an Acquiring Portfolio is

permitted to inspect the records, accounts, and books of the Fund

for any legitimate business purpose.

Meetings. As a Maryland corporation, the Fund is not required to

hold an annual shareholders' meeting if the 1940 Act does not

require such a meeting. The By-Laws of the Fund provide that a

special meeting of Fund shareholders of any series of the Fund

may be called by the directors of the Fund ("Directors") and

shall be called by the Directors upon the written request of

shareholders owning at least 25% of all of the outstanding voting

shares entitled to be cast at such meeting. The Fund will hold

special shareholder meetings as required or deemed desirable by

the Board for such purposes as electing Directors, changing

fundamental policies, or approving an investment advisory or

shareholder services agreement. Pursuant to Maryland law, any

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

Fund shareholders entitled to vote for the election of directors.

If requested by shareholders of at least 10% of the outstanding

voting shares of the Fund, the Fund will call a shareholder

meeting for the purpose of voting upon the question of the

removal of a Director and will assist in communications with

other Fund shareholders as required by Section 16(c) of the 1940

Act.

Shareholder Liability. Shareholders of a Maryland corporation,

such as the Fund, except to the extent otherwise provided in the

governing instrument of the corporation, are entitled to limited

personal liability. The Fund's governing instrument, the

Rushmore Articles, specifically disclaims shareholder liability

for acts or obligations of the Fund and provides that Fund

shareholders shall not be subject to any personal liability for

the acts or obligations of the Fund. The Rushmore Articles

further provide for indemnification, out of the property of the

series of the Fund with respect to which such shareholder's

shares are issued, for all losses and expenses of any shareholder

held personally liable solely by reason of his or her being or

having been a shareholder of such series and not because of his

or her acts or omissions or for some other reason. Thus, the

risk of a shareholder of the Fund 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 Fund would be unable to meet its obligations.

Liability of Directors. Under the Rushmore Articles, a Director

will be held personally liable only for the Director's own

willful misfeasance, bad faith, gross negligence, or reckless

disregard of the duties involved in the conduct of the office of

a Director. Under the Rushmore Articles, Directors and officers

of the Fund ("Officers") will be indemnified for the expenses of

litigation against such 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 the Fund or if the person's conduct is

determined to constitute willful misfeasance, bad faith, gross

negligence, or reckless disregard of that person's duties. The

Fund also may advance money for these expenses provided that the

Director or the Officer undertakes to repay the Fund 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 the Fund to be issued pursuant to

the proposed Reorganization, (ii) the operations of the Fund and

the Rushmore Articles and the By-Laws of the Fund, and (iii)

Maryland law. The foregoing is not a complete description of the

shares of common stock of the Fund nor of the documents or laws

cited. Shareholders should refer to the provisions of Maryland

law directly for a more thorough description.

Federal Income Tax Consequences

The Fund will receive, as a condition to the Reorganization, an

opinion from Jorden Burt Berenson & Johnson LLP, counsel to the

Fund, 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 Acquired Portfolio upon the transfer of all of

the Acquired Portfolio's assets to the Acquiring

Portfolio in exchange solely for Acquiring

Portfolio Shares and the assumption by the

Acquiring Portfolio of all the liabilities of the

Acquired Portfolio and the subsequent distribution

of those Acquiring Portfolio Shares to the

Acquired Portfolio's Shareholders of record;

3. no gain or loss will be recognized to the

Acquiring Portfolio upon the receipt of those

Acquired Portfolio assets in exchange solely for

Acquiring Portfolio Shares and the assumption by

the Acquiring Portfolio of those Acquired

Portfolio liabilities;

4. the Acquiring Portfolio's basis for those Acquired

Portfolio assets transferred by the Acquired

Portfolio to the Acquiring Portfolio will be the

same as the basis thereof in the Acquired

Portfolio's hands immediately before the

Reorganization, and the Acquiring Portfolio's

holding period for those assets will include the

Acquired Portfolio's holding period therefor;

5. each Shareholder of record of the Acquired

Portfolio will recognize no gain or loss upon the

constructive exchange of all of his or her

Acquired Portfolio Shares solely for Acquiring

Portfolio Shares pursuant to the Reorganization;

6. each Shareholder's basis for the Acquiring

Portfolio Shares to be received by the Shareholder

pursuant to the Reorganization will be the same as

the Shareholder's basis in the Acquired Portfolio

Shares to be constructively surrendered in

exchange therefor; and

7. each such Shareholder's holding period for those

Acquiring Portfolio Shares will include the period

during which the Acquired Portfolio Shares to be

constructively surrendered in exchange therefor

were held, provided the Acquired 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 the Fund.

The Acquired Portfolio, as of August 31, 1995, had a capital loss

carryover of $979,097, and the Acquiring Portfolio, as of August

31, 1995, had a capital loss carryover of $624,343. Pursuant to

the Reorganization of the Acquired Portfolio into the Acquiring

Portfolio, the Acquiring Portfolio would retain its capital loss

carryover and would succeed to the capital loss carryover of the

Acquired Portfolio, subject, in both cases, to the limitations of

Sections 381, 382, 383, and 384 of the Code. The Acquired

Portfolio and the Acquiring Portfolio, as of the foregoing dates,

had no other loss carryover.

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 ACQUIRED

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 ACQUIRED

PORTFOLIO.

Pro Forma Capitalization and Ratios

The following tables show the capitalization of the Acquired

Portfolio and the Acquiring Portfolio separately, as of August

31, 1995, and combined in the aggregate on a pro forma basis

(unaudited), as of that date, giving effect to the

Reorganization:

<TABLE>
<CAPTION>
Acquired Acquiring Pro Forma
Portfolio Portfolio Combined

<S> <C> <C> <C>
Net Assets: $11,592,845 $16,390,706 $27,983,551

Net Asset Value
Per Share: $9.44 $9.89 $9.89

Shares
Outstanding: 1,227,678 1,657,846 2,830,024

</TABLE>

Cessation of Existence

If the Plan is approved by the Shareholders of the Acquired

Portfolio and the Reorganization is completed, the Acquired

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 Board, including all of the Independent

Directors, has unanimously concluded, after due consideration of

the direct and indirect costs of the transactions contemplated by

the proposed Reorganization and all other factors and information

deemed by the Board to be relevant, that the Reorganization would

be in the best interests of the Acquired Portfolio and its

Shareholders and that the interests of existing Shareholders of

the Acquired Portfolio will not be diluted as a result of the

transactions contemplated by the Reorganization. The 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 Acquired Portfolio under Proposal One

requires the affirmative vote of a majority of all the

outstanding voting shares of the Acquired Portfolio. In the

event that the Shareholders of the Acquired Portfolio do not

approve the Plan, and the Reorganization of the Acquired

Portfolio contemplated thereunder, the Board will consider

possible alternative arrangements and MMA will continue to render

services to the Acquired Portfolio.

The Board of Directors of The Rushmore Fund, Inc. has unanimously

approved and recommends that, with respect to the Reorganization

of the Acquired Portfolio into the Acquiring Portfolio, the

Shareholders of the Acquired Portfolio vote FOR Proposal One, the

proposed Agreement and Plan of Reorganization for the Acquired

Portfolio and the transactions contemplated thereby, as described

above.

ADDITIONAL INFORMATION ABOUT THE ACQUIRING PORTFOLIO
AND THE ACQUIRING PORTFOLIO SHARES

Additional information about the Acquiring Portfolio is included

in the current Prospectus of The Rushmore U.S. Government Long-

Term Securities Portfolio, dated December 21, 1994. 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 prospectus for The

Rushmore U.S. Government Long-Term Securities Portfolio. Further

information about the Acquiring Portfolio is included in the

Statement of Additional Information for The Rushmore Fund, Inc.,

dated December 21, 1994, which also has been filed with the

Commission and is incorporated by reference herein. Copies of

this Statement of Additional Information for the Acquiring

Portfolio may be obtained without charge by contacting Rushmore

Trust and Savings, F.S.B. ("RTS"), which provides all

administrative services to the Acquiring Portfolio, at 4922

Fairmont Avenue, Bethesda, Maryland 20814, or by telephoning RTS

toll-free at (800) 343-3355.

ADDITIONAL INFORMATION ABOUT THE ACQUIRED PORTFOLIO
AND THE ACQUIRED PORTFOLIO SHARES

Additional information about the Acquired Portfolio is included

in the current Prospectus of The Rushmore U.S. Government

Intermediate-Term Securities Portfolio, dated December 21, 1994.

A copy of each 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 prospectus for The Rushmore U.S.

Government Intermediate-Term Securities Portfolio. Further

information about the Acquired Portfolio is included in the

Statement of Additional Information for The Rushmore Fund, Inc.,

dated December 21, 1994, which also has been filed with the

Commission and is incorporated by reference herein. A copy of

this Statement of Additional Information for the Acquired

Portfolio may be obtained without charge by contacting RTS, which

provides all administrative services to the Acquired Portfolio,

at 4922 Fairmont Avenue, Bethesda, Maryland 20814, or by

telephoning RTS toll-free at (800) 343-3355.

MISCELLANEOUS

Available Information

The Fund is registered under the 1940 Act and is subject to the

informational requirements of the Securities Exchange Act of

1934, as amended, and the 1940 Act, and, in accordance therewith,

files 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

Acquiring Portfolio 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

Both the audited financial statements of the Acquiring Portfolio

included in the Statement of Additional Information related to

this combined prospectus/proxy statement (the "SAI") and the

audited financial statements of the Acquired 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 Acquired Portfolio and the Shareholders of

the Acquired 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 20814
November 13, 1995

<\REDLINE>

P R O X Y P R O X Y

THE RUSHMORE U.S. GOVERNMENT
INTERMEDIATE-TERM SECURITIES PORTFOLIO
The Rushmore Fund, Inc.

4922 Fairmont Avenue
Bethesda, Maryland 20814
____________

PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS
December 22, 1995

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS of The
Rushmore Fund, Inc. (the "Fund") for use at a special meeting of
the shareholders of the Rushmore U.S. Government Intermediate-
Term Securities Portfolio, a series of the Fund, which meeting
will be held at 1:00 P.M., Eastern Time, on Friday, December 22,
1995, at the offices of the Fund, 4922 Fairmont Avenue, Bethesda,
Maryland 20814 (the "Meeting").

The undersigned shareholder of the Rushmore U.S. Government
Intermediate-Term Securities Portfolio, revoking any and all
previous proxies heretofore given for shares of the Rushmore U.S.
Government Intermediate-Term Securities Portfolio held by the
undersigned ("Shares"), does hereby appoint Daniel L. O'Connor,
Richard J. Garvey, 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 U.S.
Government Intermediate-Term Securities 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.

<\REDLINE>

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 Fund, the Rushmore U.S.
Government Intermediate-Term Securities Portfolio,
and the Rushmore U.S. Government Long-Term
Securities Portfolio, another series of the Fund
<PAGE>

(the "Plan"), and the transactions contemplated
thereby, pursuant to which Plan the Intermediate-
Term Securities Portfolio would transfer all of
its assets to the Long-Term Securities Portfolio,
in exchange for (i) shares of common stock in the
Long-Term Securities Portfolio that would be
distributed to the shareholders of the
Intermediate-Term Securities Portfolio and (ii)
the assumption by the Long-Term Securities
Portfolio of all the liabilities of the
Intermediate-Term Securities Portfolio (the
"Reorganization"). Immediately following the
Reorganization, the Long-Term Securities Portfolio
will be renamed "The Rushmore U.S. Government Bond
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: ________________, 1995

_______________________________
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.

APPENDIX A:

FORM OF
AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>

APPENDIX A:

AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement")
is made as of this ___ day of December, 1995, by and among The
Rushmore Fund, Inc. (the "Fund"), a Maryland corporation, The
Rushmore U.S. Government Long-Term Securities Portfolio (the
"Acquiring Portfolio"), a series of the Fund, and The Rushmore
U.S. Government Intermediate-Term Securities Portfolio (the
"Acquired Portfolio"), also a series of the Fund. The Fund, the
Acquiring Portfolio, and the Acquired Portfolio 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 Acquired
Portfolio, pursuant to which the Acquired Portfolio will become
part of the Acquiring Portfolio (the "Reorganization").
Specifically, this Agreement is intended to be and is adopted for
the purpose of providing for the Reorganization of the Acquired
Portfolio into the Acquiring Portfolio. The Reorganization will
consist of the transfer of all of the assets of the Acquired
Portfolio to the Acquiring Portfolio in exchange solely for (i)
shares of common stock in the Acquiring Portfolio (the "Acquiring
Portfolio Shares") and (ii) the assumption by the Acquiring
Portfolio of all the liabilities of the Acquired Portfolio, and
the distribution of the Acquiring Portfolio Shares to the
shareholders of the Acquired Portfolio, as provided herein, all
upon the terms and conditions hereinafter set forth in this
Agreement.

WHEREAS, the Acquired Portfolio and the Acquiring Portfolio
are series of an open-end, registered investment company of the
management type and the Acquired Portfolio owns securities which
generally are assets of the character in which such Acquiring
Portfolio is permitted to invest;

WHEREAS, the Board of Directors of the Fund has determined,
with respect to the Reorganization, that the exchange of all of
the assets of the Acquired Portfolio for Acquiring Portfolio
Shares and the assumption of all the liabilities of the Acquired
Portfolio by the Acquiring Portfolio is in the best interests of
the Acquired Portfolio and the Acquiring Portfolio and their
shareholders and that the interests of the existing shareholders
of the Acquired Portfolio and the Acquiring Portfolio would not
be diluted as a result of this transaction;

WHEREAS, the purpose of the Reorganization is to combine the
assets of the Acquiring Portfolio with those of the Acquired
Portfolio in an attempt to achieve greater operating economies
and increased portfolio diversification.

NOW, THEREFORE, in consideration of the premises 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 ACQUIRED PORTFOLIO TO THE
ACQUIRING PORTFOLIO IN EXCHANGE FOR THE ACQUIRING PORTFOLIO
SHARES, AND THE ASSUMPTION OF ALL THE LIABILITIES OF THE
ACQUIRED 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 Acquired
Portfolio agrees to transfer all of the Acquired Portfolio's
assets, as set forth in paragraph 1.2, to the Acquiring
Portfolio, and the Acquiring Portfolio agrees in exchange
therefor: (i) to deliver to the Acquired Portfolio the number of
Acquiring Portfolio Shares, including fractional Acquiring
Portfolio Shares, determined by dividing the value of the
Acquired 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 Acquiring Portfolio 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 Acquired Portfolio, as set
forth in paragraph 1.3.

1.2 The assets of the Acquired Portfolio to be acquired by
the Acquiring Portfolio 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 Acquired Portfolio and any deferred or prepaid expenses
shown as an asset on the books of the Acquired Portfolio on the
closing date provided in paragraph 3.1 (the "Closing Date").

1.3 The Acquired Portfolio will endeavor to discharge all
of its known liabilities and obligations prior to the Closing
Date. The Acquiring Portfolio shall assume all liabilities,
expenses, costs, charges, and reserves reflected on an unaudited
statement of assets and liabilities of the Acquired Portfolio
prepared by the administrator of the Acquiring Portfolio and the
Acquired Portfolio, as of the Valuation Date (as defined in
paragraph 2.1), in accordance with generally accepted accounting
principles consistently applied from the prior audited period.

1.4 Immediately after the transfer of assets provided for
in paragraph 1.1, the Acquired Portfolio will distribute pro rata
to the Acquired Portfolio's shareholders of record, determined as
of immediately after the close of business on the Closing Date
(the "Acquired Portfolio Shareholders"), the Acquiring Portfolio
Shares received by the Acquired Portfolio pursuant to paragraph
1.1. Such distribution will be accomplished by the transfer of
the Acquiring Portfolio Shares then credited to the account of
the Acquired Portfolio on the books of the Acquiring Portfolio to
open accounts on the share records of the Acquiring Portfolio in
the names of the Acquired Portfolio Shareholders and representing
the respective pro rata number of the Acquiring Portfolio Shares
due such shareholders. All issued and outstanding shares of the
Acquired Portfolio will simultaneously be canceled on the books
of the Acquired Portfolio, although share certificates
representing interests in the Acquired Portfolio will represent a
number of Acquiring Portfolio Shares after the Closing Date as
determined in accordance with Section 2.3. The Acquiring
Portfolio shall not issue certificates representing the Acquiring
Portfolio Shares in connection with such exchange. Ownership of
Acquiring Portfolio Shares will be shown on the books of the
Acquiring Portfolio's transfer agent.

1.5 Immediately following the Reorganization, the Acquiring
Portfolio will be renamed "The Rushmore U.S. Government Bond
Portfolio."

2. VALUATION

2.1 The value of the Acquired Portfolio's assets to be
acquired by the Acquiring Portfolio hereunder shall be the value
of such assets computed as of immediately after the close of
business of the New York Stock Exchange (the "NYSE") at 4:00
P.M., Eastern Time, on the Closing Date (such time and date being
hereinafter called the "Valuation Date"), using the valuation
procedures set forth in the Fund's Articles of Incorporation and
the Acquired Portfolio's then-current prospectus or statement of
additional information.

2.2 The net asset value of an Acquiring Portfolio 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 the
Fund's Articles of Incorporation and the Acquiring Portfolio's
then-current prospectus or statement of additional information.

2.3 The number of the Acquiring Portfolio Shares to be
issued (including fractional shares, if any) in exchange for the
Acquired Portfolio's assets shall be determined by dividing the
value of the net assets of the Acquired Portfolio determined
using the same valuation procedures referred to in paragraph 2.1

by the net asset value of an Acquiring Portfolio Share determined
in accordance with paragraph 2.2.

2.4 All computations of value for the Fund, the Acquired
Portfolio, and the Acquiring Portfolio shall be made by Money
Management Associates ("MMA").

3. CLOSING AND CLOSING DATE

3.1 The Closing Date shall be December 31, 1995 or such
other date as the parties may agree to in writing. All acts
taking place at the Closing shall be deemed to take place
simultaneously as of immediately after the close of business on
the Closing Date unless otherwise agreed to by the parties. The
close of business on the Closing Date shall be as of 4:00 P.M.,
Eastern Time. The Closing shall be held at the offices of the
Fund, 4922 Fairmont Avenue, Bethesda, Maryland 20814, or at such
other time and/or place as the parties may agree.

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3.2 Rushmore Trust and Savings, F.S.B., Bethesda, Maryland,
as custodian for the Acquired Portfolio (the "Custodian"), shall
deliver at the Closing a certificate of an authorized officer
stating that: (i) the Acquired Portfolio's portfolio securities,
cash, and any other assets shall have been delivered in proper
form to the Acquiring Portfolio 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 Acquired
Portfolio's portfolio securities.

3.3 Rushmore Trust and Savings, F.S.B., Bethesda, Maryland,
as the transfer agent for the Fund (the "Transfer Agent"), on
behalf of the Acquiring Portfolio and the Acquired Portfolio,
shall deliver at the Closing a certificate of an authorized
officer stating that their records contain the names and
addresses of the Acquired Portfolio Shareholders and the number
and percentage ownership of outstanding shares owned by each such
shareholder immediately prior to the Closing. The Acquiring
Portfolio shall issue and deliver a confirmation evidencing the
Acquiring Portfolio Shares to be credited on the Closing Date to
the Secretary of the Acquired Portfolio or provide evidence
satisfactory to the Acquired Portfolio that such Acquiring
Portfolio Shares have been credited to the Acquired Portfolio's
account on the books of the Acquiring Portfolio. 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

4.1 The Fund, on its own behalf and on behalf of the
Acquired Portfolio, represents and warrants to the Acquiring
Portfolio as follows:

(a) The Fund is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Maryland;

(b) The Fund is a registered investment company classified
as a management company of the open-end type, and its
registration with the Securities and Exchange Commission (the
"Commission"), as an investment company under the 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 Fund nor the Acquired Portfolio is in, and
the execution, delivery, and performance of this Agreement will
not result in, a material violation of the Fund's Articles of
Incorporation or By-Laws or of any agreement, indenture,
instrument, contract, lease, or other undertaking to which the
Fund or the Acquired Portfolio is a party or by which either or
both of the Fund and the Acquired Portfolio are bound;

(d) Neither the Fund nor the Acquired Portfolio has any
material contracts or other commitments (other than this
Agreement) which will be terminated with liability to the Fund or
the Acquired Portfolio prior to the Closing Date;

(e) Except as otherwise disclosed in writing to and
accepted by the Fund, on behalf of the Acquiring Portfolio, no
material litigation or administrative proceeding or investigation
of or before any court or governmental body is presently pending
or to their knowledge threatened against the Fund or the Acquired
Portfolio or any of their properties or assets which, if
adversely determined, would materially and adversely affect the
Fund's or the Acquired Portfolio's financial condition or the
conduct of either the Fund's or the Acquired Portfolio's
business. Neither the Fund nor the Acquired Portfolio knows of
any facts which might form the basis for the institution of such
proceedings and neither the Fund nor the Acquired 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 Fund or the
Acquired Portfolio to consummate the transactions herein
contemplated;

(f) The Statement of Assets and Liabilities of the Acquired
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 the
Fund, on behalf of the Acquiring Portfolio) fairly reflects the
financial condition of the Acquired Portfolio as of such date,
and there are no known contingent liabilities of the Acquired
Portfolio as of such date not disclosed therein;

(g) Since August 31, 1995, there has not been any material
adverse change in the Acquired Portfolio's financial condition,
assets, liabilities, or business other than changes occurring in
the ordinary course of business, or any incurrence by the
Acquired Portfolio of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise
disclosed to and accepted by the Fund, on behalf of the Acquiring
Portfolio. For the purposes of this subparagraph (g), a decline
in net asset value per share of the Acquired Portfolio, the
discharge of Acquired Portfolio liabilities, or the redemption of
Acquired Portfolio shares by Acquired Portfolio Shareholders
shall not constitute a material adverse change;

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(h) At the Closing Date, all material Federal and other tax
returns and reports of the Fund and the Acquired 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 Fund
and the Acquired 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 Acquired
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 Acquired
Portfolio are, and at the Closing Date will be, duly and validly
issued and outstanding, fully paid, and non-assessable by the
Acquired Portfolio. All of the issued and outstanding shares of
the Acquired 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 Acquired Portfolio as provided
in paragraph 3.3. The Acquired Portfolio does not have
outstanding any options, warrants, or other rights to subscribe

for or to purchase any of the Acquired Portfolio shares, nor is
there outstanding any security convertible into any of the
Acquired Portfolio shares;

(k) At the Closing Date, the Acquired Portfolio will have
good and marketable title to the Acquired Portfolio's assets to
be transferred to the Acquiring Portfolio pursuant to paragraph
1.2 and full right, power, and authority to sell, assign,
transfer, and deliver such assets hereunder, and, upon delivery
and payment for such assets, the Acquiring Portfolio will acquire
good and marketable title thereto, subject to any restrictions as
might arise under the 1933 Act, other than as disclosed to the
Acquiring Portfolio;

(l) The execution, delivery, and performance of this
Agreement will have been duly authorized prior to the Closing
Date by all necessary action on the part of the Fund's directors,
and, subject to the approval of the Acquired Portfolio
Shareholders, this Agreement will constitute a valid and binding
obligation of the Fund and the Acquired 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 Fund and the
Acquired 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 Fund (the "Proxy Statement")
to be included in the Registration Statement referred to in
paragraph 5.6 (other than information therein that relates to the
Acquiring Portfolio) 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 The Fund, on its own behalf and on behalf of the
Acquiring Portfolio, represents and warrants to the Acquired
Portfolio as follows:

(a) The Fund is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Maryland;

(b) The Fund is a registered investment company classified
as a management company of the open-end type, and its
registration with the 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 the Acquiring Portfolio 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, the Acquiring Portfolio will have
good and marketable title to the Acquiring Portfolio's assets;

(e) Neither the Fund nor the Acquiring Portfolio is in, and
the execution, delivery, and performance of this Agreement will
not result in, a material violation of the Fund's Articles of
Incorporation or By-Laws or of any agreement, indenture,
instrument, contract, lease, or other undertaking to which the
Fund or the Acquiring Portfolio is a party or by which the Fund
or the Acquiring Portfolio are bound;

(f) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is
presently pending or threatened against the Fund or the Acquiring
Portfolio or any of their properties or assets, except as
previously disclosed in writing to the Fund, on behalf of the
Acquired Portfolio. Neither the Fund nor the Acquiring Portfolio
knows of any facts which might form the basis for the institution
of such proceedings and neither the Fund nor the Acquiring
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 Fund or the Acquiring Portfolio to consummate the
transactions contemplated herein;

(g) The Statement of Assets and Liabilities of the
Acquiring Portfolio at August 31, 1995, audited by Deloitte &
Touche LLP, independent accountants, and a copy of which has been
furnished to the Fund, on behalf of the Acquired Portfolio,
fairly and accurately reflects the financial condition of the
Acquiring Portfolio as of such date in accordance with generally
accepted accounting principles consistently applied;

(h) Since August 31, 1995, there has not been any material
adverse change in the Acquiring Portfolio's financial condition,
assets, liabilities, or business other than changes occurring in
the ordinary course of business, or any incurrence by the
Acquiring Portfolio 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 Acquiring Portfolio shares, the discharge of Acquiring
Portfolio liabilities, or the redemption of Acquiring Portfolio
shares by Acquiring Portfolio Shareholders shall not constitute a
material adverse change;

<\REDLINE>

(i) At the Closing Date, all material Federal and other tax
returns and reports of the Fund and the Acquiring 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 Fund
and the Acquiring Portfolio, no such return is currently under
audit and no assessment has been asserted with respect to such
returns;

(j) For each taxable year of its operation, the Acquiring
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;

(k) All issued and outstanding Acquiring Portfolio Shares
are, and at the Closing Date will be, duly and validly issued and
outstanding, fully paid, and non-assessable by the Acquiring
Portfolio. The Acquiring Portfolio does not have outstanding any
options, warrants, or other rights to subscribe for or to
purchase the Acquiring Portfolio Shares, nor is there outstanding
any security convertible into the Acquiring Portfolio 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 the Fund and this Agreement will constitute a valid
and binding obligation of the Acquiring 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 Acquiring Portfolio Shares to be issued and
delivered to the Acquired Portfolio, for the account of the
Acquired 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 Acquiring Portfolio Shares, and will be fully paid and
non-assessable by the Acquiring Portfolio;

(n) The information to be furnished by the Acquiring
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
applicable thereto;

(o) The Proxy Statement to be included in the Registration
Statement (only insofar as it relates to the Fund and the
Acquiring Portfolio) 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) The Fund and the Acquiring Portfolio each 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 their operations after the Closing Date.

5. COVENANTS OF THE ACQUIRING PORTFOLIO AND THE ACQUIRED
PORTFOLIO

The following covenants of the Acquiring Portfolio and the
Acquired Portfolio, as applicable, are made on behalf of the
Acquiring Portfolio and the Acquired Portfolio, respectively, by
the Fund:

5.1 The Acquiring Portfolio and the Acquired 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 Acquired Portfolio will call a meeting of the
Acquired 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 Acquired Portfolio covenants that the Acquiring
Portfolio 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 Acquired Portfolio will assist the Acquiring
Portfolio in obtaining such information as the Acquiring
Portfolio reasonably requests concerning the beneficial ownership
of the shares of the Acquired Portfolio.

5.5 Subject to the provisions of this Agreement, the
Acquiring Portfolio and the Acquired 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 Acquired Portfolio will provide the Acquiring
Portfolio 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 the
Acquiring Portfolio (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 Acquired Portfolio Shareholders to consider
approval of this Agreement and the transactions contemplated
herein (the "Meeting").

6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE FUND AND THE
ACQUIRED PORTFOLIO

The obligations of the Fund and the Acquired Portfolio to
consummate the transactions provided for herein shall be subject,
at their election, to the performance by the Fund and the
Acquiring Portfolio of all the obligations to be performed by the
Fund and the Acquiring Portfolio hereunder on or before the
Closing Date, and, in addition thereto, to the following further
conditions:

6.1 All representations and warranties of the Fund and the
Acquiring Portfolio contained in this Agreement shall be true and
correct in all material respects as of the date hereof and,
except as they may be affected by the transactions contemplated
by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date; and

6.2 The Fund, on behalf of the Acquiring Portfolio, shall
have delivered to the Fund, on behalf of the Acquired Portfolio,
on the Closing Date, a certificate executed in the Fund's name by
the Fund's President or Vice President, and the Fund's Treasurer
or Assistant Treasurer, in a form reasonably satisfactory to the
Fund, on behalf of the Acquired Portfolio, and dated as of the
Closing Date, to the effect that the representations and
warranties of the Fund and the Acquiring 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 the Fund shall reasonably request.

7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE FUND AND THE
ACQUIRING PORTFOLIO

The obligations of the Fund and the Acquiring Portfolio to
complete the transactions provided for herein shall be subject,
at their election, to the performance by the Fund and the
Acquired Portfolio of all of the obligations to be performed by
the Fund and the Acquired Portfolio hereunder on or before the
Closing Date and, in addition thereto, to the following
conditions:

7.1 All representations and warranties of the Fund and the
Acquired 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 Fund shall have delivered to the Fund, on behalf of
the Acquiring Portfolio, a statement of the Acquired Portfolio's
assets and liabilities, as of the Closing Date, certified by the
Treasurer or the Assistant Treasurer of the Fund; and

7.3 The Fund shall have delivered to the Fund, on behalf of
the Acquiring Portfolio, on the Closing Date, a certificate
executed in the Fund's name and the Acquired Portfolio's name by
the Fund's President or Vice President, and the Fund's Treasurer
or Assistant Treasurer, in form and substance satisfactory to the
Fund, and dated as of the Closing Date, to the effect that the
representations and warranties of the Fund and the Acquired
Portfolio, with respect to the Fund and the Acquired 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 the Fund shall reasonably
request.

8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING
PORTFOLIO AND THE ACQUIRED PORTFOLIO

If any of the conditions set forth below do not exist on or
before the Closing Date, with respect to the Acquired Portfolio
or the Acquiring Portfolio, 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 Acquired Portfolio in accordance with the
provisions of the Fund's Articles of Incorporation and By-Laws,
and certified copies of the resolutions evidencing such approval
shall have been delivered to the Fund, on behalf of the Acquiring
Portfolio. Notwithstanding anything herein to the contrary, the
Fund, the Acquiring Portfolio, or the Acquired Portfolio 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 Fund to permit consummation,
in all material respects, of the transactions contemplated hereby
shall have been obtained, except where failure to obtain any such
consent, order, or permit would not involve a risk of a material
adverse effect on the assets or properties of the Fund, the
Acquiring Portfolio, or the Acquired Portfolio, provided that the
parties hereto may, for themselves, waive any of such conditions;

8.4 The Registration Statement shall have become effective
under the 1933 Act and no stop orders suspending the
effectiveness thereof shall have been issued and, to the best
knowledge of the parties hereto, no investigation or proceeding
for that purpose shall have been instituted or be pending,
threatened, or contemplated under the 1933 Act; and

8.5 The parties shall have received the opinion of Messrs.
Jorden Burt Berenson & Johnson LLP, addressed to the Fund, on
behalf of both the Acquiring Portfolio and the Acquired
Portfolio, substantially to the effect that the transactions
contemplated by this Agreement shall constitute a tax-free
reorganization for Federal income tax purposes. The delivery of
such opinion is conditioned upon receipt by Messrs. Jorden Burt
Berenson & Johnson LLP of representations that such firm shall
request of the Fund, the Acquiring Portfolio, and the Acquired
Portfolio. Notwithstanding anything herein to the contrary, the
Fund, the Acquiring Portfolio, or the Acquired Portfolio may not
waive the conditions set forth in this paragraph 8.5.

9. BROKERAGE FEES AND EXPENSES

9.1 The Fund, on behalf of the Acquiring Portfolio, and the
Fund, on behalf of the Acquired 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 The Fund, on behalf of the Acquiring Portfolio, and
the Fund, on behalf of the Acquired 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
Fund's Board of Directors at any time prior to the Closing Date,
if circumstances should develop that, in the opinion of such
Board of Directors, make proceeding with the Agreement
inadvisable.

12. WAIVER

The Fund, on behalf of either or both of the Acquiring
Portfolio and the Acquired Portfolio, after consultation with the
Fund's counsel and by consent of the Fund's Board of Directors,
may waive any condition to the respective obligations of the
Acquiring Portfolio and the Acquired 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 Fund; provided, however, that,
following the Meeting of the Acquired Portfolio Shareholders
called by the Acquired 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 Acquiring
Portfolio Shares to be issued to the Acquired 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 Fund at 4922 Fairmont Avenue, Bethesda,
Maryland 20814.

15. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY

15.1 The Article and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.

15.2 This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.

15.3 This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland.

15.4 This Agreement shall bind and inure to the benefit of
the parties hereto and their respective successors and assigns,
but no assignment or transfer hereof or of any rights or
obligations hereunder shall be made by any party without the
written consent of the other party. Nothing herein expressed or
implied is intended or shall be construed to confer upon or to
give any person, firm, or corporation, other than the parties
hereto and their respective successors and assigns, any rights or
remedies under or by reason of this Agreement.

15.5 It is expressly agreed that the obligations of the
Fund, the Acquiring Portfolio, and the Acquired Portfolio
hereunder shall not be binding upon any of the directors,
shareholders, nominees, officers, agents, or employees of the
Fund personally, but shall bind only the corporate property of
the Fund, the Acquiring Portfolio, and the Acquired Portfolio, as
provided in the Articles of Incorporation of the Fund. The
execution and delivery by such officers of the 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 Fund, the Acquiring Portfolio, and the
Acquired Portfolio as provided in the Articles of Incorporation
of the Fund.

IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed by its President or Vice President
and its seal to be affixed hereto and attested by its Secretary
or Assistant Secretary.

Attest: THE RUSHMORE FUND, INC.

[Seal]

/s/Stephenie E. Adams /s/Richard J. Garvey
By:Stephenie E. Adams By:Richard J. Garvey
Title:Secretary Title:President

Attest: THE RUSHMORE FUND, INC., on
behalf of THE RUSHMORE U.S.
[Seal] GOVERNMENT LONG-TERM SECURITIES
PORTFOLIO

/s/Stephenie E. Adams /s/Richard J. Garvey
By:Stephenie E. Adams By:Richard J. Garvey
Title:Secretary Title:President

Attest: THE RUSHMORE FUND, INC., on
behalf of THE RUSHMORE U.S.
[Seal] GOVERNMENT INTERMEDIATE-TERM
SECURITIES PORTFOLIO

/s/Stephenie E. Adams /s/Richard J. Garvey
By:Stephenie E. Adams By:Richard J. Garvey
Title:Secretary Title:President

APPENDIX B:

FORM OF
INVESTMENT MANAGEMENT AGREEMENT
BETWEEN
THE RUSHMORE FUND, INC.
AND
MONEY MANAGEMENT ASSOCIATES
<PAGE>

Attachment A
Last approved October 27, 1994

MANAGEMENT CONTRACT
BETWEEN
THE RUSHMORE FUND, INC.
AND
MONEY MANAGEMENT ASSOCIATES

This Management Contract (the "Contract"), dated as of the

10th day of October, 1985, is entered into by and between The

Rushmore Fund, Inc. (hereinafter sometimes referred to as the

"Fund") and Money Management Associates (hereinafter sometimes

referred to as 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: (a) 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

issue and transfer taxes chargeable to the Fund in connection

with securities transactions to which the Fund is a party; (b)

the compensation (if any) of those directors and officers of the

Fund who also serve as directors, officers or employees of the

Manager; and (c) 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: (a) 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; (b) auditing its financial statements; (c)

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; (d) stockholders' and

directors' meetings, and preparation, printing and distribution

of all reports and proxy materials; (e) printing the Fund's

prospectus on at least an annual basis, and distributing it to

its then-existing shareholders; (f) legal services rendered to

the Fund; (g) retaining and compensating those directors,

officers and employees of the Fund who do not also serve as

directors, officers or employees of the Manager; (h) maintaining

appropriate insurance coverage for the Fund and its directors and

officers; (i) its membership in trade associations; (j) federal

and state filing and registration fee; and (k) distribution

expenses pursuant to a distribution plan approved by a majority

of the shareholders and non-interested directors.

3. In connection with the management of the

investment and reinvestment of the assets of the Fund, the

Manager is authorized on behalf of the Fund, to place orders for

the execution of the Fund's portfolio transactions in accordance

with the applicable policies of the Fund as set forth in the

Fund's registration statements under the Securities Act of 1933

and the Investment Company Act of 1940, as such registration

statements may be amended from time to time, 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 five tenths (0.50%) of one percent of the

average daily net asset value of the Fund. The fee will be paid

monthly.

If in any fiscal year the aggregate expenses of the Fund,

exclusive of taxes, brokerage, interest charges and extraordinary

legal expenses but including the management and distribution

fees, exceed 1.25% 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 1.25%. 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 month as a percentage of the total number of days in such

month.

5. The directors of the Fund acknowledge that, in

further consideration of the services of the Manager hereunder,

the Manager has reserved for itself all rights to, and interest

in, the name "The Rushmore Fund, Inc.," or any similar name, and

that use of the name shall continue only with the continuing

consent of the Manager, which consent may be withdrawn at any

time, effective immediately upon written notice thereof to the

Fund.

6. Subject to and in accordance with the governing

instruments of the Fund and of the Manager respectively,

directors, officers, agents and stockholders of the Fund are or

may be interested in the Manager (or any successor thereof) as

partners or otherwise; partners and agents of the Manager are or

may be interested in the Fund as directors, officers, agents,

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 governing instruments and the applicable provisions of the

Investment Company Act of 1940.

The manager shall notify the Fund of any change in partners

of Money Management Associates within a reasonable time after

such change.

7. This contract shall continue in effect until the

first meeting of the Shareholders of the Fund (but in no event

longer than two years from the date hereof), and if approved at

such stockholders' meeting, until two years from the date hereof,

and thereafter only 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 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 prior written notice to the Manager, (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 the Manager on

sixty days prior 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 Section 2(a)(19) and Section

2(a)(42) of the Investment Company Act of 1940.

8. 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.

9. 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.

IN WITNESS WHEREOF, the parties hereto have caused this

contract to be executed on the day and year first above written.

WITNESS: THE RUSHMORE FUND, INC.

/s/Elizabeth L. Snider By /s/J. Hugh Ward

WITNESS: MONEY MANAGEMENT ASSOCIATES

/s/Timothy P. Hagan By /s/Daniel L. O'Connor

AMENDMENT
TO
MANAGEMENT CONTRACT
BETWEEN
THE RUSHMORE FUND, INC.
AND
MONEY MANAGEMENT ASSOCIATES

The following amendment is hereby made to the Management
Contract dated October 10, 1985 between The Rushmore Fund, Inc.
and Money Management Associates. The following paragraph is
added to Section 4 of said contract:

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 Nova Portfolio of the Fund shall pay
the Manager an annual fee of three fourths (.75) of one percent
of the average daily net asset value of the Portfolio. The fee
will be paid monthly.

Witness THE RUSHMORE FUND, INC.

/s/Eileen Loome by /s/William L. Major
Secretary

Witness MONEY MANAGEMENT ASSOCIATES

/s/Karen Teemer by /s/Daniel L. O'Connor
Partner

Date: November 17, 1989

RUSHMORE GROUP

FUND COST STRUCTURES

MGT ADM
FEE FEE TOTAL

<S> <C> <C> <C>
Fund for Government Investors, 0.50% 0.25% 0.75%
Inc.
Fund for Tax-Free Investors,
Inc.:
Money Market Portfolio 0.50% 0.25% 0.75%

Virginia Portfolio 0.625% 0.30% 0.925%

Maryland Portfolio 0.625% 0.30% 0.925%

The Rushmore Fund, Inc.:
Money Market Portfolio 0.50% 0.25% 0.75%

U.S.G. Intermediate Bond 0.50% 0.30% 0.80%

U.S.G. Long - Term Bond 0.50% 0.30% 0.80%
</TABLE>
<\REDLINE>

APPENDIX C:

CURRENT PROSPECTUS OF
THE RUSHMORE U.S. GOVERNMENT INTERMEDIATE-TERM SECURITIES
PORTFOLIO
AND
THE RUSHMORE U.S. GOVERNMENT LONG-TERM SECURITIES PORTFOLIO,
DATED DECEMBER 21, 1994
<PAGE>

THE RUSHMORE FUND, INC.
4922 Fairmont Avenue, Bethesda, MD 20814
(800) 343-3355 (301) 657-1500

U.S. Government Intermediate-Term Securities Portfolio
and
U.S. Government Long-Term Securities Portfolio

The Rushmore Fund, Inc. is an open-end investment company
consisting of three portfolios: the Money Market Portfolio, the
U.S. Government Intermediate-Term Securities Portfolio, and the
U.S. Government Long-Term Securities Portfolio. Each of the
portfolios in effect represents a different fund and investors
can exchange their holdings, without charge, among the three
separate portfolios as their investment outlook or objectives
change.

This prospectus sets forth concisely the information you should
know about the Fund and the U.S. Government Intermediate-Term
Securities Portfolio and the U.S. Government Long-Term Securities
Portfolio.

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 December 21, 1994
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 date of this Prospectus is December 21, 1994.

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.

U.S. GOVERNMENT SECURITIES
Intermediate-Term Portfolio
Long-Term Portfolio

Supplement dated August 31, 1995
to
Prospectus dated December 21, 1994

The time after which (i) purchases by wire transfer, (ii)
telephone redemptions, and (iii) telephone exchanges cannot be
accepted is hereby changed from "2:45 P.M. Eastern time" to "4:00
P.M. Eastern time," as set forth (i) as page C-8 under "How to
Invest in The Fund," (ii) as page C-9 under "How to Redeem An
Investment (Withdrawals)," and (iii) at page C-9 under
"Exchanges," respectively.

<\REDLINE>

FEE TABLE

U.S. Gov't U.S. Gov't
Intermediate- Long-
Term Term
Portfolio Portfolio
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed
on Purchases
(as a percentage of offering price) None None
Redemption Fees None None

Exchange Fees None None

Monthly Account Fee
(for accounts under $500) $5.00 $5.00

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average
net assets)

Management Fees .50% .50%

12b-1 Fees None None

Other Expenses .30 .30

Total Fund Operating Expenses .80% .80%

</TABLE>

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

<S> <C> <C> <C> <C>
Intermediate-Term $8 $26 $45 $103
Long-Term Portfolio 8 26 45 103

</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
will incur 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 representation of past or future
expenses. Actual expenses may be greater or lessor 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.

<TABLE>
<CAPTION>
The Rushmore Fund, Inc.
Financial Highlights
U.S. Government Intermediate-Term Securities Portfolio
Audited

For the Year Ended August 31,
1994 1993 1992
<S> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value - Beginning of
Period..................... $ 10.22 $ 10.73 $ 9.93

Net Investment Income........... 0.527 0.596 0.681

Net Realized and Unrealized Gains (1.080) 0.492 0.799
(Losses) on Securities....
Net Increase (Decrease) in Net
Asset Value
Resulting from Operations..... (0.553) 1.088 1.480
Dividends to Shareholders..... (0.530) (0.596) (0.680)
Distributions to Shareholders
from Net Realized
Capital Gains... (0.166) (1.002) ---

Net Increase (Decrease) in Net
Asset Value......... (1.25) (0.51) 0.80

Net Asset Value - End of
Period...................... $ 8.97 $ 10.22 $ 10.73

Total Investment Return........ (5.64)% 14.47% 15.37%

Ratios to Average Net Assets:
Expenses................. 0.80% 0.80% 0.80%
Net Investment Income......... 5.50% 5.91% 6.63%

Supplementary Data:
Portfolio Turnover Rate.... 174.0% 113.3% 199.8%
Number of Shares Outstanding at
End of Period (000 s 1,489 1,990 1,502
omitted)..
</TABLE>
*from inception December 18, 1985
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.

<TABLE>
<CAPTION>
The Rushmore Fund, Inc.
Financial Highlights
U.S. Government Intermediate-Term Securities Portfolio
Audited

For the Year Ended August 31,

1991 1990 1989
<S> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value - Beginning
of Period . . . . . . . . . $ 9.39 $ 10.01 $ 9.53

Net Investment Income . . . 0.702 0.733 0.784
Net Realized and Unrealized
Gains (Losses)
on Securities....... 0.539 (0.387) 0.480
Net Increase (Decrease) in Net
Asset Value
Resulting from Operations . . 1.241 0.346 1.264
Dividends to Shareholders.. (0.701) (0.732) (0.784)
Distributions to Shareholders
from NetRealized
Capital Gains... --- (0.234) ---

Net Increase (Decrease) in Net
Asset Value..... 0.54 (0.62) 0.48

Net Asset Value - End of
Period...................... $ 9.93 $ 9.39 $ 10.01

Total Investment Return.. 13.86% 3.28% 13.94%

Ratios to Average Net Assets:
Expenses.......... 0.80% 0.80% 0.80%
Net Investment Income..... 7.21% 7.47% 7.93%

Supplementary Data:
Portfolio Turnover Rate.... 195.8% 423.5% 461.0%
Number of Shares Outstanding
at End of Period
(000 s omitted)....... 2,322 372 695
</TABLE>
*from inception December 18, 1985
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.

<TABLE>
<CAPTION>
The Rushmore Fund, Inc.
Financial Highlights
U.S. Government Intermediate-Term Securities Portfolio
Audited

For the Year Ended August 31,
1988 1987 1986*
<S> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value - Beginning
of Period.............. $ 9.70 $ 10.47 $ 10.00

Net Investment Income...... 0.800 0.629 0.471
Net Realized and Unrealized
Gains (Losses)
on Securities............ (0.170) (0.766) 0.460

Net Increase (Decrease) in
Net Asset Value
Resulting from Operations... 0.630 (1.370) .931
Dividends to Shareholders.. (0.800) (0.633) (0.461)
Distributions to Shareholders
from Net Realized
Capital Gains....... --- --- ---

Net Increase (Decrease) in
Net Asset Value.... (0.17) (0.77) 0.47

Net Asset Value - End of
Period................... $ 9.53 $ 9.70 $ 10.47

Total Investment Return..... 6.83% (1.42)% 9.62%

Ratios to Average Net Assets:
Expenses................ 0.81% 0.78% 1.00%
Net Investment Income....... 8.14% 6.17% 6.50%

Supplementary Data:
Portfolio Turnover Rate.. 1,753.7% 87.2% ---
Number of Shares Outstanding
at End of Period
(000 s omitted)...... 116 91 37
</TABLE>
*from inception December 18, 1985
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.

<TABLE>
<CAPTION>
The Rushmore Fund, Inc.
Financial Highlights
U.S. Government Long-Term Securities Portfolio
Audited

For the Year Ended August 31,
1994 1993 1992
<S> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value - Beginning
of Period.... $ 11.55 $ 10.62 $ 9.97

Net Investment Income . . . . 0.599 0.650 0.697
Net Realized and Unrealized
Gains (Losses)
on Securities...... (1.880) 1.304 0.649

Net Increase (Decrease) in Net
Asset Value
Resulting from Operations... (1.281) 1.954 1.346
Dividends to Shareholders.. (0.602) (.650) (.696)
Distributions to Shareholders
from Net Realized (0.583) (.374) ---
Capital Gains . . . . . . .

Net Increase (Decrease) in Net
Asset Value . . . . . . . . . (2.47) 0.93 0.65

Net Asset Value - End
of Period . . . . . . . . . . $ 9.08 $ 11.55 $ 10.62

Total Investment Return....... (10.29)% 20.92% 13.97%

Ratios to Average Net Assets:
Expenses......... 0.80% 0.80% 0.80%
Net Investment Income.. 5.97% 6.08% 6.80%

Supplementary Data:
Portfolio Turnover Rate.. 188.3% 173.6% 298.0%
Number of Shares Outstanding
at End of Period
(000 s omitted)........... 3,225 2,085 2,148
</TABLE>
*from inception December 18, 1985
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.

<TABLE>
<CAPTION>
The Rushmore Fund, Inc.
Financial Highlights
U.S. Government Long-Term Securities Portfolio
Audited

For the Year Ended August 31,
1991 1990 1989
<S> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value - Beginning
of Period.......... $ 9.14 $ 9.96 $ 8.96

Net Investment Income..... 0.718 0.720 0.742
Net Realized and Unrealized
Gains (Losses)
on Securities............. 0.829 (0.821) 1.000
Net Increase (Decrease) in Net
Asset Value
Resulting from Operations... 1.547 (.101) 1.742
Dividends to Shareholders... (.717) (.719) (.742)
Distributions to Shareholders
from Net Realized
Capital Gains....... --- --- ---

Net Increase (Decrease) in Net
Asset Value....... 0.83 (0.82) 1.00

Net Asset Value - End
of Period......... $ 9.97 $ 9.14 $ 9.96

Total Investment Return.... 17.61% (1.24)% 20.17%

Ratios to Average Net Assets:
Expenses............. 0.80% 0.80% 0.80%
Net Investment Income...... 7.43% 7.28% 7.73%

Supplementary Data:
Portfolio Turnover Rate...... 235.7% 400.8% 411.8

Number of Shares Outstanding at
End of Period
(000 s omitted)....... 1,452 1,427 2,603

</TABLE>
*from inception December 18, 1985
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.

<TABLE>
<CAPTION>
The Rushmore Fund, Inc.
Financial Highlights
U.S. Government Long-Term Securities Portfolio
Audited
For the Year Ended August 31,
1988 1987 1986*
<S> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value - Beginning
of Period............. $ 9.19 $ 9.97 $ 10.00

Net Investment Income........ 0.747 0.772 0.614
Net Realized and Unrealized
Gains (Losses)
on Securities......... (0.230) (0.779) (0.031)

Net Increase (Decrease) in Net
Asset Value
Resulting from Operations.. .517 (.007) .583
Dividends to Shareholders.. (.747) (.773) (.613)
Distributions to Shareholders
from Net Realized
Capital Gains..... --- --- ---

Net Increase (Decrease) in Net
Asset Value............ (0.23) (0.78) (0.03)

Net Asset Value - End of
Period................... $ 8.96 $ 9.19 $ 9.97

Total Investment Return.... 5.73% (0.06)% 6.14%

Ratios to Average Net Assets:
Expenses........... 0.83% 0.78% 1.00%
Net Investment Income...... 8.05% 7.90% 8.83%

Supplementary Data:
Portfolio Turnover Rate.... 829.0% 226.0% 43.7%
Number of Shares Outstanding
at Endof Period
(000 s omitted)........ 806 1,175 776

MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE

It has been a year since interest rates stopped falling. In
October 1993, the yield on the 30-year bond was 5.70%, the lowest
since 1977, when the Treasury began regular auctions. On August
31, 1994 the yield on the bond had risen to 7.45%.

Since February of this year the Federal Reserve has increased the
federal funds rate 175 basis points (1.75%). Though inflation
remains relatively low, there are some signs that inflationary
pressures are growing. For example, commodity prices have been
on the rise this year. Also, Federal Reserve Chairman Greenspan
has said in public statements that it is just as important to
reduce investor's expectations of higher inflation as it is to
reduce actual inflation. Adding to the concerns of bond holders
is uncertainty about weakness in the U.S. dollar. They fear it
will diminish the value of dollar-denominated assets and boost
inflation by increasing the cost of goods imported into the
United States. These factors are adding pressure to bond prices.

Rushmore U.S. Government Intermediate-Term Portfolio invests in
the current ten-year Treasury note. The objective of the Fund is
to provide high current income, while maintaining the safety of
principal.

Rushmore U.S. Government Long-Term Portfolio invests in 30-year
Treasury bonds, and, like the Intermediate Term Portfolio,
strives to earn the highest income possible, while maintaining
the safety of principal.

The prospect of further tightening by the Federal Reserve remains
very much alive. However, it is fair to say the economy has
shown remarkable resilience in the face of a sharp backup in
interest rates. Inflation remains low, so we feel that any
further increase in rates would be an opportunity to buy Treasury
securities. Treasury notes and bonds are clearly a better buy
now, with rates up sharply, than they were a year ago. The Fund
has a conservative investment policy which it expects to
continue.

PERFORMANCE DATA

From time to time, quotations of a Portfolio's "total return" and
"yield" may be included in advertisements, sales literature or
shareholder reports. Both "total return" and "yield" figures are
based on historical earnings and show the performance of a
hypothetical investment and are not intended to indicate future
performance. The "total return" of a Portfolio refers to return
assuming an investment has been held in the Portfolio for one
year, five years and for ten years (up to the life of the
Portfolio) , the ending date of which will be stated. The "total
return" quotations are expressed in terms of average annual

compounded rates of return for all periods quoted and assume that
all dividends and capital gains distributions were reinvested.
The "yield" of a Portfolio refers to net income generated by an
investment in the fund over a specified thirty-day period. This
income is thus "annualized". That is, the amount of income
generated by the investment during the thirty-day period is
assumed to be generated over a 12-month period and is shown as a
percentage of the investment. "Yield" and "total return" for a
Portfolio will vary based on changes in market conditions and the
level of the Portfolio's expenses.

The annualized yields for the U.S. Government Intermediate-Term
Securities Portfolio and the U.S. Government Long-Term Securities
Portfolio were 6.60% and 6.95%, respectively, for the year ended
August 31, 1994.

Rushmore Rushmore Lehman Lehman
U.S. Gov't U.S. Gov't Brothers Brothers
Intermediate- Long-Term Intermediate- Long
Term Gov't Index T-Bond
<S> <C> <C> <C> <C>
12/31/85 $10,000 $10,000 $10,000 $10,000
8/31/86 $10,962 $10,614 $11,136 $12,440
8/31/87 $10,806 $10,608 $11,341 $11,529
8/31/88 $11,544 $11,215 $12,178 $12,458
8/31/89 $13,154 $13,478 $13,516 $14,942
8/31/90 $13,585 $13,310 $14,615 $15,169
8/31/91 $15,468 $15,654 $16,470 $17,981
8/31/92 $17,845 $17,841 $18,581 $20,865
8/31/93 $20,428 $21,574 $20,194 $25,455
8/31/94 $19,276 $19,354 $20,026 $23,829

</TABLE>

Past performance is not indicative of future performance.

<TABLE>
<CAPTION>
Total Return
Inception
One Year Five Years December 18,
Ended Ended 1985
August 31, August 31, to August 31,
1994 1994 1994

<S> <C> <C> <C>
Intermediate- -5.64% 7.94% 7.83%
Term Portfolio
Long-Term -10.29% 7.50% 7.88%
Portfolio
</TABLE>

INVESTMENT OBJECTIVES AND POLICIES

U.S. Government Intermediate-Term Securities Portfolio Objective
The investment objective of the U.S. Government Intermediate-Term
Securities Portfolio is to invest in Government securities with
maturities of ten years or less and to provide investors with
maximum current income to the extent that such investment is
consistent with safety of principal.

U.S. Government Long-Term Securities Portfolio Objective

The investment objective of the U.S. Government Long-Term
Securities Portfolio is to invest in Government securities with
maturities of ten years or more and to provide investors with
maximum current income to the extent that such investment is
consistent with safety of principal.

Investment Policies of the Portfolios

The Intermediate-Term and Long-Term Portfolios differ primarily
in the maturities of the Government securities in which they
invest. Both Portfolios will invest only in 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 (zero coupons). Agencies and instrumentalities
include such organizations as the Government National Mortgage
Association ("Ginnie Mae"), the Federal Home Loan Banks, the
Federal Home Loan Mortgage Corporation, and the Federal National
Mortgage Association. The Portfolios may purchase U.S.
Government securities under repurchase agreements and may also
lend Portfolio securities.

Government bonds typically pay coupon interest semi-annually and
repay the principal at maturity. Government National Mortgage
Association certificates ("Ginnie Mae"), differ from other
Government securities in that monthly payments of both principal
and interest are made. Ginnie Mae certificates represent an
ownership in a pool of either Federal Housing Administration
(FHA) insured or Veterans Administration (VA) guaranteed
mortgages. These certificates have yield and maturity
characteristics corresponding to the underlying mortgages and a
certificate's term may be shortened by unscheduled or early
payments of principal on the underlying mortgages. The actual
yield of each certificate will be influenced by the prepayment
experience of the mortgage pool.

Fixed Income Value, Yield Fluctuations and Zero Coupons

Fluctuation in the market value of the securities of the U.S.
Government Intermediate-Term Securities and the U.S. Government
Long-Term Securities Portfolios will occur due to interest rate

movements. The market values of the investment securities of
these Portfolios will vary inversely with interest rate movements
and, therefore, the per share value of these Portfolios will also
fluctuate as interest rates change. Furthermore, debt securities
with longer maturities, such as Ginnie Maes, generally experience
greater price movement compared to shorter term securities as
interest rates fluctuate. Because of the fluctuation of per
share values, investment in the U.S. Government-Intermediate Term
and U.S. Government Long-Term Securities Portfolios may not be
suitable for investors with short-term objectives.

The fixed income Portfolios may buy and sell zero coupon Treasury
securities. This term is used by the Fund to describe U.S.
Treasury notes and bonds which have been stripped of their
unmatured interest coupons, the coupons themselves, and receipts
or certificates representing interests in such stripped debt
obligations and coupons. Interest is not paid in cash during the
term of these securities, but is accrued and paid at maturity.
They are purchased at a discount from face value, reflecting the
current value of the deferred interest. The discount is taxable
even though there is no cash return until maturity. Price
volatility is greater than normal interest paying securities and
the value of the zero coupon securities reacts more quickly to
changes in interest rates than do coupon bonds. No Portfolio
will have invested more than 10% of its assets in current value
of the zero coupon securities at any time.

Specialized Investment Practices and Risks

Repurchase Agreements and Federal Agency Securities

In order to effectively utilize cash reserves kept for liquidity,
the Portfolios 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. 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

Each Portfolio may lend its securities to 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 Portfolios receive compensation for lending
their securities in the form of fees.

The Portfolios 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
Portfolios will promptly liquidate collateral. However, the
exercise of the Portfolios' 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 Portfolios could suffer a loss.

Borrowings

Each Portfolio may not borrow money except as a temporary measure
to facilitate redemptions. Such a borrowing may not exceed 30%
of the Portfolio's total assets, taken at current net asset
value before any borrowing. Each Portfolio may not purchase
securities if a borrowing is outstanding.

PORTFOLIO TURNOVER

The portfolio turnover for the U.S. Government Intermediate-Term
Securities Portfolio was 174.0% and 113.3% for the years ended
August 31, 1994 and 1993. For these same periods, the turnover
for the U.S. Government Long-Term Securities Portfolio was 188.3%
and 173.6%.

HOW TO INVEST IN THE FUND

The minimum initial investment is $2,500 which may be divided
among the separate Portfolios. Retirement accounts may be opened
with a $500 minimum investment. The shares of the Fund 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 Fund 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, MD 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. Be certain to specify the allocation of your
purchase among the Portfolios.

By Bank Wire: Request a wire transfer to:

Rushmore Trust & Savings, FSB
Bethesda, MD
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 A.M. AND 2:45 P.M. 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.

Purchase orders which do not specify the portfolio in which an
investment is to be made will be invested in the Money Market
Portfolio.

HOW TO REDEEM AN INVESTMENT - (WITHDRAWALS)

On any day the Fund 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 by telephoning 1-800-622-1386 or
(301) 657-1510 between 8:30 A.M. and 2:45 P.M. Eastern time.

Telephone redemption privileges may be terminated or modified by
the Fund upon 60 days notice to all shareholders of the Fund.

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
participates. 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. Payment
for the redemption price will be made within seven days after the
Fund's receipt of the request for redemption. For investments
that have been made by check, payment on withdrawal requests may
be delayed for up to ten business days or until the check clears,
whichever occurs first. This delay is necessary to assure the
Fund that investments made by checks are good funds. The
proceeds of the redemption will be forwarded promptly upon
confirmation of receipt of good funds.

The right of redemption may also be suspended, or the date of
payment postponed, (a) for any period during which the New York
Stock Exchange is closed (other than customary weekend or holiday
closings); or (b) 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. 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 U.S.Government
Intermediate-Term Securities and U.S.Government Long-Term
Securities Portfolios. There is also a Money Market Portfolio.
Investors may invest in one or more of the portfolios, and may
exchange shares in one portfolio, at no charge, for shares of
another 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.
or the American Gas Index Fund, Inc. 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,
MD 20814 and be signed by the record owner or owners. Telephone
exchange requests may be made by calling the Fund at 1-800-622-
1386 or (301) 657-1510 between 8:30 A.M. and 2:45 P.M. Eastern
time. Exchanges will be effected at the respective net asset
values of the portfolios involved as next determined after
receipt of the exchange request. To implement an exchange,
shareholders should provide the following information: account
registration including address and number, taxpayer
identification number, number, percentage or dollar value of
shares to be redeemed, name and account number of the portfolio
to which the investment is to be transferred. Exchanges may be
made only if they are between identically registered accounts.
Shareholders contemplating such an exchange should obtain and
review the prospectuses of those funds. The exchange privilege
is available only in states where the exchange may legally be
made. Telephone exchange privileges may be terminated or modified
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 & Savings, FSB. The fee will not be imposed on
tax-sheltered retirement plans or account established under the
Uniform Gifts or Transfers to Minors Act. The Fund may also make
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)
Keogh Accounts - Defined
Contribution Plans (Profit-Sharing Plan)
Keogh Accounts - Money Purchase
Plans (Pension Plan)
401(k) Plans
403(b) Plans

Additional information regarding these accounts may be obtained
by contacting the Fund.

DIVIDENDS AND DISTRIBUTIONS

Dividends of the U.S. Government Intermediate-Term Securities and
U.S. Government Long-Term Securities Portfolios are 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 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 Portfolios' shares will be determined
daily as of 3:00 p.m. Eastern Time, except on customary national
business holidays which result in the closing of the New York
Stock Exchange and weekends. The net asset value per share is
calculated by dividing the net worth by the number of shares.
The securities of the U.S. Government Intermediate-Term
Securities and U.S. Government Long-Term Securities Portfolios
will be valued on the basis of the average of quoted bid and ask
price when quotations are available. If market quotations are
not readily available, the Board of Directors will value the
Portfolios' securities in good faith. The directors will

continuously review these methods of valuation and recommend
changes which may be necessary to assure that the Portfolios'
investments are valued at fair value.

TAXES

The Fund intends to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code. Because of this
qualification, the Fund will not be liable for Federal income
taxes to the extent its earnings are distributed.

Dividends derived from interest and dividends received by the
Fund, together with distributions of any short-term capital
gains, are taxable to shareholders as ordinary income whether or
not reinvested.

Distributions of net long-term gains, if any, realized by the
Fund and designated as capital gains distributions will be made
annually and will be taxed to shareholders as long-term capital
gains regardless of the length of time the shares have been held.
Currently, long-term capital gains are taxed at ordinary income
rates. 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.

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: U.S.
Government Intermediate-Term Securities Portfolio, U.S.
Government Long-Term Securities Portfolio, and the 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 (301-657-1500) or
by mail (4922 Fairmont Avenue, Bethesda, MD 20814).

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 or
approval of a change in a fundamental investment policy. 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.

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, 4922 Fairmont Avenue, Bethesda,
Maryland 20814. Money Management Associates 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. Net assets under management
currently approximate $920 million.

Under an Agreement with the Adviser, the Portfolios pay the
Adviser a fee at an annual rate based on 0.50% of the net assets
of each 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, 1994, the Fund paid the Adviser investment
advisory fees of .50% (50/100 of 1%) of average daily net assets.
The Fund's net expenses exclusive of the investment fees were
.30% (30/100 of 1%) of the U.S.Government Intermediate-Term
Securities and the U.S. Government Long-Term Securities
Portfolios.

Effective September 1, 1993, the Board of Directors approved an
arrangement whereby Rushmore Trust & Savings, FSB provides the
Fund with shareholder servicing, transfer agent, custodian and
administrative services. The U.S. Government Intermediate-Term
and Long-Term Securities Portfolios pay an annual fee of .30%
(30/100 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.

THE RUSHMORE FUND, INC.

____________

The Rushmore U.S. Government Long-Term Securities Portfolio

____________

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 November 13, 1995 (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 U.S. Government Intermediate-Term
Securities Portfolio (the "Acquired Portfolio"), which Acquired
Portfolio is a separate series of The Rushmore Fund, Inc. (the
"Fund"), a diversified, open-end management investment company.
This Meeting is to be held on Friday, December 22, 1995.

<\REDLINE>

The Combined Prospectus/Proxy Statement describes certain
transactions and other actions contemplated by the proposed
reorganization of the Acquired Portfolio into The Rushmore U.S.
Government Long-Term Securities Portfolio (the "the Acquiring
Portfolio"), a separate series of the Fund (the
"Reorganization"). Pursuant to an Agreement and Plan of
Reorganization in connection with the Reorganization (the
"Reorganization Plan"), the Acquiring Portfolio would acquire all
of the assets of the Acquired Portfolio in exchange solely for
shares of common stock in the Acquiring Portfolio and the
assumption by the Acquiring Portfolio of all the liabilities of
the Acquired Portfolio. Immediately following the
Reorganization, the Acquiring Portfolio will be renamed "The
Rushmore U.S. Government Bond Portfolio."

Pursuant to the Reorganization Plan, neither the Acquired
Portfolio nor the Acquiring Portfolio will bear any costs
associated with the Reorganization. As described in the Combined
Prospectus/Proxy Statement, the Acquiring Portfolio has an
investment objective that is identical to the investment
objective of the Acquired Portfolio and has investment policies

that are comparable to the investment policies of the Acquired
Portfolio. The shareholders of the Acquired 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, F.S.B. ("RTS"),
which provides all administrative services to both the Acquired
Portfolio and the Acquiring Portfolio, at 4922 Fairmont Avenue,
Bethesda, Maryland 20814, or by telephoning RTS toll-free at
(800) 343-3355. This Statement of Additional Information
contains additional and more detailed information about the
operations and activities of the Acquiring Portfolio and the
operations and activities of the Acquired Portfolio.

The date of this Statement of Additional Information is November
13, 1995.

<\REDLINE>

STATEMENT OF ADDITIONAL INFORMATION

TABLE OF CONTENTS

Current Statement of Additional Information for The Rushmore U.S.
Government Intermediate-Term Securities Portfolio and The
Rushmore U.S. Government Long-Term Securities Portfolio,
Dated December 21, 1994

Current Annual Report of The Rushmore Fund, Inc., for the fiscal
year ended August 31, 1995

Pro Forma Financial Statements

<\REDLINE>

CURRENT STATEMENT OF ADDITIONAL INFORMATION
OF THE RUSHMORE U.S. GOVERNMENT INTERMEDIATE-TERM
SECURITIES PORTFOLIO
AND
THE RUSHMORE U.S. GOVERNMENT LONG-TERM SECURITIES PORTFOLIO
DATED DECEMBER 21, 1994

THE RUSHMORE FUND, INC.

Money Market Portfolio
U.S. Government Intermediate-Term Securities Portfolio
U.S. Government Long-Term Securities Portfolio

4922 Fairmont Avenue Bethesda, MD 20814
(301) 657-1517 (800) 621-7874

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
December 21,1994. 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 December
21, 1994.
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

TABLE OF CONTENTS

Cross Reference to Related Item in Prospectus

U.S. Gov't
Long-Term
Securities
and
U.S. Gov't
Intermediate-
Money Term
Market Securities
Page Portfolio Portfolio

<S> <C> <C> <C>
Investment
Objectives and 3 4 7
Policies

Investment
Restrictions 3 4 8

Management of
the Fund 4 9 13

Principal Holders
of Securities 5 5 13

Net Asset Value 5 8 11

Yield and Return
Calculations 6 4 5

Taxes 6 8 12

Auditors and
Custodian 6 10 13

Financial
Statement 6 3 3,4
</TABLE>

INVESTMENT POLICIES

Lending of Securities

Each portfolio may lend its securities to 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 portfolios receive compensation for lending their
securities in the form of fees.
The portfolios will enter into securities lending and
repurchase transactions only with parties who meet credit
worthiness standards approved and monitored by the Fund's board
of directors. In the event of a default or bankruptcy by a
seller or borrower, the portfolios will promptly seek to
liquidate collateral. However, the exercise of the Portfolios'
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 Portfolios could
suffer a loss.

Zero Coupon Securities

The U.S. Government Intermediate-Term Securities and the
U.S. Government Long-Term Securities Portfolios may invest in
zero coupon securities. Zero coupon securities is the term used
by the Fund to describe U.S. Treasury notes and bonds which have
been stripped of their unmatured interest coupons, the coupons
themselves, and receipts or certificates representing interests
in such stripped debt obligations and coupons. A zero coupon
security pays no interest to its holder during its life. Its
value to an investor consists of the difference between its face
value at the time of maturity and the price for which it was
acquired, which is generally an amount much less than its face
value (sometimes referred to as a "deep discount" price).

Currently the only U.S. Treasury security issued without
coupons is the Treasury bill. However, in the last few years a
number of banks and brokerage firms have separated ("stripped")
the principal portions ("corpus") from the coupon portions of the
U.S. Treasury bonds and notes and sold them separately in the
form of receipts or certificates representing undivided interests
in these instruments (which instruments are generally held by a
bank in a custodial or trust account). More recently, the U.S.
Treasury Department has facilitated the stripping of Treasury
notes and bonds by permitting the separated corpus and coupons to
be transferred directly through the Federal Reserve Banks' book-
entry system. This program, which eliminates the need for
custodial or trust accounts to hold the Treasury securities, is

called "Separate Trading of Registered Interest and Principal of
Securities" ("STRIPS"). Each such stripped instrument (or
receipt) entitles the holder to a fixed amount of money from the
Treasury at a single, specified future date. The U.S. Treasury
redeems zero coupon securities consisting of the corpus for the
face value thereof at maturity, and those consisting of stripped
coupons for the amount of interest, and at the date, stated
thereon.

Portfolio Transactions

The Money Market, U.S. Government Intermediate-Term
Securities and U.S. Government Long-Term Securities Portfolios'
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 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.

The portfolios 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 loans 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
all portfolios but are not considered fundamental and may be
changed by the Board of Directors of the Fund.

The portfolios 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 .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.

Portfolio Turnover

The portfolio turnover for the U.S. Government Intermediate-
Term Securities Portfolio was 174.0% and 113.3% for the years
ended August 31, 1994 and 1993. For these same periods, the
turnover for the U.S. Government Long-Term Securities Portfolio
was 188.3% and 173.6%. The Portfolios are not managed, any
turnover results from the inflow and outflow of funds.

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.

*Daniel L. O'Connor, III, 52 - Chairman of the Board,
President, Treasurer and Director of the Fund. Partner and
Chief Operating Officer of the Adviser. Address: 4922
Fairmont Avenue, Bethesda, MD 20814.

*Richard J. Garvey, 61 - Director. Limited Partner of the
Adviser. Address: 4922 Fairmont Avenue, Bethesda, MD 20814.

*William L. Major, 56 - Secretary. Employee of the Fund's
investment adviser since 1988, a limited partner since 1994.
Strategic Planning Manager, Leaseway Transportation, a
diversified transportation company. Address: 4922 Fairmont
Avenue, Bethesda, MD 20814.

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, MD 20816.

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, MD 20854.

Arthur J. Rosenblatt, 82 - Director. Retired. Address:
2913 39th Street, NW, Washington, DC 20016.

Leo Seybold, 80 - Director. Retired. Address: 5804
Rockmere Drive, Bethesda, MD 20816.

*Rita A. Gardner, 51 - Director. Limited partner of the
Adviser. Vice President and Director of MMA Services, Inc.
until 1993. Address: 4922 Fairmont Avenue, Bethesda, MD
20814.

Michael G. Trainer, 53 - Director. Attorney at Law.
Address: 4922 Fairmont Avenue, Bethesda, MD 20814.

Timothy N. Coakley, CPA, 27 - Controller. Audit Manager
Deloitte & Touche LLP until 1994. Address: 4922 Fairmont
Avenue, Bethesda, MD 20814.

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 managed by the Adviser.

The Adviser, Money Management Associates, which has its
office at 4922 Fairmont Avenue, Bethesda, Maryland 20814,
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., and to Fund for Tax-Free
Investors, Inc. Daniel L. O'Connor is the sole general partner of
the Adviser, and, as such, exercises control thereof.

* Indicates interested person as defined in the Investment
Company Act of 1940.

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.

For the fiscal year ending August 31, 1994, the Adviser
earned advisory fees of $156,752, $95,945, and $111,890 on the
Money Market, U.S. Government Intermediate-Term Securities, and
U.S. Government Long-Term Securities Portfolios, respectively.

Under an Agreement dated September 1, 1993, Rushmore Trust &
Savings, FSB (RTSB) provides the Fund with shareholder servicing,
transfer agent, custodian and administrative services. The
services of RTSB are provided to the Fund on a fee basis and are
paid by the Fund. RTSB will charge an annual fee of 25 basis
points (.25%) on the Money Market, 30 basis points (.30%) on the
U.S. Government Intermediate-Term and Long-Term Securities on the
average daily net assets of each 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 5, 1994 there were 22,597,986 shares of the
Money Market Portfolio, 1,174,115 shares of the U.S. Government
Intermediate-Term Securities Portfolio, 3,652,004 shares of the
U.S. Government Long-Term Securities Portfolio. Charles Schwab &
Company, San Francisco, California, held for the benefit of
others 21.71% of U.S. Government Intermediate-Term Securities
Portfolio and 70.48% of U.S. Government Long-Term Securities
Portfolio. 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 Money Market Portfolio's shares
will be determined daily as of 4:00 p.m., Eastern time. The net
asset value of U.S. Government Intermediate-Term and Long-Term
Securities Portfolios' shares will be determined at 3:00 p.m.
except on customary national business holidays which result in
the closing of the New York Stock Exchange, and weekends. The
net asset value per share is calculated by dividing the net worth
by the number of shares. The securities of the U.S. Government
Intermediate-Term Securities and U.S. Government Long-Term
Securities Portfolios will be valued on the basis of the average
of quoted bid and ask price when market quotations are available.

CALCULATION OF YIELD AND RETURN QUOTATIONS

A current quotation of yield and total return may appear
from time to time in advertisements and in communications to
shareholders and others. The yields and returns quoted may be
calculated as follows:

Money Market Portfolio
(a) Yield - the net average annualized yield for a
specified 7-day period computed by dividing the net change in
value, exclusive of capital changes, of a hypothetical pre-
existing account having a balance of one share at the beginning
of the period, subtracting a hypothetical charge for all fees and
expenses charged to all shareholders' accounts and dividing the
difference by the value of the account at the beginning of the
period. The resulting base period return is then multiplied by
365/7 with the resulting yield figure carried to the nearest
hundredth of one percent.

(b) Effective Yield - the net annualized yield giving
effect to compounding by adding 1, raising the sum to a power
equal to 365 divided by 7 and subtracting 1 from the result
according to the following formula:

EFFECTIVE YIELD =
[(BASE PERIOD RETURN + 1) 365/7] - 1.

U.S. Government Intermediate and Long-Term Securities Portfolios
Yield is calculated based on a specified 30 day period
computed by dividing the net investment income per share earned
during the period by the offering price per share on the last day
of the period according to the following formula:

YIELD = 2[(a-b/cd) + 1)6 - 1] where:
a = income earned during the period
b = expenses
c = average number of shares outstanding during the
period entitled to receive dividends
d = offering price on last day of the period

Average annual total return is computed by finding the
average annual compounded rate of return over the 1, 5 and 10
year periods (or from inception) that would equate the initial
amount invested to the ending redeemable value according to the
following formula:

P (1 + T)n = ERV where:
P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value

TAXES

The Fund qualifies as a regulated investment company under
Subchapter M of the Internal Revenue Code. To qualify, at least
90% of the Fund's gross income must be derived from dividends,
interest, and gains from the sale of securities. No more than
30% of the Fund's gross income may be derived from gains on the
sale of securities held less than three months. These
requirements may restrict the extent of the Fund's activities in
option transactions.

As a regulated investment company, the Fund will not be
subject to Federal income taxes on the net investment income and
capital gains that it distributes to its shareholders. The
distribution of net investment income and capital gains will be
taxable to shareholders regardless of whether the shareholder
elects to receive these distributions in cash or in additional
shares. Distributions reported to shareholders as long-term
capital gains shall be taxable as such, regardless of how long
the shareholder has owned the shares. Shareholders will be
notified annually by the Fund as to the Federal tax status of all
distributions made by the Fund. Distributions may be subject to
state and local taxes.

The Fund has available to it a number of elections under the
Internal Revenue Code concerning the treatment of option
transactions for tax purposes. The Fund will utilize the tax
treatment most favorable to a majority of investors. Taxation of
these transactions will vary according to the elections made by
the Fund. These tax considerations may have an impact on
investment decisions made by the Fund.

AUDITORS AND CUSTODIAN

Deloitte & Touche LLP, independent certified public
accountants, are the auditors of the Fund. Rushmore Trust &
Savings, FSB, Bethesda, Maryland acts as custodian bank for the
Fund.

FINANCIAL STATEMENTS

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 August 31, 1994, which must accompany this Statement of
Additional Information.

CURRENT ANNUAL REPORT OF
THE RUSHMORE FUND, INC.,
FOR THE FISCAL YEAR ENDED
AUGUST 31, 1995
<PAGE>

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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%.

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

<PAGE>

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<PAGE>

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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

- -------------------------------------------------------------------------------
- 2 -
<PAGE>

<PAGE>
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THE RUSHMORE FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 1995

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
-----------
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>
<PAGE>

*Same cost is used for Federal income tax purposes.

See Notes to Financial Statements.
- -----------------------------------------------------------------
- 3 -
<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.
- --------------------------------------------------------------------------------
- 4 -
<PAGE>

<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.

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- 5 -
<PAGE>

<PAGE>

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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 Invest-
ments......................... -- (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.

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- 6 -
<PAGE>

<PAGE>
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THE RUSHMORE FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED AUGUST 31,
<TABLE>
<CAPTION>
U.S. Government
Intermediate-Term
Money Market Securities
Portfolio Portfolio
--------------------------- ------------------------
1995 1994 1995 1994
------------ -------------- ----------- -----------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVI-
TIES
Net Investment Income.. $ 1,093,349 $ 884,972 $ 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............ 1,093,349 884,972 1,114,873 (1,276,793)
DISTRIBUTIONS TO
SHAREHOLDERS
From Net Investment
Income................ (1,093,349) (895,876) (696,248) (1,059,384)
From Realized Gains on
Investments........... -- -- -- (331,837)
FROM SHARE TRANSACTIONS
(Note 4)............... (275,242) (34,498,161) (2,188,052) (4,320,098)
----------- ------------ ----------- -----------
Net Increase (Decrease)
in Net Assets......... (275,242) (34,509,065) (1,769,427) (6,988,112)
NET ASSETS--Beginning of
Year................... 22,260,525 56,769,590 13,362,272 20,350,384
----------- ------------ ----------- -----------
NET ASSETS--End of Year. $21,985,283 $ 22,260,525 $11,592,845 $13,362,272
=========== ============ =========== ===========
</TABLE>

See Notes to Financial Statements.

- --------------------------------------------------------------------------------
<PAGE>

THE RUSHMORE FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED AUGUST 31,
(CONTINUED)
<TABLE>
<CAPTION>
U.S. Government
Long-Term
Securities
Portfolio
------------------------
1995 1994
---------- -----------
<S> <C> <C>
FROM INVESTMENT ACTIVI-
TIES
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.

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- 7 -
<PAGE>

<PAGE>

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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.

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- 8 -
<PAGE>

<PAGE>

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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.

- --------------------------------------------------------------------------------
- 9 -
<PAGE>

<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

See Notes to Financial Statements.

- --------------------------------------------------------------------------------
- 10 -
<PAGE>

<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.

(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
<PAGE>

Adviser, provides transfer agency, dividend-disbursing and shareholder services
to the Fund. In addition, the Trust serves as custodian
</TABLE>
- -----------------------------------------------------------------
- 11 -
<PAGE>

- -----------------------------------------------------------------
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:

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:

<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)
<PAGE>

============ =========== ============
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>

- --------------------------------------------------------------------------------
- 12 -
<PAGE>

- --------------------------------------------------------------------------------

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:

<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:

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>

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.

- --------------------------------------------------------------------------------
- 13 -
<PAGE>

- --------------------------------------------------------------------------------

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
<PAGE>

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 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.

- --------------------------------------------------------------------------------
- 14 -
<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.

DELOITTE & TOUCHE LLP
Washington, DC
September 29, 1995

- --------------------------------------------------------------------------------
- 15 -
<PAGE>
<PAGE>

RUSHMORE FUND
- --------------------------------------------------------------------------------
ANNUAL REPORT
August 31, 1995

[LOGO OF RUSHMORE APPEARS HERE]
<PAGE>

PRO FORMA FINANCIAL STATEMENTS
<PAGE>

PRO FORMA COMBINED
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1995
(unaudited)

<TABLE>
<CAPTION>
Rushmore
Rushmore U.S.
U.S. Government
Government Intermediate-
Long-Term Term
Securities Securities
Portfolio Portfolio

<S> <C> <C>
ASSETS
Securities at Value
(Cost $15,027,044 and $11,069,172) $16,193,379 $ 11,470,766
Receivable for Securities Sold - 389,835
Investment Income Receivable 203,720 64,401
Receivable for Shares Purchased 30,200 10,747

Total Assets 16,427,299 11,935,749

LIABILITIES
Dividends Payable 17,678 15,030
Investment Advisory Fee Payable 7,008 5,045
Administration Fee Payable 4,204 3,027
Liability for Shares Redeemed 7,703 319,802
Total Liabilities 36,593 342,904

Net Assets $16,390,706 $ 11,592,845

Net Assets Consist of:
Capital paid in on shares of
common stock $16,439,871 $ 12,171,679
Accumulated net realized gain (loss) (1,215,500) (980,428)
Net change in unrealized appreciation
of investments 1,166,335 401,594

$16,390,706 $ 11,592,845

Shares Outstanding 1,657,846 1,227,678

Net Asset Value Per Share $9.89 $9.44
</TABLE>

PRO FORMA COMBINED
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1995
(unaudited) (continued)

Pro Forma Pro Forma
Adjustments Combined

<S> <C> <C>
ASSETS
Securities at Value
(Cost $15,027,044 and $11,069,172) $ 27,664,145
Receivable for Securities Sold 389,835
Investment Income Receivable 268,121
Receivable for Shares Purchased 40,947

Total Assets 28,363,048

LIABILITIES
Dividends Payable 32,708
Investment Advisory Fee Payable 12,053
Administration Fee Payable 7,231
Liability for Shares Redeemed 327,505
Total Liabilities 379,497

Net Assets $ 27,983,551

Net Assets Consist of:
Capital paid in on shares of
common stock $ 28,611,550
Accumulated net realized gain (loss) (2,195,928)
Net change in unrealized appreciation
of investments 1,567,929

$ 27,983,551

Shares Outstanding (55,500) 2,830,024

Net Asset Value Per Share $9.89

</TABLE>

PRO FORMA COMBINED
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 1995
(unaudited)

Rushmore
Rushmore U.S.
U.S. Government
Government Intermediate-
Long-Term Term
Securities Securities
Portfolio Portfolio

INVESTMENT INCOME $ 2,029,836 $ 784,865

EXPENSES
Investment Advisory Fee 134,573 55,386
Administrative Fee 80,744 33,231

Total Expenses 215,317 88,617

Net Investment Income 1,814,519 696,248

Net Realized Loss on Investments (162,740) (233,727)
Net Change in Unrealized Appreciation of
Investments 1,939,775 652,352
Net Gain on Investments 1,777,035 418,625

Net Increase in Net Assets Resulting
from Operations $ 3,591,554 $ 1,114,873

</TABLE>

PRO FORMA COMBINED
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 1995
(unaudited) (continued)

Pro Forma Pro Forma
Adjustments Combined

INVESTMENT INCOME $ 2,814,701

EXPENSES
Investment Advisory Fee 189,959
Administrative Fee 113,975

Total Expenses 303,934

Net Investment Income 2,510,767

Net Realized Loss on Investments (396,467)
Net Change in Unrealized Appreciation of
Investments 2,592,127
Net Gain on Investments 2,195,660

Net Increase in Net Assets Resulting
from Operations $ 4,706,427

</TABLE>

RUSHMORE U.S. GOVERNMENT LONG-TERM SECURITIES PORTFOLIO
AND
RUSHMORE U.S. GOVERNMENT INTERMEDIATE-TERM SECURITIES PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
AUGUST 31, 1995
(unaudited)

<TABLE>
<CAPTION>
Face Amount

Rushmore
Rushmore U.S.
U.S. Government
Government Intermediate-
Long-Term Term
Securities Securities Pro Forma
Portfolio Portfolio Combined
<S> <C> <C> <C>

U.S. TREASURY OBLIGATIONS 96.95%

U.S. Treasury Notes
5.875%, 2/15/04 8,900,000 8,900,000
U.S. Treasury Notes
7.875%, 11/15/04 300,000 300,000

U.S. Treasury Bonds
7.50%, 2/15/05 700,000 700,000
U.S. Treasury Notes
6.50%, 5/15/05 1,600,000 1,600,000

U.S. Treasury Bonds
8.00%, 11/15/21 800,000 800,000

U.S. Treasury Bonds
7.50%, 11/15/24 7,400,000 7,400,000
U.S. Treasury Bonds
7.625%, 2/15/25 4,850,000 4,850,000

U.S. Treasury Bonds
6.875%, 8/15/25 1,000,000 1,000,000

</TABLE>

RUSHMORE U.S. GOVERNMENT LONG-TERM SECURITIES PORTFOLIO AND
RUSHMORE U.S. GOVERNMENT INTERMEDIATE-TERM SECURITIES PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
AUGUST 31, 1995
(unaudited) (continued)
[CAPTION]
<TABLE>
Value

Rushmore
Rushmore U.S.
U.S. Government
Government Intermediate-
Long-Term Term
Securities Securities Pro Forma
Portfolio Portfolio Combined
<S> <C> <C> <C>
U.S. TREASURY OBLIGATIONS 96.95%

U.S. Treasury Notes
5.875%, 2/15/04 8,644,125 8,644,125

U.S. Treasury Notes
7.875%, 11/15/04 331,500 331,500
U.S. Treasury Bonds
7.50%, 2/15/05 756,438 756,438

U.S. Treasury Notes
6.50%, 5/15/05 1,620,499 1,620,499
U.S. Treasury Bonds
8.00%, 11/15/21 917,749 917,749

U.S. Treasury Bonds
7.50%, 11/15/24 8,112,250 8,112,250

U.S. Treasury Bonds
7.625%, 2/15/25 5,409,263 5,409,263
U.S. Treasury Bonds
6.875%, 8/15/25 1,029,062 1,029,062

Total U.S. Treasury Obligations 15,468,324 11,352,562 26,820,886
REPURCHASE AGREEMENTS 3.05%

With Paine Webber at 5.75%,
dated 8/31/95, due 9/1/95,
collateralized by U.S. Treasury
Notes, due 11/15/96 725,055 118,204 843,259

Total Investments - Market 100.00% $16,193,379 $11,470,766 $27,664,145
Total Investments - Cost $15,027,044 $11,069,172 $26,096,216
</TABLE>

RUSHMORE U.S. GOVERNMENT LONG-TERM SECURITIES PORTFOLIO AND
RUSHMORE U.S. GOVERNMENT INTERMEDIATE-TERM SECURITIES PORTFOLIO

Notes to Pro Forma Combined Financial Statements

August 31, 1995

(unaudited)

1. BASIS OF PRESENTATION

Subject to the Agreement and Plan of Reorganization
("Agreement") by the shareholders of the Rushmore U.S.
Government Intermediate-Term Securities Portfolio
("Intermediate-Term Portfolio"), the Rushmore U.S. Government
Long-Term Securities Portfolio ("Long-Term Portfolio") would
acquire substantially all of the assets of the Intermediate-
Term Portfolio in exchange for shares of the Long-Term
Portfolio at the net asset value of the Long-Term Portfolio as
of the Valuation Date as defined in the Agreement. Shares of
the Long-Term Portfolio would then be distributed pro-rata to
the shareholders of the Intermediate-Term Portfolio.

The pro forma information is intended to provide the
shareholders of the Intermediate-Term 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 August 31, 1995; the pro forma
combined Statement of Operations for the year Ended August 31,
1995 has been presented as if the proposed merger had taken
place on September 1, 1994. This information is based upon
historical financial statement data giving effect to the pro
forma adjustments described below. The accounting policies of
the Intermediate-Term Portfolio and the Long-Term Portfolio
are not materially different. The pro forma financial
statements should be read in conjunction with the separate
financial statements of the Intermediate-Term Portfolio and
the Long-Term Portfolio incorporated by reference into this
Registration Statement on Form N-14.

2. PRO FORMA ADJUSTMENTS

The pro forma combined Statement of Assets and Liabilities
reflects the number of shares that will be outstanding after
the conversion of the Intermediate-Term Portfolio shares into
the Long-Term Portfolio shares as part of the Agreement. The
combined shares outstanding are calculated by dividing the
total net assets of the Intermediate-Term Portfolio by the net

asset value per share of the Long-Term Portfolio (the
"converted shares"). These converted shares are then added to
the shares outstanding in the Long-Term Portfolio to arrive at
the combined shares outstanding.

<PAGE>