RUSHMORE FUND INC, 485BPOS, 1995-12-29

RUSHMORE FUND INC
485BPOS, 1995-12-29

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As Filed With The Securities And Exchange Commission on
December 29, 1995.

File Nos. 2-99388 and 811-4369

SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (X)

Pre-Effective Amendment No. ( )

Post-Effective Amendment No. 19 (X)

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940 (X)

Amendment No. 21 (X)

THE RUSHMORE FUND, INC.
(Exact Name of Registrant as Specified in Charter)

4922 Fairmont Avenue, Bethesda, Maryland 20814
(Address of Principal Executive Offices) (Zip Code)

(301) 657-1500
(Registrant's Telephone Number, Including Area Code)

Richard J. Garvey
4922 Fairmont Avenue
Bethesda, Maryland 20814
(Name and Address of Agent for Service of Process)

Copies to:
James Bernstein, Esq.
Jorden Burt Berenson & Johnson LLP
1025 Thomas Jefferson Street, N.W.
Suite 400 East
Washington, D. C. 20007

Approximate Date of Commencement of the Proposed Public
Offering of the Securities:

It is proposed that this filing will become effective (check
appropriate box):

X immediately upon filing pursuant to paragraph
(b) of rule 485.
on (date) pursuant to paragraph (b) (1) (v) of
rule 485.
60 days after filing pursuant to paragraph (a)
(1) of rule 485.
on (date) pursuant to paragraph (a) (1) of rule
485.
75 days after filing pursuant to paragraph (a)
(2) of rule 485.
on (date) pursuant to paragraph (a) (2) of rule
485.

If appropriate, check the following box:

This post-effective amendment designates a new
effective date for a previously-filed post-
effective amendment.

The Registrant has previously filed a declaration of
indefinite registration of its shares pursuant to Rule 24f-2
under the Investment Company Act of 1940. The Rule 24f-2
Notice for the Registrant s fiscal year ended August 31, 1995
was filed on or before October 30, 1995.

TOTAL NUMBER OF PAGES____

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THE RUSHMORE FUND, INC.

REGISTRATION STATEMENT ON FORM N-1A

CROSS REFERENCE SHEET
<REDLINE>
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<TABLE>
<CAPTION>

Form N-1A Location in
Item No. Registration Statement

Part A. Information Required in Prospectus
<S> <C> <C>
1. Cover Page
Outside Front Cover Page
of Prospectus

2. Synopsis Fee Table

3. Condensed Financial Financial Highlights
Information

4. General Description of Organization and
Registrant Description of Common
Stock; Investment
Objective and Policies;
Management of the Fund

5. Management of the Fund Management of the Fund

5A. Management's Discussion of Management's Discussion
Fund of Fund Performance
Performance

6. Capital Stock and Other Organization and
Securities Description Common Stock;
Dividends and
Distribution; Taxes

7. Purchase of Securities How to Invest in the
Being Offered Portfolio; Exchanges; Net
Asset Value

Form N-1A Location in
Item No. Registration Statement

8. Redemption or Repurchase How to Redeem an
Investment (Withdrawals)

9. Legal Proceedings Not Applicable

Part B: Information Required In
Statement of Additional Information

10. Cover Page Outside Front Cover Page
of Statement of
Additional Information

11. Table of Contents Table of Contents

12. General Information and Not Applicable
History

13. Investment Objectives and Investment Policies;
Policies Investment Restrictions

14. Management of the Management of the Fund
Registrant

15. Control Persons and Principal Holders of
Principal Securities
Holders of Securities

16. Investment Advisory and Management of the Fund
Other Services

17. Brokerage Allocation Investment Policies

18. Capital Stock and Other Not Applicable
Securities

19. Purchase, Redemption and Not Applicable
Pricing of Securities
Being Offered

20. Tax Status Dividends, Distributions,
and Taxes

Form N-1A Location in
Item No. Registration Statement

21. Underwriters Management of the Fund

22. Calculations of Performance Information;
Performance Data Calculation of Return
Quotations

23. Financial Statements Financial Statements

Part C: Other Information

24. Financial Statements and Financial Statements and
Exhibits Exhibits

25. Persons Controlled by or Persons Controlled by or
Under Under Common Control
Common Control

26. Number of Holders of Numbers of Holders of
Securities Securities

27. Indemnification Indemnification

28. Business and Other Business and Other
Connections Connections of Investment
of Investment Adviser Adviser

29. Principal Underwriters Principal Underwriters

30. Location of Accounts and Location of Accounts and
Records Records

31. Management Services Management Services

32. Undertakings Undertakings

33. Signatures Signatures

</TABLE>

PART A

RUSHMORE NOVA PORTFOLIO

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

RUSHMORE NOVA PORTFOLIO

INVESTMENT OBJECTIVE AND POLICIES

The Rushmore Nova Portfolio (the "Portfolio") is one of a
series of portfolios in The Rushmore Fund, Inc. (the "Fund"),
an open-end management investment company. The objective of
the Portfolio is to provide total returns over time that are
superior to the market average as measured by the Standard &
Poor's 500 Composite Stock Price Index. The Portfolio is
designed for investors seeking growth of capital rather than
current income. In attempting to achieve its objective, the
Portfolio will employ aggressive investment techniques, which
include engaging in short sales and transactions in options
and futures contracts, as well as the use of leverage.
Because of the inherent risks in any investment, there can be
no assurance that the Portfolio s investment objective will be
met. The Portfolio is not intended for investors whose
principal objective is assured income or preservation of
capital.

The shares offered by this Prospectus are not deposits or
obligations of any bank, are not endorsed or guaranteed by any
bank, and are not insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other
governmental agency.

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ADDITIONAL INFORMATION
<REDLINE>

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
Portfolio. A Statement of Additional Information, dated
January 1, 1996, containing additional information about the
Portfolio has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. A copy of
the Statement of Additional Information may be obtained,
without charge, by writing or telephoning the Fund.

The date of this Prospectus is January 1, 1996.

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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.

FEE TABLE

The following table illustrates all expenses and fees that a
shareholder of the Portfolio will incur:

SHAREHOLDER TRANSACTION EXPENSES

Sales Load Imposed on Purchases . . . . . . . . . . None
Sales Load Imposed on Reinvested Dividends . . . . . None
Deferred Sales Load . . . . . . . . . . . . . . . None
Redemption Fees . . . . . . . . . . . . . . . . . . None
Exchange Fees . . . . . . . . . . . . . . . . . . . None
Monthly Account Fee (for accounts under $500)* . . $5.00

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees** . . . . . . . . . . . . . . . . 0.75%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . None
Other Expenses*** . . . . . . . . . . . . . . . . 0.50%
Total Fund Operating Expenses . . . . . . . . . . 1.25%

* A charge of $5 per month may be imposed on any account
whose average daily balance for the month falls below
$500 due to redemptions. See "Transaction Charges."
** The management fee is higher than the management fee paid
by most other investment companies. See "Management of
the Fund."
*** Estimated.

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

$13 $41 $71 $155

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The same level of expenses would be incurred if the investment
were held throughout the period indicated.

conditions. The actual expenses an investor incurs will
depend on the amount invested and actual expenses may be
greater or less than those shown. For more complete
information about the various costs and expenses, see
"Management of the Fund" in this Prospectus and "Investment
Advisory and Other Services" in the Statement of Additional
Information.

<REDLINE>
The Rushmore Fund, Inc.
Financial Highlights
Rushmore Nova Portfolio
Audited
<TABLE>
<CAPTION>

For the Year Ended August 31,
1995 1994** 1993

<S> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value - Beginning of
$ 0.00 $10.01 $9.46Year. . . . . . . . . . . .
0.310 0.060 0.157Net Investment Income. . . .
Net Realized and Unrealized
Gains (Losses)
0.570 --- 0.711 on Securities. . . . . . .
Net Increase (Decrease) in Net
Asset Value
0.880 0.060 0.868 Resulting from Operations.
--- --- (0.318)Dividends to Shareholders. .
Distributions to Shareholders
from Net
--- --- --- Realized Capital Gains. .
Liquidation of Assets and
Redemption of
--- (10.070) --- all Outstanding Shares. .
10.000 --- ---From Share Transactions***.
Net Increase (Decrease) in Net
10.88 (10.01) 0.55Asset Value. . . . . . . . .

$10.88 $0.00 $10.01Net Asset Value - End of Year

8.80%b 0.90% 9.36%Total Investment Return. . . .

Ratios to Average Net Assets:
1.25%c 0.90%a 1.36% Expenses. . . . . . . . .
2.97%c 2.41% 1.56% Net Investment Income. .

Supplementary Data:
224.4% 0.0% 1,288.9%Portfolio Turnover Rate****.
Number of Shares Outstanding
at End of Year
63 0 47 (000s omitted). . . . . .
</TABLE>
* Commencement of Operations December 7, 1989.

The Rushmore Fund, Inc.
Financial Highlights
Rushmore Nova Portfolio
Audited
<TABLE>
<CAPTION>

1992 1991 1990*

<S> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value - Beginning of
$10.73 $9.61 $10.00Year. . . . . . . . . . . .
0.186 0.263 0.202Net Investment Income. . . .
Net Realized and Unrealized
Gains (Losses)
(1.170) 1.007 (0.589) on Securities. . . . . . .
Net Increase (Decrease) in Net
Asset Value
(0.984) 1.270 (0.387) Resulting from Operations.
(0.286) (0.150) (0.003)Dividends to Shareholders. .
Distributions to Shareholders
from Net
--- --- --- Realized Capital Gains. .
Liquidation of Assets and
Redemption of
--- --- --- all Outstanding Shares. .
--- --- ---From Share Transactions***.

Net Increase (Decrease) in Net
(1.27) 1.12 (0.39)Asset Value. . . . . . . . .

$9.46 $10.73 $9.61Net Asset Value - End of Year

(7.79)% 13.31% (3.79)%Total Investment Return. . . .

Ratios to Average Net Assets:
1.12% 1.13% 1.25% Expenses. . . . . . . . .
1.88% 2.59% 2.71% Net Investment Income. .

Supplementary Data:
2,100.8% 1,088.4% 1,271.8%Portfolio Turnover Rate****.
Number of Shares Outstanding
at End of Year
1.471 7,707 3,034 (000's omitted). . . . . .
</TABLE>

* Commencement of Operations December 7, 1989.

** The Rushmore Nova Portfolio was initially intended for
money managers attempting to time short-term swings in the
stock market and such money managers did utilize the Portfolio
for these purposes. These strategies of short-term timing,
however, led to exceptionally high portfolio turnover rates
(the rates for fiscal 1993, 1992 & 1991 were 1,288.9%,
2,100.8% and 1,088.4%, respectively). Such high turnover
rates led to excessively high shareholder servicing costs and
made operation of the Portfolio uneconomical. Because the
excess costs were borne by the Adviser and not the
shareholders of the Portfolio, continued operation of the
Portfolio became unfeasible. In July 1993, the majority of
the money manager users of the Portfolio withdrew their
shares. In the first quarter of fiscal year 1994, the Board
of Directors elected to close the Rushmore Nova Portfolio to
new investors and encourage those few remaining investors to
move their investments to other alternatives which they did.

***During the six months ended February 28, 1995, 62,500
shares were sold at $10.00 per share when the net asset value
of the Portfolio was $0.00 thereby resulting in Money
Management Associates, the Portfolio s advisor, and other
affiliated persons of the Portfolio owning 80% of the
Portfolio s shares.

****Portfolio turnover rate is calculated without regard to
short-term securities having a maturity of less than one year.
The Portfolio may hold investments in options and future
contracts which are deemed short-term securities.

a Reflects all fees paid for services provided during the
period. Investment advisory services were not provided for
part of the period due to investment activity having ceased.

b Reflects the total return for the period January 3, 1995
through August 31, 1995. January 3, 1995 represents the first
date during fiscal year 1995 that the Portfolio had net assets
and shareholders.

c Annualized.

The above financial highlights have been audited by Deloitte &
Touche LLP, independent certified public accountants, whose
report thereon appears in the Fund's 1995 Annual Report to
Shareholders for the Nova Portfolio and is incorporated by
reference in the Statement of Additional Information. This
information should be read in conjunction with the financial
statements and related notes thereto included in the Statement
of Additional Information. A copy of the Fund's 1995 Annual
Report to Shareholders for the Rushmore Nova Portfolio, and
further information about the performance of the Portfolio,
may be obtained, without charge, by contacting the Fund at

4922 Fairmont Avenue, Bethesda, Maryland 20814, or by
telephoning the Fund at (800) 343-3355 or (301) 657-1500.

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MANAGEMENT'S DISCUSSION OF PORTFOLIO PERFORMANCE

The Portfolio is structured as a growth fund. The Portfolio,
for the past year, has been invested primarily in cash, and,
therefore, under-performed the market averages significantly.

Shares of the Portfolio currently are not available to the
public.

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PERFORMANCE DATA

The Portfolio may from time to time include its total return
in advertisements or reports to shareholders or prospective
shareholders. Quotations of average annual total return for
the Portfolio will be expressed in terms of the average annual
compounded rate of return on a hypothetical investment in the
Portfolio over a period of at least one, five and ten years
(up to the life of the Portfolio). Total return is calculated
from two factors: the amount of dividends earned by each
Portfolio share and by the increase or decrease in value of
the Portfolio's share price.

Performance information for the Portfolio contained in reports
and promotional literature may be compared to various
unmanaged indexes, including but not limited to the S&P 500 or
the Dow Jones Industrial Average ("DJIA"). Such unmanaged
indexes may assume the reinvestment of dividends but generally
do not reflect deductions for operating costs and expenses.
In addition, the Portfolio's total return may be compared to
other mutual funds' performances as published by such
organizations as Lipper Analytical Services, Inc., and CDA
Investment Technologies, Inc., among others. Performance
figures are based on historical results and are not intended
to indicate future performance.

THE RUSHMORE FUND, INC.
Nova Portfolio
Total Return Comparison
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<TABLE>
<CAPTION>

[Graph appears here showing the comparison of change in the
value of a $10,000 investment in the Portfolio made on
December 7, 1989 between the Portfolio and the Standard &
Poor's 500 Composite Stock Price Index]
S&P 500 Nova
Portfolio
<S> <C> <C>
12/7/89 $10,000 $10,000
8/31/90 $9,495 $9,621
8/31/91 $12,049 $10,902
8/31/92 $13,004 $10,052
8/31/93 $14,982 $10,993
8/31/94 $15,802 $11,092
8/31/95 $19,191 $12,068
</TABLE>

Past performance is not predictive of future performance. The
Standard & Poor s 500 Composite Stock Price Index is an
unmanaged stock index and, unlike the Portfolio, has no
management fee or other operating expenses to reduce its
reported return. Returns are historical and include changes
in principal and reinvested dividends and capital gains. In
September 1993, the Portfolio distributed all remaining assets
to the Portfolio shareholders and ceased operations; during
the six months ended February 28, 1995, 62,500 shares were
sold at $10.00 per share when the net asset value of the
Portfolio was $0.00. See "Financial Highlights."

Average Annual Total Return
Period Ending August 31, 1995
<TABLE>
<CAPTION>
One Since
Year* Inception
<S> <C> <C>

Rushmore Nova Portfolio 8.80% 3.15%

</TABLE>

*Reflects the total return for the period January 3, 1995
through August 31, 1995. January 3, 1995 represents the first
date during fiscal year 1995 that the Portfolio had net assets
and shareholders.
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INVESTMENT OBJECTIVE AND POLICIES

General

The objective of the Rushmore Nova Portfolio is to provide
total returns over time that are superior to the market
average as measured by the S&P 500. Total return is the
realized or unrealized appreciation or depreciation in net
asset value plus income or capital gain distribution received.
Current income is not an objective of the Portfolio. There
can be no assurance the Portfolio will achieve its objective.
In its attempt to achieve its objective, the Portfolio may
invest in shares of individual stock, in futures contracts on
stock indexes and options thereupon, and in options on stock
indexes. At any time, the Portfolio may invest any portion of
its assets in any one of these types of investments (subject
to the limitations described below). The Portfolio also may
borrow funds for the purchase of securities, invest in
repurchase agreements secured by securities issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities, and engage in short sales if, at the time
of the short sale, the Portfolio owns or has the right to
acquire an equal amount of the security being sold at no
additional cost ("selling against the box").

Stocks

The Portfolio may invest in individual stocks among the one
hundred stocks listed on the NYSE with the greatest market
value. In addition, the Portfolio may invest part or all of
its assets in stocks listed on the NASDAQ-100. The NASDAQ-100
is composed of one hundred of the largest non-financial stocks
in terms of market value traded on the NASDAQ TM national over-
the-counter-market. The terms "NASDAQ-100" and "NASDAQ" are
trademarks and service marks of the National Association of
Securities Dealers, Inc. (the "NASD"). The Portfolio is
neither sponsored by nor affiliated with NASDAQ's sponsor,
NASDAQ, Inc., a subsidiary of the NASD.

In selecting individual securities for investment by the
Portfolio, the Portfolio's investment advisor, Money
Management Associates (the "Adviser"), will rely primarily on
technical market factors rather than fundamental analysis.
Technical selection techniques rely on the analysis of such
factors as historical price trends, trading volume, short
interest, over-bought/over-sold indicators, and other
quantifiable factors. Technical selection techniques are
essentially short-term trading strategies and may generate
significant portfolio turnover (see "Portfolio Turnover"). By
utilizing such strategies, the Adviser attempts to outperform

the broader market averages, although there can be no
assurance that this strategy will be successful.

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Futures Contracts on Stock Indexes and Options Thereupon

The Portfolio may purchase and write (sell) stock index
futures contracts. The Portfolio may enter into such futures
contracts provided that not more than 5% of its assets are
required as a futures contract deposit.

The Portfolio may use index futures as a substitute for a
comparable market position in the underlying securities or for
hedging purposes. A stock index futures contract obligates
the seller to deliver (and the purchaser to take delivery of)
an amount of cash equal to a specific dollar amount times the
difference between the value of a specific stock index at the
close of the last trading day of the contract and the price at
which the agreement is made. No physical delivery of the
underlying stocks in the index is made. With respect to stock
indexes that are permitted investments, the Portfolio intends
to purchase and sell futures contracts on the stock index for
which the Portfolio can obtain the best price with
consideration also given to liquidity. The Portfolio may
trade such interests in stock index futures contracts and
options thereupon in a manner solely incidental to its
securities trading activities.

The Portfolio also may purchase put and call options on stock
index futures contracts, which options give the Portfolio the
right to sell or purchase the underlying futures contract for
a specified price upon exercise at any time during the option
period. The Portfolio also may write (sell) put and call
options on stock index futures contracts. The Portfolio
receives a premium in return for granting to the purchaser of
the option the right to sell to or buy from the Portfolio the
underlying futures contract for a specified price upon
exercise at any time during the option period. The Portfolio
also may engage in related closing transactions with respect
to options on stock index futures. The Portfolio will
purchase or write options only on futures contracts that are
traded on a United States exchange or board of trade. Whether
the Portfolio realizes a gain or loss from futures activities
depends generally upon movements in the level of stock prices
in the stock market and the Adviser's ability to predict
correctly the direction of stock prices, interest rates, and
other economic factors. In contrast to a long position, where
the Portfolio's loss from the position cannot exceed the cost

of that position, the extent of the Portfolio's loss from
investing in futures transactions is potentially unlimited.

<\REDLINE>

The Portfolio may purchase and sell stock index futures
contracts and options on stock index futures contracts to the
extent that such activities would be consistent with the
requirements of Section 4.5 of the regulations under the
Commodity Exchange Act promulgated by the Commodity Futures
Trading Commission (the "CFTC Regulations"), under which the
Portfolio would be excluded from the definition of a
"commodity pool operator." Under Section 4.5 of the CFTC
Regulations, the Portfolio may engage in futures transactions,
either for "bona fide hedging" purposes, as this term is
defined in the CFTC Regulations, or for non-hedging purposes
to the extent that the aggregate initial margins and premiums
required to establish such non-hedging positions do not exceed
5% of the liquidation value of the Portfolio's portfolio. In
the case of an option on futures contracts that is "in-the-
money" at the time of purchase (i.e., the amount by which the
exercise price of the put option exceeds the current market
value of the underlying security or the amount by which the
current market value of the underlying security exceeds the
exercise price of the call option), the in-the-money amount
may be excluded in calculating this 5% limitation.

When purchasing or selling a stock index futures contract, or
selling an option on a stock index futures contract, the
Portfolio covers its position. To cover its position, the
Portfolio may maintain with its custodian bank (and mark-to-
market on a daily basis) a segregated account consisting of
cash or U.S. Government securities or repurchase agreements
secured by U.S. Government securities that, when added to any
amounts deposited with a futures commission merchant as
margin, are equal to the market value of the futures contract
or otherwise "cover" its position. The Portfolio may cover
its long position in a futures contract by purchasing a put
option on the same futures contract with a strike price (i.e.,
an exercise price) as high or higher than the price of the
futures contract held by the Portfolio. The Portfolio may
cover its short position in a futures contract by owning the
instruments underlying the futures contract (or instruments
the prices of which are expected to move relatively
consistently with the instruments underlying the futures
contract). The Portfolio may cover its sale of a call option
on a futures contract by taking a long position on the
underlying futures contract at a price no higher than the
strike price of the call option or, if lower, the Portfolio
maintains in a segregated account cash or liquid high-grade
debt securities equal in value to the difference between the
two strike prices. The Portfolio may also cover its sale of a

put option on a futures contract by taking a short position on
the underlying instruments at the same or higher price than
the strike price of the put option, or by purchasing a put
option, if the strike price of the purchased put option is the
same as or higher than the strike price of the put option sold
by the Portfolio.

There are certain risks associated with the use of futures
contracts and options. Although the Portfolio intends to sell
futures contracts only if there is an active market for such
contracts, no assurance can be given that a liquid market will
exist for any particular contract at any particular time.
Many futures exchanges and boards of trade limit the amount of
fluctuation permitted in futures contract prices during a
single trading day. Once the daily limit has been reached in
a particular contract, no trades may be made that day at a
price beyond that limit or trading may be suspended for
specified periods during the day. Futures contract prices
could move to the limit for several consecutive trading days
with little or no trading, thereby preventing prompt
liquidation of futures positions and potentially subjecting
the Portfolio to substantial losses. If trading is not
possible, or the Portfolio determines not to close a futures
position in anticipation of adverse price movements, the
Portfolio will be required to make daily cash payments of
variation margin. The risk that the Portfolio will be unable
to closeout a futures position will be minimized by entering
into such transactions on a national exchange with an active
and liquid secondary market.

Index Options Transactions

The Portfolio may purchase and write (sell) put and call
options on stock indexes listed on national securities
exchanges or traded in the over-the-counter market as an
investment vehicle for the purpose of realizing the
Portfolio's investment objective or for the purpose of hedging
its portfolio. A stock index fluctuates with changes in the
market values of the stocks included in the index.

Options on stock indexes give the holder the right to receive
an amount of cash upon exercise of the option. Receipt of
this cash amount will depend upon the closing level of the
stock index upon which the option is based being greater than
(in the case of a call) or less than (in the case of a put)
the exercise price of an option. The amount of cash received
will be the difference between the closing price of the index
and the exercise price of the option, multiplied by a
specified dollar multiple. The writer (seller) of the option
is obligated, in return for the premiums received, to make
delivery of this amount.

Some stock index options are based on a broad market index
such as the S&P 500, the NYSE Composite Index, the American
Stock Exchange Major Market Index or on a narrower index such
as the Philadelphia Stock Exchange Over-The-Counter Index. A
stock index fluctuates with changes in the market values of
the stocks included in the index. Options are currently
traded on the Chicago Board Options Exchange, the American
Stock Exchange, and other exchanges ("Exchanges"). The
underlying value of the securities comprising the index
options purchased or sold will not exceed 10% of the
Portfolio's assets. In addition, over-the-counter index
options, purchased over-the-counter options, and the cover for
written over-the-counter options will be subject to the
Portfolio's 10% limitation on investment in illiquid
securities. See "Illiquid Securities."

Each of the Exchanges has established limitations governing
the maximum number of call or put options on the same index
which may be bought or written (sold) by a single investor,
whether acting alone or in concert with others (regardless of
whether such options are written on the same or different
Exchanges or are held or written on one or more amounts or
through one or more brokers). Option positions of all
investment companies advised by the Adviser are combined for
purposes of these limits. An Exchange may order liquidation
of positions and may impose other sanctions or restrictions.
These position limits may restrict the number of listed
options which the Portfolio may buy or sell; however, the
Adviser intends to comply with all limitations.

<\REDLINE>

Index options are subject to risks including the risk of
imperfect correlation between the option price and the value
of the underlying securities comprising the index and the risk
that there might not be a liquid secondary market for the
option. The Portfolio will not enter into an option position
(covered call) that exposes the Portfolio to an obligation to
another party, unless the Portfolio either (i) owns an
offsetting position in securities or other options and/or (ii)
maintains with its custodian bank (and marks-to-market on a
daily basis) a segregated account consisting of cash, U.S.
Government securities, or other liquid high-grade debt
securities that, when added to the premiums deposited with
respect to the option, are equal to the market value of the
underlying stock index not otherwise covered.

The Adviser intends to utilize index options as leverage for
the Portfolio's net asset value. If the Adviser is correct in
its assessment of the future direction of stock prices, the
Portfolio share price will be enhanced. However, if the
Adviser has taken a position in options and stock prices move
in a direction contrary to the Adviser's forecast, the
Portfolio would incur greater loss than the Portfolio would
have incurred without the options position.

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Borrowing

The Portfolio may borrow money, including borrowing for
investment purposes. Borrowing for investment, known as
leverage, is a speculative technique which increases
investment risk, but also increases investment opportunity.
Since substantially all of the Portfolio's assets will
fluctuate in value, whereas the interest obligations on
borrowings may be fixed, the net asset value per share of the
Portfolio will tend to increase more when its portfolio assets
increase in value and decrease more when its portfolio assets
decrease in value than would otherwise be the case. Moreover,
interest costs on borrowings may fluctuate with changing
market rates of interest and may partially offset or exceed
the returns on the borrowed funds. Under adverse conditions,
the Portfolio might have to sell portfolio securities to meet
interest or principal payments at a time investment
considerations would not favor such sales. The Portfolio
intends to use leverage during periods when the Adviser
believes the opportunities for gains are potentially greater
than the risks of loss.

As a matter of fundamental policy, the Portfolio must maintain
continuous asset coverage (total assets, including assets
acquired with borrowed funds, less liabilities exclusive of
borrowings) of 300% of all amounts borrowed. If, at any time,
the value of the Portfolio's assets should fail to meet this
300% coverage test, the Portfolio, within three days (not
including Sundays and holidays), will reduce the amount of the
Portfolio's borrowing to the extent necessary to meet this
300% coverage. Maintenance of this percentage limitation may
result in the sale of the Portfolio's portfolio securities at
a time when investment considerations otherwise indicate that
it would be disadvantages to do so. The Portfolio will borrow
only from banks, and only to the extent that it meets the 300%
coverage test described above. The Portfolio may also borrow
up to 5% of its net assets as a temporary measure for
extraordinary or emergency purposes.

Repurchase Agreements

In order to effectively utilize cash reserves kept for
liquidity, the Portfolio may invest in repurchase agreements
secured by securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. Under a
repurchase agreement, the Portfolio purchases a security and
simultaneously agrees to sell it back to the seller at an
agreed-upon future price and date, normally one day or a few
days later. The resale price is greater than the purchase
price, reflecting an agreed-upon market interest rate. The

Portfolio will enter into repurchase agreements only with
member banks of the Federal Reserve System or primary dealers
of U.S. Government securities. The Adviser will monitor the
creditworthiness of the firms which are parties to repurchase
agreements with the Portfolio. In the event of a default or
bankruptcy by the seller, the Portfolio will liquidate those
securities (whose market value, including accrued interest,
must be at least equal to 100% of the dollar amount invested
by the Portfolio in each repurchase agreement) held under the
applicable repurchase agreement, which securities constitute
collateral for the seller's obligations to pay. However,
liquidation could involve costs or delays and, to the extent
proceeds from the sales of these securities were less than the
agreed-upon repurchase price, the Portfolio would suffer a
loss. The Portfolio also may experience difficulties and
incur certain costs in exercising its rights to the collateral
and may lose the interest the Portfolio expected to receive
under the repurchase agreement. Repurchase agreements usually
are for short periods, such as one week or less, but may be
longer. It is the current policy of the Portfolio to treat
repurchase agreements that do not mature within seven days as
illiquid for the purpose of the Portfolio's investment
policies. Up to 10% of the Portfolio's assets may be
maintained in short-term investments such as repurchase
agreements.

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Short Sales

The Portfolio may engage in short sales if, at the time of
the short sale, the Portfolio owns or has the right to acquire
an equal amount of the security being sold at no additional
cost ("selling against the box"). The Portfolio may sell
against the box when the Portfolio wants to sell the security
the Portfolio owns at a current attractive price, but also
wishes to defer recognition of a gain or loss for Federal
income tax purposes and for purposes of satisfying certain
tests applicable to regulated investment companies under the
U.S. Internal Revenue Code of 1986, as amended (the "Code").

Illiquid Securities

While the Portfolio does not anticipate doing so, the
Portfolio may purchase illiquid securities, including
securities that are not readily marketable. The Portfolio
will not invest more than 10% of the Portfolio's net assets in
illiquid securities. The Portfolio will adhere to a more
restrictive limitation on the Portfolio's investment in
illiquid securities as required by the securities laws of
those jurisdictions where the shares of the Portfolio are
registered for sale.

PORTFOLIO TURNOVER AND EXECUTION

It is the policy of the Fund to permit investors in the
Portfolio to exchange their shares of the Portfolio for shares
in other series of the Fund and for shares in any money market
fund in the Rushmore Group pursuant to the Fund's exchange
policy (see "Exchanges"). This policy offers investors great
flexibility to capitalize on short-term savings in the equity
markets, but also may cause the Portfolio to experience higher
portfolio turnover than would normally occur without such
exchanges. In addition, the use of technical selection
techniques for portfolio investments could result in higher
portfolio turnover than would occur with traditional
fundamental selection techniques. Portfolio turnover rate is
defined as the value of the securities purchased or securities
sold, excluding all securities whose maturities at time of
acquisition were one year or less, divided by the average
monthly value of such securities owned during the year.
Pursuant to the formula prescribed by the Securities and
Exchange Commission, the portfolio turnover rate for the
Portfolio is calculated without regard to securities,
including options and futures contracts, having a maturity of
less than one year. The Portfolio typically holds a
significant portion of its investments in short-term options
and futures contracts, which, therefore, are excluded for
purposes of computing portfolio turnover.

Because the Portfolio's portfolio turnover rate to a great
extent will depend on the subscription, redemption, and
exchange activity of the Portfolio's investors, it is very
difficult to estimate what the Portfolio's actual turnover
rate generally will be. The Portfolio estimates, however,
that its annual portfolio turnover rate generally will not
exceed 200%. This portfolio turnover will tend to increase
the realization by the Portfolio of gains (or losses) on
securities that have been held by the Portfolio for less than
three months. Any such realized gains on securities that have
been held by the Portfolio for less than three months, and
other factors related to large cash flows into and out of the
Portfolio, will increase the risk that, in any given year, the
Portfolio may fail to qualify as a regulated investment
company under Subchapter M of the U.S. Internal Revenue Code
of 1986, as amended (the "Code") (see "Taxes"). If the
Portfolio should so fail to qualify under the Code, the
Portfolio's net investment income and capital gain net income
would become subject to Federal income tax at corporate rates.
The imposition of such taxes would directly reduce the return
to an investor from an investment in the Portfolio. For the
fiscal years ended August 31, 1995, 1994, and 1993, the

portfolio turnover rates for the Portfolio were 224.4%, 0.0%,
and 1,288.9%, respectively.

The Adviser determines which securities to purchase and sell
for the Portfolio, selects brokers and dealers to effect the
transactions, and negotiates and pays any and all commissions.
The Adviser expects that securities purchased by the Portfolio
will usually be traded on a "principal" rather than on an
"agency" basis. This means that the broker-dealer (a
securities firm or a bank) is buying and selling securities
for its own account rather than as an agent for another
client. The broker-dealer's profit, if any, is the difference
between its purchase price and the sales price for the
securities, known as a "spread." In placing orders for
portfolio transactions, the Adviser's policy is to obtain the
most favorable price and efficient execution available.
Brokerage commissions are normally paid on exchange-traded
securities transactions and on options and futures
transactions. In order to obtain the brokerage and research
services described below, a higher commission may sometimes be
paid. Such higher commissions are not applicable to principal
transactions where the dealers act without a stated
commission. The ability to receive research services may,
however, be a factor in the selection of one dealer acting as
a principal over another.

When selecting broker-dealers to execute portfolio
transactions, the Adviser considers many factors including the
rate of commission or size of the broker-dealer's "spread,"
the size and difficulty of the order, the nature of the market
for the security, the willingness of the broker-dealer to
position, the reliability, financial condition, general
execution and operational capabilities of the broker-dealer,
and the research, statistical and economic data furnished by
the broker-dealer to the Adviser. The Adviser uses these
services in connection with all its investment activities,
including other investment accounts it advises. Conversely,
brokers or dealers which supply research may be selected for
execution of transactions for such other accounts, while the
data may be used by the Adviser in providing investment
advisory services to the Portfolio. For additional
information concerning the execution of portfolio
transactions, see "Portfolio Transactions and Brokerage" in
the Statement of Additional Information.

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HOW TO INVEST IN THE PORTFOLIO

share (See "Net Asset Value") next computed after receipt of
your order. There is no minimum amount for subsequent
investments in the Portfolio. All accounts will be held in
book-entry form. NO CERTIFICATES FOR SHARES WILL BE ISSUED.
The Portfolio reserves the right to reject any purchase order.
Foreign checks will not be accepted.

Investment in the Portfolio can be made directly with the Fund
or through third parties such as broker-dealers, banks or
other financial institutions that purchase securities for
their customers. Such third parties may charge their
customers a fee in connection with services offered to
customers. When shares are purchased through third parties,
the third party, rather than the customer, may be the
shareholder of record of the shares. Investors who do not
wish to receive the services of a third party may invest
directly with the Fund without charge by mail or by bank wire,
as described below. Certain third party organizations may
receive compensation from the Fund, the Portfolio's transfer
agent, or Money Management Associates for the shareholder
accounting services these organizations provide.

By Mail: Fill out an application and make your check payable
to "The Rushmore Fund, Inc." Mail the check along with the
application to:

The Rushmore Fund, Inc.
4922 Fairmont Avenue
Bethesda, Maryland 20814

By Bank Wire: Request a wire transfer to:

Rushmore Trust and Savings, FSB
Bethesda, Maryland
Routing Number 0550-71084
For Account of:
The Rushmore Fund, Inc.
Account Number 029-385-770

After instructing your bank to transfer money by wire, you
must call the Fund at (800) 622-1386 or (301) 657-1510 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. It is important that you telephone one half hour
before the close of the New York Stock Exchange for a purchase
order to be effective in the Portfolio. If the purchase is
canceled because your wire transfer is not received, you may
be liable for any loss the Portfolio may incur.

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Shares of the Portfolio are sold at a price based on the net
asset value next calculated after receipt of a purchase order
in good form. If a purchase order is received by the Fund at
or prior to the close of regular trading on the NYSE (normally
4:00 P.M., Eastern time) on any business day, the purchase of
Portfolio shares is executed at the offering price determined
as of the closing time that day. If the purchase order is
received after the close of regular trading on the NYSE, the
purchase of Portfolio shares will be effected on the next
business day. When purchases are made by check, the Portfolio
may hold the proceeds of redemptions until the Portfolio's
transfer agent is reasonably satisfied that the purchase
payment in Federal funds has been collected (which can take up
to ten business days or until the check clears, whichever
occurs first). Delays in receiving redemption proceeds may be
avoided by purchasing shares with a certified check.

HOW TO REDEEM AN INVESTMENT (WITHDRAWALS)

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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 instruction received by telephone, providing written
confirmation not later than five business days after the
transaction, and/or tape-recording of telephone transactions.

the request must be in writing and the investor's signature
must be guaranteed by an eligible institution. Eligible
institutions generally include banking institutions,
securities exchanges, associations, agencies or
broker/dealers, and "STAMP" program participants. There are
no fees charged for redemptions.

The Portfolio will redeem its shares at a redemption price
equal to the net asset value of the shares 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, either: (a) for any period during which
the NYSE is closed (other than customary weekend or holiday
closings); or (b) when trading on the NYSE is restricted, or
an emergency exists, as determined by the Securities and
Exchange Commission, so that disposal of the Portfolio'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
Portfolio'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 value due to redemptions or
exchanges after providing 60 days written notice.

EXCHANGES

The Portfolio's shares may be exchanged, without cost, for
shares of Fund for Government Investors, Inc., Fund for Tax-
Free Investors, Inc., and American Gas Index Fund, Inc., and
for shares of any series of The Rushmore Fund, Inc. and the
Cappiello-Rushmore Trust, upon receipt by the Fund of the
order at the respective net asset values next computed of the
shares involved. Exchanges between the Portfolio and the
above funds may be made by telephone or letter. (See also
"How to Invest in the Portfolio" and "How to Redeem an
Investment.") Written requests should be sent to The

Rushmore Fund, Inc. 4922 Fairmont Avenue, Bethesda, Maryland
20814 and be signed by the record owner or owners. Telephone
exchange requests may be made by calling the Fund at (800)
622-1386 or (301) 657-1510 between 8:30 A.M. and 4:00 P.M.,
Eastern time. Exchanges will be effected at respective net
asset values of the shares 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; percentage or dollar value of shares to
be redeemed; and name and account number of the fund to which
the investment is to be transferred. Exchanges may be made
only if they are between identically registered accounts.
Shareholders contemplating such an exchange should obtain and
review the prospectuses of those funds. The exchange
privilege is available only in states where the exchange may
legally be made. Telephone exchange privileges may be
terminated or modified by the Fund upon 60 days notice to all
shareholders of the Fund.

TRANSACTION CHARGES

In addition to charges described elsewhere in this Prospectus,
the Fund may impose a charge of $5 per month for any account
whose average daily balance is below $500 due to redemptions.
The fee will continue to be imposed during months when the
account balance remains below $500. The fee will be imposed
on the last business day of the month. This fee will be paid
to Rushmore Trust and Savings, FSB. The fee will not be
imposed on tax-sheltered retirement plans or accounts
established under the Uniform Gifts or Transfers to Minors
Act. In addition to charges described elsewhere in this
Prospectus, the Fund may also make a charge of $10 for items
returned for insufficient or uncollectible funds.

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TAX-SHELTERED RETIREMENT PLANS

Tax-sheltered retirement plans of the following types will be
available to investors:

Individual Retirement Accounts (IRAs)
Defined Contribution Plans
(Profit-Sharing Plans)
Money Purchase Plans (Pension Plans)

Internal Revenue Code
Section 401(k) Plans
Internal Revenue Code
Section 403(b) Plans

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

DIVIDENDS AND DISTRIBUTIONS

The Portfolio intends to distribute any net investment income
and net realized capital gains to shareholders in December of
each year. Your income dividends and capital gains
distributions will be automatically reinvested in additional
shares of the Portfolio at net asset value calculated on the
ex-dividend date unless you have requested otherwise from the
Fund in writing. Dividends and distributions are taxable to
shareholders, as discussed below, whether they are reinvested
in shares of the Portfolio or received in cash. Statements of
account will be sent to shareholders at least quarterly.

NET ASSET VALUE

The net asset value of the Portfolio's shares will be
determined daily as of 4:00 P.M., Eastern time, except on
customary national business holidays which result in the
closing of the NYSE, and weekends. The net asset value per
share is calculated by adding the total value of all
securities held by the Portfolio plus cash and accrued
interest minus liabilities, including accrued expenses, and
then dividing this amount by the total number of shares
outstanding at such time, rounded to the nearest cent. Listed
securities will be valued at the last sales price on the NYSE
and other major exchanges. Options and futures contracts will
be valued 15 minutes after the 4:00 P.M., Eastern time, close
of trading on the NYSE. Options purchased by the Portfolio
generally are valued at their last bid price in the case of
exchange-traded options or, in the case of options traded in
the over-the-counter market, the average of the last bid price
as obtained from two or more dealers unless there is only one
dealer, in which case that dealer's price is used. The value
of a futures contract equals the unrealized gain or loss on
the contract that is determined by marking the contract to the
current settlement price for a like contract acquired on the
day on which the futures contract is being valued; a
settlement price may not be used if the market makes a limit
move with respect to a particular commodity. Over-the-counter
securities will be valued at the last sales price. Illiquid
securities, securities for which reliable market quotations or
pricing services are not readily available, and all other
assets will be valued at their respective fair value as
determined in good faith by, or under procedures established
by, the Board of Directors, which procedures may include the
delegation of certain responsibilities regarding valuation to
the Adviser or the officers of the Fund. The officers of the
Fund report, as necessary, to the directors of the Fund
regarding portfolio valuation determinations.

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The Board of Directors, from time to time, will review these
methods of valuation and will recommend changes which may be
necessary to assure that the Portfolio's investments are
valued at fair value.

TAXES

The Portfolio will seek to qualify for treatment as a
regulated investment company (a "RIC") under Subchapter M of
the Internal Revenue Code. If the Portfolio qualifies as a
RIC, the Portfolio will not be liable for Federal income taxes
to the extent its earnings are distributed within the time
periods specified in the Code. To qualify as a RIC under the
Code, the Portfolio must satisfy certain requirements,
including the requirement that the Portfolio receive at least
90% of its gross income each year from dividends, interest,
payments with respect to securities loans, gains from the sale
or other disposition of securities or foreign currencies, or
other income derived with respect to the Portfolio's
investments in stock, securities, and foreign currencies (the
"90% Test"), and that the Portfolio derive less than 30% of
the Portfolio's gross income from the sale or other
disposition of any of the following instruments which was held
less than three months (the "30% Test"): (i) stock or
securities; (ii) options, futures, or forward contracts; or
(iii) foreign currencies (or options, futures, or forward
contracts on such foreign currencies). Provided that the
Portfolio (i) is a RIC and (ii) distributes at least 98% of
the Portfolio's net investment income (including, for this
purpose, net realized short-term capital gains), the Portfolio
will not be liable for Federal income taxes to the extent the
Portfolio's net investment income and the Portfolio's net
realized long- and short-term capital gains, if any, are
distributed to the shareholders of the Portfolio.

The larger the volume of redemptions or exchanges of Portfolio
shares the more difficult it will be for the Portfolio to
satisfy the 30% Test. To minimize the risk of failing the 30%
Test, the Portfolio intends to satisfy obligations in
connection with redemptions and exchanges first by using
available cash or borrowing facilities and by selling
securities that have been held for at least three months or as
to which there will be a loss or the smallest gain. If the
Portfolio also must sell securities that have been held for
less than three months, then, to the extent possible, the
Portfolio will seek to conduct such sales in a manner that
will allow such sales to qualify for a special provision in
the Code that excludes from the 30% Test any gains resulting
from sales made as a result of "abnormal redemptions."

Notwithstanding these actions, there can be no assurance that
the Portfolio will be able to satisfy the 30% Test. For
additional information concerning this special Code provision,
see "Dividends, Distributions, and Taxes" in the Statement of
Additional Information. The Portfolio qualified for the last
three years for treatment as a regulated investment company (a
"RIC") under Subchapter M of the Internal Revenue Code.

Dividends paid by the Portfolio are taxable to shareholders
whether such dividends and distributions are reinvested in
shares of the Portfolio or are received in cash. Under
current law, dividends derived from interest and dividends
received by the Portfolio, together with distributions of any
short-term capital gains, are taxable to the shareholders as
ordinary income at rates of up to 39.6%.

Under current law, distributions of net long-term gains, if
any, realized by the Portfolio 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 a maximum rate of 28%.
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 Portfolio's dividends in their own states
and localities.

Shareholders are required by law to certify that their tax
identification number is correct and that they are not subject
to back-up withholding. In the absence of this certification,
the Fund is required to withhold taxes at the rate of 31% on
dividends, capital gains distributions, and redemptions.
Shareholders who are non-resident aliens may be subject to a
withholding tax on dividends earned.

Ordinary dividends paid to corporate or individual residents
of foreign countries are subject to a 30% withholding tax.
The rate of withholding tax may be reduced if the United
States has an income tax treaty with the foreign country where
the recipient resides. Capital gains distributions received
by foreign investors should, in most cases, be exempt from
U.S. tax. A foreign investor will have to provide the Fund
with any required documentation in order for the Fund to apply
a reduced rate or exemption from U.S. withholding tax.

ORGANIZATION AND DESCRIPTION OF COMMON STOCK

The Portfolio is an open-end, non-diversified series of the
Fund, a registered investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"). The Fund
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 more than one
class. Currently, the Fund has issued shares of three
separate classes: the Rushmore Nova Portfolio, the Rushmore
U.S. Government Bond Portfolio, and the Rushmore Money Market
Portfolio. Other separate classes may be added in the future.

All shares of the Portfolio are freely transferable. The
shares do not have preemptive rights, and none of the shares
has any preference to conversion, exchange, dividends,
retirements, liquidation, redemption or any other feature.
Fund shares have equal voting rights, except that, in a matter
affecting a particular series of the Fund, only shares of that
series may be entitled to vote on that matter. Because the
shares have non-cumulative voting rights, the holders of more
than 50% of the shares voting for the election of directors
can elect 100% of the directors, if they choose to do so. In
such event, the holders of the remaining less than 50% of the
shares voting will not be able to elect any directors.
Shareholder inquiries can be made by telephone ((800) 343-
3355) or by mail (4922 Fairmont Avenue, Bethesda, Maryland
20814).

Under Maryland Corporate law, a registered investment company
is not required to hold an annual shareholders' meeting if the
1940 Act does not require a meeting. The 1940 Act does
require a meeting if the following actions are necessary:
ratification of the selection of independent public
accountants, approval of the investment advisory agreement,
election of the board of directors, or approval of the
appointment of directors to board vacancies when such
vacancies cause less than two-thirds of the board to have been
elected. Under the 1940 Act, shareholders have the right to
remove directors and, if holders of 10% of the outstanding
shares request in writing, a shareholders' meeting must be
called. As of the date of this Prospectus, officers and
directors of the Fund owned 58.3% of the Portfolio.

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The Portfolio's classification as a "non-diversified"
investment company means that the proportion of the
Portfolio's assets that may be invested in the securities of a
single issuer is not limited by the 1940 Act. However, the
Portfolio intends to seek to qualify as a RIC for purposes of
the Code, which requires that, at the end of each quarter of
the taxable year, (i) at least 50% of the market value of the
Portfolio's total assets (a diversified investment company

would be so limited with respect to 75% of such market value)
be invested in cash, U.S. Government securities, the
securities of other RICs, and other securities, with such
securities of any one issuer limited for the purposes of this
calculation to an amount not greater than 5% of the value of
the Portfolio's total assets and 10% of the outstanding voting
securities of any one issuer, and (ii) not more than 25% of
the value of the Portfolio's total assets be invested in the
securities of any one issuer (other than U.S. Government
securities or the securities of other RICs).

MANAGEMENT OF THE FUND

Investment Adviser and Administrative Servicing Agent

The investment adviser of the Fund is Money Management
Associates, 1001 Grand Isle Way, Palm Beach Gardens, Florida
33418 (the "Adviser"). Subject to the general supervision of
the Board of Directors of the Fund, the Adviser renders
investment advice and is responsible for the overall
management of the Fund's business affairs. Daniel L.
O'Connor, the Chairman of the Board of Directors and President
and Treasurer of the Fund, and the sole General Partner and
the Chief Operating Officer of the Adviser, is the portfolio
manager of the Portfolio and as such has primary
responsibility for overseeing the Portfolio's investments.
Mr. O'Connor has been involved in the mutual fund business for
more than twenty years. In 1973, Mr. O'Connor formed Money
Management Associates, a Washington, D.C. limited partnership
and registered investment adviser. Mr. O'Connor has served as
the General Partner of the Adviser since the Adviser's
founding. Prior to establishing the Adviser, Mr. O'Connor was
an assistant treasurer for the Federal National Mortgage
Association in Washington, D.C. Mr. O'Connor received his
bachelor's degree in accounting from Spring Hill College in
Mobile, Alabama in 1964.

Daniel L. O'Connor and John E. Herzog may be considered to
"control" the Portfolio by virtue of their respective
ownership of 58% and 33% of the Portfolio's shares.

which was established in 1983 and currently consists of three
series, each of which invests primarily in securities the
interest on which is exempt either from federal income tax or
from state income tax; and American Gas Index Fund, Inc., a
common stock index fund established in 1989 that seeks to
provide investment results that correlate to those of an index
comprising the common stocks of natural gas distribution and
transmission company members of the American Gas Association.
As of August 31, 1995, total assets under the Adviser's
management were approximately $950 million.

Under an Investment Advisory Agreement between the Fund and
the Adviser, the Portfolio pays the Adviser a fee at an annual
rate based on 0.75% of the net assets of the Portfolio. The
management fee is higher than that charged for many mutual
funds. 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. The Adviser bears all
costs associated with providing these services and the fees
and expenses of the directors of the Fund who are affiliated
persons of the Adviser. For additional information concerning
the Adviser and the Investment Advisory Agreement, see
"Management of the Fund" in the Statement of Additional
Information.

Under a Service Agreement between the Fund and Rushmore Trust
and Savings, FSB ("RTS"), 4922 Fairmont Avenue, Bethesda,
Maryland 20814, a majority-owned subsidiary of the Adviser,
RTS provides transfer agency, dividend-disbursing, and
administrative services to the Fund. Under the Service
Agreement with RTS, which has been approved by the Board of
Directors, RTS receives an annual fee of 0.50% of the average
daily net assets of the Portfolio for these services. RTS
pays all fees and expenses that are directly related to the
services provided by RTS to the Fund. For additional
information concerning RTS and the Service Agreement, see
"Management of the Fund" in the Statement of Additional
Information.

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.

<\REDLINE>

THE RUSHMORE FUND, INC.

RUSHMORE NOVA PORTFOLIO

PROSPECTUS

<REDLINE>
January 1, 1996
<\REDLINE>

Table of Contents

Page

Fee Table . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial Highlights . . . . . . . . . . . . . . . . . . . .

Management's Discussion of Portfolio Performance . . . . . .

Performance Data . . . . . . . . . . . . . . . . . . . . . .

Investment Objective and Policies . . . . . . . . . . . . . .

Portfolio Turnover and Execution . . . . . . . . . . . . . .

How to Invest in the Portfolio . . . . . . . . . . . . . . .

How to Redeem an Investment (Withdrawals) . . . . . . . . . .

Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . .

Transaction Charges . . . . . . . . . . . . . . . . . . . . .

Tax-Sheltered Retirement Plans . . . . . . . . . . . . . . .

Dividends and Distributions . . . . . . . . . . . . . . . . .

Net Asset Value . . . . . . . . . . . . . . . . . . . . . . .

Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Organization and Description of Common Stock . . . . . . . .

Management of the Fund . . . . . . . . . . . . . . . . . . .

RUSHMORE U.S. GOVERNMENT BOND PORTFOLIO

<\REDLINE>

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

RUSHMORE U.S. GOVERNMENT BOND PORTFOLIO

INVESTMENT OBJECTIVE AND POLICIES

The Rushmore U.S. Government Bond Portfolio (the "Portfolio")
is one of a series of portfolios in The Rushmore Fund, Inc.
(the "Fund"), an open-end management investment company. The
objective of the Portfolio is to provide investors with
maximum current income to the extent that such investment is
consistent with safety of principal. In attempting to achieve
its objective, the 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.

ADDITIONAL INFORMATION

Investors should read this Prospectus and retain it for future
reference. It is designed to set forth concisely the
information an investor should know before investing in the
Portfolio. A Statement of Additional Information, dated
January 1, 1996, containing additional information about the
Fund and the Portfolio has been filed with the Securities and
Exchange Commission and is incorporated herein by reference.
A copy of the Statement of Additional Information may be
obtained, without charge, by writing or telephoning the Fund.

The date of this Prospectus is January 1, 1996.

<\REDLINE>

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>

FEE TABLE

The following table illustrates all expenses and fees that a
shareholder of the Portfolio will incur:
<REDLINE>
SHAREHOLDER TRANSACTION EXPENSES

Sales Load Imposed on Purchases . . . . . . . . None
Sales Load Imposed on Reinvested Dividends . . . None
Deferred Sales Load . . . . . . . . . . . . . . None
Redemption Fees . . . . . . . . . . . . . . . . None
Exchange Fees . . . . . . . . . . . . . . . . . None
Monthly Account Fee (for accounts under $500)* . $5.00

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees . . . . . . . . . . . . . . . . 0.50%
12b-1 Fees . . . . . . . . . . . . . . . . . . . None
Other Expenses** . . . . . . . . . . . . . . . . 0.30%
Total Fund Operating Expenses . . . . . . . . . 0.80%
* A charge of $5 per month may be imposed on any account
whose average daily balance for the month falls below $500
due to redemptions. See "Transaction Charges."
** Estimated.

EXAMPLE:

You would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return and (2) redemption at the end of
each time period:

1 year 3 years 5 years 10 years

$8 $26 $46 $102

The same level of expenses would be incurred if the investment
were held throughout the period indicated.

The purpose of this table is to assist the investor in
understanding the various expenses that an investor in the
Portfolio will bear directly or indirectly. The five percent
assumed annual return is for comparison purposes only. As
noted above, the Portfolio charges no redemption fees. The
actual annual return may be more or less depending on market
conditions. The actual expenses an investor incurs will
depend on the amount invested and actual expenses may be
greater or less than those shown. For more complete
information about the various costs and expenses, see
"Management of the Fund" in this Prospectus and "Management of
the Fund" in the Statement of Additional Information.
<\REDLINE>

<REDLINE>
The Rushmore Fund, Inc.
Financial Highlights
Rushmore U.S. Government Bond Portfolio
Audited
<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) (.650) (.696) (.717)
Distributions to Shareholders
from Net
Realized Capital Gains . . --- (0.583) (.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
(000s omitted) . . . . . . 1,658 3,225 2,085 2,148 1,452

</TABLE>

3
<PAGE>

The Rushmore Fund, Inc.
Financial Highlights
Rushmore U.S. Government Bond Portfolio
Audited (Continued)
<TABLE>
<CAPTION>

For the Year Ended August 31,

1990 1989 1988 1987 1986*

<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value - Beginning
of Year . . . . . . . . . . $ 9.96 $ 8.96 $ 9.19 $ 9.97 $10.00

Net Investment Income . . . 0.720 0.742 0.747 0.772 0.614
Net Realized and Unrealized
Gains (Losses)
on Securities . . . . . . (0.821) 1.000 (0.230) (0.779) (0.031)

Net Increase (Decrease) in
Net Asset Value
Resulting from Operations (.101) 1.742 .517 (.007) .583
Dividends to Shareholders . (.719) (.742) (.747) (.773) (.613)
Distributions to
Shareholders from Net
Realized Capital Gains . --- --- --- --- ---

Net Increase (Decrease) in
Net Asset Value . . . . . . (0.82) 1.00 (0.23) (0.78) (0.03)

Net Asset Value - End of
Year . . . . . . . . . . . $ 9.14 $ 9.96 $ 8.96 $ 9.19 $ 9.97

Total Investment Return . . . (1.24)% 20.17% 5.73% (0.06)% 6.14%

Ratios to Average Net Assets:
Expenses . . . . . . . . . 0.80% 0.80% 0.83% 0.78% 1.00%
Net Investment Income . . . 7.28% 7.73% 8.05% 7.90% 8.83%

Supplementary Data:
Portfolio Turnover Rate . . 400.8% 411.8% 829.0% 226.0% 43.7%
Number of Shares Outstanding
at End of Year
(000s omitted) . . . . . 1,427 2,603 806 1,175 776

</TABLE>

* Commencement of Operations December 18, 1985.

The above financial highlights relating to the Portfolio, for
the periods identified, have been audited by Deloitte & Touche
LLP, independent certified public accountants, whose report
thereon appears in the Fund's 1995 Annual Report to
Shareholders for the Rushmore U.S. Government Bond Portfolio
and is incorporated by reference in the Statement of
Additional Information. This information should be read in
conjunction with the financial statements and related notes
thereto included in the Statement of Additional Information.
A copy of the Fund's 1995 Annual Report to Shareholders for
the Rushmore U.S. Government Bond Portfolio, and further
information about the performance of the Portfolio, may be
obtained, without charge, by contacting the Fund at 4922
Fairmont Avenue, Bethesda, Maryland 20814, or by telephoning
the Fund at (800) 343-3355 or (301) 657-1500.

<\REDLINE>

MANAGEMENT'S DISCUSSION OF PORTFOLIO PERFORMANCE

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.

In December 1995, the Federal Reserve reduced rates 25 basic
points for the second time during the year. Inflation has
been subdued since the last easing in July 1995. Going
forward, the environment for notes and bonds is extremely
attractive because of the progress against inflation. We look
for the economy to accelerate and rates to move lower next
year.

Rushmore U.S. Government Bond Portfolio invests in 10 and 30
year U.S. Treasury securities and 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%.

<\REDLINE>

PERFORMANCE DATA

From time to time, quotations of the 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 the
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 the Portfolio refers to net income generated by an
investment in the Portfolio over a specified thirty-day
period. This income is then "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 the Portfolio will vary based
on changes in market conditions and the level of the
Portfolio's expenses.

The annualized yield for the Rushmore U.S. Government Bond
Portfolio was 6.06% for the year ended August 31, 1995.

<\REDLINE>

6
<PAGE>

THE RUSHMORE FUND, INC.
U.S. Government Bond Portfolio
Total Return Comparison

[Graph appears here showing the comparison of change in the
value of $10,000 investment in the Portfolio made on December
31, 1985 among the Portfolio, the Lehman Brothers
Intermediate-Gov't Index, and the Lehman Brothers Long T-Bond
Index]

Lehman Lehman
Rushmore Brothers Brothers
U.S. Gov't Intermediate- Long
Bond Gov't Index T-Bond

Past performance is not predictive of future performance. The
Lehman Brothers Intermediate Gov't Index and Long T-Bond Index
are unmanaged indices and, unlike the Portfolio, have no
management fee or other operating expenses to reduce their
reported return. Returns are historical and include changes
in principal and reinvested dividends and capital gains.
<\REDLINE>
Average Annual Total Return
Period Ending August 31, 1995
<REDLINE>
<TABLE>
<CAPTION>

One Year Five Years Since Inception

</TABLE>

INVESTMENT OBJECTIVE AND POLICIES

General

The investment objective of the Rushmore U.S. Government Bond
Portfolio is to provide investors with maximum current income
to the extent that such investment is consistent with safety
of principal. In attempting to achieve its objective, the
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. The 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
coupons). The Portfolio also may purchase U.S. Government
securities under repurchase agreements and may also lend
Portfolio securities.

<\REDLINE>

U.S. Government Securities

U.S. Treasury securities are backed by the full faith and
credit of the U.S. Treasury. U.S. Treasury securities differ
only in their interest rates, maturities, and dates of
issuance. Treasury Bills have maturities of one year or less.
Treasury Notes have maturities of one to ten years, and
Treasury Bonds generally have maturities of greater than ten
years at the date of issuance. Yields on short-,
intermediate-, and long-term U.S. Government securities are
dependent on a variety of factors, including the general
conditions of the money and bond markets, the size of a
particular offering, and the maturity of the obligation. Debt
securities with longer maturities tend to produce higher
yields and are generally subject to potentially greater
capital appreciation and depreciation than obligations with
shorter maturities and lower yields. The market value of U.S.
Government securities generally varies inversely with changes
in market interest rates. An increase in interest rates,
therefore, would generally reduce the market value of
portfolio investments of the Portfolio in U.S. Government
securities, while a decline in interest rates would generally

increase the market value of portfolio investments of the
Portfolio in these securities.

Certain U.S. Government securities are issued or guaranteed by
agencies or instrumentalities of the U.S. Government
including, but not limited to, obligations of U.S. Government
agencies or instrumentalities such as the Federal National
Mortgage Association ("FNMA"), the Government National
Mortgage Association ("Ginnie Mae"), the Federal Home Loan
Mortgage Corporation, the Small Business Administration
("SBA"), the Export-Import Bank, the Federal Farm Credit
Administration, the Federal Home Loan Banks ("FHLBs"), Banks
for Cooperatives (including the Central Bank for
Cooperatives), the Federal Land Banks, the Federal
Intermediate Credit Banks, the Tennessee Valley Authority, the
Export-Import Bank of the United States, the Commodity Credit
Corporation, the Federal Financing Bank, the Student Loan
Marketing Association, and the National Credit Union
Administration.

Some obligations issued or guaranteed by agencies or
instrumentalities of the U.S. Government, such as Ginnie Mae
and SBA certificates, are backed by the full faith and credit
of the U.S. Treasury. Such agencies and instrumentalities may
borrow funds from the U.S. Treasury. No assurances can be
given, however, that the U.S. Government will provide such
financial support to the obligations of other U.S. Government
agencies or instrumentalities in which the Portfolio invests,
such as the FHLBs and the FNMA, since the U.S. Government is
not obligated to guarantee these securities. These other
agencies and instrumentalities are supported by either the
issuer s right to borrow, under certain circumstances, an
amount limited to a specific line of credit from the U.S.
Treasury, the discretionary authority of the U.S. Government
to purchase certain obligations of an agency or
instrumentality, or the credit of the agency or
instrumentality itself.

Government bonds typically pay coupon interest semi-annually
and repay the principal at maturity. Ginnie Mae certificates
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-insured or Veterans
Administration-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.

U.S. Government securities may be purchased at a discount.
Such securities, when held to maturity or retired, may include
an element of capital gain. Capital losses may be realized
when such securities purchased at a premium are held to
maturity or are called or redeemed at a price lower than their
purchase price. Capital gains or losses also may be realized
upon the sale of securities.

<\REDLINE>

Fixed Income Value and Yield Fluctuations

Fluctuation in the market value of the securities of the
Portfolio will occur due to interest rate movements. The
market values of the investment securities of the Portfolio
will vary inversely with interest rate movements and,
therefore, the per share value of the Portfolio will also
fluctuate as interest rates change. Furthermore, debt
securities with longer maturities, such as Ginnie Mae
certificates, 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 Portfolio may not be suitable for investors
with short-term investment objectives.

<\REDLINE>

Specialized Investment Practices and Risks

Zero Coupon Bonds

The Portfolio also may buy and sell U.S. Treasury zero coupon
securities. Unlike regular U.S. Treasury bonds which pay
semi-annual interest, U.S. Treasury zero coupon bonds do not
generate semi-annual coupon payments so that interest is not
paid in cash during the term of these securities. Instead,
zero coupon bonds are purchased at a substantial discount from
the maturity value of such securities, reflecting the current
value of the deferred interest, and this discount is amortized
as interest income over the life of the security and paid at

maturity. The discount is taxable even though there is no
cash return until maturity. Zero coupon U.S. Treasury issues
originally were created by government bond dealers who bought
U.S. Treasury bonds and issued receipts representing an
ownership interest in the interest coupons or in the principal
portion of the bonds. Subsequently, the U.S. Treasury began
directly issuing zero coupon bonds with the introduction of
"Separate Trading of Registered Interest and Principal of
Securities" (or "STRIPS"). While zero coupon bonds eliminate
the reinvestment risk of regular coupon issues, that is, the
risk of subsequently investing the periodic interest payments
at a lower rate than that of the security held, zero coupon
bonds fluctuate much more sharply than regular coupon-bearing
bonds. Thus, when interest rates rise, the value of zero
coupon bonds will decrease to a greater extent than will the
value of regular bonds having the same interest rate. The
Portfolio will not invest more than 10% of its assets in
current value of the zero coupon securities at any time.

<\REDLINE>

Repurchase Agreements

In order to effectively utilize cash reserves kept for
liquidity, the Portfolio may invest in repurchase agreements
secured by securities issued or guaranteed by the U.S.
Government, its agencies and instrumentalities, and in
securities and certificates evidencing ownership of future
interest and principal payments on the above securities. A
repurchase agreement arises when a buyer purchases a security
and simultaneously agrees to sell it to the seller at an
agreed upon future date, normally one day or a few days later.
The resale price is greater than the purchase price,
reflecting an agreed upon market rate. The 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.

<\REDLINE>

Lending of Securities

The Portfolio may lend its securities to National Association
of Securities Dealers, Inc. (the "NASD")-registered broker-
dealers and Federal Reserve member banks for the purpose of
earning additional income. Such loans will be pursuant to
agreements requiring the broker-dealer or bank to fully and
continuously secure the loan by cash or other securities in
which the Portfolio may invest equal to the market value of
the securities loan. The Portfolio receives compensation for
lending its securities in the form of fees.

The Portfolio will enter into securities lending and
repurchase transactions only with parties who meet credit
worthiness standards approved by the Fund's Board of
Directors. In the event of a default or bankruptcy by a
seller or borrower, the Portfolio will promptly liquidate
collateral. However, the exercise of the Portfolio's right to
liquidate such collateral could involve certain costs or
delays and, to the extent that proceeds from any sale of
collateral on a default of the seller or borrower were less
than the seller's or borrower's obligation, the Portfolio
could suffer a loss.

<\REDLINE>

Borrowings

The Portfolio may borrow money to facilitate management of the
portfolio instruments by enabling the Portfolio to meet
redemption requests when the liquidation of portfolio
instruments would be inconvenient or disadvantageous. Such
borrowing is not for investment purposes and will be repaid by
the Portfolio promptly. Such a borrowing may not exceed 30%
of the Portfolio's total assets, taken at current net asset
value before any borrowing. The Portfolio may not purchase
securities if a borrowing is outstanding.

In addition to the foregoing, the Portfolio is authorized to
borrow money from a bank as a temporary measure for
extraordinary or emergency purposes in amounts not in excess
of 5% of the value of the Portfolio's total assets. The
Portfolio is authorized to pledge portfolio securities as the
Adviser deems appropriate in connection with any borrowings.

<\REDLINE>

PORTFOLIO TURNOVER

The portfolio turnover for the Portfolio was 63.3%, 188.3%,
and 173.6% for the years ended August 31, 1995, 1994, and
1993, respectively.

<\REDLINE>

HOW TO INVEST IN THE PORTFOLIO

The minimum initial investment in the Portfolio is $2,500.
Retirement accounts may be opened with a $500 minimum
investment. The shares of the Portfolio are offered at the
daily public offering price which is the net asset value per
share (See "Net Asset Value") next computed after receipt of
your order. There is no minimum amount for subsequent
investments in the Portfolio. All accounts will be held in
book-entry form. NO CERTIFICATES FOR SHARES WILL BE ISSUED.
The Portfolio reserves the right to reject any purchase order.
Foreign checks will not be accepted.

Investment in the Portfolio can be made directly with the Fund
or through third parties such as broker-dealers, banks, or
other financial institutions that purchase securities for
their customers. Such third parties may charge their
customers a fee in connection with services offered to
customers. When shares are purchased through third parties,
the third party, rather than the customer, may be the
shareholder of record of the shares. Investors who do not
wish to receive the services of a third party may invest
directly with the Fund without charge by mail or by bank wire,
as described below. Certain third party organizations may
receive compensation from the Fund, the Portfolio's transfer
agent, or Money Management Associates for the shareholder
accounting services these organizations provide.

By Mail: Fill out an application and make a check payable to
"The Rushmore Fund, Inc." Mail the check along with the
application, to:

The Rushmore Fund, Inc.
4922 Fairmont Avenue
Bethesda, Maryland 20814

Purchases by check will normally be credited to an account
within one business day after receipt of payment. Foreign
checks will not be accepted.

By Bank Wire: Request a wire transfer to:

Rushmore Trust and Savings, FSB
Bethesda, Maryland

Routing Number 0550-71084
For Account of The Rushmore Fund, Inc.
Account Number 029385-770

AFTER INSTRUCTING YOUR BANK TO TRANSFER MONEY BY WIRE, YOU
MUST TELEPHONE THE FUND AT (800) 622-1386 OR (301) 657-1510
BETWEEN 8:30 A.M. AND 4:00 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.

<\REDLINE>

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
(800) 822-1386 or (301) 657-1510 between 8:30 A.M. and 4:00
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.

<\REDLINE>

The privilege to initiate redemption transactions by telephone
will be made available to fund shareholders automatically.

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 ("NYSE") is closed (other than customary
weekend or holiday closings); or (b) when trading on the NYSE
is restricted, or an emergency exists, as determined by the
Securities and Exchange Commission, so that disposal of the
Fund's investments for determination of net asset value is not
reasonably practicable; or (c) for such other periods as the
Commission, by order, may permit for protection of the Fund's
investors. Investors should also be aware that telephone
redemptions or exchanges may be difficult to implement in a
timely manner during periods of drastic economic or market
changes. If such conditions occur, redemption or exchange
orders can be made by mail. Because of the administrative
expense of handling small accounts, the Fund reserves the
right to involuntarily redeem an investor's account which
falls below $500 in total value in all portfolios of the Fund

due to redemptions or exchanges after providing 60 days
written notice.

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EXCHANGES

The Fund is composed of three separate portfolios. This
Prospectus describes the features of the Rushmore U.S.
Government Bond Portfolio. The other portfolios of the Fund
are the Rushmore Nova Portfolio and the Rushmore Money Market
Portfolio, however, shares of the Rushmore Nova Portfolio
currently are not available or sold to the public. Investors
may invest in either the Rushmore U.S. Government Bond
Portfolio or the Rushmore Money Market Portfolio, and may
exchange shares in one portfolio, at no charge, for shares of
the other portfolio at their relative net asset values.
Shares of The Rushmore Fund, Inc. may also be exchanged for
shares of Fund for Government Investors, Inc., Fund for Tax-
Free Investors, Inc., the American Gas Index Fund, Inc., or
the Cappiello-Rushmore Trust on the basis of the respective
net asset values of the shares involved. Exchanges may be
made by telephone or letter. Written requests should be sent
to The Rushmore Fund, Inc., 4922 Fairmont Avenue, Bethesda,
Maryland 20814, and should be signed by the record owner or
owners. Telephone exchange requests may be made by calling
the Fund at (800) 622-1386 or (301) 657-1510 between 8:30 A.M.
and 4:00 P.M., Eastern time. Exchanges will be effected at
the respective net asset values of the portfolios as next
determined after receipt of the exchange request. To
implement an exchange, shareholders should provide the
following information: account registration including address
and number, taxpayer identification number, number, percentage
or dollar value of shares to be redeemed, and name and account
number of the portfolio to which the investment is to be
transferred. Exchanges may be made only if they are between
identically registered accounts. Shareholders contemplating
such an exchange should obtain and review the prospectuses of
those funds. The exchange privilege is available only in
states where the exchange may legally be made. Telephone
exchange privileges may be terminated or modified by the Fund
upon 60 days notice to all shareholders of the Fund.

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TRANSACTION CHARGES

In addition to charges described elsewhere in this Prospectus,
the Fund may impose a charge of $5 per month for any account
whose average daily balance is below $500 due to redemptions.
The fee will continue to be imposed during months when the
account balance remains below $500. The fee will be imposed
on the last business day of the month. This fee will be paid
to Rushmore Trust and Savings, FSB. The fee will not be
imposed on tax-sheltered retirement plans or accounts
established under the Uniform Gifts or Transfers to Minors
Act. The Fund may also assess a charge of $10 for items
returned for insufficient or uncollectible funds.

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TAX-SHELTERED RETIREMENT PLANS

Tax-sheltered retirement plans of the following types will be
available to investors:

Individual Retirement Accounts (IRAs)

Defined Contribution Plans
(Profit-Sharing Plans)
Money Purchase Plans (Pension Plans)
Internal Revenue Code
Section 401(k) Plans

Internal Revenue Code
Section 403(b) Plans

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

DIVIDENDS AND DISTRIBUTIONS

Dividends of the Portfolio 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 to shareholders at least
quarterly.

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Long-term capital gains, if any, will be distributed on an
annual basis while short-term capital gains, if any, will be
distributed quarterly.

NET ASSET VALUE

The net asset value of the Portfolio's shares will be
determined daily as of 4:00 p.m., Eastern time, except on
customary national business holidays which result in the
closing of the NYSE and weekends. The net asset value per
share is calculated by dividing the net worth by the number of
shares. The securities of the Portfolio 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 of the Fund will
value the Portfolio's securities in good faith. The directors
will continuously review these methods of valuation and
recommend changes which may be necessary to assure that the
Portfolio's investments are valued at fair value.

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TAXES

Code, the Portfolio must satisfy certain requirements,
including the requirement that the Portfolio receive at least
90% of its gross income each year from dividends, interest,
payments with respect to securities loans, gains from the sale
or other disposition of securities or foreign currencies, or
other income derived with respect to the Portfolio's
investments in stock, securities, and foreign currencies (the
"90% Test"), and that the Portfolio derive less than 30% of
the Portfolio's gross income from the sale or other
disposition of any of the following instruments which was held
less than three months (the "30% Test"): (i) stock or
securities; (ii) options, futures, or forward contracts; or
(iii) foreign currencies (or options, futures, or forward
contracts on such foreign currencies). Provided that the
Portfolio (i) is a RIC and (ii) distributes at least 98% of
the Portfolio's net investment income (including, for this
purpose, net realized short-term capital gains), the Portfolio
will not be liable for Federal income taxes to the extent the
Portfolio's net investment income and the Portfolio's net
realized long- and short-term capital gains, if any, are
distributed to the shareholders of the Portfolio.

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ORGANIZATION AND DESCRIPTION OF COMMON STOCK

The Fund is an open-end, diversified investment company. It
was incorporated in Maryland on July 24, 1985 and has a
present authorized capital of 1,000,000,000 shares of $.001
par value common stock which may be issued in three separate
classes: Rushmore U.S. Government Bond Portfolio, the
Rushmore Nova Portfolio, and the Rushmore Money Market
Portfolio.

All shares of the Fund are freely transferable. The shares do
not have preemptive rights, and none of the shares have any
preference to conversion, exchange, dividends, retirements,
liquidation, redemption or any other feature. Shares have
equal voting rights, except that in a matter affecting only a
particular portfolio, such as a change in investment policy,
only shares of that portfolio may be entitled to vote on the
matter. Because the shares have non-cumulative voting rights,
the holders of more than 50% of the shares voting for the
election of directors can elect 100% of the directors, if they
choose to do so. In such event, the holders of the remaining
less than 50% of the shares voting will not be able to elect
any directors. Shareholder inquiries can be made by telephone
((800) 343-3355) or by mail (4922 Fairmont Avenue, Bethesda,
Maryland 20814).

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. As of the date of this
Prospectus, officers and directors of the Fund, as a group,
own less than 1% of the shares outstanding.

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MANAGEMENT OF THE FUND

Investment Adviser and Administrative Servicing Agent

The Adviser currently is the investment adviser of four
registered investment companies, including The Rushmore Fund,
Inc., which was established in 1985 and currently is comprised
of two series in addition to the Portfolio, including a money
market portfolio and the Rushmore Nova Portfolio. The Adviser
also advises: Fund for Government Investors, Inc., a money
market fund established in 1975 that invests only in U.S.
Treasury securities; Fund for Tax-Free Investors, Inc., which
was established in 1983 and currently consists of three
series, each of which invests primarily in securities the
interest on which is exempt either from federal income tax or
from state income tax; and American Gas Index Fund, Inc., a
common stock index fund established in 1989 that seeks to
provide investment results that correlate to those of an index
comprising the common stocks of natural gas distribution and
transmission company members of the American Gas Association.
As of August 31, 1995, total assets under the Adviser's
management were approximately $950 million.

Under an Investment Advisory Agreement between the Fund and
the Adviser, the Portfolio pays the Adviser a fee at an annual
rate based on 0.50% of the net assets of the Portfolio. The
Adviser manages the investment and reinvestment of the assets
of the portfolios of the Fund and administers the affairs of
the Fund, subject to the control of the officers and the Board
of Directors of the Fund. Investment decisions are made by
committee. The Adviser bears all costs associated with
providing these services and the fees and expenses of the
directors of the Fund who are affiliated persons of the
Adviser. For additional information concerning the Adviser
and the Investment Advisory Agreement, see "Management of the
Fund" in the Statement of Additional Information.

Under a Service Agreement between the Fund and Rushmore Trust
and Savings, FSB ("RTS"), 4922 Fairmont Avenue, Bethesda,
Maryland 20814, a majority-owned subsidiary of the Adviser,
RTS provides transfer agency, dividend-disbursing, and
administrative services to the Fund. Under the Service
Agreement with RTS, which has been approved by the Board of
Directors, RTS receives an annual fee of 0.30% of the average
daily net assets of the Portfolio for these services. RTS
pays all fees and expenses that are directly related to the
services provided by RTS to the Fund. For additional
information concerning RTS and the Service Agreement, see
"Management of the Fund" in the Statement of Additional
Information.

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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 REORGANIZATION

Portfolio approved the Reorganization Plan at a special
shareholder meeting held on December 22, 1995. The
Reorganization Plan provided that the Rushmore U.S. Government
Bond Portfolio would be the surviving Portfolio and,
immediately after the merger, would be renamed the "Rushmore
U.S. Government Bond Portfolio," which is the Portfolio
described in this Prospectus.

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THE RUSHMORE FUND, INC.

RUSHMORE U.S. GOVERNMENT BOND PORTFOLIO

PROSPECTUS

January 1, 1996

Table of Contents

Page

Fee Table . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial Highlights . . . . . . . . . . . . . . . . . . . .

Management's Discussion of Portfolio Performance . . . . . .

Performance Data . . . . . . . . . . . . . . . . . . . . . .

Investment Objective and Policies . . . . . . . . . . . . . .

Portfolio Turnover . . . . . . . . . . . . . . . . . . . . .