<PAGE>
As Filed With The Securities And Exchange Commission on August
2, 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. ( )
<REDLINE>
Post-Effective Amendment No. 18 (X)
</REDLINE>
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 (X)
<REDLINE>
Amendment No. 20 (X)
</REDLINE>
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)
William L. Major
4922 Fairmont Avenue
Bethesda, Maryland 20814
(Name and Address of Agent for Service of Process)
<REDLINE>
Copies to:
James Bernstein, Esq.
Jorden Burt & Berenson
1025 Thomas Jefferson Street, N.W.
Suite 400 East
Washington, D. C. 20007
</REDLINE>
<PAGE>
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, 1994
was filed on or before October 30, 1994.
TOTAL NUMBER OF PAGES____
<PAGE>
THE RUSHMORE FUND, INC.
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET
This post-effective amendment shall not supersede or effect
this Registration Statement as this Registration Statement
applies to The Rushmore U.S. Government Intermediate-Term
Securities Portfolio, the Rushmore U.S. Government Long-Term
Securities Portfolio, and the Rushmore Money Market Portfolio.
N-1A Location in
Item No. Registration Statement
Part A. Information Required in Prospectus
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 Management's Discussion
of Fund Performance of Fund 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
<PAGE>
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 Holders of Securities
Securities
16. Investment Advisory and Management of the Fund
Other Services
17. Brokerage Allocation Investment Objectives and
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
21. Underwriters Management of the Fund
<PAGE>
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 Common Control Under Common Control
26. Number of Holders of Numbers of Holders of
Securities Securities
27. Indemnification Indemnification
28. Business and Other Business and Other
Connections of Investment Connections 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
<PAGE>
PART A
<PAGE>
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 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.
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
______________, 1995, 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 _______________, 1995.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
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
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%
* The management fee is higher than the management fee
paid by most other investment companies. See
Management of the Fund.
** Estimated.
*** 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 Low
Balance Account Fee.
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:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<C> <C> <C> <C>
$13 $40 $69 $151
</TABLE>
The same level of expenses would be incurred if the investment
were held throughout the period indicated.
<PAGE> 2
<PAGE>
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 "Investment
Advisory and Other Services" in the Statement of Additional
Information.
<PAGE> 3
<PAGE>
<TABLE>
<CAPTION>
The Rushmore Fund, Inc.
Financial Highlights
Nova Portfolio
Six Months
Ended For the Year Ended
February 28, August 31,
1995 1994** 1993
(Unaudited)
<S> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value-Beginning of Period $0.00 $10.01 $9.46
Net Investment Income . . . . . . 0.050 0.060 0.157
Net Realized and Unrealized Gains
(Losses) on Securities . . . . . 0.050 --- 0.711
Net Increase (Decrease) in Net
Asset Value Resulting from
Operations . . . . . . . . . . . 0.100 0.060 0.868
Dividends to Shareholders . . . . --- --- (0.318)
Distributions to Shareholders from
Net Realized Capital Gains . . . --- --- ---
Liquidation of Assets and
Redemption of all Outstanding
Shares . . . . . . . . . . . . . --- (10.070) ---
<REDLINE>
From Share Transactions*** . . . . 10.00 --- ---
</REDLINE>
Net Increase (Decrease) in Net
Asset Value . . . . . . . . . . 10.10 (10.01) 0.55
Net Asset Value - End of Period . $10.10 $ 0.00 $10.01
Total Investment Return . . . . . . 1.00% 0.90% 9.36%
Ratios to Average Net Assets:
Expenses . . . . . . . . . . . . 1.25%a 0.90%b 1.36%
Net Investment Income . . . . . 3.28%a 2.41% 1.56%
Supplementary Data:
Portfolio Turnover Rate**** . . . 0.0% 0.0% 1,288.9%
Number of Shares Outstanding at
End of Period (000's omitted) . 62 0 47
</TABLE>
<PAGE> 4
<PAGE>
<TABLE>
<CAPTION>
The Rushmore Fund, Inc.
Financial Highlights
Nova Portfolio
(Continued)
For the Year Ended August 31,
1992 1991 1990*
<S> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value-Beginning of Period $10.73 $9.61 $10.00
Net Investment Income . . . . . . 0.186 0.263 0.202
Net Realized and Unrealized Gains
(Losses) on Securities . . . . . (1.170) 1.007 (0.589)
Net Increase (Decrease) in Net
Asset Value Resulting from
Operations . . . . . . . . . . . (0.984) 1.270 (0.387)
Dividends to Shareholders . . . . (0.286) (0.150) (0.003)
Distributions to Shareholders from
Net Realized Capital Gains . . . --- --- ---
Liquidation of Assets and
Redemption of all Outstanding
Shares . . . . . . . . . . . . . --- --- ---
<REDLINE>
From Share Transactions*** . . . . --- --- ---
</REDLINE>
Net Increase (Decrease) in Net
Asset Value . . . . . . . . . . (1.27) 1.12 (0.39)
Net Asset Value - End of Period . $9.46 $10.73 $9.61
Total Investment Return . . . . . . (7.79)% 13.31% (3.79)%
Ratios to Average Net Assets:
Expenses . . . . . . . . . . . . 1.12% 1.13% 1.25%
Net Investment Income . . . . . 1.88% 2.59% 2.71%
Supplementary Data:
Portfolio Turnover Rate**** . . . 2,100.8% 1,088.4% 1,271.8%
Number of Shares Outstanding at
End of Period (000's omitted) . 1,471 7,707 3,034
</TABLE>
<PAGE> 5
<PAGE>
* Commencement of Operations December 7, 1989.
** The 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 Nova Portfolio to new investors and
encourage those few remaining investors to move their
investments to other alternatives which they did.
<REDLINE>
*** 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.
</REDLINE>
**** 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.
<REDLINE>
a Annualized.
b 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.
</REDLINE>
The above financial highlights relating to the Portfolio, for
the periods identified, other than for the six-month period
ended February 28, 1995, have been audited by Deloitte &
<PAGE> 6
<PAGE>
Touche LLP, independent certified public accountants, whose
report thereon appears in the Fund s 1994 Annual Report to
Shareholders for The Rushmore 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 1994 Annual Report to Shareholders for The
Rushmore Nova 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.
MANAGEMENT'S DISCUSSION OF PORTFOLIO PERFORMANCE
The Portfolio initially was designed to afford money managers
using a market-timing investment strategy a vehicle to time
short-term swings in the stock market, and, for the
Portfolio's first three years of operations, beginning in
1990, such money managers did utilize the Portfolio to
implement such a strategy. These short-term timing strategies
by investors in the Portfolio, however, led to exceptionally
high portfolio turnover rates that ranged from 1,088.4% to
2,100.8%. These high portfolio turnover rates, in turn, led
to excessively high shareholder servicing costs, which costs
were borne by the Portfolio's investment advisor, Money
Management Associates, and made continued operation of the
Portfolio uneconomical. In the first quarter of the Fund's
fiscal year 1994, the Board of Directors of the Fund,
therefore, elected to close the Portfolio to new investors.
In September 1993, the Portfolio distributed all remaining
assets to the few remaining shareholders in the Portfolio and
ceased operations.
The reactivated Portfolio's investment objective, to provide
total returns over time that are superior to the market
average as measured by the Standard & Poor's 500 Composite
Price Index (the "S&P 500"), and other fundamental investment
policies, including the Portfolio's investment restrictions,
have not been changed since the Portfolio's cessation of
operations in September 1993. The reactivated Portfolio,
however, now is structured purely as a normal growth fund and,
as such, is intended for investors whose goal is long-term
growth of capital rather than current income. The Portfolio,
accordingly, is not intended for investors who seek to time
short-term swings in the stock market, and the Fund will
discourage any market timers from investing in the Portfolio.
Standard & Poor's Corporation ("S&P") chooses the 500 stocks
comprising the S&P 500 on the basis of market values and
industry diversification. Most of the stocks in the S&P 500
are issued by the 500 largest companies, in terms of the
<PAGE> 7
<PAGE>
aggregate market value of their outstanding stock, and such
companies are generally listed on the New York Stock Exchange
(the "NYSE"). Additional stocks that are not among the 500
largest market value stocks are included in the S&P 500 for
diversification purposes. S&P is not a sponsor of, or in any
other way affiliated with, the Fund or the Portfolio.
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.
<REDLINE>
<PAGE> 8
<PAGE>
[Graph appears here showing the comparison of change in the
value of a $10,000 investment made on December 7, 1989 between
the Rushmore Nova Portfolio and the Standard & Poor's 500
Composite Index]
<TABLE>
<CAPTION>
Rushmore Nova Portfolio
Total Return Comparison*
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 **
</TABLE>
</REDLINE>
*Past performance is not indicative of future performance.
The Standard & Poor s 500 Composite 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.
See Management s Discussion of Portfolio Performance.
<TABLE>
<CAPTION>
Average Annual Total Return
Period Ending August 31, 1994
One Since
Year Inception
<S> <C> <C>
Nova Portfolio 0.90% 2.64%
</TABLE>
<PAGE> 9
<PAGE>
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 NASDAQTM 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 "Advisor"), 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 Advisor attempts to outperform
the broader market averages, although there can be no
assurance that this strategy will be successful.
<PAGE> 10
<PAGE>
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 Advisor'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.
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
<PAGE> 11
<PAGE>
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
<PAGE> 12
<PAGE>
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
<PAGE> 13
<PAGE>
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 Advisor 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
Advisor intends to comply with all limitations.
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 Advisor intends to utilize index options as leverage for
the Portfolio's net asset value. If the Advisor is correct in
its assessment of the future direction of stock prices, the
Portfolio share price will be enhanced. However, if the
Advisor has taken a position in options and stock prices move
in a direction contrary to the Advisor's forecast, the
Portfolio would incur greater loss than the Portfolio would
have incurred without the options position.
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
<PAGE> 14
<PAGE>
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 Advisor
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 Advisor 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
<PAGE> 15
<PAGE>
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.
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
<PAGE> 16
<PAGE>
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, 1992, 1993, and 1994, the
portfolio turnover rates for the Portfolio were 2,100.8%,
1.288.9%, and 0.0%, respectively.
The Advisor 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 Advisor 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
<PAGE> 17
<PAGE>
portfolio transactions, the Advisor'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 Advisor 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 Advisor. The Advisor 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 Advisor 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.
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
<PAGE> 18
<PAGE>
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:
<REDLINE>
The Rushmore Fund, Inc.
4922 Fairmont Avenue
Bethesda, Maryland 20814
</REDLINE>
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.
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
<PAGE> 19
<PAGE>
occurs first). Delays in receiving redemption proceeds may be
avoided by purchasing shares with a certified check.
HOW TO REDEEM AN INVESTMENT
(WITHDRAWALS)
On any day the Portfolio is open for business, an investor may
withdraw all or any portion of his investment by redeeming
shares at the next determined net asset value per share after
receipt of the order by writing the Fund or by telephoning the
Fund at 1-800-622-1386 or 301-657-1510 between 8:30 a.m. and
3:30 p.m., Eastern time.
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 proceeds of redemptions will be sent directly to the
investor's address of record. If the investor requests
payment of redemptions to a third party or to a location other
than his address of record listed on the account application,
the request must be in writing and the investor's signature
must be guaranteed by an eligible institution. Eligible
institutions generally include banking institutions,
securities exchanges, associations, agencies or
broker/dealers, and "STAMP" program participants. There are
no fees charged for redemptions.
The 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
<PAGE> 20
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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.
<PAGE> 21
<PAGE>
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 3:30 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.
LOW BALANCE ACCOUNT FEE
In addition to charges described elsewhere in this prospectus,
the Fund may impose a charge of $5 per month for any account
whose average daily balance is below $500 due to redemptions.
The fee will continue to be imposed during months when the
account balance remains below $500. The fee will be imposed
on the last business day of the month. This fee will be paid
to Rushmore Trust & Savings, FSB. The fee will not be imposed
on tax-sheltered retirement plans or accounts established
under the Uniform Gifts or Transfers to Minors Act.
TRANSACTION CHARGES
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.
<PAGE> 22
<PAGE>
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
<PAGE> 23
<PAGE>
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 Advisor or the officers of the Fund. The officers of the
Fund report, as necessary, to the directors of the Fund
regarding portfolio valuation determinations.
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.
<PAGE> 24
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<PAGE> 25
<PAGE>
<REDLINE>
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
two years for treatment as a regulated investment company (a
"RIC") under Subchapter M of the Internal Revenue Code.
</REDLINE>
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.
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<PAGE>
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 Nova 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 four separate
classes: The Rushmore Nova Portfolio, The Rushmore U.S.
Government Intermediate-Term Securities Portfolio, The
Rushmore U.S. Government Long-Term Securities 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 (1-800-343-
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
<PAGE> 27
<PAGE>
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 owned 28% of the Portfolio.
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
The investment adviser of the Fund is Money Management
Associates, 4922 Fairmont Avenue, Bethesda, Maryland 20814.
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, III, 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.
<REDLINE>
<PAGE> 28
<PAGE>
Money Management Associates ("MMA") and Daniel L. O'Connor may
be considered to "control" the Portfolio by virtue of their
respective ownership of 52% and 28% of the Portfolio's shares.
</REDLINE>
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 three series in addition to the Portfolio, including a
money market portfolio, an intermediate-term U.S. Government
bond portfolio, and a long-term U.S. Government bond
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, 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 February 28, 1995, total assets under the
Adviser's management were approximately $982 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 Advisor. For additional information concerning
the Advisor 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
& Savings Bank, FSB ("RTSB"), a wholly-owned subsidiary of the
Adviser, RTSB provides transfer agency, dividend-disbursing,
and custodian services to the Fund. Under the Service
Agreement with RTSB, which has been approved by the Board of
Directors, RTSB receives an annual fee of 0.50% of the average
daily net assets of the Portfolio for these services. RTSB
pays all fees and expenses that are directly related to the
services provided by RTSB to the Fund. For additional
information concerning RTSB and the Service Agreement, see
<PAGE> 29
<PAGE>
"Management of the Fund" in the Statement of Additional
Information.
<PAGE> 30
<PAGE>
THE RUSHMORE FUND, INC.
RUSHMORE NOVA PORTFOLIO
PROSPECTUS
________________, 1995
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 . . . . . . . . . . . . . . . . . . . . . . . . . .
Low Balance Account Fee . . . . . . . . . . . . . . . . . . .
Transaction Charges . . . . . . . . . . . . . . . . . . . . .
Tax-Sheltered Retirement Plans . . . . . . . . . . . . . . .
Dividends and Distributions . . . . . . . . . . . . . . . . .
Net Asset Value . . . . . . . . . . . . . . . . . . . . . . .
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Organization and Description of Common Stock . . . . . . . .
Management of the Fund . . . . . . . . . . . . . . . . . . .
<PAGE> 31
<PAGE>
PART B
<PAGE>
THE RUSHMORE FUND, INC.
RUSHMORE NOVA PORTFOLIO
<REDLINE>
4922 Fairmont Avenue, Bethesda, Maryland 20814
(301) 657-1517 (800) 621-7874
</REDLINE>
STATEMENT OF ADDITIONAL INFORMATION
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 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 shorts 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.
This Statement of Additional Information is not a prospectus.
It should be read in conjunction with the Portfolio's
Prospectus, dated ________________, 1995. A copy of the
Portfolio's Prospectus may be obtained without charge by
writing or telephoning the Fund.
The date of this Statement of Additional Information is
________________, 1995.
<PAGE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Table of Contents
Cross Reference to Related
Item in Prospectus
Page in
Statement of
Additional Page in
Information Prospectus
Investment Policies
Investment Restrictions
Portfolio Transactions and
Brokerage
Management of the Fund
Principal Holders of
Securities
Performance Information
Calculation of Return
Quotations
Dividends, Distributions, and
Taxes
Auditors and Custodian
Financial Statements
B-2
<PAGE>
INVESTMENT POLICIES
Options Transactions
Options on Securities
In an effort to enhance performance and to hedge the
Portfolio's risk exposure, the Portfolio may write (sell)
covered call and secured put options with respect to certain
of the Portfolio's portfolio securities, at such time and from
time to time, as Money Management Associates, the investment
advisor to the Portfolio (the "Advisor"), shall determine to
be appropriate and consistent with the investment objective of
the Portfolio. A covered call option means that the Portfolio
owns the underlying security on which the option is written.
By writing a call option, the Portfolio may become obligated
during the term of the option to deliver the securities
underlying the option at the exercise price if the option is
exercised. A secured put option means that the Portfolio has
and maintains on deposit with its custodian bank cash or U.S.
Government securities having a value equal to the exercise
value of the option. By writing a put option, the Portfolio
may become obligated during the term of the option to purchase
the securities underlying the option at the exercise price.
Options written by the Portfolio will be conducted on
recognized securities exchanges. The Portfolio does not
presently intend to invest more than 5% of its net assets in
securities options transactions.
When writing call options on securities, the Portfolio may
cover its position by owning the underlying security on which
the option is written. Alternatively, the Portfolio may cover
its position by owning a call option on the underlying
security which is deliverable under the option contract at a
price no higher than the exercise price of the call option
written by the Portfolio or, if higher, by owning such call
option and depositing and maintaining in a segregated account
cash or liquid high-grade debt securities equal in value to
the difference between the two exercise prices. In addition,
the Portfolio may cover its position by depositing and
maintaining in a segregated account cash or liquid high-grade
debt securities equal in value to the exercise price of the
call option written by the Portfolio. When the Portfolio
writes a put option, the Portfolio will have and maintain on
deposit with its custodian bank cash or liquid high-grade debt
securities having a value equal to the exercise value of the
option.
During the term of the option, the writer may be assigned an
exercise notice by the broker-dealer through whom the option
was sold. The exercise notice would require the writer to
deliver, in the case of a call, or take delivery of, in the
<PAGE> B-3
<PAGE>
case of a put, the underlying security against payment of the
exercise price. This obligation terminates upon expiration of
the option, or at such earlier time that the writer effects a
closing purchase transaction by purchasing an option covering
the same underlying security and having the same exercise
price and expiration date as the one previously sold. Once an
option has been exercised, the writer may not execute a
closing purchase transaction. To secure the obligation to
deliver the underlying security in the case of a call option,
the writer of the option is required to deposit in escrow the
underlying security or other assets in accordance with the
rules of the Options Clearing Corporation ("OCC"), an
institution created to interpose itself between buyers and
seller of options. The OCC assumes the other side of every
purchase and sale transaction on an exchange and, by doing so,
gives its guarantee to the transaction.
The principal reason for writing call options on stocks held
by the Portfolio is to attempt to realize, through the receipt
of premiums, a greater return than would be realized on the
underlying securities alone. In return for the premium, the
call option writer has given up the opportunity for profit
from a price increase in the underlying security above the
exercise price so long as the option remains open, but retains
the risk of loss should the price of the security decline.
Conversely, the put option writer gains a profit, in the form
of the premium, so long as the price of the underlying
security remains above the exercise price, but assumes an
obligation to purchase the underlying security from the buyer
of the put option at the exercise price, even though the
security may fall below the exercise price, at any time during
the option period. If an option expires, the writer realizes
a gain in the amount of the premium. Such a gain may, in the
case of a covered call option, be offset by a decline in the
market value of the underlying security during the option
period. If a call option is exercised, the writer realizes a
gain or loss from the sale of the underlying security. If a
put option is exercised, the writer must fulfill his
obligation to purchase the underlying security at the exercise
price, which will usually exceed the then market value of the
underlying security.
The writing of option contracts is a highly specialized
activity which involves investment techniques and risks
different from those ordinarily associated with investment
companies, although the Advisor believes that the writing of
covered call options listed on an exchange, where the
Portfolio owns the underlying security, tends to reduce such
risks. The option writer forgoes the opportunity to profit
from an increase in market price of the underlying security
above the exercise price so long as the option remains open.
Securities for the Portfolio's portfolio will continue to be
<PAGE> B-4
<PAGE>
bought and sold solely on the basis of investment
considerations and appropriateness to the fulfillment of the
Portfolio's objective.
Options on Securities Indexes
The Portfolio may write (sell) covered call options and
secured put 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. Options on indexes are
settled in cash, not in delivery of securities. The
exercising holder of an index option receives, instead of a
security, cash equal to the difference between the closing
price of the securities index and the exercise price of the
option. When the Portfolio writes a covered option on an
index it will be required to deposit and maintain with a
custodian cash or high-grade, liquid short-term debt
securities equal in value to the aggregate exercise price of a
put or call option pursuant to the requirements and the rules
of the applicable exchange. If, at the close of business on
any day, the market value of the deposited securities falls
below the contract price, the Portfolio will deposit with the
custodian cash or U.S. Government securities equal in value to
the deficiency.
From time to time, the Portfolio may purchase options on the
individual stocks comprising the index or options on indexes
themselves. The purchase of index options would be made in an
effort to increase the Portfolio's correlations to the index
when, in the opinion of the Adviser, purchase of stocks
comprising the index could not be done without incurring
disproportionately high transaction and brokerage costs.
Repurchase Agreements
As discussed in the Portfolio's Prospectus, the Portfolio may
enter into repurchase agreements with financial institutions.
The Portfolio follows certain procedures designed to minimize
the risks inherent in such agreements. These procedures
include effecting repurchase transactions only with large,
well-capitalized and well-established financial institutions
whose condition will be continually monitored by the Advisor.
In addition, the value of the collateral underlying the
repurchase agreement will always be at least equal to the
repurchase price, including any accrued interest earned on the
repurchase agreement. In the event of a default or bankruptcy
by a selling financial institution, the Portfolio will seek to
liquidate such collateral. However, the exercising of the
Portfolio's right to liquidate such collateral could involve
certain costs or delays and, to the extent that proceeds from
<PAGE> B-5
<PAGE>
any sale upon a default of the obligation to repurchase were
less than the repurchase price, the Portfolio could suffer a
loss. It is the current policy of the Portfolio not to invest
in repurchase agreements that do not mature within seven days
if any such investment, together with any other illiquid
assets held by the Portfolio, amounts to more than 10% of the
Portfolio's total assets. The investment by the Portfolio in
repurchase agreements, at times, may be substantial when, in
the view of the Advisor, liquidity or other considerations so
warrant.
Lending of Portfolio Securities
The Portfolio may lend portfolio securities to brokers,
dealers, and member banks of the Federal Reserve System for
the purpose of earning additional income, provided that cash
equal to at least 100% of the market value of the securities
loaned is deposited by the borrower with the Portfolio and is
maintained each business day in a segregated account pursuant
to applicable regulations. While such securities are on loan,
the borrower will pay the Portfolio any income accruing
thereon, and the Portfolio may invest the cash collateral in
portfolio securities, thereby earning additional income. The
Portfolio will enter into securities lending transactions only
with parties who meet the creditworthiness standards approved
and monitored by the Fund's Board of Directors. In the event
of a default or bankruptcy by a borrower, the Portfolio will
promptly seek to 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 a
borrower were less than the borrower's obligation to the
Portfolio, the Portfolio could suffer a loss. The Portfolio
will not lend its portfolio securities if such loans are not
permitted by the laws or regulations of any state in which the
Portfolio's shares are qualified for sale and does not
presently intend to lend more than 5% of the value of the
Portfolio's total assets.
The Portfolio will enter into securities lending and
repurchase transactions only with parties who meet credit
worthiness standards approved and monitored by the Fund's
Board of Directors. In the event of a default or bankruptcy
by a seller or borrower, the Portfolio will promptly seek to
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.
Portfolio Transactions
<PAGE> B-6
<PAGE>
Brokerage commissions are normally paid on options and common
stock transactions. A higher portfolio turnover on those
transactions involving commissions will lead to higher
portfolio expenses. It is the policy of the Portfolio to
obtain the best price and execution for all of its security
transactions.
<PAGE> B-7
<PAGE>
INVESTMENT RESTRICTIONS
The following investment restrictions supplement those set
forth in the Prospectus. These restrictions are fundamental
and may not be changed without prior approval of a majority of
the Portfolio's outstanding voting shares. As defined in the
Investment Company Act of 1940, as amended, the term
"majority" means the vote of the lesser of: (a) 67% or more
of the shares of the Portfolio at a meeting where more than
50% of the outstanding shares of the Portfolio are present in
person or represented by proxy; or (b) more than 50% of the
outstanding shares of the Portfolio. (All policies of the
Portfolio not specifically identified in this Statement of
Additional Information or the Portfolio's Prospectus as
fundamental may be changed without a vote of the shareholders
of the Portfolio.) For purposes of the following limitations,
all percentage limitations apply immediately after a purchase
or initial investment. Any subsequent change in a particular
percentage resulting from fluctuations in value does not
require the elimination of any security from the Portfolio's
portfolio.
The Portfolio may not:
1. borrow money except as a temporary measure to
facilitate redemptions. Such borrowing may be in an
amount not to exceed 30% of the Portfolio's total
assets, taken at current value, before such
borrowing. The Portfolio may not purchase an
investment security if a borrowing by the Portfolio
is outstanding.
2. make short sales of Portfolio securities or purchase
any portfolio securities on margin, except for such
short-term credits as are necessary for the clearance
of transactions. The deposit or payment by the
Portfolio of initial or variation margin in
connection with futures or options transactions is
not considered to be a securities purchase on margin.
3. make loans except through repurchase agreements and
through the loans of portfolio securities provided
the borrower maintains collateral equal to at least
100% of the value of the borrowed security, and
marked to market daily.
4. underwrite securities of any other issuer.
5. purchase or sell real estate, including limited
partnership interests.
<PAGE> B-8
<PAGE>
6. purchase or sell restricted securities or warrants,
nor may it issue senior securities.
7. purchase any security whereby it would account for
more than 10% of any issuer's outstanding shares.
8. purchase securities of any issuer if, as a result of
such a purchase, as to 50% of the Portfolio's assets,
such securities would account for more than 5%, (as
defined by Section 5 (b)(1) of the Investment Company
Act of 1940), of the Portfolio's assets. There is no
limitation, however, as to investments issued or
guaranteed by the United States Government, its
agencies or instrumentalities, or in obligations of
the United States Government, its agencies or
instrumentalities, which are purchased in accordance
with the Portfolio's investment objective and
policies.
9. concentrate more than 25% of its assets in any one
industry, except to the extent that such
concentration may be directed by the stock indexes.
The following restrictions have been adopted by the Portfolio
but are not considered fundamental and may be changed by the
Board of Directors of the Fund.
The Portfolio may not:
1. invest in companies for the purpose of exercising
management or control.
2. purchase more than 10% of the voting securities of
any one issuer, or more than 10% of the securities of
any class of any one issuer.
3. purchase or hold the securities of any issuer if
those officers or directors of the Fund, or of Money
Management Associates, who individually own
beneficially more than 5% of the outstanding
securities of the issuer, together own beneficially
more than 5% of those securities.
4. invest in securities of other investment companies,
except at customary brokerage commission rates or in
connection with mergers, consolidations or offers of
exchange.
5. purchase the securities of companies which, including
predecessors, have a record of less than three years
continuous operation if, as a result, more than 5% of
<PAGE> B-9
<PAGE>
the market value of the Portfolio's assets would be
invested in such companies.
6. invest more than 10% of their assets in illiquid
securities.
7. invest in oil, gas or other mineral leases.
8. issue shares for other than cash.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to the general supervision by the Board of Directors
of the Fund (the "Board"), the Advisor is responsible for
decisions to buy and sell securities for the Portfolio, the
selection of brokers and dealers to effect the transactions,
and the negotiation and payment of any and all brokerage
commissions, if any. Purchases and sales of portfolio
securities are normally transacted through issuers,
underwriters or major dealers in U.S. Government securities
acting as principals. Such transactions are made on a net
basis and do not involve payment of brokerage commissions.
The cost of securities purchased from an underwriter usually
includes a commission paid by the issuer to the underwriters;
transactions with dealers normally reflect the spread between
bid and asked prices.
The Advisor may serve as an investment manager to a number of
clients, including other investment companies. It is the
practice of the Advisor to cause purchase and sale
transactions to be allocated among the Portfolio and others
whose assets the Advisor manages in such manner as it deems
equitable. The main factors considered by the Advisor in
making such allocations among the Portfolio and other client
accounts of the Advisor are the respective investment
objectives, the relative size of portfolio holdings of the
same or comparable securities, the availability of cash for
investment, the size of investment commitments generally held,
and the opinions of the person responsible for managing the
portfolios of the Portfolio and the other client accounts.
The policy of the Portfolio regarding purchases and sales of
securities for its portfolio is that primary consideration
will be given to obtaining the most favorable prices and
efficient executions of transactions. Consistent with this
policy, when securities transactions are effected on a stock
exchange, the Portfolio's policy is to pay commissions which
are considered fair and reasonable without necessarily
determining that the lowest possible commissions are paid in
all circumstances. The Portfolio believes that a requirement
always to seek the lowest possible commission cost could
<PAGE> B-10
<PAGE>
impede effective portfolio management and preclude the
Portfolio and the Advisor from obtaining a high quality of
brokerage and research services. In seeking to determine the
reasonableness of brokerage commissions paid in any
transaction, the Advisor relies upon its experience and
knowledge regarding commissions generally charged by various
brokers and on its judgment in evaluating the brokerage and
research services received from the broker effecting the
transaction. Such determinations are necessarily subjective
and imprecise, as in most cases an exact dollar value for
those services is not ascertainable.
In seeking to implement the Portfolio's policies, the Advisor
effects transactions with those brokers and dealers who the
Advisor believes provide the most favorable prices and are
capable of providing efficient executions. If the Advisor
believes such prices and executions are obtainable from more
than one broker or dealer, the Advisor may give consideration
to placing portfolio transactions with those brokers and
dealers who also furnish research and other services to the
Portfolio or the Advisor. Such services may include, but are
not limited to, any one or more of the following: information
as to the availability of securities for purchase or sale;
statistical or factual information or opinions pertaining to
investment; wire services; and appraisals or evaluations of
portfolio securities. If the broker-dealer providing these
additional services is acting as a principal for its own
account, no commissions would be payable. If the broker-
dealer is not a principal, a higher commission may be
justified, at the determination of the Advisor, for the
additional services.
The information and services received by the Advisor from
brokers and dealers may be of benefit to the Advisor in the
management of accounts of some of its other clients and may
not in all cases benefit the Portfolio directly. While the
receipt of such information and services is useful in varying
degrees and would generally reduce the amount of research or
services otherwise performed by the Advisor and thereby reduce
the Advisor's expenses, this information and these services
are of indeterminable value and the management fee paid to the
Advisor is not reduced by any amount that may be attributable
to the value of such information and services.
For the fiscal years ended August 31, 1993 and 1994, total
brokerage commissions paid by the Advisor amounted to
approximately $204,559 and $ -0-.
MANAGEMENT OF THE FUND
<PAGE> B-11
<PAGE>
The names and addresses of the directors and officers of the
Fund and the officers of the Fund's investment adviser, Money
Management Associates (the "Adviser"), together with
information as to their principal business occupations during
the past five years, are set forth below. Fees and expenses
for non-interested directors will be paid by the Fund.
<REDLINE>
*Daniel L. O'Connor, III, 52 - Chairman of the Board of
Directors, President, and Treasurer of the Fund. General
Partner and Chief Operating Officer of the Adviser. Address:
4922 Fairmont Avenue, Bethesda, Maryland 20814.
*Richard J. Garvey, 61 - Director of the Fund. Limited
Partner of the Adviser. Address: 4922 Fairmont Avenue,
Bethesda, Maryland 20814.
Jeffrey R. Ellis, 50 - Director of the Fund. Vice President
of LottoFone, a telephone lottery system, since 1993. Vice
President Shoppers Express, Inc. through 1992. Address: 5525
Dorsey Lane, Bethesda, Maryland 20816.
Patrick F. Noonan, 52 - Director of the Fund. Chairman and
Chief Executive Officer of the Conservation Fund since 1986.
Vice Chairman, American Farmland Trust and Trustee, American
Conservation Association since 1985. President, Conservation
Resources, Inc. since 1981. Address: 11901 Glen Mill Drive,
Potomac, Maryland 20854.
Leo Seybold, 80 - Director of the Fund. Retired. Address:
5804 Rockmere Drive, Bethesda, Maryland 20816.
*Rita A. Gardner, 51 - Director of the Fund. Limited Partner
of the Adviser. Vice President and Director of MMA Services,
Inc. until 1993. Address: 4922 Fairmont Avenue, Bethesda,
Maryland 20814.
Michael G. Trainer, 53 - Director of the Fund. Attorney at
Law. Address: 4922 Fairmont Avenue, Bethesda, Maryland
20814.
Timothy N. Coakley, CPA, 27 - Controller. Audit Manager,
Deloitte & Touche LLP, until 1994. Address: 4922 Fairmont
Avenue, Bethesda, Maryland 20814.
</REDLINE>
*Indicates an "interested person" as that term is defined in
the Investment Company Act of 1940.
<PAGE> B-12
<PAGE>
Certain directors and officers of the Fund are also directors
and officers of Fund for Government Investors, Inc., Fund for
Tax-Free Investors, Inc., and American Gas Index Fund, Inc.,
other investment companies managed by the Adviser. As of the
date of this Statement of Additional Information, the
directors and officers of the Fund, as a group, owned, of
record and beneficially, 28% of the shares of the Portfolio.
The Adviser, which has its office at 4922 Fairmont Avenue,
Bethesda, Maryland 20814, provides the Fund with investment
advisory services. The Adviser is a limited partnership which
was formed under the laws of the District of Columbia on
August 15, 1974. Its primary business since inception has
been to serve as the investment adviser to Fund for Government
Investors, Inc., Fund for Tax-Free Investors, Inc., The
Rushmore Fund, Inc., and the American Gas Index Fund, Inc.
Daniel L. O'Connor is the sole general partner of the Adviser,
and, as such, exercises control thereof.
Under an Investment Advisory Agreement between the Fund and
the Adviser, dated October 10, 1985 (the "Advisory
Agreement"), the Adviser provides investment advice to the
Portfolio and oversees its day-to-day operations, subject to
direction and control by the Fund's Board of Directors.
Pursuant to the Advisory Agreement, the Portfolio pays the
Adviser a fee at an annual rate based on 0.75% of the net
assets of the Portfolio. The Adviser may, from its own
resources, including profits from advisory fees received from
the Portfolio provided such fees are legitimate and not
excessive, make payments to broker-dealers and other financial
institutions for their expenses in connection with the
distribution of Portfolio shares.
As of August 31, 1994, the Portfolio did not have any assets.
For the fiscal years ended August 31, 1992, 1993, and 1994,
the Portfolio paid advisory fees to the Advisor of
approximately $286,665, $235,755, and $274, respectively.
Under a Service Agreement between the Fund and Rushmore Trust
& Savings Bank, FSB ("RTSB"), dated September 1, 1993, RTSB
provides the Portfolio with shareholder servicing, transfer
agent, custodian and administrative services. The services of
RTSB are provided to the Portfolio on a fee basis and are paid
by the Portfolio. RTSB will charge an annual fee of 50 basis
points (.50%) on the average daily net assets of the
Portfolio. The non-interested directors of the Fund have
reviewed the fee structure and determined that it is
competitive and in the best interest of the shareholders of
the Portfolio. The fee will be reviewed and approved annually
by the non-interested directors of the Fund. For the fiscal
year ended August 31, 1994, the Portfolio paid service fees to
RTSB of approximately $341. The Portfolio is subject to the
<PAGE> B-13
<PAGE>
self-custodian rules of the Securities and Exchange
Commission. These rules require that the custodian be subject
to three securities verification examinations each year
conducted by the Fund's independent accountant. Two of the
examinations must be performed on an unannounced surprise
basis.
<PAGE> B-14
<PAGE>
PRINCIPAL HOLDERS OF SECURITIES
As of the date of this Statement of Additional Information,
Money Management Associates, Bethesda, Maryland, Daniel L.
O'Connor, Vero Beach, Florida, and J.E. Herzog, New York, New
York, owned 52%, 28%, and 16% of the Portfolio, respectively.
PERFORMANCE INFORMATION
The Portfolio from time to time may 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) (the ending date of the
period will be stated). 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 Standard
& Poor's 500 Composite Stock Price Index (the "S&P500") or the
Dow Jones Industrial Average (the "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.
("Lipper"), and CDA Investment Technologies, Inc., among
others. When Lipper's tracking results are used, the
Portfolio will be compared to Lipper's appropriate fund
category, that is, by fund objective and portfolio holdings.
The Portfolio, therefore, may be compared to funds within
Lipper's capital appreciation fund category. Rankings may be
listed among one or more of the asset-size classes as
determined by Lipper. Since the assets in all mutual funds
are always changing, the Portfolio may be ranked within one
Lipper asset-size class at one time and in another Lipper
asset-size class at some other time. Footnotes in
advertisements and other marketing literature will include the
time period and Lipper asset-size class, as applicable, for
the ranking in question. Performance figures are based on
historical results and are not intended to indicate future
performance.
CALCULATION OF RETURN QUOTATIONS
<PAGE> B-15
<PAGE>
For purposes of quoting and comparing the performance of the
Portfolio to that of other mutual funds and to other relevant
market indices in advertisements or in reports to
shareholders, performance may be stated in terms of total
return. Under the rules of the Securities and Exchange
Commission ("SEC Rules"), Portfolio advertising performance
must include total return quotes calculated according to the
following formula:
P (1+T)N = ERV
Where: P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years (1, 5, or 10); and
ERV = ending redeemable value of a
hypothetical $1,000 payment
made at the beginning of the
1, 5, or 10 year periods at
the end of the 1, 5, or 10
year periods (or fractional
portion thereof).
Under the foregoing formula, the time periods used in
advertising will be based on rolling calendar quarters,
updated to the last day of the most recent quarter prior to
submission of the advertising for publication, and will cover
1, 5, and 10 year periods or a shorter period dating from the
effectiveness of the Registration Statement of the Portfolio.
In calculating the ending redeemable value, all dividends and
distributions by the Portfolio are assumed to have been
reinvested at net asset value as described in the Portfolio's
Prospectus on the reinvestment dates during the period. Total
return, or "T" in the formula above, is computed by finding
the average annual compounded rates of return over the 1, 5,
and 10 year periods (or fractional portion thereof) that would
equate the initial amount invested to the ending redeemable
value.
The Portfolio, from time to time, also may include in such
advertising a total return figure that is not calculated
according to the formula set forth above in order to compare
more accurately the performance of the Portfolio with other
measures of investment return. For example, in comparing the
total return of the Portfolio with data published by Lipper
Analytical Services, Inc., or with the performance of the S&P
500 or the DJIA, the Portfolio calculates its aggregate total
return for the specified periods of time by assuming the
investment of $10,000 in Portfolio shares and assuming the
reinvestment of each dividend or other distribution at net
<PAGE> B-16
<PAGE>
asset value on the reinvestment date. Percentage increases
are determined by subtracting the initial value of the
investment from the ending value and by dividing the remainder
by the beginning value. Such alternative total return
information will be given no greater prominence in such
advertising than the information prescribed under SEC Rules.
The Portfolio's average annual compounded rate of return for
the one and five year periods ended August 31, 1993, assuming
the reinvestment of all dividends and distributions, was 9.37%
and 2.57%, respectively.
DIVIDENDS, DISTRIBUTIONS, AND TAXES
The Portfolio will seek to qualify for treatment as a
regulated investment company (a "RIC") under Subchapter M of
the U.S. Internal Revenue Code of 1986, as amended (the
"Code"). Provided that the Portfolio (i) is a RIC and (ii)
distributes at least 98% of its 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 its net investment income and its net
realized long- and short-term capital gains, if any, are
distributed to the Portfolio's shareholders. One of several
requirements for RIC qualification is that the Portfolio
receives at least 90% of the Portfolio's 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").
In addition, under the Code, the Portfolio will not qualify as
a RIC for any taxable year if more than 30% of the Portfolio's
gross income for that year is derived from gains on the sale
of securities held less than three months (the "30% Test").
These requirements may also restrict the extent of the
Portfolio's activities in option and other portfolio
transactions. Specifically, the 30% Test will limit the
extent to which the Portfolio may: (i) sell securities held
for less than three months; (ii) write options which expire in
less than three months; and (iii) effect closing transactions
with respect to call or put options that have been written or
purchased within the preceding three months. Finally, as
discussed below, this 30% Test requirement also may limit
investments by the Portfolio in futures contracts and options
on stock indexes, securities, and futures contracts.
When the Portfolio is required to sell securities to meet
significant redemptions or exchanges, the Portfolio may enter
into futures contracts for the S&P 500 as a hedge against
price declines in the securities to be sold. Gains realized
<PAGE> B-17
<PAGE>
by the Portfolio upon closing out the Portfolio's position in
these contracts are subject to the 30% Test. Ordinarily,
these gains could not be offset by declines in the value of
the hedged securities. Section 851(g)(1) of the Code,
however, provides that, in the case of a "designated hedge,"
for purposes of the 30% Test, increases and decreases in value
(during the period of the hedge) of positions which are part
of the hedge are to be netted. Section 851(g)(2) of the Code
provides that a "designated hedge" exists when: (i) the risk
of loss is reduced by reason of a contractual obligation to
sell substantially identical property; and (ii) the taxpayer
clearly identifies the positions which are part of the hedge
in the manner prescribed in Internal Revenue Service ("IRS")
regulations.
IRS regulations have not yet been issued specifying how this
identification requirement can be satisfied. The legislative
history with respect to Section 851(g) states that, prior to
issuance of regulations, the identification requirement is
satisfied either by: (i) placing the positions that are part
of the hedge in a separate account that is maintained by a
broker, futures commission merchant ("FCM"), custodian, or
similar person, and that is designated as a hedging account,
provided that such person maintaining such account makes
notations identifying the hedged and hedging positions and the
date on which the hedge is established; or (ii) the
designation by such a broker, FCM, custodian, or similar
person of such positions as a hedge for purposes of these
provisions, provided that the RIC is provided with a written
confirmation stating the date that the hedge is established
and identifying the hedged and hedging positions.
When the Portfolio enters into futures contracts to hedge
against price declines of securities to be sold, the Portfolio
may identify such securities and contracts as a hedge so as to
qualify under Section 851(g)(1) of the Code. There can be no
assurances, however, that the Portfolio (or the Portfolio's
agents) will be able to comply with the identification
requirements that may be contained in future IRS regulations.
Moreover, the netting rule of Section 851(g)(1) is available
only if the securities to be sold and the futures contracts
constitute "substantially identical" property. The Portfolio
generally intends to sell pro rata all such securities, but it
is unclear whether the securities and the futures contracts
would constitute "substantially identical" property.
The Portfolio may experience difficulty in satisfying the 30%
Test because of frequent redemptions and exchanges of shares
that may occur. To the extent it is possible to do so, the
Portfolio will seek to meet its obligations in connection with
redemptions and exchanges without the realization of gains on
the sales of stock or securities, options, futures or forward
<PAGE> B-18
<PAGE>
contracts, or foreign currencies (or options, futures
contracts, or forward contracts on such foreign currencies).
In this regard, the Portfolio will seek (consistent with its
investment strategies) to use available cash, proceeds of
borrowing facilities, proceeds of the sale of stock or
securities, options, futures or forward contracts, or foreign
currencies (or options, futures contracts, or forward
contracts on such foreign currencies) that have been held for
three months or more, and the proceeds of the sale of such
assets that produce either no gain or the smallest amount of
such gain.
Section 851(h)(3) of the Code also provides a special rule for
series mutual funds with respect to the 30% Test. Pursuant to
Section 851(h)(3), a RIC that is part of a series fund will
not fail the 30% Test as a result of sales made within five
days of "abnormal redemptions" if: (i) the sum of the
percentages for abnormal redemptions exceeds 30%; and (ii) the
RIC of which such fund is a part would meet the 30% Test if
all the funds of the investment company were treated as a
single corporation. Abnormal redemptions are deemed to occur
on any day when net redemptions exceed one percent of net
asset value. If abnormal redemptions require the Portfolio to
sell securities with a holding period of less than three
months, the Portfolio intends to make those sales within five
days of such redemptions so as to qualify for the exclusion
afforded by Section 851(h)(3) of the Code if it is possible to
do so.
Despite the Portfolio's objective to satisfy the requirements
of Section 851 of the Code, there can be no assurance that the
Portfolio's efforts to achieve that objective will be
successful. In this regard, the risk of a failure of the 30%
Test by the Portfolio is greatest in the Portfolio's first
taxable year following the recommencement of the Portfolio's
operations, because any gains realized by the Portfolio on
sales of stock or securities, options, futures or forward
contracts, or foreign currencies (or options, futures
contracts, or forward contracts on such foreign currencies)
that are made before the Portfolio has completed three month
of such operations will inevitably be gains from the sales of
such assets that have been held by the Portfolio for less than
three months, and because such first taxable year of the
Portfolio will be for a period of less than 12 months, so that
the opportunity for the Portfolio to produce income that would
not be disqualifying income under the 30% Test will be
limited. In addition, while Section 851(h)(3) of the Code
excludes gains from certain sales of stock or securities,
options, futures or forward contracts, or foreign currencies
(or options, futures contracts, or forward contracts on such
foreign currencies) for purposes of the 30% Test, the benefit
of this exclusion is limited where, as is the case with the
<PAGE> B-19
<PAGE>
Portfolio of the Fund, the series fund(s) of a series
investment company is newly formed (or newly reactivated) and
has not yet produced substantial amounts of income that would
not be disqualifying income under the 30% Test.
If the Portfolio does not satisfy the 30% Test for any taxable
year of the Portfolio, the Portfolio will not qualify as a RIC
for that year. If the Portfolio fails to qualify as a RIC for
any taxable year, the Portfolio would be taxed in the same
manner as an ordinary corporation. In that event, the
Portfolio would not be entitled to deduct the distributions
which the Portfolio had paid to shareholders and, thus, would
incur a corporate income tax liability on all of the
Portfolio's taxable income whether or not distributed. The
imposition of corporate income taxes on the Portfolio would
directly reduce the return to an investor from an investment
in the Portfolio.
In the event of a failure by the Portfolio to qualify as a
RIC, the Portfolio's distributions, to the extent such
distributions are derived from the Portfolio's current or
accumulated earnings and profits, would constitute dividends
that would be taxable to shareholders as ordinary income and
would be eligible for the dividends-received deduction for
corporate shareholders. This treatment would also apply to
any portion of the distributions that might have been treated
in the shareholder's hands as long-term capital gains, as
discussed below, had the Portfolio qualified as a RIC.
If the Portfolio were to fail to qualify as a RIC for one or
more taxable years, the Portfolio could then qualify (or
requalify) as a RIC for a subsequent taxable year only if the
Portfolio had distributed to the Portfolio's shareholders a
taxable dividend equal to the full amount of any earnings or
profits (less the interest charge mentioned below, if
applicable) attributable to such period. The Portfolio might
also be required to pay to the IRS interest on 50% of such
accumulated earnings and profits. In addition, pursuant to
the Code and an interpretative notice issued by the IRS, if
the Portfolio should fail to qualify as a RIC and should
thereafter seek to requalify as a RIC, the Portfolio may be
subject to tax on the excess (if any) of the fair market of
the Portfolio's assets over the Portfolio's basis in such
assets, as of the day immediately before the first taxable
year for which the Portfolio seeks to requalify as a RIC.
If the Portfolio determines that the Portfolio will not
qualify as a RIC under Subchapter M of the Code, the Portfolio
will establish procedures to reflect the anticipated tax
liability in the Portfolio's net asset value.
<PAGE> B-20
<PAGE>
As a RIC, the Fund will not be subject to Federal income taxes
on the net investment income and capital gains that it
distributes to its shareholders. The distribution of net
investment income and capital gains will be taxable to
shareholders regardless of whether the shareholder elects to
receive these distributions in cash or in additional shares.
Distributions reported to shareholders as long-term capital
gains shall be taxable as such, regardless of how long the
shareholder has owned the shares. Shareholders will be
notified annually by the Fund as to the Federal tax status of
all distributions made by the Portfolio. Distributions may be
subject to state and local taxes.
The Portfolio has available to it a number of elections under
the Code concerning the treatment of option transactions for
tax purposes. The Portfolio will utilize the tax treatment
most favorable to a majority of investors in the Portfolio.
Taxation of these transactions will vary according to the
elections made by the Portfolio. These tax considerations may
have an impact on investment decisions made by the Portfolio.
If a call option written by the Portfolio expires, the amount
of the premium received by the Portfolio for the option will
be short-term or long-term capital gain to the Portfolio
depending on the Portfolio's holding period for the
underlying security. If such an option is closed by the
Portfolio, any gain or loss realized by the Portfolio as a
result of the closing purchase transaction will be short-term
or long-term capital gain or loss to the Portfolio depending
on the Portfolio's holding period for the underlying
security. If the holder of a call option exercises its right
under the option, any gain or loss realized by the Portfolio
upon the sale of the underlying security pursuant to such
exercise will be short-term or long-term capital gain or loss
to the Portfolio depending on the Portfolio's holding period
for the underlying security.
With respect to call options purchased by the Portfolio, the
Portfolio will realize short-term or long-term capital gain or
loss if such option is sold and will realize short-term or
long-term capital loss if the option is allowed to expire
depending on the Portfolio's holding period for the call
option. If such a call option is exercised, the amount paid
by the Portfolio for the option will be added to the basis of
the stock so acquired.
The Portfolio in its operations will also utilize options on
stock indexes. Options on broadbased stock indexes are
classified as nonequity options under the Code. As such,
gains and losses resulting from the expiration, exercise, or
closing of such nonequity options, as well as gains and losses
resulting from futures contract transactions, will be treated
<PAGE> B-21
<PAGE>
as long-term capital gain or loss to the extent of 60% thereof
and short-term capital gain or loss to the extent of 40%
thereof (hereinafter blended gain or loss). In addition, any
option held by the Portfolio on the last day of a fiscal year
will be treated as sold for market value on that date, and
gain or loss recognized as a result of such deemed sale will
be blended gain or loss.
The Portfolio's trading strategies involving nonequity options
on stock indexes may constitute "straddle" transactions.
"Straddles" may effect the taxation of such instruments and
may cause the postponement of recognition of losses incurred
in certain closing transactions.
The Portfolio's transactions in options could, under some
circumstances, preclude the Portfolio's qualifying for the
special tax treatment available to investment companies
meeting the requirements of Subchapter M of the Code.
However, it is the intention of the Portfolio's management to
limit gains from such investments to less than 10% of the
gross income of the Portfolio during any fiscal year in order
to maintain this qualification.
AUDITORS AND CUSTODIAN
Deloitte & Touche LLP, independent certified public
accountants, are the auditors of the Fund. Rushmore Trust and
Savings Bank, FSB, Bethesda, Maryland, acts as the custodian
bank for the Fund.
FINANCIAL STATEMENTS
The Fund incorporates by reference in this Statement of
Additional Information the financial statements and notes
contained in its annual report to the shareholders for the
year ended August 31, 1994, and the unaudited financial
statements and accompanying notes for the six-month period
ended February 28, 1995, which must accompany this Statement
of Additional Information.
<PAGE> B-22
<PAGE>
Interim Financial Statements
for The Rushmore Nova Portfolio
for the Six-Month Period Ended February 28, 1995
(Unaudited)
<PAGE>
<TABLE>
<CAPTION>
THE RUSHMORE FUND, INC.
NOVA PORTFOLIO
STATEMENT OF NET ASSETS
February 28, 1995
(Unaudited)
Market
Value
Common Stocks Shares (Note 1)
<S> <C> <C>
Computer and Business Equipment - 9.54%
International Business Machines Corp. 800 $60,200
Consumer - 4.81%
Philip Morris Companies, Inc. . . . . 500 30,375
Financial Services - 9.63%
Federal National Mortgage Assn. . . . 400 30,850
NationsBank Corp. . . . . . . . . . . . 600 29,925
60,775
General Industrial - 3.46%
Fleetwood Enterprises, Inc. . . . . . 1,000 21,875
Health Care - 10.61%
Merck & Co., Inc. . . . . . . . . . . 800 33,900
Pfizer, Inc. . . . . . . . . . . . . . 400 33,100
67,000
Leisure - 5.35%
Callaway Golf Co. . . . . . . . . . . 1,000 33,750
Retail Sales - 4.89%
Wal-Mart Stores, Inc. . . . . . . . . 1,300 30,875
Telecommunications - 9.29%
American Tel. & Tel. Corp. . . . . . . 600 31,050
Telefonos De Mexico . . . . . . . . . . 1,000 27,625
58,675
Total Common Stocks - 57.58%
(Cost $360,333) . . . . . . . . . . . . 363,525
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
THE RUSHMORE FUND, INC.
NOVA PORTFOLIO
STATEMENT OF NET ASSETS (continued)
February 28, 1995
(Unaudited)
Market
Value
Mutual Funds - 41.96% Shares (Note 1)
<S> <C> <C>
Fund for Government Investors, Inc.
(Cost $264,939). . . . . . . . . . . 264,939 $264,939
Total Investments - 99.54%
(Cost $625,272) . . . . . . . . . . 628,464
Other Assets Less Liabilities - 0.46% 2,888
Net Assets 100.00% (Note 6) . . . . . $631,352
Net Asset Value Per Share (Based
on 62,500 Shares Outstanding). . . $10.10
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
THE RUSHMORE FUND, INC.
NOVA PORTFOLIO
STATEMENT OF OPERATIONS
For the Six Months Ended February 28, 1995
(Unaudited)
<S> <C>
INVESTMENT INCOME (Note 1)
Interest. . . . . . . . . . . . . . $3,685
Dividends . . . . . . . . . . . . . 680
Total Investment Income . . . . . . 4,365
EXPENSES
Investment Advisory Fee (Note 2) . 723
Administrative Fee (Note 2) . . . . 482
Total Expenses . . . . . . . . . . . 1,205
NET INVESTMENT INCOME . . . . . . . . . 3,160
Net Realized Gain on Investments . . --
Net Change in Unrealized Appreciation
of Investments (Note 5) . . . . . 3,192
NET GAIN ON INVESTMENTS . . . . . . . . 3,192
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . $6,352
</TABLE>
See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
THE RUSHMORE FUND, INC.
NOVA PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended February 28,
(Unaudited)
<S> <C> <C>
FROM INVESTMENT ACTIVITIES 1995 1994
Net Investment Income. . . . . . . . $3,160 $1,636
Net Realized Gain on Investments . . -- --
Net Change in Unrealized Appreciation
of Investments . . . . . . . . . . 3,192 --
Net Increase in Net Assets Resulting
from Operations . . . . . . . . . 6,352 1,636
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income (Note 1) -- (1,636)
From Realized Gain on Investments . -- --
FROM SHARES TRANSACTIONS (Note 4)
Net Proceeds from Sales of Shares . 625,000 --
Cost of Shares Redeemed . . . . . . -- (467,744)
Reinvestment of Distributions . . . -- --
Net Increase (Decrease) in Net Assets 631,352 (467,744)
NET ASSETS - Beginning of Period . . . 0 467,744
NET ASSETS - End of Period . . . . . . $631,352 $0
</TABLE>
See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
THE RUSHMORE FUND, INC.
NOVA PORTFOLIO
FINANCIAL HIGHLIGHTS
Six Months
Ended For the Year Ended
February 28, August 31,
1995 1994 1993
(Unaudited)
<S> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value-Beginning of Period $0.00 $10.01 $9.46
Net Investment Income . . . . . . 0.050 0.060 0.157
Net Realized and Unrealized Gains
(Losses) on Securities . . . . . 0.050 --- 0.711
Net Increase (Decrease) in Net Asset
Value Resulting from Operations . 0.100 0.060 0.868
Dividends to Shareholders . . . . --- --- (0.318)
Distributions to Shareholders from
Net Realized Capital Gains . . . --- --- ---
Liquidation of Assets and
Redemption of all Outstanding
Shares . . . . . . . . . . . . . --- (10.070) ---
From Share Transactions* . . . . . 10.00 --- ---
Net Increase (Decrease) in Net
Asset Value . . . . . . . . . . 10.10 (10.01) 0.55
Net Asset Value - End of Period . $10.10 $ 0.00 $10.01
Total Investment Return . . . . . . 1.00% 0.90% 9.36%
Ratios to Average Net Assets:
Expenses . . . . . . . . . . . . 1.25%a 0.90%b 1.36%
Net Investment Income . . . . . 3.28%a 2.41% 1.56%
Supplementary Data:
Portfolio Turnover Rate . . . . . 0.0% 0.0% 1,288.9%
Number of Shares Outstanding at
End of Period (000's omitted) . 62 0 47
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
THE RUSHMORE FUND, INC.
NOVA PORTFOLIO
FINANCIAL HIGHLIGHTS
(Continued)
For the Year Ended August 31,
1992 1991
<S> <C> <C>
Per Share Operating Performance:
Net Asset Value-Beginning of Period $10.73 $9.61
Net Investment Income . . . . . . 0.186 0.263
Net Realized and Unrealized Gains
(Losses) on Securities . . . . . (1.170) 1.007
Net Increase (Decrease) in Net Asset
Value Resulting from Operations (0.984) 1.270
Dividends to Shareholders . . . . (0.286) (0.150)
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
Asset Value . . . . . . . . . . (1.27) 1.12
Net Asset Value - End of Period . $9.46 $10.73
Total Investment Return . . . . . . (7.79)% 13.31%
Ratios to Average Net Assets:
Expenses . . . . . . . . . . . . 1.12% 1.13%
Net Investment Income . . . . . 1.88% 2.59%
Supplementary Data:
Portfolio Turnover Rate . . . . . 2,100.8% 1,088.4%
Number of Shares Outstanding at
End of Period (000's omitted) . 1,471 7,707
</TABLE>
<PAGE>
<PAGE>
<REDLINE>
*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.
a Annualized.
b 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.
</REDLINE>
See Notes to Financial Statements.
<PAGE>
<PAGE>
THE RUSHMORE FUND, INC.
NOVA PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
February 28, 1995
(Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
The Rushmore Fund, Inc. ("Fund") is registered with the
Securities and Exchange Commission under the Investment
Company Act of 1940 as an open-end diversified investment
company. The Fund consists of four separate portfolios which
are designed to meet a variety of investment objectives. The
Nova Portfolio, which is one of the four portfolios of the
Fund, is a nondiversified investment company. The following
is a summary of significant accounting policies for the Nova
Portfolio (the "Portfolio").
(a) Listed securities are valued at the last sales price.
Options and futures contracts are valued at the last sales
price as of the close of trading on the applicable exchanges.
If market quotations are not readily available, the Board of
Directors will value the Portfolio's securities in good faith.
(b) Security transactions are recorded on the trade date (the
date the order to buy or sell is executed). Interest income
is accrued on a daily basis. Dividend income is recorded on
the ex-dividend date. Realized gains and losses from
securities are computed on an identified cost basis.
(c) Income dividends are declared and paid annually in the
Nova Portfolio. Dividends are reinvested in additional shares
unless shareholders request payment in cash. Generally,
short-term capital gains are distributed annually in the Nova
Portfolio. Long-term capital gains, if any, are distributed
annually.
(d) The Fund complies with the provisions of the Internal
Revenue Code applicable to regulated investment companies and
distributes all net investment income to its shareholders.
Therefore, no Federal income tax provision is required.
(e) When the Portfolio writes (sells) an option, an amount
equal to the premium received is entered in the Portfolio's
accounting records as an asset and an equivalent liability.
The amount of the liability is subsequently marked-to-market
to reflect the current value of the option written. When an
option expires, or if the Portfolio enters into a closing
purchase transaction, the Portfolio realizes a gain (or loss
if the cost of a closing purchase transaction exceeds the
premium received when the stock was sold).
<PAGE>
<REDLINE>
(f) The (unaudited) financial statements for the interim six-
month period ended February 28, 1995, reflect all adjustments
which are, in the opinion of management, necessary for a fair
presentation of such financial statements.
</REDLLINE>
2. INVESTMENT ADVISORY AND SHAREHOLDER SERVICES
Investment advisory and management services are provided by
Money Management Associates, ("Adviser"). Under an agreement
with the Adviser, the Portfolio pays a fee for such services
at an annual rate of 0.75% of the average daily net assets of
the Portfolio.
Rushmore Trust and Savings, FSB, which is wholly owned by the
Adviser, provides transfer agency, dividend-disbursing and
shareholder services to the Portfolio. These services are
provided on a fee basis approved by the Board of Directors.
Effective September 1, 1993, the Board of Directors approved
an arrangement whereby Rushmore Trust & Savings, FSB will
provide the above services and pay the operating expenses of
the Portfolio for an annual fee of 0.50% of the average daily
net assets of the Portfolio.
3. SECURITIES TRANSACTIONS
For the period ended February 28, 1995, purchases and sales
(including maturities) of securities (excluding short-term
securities) were as follows:
<TABLE>
<CAPTION>
<S> . . . . . . . . <C>
Purchases . . . . . $360,333
Sales . . . . . . . $0
</TABLE>
4. SHARES TRANSACTIONS
<PAGE>
<PAGE>
On February 28, 1995, there were 1,000,000,000 shares of $.001
par value capital stock authorized of the Fund. Transactions
in shares of the Portfolio were as follows:
<TABLE>
<CAPTION> For the Six Months Ended February 28, 1995:
<S> Shares Dollars
<C> <C>
Shares Sold . . . . 62,500 $625,000
Shares Issued in Reinvestment
of Dividends . . . . . . . . . 0 0
62,500 $625,000
Shares Redeemed . . . . . . . 0 0
62,500 $625,000
</TABLE>
5. NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS
Unrealized appreciation (depreciation) as of February 28,
1995, based on the cost for Federal income tax purposes is as
follows:
<TABLE>
<CAPTION>
<REDLINE>
<S> <C>
Gross Unrealized Appreciation . $11,013
Gross Unrealized Depreciation . (7,821)
Net Unrealized Appreciation . . $3,192
Cost of Investments for Federal
Income Tax purposes . . . . . $625,272
</RELINE>
<PAGE> B-33
<PAGE>
6. NET ASSETS
At February 28, 1995, net assets consisted of the following:
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Paid-in Capital . . . . . . . . . . $625,000
Undistributed Net Investment Income 3,160
Accumulated Net Realized Gain on
Investments . . . . . . . . . . . 0
Net Unrealized Appreciation on
Investments . . . . . . . . . . . 3,192
Net Assets . . . . . . . . . . . . $631,352
</TABLE>
<PAGE>
<PAGE>
Annual Report, dated August 31, 1994,
for The Rushmore Nova Portfolio
<PAGE>
ANNUAL REPORT, August 31, 1994
The Rushmore Fund, Inc.
Nova Portfolio
4922 Fairmont Avenue, Bethesda, Maryland 20814
(800) 343-3355 (301) 657-1500
The 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, and 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 of 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 Nova Portfolio to new investors and
encouraged those few remaining investors to move their
investments to other alternatives, which they did.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
THE RUSHMORE FUND, INC.
NOVA PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1994
<S> <C>
ASSETS $ -0-
LIABILITIES -0-
NET ASSETS $ -0-
Shares Outstanding -0-
Net Asset Value Per Share $ -0.00-
</TABLE>
See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
THE RUSHMORE FUND, INC.
NOVA PORTFOLIO
STATEMENT OF OPERATIONS
For the Year Ended August 31, 1994
<S> <C>
INVESTMENT INCOME
Interest Income $ 2,229
Dividend Income 22
Total Investment Income 2,251
EXPENSES
Investment Advisory Fee 274
Administrative Fee (Note 2) 341
Total Expenses 615
NET INVESTMENT INCOME 1,636
NET GAIN ON INVESTMENTS 0
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 1,636
</TABLE>
See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
THE RUSHMORE FUND, INC.
NOVA PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
For the Year Ended August 31,
1994 1993
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Income . . . . . $ 1,636 $ 490,392
Net Realized Gains on Investment
Transactions . . . . . . . . . - 2,783,386
Net Change in Unrealized
Appreciation of Investments . - 65,125
Net Increase in Net Assets
Resulting From Operations . . 1,636 3,338,903
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income . . . (1,636) (991,457)
FROM SHARE TRANSACTIONS (Note 4) . (467,774) (15,797,711)
Net Decrease in Net Assets . . . (467,774) (13,450,265)
NET ASSETS - Beginning of Year . . 467,774 13,918,039
NET ASSETS - End of Year . . . . . $ 0 $ 467,774
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
THE RUSHMORE FUND, INC.
NOVA PORTFOLIO
FINANCIAL HIGHLIGHTS
For the Year Ended August 31,
1994 1993 1992
<S> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value-Beginning of Period $10.01 $9.46 $10.73
Net Investment Income . . . . . . . .060 .157 .186
Net Realized and Unrealized Gains
(Losses) on Securities . . . . . --- .711 (1.170)
Net Increase (Decrease) in Net Asset
Value Resulting from Operations . .060 .868 (.984)
Dividends to Shareholders . . . . --- (.318) (.286)
Distributions to Shareholders from
Net Realized Capital Gains . . . --- --- ---
Liquidation of Assets and
Redemption of all Outstanding
Shares . . . . . . . . . . . . . (10.070) --- ---
Net Increase (Decrease) in Net
Asset Value . . . . . . . . . . (10.01) .55 (1.27)
Net Asset Value -- End of Period $0.00 $10.01 $9.46
Total Investment Return . . . . . . 0.90% 9.36% (7.79)%
<REDLINE>
Ratios to Average Net Assets:
Expenses . . . . . . . . . . . 0.90%** 1.36% 1.12%
Net Investment Income . . . . . 2.41% 1.56% 1.88%
</REDLINE>
Supplementary Data:
Portfolio Turnover Rate . . . . . 0.0% 1,288.9% 2,100.8%
Number of Shares Outstanding at
End of Period (000's omitted) . 0 47 1,471
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
THE RUSHMORE FUND, INC.
NOVA PORTFOLIO
FINANCIAL HIGHLIGHTS
For the Year Ended
August 31,
1991 1990*
<S> <C> <C>
Per Share Operating Performance:
Net Asset Value-Beginning of Period $9.61 $10.00
Net Investment Income . . . . . . . .263 .202
Net Realized and Unrealized Gains
(Losses) on Securities . . . . . 1.007 (.589)
Net Increase (Decrease) in Net Asset
Value Resulting from Operations . 1.270 (.387)
Dividends to Shareholders . . . . (.150) (.003)
Distributions to Shareholders from
Net Realized Capital Gains . . . --- ---
Liquidation of Assets and
Redemption of all Outstanding
Shares . . . . . . . . . . . . . --- ---
Net Increase (Decrease) in Net
Asset Value . . . . . . . . . . 1.12 (.39)
Net Asset Value -- End of Period $10.73 $9.61
Total Investment Return . . . . . . 13.31% (3.79)%
Ratios to Average Net Assets:
Expenses . . . . . . . . . . . 1.13% 1.25%
Net Investment Income . . . . . 2.59% 2.71%
Supplementary Data:
Portfolio Turnover Rate . . . . . 1,088.4% 1,271.8%
Number of Shares Outstanding at
End of Period (000's omitted) . 7,707 3,034
</TABLE>
<PAGE>
<PAGE>
* Commencement of Operations December 7, 1989.
<REDLINE>
** 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.
</REDLINE>
<PAGE>
<PAGE>
THE RUSHMORE FUND, INC.
NOVA PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
August 31, 1994
1. SIGNIFICANT ACCOUNTING POLICIES
The Rushmore Fund, Inc. (the "Fund") is registered with the
Securities and Exchange Commission under the Investment
Company Act of 1940 as an open-end investment company. The
Fund consists of four separate portfolios which are designed
to meet a variety of investment objectives. The Nova
Portfolio, which is one of the four portfolios of the Fund, is
a nondiversified investment company. The following is a
summary of significant accounting policies for the Nova
Portfolio (the "Portfolio").
(a) Listed securities are valued at the last sales price.
Options and futures contracts are valued at the last sales
price as of the close of trading on the applicable exchanges.
If market quotations are not readily available, the Board of
Directors will value the Portfolio's securities in good faith.
(b) Security transactions are recorded on the trade date (the
date the order to buy or sell is executed). Interest income
is accrued on a daily basis. Dividend income is recorded on
the ex-dividend date. Realized gains and losses from
securities are computed on an identified cost basis.
(c) Income dividends are declared and paid annually in the
Nova Portfolio. Dividends are reinvested in additional shares
unless shareholders request payment in cash. Generally,
short-term capital gains are distributed annually in the Nova
Portfolio. Long-term capital gains, if any, are distributed
annually.
(d) The Fund complies with the provisions of the Internal
Revenue Code applicable to regulated investment companies and
distributes all net investment income to its shareholders.
Therefore, no Federal income tax provision is required.
(e) When the Portfolio writes (sells) an option, an amount
equal to the premium received is entered in the Portfolio's
accounting records as an asset and an equivalent liability.
The amount of the liability is subsequently marked-to-market
to reflect the current value of the option written. When an
option expires, or if the Portfolio enters into a closing
purchase transaction, the Portfolio realizes a gain (or loss
<PAGE>
<PAGE>
if the cost of a closing purchase transaction exceeds the
premium received when the stock was sold).
<PAGE> B-44
<PAGE>
2. INVESTMENT ADVISORY AND SHAREHOLDER SERVICES
Investment advisory and management services are provided by
Money Management Associates, ("Adviser"). Under an agreement
with the Adviser, the Portfolio pays a fee for such services
at an annual rate of 0.75% of the average daily net assets of
the Portfolio.
Rushmore Trust and Savings, FSB, which is wholly owned by the
Adviser, provides transfer agency, dividend-disbursing and
shareholder services to the Portfolio. These services are
provided on a fee basis approved by the Board of Directors.
Effective September 1, 1993, the Board of Directors approved
an arrangement whereby Rushmore Trust & Savings, FSB will
provide the above services and pay the operating expenses of
the Portfolio for an annual fee of 0.50% of the average daily
net assets of the Portfolio.
3. SECURITIES TRANSACTIONS
For the year ended August 31, 1994, there were no purchases or
sales of securities (excluding short-term securities).
4. SHARE TRANSACTIONS
On August 31, 1994, there were 1,000,000,000 shares of $.001
par value capital stock authorized of the Fund. Transactions
in shares of the Portfolio were as follows:
<TABLE>
<CAPTION>
For the Year Ended August 31, 1994:
Shares Dollars
<C> <C>
Shares Sold $ 0 $ 0
Shares Issued in Reinvestment
of Dividends 0 0
0 0
Shares Redeemed (46,716) (467,774)
(46,716) ($467,774)
</TABLE>
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors
of The Rushmore Fund, Inc.
We have audited the statement of net assets of the Nova
Portfolio, one of the portfolio's constituting The Rushmore
Fund, Inc., as of August 31, 1994 and the related statement of
operations for the year then ended, and the statements of
changes in net assets and the financial highlights for the
periods presented. These financial statements and financial
highlights are the responsibility of the Fund's management.
Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned at August 31, 1994 by correspondence with the
custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management,
as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, such financial statements and financial
highlights present fairly, in all material respects, the
financial position of the Nova Portfolio of The Rushmore Fund,
Inc. at August 31, 1994, the results of its operations, the
changes in its net assets and the financial highlights for the
respective stated periods in conformity with generally
accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Washington, D.C.
December 23, 1994
<PAGE>
PART C
<PAGE>
PART C
OTHER INFORMATION
The Rushmore Fund, Inc.
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
a. Financial statements: The following audited financial
statements are incorporated by reference in Part B of
this registration statement's amendment:
Statement of Assets and Liabilities of the Rushmore
Nova Portfolio as of August 31, 1994;
Statement of Operations of the Rushmore Nova Portfolio
for the year ended August 31, 1994;
Statements of Changes in Net Assets of the Rushmore
Nova Portfolio for the years ended August 31, 1994
and 1993; and
Financial Highlights of the Rushmore Nova Portfolio
for each of the five years in the period ended
August 31, 1994.
No Statement of Sources of Net Assets of the Rushmore
Nova Portfolio will be included because the full amount
of net assets on August 31, 1994 represents cash received
from issuance of shares (less cost of shares redeemed).
See Statements of Changes in Net Assets of the Rushmore
Nova Portfolio.
The following financial statements, which are not
audited, also are incorporated by reference in Part B
of this registration statement's amendment:
Statement of Assets and Liabilities of the Rushmore
Nova Portfolio as of February 28, 1995;
Statement of Operations of the Rushmore Nova Portfolio
for the year ended February 28, 1995;
Statement of Changes in Net Assets of the Rushmore
Nova Portfolio for the six-month period ended
February 28, 1995; and
Financial Highlights of the Rushmore Nova Portfolio
for the six-month period ended February 28, 1995.
b. Exhibits:
11. Consent of Deloitte & Touche LLP, independent public
accountants for Registrant
<PAGE> C-1
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
<REDLINE>
<TABLE>
<CAPTION>
N u m b e r o f
Shareholders
of Record at
Title of Class July 3, 1995
<S> <C>
(Common Stock, $.001 par value)
The Rushmore Nova Portfolio 4
The Rushmore U.S. Government
Intermediate-Term Securities Portfolio 452
The Rushmore U.S. Government Long-Term
Securities Portfolio 491
The Rushmore Money Market Portfolio 1,943
</TABLE>
</REDLINE>
ITEM 27. INDEMNIFICATION
The Registrant was incorporated in the State of Maryland on
July 24, 1985 and is operated pursuant to the Articles of
Incorporation of the Registrant, dated as of July 17, 1985,
and as last amended, that permit the Registrant to indemnify
its directors and officers under certain circumstances. Such
indemnification, however, is subject to the limitations
imposed by the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended.
The Articles of Incorporation of the Fund provide that
officers and directors shall be indemnified by the Fund
against liabilities and expenses of defense in proceedings
against them by reason of the fact that they serve as
officers or directors of the Fund or as an officer or
director of another entity at the request of the entity.
This indemnification is subject to the following conditions:
(a) no director or officer is indemnified against any
liability to the Fund or its security holders which
was the result of any willful misfeasance, bad
<PAGE> C-2
<PAGE>
faith, gross negligence, or reckless disregard of
his duties; and
(b) officers and directors are indemnified only for
actions taken in good faith which the officers and
directors believed were in or not opposed to the
best interests of the Fund;
(c) expenses of any suit or proceeding will be paid in
advance only if the persons who will benefit by such
advance undertake to repay the expenses unless it is
subsequently determined that they are entitled to
indemnification.
The Articles of Incorporation of the Registrant provide that
if indemnification is not ordered by a court, indemnification
may be authorized upon determination by shareholders, or by a
majority vote of a quorum of the directors who were not
parties to the proceedings or, if a quorum is not obtainable,
or if directed by a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion
that the persons to be indemnified have met the applicable
standard.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Money Management Associates ("MMA"), a limited partnership
organized under the laws of the District of Columbia on
August 15, 1974, has one general partner and five limited
partners. Daniel L. O'Connor, the general partner, and the
five limited partners, Richard J. Garvey, Martin M. O'Connor,
Rita A. Gardner, John R. Cralle, and William L. Major, are
full-time employees of MMA, or the transfer agent subsidiary
of MMA, at 4922 Fairmont Avenue, Bethesda, Maryland 20814.
MMA also serves as the investment adviser to Fund for
Government Investors, Inc., Fund for Tax-Free Investors,
Inc., and American Gas Index Fund, Inc., all regulated
investment companies since their inception.
ITEM 29. PRINCIPAL UNDERWRITERS
Not applicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The physical location for all accounts, books, and records
required to be maintained and preserved by Section 31(a) of
the Investment Company Act of 1940, as amended, and Rules
31a-1 and 31a-2 thereunder, is 4922 Fairmont Avenue,
Bethesda, Maryland 20814.
<PAGE> C-3
<PAGE>
ITEM 31. MANAGEMENT SERVICES
Not Applicable
ITEM 32. UNDERTAKINGS
(a) The Registrant undertakes to file a post-effective
amendment to this registration statement, using
financial statements, which need not be certified,
within four to six months from the effective date of
this amendment to the Registrant's registration
statement.
(b) The Registrant undertakes to furnish each person to
whom a prospectus is delivered with a copy of the
Registrant's latest annual report to shareholders
upon request and without charge.
<PAGE> C-4
<PAGE>
SIGNATURES
<REDLINE>
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies
that it meets all of the requirements for effectiveness of
this Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this registration
statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in this City of Bethesda in the
State of Maryland on the 31st day of July 1995.
</REDLINE>
The Rushmore Fund, Inc.
By:
/s/ Daniel L. O'Connor
Daniel L. O'Connor, Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933,
this Amendment No. 18 to the Registration Statement has been
signed below by the following persons in the capacities and on
the dates indicated.
Name Title Date
/s/ Daniel L. O'Connor Chairman of the Board July 31,
1995
Daniel L. O'Connor Treasurer, Director
/s/ Jeffrey R. Ellis Director July 31,
1995
Jeffrey R. Ellis
/s/ Patrick F. Noonan Director July 31,
1995
Patrick F. Noonan
/s/ Leo Seybold Director July 31,
1995
Leo Seybold
<PAGE> S-1
<PAGE>
<PAGE> S-2
<PAGE>
/s/ Rita A. Gardner Director July 31,
1995
Rita A. Gardner
/s/ Richard J. Garvey Director July 31,
1995
Richard J. Garvey
/s/ Michael Trainer Director July 31,
1995
Michael Trainer
<PAGE> S-3
<PAGE>
Exhibit 11
Consent of Deloitte & Touche LLP
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
The Nova Portfolio of the Rushmore Fund, Inc.:
We hereby consent to the incorporation by reference in this
Post-Effective Amendment No 18 to Registration Statement No.
2-99388 of our report dated December 23, 1994 appearing in the
Annual Report of the Rushmore Nova Portfolio for the year
ended February 28, 1995, and to the reference to us under the
caption "Financial Highlights" appearing in the Prospectus,
which is also a part of such Registration Statement.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Washington, D.C.
July ___, 1995
<PAGE>
F:\JAB\DATA\RUSHMORE\NOVA\PEA-18\EDGAR\PEA-18.FIL
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000773754
<NAME> RUSHMORE FUND, INC.
<SERIES>
<NUMBER> 4
<NAME> NOVA PORTFOLIO
<MULTIPLIER> 1
<CAPTION>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> AUG-31-1994
<PERIOD-END> FEB-28-1995
<INVESTMENTS-AT-COST> 625,272
<INVESTMENTS-AT-VALUE> 628,464
<RECEIVABLES> 4,094
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 632,557
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,205
<TOTAL-LIABILITIES> 1,205
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 625,000
<SHARES-COMMON-STOCK> 62,500
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 3,160
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,192
<NET-ASSETS> 631,352
<DIVIDEND-INCOME> 680
<INTEREST-INCOME> 3,685
<OTHER-INCOME> 0
<EXPENSES-NET> 1,205
<NET-INVESTMENT-INCOME> 3,160
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 3,192
<NET-CHANGE-FROM-OPS> 6,352
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 62,500
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 632,557
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 723
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,205
<AVERAGE-NET-ASSETS> 67,967
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0.05
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.1
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
