<PAGE>
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ANNUAL REPORT, AUGUST 31, 1995
THE RUSHMORE FUND, INC.
4922 FAIRMONT AVENUE, BETHESDA, MARYLAND
20814
(800) 343-3355 (301) 657-1500
[LOGO OF RUSHMORE
APPEARS HERE]
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Dear Shareholders:
In early 1994, the Federal Reserve began what was to be the first of seven
interest rate increases between February 1994 and February 1995, with the two
most sizable increases of 75 and 50 basis points occurring in November 1994 and
February 1995, respectively. Yet, the bear market environment of 1994 did not
abate until late in the first quarter of 1995, when the Fed's interest rate
increases finally took hold and the economy began to slow. The economic
environment turned more favorable for notes and bonds in the second quarter of
1995, but was somewhat tempered by the weakening of the U.S. dollar. Finally in
July 1995 the Federal Reserve reduced rates 25 basis points, which marked a
turning point for monetary policy from one of restraint to one of
accommodation.
RUSHMORE MONEY MARKET PORTFOLIO invests in the highest quality commercial paper
81.70%, and U.S. Treasury repurchase agreements 18.30%. The Portfolio had an
average maturity of 17 days on August 31, 1995. For the fiscal year ended
August 31, 1995, net income averaged 4.92% of net assets. We look for short-
term rates to have a market decline for the next few months.
RUSHMORE U.S. GOVERNMENT INTERMEDIATE-TERM SECURITIES PORTFOLIO invests
primarily in the current ten-year Treasury note. The objective of the Portfolio
is to provide high current income, while maintaining the safety of principal.
For the fiscal year ended August 31, 1995, the Portfolio posted a total return
of 12.07%.
RUSHMORE U.S. GOVERNMENT LONG-TERM SECURITIES PORTFOLIO invests in 10 and 30
year U.S. Treasury securities and, like the Intermediate-Term Portfolio,
strives to earn the highest income possible while maintaining the safety of
principal. For the fiscal year ended August 31, 1995, the Portfolio posted a
total return of 16.35%.
The Federal Reserve, pleased that the economy looks substantially healthier
than in July when it cut interest rates, will likely put further rate cuts on
hold until at least its next policy meeting in November 1995. The economy, now
operating close to full employment, can grow without an acceleration of
inflation. For the short-term, rates will stay around present levels. Going
forward, however, the situation for notes and bonds is extremely attractive
because of the progress against inflation. For the
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balance of the calendar year, we look for the economy to accelerate and rates
to move lower, this all being done quite possibly without further rate cuts by
the Federal Reserve.
We will continue our conservative investment philosophy and, as always, thank
you for your continued investment in The Rushmore Fund, Inc.
Sincerely,
/s/ Daniel L. O'Connor /s/ Richard J. Garvey
Daniel L. O'Connor Richard J. Garvey
Chairman of the Board President
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THE RUSHMORE FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 1995
<TABLE>
<CAPTION>
Face Value
Amount (Note 1)
---------- -----------
<S> <C> <C>
COMMERCIAL PAPER 82.18%
Abbott Lab Co., 5.68%, 9/25/95......................... $1,000,000 $ 996,213
American Express Credit Corp., 5.70%, 9/05/95.......... 1,000,000 999,367
AT&T Corp., 5.70%, 9/27/95............................. 1,000,000 995,883
Chevron Oil Finance Co., 5.70%, 10/04/95............... 800,000 795,820
Dover Corp., 5.71%, 9/11/95............................ 1,000,000 998,414
Exxon Asset Management Corp., 5.70%, 9/14/95........... 1,000,000 997,942
Ford Motor Credit Co., 5.72%, 10/19/95................. 800,000 793,899
General Electric Capital Corp., 5.73%, 9/21/95......... 800,000 797,453
Heinz Co., 5.67%, 9/01/95.............................. 800,000 800,000
Kellogg Co., 5.70%, 9/18/95............................ 750,000 747,981
Merrill Lynch Co., 5.73%, 10/20/95..................... 800,000 793,761
Pepsi Co., 5.68%, 9/12/95.............................. 800,000 798,612
Philip Morris Co., 5.70%, 10/04/95..................... 800,000 795,820
Pitney Bowes Credit Corp., 5.72%, 9/15/95.............. 775,000 773,276
Raytheon Co., 5.70%, 9/21/95........................... 800,000 797,467
Safeco Credit Corp., 5.71%, 9/22/95.................... 800,000 797,335
Texaco, Inc., 5.68%, 9/01/95........................... 1,000,000 1,000,000
Transamerica Corp, 5.73%, 10/03/95..................... 1,000,000 994,907
United Parcel Service of America, Inc., 5.70%, 9/18/95. 800,000 797,847
US West Corp., 5.65%, 9/13/95.......................... 800,000 798,493
Xerox Corp., 5.70%, 9/26/95............................ 800,000 796,833
-----------
Total Commercial Paper (Cost $18,067,323).............. 18,067,323
-----------
REPURCHASE AGREEMENTS 18.41%
With Paine Webber at 5.75%, dated 8/31/95, due 9/1/95,
collateralized by
U.S. Treasury Notes, due 11/30/96 (Cost $4,047,622)... 4,047,622
-----------
Total Investments 100.59% (Cost $22,114,945*).......... 22,114,945
-----------
Other Liabilities in excess of Assets -0.59%........... (129,662)
-----------
Net Assets (Note 6) 100.00%............................ $21,985,283
===========
Net Asset Value Per Share (Based on 21,985,283 Shares
Outstanding).......................................... $ 1.00
===========
</TABLE>
*Same cost is used for Federal income tax purposes.
See Notes to Financial Statements.
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THE RUSHMORE FUND, INC.
U.S. GOVERNMENT INTERMEDIATE-TERM SECURITIES PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 1995
<TABLE>
<CAPTION>
Face Value
Amount (Note 1)
---------- -----------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS 97.93%
U.S. Treasury Notes, 5.875%, 2/15/04.................... $8,900,000 $ 8,644,125
U.S. Treasury Notes, 7.875%, 11/15/04................... 300,000 331,500
U.S. Treasury Bonds, 7.50%, 2/15/05..................... 700,000 756,438
U.S. Treasury Notes, 6.50%, 5/15/05..................... 1,600,000 1,620,499
-----------
Total U.S. Treasury Obligations (Cost $10,950,968)...... 11,352,562
-----------
REPURCHASE AGREEMENTS 1.02%
With Paine Webber at 5.75%, dated 8/31/95, due 9/1/95,
collateralized by
U.S. Treasury Notes, due 11/30/96 (Cost $118,204)...... 118,204
-----------
Total Investments 98.95% (Cost $11,069,172*)............ 11,470,766
-----------
Other Assets Less Liabilities 1.05%..................... 122,079
-----------
Net Assets (Note 6) 100.00%............................. $11,592,845
===========
Net Asset Value Per Share (Based on 1,227,678 Shares
Outstanding)........................................... $ 9.44
===========
</TABLE>
* Same cost is used for Federal income tax purposes.
See Notes to Financial Statements.
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THE RUSHMORE FUND, INC.
U.S. GOVERNMENT LONG-TERM SECURITIES PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 1995
<TABLE>
<CAPTION>
Face Value
Amount (Note 1)
---------- -----------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS 94.37%
U.S. Treasury Bonds, 8.00%, 11/15/21.................... $ 800,000 $ 917,749
U.S. Treasury Bonds, 7.50%, 11/15/24.................... 7,400,000 8,112,250
U.S. Treasury Bonds, 7.625%, 2/15/25.................... 4,850,000 5,409,263
U.S. Treasury Bonds, 6.875%, 8/15/25.................... 1,000,000 1,029,062
-----------
Total U.S. Treasury Obligations (Cost $14,301,989)...... 15,468,324
-----------
REPURCHASE AGREEMENTS 4.43%
With Paine Webber at 5.75%, dated 8/31/95, due 9/1/95,
collateralized by
U.S. Treasury Notes, due 11/30/96 (Cost $725,055)...... 725,055
-----------
Total Investments 98.80% (Cost $15,027,044*)............ 16,193,379
-----------
Other Assets Less Liabilities 1.20%..................... 197,327
-----------
Net Assets (Note 6) 100.00%............................. $16,390,706
===========
Net Asset Value Per Share (Based on 1,657,846 Shares
Outstanding)........................................... $ 9.89
===========
</TABLE>
* Same cost is used for Federal income tax purposes.
See Notes to Financial Statements.
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THE RUSHMORE FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1995
<TABLE>
<CAPTION>
U.S. Government U.S. Government
Intermediate-Term Long-Term
Money Market Securities Securities
Portfolio Portfolio Portfolio
------------ ----------------- ---------------
<S> <C> <C> <C>
INVESTMENT INCOME (Note 1)...... $1,260,190 $ 784,865 $2,029,836
---------- ---------- ----------
EXPENSES
Investment Advisory Fee (Note
2)............................ 111,227 55,386 134,573
Administrative Fee (Note 2).... 55,614 33,231 80,744
---------- ---------- ----------
Total Expenses................ 166,841 88,617 215,317
---------- ---------- ----------
NET INVESTMENT INCOME........... 1,093,349 696,248 1,814,519
---------- ---------- ----------
Net Realized Loss on Invest-
ments......................... -- (233,727) (162,740)
Net Change in Unrealized
Appreciation of Investments... -- 652,352 1,939,775
---------- ---------- ----------
NET GAIN ON INVESTMENTS......... -- 418,625 1,777,035
---------- ---------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS...... $1,093,349 $1,114,873 $3,591,554
========== ========== ==========
</TABLE>
See Notes to Financial Statements.
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THE RUSHMORE FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED AUGUST 31,
<TABLE>
<CAPTION>
U.S. Government U.S. Government
Intermediate-Term Long-Term
Money Market Securities Securities
Portfolio Portfolio Portfolio
------------------------- ------------------------ -------------------------
1995 1994 1995 1994 1995 1994
----------- ------------ ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVI-
TIES
Net Investment Income.. $ 1,093,349 $ 884,972 $ 696,248 $ 1,054,991 $ 1,814,519 $ 1,336,390
Net Realized Losses on
Investment
Transactions.......... -- -- (233,727) (746,062) (162,740) (271,328)
Net Change in
Unrealized
Appreciation
(Depreciation) of
Investments........... -- -- 652,352 (1,585,722) 1,939,775 (2,738,037)
----------- ------------ ----------- ----------- ------------ -----------
Net Increase (Decrease)
in Net Assets
Resulting from
Operations............ 1,093,349 884,972 1,114,873 (1,276,793) 3,591,554 (1,672,975)
DISTRIBUTIONS TO
SHAREHOLDERS
From Net Investment
Income................ (1,093,349) (895,876) (696,248) (1,059,384) (1,814,519) (1,341,699)
From Realized Gains on
Investments........... -- -- -- (331,837) -- (1,300,316)
FROM SHARE TRANSACTIONS
(Note 4)............... (275,242) (34,498,161) (2,188,052) (4,320,098) (14,662,722) 9,497,713
----------- ------------ ----------- ----------- ------------ -----------
Net Increase (Decrease)
in Net Assets......... (275,242) (34,509,065) (1,769,427) (6,988,112) (12,885,687) 5,182,723
NET ASSETS--Beginning of
Year................... 22,260,525 56,769,590 13,362,272 20,350,384 29,276,393 24,093,670
----------- ------------ ----------- ----------- ------------ -----------
NET ASSETS--End of Year. $21,985,283 $ 22,260,525 $11,592,845 $13,362,272 $ 16,390,706 $29,276,393
=========== ============ =========== =========== ============ ===========
</TABLE>
See Notes to Financial Statements.
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THE RUSHMORE FUND, INC.
FINANCIAL HIGHLIGHTS
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
For the Year Ended August 31,
-------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value--Beginning of
Year............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
Net Investment Income............ 0.049 0.027 0.024 0.037 0.061
Net Realized and Unrealized Gains
(Losses) on Securities.......... -- -- -- -- --
------- ------- ------- ------- -------
Net Increase in Net Asset Value
Resulting from Operations....... 0.049 0.027 0.024 0.037 0.061
Dividends to Shareholders........ (0.049) (0.027) (0.024) (0.037) (0.061)
Distributions to Shareholders
From Net Realized Capital Gains. -- -- -- -- --
------- ------- ------- ------- -------
Net Increase (Decrease) in Net
Asset Value..................... 0.00 0.00 0.00 0.00 0.00
------- ------- ------- ------- -------
Net Asset Value--End of Year..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= =======
Total Investment Return........... 5.03% 2.88% 2.43% 3.71% 6.33%
Ratios to Average Net Assets:
Expenses......................... 0.75% 0.75% 0.78% 0.80% 0.79%
Net Investment Income............ 4.92% 2.73% 2.40% 3.71% 6.14%
Supplementary Data:
Portfolio Turnover Rate.......... -- -- -- -- --
Number of Shares Outstanding at
End of Year
(000's omitted)................. 21,985 22,261 56,759 98,606 115,539
</TABLE>
See Notes to Financial Statements.
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THE RUSHMORE FUND, INC.
FINANCIAL HIGHLIGHTS
U.S. GOVERNMENT INTERMEDIATE-TERM SECURITIES PORTFOLIO
<TABLE>
<CAPTION>
For the Year Ended August 31,
--------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value--Beginning of
Year........................... $ 8.97 $ 10.22 $ 10.73 $ 9.93 $ 9.39
------- ------- ------- ------- -------
Net Investment Income........... 0.564 0.527 0.596 0.681 0.702
Net Realized and Unrealized
Gains (Losses) on Securities... 0.470 (1.080) 0.492 0.799 0.539
------- ------- ------- ------- -------
Net Increase (Decrease) in Net
Asset Value Resulting from
Operations..................... 1.034 (0.553) 1.088 1.480 1.241
Dividends to Shareholders....... (0.564) (0.530) (0.596) (0.680) (0.701)
Distributions to Shareholders
from Net Realized Capital
Gains.......................... -- (0.166) (1.002) -- --
------- ------- ------- ------- -------
Net Increase (Decrease) in Net
Asset Value.................... 0.47 (1.25) (0.51) 0.80 0.54
------- ------- ------- ------- -------
Net Asset Value--End of Year.... $ 9.44 $ 8.97 $ 10.22 $ 10.73 $ 9.93
======= ======= ======= ======= =======
Total Investment Return.......... 12.07% (5.64)% 14.47% 15.37% 13.86%
Ratios to Average Net Assets:
Expenses........................ 0.80% 0.80% 0.80% 0.80% 0.80%
Net Investment Income........... 6.30% 5.50% 5.91% 6.63% 7.21%
Supplementary Data:
Portfolio Turnover Rate......... 28.9% 174.0% 113.3% 199.8% 195.8%
Number of Shares Outstanding at
End of Year
(000's omitted)................ 1,228 1,489 1,990 1,502 2,322
</TABLE>
See Notes to Financial Statements.
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THE RUSHMORE FUND, INC.
FINANCIAL HIGHLIGHTS
U.S. GOVERNMENT LONG-TERM SECURITIES PORTFOLIO
<TABLE>
<CAPTION>
For the Year Ended August 31,
--------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value--Beginning of
Year........................... $ 9.08 $ 11.55 $ 10.62 $ 9.97 $ 9.14
------- ------- ------- ------- -------
Net Investment Income........... 0.606 0.599 0.650 0.697 0.718
Net Realized and Unrealized
Gains (Losses) on Securities... 0.810 (1.880) 1.304 0.649 0.829
------- ------- ------- ------- -------
Net Increase (Decrease) in Net
Asset Value Resulting from
Operations..................... 1.416 (1.281) 1.954 1.346 1.547
Dividends to Shareholders....... (0.606) (0.602) (0.650) (0.696) (0.717)
Distributions to Shareholders
from Net Realized Capital
Gains.......................... -- (0.583) (0.374) -- --
------- ------- ------- ------- -------
Net Increase (Decrease) in Net
Asset Value.................... 0.81 (2.47) 0.93 0.65 0.83
------- ------- ------- ------- -------
Net Asset Value--End of Year.... $ 9.89 $ 9.08 $ 11.55 $ 10.62 $ 9.97
======= ======= ======= ======= =======
Total Investment Return.......... 16.35% (10.29)% 20.92% 13.97% 17.61%
Ratios to Average Net Assets:
Expenses........................ 0.80% 0.80% 0.80% 0.80% 0.80%
Net Investment Income........... 6.75% 5.97% 6.08% 6.80% 7.43%
Supplementary Data:
Portfolio Turnover Rate......... 63.3% 188.3% 173.6% 298.0% 235.7%
Number of Shares Outstanding at
End of Year
(000's omitted)................ 1,658 3,225 2,085 2,148 1,452
</TABLE>
See Notes to Financial Statements.
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THE RUSHMORE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1995
1. SIGNIFICANT ACCOUNTING POLICIES
The Rushmore Fund, Inc. ("Fund") is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940 as an open-end, diversified
investment company. The Fund consists of four separate portfolios each with its
own investment objectives and policies. These financial statements report on
three of the four portfolios: Money Market Portfolio, U.S. Government
Intermediate-Term Securities Portfolio, and U.S. Government Long-Term
Securities Portfolio. The following is a summary of significant accounting
policies which the Fund follows.
(a) Securities of the Money Market Portfolio are valued at amortized cost
which approximates market value. Securities of the U.S. Government
Intermediate-Term Securities Portfolio and U.S. Government Long-Term
Securities Portfolio are valued on the basis of the average of quoted
bid and ask prices when market quotations are available. If market
quotations are not readily available, the Board of Directors will
value the portfolios' securities in good faith.
(b) Security transactions are recorded on the trade date (the date the
order to buy or sell is executed). Interest income is accrued on a
daily basis. Realized gains and losses from securities transactions
are computed on an identified cost basis.
(c) Net investment income is computed, and dividends are declared daily,
in the Money Market, U.S. Government Intermediate-Term Securities and
U.S. Government Long-Term Securities Portfolios. Income dividends in
these portfolios are paid monthly. Dividends are reinvested in
additional shares unless shareholders request payment in cash.
Generally, short-term capital gains are distributed quarterly in the
Money Market, U.S. Government Intermediate-Term Securities and U.S.
Government Long-Term Securities Portfolios. Long-term capital gains,
if any, are distributed annually.
(d) The Fund complies with the provisions of the Internal Revenue Code
applicable to regulated investment companies and distributes all net
investment income to its shareholders. Therefore, no Federal income
tax provision is required.
2. INVESTMENT ADVISORY AND SHAREHOLDER SERVICES
Investment advisory and management services are provided by Money Management
Associates, ("Adviser"). Under an agreement with the Adviser, each portfolio of
the Fund pays a fee for such services at an annual rate of 0.50% of the average
daily net assets of the portfolio.
Rushmore Trust and Savings, FSB (Trust), a wholly owned subsidiary of the
Adviser, provides transfer agency, dividend-disbursing and shareholder services
to the Fund. In addition, the Trust serves as custodian
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<PAGE>
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of the Fund's assets and pays the operating expenses of the Fund. For these
services, the Trust receives an annual fee of 0.25% of the average net assets
of the Money Market Portfolio, 0.30% of the average net assets of the U.S.
Government Intermediate-Term Securities and U.S. Government Long-Term
Securities Portfolios.
3. SECURITIES TRANSACTIONS
For the year ended August 31, 1995, purchases and sales (including maturities)
of securities (excluding short-term securities) were as follows:
<TABLE>
<CAPTION>
U.S. Government U.S. Government
Intermediate-Term Long-Term
Money Market Securities Securities
Portfolio Portfolio Portfolio
------------ ----------------- ---------------
<S> <C> <C> <C>
Purchases...................... -- $ 3,078,328 $ 16,414,844
------------ ----------- ------------
Sales.......................... -- $ 4,982,766 $ 30,998,133
------------ ----------- ------------
4. SHARE TRANSACTIONS
On August 31, 1995, there were 1,000,000,000 shares of $.001 par value capital
stock authorized. Transactions in shares of the Fund were as follows:
<CAPTION>
U.S. Government U.S. Government
Intermediate-Term Long-Term
Money Market Securities Securities
Portfolio Portfolio Portfolio
------------ ----------------- ---------------
<S> <C> <C> <C>
In Shares
Shares Sold................... 49,791,377 573,883 2,729,920
Shares Issued in Reinvestment
of Dividends................. 1,055,000 66,809 183,562
------------ ----------- ------------
50,846,377 640,692 2,913,482
Shares Redeemed............... (51,121,619) (902,155) (4,480,768)
------------ ----------- ------------
(275,242) (261,463) (1,567,286)
============ =========== ============
In Dollars
Shares Sold................... $ 49,791,377 $ 5,208,101 $ 24,815,509
Shares Issued in Reinvestment
of Dividends................. 1,055,000 598,933 1,657,955
------------ ----------- ------------
50,846,377 5,807,034 26,473,464
Shares Redeemed............... (51,121,619) (7,995,086) (41,136,186)
------------ ----------- ------------
$ (275,242) $(2,188,052) $(14,662,722)
============ =========== ============
</TABLE>
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5. NET UNREALIZED APPRECIATION/DEPRECIATION OF INVESTMENTS
Unrealized appreciation (depreciation) as of August 31, 1995, based on the cost
for Federal income tax purposes is as follows:
<TABLE>
<CAPTION>
U.S. Government U.S. Government
Intermediate-Term Long-Term
Money Market Securities Securities
Portfolio Portfolio Portfolio
------------ ----------------- ---------------
<S> <C> <C> <C>
Gross Unrealized Appreciation... -- $ 406,076 $ 1,234,225
Gross Unrealized Depreciation... -- (4,482) (67,890)
----------- ----------- -----------
Net Unrealized Appreciation..... -- $ 401,594 $ 1,166,335
=========== =========== ===========
Cost of Investments for Federal
Income Tax purposes............ $22,114,945 $11,069,172 $15,027,044
=========== =========== ===========
</TABLE>
6. NET ASSETS
At August 31, 1995, net assets consisted of the following:
<TABLE>
<CAPTION>
U.S. Government U.S. Government
Intermediate-Term Long-Term
Money Market Securities Securities
Portfolio Portfolio Portfolio
------------ ----------------- ---------------
<S> <C> <C> <C>
Paid-in Capital................. $21,985,283 $12,170,348 $15,848,714
Undistributed Net Investment In-
come........................... -- -- --
Accumulated Net Realized Loss on
Investments.................... -- (979,097) (624,343)
Net Unrealized Appreciation on
Investments.................... -- 401,594 1,166,335
----------- ----------- -----------
NET ASSETS...................... $21,985,283 $11,592,845 $16,390,706
=========== =========== ===========
</TABLE>
7. CAPITAL LOSS CARRYOVERS
At August 31, 1995, for Federal income tax purposes, the following portfolio's
had capital loss carryovers which may be applied against future net taxable
realized gains of each succeeding year until the earlier of its utilization or
its expiration:
<TABLE>
<CAPTION>
U.S. Government U.S. Government
Intermediate-Term Long-Term
Securities Securities
Expires August 31, Portfolio Portfolio
- ------------------ ----------------- ---------------
<S> <C> <C>
2002.......................................... $745,370 $461,603
2003.......................................... 233,727 162,740
-------- --------
$979,097 $624,343
======== ========
</TABLE>
Permanent differences between tax and financial reporting of accumulated
realized losses have been reclassified to paid-in-capital. As of August 31,
1995 the effect of permanent differences between tax and financial reporting of
realized losses of $1,331 and $591,157 for the U.S. Government Intermediate-
Term Securities Portfolio and the U.S. Government Long-Term Securities
Portfolio, respectively, resulted in a reclassification of such losses to paid-
in-capital.
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<PAGE>
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8. REORGANIZATION PLAN
On July 27, 1995, the Board of Directors approved the development of an
Agreement and Plan of Reorganization to be voted upon by shareholders of the
U.S. Government Intermediate-Term Securities Portfolio at a December 22, 1995
meeting of shareholders. Shareholders of record as of October 27, 1995 will
receive a combined prospectus/proxy statement (on or about November 13, 1995),
and upon their approval, the U.S. Government Long-Term Securities Portfolio
would acquire the assets and liabilities of the U.S. Government Intermediate-
Term Securities Portfolio in exchange for shares of the U.S. Government Long-
Term Securities Portfolio at the Net Asset Value as of December 31, 1995.
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<PAGE>
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INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors
of The Rushmore Fund, Inc.:
We have audited the statements of net assets of the Money Market, U.S.
Government Intermediate-Term Securities, and U.S. Government Long-Term
Securities Portfolio (three of the Portfolios) of The Rushmore Fund, Inc. as of
August 31, 1995, the related statements of operations and changes in net assets
and the financial highlights for the periods presented. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at August
31, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Money Market,
U.S. Government Intermediate-Term Securities, and U.S. Government Long-Term
Securities Portfolios (three of the Portfolios) of The Rushmore Fund, Inc. at
August 31,1995, the results of their operations, the changes in their net
assets and the financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Washington, DC
September 29, 1995
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RUSHMORE FUND
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ANNUAL REPORT
August 31, 1995
[LOGO OF RUSHMORE APPEARS HERE]
