<PAGE>
ANNUAL REPORT
AUGUST 31, 1997
THE RUSHMORE FUND, INC.
NOVA PORTFOLIO
<PAGE>
THE RUSHMORE FUND, INC.
NOVA PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 1997
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS: 4.7% OF NET ASSETS
GAS AND ELECTRIC: 4.7%
Wisconsin Fuel and Light (Cost $59,250) 1,500 $ 59,250
MONEY MARKET FUNDS: 94.1%
Fund for Government Investors (Cost $1,184,145) 1,184,145 1,184,145
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Total Investments: 98.8% (Cost $1,243,395) 1,243,395
Other Assets less Liabilities: 1.2% 14,578
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Net Assets: 100.0% $ 1,257,973
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Net Asset Value per Share (Based on 113,546 Shares Outstanding) $11.08
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</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
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THE RUSHMORE FUND, INC.
NOVA PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1997
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Dividend Income (Note 1). . . . . . . . . . . . . . . . . . $ 15,163
Interest Income (Note 1). . . . . . . . . . . . . . . . . . 18,550
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Total Investment Income . . . . . . . . . . . . . . . . 33,713
EXPENSES
Investment Advisory Fee (Note 2) . . . . . . . . . . . . . . 4,470
Administrative Fee (Note 2). . . . . . . . . . . . . . . . . 2,981
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Total Expenses. . . . . . . . . . . . . . . . . . . . . 7,451
Less Expenses Waived by Investment Adviser. . . . . . . (4,470)
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Net Expenses . . . . . . . . . . . . . . . . . . . . . . . . 2,981
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NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . . . . . 30,732
NET REALIZED GAIN ON INVESTMENTS. . . . . . . . . . . . . . . . 83,806
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . $ 114,538
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</TABLE>
See Notes to Financial Statements.
2
<PAGE>
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THE RUSHMORE FUND, INC.
NOVA PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED AUGUST 31,
<TABLE>
<CAPTION>
1997 1996
----------- -----------
INCREASE (DECREASE) IN NET ASSESTS
OPERATIONS
<S> <C> <C>
Net Investment Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,732 $ 7,902
Net Realized Gains on Investment Transactions. . . . . . . . . . . . . . . . . . 83,806 34,335
Net Unrealized Depreciation of Investments . . . . . . . . . . . . . . . . . . . - (3,633)
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Net Increase in Net Assets Resulting from Operations. . . . . . . . . . . . 114,538 38,604
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DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income (Note 1). . . . . . . . . . . . . . . . . . . . . . . (1,818) (20,173)
From Net Realized Gain on Investments. . . . . . . . . . . . . . . . . . . . . . - (73,109)
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Total Distributions to Shareholders . . . . . . . . . . . . . . . . . . . . (1,818) (93,282)
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SHARE TRANSACTIONS
Net Proceeds from Sales of Shares. . . . . . . . . . . . . . . . . . . . . . . . 1,042,946 156,369
Net Asset Value of Shares Issued in Reinvestment of Distributions. . . . . . . . 1,818 12,407
Cost of Shares Redeemed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . - (693,776)
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Net Increase (Decrease) in Net Assets Resulting from Share Transactions . . 1,044,764 (525,000)
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Total Increase (Decrease) in Net Assets. . . . . . . . . . . . . . . . . 1,157,484 (579,678)
NET ASSETS - Beginning of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,489 680,167
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NET ASSETS - End of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,257,973 $ 100,489
----------- -----------
----------- -----------
SHARES
Sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,364 14,855
Issued in Reinvestment of Distributions. . . . . . . . . . . . . . . . . . . . . 182 1,123
Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - (68,478)
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Net Increase in Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 103,546 (52,500)
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</TABLE>
See Notes to Financial Statements.
3
<PAGE>
THE RUSHMORE FUND, INC.
NOVA PORTFOLIO
FINANCIAL HIGHLIGHTS
For the Years Ended August 31,
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
--------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value - Beginning of Year. . . . . . . . . . $ 10.05 $ 10.88 - $ 10.01 $ 9.46
--------- --------- --------- -------- ---------
Income from Investment Operations:
Net Investment Income . . . . . . . . . . . . . . . . 0.392 0.435 $ 0.310 0.060 0.157
Net Realized and Unrealized Gain on Securities. . . . 0.820 3.529 0.570 - 0.711
--------- --------- --------- -------- ---------
Total from Investment Operations . . . . . . . . . 1.212 3.964 0.880 0.060 0.868
--------- --------- --------- -------- ---------
Distributions to Shareholders:
From Net Investment Income. . . . . . . . . . . . . . (0.182) (0.590) - - (0.318)
From Net Realized Gain on Investments . . . . . . . . - (3.114) - - -
--------- --------- --------- -------- ---------
Total Distributions to Shareholders. . . . . . . . (0.182) (3.704) - - (0.318)
--------- --------- --------- -------- ---------
Liquidation of Assets and Redemption of all
Outstanding Shares . . . . . . . . . . . . . . . . . - (11.090) - (10.070) -
From Share Transactions. . . . . . . . . . . . . . . . - 10.000(1) 10.000(2) - -
--------- --------- --------- -------- ---------
Net Increase (Decrease) in Net Asset Value . . . . . . 1.03 (0.83) 10.88 (10.01) 0.55
--------- --------- --------- -------- ---------
Net Asset Value - End of Year. . . . . . . . . . . . . $ 11.08 $ 10.05 $ 10.88 - $ 10.01
--------- --------- --------- -------- ---------
--------- --------- --------- -------- ---------
Total Investment Return . . . . . . . . . . . . . . . . . . 12.25% 7.58% 8.80%(b) 0.90% 9.36%
Ratios to Average Net Assets:
Expenses after Fee Waiver. . . . . . . . . . . . . . . 0.50% 1.19%(a) 1.25%(c) 0.90%(a) 1.36%
Expenses before Fee Waiver . . . . . . . . . . . . . . 1.25% - - - -
Net Investment Income. . . . . . . . . . . . . . . . . 5.16% 3.32% 2.97%(c) 2.41% 1.56%
Supplementary Data:
Portfolio Turnover Rate. . . . . . . . . . . . . . . . 1,307.5% 71.2% 224.4% - 1,288.9%
Net Assets at End of Year (000's omitted). . . . . . . 1,258 100 680 - 468
Number of Shares Outstanding at End of
Year (000's omitted) . . . . . . . . . . . . . . . . 114 10 63 - 47
</TABLE>
1 During the year ended August 31, 1996, all outstanding shares were redeemed
at a net asset value of $11.09 per share, thereby resulting in the
liquidation of all net assets of the Portfolio. Subsequently, 10,000
shares were sold at $10.00 per share thereby resulting in Money Management
Associates, the Portfolio's adviser, and another affiliated person of the
Portfolio, owning 100% of the Portfolio's shares.
2 During the year ended August 31, 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 adviser, and other
affiliated persons of the Portfolio, owning 80% of the Portfolio's shares.
a Reflects all fees paid for services provided during the period. Investment
advisory services were not provided for part of the period due to
investment activity having ceased.
b Reflects the total return for the period January 3, 1995 through August 31,
1995. January 3, 1995 represents the first date during fiscal year 1995
that the portfolio had net assets and shareholders.
c Annualized.
See Notes to Financial Statements.
4
<PAGE>
THE RUSHMORE FUND, INC.
NOVA PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1997
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 two
separate portfolios each with its own investment objectives and policies.
These financial statements report on one of the two portfolios: the Nova
Portfolio. The Nova Portfolio ("Portfolio") is a non-diversified investment
company. On August 31, 1997, there were 1,000,000,000 shares of $0.001 par
value capital stock authorized. The financial statements have been
prepared in conformity with generally accepted accounting principles which
permit management to make certain estimates and assumptions at the date of
the financial statements. The following is a summary of significant
accounting policies which the Portfolio consistently follows:
(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 Portfolio.
Dividends are reinvested in additional shares unless shareholders
request payment in cash. Generally, short-term capital gains are
distributed annually in the Portfolio. Long-term 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 option was sold).
2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
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. Certain Officers and Directors
of the Fund are affiliated with the Adviser.
Rushmore Trust and Savings, FSB (Trust), a majority owned subsidiary of the
Adviser, provides transfer agency, dividend-disbursing and shareholder
services to the Portfolio. In addition, the Trust serves as custodian of
the Portfolio's assets and pays the operating expenses of the Portfolio.
For these services, the Trust receives an annual fee of 0.50% of the
average net assets of the Portfolio.
The Portfolio invests its excess cash in Fund for Government Investors, a
money market mutual fund. Certain Officers and Trustees of Fund for
Government Investors are affiliated with the Portfolio.
5
<PAGE>
3. SECURITIES TRANSACTIONS
For the year ended August 31, 1997, purchases and sales (including
maturities) of securities (excluding short-term securities) were as
follows:
Purchases . . . . . . . . . . . . . . . . . . $2,063,888
----------
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Sales . . . . . . . . . . . . . . . . . . . . $2,088,464
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4. NET UNREALIZED APPRECIATION OF INVESTMENTS
Unrealized appreciation as of August 31, 1997, and cost for Federal income
tax purposes is as follows:
Gross Unrealized Appreciation . . . . . . . . $ 0
Gross Unrealized Depreciation . . . . . . . . 0
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Net Unrealized Appreciation . . . . . . . . . $ 0
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Cost of Investments for Federal
Income Tax purposes. . . . . . . . . . . . $1,243,395
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5. NET ASSETS
At August 31, 1997, net assets consisted of the following:
Paid-in-Capital . . . . . . . . . . . . . . . $1,144,764
Undistributed Net Investment Income . . . . . 29,403
Accumulated Net Realized Gain on Investments. 83,806
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Net Assets. . . . . . . . . . . . . . . . . . $1,257,973
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<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors
of The Rushmore Fund, Inc.:
We have audited the statement of assets and liabilities of the Nova Portfolio
(one of the Portfolios) of The Rushmore Fund, Inc., as of August 31, 1997, and
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 from 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, 1997, by correspondence with the custodian and broker. 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
(one of the Portfolios) of The Rushmore Fund, Inc., at August 31, 1997, the
results of its operations, the changes in its net assets, and the financial
highlights for the presented periods in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
October 10, 1997
