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AMERICAN GAS INDEX FUND, INC.
4922 Fairmont Avenue
Bethesda, Maryland 20814
(800) 343-3355
(301) 657-1500
INVESTMENT OBJECTIVE AND POLICIES
The American Gas Index Fund, Inc. (the "Fund") is a diversified,
open-end management investment company. The Fund is designed as
a common stock index fund. The Fund's investment objective is 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
("A.G.A."). The Fund is a NO LOAD fund and does not impose any
fees when you buy or sell shares, nor does the Fund pay any
amounts to promote or distribute its shares (that is, it has no
so-called "12b-1 fees").
The shares offered by this Prospectus are not deposits or
obligations of any bank, are not endorsed or guaranteed by any
bank, and are not insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other governmental
agency.
ADDITIONAL INFORMATION
<REDLINE>
Investors should read this prospectus and retain it for future
reference. It is designed to set forth concisely the information
an investor should know before investing in the Fund. A
Statement of Additional Information dated July 31, 1995
containing additional information about the Fund has been filed
with the Securities and Exchange Commission and is incorporated
herein by reference. A copy of the Statement may be obtained,
without charge, by writing or telephoning the Fund at the above
address or telephone number.
The date of this Prospectus is July 31, 1995.
</REDLINE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
1
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FEE TABLE
The following table illustrates all expenses and fees that a
shareholder of the Fund will incur.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
<S> <C>
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fees None
Monthly Account Fee (accounts under $500) $5.00
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees . . . . . . . . . . 0.40%
Administrative Fees . . . . . . . . 0.10%
12b-1 Fees . . . . . . . . . . . . . None
Other Expenses . . . . . . . . . . . 0.35%
TOTAL Fund Operating Expenses . . 0.85%
</TABLE>
EXAMPLE:
You would pay the following expenses on a $1,000 investment,
assuming (1) a 5% annual return and (2) redemption at the end
of each time period. You would pay the same expenses on the
same investment assuming no redemptions.
<TABLE>
<CAPTION>
<C> <C> <C> <C>
1 year 3 years 5 years 10 years
$9 $27 $47 $105
</TABLE>
The purpose of this table is to assist the investor in
understanding the various expenses that an investor in the
Fund will bear directly or indirectly. The five percent
assumed annual return is for comparison purposes only. As
noted above, the Fund charges no redemption fees. The actual
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annual return may be more or less depending on market
conditions. The example should not be considered a
representation of past or future expenses. Actual expenses
may be greater or less than those shown. For more complete
information about the various costs and expenses, see
"Management of the Fund" in the prospectus and "Investment
Advisory and Other Services" in the Statement of Additional
Information.
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<REDLINE>
<TABLE>
<CAPTION>
American Gas Index Fund, Inc.
Financial Highlights
Audited
For the Year Ended March 31,
1995 1994 1993
<S> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value-Beginning of Year $11.08 $12.17 $9.45
Net Investment Income . . . . . . 0.440 0.410 0.407
Net Realized and Unrealized Gains
(Losses) on Securities . . . . . 0.050 (1.031) 2.853
Net Increase (Decrease) in Net
Asset Value Resulting from
Operations . . . . . . . . . . . 0.490 (0.621) 3.260
Dividends to Shareholders . . . . (0.440) (0.406) (0.410)
Distributions to Shareholders from
Net Realized Capital Gains . . . --- (0.063) (0.130)
Net Increase (Decrease) in Net
Asset Value . . . . . . . . . . 0.05 (1.09) 2.72
Net Asset Value - End of Year . . $11.13 $ 11.08 $12.17
Total Investment Return . . . . . . 4.72% (5.37)% 35.38%
Ratios to Average Net Assets:
Expenses Less Reimbursement
from Advisor . . . . . . . . 0.85% 0.84% 0.85%
Expenses Before Reimbursement
from Advisor . . . . . . . . 0.85% 0.84% 0.85%
Net Investment Income . . . . . 4.04% 3.33% 3.82%
Supplementary Data:
Portfolio Turnover Rate . . . . . 8.5% 11.4% 21.5%
Number of Shares Outstanding at
End of Period (000's omitted) . 16,941 18,858 17,708
</TABLE>
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<TABLE>
<CAPTION>
American Gas Index Fund, Inc.
Financial Highlights
Audited
For the Year Ended March 31,
1992 1991 1990*
<S> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value-Beginning of Year $10.20 $11.20 $10.00
Net Investment Income . . . . . . 0.472 0.528 0.504
Net Realized and Unrealized Gains
(Losses) on Securities . . . . . (0.758) (0.899) 1.273
Net Increase (Decrease) in Net
Asset Value Resulting from
Operations . . . . . . . . . . . (0.286) (0.371) 1.777
Dividends to Shareholders . . . . (0.464) (0.530) (0.500)
Distributions to Shareholders from
Net Realized Capital Gains . . . --- (0.099) (0.077)
Net Increase (Decrease) in Net
Asset Value . . . . . . . . . . 0.75 (1.00) 1.20
Net Asset Value - End of Year . . $9.45 $ 10.20 $11.20
Total Investment Return . . . . . . (2.89)% (3.55)% 16.55%
Ratios to Average Net Assets:
Expenses Less Reimbursement
from Advisor . . . . . . . . 0.85% 0.79% 0.75%
Expenses Before Reimbursement
from Advisor . . . . . . . . 0.87% 0.91% 0.90%
Net Investment Income . . . . . 4.73% 5.00% 4.99%
Supplementary Data:
Portfolio Turnover Rate . . . . . 30.2% 29.9% 25.0%
Number of Shares Outstanding at
End of Period (000's omitted) . 13,669 12,821 7,676
</TABLE>
</REDLINE>
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* Commencement of operations May 10, 1989.
The auditors' report is incorporated by reference in the
registration statement. The auditors' report and further
information about the performance of the Fund are contained in
the annual report to shareholders which may be obtained
without charge by calling or writing the Fund.
[Graph appears here showing the comparison of change in the
value of $10,000 investment made on May 10, 1989 among the
American Gas Index Fund, Standard & Poor's 500 Composite Index
and the Dow Jones Utility Average]
AMERICAN GAS INDEX FUND, INC.
Total Return Comparison
Comparison Change in Value of
$10,000 Investment in the American Gas Index Fund,
the S&P 500, and the Dow Jones Utility Average
<TABLE>
<CAPTION>
American Gas S&P 500 Dow Jones
Index Fund Composite Utility
Index Average
<S> <C> <C> <C>
5/10/89 $10,000 $10,000 $10,000
3/31/90 $11,655 $11,450 $11,915
3/31/91 $11,241 $13,100 $12,874
3/31/92 $10,917 $14,546 $13,047
3/31/93 $14,779 $16,762 $16,273
3/31/94 $13,985 $17,008 $13,989
3/31/95 $14,645 $19,656 $14,319
</TABLE>
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Past performance is not predicative of future performance.
AMERICAN GAS INDEX FUND, INC.
Average Annual Total Return
<TABLE>
<CAPTION>
One Year Ended Five Years Ended Since Inception
March 31, 1995 March 31, 1995 May 10, 1989
<S> <C> <C>
4.72% 4.67% 6.69%
</TABLE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The Fund closed the fiscal year ended March 31, 1995, with a
total return of 4.72%. A fourth quarter total return of 8.49%
turned around the lackluster performance that had occurred
during the first several months of the Fund's fiscal year.
While the rebound was not strong enough to overtake general
market indexes like the broad based Dow Jones Industrial
Average and the S&P 500 Average, it significantly exceeded the
2.52% total return of the Dow Jones Utility Average.
Factors unrelated to the basic strengths of the natural gas
transmission and distribution sector caused the decline in the
market performance of the Fund's holdings during 1994.
Analysts pointed to concerns regarding interest rates,
regulatory trends in the electric utility group and competing
energy prices as factors that negatively affected the Fund's
holdings. Combating these negative factors were positives,
such as a rise in gas demand, increases in authorized rates of
return by regulators, growing gas reserves and the success of
corporate restructuring. During the latter part of the Fund's
fiscal year, the natural gas industry's strengths became
dominant, Fund portfolio holdings improved and the Fund's net
asset value began its rebound, closing the fiscal year at
$11.13 per share.
It is our opinion that the natural gas transmission and
distribution industry is well positioned to prosper as the
supplier of our nation's most environmentally desirable fossil
fuel. Both new and improved technologies applied to electric
power generation, heating and cooling, automotive
transportation and industrial applications are the paths for
growth. With holdings in approximately 110 companies located
throughout the nation, all of which are members of the
American Gas Association, the Fund is uniquely positioned to
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participate in the long term growth of the natural gas
industry.
As of March 31, 1995, the market value of pipeline companies
represented 20% of the portfolio, diversified/integrated
companies comprised 36%, combination companies made up 22% and
natural gas utility companies were 22%.
PERFORMANCE DATA
The Fund may from time to time include total return in
advertisements or reports to shareholders or prospective
shareholders. Quotations of average annual total return for
the Fund will be expressed in terms of the average annual
compounded rate of return on a hypothetical investment in the
Fund over a period of at least one, five and ten years (up to
the life of the fund) (the ending date of the period will be
stated). Total return is calculated from two factors: the
amount of dividends earned by each share and by the increase
or decrease in value of the Fund's share price.
Performance information for the Fund contained in reports and
promotional literature may be compared to various unmanaged
indices, including but not limited to, the Standard & Poor's
500 Stock Index (S&P 500) or the Dow Jones Industrial Average.
Such unmanaged indices may assume the reinvestment of
dividends but generally do not reflect deductions for
operating costs and expenses. In addition, the Fund's total
return may be compared to the performance of other mutual
funds as published by such organizations as Lipper Analytical
Services, Inc., and CDA Investment Technologies, Inc. among
others.
INVESTMENT POLICIES
The Fund is designed as a common stock index fund. The Fund's
investment objective is to provide investment results that
correlate to the performance of an index comprising the common
stocks of natural gas distribution and transmission company
members of the American Gas Association ("A.G.A."). The
A.G.A. Stock Index (the "Index") contains approximately one
hundred ten publicly traded stocks of those A.G.A. member
companies headquartered in the United States that largely make
up the American natural gas distribution and transmission
industry. (See Attachment for the composition of the Index.)
Money Management Associates, the Fund's investment adviser
(the "Adviser"), believes that the Index is the most
representative stock index of the natural gas industry. The
industry is composed of gas distribution companies, gas
pipeline companies, diversified gas companies and combination
gas and electric companies. The stocks included in the Fund
are chosen solely on the statistical basis of their weightings
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in the Index. No attempt is made to manage the Fund's
portfolio actively in the traditional sense, using economic,
financial and market analysis; nor will the adverse financial
situation of a company directly result in the elimination of
its common stock from the portfolio unless the company is
removed from the Index. Normally, the stocks of gas
distribution and transmission companies produce relatively
high dividend income and, as such, a significant proportion of
the Fund's investment performance is expected to result from
such dividend income. The values of such high dividend yield
stocks typically move inversely to interest rates.
The A.G.A., a national trade association of natural gas
companies, periodically determines each company's proportion
of the Index. The A.G.A. will furnish an updated Index to the
Fund monthly. The composition of the Index will change only
as gas distribution or transmission companies join or resign
from the A.G.A. Each stock's proportion of the Index is based
on that stock's market capitalization, that is, the number of
shares outstanding multiplied by the market price of the
stock. Such computation is also weighted to reduce the effect
of assets not connected with natural gas distribution and
transmission revenue. The percentage of the Fund's assets to
be invested in each company's stock contained within the Index
is approximately the same as the percentage the stock
represents in the Index. The Fund's securities holdings will
be monitored by the Adviser so that its holdings do not
deviate significantly from the composition and weightings of
the Index. Transaction expenses related to brokerage
commission, management fees and other fund expenses will tend
to reduce the Fund's investment return below that of the
Index; however, such expenses are expected to be lower than
those for most actively managed investment companies.
To determine the extent to which the Fund achieves its
investment objective, the Adviser will compare the performance
of the Fund to the performance of the Index on a quarterly
basis. The performance calculations will be based on the
total return basis. Total return of the Fund is defined as
the percentage increase or decrease in the Fund's per share
price plus the amount of dividends earned per share expressed
as a percentage per share. A similar total return calculation
of the Index will be computed quarterly. The calculation will
consist of the proportionate aggregate percentage increase or
decrease of the Index stocks' prices plus the proportionate
percentage dividend yield of the Index stocks. Excluding
management fees and expenses, the Adviser anticipates a
positive correlation between the total return of the Fund and
that of the Index. To avoid deviation in the Fund's
performance from the Index, the Fund will normally seek to
invest most of its assets in the stocks of the Index.
However, generally up to five percent of the Fund's assets may
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be maintained in short-term investments to provide for
liquidity. These short-term investments will be in the form
of U.S. Government securities, high quality bank money market
instruments and repurchase agreements.
Specialized Investment Practices and Risks
Index Methodology - The Fund is managed with the goal that
changes in the net asset value per share will closely
correlate to changes in the stock index. Since the valuation
of a stock index does not consider any transaction, custodial
or brokerage expenses, the investment adviser seeks to
minimize these charges so that the goal of correlating changes
in the net asset value of the Fund to changes in the Index
will be met. The Adviser will use the proportional weighting
of each stock in the Index as a target for the composition of
the Fund itself. Since these weightings change in very small
amounts during the trading day, continual small adjustments
would be needed to track the Index exactly. Furthermore,
purchases and sales of every stock within the Index would be
necessary as contributions and redemptions to the Fund are
made. To minimize brokerage and transaction expenses, the
Adviser will make adjustments to the Fund as follows:
Comparison of the actual composition of the Fund to the
theoretical target will be made daily. Adjustments to the
holdings of any single stock will be made at least weekly
whenever the actual proportion of that stock in the Fund
varies by more than .5% of the weighting of that stock in the
Index. The percentage of each stock holding is based on the
total Fund value less the necessary cash reserves (not to
exceed 5%) for redemptions and expenses. For example, if
Stock A represented 3% of the total weighting in the Index at
the close of business, adjustments to the holdings of Stock A
will be made if the value of Stock A is greater than 3.5% or
less than 2.5% of the assets invested in stocks. Adjustments
may be made at other times even though these tolerances are
not exceeded if the adjustment can be made without incurring
unreasonable transaction expenses.
While the use of this methodology should cause changes in the
net asset value of the Fund to approximate changes in the
Index, the Fund may nevertheless outperform or underperform
the Index. Although there is no predetermined acceptable
range of deviation between the performance of the Index and
that of the Fund, so long as the Adviser follows the
investment policies described, it would be reasonable to
expect that the Fund's performance will not deviate more than
500 basis points (5%) per year from the performance of the
Index. The performance deviation in question may occur as a
result of various expenses incurred by the Fund, such as
management fees, transaction costs and other operating
<PAGE> 10
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expenses.
Industry Concentration - The Adviser does not select stocks
for investment based on a judgement of their individual future
returns, but rather invests proportionately in all of the
issues included in the Index. By employing a statistical
approach which concentrates all investment in a single
industry, the Fund is subject to those risks associated with
the natural gas distribution and transmission industry. Among
the primary risks is the competitive risk associated with
prices of alternative fuels. For example, major gas customers
such as industrial users often have the ability to switch
between the use of coal, oil or gas. During periods when
competing fuels are less expensive, revenues to gas utility
companies may decline with a corresponding impact on earnings.
The gas industry also is sensitive to increased interest rates
because of the capital intensive nature of the industry.
Typically, a significant portion of the financing of the gas
industry's assets is obtained through debt. As interest rates
increase, such debt scheduled to be refinanced would be
acquired at higher rates thereby adversely affecting earnings.
Repurchase Agreements - In order to effectively utilize cash
reserves kept for liquidity, the Fund may invest in repurchase
agreements secured by securities issued or guaranteed by the
U.S. Government, its agencies and instrumentalities. Under a
repurchase agreement, the Fund purchases a security and
simultaneously agrees to sell it back to the seller on 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
Fund will enter into repurchase agreements only with member
banks of the Federal Reserve System or primary dealers of U.S.
Government securities. The Fund's Adviser will monitor the
credit worthiness of the firms involved in repurchase
agreements. In the event of a default or bankruptcy by the
seller, the Fund will liquidate those securities held under
repurchase agreements. However, liquidation could involve
costs or delays and, to the extent proceeds from their sales
were less than the agreed upon repurchase price, the Fund
could suffer a loss. As stated above, up to five percent of
the Fund's assets may be maintained in short-term investments
such as repurchase agreements.
General Matters - Brokerage commissions are normally paid on
common stock transactions. Such brokerage commissions as well
as other Fund expenses will reduce the overall performance of
the Fund relative to the Index. Management, however,
anticipates that annual portfolio turnover will not exceed
100%. A higher portfolio turnover on transactions involving
commissions will lead to higher expenses. The portfolio
turnover ratios for the years ended March 31, 1995, March 31,
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1994 and March 31, 1993 were 8.5%, 11.4% and 21.5%,
respectively. Orders for transactions in portfolio securities
are placed for the Fund with a number of brokers and dealers.
It is the policy of the Fund to obtain the best price and
execution for all of its security transactions.
The Fund may not borrow money except as a temporary measure to
facilitate redemptions. Such a borrowing may not exceed 30%
of the Fund's total assets, taken at current net asset value
before any borrowing, and securities may not be purchased
while such borrowing is outstanding.
HOW TO INVEST IN THE FUND
The minimum initial investment is $2,500. Retirement accounts
may be opened with a $500 minimum investment. The shares of
the Fund are offered at the daily public offering price which
is the net asset value per share (See "Net Asset Value") next
computed after receipt of your order. There is no minimum
amount for subsequent investments. All accounts will be held
in book-entry form. NO CERTIFICATES FOR SHARES WILL BE
ISSUED. The Fund reserves the right to reject any purchase
order. Foreign checks will not be accepted.
Investment in the Fund can be made directly with the Fund or
through third parties such as broker-dealers, banks or other
financial institutions that purchase securities for its
customers. Such third parties may charge their customers a
fee in connection with services offered to customers. When
shares are purchased through third parties, the third party,
rather than the customer, may be the shareholder of record of
the shares. Investors who do not wish to receive the services
of a third party may invest directly with the Fund without
charge. Certain third party organizations may receive
compensation from the Fund, the Fund's transfer agent, or
Money Management Associates for the shareholder accounting
services they provide.
By Mail: Fill out an application and make your check payable
to "American Gas Index Fund, Inc." Mail the check along with
the application to:
American Gas Index Fund, Inc.
4922 Fairmont Avenue
Bethesda, MD 20814
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By Bank Wire: Request a wire transfer to:
Rushmore Trust and Savings, FSB
Bethesda, Maryland
Routing Number 0550-71084
For Account of:
American Gas Index 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 before the close of the New
York Stock Exchange for a purchase order to be effective in
the Fund. If the purchase is canceled because your wire
transfer is not received, you may be liable for any loss the
Fund may incur.
HOW TO REDEEM AN INVESTMENT (WITHDRAWALS)
On any day the Fund is open for business, an investor may
withdraw all or any portion of his investment by redeeming
shares at the next determined net asset value per share after
receipt of the order by writing the Fund or telephoning 800-
622-1386 or 301-657-1510 between 8:30 a.m. and 4:00 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,
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securities exchanges, associations, agencies or
broker/dealers, and "STAMP" program participants. There are
no fees charged for redemptions.
The Fund will redeem its shares at a redemption price equal to
their net asset value as next computed following the receipt
of a request for redemption. Payment at the redemption price
will be made within seven days after the Fund's receipt of the
request for redemption. For investments that have been made
by check, payment on withdrawal requests may be delayed for up
to ten business days or until the check clears, whichever
occurs first. This delay is necessary to assure the Fund that
investments made by checks are good funds. The proceeds of
the redemption will be forwarded promptly upon confirmation of
receipt of good funds.
The right of redemption may also be suspended, or the date of
payment postponed, (a) for any period during which the New
York Stock Exchange is closed (other than customary weekend or
holiday closings); or (b) when trading on the Exchange is
restricted, or an emergency exists, as determined by the
Securities and Exchange Commission, so that disposal of the
Fund's investments for determination of net asset value is not
reasonably practicable; or (c) for such other periods as the
Commission, by order, may permit for protection of the Fund's
investors. Investors should also be aware that telephone
redemptions or exchanges may be difficult to implement in a
timely manner during periods of drastic economic or market
changes. If such conditions occur, redemption or exchange
orders can be made by mail. Because of the administrative
expense of handling small accounts, the Fund reserves the
right to involuntarily redeem an investor's account which
falls below $500 in value due to redemptions or exchanges
after providing 60 days written notice.
American Gas Index Fund, Inc. is not meant to afford market
timers a way to speculate on short-term movements in the
market. Accordingly, to reduce the negative impact of
excessive trading on the Fund's performance and to minimize
transaction costs, the Fund restricts excessive trading.
Trading by shareholders (and those managing multiple accounts)
will not be deemed excessive if limited to five redemptions
per year. Shareholders or account managers who exceed these
limitations may be prohibited from making additional
investments. These policies do not prohibit you from
redeeming shares of the Fund.
Exchanges
The Fund's shares may be exchanged, without cost, for shares
of Fund for Government Investors, Inc., Fund for Tax-Free
<PAGE> 14
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Investors, Inc., The Rushmore Fund, Inc. or 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 American Gas Index Fund, Inc.
and the above funds may be made by telephone or letter. (See
also "How to Invest in the Fund" and "How to Redeem an
Investment.") Written requests should be sent to American Gas
Index Fund, Inc. 4922 Fairmont Avenue, Bethesda, MD 20814 and
be signed by the record owner or owners. Telephone exchange
requests may be made by calling the Fund at 800-622-1386 or
301- 657-1510 between 8:30 a.m. and 4:00 p.m. Eastern time.
Exchanges will be effected at respective net asset values of
the shares involved as next determined after receipt of the
exchange request. To implement an exchange, shareholders
should provide the following information: account registration
including address and number; taxpayer identification number;
number, percentage or dollar value of shares to be redeemed;
and name and account number of the Fund to which the
investment is to be transferred. Exchanges may be made only
if they are between identically registered accounts.
Shareholders contemplating such an exchange should obtain and
review the prospectuses of those funds. The exchange
privilege is available only in states where the exchange may
legally be made. Telephone exchange privileges may be
terminated or modified by the Fund upon 60 days notice to all
shareholders of the Fund.
TRANSACTION CHARGES
In addition to charges described elsewhere in this prospectus,
the Fund may impose a charge of $5 per month for any account
whose average daily balance is below $500 due to redemptions.
The fee will continue to be imposed during months when the
account balance remains below $500. The fee will be imposed
on the last business day of the month. This fee will be paid
to Rushmore Trust and Savings, FSB. The fee will not be
imposed on tax-sheltered retirement plans or accounts
established under the Uniform Gifts or Transfers to Minors
Act. The Fund may also make a charge of $10 for items
returned for insufficient or uncollectible funds.
TAX-SHELTERED RETIREMENT PLANS
The following tax-sheltered retirement plans will be available
to investors:
Individual Retirement Accounts (IRAs)
Defined Contribution Plans
(Profit-Sharing Plans)
Defined Contribution Plans
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(Money Purchase Plans)
Section 401(k) Plans
Section 403(b) Plans
Additional information regarding these retirement plans may be
obtained by contacting the Fund.
DIVIDENDS AND DISTRIBUTIONS
Dividends of the Fund will be declared on the next to last
business day of each calendar quarter (the declaration and
record date). Investors will receive dividends and
distributions in additional shares at the net asset value at
the end of the last business day of the quarter (the ex-
dividend date) unless they elect in writing to receive cash.
Dividends and distributions paid in cash to those investors so
electing will be mailed on the second business day of the
following month. Dividends and distributions will be paid in
cash or reinvested at the net asset value per share calculated
on the ex-dividend date. Dividends and distributions are
taxable to shareholders, as discussed below, whether they are
reinvested in shares of the Fund or received in cash. Long-
term capital gains, if any, will be distributed on an annual
basis while short-term capital gains, if any, will be
distributed quarterly. Statements of account showing
dividends and distributions paid will be sent at least
quarterly. To change the method of receiving dividends,
investors should notify the Fund in writing.
NET ASSET VALUE
The net asset value of the Fund'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
New York Stock Exchange, and weekends. The net asset value
per share is calculated by adding the total value of all
securities held by the Fund 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 New York Stock
Exchange and other major exchanges. Over-the-counter
securities shall be valued at the last sales price. If market
quotations are not readily available, the Board of Directors
will value the portfolio's securities in good faith. The
directors will periodically review these methods of valuation
and recommend changes which may be necessary to assure that
the Fund's investments are valued at fair value.
<PAGE> 16
<PAGE>
TAXES
The Fund intends to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code. Because of
this qualification under current regulations, the Fund will
not be liable for Federal income taxes to the extent its
earnings are distributed to shareholders.
Dividends derived from interest and dividends received by the
Fund, together with distributions of any short-term or long-
term capital gains, are taxable as ordinary income whether or
not reinvested. Dividends paid by the Fund may be eligible
for the dividends received deduction for corporations.
Distributions of net long-term gains, if any, realized by the
Fund and designated as capital gains distributions will be
made annually and will be taxed to shareholders as long-term
capital gains regardless of the length of time the shares have
been held. Currently, long-term capital gains are taxed at 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 Fund's dividends in their own
states and localities.
Shareholders are required by law to certify that their tax
identification number is correct and that they are not subject
to back-up withholding. In the absence of this certification,
the Fund is required to withhold taxes at the rate of 20% on
dividends, capital gains distributions and redemptions.
Shareholders who are non-resident aliens may be subject to a
withholding tax on dividends earned.
Ordinary dividends paid to corporate or individual residents
of foreign countries are subject to a 30 percent 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 Fund is an open-end, diversified investment company. It
was incorporated in Maryland on November 21, 1988 and has a
present authorized capital of 1,000,000,000 shares of $.001
par value common stock.
All shares of the Fund are freely transferable. The shares do
<PAGE> 17
<PAGE>
not have preemptive rights, and none of the shares has any
preference to conversion, exchange, dividends, retirements,
liquidation, redemption or any other feature. Because the
shares have non-cumulative voting rights, the holders of more
than 50% of the shares voting for the election of directors
can elect 100% of the directors, if they choose to do so. In
such event, the holders of the remaining less than 50% of the
shares voting will not be able to elect any directors.
Shareholder inquiries can be made by telephone (800-343-3355)
or by mail (4922 Fairmont Avenue, Bethesda, MD 20814).
Under Maryland Corporate law, a registered investment company
is not required to hold an annual shareholders' meeting if the
Investment Company Act of 1940 does not require a meeting.
The Act does require a meeting if the following actions are
necessary: ratification of the selection of independent
public accountants, approval of the investment advisory
agreement, election of the board of directors, or approval of
the appointment of directors to board vacancies when such
vacancies cause less than two-thirds of the board to have been
elected. Under the Investment Company Act of 1940,
shareholders have the right to remove directors and, if
holders of 10% of the outstanding shares request in writing, a
shareholders' meeting must be called.
Officers and directors of the Fund, as a group, own less than
1% of the shares outstanding.
MANAGEMENT OF THE FUND
<REDLINE>
The investment adviser of the Fund is Money Management
Associates ("the Adviser"), #2201 East Tower, 4000 North Ocean
Drive, Singer Island, Florida 33404. 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. 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 Advisor to Fund for
Government Investors, Inc., The Rushmore Fund, Inc., Fund for
Tax Free Investors, Inc. and American Gas Index Fund, Inc.
Daniel L. O'Connor is the sole general partner of the Adviser,
and as such, exercises control of the Adviser. The
responsibility for purchasing and selling securities of the
Index and making short-term cash investments rests with the
Adviser. Under an agreement with the Adviser, the Fund pays
the Adviser a fee at an annual rate based on 0.40% of the
average daily net assets of the Fund. The Adviser also acts as
the investment adviser to the Rushmore group of mutual funds.
Net assets under management exceeded $1 billion on July 1,
<PAGE> 18
<PAGE>
1995.
</REDLINE>
The Fund's administrator is the A.G.A., 1515 Wilson Boulevard,
Arlington, Virginia 22209, a national trade association for
the natural gas industry established in 1918. As
administrator of the Fund, A.G.A. will calculate and maintain
the Index and provide the Fund with information about the
natural gas industry. The Fund pays a fee at an annual rate
of 0.10% of the average daily net assets of the Fund to A.G.A.
under an agreement for its services.
Rushmore Trust and Savings, FSB (the "Trust"), 4922 Fairmont
Avenue, Bethesda, Maryland 20814, a wholly-owned subsidiary of
the adviser, provides transfer agency, dividend-disbursing,
and custodian services to the Fund. Under an agreement with
the Trust, which has been approved by the Board of Directors,
the Trust receives an annual fee of 0.35% of the average daily
net assets of the Fund for these services.
<PAGE> 19
<PAGE>
ATTACHMENT - AMERICAN GAS ASSOCIATION STOCK INDEX
(as of March 31, 1995)
<TABLE>
<CAPTION>
Value
Common Stocks Weighting (%)
<S> <C>
Alleghany & Western Energy Corp. 0.14
Amoco Corp. 0.13
Atlantic Richfield Co. 0.09
Atlanta Gas Light Co. 1.84
Atmos Energy Corp. 0.59
Baltimore Gas & Electric Co. 0.63
Bay State Gas Co. 0.69
The Berkshire Gas Co. 0.05
Brooklyn Union Gas Co. 2.17
Cascade Natural Gas Corp. 0.26
Central Hudson Gas & Electric Corp. 0.10
Chesapeake Utilities Corp. 0.08
Chevron Corp. 0.05
Cinergy Corp. 0.99
Citizen's Utilities, Co., Series B 0.17
CMS Energy Corp. 0.93
The Coastal Corp. 3.35
Colonial Gas Co. 0.38
The Columbia Gas System, Inc. 2.59
Commonwealth Energy System 0.24
Connecticut Energy Corp. 0.33
Connecticut Natural Gas Corp. 0.42
Consolidated Edison Co. of New York, Inc. 1.45
Consolidated Natural Gas Co. 4.92
Corning Natural Gas Corp. 0.09
Delmarva Power & Light Co. 0.16
Delta Natural Gas Co., Inc. 0.07
DPL, Inc. 0.28
Eastern Enterprises 0.66
El Paso Natural Gas Co. 2.05
Energen Corp. 0.42
EnergyNorth, Inc. 0.12
Energy West, Inc. 0.04
Enron Corp. 4.55
ENSERCH Corp. 1.03
Entergy Corp. 0.06
Equitable Resources, Inc. 1.02
Essex County Gas Co. 0.09
Fall River Gas Co. 0.19
Gulfside Industries 0.00
IES Industries, Inc. 0.13
Illinova Corp. 0.27
</TABLE>
<TABLE>
<PAGE> 20
<PAGE>
<CAPTION>
Value
Common Stocks Weighting (%)
<S> <C>
Indiana Energy, Inc. 0.91
Iowa-Illinois Gas & Electric Co. 0.17
KN Energy, Inc. 0.76
L G & E Energy Corp. 0.30
Long Island Lighting Co. 0.27
Madison Gas & Electric Co. 0.21
MCN Corp. 1.80
MDU Resources Group, Inc. 0.56
Midwest Resources, Inc. 0.24
Minnesota Power & Light Co. 0.01
Mobile Gas Service Corp. 0.13
The Montana Power Co. 0.39
National Fuel Gas Co. 1.49
New Jersey Resources Corp. 0.59
New York State Electric & Gas Corp. 0.23
Niagara Mohawk Power Corp. 0.44
NICOR, Inc. 2.39
NIPSCO Industries, Inc. 0.99
Noram Energy Corp. 1.43
North Carolina Natural Gas Corp. 0.29
Northern States Power Co. 0.41
Northwest Natural Gas Co. 0.91
Northwestern Public Service Co. 0.05
NUI Corp. 0.28
Occidental Petroleum Corp. 4.87
ONEOK, Inc. 1.00
Orange & Rockland Utilities, Inc. 0.17
Pacific Enterprises 4.33
Pacific Gas & Electric Co. 4.81
Panhandle Eastern Corp. 4.88
Pennsylvania Enterprises, Inc. 0.13
Peoples Energy Corp. 1.66
PECO Energy Co. 0.80
Piedmont Natural Gas Co., Inc. 1.08
Providence Energy Corp. 0.21
Public Service Co. of Colorado 0.90
Public Service Co. of New Mexico 0.27
Public Service Co. of North Carolina 0.52
Public Service Enterprise Group, Inc. 1.60
Questar Corp. 1.51
Roanoke Gas Co. 0.08
Rochester Gas & Electric Corp. 0.33
</TABLE>
<PAGE> 21
<PAGE>
<TABLE>
<CAPTION>
Value
Common Stocks Weighting (%)
<S> <C>
San Diego Gas and Electric Co. 0.58
SCANA Corp. 0.44
Seagull Energy Corp. 0.31
Sierra Pacific Resources 0.08
Sonat, Inc. 2.39
South Jersey Industries, Inc. 0.37
Southern Indiana Gas and Electric Co. 0.14
Southern Union Co. 0.37
Southwest Gas Corp. 0.23
Southwestern Energy Co. 0.36
Tejas Power Corp. 0.26
Tenneco, Inc. 3.62
Transco Energy Co. 0.39
UGI Corp. 0.30
United Cities Gas Co. 0.30
Utilicorp United, Inc. 0.75
Valley Resources, Inc. 0.10
Washington Energy Co. 0.56
Washington Gas Light Co. 1.82
Washington Water Power Co. 0.20
Western Resources, Inc. 0.83
WICOR, Inc. 0.82
Williams Companies, Inc. 2.12
Wisconsin Energy Corp. 0.50
Wisconsin Fuel and Light Co. 0.01
WPL Holdings, Inc. 0.15
WPS Resources Corp. 0.23
Yankee Energy Systems, Inc. 0.43
</TABLE>
<PAGE> 22
<PAGE>
AMERICAN GAS INDEX FUND
PROSPECTUS
<REDLINE>
July 31, 1995
</REDLINE>
Table of Contents
Page
Fee Table . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Highlights . . . . . . . . . . . . . . . . . . . .
Management's Discussion of Fund Performance . . . . . . . . .
Performance Data . . . . . . . . . . . . . . . . . . . . . .
Investment Policies . . . . . . . . . . . . . . . . . . . . .
How to Invest in the Fund . . . . . . . . . . . . . . . . . .
How to Redeem an Investment (Withdrawals) . . . . . . . . . .
Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax-Sheltered Retirement Plans . . . . . . . . . . . . . . .
Dividends and Distributions . . . . . . . . . . . . . . . . .
Net Asset Value . . . . . . . . . . . . . . . . . . . . . . .
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Organization and Description of Common Stock . . . . . . . .
Management of the Fund . . . . . . . . . . . . . . . . . . .
Attachment . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE> 23
<PAGE>
AMERICAN GAS INDEX FUND, INC.
4922 Fairmont Avenue, Bethesda, Maryland 20814
(301) 657-1500 (800) 343-3355
STATEMENT OF ADDITIONAL INFORMATION
The American Gas Index Fund, Inc. (the "Fund") is a
diversified, open-end management investment company. The Fund
is designed as a common stock index fund. The Fund's
investment objective is 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 ("A.G.A."). The Fund is a NO
LOAD fund and does not impose any fees when you buy or sell
shares, nor does the Fund pay any amounts to promote or
distribute its shares (that is, it has no so-called "12b-1
fees").
<REDLINE>
This Statement of Additional Information is not a Prospectus.
It should be read in conjunction with the Fund's prospectus,
dated July 31, 1995. A copy of the prospectus may be obtained
without charge by writing or telephoning the Fund at the above
address or telephone number.
The date of this Statement of Additional Information is July
31, 1995.
</REDLINE>
<PAGE>
<REDLINE>
STATEMENT OF ADDITIONAL INFORMATION
Table of Contents
Cross Reference to Related Item in
Prospectus
Page in
Statement of
Additional Page in
Information Prospectus
Investment Objectives and 1 6
Policies
Management of the Fund 3 14
Principal Holders of 4 --
Securities
Investment Advisory and 4 14
Other Services
Brokerage Allocation and 2 7
Other Practices
Purchase, Redemption and 2, 5 9
Pricing of Securities Being
Offered
Redemptions; Tax-Deferred 2, 3, 5 10, 12
Retirement Plans; Net Asset
Value
Tax Status 6 13
Auditors and Custodian 6 --
</REDLINE>
<PAGE> B-2
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
General
The Fund is designed as a common stock index fund. The Fund's
investment objective is to provide investment results that
correlate to the performance of an index comprising the common
stocks of natural gas distribution and transmission company
members of the A.G.A. Reference is made to "Investment
Policies" in the Prospectus for a discussion of the investment
objective policies of the Fund.
Index Methodology
The American Gas Association Stock Index (the "Index") is
comprised of approximately one hundred ten stocks of the
publicly traded companies that are members of A.G.A. and
headquartered in the United States. These companies are
engaged in the distribution and transmission of natural gas.
A.G.A. computes this Index by multiplying the number of
outstanding shares of common stock of each company by the
closing market price per share at the end of each month. This
product then is multiplied by the percentage of each company's
assets devoted to natural gas distribution and transmission.
This is done to recognize the natural gas component of the
company's asset base and this determination is done at least
annually. The result is each company's "gas market
capitalization value". The sum of all the companies' "gas
market capitalization values" is totalled. This summation
results in a base number called the "industry's gas market
capitalization value". Each company's stock percentage within
the Index is determined by dividing the company's "gas market
capitalization value" by the "industry's gas market
capitalization value". The "gas market capitalization value"
for each company will be recalculated at least quarterly. In
computing the Index, A.G.A. will limit an individual stock to
no more than five percent of the Index. Therefore in
calculating the Index, A.G.A. will reapportion any
representation in the Index exceeding five percent to those
other stocks which do not exceed five percent. Money
Management Associates (the "Adviser") seeks to purchase
sufficient shares of each company's stock such that its
proportion of the Fund's assets will substantially equal that
stock's proportion of the Index. The Adviser will monitor the
Fund's securities holdings so that those holdings reflect the
composition of the Index. As market conditions dictate and as
significant shareholder purchases and redemptions occur, the
Adviser will buy or sell stocks to maintain holdings of each
stock to reflect proper weightings within the Index.
<PAGE> B-3
<PAGE>
The Adviser will maintain cash reserves in the form of
short-term investments such as repurchase agreements.
Reference is made to the discussion under the caption
"Investment Policies -- Specialized Investment Practices and
Risks" in the Prospectus for information with respect to the
risks inherent in repurchase agreements. To the extent the
Adviser maintains such cash reserves, a deviation between the
Fund's investment performance, usually expressed as "rate of
return," and that of the Index will occur. Generally the
adviser will maintain a cash liquidity reserve not exceeding
5% of the Fund's total assets.
Industry Concentration
The Adviser does not select stocks for investment based on a
judgment of their individual future returns, but rather
invests proportionally in all of the issues included in the
Index. By employing a statistical approach which concentrates
all investment in a single industry, the Fund is subject to
those risks associated with the natural gas transportation and
distribution industry. Among the primary risks is the
competitive risk associated with prices of alternative fuels.
For example, major gas customers such as industrial users
often have the ability to switch between the use of coal, oil
or gas. During periods when competing fuels are less
expensive, revenues to gas utility companies may decline with
a corresponding impact on earnings. The gas industry also is
sensitive to increased interest rates because of the capital
intensive nature of the industry. Such concentration of
investment in a single industry represents a fundamental
investment policy which may not be changed without shareholder
approval.
Portfolio Turnover
Brokerage commissions will normally be paid on the Fund's
common stock. A high portfolio turnover as a result of stock
transactions will lead to higher portfolio expenses.
Management, however, anticipates that portfolio turnover will
not exceed 100% annually. Management intends to place orders
for transactions for the Fund with a number of brokers and
dealers. It is the policy of the Fund to obtain the best
price and execution for all of its security transactions. For
the years ended March 31, 1995, 1994 and 1993, the Fund paid
$95,000, $113,000 and $155,000, respectively.
Investment Restrictions
The Fund has adopted the investment restrictions listed below.
These restrictions may not be changed without prior approval
of a majority of holders of the Fund's outstanding voting
shares. As defined in the Investment Company Act of 1940, the
<PAGE> B-4
<PAGE>
term "majority" means the vote of the lesser of (a) 67% of the
shares of the Fund at a meeting where more than 50% of the
outstanding shares are present in person or by proxy; or (b)
more than 50% of the outstanding shares of the Fund. The Fund
may not:
1. Issue senior securities.
2. Make short sales of securities or purchase securities on
margin.
3. Borrow money except as a temporary measure to facilitate
redemptions. Such borrowing may not exceed 30% of the
Fund's total assets, taken at current value, before such
borrowing. The Fund may not purchase securities if a
borrowing by the Fund is outstanding.
4. Underwrite securities of any other issuer, nor purchase
or sell restricted securities.
5. Purchase or sell real estate or real estate mortgage
loans.
6. Buy or sell commodities or futures contracts.
7. Invest in oil, gas or other mineral leases.
8. Make loans except through repurchase agreements provided
the borrower maintains collateral equal to at least 100%
of the value of the borrowed security, and marked to
market daily.
9. Purchase securities of any issuer if, as a result of such
a purchase, such securities would account for more than
5% of the Fund's assets.
<PAGE> B-5
<PAGE>
REDEMPTIONS
The right of redemption may be suspended, or the date of
payment postponed, (a) for any period during which the New
York Stock Exchange is closed (other than customary weekend or
holiday closings); or (b) when trading on the Exchange is
restricted, or an emergency exists, as determined by the
Securities and Exchange Commission, so that disposal of the
Fund's investments for determination of net asset value is not
reasonably practicable; or (c) for such other periods as the
Securities and Exchange Commission, by order, may permit for
protection of the Fund's investors.
TAX-DEFERRED RETIREMENT PLANS
Three tax-deferred retirement plans are available to
investors. Forms for establishing retirement plan accounts
are available by writing or calling the Fund at 800-343-3355
or 301-657-1500. An annual maintenance fee and an account
liquidation fee are charged on all such accounts.
Individual Retirement Accounts (IRAs)
Regular, "rollover" and Simplified Employee Pension (SEP) IRA
accounts are available. Regular IRA contributions may be
wholly or partially deductible for Federal income tax purposes
depending on the investor's adjusted gross income and whether
the investor is a participant in a employer sponsored
retirement plan.
Pension/Profit Sharing Plans
The Fund offers defined contribution plans suitable for
self-employed individuals or businesses. A separate account
may be established for each employee. Statutory vesting
options are contained in these plans.
Section 401(k) Plans
A Section 401(k) plan is available for businesses. Such plans
provide for both employee and employer contributions and are
adopted in conjunction with a Fund profit-sharing plan.
However, the Fund does not act as administrator for Section
401(k) plans. Administration of a Section 401(k) plan would
be the responsibility of the sponsoring organization.
Section 403(b)(7) - Custodial Accounts
A Section 403(b)(7) custodial account is a tax-deferred
retirement plan for certain non-profit organizations under
Section 501(c) of the Internal Revenue Code.
<PAGE> B-6
<PAGE>
MANAGEMENT OF THE FUND
The names and addresses of the directors and officers of the
Fund, 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. For the year ended March 31, 1995, the Fund paid
$7,000 in directors' fees.
*Michael Baly, III, 46 - Director. President and Chief
Executive Officer of the American Gas Association (A.G.A), a
natural gas trade association since January 1995. A.G.A.
President since 1990. Address: 1515 Wilson Blvd, Arlington,
VA 22209.
*Phillip Borish, 67 - Director. Employee of the Fund's
Investment Adviser since 1991. Vice President and Treasurer
of the American Gas Association from 1968-1990. Address:
4922 Fairmont Avenue, Bethesda, MD 20814.
Bette Clemens, 71 - Director. President of Consumer Affairs
Associates since 1978, a management consulting firm providing
advice on consumer trends. Address: 315 Market St., New
Cumberland, PA 17070.
Louis T. Donatelli, 58 - Director. President of Donatelli and
Klein, Inc., engaged in the acquisition of real estate,
primarily office buildings and multi-family housing projects.
Address: 7200 Wisconsin Avenue, Bethesda, MD 20814.
*Richard J. Garvey, 62 - Chairman of the Board, Director of
the Fund, President and Treasurer of the Fund. Limited
Partner of the Adviser. Address: 4922 Fairmont Avenue,
Bethesda, Maryland 20814.
Charles A. Hass, 65 - Director. Retired. Address: 6743 Fern
Lane, Annandale, Virginia 22003
George H. Lawrence, 69 - Director. Of Counsel, Akin, Gump,
Strauss, Hauer & Feld. Retired President of American Gas
Association. Address: 8707 Eaglebrook Court, Alexandria, VA
22308.
Carl Levin, 82 - Director. Public Affairs Consultant.
Executive Director for the U.S. Council for Coconut Research
until 1992. Address: 5450 Whitley Park Terrace, #809,
Bethesda, MD 20814.
Patrick F. Noonan, 52 - Director. Chairman and Chief
Executive Officer of the Conservation Fund. Vice Chairman,
American Farmland Trust and Trustee, American Conservation
Association since 1985. President of Conservation Resources,
<PAGE> B-7
<PAGE>
Inc., since 1981. Address: 1101 Glen Mill Drive, Potomac, MD
20854.
<REDLINE>
*Daniel L. O'Connor, 53 - Director. General Partner and Chief
Operating Officer of the Adviser. Address: #2201 East Tower,
4000 North Ocean Drive, Singer Island, Florida 33404.
</REDLINE>
Eugene A. Tracy, 67 - Director. Retired. Chairman of the
Executive Committee, Peoples Energy Corporation. Address:
1424 Sequoia Trail, Glenview, IL 60325.
*David J. Muchow, 50 - Vice President and Secretary since
1989. General Counsel and Corporate Secretary of American Gas
Association since 1978. Address: 1515 Wilson Blvd.,
Arlington, VA 22209.
*Richard Frazer, 56 - Vice President since 1989. Address:
4922 Fairmont Avenue, Bethesda, MD 20814.
*William L. Major, 57 - Vice President since 1989. Employee
of the Fund's Investment Adviser since 1988, limited partner
since 1994. Address: 4922 Fairmont Avenue, Bethesda, MD
20814.
*Roger B. Cooper, 47 - Assistant Secretary since 1989. Deputy
General Counsel, American Gas Association since 1990.
Address: 1515 Wilson Blvd., Arlington, VA 22209.
*Timothy N. Coakley, CPA, 27 - Controller. Formally Audit
Manager Deloitte & Touche, LLP. Address: 4922 Fairmont
Avenue, Bethesda, MD 20814.
*Indicates interested person as defined in the Investment
Company Act of 1940.
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 The Rushmore Fund, Inc., other
investment companies managed by the Adviser.
PRINCIPAL HOLDERS OF SECURITIES
On July 11, 1995, there were 16,253,472 shares outstanding.
Charles Schwab & Co. San Francisco, California, held, for the
benefit of others, 16.24% of the Fund's shares as of July 11,
1995. The beneficial ownership of such shares is not readily
determinable. No other person owned more than 5% of the
outstanding shares of the Fund. Officers and directors of the
<PAGE> B-8
<PAGE>
Fund, as a group, own less than 1% of the shares outstanding.
INVESTMENT ADVISORY AND OTHER SERVICES
<REDLINE>
Reference is made to "Management of the Fund" in the
Prospectus for certain information concerning the management
of and advisory arrangement of the Fund. The Adviser, Money
Management Associates, which has its office at #2201 East
Tower, 4000 North Ocean Drive, Singer Island, Florida 33404,
provides the Fund with investment advisory services. Subject
to the general supervision of the Fund's Board of Directors
and in conformance with the stated policies of the Fund, the
Adviser renders investment management services to the Fund.
In this regard, it is the responsibility of the Adviser to
place the purchase and sale orders for the portfolio
transactions of the Fund. 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., and The Rushmore Fund, Inc. with assets of $568.0
million, $101.9 million, and $58.0 million, respectively, on
July 11, 1995. Daniel L. O'Connor is the sole general partner
of the Adviser, and, as such, exercises control thereof.
</REDLINE>
Under an Investment Advisory Agreement with the Adviser, dated
February 13, 1989 and last renewed by the Board of Directors
on April 27, 1995, (the "Agreement"), the Adviser executes all
securities transactions of the Fund and oversees its
day-to-day operations, subject to direction and control by the
Fund's Board of Directors. Pursuant to the Agreement, the
Fund pays the Adviser a fee at an annual rate based on 0.40%
of the average daily net assets of the Fund. For the years
ended March 31, 1995, 1994, and 1993, the Adviser earned fees
of $775,316, $956,273, and $647,532, respectively.
The Adviser may, from its own resources, including profits
from advisory fees received from the Fund, (provided such fees
are legitimate and not excessive), make payments to
broker-dealers for their expenses in connection with the
distribution of Fund shares. Although such payments may be
based upon the number of shares distributed, it is the
understanding of the Adviser that such payments will be for
reimbursement and will not exceed the expenses of the
recipients in arranging for and administering distribution of
Fund shares.
Under an Agreement dated November 1, 1993 and last renewed by
<PAGE> B-9
<PAGE>
the Board of Directors on April 27, 1995, Rushmore Trust and
Savings, FSB ("Trust"), a wholly-owned subsidiary of the
Adviser, acts as the Fund's transfer agent, dividend
disbursing agent, custodian and shareholder servicing agent.
Under the agreement, the services of the Trust were provided
to the Fund on a fee basis and were paid by the Fund. The
fees were calculated at the annual rate of 0.35% of the
average assets of the Fund. The amount paid to the Trust for
these services for the year ended March 31, 1995 was $678,402.
The non-interested directors of the Fund have reviewed the fee
structure and determined that it is competitive and in the
best interest of the shareholders of the Fund. The fees will
be reviewed and approved annually by the non-interested
directors. The Fund is subject to the self-custodian rules of
the Securities and Exchange Commission. These rules require
that the custodian be subject to three securities verification
examinations each year conducted by the Fund's independent
accountants. Two of the examinations must be performed on an
unannounced surprise basis.
Under an Agreement dated April 27, 1989 and last approved by
the Board of Directors on April 27, 1995, A.G.A. provides
administrative services to the Fund. These administrative
services include calculation and maintenance of the Index and
the provision of statistical support and information related
to the Index. It will not furnish securities advice to the
Fund or the Adviser or make recommendations to them regarding
the purchase or sale of securities by the Fund. Under the
terms of the agreement, A.G.A. shall provide the Adviser with
current information regarding the common stock composition of
the Index no less than quarterly but may supply such
information more frequently. In addition, A.G.A. shall
provide the Fund with information on the natural gas industry.
The Fund pays A.G.A. in its capacity as administrator a fee at
an annual rate of 0.10% of the average daily net assets of the
Fund. For the year ended March 31, 1995, the administration
fee was $193,830.
NET ASSET VALUE
The net asset value of the Fund'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
New York Stock Exchange and on weekends. The net asset value
per share of the Fund is calculated by dividing the Fund's net
worth by the number of outstanding shares. Listed securities
will be valued at their last sales price on the New York Stock
Exchange and other major exchanges. Over-the-counter
securities shall be valued at their last sales price. If
market quotations are not readily available, the Board of
Directors will value the portfolio's securities in good
<PAGE> B-10
<PAGE>
faith. The directors will periodically review these methods
of valuation and recommend changes which may be necessary to
assure that the portfolio's instruments are valued at fair
value.
TAXES
The Fund intends to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code. To qualify,
at least 90% of the Fund's gross income must be derived from
dividends, interest, and gains from the sale of securities.
No more than 30% of the Fund's gross income may be derived
from gains on the sale of securities held less than three
months. As a regulated investment company, the Fund will not
be subject to Federal income taxes on the net investment
income and capital gains that it distributes to its
shareholders. The distribution of net investment income and
capital gains will be taxable to shareholders regardless of
whether the shareholder elects to receive these distributions
in cash or in additional shares. Distributions reported to
shareholders as long-term capital gains shall be taxable as
such, regardless of how long the shareholder has owned the
shares. Shareholders will be notified annually by the Fund as
to the Federal tax status of all distributions made by the
Fund. Distributions may be subject to state and local taxes.
AUDITORS AND CUSTODIAN
Deloitte & Touche, LLP, independent certified public
accountants, are the auditors of the Fund and are responsible
for auditing the annual financial statements of the Fund.
Rushmore Trust and Savings, FSB, Bethesda, MD acts as the
custodian bank for the Fund and is responsible for
safeguarding and controlling the Fund's cash and securities,
handling the securities and collecting interest on the Fund's
investments.
<PAGE> B-11
<PAGE>
Annual Report, dated March 31, 1995,
for American Gas Index Fund, Inc.
<PAGE>
-----------------------------------------------------------
[RUSHMORE FUNDS ANNUAL REPORT, March
31, 1995
LOGO APPEARS HERE]
American Gas Index
Fund, Inc.
4922 Fairmont Avenue,
Bethesda, Maryland 20814
(800) 622-1386 (301)
657-1510
-----------------------------------------------------------
Dear Shareholders:
American Gas Index Fund, Inc. ("AGIF") closed the fiscal
year ended March 31, 1995, with a total return of 4.72%. A
fourth quarter total return of 8.49% turned around the
lackluster performance that had occurred during the
first several months of the Fund's fiscal year. While the
rebound was not strong enough to overtake general market
indexes like the broad based Dow Jones Industrial Average and
the S&P 500 Average, it significantly exceeded the 2.52%
total return of the Dow Jones Utility Average.
Factors unrelated to the basic strengths of the natural
gas transmission and distribution sector, caused the decline
in the market performance of the AGIF's holdings during 1994.
Analysts pointed to concerns regarding interest rates,
regulatory trends in the electric utility group and competing
energy prices as factors which negatively effected the Fund's
holdings. Combating these negative factors were positives,
such as a rise in gas demand, increases in authorized rates of
return by regulators, growing gas reserves and the success of
corporate restructuring. During the latter part of the Fund's
fiscal year, the natural gas industry's strengths became
dominant, AGIF portfolio holdings improved and the Fund's net
asset value began its rebound, closing the fiscal year at
$11.13 per share.
------------- Total Return Comparison----------------------
(April 1, 1994 - March 31, 1995)
(Bar chart appears here comparing the Total Returns during the
year April 1, 1994 - March 31, 1995 of: American Gas Index
4.72%, DJ Industries 16.99%, DJ Utilities 2.52% and S&P 500
15.57%)
The average annual total return was 4.72% for the one-year
<PAGE>
period and 6.69% for the period 5/10/89 (inception) through
March 31, 1995. Returns are historical and include changes in
principal and reinvested dividends and capital gains. Your
return and principal will vary and you may have a gain or loss
when you sell shares.
-----------------------------------------------------------
It is our opinion that the natural gas transmission and
distribution industry is well positioned to prosper as the
supplier of our nations most environmentally desirable fossil
fuel. Both new and improved technologies applied to electric
power generation, heating and cooling, automotive
transportation and industrial applications are the paths for
growth. With holdings in approximately 110 companies located
throughout the nation, all of which are members of the
American Gas Association, the Fund is uniquely positioned to
participate in the long term growth of the natural gas
industry.
---------- American Gas Index Fund -------------------------
Three Largest Holdings By Sector
(Pie chart appears here showing the three largest Holdings by
Sector:
Pipeline 20%, Diversified 36%, Combination 22% and Natural Gas
Utilities 22%)
Pipeline
Panhandle Eastern Corp.
Enron Corp.
Tenneco, Inc.
Diversified/Integrated
Consolidated Natural Gas Co.
Occidental Petroleum Corp.
Pacific Enterprises
Combination Natural
Gas & Electric Utilities
Pacific Gas & Electric Co.
Public Service Enterprise Group, Inc.
Consolidated Edison Co. of New York, Inc.
Natural Gas Utilities
Brooklyn Union Gas Co.
Atlanta Gas Light Co.
MCN Corp.
-----------------------------------------------------------
<PAGE> 2
<PAGE>
As of March 31, 1995, the market value of pipeline
companies represented 20% of the portfolio,
diversified/integrated companies comprised 36%, combination
companies made up 22% and natural gas utility companies were
22%.
We look forward to continuing to help you with your
investments.
Sincerely,
/s/ Richard J. Garvey
Richard J. Garvey, Chairman
American Gas Index Fund
------------------------------------------------------
AMERICAN GAS INDEX FUND, INC.
STATEMENT OF NET ASSETS
MARCH 31, 1995
<TABLE>
<CAPTION>
MARKET VALUE PERCENT OF
COMMON STOCKS SHARES (NOTE 1) NET ASSETS
------------- ------- ------------ ----------
<S> <C> <C> <C>
Consolidated Natural Gas Co..................... 240,000 $ 9,270,000 4.92%
Panhandle Eastern Corp.......................... 400,000 9,200,000 4.88%
Occidental Petroleum Corp....................... 420,000 9,187,500 4.87%
Pacific Gas and Electric Co..................... 365,000 9,079,375 4.81%
Enron Corp...................................... 260,000 8,580,000 4.55%
Pacific Enterprises............................. 330,000 8,167,500 4.33%
Tenneco, Inc.................................... 145,000 6,833,125 3.62%
The Coastal Corp................................ 220,000 6,325,000 3.35%
The Columbia Gas System, Inc.*.................. 165,000 4,888,125 2.59%
NICOR, Inc...................................... 180,000 4,500,000 2.39%
Sonat, Inc...................................... 150,000 4,500,000 2.39%
Brooklyn Union Gas Co........................... 170,000 4,101,250 2.17%
Williams Companies, Inc......................... 130,700 4,002,688 2.12%
El Paso Natural Gas Co.......................... 135,000 3,864,375 2.05%
Atlanta Gas Light Co............................ 100,000 3,475,000 1.84%
Washington Gas Light Co......................... 85,000 3,431,875 1.82%
MCN Corp........................................ 185,000 3,399,375 1.80%
Peoples Energy Corp............................. 125,000 3,125,000 1.66%
<PAGE> 3
<PAGE>
Public Service Enterprise Group, Inc............ 110,000 3,011,250 1.60%
Questar Corp.................................... 95,000 2,850,000 1.51%
National Fuel Gas Co............................ 100,000 2,800,000 1.49%
Consolidated Edison Co. of New York, Inc........ 100,000 2,725,000 1.45%
Noram Energy Corp............................... 500,000 2,687,500 1.43%
Piedmont Natural Gas Co., Inc................... 100,000 2,037,500 1.08%
ENSERCH Corp.................................... 130,000 1,933,750 1.03%
Equitable Resources, Inc........................ 68,800 1,917,800 1.02%
ONEOK, Inc...................................... 100,000 1,887,500 1.00%
NIPSCO Industries, Inc.......................... 60,000 1,867,500 0.99%
Cinergy Corp.................................... 75,000 1,865,625 0.99%
CMS Energy Corp................................. 75,000 1,753,125 0.93%
Indiana Energy, Inc............................. 92,500 1,722,813 0.91%
Northwest Natural Gas Co........................ 55,000 1,718,750 0.91%
Public Service Co. of Colorado.................. 55,000 1,691,250 0.90%
Western Resources, Inc.......................... 50,000 1,562,500 0.83%
WICOR, Inc...................................... 55,000 1,546,875 0.82%
PECO Energy Co.................................. 60,000 1,507,500 0.80%
KN Energy, Inc.................................. 60,000 1,440,000 0.76%
Utilicorp United, Inc........................... 50,000 1,406,250 0.75%
Bay State Gas Co................................ 53,000 1,305,125 0.69%
Eastern Enterprises............................. 45,000 1,248,750 0.66%
</TABLE>
--------------------------------------------------------------
<PAGE> 4
<PAGE>
--------------------------------------------------------------
AMERICAN GAS INDEX FUND, INC.
STATEMENT OF NET ASSETS--(CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE PERCENT OF
COMMON STOCKS SHARES (NOTE 1) NET ASSETS
------------- ------ ------------ ----------
<S> <C> <C> <C>
Baltimore Gas & Electric Co...................... 50,000 $ 1,181,250 0.63%
New Jersey Resources Corp........................ 50,000 1,112,500 0.59%
Atmos Energy Corp................................ 60,000 1,110,000 0.59%
San Diego Gas and Electric Co.................... 52,500 1,089,375 0.58%
MDU Resources Group, Inc......................... 40,000 1,065,000 0.56%
Washington Energy Co............................. 78,500 1,049,938 0.56%
Public Service Co. of North Carolina............. 65,000 975,000 0.52%
Wisconsin Energy Corp............................ 35,000 949,375 0.50%
SCANA Corp....................................... 20,000 835,000 0.44%
Niagara Mohawk Power Corp........................ 60,000 825,000 0.44%
Yankee Energy System, Inc........................ 40,000 820,000 0.43%
Connecticut Natural Gas Corp..................... 35,000 800,625 0.42%
Energen Corp..................................... 35,000 800,625 0.42%
Northern States Power Co......................... 17,500 770,000 0.41%
Transco Energy Co................................ 38,880 738,720 0.39%
The Montana Power Co............................. 32,000 728,000 0.39%
Colonial Gas Co.................................. 35,000 708,750 0.38%
South Jersey Industries, Inc..................... 35,000 691,250 0.37%
Southern Union Co.*.............................. 40,000 690,000 0.37%
Southwestern Energy Co........................... 45,000 675,000 0.36%
Connecticut Energy Corp.......................... 32,500 621,562 0.33%
Rochester Gas and Electric Corp.................. 30,000 618,750 0.33%
Seagull Energy Corp.*............................ 30,000 592,500 0.31%
UGI Corp......................................... 30,000 573,750 0.30%
United Cities Gas Co............................. 37,000 573,500 0.30%
L G & E Energy Corp.............................. 15,000 562,500 0.30%
North Carolina Natural Gas Corp.................. 26,000 546,000 0.29%
NUI Corp......................................... 35,000 529,375 0.28%
DPL, Inc......................................... 25,000 521,875 0.28%
Illinova Corp.................................... 22,500 511,875 0.27%
Long Island Lighting Co.......................... 35,000 511,875 0.27%
Public Service Co. of New Mexico................. 40,000 500,000 0.27%
Cascade Natural Gas Corp......................... 35,000 485,625 0.26%
Tejas Power Corp................................. 50,000 481,250 0.26%
Midwest Resources, Inc........................... 32,500 459,062 0.24%
Commonwealth Energy System....................... 11,000 451,000 0.24%
Southwest Gas Corp............................... 30,000 442,500 0.23%
WPS Resources Corp............................... 15,000 435,000 0.23%
New York State Electric and Gas Corp............. 20,000 427,500 0.23%
Madison Gas and Electric Co...................... 12,000 396,000 0.21%
Providence Energy Corp........................... 23,500 387,750 0.21%
Washington Water Power Co........................ 25,000 375,000 0.20%
</TABLE>
<PAGE> 5
<PAGE>
-----------------------------------------------------------
AMERICAN GAS INDEX FUND, INC.
STATEMENT OF NET ASSETS--(CONCLUDED)
<TABLE>
<CAPTION>
MARKET VALUE PERCENT OF
COMMON STOCKS SHARES (NOTE 1) NET ASSETS
------------- ------ ------------ ----------
<S> <C> <C> <C>
Fall River Gas Co............................... 14,500 $ 362,500 0.19%
Orange & Rockland Utilities, Inc................ 10,000 322,500 0.17%
Citizens Utilities Co., Series B................ 25,000 315,625 0.17%
Iowa-Illinois Gas & Electric Co................. 15,000 313,125 0.17%
Delmarva Power & Light Co....................... 15,000 296,250 0.16%
WPL Holdings, Inc............................... 10,000 287,500 0.15%
Alleghany & Western Energy Corp. *.............. 23,000 261,625 0.14%
Southern Indiana Gas and Electric Co............ 9,000 259,875 0.14%
Amoco Corp...................................... 4,000 254,500 0.13%
Pennsylvania Enterprises, Inc................... 8,000 249,000 0.13%
IES Industries, Inc............................. 10,000 248,750 0.13%
Mobile Gas Service Corp......................... 12,000 237,000 0.13%
EnergyNorth, Inc................................ 12,500 221,875 0.12%
Central Hudson Gas & Electric Corp.............. 7,500 196,875 0.10%
Valley Resources, Inc........................... 16,500 181,500 0.10%
Atlantic Richfield Co........................... 1,500 172,500 0.09%
Corning Natural Gas Corp........................ 7,000 169,750 0.09%
Essex County Gas Co............................. 7,000 164,500 0.09%
Chesapeake Utilities Corp....................... 12,000 159,000 0.08%
Sierra Pacific Resources........................ 8,000 158,000 0.08%
Roanoke Gas Co.................................. 10,000 155,000 0.08%
Delta Natural Gas Co., Inc...................... 7,500 136,875 0.07%
Entergy Corp.................................... 5,000 104,375 0.06%
Northwestern Public Service Co.................. 4,000 102,000 0.05%
The Berkshire Gas Co............................ 6,500 99,125 0.05%
Chevron Corp.................................... 2,000 96,000 0.05%
Energy West, Inc................................ 9,000 67,500 0.04%
Minnesota Power & Light Co. .................... 1,000 25,250 0.01%
Wisconsin Fuel & Light Co....................... 300 9,600 0.01%
Gulfside Industries *........................... 25,000 2,500 0.00%
------------ -------
Total Common Stocks (Cost $169,906,496)....... 182,666,683 96.88%
------------ -------
Repurchase Agreements
With PaineWebber at 6.15%, dated 3/31/95,
due 4/3/95, collaterized by U.S. Treasury
Bonds,
due 8/15/23 (Cost $1,749,438)................ 1,749,438 0.93%
------------ -------
Total Investments (Cost $171,655,934)......... 184,416,121 97.81%
Other Assets Less Liabilities................. 4,127,782 2.19%
------------ -------
<PAGE> 6
<PAGE>
Net Assets (Note 6)........................... $188,543,903 100.00%
============ =======
Net Asset Value Per Share (Based on 16,941,250 $11.13
Shares Outstanding).......................... ======
</TABLE>
*Non-income producing.
See Notes to Financial Statements.
<PAGE> 7
<PAGE>
-------------------------------------------------------------------------
AMERICAN GAS INDEX FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1995
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME (Note 1)
Dividends........................................................ $ 9,427,294
Interest......................................................... 52,789
-----------
Total Investment Income........................................ 9,480,083
-----------
EXPENSES
Investment Advisory Fee (Note 2)................................. 775,316
Accounting and Administrative Service Fee (Note 2)............... 678,402
Administrative Fee (Note 2)...................................... 193,830
-----------
Total Expenses................................................. 1,647,548
-----------
NET INVESTMENT INCOME.............................................. 7,832,535
-----------
Net Realized Loss on Investments...................................
(8,212,064)
Net Change in Unrealized Appreciation of Investments (Note 5)...... 8,574,990
-----------
NET GAIN ON INVESTMENTS............................................ 362,926
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... $ 8,195,461
===========
</TABLE>
See Notes to Financial Statements.
----------------------------------------------------------------------------
<PAGE> 8
<PAGE>
---------------------------------------------------------------------------
AMERICAN GAS INDEX FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED MARCH 31,
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Income............................ $ 7,832,535 $ 7,946,731
Net Realized Gain (Loss) on Investments.......... (8,212,064) 189,863
Net Change in Unrealized Appreciation
(Depreciation) of Investments................... 8,574,990 (21,254,511)
------------ ------------
Net Increase (Decrease) in Net Assets Resulting
from Operations................................. 8,195,461 (13,117,917)
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income (Note 1).............. (7,827,698) (7,862,843)
From Realized Gain on Investments................ -- (1,226,000)
FROM SHARE TRANSACTIONS (Note 4)................... (20,860,276) 15,686,429
------------ ------------
Net Decrease in Net Assets....................... (20,492,513) (6,520,331)
NET ASSETS--Beginning of Year...................... 209,036,416 215,556,747
------------ ------------
NET ASSETS--End of Year............................ $188,543,903 $209,036,416
============ ============
</TABLE>
See Notes to Financial Statements.
----------------------------------------------------------------------------
<PAGE> 9
<PAGE>
---------------------------------------------------------------------------
AMERICAN GAS INDEX FUND, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31,
--------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value--Beginning of
Year........................... $11.08 $12.17 $ 9.45 $10.20 $11.20
-------- -------- -------- -------- --------
Net Investment Income........... 0.440 0.410 0.407 0.472 0.528
Net Realized and Unrealized
Gains (Losses) on Securities... 0.050 (1.031) 2.853 (0.758) (0.899)
-------- -------- -------- -------- --------
Net Increase (Decrease) in Net
Asset Value Resulting from
Operations..................... 0.490 (0.621) 3.260 (0.286) (0.371)
Dividends to Shareholders....... (0.440) (0.406) (0.410) (0.464) (0.530)
Distributions to Shareholders
From Net Realized Capital
Gains.......................... -- (0.063) (0.130) -- (0.099)
-------- -------- -------- -------- --------
Net Increase (Decrease) in Net
Asset Value.................... 0.05 (1.09) 2.72 (0.75) (1.00)
-------- -------- -------- -------- --------
Net Asset Value--End of Year.... $11.13 $11.08 $12.17 $ 9.45 $10.20
======== ======== ======== ======== ========
Total Investment Return........... 4.72% (5.37)% 35.38% (2.89)% (3.55)%
Ratios to Average Net Assets:
Expenses Less Reimbursement from
Adviser........................ 0.85% 0.84% 0.85% 0.85% 0.79%
Expenses Before Reimbursement
from Adviser................... 0.85% 0.84% 0.85% 0.87% 0.91%
Net Investment Income........... 4.04% 3.33% 3.82% 4.73% 5.00%
Supplementary Data:
Portfolio Turnover Rate......... 8.5% 11.4% 21.5% 30.2% 29.9%
Number of Shares Outstanding at
End of Year (000's omitted).... 16,941 18,858 17,708 13,669 12,821
</TABLE>
See Notes to Financial Statements.
<PAGE> 10
<PAGE>
--------------------------------------------------------------
AMERICAN GAS INDEX FUND, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995
1. SIGNIFICANT ACCOUNTING POLICIES
American Gas Index 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 following is a summary of significant accounting
policies which the Fund follows.
(a) Securities listed on stock exchanges are valued at
the last sales price of the applicable exchange.
Over-the-Counter securities are valued at the last sales
price. If market quotations are not readily available, the
Board of Directors will value the Fund'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 transactions are computed on an identified
cost basis.
(c) Net investment income is computed, and dividends are
declared quarterly. Dividends are reinvested in additional
shares unless shareholders request payment in cash. Generally
short-term capital gains are distributed quarterly and
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, the Fund pays a fee for such
services at an annual rate of 0.40% of the average daily
net assets of the Fund.
Rushmore Trust and Savings, FSB ("Trust") which is wholly
owned by Money Management Associates, provides transfer
agency, dividend-disbursing and shareholder services to the
Fund. In addition, the Trust serves as custodian of the Fund's
<PAGE> 11
<PAGE>
assets and pays the operating expenses of the Fund. For these
services the Trust receives an annual fee of 0.35% of the
average daily net assets of the Fund.
The American Gas Association, (A.G.A.), serves as
administrator for the Fund. As administrator, A.G.A.
calculates and maintains the Index and provides
the Fund with information concerning the natural gas industry.
For these services the Fund pays a fee at an annual rate of
0.10% of the average daily net assets of the Fund.
3. SECURITIES TRANSACTIONS
For the year ended March 31, 1995, purchases of securities
were $16,462,348, and sales of securities were $41,852,678.
These totals exclude short-term securities.
-------------------------------------------------------------
<PAGE> 12
<PAGE>
-------------------------------------------------------------
AMERICAN GAS INDEX FUND, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
4. SHARE TRANSACTIONS
On March 31, 1995, there were 1,000,000,000 shares of
$0.001 par value capital stock authorized. Transactions in
shares of the Fund for the year ended March 31, 1995 were as
follows:
<TABLE>
<CAPTION>
SHARES DOLLARS
---------- ------------
<S> <C> <C>
Shares Sold........................................... 3,676,255 $ 40,152,519
Shares Issued in Reinvestment of Dividends............ 619,298 6,667,885
---------- ------------
4,295,553 46,820,404
Shares Redeemed....................................... (6,212,802)
(67,680,680)
---------- ------------
(1,917,249)
$(20,860,276)
========== ============
</TABLE>
5. NET UNREALIZED APPRECIATION OF INVESTMENTS
As of March 31, 1995, net unrealized appreciation of
investments for Federal income tax purposes was $10,086,551 of
which $22,356,567 related to appreciated investments and
$12,270,016 related to depreciated investments. At March 31,
1995 the cost of the Fund's securities for Federal income tax
purposes was $174,329,570.
6. NET ASSETS
At March 31, 1995 net assets consisted of the following:
<TABLE>
<S> <C>
Paid-in Capital................................................... $187,456,452
Net Unrealized Appreciation of Investments........................ 12,760,187
Accummulated Realized Loss on Investments.........................
(11,816,667)
Undistributed Net Investment Income............................... 143,931
------------
NET ASSETS........................................................ $188,543,903
============
<PAGE> 13
<PAGE>
</TABLE>
7. CAPITAL LOSS CARRYOVERS
At March 31, 1995, for Federal income tax purposes, the
Fund 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>
EXPIRES IN EXPIRES IN EXPIRES IN
2001 2002 2003 TOTAL
---------- ---------- ---------- ----------
<S> <C> <C> <C>
$2,568,466 $1,036,137 $8,212,064 $11,816,667
</TABLE>
--------------------------------------------------------------
<PAGE> 14
<PAGE>
------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors
of American Gas Index Fund, Inc.
We have audited the statement of net assets of American Gas
Index Fund, Inc. as of March 31, 1995, the related statements
of operations for the year then ended 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 March 31, 1995 by correspondence with the
custodian and brokers; where replies were not received from
brokers, we performed other auditing procedures. 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 net
assets of American Gas Index Fund, Inc. at March 31, 1995, 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.
DELOITTE & TOUCHE LLP
Washington, D.C.
May 9, 1995
--------------------------------------------------------------
<PAGE> 15
<PAGE>
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AMERICAN
GAS
INDEX
FUND
--------------------------------------------------------------
ANNUAL REPORT
MARCH
31, 1995
[RECYCLING LOGO APPEARS HERE] [LOGO OF RUSHMORE
APPEARS HERE]
Printed on Recycled Paper
[SOY INK LOGO APPEARS HERE]
<PAGE> 16
<PAGE>
<PAGE>
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<CIK> 0000843251
<NAME> AMERICAN GAS INDEX FUND, INC.
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