<PAGE>
<PAGE>
As Filed With The Securities And Exchange Commission on August
1, 1996.
File Nos. 33-25678 and 811-5702
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (X)
Pre-Effective Amendment No. ( )
Post-Effective Amendment No. 7 (X)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 (X)
Amendment No. 11 (X)
AMERICAN GAS INDEX FUND, INC.
(Exact Name of Registrant as Specified in Charter)
4922 Fairmont Avenue, Bethesda, Maryland 20814
(Address of Principal Executive Offices) (Zip Code)
(301) 657-1500
(Registrant's Telephone Number, Including Area Code)
Richard J. Garvey
4922 Fairmont Avenue
Bethesda, Maryland 20814
(Name and Address of Agent for Service of Process)
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Copies to:
Michael L. Sapir, Esq.
Law Offices of Michael L. Sapir
3813 T Street, N.W.
Washington, D. C. 20007
Approximate Date of Commencement of the Proposed Public
Offering of the Securities:
It is proposed that this filing will become effective (check
appropriate box):
X immediately upon filing pursuant to paragraph (b) of
rule 485.
on (date) pursuant to paragraph (b) (1) (v) of rule
485.
60 days after filing pursuant to paragraph (a) (1)
of rule 485.
on (date) pursuant to paragraph (a) (1) of rule 485.
75 days after filing pursuant to paragraph (a) (2)
of rule 485.
on (date) pursuant to paragraph (a) (2) of rule 485.
If appropriate, check the following box:
This post-effective amendment designates a new
effective date for a previously-filed post-effective
amendment.
The Registrant has previously filed a declaration of
indefinite registration of its shares pursuant to Rule 24f-2
under the Investment Company Act of 1940. The Rule 24f-2
Notice for the Registrant s fiscal year ended March 31, 1996
was filed on May 29, 1996.
TOTAL NUMBER OF PAGES____
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AMERICAN GAS INDEX FUND, INC.
REGISTRATION STATEMENT ON FORM N-1A
Cross Reference Sheet
Required By Rule 495(a)
Under The Securities Act of 1933
N-1A Location in
Item No. Registration Statement
Part A. Information Required in Prospectus
1. Cover Page Outside Front Cover Page of
Prospectus
2. Synopsis Fee Table
3. Condensed Financial Financial Highlights;
Information Performance Data
4. General Description Organization and Description
of Registrant of Common Stock; Investment
Policies
5. Management of the Management of the Fund
Fund
5A. Management's Management's Discussion of
Discussion of Fund Fund Performance
Performance
6. Capital Stock and Organization and Description
Other Securities of Common Stock; Taxes;
Dividends and Distributions;
7. Purchase of How to Invest in the Fund;
Securities Being Exchanges; Net Asset Value
Offered
8. Redemption or How to Redeem an Investment
Repurchase (Withdrawals); Exchanges
9. Legal Proceedings Not Applicable
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Part B: Information Required In
Statement of Additional Information
10. Cover Page Outside Front Cover Page of
Statement of Additional
Information
11. Table of Contents Table of Contents
12. General Information Not Applicable
and History
13. Investment Investment Policies;
Objectives and Investment Restrictions
Policies
14. Management of the Management of the Fund
Registrant
15. Control Persons and Principal Holders of
Principal Securities
Holders of
Securities
16. Investment Advisory Investment Advisory and
and Other Services Other Services
17. Brokerage Allocation Investment Objectives and
Policies
18. Capital Stock and Not Applicable
Other Securities
19. Purchase, Redemption Redemptions; Tax-Deferred
and Retirement Plans and Net
Pricing of Asset Value
Securities Being
Offered
20. Tax Status Taxes
21. Underwriters Not Applicable
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22. Calculations of Calculation of Yield and
Performance Data Return Quotations
23. Financial Statements Following Part B
Part C: Other Information
24. Financial Statements Financial Statements and
and Exhibits Exhibits
25. Persons Controlled Persons Controlled by or
by or Under Under Common Control
Common Control
26. Number of Holders of Numbers of Holders of
Securities Securities
27. Indemnification Indemnification
28. Business and Other Business and Other
Connections Connections of Investment
of Investment Adviser
Adviser
29. Principal Principal Underwriters
Underwriters
30. Location of Accounts Location of Accounts and
and Records Records
31. Management Services Management Services
32. Undertakings Undertakings
33. Signatures Signatures
<PAGE>
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PART A
<PAGE>
<PAGE>
AMERICAN GAS INDEX FUND, INC.
4922 Fairmont Avenue
Bethesda, Maryland 20814
(800) 343-3355
(301) 657-1500
INVESTMENT OBJECTIVES 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
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 August 1,
1996 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 August 1, 1996.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 2
<PAGE>
FEE TABLE
The following table illustrates all expenses and fees that a
shareholder of the Fund will incur.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
<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%
* A charge of $5 per month may be imposed on any account whose
average daily balance for the month falls below $500 due to
redemptions. See Transaction Charges.
</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.
1 year 3 years 5 years 10 years
<PAGE> 3
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$9 $28 $48 $108
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
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.
<PAGE> 4
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American Gas Index Fund, Inc.
Financial Highlights
Audited
<TABLE>
<CAPTION>
For the Year Ended March 31,
1996 1995 1994
---- ---- -----
<S> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value - Beginning of Year $11.13 $11.08 $12.17
Net Investment Income 0.454 0.440 0.410
Net Realized and Unrealized Gains
(Losses) on Securities 2.125 0.050 (1.031)
Net Increase (Decrease) in Net Asset
Value Resulting from Operations 2.579 0.490 (0.621)
Dividends to Shareholders (0.455) (0.440) (0.406)
Distributions to Shareholders from
Net Realized Capital Gains -- -- (0.063)
Net Increase (Decrease) in Net
Asset Value 2.12 0.05 (1.09)
Net Asset Value - End of Year $13.25 $11.13 $11.08
Total Investment Return 23.46% 4.72% (5.37)%
Ratios to Average Net Assets:
Expenses Less Reimbursement
from Adviser 0.85% 0.85% 0.84%
Expenses Before Reimbursement
from Adviser 0.85% 0.85% 0.84%
Net Investment Income 3.71% 4.04% 3.33%
Supplementary Data:
Portfolio Turnover Rate 10.0% 8.5% 11.4%
Number of Shares Outstanding at
End of Year (000s omitted) 15,391 16,941 18,858
<PAGE> 5
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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.
</TABLE>
<PAGE> 6
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American Gas Index Fund, Inc.
Financial Highlights
Audited (Continued)
<TABLE>
<CAPTION>
For the Year Ended March 31,
1993 1992
---- ----
<S> <C> <C>
Per Share Operating Performance:
Net Asset Value - Beginning of Year $9.45 $10.20
Net Investment Income 0.407 0.472
Net Realized and Unrealized Gains
(Losses) on Securities 2.853 (0.758)
Net Increase (Decrease) in Net Asset
Value Resulting from Operations 3.260 (0.286)
Dividends to Shareholders (0.410) (0.464)
Distributions to Shareholders from
Net Realized Capital Gains (0.130) --
Net Increase (Decrease) in Net
Asset Value 2.72 (0.75)
Net Asset Value - End of Year $12.17 $9.45
Total Investment Return 35.38% (2.89)%
Ratios to Average Net Assets:
Expenses Less Reimbursement
from Adviser 0.85% 0.85%
Expenses Before Reimbursement
from Adviser 0.85% 0.87%
Net Investment Income 3.82% 4.73%
Supplementary Data:
Portfolio Turnover Rate 21.5% 30.2%
Number of Shares Outstanding at
End of Year (000s omitted) 17,708 13,669
<PAGE> 7
<PAGE>
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.
</TABLE>
<PAGE> 8
<PAGE>
American Gas Index Fund, Inc.
Financial Highlights
Audited (Continued)
<TABLE>
<CAPTION>
For the Year Ended March 31,
1991 1990*
---- ----
<S> <C> <C>
Per Share Operating Performance:
Net Asset Value - Beginning of Year $11.20 $10.00
Net Investment Income 0.528 0.504
Net Realized and Unrealized Gains
(Losses) on Securities (0.899) 1.273
Net Increase (Decrease) in Net Asset
Value Resulting from Operations (0.371) 1.777
Dividends to Shareholders (0.530) (0.500)
Distributions to Shareholders from
Net Realized Capital Gains (0.099) (0.077)
Net Increase (Decrease) in Net
Asset Value (1.00) 1.20
Net Asset Value - End of Year $10.20 $11.20
Total Investment Return (3.55)% 16.55%
Ratios to Average Net Assets:
Expenses Less Reimbursement
from Adviser 0.79% 0.75%
Expenses Before Reimbursement
from Adviser 0.91% 0.90%
Net Investment Income 5.00% 4.99%
Supplementary Data:
Portfolio Turnover Rate 29.9% 25.0%
Number of Shares Outstanding at
End of Year (000s omitted) 12,821 7,676
* Commencement of operations May 10, 1989.
<PAGE> 9
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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.
</TABLE>
<PAGE> 10
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AMERICAN GAS INDEX FUND, INC.
Total Return Comparison
[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]
<TABLE>
<CAPTION>
S&P 500 Dow Jones
American Gas Composite Utility
Index Fund 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
3/31/96 $18,081 $25,964 $17,226
</TABLE>
Past performance is not predictive of future performance.
<TABLE>
<CAPTION>
Average Annual Total Return
Year Ended
March 31, 1996
<PAGE> 11
<PAGE>
One Year Five Years Since Inception
<S> <C> <C>
23.46% 9.97% 8.97%
</TABLE>
<PAGE> 12
<PAGE>
MANAGEMENT S DISCUSSION OF FUND PERFORMANCE
During the fiscal year which ended on March 31, 1996, the Fund
experienced four positive quarters and a total return of
23.46%. A new high net asset value ( NAV ) of $13.54 was
achieved on February 13, 1996. At the end of March, the NAV
was $13.25 compared to $11.13 at the beginning of the period
which started on April 1, 1995. This strong performance
resulted from more than 90% of the Fund s portfolio increasing
in share value. Two important additions to the Fund s
holdings were Laclede Gas Company and NGC Corporation.
The Fund s consistent strength during the past four quarters
reflected renewed confidence expressed by energy and
investment analysts in unabated growth in natural gas
consumption. Other factors that had a positive impact were a
rising stock market (as evidenced by the broad market
averages), declines in long-term interest rates, healthy
natural gas reserves additions, and the price behavior of
competing energy fuels. Also, the market s valuation of the
vast majority of the Fund s investments increased in response
to the various proposals to restructure and partially
deregulate the electric utility industry. Gas distribution
and pipeline companies seem to be increasingly attractive
investments and merger or acquisition targets. In our
opinion, the Fund continues to be an ideal vehicle to
financially participate in the growing natural gas markets and
the restructuring of the energy utilities.
As of March 31, 1996, the market value of pipeline companies
represented 23% of the portfolio, diversified/integrated
companies comprised 34%, combination companies made up 20% and
natural gas utility companies were 23%.
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
<PAGE> 13
<PAGE>
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 A.G.A. The A.G.A. Stock Index (the Index )
contains approximately 105 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 as of March 31, 1996.) 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 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
<PAGE> 14
<PAGE>
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 be maintained in short-term investments to provide for
<PAGE> 15
<PAGE>
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
<PAGE> 16
<PAGE>
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
expenses.
Industry Concentration
The Adviser does not select stocks for investment based on a
judgment 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
<PAGE> 17
<PAGE>
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. 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 their
customers. Such third parties may charge their customers a
fee in connection with services offered to customers. When
shares are purchased through third parties, the third party,
rather than the customer, may be the shareholder of record of
the shares. Investors who do not wish to receive the services
of a third party may invest directly with the Fund without
charge. Certain third party organizations may receive
compensation from the Fund, the Fund s transfer agent, or the
<PAGE> 18
<PAGE>
Fund s Adviser for the shareholder accounting services they
provide.
By Mail: Complete 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
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 (CURRENTLY, 4:00 P.M. EASTERN STANDARD
TIME) 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.
<PAGE> 19
<PAGE>
Telephone redemptions will only be sent to the address of
record or to bank accounts specified in the account
application. When acting on instructions believed to be
genuine, the Fund will not be liable for any loss resulting
from a fraudulent telephone redemption request and the
investor would bear the risk of any such loss. The Fund will
employ reasonable procedures to confirm that redemption
instructions communicated by telephone are genuine; and if the
Fund does not employ such procedures, then the Fund may be
liable for any losses due to unauthorized or fraudulent
instructions. The Fund follows specific procedures for
transactions initiated by telephone, including among others,
requiring some form of personal identification prior to acting
on instruction received by telephone, providing written
confirmation not later than five business days after the
transaction, and/or tape recording of telephone transactions.
The proceeds of redemptions will be sent directly to the
investor's address of record. If the investor requests
payment of redemptions to a third party or to a location other
than his address of record listed on the account application,
the request must be in writing and the investor's signature
must be guaranteed by an eligible institution. Eligible
institutions generally include banking institutions,
securities exchanges, associations, agencies or
broker/dealers, and ''STAMP'' program participants. There are
no fees charged for redemptions.
The 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
<PAGE> 20
<PAGE>
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.
The Fund 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.
<PAGE> 21
<PAGE>
EXCHANGES
The Fund s shares may be exchanged, without cost, for shares
of Fund for Government Investors, Fund for Tax-Free 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 must 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 falls 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. Subject to certain conditions, the Fund may also
<PAGE> 22
<PAGE>
involuntarily redeem such an account (see How to Redeem an
Investment (Withdrawals). 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
(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-
<PAGE> 23
<PAGE>
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.
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
<PAGE> 24
<PAGE>
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
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).
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,
<PAGE> 25
<PAGE>
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
Officer and Directors
The Fund has a Board of Directors which is responsible for the
general supervision of the Fund s business. The day-to-day
operations of the Fund are the responsibility of the Fund s
officers.
Investment Adviser, Administrator, and Servicing Agent
The Fund is provided investment advisory and management
services by Money Management Associates, 1001 Grand Isle Way,
Palm Beach Gardens, Florida 33418. The Adviser is a limited
partnership formed under the laws of the District of Columbia
on August 15, 1974. Daniel L. O Connor is the sole general
partner of the Adviser, and as such, exercises control of the
Adviser. Its primary business has been to serve as the
Adviser to four registered investment companies, including
Fund for Government Investors, The Rushmore Fund, Inc., Fund
for Tax Free Investors, Inc. and American Gas Index Fund, Inc.
Net assets under management currently approximate $900
million.
Under an Investment Advisory Agreement between the Fund and
the Adviser, the Fund pays the Adviser a fee at an annual rate
based on 0.40% of the net assets of the Fund. Subject to the
control of the officers and Directors of the Fund, the Adviser
administers the affairs of the Fund and is responsible for
purchasing and selling securities of the Index and making
short-term cash investments.
<PAGE> 26
<PAGE>
The Fund s administrator is 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. calculates and maintains the
Index and provides 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 ( RTS ), 4922 Fairmont
Avenue, Bethesda, Maryland 20814, a majority-owned subsidiary
of the Adviser, provides the Fund with custodial, transfer
agency, dividend-disbursing, and other services. RTS receives
an annual fee of 0.35% of the average daily net assets of the
Fund as compensation for providing these services to the Fund.
Under the foregoing Agreements, ultimately the Adviser or RTS
is responsible for paying the expenses of the Fund other than
taxes and extraordinary expenses.
<PAGE> 27
<PAGE>
<TABLE>
<CAPTION>
ATTACHMENT - A.G.A. STOCK INDEX
(as of March 31, 1996)
Common Stocks Value Weighting (%)
------------- ------------------
<S> <C>
AGL Resources, Inc. 1.68
Amoco Corp. 0.11
Atmos Energy Corp. 0.61
Baltimore Gas & Electric Co. 0.62
Bay State Gas Co. 0.61
Brooklyn Union Gas Co. 1.79
Central Hudson Gas & Electric Corp. 0.10
Chesapeake Utilities Corp. 0.08
Chevron Corp. 0.06
Cinergy Corp. 0.67
Citizens Utilities Co., Series B 0.08
CMS Energy Corp. 1.10
Colonial Gas Co. 0.33
Commonwealth Energy System 0.24
Connecticut Energy Corp. 0.28
Connecticut Natural Gas Corp. 0.33
Consolidated Edison Co. of NY, Inc. 1.38
Consolidated Natural Gas Co. 4.85
Corning Natural Gas Corp. 0.02
Delmarva Power & Light Co. 0.16
Delta Natural Gas Co., Inc. 0.05
DPL, Inc. 0.28
Eastern Enterprises 0.75
El Paso Natural Gas Co. 2.13
Energen Corp. 0.30
Energy West Inc. 0.03
EnergyNorth, Inc. 0.10
Enova Corp. 0.59
Enron Corp. 5.00
ENSERCH Corp. 0.87
Entergy Corp. 0.07
Equitable Resources, Inc. 1.13
<PAGE> 28
<PAGE>
Essex County Gas Co. 0.07
Fall River Gas Co. 0.06
Gulfside Industries 0.00
Illinova Corp. 0.33
Indiana Energy, Inc. 0.90
KN Energy, Inc. 1.41
Laclede Gas Company 0.63
LG&E Energy Corp. 0.28
Long Island Lighting Co. 0.32
MCN Corp. 2.16
MDU Resources Group, Inc. 0.50
Mid-American Energy Co. 0.44
Minnesota Power & Light Co. 0.01
Mobile Gas Service Corp. 0.12
National Fuel Gas Co. 1.79
National Gas & Oil 0.07
New Jersey Resources Corp. 0.72
New York State Electric and Gas Corp. 0.27
NGC Corporation 0.98
Niagra Mohawk Power Corp. 0.20
Nicor, Inc. 2.09
NIPSCO Industries, Inc. 1.03
NorAm Energy Corp. 1.94
North Carolina Natural Gas Corp. 0.27
Northern States Power Co. 0.60
Northwest Natural Gas Co. 0.76
Northwestern Public Service Co. 0.08
NUI Corp. 0.27
Occidental Petroleum Corp. 5.00
ONEOK, Inc. 0.97
Orange & Rockland Utilities, Inc. 0.15
Pacific Enterprises 3.69
Pacific Gas & Electric Co. 3.69
PanEnergy Corp. 5.00
PECO Energy Co. 0.68
Pennsylvania Enterprises, Inc. 0.15
Peoples Energy Corp. 1.88
Piedmont Natural Gas Co., Inc. 1.05
Providence Energy Corp. 0.17
Public Service Co. of Colorado 0.80
Public Service Co. of New Mexico 0.31
Public Service Co. of North Carolina 0.50
<PAGE> 29
<PAGE>
Public Service Enterprise Group, Inc. 1.37
Questar Corp. 1.39
Roanoke Gas Co. 0.04
Rochester Gas and Electric Corp. 0.28
SCANA Corp. 0.48
Sierra Pacific Resources 0.08
SIGCORP, Inc. 0.11
Sonat, Inc. 2.44
South Jersey Industries, Inc. 0.35
Southern Union Co. 0.51
Southwest Gas Corp. 0.29
Southwestern Energy Co. 0.18
Tejas Power Corp. 0.23
Tenneco, Inc. 4.92
The Berkshire Gas Co. 0.05
The Coastal Corp. 3.79
The Columbia Gas System, Inc. 3.33
The Montana Power Co. 0.30
UGI Corp. 0.28
United Cities Gas Co. 0.32
UtiliCorp United, Inc. 0.67
Valley Resources, Inc. 0.07
Washington Energy Co. 0.70
Washington Gas Light Co. 1.59
Western Resources, Inc. 0.42
WICOR, Inc. 0.84
Williams Companies, Inc. 5.00
Wisconsin Energy Corp. 0.45
WPL Holdings, Inc. 0.21
WPS Resources Corp. 0.23
Yankee Energy System, Inc. 0.36
</TABLE>
<PAGE> 30
<PAGE>
AMERICAN GAS INDEX FUND
PROSPECTUS
August 1, 1996
Table of Contents
Page
Fee Table . . . . . . . . . . . . . . . . . . . . . . . . . 2
Financial Highlights . . . . . . . . . . . . . . . . . . . 3
Management s Discussion of Fund Performance . . . . . . . . 5
Performance Data . . . . . . . . . . . . . . . . . . . . . 5
Investment Policies . . . . . . . . . . . . . . . . . . . . 5
How to Invest in the Fund . . . . . . . . . . . . . . . . . 8
How to Redeem an Investment (Withdrawals) . . . . . . . . . 9
Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . 10
Transaction Charges . . . . . . . . . . . . . . . . . . . . 10
Tax-Sheltered Retirement Plans . . . . . . . . . . . . . . 10
Dividends and Distributions . . . . . . . . . . . . . . . . 11
Net Asset Value . . . . . . . . . . . . . . . . . . . . . . 11
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Organization and Description of Common Stock . . . . . . . 12
<PAGE> 31
<PAGE>
Management of the Fund . . . . . . . . . . . . . . . . . . 12
Attachment . . . . . . . . . . . . . . . . . . . . . . . . 14
<PAGE> 32
<PAGE>
PART B
<PAGE>
<PAGE>
AMERICAN GAS INDEX FUND, INC.
4922 Fairmont Avenue, Bethesda, MD 20814
(800) 343-3355
(301) 657-1500
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 ).
This Statement of Additional Information is not a prospectus.
It should be read in conjunction with the Fund s Prospectus,
dated August 1, 1996. 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 August
1, 1996.
STATEMENT OF ADDITIONAL INFORMATION
Table of Contents
<PAGE>
<PAGE>
Cross Reference to Related Item in Prospectus
Page in Statement
of Additional Page in
Information Prospectus
Investment Objectives and Policies 3 5
Redemptions 4 8
Tax-Deferred Retirement Plans 4 10
Management of the Fund 4 12
Principal Holders of Securities 5 --
Investment Advisory and Other Services 5 12
Net Asset Value 6 11
Taxes 6 11
Auditors and Custodian 6 13
<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 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 105 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 totaled. 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. 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
<PAGE> B-3
<PAGE>
stocks to maintain holdings of each stock to reflect proper
weightings within the Index.
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. The Adviser 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, 1996, 1995 and 1994, the Fund paid
<PAGE> B-4
<PAGE>
$92,000, $95,000, and $113,000, respectively, in brokerage
commissions.
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
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.
The following restrictions are not fundamental and may be
changed by the Board of Directors:
The Fund may not:
<PAGE> B-5
<PAGE>
1. invest in warrants;
2. invest more than 15% of the Fund s net assets in illiquid
securities.
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
<PAGE> B-6
<PAGE>
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.
<PAGE> B-7
<PAGE>
Section 403 (b)(7) - Custodial Accounts
A 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.
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, 1996, the Fund paid
$7,000 in directors fees.
*Michael Baly, III, 47 - 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 Boulevard,
Arlington, VA 22209.
*Phillip Borish, 68 - Director. Employee of Rushmore
Services, Inc., a subsidiary of the Adviser, since 1995.
Address: 4922 Fairmont Avenue, Bethesda, MD 20814.
Bette Clemens, 72 - 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, 59 - Director. President of Donatelli and
Klein, Inc., engaged in the acquisition of real estate,
primarily office buildings and multi-family housing projects
since 1993. Address: 7200 Wisconsin Avenue, Bethesda, MD
20814.
*Richard J. Garvey, 63 - Chairman of the Board, Director of
the Fund, President and Treasurer of the Fund since 1989.
Employee of Rushmore Services, Inc., a subsidiary of the
Adviser, since 1995. Limited Partner of the Adviser.
Address: 4922 Fairmont Avenue, Bethesda, Maryland 20814.
Charles A. Hass, 66 - Director. Retired. Address: 6743 Fern
Lane, Annandale, Virginia 22003.
<PAGE> B-8
<PAGE>
George H. Lawrence, 70 - Director. Of Counsel Akin, Gump,
Strauss, Hauer & Feld since 1991. Retired President of
American Gas Association. Address: 8707 Eaglebrook Court,
Alexandria, VA 22308.
Carl Levin, 83 - Director. Public Affairs Consultant since
1986. Executive Director for the U.S. Council for Coconut
Research until 1992. Address: 5450 Whitley Park Terrace,
#809, Bethesda, MD 20814.
Patrick F. Noonan, 53 - Director. Chairman of the
Conservation Fund since 1985. Chairman, Executive Committee,
American Farmland Trust and Trustee, American Conservation
Association since 1985. President of Conservation Resources,
Inc., since 1981. Address: 1101 Glen Mill Drive, Potomac, MD
20854.
*Daniel L. O Connor, 54 - Director. General Partner of the
Adviser since 1974. Address: 1001 Grand Isle Way, Palm Beach
Gardens, FL 33418.
Eugene A. Tracy, 68 - Director. Retired since 1992. Chairman
of the Executive Committee, Peoples Energy Corporation until
1992. Address: 1424 Sequoia Trail, Glenview, IL 60325.
*David J. Muchow, 51 - Vice President and Secretary since
1989. General Counsel and Corporate Secretary of American Gas
Association since 1978. Address: 1515 Wilson Blvd.,
Arlington, VA 22209.
*Daniel Sanford, 48 - Assistant Secretary since 1995. Deputy
General Counsel, American Gas Association since 1995.
Address: 1515 Wilson Blvd., Arlington, VA 22209.
*Timothy N. Coakley, CPA, 28 - Vice President and Controller
since 1994. Audit Manager Deloitte & Touche LLP until 1994.
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, Fund for
Tax-Free Investors, Inc. and The Rushmore Fund, Inc., other
investment companies managed by the Adviser.
<PAGE> B-9
<PAGE>
PRINCIPAL HOLDERS OF SECURITIES
On July 1, 1996, there were 14,961,317 shares outstanding.
Charles Schwab & Co., Inc. San Francisco, California, held,
for the benefit of others, 21.65% of the Fund s shares as of
July 1, 1996. No other person owned more than 5% of the
outstanding shares of the Fund. Officers and directors of the
Fund, as a group, own less than 1% of the shares outstanding.
INVESTMENT ADVISORY AND OTHER SERVICES
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 1001 Grand Isle
Way, Palm Beach Gardens, Florida 33418, 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 formed under the
laws of the District of Columbia on August 15, 1974. Its
primary business has been to serve as the investment adviser
to Fund for Government Investors, Fund for Tax-Free Investors,
Inc., and The Rushmore Fund, Inc. with assets of $570 million,
$98 million and $25 million, respectively, on July 1, 1996.
Daniel L. O Connor is the sole general partner of the Adviser,
and, as such, exercises control thereof.
Under an Investment Advisory Agreement with the Adviser, dated
February 13, 1989 and last renewed by the Board of Directors
on April 25, 1996, 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. The Adviser may, from
its own resources, including profits from advisory fees
received from the Fund, (provided such fees are legitimate and
<PAGE> B-10
<PAGE>
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.
For the years ended March 31, 1996, 1995, and 1994 the Adviser
earned fees of $783,272, $775,316, $956,273, respectively.
Under an Administrative Services Agreement dated November 1,
1993 and last renewed by the Board of Directors on April 25,
1996, Rushmore Trust and Savings, FSB ( RTS ), 4922 Fairmont
Avenue, Bethesda, Maryland, a majority-owned subsidiary of the
Adviser, provides transfer agency, dividend-disbursing and
administrative services to the Fund. Under the agreement, the
services of RTS are provided to the Fund on a fee basis and
are paid by the Fund. The fees are calculated at the annual
rate of 0.35% of the average assets of the Fund. The amount
paid to RTS for these services for the year ended March 31,
1996 was $685,363.
Under the foregoing Agreements, ultimately the Adviser or RTS
is responsible for paying the expenses of the Fund other than
taxes and extraordinary expenses.
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 25, 1996, 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
<PAGE> B-11
<PAGE>
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, 1996, the administration
fee was $195,818.
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
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
<PAGE> B-12
<PAGE>
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. RTS
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-13
<PAGE>
Annual Report, dated March 31, 1996
for American Gas Index Fund, Inc.
<PAGE>
<PAGE>
ANNUAL REPORT - AMERICAN GAS INDEX FUND, INC.
ANNUAL REPORT, March 31, 1996
AMERICAN GAS INDEX FUND, INC.
4922 Fairmont Avenue, Bethesda, Maryland 20814
(800) 622-1386 (301) 657-1510
----------------------------------------------------------------------------
---------------TOP FIVE PERFORMERS------------
(Price Change: April 1, 1995 - March 31, 1996)
<TABLE>
<S> <C>
NoRam Energy Corp. 72.09%
Williams Companies, Inc. 61.19%
Southern Union Co. 58.45%
The Columbia Gas System, Inc. 54.85%
Washington Energy Co. 53.27%
</TABLE>
----------------------------------------------------------------------------
---------BOTTOM FIVE PERFORMERS---------
(Price Change: April 1, 1995 - March 31, 1996)
<TABLE>
<S> <C>
Niagara Mohawk Power Corp.* - 51.82%
Southwestern Energy Co. - 20.00%
Citizens Utilities Co., Series B - 13.86%
Delta Natural Gas Co., Inc. - 9.59%
Pacific Gas & Electric Co. - 1.55%
*Eliminated from Fund, May 1996.
</TABLE>
<PAGE>
<PAGE>
Dear Shareholders:
During the fiscal year which ended on March 31, 1996, the
American Gas Index Fund, Inc. experienced four positive quarters
and a total return of 23.46%. A new high net asset value ("NAV")
of $13.54 was achieved on February 13, 1996. At the end of
March, the NAV was $13.25 compared to $11.13 at the beginning of
the period which started on April 1, 1995. This strong
performance resulted from more than 90% of the Fund s portfolio
increasing in share value. Two important additions to the Fund s
holdings were Laclede Gas Company and NGC Corporation.
The Fund s consistent strength during the past four quarters
reflected renewed confidence expressed by energy and investment
analysts in unabated growth in natural gas consumption. Other
factors that had a positive impact were a rising stock market (as
evidenced by the broad market averages), declines in long-term
interest rates, healthy natural gas reserves additions, and the
price behavior of competing energy fuels. Also, the market's
valuation of the vast majority of the Fund s investments
increased in response to the various proposals to restructure and
partially deregulate the electric utility industry. Gas
distribution and pipeline companies seem to be increasingly
attractive investments and merger or acquisition targets. In our
opinion, the Fund continues to be an ideal vehicle to financially
participate in the growing natural gas markets and the
restructuring of the energy utilities.
TOTAL RETURN COMPARISON
(April 1, 1995 - March 31, 1996)
[GRAPH OF TOTAL RETURN COMPARISON APPEARS HERE]
The average annual total return was 23.46% for the one-year
period, 9.97% for the five-year period, and 8.97% for the period
5/10/89 (inception) through March 31, 1996. 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.
As of March 31, 1996, the market value of pipeline companies
represented 23% of the portfolio, diversified/integrated
companies comprised 34%, combination companies made up 20% and
natural gas utility companies were 23%.
AMERICAN GAS INDEX FUND
<PAGE> 2
<PAGE>
THREE LARGEST HOLDINGS BY SECTOR
PIPELINE DIVERSIFIED/INTEGRATED
PanEnergy Corp. Occidental
Williams Companies, Inc. Petroleum Corp.
Tenneco, Inc. Consolidated
Natural Gas Co.
COMBINATION NATURAL GAS &
ELECTRIC UTILITIES Tenneco, Inc.
Pacific Gas & Electric Co.
Consolidated Edison Co., of NY, Inc. NATURAL GAS
Public Service Enterprise Group, Inc. UTILITIES
Pacific
Enterprises
MCN Corp.
Brooklyn Union Gas Co.
We look forward to future growth in the value of the Fund
and your continued participation.
Sincerely,
/s/ Richard J. Garvey
Richard J. Garvey
Chairman
American Gas Index Fund, Inc.
<PAGE> 3
<PAGE>
AMERICAN GAS INDEX FUND, INC.
STATEMENT OF NET ASSETS
MARCH 31, 1996
<TABLE>
<CAPTION>
MARKET VALUE PERCENT OF
COMMON STOCKS SHARES (NOTE 1) NET ASSETS
------------- ------- ------------ ----------
<S> <C> <C> <C>
Occidental Petroleum Corp. ............... 400,000 $ 10,700,000 5.25%
PanEnergy Corp. .......................... 325,000 10,115,625 4.96%
Williams Companies, Inc. ................. 200,000 10,075,000 4.94%
Enron Corp. .............................. 260,000 9,587,500 4.70%
Consolidated Natural Gas Co. ............. 210,000 9,135,000 4.48%
Tenneco, Inc. ............................ 160,000 8,940,000 4.38%
The Coastal Corp. ........................ 195,000 7,702,500 3.77%
Pacific Gas and Electric Co. ............. 335,000 7,579,375 3.72%
Pacific Enterprises....................... 290,000 7,503,750 3.68%
The Columbia Gas System, Inc. ............ 135,000 6,193,125 3.04%
Sonat, Inc. .............................. 140,000 5,040,000 2.47%
MCN Corp. ................................ 195,000 4,509,375 2.21%
NorAm Energy Corp. ....................... 475,000 4,393,750 2.15%
NICOR, Inc. .............................. 160,000 4,280,000 2.10%
El Paso Energy Co. ....................... 100,000 3,700,000 1.81%
Brooklyn Union Gas Co. ................... 135,000 3,611,250 1.77%
Peoples Energy Corp. ..................... 110,000 3,561,250 1.74%
AGL Resources, Inc. ...................... 180,900 3,324,037 1.63%
National Fuel Gas Co. .................... 95,000 3,289,375 1.61%
Washington Gas Co. ....................... 150,000 3,281,250 1.61%
Questar Corp. ............................ 90,000 2,970,000 1.46%
K N Energy, Inc. ......................... 92,500 2,879,063 1.41%
Consolidated Edison Co. of New York, Inc. . 85,000 2,709,375 1.33%
Public Service Enterprise Group, Inc. .... 95,000 2,612,500 1.28%
CMS Energy Corp. ......................... 75,000 2,212,500 1.08%
Piedmont Natural Gas Co. ................. 95,000 2,113,750 1.04%
NIPSCO Industries, Inc. .................. 55,000 2,048,750 1.00%
Equitable Resources, Inc. ................ 70,000 2,047,500 1.00%
ONEOK, Inc. .............................. 85,000 2,029,375 0.99%
Indiana Energy, Inc. ..................... 77,500 1,860,000 0.91%
<PAGE> 4
<PAGE>
ENSERCH Corp. ............................ 110,000 1,787,500 0.88%
</TABLE>
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>
NGC Corp. ................................ 135,000 1,721,250 0.84%
WICOR, Inc. .............................. 50,000 1,687,500 0.83%
Public Service Co. of Colorado............ 47,500 1,674,375 0.82%
Eastern Enterprises....................... 45,000 1,597,500 0.78%
Northwest Natural Gas Co. ................ 50,000 1,587,500 0.78%
PECO Energy Co. .......................... 55,000 1,464,375 0.72%
New Jersey Resources Corp. ............... 50,000 1,443,750 0.71%
Washington Energy Co. .................... 70,000 1,435,000 0.70%
Bay State Gas Co. ........................ 50,000 1,393,750 0.68%
Southern Union Co.*....................... 66,672 1,366,776 0.67%
UtiliCorp United, Inc. ................... 47,500 1,359,688 0.67%
Cinergy Corp. ............................ 45,000 1,350,000 0.66%
Baltimore Gas and Electric Co. ........... 47,500 1,312,187 0.64%
Atmos Energy Corp. ....................... 55,000 1,265,000 0.62%
MDU Resources Group, Inc. ................ 50,000 1,150,000 0.56%
Enova Corp. .............................. 50,000 1,143,750 0.56%
Laclede Gas Co. .......................... 50,000 1,137,500 0.56%
Public Service Co. of North Carolina, Inc. 60,000 960,000 0.47%
Wisconsin Energy Corp. ................... 32,500 922,188 0.45%
MidAmerican Energy Co. ................... 50,000 893,750 0.44%
Northern States Power Co. ................ 17,500 853,125 0.42%
Western Resources, Inc. .................. 27,500 838,750 0.41%
SCANA Corp. .............................. 30,000 825,000 0.40%
Connecticut Natural Gas Corp. ............ 35,000 813,750 0.40%
Yankee Energy System, Inc. ............... 35,000 783,125 0.38%
South Jersey Industries, Inc. ............ 35,000 748,125 0.37%
Colonial Gas Co. ......................... 30,000 705,000 0.35%
Energen Corp. ............................ 30,000 656,250 0.32%
Public Service Co. of New Mexico.......... 35,000 651,875 0.32%
<PAGE> 5
<PAGE>
The Montana Power Co. .................... 30,000 648,750 0.32%
Rochester Gas and Electric Corp. ......... 30,000 648,750 0.32%
L G & E Energy Corp. ..................... 15,000 643,125 0.32%
</TABLE>
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>
UGI Corp. ................................ 30,000 637,500 0.31%
Illinova Corp. ........................... 22,500 632,812 0.31%
United Cities Gas Co. .................... 35,000 621,250 0.30%
Long Island Lighting Co. ................. 35,000 616,875 0.30%
DPL, Inc. ................................ 25,000 596,875 0.29%
Connecticut Energy Corp. ................. 30,000 573,750 0.28%
North Carolina Natural Gas Corp. ......... 22,500 565,312 0.28%
NUI Corp. ................................ 30,000 558,750 0.27%
Southwest Gas Corp. ...................... 31,800 548,550 0.27%
WPS Resources Corp. ...................... 15,000 504,375 0.25%
Commonwealth Energy System................ 10,500 490,875 0.24%
New York State Electric and Gas Corp. .... 20,000 470,000 0.23%
WPL Holdings, Inc. ....................... 15,000 463,125 0.23%
TPC Corp.*................................ 50,000 443,750 0.22%
Niagara Mohawk Power Corp. ............... 65,000 430,625 0.21%
Southwestern Energy Co. .................. 35,000 420,000 0.21%
Providence Energy Corp. .................. 20,000 365,000 0.18%
Delmarva Power and Light Co. ............. 15,000 318,750 0.16%
Pennsylvania Enterprises, Inc. ........... 8,000 309,000 0.15%
Fall River Gas Co. ....................... 14,500 308,125 0.15%
Amoco Corp. .............................. 4,000 289,000 0.14%
Mobile Gas Service Corp. ................. 12,000 276,000 0.14%
Orange and Rockland Utilities, Inc. ...... 7,500 269,063 0.13%
Sigcorp, Inc. ............................ 7,500 261,563 0.13%
EnergyNorth, Inc. ........................ 12,500 240,625 0.12%
Central Hudson Gas and Electric Corp. .... 7,500 226,875 0.11%
Sierra Pacific Resources.................. 8,000 201,000 0.10%
Chesapeake Utilities Corp. ............... 11,000 184,250 0.09%
<PAGE> 6
<PAGE>
Essex County Gas Co. ..................... 7,000 176,750 0.09%
Corning Natural Gas Corp. ................ 7,000 173,250 0.08%
Valley Resources, Inc. ................... 15,000 170,625 0.08%
Citizens Utilities Co., Series B.......... 15,000 163,125 0.08%
The Berkshire Gas Co. .................... 10,000 157,500 0.08%
</TABLE>
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>
Roanoke Gas Co. .......................... 10,000 155,000 0.08%
National Gas and Oil Co. ................. 15,450 145,809 0.07%
Northwestern Public Service Co. .......... 5,000 145,000 0.07%
Entergy Corp. ............................ 5,000 140,000 0.07%
Delta Natural Gas Co., Inc. .............. 7,500 123,750 0.06%
Chevron Corp. ............................ 2,000 112,250 0.06%
Energy West, Inc. ........................ 7,500 71,133 0.03%
Wisconsin Fuel and Light Co. ............. 1,500 60,000 0.03%
Minnesota Power and Light Co. ............ 1,000 27,750 0.01%
Gulfside Industries*...................... 25,000 1,750 0.01%
------------ ------
Total Common Stocks (Cost $152,550,346). 201,121,306 98.59%
------------ ------
Repurchase Agreements
With Paine Webber at 5.375%, dated
3/29/96,
due 4/1/96, collaterized by U.S. Trea-
sury Notes,
due 6/30/97 (Cost $3,146,976).......... 3,146,976 1.54%
<PAGE> 7
<PAGE>
------------ ------
Total Investments (Cost $155,697,322)... 204,268,282 100.13%
Liabilities in Excess of Other Assets... (268,624) (0.13)%
------------ ------
Net Assets (Note 5)..................... $203,999,658 100.00%
============ ======
Net Asset Value Per Share (Based on
15,391,065 Shares Outstanding)......... $13.25
============
</TABLE>
*Non-income producing.
See Notes to Financial Statements.
<PAGE> 8
<PAGE>
AMERICAN GAS INDEX FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME (Note 1)
Dividends........................................................ $ 8,759,752
Interest......................................................... 175,243
-----------
Total Investment Income........................................ 8,934,995
-----------
EXPENSES
Investment Advisory Fee (Note 2)................................. 783,272
Accounting and Administrative Service Fee (Note 2)............... 685,363
Administrative Fee (Note 2)...................................... 195,818
-----------
Total Expenses................................................. 1,664,453
-----------
NET INVESTMENT INCOME.............................................. 7,270,542
-----------
Net Realized Loss on Investments................................... (1,999,723)
Net Change in Unrealized Appreciation of Investments (Note 4)...... 35,810,773
-----------
NET GAIN ON INVESTMENTS............................................ 33,811,050
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... $41,081,592
===========
</TABLE>
See Notes to Financial Statements.
<PAGE> 9
<PAGE>
AMERICAN GAS INDEX FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED MARCH 31,
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Income............................ $ 7,270,542 $ 7,832,535
Net Realized Loss on Investments................. (1,999,723) (8,212,064)
Net Change in Unrealized Appreciation of
Investments..................................... 35,810,773 8,574,990
------------ ------------
Net Increase in Net Assets Resulting from
Operations...................................... 41,081,592 8,195,461
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income (Note 1).............. (7,193,118) (7,827,698)
From Net Realized Gain on Investments............ -- --
FROM SHARE TRANSACTIONS
Net Proceeds from Sales of Shares................ 44,037,602 40,152,519
Reinvestment of Distributions.................... 6,120,501 6,667,885
Cost of Shares Redeemed.......................... (68,590,822) (67,680,680)
------------ ------------
Net Decrease in Net Assets Resulting from Share
Transactions.................................... (18,432,719) (20,860,276)
Total Increase (Decrease) in Net Assets.......... 15,455,755 (20,492,513)
NET ASSETS--Beginning of Year...................... 188,543,903 209,036,416
------------ ------------
NET ASSETS--End of Year............................ $203,999,658 $188,543,903
============ ============
SHARES
Sold............................................. 3,519,043 3,676,255
Issued in Reinvestment of Distributions.......... 492,283 619,298
Redeemed......................................... (5,561,511) (6,212,802)
------------ ------------
Net Decrease..................................... (1,550,185) (1,917,249)
============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE> 10
<PAGE>
<PAGE> 11
<PAGE>
AMERICAN GAS INDEX FUND, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31,
-----------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value--
Beginning of Year.... $ 11.13 $ 11.08 $ 12.17 $ 9.45 $ 10.20
--------- --------- --------- --------- ---------
Net Investment Income. 0.454 0.440 0.410 0.407 0.472
Net Realized and
Unrealized Gains
(Losses) on
Securities........... 2.125 0.050 (1.031) 2.853 (0.758)
--------- --------- --------- --------- ---------
Net Increase
(Decrease) in Net
Asset Value Resulting
from Operations...... 2.579 0.490 (0.621) 3.260 (0.286)
Dividends to
Shareholders......... (0.455) (0.440) (0.406) (0.410) (0.464)
Distributions to
Shareholders from Net
Realized Capital
Gains................ -- -- (0.063) (0.130) --
--------- --------- --------- --------- ---------
Net Increase
(Decrease) in Net
Asset Value.......... 2.12 0.05 (1.09) 2.72 (0.75)
--------- --------- --------- --------- ---------
Net Asset Value--End
of Year.............. $ 13.25 $ 11.13 $ 11.08 $ 12.17 $ 9.45
========= ========= ========= ========= =========
Total Investment Return. 23.46% 4.72% (5.37)% 35.38% (2.89)%
Ratios to Average Net
<PAGE> 12
<PAGE>
Assets:
Expenses Less
Reimbursement from
Adviser.............. 0.85% 0.85% 0.84% 0.85% 0.85%
</TABLE>
AMERICAN GAS INDEX FUND, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31,
-----------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Expenses Before
Reimbursement from
Adviser.............. 0.85% 0.85% 0.84% 0.85% 0.87%
Net Investment Income. 3.71% 4.04% 3.33% 3.82% 4.73%
Supplementary Data:
Portfolio Turnover
Rate................. 10.0% 8.5% 11.4% 21.5% 30.2%
Net Assets at End of
Year (000's omitted). $ 204,000 $ 188,544 $ 209,036 $ 215,557 $ 129,182
Number of Shares
Outstanding at End of
Year (000's omitted). 15,391 16,941 18,858 17,708 13,669
</TABLE>
See Notes to Financial Statements.
<PAGE> 13
<PAGE>
AMERICAN GAS INDEX FUND, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
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 Fund is
authorized to issue 1,000,000,000 shares of $0.001 par value capital
stock. 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 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. Net realized 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. Certain Officers and Directors of
the Fund are affiliated with Money Management Associates.
<PAGE> 14
<PAGE>
Rushmore Trust and Savings, FSB ("Trust"), a majority-owned
subsidiary of the Adviser, provides transfer agency, dividend-
disbursing and other shareholder services to the Fund. In addition, the
Trust serves as custodian of the Fund's 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, 1996, purchases of securities were
$19,277,012, and sales of securities were $34,465,237. These totals
exclude short-term securities.
4. NET UNREALIZED APPRECIATION/ DEPRECIATION OF INVESTMENTS
As of March 31, 1996, net unrealized appreciation of investments
for Federal income tax purposes was $46,317,903 of which $50,652,658
related to appreciated investments and $4,334,755 related to depreciated
investments. At March 31, 1996, the cost of the Fund's securities for
Federal income tax purposes was $157,950,379.
5. NET ASSETS
At March 31, 1996 net assets consisted of the following:
<TABLE>
<S> <C>
Paid-in Capital.......................................... $169,023,733
Net Unrealized Appreciation of Investments............... 48,570,960
Accumulated Realized Loss on Investments................. (13,816,390)
Undistributed Net Investment Income...................... 221,355
------------
NET ASSETS............................................... $203,999,658
============
</TABLE>
6. CAPITAL LOSS CARRYOVERS
At March 31, 1996, for Federal income tax purposes, the
Fund had capital loss carry-overs which may be applied against
<PAGE> 15
<PAGE>
future net taxable realized gains of each succeeding year until
the earlier of its utilization or its expiration:
<TABLE>
<CAPTION>
Expires March 31,
-----------------
<S>
<C>
2003............................................. $ 9,143,031
2004............................................. $ 2,420,302
-----------
$11,563,333
===========
</TABLE>
<PAGE> 16
<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., (the Fund), as of March 31, 1996, the related
statements of operations for the year then ended and changes in
net assets for each of the two years in the period then ended,
and the financial highlights for each of the five years in the
period then ended. 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, 1996 by correspondence with the
custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, such financial statements and financial
highlights present fairly, in all material respects, the
financial position of American Gas Index Fund, Inc. at March 31,
1996, 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 3, 1996
<PAGE> 17
<PAGE>
AMERICAN
GAS
INDEX
FUND
-----------------------------------------------------------------
ANNUAL REPORT
MARCH 31, 1996
[LOGO OF RECYCLED PAPER APPEARS HERE]
-------------------------------
Printed on Recycled Paper [LOGO OF
RUSHMORE APPEARS HERE]
-------------------------------
[LOGO OF PRINTED WITH SOY INK APPEARS HERE]
<PAGE> 18
<PAGE>
PART C
<PAGE>
<PAGE>
PART C
OTHER INFORMATION
American Gas Index Fund, Inc.
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
a. Financial statements: The following financial statements
are incorporated by reference in Part B of this
registration statement amendment.
Statement of Net Assets as of March 31, 1996
Statement of Operations for the year ended March 31, 1996
Statements of Changes in Net Assets for the years ended
March 31, 1996 and March 31, 1995
Financial Highlights for the years ended March 31, 1996,
1995, 1994, 1993, 1992, and 1991
No Statement of Sources of Net Assets will be included
because the full amount of net assets on March 31, 1996
represents cash received from issuance of shares (less cost
of shares redeemed). See Statements of Changes in Net
Assets.
b. Exhibits:
11 Consent of Deloitte & Touche LLP independent auditors
for Registrant
16 Calculation of Total Return
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
WITH REGISTRANT
None
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Approximate Number of
Shareholders of Record
Title of Class at July 1, 1996
-------------- ----------------------
<S> <C>
Common Stock, $.001
par value 11,494
</TABLE>
ITEM 27. INDEMNIFICATION
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a director, officer of controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Money Management Associates ( MMA ), 1001 Grand Isle Way, Palm
Beach Gardens, Florida 33418, a limited partnership organized
under the laws of the District of Columbia on August 15, 1974,
has one general partner and five limited partners. Daniel L.
O'Connor is the general partner and sole employee of MMA.
<PAGE> C-2
<PAGE>
Limited partners Richard J. Garvey, Martin M. O'Connor, Rita A.
Gardner, and John R. Cralle, are full-time employees of Rushmore
Services, Inc. ( RSI ), a subsidiary of MMA, at 4922 Fairmont
Avenue, Bethesda, Maryland 20814. Limited partner William L.
Major is a retired employee of RSI.
MMA also serves as the investment adviser to Fund for
Government Investors, The Rushmore Fund, Inc., and Fund For Tax-
Free Investors, Inc., all regulated investment companies since
their inception.
ITEM 29. PRINCIPAL UNDERWRITERS
Not applicable
ITEM 30. LOCATIONS OF ACCOUNTS AND RECORDS
The physical location for all accounts, books and records
required to be maintained and preserved to Section 31(a) of the
Investment Company Act of 1940, as amended, and Rules 31a-1 and
31a-2 thereunder, is 4922 Fairmont Avenue, Bethesda, Maryland,
20814 for shareholder accounting records. Rushmore Trust and
Savings Bank, FSB, 4922 Fairmont Avenue, Bethesda, Maryland
maintains the records of Portfolio securities.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS
None
<PAGE> C-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that
it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this registration
statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in this City of Bethesda in the State
of Maryland on the 25th day of July 1996.
American Gas Index Fund, Inc.
By:
/S/ Richard J. Garvey
Richard J. Garvey, Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Name Title Date
Director
Michael Baly, III July ___, 1996
/s/ Philip Borish Director July 25, 1996
Philip Borish
/s/ Bette Clemens Director July 25, 1996
Bette Clemens
/s/ Louis T. Donatelli Director July 26, 1996
Louis T. Donatelli
/s/ Richard J. Garvey Chairman, Director July 25, 1996
Richard J. Garvey President and
Treasurer
/s/Charles A. Hass Director July 25, 1996
Charles A. Hass
<PAGE>
<PAGE>
Director July ___, 1996
George H. Lawrence
/s/ Carl Levin Director July 25, 1996
Carl Levin
/s/ Patrick F. Noonan Director July 25, 1996
Patrick F. Noonan
/s/ Daniel L. O Connor Director July 25, 1996
Daniel L. O Connor
/s/ Eugene A. Tracy Director July 25, 1996
Eugene A. Tracy
<PAGE> C-5
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
The American Gas Index Fund, Inc.:
We consent to the incorporation by reference in this Post-
Effective Amendment No. 7 to Registration Statement Nos. 33-25678
and 811-5702 of our report dated May 3, 1996 appearing in the
Annual Report of the American Gas Index Fund, Inc. for the year
ended March 31, 1996, and to the reference to us under the
caption Financial Highlights appearing in the Prospectus, which
is also a part of such Registration Statement.
/s/ Deloitte & Touche LLP
Washington, D.C.
July 26, 1996
<PAGE>
American Gas Index Fund, Inc.
Exhibit 16
Total Return Calculation
Item 22, Part B
A. For the year ended March 31, 1996
P (1 + T)n = ERV
ERV = $1,234.62
n = 1.0 year
T = 23.46%
B. For the five year period ended March 31, 1996
P (1 + T)n = ERV
ERV = $1,608.51
n = 5.0 years
T = 9.97%
C. For the period May 10, 1989 (Commencement of Operations)
to March 31, 1996
P (1 + T)n = ERV
ERV = $1,808.19
n = 6.89589 years
T = 8.97%
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6 EX-27, NSAR B
<CIK> 0000843251
<NAME> AMERICAN GAS INDEX FUND, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 155,697,322
<INVESTMENTS-AT-VALUE> 204,268,282
<RECEIVABLES> 857,857
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 205,126,139
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,126,481
<TOTAL-LIABILITIES> 1,126,481
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 169,023,733
<SHARES-COMMON-STOCK> 15,391,065
<SHARES-COMMON-PRIOR> 16,941,250
<ACCUMULATED-NII-CURRENT> 221,355
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (13,816,390)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 48,570,960
<NET-ASSETS> 203,999,658
<DIVIDEND-INCOME> 8,759,752
<INTEREST-INCOME> 175,243
<OTHER-INCOME> 0
<EXPENSES-NET> (1,664,453)
<NET-INVESTMENT-INCOME> 7,270,542
<REALIZED-GAINS-CURRENT> (1,999,723)
<APPREC-INCREASE-CURRENT> 35,810,773
<NET-CHANGE-FROM-OPS> 41,081,592
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7,193,118)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,519,043
<NUMBER-OF-SHARES-REDEEMED> (5,561,511)
<SHARES-REINVESTED> 492,283
<NET-CHANGE-IN-ASSETS> 15,455,755
<ACCUMULATED-NII-PRIOR> 143,931
<ACCUMULATED-GAINS-PRIOR> (11,816,667)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 783,272
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,664,453
<AVERAGE-NET-ASSETS> 195,817,933
<PAGE>
<PER-SHARE-NAV-BEGIN> 11.130
<PER-SHARE-NII> 0.454
<PER-SHARE-GAIN-APPREC> 2.125
<PER-SHARE-DIVIDEND> (0.455)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 13.250
<EXPENSE-RATIO> 0.850
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
</TABLE>
