About the only thing harder than creating a new investment fund is finding a name for the fund. From "A" for Acorn to "W" for Windsor, there are more than 1,000 funds, and most of the catchy names such as Discovery, Magellan and New Horizons already are in use.

At Money Management Associates in Bethesda, Chairman Daniel L. O'Connor III was searching for a name for a new fund when a colleague suggested naming it after Mount Rushmore, where the heads of Presidents Washington, Jefferson, Lincoln and Teddy Roosevelt are carved in stone 60 feet high. A little research showed that the Rushmore name was, indeed, free and clear.

So "The Rushmore Fund" was born, and in the best marketing tradition, it takes full advantage of the Mount Rushmore connection. In the fund's literature, its name is entwined with a drawing of the four presidential stone faces and a slogan that says, "We're changing the face of investing."

Having found a name and slogan, all the fund needed was approval from the Securities and Exchange Commission, and that came last week.

The money managers who created The Rushmore Fund have been running the Fund for Government Investors for the past 10 years. When O'Connor started the money-market fund in 1975, he hoped to see it reach $100 million. It went far beyond that, peaking at $1.482 billion in August 1982. But, by that time, interest rates were coming down sharply. In that one month, the fund's yield dropped from 11.4 percent to 9.2 percent.

As interest rates continued to drop, money continued to flow out of Government Investors. Today, the fund is down to $790 million. It also lost some investors this year -- O'Connor is not sure how many -- when questions were raised about the stability of the Farm Credit System. The Fund for Government Investors held between $150 million and $175 million in short-term Farm Credit discount notes, and while they were taken off the books quickly, the exposure apparently worried some investors.

The changing interest-rate climate challenged O'Connor, 43, to find a new direction for his money-management firm. O'Connor, who once worked at the Federal National Mortgage Association (Fannie Mae), said: "It was obvious that the future growth of money funds was on hold -- even though I think they will come back -- but we couldn't have just one product. We had to figure out what the next step would be."

That next step, he decided, would be to get into the traditional mutual-fund business. So he created The Rushmore Fund, which contains five portfolios: a U.S. government securities portfolio, a Government National Mortgage Association (Ginnie Mae) portfolio, a money-market fund, a stock fund that will mirror the companies in the Standard & Poor's index called the S&P-100 and a stock fund based on the National Association of Securities Dealers index, called the NASDAQ-100.

The S&P-100 includes the 100 largest corporations, in terms of market value, traded on the New York Stock Exchange. IBM tops the list. The NASDAQ-100 is based on the 100 biggest nonfinancial companies, also in terms of market value, traded over the counter. There, Intel Corp. and MCI Communications Corp. lead the list.

The idea behind the two stock index funds, said funds manager Daniel S. Ryczek, is simply to echo the performance of the general market "in up years and down years." During the past 10 years, the S&P-100 has had six up years and four down years with a net increase of 61.4 percent. The NASDAQ-100, which is somewhat more volatile because it includes smaller, newer companies, has only a three-year record. Its net plus is 2.7 percent.

"We're betting on the market going up," said Ryczek.

Because just matching the market's performance doesn't pay for commissions and other costs, Ryczek said, the managers have decided to use up to 10 percent of their portfolio assets to buy and sell options on the indexes in hopes of making up those costs. While this strategy admittedly has some risk, Ryczek said, its use will be limited.

Rushmore Fund shares will sell at $10 each with a minimum initial investment of $2,500 ($500 for retirement accounts). While the fund will have no front-end load or commission, there will be a 2 percent fee if shares are redeemed within one year and a 1 percent fee for redemptions in the second year. After two years, there will be no fee. The fund will charge a sales and advertising fee of 0.25 percent, and Money Management Associates, the fund's adviser, will be paid 0.5 percent of the net assets of each portfolio, with a total limit of 1.25 percent.

A recent top gainer among Washington-area stocks was Biospherics Inc. of Rockville, where they have been developing an exotic substance called left-handed sugar. So-called L-sugars look like sugar and taste like sugar, but don't add calories. Biospherics figures L-sugars could be a sweet deal for weight-watchers and would allow the firm to enter the estimated $900 million-a-year market for noncalorie sweeteners.

On Nov. 18, Biospherics was selling at $2 a share, far from its five-year high of $7. By the end of that week, it was up to $2.75, a 37.5 percent increase. Then, during the following week, the stock rose from $2.75 to $3.75, a boost of 36.4 percent -- or a two-week gain of 87.5 percent. Last week, as the stock continued to rise, Biospherics closed at $4.25, for a three-week move of 112.5 percent.

Why the sudden interest in a stock that has been drifting downward for a long time? Peter T. Young, vice president for finance, thinks it may be due to a favorable article about Biospherics in the issue of Fortune magazine dated today. At the moment, Biospherics' major hurdle is to win approval for its L-sugar from the Food and Drug Administration, a process that will take an estimated three years or longer and will cost about $11 million, Young said. That's more than the company can afford, said Young, so Biospherics is looking for companies that might want to invest in the project.

Biospherics, which has other divisions that do laboratory and testing work in the environmental area, chalked up $110,000 in earnings (3 cents a share) on $6 million in revenue during 1984. Young said he looks for 1985 to show even better results.

That $4.25 rise in the price of Union Trust Bancorp stock last week is attributable to a matching move in Bank of Virginia shares. Bank of Virginia is acquiring Union Trust of Maryland, and the deal has tied the market action of the two institutions together. "As Bank of Virginia goes, so goes Union Trust," quipped Pat Ryan, chief trader at Johnston, Lemon & Co.

In the forthcoming stock swap, a Union Trust stockholder will get 2.05 shares of Bank of Virginia stock for each share of Union Trust. With Bank of Virginia selling at $31.50 a share on Friday, the Union Trust shareholder will get the equivalent of $64.58 worth of Bank of Virginia stock for his one share of Union Trust.

On Friday, that one share of Union Trust was trading at $61.50, a $3.08 discount that reflects the interest cost of money invested in Union Trust stock and the small possibility that the merger might not go through.

The shares of Kay Jewelers of Alexandria moved up over the $14 level last week, reaching a new high on heavy volume. Kay Jewelers is 80.4 percent owned by Kay Corp., which spun off part of Kay Jewelers in a public offering last May at $11.50 a share. Kay Corp., whose stock has been selling for about the same price as Kay Jewelers, moved up over the $15 level. But Kay Corp. is still far from its five-year high of $28.28.

Roldan Fernandez, chief financial officer of Kay Jewelers, attributes the stock move to two recent developments: a favorable analysis from Johnston, Lemon & Co., a regional brokerage house, and an improved financial report for the first nine months of 1985.

In the jewelry business, Fernandez said, a profitable year usually depends on Christmas season business. In 1984, for example, the firm lost $1.8 million in the first nine months, but ended the year with a profit of $5.3 million, or $1.11 a share. In the first nine months of 1985, it lost only $978,000, and so expects 1985 profits to be higher than last year. "We expect to have a very decent year," Fernandez said.