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As Filed With The Securities And Exchange Commission on
October 25, 1995.
FILE NOS. 33-46283 and 811-6601
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. 5 (X)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940 (X)
Amendment No. 6 (X)
CAPPIELLO-RUSHMORE TRUST
(Exact Name of Registrant as Specified in Charter)
4922 Fairmont Avenue, Bethesda, Maryland 20814
(Address of Principal Executive Office) (Zip Code)
(301) 657-1500
(Registrant's Telephone Number, Including Area Code)
Timothy N. Coakley
4922 Fairmont Avenue
Bethesda, Maryland 20814
(Name and Address of Agent for Service of Process)
Copies to:
James Bernstein, Esq.
Jorden Burt Berenson & Johnson LLP
1025 Thomas Jefferson Street, N.W.
Suite 400 East
Washington, D.C. 20007
It is proposed that this filing will become effective (check
appropriate box):
X immediately upon filing pursuant to paragraph (b)
of rule 485.
on pursuant to paragraph (b) of rule 485.
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<PAGE>
60 days after filing pursuant to paragraph (a)(1)
of rule 485.
on pursuant to paragraph (a)(1) of rule
485.
75 days after filing pursuant to paragraph (a)(2)
of rule 485.
on pursuant to paragraph (a)(2) of rule
485.
If appropriate, check the following box:
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 June 30, 1995
was filed on August 30, 1995.
TOTAL NUMBER OF PAGES____
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<REDLINE>
CAPPIELLO-RUSHMORE TRUST
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 Information Financial Highlights;
Performance Data
4. General Description of Organization of the Trust;
Registrant . . . . . . . . . . Investment Objectives:
Investment Policies
5. Management of the Fund . . . . Management of the Trust
5A. Management's Discussion of Fund Management's Discussion of Fund
Performance . . . . . . . . . Performance
6. Capital Stock and Other Organization of Trust; Taxes;
Securities . . . . . . . . . . Dividends and Distributions
7. Purchase of Securities Being How to Invest in the Fund;
Offered . . . . . . . . . . . Exchanges; Net Asset Value
8. Redemption or Repurchase . . . How to Redeem an Investment
(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 and History Not Applicable
13. Investment Objectives and Investment Objectives and
Policies . . . . . . . . . . . Policies
14. Management of the Registrant . Management of the Trust
15. Control Persons and Principal Principal Holders of Securities
Holders of Securities . . . .
16. Investment Advisory and Other Investment Advisory and Other
Services . . . . . . . . . . . Services
17. Brokerage Allocation . . . . . Investment Objectives and
Policies
18. Capital Stock and Other Not Applicable
Securities . . . . . . . . . .
19. Purchase, Redemption and Redemptions; Tax-Deferred
Pricing of Securities Being Retirement Plans; Net Asset
Offered . . . . . . . . . . . Value
20. Tax Status . . . . . . . . . . Taxes
21. Underwriters . . . . . . . . . Not Applicable
22. Calculations of Performance Calculation of Return
Data . . . . . . . . . . . . . Quotations
23. Financial Statements . . . . . Financial Statements
Part C: Other Information
24. Financial Statements and Financial Statements and
Exhibits . . . . . . . . . . . Exhibits
25. Persons Controlled by or Under Persons Controlled by or Under
Common Control . . . . . . . . Common Control
26. Number of Holders of Securities Number of Holders of Securities
27. Indemnification . . . . . . . Indemnification
28. Business and Other Connections Business and Other Connections
of Investment Adviser . . . . of Investment Adviser
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29. Principal Underwriters . . . . Principal Underwriters
30. Location of Accounts and Location of Accounts and
Records . . . . . . . . . . . Records
31. Management Services . . . . . Management Services
32. Undertakings . . . . . . . . . Undertakings
33. Signatures . . . . . . . . . . Signatures
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PART A
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CAPPIELLO-RUSHMORE TRUST
UTILITY INCOME FUND
GROWTH FUND
EMERGING GROWTH FUND
<REDLINE>
4922 Fairmont Avenue, Bethesda, Maryland 20814
(800) 343-3355 (301) 657-1500
The Cappiello-Rushmore Trust (the "Trust") is a no-load, open-
end, non-diversified management investment company consisting
of four separate funds: the Utility Income Fund, the Growth
Fund, the Emerging Growth Fund, and the Gold Fund. This
Prospectus sets forth concisely the information you should
know about the Trust and the Utility Income Fund, the Growth
Fund, and the Emerging Growth Fund (the "Funds"). Each Fund
has its own investment objectives and policies, and a
shareholder's interest is limited to the Fund in which the
shareholder owns shares.
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. This Prospectus is designed to set forth concisely
the information an investor should know before investing in
the Funds. A Statement of Additional Information dated
October __, 1995 containing additional information about the
Funds 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 Trust.
The date of this Prospectus is October __, 1995.
<REDLINE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
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ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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<PAGE>
FEE TABLE
<REDLINE>
The following table illustrates all expenses and fees that a
shareholder of the Trust will incur:
<TABLE>
<CAPTION>
Emerging Utility
Growth Growth Income
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases None None None
Sales Load Imposed on Reinvested Dividends None None None
Deferred Sales Load None None None
Redemption Fees None None None
Exchange Fees None None None
Monthly Account Fee (accounts under $500) $5.00 $5.00 $5.00
</REDLINE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees .50% .50% .35%
12b-1 Fees None None None
Other Expenses 1.00% 1.00% .70%
TOTAL Fund Operating Expenses 1.50% 1.50% 1.05%
</TABLE>
EXAMPLE:
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of
each time period. The same level of expenses would be incurred
if the investment were held throughout the period indicated.
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<CAPTION>
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1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Growth Fund $15 $48 $82 $179
Emerging Growth Fund 15 48 82 179
Utility Income Fund 11 34 58 128
</TABLE>
<REDLINE>
The purpose of this table is to assist the investor in
understanding the various expenses that an investor will bear
directly or indirectly. The five percent assumed annual
return is for comparison purposes only. As noted above, the
Trust 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 Trust" in the
Prospectus and "Investment Advisory and Other Services" in the
Statement of Additional Information.
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Cappiello-Rushmore Trust
Financial Highlights
Audited
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<TABLE>
<CAPTION>
Utility Income Fund
For the Year Ended June 30,
1995 1994 1993*
<S> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value - Beginning of Year . . . $ 8.39 $ 10.82 $ 10.00
Net Investment Income (Loss) . . . . . . 0.555 0.527 0.255
Net Realized and Unrealized Gains
(Losses) on Securities . . . . . . . . 0.846 (2.421) 0.820
Net Increase (Decrease) in Net Asset
Value Resulting from Operations . . . . 1.401 (1.894) 1.075
Dividends to Shareholders . . . . . . . . (0.551) (0.525) (0.255)
Distributions to Shareholders from
Net Realized Capital Gains . . . . . . 0.000 (0.011) 0.000
Net Increase (Decrease) in Net Asset Value 0.85 (2.43) 0.82
Net Asset Value - End of Year . . . . . . $ 9.24 $ 8.39 $ 10.82
Total Investment Return . . . . . . . . . . 16.62% (18.18)% 9.98%
Ratios to Average Net Assets:
Expenses . . . . . . . . . . . . . . . . 1.05% 1.05% 1.05%
Net Investment Income (Loss) . . . . . . 6.26% 5.21% 3.31%
Supplementary Data:
Portfolio Turnover Rate . . . . . . . . . 147.04% 26.13% 15.93%
Number of Shares Outstanding at
End of Year (000s omitted) . . . . . . 1,855 1,086 778
* Commencement of Operations October 6, 1992.
The auditors' report is incorporated by reference in the registration
statement. The auditors' report and further information about the performance
of the Trust are contained in the annual report to shareholders which may be
obtained without charge by calling or writing the Trust.
</TABLE>
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Cappiello-Rushmore Trust
Financial Highlights
Audited
(Continued)
<REDLINE>
<TABLE>
<CAPTION>
Growth Fund
For the Year Ended June 30,
1995 1994 1993*
<S> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value - Beginning of Year . . . $ 11.05 $ 10.63 $ 10.00
Net Investment Income (Loss) . . . . . . 0.014 (0.021) 0.012
Net Realized and Unrealized Gains
(Losses) on Securities . . . . . . . . 3.593 0.444 0.620
Net Increase (Decrease) in Net Asset
Value Resulting from Operations . . . . 3.607 0.423 0.632
Dividends to Shareholders . . . . . . . . (0.017) (0.003) (0.002)
Distributions to Shareholders from
Net Realized Capital Gains . . . . . . 0.000 0.000 0.000
Net Increase (Decrease) in Net Asset Value 3.59 0.42 0.63
Net Asset Value - End of Year . . . . . . $ 14.64 $ 11.05 $ 10.63
Total Investment Return . . . . . . . . . . 32.65% 3.99% 6.34%
Ratios to Average Net Assets:
Expenses . . . . . . . . . . . . . . . . 1.50% 1.50% 1.50%
Net Investment Income (Loss) . . . . . . 0.12% (0.18)% 0.17%
Supplementary Data:
Portfolio Turnover Rate . . . . . . . . . 70.89% 119.03% 21.13%
Number of Shares Outstanding at
End of Year (000s omitted) . . . . . . 1,321 904 298
* Commencement of Operations October 6, 1992.
The auditors' report is incorporated by reference in the registration
statement. The auditors' report and further information about the performance
of the Trust are contained in the annual report to shareholders which may be
obtained without charge by calling or writing the Trust.
</TABLE>
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Cappiello-Rushmore Trust
Financial Highlights
Audited
(Continued)
<REDLINE>
<TABLE>
<CAPTION>
Emerging Growth Fund
For the Year Ended June 30,
1995 1994 1993*
<S> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value - Beginning of Year . . . $ 10.41 $ 11.32 $ 10.00
Net Investment Income (Loss) . . . . . . (0.075) (0.104) (0.050)
Net Realized and Unrealized Gains
(Losses) on Securities . . . . . . . . 4.625 (0.686) 1.377
Net Increase (Decrease) in Net Asset
Value Resulting from Operations . . . . 4.550 (0.790) 1.327
Dividends to Shareholders . . . . . . . . 0.000 0.000 0.000
Distributions to Shareholders from
Net Realized Capital Gains . . . . . . 0.000 (0.120) (0.007)
Net Increase (Decrease) in Net Asset Value 4.55 (0.91) 1.32
Net Asset Value - End of Year . . . . . . $ 14.96 $ 10.41 $ 11.32
Total Investment Return . . . . . . . . . . 43.71% (7.31)% 13.35%
Ratios to Average Net Assets:
Expenses . . . . . . . . . . . . . . . 1.50% 1.50% 1.50%
Net Investment Loss . . . . . . . . . . (0.61)% (0.85)% (0.63)%
Supplementary Data:
Portfolio Turnover Rate . . . . . . . . . 96.11% 128.13% 67.90%
Number of Shares Outstanding at
End of Year (000s omitted) . . . . . . 2,447 1,742 420
* Commencement of operations October 6, 1992.
The auditors' report is incorporated by reference in the registration
statement. The auditors' report and further information about the performance
of the Trust are contained in the annual report to shareholders which may be
obtained without charge by calling or writing the Trust.
</TABLE>
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MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
<REDLINE>
Cappiello-Rushmore Emerging Growth Fund
The Emerging Growth Fund enjoyed a superior year with a total
return of more than 43%. The Fund surpassed the unmanaged
Standard & Poor's 500 Stock Index ("S&P 500 Index") and
substantially outperformed the average growth fund which was
up 16.9% (Money Magazine's "Money Rankings," August 1995). In
fact, according to Money Magazine's "Fund Rankings," the
Cappiello-Rushmore Emerging Growth Fund was the 14th best
performing growth fund in the U.S. for the six-months ended
June 30, 1995.
Technology stocks led the market to new highs in the first
half of 1995, fueled by demand for personal computers, strong
growth for wireless communications, and the resulting
increased utilization of semi-conductors in homes and
businesses. During this period, slightly less than half of
the Fund's portfolio was invested in technology stocks
(computer software, communications products, and semi-
conductors). The majority of the Fund's holdings consisted of
a diversified industrial list of small cap companies in
sectors such as financial, healthcare services, retail and
transportation.
Cappiello-Rushmore Growth Fund
The Growth Fund's investment objective emphasizes larger
capitalization companies, and results last year were more than
satisfactory. For the year ended June 30, 1995, the
Cappiello-Rushmore Growth Fund was up more than 32%, well
above the S&P 500 Index and above the average growth fund
performance of 16.9% (Money Magazine's "Money Rankings,"
August 1995). Our focus included technology stocks, such as
Motorola and Sun Microsystems, with the majority of the
portfolio diversified among a wider range of sectors, from
financial (American Express), telecommunications (AT&T), and
aerospace (Boeing), to consumer products and services
including companies such as Coca-Cola, WR Grace and KLM Royal
Dutch Airlines.
Cappiello-Rushmore Utility Income Fund
The Utility Income Fund portfolio is concentrated in electric
utilities with greater-than-average dividend yields in order
to maximize shareholder income. We are pleased to report the
Fund's total return (income plus appreciation) was up more
than 16% for the year ended June 30, 1995. Even so, when
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compared historically to the overall equity and bond markets,
utility stocks seem undervalued.
There are several positive factors for utility investors: a
stable and declining interest rate trend; signs that the
transition to greater utility competition, especially retail
wheeling of electricity, is likely to take a number of years
to affect the industry; and, the successful cost reduction
efforts by many utilities, thus improving profits.
Finally, forthcoming competition in the utility industry has
prompted utility management to prepare for a more competitive
future. In this environment, consolidation appears
inevitable, leading to significant savings. The recent
announcement by PECO Energy to purchase nearby PP&L Resources,
Inc. in a $3.8 billion takeover is indicative of this
forthcoming takeover trend, usually with a significant premium
paid to the acquired company's shareholders.
To date, the major economic event of 1995 has been visible
signs of a slowdown in the economy, adding fuel to the
argument that further interest rate increases are unlikely.
This helped propel the stock market averages to new highs week
after week with market leadership dominated by the blue chip
issues. The S&P 500 Index ran well ahead of the other
indices. Overall, this year has been an ideal environment for
stocks: a slowing, but still vigorous economy, accompanied by
falling interest rates, relatively low inflation, rising
corporate earnings, and a continuous demand for equities.
Looking ahead, there is continuing debate regarding whether
the market is undervalued or overvalued in terms of price-
earnings ratios, price-to-book value, and dividend yield. The
current historically low dividend yield may be cause for
concern, but we believe that dividends lag earnings. The
"steady" growth stocks should continue to expand their
dividends and, more importantly, most cyclical industries have
the capacity to raise their dividend pay-outs, significantly.
We are disturbed by the pricing mania exemplified by recent
initial public offerings. Nevertheless, the economic and
financial fundamentals continue to be positive. Our research
and observations of companies reinforces our view of a
resurgent corporate America. Profits and profit margins have
improved dramatically -- the pay-off of the investment in new
plant and equipment over the past several years.
Accordingly, one of the keys to successful investing in the
months ahead will be the selection of individual stocks that
will maintain their profit momentum, as opposed to agonizing
over the direction of the overall market. So far, many of the
earnings gains of the non-technology stocks have been the
result of cost cutting measures, as opposed to gains in market
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share. In the months ahead, the possibility exists that
rising material costs will eventually pressure margins,
resulting in an increase in finished goods prices. This ever-
present inflationary threat will be the subject of much
concern as we enter the Fall of 1995.
The sentiment factor in the market is "encouragingly
pessimistic" and almost bearish on the part of investment
professionals. The majority believe the market is overpriced.
Yet, month after month the market continues to move forward.
Both the domestic economy and the stock market should continue
their trends -- although at a more moderate pace and with a
possible price correction along the way. The pessimistic
sentiment coupled with a moderating trend in the economy is
positive for stocks in the months ahead.
<\REDLINE>
<REDLINE>
[Graph appears here showing the comparison of change in the
value of a $10,000 investment in each of the Funds made on
October 6, 1992 between the Funds and the Standard & Poor's
500 Stock Index]
<TABLE>
<CAPTION>
Cappiello-Rushmore Trust
Total Return Comparison
Emerging Utility
Growth Growth Income
Fund Fund Fund S&P 500
<S> <C> <C> <C> <C>
10/6/92 $10,000 $10,000 $10,000 $10,000
6/30/93 $10,634 $11,335 $10,998 $11,297
6/30/94 $11,058 $10,506 $8,999 $11,456
6/30/95 $14,668 $15,098 $10,495 $14,443
</TABLE>
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Past Performance is not predictive of future performance.
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<REDLINE>
<TABLE>
<CAPTION>
Cappiello-Rushmore Trust
Average Annual Total Return
Period Ended June 30, 1995
Since Inception
One Year 10/6/92
<S> <C> <C>
Cappiello-Rushmore Utility
Income Fund 16.62% 1.78%
Cappiello-Rushmore Growth Fund 32.65% 15.04%
Cappiello-Rushmore Emerging
Growth Fund 43.71% 16.40%
</TABLE>
<\REDLINE>
INVESTMENT OBJECTIVES
The Trust is a no-load, open-end non-diversified management
company. The Trust consists of four Funds, each with a
different investment objective. This Prospectus sets forth
the investment objectives of the Growth Fund, the Emerging
Growth Fund, and the Utility Income Fund.
<\REDLINE>
- The Growth Fund has an investment objective of capital
appreciation through investment in a professionally managed
portfolio of common stocks, convertible securities, and
warrants to purchase common stock. Any income received on
equity investments will not be significant to the Growth
Fund's objective of capital appreciation.
- The Emerging Growth Fund has an investment objective of
capital appreciation through investment in a professionally
managed portfolio consisting primarily of common stocks,
securities convertible into common stocks, and warrants to
purchase common stock of companies having a market
capitalization of approximately $750,000,000 or less and with
investment characteristics such as participation in expanding
markets, increasing return on investment, increasing unit
sales volume, and growth in revenues and earnings per share
superior to that of the average of common stocks comprising
indices such as the S&P 500 Index ("emerging growth
companies"). Generally, the minimum capitalization of
companies in which the Fund will invest will be $100,000,000,
although the Fund may invest in companies with less than
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$100,000,000 in capitalization where the investment adviser
believes an investment in a smaller company presents an
attractive opportunity. At least 65% of the Fund's total
assets will be invested in such emerging growth companies.
Up to 25% of the Fund's assets may be invested in equity
securities of larger-capitalized companies. Also, up to 35%
of the Fund's assets may be invested in investment grade
corporate-debt securities and preferred stocks. These may or
may not be securities of emerging growth companies.
Should any individual bond held by the Fund fall below a
rating of BBB by Standard & Poor's or Baa by Moody's, the
investment adviser will dispose of such bond as soon as
reasonably practicable in light of then existing market and
tax considerations.
- The Utility Income Fund has an investment objective of
providing current income with an opportunity for capital
appreciation. The Utility Income Fund intends to concentrate
in the public utility industry. Under normal circumstances,
at least 65% of the Fund's total assets will be invested in
securities of public utility companies. The Utility Income
Fund will have substantial investment in the gas and electric
public utilities industries which have certain
characteristics and risks of which investors should be aware.
Such characteristics include: the difficulty of obtaining
adequate returns on invested capital in spite of frequent
rate increases; the difficulty of financing large
construction programs during inflationary periods;
restrictions on operations and increased costs and delays
attributable to environmental considerations; difficulties of
the capital markets in absorbing utility debt and equity
securities; difficulties in obtaining fuel for electric
generation at reasonable prices; difficulty in obtaining
natural gas for resale; risks associated with construction
and operation of nuclear power plants and general effects of
energy conservation.
There is no assurance that any Fund will achieve its stated
objective.
These objectives are fundamental and cannot be changed without
the approval of a majority of a Fund's shareholders.
INVESTMENT POLICIES
<REDLINE>
The Funds invest primarily in common stocks. The Growth Fund
and Emerging Growth Fund will invest in securities which the
investment adviser believes offer favorable prospects for
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capital growth. Current income will not be a significant
consideration. The Utility Income Fund will invest in
securities of companies engaged in the public utilities
industry that in the opinion of the investment adviser offer
above average potential for growth in earnings and dividends.
"Public Utility Industry" includes the manufacture,
production, generation, transmission and sale of natural gas,
electricity or water. The term also includes issuers engaged
in the communications field including entities such as
telephone, telegraph, satellite, microwave and other companies
providing communication facilities for the public benefit, but
not those in public broadcasting. Although each Fund intends
to invest primarily in common stocks, they may also invest in
securities convertible into common stocks (including corporate
notes, bonds and preferred stocks) when, in the opinion of the
investment adviser, such convertible securities may be
purchased at prices favorable relative to the common stock
itself. The Funds may also enter into repurchase agreements
and may lend portfolio securities.
Public utility companies generally carry a higher level of
debt than companies in other industries. As a result,
interest expense is a significant factor in determining the
profitability of such companies, resulting in the prices of
their securities being more sensitive to changes in interest
rates than to other economic factors. In addition, because
these companies operate as government sponsored monopolies,
their earnings are relatively stable, although they are also
impacted by the general level of economic activity in their
service areas. For these reasons, public utility company
securities tend to be less volatile than other securities and
may offer less potential for capital appreciation than other
companies, at least in the short term.
The investment adviser believes that the characteristics of
convertible securities make them suitable investments for an
investment company seeking capital appreciation. These
characteristics include the potential for capital appreciation
if the value of the underlying common stock increases, the
relatively high yield received from dividends and decreased
risks of decline in value, relative to the underlying common
stock due to their fixed income nature.
In selecting convertible securities for the Funds, the
following factors will be considered by the investment
adviser: (1) the investment adviser's own evaluation of the
basic underlying value of the assets and business of the
issuers of the securities; (2) the interest or dividend income
generated by the securities; (3) the potential for capital
appreciation of the securities and the underlying common
stocks; (4) the prices of the securities relative to the
underlying common stocks; (5) whether the securities are
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entitled to the benefits of sinking funds or other protective
conditions; (6) the existence of any anti-dilution protections
of the security; (7) the diversification of the Fund's
portfolio as to issuers; and (8) a rating of BBB or higher by
Standard & Poor's or Baa by Moody's.
The Funds may from time to time for temporary defensive
purposes invest in high grade, short-term corporate debt
instruments, short-term U.S. Treasury or agency securities or
money market investment companies. Such investment will be
made when, in the opinion of the investment adviser, the
outlook for the equity market is unfavorable and/or suitable
equity securities are not available, or to provide short-term
liquidity.
<\REDLINE>
All policies of the Funds not specified as fundamental are not
fundamental and may be changed by the Board of Trustees
without shareholder approval.
IMPLEMENTATION OF POLICIES
Each of the Funds utilizes a number of investment practices
and techniques in an effort to achieve its investment
objective.
Foreign Securities
<REDLINE>
Each of the Funds may invest up to 20% of its total assets in
securities of foreign issuers which are traded on a recognized
U.S. securities exchange or in dollar denominated American
Depository Receipts ("ADRs"). Investment in foreign
securities involves certain risks including those resulting
from fluctuations in foreign exchange rates (although the
Funds will only purchase dollar denominated securities and
will not be required to make foreign currency translations in
valuing the securities holdings), future political and
economic developments or other foreign governmental laws or
restrictions and reduced availability of public information
concerning issuers, and the lack of comparability of
regulatory practices and requirements applicable to domestic
issuers. In addition, securities of some foreign issuers may
be less liquid and their prices more volatile than those of
securities of comparable U.S. issuers.
<\REDLINE>
Option Transactions
<PAGE> 14
<PAGE>
<REDLINE>
The Growth Fund and the Utility Income Fund may write (sell)
covered call options and secured put options on optionable
securities from time to time on such portion of its portfolio,
without limit, as the investment adviser determines is
appropriate in seeking to achieve the Fund's investment
objective. The Emerging Growth Fund will not engage in option
transactions. By writing a call option, the Funds become
obligated during the term of the option to deliver the
securities underlying the option at the exercise price if the
option is exercised. By writing a put option the Funds may
become obligated during the term of the option to purchase the
securities underlying the option at the Fund price. A covered
call option is one in which the Fund owns the underlying
securities. The Funds will be considered secured in respect
to put options they write if they maintain on deposit with
their custodian bank in a segregated account, liquid high
quality debt securities having a value equal to the exercise
value of the option.
<\REDLINE>
During the period of a covered call option, the Fund (as
writer) has the opportunity for capital appreciation above the
exercise price of such option should the market price of the
underlying security increase, but it retains the risk of loss
should the price of the underlying security decline. As the
writer of a covered put option, the Fund assumes the risk that
it may be required to purchase the underlying security for an
exercise price higher than its current market value, resulting
in a potential capital loss unless the security subsequently
appreciates in value.
Repurchase Agreements
<REDLINE>
Each Fund may invest in repurchase agreements. A repurchase
agreement occurs when, at the time the fund purchases an
interest-bearing obligation, the seller (a bank or broker-
dealer) agrees to repurchase it on a specified date in the
future at an agreed upon price. The repurchase price reflects
an agreed-upon interest rate during the time the Fund's money
is invested in the security. The Fund's risk is the ability
of the seller to pay the agreed-upon price on the delivery
date. In the opinion of the investment adviser, the risk is
minimal because the security purchased constitutes security
for the repurchase obligation, and repurchase agreements can
be considered as loans collateralized by the security
purchased. However, the Fund may incur costs in disposing of
the collateral, which would reduce the amount realized
<PAGE> 15
<PAGE>
thereon. If the seller seeks relief under the bankruptcy
laws, the disposition of the collateral may be delayed or
limited. The Trust's investment adviser has established
procedures to evaluate the credit-worthiness of the other
parties to repurchase agreements.
<\REDLINE>
No Fund will invest more than 10% of its assets in repurchase
agreements maturing in more than seven days.
Lending Portfolio Securities
Each of the Funds may lend its investment securities to
qualified institutional investors for the purpose of realizing
additional income. Loans of securities by a Fund will be
collateralized by cash, letters of credit or securities issued
or guaranteed by the U.S. government or its agencies. The
collateral will equal at least 102% of the current market
value, marked to market daily.
Short Sales
<REDLINE>
The Funds may engage in short sales if, at the time of the
short sale, the Fund owns or has the right to acquire an equal
amount of the security being sold at no additional cost
("selling short against the box").
<\REDLINE>
The Fund may make a short sale when it wants to sell the
security it owns at a current attractive price, but also
wishes to defer recognition of gain or loss for federal income
tax purposes and for purposes of satisfying certain tests
applicable to regulated investment companies under the
Internal Revenue Code.
Borrowing Money
Each Fund may borrow money from a bank but only for temporary
or emergency purposes up to a limit of 5% of its total assets.
A Fund would borrow money only to meet redemption requests
prior to the settlement of securities already sold.
Portfolio Turnover
<REDLINE>
Although each of the Funds generally seeks to invest for the
long term, they retain the right to sell securities regardless
<PAGE> 16
<PAGE>
of how long they have been held. The investment adviser
expects the portfolio turnover of each of the Funds will not
exceed 75%.
<\REDLINE>
INVESTMENT RISKS
As mutual funds investing primarily in common stocks, the
Funds are subject to market risk -- i.e., the possibility that
stock prices in general will decline over short or even
extended periods. The stock market tends to be cyclical, with
periods when stock prices generally rise and periods when
stock prices generally decline.
Growth stocks, which are the Growth Fund's primary investment,
are likely to be even more volatile than the stock market as a
whole. Among the reasons for this volatility is small or
negligible dividends generally paid by such companies and the
greater business uncertainty associated with rapidly growing
firms. In addition to their potentially greater volatility,
growth stocks may fluctuate independently of the broad stock
market. As a result, investors in the Growth Fund may
experience greater price fluctuations in their investment than
experienced by the stock market in general and such
fluctuations may be independent of movements in the broad
stock market.
Certain securities which may be held by the Emerging Growth
Fund may be closely held with only a small proportion of their
outstanding securities owned by the general public. Such
securities may have limited trading markets and may be subject
to wide price fluctuations. The Fund may invest in companies
that have relatively small revenues, low market share or a
limited market for their products or services. In addition,
they may lack depth of management talent. As a result of
these and other factors, such emerging growth companies could
suffer substantial losses which could cause the net asset
value of the Fund to fluctuate significantly. Consequently,
the Emerging Growth Fund should not be considered by investors
where safety of capital is a major concern, or where such
investors are unable or unwilling to assume the risk of loss.
The Utility Income Fund invests in the securities of companies
that have certain unique characteristics of which potential
investors should be aware. These characteristics may include:
potentially hostile regulatory commissions which may create
difficulty in obtaining adequate returns on invested capital;
difficulty or high cost of obtaining financing for
construction programs during inflationary periods; increased
costs, delays and restrictions on operations due to
environmental regulations; risks associated with the
<PAGE> 17
<PAGE>
contraction and operation of nuclear power plants, and the
effects of energy conservation.
Each Fund's classification as a "non-diversified" investment
company means that the proportion of the Fund's assets that
may be invested in the securities of a single issuer is not
limited by the Investment Company Act of 1940. However, each
Fund intends to conduct its operations so as to qualify as a
"regulated investment company" for purposes of the Internal
Revenue Code of 1986, as amended (the "Code"), which requires
that, at the end of each quarter of the taxable year, (i) at
least 50% of the market value of the Fund's total assets (a
diversified investment company would be so limited with
respect to 75% of such market value) be invested in cash, U.S.
government securities, the securities of other regulated
investment companies and other securities, with such
securities of any one issuer limited for the purposes of this
calculation to an amount not greater than 5% of the value of
Fund's total assets and 10% of the outstanding voting
securities of any one issuer, and (ii) not more than 25% of
the value of its total assets be invested in the securities of
any one issuer (other than U.S. government securities or the
securities of other regulated investment companies). Because
a relatively high percentage of a Fund's assets may be
invested in the securities of a limited number of issuers,
primarily within the same industry or economic sector, a
Fund's portfolio securities may be more susceptible to any
single economic, political or regulatory occurrence than the
portfolio securities of a diversified investment company.
MANAGEMENT OF THE TRUST
Investment Adviser
<REDLINE>
The Trust receives investment advisory services from
McCullough, Andrews & Cappiello, Inc. ("MAC"), whose principal
location is 101 California Street, Suite 4250, San Francisco,
California 94111 and who has an office at Greenspring Station,
Suite 250, 10751 Falls Road, Lutherville, Maryland 21093.
Pursuant to the investment advisory contract between the Trust
and MAC, the Growth Fund and the Emerging Growth Fund pay MAC
an investment advisory fee at an annual rate of 0.50% of the
net assets of each Fund. The Utility Income Fund pays MAC at
an annual rate of 0.35% of the net assets of the Fund. MAC
manages the investment and reinvestment of the assets of each
Fund in accordance with its investment objective, policies and
limitations, subject to the general supervision and control of
the Trust's officers and Board of Trustees. MAC bears all
costs associated with providing these services. The three
principals of MAC collectively provide portfolio management.
<PAGE> 18
<PAGE>
MAC is owned by its three principals: Robert F. McCullough,
C.P.A., David H. Andrews, C.F.A. and Frank A. Cappiello. In
addition to providing investment advisory services to the
Trust, MAC manages investment portfolios for employee
retirement plans, charitable foundations, endowments, taxable
corporations and individuals.
Robert F. McCullough, C.P.A., is Chairman of MAC. He is a
graduate of Santa Clara University and has been a Certified
Public Accountant with a major public accounting firm,
principal of a stock brokerage firm and portfolio manager for
one of the Franklin Funds. He is past President of the Board
of Regents of Santa Clara University and is also a past
President of the University's Alumni Association. He has
served as a board member and officer of numerous charitable
institutions. He is a member of the American Institute of
C.P.A.s and the California Society of C.P.A.s.
<\REDLINE>
David H. Andrews, C.F.A., is Vice Chairman of MAC. He has
been a research analyst at investment institutions, head of
regional research for a major stock brokerage firm and
portfolio manager for a mutual fund. He is a Chartered
Financial Analyst (C.F.A.) and past President of the Security
Analysts of San Francisco. He is a graduate of Harvard
University and Stanford University's Graduate School of
Business.
Frank A. Cappiello, President of MAC since September 1983 and
Chairman of the Board of Trustees of the Trust, has primary
responsibility for overseeing each of the Fund's investments.
Mr. Cappiello has been involved in the securities business for
more than twenty-five years. He has been manager of
institutional research for a major stock brokerage firm and
Financial Vice President of an insurance holding company with
responsibility for managing assets of more than $700 million.
In 1981 - 1982, he was Chairman of the Financial Analysts
Federation, with more than 15,000 security analysts members in
the United States and Canada.
Mr. Cappiello is currently a Member of the Advisory Investment
Council that oversees the Maryland State Retirement System
Fund. He also regularly appears in the television program
"Wall Street Week in Review with Louis Rukeyser" and is author
of three books "Finding the Next Superstock," "From Main
Street to Wall Street" and "The Complete Guide to Closed End
Funds." Mr. Cappiello is a graduate of the University of Notre
Dame and Harvard University's Graduate School of Business
Administration. He is currently Adjunct Visiting Professor of
Finance at Loyola College in Baltimore.
<PAGE> 19
<PAGE>
<REDLINE>
Investment decisions made on behalf of the Funds by MAC are
made by committee. No one employee of MAC is primarily
responsible for making investment recommendations to the
committee.
<\REDLINE>
Administrative Services
<REDLINE>
The Trust has contracted with Money Management Associates
("Administrator") to provide administrative services to the
Trust. Under the administrative services agreement with the
Administrator, the Trust pays a fee at the annual rate of
1.00% of the daily net assets of the Growth and Emerging
Growth Funds, and 0.70% of the daily net assets of the Utility
Income Fund. Except for extraordinary legal expenses or
interest expense, there are no additional expenses to the
Funds.
Certain of these administrative services are provided by
Rushmore Trust and Savings, FSB ("RTS"), a wholly owned
subsidiary of the Administrator, under a subcontractual
agreement with the Administrator. These services include
transfer agency functions, dividend disbursing and other
shareholder services and custody of the Trust's assets. As
custodian, RTS holds the portfolio securities of each Fund and
keeps all necessary related accounts and records.
<\REDLINE>
PERFORMANCE DATA
From time to time, each Fund may advertise its yield which
reflects the rate of income the applicable Fund earns on its
investments as a percentage of its price per share. All yield
figures are based on historical earnings and are not intended
to indicate future performance. Each Fund's yield is computed
by dividing the interest and dividend income it earned on its
investments for a 30-day period, less expenses, by the average
number of shares outstanding during the period. The figure is
expressed as an annualized percentage rate based on the Fund's
net asset value at the end of the 30-day period.
The Funds may also from time to time include total return in
advertisements or reports to shareholders or prospective
shareholders. Quotations of average annual total return for
the Funds will be expressed in terms of the average annual
compounded rate of return on a hypothetical investment in the
<PAGE> 20
<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.
<REDLINE>
In addition to the foregoing, each Fund may advertise its
total return over different periods of time by means of
aggregate, year-by-year, or other types of total return
figures. For more information concerning the calculation of
performance data, see "Calculation of Return Quotations" in
the Statement of Additional Information.
Performance information for the Funds contained in reports and
promotional literature may be compared to various unmanaged
indices, including the S&P 500 Index, the Dow Jones Industrial
Average or the Dow Jones Utility Average. Such unmanaged
indices may assume the reinvestment of dividends but generally
do not reflect deductions for operating costs and expenses.
The indices used for performance comparison will be available
in general financial publications. In addition, a Fund's
total return may be compared to the performance of other
mutual funds as published by such organizations as
Morningstar, Lipper Analytical Services, Inc. and CDA
Investment Technologies, Inc., among others.
<\REDLINE>
HOW TO INVEST IN THE TRUST
<REDLINE>
The minimum initial investment is $2,500 which may be divided
among the separate Funds with a minimum investment of $500 in
any one Fund. Retirement accounts may be opened with a $500
minimum investment. Redemptions which bring the account
balance below $500 may result in the imposition of the low
balance account fee (see "Low Balance Account Fee"). The fee
is not imposed on tax-deferred retirement accounts. The
shares of the Funds 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.
Investments in the Funds can be made directly with the Trust
or through securities dealers who have the responsibility to
transmit orders promptly and may charge a processing fee.
The Administrator pays for the distribution of the Funds'
shares.
<PAGE> 21
<PAGE>
<\REDLINE>
The Fund reserves the right to reject any purchase order. All
accounts will be held in book-entry form. No certificates for
shares will be issued.
By Mail: Fill out an application and make a check payable to
"Cappiello-Rushmore Trust." Mail the check along with the
application, to:
Cappiello-Rushmore Trust
4922 Fairmont Avenue
Bethesda, Maryland 20814
Purchases by check will normally be credited to an account
within one business day after receipt of payment. Foreign
checks will not be accepted. Be certain to specify the
allocation of your purchase among the Funds.
<REDLINE>
By Bank Wire: Request a wire transfer to:
Rushmore Trust and Savings, FSB
Bethesda, Maryland
Routing Number 0550-71084
For Account of Cappiello-Rushmore Trust
Account Number 029385770
AFTER INSTRUCTING YOUR BANK TO TRANSFER MONEY BY WIRE, YOU
MUST TELEPHONE THE FUND AT (800) 343-3355 OR (301) 657-1500
BETWEEN 8:30 A.M. AND 4:00 P.M., EASTERN TIME 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. IF
THE PURCHASE IS CANCELLED BECAUSE YOUR WIRE TRANSFER IS NOT
RECEIVED, YOU MAY BE LIABLE FOR ANY LOSS THE FUND MAY INCUR.
<\REDLINE>
Purchase orders which do not specify the Fund in which an
investment is to be made will be invested in the Utility
Income Fund.
<REDLINE>
HOW TO REDEEM AN INVESTMENT (WITHDRAWALS)
On any day the Trust 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 Trust or by telephoning
(800) 622-1386 or (301) 657-1510 between 8:30 A.M. and 4:00
<PAGE> 22
<PAGE>
P.M., Eastern time. Telephone redemption privileges may be
terminated or modified by the Trust upon 60 days notice to all
shareholders of the Fund. Telephone redemption requests
cannot be accepted after 4:00 P.M. Eastern time. The
privilege to initiate redemption transactions by telephone
will be made available to Fund shareholders automatically.
<\REDLINE>
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 instructions received by telephone, providing
written confirmation not later than five business days after
such transactions, 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 for 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 from the purchase date 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.
<REDLINE>
<PAGE> 23
<PAGE>
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 ("Commission"), so that
disposal of the Fund's investments for determination of net
asset value is not reasonably practicable; or (c) for such
other periods as the Commission, by order, may permit for
protection of the Fund's investors. Investors should also be
aware that telephone redemptions or exchanges may be difficult
to implement in a timely manner during periods of drastic
economic or market changes. If such conditions occur,
redemption or exchange orders can be made by mail.
<\REDLINE>
EXCHANGES
<REDLINE>
The Trust is composed of four separate Funds. Investors may
invest in one or more of the Funds, and may exchange shares in
one Fund for shares of another Fund at their relative net
asset values. The Fund's shares may be exchanged, without
cost, for shares of Fund for Government Investors, Inc., Fund
for Tax-Free Investors, Inc., The Rushmore Fund, Inc. or
American Gas Index Fund, Inc. Exchanges may be made by
telephone or letter. Written requests should be sent to
Cappiello-Rushmore Trust, 4922 Fairmont Avenue, Bethesda,
Maryland 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 the
respective net asset values of the Funds involved as next
determined after receipt of the exchange request. To
implement an exchange, shareholders should provide the
following information: account registration including address
and number, taxpayer identification number, number, percentage
or dollar value of shares to be redeemed, 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. The exchange privilege is
available only in states where the exchange may legally be
made.
<\REDLINE>
Telephone exchange privileges may be terminated or modified by
the Trust upon 60 days notice to all shareholders of the
Funds.
<PAGE> 24
<PAGE>
LOW BALANCE ACCOUNT FEE
<REDLINE>
In addition to charges described elsewhere in this Prospectus,
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. 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 the Administrator.
<\REDLINE>
The fee will not be imposed on tax-sheltered retirement plans
or accounts established under the Uniform Gifts or Transfers
to Minors Act.
<PAGE> 25
<PAGE>
TAX-SHELTERED RETIREMENT PLANS
Tax-sheltered retirement plans of the following types will be
available to investors:
<REDLINE>
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 accounts may be
obtained by contacting the Trust.
<\REDLINE>
DISTRIBUTIONS
All dividends and capital gain distribution of each Fund will
be reinvested in additional shares of such Fund (including
fractional shares where necessary) at net asset value, unless
you elect on your application form or in writing, not less
than five full business days prior to the record date for a
particular dividend or distribution, to receive such dividend
or distribution in cash. If you elect to receive
distributions in cash, your election will be effective until
you give other written instructions to the applicable Fund for
a change of elections five days prior to such change.
The Growth Fund and the Emerging Growth Fund intend to
distribute all of their net investment income annually in
December. Net capital gains are intended to be distributed
annually in December.
The Utility Income Fund intends to distribute substantially
all of its net investment income quarterly and all of its net
capital gains annually in December.
The timing and amount of all dividends and distributions are
subject to the discretion of the Board of Trustees.
NET ASSET VALUE
<REDLINE>
The price of a Fund's shares on any given day is its net asset
value ("NAV"). For any given day, this figure is computed by
dividing the total market value of the Fund's investments and
<PAGE> 26
<PAGE>
other assets on that day, less any liabilities, by the number
of Fund shares outstanding. The net asset value per share of
the Fund is determined at 4:00 P.M. Eastern time on each day
the New York Stock Exchange is open for trading. The Fund's
net asset value will fluctuate and Fund shares are not insured
against reduction in NAV.
The Fund values its portfolio securities based on their market
value. Each security held by the Fund, which is listed on a
securities exchange and for which market quotations are
available, is valued at the last quoted sale price for a given
day, or if a sale is not reported for that date, at the mean
between the most recent quoted bid and asked prices. Price
information on each listed security is taken from the exchange
where the security is primarily traded. Unlisted securities
for which market quotations are readily available are valued
at the closing sales prices. The value of assets for which no
quotations are readily available (including any restricted
securities) are valued at fair value as determined in good
faith by RTS, as custodian, pursuant to Board of Trustees
guidelines. Securities may be valued on the basis of prices
provided by pricing services when such prices are believed to
reflect fair market value.
<\REDLINE>
TAXES
<REDLINE>
Each Fund will seek to qualify for treatment as a regulated
investment company (a "RIC") under Subchapter M of the
Internal Revenue Code. If a Fund qualifies as a RIC, such
Fund will not be liable for Federal income taxes to the extent
its earnings are distributed within the time periods specified
in the Code. To qualify as a RIC under the Code, a Fund must
satisfy certain requirements, including the requirement that
the Fund receive at least 90% of its gross income each year
from dividends, interest, payments with respect to securities
loans, gains from the sale or other disposition of securities
or foreign currencies, or other income derived with respect to
such Fund's investments in stock, securities, and foreign
currencies (the "90% Test"), and that the Fund derive less
than 30% of such Fund's gross income from the sale or other
disposition of any of the following instruments which was held
less than three months (the "30% Test"): (i) stock or
securities; (ii) options, futures, or forward contracts; or
(iii) foreign currencies (or options, futures, or forward
contracts on such foreign currencies). Provided that the Fund
(i) is a RIC and (ii) distributes at least 90% of its net
investment income (including, for this purpose, net realized
short-term capital gains), the Fund will not be liable for
<PAGE> 27
<PAGE>
Federal income taxes to the extent the Fund's net investment
income and the Fund's net realized long- and short-term
capital gains, if any, are distributed to the shareholders of
the Fund. To avoid an excise tax on its undistributed income,
each Fund must generally distribute at least 98% of its
income, including its net long-term capital gains.
The larger the volume of redemptions or exchanges of a Fund's
shares the more difficult it will be for the Fund to satisfy
the 30% Test. To minimize the risk of failing the 30% Test,
each Fund intends to satisfy obligations in connection with
redemptions and exchanges first by using available cash or
borrowing facilities and by selling securities that have been
held for at least three months or as to which there will be a
loss or the smallest gain. If a Fund also must sell
securities that have been held for less than three months,
then, to the extent possible, the Fund will seek to conduct
such sales in a manner that will allow such sales to qualify
for a special provision in the Code that excludes from the 30%
Test any gains resulting from sales made as a result of
"abnormal redemptions." Notwithstanding these actions, there
can be no assurance that the Fund will be able to satisfy the
30% Test. For additional information concerning this special
Code provision, see "Taxes" in the Statement of Additional
Information.
Dividends paid by a Fund are taxable to shareholders whether
such dividends and distributions are reinvested in shares of
the Fund or are received in cash. Under current law,
dividends derived from interest and dividends received by the
Fund, together with distributions of any short-term capital
gains, are taxable to individual shareholders as ordinary
income at Federal income tax rates of up to 39.6%.
Under current law, distributions of net long-term gains, if
any, realized by a Fund and designated as capital gains
distributions 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 of individual
investors are taxed at a maximum rate of 28%. Statements as
to the Federal tax status of shareholders' dividends and
distributions will be mailed annually. Shareholders should
consult their tax advisers concerning the tax status of the
Fund's dividends in their own states and localities.
Ordinary dividends paid to corporate or individual residents
of foreign countries are generally subject to a 30%
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 be
<PAGE> 28
<PAGE>
required to provide the Fund with supporting documentation in
order for the Fund to apply a reduced rate or exemption from
U.S. withholding tax.
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,
a Fund is required to withhold taxes at the rate of 31% on
dividends, capital gains distributions and redemptions.
Shareholders who are non-resident aliens may be subject to a
withholding tax on dividends earned.
<\REDLINE>
ORGANIZATION OF THE TRUST
<REDLINE>
The Trust was organized as a business trust under the laws of
Delaware on March 12, 1992 and may issue an unlimited number
of shares of beneficial interest in one or more investment
portfolios or funds. While only shares of four Funds are
presently being offered, the Board of Trustees may authorize
the issuance of shares of additional funds if deemed
desirable. Shares of all Funds have equal noncumulative
voting rights as to dividends, assets and liquidation of such
Fund. Under Delaware law, the debts or other obligations that
exist with respect to a particular Fund of the Trust are
enforceable against the assets of such Fund only and not
against the assets of the Trust generally.
The Trust is not required to hold annual shareholders'
meetings. It will, however, hold special meetings as required
or deemed desirable by the Board of Trustees for such purposes
as electing trustees, changing fundamental policies or
approving an investment advisory contract. Shareholders will
vote by Fund and not in the aggregate except when voting in
the aggregate is permitted under the Investment Company Act of
1940, such as for the election of Trustees. Matters that
affect only one Fund may include changing the Fund's
fundamental investment policies or changing the investment
advisory contract as the contract relates to that Fund.
A meeting may also be called by shareholders holding at least
10% of the shares entitled to vote at the meeting for the
purpose of voting upon the removal of Trustees.
<\REDLINE>
<PAGE> 29
<PAGE>
CONTENTS
Page
Fee Table . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Highlights . . . . . . . . . . . . . . . . . . . .
Management's Discussion of
Fund Performance . . . . . . . . . . . . . . . . . . . . .
Investment Objectives . . . . . . . . . . . . . . . . . . . .
Investment Policies . . . . . . . . . . . . . . . . . . . . .
Implementation of Policies . . . . . . . . . . . . . . . . .
Investment Risks . . . . . . . . . . . . . . . . . . . . . .
Management of the Trust . . . . . . . . . . . . . . . . . . .
Performance Data . . . . . . . . . . . . . . . . . . . . . .
How to Invest in the Trust . . . . . . . . . . . . . . . . .
How to Redeem an Investment
(Withdrawals) . . . . . . . . . . . . . . . . . . . . . . .
Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . .
Low Balance Account Fee . . . . . . . . . . . . . . . . . . .
Tax-Sheltered Retirement Plans . . . . . . . . . . . . . . .
Distributions . . . . . . . . . . . . . . . . . . . . . . . .
Net Asset Value . . . . . . . . . . . . . . . . . . . . . . .
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Organization of the Trust . . . . . . . . . . . . . . . . . .
<PAGE> 30
<PAGE>
<REDLINE>
CAPPIELLO-
RUSHMORE
TRUST
Utility Income Fund
Growth Fund
Emerging Growth Fund
PROSPECTUS
October ___, 1995
<\REDLINE>
<PAGE> 31
<PAGE>
CAPPIELLO-RUSHMORE TRUST
GOLD FUND
4922 Fairmont Avenue
Bethesda, Maryland 20814
(800) 343-3355 (301) 657-1500
<REDLINE>
The Cappiello-Rushmore Trust (the "Trust") is a no-load, open-
end, non-diversified, management investment company consisting
of four separate funds: the Gold Fund, the Growth Fund, the
Emerging Growth Fund, and the Utility Income Fund. This
Prospectus sets forth concisely the information you should
know about the Trust and the Gold Fund (the "Fund"). The
investment objective of the Fund is to provide capital
appreciation. The Fund seeks to attain capital appreciation
by investing primarily in (i) the equity securities of
companies principally engaged in the mining, exploration,
fabrication, processing, marketing, and distribution of or
dealing or investing in gold and operating companies
principally engaged in financing, managing, controlling, or
operating companies engaged in these activities, and (ii) gold
bullion and coins. The Fund also may invest in (i) the equity
securities of companies principally engaged in the foregoing
activities with respect to silver, platinum, and other
precious metals and in diamonds and other precious minerals,
and (ii) silver or other precious metal bullion and coins.
Although current income may be realized, it is not an
investment objective of the Fund.
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. This Prospectus is designed to set forth concisely
the information an investor should know before investing in
the Fund. A Statement of Additional Information dated October
__, 1995, containing additional information about the Fund,
has been filed with the Securities and Exchange Commission and
is incorporated herein by reference. A copy of the statement
may be obtained, without charge, by writing or telephoning the
Trust.
The date of this Prospectus is October __, 1995.
<\REDLINE>
<PAGE>
<PAGE>
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>
<PAGE>
FEE TABLE
The following table illustrates all expenses and fees that a
shareholder of the Fund will incur:
SHAREHOLDER TRANSACTION EXPENSES
<REDLINE>
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
<\REDLINE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 0.70%
12b-1 Fees None
Other Expenses 1.00%
TOTAL Fund Operating Expenses 1.70%
EXAMPLE:
Assuming a hypothetical investment of $1,000, a five-percent
annual return, and redemption at the end of each time period,
an investor in the Fund would pay transaction and operating
expenses at the end of each year as follows:
1 year 3 years 5 years 10 years
$17 $54 $92 $201
The same level of expenses would be incurred if the investment
were held throughout the period indicated.
The preceding table is provided to assist the investor in
understanding the various costs and expenses that the investor
will incur directly or indirectly. The five-percent assumed
annual return is for comparison purposes only. The actual
return may be more or less depending on market conditions.
The actual expenses an investor incurs will depend on the
amount invested and on the actual growth rate of the Fund.
For further information regarding management fees, see
"Management of the Trust" in this Prospectus and in the
Statement of Additional Information.
<PAGE> 3
<PAGE>
Cappiello-Rushmore Trust
Financial Highlights
Gold Fund
Audited
<REDLINE>
<TABLE>
<CAPTION>
For the Year Ended June 30,
1995 1994*
<S> <C> <C>
Per Share Operating Performance:
Net Asset Value - Beginning of Year . . . . . . $ 9.52 $ 10.00
Net Investment Loss . . . . . . . . . . . . . . (0.047) (0.008)
Net Realized and Unrealized Gains (Losses) on
Securities . . . . . . . . . . . . . . . . . 0.417 (0.472)
Net Increase (Decrease) in Net Asset Value
Resulting from Operations . . . . . . . . . . 0.370 (0.480)
Dividends to Shareholders . . . . . . . . . . . 0.000 0.000
Distributions to Shareholders from Net Realized
Capital Gains . . . . . . . . . . . . . . . . 0.000 0.000
Net Increase (Decrease) in Net Asset Value . . 0.37 (0.48)
Net Asset Value - End of Year . . . . . . . . . $ 9.89 $ 9.52
Total Investment Return . . . . . . . . . . . . . 3.89% (4.80)%
Ratios to Average Net Assets:
Expenses . . . . . . . . . . . . . . . . . . 1.70% 1.68%
Net Investment Loss . . . . . . . . . . . . . (0.51)% (0.25)%
Supplementary Data:
Portfolio Turnover Rate . . . . . . . . . . . . 51.23% 22.85%
Number of Shares Outstanding at End of Year
(000s omitted) . . . . . . . . . . . . . . . 687 672
* Commencement of Operations March 7, 1994
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>
<\REDLINE>
<PAGE> 4
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The Cappiello-Rushmore Gold Fund is now more than one year old
(the Fund was effective March 7, 1994). The Fund's principal
investment objective is to achieve capital appreciation by
investing in equity securities of companies engaged in gold
and other precious metals' production throughout the world.
The Fund is also a hedge against loss of purchasing power
through inflation or devaluation of the dollar. Our
investment philosophy continues to focus on those companies
who have the capacity to increase their profitability per
ounce of gold production and to expand the amount of gold
produced.
Currently, the Fund is primarily concentrated in North
American gold equities. Several factors have contributed to
the stocks' positive momentum: an overall strong equity
market; improving gold fundamentals; and, a slowing gold
supply and rising demand. World gold mine production fell
0.6% in 1994, its first annual decline since 1975.
Additionally, official sales of gold by the world's central
banks have been moderate by historical terms. The demand side
for gold and other precious metals is positive. Rising
jewelry fabrication this year is a reflection of the improving
economy in the U.S., Europe and parts of Asia. Further,
investment demand continues to rise throughout the world,
particularly in India and China. Accordingly, this widening
supply deficit relative to demand should continue, providing a
gradually rising floor to gold prices. Any additional
increase in demand due to inflation fears, currency worries,
or other negative financial events could accelerate gold's
price movement in the months ahead.
[Graph appears here showing the comparison of change in the
value of a $10,000 investment made on March 7, 1994 between
the Fund and the Standard & Poor's 500 Stock Index]
<REDLINE>
<TABLE>
<CAPTION>
Cappiello-Rushmore Trust
Total Return Comparison
Gold
Fund S&P 500
<S> <C> <C>
3/7/94 $10,000 $10,000
6/30/94 $9,520 $9,605
6/30/95 $9,890 $12,109
</TABLE>
<PAGE> 5
<PAGE>
<\REDLINE>
Past performance is not predictive of future performance.
<PAGE> 6
<PAGE>
<REDLINE>
<TABLE>
<CAPTION>
Cappiello-Rushmore Trust
Average Annual Total Return
Year Ended June 30, 1995
Since Inception
One Year 3/7/94
<S> <C> <C>
Cappiello-Rushmore Gold Fund 3.89% -0.84%
</TABLE>
<\REDLINE>
INVESTMENT OBJECTIVE AND POLICIES
<REDLINE>
The Cappiello-Rushmore Trust is a no-load, open-end non-
diversified management company consisting of four separate
funds. The Trust's Gold Fund has an investment objective of
capital appreciation. At least 65% of the total assets of the
Fund are normally invested in (i) the equity securities of
companies principally engaged in the mining, exploration,
fabrication, processing, marketing, and distribution of or
dealing or investing in gold and operating companies
principally engaged in financing, managing, controlling, or
operating companies engaged in these activities, and (ii) gold
bullion and coins. The Fund also may invest in (i) the equity
securities of companies principally engaged in the foregoing
activities with respect to silver, platinum, and other
precious metals and in diamonds and other precious minerals,
and (ii) silver or other precious metal bullion and coins.
Any income received on equity investments will be incidental
to the Fund's objective of capital appreciation.
<\REDLINE>
Equity securities in which the Fund invests include common
stocks, securities convertible into common stocks, preferred
stocks, and warrants. A company is considered to be
principally engaged in metals-related or minerals-related
activities if that company derives more than 50% of the
company income from such activities or devotes more than 50%
of the company's assets to such activities.
<PAGE> 7
<PAGE>
The Fund may invest in precious metals futures contracts and
options thereupon. Futures contracts and options may be used
for several reasons: to maintain cash reserves while
simulating full investment, to facilitate trading, to reduce
transaction costs, or to seek higher investment returns when a
futures contract is priced more attractively than the
underlying equity security. The Fund may purchase and sell
futures contracts and options on futures contracts only to the
extent that obligations underlying such contracts or
transactions represent not more than 20% of the Fund's assets.
Bullion and coins are bought from and sold to only domestic
and foreign banks, regulated domestic commodities exchanges,
exchanges affiliated with a regulated domestic stock exchange,
and dealers who are members of, or who are affiliated with
members of, a regulated domestic commodities exchange, in
accordance with applicable investment laws. Gold, silver,
platinum, and palladium bullion are not purchased in any form
that is not readily marketable. Coins are not purchased for
their numismatic value and are not considered for purchase if
such coins cannot be bought or sold in an active market. Any
bullion or coins purchased by the Fund are delivered to and
stored with a qualified custodian bank in the United States.
Bullion and coins do not generate income and offer only the
potential for capital appreciation or depreciation, and that,
in these transactions, the Fund may encounter higher custody
and transaction costs than those normally associated with the
ownership of securities, as well as shipping and insurance
costs. The Fund may attempt to minimize the costs associated
with actual custody of bullion or coins by the use of receipts
or certificates representing ownership interests in these
precious metals.
The Fund's investment objective and its policy to invest at
least 65% of its assets in the equity securities of issuers
engaged in gold-related business and gold bullion are
fundamental policies and may not be changed without the
affirmative vote of the majority of the outstanding shares of
the Fund. All other investment policies of the Fund not
specified as fundamental may be changed by the Board of
Trustees of the Trust without approval of the shareholders.
Of course, there can be no assurance that the Fund will
achieve its stated investment objective.
SPECIAL CONSIDERATIONS
Metals-related investments and minerals-related investments
are considered speculative and are impacted by a host of
world-wide economic, financial, and political factors.
Historically, the price of gold and precious metals have been
subject to wide price movements caused by political as well as
economic factors, and, accordingly, prices of equity
<PAGE> 8
<PAGE>
securities of companies involved in precious metals-related
and minerals-related industries have been volatile. Such
fluctuation and volatility may be due to changes in inflation
or in expectations regarding inflation in various countries,
the availability of supplies of such precious metals and
minerals, changes in industrial and commercial demand, metal
and mineral sales by governments, central banks, or
international agencies, investment speculation, monetary and
other economic policies of various governments, and
governmental restrictions on the private ownership of certain
precious metals and minerals. Such price volatility in
precious metals and minerals prices will have a similar effect
on the Fund's share prices.
At the present time, there are five major producers of gold
bullion. In order of magnitude they are: the Republic of
South Africa, the former Union of Soviet Socialist Republics,
Canada, the United States, and Australia. Political and
economic conditions in these countries may have a direct
effect on the mining, distribution, and price of gold and
sales of central bank gold holdings.
The Fund may invest up to 20% of its assets in securities of
foreign issuers which are not traded on a recognized U.S.
securities exchange or in dollar denominated American
Depository Receipts ("ADRs"). This policy presents certain
risks not present in domestic investments and exposes the
investor to general market conditions which differ
significantly from those in the United States. Securities of
foreign issuers may be affected by the strength of foreign
currencies relative to the U.S. dollar or by political or
economic developments in foreign countries. Foreign companies
may not be subject to accounting standards or governmental
regulations comparable to those that affect United States
companies, and there may be less public information about the
operations of foreign companies. Although the Fund only
purchases dollar-denominated securities, changes in foreign
currency exchange rates may affect the value of securities in
the Fund and the unrealized appreciation or depreciation of
investments. Foreign securities also may be subject to
foreign government taxes that could reduce the yield on such
securities.
The successful management of the Fund's portfolio may be more
dependent upon the skills and expertise of the Fund's
investment adviser than is the case for most mutual funds
because of the need to evaluate the factors identified above.
INVESTMENT TECHNIQUES
Investments in Futures Contracts and Options
<PAGE> 9
<PAGE>
Precious metals futures contracts are standardized exchange-
traded obligations. These contracts give the owner the right
to buy or sell precious metals at a future date at a
predetermined price. When purchasing or selling a metals
futures contract, or an option thereupon, the Fund either
maintains with its custodian bank (and marks-to-market on a
daily basis) a segregated account consisting of cash, U.S.
Government securities, or other liquid high-grade debt
securities that, when added to any amounts deposited with a
futures commission merchant as margin, are equal to the market
value of the futures contract or otherwise "covers" its
position.
Gold futures contracts trade on the Commodity Exchange, Inc.
in New York, the Chicago Board of Trade, the New York
Mercantile Exchange, and the Mid America Commodity Exchange.
It cannot be guaranteed that a liquid market for such
contracts will exist at all times. Metals futures contracts
also are subject to other substantial risks and the
effectiveness of the Fund's investment activities relating to
metals futures depends to a large extent on the ability of the
Fund's investment adviser to predict the price movement of the
futures selected. Whether the Fund realizes a gain or loss
from such activities, and from options and other futures
activities, therefore, depends generally upon movement in the
level of precious metals prices and the stocks of metals-
related issuers and the Fund's investment adviser's ability to
predict correctly the direction of these prices, interest
rates, and other economic factors. In contrast to a long
position, where the Fund's loss from the position cannot
exceed the cost of that position, the extent of the Fund's
loss from investing in futures transactions is potentially
unlimited.
Options on gold and precious metals futures contracts entitle
the holder to buy and sell the underlying futures contract at
a specific price. Unlike futures contracts, the potential
loss of owning an option on a futures contract is limited to
the initial purchase price. Although a premium is paid for
the option contract, the purchase and sale of such contracts
may, at times, be of a more beneficial interest to the Fund
than a purchase of a futures contract. Options have a limited
life span and are extremely volatile and the potential for
loss is great. Options on gold and precious metals futures
contracts are traded on the Commodity Exchange, Inc. in New
York.
Other risks associated with the use of futures contracts and
options are: (i) imperfect correlation between the change in
the market value of the underlying commodity and the prices of
futures contracts and options with the result that futures and
options may fail as hedging techniques in cases where the
<PAGE> 10
<PAGE>
price movements of the securities underlying the futures and
options do not follow the price movements of the Fund's
portfolio securities subject to a hedge; and (ii) possible
lack of a liquid secondary market for a futures position when
liquidation of that position is desired with the result that
the Fund will likely be unable to control losses by closing
its position where a liquid secondary market does not exist.
The risk that the Fund will be unable to close out a futures
position will be minimized by entering into such transactions
on a national exchange with an active and liquid secondary
market. In addition, because of the margin deposits normally
required in futures trading, a high degree of leverage is
typical of a futures trading account. As a result, a
relatively small price movement in a futures contract may
result in substantial losses to the Fund.
Index Options Transactions
The Fund also may purchase and write put and call options on
stock indexes listed on national securities exchange or traded
in the over-the-counter market as an investment vehicle for
the purposes of realizing the Fund's investment objective or
for the purpose of hedging the Fund's portfolio. Transactions
will be restricted to those index options which are based on
the common stock of metals-related or minerals-related
issuers. Currently the only index options based on the common
stock of metals-related and minerals-related issuers is traded
on the Philadelphia Stock Exchange. A stock index fluctuates
with changes in the market value of the stocks included in the
index. Options on stock indexes give the holder the right to
receive an amount of cash upon exercise of the option.
Receipt of this cash amount will depend upon the closing level
of the stock index upon which the option is based being
greater than (in the case of call) or less than (in the case
of a put) the exercise price of the option. The amount of
cash, if any, that will be received by the option holder will
be the difference between the closing price of the index and
the exercise price of the option, multiplied by a specified
dollar multiple. The writer (seller) of the option is
obligated, in return for the premiums received, to make
payment to the option holder of this amount.
Index options are subject to risks, including the risk of
imperfect correlation between the option price and the value
of the underlying securities comprising the index and the risk
that there might not be a liquid secondary market for the
option. The Fund does not enter into an option position that
exposes the Fund to an obligation to another party, unless the
Fund either (i) owns an offsetting position in securities or
other options or (ii) maintains with its custodian bank (and
marks-to-market on a daily basis) a segregated account
consisting of cash, U.S. Government securities, or other
<PAGE> 11
<PAGE>
liquid high-grade debt securities that, when added to the
premiums deposited with respect to the option, are equal to
the market value of the underlying stock index.
All domestic index option exchanges have established
limitations governing the maximum number of call or put
options on the same index which may be bought or written
(sold) by a single investor, whether acting alone or in
concert with others (regardless of whether such options are
written on the same or different exchanges or are held or
written on one or more accounts or through one or more
brokers). Under these limitations, the option positions of
all investment companies advised by the same investment
advisor are combined for purposes of these limits. An
exchange may order the liquidation of positions and may impose
other sanctions or restrictions. These limitations may
restrict the number of listed options which the Fund may buy
or sell. The Fund's investment adviser intends to comply with
all of these limitations.
The Fund's investment adviser intends to utilize index options
as a technique to leverage the Fund's portfolio. If the
Fund's investment adviser is correct in its assessment of the
future direction of stock prices, the Fund share price will be
enhanced. If the Fund's investment adviser has the Fund take
a position in options and stock prices move in a direction
contrary to the forecast of the Fund's investment adviser,
however, the Fund would incur greater loss than the Fund would
have incurred without the options position.
Options on Securities
In an effort to enhance performance and to hedge the Fund's
risk exposure, the Fund may also write (sell) covered call and
secured put options with respect to certain of the Fund's
portfolio securities, at such time and from time to time, as
the Fund's investment adviser shall determine to be
appropriate and consistent with the investment objective of
the Fund. A covered call option means that the Fund owns the
underlying security on which the option is written. By
writing a call option, the Fund may became obligated during
the term of the option to deliver the securities underlying
the option at the exercise price if the option is exercised.
A secured put option means that the Fund has and maintains on
deposit with its custodian bank cash or U.S. Government
securities having a value equal to the exercise value of the
option. By writing a put option, the Fund may become
obligated during the term of the option to purchase the
securities underlying the option at the exercise price.
Options written by the Fund are conducted only on recognized
securities exchanges.
<PAGE> 12
<PAGE>
The principal reason for writing call option on stocks held by
the Fund is to attempt to realize, through the receipt of
premiums, a greater return than would be realized on the
underlying securities alone. In return for the call premium,
the call option writer gives up the opportunity for profit
from a price increase in the underlying security above the
exercise price so long as the option remains open, but retains
the risk of loss should the price of the security decline.
Conversely, the put option writer will realize a profit, in
the form of the premium, so long as the price of the
underlying security remains above the exercise price, but may
realize a loss if the price of the underlying security falls
because of the put writer's obligation to purchase the
underling security from the buyer of the put option at the
exercise price at any time during the option period. If an
option expires, the writer realizes a gain in the amount of
the premium. In the case of a covered call option, however,
any such gain may be wholly or partly offset by a decline in
the market value of the underlying security during the option
period. If a call option is exercised, the writer realizes a
gain or loss from the sale of the underlying security. If a
put option is exercised, the writer must fulfill his
obligation to purchase the underlying security at the exercise
price, which usually will exceed the then market value of the
underlying security.
The writing of option contracts is a highly specialized
activity which involves investment techniques and risks
different from those ordinarily associated with investment
companies, although the Fund's investment adviser believes
that the writing of covered call options listed on an
exchange, where the Fund owns the underlying security, tends
to reduce such risks. The option writer forgoes the
opportunity to profit from an increase in market price of the
underlying security above the exercise price so long as the
option remains open. Securities for the Fund's portfolio will
continue to be bought and sold solely on the basis of
investment considerations and appropriateness to the
fulfillment of the Fund's objectives, without regard to the
Fund's policy on writing options.
Lending Portfolio Securities
The Fund may lend its investment securities to qualified
institutional investors for the purpose of realizing
additional income. Loans of securities by the Fund will be
collateralized by cash, letters of credit, or securities
issued or guaranteed by the U.S. Government or its agencies
and instrumentalities. The collateral will equal at least
102% of the current market value, marked-to-market daily.
Short Sales
<PAGE> 13
<PAGE>
<REDLINE>
The Fund may engage in short sales if, at the time of the
short sale, the Fund owns or has the right to acquire an equal
amount of the security being sold at no additional cost
("selling short against the box"). The Fund may sell short
against the box when the Fund wants to sell the security it
owns, but also wishes to defer recognition of gain or loss for
Federal income tax purposes and for purposes of satisfying
certain tests applicable to regulated investment companies
under the U.S. Internal Revenue Code of 1986, as amended (the
"Code").
<\REDLINE>
Borrowing Money
The Fund may borrow money from a bank but only for temporary
or emergency purposes up to a limit of 5% of the Fund's total
assets. The Fund borrows money only to meet redemption
requests prior to the settlement of securities already sold.
Temporary Defensive Positions
For defensive purposes during any period of market weakness or
of uncertain market or economic conditions, or for liquidity,
the Fund may temporarily invest in securities of the U.S.
Government and its agencies and instrumentalities, commercial
paper, various bank debt instruments, and repurchase
agreements. A repurchase agreement occurs when, at the time
the Fund purchases an interest-bearing obligation, the seller
(a bank or broker-dealer) agrees to repurchase the obligation
on a specific date in the future at an agreed-upon price. The
repurchase price reflects an agreed-upon interest rate during
the time the Fund's money is invested in the security. The
Fund's investment in repurchase agreements is subject to the
risk that the seller will not be able to pay the agreed-upon
price on the delivery date. In the opinion of the Fund's
investment adviser, the risk is minimal because the security
purchased constitutes security for the repurchase obligation,
and repurchase agreements can be considered as loans,
collateralized by the security purchased. However, the Fund
may incur costs in disposing of the collateral, which would
reduce the amount realized thereon. If the seller seeks
relief under the bankruptcy laws, the disposition of the
collateral may be delayed or limited. The Fund's investment
adviser has established procedures to evaluate the credit-
worthiness of the other parties to repurchase agreements. The
Fund will invest no more than 10% of its assets in repurchase
agreements maturing in more than seven days.
FUND CLASSIFICATION
<PAGE> 14
<PAGE>
The Fund's classification as a "non-diversified" investment
company means that the proportion of the Fund's assets that
may be invested in the securities of a single issuer is not
limited by the Investment Company Act of 1940, as amended (the
"1940 Act"). However, the Fund intends to conduct its
operations so as to qualify as a "regulated investment
company" for purposes of the Code which requires that, at the
end of each quarter of the taxable year, (i) at least 50% of
the market value of the Fund's total assets (a diversified
investment company would be so limited with respect to 75% of
such market value) be invested in cash, U.S. Government
securities, the securities of other regulated investment
companies and other securities, with such securities of any
one issuer limited for the purposes of this calculation to an
amount not greater than 5% of the value of the Fund's total
assets and 10% of the outstanding voting securities of any one
issuer, and (ii) not more than 25% of the value of the Fund's
total assets be invested in the securities of any one issuer
(other than U.S. Government securities or the securities of
other regulated investment companies). Because a relatively-
high percentage of the Fund's assets may be invested in the
securities of any one issuer (other than U.S. Government
securities or the securities of other regulated investment
companies) or in the securities of a limited number of
issuers, primarily within the same industry or economic
sector, the Fund's portfolio securities may be more
susceptible to any single economic, political, or regulatory
occurrence than the portfolio securities of a diversified
investment company.
PORTFOLIO TURNOVER AND EXECUTION
The investment activities by the Fund related to options and
futures contracts may result in a considerable amount of
securities trading. Brokerage commissions are normally paid
on options and common stock transactions. A higher portfolio
turnover on transactions involving commissions will lead to
higher expenses. It is the policy of the Fund to obtain the
best price and execution for all of its security transactions.
Although the Fund generally seeks to invest for the long term,
the Fund retains the right to sell securities regardless of
how long the securities have been held. The Fund's investment
adviser expects that the portfolio turnover of the Fund will
not exceed 75% annually.
MANAGEMENT OF THE TRUST
Investment Adviser
The Fund receives investment advisory services from
McCullough, Andrews & Cappiello, Inc. ("MAC"), whose principal
<PAGE> 15
<PAGE>
location is 101 California Street, Suite 4250, San Francisco,
California 94111, and who has an office at Greenspring
Station, Suite 250, 10751 Falls Road, Lutherville, Maryland
21093. Pursuant to the investment advisory contract between
the Trust and MAC, the Fund pays MAC an investment advisory
fee at an annual rate of 0.70% of the Fund's net assets. MAC
manages the investment and reinvestment of the assets of the
Fund in accordance with the Fund's investment objective,
policies, and limitations, subject to the general supervision
and control of the Trust's officers and Board of Trustees.
MAC bears all costs associated with providing these services.
The three principals of MAC collectively provide portfolio
management.
<REDLINE>
MAC is owned by its three principals: Robert F. McCullough,
C.P.A., David H. Andrews, C.F.A., and Frank A. Cappiello. In
addition to providing investment advisory services to the
Trust, MAC manages investment portfolios for employee
retirement plans, charitable foundations, endowments, taxable
corporations, and individuals.
Robert F. McCullough, C.P.A., is Chairman of MAC. He is a
graduate of Santa Clara University and has been a Certified
Public Accountant with a major public accounting firm,
principal of a stock brokerage firm and portfolio manager for
one of the Franklin Funds. He is past President of the Board
of Regents of Santa Clara University and is also a past
President of the University's Alumni Association. He has
served as a board member and officer of numerous charitable
institutions. He is a member of the American Institute of
C.P.A.s and the California Society of C.P.A.s.
<\REDLINE>
David H. Andrews, C.F.A., Vice Chairman of MAC (since 1970),
has been a research analyst at investment institutions, head
of regional research for a major stock brokerage firm, and
portfolio manager for a mutual fund. He is a Chartered
Financial Analyst ("C.F.A.") and past President of the
Security Analysts of San Francisco. He is a graduate of
Harvard University and Stanford University's Graduate School
of Business.
Frank A. Cappiello, President of MAC since September 1983 and
Chairman of the Board of Trustees of the Trust, has primary
responsibility for overseeing the Fund's investments. Mr.
Cappiello has been involved in the securities business for
more than twenty-five years. He has been a manager of an
institutional research division for a major stock brokerage
firm and Financial Vice President of an insurance holding
<PAGE> 16
<PAGE>
company with responsibility for managing assets of more than
$700 million. In 1981 - 1982, he was Chairman of the
Financial Analysts Federation, with more than 15,000 security
analysts members in the United States and Canada.
<REDLINE>
Mr. Cappiello is currently a Member of the Advisory Investment
Council that oversees the Maryland State Retirement System
Fund. He also regularly appears in the television program
"Wall Street Week in Review with Louis Rukeyser" and is author
of three books, "Finding the Next Superstock," "From Main
Street to Wall Street," and "The Complete Guide to Closed End
Funds." Mr. Cappiello is a graduate of the University of
Notre Dame and Harvard University's Graduate School of
Business Administration. He is currently Adjunct Visiting
Professor of Finance at Loyola College in Baltimore.
Investment decisions made on behalf of the Funds by MAC are
made by committee. No one employee of MAC is primarily
responsible for making investment recommendations to the
committee.
<\REDLINE>
Administrative Services
<REDLINE>
The Trust has contracted with Money Management Associates
("Administrator") to provide administrative services to the
Trust. Under the administrative services agreement with the
Administrator, the Trust pays a fee at the annual rate of
1.00% of the daily net assets of the Fund. Except for
extraordinary legal expenses or interest expense, there are no
additional expenses to the Funds.
Certain of these administrative services are provided by
Rushmore Trust and Savings, FSB ("RTS"), a wholly owned
subsidiary of the Administrator, under a subcontractual
agreement with the Administrator. These services include
transfer agency functions, dividend disbursing and other
shareholder services and custody of the Trust's assets. As
custodian, RTS holds the portfolio securities of each Fund and
keeps all necessary related accounts and records.
<\REDLINE>
PERFORMANCE DATA
From time to time, the Fund may advertise its yield which
reflects the rate of income that the Fund earns on its
<PAGE> 17
<PAGE>
investments as a percentage of its price per share. All yield
figures are based on historical earnings and are not intended
to indicate future performance. The Fund's yield is computed
by dividing the interest and dividend income it earned on its
investments for a 30-day period, less expenses, by the average
number of shares outstanding during the period. The figure is
expressed as an annualized percentage rate based on the Fund's
net asset value at the end of the 30-day period.
The Fund from time to time may also include total return in
advertisements or reports to shareholders or prospective
shareholders. Quotations of average annual total return for
the Fund will be expressed in terms of the average annual
compounded rate of return on a hypothetical investment in the
Fund over a period of at least one, five, and ten years (up to
the life of the Fund) (the ending date of the period will be
stated). Total return is calculated from two factors: the
amount of dividends earned by each share and by the increase
or decrease in value of the Fund's share price.
<REDLINE>
In addition to the foregoing, the Fund may advertise its total
return over different periods of time by means of aggregate,
year-by-year, or other types of total return figures. For
more information concerning the calculation of performance
data, see "Calculation of Return Quotations" in the Statement
of Additional Information.
Performance information for the Fund contained in reports and
promotional literature may be compared to various unmanaged
indices, including the Standard & Poor's 500 Stock Index, the
Dow Jones Industrial Average, or the Dow Jones Utility
Average. Such unmanaged indices may assume the reinvestment
of dividends, but generally do not reflect deductions for
operating costs and expenses. The indices used for performance
comparison will be available in general financial
publications. In addition, the Fund's total return may be
compared to the performance of other mutual funds as published
by such organizations as Morningstar, Lipper Analytical
Services, Inc., and CDA Investment Technologies, Inc., among
others.
<\REDLINE>
HOW TO INVEST IN THE TRUST
The minimum initial investment in the Trust is $2,500, which
may be divided among the four separate portfolios of the
Trust, the Gold Fund, the Growth Fund, the Emerging Growth
Fund, and the Utility Income Fund (collectively, the "Funds"),
with a minimum investment of $500 in any one Fund. Retirement
<PAGE> 18
<PAGE>
accounts may be opened with a $500 minimum investment.
Redemptions which bring the account balance below $500 may
result in the imposition of the low balance account fee. The
fee is not imposed on tax-deferred retirement accounts (see
"Low Balance Account Fee"). The shares of the Funds are
offered at the daily public offering price which is the net
asset value per share next computed after receipt of the
investor's order (see "Net Asset Value"). There is no minimum
amount for subsequent investments. The Trust reserves the
right to reject any purchase order. All accounts will be held
in book-entry form. No certificates for shares will be
issued.
Investments in the Funds can be made (i) through securities
dealers who have the responsibility to transmit orders
promptly and may charge a processing fee or (ii) directly with
the Funds by mail or by bank wire as follows:
By Mail: Fill out an application and make a check payable to
"Cappiello-Rushmore Trust-Gold Fund". Mail the check along
with the application, to:
Cappiello-Rushmore Trust
4922 Fairmont Avenue
Bethesda, Maryland 20814
<REDLINE>
By Bank Wire: Request a wire transfer to:
Rushmore Trust and Savings Bank, FSB
Bethesda, Maryland 20814
Routing Number 0550-71084
For Account of Cappiello-Rushmore Trust
Account Number 029385770
After instructing your bank to transfer money by wire, you
must telephone the Fund at (800) 343-3355 or (301) 657-1500
between 8:30 A.M. and 4:00 P.M. Eastern time, 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. If
the purchase is canceled because your wire transfer is not
received, you may be liable for any loss the Fund may incur.
<\REDLINE>
Shares of the Fund are sold at a price based on the net asset
value next calculated after receipt of a purchase order in
good form. If a purchase order is received by the Fund at or
prior to the close of regular trading of the New York Stock
Exchange (the "NYSE") (normally 4:00 P.M. Eastern time) on any
business day, the purchase of Fund shares is executed at the
<PAGE> 19
<PAGE>
offering price determined as of the closing time that day. If
the purchase order is received after the close of regular
trading on the NYSE, the purchase of Fund shares will be
affected on the next business day. When purchases are made by
check, the Fund may hold the proceeds of redemptions until the
Fund's transfer agent is reasonably satisfied that the
purchase payment in Federal funds has been collected (which
can take up to ten business days or until the check clears,
whichever occurs first). An investor may avoid a delay in
receiving redemption proceeds by purchasing shares with a
certified check. Foreign checks will not be accepted. Be
certain to specify the allocation of your purchase among the
Funds.
HOW TO REDEEM AN INVESTMENT (WITHDRAWALS)
<REDLINE>
On any day the Trust 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 Trust or by telephoning
(800) 622-1386 or (301) 657-1510 between 8:30 A.M. and 4:00
P.M. Eastern time. Telephone redemption privileges may be
terminated or modified by the Trust upon 60 days notice to all
shareholders of the Fund. Telephone redemption requests
cannot be accepted after 4:00 P.M. Eastern time.
<\REDLINE>
The privilege to initiate redemption transactions by telephone
will be made available to Fund shareholders automatically.
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
upon instructions received by telephone, providing written
confirmation not later than five business days after such
transactions, 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
<PAGE> 20
<PAGE>
than the investor's 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
the net asset value of the shares as next computed following
the receipt of a request for redemption. Payment for 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 from the purchase
date 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 NYSE is
closed (other than customary weekend or holiday closings); or
(b) when trading on the NYSE is restricted, or an emergency
exists, as determined by the Commission, so that disposal of
the Fund's investments for determination of net asset value is
not reasonably practicable; or (c) for such other periods as
the Commission, by order, may permit for protection of the
Fund's investors. Investors should also be aware that
telephone redemptions or exchanges may be difficult to
implement in a timely manner during periods of drastic
economic or market changes. If such conditions occur,
redemption or exchange orders can be made by mail.
EXCHANGES
<REDLINE>
The Trust is composed of four separate Funds. Investors may
invest in one or more of the Funds, and may exchange shares in
one Fund for shares of another Fund at their relative net
asset values. The Fund's shares may be exchanged, without
cost, for shares of Fund for Government Investors, Inc., Fund
for Tax-Free Investors, Inc., The Rushmore Fund, Inc. or
American Gas Index Fund, Inc. Exchanges may be made by
telephone or letter. Written requests should be sent to
Cappiello-Rushmore Trust, 4922 Fairmont Avenue, Bethesda,
Maryland 20814 and be signed by the record owner or owners.
Telephone exchange requests also 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 the
respective net asset values of the Funds involved as next
<PAGE> 21
<PAGE>
determined after receipt of the exchange request. To
implement an exchange, shareholders should provide the
following information: account registration including address
and number, taxpayer identification number, number, percentage
or dollar value of shares to be redeemed, name and account
number of the Fund to which the investment is to be
transferred. Exchanges may be made only if the exchanges are
between identically-registered accounts. 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 Trust upon 60 days notice to all
shareholders of the Funds.
<\REDLINE>
LOW BALANCE ACCOUNT FEE
<REDLINE>
In addition to charges described elsewhere in this Prospectus,
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. 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 the Administrator. The fee will not be
imposed on tax-sheltered retirement plans or accounts
established under the Uniform Gifts or Transfers to Minors
Act.
<\REDLINE>
TAX-SHELTERED RETIREMENT PLANS
Tax-sheltered retirement plans of the following types will be
available to investors:
<REDLINE>
Individual Retirement Accounts (IRAs)
Defined Contribution Plans (Profit-Sharing Plans)
Defined Contribution Plans (Money Purchase Plans)
Section 401(k) Plans
Section 403(b) Plans
<\REDLINE>
Additional information regarding these accounts may be
obtained by contacting the Trust.
DIVIDENDS AND DISTRIBUTIONS
<PAGE> 22
<PAGE>
All dividends and capital gain distributions will be
reinvested in additional shares of the Fund (including
fractional shares where necessary) at net asset value, unless
you elect on your application form or in writing, not less
than five full business days prior to the record date for a
particular dividend or distribution, to receive such dividend
or distribution in cash. If you elect to receive
distributions in cash, your election will be effective until
you give other written instructions to the Fund for a change
of elections five days prior to such change. Dividends and
distributions are taxable to shareholders, as discussed below,
whether such dividends are reinvested in shares of the Fund or
are received in cash. Statements of account will be sent to
shareholders at least quarterly.
The Fund intends to distribute all net investment income and
net capital gains annually in December.
The timing and amount of all dividends and distributions are
subject to the discretion of the Board of Trustees.
NET ASSET VALUE
The price of the Fund's shares on any given day is its net
asset value ("NAV"). For any given day, this figure is
computed by dividing the total market value of the Fund's
investments and other assets on that day, less any
liabilities, by the number of Fund shares outstanding. The
net asset value per share of the Fund is determined daily at
4:00 P.M. Eastern time, except on customary national business
holidays which result in the closing of the NYSE and on
weekends. The Fund's net asset value will fluctuate and Fund
shares are not insured against reduction in net asset value.
The Fund values its portfolio securities based on the market
values of such securities. Each security held by the Fund
which is listed on a securities exchange, and for which market
quotations are available, is valued at the last quoted sale
price for a given day, or, if a sale is not reported for that
date, at the mean between the most recent quoted bid and asked
prices. Price information on each listed security is taken
from the exchange where the security is primarily traded.
Unlisted securities for which market quotations are readily
available are valued at the closing sales prices. The value
of assets for which no quotations are readily available
(including any restricted securities) are valued at fair value
as determined in good faith by the Custodian pursuant to Board
of Trustees guidelines. Securities may be valued on the basis
of prices provided by pricing services when such prices are
believed to reflect fair market value.
<PAGE> 23
<PAGE>
Gold and other precious metals are valued daily at fair market
value, based upon price quotations in common use, in such
manner as the Board of Trustees from time to time (not less
frequently than quarterly) determines in good faith to reflect
most accurately their fair market value.
TAXES
<REDLINE>
The Fund intends to qualify for treatment as a regulated
investment company under Subchapter M of the Internal Revenue
Code. If the Fund (i) qualifies as a regulated investment
company and (ii) distributes at least 90% of its net
investment income (including, for this purpose, net realized
short-term capital gains), the Fund will not be liable for
Federal income taxes to the extent its net investment income
and its net realized long-term and short-term capital gains,
if any, are distributed to the Fund s shareholders within the
time periods specified in the Code. To avoid an excise tax on
its undistributed income, the Fund must generally distribute
at least 98% of its income, including its net long-term
capital gains.
<\REDLINE>
To qualify as a regulated investment company under the Code,
the Fund must satisfy certain requirements, including the
requirements that the Fund receive at least 90% of its gross
income each year from dividends, interest, payments with
respect to securities loans, gains from the sale or other
disposition of securities or foreign currencies, or other
income derived with respect to the Fund s investments in
stock, securities, and foreign currencies (the "90% Test"),
and that the Fund derive less than 30% of the Fund s gross
income from the sale or other disposition of any of the
following instruments which was held less than three months
(the "30% Test"): (i) stock or securities; (ii) options,
futures, or forward contracts; or (iii) foreign currencies
(or options, futures, or forward contracts on such foreign
securities).
Satisfaction of the 90% Test will impose limitations on the
investment strategies that may be pursued by the Fund. Income
from investments in precious metals, minerals, and coins will
not be qualifying income for purposes of the 90% Test.
Therefore, the Fund will seek to limit its investment
transactions in precious metals, minerals, and coins so as to
avoid a violation of the 90% Test.
<REDLINE>
<PAGE> 24
<PAGE>
Under current law, dividends derived from interest and
dividends received by the Fund, together with distributions of
any short-terms capital gains, are taxable to the shareholders
as ordinary income at Federal income tax rates of up to 39.6%
whether or not such dividends and distributions are reinvested
in shares of the Fund or are received in cash.
The larger the volume of redemptions or exchanges of the
Fund's shares the more difficult it will be for the Fund to
satisfy the 30% Test. To minimize the risk of failing the 30%
Test, the Fund intends to satisfy obligations in connection
with redemptions and exchanges first by using available cash
or borrowing facilities and by selling securities that have
been held for at least three months or as to which there will
be a loss or the smallest gain. If the Fund also must sell
securities that have been held for less than three months,
then, to the extent possible, the Fund will seek to conduct
such sales in a manner that will allow such sales to qualify
for a special provision in the Code that excludes from the 30%
Test any gains resulting from sales made as a result of
"abnormal redemptions." Notwithstanding these actions, there
can be no assurance that the Fund will be able to satisfy the
30% Test. For additional information concerning this special
Code provision, see "Taxes" in the Statement of Additional
Information.
Under current law, distributions of net long-term gains, if
any, realized by the Fund and designated as capital gains
distributions 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 of individual
investors are taxed at Federal income tax rates of up to 28%.
Statements as to the Federal tax status of shareholders
dividends and distributions will be mailed annually.
Shareholders should consult their tax advisors concerning the
tax status of the Fund s dividends in their own states and
localities.
Ordinary dividends paid to corporate or individual residents
of foreign countries are generally subject to a 30%
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 be
required to provide the Fund with supporting documentation in
order for the Fund to apply a reduced rate or exemption from
U.S. withholding tax.
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,
<PAGE> 25
<PAGE>
a Fund is required to withhold taxes at the rate of 31% on
dividends, capital gains distributions, and redemptions.
Shareholders who are non-resident aliens may be subject to a
withholding tax on dividends earned.
<\REDLINE>
ORGANIZATION OF THE TRUST
The Trust was organized as a business trust under the laws of
Delaware on March 12, 1992, and may issue an unlimited number
of shares of beneficial interest in one or more investment
portfolios or Funds. While only shares of four Funds are
presently being offered, the Board of Trustees may authorize
the issuance of shares of additional Funds if deemed
desirable. Shares of each Fund have equal noncumulative
voting rights as to dividends, assets and liquidation of such
Fund. Under Delaware law, the debts or other obligations that
exist with respect to a particular Fund of the Trust are
enforceable against the assets of such Fund only and not
against the assets of the Trust generally.
The Trust is not required to hold annual shareholders'
meetings. The Trust will, however, hold special meetings as
required or deemed desirable by the Board of Trustees for such
purposes as electing trustees, changing fundamental policies
or approving an investment advisory contract. Shareholders
will vote by Fund and not in the aggregate except when voting
in the aggregate is permitted under the 1940 Act, such as for
the election of Trustees. Matters that affect only one Fund
may include changing the Fund's fundamental investment
policies or changing the investment advisory contract as the
contract relates to that Fund.
A meeting may also be called by shareholders holding at least
10% of the shares entitled to vote at the meeting for the
purpose of voting upon the removal of Trustees.
<PAGE> 26
<PAGE>
CONTENTS
Page
Fee Table . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Highlights . . . . . . . . . . . . . . . . . . . .
Management's Discussion of
Fund Performance . . . . . . . . . . . . . . . . . . . . .
Investment Objective and Policies . . . . . . . . . . . . . .
Special Considerations . . . . . . . . . . . . . . . . . . .
Investment Techniques . . . . . . . . . . . . . . . . . . . .
Fund Classification . . . . . . . . . . . . . . . . . . . . .
Portfolio Turnover and Execution . . . . . . . . . . . . . .
Management of the Trust . . . . . . . . . . . . . . . . . . .
Performance Data . . . . . . . . . . . . . . . . . . . . . .
How to Invest in the Trust . . . . . . . . . . . . . . . . .
How to Redeem an Investment
(Withdrawals) . . . . . . . . . . . . . . . . . . . . . . .
Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . .
Low Balance Account Fee . . . . . . . . . . . . . . . . . . .
Tax-Sheltered Retirement Plans . . . . . . . . . . . . . . .
Dividends and Distributions . . . . . . . . . . . . . . . . .
Net Asset Value . . . . . . . . . . . . . . . . . . . . . . .
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Organization of the Trust . . . . . . . . . . . . . . . . . .
<PAGE> 27
<PAGE>
<REDLINE>
CAPPIELLO-
RUSHMORE
TRUST
Gold Fund
PROSPECTUS
October ___, 1995
<\REDLINE>
<PAGE> 28
<PAGE>
<REDLINE>
PART B
<\REDLINE>
<PAGE>
<REDLINE>
CAPPIELLO-RUSHMORE TRUST
Growth Fund
Emerging Growth Fund
Utility Income Fund
Gold Fund
4922 Fairmont Avenue, Bethesda, Maryland 20814
(800) 343-3355
(301) 657-1500
STATEMENT OF ADDITIONAL INFORMATION
The Cappiello-Rushmore Trust (the "Trust") is a no-load,
open-end, non-diversified management investment company
consisting of four separate funds: the Utility Income Fund,
the Growth Fund, the Emerging Growth Fund, and the Gold Fund
(the "Funds"). Each Fund has its own investment objectives
and policies, and a shareholder's interest is limited to the
Fund in which the shareholder owns shares.
This Statement of Additional Information is not a
Prospectus. It should be read in conjunction with the Trust's
prospectuses, each dated October __, 1995. Copies of the
Trust's prospectuses may be obtained without charge by writing
or telephoning the Trust at the above address or telephone
number.
The date of this Statement of Additional Information is
October __, 1995.
<\REDLINE>
<PAGE>
<PAGE>
<REDLINE>
<TABLE>
<CAPTION>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Cross Reference to Related Item in
Prospectuses
Page in
Growth Fund,
Emerging
Page in Growth Fund,
Statement of Page in and Utility
Additional Gold Fund Income Fund
Information Prospectus Prospectus
<S> <C> <C> <C>
Investment Objectives and
Policies
Investment Limitations
Redemptions of Shares
Tax-Deferred Retirement Plans
Management of the Trust
Principal Holders of Securities
Calculation of Return Quotations
Investment Advisory and
Other Services
Net Asset Value
Taxes
Auditors and Custodian
Financial Statements
</TABLE>
<\REDLINE>
<PAGE>
<PAGE>
INVESTMENT POLICIES
Repurchase Agreements
Each Fund of the Trust may invest in repurchase agreements
with commercial banks, brokers or dealers either for defensive
purposes due to market conditions or to generate income from
its excess cash balances. A repurchase agreement is an
agreement under which the Fund acquires a money market
instrument (generally a security issued by the U.S. government
or an agency thereof, a banker's acceptance or a certificate
of deposit) from a commercial bank, broker or dealer, subject
to resale to the seller at an agreed upon price and date
(normally, the next business day). A repurchase agreement may
be considered a loan collateralized by securities. The resale
price reflects an agreed upon interest rate effective for the
period the instrument is held by the Fund and is unrelated to
the interest rate on the underlying instrument. In these
transactions, the securities acquired by the Fund (including
accrued interest earned thereon) must have a total value in
excess of the value of the repurchase agreement and are held
by the Trust's custodian bank until repurchased. In addition,
the Board of Trustees will monitor the Trusts' repurchase
agreement transactions generally and will establish guidelines
and standards for review of the creditworthiness of any bank,
broker or dealer party to a repurchase agreement with the
Trust. No more than an aggregate of 10% of a Fund's assets,
at the time of investment, will be invested in repurchase
agreements having maturities longer than seven days and
illiquid securities.
The use of repurchase agreements involves certain risks. For
example, if the other party to the agreement defaults on its
obligations to repurchase the underlying security at a time
when the value of the security has declined, the Fund may
incur a loss upon disposition of the security. If the other
party to the agreement becomes insolvent and subject to
liquidation or reorganization under the Bankruptcy Code or
other laws, a court may determine that the underlying security
is collateral for a loan by the Fund not within the control of
the Fund and therefore the Fund may not be able to
substantiate its interest in the underlying security and may
be deemed an unsecured creditor of the other party to the
agreement. While the Trust's management acknowledges these
risks, it is expected that they can be controlled through
careful monitoring procedures.
Lending of Securities
Each Fund of the Trust may lend its securities to qualified
institutional investors who need to borrow securities in order
to complete certain transactions, such as covering short
sales, avoiding failures to deliver securities or completing
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arbitrage operations. By lending its portfolio securities, a
Fund attempts to increase its net investment income through
the receipt of interest on the loan. Any gain or loss in the
market price of the securities loaned that might occur during
the term of the loan would be for the account of the Fund.
The Fund may lend its portfolio securities to qualified
brokers, dealers, banks or other financial institutions, so
long as the terms, the structure and the aggregate amount of
such loans are not inconsistent with the Investment Company
Act of 1940, or the Rules and Regulations or interpretations
of the Securities and Exchange Commission (the "Commission")
thereunder, which currently requires that (a) the borrower
pledge and maintain with the Trust collateral consisting of
cash, a letter of credit issued by a domestic U.S. bank or
securities issued or guaranteed by the United States
government having at all times not less than 100% of the value
of the securities loaned, (b) the borrower add to such
collateral whenever the price of the securities loaned rises
(i.e., the borrower "marks to the market" on a daily basis),
(c) the loan be made subject to termination by the Trust at
any time and (d) the Fund receives reasonable interest on the
loan (which may include the Fund's investing any cash
collateral in interest bearing short-term investments), any
distribution on the loaned securities and any increase in
their market value. Loan arrangements made by the Trust will
comply with all other applicable regulatory requirements,
including the rules of the New York Stock Exchange, which
rules presently require the borrower, after notice, to
redeliver the securities within the normal settlement time of
five business days. All relevant facts and circumstances,
including the creditworthiness of the broker, dealer or
institution, will be considered in making decisions with
respect to the lending of securities, subject to review by the
Board of Trustees.
At the present time, the Staff of the Commission does not
object if an investment company pays reasonable negotiated
fees in connection with loaned securities, so long as such
fees are set forth in a written contract and approved by the
investment company's trustees. In addition, voting rights may
pass with the loaned securities, but if a material event will
occur affecting an investment on loan, the loan must be called
and the securities voted.
Options Transactions
Purchasing Call and Put Options. The Growth Fund, Emerging
Growth Fund, and Utility Income Fund could purchase call
options to protect (i.e., hedge) against anticipated increases
in the prices of securities it wishes to acquire.
Alternatively, call options could be purchased for capital
appreciation. Since the premium paid for a call option is
typically a small fraction of the price of the underlying
<PAGE> 4
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security, a given amount of funds will purchase call options
covering a much larger quantity of such security than could be
purchased directly. Before purchasing call options, the Funds
could benefit from any significant increase in the price of
the underlying security to a greater extent then had it
invested the same amount in the security directly. However,
because of the very high volatility of option premiums, the
Fund would bear a significant risk of losing the entire
premium if the price of the underlying security did not rise
sufficiently, or if it did not do so before the option
expired.
Conversely, put options could be purchased to protect (i.e.,
hedge) against anticipated declines in the market value of
either specific portfolio securities or of the Funds' assets
generally. Alternatively, put options could be purchased for
capital appreciation in anticipation of a price decline in the
underlying security and a corresponding increase of put
options for capital risk appreciation involves the same
significant risk of loss as described above for call options.
In any case, the purchase of options for capital appreciation
would increase the Funds' volatility by increasing the impact
of changes in the market price of the underlying securities on
the Funds' net asset value.
The Registrant does not intend to invest more than 5% of the
assets of any Fund in purchasing put or call options.
Writing Call and Put Options. The Growth Fund, the Utility
Income Fund, and the Gold Fund may write (sell) covered call
options and secured put options. The Emerging Growth Fund
will not engage in option transactions. By writing a call
option, the Funds become obligated during the term of the
option to deliver the securities underlying the option at the
exercise price if the option is exercised. By writing a put
option, the Funds become obligated during the term of the
option to purchase the securities underlying the option at the
exercise price. The Funds will be considered secured in
respect to put options they write if they maintain on deposit
with their custodian bank liquid high quality debt securities
having a value equal to the exercise value of the option.
During the term of the option, the writer may be assigned an
exercise notice by the broker-dealer through whom the option
was sold. The exercise notice would require the writer to
deliver, in the case of a call, or take delivery of, in the
case of a put, the underlying security against payment of the
exercise price. This obligation terminates upon expiration of
the option, or at such time that the writer effects a closing
purchase transaction by purchasing an option covering the same
underlying security and having the same exercise price and
expiration date the one previously sold. Once an option has
<PAGE> 5
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been exercised, the writer of the option may not execute a
closing purchase transaction. To secure the obligation to
deliver the underlying security in the case of a call option,
the writer of the option is required to deposit in escrow the
underlying security or other assets in accordance with the
rules of the Options Clearing Corporation (the "OCC"), an
institution created to interpose itself between buyers and
sellers of options. The OCC assumes the other side of every
purchase and sale transaction on an exchange and, by doing so,
gives its guarantee to the transaction.
The principal reason for writing call options on stocks held
by the Growth Fund and the Utility Income Fund is to attempt
to realize, through the receipt of premiums, a greater return
than would be realized on the underlying securities alone. In
return for the premium, the call option writer has given up
the opportunity for profit from a price increase in the
underlying security above the exercise price so long as the
option remains open, but retains the risk of loss should the
price of the security decline. Conversely, the put option
writer gains a profit, in the form of the premium, so long as
the price of the underlying security remains above the
exercise price, but assumes an obligation to purchase the
underlying security from the buyer of the put option at the
exercise price, even though the security may fall below the
exercise price, at any time during the option period. If an
option expires, the writer realizes a gain in the amount of
the premium. Such a gain may, in the case of a covered call
option, be offset by a decline in the market value of the
underlying security during the option period. If a call
option is exercised, the writer realizes a gain or loss from
the sale of the underlying security. If a put option is
exercised, the writer must fulfill his obligation to purchase
the underlying security at the exercise price, which will
usually exceed the then market value of the underlying
security.
Investment in Foreign Securities
Each of the Funds may invest up to 20% of its total assets in
securities of foreign issuers which are traded on a recognized
U.S. securities exchange or in dollar denominated American
Depository Receipts ("ADR's"). Investing in foreign companies
may involve risks not typically associated with investing in
United States' companies. There is generally less publicly
available information about foreign companies and other
issuers comparable to reports and ratings that are published
about issuers in the United States. Foreign issuers are also
not subject to uniform accounting and auditing and financial
reporting standards, practices and requirements comparable to
those applicable to United States issuers.
<PAGE> 6
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Foreign securities markets are generally not as developed or
as efficient as those in the United States. While growing in
volume, they usually have substantially less volume than the
New York Stock Exchange, and securities of some foreign
issuers are less liquid and more volatile than securities of
comparable United States issuers. Fixed commissions on
foreign exchanges are generally higher than negotiated
commission on United States exchanges, although each Fund will
endeavor to achieve the most favorable net results on its
portfolio transaction. There is generally less government
supervision and regulation of securities exchanges, brokers
and listed issuers than in the United Sates.
With respect to certain foreign countries, there is the
possibility of adverse changes in investment or exchange
control regulations, expropriation or confiscatory taxation,
limitations on the removal of funds or other assets of the
Funds, political or social instability, or diplomatic
developments which could affect United States investment in
those countries. Moreover, individual foreign economies may
differ favorable or unfavorably from the United States'
economy in such respects as growth of gross national product,
rate of inflation, capital reinvestment, resource self-
sufficiency and balance of payments position.
The dividends and interest payable in certain foreign
portfolio securities may be subject to foreign withholding
taxes, thus reducing the net amount of income available for
distribution to the Funds' shareholders. A shareholder
otherwise subject to United States federal income taxes may,
subject to certain limitations, be entitled to claim a credit
or deduction for U.S federal income tax purposes for his or
her proportionate share of taxes paid by each of the Funds.
Futures Contracts on Metals and Related Options
The Gold Fund may enter into a metals futures contract or a
related option in order to profit from fluctuations in the
price of the metal without necessarily buying or selling the
metal or other portfolio assets. For example, if the Fund
expects gold prices to increase, the Fund might purchase gold
futures contracts in anticipation of the future purchase of
gold or gold-related securities. Such a purchase would have
much the same effect as the Fund actually buying gold. If
gold prices increase as anticipated, the value of the gold
futures contracts would increase at approximately the same
rate.
No consideration is paid or received by the Fund upon the
purchase of a metals futures contract. Initially, the Fund
will be required to deposit with a broker an initial margin
amount in cash equivalents, such as U.S. Government securities
or high-grade debt obligations. This initial margin amount is
<PAGE> 7
<PAGE>
subject to change by the exchange on which the contract is
traded and brokers may require a higher amount. The initial
margin is in the nature of a performance bond or good faith
deposit on the contract and is returned to the Fund upon
termination of the futures contract, assuming that all of the
Fund's contractual obligations have been satisfied.
Subsequent payments to and from the broker (known as
maintenance margin) will be made daily as the price of the
commodity underlying the futures contract fluctuates, making
the Fund's positions in the futures contract more or less
valuable. This process is known as "marking-to-market."
Because the value of an option on a futures contract is fixed
at the point of sale, there are no daily cash payments by the
purchaser to reflect changes in the value of the underlying
contract, however, the value of the option does change daily
and that change would be reflected in the net asset value of
the Fund.
There are several risks in connection with the use of metals
futures contracts and related options. Successful use of
futures contracts and related options by the Fund is subject
to the ability of the Fund's investment adviser to predict
correctly movements in the price of the commodity and other
factors affecting markets for the commodity. These
predictions involve skills and techniques that are different
from those generally involved in the management of the Fund.
In addition, there can be no assurance that there will be a
correlation between movements in the price of futures
contracts or an option on a futures contract and movements in
the price of the underlying assets.
At any time prior to the expiration of a futures contract or
an option on a futures contract, the Fund may elect to close
the position by taking an opposite position, which will
operate to terminate the Fund's existing position in the
contract. Positions in futures contracts and options on
futures contracts may be closed out only on the exchange on
which the futures contracts and related options were entered
into (or through a linked exchange). Although the Fund
intends to purchase futures contracts and related options only
if there is an active market for the contracts or the related
options, there is no assurance that an active market will
exist for the contracts or the related options at any
particular time. Most futures exchanges limit the amount of
fluctuation that is permitted in futures contract prices
during a single trading day. Once the daily limit has been
reached in a particular contract, no trades may be made that
day at a price beyond that limit. It is possible that futures
contract prices could move to the daily limit for several
consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and
subjecting the Fund to substantial losses. In such event, and
in the event of adverse price movements, the Fund would be
<PAGE> 8
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required to make daily cash payments of maintenance margin,
and an increase, if any, in the value of the portion of the
portfolio being hedged may partially or completely offset
losses on the futures contract. As described above, however,
there is no guarantee that the price of the assets being
hedged will, in fact, correlate with the price movements in a
futures contract or an option thereon and, thus, provide an
offset to losses on the futures contract or the related
option.
If the Fund has hedged against the possibility of a change in
the price of the commodity adversely affecting the value of
the Fund's assets, and prices move in a direction opposite to
that which was anticipated, the Fund will probably lose part
or all of the benefit of the increased value of the assets
hedged because of offsetting losses in the Fund's futures
positions. In addition, in such a situation, if the Fund has
insufficient cash, the Fund might have to sell assets to meet
daily maintenance margin requirements at a time when it would
be disadvantageous for the Fund to do so. These sales of
assets could, but will not necessarily, be at increased prices
which reflect the change in the value of the underlying
commodity.
Portfolio Transactions
Brokerage commissions will normally be paid on a Fund's common
stock. A high portfolio turnover as a result of stock
transactions will lead to higher portfolio expenses.
Management, however, anticipates that portfolio turnover will
not exceed 75% annually.
As provided in the Management Contract between the Trust and
McCullough, Andrews, & Cappiello, Inc. ("MAC"), MAC makes
investment decisions and decisions as to the execution of
portfolio transactions for each Fund. Transactions on stock
exchanges and other agency transactions involve the payment by
a Fund of negotiated brokerage commissions. There is
generally no stated commission in the case of securities
traded in the over-the-counter markets. The best price
available is sought by MAC. This price may or may not include
an undisclosed dealer commission or markup. In underwritten
offerings, the price paid by a Fund includes a fixed
commission or discount retained by the underwriter or dealer.
MAC, in effecting purchases and sales of portfolio securities
for the account of a Fund, places orders for the purchase and
sale of portfolio securities in such a manner as in its
opinion will offer the best price and market for the execution
of each transaction. In selecting broker-dealers and in
negotiating commission, MAC considers several factors
including the size of and difficulty of the order, the firm's
reliability, its financial conditions, its general execution
<PAGE> 9
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and operational capabilities, and the brokerage and research
services furnished by such firms to MAC. The term "brokerage
and research services" includes advice as to the value of
securities, the advisability of purchasing or selling
securities, the availability of securities or purchasers or
sellers of securities, and furnishing analyses and reports
concerning issuers, industries, securities, economic factors
and trends and portfolio strategy. MAC is not authorized when
placing portfolio transactions for a Fund to pay a brokerage
commission (to the extent applicable) in excess of that which
another broker might have charged for effecting the same
transaction on account of the receipt of brokerage and
research services, except that MAC may do so to obtain better
execution of a particular transaction. Although certain
brokerage and research services from brokers and dealers are
useful to the Funds and MAC, it is the opinion of MAC that
such information is only supplementary to MAC's own research
effort, since the information must still be analyzed, weighed
and reviewed by MAC's staff. Such information may be useful
to MAC in providing services to clients other than the Trust
and not all such information is used by MAC in connection with
the Trust. Conversely, such information provided to MAC by
brokers and dealers through whom the other clients of MAC
effect securities transactions may be useful to MAC in
providing services to the Trust. While MAC is responsible for
the placement of the Trust's transactions, the policies and
practices of MAC in this regard must be consistent with the
foregoing and will at all times be subject to review by the
Board of Trustees of the Trust.
INVESTMENT LIMITATIONS
The following restrictions and fundamental policies cannot be
changed without approval of the holders of a majority of the
outstanding shares of each portfolio (as defined in the
Investment Company Act of 1940).
Each Fund may not under any circumstances:
1. change its investment objective;
2. lend money to any person except (i) by purchasing a
portion of an issue of short-term debt securities or similar
obligations (including repurchase agreements) which are
publicly distributed or customarily purchased by
institutional invests, and (ii) as provided under "Lending
of Securities";
3. purchase securities on margin or sell securities short
except that a Fund may sell short against the box;
4. borrow money, except as a temporary measure for
extraordinary or emergency purposes, and then only in
<PAGE> 10
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amounts not exceeding 5% of the total assets of a Fund,
taken at market value;
5. issue senior securities or mortgage, pledge,
hypothecate or otherwise encumber its assets, except insofar
as any Fund may be deemed to have issued a senior security
by reason of borrowing money in accordance with restriction
(4), (ii) that the Fund may issue senior securities in
connection with foreign currency exchange transactions and
transactions in options, futures, options on futures, and
other similar investments, and (iii) as otherwise permitted
herein;
6. underwrite the securities of other issuers;
7. invest for the purpose of controlling management of
any company;
8. invest its assets in securities of other investment
companies except by purchase in the open market involving
only customary broker's commission or as part of a merger,
consolidation, reorganization or purchase of assets approved
by the portfolio's shareholders; or
9. invest in commodities or purchase real estate,
although it may purchase securities of companies which deal
in real estate or interest therein, except that this shall
not prevent the Gold Fund from (i) trading in futures
contracts and options on futures contracts or (ii) investing
in precious metals and precious minerals.
In addition, the Growth and Emerging Growth Funds will not
concentrate in any particular industry.
The following restrictions are not fundamental and may be
changed by the Board of Trustees:
Each Fund may not:
1. purchase more than 10% of the outstanding voting
securities of any company;
2. purchase or retain securities of an issuer if those
officers and Trustees of the Trust owning more than 1/2 of 1%
of such securities together own more than 5% of such
securities;
3. invest more than 5% of total assets in securities of
companies which have (with predecessor) a record of less
than three years' continuous operation;
4. invest in oil, gas or mineral leases or exploration
or development programs;
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5. invest more than 5% of its net assets in securities
of other investment companies;
6. invest more than 5% of the value of the Fund's net
assets in warrants valued at lower of cost or market.
Included within that amount, but not to exceed 2% of the
value of the Fund's net assets, may be warrants which are
not listed on the New York or American Stock Exchange;
7. invest more than 15% of the Fund's net assets in
illiquid securities; or
8. purchase or sell real property (including limited
partnership interests, but excluding readily marketable
interests in real estate investment trusts or readily
marketable securities of companies which invest in real
estate).
The above-mentioned investment limitations are considered at
the time investment securities are purchased.
REDEMPTION OF SHARES
Each Fund may suspend redemption privileges or postpone the
date of payment (i) during any period that the New York Stock
Exchange is closed, or trading on the Exchange is restricted
as determined by the Commission, (ii) during any period when
an emergency exists as defined by the rules of the Commission
as a result of which it is not reasonably practical for the
Trust to dispose of securities owned by it, or fairly to
determine the value of its assets, and (iii) for such other
periods as the Commission may permit.
The Trust has made an election with the Commission to pay in
cash all redemptions requested by any shareholder of record
limited in amount during any 90-day period to the lesser of
$250,000 or 1% of the net assets of a Fund at the beginning of
such period. Such commitment is irrevocable without the prior
approval of the Commission. Redemptions in excess of the
above limit may be paid on whole or in part, in investment
securities or in cash, as the Trustees may deem advisable;
however, payment will be made wholly in cash unless the
Trustees believe that economic or market conditions exist
which would make such a practice detrimental to the best
interests of the Trust. If redemptions are paid in investment
securities, such securities will be valued as set forth in the
Prospectus under "Net Asset Value" and a redeeming shareholder
would normally incur brokerage expenses if he converted these
securities to cash.
TAX-DEFERRED RETIREMENT PLANS
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<REDLINE>
Four tax-deferred retirement plans are available to investors.
Forms for establishing retirement plan accounts are available
by writing or calling the Fund at 1-800-532-2268 or 301-951-
6963. An annual maintenance fee and an account liquidation
fee is charged on all such accounts.
<\REDLINE>
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.
<PAGE> 13
<PAGE>
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.
<REDLINE>
401(k) Plans
A 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. The Fund does
not act, however as administrator for 401(k) plans.
Administration of a 401(k) plan would be the responsibility of
the sponsoring organization.
<\REDLINE>
403(b) Plans
A 403(b) plan is available for qualifying non-profit, tax-
exempt organizations such as public education institutions,
medical or church organizations. Separate amounts are
established for each employee and savings and earnings
accumulate tax-deferred until withdrawn. Typically, employees
do not contribute to 403(b) plans.
MANAGEMENT OF THE TRUST
The names and addresses of the trustees and officers of the
Trust, together with information as to their principal
business occupations during the past five years, are set forth
below.
<REDLINE>
*Frank A. Cappiello, 69 - Trustee. Chairman of the Board.
President of McCullough, Andrews & Cappiello, Inc., registered
investment advisers since 1983. Address: Greenspring
Station, Suite 250, 10751 Falls Road, Lutherville, MD 21093.
Peter J. DeAngelis, 59 - Trustee. President of PDA Associates,
Inc., a financial consulting and investment firm, since 1974;
President of Dow Beaters, Inc., a registered investment
advisor, since 1977. Address: P.O. Box 284, Ironia, NJ 07845
*Daniel L. O'Connor, 53 - Trustee. President and Treasurer.
Since 1975, the General Partner of Money Management
Associates, a registered investment adviser. Address: #2201
East Tower, 4000 North Ocean Drive, Singer Island, FL 33404.
<PAGE> 14
<PAGE>
Bruce C. Ellis, 50 - Trustee. Vice President, LottoPhone,
Inc., a telephone state lottery service, since September 1991.
Vice President, Shoppers' Express, December 1987 - December
1991. Vice President, Ridgewell's Caterers from January 1972
to December 1987. Address: 7108 Heathwood Court, Bethesda, MD
20817
Peter B. Petersen, 62 - Trustee. Professor of Management and
Organization Theory, Johns Hopkins University since 1979.
Address: Johns Hopkins University, School of Continuing
Studies, Shaffer Hall 203, Baltimore, MD 21216.
Leo Seybold, 81 - Trustee. Retired 1988. Formerly Executive
Vice President and General Counsel, U.S. Travel Affiliates,
Inc. from 1979 to 1988. Address: 5804 Rockmere Drive,
Bethesda, MD 20816.
David H. Andrews, CFA, 66 - Vice President. Vice Chairman of
McCullough, Andrews & Cappiello. Address 101 California
Street, San Francisco, CA 94111.
Robert F. McCullough, CPA, 63 - Vice President. Chairman of
McCullough, Andrews & Cappiello. Address 101 California
Street, San Francisco, CA 94111.
Timothy N. Coakley, CPA, 28 - Controller. Formerly Audit
Manager, Deloitte & Touche LLP until 1994. Address: 4922
Fairmont Avenue, Bethesda, MD 20814.
Stephenie E. Adams, 26 - Secretary. Director of Marketing,
Rushmore Services, Inc., from July 1994 to Present. Regional
Sales Coordinator, Media General Cable, from June 1993 to June
1994. Graduate Student, Northwestern University, Evanston,
Illinois, M.S., from September 1991 to December 1992.
Student, Stephens College, Columbia, Missouri, B.A., from
August 1987 to May 1991. Address: 4922 Fairmont Avenue,
Bethesda, MD 20814.
<\REDLINE>
* Indicates interested person
PRINCIPAL HOLDERS OF SECURITIES
<REDLINE>
On October 9, 1995, there were outstanding 2,120,048,
1,496,441, 3,787,995, and 689,556 shares of the Utility Income
Fund, the Growth Fund, the Emerging Growth Fund, and the Gold
Fund, respectively. Charles Schwab & Co., San Francisco,
California owned for the benefit of others 35.93%, 25.02%,
40.69%, and 22.33% of the Utility Income Fund, the Growth
Fund, the Emerging Growth Fund, and the Gold Fund
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respectively. National Automobile Dealers Association, McLean,
Virginia, owned 18.22% of the Growth Fund. National Financial
Services Corporation, New York, New York, owned for the
benefit of others, 12.69% and 30.14% of the Emerging Growth
Fund and Utility Income Fund, respectively. FTC & Company,
Denver, Colorado, and Donaldson, Lufkin and Jenrette, Jersey
City, New Jersey owned for the benefit of others, 8.08% and
5.47% of the Emerging Growth Fund, respectively. Robert
Prechter, Gainesville, Georgia, and Harold Cleaveland,
Houston, Texas owned 6.19% and 5.53% of the Gold Fund,
respectively. Officers and Trustees of the Trust, as a group,
own less than 1% of the shares outstanding.
<\REDLINE>
CALCULATION OF RETURN QUOTATIONS
<REDLINE>
For purposes of quoting and comparing the performance of the
Funds to that of other mutual funds and to other relevant
market indices in advertisements or in reports to
shareholders, performance may be stated in terms of total
return. Under the rules of the Securities and Exchange
Commission ("SEC Rules"), Fund advertising performance must
include total return quotes calculated according to the
following formula:
P (1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years (1, 5, or 10); and
ERV = ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the 1,
5, or 10 year periods at the end of the 1, 5,
or 10 year periods (or fractional portion
thereof).
Under the foregoing formula, the time periods used in
advertising will be based on rolling calendar quarters,
updated to the last day of the most recent quarter prior to
submission of the advertising for publication, and will cover
1, 5, and 10 year periods or a shorter period dating from the
effectiveness of the Registration Statement of the Funds. In
calculating the ending redeemable value, all dividends and
distributions by the Funds are assumed to have been reinvested
at net asset value as described in the Funds' Prospectus on
the reinvestment dates during the period. Total return, or
"T" in the formula above, is computed by finding the average
<PAGE> 16
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annual compounded rates of return over the 1, 5, and 10 year
periods (or fractional portion thereof) that would equate the
initial amount invested to the ending redeemable value.
The Funds, from time to time, also may include in such
advertising a total return figure that is not calculated
according to the formula set forth above in order to compare
more accurately the performance of the Funds with other
measures of investment return. For example, in comparing the
total return of the Funds with data published by Lipper
Analytical Services, Inc., or with the performance of the
Standard & Poor's 500 Stock Index or the Dow Jones Industrial
Average, the Funds calculate their aggregate total return for
the specified periods of time by assuming the investment of
$10,000 in a Fund's shares and assuming the reinvestment of
each dividend or other distribution at net asset value on the
reinvestment date. Percentage increases are determined by
subtracting the initial value of the investment from the
ending value and by dividing the remainder by the beginning
value. Such alternative total return information will be
given no greater prominence in such advertising than the
information prescribed under SEC Rules.
The average annual compounded rates of return for the one year
period ended June 30, 1995, assuming the reinvestment of all
dividends and distributions, for the Growth Fund, Emerging
Growth Fund, Utility Income Fund, and Gold Fund were 32.65%,
43.71%, 16.62%, and 3.89%, respectively. The average annual
compounded rates of return, assuming the reinvestment of all
dividends and distributions, for the Growth Fund, Emerging
Growth Fund, and Utility Income Fund were 15.04%, 16.40%, and
1.78%, respectively, for the period commencing October 6, 1992
and ending June 30, 1995, and for the Gold Fund was -0.84% for
the period commencing March 7, 1994 and ending June 30, 1995.
In addition to the total return quotations discussed above,
the Funds also may advertise their yield based on a thirty-day
(or one month) period ended on the date of the most recent
balance sheet included in the Trust's Registration Statement,
computed by dividing the net investment income per share of a
Fund earned during the period by the maximum offering price
per Fund share on the last day of the period, according to the
following formula:
YIELD = 2[(a-b/cd+1) 6-1]
Where: a = dividends and interest earned during the
period;
b = expenses accrued for the period (net of
reimbursements);
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c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends; and
d = the maximum offering price per share on
the last day of the period.
<\REDLINE>
INVESTMENT ADVISORY AND OTHER SERVICES
<REDLINE>
The four Funds of the Trust receive investment advisory
services from McCullough, Andrews & Cappiello, Inc., whose
principal location is 101 California Street, Suite 4250, San
Francisco, California 94111 and who has an office at
Greenspring Station, Suite 250, 10751 Falls Road, Lutherville,
Maryland 21093. Pursuant to the investment advisory contract
between the Trust and MAC, the Growth Fund and the Emerging
Growth Fund pay MAC an investment advisory fee at an annual
rate of 0.50% of the net assets of each Fund. The Utility
Income Fund pays MAC at an annual rate of 0.35% of the net
assets of the Fund. The Gold Fund pays MAC at an annual rate
of 0.70% of the net assets of the Fund. MAC manages the
investment and reinvestment of the assets of each Fund in
accordance with its investment objective, policies and
limitations, subject to the general supervision and control of
the Trust's officers and Board of Trustees. MAC bears all
costs associated with providing these services. For the
fiscal years ended June 30, 1995, 1994, and 1993, the Funds
paid the following investment advisory fees to MAC:
1995 1994 1993
Growth Fund $ 67,000 $32,268 $1,276
Emerging Growth Fund $126,202 $67,592 $1,796
Utility Income Fund $ 55,310 $36,042 $2,086
Gold Fund $ 44,448 $13,482 ---
<\REDLINE>
MAC is owned by its three principals: Robert F. McCullough,
C.P.A., David H. Andrews, C.F.A., and Frank A. Cappiello. In
addition to providing investment advisory services to the
Trust, MAC manages investment portfolios for employee
retirement plans, charitable foundations, endowments, taxable
corporations and individuals.
<REDLINE>
<PAGE> 18
<PAGE>
The Trust has contracted with Money Management Associates
("Administrator") to provide administrative services to the
Trust. Under the administrative services agreement with the
Administrator, the Trust pays a fee at the annual rate of
1.00% of the daily net assets of the Growth, Emerging Growth
and Gold Funds, and .70% of the daily net assets of the
Utility Income Fund. For the fiscal years ended June 30,
1995, 1994, and 1993, the Funds paid the following
administrative services fees to the Administrator:
1995 1994 1993
Growth Fund $134,001 $ 64,535 $2,553
Emerging Growth Fund $252,403 $135,183 $3,594
Utility Income Fund $110,619 $ 72,084 $4,078
Gold Fund $ 63,496 $ 19,260 ---
The Administrator is responsible for all costs of the Funds
including costs of registration of the Trust and the Funds'
shares with the Securities and Exchange Commission and the
various states, all expenses of dividend and transfer agent
services, outside auditing and legal fees, costs of
maintenance of business trust existence, preparation of
prospectuses including printing and distribution thereof to
existing and potential shareholders, shareholder reports,
shareholder meetings, portfolio pricing services and all costs
incurred in providing the custodial services.
Certain of these administrative services are provided by
Rushmore Trust and Savings, FSB ("RTS"), a wholly owned
subsidiary of the Administrator, under a subcontractual
agreement with the Administrator. These services include
transfer agency functions, dividend disbursing and other
shareholder services and custody of the Trust's assets.
The investment advisory agreement and the administrative
services agreement described above continue in effect from
year to year, if specifically approved at least annually by a
vote cast in person at a meeting called for such purpose of a
majority of the Trustees, and a majority of the Trustees who
are not "interested persons" as defined in the 1940 Act
("Independent Trustees"). The contracts may be terminated by
either party thereto, by the Independent Trustees of the Trust
or by a vote of the holders of a majority of the outstanding
securities of a Fund at any time, without penalty, upon 60
days' written notice, and automatically terminates in the
event of an assignment. Termination will not affect the right
of the Adviser or the Administrator to receive payment of any
unpaid balance of the compensation earned prior to
termination.
<\REDLINE>
<PAGE> 19
<PAGE>
NET ASSET VALUE
The net asset value of each 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 a 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. Options
and futures contracts are valued at the last sales price as of
the close of trading on the applicable exchanges. If market
quotations are not readily available, the Board of Trustees
will value the portfolios' securities in good faith. Gold and
other precious metals are valued daily at fair market value,
based upon price quotations in common use, in such manner as
the Trustees from time to time (not less frequently than
quarterly) determines in good faith to most accurately reflect
their fair value. The Trustees will periodically review these
methods of valuation and recommend changes which may be
necessary to assure that the portfolios' instruments are
valued at fair value.
TAXES
<REDLINE>
Each Fund will seek to qualify for treatment as a regulated
investment company (a "RIC") under Subchapter M of the U.S.
Internal Revenue Code of 1986, as amended (the "Code").
Provided that a Fund (i) is a RIC and (ii) distributes at
least 90% of its net investment income (including, for this
purpose, net realized short-term capital gains), the Fund will
not be liable for Federal income taxes to the extent its net
investment income and its net realized long- and short-term
capital gains, if any, are distributed to the Fund's
shareholders. To avoid an excise tax on its undistributed
income, each Fund must generally distribute at least 98% of
its income, including its net long-term capital gains. One of
several requirements for RIC qualification is that the Fund
must receive at least 90% of its gross income each year from
dividends, interest, payments with respect to securities
loans, gains from the sale or other disposition of securities
or foreign currencies, or other income derived with respect to
the Fund's investments in stock, securities, and foreign
currencies (the "90% Test").
In addition, under the Code, a Fund will not qualify as a RIC
for any taxable year if more than 30% of the Fund's gross
income for that year is derived from gains on the sale of
securities held less than three months (the "30% Test").
These requirements may also restrict the extent of a Fund's
<PAGE> 20
<PAGE>
activities in option and other portfolio transactions.
Specifically, the 30% Test will limit the extent to which a
Fund may: (i) sell securities held for less than three
months; (ii) write options which expire in less than three
months; and (iii) effect closing transactions with respect to
call or put options that have been written or purchased within
the preceding three months. Finally, as discussed below, this
30% Test requirement also may limit investments by a Fund in
futures contracts and options on stock indexes, securities,
and futures contracts.
When the Gold Fund is required to sell securities to meet
significant redemptions or exchanges, the Gold Fund may enter
into futures contracts as a hedge against price declines in
the securities to be sold. Gains realized by the Gold Fund
upon closing out the Gold Fund's position in these contracts
are subject to the 30% Test. Ordinarily, these gains could
not be offset by declines in the value of the hedged
securities for purposes of the 30% Test. Section 851(g)(1) of
the Code, however, provides that, in the case of a "designated
hedge," for purposes of the 30% Test, increases and decreases
in value (during the period of the hedge) of positions which
are part of the hedge are to be netted. Section 851(g)(2) of
the Code provides that a "designated hedge" exists when: (i)
the taxpayer's risk of loss with respect to any position in
property is reduced by reason of a contractual obligation to
sell substantially identical property; and (ii) the taxpayer
clearly identifies the positions which are part of the hedge
in the manner prescribed in Internal Revenue Service ("IRS")
regulations.
IRS regulations have not yet been issued specifying how this
identification requirement can be satisfied. The legislative
history with respect to Section 851(g) states that, prior to
issuance of regulations, the identification requirement is
satisfied either by: (i) placing the positions that are part
of the hedge in a separate account that is maintained by a
broker, futures commission merchant ("FCM"), custodian, or
similar person, and that is designated as a hedging account,
provided that such person maintaining such account makes
notations identifying the hedged and hedging positions and the
date on which the hedge is established; or (ii) the
designation by such a broker, FCM, custodian, or similar
person of such positions as a hedge for purposes of these
provisions, provided that the RIC is provided with a written
confirmation stating the date that the hedge is established
and identifying the hedged and hedging positions.
When the Gold Fund enters into futures contracts to hedge
against price declines of securities to be sold, the Gold Fund
may identify such securities and contracts as a hedge so as to
qualify under Section 851(g)(1) of the Code. There can be no
assurances, however, that the Gold Fund (or such Fund's
<PAGE> 21
<PAGE>
agents) will be able to comply with the identification
requirements that may be contained in future IRS regulations.
Moreover, the netting rule of Section 851(g)(1) is available
only if the securities to be sold and the property subject to
the futures contracts constitute "substantially identical"
property. The Gold Fund generally intends to sell pro rata
the securities being hedged, but it is unclear whether the
securities and the futures contracts would constitute
"substantially identical" property.
To minimize the risk that it will not satisfy the 30% Test
because of frequent redemptions and exchanges of shares that
may occur, each Fund will seek to meet its obligations in
connection with redemptions and exchanges without the
realization of gains on the sales of stock or securities,
options, futures or forward contracts, or foreign currencies
(or options, futures contracts, or forward contracts on such
foreign currencies). In this regard, each Fund will seek
(consistent with its investment strategies) to use available
cash, proceeds of borrowing facilities, proceeds of the sale
of stock or securities, options, futures or forward contracts,
or foreign currencies (or options, futures contracts, or
forward contracts on such foreign currencies) that have been
held for three months or more, and the proceeds of the sale of
such assets that produce either no gain or the smallest amount
of such gain.
Section 851(h)(3) of the Code also provides a special rule for
series mutual funds with respect to the 30% Test. Pursuant to
Section 851(h)(3), a RIC that is part of a series fund will
not fail the 30% Test as a result of sales made within five
days of "abnormal redemptions" if: (i) the sum of the
percentages for abnormal redemptions exceeds 30%; and (ii) the
RIC of which such fund is a part would meet the 30% Test if
all the funds of the investment company were treated as a
single corporation. Abnormal redemptions are defined as
redemptions which occur on any day when net redemptions exceed
one percent of net asset value. If abnormal redemptions
require a Fund to sell securities with a holding period of
less than three months, the Fund intends to make those sales
within five days of such redemptions so as to qualify for the
exclusion afforded by Section 851(h)(3) of the Code if it is
possible to do so.
If a Fund does not satisfy the 30% Test for any taxable year
of the Fund, that Fund will not qualify as a RIC for that
year. If a Fund fails to qualify as a RIC for any taxable
year, the Fund would be taxed in the same manner as an
ordinary corporation. In that event, the Fund would not be
entitled to deduct the distributions which the Fund had paid
to shareholders and, thus, would incur a corporate income tax
liability on all of the Fund's taxable income whether or not
distributed. The imposition of corporate income taxes on the
<PAGE> 22
<PAGE>
Fund would directly reduce the return to an investor from an
investment in the Fund.
In the event of a failure by a Fund to qualify as a RIC, the
Fund's distributions, to the extent such distributions are
derived from the Fund's current or accumulated earnings and
profits, would constitute dividends that would be taxable to
shareholders as ordinary income and would be eligible for the
dividends-received deduction for corporate shareholders. This
treatment would also apply to any portion of the distributions
that might have been treated in the shareholder's hands as
long-term capital gains, as discussed below, had the Fund
qualified as a RIC.
If a Fund were to fail to qualify as a RIC for one or more
taxable years, the Fund could then qualify (or re-qualify) as
a RIC for a subsequent taxable year only if the Fund had
distributed to the Fund's shareholders a taxable dividend
equal to the full amount of any earnings or profits (less the
interest charge mentioned below, if applicable) attributable
to such period. The Fund might also be required to pay to the
IRS interest on 50% of such accumulated earnings and profits.
In addition, pursuant to the Code and an interpretative notice
issued by the IRS, if the Fund should fail to qualify as a RIC
and should thereafter seek to re-qualify as a RIC, the Fund
may be subject to tax on the excess (if any) of the fair
market of the Fund's assets over the Fund's basis in such
assets, as of the day immediately before the first taxable
year for which the Fund seeks to re-qualify as a RIC.
If a Fund determines that it will not qualify as a RIC under
Subchapter M of the Code, the Fund will establish procedures
to reflect the anticipated tax liability in its net asset
value.
As a RIC, each Fund will not be subject to Federal income
taxes on the net investment income and capital gains that it
distributes to its shareholders. The distribution of net
investment income and capital gains will be taxable to
shareholders regardless of whether the shareholder elects to
receive these distributions in cash or in additional shares.
Distributions reported to shareholders as long-term capital
gains shall be taxable as such, regardless of how long the
shareholder has owned the shares. Shareholders of a Fund will
be notified annually by the Trust as to the Federal tax status
of all distributions made by the Fund. Distributions may be
subject to state and local taxes.
A Fund has available to it a number of elections under the
Code concerning the treatment of option transactions for tax
purposes. The Fund will utilize the tax treatment most
favorable to a majority of investors in the Fund. Taxation of
these transactions will vary according to the elections made
<PAGE> 23
<PAGE>
by the Fund. These tax considerations may have an impact on
investment decisions made by the Fund.
If a call option written by a Fund expires, the amount of the
premium received by such Fund for the option will be short-
term capital gain to such Fund. If such an option is closed
by a Fund, any gain or loss realized by the Fund as a result
of the closing purchase transaction will be short-term capital
gain or loss to such Fund. If the holder of a call option
exercises its right under the option, any gain or loss
realized by the Fund upon the sale of the underlying security
pursuant to such exercise will be short-term or long-term
capital gain or loss to the Fund depending on such Fund's
holding period for the underlying security.
With respect to call options purchased by a Fund, such Fund
will realize short-term or long-term capital gain or loss if
such option is sold and will realize short-term or long-term
capital loss if the option is allowed to expire depending on
such Fund's holding period for the call option. If such a
call option is exercised, the amount paid by the Fund for the
option will be added to the basis of the stock so acquired.
A Fund in its operations may also utilize options on stock
indexes. Options on broadbased stock indexes are classified
as nonequity options under the Code. As such, gains and
losses resulting from the expiration, exercise, or closing of
such nonequity options, as well as gains and losses resulting
from futures contract transactions, will be treated as long-
term capital gain or loss to the extent of 60% thereof and
short-term capital gain or loss to the extent of 40% thereof
(hereinafter blended gain or loss). In addition, any option
held by a Fund on the last day of a fiscal year will be
treated as sold for market value on that date, and gain or
loss recognized as a result of such deemed sale will be
blended gain or loss.
A Fund's trading strategies involving nonequity options on
stock indexes may constitute "straddle" transactions.
"Straddles" may effect the taxation of such instruments and
may cause the postponement of recognition of losses incurred
in certain closing transactions.
A Fund's transactions in options could, under some
circumstances, preclude the Fund's qualifying for the special
tax treatment available to investment companies meeting the
requirements of Subchapter M of the Code. However, it is the
intention of each Fund's management to limit gains from such
investments to less than 10% of the gross income of the Fund
during any fiscal year in order to maintain this
qualification.
<\REDLINE>
<PAGE> 24
<PAGE>
AUDITORS AND CUSTODIAN
Deloitte & Touche LLP, independent certified public
accountants, are the auditors of the Trust and are responsible
for auditing the annual financial statements of the Trust.
Rushmore Trust and Savings, FSB, Bethesda, Maryland, acts as
the custodian for the Trust and is responsible for
safeguarding and controlling the Trust's cash and securities,
handling the securities and collecting interest on the Fund's
investments.
<REDLINE>
FINANCIAL STATEMENTS
The Financial Statements (audited) of the Trust for the fiscal
year ended June 30, 1995, are incorporated by reference from
the Trust's 1995 Annual Report to Shareholders. Copies of the
Trust's Annual Report may be obtained without charge by
contacting the Trust at 4922 Fairmont Avenue, Bethesda,
Maryland 20814, or by telephoning the Trust at (800) 622-1386
or (301) 657-1510.
<\REDLINE>
<PAGE> 25
<PAGE>
----------------------------------------------------------------------------
ANNUAL REPORT, June 30, 1995
CAPPIELLO-RUSHMORE TRUST
4922 FAIRMONT AVENUE, BETHESDA, MD 20814
[ART] (800) 622-1386 (301) 657-1510
-----------------------------------------------------------------------------
Dear Fellow Investor:
This is the Cappiello-Rushmore Trust's third annual report and the results
are, in varying degrees, most positive and gratifying. The Funds' performances
for the fiscal year ended June 30, 1995 were as follows:
------------------------------------------------------------------------------
TOTAL RETURN COMPARISON
(Average annual total return for the period ended June 30, 1995)
<TABLE>
<CAPTION>
Since
One Year Inception*
-------- ----------
<S> <C> <C>
Cappiello-Rushmore Emerging Growth Fund 43.71% 16.40 %
Cappiello-Rushmore Growth Fund 32.65% 15.04 %
Cappiello-Rushmore Utility Income Fund 16.62% 1.78 %
Standard & Poor's 500 Index 26.07% 14.40 %
Cappiello-Rushmore Gold Fund 3.89% (0.84)%
Standard & Poor's 500 Index 26.07% 15.63 %
</TABLE>
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.
*Inception dates: October 6, 1992 for the Emerging Growth Fund, Growth Fund
and Utility Income Fund; Gold Fund inception March 7, 1994.
-----------------------------------------------------------------------------
Propelled by falling interest rates and rising corporate earnings, the stock
market has set a series of record highs measured by nearly all market indices.
Technology stocks and large capitalization industrial stocks were the leading
groups while utilities were among the laggards. All of the Cappiello-Rushmore
Funds' results were positive, with three of the four Funds' performances in
the double digit category.
<PAGE>
CAPPIELLO-RUSHMORE EMERGING GROWTH FUND
The Emerging Growth Fund enjoyed a superior year with a total return of more
than 43%. The Fund surpassed the unmanaged Standard & Poor's 500 Stock Index
and substantially
-----------------------------------------------------------------------------
<PAGE>
outperformed the average growth fund which was up 16.9% (Money Magazine's
"Money Rankings," August 1995). In fact, according to Money Magazine's "Fund
Rankings," the Cappiello-Rushmore Emerging Growth Fund was the 14th best
performing growth fund in the U.S. for the six-months ended June 30, 1995.
Technology stocks led the market to new highs in the first half of 1995,
fueled by demand for personal computers, strong growth for wireless
communications, and the resulting increased utilization of semi-conductors in
homes and businesses. During this period, slightly less than half of the
Fund's portfolio was invested in technology stocks (computer software,
communications, products and semi-conductors). The majority of the Fund's
holdings consisted of a diversified industrial list of small cap companies in
sectors such as financial, healthcare services, retail and transportation.
CAPPIELLO-RUSHMORE GROWTH FUND
The Growth Fund's investment objective emphasizes larger capitalization
companies, and results last year were more than satisfactory. For the year
ended June 30, 1995, the Cappiello- Rushmore Growth Fund was up more than 32%,
well above the Standard & Poor's 500 Index and above the average growth fund
performance of 16.9% (Money Magazine's "Money Rankings," August 1995). Our
focus included technology stocks, such as Motorola and Sun Microsystems, with
the majority of the portfolio diversified among a wider range of sectors, from
financial (American Express), telecommunications (AT&T), and aerospace
(Boeing), to consumer products and services including companies such as Coca
Cola, WR Grace and KLM Royal Dutch Airlines.
CAPPIELLO-RUSHMORE UTILITY INCOME FUND
The Utility Income Fund portfolio is concentrated in electric utilities with
greater-than-average dividend yields in order to maximize shareholder income.
We are pleased to report the Fund's total return (income plus appreciation)
was up more than 16% for the year ended June 30, 1995. Even so, when compared
historically to the overall equity and bond markets, utility stocks seem
undervalued.
There are several positive factors for utility investors: a stable and
declining interest rate trend; signs that the transition to greater utility
competition, especially retail wheeling of electricity, is likely to take a
number of years to affect the industry; and the successful cost reduction
efforts by many utilities, thus improving profits.
Finally, forthcoming competition in the utility industry has prompted
utility management to prepare for a more competitive future. In this
environment, consolidation appears inevitable, leading to significant savings.
The recent announcement by PECO Energy to purchase nearby PP&L Resources, Inc.
in a $3.8 billion takeover is indicative of this forthcoming takeover trend,
<PAGE>
usually with a significant premium paid to the acquired company's
shareholders.
2
<PAGE>
CAPPIELLO-RUSHMORE GOLD FUND
The Cappiello-Rushmore Gold Fund is now more than one year old (the Fund was
effective March 7, 1994). The Fund's principal investment objective is to
achieve capital appreciation by investing in equity securities of companies
engaged in gold and other precious metals' production throughout the world.
The Fund is also a hedge against loss of purchasing power through inflation or
devaluation of the dollar. Our investment philosophy continues to focus on
those companies who have the capacity to increase their profitability per
ounce of gold production and to expand the amount of gold produced.
Currently, the Cappiello-Rushmore Gold Fund is primarily concentrated in
North American gold equities. Several factors have contributed to the stocks'
positive momentum: an overall strong equity market; improving gold
fundamentals; and, a slowing gold supply and rising demand. World gold mine
production fell 0.6% in 1994, its first annual decline since 1975.
Additionally, official sales of gold by the world's central banks have been
moderate by historical terms. The demand side for gold and other precious
metals is positive. Rising jewelry fabrication this year is a reflection of
the improving economy in the U.S., Europe and parts of Asia. Further,
investment demand continues to rise throughout the world, particularly in
India and China. Accordingly, this widening supply deficit relative to demand
should continue, providing a gradually rising floor to gold prices. Any
additional increase in demand due to inflation fears, currency worries, or
other negative financial events could accelerate gold's price movement in the
months ahead.
OUTLOOK
To date, the major economic event of 1995 has been visible signs of a
slowdown in the economy, adding fuel to the argument that further interest
rate increases are unlikely. This helped propel the stock market averages to
new highs week after week with market leadership dominated by the blue chip
issues. The S&P 500 Index ran well ahead of the other indices. Overall, this
year has been an ideal environment for stocks: a slowing, but still vigorous
economy, accompanied by falling interest rates, relatively low inflation,
rising corporate earnings, and a continuous demand for equities.
Looking ahead, there is continuing debate regarding whether the market is
undervalued or overvalued in terms of price-earnings ratios, price-to-book
value, and dividend yield. The current historically low dividend yield may be
cause for concern, but we believe that dividends lag earnings. The "steady"
growth stocks should continue to expand their dividends and, more importantly,
most cyclical industries have the capacity to raise their dividend pay-outs,
significantly. We are also disturbed by the pricing mania exemplified by
recent initial public offerings. Nevertheless, the economic and financial
fundamentals continue to be positive. Our research and observations of
companies reinforces our view of a resurgent corporate America. Profits and
<PAGE>
profit margins have improved dramatically--the pay-off of the investment in
new plant and equipment over the past several years.
Accordingly, one of the keys to successful investing in the months ahead
will be the selection of individual stocks that will maintain their profit
momentum, as opposed to
3
<PAGE>
agonizing over the direction of the overall market. So far, many of the
earnings gains of the non-technology stocks have been the result of cost
cutting measures, as opposed to gains in market share. In the months ahead,
the possibility exists that rising material costs will eventually pressure
margins, resulting in an increase in finished goods prices. This ever-present
inflationary threat will be the subject of much concern as we enter the Fall.
The sentiment factor in the market is "encouragingly pessimistic" and almost
bearish on the part of investment professionals. The majority believe the
market is overpriced. Yet, month after month the market continues to move
forward. Both the domestic economy and the stock market should continue their
trends--although at a more moderate pace and with a possible price correction
along the way. The pessimistic sentiment coupled with a moderating trend in
the economy is positive for stocks in the months ahead.
/s/ Frank A. Cappiello
Frank A. Cappiello
Chairman, Cappiello-Rushmore Trust
August 17, 1995
4
<PAGE>
June 30, 1995 CAPPIELLO-RUSHMORETRUST
------------------------------------------------------------------------
STATEMENTS OF NET ASSETS
<TABLE>
<CAPTION>
UTILITY INCOME FUND
---------------------------------------------------------------------------
Market Value
Shares (Note 1)
---------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
GAS & ELECTRIC -- 73.88%
25,000 Allegheny Power Systems, Inc. $ 587,500
31,000 Central and South West Corp. 813,750
20,000 CMS Energy Corp. 492,500
36,000 Detroit Edison Co. 1,062,000
<PAGE>
27,000 Houston Industries, Inc. 1,137,375
20,000 Interstate Power Co. 482,500
50,000 Long Island Lighting Co. 775,000
37,500 Potomac Electric Power Co. 806,250
25,000 Public Service Co. of Colorado 812,500
29,500 Public Service Enterprise Group, Inc. 818,625
30,000 Southern Co. 671,250
36,000 Texas Utilities Co. 1,237,500
60,000 TNP Enterprises, Inc. 967,500
22,000 Union Electric Co. 819,500
36,000 United Illuminating Co. 1,188,000
-----------
12,671,750
-----------
NATURAL GAS DISTRIBUTION -- 11.29%
45,000 Brooklyn Union Gas Co. 1,181,250
40,000 Washington Gas Light Co. 755,000
-----------
1,936,250
-----------
TELEPHONE -- 7.66%
19,500 Nynex Corp. 784,875
15,000 Southern New England Telecommunications Corp. 528,750
-----------
1,313,625
-----------
TOTAL COMMON STOCKS -- 92.83% (COST $15,292,884) 15,921,625
-----------
MUTUAL FUNDS -- 2.95%
504,739 Fund for Government Investors, Inc. (Cost $504,739) 504,739
-----------
TOTAL INVESTMENTS -- 95.78% (COST $15,797,623) 16,426,364
OTHER ASSETS LESS LIABILITIES -- 4.22% 724,485
-----------
NET ASSETS (NOTE 6) -- 100.00% $17,150,849
===========
Net Asset Value Per Share (Based on 1,855,441 Shares
Outstanding) $9.24
===========
</TABLE>
GROWTH FUND
<TABLE>
<CAPTION>
-------------------------------------------------------------
Market Value
Shares (Note 1)
-------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS
AIRCRAFT -- 1.94%
6,000 Boeing Co. $ 375,750
-----------
BEVERAGES -- SOFT DRINKS -- 3.30%
<PAGE>
10,000 Coca-Cola Co. 637,500
-----------
CHEMICALS -- 4.44%
10,000 Engelhard Corp. 428,750
7,000 W. R. Grace Co. 429,625
-----------
858,375
-----------
COMPUTER AND BUSINESS
EQUIPMENT -- 13.36%
20,000 Cisco Systems, Inc.* 1,011,250
20,000 Sun Microsystems, Inc.* 970,000
20,000 VLSI Technology, Inc.* 602,500
-----------
2,583,750
-----------
COMPUTER SOFTWARE INFORMATION
PROCESSING -- 12.77%
15,000 Lotus Development Corp.* 956,250
20,000 Reynolds & Reynolds Co. 590,000
23,000 Shared Medical Systems Corp. 922,875
-----------
2,469,125
-----------
FINANCIAL -- 10.73%
15,000 American Express Co. 526,875
19,000 Franklin Resources, Inc. 845,500
15,000 Student Loan Marketing Association 703,125
-----------
2,075,500
-----------
FOOD PRODUCTS -- 1.75%
12,500 Nabisco Holdings Corp. 337,500
-----------
HEALTHCARE -- 9.58%
12,000 Genentech, Inc.* 583,500
20,000 Health Systems International, Inc.* 580,000
20,000 Horizon/CMS Healthcare* 357,500
8,000 United Healthcare Corp. 331,000
-----------
1,852,000
-----------
INSURANCE -- 2.02%
60,000 Reliance Group Holdings, Inc. 390,000
-----------
</TABLE>
*Non-income producing.
See Notes to Financial Statements.
5
<PAGE>
<PAGE>
June 30, 1995 CAPPIELLO-RUSHMORE
TRUST
-------------------------------------------------------------------------
STATEMENTS OF NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
GROWTH FUND (CONTINUED)
-------------------------------------------------------------------------
Market Value
Shares (Note 1)
-------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
<C> <S> <C>
RETAIL -- 7.91%
8,000 Federated Department Stores, Inc.* $ 206,000
17,000 Gap, Inc. 592,875
50,000 K-Mart Corp. 731,250
-----------
1,530,125
-----------
SEMICONDUCTORS/COMPONENTS -- 10.73%
14,000 Micron Technology, Inc. 768,250
5,000 Motorola, Inc. 335,625
35,000 National Semiconductor Corp.* 971,250
-----------
2,075,125
-----------
TELECOMMUNICATIONS -- 3.84%
14,000 AT&T Corp. 743,750
-----------
TRANSPORTATION -- 6.48%
20,000 KLM Royal Dutch Airlines* 652,500
25,000 Pittston Services Group 600,000
-----------
1,252,500
-----------
TOTAL COMMON STOCKS -- 88.85%
(COST $13,969,690) 17,181,000
-----------
WARRANTS -- 3.56%
100,000 Federated Department Stores, Inc. WTS C* (Cost
$514,513) 687,500
-----------
MUTUAL FUNDS -- 6.59%
1,274,175 Fund for Government Investors (Cost $1,274,175) 1,274,175
-----------
TOTAL INVESTMENTS -- 99.00% (COST $15,758,378) 19,142,675
OTHER ASSETS LESS LIABILITIES -- 1.00% 193,980
-----------
NET ASSETS (NOTE 6) -- 100.00% $19,336,655
===========
<PAGE>
Net Asset Value Per Share (Based on 1,320,905 Shares
Outstanding) $14.64
===========
</TABLE>
<TABLE>
<CAPTION>
EMERGING GROWTH FUND
----------------------------------------------------------------
Market Value
Shares (Note 1)
----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS
AEROSPACE -- 1.45%
24,100 Whittaker Corp.* $ 530,200
-----------
AUTO -- 1.66%
25,000 Lo-Jack Corp.* 276,563
20,000 Safety Components International, Inc.* 330,000
-----------
606,563
-----------
COMPUTER SOFTWARE -- 11.59%
82,000 Actel Corp.* 1,066,000
10,000 Progress Software Corp.* 520,000
35,000 Softkey International, Inc.* 1,115,625
60,000 System Software Associates, Inc. 1,200,000
57,000 Trinzic Corp.* 342,000
-----------
4,243,625
-----------
COMMUNICATIONS PRODUCTS -- 9.74%
26,000 Boca Research, Inc.* 702,000
30,000 Madge N.V.* 840,000
45,000 Octel Communications Corp.* 1,316,250
20,000 Sheldahl, Inc.* 265,000
30,000 Stanford Telecommunications, Inc.* 442,500
-----------
3,565,750
-----------
FINANCIAL -- 4.47%
100,000 First Financial Caribbean Corp. 1,475,000
106,500 Search Capital Group, Inc.* 159,750
-----------
1,634,750
-----------
HEALTHCARE PRODUCTS -- 9.92%
24,000 Hanger Orthopedic Group, Inc.* 75,000
60,000 I-STAT Corp.* 2,190,000
35,000 KV Pharmaceutical Co., Class A* 288,750
17,000 Lifequest Medical, Inc.* 38,250
50,000 Protein Design Labs, Inc.* 1,037,500
-----------
<PAGE>
3,629,500
-----------
</TABLE>
*Non-income producing.
See Notes to Financial Statements.
6
<PAGE>
June 30, 1995 CAPPIELLO-RUSHMORETRUST
--------------------------------------------------------------
STATEMENTS OF NET ASSETS (CONTINUED)
EMERGING GROWTH FUND (CONTINUED)
<TABLE>
<CAPTION>
-------------------------------------------------------------
Market Value
Shares (Note 1)
-------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
HEALTHCARE SERVICES -- 4.18%
27,000 Orthodontic Centers of America, Inc.* $ 654,750
40,000 Pacific Physicians Service, Inc.* 520,000
10,000 Regency Health Services, Inc.* 105,000
8,000 Vencor, Inc.* 252,000
-----------
1,531,750
-----------
HEALTHCARE SOFTWARE INFORMATION
PROCESSING -- 5.64%
40,000 Clinicom, Inc.* 660,000
35,000 Shared Medical Systems Corp. 1,404,375
-----------
2,064,375
-----------
INFORMATION PROCESSING -- 5.44%
68,850 National Data Corp. 1,592,156
25,000 Transaction Network Services, Inc.* 400,000
-----------
1,992,156
-----------
LEASING -- 2.79%
75,000 Interpool, Inc.* 1,021,875
-----------
MANUFACTURING -- 2.58%
42,000 Simula, Inc.* 945,000
-----------
MEDIA -- 5.12%
<PAGE>
200,000 National Media Corp.* 1,875,000
-----------
MISCELLANEOUS -- 3.22%
4,000 Peak Technologies Group, Inc.* 110,000
50,000 Uniphase Corp.* 1,068,750
-----------
1,178,750
-----------
OIL AND GAS PRODUCTION & SERVICE -- 3.46%
25,000 Arakis Energy Corp.* 403,125
150,000 Global Marine, Inc.* 862,500
-----------
1,265,625
-----------
RETAIL -- 6.69%
95,000 Intertan, Inc.* 712,500
211,000 Score Board, Inc.* 1,213,250
45,000 Today's Man, Inc.* 523,125
-----------
2,448,875
-----------
</TABLE>
<TABLE>
<CAPTION>
EMERGING GROWTH FUND (CONTINUED)
-------------------------------------------------------------------------------
Market Value
Shares (Note 1)
-------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
<C> <S> <C>
SEMICONDUCTORS/COMPONENTS -- 11.77%
5,000 ASYST Technology Corp.* $ 185,625
37,500 Credence Systems Corp* 1,134,375
30,000 Lattice Semiconductor Corp.* 1,031,250
50,000 LSI Logic Corp.* 1,956,250
-----------
4,307,500
-----------
TELECOMMUNICATIONS -- 1.25%
25,000 Metricom, Inc.* 375,000
20,000 Peoples Telephone Co.* 83,750
-----------
458,750
-----------
TRANSPORTATION -- 4.32%
160,000 Worldcorp, Inc.* 1,580,000
-----------
TOTAL COMMON STOCKS -- 95.29% (COST $28,190,408) 34,880,044
-----------
MUTUAL FUNDS -- 4.86%
1,782,056 Fund for Government Investors, Inc. (Cost $1,782,056) 1,782,056
<PAGE>
-----------
TOTAL INVESTMENTS -- 100.15% (COST $29,972,464) 36,662,100
OTHER LIABILITIES LESS ASSETS -- (0.15%) (56,324)
-----------
NET ASSETS (NOTE 6) -- 100.00% $36,605,776
===========
Net Asset Value Per Share (Based on 2,446,753 Shares
Outstanding) $14.96
===========
</TABLE>
*Non-income producing.
See Notes to Financial Statements.
7
<PAGE>
June 30, 1995 CAPPIELLO-RUSHMORE TRUST
- -------------------------------------------------------------------------------
STATEMENTS OF NET ASSETS (CONTINUED)
GOLD FUND
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
Market Value
Shares (Note 1)
---------------------------------------------------------------------------
COMMON STOCKS
<C> <S> <C>
METALS AND MINING -- 92.84%
26,300 Agnico Eagle Mines, LTD. $ 348,475
55,000 Amax Gold, Inc.* 302,500
7,000 ASA, LTD. 301,000
15,000 Barrick Gold Corp. 378,750
33,000 Battle Mountain Gold Co. 317,625
26,000 Cambior, Inc. 318,500
29,850 Echo Bay Mines, LTD. 268,650
26,900 Hecla Mining Co.* 279,088
40,000 Hemlo Gold Mines, Inc. 425,000
15,000 Homestake Mining Co. 247,500
80,000 Miramar Mining Corp.* 430,000
8,000 Newmont Gold Co. 322,000
7,504 Newmont Mining Corp. 314,230
17,500 Placer Dome, Inc. 457,188
90,000 Royal Oak Mines, Inc.* 281,250
23,000 Santa Fe Pacific Gold Corp. 278,875
23,000 Stillwater Mining Co.* 639,687
55,000 TVX Gold, Inc.* 398,750
-----------
TOTAL COMMON STOCKS -- 92.84% (COST $5,770,042) 6,309,068
-----------
<PAGE>
MUTUAL FUNDS -- 9.86%
670,259 Fund for Government Investors, Inc. (Cost $670,259) 670,259
-----------
TOTAL INVESTMENTS -- 102.70% (COST $6,440,301) 6,979,327
OTHER LIABILITIES LESS ASSETS -- (2.70%) (183,472)
-----------
NET ASSETS (NOTE 6) -- 100.00% $ 6,795,855
===========
Net Asset Value Per Share (Based on 687,214 Shares
Outstanding) $9.89
===========
</TABLE>
*Non-income producing.
See Notes to Financial Statements.
8
<PAGE>
For the Year Ended June 30, 1995 CAPPIELLO-RUSHMORE TRUST
----------------------------------------------------------------------------
-
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
UTILITY EMERGING
INCOME FUND GROWTH FUND GROWTH FUND GOLD
FUND
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest..................... $ 60,866 $ 49,088 $ 137,934 $
29,673
Dividends.................... 1,093,908 167,390 86,730
45,886
----------- ---------- ----------
---------
Total Investment Income...... 1,154,774 216,478 224,664
75,559
----------- ---------- ----------
---------
EXPENSES
Investment Advisory Fee (Note
2).......................... 55,310 67,000 126,202
44,448
Administrative Fee (Note 2).. 110,619 134,001 252,403
63,496
----------- ---------- ----------
---------
<PAGE>
Total Expenses............... 165,929 201,001 378,605
107,944
----------- ---------- ----------
---------
NET INVESTMENT INCOME (LOSS). 988,845 15,477 (153,941)
(32,385)
----------- ---------- ----------
---------
Net Realized Gain (Loss) on
Investments................. (1,427,789) 842,836 396,260
(265,143)
Net Change in Unrealized
Appreciation of Investments. 2,715,291 3,175,447 9,024,889
680,092
----------- ---------- ----------
---------
NET GAIN ON INVESTMENTS...... 1,287,502 4,018,283 9,421,149
414,949
----------- ---------- ----------
---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $ 2,276,347 $4,033,760 $9,267,208 $
382,564
=========== ========== ==========
=========
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
CAPPIELLO-RUSHMORE
TRUST
---------------------------------------------------------------------------
-
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
UTILITY
INCOME FUND GROWTH FUND
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 1995 JUNE 30, 1994 JUNE 30, 1995 JUNE 30,
1994
------------- ------------- -------------
-------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVI-
TIES
Net Investment Income
<PAGE>
(Loss)................. $ 988,845 $ 536,068 $ 15,477 $
(11,780)
Net Realized Gains
(Losses) on Investment
Transactions........... (1,427,789) (248,705) 842,836 (378,413)
Net Change in Unrealized
Appreciation
(Depreciation) of
Investments............ 2,715,291 (2,380,542) 3,175,447 26,592
----------- ----------- -----------
----------
Net Increase (Decrease)
in Net Assets Resulting
from Operations........ 2,276,347 (2,093,179) 4,033,760
(363,601)
DISTRIBUTIONS TO SHARE-
HOLDERS
From Net Investment
Income................. (981,811) (533,984) (18,530)
(1,676)
From Realized Gain on
Investments............ 0 (11,492) 0 0
FROM SHARE TRANSACTIONS
(Note 4)............... 6,739,356 3,340,541 5,328,793 7,192,767
----------- ----------- ----------- ----------
Net Increase in Net
Assets................. 8,033,892 701,886 9,344,023 6,827,490
NET ASSETS -- Beginning
of Year................ 9,116,957 8,415,071 9,992,632 3,165,142
----------- ----------- ----------- ----------
NET ASSETS -- End of
Year................... $17,150,849 $ 9,116,957 $19,336,655 $9,992,632
=========== =========== ===========
==========
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
CAPPIELLO-RUSHMORE
TRUST
----------------------------------------------------------------------------
-
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
EMERGING
GROWTH FUND GOLD FUND
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
<PAGE>
JUNE 30, 1995 JUNE 30, 1994 JUNE 30, 1995 JUNE 30,
1994*
------------- ------------- -------------
--------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVI-
TIES
Net Investment Loss..... $ (153,941) $ (115,470) $ (32,385) $
(4,865)
Net Realized Gains
(Losses) on Investment
Transactions........... 396,260 (37,246) (265,143)
81,679
Net Change in Unrealized
Appreciation
(Depreciation) of
Investments............ 9,024,889 (2,526,472) 680,092
(141,066)
----------- ----------- ----------
----------
Net Increase (Decrease)
in Net Assets Resulting
from Operations........ 9,267,208 (2,679,188) 382,564
(64,252)
DISTRIBUTIONS TO SHARE-
HOLDERS
From Net Investment
Income................. 0 0 0
0
From Realized Gain on
Investments............ 0 (133,442) 0
0
FROM SHARE TRANSACTIONS
(Note 4)............... 9,205,658 16,195,313 18,028
6,459,515
----------- ----------- ----------
----------
Net Increase in Net
Assets................. 18,472,866 13,382,683 400,592
6,395,263
NET ASSETS -- Beginning
of Year................ 18,132,910 4,750,227 6,395,263
0
----------- ----------- ----------
----------
NET ASSETS -- End of
Year................... $36,605,776 $18,132,910 $6,795,855
$6,395,263
=========== =========== ==========
==========
</TABLE>
*From Commencement of Operations March 7, 1994.
See Notes to Financial Statements.
<PAGE>
11
<PAGE>
CAPPIELLO-RUSHMORE
TRUST
-----------------------------------------------------------------------------
-
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
UTILITY
INCOME FUND
FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 1995 JUNE 30, 1994 JUNE 30, 1993*
------------- ------------- --------------
<S> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value --
Beginning of Year.... $ 8.39 $10.82 $10.00
------- ------- -------
Net Investment Income
(Loss)................ 0.555 0.527 0.255
Net Realized and
Unrealized Gains
(Losses) on
Securities............ 0.846 (2.421) 0.820
------- ------- ------
Net Increase (Decrease)
in Net Asset Value
Resulting from
Operations............ 1.401 (1.894) 1.075
Dividends to
Shareholders.......... (0.551) (0.525) (0.255)
Distributions to
Shareholders from Net
Realized Capital
Gains................. 0.000 (0.011) 0.000
------- ------- -------
Net Increase (Decrease)
in Net Asset Value.... 0.85 (2.43) 0.82
------- ------- -------
Net Asset Value -- End
of Year............... $ 9.24 $ 8.39 $10.82
<PAGE>
======= ======= =======
Total Investment Return. 16.62% (18.18)% 9.98%
Ratios to Average Net
Assets:
Expenses............... 1.05% 1.05% 1.05%
Net Investment Income
(Loss)................ 6.26% 5.21% 3.31%
Supplementary Data:
Portfolio Turnover
Rate.................. 147.04% 26.13% 15.93%
Number of Shares
Outstanding at End of
Year (000's omitted).. 1,855 1,086 778
</TABLE>
*From Commencement of Operations October 6, 1992.
See Notes to Financial Statements.
12
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GROWTH FUND
FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 1995 JUNE 30, 1994 JUNE 30, 1993*
------------- ------------- --------------
<S> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value --
Beginning of Year $11.05 $10.63 $10.00
------- ------- -------
Net Investment Income
(Loss)............ 0.014 (0.021) 0.012
Net Realized and
Unrealized Gains
(Losses) on
Securities... 3.593 0.444 0.620
------- ------- -------
Net Increase (Decrease)
in Net Asset Value
Resulting from
Operations........ 3.607 0.423 0.632
Dividends to
Shareholders....... (0.017) (0.003) (0.002)
Distributions to
Shareholders from Net
<PAGE>
Realized Capital
Gains.............. 0.000 0.000 0.000
------- ------- -------
Net Increase (Decrease)
in Net Asset Value... 3.59 0.42 0.63
------- ------- -------
Net Asset Value -- End
of Year............... $14.64 $11.05 $10.63
======= ======= =======
Total Investment Return. 32.65% 3.99 % 6.34 %
Ratios to Average Net
Assets:
Expenses............... 1.50% 1.50 % 1.50%
Net Investment Income
(Loss)................ 0.12% (0.18)% 0.17%
Supplementary Data:
Portfolio Turnover
Rate.................. 70.89% 119.03 % 21.13%
Number of Shares
Outstanding at End of
Year (000's omitted).. 1,321 904 298
</TABLE>
*From Commencement of Operations October 6, 1992.
See Notes to Financial Statements.
12
<PAGE>
<PAGE>
CAPPIELLO-RUSHMORE TRUST
---------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
EMERGING
GROWTH FUND
FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED PERIOD ENDED
JUNE 30, 1995 JUNE 30, 1994 JUNE 30, 1993*
------------- ------------- --------------
<S> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value --
Beginning of Year.... $10.41 $11.32 $10.00
------- ------- -------
Net Investment Loss.... (0.075) (0.104) (0.050)
Net Realized and
Unrealized Gains
(Losses) on
Securities............ 4.625 (0.686) 1.377
------- ------- -------
Net Increase (Decrease)
in Net Asset Value
Resulting from
Operations............ 4.550 (0.790) 1.327
Dividends to Sharehold-
ers................... 0.000 0.000 0.000
Distributions to
Shareholders from Net
Realized Capital
Gains................. 0.000 (0.120) (0.007)
------- ------- -------
Net Increase (Decrease)
in Net Asset Value.... 4.55 (0.91) 1.32
------- ------- -------
Net Asset Value -- End
of Year.............. $14.96 $10.41 $11.32
======= ======= =======
Total Investment Return. 43.71 % (7.31)% 13.35 %
Ratios to Average Net
Assets:
Expenses............... 1.50 % 1.50 % 1.50 %
Net Investment Income
(Loss)............... (0.61)% (0.85)% (0.63)%
Supplementary Data:
Portfolio Turnover
Rate.................. 96.11 % 128.13 % 67.90 %
Number of Shares
Outstanding at End of
Year (000's omitted).. 2,447 1,742 420
</TABLE>
<PAGE>
*From Commencement of Operations October 6, 1992.
**From Commencement of Operations March 7, 1994.
See Notes to Financial Statements.
13
<PAGE>
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GOLD FUND
FOR THE FOR THE
YEAR ENDED PERIOD ENDED
JUNE 30, 1995 JUNE 30, 1994**
------------- ---------------
<S> <C> <C>
Per Share Operating
Performance:
Net Asset Value --
Beginning of Year.... $9.52 $10.00
------ -------
Net Investment Loss.... (0.047) (0.008)
Net Realized and
Unrealized Gains
(Losses) on
Securities......... 0.417 (0.472)
------ -------
Net Increase (Decrease)
in Net Asset Value
Resulting from
Operations............ 0.370 (0.480)
Dividends to Sharehold-
ers................... 0.000 0.000
Distributions to
Shareholders from Net
Realized Capital
Gains................. 0.000 0.000
------ -------
Net Increase (Decrease)
in Net Asset Value.... 0.37 (0.48)
------ -------
Net Asset Value -- End
of Year............... $9.89 $ 9.52
====== =======
Total Investment Return. 3.89 % (4.80)%
Ratios to Average Net
Assets:
Expenses............... 1.70 % 1.68 %
Net Investment Income
(Loss)................ (0.51)% (0.25)%
Supplementary Data:
Portfolio Turnover
Rate.................. 51.23 % 22.85 %
Number of Shares
Outstanding at End of
<PAGE>
Year (000's omitted).. 687 672
</TABLE>
*From Commencement of Operations October 6, 1992.
**From Commencement of Operations March 7, 1994.
See Notes to Financial Statements.
13
<PAGE>
<PAGE>
June 30, 1995 CAPPIELLO-RUSHMORE TRUST
- ---------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
Cappiello-Rushmore Trust ("Trust") is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 as a no-load,
open-end investment company, and is authorized to issue an unlimited number of
shares. The Trust consists of four separate portfolios ("Funds"), each with a
different investment objective. The following is a summary of significant
accounting policies which the Funds follow:
(a) Listed securities are valued at the last sales price of the New York
Stock Exchange and other major exchanges. Over-the-Counter securities are
valued at the last sales price. If market quotations are not readily
available, the Board of Trustees will value the Funds' securities in good
faith. The trustees will periodically review this method of valuation and
recommend changes which may be necessary to assure that the Funds'
instruments are valued at fair value.
(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) Dividends from net investment income are declared and paid annually in
the Growth, Emerging Growth and Gold Funds and quarterly in the Utility
Income Fund. Dividends are re-invested in additional shares unless
shareholders request payment in cash. Net capital gains, if any, are
distributed annually.
(d) For Federal income tax purposes, each Fund of the Trust is treated as a
separate corporation. Each Fund intends to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and
distribute all net investment income and realized capital gains to their
shareholders. If for some reason one or more Funds fails to qualify as a
regulated investment company, and therefore become subject to Federal and
State income taxes, the Investment Adviser and Administrator have agreed to
indemnify the Fund for such taxes. Therefore, no Federal income tax provision
is required.
2. Investment Advisory and Administrative Services
Investment advisory services are provided by McCullough, Andrews and
Cappiello, Inc., ("Adviser"). Under an agreement with the Adviser, the Trust
pays a fee at the annual rate of 0.50% of the daily net assets of the Growth
and Emerging Growth Funds, 0.70% of the daily net assets of the Gold Fund and
0.35% of the daily net assets of the Utility Income Fund. Certain Trustees of
the Trust are also officers and Directors of the Adviser.
The Trust has contracted with Money Management Associates ("Administrator")
<PAGE>
to provide Administrative services to the Trust. Under the administrative
services agreement with the Administrator, the Trust pays a fee at the annual
rate of 1.00% of the daily net assets of the Growth, Emerging Growth and Gold
Funds, and .70% of the daily net assets of the Utility Income Fund. Certain
officers and Trustees of the Trust are also officers and Directors of the
Administrator.
Certain of these administrative services are provided by Rushmore Trust and
Savings, FSB ("Rushmore Trust"), a wholly owned subsidiary of the
Administrator, under a subcontractual agreement with the Administrator. These
services include transfer agency functions, dividend disbursing and other
shareholder services and custody of the Trust's assets.
3. Securities Transactions
For the year ended June 30, 1995, purchases and sales (including maturities)
of securities (excluding short-term securities) were as follows:
<TABLE>
<CAPTION>
UTILITY EMERGING
INCOME FUND GROWTH FUND GROWTH FUND GOLD FUND
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Purchases...................... $27,387,174 $13,327,705 $31,140,138 $3,877,663
----------- ----------- ----------- ----------
Sales.......................... $20,817,372 $ 8,916,432 $22,417,871 $2,914,407
----------- ----------- ---------- ----------
</TABLE>
14
<PAGE>
June 30, 1995 CAPPIELLO-RUSHMORE TRUST
- ---------------------------------------------------------------------------
4. Share Transactions
Transactions in shares and dollars of the Trust for the year ended June 30,
1995 were as follows:
<TABLE>
<CAPTION>
UTILITY EMERGING
INCOME FUND GROWTH FUND GROWTH FUND GOLD FUND
------------ ------------ ------------ ---------
<S> <C> <C> <C> <C>
In Shares
Shares Sold........... 4,159,987 1,788,616 4,797,089 2,371,129
Shares Issued in
Reinvestment of
Dividends............. 90,906 966 0 0
------------ ------------ ------------ ------------
4,250,893 1,789,582 4,797,089 2,371,129
Shares Redeemed... (3,481,616) (1,372,991) (4,092,329) (2,355,424)
------------ ------------ ----------- ----------
Net Increase in
Shares. 769,277 416,591 704,760 15,705
============ ============ ============ ============
In Dollars
Shares Sold.. $ 37,117,411 $ 22,155,069 $ 61,618,131 $21,826,166
Shares Issued in
Reinvestment of
Dividends.... . 803,619 11,598 0 0
------------ ------------ ------------ ------------
37,921,030 22,166,667 61,618,131 21,826,166
Shares Redeemed (31,181,674) (16,837,874) (52,412,473) (21,808,138)
------------ ------------ ------------ ------------
Net Increase in Dol-
lars ......... $ 6,739,356 $ 5,328,793 $ 9,205,658 $ 18,028
============ ============ ============ ============
</TABLE>
5. Net Unrealized Appreciation/Depreciation of Investments
Unrealized appreciation (depreciation) as of June 30, 1995, based on the cost
for Federal income tax purposes is as follows:
<TABLE>
<CAPTION>
UTILITY EMERGING
INCOME FUND GROWTH FUND GROWTH FUND GOLD FUND
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Gross Unrealized Apprecia-
tion..................... $ 743,931 $ 3,770,866 $ 8,200,434 $ 622,011
Gross Unrealized Deprecia-
tion..................... (121,445) (397,693) (1,664,548) (350,010)
----------- ----------- ----------- ----------
Net Unrealized
Appreciation............. $ 622,486 $ 3,373,173 $ 6,535,886 $ 272,001
=========== =========== =========== ==========
Cost of Investments for
<PAGE>
Federal Income Tax Pur-
poses.................... $15,803,878 $15,769,502 $30,126,214 $6,707,326
=========== =========== =========== ==========
</TABLE>
15
<PAGE>
June 30, 1995 CAPPIELLO-RUSHMORE TRUST
---------------------------------------------------------------------------
-
6. Net Assets
At June 30, 1995, net assets consisted of the following:
<TABLE>
<CAPTION>
UTILITY EMERGING
INCOME FUND GROWTH FUND GROWTH FUND GOLD FUND
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Paid-in Capital............. $18,189,501 $15,529,919 $29,557,065 $6,440,293
Undistributed Net Investment
Income..................... 9,089 0 0 0
Accumulated Net Realized
Gain (Loss) on Investments. (1,676,482) 422,439 359,075 (183,464)
Net Unrealized Appreciation
on Investments............. 628,741 3,384,297 6,689,636 539,026
----------- ----------- ----------- ----------
Net Assets.................. $17,150,849 $19,336,655 $36,605,776 $6,795,855
=========== =========== =========== ==========
</TABLE>
7. Federal Income Tax
Each Fund of the Trust has adopted Statement of Position 93-2; Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain, and
Return of Capital Distributions by Investment Companies. Adoption of this
standard results in the reclassification to paid-in capital of permanent
differences between tax and financial reporting of net investment income and
realized gains/(losses). As of June 30, 1995, the effect of permanent
differences between tax and financial reporting of net investment losses as
shown below resulted in a reclassification of such losses to paid-in capital:
<TABLE>
<CAPTION>
UTILITY EMERGING
INCOME FUND GROWTH FUND GROWTH FUND GOLD FUND
----------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Reduction of paid-in capital... $ 0 $11,780 $279,593 $37,250
</TABLE>
At June 30, 1995, for Federal income tax purposes, the following Funds had
capital loss carryovers which may be applied against future net taxable
<PAGE>
realized gains of each succeeding year until the earlier of its utilization or
its expiration:
<TABLE>
<CAPTION>
UTILITY EMERGING
EXPIRES JUNE 30, INCOME FUND GROWTH FUND GROWTH FUND GOLD FUND
---------------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
1996........................... $ -- $1,962,613 $ -- $ --
1997........................... -- -- -- --
1998........................... -- -- -- --
1999........................... -- -- -- 1,289,399
2000........................... -- -- 795,779 --
2001........................... -- -- -- --
2002........................... 248,705 821,534 593,120 281,566
2003........................... 1,421,534 -- -- 434,866
---------- ---------- ---------- ----------
Total........................ $1,670,239 $2,784,147 $1,388,899 $2,005,831
========== ========== ========== ==========
</TABLE>
16
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees
of Cappiello-Rushmore Trust:
We have audited the statements of net assets of the Utility Income, Growth,
Emerging Growth and Gold Funds of Cappiello-Rushmore Trust as of June 30, 1995,
the related statements of operations, changes in net assets and the financial
highlights for the periods presented. These financial statements and financial
highlights are the responsibility of the Trust'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 as of June
30, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Utility Income,
Growth, Emerging Growth and Gold Funds of Cappiello-Rushmore Trust as of June
30,1995, the results of their operations, the changes in their net assets and
financial highlights for the respective stated periods in conformity with
<PAGE>
generally accepted accounting principles.
Deloitte & Touche LLP
Washington, DC
August 4, 1995
17
<PAGE>
CAPPIELLO-
RUSHMORE
TRUST
UTILITY INCOME FUND
GROWTH FUND
EMERGING GROWTH FUND
GOLD FUND
----------------------------------------------------------------------------
ANNUAL REPORT
JUNE 30, 1995
[RECYCLING LOGO APPEARS HERE] Printed on Recycled Paper
(ART)
[INK LOGO APPEARS HERE] PRINTED WITH SOY INK(TM)
<PAGE>
<REDLINE>
PART C
<\REDLINE>
<PAGE>
PART C
OTHER INFORMATION
Cappiello-Rushmore Trust
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
<REDLINE>
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 June 30, 1995
Statement of Operations for the year ended
June 30, 1995
Statements of Changes in Net Assets for the years
ended June 30, 1995 and June 30, 1994
Financial Highlights for the years ended June 30,
1995, 1994 and 1993
No Statement of Sources of Net Assets will be included because the
full amount of net assets on June 30, 1995 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
<\REDLINE>
16 Calculation of Total Return
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
<REDLINE>
Approximate Number of
Shareholders of Record
Title of Class at October 9, 1995
Common Stock, $.001 par value
Utility Income Fund 937
Growth Fund 1,299
Emerging Growth 1,993
Gold Fund 445
<\REDLINE>
ITEM 27. INDEMNIFICATION
<PAGE> C-1
<PAGE>
Pursuant to Delaware Code Ann. title 12 Section 3817, a Delaware business
trust may provide in its governing instrument for the indemnification
of its officers and trustees from and against any and all claims and
demands whatsoever. Article X, Section 10.02 of the Declaration of
Trust states that the Trust shall indemnify any present or former
trustee or officer to the fullest extent permitted by law against
liability, and all expenses reasonably incurred by him or her in
connection with any claim, action, suit or proceeding in which he or
she is involved by virtue of his or her service as a trustee, officer
or both, and against any amount incurred in settlement thereof.
Indemnification will not be provided to a person adjudged by a court
or other adjudicatory body either to be liable to the Trust or its
shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of his or her duties (collectively,
"disabling conduct"), or not to have acted in good faith in the
reasonable belief that his or her action was in the best interest of
the Trust. In the event of a settlement, no indemnification may be
provided unless there has been a determination, as specified in the
Declaration of Trust, that the officer or trustee did not engage in
disabling conduct.
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.
<REDLINE>
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Not Applicable.
<\REDLINE>
ITEM 29. PRINCIPAL UNDERWRITER
Not Applicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
<PAGE> C-2
<PAGE>
The physical location of all accounts, books and records required to
be maintained and preserved pursuant to Section 31(a) of the
Investment Company Act of 1940, as amended, and Rules 31-a-1 and 31-
a-2 thereunder, is 4922 Fairmont Avenue, Bethesda, Maryland 20814.
ITEM 31. MANAGEMENT SERVICES
Not Applicable
ITEM 32. UNDERTAKINGS
None
<PAGE> C-3
<PAGE>
SIGNATURES
<REDLINE>
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(a) 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 the city of Bethesda in the State of Maryland on the 25th day of
October, 1995.
Cappiello-Rushmore Trust
By:
/s/ Frank A. Cappiello
Frank A. Cappiello, Chairman of
the Board
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
/s/ Frank A. Cappiello Chairman of October 25, 1995
Frank A. Cappiello the Board,
Trustee
/s/ Daniel L. O'Connor President, October 25, 1995
Daniel L. O'Connor Treasurer,
Trustee
/s/ Bruce C. Ellis Trustee October 25, 1995
Bruce C. Ellis
/s/ Peter J. DeAngelis Trustee October 25, 1995
Peter J. DeAngelis
/s/ Peter B. Petersen Trustee October 25, 1995
Peter B. Petersen
/s/ Leo Seybold Trustee October 25, 1995
Leo Seybold
<\REDLINE>
<PAGE> S-1
<PAGE>
Exhibit 11
Consent of Deloitte & Touche LLP
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
Cappiello-Rushmore Trust:
We consent to the incorporation by reference in this Post-
Effective Amendment No. 5 to Registration Statement No. 33-46283
of our report dated August 4, 1995 appearing in the Annual Report
of the Cappiello-Rushmore Trust for the year ended June 30, 1995,
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
DELOITTE & TOUCHE LLP
Washington, D.C.
October 23, 1995
<PAGE>
Exhibit 16
Calculation of Total Return
<PAGE>
Exhibit 16
Cappiello-Rushmore Trust
Total Return Calculations
One Year Ended June 30, 1995 Since Inception
I. Cappiello-Rushmore Growth Fund October 6, 1992 (inception)
to June 30, 1995
P (1+T) n = ERV P (1+T) n = ERV
ERV = $13,265 ERV = $14,663
n = 1 n = 2.73
T = 32.65% T = 15.04%
II. Cappiello-Rushmore Emerging
Growth Fund
P (1+T) n = ERV P (1+T) n = ERV
ERV = $14,370.80 ERV = $15,141
n = 1 n = 2.73
T = 43.71% T = 16.40%
III. Cappiello-Rushmore Utility
Income Fund
P (1+T) n = ERV P (1+T) n = ERV
ERV = $11,662 ERV = $10,493.19
n = 1 n = 2.73
T = 16.62% T = 1.78%
IV. Cappiello-Rushmore Gold Fund March 7, 1994 (inception) to
June 30, 1995
P (1+T) n = ERV P (1+T) n = ERV
ERV = $10,388.66 ERV = $9,890
n = 1 n = 1.318
T = 3.89% T = (0.84)%
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000885113
<NAME> CAPPIELLO-RUSHMORE TRUST
<SERIES>
<NUMBER> 3
<NAME> EMERGING GROWTH FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 29,972,464
<INVESTMENTS-AT-VALUE> 36,662,100
<RECEIVABLES> 613,624
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 37,275,724
<PAYABLE-FOR-SECURITIES> 334,740
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 335,208
<TOTAL-LIABILITIES> 669,948
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 29,557,065
<SHARES-COMMON-STOCK> 2,446,753
<SHARES-COMMON-PRIOR> 1,741,993
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 359,075
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,689,636
<NET-ASSETS> 36,605,776
<DIVIDEND-INCOME> 86,730
<INTEREST-INCOME> 137,934
<OTHER-INCOME> 0
<EXPENSES-NET> (378,605)
<NET-INVESTMENT-INCOME> (153,941)
<REALIZED-GAINS-CURRENT> 396,260
<APPREC-INCREASE-CURRENT> 9,024,889
<NET-CHANGE-FROM-OPS> 9,267,208
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,797,089
<NUMBER-OF-SHARES-REDEEMED> (4,092,329)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 18,472,866
<ACCUMULATED-NII-PRIOR> (125,652)
<ACCUMULATED-GAINS-PRIOR> (37,185)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 126,202
<PAGE>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 378,605
<AVERAGE-NET-ASSETS> 25,240,325
<PER-SHARE-NAV-BEGIN> 10.41
<PER-SHARE-NII> (0.075)
<PER-SHARE-GAIN-APPREC> 4.625
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.96
<EXPENSE-RATIO> 1.500
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000885113
<NAME> CAPPIELLO-RUSHMORE TRUST
<SERIES>
<NUMBER> 4
<NAME> GOLD FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 6,440,301
<INVESTMENTS-AT-VALUE> 6,979,326
<RECEIVABLES> 33,745
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,013,071
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 217,216
<TOTAL-LIABILITIES> 217,216
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,440,293
<SHARES-COMMON-STOCK> 687,214
<SHARES-COMMON-PRIOR> 671,509
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (183,464)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 539,026
<NET-ASSETS> 6,795,855
<DIVIDEND-INCOME> 45,886
<INTEREST-INCOME> 29,673
<OTHER-INCOME> 0
<EXPENSES-NET> (107,944)
<NET-INVESTMENT-INCOME> (32,385)
<REALIZED-GAINS-CURRENT> (265,143)
<APPREC-INCREASE-CURRENT> 680,092
<NET-CHANGE-FROM-OPS> 382,564
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,371,129
<NUMBER-OF-SHARES-REDEEMED> (2,355,424)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 400,592
<ACCUMULATED-NII-PRIOR> (4,865)
<ACCUMULATED-GAINS-PRIOR> 81,679
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 44,448
<PAGE>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 107,944
<AVERAGE-NET-ASSETS> 6,349,627
<PER-SHARE-NAV-BEGIN> 9.52
<PER-SHARE-NII> (0.047)
<PER-SHARE-GAIN-APPREC> 0.417
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.89
<EXPENSE-RATIO> 1.700
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000885113
<NAME> CAPPIELLO-RUSHMORE TRUST
<SERIES>
<NUMBER> 2
<NAME> GROWTH FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 15,758,378
<INVESTMENTS-AT-VALUE> 19,142,675
<RECEIVABLES> 444,909
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 19,587,584
<PAYABLE-FOR-SECURITIES> 220,150
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 30,779
<TOTAL-LIABILITIES> 250,929
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 15,529,919
<SHARES-COMMON-STOCK> 1,320,905
<SHARES-COMMON-PRIOR> 904,314
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 422,439
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,384,297
<NET-ASSETS> 19,336,655
<DIVIDEND-INCOME> 167,390
<INTEREST-INCOME> 49,088
<OTHER-INCOME> 0
<EXPENSES-NET> (201,001)
<NET-INVESTMENT-INCOME> 15,477
<REALIZED-GAINS-CURRENT> 842,836
<APPREC-INCREASE-CURRENT> 3,175,447
<NET-CHANGE-FROM-OPS> 4,033,760
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (18,530)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,788,616
<NUMBER-OF-SHARES-REDEEMED> (1,372,991)
<SHARES-REINVESTED> 966
<NET-CHANGE-IN-ASSETS> 9,344,023
<ACCUMULATED-NII-PRIOR> (11,780)
<ACCUMULATED-GAINS-PRIOR> (417,344)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 67,000
<PAGE>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 201,001
<AVERAGE-NET-ASSETS> 13,400,062
<PER-SHARE-NAV-BEGIN> 11.05
<PER-SHARE-NII> 0.014
<PER-SHARE-GAIN-APPREC> 3.593
<PER-SHARE-DIVIDEND> (0.017)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.64
<EXPENSE-RATIO> 1.500
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000885113
<NAME> CAPPIELLO-RUSHMORE TRUST
<SERIES>
<NUMBER> 1
<NAME> UTILITY INCOME FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 15,797,623
<INVESTMENTS-AT-VALUE> 16,426,364
<RECEIVABLES> 838,252
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 17,264,616
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 113,767
<TOTAL-LIABILITIES> 113,767
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 18,189,501
<SHARES-COMMON-STOCK> 1,855,441
<SHARES-COMMON-PRIOR> 1,086,163
<ACCUMULATED-NII-CURRENT> 9,089
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,676,482)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 628,741
<NET-ASSETS> 17,150,849
<DIVIDEND-INCOME> 1,093,908
<INTEREST-INCOME> 60,866
<OTHER-INCOME> 0
<EXPENSES-NET> (165,929)
<NET-INVESTMENT-INCOME> 988,845
<REALIZED-GAINS-CURRENT> (1,427,789)
<APPREC-INCREASE-CURRENT> 2,715,291
<NET-CHANGE-FROM-OPS> 2,276,347
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (981,811)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,159,987
<NUMBER-OF-SHARES-REDEEMED> (3,481,616)
<SHARES-REINVESTED> 90,906
<NET-CHANGE-IN-ASSETS> 8,033,892
<ACCUMULATED-NII-PRIOR> 2,055
<ACCUMULATED-GAINS-PRIOR> (248,693)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 55,310
<PAGE>
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 165,929
<AVERAGE-NET-ASSETS> 15,801,495
<PER-SHARE-NAV-BEGIN> 8.39
<PER-SHARE-NII> 0.555
<PER-SHARE-GAIN-APPREC> 0.846
<PER-SHARE-DIVIDEND> (0.551)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.24
<EXPENSE-RATIO> 1.050
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
</TABLE>
