<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.
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,
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
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-RUSHMORE TRUST
- --------------------------------------------------------------------------------
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
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%
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>
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
===========
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
-----------
3,629,500
-----------
</TABLE>
*Non-income producing.
See Notes to Financial Statements.
6
<PAGE>
June 30, 1995 CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
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%
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
-----------
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
-----------
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
----------- ---------- ---------- ---------
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
(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
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.
11
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
UTILITY
INCOME FUND GROWTH FUND
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
JUNE 30, 1995 JUNE 30, 1994 JUNE 30, 1993* JUNE 30, 1995 JUNE 30, 1994 JUNE 30, 1993*
------------- ------------- -------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value --
Beginning of Year.... $ 8.39 $10.82 $10.00 $11.05 $10.63 $10.00
------- ------- ------- ------- ------- -------
Net Investment Income
(Loss)................ 0.555 0.527 0.255 0.014 (0.021) 0.012
Net Realized and
Unrealized Gains
(Losses) on
Securities............ 0.846 (2.421) 0.820 3.593 0.444 0.620
------- ------- ------- ------- ------- -------
Net Increase (Decrease)
in Net Asset Value
Resulting from
Operations............ 1.401 (1.894) 1.075 3.607 0.423 0.632
Dividends to
Shareholders.......... (0.551) (0.525) (0.255) (0.017) (0.003) (0.002)
Distributions to
Shareholders from Net
Realized Capital
Gains................. 0.000 (0.011) 0.000 0.000 0.000 0.000
------- ------- ------- ------- ------- -------
Net Increase (Decrease)
in Net Asset Value.... 0.85 (2.43) 0.82 3.59 0.42 0.63
------- ------- ------- ------- ------- -------
Net Asset Value -- End
of Year............... $ 9.24 $ 8.39 $10.82 $14.64 $11.05 $10.63
======= ======= ======= ======= ======= =======
Total Investment Return. 16.62% (18.18)% 9.98% 32.65% 3.99 % 6.34 %
Ratios to Average Net
Assets:
Expenses............... 1.05% 1.05% 1.05% 1.50% 1.50 % 1.50%
Net Investment Income
(Loss)................ 6.26% 5.21% 3.31% 0.12% (0.18)% 0.17%
Supplementary Data:
Portfolio Turnover
Rate.................. 147.04% 26.13% 15.93% 70.89% 119.03 % 21.13%
Number of Shares
Outstanding at End of
Year (000's omitted).. 1,855 1,086 778 1,321 904 298
</TABLE>
*From Commencement of Operations October 6, 1992.
See Notes to Financial Statements.
12
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
EMERGING
GROWTH FUND GOLD FUND
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED
JUNE 30, 1995 JUNE 30, 1994 JUNE 30, 1993* JUNE 30, 1995 JUNE 30, 1994**
------------- ------------- -------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net Asset Value --
Beginning of Year.... $10.41 $11.32 $10.00 $9.52 $10.00
------- ------- ------- ------ -------
Net Investment Loss.... (0.075) (0.104) (0.050) (0.047) (0.008)
Net Realized and
Unrealized Gains
(Losses) on
Securities............ 4.625 (0.686) 1.377 0.417 (0.472)
------- ------- ------- ------ -------
Net Increase (Decrease)
in Net Asset Value
Resulting from
Operations............ 4.550 (0.790) 1.327 0.370 (0.480)
Dividends to Sharehold-
ers................... 0.000 0.000 0.000 0.000 0.000
Distributions to
Shareholders from Net
Realized Capital
Gains................. 0.000 (0.120) (0.007) 0.000 0.000
------- ------- ------- ------ -------
Net Increase (Decrease)
in Net Asset Value.... 4.55 (0.91) 1.32 0.37 (0.48)
------- ------- ------- ------ -------
Net Asset Value -- End
of Year............... $14.96 $10.41 $11.32 $9.89 $ 9.52
======= ======= ======= ====== =======
Total Investment Return. 43.71 % (7.31)% 13.35 % 3.89 % (4.80)%
Ratios to Average Net
Assets:
Expenses............... 1.50 % 1.50 % 1.50 % 1.70 % 1.68 %
Net Investment Income
(Loss)................ (0.61)% (0.85)% (0.63)% (0.51)% (0.25)%
Supplementary Data:
Portfolio Turnover
Rate.................. 96.11 % 128.13 % 67.90 % 51.23 % 22.85 %
Number of Shares
Outstanding at End of
Year (000's omitted).. 2,447 1,742 420 687 672
</TABLE>
*From Commencement of Operations October 6, 1992.
**From Commencement of Operations March 7, 1994.
See Notes to Financial Statements.
13
<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")
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
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
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
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
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