CAPPIELLO RUSHMORE TRUST, 485BPOS, 1996-10-25

CAPPIELLO RUSHMORE TRUST
485BPOS, 1996-10-25

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<PAGE>

As Filed With The Securities And Exchange Commission on October 25, 1996.

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. 6 (X)
---

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 (X)

Amendment No. 7 (X)
---

CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)

4922 Fairmont Avenue, Bethesda, Maryland 20814
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(Address of Principal Executive Offices) (Zip Code)

(301) 657-1500
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(Registrant's Telephone Number, Including Area Code)

Timothy N. Coakley
4922 Fairmont Avenue
Bethesda, Maryland 20814
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(Name and Address of Agent for Service of Process)

Copies to:
Michael L. Sapir, Esq.
Law Offices of Michael L. Sapir
3813 T Street, Northwest
Washington, D.C. 20007

It is proposed that this filing will become effective (check appropriate box):

immediately upon filing pursuant to paragraph (b) of rule 485.
- ---
X on November 1, 1996 pursuant to paragraph (b) of rule 485.
- ---

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, 1996 was filed
on August 27, 1996.

TOTAL NUMBER OF PAGES____
<PAGE>

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
- -------- ----------------------
<S> <C> <C>

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 Registrant . . . . . . . . . . . . . . . Organization of the Trust; Investment Objectives:
Investment Policies
5. Management of the Fund. . . . . . . . . . . . . . . . . . . . . Management of the Trust
5A. Management's Discussion of Fund Performance . . . . . . . . . . Management's Discussion of Fund Performance
6. Capital Stock and Other Securities. . . . . . . . . . . . . . . Organization of Trust; Taxes; Dividends and Distributions
7. Purchase of Securities Being Offered. . . . . . . . . . . . . . How to Invest in the Fund; Exchanges; Net Asset Value
8. Redemption or Repurchase. . . . . . . . . . . . . . . . . . . . How to Redeem an Investment (Withdrawals); Exchanges
9. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . Not Applicable

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 Policies. . . . . . . . . . . . . . . Investment Objectives and Policies
14. Management of the Registrant. . . . . . . . . . . . . . . . . . Management of the Trust
15. Control Persons and Principal Holders of Securities . . . . . . Principal Holders of Securities
<PAGE>

16. Investment Advisory and Other Services. . . . . . . . . . . . . Investment Advisory and Other Services
17. Brokerage Allocation. . . . . . . . . . . . . . . . . . . . . . Investment Objectives and Policies
18. Capital Stock and Other Securities. . . . . . . . . . . . . . . Not Applicable
19. Purchase, Redemption and Pricing of Securities Being Offered. . Redemptions; Tax-Deferred Retirement Plans; Net Asset Value
20. Tax Status. . . . . . . . . . . . . . . . . . . . . . . . . . . Taxes
21. Underwriters. . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
22. Calculations of Performance Data. . . . . . . . . . . . . . . . Calculation of Return Quotations
23. Financial Statements. . . . . . . . . . . . . . . . . . . . . . Financial Statements

PART C: OTHER INFORMATION

24. Financial Statements and Exhibits . . . . . . . . . . . . . . . Financial Statements and Exhibits
25. Persons Controlled by or Under Common Control . . . . . . . . . Persons Controlled by or Under Common Control
26. Number of Holders of Securities . . . . . . . . . . . . . . . . Number of Holders of Securities
27. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . Indemnification
28. Business and Other Connections of Investment Adviser. . . . . . Business and Other Connections of Investment Adviser
29. Principal Underwriters. . . . . . . . . . . . . . . . . . . . . Principal Underwriters
30. Location of Accounts and Records. . . . . . . . . . . . . . . . Location of Accounts and Records
31. Management Services . . . . . . . . . . . . . . . . . . . . . . Management Services
32. Undertakings. . . . . . . . . . . . . . . . . . . . . . . . . . Undertakings
33. Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . Signatures
</TABLE>

<PAGE>

PART A
<PAGE>

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CAPPIELLO-RUSHMORE TRUST
UTILITY INCOME FUND
GROWTH FUND
EMERGING GROWTH FUND

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
November 1, 1996 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 November 1, 1996.

- --------------------------------------------------------------------------------
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>

FEE TABLE

The following table illustrates all expenses and fees that a shareholder of the
Trust will incur:

Emerging Utility
Growth Growth Income
------ ------ ------

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

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)

Management Fees 0.50% 0.50% 0.35%
12b-1 Fees None None None
Other Expenses 1.00% 1.00% 0.70%
----- ----- -----
Total Fund Operating Expenses 1.50% 1.50% 1.05%
----- ----- -----

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.

1 year 3 years 5 years 10 years
------ ------- ------- --------

Growth Fund $ 15 $ 48 $ 82 $ 179
Emerging Growth Fund 15 48 82 179
Utility Income Fund 11 34 58 128

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.

2
<PAGE>

CAPPIELLO-RUSHMORE TRUST
FINANCIAL HIGHLIGHTS
Audited

UTILITY INCOME FUND

For the Period
For the Year Ended June 30, Ended June 30,
-------------------------------------- -------------
1996 1995 1994 1993*
<C> <C> <C> <C>

PER SHARE OPERATING PERFORMANCE:
Net Asset Value--Beginning of Year . . . . . . . . . . . . $ 9.24 $ 8.39 $ 10.82 $ 10.00
-------- ------- ------- --------
Income from Investment Operations:
Net Investment Income. . . . . . . . . . . . . . . . . . 0.489 0.555 0.527 0.255
Net Realized and Unrealized Gains
(Losses) on Securities . . . . . . . . . . . . . . . . 1.391 0.846 (2.421) 0.820
-------- ------- ------- --------
Total from Investment Operations . . . . . . . . . . . 1.880 1.401 (1.894) 1.075
-------- ------- ------- --------

Distributions to Shareholders:
From Net Investment Income . . . . . . . . . . . . . . . (0.520) (0.551) (0.525) (0.255)
From Net Realized Capital Gains. . . . . . . . . . . . . -- -- (0.011) --
-------- ------- ------- --------
Total Distributions to Shareholders. . . . . . . . . . (0.520) (0.551) (0.536) (0.255)
-------- ------- ------- --------
Net Increase (Decrease) in Net Asset Value . . . . . . . . 1.36 0.85 (2.43) 0.82
-------- ------- ------- --------
Net Asset Value--End of Year . . . . . . . . . . . . . . . $ 10.60 $ 9.24 $ 8.39 $ 10.82
-------- ------- ------- --------
-------- ------- ------- --------

TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . 20.60% 16.62% (18.18)% 9.98% (A)

RATIOS TO AVERAGE NET ASSETS:
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 1.05% 1.05% 1.05% 1.05% (B)
Net Investment Income. . . . . . . . . . . . . . . . . . . 4.82% 6.26% 5.21% 3.31% (B)

SUPPLEMENTARY DATA:
Portfolio Turnover Rate. . . . . . . . . . . . . . . . . . 45.11% 147.04% 26.13% 15.93%
Net Assets at End of Year (000s omitted) . . . . . . . . . $15,106 $17,151 $9,117 $8,415
Number of Shares Outstanding at End of
Year (000s omitted). . . . . . . . . . . . . . . . . . . 1,425 1,855 1,086 778

</TABLE>

* COMMENCEMENT OF OPERATIONS OCTOBER 6, 1992.

(A) TOTAL INVESTMENT RETURN FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(B) ANNUALIZED.

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.

3
<PAGE>

CAPPIELLO-RUSHMORE TRUST
FINANCIAL HIGHLIGHTS
Audited

GROWTH FUND

For the Period
For the Year Ended June 30, Ended June 30,
-------------------------------------- -------------
1996 1995 1994 1993*
<C> <C> <C> <C>

PER SHARE OPERATING PERFORMANCE:
Net Asset Value--Beginning of Year . . . . . . . . . . . . $ 14.64 $ 11.05 $ 10.63 $ 10.00
-------- ------- ------- --------
Income from Investment Operations:
Net Investment Income (Loss) . . . . . . . . . . . . . . (0.069) 0.014 (0.021) 0.012
Net Realized and Unrealized Gains
on Securities. . . . . . . . . . . . . . . . . . . . . 3.299 3.593 0.444 0.620
-------- ------- ------- --------
Total from Investment Operations . . . . . . . . . . . 3.230 3.607 0.423 0.632
-------- ------- ------- --------

Distributions to Shareholders:
From Net Investment Income . . . . . . . . . . . . . . . -- (0.017) (0.003) (0.002)
From Net Realized Capital Gains. . . . . . . . . . . . . -- -- -- --
-------- ------- ------- --------
Total Distributions to Shareholders. . . . . . . . . . -- (0.017) (0.003) (0.002)
-------- ------- ------- --------
Net Increase in Net Asset Value. . . . . . . . . . . . . . 3.23 3.59 0.42 0.63
-------- ------- ------- --------
Net Asset Value--End of Year . . . . . . . . . . . . . . . $ 17.87 $ 14.64 $ 11.05 $ 10.63
-------- ------- ------- --------
-------- ------- ------- --------

TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . 22.06% 32.65% 3.99% 6.34%(A)

RATIOS TO AVERAGE NET ASSETS:
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 1.50% 1.50% 1.50% 1.50%(B)
Net Investment Income (Loss) . . . . . . . . . . . . . . . (0.41)% 0.12% (0.18)% 0.17%(B)

SUPPLEMENTARY DATA:
Portfolio Turnover Rate. . . . . . . . . . . . . . . . . . 74.50% 70.89% 119.03% 21.13%
Net Assets at End of Year (000s omitted) . . . . . . . . . $31,777 $19,337 $9,993 $3,165
Number of Shares Outstanding at End of
Year (000s omitted). . . . . . . . . . . . . . . . . . . 1,778 1,321 904 298

</TABLE>

* COMMENCEMENT OF OPERATIONS OCTOBER 6, 1992.

(A) TOTAL INVESTMENT RETURN FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(B) ANNUALIZED.

4
<PAGE>

CAPPIELLO-RUSHMORE TRUST
FINANCIAL HIGHLIGHTS
Audited

EMERGING GROWTH FUND

For the Period
For the Year Ended June 30, Ended June 30,
-------------------------------------- -------------
1996 1995 1994 1993*
<C> <C> <C> <C>

PER SHARE OPERATING PERFORMANCE:
Net Asset Value--Beginning of Year . . . . . . . . . . . . $ 14.96 $ 10.41 $ 11.32 $ 10.00
-------- ------- ------- --------
Income from Investment Operations:
Net Investment Loss. . . . . . . . . . . . . . . . . . . (0.161) (0.075) (0.104) (0.050)
Net Realized and Unrealized Gains
(Losses) on Securities . . . . . . . . . . . . . . . . 2.300 4.625 (0.686) 1.377
-------- ------- ------- --------
Total from Investment Operations . . . . . . . . . . . 2.139 4.550 (0.790) 1.327
-------- ------- ------- --------

Distributions to Shareholders:
From Net Investment Income . . . . . . . . . . . . . . . -- -- -- --
From Net Realized Capital Gains. . . . . . . . . . . . . (0.109) -- (0.120) (0.007)
-------- ------- ------- --------
Total Distributions to Shareholders. . . . . . . . . . (0.109) -- (0.120) (0.007)
-------- ------- ------- --------
Net Increase (Decrease) in Net Asset Value . . . . . . . . 2.03 4.55 (0.91) 1.32
-------- ------- ------- --------
Net Asset Value--End of Year . . . . . . . . . . . . . . . $ 16.99 $ 14.96 $ 10.41 $ 11.32
-------- ------- ------- --------
-------- ------- ------- --------

TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . 14.36% 43.71% (7.31)% 13.35%(A)

RATIOS TO AVERAGE NET ASSETS:
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 1.50% 1.50% 1.50% 1.50%(B)
Net Investment Loss. . . . . . . . . . . . . . . . . . . . (0.98)% (0.61)% (0.85)% (0.63)%(B)

SUPPLEMENTARY DATA:
Portfolio Turnover Rate. . . . . . . . . . . . . . . . . . 121.22% 96.11% 128.13% 67.90%
Net Assets at End of Year (000s omitted) . . . . . . . . . $44,985 $36,606 $18,133 $4,750
Number of Shares Outstanding at End of
Year (000s omitted). . . . . . . . . . . . . . . . . . . 2,647 2,447 1,742 420

</TABLE>

* COMMENCEMENT OF OPERATIONS OCTOBER 6, 1992.

(A) TOTAL INVESTMENT RETURN FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(B) ANNUALIZED.

5
<PAGE>

CAPPIELLO-RUSHMORE TRUST
TOTAL RETURN COMPARISON

UTILITY INCOME GROWTH FUND EMERGING GROWTH S&P 500
INCOME FUND

10/6/92 $10,000 $10,000 $10,000 $10,000
6/30/93 $10,998 $10,634 $11,335 $11,297
6/30/94 $8,999 $11,058 $10,506 $11,456
6/30/95 $10,495 $14,668 $15,098 $14,443
6/30/96 $12,657 $17,904 $17,266 $18,213

PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.

CAPPIELLO-RUSHMORE TRUST
AVERAGE ANNUAL TOTAL RETURN
Period Ended June 30, 1996

Since Inception
One Year 10/6/92
-------- --------------

Cappiello-Rushmore Utility Income Fund 20.60% 6.51%
Cappiello-Rushmore Growth Fund 22.06% 16.88%
Cappiello-Rushmore Emerging Growth Fund 14.36% 15.84%

6
<PAGE>

MANAGEMENT'S DISCUSSION OF
FUND PERFORMANCE

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 that the Fund's total return (income plus appreciation)
was up more than 20% for the year ended June 30, 1996. Our exposure to the
telephone sector has increased, while our exposure to electric and gas utilities
has declined.

Forthcoming competition in all sectors of the utility industry has prompted
utility management to prepare for a more competitive future. Consolidation is
inevitable, leading to significant savings and subsequent stock appreciation.
The recent announcement by SBC Communications to purchase Pacific Telesis is
indicative of this forthcoming takeover trend.

CAPPIELLO-RUSHMORE GROWTH FUND

The Growth Fund maintained its larger capitalization focus and enjoyed a return
of 22% for the year. Our emphasis remains technology (although less weighted
than in 1995), consumer non-durables and "quality" names in energy, financial
service as well as sectors such as health care, retailing, and marketing.
Health care stocks represented by Shared Medical Systems Corp. and Tenet
Healthcare Corp. occupy major positions in the portfolio as we seek to
capitalize on the accelerating movement of the U.S. health care system to
managed care.

The retailing and marketing business presents a restructuring opportunity. This
sector has been plagued by over-capacity for some years. Currently, capacity is
being restrained; however, with costs managed more effectively and modest
revenue growth, the result has been stronger earnings gains in the case of
stocks such as Federated Department Stores, Inc. Other stocks in this area
represented in the portfolio are Albertsons, Inc., National Media Corp., and K-
Mart Corp.

Among the best performing stocks held in the portfolio as of the end of the year
were:

Federated Department Stores, Inc.
Warrants "C" +100%
Reynolds & Reynolds Co. + 81%
Shared Medical Systems Corp. + 60%
Student Loan Marketing Association + 58%
Coca-Cola Co. + 53%

CAPPIELLO-RUSHMORE EMERGING GROWTH FUND

The Emerging Growth Fund invests primarily in common stocks of smaller
capitalization growth companies (predominantly in the technology, specialty
retailing and health care) with above-average growth potential.

The Fund enjoyed another year of double digit growth with a return of 14%. While
not comparable to the sterling returns of 1995, the performance is satisfactory
considering the frantic declines of high tech stocks during the year. The
technology sector, after several years of fast growth, underwent a severe
correction of nearly a year. Earlier, we had adopted a more cautious stance
toward this group reducing our overweighted positions in micro-chip producers
and software manufacturers. However, our decreased exposure to high tech
stocks, (software and computer equipment) last Fall was not nearly enough, in
retrospect. Nevertheless, the shift to other sectors was significant enough,
particularly in the consumer non-durables and health care area, to show some
impressive performances. Among the better performing stocks in the portfolio as
of June 30, 1996 were:

7
<PAGE>

National Media Corp. +88%
KV Pharmaceutical Co., Class A +73%
Shared Medical Systems Corp. +60%
National Data Corp. +48%
Transaction Network Services, Inc. +34%

Also indicative of shifts in the portfolio during the year were purchases in
energy-related stocks. (Reading & Bates Corp. up 97%, Mesa, Inc. up 64%, Nice
Systems, Ltd. (ADR) up 90% and Hub Group, Inc. Class A up 46%.)

With our holdings in technology reduced (but still substantial), added to our
exposure in consumer non-durables and smaller capitalization companies in
sectors such as health care services, retail, and marketing, we believe we are
well positioned to take advantage of an evolving, yet highly selective ongoing
bull market.

We are optimistic about the Fund's prospects for the next twelve months. Many
of our holdings sell at attractive valuations, relative to their growth. While
a number of institutional favorite NASDAQ issues, especially in the technology
sector, have moved up in price the past few weeks, the large majority of stocks
are still closer to their yearly lows than their highs.

Our expectations for the next twelve months include an economy growing at a rate
between 2 1/2 and 3% measured in terms of Gross Domestic Product. Part of the
growth is based on a optimistic view of consumer spending behavior.
Historically consumer spending patterns are move determined by changes in income
than any other factor, and income continues to rise. We also see improvement in
the manufacturing sector. While capital spending will not grow at 1995 rates,
the better-than-expected improvement in second quarter profits indicates that
cash flow remains healthy, which means investment in plant and equipment will
increase. Finally, the economies of our major trading partners are either
beginning to recover, like Japan and Canada; or bottoming out, as in Mexico and
Europe. Consequently, a better trade balance should also be part of the growth
picture.

With interest rates over the next few months only modestly higher than current
levels and inflation pretty much in check, the U.S. equity market continues to
represent a positive environment. Accordingly, despite the recent volatile
market, your Funds continue to be managed with an essentially long term view,
based on opportunities for exceptional corporate development and growth.

INVESTMENT OBJECTIVES

The Trust is a no-load, open-end non-diversified management investment 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.

- 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

8
<PAGE>

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 $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

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 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,

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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 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.

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

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.

OPTION TRANSACTIONS

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

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<PAGE>

option at the exercise 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.

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

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 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.

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

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").

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

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Although each of the Funds generally seeks to invest for the long term, they
retain the right to sell securities regardless of how long they have been held.
The investment adviser expects the portfolio turnover of each of the Funds will
not exceed 75%.

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 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

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INVESTMENT ADVISER

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.

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.

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 has been President of MAC since September 1983 and is
Chairman of the Board of Trustees of the Trust. 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.

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. Certain officers and trustees of the Trust
are affiliated with MAC.

ADMINISTRATIVE SERVICES

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<PAGE>

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 the investment
advisory fee and any extraordinary legal expenses or interest expenses, there
are no additional expenses to the Funds. Certain officers and trustees of the
Trust are affiliated with the Administrator.

Certain of these administrative services are provided by Rushmore Trust and
Savings, FSB ("RTS"), 4922 Fairmont Avenue, Bethesda, Maryland 20814, a
majority-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.

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 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.

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.

HOW TO INVEST IN THE TRUST

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.

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<PAGE>

The Administrator pays for the distribution of the Funds' shares.

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: Complete 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.

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 CANCELED BECAUSE YOUR WIRE TRANSFER IS NOT RECEIVED, YOU MAY BE
LIABLE FOR ANY LOSS THE FUND MAY INCUR.

Purchase orders which do not specify the Fund in which an investment is to be
made will be invested in the Utility Income Fund.

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 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.

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

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<PAGE>

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.

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.
EXCHANGES

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, 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.

Telephone exchange privileges may be terminated or modified by the Trust upon 60
days notice to all shareholders of the Funds.

TRANSACTION CHARGES

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<PAGE>

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.

TAX-SHELTERED RETIREMENT PLANS

Tax-sheltered retirement plans of the following types will be available to
investors:

Individual Retirement Accounts (IRAs)
Defined Contribution Plans
(Profit-Sharing Plans)
Defined Contribution Plans
(Money Purchase Plans)
Section 401(k) Plans
Section 403(b) Plans

Additional information regarding these accounts may be obtained by contacting
the Trust.

DISTRIBUTIONS

All dividends and capital gain distributions 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

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 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

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<PAGE>

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.

TAXES

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 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.

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<PAGE>

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, 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.

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 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.

19
<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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transaction Charges. . . . . . . . . . . . . . . . . . . . . . . . .
Tax-Sheltered Retirement Plans . . . . . . . . . . . . . . . . . . .
Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Asset Value. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Organization of the Trust. . . . . . . . . . . . . . . . . . . . . . .

[ART]
CAPPIELLO
RUSHMORE FUNDS

PROSPECTUS

Utility Income Fund
Growth Fund
Emerging Growth Fund

November 1, 1996

20
<PAGE>

- --------------------------------------------------------------------------------

CAPPIELLO-RUSHMORE TRUST
GOLD FUND
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 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.

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
November 1, 1996, containing additional information about the Fund, has been
filed with the Securities and Exchange Commission and is incorporated herein by
reference. A copy of the statement may be obtained, without charge, by writing
or telephoning the Trust.

The date of this Prospectus is November 1, 1996.

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>

FEE TABLE

The following table illustrates all expenses and fees that a shareholder of the
Fund will incur:

SHAREHOLDER TRANSACTION EXPENSES

Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fees None
Monthly Account Fee (accounts under $500) $5.00

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)

Management Fees 0.70%
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.

2
<PAGE>

CAPPIELLO-RUSHMORE TRUST
FINANCIAL HIGHLIGHTS
Audited

GOLD FUND

For the Year For the Period
Ended June 30, Ended June 30,
----------------------- --------------
<S> <C> <C> <C>
1996 1995 1994*

PER SHARE OPERATING PERFORMANCE:
Net Asset Value--Beginning of Year . . . . . . . . . . . . . . . . . . . $ 9.89 $ 9.52 $ 10.00
-------- ------- -------
Income from Investment Operations:
Net Investment Loss. . . . . . . . . . . . . . . . . . . . . . . . . . (0.060) (0.047) (0.008)
Net Realized and Unrealized Gains
(Losses) on Securities . . . . . . . . . . . . . . . . . . . . . . . 0.100 0.417 (0.472)
-------- ------- -------
Total from Investment Operations . . . . . . . . . . . . . . . . . . 0.040 0.370 (0.480)
-------- ------- -------

Distributions to Shareholders:
From Net Investment Income . . . . . . . . . . . . . . . . . . . . . . -- -- --
From Net Realized Capital Gains. . . . . . . . . . . . . . . . . . . . -- -- --
-------- ------- -------
Total Distributions to Shareholders. . . . . . . . . . . . . . . . . -- -- --
-------- ------- -------
Net Increase (Decrease) in Net Asset Value . . . . . . . . . . . . . . . 0.04 0.37 (0.48)
-------- ------- -------
Net Asset Value--End of Year . . . . . . . . . . . . . . . . . . . . . . $ 9.93 $ 9.89 $ 9.52
-------- ------- -------
-------- ------- -------

TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . . . . . . . . 0.40% 3.89% (4.80)%(A)

RATIOS TO AVERAGE NET ASSETS:
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.70% 1.70% 1.68%(B)
Net Investment Loss. . . . . . . . . . . . . . . . . . . . . . . . . . . (0.59)% (0.51)% (0.25)%(B)

SUPPLEMENTARY DATA:
Portfolio Turnover Rate. . . . . . . . . . . . . . . . . . . . . . . . . 59.06% 51.23% 22.85%
Net Assets at End of Year (000s omitted) . . . . . . . . . . . . . . . . $6,122 $6,796 $6,395
Number of Shares Outstanding at End of
Year (000s omitted). . . . . . . . . . . . . . . . . . . . . . . . . . 616 687 672
</TABLE>

(A) TOTAL INVESTMENT RETURN FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(B) ANNUALIZED.

* 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.

<PAGE>

CAPPIELLO-RUSHMORE TRUST
TOTAL RETURN COMPARISON

GOLD FUND S&P 500 PHILADELPHIA EXCHANGE
GOLD & SILVER INDEX (XAU)

3/07/94 $10,000 $10,000 $10,000
6/30/94 $9,520 $9,605 $9,560
6/30/95 $9,890 $12,109 $9,970
6/30/96 $9,930 $15,269 $10,266

PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.

CAPPIELLO-RUSHMORE TRUST
AVERAGE ANNUAL TOTAL RETURN
Year Ended June 30, 1996

Since Inception
One Year 3/7/94
-------- ---------------

Cappiello-Rushmore Gold Fund 0.40% -0.30%

4
<PAGE>

MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE

The Gold 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's performance of
+0.40% for the year, while disappointing, is reflective of the flat price of the
metal, itself. Gold continues to be a hedge against loss of purchasing power
through inflation or devaluation of the dollar as well as an insurance policy
against disasters, both financial, diplomatic and political. The demand for
gold and other precious metals is expected to be positive over the next twelve
months and should be translated into higher prices for mining company stocks.
Our investment philosophy continues to center on those companies who have the
capacity to increase their profitability per ounce of gold production and to
expand the amount of gold produced.

INVESTMENT OBJECTIVE AND POLICIES

The Cappiello-Rushmore Trust is a no-load, open-end non-diversified management
investment 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.

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.

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.

5
<PAGE>

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.

SPECIALIZED INVESTMENT PRACTICES AND RISKS

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 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.

INVESTMENT IN FOREIGN SECURITIES

The Fund has no limit on investment in securities of foreign issuers. However,
the Fund may not invest more than 20% of its total assets in such securities not
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.

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
the 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 Fund, 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 Fund's 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 the Fund.

6
<PAGE>

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 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.

INVESTMENTS IN FUTURES CONTRACTS AND OPTIONS

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 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.

7
<PAGE>

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 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.

8
<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.

The Fund will enter into securities lending and repurchase transactions only
with parties who meet credit worthiness standards approved by the Trust's Board
of Trustees. In the event of a default or bankruptcy by a seller or borrower,
the Fund will promptly liquidate collateral. However, the exercise of the
Fund's right to liquidate such collateral could involve certain costs or delays
and, to the extent that proceeds from any sale of collateral on a default of the
seller or borrower were less than the seller's or borrower's obligation, the
Fund could suffer a loss.

SHORT SALES

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").

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.

9
<PAGE>

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, money market funds, 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

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

10
<PAGE>

INVESTMENT ADVISER

The Fund 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 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.

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.

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 has been President of MAC since September 1983 and is
Chairman of the Board of Trustees of the Trust. 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 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.

ADMINISTRATIVE SERVICES

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<PAGE>

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 the investment advisory
fee and any extraordinary legal expenses or interest expenses, there are no
additional expenses to the Fund. Certain officers and trustees of the Trust are
affiliated with the Administrator.

PERFORMANCE DATA

From time to time, the Fund may advertise its yield which reflects the rate of
income that the 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. 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.

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.

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
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.

12
<PAGE>

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: Complete 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

BY BANK WIRE: Request a wire transfer to:

Rushmore Trust and Savings, 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.

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 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)

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.

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

13
<PAGE>

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 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

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, 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 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.

TRANSACTION CHARGES

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

14
<PAGE>

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.

TAX-SHELTERED RETIREMENT PLANS

Tax-sheltered retirement plans of the following types will be available to
investors:

Individual Retirement Accounts (IRAs)
Defined Contribution Plans (Profit-Sharing Plans)
Defined Contribution Plans
(Money Purchase Plans)
Section 401(k) Plans
Section 403(b) Plans
Additional information regarding these accounts may be obtained by contacting
the Trust.

DIVIDENDS AND DISTRIBUTIONS

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.

15
<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

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.

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.

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

16
<PAGE>

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, 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.

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.

17
<PAGE>

CONTENTS

PAGE

Fee Table. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . .
Management's Discussion of
Fund Performance . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Objective and Policies. . . . . . . . . . . . . . . . . .
Specialized Investment Practices
and Risks. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transaction Charges. . . . . . . . . . . . . . . . . . . . . . . . .
Tax-Sheltered Retirement Plans . . . . . . . . . . . . . . . . . . .
Dividends and Distributions. . . . . . . . . . . . . . . . . . . . .
Net Asset Value. . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Organization of the Trust. . . . . . . . . . . . . . . . . . . . . .

[ART]
CAPPIELLO
RUSHMORE FUNDS

PROSPECTUS

Gold Fund

November 1, 1996

18
<PAGE>

PART B
<PAGE>

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 November 1, 1996.
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 November 1, 1996.

<PAGE>

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
----------- ---------- ----------

Investment Objectives and Policies
Investment Limitations
Redemption 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

2
<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.

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 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

3
<PAGE>

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.

A Fund will enter into securities lending and repurchase transactions only with
parties who meet credit worthiness standards approved by the Fund's Board of
Trustees. In the event of a default or bankruptcy by a seller or borrower, the
Fund will promptly liquidate collateral. However, the exercise of the Fund's
right to liquidate such collateral could involve certain costs or delays and, to
the extent that proceeds from any sale of collateral on a default of the seller
or borrower were less than the seller's or borrower's obligation, the Fund could
suffer a loss.

OPTIONS TRANSACTIONS

PURCHASING CALL AND PUT OPTIONS. The 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 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

4
<PAGE>

an option covering the same underlying security and having the same exercise
price and expiration date the one previously sold. Once an option has 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 Fund, other than the Gold Fund, 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"). The
Gold Fund has no limit on investment in securities of foreign issuers but may
not invest more than 20% of its total assets in such securities not 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.

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.

5
<PAGE>

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 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 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,

6
<PAGE>

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 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

7
<PAGE>

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 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;

8
<PAGE>

5. purchase or acquire the security of another investment company if
immediately after such purchase or acquisition more than three percent of
the total outstanding stock of such investment company is owned by the Fund
and all affiliated persons of the Fund unless such purchase or acquisition
is otherwise permitted under the Investment Company Act of 1940;

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. purchase restricted securities if the value of its aggregate investment
will exceed 10% of its total assets.

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

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.

INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)

Regular, "rollover" and Simplified Employee Pension (SEP) IRA accounts are
available. Regular IRA contributions may be wholly or partially deductible for
Federal income tax purposes depending on the investor's adjusted gross income
and whether the investor is a participant in a employer sponsored retirement
plan.

PENSION/PROFIT SHARING PLANS

9
<PAGE>

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.

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.

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.

*Frank A. Cappiello, 70 - 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, 60 - 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 312, Ironia, NJ
07845

*Daniel L. O'Connor, 54 - Trustee. President and Treasurer. General Partner of
Money Management Associates, a registered investment adviser, since 1975.
President of Rushmore Trust and Savings, FSB since 1989. Address: 1001 Grand
Isle Way, Palm Beach Gardens, FL 33418.

Bruce C. Ellis, 51 - Trustee. Vice President, LottoPhone, Inc., a telephone
state lottery service, since September 1991. Vice President, Shoppers' Express,
December 1987 - December 1991. Address: 7108 Heathwood Court, Bethesda, MD
20817

Dr. Peter B. Petersen, 64 - Trustee. Professor of Management and Organization
Theory, Johns Hopkins University since 1979. Address: Johns Hopkins University,
Division of Business and Management, One Charles Plaza, Baltimore, MD
21201-3933.

Leo Seybold, 82 - Trustee. Retired 1988. Address: 5804 Rockmere Drive,
Bethesda, MD 20816.

David H. Andrews, CFA, 67 - Vice President. Vice Chairman of McCullough,
Andrews & Cappiello, Inc. since 1991. Address 101 California Street, San
Francisco, CA 94111.

Robert F. McCullough, CPA, 64 - Vice President. Chairman of McCullough, Andrews
& Cappiello, Inc. since 1983. Address: 101 California Street, San Francisco, CA
94111.

10
<PAGE>

Timothy N. Coakley, CPA, 29 - Vice President and Controller since 1994. Chief
Financial Officer, Rushmore Trust and Savings, FSB since 1995. Formerly Audit
Manager, Deloitte & Touche LLP until 1994. Address: 4922 Fairmont Avenue,
Bethesda, MD 20814.

Stephenie E. Adams, 27 - 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. Address: 4922
Fairmont Avenue, Bethesda, MD 20814.

* INDICATES INTERESTED PERSON

PRINCIPAL HOLDERS OF SECURITIES

On October 4, 1996, there were outstanding 1,227,544, 1,673,651, 2,301,153, and
477,799 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 46.4%, 29.9%, 36.3%, and 14.6% of the
outstanding shares of the Utility Income Fund, the Growth Fund, the Emerging
Growth Fund, and the Gold Fund, respectively. National Automobile Dealers
Association, McLean, Virginia, owned 14.2% of the outstanding shares of the
Growth Fund. National Financial Services Corporation, New York, New York, owned
for the benefit of others, 4.9% and 5.7% of the outstanding shares of the Growth
Fund and Emerging Growth Fund, respectively. Donaldson, Lufkin and Jenrette,
Jersey City, New Jersey owned for the benefit of others 5.0% of the outstanding
shares of the Emerging Growth Fund. Alan Roth, Rancho Santa Fe, California,
beneficially owned 8.3% of the outstanding shares of the Gold Fund. Harold
Cleaveland, Jr., Houston, Texas owned of record 7.9% of the outstanding shares
of the Gold Fund. Officers and Trustees of the Trust, as a group, own less than
1% of the shares outstanding.

CALCULATION OF RETURN QUOTATIONS

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:

n
P (1+T) = 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 annual compounded rates of

11
<PAGE>

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, 1996, assuming the reinvestment of all dividends and distributions, for
the Growth Fund, Emerging Growth Fund, Utility Income Fund, and Gold Fund were
22.06%, 14.36%, 20.60%, and 0.40%, 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 16.88%,
15.84%, and 6.51%, respectively, for the period commencing October 6, 1992 and
ending June 30, 1996, and for the Gold Fund was -0.30% for the period commencing
March 7, 1994 and ending June 30, 1996.

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:

6
YIELD = 2[(a-b/cd+1) -1]

Where:a = dividends and interest earned during the period;

b =expenses accrued for the period (net of reimbursements);

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.

INVESTMENT ADVISORY AND
OTHER SERVICES
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

12
<PAGE>

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,
1996, 1995, and 1994, the Funds paid the following investment advisory fees to
MAC:

1996 1995 1994
---- ---- ----

Growth Fund $ 137,107 $ 67,000 $ 32,268
Emerging Growth Fund $ 253,800 $ 126,202 $ 67,592
Utility Income Fund $ 61,055 $ 55,310 $ 36,042
Gold Fund $ 53,459 $ 44,448 $ 13,482

The Trust has contracted with Money Management Associates ("Administrator"),
1001 Grand Isle Way, Palm Beach Gardens, Florida 33418, 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, 1996, 1995, and 1994, the Funds paid the following administrative
services:

1996 1995 1994
---- ---- ----

Growth Fund $ 274,215 $ 134,001 $ 64,535
Emerging Growth Fund $ 507,600 $ 252,403 $ 135,183
Utility Income Fund $ 122,110 $ 110,619 $ 72,084
Gold Fund $ 76,369 $ 63,496 $ 19,260

The Administrator is responsible for all costs of the Funds except for the
investment advisory fee, extraordinary legal expenses and interest. The
Administrator pays 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.

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.

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

13
<PAGE>

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

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 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

14
<PAGE>

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 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 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

15
<PAGE>

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 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.

AUDITORS AND CUSTODIAN

16
<PAGE>

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.

FINANCIAL STATEMENTS

The Financial Statements (audited) of the Trust for the fiscal year ended June
30, 1996, are incorporated by reference from the Trust's 1996 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.

17
<PAGE>

CAPPIELLO-
RUSHMORE
TRUST
UTILITY INCOME FUND
GROWTH FUND
EMERGING GROWTH FUND
GOLD FUND
- --------------------------------------------------------------------------------
ANNUAL REPORT
JUNE 30, 1996

[LOGO]

<PAGE>

- --------------------------------------------------------------------------------
ANNUAL REPORT, JUNE 30, 1996
[LOGO]
CAPPIELLO-RUSHMORE TRUST
4922 FAIRMONT AVENUE, BETHESDA, MD 20814
(800) 622-1386 (301) 657-1510

- --------------------------------------------------------------------------------

Dear Fellow Investor:

This is the Cappiello-Rushmore Trust's fourth annual report. The Funds'
performances for the fiscal year ended June 30, 1996 were as follows:
- --------------------------------------------------------------------------------

TOTAL RETURN COMPARISON
(AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED JUNE 30, 1996)

Since
One Year Inception*
-------- ----------
Cappiello-Rushmore Emerging Growth Fund 14.36% 15.84 %
Cappiello-Rushmore Growth Fund 22.06% 16.88 %
Cappiello-Rushmore Utility Income Fund 20.60% 6.51 %
Standard & Poor's 500 Index 26.10% 17.32 %
Cappiello-Rushmore Gold Fund 0.40% (0.30)%
Philadelphia Exchange Gold & Silver Index (XAU) 2.77% 13.19 %

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 EMERGING GROWTH FUND, GROWTH FUND AND
UTILITY INCOME FUND; GOLD FUND INCEPTION: MARCH 7, 1994
- --------------------------------------------------------------------------------

SUMMARY

Since early January, stock market momentum, measured by the popular
averages (Standard & Poor's 500 Stock Index and the Dow Jones Industrials)
slowed from its hectic pace of last Fall, culminating in a steady decline in
June and a sharp and sudden correction in July. Beneath the big-capitalization
stock surge of the past twelve months has been a bear market in the technology
and health care stocks, particularly the smaller companies on NASDAQ. Many of
the big gains in technology stocks achieved in the summer and early fall of 1995
(most notably the semi-conductors and computer equipment), dissipated in 1996.

The July correction moderated if not eliminated two of the market's
excesses: the high flying speculation stocks (chiefly technology and initial
public offerings) and the almost universal bullishness on the part of portfolio
managers. In this most recent recovery from the July lows we have seen financial
stocks and other interest sensitive issues outperforming the averages,
reflecting a more positive attitude toward interest rates. This has been
accompanied by growing bearish sentiment (a great contrary indicator). Declining
bond yields, a necessary element for improving stock prices, indicates
conviction that the economy is slowing from its surging pace of the second
quarter. Earnings disappointments such as Motorola and Hewlett Packard, which
helped set off the July decline, have now been replaced by earnings surprises
such as Microsoft which bodes well for third quarter earnings when reported in
early October. While earnings surprises may be past history, inflation is not.
Flat to falling commodity prices reflect no imminent price threat, but the
shifting political agenda regarding the economy from deficit reduction to growth
stimulation on the part of both Democrats and Republicans poses a longer term
threat to the economy.

- --------------------------------------------------------------------------------

<PAGE>

CAPPIELLO-RUSHMORE EMERGING GROWTH FUND

The Fund enjoyed another year of double digit growth with a return of 14%.
While not comparable to the sterling returns of 1995, the performance is
satisfactory considering the frantic declines of high tech stocks during the
year. The technology sector, after several years of fast growth, underwent a
severe correction of nearly a year. Earlier, we had adopted a more cautious
stance toward this group reducing our overweighted positions in micro-chip
producers and software manufacturers. However, our decreased exposure to high
tech stocks, (software and computer equipment) last Fall was not nearly enough,
in retrospect. Nevertheless, the shift to other sectors was significant enough,
particularly in the consumer non-durables and health care area, to show some
impressive performances. Among the better performing stocks in the portfolio as
of June 30, 1996 were:

National Media Corp. +88%
KV Pharmaceutical Co., Class A +73%
Shared Medical Systems Corp. +60%
National Data Corp. +48%
Transaction Network Services, Inc. +34%

Also indicative of shifts in the portfolio during the year were purchases
in energy-related stocks. (Reading & Bates Corp. up 97%, Mesa, Inc. up 64%, Nice
Systems, Ltd. (ADR) up 90% and Hub Group, Inc. Class A up 46%.)

With our holdings in technology reduced (but still substantial), added to
our exposure in consumer non-durables and smaller capitalization companies in
sectors such as health care services, retail, and marketing, we believe we are
well positioned to take advantage of an evolving, yet highly selective ongoing
bull market.

We are optimistic about the Fund's prospects for the next twelve months.
Many of our holdings sell at attractive valuations, relative to their growth.
While a number of institutional favorite NASDAQ issues, especially in the
technology sector, have moved up in price the past few weeks, the large majority
of stocks are still closer to their yearly lows than their highs.

CAPPIELLO-RUSHMORE GROWTH FUND

The Growth Fund maintained its larger capitalization focus and enjoyed a
return of 22% for the year. Our emphasis remains technology (although less
weighted than in 1995), consumer non-durables and "quality" names in energy,
financial service as well as sectors such as health care, retailing, and
marketing. Health care stocks represented by Shared Medical Systems Corp. and
Tenet Healthcare Corp. occupy major positions in the portfolio as we seek to
capitalize on the accelerating movement of the U.S. health care system to
managed care.

The retailing and marketing business presents a restructuring opportunity.
This sector has been plagued by over-capacity for some years. Currently,
capacity is being restrained; however, with costs managed more effectively and
modest revenue growth, the result has been stronger earnings gains in the case
of stocks such as Federated Department Stores, Inc. WTS C. Other stocks in this
area represented in the portfolio are Albertsons, Inc., National Media Corp.,
and K-Mart Corp.

Among the best performing stocks held in the portfolio as of the end of the
year were:

Federated Department Stores, Inc. Warrants "C" +100%
Reynolds & Reynolds Co. + 81%
Shared Medical Systems Corp. + 60%
Student Loan Marketing Association + 58%
Coca-Cola Co. + 53%

<PAGE>

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 that the Fund's total return (income plus
appreciation) was more than 20% for the year ended June 30, 1996. Our exposure
to the telephone sector has increased, while our exposure to electric and gas
utilities has declined.

CAPPIELLO-RUSHMORE GOLD FUND

The Gold 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's performance of
+.40% for the year, while disappointing, is reflective of the flat price of the
metal, itself. Gold continues to be a hedge against loss of purchasing power
through inflation or devaluation of the dollar as well as an insurance policy
against disasters, both financial, diplomatic and political. The demand for gold
and other precious metals is expected to be positive over the next twelve months
and should be translated into higher prices for mining company stocks. Our
investment philosophy continues to center on those companies who have the
capacity to increase their profitability per ounce of gold production and to
expand the amount of gold produced.

OUTLOOK FOR 1996-1997

Our expectations for the next twelve months include an economy growing at a
rate between 2 1/2 and 3% measured in terms of Gross Domestic Product. Part of
the growth is based on an optimistic view of consumer spending behavior.
Historically consumer spending patterns are more determined by changes in income
than any other factor, and income continues to rise. We also see improvement in
the manufacturing sector. While capital spending will not grow at 1995 rates,
the better-than-expected improvement in second quarter profits indicates that
cash flow remains healthy, which means investment in plant and equipment will
increase. Finally, the economies of our major trading partners are either
beginning to recover, like Japan and Canada; or bottoming out, as in Mexico and
Europe. Consequently, a better trade balance should also be part of the growth
picture.

With interest rates over the next few months only modestly higher than
current levels and inflation pretty much in check, the U.S. equity market
continues to represent a positive environment. Accordingly, despite the recent
volatile market, your Funds continue to be managed with an essentially long term
view, based on opportunities for exceptional corporate development and growth.

As always, thank you for your continued support.

/s/ Frank A. Cappiello

Frank A. Cappiello
Chairman, Cappiello-Rushmore Trust
August 13, 1996

<PAGE>

JUNE 30, 1996 CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS

UTILITY INCOME FUND
- --------------------------------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- --------------------------------------------------------------------------------
COMMON STOCKS

GAS & ELECTRIC -- 68.70%
15,000 Allegheny Power Systems, Inc. $ 463,125
27,000 Central and South West Corp. 783,000
20,000 CMS Energy Corp. 617,500
23,500 Detroit Edison Co. 725,562
20,000 Interstate Power Co. 642,500
40,000 Long Island Lighting Co. 670,000
20,000 Potomac Electric Power Co. 530,000
20,000 Public Service Co. of Colorado 735,000
26,000 Public Service Enterprise Group, Inc. 711,750
28,000 Southern Co. 689,500
40,000 TNP Enterprises, Inc. 1,135,000
17,000 Union Electric Co. 684,250
25,000 United Illuminating Co. 934,375
30,000 Washington Water Power Co. 558,750
-----------
9,880,312
-----------
NATURAL GAS DISTRIBUTION -- 5.36%
35,000 Washington Gas Light Co. 770,000
-----------
TELEPHONE -- 17.13%
25,000 Alltel Corp. 768,750
18,000 Nynex Corp. 855,000
20,000 Southern New England Telecommunications Corp. 840,000
-----------
2,463,750
-----------
TOTAL COMMON STOCKS -- 91.19%
(COST $11,239,826) 13,114,062
-----------
CONVERTIBLE PREFERRED -- 5.85%
17,900 Sea Containers, Ltd. Conv. Pfd. $4.00 (Cost $806,512) 841,300
-----------
MUTUAL FUNDS -- 2.96%
425,669 Fund for Government Investors
(Cost $425,669) 425,669
-----------
TOTAL INVESTMENTS -- 100.00%
(COST $12,472,007) $14,381,031
===========

GROWTH FUND
- --------------------------------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- --------------------------------------------------------------------------------
COMMON STOCKS
BEVERAGES -- SOFT DRINKS -- 3.08%
20,000 Coca-Cola Co. $ 977,500
-----------
COMPUTER AND BUSINESS EQUIPMENT -- 7.12%
30,000 Sun Microsystems, Inc.* 1,766,250
40,000 Tandem Computers, Inc.* 495,000
-----------
2,261,250
-----------
COMPUTER SOFTWARE INFORMATION PROCESSING -- 13.89%
149,900 Amdahl Corp.* 1,611,425
20,000 Reynolds & Reynolds Co. 1,065,000
27,000 Shared Medical Systems Corp. 1,734,750
-----------
4,411,175
-----------
CONSUMER ELECTRONICS -- 0.78%
5,000 Harman International Industries, Inc. 246,250
-----------
DIVERSIFIED ELECTRONICS -- 6.24%
30,000 Comsat Corp. 780,000
20,000 GM Hughes Electronics Corp. 1,202,500
-----------
1,982,500
-----------
FINANCIAL -- 13.11%
15,000 American Express Co. 669,375
50,000 Charles Schwab Corp. 1,225,000
19,000 Franklin Resources, Inc. 1,159,000
15,000 Student Loan Marketing Association 1,110,000
-----------
4,163,375
-----------
HEALTHCARE -- 13.17%
20,000 CR Bard, Inc. 680,000
30,000 Foundation Health Corp.* 1,076,250
30,000 Health Systems International, Inc.* 813,750
35,000 Horizon/CMS Healthcare* 450,625
30,000 I-STAT Corp.* 566,250
27,900 Tenet Healthcare Corp.* 596,363
-----------
4,183,238
-----------
MERCHANDISING -- 13.76%
25,000 Albertsons, Inc. 1,034,375
150,000 K-Mart Corp.* 1,856,250
84,000 National Media Corp.* 1,480,500
-----------
4,371,125
-----------

*NON-INCOME PRODUCING.

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>

JUNE 30, 1996 CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED)

GROWTH FUND (CONTINUED)
- --------------------------------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)

OIL AND GAS -- 2.41%
23,700 Nuevo Energy Co.* $ 764,325
-----------
OIL AND GAS SERVICES -- 4.84%
19,400 Ensco International, Inc.* 630,500
50,000 Varco International, Inc.* 906,250
-----------
1,536,750
-----------
SEMICONDUCTORS/COMPONENTS -- 2.82%
20,000 LSI Logic Corp.* 520,000
20,000 Silicon Valley Group, Inc.* 375,000
-----------
895,000
-----------
TRANSPORTATION -- 9.97%
40,487 KLM Royal Dutch Airlines 1,285,462
35,250 Pittston Burlington Group 762,281
60,000 Stolt Nielsen (ADR), Rep. B 1,117,500
-----------
3,165,243
-----------
TOTAL COMMON STOCKS -- 91.19%
(COST $23,151,990) 28,957,731
-----------
WARRANTS -- 5.41%
125,000 Federated Department Stores, Inc. WTS C*
(Cost $734,513) 1,718,750
-----------
MUTUAL FUNDS -- 3.40%
1,077,798 Fund for Government Investors
(Cost $1,077,798) 1,077,798
-----------
TOTAL INVESTMENTS -- 100.00%
(COST $24,964,301) $31,754,279
===========

EMERGING GROWTH FUND
- --------------------------------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- --------------------------------------------------------------------------------
COMMON STOCKS

COMMUNICATIONS PRODUCTS -- 6.96%
15,000 Madge Networks NV* $ 217,500
43,000 Netstar, Inc.* 849,250
80,000 Nice Systems, Ltd. (ADR)* 1,520,000
26,500 Remec, Inc.* 470,375
15,000 Voice Control Systems, Inc.* 136,875
-----------
3,194,000
-----------
COMPUTER AND BUSINESS EQUIPMENT -- 2.02%
70,000 Multiple Zones International, Inc.* 927,500
-----------
COMPUTER SOFTWARE -- 10.49%
15,000 Analogy, Inc.* 108,750
74,000 Dataworks Corp.* 1,313,500
15,000 EIS International, Inc.* 382,500
57,800 National Data Corp. 1,979,650
30,000 Transaction Network Services, Inc.* 645,000
42,000 Vmark Software, Inc.* 383,250
-----------
4,812,650
-----------
COMPUTER SOFTWARE INFORMATION PROCESSING -- 4.90%
35,000 Shared Medical Systems Corp. 2,248,750
-----------
ELECTRONICS -- 1.66%
43,000 Mylex Corp.* 763,250
-----------
FINANCIAL -- 0.28%
106,500 Search Capital Group, Inc.* 126,469
-----------
FOOD PROCESSING -- 0.73%
20,000 Unimark Group, Inc.* 332,500
-----------
HEALTHCARE PRODUCTS -- 4.75%
50,500 Avigen, Inc.* 353,500
50,000 I-STAT Corp.* 943,750
53,000 KV Pharmaceutical Co., Class A* 755,250
17,000 Lifequest Medical, Inc.* 36,125
10,000 Virus Research Institute, Inc.* 91,250
-----------
2,179,875
-----------
HEALTHCARE SERVICES -- 3.85%
75,000 Cardiovascular Dynamics, Inc.* 918,750
100,000 Universal Hospital Services, Inc.* 850,000
-----------
1,768,750
-----------

*NON-INCOME PRODUCING.
ADR -- AMERICAN DEPOSITORY RECEIPT

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>

JUNE 30, 1996 CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED)

EMERGING GROWTH FUND (CONTINUED)
- --------------------------------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)

LEISURE -- 2.94%
100,000 Ek Chor China Motorcycle Co., Ltd. $ 1,350,000
-----------
MANUFACTURING -- 2.39%
17,000 Furon Co. 420,750
33,500 Oxford Industries, Inc. 540,188
7,700 Simula, Inc.* 135,712
-----------
1,096,650
-----------
MERCHANDISING -- 21.58%
100,000 Charming Shoppes, Inc.* 706,250
300,000 Filenes Basement Corp.* 1,462,500
100,000 Intertan, Inc.* 575,000
206,000 National Media Corp.* 3,630,750
21,000 Phillips Van Heusen Corp. 267,750
385,000 Score Board, Inc. * 1,828,750
154,400 Service Merchandise Co., Inc.* 868,500
100,000 Topps Company, Inc.* 562,500
-----------
9,902,000
-----------
MISCELLANEOUS -- 4.00%
100,000 Lo-Jack Corp.* 1,125,000
20,000 Uniphase Corp. 710,000
-----------
1,835,000
-----------
OIL -- DOMESTIC & CRUDE -- 3.00%
250,000 Mesa, Inc.* 1,375,000
-----------
OIL AND GAS SERVICES -- 8.09%
100,000 Reading & Bates Corp.* 2,212,500
50,000 Weatherford Enterra, Inc.* 1,500,000
-----------
3,712,500
-----------
SERVICE -- 2.82%
140,000 Forensic Technologies International Corp.* 1,295,000
-----------
TELECOMMUNICATIONS -- 8.31%
30,000 Celeritek, Inc.* 330,000
8,000 Davox Corp.* 236,000
70,000 Hungarian Telephone & Cable Co.* 840,000
48,000 JPM Co.* 402,000
60,000 Metricom, Inc.* 945,000
50,000 Network Equipment Technologies, Inc.* 1,062,500
-----------
3,815,500
-----------

TRANSPORTATION -- 6.01%
25,000 Hub Group, Inc. Class A* $ 509,375
45,000 Pittston Burlington Group 973,125
86,000 World Airways, Inc.* 602,000
100,000 Worldcorp, Inc.* 675,000
-----------
2,759,500
-----------
TOTAL COMMON STOCKS -- 94.78%
(COST $38,193,565) 43,494,894
-----------
MUTUAL FUNDS -- 5.22%
2,395,721 Fund for Government Investors (Cost $2,395,721) 2,395,721
-----------
TOTAL INVESTMENTS -- 100.00%
(COST $40,589,286) $45,890,615
===========

*NON-INCOME PRODUCING.

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>

JUNE 30, 1996 CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (CONTINUED)

GOLD FUND
- --------------------------------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- --------------------------------------------------------------------------------
OMMON STOCKS

METALS AND MINING

DOMESTIC -- 47.12%
50,000 Amax Gold, Inc.* $ 275,000
40,000 Battle Mountain Gold Co. 290,000
15,000 Coeur D'Alene Mines Corp. 275,625
17,000 Homestake Mining Co. 291,125
5,000 Newmont Gold Co. 251,875
7,000 Newmont Mining Corp. 345,625
25,000 Pegasus Gold, Inc.* 306,250
25,000 Santa Fe Pacific Gold Corp. 353,125
15,000 Stillwater Mining Co.* 354,375
----------
2,743,000
----------
FOREIGN -- 48.90%
25,000 Agnico Eagle Mines, Ltd. 406,250
10,000 Barrick Gold Corp. 271,250
26,000 Cambior, Inc. 347,750
8,000 De Beers Consolidated Mines (ADR) 270,000
40,000 Kinross Gold Corp.* 300,000
60,000 Miramar Mining Corp.* 330,000
11,000 Placer Dome, Inc. 262,625
100,000 Royal Oak Mines, Inc.* 368,750
40,000 TVX Gold, Inc.* 290,000
----------
2,846,625
----------
TOTAL COMMON STOCKS -- 96.02%
(COST $5,236,445) 5,589,625
----------
MUTUAL FUNDS -- 3.98%
231,433 Fund for Government Investors (Cost $231,433) 231,433
----------
TOTAL INVESTMENTS -- 100.00%
(COST $5,467,878) $5,821,058
==========

*NON-INCOME PRODUCING.
ADR -- AMERICAN DEPOSITORY RECEIPT

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>

JUNE 30, 1996 CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
UTILITY EMERGING
INCOME FUND GROWTH FUND GROWTH FUND GOLD FUND
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Securities at Value (Note 1, see portfolios
for cost information). . . . . . . . . . . . $14,381,031 $31,754,279 $45,890,615 $ 5,821,058
Dividends Receivable . . . . . . . . . . . . . 82,403 10,260 7,350 --
Interest Receivable. . . . . . . . . . . . . . 1,034 5,449 5,599 1,359
Receivable for Securities Sold . . . . . . . . 259,466 -- 700,117 260,606
Receivable for Shares Sold . . . . . . . . . . 428,918 79,021 87,305 48,838
----------- ----------- ----------- -----------
Total Assets . . . . . . . . . . . . . . . . 15,152,852 31,849,009 46,690,986 6,131,861
----------- ----------- ----------- -----------
LIABILITIES
Dividends Payable. . . . . . . . . . . . . . . 17,383 -- -- --
Investment Advisory Fee Payable. . . . . . . . 4,052 13,255 18,982 3,904
Administration Fee Payable . . . . . . . . . . 8,104 26,511 37,964 5,577
Liability for Shares Redeemed. . . . . . . . . 17,184 32,327 391,670 --
Liability for Securities Purchased . . . . . . -- -- 1,256,875 --
----------- ----------- ----------- -----------
Total Liabilities. . . . . . . . . . . . . . 46,723 72,093 1,705,491 9,481
----------- ----------- ----------- -----------
NET ASSETS . . . . . . . . . . . . . . . . . . . $15,106,129 $31,776,916 $44,985,495 $ 6,122,380
=========== =========== =========== ===========
SHARES OUTSTANDING . . . . . . . . . . . . . . . 1,424,777 1,778,484 2,647,080 616,426
=========== =========== =========== ===========
NET ASSET VALUE PER SHARE. . . . . . . . . . . . $10.60 $17.87 $16.99 $9.93
=========== =========== =========== ===========

- ---------------------------------------------------------------------------------------------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>

FOR THE YEAR ENDED JUNE 30, 1996 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 . . . . . . . . . . . . . . . . . . . $ 59,165 $ 70,296 $ 171,003 $ 39,042
Dividends. . . . . . . . . . . . . . . . . . . 964,420 227,318 91,865 46,017
---------- ---------- ----------- ---------
Total Investment Income. . . . . . . . . . . 1,023,585 297,614 262,868 85,059
---------- ---------- ----------- ---------
EXPENSES
Investment Advisory Fee (Note 2) . . . . . . . 61,055 137,107 253,800 53,459
Administrative Fee (Note 2). . . . . . . . . . 122,110 274,215 507,600 76,369
---------- ---------- ----------- ---------
Total Expenses . . . . . . . . . . . . . . . 183,165 411,322 761,400 129,828
---------- ---------- ----------- ---------
NET INVESTMENT INCOME (LOSS) 840,420 (113,708) (498,532) (44,769)
---------- ---------- ----------- ---------
Net Realized Gain on Investment Transactions . . 1,027,583 1,720,027 6,135,405 322,082
Net Change in Unrealized Appreciation
(Depreciation) of Investments. . . . . . . . . 1,280,283 3,405,681 (1,388,307) (185,846)
---------- ---------- ----------- ---------
NET GAIN ON INVESTMENTS. . . . . . . . . . . . . 2,307,866 5,125,708 4,747,098 136,236
---------- ---------- ----------- ---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS. . . . . . . . . . . $3,148,286 $5,012,000 $ 4,248,566 $ 91,467
========== ========== =========== =========

- ---------------------------------------------------------------------------------------------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>

CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
UTILITY
INCOME FUND GROWTH FUND
- -------------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED JUNE 30,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Income (Loss) . . . . . . . . . . . . . . . $ 840,420 $ 988,845 $ (113,708) $ 15,477
Net Realized Gains (Losses) on Investment Transactions . . 1,027,583 (1,427,789) 1,720,027 842,836
Net Change in Unrealized Appreciation of Investments . . . 1,280,283 2,715,291 3,405,681 3,175,447
------------ ------------ ------------ ------------
Net Increase in Net Assets Resulting from Operations . . 3,148,286 2,276,347 5,012,000 4,033,760
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income . . . . . . . . . . . . . . . . (839,386) (981,811) -- (18,530)
From Net Realized Gain on Investments. . . . . . . . . . . -- -- -- --
------------ ------------ ------------ ------------
Total Distributions to Shareholders. . . . . . . . . . . (839,386) (981,811) -- (18,530)
------------ ------------ ------------ ------------
FROM SHARE TRANSACTIONS
Net Proceeds from Sales of Shares. . . . . . . . . . . . . 22,326,670 37,117,411 36,733,251 22,155,069
Reinvestment of Distributions. . . . . . . . . . . . . . . 671,443 803,619 -- 11,598
Cost of Shares Redeemed. . . . . . . . . . . . . . . . . . (27,351,733) (31,181,674) (29,304,990) (16,837,874)
------------ ------------ ------------ ------------
Net Increase (Decrease) in Net Assets Resulting from
Share Transactions . . . . . . . . . . . . . . . . . . (4,353,620) 6,739,356 7,428,261 5,328,793
------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . (2,044,720) 8,033,892 12,440,261 9,344,023
NET ASSETS -- Beginning of Year. . . . . . . . . . . . . . . 17,150,849 9,116,957 19,336,655 9,992,632
------------ ------------ ------------ ------------
NET ASSETS -- End of Year. . . . . . . . . . . . . . . . . . $15,106,129 $17,150,849 $31,776,916 $19,336,655
============ ============ ============ ============
SHARES
Sold . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,216,170 4,159,987 2,234,071 1,788,616
Issued in Reinvestment of Distributions. . . . . . . . . . 64,781 90,906 -- 966
Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . (2,711,615) (3,481,616) (1,776,492) (1,372,991)
------------ ------------ ------------ ------------
Net Increase (Decrease) in Shares. . . . . . . . . . . . (430,664) 769,277 457,579 416,591
============ ============ ============ ============

- -------------------------------------------------------------------------------------------------------------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>

CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)

<TABLE>
<CAPTION>
EMERGING
GROWTH FUND GOLD FUND
- -------------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED JUNE 30,
1996 1995 1996 1995
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Loss. . . . . . . . . . . . . . . . . . . .$ (498,532) $ (153,941) $ (44,769) $ (32,385)
Net Realized Gains (Losses) on Investment Transactions . . 6,135,405 396,260 322,082 (265,143)
Net Change in Unrealized Appreciation
(Depreciation) of Investments. . . . . . . . . . . . . . (1,388,307) 9,024,889 (185,846) 680,092
------------- ------------ ------------ ------------
Net Increase in Net Assets Resulting from Operations . . . 4,248,566 9,267,208 91,467 382,564
------------- ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income . . . . . . . . . . . . . . . . -- -- -- --
From Net Realized Gain on Investments. . . . . . . . . . . (344,847) -- -- --
------------- ------------ ------------ ------------
Total Distributions to Shareholders. . . . . . . . . . . (344,847) -- -- --
------------- ------------ ------------ ------------
FROM SHARE TRANSACTIONS
Net Proceeds from Sales of Shares. . . . . . . . . . . . . 133,412,070 61,618,131 32,770,950 21,826,166
Reinvestment of Distributions. . . . . . . . . . . . . . . 291,283 -- -- --
Cost of Shares Redeemed. . . . . . . . . . . . . . . . . . (129,227,353) (52,412,473) (33,535,892) (21,808,138)
------------- ------------ ------------ ------------
Net Increase (Decrease) in Net Assets Resulting from
Share Transactions . . . . . . . . . . . . . . . . . . 4,476,000 9,205,658 (764,942) 18,028
------------- ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . 8,379,719 18,472,866 (673,475) 400,592
NET ASSETS -- Beginning of Year. . . . . . . . . . . . . . . 36,605,776 18,132,910 6,795,855 6,395,263
------------- ------------ ------------ ------------
NET ASSETS -- End of Year. . . . . . . . . . . . . . . . . .$ 44,985,495 $ 36,605,776 $ 6,122,380 $ 6,795,855
============= ============ ============ ============
SHARES
Sold . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,118,604 4,797,089 3,126,181 2,371,129
Issued in Reinvestment of Distributions. . . . . . . . . . 18,518 -- -- --
Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . (7,936,795) (4,092,329) (3,196,969) (2,355,424)
------------- ------------ ------------ ------------
Net Increase (Decrease) in Shares. . . . . . . . . . . . 200,327 704,760 (70,788) 15,705
============= ============ ============ ============
- -------------------------------------------------------------------------------------------------------------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>

CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
UTILITY INCOME FUND
- -------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1994 1993*
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of Year . . . . . . . . . . . . . . $ 9.24 $ 8.39 $ 10.82 $ 10.00
------- ------- ------- -------
Income from Investment Operations:
Net Investment Income. . . . . . . . . . . . . . . . . . . . . 0.489 0.555 0.527 0.255
Net Realized and Unrealized Gains (Losses) on Securities . . . 1.391 0.846 (2.421) 0.820
------- ------- ------- -------
Total from Investment Operations . . . . . . . . . . . . . . 1.880 1.401 (1.894) 1.075
------- ------- ------- -------
Distributions to Shareholders:
From Net Investment Income (0.520) (0.551) (0.525) (0.255)
From Net Realized Capital Gains. . . . . . . . . . . . . . . . -- -- (0.011) --
------- ------- ------- -------
Total Distributions to Shareholders. . . . . . . . . . . . . (0.520) (0.551) (0.536) (0.255)
------- ------- ------- -------
Net Increase (Decrease) in Net Asset Value . . . . . . . . . . . 1.36 0.85 (2.43) 0.82
------- ------- ------- -------
Net Asset Value -- End of Year . . . . . . . . . . . . . . . . . $ 10.60 $ 9.24 $ 8.39 $ 10.82
======= ======= ======= =======
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . . . . 20.60 % 16.62 % (18.18)% 9.98 %(A)

RATIOS TO AVERAGE NET ASSETS:
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.05 % 1.05 % 1.05 % 1.05 %(B)
Net Investment Income. . . . . . . . . . . . . . . . . . . . . . 4.82 % 6.26 % 5.21 % 3.31 %(B)

SUPPLEMENTARY DATA:
Portfolio Turnover Rate. . . . . . . . . . . . . . . . . . . . . 45.11 % 147.04 % 26.13 % 15.93 %
Net Assets at End of Year (000's omitted). . . . . . . . . . . . $15,106 $17,151 $9,117 $8,415
Number of Shares Outstanding at End of Year
(000's omitted). . . . . . . . . . . . . . . . . . . . . . . . 1,425 1,855 1,086 778

</TABLE>
- ----------

(A) Total Investment Return for periods of less than one year are not
annualized.
(B) Annualized.

- -------------------------------------------------------------------------------

*FROM COMMENCEMENT OF OPERATIONS OCTOBER 6, 1992.

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>

CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)

<TABLE>
<CAPTION>
GROWTH FUND
- -------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1994 1993*
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of Year . . . . . . . . . . . . . . $ 14.64 $ 11.05 $ 10.63 $ 10.00
------- ------- ------- -------
Income from Investment Operations:
Net Investment Income (Loss) . . . . . . . . . . . . . . . . . (0.069) 0.014 (0.021) 0.012
Net Realized and Unrealized Gains on Securities. . . . . . . . 3.299 3.593 0.444 0.620
------- ------- ------- -------
Total from Investment Operations . . . . . . . . . . . . . . 3.230 3.607 0.423 0.632
------- ------- ------- -------
Distributions to Shareholders:
From Net Investment Income . . . . . . . . . . . . . . . . . . -- (0.017) (0.003) (0.002)
From Net Realized Capital Gains. . . . . . . . . . . . . . . . -- -- -- --
------- ------- ------- -------
Total Distributions to Shareholders. . . . . . . . . . . . . -- (0.017) (0.003) (0.002)
------- ------- ------- -------
Net Increase in Net Asset Value. . . . . . . . . . . . . . . . . 3.23 3.59 0.42 0.63
------- ------- ------- -------
Net Asset Value -- End of Year . . . . . . . . . . . . . . . . . $ 17.87 $ 14.64 $ 11.05 $ 10.63
======= ======= ======= =======
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . . . . 22.06 % 32.65 % 3.99 % 6.34 %(A)

RATIOS TO AVERAGE NET ASSETS:
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.50 % 1.50 % 1.50 % 1.50 %(B)
Net Investment Income (Loss) . . . . . . . . . . . . . . . . . . (0.41)% 0.12 % (0.18)% 0.17 %(B)

SUPPLEMENTARY DATA:
Portfolio Turnover Rate. . . . . . . . . . . . . . . . . . . . . 74.50 % 70.89 % 119.03 % 21.13 %
Net Assets at End of Year (000's omitted). . . . . . . . . . . . $31,777 $19,337 $9,993 $3,165
Number of Shares Outstanding at End of Year
(000's omitted). . . . . . . . . . . . . . . . . . . . . . . . 1,778 1,321 904 298

</TABLE>

- --------
(A) Total Investment Return for periods of less than one year are not
annualized.
(B) Annualized.

- ---------------------------------------------------------------------
*FROM COMMENCEMENT OF OPERATIONS OCTOBER 6, 1992.

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>

CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)

<TABLE>
<CAPTION>
EMERGING GROWTH FUND
- -------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1994 1993*
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of Year . . . . . . . . . . . . . . $ 14.96 $ 10.41 $ 11.32 $ 10.00
------- ------- ------- -------
Income from Investment Operations:
Net Investment Loss. . . . . . . . . . . . . . . . . . . . . . (0.161) (0.075) (0.104) (0.050)
Net Realized and Unrealized Gains (Losses) on Securities . . . 2.300 4.625 (0.686) 1.377
------- ------- ------- -------
Total from Investment Operations . . . . . . . . . . . . . . 2.139 4.550 (0.790) 1.327
------- ------- ------- -------
Distributions to Shareholders:
From Net Investment Income . . . . . . . . . . . . . . . . . . -- -- -- --
From Net Realized Capital Gains. . . . . . . . . . . . . . . . (0.109) -- (0.120) (0.007)
------- ------- ------- -------
Total Distributions to Shareholders. . . . . . . . . . . . . (0.109) -- (0.120) (0.007)
------- ------- ------- -------
Net Increase (Decrease) in Net Asset Value . . . . . . . . . . . 2.03 4.55 (0.91) 1.32
------- ------- ------- -------
Net Asset Value -- End of Year . . . . . . . . . . . . . . . . . $ 16.99 $ 14.96 $ 10.41 $ 11.32
======= ======= ======= =======
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . . . . 14.36 % 43.71 % (7.31)% 13.35 %(A)

RATIOS TO AVERAGE NET ASSETS:
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.50 % 1.50 % 1.50 % 1.50 %(B)
Net Investment Loss. . . . . . . . . . . . . . . . . . . . . . . (0.98)% (0.61)% (0.85)% (0.63)%(B)

SUPPLEMENTARY DATA:
Portfolio Turnover Rate. . . . . . . . . . . . . . . . . . . . . 121.22 % 96.11 % 128.13 % 67.90 %
Net Assets at End of Year (000's omitted). . . . . . . . . . . . $44,985 $36,606 $18,133 $4,750
Number of Shares Outstanding at End of Year
(000's omitted). . . . . . . . . . . . . . . . . . . . . . . . 2,647 2,447 1,742 420

</TABLE>

- --------
(A) Total Investment Return for periods of less than one year are not
annualized.
(B) Annualized.

- -------------------------------------------------------------------------------
*FROM COMMENCEMENT OF OPERATIONS OCTOBER 6, 1992.

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>

CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)

<TABLE>
<CAPTION>
GOLD FUND
- -----------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30,
1996 1995 1994*
---------- ---------- ----------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of Year . . . . . . . . . . . . . . . . $ 9.89 $ 9.52 $ 10.00
------ ------ -------
Income from Investment Operations:
Net Investment Loss. . . . . . . . . . . . . . . . . . . . . . . . (0.060) (0.047) (0.008)
Net Realized and Unrealized Gains (Losses) on Securities . . . . . 0.100 0.417 (0.472)
------ ------ -------
Total from Investment Operations . . . . . . . . . . . . . . . . 0.040 0.370 (0.480)
------ ------ -------
Distributions to Shareholders:
From Net Investment Income . . . . . . . . . . . . . . . . . . . . -- -- --
From Net Realized Capital Gains. . . . . . . . . . . . . . . . . . -- -- --
------ ------ -------
Total Distributions to Shareholders. . . . . . . . . . . . . . . -- -- --
------ ------ -------
Net Increase (Decrease) in Net Asset Value . . . . . . . . . . . . . 0.04 0.37 (0.48)
------ ------ -------
Net Asset Value -- End of Year . . . . . . . . . . . . . . . . . . . $ 9.93 $ 9.89 $ 9.52
====== ====== =======
TOTAL INVESTMENT RETURN. . . . . . . . . . . . . . . . . . . . . . . . 0.40 % 3.89 % (4.80)%(A)
RATIOS TO AVERAGE NET ASSETS:
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.70 % 1.70 % 1.68 %(B)
Net Investment Loss. . . . . . . . . . . . . . . . . . . . . . . . . (0.59)% (0.51)% (0.25)%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate. . . . . . . . . . . . . . . . . . . . . . . 59.06 % 51.23 % 22.85 %
Net Assets at End of Year (000's omitted). . . . . . . . . . . . . . $6,122 $6,796 $6,395
Number of Shares Outstanding at End of Year (000's omitted). . . . . 616 687 672

</TABLE>

- --------
(A) Total Investment Return for periods of less than one year are not
annualized.
(B) Annualized.

- -------------------------------------------------------------------------------
*FROM COMMENCEMENT OF OPERATIONS MARCH 7, 1994.

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>

JUNE 30, 1996 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 financial statements have been prepared in
conformity with generally accepted accounting principles which permit management
to make certain estimates and assumptions at the date of the financial
statements. The following is a summary of significant accounting policies which
the 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, the Investment Adviser and
Administrator will indemnify the Fund. Therefore, no Federal income tax
provision is required.

2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES

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 Officers and
Trustees of the Trust are affiliated with 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 0.70% of the daily net assets of the Utility Income Fund. Certain
Officers and Trustees of the Trust are affiliated with the Administrator.

Certain of these administrative services are provided by Rushmore Trust and
Savings, FSB ("Rushmore Trust"), a majority-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.

Each Fund of the Trust invests excess cash in Fund for Government
Investors, a money market mutual fund. Certain Officers and Trustees of Fund for
Government Investors are affiliated with the Trust.

<PAGE>

JUNE 30, 1996 CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
3. SECURITIES TRANSACTIONS

For the year ended June 30, 1996, 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. . . . . . . . . . . . . . . $ 7,197,060 $26,989,712 $61,383,739 $3,990,203
----------- ----------- ----------- ----------
Sales. . . . . . . . . . . . . . . . . $11,471,189 $19,307,439 $57,492,616 $4,845,639
----------- ----------- ----------- ----------
</TABLE>

4. NET UNREALIZED APPRECIATION/DEPRECIATION OF INVESTMENTS

Unrealized appreciation (depreciation) as of June 30, 1996, 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 Appreciation. . . . . $ 1,925,034 $ 8,281,724 $ 9,336,083 $ 525,296
Gross Unrealized Depreciation. . . . . (47,035) (1,494,410) (4,406,241) (396,176)
----------- ----------- ----------- ----------
Net Unrealized Appreciation. . . . . . $ 1,877,999 $ 6,787,314 $ 4,929,842 $ 129,120
=========== =========== =========== ==========
Cost of Investments for
Federal Income Tax Purposes. . . . . $12,503,032 $24,966,965 $40,960,773 $5,691,938
=========== =========== =========== ==========
</TABLE>

5. NET ASSETS

At June 30, 1996, 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. . . . . . . . . . . . $13,835,881 $22,841,419 $33,534,533 $5,630,582
Undistributed Net Investment
Income . . . . . . . . . . . . . . . 10,123 -- -- --
Accumulated Net Realized Gain
(Loss) on Investments. . . . . . . . (648,899) 2,145,519 6,149,633 138,618
Net Unrealized Appreciation on
Investments. . . . . . . . . . . . . 1,909,024 6,789,978 5,301,329 353,180
----------- ----------- ----------- ----------
Net Assets . . . . . . . . . . . . . . $15,106,129 $31,776,916 $44,985,495 $6,122,380
=========== =========== =========== ==========
</TABLE>

<PAGE>

JUNE 30, 1996 CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
6. FEDERAL INCOME TAX

Permanent differences between tax and financial reporting of net investment
income and realized gains/(losses) are reclassified to paid-in-capital. As of
June 30, 1996, net investment losses were reclassified to paid-in-capital as
follows:

<TABLE>
<CAPTION>
UTILITY EMERGING
INCOME FUND GROWTH FUND GROWTH FUND GOLD FUND
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Reduction of paid-in-capital . . . . -- $113,708 $498,532 $44,769
</TABLE>

At June 30, 1996, 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>
1998 . . . . . . . . . . . . . . . . $ -- $ -- $ -- $1,010,282
1999 . . . . . . . . . . . . . . . . -- -- 657,715 --
2000 . . . . . . . . . . . . . . . . -- -- -- 434,866
2001 . . . . . . . . . . . . . . . . -- -- 287,195 281,566
2002 . . . . . . . . . . . . . . . . -- -- -- --
2003 . . . . . . . . . . . . . . . . 617,886 -- -- --
-------- ------- -------- ----------
Total . . . . . . . . . . . . . . $617,886 $ -- $944,910 $1,726,714
======== ======= ======== ==========
</TABLE>

<PAGE>

INDEPENDENT AUDITORS' REPORT

The Shareholders and Board of Trustees
of Cappiello-Rushmore Trust:

We have audited the statements of assets and liabilities including the
portfolios of investments of the Utility Income, Growth, Emerging Growth and
Gold Funds of Cappiello-Rushmore Trust as of June 30, 1996, 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, 1996 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Utility
Income, Growth, Emerging Growth and Gold Funds of Cappiello-Rushmore Trust as of
June 30, 1996, 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 5, 1996

<PAGE>

CAPPIELLO-
RUSHMORE
TRUST
UTILITY INCOME FUND
GROWTH FUND
EMERGING GROWTH FUND
GOLD FUND
- --------------------------------------------------------------------------------
ANNUAL REPORT
JUNE 30, 1996

[LOGO]

<PAGE>

PART C
<PAGE>

PART C

OTHER INFORMATION
Cappiello-Rushmore Trust

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

a. Financial statements: The following financial statements are
incorporated by reference in Part B of this registration statement
amendment.

Statement of Net Assets as of June 30, 1996
Statement of Operations for the year ended June 30, 1996
Statements of Changes in Net Assets for the years ended June 30, 1996
and June 30, 1995
Financial Highlights for the years ended June 30, 1996, 1995, 1994 and
1993

No Statement of Sources of Net Assets will be included because the
full amount of net assets on June 30, 1996 represents cash received
from issuance of shares (less cost of shares redeemed). See
Statements of Changes in Net Assets.

b. Exhibits:

11 Consent of Deloitte & Touche LLP independent auditors for Registrant

16 Calculation of Total Return

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

None

ITEM 26. NUMBER OF HOLDERS OF SECURITIES

Approximate Number of
Shareholders of Record
Title of Class at October 4, 1996
- --------------------------------------------------------------------------------
Common Stock, $.001 par value

Utility Income Fund 785
Growth Fund 1,426
Emerging Growth 1,829
Gold Fund 391

C-1
<PAGE>

ITEM 27. INDEMNIFICATION

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.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

Not Applicable.

ITEM 29. PRINCIPAL UNDERWRITER

Not Applicable

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

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

C-2
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all the requirements
for effectiveness of this Registration Statement pursuant to Rule 485(b) under
the Securities Act of 1933 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned thereunto duly authorized, in the city
of Bethesda in the State of Maryland on the 21st day of October, 1996.

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 the Board, October 21, 1996
- ------------------------- Trustee
Frank A. Cappiello

/s/ Daniel L. O'Connor President, Treasurer, October 21, 1996
- ------------------------- Trustee
Daniel L. O'Connor

/s/ Bruce C. Ellis Trustee October 21, 1996
- -------------------------
Bruce C. Ellis

/s/ Peter J. DeAngelis Trustee October 21, 1996
- --------------------------
Peter J. DeAngelis

/s/ Dr. Peter B. Petersen Trustee October 21, 1996
- --------------------------
Dr. Peter B. Petersen

/s/ Leo Seybold Trustee October 21, 1996
- --------------------------
Leo Seybold

S-1
<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints
Timothy N. Coakley and Linda R. Paisley, and each of them, his or her true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place, and stead, in and
all of his or her capacities as a Trustee of Cappiello-Rushmore Trust (the
"Trust"), a Maryland corporation, to sign on his or her behalf any and all
Registration Statements (including any post-effective amendments to Registration
Statements) under the Securities Act of 1933, as amended, and/or the Investment
Company Act of 1940, as amended, filed by the Trust and any amendments and
supplements thereto, and other documents in connection therewith, and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the U.S. Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully as to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said attorney-
in-fact and agent, and each of them, may lawfully do or cause to be done by
virtue hereof. This power of attorney hereby revokes any and all powers of
attorney previously granted by the undersigned in connection with the
aforementioned matters.

DATED this 31st day of October, 1995.

\s\ Frank A. Cappiello

<PAGE>

POWER OF ATTORNEY

DATED this 31st day of October, 1995.

\s\ Bruce Ellis

<PAGE>

POWER OF ATTORNEY

DATED this 31st day of October, 1995.

\s\ Daniel O'Connor

<PAGE>

POWER OF ATTORNEY

DATED this 31st day of October, 1995.

\s\ Peter J. DeAngelis

<PAGE>

POWER OF ATTORNEY

DATED this 31st day of October, 1995.

\s\ Peter B. Petersen

<PAGE>

POWER OF ATTORNEY

DATED this 31st day of October, 1995.

\s\ Leo Seybold

<PAGE>

Exhibit 11

CONSENT OF DELOITTE & TOUCHE LLP

<PAGE>

CONSENT OF INDEPENDENT AUDITORS

Cappiello-Rushmore Trust:

We hereby consent to the incorporation by reference in this Post-Effective
Amendment No. 6 to Registration Statement No. 33-46283 of our report dated
August 5, 1996 appearing in the Annual Report of Cappiello-Rushmore Trust for
the year ended June 30, 1996 and to the reference to us under the caption
"Financial Highlights" appearing in the Prospectus, which is also a part of such
Registration Statement.

/s/ DELOITTE & TOUCHE LLP

Washington, D.C.

October 23, 1996

<PAGE>

EXHIBIT 16

CALCULATION OF TOTAL RETURN

<PAGE>

CAPPIELLO-RUSHMORE TRUST
Total Return Calculations

ONE YEAR ENDED JUNE 30, 1996 SINCE INCEPTION
---------------------------- ---------------
<S> <C>
I. Cappiello-Rushmore Growth Fund October 6, 1992 (inception) to June 30,
1996

n n
P (1+T) = ERV P (1+T) = ERV
ERV = $12,206 ERV = $17,904
n = 1 n = 3.73
T = 22.06% T = 16.88%

II. Cappiello-Rushmore Emerging Growth Fund

n n
P (1+T) = ERV P (1+T) = ERV
ERV = $14,436 ERV = $17,315
n = 1 n = 3.73
T = 14.36% T = 15.84%

III. Cappiello-Rushmore Utility Income Fund

n n
P (1+T) = ERV P (1+T) = ERV
ERV = $12,060 ERV = $12,655
n = 1 n = 3.73
T = 20.60% T = 6.50%

IV. Cappiello-Rushmore Gold Fund March 7, 1994 (inception) to June 30, 1996

n n
P (1+T) = ERV P (1+T)n = ERV
ERV = $10,040 ERV = $9,930
n = 1 n = 2.318
T = 0.40% T = (0.30)%

</TABLE>

<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> UTILITY INCOME FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 12,472,007
<INVESTMENTS-AT-VALUE> 14,381,031
<RECEIVABLES> 771,821
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 15,152,852
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 46,723
<TOTAL-LIABILITIES> 46,723
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 13,835,881
<SHARES-COMMON-STOCK> 1,424,777
<SHARES-COMMON-PRIOR> 1,855,441
<ACCUMULATED-NII-CURRENT> 10,123
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (648,899)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,909,024
<NET-ASSETS> 15,106,129
<DIVIDEND-INCOME> 964,420
<INTEREST-INCOME> 59,165
<OTHER-INCOME> 0
<EXPENSES-NET> (183,165)
<NET-INVESTMENT-INCOME> 840,420
<REALIZED-GAINS-CURRENT> 1,027,583
<APPREC-INCREASE-CURRENT> 1,280,283
<NET-CHANGE-FROM-OPS> 3,148,286
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (839,386)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,216,170
<NUMBER-OF-SHARES-REDEEMED> (2,711,615)
<SHARES-REINVESTED> 64,781
<NET-CHANGE-IN-ASSETS> (2,044,720)
<ACCUMULATED-NII-PRIOR> 9,089
<ACCUMULATED-GAINS-PRIOR> (1,676,482)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 61,055
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 183,165
<AVERAGE-NET-ASSETS> 17,444,296
<PER-SHARE-NAV-BEGIN> 9,240
<PER-SHARE-NII> 0.489
<PER-SHARE-GAIN-APPREC> 1.391
<PER-SHARE-DIVIDEND> (0.520)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.600
<EXPENSE-RATIO> 1.050
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000

</TABLE>

<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> GROWTH FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 24,964,301
<INVESTMENTS-AT-VALUE> 31,754,279
<RECEIVABLES> 94,730
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 31,849,009
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 72,093
<TOTAL-LIABILITIES> 72,093
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 22,841,419
<SHARES-COMMON-STOCK> 1,778,484
<SHARES-COMMON-PRIOR> 1,320,905
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,145,519
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,789,978
<NET-ASSETS> 31,776,916
<DIVIDEND-INCOME> 227,318
<INTEREST-INCOME> 70,296
<OTHER-INCOME> 0
<EXPENSES-NET> (411,322)
<NET-INVESTMENT-INCOME> (113,708)
<REALIZED-GAINS-CURRENT> 1,720,027
<APPREC-INCREASE-CURRENT> 3,405,681
<NET-CHANGE-FROM-OPS> 5,012,000
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,234,071
<NUMBER-OF-SHARES-REDEEMED> (1,776,492)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 12,440,261
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 422,439
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 137,107
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 411,322
<AVERAGE-NET-ASSETS> 27,421,497
<PER-SHARE-NAV-BEGIN> 14.640
<PER-SHARE-NII> (0.069)
<PER-SHARE-GAIN-APPREC> 3.299
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 17.870
<EXPENSE-RATIO> 1.500
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000

</TABLE>

<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> EMERGING GROWTH FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 40,589,286
<INVESTMENTS-AT-VALUE> 45,890,615
<RECEIVABLES> 800,371
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 46,690,986
<PAYABLE-FOR-SECURITIES> 1,256,875
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 448,616
<TOTAL-LIABILITIES> 1,705,491
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 33,534,533
<SHARES-COMMON-STOCK> 2,647,080
<SHARES-COMMON-PRIOR> 2,446,753
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,149,633
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,301,329
<NET-ASSETS> 44,985,495
<DIVIDEND-INCOME> 91,865
<INTEREST-INCOME> 171,003
<OTHER-INCOME> 0
<EXPENSES-NET> (761,400)
<NET-INVESTMENT-INCOME> (498,532)
<REALIZED-GAINS-CURRENT> 6,135,405
<APPREC-INCREASE-CURRENT> (1,388,307)
<NET-CHANGE-FROM-OPS> 4,248,566
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (344,847)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,118,604
<NUMBER-OF-SHARES-REDEEMED> (7,936,795)
<SHARES-REINVESTED> 18,518
<NET-CHANGE-IN-ASSETS> 8,379,719
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 359,075
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 253,800
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 761,400
<AVERAGE-NET-ASSETS> 50,760,000
<PER-SHARE-NAV-BEGIN> 14.960
<PER-SHARE-NII> (0.161)
<PER-SHARE-GAIN-APPREC> 2.300
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> (0.019)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 16.990
<EXPENSE-RATIO> 1.500
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000

</TABLE>

<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> GOLD FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 5,467,878
<INVESTMENTS-AT-VALUE> 5,821,058
<RECEIVABLES> 310,803
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,131,861
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,481
<TOTAL-LIABILITIES> 9,481
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,630,582
<SHARES-COMMON-STOCK> 616,426
<SHARES-COMMON-PRIOR> 687,214
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 138,618
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 353,180
<NET-ASSETS> 6,122,380
<DIVIDEND-INCOME> 46,017
<INTEREST-INCOME> 39,042
<OTHER-INCOME> 0
<EXPENSES-NET> (129,828)
<NET-INVESTMENT-INCOME> (44,769)
<REALIZED-GAINS-CURRENT> 322,082
<APPREC-INCREASE-CURRENT> (185,846)
<NET-CHANGE-FROM-OPS> 91,467
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,126,181
<NUMBER-OF-SHARES-REDEEMED> (3,196,969)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (673,475)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (183,464)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 53,459
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 129,828
<AVERAGE-NET-ASSETS> 7,636,933
<PER-SHARE-NAV-BEGIN> 9.890
<PER-SHARE-NII> (0.060)
<PER-SHARE-GAIN-APPREC> 0.100
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 9.930
<EXPENSE-RATIO> 1.700
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000

</TABLE>