<PAGE>
- --------------------------------------------------------------------------------
ANNUAL REPORT, June 30, 1997
[LOGO] CAPPIELLO-RUSHMORE TRUST
4922 FAIRMONT AVENUE, BETHESDA, MARYLAND 20814
(800) 622-1386 (301) 657-1510
- --------------------------------------------------------------------------------
Dear Fellow Investor:
This is the Cappiello-Rushmore Trust's fifth annual report. The Funds'
performances for the fiscal year ended June 30, 1997 were as follows:
- --------------------------------------------------------------------------------
TOTAL RETURN COMPARISON
(AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED JUNE 30, 1997)
SINCE
ONE YEAR INCEPTION*
-------- ----------
Cappiello-Rushmore Growth Fund 10.10% 15.48%
Cappiello-Rushmore Emerging Growth
Fund (2.15)% 11.78%
Cappiello-Rushmore Utility Income
Fund 3.39% 5.84%
Standard & Poor's 500 Index 34.70% 20.85%
*************************************************************
Cappiello-Rushmore Gold Fund (29.31)% (10.12)%
Philadelphia Exchange Gold & Silver
Index (XAU) (22.76)% (20.70)%
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
Over the past twelve months, economic growth (measured by real Gross
Domestic Product) has averaged a robust 3.1%. Most recently, in the second
quarter of 1997, that growth slowed to 2.7% due primarily to weak consumer
spending. Powering this growth has been the corporate investment boom, primarily
business equipment including computers and allied equipment. This has been
reflected in the improved performance of technology stocks. This technology boom
appears to be improving productivity growth and holding down prices thereby
allowing the economy to grow at a faster rate without generating inflationary
pressures. Some evidence of this is reflected in the inflation figures which
over the past few quarters represent the lowest inflation rate that we have seen
since 1965. With such economic positives as a backdrop, the stock market
measured by the major market averages continued to move forward to record highs.
However, beneath the surface of the stock market were significant "pockets" of
underperformance including gold, utility stocks (particularly electric
utilities), and surprisingly, the dramatic underperformance of small stocks with
the Russell 2000 underperforming the S&P 500 by the widest margin since October
of 1990.
The big investment news has not been economic, but tax related. The new tax
act occurred after June 30th but the lower capital gains tax rate became
effective as of May 7, 1997. The following describes the new tax act and its
implications for the market and investors. The lower capital gains tax favors
growth stocks over the long haul
<PAGE>
versus income since dividends will be taxed as ordinary income. Further, the new
tax act will be encouraging for corporate managers to favor share buy-backs
rather than increasing dividend payments. This will serve to reduce the supply
of stock available in the marketplace and should be positive for large and
medium-sized capitalization stocks. In terms of small capitalization stocks, the
capital gains tax cut could spur a period of outperformance by small-cap stocks.
Every time capital gains taxes have been cut since 1978, small-cap stocks have
significantly outperformed the S&P 500.
THE CAPPIELLO-RUSHMORE EMERGING GROWTH FUND
The Emerging Growth Fund's investment objective is capital appreciation
through investment in smaller, emerging growth companies with above-average
appreciation potential. Typically, these companies have market capitalization
between $50 million and $750 million. While equities in fast-growing, dynamic
companies in expanding industries have historically been excellent vehicles for
long-term capital growth, smaller companies are generally considered riskier
investments than larger, more established companies due to their companies'
greater reliance upon entrepreneurial management talent, less robust balance
sheets, and less established businesses. Nevertheless, the superior growth
prospects of smaller companies have provided investors the better returns over
the long term reflecting the value and growth of underlying businesses. In the
short term, while these businesses change very little, their stock prices can
change significantly each day. So while small-cap stocks can provide attractive
returns over the long term, they can be rocky in the short term. This proved to
be the case in the past year when the Fund recorded a negative total return of
(2.15)%. Compared to the Fund's 14.36% total return of 1996, this reflected that
the smaller rapidly growing stocks had a tough time from June of 1996 to April
of 1997. Since the Spring of 1996, the Russell 2000 Index of small stocks had
been significantly underperforming the Standard & Poor's 500 Index which is
dominated by large stocks. Prior to this underperformance period, small-cap
growth companies had enjoyed a typical five-and-a-half-year cycle, stretching
from October 1990 to peak in May 1996, in which they outperformed their larger
counterparts. Further, pressure from stock redemptions during this period forced
us to sell down our more promising stocks to raise cash. Falling prices and
selling in a declining environment proved to be a deadly cycle for the Fund's
overall performance. Nevertheless the Fund produced a number of winning stocks.
Among the best acting stocks in the Emerging Growth's portfolio as of June 30,
1997 were:
JPM Co. + 375.00%
Remec, Inc. + 340.63%
World Access, Inc. + 156.25%
National Data Corp. + 129.60%
Reading & Bates Corp. + 119.49%
Happily, the small capitalization sector has improved significantly since
the Spring of this year. In May and June of this year, small caps began their
rebound with the Russell 2000 and this is reflected in the recent quarter
performance of the Fund up 12.61% for the quarter ended June 30, 1997. This
performance has continued to date (August 11, 1997).
This recent improvement in small-cap stocks after a long period of
underperformance provides a base for optimism for the next twelve months. While
last year demonstrated that small caps tend to be more volatile than their
larger counterparts both down and now up demonstrates that small caps can
compensate for that extra risk by providing superior returns over the long haul.
THE CAPPIELLO-RUSHMORE GROWTH FUND
The Growth Fund is designed to provide investors with capital appreciation
through investment in larger, established companies that have demonstrated
consistent sales and earnings growth. The Fund recorded a return
2
<PAGE>
of 10.10% for the year marking the third consecutive year of double-digit
returns. The performance, while respectable in a volatile market year, fell
short of the fast moving Standard & Poor's 500 Index. The S&P 500 which is
weighted by market capitalization with the top 50 stocks having an average
capitalization of over $70 billion each and selling at a price/earnings ratio of
24 times earnings with an average growth rate of 13% annually.
Since the Fund's inception, the focus has been on larger capitalization
growth companies with an emphasis on value. Investment in this type of company
is generally stable, yet provides substantial long-term capital appreciation
potential. Buying growth stocks for less than their underlying value is a key
consideration of our portfolio management team since this further reduces
long-term risk. This has precluded purchases of "momentum" type growth stocks
which sell at price/earnings multiples of 50% or higher than their growth rates.
While our focus continues to be the technology sector (24.27% of the
portfolio) with names like Sun Microsystems, Inc., Tandem Computers, and Micron
Technology, this sector is now overshadowed by a new emphasis on financial
stocks (25.16% of assets) such as Charles Schwab Corp, Franklin Resources, and
Student Loan Marketing Association. Oil and gas and related energy services is
another new major category representing more than 10% of the assets including
names such as Nuevo Energy and Varco International. We expect these stocks to do
well over the next twelve months in the current business and interest rate
environment. In redeploying the Funds assets, we have reduced a heretofore large
portion in retailing and healthcare stocks. Among the better performing stocks
in the portfolio as of June 30, 1997 were:
Student Loan Marketing Assn. + 268.83%
Franklin Resources, Inc. + 187.59%
Coca Cola Co. + 174.05%
Varco International, Inc. + 152.15%
American Express Co. + 149.93%
Note that only two of our five best performing stocks can be categorized
among the top 50 names in the S&P 500 Index.
THE CAPPIELLO-RUSHMORE UTILITY INCOME FUND
The Utility Income Fund is structured to provide shareholders with high
dividend income first and capital gains as a secondary consideration. The Fund's
total return for the year ended June 30, 1997 was 3.39%. The portfolio's net
dividend yield was 5.9%. Part of the disappointing performance reflected
uncertainty in the electric utility sector reflecting the pressure of state and
federal government regulation toward a more competitive marketplace. Further the
relative underperformance in the prices of electric utility common stocks versus
bonds and other income securities has been driven primarily by continued
strength in the economy. Historically, strength in the U.S. economy usually has
meant lagging performance for the utility sector as investors fear that an
improving economy means higher interest rates. Additionally, investors sentiment
reflects the fact that the sector is unlikely to outperform the market until the
economy slows down, considerably. Finally, while most electric utilities are
experiencing savings from cost-cutting measures now underway, these savings are
expected to be partially offset by increasing competition and accelerated
depreciation.
During the year we have taken measures to lessen the Fund's dependence on
electric utility performance. While the electric and gas utility stocks
represent 64.79% of the portfolio, telephone companies are now 12.74% of the
portfolio and a natural gas distribution company is 5.76% of the portfolio.
Telephone companies such as NYNEX and ALLTEL possess some of the defensive
characteristics of utilities but also offer the growth potential of
telecommunications as a broad-based platform for the information highway.
Additionally, we have begun to diversify into several non-utility areas which
are both undervalued and paying a higher than average dividend
3
<PAGE>
including Crown America Realty Trust (a Real Estate Investment Trust)
constituting 5.83% of the portfolio and a modest holding in convertible
preferred stock (2.88% of the portfolio).
We continue to believe that electric and gas utilities offer a solid
defensive hedge against a moderating economy and/or a difficult market
environment, which could well develop over the next twelve months. Additionally,
utilities will continue to manage in order to strengthen their competitive
positions providing capital gains opportunities. Further, we believe that the
electric utility stocks are attractive in terms of fundamentals which include
low price earnings ratios and higher than average yields. For example, stocks in
DLJ Electric Utility Universe (as of July, 1997) are currently selling at an
average of 11.2 times 1998 earnings estimates, and 1.4 times estimated 1997 book
value representing a historically low level.
THE CAPPIELLO-RUSHMORE GOLD FUND
The Gold Fund seeks capital appreciation through investment in securities of
companies engaged in the mining or processing of gold and other precious metals
throughout the world. Particular emphasis is placed on companies who are
expanding production from current operations and/or seeking new discoveries.
During the past twelve months, both the price of gold and the performance of
the Gold Fund has been disappointing with the Fund showing a one-year
performance of (29.31)% and gold selling at its lowest point since 1985 when it
traded down to $285 an ounce. The most recent sell-off in gold and gold stocks
reflects the actions of the Australian central bank in selling 167 tonnes of
gold which equates to two-thirds of that country's reserve. This was surprising
since Australia was not viewed as a potential seller and reinforced the growing
belief that other central banks may be considering gold sales. In addition to
the threat of future central bank sales, there are three other factors that have
come together to depress the price of gold: the surging stock markets around the
world, low inflation, and the strong dollar. Despite reasonably strong
supply/demand fundamentals (including rising demand for the metal in Asia and
South America, and increased industrial and jewelry usage), sentiment toward
gold continues to be negative due to the belief of the inevitability of future
central banks sales.
Our view is that the threat of future sales is exaggerated and that the
European Monetary Union (EMU) will require strong gold backing to inspire
confidence in the EMU's forthcoming currency, the Euro. Further, history tells
us that the reason for holding gold has never been to outperform financial
assets but as a hedge against inflation as well as other economic and political
risks. Typically, gold is a metal that a well diversified investor wants to
focus on when everyone hates it. This appears to be one of those times for gold
stocks.
OUTLOOK FOR 1997 - 1998
We do not attempt to forecast what the stock market will do or when. We do
attempt to make projections about the economy, because that is a necessary input
to an interest rate forecast. Our forecast for the next twelve months includes
an economic growth trend of about 3% (measured by GDP) which happens to be the
average of the last fifteen years. So far in 1997, in a stronger than expected
economy, the Consumer Price Index (CPI) on an annualized basis is up only 2.1%.
Our forecast is that there will be only a modest upward change (perhaps to 2.5%)
by mid-1998. In terms of interest rates, the 30-year Treasury bond should range
between 6-7% (30 year Treasury Bond) with a Fed Fund Rate (the key short term
rate at which banks lend money to other banks) at between 5 1/2 - 6%.
Not since the early days after World War One have economic, financial, and
business conditions together been as favorable as they have been in recent years
and still are today. Continuing growth in business activity, less government
interference, rising export demand, the strong competitive position of our
companies in world markets, accelerating productivity stemming from rapid
adoption of new technology all have contributed to this extraordinary market. In
the long run of course, only one thing matters: the growth of earnings and
dividends. That
4
<PAGE>
uptrend is what makes the market rewarding for patient investors. In this
regard, we expect operating earnings on the Dow Industrial Average to be up
about 12% to 15% with mid-cap and small-cap companies, on average, exceeding
these levels in 1997 through 1998. Stock valuations continue to be attractive
with price/earnings multiples relative to the interest rates and inflation
environment.
Nevertheless, all forecasts are tentative, including this one. The few
negatives in the economy and the stock market are related to "time." First, the
current business cycle is over seven years old. It is now the third longest in
U.S. economic history. Secondly, the stock market's surge since the Fall of 1990
rivals the two great bull markets of this century both in time and magnitude of
gain; specifically, the U.S. market of the 1920's and the Japanese stock market
of the 1980's. This raises the risk of miscalculation. Growth may be stronger
than expected, putting more pressure on capacity and other resources and
requiring a more aggressive response from the Federal Reserve. This could occur
if global economic growth rebounds faster than expected. Thirdly, any increase
in productivity growth could be short-lived. This would be reflected in a rise
in inflation causing investors to lose confidence in the Fed. This would imply
higher interest rates and a decline in stock and bond prices. In our view, the
one major positive that may outweigh all the possible negatives is the enactment
of the new tax legislation and its effect on investing as noted in the "Summary"
section. The most important part of the bill is the capital gains tax rate cut.
Now if you owned a stock for 18 months and a day, you can sell and pay a tax of
just 20% on your profits down from 28%. Investment income such as dividends and
interest are taxed at rates up to 39.6%. This is a powerful incentive toward
long-term investing in stocks.
As always, thank you for your continued support.
[SIGNATURE]
Frank A. Cappiello
Chairman, Cappiello-Rushmore Trust
August 11, 1997
5
<PAGE>
JUNE 30, 1997 CAPPIELLO-RUSHMORE TRUST
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PORTFOLIOS OF INVESTMENTS
UTILITY INCOME FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- -----------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 89.12% OF TOTAL
INVESTMENTS
GAS AND ELECTRIC -- 64.79%
15,000 Allegheny Power System, Inc. $ 400,313
14,000 CMS Energy Corp. 493,500
15,000 DTE Energy Holding Co. 414,375
14,500 Interstate Power Co. 415,062
25,000 Long Island Lighting Co. 575,000
10,400 Peoples Energy Corp. 389,350
18,000 Potomac Electric Power Co. 416,250
10,000 Public Service Co. of Colorado 415,000
19,000 Southern Co. 415,625
17,000 TNP Enterprises, Inc. 394,188
11,400 Union Electric Co. 429,637
15,000 United Illuminating Co. 463,125
22,000 Washington Water Power Co. 431,750
------------
5,653,175
------------
NATURAL GAS DISTRIBUTION -- 5.76%
20,000 Washington Gas Light Co. 502,500
------------
REAL ESTATE INVESTMENT TRUSTS -- 5.83%
55,000 Crown American Realty Trust 508,750
------------
TELEPHONE -- 12.74%
16,000 ALLTEL Corp. 535,000
10,000 NYNEX Corp. 576,250
------------
1,111,250
------------
TOTAL COMMON STOCKS
(COST $6,659,158) 7,775,675
------------
CONVERTIBLE PREFERRED
STOCKS -- 2.88%
5,000 Sea Containers, Ltd. Conv. Pfd.
$4.00 (Cost $222,400) 251,250
------------
MONEY MARKET FUNDS -- 8.00%
697,872 Fund for Government Investors
(Cost $697,872) 697,872
------------
TOTAL INVESTMENTS -- 100.00%
(COST $7,579,430) $ 8,724,797
------------
------------
</TABLE>
GROWTH FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ---------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 92.78% OF TOTAL
INVESTMENTS
BEVERAGES -- 5.79%
20,000 Coca Cola Co. $ 1,350,000
-------------
COMPUTER AND BUSINESS
EQUIPMENT -- 7.98%
20,000 Sun Microsystems, Inc.* 744,376
55,000 Tandem Computers, Inc.* 1,113,750
-------------
1,858,126
-------------
COMPUTER SOFTWARE INFORMATION
PROCESSING -- 8.03%
29,600 Reynolds and Reynolds Co. 466,200
26,000 Shared Medical Systems Corp. 1,404,000
-------------
1,870,200
-------------
CONSUMER ELECTRONICS -- 1.52%
15,000 VLSI Technology, Inc.* 354,375
-------------
CONTAINERS AND PACKAGING -- 1.63%
8,000 Sealed Air Corp.* 380,000
-------------
DIVERSIFIED ELECTRONICS -- 10.31%
20,000 General Motors Corp. Class H 1,155,000
150,000 Gulf Canada Resources Ltd.* 1,246,875
-------------
2,401,875
-------------
FINANCIAL -- 25.16%
15,000 American Express Co. 1,117,500
35,000 Charles Schwab Corp. 1,424,063
26,500 Franklin Resources, Inc. 1,922,906
11,000 Student Loan Marketing Assn. 1,397,000
-------------
5,861,469
-------------
HEALTHCARE -- 5.13%
10,000 Pfizer, Inc. 1,195,000
-------------
OIL AND GAS -- 3.87%
22,000 Nuevo Energy Co.* 902,000
-------------
OIL AND GAS SERVICES -- 5.81%
42,000 Varco International, Inc.* 1,354,500
-------------
PERSONAL PRODUCTS -- 2.31%
20,300 Nu Skin Asia Pacific, Inc.* 537,950
-------------
</TABLE>
*NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
JUNE 30, 1997 CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS (CONTINUED)
GROWTH FUND (CONTINUED)
<TABLE>
<CAPTION>
- ------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- -------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
SEMICONDUCTORS/COMPONENTS -- 6.74%
15,000 Micron Technology, Inc. $ 599,063
31,700 National Semiconductor Corp.* 970,812
-------------
1,569,875
-------------
TRANSPORTATION -- 8.50%
32,000 KLM Royal Dutch Airlines 988,000
35,250 Pittston Burlington Group 991,406
-------------
1,979,406
-------------
TOTAL COMMON STOCKS
(COST $13,415,565) 21,614,776
-------------
WARRANTS -- 5.57%
97,000 Federated Department Stores,
Inc.
WTS C* (Cost $614,392) 1,297,375
-------------
MONEY MARKET FUNDS -- 1.65%
385,857 Fund for Government Investors
(Cost $385,857) 385,857
-------------
TOTAL INVESTMENTS -- 100.00%
(COST $14,415,814) $ 23,298,008
-------------
-------------
</TABLE>
EMERGING GROWTH FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- ---------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 90.64% OF TOTAL
INVESTMENTS
COMMUNICATIONS PRODUCTS -- 0.89%
7,500 Remec, Inc.* $ 176,250
-------------
COMPUTER AND BUSINESS
EQUIPMENT -- 1.36%
25,000 Larscom, Inc., Class A* 268,750
-------------
COMPUTER SOFTWARE -- 1.52%
15,000 Planning Sciences International
PLC ADR* 86,250
35,000 Premis Corp.* 71,095
21,200 Quadramed Corp.* 143,100
-------------
300,445
-------------
COMPUTER SOFTWARE INFORMATION
PROCESSING -- 4.65%
17,000 Shared Medical Systems Corp. 918,000
-------------
ELECTRONICS -- 1.69%
57,000 Laser Power Corp.* 334,875
-------------
HEALTHCARE PRODUCTS -- 12.33%
60,000 IBAH, Inc.* 213,750
40,000 Immune Response Corp.* 305,000
30,000 I-STAT Corp. * 513,750
59,000 KV Pharmaceutical Co.,
Class A * 977,187
30,000 Nexstar Pharmaceuticals * 427,500
-------------
2,437,187
-------------
INFORMATION PROCESSING -- 7.67%
35,000 National Data Corp. 1,515,938
-------------
LODGING -- 3.05%
72,000 Candlewood Hotel Co., Inc.* 603,000
-------------
MANUFACTURING -- 1.88%
31,000 Alyn Corp.* 372,000
-------------
MERCHANDISING/RETAIL -- 13.48%
49,800 Braun Fashions Corp.* 423,300
90,000 Charming Shoppes, Inc.* 469,692
117,700 National Media Corp.* 765,050
55,000 Paul Harris Stores, Inc.* 921,250
89,232 Score Board, Inc. * 83,655
-------------
2,662,947
-------------
OIL AND GAS SERVICES -- 6.77%
50,000 Reading and Bates Corp.* 1,337,500
-------------
</TABLE>
ADR AMERICAN DEPOSITORY RECEIPT
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
JUNE 30, 1997 CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
PORTFOLIOS OF INVESTMENTS (CONTINUED)
EMERGING GROWTH FUND (CONTINUED)
<TABLE>
<CAPTION>
- ------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- -------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
SEMICONDUCTORS/COMPONENTS -- 6.65%
50,000 PMC Sierra, Inc.* $ 1,312,500
-------------
SERVICE -- 4.66%
115,000 Forensic Technologies
International Corp.* 920,000
-------------
TELECOMMUNICATIONS -- 14.05%
20,000 Celeritek, Inc.* 250,000
36,200 Hungarian Telephone and
Cable* 316,750
20,000 JPM Co.* 712,500
73,000 World Access, Inc.* 1,496,500
-------------
2,775,750
-------------
TRANSPORTATION -- 9.99%
25,000 Hub Group, Inc. Class A* 753,125
32,000 Pittston Burlington Group 900,000
125,000 Worldcorp, Inc. Holding Co.* 320,313
-------------
1,973,438
-------------
TOTAL COMMON STOCKS
(COST $13,744,472) 17,908,580
-------------
CONVERTIBLE PREFERRED
STOCKS -- 7.04%
208,080 Mesa, Inc. 8% Conv. Pfd.
Class A (Cost $707,854) 1,391,535
-------------
WARRANTS -- 0.20%
28,000 Barringer Technologies, Inc.
WTS* (Cost $1,400) 40,250
-------------
MONEY MARKET FUNDS -- 2.12%
418,256 Fund for Government Investors
(Cost $418,256) 418,256
-------------
TOTAL INVESTMENTS -- 100.00%
(COST $14,871,982) $ 19,758,621
-------------
-------------
</TABLE>
GOLD FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
MARKET VALUE
SHARES (NOTE 1)
- --------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 89.01% OF TOTAL
INVESTMENTS
METALS AND MINING
DOMESTIC -- 39.52%
27,000 Amax Gold, Inc.* $ 165,375
35,000 Battle Mountain Gold Co. 199,062
25,000 Crown Resources Corp.* 159,375
13,000 Homestake Mining Co. 169,813
10,000 Newmont Mining Corp. 390,000
15,500 Stillwater Mining Co.* 344,875
------------
1,428,500
------------
FOREIGN -- 49.49%
12,000 Aber Resources, Ltd.* 168,000
10,000 Agnico Eagle Mines, Ltd. 96,250
7,000 Barrick Gold Corp. 154,000
14,000 Cambior, Inc. 158,375
28,000 Golden Star Resources, Ltd.* 227,500
30,000 Kinross Gold Corp.* 135,000
6,000 Lihir Gold, Ltd.* 197,250
60,000 Miramar Mining Corp.* 221,250
10,000 Placer Dome, Inc. 163,750
200,000 Rea Gold Corp.* 125,000
60,000 Royal Oak Mines, Inc.* 142,500
------------
1,788,875
------------
TOTAL COMMON STOCKS
(COST $3,931,025) 3,217,375
------------
MONEY MARKET FUNDS -- 10.99%
397,342 Fund for Government Investors
(Cost $397,342) 397,342
------------
TOTAL INVESTMENTS -- 100.00%
(COST $4,328,367) $ 3,614,717
------------
------------
</TABLE>
*NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
JUNE 30, 1997 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 Cost............... $7,579,430 $14,415,814 $14,871,982 $4,328,367
----------- ------------- ------------- -----------
----------- ------------- ------------- -----------
Securities at Value (Note 1)..... $8,724,797 $23,298,008 $19,758,621 $3,614,717
Receivable for Securities Sold... 59,924 1,659,590 1,233,775 --
Receivable for Shares Sold....... 1,025 11,285 6,619 2,675
Dividends Receivable............. 44,850 10,645 3,570 --
Interest Receivable.............. 887 1,054 2,022 1,927
----------- ------------- ------------- -----------
Total Assets................... 8,831,483 24,980,582 21,004,607 3,619,319
----------- ------------- ------------- -----------
LIABILITIES
Investment Advisory Fee
Payable........................ 2,494 10,137 8,564 2,279
Administrative Fee Payable....... 4,989 20,274 17,128 3,256
Payable for Securities
Purchased...................... -- -- 41,750 --
Liability for Shares Redeemed.... 7,346 50,797 205,253 205,159
Other Fees Payable............... 2 -- 83 81
Dividends Payable................ 10,641 -- -- --
----------- ------------- ------------- -----------
Total Liabilities.............. 25,472 81,208 272,778 210,775
----------- ------------- ------------- -----------
NET ASSETS......................... $8,806,011 $24,899,374 $20,731,829 $3,408,544
----------- ------------- ------------- -----------
----------- ------------- ------------- -----------
SHARES OUTSTANDING................. 846,722 1,308,875 1,497,533 485,392
----------- ------------- ------------- -----------
----------- ------------- ------------- -----------
NET ASSET VALUE PER SHARE.......... $10.40 $19.02 $13.84 $7.02
----------- ------------- ------------- -----------
----------- ------------- ------------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
FOR THE YEAR ENDED JUNE 30, 1997 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.............................. $ 5,501 $ 69,735 $ 36,966 $ 25,195
Dividends............................. 641,749 198,458 54,049 21,919
----------- ----------- ------------ ------------
Total Investment Income............. 647,250 268,193 91,015 47,114
----------- ----------- ------------ ------------
EXPENSES
Investment Advisory Fee (Note 2)...... 38,223 129,484 151,476 34,904
Administrative Fee (Note 2)........... 76,447 258,968 302,952 49,863
Other Fees............................ 2 -- 83 81
----------- ----------- ------------ ------------
Total Expenses...................... 114,672 388,452 454,511 84,848
----------- ----------- ------------ ------------
NET INVESTMENT INCOME (LOSS)............ 532,578 (120,259) (363,496) (37,734)
----------- ----------- ------------ ------------
Net Realized Gain (Loss) on Investment
Transactions......................... 462,173 (90,376) (650,708) (527,830)
Net Change in Unrealized Appreciation/
Depreciation of Investments.......... (763,657) 2,092,216 (414,690) (1,066,830)
----------- ----------- ------------ ------------
NET GAIN (LOSS) ON INVESTMENTS.......... (301,484) 2,001,840 (1,065,398) (1,594,660)
----------- ----------- ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............ $ 231,094 $1,881,581 $(1,428,894) $(1,632,394)
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
UTILITY
INCOME FUND GROWTH FUND
FOR THE YEARS ENDED JUNE 30,
1997 1996 1997 1996
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Income (Loss).......... $ 532,578 $ 840,420 $ (120,259) $ (113,708)
Net Realized Gain (Loss) on Investment
Transactions........................ 462,173 1,027,583 (90,376) 1,720,027
Net Change in Unrealized
Appreciation/Depreciation of
Investments......................... (763,657) 1,280,283 2,092,216 3,405,681
----------- ------------ ------------ ------------
Net Increase in Net Assets Resulting
from Operations................... 231,094 3,148,286 1,881,581 5,012,000
----------- ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income............ (540,376) (839,386) -- --
From Net Realized Gain on
Investments......................... -- -- (890,035) --
----------- ------------ ------------ ------------
Total Distributions to
Shareholders...................... (540,376) (839,386) (890,035) --
----------- ------------ ------------ ------------
FROM SHARE TRANSACTIONS
Net Proceeds from Sales of Shares..... 2,791,305 22,326,670 24,857,946 36,733,251
Reinvestment of Distributions......... 429,181 671,443 862,676 --
Cost of Shares Redeemed............... (9,211,322) (27,351,733) (33,589,710) (29,304,990)
----------- ------------ ------------ ------------
Net Increase (Decrease) in Net
Assets Resulting from Share
Transactions...................... (5,990,836) (4,353,620) (7,869,088) 7,428,261
----------- ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS............................ (6,300,118) (2,044,720) (6,877,542) 12,440,261
NET ASSETS -- Beginning of Year......... 15,106,129 17,150,849 31,776,916 19,336,655
----------- ------------ ------------ ------------
NET ASSETS -- End of Year............... $ 8,806,011 $ 15,106,129 $ 24,899,374 $ 31,776,916
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
SHARES
Sold.................................. 272,300 2,216,170 1,435,617 2,234,071
Issued in Reinvestment of
Distributions....................... 42,219 64,781 50,332 --
Redeemed.............................. (892,574) (2,711,615) (1,955,558) (1,776,492)
----------- ------------ ------------ ------------
Net Increase (Decrease) in Shares... (578,055) (430,664) (469,609) 457,579
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
EMERGING
GROWTH FUND GOLD FUND
FOR THE YEARS ENDED JUNE 30,
1997 1996 1997 1996
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES
Net Investment Loss....................................... $ (363,496) $ (498,532) $ (37,734) $ (44,769)
Net Realized Gain (Loss) on Investment Transactions....... (650,708) 6,135,405 (527,830) 322,082
Net Change in Unrealized Appreciation/Depreciation of
Investments............................................. (414,690) (1,388,307) (1,066,830) (185,846)
------------ ------------- ------------ ------------
Net Increase (Decrease) in Net Assets Resulting from
Operations............................................ (1,428,894) 4,248,566 (1,632,394) 91,467
------------ ------------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From Net Investment Income................................ -- -- -- --
From Net Realized Gain on Investments..................... (5,065,773) (344,847) -- --
------------ ------------- ------------ ------------
Total Distributions to Shareholders....................... (5,065,773) (344,847) -- --
------------ ------------- ------------ ------------
FROM SHARE TRANSACTIONS
Net Proceeds from Sales of Shares......................... 61,065,491 133,412,070 30,042,821 32,770,950
Reinvestment of Distributions............................. 4,754,104 291,283 -- --
Cost of Shares Redeemed................................... (83,578,594) (129,227,353) (31,124,263) (33,535,892)
------------ ------------- ------------ ------------
Net Increase (Decrease) in Net Assets Resulting from
Share Transactions.................................... (17,758,999) 4,476,000 (1,081,442) (764,942)
------------ ------------- ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS................. (24,253,666) 8,379,719 (2,713,836) (673,475)
NET ASSETS -- Beginning of Year............................. 44,985,495 36,605,776 6,122,380 6,795,855
------------ ------------- ------------ ------------
NET ASSETS -- End of Year................................... $ 20,731,829 $ 44,985,495 $ 3,408,544 $ 6,122,380
------------ ------------- ------------ ------------
------------ ------------- ------------ ------------
SHARES
Sold...................................................... 4,123,530 8,118,604 3,355,585 3,126,181
Issued in Reinvestment of Distributions................... 359,071 18,518 -- --
Redeemed.................................................. (5,632,148) (7,936,795) (3,486,619) (3,196,969)
------------ ------------- ------------ ------------
Net Increase (Decrease) in Shares....................... (1,149,547) 200,327 (131,034) (70,788)
------------ ------------- ------------ ------------
------------ ------------- ------------ ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
UTILITY INCOME FUND
FOR THE
FOR THE YEARS ENDED JUNE 30, PERIOD ENDED
--------------------------------------------------- JUNE 30,
1997 1996 1995 1994 1993*
------------ ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net Asset Value --
Beginning of Period.... $10.60 $9.24 $8.39 $10.82 $10.00
------------ ---------- ---------- ---------- ------------
Income from Investment
Operations:
Net Investment Income... 0.532 0.489 0.555 0.527 0.255
Net Realized and
Unrealized Gain (Loss)
on Securities......... (0.196) 1.391 0.846 (2.421) 0.820
------------ ---------- ---------- ---------- ------------
Total from Investment
Operations.......... 0.336 1.880 1.401 (1.894) 1.075
------------ ---------- ---------- ---------- ------------
Distributions to
Shareholders:
From Net Investment
Income................ (0.536) (0.520) (0.551) (0.525) (0.255)
From Net Realized
Capital Gain.......... -- -- -- (0.011) --
------------ ---------- ---------- ---------- ------------
Total Distributions to
Shareholders........ (0.536) (0.520) (0.551) (0.536) (0.255)
------------ ---------- ---------- ---------- ------------
Net Increase (Decrease) in
Net Asset Value........ (0.20) 1.36 0.85 (2.43) 0.82
------------ ---------- ---------- ---------- ------------
Net Asset Value -- End of
Period................. $10.40 $10.60 $9.24 $8.39 $10.82
------------ ---------- ---------- ---------- ------------
------------ ---------- ---------- ---------- ------------
TOTAL INVESTMENT RETURN... 3.39% 20.60% 16.62% (18.18)% 9.98%(A)
RATIOS TO AVERAGE NET
ASSETS:
Expenses................ 1.05% 1.05% 1.05% 1.05% 1.05%(B)
Net Investment Income... 4.88% 4.82% 6.26% 5.21% 3.31%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover
Rate.................. 17.33% 45.11% 147.04% 26.13% 15.93%
Net Assets at End of
Period (000's
omitted).............. $8,806 $15,106 $17,151 $9,117 $8,415
Number of Shares
Outstanding at End of
Period (000's
omitted).............. 847 1,425 1,855 1,086 778
Average Commission Rate
Paid.................. $0.0496(C) -- -- -- --
- --------------------------
</TABLE>
(A) Total Investment Return for periods of less than one year are not
annualized.
(B) Annualized.
(C) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for
security trades on which commissions are charged. This amount may
vary from period to period and fund to fund depending on the mix of
trades executed in various markets where trading practices and
commission rate structures may differ.
*FROM COMMENCEMENT OF OPERATIONS OCTOBER 6, 1992.
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GROWTH FUND
FOR THE
FOR THE YEARS ENDED JUNE 30, PERIOD ENDED
--------------------------------------------------- JUNE 30,
1997 1996 1995 1994 1993*
------------ ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of
Period........................ $17.87 $14.64 $11.05 $10.63 $10.00
------------ ---------- ---------- ---------- ------------
Income from Investment
Operations:
Net Investment Income
(Loss)...................... (0.092) (0.069) 0.014 (0.021) 0.012
Net Realized and Unrealized
Gain on Securities.......... 1.831 3.299 3.593 0.444 0.620
------------ ---------- ---------- ---------- ------------
Total from Investment
Operations................ 1.739 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
Gain........................ (0.589) -- -- -- --
------------ ---------- ---------- ---------- ------------
Total Distributions to
Shareholders.............. (0.589) -- (0.017) (0.003) (0.002)
------------ ---------- ---------- ---------- ------------
Net Increase in Net Asset
Value......................... 1.15 3.23 3.59 0.42 0.63
------------ ---------- ---------- ---------- ------------
Net Asset Value -- End of
Period........................ $19.02 $17.87 $14.64 $11.05 $10.63
------------ ---------- ---------- ---------- ------------
------------ ---------- ---------- ---------- ------------
TOTAL INVESTMENT RETURN........... 10.10% 22.06% 32.65% 3.99% 6.34%(A)
RATIOS TO AVERAGE NET ASSETS:
Expenses........................ 1.50% 1.50% 1.50% 1.50% 1.50%(B)
Net Investment Income (Loss).... (0.46)% (0.41)% 0.12% (0.18)% 0.17%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate......... 41.93% 74.50% 70.89% 119.03% 21.13%
Net Assets at End of Period
(000's omitted)............... $24,899 $31,777 $19,337 $9,993 $3,165
Number of Shares Outstanding at
End of Period (000's
omitted)...................... 1,309 1,778 1,321 904 298
Average Commission Rate Paid.... $0.0453(C) -- -- -- --
- ----------------------------------
</TABLE>
(A) Total Investment Return for periods of less than one year are not
annualized.
(B) Annualized.
(C) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for
security trades on which commissions are charged. This amount may
vary from period to period and fund to fund depending on the mix of
trades executed in various markets where trading practices and
commission rate structures may differ.
*FROM COMMENCEMENT OF OPERATIONS OCTOBER 6, 1992.
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
EMERGING GROWTH FUND
FOR THE
FOR THE YEARS ENDED JUNE 30, PERIOD ENDED
-------------------------------------------------- JUNE 30,
1997 1996 1995 1994 1993*
----------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of Period....................... $16.99 $14.96 $10.41 $11.32 $10.00
----------- ---------- ---------- ---------- ------
Income from Investment Operations:
Net Investment Loss........................................ (0.242) (0.161) (0.075) (0.104) (0.050)
Net Realized and Unrealized Gain (Loss) on Securities...... (0.243) 2.300 4.625 (0.686) 1.377
----------- ---------- ---------- ---------- ------
Total from Investment Operations......................... (0.485) 2.139 4.550 (0.790) 1.327
----------- ---------- ---------- ---------- ------
Distributions to Shareholders:
From Net Investment Income................................. -- -- -- -- --
From Net Realized Capital Gain............................. (2.665) (0.109) -- (0.120) (0.007)
----------- ---------- ---------- ---------- ------
Total Distributions to Shareholders...................... (2.665) (0.109) -- (0.120) (0.007)
----------- ---------- ---------- ---------- ------
Net Increase (Decrease) in Net Asset Value................... (3.15) 2.03 4.55 (0.91) 1.32
----------- ---------- ---------- ---------- ------
Net Asset Value -- End of Period............................. $13.84 $16.99 $14.96 $10.41 $11.32
----------- ---------- ---------- ---------- ------
----------- ---------- ---------- ---------- ------
TOTAL INVESTMENT RETURN........................................ (2.15)% 14.36% 43.71% (7.31)% 13.35%(A)
RATIOS TO AVERAGE NET ASSETS:
Expenses..................................................... 1.50% 1.50% 1.50% 1.50% 1.50%(B)
Net Investment Loss.......................................... (1.20)% (0.98)% (0.61)% (0.85)% (0.63)%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate...................................... 66.16% 121.22% 96.11% 128.13% 67.90%
Net Assets at End of Period (000's omitted).................. $20,732 $44,985 $36,606 $18,133 $ 4,750
Number of Shares Outstanding at End of Period (000's
omitted)................................................... 1,498 2,647 2,447 1,742 420
Average Commission Rate Paid................................. $0.0382(C) -- -- -- --
- ---------------------------------------------------------------
</TABLE>
(A) Total Investment Return for periods of less than one year are not
annualized.
(B) Annualized.
(C) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for
security trades on which commissions are charged. This amount may
vary from period to period and fund to fund depending on the mix of
trades executed in various markets where trading practices and
commission rate structures may differ.
* FROM COMMENCEMENT OF OPERATIONS OCTOBER 6, 1992.
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GOLD FUND
FOR THE YEARS ENDED FOR THE
JUNE 30, PERIOD ENDED
------------------------------------- JUNE 30,
1997 1996 1995 1994*
----------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of Period.................................... $ 9.93 $ 9.89 $ 9.52 $ 10.00
----------- ---------- ---------- ------
Income from Investment Operations:
Net Investment Loss..................................................... (0.078) (0.060) (0.047) (0.008)
Net Realized and Unrealized Gain (Loss) on Securities................... (2.832) 0.100 0.417 (0.472)
----------- ---------- ---------- ------
Total from Investment Operations...................................... (2.910) 0.040 0.370 (0.480)
----------- ---------- ---------- ------
Distributions to Shareholders:
From Net Investment Income.............................................. -- -- -- --
From Net Realized Capital Gain.......................................... -- -- -- --
----------- ---------- ---------- ------
Total Distributions to Shareholders................................... -- -- -- --
----------- ---------- ---------- ------
Net Increase (Decrease) in Net Asset Value................................ (2.91) 0.04 0.37 (0.48)
----------- ---------- ---------- ------
Net Asset Value -- End of Period.......................................... $7.02 $9.93 $9.89 $9.52
----------- ---------- ---------- ------
----------- ---------- ---------- ------
TOTAL INVESTMENT RETURN..................................................... (29.31)% 0.40% 3.89% (4.80)%(A)
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................................. 1.70% 1.70% 1.70% 1.68%(B)
Net Investment Loss....................................................... (0.76)% (0.59)% (0.51)% (0.25)%(B)
SUPPLEMENTARY DATA:
Portfolio Turnover Rate................................................... 108.47% 59.06% 51.23% 22.85%
Net Assets at End of Period (000's omitted)............................... $ 3,409 $ 6,122 $ 6,796 $ 6,395
Number of Shares Outstanding at End of Period (000's omitted)............. 485 616 687 672
Average Commission Rate Paid.............................................. $0.0477(C) -- -- --
- ----------------------------------------------------------------------------
</TABLE>
(A) Total Investment Return for periods of less than one year are not
annualized.
(B) Annualized.
(C) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for
security trades on which commissions are charged.This amount may
vary from period to period and fund to fund depending on the mix of
trades executed in various markets where trading practices and
commission rate structures may differ.
*FROM COMMENCEMENT OF OPERATIONS MARCH 7, 1994.
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
JUNE 30, 1997 CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
Cappiello-Rushmore Trust (the "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 (the "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 reinvested 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, if any, and realized capital gains to
their shareholders. 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., (the "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 (the
"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.
3. Securities Transactions
For the year ended June 30, 1997, 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.............................................. $ 1,849,821 $10,168,712 $19,416,491 $4,870,854
------------- ------------- ------------- -----------
------------- ------------- ------------- -----------
Sales.................................................. $ 7,476,774 $19,934,882 $42,423,001 $5,648,444
------------- ------------- ------------- -----------
------------- ------------- ------------- -----------
</TABLE>
17
<PAGE>
JUNE 30, 1997 CAPPIELLO-RUSHMORE TRUST
- --------------------------------------------------------------------------------
4. Net Unrealized Appreciation/Depreciation of Investments
Net unrealized appreciation (depreciation) as of June 30, 1997, 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........... $1,204,447 $ 8,980,474 $ 6,796,449 $ 141,985
Gross Unrealized Depreciation........... (90,105) (98,280) (2,253,125) (959,266)
----------- ------------ ------------ -----------
Net Unrealized Appreciation
(Depreciation)........................ $1,114,342 $ 8,882,194 $ 4,543,324 $ (817,281)
----------- ------------ ------------ -----------
----------- ------------ ------------ -----------
Cost of Investments for Federal Income
Tax Purposes.......................... $7,610,455 $14,415,814 $15,215,297 $4,431,998
----------- ------------ ------------ -----------
----------- ------------ ------------ -----------
</TABLE>
5. Net Assets
At June 30, 1997, 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......................... $7,845,045 $16,110,219 $17,812,292 $6,600,798
Undistributed Net Investment Income..... 2,325 -- -- --
Accumulated Net Realized Loss on
Investments........................... (186,726) (93,039) (1,967,102) (2,478,604)
Net Unrealized Appreciation
(Depreciation) on Investments......... 1,145,367 8,882,194 4,886,639 (713,650)
----------- ------------ ------------ -----------
Net Assets.............................. $8,806,011 $24,899,374 $20,731,829 $3,408,544
----------- ------------ ------------ -----------
----------- ------------ ------------ -----------
</TABLE>
6. Federal Income Tax
Permanent differences between tax and financial reporting of net investment
income and realized gains are reclassified to paid-in-capital. As of June 30,
1997, net investment losses and accumulated net realized 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>
Net Investment Losses................... -- $ 120,259 $ 363,496 $ 37,734
Net Accumulated Net Realized Loss....... -- 1,258,147 2,400,444 2,089,392
</TABLE>
At June 30, 1997, 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
2003.................................... $155,713 -- -- --
2005.................................... -- $93,039 678,880 648,259
----------- ------------ ----------- -----------
Total............................. $155,713 $93,039 $1,623,790 $2,374,973
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
</TABLE>
18
<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, 1997, 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 at June 30,
1997 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, 1997, the results of their operations, the changes in their net assets, and
the financial highlights for the respective stated periods in conformity with
generally accepted accounting principles.
[SIGNATURE]
Washington, DC
August 8, 1997
- --------------------------------------------------------------------------------
19
<PAGE>
[LOGO]
CAPPIELLO-RUSHMORE
TRUST
Annual Report
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June 30, 1997
